Allianz SE , AL-i-ənts) is a German multinational financial services company headquartered in Munich. Its core business and focus is insurance. As of 2013, it is the world's largest insurance company, the 11th-largest financial services group and 25th-largest company according to a composite measure by Forbes magazine, as well as the largest financial services company when measured by 2012 revenue.Its Allianz Global Investors division ranks as a top-five global active investment manager, having €1,770 billion of assets under management , of which €1,131 billion are third-party assets , with specialized asset managers including PIMCO , RCM and Degi .Allianz sold Dresdner Bank to Commerzbank in November 2008. As a result of this merger, Allianz gained a 14% controlling stake in the new Commerzbank. Wikipedia.
News Article | October 9, 2015
A year after bond king Bill Gross was ousted from the firm he helped build, he is looking for vindication. In a lawsuit filed on Thursday, Mr Mr Gross sued Pacific Investment Management Co and parent Allianz for "hundreds of millions of dollars," claiming he was wrongfully pushed out as the bond giant's chief investment officer by a "cabal" of executives seeking a bigger slice of the bonus pool. "Driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency, a cabal of Pimco managing directors plotted to drive founder Bill Gross out of Pimco in order to take, without compensation, Mr Gross's percentage ownership in the profitability of Pimco," according to the complaint. "Their improper, dishonest, and unethical behaviour must now be exposed." The lawsuit presents a detailed account of the events leading up to Mr Gross's departure on September 26 last year, a move that rattled bond markets and prompted record redemptions at what once was the world's largest mutual fund. It portrays Mr Gross as an advocate for lower fees and traditional, lower-risk bond investments who was pushed out gradually by other executives seeking to expand into riskier assets and higher-fee products. Mr Gross, 71, claims the Newport Beach, California-based firm owes him at least "hundreds of millions" for wrongful termination, breach of written contract, and breach of covenant of good faith and fair dealing, according to the document. Mr Gross was expecting a bonus of about $US250 million ($345 million) for last year, with most of that due in the second half of the year, according to the lawsuit. Because he left the firm days before the third quarter ended, Pimco refused to pay him a proportionate amount, said the complaint, which claims that his termination resulted in damages to Mr Gross of no less than $US200 million. Mr Gross, who is worth $US2 billion according to the Bloomberg Billionaires index, says he wouldn't keep the money, should he win. Patricia Glaser, Mr Gross's lead attorney, said in an email that all proceeds from the lawsuit will go to charity, including the Pimco Foundation. At its height in 2013, Pimco oversaw about $US2 trillion in assets. It's since shrunk to $US1.5 trillion. The Pimco Total Return Fund, which Mr Gross oversaw since inception in 1987 until his departure, now has $US95.5 billion of assets under management, about a third of what it had at its peak. Mr Gross is now running the $US1.38 billion Janus Global Unconstrained Bond Fund for Janus Capital Group Inc., which has lost 1.9 per cent in the past year, according to data compiled by Bloomberg. That performance puts him in the middle of the pack, trailing 51 per cent of unconstrained funds.
News Article | May 12, 2015
The bond rout deepens, European stocks tank and outflows at Pimco takes a bite out of profit at Allianz. Here are some of the things that people are talking about in the markets this morning. The global bond rout spread to Asia overnight. The yield on the Japanese 10-year bond climbed as much as 8 basis points and the yield on the Australian equivalent surged the most since June 2013. After yesterday's ugly session for U.S. bonds, the Treasury is selling $24 billion worth of 3-year notes later today. Meanwhile, the German 10-year bund has seen its yield rise above 0.70%. At the time of writing, stock markets from the FTSE 100 in London to the DAX in Frankfurt are down by over 1.5 percent. The Stoxx Europe 600 Index fell as much as 2 percent earlier in the session, with all 19 industry groups declining. Dow futures are pointing down over 100 points. Here's some encouraging news: Greece is going to pay the IMF €750 million as scheduled today. Here's some less encouraging news: according to Kethimerini newspaper, the government used reserves from its IMF holdings account to make the payment. Withdrawals at Pimco's flagship fund exacerbated by the departure of fund manager Bill Gross, cut first-quarter profit from asset management at Allianz by 14 percent. In what is set to be the most high profile meeting of the day, U.S. Secretary of State John Kerry heads for Russia intending to meet with President Vladimir Putin for their first direct talks in two years.
