FRANKFURT, Oct 1 (Reuters) - German insurer Allianz , still smarting from the sudden resignation of Bill Gross, founder of its Pimco asset management unit, is expected to break its own age rules by extending the contract of Chief Executive Michael Diekmann on Thursday.
The turmoil at Pimco has compounded challenges facing Europe’s biggest insurer, making it likely Diekmann will be asked to stay at the helm after he reaches both his 60th birthday, the traditional retirement age for top Allianz executives, and the end of his current contract in December.
Big investors have said they expect Diekmann to hold the top job for one or two more years to steer the company back onto a smooth course and calmly prepare the ground for a successor.
An exit by Diekmann shortly after the departure of Pimco leadership duo Gross and Mohamed El-Erian, who resigned in January, would send a “very bad signal to investors”, a manager at one of Allianz’s top 10 shareholders said, declining to be named because he is not authorised to speak publicly on the issue.
“Sort out the problems first,” was the shareholder’s recommendation to Diekmann and Allianz’s supervisory board, tasked with sorting out the executive mandates of Diekmann and five other management board members whose contracts also expire at the end of December.
Allianz declined to comment on the supervisory board meeting or possible changes to its management board.
It’s shares have fallen more than 6 percent since Thursday, the day before “Bond King” Bill Gross shocked markets by saying he was leaving the firm he founded 43 years ago to join far-smaller rival Janus Capital Group.
Allianz, which is counting on Pimco to supply around one fourth of its earnings, on Monday said it was sticking to its guidance for full-year operating profit to be in the upper end of its 9.5 billion euro to 10.5 billion euros forecast range.
“The risks are the uncertainties around Pimco,” said JP Morgan analyst Michael Huttner in a note to clients published on Wednesday. Retail customers may flee Pimco, who they have come to associate with the media-savvy Bill Gross.
“Retail investors may be more focused on the portfolio manager who manages their fund, rather than on broader process and performance measures,” Huttner said.
It will take time for Pimco to establish a winning track record in the post-Gross era, said Michael Huenseler, head of credit portfolio management at Assenagon Asset Management SA.
Troubles at Pimco have led to some criticisms that Allianz’s approach to managing the California-based Pimco was too hands-off.
“That the crisis has come to a head is also an opportunity to give some stability to Pimco that might not have been possible under the leadership of Bill Gross,” Huenseler said. “Allianz has to make very clear who carries the responsibility for decision making.” (Reporting by Jonathan Gould and Kathrin Jones; editing by Thomas Atkins)