Pimco's Turnaround Gathers Pace With $5 Billion in January

Updated on
  • Allianz-owned money manager posts highest profit since 2014
  • Pimco performance helps lift earnings at Allianz by 23%

Allianz Plans $3.2B Share Buyback as 4Q Profit Climbs

Pacific Investment Management Co. had about $5 billion in third-party inflows last month, almost as much as in the entire fourth quarter, suggesting the turnaround at the bond manager owned by Allianz SE is gathering steam.

Allianz said Thursday that Pimco had its second consecutive quarter of inflows in the final three months of last year, and the highest operating profit since the third quarter of 2014. That trend accelerated this year, Allianz Chief Financial Officer Dieter Wemmer said Friday.

“January started very strong with further inflows,” Wemmer said in an interview on Bloomberg TV. “It’s a very good time for active managed credit. We were getting pretty close to the inflows we saw in the fourth quarter, we made another 5 billion in January.”

Allianz, Europe’s biggest insurer, on Thursday reported a 23 percent increase in fourth-quarter profit and announced its first-ever share buyback as Chief Executive Officer Oliver Baete makes good on a promise to return excess cash to shareholders. Baete hired Jacqueline Hunt last year to oversee the insurer’s U.S. life insurance unit and its $2 trillion asset management unit, which comprises Pimco and Allianz Global Investors.

For a story that profiles Jackie Hunt, click here

Pimco has seen assets decline by about a quarter from their peak as the surprise departure of co-founder Bill Gross in 2014 accelerated a flight from bonds. That trend reversed in the third quarter of last year, with clients adding 4.7 billion euros ($5 billion). In the fourth quarter, third-party inflows accelerated to 5.9 billion euros, Allianz said yesterday. AGI had third-party net outflows of 4.2 billion euros as clients pulled money from equities.

Pimco’s cost-income ratio improved to 56.9 percent in the fourth quarter from 60.2 percent a year earlier, Allianz said. While that’s still above 51.3 percent in 2013, the insurer said it was satisfied for now.

“The target remains below 60 percent,” Wemmer said at a press conference in Munich Friday. “We will be happy if it improves further but we won’t set new targets.”

Allianz rose 2.4 percent to 162.15 euros at 12:59 p.m. in Frankfurt trading, bringing gains in the past six months to 23 percent.

Net income at Allianz rose to 1.74 billion euros in the fourth quarter from 1.42 billion euros a year ago. Analysts had expected earnings of 1.62 billion euros, according to the average of seven estimates compiled by Bloomberg.

The company announced plans to spend as much as 3 billion euros to repurchase shares over the next 12 months. Allianz had promised investors to pay out the company’s unused acquisition budget if it couldn’t find suitable deals.

(Updates with CFO comment in seventh paragraph.)
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