<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                            ------------------------

                                   FORM 20-F
(MARK ONE)

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 1-15154

                           ALLIANZ AKTIENGESELLSCHAFT
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                          FEDERAL REPUBLIC OF GERMANY
                (JURISDICTION OF INCORPORATION OR ORGANIZATION)

                    KONIGINSTRASSE 28, 80802 MUNICH, GERMANY
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<Table>
<Caption>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
    ORDINARY SHARES (WITHOUT PAR VALUE)*             THE NEW YORK STOCK EXCHANGE, INC.
</Table>

---------------
* Not for trading, but only in connection with the listing of American
  Depositary Shares, pursuant to the requirements of the New York Stock
  Exchange.

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE

 SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
                                OF THE ACT: NONE

     Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock at December 31, 2001:

<Table>
<S>                                                       <C>
Ordinary shares, without par value......................  266,428,000 shares
</Table>

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                            YES [X]          NO [ ]

     Indicate by check mark which financial statement item the registrant has
elected to follow.

                          Item 17 [ ]          Item 18 [X]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
ITEM                                                                          PAGE
----                                                                          ----
<S>             <C>                                                           <C>
PRESENTATION OF FINANCIAL AND OTHER INFORMATION.............................    1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS...................    2
ITEM 1.         IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.......    3
ITEM 2.         OFFER STATISTICS AND EXPECTED TIMETABLE.....................    3
ITEM 3.         KEY INFORMATION.............................................    3
                Selected Consolidated Financial Data........................    3
                Dividends...................................................    5
                Exchange Rate Information...................................    5
                Risk Factors................................................    7
ITEMS 4. - 5.   INFORMATION ON THE COMPANY AND
                OPERATING AND FINANCIAL REVIEW AND PROSPECTS................   10
                Factors Affecting Results of Operations.....................   15
                Critical Accounting Policies................................   17
                Accounting Differences......................................   19
                Consolidated Results of Operations..........................   21
                Consolidated Assets and Liabilities.........................   23
                Property-Casualty Insurance Operations......................   25
                  Germany...................................................   29
                  Rest of Europe............................................   35
                  NAFTA.....................................................   43
                  Rest of World.............................................   45
                Specialty Lines.............................................   47
                Life/Health Insurance Operations............................   49
                  Germany...................................................   53
                  Rest of Europe............................................   59
                  Rest of World.............................................   63
                Banking Operations..........................................   65
                Asset Management Operations.................................   80
                Property-Casualty Insurance Reserves........................   97
                Selected Statistical Information Relating to Our Banking
                Operations..................................................  108
                Regulation and Supervision..................................  128
ITEM 6.         DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES..................  149
                Corporate Governance........................................  149
                Management Board............................................  150
                Supervisory Board...........................................  153
                Compensation of Directors and Officers......................  157
                Board Practices.............................................  158
                Share Ownership.............................................  158
                Employees...................................................  158
                Options to Purchase Securities..............................  159
ITEM 7.         MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...........  161
                Major Shareholders..........................................  161
                Related Party Transactions..................................  162
</Table>

                                        i
<PAGE>

<Table>
<Caption>
ITEM                                                                          PAGE
----                                                                          ----
<S>             <C>                                                           <C>
ITEM 8.         FINANCIAL INFORMATION.......................................  167
                Consolidated Statements and Other Financial Information.....  167
                Legal Proceedings...........................................  167
                Dividend Policy.............................................  169
                Significant Changes.........................................  169
ITEM 9.         THE OFFER AND LISTING.......................................  170
                Trading Markets.............................................  170
                Market Price Information....................................  170
ITEM 10.        ADDITIONAL INFORMATION......................................  173
                Objects and Purposes........................................  173
                Share Capital...............................................  173
                Material Contracts..........................................  174
                Exchange Controls...........................................  174
                Taxation....................................................  175
                Documents on Display........................................  180
ITEM 11.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK........................................................  181
                Risk Management Organization................................  181
                Market Risk Measurement.....................................  186
                Allianz Group Market Risk Exposure Estimates................  187
                Other Risk Management.......................................  190
ITEM 12.        DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES......  193
ITEM 13.        DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.............  194
ITEM 14.        MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
                USE OF PROCEEDS.............................................  194
ITEM 15.        [RESERVED]..................................................  194
ITEM 16.        [RESERVED]..................................................  194
ITEM 17.        FINANCIAL STATEMENTS........................................  195
ITEM 18.        FINANCIAL STATEMENTS........................................  195
ITEM 19.        EXHIBITS....................................................  195
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES....................  F-1
</Table>

                                        ii
<PAGE>

                PRESENTATION OF FINANCIAL AND OTHER INFORMATION

     Unless otherwise indicated, when we use the term "consolidated financial
statements," we are referring to the consolidated financial statements
(including the related notes) of Allianz Aktiengesellschaft (or Allianz AG, and
together with its consolidated subsidiaries, the Allianz Group) as of December
31, 2001 and 2000 and for each of the years in the three-year period ended
December 31, 2001, which have been audited by KPMG Deutsche
Treuhand-Gesellschaft AG Wirtschaftsprufungsgesellschaft. The consolidated
financial statements have been prepared in accordance with International
Accounting Standards (or IAS), which differ in certain respects from accounting
principles generally accepted in the United States of America (U.S. GAAP). For a
discussion of significant differences between IAS and U.S. GAAP, you should read
Note 45 to the consolidated financial statements. All 1999, 1998 and 1997
balances have been restated to reflect the retroactive consolidation of certain
investment funds in accordance with IAS Standing Interpretations Committee (or
SIC) 12. Certain information in the notes to our consolidated financial
statements has been amended on the basis of more recently available information
and accordingly differs in certain respects from the information presented in
the notes to our German annual report for fiscal 2001. Note 45 to our
consolidated financial statements includes a restatement of previous U.S. GAAP
reconciling items for the year ended December 31, 2000. In addition, the amounts
set forth in some of the tables may not add up to the total amounts given in
those tables due to rounding.

     References herein to "DM" are to Deutsche marks, references to "$" and
"U.S. dollars" are to United States dollars and references to "E" and "euro" are
to the euro, the single currency established for participants in the third stage
of the European Economic and Monetary Union (or EMU), commencing January 1,
1999. We refer to the countries participating in the third stage of the EMU as
the "euro zone."

     Prior to December 31, 1998, we prepared and reported our consolidated
financial statements in DM. With the introduction of the euro on January 1,
1999, we have adopted the euro as our reporting currency. Accordingly, our DM
consolidated financial statements for 1998 have been restated into euro using
the official fixed conversion rate of E1.00 = DM1.95583. Our 1998 restated euro
financial statements depict the same trends as would have been presented if the
financial statements had been continued to be presented in DM. However, the
consolidated financial statements will not be comparable to the euro financial
statements of other companies that previously reported their financial
information in a currency other than DM.

     For convenience only (except where noted otherwise), some of the euro
figures have been translated into U.S. dollars at the rate of $0.9442 = E1.00,
the noon buying rate in New York for cable transfers in euros certified by the
Federal Reserve Bank of New York for customs purposes on June 17, 2002. These
translations do not mean that the euro amounts actually represent those U.S.
dollar amounts or could be converted into U.S. dollars at those rates. See "Key
Information -- Exchange Rate Information" for information concerning the noon
buying rates for the DM and the euro from January 1, 1997 through June 17, 2002.

     Unless otherwise indicated, when we use the terms "gross premiums," "gross
premiums written" and "gross written premiums," we are referring to premiums
(whether or not earned) for insurance policies written during a specific period,
without deduction for premiums ceded to reinsurers, and when we use the terms
"net premiums," "net premiums written" and "net written premiums," we are
referring to premiums (whether or not earned) for insurance policies written
during a specified period, after deduction for premiums ceded to reinsurers.

     Unless otherwise indicated, we have obtained data regarding the relative
size of various national insurance markets from annual reports prepared by
SIGMA, an independent organization which publishes market research data on the
insurance industry. In addition, unless otherwise indicated, insurance market
share data are based on gross premiums written. Data on market share within
particular countries is based on our own internal estimates.

                                        1
<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     This annual report includes "forward-looking statements" within the meaning
of the safe harbor provisions of The Private Securities Litigation Reform Act of
1995. These include statements under "Information on the Company and Operating
and Financial Review and Prospects," "Quantitative and Qualitative Disclosures
About Market Risk" and elsewhere in this annual report relating to, among other
things, our future financial performance, plans and expectations regarding
developments in our business, growth and profitability, and general industry and
business conditions applicable to the Allianz Group. These forward-looking
statements can generally be identified by terminology such as "may," "will,"
"should," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or other similar terminology. We have
based these forward-looking statements on our current expectations, assumptions,
estimates and projections about future events. These forward-looking statements
are subject to a number of risks, uncertainties, assumptions and other factors
that may cause our actual results, performance or achievements or those of our
industry to be materially different from or worse than those expressed or
implied by these forward-looking statements. These factors include, without
limitation:

     - general economic conditions, including in particular economic conditions
       in our core business and core markets;

     - performance of financial markets, including emerging markets;

     - the frequency and severity of insured loss events;

     - mortality and morbidity levels and trends;

     - persistency levels;

     - interest rate levels;

     - currency exchange rates, including the euro/U.S. dollar exchange rate;

     - changing levels of competition;

     - changes in laws and regulations, including monetary convergence and the
       European Monetary Union;

     - changes in the policies of central banks and/or foreign governments;

     - the impact of our acquisition of Dresdner Bank AG, including related
       integration and restructuring issues; and

     - general competitive factors, in each case on a local, regional, national
       and/or global basis.

                                        2
<PAGE>

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not applicable.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3.  KEY INFORMATION

                      SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data set forth below are derived from
our consolidated financial statements, which have been audited by KPMG Deutsche
Treuhand-Gesellschaft AG Wirtschaftsprufungsgesellschaft.

     We prepare our consolidated financial statements in accordance with IAS,
which differ in certain significant respects from U.S. GAAP. For a description
of the significant differences between IAS and U.S. GAAP and a reconciliation of
certain income statement and balance sheet items to U.S. GAAP, you should read
Note 45 to the consolidated financial statements.

     You should read the information below in conjunction with our consolidated
financial statements and the other financial information we have included
elsewhere in this annual report.

<Table>
<Caption>
                                               AT OR FOR THE YEAR ENDED DECEMBER 31,
                                     ---------------------------------------------------------
                                     2001(1)    2001      2000     1999(2)   1998(2)   1997(2)
                                     -------   -------   -------   -------   -------   -------
                                        $         E         E         E         E         E
                                               (IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                  <C>       <C>       <C>       <C>       <C>       <C>
IAS CONSOLIDATED INCOME STATEMENT
  DATA
Gross premiums written(3)
  Property-Casualty................   39,786    42,137    38,382    36,027    30,868    25,255
  Life/Health......................   19,021    20,145    20,239    18,473    15,882    14,009
  Consolidation adjustments(4).....     (655)     (694)     (736)     (693)     (543)     (622)
                                     -------   -------   -------   -------   -------   -------
     Total.........................   58,152    61,588    57,885    53,807    46,207    38,642
Premiums earned (net)..............   49,802    52,745    49,907    46,182    39,781    33,212
Total income
  Property-Casualty................   46,169    48,897    45,197    42,079    35,687    27,636
  Life/Health......................   32,278    34,186    37,251    32,723    27,319    21,182
  Banking Operations...............   12,124    12,841     1,722     1,795     1,266       123
  Asset Management Operations......    2,585     2,738     1,722       693       754       441
  Consolidation adjustments(4).....   (2,554)   (2,705)   (2,103)   (1,471)   (1,519)   (1,195)
                                     -------   -------   -------   -------   -------   -------
     Total.........................   90,602    95,957    83,789    75,819    63,507    48,187
Net income.........................    1,532     1,623     3,460     2,317     2,177     1,706
Earnings per share.................     6.29      6.66     14.10      9.46      8.97      7.30
Earnings per share, diluted........     6.29      6.66     14.10      9.46      8.97      7.24
U.S. GAAP CONSOLIDATED INCOME
  STATEMENT DATA
Net income.........................    4,045     4,284     6,531(5)   2,869    2,185       N/A
Net income per share...............    17.90     18.96     28.90(5)   11.70     9.01       N/A
</Table>

                                        3
<PAGE>

<Table>
<Caption>
                                               AT OR FOR THE YEAR ENDED DECEMBER 31,
                                     ---------------------------------------------------------
                                     2001(1)    2001      2000     1999(2)   1998(2)   1997(2)
                                     -------   -------   -------   -------   -------   -------
                                        $         E         E         E         E         E
                                               (IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                  <C>       <C>       <C>       <C>       <C>       <C>
IAS CONSOLIDATED BALANCE SHEET DATA
Total investments(6)...............  764,453   809,630   350,895   331,700   300,868   208,281
Total assets.......................  890,310   942,925   439,995   410,690   365,575   257,367
Total insurance reserves...........  282,799   299,512   284,824   268,064   237,663   174,044
Total liabilities..................  860,413   911,261   404,392   381,014   340,508   238,016
Issued capital and capital
  reserves.........................   13,945    14,769     7,994     7,811     7,721     5,717
Shareholders' equity...............   29,897    31,664    35,603    29,676    25,066    19,351
Shareholders' equity per share.....      124       131       145       121       103        83
Weighted average number of shares
  outstanding
  Basic............................    243.6     243.6     245.4     245.0     242.5     233.8
  Diluted..........................    243.6     243.6     245.4     245.0     242.5     235.8
U.S. GAAP CONSOLIDATED BALANCE
  SHEET DATA
Shareholders' equity...............   29,937    31,706    35,113(5)  30,003   25,457       N/A
Shareholders' equity per share.....      132       140       155(5)     122      104       N/A
OTHER FINANCIAL AND OPERATING DATA
Combined ratio (for the period)....   108.8%    108.8%    104.9%    104.5%    100.8%     99.4%
Earnings per share, adjusted for
  special items(7).................      N/A       N/A      9.72      8.58       N/A       N/A
Third-party assets.................  585,836   620,458   336,424    29,506    22,548    17,587
Market capitalization..............   60,576    64,156    97,813    81,920    77,513    54,752
</Table>

---------------
(1) Dividend amounts given in euros have been translated for convenience only
    into U.S. dollars at the rate of $0.9442 = E1.00, the noon buying rate in
    New York for cable transfers in euros certified by the Federal Reserve Bank
    of New York for customs purposes on June 17, 2002. See "Presentation of
    Financial and Other Information."

(2) All 1998 and 1997 balances have been restated from Deutsche marks into euros
    using the official fixed conversion rate. See "Presentation of Financial and
    Other Information" and Note 3 to the consolidated financial statements.

(3) In some countries, health insurance operations are reflected in either or
    both of the property-casualty and life/health segments in accordance with
    local practice and regulatory considerations.

(4) Represents the elimination of intercompany transactions between Group
    companies in different segments.

(5) See Note 45 to our consolidated financial statements for a discussion of our
    restatement of previous U.S. GAAP reconciling items.

(6) Includes separate account assets. For additional information on investments,
    see "Information on the Company and Operating and Financial Review and
    Prospects -- Asset Management Operations."

(7) For 2000 and 1999, adjusted to exclude special non-recurring income items.
    See "Information on the Company and Operating and Financial Review and
    Prospects -- Special Income Adjustments."

                                        4
<PAGE>

                                   DIVIDENDS

     The following table sets forth the annual dividends paid per ordinary share
and American Depositary Share (or ADS) equivalent for 1997 through 2001. The
table does not reflect the related tax credits available to German taxpayers.
See "Additional Information -- Taxation -- German Taxation -- Taxation of
Dividends."

<Table>
<Caption>
                                                                DIVIDEND      DIVIDEND PAID
                                                              PER ORDINARY       PER ADS
                                                                  SHARE        EQUIVALENT
                                                              -------------   -------------
                                                              E(1)    $(2)    E(1)    $(2)
<S>                                                           <C>     <C>     <C>     <C>
1997(3).....................................................  0.97    0.92    0.097   0.092
1998........................................................  1.12    1.06    0.112   0.106
1999........................................................  1.25    1.18    0.125   0.118
2000........................................................  1.50    1.42    0.150   0.142
2001........................................................  1.50    1.42    0.150   0.142
</Table>

---------------
(1) Dividends for 1997 were declared in Deutsche marks. The Deutsche mark
    dividend amounts have been converted into euros at the rate of DM1.95583 =
    E1.00, the rate of exchange fixed as of January 1, 1999.

(2) Dividend amounts given in euros have been translated for convenience only
    into U.S. dollars at the rate of $0.9442 = E1.00, the noon buying rate in
    New York for cable transfers in euros certified by the Federal Reserve Bank
    of New York for customs purposes on June 17, 2002. See "Presentation of
    Financial and Other Information."

(3) Adjusted to reflect a stock split in 1997.

     Although the ability to pay future dividends will depend upon our future
earnings, financial condition (including our cash needs), prospects and other
factors, we do not presently anticipate any changes to our current dividend
policy. However, you should not assume that any dividends will actually be paid
or make any assumptions about the amount of dividends which will be paid in any
given year.

                           EXCHANGE RATE INFORMATION

     Germany is a member of the European Community. Pursuant to the Maastricht
Treaty to which Germany and other members of the European Community are
signatories, the euro is legal tender in those member states of the EMU that
satisfied the convergence criteria set forth in the Maastricht Treaty, including
Germany. The euro replaced the Deutsche mark as the official currency of Germany
on January 1, 1999, after which the Deutsche mark continued to exist solely as a
subdivision of the euro. The Deutsche mark ceased to be legal tender in the
Federal Republic of Germany on January 1, 2002. The conversion rate between the
Deutsche mark and the euro in the period between January 1, 1999 and January 1,
2002 was fixed by the Council of the European Union at DM1.95583 = E1.00.

     As of January 1, 1999, we declare all dividends in euros. As a result,
euro/U.S. dollar exchange rate fluctuations will affect the U.S. dollar
equivalent of any cash dividend received by holders of ordinary shares or ADSs.

     The table below sets forth, for the periods indicated, information
concerning the noon buying rates for the euro expressed in U.S. dollars per
E1.00. No representation is made that the euro or U.S. dollar amounts referred
to herein could be or could have been converted into U.S. dollars or euros, as
the case may be, at any particular rate or at all.

                                        5
<PAGE>

     Since the euro did not exist prior to January 1, 1999, we cannot present
actual exchange rates between the euro and the U.S. dollar for earlier periods
in our consolidated financial statements and in the other financial information
discussed in this annual report. To enable you to ascertain how the trends in
our financial results might have appeared had they been expressed in U.S.
dollars, the table below shows the high, low, average and period-end exchange
rates of U.S. dollars per euro for the periods shown. For all periods prior to
the creation of the euro on January 1, 1999, this information has been
calculated using the noon buying rates for the Deutsche mark per $1.00 for each
period, as translated into euro at the official fixed rate of DM1.95583 = E1.00.

<Table>
<Caption>
                                                                           PERIOD     PERIOD
                                                        HIGH     LOW     AVERAGE(1)    END
                                                        ----     ---     ----------   ------
                                                                   ($ PER E1.00)
<S>                                                    <C>      <C>      <C>          <C>
1997.................................................  1.2689   1.0398     1.1244     1.0871
1998.................................................  1.2178   1.0548     1.1120     1.1733
1999.................................................  1.1812   1.0016     1.0588     1.0070
2000.................................................  1.0335   0.8270     0.9207     0.9388
2001.................................................  0.9535   0.8370     0.8909     0.8901
  December...........................................  0.9044   0.8773     0.8899     0.8901
2002
  January............................................  0.9031   0.8594     0.8812     0.8594
  February...........................................  0.8778   0.8613     0.8636     0.8658
  March..............................................  0.8836   0.8652     0.8684     0.8717
  April..............................................  0.9028   0.8750     0.8904     0.9002
  May................................................  0.9373   0.9022     0.9200     0.9339
  June (until June 17, 2002).........................  0.9473   0.9390     0.9432     0.9442
</Table>

---------------
(1) Computed using the average of the noon buying rates for Deutsche marks or
    euros on the last business day of each month during the relevant annual
    period or on the first and last business days of each month during the
    relevant monthly period.

     On June 17, 2002, the noon buying rate for the euro was $0.9442.

                                        6
<PAGE>

                                  RISK FACTORS

     You should carefully consider the risks described below before making an
investment decision. The occurrence of any of the following events could
adversely affect our business. If these events occur, the trading price of
Allianz AG's ADSs could decline. Additional risks not currently known to us or
that we now deem immaterial may also adversely affect our business and your
investment.

CHANGES IN PREVAILING INTEREST RATES AND OTHER MARKET FACTORS MAY ADVERSELY
AFFECT OUR INSURANCE AND BANKING RESULTS

     Our insurance investment portfolio, excluding separate accounts, consists
primarily of fixed income securities, which represented approximately 59.8% of
our insurance investments at December 31, 2001. We also have a significant
equity portfolio, which represented approximately 26.5% of our insurance
investments at December 31, 2001. Our banking investment portfolio consists
primarily of loans (approximately 57.3%) and fixed-income securities
(approximately 33.0%).

     Changes in prevailing interest rates (including changes in the difference
between the levels of prevailing short-term and long-term interest rates) may
adversely affect our insurance, banking and asset management results. Over the
past several years, movements in both short-and long-term interest rates have
affected the level and timing of recognition of gains and losses on securities
held in our various investment portfolios. Our investment portfolios are heavily
weighted toward euro-denominated fixed-income investments. Accordingly, interest
rate movements in the euro zone will significantly affect the value of our
investment portfolios. As our investment portfolio is also characterized by
large equity stakes in a number of major German companies, including Munchener
Ruckversicherungs-Gesellschaft Aktiengesellschaft in Munchen (or Munich Re, and
together with its subsidiaries, Munich Re Group) and Beiersdorf AG, as well as
significant equity holdings in France and Italy, fluctuations in equity markets
will impact the market value and liquidity of these holdings. See "Information
on the Company and Operating and Financial Review and Prospects -- Factors
Affecting Results of Operations -- Investment Related Factors."

     In addition, the results of our banking operations are affected by our
management of interest rate sensitivity. Interest rate sensitivity refers to the
relationship between changes in market interest rates and changes in net
interest income. The composition of our banking assets and liabilities, and any
gap position resulting from that composition, causes our banking operations' net
income to vary with changes in interest rates. Variations in interest rate
sensitivity may also exist within the repricing periods or between the different
currencies in which we hold interest rate positions. A mismatch of
interest-earning assets and interest-bearing liabilities in any given period
may, in the event of changes in interest rates, have a material effect on the
financial condition or results of operations of our banking business. For
additional information, see "Information on the Company and Operating and
Financial Review and Prospects -- Selected Statistical Information Relating to
Our Banking Operations."

     In addition to interest rates, activity in the capital markets generally
also significantly affects our banking, securities trading and brokerage
activities, which tends to make those activities more volatile than other parts
of our business.

     In addition, in our banking business, economic and other developments
affecting borrowers may lead to the need for increased loan loss allowances in
our loan portfolio, which may in turn adversely impact our results of
operations. See "Information on the Company and Operating and Financial Review
and Prospects -- Selected Statistical Information Relating to Our Banking
Operations -- Risk Elements."

                                        7
<PAGE>

WE OPERATE IN HIGHLY COMPETITIVE INDUSTRIES, INCLUDING IN OUR HOME MARKET

     There is substantial competition in Germany and the other countries in
which we do business for the types of insurance, banking, asset management and
other products and services that we provide. Such competition is most pronounced
in our more mature markets of Germany, France, Italy and the United States. In
recent years, however, competition in emerging markets has also increased as
large insurance and other financial services participants from more developed
countries have sought to establish themselves in markets that are perceived to
offer higher growth potential, and as local institutions have become more
sophisticated and have sought alliances, mergers or strategic relationships with
our competitors.

     In Germany, which is our largest market for our insurance and banking
operations, there is intense competition for virtually all of our products and
services. In addition, the German insurance and banking markets are mature ones
and ones in which we already have significant market shares in most lines of
business.

     Increasing competition in these markets could have a negative effect on our
financial performance if we are unable to match the products and services
offered by our competitors.

CHANGES IN TAX LEGISLATION COULD ADVERSELY AFFECT OUR LIFE INSURANCE BUSINESS

     Under current German tax regulations, payments received at the maturity of
a life insurance policy on which premiums have been paid for at least 12 years
are not taxable, and the life insurance premiums are deductible from the
insured's income in the year paid, subject to certain limitations. In recent
years, the German legislature has from time to time proposed legislation that
would reduce the tax-favored treatment of both premiums and benefit payouts for
these life insurance policies. The enactment of legislation reducing the tax
benefit associated with our German life insurance products could significantly
reduce the attractiveness of life insurance as an investment in Germany. Because
our German life/health business accounts for a significant portion of our net
income (5.5% in 2001), the enactment of any such legislation could adversely
affect our financial results. Similar considerations apply to certain of our
life insurance subsidiaries in other jurisdictions. In the event any such
proposals were to be enacted, we would expect to develop new products that
utilize any remaining tax advantages, but we cannot guarantee that we would be
able to do so successfully.

     In addition, from time to time, proposals have been made to repeal the
provisions of the recently enacted German Tax Reform discussed below under
"Additional Information -- Taxation -- German Taxation" that exempted from
German tax certain capital gains on the disposal of corporate shareholdings. In
the event such proposals were to be enacted into law, our ability to dispose of
our shareholdings profitably might be significantly affected.

OUR FINANCIAL RESULTS MAY BE ADVERSELY AFFECTED BY THE OCCURRENCE OF
CATASTROPHES

     Portions of our property and casualty insurance cover losses from
unpredictable events such as hurricanes, windstorms, hailstorms, earthquakes,
fires, industrial explosions, freezes, riots, floods, terrorist attacks (such as
the September 11, 2001 attack on the World Trade Center in the United States)
and other man-made or natural disasters. While we monitor our overall exposure
to catastrophic events in each geographic region, each of our subsidiaries
independently determines its own underwriting limits related to insurance
coverage for losses from catastrophic events. As a result, although we generally
seek to reduce our exposure to these events through the purchase of reinsurance,
claims or catastrophes could have a significant adverse effect on our operating
results and financial condition. In addition, if catastrophes affecting
properties insured by us occur with greater frequency or severity than has
historically been the case, related claims could have a greater adverse effect
on our financial performance than in previous years.

                                        8
<PAGE>

     Catastrophes and other unpredictable events such as the terrorist attack of
September 11, 2001 can also lead to an abrupt interruption of our operations,
which can cause substantial losses. Such losses can relate to property,
financial assets, trading positions and also to key employees. If our business
continuity plans do not address such events or cannot be implemented under the
circumstances, such losses may increase.

BECAUSE MANY OF OUR SUBSIDIARIES OPERATE IN A CURRENCY OTHER THAN EUROS, ADVERSE
CHANGES IN FOREIGN EXCHANGE RATES RELATIVE TO THE EURO COULD ADVERSELY AFFECT
OUR REPORTED EARNINGS AND CASH FLOW

     Prior to January 1, 1998, our financial statements were published in
Deutsche marks. Between January 1, 1998 and January 1, 1999, our financial
statements were published in Deutsche marks with euro conversions. Since January
1, 1999, our financial statements have been prepared exclusively in euros.
However, a significant portion of our revenues and expenses from our
subsidiaries outside the euro zone, including in the United States, Switzerland
and the United Kingdom, originates in currencies other than the euro, and we
expect this to be increasingly true as we expand our business into growing
non-euro zone markets. For the year ended December 31, 2001, approximately 30.4%
of our gross premiums written originated in currencies other than euros. As a
result, while the revenues and expenses of any particular non-euro zone
subsidiary within the Allianz Group are generally recorded in the same currency,
changes in the exchange rates used to translate foreign currencies into euros
may adversely affect our reported results. In addition, our obligations and our
dividends are generally payable in euros. As a result, adverse changes in
exchange rates used to translate the currencies in which our non-euro zone
subsidiaries pay us dividends may adversely affect the cash flow available to us
to pay dividends and other obligations. We do not generally engage in hedging
transactions to reduce our exposure to foreign exchange risk.

                                        9
<PAGE>

ITEMS 4. - 5.  INFORMATION ON THE COMPANY AND OPERATING AND FINANCIAL REVIEW
               AND PROSPECTS

     You should read the following discussion in conjunction with our
consolidated financial statements. We prepare our consolidated financial
statements in accordance with IAS, which differ in certain significant respects
from U.S. GAAP. For a description of the significant differences between IAS and
U.S. GAAP and a reconciliation of certain income statement and balance sheet
items to U.S. GAAP, you should read Note 45 to the consolidated financial
statements. Unless otherwise indicated, the financial information we have
included in this annual report is presented on a consolidated basis under IAS.

                                  INTRODUCTION

     Allianz AG is a stock corporation organized in the Federal Republic of
Germany under the German Stock Corporation Act. It was incorporated as Allianz
Versicherungs-Aktiengesellschaft in Berlin, Germany on February 5, 1890. It is
registered in the Commercial Register in Munich, Germany under the entry number
HR B 7158. Our registered office is located at Koniginstrasse 28, 80802 Munich,
Germany, telephone (49)(89) 3800-0. Allianz AG is the ultimate parent company of
the Allianz Group.

     The Allianz Group is one of the world's leading financial services
providers, offering insurance, banking and asset management products and
services through property-casualty, life/health, banking and asset management
business segments. We are the largest insurance group in the world based on
gross premiums written in 2001. We are the leading German property-casualty and
life/health insurance company, with estimated market shares of approximately
18.7% and 14.4%, respectively, based on gross premiums written in 2001. We also
have leading market positions in a number of other countries, including France,
Italy, the United Kingdom, Switzerland and Spain. We are the largest German
financial institution, based on market capitalization at December 31, 2001. We
believe that we are well capitalized relative to our competitors. We have a
rating of A++ from A.M. Best, its highest rating, and AA+ from Standard &
Poor's. Our investment portfolio includes a number of significant equity
participations, primarily in major German companies, including both financial
institutions and industrial enterprises.

     We were founded in 1890 in Berlin, Germany, and since that time we have
become the largest German insurer. Through our international expansion strategy,
we have sought to bring into the Allianz Group companies that are
well-positioned in their domestic markets and that have leading positions in
particular business lines and attractive earnings prospects. In the last several
years, our non-German insurance business has grown substantially in importance.
Gross premiums written by our non-German business represent approximately 62.0%
of our total gross premiums written. We now operate in more than 70 countries
worldwide and have leading market positions in many of them.

     In 1998, building on over a century's experience in managing our extensive
insurance investment portfolio, we established financial services as our third
core business segment. In 2001, following our acquisition of Dresdner Bank AG
(or Dresdner Bank), we reorganized our financial services segment into separate
asset management and banking segments. In our asset management segment, the
acquisitions of Dresdner Bank on July 23, 2001 and Nicholas-Applegate Capital
Management (or Nicholas-Applegate) on January 31, 2001 increased our third-party
assets under management by E228 billion and E36 billion, respectively, as of the
respective dates of the acquisitions and made us the second-largest asset
manager in the world. In our banking segment, which is now our fourth core
business segment, our acquisition of Dresdner Bank made us the third-largest
bank in Germany and the eleventh-largest bank in

                                        10
<PAGE>

Europe and provided us with significant new bank distribution channels for our
property-casualty, life/health and asset management products and services.

     Our German property-casualty and life/health insurance businesses are
managed by subsidiaries located primarily in Munich and Stuttgart. Our
non-German insurance businesses are locally managed, generally through "flagship
subsidiary" operations located in France, Italy, the United Kingdom,
Switzerland, Spain and the United States, which are our largest non-German
markets. In contrast, each of our specialty lines of credit insurance and travel
and assistance insurance is managed and operates on a global basis. Our asset
management segment also operates on a worldwide basis, with key management
centers in Munich, Hong Kong, Paris, Milan, Westport, Connecticut, and San Diego
and Newport Beach, California. Our banking segment operates through the
approximately 1,150 German and non-German branch offices of Dresdner Bank and
various subsidiaries, with significant operations in Germany, the United
Kingdom, other European countries and the United States. For a listing of our
significant subsidiaries, see Note 46 to our consolidated financial statements.

     Our strategy is to achieve profitable growth across our four business
segments for the benefit of our shareholders, policyholders and employees. We
believe that our size, financial strength and worldwide reach are key
competitive strengths which will permit us to participate in the ongoing
consolidation of the financial services industry and maintain our position as an
industry leader. We offer our products through multiple distribution channels
including agents and brokers and, in many markets, bancassurance and e-commerce.
In our mature markets of Germany, the rest of western Europe and the United
States, we believe demographic trends will particularly favor our life/health
and asset management businesses in the coming years. We intend to capitalize on
cross-selling opportunities between our banking and pension provision businesses
for corporate customers and to take advantage of additional potential synergies
between our life/health, asset management and banking operations. We also intend
to continue to expand in the emerging markets of Asia, eastern Europe and South
America. We actively review potential acquisitions and strategic alliances to
complement our existing businesses worldwide.

     The acquisition and integration of Dresdner Bank follows our decision to
enlarge the Allianz Group's scope of activities and to reorient the company
accordingly. With this strategic move, we anticipate future market developments,
positioning ourselves at an early stage as an integrated financial services
provider. We believe this will enable us to shape this growth market and
continue our profitable growth.

     Our strategic objectives and our priorities reflect our commitment to
making full use of the tremendous business opportunities brought about by the
ongoing transformation of our markets. In this process, we are guided by the
following five long-term business principles:

     - We believe that we can best serve our shareholders by giving priority to
       our clients.

     - We realize that our continued success is based on our reputation, our
       acceptance by society and our ability to attract and retain the best
       people.

     - We foster the entrepreneurial spirit of our local group companies while
       providing the leverage of a global institution.

     - We recognize that a sustainable performance requires primary focus on
       operational excellence and organic growth, supported by profitable
       acquisitions.

     - We aim to be among the top five competitors in the markets in which we
       choose to participate.

These principles lead us to the five strategic priorities listed below. They
reflect a new strategic vision of the changing realities in the international
financial services market: we see ourselves as a global financial services
provider with activities in insurance, banking and asset management.

                                        11
<PAGE>

     Our five strategic priorities are:

     - optimizing the Economic Value Added (EVA) of our Group, based on
       risk-adequate capital requirements and sustainable growth targets;

     - exploiting high-growth market opportunities by leveraging our traditional
       risk management expertise;

     - strengthening our leading position in life and health insurance and in
       asset management, especially in private and corporate retirement
       insurance plans;

     - increasing our asset gathering capabilities by building customer
       specific, multichannel distribution platforms; and

     - expanding our investments and capital market expertise.

     We are convinced that these principles and priorities will serve as a
suitable compass to guide us in our efforts to cope with and fully exploit
future changes in market conditions to the benefit of our clients, shareholders
and employees.

     At December 31, 2001, we employed 179,946 persons in our insurance, banking
and asset management businesses worldwide, of whom 92,357 were based outside
Germany. Through interdisciplinary and multi-jurisdictional training and
advancement programs, we seek to develop and promote a corporate culture that
emphasizes technical expertise, dedication to client service and an
international outlook.

     Our headquarters are located in Munich, Germany. In addition, we have
subsidiary, branch, representative and similar offices worldwide. We own
substantially all of the land and buildings which are used in the normal course
of our business in Europe and lease office space in various locations throughout
the world. We also have part of our investment portfolio invested in land and
buildings. We believe that our facilities are adequate for our present needs in
all material respects.

                                        12
<PAGE>

     The following table shows the relative contributions of our
property-casualty, life/health, banking and asset management segments and
related geographic and other sub-segments to our gross premiums written, total
income and net income in 2001, 2000 and 1999. The table also shows the impact of
consolidation adjustments, amortization of goodwill and minority interests.
Consistent with our general practice, gross premiums written and total income by
geographic region are presented before consolidation adjustments representing
the elimination of transactions between Group companies in different geographic
regions and different segments, and net income by geographic region is presented
before those consolidation adjustments, amortization of goodwill and minority
interests.

<Table>
<Caption>
                                                                        YEAR ENDED DECEMBER 31,
                                       ------------------------------------------------------------------------------------------
                                                   2001                           2000                           1999
                                       ----------------------------   ----------------------------   ----------------------------
                                         GROSS                          GROSS                          GROSS
                                        PREMIUMS    TOTAL     NET      PREMIUMS    TOTAL     NET      PREMIUMS    TOTAL     NET
                                       WRITTEN(1)   INCOME   INCOME   WRITTEN(1)   INCOME   INCOME   WRITTEN(1)   INCOME   INCOME
                                       ----------   ------   ------   ----------   ------   ------   ----------   ------   ------
                                                                            (E IN MILLIONS)
<S>                                    <C>          <C>      <C>      <C>          <C>      <C>      <C>          <C>      <C>
Property-Casualty
 Germany.............................    12,644     18,382    3,773     11,948     16,966   3,320      11,437     15,977   1,898
 Rest of Europe......................    19,606     20,680      848     17,302     20,011   1,285      16,315     18,438     790
 NAFTA...............................     6,822      6,837   (1,030)     6,300      5,866     (86)      5,384      5,367     310
 Rest of World.......................     2,401      1,787       39      1,886      1,630       5       1,559      1,315     (98)
 Specialty Lines.....................     2,321      2,303       94      2,267      2,036     227       2,115      1,871     161
 Consolidation adjustments(2)........    (1,657)    (1,092)    (265)    (1,321)    (1,312)   (570)       (783)      (889)   (183)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
     Subtotal........................    42,137     48,897    3,459     38,382     45,197   4,181      36,027     42,079   2,878
 Amortization of goodwill............        --         --     (349)        --         --    (277)         --         --    (388)
 Minority interests..................        --         --     (746)        --         --    (642)         --         --    (475)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
   Total Property-Casualty...........    42,137     48,897    2,364     38,382     45,197   3,262      36,027     42,079   2,015
Life/Health
 Germany.............................    11,660     19,809      127     11,681     21,662     583      11,429     19,388     293
 Rest of Europe......................     5,486     10,524      381      5,751     11,866     910       4,930     10,908     665
 Rest of World.......................     3,010      3,856      (49)     2,818      3,724     (71)      2,047      2,354      31
 Consolidation adjustments(2)........       (11)        (3)      --        (11)        (1)     (2)         67         73      (2)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
   Subtotal..........................    20,145     34,186      459     20,239     37,251   1,420      18,473     32,723     987
 Amortization of goodwill............        --         --     (146)        --         --    (137)         --         --    (104)
 Minority interests..................        --         --      (84)        --         --    (658)         --         --    (491)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
   Total Life/Health.................    20,145     34,186      229     20,239     37,251     625      18,473     32,723     392
Banking(3)
 Operations..........................        --     12,841      303         --      1,722     183          --      1,795      48
 Amortization of goodwill............        --         --      (70)        --         --       8          --         --       7
 Minority interests..................        --         --     (453)        --         --     (90)         --         --     (25)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
   Total Banking.....................        --     12,841     (220)        --      1,722     101          --      1,795      30
Asset Management(3)
 Operations..........................        --      2,738       77         --      1,722     138          --        693      52
 Amortization of goodwill............        --         --     (243)        --         --     (89)         --         --      --
 Minority interests..................        --         --     (182)        --         --    (136)         --         --     (29)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
     Total Asset Management..........        --      2,738     (348)        --      1,722     (87)         --        693      23
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
Subtotal.............................        --     98,662    2,025     58,621     85,892   3,901      54,500     77,290   2,460
Consolidation adjustments(4).........      (694)    (2,705)    (402)      (736)    (2,103)   (441)       (693)    (1,471)   (143)
                                         ------     ------   ------     ------     ------   -----      ------     ------   -----
Total................................    61,588     95,957    1,623     57,885     83,789   3,460      53,807     75,819   2,317
                                         ======     ======   ======     ======     ======   =====      ======     ======   =====
</Table>

                                        13
<PAGE>

---------------

(1) Represents premiums written for both direct business and reinsurance assumed
    between Group companies in different countries and segments, as well as from
    third parties. Our gross premiums written in respect of reinsurance assumed
    from Group companies are eliminated in consolidation.

(2) Represents elimination of intercompany transactions between Group companies
    in different geographic regions.

(3) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

(4) Represents elimination of intercompany transactions between Group companies
    in different segments.

                                        14
<PAGE>

                    FACTORS AFFECTING RESULTS OF OPERATIONS

     Our results of operations are affected by demographics (particularly with
respect to life insurance) and by a variety of market conditions, including
economic cycles, insurance industry cycles (particularly with respect to
property-casualty insurance) and fluctuations in interest rates. We believe that
the impact of these factors will continue to affect our results of operations.
For the year ended December 31, 2001, approximately 38.0% of our gross premiums
were derived from our German operations. Our German net income includes
investment income and realized capital gains on the substantial equity portfolio
held at Allianz AG, which is part of our German property-casualty segment. As a
result, economic, demographic and market developments in Germany have materially
impacted and can be expected to continue to materially impact our results. In
addition, fluctuations in exchange rates in non-euro zone countries in which we
do business affect our euro-denominated reported results. See "-- Exchange
Rates."

GENERAL MARKET CONDITIONS

     Property-Casualty.  Conditions in the property-casualty insurance markets
in which we operate are generally characterized by periods of price competition,
fluctuations in underwriting results and the occurrence of unpredictable
weather-related and other catastrophe losses. In recent years, the commercial
and industrial property-casualty markets in which we operate have also been
characterized by generally lower customer demand and a growing trend towards
higher retention levels and the use of self-insurance mechanisms by insureds.
During this same period in Europe, our automobile insurance business lines have
been characterized by increased competition and generally falling rates,
although we have succeeded in achieving rate increases in several of our primary
markets in 2001. In late 2001 and early 2002, there were indications that rates
had begun to stabilize in the commercial and industrial and several other of our
main property-casualty insurance lines.

     In addition, the underwriting results of our property-casualty operations
are significantly influenced by estimates of property-casualty loss reserves,
which are an accumulation of the estimated amounts necessary to settle all
outstanding claims as of a particular reporting date. In recent years, our U.S.
property-casualty loss reserves have shown cumulative deficiencies, primarily as
a result of claims related to environmental and asbestos exposures. As our most
significant equity investee is Munich Re, the world's largest reinsurer, to the
extent loss reserve development (favorable or unfavorable) impacts Munich Re's
results, it will be reflected in our results on an equity basis. In recent
years, we understand from publicly available information concerning Munich Re
that Munich Re has had high catastrophe losses, most recently from the terrorist
attack of September 11, 2001, but also in 1999 in connection with environmental
and asbestos-related claims at its American Re subsidiary, and that it continued
in 2001 to strengthen reserves for earlier claims years in the United States.
Following the terrorist attack of September 11, 2001, A.M. Best reaffirmed its A
++ rating for the Munich Re Group. Any significant further reserve strengthening
at Munich Re could, however, adversely impact Munich Re's results, and reduce
our pro rata share thereof accordingly. See "-- Property-Casualty Insurance
Reserves" for a discussion of our property-casualty reserves on a consolidated
Group basis under IAS, and on an individual country basis under local accounting
rules.

     Life/Health.  Demographic studies suggest that over the next decade there
will be growth in our principal life insurance markets of Germany, France, Italy
and the rest of Europe and the United States in the number of individuals who
enter the age group that we believe is most likely to purchase
retirement-oriented life insurance products. In addition, in a number of our
European markets, including Germany, retirement, medical and other social
benefits previously provided by the government have been or are expected to be
curtailed in the coming years. We believe that these trends will increase
opportunities for private sector providers of life insurance, health,

                                        15
<PAGE>

pension and other social benefits-related insurance products. We believe that
our distribution networks, the quality and diversity of our products and our
investment management expertise in each of these markets position us to benefit
from such developments.

     Banking.  Conditions in the banking market in which we operate,
particularly in Europe, are generally characterized by intense competition and
low profit margins. In 2001, the downturn in global equity markets, declining
transaction volumes and increasing levels of default by both corporate and
individual borrowers combined to make the year a difficult one for our banking
segment. The terrorist attack of September 11, 2001 exacerbated these economic
and market difficulties. Nonetheless, the sale of life insurance and retirement
savings products through our bank branches increased in 2001, particularly in
our core markets of Germany, Italy and France. We believe that bancassurance
will be an increasingly important distribution channel for all of our business
segments in the years to come.

     Asset Management.  Prior to 2001, our asset management segment had
generally benefited from favorable market conditions, including falling interest
rates and generally strong capital markets conditions in Europe and the United
States, marked by intermittent periods of extreme volatility. In 2001, the
downturn in the global equity markets, together with the terrorist attack of
September 11, 2001, had a significant negative impact on our asset management
operations, resulting in widespread price declines in equity securities and
transaction volumes and increased uncertainty on the part of many third-party
investors. We cannot predict how long the downturn in the capital markets will
last or what its long-term effect on investor confidence will be. While the
assets under management in our asset management segment include a significant
amount of funds related to affiliated Allianz Group insurance operations, a
growing portion of our assets under management, particularly following our
acquisitions of the PIMCO Group (or PIMCO) in May 2000, Nicholas-Applegate in
January 2001 and Dresdner Bank in July 2001, represents third-party funds. These
funds are subject to withdrawal in the event our investment performance is not
competitive with other asset management firms. As a result, fee income from the
asset management business might decline if the level of our third-party assets
under management were to decline due to investment performance or otherwise.
Results of our asset management activities may also be affected by share prices,
share valuation and market volatility.

INVESTMENT RELATED FACTORS

     Our insurance investment portfolio, excluding separate accounts, consists
primarily of fixed income securities, which represented approximately 59.8% of
our insurance investments at December 31, 2001. We also have a significant
equity portfolio, which represented approximately 26.5% of our insurance
investments at December 31, 2001. Our banking investment portfolio consists
primarily of loans (approximately 57.3%) and fixed-income securities
(approximately 33.0%). For a discussion of the investment portfolios of our
banking operations, see "-- Selected Statistical Information Relating to Our
Banking Operations."

     Changes in prevailing interest rates (including changes in the difference
between the levels of prevailing short-term and long-term rates) can affect our
insurance, banking and asset management results. Over the past several years,
movements in both short- and long-term interest rates have affected the level
and timing of recognition of gains and losses on securities held in our various
investment portfolios. Our investment portfolios are heavily weighted toward
euro-denominated fixed-income investments. Accordingly, interest rate movements
in the euro zone will significantly affect the value of our investment
portfolios. As our investment portfolio is also characterized by large equity
stakes in a number of major German companies, including Munich Re and
Beiersdorf, as well as significant equity holdings in France and Italy,
fluctuations in equity markets will impact the market value and liquidity of
these holdings.

     The short-term impact of interest rate fluctuations on our life insurance
business is reduced in part by products designed to partly or entirely transfer
our exposure to interest rate

                                        16
<PAGE>

movements to the policyholder. Examples of these products include profit-sharing
individual policies (which may have guaranteed rates) and segregated fund
pension plans in our group business. In general, profit sharing may serve to
reduce the impact of interest rate fluctuations on our profit by transferring a
portion of total profits or excess interest margins to policyholders. While
product design reduces our interest rate sensitivity, changes in interest rates
will impact this business to the extent they result in changes to interest
income and to the extent they affect the levels of new product sales or
surrenders and withdrawals of business in force. In addition, longer-term
sustained declines in interest rates, or increases in the longevity profile of
our insureds, may adversely impact the profitability of our life business. In
general, reductions in our investment income below the rates assumed in our
product pricing would reduce the profit margins on our in-force life insurance
business.

     Results of our asset management activities may also be affected by interest
rates, since management fees are generally based on the value of assets under
management, which fluctuate with changes in the level of interest rates.

     In May 2000, we entered into a non-binding letter of intent with Munich Re
to reduce our cross-shareholdings in each other by December 31, 2003 and to
restructure our shareholdings in certain jointly owned subsidiaries and
affiliates by June 30, 2002, or by another date as mutually agreed. In January
2002, pursuant to an agreement entered into with Munich Re in April 2001 in
connection with our acquisition of Dresdner Bank, we disposed of substantially
all of our shareholding in HypoVereinsbank to Munich Re and acquired Munich Re's
shareholding in Allianz Lebensversicherungs-AG. See "Major Shareholders and
Related Party Transactions."

EXCHANGE RATES

     We publish our consolidated financial statements in euros. A significant
portion of our revenues and expenses from our subsidiaries outside the euro
zone, including in the United States, Switzerland and the United Kingdom,
originates in currencies other than the euro currencies. As a result, we have a
financial reporting translation exposure attributable to fluctuations in the
values of these currencies against the euro. The impact of these fluctuations in
exchange rates is mitigated by the fact that our non-euro revenues and related
expenses, as well as assets and liabilities, are generally denominated in the
same currencies. See "Quantitative and Qualitative Disclosures About Market
Risk" for a discussion of our management of foreign exchange rate-related risks
and Note 3 to our consolidated financial statements for certain historical
exchange rate information.

CONSOLIDATION DIFFERENCES

     Our reported results in 2001 were significantly affected by the
consolidation of Dresdner Bank and Nicholas-Applegate as of July 23, 2001 and
January 31, 2001, respectively. For further information, see Note 3 to our
consolidated financial statements. The acquisition of Dresdner Bank also
significantly impacted our consolidated Group and segment reporting. For a
discussion of accounting and reporting developments, see "-- Accounting
Differences".

     The effects of our adoption of SIC 12 in 2000 are discussed under
"-- Accounting Differences" below.

                          CRITICAL ACCOUNTING POLICIES

     We have identified the accounting policies that are critical to our
business operations and the understanding of its results of operations. These
critical accounting policies are those which involve the most complex or
subjective decisions or assessments, and relate to insurance reserves, loan loss
allowances, and the determination of the fair value of financial assets and
liabilities, including impairment charges. In each case, the determination of
these items is

                                        17
<PAGE>

fundamental to our financial condition and results of operations, and requires
management to make complex judgments based on information and financial data
that may change in future periods. As a result, determinations regarding these
items necessarily involve the use of assumptions and subjective judgments as to
future events and are subject to change, and the use of different assumptions or
data could produce materially different results.

INSURANCE RESERVES

     Our insurance reserves represent estimates of future payouts that we will
make in respect of property-casualty and life/health insurance claims, including
expenses relating to such claims. Such estimates are made on a case-by-case
basis, based on the facts known to us at the time reserves are established, and
are periodically adjusted to recognize the estimated ultimate cost of a claim.
In addition, we establish so-called "IBNR" reserves in our property-casualty
business to recognize the estimated cost of losses that have occurred but about
which we do not yet have notice. When actual claims experience differs from our
previous estimates, the resulting difference will generally be reflected in our
reported results for the period of the change in estimate. In each case, the
establishment of our insurance reserves is an inherently uncertain process,
involving assumptions as to factors such as court decisions, changes in laws,
social, economic and demographic trends, inflation and other factors affecting
claim costs, and, in our life/health insurance business, assumptions concerning
mortality and morbidity trends. In recent years, our property-casualty insurance
reserves in the U.S. have been significantly impacted by claims relating to
asbestos and environmental exposures. For a further discussion of our
property-casualty insurance reserves, see "-- Property-Casualty Insurance
Reserves."

LOAN LOSS ALLOWANCES

     Our loan loss allowances represent management's estimate of the probable
credit losses in our loan portfolio. Allowances are established on a
case-by-case basis, are updated over time, and are described at greater length
under "-- Selected Statistical Information Relating to Our Banking Operations."
Judgments concerning the timing and level of our loan loss allowances are based
on numerous estimates and judgments, including determinations concerning
borrower creditworthiness, contractual loan terms and available judicial and
other remedies. Allowances for counterparty risk are established against
individual exposures and are subject to periodic management review. Specific
loan loss allowances are recorded if it is probable that the borrower will not
repay principal and interest according to the contractually agreed terms.
Individually impaired loans are measured on the basis of the present value of
expected cash flows and take into consideration the borrower's financial
condition, the contractual terms of the loan and the value of collateral if any.

     General loss allowances are established to provide for incurred but
unidentified losses that are inherent in the loan portfolio at the relevant
balance sheet date. The general loan loss allowance is reviewed in the light of
general economic conditions, the size and diversity of the portfolio and
historical default rates.

     Country risk allowances are established for transfer risk, which is a
measure of the likely ability of a borrower in a certain country to repay its
foreign currency-denominated debt in light of the impact of currency
devaluations, macroeconomic or political developments in that country. Country
risk allowances are based on country ratings that incorporate current and
historical economic, political and other data to categorize countries by risk
profile.

     When we determine that a loan is uncollectible, the loan is charged off
against any existing specific loss allowance or directly recognized as expense
in the income statement. Changes in judgments and analyses we utilize may lead
to changes over time in the level and timing of the allowances we establish and
related charge-offs, which may in turn materially impact the results of our
banking segment.

                                        18
<PAGE>

FAIR VALUES AND IMPAIRMENTS

     A portion of our assets and liabilities is recorded at fair value,
including trading assets and liabilities, and securities available for sale.
Fair value determinations for financial assets and liabilities are based
generally on listed market prices or broker or dealer price quotations. If
prices are not readily determinable or if liquidating our positions is
reasonably expected to affect market prices, fair value is based on either
internal valuation models or management's estimate of amounts that could be
realized under current market conditions, assuming an orderly liquidation over a
reasonable period of time. Fair values of certain financial instruments,
including OTC derivative instruments, are determined using pricing models that
consider, among other factors, contractual and market prices, correlations, time
value, credit, yield curve volatility factors and/or prepayment rates of the
underlying positions. The use of different pricing models and assumptions could
lead to materially different estimates of fair value.

     Financial assets are reviewed regularly for impairments, and valuation
write-downs to fair value are charged to income if a permanent dimunition in
value occurs. Determinations concerning permanent dimunition involve judgments
concerning market conditions, issuers' financial conditions and other factors.

     For a further discussion of the application of these and other accounting
policies, see Notes 4, 42 and 43 to our consolidated financial statements.

OFF-BALANCE-SHEET ARRANGEMENTS

     Off-balance sheet arrangements that we enter into in our investment and
banking activities include securitization and other transactions involving
non-consolidated financing vehicles, credit lines and loan commitments.
Off-balance-sheet arrangements we enter into in our insurance business also
include letter of credit (LOC) transactions where we provide LOC coverage for
all or part of our obligations to insureds or other customers, or where similar
coverage is provided to us by reinsurers or other counterparties, in each case
in accordance with applicable credit or regulatory requirements.

     Off-balance sheet transactions may be carried out with or through a variety
of unconsolidated, special- or limited-purpose entities (SPEs). In our insurance
and reinsurance businesses, we have entered into reinsurance transactions with
SPEs which provide us with long-term reinsurance coverage, and were funded
through the issuance of so-called "catastrophe bonds" to third-party investors.
In our banking business, we have established SPEs in order to provide
administrative services, engage in underwriting activities, enter into
derivative transactions, provide liquidity and overdraft facilities and
guarantees, securitize financial assets we hold, reduce credit risks on our loan
portfolios, and provide alternative financing structures and investment products
for our customers. Material exposures related to the transactions are recorded
or disclosed in our consolidated financial statements. Risks associated with
establishing SPEs and transactions entered into with SPEs are reviewed in the
banking operations risk management process.

                             ACCOUNTING DIFFERENCES

     On January 1, 2001, we adopted IAS 39, Financial instruments: recognition
and measurement, and IAS 40, Investment property. IAS 39 sets forth requirements
for the recognition in financial statements and valuation of the financial
assets and liabilities of an enterprise, including the reporting of hedging
instruments, and relating to additional disclosure. Under this standard, all
financial assets and liabilities, including all derivatives, are initially
recognized on the balance sheet at cost. Subsequent to initial recognition, all
financial assets are re-measured to fair value, with the exception of certain
assets and liabilities listed in the standard. This standard does not apply to
rights and obligations arising under insurance contracts. The effect of the
first-time

                                        19
<PAGE>

recognition under IAS 39 of the market values of derivatives that have until now
not been shown in the balance sheet have been recorded in the beginning balance
of shareholders' equity. This reduced revenue reserves by E153 million.

     IAS 40 covers investment property independent of the main activity of the
enterprise concerned. Investment property is real estate held to earn rentals or
for capital appreciation. IAS 40 does not apply to real estate held for use in
the production or supply of goods or services or for administrative purposes.
The standard allows an enterprise to choose either a fair value model or a cost
model for valuation purposes. We have chosen the acquisition cost method, which
is consistent with our previous accounting policy. First-time application of IAS
40 has resulted only in changes in presentation.

     With the first-time consolidation of the Dresdner Bank Group, we have
changed the structure of the consolidated balance sheet and the consolidated
income statement. The purpose is to provide appropriate information for both the
insurance and banking activities within the Group. Some headings in the
consolidated balance sheet and consolidated income statement have been combined.
To maintain transparency and clarity, the relevant information is presented in
detail in the notes to the consolidated financial statements.

     We have also expanded our segment reporting. In accordance with our
internal organizational structure and group controlling, the segment formerly
entitled financial services was replaced with two new segments, banking and
asset management, alongside our existing insurance segments of property-casualty
and life/health.

     In addition, our property-casualty financial information by geographic
region has been adjusted to reflect specialty lines results separately, where in
previous years specialty lines results were included in the results of the
geographic regions. Intra-segment consolidation adjustments impacted by this
change in reporting were also adjusted.

     Amounts in the consolidated financial statements were reported for the
first time in E million without a decimal place.

     All figures from fiscal year 2000 and 1999 have been restated to reflect
the foregoing changes, in order to permit comparison between years.

     In addition, our adoption of SIC 12 in 2000 with retrospective application
to prior years resulted in consolidation of certain investment funds for prior
years. As a result, our IAS net income for 1999 increased by approximately E39
million compared to the amounts we previously recorded for this year. For the
year ended December 31, 2000, our IAS net income decreased by approximately E17
million. In addition, in 2000, our accounting for investments in certain
associates accounted for by the equity method was changed, from recording equity
results on a current basis to recording such results on a lag of no more than
six months. The change in lag period was necessitated by reporting deadlines of
the Allianz Group. Furthermore, in 2000, goodwill was reclassified to present
goodwill in the appropriate segment for each subsidiary, rather than being
included primarily in the property-casualty insurance segment. IAS 36,
Impairment of Assets, IAS 37, Provisions, Contingent Liabilities and Contingent
Assets, and IAS 38, Intangible Assets, were adopted by the Group on January 1,
2000. The impact of the adoption of these standards was immaterial.

     For more information on accounting changes, see Note 2 to the consolidated
financial statements.

                                        20
<PAGE>

                           SPECIAL INCOME ADJUSTMENTS

     Our consolidated results of operations discussed below include the effects
of certain special adjustments recorded in 2000 and 1999. The following table
presents the effect on our net income of these special adjustments:

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                              2001      2000     1999
                                                              -----    ------    -----
                                                                  (E IN MILLIONS)
<S>                                                           <C>      <C>       <C>
Taxes.......................................................    --     1,075      383
Goodwill writedown..........................................    --        --     (128)
Holocaust provision.........................................    --        --      (42)
                                                               ---     -----     ----
  Total adjustments.........................................    --     1,075      213
                                                               ===     =====     ====
</Table>

     The adjustments to income taxes in 2000 and 1999 included the release of
deferred taxes, primarily in Germany, resulting from a decrease in statutory tax
rates. In 2000, the statutory tax rate in Germany was reduced from 40% to 25%,
effective for 2001. Under IAS, deferred tax assets and liabilities were revalued
in the current year, leading to non-recurring net income effects. In 1999,
statutory tax rates in Germany were also reduced, but to a lesser extent.

     The following table presents a summary of net income, adjusted to eliminate
the effect of these special items:

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                                           ------------------------
                                                           2001      2000     1999
                                                           -----    ------    -----
                                                               (E IN MILLIONS)
<S>                                                        <C>      <C>       <C>
Net income as reported under IAS.........................  1,623     3,460    2,317
Special adjustments......................................     --    (1,075)    (213)
                                                           -----    ------    -----
  Net income as adjusted.................................  1,623     2,385    2,104
                                                           =====    ======    =====
</Table>

     Excluding the impact of these items, net income decreased by 31.9% in 2001
compared to 2000 and increased by 13.4% in 2000 compared to 1999. The effect of
these special adjustments on our total company and segment results is also
discussed where applicable under "Discussion of Operations by Business Segment"
below.

                       CONSOLIDATED RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Our total income increased E12,168 million, or 14.5%, to E95,957 million in
2001 from E83,789 million in 2000, due primarily to the acquisition of Dresdner
Bank in July 2001, together with increases in property-casualty insurance,
offset in part by a decrease in life/health insurance. Despite the increase in
total income, our earnings from ordinary activities before taxation decreased by
E3,086 million, or 62.8%, to E1,827 million in 2001 from E4,913 million in 2000,
reflecting primarily the effects of the terrorist attack of September 11, 2001
in the United States and weakness in the capital markets. On a consolidated
Group basis, the terrorist attack of September 11, 2001 resulted in net claims
costs of approximately E1.5 billion. As a result of the weakness in the capital
markets, earnings were also negatively affected by E1.6 billion of investment
write-downs. We had a consolidated tax benefit of E840 million in 2001 and a
consolidated tax expense of E176 million in 2000, representing overall effective
tax rates of (52.1)% and 2.8% respectively, compared to statutory rates for our
primary German and other operating subsidiaries that ranged from 10.0% to 43.0%,
and averaged 19.2%. The consolidated tax benefit in 2001 was due to a
substantial amount of tax losses resulting primarily from claims

                                        21
<PAGE>

related to the September 11, 2001 terrorist attack in the United States,
together with a significant amount of tax-exempt realized gains on investments.

     Net income decreased E1,837 million, or 53.1%, to E1,623 million in 2001,
compared to E3,460 million in 2000, reflecting primarily the impact of the
special adjustment to income taxes in 2000, the effects of the terrorist attack
of September 11, 2001 in the United States and weakness in the capital markets,
offset in part by the tax benefit discussed above.

     The following table sets forth the percentage changes for 2001 over 2000 in
our total income, total expenses and net income by segment, which are discussed
in greater detail below, and for the Group as a whole. Results in our banking
and asset management segments reflected primarily to the acquisition of Dresdner
Bank in July 2001. Percentage changes for 2001 over 2000 for our banking
segment, which we established as a separate segment in 2001, are based on the
results for 2000 of the banking operations of the Allianz Group, which we
reported in 2000 and prior years together with asset management as part of our
financial services segment. See "-- Asset Management Operations" and "-- Banking
Operations."

<Table>
<Caption>
                                                          % CHANGE 2001/2000
                                             --------------------------------------------
                                             TOTAL INCOME    TOTAL EXPENSES    NET INCOME
                                             ------------    --------------    ----------
<S>                                          <C>             <C>               <C>
Property-Casualty..........................       8.2 %           12.6 %          (27.5)%
Life/Health................................      (8.2)%           (5.2)%          (63.4)%
Banking....................................     645.7 %          689.4 %         (317.8)%
Asset Management...........................      59.0 %           83.2 %         (300.0)%
Consolidated Group.........................      14.5 %           19.3 %          (53.1)%
</Table>

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Our total income increased E7,970 million, or 10.5%, to E83,789 million in
2000 from E75,819 million in 1999, with significant contributions from each of
our business segments. Our earnings from ordinary activities before taxation
increased E109 million, or 2.3%, to E4,913 million in 2000 compared to E4,804
million in 1999. Our consolidated taxes of E176 million in 2000 and E1,513
million in 1999 represented overall effective tax rates of 2.8% and 30.9%,
respectively, compared to statutory rates for our primary German and other
operating subsidiaries that ranged from 11.0% to 44.6%, and averaged 37.8%. The
difference between statutory and effective rates in 2000 was due primarily to
municipal trade tax and similar taxes, tax-exempt income and income arising from
the release of deferred taxes on account of reductions in statutory tax rates.
As indicated in Note 45 to the consolidated financial statements, the reduction
in 2001 in German statutory tax rates results in a tax benefit for U.S. GAAP
purposes which in 2000 accounted for a significant portion of the difference
between our IAS and U.S. GAAP net income. Under IAS, the release of deferred tax
liabilities due to the effect of tax rate changes on investments available for
sale is recorded directly to equity.

     Net income increased E1,143 million, or 49.3%, to E3,460 million in 2000
compared to E2,317 million in 1999, reflecting the improved earnings before
taxation and decreased effective tax rates noted above. Our property-casualty
insurance business was the main driver of improved earnings in 2000, in
particular due to the impact of the release of deferred taxes resulting from the
reduction in statutory tax rates.

                                        22
<PAGE>

     The following table sets forth the percentage changes for 2000 over 1999 in
our total income, total expenses and net income by segment, which are discussed
in greater detail below, and for the Group as a whole. Percentage changes for
2000 over 1999 for our banking segment, which we established as a separate
segment in 2001, are based on the results for 1999 of the banking operations of
the Allianz Group, which we reported in 2000 and prior years together with asset
management as part of our financial services segment. See "-- Asset Management
Operations" and "-- Banking Operations." Results in our asset management segment
reflected significant growth in 2000, which was due primarily to the acquisition
of PIMCO in May 2000. Percentage changes for 2000 over 1999 in our asset
management segment, which was established as a separate segment in 1997, may not
be meaningful due to the relatively small size and start-up nature of this
segment in 1999.

<Table>
<Caption>
                                                          % CHANGE 2000/1999
                                             --------------------------------------------
                                             TOTAL INCOME    TOTAL EXPENSES    NET INCOME
                                             ------------    --------------    ----------
<S>                                          <C>             <C>               <C>
Property-Casualty..........................       7.4 %            7.4 %           61.9 %
Life/Health................................      13.8 %           13.1 %           59.4 %
Banking....................................      (4.0)%           (8.2)%          236.7 %
Asset Management...........................     148.5 %          186.7 %         (478.3)%
Consolidated Group.........................      10.5 %           11.1 %           49.3 %
</Table>

                      CONSOLIDATED ASSETS AND LIABILITIES

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Total assets increased by E502,930 million, or 114.3%, to E942,925 million
at December 31, 2001, from E439,995 million at December 31, 2000, primarily as a
result of our acquisition of Dresdner Bank in July 2001. The Group's own
investments grew by E456,813 million, or 139.2%, to E784,938 million in 2001
from E328,125 million in 2000, while separate account assets increased E1,922
million, or 8.4%, to E24,692 million at December 31, 2001, from E22,770 million
at December 31, 2000. Insurance investments grew by E19,066 million, or 5.7%, to
E354,135 million in 2001 from E335,069 million in 2000.

     Our shareholders' equity decreased by 11.1% to E31,664 million at December
31, 2001 compared to E35,603 million at December 31, 2000. This decrease
resulted primarily from a decrease in net unrealized gains of E5,210 million in
2001.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Total assets increased by E29,305 million, or 7.1%, at December 31, 2000 to
E439,995 million, from E410,690 million at December 31, 1999 as a result of both
internal growth and acquisitions. The Group's own investments grew by E15,534
million, or 5.0%, to E328,125 million in 2000 from E312,591 million in 1999,
while investments held on account and for the risk of life policyholders
increased E3,661 million, or 19.2%, to E22,770 million at December 31, 2000 from
E19,109 million at December 31, 1999.

     Our shareholders' equity increased by 20.0% to E35,603 million at December
31, 2000 compared to E29,676 million at December 31, 1999. This substantial
increase resulted primarily from retained profit of E3,154 million and net
unrealized investment gains of E1,745 million.

                                        23
<PAGE>

                  DISCUSSION OF OPERATIONS BY BUSINESS SEGMENT

                              INSURANCE OPERATIONS

     We provide property-casualty and life/health products and services on an
individual and group basis in more than 70 countries worldwide. Except for our
specialty line insurance operations, our insurance operations are centered
around our flagship subsidiary operations. In our property-casualty business, we
provide automobile, homeowners, travel and other personal lines products and are
a leading provider of commercial and industrial coverages to business
enterprises of all sizes, including many of the world's largest companies. Our
life/health insurance businesses provide endowment, annuity and term insurance
products and a wide range of health, disability and related coverages to
individual insureds, as well as group life, group health and pension products to
employers. In addition to strong local positions, we have established leading
positions in certain specialty lines on a global basis, including credit
insurance and travel and assistance insurance.

     Our products are marketed in Germany primarily under the "Allianz" brand
name. In other countries we generally operate through our subsidiary insurers'
brand names, which are identified as part of the Allianz Group. We believe that
our brand name is one of the best-known and most highly respected in the German
marketplace, combining a reputation for excellent customer service with an image
of superior financial strength. In 1999, we launched a global promotional
campaign to further establish "Allianz" brand recognition worldwide.

     Our philosophy is to provide considerable latitude to our operating
entities in product design, underwriting, distribution, marketing and operations
while providing various levels of centralized support in such areas as financial
and strategic planning, investment management, knowledge transfer, accounting
and reinsurance to our subsidiaries from our headquarters in Munich. We refer to
this combination of centralized strategic management and local business autonomy
as a "multi-local" approach to our global insurance business. We believe that
this gives our subsidiary operations the flexibility to best respond to local
market conditions and allows us to implement strategic goals and create
incentives for our employees on a country-by-country basis.

                                        24
<PAGE>

                     PROPERTY-CASUALTY INSURANCE OPERATIONS

     The following table sets forth certain financial information for our
property-casualty operations for the years indicated:

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
                                                              -------   -------   -------
                                                                    (E IN MILLIONS)
<S>                                                           <C>       <C>       <C>
Gross premiums written......................................   42,137    38,382    36,027
Premiums earned(net)(1).....................................   34,428    31,529    29,783
Interest and similar income.................................    5,068     5,568     5,169
Income from affiliated enterprises, joint ventures and
  associated enterprises....................................      889     1,833     1,113
Other income from investments...............................    4,307     4,259     3,733
Trading income..............................................    1,451       (10)        2
Fee and commission income, and income from service
  activities................................................    1,425       940       704
Other income................................................    1,329     1,078     1,575
                                                              -------   -------   -------
       Total income.........................................   48,897    45,197    42,079
                                                              -------   -------   -------
Insurance benefits(net)(2)..................................  (28,200)  (25,413)  (23,955)
Interest and similar expenses...............................   (1,323)   (1,136)     (621)
Other expenses for investments..............................   (2,888)   (1,913)   (1,153)
Loan loss allowance.........................................       (4)       --        --
Acquisition costs and administrative expenses(3)............  (10,042)   (9,106)   (8,414)
Amortization of goodwill....................................     (349)     (277)     (388)
Other expenses..............................................   (3,682)   (3,453)   (3,909)
                                                              -------   -------   -------
       Total expenses.......................................  (46,488)  (41,298)  (38,440)
                                                              -------   -------   -------
Earnings from ordinary activities before taxation...........    2,409     3,899     3,639
Taxes.......................................................      701         5    (1,149)
Minority interests in earnings..............................     (746)     (642)     (475)
                                                              -------   -------   -------
Net income..................................................    2,364     3,262     2,015
                                                              -------   -------   -------
Special income effects......................................       --    (1,037)     (132)
                                                              -------   -------   -------
Adjusted net income.........................................    2,364     2,225     1,883
                                                              =======   =======   =======
</Table>

---------------

(1) Net of reinsurance ceded of E6,669 million, E6,488 million and E5,880
    million in 2001, 2000 and 1999, respectively.

(2) Includes loss and loss adjustment expenses of E27,919 million, E24,566
    million, and E23,065 million in 2001, 2000 and 1999, respectively.

(3) Includes net underwriting costs of E9,543 million, E8,548 million, and
    E8,062 million in 2001, 2000 and 1999, respectively.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Our gross premiums written from property-casualty
operations in 2001 increased by E3,755 million, or 9.8%, to E42,137 million from
E38,382 million in 2000. Eliminating the effect of exchange rate movements,
which increased 2001 gross premiums written by E28 million, gross premiums
written increased by 9.7%. This increase came as a result of increases in all of
our geographic segments, particularly in Rest of Europe, due to growth in France
and Italy, and in Germany as discussed below.

                                        25
<PAGE>

     Premiums Earned (Net).  On a Group-wide basis, property-casualty net
premiums earned in 2001 and 2000 reflected premiums ceded to reinsurers of
E6,669 million and E6,488 million, respectively, resulting in overall retention
levels of approximately 83.8% in 2001 and 82.9% in 2000. Net premiums earned
increased by E2,899 million, or 9.2%, to E34,428 million in 2001 from E31,529
million in 2000, paralleling the 9.8% increase in gross premiums written.

     Trading Income.  Trading income from our property-casualty operations
increased E1,461 million, to E1,451 million in 2001 from a loss of E10 million
in 2000, due primarily to E1,437 million in gains generated by Allianz AG from
derivative financial instruments for which hedge accounting is not applied.
These gains relate to derivative financial instruments embedded in exchangeable
bonds issued and from forward contracts that are used to hedge investments, but
that do not qualify for hedge accounting. For additional information, see Note
42 to our consolidated financial statements.

     Insurance Benefits (Net).  Net insurance benefits for our worldwide
property-casualty business, which consist of claims paid, changes in reserves
for loss and loss adjustment expenses, changes in other reserves and expenses of
premium refunds, increased by E2,787 million, or 11.0%, to E28,200 million in
2001 from E25,413 million in 2000. A significant portion of the increase was
attributable to the September 11, 2001 terrorist attack in the United States,
which negatively impacted net claims in the property-casualty lines by
approximately E1.5 billion in 2001, primarily in the United States, and to a
lesser extent, in our reinsurance operations in Germany and other countries. The
remainder of the increase in net insurance benefits related to increased premium
volume.

     The following table sets forth net loss, expense and combined ratio
information for our property-casualty operations by geographic region for the
years 2001 and 2000:

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31, 2001
                                         -------------------------------------------------------
                                                   REST OF           REST OF   SPECIALTY
                                         GERMANY   EUROPE    NAFTA    WORLD      LINES     TOTAL
                                         -------   -------   -----   -------   ---------   -----
<S>                                      <C>       <C>       <C>     <C>       <C>         <C>
Loss ratio(1)..........................    76.2%     80.3%   99.9%     72.8%      66.5%     81.1%
Expense ratio(2).......................    26.8%     26.2%   29.2%     32.9%      39.5%     27.7%
                                          -----     -----    -----    -----      -----     -----
Combined ratio.........................   103.0%    106.5%   129.1%   105.7%     106.0%    108.8%
</Table>

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31, 2000
                                         -------------------------------------------------------
                                                   REST OF           REST OF   SPECIALTY
                                         GERMANY   EUROPE    NAFTA    WORLD      LINES     TOTAL
                                         -------   -------   -----   -------   ---------   -----
<S>                                      <C>       <C>       <C>     <C>       <C>         <C>
Loss ratio(1)..........................   73.5%      80.8%   87.9%     75.5%     53.1%      77.9%
Expense ratio(2).......................   24.2%      27.1%   29.6%     30.0%     36.3%      27.0%
                                          ----      -----    -----    -----      ----      -----
Combined ratio.........................   97.7%     107.9%   117.8%   105.5%     89.4%     104.9%
</Table>

---------------

(1) Represents ratio of total loss and loss adjustment expenses to net earned
    premium.

(2) Represents ratio of net underwriting costs to net earned premium.

     The overall increase in the Group combined ratio to 108.8% in 2001 from
104.9% in 2000 reflects deteriorating loss ratios in the NAFTA zone, Germany and
our specialty lines, primarily due to increased net claims as a result of the
September 11, 2001 terrorist attack and, in the case of specialty lines,
unfavorable economic conditions, offset in part by improved loss ratios in Rest
of Europe and Rest of World. Excluding the effect of the claims relating to the
September 11, 2001 terrorist attack in the United States, the combined ratio
would have decreased slightly to 104.4% in 2001 from 104.9% in 2000. The Group
expense ratio worsened slightly to 27.7% in 2001 from 27.0% in 2000, due
primarily to expenses incurred in our German Property-Casualty Group and at
Allianz AG, the results of which are included in our property-casualty segment,
in connection with the build-out of our information technology systems and

                                        26
<PAGE>

marketing and sales force development. Also contributing to the increased
expense ratio were expenses incurred at Allianz AG relating to the integration
of Dresdner Bank.

     Acquisition Costs and Administrative Expenses.  Acquisition costs and
administrative expenses consist primarily of payments and changes in deferred
acquisition costs, administrative expenses, and net underwriting costs. Net
underwriting costs of E9,543 million in 2001 increased E995 million, or 11.6%,
over 2000 levels of E8,548 million, which slightly exceeded our property-
casualty premium growth rate of 9.8% due primarily to expenses incurred in
connection with information technology, marketing and sales force development
and the integration of Dresdner Bank information technology systems.

     Net Income.  Net income from property-casualty insurance operations in 2001
decreased by E898 million, or 27.5%, to E2,364 million in 2001 compared with
E3,262 million in 2000. The decrease was driven primarily by the special
adjustment to income taxes, which benefitted our results in 2000, increased net
claims resulting from the September 11, 2001 terrorist attack and reduced
investment results, reflecting weakness in the capital markets. These were
offset in part by a tax benefit resulting from a substantial amount of tax
losses attributable primarily to claims related to the September 11, 2001
terrorist attack in the United States, together with a significant amount of
tax-exempt realized gains on investments resulting in large part from forward
sales and other transactions that were entered into in 2001 but concluded in
2002. See "Additional Information -- Taxation -- German Taxation."

     On a Group-wide basis, amortization of goodwill was E349 million in 2001,
an increase of E72 million, or 26.0%, from E277 million in 2000, largely as a
result of amortization of goodwill on acquisitions made in Australia and the
Netherlands. Minority interest increased to E746 million in 2001 from E642
million in 2000.

     Our consolidated results of operations in 2000 included the effects of
certain special adjustments to income taxes. There were no special adjustments
to our consolidated results of operations in 2001. See "-- Special Income
Adjustments." Excluding the impact of these items in 2000, net income would have
increased by E139 million, or 6.2%, to E2,364 million in 2001, from E2,225
million in 2000.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Our gross premiums written from property-casualty
operations in 2000 increased by E2,355 million, or 6.5%, to E38,382 million from
E36,027 million in 1999. Eliminating the effect of exchange rate movements,
gross premiums written increased by 4.8%. This increase came largely as a result
of growth in Germany and Rest of World as discussed below.

     Premiums Earned (Net).  On a Group-wide basis, property-casualty net
premiums earned in 2000 and 1999 reflected premiums ceded to reinsurers of
E6,488 million and E5,880 million, respectively, resulting in overall retention
levels of approximately 82.9% in 2000 and 83.5% in 1999. Net premiums earned
increased by E1,746 million, or 5.9%, to E31,529 million in 2000 from E29,783
million in 1999, paralleling the 6.5% increase in gross premiums written.

     Insurance Benefits (Net).  Net insurance benefits for our worldwide
property-casualty business, which consists of claims paid, changes in reserves
for loss and loss adjustment expenses, changes in other reserves and expenses of
premium refunds, increased by E1,458 million, or 6.1%, to E25,413 million in
2000 from E23,955 million in 1999, consistent with the growth of 6.5% in gross
premiums in this segment in 2000. Excluding the effects of exchange-rate
fluctuations (E503 million), net insurance benefits would have increased by 4.0%
to E24,910 million in 2000 from E23,955 million in 1999.

                                        27
<PAGE>

     The following table sets forth net loss, expense and combined ratio
information for our property-casualty operations by geographic area for the
years 2000 and 1999:

<Table>
<Caption>
                                              YEAR ENDED DECEMBER 31, 2000
                                 -------------------------------------------------------
                                           REST OF           REST OF   SPECIALTY
                                 GERMANY   EUROPE    NAFTA    WORLD      LINES     TOTAL
                                 -------   -------   -----   -------   ---------   -----
<S>                              <C>       <C>       <C>     <C>       <C>         <C>
Loss ratio.....................   73.5%      80.8%   87.9%     75.5%     53.1%      77.9%
Expense ratio..................   24.2%      27.1%   29.6%     30.0%     36.3%      27.0%
                                  ----      -----    -----    -----      ----      -----
Combined ratio.................   97.7%     107.9%   117.8%   105.5%     89.4%     104.9%
</Table>

<Table>
<Caption>
                                              YEAR ENDED DECEMBER 31, 1999
                                 -------------------------------------------------------
                                           REST OF           REST OF   SPECIALTY
                                 GERMANY   EUROPE    NAFTA    WORLD      LINES     TOTAL
                                 -------   -------   -----   -------   ---------   -----
<S>                              <C>       <C>       <C>     <C>       <C>         <C>
Loss ratio.....................   72.8%      81.6%   80.5%     81.6%     55.9%      77.4%
Expense ratio..................   24.4%      27.6%   26.6%     28.8%     39.6%      27.1%
                                  ----      -----    -----    -----      ----      -----
Combined ratio.................   97.2%     109.2%   107.1%   110.4%     95.5%     104.5%
</Table>

     The overall increase in the Group combined ratio to 104.9% in 2000 from
104.5% in 1999 reflected an increase in the loss ratio to 77.9% from 77.4%,
primarily due to loss expenses caused by the late-1999 storms "Lothar" and
"Martin" and increased workers' compensation claims in the United States.
Improving loss ratios in Rest of Europe and Rest of World were offset by
increases in Germany and the NAFTA zone. The Group expense ratio improved
slightly to 27.0%, with improving expense ratios in Germany, Rest of Europe and
Specialty Lines being offset by increases in the NAFTA zone and Rest of World.

     Acquisition Costs and Administrative Expenses.  Acquisition costs and
administrative expenses consist primarily of payments and changes in deferred
acquisition costs, administrative expenses, and net underwriting costs. Net
underwriting costs of E8,548 million in 2000 increased E486 million, or 6.0%,
over 1999 levels of E8,062 million, which was in line with our property-
casualty premium growth rate of 6.5%.

     Net Income.  Net income from property-casualty insurance operations in 2000
increased by E1,247 million, or 61.9%, to E3,262 million in 2000 compared with
E2,015 million in 1999. The increase was driven primarily by a release of
deferred taxes resulting from reduced statutory tax rates, primarily in Germany.

     On a Group-wide basis, amortization of goodwill was E277 million in 2000, a
decrease of E111 million, or 28.6%, from E388 million in 1999, largely as a
result of a significant goodwill writedown of E128 million in 1999 related to
Allianz Australia Ltd. Minority interest increased to E642 million in 2000 from
E475 million in 1999.

     Our consolidated results of operations include the effects of certain
special adjustments recorded in 2000 and 1999, including adjustments to income
taxes of E1,037 in 2000 and E302 million in 1999. These adjustments to income
taxes included the release of deferred taxes, primarily in Germany, resulting
from a decrease in statutory tax rates. In 2000, the statutory tax rate in
Germany was reduced from 40% to 25%, effective for 2001. Under IAS, deferred tax
assets and liabilities were revalued in the current year, leading to
non-recurring net income effects. In 1999, statutory tax rates in Germany were
also reduced, but to a lesser extent. In addition, in 1999, we recorded the
goodwill writedown of E128 million related to Allianz Australia Ltd. discussed
above and a Holocaust provision of E42 million. Excluding the impact of these
items, net income would have increased by E342 million, or 18.2%, to E2,225
million in 2000, from E1,883 million in 1999. The effect of these special
adjustments on our geographic segment results is further discussed where
applicable under "Discussion of Property-Casualty Operations by Geographic
Region" below.

                                        28
<PAGE>

        DISCUSSION OF PROPERTY-CASUALTY OPERATIONS BY GEOGRAPHIC REGION

     The following table sets forth our property-casualty gross premiums written
and net income by geographic region. Consistent with our general practice, gross
premiums written by geographic region is presented before consolidation
adjustments representing the elimination of transactions between Group companies
in different geographic regions and different segments, and net income by
geographic region is presented before those consolidation adjustments,
amortization of goodwill and minority interests.

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
Germany.................................   12,644     3,773    11,948    3,320     11,437    1,898
Rest of Europe..........................   19,606       848    17,302    1,285     16,315      790
NAFTA...................................    6,822    (1,030)    6,300      (86)     5,384      310
Rest of World...........................    2,401        39     1,886        5      1,559      (98)
Specialty Lines.........................    2,321        94     2,267      227      2,115      161
Consolidation adjustments...............   (1,657)     (265)   (1,321)    (570)      (783)    (183)
                                           ------    ------    ------    -----     ------    -----
  Subtotal..............................   42,137     3,459    38,382    4,181     36,027    2,878
Amortization of goodwill................       --      (349)       --     (277)        --     (388)
Minority interests......................       --      (746)       --     (642)        --     (475)
                                           ------    ------    ------    -----     ------    -----
  Total.................................   42,137     2,364    38,382    3,262     36,027    2,015
                                           ======    ======    ======    =====     ======    =====
</Table>

                                    GERMANY

DESCRIPTION OF BUSINESS

     Germany is the world's third-largest property-casualty insurance market,
based on gross premiums written in 2000. We were the largest provider of
property-casualty insurance in Germany, with an estimated market share of 18.7%,
as measured by gross premiums written in 2001. Germany is our most important
market for property-casualty insurance. As a percentage of our total
property-casualty gross premiums written worldwide, Germany accounted for 28.9%
in 2001, 30.1% in 2000 and 31.1% in 1999. This decrease in percentage primarily
reflects the increased levels of gross premiums written from our operations in
countries other than Germany.

     We conduct our property-casualty insurance operations in Germany primarily
through Sachversicherungsgruppe Deutschland (or the German Property-Casualty
Group), which handles all our lines of property-casualty insurance in Germany
other than credit insurance, and Allianz AG, the parent company of the Group,
which acts as the clearing house for the Group's reinsurance needs, including
acting as primary reinsurer for other Group companies and procuring third-party
reinsurance for the Group.

GERMAN PROPERTY-CASUALTY GROUP

     The German Property-Casualty Group comprises a number of different
operating entities, some of which offer a full range of property-casualty lines
and others of which provide specialized coverages:

     - Allianz Versicherungs-AG (or Allianz Versicherung), which is the German
       Property-Casualty Group's primary full-line property-casualty insurer;

     - Frankfurter Versicherungs-AG, a full-line property-casualty insurer based
       in Frankfurt;

                                        29
<PAGE>

     - Bayerische Versicherungsbank-AG, a full-line property-casualty insurer
       based in Munich;

     - Vereinte Versicherung AG, a full-line provider of property-casualty
       insurance;

     - Vereinte Rechtsschutzversicherung-AG, a specialist provider of legal
       expense insurance;

     - Allianz Globus MAT Versicherung-AG (or Allianz Globus MAT), a specialist
       provider of MAT insurance;

     - Kraft Versicherungs-AG, a specialist provider of automobile insurance;
       and

     - Vereinte Spezial Versicherung-AG, a specialist provider of automobile
       insurance.

     Our interests in some of these subsidiaries will be substantially
restructured pursuant to our letter of intent with Munich Re. See "Major
Shareholders and Related Party Transactions."

PRODUCTS

     The operating companies that make up the German Property-Casualty Group
together offer a comprehensive range of property-casualty insurance products and
related services to customers in Germany. The German Property-Casualty Group's
principal product lines are automobile liability and other automobile insurance,
fire and property insurance, personal accident insurance, liability insurance,
legal expense insurance, and transport and aviation insurance.

     The German Property-Casualty Group's policy terms and conditions largely
conform to those offered by other insurers in the German market. While the
German Property-Casualty Group does seek to develop new policy types, given its
position as the market leader in the German property-casualty insurance market,
any competitive advantage gained by the introduction of new policy types tends
to be short-lived, as competitors introduce equivalent forms of coverage.

     In all of our German business lines, policy persistency is an important
factor in our profitability. Accordingly, we seek to ensure that our
policyholders maintain their policies in force with us for long periods of time.
Based on German industry statistics, we believe that our persistency rates are
generally higher than those of most other German companies. In the
property-casualty area, we have found that customers with multiple policies with
us generally keep their policies in force for longer periods of time.
Accordingly, the German Property-Casualty Group provides its customers with
substantial discounts to the extent they hold multiple Allianz insurance
policies. We estimate that currently approximately 60% of the German Property-
Casualty Group's German personal lines customers have more than one Allianz
policy in force.

     While our insurance operations in Germany generally operate on a
decentralized basis through separate operating entities, many of our products in
Germany are distributed through common or overlapping distribution systems. The
importance of these distribution channels varies by type of business. For the
German Property-Casualty Group's personal and commercial lines, the network of
full-time tied agents is our most important distribution channel. For industrial
lines, the brokerage channel predominates. In connection with our acquisition of
Dresdner Bank on July 23, 2001, we expect to place approximately 1,000 insurance
specialists to sell both life insurance products and property-casualty insurance
products at Dresdner Bank branches throughout Germany, of whom more than 700 had
been placed at December 31, 2001. The relative importance of each of these
distribution channels also varies by region and by product mix.

                                        30
<PAGE>

     The following sets forth certain key data concerning our German insurance
distribution systems as they related to property-casualty insurance at and for
the year ended December 31, 2001:

<Table>
<Caption>
                                                                               % OF 2001
                                                                           PROPERTY-CASUALTY
                                                              NUMBER(1)        PREMIUMS
                                                              ---------    -----------------
<S>                                                           <C>          <C>
Full-time tied agents.......................................   11,970             66.1
Part-time tied agents.......................................   43,201              6.8
Brokers.....................................................    7,878             14.2
Banks.......................................................    2,541(2)           2.8
Other(3)....................................................       --             10.1
                                                                                 -----
  Total.....................................................                     100.0
                                                                                 =====
</Table>

---------------

(1) Represents the total number in Germany for all Allianz Group segments.

(2) Represents the number of German branches at Dresdner Bank (803), and at two
    unaffiliated banks, Volks-und Raiffeisenbanken (1,730) and Industrie
    Kredit-Bank (8), with which we have distribution agreements covering our
    property-casualty and life/health insurance products.

(3) Includes all Allianz Group employees in Germany, who are able to sell
    Allianz policies.

     In our German property-casualty insurance business, we distribute our
products primarily through a network of self-employed, full-time tied agents. We
believe that our network of tied agents is the largest full-time insurance sales
force in Europe. These agents, who have an average of more than ten years'
experience selling Allianz products, receive a full range of support from the
Allianz Group, from initial support in establishing an office and a portfolio to
pension benefits based upon the volume and product mix of their portfolios.
Apart from pension provisions, agent compensation is based primarily on volume,
although we also utilize a number of incentive schemes to encourage sales of
strategically more important policy types. Our full-time tied agents follow
centralized underwriting and pricing guidelines, allowing us to carefully
segment and monitor our German book of business.

ALLIANZ AG

     Allianz AG, the parent company of the Group, acts as the reinsurance
clearinghouse for our German property-casualty operations, as well as other
Group companies. In addition, Allianz AG assumes a relatively small amount of
reinsurance from non-Group companies.

     Like most insurers, the Allianz Group manages its overall exposure to
single risks or events through the purchase of reinsurance coverage both on a
treaty basis, under which risks are ceded to a reinsurer on specific blocks of
business where the underlying risks meet certain predetermined criteria, and on
a facultative basis, under which the reinsurer's prior approval is required on
each risk ceded. We place reinsurance with insurance companies based on
evaluation of the financial security of the reinsurer, terms of coverage and
price. The retention levels applicable to Allianz Group's insurance business are
established by risk category and determined by individual subsidiaries and
business units, subject to overall guidelines established at the Group level in
Munich. Generally, the Group establishes lists of approved reinsurers as well as
risk-retention guidelines on a per-event and per-risk basis, and seeks to
coordinate the activities of its subsidiary insurers to avoid concentration of
risk with particular reinsurers and to ensure that the aggregate risk retentions
of Group companies are within Group guidelines. While each subsidiary is able to
place reinsurance directly with reinsurers other than Allianz AG, Allianz AG has
a preferred partnership with respect to reinsurance cessions of its
subsidiaries. For the

                                        31
<PAGE>

years ended December 31, 2001, 2000 and 1999, Allianz AG assumed 41.5%, 41.8%
and 42.8%, respectively, of all reinsurance ceded by Group companies.

     While the Group remains liable as a primary insurer notwithstanding the
ceding of reinsurance to third parties, our evaluation criteria, which include
the claims-paying and debt ratings, capital and surplus levels, and marketplace
reputation of its reinsurers, are such that we believe any risks of
collectibility to which we are exposed are minimal, and historically Group
companies have not experienced difficulty in collecting from their reinsurers.
Munich Re is Allianz AG's primary outside reinsurer. For the fiscal years ended
December 31, 2001, 2000 and 1999, Munich Re Group assumed E2,400 million, E2,300
million and E2,300 million in reinsurance premiums from the Allianz Group,
representing 30.6%, 30.2% and 32.7%, respectively, of the Allianz Group's total
reinsurance premiums ceded. See Note 26 to the consolidated financial
statements. The following table sets forth premiums ceded by Allianz Group to
Munich Re Group and other reinsurers for the years indicated:

<Table>
<Caption>
                                                          YEAR ENDED DECEMBER 31,
                                               ---------------------------------------------
                                                   2001            2001            1999
                                               -------------   -------------   -------------
                                                 E       %       E       %       E       %
                                                              (E IN MILLIONS)
<S>                                            <C>     <C>     <C>     <C>     <C>     <C>
Premiums ceded, gross
Munich Re Group..............................  2,400    30.6   2,300    30.2   2,300    32.7
Other........................................  5,438    69.4   5,327    69.8   4,749    67.3
                                               -----   -----   -----   -----   -----   -----
  Total......................................  7,838   100.0   7,627   100.0   7,049   100.0
                                               =====   =====   =====   =====   =====   =====
</Table>

     Allianz AG acts as the primary reinsurer of our German property-casualty
subsidiaries, other than HERMES, for which Munich Re is the primary reinsurer.
Allianz AG assumes reinsurance on an intra-Group basis from such subsidiaries
and centralizes the placement of outgoing reinsurance with third-party carriers.
In the life/health area, Allianz AG and Munich Re each assume 50% of the
reinsurance ceded by Allianz Lebensversicherungs-AG, the main operating company
for our German life insurance operations. Outside of Germany, Allianz AG acts as
a reinsurer of Group subsidiaries, with a preferred partnership on all business
ceded, and provides centralized advice to subsidiaries on structuring their own
reinsurance programs, establishing lists of permitted reinsurers, and monitoring
aggregate exposures to catastrophes and other events.

     The following table sets forth the reinsurance assumed by Allianz AG by
gross premiums written for the years shown:

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2001     2000     1999
                                                              ------   ------   ------
                                                                  (E IN MILLIONS)
<S>                                                           <C>      <C>      <C>
From German Property-Casualty Group subsidiaries............  3,024    3,176    3,131
From German life/health subsidiaries........................    539      567      555
From HERMES.................................................     87       77       53
From non-German subsidiaries................................  1,190      937      723
                                                              -----    -----    -----
     Subtotal...............................................  4,840    4,757    4,462
From non-Group companies....................................    847      830      718
                                                              -----    -----    -----
     Total..................................................  5,687    5,587    5,180
                                                              =====    =====    =====
</Table>

     The Allianz Group writes a limited amount of third-party reinsurance, with
premiums totaling E847 million in 2001, E830 million in 2000 and E718 million in
1999. Other than Munich Re Group, which represented E511 million, E606 million
and E531 million, or 60.3%, 73.0% and 74.0%,

                                        32
<PAGE>

respectively, of Allianz AG's third-party assumed reinsurance in 2001, 2000 and
1999, no single third party accounted for any significant amount of reinsurance
assumed in such years.

RESULTS OF OPERATIONS

     The following tables show key financial data for our German
property-casualty operations. Gross premiums written by operating company are
presented before consolidation adjustments representing the elimination of
transactions between Group companies in different countries and different
segments, and net income by operating company is presented before those
consolidation adjustments, amortization of goodwill and minority interests.

                     GERMANY -- PROPERTY-CASUALTY: KEY DATA

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
German Property-Casualty Group..........   10,075    1,660      9,576    1,377      9,420      759
Allianz AG..............................    5,687    2,516      5,587    2,293      5,180    1,475
Consolidation items.....................   (3,118)    (404)    (3,215)    (350)    (3,163)    (336)
                                           ------    -----     ------    -----     ------    -----
  Total.................................   12,644    3,773     11,948    3,320     11,437    1,898
                                           ======    =====     ======    =====     ======    =====
</Table>

     The following table shows the composition of the German Property-Casualty
Group's gross premiums written by product line for each of the years shown:

 GERMAN PROPERTY-CASUALTY GROUP: GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS(1)

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                   ---------------------------------------------
                                                       2001            2000            1999
                                                   -------------   -------------   -------------
                                                     E       %       E       %       E       %
                                                                  (E IN MILLIONS)
<S>                                                <C>     <C>     <C>     <C>     <C>     <C>
Automobile liability.............................  2,330    23.9   2,229    23.8   2,161    23.4
Fire and property(2).............................  1,514    15.5   1,454    15.5   1,519    16.4
Other automobile.................................  1,468    15.0   1,394    14.9   1,368    14.8
Personal accident................................  1,401    14.4   1,385    14.8   1,370    14.8
Liability........................................  1,293    13.3   1,243    13.3   1,217    13.1
Legal Expense....................................    382     3.9     379     4.0     367     4.0
Transport and aviation...........................    259     2.7     229     2.4     231     2.5
Other(3).........................................  1,102    11.3   1,051    11.3   1,019    11.0
                                                   -----   -----   -----   -----   -----   -----
  Total..........................................  9,749   100.0   9,364   100.0   9,252   100.0
                                                   =====   =====   =====   =====   =====   =====
</Table>

---------------

(1) Does not reflect business assumed through reinsurance operations in the
    amount of E326 million in 2001, of E212 million in 2000 and E168 million in
    1999.

(2) Includes fire, household goods, building and other property insurance.

(3) Includes multi-line policies with individual customers in the former German
    Democratic Republic that were acquired through the acquisition of Deutsche
    Versicherungs-AG, as well as commercial multi-line property insurance.

                                        33
<PAGE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Property-casualty gross premiums written in 2001
were E12,644 million, an increase of E696 million, or 5.8%, from 2000 levels of
E11,948 million, due primarily to growth in our automobile liability, other
automobile, fire and property and liability lines, as well as in reinsurance.

     Automobile liability and other automobile gross premiums written in Germany
increased by E175 million, or 4.8%, to E3,798 million in 2001 from E3,623
million in 2000, due primarily to a general rise in rates in the German market.
The number of vehicles insured decreased slightly to 9.17 million in 2001 from
9.24 million in 2000. Fire and property gross premiums written in Germany
increased by E60 million, or 4.1%, to E1,514 million in 2001 from E1,454 million
in 2000, primarily as a result of the purchase of a block of business from
another insurance company. Liability gross premiums written increased by E50
million, or 4.0%, to E1,293 million in 2001 from E1,243 million in 2000,
primarily as a result of increased demand for coverage of industrial and
commercial risks. Reinsurance assumed by the German Property-Casualty Group
increased by E114 million, or 53.8%, to E326 million in 2001 from E212 million
in 2000, due to increased aviation and transportation reinsurance business
written by Allianz and ceded in part through various pooling arrangements.
Premiums in our other lines of insurance showed slight increases from 2000
levels.

     Reinsurance assumed by Allianz AG increased by E100 million, or 1.8%, to
E5,687 million in 2001 from E5,587 million in 2000, due primarily to increased
gross premiums written from expanded reinsurance relationships, predominantly
with Allianz Group companies outside of Germany, offset by the reduction of an
internal quota share cession from the German Property-Casualty Group to Allianz
AG, which had a calculated premium impact of E204 million.

     Net Income.  In Germany, property-casualty net income increased by E453
million, or 13.6%, to E3,773 million in 2001 from E3,320 million in 2000. Net
income in 2000 reflected special adjustments to income taxes before minority
interests of E1,017 million. Excluding the impact of these adjustments, German
property-casualty net income would have increased by E1,470 million, or 63.8%,
to E3,773 million in 2001 from E2,303 million in 2000. The increase was due
primarily to increased investment results, including the E1,437 million of
trading income discussed above, offset in part by higher claims resulting from
the September 11, 2001 terrorist attack, amounting to E273 million in net
reinsurance claims at Allianz AG and E67 million in net claims in the German
Property-Casualty Group. Total net insurance benefits in Germany increased by
E249 million, or 3.2%, to E8,105 million in 2001 from E7,856 million in 2000.
The loss ratio increased to 76.2% in 2001 from 73.5% in 2000 as a result of the
increased claims. The increase in the loss ratio resulting from the September
11, 2001 terrorist attack was offset in part by improvements in claim frequency,
and a decrease in natural disasters affecting our German property-casualty
results. The expense ratio increased to 26.8% in 2001 from 24.2% in 2000, due
primarily to expenses incurred in connection with the build-out of our
information technology systems and marketing and sales force development. Also
contributing to the increased expense ratio were expenses incurred at Allianz AG
relating to the integration of Dresdner Bank.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Property-casualty gross premiums written in 2000
were E11,948 million, an increase of E511 million, or 4.5%, from 1999 levels of
E11,437 million, due primarily to higher premiums in the automobile, personal
accident, liability, other property-casualty lines and reinsurance assumed, and
in the reinsurance business of Allianz AG. Premium increases in these lines more
than offset lower premiums in the fire and property lines.

     Automobile liability and other automobile gross premiums written in Germany
increased by E94 million, or 2.7%, to E3,623 million in 2000 from E3,529 million
in 1999, due primarily to a growing number of vehicles insured and a general
rise in rates in the German market. The

                                        34
<PAGE>

number of vehicles insured increased slightly to 9.24 million in 2000 from 9.19
million in 1999. Fire and property gross premiums written in Germany decreased
by E65 million, or 4.3%, to E1,454 million in 2000 from E1,519 million in 1999,
as a result of continuing increased competition and reduced rates in the
broker-driven markets for large industrial and commercial customers. The
continuation of our selective underwriting policies and the still increasing
willingness of commercial insureds to insure their own risks through captive
insurance arrangements or alternative risk transfer mechanisms also contributed
to reduced premiums in 2000. Liability gross premiums written increased by E26
million, or 2.1%, to E1,243 million in 2000 from E1,217 million in 1999, as a
result of growing demand for D&O coverage by our commercial clients. Premiums in
our personal accident, other property-casualty lines, reinsurance assumed and
credit insurance showed a slight increase from 1999 levels.

     Reinsurance assumed by Allianz AG increased by E407 million, or 7.9%, to
E5,587 million in 2000 from E5,180 million in 1999, due primarily to increased
premiums from Allianz Group companies, reflecting expanded reinsurance
relationships and consistent with the higher gross premiums written of the
Group.

     Net income.  In Germany, property-casualty net income increased by E1,422
million, or 74.9%, to E3,320 million in 2000 from E1,898 million in 1999. This
reflected primarily reduced income tax expenses, which decreased by E1,229
million to a benefit of E276 million in 2000 from an expense of E953 million in
1999, due primarily to a release of deferred taxes resulting from a decrease in
the statutory tax rate. Additionally, investment income increased in 2000 over
1999. Reduced income taxes and increased investment income were offset in part
by increased net insurance benefits, which rose by E324 million, or 4.3%, to
E7,856 million in 2000, from E7,532 million in 1999 with a corresponding
increase in the loss ratio to 73.5% in 2000 from 72.8% in 1999. The increase in
net insurance benefits reflects additional catastrophe losses in 2000,
particularly in relation to late claims reported for the late-December 1999
storms "Lothar" and "Martin." The losses from these storms were far higher than
initially expected, and were underestimated by the market as a whole. This was
offset somewhat by improved experience in the auto liability line. The expense
ratio decreased slightly in 2000 to 24.2% due to the comparatively greater
increase in premiums.

                                 REST OF EUROPE

DESCRIPTION OF BUSINESS

     The Rest of Europe is, in the aggregate, our largest market for
property-casualty insurance. As a percentage of our total property-casualty
gross premiums written worldwide, the Rest of Europe accounted for 44.8% in
2001, 43.6% 2000 and 44.3% in 1999.

     We conduct our property-casualty insurance operations in the Rest of Europe
through five main groups of operating companies in France, Italy, the United
Kingdom, Switzerland and Spain. In the remainder of the Rest of Europe, we
operate through approximately 35 Allianz subsidiaries in more than 17 other
European countries. The property-casualty insurance products we offer in the
Rest of Europe are in each case generally similar to those we offer in Germany.

     France.  France is the world's fifth-largest property-casualty insurance
market, based on gross premiums written in 2000. We conduct our
property-casualty insurance operations in France through the companies of the
AGF Group. The AGF Group is the third-largest property-casualty insurance
provider in France, with an estimated market share of 12.3%, as measured by
gross premiums written in 2001. The primary property-casualty insurance products
which we offer in France are automobile, personal property, commercial, fire and
injury insurance. We distribute our property-casualty products and services in
France primarily through a network of general agents and brokers. We also
utilize specialized employee sales staff and bancassurance and other direct
sales channels.

                                        35
<PAGE>

     Italy.  Italy is the world's sixth-largest property-casualty insurance
market, based on gross premiums written in 2000. We conduct our
property-casualty insurance operations in Italy primarily through Lloyd
Adriatico and the RAS Group, which we refer to together with our other Italian
subsidiaries as our "Italian Subsidiaries." Taken together, the Italian
Subsidiaries are the second-largest property-casualty insurer in the Italian
market, with an estimated combined market share of 15.2%, as measured by gross
premiums written in 2001. Lloyd Adriatico operates in all property-casualty
lines, having developed a particular expertise in automobile insurance, while
RAS Group underwrites primarily automobile insurance together with various other
types of property-casualty insurance for both personal and commercial business
throughout Italy. As of December 31, 2001, we held 51.1% of the share capital of
RAS Group, with the remainder being publicly traded in Italy, and 99.7% of the
share capital of Lloyd Adriatico. The Italian Subsidiaries distribute our
property-casualty products and services primarily through an extensive network
of general agents and on a limited basis through Internet and telephone-based
direct sales channels.

     United Kingdom.  The United Kingdom is the world's fourth-largest
property-casualty insurance market, based on gross premiums written in 2000. We
were the sixth-largest provider of property-casualty insurance in the United
Kingdom, with an estimated market share of 4.5% in 2001, as measured by gross
premiums written in 2001. We operate our property-casualty insurance business in
the United Kingdom primarily through our wholly owned subsidiary Cornhill
Insurance Public Limited Company (or Cornhill). The primary property-casualty
insurance products that Cornhill offers in the United Kingdom are generally
similar to those offered by the German Property-Casualty Group in Germany. In
addition, we sell a number of specialty products in the United Kingdom,
including extended warranty and pet insurance. We distribute our
property-casualty products and services in the United Kingdom through a range of
distribution channels, including brokers and retailers, as well as the Internet,
telephone and other direct sales methods.

     Switzerland.  Switzerland is the world's twelfth-largest property-casualty
insurance market, based on gross premiums written in 2000. We were the
third-largest provider of property-casualty insurance in Switzerland, with an
estimated market share of 11.4%, as measured by gross premiums written in 2001,
not including travel insurance. We conduct our property-casualty insurance
operations in Switzerland primarily through the Allianz Suisse companies,
comprising the former ELVIA Versicherungs-AG group of companies, the Berner
Versicherungs-Group and Allianz Versicherung (Schweiz) AG. Together with AGF
Phenix, we refer to these companies as our "Swiss Subsidiaries". The Swiss
Subsidiaries handle our lines of property-casualty insurance in Switzerland
other than travel insurance. In addition, our wholly owned subsidiary Allianz
Risk Transfer (or ART) sells conventional reinsurance as well as a variety of
alternative risk transfer products for corporate customers worldwide. Our travel
insurance subsidiary Mondial Assistance Group operates and is managed on a
global basis and is discussed separately (see "-- Specialty Lines"). The Swiss
Subsidiaries and ART distribute our products and services through a wide range
of tied and general agents, and also through brokers, bancassurance and other
direct channels.

     Spain.  Spain is the world's eighth-largest property-casualty market, based
on gross premiums written in 2000. We were the second-largest provider of
property-casualty insurance in Spain, with an estimated market share of 6.6% in
2001, as measured by gross premiums written in 2001. We serve the Spanish
property-casualty insurance market through Allianz Compania de Seguros (Allianz
Spain), which was created in 1999 following the merger of Allianz-RAS Seguros y
Reaseguros, ELVIASEG S.A., and the two former AGF companies Union y Fenix and
Athena Seguros. Allianz Spain has headquarters in Madrid and Barcelona, with
regional offices throughout the country. Allianz Spain offers a wide variety of
traditional personal and commercial property-casualty insurance products, with
an emphasis on automobile insurance. Allianz Spain distributes its products
through agents, brokers and direct distribution channels.

                                        36
<PAGE>

     Netherlands.  The Netherlands is the world's ninth-largest
property-casualty insurance market, based on gross premiums written in 2000. Our
most important subsidiaries in the Netherlands are Royal Nederland
Verzekeringsgroep and Zwolsche Algemeene Holding, which we acquired in late
2000. Our most important products are automobile and fire insurance. We are the
second-largest automobile insurer and the largest insurer in the industrial
client sector. Our Netherlands subsidiaries distribute their products through
independent agents and brokers.

     Austria.  Allianz Elementar offers a broad range of property-casualty and
health insurance products to individual and group customers in Austria. Allianz
Elementar is the largest Austrian property-casualty insurer, based on gross
premiums written in 2000, and the leading insurer for industrial business in
Austria. We distribute our property-casualty products in Austria primarily
through employee agents, tied agents and brokers.

     Ireland.  Our subsidiary Allianz Irish Life Holdings offers a wide variety
of traditional property-casualty insurance products, including mainly automobile
and commercial/industrial lines. Allianz Irish Life Holdings distributes its
products primarily through brokers and to a lesser extent through agents and
banks.

     Belgium.  We conduct our property-casualty insurance business in Belgium
primarily through AGF Belgium Insurance and Cobac. Our primary emphasis is on
industrial insurance, in which we are among the market leaders. We also have a
significant position in the market in automobile insurance. We distribute our
property-casualty products in Belgium mainly through brokers.

     Other.  In addition, we have property-casualty insurance operations in
Hungary, Portugal, Luxembourg, Greece, the Czech Republic and Poland. We also
acquired majority holdings in existing insurance companies in Croatia and
Bulgaria in 1998 and consolidated these acquisitions into our results in 1999
and 2000, respectively. We are also represented in the Slovak Republic, Denmark,
Sweden, Romania and Russia, and are among the top five insurers in many of these
markets. The primary products sold in these countries are mandatory third-party
liability coverages and related additional coverage. We expect further increases
in property-casualty gross premiums written as we work to build up our sales
organization and exploit other synergies in our insurance operations in the rest
of Europe.

