Allianz SE, the German insurer that owns bond manager Pacific Investment Management Co., relied on inflows at the asset management unit to offset lower earnings at its property and casualty business.

Pimco attracted 22 billion euros ($24 billion) from clients in the third quarter, more than offsetting 4 billion euros in outflows at sister unit Allianz Global Investors, the company reported Friday. The shares fell as operating profit from non-life insurance, the largest unit at the Munich-based company, declined 10% and analysts highlighted a drop in a key measure of financial strength.

Chief Executive Officer Oliver Baete, who took over in 2015, has relied on cost cuts, inflows at the asset management unit and smaller deals to lift profit as low interest rates and pressure on prices weigh on the industry. After agreeing two general insurance takeovers in the U.K. earlier this year, he struck another deal in Brazil in August and this week took a stake in one of China’s largest insurance and financial services companies.

Allianz raised its outlook for the year, saying full-year operating profit at the group will be at the top of the 11 billion euros to 12 billion euros that it had targeted for the year.

In asset management, a business overseen by board member Jackie Hunt, Allianz is sticking to actively run strategies, which attract higher fees but have come under pressure as investors flocked to cheaper index funds after the financial crisis. Operating profit at the business rose 8.2% in the quarter, Allianz said Friday, and assets overseen for outside clients reached a record 1.68 trillion euros.

But at the property and casualty business, higher claims and expenses and a lower contribution from what the company called “run-off” contributed to a slump in earnings. That left operating profit at the group little changed in the third quarter at 2.98 billion euros. Analysts polled by Bloomberg had expected a profit of 2.94 billion euros.

“Falling interest rates squeeze investment margins in Allianz’s life business while slowing economic growth makes it harder to expand its property and casualty business,” said Charles Graham, a senior analyst for Bloomberg Intelligence.

Shares of Allianz fell 1.6% at 11:14 a.m. in Frankfurt trading, paring gains this year to 26%. The stock is up about 44% since Baete took over in May 2015, outperforming the Bloomberg Europe 500 Insurance Index.

‘Very Solid’

Commerzbank AG analyst Michael Haid also pointed to a lower Solvency II ratio — a measure of an insurer’s ability to absorb losses — as a reason for Friday’s stock reaction. The measure decreased to 202% at the end of the third quarter from 213% at the end of the second quarter. It’s still well above what Allianz needs — a ratio of 100% means a firm has sufficient capital to withstand the kind of shock that happens once in 200 years.

“While I think the results are very solid, the market might be disturbed by the fact that the Solvency II ratio has fallen sharply,” he said in an interview.

Baete took over at a time when analysts predicted stagnating profit and Pimco was still bleeding assets following the departure of co-founder Bill Gross. He managed to increase profit steadily, despite being unable to pull of any of the big deals he’d been looking for in property and casualty insurance or in asset management.

Smaller Deals

So far, the smaller transaction have worked well for the firm. Allianz agreed in August to acquire automobile and other property-casualty operations from SulAmérica for 667 million euros. The transaction will make it Brazil’s second-largest provider of motor insurance. The company agreed in May to buy two insurance businesses in the U.K., transforming it into the second-biggest general insurer in that country.

This week, Allianz took a stake of about 4% in Beijing-based Taikang Life Insurance Co., purchasing the investment from Goldman Sachs Group Inc. Founded in 1996, closely-held Taikang Life is among China’s largest insurance and financial services companies with 800,000 employees and agents, according to its website.

The insurer paid about 800 million euros for the stake and considers it a financial investment that may lead to cooperations down the road, Chief Financial Officer Giulio Terzariol said in an interview with Bloomberg TV.