Allianz SE said its Pacific Investment Management Co.unit, which has struggled to contain outflows since the departure of money manager Bill Gross in 2014, will see a return to inflows by the end of the year.
Third-party assets under management at Pimco fell to 987 billion euros ($1.1 trillion) by the end of last year from 1.05 trillion euros a year earlier, Munich-based Allianz said in a presentation Friday. Net outflows almost halved to 125 billion euros last year compared with 2014, it said.
“We expect outflows to switch to inflows toward the end of the year,” said Chief Executive Officer Oliver Baete. “In the current capital market environment, I’m cautious to make a more precise announcement regarding the exact month or quarter, but the major Gross-related outflows are a topic of the past.”
Pimco’s flagship fund, the $89.3 billion Pimco Total Return Fund, ended a 31-month streak of net redemptions in December, although outflows resumed in January when about $1.1 billion was withdrawn. Customers have pulled more than $200 billion since the fund’s peak in April 2013. Allianz Global Investors, the insurer’s second asset manager, saw record third-party net inflows of 17.5 billion euros last year.
Pimco will focus on reducing expenses this year after the business has stabilized, Baete said. The firm’s cost-income ratio, which has been a benchmark for the industry, worsened to 61.3 percent last year from 54.5 percent in 2014, partly because of a bonus program introduced to retain talent in November 2014. The impact of the program will decline by about two thirds in 2016, Allianz said in the presentation.
Allianz, Europe’s biggest insurer, today said it missed analyst estimates for fourth-quarter profit because of claims from natural catastrophes. Net income increased to 1.42 billion euros from 1.22 billion euros a year earlier.