FRANKFURT (Reuters) - Allianz (ALVG.DE) will replace its chief executive earlier than expected, promoting insider Oliver Baete from May as the insurer seeks to restore order at Pimco, its U.S. funds business beset by investor and executive defections.
Europe’s largest insurer said current chief Michael Diekmann would make way for ex-McKinsey executive Baete at the company’s annual shareholder meeting in May next year.
Baete, 49, had been seen as front runner for the job, and is currently serving as Allianz’s board member for insurance operations in Western and Southern Europe.
The transition comes at a delicate time for Allianz, which has become the world’s second largest asset manager thanks to the strong, long-term performance of its California-based funds unit, Pacific Investment Management Company.
But Pimco has seen its top two executives quit this year amid management clashes, including renowned investor and company co-founder Bill Gross, who resigned abruptly last Friday.
Allianz’s shares have fallen more than 7 percent since the day before Gross resigned and were down 0.6 percent on Thursday, outpacing a 1 percent decline in the STOXX Europe 600 insurance index .SXIP.
Gross’s flagship Total Return Fund saw its 17th straight month of outflows in September, with assets under management falling below $200 billion, down from a peak of $292.9 billion in April 2013.
Allianz is also in the midst of restructuring its U.S. property and casualty business Fireman’s Fund after struggling for years to bring underwriting losses under control.
Large investors in Allianz had expected Diekmann to stay at the helm for as long as two more years to sort out some of the company’s problems. His contract was due to expire in December, when he will also have turned 60, the traditional retirement age for top executives at the insurer.
Baete will be responsible for global property and casualty business until he takes up his post as CEO, Allianz said in a statement on Thursday. He is expected to serve as chief executive until September, 2019.
“He seems to have kind of the right level of steel and energy to run a business as big and as complex as Allianz and I’m sure he’s going to have some very strong views about how the business is run,” said Ben Cohen, analyst at Canaccord Genuity in London.
But there are no easy solutions at Pimco, Cohen said. Management must first stem outflows of client money before turning to deeper management issues.
“There has been some tension about how closely Pimco is managed from Munich and that may change.”
Fast-talking Baete, known for blazing through analyst presentations at a rapid pace, joined Allianz’s board in 2008, serving as chief operating officer and chief financial officer before moving into his regional role last year.
That move was part of an Allianz plan to offer Baete hands-on experience in insurance, Diekmann said at the time, fuelling speculation he was being groomed for the top job.
One Allianz manager familiar with Baete’s progress said the plan appeared to be working, with Baete showing impressive technical knowledge of insurance issues.
Allianz’s supervisory board on Thursday praised Diekmann for steering Allianz through the financial crisis and requested that he be available for election to join that body in 2017.
It also said that the man responsible for U.S. insurance business, Gary Bhojwani, 46, would leave the management board as of Dec. 31. His responsibilities would be taken over by board member Jay Ralph, 55, who previously ran the business and who will maintain his role as head of asset management.
The insurer also appointed long time Generali (GASI.MI) executive Sergio Balbinot, 56, to the board for a four year term starting on Jan 1, 2015. Balbinot will be in charge of Allianz’s insurance business in France, Benelux, Italy, Greece and Turkey.
Reporting by Jonathan Gould; editing by Thomas Atkins and Keith Weir