                                        37
<PAGE>

RESULTS OF OPERATIONS

     The following table shows key financial data for our Rest of Europe
property-casualty operations. Consistent with our general practice, gross
premiums written by geographic region are presented before consolidation
adjustments representing the elimination of transactions between Group companies
in different countries and different segments, and net income by geographic
region is presented before those consolidation adjustments, amortization of
goodwill and minority interests.

                 REST OF EUROPE -- PROPERTY-CASUALTY: KEY DATA

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
France..................................    5,392       31      4,745      451      4,585      384
Italy...................................    4,585      487      4,264      258      4,071      239
United Kingdom..........................    2,507       94      2,108       49      1,950       57
Switzerland.............................    1,750      155      1,650      249      1,583      140
Spain...................................    1,278       32      1,073       69      1,058      (14)
Netherlands.............................      873      284        557      438        523      499
Austria.................................      844       16        831      (50)       810       13
Ireland.................................      738       (4)       563       19        493       14
Belgium.................................      391        8        393      (37)       373      (12)
Other...................................    1,410       98      1,284      118        993       55
Consolidation adjustments...............     (162)    (353)      (166)    (279)      (124)    (585)
                                           ------     ----     ------    -----     ------     ----
  Total.................................   19,606      848     17,302    1,285     16,315      790
                                           ======     ====     ======    =====     ======     ====
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  In Rest of Europe, property-casualty gross
premiums written increased by E2,304 million, or 13.3%, to E19,606 million in
2001 from E17,302 million in 2000. This increase reflected growth in gross
premiums written in all of our primary property-casualty markets in Rest of
Europe, especially France, the United Kingdom and Italy, due primarily to rate
increases in a number of lines.

     Net Income.  Property-casualty net income in Rest of Europe decreased by
E437 million, or 34.0%, to E848 million in 2001 from E1,285 million in 2000,
primarily as a result of sharply decreased net income in France, due primarily
to reduced investment results and increased reinsurance costs, offset in part by
increased investment results in Italy. Also contributing to the decrease in Rest
of Europe was a broad decline in investment results in other countries due to
weakness in the capital markets. Net insurance benefits in Rest of Europe rose
by E822 million, or 6.9%, to E12,798 million in 2001 from E11,976 million in
2000, which was slightly less than the 8.8% increase in net premiums earned,
which increased to E16,106 million in 2001 from E14,797 million in 2000. The
loss ratio in Rest of Europe decreased slightly to 80.3% in 2001 from 80.8% in
2000, reflecting decreases in France, Italy, United Kingdom and Spain, offset in
part by increases in Switzerland and Other Rest of Europe. The expense ratio
declined slightly to 26.2% in 2001 from 27.1% in 2000.

                                        38
<PAGE>

     The following table sets forth net loss, expense and combined ratio
information for our property-casualty operations in the Rest of Europe by
geographic area for the years 2001 and 2000:

<Table>
<Caption>
                                                    YEAR ENDED DECEMBER 31, 2001
                                   --------------------------------------------------------------
                                                    UNITED
                                   FRANCE   ITALY   KINGDOM   SWITZERLAND   SPAIN   OTHER   TOTAL
                                   ------   -----   -------   -----------   -----   -----   -----
<S>                                <C>      <C>     <C>       <C>           <C>     <C>     <C>
Loss ratio.......................   83.0%   76.7%     73.2%       79.1%     78.7%    86.1%   80.3%
Expense ratio....................   29.3%   22.5%     31.0%       26.9%     21.2%    25.7%   26.2%
                                   -----    ----     -----       -----      ----    -----   -----
Combined ratio...................  112.3%   99.2%    104.2%      106.0%     99.9%   111.8%  106.5%
</Table>

<Table>
<Caption>
                                                   YEAR ENDED DECEMBER 31, 2000
                                  --------------------------------------------------------------
                                                   UNITED
                                  FRANCE   ITALY   KINGDOM   SWITZERLAND   SPAIN   OTHER   TOTAL
                                  ------   -----   -------   -----------   -----   -----   -----
<S>                               <C>      <C>     <C>       <C>           <C>     <C>     <C>
Loss ratio......................   85.8%   77.8%     82.7%       71.3%      81.1%   82.0%   80.8%
Expense ratio...................   28.3%   21.6%     33.4%       30.9%      23.8%   28.4%   27.1%
                                  -----    ----     -----       -----      -----   -----   -----
Combined ratio..................  114.1%   99.4%    116.1%      102.2%     104.9%  110.4%  107.9%
</Table>

     France.  In France, property-casualty gross premiums written increased by
E647 million, or 13.6%, to E5,392 million in 2001 from E4,745 million in 2000,
reflecting rate increases in all lines of business. In the commercial and
industrial lines, the increase in gross premiums written was also due to new
large industrial business and the increase of AGF MAT's share in aviation pools.
In the individual lines, our distribution arrangement with Credit Lyonnais Bank
also contributed to the increase.

     Net income decreased by E420 million, or 93.1%, to E31 million in 2001 from
E451 million in 2000. The decrease resulted primarily from sharply reduced
investment results as a result of the weak capital markets. We also experienced
an increase in net insurance benefits, due to a greater volume of losses,
especially in the second half of the year in our large industrial accounts, as
well as a rise in the cost of reinsurance resulting from a change in market
conditions for general industrial risks, particularly for non-proportional
windstorm covered risks. Our loss ratio in France nonetheless improved to 83.0%
in 2001 from 85.8% in 2000, largely reflecting increased premiums, the
significant claims recorded in 2000 in relation to the late December 1999 storms
"Lothar" and "Martin", a reduction in the frequency of automobile claims, and a
decrease in the average claim payments in our private insurance business. Net
insurance benefits included E17 million related to the September 11, 2001
terrorist attack.

     Italy.  In Italy, property-casualty gross premiums written were E4,585
million in 2001, an increase of E321 million, or 7.5%, from E4,264 million in
2000, primarily due to increased automobile premiums. Automobile premiums
increased by E238 million, or 8.8%, in 2001, reflecting the overall rate
increases in the Italian market following a twelve-month statutory rate freeze
on third-party liability policies which expired in March 2001. We also had an
increase in the number of vehicles insured and an increase in rates on
automobile policies other than third party liability. We saw moderate increases
in our other main lines of business, including fire and personal property,
general liability, health and personal accident.

     Net income increased by E229 million, or 88.8%, to E487 million in 2001
from E258 million in 2000, due primarily to improved underwriting results and
increased investment results, offset in part by expenses incurred to improve the
organizational structure and information technology systems of the RAS group.
The loss ratio decreased slightly to 76.7% in 2001 from 77.8% in 2000,
reflecting a more selective underwriting policy.

     United Kingdom.  In the United Kingdom, property-casualty gross premiums
written increased by E399 million, or 18.9%, to E2,507 million in 2001 from
E2,108 million in 2000, primarily as a result of increased rates in the
automobile and property lines, reflecting the claims

                                        39
<PAGE>

experience of UK insurers generally, as well as volume increases in commercial
lines and pet insurance.

     Net income increased by E45 million, or 91.8% to E94 million in 2001 from
E49 million in 2000, reflecting primarily improved underwriting results due to
increased rates in the automobile and property lines. Net insurance benefits
decreased by E26 million, or 2.0%, to E1,300 million in 2001 from E1,326 million
in 2000, reflecting a more selective underwriting policy. The loss ratio
improved to 73.2% in 2001 from 82.7% in 2000, reflecting the increase in gross
premiums written and the decrease in net insurance benefits.

     Switzerland.  In Switzerland, property-casualty gross premiums written
increased by E100 million, or 6.1%, to E1,750 million in 2001 from E1,650
million in 2000. Of this increase, E46 million was due to the one time effect of
a change in our method of recording assumed reinsurance premiums. In previous
years, such premiums were recorded on a one-year lag basis. In 2001, we began
recording such premiums on a current-year basis, with the result that two years'
premiums were recorded in 2001. An additional E56 million was attributable to
the positive effects of exchange rate movements.

     Net income decreased by E94 million, or 37.8%, to E155 million in 2001 from
E249 million in 2000, reflecting a decrease in investment results. The loss
ratio deteriorated to 79.1% in 2001 from 71.3% in 2000, despite a low level of
natural catastrophes, due to a change in accounting methods whereby
approximately E40 million previously allocated to underwriting costs are now
included under net insurance benefits. This change in turn improved the expense
ratio to 26.9% in 2001 from 30.9% in 2000. We also experienced increased
reinsurance claims at ART, including E17 million related to the September 11,
2001 terrorist attack.

     Spain.  In Spain, property-casualty gross premiums written increased by
E205 million, or 19.1%, to E1,278 million in 2001 from E1,073 million in 2000,
reflecting increased sales in all lines of business, particularly automobile
lines, where premium increased 21.8%. The increased sales resulted from the
reorganization of the distribution system to better incentivize agents and to
increase productivity.

     Net income decreased by E37 million, or 53.6%, to E32 million in 2001 from
E69 million in 2000, despite improved underwriting results in the automobile
line. The decrease reflected primarily the effect of a tax adjustment in 2000,
which increased net income in 2000 by E37 million, as well as decreased
investment results in 2001. The loss ratio improved to 78.7% in 2001 from 81.1%
in 2000, due to more selective underwriting policies introduced in recent years,
which led to a reduction in claims frequency, particularly in the automobile
line. The expense ratio also improved to 21.2% in 2001 from 23.8% in 2000, due
to cost savings resulting from the successful integration of our Spanish
subsidiaries into Allianz Spain.

     Other.  Property-casualty gross premiums written in Rest of Europe
countries other than France, Italy, Switzerland, the United Kingdom and Spain
(which we refer to as Other Rest of Europe) increased by E628 million, or 17.3%,
to E4,256 million in 2001 from E3,628 million in 2000, primarily as a result of
growth in the Netherlands and Ireland. Net income in Other Rest of Europe
decreased by E86 million, or 17.6%, to E402 million in 2001 from E488 million in
2000, primarily as a result of deteriorating underwriting results and increased
interest expense in the Netherlands.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Property-casualty gross premiums written in Rest
of Europe increased by E987 million, or 6.0%, to E17,302 million in 2000 from
E16,315 million in 1999. This increase was due primarily to growth in France,
Italy and the United Kingdom. Our Rest of Europe property-casualty operations
generally experienced a solidification of rates in 2000, particularly in the
automobile line.

                                        40
<PAGE>

     Net income.  In Rest of Europe, net income increased by E495 million, or
62.7%, to E1,285 million in 2000 from E790 million in 1999, primarily due to
increased net income in France and Switzerland, offset in part by decreased net
income in Austria and the Netherlands. Net insurance benefits increased by E578
million, or 5.1%, to E11,976 million in 2000 from E11,398 million in 1999,
consistent with the increase of 6.0% in gross premiums written in Rest of
Europe. The loss ratio decreased slightly to 80.8% in 2000 from 81.6% in 1999.

     The following table sets forth net loss, expense and combined ratio
information for our property-casualty operations in the Rest of Europe by
geographic area for the years 2000 and 1999:

<Table>
<Caption>
                                                  YEAR ENDED DECEMBER 31, 2000
                                 --------------------------------------------------------------
                                                  UNITED
                                 FRANCE   ITALY   KINGDOM   SWITZERLAND   SPAIN   OTHER   TOTAL
                                 ------   -----   -------   -----------   -----   -----   -----
<S>                              <C>      <C>     <C>       <C>           <C>     <C>     <C>
Loss ratio.....................   85.8%    77.8%    82.7%       71.3%      81.1%   82.0%   80.8%
Expense ratio..................   28.3%    21.6%    33.4%       30.9%      23.8%   28.4%   27.1%
                                 -----    -----    -----       -----      -----   -----   -----
Combined ratio.................  114.1%    99.4%   116.1%      102.2%     104.9%  110.4%  107.9%
</Table>

<Table>
<Caption>
                                                  YEAR ENDED DECEMBER 31, 1999
                                 --------------------------------------------------------------
                                                  UNITED
                                 FRANCE   ITALY   KINGDOM   SWITZERLAND   SPAIN   OTHER   TOTAL
                                 ------   -----   -------   -----------   -----   -----   -----
<S>                              <C>      <C>     <C>       <C>           <C>     <C>     <C>
Loss ratio.....................   81.4%    80.2%    81.7%       77.0%      89.7%   83.4%   81.6%
Expense ratio..................   28.9%    22.8%    32.9%       27.9%      25.0%   29.9%   27.6%
                                 -----    -----    -----       -----      -----   -----   -----
Combined ratio.................  110.4%   103.0%   114.6%      104.9%     114.7%  113.3%  109.2%
</Table>

     France.  In France, property-casualty gross premiums written increased by
E160 million, or 3.5%, to E4,745 million in 2000 from E4,585 million in 1999.
Following several years of flat sales, French property-casualty gross premiums
increased in 2000 due mainly to a rise in rates, particularly in commercial
lines, large accounts and aviation. In the individual market segment, gross
premiums written increased by 1.5% following several years of decreases. The
positive trend resulted from household sales increases and the increased demand
for auto and fleet products. Compared to 1999, every distribution channel
contributed to the increase. The AGF Group strategy to develop partnerships in
multi-distribution channels has also been successful, particularly a
distribution arrangement with Credit Lyonnais Bank, which contributed to an
increase in gross premiums written of 21.6% (E54 million) in 2000.

     Net income increased by E67 million, or 17.4%, to E451 million in 2000 from
E384 million in 1999, primarily due to reduced expenses reflecting the greater
efficiencies achieved in 2000 following the additional costs incurred in 1999,
together with reduced taxes due primarily to increased tax-exempt income. These
increases were offset by the E186 million pretax impact of the late-December
1999 storms "Lothar" and "Martin". Net insurance benefits increased by E212
million, or 6.9%, to E3,275 million in 2000 from E3,063 million in 1999. The
loss ratio increased to 85.8% in 2000 from 81.4% in 1999, due primarily to
losses and claim management costs resulting from winter storms "Lothar" and
"Martin" and increased reinsurance costs, and to a lesser extent, an increase in
current year claims in damages. As noted above, losses from winter storms
"Lothar" and "Martin" were far higher than initially expected, and were
underestimated by the market as a whole. The expense ratio decreased in 2000 due
to the comparatively greater increase in premiums.

     Italy.  In Italy, property-casualty gross premiums written were E4,264
million in 2000, an increase of E193 million, or 4.7%, from E4,071 million in
1999. Automobile premiums increased by E186 million, or 7.4%, to E2,704 million
in 2000 from E2,518 million in 1999. This reflects primarily a premium increase
of 8.2% in automobile business other than third party liability premiums, which
increased by only 5.1% due to a statutory freeze in tariffs for a period of
twelve months beginning in March 2000. Fire and personal property premiums
increased by E3 million, or 1.2%,

                                        41
<PAGE>

in line with market trends. Health premiums increased by E19 million, or 12.7%,
due primarily to a single large group policy written in 2000. General liability
premiums increased by E23 million, or 7.7%, due to increasing sales of all-risk
products for families and small businesses.

     Net income increased by E19 million, or 7.9%, to E258 million in 2000 from
E239 million in 1999 due to an increase in underwriting results and investment
income, which exceeded the growth in taxes of E98 million from 1999 levels.
Taxes in 1999 reflect the release of deferred taxes resulting from a reduction
in statutory tax rates. The freeze on automobile policy tariffs had a negative
impact on net income due to lower premiums and is expected to have a negative
effect in the next few years as well. The results were also negatively impacted
by a charge taken in respect of a fine imposed by the Italian antitrust
authority in 2000. See "-- Regulation and Supervision -- Insurance -- Italy." In
addition, net insurance benefits increased by E73 million, or 2.5%, to E3,049
million in 2000 from E2,976 million in 1999. This reflects the combined effect
of an increase in the severity of motor vehicle claims, primarily due to a
further increase of personal injury costs, partially offset by a reduction in
claim frequency due to the adoption of a more selective underwriting policy in
the last few years. The loss ratio decreased to 77.8% in 2000 from 80.2% in
1999, because the growth in premiums exceeded the increase in claims. The
expense ratio decreased to 21.6% in 2000 from 22.8% in 1999 due to the
comparatively greater increase in premiums and cost savings resulting from the
merger of several RAS subsidiaries in 1999.

     United Kingdom.  In the United Kingdom, property-casualty gross premiums
written increased by E158 million, or 8.1%, to E2,108 million in 2000 from
E1,950 million in 1999, reflecting primarily increased rates in the automobile
and property lines reflecting the claims experience of UK insurers generally.

     Net income decreased by E8 million, or 14.0%, to E49 million in 2000 from
E57 million in 1999, reflecting primarily the decreased underwriting results at
Cornhill, offset in part by increased investment results. The net income of
Cornhill decreased by E39 million to a loss of E11 million in 2000 from income
of E28 million in 1999, due to losses in the industrial lines. Net insurance
benefits increased by E96 million, or 7.8%, to E1,326 million in 2000 from
E1,230 million in 1999 as the loss ratio deteriorated slightly to 82.7% in 2000
from 81.7% in 1999.

     Switzerland.  In Switzerland, property-casualty gross premiums written
increased by E67 million, or 4.2%, to E1,650 million in 2000 from E1,583 million
in 1999, due primarily to an increase in ART reinsurance assumed, reflecting
both increased sales of conventional insurance and alternative risk transfer
solutions, as well as an increase in direct business, in particular in the
automobile line. These increases were offset by a E44 million decrease in
premiums resulting from Joint Re, a reinsurance subsidiary which was put into
runoff in 2000.

     Net income increased by E109 million, or 77.9%, to E249 million in 2000
from E140 million in 1999, reflecting improved results in our ART business, an
increase in investment income and capital gains, and a decline in net insurance
benefits to E1,134 million in 2000 from E1,150 million in 1999, a decrease of
E16 million, or 1.4%. Overall, the loss ratio decreased to 71.3% in 2000 from
77.0% in 1999, reflecting primarily a lower, but still high level of natural
catastrophes, together with positive development in our ART business.

     Spain.  In Spain, property-casualty gross premiums written increased by E15
million, or 1.4% to E1,073 million in 2000 from E1,058 million in 1999,
primarily due to increased automobile premium rates, consistent with market
trends in general. These increases were necessitated by rising loss expenses.
The increase was partially offset by a reduction in the number of automobile
policies in force. Premiums in our personal lines were unchanged from 1999,
while premiums in our industrial lines increased moderately, primarily due to
the introduction of a new multi-risk product.

                                        42
<PAGE>

     Net income increased by E83 million to E69 million in 2000 from a loss of
E14 million in 1999, primarily as a result of improved underwriting results in
the automobile line, together with higher investment income. The loss ratio
improved to 81.1% in 2000 from 89.7% in 1999, due to the rate increases in the
automobile line, portfolio cleansing and more selective underwriting. The
expense ratio also improved, reflecting personnel reductions and synergy effects
achieved in the past year.

     Other.  Property-casualty gross premiums written in Rest of Europe
countries other than France, Italy, Switzerland, the United Kingdom and Spain
(which we refer to as Other Rest of Europe) increased by E436 million, or 13.7%,
to E3,628 million in 2000 from E3,192 million in 1999, primarily as a result of
increases in premiums in Belgium, the Netherlands, Ireland and other European
countries. Net income decreased E81 million, or 14.2%, to E488 million in 2000
from E569 million in 1999, due primarily to losses in Austria reflecting the
one-time restructuring change of the Allianz Group in Austria and increased
interest expense in the Netherlands. The loss ratio decreased to 82.0% in 2000
from 83.4% in 1999, primarily due to improved underwriting results in the
Netherlands and Ireland.

                                     NAFTA

DESCRIPTION OF BUSINESS

     Our property-casualty insurance markets in the NAFTA zone are the United
States, Canada and Mexico. As a percentage of our total property-casualty gross
premiums written worldwide, the NAFTA zone accounted for 15.6%, 15.9%, and 14.6%
in 2001, 2000 and 1999, respectively.

     United States.  The United States is the world's largest property-casualty
insurance market, based on gross premiums written in 2000. Our property-casualty
operations in the United States are organized under the umbrellas of Allianz of
America, Inc. and Allianz Insurance Co. Allianz of America comprises a group of
companies writing a wide variety of property-casualty lines of business. We have
been present in the United States since 1977, when we established Allianz
Insurance Co., a leading provider of commercial insurance to major corporate
customers, as one of our first U.S. subsidiaries. In 1991, we acquired Fireman's
Fund Insurance Company, a leading personal and commercial lines
property-casualty insurance company founded in 1864. Our operations in the
United States accounted for 90.2% of our gross written property-casualty
insurance premiums in the NAFTA zone in 2001.

     The primary property-casualty products which we offer in the United States
are generally similar to those offered by the German Property-Casualty Group in
Germany. We also write specialized commercial lines coverages, including crop
insurance and other agricultural products, umbrella and high-excess casualty
programs, marine insurance and surety insurance. In addition, we offer workers'
compensation policies that cover businesses for job-related injuries to or
disability or death of their employees, without regard to fault.

     Other.  We also conduct property-casualty operations in Canada and Mexico.
Our property-casualty products are generally similar to those we offer and sell
in the United States.

                                        43
<PAGE>

RESULTS OF OPERATIONS

     The following table shows key financial data for our NAFTA zone
property-casualty operations. Consistent with our general practice, gross
premiums written by geographic region are presented before consolidation
adjustments representing the elimination of transactions between Group companies
in different countries and different segments, and net income by geographic
region is presented before those consolidation adjustments, amortization of
goodwill and minority interests.

                      NAFTA -- PROPERTY-CASUALTY: KEY DATA

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31,
                                     ---------------------------------------------------------
                                           2001                2000                1999
                                     -----------------   -----------------   -----------------
                                      GROSS               GROSS               GROSS
                                     PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                     WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                     --------   ------   --------   ------   --------   ------
                                                          (E IN MILLIONS)
<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
United States......................   6,171       (986)   5,667      (100)    4,865      292
Canada.............................     539        (40)     516        (1)      460       10
Mexico.............................     135         (4)     137        15        88        8
Consolidated adjustments...........     (23)        --      (20)       --       (29)      --
                                      -----     ------    -----      ----     -----      ---
  Total............................   6,822     (1,030)   6,300       (86)    5,384      310
                                      =====     ======    =====      ====     =====      ===
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Gross premiums written in the NAFTA zone increased
E522 million, or 8.3%, to E6,822 million in 2001 from E6,300 million in 2000,
due primarily to increases in the United States. Gross premiums written in the
United States increased E504 million, or 8.9% to E6,171 million in 2001 from
E5,667 million in 2000. Excluding the effect of exchange rate movements (E201
million), gross premiums written increased by 5.3%, primarily reflecting growth
at Fireman's Fund. On a constant currency basis, gross premiums written for
commercial and automobile lines in the United States increased by 6.6% and
13.3%, respectively, as a result of rate increases due to the hardening market.
Premium increases also reflect growth from new business in the liability, marine
and crop lines of business. These increases were offset by a decrease in
workers' compensation at Fireman's Fund, which continued to reduce its exposure
to this line of business in 2001. On a constant currency basis, our workers'
compensation gross written premiums decreased by 19.6%.

     Net Income.  In the NAFTA zone, net income decreased sharply by E944
million to a loss of E1,030 million in 2001 from a loss of E86 million in 2000,
due primarily to decreases in the United States. Net income from
property-casualty operations in the United States decreased by E886 million, to
a loss of E986 million in 2001 from a loss of E100 million in 2000, due
primarily to the September 11, 2001 terrorist attack in the United States and
weakness in the U.S. capital markets. The loss ratio in the NAFTA zone increased
to 99.9% in 2001 from 87.9% in 2000, largely due to net claims of E642 million
at Allianz Insurance Co. and E55 million at Fireman's Fund related to the
September 11, 2001 terrorist attack.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Gross premiums written in the NAFTA zone increased
E916 million, or 17.0%, to E6,300 million in 2000 from E5,384 million in 1999,
due primarily to increases in the United States. Gross premiums written in the
United States increased by E802 million, or 16.5%, to E5,667 million in 2000
from E4,865 in 1999. Excluding the effect of exchange rate movements (E697
million), gross premiums written increased by 2.2%, primarily reflecting the
moderate

                                        44
<PAGE>

growth experienced by Fireman's Fund. On a constant currency basis, United
States gross premiums written for our commercial business increased by 7.1%.
This was the result of increased rates as prices began to harden in 2000. In our
workers' compensation line, poor results from adverse loss development,
affecting the entire market, prompted a sharp reduction in our premiums as
Fireman's Fund reduced its exposure to this line of business. On a constant
currency basis, our workers' compensation gross written premiums in the United
States decreased by 19.7%. Automobile premiums were relatively stable when
compared to 1999 with a slight growth of approximately 1.3% on a constant
currency basis. Our personal property line of business grew by approximately
6.7% in constant currency due to organic growth in affluent personal insurance
and acquisitions of books of business.

     Net income.  In the NAFTA zone, net income decreased by E396 million, or
127.7%, to a loss of E86 million in 2000 from income of E310 million in 1999,
due primarily to adverse underwriting results in the United States. Net
insurance benefits increased by E583 million, or 18.6%, to E3,721 million in
2000 from E3,138 million in 1999, largely reflecting the effects of changes in
exchange rates. The loss ratio increased to 87.9% in 2000 from 80.5% in 1999 and
was largely affected by the adverse development of the workers' compensation
line of business at Fireman's Fund, which constitutes a relatively large portion
of our commercial lines business in the NAFTA zone. In addition, our affluent
segment also experienced increased losses due to unusually high water-and
weather-related claims, in addition to the payout of one severe property loss.
Losses in other segments also contributed to the deterioration of Fireman's
Fund's claims results.

                                 REST OF WORLD

DESCRIPTION OF BUSINESS

     The primary property-casualty insurance markets in which we operate in the
Rest of World are Asia-Pacific and South America. As a percentage of our total
property-casualty gross premiums written worldwide, Rest of World accounted for
5.5%, 4.8%, and 4.2% in 2001, 2000 and 1999, respectively.

Asia-Pacific

     Australia.  Australia is the world's eleventh-largest property-casualty
market, based on gross premiums written in 2000. Through Allianz Australia
Group, we serve the markets of Australia, New Zealand and Papua New Guinea.
Allianz Australia Group's insurance operations comprise exclusively
property-casualty insurance products and services. We are the largest workers'
compensation insurer in Australia, based on gross premiums written in 2001, and
a leading provider of rehabilitation and occupational health, safety and
environment services. In Australia, we insure approximately one in five of the
nation's employees. We also operate in certain niche areas including premium
financing and pleasure craft insurance. We market our products through brokers,
which are the major distribution channels for commercial business in Australia,
as well as non-tied agents (including automobile dealers, accountants and banks)
and directly to the customer. Allianz Australia Group had gross premiums written
of E1,048 million in 2001.

     Taiwan.  We conduct our property-casualty operations in Taiwan through our
subsidiary Allianz President General. Allianz President General, together with
Allianz President Life Insurance, is part of the joint venture we established in
June 1999 with Uni-President Group, which is one of Taiwan's leading business
groups with diversified interests ranging from banking to commercial
manufacturing. The company offers a wide range of property-casualty insurance
products such as automobile, engineering and construction insurance through
agents, brokers, the Internet and approximately 2,500 7-Eleven stores throughout
Taiwan. Allianz President General generated property-casualty insurance gross
premiums written of E89 million in 2001.

                                        45
<PAGE>

     Malaysia.  In October 2001, we increased to over 90% our ownership of the
issued capital of Malaysia British Assurance Berhard (MBA), the second-largest
property-casualty insurer in Malaysia. MBA generated gross written premiums of
E126 million for the year 2001, E48 million of which has been consolidated in
our financial results.

     Other.  We also market property-casualty insurance products and services
through our subsidiaries in Japan, Hong Kong, Indonesia, Laos, Singapore and
Vietnam, and through signed joint venture agreements with Bajaj Auto, a large
manufacturing company in India and the CP Group, a large conglomerate in
Thailand.

South America

     Brazil.  We conduct our property-casualty operations in Brazil through our
subsidiary AGF Seguros. With gross premiums written of E355 million in 2001, AGF
Seguros is our largest property-casualty operation in South America and the
sixth-largest property-casualty insurance provider in Brazil. The company writes
primarily automobile insurance, together with fire, transportation and other
lines. Distribution is primarily through brokers.

     Colombia.  In Colombia, we operate through our subsidiary Colseguros. Gross
premiums written in Colombia were E267 million in 2001. We are the largest
property-casualty insurance provider in Colombia and are particularly strong in
the industrial risks business. Distribution is primarily through agents. Brokers
also play an important role in the commercial lines business.

     Other.  In addition to the markets described above, we sell
property-casualty products in Argentina, Venezuela and Chile.

RESULTS OF OPERATIONS

     The following table shows key financial data for our Rest of World
property-casualty operations. Consistent with our general practice, gross
premiums written by geographic region are presented before consolidation
adjustments representing the elimination of transactions between Group companies
in different countries and different segments, and net income by geographic
region is presented before those consolidation adjustments, amortization of
goodwill and minority interests.

                  REST OF WORLD -- PROPERTY-CASUALTY: KEY DATA

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
Asia-Pacific............................   1,344       11        784       31        715      (127)
South America...........................     962       29        891      (34)       697        26
Other...................................      95       (1)       211        8        147         3
                                           -----       --      -----      ---      -----      ----
  Total.................................   2,401       39      1,886        5      1,559       (98)
                                           =====       ==      =====      ===      =====      ====
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Gross premiums written in Rest of World increased
by E515 million, or 27.3%, to E2,401 million in 2001 from E1,886 million in
2000. The increase was primarily attributable to our Australian operations,
which acquired a significant block of business in 2001.

     Net Income.  In Rest of World, net income increased by E34 million, to E39
million in 2001 from E5 million in 2000, due primarily to increased income in
South America from our Brazilian

                                        46
<PAGE>

and Colombian operations. These increases were offset in part by decreased
income in Asia-Pacific. The loss ratio decreased to 72.8% in 2001 from 75.5% in
2000, reflecting more favorable underwriting results in South America, partially
offset by deteriorating underwriting results in our Australian operations in
Asia-Pacific.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Gross premiums written in Rest of World increased
E327 million, or 21.0%, to E1,886 million in 2000 from E1,559 million in 1999.
The increase was primarily attributable to the first-time consolidation of our
acquisition at the end of 1999 of Columbiana De Inversion in Colombia, which
increased gross written premiums by E165 million.

     Net Income.  In Rest of World, net income increased by E103 million to E5
million in 2000 from a loss of E98 million in 1999, due primarily to our
operations in Australia. Net income from our Australian operations increased by
E148 million to E35 million in 2000 from a loss of E113 million in 1999,
reflecting primarily growth in gross premiums written and improved underwriting
results.

                                SPECIALTY LINES

DESCRIPTION OF BUSINESS

     In addition to our multi-local approach to our global insurance business,
under which our non-German insurance businesses are locally managed, generally
through regional flagship subsidiaries, we manage our specialty lines of
credit/trade insurance and travel/assistance insurance on a worldwide basis.
Each of our specialty lines is a global leader, including credit insurance
through our subsidiaries EULER and HERMES, which together make us the largest
credit insurer in the world, and travel/assistance insurance, where we are also
one of the world's largest insurers.

     Credit Insurance.  Through our French subsidiary, EULER, and our German
subsidiary, HERMES, we are the largest credit insurer in the world, with an
estimated world market share of 36.0%, based on gross premiums written in 2001.
Through EULER and HERMES, we are either the largest or the second-largest credit
insurer in 17 of the 29 markets in which we operate. Our credit operations
generated gross premiums written of E1,589 million in 2001, E1,611 million in
2000 and E1,534 million in 1999.

     EULER is the global leader in credit insurance in terms of gross premiums
written and one of the European market leaders in factoring. EULER's credit
insurance operations are rated AA+ by Standard & Poor's, the highest rating
given to a credit insurer.

     HERMES is the leading credit insurer in Germany, with an estimated domestic
market share of approximately 41.6% at December 31, 2001, based on gross
premiums written. HERMES cedes a large portion of its gross premiums written to
reinsurers, primarily Munich Re. The percentage of gross premiums written ceded
in reinsurance was 67.4% in 2001, 69.4% in 2000 and 69.0% in 1999, of which
22.9%, 20.3% and 15.8%, respectively, was ceded to Allianz AG and 32.2%, 32.2%
and 34.1%, respectively, was ceded to Munich Re.

     EULER and HERMES provide customers around the world with a wide range of
credit insurance and related products and services, including commercial credit
insurance and reinsurance. In addition, EULER offers factoring services, while
HERMES offers guarantee insurance, fidelity insurance and consumer credit
insurance and participates in, and derives fee income from, the German federal
government's export credit guarantee program.

                                        47
<PAGE>

     In March 2002, the operations of EULER and HERMES, which complement each
other in terms of product mix and geographical penetration, were consolidated
into a new corporate entity called EULER & HERMES S.A., further strengthening
our presence in the marketplace.

     Travel and Assistance Insurance.  We are one of the world's largest
providers of travel and assistance insurance. Our travel and assistance
insurance operations generated gross premiums written of E732 million in 2001,
E656 million in 2000 and E581 million in 1999. We believe that internal growth
and recent acquisitions in our travel and assistance business will enable us to
strengthen our leading market position and achieve enhanced efficiencies in this
dynamic market.

     With a view toward establishing long-term partnerships, our travel and
assistance business provides business-to-business services to clients in the
travel, insurance, automobile and banking industries. Our travel and assistance
business offers its partners a wide range of services in the areas of mobility
and travel (travel insurance and assistance, vehicle assistance), home
assistance (assistance in the event of damage to property, for example),
person-related assistance (babysitting services, hotlines, unemployment
services, assistance to dependent or elderly persons, and other services) as
well as customer services (customer relations services, hotlines, and legal and
financial information by telephone).

     We provide travel and assistance insurance primarily through the Mondial
Assistance Group (previously called the Elmonda Group), which was founded in
1999 and is owned equally by our subsidiaries AGF and RAS. Mondial Assistance is
present in 26 countries, through branch offices and subsidiaries, and works with
a network of partners worldwide. All of the companies of Mondial Assistance can
call upon the services and support of Mondial Assistance's headquarters in
Zurich and Paris in the areas of travel and assistance products, corporate
marketing and sales, finance, audit and consulting, and information systems.

RESULTS OF OPERATIONS

     The following table shows key financial data for our specialty insurance
operations. Consistent with our general practice, gross premiums written by
geographic region are presented before consolidation adjustments representing
the elimination of transactions between Group companies in different countries
and different segments, and net income by geographic region is presented before
those consolidation adjustments, amortization of goodwill and minority
interests.

                         SPECIALTY INSURANCE: KEY DATA

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
Credit..................................   1,589       91      1,611      203      1,534      138
Travel and assistance...................     732        3        656       24        581       23
                                           -----       --      -----      ---      -----      ---
                                           2,321       94      2,267      227      2,115      161
                                           =====       ==      =====      ===      =====      ===
</Table>

YEAR ENDED DECEMBER 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Gross premiums written in our specialty lines
increased E54 million, or 2.4%, to E2,321 million in 2001 from E2,267 million in
2000, reflecting an increase in the travel and assistance lines, offset in part
by a decrease in the credit lines. The increase in travel and assistance
premiums is attributable to internal growth, together with targeted
acquisitions. The decrease in the credit lines was due to a change in the method
of reporting service fees for

                                        48
<PAGE>

EULER. Prior to 2001, these fees were included as part of gross premiums
written. Beginning in 2001, these fees, which amounted to E144 million and E122
million in 2001 and 2000, respectively, were excluded from gross premiums
written consistent with the treatment of such fees by HERMES. Excluding the
impact of this change, gross premiums written would have increased by E122
million, or 7.6%, in 2001 compared to 2000, primarily due to internal growth.

     Net Income.  In our specialty lines, net income decreased by E133 million,
or 58.6%, to E94 million in 2001 from E227 million in 2000, due primarily to
reduced net income in the credit line, resulting from an increased number of
large claims as a result of unfavorable economic conditions. Net income in our
travel and assistance lines also decreased due to lower investment results and
higher expenses for assistance services. The loss ratio increased to 66.5% in
2001 from 53.1% in 2000, largely due to the increased claims in the credit line.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Gross premiums written in our specialty lines
increased E152 million, or 7.2%, to E2,267 million in 2000 from E2,115 million
in 1999, reflecting increases in both the credit and the travel and assistance
lines. Increased premium in the credit lines resulted primarily from internal
growth. In the travel and assistance lines, E9 million of the increase was
attributable to the first time consolidation of the results of World Access in
2000, and the remainder was attributable to internal growth.

     Net Income.  In our specialty lines, net income increased by E66 million,
or 41.0%, to E227 million in 2000 from E161 million in 1999, due primarily to
increased income in our credit business, resulting from improved underwriting
results. The loss ratio decreased to 53.1% in 2000 from 55.9% in 1999 and was
largely affected by improvement in the quality of risk selection in our credit
lines.

                        LIFE/HEALTH INSURANCE OPERATIONS

     The following table sets forth certain financial information for our
life/health insurance operations for the years indicated:

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
                                                              -------   -------   -------
                                                                    (E IN MILLIONS)
<S>                                                           <C>       <C>       <C>
Gross premiums written(1)...................................   20,145    20,239    18,473
                                                              -------   -------   -------
Premiums earned (net)(2)....................................   18,317    18,378    16,399
Interest and similar income.................................   10,765    10,152     9,889
Income from affiliated enterprises joint ventures and
  associated enterprises....................................      525       693       625
Other income from investments...............................    3,562     6,667     4,702
Trading income..............................................     (117)      (49)       --
Fee and commission income, and income from service
  activities................................................      268       271       159
Other income................................................      866     1,139       949
                                                              -------   -------   -------
  Total income..............................................   34,186    37,251    32,723
                                                              -------   -------   -------
</Table>

                                        49
<PAGE>

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
                                                              -------   -------   -------
                                                                    (E IN MILLIONS)
<S>                                                           <C>       <C>       <C>
Insurance benefits (net)....................................  (21,979)  (26,354)  (24,376)
Interest and similar expenses...............................     (492)     (148)     (119)
Other expenses for investments..............................   (5,537)   (3,004)   (1,876)
Loan loss allowance.........................................       (4)       --        --
Acquisition costs and administrative expenses...............   (4,259)   (3,927)   (3,119)
Amortization of goodwill....................................     (146)     (137)     (104)
Other expenses..............................................   (1,357)   (2,055)   (1,899)
                                                              -------   -------   -------
  Total expenses............................................  (33,774)  (35,625)  (31,493)
                                                              -------   -------   -------
Earnings from ordinary activities before taxation...........      412     1,626     1,230
Taxes.......................................................      (99)     (343)     (347)
Minority interests in earnings..............................      (84)     (658)     (491)
                                                              -------   -------   -------
Net income..................................................      229       625       392
                                                              -------   -------   -------
Special income effects......................................       --        16       (82)
                                                              -------   -------   -------
Adjusted net income.........................................      229       641       310
                                                              =======   =======   =======
</Table>

---------------

(1) Under IAS reporting standards, gross written premiums include fee income
    generated from unit-linked and other investment-oriented products, but do
    not include the full amount of statutory premiums written on these products.
    On a statutory premium basis, total premiums written were E33,687 million,
    E31,025 million and E25,247 million in 2001, 2000 and 1999, respectively.

(2) Net of reinsurance ceded of E1,169 million, E1,139 million and E1,169
    million, in 2001, 2000 and 1999, respectively.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Gross premiums written of our life/health
operations in 2001 decreased by E94 million, to E20,145 million in 2001 from
E20,239 million in 2000. Disregarding the effects of exchange rate movements,
which reduced 2001 life/health gross premiums written by E85 million, gross
premiums written would have decreased by E9 million. A large portion of the
decrease is explained by the sale of a large group policy in France in 2000,
which increased gross premiums written in that year by approximately E800
million. Excluding the impact of this sale, together with the impact of foreign
exchange movements, gross premiums written would have increased by E791 million,
or 3.9%, in 2001, due to increases in Rest of Europe and Rest of World. On a
statutory premium basis, gross premiums written increased by E2,662 million, or
8.6%, to E33,687 million in 2001 from E31,025 million in 2000, reflecting the
general trend towards investment-oriented insurance products in Rest of Europe
and the United States.

     Premiums Earned (Net).  On a Group-wide basis, life/health net premiums
earned in 2001 and 2000 reflected premiums ceded to reinsurers of E1,169 million
and E1,139 million, respectively, resulting in overall retention levels of
approximately 94.0% in 2001 and 94.2% in 2000. Net premiums decreased slightly
by E61 million to E18,317 million in 2001 from E18,378 million in 2000,
consistent with the slight decrease in gross premiums written in this period.

     Insurance Benefits (Net).  Net insurance benefits for our worldwide
life/health business consist of benefits paid, changes in aggregate policy
reserves, and expenses of premium refunds to policyholders. Net life/health
insurance benefits decreased by E4,375 million, or 16.6%, to

                                        50
<PAGE>

E21,979 million in 2001 from E26,354 million in 2000, primarily as a result of
reduced income from investments in 2001. The reduction in income from
investments in turn resulted in reduced policyholder participation benefits,
which are included in benefits paid and changes in aggregate policy reserves.

     Acquisition Costs and Administrative Expenses.  Acquisition costs and
administrative expenses which consist primarily of payments and changes in
deferred acquisition costs, administrative expenses, and net underwriting costs,
increased by E332 million, or 8.5%, to E4,259 million in 2001 from E3,927
million in 2000, due primarily to increased underwriting costs resulting from
the continued expansion of our investment-oriented products. Under IAS, these
costs are expensed as incurred, even though significantly less than the amount
of statutory premium is recognized as revenue.

     Net Income.  Net income from life/health insurance decreased by E396
million, or 63.4%, to E229 million in 2001 from E625 million in 2000, primarily
as a result of reduced income from investments, particularly in Germany and Rest
of Europe. See "-- Asset Management Operations -- Investment Income" for a
discussion of investment results for life/health insurance investments.

     On a Group-wide basis, amortization of goodwill in our life/health lines
increased to E146 million in 2001 from E137 million in 2000, while minority
interest decreased to E84 million in 2001 from E658 million in 2000. The
decrease in minority interests resulted primarily from decreased earnings.

     The consolidated results of our life/health operations in 2000 included the
effects of certain special adjustments to income taxes. There were no special
adjustments to our consolidated results of operations in 2001. Excluding the
impact of these items in 2000, net income would have decreased by E412 million,
or 64.3%, to E229 million in 2001 from E641 million in 2000.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Gross premiums written of our life/health
operations in 2000 increased by E1,766 million, or 9.6%, to E20,239 million in
2000 from E18,473 million in 1999. Disregarding the effects of exchange rate
movements, which increased 2000 life/health gross premiums written by E181
million, gross premiums written increased by E1,585 million, or 8.6%, largely as
a result of premium growth in Rest of Europe and Rest of World.

     Net Premiums.  On a Group-wide basis, net life/health premiums written in
2000 and 1999 reflected premiums ceded to reinsurers of E1,139 million and
E1,169 million, respectively, resulting in overall retention levels of
approximately 94.2% in 2000 and 93.3% in 1999. Net premiums increased by E1,979
million, or 12.1%, to E18,378 million in 2000 from E16,399 million in 1999,
which was slightly greater than the 9.6% increase in gross premiums written in
this period.

     Insurance Benefits (Net).  Net insurance benefits for our worldwide
life/health business consist of benefits paid, changes in aggregate policy
reserves, and expenses of premium refunds to policyholders. Net life/health
policy benefits increased by E1,978 million, or 8.1%, to E26,354 million in 2000
from E24,376 million in 1999, reflecting primarily increased income from
investments in 2000. The increase in income from investments resulted in turn in
increased policyholder participation benefits, which are included in benefits
paid and changes in aggregate policy reserves.

     Acquisition Costs and Administrative Expenses.  Acquisition costs and
administrative expenses, which consist primarily of payments and changes in
deferred acquisition costs, administrative expenses, and net underwriting costs
increased by E808 million, or 25.9%, to E3,927 million in 2000 from E3,119
million in 1999 due primarily to increased underwriting costs as a result of the
continued expansion of our investment-oriented products. Under IAS, these

                                        51
<PAGE>

costs are expensed as incurred, even though significantly less than the amount
of statutory premium is recognized as revenue.

     Net Income.  Net income from life/health insurance increased by E233
million, or 59.4%, to E625 million in 2000 from E392 million in 1999, due to
increases in Germany and Rest of Europe, primarily as a result of increased
income from investments, offset in part by a decrease in Rest of World,
primarily due to decreases in South Korea, where we incurred restructuring and
portfolio optimization expenses in 2000. See "Asset Management
Operations -- Investment Income" for a discussion of investment results for
life/health insurance investments.

     On a Group-wide basis, amortization of goodwill and minority interests in
life/health lines increased 33.6%, to E795 million in 2000 from E595 million in
1999. Of such amount, amortization of goodwill increased to E137 million in 2000
from E104 million in 1999, while minority interest increased to E658 million in
2000 from E491 million in 1999.

     Our consolidated results of operations include the effects of certain
special adjustments to income taxes, including an expense of E16 million in 2000
and a benefit of E82 million in 1999. These adjustments to income taxes included
the release of deferred taxes, primarily in Germany, resulting from a decrease
in statutory tax rates. In 2000, the statutory tax rate in Germany was reduced
from 40% to 25%, effective for 2001. Under IAS, deferred tax assets and
liabilities were revalued in 2000, leading to non-recurring net income effects.
In 1999, statutory tax rates in Germany were also reduced, but to a lesser
extent. Excluding the impact of these items, net income would have increased by
E331 million, or 106.8%, to E641 million in 2000 from E310 million in 1999. The
effect of these special adjustments on our geographic segment results is further
discussed where applicable under "-- Discussion of Life/Health Operations by
Geographic Region" below.

                                        52
<PAGE>

           DISCUSSION OF LIFE/HEALTH OPERATIONS BY GEOGRAPHIC REGION

     The following table sets forth our gross life/health premiums written and
net income by geographic region for the years indicated. Consistent with our
general practice, gross premiums written by geographic region are presented
before consolidation adjustments representing the elimination of transactions
between Group companies in different geographic regions and different segments,
and net income by geographic region is presented after tax and before those
consolidation adjustments, amortization of goodwill and minority interests.

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
Germany
  Life..................................    8,969       65      9,094      514      8,916      234
  Health................................    2,691       48      2,587       56      2,513       58
  Consolidation adjustments.............       --       14         --       13         --        1
                                           ------     ----     ------    -----     ------     ----
     Total..............................   11,660      127     11,681      583     11,429      293
Rest of Europe..........................    5,486      381      5,751      910      4,930      665
Rest of World...........................    3,010      (49)     2,818      (71)     2,047       31
Consolidation adjustments...............      (11)      --        (11)      (2)        67       (2)
                                           ------     ----     ------    -----     ------     ----
     Subtotal...........................   20,145      459     20,239    1,420     18,473      987
Amortization of goodwill................       --     (146)        --     (137)        --     (104)
Minority interests......................       --      (84)        --     (658)        --     (491)
                                           ------     ----     ------    -----     ------     ----
     Total..............................   20,145      229     20,239      625     18,473      392
                                           ======     ====     ======    =====     ======     ====
</Table>

     A significant portion of our life/health operations in Rest of Europe and
Rest of World consists of sales of unit-linked products. Only the fee income
generated from the sale of such products is included in gross premiums written
under IAS.

                                    GERMANY

DESCRIPTION OF BUSINESS

     We were the largest provider of life insurance and the third-largest
provider of health insurance in Germany, with estimated market shares of 15.2%
and 12.5%, respectively, as measured by gross premiums written in 2001. Germany
is by far our most important market for life/health insurance. As a percentage
of our total life/health gross premiums written worldwide, Germany accounted for
57.8% in 2001, 57.7% in 2000 and 61.6% in 1999. On a statutory premium basis,
Germany accounted for 34.6% of our total life/health gross premiums written in
2001.

     We conduct our life/health insurance operations in Germany through:

     - Allianz Lebensversicherungs-AG (or Allianz Leben), the main operating
       company for our German life insurance operations. At December 31, 2001,
       we owned 50.5% of Allianz Leben. In January 2002, pursuant to an
       agreement announced in April 2001, we purchased an additional 40.6% of
       Allianz Leben's outstanding shares from Munich Re, thereby increasing our
       shareholding in Allianz Leben to 91.1%, with the balance of the
       outstanding shares in Allianz Leben publicly traded in Germany. See
       "Major Shareholders and Related Party Transactions";

                                        53
<PAGE>

     - Deutsche Lebensversicherungs-AG, a wholly owned subsidiary of Allianz
       Leben, which is our vehicle for selling standardized, low-cost term
       insurance and unit-linked annuities in Germany; and

     - Vereinte Lebensversicherung AG (or Vereinte Leben), which sells Allianz
       Leben products under its own brand name.

     - Vereinte Krankenversicherung AG (or Vereinte Health), our health
       insurance subsidiary.

     Our life/health insurance operations in Germany employed 10,366 people at
the end of 2001, 9,995 people at the end of 2000 and 10,279 people at the end of
1999.

DISTRIBUTION

     Our distribution channels for our life/health products in Germany are
similar to those used for our property-casualty products. Many of our products
in Germany are distributed through common or overlapping distribution systems.
In our German life/health insurance businesses, we distribute our products
primarily through a network of self-employed, full-time tied agents. For our
individual life, health and mutual fund products, the network of full-time tied
agents is our most important distribution channel. Brokers are also an important
channel for the distribution of Allianz Leben's and Vereinte Health's group life
and health products. The bank distribution channel is utilized primarily in our
life insurance business. We distribute our life insurance products through
Dresdner Bank, and under contractual arrangements with Volks-und
Raiffeisenbanken, and a network of cooperative banks in southern Germany, as
well as through IKB, a German industrial credit bank. In connection with our
acquisition of Dresdner Bank on July 23, 2001, we expect to place approximately
1,000 insurance specialists to sell both life insurance products and
property-casualty insurance products at Dresdner Bank branches throughout
Germany, of whom more than 700 had been placed at December 31, 2001. We
terminated our previous distribution agreements with HypoVereinsbank upon our
acquisition of Dresdner Bank. See "Major Shareholders and Related Party
Transactions."

     The following sets forth certain key data concerning our distribution
systems as they relate to life and health insurance at and for the year ended
December 31, 2001:

<Table>
<Caption>
                                                                              % OF 2001
                                                                         --------------------
                                                                           LIFE       HEALTH
                                                            NUMBER(1)    PREMIUMS    PREMIUMS
                                                            ---------    --------    --------
<S>                                                         <C>          <C>         <C>
Full-time tied agents.....................................   11,970        61.0        82.1
Part-time tied agents.....................................   43,201         6.0         6.6
Brokers...................................................    7,878         9.5         6.3
Banks.....................................................    2,541(2)     17.7          --
Other(3)..................................................       --         5.8         5.0
                                                                          -----       -----
  Total...................................................                100.0       100.0
                                                                          =====       =====
</Table>

---------------

(1) Represents the total number in Germany for all Allianz Group segments.

(2) Represents the number of German branches at Dresdner Bank, (803), and at two
    unaffiliated banks, Volks- und Raiffeisenbanken (1,730) and Industrie
    Kredit-Bank (8), with which we have distribution agreements covering our
    property-casualty and life/health insurance products.

(3) Includes all Allianz Group employees in Germany, who are able to sell
    Allianz policies.

                                        54
<PAGE>

LIFE INSURANCE

     Life insurance is the most popular form of savings for old age in Germany.
With the demographic shift toward an aging German population, we see increasing
opportunities for our life insurance business as private sector products are
used to supplement decreasing levels of state provisions. In addition, the
demand for insurance against financial loss resulting from occupational
disability has grown rapidly in Germany in recent years as the German statutory
social insurance system has provided declining levels of support. In 2001,
approximately 60% of our new policies included supplementary occupational
disability insurance products.

     On January 1, 2002, a new law (the Altersvermogensgesetz) took effect,
providing incentives for private retirement plans and company pension funds
beginning in 2002. The new law, which was enacted by the German legislature in
May 2001, provides for direct state subsidies or, in certain circumstances,
tax-free premium payments, and it requires that life-long benefit payments be
guaranteed. The benefit payments will be subject to income tax. The German life
insurance industry is expected to be the main beneficiary of the new law. In
July 2001, we started selling through Allianz Leben and Vereinte Leben specially
designed products that satisfy the legal requirements of the
Altersvermogensgesetz, primarily that the sum of premium payments be fixed at
the beginning of the benefit payment period.

     In the life insurance area, our policy surrender rates were 3.6% in 2001,
3.6% in 2000 and 3.4% in 1999, compared to German industry-wide rates of 4.6%,
4.5% and 4.4%, respectively. We believe that this is in large part due to our
widely recognized and well respected brand name, our position as a market leader
in most German insurance lines, our reputation for superior customer service and
our financial strength. We also pay close attention to promoting follow-on
business, which involves persuading policyholders to reinvest funds. This
typically takes the form of using the benefits paid out on an endowment policy
as the single premium for an immediate annuity that ensures a guaranteed income
for the rest of the policyholder's life, or investing in a fund managed by our
asset management subsidiary ADAM. See "-- Asset Management Operations." The
proportion of funds paid by our German life insurance operations that were
reinvested in other Allianz products amounted to 14% in 2001, 12% in 2000 and
15% in 1999.

PRODUCTS

     Our German life insurance companies offer a comprehensive and unified range
of life insurance and life insurance-related products on both an individual and
group basis. The main classes of coverage offered are: endowment life insurance,
annuity policies, term life insurance, unit-linked annuities, and other life
insurance-related forms of cover, which are provided as riders to other policies
and on a stand-alone basis. Allianz Leben also assumes reinsurance of each of
these individual and group life insurance products.

     Endowment life.  An endowment policy is a form of life insurance under
which a capital benefit is paid out either on the policyholder's death or upon
maturity of the policy. Our endowment life products for the German market
include policies both with unchanging levels of premiums and guaranteed benefits
and with premiums and guaranteed benefits that rise automatically in accordance
with various indexes of earnings levels in Germany.

     Amounts payable at maturity of an endowment policy include a "guaranteed
benefit," an amount established by reference to a legally mandated maximum
guaranteed technical interest rate on actuarial reserves. This interest rate is
currently 3.25% per year for policies issued on or after July 1, 2000, having
declined from 4% per year. The future profit participation credited to
policyholders is not guaranteed. The total amount payable at the maturity of a
policy, which is calculated based on the total expected profit participation, is
the principal basis of competition between German life insurance providers.
Under current German law, the policyholder must be credited with at least 90% of
each year's statutory profits. In the current competitive environment, however,
the rate of profit participation exceeds this statutory minimum and is subject
to periodic

                                        55
<PAGE>

adjustment by insurers in light of competitive conditions prevailing from time
to time. In conformity with prevailing market conditions, we currently credit
94% to 95% of each year's profits to policyholders.

     Annuity policies.  An annuity policy is a form of life insurance product
under which the insured receives a series of periodic payments over the course
of his or her remaining life. Annuities may either be deferred, meaning that the
insured starts receiving payments only after the expiration of a specified term,
or immediate, in which case the payment stream starts immediately. Benefits
under annuity policies, like those under endowment policies, include both
guaranteed benefit and profit participation elements.

     Term life.  In addition to endowment and annuity policies, we also provide
a small amount of term life insurance, primarily standardized low-cost term life
insurance product aimed at individual customers.

     Other life-insurance related products.  We also provide a wide range of
other life insurance-related products as riders to individual and group
customers.

RESULTS OF OPERATIONS

     The following table sets forth the components of life insurance gross
premiums written in Germany for the years 2001, 2000 and 1999:

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31,
                                    ------------------------------------------------------------------------------------------
                                                2001                           2000                           1999
                                    ----------------------------   ----------------------------   ----------------------------
                                      NEW      RECURRING             NEW      RECURRING             NEW      RECURRING
                                    BUSINESS   PREMIUMS    TOTAL   BUSINESS   PREMIUMS    TOTAL   BUSINESS   PREMIUMS    TOTAL
                                    --------   ---------   -----   --------   ---------   -----   --------   ---------   -----
                                                                         (E IN MILLIONS)
<S>                                 <C>        <C>         <C>     <C>        <C>         <C>     <C>        <C>         <C>
Individual policies
  Endowment.......................     208       4,501     4,709      378       4,524     4,902      848       4,218     5,066
  Annuities.......................   1,176       1,320     2,496    1,145       1,363     2,508    1,298         970     2,268
  Term............................      16          73        89       14          68        82       12          64        76
                                     -----       -----     -----    -----       -----     -----    -----       -----     -----
    Subtotal......................   1,400       5,894     7,294    1,537       5,955     7,492    2,158       5,252     7,410
Group policies....................     617       1,058     1,675      591       1,011     1,602      687         819     1,506
                                     -----       -----     -----    -----       -----     -----    -----       -----     -----
    Total.........................   2,017       6,952     8,969    2,129       6,965     9,094    2,845       6,071     8,916
                                     =====       =====     =====    =====       =====     =====    =====       =====     =====
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  In Germany, life insurance premiums decreased E125
million, or 1.4%, to E8,969 million in 2001 from E9,094 million in 2000, due
primarily to a decrease in premiums on individual policies.

     Individual life insurance policies, which include endowment, term and
annuity policies, accounted for 81.3% of our gross life insurance premiums
written in Germany in 2001. Gross premiums written on individual life insurance
decreased by 2.6%, to E7,294 million in 2001 from E7,492 million in 2000, due
primarily to a large number of endowment policies either maturing or reaching
the end of their premium payment period. New individual business decreased to
E1,400 million in 2001 from E1,537 million in 2000. The decrease in new
individual business was attributable primarily to a shift in the focus of our
full-time tied agent distribution channel toward the sale of new
Altersvermogensgesetz policies, most of which, although sold in 2001, have
premium payments which begin on January 1, 2002.

     Group life insurance gross premiums written increased E73 million, or 4.6%,
to E1,675 million in 2001 from E1,602 in 2000, due to the growth of new
business.

                                        56
<PAGE>

     Net Income.  In Germany, net income from life insurance operations
decreased by E449 million, or 87.4%, to E65 million in 2001 from E514 million in
2000. Excluding the impact of a release of deferred taxes in 2000 resulting from
a change in German statutory tax rates, net income would have decreased by E402
million, or 86.1%, to E65 million in 2001 from E467 million in 2000, due
primarily to reduced investment results in 2001, attributable to weakness in the
capital markets.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  In Germany, which represented 57.6% of our total
life/health insurance gross premiums written in 2000, life premiums increased
E178 million, or 2.0%, to E9,094 million in 2000, from E8,916 million in 1999,
due primarily to increases in annuity and group policy premiums, reflecting the
increased popularity of those products as a supplement to retirement coverage
offered by the German state pension scheme, as well as recurring premiums from
the significant amount of new business written in 1999 resulting from the
proposed tax legislation discussed below.

     Individual life insurance policies, which include endowment, term and
annuity policies, accounted for 82.4% of our gross life insurance premiums in
Germany in 2000. Gross premiums written on individual life insurance increased
by 1.1% over 1999 levels to E7,492 million in 2000, due primarily to continued
growth in annuity policies. New individual business decreased by E621 million,
or 28.8%, to E1,537 million in 2000 from E2,158 million in 1999. This decrease
is in part the result of the significant level of 1999 premiums, due to proposed
tax legislation which would have decreased the potential tax benefits of future
insurance purchases. In addition, new business sales of both endowment policies
and annuities decreased in 2000 as customers waited to see how insurance
products would be impacted by current government discussions on potential tax
benefits to private retirement plans. Recurring premiums for both endowment
policies and annuities increased due to the significant business written in 1999
and prior years.

     Gross premiums written on endowment policies, which accounted for 65.4% of
total individual premiums in 2000, decreased by E164 million, or 3.2%, to E4,902
million in 2000 from E5,066 million in 1999. Recurring premium income on
endowment policies grew by E306 million, or 7.3%, while new premium income
decreased by E470 million, or 55.4% due to the significant business written in
1999 and some customers' "wait-and-see" approach in 2000 as discussed above.

     Annuity gross premiums written increased by E240 million, or 10.6%, to
E2,508 million in 2000 from E2,268 million in 1999, due mainly to reinvestment
in annuity products as older endowment policies matured. The increase was also
driven by growth in recurring premiums, which increased by E393 million, or
40.5%, to E1,363 million in 2000 from E970 million in 1999, reflecting the
significant business written in 1999. New business declined by E153 million, or
11.8%, to E1,145 million in 2000 from E1,298 million in 1999, similar to the
trend in our endowment line.

     Gross premiums written on term policies increased by E6 million, or 7.9%,
to E82 million in 2000 from E76 million in 1999. New business rose slightly in
2000, while recurring premiums rose by E4 million, or 6.3%, over 1999 levels.

     Group life insurance gross premiums written increased by E96 million, or
6.4%, to E1,602 million in 2000 from E1,506 million in 1999. Recurring premiums
increased by E192 million, or 23.4%, to E1,011 million in 2000 from E819 million
in 1999 due to the significant business written in 1999 and prior years. New
business decreased by E96 million, or 14.0%, to E591 million in 2000 from E687
million in 1999 due to customers awaiting the impact of the proposed legislation
discussed above, which was offset in part by one large group contract written in
2000.

     Net Income.  In Germany, net income from life insurance operations
increased by E280 million, or 119.7%, to E514 million in 2000 from E234 million
in 1999. This was due primarily to increased investment income, a higher
shareholder participation rate and the release of deferred taxes pursuant to a
decrease in statutory tax rates.

                                        57
<PAGE>

HEALTH INSURANCE

     Vereinte Health is the third-largest private health insurer in Germany,
with approximately 2.3 million customers and an estimated market share of
approximately 12.5% in 2001. Vereinte Health has strong ties to the German
medical profession, and with approximately E600 million in gross premiums
written from physicians in 2001, it is the largest health insurer for physicians
in Germany. Vereinte Health is also a market leader in providing group health
insurance for corporations and associations.

     The German statutory healthcare system operates as a mandatory system for
persons with incomes below a specified threshold and allows persons with incomes
above the threshold to voluntarily opt out of the statutory system and use the
private healthcare system. Currently, the German healthcare system is dominated
by the German statutory schemes, which together cover approximately 90% of all
insureds, while private providers of health insurance, including Vereinte
Health, compete for the remainder.

PRODUCTS

     Vereinte Health provides a wide range of health insurance products,
including full private healthcare coverage for the self-employed, salaried
employees and civil servants; supplementary insurance for people insured under
statutory health insurance plans; daily sickness allowance for the self-employed
and salaried employees; hospital daily allowance; compulsory long-term care
insurance and supplementary care insurance; and foreign travel medical expenses
insurance.

     Like our endowment and other life insurance products, our health insurance
products include mandatory profit-sharing features, whereby we return 80% of the
statutory profit on our health business, after the payment of claims and claims
costs, the establishment of reserves and payment of taxes, to policyholders
annually, generally in the form of premium subsidies or rebates. Since the
beginning of 2000, we have also been required by law to return 90% of surplus
from capital investments to our policyholders. As with our endowment policies,
the actual level of profit sharing we provide our policyholders is, for
competitive reasons, in excess of the statutory minimum and has been over 90% of
statutory profits in recent years.

RESULTS OF OPERATIONS

     The following table sets forth the components of health insurance gross
premiums written in Germany for the years 2001, 2000 and 1999:

<Table>
<Caption>
                                                                   YEAR ENDED
                                                                  DECEMBER 31,
                                                              ---------------------
                                                              2001    2000    1999
                                                              -----   -----   -----
                                                                 (E IN MILLIONS)
<S>                                                           <C>     <C>     <C>
Individual policies.........................................  2,054   1,979   1,927
Group policies..............................................    637     608     586
                                                              -----   -----   -----
  Total.....................................................  2,691   2,587   2,513
                                                              =====   =====   =====
Medical expense insurance...................................  1,853   1,754   1,698
Other personal supplementary insurance......................    370     358     345
Compulsory long-term care insurance.........................    230     238     236
Other health insurance......................................    238     237     234
                                                              -----   -----   -----
  Total.....................................................  2,691   2,587   2,513
                                                              =====   =====   =====
</Table>

                                        58
<PAGE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Health insurance premiums in Germany increased
E104 million, or 4.1%, to E2,691 million in 2001 from E2,587 million in 2000.
This increase was due primarily to increases in new business, especially in
medical and other personal supplementary lines, as well as increased rates and a
decrease in cancellations from the previous year.

     Gross premiums written on medical expense insurance, which accounted for
68.9% of health insurance premiums in Germany in 2001, increased by E99 million,
or 5.6% to E1,853 million in 2001 from E1,754 million in 2000. Gross premiums
written on other personal supplementary insurance increased by E12 million, or
3.4% to E370 million in 2001 from E358 million in 2000. Both increases were
attributable to a growth in new business and a decrease in cancellations.
Compulsory long-term care insurance decreased by E8 million, or 3.4%, from E238
million in 2000 to E230 million in 2001, reflecting a reduction in the
industry-wide tariff for compulsory long-term care insurance. Gross premiums
written on other health insurance in Germany increased by E1 million to E238
million in 2001.

     Net Income.  In Germany, net income from health insurance operations
decreased by E8 million, or 14.3%, to E48 million in 2001 from E56 million in
2000. This was due primarily to decreased investment results, offset in part by
an increase in the amount of deferred taxes released in 2001 compared to 2000.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Health insurance premiums in Germany increased E74
million, or 2.9%, to E2,587 million in 2000 from E2,513 million in 1999. This
increase was due in large part to increases in new business, particularly in
medical and personal lines, and a decrease in cancellations from the previous
year. Due to moderate tariff increases, the increase in health premiums was
slightly below the market growth.

     Gross premiums written on medical expense insurance, which accounted for
67.8% of health insurance premiums in Germany in 2000, increased by E56 million,
or 3.3%, to E1,754 million in 2000 from E1,698 million in 1999. Gross premiums
written on other personal supplementary insurance increased by E13 million, or
3.8%, to E358 million in 2000 from E345 million in 1999. Both increases were
attributable to a growth in new business and a decrease in cancellations.
Compulsory long-term care insurance increased by E2 million, or 0.8%, from E236
million in 1999 to E238 million in 2000. Gross premiums written on other health
insurance in Germany increased by E3 million, or 1.3%, over 1999 levels to E237
million in 2000.

     Net Income.  In Germany, net income from health insurance operations
decreased by E2 million, or 3.4%, to E56 million in 2000 from E58 million in
1999, due primarily to decreased income from investments, offset in part by
reduced income tax expenses resulting from the release of deferred taxes
pursuant to a decrease in the German statutory tax rate.

                                 REST OF EUROPE

DESCRIPTION OF BUSINESS

     The Rest of Europe is our second-largest market for life/health insurance.
As a percentage of our total life/health gross premiums written worldwide, the
Rest of Europe accounted for 27.2% in 2001, 28.4% in 2000 and 26.6% in 1999.

     We conduct our life/health insurance operations in the Rest of Europe
through four main groups of operating companies in France, Italy, Spain and
Switzerland. The life products we write in our various Rest of Europe markets
are written on both an individual and group basis and include traditional term
and annuity products, unit-linked products and endowment and pension

                                        59
<PAGE>

products. The design and features of these products vary by country, depending
on local tax laws, product regulation and market conditions, and are designed to
pay death benefits, optimize inheritances, provide for retirement, pay annuities
or build capital, or combinations of these.

     France.  We conduct our life/health insurance operations in France through
the companies of the AGF Group. The AGF Group is the sixth-largest life
insurance provider in France, with an estimated market share of 5.5%, based on
gross premiums written in 2001. The AGF Group provides a broad line of life
insurance and other financial products, including short-term investment and
savings products. An important portion of AGF Group's life premiums is generated
through the sale of unit linked policies, only the fee income from which is
reflected in gross premiums written under IAS.

     The AGF Group also operates in the French health insurance market through a
separate business unit responsible for both group insurance and health insurance
and offers a wide variety of health products, which are designed to pay benefits
that complement those of the mandatory French Social Security plan. The results
of our health operations in France are included in both our property-casualty
and life segments.

     Italy.  We conduct our life/health insurance operations in Italy primarily
through the Italian Subsidiaries. Taken together, the Italian Subsidiaries are
the second-largest life insurer in the Italian market, with an estimated market
share of 13.5%, based on gross premiums written in 2001. The Italian
Subsidiaries' individual life policies are primarily endowment policies but also
include annuities and other policies, including capitalization and other
products. Consistent with trends in the Italian market generally, the Italian
Subsidiaries' products include an increasing amount of unit-linked policies,
where policyholders participate directly in the performance of policy-related
investments, and a decreasing amount of endowment products. In 2001, sales of
unit-linked and equity-linked products sold through banks reached 66.5% of our
total statutory life premiums in Italy, reflecting the importance of this
distribution channel. The Italian Subsidiaries' unit-linked policies include
products linked to funds managed by the Italian Subsidiaries, as well as by
third-party investment managers, and index-linked products.

     In recent years, the Italian government has promulgated a series of reforms
to the state pension system designed to reduce the level of benefits that the
state provides and to promote the development of private pension funds to
supplement state retirement benefits. In response to these reforms, the Italian
Subsidiaries have introduced a series of flexible new pension-related products
in their group life insurance line, under which policyholders may choose the
investment income option which they consider most appropriate from several funds
on the basis of their individual propensity for risk.

     Spain.  We are the eighth-largest life insurance provider in Spain, with an
estimated market share of 4.1%, based on gross premiums written in 2001. We
conduct our life/health operations in Spain primarily through Allianz Spain and
through Eurovida and Europensiones, our joint ventures with Banco Popular. Our
Spanish life insurance subsidiaries sell mainly traditional life insurance and
pensions and began selling unit-linked products in 1999.

     Switzerland.  We conduct our life/health operations in Switzerland
primarily through the Swiss Subsidiaries. Taken together, the Swiss Subsidiaries
are the sixth-largest life insurance provider in Switzerland, with an estimated
market share of 5.3%, based on gross premiums written in 2001. The Swiss
Subsidiaries sell a wide range of individual and group life insurance products,
including retirement and old age, death and disability products. Insureds may
select products offering conventional investment capability or investment in
funds or annuity and capital insurance contracts.

     Other Rest of Europe.  We conduct significant life/health operations in the
remainder of the Rest of Europe through approximately 18 Allianz subsidiaries in
more than 13 other European countries. In the United Kingdom, we offer life
insurance products through our subsidiary

                                        60
<PAGE>

Cornhill. In Austria, we operate through our life insurance subsidiary Allianz
Elementar Leben. We serve the Belgian life insurance market primarily through
AGF Belgium Insurance and the Netherlands life insurance market primarily
through Royal Nederland Verzekeringsgroep. Our largest life insurance
subsidiaries in other countries in the Rest of Europe are located in Greece,
Luxembourg, Portugal, Hungary and Poland. Our life insurance products in Other
Rest of Europe are generally the same as the life products we offer in the
German market. Our life insurance operations in Other Rest of Europe had gross
premiums written of E1,148 million in 2001, E971 million in 2000 and E998
million in 1999.

RESULTS OF OPERATIONS

     The following table shows key financial data for our Rest of Europe
life/health operations. Consistent with our general practice, gross premiums
written by geographic region are presented before consolidation adjustments
representing the elimination of transactions between Group companies in
different countries and different segments, and net income by geographic region
is presented before those consolidation adjustments, amortization of goodwill
and minority interests.

                    REST OF EUROPE -- LIFE/HEALTH: KEY DATA

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31,
                                     ---------------------------------------------------------
                                           2001                2000                1999
                                     -----------------   -----------------   -----------------
                                      GROSS               GROSS               GROSS
                                     PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                     WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                     --------   ------   --------   ------   --------   ------
                                                          (E IN MILLIONS)
<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
France.............................   1,556       97      2,297      391      1,458      224
Italy..............................   1,336      261      1,454      306      1,453      306
Spain..............................     879       28        532       75        421        8
Switzerland........................     584      (17)       524       43        630       34
Other..............................   1,148       12        971       95        998       94
Consolidation adjustments..........     (17)      --        (27)      --        (30)      (1)
                                      -----      ---      -----      ---      -----      ---
  Total............................   5,486      381      5,751      910      4,930      665
                                      =====      ===      =====      ===      =====      ===
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  In Rest of Europe, life/health gross premiums
written decreased by E265 million, or 4.6%, to E5,486 million in 2001 from
E5,751 in 2000, reflecting primarily in a sharp decrease in gross premiums
written in France and a smaller decrease in Italy, offset in part by increases
in Spain, Other Rest of Europe and Switzerland.

     Net Income.  In Rest of Europe, net income from life/health insurance
operations decreased by E529 million, or 58.1%, to E381 million in 2001 from
E910 million in 2000. This was due to decreases in all of our Rest of Europe
markets, particularly France and Switzerland, reflecting primarily reduced
income from investments.

     France.  In France, life/health gross premiums written, which include fees
from unit-linked products, decreased by E741 million, or 32.3%, to E1,556
million in 2001 from E2,297 million in 2000. The decrease in 2001 from 2000
reflects primarily the sale of a large group policy in 2000. Excluding this
policy, gross premiums written would have increased by 3% in 2001 over 2000. Net
income in France decreased by E294 million, or 75.2%, to E97 million in 2001
from E391 million in 2000, primarily as a result of decreased income from
investments due to unfavorable conditions in the capital markets, while expenses
remained constant compared to 2000.

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<PAGE>

     Italy.  In Italy, life gross premiums written, which include fees from
unit-linked products, decreased E118 million, or 8.1%, to E1,336 million in 2001
from E1,454 million in 2000. This decrease was primarily attributable to a high
number of endowment policies which matured and were replaced by sales of
unit-linked products, reflecting the importance of the banking channel, which
distributes such products. Net income in Italy decreased to E261 million in 2001
from E306 million in 2000, due primarily to reduced income from investments
resulting from weak capital markets in 2001.

     Spain.  In Spain, life gross premiums written increased by E347 million, or
65.2%, to E879 million in 2001 from E532 million in 2000. This increase was
primarily attributable to higher sales of pension policies. Net income decreased
by E47 million, or 62.7%, to E28 million in 2001 from E75 million in 2000, due
primarily to reduced income from investments in 2001 and a tax adjustment in
2000.

     Switzerland.  In Switzerland, life/health gross premiums written increased
by E60 million, or 11.5%, to E584 million in 2001 from E524 million in 2000.
This increase was attributable primarily to growth in single premium policies,
especially in group life. In Switzerland, net income decreased to a loss of E17
million in 2001 from net income of E43 million in 2000, due primarily to lower
income from investments, including significant write-downs for impairments.

     Other.  Life/health gross premiums written in Other Rest of Europe
increased by E177 million, or 18.2%, to E1,148 million in 2001 from E971 million
in 2000. Net income in Other Rest of Europe decreased by E83 million or 87.4%,
to E12 million in 2001 from E95 million in 2000, reflecting primarily reduced
income in our Belgian operations, as a result of lower income from investments.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  In Rest of Europe, life/health gross premiums
written increased by E821 million, or 16.7%, to E5,751 million in 2000 from
E4,930 million in 1999, due primarily to growth in France and Spain, offset in
part by decreases in Switzerland.

     Net Income.  In Rest of Europe, net income increased by E245 million, or
36.8%, to E910 million in 2000 from E665 million in 1999, due primarily to
increases in France and Spain.

     France.  In France, life/health gross premiums written, which include fees
from unit-linked products, increased by E839 million, or 57.5%, to E2,297
million in 2000 from E1,458 million in 1999. The increase in individual premiums
is due primarily to unit-linked products, which increased by 40.0% in 2000.
Group premiums increased by 153.1%, primarily due to one large policy sold in
2000. Excluding this policy, group premiums would have increased by 19.7%. Net
income increased by E167 million, or 74.6%, to E391 million in 2000 from E224
million in 1999, primarily as a result of increased investment spreads, and also
due to a decrease in expenses resulting from cost efficiencies realized in 2000
following additional costs incurred in 1999. In addition, tax expense decreased
by E59 million, or 50.6%, in 2000 due to increased tax-exempt income.

     Italy.  In Italy, life gross premiums written, which include fees from
unit-linked products, were E1,454 million in 2000, a slight increase from E1,453
million in 1999, due primarily to increased sales of traditional life insurance
products with an increase in premiums on unit-linked and other saving products
offsetting decreases in endowment policies in line with market trends. The
increase in unit-linked premiums also reflects the growing importance of the
banking channel which distributes such products. Net income was unchanged
between 2000 and 1999, with higher premiums, including fees from unit-linked
products, offset by increased taxes. Taxes increased E76 million, or 304.0%,
from E25 million in 1999 to E101 million in 2000. Taxes in 1999 reflect the
release of deferred taxes resulting from a reduction in statutory tax rates.

                                        62
<PAGE>

     Spain.  In Spain, life gross premiums written increased by E111 million, or
26.4%, to E532 million in 2000 from E421 million in 1999, due primarily to
higher sales of pension policies and unit-linked products. Net income increased
by E67 million, to E75 million in 2000 from E8 million in 1999, due primarily to
an increase in premium and more favorable investment results.

     Switzerland.  In Switzerland, life/health gross premiums written decreased
by E106 million, or 16.8%, to E524 million in 2000 from E630 million in 1999.
This decrease was attributable primarily to changing interest rates. While
market interest rates in Switzerland rose in 2000, guaranteed interest rates on
our individual life policies were reduced to 2.5% in 2000 from 3.5% in 1999. Net
income increased to E43 million in 2000 from E34 million in 1999, due primarily
to increased income from investments.

     Other.  Life/health gross premiums written in Other Rest of Europe
decreased by E27 million, or 2.7%, to E971 million in 2000 from E998 million in
1999. Net income in Other Rest of Europe was flat at E95 million in 2000,
compared to E94 million in 1999.

                                 REST OF WORLD

DESCRIPTION OF BUSINESS

     As a percentage of our total life/health gross premiums written worldwide,
Rest of World accounted for 14.9% in 2001, 13.9% in 2000 and 11.0% in 1999. Our
primary life/health markets in Rest of World are the United States and the
Asia-Pacific region.

     United States.  We serve the United States life/health insurance market
through Allianz Life, which is headquartered in Minneapolis, Minnesota. Allianz
Life and its subsidiaries are licensed to write business in all 50 states, the
District of Columbia and Guam. Allianz Life markets a wide variety of fixed and
variable life insurance and annuity contracts, and long-term care insurance to
individual and corporate customers. Allianz Life is a market leader in providing
equity-indexed annuities to individuals and life and health reinsurance to
individual and corporate customers. In 2001, our total statutory premiums
written from life/health insurance in the United States, which include sales of
investment-oriented products, amounted to E4,982 million.

     Asia-Pacific.  The primary life, health insurance markets in which we
operate in the Asia-Pacific area are as follows:

        South Korea.  Our insurance operations in South Korea consist of our two
subsidiaries, Allianz Life, formerly Allianz First Life, which we acquired in
1999, and France Life, a former subsidiary of AGF which joined the Allianz Group
in 1998 following our acquisition of AGF. We refer to these subsidiaries
together as the South Korean Subsidiaries. The South Korean Subsidiaries market
over 30 life insurance products including individual endowment insurance,
education insurance (which provide periodical payments to support a child's
education and protection in case of a parent's death), protection insurance,
annuities, and traditional whole life insurance policies. They also sell group
life insurance protection and employee severance plans to both local and foreign
multinationals. The South Korean Subsidiaries use approximately 15,000 exclusive
tied agents, most of whom are part time, with the support of 577 sales offices
to distribute their life insurance products. Together, the South Korean
Subsidiaries generated E1,600 million in annual statutory premiums in 2001.

        Taiwan.  We conduct our life insurance business operations in Taiwan
through our subsidiary, Allianz President Life Insurance. Allianz President Life
is part of our joint venture with Uni-President Group and sells a wide range of
life insurance products including whole life insurance, term insurance,
endowment insurance and health insurance. We sell these products

                                        63
<PAGE>

through a direct sales force and are currently developing other channels.
Allianz President Life generated life insurance statutory premiums written of
E128 million in 2001.

        Other Asia-Pacific.  In addition to the primary markets described above,
we have sold life and accident insurance products in Shanghai, China since
January 1999 through a joint venture in which Allianz has a shareholding of 51%.
We sell life insurance products in Thailand through a joint venture with the CP
Group, in the Philippines through a joint venture with Pioneer Assurance
Corporation, in India through a joint venture with Bajaj Auto, and in Malaysia
through our subsidiary MBA Life. We also market a range of health insurance
products in Indonesia, Singapore and Pakistan.

     Other.  In addition to the United States and Asia-Pacific, we also sell
life/health products in South America, primarily Brazil, Chile and Colombia.

RESULTS OF OPERATIONS

     The following table shows key financial data for our Rest of World
life/health operations. Consistent with our general practice, gross premiums
written by geographic region are presented before consolidation adjustments
representing the elimination of transactions between Group companies in
different countries and different segments, and net income by geographic region
is presented before those consolidation adjustments, amortization of goodwill
and minority interests.

                     REST OF WORLD -- LIFE/HEALTH: KEY DATA

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------
                                                2001                2000                1999
                                          -----------------   -----------------   -----------------
                                           GROSS               GROSS               GROSS
                                          PREMIUMS    NET     PREMIUMS    NET     PREMIUMS    NET
                                          WRITTEN    INCOME   WRITTEN    INCOME   WRITTEN    INCOME
                                          --------   ------   --------   ------   --------   ------
                                                               (E IN MILLIONS)
<S>                                       <C>        <C>      <C>        <C>      <C>        <C>
United States...........................   1,478      (24)     1,465       133     1,458       (1)
Asia-Pacific............................   1,229       (5)       970      (181)      414       25
Other...................................     303      (20)       383       (23)      175        7
                                           -----      ---      -----      ----     -----       --
  Total.................................   3,010      (49)     2,818       (71)    2,047       31
                                           =====      ===      =====      ====     =====       ==
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Gross Premiums Written.  Life/health gross written premiums for Rest of
World increased by E192 million, or 6.8%, to E3,010 million in 2001 from E2,818
million in 2000. Life/health gross premiums written in the United States, which
include annuity considerations, were E1,478 million in 2001, an increase of E13
million from E1,465 million in 2000. On a constant currency basis, gross
premiums written in the United States decreased by E35 million, or 2.4%, in
2001. The decrease was primarily attributable to reduced mortality and expense
fees on our variable annuity business due to decreased assets under management
resulting from unfavorable market conditions, together with the termination of
our accident and health reinsurance assumed and broker administrator business.
Life/health gross premiums written in Asia-Pacific increased by E259 million, or
26.7%, to E1,229 million in 2001 from E970 million in 2000, primarily as a
result of our operations in South Korea, where gross premiums written increased
by E206 million, or 24.1%, to E1,060 million in 2001 from E854 million in 2000,
as a result of a significant increase in new business. Life/health gross
premiums written in Other Rest of World decreased by E80 million, or 20.9%, to
E303 million in 2001 from E383 million in 2000, primarily due to decreased gross
premiums written in Brazil and Colombia.

                                        64
<PAGE>

     Net Income.  Life/health net income in Rest of World increased by E22
million to a loss of E49 million in 2001 from a loss of E71 million in 2000. The
reduced loss was primarily the result of reduced losses in Asia-Pacific, despite
a loss in the United States in 2001. Losses in Asia-Pacific decreased by E176
million, to a net loss of E5 million in 2001 from a net loss of E181 million in
2000, due primarily to improved results in South Korea, whose 2000 results
reflected significant write-offs as discussed below. In 2001, the net loss from
life/health operations in the United States was E24 million, compared to net
income of E133 million in 2000. This decrease was primarily the result of
realized losses on investments of E38 million in 2001 compared to realized gains
on investments of E146 million in 2000. In addition, net income in the United
States decreased as a result of increased reinsurance claims, primarily due to
the September 11, 2001 terrorist attack, and increased costs associated with the
development of our distribution force for our variable annuity business, coupled
with decreased annuity considerations as a result of lower variable annuity
assets under management, due to declines in the capital markets.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Gross Premiums Written.  Life/health gross written premiums for Rest of
World increased E771 million, or 37.7%, to E2,818 million in 2000 from E2,047
million in 1999. Life/health gross premiums written in the United States, which
include annuity considerations, were E1,465 million in 2000, a slight increase
of E7 million from E1,458 million in 1999. On a constant currency basis, gross
premiums written in the United States decreased by E174 million, or 11.9% in
2000. The decrease was attributable primarily to lower variable annuity
production and the termination of our accident and health reinsurance assumed
business. In addition, Allianz Life ceased pursuing the broker administrator
distribution channel, which slightly impacted overall premium levels. These
decreases were offset in part by strong life and annuity production as well as
strong life reinsurance sales. Life/health gross premiums written in
Asia-Pacific increased E556 million, or 134.3%, to E970 million in 2000 from
E414 million in 1999, due to the full-year consolidation of our South Korean
operations in 2000.

     Net Income.  Net income in Rest of World decreased by E102 million, to a
loss of E71 million in 2000 from net income of E31 million in 1999, due
primarily to losses in Asia-Pacific, offset in part by increased income in the
United States. Net loss in Asia-Pacific was E181 million in 2001, compared to
net income of E25 million in 2000. The loss resulted primarily from the
write-off of impaired intangible assets at our operations in South Korea. Net
income in the United States increased by E134 million to E133 million in 2000
from a loss of E1 million in 1999, primarily due to improved investment results
and the inclusion of the results of LifeUSA in our consolidated results for
2000. In addition, 1999 results had been negatively impacted by a writedown of
deferred acquisition costs due to the early redemption of variable annuity
contracts. These increases in net income in the United States were offset by
decreases attributable to continued poor experience in the accident and health
reinsurance assumed business, discontinued in 1999, unfavorable fund experience
on our variable annuity block of business, and increased reserves for a class
action settlement related to business written during the 1980s.

                               BANKING OPERATIONS

     Through our subsidiary Dresdner Bank, we are among the leading banks in the
European banking market with a wide range of private, commercial and investment
banking products and services for corporate, governmental and individual
customers. As measured by total assets at December 31, 2000, Dresdner Bank was
the third-largest bank in Germany, the eleventh-largest bank in Europe and the
nineteenth-largest bank in the world. (Source: The Banker, July 2001)

     We established banking as our fourth core business segment alongside
property-casualty insurance, life/health insurance and asset management
following our acquisition of Dresdner

                                        65
<PAGE>

Bank in 2001. We have included Dresdner Bank in our consolidated financial
statements since July 23, 2001, the date of the acquisition. The consolidation
of Dresdner Bank as of July 23, 2001 added significantly to the existing banking
operations of the Allianz Group for the year ended December 31, 2001. Prior to
2001, we had included the results of our banking operations, together with those
of our asset management business, in our financial services segment. Our banking
segment now consists of the banking operations of Dresdner Bank and the other
banking operations of the Allianz Group. For a discussion of our asset
management operations, including those of Dresdner Bank, which are not included
in our banking segment, see "-- Asset Management Operations." For the year ended
December 31, 2001, our banking segment contributed E12,841 million, or 13.0%, of
our total income. For pro forma financial information, see Note 3 to our
consolidated financial statements.

     We provide selected statistical information on our banking operations in
"-- Selected Statistical Information Relating to Our Banking Operations." Such
statistical information differs in significant respects from, and may not be
comparable to, the financial information presented below. Although we have
included Dresdner Bank in our consolidated financial statements since July 23,
2001, the statistical information includes the banking operations of Dresdner
Bank for the full year ended December 31, 2001 and for each of the four full
fiscal years prior to 2001. The statistical information also includes the asset
management operations of Dresdner Bank, which we do not include in our banking
segment. In addition, the statistical information presents the assets and
liabilities of Dresdner Bank without reflecting the adjustments that are
necessary to apply purchase accounting, which we have applied in the financial
information presented below. For additional information, see "-- Selected
Statistical Information Relating to Our Banking Operations."

     Dresdner Bank was founded in 1872 in Dresden, Germany, and grew by
acquisition and branch expansion throughout Germany to become a leading German
bank. In 1952, Dresdner Bank was split into three separate institutions, which
were subsequently reunified to form Dresdner Bank Aktiengesellschaft, Frankfurt
am Main, in 1957. In recent years, Dresdner Bank has made significant
acquisitions in investment banking, including British merchant bank Kleinwort
Benson Group plc in 1995 and U.S.-based investment bank Wasserstein Perella &
Co. in January 2001, and asset management, including U.S. asset manager RCM
Capital Management in 1995.

     With approximately 1,170 branch offices and 50,000 employees at December
31, 2001, Dresdner Bank is focused on selected customer groups, geographic
regions and business areas in which the bank traditionally holds a strong
position. Our principal banking products and services include traditional
commercial banking activities such as deposit taking, lending (including
mortgage lending), cash management and transaction banking, as well as corporate
finance advisory services, mergers and acquisitions advisory services, capital
and money market services, securities underwriting and securities trading and
derivatives business on our own account and for our customers.

     We operate through the domestic and international branch network of
Dresdner Bank and through various subsidiaries both in Germany and abroad, some
of which also have branch networks. At December 31, 2001, our branch banking
network comprised approximately 1,060 German branches, giving us a presence
throughout Germany, and 110 non-German branches. For 2001, Germany, the Rest of
Europe and the NAFTA zone accounted for approximately 73%, 17% and 7%,
respectively, of our net revenue from banking operations.

REORGANIZATION OF BUSINESS DIVISIONS

     In the course of 2001, we reorganized our business structure to focus on
two major operating divisions, Private Clients and Corporates & Markets. In July
2001, in order to serve comparable customer needs out of a single integrated
business division focused on corporate

                                        66
<PAGE>

customers and the capital markets, we combined our investment banking activities
and our European corporate banking and capital markets activities into our new
Corporates & Markets division. We believe our Corporates & Markets division will
strengthen our competitive market position through greater mass, a larger and
more integrated product offering and enhanced advisory expertise, and we expect
it to enhance our operational efficiency by generating potential cost savings
and earnings synergies through increased cross-selling opportunities between
investment banking and corporate clients.

     As part of the reorganization of our business divisions, we also announced
in September 2001 that our small business operations, which we have included as
part of our Corporates & Markets division for the year ended December 31, 2001,
would be integrated with our existing Private Clients division to form a new
Private and Business Clients division, effective January 1, 2002. The goal of
the reorganization is to increase fee and commission income by creating
cross-selling opportunities through joint provision of services to both small
business and private client customers and by offering a wider range of
commission-related services together with additional advisory expertise.

     In addition, in the course of integrating Dresdner Bank into the Allianz
Group and streamlining the Group's business structure, we expect to undertake
several other reorganizations. In 2002, we intend to merge the home loan savings
businesses of the Allianz Group and Dresdner Bank, which provide home loans at
favorable rates to customers with home loan savings accounts, into a new entity,
Allianz Dresdner Bauspar AG, within the new Private and Business Clients
division. In 2001, we have included the home loan savings business of the
Allianz Group in our Private Clients division, while the home loan savings
business of Dresdner Bank continues to be reported in our Other division.

     In November 2001, we also announced that our mortgage banking subsidiary,
Deutsche Hypothekenbank AG (or Deutsche Hyp), which is a part of our Other
division, would merge with the mortgage banking subsidiaries of Commerzbank and
Deutsche Bank. See "-- Other -- Description of Business -- Real Estate."

     Other initiatives include the establishment of our financial planner
organization by combining our direct banking subsidiary Advance Bank with our
mobile financial planners, the merger of our information technology companies
AGIS and DREGIS, and the combination of Allianz's and Dresdner Bank's private
equity business.

COST-CUTTING AND RESTRUCTURING MEASURES

     In 2001, in order to increase operating efficiency and cut costs in our
banking segment, Dresdner Bank supplemented its existing restructuring programs
introduced in May 2000 with new initiatives affecting all major parts of its
banking operations. Through the combined initiatives, we intend to eliminate an
aggregate of approximately 7,800 positions and to significantly improve the
operating efficiency of Dresdner Bank by 2004.

     The principal restructuring measures implemented in 2001 were as follows:

     - Over the course of 2001, we continued to implement the comprehensive
       restructuring plan introduced by Dresdner Bank in May 2000 to reduce
       administrative expenses. The restructuring plan calls for consolidation
       of our German branch network and related back-office activities in
       Germany, including closing approximately 300 of our German branches, and
       the discontinuation of commercial lending activities outside of Europe
       that are not directly related to investment banking, by 2004. These
       measures included aggregate job cuts of approximately 5,000 employees.
       Restructuring charges for the plan were recorded by Dresdner Bank in
       2000.

     - In connection with the reorganization of our Corporates & Markets
       division discussed above, we recorded charges for the elimination of
       approximately 1,500 positions in 2001,

                                        67
<PAGE>

       primarily in front and back office support functions. The charges for
       these restructuring measures, as well as the qualifying plans noted in
       the following paragraph, were recorded in the Other division rather than
       in our Corporates & Markets division because we consider them to be
       expenses of our banking segment as a whole rather than of the operations
       of a particular business unit. For information on the charges recorded in
       2001 in connection with this restructuring, see "-- Results of
       Operations -- Year Ended December 31, 2001 -- Other Expenses."

     - In September 2001, we announced initiatives involving an aggregate
       reduction of approximately 1,300 positions throughout our banking
       segment. At the time of this announcement, only our restructuring plans
       at our German subsidiaries, including Deutsche Hyp, were sufficiently
       detailed to qualify for restructuring charges to be recorded under IAS
       and U.S. GAAP. Pursuant to such qualifying plans, we expect to eliminate
       approximately 240 positions in branch and support functions at our German
       subsidiaries by the end of 2004. Pursuant to restructuring plans that do
       not currently qualify, we expect to eliminate approximately 1,060
       positions. We expect to record charges in connection with such plans as
       incurred or when the plans qualify under IAS and U.S. GAAP. For
       information on the charges recorded in 2001 in connection with this
       restructuring, see "-- Results of Operations -- Year Ended December 31,
       2001 -- Other Expenses."

     For additional information on these charges, see Note 23 to our
consolidated financial statements.

COMPETITION

     We are subject to intense competition in all aspects of our banking
business from both bank and non-bank institutions that provide financial
services and, in some of our activities, from government agencies. Substantial
competition exists among a large number of commercial banks, savings banks,
other public sector banks, brokers and dealers, investment banking firms,
insurance companies, investment advisors, mutual funds and hedge funds to
provide the types of banking products and services that we offer in our banking
operations. In our Private Clients division, our main competitors are Deutsche
Bank, HypoVereinsbank, Commerzbank, Citibank and German savings and cooperative
banks. In our Corporates & Markets division, our main competitors for large
multinational corporate and financial institution clients are Deutsche Bank,
Goldman Sachs, Morgan Stanley, Merrill Lynch, Citigroup and Commerzbank, while
our main competitors for medium-sized corporate and small business clients are
Deutsche Bank, Commerzbank and HypoVereinsbank, as well as German public state
banks and savings and cooperative banks. Competition is based on a number of
factors, including distribution systems, transaction execution, products and
services, innovation, reputation and price. In recent years, we have generally
experienced intensifying price competition as competitors have sought to
increase their market share. We believe this trend will continue.

                                        68
<PAGE>

     The following table sets forth certain financial information for our
banking operations for the years indicated.

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                              2001(1)     2000      1999
                                                              -------    ------    ------
                                                                    (E IN MILLIONS)
<S>                                                           <C>        <C>       <C>
Interest and similar income.................................    9,085     1,502     1,503
Income (net) from investments in affiliated enterprises,
  joint ventures, and associated enterprises................    1,016       122        35
Other income from investments...............................      628        25        24
Trading income..............................................      244         7         6
Fee and commission income, and income resulting from service
  activities................................................    1,474         2         1
Other income................................................      394        64       226
                                                              -------    ------    ------
  Total income..............................................   12,841     1,722     1,795
                                                              -------    ------    ------
Interest and similar expenses...............................   (6,852)   (1,257)   (1,268)
Other expenses for investments..............................     (465)      (33)      (29)
Loan loss provisions........................................     (588)      (21)      (29)
Acquisition costs and administrative expenses...............   (3,446)     (170)     (134)
Amortization of goodwill....................................      (70)        8         7
Other expenses..............................................   (1,193)     (125)     (287)
                                                              -------    ------    ------
  Total expenses............................................  (12,614)   (1,598)   (1,740)
                                                              -------    ------    ------
Earnings from ordinary activities before taxation...........      227       124        55
Taxes.......................................................        6        67        --
Minority interests in earnings..............................     (453)      (90)      (25)
                                                              -------    ------    ------
Net income..................................................     (220)      101        30
                                                              =======    ======    ======
</Table>

---------------

(1) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001

     In the following section, we discuss the consolidated results of our
banking operations for the year ended December 31, 2001. This discussion focuses
on factors and trends that affected our consolidated banking results after our
acquisition of Dresdner Bank on July 23, 2001, since our banking operations
prior to our acquisition of Dresdner Bank were not significant.

     Net interest and current income.  We measure interest and current income in
our banking operations on a net basis. Net interest and current income consists
of interest and similar income, income from affiliated enterprises, joint
ventures and associated enterprises, less interest and similar expenses.

                                        69
<PAGE>

     The following table shows net interest and current income and its income
statement components for the years indicated:

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                              2001(1)     2000      1999
                                                              -------    ------    ------
                                                                    (E IN MILLIONS)
<S>                                                           <C>        <C>       <C>
Interest and similar income.................................   9,085      1,502     1,503
Income (net) from investments in affiliated enterprises,
  joint ventures and associated enterprises.................   1,016        122        35
Interest and similar expenses...............................  (6,852)    (1,257)   (1,268)
                                                              ------     ------    ------
     Net interest and current income........................   3,249        367       270
                                                              ======     ======    ======
</Table>

---------------

(1) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

     Interest and similar income consists primarily of income from loans,
lending and money market transactions and securities available for sale.
Interest and similar income from our banking operations was E9,085 million in
2001, reflecting primarily declining interest rates and decreasing loan
balances, offset in part by increased income from other interest-bearing
instruments. Of this amount, income from loans accounted for E5,566 million,
reflecting our reduction of non-core commercial lending activities outside of
Europe, together with intense competition for borrowers in most areas of
lending. Income from lending and money market transactions was E1,908 million,
of which E1,472 million related to increased volume of reverse repurchase
agreements. Interest income from securities available for sale was E1,291
million, consisting primarily of income from fixed-interest government
securities (E1,148 million), reflecting an increase in the volume of such
securities in our portfolio.

     Net income from investments in affiliated enterprises, joint ventures and
associated enterprises, which consists primarily of realized gains and losses
from the disposition of such investments, was E1,016 million in 2001, reflecting
primarily realized gains of E866 million from the sale of equity holdings in
Munich Re in connection with our acquisition of Dresdner Bank on July 23, 2001.
For additional information on our disposition of ordinary shares of Munich Re in
2001, see "Major Shareholders and Related Party Transactions -- Related Party
Transactions -- Transaction with Munich Re -- Agreement in Principle."

     Interest and similar expense consists primarily of interest expense on
certificated liabilities, deposits, repurchase agreements and derivatives
qualifying for hedge accounting treatment. Interest and similar expense was
E6,852 million in 2001, consisting primarily of interest expense of E3,837
million on certificated liabilities, including long-term bonds and long-term
subordinated liabilities, which reflected the impact of declining interest
rates. Interest expense on deposits and from repurchase agreements was E2,079
million, reflecting primarily an increase with respect to repurchase agreements
in the volume of short term transactions due to uncertain economic conditions,
as well as a slight increase in the average balance of deposits from customers,
particularly non-German corporate clients, offset in part by a decrease in
deposits from banks.

     Net interest and current income from our banking operations amounted to
E3,249 million in 2001. Excluding our sale of a part of our shareholding in
Munich Re, there was a downward trend in net interest and current income in 2001
due to a shift in the second half of the year from corporate and customer
lending to lower-yielding reverse repurchase agreements and investment
securities and a shift in funding from deposits from banks to repurchase
agreements.

     Our net interest spread, which we define as the difference between the
average interest rate earned on average interest-earning assets and the average
interest rate paid on average interest-bearing liabilities, was 0.36% in 2001,
reflecting a change in the mix of interest income from higher-yielding loans to
customers to lower-yielding reverse repurchase agreements and

                                        70
<PAGE>

trading assets, and a change in the mix of funding from higher-yielding deposits
from banks to lower-yielding repurchase agreements. Our net interest margin,
which we define as net interest income, including net interest income on trading
assets and trading liabilities, as a percentage of average interest-earning
assets, was 0.45% in 2001. In each case, our net interest spread and margin
reflect income and expense from Dresdner Bank only for the period from July 23,
2001 to December 31, 2001, calculated as a percentage of the average assets for
such period. For a discussion of the interest spread and margin in our banking
business for the full year 2001 and prior years, see "-- Selected Statistical
Information Relating to Our Banking Operation -- Net Interest Margin."

     Other Income from Investments.  Other income from investments consists
primarily of realized gains on investments. Other income from investments
amounted to E628 million in 2001, primarily as a result of E406 million of
realized gains on the disposition of equity securities available for sale,
including primarily shareholdings of Dresdner Bank, and an additional E92
million on the disposition of government debt securities available for sale.

     Trading Income.  Trading income comprises mainly realized and unrealized
gains and losses from our trading portfolio of securities and foreign
exchange/precious metals, and other dealings in financial instruments. Trading
income includes both proprietary trading revenues and margins realized from
trades made on behalf of customers. Trading income was E244 million in 2001,
reflecting primarily income from other dealings in derivative financial
instruments of E177 million, net of trading interest expense. Income from
securities trading was E67 million, reflecting gains from foreign exchange and
bond trading which more than offset losses in the equity trading portfolio.

     Fee and Commission Income, and Income from Service Activities.  Fee and
commission income, and income from service activities from our banking
operations comprises mainly fees and commissions from our securities, lending,
underwriting and mergers and acquisitions advisory businesses. Fee and
commission income, and income from service activities amounted to E1,474 million
in 2001. Fee and commission income from our securities business was E623 million
for this period, reflecting decreased transaction volume in our mutual fund and
equity securities businesses due to the reluctance of German clients to engage
in securities transactions. Fee and commission income from our lending,
underwriting and mergers and acquisitions advisory businesses of E213 million,
also was negatively affected as a result of slowing market activity in the
underwriting and advisory businesses in 2001. In addition, fee and commission
income included commission income on account and payment transactions (E176
million), insurance and real estate commissions (E76 million), and commissions
earned from our asset management segment (E194 million).

     Other Income.  Other income consists primarily of income from releasing or
reducing miscellaneous accrued liabilities, income from other assets and other
income. Other income from our banking operations was E394 million.

     Other Expenses for Investments.  Other expenses for investments from our
banking operations consist of realized losses and impairment write-downs on
securities and other investments. Other expenses for investments were E465
million in 2001, reflecting primarily E340 million of realized losses, mainly on
investments in equity securities and E125 million of impairment write-downs. The
realized losses on equity securities reflected primarily realized losses on
shareholdings of Dresdner Bank.

     Loan Loss Provisions.  Loan loss provisions in our banking operations
consists of specific loan loss provisions, country loan loss provisions and
general loan loss provisions. In addition, allowances for off-balance sheet
obligations relating to our lending business are included in this category. We
establish specific loan loss provisions if we consider it probable that
specifically identified borrowers are no longer able to make their contractually
agreed upon interest and principal payments. We establish general loss
provisions to provide for incurred but unidentified

                                        71
<PAGE>

losses that are inherent in the loan portfolio as of the relevant balance sheet
date. We establish country risk provisions for transfer risk, which is a measure
of the likely ability of a borrower in a certain country to repay its foreign
currency-denominated debt in light of the economic or political situation
prevailing in that country, on the basis of our country rating system that
incorporates current and historical economic, political and other data to
categorize countries by risk profile. For the year ended December 31, 2001, net
loan loss provisions in our banking segment were E588 million, consisting of
E1,197 million of new provisions, offset in part primarily by releases of E593
million of existing provisions. Provisions for loan losses in 2001 significantly
exceeded expectations in both our German and non-German loan portfolios, due
primarily to the continuing deterioration of the global economy. In our Dresdner
Bank operations, we added specific loan loss provisions of E562 million for
corporate borrowers and E308 million for private clients. All of our private
client provisions and the majority of our corporate provisions were incurred in
respect of German borrowers. A substantial part of our non-German corporate
provisions in 2001 were incurred in the United States, including approximately
E100 million related to one corporate borrower. We recorded net general loss
provisions of E33 million in 2001, based primarily on historical loss experience
and management's assessment of the credit quality of the loan portfolio caused
by the deteriorating condition of the global economy, and released net country
risk provisions of E92 million. To reduce our loan loss exposure, we have taken
a variety of steps in 2001, including reducing our loans to corporate borrowers
in the United States by approximately 25% for the year ended December 31, 2001.
To manage country risk, we have also reduced our loan exposure in Latin American
and other problem loan countries, including Argentina, which helped to reduce
the impact on our banking operations of the Argentine financial crisis in late
2001. For additional information, see "-- Selected Statistical Information
Relating to Our Banking Operations -- Summary of Loan Loss Experience."

     Acquisition Costs and Administrative Expenses.  Acquisition costs and
administrative expenses in our banking segment, which consist primarily of
personnel expenses and operating expenses, were E3,446 million in 2001.
Personnel expenses amounted to E2,045 million, reflecting primarily wages and
salary expenses, social security and pension expenses and bonus and retention
payments made to Dresdner Bank executives and key management personnel pursuant
to agreements made after merger negotiations with Deutsche Bank in 2000 and in
connection with the acquisition of Wasserstein Perella & Co. in January 2001.
Bonus and retention payments recorded in 2001 amounted in the aggregate to E744
million, of which E462 million were recorded in acquisition costs and
administrative expenses and E282 million in other expenses. See "-- Other
Expenses." Operating expenses were E1,401, consisting mainly of rental expenses
(E376 million), depreciation expenses (E205 million), fee and commission
expenses (E184 million), marketing and advertising expenses (E151 million),
training and outsourcing expenses (E92 million) and travel expenses (E84
million). For a discussion of our restructuring program to reduce administrative
expenses, see "-- Cost-Cutting and Restructuring Measures."

     Amortization of Goodwill.  Amortization of goodwill in our banking
operations was E70 million in 2001, attributable primarily to the acquisition of
Dresdner Bank on July 23, 2001.

     Other Expenses.  Other expenses from our banking operations were E1,193
million in 2001, reflecting primarily charges of E206 million recorded in
connection with the integration of Dresdner Bank into the Allianz Group,
restructuring charges of E132 million, expenses for amortization of software and
other intangible assets of E119 million and consulting fees of E60 million.
Other expenses also included bonus and retention payments of E282 million; we
recorded the additional bonus and retention payments noted above in acquisition
costs and administrative expenses. The integration costs of E206 million
comprised mainly consulting costs of E98 million and other non-staff costs of
E95 million relating primarily to integration of information technology systems.
We recorded additional charges in connection with the integration of Dresdner
Bank at Allianz AG, the results of which are shown in our property-

                                        72
<PAGE>

casualty business segment. See "-- Insurance Operations -- Property-Casualty
Insurance Operations -- Results of Operations -- Year Ended December 31, 2001
Compared to Year Ended December 31, 2000 -- Acquisition Costs and Administrative
Expenses." Restructuring charges recorded in 2001 consisted primarily of charges
relating to the reorganization of our Corporates & Markets division (E118
million) and other German subsidiaries (E31 million), offset in part by releases
of E17 million from restructuring plans initiated in May 2000. For a discussion
of our restructuring programs, see "-- Cost Cutting and Restructuring Measures."
See also Note 23 to our consolidated financial statements.

     Taxes.  Taxes on our banking operations amounted to a tax credit of E6
million in 2001. The tax benefit was due to tax losses, for which a deferred tax
asset was recognized. Taxable income was reduced by tax-exempt capital gains.

     Minority Interests in Earnings.  Minority interests in our banking
operations were E453 million in 2001, reflecting primarily the application of
the minority interest ownership in Dresdner Bank during the period ended
December 31, 2001 to the historical cost basis of Dresdner Bank. Minority
interest in earnings is expected to decrease significantly in 2002 as a result
of the anticipated increase in our ownership of Dresdner Bank to 100% in the
course of 2002.

     Net Income.  Net income for our banking operations was a loss of E220
million in 2001, reflecting the weakness in the capital markets, particularly in
the second half of 2001. The loss was attributable primarily to reduced fee and
commission income (E1,474 million), due primarily to decreased transaction
volume attributable to clients' general reluctance to engage in securities
transactions, in combination with a high level of net loan loss provisions (E588
million). At the same time, administrative expenses were high (E3,446 million),
due largely to high personnel costs and bonus and retention payments, and we
incurred significant other expenses (E1,193 million), primarily in connection
with the integration of Dresdner Bank into the Allianz Group and the
implementation measures to restructure our banking segment as discussed above.
See "-- Cost Cutting and Restructuring Measures."

                  DISCUSSION OF BANKING OPERATIONS BY DIVISION

     We conduct our banking operations through two principal operating business
divisions, Private Clients and Corporates & Markets. Our Other division includes
our real estate operations, together with income and expense items that are not
attributable to one of our operating divisions.

                                        73
<PAGE>

     The following tables set forth certain key data concerning our banking
operations by division and by geographic region for the years indicated.
Consistent with our general practice, net revenue by division, and total income
and net revenue by geographic region are presented before consolidation
adjustments representing the elimination of transactions between Group companies
in different geographic regions and different segments, and net income by
geographic region is presented before those consolidation adjustments,
amortization of goodwill and minority interests. Net income by division is
presented before amortization of goodwill and minority interests.