News Article | February 25, 2015
Europe’s insurers are preparing to boost dividends to the highest of any industry except utilities, making use of expanding surplus capital to offer investors an alternative to record low interest earnings from bonds. Companies including Allianz SE, Europe’s biggest insurer, may provide a dividend yield averaging 4.4 percent this year versus 4.1 percent for the past year, according to data compiled by Bloomberg. Insurers are poised to overtake telecommunications firms to become the second-biggest payers in the 18-industry Stoxx Europe 600 Index. They ranked third last year. The industry is boosting payouts after its pool of shareholder funds swelled to 422 billion euros ($478 billion) at the end of the first half, helped by cost cuts and gains from a bond market rally, according to data provided by Bloomberg Intelligence. Deflation and creaking economic growth forced the European Central Bank to cut deposit rates to negative last June. “As interest rates are at a record low in many markets, insurer’s dividend yields have become even more attractive as investors are searching for yield,” said Tim Friebertshaeuser, who helps oversee about 1 trillion euros at Deutsche Asset & Wealth Management in Frankfurt. “Pressure on investment income has brought further cost-cutting efforts and pricing discipline.” Axa SA, France’s largest insurer, said on Wednesday it will increase dividends to 95 cents a share from 81 cents in 2013. U.K. insurer St. James’s Place will pay out 14.37 pence a share, 10 percent higher than it indicated six months into 2014. Its shares climbed to a record in London. Gains for insurance stocks are beating those of the wider market. The Stoxx Europe 600 Insurance index climbed 21 percent over the past year compared with an increase of 14 percent for the broad Stoxx Europe 600 and less than 1 percent for the region’s banks. Allianz, Italy’s Assicurazioni Generali SpA and Munich Re, the world’s biggest reinsurer, have pledged to keep payouts at least stable and if possible raise them further. Dividend yields are payments per share expressed as a percentage of the current stock price. Average yields in the telecommunications industry are expected to fall to 4.1 percent from 9.4 percent last year, according to data compiled by Bloomberg. Payouts by utilities such as gas and electricity companies are estimated to decline to 4.7 percent over the same period from 6 percent. “Strong payouts have become one of investors’ key arguments for the sector,” said Reiner Kloecker, who helps oversee about 232 billion euros at Union Investment in Frankfurt. “Business is in decline for most insurers and as a result they are distributing excess capital.” Pressure on insurers’ investment returns is increasing as the European Central Bank embarks on a bond-buying program worth at least 1.14 trillion euros, dubbed quantitative easing, or QE, raising doubts about how much further they can boost dividends. The measures, announced last month, are making it more difficult for insurers to earn the income needed to meet pension and life insurance policies with guaranteed returns. “The economic reality of ECB QE for significant parts of the sector is actually quite dire, particularly for guarantee businesses,” analysts including Andy Broadfield at Barclays Plc wrote in a note to clients on Feb. 11. Germany auctioned five-year notes with a negative yield for the first time on Wednesday. The rate on Irish 10-year securities touched a record-low 0.991 percent, while that on similar-maturity Italian bonds fell for a seventh day to 1.45 percent. Allianz said in November that it will raise its dividend payout ratio to 50 percent of net income from 40 percent. The company is due to report fourth-quarter earnings and its dividend proposal for 2014 Thursday. It is expected to raise the dividend to 7 euros per share from a payout of 5.30 euros for 2013 according to the Bloomberg Dividend Forecast. Munich Re said this month it plans to raise its dividend for 2014 to 7.75 euros a share from the 7.25 euros distributed for 2013. The U.K.’s largest insurers, Prudential Plc, Aviva Plc and Legal & General Group Plc have also focused on generating more cash for payouts. “Lower-for-longer interest rates will not so much impact dividend paying capacity in the short term, but will eat into earnings and cash flow generation of life insurers primarily in the longer term,” said Esther Dijkman Dulkes, who helps manage about 850 billion euros at Amundi Asset Management. “Insurers’ dividend yields are driven by capital discipline, a shift toward capital light products and efforts to cut costs.”
