* Pimco problems not hurting brand - Fitch
* Allianz forecasts asset management earnings to fall
* Allianz hints at higher dividend for 2014
By Jonathan Gould
FRANKFURT, March 14 Management turmoil at
Allianz asset manager Pimco is unlikely to threaten
the credit standing of Europe's largest insurer, credit rating
agency Fitch said on Friday.
"We are looking at the problem with asset management but for
the time being we do not consider it as a trigger for a negative
rating change," Fitch Senior Director Stephan Kalb told Reuters.
Allianz expects operating profit in asset management to fall
this year and analysts are watching performance at fixed-income
manager Pimco closely after a high-profile falling out between
its star chief investment officer Bill Gross and Mohamed
El-Erian, who is due to step down as Pimco's chief executive.
"Two leading people are having a fight but I would not
expect this to hang over the company for long," Kalb said,
pointing out that Pimco had deep investment expertise.
Earlier on Friday, Fitch affirmed Allianz's "AA-" rating
with a stable outlook, saying the insurer's profitable property
and casualty business would offset downward pressure on earnings
from life insurance and investments this year.
Pimco has been suffering investor outflows for months but
this was a cyclical problem rather than indicating any weakness
in its business or strategic model, Kalb said.
"There is a management problem within Pimco but so far I
would not consider that the brand is damaged," he said.
In its annual report published on Friday, Allianz reiterated
its goal of earning operating profit of 9.5-10.5 billion euros
($13.2-$14.6 billion) this year, versus 10.1 billion in 2013.
The 2014 plan includes an expected decline in the
contribution from asset management to 2.5-2.9 billion euros from
a record 3.2 billion last year.
Analysts have been weighing whether the departure of
El-Erian could add to the general momentum away from
fixed-income investments, which are also dragging on performance
at rival asset managers.
"We believe the main risk is that Pimco underperforms its
2.5-2.9 billion euro fiscal 2014 target operating profit range,"
said JP Morgan analyst Michael Huttner in a note to clients.
"But to fall to below 2.5 billion operating profit, we
believe Pimco's assets under management would have to drop 13
percent or 180 billion euros to December 2014 and this is a
large number," Huttner added.
Pimco's third party assets under management fell 10 percent
to 1.1 trillion euros at the end of 2013, with nearly one-fifth
of the decline attributed to net investor outflows.
Despite the headwinds in asset management, Allianz expressed
confidence in its own prospects for 2014, hinting that it could
raise its dividend payout after criticisms its dividend for 2013
had fallen short of expectations.
"In 2014, we will re-evaluate our target payout ratio of 40
percent," Allianz said in the annual report.
Allianz raised its dividend for 2013 by 0.80 euros to 5.30
euros per share, which was exactly in line with the median
forecast in a Reuters poll of analysts.
Allianz has traditionally aimed to dedicate 20 percent of
net income to invest in its existing operations, 20 percent to
fund takeovers, 20 percent to purchase real assets and 40
percent to the dividend.
JP Morgan's Huttner forecast Allianz's dividend to rise by a
further 0.80 euros to 6.10 euros per share for 2014, and said
the insurer also had room to pay a special dividend of 2 euros