                   BANKING OPERATIONS -- KEY DATA BY DIVISION

<Table>
<Caption>
                                                         YEAR ENDED DECEMBER 31,
                                     ---------------------------------------------------------------
                                           2001(1)                2000                  1999
                                     -------------------   -------------------   -------------------
                                        NET        NET        NET        NET        NET        NET
                                     REVENUE(2)   INCOME   REVENUE(2)   INCOME   REVENUE(2)   INCOME
                                     ----------   ------   ----------   ------   ----------   ------
                                                             (E IN MILLIONS)
<S>                                  <C>          <C>      <C>          <C>      <C>          <C>
Private Clients....................    1,443       (111)       --         --         --         --
Corporates & Markets...............    1,864       (619)       --         --         --         --
Other..............................    1,957      1,033       432        183        498         48
                                       -----      -----       ---        ---        ---        ---
  Subtotal.........................    5,264        303       432        183        498         48
                                       -----      -----       ---        ---        ---        ---
Amortization of goodwill...........       --        (70)       --          8         --          7
Minority Interests.................       --       (453)       --        (90)        --        (25)
                                       -----      -----       ---        ---        ---        ---
  Total............................    5,264       (220)      432        101        498         30
                                       =====      =====       ===        ===        ===        ===
</Table>

---------------

(1) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

(2) Consists of net interest income, net fee and commission income, net trading
    income, net other investment income and other income.

             BANKING OPERATIONS -- KEY DATA BY GEOGRAPHIC REGION(1)

<Table>
<Caption>
                                                          YEAR ENDED DECEMBER 31,
                         ------------------------------------------------------------------------------------------
                                   2001(2)                          2000                           1999
                         ----------------------------   ----------------------------   ----------------------------
                         TOTAL       NET        NET     TOTAL       NET        NET     TOTAL       NET        NET
                         INCOME   REVENUE(3)   INCOME   INCOME   REVENUE(3)   INCOME   INCOME   REVENUE(3)   INCOME
                         ------   ----------   ------   ------   ----------   ------   ------   ----------   ------
                                                              (E IN MILLIONS)
<S>                      <C>      <C>          <C>      <C>      <C>          <C>      <C>      <C>          <C>
Germany................  12,515      6,227     1,931      144        70          2       145        78          3
Rest of Europe.........   3,939      1,451      (434)   1,444       331        166     1,453       413         43
NAFTA..................     984        572      (218)      --        --         --        --        --         --
Rest of World..........     544        245      (106)     134        31         15       197         7          2
Consolidation
  adjustments(4).......  (5,141)    (3,231)     (870)      --        --         --        --        --         --
                         ------     ------     -----    -----       ---        ---     -----       ---        ---
  Total................  12,841      5,264       303    1,722       432        183     1,795       498         48
                         ======     ======     =====    =====       ===        ===     =====       ===        ===
</Table>

---------------

(1) Represents the location of the entity or branch that recorded the
    transaction.

(2) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

(3) Consists of net interest income, net fee and commission income, net trading
    income, net other investment income and other income.

                                        74
<PAGE>

(4) Represents elimination of intercompany transactions between Group companies
    in different geographic regions.

                                PRIVATE CLIENTS

DESCRIPTION OF BUSINESS

     We serve our private customers through our Private Clients division. In
2001, our Private Clients division accounted for approximately 27.4% of our net
revenue from banking operations.

     Our Private Clients business is one of our core banking activities. We
believe that rising levels of private wealth, increasing emphasis on private
retirement provision and a growing interest in equity securities and investment
funds are increasing demand not only in Germany, but throughout Europe for
sophisticated, individualized investment and private retirement provision
advice. Focusing on structured investment and private retirement provision
advice is a core element of our Private Clients strategy. The Private Client
business also continues to grow in importance for the distribution of investment
banking and asset management products. In 2001, we provided Private Clients
banking products and services to more than five million customers with more than
E40 billion of deposits and more than E110 billion of assets held under custody.

     Our Private Clients customer base consists of:

     - approximately 100,000 high net worth customers worldwide, which we define
       as customers with more than E1.5 million of assets available for
       investment. We serve our high net worth customers through our business
       unit Dresdner Private Banking International;

     - approximately 5.1 million individual customers in Germany, including
       approximately 550,000 affluent customers, which we define as customers
       who are financially able to make use of high levels of personalized
       advice. We serve our affluent and other individual customers through our
       network of approximately 11,000 employees at approximately 1,060 German
       branches and subsidiaries and our online portals and other electronic
       services.

     In mid-2000, Dresdner Bank launched two initiatives designed to optimize
its core expertise in structured advice: a restructuring of its branch network,
and an investment and growth program.

     Where customers require a less intensive level of advice, as in our
individual customer business, we have restructured our individual customer
business to reduce costs, for example by consolidating our branch network and
reducing the number of branch locations. See the discussion above under "-- Cost
Cutting and Restructuring Measures." We have also expanded our electronic
banking activities, offering our private clients a dedicated Internet portal
since July 2001, while building on the direct banking services and financial
planning advice that we provide through our direct bank Advance Bank AG. Through
such measures we expect to offer greater convenience to our private clients, to
achieve additional cost reductions and to increase the capacity of our branch
advisors to provide quality investment advice.

     Our investment and growth program consists of a series of measures designed
to strengthen our position in the provisions of investment and private
retirement provision advice to high income and high net worth customers,
particularly in our core market of Germany. As part of this program, we expect
to train and place in our German branch network by the end of 2003 an additional
600 securities advisors. We plan to provide a larger variety of services for
high net worth clients, particularly our capacity to provide securities advice,
and to concentrate our securities advisory teams on serving affluent customers
in approximately 200 locations. We have also begun to integrate our banking and
insurance distribution networks. Since August 2001, our banking customers have
had access to the advice of Allianz Group retirement provision and insurance
specialists, approximately 870 of whom were located in our branch banks at

                                        75
<PAGE>

December 31, 2001, and to the entire range of Allianz Group insurance products.
An additional approximately 100 Dresdner Bank securities advisors have been
placed at Allianz Group insurance agencies since August 2001 in order to provide
our insurance customers with structured investment advice. In addition, outside
our core German market, we hope to capitalize through our international private
banking arm, Dresdner Private Banking International, on the growing interest of
global investors in European investments in recent years.

PRODUCTS AND SERVICES

     We offer a wide range of banking products and services for high net worth,
affluent and other private individual customers. For our high net worth
customers, we offer sophisticated, personalized solutions through Dresdner
Private Banking International. Our services include advisory and discretionary
portfolio management, fund-based portfolio management, administration of trusts
and estates and structural asset analysis, including tax planning. For our
affluent customers, we provide structured financial advice based on a variety of
financial planning and investment tools and products, such as mutual funds,
mutual fund portfolio management, tax-advantaged products and alternative
investments. For our other private individual customers, our banking products
and services include deposit-taking, the transmission of payments, commercial
and consumer lending, mortgage lending and other property-related financing
services, credit card operations, securities brokerage and asset management
services and insurance. We allocate fees between our banking segment and our
asset management and insurance segments in the case of cross-segment sales and
distribution activities, e.g., the sale of proprietary fund products or
insurance policies through our Private Client distribution channels.

DISTRIBUTION

     In our Private Clients division, we distribute our products primarily
through our branch bank network and our on-site securities advisors, as well as
our network of ATMs. We also offer our banking products and services through our
subsidiary Advance Bank AG, which we believe offers a unique combination in
Germany of individualized direct banking services and financial and investment
advice and we intend to build out as an additional distribution channel, as well
as through a variety of other Internet and electronic banking channels, certain
Allianz Group insurance agencies, independent financial advisors and call
centers.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001

     Net Revenue.  Net revenue in our Private Clients division was E1,443
million in 2001, reflecting primarily the downward trend in net fee and
commission income due to decreased transaction volume attributable to German
clients' reluctance to engage in securities transactions.

     Net Income.  Net income in our Private Clients division amounted to a loss
of E111 million in 2001, primarily as a result of declining net fee and
commission income, in combination with a high level of loan loss provisions
relating to German borrowers.

                              CORPORATES & MARKETS

DESCRIPTION OF BUSINESS

     We serve our corporate and capital markets customers through our Corporates
& Markets division, into which we combined our former investment banking and
corporate clients business divisions in the third quarter of 2001. Through this
combination, we aim to take advantage of our access to corporate Europe,
Dresdner Bank's balance sheet strength, the Allianz Group's strong credit
rating, our extensive capital markets experience around the world and our strong
position

                                        76
<PAGE>

in Germany. In 2001, our Corporates & Markets division accounted for
approximately 35.4% of our net revenue from banking operations.

     Our Corporates & Markets division is focused on raising capital for
corporate and institutional customers in our core markets of Germany, the United
Kingdom, other countries in Western Europe, and the United States. We offer a
wide range of investment banking, commercial banking and other capital markets
products and services to selected multinational, large and medium-sized
corporate customers and public sector entities. Our strategy is built on an
integrated business approach and product range in German commercial and
investment banking, our strength in the European capital markets and our global
expertise in selected business areas such as mergers and acquisitions and
advisory services, risk management and specialty finance. Our goal is to exploit
potential synergies between our traditional corporate customers and our
investment banking business while further strengthening our position in the
European capital markets, particularly in Germany and in relation to
medium-sized corporate clients, and expanding selected global product areas. In
recent years, in order to capitalize on our strengths, we have sought to
consolidate our position in Germany and the United Kingdom, to expand in other
key European markets, and to move away from non-core activities such as
commercial lending to customers outside of Europe, while continuing to provide
the banking products and services required by our core market customers as they
progress into global markets. At December 31, 2001, we had approximately 30,000
large and medium-sized Corporates & Markets clients, the majority of which were
in Germany.

     In January 2001, Dresdner Bank acquired Wasserstein Perella & Co., a
premier U.S.-based investment bank with a leading mergers and acquisitions
business and a strong international franchise. Wasserstein Perella & Co.'s
activities have been integrated into our global investment banking business
under the brand name Dresdner Kleinwort Wasserstein. We believe that Dresdner
Kleinwort Wasserstein's combined corporate and investment banking know-how and
close client relationships will significantly enhance our capabilities in our
core investment banking markets. In November 2001, we announced the departure of
Bruce Wasserstein, the former chairman of Wasserstein Perella & Co., from
Dresdner Kleinwort Wasserstein. We do not believe that his departure will have a
significant negative impact on our investment banking operations.

PRODUCTS AND SERVICES

     Our Corporates & Markets division offers corporate finance advisory
services on mergers and acquisitions, divestitures, restructurings and other
strategic matters, securities underwriting and market making, securities and
derivatives trading, portfolio management, custodial services, and other capital
markets products and services. We also provide corporate loans, take deposits,
and provide our corporate customers with payment, management consulting, real
estate and other corporate banking services.

     Our Corporates & Markets division operates through the following five
business lines:

     Investment Banking.  We created this business line by integrating our
former global corporate finance division and Wasserstein Perella & Co.'s
strategic advisory services unit. Our investment banking business line provides
German and international financial advisory services to a range of corporate,
institutional and public sector clients. These services include strategic and
financial advice on mergers and acquisitions, privatizations, divestitures,
restructurings, leveraged buy-outs, defensive strategies and valuation. In
addition, our investment banking business line underwrites equity and
equity-linked issues, including those in privatizations, capital increases,
initial public offerings and secondary distributions, in close cooperation with
our global equities business line. While our investment banking business line is
organized to provide geographic coverage and sector expertise to customers in
major countries and industry groups around the world, our aim is to be a market
leader in mergers and acquisitions advisory services in key economic sectors
such as power and utilities, media and telecommunications and financial

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<PAGE>

services. In 2001, Dresdner Bank ranked fifth in completed European mergers and
acquisitions and seventh in mergers and acquisitions worldwide, based on dollar
volume. (Source: Thompson Financial, January 2002). In April 2002, we announced
that we expected to dispose of our U.S. restructuring business through a
management buyout, effective June 2002.

     Global Debt.  We integrated our former global markets and global finance
business lines into our global debt business line in the first quarter of 2001
in order to provide a single unified platform for all of our customers'
debt-related requirements. Through our global debt business line, we originate,
underwrite and engage in secondary trading of various types of corporate and
public sector debt instruments and arrange syndicated loans. Our global debt
business line offers fully integrated products and services across the debt
spectrum, including derivatives, foreign exchange, securitization, origination
and distribution. Our global debt business line benefits from our strong
European base, together with selected operational centers in Asia-Pacific and
North America, in the global bond and syndicated loan markets.

     Global Equities.  Our global equities business line comprises primary and
secondary distribution, research, trading, sales and equity derivatives.
Operating in a global context, Dresdner Kleinwort Wasserstein is a major player
in European equity markets, with research, execution and distribution
capabilities underpinned by technical expertise, balance sheet strength and
continuous investment in leading-edge information technology. We have built our
global equities business on our strong position in the UK and German equities
markets, our globally integrated service, our commitment to excellence in
research and in-depth industry knowledge, and our placement capability in major
markets worldwide.

     Corporate Banking.  Our corporate banking business line comprises our
former corporate clients business, which we reorganized in the third quarter of
2001. Our corporate banking strategy emphasizes growth based on above-average
commission income, together with a firm control over administrative expenses and
risk costs. We arrange non-syndicated bank loans and foreign trade financing,
take deposits, and provide our customers with payment, clearing, cash and
account management, and electronic and other banking services and products. In
July 2000, we launched an Internet-based corporate financial portal, which
offers comprehensive, secure transaction capabilities and a broad array of
services, ranging from information on asset, cash and currency management to
financing solutions and other value-added services. We continue to integrate our
e-business solutions into our product range and customer service.

     Global Private Equity.  Our private equity capital business line was
renamed Dresdner Kleinwort Capital in January 2001. We have extensive experience
in both equity and mezzanine investments for leveraged buyouts, management
buy-ins, expansion financing, bridge equity, recapitalizations, corporate joint
venture transactions and late stage development capital. At December 31, 2001,
we had assets and funds under management of approximately E3.7 billion,
including our own assets and funds as well as those we manage for customers in
our Private Clients division. In 2001, we made new investments of E209 million.

     In April 2002, we announced that our global debt and global equities
business lines would be merged into a single new capital markets business line,
effective immediately.

     In addition, in May 2002, we announced that we would combine the private
equity operations of the Allianz Group and Dresdner Bank into Allianz Private
Equity Holding.

DISTRIBUTION

     In our Corporates & Markets division, we rely on relationship managers and
sales teams working together with product specialists to develop in-depth
corporate finance expertise in both investment banking and commercial banking to
meet the capital markets needs of our clients. Our goal is to offer a full range
of capital markets products and services to our Corporates & Markets clients
worldwide. Our customers now have a choice of three complementary distribution

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<PAGE>

channels: standard "face-to-face" support by professional advisory staff, the
Internet, and our service centers.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001

     Net Revenue.  Net revenue in our Corporates & Markets division was E1,864
million in 2001, reflecting mainly decreased fee and commission income,
particularly in our mergers and acquisitions and other advisory business, and
decreased trading income, particularly from equity securities, due to the weak
capital markets. These declines were offset in part by increased interest income
and trading income from fixed-income securities, reflecting a shift into fixed-
income securities as a result of the poor performance of many equity indices.

     Net Income.  Net income in our Corporates & Markets division was a loss of
E619 million in 2001. Net income for our Corporates & Markets business declined
primarily as a result of decreased fee and commission and trading income, in
conjunction with increases in net loan loss provisions and write-downs on
private equity investments as a result of deteriorating economic conditions, as
well as high personnel and other administrative expenses.

                                     OTHER

DESCRIPTION OF BUSINESS

     Our Other division contains income and expense items that are not directly
assigned to our operating divisions, as well as our real estate and transaction
banking business lines. Income and expense items that are not directly assigned
to our operating divisions include, in particular, expenses for banking segment
functions and projects affecting more than one division, realized gains and
losses from our strategic investment portfolio and provisioning requirements for
country and general risks. In addition, other items contains charges relating to
the integration of Dresdner Bank into the Allianz Group and charges for the
restructuring measures that have been introduced. See "-- Cost-Cutting and
Restructuring Measures." In 2001, our Other division accounted for approximately
37.2% of our net revenue from banking operations.

     Real Estate.  We serve our real estate customers through our real estate
business line, which comprises primarily the business operations of our mortgage
bank Deutsche Hypothekenbank AG (or Deutsche Hyp) and our German real estate
fund management subsidiary, DEGI Deutsche Gesellschaft fur Immobilienfonds GmbH.
Our real estate business line offers a full array of real estate services.

     In November 2001, we announced that Rheinische Hypothekenbank AG, the
mortgage banking subsidiary of Commerzbank, Eurohypo AG, the mortgage banking
subsidiary of Deutsche Bank, and Deutsche Hyp would merge into a single entity
by 2002, subject to regulatory and shareholder approvals. Upon completion of the
merger, we will hold an ownership interest of approximately 30% in the merged
entity, while Deutsche Bank and Commerzbank will hold approximately 35% each.
The new entity will retain the name Eurohypo AG. We expect the new Eurohypo AG
to develop over the next several years into a strong competitor in the European
commercial mortgage banking market by achieving economies of scale and offering
a broader product portfolio. The new Eurohypo AG will also retain the existing
residential and other private mortgage banking business of Deutsche Hyp, while
our new residential and other private mortgage banking operations will be
transferred to Allianz Leben, which we expect to occur in the third quarter of
2002.

     Transaction Banking.  As a corporate service unit in Germany, our
transaction banking business line primarily provides our Private Clients and
Corporates & Markets divisions, as well as Dresdner Asset Management and other
Allianz Group companies, with a wide variety of

                                        79
<PAGE>

products and services relating to the processing of securities business and
payments transactions. Through our custody business, we offer a comprehensive
range of custody products and services to national and international financial
intermediaries. As of December 31, 2001, the total market value of securities
under custody in the Group was E745 billion.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001

     Net Revenue.  Net revenue in our Other division was E1,957 million in 2001,
reflecting primarily realized gains of E866 million from the sale of shares of
Munich Re held by Dresdner Bank, other investment income of E628 million from
realized gains on our strategic investment portfolio, changes in the fair value
of non-qualifying hedge derivatives and interest income from our mortgage
lending operations, offset in part by other expense from investments of E465
million consisting of realized losses and write-downs of investments.

     Net Income.  Net income in our Other division was E1,033 million in 2001.
Net income was positively affected by the disposition of Munich Re shares and
other investment income, offset primarily by realized losses on investments of
E340 million, restructuring charges of E132 million and charges of E206 million
relating to the integration of Dresdner Bank into the Allianz Group.

                          ASSET MANAGEMENT OPERATIONS

     Our asset management segment operates as a global provider of institutional
and retail asset management products and services to third-party investors and
provides investment management services to our insurance operations. We managed
approximately E1,173 billion of third-party assets and Group's own investments
on a worldwide basis as of December 31, 2001, with key management centers in
Munich, Frankfurt, London, Paris, Hong Kong, Milan, Westport, Connecticut, and
San Francisco, San Diego and Newport Beach, California. Our third-party assets
under management have grown significantly in recent years to approximately E620
billion as of December 31, 2001. The 2001 acquisitions of Dresdner Bank and
Nicholas-Applegate increased our third-party assets under management by E228
billion as of July 23, 2001 and E36 billion as of January 31, 2001,
respectively. As measured by total assets under management at December 31, 2001,
we were the largest asset manager in Germany, the second-largest asset manager
in Europe and the second-largest asset manager in the world. (Source: Global
Investor, December 2001/January 2002)

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<PAGE>

     The following table sets forth certain key data concerning our asset
management operations at December 31 for the years indicated:

                       ASSETS UNDER MANAGEMENT: KEY DATA

<Table>
<Caption>
                                                                      DECEMBER 31,
                                                           -----------------------------------
                                                                2001(1)             2000
                                                           -----------------   ---------------
                                                               E         %        E        %
                                                                     (E IN MILLIONS)
<S>                                                        <C>         <C>     <C>       <C>
Third-party assets(2)
  PIMCO Group............................................    333,093    28.4   297,220    42.4
  Dresdner Bank Group....................................    210,855    18.0        --      --
  Nicholas-Applegate.....................................     29,209     2.5        --      --
  Other..................................................     47,301     4.0    39,204     5.6
                                                           ---------   -----   -------   -----
  Subtotal...............................................    620,458    52.9   336,424    48.0
Group's own investments(3)...............................    527,386    45.0   341,283    48.7
Separate account assets(2)(4)............................     24,692     2.1    22,770     3.3
                                                           ---------   -----   -------   -----
Total....................................................  1,172,536   100.0   700,477   100.0
                                                           =========   =====   =======   =====
</Table>

---------------

(1) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

(2) Assets are presented at fair value.

(3) Includes adjustments to reflect real estate and investments in affiliated
    enterprises, joint ventures and associated enterprises at market value, and
    excludes certain loans to banks and loans to customers.

(4) Represents investments held on account and at risk of life insurance
    policyholders.

     Our asset management operations pursue two separate but related objectives.
In our third-party asset management business, we seek to leverage the power of
our portfolio management expertise, existing customer relationships and
distribution to develop a leading global asset management business. In the
management of our Group's own investments, we seek to maximize long-term total
return on our investments for the benefit of our shareholders and policyholders,
including the value of our portfolio of financial and industrial equity
participations, while remaining within the Group's risk management guidelines.

     We manage our asset management operations primarily through Allianz
Dresdner Asset Management GmbH (or ADAM), our wholly owned asset management
subsidiary formed after our acquisition of Dresdner Bank in July 2001. We
reorganized our former financial services segment in late 2001 under ADAM in
order to integrate the asset management operations of Dresdner Bank, to achieve
new economies of scale and to extend the reach of our distribution networks for
asset management products and services. We consolidated the assets and
liabilities and results of operations of Dresdner Bank's asset management
business into our asset management segment as of July 23, 2001, the date of the
acquisition. The banking operations formerly included in our financial services
segment are now a part of our banking segment. See "-- Banking Operations." As
of December 31, 2001, ADAM managed approximately E584 billion, or 94%, of our
third-party assets under management and approximately E184 billion, or 35%, of
our Group's own investments. The remainder of our third-party assets are managed
by Dresdner Bank (approximately E27 billion, or 4%) and other Allianz Group
companies. The majority of our Group's own investments (approximately E343
million, or 65%) continue to be managed by the respective investment management
units of Allianz Group insurance companies around the world.

                                        81
<PAGE>

     We conduct our asset management operations primarily through our operating
companies worldwide. As part of our multi-regional strategy, we operate under
multiple brand names in different regions. In the United States, our main
operating companies include PIMCO, Nicholas-Applegate, Dresdner RCM Global
Investors, and Oppenheimer Capital. In Europe, we operate primarily through AGF
Asset Management, RAS Asset Management, Deutscher Investment Trust (or dit),
Dresdner Bank Investment Management (or dbi), and Dresdner Asset Management, as
well as Dresdner RCM Global Investors and PIMCO. In Asia, our main brands are
Dresdner RCM Global Investors, PIMCO, Meiji Dresdner Asset Management and
Allianz Asset Management.

RESULTS OF OPERATIONS

     The following table sets forth certain summarized financial information for
our asset management operations for the years indicated:

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                              -------------------------
                                                              2001(1)     2000     1999
                                                              -------    ------    ----
                                                                   (E IN MILLIONS)
<S>                                                           <C>        <C>       <C>
Interest and similar income.................................     129        204     204
Income from affiliated enterprises, joint ventures and
  associated enterprises....................................      (3)         1     (39)
Other income from investments...............................      44         18       7
Trading income..............................................      10         16       6
Fee and commission income, and income from service
  activities................................................   2,479      1,420     427
Other income................................................      79         63      88
                                                              ------     ------    ----
  Total income..............................................   2,738      1,722     693
                                                              ------     ------    ----
Interest and similar expenses...............................     (82)       (61)   (114)
Other expenses for investments..............................     (57)        --      (1)
Net loan loss provision.....................................      --         --      --
Acquisition costs and administrative expenses...............  (1,895)      (484)    (28)
Amortization of goodwill....................................    (243)       (89)     --
Other expenses..............................................    (795)    (1,043)   (442)
                                                              ------     ------    ----
Total expenses..............................................  (3,072)    (1,677)   (585)
                                                              ------     ------    ----
Earnings from ordinary activities before taxation...........    (334)        45     108
Taxes.......................................................     168          4     (56)
Minority interests in earnings..............................    (182)      (136)    (29)
                                                              ------     ------    ----
Net income..................................................    (348)       (87)     23
                                                              ======     ======    ====
</Table>

---------------
(1) Reflects the inclusion of Dresdner Bank in our consolidated financial
    statements as of July 23, 2001.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Assets Under Management.  Third-party assets under management and Group's
own investments increased by E473 billion, or 67.6%, to E1,173 billion at the
end of 2001 from E700 billion at the end of 2000. The increase was due primarily
to our acquisitions of Dresdner Bank and Nicholas-Applegate, and to a lesser
extent, an increase in the Group's own investments and third-party assets under
management. Of the increase, E186 billion represented growth in Group's own
investments, while E284 billion represented growth in third-party assets under
management, primarily as a result of the acquisition of Dresdner Bank (E211
billion), as well as the acquisition of Nicholas-Applegate (E29 billion).
Excluding the effects of these acquisitions, as well as the effects of exchange
rate movements (E16 billion), our third-party

                                        82
<PAGE>

assets under management would have increased by E28 billion, or 8.3%, to E364
billion at the end of 2001 due primarily to growth in fixed-income investments
in our PIMCO operations.

     Net Income.  Asset management net income decreased by E261 million, to a
net loss of E348 million in 2001 from a net loss of E87 million in 2000, despite
the increase in assets under management, primarily because costs rose more
quickly than income. Total income, which consists primarily of fee and
commission income, and income from service activities, increased by E1,016
million, or 59.0% to E2,738 million in 2001 from E1,722 million in 2000,
reflecting primarily the increased assets under management due to our
acquisition of Dresdner Bank. Total expenses increased by E1,395 million or
83.2%, to E3,072 million in 2001 from E1,677 million in 2000, due primarily to
increased expenses associated with our acquisition of Dresdner Bank. Total
expenses included acquisition-related expenses of E647 million recorded in 2001,
as well as costs incurred in connection with the establishment of ADAM and the
reorganization of our asset management operations as a result of our acquisition
of Dresdner Bank. The acquisition-related expenses included amortization of
goodwill of E243 million associated with the acquisitions of PIMCO and
Nicholas-Applegate, amortization charges of E374 million relating to capitalized
retention payments to key executives of the PIMCO Group, which are being
amortized over periods of five to seven years from the date of the acquisition,
and an additional E30 million of expenses incurred in connection with retention
payments to key executives at Dresdner RCM following our acquisition of Dresdner
Bank in July 2001. In addition, minority interest of E182 million in our asset
management operations was accounted for mainly by the minority interest in PIMCO
(E142 million) of PIMCO's former parent company, which continues to hold an
approximately 30% ownership interest in PIMCO. See Note 3 to our consolidated
financial statements. Excluding the effects of the acquisition-related expenses
of E647 million, earnings from ordinary activities before taxation from our
asset management operations would have been E313 million in 2001, due primarily
to earnings at PIMCO.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Assets Under Management.  Third-party assets under management and Group's
own investments increased by E331 billion, or 89.7%, to E700 billion at the end
of 2000 from E369 billion at the end of 1999. Of this increase, E24 billion
represented growth in Group's own investments managed by the asset management
segment, while E307 billion represented growth in third-party assets under
management, primarily as a result of the acquisition of PIMCO in May 2000.

     Net Income.  Asset management net income of E23 million in 1999 decreased
E110 million to a net loss of E87 million in 2000. The increased assets under
management and the reduction in net income in 2000 from 1999 is primarily due to
the consolidation of seven months' results of PIMCO after its acquisition in May
2000. The contribution to net income from PIMCO of E51 million was more than
offset by expenses related to the acquisition.

                                        83
<PAGE>

                               THIRD-PARTY ASSETS

     The following table sets forth certain key data concerning our third-party
assets under management at December 31 for the years indicated:

        ASSET MANAGEMENT OPERATIONS -- KEY DATA BY GEOGRAPHIC REGION(1)

<Table>
<Caption>
                                                                      DECEMBER 31,
                                                              -----------------------------
                                                                  2001            2000
                                                              -------------   -------------
                                                                       %        E       %
                                                               E    (E IN BILLIONS)
<S>                                                           <C>   <C>       <C>     <C>
ADAM
  Germany...................................................   96     15.5       8      2.4
  Rest of Europe............................................   53      8.5      22      6.5
  NAFTA.....................................................  409     66.0     297     88.4
  Rest of World.............................................   26      4.2      --       --
                                                              ---    -----     ---    -----
     Subtotal...............................................  584     94.2     327     97.3
Other(2)....................................................   36      5.8       9      2.7
                                                              ---    -----     ---    -----
     Total..................................................  620    100.0     336    100.0
                                                              ===    =====     ===    =====
</Table>

---------------

(1) Represents location of Allianz Group asset management operations.

(2) In 2001, consists of assets managed by Dresdner Bank (E27 billion) and other
    Allianz Group companies (E9 billion).

     We have significantly grown our third-party assets under management in
recent years, both through acquisitions such as Dresdner Bank and
Nicholas-Applegate in 2001 and PIMCO in 2000, and through organic growth. We
intend to leverage the PIMCO, dit, Nicholas-Applegate and Dresdner RCM
franchises in further developing our third-party asset management business
through our flagship subsidiaries on a global basis. We believe that the
European markets offer especially attractive opportunities for third-party fund
managers. We also expect that investment fund products, in particular retirement
planning vehicles, will increase in importance in Europe. We expect this trend
to be supported by the increased demographic pressure that state-run pension
systems will face and the rising prevalence of defined contribution
arrangements. We believe that we are well-positioned in third-party markets,
especially in Germany, France and Italy, and we are seeking to increase our
market share in these markets.

     We are also developing our insurance and banking distribution capabilities,
including our dedicated advisory, branch bank and insurance networks in Europe,
as asset accumulation arms to further our asset management capabilities. Leading
examples of our activities in this area include our operations through Dresdner
Bank, where we have approximately 7,000 financial advisors in branch offices to
distribute our asset management, life insurance and other financial products;
our operations at RAS Group, with its independent network of licensed financial
advisors who distribute life insurance and financial products; and our
operations at the AGF Group in France, with its network of advisors offering
comprehensive financial planning services. See also "-- Banking Operations."

     We serve a comprehensive range of retail and institutional asset management
clients, including corporate and public pension funds, insurance and other
financial services companies, governments and charities, financial advisors and
private individuals. Our third-party asset management includes primarily equity,
fixed income, money market and sector products, as well as alternative
investments.

                                        84
<PAGE>

     The following tables show our third-party assets under management by
investment category and by investor class at December 31 for the years
indicated:

<Table>
<Caption>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 2001          2000
                                                              -----------   -----------
                                                               E      %      E      %
                                                                   (E IN BILLIONS)
<S>                                                           <C>   <C>     <C>   <C>
Fixed income................................................  377    60.8   240    71.3
Equity......................................................  218    35.2    96    28.7
Other(1)....................................................   25     4.0    --      --
                                                              ---   -----   ---   -----
  Total.....................................................  620   100.0   336   100.0
                                                              ===   =====   ===   =====
</Table>

---------------

(1) Includes primarily investments in real estate.

<Table>
<Caption>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 2001          2000
                                                              -----------   -----------
                                                               E      %      E      %
                                                                   (E IN BILLIONS)
<S>                                                           <C>   <C>     <C>   <C>
Institutional...............................................  466    75.2   269    80.1
Retail......................................................  154    24.8    67    19.9
                                                              ---   -----   ---   -----
  Total.....................................................  620   100.0   336   100.0
                                                              ===   =====   ===   =====
</Table>

     Our third-party asset management subsidiary ADAM is organized globally into
three principal business lines: global equity, global fixed-income and global
retail (distribution). Each of our asset management business lines is led by a
global head. Together with ADAM's chief executive officer and chief operating
officer, who sets standards and coordinates corporate controlling and
administration, each of the global heads is also a member of ADAM's executive
committee, which is responsible for ADAM's strategic development and financial
performance. In addition, country organizations led by country managers provide
shared infrastructure and services. ADAM's management structure has been
designed to manage the complexity of its multi-regional, multi-product and
multi-channel business activities. Within this structure, ADAM maintains
significant incentives for entrepreneurship and encourages its business units to
operate autonomously.

PORTFOLIO MANAGEMENT

     ADAM has globally consistent, well-structured and transparent investment
processes that are based on fundamental primary research. Our goal is to provide
our clients with portfolios that consistently offer superior performance in
accordance with our clients' investment objectives. We aim for outperformance
through active portfolio management coupled with comprehensive risk management
at all levels of the investment process. At December 31, 2001, we had more than
590 portfolio managers and more than 200 analysts in major markets worldwide
providing a comprehensive range of actively managed fixed-income and equity
products and services.

Global Fixed Income

     Our fixed-income portfolio investment process is led by PIMCO, one of the
world's leading fixed-income investment managers. Our fixed-income product range
includes total return, short and long duration, regional, country-specific,
global and other geographic products, sector products including government and
corporate bonds and specialty funds such as high yield and emerging markets. We
deliver our fixed-income products in a broad range of investment vehicles,
including separate accounts, fixed-income mutual funds and investment trusts.

                                        85
<PAGE>

Global Equity

     Our equity portfolio investment products include all major investment
styles: value investment, growth investment and core investment. Our equity
product range comprises regional, country-specific, global and other geographic
products, sector products such as technology, biotechnology, capital equipment,
consumer goods, energy and materials, and finance, as well as large, medium and
small market capitalization funds. We deliver our equity products in a broad
range of investment vehicles.

DISTRIBUTION

     In Europe, ADAM markets and services institutional products offered by its
asset management subsidiaries through specialized personnel located primarily in
its Frankfurt, London, Munich, Paris and Milan offices. European retail
distribution is provided primarily through the proprietary channels of the
Allianz Group, including branch bank advisors, full-time agents employed by
affiliated insurance companies and other Allianz Group financial planners and
advisors.

     In Germany, ADAM and its predecessors have offered mutual funds since 1949.
The funds are distributed primarily through our branch bank network and our
full-time insurance agents. To strengthen these channels, ADAM provides asset
management specialists and support services, including call centers and client
services. In addition, through our Advance financial planners and ADAM
subsidiaries, we are recruiting, training and deploying additional financial
planners who will offer a wide range of Allianz Group products, including mutual
funds, to investors.

     In France, AGF Asset Management markets a wide range of retail products to
individual investors through its own in-house network totaling approximately
8,000 financial advisors, including full-time agents employed by AGF Group,
brokers and specialist networks.

     In Italy, RAS Asset Management offers mutual funds, private banking
products, current accounts, credit and debit cards, brokerage services and real
estate financing. Retail products and services are marketed through affiliated
financial planners, financial advisors, banks and via the Internet.

     In the United Kingdom and the United States, each of our ADAM asset
managers markets and services its institutional products through its own
specialized personnel. The institutional markets in the United Kingdom and the
United States are dominated by consultants, who advise their clients with regard
to investment strategy and asset allocation, conduct due diligence on and rank
portfolio managers, and conduct searches. As a result, ADAM portfolio managers
in these areas put emphasis on servicing consultants. In addition, in the United
States, ADAM asset managers offer a wide range of retail products. The principal
proprietary channel is PIMCO Funds, which distributes mutual funds managed by
its affiliates through broker-dealers, financial planners, 401(k) funds and
other intermediaries. We also provide "wrap" services through broker-dealers, by
managing all or a part of separate accounts maintained by broker-dealers for
their customers. In the United States, ADAM also advises mutual funds sponsored
by third parties, including other mutual fund families and insurance companies
offering variable annuity products.

     ADAM has committed substantial resources to the build-out of a third-party
asset management business in Asia-Pacific. We have offices in Tokyo, Hong Kong,
Singapore, Taipei, Seoul and Sydney, which are being enlarged to accommodate
equity and fixed-income portfolio management as well as institutional and retail
distribution. ADAM is also seeking to leverage our brand, investment know-how
and customer relationships in China and to exploit the opportunities in this
growing asset management market.

                                        86
<PAGE>

COMPETITION

     Our main competitors in the asset management business include Deutsche
Bank, AXA, UBS, Credit Suisse, Fidelity Investments, Citigroup, Merrill Lynch,
Capital Group and Amvescap. Each of these entities has large,
multi-jurisdictional and multi-product asset management operations, and most of
them compete with us for both retail and institutional clients.

                            GROUP'S OWN INVESTMENTS

     Our Group's own investments consist of the investment portfolios of our
insurance, banking and asset management operations. Our investment strategy with
regard to our Group's own investments is to maximize long-term total return
while remaining within the Group's risk management guidelines. These guidelines
relate primarily to the quality of the investments and the matching of assets
and liabilities. Our policy is to closely match the maturities and currencies of
assets and liabilities. The investment policies of the insurance subsidiaries
reflect the different liability characteristics and tax profiles of their
respective operations. Our internationally integrated teams of portfolio
managers work closely with the regional asset management subsidiaries to
coordinate asset/liability management and product development activities.
Because our insurance investments mostly serve to cover liabilities in the
insurance business, our asset management professionals place a high priority on
high quality, liquid and widely marketable securities in our insurance
investments portfolio. For a discussion of the investment portfolios of our
banking operations, see "-- Selected Statistical Information Relating to Our
Banking Operations." For further discussion regarding our Group's investment
strategy and risk management practices, see "Quantitative and Qualitative
Disclosure about Market Risk."

     The following tables set forth the components of our Group's own investment
portfolios by investment category, as well as separate account assets, at the
end of the years indicated. Consistent with our general practice, amounts by
investment category are presented before consolidation adjustments representing
the elimination of transactions between Group companies in different segments.

<Table>
<Caption>
                                                   DECEMBER 31, 2001(1)
                           --------------------------------------------------------------------
                           PROPERTY-    LIFE/                ASSET      CONSOLIDATION
                           CASUALTY    HEALTH    BANKING   MANAGEMENT    ADJUSTMENTS     TOTAL
                           ---------   -------   -------   ----------   -------------   -------
                                                   (E IN MILLIONS)
<S>                        <C>         <C>       <C>       <C>          <C>             <C>
Investments in affiliated
  enterprises, joint
  ventures and associated
  enterprises............    40,387      6,043     2,079       116         (38,378)      10,247
Investments..............    91,712    180,076    85,133     1,362         (12,981)     345,302
Loans and advances to
  banks..................     5,079      1,010    54,271     1,646            (732)      61,274
Loans and advances to
  customers..............     2,837     24,843   222,916       561         (11,464)     239,693
Trading assets...........     1,373        775   125,741       539              (6)     128,422
                            -------    -------   -------     -----         -------      -------
  Subtotal...............   141,388    212,747   490,140     4,224         (63,561)     784,938
Separate accounts........        --     24,692        --        --              --       24,692
                            -------    -------   -------     -----         -------      -------
  Total..................   141,388    237,439   490,140     4,224         (63,561)     809,630
                            =======    =======   =======     =====         =======      =======
</Table>

---------------

(1) Group's own investments are stated at balance sheet value.

                                        87
<PAGE>

<Table>
<Caption>
                                                         DECEMBER 31, 2000(1)
                                 --------------------------------------------------------------------
                                 PROPERTY-    LIFE/                ASSET      CONSOLIDATION
                                 CASUALTY    HEALTH    BANKING   MANAGEMENT    ADJUSTMENTS     TOTAL
                                 ---------   -------   -------   ----------   -------------   -------
                                                         (E IN MILLIONS)
<S>                              <C>         <C>       <C>       <C>          <C>             <C>
Investments in affiliated
  Enterprises, joint ventures
  and associated enterprises...    22,514      5,615       96         62         (16,524)      11,763
Investments....................    95,718    186,799    3,070        528          (5,281)     280,834
Loans and advances to banks....     4,527      3,747    1,142      1,102          (3,448)       7,070
Loans and advances to
  customers....................     1,565     14,445   12,555        395            (874)      28,086
Trading assets.................        20        119       51        182              --          372
                                  -------    -------   ------      -----         -------      -------
  Subtotal.....................   124,344    210,725   16,914      2,269         (26,127)     328,125
Separate accounts assets.......        --     22,770       --         --              --       22,770
                                  -------    -------   ------      -----         -------      -------
  Total........................   124,344    233,495   16,914      2,269         (26,127)     350,895
                                  =======    =======   ======      =====         =======      =======
</Table>

---------------

(1) Group's own investments are stated at balance sheet value.

INSURANCE OPERATIONS INVESTMENTS

     The following is a discussion of the investment portfolio of our insurance
operations. For a discussion of the investment portfolios of our banking
operations, see "-- Selected Statistical Information Relating to Our Banking
Operations."

INTEREST-BEARING SECURITIES

     Fixed income securities, including both government and corporate bonds,
constituted 43.8% of our property-casualty investment portfolio and 68.1% of our
life/health investment portfolio as of December 31, 2001. The credit quality of
our fixed income securities portfolio has historically been strong. As of
December 31, 2001, of the rated fixed income securities in our Group's own
investments portfolio, approximately 41% had a rating comparable to a Standard &
Poor's rating of AAA, approximately 75% were invested in securities with a
Standard & Poor's rating of AA or better and approximately 99% were invested in
securities with a Standard & Poor's rating of BBB or better.

     The following table analyzes the maturities of our fixed income investments
available for sale at December 31, 2001:

<Table>
<Caption>
                                                              AMORTIZED COST   MARKET VALUE
                                                              --------------   ------------
                                                                     (E IN MILLIONS)
<S>                                                           <C>              <C>
Contractual term to maturity:
  Up to one year............................................      28,814          25,689
  Over one year through five years..........................      98,301         105,619
  Over five years through ten years.........................      85,572          88,209
  Over ten years............................................      23,062          21,212
                                                                 -------         -------
     Total..................................................     235,749         240,729
                                                                 =======         =======
</Table>

EQUITY INVESTMENTS

     Equity investments constituted 39.4% of our property-casualty investment
portfolio and 19.9% of our life/health investment portfolio as of December 31,
2001. We have a long-standing strategy of investing life policyholders' and
shareholders' funds and some amounts of property-casualty cash flow in equities.
Since the early 1900's, the life/health and property-casualty

                                        88
<PAGE>

investments in Germany have included equity positions in a number of well-known
German companies (see table below). In January 2002, we sold substantially all
of our shareholding in HypoVereinsbank to Munich Re and acquired Munich Re's
shareholding in Allianz Leben, thereby increasing our ownership of Allianz Leben
to 91.1%. See "Major Shareholders and Related Party Transactions."

     The long duration of this strategy, combined with the high returns on the
equity investments, has contributed to the long-term return of policyholders and
has enhanced the overall capitalization of the Group. The German tax reform that
took effect on January 1, 2002 eliminated the capital gains tax for corporations
on the sale of such equity investments. This change significantly increases the
potential value of these investments, as it allows us to realize the value of
these holdings in a tax advantaged manner. We believe that equities will
continue to represent an attractive long-term investment option. We expect that
the Group's own investment portfolio will become more weighted towards equities
in the coming years. In accordance with German law, a substantial portion of the
annual profits of the life insurance portfolio is credited to policyholders.

     The following table sets forth our Group's own investment portfolios by
geographic region at the end of the years indicated:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                   --------------------------------------------
                                                           2001                    2000
                                                   --------------------    --------------------
                                                   PROPERTY-     LIFE/     PROPERTY-     LIFE/
                                                   CASUALTY     HEALTH     CASUALTY     HEALTH
                                                   ---------    -------    ---------    -------
                                                                 (E IN MILLIONS)
<S>                                                <C>          <C>        <C>          <C>
Germany..........................................   100,600     117,233      79,398     121,100
Rest of Europe...................................    59,139      97,547      56,164      93,400
NAFTA............................................    20,398      18,438      17,945      15,604
Rest of World....................................     2,514       4,491       1,820       3,607
Specialty Lines..................................     3,007          --       3,057          --
Consolidated Adjustments.........................   (44,270)       (270)    (34,040)       (216)
                                                    -------     -------     -------     -------
  Total..........................................   141,388     237,439     124,344     233,495
                                                    =======     =======     =======     =======
</Table>

SIGNIFICANT GROUP EQUITY INVESTMENTS

     The following tables set forth information regarding our significant equity
investments in German and non-German companies at December 31, 2001. Except for
the investments in Munich Re and Beiersdorf AG, which are valued by the equity
method because we hold more than a 20% interest, these investments are carried
on our financial statements at market value.

<Table>
<Caption>
                                                                   DECEMBER 31, 2001
                                                     ---------------------------------------------
                                                     CARRYING VALUE    MARKET VALUE    % OWNERSHIP
                                                     --------------    ------------    -----------
                                                                    (E IN MILLIONS)
<S>                                                  <C>               <C>             <C>
Munich Re(1).......................................      4,572            13,454          24.9
Beiersdorf AG......................................      1,077             4,629          43.6
</Table>

---------------

(1) Our interest in Munich Re was substantially restructured pursuant to our
    acquisition of Dresdner Bank in July 2001 and our related agreements with
    Munich Re. See "Major Shareholders and Related Party Transactions."

                                        89
<PAGE>

<Table>
<Caption>
                                                                   DECEMBER 31, 2001
                                                              ---------------------------
                                                              MARKET VALUE    % OWNERSHIP
                                                              ------------    -----------
                                                                    (E IN MILLIONS)
<S>                                                           <C>             <C>
GERMAN COMPANIES
  E.ON AG...................................................     3,736            9.2
  HypoVereinsbank(1)........................................     3,024           16.4
  RWE AG....................................................     2,753           11.4
  BASF AG...................................................     2,678           10.9
  Siemens AG................................................     2,558            3.8
  Deutsche Bank AG..........................................     2,209            4.5
  Bayerische Motorenwerke AG................................     1,692            6.5
  Bayer AG..................................................     1,524            5.8
  Schering AG...............................................     1,422           11.9
  Vodafone AG...............................................     1,145            0.7

NON-GERMAN COMPANIES
  Credit Lyonnais S.A.......................................     1,272            9.9
  UniCredito Italiano S.p.A.................................     1,134            5.0
  Nokia Oyj.................................................       988            0.7
  Total Fina Elf S.A........................................       925            0.8
  Nestle S.A................................................       853            0.9
  Novartis AG...............................................       818            0.8
  Societe Generale S.A......................................       747            2.8
  Royal Dutch Petroleum.....................................       701            0.6
  Vodafone Group PLC........................................       618            0.3
  Aventis S.A...............................................       593            1.0
  UBS AG....................................................       580            0.8
  BNP Paribas...............................................       568            1.3
  Vivendi Universal.........................................       538            0.8
  ENI S.p.A.................................................       512            0.9
</Table>

---------------

(1) We disposed of substantially all of our current shareholding in
    HypoVereinsbank in January 2002 pursuant to our agreements with Munich Re.
    See "Major Shareholders and Related Party Transactions."

                                        90
<PAGE>

INVESTMENT INCOME

     The following tables set forth the components of our investment income and
expenses for each of the property-casualty, life/health, banking and asset
management segments for the years ended December 31, 2001, 2000 and 1999:

<Table>
<Caption>
                                                       YEAR ENDED DECEMBER 31, 2001
                                    -------------------------------------------------------------------
                                    PROPERTY-   LIFE/                ASSET      CONSOLIDATION
                                    CASUALTY    HEALTH   BANKING   MANAGEMENT    ADJUSTMENTS     TOTAL
                                    ---------   ------   -------   ----------   -------------   -------
                                                              (E IN MILLIONS)
<S>                                 <C>         <C>      <C>       <C>          <C>             <C>
INVESTMENT INCOME
  Interest and similar income.....    5,068     10,765    9,085        129           (823)       24,224
  Income from affiliated
    enterprises, joint ventures
    and associated enterprises....      889        525    1,016         (3)          (839)        1,588
  Realized gains..................    4,211      3,405      505         33            (39)        8,115
  Income from revaluations........       96        157      123         11             --           387
  Trading income..................    1,451       (117)     244         10              4         1,592
                                     ------     ------   ------       ----         ------       -------
    Subtotal......................   11,715     14,735   10,973        180         (1,697)       35,906

INVESTMENT EXPENSES
  Interest and similar expenses...   (1,323)      (492)  (6,852)       (82)           802        (7,947)
  Realized losses.................   (2,088)    (4,542)    (341)       (51)            24        (6,998)
  Loan loss allowance.............       (4)        (4)    (588)        --             --          (596)
  Write-downs and other expenses..     (800)      (995)    (124)        (6)            --        (1,925)
  Investment management
    expenses......................     (499)      (546)      --         --            104          (941)
                                     ------     ------   ------       ----         ------       -------
    Subtotal......................   (4,714)    (6,579)  (7,905)      (139)           930       (18,407)
                                     ------     ------   ------       ----         ------       -------
INVESTMENT INCOME (NET)...........    7,001      8,156    3,068         41           (767)       17,499
                                     ======     ======   ======       ====         ======       =======
</Table>

                                        91
<PAGE>

<Table>
<Caption>
                                                       YEAR ENDED DECEMBER 31, 2000
                                    -------------------------------------------------------------------
                                    PROPERTY-   LIFE/                ASSET      CONSOLIDATION
                                    CASUALTY    HEALTH   BANKING   MANAGEMENT    ADJUSTMENTS     TOTAL
                                    ---------   ------   -------   ----------   -------------   -------
                                                              (E IN MILLIONS)
<S>                                 <C>         <C>      <C>       <C>          <C>             <C>
INVESTMENT INCOME
  Interest and similar income.....    5,568     10,152    1,502        204           (831)       16,595
  Income from affiliated
    enterprises, joint ventures
    and associated enterprises....    1,833        693      122          1           (789)        1,860
  Realized gains..................    4,250      6,639       24         18            (24)       10,907
  Income from revaluations........        9         28        1         --             --            38
  Trading income..................      (10)       (49)       7         16             --           (36)
                                     ------     ------   ------       ----         ------       -------
    Subtotal......................   11,650     17,463    1,656        239         (1,644)       29,364

INVESTMENT EXPENSES
  Interest and similar expenses...   (1,136)      (148)  (1,257)       (61)           203        (2,399)
  Realized losses.................   (1,428)    (2,624)     (28)        --              1        (4,079)
  Loan loss allowance.............       --         --      (21)        --             --           (21)
  Write-downs and other expenses..     (485)      (380)      (5)        --             --          (870)
  Investment management
    expenses......................     (558)      (406)      --         --              8          (956)
                                     ------     ------   ------       ----         ------       -------
    Subtotal......................   (3,607)    (3,558)  (1,311)       (61)           212        (8,325)
                                     ------     ------   ------       ----         ------       -------
INVESTMENT INCOME (NET)...........    8,043     13,905      345        178         (1,432)       21,039
                                     ======     ======   ======       ====         ======       =======
</Table>

<Table>
<Caption>
                                                       YEAR ENDED DECEMBER 31, 1999
                                    ------------------------------------------------------------------
                                    PROPERTY-   LIFE/                ASSET      CONSOLIDATION
                                    CASUALTY    HEALTH   BANKING   MANAGEMENT    ADJUSTMENTS    TOTAL
                                    ---------   ------   -------   ----------   -------------   ------
                                                             (E IN MILLIONS)
<S>                                 <C>         <C>      <C>       <C>          <C>             <C>
INVESTMENT INCOME
  Interest and similar income.....    5,169      9,889    1,503        204           (822)      15,943
  Income from affiliated
     enterprises, joint ventures
     and associated enterprises...    1,113        625       35        (39)          (254)       1,480
  Realized gains..................    3,728      4,694       24          7            (52)       8,401
  Income from revaluations........        5          8       --         --             --           13
  Trading income..................        2         --        6          6             --           14
                                     ------     ------   ------       ----         ------       ------
     Subtotal.....................   10,017     15,216    1,568        178         (1,128)      25,851
                                     ------     ------   ------       ----         ------       ------
INVESTMENT EXPENSES
  Interest and similar expenses...     (621)      (119)  (1,268)      (114)            92       (2,030)
  Realized losses.................     (991)    (1,587)     (27)        --             70       (2,535)
  Loan loss allowance.............       --         --      (29)        --             --          (29)
  Write-downs and other expenses..     (162)      (289)      (2)        (1)            --         (454)
  Investment management expenses..     (352)      (364)      --         --             11         (705)
                                     ------     ------   ------       ----         ------       ------
     Subtotal.....................   (2,126)    (2,359)  (1,326)      (115)           173       (5,753)
                                     ------     ------   ------       ----         ------       ------
INVESTMENT INCOME (NET)...........    7,891     12,857      242         63           (955)      20,098
                                     ======     ======   ======       ====         ======       ======
</Table>

                                        92
<PAGE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Net investment income decreased by E3,540 million, or 16.8%, to E17,499
million in 2001 from E21,039 million in 2000, largely as a result of the
downturn in the capital markets in 2001, as reflected in the decrease in
realized gains, which decreased by E2,792 million, or 25.6%, and the increase in
realized losses, which increased by E2,919 million, or 71.6%, in 2001 compared
to 2000.

     Property-casualty insurance investments increased by E17,044 million, or
13.7%, to E141,388 million in 2001 from E124,344 million in 2000, due primarily
to an increase in investments in affiliated enterprises, joint ventures and
associated enterprises. Net investment income from property-casualty investments
decreased by E1,042 million, or 13.0%, to E7,001 million in 2001 from E8,043
million in 2000, due primarily to price declines on the capital markets.
Interest and similar income decreased 9.0% to E5,068 million in 2001, compared
with E5,568 million in 2000, while realized gains decreased slightly to E4,211
million in 2001, compared with E4,250 million in 2000. Investment expenses
increased by E1,107 million, or 30.7%, to E4,714 million in 2001 from E3,607
million in 2000, reflecting primarily increased realized losses on investments
and write-downs of investments as a result of price declines in the capital
markets.

     Life/health insurance investments increased slightly by E3,944 million, or
1.7%, to E237,439 million in 2001 from E233,495 million in 2000, reflecting
primarily an increase in separate account investments. Net investment income
from life/health investments decreased by E5,749 million, or 41.3%, to E8,156
million in 2001 from E13,905 million in 2000, primarily due to a decrease in
realized gains on investments and an increase in realized losses on investments
due to price declines in the capital markets. Interest and similar income
increased 6.0%, to E10,765 million in 2001, compared with E10,152 million in
2000, while realized gains decreased 48.7%, to E3,405 million in 2001, compared
with E6,639 million in 2000. Investment expenses increased by E3,021 million, or
84.9%, to E6,579 million in 2001 from E3,558 million in 2000, reflecting
primarily an increase in realized losses on investments and write-downs of
investments due to price declines in the capital markets.

     Banking investments increased by E473,226 million to E490,140 million in
2001 from E16,914 in 2000, due primarily to the acquisition of Dresdner Bank.
The Dresdner Bank acquisition was also the primary driver of the banking
segment's investment results, as our banking operations were not significant in
2000. Net investment income from banking investments increased by E2,723
million, to E3,068 million in 2001 from E345 million in 2000. Interest and
similar income increased to E9,085 million in 2001, compared with E1,502 million
in 2000, while realized gains increased to E505 million in 2001, compared with
E24 million in 2000. Investment expenses increased to E7,905 million in 2001
from E1,311 million in 2000.

     Asset management investments increased by E1,955 million, or 86.2%, to
E4,224 million in 2001 from E2,269 million in 2000, reflecting primarily the
acquisition of Dresdner Bank, offset in part by price declines on the capital
markets. Net investment income from asset management investments decreased by
E137 million to E41 million in 2001 from E178 million in 2000. Interest and
similar income decreased by E75 million, or 36.8%, to E129 million in 2001,
compared with E204 million in 2000, while realized gains increased to E33
million in 2001 from E18 million in 2000. Investment expenses increased by E78
million, or 127.9%, to E139 million in 2001 from E61 million in 2000, reflecting
primarily realized losses on investments due to price declines in the capital
markets.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Net investment income increased by E941 million, or 4.7%, to E21,039
million in 2000 from E20,098 million in 1999, largely as a result of portfolio
growth and higher net realized gains, which were taken due to the strong
performance of the capital markets.

                                        93
<PAGE>

     Property-casualty insurance investments increased by E8,131 million, or
7.0%, to E124,344 million in 2000 from E116,213 million in 1999, due primarily
to the strong performance of capital markets. Net investment income from
property-casualty investments increased by E152 million, or 1.9%, to E8,043
million in 2000 from E7,891 million in 1999. Interest and similar income rose
7.7% to E5,568 million in 2000, compared with E5,169 million in 1999, while
realized gains increased 14.0%, to E4,250 million in 2000, compared with E3,728
million in 1999. Investment expenses increased by E1,481 million, or 69.7%, to
E3,607 million in 2000 from E2,126 million in 1999, reflecting an increase in
realized losses resulting from a repositioning of the investment portfolio which
involved the sale of positions with underlying losses.

     Life/health insurance investments increased by E15,483 million, or 7.1%, to
E233,495 million in 2000 from E218,012 million in 1999, reflecting the strong
performance of the capital markets and a strong increase in the life insurance
segment in Germany. Net investment income from life/health investments increased
by E1,048 million, or 8.2%, to E13,905 million in 2000 from E12,857 million in
1999, primarily due to higher realized gains. Interest and similar income rose
2.7%, to E10,152 million in 2000, compared with E9,889 million in 1999, while
realized gains increased 41.4%, to E6,639 million in 2000, compared with E4,694
million in 1999. The increase in realized gains reflected favorable market
conditions and was driven in large part by the need to deliver competitive
returns on policies with profit-sharing components. Investment expenses
increased by E1,199 million, or 50.8%, to E3,558 million in 2000 from E2,359
million in 1999, reflecting primarily an increase in realized losses resulting
from portfolio management activities similar to those for our property-casualty
insurance investments described above.

     Banking investments increased slightly by E104 million, to E16,914 million
in 2000 from E16,810 million in 1999. Net investment income from banking
investments increased by E103 million, or 42.6%, to E345 million in 2001 from
E242 million in 2000, due primarily to increased income from affiliated
enterprises, joint ventures and associated enterprises, which increased by E87
million to E122 million in 2000 from E35 million in 1999. Interest and similar
income decreased slightly to E1,502 million in 2000 from E1,503 million in 1999,
while realized gains remained unchanged at E24 million in 2000. Investment
expenses decreased by E15 million, or 1.1%, to E1,311 million in 2000 from
E1,326 million in 1999.

     Asset management investments decreased slightly by E3 million, to E2,269
million in 2000 from E2,272 million in 1999. Net investment income from asset
management operations increased by E115 million, or 182.5%, to E178 million in
2000 from E63 million in 1999, due primarily to an increase in income from
affiliated enterprises, joint ventures and associated enterprises, as well as a
decrease in interest and similar expenses. Interest and similar income remained
unchanged at E204 million in 2000, while realized gains increased to E18 million
in 2000 from E7 million in 1999. Investment expenses decreased by E54 million,
or 47.0%, to E61 million in 2000 from E115 million in 1999, due primarily to
decreased interest and similar expenses, which decreased by E53 million, to E61
million in 2000 from E114 million in 1999.

                        LIQUIDITY AND CAPITAL RESOURCES

     We operate as both a holding company for the Group's insurance, banking and
other subsidiaries and as a reinsurance company, primarily for other Group
companies. The liquidity and capital resource considerations for us and for our
domestic and non-domestic operating subsidiaries vary in light of the business
conducted by each, as well as the insurance and banking regulatory requirements
applicable to the Allianz Group in Germany and the other countries in which it
does business. At December 31, 2001, 2000 and 1999, the Allianz Group had
E21,240 million, E4,209 million and E3,930 million, respectively, of cash and
cash equivalents. See Note 12 to our consolidated financial statements. We
believe that our working capital is sufficient for our present requirements.

                                        94
<PAGE>

     Our principal sources of funds are premiums, customer deposits, investment
income, funds that may be raised from time to time from the issuance of debt or
equity securities and bank or other borrowings, as well as cash dividends and
reinsurance premiums received from our subsidiaries. We also receive funds from
our subsidiaries' internal pension operations, which we invest on their behalf.
For a description of the types of financial instruments we use and the maturity
profile of our financial liabilities, see Note 21 to the consolidated financial
statements. See also "-- Selected Statistical Information Relating to Our
Banking Operations" and "Quantitative and Qualitative Disclosures About Market
Risk." For further information regarding the uses and sources of liquidity,
capital requirements, and other related matters, see "-- Consolidated Cash
Flows."

     The majority of Allianz AG's external debt financing at December 31, 2001
was in the form of debentures and money market securities. The Allianz Group's
total certificated liabilities outstanding at December 2001, 2000 and 1999 were
E134,670 million, E13,606 million, and E10,963 million, respectively. Of the
certificated liabilities outstanding at December 31, 2001, E54,106 million were
due within one year. For further information regarding outstanding certificated
liabilities, see Note 21 to our consolidated financial statements. Proceeds to
Allianz AG from the issuance of debt for the years ended December 31, 2001, 2000
and 1999 were E3,054 million, E2,354 million and E767 million, respectively.

     We paid dividends of E367 million, E306 million and E275 million on our
shares in 2001, 2000 and 1999 with respect to the fiscal years 2000, 1999 and
1998, respectively. See "Key Information -- Dividends." Dividends paid by our
operating subsidiaries outside of Germany are generally retained by an
intermediate holding company to finance operations or acquisitions in the
relevant countries. As a result, we generally pay dividends out of the profits
from our reinsurance operations and profits transferred from our German
operating subsidiaries.

     Certain of our subsidiaries are subject to legal restrictions on the amount
of dividends they can pay to their shareholders. In addition to the restrictions
in respect of minimum capital and solvency requirements that are imposed by
insurance and other regulators in the countries in which our subsidiaries
operate, other limitations exist in certain countries. For example, the
operations of our insurance company subsidiaries located in the United States
are subject to limitations on the payment of dividends to their parent company
under applicable state insurance laws. Dividends paid in excess of these
limitations generally require prior approval of the insurance commissioner of
the state of domicile. See "-- Regulation and Supervision."

                            CONSOLIDATED CASH FLOWS

     The principal sources of funds for our insurance operations are premiums,
net investment income and proceeds from sales or maturity of investments, while
the major uses of these funds are to pay property-casualty claims and related
claims expenses, provide life policy benefits, pay surrenders and profit sharing
for life policyholders and pay other operating costs. We generate a substantial
cash flow from insurance operations as a result of most premiums being received
in advance of the time when claim payments or policy benefits are required.
These positive operating cash flows, along with that portion of the investment
portfolio that is held in cash and highly liquid securities, have historically
met the liquidity requirements of our insurance operations, as evidenced by the
growth in investments.

     With regard to our banking operations, our primary sources of liquidity are
customer deposits and interest income from our lending transactions and our
investment portfolio, while our major uses of funds are for the issuance of new
loans and advances to banks and customers, and the payment of interest on
deposits, certificated liabilities and subordinated liabilities. Other sources
of liquidity include our ability to borrow on the interbank market and convert
securities in our investment and trading portfolios into cash.

                                        95
<PAGE>

     On a consolidated basis, we have additional sources of liquidity through
our access to commercial paper, medium-term notes and other credit facilities.

     In the insurance industry, liquidity generally refers to the ability of an
enterprise to generate adequate amounts of cash from its normal operations,
including its investment portfolio, in order to meet its financial commitments,
which are principally obligations under its insurance or reinsurance contracts.
The liquidity of our property-casualty insurance operations is affected by the
frequency and severity of losses under its policies, as well as by the
persistency of its products. Future catastrophic events, the timing and effect
of which are inherently unpredictable, may also create increased liquidity
requirements for our property-casualty operations. The liquidity needs of our
life operations are generally affected by trends in actual mortality experience
relative to the assumptions with respect thereto included in the pricing of its
life insurance policies, by the extent to which minimum returns or crediting
rates are provided in connection with its life insurance products, as well as by
the level of surrenders and withdrawals.

     Our uses of funds, in addition to shareholder dividends (which amounted to
E367 million in 2001), include underwriting expenditures (reinsurance premiums,
benefits, surrenders, claims (including claims handling expenses) and profit
sharing by life policyholders), acquisitions, and employee and other operating
expenses, as well as interest expense on outstanding borrowings. Our life and
health insurance products include mandatory profit-sharing features, whereby we
return a specified portion of statutory profits to policyholders annually,
generally in the form of premium subsidies or rebates. Since the beginning of
2000, we have been required by law to return 90% of surplus from capital
investments in our life and health businesses to our policyholders. Since the
actual levels of profit sharing have been over 90% in recent years as a result
of competitive forces, we do not expect the new regulatory requirement to
materially affect our liquidity or results of operations.

     Recent significant acquisitions have included the purchases of AGF in 1998,
PIMCO in May 2000, Nicholas-Applegate in January 2001 and Dresdner Bank in July
2001. See Note 3 to our consolidated financial statements for additional
information.

     The liquidity requirements of our insurance operations are met on both a
short- and long-term basis by funds provided by insurance premiums collected,
investment income and collected reinsurance receivables, and from the sale and
maturity of investments. We also have access to commercial paper, medium-term
note and other credit facilities as additional sources of liquidity.

     Our capital requirements are primarily dependent on our business plans
regarding the levels and timing of capital expenditures and investments. Subject
to developments affecting the Group which cannot be predicted or controlled, we
currently intend to maintain Group capital expenditure levels generally in the
range of the past three years. We are not currently subject to any commitment
for capital expenditures which individually is material to the Group. For a
description of our principal acquisitions and dispositions of businesses during
the last three years, see Note 3 to the consolidated financial statements. For a
listing of our significant subsidiaries, see Note 46 to the consolidated
financial statements.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     First-time compliance with regulations specific to the banking sector
required changes in the format of the cash flow statement. The headings for the
previous years were adjusted accordingly. The cash flow statement excludes the
effects of the first-time consolidation of major new acquisitions during the
course of 2001, including, among others, Dresdner Bank and Nicholas-Applegate.
Subsequent to their respective dates of acquisition, the cash of these companies
has been included in the cash flow statement. For additional information, see
Note 44 to our consolidated financial statements.

                                        96
<PAGE>

     Net cash used in operating activities was E775 million in 2001, compared to
net cash provided by operating activities of E2,476 million in 2000. The
decrease was primarily attributable to an increased change in trading securities
and a decrease in net income for the year. This was offset by an increased
adjustment for investment income and expenses not involving movement in cash,
and an increased change in other receivables and liabilities.

     Net cash provided by investing activities was E18,019 million in 2001,
compared to net cash used in investing activities of E6,955 million in 2000. The
increase was primarily driven by an increased change in cash and cash
equivalents from the acquisition of consolidated affiliated companies, following
the acquisition of Dresdner Bank and Nicholas-Applegate, an increased change in
available-for-sale securities and an increased change in other investments.

     Net cash used in financing activities was E231 million in 2001, compared to
net cash provided by financing activities of E4,749 million in 2000. The
decrease was primarily attributable to a decreased change in loans,
participation certificates and post-ranking liabilities, and a decreased change
in other financing activities.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Net cash provided by operating activities was E2,476 million in 2000,
compared to E10,996 million in 1999. The decrease was primarily attributable to
a decreased change in deferred acquisition costs, an increase in loans and
advances from banks and customers, a decrease in certificated liabilities, a
decrease change in other assets and liabilities, an increased change in deferred
tax assets/liabilities, and an increased adjustment for investment
income/expenses not involving movements of cash. This was offset by increased
net income for the year and increased changes in reserve for loss and loss
adjustment expense and other insurance reserves.

     Net cash used in investing activities in 2000 was E6,955 million, compared
to E9,727 million in 1999, a decrease of E2,772 million, or approximately 28.5%.
The decrease reflected a decline in net purchases of securities available for
sale, offset by increased use of cash flows for acquisitions.

     Net cash flow from financing activities increased to E4,749 million in 2000
from E286 million in 1999, primarily reflecting an increase in debt.

     The operating, investing and financing activities described above resulted
in net cash and cash equivalents at year-end 2000 of E4,209 million, compared to
E3,930 million at year-end 1999, an increase of E279 million from 1999 levels.

                      PROPERTY-CASUALTY INSURANCE RESERVES

GENERAL

     When claims are made by or against policyholders, any amounts that a member
of the Allianz Group's property-casualty segment pays or expects to pay the
claimant are referred to as losses, and the costs of investigating, resolving
and processing these claims are referred to as loss adjustment expenses (or
LAE). Allianz establishes reserves for payment of losses and LAE for claims that
arise from its property-casualty insurance and reinsurance policies by product,
coverage and year for each company in the Group. In accordance with IAS, no
specific loss and LAE reserves are established until an event that causes a loss
occurs.

     Loss and LAE falls into two categories: reserves for reported claims and
reserves for incurred but not reported (IBNR) claims. Reserves for reported
claims are based on estimates of future payments that will be made in respect of
claims, including expenses relating to such claims. Such estimates are made on a
case-by-case basis, based on the facts and circumstances available at the time
the reserves are established. The estimates reflect the informed judgment of our
claims personnel based on general insurance reserving practices and knowledge of
the

                                        97
<PAGE>

nature and value of a specific type of claim. These reserves are periodically
adjusted in the ordinary course of settlement and represent the estimated
ultimate costs necessary to bring all pending reported claims to final
settlement, taking into account inflation, and other societal and economic
factors which can influence the amount of the reserves required. Consideration
is given to historic trends of disposition patterns and loss payments, pending
levels of unpaid claims and types of coverage. In addition, court decisions,
economic conditions and public attitudes may also affect the estimation of
reserves, as well as ultimate costs of claims.

     IBNR reserves are established to recognize the estimated cost of losses
that have occurred but about which the Group does not yet have notice. These
reserves, like the reserves for reported claims, are established to recognize
the estimated costs, including expenses, necessary to bring claims arising out
of losses to final settlement. Since nothing is known about the occurrence, the
Group relies on its past experience adjusted for current trends and any other
factors that would modify past experience to estimate the IBNR liability. These
reserves are estimates that involve actuarial and statistical projections of the
expected cost of the ultimate settlement and administration of claims. The
analyses are based on facts and circumstances known at the time, predictions of
future events, estimates of future inflation and other societal and economic
factors. Late reported claim trends, claim severity, exposure growth and future
inflation are some of the factors used in projecting the IBNR reserve
requirements. These reserves are reviewed and revised periodically as additional
information becomes available and actual claims are reported.

     The time required to learn of and settle claims is an important
consideration in establishing reserves. Short-tail claims, such as automobile
property damage claims, are reported within a few days or weeks and are
generally settled within two to three years. Medium-tail claims such as personal
and commercial motor liability claims generally take four to six years to
settle, while long-tail claims, such as general liability, workers compensation,
construction and professional liability claims take longer to settle. Based on
the profile of property-casualty reserves for our largest operating entities, we
characterize our reserves as approximately 20% short-tail, 40% medium-tail and
40% long-tail.

     The ultimate cost of loss and LAE is subject to a number of highly variable
circumstances. As time passes between when a claim is reported to the final
settlement of the claim, a change in circumstances may require established
reserves to be adjusted either upwards or downwards. Items such as changes in
the legal environment, results of litigation, and changes in medical costs,
costs of automobile and home repair materials and labor rates can substantially
impact claim costs. These factors can cause actual developments to vary from
expectations, perhaps materially. Claims reserve estimates are periodically
reviewed and updated, using the most current information available to
management, and any adjustments resulting from changes in reserve estimates are
reflected in current results of operations.

     On the basis of the Group's internal procedures, management believes, based
on information currently available to it, that the Group's property-casualty
reserves are adequate. However, the establishment of loss reserves is an
inherently uncertain process, and accordingly, there can be no assurance that
ultimate losses will not differ from the Group's initial estimates.

                                        98
<PAGE>

RECONCILIATION OF BEGINNING AND ENDING LOSS AND LAE RESERVES

     The following table is a summary reconciliation of the beginning and ending
reserves of the Allianz Group, including the effect of reinsurance ceded, for
the property-casualty insurance segment for each of the years in the three-year
period ended December 31, 2001, on an IAS basis.

                    RECONCILIATION OF LOSS AND LAE RESERVES
                      PROPERTY-CASUALTY INSURANCE SEGMENT

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2001     2000     1999
                                                              ------   ------   ------
                                                                  (E IN MILLIONS)
<S>                                                           <C>      <C>      <C>
Balance as of January 1.....................................  54,047   51,272   45,560
Less reinsurance recoverable................................  12,571   12,089    9,428
                                                              ------   ------   ------
Net.........................................................  41,476   39,183   36,132
                                                              ------   ------   ------
Plus incurred related to:
  Current year..............................................  27,295   24,163   23,427
  Prior years(1)............................................      76     (123)    (787)
                                                              ------   ------   ------
Total incurred..............................................  27,371   24,040   22,640
                                                              ======   ======   ======
Less paid related to:
  Current year..............................................  11,895   11,735   12,279
  Prior years...............................................  12,462   11,968    9,166
                                                              ------   ------   ------
Total paid..................................................  24,357   23,703   21,445
                                                              ------   ------   ------
Effect of foreign exchange..................................     407      649    1,410
Effect of acquisitions(2)...................................     423      240      928
Reclassification(3).........................................      --      458       --
Other(4)....................................................      --      609     (482)
                                                              ------   ------   ------
Net balance at end of year..................................  45,320   41,476   39,183
Plus reinsurance recoverable................................  16,156   12,571   12,089
                                                              ------   ------   ------
Balance as of December 31...................................  61,476   54,047   51,272
                                                              ======   ======   ======
</Table>

---------------

(1) The favorable development in 1999 and 2000 is primarily due to our
    subsidiaries in Germany, Austria and the United Kingdom, offset to some
    extent by unfavorable run-off in Italy and the United States.

(2) Reserves for loss and LAE of subsidiaries purchased (or sold) are included
    (or excluded) as of the date of transaction (or disposition).

(3) Represents the movement of certain AGF Belgium reserves from aggregate
    policy reserves to loss reserves.

(4) In 2000, includes the impact of the commutation of a reinsurance agreement
    with Munich Re (E322 million).

CHANGES IN HISTORICAL LOSS AND LAE RESERVES

     The following loss and LAE reserve development table illustrates the change
over time of the loss and LAE reserves of the Group at the end of the years
indicated. The reserves represent the estimated amount of loss and LAE for
claims arising in the current and all prior accident years that are unpaid at
the balance sheet date, including IBNR. Since the Group adopted IAS in 1997,
historical loss development data is available on an IAS basis of accounting for
the five years 1997 to 2001 only.

                                        99
<PAGE>

     The first section of each table shows gross reserves for loss and LAE as
initially established at the end of each stated year. The second section,
reading down, shows the cumulative amounts paid, gross of reinsurance and
retrocessions, as of the end of the successive years with respect to the reserve
initially established. The third section shows the retroactive re-estimation of
the initially established gross reserves for loss and LAE as of the end of each
successive year, which results primarily from the Group's expanded awareness of
additional facts and circumstances that pertain to open claims. The last section
compares the latest re-estimated gross reserves for loss and LAE to the gross
reserves as initially established and indicates the cumulative development of
the initially established gross reserves through December 31, 2001. For
instance, the surplus (deficiency) shown in the table for each year represents
the aggregate amount by which the original estimates of reserves at that
year-end have changed in subsequent years.

     Accordingly, the cumulative surplus (deficiency) for a year-end relates
only to reserves at that year-end and such amounts are not additive.

     Caution should be exercised in evaluating the information shown on this
table, as each amount includes the effects of all changes in amounts for prior
periods. Conditions and trends that have affected development of liability in
the past may or may not necessarily occur in the future, and accordingly,
conclusions about future results may not be derived from information presented
in this table.

             CHANGES IN HISTORICAL RESERVES FOR UNPAID LOSS AND LAE
                      PROPERTY-CASUALTY INSURANCE SEGMENT
                              GROSS OF REINSURANCE

<Table>
<Caption>
                                                                      DECEMBER 31,(1)
                                                       ----------------------------------------------
                                                        1997      1998      1999      2000      2001
                                                       ------    ------    ------    ------    ------
                                                                      (E IN MILLIONS)
<S>                                                    <C>       <C>       <C>       <C>       <C>
Gross liability for unpaid claims and claims
  expenses...........................................  34,323    45,560(2) 51,272(3) 54,047    61,476(4)
Paid (cumulative) as of:
  One year later.....................................   8,573    12,996    15,949    16,639
  Two years later....................................  13,329    20,967    24,132
  Three years later..................................  16,778    24,588
  Four years later...................................  19,562
Liability re-estimated as of:
  One year later.....................................  32,200    46,768    52,663    55,357
  Two years later....................................  33,104    46,975    53,589
  Three years later..................................  32,766    47,346
  Four years later...................................  33,455
Cumulative surplus (deficiency)......................     868    (1,786)   (2,317)   (1,310)
Cumulative surplus (deficiency) excluding impact of
  foreign exchange...................................   2,294     1,515      (694)     (581)
  Percent............................................     6.7%      3.3%     (1.4)%    (1.1)%
</Table>

---------------

(1) Reserves for loss and LAE of subsidiaries purchased (or sold) are included
    (or excluded) as of the date of the acquisition (or disposition).

(2) As a result of the acquisition of AGF, loss and LAE reserves at December 31,
    1998 increased by E10,658 million on a gross basis.

(3) As of December 31, 1999, gross reserves increased by E1.2 billion as a
    result of the completion of the acquisition of Allianz Australia and by E2.0
    billion as a result of the strengthening of the U.S. dollar and the pound
    sterling against the euro.

(4) As of December 31, 2001, the increase in gross reserves was primarily due to
    the gross incurred losses and loss adjustment expenses related to the
    terrorist attack of September 11, 2001.

                                       100
<PAGE>

     As of December 31, 2001, 2000 and 1999, our consolidated property-casualty
reserves reflected discounts of E1,588 million, E1,445 million, and E1,167
million, respectively.

     Reserves are discounted to varying degrees in the United States, Germany,
Hungary, Brazil, Switzerland, Portugal, France, Belgium and the Netherlands. For
the United States, the discount reflected in the reserves is related to
annuities for certain long-tailed liabilities, primarily in workers'
compensation. For the other countries, the reserve discounts relate to annuity
reserves for various classes of business. These classes include personal
accident, general liability and motor liability in Germany, Hungary and Brazil,
workers' compensation in Switzerland and Portugal, individual and group health
disability and motor liability in France and health disability in Belgium and
the Netherlands. All of the reserves that have been discounted have payment
amounts that are fixed and timing that is reasonably determinable.

     The significant increase in the gross reserves for 2001 over 2000 for the
Allianz Group companies is driven by gross incurred losses and loss adjustment
expenses related to the terrorist attack of September 11, 2001. On a
consolidated Group basis, the terrorist attack of September 11, 2001 resulted in
net claims costs of approximately E1,500 million. Estimated losses are based on
a policy-by-policy analysis as well as a variety of actuarial techniques,
coverage interpretations and claim estimation methodologies, and include an
estimate of incurred but not reported, as well as estimated costs related to the
settlement of claims. These loss estimates are subject to considerable
uncertainty.

     Because the terrorist attack of September 11, 2001 was a single coordinated
event, it is the belief of the Group's management that the losses at the World
Trade Center constitute one occurrence. A Group company is currently a defendant
in a lawsuit brought by an insured alleging that the attack constituted multiple
occurrences. Based on the policy wording, the Group believes it is clear that
the attack constitutes one occurrence and intends to defend this matter
vigorously. See "Financial Information -- Legal Proceedings -- Litigation."

     The reserves held at year-end 1997 and year-end 1998 show surpluses of 6.7%
and 3.3%, respectively, after adjusting for the impact of exchange rate
fluctuations. The surplus is primarily driven by favorable claims experience in
Germany, France, the United Kingdom, and Austria and is offset by adverse
development in Italy. The reserves held at year-end 1999 and year-end 2000 show
deficiencies of 1.4% and 1.1%, respectively, after adjusting for the impact of
exchange rate fluctuations. The deficiency for year-end 1999 is driven by upward
development on claims related to the storms "Lothar" and "Martin" that occurred
in Europe in late 1999. Additionally, the strengthening of the reserves for
motor liability and general liability in Italy during 2001 contributed to the
deficiencies shown for both 1999 and 2000.

                 INDIVIDUAL COUNTRY RESERVES -- GROSS RESERVES

     The following five tables present loss development data on a local
statutory basis of accounting for Germany, the United States, the United
Kingdom, France and Italy, the five countries in which we write the majority of
our business.

     Since the Group adopted IAS in 1997, historical loss development data is
not available on a consistent basis of accounting for years prior to 1997.
Therefore, the individual country tables presented on the following pages are
prepared on a local statutory basis of accounting for each respective country.

     Generally, under German, French and Italian statutory accounting
principles, property-casualty loss and LAE reserves are established based on a
case reserving approach. Individual case reserves, set by claims adjusters, are
aggregated to determine the overall reserve amounts. In addition, local
regulations require an equalization reserve as a safety margin. In comparison,
under IAS, overall property-casualty reserves are set by analyzing past data and
applying actuarial methodologies to this data. In addition, IAS-based reserves
exclude equalization

                                       101
<PAGE>

reserves. Consistent with IAS principles, catastrophe and equalization reserves
are not included in the individual country loss and LAE reserves disclosures.

     The tables for Germany, France, Italy and the United Kingdom present eight
years of loss information, as over 60% of the business in these countries is
short- and medium-tail. The table for the United States presents ten years of
loss information, as the Group provides longer-tail coverages in this market.
The tables for Germany and France have changed due to the inclusion of data for
assumed reinsurance (such as from underwriting pools) that was not included
previously, and the tables for Italy have changed due to improved coverage. The
Group total table above is unaffected by these changes.

GERMANY

     The loss reserve development table for Germany includes the development of
property-casualty reserves for the Group subsidiaries that insure or reinsure
property-casualty risks in Germany. The table is presented on a consolidated
basis for the Group's subsidiaries in Germany on a German statutory accounting
basis, and represents 100% of property-casualty reserves in Germany.

     In Germany, reserves related to annuities for personal accident, general
liability and motor liability claims are discounted. As of December 31, 2001,
2000, and 1999, our German property-casualty reserves reflected discounts of
E202 million, E180 million, and E162 million, respectively.

<Table>
<Caption>
                                                                               DECEMBER 31,
                                                   ---------------------------------------------------------------------
                                                    1994     1995     1996     1997     1998     1999     2000     2001
                                                   ------   ------   ------   ------   ------   ------   ------   ------
                                                                              (E IN MILLIONS)
<S>                                                <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Gross reserves for unpaid claims and claims
  Expenses.......................................  10,068   10,787   13,046   13,409   13,235   13,341   13,522   14,642
Cumulative paid as of:
  One year later.................................   2,080    2,052    2,448    2,444    2,527    2,841    2,721
  Two years later................................   2,875    2,829    3,434    3,328    3,576    3,889
  Three years later..............................   3,334    3,357    3,927    4,013    4,198
  Four years later...............................   3,710    3,762    4,421    4,453
  Five years later...............................   4,026    4,103    4,766
  Six years later................................   4,299    4,329
  Seven years later..............................   4,480
Liability re-estimated as of:
  One year later.................................   9,314    9,780   11,821   11,954   11,982   12,413   12,427
  Two years later................................   8,701    9,144   10,814   10,764   10,916   11,424
  Three years later..............................   8,337    8,542    9,977   10,036   10,279
  Four years later...............................   7,913    8,105    9,425    9,549
  Five years later...............................   7,602    7,772    9,061
  Six years later................................   7,366    7,518
  Seven years later..............................   7,167
  Cumulative surplus (deficiency)................   2,901    3,269    3,985    3,860    2,956    1,917    1,095
    Percent......................................    28.8%    30.3%    30.5%    28.8%    22.3%    14.4%     8.1%
</Table>

     As a multi-line insurer in the German market, our reserves include diverse
property-casualty coverages including motor liability, general liability,
property, marine, and credit. In Germany, the general practice is to record
statutory reserves based on a prudent case-by-case reserve approach.
Statistically, due to favorable outcomes on certain portions of the case
reserves, this methodology leads to overall favorable development in the total
reserves, leading to statutory reserves that are generally redundant. The
reserves for Germany on an IAS basis for 1997 through 2001, the years for which
IAS figures are available, are 20-25% lower than the statutory reserves. This
reflects the difference in the methodologies for calculating reserves under
Germany's statutory accounting standards and IAS. On an IAS basis, the reserves
in Germany

                                       102
<PAGE>

show cumulative surplus percentages of 15.9%, 9.8%, 4.0%, and 1.7% for the years
1997 through 2000, respectively.

     The increase in the gross reserves for 2001 over 2000 for Allianz Group
non-life insurance companies in Germany is driven by gross incurred losses and
loss adjustment expenses related to the terrorist attack of September 11, 2001,
a majority of which is attributable to reinsurance underwritten by Allianz AG.

UNITED STATES

     The loss reserve development table for the United States includes the
development of property-casualty reserves for the Group subsidiaries in the
United States that insure or reinsure property-casualty risks. The table is
presented on a consolidated basis for the Group's subsidiaries in the United
States on a U.S. statutory basis, and represents 100% of property-casualty
reserves in the United States. As of December 31, 2001, 2000, and 1999, our U.S.
property-casualty reserves reflected discounts of E412 million, E295 million,
and E212 million, respectively.

<Table>
<Caption>
                                                                 DECEMBER 31,
                            ---------------------------------------------------------------------------------------
                             1992     1993     1994     1995     1996     1997     1998     1999     2000     2001
                            ------   ------   ------   ------   ------   ------   ------   ------   ------   ------
                                                                (E IN MILLIONS)
<S>                         <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Gross reserves for unpaid
  claims and claims
  expenses................   7,392    7,972    7,174    7,415    8,633   10,571   10,047   11,932   12,701   16,292
Cumulative paid as of:
  One year later..........   1,878    1,589    1,536    1,626    2,538    2,589    2,937    4,025    3,961
  Two years later.........   2,968    2,557    2,516    3,191    4,099    4,429    5,269    6,280
  Three years later.......   3,663    3,213    3,573    4,308    5,455    5,932    6,705
  Four years later........   4,145    3,960    4,432    5,384    6,383    6,878
  Five years later........   4,698    4,569    5,358    6,110    7,084
  Six years later.........   5,218    5,436    5,963    6,650
  Seven years later.......   6,033    5,977    6,410
  Eight years later.......   6,538    6,353
  Nine years later........   6,898
Liability re-estimated as of:
  One year later..........   7,895    6,970    7,285    8,260   10,644   10,254   11,711   13,145   13,357
  Two years later.........   7,192    7,207    7,984    9,859   10,341   11,286   11,990   13,308
  Three years later.......   7,538    7,814    9,274    9,614   11,087   11,411   11,966
  Four years later........   8,084    8,834    9,112   10,250   11,105   11,313
  Five years later........   8,963    8,780    9,687   10,292   10,956
  Six years later.........   9,035    9,384    9,742   10,126
  Seven years later.......   9,683    9,460    9,594
  Eight years later.......   9,807    9,324
  Nine years later........   9,695
  Cumulative surplus
    (deficiency)..........  (2,303)  (1,352)  (2,420)  (2,711)  (2,323)    (742)  (1,919)  (1,376)    (656)
  Cumulative surplus
    (deficiency) excluding
    impact of foreign
    exchange..............  (1,153)    (881)    (899)    (188)      (9)     455      591       17      (54)
    Percent...............   (15.6)%  (11.0)%  (12.5)%   (2.5)%   (0.1)%    4.3%     5.9%     0.1%    (0.4)%
</Table>

     The Allianz Group companies in the United States form one of the leading
U.S. property-casualty groups. Our portfolio consists of a diverse group of
personal and commercial coverages, including workers' compensation, general
liability, automobile liability, property, fire

                                       103
<PAGE>

and marine generally written throughout the United States, and as such we are
exposed to general developments and risks that affect the entire U.S.
property-casualty industry.

     The significant increase in the gross reserves for 2001 over 2000 for the
Allianz Group non-life insurance companies in the United States is driven by
losses and loss adjustment expenses related to the terrorist attack of September
11, 2001, significantly all of which are attributable to Allianz Insurance Co.

     In the years shown, we have experienced adverse loss development in our
U.S. property-casualty reserves, primarily due to environmental, asbestos and
other toxic-tort related (or E&A) claims. In 1995, Fireman's Fund increased its
net and gross reserves for E&A claims by $800 million. In 2000, an additional
$250 million in gross and net reserves were reallocated to E&A liabilities.

     The following table summarizes the gross and net U.S. claim reserves for
E&A claims at December 31 for the years indicated.

<Table>
<Caption>
                                                               AS A PERCENTAGE OF   AS A PERCENTAGE OF
                                                                 U.S. PROPERTY-        THE GROUP'S
                                                                    CASUALTY        PROPERTY-CASUALTY
YEAR-END DECEMBER 31,  NET E&A RESERVES   GROSS E&A RESERVES     GROSS RESERVES       GROSS RESERVES
---------------------  ----------------   ------------------   ------------------   ------------------
                         (E MILLIONS)        (E MILLIONS)
<S>                    <C>                <C>                  <C>                  <C>
1998.................         978               1,845                 18.4%                4.0%
1999.................         883               1,748                 14.6%                3.4%
2000.................       1,073               1,983                 15.6%                3.7%
2001.................         979               1,838                 11.3%                3.0%
</Table>

     There are significant uncertainties in estimating the amount of our U.S.
E&A claims. Reserves for E&A claims cannot be estimated with traditional loss
reserving techniques. Case reserves are established when sufficient information
has been obtained to indicate the involvement of a specific insurance policy. In
addition, IBNR reserves are established to cover additional exposures on both
known and unasserted claims. In establishing the liabilities for claims arising
from asbestos-related illnesses, toxic waste clean-up and latent drug and
chemical exposures, management considers facts currently known and the current
state of the law and coverage litigation. However, given the expansion of
coverage and liability by the courts and the legislatures in the past and the
possibilities of similar interpretation in the future, there is significant
uncertainty regarding the extent of remediation and insurer liability.

     In response to the uncertainty associated with E&A claims, Fireman's Fund
has created an environmental claims unit focused on E&A claims evaluation and
remediation for our U.S. subsidiaries. The staff of this unit, consisting of a
total of approximately 50 employees, determines appropriate coverage issues
according to the terms of the policies and contracts involved and, on the basis
of its experience and expertise, makes judgments as to the ultimate loss
potential related to each claim submitted for payment under the various policies
and contracts. Judgments of potential losses are also made from precautionary
reports submitted by insured companies for claims which have the possibility of
involving policy coverage. Factors considered in determining the reserve are:
whether the claim relates to asbestos or hazardous waste; whether the claim is
for bodily injury or property damage; the limits of liability and attachment
points; policy provisions for expenses (which are a significant portion of the
estimated ultimate cost of these claims); type of insured; and any provision for
reinsurance recoverables. In addition, Fireman's Fund actively pursues
commutations and reinsurance cessions to reduce its E&A exposures.

     The industry-wide loss trends for some of these exposures, especially for
asbestos-related losses, have deteriorated recently. Some of the reasons for
this deterioration include: insureds who either produced or installed products
containing asbestos have seen more and larger claims brought against them, some
of these companies have declared bankruptcy which has caused

                                       104
<PAGE>

plaintiff attorneys to seek larger amounts from solvent defendants and to also
include new defendants. Some defendants are also seeking relief under different
coverage provisions when the products liability portion of their coverage has
been exhausted.

     The foregoing developments led the Allianz Group companies in the U.S. to
engage outside actuarial consulting firms to update a previous study conducted
in 1995 to analyze the adequacy of the reserves for these types of losses. This
analysis is expected to be completed during the second half of 2002. As of the
current date, management continues to rely on the results of the 1995 study as
the basis for its best estimate of asbestos and environmental reserves. Upon
completion of the analysis, additions to the reserves for environmental and
asbestos losses may be necessary and such additions could be significant.

UNITED KINGDOM

     The loss reserve development table for the United Kingdom includes the
development of property-casualty reserves for the Group subsidiaries that insure
or reinsure property-casualty risks in the United Kingdom. The table is
presented on a consolidated basis for the Group's subsidiaries on a U.K. GAAP
basis, which is similar to an IAS basis, and represents 100% of
property-casualty reserves in the United Kingdom.

<Table>
<Caption>
                                                                                   DECEMBER 31,
                                                        -------------------------------------------------------------------
                                                          1994      1995    1996     1997     1998    1999    2000    2001
                                                        ---------   -----   -----   ------   ------   -----   -----   -----
                                                                                    (E IN MILLIONS)
<S>                                                     <C>         <C>     <C>     <C>      <C>      <C>     <C>     <C>
Gross reserves for unpaid claims and claims
  expenses............................................      1,141   1,158   1,445   1,797    2,727    3,165   3,262   3,557
Cumulative paid as of:
  One year later......................................        305     393     469     507      835      911   1,059
  Two years later.....................................        534     627     695     759    1,264    1,496
  Three years later...................................        708     765     856     907    1,622
  Four years later....................................        807     882     947   1,039
  Five years later....................................        897     938   1,031
  Six years later.....................................        934   1,001
  Seven years later...................................        969
Liability re-estimated as of:
  One year later......................................      1,055   1,349   1,613   1,606    2,960    3,052   3,189
  Two years later.....................................      1,205   1,467   1,467   1,629    2,816    3,013
  Three years later...................................      1,298   1,356   1,485   1,614    2,720
  Four years later....................................      1,203   1,356   1,467   1,506
  Five years later....................................      1,204   1,355   1,407
  Six years later.....................................      1,219   1,330
  Seven years later...................................      1,270
  Cumulative surplus (deficiency).....................       (129)   (172)     38     291        7      152      73
  Cumulative surplus (deficiency) excluding impact of
    foreign exchange..................................         18     152     233     322      337      204     131
    Percent...........................................        1.6%   13.1%   16.2%   17.9%    12.3%     6.4%    4.0%
</Table>

     In the United Kingdom, the Group writes a very broad mix of
property-casualty business for both individual and commercial clients. Our
general practice is to record property-casualty reserves at the actuarial best
estimate plus a margin for prudence. Accordingly, from 1995 through 2000, we
have experienced favorable development in property-casualty claim reserves.
These savings have arisen to differing degrees on almost all lines of business
and reflect the approach of calculating reserves on a prudent best estimate
basis. This approach reflects industry practice in the United Kingdom.

                                       105
<PAGE>

     Cornhill experienced gross incurred losses and loss adjustment expenses
related to the terrorist attack of September 11, 2001, which was a primary
factor in year-to-year reserves development.

     The periods prior to and including 1994 differ from subsequent periods in
that they showed a deficiency for three development years before a surplus
emerged. This deficiency arose from the strengthening of reserves relating to
Marine Excess of Loss business written through the London Market during the late
1980's. This strengthening of Marine reserves more than offset the redundancy
emerging from other lines of business at the time. The Group considers that the
reserve issues that arose at the time have been fully addressed, as evidenced by
the now positive run-off.

     The table also shows a sharp increase in the level of gross reserves from
1997 to 1998. This is primarily due to the acquisition of AGF in 1998. Reserves
from AGF's UK subsidiaries were E1,067 million at December 31, 1998.

FRANCE

     The loss reserve development table for France includes the development of
property-casualty reserves for the Group subsidiaries that insure or reinsure
property-casualty risks in France. The table is presented on a consolidated
basis for the Group's subsidiaries in France on a French statutory accounting
basis. All property-casualty lines other than construction, MAT and credit are
presented on an accident year basis. Construction, MAT and credit are presented
on an underwriting year basis, consistent with applicable French statutes. Loss
reserves presented on an "underwriting year" basis represent claims related to
all policies written during a given year. In contrast, "accident year" loss
reserves represent claims for events that occurred during a given calendar year,
regardless of when the policy was written. Loss reserves on an underwriting year
basis may include claims from different accident years. For example, a policy
written during 1999 may have losses in accident year 1999 and in accident year
2000. Therefore, underwriting year data as of a particular evaluation date is
less mature than accident year data. This leads to loss emergence taking place
over a slightly longer period of time. For year-ends 1998 through 2001, the
lines of business accounted for on an underwriting year basis accounted for
approximately 25% of the Group's reserves in France.

     At December 31, 2001, 2000, and 1999, as permitted by applicable French
statutes, the Group carried approximately E1.4 billion, E1.4 billion, and E1.3
billion, respectively, in annuity reserves. These annuities reflected discounts
of E451 million, E444 million, and E387 million, respectively. These annuities
relate to individual and group health disability reserves (included in the
non-life segment under the Group's French statutory financial statements) and to
motor liability where payment amounts are fixed and the timing is reasonably
determinable. The reserve development reflected in the table below includes
development attributable to the amortization of the discount.

<Table>
<Caption>
                                                                                   DECEMBER 31,
                                                          ---------------------------------------------------------------
                                                          1994    1995    1996    1997    1998     1999    2000     2001
                                                          -----   -----   -----   -----   -----   ------   -----   ------
                                                                                  (E IN MILLIONS)
<S>                                                       <C>     <C>     <C>     <C>     <C>     <C>      <C>     <C>
Gross reserves for unpaid claims and claims expenses....  1,231   1,275   1,319   1,297   8,468    9,169   9,573   10,277
Cumulative paid as of:
  One year later........................................    373     363     345     341   2,076    3,003   2,877
  Two years later.......................................    536     518     500     469   3,140    4,358
  Three years later.....................................    641     622     594     573   3,826
  Four years later......................................    723     696     672     648
  Five years later......................................    780     758     733
  Six years later.......................................    829     803
  Seven years later.....................................    867
</Table>

                                       106
<PAGE>

<Table>
<Caption>
                                                                                   DECEMBER 31,
                                                          ---------------------------------------------------------------
                                                          1994    1995    1996    1997    1998     1999    2000     2001
                                                          -----   -----   -----   -----   -----   ------   -----   ------
                                                                                  (E IN MILLIONS)
<S>                                                       <C>     <C>     <C>     <C>     <C>     <C>      <C>     <C>
Liability re-estimated as of:
  One year later........................................  1,230   1,293   1,280   1,279   8,082   10,231   9,860
  Two years later.......................................  1,260   1,273   1,271   1,218   8,649   10,033
  Three years later.....................................  1,253   1,276   1,222   1,241   8,615
  Four years later......................................  1,277   1,233   1,234   1,228
  Five years later......................................  1,242   1,239   1,239
  Six years later.......................................  1,215   1,236
  Seven years later.....................................  1,252
  Cumulative surplus (deficiency).......................    (21)     39      81      69    (147)    (864)   (286)
    Percent.............................................   (1.7)%   3.1%    6.1%    5.3%   (1.7)%   (9.4)%  (3.0)%
</Table>

     The Allianz Group companies in France form one of the leading French
property-casualty groups. The Group's acquisition of AGF in 1998 resulted in a
E5,513 million increase in held reserves at December 31, 1998.

     The Group's primary property-casualty lines of business in France are motor
liability, property, individual and group health, group disability, general
liability, construction, MAT and credit. Declining frequency trends for motor
liability in recent years and a prudent case reserving philosophy for motor
liability and general liability have contributed to the favorable runoff
reflected in the table for years 1995 through 1997. For 1999, the adverse
run-off is primarily due to the upward development during 2000 of losses from
the storms "Lothar" and "Martin," which occurred in Europe in late December
1999.

ITALY

     The loss reserve development table for Italy includes the development of
property-casualty reserves for the Group subsidiaries that insure or reinsure
property-casualty risks in Italy. The table is presented on a consolidated basis
for the Group's subsidiaries in Italy on an Italian statutory accounting basis,
and represents 100% of property-casualty reserves in Italy.

<Table>
<Caption>
                                                                             DECEMBER 31,
                                                     -------------------------------------------------------------
                                                     1994    1995    1996    1997    1998    1999    2000    2001
                                                     -----   -----   -----   -----   -----   -----   -----   -----
                                                                            (E IN MILLIONS)
<S>                                                  <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Gross reserves for unpaid claims and Claims
  expenses.........................................  2,379   3,471   3,829   4,029   4,640   5,040   5,560   6,097
Cumulative paid as of:
  One year later...................................    888   1,308   1,487   1,562   1,824   1,940   2,092
  Two years later..................................  1,280   1,989   2,152   2,308   2,626   2,879
  Three years later................................  1,534   2,372   2,571   2,742   3,173
  Four years later.................................  1,717   2,660   2,861   3,101
  Five years later.................................  1,859   2,877   3,129
  Six years later..................................  1,989   3,084
  Seven years later................................  2,118
</Table>

                                       107
<PAGE>

<Table>
<Caption>
                                                                             DECEMBER 31,
                                                     -------------------------------------------------------------
                                                     1994    1995    1996    1997    1998    1999    2000    2001
                                                     -----   -----   -----   -----   -----   -----   -----   -----
                                                                            (E IN MILLIONS)
<S>                                                  <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Liability re-estimated as of:
  One year later...................................  2,376   3,527   3,829   4,037   4,650   5,091   5,687
  Two years later..................................  2,333   3,524   3,804   4,147   4,788   5,332
  Three years later................................  2,404   3,605   3,938   4,279   4,984
  Four years later.................................  2,449   3,710   4,049   4,429
  Five years later.................................  2,498   3,796   4,162
  Six years later..................................  2,547   3,879
  Seven years later................................  2,165
  Cumulative surplus (deficiency)..................   (237)   (408)   (333)   (401)   (344)   (292)   (127)
    Percent........................................   (9.9)% (11.8)%  (8.7)%  (9.9)%  (7.4)%  (5.8)%  (2.3)%
</Table>

     The Allianz Group companies in Italy form one of the leading Italian
property-casualty groups. The property-casualty reserve portfolio in Italy
consists predominantly of motor liability and general liability. During the past
few calendar years, adverse development in the Italian general liability market
has occurred due to an increase in late-reported claims. In addition, an
increase in personal injuries for motor liability, coupled with an increase in
the average cost of claims, has led to an increase in the ultimate cost of
claims for motor liability. As a result, during the last several calendar years,
but especially during 2001, reserves for motor liability and general liability
were strengthened at the RAS Group across several accident years causing most of
the adverse development shown above for Italy.

      SELECTED STATISTICAL INFORMATION RELATING TO OUR BANKING OPERATIONS

     For the purposes of presenting the following information, our banking
operations include Dresdner Bank AG and its subsidiaries (Dresdner Bank),
including its asset management operations, and certain other banking
subsidiaries of Allianz. This presentation differs from the presentation in
"Information on the Company and Operating and Financial Review and Prospects",
where the asset management operations of Dresdner Bank are included in our asset
management segment and excluded from our banking segment. The following
information has been derived from the financial records of our banking
operations and has been prepared in accordance with IAS; it does not reflect
adjustments necessary to convert such information to U.S. GAAP. Although the
financial statements of Dresdner Bank were consolidated into the financial
statements of Allianz AG on the date of our acquisition of Dresdner Bank on July
23, 2001, the information presented below includes the banking operations of
Dresdner Bank for all periods in order to provide the reader with comparable
information about our banking operations. Additionally, the assets and
liabilities of Dresdner Bank do not reflect adjustments necessary to apply
purchase accounting. Certain additional limitations concerning the average
balance sheet data of Dresdner Bank discussed in this section are noted below
under "-- Average Balance Sheet and Interest Rate Data."

     In applying our accounting policies to the financial statements of Dresdner
Bank during periods prior to July 23, 2001, certificated commercial loans common
to the German market, or Schuldscheindarlehen, have been reclassified from Loans
and advances to banks and Loans and advances to customers to Investment
securities available for sale in order to conform to our accounting policies. At
December 31, 2001, 2000, 1999, 1998 and 1997, the book value of
Schuldscheindarlehen was approximately E44.0 billion, E46.6 billion, E48.6
billion, E49.1 billion, and E43.8 billion, respectively. Because there were no
loss allowances recorded on such Schuldscheindarlehen, such reclassification had
no impact on the gross amount of the loss allowances described below under
"-- Summary of Loan Loss Experience." However, such reclassification did
adversely affect the ratio of total allowances for loan losses to total loans.

                                       108
<PAGE>

AVERAGE BALANCE SHEET AND INTEREST RATE DATA

     The following table sets forth the average balances of assets and
liabilities and related interest earned from interest-earning assets and
interest expensed on interest-bearing liabilities, as well as the resulting
average interest yields and rates. Dresdner Bank did not, in the periods shown,
prepare consolidated balance sheet and interest rate data on a monthly basis.
The average balance sheet and interest rate data shown below was derived using
unconsolidated monthly balances of Dresdner Bank AG and its branch operations
and significant subsidiaries, together with quarterly consolidated balances of
Dresdner Bank prepared in accordance with IAS. Such unconsolidated monthly
balances reflected approximately 90% of Dresdner Bank's consolidated assets and
liabilities, were not available for all months in the periods shown, and were
not in all cases prepared fully in accordance with IAS. Dresdner Bank has
reconciled such monthly balances to the consolidated quarterly balances that
were not subject to these limitations, and the data shown below reflects
adjustments to give effect to differences identified in such a reconciliation
process. We believe such adjusted monthly balances provide a fair representation
of the activities of Dresdner Bank's banking operations.

     Since the adoption of IAS 39 on January 1, 2001, the fair values of all
derivative instruments have been included within non-interest-earning assets or
non-interest-bearing liabilities. Prior to January 1, 2001, the fair values of
qualifying hedge derivative instruments were not recorded in the balance sheet;
however, the fair values of all non-qualifying hedge and trading derivatives
have been included within non-interest-earning assets or non-interest-bearing
liabilities for each period. Interest income and interest expense relating to
qualifying hedge derivative instruments have been reported within the interest
income and interest expense of the hedged item for each period.

     The allocation between German and non-German components is based on the
location of the office that recorded the transaction. Categories of loans and
advances include loans placed on nonaccrual status. For a description of our
accounting policies on nonaccrual loans see "-- Risk Elements -- Nonaccrual
loans."

     Our banking operations do not have a significant balance of tax-exempt
investments. Accordingly, interest income on such investments has been included
as taxable interest income for purposes of calculating the change in taxable net
interest income.

<Table>
<Caption>
                                                                      YEAR ENDED DECEMBER 31,
                                     ------------------------------------------------------------------------------------------
                                                 2001                           2000                           1999
                                     ----------------------------   ----------------------------   ----------------------------
                                               INTEREST   AVERAGE             INTEREST   AVERAGE             INTEREST   AVERAGE
                                     AVERAGE   INCOME/    YIELD/    AVERAGE   INCOME/    YIELD/    AVERAGE   INCOME/    YIELD/
                                     BALANCE   EXPENSE     RATE     BALANCE   EXPENSE     RATE     BALANCE   EXPENSE     RATE
                                     -------   --------   -------   -------   --------   -------   -------   --------   -------
                                                                     (E IN MILLIONS, EXCEPT %)
<S>                                  <C>       <C>        <C>       <C>       <C>        <C>       <C>       <C>        <C>
ASSETS
Trading securities
  In German offices................   56,220     2,075     3.7%      38,637     1,387     3.6%      24,400       823     3.4%
  In non-German offices............   30,020     1,484     4.9%      22,093     1,057     4.8%      20,262       838     4.1%
                                     -------    ------              -------    ------              -------    ------
  Total............................   86,240     3,559     4.1%      60,730     2,444     4.0%      44,662     1,661     3.7%
                                     -------    ------              -------    ------              -------    ------
Loans and advances to banks
  In German offices................   22,028       744     3.4%      17,632       651     3.7%      19,178       616     3.2%
  In non-German offices............   18,009       776     4.3%      12,853     1,271     9.9%      14,334     1,045     7.3%
                                     -------    ------              -------    ------              -------    ------
  Total............................   40,037     1,520     3.8%      30,485     1,922     6.3%      33,512     1,661     5.0%
                                     -------    ------              -------    ------              -------    ------
Loans and advances to customers
  In German offices................  131,346     8,339     6.3%     133,241     7,391     5.5%     121,801     6,485     5.3%
  In non-German offices............   56,144     3,741     6.7%      50,850     3,627     7.1%      44,059     3,000     6.8%
                                     -------    ------              -------    ------              -------    ------
  Total............................  187,490    12,080     6.4%     184,091    11,018     6.0%     165,860     9,485     5.7%
                                     -------    ------              -------    ------              -------    ------
</Table>

                                       109
<PAGE>

<Table>
<Caption>
                                                                      YEAR ENDED DECEMBER 31,
                                     ------------------------------------------------------------------------------------------
                                                 2001                           2000                           1999
                                     ----------------------------   ----------------------------   ----------------------------
                                               INTEREST   AVERAGE             INTEREST   AVERAGE             INTEREST   AVERAGE
                                     AVERAGE   INCOME/    YIELD/    AVERAGE   INCOME/    YIELD/    AVERAGE   INCOME/    YIELD/
                                     BALANCE   EXPENSE     RATE     BALANCE   EXPENSE     RATE     BALANCE   EXPENSE     RATE
                                     -------   --------   -------   -------   --------   -------   -------   --------   -------
                                                                     (E IN MILLIONS, EXCEPT %)
<S>                                  <C>       <C>        <C>       <C>       <C>        <C>       <C>       <C>        <C>
Securities purchased under resale
  agreement
  In German offices................   46,890     2,267     4.8%      24,895     1,180     4.7%      20,003       691     3.5%
  In non-German offices............   41,254     1,545     3.7%      33,170     1,656     5.0%      31,551     1,131     3.6%
                                     -------    ------              -------    ------              -------    ------
  Total............................   88,144     3,812     4.3%      58,065     2,836     4.9%      51,554     1,822     3.5%
                                     -------    ------              -------    ------              -------    ------
Investment securities(1)
  In German offices................   59,346     2,929     4.9%      60,712     3,310     5.5%      61,465     3,108     5.1%
  In non-German offices............   10,577       469     4.4%      10,460       702     6.7%      10,421       644     6.2%
                                     -------    ------              -------    ------              -------    ------
  Total............................   69,923     3,398     4.9%      71,172     4,012     5.6%      71,886     3,752     5.2%
                                     -------    ------              -------    ------              -------    ------
Total interest-earning assets......  471,834    24,369     5.2%     404,543    22,232     5.5%     367,474    18,381     5.0%
                                     -------    ------              -------    ------              -------    ------
Non-interest-earning assets
  In German offices................   49,006                         30,123                         39,085
  In non-German offices............   22,101                         30,702                         23,791
                                     -------                        -------                        -------
Total non-interest-earning
  assets...........................   71,107                         60,825                         62,876
                                     -------                        -------                        -------
Total assets.......................  542,941                        465,368                        430,350
                                     =======                        =======                        =======
Percent of assets attributable to
  non-German offices...............     32.8%                          34.4%                          33.6%

LIABILITIES AND SHAREHOLDERS'
  EQUITY
Liabilities to banks(2)
  In German offices................   71,681     2,765     3.9%      49,420     2,026     4.1%      43,835     1,380     3.1%
  In non-German offices............   30,217     2,301     7.6%      21,602     2,121     9.8%      20,980     1,913     9.1%
                                     -------    ------              -------    ------              -------    ------
  Total............................  101,898     5,066     5.0%      71,022     4,147     5.8%      64,815     3,293     5.1%
                                     -------    ------              -------    ------              -------    ------
Liabilities to customers(2)
  In German offices................   99,113     2,713     2.7%      90,666     2,040     2.3%      87,021     1,493     1.7%
  In non-German offices............   46,628     1,653     3.5%      40,780     2,172     5.3%      29,799     1,793     6.0%
                                     -------    ------              -------    ------              -------    ------
  Total............................  145,741     4,366     3.0%     131,446     4,212     3.2%     116,820     3,286     2.8%
                                     -------    ------              -------    ------              -------    ------
Securities sold under repurchase
  agreement
  In German offices................   39,327     1,958     5.0%      20,441       917     4.5%      13,616       451     3.3%
  In non-German offices............   37,548     1,315     3.5%      33,661     1,640     4.9%      31,399     1,333     4.2%
                                     -------    ------              -------    ------              -------    ------
  Total............................   76,875     3,273     4.3%      54,102     2,557     4.7%      45,015     1,784     4.0%
                                     -------    ------              -------    ------              -------    ------
Subordinated liabilities
  In German offices................    4,439       189     4.3%       4,355       176     4.0%       4,264       144     3.4%
  In non-German offices............    4,793       458     9.6%       4,335       369     8.5%       3,525       245     7.0%
                                     -------    ------              -------    ------              -------    ------
  Total............................    9,232       647     7.0%       8,690       545     6.3%       7,789       389     5.0%
                                     -------    ------              -------    ------              -------    ------
Certificated liabilities(2)
  In German offices................   71,266     4,628     6.5%      73,717     4,803     6.5%      70,891     4,281     6.0%
  In non-German offices............   44,657     2,440     5.5%      45,818     2,683     5.9%      40,931     2,045     5.0%
                                     -------    ------              -------    ------              -------    ------
  Total............................  115,923     7,068     6.1%     119,535     7,486     6.3%     111,822     6,326     5.7%
                                     -------    ------              -------    ------              -------    ------
Profit participation certificates
  outstanding
  In German offices................    2,052        76     3.7%       2,034        64     3.1%       2,089        96     4.6%
                                     -------    ------              -------    ------              -------    ------
  Total............................    2,052        76     3.7%       2,034        64     3.1%       2,089        96     4.6%
                                     -------    ------              -------    ------              -------    ------
Total interest-bearing
  liabilities......................  451,721    20,496     4.5%     386,829    19,011     4.9%     348,350    15,174     4.4%
                                     -------    ------              -------    ------              -------    ------
</Table>

                                       110
<PAGE>

<Table>
<Caption>
                                                                      YEAR ENDED DECEMBER 31,
                                     ------------------------------------------------------------------------------------------
                                                 2001                           2000                           1999
                                     ----------------------------   ----------------------------   ----------------------------
                                               INTEREST   AVERAGE             INTEREST   AVERAGE             INTEREST   AVERAGE
                                     AVERAGE   INCOME/    YIELD/    AVERAGE   INCOME/    YIELD/    AVERAGE   INCOME/    YIELD/
                                     BALANCE   EXPENSE     RATE     BALANCE   EXPENSE     RATE     BALANCE   EXPENSE     RATE
                                     -------   --------   -------   -------   --------   -------   -------   --------   -------
                                                                     (E IN MILLIONS, EXCEPT %)
<S>                                  <C>       <C>        <C>       <C>       <C>        <C>       <C>       <C>        <C>
Non-interest-bearing liabilities
  In German offices................   34,196                         27,538                         32,890
  In non-German offices............   34,576                         38,693                         37,499
                                     -------                        -------                        -------
Total non-interest-bearing
  liabilities......................   68,772                         66,231                         70,389
                                     -------                        -------                        -------
Shareholders' equity...............   22,448                         12,308                         11,611
                                     -------                        -------                        -------
Total liabilities and shareholders'
  equity...........................  542,941                        465,368                        430,350
                                     =======                        =======                        =======
Percent of liabilities attributable
  to non-German offices............     38.1%                          40.8%                          39.2%
</Table>

---------------

(1) The average yields for investment securities available for sale have been
    calculated using amortized cost balances and do not include changes in fair
    value recorded within a component of shareholders' equity. The average
    yields for investment securities held to maturity have been calculated using
    amortized cost balances.

