Allianz SE said second-quarter profit almost halved, missing estimates, as Europe’s biggest insurer faced higher claims from natural disasters and charges for the expected sale of its South Korea unit.

Net income declined to 1.1 billion euros ($1.2 billion) from 2.02 billion euros a year earlier, the Munich-based company said in a statement on Friday. That compares with the 1.55 billion-euro average of 12 estimates compiled by Bloomberg. Allianz confirmed its target for full-year operating profit of 10 billion euros to 11 billion euros compared with 10.7 billion euros in 2015.

Insurers in Europe are under pressure as low interest rates crimp investment returns, which typically provide a buffer for earnings when claims rise or prices for coverage decline. The industry is also grappling with stricter regulatory capital requirements and subdued prices in some markets. Chief Executive Officer Oliver Baete seeks to achieve annual growth per share growth of 5 percent on average over the next three years and an adjusted return on equity of 13 percent by 2018.

“Management needs to deploy capital to accretive M&A or buybacks in order to achieve their 2018 financial targets” following declines in earnings per share and return on equity in the first half, Sanford C. Bernstein analyst Thomas Seidl wrote in a note to clients. Considering the company’s “rather dry M&A pipeline” there’s more than a 70 percent chance that it will announce a buyback of 1 billion euros to 2 billion euros in the second half, he said.

Shares Fall

Allianz declined as much as 4.3 percent in Frankfurt trading and was down 4.1 percent at 123 euros as of 11:05 a.m. The stock has fallen 25 percent this year, valuing the company at about 56 billion euros. The Bloomberg Europe 500 Insurance Index declined 22 percent over the same time.

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The expected sale of the South Korean business resulted in a charge of 352 million euros in the quarter, Allianz said. The insurer agreed to sell its unprofitable operations in the country to Chinese insurer Anbang Insurance Group Co. in April.

“Operating profit was burdened by European floods and storms, wildfires in Canada, hailstorms in the United States, as well as lower investment income,” Chief Financial Officer Dieter Wemmer said in the statement.

Pimco Pressure

The insurer’s asset management unit, which comprises Pacific Investment Management Co. and Allianz Global Investors, is also under pressure to bolster earnings after Bill Gross left Pimco in September 2014. Since then, Pimco lost about a quarter of its assets and now manages about $1.5 trillion. The flagship Pimco Total Return Fund — once the world’s largest mutual fund — has shrunk 70 percent to $86 billion in the past three years.

Operating profit for the asset-management business fell 1.4 percent to 498 million euros in the second quarter. Pimco’s third-party net outflows declined to 18 billion euros in the quarter, down from 29 billion euros a year ago but an increase from the 10 billion euros of outflows in the first three months of the year, Allianz said.

“Expected strategic asset re-allocation of a few large institutional customers crystallized in larger negative flows in April,” Allianz said. Outflows in May and June were in line with a longer term trend of declines, it said.

Pimco last month hired Emmanuel “Manny” Roman as CEO from Man Group Plc, the world’s largest publicly-traded hedge fund manager. At Pimco, with almost 20 times the assets of Man Group, Roman is expected to contain costs and broaden the product offering to revive profit. He will start on Nov. 1 and report to Jacqueline Hunt, Allianz’s head of asset management.