News Article | February 26, 2015
Allianz SE reported an unexpected decline in fourth-quarter profit as the exit of Bill Gross at Pacific Investment Management Co. spurred clients to withdraw assets. The shares fell the most in five months. Net income fell to 1.22 billion euros ($1.39 billion) from 1.26 billion euros a year earlier. That missed the average estimate of 1.41 billion euros in a Bloomberg survey of 10 analysts. Operating profit at the asset-management unit, which includes Pacific Investment Management Co. and Allianz Global Investors, declined to 588 million euros from 703 million euros. Net outflows in third-party assets under management amounted to 236 billion euros for the full year. Outflows “looked much better in January and February than in the fourth quarter” at Pimco, Allianz Chief Financial Officer Dieter Wemmer said in an interview on Bloomberg TV. Pimco is beginning to see substantially lower outflows, he said. Allianz shares slid as much as 4 percent, the most since Sept. 26, and traded down 3.3 percent at 145 euros as of 9:12 a.m. in Frankfurt. The stock has gained 5.7 percent in Frankfurt this year, valuing the Munich-based company at 66 billion euros. The Bloomberg Europe 500 Insurance Index rose 12 percent during the same period. Pimco, the Newport Beach, California asset manager acquired by Allianz in 2000, presents a challenge for Oliver Baete, the management board member who will take over as chief executive officer in May. The German insurer has sought to reassure investors, who include BlackRock Inc. and Deutsche Bank AG, that it can contain the damage from the abrupt departure of Gross, formerly the manager of its flagship Total Return Fund. With 1.8 trillion euros in client assets, Pimco provides a quarter of Allianz’s operating profit. Gross’s exit in September from the company he co-founded and helped build into one of the world’s biggest money managers set off a stampede. Outflows continued the last three months of the year, with assets declining about 10 percent to $1.68 trillion in the fourth quarter, the firm said Feb. 3. Like other insurers awash in capital, Allianz raised the dividend for 2014 to 6.85 euros per share from a 5.30-euro payout for 2013. Allianz was expected to pay 7 euros a share, according to the Bloomberg Dividend Forecast. Axa SA, Europe’s second-biggest insurer, said yesterday it plans a dividend of 95 cents a share for 2014, up from 81 cents a year earlier. Insurers are returning cash to shareholders as ultra-low interest rates erode investment margins. Allianz set a target for operating profit of 10 billion euros to 10.8 billion euros this year. Operating profit rose 3.3 percent to 10.4 billion euros last year. That beat Allianz’s goal of reaching the “upper end” of its target range of 9.5 billion euros to 10.5 billion euros for the year. Finding a way to further increase earnings will be another challenge for Baete, 49, when he succeeds Chief Executive Officer Michael Diekmann, 60. The latter is leaving after 12 years in the position. Gross left Pimco on Sept. 26 to join Janus Capital Group Inc., later saying he was dismissed after clashing with management. It was the second high-profile departure from Pimco last year. Mohamed El-Erian, who had worked for Pimco as CEO and co-chief investment officer alongside Gross, left in January last year. El-Erian is now chief economic adviser at Allianz and a contributor to Bloomberg View. Pimco’s Total Return Fund, its biggest mutual fund, shrank to $134.6 billion at the end of January, compared with $222 billion at the end of August, before Gross left. That compares with $293 billion at the peak in April 2013. The fund trailed most peers for the second straight year in 2014 after missing a rally in longer-term bonds and betting that inflation would rise. It returned 4.7 percent in 2014, lagging behind 54 percent of comparable funds, according to data compiled by Bloomberg. In property and casualty insurance, Allianz’s most important in terms of earnings, operating profit declined 27 percent to 1.13 billion euros in the fourth quarter. While “a benign natural catastrophe environment” provided some buffer, reserve strengthening in Brazil, Russia and at Fireman’s Fund in the U.S. weighed on the results. Allianz said on Dec. 18 it sold Fireman’s Fund, which serves wealthy clients in the U.S., to Ace Ltd. for $365 million after it failed to turn around the business that was established in San Francisco more than 150 years ago and survived the city’s 1906 earthquake. Allianz bought Novato, California-based Fireman’s Fund in 1991 for more than $3 billion. Allianz will now focus its U.S. insurance operations on business clients, a move that it also has announced for the Russian market following “difficult economic conditions”.
