(May 15, 2014) – German insurance giant Allianz saw earnings suffer in the first quarter of 2014 following internal strife and asset outflows at PIMCO, which it owns.
Profits earned by the parent company’s asset management division fell 28% compared with the same period last year, according to Allianz’ latest earnings announcement. Operating revenues dropped 19%, from €1.87 billion ($2.56 billion) in 2013’s first quarter to €1.52 billion ($2.08 billion) this year.
In January, PIMCO’s CEO and co-CIO Mohamed El-Erian abruptly announced his resignation. A period of public strife between El-Erian and firm founder Bill Gross followed, and investors pulled billions from the venerable bond house.
In the earnings release, Allianz characterized the asset management division’s revenues as “on track.” However, during the earnings call on May 14, PIMCO came up in the very first question.
Berenberg Bank analyst Peter Eliot asked Allianz CFO Dieter Wemmer for any comment on how he was “feeling after the events of Q1” at the Newport Beach, California-based firm.
“PIMCO was a very flat development month-over-month” in assets under management, Wemmer said. “And actually, before anyone asks it, April was pretty much unchanged compared to January, February and March.”
El-Erian left the firm in March.
“You see in the whole industry outflows out of actively managed fixed income,” Wemmer continued. “You can look at BlackRock and Vanguard: the flows at the moment in the fixed income sector are more going to the passive funds than to the active managed.”
Wemmer characterized the division’s struggling numbers as “seasonal,” and expressed confidence they would recover. “I think that the performance of the active managed will in the end attract the customers which at the moment are more attracted to the passive funds,” he concluded.