Allianz SE, owner of the world's second-biggest asset management business after BlackRock Inc., is trimming targets for that unit as Europe's debt crisis crimps investment returns.
The company is targeting annual asset growth of 5% to 10% “over a full market cycle,” Jay Ralph, Allianz management board member responsible for asset management, said in an interview in Munich. The previous target of 10%, derived equally from market gains and client inflows, is no longer achievable, he said.
“Today's market environment won't allow the same level of market performance as in the past,” said Mr. Ralph, who headed the insurer's business in North America before taking over from Joachim Faber this year.
Asset management's contribution to the operating profit of Europe's biggest insurer almost tripled to 27% in the past five years. Growth was driven by Pacific Investment Management Co., the money manager led by Mohamed El-Erian and Bill Gross that Allianz acquired more than a decade ago. PIMCO, which gained assets in the second quarter while those at BlackRock declined, is seeking to attract more European clients after Allianz granted the division more independence last year.
“PIMCO is an impressive success story for Allianz, especially as many other asset managers seem to face difficulties,” said Philipp Haessler, an analyst at Equinet AG in Frankfurt. “Asset management has been a good hedge for Allianz when its insurance operations are burdened by low investment returns.”