(Bloomberg News) Allianz SE, owner of the world's second-biggest asset management business after BlackRock Inc., is trimming targets for that unit as Europe's debt crisis crimps investment returns.

The company is targeting annual asset growth of 5 percent to 10 percent "over a full market cycle," Jay Ralph, Allianz management board member responsible for asset management, said in an interview in Munich. The previous target of 10 percent, derived equally from market gains and client inflows, is no longer achievable, he said.

"Today's market environment won't allow the same level of market performance as in the past," said Ralph, who headed the insurer's business in North America before taking over from Joachim Faber this year.

Asset management's contribution to the operating profit of Europe's biggest insurer almost tripled to 27 percent over the past five years. Growth was driven by Pacific Investment Management Co., the Mohamed El-Erian and Bill Gross-led business that Allianz acquired more than a decade ago. Pimco, which gained assets in the second quarter while those at BlackRock declined, is seeking to attract more European clients after Allianz granted the division more independence last year.

"Pimco is an impressive success story for Allianz, especially as many other asset managers seem to face difficulties," said Philipp Haessler, an analyst at Equinet AG in Frankfurt. "Asset management has been a good hedge for Allianz when its insurance operations are burdened by low investment returns."

'Good Growth'

Total assets at Allianz Asset Management climbed 16 percent to $2.16 trillion in the second quarter from a year earlier. Pimco, which accounted for almost 82 percent of those assets and an even bigger share of operating profit, was separated from the insurer's other managers last September to give the Newport Beach, California-based unit more independence as it expands into equities.

"We have not lost a single client as a result of the new setup of our asset management unit, which is better than we anticipated," said Ralph.

Asset gains at Pimco contrast with a 3 percent drop in BlackRock's assets to $3.56 trillion in the second quarter after market losses totaling $76.2 billion and client redemptions of $29.4 billion.

Highest Marks

Gross's Total Return Fund, the world's biggest bond fund, attracted $2.1 billion last month. The seventh straight month of net deposits into the mutual fund contributed to $8 billion in new cash for the year through July 31, Chicago-based Morningstar Inc. said Aug. 1.

Clients have pulled more than $130 billion over the past two-and-a-half years from AllianceBernstein Holding LP, the New York-based fund-management unit of Axa SA, Europe's second- biggest insurer. That included outflows of 5.2 billion euros in the first half, Paris-based Axa said on Aug. 3.