(2) Interest-bearing deposits have been presented within liabilities to banks
    and liabilities to customers; certificates of deposit have been presented
    within certificated liabilities.

NET INTEREST MARGIN

     The following table sets forth the average total interest-earning assets,
net interest earned and the net interest margin of our banking operations.

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              -----------------------------
                                                               2001       2000       1999
                                                              -------    -------    -------
                                                                (E IN MILLIONS, EXCEPT %)
<S>                                                           <C>        <C>        <C>
Average total interest-earning assets.......................  471,834    404,543    367,474
Net interest earned(1)......................................    3,873      3,221      3,207
Net interest margin(2)......................................     0.82%      0.80%      0.87%
</Table>

---------------

(1) Net interest earned is defined as total interest income less total interest
    expense.

(2) Net interest margin is defined as net interest earned divided by average
    total interest-earning assets.

                                       111
<PAGE>

     The following table sets forth an allocation of changes in interest income,
interest expense and net interest income between changes in the average volume
and changes in the average interest rates for the two most recent years. Volume
and interest rate variances have been calculated based on movements in average
balances over the period and changes in interest rates on average
interest-earning assets and average interest-bearing liabilities. Changes due to
a combination of volume and rate are allocated proportionally to the absolute
change in volume and rate.

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                              --------------------------------------------------------------
                                                     2001 OVER 2000                   2000 OVER 1999
                                              -----------------------------    -----------------------------
                                                        INCREASE/(DECREASE)              INCREASE/(DECREASE)
                                                         DUE TO CHANGE IN:                DUE TO CHANGE IN:
                                                        -------------------              -------------------
                                                        AVERAGE                          AVERAGE
                                              TOTAL     INTEREST    AVERAGE    TOTAL     INTEREST    AVERAGE
                                              CHANGE      RATE      VOLUME     CHANGE      RATE      VOLUME
                                              ------    --------    -------    ------    --------    -------
                                                                     (E IN MILLIONS)
<S>                                           <C>       <C>         <C>        <C>       <C>         <C>
INTEREST INCOME
Trading securities
  In German offices.........................    688          40        648       564         56         508
  In non-German offices.....................    427          36        391       219        139          80
                                              -----      ------      -----     -----      -----       -----
  Total.....................................  1,115          76      1,039       783        195         588
                                              -----      ------      -----     -----      -----       -----
Loans and advances to banks
  In German offices.........................     93         (59)       152        35         87         (52)
  In non-German offices.....................   (495)       (885)       390       226        343        (117)
                                              -----      ------      -----     -----      -----       -----
  Total.....................................   (402)       (944)       542       261        430        (169)
                                              -----      ------      -----     -----      -----       -----
Loans and advances to customers
  In German offices.........................    948       1,054       (106)      906        279         627
  In non-German offices.....................    114        (248)       362       627        148         479
                                              -----      ------      -----     -----      -----       -----
  Total.....................................  1,062         806        256     1,533        427       1,106
                                              -----      ------      -----     -----      -----       -----
Securities purchased under resale agreement
  In German offices.........................  1,087          24      1,063       489        295         194
  In non-German offices.....................   (111)       (465)       354       525        464          61
                                              -----      ------      -----     -----      -----       -----
  Total.....................................    976        (441)     1,417     1,014        759         255
                                              -----      ------      -----     -----      -----       -----
Investment securities
  In German offices.........................   (381)       (308)       (73)      202        240         (38)
  In non-German offices.....................   (233)       (241)         8        58         56           2
                                              -----      ------      -----     -----      -----       -----
  Total.....................................   (614)       (549)       (65)      260        296         (36)
                                              -----      ------      -----     -----      -----       -----
Total interest income.......................  2,137      (1,052)     3,189     3,851      2,107       1,744
                                              -----      ------      -----     -----      -----       -----

INTEREST EXPENSE
Liabilities to banks
  In German offices.........................    739        (126)       865       646        454         192
  In non-German offices.....................    180        (544)       724       208        150          58
                                              -----      ------      -----     -----      -----       -----
  Total.....................................    919        (670)     1,589       854        604         250
                                              -----      ------      -----     -----      -----       -----
Liabilities to customers
  In German offices.........................    673         471        202       547        482          65
  In non-German offices.....................   (519)       (799)       280       379       (224)        603
                                              -----      ------      -----     -----      -----       -----
  Total.....................................    154        (328)       482       926        258         668
                                              -----      ------      -----     -----      -----       -----
</Table>

                                       112
<PAGE>

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                              --------------------------------------------------------------
                                                     2001 OVER 2000                   2000 OVER 1999
                                              -----------------------------    -----------------------------
                                                        INCREASE/(DECREASE)              INCREASE/(DECREASE)
                                                         DUE TO CHANGE IN:                DUE TO CHANGE IN:
                                                        -------------------              -------------------
                                                        AVERAGE                          AVERAGE
                                              TOTAL     INTEREST    AVERAGE    TOTAL     INTEREST    AVERAGE
                                              CHANGE      RATE      VOLUME     CHANGE      RATE      VOLUME
                                              ------    --------    -------    ------    --------    -------
                                                                     (E IN MILLIONS)
<S>                                           <C>       <C>         <C>        <C>       <C>         <C>
Securities sold under repurchase agreement
  In German offices.........................  1,041         111        930       466        193         273
  In non-German offices.....................   (325)       (499)       174       307        206         101
                                              -----      ------      -----     -----      -----       -----
  Total.....................................    716        (388)     1,104       773        399         374
                                              -----      ------      -----     -----      -----       -----
Subordinated liabilities
  In German offices.........................     13           9          4        32         29           3
  In non-German offices.....................     89          48         41       124         61          63
                                              -----      ------      -----     -----      -----       -----
  Total.....................................    102          57         45       156         90          66
                                              -----      ------      -----     -----      -----       -----
Certificated liabilities
  In German offices.........................   (175)        (16)      (159)      522        347         175
  In non-German offices.....................   (243)       (176)       (67)      638        377         261
                                              -----      ------      -----     -----      -----       -----
  Total.....................................   (418)       (192)      (226)    1,160        724         436
                                              -----      ------      -----     -----      -----       -----
Profit participation certificates
  outstanding
  In German offices.........................     12          11          1       (32)       (30)         (2)
  Total.....................................     12          11          1       (32)       (30)         (2)
                                              -----      ------      -----     -----      -----       -----
TOTAL INTEREST EXPENSE......................  1,485      (1,510)     2,995     3,837      2,045       1,792
                                              -----      ------      -----     -----      -----       -----
CHANGE IN TAXABLE NET INTEREST INCOME.......    652         458        194        14         62         (48)
                                              =====      ======      =====     =====      =====       =====
</Table>

RETURN ON EQUITY AND ASSETS

     The following table sets forth the net income, average shareholders' equity
and selected financial information and ratios of our banking operations.

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                              --------------------------
                                                               2001      2000      1999
                                                              ------    ------    ------
                                                              (E IN MILLIONS, EXCEPT %)
<S>                                                           <C>       <C>       <C>
Net income..................................................     539     1,809     1,057
Average shareholders' equity................................  22,448    12,308    11,611
Return on assets(1).........................................    0.10%     0.39%     0.25%
Return on equity(2).........................................    2.40%    14.70%     9.10%
Equity to assets ratio(3)...................................    4.13%     2.64%     2.70%
</Table>

---------------

(1) Return on assets is defined as net income of our banking operations divided
    by average total assets of our banking operations.

(2) Return on equity is defined as net income of our banking operations divided
    by average shareholders' equity of our banking operations.

(3) Equity to assets ratio is defined as average shareholders' equity of our
    banking operations divided by average total assets of our banking
    operations.

                                       113
<PAGE>

TRADING AND INVESTMENT SECURITIES

     The following table sets forth the book value of trading and investment
securities held by our banking operations by type of issuer. The allocation
between German and non-German components is based on the location of the issuer.

<Table>
<Caption>
                                                                    AT DECEMBER 31,
                                                              ---------------------------
                                                               2001       2000      1999
                                                              -------    ------    ------
                                                                    (E IN MILLIONS)
<S>                                                           <C>        <C>       <C>
TRADING SECURITIES
  GERMAN:
     Federal and state government and government agency debt
       securities...........................................    8,267     4,225     1,651
     Local government debt securities.......................    3,153     1,611     1,856
     Corporate debt securities..............................   35,326    29,892    20,933
     Mortgage-backed securities.............................       50         0         0
     Equity securities......................................    1,147     2,661     2,404
                                                              -------    ------    ------
     German total...........................................   47,943    38,389    26,844
                                                              -------    ------    ------
  NON-GERMAN:
     U.S. Treasury and other U.S. government agency debt
       securities...........................................      802       610     1,855
     Other government and official institution debt
       securities...........................................   29,509    22,477    13,991
     Corporate debt securities..............................   12,667    11,734     7,526
     Mortgage-backed securities.............................      474         0        72
     Equity securities......................................   13,917     9,762     7,626
                                                              -------    ------    ------
     Non-German total.......................................   57,369    44,583    31,070
                                                              -------    ------    ------
TOTAL TRADING SECURITIES....................................  105,312    82,972    57,914
                                                              =======    ======    ======

SECURITIES AVAILABLE FOR SALE
  GERMAN:
     Federal and state government and government agency debt
       securities...........................................    6,691     7,030     7,510
     Local government debt securities.......................   24,842    25,517    26,933
     Corporate debt securities..............................   21,566    24,196    23,540
     Mortgage-backed and other debt securities..............       63        73       118
     Equity securities......................................    7,003     7,295     5,387
                                                              -------    ------    ------
     German total...........................................   60,165    64,111    63,488
                                                              -------    ------    ------
  NON-GERMAN:
     U.S. Treasury and other U.S. government agency debt
       securities...........................................      453       916       575
     Other government and official institution debt
       securities...........................................    6,884     6,467     6,454
     Corporate debt securities..............................    6,270     5,626     5,910
     Mortgage-backed and other debt securities..............      105        19        58
     Equity securities......................................    3,297     2,863     2,273
                                                              -------    ------    ------
     Non-German total.......................................   17,009    15,891    15,270
                                                              -------    ------    ------
TOTAL SECURITIES AVAILABLE FOR SALE.........................   77,174    80,002    78,758
                                                              =======    ======    ======
</Table>

                                       114
<PAGE>

<Table>
<Caption>
                                                                    AT DECEMBER 31,
                                                              ---------------------------
                                                               2001       2000      1999
                                                              -------    ------    ------
                                                                    (E IN MILLIONS)
<S>                                                           <C>        <C>       <C>
SECURITIES HELD TO MATURITY
  GERMAN:
     Mortgage-backed securities.............................      301       219       171
                                                              -------    ------    ------
     German total...........................................      301       219       171
                                                              -------    ------    ------
  NON-GERMAN:
     Other government and official institution debt
       securities...........................................      558       593       615
     Corporate debt securities..............................      152       165       177
                                                              -------    ------    ------
     Non-German total.......................................      710       758       792
                                                              -------    ------    ------
TOTAL SECURITIES HELD TO MATURITY...........................    1,011       977       963
                                                              =======    ======    ======
</Table>

     At December 31, 2001, our banking operations held ordinary shares of Munich
Re that had a book value in excess of ten percent of the shareholders' equity of
our banking operations. The shareholders' equity of our banking operations was
approximately E21.8 billion at December 31, 2001. The aggregate book value and
market value of such ordinary shares were E2.7 billion at December 31, 2001.

MATURITY ANALYSIS OF DEBT INVESTMENT SECURITIES

     The following table sets forth an analysis of the contractual maturity and
weighted average yields of our banking operations' debt investment securities.
Actual maturities may differ from contractual maturity dates because issuers may
have the right to call or prepay obligations. The allocation between German and
non-German components is based on the location of the issuer.

<Table>
<Caption>
                                                                         AT DECEMBER 31, 2001
                                                        -------------------------------------------------------
                                                                   DUE AFTER    DUE AFTER
                                                         DUE IN     ONE YEAR    FIVE YEARS
                                                        ONE YEAR    THROUGH      THROUGH     DUE AFTER
                                                        OR LESS    FIVE YEARS   TEN YEARS    TEN YEARS   TOTAL
                                                        --------   ----------   ----------   ---------   ------
                                                                       (E IN MILLIONS, EXCEPT %)
<S>                                                     <C>        <C>          <C>          <C>         <C>
SECURITIES AVAILABLE FOR SALE
  GERMAN:
    Federal and state government and government agency
      debt securities.................................    1,981       3,686          949          75      6,691
    Local government debt securities..................    3,224      15,266        5,231       1,121     24,842
    Corporate debt securities.........................    4,983      11,117        5,326         140     21,566
    Mortgage-backed and other debt securities.........       18          35           10          --         63
                                                         ------      ------       ------       -----     ------
    German total......................................   10,206      30,104       11,516       1,336     53,162
                                                         ------      ------       ------       -----     ------

  NON-GERMAN:
    U.S. Treasury and other U.S. government agency
      debt securities.................................        5          70           56         322        453
    Other government and official institution debt
      securities......................................    1,028       2,985        2,428         443      6,884
    Corporate debt securities.........................    3,520       1,754          477         519      6,270
    Mortgage-backed and other debt securities.........       38          60           --           7        105
                                                         ------      ------       ------       -----     ------
    Non-German total..................................    4,591       4,869        2,961       1,291     13,712
                                                         ------      ------       ------       -----     ------
TOTAL SECURITIES AVAILABLE FOR SALE...................   14,797      34,973       14,477       2,627     66,874
                                                         ======      ======       ======       =====     ======
WEIGHTED AVERAGE YIELD................................      4.5%        5.2%         4.8%        5.7%       5.0%
</Table>

                                       115
<PAGE>

<Table>
<Caption>
                                                                         AT DECEMBER 31, 2001
                                                        -------------------------------------------------------
                                                                   DUE AFTER    DUE AFTER
                                                         DUE IN     ONE YEAR    FIVE YEARS
                                                        ONE YEAR    THROUGH      THROUGH     DUE AFTER
                                                        OR LESS    FIVE YEARS   TEN YEARS    TEN YEARS   TOTAL
                                                        --------   ----------   ----------   ---------   ------
                                                                       (E IN MILLIONS, EXCEPT %)
<S>                                                     <C>        <C>          <C>          <C>         <C>
SECURITIES HELD TO MATURITY
  GERMAN:
    Mortgage-backed securities........................       13          96          192          --        301
                                                         ------      ------       ------       -----     ------
    German total......................................       13          96          192          --        301
                                                         ------      ------       ------       -----     ------
  NON-GERMAN:
    Other government and official institution debt
      securities......................................       20         538           --          --        558
    Corporate debt securities.........................       16         136           --          --        152
                                                         ------      ------       ------       -----     ------
    Non-German total..................................       36         674           --          --        710
                                                         ------      ------       ------       -----     ------
TOTAL SECURITIES HELD TO MATURITY.....................       49         770          192          --      1,011
                                                         ======      ======       ======       =====     ======
WEIGHTED AVERAGE YIELD................................      6.6%        6.6%         5.1%         --        6.3%
</Table>

LOAN PORTFOLIO

     The following table sets forth an analysis of our loan portfolio, excluding
allowances for loan losses, net of unearned income, according to the industry
sector of borrowers. The allocation between German and non-German components is
based on the location of the borrower.

<Table>
<Caption>
                                                           AT DECEMBER 31,
                                           -----------------------------------------------
                                            2001      2000      1999      1998      1997
                                           -------   -------   -------   -------   -------
                                                           (E IN MILLIONS)
<S>                                        <C>       <C>       <C>       <C>       <C>
GERMAN:
  Corporate:
     Manufacturing industry..............   10,825    11,539    11,014    12,459    13,074
     Construction........................    1,813     2,042     2,228     3,378     3,417
     Wholesale and retail trade..........    7,165     7,419     7,555     9,988     9,495
     Financial institutions (excluding
       banks) and insurance companies....    4,896     4,196       926     4,090     3,814
     Banks...............................      517       601     2,342       628       142
     Service providers...................   22,943    21,326    23,658    15,243    11,544
     Other...............................    3,974     3,067     4,416     3,048     4,225
                                           -------   -------   -------   -------   -------
     Corporate total.....................   52,133    50,190    52,139    48,834    45,711
  Public authorities.....................      718       540       276     1,101     1,432
  Private individuals (including self-
     employed professionals).............   63,773    65,883    64,706    60,545    54,917
                                           -------   -------   -------   -------   -------
  German total...........................  116,624   116,613   117,121   110,480   102,060
                                           -------   -------   -------   -------   -------
</Table>

                                       116
<PAGE>

<Table>
<Caption>
                                                           AT DECEMBER 31,
                                           -----------------------------------------------
                                            2001      2000      1999      1998      1997
                                           -------   -------   -------   -------   -------
                                                           (E IN MILLIONS)
<S>                                        <C>       <C>       <C>       <C>       <C>
NON-GERMAN:
  Corporate:
     Manufacturing industry, wholesale
       and retail trade, service
       providers and construction........   38,383    43,771    39,197    24,586    19,145
     Financial institutions (excluding
       banks) and insurance companies....   10,285    10,166     8,100     7,379    10,472
     Banks...............................    5,157     6,287     6,645     8,888     8,526
     Other...............................    3,899     3,536     3,405     4,446     2,789
                                           -------   -------   -------   -------   -------
     Corporate total.....................   57,724    63,760    57,347    45,299    40,932
  Public authorities.....................    3,458       990     2,913     1,239       724
  Private individuals....................   10,601    10,151     9,922     9,595     1,725
                                           -------   -------   -------   -------   -------
  Non-German total.......................   71,783    74,901    70,182    56,133    43,381
                                           -------   -------   -------   -------   -------
TOTAL LOANS..............................  188,407   191,514   187,303   166,613   145,441
                                           =======   =======   =======   =======   =======
</Table>

     The following table sets forth our banking operations' mortgage loans and
finance leases that are included within the above analysis of loans.

<Table>
<Caption>
                                                              AT DECEMBER 31,
                                                 ------------------------------------------
                                                  2001     2000     1999     1998     1997
                                                 ------   ------   ------   ------   ------
                                                              (E IN MILLIONS)
<S>                                              <C>      <C>      <C>      <C>      <C>
Mortgage loans.................................  57,315   61,303   60,587   55,975   43,815
Finance leases.................................   2,414    1,430    1,778    1,568    1,372
</Table>

LOAN CONCENTRATIONS

     Although our loan portfolio is diversified across more than 145 countries,
at December 31, 2001 approximately 62% of our total loans were to borrowers in
Germany. At December 31, 2001, our largest credit exposures to borrowers in
Germany were loans to private individuals (including self-employed
professionals). Approximately two-thirds of these loans are residential mortgage
loans, which represent approximately 23% of our total loans. Our residential
mortgage loans include owner-occupied, single- and two-family homes and
apartment dwellings (approximately 81% of our residential mortgage loans) and
investment properties (approximately 18% of our residential mortgage loans). Our
residential mortgage loans are well diversified across all German states. Our
remaining loans to private individuals in Germany primarily include other
consumer installment loans and loans to self-employed professionals, which are
also geographically diversified across Germany. We have no other concentrations
of loans to private individuals (including self-employed professionals) in
Germany in excess of ten percent of our total loans.

     Our corporate customer loan portfolio is broadly diversified. At December
31, 2001, approximately 12% of our total loans were to German corporate
customers in various services industries, including hotels, restaurants,
transportation and education. However, none of those industries are individually
significant to our domestic loan portfolio and we have no concentrations of
loans to borrowers in any services industry in excess of ten percent of our
total loans.

                                       117
<PAGE>

     At December 31, 2001, approximately 22% of our total loans were to
non-financial corporate borrowers outside Germany. Such loans are diversified to
borrowers in the following regions:

<Table>
<Caption>
                                                              PERCENT OF
                                                              TOTAL LOANS
                                                              -----------
<S>                                                           <C>
Europe (outside Germany)....................................      12%
North America...............................................       5%
South America...............................................       3%
Asia/Pacific................................................       2%
</Table>

     Those loans are well diversified across various commercial industries
including manufacturing of capital and consumer goods, natural resources,
utilities, retail and wholesale trade, real estate, services (including hotels,
restaurants, transportation and education), telecommunications, media,
technology and transportation. We have no concentrations of loans to
non-financial corporate borrowers in any industry in excess of ten percent of
our total loans.

MATURITY ANALYSIS OF LOAN PORTFOLIO

     The following table sets forth an analysis of the contractual maturity of
our loans at December 31, 2001. The allocation between German and non-German
components is based on the location of the borrower.

<Table>
<Caption>
                                                                  AT DECEMBER 31, 2001
                                                      --------------------------------------------
                                                                 DUE AFTER
                                                       DUE IN     ONE YEAR
                                                      ONE YEAR    THROUGH     DUE AFTER
                                                      OR LESS    FIVE YEARS   FIVE YEARS    TOTAL
                                                      --------   ----------   ----------   -------
                                                                    (E IN MILLIONS)
<S>                                                   <C>        <C>          <C>          <C>
GERMAN:
  Corporate:
     Manufacturing industry.........................    6,348       2,506        1,971      10,825
     Construction...................................      995         363          455       1,813
     Wholesale and retail trade.....................    4,161       1,672        1,332       7,165
     Financial institutions (excluding banks) and
       insurance companies..........................    2,660       1,459          777       4,896
     Banks..........................................      166         297           54         517
     Service providers..............................    8,848       4,508        9,587      22,943
     Other..........................................    2,013         984          977       3,974
                                                       ------      ------       ------     -------
     Corporate total................................   25,191      11,789       15,153      52,133
  Public authorities................................      498         117          103         718
  Private individuals (including self-employed
     professionals).................................   10,879       9,520       43,374      63,773
                                                       ------      ------       ------     -------
  German total......................................   36,568      21,426       58,630     116,624
                                                       ------      ------       ------     -------
</Table>

                                       118
<PAGE>

<Table>
<Caption>
                                                                  AT DECEMBER 31, 2001
                                                      --------------------------------------------
                                                                 DUE AFTER
                                                       DUE IN     ONE YEAR
                                                      ONE YEAR    THROUGH     DUE AFTER
                                                      OR LESS    FIVE YEARS   FIVE YEARS    TOTAL
                                                      --------   ----------   ----------   -------
                                                                    (E IN MILLIONS)
<S>                                                   <C>        <C>          <C>          <C>
NON-GERMAN:
  Corporate:
     Manufacturing industry, wholesale and retail
       trade, service providers and construction....   22,114      10,151        6,118      38,383
     Financial institutions (excluding banks) and
       insurance companies..........................      365       5,633        4,287      10,285
     Banks..........................................    3,437       1,299          421       5,157
     Other..........................................    1,432       1,414        1,053       3,899
                                                       ------      ------       ------     -------
     Corporate total................................   27,348      18,497       11,879      57,724
  Public authorities................................    2,929         299          230       3,458
  Private individuals...............................    2,611       3,100        4,890      10,601
                                                       ------      ------       ------     -------
  Non-German total..................................   32,888      21,896       16,999      71,783
                                                       ------      ------       ------     -------
TOTAL LOANS.........................................   69,456      43,322       75,629     188,407
                                                       ======      ======       ======     =======
</Table>

     The following table sets forth the total amount of loans due after one year
with predetermined interest rates and floating or adjustable interest rates at
December 31, 2001. Loans with predetermined interest rates are loans for which
the interest rate is fixed for the entire term of the loan. All other loans are
considered floating or adjustable interest rate loans. The allocation between
German and non-German components is based on the location of the borrower.

<Table>
<Caption>
                                                                  AT DECEMBER 31, 2001
                                                       -------------------------------------------
                                                                           LOANS WITH
                                                         LOANS WITH       FLOATING OR
                                                       PREDETERMINED       ADJUSTABLE
                                                       INTEREST RATES    INTEREST RATES     TOTAL
                                                       --------------    --------------    -------
                                                                     (E IN MILLIONS)
<S>                                                    <C>               <C>               <C>
German...............................................      71,741             8,315         80,056
Non-German...........................................       7,685            31,210         38,895
                                                           ------            ------        -------
Total................................................      79,426            39,525        118,951
                                                           ======            ======        =======
</Table>

                                       119
<PAGE>

RISK ELEMENTS

NONPERFORMING LOANS

     The following table sets forth the outstanding balance of our nonperforming
loans. The allocation between German and non-German components is based on the
location of the borrower.

<Table>
<Caption>
                                                                AT DECEMBER 31,
                                                     --------------------------------------
                                                      2001    2000    1999    1998    1997
                                                     ------   -----   -----   -----   -----
                                                                (E IN MILLIONS)
<S>                                                  <C>      <C>     <C>     <C>     <C>
NONACCRUAL LOANS:
  German...........................................   8,751   7,991   7,516   6,322   5,790
  Non-German.......................................   2,404   1,928   1,618     869     443
                                                     ------   -----   -----   -----   -----
  Total nonaccrual loans...........................  11,155   9,919   9,134   7,191   6,233
                                                     ======   =====   =====   =====   =====
LOANS PAST DUE 90 DAYS AND STILL ACCRUING INTEREST:
  German...........................................   1,640   1,238   1,526   1,876   1,499
  Non-German.......................................     309     300     305     196     154
                                                     ------   -----   -----   -----   -----
  Total loans past due 90 days and still accruing
     interest......................................   1,949   1,538   1,831   2,072   1,653
                                                     ======   =====   =====   =====   =====
TROUBLED DEBT RESTRUCTURINGS:
  German...........................................     215     253     261     307     350
  Non-German.......................................     336     323     289     294     271
                                                     ------   -----   -----   -----   -----
  Total troubled debt restructurings...............     551     576     550     601     621
                                                     ======   =====   =====   =====   =====
</Table>

NONACCRUAL LOANS

     Nonaccrual loans are loans on which interest income is no longer recognized
on an accrual basis and loans for which a specific provision is recorded for the
full amount of accrued interest receivable. We place loans on nonaccrual status
when we determine, based on management's judgement, that the payment of interest
or principal is doubtful.

     When a loan is placed on nonaccrual status, any accrued and unpaid interest
receivable is reversed and charged against interest income. We restore loans to
accrual status only when interest and principal are made current in accordance
with the contractual terms and, in management's judgement, future payments are
reasonably assured. When we have doubts about the ultimate collectibility of the
principal of a loan placed on nonaccrual status, all cash receipts are recorded
as reductions in principal. Once the recorded principal amount of the loan is
reduced to zero, future cash receipts are recognized as interest income. For all
remaining loans, interest income is recognized when received.

LOANS PAST DUE 90 DAYS AND STILL ACCRUING INTEREST

     Loans past due 90 days and still accruing interest are loans that are
contractually past due 90 days or more as to principal or interest on which we
continue to recognize interest income on an accrual basis.

TROUBLED DEBT RESTRUCTURINGS

     Troubled debt restructurings are loans that we have restructured due to a
deterioration in the borrower's financial position and in relation to which, for
economic or legal reasons related to the borrower's deteriorated financial
position, we have granted a concession to the borrower that we would not have
otherwise granted.

                                       120
<PAGE>

Interest Income on Nonperforming Loans

     The following table sets forth the gross interest income that would have
been recorded during the year ended December 31, 2001 on nonaccrual loans and
troubled debt restructurings if such loans had been current in accordance with
their original contractual terms and the interest income on such loans that was
actually included in interest income during the year ended December 31, 2001.

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31, 2001
                                                              -----------------------------
                                                                IN          IN
                                                              GERMAN    NON-GERMAN
                                                              OFFICES    OFFICES      TOTAL
                                                              -------   ----------    -----
                                                                     (E IN MILLIONS)
<S>                                                           <C>       <C>           <C>
Interest income that would have been recorded in accordance
  with the original contractual terms.......................    561        202         763
Interest income actually recorded...........................     69         36         105
</Table>

POTENTIAL PROBLEM LOANS

     Potential problem loans are loans that are not classified as nonaccrual
loans, loans past due 90 days and still accruing interest or as troubled debt
restructurings, but where known information about possible credit problems
causes us to have serious doubts as to the ability of the borrower to comply
with the present loan repayment terms and which may result in classifying the
loans in one of the three categories of nonperforming loans described above. The
outstanding balance of our potential problem loans was E2,876 million at
December 31, 2001.

     Each of our potential problem loans has been subject to our normal credit
monitoring and review procedures. Of these loans, approximately E1,071 million
have a specific loss allowance. The remaining loans have also been reviewed for
impairment, however, based on our estimated measurement of the impairment, no
specific loss allowance has been recorded on such loans.

     Approximately 10% of our potential problem loans are to private individuals
in Germany. The remaining loans are to corporate borrowers in manufacturing,
wholesale and retail trade, service and other industry sectors. Our potential
problem loans to corporate borrowers are diversified across the following
geographic regions:

<Table>
<Caption>
                                                              AT DECEMBER 31, 2001
                                                              --------------------
                                                                   PERCENT OF
                                                                TOTAL POTENTIAL
                                                                 PROBLEM LOANS
                                                              --------------------
<S>                                                           <C>
Germany.....................................................           52%
Europe (outside Germany)....................................           14%
North America...............................................           12%
Asia/Pacific................................................            8%
Latin America...............................................            4%
</Table>

FOREIGN OUTSTANDINGS

     Cross-border outstandings consist of loans, net of allowances for loan
losses, accrued interest receivable, acceptances, interest-bearing deposits with
other banks, other interest-bearing investments and other monetary assets that
either are recorded in an office that is not in the same country as the domicile
of the borrower, guarantor, issuer or counter-party, or are denominated in a
currency that is not the local currency of the borrower, guarantor, issuer or
counter-party or are net local country claims. Net local country claims are
domestic claims recorded in offices outside Germany that are denominated in
local or foreign currency and that are not funded by liabilities in the same
currency as the claim and recorded in the same office.

                                       121
<PAGE>

     Our cross-border outstandings are allocated by country based on the country
of domicile of the borrower, guarantor, issuer or counter-party of the ultimate
credit risk. At head-office level we set limits on and monitor actual
cross-border outstandings on a country-by-country basis based on transfer,
economic and political risks.

     The following table sets forth our cross-border outstandings by geographic
location for countries that exceeded 0.75% of the total assets of our banking
operations. At December 31, 2001, there were no cross-border outstandings that
exceeded 0.5% of the total assets of our banking operations in any country
currently facing debt restructurings or liquidity problems that we expect would
materially impact the borrowers' ability to repay their obligations.

<Table>
<Caption>
                                                             AT DECEMBER 31, 2001
                        ----------------------------------------------------------------------------------------------
                         GOVERNMENT     BANKS AND                NET LOCAL      TOTAL        PERCENT
                        AND OFFICIAL    FINANCIAL                 COUNTRY    CROSS-BORDER   OF TOTAL     CROSS-BORDER
                        INSTITUTIONS   INSTITUTIONS   OTHER(1)    CLAIMS     OUTSTANDINGS   ASSETS(2)   COMMITMENTS(3)
                        ------------   ------------   --------   ---------   ------------   ---------   --------------
                                                          (E IN MILLIONS, EXCEPT %)
<S>                     <C>            <C>            <C>        <C>         <C>            <C>         <C>
COUNTRY
United States.........      1,266          8,200       7,135       1,178        17,779         3.4%         14,301
United Kingdom........        354          9,472       2,495          --        12,321         2.3%          7,137
France................        556          6,834       4,020          --        11,410         2.2%            124
Italy.................     11,320          1,344         361       1,088        14,113         2.7%          2,409
Netherlands...........      1,408          4,561       2,105          --         8,074         1.5%             --
Japan.................        361          1,334         422         644         2,761         0.5%          3,132
Switzerland...........         86          2,995       1,887          --         4,968         0.9%            219
Luxembourg............          5          3,415         441          --         3,861         0.7%          1,686
Spain.................      2,509          1,530       1,004          32         5,075         1.0%            133
Cayman Islands........         --          2,624         719          --         3,343         0.6%            266
</Table>

<Table>
<Caption>
                                                             AT DECEMBER 31, 2000
                        ----------------------------------------------------------------------------------------------
                         GOVERNMENT     BANKS AND                NET LOCAL      TOTAL        PERCENT
                        AND OFFICIAL    FINANCIAL                 COUNTRY    CROSS-BORDER   OF TOTAL     CROSS-BORDER
                        INSTITUTIONS   INSTITUTIONS   OTHER(1)    CLAIMS     OUTSTANDINGS   ASSETS(2)   COMMITMENTS(3)
                        ------------   ------------   --------   ---------   ------------   ---------   --------------
                                                          (E IN MILLIONS, EXCEPT %)
<S>                     <C>            <C>            <C>        <C>         <C>            <C>         <C>
COUNTRY
United States.........      1,130         11,944       6,632       1,421        21,127         4.2%         18,568
United Kingdom........        216         12,398       2,891          --        15,505         3.1%          6,685
France................        730          6,454       3,513          --        10,697         2.1%             69
Italy.................      6,548          3,098         314          77        10,037         2.0%          1,041
Netherlands...........      1,131          4,809       2,510          --         8,450         1.7%             --
Japan.................        966          2,316         424         696         4,402         0.9%          3,204
Switzerland...........        116          3,531       2,181         455         6,283         1.3%            248
Luxembourg............          5          2,236         526          --         2,767         0.6%          1,184
Spain.................      2,281          1,430         712         182         4,605         0.9%            775
Cayman Islands........         --          2,283         642          --         2,925         0.6%            289
</Table>

                                       122
<PAGE>

<Table>
<Caption>
                                                             AT DECEMBER 31, 1999
                        ----------------------------------------------------------------------------------------------
                         GOVERNMENT     BANKS AND                NET LOCAL      TOTAL        PERCENT
                        AND OFFICIAL    FINANCIAL                 COUNTRY    CROSS-BORDER   OF TOTAL     CROSS-BORDER
                        INSTITUTIONS   INSTITUTIONS   OTHER(1)    CLAIMS     OUTSTANDINGS   ASSETS(2)   COMMITMENTS(3)
                        ------------   ------------   --------   ---------   ------------   ---------   --------------
                                                          (E IN MILLIONS, EXCEPT %)
<S>                     <C>            <C>            <C>        <C>         <C>            <C>         <C>
COUNTRY
United States.........      1,059          8,069       3,977       1,493        14,598         3.5%         17,277
United Kingdom........        470         10,402       2,322          26        13,220         3.2%          7,354
France................        532          6,036       3,364          --         9,932         2.4%             --
Italy.................      6,324          1,176         284          --         7,784         1.9%            681
Netherlands...........        695          3,181       1,681          --         5,557         1.3%             --
Japan.................      1,599            997         620         663         3,879         0.9%          3,244
Switzerland...........         81          2,209       1,196          59         3,545         0.9%            252
Luxembourg............          5          1,050         234           3         1,292         0.3%          1,424
Spain.................      1,577          1,126         668         111         3,482         0.8%            794
Cayman Islands........         --          2,303         943          --         3,246         0.8%            237
</Table>

---------------

(1) Other includes insurance, commercial, industrial, service providers and
    other corporate counter-parties.

(2) Percent of total assets is defined as total cross-border outstandings
    divided by total assets of our banking operations. The total assets of our
    banking operations were E526 billion and E501 billion and E414 billion at
    December 31, 2001, 2000 and 1999, respectively.

(3) Cross-border commitments have been presented separately as they are not
    included as cross-border outstandings unless utilized.

     At December 31, 2001, total cross-border outstandings disclosed above
included E668 million and E114 million of gross loans outstanding to borrowers
in the United States that are also disclosed within the categories of
nonperforming loans and potential problem loans, respectively.

SUMMARY OF LOAN LOSS EXPERIENCE

     We establish allowances for loan losses in our loan portfolio that
represent our management's estimate of probable losses in the portfolio at the
balance sheet date. The components of these allowances are:

     - Specific loss allowances.  A specific loss allowance is established to
       provide for specifically identified counter-party risks. Loans are
       identified as impaired if it is probable that borrowers are no longer
       able to make their contractually agreed-upon interest and principal
       payments. Specific allowances are established for impaired loans. The
       amount of the impairment is measured based on the present value of
       expected future cash flows or based on the fair value of the collateral
       if the loan is collateralized and foreclosure is probable. If the amount
       of the impairment subsequently increases or decreases due to an event
       occurring after the initial measurement of impairment, a change in the
       allowance is recognized in earnings by a charge or a credit to net loan
       loss provisions.

     - General loss allowances.  General loss allowances are established to
       provide for incurred but unidentified losses that are inherent in the
       loan portfolio as of the relevant balance sheet date. General allowances
       for loan losses are established for loans not specifically identified as
       impaired. The amount of the allowance is based on historical loss
       experience and management's evaluation of the loan portfolio under
       current events and economic conditions.

     - Country risk allowances.  Country risk allowances are established for
       transfer risk. Transfer risk is a measure of the likely ability of a
       borrower in a certain country to repay

                                       123
<PAGE>

       its foreign currency-denominated debt in light of the economic or
       political situation prevailing in that country. Country risk allowances
       are based on our country rating system that incorporates current and
       historical economic, political and other data to categorize countries by
       risk profile.

     The following table sets forth an analysis of the specific loan loss
allowances by industry sector and geographic category of the borrowers, and the
percentage of our total loan portfolio accounted for by those industry and
geographic categories, on the dates specified. The allocation between German and
non-German components is based on the location of the borrower.

<Table>
<Caption>
                                                                         AT DECEMBER 31,
                                -------------------------------------------------------------------------------------------------
                                      2001                2000                1999                1998                1997
                                -----------------   -----------------   -----------------   -----------------   -----------------
                                         PERCENT             PERCENT             PERCENT             PERCENT             PERCENT
                                         OF TOTAL            OF TOTAL            OF TOTAL            OF TOTAL            OF TOTAL
                                          LOANS               LOANS               LOANS               LOANS               LOANS
                                         IN EACH             IN EACH             IN EACH             IN EACH             IN EACH
                                         CATEGORY            CATEGORY            CATEGORY            CATEGORY            CATEGORY
                                         TO TOTAL            TO TOTAL            TO TOTAL            TO TOTAL            TO TOTAL
                                AMOUNT    LOANS     AMOUNT    LOANS     AMOUNT    LOANS     AMOUNT    LOANS     AMOUNT    LOANS
                                ------   --------   ------   --------   ------   --------   ------   --------   ------   --------
                                                                    (E IN MILLIONS, EXCEPT %)
<S>                             <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>
GERMAN:
 Corporate:
   Manufacturing industry.....    884       5.7%      687       6.0%      840       5.9%      738       7.5%      705       9.0%
   Construction...............    353       1.0%      381       1.1%      389       1.2%      372       2.0%      312       2.3%
   Wholesale and retail
     trade....................    448       3.8%      506       3.9%      585       4.0%      557       6.0%      493       6.5%
   Financial institutions
     (excluding banks) and
     insurance companies......    133       2.6%      135       2.2%      110       0.5%      126       2.5%      105       2.6%
   Banks......................      5       0.3%        1       0.3%       --       1.3%       --       0.4%        7       0.1%
   Service providers..........    982      12.2%    1,030      11.1%      887      12.6%      654       9.1%      609       7.9%
   Other......................     59       2.1%       95       1.6%      130       2.4%       97       1.8%       80       2.9%
                                -----               -----               -----               -----               -----
   Corporate total............  2,864      27.7%    2,835      26.2%    2,941      27.9%    2,544      29.3%    2,311      31.3%
   Public authorities.........     --       0.4%       --       0.3%        1       0.1%        2       0.7%        6       1.0%
   Private individuals
     (including self-employed
     professionals)...........  2,090      33.8%    1,730      34.4%    1,342      34.6%    1,170      36.3%      965      37.8%
                                -----               -----               -----               -----               -----
   German total...............  4,954      61.9%    4,565      60.9%    4,284      62.6%    3,716      66.3%    3,282      70.1%
                                -----               -----               -----               -----               -----
NON-GERMAN:
 Corporate:
   Manufacturing industry,
     wholesale and retail
     trade, service providers
     and construction.........  1,201      20.4%      998      22.9%    1,183      20.9%    1,001      14.8%      643      13.2%
   Financial institutions
     (excluding banks) and
     insurance companies......     96       5.5%      109       5.3%      107       4.3%       17       4.4%       --       7.2%
   Banks......................    118       2.7%       92       3.3%      142       3.5%      195       5.3%       60       5.9%
   Other......................    247       2.1%      118       1.8%       85       1.8%       98       2.7%       38       1.9%
                                -----               -----               -----               -----               -----
   Corporate total............  1,662      30.7%    1,317      33.3%    1,517      30.5%    1,311      27.2%      741      28.2%
   Public authorities.........     15       1.8%       14       0.5%       30       1.6%       15       0.7%       --       0.5%
   Private individuals........    211       5.6%      224       5.3%      231       5.3%      216       5.8%       41       1.2%
                                -----               -----               -----               -----               -----
   Non-German total...........  1,888      38.1%    1,555      39.1%    1,778      37.4%    1,542      33.7%      782      29.9%
                                -----               -----               -----               -----               -----
TOTAL SPECIFIC LOAN LOSS
 ALLOWANCES...................  6,842     100.0%    6,120     100.0%    6,062     100.0%    5,258     100.0%    4,064     100.0%
COUNTRY RISK ALLOWANCES.......    443                 480                 659                 529                 560
GENERAL LOSS ALLOWANCES.......    753                 523                 386                 344                 331
                                -----               -----               -----               -----               -----
TOTAL LOAN LOSS ALLOWANCES....  8,038               7,123               7,107               6,131               4,955
                                =====               =====               =====               =====               =====
</Table>

                                       124
<PAGE>

     The following table sets forth the movements in the loan loss allowance
according to the industry sector and geographic category of the borrower. The
allocation between German and non-German components is based on the location of
the borrower.

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                          -------------------------------------
                                                          2001    2000    1999    1998    1997
                                                          -----   -----   -----   -----   -----
                                                                     (E IN MILLIONS)
<S>                                                       <C>     <C>     <C>     <C>     <C>
TOTAL ALLOWANCES FOR LOAN LOSSES AT BEGINNING OF THE
  YEAR..................................................  7,123   7,107   6,131   4,955   4,543
                                                          -----   -----   -----   -----   -----
GROSS CHARGE-OFFS:
GERMAN:
  Corporate:
     Manufacturing industry.............................     66     211      71      47      46
     Construction.......................................     16      53      33      11       8
     Wholesale and retail trade.........................     54     163      71      26      44
     Financial institutions (excluding banks) and
       insurance companies..............................     17      19       4       1       2
     Service providers..................................    103     131      82      78      39
     Other..............................................     16      36       5       5      20
                                                          -----   -----   -----   -----   -----
     Corporate total....................................    272     613     266     168     159
     Public authorities.................................     --       1      --      --      --
     Private individuals (including self-employed
       professionals)...................................    211     337     173     115      90
                                                          -----   -----   -----   -----   -----
German total............................................    483     951     439     283     249
                                                          -----   -----   -----   -----   -----
NON-GERMAN:
  Corporate:
     Manufacturing industry, wholesale and retail trade,
       service providers and construction...............    516     594      93     116      78
     Financial institutions (excluding banks) and
       insurance companies..............................     23      48       6       5      35
     Banks..............................................     13      14      19       3      18
     Other..............................................      2      72       1       4       9
                                                          -----   -----   -----   -----   -----
     Corporate total....................................    554     728     119     128     140
     Private individuals................................     49      32       9      11       4
                                                          -----   -----   -----   -----   -----
Non-German total........................................    603     760     128     139     144
                                                          -----   -----   -----   -----   -----
TOTAL GROSS CHARGE-OFFS.................................  1,086   1,711     567     422     393
                                                          -----   -----   -----   -----   -----
</Table>

                                       125
<PAGE>

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                          -------------------------------------
                                                          2001    2000    1999    1998    1997
                                                          -----   -----   -----   -----   -----
                                                                     (E IN MILLIONS)
<S>                                                       <C>     <C>     <C>     <C>     <C>
RECOVERIES:
GERMAN:
  Corporate:
     Manufacturing industry.............................      1       9       1       1       4
     Construction.......................................     --      --       1      --       1
     Wholesale and retail trade.........................     --      --       1      --       3
     Financial institutions (excluding banks) and
       insurance companies..............................     --      --      --      --       1
     Service providers..................................     --      --      10       1       3
     Other..............................................     --      --      --       1       1
                                                          -----   -----   -----   -----   -----
     Corporate total....................................      1       9      13       3      13
     Private individual (including self-employed
       professionals)...................................     25      21      17      17      10
                                                          -----   -----   -----   -----   -----
German total............................................     26      30      30      20      23
                                                          -----   -----   -----   -----   -----
NON-GERMAN:
  Corporate:
     Manufacturing industry, wholesale and retail trade,
       service providers and construction...............      3       1       1       3       6
     Financial institutions (excluding banks) and
       insurance companies..............................      7      --      --      --       3
     Banks..............................................      4       1      --      --       1
     Other..............................................      2       1      --      37      --
                                                          -----   -----   -----   -----   -----
     Corporate total....................................     16       3       1      40      10
     Public authorities.................................     --       1      --      --      --
     Private individuals................................      6       2       5       6      --
                                                          -----   -----   -----   -----   -----
Non-German total........................................     22       6       6      46      10
                                                          -----   -----   -----   -----   -----
TOTAL RECOVERIES........................................     48      36      36      66      33
                                                          -----   -----   -----   -----   -----
NET CHARGE-OFFS.........................................  1,038   1,675     531     356     360
Additions to allowances charged to operations...........  1,901   1,595   1,237   1,024     749
Increase in allowances due to mergers and acquisitions
  and other increases/(decreases).......................     12      41     158     555      --
Foreign exchange translation adjustments................     40      55     112     (47)     23
                                                          -----   -----   -----   -----   -----
TOTAL ALLOWANCES FOR LOAN LOSSES AT END OF THE YEAR.....  8,038   7,123   7,107   6,131   4,955
                                                          =====   =====   =====   =====   =====
RATIO OF NET CHARGE-OFFS DURING THE YEAR TO AVERAGE
  LOANS OUTSTANDING DURING THE YEAR.....................   0.46%   0.78%   0.27%   0.15%   0.18%
</Table>

     When we determine that a loan is uncollectible, the loan is charged off
against any existing specific loss allowance or directly recognized as expense
in the income statement. Subsequent recoveries, if any, are recognized in the
income statement as a credit to the net loan loss provisions. Since 2000, we
have charged off loans when, based on management's judgement, all economically
sensible means of recovery have been exhausted. Our determination considers
information such as the age of specific loss allowances and expected proceeds
from liquidation of collateral and other repayment sources. Prior to 2000, we
charged off loans only when all legal means of recovery had been exhausted, for
example only after completion of bankruptcy

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<PAGE>

proceedings. The change in practice has affected both the timing and amount of
charge-offs since 2000.

DEPOSITS

     The following table sets forth the average balances and the average
interest rates on deposit categories in excess of ten percent of average total
deposits of our banking operations. The allocation between German and non-German
components is based on the location of the office that recorded the transaction.

<Table>
<Caption>
                                                          YEAR ENDED DECEMBER 31,
                                         ---------------------------------------------------------
                                               2001                2000                1999
                                         -----------------   -----------------   -----------------
                                         AVERAGE   AVERAGE   AVERAGE   AVERAGE   AVERAGE   AVERAGE
                                         BALANCE    RATE     BALANCE    RATE     BALANCE    RATE
                                         -------   -------   -------   -------   -------   -------
                                                         (E IN MILLIONS, EXCEPT %)
<S>                                      <C>       <C>       <C>       <C>       <C>       <C>
IN GERMAN OFFICES:
  Non-interest-bearing demand
     deposits..........................    1,854               1,874               3,323
  Interest-bearing demand deposits.....   31,608    1.5%      33,849    2.1%      46,377    1.4%
  Savings deposits.....................   10,352    3.4%      14,457    2.6%      15,570    2.4%
  Time deposits........................  128,749    3.6%      91,686    3.3%      68,741    2.7%
                                         -------             -------             -------
German total...........................  172,563             141,866             134,011
                                         -------             -------             -------
IN NON-GERMAN OFFICES:
  Non-interest-bearing demand
     deposits..........................    6,098               8,405               7,807
  Interest-bearing demand deposits.....   11,351    3.8%      10,392    4.2%      10,040    3.2%
  Savings deposits.....................    1,073    3.9%         612    3.1%       1,225    4.0%
  Time deposits........................   57,432    5.3%      44,358    7.5%      33,720    8.8%
                                         -------             -------             -------
Non-German total.......................   75,954              63,767              52,792
                                         -------             -------             -------
TOTAL DEPOSITS.........................  248,517             205,633             186,803
                                         =======             =======             =======
</Table>

     The aggregate amount of deposits by foreign depositors in our German
offices was E63,663 million, E55,263 million and E42,999 million at December 31,
2001, 2000 and 1999, respectively.

TIME DEPOSITS

     The following table sets forth the balance of time certificates of deposit
and other time deposits in the amount of E100,000 or more issued by our German
offices by time remaining to maturity at December 31, 2001.

<Table>
<Caption>
                                                               AT DECEMBER 31, 2001
                                                                 TIME DEPOSITS OF
                                                                 E100,000 OR MORE
                                                               --------------------
                                                                 (E IN MILLIONS)
<S>                                                            <C>
Maturing in three months or less............................          61,236
Maturing in over three months through six months............           6,872
Maturing in over six months through twelve months...........           5,033
Maturing in over twelve months..............................          19,110
                                                                      ------
Total.......................................................          92,251
                                                                      ======
</Table>

     The amount of time deposits of E100,000 or more issued by our non-German
offices was E45,166 million at December 31, 2001.

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<PAGE>

SHORT-TERM BORROWINGS

     Short-term borrowings are borrowings with an original maturity of one year
or less. Short-term borrowings are included within liabilities to customers,
liabilities to banks and certificated liabilities. Securities sold under
agreement to repurchase and negotiable certificates of deposit are the only
significant categories of short-term borrowings of our banking operations.

     The following table sets forth certain information relating to the
categories of our short-term borrowings.

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ----------------------------
                                                               2001       2000      1999
                                                              -------    ------    -------
                                                               (E IN MILLIONS, EXCEPT %)
<S>                                                           <C>        <C>       <C>
SECURITIES SOLD UNDER REPURCHASE AGREEMENT:
  Balance at the end of the year............................   56,354    60,648     38,217
  Monthly average balance outstanding during the year.......   76,875    54,102     45,015
  Maximum balance outstanding at any period-end during the
     year...................................................  102,587(1) 68,950(1)  51,307(2)
  Weighted average interest rate during the year............      4.3%      4.7%       4.0%
  Weighted average interest rate on balance at the end of
     the year...............................................      2.4%      4.7%       3.3%

NEGOTIABLE CERTIFICATES OF DEPOSIT:
  Balance at the end of the year............................   30,268    28,552     26,268
  Monthly average balance outstanding during the year.......   28,718    28,009     25,027
  Maximum balance outstanding at any period-end during the
     year...................................................   30,518(2) 28,552(2)  26,268(2)
  Weighted average interest rate during the year............      5.0%      5.7%       3.8%
  Weighted average interest rate on balance at the end of
     the year...............................................      3.1%      6.4%       5.7%
</Table>

---------------

(1) The maximum balance outstanding at any period-end during the year was
    derived from the maximum balance outstanding at any month-end, based on the
    unconsolidated balances of Dresdner Bank AG, its branch operations and
    significant subsidiaries, and certain other banking subsidiaries of Allianz.

(2) The maximum balance outstanding at any period-end during the year was
    derived from the maximum balance outstanding at any quarter-end, based on
    the consolidated balances of our banking operations.

                           REGULATION AND SUPERVISION

                                    GENERAL

     Our insurance, banking and asset management businesses are subject to
detailed, comprehensive regulation and supervision in all the countries in which
we do business. In addition, certain EU directives and regulations, which are
implemented through local legislation in EU member states, have had and will
continue to have a significant impact on the regulation of the insurance,
banking and asset management industries in EU member states, including those in
which many of our most important flagship operations are located, such as
Germany, France, Italy and the United Kingdom. The following discussion
addresses significant aspects of the regulatory schemes in these countries.

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<PAGE>

                                   ALLIANZ AG

     Allianz AG operates as a reinsurer and holding company for our insurance,
banking and asset management operating entities. Our insurance, banking and
asset management operating entities in Germany are extensively supervised and
regulated by the German Federal Institution for Financial Services Supervision
(the Bundesanstalt fur Finanzdienstleistungsaufsicht, or BAFin), a federal
authority that monitors and enforces regulatory standards for German insurers,
banks and other credit institutions, asset management companies and other
financial services institutions. The BAFin was formed by merging the German
Federal Banking Supervisory Authority (the Bundesaufsichtsamt fur das
Kreditwesen), the German Federal Insurance Supervisory Authority (the
Bundesaufsichtsamt fur das Versicherungswesen) and the German Federal Securities
Supervisory Authority (the Bundesaufsichtsamt fur den Wertpapierhandel) into a
single German federal agency on May 1, 2002. The BAFin is an independent federal
authority that reports to and is supervised by the Federal Ministry of Finance.

     As a reinsurer and holding company, Allianz AG is not subject to direct
insurance supervisory regulation in Germany applicable to primary insurers.
Reinsurance companies are not required to be licensed as such in Germany. The
BAFin regulates reinsurance activities mainly through its supervision of
reinsurance programs that are submitted by direct insurers. In addition, the
BAFin can require the establishment of deposits by a reinsurance company, a
reduction in the share of business ceded to another reinsurer or the termination
of reinsurance treaties. Allianz AG is subject to regulation as an insurance
holding company and is required to submit its annual report and statutory
quarterly reports to the BAFin. The BAFin also reviews transactions between
Allianz AG and its subsidiaries, including reinsurance relationships and cost
sharing agreements. In addition, Allianz AG's reinsurance activities are subject
to the German Insurance Supervision Act and to regulation by the BAFin in areas
such as financial accounting. Allianz AG is currently not subject to regulatory
restrictions with respect to the investment of its assets, including assets held
to cover its reinsurance liabilities. A German legislative initiative (the 4.
Finanzmarktforderungsgesetz, or Fourth Financial Markets Promotion Act) expected
to be implemented in July 2002 and to take effect, with respect to reinsurance
in 2005, proposes stronger supervision for reinsurance companies with regard to
investment of assets, requiring consideration of appropriate diversification and
mixing of risks while taking into account the individual circumstances of the
particular insurance company and its financial situation, capital allocation and
group structure.

                          GROUP SOLVENCY REQUIREMENTS

     An EU directive implemented into German law with effect for the reporting
year 2001 requires that Allianz AG establish appropriate internal controls to
ensure solvency sufficient to cover all of the Group's insurance liabilities and
that Allianz AG inform the BAFin annually of intra-group transactions and
promptly after any such transaction endangering that solvency. The law requires
that Allianz AG calculate the capital needed to meet the respective solvency
requirements for the Group's insurance companies on a consolidated basis. IAS
accounting may be used as a basis for the calculation. Similar group solvency
requirements are required to be fulfilled by the local parent companies of
insurance subsidiary groups in the different EU jurisdictions.

     Two directives have been issued in the EU, the solvency ratio directive and
the capital adequacy directive, with the aim of establishing a harmonised
European banking market by defining one regulatory standard for all institutions
offering banking services. The directives were implemented into German law in
1993 and 1998, respectively. They define the capital requirements that a bank
has to meet in order to ensure solvency sufficient to cover the bank's market
and credit risks associated with banking and trading book activities.

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<PAGE>

                            FINANCIAL CONGLOMERATES

     In the EU and in individual EU member states, ongoing discussions are being
held relating to the regulation and supervision of financial conglomerates. The
EU has proposed a directive that proposes assessment of the solvency of a
financial conglomerate on the group level, supervision of risk concentration and
intra-group transactions and prevention of double-leveraging of the capital of
the holding or parent company, i.e. once in the holding or parent company and a
second time in the subsidiary ("double gearing"). The directive is expected to
be adopted in 2002 and implemented into German law in 2005. The Allianz Group is
a financial conglomerate within the meaning of this directive.

     In the United States, the recently enacted Gramm-Leach-Bliley Financial
Modernization Act of 1999 substantially eliminates barriers separating the
banking, insurance and securities industries in the United States. The
legislation allows the formation of diversified financial services firms that
can provide a broad array of financial products and services to their customers.
In addition, the legislation permits insurers and other financial services
companies to acquire banks, and expands permitted banking activities to
encompass the insurance business.

                                   INSURANCE

EUROPEAN UNION

     Under the Treaty of Rome of 1957, Germany and the other member states of
the EU are required to implement EU legislation into domestic law and to take EU
legislation into account in applying domestic law. EU legislation can take a
number of forms. EU regulations have general application and are binding in
their entirety and directly applicable in all member states. EU directives are
binding on member states, whose authorities may choose the form and method of
their implementation. In addition, certain "self-executing" directives are
directly binding on member states, although they still require formal
implementation in national legislation.

     Since 1973, the EU has adopted a series of insurance directives on life
insurance and direct insurance other than life insurance. These directives have
been implemented in Germany, France, Italy, the United Kingdom, Austria and the
other EU jurisdictions through national legislation and have resulted in
significant deregulation of the EU insurance markets. The directives are based
on the general principles of freedom of branch operations, freedom of provision
of services and home country control. Under the directives, the regulation of
insurance companies, including insurance operations outside their respective
home countries (whether direct or through branches), is the responsibility of
the home country insurance regulatory authority. In particular, the home country
insurance regulatory authority is responsible for monitoring compliance with
applicable regulations, the solvency and actuarial reserves of insurers and the
assets supporting those reserves.

     As a result of the home country control principle, the EU insurance
directives generally permit an insurance company licensed in any jurisdiction of
the EU to conduct insurance activities, directly or through branches, in all
other jurisdictions of the EU, without being subject to additional licensing
requirements. Under the EU insurance directives, there is no authorization
procedure to regulate insurance terms and conditions or tariffs. Insurance
selling activities, however, are regulated by the regulatory authorities in the
country in which the sale of the insurance product takes place. In addition,
insurers are required to submit reports to the regulatory authorities in
jurisdictions outside their home country regarding qualifying shareholders (as
defined below), and other matters such as general and specific policy terms and
conditions, premiums and technical reserves. The EU insurance directives are not
applicable to state-supported export credit insurance and certain types of
mandatory social services insurance.

                                       130
<PAGE>

     The EU insurance directives generally prohibit an insurance company from
conducting both non-life and life insurance activities. However, life insurance
companies that conducted non-life insurance activities in EU member states prior
to March 5, 1979, including some of our subsidiaries, may continue to conduct
these activities without restriction. In addition, member states may permit life
insurance companies to write personal accident and health insurance policies, or
insurance companies authorized to write personal accident and health insurance
policies to write life insurance policies.

     The EU insurance directives impose certain disclosure requirements on life
insurance companies and permit member states to require that life insurance
companies report the technical bases for the calculation of premiums and
technical reserves. Premiums for new business must be appropriate to cover a
life insurance company's benefit obligations and to provide for a sufficient
level of reserves. With respect to the calculation of reserves, the directives
allow member states the option to choose between a maximum interest rate of 60%
of the average return on government bonds, or a mixed rate determined on the
basis of existing capital investments in combination with a rate set in relation
to the insurer's future obligations by the regulatory authority of the relevant
member state.

GERMANY

General

     German insurance companies, including the companies in our German
Property-Casualty Group, our credit insurance companies, our life insurance
companies and our health insurance companies, are subject to a comprehensive
system of regulation under the German Insurance Supervision Act. The BAFin
monitors and enforces compliance with German insurance laws, applicable
accounting standards, technical administrative regulations, and investment and
solvency provisions. Any change in the articles of association and all material
changes in the business plan of a German insurance company must be approved, and
the books and records of German insurance companies are subject to examination
at any time, by the BAFin.

     Under the Insurance Supervision Act, German insurance companies are subject
to detailed requirements with respect to the administration of their assets and
liabilities. In general, the actuarial and claims reserves of each insurer must
be adequate to allow the insurer to fulfill its contractual commitments to pay
upon receipt of claims. Toward this end, insurers must maintain a minimum
solvency margin and a guarantee fund equal to one third of the solvency margin.
German property-casualty insurance companies are also required to establish
claims equalization reserves according to established actuarial rules. These
claims equalization reserves, which are intended to level out fluctuating claims
requirements over the course of time, are estimated on a case-by-case basis.
German law limits the proportion of assets which German insurers may invest in
certain categories of investments and imposes restrictions with respect to
particular investments.

     New insurance products and policies may be offered in Germany without prior
approval of the BAFin. Insurers must file a description of new products and
policies, and the BAFin may require the modification of terms and conditions or
the withdrawal from the market or modification of any contract that does not
comply with applicable laws and regulations. In addition, the terms of all
health insurance policies are subject to German consumer protection and other
legislation. These provisions, which have been in effect in Germany since the
implementation of EU insurance directives in 1994, have substantially
deregulated the Group's property-casualty business in Germany.

Life Insurance

     Under German law, German life insurance companies are required to notify
the BAFin of the principles they use to set premium rates and establish
actuarial provisions, and of any intention

                                       131
<PAGE>

to alter or amend these principles. German life insurance companies are also
required to appoint a chief actuary responsible for reviewing and ensuring the
appropriateness of actuarial calculation methods. The chief actuary is subject
to direct supervision by the BAFin.

     Additional restrictions apply to the investment of German life insurance
company assets. The BAFin closely monitors the calculation of actuarial reserves
and the allocation of assets covering actuarial reserves. Assets covering
actuarial reserves are also monitored by an independent trustee supervised by
the BAFin. The BAFin may issue supplemental instructions to an insurer if deemed
necessary to safeguard the interests of policyholders.

     Amounts payable to policyholders at the maturity of endowment policies
underwritten by German life insurance companies include a "guaranteed benefit,"
an amount established by reference to a legally mandated maximum rate of return
on actuarial reserves. This rate is currently 3.25% per year for policies issued
on or after July 1, 2000. For policies issued through June 30, 2000, the maximum
rate of return is 4.0% per annum. On policies written through 1994, German life
insurance companies are obliged by regulations to allocate for the benefit of
policyholders at least 90% of their annual surplus. In 1994 and 1996, the laws
and the regulations, respectively, were modified, and on policies written since
June 30, 1994 and thereafter, German life insurance companies are obliged by the
modified regulations to allocate for the benefit of policyholders at least 90%
of their net interest yield on assets corresponding to technical reserves. In
addition, holders of policies written in 1995 and thereafter are entitled to
participate in "appropriate amounts" of profit from sources other than assets.
The amount required to be allocated to policyholders may be used to directly
increase a policyholder's profit participation or to contribute to the
policyholder's profit reserve. In no case may this amount be transferred to
shareholders. In the event of an overall loss, the insurer may use the
policyholder profit reserve to cover the loss with the approval of the BAFin.
The profit reserve is accordingly included in the calculation of the life
insurer's solvency margin.

     On January 1, 2002, a new law (the Altersvermogensgesetz) took effect that
is intended to reform the pension system in Germany. The Altersvermogensgesetz
provides for state subsidies, in the form of either direct subsidies or, under
certain circumstances, tax benefits. The prerequisite for state subsidies is
that the underlying products contain certain characteristics entitled to
certification by the BAFin. The main characteristic is that at least the amount
that has been paid in premiums is available at maturity and that life-long
benefit payments be guaranteed. Administration costs of the certified products
may be high due to the complex state subsidy process. The Altersvermogensgesetz
also intends to foster company old-age provision. As of January 1, 2002,
employees are entitled by law to request that parts of their compensation be
converted into company old-age provision. The new law and the regulations
promulgated thereunder permit the establishment of pension funds (Pensionsfonds)
as new means of company old-age provision. These pension funds are under the
supervision of BAFin.

Health Insurance

     We offer "substitutive" health insurance products in Germany designed to
partially or totally replace statutory public health insurance coverage. We also
offer products intended to supplement both the statutory and substitutive
schemes. These products are subject to detailed regulations designed to protect
policyholders.

     In general, the core products of German health insurance companies,
including comprehensive health insurance, daily sickness and hospital daily
allowance insurance, are regulated by the BAFin. German law also requires that
private health insurance companies offer certain kinds of health insurance,
including private compulsory long-term care insurance, to policyholders with
substitutive health insurance.

     German health insurance companies are required to appoint and register a
chief actuary and an independent trustee with the BAFin. Premiums are calculated
in accordance with established

                                       132
<PAGE>

actuarial and legal principles and are required to provide an adequate reserve
for the increased likelihood of poor health in old age. While health insurance
policies may provide for premium increases to cover inflation and the increased
costs of medical treatment and other developments, specific premium adjustments
must be approved by an independent trustee.

     German health insurance companies are required to allocate for the benefit
of policyholders at least 80% of their annual statutory profit as a reserve for
premium subsidies or rebates. The relevant regulations also specify the amount
of the surplus to be used to limit premium increases for insureds in higher age
brackets. Since the beginning of 2000, we have also been required by law to
return 90% of our surplus from capital investments to our policyholders. Due to
strong competition in the German health insurance sector, the average profit
participation for health policyholders has exceeded 90% of the overall statutory
profit in recent years.

FRANCE

     The activities of French insurance companies including AGF are governed by
the French Insurance Code and supervised and licensed by the French Ministry of
the Economy and the Commission de Controle des Assurances (or the Insurance
Commission). The Insurance Commission is an independent administrative authority
that supervises the financial condition and solvency of French insurance
companies and their compliance with applicable insurance regulations, including
statutory accounting principles and financial and technical management
regulations. French insurers are required to make periodic filings of financial,
accounting and statistical statements with the Insurance Commission. Any change
in the articles of association of French insurance companies must also be
approved by the Insurance Commission. The Insurance Commission may examine the
accounts of French insurance companies at any time. French insurance companies
may not engage on an ongoing basis in any commercial activity other than that of
providing insurance coverage and directly related activities.

     French insurance companies are subject to a number of requirements with
respect to the administration of their assets and liabilities. With respect to
liabilities, actuarial and claims reserves must be adequate to allow the insurer
to fulfill contractual commitments to pay claims upon receipt. French law also
prescribes a minimum solvency margin and requires the maintenance of a guarantee
fund. French insurance companies may invest assets that support actuarial and
claims reserves generally only in debt securities, equity securities and shares
of mutual funds, real estate, mortgage loans, certain government-guaranteed
loans and certain other loans and deposits. French law limits the proportion of
assets that French insurers may invest in certain categories of investments and
imposes restrictions with respect to particular investments.

     French life insurers are obligated by law to allocate for the benefit of
policyholders (other than holders of contracts supported by separate accounts
and term policies) at least 85% of annual investment results on assets
attributable to such policyholders, plus at least 90% of other profits. Amounts
allocated must be credited to policyholders within eight years but otherwise can
be credited at the insurer's discretion. The allocation generally takes the form
of an increase in guaranteed benefits but may also take the form of a reduction
of future premiums.

     New insurance products and policies may be offered in France by either a
French or foreign insurer without obtaining prior approval. However, the
Ministry of the Economy may require submission of contracts or advertising
materials relating to the insurance business. The Ministry of the Economy may
also require the withdrawal from the market or the modification of any contract
or advertising material which, in its judgment, does not comply with applicable
laws and regulations.

                                       133
<PAGE>

ITALY

     Italian insurance companies including our major subsidiaries RAS and Lloyd
Adriatico are subject to a comprehensive regulatory scheme contained in the
Supervision of Insurance Act and supplemented by numerous other regulations and
ordinances. These laws and regulations regulate access to insurance activities,
require the maintenance of certain solvency margins, in part through a guarantee
fund, determine the form of financial statements for insurance concerns and
regulate the activities of insurance intermediaries.

     The activities of Italian insurance companies, insurance agents and brokers
are regulated by the Institute for the Supervision of Private and Public
Interest Insurance, known by its Italian acronym ISVAP. ISVAP is also
responsible for the supervision of the financial management of Italian insurance
companies. In addition, ISVAP grants authorization to companies to conduct
insurance activities and has the authority to propose disciplinary measures,
including the revocation of authorizations, which may ultimately be taken by the
Ministry of Industry. ISVAP has the power to request information from insurance
companies, conduct audits of their activities and question their legal
representatives, managing directors and statutory auditors and convene
shareholders, directors and statutory auditors meetings in order to propose
measures necessary to conform the management of insurance companies to legal
requirements. Insurance companies having their registered offices in Italy must
receive prior authorization by ISVAP in order to operate life or non-life
insurance activities.

     All Italian insurance companies are required to maintain adequate technical
reserves in respect of each insurance contract. ISVAP determines the interest
rate for calculation of required life reserves. Italian law also establishes
maximum limits on the amount of reserves that may be invested in any particular
category of investments. ISVAP may establish stricter limits under some
circumstances. In addition, ISVAP may prohibit companies that do not comply with
reserve requirements from disposing of their assets located in Italy and from
accepting new business.

     Italian insurance companies are required to observe a solvency margin
calculated in accordance with a formula that varies depending on the types of
insurance that they underwrite. In cases where the solvency margin is less than
the guarantee fund, ISVAP may require a company to prepare and implement a
short-term financing plan in order to bring it into compliance with the
applicable requirements, or may prohibit a company from disposing of its assets.

     In March 2000, the Italian government introduced a law to freeze rates for
third-party motor liability policies for a period of one year. The European
Commission considered this freezing of rates to be incompatible with the freedom
of the insurance product market and in July 2000 instituted a proceeding based
on European Community law against Italy as a member of the EU. In December 2000,
the European Commission also decided to challenge the Italian law before the
European Court of Justice. In addition, in May 2001, the Italian law was
challenged before the European Court of Justice by an Italian judge in
connection with a civil proceeding in Italy. Nevertheless, the law was put into
force and had a negative impact in 2001. The rate freeze expired in March 2001.

     In July 2000, the Italian antitrust authority imposed fines totaling E361
million on several insurance companies because of alleged coordination of
activities through sharing of information in automobile liability insurance in
previous years. Our Italian subsidiaries have been assessed, and have paid, E83
million of this fine. In February 2002, the fine was upheld by the Italian State
Council, the highest administrative court in Italy.

SWITZERLAND

     Swiss insurance companies including our Swiss Subsidiaries must be licensed
by the Swiss Federal Department of Justice and Police and are subject to the
supervision of the Swiss Federal

                                       134
<PAGE>

Office of Private Insurance. A separate authorization is required for each
separate line of insurance business conducted in Switzerland. Although
Switzerland is not a member state of the EU and is not subject to the EU
insurance directives, Swiss insurance regulation is generally consistent with
regulation in the EU.

     The Federal Office of Private Insurance monitors the compliance of Swiss
insurance companies with requirements relating to solvency, minimum capital,
reserve building and assets and may conduct audits at any time. The Federal
Office of Private Insurance also fixes the interest rate for calculation of
required life insurance company reserves. Swiss life and health insurance
companies are required to file tariffs and contract conditions with the Federal
Office of Private Insurance.

UNITED KINGDOM

     Insurance companies in the United Kingdom are regulated under the Financial
Services and Market Act 2000 (or FSMA). The FSMA provides the framework for the
regulation of all business activities within the financial services sector in
the United Kingdom, including life insurance and general insurance companies
such as our subsidiary Cornhill. The FSMA took effect on December 1, 2001 and
provides that no firm may carry on a regulated activity in the United Kingdom in
the insurance, securities, banking or pension sectors, unless it has been
authorized to do so under the FSMA or exempted from it. The Financial Services
Authority (or FSA) has been created as a single regulator for the insurance,
securities, banking and pension sectors in the United Kingdom. The FSA enforces
detailed requirements that firms have to meet in order to receive authorization,
including requirements relating to minimum capital, internal governance systems
and risk control, and the suitability of management and controlling
shareholders. A self-regulatory body known as the General Insurance Standards
Council (or GISC) has also been established to ensure compliance by general
insurance companies with applicable codes of business conduct. Allianz's UK
authorized insurance subsidiaries, which engage in general insurance activities,
are GISC members. The FSA also establishes the conditions on which the home
country principle is implemented with respect to insurance, securities and
banking, granting a European financial services "passport."

     All insurance companies in the United Kingdom must submit to the FSA annual
and, in some cases, quarterly returns together with audited accounts. These
returns must include a certificate as to whether domestic assets are sufficient
to cover domestic liabilities, and are subject to examination by the FSA. An
annual assessment for the protection of UK policyholders is imposed on all
insurance companies underwriting life and general business.

     Policyholder protection exists through two bodies, the Financial Services
Compensation Scheme (or FSCS) and the Motor Insurance Bureau (or MIB). The FSCS
provides policyholders with a level of protection against insurance company
insolvency. The protection covers all types of property and casualty insurance.
The scheme is funded by means of levies on insurance companies. The MIB provides
coverage for victims of automobile accidents where there is no (or inadequate)
insurance coverage. The MIB is funded by levies on all automobile insurers and
the levies are payable each year in proportion to the level of automobile
insurance premiums written each year.

     Insurance companies in the United Kingdom may only market products in
conformity with classes authorized by the FSA. Failure by an insurer to write
business in an authorized class over a specified period of time may lead to
withdrawal of the authorization.

     In some areas, UK regulations establish customer information rights that
exceed the disclosure standards mandated by the relevant EU directives. Revised
regulations that came into effect on October 1, 1999 enable policyholders who
are consumers to challenge the terms of policies which they claim are unfair or
unclear. The Office of Fair Trading and certain consumer

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groups are empowered to enforce these regulations by requiring revised contracts
when the terms of existing contracts appear to contravene the regulations.

UNITED STATES

     Our insurance subsidiaries in the United States are subject to
comprehensive and detailed regulation of their activities under U.S. state and
federal laws.

     U.S. property-casualty and life insurance companies are subject to
insurance regulation and supervision in the individual states in which they
transact business. Supervisory agencies in various states have broad powers to
grant or revoke licenses to transact business, regulate trade practices, license
agents, approve insurance policy terms and certain premium rates, set standards
of solvency and reserve requirements, determine the form and content of required
financial reports, examine insurance companies and prescribe the type,
concentration, and amount of investments permitted. Insurance companies are
subject to a mandatory audit every three to five years by state regulatory
authorities, depending on the state of domicile, and every year by independent
auditors.

     U.S. property-casualty and life insurers are also subject to risk based
capital (or RBC) guidelines, which provide a method to measure the adjusted
capital (statutory capital and surplus plus other adjustments) that insurance
companies should have for regulatory purposes, taking into account the risk
characteristics of the company's investments and products. The RBC requirements
establish capital requirements for four categories of risk: asset risk,
insurance risk, interest rate risk and business risk. For each category, the
capital requirement is determined by applying factors to various asset, premium
and reserve items, with the factors being higher for those items with greater
underlying risk and lower for less risky items. An insurance company's RBC ratio
will vary over time depending upon many factors, including its earnings, the mix
of assets in its investment portfolio, the nature of the products it sells and
its rate of sales growth, as well as changes in the RBC formulas required by
regulators. The RBC guidelines are intended to be a regulatory tool only, and
are not intended as a means to rank insurers generally. Each of our U.S.
insurance subsidiaries met its statutory minimum RBC ratios at December 31,
2001.

     Although the federal government generally does not directly regulate the
insurance business, many federal laws affect the insurance business in a variety
of ways. There are a number of existing or recently proposed federal laws which
may significantly affect the U.S. market, including establishment of an optional
federal charter for insurance and reinsurance companies, employee benefits
regulations, federal reinsurance for risks involving acts of terrorism,
establishment of a federal registry for asbestos claims subject to compensation
limits, and the taxation of insurance companies and their products. These
initiatives are mostly in a preliminary stage and, consequently, we cannot
assess their potential impact at this time. In addition, we cannot predict what
other proposals may be made (whether at the federal or state level), what
legislation, if any, may be introduced or enacted or what the effect of any such
legislation might be.

OTHER COUNTRIES

     Our insurance operations in countries other than those discussed above are
also subject to detailed regulation and supervision by authorities in the
relevant jurisdictions, including with respect to such matters as policy forms
and rates, reserving, investment and financial practices, and marketing,
distribution and sales activities.

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               BANKING, ASSET MANAGEMENT AND INVESTMENT SERVICES

EUROPEAN UNION

     The supervision of banking, asset management and investment services in the
member states of the European Union is the exclusive responsibility of national
authorities within the individual member states. However, the rules governing
the regulation and supervision of these financial services have been harmonized
by a number of EU directives, which have been implemented in the member states.
These directives mostly focus on establishing an equal standard of financial
viability and deposit guarantee by setting forth minimum capital requirements
and providing for a common deposit guarantee fund that financial institutions
have to contribute to. As a result of this harmonization, banking licenses
granted in one EU member state are recognized in all other member states.

     Under the EU securities directives, member states have to ensure that
financial institutions that are members of a securities exchange in one member
state are eligible for admission to trading on the exchanges of all other member
states. Moreover, the securities services directive provides for certain rules
of conduct regarding the solicitation of clients and business by financial
institutions.

     Another field of harmonization which is of importance for financial
institutions is securities trading. The EU directive on offering prospectuses
provides for harmonized rules with respect to the contents and filing of
prospectuses for publicly traded securities. Another directive harmonizes the
rules for disclosure of financial and other information that publicly traded
companies have to provide. The insider trading directive sets forth certain
rules for securities trading by corporate insiders. There are also EU directives
harmonizing rules governing investments, fund management and investor
protection.

GERMANY

     Our banking and other financial services activities in Germany are
extensively supervised and regulated by the BAFin.

BANKING

     All banks and financial institutions in Germany, including Dresdner Bank,
are subject to comprehensive governmental supervision and regulation on a
consolidated basis by the BAFin in accordance with the German Banking Act
(Kreditwesengesetz, or the German Banking Act). The BAFin is authorized to issue
regulations and guidelines implementing the provisions of the German Banking Act
and other laws affecting German banks. The German Banking Act and the
regulations issued thereunder have been amended over time to implement the
recommendations on banking supervision issued by the Basle Committee on Banking
Supervision and the relevant European Council Directives.

     Under the German Banking Act, all banking and financial service
institutions conducting business in Germany are required to have a license from
the BAFin. The BAFin supervises the operations of all banks, including Dresdner
Bank, to ensure that it conducts its business in accordance with the provisions
of the German Banking Act and other applicable German laws and regulations.
Reports by a bank's auditors have to be submitted to the BAFin and the Deutsche
Bundesbank (or the Bundesbank), the German central bank. The contents of the
reports are prescribed in a special regulation issued by the BAFin (the
Prufungsberichtsverordnung). Particular emphasis is placed on compliance with
capital adequacy and liquidity requirements, lending limits and restrictions on
certain activities imposed by the German Banking Act and the regulations
promulgated thereunder.

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REGULATION BY THE BUNDESBANK

     The BAFin carries out its banking supervision role in close cooperation
with the Deutsche Bundesbank. Although the authority to issue administrative
orders that are binding on specific banks is vested solely with the BAFin, the
BAFin must consult with the Bundesbank before it issues general regulations and
must obtain the consent of the Bundesbank if the regulations affect the
Bundesbank, as, for example, in the case of regulations affecting capital
adequacy and liquidity requirements. The Bundesbank is responsible for
organizing the collection and analysis of the periodic and other reports from
the banks.

CAPITAL ADEQUACY REQUIREMENTS

     German banking regulation contains certain capital adequacy requirements.
In accordance with what is known as Principle I, each bank's ratio of Liable
Capital to risk-weighted assets and certain off-balance sheet items, as such
terms are defined or described below, must be at least 8% at the end of each
business day. This ratio is known as the Solvency Ratio.

     Liable Capital consists principally of (i) paid-in share capital without
preferred stock (Vorzugsaktien), (ii) capital reserves, (iii) earnings reserves
which are disclosed in the bank's annual balance sheet, (iv) net profits which
are shown in audited interim financial statements and which will not be used for
distribution or the payment of taxes, (v) the fund for general banking risks
pursuant to Section 340g of the German Commercial Code, (vi) capital paid in by
silent partners which meets certain conditions set forth in the German Banking
Act, including subordination to all other creditors and participation in the
bank's losses, (vii) reserves for general banking risks pursuant to Section 340f
of the German Commercial Code, provided that such reserves may not exceed 4% of
the book value of such receivables and securities, (viii) preferred stock, (ix)
capital paid in consideration of profit participation rights (GenuSSrechte)
which meets certain conditions set forth in the German Banking Act, including
subordination to all creditors and participation in the bank's losses, (x)
long-term subordinated debt with a term of at least five years meeting certain
conditions set forth in the German Banking Act, (xi) certain revaluation
reserves and (xii) reserves pursuant to Section 6b of the German Income Tax Act
(Einkommensteuergesetz), less certain positions that are required to be
deducted. At least half of Liable Capital must be Core Capital, which is the
portion of Liable Capital set forth in items (i) through (vi) above, less
balance sheet losses, certain intangible assets (including goodwill) and certain
other items. The German Banking Act also requires that balance sheet losses and
certain intangible assets, including goodwill, as well as certain investments in
banks or financial institutions and certain other items, be deducted in
computing Liable Capital.

     The German Banking Act provides that the aggregate amount of Supplementary
Capital, which is the portion of Liable Capital referred to in items (vii)
through (xii) above, must not exceed the Core Capital. In addition, the sum of
long-term subordinated debt must not exceed 50% of Core Capital. Core Capital
reflects the same concept as Tier I capital, and Supplementary Capital reflects
a concept similar to Tier II capital as such terms are used in U.S. capital
adequacy rules.

     To calculate risk-weighted assets and certain off-balance sheet items, the
assets of a bank are assigned to six broad categories of relative credit risk
depending on the debtor or on the type of instrument or collateral securing the
asset (0%, 10%, 20%, 50%, 70% and 100%), and the balance sheet value of each
asset is multiplied by the percentage weight applicable to its risk category to
arrive at the risk-weighted value. With respect to off-balance sheet items, such
as financial guarantees, letters of credit, swaps and other financial
derivatives, first, their value is adjusted according to their risk
classification depending on the type of instrument (20%, 50% and 100%), or, in
the case of derivatives, on the counterparty (20% and 50%). After such
adjustment, they are assigned, in the same manner as on-balance sheet assets, to
the credit risk

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categories depending on the type of the counterparty or the debtor and
multiplied by the applicable percentage weight.

     The German Banking Act also requires market risk and counterparty risk
associated with securities transactions, transactions in derivative products and
foreign exchange transactions of banks to be covered by adequate capital. The
German Banking Act also employs two related concepts: (i) Bank Funds
(Eigenmittel) and (ii) the distinction between trading transactions which are
allocated to a bank's trading book (Handelsbuch) and transactions in commercial
banking business which are allocated to a bank's investment book (Anlagebuch).

     Bank Funds consist of Liable Capital plus Tier III Capital. Tier III
Capital consists of (i) short-term subordinated debt (with a term of at least
two years but less than five years) that meets certain conditions set forth in
the German Banking Act and (ii) the net profits which would be realized if all
positions in the trading book were matched, if all anticipated expenses and
distributions on capital were deducted and if all losses that would be incurred
in the investment book if the bank were liquidated were deducted. The sum of
Tier III Capital plus the portion of Supplementary Capital that is not required
to cover risk positions in the investment book cannot exceed 250% of the portion
of Core Capital that is not required to cover risk positions in the investment
book.

     The trading book of a bank comprises (i) securities, money market
instruments, derivatives and marketable obligations and participations that are
held by the bank for its own account for resale or trading; (ii) instruments
held and transactions entered into for the purpose of hedging the market risk of
the trading book and transactions to refinance such hedging; (iii) transactions
subject to the designation of the counterparty (Aufgabegeschafte); (iv)
receivables for fees, interest and dividends related to positions in the trading
book; and (v) securities lending, loans or similar transactions related to
positions in the trading book. Banks must establish guidelines for the inclusion
of transactions in their trading books, which must be submitted to the BAFin and
the Bundesbank.

     Banks must establish guidelines for the inclusion of transactions in their
trading books, which must be submitted to the BAFin and the Bundesbank. The
investment book of a bank consists of all transactions that are not contained in
the trading book.

     The sum of the risk-weighted values of market risk positions (foreign
exchange positions, commodity positions and positions allocated to the trading
book) and, under certain circumstances, separately computed option positions,
may not exceed the difference between Bank Funds and an amount equal to 8% of
the risk-weighted assets plus certain risk-weighted off-balance sheet items.
This limitation must be computed daily at the close of business. The risk-
weighted values of market risk positions and option positions must be computed
in accordance with rules set forth in Principle I or, in the case of market risk
positions, in accordance with the bank's own risk computation models which have
been approved by the BAFin. The positions allocated to the trading book are
risk-weighted according to market risk (interest rate and equity security price
related) and according to counterparty risk.

     Capital adequacy rules must not only be met by a bank and its banking
subsidiaries on an individual basis, but also by the entire banking group.

LIQUIDITY REQUIREMENTS

     The German Banking Act and the regulations issued by the BAFin also contain
liquidity requirements. Each bank must invest its funds in a manner designed to
provide adequate liquidity at all times. Under what is known as Principle II,
banks must compute four liquidity factors at the end of every calendar month.
Each liquidity factor is the quotient of available funds to payment obligations
for one of four short-term time periods of less than one year.

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LENDING AND INVESTMENT LIMITS

     The German Banking Act as it applies to Dresdner Bank distinguishes between
investment book lending limits, combined investment and trading book lending
limits, and trading book lending limits. The limits are as follows:

          (i)  A credit constitutes a "large investment book credit" if the sum
               of credits allocated to the investment book extended to any one
               borrower or related group of borrowers, in the aggregate, equals
               or exceeds 10% of a bank's Liable Capital. No single large
               investment book credit may exceed 25% of the bank's Liable
               Capital (20% in the case of a bank's unconsolidated affiliate).
               The sum of all of a bank's disbursed large investment book
               credits may not exceed eight times the bank's Liable Capital.

          (ii)  A credit constitutes a "large combined investment and trading
                book credit" if the sum of credits allocated to both the
                investment and trading books extended to any one borrower or
                related group of borrowers, in the aggregate, equals or exceeds
                10% of the bank's Bank Funds. No single large combined
                investment trading book credit may exceed 25% of the bank's Bank
                Funds (20% in the case of a bank's unconsolidated affiliate).
                The sum of all of a bank's disbursed large combined investment
                trading book credits may not exceed eight times the bank's Bank
                Funds.

          (iii) If a single large combined investment and trading book credit
                exceeds the respective percentage of the bank's Bank Funds set
                forth in (ii) above, the sum of credits extended to any one
                borrower or related group of borrowers that is allocated to the
                trading book cannot exceed five times that portion of the bank's
                Bank Funds that is not required to cover risk positions in the
                investment book.

          (iv) The sum of all portions of single large combined investment and
               trading book credits that exceed the respective percentage of the
               bank's Bank Funds set forth in (ii) above for more than 10 days
               cannot exceed six times that portion of the bank's Bank Funds
               that is not required to cover risk positions in the investment
               book.

     A bank must report its large credits to the Bundesbank and must notify the
BAFin and the Bundesbank if it exceeds the ceilings set forth above. With the
approval of the BAFin, a bank may exceed the eight times Liable Capital or Bank
Funds and the respective percentage of Liable Capital or Bank Funds set forth in
(i) and (ii) above, if the amount exceeding these ceilings is covered by Liable
Capital and Bank Funds, respectively. The bank may exceed the Bank Funds
ceilings with the approval of the BAFin only if the excess results from large
trading book credits and not from large investment book credits. The amounts of
Liable Capital used to cover such excess amount must be disregarded when
computing the adequacy of Liable Capital under the capital adequacy rules
discussed under "-- Capital Adequacy Requirements" above. If the respective
percentage ceilings and the eight times Liable Capital ceiling or Bank Funds
ceiling are exceeded, the larger of both excess amounts must be covered by
Liable Capital and Bank Funds, respectively. If a bank exceeds the five times
Bank Funds ceiling referred to in paragraph (iii) above or the six times Bank
Funds ceiling referred to in (iv) above, it must cover such excess amounts with
Bank Funds. Credit is defined to include all items on the asset side of the
balance sheet, derivative transactions and related guarantees, other off-balance
sheet positions and equity investments. A borrower is defined to include certain
affiliates of the borrower. The limitations on large credits are applied on a
risk-weighted basis in a manner similar to the application of the risk-weighted
capital adequacy rules.

     The provisions of the German Banking Act limiting large credits by a bank
apply also to the aggregate credits extended by members of a banking group. In
order to determine whether

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members of a banking group in the aggregate have extended a large credit, all
credits extended by members of the group to one borrower are consolidated and
measured against the consolidated Liable Capital and Bank Funds of the banking
group. Consolidation of credits to one borrower or related group of borrowers is
only required if the credit of at least one member of the banking group to such
borrower is equal to or exceeds 5% of such member's Liable Capital.

BANK REPORTING REQUIREMENTS

     In order to enable the BAFin and the Bundesbank to monitor compliance with
the German Banking Act and other applicable legal requirements and to obtain
information on the financial condition of the German banks, the BAFin and the
Bundesbank require the routine periodic filing of information.

     Each bank must file with the BAFin or the Bundesbank, or both, among other
things, the following information: (i) immediate notice of certain
organizational changes, the extension or increase of large credits, the
extension of certain credits to companies in which the bank owns more than 25%
(or, under certain circumstances, 10%) of the capital, the acquisition or
disposition of more than 10% of the equity of another company or certain changes
in the amount of such equity investment, and the commencement or termination of
certain non-banking activities; (ii) monthly balance sheet and statistical
information and annual audited unconsolidated and consolidated financial
statements; (iii) the acquisition or disposition of a direct or indirect
investment in the bank representing 10% or more of the voting rights or capital
of the bank or giving the person making the investment a significant influence
over the management of the bank ("Significant Shareholding"), or an increase or
decrease of a Significant Shareholding which results in the investment reaching
or passing the threshold of 20%, 33% or 50% of such voting rights or capital, as
well as the fact that the bank became or ceased to be a subsidiary of another
enterprise, if the bank has knowledge of such facts; and on an annual basis, the
names and addresses of holders of Significant Shareholdings in the bank and its
foreign subsidiary banks, and the amount of such investment if the bank has
knowledge of such facts; (iv) monthly compliance statements with regard to the
capital adequacy rules and the requirements on liquidity and statements on
certain foreign lending; and (v) quarterly statements listing the borrowers to
whom the reporting bank has outstanding loans of E1.5 million or more and
certain information about the amount and the type of the loan, including
syndicated loans exceeding this amount even if the reporting bank's share does
not reach E1.5 million.

     If several banks report to the Bundesbank loans of E1.5 million or more to
the same borrower group of affiliated borrowers, the Bundesbank must inform the
reporting banks of the total reported indebtedness and of the type of such
indebtedness of such borrower group and of the number of reporting lending
banks.

SANCTIONS FOR NON-COMPLIANCE

     If the BAFin discovers irregularities, it has a wide range of enforcement
powers. The BAFin can challenge the qualifications of a bank's management. If
the Liable Capital of a bank is not adequate or if the liquidity requirements
are not met and the bank has failed to remedy the deficiency within a period
determined by the BAFin, the BAFin may prohibit or restrict the bank's
distribution of profits or extension of credit. These prohibitions also apply to
the parent bank of a banking group if the Bank Funds of the bank members of the
group do not meet the legal requirements. If the liquidity requirements are not
met, the BAFin may also prohibit further investments in illiquid assets.

     If a bank is in danger of defaulting on its obligations to creditors, the
BAFin may take emergency measures to avert default. In this connection, it may,
among other things: (i) issue instructions relating to the management of the
bank; (ii) prohibit or restrict the acceptance of deposits and the extension of
credit; (iii) prohibit or restrict management of the bank from

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carrying on their functions; and (iv) appoint supervisors. If these measures are
inadequate, the BAFin may revoke the bank's license and, if appropriate, order
the bank to close. To avoid the insolvency of a bank, the BAFin has the
authority to prohibit payments and disposals of assets, suspend customer
services and prohibit the acceptance of payments other than in payment of debt
owed to the bank. In addition, violations of the German Banking Act may result
in criminal and administrative penalties.

DEPOSIT PROTECTION

     In accordance with the EC Directives on Deposit-Guarantee Schemes and
Investor Compensation Schemes and its implementation in German law (the Gesetz
zur Umsetzung der EG-Einlagensicherungsrichtlinie und der
EG-Anlegerentschadigungsrichtlinie, or the "Deposit Guarantee Act"), the
Bundesverband Deutscher Banken, the association of the German private sector
commercial banks, established a company known as the Compensation Institution
(Entschadigungseinrichtung deutscher Banken GmbH) to carry out and ensure the
deposit guarantee scheme of the German private sector commercial banks. The
Deposit Guarantee Act provides that the aggregate deposits of a given depositor
at a given bank and claims resulting from securities transactions by a customer
with a given bank must each be covered up to 90% of the aggregate amount or
E10,000, whichever is less. The deposit guarantees will be funded through annual
contributions by the private sector commercial banks to the Compensation
Institution.

     In addition, the banking industry has voluntarily set up various protection
funds for the protection of depositors. Most private sector commercial banks,
including Dresdner Bank, are members of the Einlagensicherungsfond, a deposit
protection association with a fund which covers liabilities to each creditor up
to a certain amount. Payments from the Einlagensicherungsfond generally cover
the portion of a deposit not already covered by the Compensation Institution.
Members are required to provide certain information to the association and the
Prufungsverband deutscher Banken e.V., an institution for the auditing of German
banks. This auditing institution conducts its own inspections of banks in order
to reduce the risk of failures within the deposit protection system.

     Furthermore, depositors and other creditors of German banks are protected
by the arrangements in relation to Liquiditats-Konsortialbank GmbH ("LIKO"), a
bank founded in 1974 in order to provide funding for German banks which
experience liquidity problems. The shares in LIKO are owned 30% by the
Bundesbank, with the rest of the shares being held by other German banks and
banking associations. LIKO is funded by its shareholders. For additional
information, see Note 44 to our consolidated financial statements.

MORTGAGE BANKS

     Mortgage banks in Germany are regulated by a special statute, the German
Mortgage Bank Act (Hypothekenbankgesetz). Under this Act, mortgage banks are
authorized to finance themselves through the issuance of mortgage bonds
(Pfandbriefe) and public-debt bonds (Kommunalobligationen). These bonds are
generally long-term bonds with an original maturity of four years or longer, the
principal and interest of which are at all times required to be covered by a
pool of specified qualifying assets listed in a register maintained by the
mortgage bank. Mortgage-backed bonds are backed by mortgage loans extended by
the mortgage bank that cover 60% or less of the market value of the respective
real estate property, and public-debt backed bonds are backed by communal loans
extended by the mortgage bank to German public authorities or entities organized
under public law or to member states of the EU and their territorial
subdivisions, or which are guaranteed or otherwise secured by such persons. A
separate pool is maintained for the mortgage-backed bonds and for the
public-debt backed bonds. Each pool is required to be replenished when necessary
to assure that all bonds issued by the mortgage bank are fully covered. The
qualifying assets remain on the mortgage bank's

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balance sheet. In case of insolvency proceedings relating to the mortgage bank,
the asset pools constituting cover will be exempt from such proceedings.
Mortgage-backed bonds and public debt-backed bonds may be issued in registered
or bearer form and they are general recourse obligations of the issuing mortgage
bank.

OTHER FINANCIAL SERVICES

     Other German financial services institutions are generally subject to the
German Banking Act and to wide-ranging notification and reporting requirements
to enable the BAFin to monitor their compliance with the German Banking Act. The
German Banking Act provides the BAFin with a wide range of enforcement
mechanisms. Among other actions, the BAFin is empowered to conduct on-site
inspections without specific cause and to impose monetary and other sanctions,
including revocation of a company's license to engage in financial services
activities.

     German financial services companies are subject to regulations relating to,
among other things, the transmission, receipt and acceptance of trading orders
on behalf of investors, discretionary management of investment portfolios and
trading on an own-account basis. Only licensed investment companies subject to
the provisions of the German Banking Act may engage in investment management
activities in Germany. German law also requires that investment management
companies be autonomous operational units and restricts the ancillary activities
of these companies.

     In addition, products sold under the Altersvermogensgesetz are subject to
BAFin supervision. See "-- Insurance -- Germany -- Life Insurance."

UNITED KINGDOM

     The FSMA provides the framework in the United Kingdom for the regulation of
the financial services sector. The FSA incorporates previous self-regulating
organizations such as the Securities & Futures Authority, Investment Management
Regulatory Organisation and the Personal Investment Authority. The FSA is also
the prosecuting authority for offenses involving insider dealing, market
manipulation, money laundering and of market abuse.

     The above requirements of the FSA with respect to the financial services
sector apply to most Allianz Group entities in the United Kingdom, including our
Dresdner Bank subsidiaries. The London Branch of Dresdner Bank is a "passported"
bank in the United Kingdom in accordance with the provisions of the EU
directives as implemented in UK law. As such it is lead regulated in prudential
matters by BAFin in Germany.

FRANCE

     Under French law, investment and investment services companies dealing with
financial instruments must be authorized by the Comite des Etablissement de
Credit et des Entreprises d'Investissement (Banque de France) and by the
Commission des Operations de Bourse if they act under the portfolio management
status. They are subject to the supervision of the Conseil des Marches
Financiers for the dealing with listed financial instruments and the Commission
des Operations de Bourse for their portfolio management activity.

     Banks in France, including our Dresdner Bank subsidiary Dresdner Bank
Gestions France, must be authorized by the Comite des Etablissement de Credit et
des Entreprises d'Investissement (Banque de France) and are subject to the
supervision of the Commission Bancaire (Banque de France). The supervision
extends to all the activities of French banks, including their capital adequacy,
shareholdings in other companies and limitation of risk. The Paris branch of
Dresdner Bank is a "passported" bank in France in accordance with the provisions
of EU directives as implemented in French law. As such it is lead regulated by
the BAFin.

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     Banks are required to file monthly reports to the Commission Bancaire.
Changes of shareholdings in French banks do need approval by the Comite des
Etablissement de Credit et des Entreprises d'Investissement (Banque de France).

     French securities regulations prescribe a minimum amount of share capital
for investment and investment services companies and impose certain requirements
on company management and shareholders. The business plan of French investment
and investment services companies must be approved by the Comite des
Etablissement de Credit et des Entreprises d'Investissement (Banque de France).
There are also regulatory restrictions with respect to equity capital on
limitation of risks, and specific disclosure rules must be observed. In
addition, the Conseils des Marches Financiers and the Commission des Operations
de Bourse oversee the dealings of investment and investment services companies
with investors, including the provision of appropriate information to investors,
and supervise control procedures within these companies. The Conseils des
Marches Financiers supervises compliance with market rules, and the Commission
des Operations de Bourse supervises the fairness of transactions.

     French supervisory authorities are authorized to impose sanctions,
including revocation of operating licenses, on companies that fail to comply
with applicable regulations.

ITALY

     Investment and investment services companies in Italy dealing with
financial instruments must be licensed and are subject to regulation by both
Banca d'Italia, the Italian national bank, and the Commissione Nazionale per la
Societa e la Borsa (or CONSOB). Shareholdings in excess of 5% in Italian
investment and investment services companies require the authorization of Banca
d'Italia.

     Banks in Italy, including our subsidiary Rasbank and our Dresdner Bank
subsidiaries, must be authorized by Banca d'Italia and are subject to the
supervision of both Banca d'Italia and CONSOB. The supervision of Banca d'Italia
extends to all the activities of Italian banks, including their capital
adequacy, shareholdings in other companies and limitation of risk. The Milan
branch of Dresdner Bank is a "passported" bank in Italy in accordance with the
provisions of EU directives as implemented in Italian law. As such it is lead
regulated by the BAFin. The CONSOB supervises the provision of investment
services by banks in Italy and rules of conduct to be followed by the banks in
their dealings with the public. Banks are required to file their annual and
semi-annual reports with both Banca d'Italia and the CONSOB. They also have
ongoing disclosure obligations. The Milan branch of Dresdner Bank is exempt from
these requirements and instead has to submit the annual financial statements of
Dresdner Bank Group to the Camera di Commercio and Banca d'Italia. Changes in
organizational structure of the branch have to be reported annually.

     Major shareholders of banks and investment and investment services
companies, as well as their top managers and members of the boards of directors
and boards of auditors, must meet specific qualifications in terms of
professionalism and good standing. With respect to banks, Italian law requires
those assuming control of or a shareholding of greater than 5% in an Italian
bank to obtain authorization from Banca d'Italia. Similarly, banks assuming
shareholdings in any other company are required to obtain authorization from
Banca d'Italia.

     Italian supervisory authorities are empowered to impose sanctions,
including revocation of operating licenses, on banks and investment and
investment services companies that fail to comply with relevant regulations.

UNITED STATES

     Allianz of America, Inc., Allianz Dresdner Asset Management of America
L.P., Pacific Investment Management Company LLC, Oppenheimer Capital,
Nicholas-Applegate, Dresdner

                                       144
<PAGE>

RCM Global Investors LLC and other financial services subsidiaries of Allianz AG
in the United States are registered as investment advisers under the Investment
Advisers Act of 1940. Many of the investment instruments managed by these
financial services subsidiaries, including a variety of mutual funds and other
pooled investment vehicles, are registered with the SEC under the Investment
Company Act of 1940. The investment advisory activities of these financial
services subsidiaries are subject to various U.S. federal and state laws and
regulations. These laws and regulations relate to, among other things,
limitations on the ability of investment advisers to charge performance-based or
non-refundable fees to clients, record-keeping and reporting requirements,
disclosure requirements, limitations on principal transactions between an
adviser or its affiliates and advisory clients, as well as general anti-fraud
provisions. The failure to comply with these laws or regulations may result in
possible sanctions, including the suspension of individual employees,
limitations on the activities in which the investment adviser may engage,
suspension or revocation of the investment adviser's registration as an adviser,
censure and/or fines.

     Some U.S. financial service subsidiaries of Allianz AG are also registered
with the SEC as broker-dealers under the Securities Exchange Act of 1934 and are
subject to extensive regulation as such. In addition, some of these subsidiaries
are members of, and subject to, regulation by self-regulatory organizations such
as the National Association of Securities Dealers and, in the case of Dresdner
Kleinwort Wasserstein Securities LLC, the New York Stock Exchange. The scope of
broker-dealer regulation covers matters such as capital requirements, the use
and safekeeping of customers' funds and securities, advertising and other
communications with the public, record-keeping and reporting requirements,
supervisory and organizational procedures intended to assure compliance with
securities laws and rules of the self-regulatory organizations and to prevent
improper trading on material non-public information, employee-related matters,
limitations on extensions of credit in securities transactions, and clearance
and settlement procedures. A particular focus of the applicable regulations
concerns the relationship between broker-dealers and their customers. As a
result, in some instances they may be required to make "suitability"
determinations as to certain customer transactions and are limited in the
amounts that they may charge customers.

     Dresdner Bank provides commercial banking services in the United States
through its offices in New York, Chicago and Los Angeles, as well as the Miami
office of its subsidiary Dresdner Bank Lateinamerika AG. Dresdner Bank is
accordingly subject to regulation, supervision and examination by the Federal
Reserve Board under the U.S. Bank Holding Company Act of 1956, as amended (the
BHCA), and the International Banking Act of 1978, as amended (the IBA). The New
York branch of Dresdner Bank is licensed, supervised and examined by the New
York State Banking Department.

     Our U.S. subsidiaries are also subject to certain restrictions on funds
transfers and other activities under the U.S. Patriot Act of 2001, which took
effect on October 28, 2001. The Patriot Act affects primarily our banking and
investment services subsidiaries but also applies to our insurance subsidiaries.

     In the United States, the Gramm-Leach-Bliley Act of 1999 substantially
eliminated barriers separating the banking, insurance and securities industries
in the United States. Dresdner Bank became a financial holding company under the
Gramm-Leach-Bliley Act in 2000. To qualify as a financial holding company, a
bank is required to meet the criteria of being well-managed and
well-capitalized. A foreign bank that is well-capitalized has capital ratios
equal to or comparable with those required for a well-capitalized U.S. bank,
i.e. a Tier I capital ratio of 6% and a total capital to total risk-based assets
ratio of 10%. In the event of non-compliance with these criteria, a financial
holding company may be required to discontinue previously authorized financial
activities or terminate U.S. banking operations, and its ability to undertake
acquisitions that are otherwise permitted for financial holding companies may be
restricted. In addition, any company owning or controlling a financial holding
company, including Allianz AG, is required to make

                                       145
<PAGE>

certain certifications in order to be able to elect to be treated as a financial
holding company. As a result of its ownership of Dresdner Bank, Allianz AG is
also subject to the supervision of the Federal Reserve Board under the BHCA and
the IBA and has applied to be treated as a financial holding company. See also
"-- Financial Conglomerates."

     Under the IBA, the Federal Reserve Board may terminate the activities of
any U.S. office of a foreign bank if it determines that the foreign bank is not
subject to comprehensive regulation on a consolidated basis in its home country
or that there is reasonable cause to believe that the foreign bank or its
affiliate has violated U.S. law or engaged in unsafe or unsound banking practice
in the United States, and as a result of such violation or practice, the
continued operation of the U.S. office would be inconsistent with the public
interest or the purposes of federal banking law.

     Under the trade name Dresdner Kleinwort Capital, subsidiaries of Dresdner
Bank are also active in the private equity business. They provide investment
management services and make, manage and monitor private equity investments in
unaffiliated companies and investment funds, and establish and operate
investment funds in which third-party investors make private equity investments.
These subsidiaries are subject to regulation by the Federal Reserve Board and
the SEC. Two subsidiaries of Dresdner Bank are also active as small business
investment companies and are subject to the U.S. Small Business Administration
Act.

OTHER COUNTRIES

     Our financial services businesses in countries other than those discussed
above are also subject to detailed regulation and supervision by authorities in
the relevant jurisdictions, including with respect to such matters as capital
adequacy, investment advisory and securities trading activities, and mutual fund
management and distribution activities.

