El-Erian Appointed by Allianz as Chief Economic Adviser

(February 28, 2014) — Mohamed El-Erian has accepted a part-time role as chief economic adviser for German insurer Allianz, following his shock decision to leave the Allianz-owned fund manager PIMCO last month.

Allianz CEO Michael Diekmann told a Munich press conference yesterday that El-Erian would spend 50% of his time in the role, working alongside Chief Economist Michael Heise. The remainder will be spent on book projects and spending time with his family.

The former PIMCO chief executive officer and co-chief investment officer hit the headlines on January 21 by shocking the market with his unexpected resignation.

His departure coincided with a broader shakeup of PIMCO’s senior executives and follows one of the firm’s worst years in decades.

For more stories like this, sign up for the CIO Alert newsletter. 

Investors pulled €35.6 billion from PIMCO in the fourth quarter of 2013, capping a tumultuous year for the bond giant in which assets under management fell 10%.

PIMCO’s official announcement failed to provide an explanation for the resignation of Gross’s second-in-command.

But media reports, originated by articles in the Wall Street Journal citing internal PIMCO sources, have since suggested a major falling out between El-Erian and PIMCO founder and co-CIO Bill Gross.

The paper reported that the two men openly squared off in front of more than a dozen colleagues amid disagreements about Gross’s conduct last June.

“I have a 41-year track record of investing excellence,” Gross is said to have told El-Erian, according to two witnesses. “What do you have?”

“I’m tired of cleaning up your ****,” El-Erian is said to have responded, referring to conduct by Gross that he felt was hurting PIMCO, the same two people recalled.

Allianz’s Diekmann said that he could not confirm the media reports about the reason for El-Erian’s resignation, according to Bloomberg.

(February 28, 2014) — A subsidiary of the Ontario Teachers’ Pension Plan (OTTP) has settled terms to run the Irish national lottery for the next two decades, five months after initially being granted the license.

The pension fund’s Premier Lotteries Ireland (PLI) subsidiary, which has minority stakes held by An Post (the Irish Post office and previous operator) and An Post pension funds in Ireland, was selected in October 2013 as the preferred bidder for the licence following a competitive bidding process.

With terms now finalised, the initial payment of the €405-million licence fee will be made to the Irish government. The transition to PLI operating the National Lottery is expected to be completed over the next year.

The deal marks the second national lottery venture for OTTP, having already bought Camelot Group, the operator of the UK national lottery, in 2010.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

Camelot will provide consulting services to the Irish lottery’s existing management.

“Teachers’ is an experienced investor in lottery operators and we look forward to working with our partners in Ireland to grow the National Lottery through innovation and technology investments that grow sales,” Lee Sienna, OTTP’s vice-president of long-term equities and chairman of PLI, said in a statement.

“The Irish licence is a significant milestone in our strategy of building a leadership position in the international lottery sector.”

The PLI takes over the running of the Irish lottery at a difficult time. Five years of declining sales have resulted in an annual turnover drop from a 2008 high of €840 million to €735 million in 2012, according to the Irish Times.