UPDATE 2-PIMCO gains greater autonomy in Allianz revamp

Tue Sep 6, 2011 4:44pm EDT

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* PIMCO given greater control over new asset manager

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* PIMCO gets greater independence from parent

(Recasts lede; adds comments from Mohamed El-Erian)

By Jennifer Ablan and Harro Ten Wolde

NEW YORK/FRANKFURT, Sept 6 (Reuters) - German insurer Allianz (ALVG.DE) said on Tuesday that Pacific Investment Management Co. will be granted full control of its global distribution of its products -- a move that gives the world's largest bond fund more independence as it expands into new businesses.

PIMCO, Allianz's largest fund manager, and Allianz Global Investors will be combined under a new holding company, Allianz Asset Management, effective Jan. 1, Allianz said in a statement.

The reorganization gives PIMCO, whose assets under management has increased to $1.3 trillion under co-chief investment officers Bill Gross and Mohamed El-Erian, more independence from its corporate parent as it expands into equities and other asset classes as well as products.

In one example, PIMCO launched a new global bond index to chart the performance of fixed-income securities in the United States and other industrialized and emerging markets.

Traditionally, bond and stock indexes are rolled out by brokerages and investment banks, which made the move by PIMCO unusual.

El-Erian characterized the reorganization as a vote of confidence for PIMCO: "This is another step in PIMCO's ongoing evolution as the complete provider of global investment solutions for our clients around the world, and an affirmation of the strength of the relationship between Allianz and PIMCO," he told Reuters on Tuesday.

A spokesman at Allianz said the reshuffle was not a precursor to spinning off PIMCO.

Both divisions, PIMCO and Allianz Global Investors, will sit within the holding company called Allianz Asset Management and be headed by Allianz management board member Jay Ralph.

"PIMCO gaining greater autonomy potentially means (it) either pays itself more or can invest and spend more, so the cash returns to Allianz may shrink a little," said a London-based financial analyst.

PIMCO oversaw two-thirds of Allianz's 1.5 trillion euros ($2.08 trillion) in assets under management as of June 30, a figure that includes funds managed for outside clients as well as Allianz's own money.

Ralph, the incoming head of Allianz Asset Management, said that he expected Gross, at the helm of the world's largest bond fund, the $243 billion PIMCO Total Return Fund (PTTRX.O), to carry on working for some time at PIMCO. [ID:nL5E7K50EA]

The changes follow the separation of the distribution of PIMCO and Allianz Global Investors products, initiated last year in the United States.

Elizabeth Corley will be chief executive of Allianz Global Investors, while Andreas Utermann will be chief investment officer.

($1 = 0.709 euro) (Additional reporting by Jennifer Ablan in New York; Jonathan Gould in Frankfurt; Editing by Dan Lalor, Will Waterman and Walden Siew)

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