                          ACQUISITION CONTROL MATTERS

     In a number of jurisdictions, the direct or indirect acquisition of
"control" of companies is subject to prior regulatory approval. Under EU
insurance directives, any person acquiring shares in an insurance company who
would become a "qualifying shareholder" as a result of the acquisition is
required to give prior notice of the proposed acquisition to the relevant
supervisory authorities in the insurer's home jurisdiction. A qualifying
shareholder is a shareholder that holds more than 10% of the voting capital of
an insurance company or otherwise has the ability to exercise a significant
influence over the management of the company. An insurance company must also
report any increases in shareholdings by any holder to levels equal to or
exceeding 20%, 33% or 50% of voting capital. The supervisory authorities have a
maximum period of three months during which to oppose an acquisition of shares
if they believe that the acquisition would jeopardize the sound and prudent
management of the insurance company. Reductions in ownership below the
thresholds indicated above must also be notified to the supervisory authorities.
These directives, as well as similar regulations with respect to banking and
investment services companies, have been implemented in most EU jurisdictions.

     Under the German Securities Trading Act, holders of voting securities of a
German company listed on a stock exchange within the European Union must notify
that company and the BAFin without delay (at the latest, within seven calendar
days) of the level of their holding whenever that holding reaches, exceeds or
falls below 5%, 10%, 25%, 50% and 75% of the company's shares. Also, a German
company receiving this notification of shareholding must generally publish these
facts. Effective January 1, 2002, the provisions of the German Securities
Trading Act were amended to broaden the criteria for attribution of shares.

     On January 1, 2002, the recently enacted German Securities Acquisition and
Takover Act (Wertpapiererwerbs- und Ubernahmegesetz, or WpUG) took effect. The
WpUG applies to all

                                       146
<PAGE>

offers to acquire securities issued by stock corporations and limited
partnerships that are domiciled in Germany and admitted to trading on an
organized market in the European Economic Area (EEA). The WpUG provides that any
shareholder obtaining direct or indirect control, which is defined as 30% or
more of the voting rights, of a stock corporation is required to make a
mandatory takeover offer to all other shareholders of the corporation. The WpUG
also amends provisions of the German Stock Corporation Act (Aktiengesetz)
relating to the buyout of minority shareholders. Upon request of a shareholder
holding 95% or more of the share capital of the stock corporation, the
shareholders' meeting of the stock corporation can resolve to transfer all
shares held by minority shareholders to the controlling shareholder in exchange
for appropriate cash compensation. Allianz AG has made use of these new
provisions to acquire the remaining minority shareholdings of Vereinte
Versicherungs-AG and Dresdner Bank.

     Similar regulations relating to acquisition of control have been
established in various jurisdictions inside and outside of the EU in which we do
business. State insurance holding company statutes in the United States
applicable to Allianz AG's U.S. insurance subsidiaries generally provide that no
person may acquire control of Allianz AG, and thus indirect control of its U.S.
insurance subsidiaries, without the prior approval of the appropriate insurance
regulators. Generally, any person who acquires beneficial ownership of 10% or
more of the outstanding ordinary shares or voting power of Allianz AG (including
through ADSs) would be presumed to have acquired such control unless the
appropriate insurance regulators upon application determine otherwise.

                     ANTITRUST REGULATION AND MERGER REVIEW

     EU antitrust regulation affects associations of insurance companies. Some
market-wide pool arrangements among insurers may require exemptions under
applicable EU antitrust law. However, most of the applications for such
exemptions have not yet been finalized by EU authorities. Some pool arrangements
in the insurance sector in which we participate are subject to permanent review
under the applicable competition rules.

     In some business lines, our market share might raise concerns under
European merger control regulations. In the event that we intended to make a
substantial acquisition in these business lines, the relevant EU authorities
might require divestiture of parts of the portfolio or might disapprove the
transaction. Comparable legislation with respect to merger review has been
enacted in many jurisdictions outside the EU.

                           INSIDER TRADING REGULATION

     The German Securities Trading Act (Wertpapierhandelsgesetz, or the German
Securities Trading Act) prohibits insider trading with respect to securities
admitted to trading or included in the over-the-counter market at a German
exchange or the exchange in another European country. The German Securities
Trading Act also requires that the issuer of securities admitted to trading on a
German stock exchange publish promptly any new fact relating to the issuer which
is not publicly known if such fact could have a material influence on the market
price of such securities due to its effects on the financial condition or the
overall business performance of the issuer. The BAFin carries out supervisory
functions with respect to these regulations. Institutions that are members of a
German stock exchange are subject to comprehensive reporting requirements with
respect to all transactions in securities and derivatives that are listed or
traded on an exchange or other organized market in Germany or another member
country of the EU.

     The German Securities Trading Act also introduced rules of conduct for
banks and securities firms (the Rules of Conduct). The Rules of Conduct apply to
all investment services firms in Germany, i.e., firms engaged in the purchase
and sale of securities or derivatives for others or the intermediation of
transactions in securities or derivatives. In practice, the Rules of Conduct

                                       147
<PAGE>

therefore apply principally to the German banks. The BAFin has broad powers to
investigate investment services firms with a view to monitoring compliance with
the Rules of Conduct. The German Securities Trading Act provides for an annual
examination on behalf of the BAFin of a bank's compliance with its obligations
under the German Securities Trading Act. Similar insider trading rules have been
implemented in many other EU and non-EU jurisdictions.

                                       148
<PAGE>

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

                              CORPORATE GOVERNANCE

     As required by the German Stock Corporation Act, Allianz AG has a two-tier
board system consisting of a management board (Vorstand) and a supervisory board
(Aufsichtsrat). The two boards are separate, and no individual may serve
simultaneously as a member of both boards.

     The management board is responsible for managing the day-to-day business of
Allianz AG in accordance with applicable German laws and the articles of
association of Allianz AG. The management board represents Allianz AG in its
dealings with third parties. The supervisory board oversees the management of
Allianz AG. It is also responsible for appointing and removing the members of
the management board and representing Allianz AG in connection with transactions
between a management board member and Allianz AG. The supervisory board may not
make management decisions, but the supervisory board or the articles of
association may determine that certain types of transactions require the
supervisory board's prior consent.

     In carrying out their duties, the members of the management board and the
supervisory board must exercise the standard of care of a diligent and prudent
business person. In complying with this standard of care, the members of both
boards must take into account a broad range of considerations in their
decisions, including the interests of Allianz AG and its shareholders and
employees. Although there is no explicit obligation to act solely in the
interests of shareholders, the management board is required to respect the
rights of shareholders to equal treatment and equal information. Members of
either board who violate their duties may be personally liable for damages to
Allianz AG.

     The supervisory board has comprehensive monitoring functions. To ensure
that these functions are carried out properly, the management board must
establish an internal monitoring system and regularly report to the supervisory
board with regard to current business operations and future business planning.
The supervisory board is also entitled to request at any time special reports
regarding the affairs of Allianz AG or any of its subsidiaries to the extent
that the affairs of such subsidiary may have a significant impact on Allianz AG.
The management board is required to ensure appropriate risk management within
Allianz AG.

     Under German law, the shareholders of a stock corporation, like other
persons, may be liable to the corporation if they intentionally use their
influence on the corporation to cause a member of the management board, the
supervisory board, or holders of special proxies to act in a way that is harmful
to the corporation. If a member of the management board or the supervisory board
neglects his duties, he may be jointly and severally liable with the persons
exercising such influence.

     As a general rule under German law, a shareholder has no direct recourse
against the members of the management board or the supervisory board in the
event that they are believed to have breached a duty to Allianz AG. Apart from
insolvency or other limited circumstances, only Allianz AG has the right to
claim damages from members of either board. Allianz AG may only waive these
damages or settle these claims if at least three years have passed from the date
of their origination, and if the general shareholders' assembly approves the
waiver or settlement with a simple majority. No approval of a waiver or
settlement by the general shareholders will be effective if opposing
shareholders who hold, in the aggregate, one-tenth or more of the share capital
of Allianz AG have their opposition formally noted in the minutes recorded by a
German notary.

     Additional corporate governance rules were recently published as part of a
voluntary Corporate Governance Code by a German government commission and are
currently being considered by the German legislature for inclusion in formal
legislation. Such requirements relate,

                                       149
<PAGE>

among other things, to the role of auditors and the establishment of an audit
committee of the supervisory board. We believe that many of the standards set
forth in the Corporate Governance Code have long been part of everyday business
practice at Allianz AG. We have participated in the German government
commission's work and support the goals of the Corporate Governance Code. We
will consider the commission's recommendations concerning the management board
and the supervisory board, as well as the auditors, and where we do not adhere
to such recommendations, we will make use of the right provided under the
Corporate Governance Code to explain why we have not adhered to the
recommendations.

                                MANAGEMENT BOARD

     The management board of Allianz AG currently consists of twelve members.
Under the articles of association of Allianz AG, the supervisory board
determines the size of the management board, although it must have at least two
members. Under the articles of association, Allianz AG may be legally
represented by two members of the management board or by one member of the
management board and the holder of a general commercial power of attorney which
entitles its holder to carry out all legal acts and transactions on behalf of
Allianz AG. The names of such holders are filed with the commercial register in
Munich. In addition, pursuant to a filing with the commercial register in
Munich, Allianz AG may also be represented by two holders of a general
commercial power of attorney.

     Each member of the management board is appointed by the supervisory board
for a maximum term of five years. Each member may be reappointed or have his
term extended by the supervisory board for one or more terms of up to five years
each. The supervisory board may remove a member of the management board prior to
the expiration of his term for good cause, for example in the case of a serious
breach of duty or a bona fide vote of no confidence by the general shareholders'
assembly. A member of the management board may not deal with, or vote on,
matters relating to proposals, arrangements or contractual agreements between
himself and Allianz AG and may be liable to Allianz AG if he has a material
interest in any contractual agreement between Allianz AG and a third party which
was not disclosed to, and approved by, the supervisory board. The management
board regularly reports to the supervisory board, in particular on business
policy, budgets and strategy, profitability. It also reports the current
business of Allianz AG, as well as any exceptional matters that arise from time
to time. However, the management board is solely responsible for managing the
day-to-day business operations of Allianz AG, and the supervisory board may
neither make nor direct any management decisions.

     The current members of the management board, their areas of responsibility,
the year in which each member was first appointed the year in which the term of
each member expires, and the principal supervisory or management board
memberships of each member outside the Allianz Group, respectively, are as
follows:

<Table>
<Caption>
                                                                         YEAR
                                                              YEAR      CURRENT
                                           AREA OF            FIRST      TERM       PRINCIPAL OUTSIDE BOARD
NAME                                    RESPONSIBILITY      APPOINTED   EXPIRES       MEMBERSHIPS IN 2001
----------------------------------  ----------------------  ---------   -------   ---------------------------
<S>                                 <C>                     <C>         <C>       <C>
Dr. Henning Schulte-Noelle........  Chairman                  1991       2003     Member of the supervisory
                                                                                  boards of BASF AG, E.ON AG,
                                                                                  Linde AG, Munich Re,
                                                                                  Siemens AG and ThyssenKrupp
                                                                                  AG, and member of the board
                                                                                  of directors of Vodafone
                                                                                  Group plc (until July 31,
                                                                                  2001) and Lafarge S.A.
</Table>

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<PAGE>

<Table>
<Caption>
                                                                         YEAR
                                                              YEAR      CURRENT
                                           AREA OF            FIRST      TERM       PRINCIPAL OUTSIDE BOARD
NAME                                    RESPONSIBILITY      APPOINTED   EXPIRES       MEMBERSHIPS IN 2001
----------------------------------  ----------------------  ---------   -------   ---------------------------
<S>                                 <C>                     <C>         <C>       <C>
Dr. Paul Achleitner...............  Group Finance             2000       2004     Member of the supervisory
                                                                                  boards of ConSors Discount
                                                                                  Broker AG (until May 2001),
                                                                                  MAN AG, RWE AG and Bayer AG
                                                                                  (since May 1, 2002)
Detlev Bremkamp...................  Europe I                  1991       2004     Member of the supervisory
                                                                                  boards of Asea Brown Boveri
                                                                                  AG and Hochtief AG
Michael Diekmann..................  Americas, Group Human     1998       2006     Member of the advisory
                                    Resources                                     board of Apex Software Ltd.
                                                                                  and member of the board of
                                                                                  directors of National
                                                                                  Insurance Company Berhard
Dr. Joachim Faber.................  Allianz Dresdner Asset    2000       2004     Member of the supervisory
                                    Management (ADAM)                             boards of Infineon
                                                                                  Technologies AG, Karlsruher
                                                                                  Rendite GmbH (until April
                                                                                  2001) and Berlinwasser
                                                                                  Holding AG
Dr. Bernd Fahrholz................  Allianz Dresdner          2001       2005     Member of the supervisory
                                    Financial Services                            boards of Bayerische
                                    (ADFS)                                        Motorenwerke AG, Fresenius
                                                                                  Medical Care AG,
                                                                                  Heidelberger Zement AG,
                                                                                  Banco General de Negocios
                                                                                  S.A. (until January 28,
                                                                                  2002) and BNP Paribas S.A.
Leonhard H. Fischer...............  Dresdner Corporates &     2001       2005     Member of the supervisory
                                    Markets                                       boards of Deutsche Borse
                                                                                  AG, Eurex Clearing AG,
                                                                                  Eurex Frankfurt AG,
                                                                                  Itelligence AG, K+S
                                                                                  Aktiengesellschaft (until
                                                                                  February 5, 2002), NorCom
                                                                                  Information Technology AG
                                                                                  (until February 15, 2002),
                                                                                  Eurex Zurich AG and
                                                                                  Fordergesellschaft fur
                                                                                  Borsen und Finanzmarkte mbH
Dr. Reiner Hagemann...............  Europa II, Labor          1995       2004     Member of the supervisory
                                    Relations                                     boards of Schering AG,
                                                                                  Steag AG, ThyssenKrupp
                                                                                  Stahl AG, E.ON Energie AG
                                                                                  and TELA Versicherungs AG
                                                                                  (until May 31, 2001)
</Table>

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<PAGE>

<Table>
<Caption>
                                                                         YEAR
                                                              YEAR      CURRENT
                                           AREA OF            FIRST      TERM       PRINCIPAL OUTSIDE BOARD
NAME                                    RESPONSIBILITY      APPOINTED   EXPIRES       MEMBERSHIPS IN 2001
----------------------------------  ----------------------  ---------   -------   ---------------------------
<S>                                 <C>                     <C>         <C>       <C>
Dr. Horst Muller..................  Group Financial Risk      2001       2003     Member of the supervisory
                                    Management                                    boards of Europa Carton
                                                                                  GmbH, Stone Container GmbH,
                                                                                  Buderus AG, BATIG
                                                                                  Gessellschaft fur
                                                                                  Beteiligungen mbH, British-
                                                                                  American Tobacco (Germany)
                                                                                  GmbH, British-American
                                                                                  Tobacco (Industrie) GmbH,
                                                                                  debis Air Finance B.V., BVV
                                                                                  Versicherungsverein des
                                                                                  Bankgewerbes and Herlitz AG
                                                                                  (until October 10, 2001)
Dr. Helmut Perlet.................  Group Controlling,        1997       2004     None
                                    Accounting and
                                    Taxation, and
                                    Compliance
Dr. Gerhard Rupprecht.............  Group Information         1991       2005     Member of the supervisory
                                    Technology (GIT)                              boards of Heidelberger
                                                                                  Druckmaschinen AG,
                                                                                  ThyssenKrupp Automotive AG
                                                                                  and Quelle AG
Dr. Werner Zedelius...............  Growth Markets            2002       2004     Member of the supervisory
                                                                                  boards of RWE Power AG and
                                                                                  SMS AG
</Table>

     The following is a summary of the business experience of the current
members of the management board within the Allianz Group:

     Dr. Henning Schulte-Noelle:  Joined the Allianz Group in 1975. He was a
member of the management board of Allianz Versicherung and Allianz Leben from
1988 to 1990. In 1991 he was appointed chairman of the management board of
Allianz Leben. He became a member of the management board of Allianz AG in
January 1991. When he was appointed chairman of the management board of Allianz
AG in October 1991, he ceased to be chairman of the management board of Allianz
Leben.

     Dr. Paul Achleitner:  Joined the management board of Allianz AG in January
2000. He was previously chairman of Goldman, Sachs & Co. OHG, Frankfurt, Germany
and a partner of Goldman Sachs Group from 1994 to 1999.

     Detlev Bremkamp:  Joined the Allianz Group in 1963. He was a deputy member
of the management board of Allianz Versicherung from 1981 to 1982 and a full
member from 1983 to 1987, managing director and general manager of Allianz
Europe Ltd. in Amsterdam from 1987 to 1990, and became a member of the
management board of Allianz AG in 1991.

     Michael Diekmann:  Joined the Allianz Group in 1988. From 1996 to 1998 he
was chief executive officer of Allianz Asia-Pacific, Singapore. He became a
deputy member in October 1998 and a full member of the management board of
Allianz AG in March 2000.

     Dr. Joachim Faber:  Joined the Allianz Group in 1997 after holding various
positions at Citibank AG, Frankfurt, Germany (1984-1992), including member of
the management board, and Citibank International PLC, London (1992-1997),
including head of capital markets. He was a member of the management board of
Allianz Versicherung from 1997 to 1999 and became a member of the management
board of Allianz AG in January 2000.

                                       152
<PAGE>

     Dr. Bernd Fahrholz:  Joined Dresdner Bank in 1977. He was appointed a
member of the management board of Dresdner Bank in 1998 and chairman in 2000.
With the acquisition of Dresdner Bank in July 2001, he also joined the
management board of Allianz AG and was appointed to deputy chairman.

     Leonhard H. Fischer:  Joined Dresdner Bank in 1995. In 1998 he became a
deputy member, in 1999 a full member of the management board of Dresdner Bank.
With the acquisition of Dresdner Bank in July 2001, he became member of the
management board of Allianz AG.

     Dr. Reiner Hagemann:  Joined the Allianz Group in 1977. In 1987, he became
a deputy member, in 1990 a full member and in 1995 was made chairman of the
management board of Allianz Versicherung. He was a member of the management
board of Allianz Leben from 1991 through 1994 and became a member of the
management board of Allianz AG in 1995.

     Dr. Horst Muller:  Joined Dresdner Bank in 1970. He became a member of the
management board of Dresdner Bank in 1992. With the acquisition of Dresdner Bank
in July 2001, he became member of the management board of Allianz AG.

     Dr. Helmut Perlet:  Joined the Allianz Group in 1973. He has been head of
the foreign tax department since 1981, head of accounting and controlling since
1992, head of corporate finance since 1990 and head of the tax department since
1994. He became a deputy member in July 1997 and a full member of the management
board of Allianz AG in January 2000.

     Dr. Gerhard Rupprecht:  Joined the Allianz Group in 1979. In January 1989,
he became a deputy member, and in January 1991 a full member, and in October
1991 was appointed chairman, of the management board of Allianz Leben. He became
a member of the management board of Allianz AG in October 1991.

     Dr. Werner Zedelius:  Joined the Allianz Group in 1987. After various
positions in branch offices and in the headquarters of Allianz AG, he became
member of the management board of Cornhill Insurance PLC in London in 1996 and a
member of the management board of Allianz AG on January 1, 2002.

                               SUPERVISORY BOARD

     The supervisory board of Allianz AG consists of 20 members, ten of whom are
elected by the shareholders and ten of whom are elected by the employees of the
German companies of the Allianz Group. Three of the employee representatives are
representatives of the trade unions represented in the Allianz Group in Germany
and seven are representatives of Allianz Group employees. The shareholders'
assembly may remove any supervisory board member it has elected by a simple
majority of the votes cast. The employee representatives may be removed by those
employees who elected them with a majority of three-quarters of the votes cast.

     The supervisory board chooses a chairman and one or more deputy chairmen
from among its members by a majority vote of its members. If such majority is
not reached on the first vote, the shareholder representatives will elect the
chairman, and the employee representatives will elect a deputy chairman. The
supervisory board acts by simple majority. In the case of any deadlock, the
chairman has the deciding vote.

     The supervisory board meets at least once each quarter. Its main functions
are:

     - to monitor the management of Allianz AG;

     - to appoint the members of the management board; and

     - to approve matters in areas where such approval is required by German law
       and which the supervisory board has made generally subject to its
       approval.

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<PAGE>

     The supervisory board has established a Standing Committee, a Compensation
Committee and a Conciliation Committee.

     Standing Committee.  The Standing Committee, which comprises the chairman
of the supervisory board and his representatives and other members elected by
the supervisory board, may approve or disapprove certain transactions of the
company and transactions between the company and members of the supervisory
board or management board. The Standing Committee also commissions the company's
auditors, which are then appointed by the supervisory board, and exercises
certain other powers on behalf of the supervisory board, including determining
the guest status of non-members who wish to attend supervisory board meetings
and appointing the chairman of the annual shareholder meeting in the event that
the chairman of the supervisory board is unavailable. The members of the
Standing Committee are Dr. Klaus Liesen, Bernd W. Voss, Dr. Manfred Schneider,
Nobert Blix and Frank Ley. The Standing Committee held four meetings in 2001.

     Compensation Committee.  The Compensation Committee consists of the
chairman of the supervisory board and two other members elected by the
supervisory board and is charged with representing the company in matters
relating to the compensation and remuneration of the management board. The
members of the Compensation Committee are Dr. Klaus Liesen, Frank Ley and Bernd
W. Voss. The Compensation Committee held three meetings in 2001.

     Conciliation Committee.  The Conciliation Committee consists of the
chairman of the supervisory board and his representatives, one member elected by
the employees and one member elected by the shareholders. The Conciliation
Committee elects the members of the supervisory board where ordinary supervisory
board elections do not result in election of new members. The members of the
Conciliation Committee are Dr. Klaus Liesen, Prof. Dr. Rudolf Hickel, Gerhard
Cromme and Frank Ley. There arose no need for the Conciliation Committee to meet
in 2001.

     Each member of the supervisory board is generally elected for a fixed term
of approximately five years. In accordance with German law, the term expires at
the end of the annual general shareholders' assembly in the fourth fiscal year
after the year in which such supervisory board member was elected. Supervisory
board members may be reelected.

     The current members of the supervisory board of Allianz AG, their principal
occupations, the year in which each member first served on the supervisory
board, the year in which the term of each member expires and the principal
supervisory or management board memberships of each member outside the Allianz
Group, respectively, are as follows:

<Table>
<Caption>
                                                                             YEAR
                                                                            CURRENT
                                                               YEAR FIRST    TERM     PRINCIPAL OUTSIDE BOARD
NAME                                  PRINCIPAL OCCUPATION     APPOINTED    EXPIRES     MEMBERSHIPS IN 2001
----------------------------------  -------------------------  ----------   -------   ------------------------
<S>                                 <C>                        <C>          <C>       <C>
Dr. Klaus Liesen, Chairman(1).....  Chairman of the               1983       2003     Member of the
                                    supervisory board of                              supervisory boards of
                                    Ruhrgas AG                                        E.ON AG (chairman since
                                                                                      May 2000 and previously
                                                                                      member of the
                                                                                      supervisory board of
                                                                                      Veba AG), Preussag AG,
                                                                                      Ruhrgas AG (chairman),
                                                                                      Volkswagen AG
                                                                                      (chairman), and Beck
                                                                                      GmbH & Co. KG
</Table>

                                       154
<PAGE>

<Table>
<Caption>
                                                                             YEAR
                                                                            CURRENT
                                                               YEAR FIRST    TERM     PRINCIPAL OUTSIDE BOARD
NAME                                  PRINCIPAL OCCUPATION     APPOINTED    EXPIRES     MEMBERSHIPS IN 2001
----------------------------------  -------------------------  ----------   -------   ------------------------
<S>                                 <C>                        <C>          <C>       <C>
Frank Ley, Deputy Chairman(2).....
                                    Employee of Allianz Leben     1993       2003     None
Norbert Blix(2)...................  Employee of Allianz           1997       2003     Member of the
                                    Versicherung                                      supervisory board of
                                                                                      Allianz Versorgungskasse
                                                                                      VvaG
Dr. Diethart Breipohl(1)..........  Former member of the          2000       2003     Member of the
                                    management board of                               supervisory boards of
                                    Allianz AG                                        HypoVereinsbank (until
                                                                                      May 23, 2002),
                                                                                      Beiersdorf AG,
                                                                                      Continental AG,
                                                                                      KarstadtQuelle AG, mg
                                                                                      technologies AG, KM
                                                                                      Europa Metal AG, Banco
                                                                                      Popular Espanol, Banco
                                                                                      Portugues de
                                                                                      Investimento and Credit
                                                                                      Lyonnais
Bertrand Collomb(1)...............  President Directeur           1998       2003     Member of the boards of
                                    General of Lafarge S.A                            directors of
                                                                                      Total-Fina-Elf, ATCO
                                                                                      Ltd. and the Conseil
                                                                                      D'Administration of
                                                                                      Credit Commercial de
                                                                                      France S.A.
Dr. Gerhard Cromme(1).............  Chairman of the               2001       2003     Member of the
                                    supervisory board of                              supervisory boards of
                                    ThyssenKrupp AG (since                            Deutsche Lufthansa AG
                                    October 2001) and                                 (since January 1, 2002),
                                    chairman of the                                   E.ON AG, Ruhrgas AG,
                                    supervisory board of                              Volkswagen AG, Asea
                                    ThyssenKrupp Technologies                         Brown Boveri AG (until
                                    AG (until September 2001)                         March 12, 2002), Suez
                                                                                      S.A., Thales S.A. and
                                                                                      member of the board of
                                                                                      directors of the Budd
                                                                                      Company (until September
                                                                                      2001)
Jurgen Dormann(1).................  Chairman of the               1998       2003     Member of the boards of
                                    management board of                               directors of Asea Brown
                                    Aventis S.A                                       Boveri Ltd. and IBM
                                                                                      Corporation
Hinrich Feddersen(3)..............  Member of the management      2001       2003     Member of the
                                    board of ver.di Vereinte                          supervisory boards of
                                    Dienstleistungsgewerkschaft                       Deutscher Ring
                                    e.V                                               Lebensversicherungs AG
                                                                                      (deputy chairman) and
                                                                                      Basler Versicherung
                                                                                      Beteiligungs GmbH
                                                                                      (deputy chairman)
</Table>

                                       155
<PAGE>

<Table>
<Caption>
                                                                             YEAR
                                                                            CURRENT
                                                               YEAR FIRST    TERM     PRINCIPAL OUTSIDE BOARD
NAME                                  PRINCIPAL OCCUPATION     APPOINTED    EXPIRES     MEMBERSHIPS IN 2001
----------------------------------  -------------------------  ----------   -------   ------------------------
<S>                                 <C>                        <C>          <C>       <C>
Dr. Uwe Haasen(1).................  Former member of the          2002       2003     Chairman of the
                                    management board of                               supervisory board of
                                    Allianz AG                                        United Systems AG
                                                                                      Munchen
Peter Haimerl(3)..................  Employee of Dresdner Bank     2001       2003     None
Professor Dr. Rudolf Hickel(2)....  Professor of Economics at     1999       2003     Member of the
                                    the University of Bremen                          supervisory boards of
                                                                                      Salzgitter Stahl und
                                                                                      Technologie AG and
                                                                                      Gewoba
                                                                                      Aktiengesellschaft fur
                                                                                      Wohnen und Bauen
Horst Meyer(2)....................  Employee of HERMES            2001       2003     None
Uwe Plucinski(3)..................  Employee of Dresdner Bank     2001       2003     None
Reinhold Pohl(2)..................  Building Manager of           1993       2003     None
                                    Allianz Leben
Roswitha Schiemann(2).............  Branch Manager of Allianz     1998       2003     None
                                    Versicherung
Dr. Manfred Schneider(1)..........  Chairman of the               1998       2003     Member of the
                                    management board of Bayer                         supervisory boards of
                                    AG                                                DaimlerChrysler AG,
                                                                                      Metro AG, RWE AG and
                                                                                      Linde AG
Dr. Hermann Scholl(1).............  Chairman of the executive     1998       2003     Member of the
                                    board of Robert Bosch                             supervisory boards of
                                    GmbH                                              BASF AG, Robert Bosch
                                                                                      Corp., Robert Bosch
                                                                                      Internationale
                                                                                      Beteiligungen AG and
                                                                                      Deutsche Bank (until
                                                                                      June 30, 2001)
Jurgen E. Schrempp(1).............  Chairman of the               1998       2003     Member of the
                                    management board of                               supervisory boards of
                                    DaimlerChrysler AG                                DaimlerChrysler Services
                                                                                      AG, HypoVereinsbank, and
                                                                                      member of the board of
                                                                                      directors of South
                                                                                      African Coal, Oil and
                                                                                      Gas Corporation (Sasol)
                                                                                      Ltd., Vodafone Group
                                                                                      plc, The New York Stock
                                                                                      Exchange and
                                                                                      DaimlerChrysler of South
                                                                                      Africa (Pty) Ltd.
Jorg Thau(2)......................  Employee of Vereinte          2000       2003     None
                                    Kranken
</Table>

                                       156
<PAGE>

<Table>
<Caption>
                                                                             YEAR
                                                                            CURRENT
                                                               YEAR FIRST    TERM     PRINCIPAL OUTSIDE BOARD
NAME                                  PRINCIPAL OCCUPATION     APPOINTED    EXPIRES     MEMBERSHIPS IN 2001
----------------------------------  -------------------------  ----------   -------   ------------------------
<S>                                 <C>                        <C>          <C>       <C>
Dr. Bernd W. Voss(1)..............  Former member of the          2002       2003     Member of the
                                    management board of                               supervisory boards of
                                    Dresdner Bank (retired)                           Continental AG, E.ON AG,
                                                                                      KarstadtQuelle AG,
                                                                                      Preussag AG, Quelle AG,
                                                                                      VARTA AG (until February
                                                                                      15, 2001), Volkswagen AG
                                                                                      (until April 16, 2002)
                                                                                      and Wacker Chemie GmbH
                                                                                      and of the board of
                                                                                      directors of Asea Brown
                                                                                      Boveri Ltd.
</Table>

---------------

(1) Elected by Allianz AG's shareholders.

(2) Elected by the employees of the German companies of the Allianz Group.

(3) Appointed by court.

                     COMPENSATION OF DIRECTORS AND OFFICERS

     Total remuneration for members of our management board includes a fixed
component (the base salary) and a variable component. The latter comprises
components that depend on the Allianz AG dividend, an annual bonus (which
includes an individual element and an element based on company performance), and
a three-year bonus. Provided that the annual general meeting of shareholders
approves payment of the dividend proposed, the compensation allocated by Allianz
AG and its subsidiaries to the management board in 2001 will be approximately
E16 million. The number of members of the management board increased from nine
to 12 in 2001.

     The compensation allocated to the management board in 2001 consists of
fixed remuneration of approximately E6.7 million and variable remuneration of
approximately E9.2 million, compared to E4.3 million and E5.3 million,
respectively, in 2000. The variable component includes dividend-related variable
remuneration, the bonus for fiscal 2001 and the allocation to the reserve for
the performance-related three-year bonus. Payments from the reserve for the
performance-related three-year bonus can be made to members of the management
board only from 2004 onward.

     In addition to the amounts reported above, Allianz AG and its subsidiaries
set aside an amount of approximately E1.3 million to increase pension reserves
and reserves for similar obligations in favor of active members of the
management board.

     In addition, under the long-term incentive plan for 2001 described under
"-- Options to Purchase Securities -- Incentive Plans", a total of 39,815
appreciation rights tied to the price of Allianz AG stock were awarded to
members of the management board in 2001. Based on standard option valuation
methods (Black-Scholes or Binomial Method), the value of these appreciation
rights was E4 million at the time of their award and E3 million at December 31,
2001. Since none of the appreciation rights had an intrinsic or exercise value,
these amounts were entirely time values.

     At December 31, 2001, members of our management board held a total of
86,479 appreciation rights awarded from 1999 through 2001. Based on standard
option valuation

                                       157
<PAGE>

methods (Black-Scholes or Binomial Method), the total value of these
appreciation rights was E7 million at December 31, 2001. Since none of the
appreciation rights had an intrinsic or exercise value, these amounts were
entirely time values.

     For additional information on the appreciation rights held by members of
our management board, see Note 44 to our consolidated financial statements. See
also "-- Options to Purchase Securities -- Incentive Plans" below.

     The compensation of the supervisory board members is determined by the
articles of association of Allianz AG. The articles provide that the annual
compensation for each supervisory board member is E4,000, plus E500 for every
cent by which the dividend per share declared for the relevant year exceeds 15
cents. The chairman of the supervisory board receives twice that amount, and
each deputy chairman receives one and one half times that amount. In addition,
Allianz AG reimburses all supervisory board members for their out-of-pocket
expenses and for the value-added tax on this compensation. Assuming that the
shareholders approve the dividend as proposed at the annual general
shareholders' assembly of June 2002, the aggregate amount paid by the Allianz
Group as compensation for the members of the supervisory board of Allianz AG as
it was constituted in 2001 in respect of the year ended December 31, 2001 will
be E2 million.

                                BOARD PRACTICES

     Allianz AG has entered into service contracts with management board members
providing for a limited benefit upon termination of service prior to the stated
expiration date of a management board member's contract. In such circumstances,
in addition to the regular pension benefits described above, the management
board member would receive a severance payment equal to six months' additional
salary. Allianz AG has not entered into such contracts with supervisory board
members.

                                SHARE OWNERSHIP

     As of June 17, 2002, the members of the management board and the
supervisory board held less than 1% of our ordinary shares issued and
outstanding. As of such date, based on our share register, the members of the
management board and the supervisory board held in the aggregate 2,885 ordinary
shares of Allianz AG.

                                   EMPLOYEES

     The Allianz Group had 179,946 employees at December 31, 2001, of which
87,589, or 48.7%, were employed in Germany. The geographical distribution of the
Group's employees over the past three years was as follows:

<Table>
<Caption>
                                                                    AT DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
Germany.....................................................   87,589    43,124    41,923
Rest of Europe..............................................   61,892    50,569    49,569
NAFTA.......................................................   14,722    12,667    12,056
Rest of World...............................................   15,743    13,323     9,924
                                                              -------   -------   -------
  Total.....................................................  179,946   119,683   113,472
                                                              =======   =======   =======
</Table>

     Substantially all of the Group's German employees are subject to collective
bargaining agreements covering the insurance and banking industries. The Group
believes that its employee relations are generally good.

                                       158
<PAGE>

                         OPTIONS TO PURCHASE SECURITIES

INCENTIVE PLANS

     Our long-term incentive plans are subject to annual approval by the
management board. As of December 31, 2001, plans were authorized for 2001, 2000
and 1999. Under these incentive plans, Allianz AG and its subsidiaries granted
non-transferable appreciation rights tied to the value of the ordinary shares of
Allianz AG to members of the management board of Allianz AG and eligible key
executives of the Allianz Group. The appreciation rights were granted on April 1
of each of these years. The rights expire seven years after issuance.

     Under the relevant incentive plans, each plan participant was advised at
the beginning of the plan of the number of appreciation rights that were granted
to him or her. Each appreciation right entitles the holder to the difference
between the stock price of Allianz AG at the time the right is exercised and the
base price of the stock of Allianz AG as specified in the plan, the maximum
difference being capped at 150% of the base price. The 2001, 2000 and 1999
incentive plans specify base prices of E356, E367 and E292, respectively. As of
December 31, 2001, a total of 825,979 appreciation rights were outstanding under
all our incentive plans. Of this amount, 311,439 appreciation rights were
outstanding under the 2001 incentive plan, 255,950 were outstanding under the
2000 incentive plan and 258,590 were outstanding under the 1999 incentive plan.

     The appreciation rights may be exercised at any time between the second and
the seventh anniversary of the effective date of the relevant plan, provided
that the closing stock price of Allianz AG in the Frankfurt Xetra Trade has
exceeded by 0.01 points or more the closing price of the Dow Jones Stoxx Price
Index on each of at least five consecutive trading days and the closing stock
price of Allianz AG in the Frankfurt Xetra Trade has appreciated as of the
exercise date by at least 20% over the base price specified in the plan. Holders
may not exercise an appreciation right within fixed time periods prior to the
publication of the Allianz Group's quarterly, semi-annual or annual results. At
other times, appreciation rights may be exercised only with the approval of the
Group's compliance department.

     Upon exercise of the appreciation rights, payment is made in the relevant
local currency by the company granting the appreciation rights. Appreciation
rights not exercised by the last day of a plan will be exercised automatically
where the necessary conditions have been met. Where these conditions have not
been met or a plan participant ceases to be employed by us, the plan
participant's appreciation rights are forfeited.

EMPLOYEE STOCK OWNERSHIP ARRANGEMENTS

     Our management board has from time to time with the approval of the
shareholders offered ordinary shares of Allianz AG at a discounted price per
share to eligible employees of certain Allianz Group companies. While such
arrangements had previously been restricted to employees of our German
companies, in 2000 we included employees of several of our non-German companies,
and in 2001 we included employees of several of our U.S., Mexican and Canadian
companies. When implementing an employee share purchase program, Allianz AG
establishes parameters that are binding on Group companies. In general, to be
eligible, employees are required to have been employed for a minimum period of
approximately six months or a similar waiting period prior to and during the
share offering. Employees are also subject to certain restrictions on the
percentage of their monthly compensation that may be used to purchase the
ordinary shares. While the shares are not subject to vesting or other
restrictions, each participating Group subsidiary may establish a restricted
period during which employees may not transfer the shares after purchasing them.

                                       159
<PAGE>

     A total of 361,235 ordinary shares of Allianz AG were issued under such
arrangements at a total discount of approximately E27 million in 2001.

     For additional information on our incentive plans and employee stock
ownership arrangements, see Note 44 to our consolidated financial statements.

                                       160
<PAGE>

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

                               MAJOR SHAREHOLDERS

     The outstanding capital stock of Allianz AG consists of ordinary shares
without par value that are issued in registered form. Under the articles of
association, each outstanding ordinary share represents one vote. Major
shareholders do not have different voting rights. Based on our share register,
as of June 7, 2002, we had approximately 443,554 registered shareholders, of
which approximately 892 were holders resident in the United States. Based on our
share register, approximately 5.67% of our ordinary shares issued were held by
such U.S. holders. Although our shareholders are generally required when
registering to indicate their respective names, addresses and, in the case of
legal entities, whether they hold on behalf of a third party, many of our shares
may be held of record by brokers, trustees or other nominal holders who are not
required to provide such information with regard to beneficial holders. As a
result, the number of holders of record or registered holders in the United
States may not be representative of the actual number of beneficial holders in
the United States. See also "Directors, Senior Management and Employees -- Share
Ownership."

     Under the German Securities Trading Act, holders of voting securities of a
listed German company must notify the German Federal Securities Supervisory
Authority and the company of the level of their holding whenever it reaches,
exceeds or falls below specified thresholds. These thresholds are 5%, 10%, 25%,
50% and 75% of a company's shares. In addition, effective January 1, 2002, the
provisions of the German Securities Trading Act were amended to broaden the
criteria for attribution of shares.

     The following table sets forth information about beneficial ownership of
our ordinary shares as of the indicated date as to each person (or group of
affiliated persons) known by us, through documents filed publicly with the SEC,
to own beneficially more than 5% of the ordinary shares issued and outstanding,
and as adjusted for recent changes in our outstanding shares. In addition, where
different, we have indicated the percentage ownership provided by such
shareholders in the filings under the new German reporting requirements
discussed above.

<Table>
<Caption>
                                                                                    OWNERSHIP
                                                                     OWNERSHIP     REPORTED IN
                                                       NUMBER OF    REPORTED IN       GERMAN
              NAME OF BENEFICIAL OWNER                   SHARES     SEC FILINGS     FILINGS(4)
              ------------------------                 ----------   -----------   --------------
<S>                                                    <C>          <C>           <C>
Munich Re............................................  61,317,400      23.0%(1)       21.2%(5)
HypoVereinsbank......................................  16,629,082       6.8%(2)        6.2%(6)
Deutsche Bank........................................  16,284,683       6.1%(3)        3.7%(7)
</Table>

---------------

(1) As of December 31, 2001, as reported on March 12, 2002. In its report,
    Munich Re stated that such percentage was based on a total number of
    266,428,000 shares issued by Allianz as of December 31, 2001, but did not
    include shares of Allianz AG owned by Allianz Group companies. Munich Re
    reported that such percentage would have been 25.21% if shares of Allianz AG
    held within the Allianz Group had been treated differently for calculation
    purposes, and that such percentage would have been 24.76% if a further
    1,106,120 shares lent by Munich Re to a third party at such date had been
    excluded from Munich Re's beneficial ownership.

(2) As of December 31, 2000, as reported on February 15, 2001.

(3) As of December 31, 2001, as reported on February 14, 2002.

(4)Percentages have been rounded to a single decimal place.

(5) As reported under the German Securities Trading Act on April 2, 2002.

(6) As reported under the German Securities Trading Act on April 4, 2002.

                                       161
<PAGE>

(7) As reported under the German Securities Trading Act on April 8, 2002.

     As of June 7, 2002, 266,428,000 ordinary shares were issued but only
242,986,892 were outstanding, as a result of our repurchase of 786,100 ordinary
shares in May 2001 and our purchase of 5,500,000 ordinary shares from a
subsidiary of Dresdner Bank in February 2002, as well as the holding of
17,155,008 ordinary shares by Dresdner Bank or its subsidiaries.

     The decrease in the share ownership of Deutsche Bank to 6.1% as reported to
the SEC on February 14, 2002, the decrease in the share ownership of Munich Re
from slightly less than 25% to approximately 21.2% of our outstanding ordinary
shares as reported under German law on April 2, 2002 due to sales related to our
acquisition of Dresdner Bank, and the percentage changes resulting with respect
to our shares from our share purchases in 2001 and 2002 constitute the only
significant changes in the percentage ownership held of record by any of our
major shareholders in the past three years.

                           RELATED PARTY TRANSACTIONS

     The following describes certain transactions between the Allianz Group and
its related parties since January 1, 2001.

                          TRANSACTIONS WITH MUNICH RE

     As of June 7, 2002, we held approximately 24.9% of Munich Re's ordinary
shares. As of April 12, 2002, based on its most recent German reporting, Munich
Re held approximately 21.2% of our ordinary shares outstanding, which
constituted approximately 19.3% of our ordinary shares issued as of such date.

PRINCIPLES OF COOPERATION

     Certain principles of cooperation have historically governed the
relationship between Allianz AG and Munich Re. These principles have been
adapted to current circumstances in an agreement, dated May 2000 (which we refer
to as the "Principles of Cooperation"), which sets forth the principles
governing the cross-shareholdings, joint interests in third parties and
reinsurance relationships between Allianz AG and Munich Re. The Principles of
Cooperation were amended by a supplementary agreement (which we refer to as the
"Supplement") in December 2001. The Principles of Cooperation are effective from
January 1, 2000 through December 31, 2005, and will automatically be renewed for
further periods of ten years upon the expiration of each term unless notice of
termination has been given by either party at least three years before such
expiration. The Supplement is effective through December 31, 2010.

     Cross Shareholdings.  The Principles of Cooperation provide that the
reciprocal long term shareholdings between Allianz AG and Munich Re will range
from 24.9% to 19.9%. During the term of the Principles of Cooperation, and for a
period of two years after their termination, the ownership interest held by one
party in the other party may be reduced, in consultation with the other party,
to 19.9%.

     Shareholdings in Insurance Subsidiaries.  As of June 7, 2002, Munich Re
held 49.9% of the ordinary shares of Frankfurter Versicherungs-AG and 45% of the
ordinary shares of Bayerische Versicherungsbank AG, each a member of our German
Property Casualty Group. We held a 36.1% interest in Karlsruher
Lebensversicherungs-AG (or Karlsruher Leben), a German life insurance company
that is 54% owned by Munich Re, as of such date.

     Reinsurance Relationships.  Munich Re is the primary external reinsurer for
the Allianz Group. The Allianz Group ceded approximately E2.4 billion, E2.3
billion and E2.3 billion in reinsurance premiums written to Munich Re in 2001,
2000 and 1999, respectively. Of the Allianz

                                       162
<PAGE>

Group's total third-party reinsurance premiums ceded, approximately 30.6%, 30.2%
and 32.7% were ceded to Munich Re in 2001, 2000 and 1999 respectively. These
amounts represented approximately 4%, 4% and 4% of the Allianz Group's gross
premiums written in 2001, 2000 and 1999, respectively. During 2001, Munich Re,
as principal reinsurer of Allianz AG, assumed substantial claims received by
companies of the Allianz Group arising from the terrorist attack of September
11, 2001 in accordance with the foregoing contractual agreements. See
"Information on the Company and Operating and Financial Review and
Prospects -- Discussion of Property-Casualty Operations by Geographic
Region -- Germany -- Allianz AG."

     The Principles of Cooperation provide that Allianz AG will cede to Munich
Re a 14% quota-share of the gross self-retention of the insurance business of
Allianz Versicherung, Frankfurter Versicherungs-AG, Bayerische Versicherungsbank
AG, Allianz Globus MAT, Kraft Versicherungs-AG and Vereinte Spezial
Versicherung-AG. In addition, the Principles of Cooperation provide that Munich
Re shall, subject to competitive conditions, assume a majority of reinsurance
ceded by Allianz AG externally other than pursuant to the quota-share
arrangements described above. The Principles of Cooperation further provide that
Allianz AG and Munich Re shall share the reinsurance ceded by all other majority
jointly held German insurance companies (other than the German Property-Casualty
Group companies subject to the quota-share arrangements described above) pro
rata based on each party's respective ownership interest in such companies. The
Principles of Cooperation also provide that Allianz AG and Munich Re shall
equally share, on an arm's-length basis, the reinsurance ceded by Allianz Leben
and Karlsruher Leben. Finally, the Principles of Cooperation provide that
Allianz AG shall be entitled to assume reinsurance from Munich Re, although the
amounts and terms thereof are not specified. During 2001, 2000 and 1999, Munich
Re ceded approximately E850 million, E900 million and E800 million,
respectively, in reinsurance premiums to the Allianz Group. The Supplement
provides that the mutually ceded reinsurance volume between the Allianz Group
and Munich Re is to be adjusted on a step-by-step basis by 2005.

     Allianz AG believes that the reinsurance it cedes to Munich Re and the
reinsurance it assumes from Munich Re are on terms that are comparable to those
that could be obtained from unrelated third parties.

     Termination.  Upon termination of the Principles of Cooperation, each of
Allianz AG and Munich Re may, after a two-year period from termination, sell the
interests it holds in the other party, subject to a right of first offer and a
right to designate the buyer on the part of the party whose shares are being
sold. In addition, if the party whose shares are being sold exercises its right
of first offer, the selling party shall be entitled to request the other party
to sell to it or another designated person the shares of the selling party.
Reciprocal rights of first refusal also apply to post-termination dispositions
of interests in majority jointly held German insurance companies. Upon
termination of the Principles of Cooperation, the existing reinsurance
arrangements between Allianz AG and Munich Re will remain in force but may be
terminated at any time pursuant to the provisions of the relevant reinsurance
agreements. The reinsurance arrangements with respect to majority jointly held
entities will remain in effect. All disputes arising from the Principles of
Cooperation are to be resolved through binding arbitration.

LETTER OF INTENT

     Pursuant to a non-binding Letter of Intent, dated May 4, 2000 (which we
refer to as the "Letter of Intent"), Allianz AG and Munich Re have agreed to
gradually reduce their shareholdings in each other to a level of approximately
20% of outstanding shares. To the extent possible, this reduction is to be
achieved, or initiated, by December 31, 2003, with the relevant shares to be
placed principally in the capital markets.

     In addition, the Letter of Intent provides for a restructuring of the
shareholdings of Allianz AG and Munich Re in certain jointly owned subsidiaries
and affiliates. The Letter of Intent

                                       163
<PAGE>

contemplates that Munich Re will transfer its current indirect 45% interest in
Bayerische Versicherungsbank AG and its current indirect 49.9% interest in
Frankfurter Versicherungs-AG to Allianz AG or an Allianz Group company named by
Allianz AG, while Allianz AG will transfer its current indirect 36.1% interest
in Karlsruher Leben and its 39% interest in Mercur Assistance AG Holding (or
Mercur), a German provider of medical and automobile assistance services, to
Munich Re or a Munich Re Group company named by Munich Re. Pursuant to the
Letter of Intent, Allianz AG sold its 39% interest in Mercur to Munich Re in
2000. The parties' other interests shall at the latest be transferred by June
30, 2002, or by another date as mutually agreed. We currently anticipate that
this transfer will occur on July 1, 2002. If the restructuring takes place as
contemplated, Munich Re will hold approximately 90% of Karlsruher Leben, and
Allianz AG will hold approximately 90% of Bayerische Versicherungsbank AG and
99.9% of Frankfurter Versicherungs-AG.

AGREEMENT IN PRINCIPLE

     In April 2001, in connection with our acquisition of Dresdner Bank, we
entered into an Agreement in Principle with Munich Re (which we refer to as the
"Agreement in Principle"), pursuant to which we sold a 16.0% shareholding in
HypoVereinsbank to Munich Re for E59.22 per share, or an aggregate price of
approximately E4.285 billion, on January 15, 2002, thereby reducing our
shareholding in HypoVereinsbank to approximately 0.5%. In addition, we purchased
from Munich Re its 40.6% shareholding in Allianz Leben for E607.17 per share, or
an aggregate price of E2.587 billion, on January 15, 2002, thereby increasing
our shareholding in Allianz Leben to 91.1%. The current reinsurance
relationships between Allianz Leben and Munich Re are intended to remain in
effect on the basis of existing contracts until 2010.

     We recently confirmed to Munich Re that we would not dilute Munich Re's
shareholding in Allianz AG to a level below 20% by means of any change in the
number of Allianz AG ordinary shares outstanding undertaken by us in connection
with the financing of our acquisition of Dresdner Bank.

EUROPEAN COMMISSION UNDERTAKING

     In connection with the acquisition of Dresdner Bank, Allianz AG pledged to
the European Commission to limit its voting rights from ordinary shares of
Munich Re to 20.5% of the total ordinary share capital of Munich Re. In
addition, Allianz AG agreed to reduce its long-term shareholding in Munich Re to
20.5%. This commitment includes the ordinary shares of Munich Re held by
Dresdner Bank. The commitment of Allianz AG to the European Commission does not
affect ordinary shares of Munich Re that are acquired and held by the companies
of the Allianz Group as part of their trading portfolio in the ordinary course
of business and which do not have voting rights. The commitment also does not
affect the exercise of voting rights on behalf of clients or voting rights of
ordinary shares held in the ordinary course of business for the account of third
parties.

OTHER TRANSACTIONS

     In addition to the arrangements described above, the Allianz Group and
Munich Re and its subsidiaries enter into various transactions with each other
in the ordinary course of business, including the provision of direct insurance
by Allianz Group companies to Munich Re and its subsidiaries, and vice versa.
Allianz expects these transactions to continue.

                        TRANSACTIONS WITH DRESDNER BANK

     We entered into an agreement with Dresdner Bank in March 2001, pursuant to
which we launched a public cash tender offer for the ordinary shares of Dresdner
Bank on May 31, 2001. The offer was launched for a price of E53.13 per share,
and closed successfully on July 23, 2001,

                                       164
<PAGE>

thereby increasing our ownership interest in the ordinary shares of Dresdner
Bank from 21.2% at the end of 2000 to 77.5% as of July 23, 2001. We included the
assets and liabilities and results of operations of Dresdner Bank in our
consolidated financial statements as of July 23, 2001, the date of the
acquisition. Pursuant to the conclusion of several forward sale agreements in
January 2002 and other purchases, we increased our shareholding in Dresdner Bank
to 95.6% as of March 15, 2002. In April 2002, we announced our intention to
assume all outstanding ordinary shares of Dresdner Bank from its minority
shareholders for a price of E51.50 per share, in accordance with provisions of
German law that permit us, as the holder of more than 95% of Dresdner Bank's
ordinary shares, to do so without the consent of such minority shareholders. The
purchase price was established by Ernst & Young and a court-appointed auditor.
The purchase was approved at Dresdner Bank's annual shareholder meeting on May
24, 2002 but will be consummated only after the conclusion in June 2002 of
additional forward sale agreements and the entry of the Dresdner Bank
shareholders' resolution in the Commercial Register of Dresdner Bank in
Frankfurt, which we expect to occur in July 2002. In connection with our
acquisition of Dresdner Bank, we also entered into the European Commission
undertaking concerning the reduction of our Munich Re shareholding described
above.

     As of June 3, 2002, Dresdner Bank held, directly or indirectly, 17,155,008,
or approximately 6.4%, of our ordinary shares issued. In accordance with German
law, the Allianz AG ordinary shares held by or on behalf of Dresdner Bank and
other Allianz Group companies are considered own shares of Allianz AG that do
not have dividend or voting rights.

     Historically, the Allianz Group and Dresdner Bank and its subsidiaries have
also entered into a wide variety of transactions with each other in the ordinary
course of business, including banking, insurance, asset management,
broker-dealer, securities lending, joint venture and other transactions.

                       TRANSACTIONS WITH HYPOVEREINSBANK

     Pursuant to the Agreement in Principle, we disposed of the Allianz Group's
16.0% shareholding in HypoVereinsbank to Munich Re in January 2002. See "--
Transactions with Munich Re -- Agreement in Principle." As of June 7, 2002, we
held approximately 0.5% of the ordinary shares of HypoVereinsbank. As of
December 31, 2000, based on its most recent SEC reporting, HypoVereinsbank held
6.8% of Allianz AG's ordinary shares outstanding. In June and July 2001,
HypoVereinsbank informed us that it had a firm intention to reduce its stake in
Allianz AG to a maximum of 2.5% of Allianz AG's voting shares, based on the
Allianz AG ordinary shares outstanding at such time. HypoVereinsbank stated that
such reduction would be consummated by the end of 2002, and would take place,
subject to the satisfaction of certain conditions, through the sale of Allianz
AG ordinary shares or, in the event that such conditions were not met, the
placing of Allianz AG ordinary shares in a voting trust controlled by persons
unaffiliated with HypoVereinsbank. HypoVereinsbank also informed us that it had
already committed 1.8% of its then-current Allianz AG holdings to a transaction
that was expected to close in 2002. On April 4, 2002, HypoVereinsbank reported
ownership of 6.2% of Allianz AG's ordinary shares pursuant to the German
Securities Trading Act.

     Allianz AG and its subsidiaries terminated the cooperation agreement with
HypoVereinsbank concerning the distribution of Allianz Group insurance products
in 2001.

     In addition, Allianz Group companies and HypoVereinsbank and its
subsidiaries enter into a wide variety of transactions with each other in the
ordinary course of business, including banking, insurance, broker-dealer,
securities lending, joint venture and other transactions.

                                       165
<PAGE>

                              OTHER RELATIONSHIPS

     Certain persons are members of both the management or supervisory boards of
Allianz AG or its subsidiaries and the management or supervisory boards of
Munich Re, HypoVereinsbank and Deutsche Bank and their respective subsidiaries.
See "Directors, Senior Management and Employees."

     Loans to members of the management board of Allianz AG and liabilities
assumed on their behalf totaled approximately E1 million at December 31, 2001.
This amount included loans extended to, or liabilities assumed on behalf of,
members of the management boards of subsidiaries amounting to approximately E1
million, substantially all of which had been granted or extended prior to fiscal
2001. These transactions were entered into on ordinary commercial terms. There
were no loans extended to, or liabilities assumed on behalf of, members of the
supervisory board of Allianz AG.

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<PAGE>

ITEM 8.  FINANCIAL INFORMATION

            CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     See pages F-1 through F-131 for the consolidated financial statements
required by this item.

                               LEGAL PROCEEDINGS

GENERAL

     Allianz Group companies are involved in legal, regulatory and arbitration
proceedings in Germany and in a number of foreign jurisdictions, including the
United States, involving claims by and against them which arise in the ordinary
course of their businesses, including in connection with their activities as
insurers, employers, investors and taxpayers. While it is not feasible to
predict or determine the ultimate outcome of all pending or threatened legal,
regulatory and arbitration proceedings, management does not believe that the
outcome of these proceedings, including the litigation and the Holocaust-related
matters discussed below, will have a material adverse effect on the Group's
financial position or results of operations.

LITIGATION

     In March 2001, a consolidated amended class action complaint, In re
Deutsche Telekom Securities Litigation, was brought against Dresdner Bank and
others in the United States District Court for the Southern District of New York
by purported purchasers of Deutsche Telekom American Depositary Shares (ADSs)
issued pursuant to a registration statement on Form F-3 filed by Deutsche
Telekom with the Securities and Exchange Commission on May 22, 2000 and pursuant
to a prospectus dated June 17, 2000. Dresdner Bank, which was one of the
underwriting syndicate's joint global coordinators, was one of the named
defendants. The complaint alleges that the offering prospectus contained
material misrepresentations and/or omissions relating to Deutsche Telekom. The
management of Dresdner Bank believes the complaint is without merit insofar as
it relates to Dresdner Bank and intends to defend itself vigorously in this
matter.

     In August 2001, the European Commission initiated antitrust proceedings
pursuant to Article 81 of the EU Treaty against various banks, including
Dresdner Bank, in connection with alleged agreements to set prices for the
exchange of foreign currencies within the EU. In December 2001, pursuant to
these proceedings, the European Commission imposed a fine of E28 million on
Dresdner Bank. The management of Dresdner Bank believes these proceedings are
without merit as they relate to Dresdner Bank. In February 2002, Dresdner Bank
initiated proceedings against the European Commission in the Court of First
Instance of the European Community.

     On November 5, 2001, a lawsuit, Silverstein v. Swiss Re International
Business Insurance Company Ltd., was filed against certain insurers and
reinsurers, including Allianz Insurance Co., in the United States District Court
for the Southern District of New York seeking a determination that the terrorist
attack of September 11, 2001 on the World Trade Center constituted two separate
occurrences under the alleged terms of various coverages. Allianz Insurance Co.
has also filed suit against Silverstein on January 2, 2002 in connection with
the coverage issues arising from the September 11, 2001 attack on the World
Trade Center, and these and other related suits have been consolidated for
discovery and other purposes. Based on the policy wording at issue, we believe
that the basis of Allianz Insurance Co.'s claim is sound, and that the
Silverstein claims are without merit insofar as they relate to Allianz Insurance
Co.

     A lawsuit filed against Allianz AG in October 2000 seeking a determination
with respect to compensation for profit participation certificates based on the
market price of Allianz AG ordinary

                                       167
<PAGE>

shares was dismissed in a judgment handed down by the Munich district court
(Landgericht) on July 5, 2001. For more information concerning the profit
participation certificates, see Note 17 to our consolidated financial
statements.

HOLOCAUST-RELATED MATTERS

     In July 2000, the governments of Germany and the United States signed an
Executive Agreement (or the Executive Agreement) meant to secure a comprehensive
and enduring resolution with respect to Holocaust-related claims brought against
German companies and their non-German subsidiaries. Pursuant to the Executive
Agreement, after being notified that a Holocaust-related claim has been asserted
in a U.S. federal or state court against a German company, the U.S. government
shall inform the court through a statement of interest that it is in the foreign
policy interests of the United States for the Foundation for Remembrance,
Responsibility and the Future (or the Foundation) described below to be the
exclusive remedy and forum for resolving such claims against German companies
and their subsidiaries, and that dismissal of such claims by U.S. federal and
state courts is in the foreign policy interest of the United States.

     The U.S. government has consented to use its best efforts to achieve
similar objectives with respect to legislation that has been implemented by the
states of the United States since 1998, requiring insurance companies to report
the status of policies sold in Europe prior to and during World War II. Some of
these statutes provide for license suspension in the event of non-compliance.
This legislation has been challenged primarily on constitutional grounds in
federal courts in Florida and California by individual insurance companies and
in addition, in California by the American Insurance Association. On October 2,
2001, the United States Court of Appeals for the Eleventh Circuit struck down
the reporting provisions of the Florida statute as unconstitutional. The period
for appeal of this decision has expired. In October 2001, the United States
District Court for the Eastern District of California struck down the California
statute as unconstitutional. An appeal of the Court's decision is currently
pending before the United States Court of Appeals for the Ninth Circuit.

     In August 2000, the German government enacted legislation (or the
Foundation Law) implementing the Foundation, which was funded with approximately
E5.1 billion in equal parts from the German government and German companies.
Eligible claims, including costs, are covered under the provisions of the
Foundation Law. The Foundation began to distribute funds in mid-2001.

     Based on the Executive Agreement and statements of interest, individual
actions and purported class actions previously filed in the United States
against Allianz AG and its subsidiaries, including Dresdner Bank, were dismissed
in 2000 and early 2001. On February 23, 2001, a new purported class action was
filed in the United States District Court for the Central District of
California. This action, Anderman v. Federal Republic of Austria, names as
defendants, among others, Allianz Leben, Fireman's Fund and RAS. In December
2001, pursuant to a motion to transfer, the action was transferred to the United
States District Court for the District of New Jersey for inclusion in the
consolidated pretrial proceedings established there. On February 1, 2002, the
United States government reaffirmed its statement of interest previously filed
with the Court. Upon a motion of the plaintiff, the action was dismissed without
prejudice on May 30, 2002. On June 21, 2001, Dresdner Bank was served with
process in a Holocaust-related action, Ungaro-Benages v. Dresdner Bank, filed in
the United States District Court for the Southern District of Florida. On
January 18, 2002, the United States government filed a statement of interest
with the Court. On May 31, 2002, Dresdner Bank was served with process in an
additional Holocaust-related action, Widerynski v. Dresdner Bank, filed in the
Superior Court of California, County of Los Angeles. On June 20, 2002, a new
Holocaust-related action, Gross v. German Foundation Industrial Initiative, was
filed in the United States District Court for the

                                       168
<PAGE>

District of New Jersey against Allianz AG, Dresdner Bank and other members of
the initiative that led to the implementation of the Foundation.

                                DIVIDEND POLICY

     Allianz AG normally declares dividends at the annual general assembly of
shareholders and has historically paid these dividends once a year. Under
applicable German law, dividends may be declared and paid only from balance
sheet profits as shown in the German statutory annual financial statements of
Allianz AG. For each fiscal year, the management board approves the annual
financial statements and submits them to the supervisory board with its proposal
as to the appropriation of the annual profit. This proposal will set forth what
amounts of the annual profit should be paid out as dividends, transferred to
capital reserves, or carried forward to the next fiscal year. Upon approval by
the supervisory board, the management board and the supervisory board submit
their combined proposal to the shareholders at the shareholders' assembly. The
general assembly of shareholders ultimately determines the appropriation of the
annual profits, including the amount of the annual dividends. Shareholders
generally participate in distributions of any dividends in proportion to the
number of their ordinary shares. Any dividends declared by Allianz AG will be
paid in euro.

     For information regarding annual dividends paid from 1997 through 2001, see
"Key Information -- Dividends."

                              SIGNIFICANT CHANGES

     For a description of significant developments since the date of the annual
financial statements included in this annual report, see Note 44 to the
consolidated financial statements.

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<PAGE>

ITEM 9.  THE OFFER AND LISTING

                                TRADING MARKETS

     The principal trading market for the ordinary shares is the Frankfurt Stock
Exchange. The ordinary shares also trade on the other German stock exchanges in
Berlin, Bremen, Dusseldorf, Hamburg, Hanover, Munich and Stuttgart, as well as
the stock exchanges in London, Paris and Zurich. The ADSs of Allianz AG, each
representing one-tenth of an ordinary share, trade on the New York Stock
Exchange under the symbol "AZ." See also "Major Shareholders and Related Party
Transactions -- Major Shareholders."

                            MARKET PRICE INFORMATION

     The table below sets forth, for the periods indicated, the high and low
closing sales prices on the Frankfurt Stock Exchange for the ordinary shares of
Allianz AG as reported by Xetra. Since January 4, 1999, the first official
trading day of 1999, the prices of shares traded on German stock exchanges,
including the ordinary shares of Allianz AG, have been quoted in euros. In order
to achieve comparability with the sales prices quoted in Deutsche marks during
the relevant periods in 1997 and 1998, the sales prices indicated for those
periods have been converted into euros at the official conversion rate of
DM1.95583 = E1.00. The table also shows, for the periods indicated, the highs
and lows of the DAX. See the discussion under "Exchange Rate Information" for
information with respect to rates of exchange between the U.S. dollar and the
Deutsche mark (translated into euros at the official conversion rate of
DM1.95583 = E1.00) and the U.S. dollar and the euro applicable during the
periods set forth below.

<Table>
<Caption>
                                                              PRICE PER
                                                           ORDINARY SHARE           DAX
                                                           ---------------   -----------------
                                                            HIGH     LOW      HIGH       LOW
                                                           ------   ------   -------   -------
                                                                 (E)
<S>                                                        <C>      <C>      <C>       <C>
ANNUAL HIGHS AND LOWS
1997.....................................................  245.6    135.4    4,438.9   2,848.8
1998.....................................................  348.2    216.4    6,171.4   3,896.1
1999.....................................................  348.0    237.4    6,958.1   4,678.7
2000.....................................................  440.9    316.3    8,065.0   6,200.7
2001.....................................................  397.0    205.3    6,795.1   3,787.2
2002 (until June 17, 2002)...............................  286.8    205.3    5,462.6   4,303.9
</Table>

                                       170
<PAGE>

<Table>
<Caption>
                                                              PRICE PER
                                                           ORDINARY SHARE           DAX
                                                           ---------------   -----------------
                                                            HIGH     LOW      HIGH       LOW
                                                           ------   ------   -------   -------
                                                                 (E)
<S>                                                        <C>      <C>      <C>       <C>
QUARTERLY HIGHS AND LOWS
1999
First quarter............................................  346.5    267.6    5,443.6   4,678.7
Second quarter...........................................  302.4    248.1    5,468.7   4,914.6
Third quarter............................................  293.9    237.0    5,652.0   4,978.5
Fourth quarter...........................................  342.5    271.0    6,958.1   5,124.6
2000
First quarter............................................  433.5    316.0    8,065.0   6,474.9
Second quarter...........................................  441.2    363.0    7,555.9   6,834.9
Third quarter............................................  415.6    354.5    7,480.1   6,682.9
Fourth quarter...........................................  414.1    362.0    7,136.3   6,200.7
2001
First quarter............................................  397.0    307.3    6,795.1   5,388.0
Second quarter...........................................  353.5    297.9    6,278.9   5,553.5
Third quarter............................................  342.5    205.3    6,109.5   3,787.2
Fourth quarter...........................................  286.0    244.0    5,271.3   4,240.0
2002
First quarter............................................  286.8    234.5    5,462.6   4,745.6
Second quarter (until June 17, 2002).....................  280.8    205.3    5,397.3   4,303.9
MONTHLY HIGHS AND LOWS
2001
December.................................................  275.0    253.0    5,271.3   4,909.4
2002
January..................................................  271.0    253.6    5,318.7   4,984.2
February.................................................  261.0    234.5    5,097.1   4,745.6
March....................................................  286.8    259.1    5,462.6   5,097.4
April....................................................  280.8    261.5    5,397.3   5,000.4
May......................................................  261.5    235.0    5,072.4   4,762.0
June (until June 17, 2002)...............................  235.1    205.3    4,748.0   4,303.9
</Table>

     On June 17, 2002, the closing sale price per Allianz AG ordinary share on
Xetra was E213.9, which was equivalent to $201.9 per ordinary share, translated
at the noon buying rate for euros on such date.

     Based on turnover statistics supplied by Bloomberg, the average daily
volume of the ordinary shares of Allianz AG traded on the Frankfurt Stock
Exchange between January 1 and June 17, 2002 was 920,365.

                                       171
<PAGE>

                     TRADING ON THE NEW YORK STOCK EXCHANGE

     Official trading of Allianz AG ADSs on the New York Stock Exchange
commenced on November 3, 2000. Allianz AG ADSs trade under the symbol "AZ."

     The following table sets forth, for the periods indicated, the high and low
closing sales prices per Allianz AG ADS as reported on the New York Stock
Exchange Composite Tape:

<Table>
<Caption>
                                                              PRICE PER ADS
                                                              -------------
                                                              HIGH     LOW
                                                              -----   -----
                                                                   ($)
<S>                                                           <C>     <C>
ANNUAL HIGHS AND LOWS
2000 (from November 3, 2000)................................  37.5    33.4
2001........................................................  37.6    18.7
2002 (until June 17, 2002)..................................  25.2    20.7
QUARTERLY HIGHS AND LOWS
2000
Fourth quarter (from November 3, 2000)......................  37.5    33.4
2001
First quarter...............................................  37.6    27.0
Second quarter..............................................  30.2    26.2
Third quarter...............................................  29.9    18.7
Fourth quarter..............................................  25.4    22.2
2002
First quarter...............................................  25.2    20.7
Second quarter (until June 17, 2002)........................  25.1    21.9
MONTHLY HIGHS AND LOWS
2001
December....................................................  24.7    22.2
2002
January.....................................................  24.3    21.9
February....................................................  22.7    20.7
March.......................................................  25.2    22.8
April.......................................................  25.1    23.5
May.........................................................  24.0    22.2
June (until June 17, 2002)..................................  23.5    21.9
</Table>

     On June 17, 2002, the closing sales price per Allianz AG ADS on the New
York Stock Exchange as reported on the New York Stock Exchange Composite Tape
was $22.3.

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<PAGE>

ITEM 10.  ADDITIONAL INFORMATION

     Information relating to Allianz AG's memorandum and articles of association
is incorporated in this annual report by reference to Allianz AG's Registration
Statement on Form 20-F (File No. 1-15154) as filed with the SEC on October 31,
2000.

                              OBJECTS AND PURPOSES

     The objects and purposes of Allianz AG as described in article 1, paragraph
2 of our articles of association are to head an insurance group that is active
in all classes of private insurance in Germany and abroad, and to hold
participations in German and non-German insurance companies, industrial
companies, investment companies and other enterprises. Allianz AG is active in
the investment sector as well as in the agency and service-provision business.
As a reinsurer, Allianz AG primarily assumes insurance business from its Group
companies and from other companies in which it holds direct or indirect
participations.

     The management board and supervisory board of Allianz AG have proposed that
the annual general meeting of shareholders on June 12, 2002 amend article 1,
paragraph 2 of Allianz AG's articles of association to provide that the objects
and purposes of Allianz AG are to direct an international group of companies
that are active in the areas of insurance, banking, asset management and other
financial, consulting and similar services, and to hold ownership interests in
insurance companies, banks, industrial companies, investment companies and other
companies.

                                 SHARE CAPITAL

     The following is a summary of material information concerning the share
capital of Allianz AG. This summary is not complete and is qualified by
reference to Allianz AG's articles of association and German law as in effect at
the date of this annual report. Copies of the articles of association are
publicly available from the Commercial Register in Munich or in German- and
English-language versions at our headquarters, and an English translation has
been filed with the Securities and Exchange Commission in the United States.

                                    GENERAL

     Allianz AG is a stock corporation organized in the Federal Republic of
Germany under the German Stock Corporation Act. It is registered in the
Commercial Register in Munich, Germany under the entry number HR B 7158.

     The share capital of Allianz AG consists of ordinary shares without par
value. As of June 7, 2002, the issued share capital of Allianz AG was
682,055,680, divided into 266,428,000 registered shares, of which 242,986,892
shares were outstanding. See also "Major Shareholders and Related Party
Transactions -- Major Shareholders."

                     SHARE CAPITAL INCREASES AND DECREASES

     Allianz AG has several categories of authorized capital. The shareholders
have approved the following authorized capital for issuance by the management
board (with the approval of the supervisory board) of new registered shares:

     - Up to E300,000,000 in the aggregate on one or more occasions up to July
       10, 2006 by issuing new registered no-par shares against contributions in
       cash or in kind, of which amount E300,000,000 remain as of June 17, 2002.
       The management board is authorized, upon the approval of the supervisory
       board, to exclude shareholders' preemptive rights

                                       173
<PAGE>

       when shares are issued against contributions in kind. Whenever shares are
       issued against contributions in cash, the shareholders must be granted
       preemptive rights, except that the management board may, upon the
       approval of the supervisory board, exclude shareholders' preemptive
       rights in the case of a capital increase against contributions in cash
       when the issue price is not substantially lower than the market price,
       subject to certain additional limitations in accordance with the German
       Stock Corporation Act.

     - Up to E8,193,507.84 in the aggregate on one or more occasions up to July
       10, 2006 by issuing new registered no-par shares against contributions in
       cash, of which amount E8,193,507.84 remain as of June 17, 2002. The
       management board is authorized, upon the approval of the supervisory
       board, to exclude shareholders' preemptive rights in order to issue
       shares to the employees of Allianz AG and its Group companies.

     The shareholders have also authorized the management board to increase, up
to July 7, 2003, the share capital by an amount not exceeding E2,556,459.41 by
issuing registered shares, none of which has been issued as of June 17, 2002.
The management board may exclude the shareholder preemptive rights as to these
shares in order to grant bearers of conversion privileges or option rights
issued by Allianz AG or its group member companies a right to subscribe to that
number of new shares in future cash capital increases to which they would be
entitled on exercising their option right or conversion privilege.

     The shareholders have conditionally increased the share capital by an
aggregate amount of E50,000,000.00. The conditional increase in capital will be
carried out only to the extent that bearers of convertible bonds or of warrants
from option bonds issued by Allianz AG, or by majority owned direct or indirect
group subsidiaries, pursuant to the authorization approved by the annual general
meeting of shareholders on July 11, 2001 for the period up to July 10, 2006,
exercise their conversion and/or option rights, or to the extent that holders of
mandatory convertible bonds fulfill their conversion obligation, and insofar as
no treasury shares are delivered to the holders of the bonds.

     With respect to purchases of our own shares, see Note 15 to our
consolidated financial statements.

                               MATERIAL CONTRACTS

     For information on material contracts to which Allianz AG or any of its
subsidiaries was a party in the preceding two years, see "Major Shareholders and
Related Party Transactions -- Related Party Transactions."

                               EXCHANGE CONTROLS

     At present, Germany does not generally restrict the movement of capital,
except with respect to certain countries subject to embargoes in accordance with
applicable resolutions adopted by the United Nations or the European Union.
However, for statistical purposes only, every individual or corporation residing
in Germany (a "resident") must report to the German Central Bank (Bundesbank),
subject only to certain immaterial exceptions, any payment received from or made
to an individual or a corporation resident outside Germany (or a "non-resident")
if such payment exceeds the equivalent of E12,500. German corporations are also
required to notify the Bundesbank if a non-resident of Germany acquires more
than 10% of the corporation's equity. In addition, residents must report any
claims against or any liabilities payable to non-residents if such claims or
liabilities, in the aggregate, exceed the equivalent of E5 million during any
one calendar month. Residents must also report any direct investment outside
Germany if the investment exceeds 10% of the foreign corporation's equity.

                                       174
<PAGE>

     Other than as described above, there is no limitation on the right of
non-resident or foreign owners to receive dividends or other payments relating
to the ordinary shares or the ADSs permitted or granted by German law. Various
national, state and other laws relating to the acquisition of "control" of
Allianz AG's insurance and banking subsidiaries may impose limitations on the
ability to acquire ordinary shares or ADSs beyond specified thresholds. In
addition, some national laws may authorize investigation of certain money
transfers. See "Information on the Company and Operating and Financial Review
and Prospects -- Regulation and Supervision -- Acquisition Control Matters."

                                    TAXATION

                                GERMAN TAXATION

     The following discussion is a summary of the material German tax
consequences for beneficial owners of shares or ADSs who are (i) not German
residents for German income tax purposes (i.e., persons whose residence,
habitual abode, statutory seat or place of effective management and control is
not located in Germany) and (ii) whose shares do not form part of the business
property of a permanent establishment or fixed base in Germany. Throughout this
section we refer to these owners as "Non-German Holders."

     This summary is based on German tax laws and typical tax treaties to which
Germany is a party as they are in effect on the date hereof and is subject to
changes in German tax laws or such treaties. This summary also reflects changes
resulting from the German Tax Reduction Act (which we refer to as the German Tax
Reform) approved by the German legislature on July 14, 2000. Most changes out of
the German Tax Reform were implemented effective January 1, 2001.

     The following discussion does not purport to be a comprehensive discussion
of all German tax consequences which may be relevant for Non-German Holders. You
should consult your tax advisor regarding the German federal, state and local
tax consequences of the purchase, ownership and disposition of shares or ADSs
and the procedures to follow for the refund of German taxes withheld from
dividends.

TAXATION OF THE COMPANY IN GERMANY

     As a result of the German Tax Reform, effective January 1, 2001, German
corporations with a fiscal year that equals the calendar year, including Allianz
AG, are subject to a corporate income tax rate of 25%. The solidarity surcharge
of 5.5% on the net assessed corporate income tax has been retained, so that the
corporate income tax and the solidarity surcharge, in the aggregate, amount to
26.375%.

     In addition, German corporations are subject to profit-related trade tax on
income, the exact amount of which depends on the municipality in which the
corporation maintains its business establishment(s). Trade tax on income is a
deductible item in computing the corporation's tax base for corporate income tax
purposes.

TAXATION OF DIVIDENDS

     One major change resulting from the German Tax Reform is the abolition of
the corporate income tax credit system and the introduction of a classic
corporate tax system.

     Under the new system, a tax credit is no longer attached to the dividends.
To avoid multiple levels of taxation in a corporate chain, the new law provides
for an exemption comparable to a full dividend received deduction for
inter-corporate dividends at the level of a German corporate shareholder. German
resident individuals are required to recognize 50% of the dividends received as
taxable income. Dividends received from non-qualifying participations, which are
participations of less than 10%, are subject to trade tax on income. Certain
transition rules apply in connection

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with the change from the corporate income tax credit system in effect in 2000 to
the new system. Dividend distributions paid in 2001 by Allianz AG for the
financial year 2000 or earlier years remain subject to the corporate income tax
credit system. The new system applies, however, to dividend distributions paid
by Allianz AG for the financial year 2001 and subsequent years.

IMPOSITION OF WITHHOLDING TAX

     Dividend distributions by a German corporation in 2001 were subject to a
25% withholding tax. In addition, a solidarity surcharge at a rate of 5.5% on
the withholding tax was levied such that the aggregate withholding from
dividends was 26.375% of the declared dividend.

     For dividend distributions made on or after January 1, 2002 by Allianz AG,
the withholding tax has been reduced to 20% as a result of the German Tax
Reform. The solidarity surcharge of 5.5% on the withholding tax has been
retained, resulting in a total withholding from dividends of 21.1%.

     If you are a Non-German Holder, the withholding tax rate may be reduced in
accordance with an applicable income tax treaty. Under most income tax treaties
to which Germany is a party, the rate of dividend withholding tax is reduced to
15%. Given a reduction of dividend withholding tax to 15% under an applicable
income tax treaty, a Non-German Holder may apply for a refund of 11.375% of the
declared dividend for dividend distributions subject to aggregate withholding of
26.375%. As a result of the German Tax Reform, for dividend distributions paid
on or after January 1, 2002 by Allianz AG, a Non-German Holder is able to apply
for a refund of 6.1% of the declared dividend subject to aggregate withholding
of 21.1%, provided the dividend withholding tax under the applicable treaty is
15%. The application for refund must be filed with the German Federal Tax Office
(Bundesamt fur Finanzen, Friedhofstrasse 1, D-53221 Bonn, Germany). The relevant
forms can be obtained from the German Federal Tax Office or from German
embassies and consulates.

SPECIAL TAX RULES FOR U.S. SHAREHOLDERS

     Under the U.S-German Income Tax Treaty (or the Treaty), the withholding tax
rate is reduced to 15% of the gross amount of the dividends. As long as the
corporate income tax credit system was applicable to dividends paid by Allianz
AG to individual German shareholders, eligible U.S. holders, as defined below
under "United States Taxation," were entitled to an additional reduction in
German dividend withholding tax equal to 5% of the declared dividend. As a
result of the German Tax Reform, the corporate income tax credit system was
available for German shareholders for the last time in 2001 for dividends paid
for the financial year 2000 or prior years by German corporations (including
Allianz AG) whose fiscal year is the calendar year. Therefore, dividend payments
made in 2001 by Allianz AG for the financial year 2000 were subject to the
additional 5% withholding tax reduction at the level of an eligible U.S. holder,
whereas dividends paid in 2002 and subsequent years will be subject to the
general withholding tax rate under the Treaty of 15%.

     For dividend distributions made by Allianz AG in 2001 for the financial
year 2000 or prior years, the following procedure was applicable: At the level
of the company the dividend was subject to a 25% withholding tax plus a
solidarity surcharge of 5.5% on the withholding tax, resulting in an aggregate
withholding of 26.375% of the declared dividend. The eligible U.S. holders were
entitled to claim a refund of a portion of the German withholding tax, and will
be treated as receiving additional dividend income from us under the mechanism
described below. Under the Treaty, an eligible U.S. holder is entitled to
receive a payment from the German tax authorities equal to 16.375% of the
declared dividend. The Treaty provides that a portion of this payment (i.e.,
11.375% of the declared dividend) is treated for U.S. tax purposes as a
reduction in German withholding tax to the generally applicable treaty rate of
15%, and the remainder of the payment (i.e., 5% of the declared dividend) is
treated as the net amount of an

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additional dividend of 5.88% of the declared dividend that has been subject to a
15% German withholding tax. Accordingly, if we declared a dividend of 100, an
eligible U.S. holder initially would receive 73.625 (100 minus the 26.375%
withholding tax). The eligible U.S. holder then could claim a refund from the
German tax authorities of 16.375 and thereby would receive a total cash payment
of 90 (i.e., 90% of the declared dividend). Thus, the eligible U.S. holder would
be deemed to have received a dividend of 105.88 in total, consisting of the
declared dividend of 100 plus the deemed additional dividend of 5.88 that is
associated with the Treaty refund, subject to German withholding tax of 15.88.

     For dividend distributions made by Allianz AG on or after January 1, 2002,
the following procedure applies: At the level of Allianz AG, the dividend is
subject to a 20% withholding tax plus a solidarity surcharge of 5.5% on the
withholding tax, resulting in an aggregate withholding of 21.1% of the declared
dividend. Eligible U.S. holders are entitled to receive a payment from the
German tax authorities equal to 6.1% of the declared dividend. Accordingly, if
we declared a dividend of 100, an eligible U.S. holder initially would receive
78.9 (100 minus the 21.1% withholding tax). The eligible U.S. holder then could
claim a refund from the German tax authorities of 6.1 and thereby receive a
total cash payment of 85 (i.e. 85% of the declared dividend). Thus, the eligible
U.S. holder would be deemed to have received a dividend of 100, subject to
German withholding tax of 15.

REFUND PROCEDURE FOR U.S. SHAREHOLDERS

     For shares and ADSs kept in custody with The Depository Trust Company in
New York or one of its participating banks, the German tax authorities have
introduced a collective procedure for the refund of German dividend withholding
tax and the solidarity surcharge thereon on a trial basis. Under this procedure,
The Depository Trust Company may submit claims for refunds payable to eligible
U.S. holders under the Treaty collectively to the German tax authorities on
behalf of these eligible U.S. holders. The German Federal Tax Office will pay
the refund amounts on a preliminary basis to The Depository Trust Company, which
will redistribute these amounts to the eligible U.S. holders according to the
regulations governing the procedure. The German Federal Tax Office may review
whether the refund was made in accordance with the law within four years after
making the payment to The Depository Trust Company. Details of this collective
procedure are available from The Depository Trust Company.

     Individual claims for refunds may be made on a special German form which
must be filed with the German Federal Tax Office at the address noted above.
Copies of such form may be obtained from the German Federal Tax Office at the
same address or from the Embassy of the Federal Republic of Germany, 4645
Reservoir Road, N.W., Washington, D.C. 20007-1998. Claims must be filed within a
four-year period from the end of the calendar year in which the dividend was
received. Holders who are entitled to a refund in excess of E150 for the
calendar year generally must file their refund claims on an individual basis.
However, the custodian bank may be in a position to make refund claims on behalf
of such holders.

     As part of the individual refund claim, an eligible U.S. holder must submit
to the German tax authorities the original bank voucher (or a certified copy
thereof) issued by the paying agent documenting the tax withheld, and an
official certification on IRS Form 6166 of its last United States federal income
tax return. IRS Form 6166 may be obtained by filing a request with the Internal
Revenue Service Center in Philadelphia, Pennsylvania, Foreign Certification
Request, P.O. Box 16347, Philadelphia, PA 19114-0447. Requests for certification
must include the eligible U.S. holder's name, Social Security or Employer
Identification Number, tax return form number, and tax period for which the
certification is requested. Requests for certifications can include a request to
the Internal Revenue Service to send the certification directly to the German
tax authorities. If no such request is made, the Internal Revenue Service will
send a certification on IRS Form 6166 to the eligible U.S. holder, who then must
submit this document with his refund claim.

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CAPITAL GAINS

     Under German domestic tax law as in effect in 2001, capital gains derived
by a Non-German Holder from the sale or other disposition of shares or ADSs are
subject to tax in Germany only if such Non-German Holder has held, directly or
indirectly, shares or ADSs representing 10% or more of the registered share
capital of the company at any time during the five-year period immediately
preceding the disposition. This participation threshold has been reduced to 1%
pursuant to the German Tax Reform in relation to capital gains derived on or
after January 1, 2002. In computing the relevant size of a Non-German Holder's
shareholding, shareholdings already existing prior to the effective date of the
German Tax Reform are also taken into account. Pursuant to the German Tax
Reform, corporate Non-German Holders are fully exempt from German tax on capital
gains derived on or after January 1, 2002 from the sale or other disposition of
shares or ADSs.

     U.S. holders that qualify for benefits under the Treaty are exempt in
Germany under the Treaty on capital gains derived from the sale or disposition
of shares or ADSs.

INHERITANCE AND GIFT TAX

     Under German law, German gift or inheritance tax will only be imposed on
transfers of shares or ADSs by a Non-German Holder at death or by way of gift,
if

     (i)  the decedent or donor, or the heir, donee or other transferee has his
          residence in Germany at the time of the transfer or with respect to
          German citizens who are not resident in Germany, if the decedent or
          donor, or the heir, donee or other transferee has not been
          continuously outside of Germany for a period of more than five years;
          or

     (ii)  the shares or ADSs subject to such transfer form part of a portfolio
           which represents 10% or more of the registered share capital of the
           company and has been held, directly or indirectly, by the decedent or
           donor, respectively, himself or together with related parties.

     The right of the German government to impose inheritance or gift tax on a
Non-German Holder may be further limited by an applicable estate tax treaty
(such as the U.S.-German Inheritances and Gifts Tax Treaty of December 3, 1980).

OTHER TAXES

     No German transfer, stamp or similar taxes apply to the purchase, sale or
other disposition of shares or ADSs by a Non-German Holder. Currently, net worth
tax is not levied in Germany.

                             UNITED STATES TAXATION

     This section describes the principal United States federal income tax
consequences of owning shares or ADSs. It applies to you only if you hold your
shares or ADSs as capital assets for tax purposes. This section does not address
all material tax consequences of owning shares or ADSs. It does not address
special classes of holders, some of whom may be subject to other rules,
including:

     - financial institutions;

     - tax-exempt entities;

     - certain insurance companies;

     - broker-dealers;

     - traders in securities that elect to mark to market;

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     - investors liable for alternative minimum tax;

     - investors that actually or constructively own 10% or more of the voting
       stock of Allianz AG;

     - investors that hold shares or ADSs as part of a straddle or a hedging or
       conversion transaction; or

     - investors whose functional currency is not the U.S. dollar.

     This section is based on the tax laws of the United States, including the
Internal Revenue Code of 1986, as amended, its legislative history, existing and
proposed regulations, and published rulings and court decisions, as currently in
effect, as well as on the Treaty. These laws are subject to change, possibly on
a retroactive basis. In addition, this section is based in part upon the
representations of the depositary and the assumption that each obligation in the
deposit agreement and any related agreement will be performed in accordance with
its terms.

     You are a "U.S. holder" if you are a beneficial owner of shares or ADSs and
you are:

     - a citizen or resident of the United States;

     - a domestic corporation;

     - an estate whose income is subject to United States federal income tax
       regardless of its source; or

     - a trust if a United States court can exercise primary supervision over
       the trust's administration and one or more United States persons are
       authorized to control all substantial decisions of the trust.

     You are an "eligible U.S. holder" if you are a U.S. holder that:

     - is a resident of the United States for purposes of the Treaty;

     - does not maintain a permanent establishment or fixed base in Germany to
       which the shares or ADSs are attributable and through which you carry on
       or have carried on business (or, in the case of an individual, perform or
       have performed independent personal services); and

     - is otherwise eligible for benefits under the Treaty with respect to
       income and gain from the shares or ADSs.

     This discussion addresses only United States federal income taxation. You
should consult your own tax advisor regarding the United States federal, state,
local, foreign and other tax consequences of owning and disposing of shares and
ADSs in your particular circumstances. In particular, you should confirm your
status as an eligible U.S. holder with your advisor and should discuss any
possible consequences of failing to qualify as an eligible U.S. holder.

     In general, and taking into account the earlier assumptions, for United
States federal income tax purposes, if you hold ADRs evidencing ADSs, you will
be treated as the owner of the shares represented by those ADSs. Exchanges of
shares for ADSs, and ADSs for shares, generally will not be subject to United
States federal income tax.

TAXATION OF DIVIDENDS

     Under the United States federal income tax laws, if you are a U.S. holder,
you must include in your gross income the gross amount of any dividend paid by
us out of our current or accumulated earnings and profits (as determined for
United States federal income tax purposes). You must include any German tax
withheld from the dividend payment and any additional dividend associated with
the Treaty refund in this gross amount even though you do not in fact receive
it. See "-- German Taxation -- Special Tax Rules for U.S. Shareholders" for an
explanation of how you compute the amount of the dividends received. The
dividend is

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ordinary income that you must include in income when you, in the case of shares,
or the depositary, in the case of ADSs, receive the dividend, actually or
constructively. The dividend will not be eligible for the dividends-received
deduction generally allowed to United States corporations in respect of
dividends received from other United States corporations. The amount of the
dividend distribution that you must include in your income as a U.S. holder will
be the U.S. dollar value of the gross dividend amount, determined at the spot
euro/U.S. dollar rate on the date the dividend distribution is includible in
your income, regardless of whether the payment is in fact converted into U.S.
dollars. Generally, any gain or loss resulting from currency exchange
fluctuations during the period from the date you include the dividend payment in
income to the date you convert the payment into U.S. dollars will be treated as
ordinary income or loss. The currency gain or loss generally will be income or
loss from sources within the United States for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and
profits, as determined for United States federal income tax purposes, will be
treated as a return of capital to the extent of your basis in the shares or ADSs
and thereafter as capital gain.

     Subject to certain limitations, the German tax withheld in accordance with
German law or the Treaty and paid over to Germany will be creditable against
your United States federal income tax liability. To the extent a refund of the
tax withheld is available to you under German law or under the Treaty, the
amount of tax withheld that is refundable will not be eligible for credit
against your United States federal income tax liability. See "-- German
Taxation -- Refund Procedure for U.S. Shareholders," above, for the procedures
for obtaining a tax refund.

     Dividends constitute income from sources outside the United States, but
generally will be "passive income" or "financial services income" which are
treated separately from other types of income for purposes of computing the
foreign tax credit allowable to you.

TAXATION OF CAPITAL GAINS

     If you are a U.S. holder and sell or otherwise dispose of your shares or
ADSs, you will recognize capital gain or loss for United States federal income
tax purposes equal to the difference between the U.S. dollar value of the amount
that you realize and your tax basis, determined in U.S. dollars, in your shares
or ADSs. Capital gain of a non-corporate U.S. holder is generally taxed at a
maximum rate of 20% where the property is held more than one year, and 18% where
the property is acquired after December 31, 2000 and held for more than five
years. Additionally, gain or loss will generally be treated as arising from
sources within the United States for foreign tax credit limitation purposes.

                              DOCUMENTS ON DISPLAY

     Allianz AG is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with these requirements, Allianz
AG files reports and other information with the Securities and Exchange
Commission. These materials, including this annual report and the exhibits
thereto, may be inspected and copied at the Commission's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of the materials may
be obtained from the Commission's Public Reference Room at prescribed rates. The
public may obtain information on the operation of the Commission's Public
Reference Room by calling the Commission in the United States at 1-800-SEC-0330.
The Commission also maintains a web site at http://www.sec.gov that contains
reports, proxy statements and other information regarding registrants that file
electronically with the Commission. Allianz AG's annual reports and some of the
other information submitted by Allianz AG to the Commission may be accessed
through this web site. In addition, material filed by Allianz AG can be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.

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ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As providers of financial services, we consider risk management one of our
core competencies. As a result, risk management is an integral part of our
controlling process, which involves identifying, measuring, aggregating and
managing risks, and the risk management process is used to determine how capital
is allocated to the Group's divisions for performance and risk measurement
purposes.

                          RISK MANAGEMENT ORGANIZATION

RESPONSIBILITIES

     In our business, successful risk management means controlling risks in
order to increase the value of the Allianz Group. This is done through
risk-based allocation of capital resources and activities required to achieve
sustainable growth, and the management board formulates the business objectives
of the Allianz Group on the basis of return and risk criteria. Our risk-control
strategy involves assignment of responsibility for risk management to local
entities, which operate within the legal frameworks applicable in their
respective locations.

     This decentralized approach is complemented by centralized responsibility.
This is necessary because we need to deal with an accumulation of global risks
which can considerably increase potential risk exposure. As a result, central
controls are essential. Group Controlling assesses the Allianz Group's risk
exposure on the basis of both local and global risks. The results of these
analyses are then submitted to senior management. Risk management activities are
supervised by both internal auditors and compliance personnel, and by external
parties such as auditors and regulators.

RISK CATEGORIES

     We divide our risk exposures into the following individual risk categories,
which form the framework for risk controlling across our business segments:

     ACTUARIAL RISKS.  These are based on the technical requirements of our
insurance business, where we have to guarantee future policy commitments, which
must be calculated in advance. Different actuarial risks exist in our different
insurance lines. In our property-casualty insurance business, actuarial risks
arise in circumstances where the volume of losses exceeds premiums fixed in
advance (premium risk), or the payout for claims made is higher than the
corresponding provisions (reserve risk). In our life insurance business,
actuarial risks arise because we are committed to making guaranteed long-term
payments under our policies in return for fixed insurance premiums calculated in
advance, even though the biometric data of the insured population may change
over time (e.g., longer life expectancy as a result of medical progress), which
may result in actual morbidity and mortality trends that differ from those we
anticipated at the time a policy was issued.

     Health insurance risks are treated either as property and casualty
insurance risks or as life and health insurance risks, depending on the segment
to which the health insurance is assigned in the given market.

     CREDIT AND COUNTERPARTY RISKS.  These involve potential losses that may
result from the default of a business partner. "Default" means the inability or
refusal of a counterparty, an issuer or another contracting party to meet
contractual obligations. Credit risk also includes the risk of a deterioration
of a business partner's creditworthiness. These risks also include counterparty
risks from trading activities as well as country risks in connection with
cross-border transactions and the local business of foreign units. Counterparty
risks from trading activities relate primarily to derivatives, particularly OTC
transactions, in our banking business, and, in our insurance

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business, these risks stem from the possibility that receivables may remain
unpaid, in particular those due from reinsurers.

     MARKET RISKS.  Market risks result from portfolio valuation fluctuations
due to changes in share prices, interest rates or exchange rates. Market risk
also reflects changes in the variation behavior (volatility) of prices or rates.

     In the banking area, volatility risk primarily arises in connection with
trading activities, which are shown in our banking trading portfolio. The
non-trading portfolio, which contains customer business and strategic
investments, is exposed to long-term factors, generally interest rate risk
resulting from granting long-term fixed-rate loans, which are to some extent
funded by shorter-term deposits. In addition, loans and deposits in foreign
currencies are exposed to currency risks.

     INVESTMENT RISKS.  In our insurance business, investment risks generally
include all counterparty and market risks. There is a direct link between
investments and obligations to our customers, because premium payments for our
insurance contracts are received in advance of any claims under the contracts,
and our insurance investments serve to fund the benefits provided in our
insurance products over the long term. Certain insurance product lines are
exposed to an interest guarantee risk, such as life insurance products which
must generate the guaranteed interest payments provided for in the policy terms.

     LIQUIDITY RISKS.  These can materialize under various circumstances,
including if present or future payment obligations cannot be met in full as of a
due date, or if refinancing capital can only be raised at higher rates
(refinancing risk) in the case of a liquidity crisis, or if assets can only be
liquidated below current market prices (market liquidity risk).

USE OF RISK CAPITAL MEASURES

     We control our activities through our respective local companies. Economic
Value Added (EVA) and risk capital are the most important parameters used in the
context of our risk-based controlling process.

     Risk capital is required to cover unexpected losses. Our internal model for
risk capital calculations follows the approach of the Standard & Poor's rating
agency. When measuring and analyzing risks, we distinguish between the various
risk-relevant factors in a given situation. This enables us to appraise specific
risks at various levels: first, for the Group as a whole, and second, on the
level of our operational units and their business activities.

     We back our risk capital calculations with a certain level of statistical
confidence to validate their reliability and to permit comparison. We believe
the security level of our internal models is sufficiently high to ensure that we
meet Standard & Poor's requirements of an AAA rating for the Allianz Group.

     In the insurance area, we calculate risk capital for premium, reserve,
investment and credit risks. Within these risk categories, we distinguish
between the following types of risks:

     - Actuarial risks, which in the area of property and casualty insurance
       include the premium and reserve risks for each insurance line.
       Reinsurance is considered separately. In the case of life insurance, we
       calculate the insurance provisions required.

     - Investment risks, which include market and counterparty risks. Market
       risks are subdivided by dividend-bearing instruments, interest-bearing
       instruments and real estate. Credit and counterparty risks are assessed
       on the basis of the counterparty's creditworthiness or rating class.

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     - Credit and counterparty risks in connection with reinsurance receivables.
       These risks are primarily evaluated on the basis of the financial
       strength or rating class of our reinsurance partners.

RISK CONTROLLING IN OUR INSURANCE BUSINESS

     To control risks in our insurance business, we focus on premium risks,
reserve risks, credit and counterparty risks, investment risks and liquidity
risks.

     PREMIUM RISKS.  Premium risks are controlled primarily with the help of
actuarial models used to calculate premiums and monitor claim patterns. In
addition, we develop guidelines for underwriting and pricing our insurance
contracts and insurance risks. In the case of life insurance, we concentrate
primarily on biometric risks, e.g., life expectancy, disability, illness and
long term care requirements. We also focus on risks relating to policy
persistency, e.g., the risk of future policy cancellations or lapses.

     Risk management also includes participation in scientific and technical
loss prevention. We regularly carry out technical studies for the manufacturing
and automobile industries, for example, which are designed to reduce the
probability of claims and keep losses to a minimum.

     Natural disasters such as earthquakes, storms and floods represent a
special challenge for risk management. Although they happen considerably less
frequently than other incidents, the consequences are far more extensive when,
for example, entire regions are devastated. We make use of special modeling
techniques to monitor such risks. Such techniques involve the collection of data
on earthquakes and weather patterns, which are used to simulate natural disaster
scenarios and estimate the potential for damage.

     RESERVE RISKS.  We have to establish provisions for insurance claims that
have been submitted but not yet settled or incurred but not reported. The amount
or reserves we establish is estimated on the basis of past experience as well as
through the use of statistical methods. We constantly monitor the development of
our insurance reserves and use the information we obtain to make forecasts. In
the area of life insurance, reserves are calculated using actuarial methods. In
addition to other criteria, these calculations take into account the biometric
data of the populations insured by using, for example, national mortality
tables. See "Information on the Company and Operating and Financial Review and
Prospects -- Property-Casualty Insurance Reserves" for a discussion of certain
historical data concerning the development of our property-casualty insurance
reserves.

     CREDIT AND COUNTERPARTY RISKS.  We use reinsurance to cede part of the
insurance risks we assume to the international reinsurance market when
necessary. When selecting our reinsurance partners, we consider only companies
that offer excellent security. Our Group companies use comprehensive rating
information for the active management of the credit and counterparty risks of
our reinsurers, based on public data or information gathered through internal
investigations.

     INVESTMENT RISKS.  Investments are an integral part of our insurance
business, as they ensure our ability to meet the payment commitments we make in
our insurance contracts. We regularly renew and monitor the relationship between
our insurance obligations and investment of the capital related to these
obligations, which also enables us to manage the risks arising from interest
guarantees provided to our customers.

     We monitor the market risks affecting our insurance investments by means of
sensitivity analyses and stress testing. We limit credit risks by setting high
requirements on the creditworthiness of our counterparties, by monitoring our
exposures to single obligors across different investment categories and use
limit lists to monitor other exposures.

     We selectively use derivative financial instruments such as swaps, options
and futures to manage the risk profile of equity, currency and interest rate
exposure in our insurance portfolios.

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Group insurance companies are end-users of derivatives. Our internal investment
and monitoring rules are considerably stricter than the regulations imposed by
our supervisory authorities. Market and counterparty risks arising from the use
of derivative financial instruments are subject to particularly strict control
procedures. Asset structuring and diversification are other elements in our
management of investment risk.

     LIQUIDITY RISKS.  We limit liquidity risks by reconciling our investment
portfolio with our insurance commitments, and by monitoring our cash flow from
ordinary activities.

     ORGANIZATION.  In terms of organization, we limit our investment risks
through a clear separation of management and controlling functions. Within the
Group, risk management is implemented in cooperation with local business units
through the use of a top-down, bottom-up process. The Allianz Finance Committee,
which is made up of members of the Allianz management board, delegates
far-reaching decision-making authority to regional Finance Committees, which
monitor activities in their respective regions or countries. The duties and
responsibilities at each decision-making level are defined by guidelines issued
at the Group level. These guidelines are then applied by the regional Finance
Committees, which formulate specific local investment guidelines. These are
adapted according to national legislation and the nature of the local insurance
and capital markets. Operational responsibility for investment portfolios lies
with the local insurance company operating units.

     RISK CAPITAL.  As of December 31, 2001, the risk capital, before minority
interests, allocated to our property-casualty insurance operations was E13.3
billion for actuarial risks, E1.0 billion for credit and counterparty risks and
E5.3 billion for investment risks. Risk capital allocated to our life insurance
operations was E10.3 billion as of December 31, 2001.

RISK CONTROLLING IN OUR BANKING BUSINESS

     In our banking business, we monitor and control a number of risks,
including primarily credit and counterparty risks, counterparty risks from
trading activities, country risks, market risks and liquidity risks. See
"Information on the Company and Operating and Financial Review and
Prospects -- Selected Statistical Information Relating to Our Banking
Operations" for further information concerning our bank lending, investment and
deposit portfolios.

     CREDIT AND COUNTERPARTY RISKS.  When granting credits in the banking
business, we pay particular attention to the client's creditworthiness, and
control credit risk through guidelines and credit risk committees. The ratings
of our customers and their credit engagements represent the central element used
in the approval, supervisory and control process in the area of credit and
derivatives activities. This process involves analyzing and weighing the various
creditworthiness characteristics of the customers and presenting the results in
the form of rating scales. The forecasting quality, up-to-dateness and portfolio
coverage of the rating methods used are controlled by periodic sampling and
regular reports.

     The results of these ratings are reflected in rates applied in the case of
new business. That ensures, when we formulate the conditions for contracts, the
probability of a loss due to default on the part of the counterparty and the
interest on the capital we have to set aside for such potential losses can be
taken into account.

     COUNTERPARTY RISKS FROM TRADING ACTIVITIES.  We limit these risks through
conservative selection of our trading partners, and deal only with
counterparties with high-quality credit ratings. To further reduce counterparty
risks in the derivatives area, Dresdner Bank enters into cross product netting
master agreements with its business partners, which, in the case of a defaulting
counterparty, make it possible to offset any claims and liabilities not yet due.

     COUNTRY RISKS.  We control country risks by using internal country ratings.
These ratings are based upon macroeconomic data and key qualitative indicators.
The latter take into account the

                                       184
<PAGE>

economic, social and political environment and focus on a country's ability to
make payments in foreign currencies. At present, Dresdner Bank's country rating
system includes eight risk groups.

     VAR: TRADING PORTFOLIO.  At the global level, Dresdner Bank AG and its
subsidiaries control the risks of their worldwide trading units by using the
value-at-risk (VaR) method. Value-at-risk is defined as the potential loss in
fair value which may occur during a specific period of time and with a given
confidence level. This statistical valuation tool can be applied to a range of
different financial instruments such as stocks, foreign exchange instruments or
interest rate instruments. This risk quantification model was approved by the
German Federal Banking Supervisory Authority (BaKred). One of the important
effects of this method was that the bank was able to substantially reduce the
amount of capital it must allocate for market risks in accordance with
regulatory guidelines. The VaR data presented herein only include Dresdner Bank
AG and its subsidiaries (Dresdner Bank) and do not include other banking
subsidiaries of Allianz.

     The BaKred requires that Dresdner Bank's value-at-risk take into account
potential market movements that occur within a confidence level of 99% and a
holding period of ten trading days.

     The following table below shows the VaR for the trading portfolio of
Dresdner Bank at and for the periods indicated:

<Table>
<Caption>
                                    AT               2001 ANNUAL STATISTICS               AT
                               DECEMBER 31,   ------------------------------------   DECEMBER 31,
                                   2001       MEAN VALUE   MAXIMUM(1)   MINIMUM(1)       2000
                               ------------   ----------   ----------   ----------   ------------
                                                        (E IN MILLIONS)
<S>                            <C>            <C>          <C>          <C>          <C>
Aggregate risk(2)............      147           154          252          104           114
Interest rate risk(2)........      124           107          179           62            73
Equity risk..................       64            71          173           35            72
Currency/commodity risk......       18            19           67            3            10
Diversification effect.......      (59)          (43)          --           --           (41)
</Table>

---------------

(1) Since maximum and minimum values were taken at different dates, no
    diversification effect applies.

(2) At year-end 2001, includes for the first time specific interest rate risk
    covering potential losses due to a change in the issuer specific credit
    spreads above the risk-free yield curve.

     The risks from Dresdner Bank's trading activities increased during 2001,
and in the second quarter, VaR rose sharply. This was primarily due to
increasing market volatility resulting from the interest rate decisions of the
U.S. Federal Reserve Bank and the European Central Bank. In addition, VaR
continued to increase after the terrorist attack of September 11, 2001, since
this event increased volatility even more by destabilizing world financial
markets.

     To validate the quality of the value-at-risk model, Dresdner Bank performs
regular back-testing. Assuming a constant portfolio, the value-at-risk
calculated for the current position of a given portfolio is compared to its
actual change in value on the following day. Analyses then show whether the
value at risk model used provides an adequate assessment of the risks.

     For purposes of setting internal limits and risk determination, Dresdner
Bank calculates value-at-risk with a confidence level of 95 percent and a
one-day holding period. This ensures that value-at-risk data more accurately
reflect current market developments. Trading is controlled by using market risk
limits. Current limit utilization is determined and monitored on a daily basis.

     Limits are periodically revised and adapted to take into account changes in
business structures, market situations or risk profiles. To ensure that the data
used meet the required quality and consistency criteria, they are subjected to
stringent controls.

     VAR: NON-TRADING PORTFOLIO.  Interest rate risks, which represent the
primary part of the market risk of the Dresdner Bank non-trading portfolio, are
controlled by using sensitivity and

                                       185
<PAGE>

VaR indicators (99 percent confidence level, 10-day holding period). As in the
case of trading risks, Dresdner Bank contains its exposure by using limits.
Taking into account portfolio effects, the interest rate VaR from Dresdner
Bank's non-trading portfolio at December 31, 2001 was E95.3 million. Currency
risks in the non-trading portfolio are limited by applying a principle that
involves refinancing or reinvesting all loans and deposits in foreign currencies
in the same currency with matching maturities.

     LIQUIDITY RISKS.  Dresdner Bank utilizes group-wide liquidity management
guidelines, which establish basic principles as well as emergency procedures. In
addition to satisfying legal requirements, it sets even stricter internal
standards concerning liquidity risk limits and other control tools.

     ORGANIZATION.  At the organizational level, risk management and risk
controlling are strictly separated on the basis of the principle of dual
control. Dresdner Bank's risk management sets the limits for the company's
different activities that are exposed to risks. This is done in accordance with
a general framework approved by the management board.

RISK CONTROL IN ASSET MANAGEMENT

     Risk control in the area of asset management is an integral part of the
processes of the local units or the investment platform. The Corporate Center
ensures that Group-wide standards for asset management are applied at the local
level. The individual asset management companies have the possibility of
assessing the portfolio risks of the customer assets they manage at all times by
using analytical tools specifically adapted to the risk profile of the
instruments concerned. At the same time, the performance of the various product
lines is periodically monitored and analyzed at the Group level.

                            MARKET RISK MEASUREMENT

SENSITIVITY ANALYSIS

     The Group uses a risk modeling technique known as "sensitivity analysis" to
show the implications of changes in market conditions on the financial
instruments it holds in its trading and non-trading portfolios. This enables us
to make comparisons across the business segments. Sensitivity analysis measures
the potential loss due to changes in fair values resulting from hypothetical
changes in equity prices, interest rates and foreign currency rates at a certain
point in time. The values from sensitivity analysis represent the risk inherent
in each position under certain market conditions. Due to the standardization of
the sensitivity analysis in this risk assessment, diversification effects are
not considered.

ASSUMPTIONS

     For the calculation of equity price sensitivity, a decrease in stock prices
of 20% is estimated. Previously, we had assumed a 10% downward movement in stock
prices for calculating equity price sensitivity. However, given the market
volatility experienced in 2001 and consistent with our risk management approach,
we have assumed a 20% decrease in stock prices for 2001 and prior year
calculations of equity price sensitivity.

     Interest rate risk sensitivity is estimated under the assumption of a 100
basis point increase in interest rates. If interest rates rise, the fair values
of interest-sensitive instruments such as bonds, loans and mortgages may fall,
and do so to a different magnitude depending on the respective maturity, coupon
or other characteristics of a particular instrument. The table below shows the
aggregate effect on the fair value of all of the Group's interest-sensitive
investments, assuming a 100 basis point parallel shift that occurs
simultaneously and instantaneously across all countries, markets and maturities.

