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Allianz Profits Offset By Serious Losses In Asset Management Arm

Sandra Kilhof

28 February 2014

, the German financial services and insurance group, has revealed worse than expected fourth-quarter results as the firm struggled with falling profits and investor outflows in its asset management arm in the last months of 2013. Still, the firm managed an overall profit of just over €10 billion ($13.68 billion), outperforming expectations.

Its annual results today revealed that net income at the German insurer rose just 1 per cent in the fourth quarter of 2013 to €1.26 billion, missing previous estimates of a 9 per cent gain.

The poor results come down to a significant fall in profits at Allianz’s asset management arm, where US fund management firm Pimco makes up nearly 90 per cent. The business saw its operating profits drop more than 23 per cent in the fourth quarter and continued to see outflows amid a more difficult trading environment for fixed income triggered by the US Federal Reserve’s decision to slow its monetary easing, a statement said.

The fourth-quarter bore the brunt of the outflows, with €35.6 billion of net outflows from Pimco funds, most of which came from US retail investors leaving the fund.

Third-party net outflows in the asset management arm were €12 billion over 2013, compared with €114 billion of net inflows the previous year.

The Pimco performance is especially weighing on overall group results after investors withdrew money last year following the departure of chief executive Mohamed El-Erian. Read more on that story, here.

Conversely, this has not damaged the full-year operating profit at Allianz, which beat expectations, rising nearly eight per cent to just over €10 billion - surpassing the expected full-year operating profit of €9.7 billion.

Looking ahead, the firm said that it expects asset management operating profit to fall even further, to between €2.5 billion and €2.9 billion this year, from the €3.2 billion in 2013.