By Ulrike Dauer
FRANKFURT-- Allianz SE on Friday reported higher second-quarter
profit and said it was more confident on its full-year targets
despite continued weakness at its bond-fund management business,
Pacific Investment Management Co., as its insurance earnings were
lifted by low claims payouts and a one-time disposal gain.
Europe's largest insurer by market value said it was on track to
reach the upper end of its full-year target range of operating
profit of between EUR10 billion ($10.9 billion) and EUR10.8
billion. After the first six months it had reached EUR5.70 billion
of that.
Quarterly net profit rose 15% to EUR2.02 billion from EUR1.76
billion in the same quarter a year ago. That was a clear beat of
the forecast EUR1.83 billion in a Dow Jones Newswires analyst
poll.
Operating profit--Allianz's main yardstick--rose 2.6% to EUR2.84
billion, falling short of the forecast rise to EUR2.92 billion as
an improvement in property and casualty insurance wasn't enough to
offset a weaker contribution from its asset management and life and
health insurance operations.
Allianz's asset-management business includes the world's biggest
bond fund manager, Pimco, and smaller peer Allianz Global
Investors. Pimco's weakness has been a drag on group earnings since
last year's turbulent management reshuffle that culminated in the
departure of co-founder and chief investment officer Bill Gross in
September. As investors continue to pull their funds, Pimco's net
asset outflows weakened the quarterly results, though they have
eased since the beginning of the year.
Nonetheless, there is no light at the end of the tunnel yet. In
the second quarter, the asset management's contribution to the
group's quarterly operating profit fell 25% to EUR505 million, down
from EUR676 million and shy of the forecast EUR570 million.
This follows a 14% decline in the first quarter.
Still, Allianz confirmed its full-year operating profit target
for the business. Asset management "performed within expectations,"
said Chief Financial Officer Dieter Wemmer. He noted that
third-party net outflows at Pimco eased in the course of this year
and that net inflows at the smaller Allianz Global Investors
reached a record high.
According to the group figures, Pimco and AGI combined had
third-party net outflows of EUR22.5 billion in the second quarter,
still marking a 31% increase from EUR17.2 billion in the same
quarter a year ago. But compared with the first quarter, outflows
eased by one-third. This was mainly due to Pimco, where quarterly
net outflows topped the second quarter of last year but were less
than half the outflows seen in the previous quarter.
The group's total assets under management--the bulk of which is
third-party assets but also includes Allianz group assets--were
EUR1.81 trillion at the end of June, a 6 .3% decrease since March.
But they were little changed from the end of 2014 and from the
second quarter of 2014.
Third-party assets under management of EUR1.32 trillion fell 6%
since the end of March, due to a combination of net outflows,
declines in market value and currency losses. They were down 3.6%
from the same quarter a year ago.
The cost-income ratio in the asset management business rose
further to 67.4% from 57.9%, and against 64.7% in the first
quarter.
In the group's life and health insurance business, operating
profit fell 13% to EUR853 million, mainly due to a narrower
investment margin in Germany and reserve strengthening in South
Korea.
The group's quarterly operating profit received a EUR200 million
net boost from the sale of the retail business of its U.S. insurer
Fireman's Fund to ACE Ltd. (ACE). The sale was closed in April.
Write to Ulrike Dauer at ulrike.dauer@wsj.com
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