News Article | July 22, 2015
As Nestle SA slugs it out with India’s food regulator over the amount of lead in its popular Maggi instant noodles, the dispute is whipping up business for insurers. The local unit of American International Group Inc. is predicting a 10-fold jump in product insurance sales, with more makers of food, beverages and cosmetics seeking cover for regulatory risks such as recalls. The Indian arm of Allianz SE said it has seen a sixfold jump in inquiries. Businesses are seeking protection after the Food Safety and Standards Authority of India ordered the recall of Maggi packs last month, following tests showing excess lead. Disputing the findings, Nestle is battling to get the ban overturned by a court even as its Mumbai-listed shares sank, wiping out 144 billion rupees ($2.3 billion) of shareholder wealth in just 10 days. “This is the first time the manufacturers have been shaken up so much,” said Sasikumar Adidamu, Mumbai-based chief technical officer for non-motor insurance at Bajaj Allianz General Insurance. “Earlier, they thought such a thing would never happen to them. Now, everyone is keener to buy this policy.” After banning Maggi, a product deemed safe by Singapore and U.K. regulators, the FSSAI widened its net to include other companies that were selling products or using ingredients that weren’t approved yet. Hindustan Unilever Ltd., the nation’s biggest consumer-goods company, said June 11 that it was withdrawing its Knorr range of Chinese instant noodles, while Starbucks Corp.’s local unit said four days later that it was stopping the use of some elements and was working “diligently” with FSSAI on pending applications. “As a result of the recent events, an impression is gaining ground among the public that all branded, packaged foods in India are unsafe,” the Associated Chambers of Commerce & Industry of India said in a statement earlier this month. The lobby group sought Prime Minister Narendra Modi’s intervention to stem “consumer distrust being spread by the government machinery,” and added an investment of about 900 billion rupees rides on the need for clearer food safety rules and laws. Yudhvir Singh Malik, chief executive officer of India’s federal food regulator, didn’t return an e-mail seeking comment and calls put through to his office were unanswered. Nestle India Ltd., which will announce its quarterly earnings on July 29, said in a filing on June 15 that the total value of the stock in the market was about $50 million, not including the costs associated with recall and destruction. For each month Maggi remains off shelves, Nestle stands to lose about 1.8 billion rupees in sales, Sanjay Manyal, an analyst at brokerage ICICI Direct, said in June. Nestle dominated the noodle market in the world’s second-most populous country, with a 63 percent share in 2014, six times as much as its nearest rival ITC Ltd. and the third-largest seller Bambino, which had a 5.1 percent share. Himanshu Manglik, the New Delhi-based spokesman for Nestle India, didn’t immediately respond to an e-mail on whether the company has increased its liability cover. Hearings are underway in a lawsuit before the Bombay High Court where Nestle has challenged the recall of its noodle brand. Nestle India’s shares rose 1.2 percent to 6,060.40 rupees on Thursday in Mumbai, trimming this year’s loss to 5.1 percent. Hindustan Unilever fell 1.8 percent to 904.25 rupees, paring this year’s gain to 19 percent. Tata AIG General Insurance Co. arranges and pays for reverse logistics when companies recall a product, public relations consultants for rebuilding public confidence in the brand and also compensates the manufacturer for any loss in profits, according to Sushant Sarin, the insurer’s senior vice president for commercial lines and broking. “While companies have a mechanism in place to distribute and sell products, most of them don’t have a reverse logistics mechanism in place to get the product back,” he said. “It is a costly process, and there is a surge in demand for policy.” Hurlene Kharbanda, Tata Starbucks’ external spokeswoman, declined to comment, while Hindustan Unilever in an e-mailed statement Wednesday didn’t reply to a question on whether it’s boosting its liability cover. Of the 21 general insurers in India, HDFC Ergo General Insurance Co. and Universal Sompo General Insurance Co. were the two that added product recall policy to their portfolio in the fiscal year through March 2014, while Magma HDI General Insurance Co. started offering product liability cover, according to data on the website of the Insurance Regulatory and Development Authority of India. The current market for such policies is minuscule in India, with no reliable estimates. “Strong growth is coming on that small base and will take several years to become a sizable business” Karthik Srinivasan, Mumbai-based co-head of financial industry ratings at ICRA Ltd., the local unit of Moody’s Investors Service said by phone.