                                       186
<PAGE>

     Calculated similarly to equities, foreign exchange risk is estimated by
assuming a 10% decrease in all non-euro currency exchange rates against the
euro. Consequently, the aggregate fair value sensitivity shown in the table
below illustrates the effect on fair values if, simultaneously and uniformly,
all non-euro currencies lose 10% of their value relative to the euro.

     The Group believes that the scenarios chosen make reasonable assumptions
based on past observations about market conditions. The Group recognizes that
market changes exceeding 20% or 100 basis points, respectively, are possible but
considers the resulting estimates it uses to offer a fair view on the risk
inherent in its positions. While these assumptions are intentionally simplified
(for example, they assume static portfolios and do not take into account that
market prices under normal conditions change neither simultaneously nor by the
same magnitude), we believe they provide a useful framework for our risk
management analysis and support our strategic decisions.

LIMITATIONS

     While the Allianz Group considers sensitivity analysis to provide its
managers with a valid estimation of market risk exposures, it recognizes that
there are certain limitations in its use.

     Changes of prices in a diversified portfolio have offsetting effects, since
different assets revalue in different directions or in different magnitudes to
marketplace changes. This is known as the "diversification effect" of holding a
portfolio consisting of different assets. Diversification is not taken into
account in the Group's risk estimates due to the generalized methodology of a
sensitivity analysis. The actual changes in the fair value of the Group's assets
may be different than those shown here.

     Additionally, routine daily business activity entails a certain amount of
change in the portfolios' composition as bonds mature or as portfolio managers
buy or sell investments. As a result, the actual sensitivity of the Allianz
Group's portfolio will vary at any particular moment in time, and the risk of
loss from equity, interest rate, foreign exchange or other risks cannot be
eliminated, but can be quantified and monitored.

     The Allianz Group pursues continuous growth through acquisitions, and
complete integration of new entities into the Group-wide risk measurement and
reporting structure is a complex process, particularly for larger organizations.
Integration is normally achieved in a reasonable amount of time with priority
based on the size of a new entity's contribution to risk.

     Finally, the Group's sensitivity analyses are estimates based on a fixed
point in the past. Nearly all of the Group's assets and liabilities are subject
to market risk from fluctuating equity, interest and foreign exchange market
values. These fluctuations cannot be foreseen and can occur very suddenly. The
quantitative risk measures provided by the model and given here are a snapshot,
describing the potential losses to investments under a particular set of
assumptions and parameters, which, though "reasonably possible," may differ
considerably from actual losses that may be experienced in the future.

                  ALLIANZ GROUP MARKET RISK EXPOSURE ESTIMATES

TRADING PORTFOLIOS

     The trading portfolios of the Group and resulting market risks relate
primarily to our banking segment. In our worldwide trading activities we use
financial derivatives as non-standardized financial instruments for the
individual management of market risks, and as a component for structured
financial transactions. We use derivatives to manage our proprietary trading
portfolio. The focus of our activities in derivative trading is in the area of
interest bearing financial instruments, predominately interest rate swaps. We
also use currency and credit derivatives as well as equity/index derivatives.

                                       187
<PAGE>

     INSURANCE OPERATIONS.  In our insurance we generally do not engage in
trading activities, but with the adoption of IAS 39, effective January 1, 2001,
derivative instruments that do not meet IAS hedge accounting standards are
treated as trading derivatives. As a result of this new accounting rule, the
trading portfolio tables below show significant impact from trading not only for
our banking business but also for our insurance business. Derivatives used in
our insurance operations, however, are principally used for portfolio hedging
and not for trading purposes.

     BANKING OPERATIONS.  Our banking segment is active in trading equities,
interest rate instruments and foreign exchange and commodities. Our banking
segment uses derivatives in its trading portfolios primarily to meet customer
demand as well as to hedge market risk. Furthermore, derivatives are also used
to take advantage of market opportunities. In terms of volume, the primary
derivative products we use are interest rate swaps, futures and options as well
as foreign exchange swaps and equity related derivatives.

     The primary exposures in foreign currencies are United States dollars and
pound sterling.

     The following table shows the sensitivity analysis of the market risk in
our material trading portfolio of the Allianz Group. Certain financial
instruments are included in more than one risk category, e.g., equities, in
non-euro currencies are affected by changes in both stock prices and exchange
rates. The Group's portfolios were all considered non-trading in the year 2000,
prior to the adoption of IAS 39 and our acquisition of Dresdner Bank.

 SENSITIVITY ANALYSIS BY BUSINESS SEGMENT AND RISK CATEGORY: TRADING PORTFOLIOS
                                 (IN E MILLION)

<Table>
<Caption>
                                                          AT DECEMBER 31, 2001
                                        ---------------------------------------------------------
                                        PROPERTY-
                                        CASUALTY    LIFE/HEALTH                  ASSET
                                        INSURANCE    INSURANCE    BANKING(1)   MANAGEMENT   TOTAL
                                        ---------   -----------   ----------   ----------   -----
<S>                                     <C>         <C>           <C>          <C>          <C>
Equity price risk(2)..................     300         (200)         (200)                  (100)
Interest rate risk....................                               (400)                  (400)
Foreign exchange risk(3)..............    (100)         100           300                    300
</Table>

---------------

(1) Includes for the first time the Dresdner Bank Group.

(2) Amounts do not take into account the Allianz Group's unconsolidated
    subsidiaries, or affiliated enterprises, joint ventures and associated
    enterprises.

(3) Amounts take into account financial instruments not denominated in euros.

NON-TRADING PORTFOLIOS

     Our remaining portfolios contain all non-trading activities of the banking
segment, as well as the financial investments of the insurance segment. The
Group holds and uses many different financial instruments in managing its
businesses. Grouped according to risk category, the following are the most
significant assets according to their fair values:

     - equity price risk: common shares and preferred shares;

     - interest rate risk: bonds, loans and mortgages; and

     - foreign exchange rate risk: non-euro denominated equities and interest
       rate risk sensitive assets.

     INSURANCE SEGMENT.  The insurance segment's non-trading portfolio is
exposed to foreign exchange risk because some of its assets are denominated in
currencies other than the euro. If non-euro foreign exchange rates decline
against the euro, the fair values of the corresponding assets would also decline
in value. The insurance segment's primary exposures for foreign

                                       188
<PAGE>

exchange risk are for the United States dollar, Swiss franc and pound sterling.
Local laws generally require that the insurance policy obligations of our
subsidiaries and the investments covering them must be in the same currency. As
a result, currency fluctuations in connection with foreign subsidiaries have
only a minor impact on the insurance segment's risk management strategies.

     The decline in the equity price risk in 2001 was due to the overall decline
in stock prices. Most of our insurance-related equity investments are intended
to be held for the long term. The equity holdings are primarily in the EMU
equity markets of Germany, France and Italy, with significant additional
exposures in the United States, Swiss and United Kingdom markets.

     The insurance segment is exposed to interest rate risk due to its
investments in fixed-income instruments, in particular bonds, loans and
mortgages. The primary exposures for interest rate sensitivity securities are
for bonds, loans and mortgages held by our German, French, United States,
Italian and Swiss subsidiaries.

     BANKING SEGMENT.  Our banking operations are subject to currency risk on
all non-euro loans and deposits. For our non-trading activities it is our policy
that all loans and deposits in foreign currencies are funded and reinvested in
the same currency and with matching maturities. Any residual risk is
concentrated in the foreign exchange trading portfolio and is shown in the
foreign exchange risk in the trading portfolio.

     The non-trading portfolio of the banking segment with respect to interest
rate risk includes all loans and deposits in commercial banking, the bank's own
issued securities, interest rate-related investment securities as well as
corresponding hedges. Market risk associated with these positions is primarily
interest rate risk resulting from long-term fixed rate loans, which are funded
in part by short-term deposits. On the bank's non-trading books, interest rate
derivatives are used to hedge risk associated with fixed rate loans. For this
purpose, the bank primarily used interest rate swaps. Futures and options are
also used for asset and liability management in the non-trading activities,
albeit to a significantly smaller degree. We also used swaptions to hedge risk
arising from a borrower's prepayment options under some loan agreements. A small
volume of equity derivatives is held due to investments in shares from
affiliated and non-affiliated companies.

     Most of the equity investments are intended to be held for long term. The
equity holdings in the banking segment are primarily in the Germany market.

     The following table shows a sensitivity analysis of the market risk in our
material non-trading portfolios. Certain financial instruments are included in
more than one risk category, e.g., stock positions in non-euro currencies are
affected by changes in both equity prices and exchange rates.

    SENSITIVITY ANALYSIS BY BUSINESS SEGMENT AND RISK CATEGORY: NON-TRADING
                                   PORTFOLIOS

<Table>
<Caption>
                                                        AT DECEMBER 31, 2001(3)
                                        --------------------------------------------------------
                                        PROPERTY-
                                        CASUALTY    LIFE/HEALTH               ASSET
                                        INSURANCE    INSURANCE    BANKING   MANAGEMENT    TOTAL
                                        ---------   -----------   -------   ----------   -------
                                                            (E IN MILLIONS)
<S>                                     <C>         <C>           <C>       <C>          <C>
Equity price risk(1)..................   (5,900)      (7,600)     (2,800)      (100)     (16,400)
Interest rate risk....................   (2,400)      (8,500)       (400)      (200)     (11,500)
Foreign exchange risk(2)..............   (2,600)      (2,600)                             (5,200)
</Table>

                                       189
<PAGE>

<Table>
<Caption>
                                                          AT DECEMBER 31, 2000
                                        --------------------------------------------------------
                                        PROPERTY-
                                        CASUALTY    LIFE/HEALTH               ASSET
                                        INSURANCE    INSURANCE    BANKING   MANAGEMENT    TOTAL
                                        ---------   -----------   -------   ----------   -------
                                                            (E IN MILLIONS)
<S>                                     <C>         <C>           <C>       <C>          <C>
Equity price risk(1)..................   (7,700)      (10,400)                           (18,100)
Interest rate risk....................   (2,200)       (7,700)      (100)      (300)     (10,300)
Foreign exchange risk(2)..............   (3,000)       (3,000)                 (100)      (6,100)
</Table>

---------------

(1) Amounts do not take into account unconsolidated subsidiaries of the Allianz
    Group, or affiliated enterprises, joint ventures and associated enterprises.

(2) Amounts take into account financial instruments in foreign currency.

(3) Includes for the first time the Dresdner Bank Group.

                             OTHER RISK MANAGEMENT

INSURANCE UNDERWRITING AND PRICING

     The Allianz Group's insurance businesses are subject to underwriting and
pricing risks. Insurance underwriting involves a determination of the type and
amount of risk which an insurer is willing to accept. Allianz Group insurance
underwriters evaluate policy applications on the basis of information provided
by the applicant and others. We follow detailed and uniform underwriting
practices and procedures designed to properly assess and qualify risks before
issuing coverage to qualified applicants. Our insurance underwriting standards
attempt to produce results consistent with the assumptions used in product
pricing while also allowing competitive risk selection. In addition, the Allianz
Group manages its overall exposure to single risks or events through the
purchase of reinsurance coverage. See "Information on the Company and Operating
and Financial Review and Prospects -- Discussion of Operations by Business
Segment -- Insurance Operations -- Property Casualty Insurance Operations --
Germany -- Allianz AG."

     As a general matter, the underwriting of insurance risks occurs at the
level of each of our operating insurance subsidiaries. Allianz AG provides
overall underwriting guidelines to its subsidiaries, and in addition provides
centralized underwriting expertise to its subsidiaries as needed, but generally
allows each subsidiary to underwrite risks in its local market. Exceptions to
this general policy arise in the case of large industrial risks, where Allianz
AG underwriters in Germany are involved in underwriting decisions for exposures
beyond certain limits, and in the case of the aggregation of property-casualty
exposures in catastrophe-prone areas, where Allianz AG coordinates Group-wide
exposure guidelines to limit the risks to the Group from a single catastrophic
event.

     The pricing of insurance products involves the risk that, once a
determination that coverage should be provided through the underwriting process
has been made, the price charged for the coverage may be inadequate. The pricing
of the Allianz Group's insurance products takes into consideration the expected
frequency and severity of claims; the costs of providing the necessary coverage,
including the cost of administering policy benefits, sales and other
administrative and overhead costs; and a margin for profit. Additional factors
considered in setting premiums and prices for the Allianz Group's life insurance
products include assumptions as to future investment returns, expenses,
persistency, mortality, morbidity and taxes, where appropriate. The long-term
profitability of our products is affected by the degree to which future
experience deviates from these assumptions. The Allianz Group endeavors to
appropriately price its products according to risk with a margin for profit.

                                       190
<PAGE>

     As in the case of insurance underwriting, our philosophy on pricing is that
our local subsidiaries can best analyze and respond to local market conditions,
and the pricing function is accordingly decentralized and is the responsibility
of each operating subsidiary. Allianz AG in Munich provides support to its
subsidiaries and plays a coordinating role in knowledge transfer among Group
subsidiaries to ensure that all Group companies have the benefit of the latest
actuarial and other data available to the Group.

INSURANCE CLAIMS AND RESERVES

     The Allianz Group is subject to risks associated with claims settlement,
including the risk that amounts paid may be in excess of related losses or
reserves, fraud and customer service-related issues affected by the promptness
of its claims-handling procedures, as well as risks associated with the adequacy
of our reserves.

     Claims processing is managed by each Group insurance company on a local
basis. The claims process involves professional claims evaluation personnel,
with input from legal, accounting, actuarial and other functions as necessary,
and is closely coordinated with the reserving process. We believe that we have a
reputation as a company that settles claims promptly and fairly, and that this
reputation constitutes a competitive advantage. While the claims process is
managed at the local level, the Allianz Group coordinates the establishment of
claims guidelines, monitors claims development trends and exposures, and
provides centralized support to its subsidiary operations in order to ensure
that the Group benefits from the "best practices" of its member companies. In
addition, for large industrial and commercial risks, claims in excess of certain
levels are actively managed by Allianz AG's central claims department. To assess
the appropriateness of our insurance reserves, we make use of historic values as
well as statistical testing and regularly review the development of our reserves
over time relative to our initial assumptions. See "Information on the Company
and Operating and Financial Review and Prospects -- Property-Casualty Insurance
Reserves."

LEGAL RISK

     The Allianz Group is subject to legal risks arising from the uncertainty in
the enforceability, through legal or judicial processes, of the obligations of
the Group's policyholders and counterparties, particularly in jurisdictions
where applicable laws and regulation may be relatively recent or incomplete. The
Group seeks to minimize such uncertainty through consultation with internal and
external legal advisors in all countries in which it conducts business.

LIQUIDITY AND CREDIT RISK

     Because of the Allianz Group's policy of matching assets and liabilities,
primarily life business, the long-term nature of most of its liabilities and the
sizable cash flow from its investment portfolio, the Group believes that its
liquidity risk is limited. The Group's policy of having a fixed-income
investment portfolio with a high average credit quality means that the credit
risk in that portfolio is relatively small. Credit risk also arises in
connection with the collectibility of amounts owed by reinsurers. The Group
monitors the creditworthiness of its reinsurers on an ongoing basis and seeks to
minimize reinsurance recoverability risk by ceding business to reinsurers
meeting specified size and rating criteria. See "Information on the Company and
Operating and Financial Review and Prospects -- Discussion of Operations by
Business Segment -- Insurance Operations -- Property Casualty Insurance
Operations -- Germany -- Allianz AG." Credit analyses are also performed with
respect to banks with whom the Group maintains deposit relationships and other
financial counterparties, including derivatives counterparties, to minimize the
Group's exposure.

                                       191
<PAGE>

OPERATIONAL RISK

     The Allianz Group's operations are subject to the potential for loss caused
by breakdowns in information, communication, transaction processing, settlement
systems and procedures. Operational risks can also include failure to obtain
proper internal authorizations or to properly document transactions, equipment
failure, inadequate training or errors by employees. The Group seeks to minimize
operational risk by maintaining a comprehensive system of internal controls and
back-up systems at each operating entity.

                                       192
<PAGE>

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.

                                       193
<PAGE>

                                    PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None.

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

     None.

ITEM 15.  [RESERVED]

ITEM 16.  [RESERVED]

                                       194
<PAGE>

                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

     Not applicable.

ITEM 18.  FINANCIAL STATEMENTS

     See pages F-1 through F-131 for the consolidated financial statements
required by this item.

ITEM 19.  EXHIBITS

     The following exhibits are filed as part of this annual report:

<Table>
<Caption>
EXHIBIT
NUMBER                              DOCUMENT
-------                             --------
<C>       <S>
  1.1     Articles of Association
  4.1     Principles of Cooperation between Allianz AG and Munich Re,
          dated May 2000*
  4.2     Letter of Intent between Allianz AG and Munich Re, dated May
          4, 2000**
  4.3     Agreement in Principle between Allianz AG and Munich Re,
          dated April 4, 2001***
  4.4     Basic Agreement between Allianz AG and Dresdner Bank, dated
          March 31, 2001****
  4.5     Supplement to Principles of Cooperation between Allianz AG
          and Munich Re, dated December 2001
  8.1     List of subsidiaries
 10.1     Consent of KPMG Deutsche Treuhand-Gesellschaft
          Aktiengesellschaft Wirtschaftsprufungsgesellschaft
</Table>

---------------
    * Incorporated by reference to Exhibit 3.1 to the Registrant's Registration
      Statement on Form 20-F (File No. 1-15154).

  ** Incorporated by reference to Exhibit 3.2 to the Registrant's Registration
     Statement on Form 20-F (File No. 1-15154).

 *** Incorporated by reference to Exhibit 4.3 to the Registrant's Annual Report
     on Form 20-F for the year ended December 31, 2000.

**** Incorporated by reference to Exhibit 4.4 to the Registrant's Annual Report
     on Form 20-F for the year ended December 31, 2000.

                                       195
<PAGE>

                                 ALLIANZ GROUP

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Independent Auditors' Report................................    F-2
Consolidated Balance Sheets as of December 31, 2001 and
  2000......................................................    F-3
Consolidated Income Statements for each of the years in the
  three-year period ended December 31, 2001.................    F-4
Consolidated Statements of Movements in Shareholders' Equity
  for each of the years in the three-year period ended
  December 31, 2001.........................................    F-5
Consolidated Cash Flow Statements for each of the years in
  the three-year period ended December 31, 2001.............    F-6
Notes to the Consolidated Financial Statements:
  Business Segment Information:
     Consolidated Balance Sheets as of December 31, 2001 and
      2000..................................................    F-8
     Consolidated Income Statements for each of the years in
      the three-year period ended December 31, 2001.........   F-10
     Insurance..............................................   F-12
     Banking................................................   F-14
  Accounting Regulations....................................   F-15
  Changes to the Accounting, Valuation and Reporting
     Policies...............................................   F-15
  Consolidation.............................................   F-16
  Accounting and Valuation Policies.........................   F-25
  Supplementary Information on Group Assets.................   F-37
  Supplementary Information on Group Liabilities and
     Equity.................................................   F-54
  Supplementary Information on the Consolidated Income
     Statement..............................................   F-72
  Other Information.........................................   F-96
  Summary of Significant Differences between the Accounting
     Principles used in the Preparation of the Consolidated
     Financial Statements and Accounting Principles
     Generally Accepted in the United States of America.....  F-112
  Selected subsidiaries and other holdings..................  F-124
Schedules:
  Schedule I Summary of Investments.........................    S-1
  Schedule II Condensed Financial Information of the
     Registrant.............................................    S-2
  Schedule III Supplementary Insurance Information..........    S-5
  Schedule IV Supplementary Reinsurance Information.........    S-7
</Table>

     Schedule of Valuation and Qualifying Accounts excluded as account balances
are not material.

                                       F-1
<PAGE>

[KPMG Logo]

                          INDEPENDENT AUDITORS' REPORT

To the Management Board and Supervisory Board of Allianz Aktiengesellschaft:

     We have audited the accompanying consolidated balance sheets of Allianz
Aktiengesellschaft and its subsidiaries (collectively, "the Allianz Group") as
of December 31, 2001 and 2000, and the related consolidated statements of
income, movements in shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 2001. In connection with our audits
of the consolidated financial statements we have also audited the accompanying
financial statement schedules. These consolidated financial statements and
financial statement schedules are the responsibility of Allianz Group's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Allianz
Group as of December 31, 2001 and 2000, and the results of their operations and
their cash flows for each of the years in the three-year period ended December
31, 2001, in conformity with International Accounting Standards. Also, in our
opinion, the related financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.

     International Accounting Standards vary in certain significant respects
from accounting principles generally accepted in the United States of America
(US GAAP). Application of accounting principles generally accepted in the United
States of America would have affected results of operations for each of the
years in the three-year period ended December 31, 2001 and shareholders' equity
as of December 31, 2001 and 2000 to the extent summarized in Note 45 to the
consolidated financial statements.

     As described in Note 45 to the consolidated financial statements, the
Allianz Group has restated its US GAAP reconciliation for the year ended
December 31, 2000.

                              /s/ KPMG Deutsche Treuhand-Gesellschaft
                                  Aktiengesellschaft
                                  Wirtschaftsprufungsgesellschaft

                              KPMG Deutsche Treuhand-Gesellschaft
                              Aktiengesellschaft
                              Wirtschaftsprufungsgesellschaft

Munich, Germany
June 25, 2002
                                       F-2
<PAGE>

                                 ALLIANZ GROUP

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000

<Table>
<Caption>
                                                                           2001       2000
                                                                  NOTE     E(MN)      E(MN)
                                                                  ----    -------    -------
<S>  <C>                                                          <C>     <C>        <C>
ASSETS
A.   Intangible assets........................................      5      16,911     10,394
B.   Investments in affiliated enterprises, joint ventures and
       associated enterprises.................................      6      10,247     11,763
C.   Investments..............................................      7     345,302    280,834
D.   Investments held on account and at risk of life insurance
       policyholders..........................................      8      24,692     22,770
E.   Loans and advances to banks..............................      9      61,274      7,070
F.   Loans and advances to customers..........................     10     239,693     28,086
G.   Trading assets...........................................     11     128,422        372
H.   Cash funds and cash equivalents..........................     12      21,240      4,209
I.   Amounts ceded to reinsurers from insurance reserves......     13      30,999     28,475
J.   Deferred tax assets......................................     39       8,415      6,133
K.   Other assets.............................................     14      55,730     39,889
                                                                          -------    -------
             Total assets.....................................            942,925    439,995
                                                                          =======    =======
EQUITY AND LIABILITIES
A.   Shareholders' equity.....................................     15      31,664     35,603
B.   Minority interests in shareholders' equity...............     16      17,349     16,200
C.   Participating certificates and post-ranking
       liabilities............................................     17      12,207      1,337
D.   Insurance reserves.......................................     18     299,512    284,824
E.   Insurance reserves for life insurance where the
       investment risk is carried by policyholders............      8      24,726     22,841
F.   Liabilities to banks.....................................     19     135,402      5,172
G.   Liabilities to customers.................................     20     177,323      9,684
H.   Certificated liabilities.................................     21     134,670     13,606
I.   Trading liabilities......................................     22      44,538        197
J.   Other accrued liabilities................................     23      14,117      7,143
K.   Other liabilities........................................     24      41,900     28,492
L.   Deferred tax liabilities.................................     39       8,898     14,332
M.   Deferred income..........................................     25         619        564
                                                                          -------    -------
             Total equity and liabilities.....................            942,925    439,995
                                                                          =======    =======
</Table>

        See accompanying notes to the consolidated financial statements.
                                       F-3
<PAGE>

                                 ALLIANZ GROUP

                         CONSOLIDATED INCOME STATEMENTS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                    2001      2000      1999
                                                           NOTE    E(MN)     E(MN)     E(MN)
                                                           ----    -----     -----     -----
<C>  <S>                                                   <C>    <C>       <C>       <C>
 1.  Premiums earned (net)...............................   26      52,745    49,907    46,182
 2.  Interest and similar income.........................   27      24,224    16,595    15,943
 3.  Income (net) from investments in affiliated
       enterprises, joint ventures and associated
       enterprises.......................................   28       1,588     1,860     1,480
 4.  Other income from investments.......................   29       8,502    10,945     8,414
 5.  Trading income......................................   30       1,592      (36)        14
 6.  Fee and commission income, and income from service
       activities........................................   31       4,827     2,187     1,028
 7.  Other income........................................   32       2,479     2,331     2,758
                                                                  --------  --------  --------
             Total income (1. to 7.).....................           95,957    83,789    75,819
                                                                  --------  --------  --------
 8.  Insurance benefits (net)............................   33      50,154    51,738    48,331
 9.  Interest and similar expenses.......................   34       7,947     2,399     2,030
10.  Other expenses for investments......................   35       8,923     4,949     2,989
11.  Loan loss provisions................................   36         596        21        29
12.  Acquisition costs and administrative expenses.......   37      19,324    13,679    11,683
13.  Amortization of goodwill............................    5         808       495       485
14.  Other expenses......................................   38       6,378     5,595     5,468
                                                                  --------  --------  --------
             Total expenses (8. to 14.)..................           94,130    78,876    71,015
                                                                  --------  --------  --------
15.  Earnings from ordinary activities before taxes......            1,827     4,913     4,804
16.  Taxes...............................................   39       (840)       176     1,513
17.  Minority interests in earnings......................   16       1,044     1,277       974
                                                                  --------  --------  --------
18.  Net income..........................................            1,623     3,460     2,317
                                                                  ========  ========  ========
                                                                     E         E         E
                                                                  --------  --------  --------
     Basic earnings per share............................   44        6.66     14.10      9.46
                                                                  ========  ========  ========
     Diluted earnings per share..........................   44        6.66     14.10      9.46
                                                                  ========  ========  ========
</Table>

        See accompanying notes to the consolidated financial statements.
                                       F-4
<PAGE>

                                 ALLIANZ GROUP

          CONSOLIDATED STATEMENTS OF MOVEMENTS IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                            UNREALIZED
                                                              GAINS       CONSOLIDATED
                                       PAID-IN   REVENUE       AND       UNAPPROPRIATED   SHAREHOLDERS'
                                       CAPITAL   RESERVES     LOSSES         PROFIT          EQUITY
                                        E(MN)     E(MN)       E(MN)          E(MN)            E(MN)
                                       -------   --------   ----------   --------------   -------------
<S>                                    <C>       <C>        <C>          <C>              <C>
Beginning balance January 1, 1999....    7,721      7,046       9,950           349           25,066
Currency translation adjustments.....       --        641         210            --              851
Changes in the group of consolidated
  companies..........................       --         48          --            --               48
Capital paid in......................       90         --          --            --               90
Unrealized investment gains and
  losses.............................       --         --       1,466            --            1,466
Net income for the year..............       --      2,036          --           281            2,317
Shareholders' dividend...............       --         --          --          (275)            (275)
Miscellaneous........................       --        113          --            --              113
                                       -------   --------    --------        ------         --------
Balance as of December 31, 1999......    7,811      9,884      11,626           355           29,676
                                       -------   --------    --------        ------         --------
Currency translation adjustments.....       --        374          77            --              451
Changes in the group of consolidated
  companies..........................       --        283          --            --              283
Capital paid in......................      183         --          --            --              183
Unrealized investment gains and
  losses.............................       --         --       1,745            --            1,745
Net income for the year..............       --      3,027          --           433            3,460
Shareholders' dividend...............       --         --          --          (306)            (306)
Miscellaneous........................       --        160          --           (49)             111
                                       -------   --------    --------        ------         --------
Balance as of December 31, 2000......    7,994     13,728      13,448           433           35,603
                                       -------   --------    --------        ------         --------
Currency translation adjustments.....       --       (127)         38            --              (89)
Changes in the group of consolidated
  companies..........................       --       (554)         --            --             (554)
Capital paid in......................    6,775         --          --            --            6,775
Treasury stock.......................       --     (5,801)         --            --           (5,801)
Unrealized investment gains and
  losses.............................       --         --      (5,210)           --           (5,210)
Net income for the year..............       --      1,213          --           410            1,623
Shareholders' dividend...............       --         --          --          (367)            (367)
Miscellaneous........................       --       (250)         --           (66)            (316)
                                       -------   --------    --------        ------         --------
Balance as of December 31, 2001......   14,769      8,209       8,276           410           31,664
                                       =======   ========    ========        ======         ========
</Table>

        See accompanying notes to the consolidated financial statements.
                                       F-5
<PAGE>

                                 ALLIANZ GROUP

                       CONSOLIDATED CASH FLOW STATEMENTS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                               2001       2000       1999
                                                               E(MN)      E(MN)      E(MN)
                                                              -------    -------    -------
<S>                                                           <C>        <C>        <C>
Net income for the year.....................................    1,623      3,460      2,317
Change in unearned premiums.................................      949       (674)       541
Change in aggregate policy reserves (without aggregate
  policy reserves for life insurance products in accordance
  with SFAS 97).............................................    6,859      6,550      6,652
Change in reserve for loss and loss adjustment expenses.....    3,375      2,715      1,450
Change in other insurance reserves (without change in the
  reserve for latent premium refunds from unrealized
  investment gains and losses)..............................   (4,007)     2,227        501
Change in deferred acquisition costs........................     (662)    (1,093)       230
Change in funds held by others under reinsurance business
  assumed...................................................     (171)        66       (151)
Change in funds held under reinsurance business ceded.......     (278)       483        640
Change in accounts receivable/payable on reinsurance
  business..................................................       (4)      (604)       557
Change in trading securities (including trading
  liabilities)..............................................  (12,544)        46         68
Change in loans and advances to banks and customers.........    3,442     (3,694)    (2,527)
Change in liabilities to banks and customers................   (5,456)       836      1,805
Change in certificated liabilities..........................    3,130      2,642      4,092
Change in other receivables and liabilities.................    3,843     (1,408)     1,584
Change in deferred tax assets/liabilities (without change in
  deferred tax assets/liabilities from unrealized investment
  gains and losses).........................................   (2,181)    (2,226)      (943)
Adjustment for investment income/expenses not involving
  movements of cash.........................................      112     (7,525)    (6,437)
Adjustments to reconcile amortization of goodwill...........      808        495        485
Other.......................................................      387        180        132
                                                              -------    -------    -------
Cash flow (deficit) from operating activities:..............     (775)     2,476     10,996
                                                              -------    -------    -------
Change in securities available for sale.....................   (3,465)    (7,271)   (11,883)
Change in investments held to maturity......................      383        634        616
Change in real estate.......................................      112       (287)    (1,124)
Change in other investments.................................    2,692       (416)    (1,918)
Change in investments held on account and at risk of life
  insurance policyholders...................................   (1,465)    (1,942)    (1,750)
Change in cash and cash equivalents from the acquisition of
  consolidated affiliated companies.........................   12,114     (3,054)      (795)
Change in aggregate policy reserves for life insurance
  products according to SFAS 97.............................    8,089      6,770      5,683
Other.......................................................     (441)    (1,389)     1,443
                                                              -------    -------    -------
Cash flow (deficit) from investing activities:..............   18,019     (6,955)    (9,727)
                                                              -------    -------    -------
Change in participation certificates and post-ranking
  liabilities...............................................     (770)     1,714       (873)
Cash inflow from capital increases..........................      275        184         90
Dividend payouts............................................     (673)      (613)      (586)
Other from shareholders' capital and minority interests
  (without change in revenue from unrealized investment
  gains and losses).........................................      937      3,464      1,654
                                                              -------    -------    -------
Cash flows from financing activities........................     (231)     4,749        286
                                                              -------    -------    -------
Effect of exchange rate changes on cash and cash
  equivalents...............................................       18          9         46
                                                              -------    -------    -------
Change in cash and cash equivalents.........................   17,031        279      1,601
                                                              -------    -------    -------
Cash and cash equivalents at beginning of period............    4,209      3,930      2,329
                                                              -------    -------    -------
Cash and cash equivalents at end of period..................   21,240      4,209      3,930
                                                              =======    =======    =======
</Table>

        See accompanying notes to the consolidated financial statements.
                                       F-6
<PAGE>

                      [THIS PAGE INTENTIONALLY LEFT BLANK]

                                       F-7
<PAGE>

                                 ALLIANZ GROUP

                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
          BUSINESS SEGMENT INFORMATION -- CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000

<Table>
<Caption>
                                                                          PROPERTY-
                                                     LIFE/HEALTH          CASUALTY            BANKING
                                                  -----------------   -----------------   ----------------
                                                   2001      2000      2001      2000      2001      2000
                                                   E(MN)     E(MN)     E(MN)     E(MN)     E(MN)    E(MN)
                                                   -----     -----     -----     -----     -----    -----
<S>    <C>                                        <C>       <C>       <C>       <C>       <C>       <C>
ASSETS
A.     Intangible assets........................    4,005     4,232     2,943     2,822     3,183        1
B.     Investments in affiliated enterprises,
         joint ventures and associated
         enterprises............................    6,043     5,615    40,387    22,514     2,079       96
C.     Investments..............................  180,076   186,799    91,712    95,718    85,133    3,070
D.     Investments held on account and at risk
         of life insurance policyholders........   24,692    22,770        --        --        --       --
E.     Loans and advances to banks..............    1,010     3,747     5,079     4,527    54,271    1,142
F.     Loans and advances to customers..........   24,843    14,445     2,837     1,565   222,916   12,555
G.     Trading assets...........................      775       119     1,373        20   125,741       51
H.     Cash funds and cash equivalents..........    2,351     1,978     2,617     2,041    16,244       95
I.     Amounts ceded to reinsurers from
         insurance reserves.....................   17,927    18,073    19,209    15,439        --       --
J.     Deferred tax assets......................    1,911     2,253     5,060     3,631     1,350      208
K.     Other assets.............................   17,634    17,187    22,840    21,717    14,977      783
                                                  -------   -------   -------   -------   -------   ------
             Total segment assets...............  281,267   277,218   194,057   169,994   525,894   18,001
                                                  =======   =======   =======   =======   =======   ======
EQUITY AND LIABILITIES
A.     Participating certificates and
         post-ranking liabilities...............       --        --       573       953    11,757      371
B.     Insurance reserves.......................  215,217   208,829    90,432    81,046        --       --
C.     Insurance reserves for life insurance
         where the investment risk is carried by
         policyholders..........................   24,726    22,841        --        --        --       --
D.     Liabilities to banks.....................    2,143     1,201     6,303     5,942   131,454      781
E.     Liabilities to customers.................       --         3        --         3   175,228    8,630
F.     Certificated liabilities.................      229      (163)   14,727     7,312   122,713    6,310
G.     Trading liabilities......................       50        --       448        --    44,052      197
H.     Other accrued liabilities................      967       961     5,387     5,458     7,130      193
I.     Other liabilities........................   19,963    19,880    21,624    14,620     8,798      511
J.     Deferred tax liabilities.................    1,958     3,906     5,920    10,353       980       53
K.     Deferred income..........................      406       413        84       136       129       11
                                                  -------   -------   -------   -------   -------   ------
             Total segment liabilities..........  265,659   257,871   145,498   125,823   502,241   17,057
                                                  =======   =======   =======   =======   =======   ======
       Shareholders' equity and minority interests........................................................
             Total equity and liabilities.................................................................
</Table>

                                       F-8
<PAGE>

<Table>
<Caption>
       ASSET           CONSOLIDATION
    MANAGEMENT          ADJUSTMENTS              GROUP
  ---------------    ------------------    ------------------
   2001     2000      2001       2000       2001       2000
  E(MN)     E(MN)     E(MN)      E(MN)      E(MN)      E(MN)
  -----     -----     -----      -----      -----      -----
  <S>       <C>      <C>        <C>        <C>        <C>
   6,780    3,339         --         --     16,911     10,394
     116       62    (38,378)   (16,524)    10,247     11,763
   1,362      528    (12,981)    (5,281)   345,302    280,834
      --       --         --         --     24,692     22,770
   1,646    1,102       (732)    (3,448)    61,274      7,070
     561      395    (11,464)      (874)   239,693     28,086
     539      182         (6)        --    128,422        372
     550      139       (522)       (44)    21,240      4,209
      --       --     (6,137)    (5,037)    30,999     28,475
      94       30         --         11      8,415      6,133
   2,589    1,538     (2,310)    (1,336)    55,730     39,889
  ------    -----    -------    -------    -------    -------
  14,237    7,315    (72,530)   (32,533)   942,925    439,995
  ======    =====    =======    =======    =======    =======
      22       21       (145)        (8)    12,207      1,337
      --       --     (6,137)    (5,051)   299,512    284,824
      --       --         --         --     24,726     22,841
   1,554      504     (6,052)    (3,256)   135,402      5,172
   2,981    1,312       (886)      (264)   177,323      9,684
     435        5     (3,434)       142    134,670     13,606
       2       --        (14)        --     44,538        197
     633      531         --         --     14,117      7,143
   1,413    1,015     (9,898)    (7,534)    41,900     28,492
      40       20         --         --      8,898     14,332
      --        4         --         --        619        564
  ------    -----    -------    -------    -------    -------
   7,080    3,412    (26,566)   (15,971)   893,912    388,192
  ======    =====    =======    =======    =======    =======
                                            49,013     51,803
                                           =======    =======
                                           942,925    439,995
                                           =======    =======
</Table>

                                       F-9
<PAGE>

                                 ALLIANZ GROUP

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         BUSINESS SEGMENT INFORMATION -- CONSOLIDATED INCOME STATEMENTS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                       LIFE/HEALTH             PROPERTY-CASUALTY              BANKING
                                 ------------------------   ------------------------   ----------------------
                                  2001     2000     1999     2001     2000     1999     2001    2000    1999
                                 E(MN)    E(MN)    E(MN)    E(MN)    E(MN)    E(MN)    E(MN)    E(MN)   E(MN)
                                 -----    -----    -----    -----    -----    -----    -----    -----   -----
<S>                              <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>     <C>
1.  Premiums earned (net)......  18,317   18,378   16,399   34,428   31,529   29,783       --      --      --
2.  Interest and similar
    income.....................  10,765   10,152    9,889    5,068    5,568    5,169    9,085   1,502   1,503
3.  Income from affiliated
    enterprises, joint ventures
    and associated
    enterprises................     525      693      625      889    1,833    1,113    1,016     122      35
4.  Other income from
    investments................   3,562    6,667    4,702    4,307    4,259    3,733      628      25      24
5.  Trading income.............    (117)     (49)      --    1,451      (10)       2      244       7       6
6.  Fee and commission income,
    and income from service
    activities.................     268      271      159    1,425      940      704    1,474       2       1
7.  Other income...............     866    1,139      949    1,329    1,078    1,575      394      64     226
                                 ------   ------   ------   ------   ------   ------   ------   -----   -----
      Total income
         (1. to 7.)............  34,186   37,251   32,723   48,897   45,197   42,079   12,841   1,722   1,795
                                 ------   ------   ------   ------   ------   ------   ------   -----   -----
8.  Insurance benefits (net)...  21,979   26,354   24,376   28,200   25,413   23,955       --      --      --
9.  Interest and similar
    expenses...................     492      148      119    1,323    1,136      621    6,852   1,257   1,268
10. Other expenses for
    investments................   5,537    3,004    1,876    2,888    1,913    1,153      465      33      29
11. Loan loss provisions.......       4       --       --        4       --       --      588      21      29
12. Acquisition costs and
    administrative expenses....   4,259    3,927    3,119   10,042    9,106    8,414    3,446     170     134
13. Amortization of goodwill...     146      137      104      349      277      388       70      (8)     (7)
14. Other expenses.............   1,357    2,055    1,899    3,682    3,453    3,909    1,193     125     287
                                 ------   ------   ------   ------   ------   ------   ------   -----   -----
      Total expenses
         (8. to 14.)...........  33,774   35,625   31,493   46,488   41,298   38,440   12,614   1,598   1,740
                                 ------   ------   ------   ------   ------   ------   ------   -----   -----
15. Earnings from ordinary
    activities before taxes....     412    1,626    1,230    2,409    3,899    3,639      227     124      55
16. Taxes......................      99      343      347     (701)      (5)   1,149       (6)    (67)     --
17. Minority interests in
    earnings...................      84      658      491      746      642      475      453      90      25
                                 ------   ------   ------   ------   ------   ------   ------   -----   -----
18. Net income.................     229      625      392    2,364    3,262    2,015     (220)    101      30
                                 ======   ======   ======   ======   ======   ======   ======   =====   =====
</Table>

                                       F-10
<PAGE>

<Table>
<Caption>
                        ASSET MANAGEMENT       CONSOLIDATION ADJUSTMENTS             GROUP
                      ---------------------   ---------------------------   ------------------------
                      2001    2000    1999     2001      2000      1999      2001     2000     1999
                      E(MN)   E(MN)   E(MN)    E(MN)     E(MN)     E(MN)    E(MN)    E(MN)    E(MN)
                      -----   -----   -----    -----     -----     -----    -----    -----    -----
<S>                   <C>     <C>     <C>     <C>       <C>       <C>       <C>      <C>      <C>
                         --      --     --        --        --        --    52,745   49,907   46,182
                        129     204    204      (823)     (831)     (822)   24,224   16,595   15,943
                         (3)      1    (39)     (839)     (789)     (254)    1,588    1,860    1,480
                         44      18      7       (39)      (24)      (52)    8,502   10,945    8,414
                         10      16      6         4        --        --     1,592      (36)      14
                      2,479   1,420    427      (819)     (446)     (263)    4,827    2,187    1,028
                         79      63     88      (189)      (13)      (80)    2,479    2,331    2,758
                      -----   -----    ---    ------    ------    ------    ------   ------   ------
                      2,738   1,722    693    (2,705)   (2,103)   (1,471)   95,957   83,789   75,819
                      -----   -----    ---    ------    ------    ------    ------   ------   ------
                         --      --     --       (25)      (29)       --    50,154   51,738   48,331
                         82      61    114      (802)     (203)      (92)    7,947    2,399    2,030
                         57      --      1       (24)       (1)      (70)    8,923    4,949    2,989
                         --      --     --        --        --        --       596       21       29
                      1,895     484     28      (318)       (8)      (12)   19,324   13,679   11,683
                        243      89     --        --        --        --       808      495      485
                        795   1,043    442      (694)   (1,081)   (1,069)    6,378    5,595    5,468
                      -----   -----    ---    ------    ------    ------    ------   ------   ------
                      3,072   1,677    585    (1,818)   (1,322)   (1,243)   94,130   78,876   71,015
                      -----   -----    ---    ------    ------    ------    ------   ------   ------
                       (334)     45    108      (887)     (781)     (228)    1,827    4,913    4,804
                       (168)     (4)    56       (64)      (91)      (39)     (840)     176    1,513
                        182     136     29      (421)     (249)      (46)    1,044    1,277      974
                      -----   -----    ---    ------    ------    ------    ------   ------   ------
                       (348)    (87)    23      (402)     (441)     (143)    1,623    3,460    2,317
                      =====   =====    ===    ======    ======    ======    ======   ======   ======
</Table>

                                       F-11
<PAGE>

                                 ALLIANZ GROUP

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   BUSINESS SEGMENT INFORMATION -- INSURANCE
                        DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                                              NET EXPENSE
                                                             PREMIUMS EARNED (NET)              RATIO(1)
                                                         ------------------------------    ------------------
                                                           2001       2000       1999      2001   2000   1999
                                                          E(MN)      E(MN)      E(MN)       %      %      %
                                                          -----      -----      -----      ----   ----   ----
<S>  <C>                                                 <C>        <C>        <C>         <C>    <C>    <C>
LIFE/HEALTH
1.   Europe
       Germany..........................................  10,545    10,500     10,050      12.7   10.7    9.0
       France...........................................   1,515     2,283      1,508      52.0   27.6   36.0
       Italy............................................   1,247     1,339      1,335      22.5   14.8   16.7
       Switzerland......................................     557       477        581      22.6    9.9   12.0
       Spain............................................     873       525        409       4.2    8.9    9.3
2.   USA................................................   1,068     1,092      1,025      49.2   48.2   40.2
3.   Asia-Pacific.......................................   1,202       937        396      17.6   19.6   28.4
</Table>


<Table>
<Caption>
                                                                                             NET EXPENSE
                                                            PREMIUMS EARNED (NET)              RATIO(1)
                                                        ------------------------------    ------------------
                                                          2001       2000       1999      2001   2000   1999
                                                         E(MN)      E(MN)      E(MN)       %      %      %
                                                         -----      -----      -----      ----   ----   ----
<S>  <C>                                                <C>        <C>        <C>         <C>    <C>    <C>
PROPERTY-CASUALTY
1.   Europe
       Germany........................................  10,149      9,714      9,419      26.8   24.2   24.4
       France.........................................   4,083      3,803      3,682      29.3   28.3   28.9
       Great Britain..................................   1,765      1,604      1,507      31.0   33.4   32.9
       Italy..........................................   4,181      3,956      3,688      22.5   21.6   22.8
       Switzerland....................................   1,599      1,514      1,437      26.9   30.9   27.9
       Spain..........................................   1,027        915        883      21.2   23.8   25.0
2.   America
       NAFTA Region...................................   5,177      4,173      3,870      29.2   29.6   26.6
       South America..................................     610        653        490      39.7   34.8   32.2
3.   Asia-Pacific
       Region.........................................     768        553        455      27.3   23.0   23.8
       Specialty Lines
       Credit.........................................     901        932        881      44.0   35.9   36.7
       Travel and                                          669        608        541      33.4   36.5   44.2
         Assistance...................................
</Table>

---------------
(1) The net expense ratio equals net underwriting costs as a percentage of
    premiums earned.

(2) The net loss ratio equals net loss and loss adjustment expenses as a
    percentage of net premiums earned.

                                       F-12
<PAGE>

<Table>
<Caption>
       NET INCOME (LOSS)        INVESTMENTS
     ---------------------    ----------------
     2001    2000    1999      2001     2000
     E(MN)   E(MN)   E(MN)    E(MN)     E(MN)
     -----   -----   -----    -----     -----
<S>  <C>     <C>     <C>      <C>      <C>
       63     339     132     93,316   104,109
      132     127      42     39,319    39,025
      133     158     166     14,171    14,161
      (20)     14      10      7,042     7,027
       12      38       2      3,176     2,774
      (46)    112      (8)    10,415     7,680
      (32)   (184)     10      3,296     2,680
</Table>

<Table>
<Caption>
       NET INCOME (LOSS)        INVESTMENTS      NET LOSS RATIO(2)
     ----------------------    --------------    -----------------
       2001    2000    1999      2001    2000    2001  2000   1999
      E(MN)   E(MN)   E(MN)     E(MN)   E(MN)       %     %      %
      -----   -----   -----     -----   -----    ----  ----   ----
<S>  <C>      <C>     <C>      <C>     <C>       <C>   <C>   <C>

      3,230   3,014   1,709    41,623  44,412    76.2  73.5   72.8
        (94)    180     114     9,237  10,564    83.0  85.8   81.4
         68      21      29     2,865   2,731    73.2  82.7   81.7
        318     144     115     8,417   8,241    76.7  77.8   80.2
         81     121      56     4,098   4,337    79.1  71.3   77.0
         18      38      (8)    1,387   1,332    78.7  81.1   89.7
     (1,064)   (117)    292    12,595  12,899    99.9  87.9   80.5
         12     (24)     11       479     364    63.7  70.9   59.5
        (25)     17    (274)    1,520   1,045    79.9  83.1  107.7
         70     131      89     2,118   2,336    68.0  46.6   51.5
         (8)      6       4       237     276    64.4  63.2   63.1
</Table>


                                       F-13
<PAGE>

                                 ALLIANZ GROUP

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                    BUSINESS SEGMENT INFORMATION -- BANKING
                        DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                              LOAN LOSS                          EARNINGS AFTER
                                          NET REVENUE(1)      PROVISIONS      TOTAL EXPENSES        TAXES(2)
                                          --------------    --------------    ---------------    --------------
                                          2001     2000     2001     2000      2001     2000     2001     2000
                                          E(MN)    E(MN)    E(MN)    E(MN)    E(MN)     E(MN)    E(MN)    E(MN)
                                          -----    -----    -----    -----    -----     -----    -----    -----
<S>                                       <C>      <C>      <C>      <C>      <C>       <C>      <C>      <C>
Private Customers.......................  1,443      165      177        4    (1,400)   (136)    (111)       25
Corporates & Markets....................  1,864       10      417       --    (2,040)     (9)    (619)        1
</Table>

<Table>
<Caption>
                                                                 NET REVENUE(1)         EARNINGS AFTER TAXES(2)
                                                            ------------------------    ------------------------
                                                             2001     2000     1999      2001     2000     1999
                                                            E(MN)     E(MN)    E(MN)    E(MN)     E(MN)    E(MN)
                                                            -----     -----    -----    -----     -----    -----
<S>                                                         <C>       <C>      <C>      <C>       <C>      <C>
Germany...................................................   6,227       70       78     1,931        2        3
Europe (excluding Germany)................................   1,451      331      413      (434)     166       43
NAFTA.....................................................     572       --       --      (218)      --       --
Rest of world.............................................     245       31        7      (106)      15        2
                                                            ------    -----    -----    ------    -----    -----
Subtotal..................................................   8,495      432      498     1,173      183       48
                                                            ------    -----    -----    ------    -----    -----
Consolidation Adjustments.................................  (3,231)      --       --      (870)      --       --
                                                            ------    -----    -----    ------    -----    -----
        Total.............................................   5,264      432      498       303      183       48
                                                            ======    =====    =====    ======    =====    =====
</Table>

---------------
(1) Consists of net interest income, net fee and commission income, net trading
    income, net other investment income and other income.

(2) Earnings after taxes represent income before goodwill amortization and
    minority interest.

                                       F-14
<PAGE>

                                 ALLIANZ GROUP

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999

(1) ACCOUNTING REGULATIONS

     Allianz Aktiengesellschaft (Allianz AG or "the Company") and its
subsidiaries (collectively, "the Allianz Group" or "the Group") have global
property and casualty insurance, life and health insurance, banking and asset
management operations in more than 70 countries, with the largest of their
operations in Europe. The Group's headquarters are located in Munich, Germany.

     The consolidated financial statements of the Allianz Group have been
prepared in conformity with International Accounting Standards (IAS), in
accordance with sec.292a of the German Commercial Code (HGB). All standards
currently in force for the years under review have been adopted in the
presentation of the consolidated financial statements. IAS does not provide
specific guidance concerning the reporting of insurance transactions in annual
financial statements. In such cases, as envisioned in the IAS Framework, the
provisions embodied under accounting principles generally accepted in the United
States of America (US GAAP) have been applied.

     The consolidated financial statements have been translated into English
from those published in German and include additional disclosures required by US
GAAP and by the United States Securities and Exchange Commission. Significant
differences between IAS and US GAAP affecting the Group's consolidated net
income and shareholders' equity have been summarized in Note 45. Condensed
consolidated balance sheet and income statement information reflecting the
impact of differences between IAS and US GAAP are also presented in Note 45.

     The preparation of consolidated financial statements requires the Group to
make estimates and assumptions that affect items reported under the headings in
the consolidated balance sheet and income statement, and contingent liabilities.
The actual values may differ from those reported. The most important of such
items are the reserve for loss and loss adjustment expenses, the aggregate
policy reserves and the loan loss allowance. In addition, management must make
certain estimates and assumptions regarding the fair value of financial assets
and liabilities, as well as the impairment of assets when recovery of the
carrying amount is deemed unlikely.

     The financial statements are prepared in euros (E).

(2) CHANGES TO THE ACCOUNTING, VALUATION AND REPORTING POLICIES

     The following IAS accounting principles were applied for the first time in
fiscal year 2001: IAS 39 -- Financial instruments: recognition and measurement
and IAS 40 -- Investment property.

     IAS 39 sets forth requirements for the recognition in financial statements
and valuation of financial assets and liabilities of an enterprise, including
the reporting of hedging instruments, as well as requirements for additional
disclosure. Under this standard all financial assets and liabilities, including
all derivatives, are initially recognized on the balance sheet at cost.
Subsequent to initial recognition, all financial assets are remeasured to fair
value, with the exception of certain assets and liabilities listed in the
standard. This standard does not apply to rights and obligations arising under
insurance contracts.

     IAS 40 covers investment property independent of the main activity of the
enterprise concerned. Investment property is real estate held to earn rentals or
for capital appreciation. IAS 40 does not apply to real estate held for use in
the production or supply of goods or services or for administrative purposes.
The standard allows an enterprise to choose either a fair

                                       F-15
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

value model or a cost model for valuation purposes. The Group has chosen the
acquisition cost model which is consistent with its previous accounting policy.

     The effects of the first-time recognition under IAS 39 of the market values
of derivatives that have previously not been shown in the balance sheet have
been recorded in the beginning balance of shareholders' equity, reducing revenue
reserves by E153 million. First-time application of IAS 40 has resulted only in
changes in presentation.

     With the first-time consolidation of the Dresdner Bank Group on July 23,
2001, we have changed the structure of the consolidated balance sheet and the
consolidated income statement. The purpose of this change is to provide
appropriate information for both the insurance and banking activities within the
Group. Some headings in the consolidated balance sheet and consolidated income
statement have been combined.

     We have also revised our segment reporting to reflect changes to our
internal organizational structure and group controlling. Following our
acquisition of Dresdner Bank, the segment formerly entitled Financial Services
has been replaced by two new segments, Banking and Asset Management. These
business segments are reported in addition to the existing segments of
Life/Health and Property-Casualty.

     To provide additional clarity, our property-casualty financial information
by geographic region has been adjusted to reflect Specialty Lines results
separately, where in previous years Specialty Lines results were included in the
results of the geographic regions. Intra-segment consolidation adjustments
impacted by this change in reporting were also adjusted.

     Amounts in the consolidated financial statements were reported for the
first time in E million without a decimal place.

     All figures from fiscal years 2000 and 1999 have been restated to reflect
the foregoing changes, in order to permit comparison between years.

(3) CONSOLIDATION

SCOPE OF THE CONSOLIDATION

     In addition to Allianz AG, 163 (2000: 104 and 1999: 100) German and 1,021
(2000: 660 and 1999: 564) foreign enterprises have been consolidated in full. In
addition, 73 (2000: 59 and 1999: 49) German and 85 (2000: 79 and 1999: 64)
foreign investment funds were consolidated. Of the entities that have been
consolidated in full, 19 (2000: 14 and 1999: 14) subsidiaries have been
consolidated where Allianz AG owns less than majority of the voting power of the
subsidiary, including Bayerische Versicherungsbank AG (BVB), Frankfurter
Versicherungs-AG (FFV), CreditRas Vita S.p.A. (CreditRas), Duerrevita Compagnia
di Assicurazione sulla Vita S.p.A. (Duerrevita) and Antoniana Popolare Veneta
Vita S.p.A. (Antoniana), in all periods presented. Allianz AG exercises control
over these entities by its ability to govern the financial and operating
policies of the enterprise through management agreements, as further discussed
in Note 44 under "Other information".

     There are 13 (2000: 9 and 1999: 8) joint ventures that have been accounted
for at equity; each of these enterprises is managed by Allianz AG together with
a company not included in the consolidation.

     There are 146 (2000: 95 and 1999: 80) associated enterprises that have been
accounted for by the equity method.

                                       F-16
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Certain enterprises have not been included in the consolidation or
accounted for at equity, in cases where their value is not material to the
presentation of the financial statements as a whole.

     All affiliated companies, joint ventures, and associated companies that are
included in or excluded from the consolidated financial statements are
individually listed in the disclosure of equity investments filed with the
Commercial Register in Munich. All private companies are also listed and
identified separately in this disclosure of equity investments, for which the
consolidated financial statements and the Group management report have an
exempting effect in accordance with the application of sec.264 b of the German
Commercial Code (HGB). Selected affiliated and associated enterprises are listed
in Note 46.

ACQUISITIONS

     The following are the significant companies consolidated for the first-time
for the years ended December 31, 2001, 2000 and 1999:

<Table>
<Caption>
                                                    EFFECTS ON THE CONSOLIDATED FINANCIAL
                                                     STATEMENTS IN YEAR OF ACQUISITION(1)
                                                ----------------------------------------------
                                 DATE OF         GROSS      NET                   AMORTIZATION
                               FIRST-TIME       PREMIUMS   INCOME   GOODWILL(2)   OF GOODWILL
PRINCIPAL NEW ACQUISITIONS    CONSOLIDATION      E(MN)     E(MN)       E(MN)         E(MN)
--------------------------    -------------     --------   ------   -----------   ------------
<S>                         <C>                 <C>        <C>      <C>           <C>
2001
Dresdner Bank AG,
  Frankfurt/Main.........     July 23, 2001         --       (300)      3,977          (108)
Nicholas-Applegate, San
  Diego..................   January 31, 2001        --        (29)      1,042           (47)
2000
PIMCO Advisors L.P.,
  Delaware...............      May 5, 2000          --        (37)      2,674           (88)
Allianz-Tiriac Asigurari,
  Bucharest..............    October 1, 2000        18          1          10            --
Arab International
  Insurance Company,
  Cairo..................    January 1, 2000        12         --          --            --
Munchener und Magdeburger
  Hagelverischerung AG,
  Munich.................     July 1, 2000          19         (1)          1            --
Zwolsche Algemeene
  Holding, Nieuwegein....   December 31, 2000       --         --         153            --
1999
Life USA Holding, Inc.,
  Minneapolis............    October 1, 1999        16         --         306            (4)
Allianz First Life
  Insurance Company
  Limited, Seoul.........     July 1, 1999         346         38         720           (18)
Allianz President General
  Insurance, Taipei......     July 1, 1999          26        (11)          7            --
Allianz President Life
  Insurance, Taipei......     July 1, 1999          49         (5)         (4)           --
</Table>

                                       F-17
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                    EFFECTS ON THE CONSOLIDATED FINANCIAL
                                                     STATEMENTS IN YEAR OF ACQUISITION(1)
                                                ----------------------------------------------
                                 DATE OF         GROSS      NET                   AMORTIZATION
                               FIRST-TIME       PREMIUMS   INCOME   GOODWILL(2)   OF GOODWILL
PRINCIPAL NEW ACQUISITIONS    CONSOLIDATION      E(MN)     E(MN)       E(MN)         E(MN)
--------------------------    -------------     --------   ------   -----------   ------------
<S>                         <C>                 <C>        <C>      <C>           <C>
Sacnas Holding, Paris....    January 1, 1999       238          7          --            --
Allianz Australia Limited,
  Sydney.................    January 1, 1999       591       (113)        234          (151)
Wm. H McGee & Co. Inc.,
  New York...............    January 1, 1999       212        (12)         73            (7)
Colombiana De Inversion,
  Colombia...............   December 31, 1999       --         --          44            --
</Table>

     --------------------
     (1) Effects within consolidated business segments.

     (2) On the date of first-time consolidation.

2001 ACQUISITIONS:

     - Dresdner Bank AG, Frankfurt/Main and its subsidiaries:  On July 23, 2001,
       Allianz Group acquired 56.7% of the outstanding shares of common stock of
       Dresdner Bank AG, and its subsidiaries (Dresdner Bank) for a price of
       E17,277 million. Between July 23, 2001, and December 31, 2001, Allianz
       Group purchased an additional 1.0% of the outstanding shares of common
       stock of Dresdner Bank for E418 million. Prior to the July 23, 2001
       acquisition, Allianz Group held an equity interest of 20.8% in Dresdner
       Bank, and accounted for it under the equity method. Total acquisition
       costs to obtain the majority holding of 78.5% as of December 31, 2001
       amounted to E19,561 million. The transaction included the issuance of
       19,972,339 shares of Allianz AG common stock valued at E6,596 million.

     Allianz accounted for its 57.7% fiscal year 2001 acquisitions of Dresdner
     Bank under the purchase method of accounting. The results of operations of
     Dresdner Bank are included in the consolidated financial statements of
     Allianz since July 23, 2001.

     Dresdner Bank is among the leading banks in the European banking market
     with a wide range of private, commercial and investment banking products
     and services for corporate, governmental and individual customers. As a
     result of the acquisition, the Group will seek to generate significant
     income opportunities and cost synergies over the coming years with regard
     to integration and associated strategic realignment in the German financial
     services market.

                                       F-18
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes the estimated fair value of the assets
acquired and the liabilities assumed:

<Table>
<Caption>
                                                                  ALLOCATED PURCHASE PRICE FOR 57.7%
                                                                   ACQUISITION BASED ON FAIR VALUES
                                                                   ASSIGNED TO ASSETS ACQUIRED AND
                                                                         LIABILITIES ASSUMED
                                                                                E(MN)
                                                                  ----------------------------------
    <S>                                                           <C>
    Goodwill....................................................                 3,977
    Intangible assets...........................................                   670
    Investments in affiliated enterprises, joint ventures and
      associated enterprises....................................                   901
    Investments.................................................                50,798
    Loans and advances to banks.................................                40,653
    Loans and advances to customers.............................               124,373
    Trading assets..............................................                67,833
    Other assets................................................                13,949
                                                                               -------
      Total assets acquired.....................................               303,154
                                                                               -------
    Liabilities to banks........................................                72,003
    Liabilities to customers....................................               101,508
    Certificated liabilities....................................                67,984
    Trading liabilities.........................................                27,481
    Other accrued liabilities...................................                 4,801
    Other liabilities...........................................                11,682
                                                                               -------
      Total liabilities assumed.................................               285,459
                                                                               -------
      Net assets acquired.......................................                17,695
                                                                               =======
</Table>

     The intangible assets acquired include the brand names of "Dresdner Bank"
of E647 million and "dit" (Deutscher Investment-Trust) of E23 million, and are
amortized over 20 years. Amortization of these intangible assets is included in
other expenses in the consolidated income statement. The goodwill of E3,977
million was assigned to the Asset Management and Banking segments in the amount
of E2,573 million and E1,404 million, respectively. No deductible exists for tax
purposes for the recognized goodwill.

                                       F-19
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The table below reflects unaudited pro forma combined results of Allianz
and Dresdner Bank as if the acquisition had taken place at the beginning of 2001
and 2000, respectively. The pro forma amounts do not reflect any benefits
achieved from the acquisition, do not necessarily reflect the actual results
that would have occurred, nor are they necessarily indicative of future results
of operations.

<Table>
<Caption>
                                                         YEAR ENDED             YEAR ENDED
                                                     DECEMBER 31, 2001      DECEMBER 31, 2000
                                                    --------------------   --------------------
                                                              PRO FORMA              PRO FORMA
                                                    ACTUAL   (UNAUDITED)   ACTUAL   (UNAUDITED)
                                                    ------   -----------   ------   -----------
                                                    E(MN)       E(MN)      E(MN)       E(MN)
    <S>                                             <C>      <C>           <C>      <C>
    Total income..................................  95,957     110,692     83,789     108,832
    Net income....................................   1,623       1,965      3,460       4,217
                                                      E          E           E          E
                                                    ------     -------     ------     -------
    Basic earnings per share......................    6.66        8.07      14.10       17.18
    Diluted earnings per share....................    6.66        8.07      14.10       17.18
</Table>

                                       F-20
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following tables present Allianz's pro-forma balance sheet and
consolidated income statement information before and after the consolidation of
the Dresdner Bank:

CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                      DECEMBER 31, 2001            DECEMBER 31, 2001
                                                 BEFORE CONSOLIDATION OF THE   AFTER CONSOLIDATION OF THE
                                                        DRESDNER BANK                DRESDNER BANK
                                                            E(MN)                        E(MN)
                                                 ---------------------------   --------------------------
<S>                                              <C>                           <C>
ASSETS
A.  Intangible assets..........................             11,137                       16,911
B.  Investments in affiliated enterprises,
    joint ventures and associated
    enterprises................................             12,968                       10,274
C.  Investments................................            270,320                      345,302
D.  Investments held on account and at risk of
    life insurance policyholders...............             24,692                       24,692
E.  Loans and advances to banks................              7,785                       61,274
F.  Loans and advances to customers............             35,011                      239,693
G.  Trading assets.............................              2,399                      128,422
H.  Cash funds and cash equivalents............              5,464                       21,240
I.   Amounts ceded to reinsurers from insurance
     reserves..................................             30,999                       30,999
J.  Deferred tax assets........................              7,273                        8,415
K.  Other assets...............................             41,281                       55,730
                                                           -------                      -------
            Total assets.......................            449,329                      942,925
                                                           =======                      =======
EQUITY AND LIABILITIES
A.  Shareholders' equity.......................             32,146                       31,664
B.  Minority interests in shareholders'
       equity..................................             14,336                       17,349
C.  Participating certificates and post-ranking
    liabilities................................                929                       12,207
D.  Insurance reserves.........................            299,512                      299,512
E.  Insurance reserves for life insurance where
    the investment risk is carried by
    policyholders..............................             24,726                       24,726
F.  Liabilities to banks.......................              1,584                      135,402
G.  Liabilities to customers...................              5,977                      177,323
H.  Certificated liabilities...................             19,803                      134,670
I.   Trading liabilities.......................                507                       44,538
J.  Other accrued liabilities..................               7660                       14,117
K.  Other liabilities..........................             33,631                       41,900
L.  Deferred tax liabilities...................              7,908                        8,898
M.  Deferred income............................                610                          619
                                                           -------                      -------
            Total equity and liabilities.......            449,329                      942,925
                                                           =======                      =======
</Table>

                                       F-21
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONSOLIDATED INCOME STATEMENTS

<Table>
<Caption>
                                                            2001                          2001
                                                 BEFORE CONSOLIDATION OF THE   AFTER CONSOLIDATION OF THE
                                                        DRESDNER BANK                DRESDNER BANK
                                                            E(MN)                        E(MN)
                                                 ---------------------------   --------------------------
<S>                                              <C>                           <C>
1.  Premiums earned (net)......................            52,745                        52,745
2.  Interest and similar income................            16,895                        24,224
3.  Income (net) from investments in affiliated
    enterprises, joint ventures and associated
    enterprises................................               508                         1,588
4.  Other income from investments..............             7,905                         8,502
5.  Trading income.............................             1,351                         1,592
6.  Fee and commission income, and income from
    service activities.........................             2,998                         4,827
7.  Other income...............................             2,307                         2,479
                                                           ------                        ------
            Total income (1. to 7.)............            84,709                        95,957
                                                           ------                        ------
8.  Insurance benefits (net)...................            50,154                        50,154
9.  Interest and similar expenses..............             2,683                         7,947
10. Other expenses for investments.............             8,234                         8,923
11. Loan loss provisions.......................                26                           596
12. Acquisition costs and administrative
    expenses...................................            15,588                        19,324
13. Amortization of goodwill...................               673                           808
14. Other expenses.............................             5,563                         6,378
                                                           ------                        ------
            Total expenses (8. to 14.).........            82,921                        94,130
                                                           ------                        ------
15. Earnings from ordinary activities before
       taxes...................................             1,788                         1,827
16. Taxes......................................              (739)                         (840)
17. Minority interests in earnings.............               543                         1,044
18. Net income.................................             1,984                         1,623
                                                           ======                        ======
</Table>

OTHER 2001 ACQUISITIONS

     - Nicholas-Applegate, San Diego:  On January 31, 2001, the Allianz Group
       acquired 100% of this U.S. asset management holding company at a purchase
       price of E1,111 million. The transaction also included
       performance-related purchase price payments of up to E1,236 million and
       incentive and retention schemes amounting to a maximum of E170 million.

2000 ACQUISITIONS:

     - PIMCO Advisors L.P., Delaware:  On May 5, 2000, the Allianz Group
       acquired 69.5% of the ownership interests in PIMCO Advisors L.P., a
       Delaware limited partnership. The total cost of acquisition was E3,738
       million in cash and shares of Allianz AG and obligations for future
       payments of approximately E200 million. The excess of the purchase price
       of E3,738 million over the estimated fair value of net assets acquired of
       E103 million was allocated to covenants not to compete in an amount of
       E863 million, to be amortized on a

                                       F-22
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

       straight-line basis over 5 years, and goodwill of E2,773 million, to be
       amortized on a straight-line basis over 20 years. In connection with this
       acquisition, Allianz AG holds a call option on the remaining 30.5%
       ownership interest in PIMCO Advisors L.P., which is currently held by a
       third party. Subject to certain conditions, the call option will allow
       Allianz AG to purchase the remaining ownership interests on the last
       business day of any calendar quarter beginning on January 31, 2003. In
       addition, this third party holds a put option, under which it can require
       Allianz AG, subject to certain conditions, to purchase its ownership
       interests in PIMCO Advisors L.P., on the last business day of any
       calendar quarter.

     - Allianz-Tiriac Asigurari, Bucharest:  On August 21, 2000, the Allianz
       Group acquired 51.0% of Allianz-Tiriac Asigurari for E14 million.

     - Arab International Insurance Company, Cairo:  On March 2, 2000, the
       Allianz Group purchased an additional 40.0% of Arab International
       Insurance Company. The current purchase increased the Allianz Group
       interest to 80.0%. The current purchase cost was E10 million, bringing
       the total purchase cost to E18 million.

     - Munchener und Magdeburger Hagelversicherung, Munich:  The additional
       acquisition on June 26, 2000, of 1.5% of Munchener and Magdeburger
       Hagelversicherung AG increased the Allianz Group's interest to 50.7%. The
       cost of additional interest was E0.1 million, bringing the total cost to
       E2 million.

     - Zwolsche Algemeene Holding, Nieuwegein:  On December 20, 2000, AGF Group,
       Paris purchased 100% of the Zwolsche Algemeene Holding Company and its
       subsidiaries. The subsidiaries include life and health, property and
       casualty and asset management companies. The cost of the purchase was
       E599 million. The operating results of these companies were included in
       the consolidated financial statements for the first time in fiscal year
       2001 with gross premium income of E205 million and net loss for 2001 of
       E12 million.

     - Assurance Generales de France (AGF), Paris:  The Allianz Group purchased
       an additional 10.9% of AGF for E780 million. The current purchase
       increased the Allianz Group interest to 65.2% and resulted in additional
       goodwill of E467 million. The Allianz Group also incurred additional
       costs in 2000 of E40 million for AGF contingent value rights (CVRs),
       which resulted in additional goodwill of E40 million.

1999 ACQUISITIONS:

     - Life USA Holding, Inc., Minneapolis:  On October 1, 1999, the Allianz
       Group acquired 75.7% of the shares in the U.S. company Life USA Holding,
       Inc. and its subsidiaries, which increased the Group's interest to 100%.
       The total cost of acquisition was E512 million. The subsidiaries of Life
       USA Holding, Inc. comprise a life insurance company and enterprises in
       the asset management sector.

     - Allianz First Life Insurance Company Limited, Seoul:  On June 12, 1999,
       the Allianz Group purchased an interest of 71.6% and on August 6, 1999,
       the remaining 28.4% in the Korean life insurance company Allianz First
       Life Insurance Company Limited, for a total purchase price of E454
       million.

     - Allianz President General Insurance, Taipei, & Allianz President Life
       Insurance, Taipei:  On June 2, 1999, 50% of the shares in Allianz
       President General Insurance and 50% of the shares in Allianz President
       Life Insurance, were purchased for a purchase price of

                                       F-23
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

       E31 million and E22 million, respectively. Allianz AG exercises control
       over the operations of these two companies.

     - Sacnas Holding, Paris:  The additional acquisition of 21.3%, on January
       1, 1999, of Sacnas Holding, and its subsidiaries increased Allianz
       Group's interest to 72%. The cost of the acquisition was E39 million. The
       subsidiaries are property and accident insurance companies. Prior to
       1999, Sacnas was managed by AGF and an unrelated insurance company and
       was accounted for by the equity method of accounting.

     - Allianz Australia Limited, Sydney:  This acquisition comprised property
       and casualty insurance enterprises and enterprises in the financial
       services sector. The acquisition increased Allianz's interest to 100% on
       December 17, 1998, at a cost of E220 million.

     - Wm. H. McGee & Co. Inc., New York:  Effective January 1, 1999, Allianz
       purchased 100% of Wm. H. McGee & Co. Inc., a U.S. based property and
       casualty insurance company. The cost of this acquisition was E60 million.

     - Colombiana De Inversion, Bogota:  This acquisition represents 60% of
       Colombiana De Inversion, a Colombia-based holding company and its
       subsidiaries which include property, casualty and life insurance
       companies. The cost of this acquisition was E53 million.

CONSOLIDATION PRINCIPLES

     The consolidated financial statements are based on the annual financial
statements of Allianz AG and all principal subsidiaries. All the financial
statements included are uniformly prepared in conformity with IAS accounting and
valuation standards as of December 31, 2001. The Group has used interim
financial statements for those entities whose fiscal year end is other than
December 31, 2001.

     Equity consolidation is carried out on the basis of the benchmark method in
conformity with IAS 22, Business Combinations. The acquisition costs are offset
against the Group's proportion of the shareholders' equity in the subsidiaries
at the date of acquisition. Any net assets and liabilities attributable to the
Allianz Group are carried at their fair value on the date of acquisition of the
subsidiary enterprises; for the proportion attributable to minority interests,
the pre-acquisition carrying amounts are used. When foreign subsidiaries are
consolidated for the first time, their net assets are translated at the exchange
rates in force at the date of their acquisition.

     Positive differences arising on first-time consolidation are capitalized as
goodwill and amortized over their estimated useful life. In the case of
acquisitions prior to January 1, 1995, such differences have been taken to
revenue reserves (within shareholders' equity) in accordance with the
transitional provisions in force under IAS 22.

     The earnings generated by subsidiaries after their first-time consolidation
or, where appropriate, their acquisition, are allocated to the revenue reserves
of the Group, as are the effects of consolidation procedures on earnings and the
Group's portion of the unappropriated retained earnings of subsidiaries.

     The proportion of net income or losses attributable to minority interests
has been calculated on the basis of the consolidated net income or loss of those
enterprises for the year.

     Intra-Group receivables and payables, income and expenses, and intercompany
profits have been eliminated.

                                       F-24
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FOREIGN CURRENCY TRANSLATION

     Allianz AG's reporting currency is the euro (E). Foreign currency is
translated in accordance with IAS 21 -- The Effects of Changes in Foreign
Exchange Rates, by the method of functional currency. The functional currency
for Group companies is always the local currency of the relevant company, e.g.,
the prevailing currency in the environment where the enterprise carries on its
ordinary activities. In accordance with the functional currency method, assets
and liabilities are translated at the closing rate on the balance sheet date and
expenses and income are translated at the annual average rate in all financial
statements of subsidiaries not reporting in euro. Any translation differences,
including those arising in the process of equity consolidation, are recorded
directly in shareholders' equity without affecting earnings.

     Currency gains/losses arising from foreign currency transactions
(transactions in a currency other than the functional currency of the entity)
are reported in other income or other expenses.

     Assets and liabilities of the Group which are subject to exchange rate
fluctuations are normally safeguarded against such fluctuations by the fact that
individual foreign subsidiaries have most of their liabilities in the local
currency and principally invest in the same currency in capital markets.

     The principal exchange rates used are summarized in the following table:

<Table>
<Caption>
                                              E CLOSING RATES      E AVERAGE RATES
                                             -----------------    -----------------
CURRENCY                                      2001      2000       2001       2000
--------                                     -------   -------    -------    ------
<S>                                          <C>       <C>        <C>        <C>
Australian Dollar (AUD)....................    1.739     1.675      1.732     1.596
Japanese Yen (JPY).........................  115.330   106.759    108.749    99.736
Pound Sterling (GBP).......................    0.609     0.624      0.622     0.609
Swiss Franc (CHF)..........................    1.483     1.523      1.510     1.561
South Korean Won (KRW) (in thousands)......    1.162     1.173      1.155     1.053
US Dollar (USD)............................    0.885     0.930      0.896     0.926
</Table>

(4) ACCOUNTING AND VALUATION POLICIES

     For consolidation purposes, the financial statements of Allianz AG and its
consolidated German and non-German subsidiaries have been prepared uniformly in
conformity with IAS accounting and valuation standards.

EFFECTS OF APPLYING IAS 39

     IAS 39 defines a financial instrument as "any contract that gives rise to
both a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise".

     The financial assets in their entirety are thus reported under assets on
the balance sheet, regardless of whether they are in the form of shares, cash
receivables or interest-bearing securities, or investment interests in separate
trust assets. All cash liabilities are reported under equities and liabilities,
irrespective of whether they are certificated or not certificated. Furthermore,
all commitments for delivery or receipt of financial instruments and cash
receivables or cash liabilities are classified as financial instruments. IAS 39
also defines derivative financial instruments (derivatives) as financial
instruments.

     IAS 39 also includes a new rule for reporting hybrid financial instruments.
Hybrid financial instruments are a combination of cash instruments (bearer
contracts) and derivative financial

                                       F-25
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

instruments (embedded derivatives). Subject to certain conditions, IAS 39
requires that embedded derivative components be separated out from the bearer
contract, and also requires separate reporting and valuation.

     IAS 39 regulates hedge accounting in conjunction with the reporting of
derivatives. The commercial hedge provided by derivative financial instruments
is recognized in the financial statements by balancing differing principles for
recognition and/or measurement for the valuation of hedged items and hedging
instruments in case the requirements are met for qualification as fair value
hedges, cash flow hedges or hedges of a net investment in a foreign entity.
Qualification as hedge accounting is principally based on requirements related
to formal documentation of hedging relationship, high effectiveness and
reliability of measurement as well as probability in case of forecasted
transactions.

     For purposes of initial recognition and derecognition, IAS 39 requires that
a financial asset or a financial liability be recorded in the balance sheet from
the date at which the company reporting the item in the balance sheet becomes a
partner to the contractual provisions of the financial instrument, e.g., when
the conclusion of a contract authorizes agreed payments or entails an agreed
commitment to considerations. A financial asset is derecognized when the Group
company reporting the item loses control (power of disposal) over the
contractual rights that comprise the financial asset. Financial liabilities are
derecognized when the liability is amortized, settled, expired, cancelled or
lapsed.

     Derivative financial instruments are initially measured at cost in the same
way as the underlying financial instruments. Subsequent to initial recognition,
derivatives are then revalued at fair value.

     Exchange-traded derivative financial instruments are valued using the
fair-value method and based on publicly quoted market prices. Valuation models
established in financial markets (such as present value models or option pricing
models) are used to value OTC-traded derivatives. In addition to interest rate
curves and volatilities, these models also take market and counterparty risks
into account.

INTANGIBLE ASSETS

     Intangible assets comprise goodwill and other intangible assets.

     Goodwill represents the difference between the purchase price of
subsidiaries and associated enterprises and the proportionate share of their net
assets, valued at the current value of all assets and liabilities at the time of
acquisition. Minority interests are generally valued at amortized historical
cost. Goodwill is amortized on a straight-line basis over its estimated useful
life, which is normally 20 years in the case of life and health insurance
enterprises, 10 years in the case of property and casualty insurance
enterprises, 10 years in the case of banks, and 20 years in the case of asset
management companies.

     The book values of goodwill are reviewed annually. Special depreciations
are made for diminutions in value which are deemed to be other than temporary.
Gains or losses realized on the disposal of subsidiaries include any related
unamortized goodwill balances.

     Other intangible assets include software purchased from others or developed
in-house and real property rights, which are amortized on a straight-line basis
over their useful service life or contractual term.

     The present value of future profits (PVFP) represents the capitalized value
of life/health insurance portfolios. The capitalized value is the present value
of net cash flows anticipated in
                                       F-26
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the future from insurance policies written at the point in time of first-time
consolidation after the insurance portfolio was purchased. Interest accrues on
the unamortized PVFP based upon the policy liability rate or contract rate. The
capitalized value of life/health insurance policies is amortized over the years
that such profits are anticipated to be received in proportion to the estimated
gross margins or estimated gross profits for traditional participating products
that follow the contribution principle and financial or investment products,
respectively, and over the premium paying period in proportion to premiums for
other traditional insurance products.

     The methods used by the Group to value insurance products purchased are
consistent with the valuation methods used most commonly to value blocks of
insurance business. They are also consistent with the basic methodology
generally used to value insurance assets. The procedures used by the Group
include:

     - Identify the future cash flows from the acquired business.

     - Identify the risks inherent in realizing those cash flows and the rate of
       return the Group believes it must earn in order to accept the risks
       inherent in realizing the cash flows.

     - Determine the value of the insurance asset by discounting the expected
       future cash flows by the discount rate the Group requires.

     Expected future cash flows used in determining the PVFP are based on
actuarial determinations of future premium income, mortality, disease and
surrender probabilities, in addition to underwriting costs and returns on assets
that were invested in order to be able to meet the obligations arising under the
insurance contracts.

     The discount rate used to determine the PVFP corresponds to the opportunity
costs for the risk capital used. In selecting the rate of return, the Group
considered the magnitude of the risks associated with the type of business being
acquired, actuarial factors described in the preceding paragraph, cost of
capital available to the Group to fund the acquisition and compatibility with
other Group activities that may favorably affect future profits.

     Other intangible assets also include capitalized loyalty bonuses for senior
management of the PIMCO Group, Delaware that are amortized on a straight-line
basis over five years, as well as the value of the brand names of Dresdner Bank
that are amortized on a straight-line basis over 20 years. The fair value for
the names "Dresdner Bank" and "dit" (Deutscher Investment-Trust), registered as
trade names, was determined using a royalty savings approach.

INVESTMENTS IN AFFILIATED ENTERPRISES, JOINT VENTURES AND ASSOCIATED ENTERPRISES

     Investments in unconsolidated affiliated enterprises, joint ventures and
associated enterprises are generally valued by the equity method, in accordance
with the Group's valuation principles, at the Group's proportionate share of
their net assets using a date as close as possible to the Group's year end, but
no more than six months prior to the Group's year-end. In the case of
investments in enterprises that prepare their own consolidated financial
statements, the valuation is based on the sub-group's consolidated net assets.
Accordingly, the company's share of net income or loss of such investments is
included in consolidated net income. The effect of profits and losses from
intercompany transactions has been eliminated.

     Investments in unconsolidated affiliated enterprises, joint ventures, and
associated enterprises, that are not valued by the equity method because they
are not material, are accounted for at cost. Associated enterprises are all
those enterprises in which the Group has an interest of between 20 percent and
50 percent, for all of which a significant influence is presumed.

                                       F-27
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INVESTMENTS

     Investments include securities held to maturity, securities available for
sale, real estate used by third parties and funds held by others under
reinsurance contracts assumed. Derivatives used for hedge transactions are
included with the classification of the item hedged.

     Securities held to maturity are comprised of fixed income securities which
the Group has the intent and ability to hold to maturity. They are accounted for
at amortized cost and the related premium or discount is amortized using the
interest method over the life of the security. Amortization is recognized in
interest income.

     Securities available for sale are securities that are not classified as
held to maturity or trading assets. Available for sale securities are accounted
for at fair value at the balance sheet date. Unrealized gains and losses which
are the difference between fair value and cost (amortized cost in the case of
fixed income securities) are included as a separate component of shareholders'
equity, net of deferred taxes, or, for amounts that would be due to
participating policyholders if realized, taken to the latent reserve for premium
refunds within other insurance reserves. Realized gains and losses on securities
are principally determined by applying the average cost method.

     Real estate used by third parties (e.g., real property and buildings,
including buildings on leased land) is carried at cost less accumulated,
scheduled and unscheduled depreciation. Investment property is depreciated on a
straight-line basis over its estimated life. The fair value of real estate used
by third parties is determined by the discounted cash flow method.

     Funds held by others under reinsurance contracts assumed are accounted for
at face value.

INVESTMENTS HELD ON ACCOUNT AND AT RISK OF LIFE INSURANCE POLICYHOLDERS

     These relate mainly to investments funding unit-linked life insurance
policies and variable annuities. They are valued at market value on the balance
sheet date. Unrealized gains and losses arising from market valuations lead to a
corresponding increase or decrease in the related insurance reserves.

LOANS AND ADVANCES TO BANKS AND CUSTOMERS

     Loans and advances to banks and customers originated by the enterprise that
are intended to be held to maturity are carried at their outstanding unpaid
principal balances net of charge-offs, deferred fees and costs, and unamortized
premiums or discounts. Any difference between the loan proceeds issued and the
nominal amount of the loan that represents interest is deferred and recognised
as interest income using the effective interest method. Loan administration fees
are also deferred and recognised in income using the effective interest method.

     Loans and advances to banks and customers also include outstanding reverse
repurchase (reverse repo) transactions. A reverse repo transaction involves the
purchase of securities with the simultaneous obligation to sell these securities
at a future date. If control over the securities remains with the pledgor, these
transactions are reported in "Loans and Advances to Banks", or "Loans and
Advances to Customers". Interest income from reverse repos is accrued evenly
over the duration of the transaction.

                                       F-28
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Non-accrual loans

     Non-accrual loans are loans on which interest income is no longer
recognised on an accrual basis and loans for which a specific provision is
recorded for the full amount of accrued interest receivable. Loans are placed on
nonaccrual status when management determines, based on its judgement, that the
payment of interest or principal is doubtful.

     When a loan is placed on nonaccrual status, any accrued and unpaid interest
receivable is reversed and charged against interest income. Loans are restored
to accrual status only when interest and principal are made current in
accordance with the contractual terms and, in management's judgement, future
payments are reasonable assured. When there is doubt regarding the ultimate
collectibility of the principal of a loan placed on non-accrual status, all cash
receipts are applied as reductions in principal. Once the recorded principal
amount of the loan is reduced to zero, future cash receipts are recognized as
interest income.

Loan impairments and provisions

     The Group believes that specific and general allowances as well as country
risk provisions take adequate account of the credit risks identifiable at the
balance sheet date. The total amount of loan loss provisions consists of the
loan loss allowance deducted from assets and the provisions for contingent
liabilities, such as guarantees, loan commitments and other obligations, carried
as liabilities.

     A specific loss allowance is established to provide for specifically
identified counter-party risks. Loans are identified as impaired if it is
probable that borrowers are no longer able to make their contractually
agreed-upon interest and principal payments. Specific allowances are established
for impaired loans. The amount of the impairment is measured based on the
present value of expected future cash flows or based on the fair value of the
collateral if the loan is collateralized and foreclosure is probable. If the
amount of the impairment subsequently increases or decreases due to an event
occurring after the initial measurement of impairment, a change in the allowance
is recognized in earnings by a charge or a credit to net loan loss provisions.

     General loss allowances are established to provide for incurred but
unidentified losses that are inherent in the loan portfolio as of the relevant
balance sheet date. General allowances for loan losses are established for loans
not specifically identified as impaired. The amount of the allowance is based on
historical loss experience and management's evaluation of the loan portfolio
under current events and economic conditions.

     Country risk allowances are established for transfer risk. Transfer risk is
a measure of the likely ability of a borrower in a certain country to repay its
foreign currency-denominated debt in light of the economic or political
situation prevailing in that country. Country risk allowances are based on our
country rating system that incorporates current and historical economic,
political and other data to categorize countries by risk profile.

     When management determines that a loan is uncollectible, the loan is
charged off against any existing specific loss allowance or directly recognized
as expense in the income statement. Subsequent recoveries, if any, are
recognized in the income statement as a credit to the net loan loss provisions.
Since 2000, the Group has charged off loans when, based on management's
judgement, all economically sensible means of recovery have been exhausted. This
determination considers information such as the age of specific loss allowances
and expected proceeds from liquidation of collateral and other repayment
sources.

                                       F-29
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TRADING ASSETS

     These consist of debt and equity securities, derivatives with positive
market values, promissory notes and precious metal holdings, that have been
acquired solely for sale in the near term. They are classified as "Held for
trading" on account of their purpose and are reported at fair value at the
balance sheet date. Changes in fair value are recognized directly in the income
statement. Exchange-traded financial instruments are valued at the exchange
prices prevailing on the last exchange trading day of the year. To determine the
market values of unlisted financial instruments, quotations of similar
instruments or other valuation models (in particular present value models or
option pricing models) are used. Creditworthiness, settlement costs and market
liquidity are also taken into account as integral components of the valuation
process.

     Realized gains and losses on securities are primarily calculated based on
the average cost method.

CASH FUNDS AND CASH EQUIVALENTS

     These items include balances with banks payable on demand, balances with
central banks, checks and cash on hand, treasury bills (to the extent that they
are not included in trading assets), and bills of exchange which are eligible
for refinancing at central banks, subject to a maximum term of six months from
the date of acquisition. Cash funds are stated at their face value, with
holdings of foreign notes and coins valued at year-end closing prices.

OTHER ASSETS

     Other assets consist of real estate owned by the Allianz Group and used for
its own activities, property, plant and equipment, accounts receivable, deferred
acquisition costs, prepaid expenses and miscellaneous assets.

     Real estate owned by Allianz Group used for its own activities (e.g., real
property, and buildings, including buildings on leased land) is carried at cost
less accumulated, scheduled and unscheduled depreciation. Land and buildings
owned by the Allianz Group for its own use are depreciated on a straight-line
basis over their estimated life.

     Property, plant and equipment are carried in other assets and are stated at
cost less accumulated depreciation. Property, plant and equipment, and
inventories are depreciated on a straight-line basis over its estimated useful
life. Repairs and maintenance costs are capitalized if they extend the useful
life of the asset; otherwise they are expensed as incurred. Reversal of
impairment is credited to other income.

     Receivables are recorded at face value less any payments received or
appropriate valuation allowances.

     Deferred acquisition costs include commissions paid and other costs which
vary with and are incurred in connection with the acquisition or renewal of
insurance policies. Deferred acquisition costs are capitalized and amortized
against income over the term of the policies to which they relate.

     All deferred policy acquisition costs are reviewed regularly to determine
if they are recoverable from future operations, including anticipated investment
income. Deferred acquisition costs which are not deemed to be recoverable, are
charged to income.

                                       F-30
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

IMPAIRMENT OF ASSETS OTHER THAN LOANS

     All assets are reviewed regularly for impairment. Valuation write-downs to
fair value are charged to the income statement if any permanent diminution in
value occurs.

     The methods and assumptions used by the Group to determine fair values are
disclosed in Note 43.

SECURITIES BORROWING AND LENDING

     The Group enters into securities borrowing and lending transactions on
behalf of its customers and to fulfill its own obligations to deliver or take
delivery of securities and to maximize returns on the investment-portfolios of
the insurance companies. Such transactions involve the transfer of securities
from one market participant (lender) to a counterparty (borrower), for a certain
period of time. If the lender retains control, the lender continues to report
the securities involved on its balance sheet, whereas borrowed securities are
not reported. Income and expenses from securities borrowing and lending
transactions are recognized on an accrual basis and reported under "Interest and
similar income" or "Interest and similar expenses".

ASSET SECURITIZATIONS

     The Group transfers financial assets to certain special purpose entities in
revolving securitizations of commercial mortgage or other loan portfolios. The
Group consolidates these special purpose entities as the Group continues to
control the financial assets transferred and retains the servicing of such
loans.

ACCOUNTING FOR LEASES

     Property and equipment holdings are used by the Group under operating
leases, whereby the risks and benefits relating to ownership of the assets
remain with the lessor, and are not recorded on our balance sheet. Payments made
under operating leases to the lessor are charged to administrative expenses
using the straight-line method over the period of the lease. When an operating
lease is terminated before the lease period has expired, any penalty is
recognized in full as an expense at the time when such termination takes place.

SHAREHOLDERS' EQUITY

     Treasury stock held by the Group is stated as shares held by the company.
These shares are deducted from shareholders' equity at cost. Gains and losses
arising from trading in treasury stock held by the company are added to revenue
reserves after income tax has been deducted.

INSURANCE RESERVES

     These include aggregate policy reserves, reserve for loss and loss
adjustment expenses, and other insurance reserves and unearned premiums.

AGGREGATE POLICY RESERVES

     The aggregate policy reserve for traditional life insurance products,
including the reserve for advancing age in health insurance, is based on
actuarial principles and is calculated using the present value of future
benefits less the present value of future net premiums. Reserves for traditional
participating insurance products that follow the contribution principle are
computed

                                       F-31
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

based on assumptions for mortality and interest that are guaranteed in the
contracts or are used in determining dividends. Reserves for other traditional
life insurance products are determined using Group experience as to mortality,
morbidity, lapses, and interest rates, with a provision for adverse deviation.
The Group may vary assumptions by year of policy issue.

     The aggregate policy reserve for financial and investment products is equal
to the account value. Account values are not actuarially determined. Rather,
account values are equal to the premium received and interest credited to the
policy less deductions for mortality costs and expense charges. Mortality costs
and expense charges are established by the Group based upon its experience and
cost structure and in accordance with policy terms.

     The Group's life insurance subsidiaries offer a wide range of traditional
life insurance, financial and investment products. Traditional life insurance
products consist of both short and long duration policies with participating and
non-participating features. Short duration traditional life insurance products
include term, accident and health contracts. Long duration traditional life
insurance products include individual and group whole-life, endowment,
guaranteed renewable term and accident and health, and annuity contracts.
Financial and investment products consist of universal life, unit-linked
products (variable annuities), single premium annuity, and guaranteed investment
contracts.

     Traditional life insurance products (participating and non-participating):

     - Policyholders participate in profits in the same proportion as their
       policies have contributed to profit; policyholders do not participate in
       losses (referred to as the "contribution principle").

     - Policyholders participate in profits on the basis of a mechanical or
       non-contributory system.

     - Policyholders are guaranteed fixed benefits and do not participate in any
       profits; all other benefits and risks are carried by the insurer.

     Financial and investment products:

     - Policyholders carry not only the investment risk and corresponding
       benefits, but also any losses ("variable annuities"). The aggregate
       reserve for these policies is shown under a separate liability heading
       "insurance reserves for the life insurance where the investment risk is
       carried by policyholders."

     - Policyholders are entitled within certain limits to vary the level of
       premium payments, and the life insurance enterprise does not give any
       contractual guarantees about minimum rate of return or the level of
       management fees ("universal life type" policies).

     The interest rate assumptions were as follows:

<Table>
<Caption>
                                                                 POLICIES USING THE         OTHER
                                                               CONTRIBUTION PRINCIPLE      POLICIES
                                                               ----------------------   --------------
    <S>                                                        <C>                      <C>
    Aggregate policy reserves................................            3%                   7%
    Deferred acquisition costs...............................            7%                   7%
</Table>

     Mortality costs and expense charges are established by the Group based upon
its experience and cost structure and in accordance with policy terms.

     THE RESERVE FOR LOSS AND LOSS ADJUSTMENT EXPENSE is for future payment
obligations under insurance claims, where normally either the amount of benefits
to be paid or the date when

                                       F-32
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

payments are to be made is not yet fixed. The reserve for loss and loss
adjustment expenses is calculated at the estimated amount considered necessary
to settle claims in full. It is calculated using recognized actuarial methods.
Unusual cases are calculated on an individual basis. Past experience is taken
into account as well as current and future anticipated social and economic
factors. With the exception of claims for which annuity reserves have been
established, claim reserves are not discounted. The necessary estimates may mean
that the payment obligations calculated may differ from the ultimate costs.

     The reserve for loss and loss adjustment expenses includes:

     - claims reported at the balance sheet date

     - claims incurred but not yet reported at the balance sheet date

     - claims settlement expenses.

     There is no adequate statistical data available for some risk exposures in
liability insurance, such as environmental and asbestos claims and large-scale
individual claims, because some aspects of these types of claims are still
evolving. Appropriate provision has been made for such cases following an
analysis of the portfolios in which such risks occur.

     OTHER INSURANCE RESERVES include the reserve for premium refunds. This item
includes experience-rated and other premium refunds in favor of policyholders.

     The reserve for premium refunds includes the amounts allocated under the
relevant local statutory or contractual regulations to the accounts of the
policyholders and the amounts resulting from the differences between this income
statement under IAS rules and local income statements, which will reverse and
enter into future deferred profit sharing calculations. These differences are
restated and recognized on a future accrual basis and reported in profit
participation accounts. Unrealized gains and losses in connection with the
valuation of investments are recognized in the latent reserve for premium
refunds to the extent that the policyholder will participate in such gains and
losses on the basis of statutory or contractual regulations when they are
realized.

     The profit participation allocated to participating policyholders or paid
out to them reduces the reserve. Any dividends allocated or paid out over and
above the reserve are recorded in operating expenses.

     Methods and corresponding percentages for participation in profits by the
policyholders are set out below for the most significant countries:

<Table>
<Caption>
COUNTRY                                                       METHOD     PERCENTAGE
-------                                                       -------    ----------
<S>                                                           <C>        <C>
Germany:
  Life......................................................  Minimum        90%
  Health....................................................  Minimum        80%
France-Life.................................................  Minimum        85%
Italy-Life..................................................  Minimum        85%
</Table>

     Other insurance reserves also include the premium deficiency reserve which
is calculated individually for each insurance portfolio on the basis of
estimates of future claims, costs, premiums earned and proportionate investment
income. For short duration contracts, a premium deficiency is recognized if the
sum of unexpected claim costs, claim adjustment expenses, expected dividends to
policyholders, unamortized acquisition costs, and maintenance expenses

                                       F-33
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

exceeds related unearned premiums while considering anticipated investment
income. For long duration contracts, if actual experience regarding investment
yields, mortality, morbidity, terminations or expense indicate that existing
contract liabilities, along with the present value of future gross premiums,
will not be sufficient to cover the present value of future benefits and to
recover unamortized acquisition costs, then a premium deficiency is recognized.

REINSURANCE

     Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense accounts.
Assets and liabilities related to reinsurance ceded are reported on a gross
basis. Prepaid reinsurance represents the ceded portion of unearned premiums.
Amounts recoverable from reinsurers are estimated in a manner consistent with
the claim liability associated with the reinsured risks. Accordingly, revenues
and expenses related to reinsurance agreements are recognized consistent with
the underlying risk of the business reinsured.

LIABILITIES TO BANKS AND CUSTOMERS AND CERTIFICATED LIABILITIES

     Interest-bearing liabilities are accounted for at their nominal value,
e.g., at the amount to be repaid. Where liabilities are entered into subject to
a discount, such discounts are reported as prepaid expenses and amortized over
the life of the respective liabilities, using the effective yield method.
Non-interest-bearing liabilities such as zero-coupon bonds are valued at their
present value on initial recognition and written up in accordance with the
effective yield method at the contracted interest rate. Costs relating to the
issuance of debt securities, such as fees relating to placement, underwriting
commitments, subscription, management or syndication are recognized in the year
that they are incurred, and are reported in "Other expenses".

     Liabilities to banks and customers also include repurchase ("repo")
transactions. Repo transactions involve the sale of securities by the Group to a
counterparty, subject to the simultaneous agreement to repurchase these
securities at a certain later date, at an agreed price. If control of the
securities remains in the Group over the entire lifetime of the transactions,
the securities concerned are retained in the Group's balance sheet and are
valued in accordance with the accounting principles for trading assets or
investments. The proceeds of the sale are reported under "Liabilities to banks"
or "Liabilities to customers" as appropriate.

     Interest expenses from repos are accrued evenly over the lifetime of the
transactions and reported under "Interest and similar expenses".

TRADING LIABILITIES

     This item primarily includes derivatives with negative market values and
obligations to deliver assets arising from short sales of securities, which are
carried out in order to benefit from short-term price fluctuations. The
securities required to close out short sales are obtained through securities
borrowing or repurchase agreements. These liabilities are valued the same as
trading assets.

OTHER ACCRUED LIABILITIES

     Pension and similar reserves are calculated taking local circumstances into
account as well as current mortality, morbidity and employee turnover
projections. Expected future trends in salaries and wages, retirement rates and
pension increases are also taken into account. The

                                       F-34
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

notional interest rate used is based on the rate for long-term, highly rated
corporate or government bonds.

     Accrued taxes are calculated in accordance with relevant local tax
regulations.

     Miscellaneous accrued liabilities are recorded as projected. Miscellaneous
accrued liabilities primarily include reserves for restructuring, for
anticipated losses arising from non-insurance business, for litigation, for
employees (e.g., early retirement, phased retirement, employee awards for long
service, and vacation) and agents (e.g., unpaid commissions).

OTHER LIABILITIES

     These include funds held under reinsurance business ceded, accounts payable
on direct insurance business, accounts payable on reinsurance business, and
miscellaneous liabilities. These are reported at the redemption value.

DEFERRED TAX LIABILITIES

     The calculation of deferred tax is based on temporary differences between
the carrying amounts of assets or liabilities in the published balance sheet and
their tax basis, and on differences arising from the application of uniform
valuation policies for consolidation purposes. The tax rates used for the
calculation of deferred taxes are the local rates applicable in the countries
concerned; changes to tax rates already adopted prior to or as of the balance
sheet date are taken into account.

PREMIUMS

     Property-casualty insurance premiums are recognized as revenues over the
period of the contract in proportion to the amount of insurance protection
provided. Unearned premiums are calculated separately for each individual policy
to cover the unexpired portion of written premiums.

     In the case of premiums for life insurance products where the policyholder
carries the investment risk (e.g., variable annuities), only those parts of the
premiums used to cover the risks insured and costs involved are treated as
premium income.

     Life insurance premiums on traditional life insurance policies are
recognized as earned when due. Benefits and expenses are provided against such
revenues to recognize profits over the estimated life of the policies.

     Revenues for financial and investment policies, such as universal life and
variable annuity contracts, represent charges assessed against the
policyholders' account balance for the cost of insurance, surrenders and policy
administration and are included with premiums earned on the income statement.
Benefits charged to expense include benefit claims incurred during the period in
excess of policy account balances and interest credited to policy account
balances.

INTEREST AND SIMILAR INCOME/EXPENSES

     Interest income and interest expenses are recognized on an accrual basis.
Interest income from lending business is recognized using the effective yield
method. This item also includes dividends from available for sale equity
securities and interest recognized on finance leases. Dividends are recognized
in income when earned. Interest on finance leases is recognized in interest
income over the term of the respective lease so that a constant period yield
based on the net investment is attained.
                                       F-35
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TRADING INCOME

     Trading income comprises all realized and unrealized gains and losses from
trading assets and trading liabilities. In addition, commissions and all
interest and all dividend income attributable to trading operations and related
refinancing costs are included in trading income.

NET FEE AND COMMISSION INCOME

     In addition to traditional commission income received on security
transactions, fee and commission income include commissions received in relation
to private placements, syndicated loans and financial advisory services. Other
fees reflect commissions received for trust and custodial services, brokerage of
insurance policies, credit cards, home loan and savings contracts and brokerage
of real estate. Fee and commission income is recognized when the corresponding
service is provided.

TRUSTEE BUSINESS

     Assets and liabilities held by the Group in its own name, but for the
account of third parties, are not reported in the balance sheet. Commissions
received from such business are shown as "Fee and commission income" in the
income statement.

EQUITY REMUNERATION PLANS

     Equity-based remuneration plans are reported in conformity with US GAAP
Standard APB (Accounting Principles Board) Opinion No. 25 and related
regulations on the basis of the intrinsic value of the option rights.

     In conformity with the method based on the intrinsic value of the option
rights, remuneration expenses correspond to the difference between the current
share price on the balance sheet date and the exercise price of the option on
the assignment date. They are reported proportionately over the retirement term
for the allocation. Remuneration expenses for Stock Appreciation Rights (SAR)
correspond to the amount by which the market price exceeds the reference price,
provided that it can be assumed that the stock appreciation requirements and the
associated rights of employees are being exercised. An increase or decrease in
the stock-market price of the share leads to a corresponding change in the
remuneration expenses.

SEGMENT REPORTING

     Information on segments is reported separately in the consolidated
financial statements. Segment information has been prepared on the basis of the
accounting regulations used to prepare the consolidated financial statements as
a whole. The segments of the Group are organized as geographical segments
(regions) and business segments (products) in a matrix that comprises a number
of profit and service-center segments. The business segments are structured as
Life/Health, Property-Casualty, Banking, and Asset Management.

     Life/Health:  The Group's life/health segment provides endowment, fixed and
variable annuities and traditional life insurance and a wide range of health,
disability and related coverages to individual insureds. Additionally, the Group
offers group life, group health and pension products to employers.

     Property-Casualty:  The Group's property-casualty segment primarily relates
to property and casualty insurance. The Group offers automobile, homeowners,
travel and other personal lines

                                       F-36
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

products. Additionally, the Group provides commercial and industrial coverages
to business enterprises of all sizes.

     Banking:  The Group's banking segment provides traditional commercial
banking products and services such as deposit-taking, lending (including
mortgage lending), cash management and transaction banking, as well as corporate
finance advisory services, mergers and acquisitions advisory services, capital
and money market services, securities underwriting and securities trading and
derivatives business on its own account and for its customers.

     Asset Management:  The Group's asset management segment provides equity,
fixed income, money market, sector, geographic and a variety of other products
and alternative investment vehicles to retail and institutional customers.

                   SUPPLEMENTARY INFORMATION ON GROUP ASSETS

(5) INTANGIBLE ASSETS

     Intangible assets for the years ended December 31, were:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              ------    ------
<S>                                                           <C>       <C>
Goodwill....................................................  12,649     7,393
Other intangible assets.....................................   4,262     3,001
                                                              ------    ------
Total.......................................................  16,911    10,394
                                                              ======    ======
</Table>

GOODWILL

     Changes in goodwill for the years ended December 31:

<Table>
<Caption>
                                                       2001        2000       1999
                                                      E(MN)       E(MN)       E(MN)
                                                     --------    --------    -------
<S>                                                  <C>         <C>         <C>
Gross amount capitalized as of beginning of year...     8,899       5,306      3,549
Accumulated amortization as of beginning of year...    (1,506)     (1,010)      (525)
                                                     --------    --------    -------
Value stated as of beginning of year...............     7,393       4,296      3,024
Translation differences............................       134          35         20
                                                     --------    --------    -------
Value stated as of beginning of year...............     7,527       4,331      3,044
Reclassification...................................       350          --         --
Additions..........................................     5,580       3,557      1,737
Amortization.......................................      (808)       (495)      (485)
                                                     --------    --------    -------
Value stated as of end of year.....................    12,649       7,393      4,296
Accumulated amortization as of end of year.........     2,314       1,506      1,010
                                                     --------    --------    -------
Gross amount capitalized as of end of year.........    14,963       8,899      5,306
                                                     ========    ========    =======
</Table>

     Reclassification relates to the interest of the Group in the goodwill shown
in the balance sheet of Dresdner Bank prior to acquisition of the majority
shareholding on July 23, 2001.

                                       F-37
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Major additions in 2001 include the following:

<Table>
<Caption>
                                                               E(MN)
                                                               -----
<S>                                                           <C>
Dresdner Bank AG, Frankfurt/Main............................    3,977
Nicholas-Applegate, San Diego...............................    1,042
HIH Insurance Group, Sydney.................................      243
Munich Re, Munich...........................................      189
Malaysia British Assurance, Malaysia........................       45
Increase in interest in Berner Allgemeine
  Versicherungs-Gesellschaft,
  Bern by 39.8% to 99.9%....................................       19
</Table>

     Amortization of goodwill is shown separately in the income statement under
caption 13. There were no write-downs of goodwill in 2001 or 2000. Amortization
in 1999 includes a E128 million write-down of goodwill for Allianz Australia
Limited.

SOFTWARE

     The following table presents changes in capitalized software during the
years ended December 31:

<Table>
<Caption>
                                                         2001       2000       1999
                                                         E(MN)      E(MN)     E(MN)
                                                         -----      -----     -----
<S>                                                     <C>        <C>        <C>
Gross amount capitalized as of beginning of year......    1,356      1,086       823
Accumulated amortization as of beginning of year......     (762)      (572)     (459)
                                                        -------    -------    ------
Valuation stated as of beginning of year..............      594        514       364
Translation differences...............................        6          6         4
                                                        -------    -------    ------
Value stated as of beginning of year..................      600        520       368
Additions.............................................      491        320       288
Changes in the group of consolidated companies........      612         14         4
Disposals.............................................      (26)       (59)      (21)
Amortization charge...................................     (241)      (201)     (125)
                                                        -------    -------    ------
Value stated as of end of year........................    1,436        594       514
Accumulated amortization as of end of year............    1,003        762       572
                                                        -------    -------    ------
Gross amount capitalized as of end of year............    2,439      1,356     1,086
                                                        =======    =======    ======
</Table>

     The balance sheet value amounting to E1,436 million at December 31, 2001
(2000: E594 million) includes E619 million (2000: E394 million) for software
developed in-house and E817 million (2000: E200 million) for software purchased
from others. Software is amortized over a maximum of five years, according to
its useful life.

                                       F-38
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CAPITALIZED VALUE OF LIFE/HEALTH INSURANCE PORTFOLIOS

     The following table presents changes in the capitalized value of life and
health insurance portfolios during the years ended December 31:

<Table>
<Caption>
                                                         2001       2000       1999
                                                         E(MN)      E(MN)     E(MN)
                                                        -------    -------    ------
<S>                                                     <C>        <C>        <C>
Gross amount capitalized as of beginning of year......    1,975      1,900       548
Accumulated amortization as of beginning of year......     (457)      (192)      (99)
                                                        -------    -------    ------
Value stated as of beginning of year..................    1,518      1,708       449
Translation differences...............................       13         21        --
                                                        -------    -------    ------
Value stated as of beginning of year..................    1,531      1,729       449
Additions.............................................       11        114       606
Transfers.............................................       --         --       746
Amortization charge...................................     (168)      (325)      (93)
                                                        -------    -------    ------
Value stated as of end of year........................    1,374      1,518     1,708
Accumulated amortization as of end of year............      625        457       192
                                                        -------    -------    ------
Gross amount capitalized as of end of year............    1,999      1,975     1,900
                                                        =======    =======    ======
</Table>

     The capitalized value of life/health insurance portfolios was determined
using discount rates ranging from 12.0% to 15.0%. Interest rates between 3.5%
and 8.5% were applied for interest not yet due.

     The addition under capitalized value of life insurance portfolios in 2001
relates to first-time consolidation of the subsidiary Malaysia British Assurance
Life, Kuala Lumpur. Major additions in 2000 relate to first-time consolidation
of the subsidiary Life ZA Leven, Nieuwegein and in 1999 relate to the
acquisition of Life USA Holding Inc., Minneapolis at E213 million and Allianz
First Life Insurance Co. Ltd., Seoul at E122 million.

     Amortization of the capitalized value of life/health insurance portfolios
net of interest accrued is included in acquisition costs and administrative
expenses. The amount of interest accrued on the amortized present value of
future profits in 2001 is E99 million (2000: E119 million and 1999: E52
million).

     Amortization in 2000 includes a E132 million write-down of present value of
future profit for Allianz First Life Insurance Company Limited, Seoul due to
changing conditions in the capital market.

