November 7, 2014 / 9:37 AM / 5 years ago

UPDATE 2-Allianz shares jump as dividend vow offsets Pimco concerns

* Net profit up 11 pct to 1.6 bln euros in Q3

* 2014 operating profit of 10.5 bln euros in reach

* Pimco Q3 revenue drops by 5.9 pct y/y

* Raising dividend payout to 50 pct of profit starting 2014

* Shares rise 3.5 percent (Releads with share reaction)

By Jonathan Gould

FRANKFURT, Nov 7 (Reuters) - Shares in Allianz jumped more than 3 percent on Friday after the German insurer promised bigger dividend payouts having posted a forecast-beating jump in third-quarter net profit.

The surprise dividend move helped mollify shareholders worried about turmoil at asset management arm Pimco, where the defection of investment guru Bill Gross has unsettled clients, triggered record investor outflows and weighed on the unit’s quarterly contribution to the group.

“Operating profit in asset management was still on a high level, but the high net outflows (of client funds) remains a concern,” said DZ Bank analyst Thorsten Wenzel in a note to clients.

Allianz shares opened 3.7 percent higher and were trading up 3.5 percent at 0835 GMT, outpacing a 0.9 percent rise in the STOXX Europe 600 insurance index.

In a statement issued after Thursday’s Frankfurt stock market close, Europe’s biggest insurer said it would pay out 50 percent of net profit in dividends versus 40 percent up to now.

Allianz had said it would review its dividend policy by the end of the year after facing calls from investors to bring its dividend more into line with peers like Zurich Insurance , which pays out around 70 percent of net results.

“We were positively surprised by Allianz’s commitment to not cut the dividend and to pay out every three years the unused portion of net profit that is normally dedicated to M&A (acquisitions),” LBBW analyst Werner Schirmer said in a note.

Major European insurers also including Italy’s largest insurer Generali are offering shareholders a bigger share of their earnings this year as a low level of payouts for damage claims has allowed them to build up large cash piles.

Allianz’s quarterly operating and net profit rose 5 percent and 11 percent respectively, beating the average forecasts in a Reuters poll of banks and brokerages for 2.4 percent and 6.7 percent increases.


Operating profit in property-casualty insurance and asset management were both ahead of average analyst expectations, but asset management still posted an 8 percent decline from the year earlier quarter.

Pimco, or Pacific Investment Management Co, posted outflows of $48.3 billion across its open-ended funds in October following the surprise departure of Gross, adding to the $25.5 billion of withdrawals the previous month, according to Morningstar data this week.

Gross, who co-founded Pimco in 1971 and built it into one of the largest investment firms in the world, managing $2 trillion of pension, endowment and retirement money, resigned on Sept. 26 to join rival Janus Capital Group Inc.

Allianz’s shares had fallen by more than 7 percent following Gross’s departure. The group’s asset management arm that Pimco dominates contributes roughly a quarter of group profit.

A majority of Pimco’s outflows in October stemmed from investors pulling money from its flagship Pimco Total Return Fund, which was managed by Gross.

“Net outflow ... after the resignation of Bill Gross is within our expectation,” Allianz Chief Financial Officer Dieter Wemmer said in a statement.

Revenue at Pimco fell 5.9 percent in the third quarter compared with the same period a year earlier, the company said.

Allianz also said it was in reach of earning 10.5 billion euros in operating profit this year, the upper end of its target range. Quarterly net profit jumped to 1.6 billion euros from 1.45 billion in the year-earlier quarter, beating the 1.54 billion average in the Reuters poll. (1 US dollar = 0.8082 euro) (Editing by Thomas Atkins and David Holmes)

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