By Jonathan Gould
FRANKFURT (Reuters) - Allianz's earnings fell by more than expected in the third quarter as market turbulence hit asset management and insurance results, raising the pressure on Europe's biggest insurer ahead of this month's strategy review.
Chief Executive Oliver Baete will unveil conclusions on Nov. 24 of a review after taking charge in May as Allianz (DE:ALVG) seeks to boost its underwriting strength in face of persistently low interest rates and tightening regulation.
Allianz's Pimco asset management business has been hit by cash outflows and its issues came into the spotlight last year with the acrimonious departure of "Bond King" Bill Gross.
Quarterly net profit fell 15 percent -- a sharper decline than analysts had expected -- dented by fallout from financial market ructions in China and interest rate uncertainty in the United States.
Investment declines and claims for events including deadly explosions at the port of Tianjin in China also played havoc with results at rivals such as Zurich, Generali (MI:GASI) and Munich Re in the quarter.
Tianjin cost Allianz around 60 million euros ($65 million).
The company said it expected a result towards the upper end of its full-year target for operating profit of between 10.0 and 10.8 billion euros, reflecting increased uncertainty about financial market volatility relative to its previous forecast to be "at" the top end.
Financial Officer Dieter Wemmer sought to temper expectations for the strategy presentation, which he said would centre on boosting growth through a sharper focus on clients and digitisation as well as improving international teamwork.
"Whether it's a sea change will certainly be judged differently seen from the inside and outside; internally, it is a big step towards the changes needed in the organisation," Wemmer told reporters.
PIMCO OUTLOOK BRIGHTENS
Allianz shares fell 2.4 percent by 1155 GMT, against a flat German blue chip index. The STOXX Europe 600 insurance index was 0.9 percent lower.
Group operating profit fell 7.5 percent to 2.45 billion euros, with all business segments posting declines. However, asset management performed better than analysts expected, with a 14 percent drop.
Allianz has been working to contain third-party investor outflows at Pacific Investment Management Co (Pimco), which totalled 16 billion euros in the third quarter but were the lowest in two years.
"Operating performance in asset management surprised positively with strong performance fees, although net outflows remained too high," Equinet Bank analyst Phlipp Haessler said.
Wemmer said investor net flows turned slightly positive at Pimco in October. "We have succeeded in a turnaround," he said.
Pimco's flagship fund, once managed by Gross, posted its smallest monthly outflow this year, the Newport Beach, California-based firm said on Tuesday.
The slowdown in outflows from the Pimco Total Return Fund, with assets under management of $93.7 billion came as Pimco posted a sharp improvement in the fund's performance, beating 91 percent of similar bond funds in October.