Allianz's board member overseeing bond giant Pacific Investment Management Co. said the German insurance company plans to play an active role in money management consolidation as mergers and acquisitions in the fragmented industry speed up.
"We saw M&A acceleration in 2020, and it looks like there will be another acceleration this year," Jacqueline Hunt, who runs Allianz's $3 trillion money management business that also includes Allianz Global Investors, said in an interview. "I think we will see more M&A, more generally. And we would participate in that."
Bloomberg previously reported that Allianz was looking at the asset management arm of NN Group after exploring a combination with Deutsche Bank's DWS Group about two years ago. Ms. Hunt declined to comment on specific targets, but said any deal would have to complement its existing asset management business.
In the last 18 months alone, fund manager Amundi has struck deals for Sabadell Asset Management and Societe Generale's Lyxor investment arm. Bank of Montreal recently sold its international asset manager. Ms. Hunt said she doesn't want to grow PIMCO and AGI at all costs, as both asset managers have sufficient scale as stand-alone companies.
Valuations are high as "there is a fair amount of money chasing a few opportunities," she said by video. Geographically, fast-growing Asia-Pacific remains a region of interest for Allianz, she said.
Allianz's total third-party assets under management have risen to about €1.8 trillion ($2.2 trillion) in the first quarter this year, from €1.3 trillion about five years ago, shortly before Ms. Hunt joined Allianz. The two units also run internal money for the insurer.
Ms. Hunt has overseen a rebound at PIMCO, which was bleeding assets following the surprise departure of co-founder Bill Gross, but has since managed to revive its fortunes.
"We needed to get PIMCO stabilized in the first couple of years. But especially in the last three years, it has been much more about growing profitably, focusing on efficiencies," Ms. Hunt said. About 92% of PIMCO third-party assets have outperformed benchmarks net of fees in the last five years, she added.
Still, Allianz continues to streamline the structures at both asset managers. PIMCO is cutting 54 jobs at its Munich office. The move will see 19 portfolio management roles in the city discontinued, with positions consolidated in London. AGI has also been cutting jobs in Germany.
Ms. Hunt said she expects the most growth in the long run to be in Southeast Asia because of growing demographics, better education and rising savings rates. "But we can't ignore the U.S. and the European markets as the sizable markets in the short and medium term", Ms. Hunt said. In terms of investment strategies, she sees the biggest potential in alternatives and ESG offerings.
PIMCO and AGI will continue to be active managers, Ms. Hunt added. "The margins on passive products and the ability to differentiate yourself are simply not there for a player like us," she said.
As COVID-19 vaccinations take hold, Ms. Hunt expects work from home being reduced at Allianz's asset managers. "My preference is to find something that is a little more office-based with people coming in more regularly," she said. "While it is possible to work from home in very many roles, the question becomes how much do you lose in terms of culture and focus."