German insurer Allianz’s asset management business suffered a two-thirds drop in performance fee income to €126 million in the nine months to September, including a 4.8% drop in the third quarter.
Total fee income at Allianz's fund division fell 11% to €5.82 billion and expenses were cut by 3% to €1.08 billion. Performance fees only contributed to part of the decline, but their receipt is viewed as an important test of asset manager virility.
The overall drop in fee income contributed to a fall of 18% in nine-month operating profits to €2 billion from asset management so far in 2014. In the third quarter, operating profits fell 8.1% to €694 million.
Allianz suffered overall outflows of €79 billion over the nine months, principally driven by Pimco. Outflows increased following the resignation of Pimco’s chief investment officer Bill Gross in September. The Wall Street Journal has reported that Pimco executives are braced for outflows totalling $100 billion as a result of his departure. Allianz said overall funds were cut by €34 billion, as a result of internal transfers.
Allianz said Pimco outflows of €91 billion over nine months compared with inflows of €15.9 billion in the same period last year. Third quarter outflows were €49 billion, against outflows of €20.4 billion the previous quarter and €28.8 billion in the third quarter of last year.
Performance fees at Pimco over the nine months to September fell 74% to €83 million. Equivalent fees at sister asset manager Allianz Global Investors fell 41% to €43 million.
The ratio of costs to income rose at Pimco from 50.2% to 52.1% in the nine months, but this was significantly lower than the 73% seen at Allianz Global Investors in the same period against 72.3% in the previous year. Allianz Global Investors saw inflows of €6.9 billion over the nine months and €1.8 billion in the third quarter.
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