* No intention of selling PIMCO or AGI - exec
* Low interest rates give boost to asset mgt
* Focus on containing costs - exec
(Adds comments, background on costs)
By Kathrin Jones and Jonathan Gould
FRANKFURT, Jan 30 A year after launching its
twin-brand asset management strategy, Europe's biggest insurer
is pleased with the performance of PIMCO and Allianz Global
Investors and expects further growth, an Allianz SE
board member said.
"The new model has turned out to be a success not just from
a business standpoint but most importantly from the clients'
perspective," said Jay Ralph, who oversees the insurer's
The division had 1.8 trillion euros ($2.4 trillion) in
assets under management at the end of the third quarter and
delivered around one third of group operating profit.
When the new structure was launched in January 2012, Allianz
said it would allow each brand to tailor its products to best
meet clients' needs.
However, some analysts and competitors have wondered how
long Allianz will permit both asset management engines to
operate separately in a tough trading environment where large
scale and low costs are of prime importance.
Deutsche Bank AG, for example, is taking the
opposite tack, bundling all its services for retail and
institutional clients onto a common platform to save costs.
"We have no intention of divesting either one of our two
investment managers," Ralph said in written answers to questions
from Reuters, adding that customer reaction to Allianz's
strategy had been positive.
"We did not lose one single client in Germany due to the
transition to the new set-up," added the executive. "The low
interest-rate environment, which tends to make life more
difficult for life insurance, has provided a nice tailwind for
our asset management segment."
The revamp gave PIMCO, which manages the world's largest
bond fund, sole responsibility for the distribution of its
products around the world, as it expanded beyond bonds into
equities and other asset classes.
California-based PIMCO had 1.5 trillion euros in assets
under management at end-September and contributed 1.8 billion
euros to group operating profit in the third quarter.
Allianz Global Investors, by contrast, managed around 300
billion euros in assets and added 250 million to earnings in the
The smaller unit has some work to do to reach Allianz's
mandated target cost-to-income ratio of 65 percent or better.
That ratio stood at nearly 74 percent in the third quarter,
compared with PIMCO's more profitable 51 percent.
"Cost containment and focus on efficiency will remain
important," Ralph said.
Allianz Global Investors is already cutting costs by
streamlining its organisation and merging various European units
into its umbrella brand by the end of this year.
Ralph declined to say how much time Allianz Global Investors
would need to meet its parent's cost-income goal, nor would he
give specific earnings targets for his asset managers beyond the
already stated ambition to achieve annual operating profit
growth of between 5 and 10 percent over the business cycle.
More broadly, Ralph summarised PIMCO's branding goal as
moving from the "Global Authority on Bonds" to "Your Global
"AllianzGI will focus on becoming 'one' global firm and
hence is the second strong operational pillar of Allianz Asset
Management," he added.
Allianz has said it expects to earn more than 9 billion
euros in operating profit in 2012. It is due to release
preliminary year-end results on Feb. 21.
($1 = 0.7420 euros)
(Reporting by Jonathan Gould and Kathrin Jones; Editing by