* Property and casualty oper profit down 13.7 pct
* Strong U.S. dollar boosts asset management revenue (Adds detail from statement, background)
FRANKFURT, May 12 (Reuters) - Allianz saw another 68 billion euros ($76 billion) in assets flow out of its asset manager Pimco in the first quarter, compressing the unit's contribution to the group and underscoring the reform challenge facing new Chief Executive Oliver Baete.
Operating profit in the division fell 14 percent to 555 million euros in the quarter, overshadowing an 11 percent rise in group net profit that Europe's largest insurer reported earlier in May.
Clients pulled funds out of Pimco at less than half the pace seen one year ago, with most withdrawals occurring in traditional bond products and in the United States, the company said.
Fifty-year-old Baete, who took over earlier in May, will be closely watched to see how he manages rapidly shrinking Pimco after some large shareholders demanded Allianz take action to exert more control over the business.
Total assets under management at Allianz rose 7.3 percent to 1.933 trillion euros largely due to currency translation effects and market value increases, the company said. The group's Europe-based asset manager AllianzGI saw net inflows of 6.2 billion euros.
U.S.-based Pimco - which contributes more than a fifth of the German insurer's operating profit - saw record outflows and management turmoil last year, including the acrimonious departure of its leader Bill Gross, known as the "Bond King".
Investors have continued to withdraw money this year, albeit at a slower pace, and Pimco's flagship Total Return Fund has lost its title as the world's biggest bond mutual fund.
At the group's biggest profit motor, its property and casualty insurance division, operating profit fell 13.7 percent to 1.28 billion euros, as the cost of natural catastrophes and restructuring expenses following the sale of the private lines of Fireman's Fund weighed.
($1 = 0.8947 euros) (Reporting by Thomas Atkins; Editing by Kirsti Knolle and Maria Sheahan)