(Bloomberg) — Allianz SE, Europe's biggest insurer, saidfirst-quarter profit climbed 11%, even as investors withdrew fundsfrom its asset manager Pacific Investment Management Co. The sharessurged the most in six months.

Net income increased to 1.82 billion euros ($2 billion) from1.64 billion euros a year earlier, the Munich-based insurer said ina statement Wednesday, citing preliminary results. It kept itstarget for operating profit at 10 billion euros to 10.8 billioneuros this year compared with 10.4 billion euros last year.

“Our first-quarter results were a good start into 2015 and weremain confident in achieving our full-year operating profittarget,” Chief Executive Officer Michael Diekmann said. He didn'tprovide details of what drove the profit gain.

Allianz has seen investment margins narrow along with otherEuropean insurers after the European Central Bank's quantitativeeasing pushed yields on some government bonds into negative. Twoyears of withdrawals at Newport Beach, California-based Pimco'sflagship Pimco Total Return Fund have also crimped returns. OnWednesday, JPMorgan Chase & Co. cut its rating on Allianz tounderweight, joining Barclays Plc in warning of slower earningsgrowth.

The shares advanced as much as 3.4%, the biggest increase sinceNov. 7. They climbed 2.5% to 154.3 euros at 9:46 a.m. in Frankfurt,bringing this year's gain to 12% and valuing the company at 70billion euros. The Bloomberg Europe 500 Insurance Index rose0.1%.

Rates Challenge

Allianz convened its annual shareholder meeting in Munich onWednesday, when Diekmann, 60, will hand over to Oliver Baete, 50,after 12 years as CEO. Allianz plans a comprehensive strategyreview for the coming years under Baete.

The “challenges of low interest rates” were reflected in adecline in the new business margin at the life and health unit to1.5% from 2.5%, Allianz said in the statement.

Lower interest rates and new capital rules for global insurerswill force Allianz and other EU insurers to allocate more and morecash to units that offer guaranteed returns for investors, JPMorgananalysts Michael Huttner and Rahul Parekh said in a report. Theaverage guaranteed rate in Germany, where Allianz is the marketleader in life, is three percent.

Investors pulled $5.6 billion from Pimco's bond mutual fund inApril, after redemptions of $7.3 billion in March and $8.6 billionin February.

Third-party assets under management at Allianz's assetmanagement unit, which includes Pimco and Allianz Global Investors,rose to 1.41 trillion euros at the end of March from 1.31 trillioneuros at the end of last year helped by currency effects andvaluation gains, Allianz said.

Bill Gross, who co-founded Pimco in 1971 and built it into oneof the world's largest investment companies, left for Denver-basedJanus Capital Group Inc. in September. Pimco saw total assetsdecline 5.4% to $1.59 trillion in the first quarter, it said April16.

The property and casualty insurance unit's combined ratioworsened to 94.6% from 92.6%, with 1.9 percentage points attributedto natural catastrophe claims, Allianz said.

The insurer is due to report full first-quarter earnings on May12.

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