     The percentage of the capitalized value as of December 31, 2001 that is
expected to be amortized in 2002 is 21.7% (19.2% in 2003, 16.7% in 2004, 13.2%
in 2005, and 11.4% in 2006).

     Other intangible assets also include capitalized loyalty bonuses for senior
management of the PIMCO Group, Delaware, amounting to E574 million at December
31, 2001 (2000: E713 million), which is amortized on a straight-line basis over
five years.

     Assets of E659 million were recognized for the value of the brand name
"Dresdner Bank" and "dit" (Deutscher Investment-Trust), and these are amortized
on a straight-line basis over 20 years.

     Scheduled amortization for the brand names amounted to E15 million during
the year under review.

                                       F-39
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(6) INVESTMENTS IN AFFILIATED ENTERPRISES, JOINT VENTURES AND ASSOCIATED
    ENTERPRISES

     The following represents the Group's investments in affiliated enterprises,
joint ventures and associated enterprises as of December 31:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Affiliated enterprises......................................     870       581
Joint ventures..............................................     105        97
Associated enterprises......................................   9,272    11,085
                                                              ------    ------
          Total stated value................................  10,247    11,763
                                                              ======    ======
          Total market value................................  24,134    29,477
                                                              ======    ======
</Table>

     The market value is principally based on stock exchange quotations.

     The amount of investments in affiliated enterprises, joint ventures and
associated enterprises that relates to banks was E2,079 million (2000: E76
million).

     Unaudited condensed combined balance sheet information for the significant
associated enterprises of the Group, as of December 31, is as follows:

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)      E(MN)
                                                               -----      -----
<S>                                                           <C>        <C>
Premium receivable..........................................    7,185      5,581
Loans and advances to banks and customers...................    6,641    324,234
Trade accounts receivable...................................      688        598
Other accounts receivable...................................    7,049      4,063
Financial investments.......................................  168,789    321,942
Inventories.................................................    1,575        532
Land/building...............................................    2,958      2,916
Other assets................................................   32,644     46,555
                                                              -------    -------
          Total assets......................................  227,529    706,421
                                                              =======    =======
Deposits....................................................       40    324,077
Insurance reserves..........................................  140,803    143,724
Loans and financial liabilities.............................   11,245      1,335
Trade accounts payable......................................      422        370
Other liabilities...........................................   39,800    189,756
Minority interest...........................................    2,162      2,342
Equity......................................................   33,057     44,817
                                                              -------    -------
          Total liabilities and equity......................  227,529    706,421
                                                              =======    =======
</Table>

                                       F-40
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Unaudited condensed combined income statement information for the
significant associated enterprises of the Group for the years ended December 31,
is follows:

<Table>
<Caption>
                                                          2001      2000      1999
                                                         E(MN)     E(MN)     E(MN)
                                                         -----     -----     -----
<S>                                                      <C>       <C>       <C>
Earned premium.........................................  30,220    28,347    26,074
Fees and commission income.............................   2,148     4,488     3,624
Interest income........................................  21,073    26,798    23,915
Rental income..........................................     366       182       182
Sales..................................................   8,413     4,262     3,638
Other revenue..........................................   3,029     6,578     6,520
                                                         ------    ------    ------
          Total revenue................................  65,249    70,655    63,953
Claims/benefit expenses................................  29,174    28,352    25,991
Fees and commissions expense...........................      98       197       187
Purchases and other external expenses..................   2,573        62        62
Cost of goods sold.....................................   1,748     1,560     1,413
Other expenses.........................................  26,224    35,537    31,657
                                                         ------    ------    ------
          Total expenses...............................  59,817    65,708    59,310
                                                         ------    ------    ------
Taxes..................................................   1,137     1,220     1,751
Minority interest......................................     174       184       216
                                                         ------    ------    ------
          Net income (after taxes).....................   4,121     3,543     2,676
                                                         ======    ======    ======
</Table>

(7) INVESTMENTS

     Investments comprise the following:

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)      E(MN)
                                                               -----      -----
<S>                                                           <C>        <C>
Securities held to maturity.................................    7,688      8,087
Securities available for sale...............................  322,192    258,001
Real estate used by third parties...........................   12,004     11,506
Funds held by others under reinsurance contracts assumed....    3,418      3,240
                                                              -------    -------
          Total.............................................  345,302    280,834
                                                              =======    =======
</Table>

                                       F-41
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SECURITIES HELD TO MATURITY

     The following tables present amortized cost, fair value and unrealized
gains and losses for securities held to maturity:

<Table>
<Caption>
                                                    AS OF DECEMBER 31, 2001
                                         ----------------------------------------------
                                         AMORTIZED    UNREALIZED    UNREALIZED    FAIR
                                           COST         GAINS         LOSSES      VALUE
                                           E(MN)        E(MN)         E(MN)       E(MN)
                                         ---------    ----------    ----------    -----
<S>                                      <C>          <C>           <C>           <C>
Government and government agency bonds:
     Germany...........................      684          11             8          687
     France............................      760          --             9          751
     Other.............................    1,378           1            17        1,362
                                           -----         ---           ---        -----
                                           2,822          12            34        2,800
                                           -----         ---           ---        -----
Corporate bonds........................    2,094          58            28        2,124
Corporate mortgage-backed securities...      225           2             7          220
                                           -----         ---           ---        -----
                                           2,319          60            35        2,344
Other..................................    2,547         149            33        2,663
                                           -----         ---           ---        -----
          Total........................    7,688         221           102        7,807
                                           =====         ===           ===        =====
</Table>

<Table>
<Caption>
                                                    AS OF DECEMBER 31, 2000
                                         ----------------------------------------------
                                         AMORTIZED    UNREALIZED    UNREALIZED    FAIR
                                           COST         GAINS         LOSSES      VALUE
                                           E(MN)        E(MN)         E(MN)       E(MN)
                                         ---------    ----------    ----------    -----
<S>                                      <C>          <C>           <C>           <C>
Government and government agency bonds:
     Germany...........................      469          68            16          521
     France............................      632           3            --          635
     Other.............................    1,593           2            37        1,558
                                           -----         ---           ---        -----
                                           2,694          73            53        2,714
                                           -----         ---           ---        -----
Corporate bonds........................    2,120         112           101        2,131
Corporate mortgage-backed securities...      236           3            24          215
                                           -----         ---           ---        -----
                                           2,356         115           125        2,346
                                           -----         ---           ---        -----
Other..................................    3,037         118            35        3,120
                                           -----         ---           ---        -----
          Total........................    8,087         306           213        8,180
                                           =====         ===           ===        =====
</Table>

     The fair value of individual securities can fall temporarily below their
carrying value, but, provided there is no risk resulting from changes in
financial standing, such securities are not written down in value.

                                       F-42
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SECURITIES AVAILABLE FOR SALE

     The following tables present amortized cost, fair value and unrealized
gains and losses for securities available for sale:

<Table>
<Caption>
                                                   AS OF DECEMBER 31, 2001
                                       ------------------------------------------------
                                       AMORTIZED    UNREALIZED    UNREALIZED     FAIR
                                         COST         GAINS         LOSSES       VALUE
                                         E(MN)        E(MN)         E(MN)        E(MN)
                                       ---------    ----------    ----------     -----
<S>                                    <C>          <C>           <C>           <C>
Fixed Maturities:
Mortgage-backed securities
  (government and agency)............     2,566           51           19         2,598
Government and government agency
  bonds:
     Germany.........................    53,737        1,601          434        54,904
     France..........................    10,090          413          310        10,193
     Austria.........................       964           23           10           977
     UK..............................     1,200           44            3         1,241
     Italy...........................    14,365          383          105        14,643
     Switzerland.....................     2,110           25           14         2,121
     Netherlands.....................       659           19           12           666
     Spain...........................     5,001          330          125         5,206
     Canada..........................       534           21            9           546
     US..............................     6,805          110           25         6,890
     Other...........................    12,111          321          123        12,309
                                        -------       ------        -----       -------
                                        110,142        3,341        1,189       112,294
  Corporate bonds....................    83,269        2,537          706        85,100
  Corporate mortgage-backed
     securities......................     1,212           49            4         1,257
                                        -------       ------        -----       -------
  Total fixed maturities.............   194,623        5,927        1,899       198,651
  Equity securities..................    69,896       19,267        7,700        81,463
  Other..............................    41,126        1,009           57        42,078
                                        -------       ------        -----       -------
          Total......................   305,645       26,203        9,656       322,192
                                        =======       ======        =====       =======
</Table>

                                       F-43
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                   AS OF DECEMBER 31, 2000
                                       ------------------------------------------------
                                       AMORTIZED    UNREALIZED    UNREALIZED     FAIR
                                         COST         GAINS         LOSSES       VALUE
                                         E(MN)        E(MN)         E(MN)        E(MN)
                                       ---------    ----------    ----------     -----
<S>                                    <C>          <C>           <C>           <C>
Fixed Maturities:
Mortgage-backed securities
  (government and agency)............     1,550           49            4         1,595
Government and government agency
  bonds:
     Germany.........................    45,145          829          663        45,311
     France..........................     8,835          120           71         8,884
     Austria.........................       708           10            5           713
     UK..............................       819           36            1           854
     Italy...........................    11,130          173           93        11,210
     Switzerland.....................     1,177           12           17         1,172
     Netherlands.....................       654           14            2           666
     Spain...........................     3,261          114           77         3,298
     Canada..........................       620            6            9           617
     US..............................     1,408           42            2         1,448
     Other...........................    25,819          190          128        25,881
                                        -------       ------        -----       -------
                                        101,126        1,595        1,072       101,649
  Corporate bonds....................    47,893        1,443          691        48,645
  Corporate mortgage-backed
     securities......................     1,307           27            8         1,326
                                        -------       ------        -----       -------
  Total fixed maturities.............   150,326        3,065        1,771       151,620
  Equity securities..................    62,385       30,738        1,398        91,725
  Other..............................    14,266          391            1        14,656
                                        -------       ------        -----       -------
          Total......................   226,977       34,194        3,170       258,001
                                        =======       ======        =====       =======
</Table>

     The following table presents proceeds of sale, gross realized gains, and
gross realized losses of securities available for sale for the years ended
December 31:

<Table>
<Caption>
                                                                   GROSS       GROSS
                                                      PROCEEDS    REALIZED    REALIZED
                                                      OF SALES     GAINS       LOSSES
                                                       E(MN)       E(MN)       E(MN)
                                                      --------    --------    --------
<S>                                                   <C>         <C>         <C>
2001
Government bonds....................................   43,724         768        295
Corporate bonds.....................................   21,690         238        363
Equity securities...................................   37,844       6,632      6,153
Other...............................................    7,404         100         77
                                                      -------      ------      -----
          Total.....................................  110,662       7,738      6,888
                                                      =======      ======      =====
</Table>

                                       F-44
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                                   GROSS       GROSS
                                                      PROCEEDS    REALIZED    REALIZED
                                                      OF SALES     GAINS       LOSSES
                                                       E(MN)       E(MN)       E(MN)
                                                      --------    --------    --------
<S>                                                   <C>         <C>         <C>
2000
Government bonds....................................   27,175         701        651
Corporate bonds.....................................   12,193         162        529
Equity securities...................................   33,656       9,546      2,654
Other...............................................    6,664         174        155
                                                      -------      ------      -----
          Total.....................................   79,688      10,583      3,989
                                                      =======      ======      =====
1999
Government bonds....................................   17,413         283        263
Corporate bonds.....................................   10,030         126        324
Equity securities...................................   22,314       7,261      1,610
Other...............................................   13,092         403        294
                                                      -------      ------      -----
          Total.....................................   62,849       8,073      2,491
                                                      =======      ======      =====
</Table>

     Realized gains and losses have been calculated on the basis of average
values.

     Investment strategy within the Group is primarily geared to the long-term.
Forward sale agreements and securities lending are used to hedge unrealized
gains.

     Write-downs on securities available for sale totaled E1,507 million (2000:
E411 million and 1999: E1 million).

     The amortized cost and estimated market values of fixed maturity and other
securities available for sale and held to maturity as of December 31, 2001, by
contractual maturity, are as follows:

<Table>
<Caption>
                                                  AVAILABLE FOR SALE     HELD TO MATURITY
                                                  -------------------   ------------------
                                                  AMORTIZED   MARKET    AMORTIZED   MARKET
                                                    COST      VALUES      COST      VALUES
                                                    E(MN)      E(MN)      E(MN)     E(MN)
                                                  ---------   ------    ---------   ------
<S>                                               <C>         <C>       <C>         <C>
Contractual term to maturity:
  Due in 1 year or less.........................    28,814     25,689       692       675
  Due after 1 year and in less than 5 years.....    98,301    105,619     3,797     3,901
  Due after 5 years and in less than 10 years...    85,572     88,209     2,125     2,174
  Due after 10 years............................    23,062     21,212     1,074     1,057
                                                   -------    -------     -----     -----
          Total.................................   235,749    240,729     7,688     7,807
                                                   =======    =======     =====     =====
</Table>

     Actual maturities may deviate from the contractually defined maturities,
because certain security holders/borrowers have the right to call or repay
certain obligations ahead of schedule, with or without redemption or early
repayment penalties.

                                       F-45
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SECURITIES LENDING

     Certain entities within the Group participate in securities lending
arrangements whereby specific securities are loaned to other institutions for
short periods of time. As of December 31, 2001 the Group had E1,845 million of
loaned securities outstanding.

REAL ESTATE USED BY THIRD PARTIES

     The capitalized cost of buildings is depreciated over a maximum of 50 years
in accordance with their useful lives. The gross capitalized values totaled
E13,942 million at the beginning of the year and E14,545 million at the end of
the year. Accumulated depreciation was E2,436 million as of December 31, 2001
(2000: E2,541 million). Depreciation expense on real estate was approximately
E378 million (2000: E444 million and 1999: E445 million). Real estate pledged as
security and other restrictions on title were E68 million.

     Depreciation includes unscheduled write-downs to fair value of E86 million
for the year ended December 31, 2001 (2000: E90 million and 1999: E133 million).

     Improvement costs are capitalized if they extend the useful life of the
asset, otherwise they are recognized as an expense. Commitments outstanding at
the balance sheet date to purchase real estate amounted to E61 million.

     Changes in the carrying value of real estate used by third parties during
the year ended December 31 was:

<Table>
<Caption>
                                                               2001
                                                              E(MN)
                                                              -----
<S>                                                           <C>
Value stated as of beginning of year........................  11,506
Translation differences.....................................       1
                                                              ------
Value stated as of beginning of year........................  11,507
Additions...................................................   1,525
Changes in the group of consolidated companies..............     428
Disposals...................................................  (1,078)
Depreciation................................................    (378)
                                                              ------
Value stated as of end of year..............................  12,004
                                                              ======
</Table>

     The fair value of real estate used by third parties as of December 31, 2001
was E16,731 million.

     Rental income for the year ended December 31, 2001 was approximately E1,108
million (2000: E818 million and 1999: E873 million).

(8) INVESTMENTS HELD ON ACCOUNT AND AT RISK OF LIFE INSURANCE POLICYHOLDERS

     Investments held on account and at risk of life insurance policyholders
comprise mainly of investments funding unit-linked life insurance policies and
investments to cover obligations under policies where the benefits are
index-linked.

     Group enterprises keep these investments separate from other investments
and invest them separately.

                                       F-46
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Policyholders are entitled to all the gains recorded and therefore to the
total amount of all the investments shown under this heading, but they also have
to carry any losses.

     For this reason the liability heading "Insurance reserves for life
insurance where the investment risk is carried by policyholders" moves in
parallel with this account.

(9) LOANS AND ADVANCES TO BANKS

     Loans and advances to banks are comprised of the following:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              ------    ------
<S>                                                           <C>       <C>
Loans.......................................................   5,812      260
Other advances..............................................  55,716    6,811
                                                              ------    -----
Loans and advances to banks.................................  61,528    7,071
Less loan loss allowance....................................     254        1
                                                              ------    -----
Loans and advances to banks after loan loss allowance.......  61,274    7,070
                                                              ======    =====
</Table>

     Receivables due within one year total E51,052 million (2000: E5,867
million), and those due after more than one year total E10,476 million (2000:
E1,204 million).

     Other advances include reverse repos amounting to E40,552 million (2000: E0
million).

(10) LOANS AND ADVANCES TO CUSTOMERS

     Loans and advances by type of customer are as follows:

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)     E(MN)
                                                               -----     -----
<S>                                                           <C>        <C>
Corporate customers.........................................  149,244        --
Public authorities..........................................    4,223        --
Private customers...........................................   94,036    28,412
                                                              -------    ------
Loans and advances to customers.............................  247,503    28,412
Less loan loss allowance....................................    7,810       326
                                                              -------    ------
Loans and advances to customers after loan loss allowance...  239,693    28,086
                                                              =======    ======
</Table>

     Loans and advances to customers by type of loan are as follows:

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)     E(MN)
                                                              -------    ------
<S>                                                           <C>        <C>
Loans.......................................................  199,190    14,806
Reverse repos...............................................   42,393        --
Other advances..............................................    5,920    13,606
                                                              -------    ------
Loans and advances to customers.............................  247,503    28,412
                                                              =======    ======
</Table>

     Loans and advances due within one year total E109,693 million (2000:
E20,627 million), those due after more than one year total E137,810 million
(2000: E7,785 million).

                                       F-47
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Unearned income related to discounts deducted from loan balances as of
December 31, 2001 was E663 million (2000: E77 million).

ALLOWANCE FOR LOAN LOSSES

     The overall volume of risk provisions includes allowances for loan losses
deducted from loans and advances to banks and customers in the amount of E8,064
million and provisions for contingent liabilities included in other liabilities
in the amount of E497 million.

<Table>
<Caption>
                                           COUNTERPARTY
                                              RISKS         COUNTRY RISKS        GENERAL             TOTAL
                                          --------------    --------------    --------------    ---------------
                                          2001     2000     2001     2000     2001     2000      2001     2000
                                          E(MN)    E(MN)    E(MN)    E(MN)    E(MN)    E(MN)    E(MN)     E(MN)
                                          -----    -----    -----    -----    -----    -----    ------    -----
<S>                                       <C>      <C>      <C>      <C>      <C>      <C>      <C>       <C>
As of January 1.........................   304      290       --       --       23       22        327     312
Additions
Additions to allowances charged to the
  income statement......................  1,087      97       --       --      110        7      1,197     104
Changes in the Group of consolidated
  companies.............................  6,596      --      544       --      855       --      7,995      --
                                          -----     ---      ---      ---      ---      ---     ------     ---
        Total...........................  7,683      97      544       --      965        7      9,192     104
Reductions
Charge-offs.............................  (445)     (16)      --       --       --       --       (445)    (16)
Amounts released........................  (424)     (67)     (92)      --      (77)      (6)      (593)    (73)
                                          -----     ---      ---      ---      ---      ---     ------     ---
        Total...........................  (869)     (83)     (92)      --      (77)      (6)    (1,038)    (89)
Other additions/reductions..............    38       (1)     (29)      --       18       --         27      (1)
Changes due to currency translation.....    44        1        5       --        4       --         53       1
                                          -----     ---      ---      ---      ---      ---     ------     ---
As of December 31.......................  7,200     304      428       --      933       23      8,561     327
                                          =====     ===      ===      ===      ===      ===     ======     ===
</Table>

     Debit balances of E7 million were written off, resulting in a direct charge
to the income statement.

     The loan portfolio contains nonaccrual loans of E11,155 million. The
balance includes E9,778 million of value adjusted loans, on which interest was
not being recognized. The value adjusted loans include E6,843 million of loans
that were placed on non-accrual status, and E2,935 million of loans which have a
specific allowance against the interest accrued. Interest which would have been
recognized, had these loans been accruing interest, amounting to E224 million
was not included in interest income.

     The amount of interest collected and recorded on non-accrual loans was
approximately E45 million.

     At December 31, 2001 the Group had E13,986 million of impaired loans.
Impaired loans include loans with a related valuation allowance of E6,842
million at December 31, 2001.

     For the year ended December 31, 2001 the average balance in impaired loans
was E12,990 million and the interest income recognized on impaired loans was E67
million.

     Restructured loans totaled E551 million at December 31, 2001.

     The Group has no commitments to lend additional funds to borrowers whose
loans are non-performing or whose terms have been previously restructured.

                                       F-48
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(11) TRADING ASSETS

<Table>
<Caption>
                                                               FAIR
                                                               VALUE
                                                               E(MN)
                                                               -----
<S>                                                           <C>
2001
Equities....................................................   15,123
Fixed income securities.....................................   91,493
Derivatives.................................................   19,827
Other trading assets........................................    1,979
                                                              -------
          Total.............................................  128,422
                                                              =======
2000
Equities....................................................       60
Fixed income securities.....................................      312
                                                              -------
          Total.............................................      372
                                                              =======
</Table>

     The majority of equities and fixed-income securities held in the trading
portfolio are marketable and listed securities. The fixed-income securities
include E42,432 million from public-sector issuers and E49,061 million from
other issuers.

     Other trading assets mainly consist of promissory notes and precious metal
holdings.

(12) CASH FUNDS AND CASH EQUIVALENTS

     Cash funds and cash equivalents are comprised of the following as of
December 31:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              ------    ------
<S>                                                           <C>       <C>
Balances with banks payable on demand.......................  11,797    4,209
Balances with central banks.................................   7,222       --
Checks and cash on hand.....................................   1,584       --
Treasury bills, discounted treasury notes and similar
  treasury securities.......................................     255       --
Bills of exchange...........................................     382       --
                                                              ------    -----
          Total.............................................  21,240    4,209
                                                              ======    =====
</Table>

     Balances with central banks includes balances held with the Deutsche
Bundesbank of E4,973 million, which also have the function of meeting minimum
reserve requirements.

                                       F-49
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(13) AMOUNTS CEDED TO REINSURERS FROM INSURANCE RESERVES

     The amounts ceded to reinsurers from insurance reserves comprise of the
following as of December 31:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Unearned premiums...........................................   1,663     1,506
Aggregate policy reserves...................................  12,207    13,085
Reserves for loss and loss adjustment expenses..............  16,784    13,100
Other insurance reserves....................................     298       221
                                                              ------    ------
          Subtotal..........................................  30,952    27,912
Insurance reserves for life insurance where the investment
  risk is carried by policyholders..........................      47       563
                                                              ------    ------
          Total.............................................  30,999    28,475
                                                              ======    ======
</Table>

     The amounts ceded to reinsurers from insurance reserves stated under assets
include rights of recourse against reinsurers. The credit risk is partly covered
by funds held for others under reinsurance contracts, securities portfolios and
bank guarantees.

     The following table presents direct, assumed and ceded premiums for the
years ended December 31:

<Table>
<Caption>
                                                                  PROPERTY-
                                                   LIFE/HEALTH    CASUALTY      TOTAL
                                                      E(MN)         E(MN)       E(MN)
                                                   -----------    ---------     -----
<S>                                                <C>            <C>          <C>
2001
Premiums written:
  Direct and assumed.............................     20,129        41,459       61,588
  Ceded..........................................     (1,169)       (6,669)      (7,838)
                                                    --------      --------     --------
     Net.........................................     18,960        34,790       53,750
                                                    ========      ========     ========
Premiums earned:
  Direct and assumed.............................     20,148        40,434       60,582
  Ceded..........................................     (1,169)       (6,668)      (7,837)
                                                    --------      --------     --------
     Net.........................................     18,979        33,766       52,745
                                                    ========      ========     ========
2000
Premiums written:
  Direct and assumed.............................     20,219        37,666       57,885
  Ceded..........................................     (1,139)       (6,488)      (7,627)
                                                    --------      --------     --------
     Net.........................................     19,080        31,178       50,258
                                                    ========      ========     ========
Premiums earned:
  Direct and assumed.............................     20,202        37,329       57,531
  Ceded..........................................     (1,125)       (6,499)      (7,624)
                                                    --------      --------     --------
     Net.........................................     19,077        30,830       49,907
                                                    ========      ========     ========
</Table>

                                       F-50
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                                  PROPERTY-
                                                   LIFE/HEALTH    CASUALTY      TOTAL
                                                      E(MN)         E(MN)       E(MN)
                                                   -----------    ---------     -----
<S>                                                <C>            <C>          <C>
1999
Premiums written:
  Direct and assumed.............................     18,466        35,341       53,807
  Ceded..........................................     (1,169)       (5,880)      (7,049)
                                                    --------      --------     --------
     Net.........................................     17,297        29,461       46,758
                                                    ========      ========     ========
Premiums earned:
  Direct and assumed.............................     18,206        35,214       53,420
  Ceded..........................................     (1,147)       (6,091)      (7,238)
                                                    --------      --------     --------
     Net.........................................     17,059        29,123       46,182
                                                    ========      ========     ========
</Table>

     The Group reinsures a portion of the risks it underwrites in an effort to
control its exposure to losses, and protect capital resources. Each subsidiary
has its own reinsurance program and determines its own risk limits. A large
portion of the business ceded by the subsidiaries is assumed by Allianz AG,
which acts as the reinsurer for the Group, although the subsidiaries also cede
business to companies outside of the Group. Allianz AG retains a portion of the
intercompany business it assumes and then retrocedes the remainder to companies
outside of the Group. Some of the business ceded by the Group is ceded to
associated companies (see related party transactions at Note 44).

     The majority of the business ceded by Allianz AG is placed on a quota-share
basis. In general for the years 2001, 2000 and 1999 Allianz AG retains E38
million on a per risk basis for its property and casualty business and E50
million per event in case of natural catastrophes. For life business, Allianz AG
retains E4 million per risk and E5 million per event.

     The reinsurance department at Allianz AG establishes lists of approved
reinsurers, provides guidance to the subsidiaries on a per-event and per-risk
basis and seeks to coordinate the activities of the subsidiaries to avoid
concentration of risk with particular reinsurers and to ensure that the
aggregate risk retention of Group companies is within Group guidelines.
Reinsurance is placed with insurance companies based on an evaluation of the
financial security of the reinsurers, terms of coverage and price.

     The Group pays premiums to reinsurers based upon the risk and exposure of
the policies subject to such reinsurance. On most of the premium that the Group
cedes, the reinsurer pays a commission to the Group, which includes a
reimbursement of the cost of acquiring the portion of the premium that is ceded.

     Reinsurance involves credit risk and is subject to aggregate loss limits.
Reinsurance does not legally discharge the Group from primary liability under
its policies. Although the reinsurer is liable to the Group to the extent of the
reinsurance ceded, the Group remains primarily liable as the direct insurer on
all risks reinsured. The Group monitors the financial condition of its
reinsurers on an ongoing basis and reviews its reinsurance arrangements
periodically in order to evaluate the reinsurer's ability to fulfill obligations
assumed under the reinsurance contracts.

                                       F-51
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(14) OTHER ASSETS

     Other assets consist of the following as of December 31:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Real estate used by Allianz for its own activities..........   5,097     3,006
Property, plant and equipment...............................   2,303     1,354
Accounts receivable on direct insurance business............   9,523     8,295
Accounts receivable on reinsurance business.................   3,164     3,161
Other receivables...........................................  19,633     9,812
Other assets................................................   3,454     1,943
Deferred acquisition costs..................................  11,192    10,433
Prepaid expenses............................................   1,364     1,885
                                                              ------    ------
          Total.............................................  55,730    39,889
                                                              ======    ======
</Table>

     The accounts receivable on direct insurance business stated under other
assets and accounts receivable on reinsurance business are due within one year.
Other receivables stated under other assets due within one year amount to E8,701
million (2000: E7,124 million), those due after more than one year total E10,932
million (2000: E2,688 million).

REAL ESTATE USED BY ALLIANZ GROUP FOR ITS OWN ACTIVITIES

     The capitalized cost of buildings is calculated on the basis of acquisition
cost and depreciated over a maximum of 50 years in accordance with their useful
lives. The gross capitalized values totaled E3,642 million at the beginning of
the year and E6,175 million at the end of the year. Accumulated depreciation
amounted to E636 million at the beginning of the year and E1,078 million at the
end of the year. Assets pledged as security and other restrictions on title
amount to E29 million.

     As in the previous year, no unscheduled depreciation was recorded in 2001.

     Expenditures to restore the future economic benefits from the assets are
capitalized if they extend the useful life of the asset, otherwise they are
recognized as an expense. At the balance sheet date, commitments outstanding to
purchase real estate amounted to E26 million.

     Changes in the total carrying value of real estate owned by Allianz Group
and used for its own activities during the year ended December 31 were:

<Table>
<Caption>
                                                               2001
                                                              E(MN)
                                                              ------
<S>                                                           <C>
Value stated as of beginning of year........................  3,006
Translation differences.....................................     65
                                                              -----
Value stated as of beginning of year........................  3,071
Additions...................................................  1,068
Changes in the group of consolidated companies..............  2,203
Disposals...................................................   (597)
Depreciation................................................   (648)
                                                              -----
Value stated as of end of year..............................  5,097
                                                              =====
</Table>

                                       F-52
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The market value of real estate used by Allianz for its own activities as
of December 31, 2001 amounted to E6,205 million.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are depreciated over 5 to 10 years according
to their useful lives. The gross capitalized values totaled E3,794 million at
the beginning of 2001 and E6,453 million at the end of 2001. Accumulated
depreciation amounted to E2,440 million at the beginning of 2001 and E4,150
million at the end of 2001. Improvements are capitalized if they extend the
useful life of the asset; otherwise they are recognized as an expense.

     At the balance sheet date, commitments outstanding to purchase items of
property, plant and equipment amounted to E51 million.

     Depreciation is apportioned between the relevant cost headings in the
income statement.

ACCOUNTS RECEIVABLE ON DIRECT INSURANCE BUSINESS

     These amount to E5,884 million (2000: E5,019 million) for policyholders and
E3,639 million (2000: E3,276 million) for agents.

OTHER RECEIVABLES

     These primarily include tax refunds amounting to E3,310 million (2000:
E2,236 million), interests and rental receivables amounting to E8,785 million
(2000: E2,891 million), and accounts receivable on banking and asset management
business amounting to E2,817 million (2000: E312 million).

OTHER ASSETS

     Included in other assets are non-trading derivatives used for hedging
totaling E598 million (2000: E0).

DEFERRED ACQUISITION COSTS

     In the case of property and casualty insurance enterprises, the
amortization period is calculated for each insurance portfolio, based on the
average term of the relevant policies, and varies between one and five years.

     Deferred policy acquisition costs related to universal life, investment
products and traditional participating business that follow the contribution
principle are amortized in relation to expected gross profits or estimated gross
margins over the life of the policy. Deferred policy acquisition costs related
to other traditional life business are deferred and amortized over the premium
paying period of the policy in proportion to premium revenues.

     The change in and the amortization of deferred acquisition costs is
presented in Note 37.

                                       F-53
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SUBORDINATED ASSETS

     Assets are recorded as subordinated assets if, in the case of liquidation
or bankruptcy, the related claim cannot be realized before the claims of other
creditors are realized.

<Table>
<Caption>
                                                              2001
                                                              E(MN)
                                                              -----
<S>                                                           <C>
Loans and advances to banks.................................    52
Loans and advances to customers.............................    11
Trading assets:
  Equities and other non-fixed-income securities............   132
Investment securities:
  Public Sector debt issues.................................     3
  Other debt issuers........................................   259
                                                               ---
Subordinated Assets.........................................   457
                                                               ===
</Table>

           SUPPLEMENTARY INFORMATION ON GROUP LIABILITIES AND EQUITY

(15) SHAREHOLDERS' EQUITY

     Shareholder's equity comprises the following:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Issued capital..............................................     682       629
Capital reserve.............................................  14,087     7,365
Revenue reserves............................................  14,010    13,728
Less treasury stock.........................................   5,801        --
Other reserves..............................................   8,276    13,448
Consolidated unappropriated profit..........................     410       433
                                                              ------    ------
          Total.............................................  31,664    35,603
                                                              ======    ======
</Table>

ISSUED CAPITAL

     Within the framework of the takeover bid to the shareholders of Dresdner
Bank AG, Allianz AG increased its capital stock by E51,129,188 through the issue
of 19,972,339 registered no par value ordinary shares. The ordinary shares were
issued to DAD Transaktionsgesellschaft mbH, Frankfurt/Main, for a non-cash
consideration. The amount of E6,544,803,673 of issued ordinary shares which
exceeded the ordinary share stated value of the issued capital was included in
the capital reserve.

     In September 2001, 705,661 ordinary shares held by the company were issued
at a price of E253.20 each, enabling employees of Allianz Group enterprises in
Germany and abroad to purchase 361,235 ordinary shares at prices between E177.24
and E215.22. The remaining 344,426 ordinary shares were sold on the stock
exchange at an average price of E259.41. The difference between the issue price
and the sale price was taken to revenue reserves.

                                       F-54
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The ordinary shares issued in 2001 are qualifying shares from the beginning
of the year of issue.

     In September of 2000, 480,000 shares with a notional principal amount of
E1,228,800 (0.2 percent as a proportion of the issued capital of Allianz AG)
were issued at a price of E383.00 each, enabling employees of Group enterprises
in Germany and abroad to take up to 193,586 employee shares at prices between
E268.10 and E325.55. The difference between the share purchase price and the
share market price was recorded as employee compensation expense. The remaining
286,524 shares, with a notional principal amount of E733,501 were sold in the
market at an average price of E378.41. The difference between the issue price
and the sale price was taken to revenue reserves. Allianz AG held no treasury
shares at the end of 2000.

     In March of 1999, the capital of Allianz AG and all other DM amounts in its
articles of association were restated to euro. In order for each share to have a
stated value of precisely E2.56 per share, paid in capital was increased by
E867,141 to E626,979,840, with a corresponding charge to retained earnings on
the basis of a resolution adopted at the Annual General Meeting on July 7, 1999.

     In September of 1999, 356,000 shares were issued at a price of E250.30 per
share. Of these shares, 233,055 were sold to employees of the Group's German
companies at a price of E150.32 per share. The difference between the share
purchase price and the share market price was recognized as employee
compensation. Of the remaining 122,945 shares, 122,000 were sold to the public
in December 1999 at an average market price of E289.11 per share. Allianz AG
kept the remaining 945 shares.

     The issued capital at December 31, 2001 amounted to E682,055,680, divided
into 266,428,000 registered shares. The shares have no par value as such but a
mathematical value of E2.56 each as a proportion of the issued capital. At the
end of the year under review, there was authorized unissued capital with a
notional principal amount of E300,000,000 (117,187,500 shares), which can be
issued at any time up to July 10, 2006 (authorized unissued capital 2001/I). If
shares are issued against a non-cash consideration, the Board of Management is
authorized to exclude the pre-emptive rights of shareholders. In the case of
capital increases against a cash consideration, pre-emptive rights can be
partially excluded, if the issue price is not significantly less than the
stock-market price. At the end of the year under review, there was a further
E8,193,508 (3,200,589 shares) of Authorized Unissued Capital 2001/II which can
be issued up to July 10, 2006. The pre-emptive rights of shareholders can be
excluded in order to offer the new shares to employees of Allianz AG or its
Group companies. Authorized Unissued Capital 1998 can be used at any time up to
July 7, 2003 to issue shares with a notional principal amount of E2,556,459
(998,617 shares). In the event of future capital increases for cash, these
shares can be used to protect the holders of conversion or subscription rights
from dilution by granting them a pre-emptive right to subscribe for new shares.
To that extent the pre-emptive rights of shareholders are excluded.

     As of December 31, 2001, Allianz AG had conditionally authorized capital
2001 amounting to E50,000,000 (19,531,250 shares) on which subscription or
conversion rights, with pre-emptive rights for shares, can be issued up to July
10, 2006.

     Issued capital and capital reserve comprise the capital stock and the
premium received on the issuance of shares, respectively.

                                       F-55
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TREASURY STOCK

     Allianz AG received 24,452,365 of its own shares through the takeover of
Dresdner Bank AG on July 23, 2001. The acquisition cost for treasury stock
amounted to E5,444 million and was recorded in revenue reserves.

     In order to enable Dresdner Bank AG to trade in shares of Allianz AG
following the takeover of the bank, the Annual General Meeting on July 11, 2001
authorized the banks in which Allianz AG has a majority holding, including
Dresdner Bank, to acquire treasury stock for purposes of securities trading
pursuant to sec. 71 (1) No. 7 of the Corporation Law (Aktiengesetz). In
accordance with this authorization, the banks in the Group purchased 26,910,860
during the course of 2001 at an average price of E272.63 per share, which
includes previously held Allianz shares. 26,851,171 shares were disposed of
during the course of 2001 at an average price of E280.64 per share. The surplus
proceeds arising from these transactions were E34 million and were transferred
to revenue reserves.

     The Annual General Meetings on July 11, 2001 and on July 12, 2000
authorized the company to acquire own shares for miscellaneous purposes pursuant
to sec.71 (1) No. 8 of the Corporation Law (Aktiengesetz). On the basis of this
authorization, Allianz AG purchased 786,100 shares in treasury stock at an
average price of E314.48 per share in the months January to June 2001.

     At year-end, treasury stock consisted of the following:

<Table>
<Caption>
                            ACQUISITION      2001        % OF      ACQUISITION      2000        % OF
                               COSTS      NUMBER OF     ISSUED        COSTS        NUMBER      ISSUED
                               E(MN)        SHARES      CAPITAL       E(MN)       OF SHARES    CAPITAL
                            -----------   ---------     -------    -----------    ---------    -------
<S>                         <C>           <C>           <C>        <C>            <C>          <C>
Shares held by
  Allianz AG..............       247         786,100     0.30           --            --          --
  Affiliated enterprises
     (Dresdner Bank
     Group)...............     5,554      24,452,365     9.18           --            --          --
                               -----      ----------     ----
          Total...........     5,801      25,238,465     9.48           --            --          --
                               =====      ==========     ====
</Table>

     Changes to the number of issued shares outstanding during the years were:

<Table>
<Caption>
                                                     2001           2000           1999
                                                  -----------    -----------    -----------
<S>                                               <C>            <C>            <C>
As of beginning of year.........................  245,750,000    245,269,055    244,914,000
Additions
  Capital increase against non-cash
     consideration..............................   19,972,339             --             --
  Capital increase for employee shares..........      705,661        480,945        355,055
                                                  -----------    -----------    -----------
                                                  266,428,000    245,750,000    245,269,055
Reductions on account of acquisition of treasury
  stock
  Acquisition of Dresdner Bank..................  (24,452,365)            --             --
  Acquisition for purposes of securities
     trading....................................           --             --             --
  Acquisition for miscellaneous purposes........     (786,100)            --             --
                                                  -----------    -----------    -----------
As of end of year...............................  241,189,535    245,750,000    245,269,055
                                                  ===========    ===========    ===========
</Table>

     In addition to the reserves in the financial statements of Allianz AG
required by law, revenue reserves include the retained earnings of consolidated
subsidiaries and amounts transferred out

                                       F-56
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of consolidated net income. Revenue reserves also include foreign currency
translation adjustments in the equity section. In the case of acquisitions,
prior to January 1, 1995, differences arising on first-time consolidation have
been taken to revenue reserves.

     OTHER RESERVES comprise the component of shareholders' equity representing
unrealized gains and losses on investments available for sale.

     The CONSOLIDATED UNAPPROPRIATED PROFIT is derived from consolidated net
income as follows for the years ended December 31:

<Table>
<Caption>
                                                           2001     2000     1999
                                                           E(MN)    E(MN)    E(MN)
                                                           -----    -----    -----
<S>                                                        <C>      <C>      <C>
Consolidated net income for the year.....................  1,623    3,460    2,317
Transfers to revenue reserves (appropriated retained
  earnings)..............................................  1,213    3,027    1,962
                                                           -----    -----    -----
Consolidated unappropriated profit as of December 31.....    410      433      355
                                                           =====    =====    =====
</Table>

     The Board of Management will propose to the Annual General Meeting the
distribution of a dividend of E1.50 per qualifying share for fiscal year 2001.
Details on the recommendation for appropriation of profit are given in the Group
management report.

     The dividend paid per share for the fiscal year 2000 was E1.50 and for the
fiscal year 1999 was E1.25.

INSURANCE CAPITAL REQUIREMENTS AND DIVIDEND RESTRICTIONS

     Certain of the Group's insurance subsidiaries prepare individual financial
statements based on local laws and regulations. These laws establish
restrictions on the minimum level of capital and surplus an insurance entity
must maintain and the amount of dividends that may be paid to shareholders. The
minimum capital requirements and dividend restrictions vary by jurisdiction. The
minimum capital requirements are based on various criteria including, but not
limited to, volume of premiums written or claims paid, amount of insurance
reserves, asset risk, mortality risk, credit risk, underwriting risk and
off-balance sheet risk.

     European insurance companies are required to maintain solvency margins
which must be supported by capital reserves and other resources, including
unrealized gains and losses on investments. Life insurance companies are
required to maintain a solvency margin generally equal to 4% of aggregate policy
reserves and gross unearned premiums plus 0.3% of the amount at risk under
insurance policies. The required minimum solvency margin for property and
casualty insurance is the greater of two calculations, one based on premiums and
the other based on gross claims. The Group's insurance business in other
countries, primarily the United States, are also subject to capital adequacy and
solvency margin regulations which are based on factors for asset risk, insurance
risk, interest rate risk, and business risk. As of December 31, 2001 the Group's
insurance subsidiaries were in compliance with all applicable solvency and
capital adequacy requirements.

     Certain insurance subsidiaries are subject to regulatory restrictions on
the amount of dividends which can be remitted to Allianz AG without prior
approval by the appropriate regulatory body. Such restrictions provide that a
company may only pay dividends up to an amount in excess of certain regulatory
capital levels or based on the levels of undistributed earned surplus or current
year income or a percentage thereof. For example, the operations of our
insurance company subsidiaries located in the United States are subject to
limitations on the

                                       F-57
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

payment of dividends to their parent company under applicable state insurance
laws. Dividends paid in excess of these limitations generally require prior
approval of the insurance commissioner of the state of domicile. The Group's
management believes that these restrictions will not affect the ability of the
Group to pay dividends to its shareholders in the future. In addition, Allianz
AG is not subject to legal restrictions on the amount of dividends it can pay to
its shareholders.

BANK LIABLE CAPITAL AND RISK-WEIGHTED ASSETS REQUIREMENTS

     Certain of the Group's bank subsidiaries are subject to various capital
adequacy and liquidity requirements. Such requirements vary by jurisdiction.
Under the German Banking Act, all banking institutions operating in Germany must
maintain certain ratios regarding liable capital.

     Liable capital consists of the two categories of core capital (Tier I
Capital) and supplementary capital (Tier II Capital). Core capital mainly
consists of the shareholders' equity and minority interests, plus other
adjustments. Supplementary capital comprises profit-participation certificates,
subordinated liabilities portions of reserves for general banking risks and
revaluation reserves on securities. The German Banking Act contains provisions
setting minimum ratios of core capital and total capital to risk-weighted
assets. Non-compliance with these ratios may result in penalties imposed by the
regulatory authority. The German Banking Act also contains liquidity
requirements relating to funds available to pay obligations over various future
time frames. As of December 31, 2001 the Group's bank subsidiaries were in
compliance with all applicable capital and liquidity requirements.

COMPREHENSIVE INCOME

     The components of comprehensive income, including the related tax effects
were as follows for the years ended December 31:

<Table>
<Caption>
                                                         2001      2000      1999
                                                        E(MN)     E(MN)     E(MN)
                                                        -----     -----     -----
<S>                                                     <C>       <C>       <C>
Foreign currency translation adjustments net of
  deferred taxes of E(21) million in 2001 (2000: E270
  million and 1999: E506 million).....................     (89)      451       851
                                                        ------    ------    ------
Unrealized gains on investments:
Unrealized holding gain (loss) arising during the
  period net of deferred taxes of E(1,384) million in
  2001 (2000: E5,490 million and 1999: E5,120
  million)............................................  (5,898)    4,832     3,869
Less reclassification adjustment for gains included in
  net earnings, net of deferred taxes of E162 million
  in 2001 (2000: E3,507 million and 1999: E3,179
  million)............................................     688    (3,087)   (2,402)
                                                        ------    ------    ------
Net unrealized investment gain (loss).................  (5,210)    1,745     1,467
                                                        ------    ------    ------
Other comprehensive income (loss).....................  (5,299)    2,196     2,318
Net income............................................   1,623     3,460     2,317
                                                        ------    ------    ------
     Comprehensive income (loss)......................  (3,676)    5,656     4,635
                                                        ======    ======    ======
</Table>

     Net unrealized investment gains and losses have been reduced to the extent
that the unrealized gains and losses would result in adjustments for minority
interests and policyholder liabilities had the gain and losses actually been
realized. Unrealized gains, net of unrealized losses which have been allocated
to policyholder liabilities, included in other insurance reserves,

                                       F-58
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

were E5,458 million and E8,578 million as of December 31, 2001 and 2000.
Unrealized gains, net of unrealized losses which have been allocated to minority
interests, are presented in Note 16.

     The deferred taxes of E722 million (2000: E5,945 million) on unrealized
holding gains in 2001 included a E2,554 million (2000: E2,559 million and 1999:
E593 million) reduction in deferred taxes, after elimination of minority
interests, resulting from the reduction of German statutory tax rates.

(16) MINORITY INTERESTS IN SHAREHOLDERS' EQUITY/EARNINGS

     The primary subsidiaries included in minority interests are the AGF Group,
Paris, the RAS Group, Milan, the PIMCO Group, Delaware, Allianz
Lebensversicherungs-AG (Allianz Leben), Stuttgart, Frankfurter Versicherungs-AG,
Frankfurt/Main, Bayerische Versicherungsbank AG, Munich, and, in 2001, the
Dresdner Bank Group, Frankfurt/Main.

     The interests of minority shareholders are made up as follows as of
December 31:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Other reserves:
  Unrealized gains and losses...............................   3,114     5,956
  Share of earnings.........................................   1,044     1,277
  Other equity components...................................  13,191     8,967
                                                              ------    ------
          Total.............................................  17,349    16,200
                                                              ======    ======
</Table>

(17) PARTICIPATING CERTIFICATES AND POST-RANKING LIABILITIES

     Participating certificates and post-ranking liabilities as of December 31:

<Table>
<Caption>
                                                               2001     2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Participating certificates..................................   2,508      476
Post-ranking liabilities....................................   9,699      861
                                                              ------    -----
          Total.............................................  12,207    1,337
                                                              ======    =====
</Table>

     PARTICIPATING CERTIFICATES include E450 million (2000:  E450 million) in
respect of those issued by Allianz AG. The balance of participating certificates
represents the guaranteed total redemption price that Allianz AG is required to
pay upon redemption by the holders of the 5,723,512 "profit participation
certificates" issued by the company. The distributions payable on the profit
participation certificates for the last fiscal year are included in "Other
liabilities".

     Between October 1986 and 1995, Allianz AG issued a total of 5,559,983
profit participation certificates. The company issued an additional 163,529
profit participation certificates in March 1998. There were no further issues of
profit participation certificates in 1999 through 2001.

     The terms of the profit participation certificates provide for an annual
cash distribution of 240% of the dividend paid by the company per one Allianz AG
ordinary share. If certain conditions are met, the holders of profit
participation certificates may also subscribe to new profit participation
certificates; to this extent, the preemptive subscription rights of Allianz AG
shareholders are excluded. Holders of profit participation certificates do not
have voting rights, or any rights to convert the said certificates into Allianz
AG shares, or rights to liquidation proceeds. Profit participation certificates
are unsecured and rank pari passu with the claims of other unsecured creditors.

                                       F-59
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Profit participation certificates can be redeemed by holders upon twelve
months prior notice, beginning December 31, 2001, and every fifth year
thereafter. To date, redemption rights have been exercised with respect to 358
profit participation certificates. Upon redemption by holders, the terms of the
profit participation certificates provide for a redemption price equal to the
weighted average of the issue prices of all profit participation certificates.
Since the last issue of March 1998, the price has been uniformly E78.54.

     The company may call the profit participation certificates for redemption,
upon six months' prior notice, beginning December 31, 2006, and each year
thereafter. Upon redemption by the company, the cash redemption price per
certificate would be equal to 123% of the then current price of one Allianz AG
ordinary share. In lieu of redemption for cash, the company may offer 10 Allianz
ordinary shares per eight profit participation certificates. Allianz AG has
consistently stated at its Annual General Meeting that the company is not
legally required, and does not intend, to redeem the profit participation
certificates, either in cash or in shares. Allianz AG currently has no intention
of changing this position.

     Participation certificates also include E2,035 million (2000: E0 million)
issued by the Dresdner Bank Group that entitle holders to annual interest
payments, which take priority over Dresdner Bank shareholders' dividend
entitlements. They are subordinated to obligations for all other creditors of
the issuer, except those similarly subordinated, and share in losses in
accordance with the conditions attached to the certificates. The profit
participation certificates will be redeemed subject to the provisions regarding
loss sharing.

     Capital relating to profit-participation certificates of the Dresdner Bank
Group with a notional amount of E3,980 million comprises 12 issues from the
years 1991 to 1998. The certificates were issued by Dresdner Bank AG, Deutsche
Hypothekenbank Frankfurt-Hamburg AG, Oldenburgische Landesbank AG and Dresdner
Bank Lateinamerika AG. Interest rates are between 6.125% and 9.0%, two issues
have variable interest rates. The issues will mature between 2002 and 2009.

     POST-RANKING LIABILITIES in the amount of E9,699 million include E9,243
million (2000: E0 million) of Dresdner Bank, and E438 million (2000: E830
million) of the AGF Group. Post-ranking liabilities of Dresdner Bank include
hybrid shareholders' equity, including non-voting interests, amounting to E1,923
million and other post-ranking liabilities totaling E7,320 million. In the event
of bankruptcy proceedings or liquidation, post-ranking liabilities may not be
redeemed until all non-post-ranking creditors have been satisfied. There is no
obligation to redeem such liabilities prior to maturity.

     The non-voting interests were issued for the first time in May 1999, in the
amount of approximately E1.5 billion by Dresdner Bank. These non-voting
interests include two issues of Dresdner Bank AG in 1999 in the nominal amount
of E500 million and USD 1,000 million with interest rates of 5.79% and 8.15%,
respectively, which are due in 2011 and in 2031, respectively. Additionally
Dresdner Bank AG issued two non-voting interests in the nominal amount of E159
million and JPY 15,000 million in 2001, with interest rates of 7.00% and 3.50%
respectively, and which are due in 2013 and in 2033, respectively. Interest paid
on non-voting interests in 2001 amounted to E128 million.

     Fixed-rate post-ranking liabilities have coupons between 4.0% and 8.5%.
Floating rate issues linked to a reference interest rate and zero-coupon bonds
have an average interest rate of 7.0%.

                                       F-60
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(18) INSURANCE RESERVES

     Insurance Reserves are comprised of the following for the years ended
December 31:

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)      E(MN)
                                                               -----      -----
<S>                                                           <C>        <C>
Unearned premiums...........................................   12,391     11,143
Aggregate policy reserves...................................  197,689    184,886
Reserve for loss and loss adjustment expense................   66,648     59,013
Reserve for premium refunds.................................   21,589     28,138
Premium deficiency reserve..................................      517        786
Other insurance reserves....................................      678        858
                                                              -------    -------
          Total.............................................  299,512    284,824
                                                              =======    =======
</Table>

AGGREGATE POLICY RESERVES

     The Group's life insurance subsidiaries offer a wide range of traditional
life insurance, financial and investment products. Traditional life insurance
products consist of both short and long duration policies with participating and
non-participating features. Short duration traditional life insurance products
include term, accident and health contracts. Long duration traditional life
insurance products include individual and group whole-life, endowment,
guaranteed renewable term and accident and health, and annuity contracts.
Financial and investment products consist of universal life, unit-linked
products (variable annuities), single premium annuity, and guaranteed investment
contracts.

     The aggregate policy reserves as of December 31, according to the various
profit participation systems, were as follows:

<Table>
<Caption>
                                                                UNIT LINKED AND
                                                CONTRIBUTION       VARIABLE
                                                 PRINCIPLE         ANNUITIES        OTHER
                                                   E(MN)             E(MN)          E(MN)
                                                ------------    ---------------    --------
<S>                                             <C>             <C>                <C>
2001
Life/Health...................................    101,858           77,890          36,867
Property-Casualty.............................      5,695               --             105
                                                  -------           ------          ------
          Total...............................    107,553           77,890          36,972
                                                  =======           ======          ======
2000
Life/Health...................................    102,778           67,893          32,019
Property-Casualty.............................      4,946               --              91
                                                  -------           ------          ------
          Total...............................    107,724           67,893          32,110
                                                  =======           ======          ======
</Table>

                                       F-61
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RESERVE FOR LOSS AND LOSS ADJUSTMENT EXPENSES

     The gross reserve for loss and loss adjustment expenses is divided between
the two main categories of the Group's insurance business as follows as of
December 31:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Life/Health.................................................   5,172     4,966
Property-Casualty...........................................  61,476    54,047
                                                              ------    ------
          Total.............................................  66,648    59,013
                                                              ======    ======
</Table>

     The reserve for loss and loss adjustment expenses (loss reserves) has
changed in Property-Casualty insurance the years ended December 31, as follows:

<Table>
<Caption>
                                                          2001      2000      1999
                                                         E(MN)     E(MN)     E(MN)
                                                         -----     -----     -----
<S>                                                      <C>       <C>       <C>
Loss reserve as of January 1:
     Gross.............................................  54,047    51,272    45,560
     Amount ceded to reinsurers........................  12,571    12,089     9,428
                                                         ------    ------    ------
     Net...............................................  41,476    39,183    36,132
                                                         ------    ------    ------
Plus claims (net):
     Claims in the year under review...................  27,295    24,163    23,427
     Previous years claims.............................      76      (123)     (787)
                                                         ------    ------    ------
     Total.............................................  27,371    24,040    22,640
                                                         ------    ------    ------
Less claims paid (net):
     Claims in the year under review...................  11,895    11,735    12,279
     Previous years claims.............................  12,462    11,968     9,166
                                                         ------    ------    ------
     Total.............................................  24,357    23,703    21,445
                                                         ------    ------    ------
Currency translation adjustments.......................     407       649     1,410
Change in the group of consolidated companies..........     423       240       928
Reclassification.......................................      --       458        --
Other changes..........................................      --       609      (482)
                                                         ------    ------    ------
Loss reserve as of December 31:
     Net...............................................  45,320    41,476    39,183
     Amount ceded to reinsurers........................  16,156    12,571    12,089
                                                         ------    ------    ------
     Gross.............................................  61,476    54,047    51,272
                                                         ======    ======    ======
</Table>

     The favorable development for prior year claims in 1999 is primarily due to
subsidiaries in Germany, Austria and the UK, offset to some extent by
unfavorable run-off in Italy and the United States.

     Reserves for loss and LAE of subsidiaries purchased (sold) are included
(excluded) as of the date of transaction (disposition).

                                       F-62
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Other changes in 2000 includes an amount of E322 million for ending a
reinsurance contract with Munich Re. Restructuring represents the movement of
certain AGF Belgium reserves from aggregate policy reserves to loss reserves.

     On a consolidated Group basis, the terrorist attack of September 11, 2001
resulted in net claims costs of E1,500 million. No exceptional events insured
against have occurred since the balance sheet date which would materially effect
the net worth, financial position or results of the Group.

     Annuities are established to satisfy liabilities for certain loss and loss
adjustment expenses. The balance sheet figure includes annuity reserves as of
December 31, 2001 on a gross basis of E2,743 million (2000: E2,577 million). A
majority of these reserves have been discounted at interest rates between 3.25%
and 6.55%.

     The following table shows, by country, the carrying amounts of reserves as
of December 31, for claims and claim adjustment expenses that have been
discounted, and the interest rates used for discounting.

<Table>
<Caption>
                         DISCOUNTED      AMOUNT OF THE
                        RESERVES IN       DISCOUNT IN           INTEREST RATE USED FOR
                           E(MN)             E(MN)                   DISCOUNTING
                       --------------    --------------    --------------------------------
                       2001     2000     2001     2000          2001              2000
                       ----     ----     ----     ----          ----              ----
<S>                    <C>      <C>      <C>      <C>      <C>               <C>
United States........    288      208      412      295        6.55%             6.55%
Germany..............    279      250      202      180    3.25% to 4.00%    3.25% to 4.00%
Switzerland..........    456      443      374      379        4.00%         4.00% to 6.00%
France...............  1,410    1,386      451      444    3.2% to 4.00%     3.20% to 4.00%
Portugal.............     91       87       91       96    5.25% to 6.00%        5.25%
Netherlands..........      7        4        2        1        4.00%             4.00%
Brazil...............     52       49        7        7        19.00%            19.00%
Hungary..............     50       41       19       15        1.80%             2.00%
Belgium..............    110      109       31       28        4.74%             4.75%
                       -----    -----    -----    -----
          Total......  2,743    2,577    1,589    1,445
                       =====    =====    =====    =====
</Table>

ASBESTOS AND ENVIRONMENTAL CLAIMS EXPOSURE

     Reserves for asbestos-related illnesses, toxic waste clean-up claims and
latent drug and chemical exposures cannot be estimated with traditional loss
reserving techniques. Case reserves are established when sufficient information
has been obtained to indicate the involvement of a specific insurance policy. In
addition, IBNR reserves are established to cover additional exposures on both
known and unasserted claims. In establishing liabilities for claims arising from
asbestos-related illnesses, toxic waste clean-up and latent drug and chemical
exposures, management considers facts currently known and the current state of
the law and coverage litigation.

     However, given the expansion of coverage and liability by the courts and
the legislatures in the past and the possibilities of similar interpretation in
the future, there is significant uncertainty regarding the extent of remediation
and insurer liability.

     The Group is affected by industry-wide increases in asbestos and
environmental claims, primarily through its US subsidiary Fireman's Fund.

                                       F-63
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The industry-wide loss trends for some of these exposures, especially for
asbestos-related losses, have deteriorated recently. Some of the reasons for
this deterioration include: insured's who either produced or installed products
containing asbestos have seen more and larger claims brought against them, some
of these companies have declared bankruptcy which has caused plaintiff attorneys
to seek larger amounts from solvent defendants and to also include new
defendants. Some defendants are also seeking relief under different coverage
provisions when the products liability portion of their coverage has been
exhausted. These developments led the Company to engage outside actuarial
consulting firms to update a previous study conducted in 1995 to analyze the
adequacy of the Company's reserves for these types of losses.

     Management expects this analysis to be completed during the second half of
2002. As of the current date, management continues to rely on the results of the
1995 study as the basis for its best estimate of asbestos and environmental
reserves. Upon completion of the analyses, additions to the reserves for
environmental and asbestos losses may be necessary and these additions could be
significant.

     The total net reserve for asbestos and environmental claims exposure
related liabilities for the Group's US based subsidiaries at December 31, 2001
was E979 million (2000: E1,073 million). The total gross reserve for asbestos
and environmental claims exposure related liabilities at December 31, 2001 was
E1,838 million (2000: E1,983 million).

RESERVE FOR PREMIUM REFUNDS

     The reserve for premium refunds includes the amounts to which policyholders
are entitled under the relevant local statutory or contractual regulations in
the form of experience-rated or other participations in profits and, secondly,
amounts arising from the valuation of certain assets and liabilities of the
Group's life and health insurance enterprises at fair market value (the "latent"
reserve for premium refunds).

     The reserve for premium refunds has changed as follows during the years
ended December 31:

<Table>
<Caption>
                                                          2001      2000      1999
                                                         E(MN)     E(MN)     E(MN)
                                                         -----     -----     -----
<S>                                                      <C>       <C>       <C>
Amounts already allocated under local regulations:
     As of January 1...................................  10,583     9,094     7,509
     Changes in the Group of consolidated companies....      --        --        97
     Change............................................    (495)    1,489     1,488
                                                         ------    ------    ------
As of December 31......................................  10,088    10,583     9,094
                                                         ------    ------    ------
Latent reserves
     As of January 1...................................  17,555    19,529    18,800
     Change due to fluctuations in market value........  (3,120)   (2,949)      564
     Changes in the Group of consolidated companies....     (66)       --        --
     Changes due to valuation differences charged
       (credited) to income............................  (2,868)      975       164
                                                         ------    ------    ------
As of December 31......................................  11,501    17,555    19,528
                                                         ------    ------    ------
Total..................................................  21,589    28,138    28,622
                                                         ======    ======    ======
</Table>

                                       F-64
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In addition to the amounts allocated under policyholders of the Allianz
Group were credited amounts totaling E6,478 million (2000: E7,536 million and
1999: E7,830 million) directly from the surplus.

(19) LIABILITIES TO BANKS

<Table>
<Caption>
                                                               2001      2000
                                                               E(MN)     E(MN)
                                                               -----     -----
<S>                                                           <C>        <C>
Payable on demand...........................................   21,352      471
Registered bonds............................................    6,843       --
Other term liabilities......................................  107,207    4,701
                                                              -------    -----
Liabilities to banks........................................  135,402    5,172
                                                              =======    =====
</Table>

     Liabilities due within one year total E121,320 million (2000: E4,634
million) and those due after more than one year total E14,082 million (2000:
E538 million)

     Liabilities to domestic banks amount to E55,671 million (2000: E1,613
million) and liabilities to foreign banks amount to E79,731 million (2000:
E3,557 million).

(20) LIABILITIES TO CUSTOMERS

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)     E(MN)
                                                               -----     -----
<S>                                                           <C>        <C>
Savings deposits............................................   10,995    1,931
Home loan savings deposits..................................    2,903    1,300
                                                              -------    -----
Total.......................................................   13,898    3,231
                                                              -------    -----
Payable on demand...........................................   50,908      991
Registered mortgage bonds...................................   12,660       --
Term liabilities............................................   67,978       --
Other liabilities...........................................   31,879    5,462
                                                              -------    -----
Liabilities to customers....................................  177,323    9,684
                                                              =======    =====
</Table>

     2001 liabilities to customers include E7,307 million of non-interest
bearing deposits. Liabilities due within one year total E134,766 million.

     Liabilities to customers are classified according to the following customer
groups:

<Table>
<Caption>
                                               2001                                  2000
                                -----------------------------------   ----------------------------------
                                GERMANY   OTHER COUNTRIES    TOTAL    GERMANY   OTHER COUNTRIES   TOTAL
                                 E(MN)         E(MN)         E(MN)     E(MN)         E(MN)        E(MN)
                                -------   ---------------    -----    -------   ---------------   -----
<S>                             <C>       <C>               <C>       <C>       <C>               <C>
Corporate customers...........  52,036        73,332        125,368       --            --           --
Public authorities............   2,531         5,449          7,980       --            --           --
Private customers.............  33,543        10,432         43,975    7,859         1,825        9,684
                                ------        ------        -------    -----         -----        -----
Liabilities to customers......  88,110        89,213        177,323    7,859         1,825        9,684
                                ======        ======        =======    =====         =====        =====
</Table>

                                       F-65
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(21) CERTIFICATED LIABILITIES

     Certificated liabilities comprise debentures and other liabilities for
which transferable certificates have been issued.

<Table>
<Caption>
                                                               2001       2000
                                                               E(MN)     E(MN)
                                                               -----     -----
<S>                                                           <C>        <C>
Mortgage bonds..............................................   13,037        --
Public-sector bonds.........................................   41,540        --
Debentures..................................................   48,222        --
                                                              -------    ------
Total bonds issued..........................................  102,799        --
                                                              -------    ------
Money market securities.....................................   29,749        --
Other.......................................................    2,122    13,606
                                                              -------    ------
Other certificated liabilities..............................   31,871    13,606
                                                              -------    ------
Certificated liabilities....................................  134,670    13,606
                                                              =======    ======
</Table>

     E20,560 million of bonds issued mature within one year.

     The contractual maturity of certificated liabilities as of December 31,
2001, was as follows:

<Table>
<Caption>
                                                               E(MN)
                                                              -------
<S>                                                           <C>
Due within three months.....................................   32,998
Due after three months or within one year...................   21,108
Due after one year or within five years.....................   58,088
Due after five years........................................   22,476
                                                              -------
          Total.............................................  134,670
                                                              =======
</Table>

(22) TRADING LIABILITIES

<Table>
<Caption>
                                                               2001     2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Derivatives.................................................  15,973      --
Obligations to deliver securities...........................  26,031      --
Other trading liabilities...................................   2,534     197
                                                              ------     ---
          Total.............................................  44,538     197
                                                              ======     ===
</Table>

(23) OTHER ACCRUED LIABILITIES

<Table>
<Caption>
                                                               2001     2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Reserves for pensions and similar obligations...............   5,629    3,528
Accrued taxes...............................................   2,478      947
Miscellaneous accrued liabilities...........................   6,010    2,668
                                                              ------    -----
          Total.............................................  14,117    7,143
                                                              ======    =====
</Table>

                                       F-66
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Accrued taxes amounting to E1,523 million are attributable to Dresdner
Bank.

PENSIONS AND SIMILAR RESERVES

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Reserves for pensions.......................................  5,268    3,147
Reserves for similar obligations............................    361      381
                                                              -----    -----
          Total.............................................  5,629    3,528
                                                              =====    =====
</Table>

     The Allianz Group maintains various defined benefit and defined
contribution pension plans covering its worldwide operations. Allianz Group
companies normally have pension plans covering their employees, and in Germany,
their agents. In Germany, these are based on fixed benefits (defined benefit
pension plans), while in other countries pension plans are normally on the
defined contribution basis.

     Under defined benefit pension plans, the beneficiary is promised a
particular level of retirement benefit by the enterprise or by a pension fund,
while the premiums payable by the enterprise, in contrast, are not fixed in
advance.

     The main pension fund is Allianz Versorgungskasse VVaG, Munich, which
covers most of the employees of Group enterprises in Germany. It is not included
in the consolidated financial statements.

     The pension fund assets are invested mainly in equity securities,
investment fund units, fixed income securities and registered bonds. The need to
recognize actuarial gains or losses is reviewed using the corridor approach for
each individual pension plan.

     The reserve for defined benefit pension plans changed in the year under
review as follows:

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Value stated as of January 1................................  3,147    3,111
Translation differences.....................................      3        5
Value stated as of January 1................................  3,150    3,116
Changes in the group of consolidated companies..............  2,160        1
Expenses....................................................    449      316
Payments....................................................   (491)    (286)
                                                              -----    -----
Value stated as of December 31..............................  5,268    3,147
                                                              =====    =====
</Table>

                                       F-67
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth the change in the benefit obligation, change
in plan assets and the weighted average assumptions used for the various Group
pension plans and the amounts recognized in the accompanying consolidated
balance sheet as of December 31:

<Table>
<Caption>
                                                               2001     2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Changes in benefit obligation:
  Benefit obligation as of January 1........................   7,728    7,549
  Service cost..............................................     231      187
  Interest cost.............................................     553      465
  Contributions by plan participants........................      47       41
  Actuarial loss(gain)......................................     107     (203)
  Foreign currency exchange.................................      34       24
  Benefits paid.............................................    (452)    (407)
  Changes in the group of consolidated companies............   2,747        1
  Other.....................................................     (50)      71
                                                              ------    -----
  Benefit obligation as of December 31......................  10,945    7,728
                                                              ======    =====
     Including direct commitments of Group enterprises......   5,842    3,321
     Including commitments through pension funds............   5,103    4,407
Changes in pension fund assets:
  Fair value of pension fund assets as of January 1.........   4,650    4,475
  Actual return (loss) on pension fund assets...............    (198)     154
  Company contributions.....................................      90       78
  Plan participant contributions............................      47       41
  Benefits paid.............................................    (228)    (152)
  Changes in the group of consolidated companies............     588       --
  Other.....................................................      38       54
                                                              ------    -----
  Fair value of pension fund assets as of December 31.......   4,987    4,650
                                                              ======    =====
Reconciliation of balance sheet:
  Pension obligations less pension fund assets..............   5,958    3,078
  Unrecognized gains (losses)...............................    (607)      69
  Unrecognized (prior) service cost.........................     (83)      --
                                                              ------    -----
  Net amount recognized.....................................   5,268    3,147
                                                              ======    =====
</Table>

     The assumptions for the actuarial computation of the obligations depend on
the circumstance in the particular country where the plan has been established.

     The actuarial assumptions for the main pension plans are as follows:

<Table>
<S>                                                           <C>     <C>
Discount rate...............................................  5-8%    6-8%
Expected rate of return on pension funds assets.............  7-9%    7-9%
Retirement rates............................................  2-5%    3-5%
Benefit levels..............................................  2-3%    2-3%
</Table>

                                       F-68
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The calculations are based on current actuarially calculated mortality
estimates. Projected fluctuations depending on age and length of service have
also been used, as well as internal Group retirement projections.

     The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for pension plans with accumulated benefit obligations in
excess of plan assets were E10,945 million, E9,850 million and E4,987 million,
respectively, as of December 31, 2001 (2000: E6,842 million, E6,241 million and
E3,381 million, respectively).

     The net periodic benefit cost (income and expense recognized in the income
statement) for the years ended December 31 include the following components:

<Table>
<Caption>
                                                             2001     2000     1999
                                                             E(MN)    E(MN)    E(MN)
                                                             -----    -----    -----
<S>                                                          <C>      <C>      <C>
Components of net periodic benefit cost:
  Current service cost.....................................   231      187      165
  Interest cost............................................   553      465      433
  Expected return on pension fund assets...................  (358)    (339)    (279)
Amortization of:
  Gains/(losses) recognized................................   (19)      --       --
  Prior service cost recognized............................    (1)      --       --
  Income/(expenses) of plan curtailments or settlements....    43        3       (6)
                                                             ----     ----     ----
          Total............................................   449      316      313
                                                             ====     ====     ====
</Table>

     Most of the amounts expensed are charged in the income statement as
acquisition and administrative expenses, and loss and loss adjustment expenses
(claims settlement expenses). The actual losses from the pension funds amounted
to E198 million in 2001 (2000: gain of E154 million and 1999: gain of E561
million).

     The reserve for other post-retirement obligations was E361 million as of
December 31, 2001 (2000: E381 million). The reserve for other post-retirement
obligations is primarily composed of obligations for post-retirement benefits
not under defined benefit plans, health care benefits and statutorily required
post-retirement benefits.

     DEFINED CONTRIBUTION PENSION PLANS are funded through independent pension
funds or similar organizations. Contributions fixed in advance, based e.g., on
salary, are paid to these institutions and the beneficiary's right to benefits
exists against the pension fund. The employer has no obligation beyond payment
of the contributions (premiums). The main pension fund is the
Versicherungsverein des Bankgewerbes a.G., Berlin, which covers most of the
banking employees in Germany.

     Amounts expensed by the Group for defined contribution pension plans was
E108 million for the year ended December 31, 2001 (2000: E65 million and 1999:
E35 million).

MISCELLANEOUS ACCRUED LIABILITIES

     Miscellaneous accrued liabilities primarily include reserves of E478
million (2000: E309 million) for restructuring in connection with company
mergers and reserves for employee expenses amounting to E3,039 million (2000:
E811 million).

                                       F-69
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Activity in the provisions for restructuring costs for the years ended
December 31, was as follows:

<Table>
<Caption>
                                                             2001     2000     1999
                                                             E(MN)    E(MN)    E(MN)
                                                             -----    -----    -----
<S>                                                          <C>      <C>      <C>
Provisions as of January 1.................................   309      485      637
New Provision:
  Changes in consolidation.................................   385       --       --
  Through income...........................................   149        5       --
Reclassifications..........................................    --       --      (50)
Additions to existing provisions...........................    62       15       76
Release of provisions via payments.........................  (370)    (196)    (173)
Release of provisions through income.......................   (58)      --       --
Exchange rate impact.......................................     1       --       (5)
                                                             ----     ----     ----
Provisions as of December 31,..............................   478      309      485
                                                             ====     ====     ====
</Table>

DRESDNER BANK RESTRUCTURING PLANS

     In connection with the acquisition of Dresdner Bank, several restructuring
plans established by Dresdner Bank prior to the acquisition by Allianz AG have
been included in the consolidated financial statements of Allianz AG. In total,
E315 million of restructuring provisions have been assumed by Allianz AG as of
the acquisition date.

     This amount is comprised of restructuring plans established by Dresdner
Bank in May 2000 related to the reorganization of the German branch network and
other domestic restructuring activities of E217 million and a restructuring
initiative related to the bank's non-European business of E98 million primarily
concerning the reduction of commercial lending activities outside of Europe.
These plans are expected to be completed by 2004. During 2001, the provisions
relating to these plans were reduced by E5 million and payments of E28 million
were made. At December 31, 2001, a provision of E188 million and E94 million,
respectively was outstanding related to the two plans.

     In addition, a restructuring provision of E70 million directly related to
the acquisition of Dresdner Bank was included as part of the purchase price.
This provision relates to the reorganization of the bank's investment banking
division, which was combined with its European corporate banking and capital
market activities into a single new division. This project is expected to be
completed by the end of 2002. During 2001, a total of E118 million was added to
this provision and charged to income, whereas a total of E78 million was
utilized resulting in a balance of E110 million as of December 31, 2001.

     In September 2001, another restructuring plan relating primarily to two
subsidiaries of Dresdner Bank was established. This restructuring plan is
expected to be completed by the end of 2004. Initially, E31 million was provided
and expensed, of which E4 million has been utilized, resulting in a balance of
E27 million as of December 31, 2001.

     In total, the restructuring provisions related to Dresdner Bank amounted to
E419 million at December 31, 2001.

                                       F-70
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

AGF RESTRUCTURING PLAN

     In connection with the acquisition of AGF, a restructuring plan was
implemented to integrate AGF with other French subsidiaries and to facilitate
AGF being the operating entity for a significant portion of Group companies in
Europe, Africa, and the Middle East. The total restructuring charges allocated
to the purchase price of AGF amounted to E469 million in 1998. AGF recorded
charges of E76 million and E15 million for 1999 and 2000, respectively in
restructuring costs which were included in other expenses in the income
statement.

     In 2001, AGF utilized the remaining outstanding provision of E209 million
resulting in no provision as of December 31, 2001.

(24) OTHER LIABILITIES

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Funds held under reinsurance business ceded.................   8,929     9,127
Accounts payable on direct insurance business...............   7,610     7,296
Accounts payable on reinsurance business....................   2,103     2,082
Other liabilities...........................................  23,258     9,987
                                                              ------    ------
          Total.............................................  41,900    28,492
                                                              ======    ======
</Table>

     Accounts payable on direct insurance business and accounts payable on
reinsurance are due within one year. Of the remaining liabilities stated under
other liabilities, E14,876 million (2000: E6,392 million) are due within one
year, those due after more than one year total E8,382 million (2000: E3,595
million).

     Other liabilities primarily include liabilities arising from tax charges on
income totaling E1,055 million (2000: E978 million), interest and rental
liabilities amounting to E3,874 million (2000: E590 million), social security
liabilities of E274 million (2000: E156 million), derivative liabilities of E868
million (2000: E0 million), and unprocessed sales totaling E876 million (2000:
E531 million).

(25) DEFERRED INCOME

     This item includes miscellaneous deferred income positions amounting to
E619 million as of December 31, 2001 (2000: E564 million).

                                       F-71
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

         SUPPLEMENTARY INFORMATION ON THE CONSOLIDATED INCOME STATEMENT

(26) PREMIUMS EARNED (NET)

<Table>
<Caption>
                                                                     PROPERTY-
                                                     LIFE/HEALTH*    CASUALTY*    TOTAL
                                                        E(MN)          E(MN)      E(MN)
                                                     ------------    ---------    -----
<S>                                                  <C>             <C>          <C>
2001
Gross premiums written.............................     20,129        41,459      61,588
Premiums ceded in reinsurance......................     (1,169)       (6,669)     (7,838)
Change in unearned premiums (net)..................         19        (1,024)     (1,005)
                                                        ------        ------      ------
Premiums earned (net)..............................     18,979        33,766      52,745
                                                        ======        ======      ======
2000
Gross premiums written.............................     20,219        37,666      57,885
Premiums ceded in reinsurance......................     (1,139)       (6,488)     (7,627)
Change in unearned premiums (net)..................         (3)         (348)       (351)
                                                        ------        ------      ------
Premiums earned (net)..............................     19,077        30,830      49,907
                                                        ======        ======      ======
1999
Gross premiums written.............................     18,466        35,341      53,807
Premiums ceded in reinsurance......................     (1,169)       (5,880)     (7,049)
Change in unearned premiums (net)..................       (239)         (337)       (576)
                                                        ------        ------      ------
Premiums earned (net)..............................     17,058        29,124      46,182
                                                        ======        ======      ======
</Table>

---------------
     * After eliminating intra-group transactions between segments.

     Gross premiums written in the year under review totaled E58,331 million for
direct insurance business and E3,257 million for reinsurance business assumed.

     In the case of life insurance products where the policyholder carries the
investment risk (e.g., variable annuities), only those parts of the premiums
used to cover the risks insured and costs involved are treated as premium
income.

(27) INTEREST AND SIMILAR INCOME

<Table>
<Caption>
                                                          2001      2000      1999
                                                         E(MN)     E(MN)     E(MN)
                                                         -----     -----     -----
<S>                                                      <C>       <C>       <C>
Income from
  Securities held to maturity..........................     467       509       983
  Securities available for sale........................  13,055    11,889    11,056
  Real estate used by third parties....................   1,108       850       873
  Lending and money market transaction.................   1,935       253        --
  Leasing agreements...................................      68        87       141
  Loans advanced by Group enterprises..................   6,631     1,699     2,256
  Other interest-bearing instruments...................     960     1,308       634
                                                         ------    ------    ------
          Total........................................  24,224    16,595    15,943
                                                         ======    ======    ======
</Table>

                                       F-72
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Interest and similar income includes dividend income of E2,147 million
(2000: E1,806 million and 1999: E2,323 million).

     The net interest margin from banking business* is comprised as follows:

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              -----     -----
<S>                                                           <C>       <C>
Interest and current income.................................   9,073     1,414
Interest expenses...........................................  (6,668)   (1,190)
Net interest margin.........................................   2,405       224
Less loan loss allowance....................................     588        21
Net interest margin after loan loss allowance...............   1,817       203
</Table>

---------------
     * After eliminating intra-group transactions between segments.

(28) INCOME (NET) FROM INVESTMENTS IN AFFILIATED ENTERPRISES, JOINT VENTURES AND
     ASSOCIATED ENTERPRISES

<Table>
<Caption>
                                                             2001     2000     1999
                                                             E(MN)    E(MN)    E(MN)
                                                             -----    -----    -----
<S>                                                          <C>      <C>      <C>
Income
Current income.............................................    657    1,161      997
Write-ups..................................................     27       12       --
Realized gains from investments in affiliated enterprises,
  joint ventures and associated enterprises................  1,319      725      497
                                                             -----    -----    -----
     Total.................................................  2,003    1,898    1,494
                                                             =====    =====    =====
Expenses
Depreciation...............................................   (243)     (23)      (7)
Realized losses on investments in affiliated enterprises,
  joint ventures and associated enterprises................   (119)     (15)      (7)
Miscellaneous expenses.....................................    (53)      --       --
     Total.................................................   (415)     (38)     (14)
                                                             -----    -----    -----
Income (net)...............................................  1,588    1,860    1,480
                                                             =====    =====    =====
</Table>

     E1,388 million (2000: E1,263 million and 1999: E982 million) of the income
(net) from investments in affiliated enterprises, joint ventures and associated
enterprises is attributable to associated enterprises. E866 million of this
relates to a structured securities lending transaction relating to ordinary
shares of Munich Re.

                                       F-73
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(29) OTHER INCOME FROM INVESTMENTS

<Table>
<Caption>
                                                           2001      2000     1999
                                                           E(MN)    E(MN)     E(MN)
                                                           -----    -----     -----
<S>                                                        <C>      <C>       <C>
Realized gains on
Securities held to maturity..............................      2         8       15
Securities available for sale............................  7,738    10,583    8,072
Real estate used by third parties........................    303       278      302
Other investments........................................     72        38       12
                                                           -----    ------    -----
Subtotal.................................................  8,115    10,907    8,401
                                                           -----    ------    -----
Income from revaluations on
Securities held to maturity..............................      7         3        1
Securities available for sale............................    184        --
Real estate used by third parties........................     87        35       11
Other investments........................................    109        --        1
                                                           -----    ------    -----
Subtotal.................................................    387        38       13
                                                           -----    ------    -----
Total....................................................  8,502    10,945    8,414
                                                           =====    ======    =====
</Table>

(30) TRADING INCOME

     Trading income amounting to E1,592 million (2000:(E36 million)) includes
income from trading activities of banking business (after eliminating
intra-Group transactions between segments) totaling E244 million (2000: E7
million). This is comprised as follows:

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Securities Trading..........................................    59       3
Foreign exchange/precious metals trading....................    49      (1)
Other dealings in financial instruments.....................   136       5
                                                               ---      --
          Total.............................................   244       7
                                                               ===      ==
</Table>

     Trading income includes contributions to earnings amounting to E1,385
million from derivative financial instruments used by insurance companies for
which hedge accounting is not applied. These include gains on derivative
financial instruments embedded in exchangeable bonds issued amounting to E880
million and income from forward contracts that are used to hedge investments
amounting to E966 million. Also included are losses totaling E461 million
arising from the use of other derivative financial instruments by insurance
companies.

                                       F-74
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(31) FEE AND COMMISSION INCOME, AND INCOME FROM SERVICE ACTIVITIES

     Out of the total fee and commission income, and income from service
activities, E1,383 million (2000: E38 million) are attributable to banking
business and E2,429 million (2000: E1,099 million) are attributable to asset
management.*

     Net fee and commission income from banking business*:

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Fee and commission income...................................  1,383      38
Fee and commission expenses.................................   (162)    (37)
                                                              -----     ---
          Total.............................................  1,221       1
                                                              =====     ===
</Table>

---------------
     * After eliminating intra-group transactions between segments.

     Net fee and commission income comprises the following:

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Securities business.........................................    713      --
Loan business...............................................     72      --
Underwriting business (new issues)..........................     75      --
Other.......................................................    361       1
                                                              -----    ----
          Net fee and commission income.....................  1,221       1
                                                              =====    ====
</Table>

(32) OTHER INCOME

     Other income is comprised of the following:

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Other reserve reductions....................................    694      198
Reinsurance.................................................    485      426
Fees........................................................    473      118
Foreign currency transaction gains..........................    114      135
Income from other assets....................................    101      100
Other.......................................................    612    1,354
                                                              -----    -----
          Total.............................................  2,479    2,331
                                                              =====    =====
</Table>

                                       F-75
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(33) INSURANCE BENEFITS

     Insurance benefits in Life/Health* comprise the following:

<Table>
<Caption>
                                                                 CEDED IN
                                                      GROSS     REINSURANCE     NET
                                                      E(MN)        E(MN)       E(MN)
                                                      -----     -----------    -----
<S>                                                   <C>       <C>            <C>
2001
Benefits paid.......................................  15,576      (1,135)      14,441
Change in reserves
  Aggregate policy reserve..........................   6,526        (231)       6,295
  Other.............................................     196        (122)          74
                                                      ------      ------       ------
Subtotal............................................  22,298      (1,488)      20,810
Expenses for premium refunds........................   1,873          (4)       1,869
                                                      ------      ------       ------
          Total.....................................  24,171      (1,492)      22,679
                                                      ======      ======       ======
2000
Benefits paid.......................................  14,948        (951)      13,997
Change in reserves
  Aggregate policy reserve..........................   6,364        (345)       6,019
  Other.............................................     524         104          628
                                                      ------      ------       ------
Subtotal............................................  21,836      (1,192)      20,644
                                                      ------      ------       ------
Expenses for premium refunds........................   6,448          --        6,448
                                                      ------      ------       ------
          Total.....................................  28,284      (1,192)      27,092
                                                      ======      ======       ======
1999
Benefits paid.......................................  13,569        (886)      12,683
Change in reserves
  Aggregate policy reserve..........................   6,430        (316)       6,114
  Other.............................................     427        (121)         306
                                                      ------      ------       ------
Subtotal............................................  20,426      (1,323)      19,103
                                                      ------      ------       ------
Expenses for premium refunds........................   5,946          --        5,946
                                                      ------      ------       ------
          Total.....................................  26,372      (1,323)      25,049
                                                      ======      ======       ======
</Table>

---------------
     * After eliminating intra-Group transactions between segments.

                                       F-76
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Insurance benefits in Property-Casualty* comprise the following:

<Table>
<Caption>
                                                                   CEDED
                                                      GROSS     REINSURANCE     NET
                                                      E(MN)        E(MN)       E(MN)
                                                      -----     -----------    -----
<S>                                                   <C>       <C>            <C>
2001
Claims:
Claims paid.........................................  29,966      (5,609)      24,357
Change in loss and LAE..............................   5,871      (2,857)       3,014
                                                      ------      ------       ------
Subtotal............................................  35,837      (8,466)      27,371
                                                      ------      ------       ------
Change in other reserves:
Aggregate policy reserves...........................     428        (227)         201
Other...............................................    (227)        (15)        (242)
                                                      ------      ------       ------
Subtotal............................................     201        (242)         (41)
                                                      ------      ------       ------
Expenses for premium refunds........................     167         (22)         145
                                                      ------      ------       ------
          Total.....................................  36,205      (8,730)      27,475
                                                      ======      ======       ======
2000
Current claims:
Claims paid.........................................  28,646      (4,943)      23,703
Change in loss and LAE..............................     948        (611)         337
                                                      ------      ------       ------
Subtotal............................................  29,594      (5,554)      24,040
                                                      ------      ------       ------
Change in other reserves:
Aggregate policy reserve............................     370         (27)         343
Other...............................................    (132)         18         (114)
                                                      ------      ------       ------
Subtotal............................................     238          (9)         229
                                                      ------      ------       ------
Expenses for premium refunds........................     407         (30)         377
                                                      ------      ------       ------
          Total.....................................  30,239      (5,593)      24,646
                                                      ======      ======       ======
1999
Current claims:
Claims paid.........................................  25,685      (4,240)      21,445
Change in loss and LAE..............................   2,593      (1,398)       1,195
                                                      ------      ------       ------
Subtotal............................................  28,278      (5,638)      22,640
                                                      ------      ------       ------
Change in other reserves:
Aggregate policy reserve............................     247         (27)         220
Other...............................................      43           9           52
                                                      ------      ------       ------
Subtotal............................................     290         (18)         272
                                                      ------      ------       ------
Expenses for premium refunds........................     428         (58)         370
                                                      ------      ------       ------
          Total.....................................  28,996      (5,714)      23,282
                                                      ======      ======       ======
</Table>

---------------
     * After eliminating intra-Group transactions between segments.

                                       F-77
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(34) INTEREST AND SIMILAR EXPENSES

     The following table presents interest and similar expenses at December 31,:

<Table>
<Caption>
                                                             2001     2000     1999
                                                             E(MN)    E(MN)    E(MN)
                                                             -----    -----    -----
<S>                                                          <C>      <C>      <C>
  Deposits.................................................    610      198      168
  Certificated liabilities.................................  4,607      617      522
                                                             -----    -----    -----
  Subtotal.................................................  5,217      815      690
  Other interest expenses..................................  2,730    1,584    1,340
                                                             -----    -----    -----
          Total............................................  7,947    2,399    2,030
                                                             =====    =====    =====
</Table>

                                       F-78
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(35) OTHER EXPENSES FOR INVESTMENTS

<Table>
<Caption>
                                                             2001     2000     1999
                                                             E(MN)    E(MN)    E(MN)
                                                             -----    -----    -----
<S>                                                          <C>      <C>      <C>
Realized losses on investments
  Securities held to maturity..............................     12       15        3
  Securities available for sale............................  6,888    3,989    2,491
  Real estate used by third parties........................     19       75       31
  Other investment securities..............................     79       --       10
                                                             -----    -----    -----
Subtotal...................................................  6,998    4,079    2,535
Unscheduled write-downs on investments
  Securities held to maturity..............................     35        2        2
  Securities available for sale............................  1,507      411        1
  Real estate used by third parties........................    378      444      446
  Other investment securities..............................      5       13        5
                                                             -----    -----    -----
Subtotal...................................................  1,925      870      454
                                                             -----    -----    -----
          Total............................................  8,923    4,949    2,989
                                                             =====    =====    =====
</Table>

(36) LOAN LOSS PROVISIONS

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Additions to allowances including direct write-offs.........  1,204     104
Less amounts released.......................................   (593)    (73)
Less recoveries on loans previously written off.............    (15)    (10)
                                                              -----     ---
Loan loss provisions........................................    596      21
                                                              =====     ===
</Table>

                                       F-79
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(37) ACQUISITION COSTS AND ADMINISTRATIVE EXPENSES

<Table>
<Caption>
                                                                              PROPERTY-
                                                              LIFE/HEALTH*    CASUALTY*
                                                                 E(MN)          E(MN)
                                                              ------------    ---------
<S>                                                           <C>             <C>
2001
Acquisition costs:
  Payments..................................................      3,341         6,642
  Less Commissions and profit received on reinsurance
    business ceded..........................................       (198)       (1,389)
  Change in deferred acquisition costs......................       (620)         (270)
                                                                 ------        ------
Deferred acquisition costs amortization.....................      2,523         4,983
Administrative expenses.....................................      1,269         4,482
                                                                 ------        ------
Underwriting costs (net)....................................      3,792         9,465
Expenses for management of investments......................        457           484
                                                                 ------        ------
Total acquisition costs and administrative expenses.........      4,249         9,949
                                                                 ======        ======
2000
Acquisition costs:
  Payments..................................................      3,097         7,698
  Less Commissions and profit received on reinsurance
    business ceded..........................................       (193)       (1,449)
  Change in deferred acquisition costs......................       (848)       (1,021)
                                                                 ------        ------
Deferred acquisition costs amortization.....................      2,056         5,228
Administrative expenses.....................................      1,528         3,257
                                                                 ------        ------
Underwriting costs (net)....................................      3,584         8,485
Expenses for management of investments......................        398           558
                                                                 ------        ------
Total acquisition costs and administrative expenses.........      3,982         9,043
                                                                 ======        ======
1999
Acquisition costs:
  Payments..................................................      2,867         6,254
  Less Commissions and profit received on reinsurance
    business ceded..........................................       (183)       (1,427)
  Change in deferred acquisition costs......................     (1,007)         (185)
                                                                 ------        ------
Deferred acquisition costs amortization.....................      1,677         4,642
Administrative expenses.....................................      1,129         3,369
                                                                 ------        ------
Underwriting costs (net)....................................      2,806         8,011
Expenses for management of investments......................        358           347
                                                                 ------        ------
Total acquisition costs and administrative expenses.........      3,164         8,358
                                                                 ======        ======
</Table>

                                       F-80
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                                             ASSET
                                                              BANKING*    MANAGEMENT*
                                                               E(MN)         E(MN)
                                                              --------    -----------
<S>                                                           <C>         <C>
2001
Personnel expenses..........................................    2,045        1,102
Operation expenses..........................................    1,360          619
                                                               ------       ------
Total acquisition costs and administrative expenses.........    3,405        1,721
                                                               ======       ======
2000
Personnel expenses..........................................      106          303
Operation expenses..........................................       64          181
                                                               ------       ------
Total acquisition costs and administrative expenses.........      170          484
                                                               ======       ======
</Table>

---------------
     * After eliminating intra-Group transactions between segments.

     Acquisition costs and administrative expenses in insurance business include
the personnel and operating expenses of the insurance business allocated to the
functional areas "Acquisition of insurance policies", "Administration of
insurance policies" and "Management of investments". Other personnel and
operating expenses are reported under insurance benefits (claims settlement
expenses) and other expenses.

     All personnel and operating expenses in banking are reported under
"Acquisition and administrative expenses".

(38) OTHER EXPENSES

<Table>
<Caption>
                                                              2001     2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Overhead expenses...........................................  1,526    1,112
Expenses for service activities.............................    971      923
Expenses resulting from reinsurance business................    562    1,204
Depreciation and write-downs of other intangible assets.....    413      303
Expense of transferring or increasing miscellaneous or
  accrued liabilities.......................................    389       91
Fees........................................................    281      113
Direct charge to policy reserve.............................    257      107
Integration expenses........................................    236       --
Amortization of capitalized loyalty bonuses to senior
  management of PIMCO Group.................................    188      110
Foreign currency losses.....................................    137      131
Expenses for assistance to victims under joint and several
  liability and road casualties.............................    127       85
Interest on accumulated policyholder dividends..............    108       72
Other.......................................................  1,183    1,344
                                                              -----    -----
          Total.............................................  6,378    5,595
                                                              =====    =====
</Table>

                                       F-81
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(39) TAXES

     The tax shown in the income statement comprises the taxes actually charged
to individual Group enterprises and changes in deferred tax assets and
liabilities.

     Taxes for the years ended December 31, are as follows:

<Table>
<Caption>
                                                             2001     2000     1999
                                                            E(MN)     E(MN)    E(MN)
                                                            -----     -----    -----
<S>                                                         <C>       <C>      <C>
Current taxes.............................................     617     629     1,909
Deferred taxes............................................  (1,531)   (491)     (437)
                                                            ------    ----     -----
Subtotal..................................................    (914)    138     1,472
                                                            ------    ----     -----
Other taxes...............................................      74      38        41
                                                            ------    ----     -----
          Total...........................................    (840)    176     1,513
                                                            ======    ====     =====
</Table>

     The calculation of deferred tax is based on temporary differences between
the carrying amounts of assets or liabilities in the balance sheet and their tax
basis, and on differences recognized as income or expense arising from the
application of uniform valuation policies for consolidation purposes and from
consolidation procedures.

     The tax rates used in the calculation of deferred taxes are the applicable
national rates; changes to tax rates already adopted on the balance sheet date
are taken into account. Deferred taxes on losses carried forward are recognized
as an asset, if at the time of recognition, it is probable that sufficient
future taxable profits will be available against which the unused tax losses can
be utilized. The Group reported average earnings from ordinary activities
(before income taxes) for the past three years amounting to E3,797 million and
believes that the recoverability of deferred tax assets is probable.

     Carrying back tax losses reduced current taxes for the year ended December
31, 2001 by E72 million (2000: E92 million and 1999: E17 million).

     Unused tax losses carried forward at the balance sheet date of E9,876
million and deferred tax assets have been recognized where there is sufficient
certainty that the unused tax losses will be utilized. E5,672 million of the tax
losses carried forward can be utilized without restriction.

     Aside from the losses sustained during the course of fiscal year 2001, the
rise in tax losses carried forward by comparison with the previous year is due
to consolidation of Dresdner Bank in the consolidated financial statements.

                                       F-82
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Losses carried forward can be utilized subject to restrictions and are
scheduled in subsequent years as follows:

<Table>
<Caption>
YEAR ENDING                                                   E(MN)
-----------                                                   ------
<S>                                                           <C>
2002........................................................     72
2003........................................................    598
2004........................................................    660
2005........................................................    332
2006........................................................    695
2007........................................................     49
2008........................................................     18
2009........................................................     15
2010........................................................     30
2011........................................................      6
> 10 years..................................................  1,729
unrestricted................................................  5,672
                                                              -----
Total.......................................................  9,876
                                                              =====
</Table>

     The current tax charge for 2001 is E1,250 million less than (2000: E1,666
million less than and 1999: E281 million less than) the anticipated tax charge
on income which would have been incurred based on an estimated weighted average
tax rate for the Group applied to earnings before taxation. The difference is
due mainly to tax-free income and extraordinary income arising from the release
of deferred taxes due to tax rate reductions.

     The low corporate income tax rate of 19.2% expected in 2001 primarily
results from the reduction of the income tax rate in Germany. Actual tax expense
on income differs from the expected amount computed by applying the statutory
rate in each country as follows for the years ended December 31:

<Table>
<Caption>
                                                             2001       2000       1999
                                                             E(MN)      E(MN)      E(MN)
                                                             -----      -----      -----
<S>                                                         <C>        <C>        <C>
Anticipated tax rate......................................    19.2%      37.8%      37.7%
                                                            =======    =======    =======
Anticipated tax charge on income..........................      336      1,842      1,794
- municipal trade tax and similar taxes...................     (276)        74        172
- tax-free income.........................................   (1,314)      (247)      (322)
+ effects of tax losses...................................       63        (92)       (20)
+ other tax settlements...................................      277     (1,439)      (152)
                                                            -------    -------    -------
= Current tax charge......................................     (914)       138      1,472
                                                            =======    =======    =======
Effective tax rate........................................   (52.1%)      2.8%      30.9%
                                                            =======    =======    =======
</Table>

     The effective tax rate is determined on the basis of the current tax charge
on earnings from ordinary activities (before income tax and before minority
interests) amounting to E1,753 million (2000: E4,875 million and 1999: E4,763
million). The effective tax rate related to earnings from ordinary activities
before amortization of goodwill is (35.7%) (2000: 2.6% and 1999: 28.1%).

     Other tax settlements include an expense of E30 million and income of
E1,202 million in 2001 and 2000, respectively, arising from the release of
deferred taxes.

                                       F-83
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The item "effects of tax losses" includes effects arising from recognizing
deferred taxes on losses carried forward as an asset for which no deferred taxes
had so far been recognized. It also includes effects that arise from not
recognizing deferred taxes on tax losses for the fiscal year.

     During 2000 (effective for 2001), corporate income tax rates in Germany
have been reduced from 40% to 25%. In addition, taxes on capital gains on the
sale of investment securities after 2001 have been eliminated.

     Corporate income tax rates during 1999 (effective 2000) were reduced from
45% to 40%. The tax burden eased in Italy as a result of a change in municipal
taxes. Income from the release of deferred taxes due to these changes in rates
for the year ended December 31, 1999, amounted to E484 million.

     Deferred tax assets and liabilities comprise the following balance sheet
headings:

<Table>
<Caption>
                                                              2001      2000
                                                              E(MN)    E(MN)
                                                              -----    -----
<S>                                                           <C>      <C>
Deferred tax assets:
  Intangible assets.........................................    169        16
  Investments...............................................  1,809     1,868
  Trading assets............................................    765        --
  Deferred acquisition costs................................     61        72
  Tax losses carried forward................................  3,019       730
  Other assets..............................................    934       508
  Insurance reserves........................................  1,508     1,642
  Pensions and similar reserves.............................    400       247
  Deferred income...........................................   (250)    1,050
                                                              -----    ------
          Total deferred tax assets.........................  8,415     6,133
                                                              -----    ------
Deferred tax liabilities:
  Intangible assets.........................................    238       324
  Investments...............................................  4,064     9,907
  Trading assets............................................    388         9
  Deferred acquisition costs................................  1,493     1,481
  Other assets..............................................   (101)     (271)
  Insurance reserves........................................  1,593     1,613
  Pensions and similar reserves.............................      5        --
  Deferred income...........................................  1,218     1,269
                                                              -----    ------
          Total deferred tax liability......................  8,898    14,332
                                                              -----    ------
          Net deferred tax liability........................    483     8,199
                                                              =====    ======
</Table>

                                       F-84
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(40) SUPPLEMENTARY INFORMATION ON INSURANCE BUSINESS

INVESTMENTS*

<Table>
<Caption>
                                                      LIFE/HEALTH        PROPERTY- CASUALTY          TOTAL
                                                   ------------------    ------------------    ------------------
                                                    2001       2000       2001       2000       2001       2000
                                                    E(MN)      E(MN)      E(MN)      E(MN)      E(MN)      E(MN)
                                                    -----      -----      -----      -----      -----      -----
<S>                                                <C>        <C>        <C>        <C>        <C>        <C>
Real estate......................................    7,450      7,582      6,930      6,819     14,380     14,401
Investments in affiliated enterprises, joint
  ventures and associated enterprises............    1,073      1,173      6,988     10,513      8,061     11,686
Loans............................................   14,785     13,473      1,901      1,368     16,686     14,841
Other securities
  Held to maturity...............................    5,482      5,309      1,179      1,765      6,661      7,074
  Available for sale.............................  168,030    174,830     76,703     80,796    244,733    255,626
  Trading........................................      771        104      1,371         19      2,142        123
  Total other securities.........................  174,283    180,243     79,253     82,580    253,536    262,823
                                                   -------    -------    -------    -------    -------    -------
Other investments................................    1,563      1,458      8,070      6,948      9,633      8,406
                                                   -------    -------    -------    -------    -------    -------
    Total........................................  199,154    203,929    103,142    108,228    302,296    312,157
                                                   =======    =======    =======    =======    =======    =======
</Table>

INVESTMENT INCOME* (LIFE/HEALTH AND PROPERTY-CASUALTY)

<Table>
<Caption>
                                   LIFE/HEALTH                PROPERTY-CASUALTY                  TOTAL
                            --------------------------    -------------------------    --------------------------
                             2001      2000      1999      2001      2000     1999      2001      2000      1999
                            E(MN)     E(MN)     E(MN)     E(MN)     E(MN)     E(MN)    E(MN)     E(MN)     E(MN)
                            -----     -----     -----     -----     -----     -----    -----     -----     -----
<S>                         <C>       <C>       <C>       <C>       <C>       <C>      <C>       <C>       <C>
Income from investments
  Current income..........  10,516    10,122     9,978     5,278     5,922    5,429    15,794    16,044    15,407
  Income from
    revaluations..........     614        37         8     1,329        15      10      1,943        52        18
  Realized investment
    gains.................   3,605     6,883     5,045     4,458     4,728    3,830     8,063    11,611     8,875
                            ------    ------    ------    ------    ------    -----    ------    ------    ------
Subtotal..................  14,735    17,042    15,031    11,065    10,665    9,269    25,800    27,707    24,300
                            ------    ------    ------    ------    ------    -----    ------    ------    ------
Investment expenses
  Depreciation and write-
    downs on investments..   1,319       400       292     1,104       509     173      2,423       909       465
  Realized investment
    losses................   4,909     2,638     1,560     2,193     1,456     957      7,102     4,094     2,517
  Investment management,
    interest charges and
    other investment
    expenses..............     526       463       392     1,061       923     682      1,587     1,386     1,074
                            ------    ------    ------    ------    ------    -----    ------    ------    ------
Subtotal..................   6,754     3,501     2,244     4,358     2,888    1,812    11,112     6,389     4,056
                            ------    ------    ------    ------    ------    -----    ------    ------    ------
        Total.............   7,981    13,541    12,787     6,707     7,777    7,457    14,688    21,318    20,244
                            ======    ======    ======    ======    ======    =====    ======    ======    ======
</Table>

---------------

* Presentation of investments and investment income is made in conformity with
  the EU insurance accounting guideline and after eliminating intra-Group
  transactions between segments.

                                       F-85
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(41) SUPPLEMENTARY INFORMATION ON BANKING BUSINESS*

LOANS AND ADVANCES TO BANKS

<Table>
<Caption>
                                                                     2001
                                                        ------------------------------
                                                                     OTHER
                                                        GERMANY    COUNTRIES    TOTAL
                                                         E(MN)       E(MN)      E(MN)
                                                        -------    ---------    -----
<S>                                                     <C>        <C>          <C>
Loans.................................................     531       5,230       5,761
Other advances........................................   9,150      39,612      48,762
                                                         -----      ------      ------
Loans and advances to banks...........................   9,681      44,842      54,523
                                                         -----      ------      ------
Less loan loss allowance..............................       6         246         252
                                                         -----      ------      ------
Loans and advances to banks after loan loss
  allowance...........................................   9,675      44,596      54,271
                                                         =====      ======      ======
</Table>

LOANS AND ADVANCES TO CUSTOMERS

<Table>
<Caption>
                                                                   2001
                                                      -------------------------------
                                                                   OTHER
                                                      GERMANY    COUNTRIES     TOTAL
                                                       E(MN)       E(MN)       E(MN)
                                                      -------    ---------     -----
<S>                                                   <C>        <C>          <C>
Corporate customers.................................   63,890     82,710      146,600
Public authorities..................................      741      3,460        4,201
Private customers...................................   67,801     12,100       79,901
                                                      -------     ------      -------
Loans and advances to customers.....................  132,432     98,270      230,702
                                                      -------     ------      -------
Less loan loss allowance............................    5,606      2,180        7,786
                                                      -------     ------      -------
Loans and advances to customers after loan loss
  allowance.........................................  126,826     96,090      222,916
                                                      =======     ======      =======
</Table>

---------------

*  After eliminating intra-Group transactions between segments

     Loans and advances (after loan loss allowance) to banks and customers
include reverse repos totaling E82,945 million. Liabilities to banks and to
customers include repo transactions amounting to E59,946 million.

     Post-ranking assets amounted to E466 million.

     At the balance sheet date there were commitments to repurchase assets sold
under repurchase agreements with a net book value of E63,505 million.

     An amount of E381 million eligible for refinancing with the central bank is
held in cash funds.

     The aggregate amount of time deposits in denominations of E100,000 or more
at December 31, 2001, was E92,251 million.

                                       F-86
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ADDITIONAL INFORMATION ON LOANS AND ADVANCES TO CUSTOMERS

     The table shown below provides a breakdown of loans and advances (excluding
loan loss allowance) to domestic and foreign corporate customers, private
customers and public authorities by economic sector.

<Table>
<Caption>
                                                             2001
                                                             E(MN)
                                                             -----
<S>                                                         <C>
Germany:
Manufacturing industry....................................   12,787
Construction..............................................    2,163
Wholesale and retail trade................................    8,357
Financial institutions (excluding banks) and insurance
  companies...............................................    6,861
Service providers.........................................   27,352
Other.....................................................    6,370
                                                            -------
Corporate customers.......................................   63,890
Public authorities........................................      741
Private individuals (including self-employed
  professionals)..........................................   67,801
                                                            -------
          Total...........................................  132,432
                                                            =======
</Table>

<Table>
<Caption>
                                                             2001
                                                             E(MN)
                                                             -----
<S>                                                         <C>
Other countries:
Industry, wholesale and retail trade and service
  providers...............................................   48,778
Financial institutions (excluding banks) and insurance
  companies...............................................   17,607
Other.....................................................   16,325
                                                            -------
Corporate customers.......................................   82,710
Public authorities........................................    3,460
Private individuals.......................................   12,100
                                                            -------
          Total...........................................   98,270
                                                            -------
          Grand total.....................................  230,702
                                                            =======
</Table>

VOLUME OF FOREIGN CURRENCY EXPOSURE FROM BANKING BUSINESS

     The amounts reported constitute aggregate euro equivalents of a wide
variety of currencies outside the EMU. Any differences between the amounts of
assets and liabilities result from differing valuation principles. Loans and
advances and liabilities are reported at amortized cost, while all derivative
transactions are accounted for at fair value.

                                       F-87
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                               USD       GBP      OTHER      2001
                                              E(MN)     E(MN)     E(MN)      E(MN)
                                              -----     -----     -----      -----
<S>                                          <C>        <C>       <C>       <C>
Balance sheet items:
Assets.....................................  101,680    46,055    37,793    185,528
Liabilities................................  120,113    54,266    33,805    208,184
</Table>

COLLATERAL PLEDGED FOR OWN LIABILITIES OF BANKING BUSINESS

     For the following liabilities and contingencies, assets having the
indicated value were pledged as collateral:

<Table>
<Caption>
                                                               2001
                                                              E(MN)
                                                              -----
<S>                                                           <C>
Liabilities to banks........................................  32,226
Liabilities to customers....................................   4,018
Contingent liabilities......................................       2
Other commitments...........................................   8,521
                                                              ------
          Total collateralized liabilities..................  44,767
                                                              ======
</Table>

     The total amount of collateral pledged consists of the following assets:

<Table>
<Caption>
                                                               2001
                                                              E(MN)
                                                              -----
<S>                                                           <C>
Loans and advances to banks.................................   5,132
Loans and advances to customers.............................   9,542
Trading assets..............................................  26,700
Investment securities.......................................   3,376
Property and equipment......................................      17
                                                              ------
          Total value of collateral pledged.................  44,767
                                                              ======
</Table>

                                       F-88
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STRUCTURE OF RESIDUAL TERMS FOR BANKING BUSINESS

     The following provides a breakdown of loans and advances in the banking
segment as well as liabilities by final maturity or call date.

<Table>
<Caption>
                                                   MATURITY AT DECEMBER 31, 2001
                                    ------------------------------------------------------------
                                               UP TO     > 3 MONTHS -    > 1 YEAR -    MORE THAN
                                     TOTAL    3 MONTHS      1 YEAR         5 YEARS      5 YEARS
                                     E(MN)     E(MN)         E(MN)          E(MN)        E(MN)
                                     -----    --------   ------------    ----------    ---------
<S>                                 <C>       <C>        <C>             <C>           <C>
Assets:
Term loans and advances to banks..   54,292    32,737       12,311          6,091        3,153
Loans and advances to
  customers(1)....................  229,805    85,096       20,377         53,308       71,024
                                    -------   -------       ------         ------       ------
Total assets......................  284,097   117,833       32,688         59,399       74,177
                                    =======   =======       ======         ======       ======
Liabilities:
Participation certificates and
  post-ranking liabilities........   11,739        49          857          3,269        7,564
Term liabilities to banks(2)......  105,553    78,309       13,905          5,949        7,390
Liabilities to customers(2):
  Savings deposits and home-loan
     savings deposits.............   13,566    11,049          777            979          761
  Other terms liabilities to
     customers....................   79,577    53,310        6,242         10,034        9,991
Certificated liabilities..........  122,644    30,051       19,223         52,901       20,469
                                    -------   -------       ------         ------       ------
Total liabilities.................  333,079   172,768       41,004         73,132       46,175
                                    =======   =======       ======         ======       ======
</Table>

---------------

(1) Loans and advances to customers with residual terms of up to 3 months
    include E13,130 million of undated claims. These claims include credit lines
    available until further notice, overdraft facilities, loans called or
    overdue, unauthorised overdrafts, call money and internal account balances.

(2) Excluding balances payable on demand.

     Dresdner Bank securitizes certain loan portfolios and sells them in the
capital market. The transferred assets are securitized by special-purpose
entities in the form of debt securities and sold to third parties. Dresdner Bank
carries out these transactions through the fully-consolidated special-purpose
entities Silver Lux Inc., Grand Cayman and Silver Tower 125 Inc., Grand Cayman.
The maximum transaction volume in each case is E5 billion. The average
transaction volume for the year for both entities combined was approximately E3
billion.

                                       F-89
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TRUSTEE BUSINESS IN BANKING BUSINESS

     The following presents trustee business within banking business not
recorded in the balance sheet.

