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 Allianz stock, which fell over 6 percent on Friday, recovered
somewhat on Monday morning, up 1 percent at 0600 ET. But the
departure of Gross, known as the "bond king" for his stellar track
record in the fixed income markets over decades, sparked a flurry of
broker downgrades of Allianz in anticipation of massive investor
outflows from Pimco funds.
Gross's abrupt departure to rival Janus Capital Group comes just
eight months after his presumed successor as head of Pimco, former
CEO Mohamed El-Erian, quit the group amid a row with Gross, raising
questions about Allianz's oversight of its Newport Beach subsidiary.
Throughout the turmoil, the German firm has denied the need to exert
stronger control over Pimco, and reiterated that message in
newspaper interviews on Monday.
"We have the exact same control over Pimco we have had for 10
years," Jay Ralph, the Allianz board member in charge of asset
management, told the Financial Times. "We have no desire to change
that. Bill's departure will have absolutely no impact on the Allianz
relationship with Pimco."
Separately, Ralph told the Handelsblatt newspaper that Allianz stood
"100 percent" behind Gross's successor Dan Ivascyn and saw no need
for a change in strategy.
Gross's departure comes at a delicate time for Allianz, with the
contracts of Chief Executive Michael Diekmann and five more of the
insurer's 11 board members due to expire at the end of the year.
Allianz's supervisory board is due to meet later this week and will
likely give Diekmann a new two-year term, disregarding its own age
limit of 60 for top executives. Diekmann will turn 60 in December.
OUTFLOWS
Analysts at J.P.Morgan said they believed the Pimco franchise
remained strong even without Gross, but expressed concern about the
speed of his switch to Janus, where he is due to start work on
Monday.
As a result of this, they are expecting net outflows from Pimco
equivalent to the $225 billion euros in assets at Gross's flagship
Total Return Fund.
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But a top-10 investor in Allianz, who requested anonymity, said
there was a positive side to Gross's departure, given his recent
bout of poor performance and volatile behavior. "They now need to
prove that it’s true what they’ve always said - that Pimco is much
more than just Bill Gross. Only results will show," the investor
said.
"But let's face it: He missed expectations recently and a lot of
money is already gone because people were disappointed with his
performance, not with Pimco's performance in general."
In an interview with Reuters on Sunday, Pimco CEO Doug Hodge said
the asset manager had evolved to become much more than Bill Gross
and his Total Return Fund.
"Over the last five years, we have expanded into far more parts of
the fixed income market and into other asset classes and other
geographies, so the Pimco Total Return Fund does not define Pimco,"
Hodge said.
"It's an important flagship product of this firm but it is not our
only strategy."
(1 US dollar = 0.7883 euro)
(Writing by Noah Barkin; Editing by Sophie Walker)
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