<Table>
<Caption>
                                                            31.12.2001
                                                              E(MN)
                                                            ----------
<S>                                                         <C>
Loans and advances to banks...............................    3,415
Loans and advances to customers...........................    4,497
Investment securities.....................................        7
Other.....................................................        9
                                                              -----
Total assets*.............................................    7,928
                                                              =====
Liabilities to banks......................................      300
Liabilities to customers..................................    7,628
                                                              -----
Total liabilities.........................................    7,928
                                                              =====
</Table>

           --------------------------

           *  Including E5,078 million of trustee loans.

(42) DERIVATIVE FINANCIAL INSTRUMENTS

USE, TREATMENT AND REPORTING OF DERIVATIVE FINANCIAL INSTRUMENTS

     Derivative financial instruments ("derivatives") derive their market values
from one or more underlying assets or specified reference values.

     Typical examples of derivatives are contracts for future delivery in the
form of futures or forwards, options on shares or indices, interest rate options
such as caps and floors, and swaps relating to both interest rates and
non-interest rate markets. The latter include agreements to exchange previously
defined assets or payment series.

     Derivatives used by individual enterprises in the Allianz Group comply with
the relevant supervisory regulations and the Group's own internal guidelines.
The Group's strict investment and monitoring rules exceed regulations imposed by
supervisory authorities. In addition to local management supervision,
comprehensive financial and risk management systems are in force across the
Group. Risk Management is an integral part of Allianz Group's controlling
process that includes identifying, measuring, aggregating and managing risks.
Risk management objectives are implemented at both the Group level and by the
local operational units. The uses of derivatives is one key strategy used by the
Group to manage its market and investment risks.

     Insurance companies in the Allianz Group use derivatives to manage the risk
exposures in their investment portfolios based on general thresholds and
targets. The most important aspect of these instruments is hedging against
adverse market movements for selected securities or for parts of a portfolio.
Specifically, the Group selectively uses derivative financial instruments such
as swaps, options and futures to hedge against changes in prices or interest
rates in their investment portfolio.

     In our banking business, derivatives are used both for trading purposes and
to hedge against movements in interest-rate, currency and other price risks of
the Group's investments, loans, deposit liabilities and other interest-sensitive
assets and liabilities.

                                       F-90
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Market and counterparty risks arising from the use of derivative financial
instruments are subject to particular strict control procedures. Credit risks
related to counterparties are assessed by calculating gross replacement values.
Market risks are monitored by means of up-to-date value-at-risk calculations and
stress tests and limited by specifying stop-loss limits.

     The counterparty settlement risk is virtually excluded in the case of
exchange-traded products, as these are standardized products. By contrast,
over-the-counter (OTC) products, which are individually traded contracts, carry
a theoretical credit risk amounting to the replacement value. The Allianz Group
therefore closely monitors the credit rating of counterparties for OTC
derivatives.

     The total notional principal amount of all open derivative positions of the
Allianz Group was E3,957,125 million at December 31, 2001. The market values
were E5,378 million at December 31, 2001.

     The following tables show the distribution of derivative positions on the
balance sheet date between the Group's insurance business and its banking
business.

INSURANCE SEGMENTS LIFE/HEALTH AND PROPERTY-CASUALTY

<Table>
<Caption>
                                         NOTIONAL AMOUNT MATURITY AT
                                              DECEMBER 31, 2001                2001                2000
                                        ------------------------------   -----------------   -----------------
                                                                         NOTIONAL            NOTIONAL
                                        UP TO 1    1-5     MORE THAN 5   PRINCIPAL   FAIR    PRINCIPAL   FAIR
                                         YEAR     YEARS       YEARS       AMOUNT     VALUE    AMOUNT     VALUE
                                         E(MN)    E(MN)       E(MN)        E(MN)     E(MN)     E(MN)     E(MN)
                                        -------   -----    -----------   ---------   -----   ---------   -----
<S>                                     <C>       <C>      <C>           <C>         <C>     <C>         <C>
Interest rate contracts:..............   1,510     1,198      9,696       12,404       (30)    8,567        86
  OTC:
    Swaps.............................       3     1,019      2,067        3,089        (6)      324        65
    Swaptions.........................      --        80         56          136         6       130         4
    Caps..............................      --        --      7,573        7,573       (26)    7,242         6
    Floors............................      --        --         --           --        --         9         9
    Options...........................      --        99         --           99        (3)       --        --
  Exchange traded:
    Futures...........................     217        --         --          217        (1)      408        --
    Options...........................   1,290        --         --        1,290        --       454         2
Equity index contracts................  10,781     8,930      1,991       21,702     2,576     4,462     1,924
  OTC:
    Forwards..........................   6,245     2,459         --        8,704     2,801     2,477     1,768
    Swaps.............................   1,464        20         --        1,484       180        36         1
    Options...........................   1,321     6,451      1,991        9,763      (408)    1,031       152
  Exchange traded:
    Futures...........................     800        --         --          800         1       790       (16)
    Options...........................     951        --         --          951         2       128        19
</Table>

                                       F-91
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                         NOTIONAL AMOUNT MATURITY AT
                                              DECEMBER 31, 2001                2001                2000
                                        ------------------------------   -----------------   -----------------
                                                                         NOTIONAL            NOTIONAL
                                        UP TO 1    1-5     MORE THAN 5   PRINCIPAL   FAIR    PRINCIPAL   FAIR
                                         YEAR     YEARS       YEARS       AMOUNT     VALUE    AMOUNT     VALUE
                                         E(MN)    E(MN)       E(MN)        E(MN)     E(MN)     E(MN)     E(MN)
                                        -------   -----    -----------   ---------   -----   ---------   -----
<S>                                     <C>       <C>      <C>           <C>         <C>     <C>         <C>
Foreign exchange contracts:...........   2,428     1,457         62        3,947        58     1,175        (9)
  OTC:
    Forwards..........................   2,422        --         --        2,422        68       137        (6)
    Swaps.............................       5     1,311         62        1,378       (10)    1,032        (3)
    Options...........................      --       146         --          146        --        --        --
  Exchange traded:
    Futures...........................       1        --         --            1        --         6        --
                                        ------    ------     ------       ------     -----    ------     -----
         Total........................  14,719    11,585     11,749       38,053     2,604    14,204     2,001
                                        ======    ======     ======       ======     =====    ======     =====
</Table>

     In addition to the positions above, the Group has entered into forward
contracts with total notional amounts of E15,410 million that relate to the
restructuring of holdings in affiliates and associated enterprises. These
forward contracts represent non-derivative commitments carried off balance
sheet.

     The most significant derivative instruments for the insurance business are
in the form of interest rate caps and swaps, which are used to manage interest
income in anticipation of changing interest rates, and stock futures and options
which are used to hedge fluctuations in market prices over the long term
relating to shareholdings. Long call options are used to hedge future
obligations arising from the Long-term Incentive Plan for key executives. Equity
security options also hedge obligations arising from index-linked life insurance
policies.

BANKING AND ASSET MANAGEMENT SEGMENTS

<Table>
<Caption>
                                    NOTIONAL AMOUNT MATURITY AT
                                         DECEMBER 31, 2001                  2001                 2000
                                 ---------------------------------   ------------------   ------------------
                                                                     NOTIONAL             NOTIONAL
                                  UP TO 1      1-5     MORE THAN 5   PRINCIPAL    FAIR    PRINCIPAL    FAIR
                                   YEAR       YEARS       YEARS       AMOUNT     VALUE     AMOUNT     VALUE
                                   E(MN)      E(MN)       E(MN)        E(MN)     E(MN)      E(MN)     E(MN)
                                  -------     -----    -----------   ---------   -----    ---------   -----
<S>                              <C>         <C>       <C>           <C>         <C>      <C>         <C>
Interest rate contracts:.......  2,015,876   726,057     474,268     3,216,201     259     23,667      (35)
  OTC:
    Forwards...................    254,519    20,900         369       275,788      20
    Swaps......................  1,479,282   594,890     403,513     2,477,685     903     16,185      (57)
    Swaptions..................         19    18,761      43,062        61,842    (810)
    Caps.......................     18,168    28,725      15,279        62,172      39      3,892       21
    Floors.....................     13,022    15,982      11,487        40,491     118      1,402        2
    Options....................         10       374         412           796       4         --       --
    Other......................         --        --         146           146      --         --       --
  Exchange traded:
    Futures....................    208,650    46,425          --       255,075     (15)       788       (1)
    Options....................     42,206        --          --        42,206      --      1,400       --
</Table>

                                       F-92
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                    NOTIONAL AMOUNT MATURITY AT
                                         DECEMBER 31, 2001                  2001                 2000
                                 ---------------------------------   ------------------   ------------------
                                                                     NOTIONAL             NOTIONAL
                                  UP TO 1      1-5     MORE THAN 5   PRINCIPAL    FAIR    PRINCIPAL    FAIR
                                   YEAR       YEARS       YEARS       AMOUNT     VALUE     AMOUNT     VALUE
                                   E(MN)      E(MN)       E(MN)        E(MN)     E(MN)      E(MN)     E(MN)
                                  -------     -----    -----------   ---------   -----    ---------   -----
<S>                              <C>         <C>       <C>           <C>         <C>      <C>         <C>
Equity/Index contracts.........     75,601    69,852       1,723       147,176     852         22        1
  OTC:
    Swaps......................      2,596     1,022         333         3,951     271         18        1
    Options....................     22,738    61,205       1,390        85,333     272         --       --
    Other......................        475        22          --           497     361         --       --
  Exchange traded:
    Futures....................     10,356        --          --        10,356      15          3       --
    Options....................     39,436     7,603          --        47,039     (67)         1       --
Foreign exchange contracts:....    436,447    58,429      24,649       519,525   1,884        229       --
  OTC:
    Forwards...................    360,135    10,302         241       370,678     874         86       (3)
    Swaps......................     16,474    44,806      22,998        84,278   1,011        123        3
    Options....................     57,988     3,132       1,410        62,530       1         20       --
    Other......................        122        --          --           122       1         --       --
  Exchange traded:
    Futures....................      1,609       189          --         1,798      --         --       --
    Options....................        119        --          --           119      (3)        --       --
Credit contracts...............      3,436    10,690      11,694        25,820    (190)        --       --
  OTC:
    Credit default swaps.......      2,027     3,723      10,811        16,561      57         --       --
Total return swaps.............      1,409     6,967         883         9,259    (247)        --       --
Other contracts................      6,050     2,941       1,359        10,350     (31)        --       --
  OTC:
    Precious metals............      5,424     2,940       1,359         9,723     (18)        --       --
    Other......................        331         1          --           332     (13)        --       --
  Exchange traded:
    Futures....................        217        --          --           217      --         --       --
    Options....................         78        --          --            78      --         --       --
         Total.................  2,537,410   867,969     513,693     3,919,072   2,774     23,918      (34)
</Table>

     The main derivative financial instruments used in the banking business are
interest rate derivatives, in particular interest rate swaps that are primarily
entered into in the course of trading activities. Foreign exchange contracts are
also used to swap foreign exchange exposures into euro and US dollars. Gains or
losses associated with foreign currency swaps are deferred and included in the
measurement of the related foreign currency transaction.

     Pursuant to IAS 39, derivative financial instruments that do not meet the
criteria for hedge accounting are reported at fair value as financial assets or
liabilities held for trading. Gains or losses on these instruments arising from
valuation at fair value are included under trading income. This treatment is
applicable to derivatives used independently, not in connection with hedge
transactions, and for separated embedded derivatives of a hybrid financial
instrument. In contrast, derivatives used in hedge transactions are recognized
and classified as follows:

     The risk of changes in the fair value of reported assets or liabilities is
hedged by a fair value hedge. Changes in the fair value of a hedging instrument
are recognized in current period

                                       F-93
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

income, and classified together with the pro rata share of the profit or loss
attributable to the change in value of the hedged risk recognized in the income
statement.

     The Allianz Group principally uses fair value hedging. Insurance companies
mainly use interest rate swaps and caps, and forward sale agreements. Important
hedging instruments in Banking are interest rate swaps and forwards and currency
swaps and forwards. Hedging instruments may be implemented for individual
transactions (micro hedge) or for a portfolio of similar assets or liabilities
(portfolio hedge). The derivative financial instruments used for fair value
hedges had a fair value at December 31, 2001 totaling E1,925 million.
Ineffectiveness in fair value hedge transactions led to a gain of E66 million
which was classified consistent with the hedged item.

     Cash flow hedges reduce the exposure to variability in cash flows that is
attributable to a particular risk associated with a recognized asset or
liability or attributable to future cash flows from a firm commitment or a
forecasted transaction. Any value changes in derivative instruments that
represent an effective hedge are recorded under shareholders' equity, and
recognized in income when the offsetting gain or loss associated with the hedged
item is recognized. The ineffective part of the hedge is recognized directly in
the income statement in the current period.

     Derivative financial instruments for cash flow hedges had a fair value at
December 31, 2001 totaling E387 million. The use of derivatives as a hedging
instrument in cash flow hedges increased other reserves in shareholders' equity
by E388 million.

     Hedge accounting may also be applied to hedge a net investment in a foreign
entity. Financial instruments are used here to hedge the currency risk. The
proportion of gains or losses arising from valuation of the hedging instrument,
which is classified as an effective hedge, is recognized as shareholders'
equity, while the ineffective part flows directly into the income statement.

     Foreign exchange hedging transactions with a total fair value at December
31, 2001 of E46 million were entered into to hedge currency risks related to a
net investment in a foreign entity. Other reserves in shareholders' equity
decreased by E61 million resulting from foreign exchange hedging transactions
entered into during the period.

(43) FAIR VALUE

     The fair value of a financial instrument is defined as the amount for which
a financial instrument could be exchanged between two willing parties in the
ordinary course of business. If market prices are not available, the fair value
is based on estimates using the present value of future cash flows method or
another appropriate valuation method. These methods are significantly influenced
by the assumptions made, including the discount rate applied and the estimates
of future cash flows. Specific financial instruments are discussed below.

     The Group uses the following methods and assumptions to determine fair
values:

     Cash funds and cash equivalents:  The carrying amount corresponds to the
fair value due to its short-term nature.

     Fixed-term securities, equities, and other investments:  The fair value of
fixed-term securities is based on market prices, provided these are available.
If fixed-term securities are not actively traded, their fair value is determined
on the basis of valuations by independent data suppliers. The fair value of
equities is based on their stock-market prices. The carrying amount and the fair
value for fixed-term securities and equities do not include the fair value of
derivative contracts used to hedge fixed-term securities and equities.
                                       F-94
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Loans and advances to banks and customers:  The fair value of loans is
calculated using the discounted cash flow method. This method uses the effective
yield of the relevant debt instrument. Where there is doubt about the repayment
of loans, the anticipated cash flows are discounted at a reasonable rate that
takes into account date of receipt and includes a charge for an element of
uncertainty in cash flows.

     Derivative instruments:  The fair values of derivatives are derived from
the value of underlying assets and other market parameters. Exchange-traded
derivative financial instruments are valued using the fair-value method and
based on publicly quoted market prices. Valuation models established in
financial markets (such as present value models or option pricing models) are
used to value OTC-traded derivatives. In addition to interest rate curves and
volatilities, these models also take market and counterparty risks into account.
Fair value represents the capital required to settle in full all the future
rights and obligations arising from the financial contract.

     Policy benefits for life and annuity contracts:  Fair values for life
insurance investment and annuity contracts were determined using the cash
surrender values of the policyholder's and contract holder's account.

     Separate accounts assets and liabilities:  The fair values of separate
accounts assets were determined using the market value of the underlying
investments. Fair values of separate accounts liabilities were determined using
cash surrender values of the policyholder's and contractholder's account.

     Certificated liabilities:  The fair value of bonds and loans payable is
estimated using discounted cash flow analyses, using interest rates currently
being offered for similar loans and other borrowings.

     The following disclosures summarize the carrying amount and estimated fair
value of the Group's financial instruments as of December 31:

<Table>
<Caption>
                                                  2001                   2000
                                           -------------------    -------------------
                                           CARRYING     FAIR      CARRYING     FAIR
                                            AMOUNT      VALUE      AMOUNT      VALUE
                                            E(MN)       E(MN)      E(MN)       E(MN)
                                           --------    -------    --------    -------
<S>                                        <C>         <C>        <C>         <C>
Financial assets:
  Cash funds and cash equivalents........   21,240      21,240      4,209       4,209
  Investments............................  329,880     329,999    266,088     266,181
  Loans and advances to banks and
     customers...........................  300,967     302,201     35,156      35,652
  Trading assets.........................  128,422     128,422        372         372
  Separate account assets................   24,692      24,692     22,770      22,770
Other non-financial assets:
     Investments in affiliated
       enterprises, joint ventures and
       associated enterprises............   10,247      24,134     11,763      29,477
</Table>

                                       F-95
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                  2001                   2000
                                           -------------------    -------------------
                                           CARRYING     FAIR      CARRYING     FAIR
                                            AMOUNT      VALUE      AMOUNT      VALUE
                                            E(MN)       E(MN)      E(MN)       E(MN)
                                           --------    -------    --------    -------
<S>                                        <C>         <C>        <C>         <C>
Financial liabilities:
  Investment contracts with
     policyholders.......................   58,685      57,128     28,271      26,478
  Separate account liabilities...........   24,726      24,322     22,841      22,494
  Liabilities to banks and customers.....  312,725     313,144     14,856      14,823
  Certificated liabilities...............  134,670     133,162     13,606      13,378
  Trading liabilities....................   44,538      44,538        197         197
</Table>

     Certain insurance contracts are excluded from the fair value disclosure and
are therefore not included in the amounts discussed.

     The tax ramifications of the related unrealized gains and losses can have a
significant effect on fair value estimates and have not been considered in the
estimates.

     Certain assets and liabilities are specifically excluded from the
disclosure requirements of financial instruments. Accordingly, the aggregate
fair value amounts presented do not represent the underlying value of the Group.

(44)  OTHER INFORMATION

GENERAL INFORMATION ABOUT THE PARENT COMPANY

     The parent company of the Group is Allianz AG, Munich. The company is an
"Aktiengesellschaft" (public stock corporation) incorporated in Germany. It is
recorded in the Munich Commercial Register under its registered address at
Koniginstrasse 28, 80802 Munchen. Besides serving as holding company for the
Group, Allianz AG also acts as the primary reinsurance carrier for the Group.

EMPLOYEE INFORMATION

     At the end of 2001 the Group employed a total of 179,946 people (2000:
119,683 and 1999: 113,472). 87,589 (2000: 43,124 and 1999: 41,923) were employed
in Germany and 92,357 (2000: 76,559 and 1999: 71,549) abroad. The number of
employees undergoing training rose by 3,554 in 2001 to 8,245.

     Personnel expenses for the years ended December 31, are as follows:

<Table>
<Caption>
                                                             2001     2000     1999
                                                             E(MN)    E(MN)    E(MN)
                                                             -----    -----    -----
<S>                                                          <C>      <C>      <C>
Salaries and wages.........................................  6,760    4,784    4,073
Social security contributions and employee assistance......  1,208    1,104      958
Expenses for pensions and other post-retirement benefits...    405      501      380
                                                             -----    -----    -----
          Total............................................  8,373    6,389    5,411
                                                             =====    =====    =====
</Table>

                                       F-96
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONTINGENT LIABILITIES AND OTHER FINANCIAL COMMITMENTS

LEGAL PROCEEDINGS

GENERAL

     Allianz Group companies are involved in litigation and arbitration
proceedings in Germany and in a number of foreign jurisdictions, including the
United States, involving claims by and against them which arise in the ordinary
course of their businesses, including in connection with their activities as
insurers, employers, investors and taxpayers. While it is not feasible to
predict or determine the ultimate outcome of all pending or threatened legal and
regulatory proceedings, management does not believe that the outcome of these
proceedings, including the litigation and the Holocaust-related matters
discussed below, will have a material adverse effect on the Group's financial
position or results of operations.

LITIGATION

     In March 2001, a consolidated amended class action complaint, In re
Deutsche Telekom Securities Litigation, was brought against Dresdner Bank and
others in the United States District Court for the Southern District of New York
by purported purchasers of Deutsche Telekom American Depositary Shares (ADSs)
issued pursuant to a registration statement on Form F-3 filed by Deutsche
Telekom with the Securities and Exchange Commission on May 22, 2000 and pursuant
to a prospectus dated June 17, 2000. Dresdner Bank, which was one of the
underwriting syndicate's joint global coordinators, was one of the named
defendants. The complaint alleges that the offering prospectus contained
material misrepresentations and/or omissions relating to Deutsche Telekom. The
management of Dresdner Bank believes the complaint is without merit insofar as
it relates to Dresdner Bank and intends to defend itself vigorously in this
matter.

     On August 1, 2001 the European Commission initiated antitrust proceedings
pursuant to Article 81 of the EU Treaty against various banks, including
Dresdner Bank, in connection with alleged agreements to set prices for the
exchange of foreign currencies within the EU. In December 2001, pursuant to
these proceedings, the European Commission imposed a fine of E28 million on
Dresdner Bank. The management of Dresdner Bank believes these proceedings are
without merit as they relate to Dresdner Bank. In February 2002, Dresdner Bank
initiated proceedings against the European Commission in the Court of First
Instance of the European Community.

     On November 5, 2001, a lawsuit, Silverstein v. Swiss Re International
Business Insurance Company Ltd., was filed against certain insurers and
reinsurers, including Allianz Insurance Co., in the United States District Court
for the Southern District of New York seeking a determination that the terrorist
attack of September 11, 2001 on the World Trade Center constituted two separate
occurrences under the alleged terms of various coverages. Allianz Insurance Co.
has also filed suit against Silverstein on January 2, 2002, in connection with
the coverage issues arising from the September 11, 2001 attack on the World
Trade Center, and these and other related suits have been consolidated for
discovery and other purposes. Based on the policy wording at issue, we believe
that the basis of Allianz Insurance Co.'s claim is sound, and that the
Silverstein claims are without merit insofar as they relate to Allianz Insurance
Co.

     A lawsuit filed against Allianz AG in October 2000 seeking a determination
with respect to compensation for profit participation certificates based on the
market price of Allianz AG ordinary shares was dismissed in a judgment handed
down by Munich district court (Landgericht) on July 5, 2001.
                                       F-97
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For more information concerning the profit participation certificates, see Note
17 to our consolidated financial statements.

HOLOCAUST-RELATED MATTERS

     In July 2000, the governments of Germany and the United States signed an
Executive Agreement (or the Executive Agreement) meant to secure a comprehensive
and enduring resolution with respect to Holocaust-related claims brought against
German companies and their non-German subsidiaries. Pursuant to the Executive
Agreement, after being notified that a Holocaust-related claim has been asserted
in a U.S. federal or state court against a German company, the U.S. government
shall inform the court through a statement of interest that it is in the foreign
policy interests of the United States for the Foundation for Remembrance,
Responsibility and the Future (or the Foundation) described below to be the
exclusive remedy and forum for resolving such claims against German companies
and their subsidiaries, and that dismissal of such claims by U.S. federal and
state courts is in the foreign policy interest of the United States.

     The U.S. government has consented to use its best efforts to achieve
similar objectives with respect to legislation that has been implemented by the
states of the United States since 1998, requiring insurance companies to report
the status of policies sold in Europe prior to and during World War II. Some of
these statutes provide for license suspension in the event of non-compliance.
This legislation has been challenged primarily on constitutional grounds in
federal courts in Florida and California by individual insurance companies and
in addition, in California by the American Insurance Association. On October 2,
2001, the United States Court of Appeals for the Eleventh Circuit struck down
the reporting provisions of the Florida statute as unconstitutional. The period
for appeal of this decision has expired. In October 2001, the United States
District Court for the Eastern District of California struck down the California
statute as unconstitutional. An appeal of the Court's decision is currently
pending before the United States Court of Appeals for the Ninth Circuit.

     In August 2000, the German government enacted legislation (or the
Foundation Law) implementing the Foundation, which was funded with approximately
E5.1 billion in equal parts from the German government and German companies.
Eligible claims, including costs, are covered under the provisions of the
Foundation Law. The Foundation began to distribute funds in mid-2001.

     Based on the Executive Agreement and statements of interest, individual
actions and purported class actions previously filed in the United States
against Allianz AG and its subsidiaries, including Dresdner Bank, were dismissed
in 2000. On February 23, 2001, a new purported class action was filed in the
United States District Court for the Central District of California. This
action, Anderman v. Federal Republic of Austria, names as defendants, among
others, Allianz Leben, Fireman's Fund, and RAS. In December 2001, pursuant to a
motion to transfer, the action was transferred to the United States District
Court for the District of New Jersey for inclusion in the consolidated pretrial
proceedings established there. On February 1, 2002, the United States government
reaffirmed its statement of interest previously filed with the Court. Upon a
motion of the plaintiff, the action was dismissed without prejudice on May 30,
2002. On June 21, 2001, Dresdner Bank was served with process in new
Holocaust-related action, Ungaro-Benages v. Dresdner Bank, filed in the United
States District Court for the Southern District of Florida. On January 18, 2002,
the United States government filed a statement of interest with the Court. On
May 31, 2002, Dresdner Bank was served with process in an additional
Holocaust-related action, Widerynski v. Dresdner Bank, filed in the Superior
Court of

                                       F-98
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

California, County of Los Angeles. On June 20, 2002, a new Holocaust-related
action, Gross v. German Foundation Industrial Initiative, was filed in the
United States District Court for the District of New Jersey against Allianz AG,
Dresdner Bank and other members of the initiative that led to the implementation
of the Foundation.

OTHER CONTINGENCIES AND COMMITMENTS

     Other contingencies and commitments resulting primarily from our banking
business include the Group's potential future liabilities under loan commitments
to customers not yet drawn upon, with the term of such commitments being
limited. The Group engages in providing open credit facilities to allow
customers quick access to funds required to meet their short-term obligations as
well as their long-term financing needs. Such credit facilities can take the
form of guarantees, whereby the Group might guarantee repayment of a loan taken
out by a client with a third party, stand-by letters of credit which are credit
enhancement facilities enabling customers to engage in trade finance at lower
cost, documentary letters of credit which are payments related to foreign trade
finance made on behalf of a customer and reimbursed to the Group later, note
issuance facilities and revolving underwriting facilities which allow customers
to issue money-market paper or medium-term notes when required without engaging
in the normal underwriting process on each occasion. Revenue for guarantees is
recognized under "Fee and commission income" and is determined by application of
agreed rates on the nominal amount of the guarantees.

     The figures disclosed in the accompanying tables represent the amounts at
risk should customers draw fully on all facilities and then default, excluding
the effect of any collateral. The majority of these commitments may expire
without being drawn upon and are not representative of actual future credit
exposure or liquidity requirements for such commitments.

<Table>
<Caption>
                                                               2001
                                                              E(MN)
                                                              -----
<S>                                                           <C>
Contingent liabilities on endorsed bills of exchange settled
  with customers
  Including: Rediscounted at central banks..................       1
  Contingencies on guarantees and warranties................      --
  Credit guarantees.........................................   2,131
  Other guarantees and warranties...........................  17,301
  Letters of credit.........................................   2,297
  of which:
     Letters of credit opened...............................   1,189
     Letters of credit confirmed............................   1,108
                                                              ------
Subtotal....................................................  21,730
Liability on collateral pledged for third-party
  liabilities...............................................     567
Other contingent liabilities................................   3,194
                                                              ------
Total contingent liabilities................................  25,491
</Table>

                                       F-99
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                               2001
                                                              E(MN)
                                                              -----
<S>                                                           <C>
Irrevocable loan commitments
  Advances..................................................  27,947
  Stand-by facilities.......................................  12,346
  Guarantee credits.........................................   1,785
  Discount credits..........................................      15
  Mortgage loans/public-sector loans........................     844
                                                              ------
Other commitments...........................................  42,937
                                                              ======
</Table>

     As of December 31, 2001 there were no underwriting commitments drawn.

     On the balance sheet date commitments to pay up shares, bonds and other
capital interests totaled E58 million; secondary liabilities under sec.24 of the
German Limited Liability Companies Act (GmbH-Gesetz) were E16 million, and
obligations arising from hire, rental and leasing agreements existed in an
aggregate amount of E1,971 million.

     Liquiditats-Konsortialbank GmbH (LIKO) is a bank founded in 1974 in order
to provide funding for German banks which experience liquidity problems. The
shares in LIKO are owned 30% by Deutsche Bundesbank, with the rest of the shares
being held by other German banks and banking associations. The shareholders have
provided capital of E190 million to fund LIKO; Dresdner Bank's participation is
E10 million. Dresdner Bank is contingently liable to pay in further assessments
to LIKO up to E58 million. In addition, under clause sec.5 (4) of the Articles
of Association of LIKO, Dresdner Bank is committed to a secondary liability
which arises if other shareholders do not fulfill their commitments to pay their
further assessment. In all cases of secondary liability, the financial status of
the other shareholders involved is sound.

     Dresdner Bank's interest in Bankhaus Reuschel & Co. is associated with an
unlimited liability due to the legal form in which this enterprise is organized.
The financial status of the other partners involved is sound.

     In addition, Dresdner Bank is a member of the German banks' Joint Fund for
Securing Customer Deposits, which covers liabilities to each creditor up to
specified amounts. As a member of the Joint Fund, which is itself a shareholder
in LIKO, Dresdner Bank is severally liable with the other members of the Fund
for additional capital contributions, with the maximum being the amount of
Dresdner Bank's annual contribution. In the year 2001, the Joint Fund did not
levy a contribution (2000: no contribution). Under section 5 (10) of the
Statutes of the Joint Fund for Securing Customer Deposits we have undertaken to
indemnify the Federal Association of German Banks (Bundesverband deutscher
Banken e.V.) for any losses it may incur by reason of measures taken on behalf
of any banks in which we own a majority interest.

     Allianz AG has committed to make future capital payments in favor of our
North American holding company, Allianz of America, Inc. This will place Allianz
of America, Inc. in a position to provide sufficient capital on its part for
Allianz Insurance Company, Los Angeles, so that this company can meet its
payment obligations for claims received in connection with the terrorist attack
of September 11, 2001. These future capital payments are limited to USD 575
million and are secured by pledges of securities.

     Allianz AG has also provided a guarantee for Allianz of America, Inc.,
Wilmington, in respect of obligations relating to the acquisition of the
minority interest in PIMCO Advisors L.P. The

                                      F-100
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Allianz Group acquired a holding of 69.5% in PIMCO in 2000 and the minority
shareholders have the option of selling their 30.5% holding to Allianz.

     An agreement was reached in the course of the purchase of Nicholas
Applegate, San Diego that part of the purchase price would fall due in 2005 and
that the amount would depend on the income growth of Nicholas-Applegate, San
Diego:

     - If average income growth is at least 25% during the next 5 years, this
       purchase price component will be USD 1.09 billion, with bonus payments of
       USD 150 million.

     - If average income growth is between 10% and 25% payments will be scaled
       down.

     - If average income growth is below 10%, no payments will be made.

     There are further potential financial commitments in connection with the
promise of compensation to holders of rights under stock option programs of AGF.

     The Group occupies leased space in many locations under various long-term
operating leases and have entered into various operating leases covering the
long-term use of data processing equipment and other office items.

     As of December 31, 2001, the future minimum lease payments under operating
leases were as follows:

<Table>
<Caption>
                                                              E(MN)
                                                              -----
<S>                                                           <C>
2002........................................................    318
2003........................................................    286
2004........................................................    244
2005........................................................    200
Thereafter..................................................    652
                                                              -----
  Total.....................................................  1,700
Less: Subleases.............................................     59
                                                              -----
          Total, net........................................  1,641
                                                              =====
</Table>

EARNINGS PER SHARE

     Basic earnings per share is computed by dividing income available to
shareholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the effect of potentially dilutive
securities. The reconciliation of basic and dilutive earnings per share for the
years ended December 31, is as follows:

<Table>
<Caption>
                                                               NUMBER OF SHARES
                                                                (NOT INCLUDING    EARNINGS
                               NET INCOME   WEIGHTED AVERAGE    SHARES HELD BY    PER SHARE
                                 E(MN)      NUMBER OF SHARES     THE COMPANY)         E
                               ----------   ----------------   ----------------   ---------
<S>                            <C>          <C>                <C>                <C>
2001
  Basic earnings per share...    1,623        243,585,880        241,189,535         6.66
  Effect of dilutive
     securities..............       --                 --                 --           --
                                 -----        -----------        -----------        -----
     Net income available to
       common shareholders...    1,623        243,585,880        241,189,535         6.66
                                 =====        ===========        ===========        =====
</Table>

                                      F-101
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                               NUMBER OF SHARES
                                                                (NOT INCLUDING    EARNINGS
                               NET INCOME   WEIGHTED AVERAGE    SHARES HELD BY    PER SHARE
                                 E(MN)      NUMBER OF SHARES     THE COMPANY)         E
                               ----------   ----------------   ----------------   ---------
<S>                            <C>          <C>                <C>                <C>
2000
  Basic earnings per share...    3,460        245,401,507        245,750,000        14.10
  Effect of dilutive
     securities..............       --                 --                 --           --
                                 -----        -----------        -----------        -----
     Net income available to
       common shareholders...    3,460        245,401,507        245,750,000        14.10
                                 =====        ===========        ===========        =====
1999
  Basic earnings per share...    2,316        245,013,485        245,269,055         9.46
  Effect of dilutive
     securities..............       --                 --                 --           --
                                 -----        -----------        -----------        -----
     Net income available to
       common shareholders...    2,316        245,013,485        245,269,055         9.46
                                 =====        ===========        ===========        =====
</Table>

     The weighted average number of shares does not include 11,073,783 (2000: 0
and 1999: 0) shares held by the company. A diluted earnings per share figure was
not calculated because there were no dilutive securities.

SUPPLEMENTARY CASH FLOW INFORMATION

     First-time compliance with regulations specific to the banking sector
required changes in the format of the cash flow statement. The headings for the
previous years were adjusted accordingly.

     The cash flow statement excludes the effects of the first-time
consolidation of major new acquisitions, during the course of 2001, in
particular the Dresdner Bank Group, Frankfurt/Main, and Nicholas-Applegate, San
Diego, and during the course of 2000, in particular PIMCO Advisors L.P.,
Delaware, Zwolsche Algemeene Holding, Nieuwegein, and Allianz-Tiriac Asigurari,
Bucharest and during the course of 1999, in particular Allianz Australia
Limited, Sydney, Allianz First Life Insurance Company Limited, Seoul, Allianz
President General Insurance, Taipeh, Life USA Holding Inc., Minneapolis, and
Sacnas Holding, Paris. Subsequent the date of acquisition, the cash of these
companies have been included in the cash flow statement. These acquisitions
increased the value of investments held (excluding funds held by others) by
E77,978 million (2000: E1,440 million and 1999: E6,167 million), insurance
reserves in 2000 by E1,601 million (1999: E7,740 million), goodwill by E5,146
million (2000: E2,761 million and 1999: E1,382 million). Cash outflow related to
these acquisitions amounted to E12,450 (2000: E3,099 million and 1999: E1,044
million). Cash outflow contrasted with cash and cash equivalents of E24,564
million (2000: E45 million and 1999: E250 million) through first-time
consolidation included in the consolidated financial statements. Tax benefits on
income amounted to E306 million (2000: outflow E1,873 million and 1999: outflow
of E1,756 million).

RELATED PARTY DISCLOSURES

     The following report relates to associated enterprises and enterprises in
which the Allianz Group held ownership interest of between 10% and 20%, or which
held such an ownership interest in Allianz AG and it relates to transactions
with such related parties. These business relationships are stated as of
December 31, 2001 unless otherwise indicated.

                                      F-102
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MUNCHENER RUCKVERSICHERUNGS-GESELLSCHAFT AG, MUNCHEN (MUNICH RE)

     As of June 7, 2002, we held approximately 24.9% of Munich Re's ordinary
shares. As of April 12, 2002, based on its most recent German reporting, Munich
Re held approximately 21.2% of our ordinary shares outstanding, which
constituted approximately 19.3% of our ordinary shares issued as of such date.

PRINCIPLES OF COOPERATION

     Certain principles of cooperation have historically governed the
relationship between Allianz AG and Munich Re. These principles have been
adapted to current circumstances in an agreement, dated May 2000 (which we refer
to as the "Principles of Cooperation"), which sets forth the principles
governing the cross-shareholdings, joint interests in third parties and
reinsurance relationships between Allianz AG and Munich Re. The Principles of
Cooperation were amended by a supplementary agreement (which we refer to as the
"Supplement") in December 2001. The Principles of Cooperation are effective from
January 1, 2000 through December 31, 2005, and will automatically be renewed for
further periods of ten years upon the expiration of each term unless notice of
termination has been given by either party at least three years before such
expiration. The Supplement is effective through December 31, 2010.

     Cross Shareholdings.  The Principles of Cooperation provide that the
reciprocal long term shareholdings between Allianz AG and Munich Re will range
from 24.9% to 19.9%. During the term of the Principles of Cooperation, and for a
period of two years after their termination, the ownership interest held by one
party in the other party may be reduced, in consultation with the other party,
to 19.9%.

     Shareholdings in Insurance Subsidiaries.  As of June 7, 2002, Munich Re
held 49.9% of the ordinary shares of Frankfurter Versicherungs-AG and 45% of the
ordinary shares of Bayerische Versicherungsbank AG, each a member of our German
Property Casualty Group. We held a 36.1% interest in Karlsruher
Lebensversicherungs-AG (or Karlsruher Leben), a German life insurance company
that is 54% owned by Munich Re, as of such date.

     Reinsurance Relationships.  Munich Re is the primary external reinsurer for
the Allianz Group. The Allianz Group ceded approximately E2.4 billion, E2.3
billion and E2.3 billion in reinsurance premiums written to Munich Re in 2001,
2000 and 1999, respectively. Of the Allianz Group's total third-party
reinsurance premiums ceded, approximately 30.6%, 30.2% and 32.7% were ceded to
Munich Re in 2001, 2000 and 1999 respectively. These amounts represented
approximately 4%, 4% and 4% of the Allianz Group's gross premiums written in
2001, 2000 and 1999, respectively. During 2001, Munich Re, as principal
reinsurer of Allianz AG, assumed substantial claims received by companies of the
Allianz Group arising from the terrorist attack of September 11, 2001 in
accordance with the foregoing contractual agreements. See "Information on the
Company and Operating and Financial Review and Prospects -- Discussion of
Property-Casualty Operations by Geographic Region -- Germany -- Allianz AG."

     The Principles of Cooperation provide that Allianz AG will cede to Munich
Re a 14% quota-share of the gross self-retention of the insurance business of
Allianz Versicherung, Frankfurter Versicherungs-AG, Bayerische Versicherungsbank
AG, Allianz Globus MAT, Kraft Versicherungs-AG and Vereinte Spezial
Versicherung-AG. In addition, the Principles of Cooperation provide that Munich
Re shall, subject to competitive conditions, assume a majority of reinsurance
ceded by Allianz AG externally other than pursuant to the quota-share
arrangements described above. The Principles of Cooperation further provide that
Allianz AG and Munich Re shall share the reinsurance ceded by all other majority
jointly held German insurance companies (other than the

                                      F-103
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

German Property-Casualty Group companies subject to the quota-share arrangements
described above) pro rata based on each party's respective ownership interest in
such companies. The Principles of Cooperation also provide that Allianz AG and
Munich Re shall equally share, on an arm's-length basis, the reinsurance ceded
by Allianz Leben and Karlsruher Leben. Finally, the Principles of Cooperation
provide that Allianz AG shall be entitled to assume reinsurance from Munich Re,
although the amounts and terms thereof are not specified. During 2001, 2000 and
1999, Munich Re ceded approximately E850 million, E900 million and E800 million,
respectively, in reinsurance premiums to the Allianz Group. The Supplement
provides that the mutually ceded reinsurance volume between the Allianz Group
and Munich Re is to be adjusted on a step-by-step basis by 2005.

     Allianz AG believes that the reinsurance it cedes to Munich Re and the
reinsurance it assumes from Munich Re are on terms that are comparable to those
that could be obtained from unrelated third parties.

     Termination.  Upon termination of the Principles of Cooperation, each of
Allianz AG and Munich Re may, after a two-year period from termination, sell the
interests it holds in the other party, subject to a right of first offer and a
right to designate the buyer on the part of the party whose shares are being
sold. In addition, if the party whose shares are being sold exercises its right
of first offer, the selling party shall be entitled to request the other party
to sell to it or another designated person the shares of the selling party.
Reciprocal rights of first refusal also apply to post-termination dispositions
of interests in majority jointly held German insurance companies. Upon
termination of the Principles of Cooperation, the existing reinsurance
arrangements between Allianz AG and Munich Re will remain in force but may be
terminated at any time pursuant to the provisions of the relevant reinsurance
agreements. The reinsurance arrangements with respect to majority jointly held
entities will remain in effect. All disputes arising from the Principles of
Cooperation are to be resolved through binding arbitration.

LETTER OF INTENT

     Pursuant to a non-binding Letter of Intent, dated May 4, 2000 (which we
refer to as the "Letter of Intent"), Allianz AG and Munich Re have agreed to
gradually reduce their shareholdings in each other to a level of approximately
20% of outstanding shares. To the extent possible, this reduction is to be
achieved, or initiated, by December 31, 2003, with the relevant shares to be
placed principally in the capital markets.

     In addition, the Letter of Intent provides for a restructuring of the
shareholdings of Allianz AG and Munich Re in certain jointly owned subsidiaries
and affiliates. The Letter of Intent contemplates that Munich Re will transfer
its current indirect 45% interest in Bayerische Versicherungsbank AG and its
current indirect 49.9% interest in Frankfurter Versicherungs-AG to Allianz AG or
an Allianz Group company named by Allianz AG, while Allianz AG will transfer its
current indirect 36.1% interest in Karlsruher Leben and its 39% interest in
Mercur Assistance AG Holding (or Mercur), a German provider of medical and
automobile assistance services, to Munich Re or a Munich Re Group company named
by Munich Re. Pursuant to the Letter of Intent, Allianz AG sold its 39% interest
in Mercur to Munich Re in 2000. The parties' other interests shall at the latest
be transferred by June 30, 2002, or by another date as mutually agreed. We
currently anticipate that this transfer will occur on July 1, 2002. If the
restructuring takes place as contemplated, Munich Re will hold approximately 90%
of Karlsruher Leben, and Allianz AG will hold approximately 90% of Bayerische
Versicherungsbank AG and 99.9% of Frankfurter Versicherungs-AG.

                                      F-104
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

AGREEMENT IN PRINCIPLE

     In April 2001, in connection with our acquisition of Dresdner Bank, we
entered into an Agreement in Principle with Munich Re (which we refer to as the
"Agreement in Principle"), pursuant to which we sold a 16.0% shareholding in
HypoVereinsbank to Munich Re for E59.22 per share, or an aggregate price of
approximately E4.285 billion, on January 15, 2002, thereby reducing our
shareholding in HypoVereinsbank to approximately 0.5%. In addition, we purchased
from Munich Re its 40.6% shareholding in Allianz Leben for E607.17 per share, or
an aggregate price of E2.587 billion, on January 15, 2002, thereby increasing
our shareholding in Allianz Leben to 91.1%. The current reinsurance
relationships between Allianz Leben and Munich Re are intended to remain in
effect on the basis of existing contracts until 2010.

     We recently confirmed to Munich Re that we would not dilute Munich Re's
shareholding in Allianz AG to a level below 20% by means of any change in the
number of Allianz AG ordinary shares outstanding undertaken by us in connection
with the financing of our acquisition of Dresdner Bank.

EUROPEAN COMMISSION UNDERTAKING

     In connection with the acquisition of Dresdner Bank, Allianz AG pledged to
the European Commission to limit its voting rights from ordinary shares of
Munich Re to 20.5% of the total ordinary share capital of Munich Re. In
addition, Allianz AG agreed to reduce its long-term shareholding in Munich Re to
20.5%. This commitment includes the ordinary shares of Munich Re held by
Dresdner Bank. The commitment of Allianz AG to the European Commission does not
affect ordinary shares of Munich Re that are acquired and held by the companies
of the Allianz Group as part of their trading portfolio in the ordinary course
of business and which do not have voting rights. The commitment also does not
affect the exercise of voting rights on behalf of clients or voting rights of
ordinary shares held in the ordinary course of business for the account of third
parties.

OTHER TRANSACTIONS

     In addition to the arrangements described above, the Allianz Group and
Munich Re and its subsidiaries enter into various transactions with each other
in the ordinary course of business, including the provision of direct insurance
by Allianz Group companies to Munich Re and its subsidiaries, and vice versa.
Allianz expects these transactions to continue.

DRESDNER BANK

     We entered into an agreement with Dresdner Bank in March 2001, pursuant to
which we launched a public cash tender offer for the ordinary shares of Dresdner
Bank on May 31, 2001. The offer was launched for a price of E53.13 per share,
and closed successfully on July 23, 2001, thereby increasing our ownership
interest in the ordinary shares of Dresdner Bank from 21.2% at the end of 2000
to 77.5% as of July 23, 2001. We included the assets and liabilities and results
of operations of Dresdner Bank in our consolidated financial statements as of
July 23, 2001, the date of the acquisition. Pursuant to the conclusion of
several forward sale agreements in January 2002 and other purchases, we
increased our shareholding in Dresdner Bank to 95.6% as of March 15, 2002. In
April 2002, we announced our intention to assume all outstanding ordinary shares
of Dresdner Bank from its minority shareholders for a price of E51.50 per share,
in accordance with provisions of German law that permit us, as the holder of
more than 95% of Dresdner Bank's ordinary shares, to do so without the consent
of such minority shareholders. The purchase price was established by Ernst &
Young and a court-appointed auditor. The
                                      F-105
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

purchase was approved at Dresdner Bank's annual shareholder meeting on May 24,
2002 but will be consummated only after the conclusion in June 2002 of
additional forward sale agreements and the entry of the Dresdner Bank
shareholders' resolution in the Commercial Register of Dresdner Bank in
Frankfurt, which we expect to occur in July 2002. In connection with our
acquisition of Dresdner Bank, we also entered into the European Commission
undertaking concerning the reduction of our Munich Re shareholding described
above.

     As of June 3, 2002, Dresdner Bank held, directly or indirectly, 17,155,008,
or approximately 6.4%, of our ordinary shares issued. In accordance with German
law, the Allianz AG ordinary shares held by or on behalf of Dresdner Bank and
other Allianz Group companies are considered own shares of Allianz AG that do
not have dividend or voting rights.

     Historically, the Allianz Group and Dresdner Bank and its subsidiaries have
also entered into a wide variety of transactions with each other in the ordinary
course of business, including banking, insurance, asset management,
broker-dealer, securities lending, joint venture and other transactions.

HYPOVEREINSBANK

     Pursuant to the Agreement in Principle, we disposed of the Allianz Group's
16.0% shareholding in HypoVereinsbank to Munich Re in January 2002. See "--
Transactions with Munich Re -- Agreement in Principle." As of June 7, 2002, we
held approximately 0.5% of the ordinary shares of HypoVereinsbank. As of
December 31, 2000, based on its most recent SEC reporting, HypoVereinsbank held
6.8% of Allianz AG's ordinary shares outstanding. In June and July 2001,
HypoVereinsbank informed us that it had a firm intention to reduce its stake in
Allianz AG to a maximum of 2.5% of Allianz AG's voting shares, based on the
Allianz AG ordinary shares outstanding at such time. HypoVereinsbank stated that
such reduction would be consummated by the end of 2002, and would take place,
subject to the satisfaction of certain conditions, through the sale of Allianz
AG ordinary shares or, in the event that such conditions were not met, the
placing of Allianz AG ordinary shares in a voting trust controlled by persons
unaffiliated with HypoVereinsbank. HypoVereinsbank also informed us that it had
already committed 1.8% of its then-current Allianz AG holdings to a transaction
that was expected to close in 2002. On April 4, 2002, HypoVereinsbank reported
ownership of 6.2% of Allianz AG's ordinary shares pursuant to the German
Securities Trading Act.

     Allianz AG and its subsidiaries terminated the cooperation agreement with
HypoVereinsbank concerning the distribution of Allianz Group insurance products
in 2001.

     In addition, Allianz Group companies and HypoVereinsbank and its
subsidiaries enter into a wide variety of transactions with each other in the
ordinary course of business, including banking, insurance, broker-dealer,
securities lending, joint venture and other transactions.

TRANSACTIONS WITH RELATED PARTIES

     Transactions with the above mentioned related parties were concluded at
ordinary market terms and conditions.

     Certain members of the respective Management Boards of Allianz AG, Munich
Re and HypoVereinsbank hold seats on the respective Supervisory Boards of the
other companies, and in some cases also on the boards of their subsidiary
companies.

                                      F-106
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LOANS TO SHAREHOLDERS

     As part of the normal course of business, the Group grants loans to
non-employee shareholders. These transactions are entered into on an
arm's-length basis.

LOANS TO MEMBERS OF THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD

     Loans to members of the board of management of Allianz AG and liabilities
assumed on their behalf totaled E1 million (2000: E0). This included loans
extended to, or liabilities assumed on behalf of members of the boards of
management of subsidiaries amounting to E1 million (2000: E0). These
transactions have been entered into on ordinary commercial terms including
interest rate and collateral requirements, and do not represent more than normal
credit risk.

STOCK RELATED REMUNERATION

STOCK PURCHASE PLANS FOR EMPLOYEES

     Shares in Allianz AG are offered to qualified employees in Germany and
abroad within pre-defined timeframes at favorable conditions. In order to be
qualified, employees must have been employed in continuous service or had a
position as an apprentice for a period of six months prior to the share offer
and notice must not have been served. Share purchase plans also include
restrictions relating to the amount that the employee can invest in purchasing
shares. All participating enterprises in Germany and abroad impose restrictions
on the disposal of shares, though the length of time varies from a minimum of
one year to a maximum of five years, depending on the country involved. The
shares are freely disposable after the expiration of the minimum holding period.
The number of shares issued under these plans was 361,235 in 2001 (2000: 193,586
and 1999: 233,055). The difference between the exercise price and market price
of E27 million in 2001 (2000: E21 million and 1999: E23 million) was reported as
part of compensation expense.

LONG TERM INCENTIVE PLAN

     Long term incentive plans (LIP) were set up in 1999 for senior management,
in order to reward the contribution made by this level of management toward
increasing corporate value and to promote the long-term success of the company.
As of December 31, 2001, plans were authorized for 2001, 2000 and 1999.

     Under these plans, Stock Appreciation Rights (SARs) are allocated to each
senior manager as of April 1. Restrictions are applicable for a period of two
years and the rights expire at the end of seven years.

     The stock appreciation rights may be exercised at any time between the
second and the seventh anniversary of the effective date of the relevant plan,
provided

     - during their contractual term, the price of Allianz AG shares has
       outperformed the Dow Jones Europe STOXX Price Index (600) at least once
       for a period of five consecutive stock exchange days and

     - the Allianz share price outperforms the reference price by at least 20.0%
       at the time when the rights are exercised (the reference price for the
       LIP 2001 is the average price of Allianz shares in the first quarter of
       2001).

     Under the conditions of the LIP, Group companies are obligated to pay the
difference between the stock market price of Allianz shares on the day the
rights are exercised and the

                                      F-107
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

reference price as specified in the respective plan in cash. The maximum
difference is capped at 150% of the reference price.

     The 2001, 2000 and 1999 incentive plans specify reference prices of E356,
E367 and E292, respectively. As of December 31, 2001, a total of 825,979
appreciation rights were outstanding under all our incentive plans. Of this
amount, 311,439 appreciation rights were outstanding under the 2001 incentive
plan whereas 255,950 and 258,590 were outstanding under the 2000 and 1999
incentive plan respectively.

     The fair value at grant date of the 311,439 SARs issued under the LIP 2001
was E31 million based on standard option valuation methods (Black-Scholes or
Binomial Method). The fair value of these rights at the end of the fiscal year
was E25 million. The total outstanding SARs issued from 1999 to 2001 as of
December 31, 2001 of 825,979 (2000: 540,593) had a fair value of E65 million
(2000: E92 million).

     Upon exercise of the appreciation rights, payment is made in the relevant
local currency by the company granting the stock appreciation rights. Stock
appreciation rights not exercised by the last day of a plan will be exercised
automatically where the necessary conditions have been met. Where these
conditions have not been met or a plan participant ceases to be employed, the
plan participant's appreciation rights are forfeited.

     No rights were exercised for any LIP as of December 31, 2001. The two-year
restricted period had not yet expired on December 31, 2001, for the incentive
plans covering the years 2001 and 2000.

     A reserve of E21 million was established at December 31, 2000 and reported
under the heading "Miscellaneous accrued liabilities" to record the intrinsic
value of the SARs. The intrinsic value corresponds to the difference between the
current share price on the balance sheet date and the reference price of the
relevant plan. Because the intrinsic value of all SARs issued at December 31,
2001 was zero, the reserve formed in the course of the previous year was
released. Call options have been entered into to hedge future obligations.

SHARE OPTION AND SHAREHOLDING PLANS OF SUBSIDIARIES

     Managers at the AGF Group, Paris were offered share options on AGF shares
as follows:

<Table>
<Caption>
                                            VESTING    OPTIONS
DATE GRANTED                                PERIOD     GRANTED    EXERCISED   EXPIRED
------------                                -------   ---------   ---------   -------
<S>                                         <C>       <C>         <C>         <C>
December 1994 and February 1996...........  2 years   1,217,000    995,650    111,400
December 1996.............................  2 years     794,150    406,050     90,050
September 1997, October 1998 and October
  1999....................................  5 years   2,693,500     49,000     37,000
October 2000..............................  5 years   1,000,000      3,000         --
October 2001..............................  2 years   1,022,100         --         --
</Table>

     These options have an exercise price of at least 95% of the market price on
the day of grant. The maximum term for these options is eight years.

     On December 31, 2001, 5,034,600 (2000: 4,165,750) exercisable options
remained outstanding under the AGF option plans. These options are independent
of the renumeration plans of the Allianz Group.

                                      F-108
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     AGF stock option activity during the periods indicated were as follows:

<Table>
<Caption>
                                                                           WEIGHTED-
                                                         NUMBER OF          AVERAGE
                                                         AGF SHARES    EXERCISE PRICE(E)
                                                         ----------    -----------------
<S>                                                      <C>           <C>
Balance as of December 31, 1999........................  3,260,774           38.97
                                                         ---------
  Granted..............................................  1,000,000           57.03
  Exercised............................................    (60,524)          24.59
  Forfeited............................................    (34,500)          34.68
                                                         ---------
Balance as of December 31, 2000........................  4,165,750           43.48
                                                         =========
  Granted..............................................  1,022,100           48,59
  Exercised............................................   (147,200)          25.34
  Forfeited............................................     (6,050)          23.90
                                                         ---------
Balance as of December 31, 2001........................  5,034,600           45.07
                                                         =========
</Table>

     The following table summarizes information about AGF stock options
outstanding and exercisable as of December 31, 2001:

<Table>
<Caption>
                                           AGF OPTIONS           WEIGHTED
                                         OUTSTANDING AND         AVERAGE
                                        EXERCISABLE AS OF       REMAINING           WEIGHTED
RANGE OF                                  DECEMBER 31,       CONTRACTUAL LIFE       AVERAGE
EXERCISE PRICE                                2001               (YEARS)         EXERCISE PRICE
--------------                          -----------------    ----------------    --------------
<S>                                     <C>                  <C>                 <C>
23.32 to 28.05........................        408,000              2.68              24.14
32.62 to 48.11........................      2,607,500              4.93              42.40
57.03.................................        997,000              6.83              57.03
48.59.................................      1,022,100              7.83              48.49
</Table>

     Managers at the RAS Group, Milan have been offered share options on RAS
shares during 2001. These options have an exercise price of E15.35 per share.
The options can be exercised between August 1, 2002 and July 31, 2007. There
were 711,000 options issued under this scheme outstanding as of December 31,
2001. During 1999, members of management of the RAS Group were granted 770,000
shares at a purchase price of the par value of RAS shares.

     RAS S.p.a., Milan, also offers shareholding plans for eligible employees
based on the RAS share, independently of the share purchase plan offered by
Allianz. The shares issued under this scheme are subject to restrictions for 3
years in each case from the date of issue. The number of RAS shares issued in
2001 was 303,911 (2000: 378,492) resulting in 682,403 RAS shares issued under
the plans that were still subject to restrictions as of December 31, 2001.

     During 1999, Subalpina S.p.a., Turin has granted 40,000 shares of Subalpina
to members of its management. No further shares have been granted during 2000
and 2001, respectively.

EVENTS AFTER THE BALANCE SHEET DATE

  MONACHIA GRUNDSTUCKS-AG

     Allianz AG disposed of 46.2% of the capital stock of Monachia
Grundstucks-AG, Munich at a price of E187 million to Bayerische Stadte- und
Wohnungsbau GmbH on January 15, 2002.

                                      F-109
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On February 28, 2002 Arber Baubetreuungs-GmbH purchased 2.5% of Monachia
capital stock from Allianz AG for a purchase price of E10 million by exercising
their call option.

  RESTRUCTURING OTHER PARTICIPATIONS

     In connection with the public takeover offer made by Munich Re to ERGO
shareholders, the Allianz Group entered into forward sales for 6.3% of the
shares in Munich Re. Munich Re in turn entered into forward sales of 3.7% of the
shares of Allianz in connection with the acquisition by Allianz of Dresdner
Bank. It was also agreed with Munich Re that Allianz would sell the interest
held by the Allianz Group in HypoVereinsbank AG, which was approximately 16% of
the share capital of HypoVereinsbank AG at December 31, 2001, to Munich Re
during the course of 2002. These transactions were concluded on January 15,
2002. Pursuant to the agreement between Allianz and Munich Re, Allianz acquired
the shares in Allianz Lebensversicherungs-AG held by Munich Re amounting to
40.6% of the capital stock on January 15, 2002. Allianz expects to purchase the
45% stake held by Munich Re in Bayerische Versicherungsbank as well as the 49.9%
stake in Frankfurter Versicherung on July 1, 2002. Munich Re in turn expects to
purchase the 36.1% holding in Karlsruher Lebensversicherung held by the Allianz
Group.

  INCREASE IN THE HOLDING IN DRESDNER BANK

     As of December 31, 2001, the Allianz Group held an interest of 78.5% in
Dresdner Bank AG. Through the exercise of options and conversion rights, the
number of outstanding shares of Dresdner Bank AG increased during 2002. During
the first months of 2002, the Allianz Group purchased additional shares in the
market and had already increased its shareholding in Dresdner Bank by 15.8% in
January 2002 through forward purchase agreements. As of March 15, 2002, the
Allianz Group held an interest of 95.6% in Dresdner Bank AG.

  MORTGAGE BANKS

     By 2002, Dresdner Bank, Deutsche Bank and Commerzbank will combine their
mortgage business under the brand "Eurohypo". The interest of the Allianz Group
in the new institution will be less than 50%.

SUBORDINATED DEBT ISSUANCE

     On May 31, 2002, the Group issued E2,000 million of subordinated debt which
matures in May 2022. The debt carries a fixed interest rate from the issue date
until May 31, 2012 of 6.125%, after which the interest rate converts to a
floating rate equal to the three-month EURIBOR plus 1.74%, until maturity.

COMPENSATION FOR THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD

     Provided that the Annual Meeting of shareholders approves payment of the
dividend proposed, the compensation paid by Allianz AG and its affiliated
enterprises to the Board of Management for the year ended December 31, 2001,
will be approximately E16 million (2000: E10 million). The number of members of
the Board of Management increased from 9 to 12.

     Total remuneration for members of the Board of Management includes a
fixed-component (the basic salary) and a variable component. The latter
comprises a component depending on the dividend, the annual bonus which includes
an individual element and an element based on company performance, and a 3-year
bonus.

                                      F-110
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The compensation paid to the Board of Management is comprised as follows:

<Table>
<Caption>
                                                                2001          2001
                                                               E(MN)         E(MN)
                                                               -----         -----
<S>                                                          <C>           <C>
Fixed remuneration.........................................   6,691,056    4,271,079
Variable remuneration......................................   9,231,921    5,271,632
                                                             ----------    ---------
          Total............................................  15,922,977    9,542,711
                                                             ==========    =========
</Table>

     The variable component includes expenses for the dividend-related variable
remuneration, for the bonus for fiscal year 2001, and for allocation to the
reserve for the performance-related three-year bonus. Payments from this reserve
for the performance-related three-year bonus can only be made to members of the
Board of Management from 2004.

     In addition to the amounts reported above, Allianz AG and its affiliated
enterprises paid an amount of E1 million to increase pension reserves and
reserves for similar obligations in favor of active members of the Board of
Management.

     Under the LIP 2001, a total of 39,815 Stock Appreciation Rights (SARs) were
issued to members of the Board of Management during the year under review. Based
on standard option valuation methods (Black-Scholes or Binomial Method), the
value of these rights at the point of their issue was E4 million. The value of
these rights at the end of the fiscal year is E3 million. At an intrinsic value
of E0, the full amount specified is a time value.

     On December 31, 2001 the members of the Board of Management held a total of
86,479 (2000: 46,664) SARs issued from 1999 to 2001. Based on standard option
valuation methods (Black-Scholes or Binomial Method) these rights had a value of
E7 million (2000: E8 million) on the balance sheet date. None of the SARs has an
intrinsic value at December 31, 2001, so that the full amount specified is a
time value.

     The following table includes key information on current LIPs in favor of
active members of the Board of Management:

<Table>
<Caption>
                                        LIP             LIP             LIP
                                       2001            2000            1999
                                       ----            ----            ----
<S>                                <C>             <C>             <C>
Exercise period..................  4/2003-3/2008   4/2002-3/2007   4/2001-3/2006
Number of SARs issued............     39,815          19,890          26,774
Value of SARs on assignment......   E4,483,965      E3,480,750      E2,971,914
Fair value of SARs as of December
  31, 2001.......................   E3,395,025      E1,430,422      E2,105,679
Intrinsic value of SARs as of
  December 31, 2000..............       E0              E0              E0
Waiting time expired?............       no              no              yes
20% hurdle cleared?..............       no              no              no
Performance hurdle cleared?......       yes             no              yes
</Table>

     In the year 2001 pensions and other benefits for former members of the
Board of Management amount to E3 million (2000: E3 million). E27 million (2000:
E25 million) has been set aside for current and future pension benefits of
former members of the Board of Management and their beneficiaries.

                                      F-111
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The remuneration of members of the Supervisory Board for 2001, includes
fees becoming payable after the 2002 Annual Meeting of shareholders, will be E2
million (2000: E2 million).

  OTHER DISCLOSURE

     As discussed in Note 3, certain subsidiaries have been consolidated where
Allianz AG owns less than the majority of the voting power of the subsidiary
because Allianz AG exercises control over these entities by its ability to
govern the financial and operating policies of the enterprise through management
agreements.

     Bayerische Versicherungsbank and Frankfurter Versicherungs-AG were
consolidated in all periods presented, on the basis of control agreements
between each such subsidiary and Allianz AG. The control agreements operate to
give Allianz AG the right to approve all matters presented to meetings of the
relevant subsidiary's shareholders and supervisory board, including such matters
as approval of annual accounts, amendments to articles of association, and
appointments of management board and supervisory board members. All of the
members of the management boards of Bayerische Versicherungsbank and Frankfurter
Versicherungs-AG in 2001, 2000 and 1999 were also officers or directors of
Allianz Group companies. No other shareholder of Allianz Leben, Bayerische
Versicherungsbank or Frankfurter Versicherungs-AG was represented on the
management boards of such subsidiaries during such periods.

     Each of Creditras, Duerrevita and Antoniana was consolidated in all periods
presented on the basis of shareholder agreement between the Allianz Group
subsidiary owning 50% of each such subsidiary and the other 50% shareholder of
each such subsidiary. Pursuant to these shareholder agreements, the Group has
the power to govern the financial and operating policies of these subsidiaries
and the right to appoint the subsidiaries' general manager, in the case of
Creditras and Duerrevita, and the CEO, in the case of Lloyd Adriatico, who has
been given unilateral authority over all aspects of the financial and operating
policies of these entities, including the hiring and termination of staff and
the purchase and sale of assets. In addition, all management functions of these
subsidiaries are performed by the Group employees and all operations are
undertaken in the Group's facilities. The Group also develops all insurance
products written through these subsidiaries. Although the Group and the other
shareholder each has the right to appoint half of the directors of each
subsidiary, the rights of the other shareholders are limited to matters
specifically reserved to the board of directors and shareholders under Italian
law, such as decisions concerning capital increases, amendments to articles and
similar matters. In addition, the case of Antoniana, the Group has the right to
appoint the Chairman, who has double board voting rights, thereby giving the
Group a majority of board votes. The shareholder agreements for Creditras,
Duerrevita and Antoniana are subject to automatic renewal and are note
terminable prior to their stated terms.

(45) SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN THE ACCOUNTING PRINCIPLES USED
     IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND ACCOUNTING
     PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA

     The consolidated financial statements of the Group are presented in
accordance with the accounting principles and practices of the International
Accounting Standards Committee (IAS). IAS differs in certain respects from the
accounting principles generally accepted in the United States of America (US
GAAP).

                                      F-112
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth the reconciliation to US GAAP of net income
and shareholders' equity for the years ended December 31:

<Table>
<Caption>
                                                   NET INCOME              SHAREHOLDERS' EQUITY
                                         ------------------------------    ---------------------
                                                      2000                               2000
                                          2001      RESTATED     1999        2001      RESTATED
                                          E(MN)      E(MN)       E(MN)      E(MN)        E(MN)
                                          -----     --------     -----      -----      --------
<S>                                      <C>        <C>         <C>        <C>         <C>
Amounts reported in the consolidated
  financial statements.................    1,623      3,460       2,317     31,664       35,603
                                         -------    -------     -------    -------     --------
Adjustments in respect to:
  (a) Equity method investees..........      246        641         127         18         (611)
  (b) Employee benefit plans...........      (17)       (11)        (11)        88           54
  (c) Stock based compensation.........       --          4          (6)        --           --
  (d) Investments......................      (26)       (10)        (10)       (50)         (24)
  (e) Restructuring charges............       43        (45)        (46)        --          (43)
  (f) Derivatives......................     (178)       (73)        (33)       (24)          (2)
  (g) Goodwill and other intangible
      assets...........................       44        (84)        (84)        44           --
                                         -------    -------     -------    -------     --------
Total US GAAP adjustments..............      112        422         (64)        76         (626)
  (h) Income taxes.....................    3,415      4,008         837        (42)           1
  (i) Minority interest in earnings....     (866)    (1,359)       (220)         8          135
                                         -------    -------     -------    -------     --------
  Effect of US GAAP adjustments........    2,661      3,071         553         42         (490)
                                         -------    -------     -------    -------     --------
Amount determined in conformity with US
  GAAP.................................    4,284      6,531       2,870     31,706       35,113
                                         =======    =======     =======    =======     ========
Net income per share in accordance with
  US GAAP:
  Basic................................    18.96      28.90       11.70
  Diluted..............................    18.96      28.90       11.70
</Table>

RESTATEMENT OF 2000 US GAAP RECONCILIATION

     Subsequent to the Group's acquisition of Dresdner Bank, in preparing the
2001 US GAAP reconciliation the Group became aware of certain additional
information pertaining to the period prior to the acquisition when Dresdner Bank
was an associate of the Group. This subsequent information indicated that tax
information previously reported did not fully reflect the elimination of taxes
in Germany on long term capital gains on investment securities sold after
January 1, 2002, which was adopted into law in October 2000. In addition, this
information indicated that a correction to the Group's US GAAP accounting
methodology in calculating its investments in associates was required. Under US
GAAP, unrealized gains and losses on Allianz shares held by associates have now
been eliminated when performing the Group's equity method calculations.

     The effect of the information obtained subsequent to Allianz's acquisition
of Dresdner is reflected in the columns labeled '2000 Restated' in the US GAAP
reconciliation table. The impact of these adjustments was an increase in US GAAP
net income of E423 million and a decrease in shareholders equity of E467
million. The impact on US GAAP shareholders' equity is comprised of an increase
in equity of E347 million relating to the release of deferred tax liabilities.
These deferred tax liabilities were released on a US GAAP basis in 2000 and
accounted for

                                      F-113
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

prospectively on an IAS basis in 2001. The remaining impact, which decreased
equity by E814 million, is due to the elimination of unrealized gains relating
to Allianz shares held by associates, as described above.

VALUATION AND RECOGNITION DIFFERENCES

     The following narrative provides details to support the valuation and
recognition differences presented in the reconciliation of the Group's net
income and shareholders' equity prepared under IAS to US GAAP.

  (a) EQUITY METHOD INVESTEES

     Under IAS, associated companies are accounted for under the equity method
of accounting in which the Group records its share of the net income or loss of
the associate in the periods for which they are reported by the associate (for
certain associates, with a lag of no more than six months) in its financial
statements after conforming to the Group's basis of accounting. For US GAAP,
adjustments have been made to calculate net income and equity of significant
associates on the basis of US GAAP.

  (b) EMPLOYEE BENEFIT PLANS

     Under the provisions of IAS, the Group did not record a transition
adjustment upon the adoption of IAS 19, Employee Benefits, due to the fact that
the accrual at the time of adoption was equal to the difference between the
projected benefit obligation and the plan assets.

     Under US GAAP, a transition obligation is calculated as the difference
between the projected benefit obligation minus the plan assets and the benefit
accrual under domestic rules. The transition obligation must be amortized on a
straight-line basis over the average remaining service period of plan
participants or over 15 years if the average remaining service period is less
than 15 years. For US GAAP purposes the Group is amortizing the unrecognized
transition obligation over 19 years, ending in 2005.

     The Group adopted Statement of Financial Accounting Standards (SFAS) No.
87, Employers' Accounting for Pensions, effective January 1, 1998. The Group was
unable to adopt the standard as of the effective date of SFAS 87 due to the
unavailability of actuarial data. The 19 year amortization period is applied
retroactively to January 1, 1987, the effective date of the standard, to
effectively extinguish the transition obligation at the same date as if SFAS 87
were adopted on the effective date.

  (c) STOCK BASED COMPENSATION

     Under IAS, for 1999 and prior, no compensation expense was recognized for
stock option plans. Compensation expense for stock appreciation rights was
recognized when the stock appreciation requirements were met. In 2000, the Group
changed its method of accounting under IAS for subsidiary stock option plans to
recognize compensation expense in accordance with the intrinsic value method of
the US GAAP standard Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Based Compensation, and related interpretations. For IAS,
the cumulative effect of this change in accounting method was included in income
in 2000. Accordingly, the cumulative effect of compensation expense recorded in
prior years for US GAAP was reversed through income in 2000.

     If compensation expense had been determined in accordance with the fair
value of the stock options on the grant date for AGF's stock based compensation,
a subsidiary of the Group, in
                                      F-114
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accordance with the provisions of SFAS 123, Accounting for Stock Based
Compensation, the Group's US GAAP net income and earnings per share would have
been the following:

<Table>
<Caption>
                                                                      2000
                                                           2001     RESTATED    1999
                                                           E(MN)     E(MN)      E(MN)
                                                           -----    --------    -----
<S>                                                        <C>      <C>         <C>
Pro forma net income.....................................  4,281     6,528      2,868
                                                             E        E           E
                                                           -----     -----      -----
  Basic earnings per share...............................  18.94     28.89      11.70
  Diluted earnings per share.............................  18.94     28.89      11.70
</Table>

     The following table provides the weighted average fair value of options
granted and the assumptions used by the Group in estimating the fair value of
the options at the grant date using the binomial option pricing model.

<Table>
<Caption>
                                                           2001      2000     1999
                                                           ----      ----     ----
<S>                                                        <C>      <C>       <C>
Weighted average fair value of options granted...........  E9.56    E13.77    E9.77
Weighted average assumptions:
  Risk free interest rate................................    4.8%      5.7%     5.6%
  Expected volatility....................................   20.0%     23.0%    21.0%
  Dividend yield.........................................    3.7%      3.2%     3.1%
</Table>

  (d) INVESTMENTS

     Under IAS, recoveries of previously impaired loan and investment assets are
recognized as gains in the income statement.

     Under US GAAP, the revaluation of previously impaired assets is not
permitted.

  (e) RESTRUCTURING CHARGES

     Under IAS with respect to restructuring provisions established in
connection with the acquisition of AGF in 1998, the Group recorded all
incremental costs associated with the discontinuance of duplicate facilities in
the restructuring provisions established in 1998.

     Under US GAAP, costs resulting from a plan to exit an activity of an
acquired company are only recognized as a liability if the cost is an
incremental cost and has no future economic benefit to the combined company,
subject to certain other considerations. Certain costs provided for in the AGF
restructuring plan, primarily data processing and other integration costs to be
incurred by outside consultants, are non-accruable under the more prescriptive
US GAAP requirements. Accordingly, US GAAP net income reflects for 1999, the
reversal of E6 million in goodwill amortization related to the provision
recorded in purchase accounting, less actual costs incurred of E52 million; and
for 2000, the reversal of E6 million in goodwill amortization related to the
provision recorded in purchase accounting, less actual costs incurred of E51
million. At December 31, 2001, the AGF restructuring provision was fully
utilized.

  (f) DERIVATIVES

     Under IAS, prior to the adoption of IAS 39, Financial Instruments:
Recognition and Measurement (IAS 39), unrealized gains and losses on derivative
instruments which the Group used to hedge certain asset and liability exposures
were deferred and recognized when the

                                      F-115
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

hedged assets or liabilities were settled, or upon termination of the derivative
contract. The Group implemented IAS 39 effective January 1, 2001. IAS 39
requires the recognition of all derivative instruments at fair value in the
Group's consolidated balance sheet. For those derivative instruments, other than
those designated as hedging instruments, a transition adjustment resulting from
the adoption of IAS 39 was recognized as an adjustment to shareholders' equity
at the beginning of 2001 for the difference between the previous carrying amount
and fair value of those derivative instruments.

     Under US GAAP, prior to the adoption of FASB No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS 133), as amended, unrealized
gains and losses were recognized in the consolidated income statement on
derivative instruments that did not meet certain specific criteria for hedge
accounting. The Group implemented SFAS 133, as amended, effective January 1,
2001. SFAS 133 requires the recognition of all derivative instruments in the
Group's consolidated balance sheet at fair value. The financial statement
recognition of the change in fair value of derivative instruments is dependent
on a number of factors, including the intended use of the derivative and the
extent to which it is effective as part of a hedge transaction. The transition
adjustments resulting from the adoption of SFAS 133, as amended, are recognized
in the Group's consolidated income statement and directly in shareholders'
equity, as appropriate. The reconciliation difference of E178 million reflects
the amount of the US GAAP transition adjustment recorded in the income
statement.

  (g) GOODWILL AND OTHER INTANGIBLE ASSETS

     Effective July 1, 2001, the Group adopted the provisions of SFAS No. 141,
Business Combinations (Statement 141), and certain provisions of SFAS No. 142,
Goodwill and Other Intangible Assets (Statement 142), as required for goodwill
and intangible assets resulting from business combinations consummated after
June 30, 2001. Further discussions concerning the future effects of Statements
141 and 142 are presented in the Future Accounting Pronouncements section of
this Note.

     The reconciliation adjustment for 2001 primarily reflects the reversal of
amortization on goodwill and brand name intangible assets relating to the
Dresdner Bank acquisitions, offset by amortization of the customer base and core
deposit relationship intangible assets recognized on a US GAAP basis.

     Under IAS, goodwill and intangible assets are amortized to reflect the
pattern in which the assets' economic benefits are consumed, not to exceed
twenty years. Under US GAAP, effective for business combinations consummated
after June 30, 2001, goodwill and intangible assets determined to have an
indefinite useful life acquired in a purchase business combination are no longer
amortized but will continue to be evaluated for impairment.

     IAS requires that an intangible asset be recognized as part of purchase
business combination if the asset is separable and can be clearly distinguished
from goodwill. Under US GAAP, additional intangible assets may arise from
contractual or legal rights, such as Dresdner Bank's customer base and core
deposit relationships. These intangibles are amortized over their useful lives.

     For years 2000 and prior, the difference identified relates to the IAS
transition provisions. Under IAS transition provisions, the Group's goodwill on
acquisitions prior to January 1, 1995, can continue to be amortized under
previous home country rules where it is directly set off against stockholders'
equity. Accordingly, there was no revaluation of pre-1995 goodwill in connection
with the implementation of IAS.

                                      F-116
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     For US GAAP, goodwill for pre-1995 acquisitions has been presented as if
the acquisitions had been initially recorded in accordance with the business
combination requirements of US GAAP.

  (h) INCOME TAXES

     Under IAS, the effect on deferred taxes resulting from a change in tax laws
or rates is recognized in the income statement except to the extent the change
relates to transactions recognized directly in shareholders' equity. The effect
on deferred taxes for transactions originally recognized directly in
shareholders' equity are allocated directly to shareholders' equity.

     Under US GAAP, the effect on deferred taxes of a change in tax laws or
rates is recognized in the income statement including the effect for
transactions originally recognized directly in shareholders' equity. The
following table indicates the amounts recognized in US GAAP net income for
changes in tax rates related to transactions originally recognized directly to
shareholders' equity under IAS:

<Table>
<Caption>
                                                          2001       2000      1999
                                                          E(MN)      E(MN)     E(MN)
                                                          -----      -----     -----
<S>                                                      <C>        <C>        <C>
Before elimination of minority interests...............    3,385      3,796      850
After elimination of minority interests................    2,554      2,559      593
</Table>

     The adjustment concerning the change in tax rates for 2001 primarily
relates to the elimination in Germany of long term capital gains tax on certain
equity investments sold after January 1. 2002. This adjustment is applied to the
relevant available-for-sale securities which carried a deferred tax balance
during 2001.

     The change in tax rates for 2000 and 1999 primarily relates to a reduction
in German corporate tax rates from 45% to 40% in 1999 (effective in 2000) and
from 40% to 25% in 2000 (effective in 2001), as well as the elimination in
Germany of long term capital gains tax on certain stock investments sold after
January 1, 2002. The tax effect of all other US GAAP adjustments in 2001
amounted to E30 million, in 2000 E212 million, and 1999 E(14) million, resulting
in a tax reconciliation adjustment of E3,415 million in 2001, E4,008 million in
2000, and E837 million in 1999.

     The Group has elected to utilize the portfolio method in its US GAAP
accounting treatment for the accumulated deferred tax amounts recorded within
stockholders' equity which relate to the net unrealized gains of
available-for-sale securities that are no longer taxable. Under the portfolio
method, the accumulated deferred tax amounts recorded within stockholders'
equity will not be recognized in the income statement as income tax expense in
future periods as long as the Group maintains an available-for-sale investment
portfolio.

  (i) MINORITY INTEREST IN EARNINGS

     Represents the minority interest effect of the US GAAP adjustments.

                                      F-117
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRESENTATION DIFFERENCES

     In addition to the valuation and recognition differences, the following
discusses the significant financial statement presentation differences under IAS
and US GAAP in order to more fully understand the US GAAP condensed consolidated
financial statements presented within this note:

Balance sheet:

     a.  Investments in affiliated enterprises, joint ventures and associated
         enterprises are presented in investments excluding funds held by others
         under reinsurance contracts assumed. Derivatives which hedge available
         for sale investments are reclassified from investments into other
         assets.

     b.  Other assets are allocated among interest and fees receivable, premium
         and insurance balances receivables (net), reinsurance recoverables,
         deferred acquisition costs, and other assets.

     c.   Deferred tax assets and liabilities are presented net.

     d.  Unearned premiums included in insurance reserves are disclosed
         separately.

     e.  Participation certificates and post-ranking liabilities, other accrued
         liabilities and other liabilities are presented within other
         liabilities.

Income statement:

     a.  Interest and similar income is primarily allocated between interest and
         fees on loans and interest and dividends on investment securities.

     b.  Other income from investments is presented within realized investment
         gains and losses.

     c.   Interest and similar expenses are primarily allocated among interest
          on deposits, interest on short-term borrowings, and interest on
          long-term debt, as appropriate.

     d.  Other expenses for investments are presented primarily within net
         realized investment gains and losses.

     e.  Acquisition costs and administrative expenses are allocated among
         commission and fees, insurance underwriting, acquisition and insurance
         expenses, salaries and employee benefits, and other expenses.

     f.   Other expenses are allocated among net realized investment gains and
          losses, insurance underwriting, acquisition and insurance expenses,
          and other expenses.

                                      F-118
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONDENSED BALANCE SHEET INFORMATION

     Following is condensed consolidated balance sheet information of the
Allianz Group as of December 31, restated to reflect the impacts of the
valuation and presentation differences between IAS and US GAAP:

<Table>
<Caption>
                                                         US GAAP           IAS REFORMATTED
                                                   -------------------    ------------------
                                                                2000
                                                    2001      RESTATED     2001       2000
                                                    E(MN)      E(MN)       E(MN)      E(MN)
                                                   -------    --------    -------    -------
<S>                                                <C>        <C>         <C>        <C>
ASSETS
Cash and cash equivalents........................   21,240      4,209      21,240      4,209
Trading account assets...........................  128,383        372     128,407        374
Investments......................................  350,209    288,722     350,241    289,357
Assets held for separate accounts................   24,692     22,770      24,692     22,770
Loans (net)......................................  300,879     35,156     300,879     35,156
Interest and fees receivable.....................    8,785      2,891       8,785      2,891
Premium and insurance balances receivables
  (net)..........................................    9,523      8,295       9,523      8,295
Reinsurance recoverables.........................   34,163     31,636      34,163     31,636
Deferred acquisition costs.......................   11,192     10,433      11,192     10,433
Goodwill and other intangible assets.............   16,955     10,394      16,911     10,394
Other assets.....................................   28,565     18,402      28,477     18,348
                                                   -------    -------     -------    -------
          Total assets...........................  934,586    433,280     934,510    433,863
                                                   =======    =======     =======    =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Insurance policy and claims reserves.............  287,122    273,681     287,122    273,681
Deposits.........................................  255,551     10,905     255,551     10,905
Liabilities held for separate accounts...........   24,726     22,841      24,726     22,841
Unearned premiums................................   12,391     11,143      12,391     11,143
Short-term borrowings............................   87,474      3,950      87,474      3,950
Long-term debt...................................  104,370     13,605     104,370     13,605
Trading account liabilities......................   44,537        197      44,537        197
Net deferred tax liabilities.....................      524      8,200         482      8,200
Other liabilities................................   68,844     37,580      68,844     37,538
                                                   -------    -------     -------    -------
          Total liabilities......................  885,539    382,102     885,497    382,060
                                                   =======    =======     =======    =======
Minority interests in consolidated
  subsidiaries...................................   17,341     16,065      17,349     16,200
                                                   -------    -------     -------    -------
          Total shareholders' equity.............   31,706     35,113      31,664     35,603
                                                   =======    =======     =======    =======
          Total liabilities and shareholders'
            equity...............................  934,586    433,280     934,510    433,863
                                                   =======    =======     =======    =======
</Table>

                                      F-119
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONDENSED INCOME STATEMENT INFORMATION

     The following is condensed consolidated income statement information of the
Allianz Group, for the years ended December 31, restated to reflect the impacts
of the valuation and presentation differences between IAS and US GAAP:

<Table>
<Caption>
                                                     US GAAP                 IAS REFORMATTED
                                            --------------------------   ------------------------
                                                       2000
                                             2001    RESTATED    1999     2001     2000     1999
                                            E(MN)     E(MN)     E(MN)    E(MN)    E(MN)    E(MN)
                                            ------   --------   ------   ------   ------   ------
<S>                                         <C>      <C>        <C>      <C>      <C>      <C>
Premiums earned (net).....................  52,745    49,907    46,182   52,745   49,907   46,182
Interest and fees on loans................   8,954     1,953     2,257    8,954    1,953    2,257
Interest and dividends on investment
  securities..............................  13,707    13,067    12,360   13,707   13,067   12,360
Income (net) from investments in
  affiliated enterprises, joint ventures
  and associated enterprises..............   1,834     2,501     1,606    1,588    1,860    1,480
Trading income............................   1,414      (109)      (19)   1,592      (36)      14
Realized investment gains and losses
  (net)...................................    (447)    5,986     5,415     (421)   5,996    5,425
Commissions and fees......................   4,334     2,059     1,028    4,334    2,059    1,028
Other income..............................   4,040     3,905     4,084    4,040    3,905    4,084
                                            ------    ------    ------   ------   ------   ------
          Total income....................  86,581    79,269    72,913   86,539   78,711   72,830
                                            ------    ------    ------   ------   ------   ------
Interest on deposits......................     753       187        --      753      187       --
Interest on short-term borrowings.........   1,554       850     1,661    1,554      850    1,661
Interest on long-term debt................   5,640     1,362       369    5,640    1,362      369
                                            ------    ------    ------   ------   ------   ------
          Total interest expense..........   7,947     2,399     2,030    7,947    2,399    2,030
                                            ------    ------    ------   ------   ------   ------
          Total income, net of interest
            expense.......................  78,634    76,870    70,883   78,592   76,312   70,800
                                            ------    ------    ------   ------   ------   ------
Benefits, claims, and loss expenses
  incurred................................  50,154    51,738    48,331   50,154   51,738   48,331
Provision for loan losses.................     596        21        29      596       21       29
                                            ------    ------    ------   ------   ------   ------
          Total provisions for losses,
            loss expenses, and loan
            losses........................  50,750    51,759    48,360   50,750   51,759   48,360
                                            ------    ------    ------   ------   ------   ------
Insurance underwriting, acquisition and
  insurance expenses......................  14,850    13,897    12,689   14,850   13,897   12,689
Salaries and employee benefits............   3,193       114       953    3,176      107      936
Goodwill and other intangibles
  amortization............................     764       579       569      808      495      485
Other expenses............................   7,212     5,224     3,613    7,255    5,179    3,567
                                            ------    ------    ------   ------   ------   ------
          Total operating expenses........  26,019    19,814    17,824   26,089   19,678   17,677
                                            ------    ------    ------   ------   ------   ------
Income before income tax expense and
  minority interests......................   1,865     5,297     4,699    1,753    4,875    4,763
                                            ------    ------    ------   ------   ------   ------
Income tax expense........................  (4,329)   (3,870)      635     (914)     138    1,472
                                            ------    ------    ------   ------   ------   ------
Income before minority interests..........   6,194     9,167     4,064    2,667    4,737    3,291
                                            ------    ------    ------   ------   ------   ------
Minority interests in income of
  consolidated subsidiaries...............   1,910     2,636     1,194    1,044    1,277      974
                                            ------    ------    ------   ------   ------   ------
          Net income......................   4,284     6,531     2,870    1,623    3,460    2,317
                                            ======    ======    ======   ======   ======   ======
</Table>

                                      F-120
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH FLOWS

     The Cash Flow Statement has been prepared under the provisions of IAS 7.
The presentation requirements of IAS 7 vary in some respects from the
presentation requirements of US GAAP. These presentation differences are
summarized as follows:

     Cash flows from operating activities include the following item that would
be included in cash flows from investing activities under US GAAP:

<Table>
<Caption>
                                                              AMOUNT FOR THE YEARS ENDED
                                                                     DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
ITEM                                                           E(MN)     E(MN)     E(MN)
----                                                          -------   -------   -------
<S>                                                           <C>       <C>       <C>
Change in loans and advances to banks and customers.........  (3,442)   (3,694)   (2,527)
</Table>

     Cash flows from operating activities include the following items that would
be included in cash flows from financing activities under US GAAP:

<Table>
<Caption>
                                                              AMOUNT FOR THE YEARS ENDED
                                                                     DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
ITEM                                                           E(MN)     E(MN)     E(MN)
----                                                          -------   -------   -------
<S>                                                           <C>       <C>       <C>
Change in liabilities to banks and customers................  (5,456)      836     1,805
Change in certificated liabilities..........................   3,130     2,642     4,092
</Table>

     Cash flows from investing activities include the following item that would
be included in cash flows from financing activities under US GAAP:

<Table>
<Caption>
                                                              AMOUNT FOR THE YEARS ENDED
                                                                     DECEMBER 31,
                                                              ---------------------------
                                                               2001      2000      1999
ITEM                                                           E(MN)     E(MN)     E(MN)
----                                                          -------   -------   -------
<S>                                                           <C>       <C>       <C>
Change in aggregate policy reserves for life insurance
  products according to SFAS 97.............................   8,089     6,770     5,683
</Table>

NET INCOME PER SHARE

     Net income per share is calculated excluding the effect of Allianz shares
held by associated companies. The weighted average of Allianz shares held by
associates was 17,592,284 and 19,431,038 for 2001 and 2000, respectively.

RECENTLY ISSUED US ACCOUNTING PRONOUNCEMENTS

Business Combinations and Goodwill and Other Intangible Assets

     In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement No. 141, Business Combinations (Statement 141), and Statement No. 142,
Goodwill and Other Intangible Assets (Statement 142). Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. Statement 141 also specifies criteria intangible
assets acquired in a purchase method business combination must meet to be
recognized and reported apart from goodwill, noting that any purchase price
allocable to an assembled workforce may not be accounted for separately.
Statement 142 will require that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of Statement 142. Statement 142 will
also require that intangible assets with estimable useful lives be amortized

                                      F-121
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

over their respective estimated useful lives to their estimated residual values,
and reviewed for impairment in accordance with FAS Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (Statement 121).

     The Group is required to adopt the provisions of Statement 141 immediately,
except with regard to business combinations initiated prior to July 1, 2001, and
Statement 142 effective January 1, 2002. Furthermore, goodwill and intangible
assets determined to have an indefinite useful life acquired in a purchase
business combination completed after June 30, 2001, but before Statement 142 is
adopted in full will not be amortized, but will continue to be evaluated for
impairment in accordance with the appropriate pre-Statement 142 accounting
literature. Goodwill and intangible assets acquired in business combinations
completed before July 1, 2001 will continue to be amortized and tested for
impairment in accordance with the appropriate pre-Statement 142 accounting
requirements prior to the full adoption of Statement 142.

     Statement 141 will require upon adoption of Statement 142, that the Group
evaluates its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon full adoption of Statement 142, the Group will be required
to reassess the useful lives and residual values of all intangible assets
acquired, and make any necessary amortization period adjustments by the end of
the first interim period after adoption. In addition, to the extent an
intangible asset is identified as having an indefinite useful life, the Group
will be required to test the intangible asset for impairment in accordance with
the provisions of Statement 142 within the first interim period. Any impairment
loss will be measured as of the date of adoption and recognized as the
cumulative effect of a change in accounting principle in the first interim
period.

     In connection with Statement 142's transitional goodwill impairment
evaluation, Statement 142 will require the Group to perform an assessment of
whether there is an indication that goodwill, and equity-method goodwill, is
impaired as of January 1, 2002. To accomplish this, the Group must identify its
reporting units and determine the carrying value of each reporting unit by
assigning the assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units as of January 1, 2002. The Group
will then have up to six months from the date of adoption to determine the fair
value of each reporting unit and compare it to the reporting unit's carrying
amount. To the extent a reporting unit's carrying amount exceeds its fair value,
an indication exists that the reporting unit's goodwill may be impaired and the
Group must perform the second step of the transitional impairment test. In the
second step, the Group must compare the implied fair value of the reporting
unit's goodwill, determined by allocating the reporting unit's fair value to all
of it assets (recognized and unrecognized) and liabilities in a manner similar
to a purchase price allocation in accordance with Statement 141, to its carrying
amount, both of which would be measured as of January 1, 2002. This second step
is required to be completed as soon as possible, but no later than December 31,
2002. Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in the Group's US GAAP net income.
Additionally, any unamortized negative goodwill, and equity-method negative
goodwill, existing at January 1, 2002 must be written off as the cumulative
effect of a change in accounting principle.

     The Group has adopted certain provisions of Statement 142, as required for
goodwill and intangible assets resulting from business acquisitions consummated
after June 30, 2001. The Group will fully adopt Statement 142 effective January
1, 2002. However, because of the extensive effort needed to comply with adopting
Statement 142, it is not practicable to reasonably estimate the impact of fully
adopting Statement 142 on the Group's financial

                                      F-122
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

statements at the date of this report, including whether it will be required to
recognize any transitional impairment losses as the cumulative effect of a
change in accounting principle.

Asset Retirement Obligations

     In June 2001, the FASB issued Statement No. 143, Accounting for Asset
Retirement Obligations (Statement 143), which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Statement 143 applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and (or) normal use of the asset.

     Statement 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional
carrying amount is depreciated over the life of the asset. The liability is
accreted at the end of each period through charges to operating expense. If the
obligation is settled for other than the carrying amount of the liability, a
gain or loss will be recognized on settlement.

     The Group is required to adopt the provisions of Statement 143 for the
quarter ending March 31, 2003. To accomplish this, the Group must identify all
legal obligations for asset retirement obligations, if any, and determine the
fair value of these obligations on the date of adoption. The determination of
fair value is complex and will require the Group to gather market information
and develop cash flow models. Additionally, the Group will be required to
develop processes to track and monitor these obligations. Because of the effort
necessary to comply with the adoption of Statement 143, it is not practicable
for management to estimate the impact of adopting Statement 143 at the date of
this report.

Impairment of Disposal of Long-Lived Assets

     In August 2001, the FASB issued Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (Statement 144), which supersedes
both Statement 121, and the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30, Reporting the Results of Operations-Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions (Opinion 30), for the
disposal of a segment of a business, as previously defined in Opinion 30.
Statement 144 retains the fundamental provisions in Statement 121 for
recognizing and measuring impairment losses on long-lived assets held for use
and long-lived assets to be disposed of by sale, while also resolving
significant implementation issues associated with Statement 121.

     The Group is required to adopt Statement 144 no later than the year
beginning after December 15, 2001, and plans to adopt its provisions for the
quarter ending March 31, 2002. Management does not expect the adoption of
Statement 144 for long-lived assets held for use to have a material impact on
the Group's financial statements because the impairment assessment under
Statement 144 is largely unchanged from Statement 121. The provisions of
Statement 144 for assets held for sale or other disposal generally are required
to be applied prospectively after the adoption date to newly initiated disposal
activities. Therefore, management cannot determine the potential effects that
adoption of Statement 144 will have on the Group's financial statements.

                                      F-123
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(46) SELECTED SUBSIDIARIES AND OTHER HOLDINGS

<Table>
<Caption>
                                                              EQUITY IN
OPERATING SUBSIDIARIES                                          E(MN)     % OWNED(1)
----------------------                                        ---------   ----------
<S>                                                           <C>         <C>
ADVANCE Bank AG, Duisburg...................................        77      100.0
AGIS Allianz Gesellschaft fur Informatik Service mbH,
  Munich....................................................       181      100.0
Allianz Bauspar AG, Munich..................................        23      100.0
Allianz Capital Partners GmbH, Munich.......................       649      100.0
Allianz Dresdner Asset Management GmbH, Munich..............        39      100.0
Allianz Global Risks Ruckversicherungs-AG, Munich...........        50      100.0
Allianz Globus MAT Versicherungs-Aktiengesellschaft,
  Hamburg...................................................        52      100.0
Allianz Immobilien GmbH, Stuttgart..........................         4      100.0
Allianz Kapitalanlagegesellschaft mbH, Stuttgart............         5      100.0
Allianz Lebensversicherungs-AG, Stuttgart...................     1,074       50.5
Allianz PIMCO Asset Management GmbH, Munich.................         7      100.0
Allianz Vermogens-Bank AG, Augsburg.........................        23      100.0
Allianz Versicherungs-AG, Munich............................     1,516      100.0
Allianz Zentrum fur Technik GmbH, Munich....................         0      100.0
Bayerische Versicherungsbank AG, Munich.....................       321       45.0(2)
DEGI Deutsche Gesellschaft fur Immobilienfonds mbH,
  Frankfurt/Main............................................        23      100.0
Deutsche Hyp Deutsche Hypothekenbank Frankfurt-Hamburg AG,
  Frankfurt/Main............................................     1,245       98,1
Deutsche Lebensversicherungs-AG, Berlin.....................        36      100.0
dit DEUTSCHER INVESTMENT-TRUST Gesellschaft fur
  Wertpapieranlagen mbH, Frankfurt/Main.....................       139      100.0
DREGIS Dresdner Global IT Services Gesellschaft mbH,
  Frankfurt/Main............................................       106      100.0
Dresdner Asset Management (Germany) GmbH, Frankfurt/Main....         3      100.0
Dresdner Bank AG, Frankfurt/Main............................    21,633       78.5
Dresdner Bank Lateinamerika AG, Hamburg.....................       438      100.0
Dresdner Bauspar AG, Bad Vilbel.............................        42      100.0
Frankfurter Versicherungs-AG, Frankfurt/Main................       343       50.0(2)
Hermes Kreditversicherungs-AG, Hamburg......................       103       89.6
Kraft Versicherungs-AG, Berlin/Munich.......................        10       99.5
Lombardkasse AG, Berlin.....................................        31       99.4
Munchner und Magdeburger Hagelversicherung AG, Munich.......         6       52.4
Oldenburgische Landesbank AG, Oldenburg.....................       392       89.7
Reuschel & Co., Munich......................................       155       50.1
Vereinte Krankenversicherung AG, Munich.....................       245      100.0
Vereinte Lebensversicherung AG, Munich......................        57      100.0
Vereinte Rechtschutzversicherung AG, Munich.................        10      100.0
Vereinte Spezial Krankenversicherung AG, Munich.............         8      100.0
Vereinte Spezial Versicherung AG, Munich....................         8      100.0
Vereinte Versicherung AG, Munich............................       269       99.3
</Table>

---------------
(1) Including shares held by subsidiaries.

(2) Management control agreement.

                                      F-124
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OPERATING SUBSIDIARIES                                          E(MN)     % OWNED(1)
----------------------                                        ---------   ----------
<S>                                                           <C>         <C>
AGF Belgium Insurance, Brussels.............................       396      100.0
AGF La Lilloise, Paris......................................        71      100.0
AGF-M.A.T., Paris...........................................       127      100.0
Alba Allgemeine Versicherungs-Gesellschaft, Basel...........        17      100.0
Allianz Asset Management (Ltd.), Hong Kong..................         3      100.0
Allianz Australia Limited, Sydney...........................       459      100.0
Allianz Bulgaria Insurance and Reinsurance Company Ltd.,
  Sofia.....................................................         9       71.6
Allianz Bulgaria Life Insurance Company Ltd., Sofia.........         5       94.0
Allianz Compania de Seguros y Reaseguros S.A., Madrid.......       269       99.8
Allianz Elementar Lebensversicherungs-Aktiengesellschaft,
  Vienna....................................................        99      100.0
Allianz Elementar Versicherungs-Aktiengesellschaft,
  Vienna....................................................       363       98.7
Allianz Europe Ltd., Amsterdam..............................     1,657      100.0
Allianz Fire and Marine Insurance Japan Ltd., Tokyo.........        10      100.0
Allianz First Life Insurance Co. Ltd., Seoul................       299      100.0
Allianz General Insurance Company S.A., Athens..............         7      100.0
Allianz Hungaria Biztosito Rt., Budapest....................        98      100.0
Allianz Insurance (Hong Kong) Ltd., Hong Kong...............        11      100.0
Allianz Insurance Company of Singapore Pte. Ltd.,
  Singapore.................................................        44      100.0
Allianz Insurance Company, Los Angeles......................     4,103      100.0
Allianz Lebensversicherung (Schweiz) AG, Zurich.............        41      100.0
Allianz Life Insurance Company of North America,
  Minneapolis...............................................     1,716      100.0
Allianz Life Insurance Company S.A., Athens.................         5      100.0
Allianz Mexico S.A. Compania de Seguros, Mexico City........        89      100.0
Allianz of America Inc., Wilmington.........................     5,873      100.0
Allianz of Canada Inc., Toronto.............................       182      100.0
Allianz of South Africa (Proprietary) Ltd., Johannesburg....        14      100.0
Allianz pojistovna a.s., Bratislava.........................        26      100.0
Allianz poistovna a.s., Prague..............................        24      100.0
Allianz President General Insurance, Taipeh.................        36       50.0(2)
Allianz President Life Insurance, Taipeh....................        18       50.0(2)
Allianz-RAS Tutela Giudiziaria S. p. A., Milan..............         6      100.0
Allianz Re Dublin Ltd., Dublin..............................        11      100.0
Allianz Risk Transfer, Zurich...............................       387      100.0
Allianz Subalpina Societa di Assicurazioni Riassicurazioni
  S. p. A., Turin...........................................       186       97.1
Allianz Suisse Lebensversicherungs-Gesellschaft, Zurich.....       100      100.0
Allianz Suisse Versicherungs-Gesellschaft, Zurich...........       363       99.9
Allianz Tiriac Insurance S.A., Bucharest....................         8       51.0
Allianz Underwriters Insurance Company, Los Angeles.........        64      100.0
Allianz Versicherung (Schweiz) AG, Zurich...................        68      100.0
Allianz Worldwide Care, Dublin..............................        12      100.0
</Table>

---------------
(1) Including shares held by dependent subsidiaries.

(2) Controlled by Allianz.

                                      F-125
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OPERATING SUBSIDIARIES                                          E(MN)     % OWNED(1)
----------------------                                        ---------   ----------
<S>                                                           <C>         <C>
Allianz Zagreb d.d., Zagreb.................................        10       52.0
Allianz (UK) Ltd., London...................................       806      100.0
Arab International Insurance Company, Cairo.................         9       80.0
Arab International Life Company, Cairo......................         7      100.0
Assurances Generales de France lart, Paris..................     1,820      100.0
Assurances Generales de France Vie, Paris...................     1,964      100.0
Assurances Generales de France, Paris.......................     5,730       67.8
Banque AGF, Paris...........................................       427      100.0
Berner Allgemeine Versicherungs-Gesellschaft, Bern..........       223       99.9
Berner Lebensversicherungs-Gesellschaft, Bern...............        19      100.0
Church and General Insurance p.l.c., Dublin.................        74      100.0
Commercial Bank "Bulgaria Invest" Company Ltd., Sofia.......         7       99.2
Compagnie d'Assurance de Protection Juridique S.A., Zug.....         6      100.0
Companhia de Seguros Allianz Portugal S.A., Lisbon..........       108       64.8
Cornhill Insurance PLC, London..............................       874      98.02
Dresdner Asset Management Ltd., Singapore...................         3      100.0
dresdnerbank asset management S.A., Luxemburg...............        32      100.0
Dresdner Bank (Ireland) plc., Dublin........................       271      100.0
Dresdner Bank Luxembourg S.A., Luxemburg....................     1,024      100.0
Dresdner Bank (Schweiz) AG, Zurich..........................       101       99.8
Dresdner International Management Services Ltd., Dublin.....         4      100.0
Dresdner Kleinwort Wasserstein (Japan) Ltd., Hong Kong,
  Tokyo.....................................................       351      100.0
Dresdner Kleinwort Wasserstein Securities SIM p.A., Milan...        30       66.9
Dresdner Kleinwort Wasserstein (South East Asia) Ltd.,
  Singapore.................................................       195      100.0
Dresdner RCM Global Investors Holdings (UK) Ltd., London....        64      100.0
ELVIA Reiseversicherungs-Gesellschaft, Zurich...............        22      100.0
Entenial, Guyancourt........................................       334       72.2
EULER, Paris................................................       698       71.5
Fireman's Fund Insurance Company, Novato....................     3,537      100.0
France Life, Seocho-Ku, Seoul...............................         2      100.0
Groupe Mondial Assistance, Zurich...........................       532      100.0
International Reinsurance Company S.A., Luxemburg...........        32      100.0
Jefferson Insurance Company of N.Y., New York...............       106      100.0
LifeU.S.A. Insurance Company, Minneapolis...................     1,001      100.0
Lloyd 1885 S.p.A., Milan....................................        23      100.0
Lloyd Adriatico S.p.A., Triest..............................       443       99.7
Malaysia British Assurance, Malaysia........................        35       98.5
Malaysia British Assurance Life, Kuala Lumpur...............        24      100.0
Merchant Investors Assurance Co. Ltd., Bristol..............        12      100.0
Nicholas Applegate, San Diego...............................     1,117      100.0
Oppenheimer Capital, Delaware...............................        22      100.0
Orbis Group Ltd., St. Peter Port/Guernsey...................         7      100.0
</Table>

---------------
(1) Including shares held by dependent subsidiaries.

(2) Percentage of voting capital owned: 99.99%.

                                      F-126
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OPERATING SUBSIDIARIES                                          E(MN)     % OWNED(1)
----------------------                                        ---------   ----------
<S>                                                           <C>         <C>
Ost-West Allianz Insurance Company, Moscow..................         1      100.0
Pacific Investment Management Company LLC, a DE LLC,
  Delaware..................................................        89       97.0
Pet Plan Health Care Ltd., London...........................        10      100.0
PIMCO Funds Distributors LLC, Delaware......................        58      100.0
Privatinvest Bank AG, Salzburg..............................        15       69.0
P.T. Asuransi Allianz Life Indonesia, Jakarta...............         3       98.7
P.T. Asuransi Allianz Utama Indonesia, Jakarta..............         8       55.4
RB Vita S.p.A., Milan.......................................       146      100.0
Riunione Adriatica di Sicurta S.p.A., Milan.................     4,054       51.1(2)
T.U. Allianz Polska S.A., Warsaw............................        84      100.0
T.U. Allianz Polska Zycie S.A., Warsaw......................        28      100.0
Veer Palthe Voute N.V., Gouda...............................         7      100.0
Wm. H McGee & Co. Inc., New York............................        52      100.0
ZA Leven, Nieuwegein........................................       199      100.0
Zwolsche Algemeene Schadeverzekering N.V., Nieuwegein.......       113      100.0
</Table>

<Table>
<Caption>
                                                              EQUITY IN
ASSOCIATED COMPANIES(3)                                         E(MN)     % OWNED(1)
-----------------------                                       ---------   ----------
<S>                                                           <C>         <C>
Autobahn Tank & Rast Holding GmbH, Bonn.....................        21       31.4
Beiersdorf AG, Hamburg......................................     1,458       43.6
Bilfinger + Berger Bauaktiengesellschaft, Mannheim..........       748       25.1
Heidelberger Zement AG, Heidelberg..........................     3,639       18.1
Karlsruher Lebensversicherung AG, Karlsruhe.................       175       36.1
Kommanditgesellschaft Allgemeine Leasing GmbH & Co.,
  Grunwald..................................................        48       40.5
Monachia Grundstucks-Aktiengesellschaft, Munich.............        26       48.7
Munchener Ruckversicherungs-Gesellschaft AG, Munich.........    23,602       24.9
TELA Versicherung AG, Berlin/Munich.........................       277       25.0
Allianz CP General Insurance Company Ltd., Bangkok..........         8       25.0
EUROPENSIONES S.A., Entidad Grestora de Fondos de Pensiones,
  Madrid....................................................        35       49.0
Koc Allianz Hayat Sigorta A.S., Istanbul....................        17       38.0
Koc Allianz Sigorta T.A.S., Istanbul........................        21       37.1
National Insurance Company Berhad, Brunei...................         6       25.0
Russian People's Insurance Society "Rosno", Moscow..........        26       45.3
Sophia, Paris...............................................       821       28.1
</Table>

---------------
(1) Including shares held by dependent subsidiaries.

(2) Percentage of voting capital owned: 51.87%.

(3) Associated enterprises are all those enterprises other than affiliated
    enterprises or joint ventures, in which the Group has an interest of between
    20% and 50% regardless of whether a significant influence is exercised.

                                      F-127
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OTHER SELECTED HOLDINGS IN LISTED COMPANIES(1)                  E(MN)     % OWNED(2)
----------------------------------------------                ---------   ----------
<S>                                                           <C>         <C>
AMB Generali Holding AG.....................................       602        9.5
BASF AG, Ludwigshafen.......................................     2,678       10.9
Bayerische Motorenwerke AG, Munich..........................     1,692        6.5
Bayer AG, Leverkusen........................................     1,524        5.8
Bayerische Hypo- und Vereinsbank AG, Munich.................     3,024       16.4
Continental AG, Hanover.....................................       159        8.0
DaimlerChrysler AG, Stuttgart...............................       780        1.6
Deutsche Bank AG, Frankfurt/Main............................     2,209        4.5
Deutsche Borse AG, Frankfurt/Main...........................       260        5.9
Deutsche Telekom AG, Bonn...................................       372        0.5
E.ON AG, Dusseldorf.........................................     3,736        9.2
ERGO Versicherungsgruppe AG, Dusseldorf.....................       205        1.5
Fresenius AG, Bad Homburg...................................       201        6.0
Karstadt Quelle AG, Essen...................................       724       14.0
Linde AG, Wiesbaden.........................................       670       12.3
mg technologies ag, Frankfurt/Main..........................       238       13.0
Norddeutsche Affinerie AG, Hamburg..........................        40        8.7
Preussag AG, Hanover........................................       118        2.4
RWE AG, Essen...............................................     2,753       11.4
SAP AG, Walldorf............................................       409        0.9
Schering AG, Berlin.........................................     1,422       11.9
SGL Carbon AG, Wiesbaden....................................        38        7.7
Siemens AG, Munich..........................................     2,558        3.8
Sud-Chemie AG, Munich.......................................        58       19.0
ThyssenKrupp AG, Essen......................................       356        4.2
Vodafone AG, Dusseldorf.....................................     1,145        0.7
Volkswagen AG, Wolfsburg....................................       196        1.4
Vossloh AG, Werdohl.........................................        18        5.7
</Table>

---------------
(1) Market value >= E100 million or percentage of shares owned >= 5% without
    trading portfolio of banking business.

(2) Including shares held by dependent subsidiaries (incl. consolidated
    investment fund).

<Table>
<Caption>
                                                              EQUITY IN
OTHER SELECTED HOLDINGS IN LISTED COMPANIES(1)                  E(MN)     % OWNED(2)
----------------------------------------------                ---------   ----------
<S>                                                           <C>         <C>
Abbott Laboratories Inc., Abbott Park, IL...................       100        0.1
ABN Amro Holding N.V., Amsterdam............................       110        0.4
Aegon N.V., The Hague.......................................       172        0.4
Alcatel S.A., Paris.........................................       214        0.9
American Int. Group Inc., New York, NY......................       151        0.1
Assicurazioni Generali S.p.A., Triest.......................       310        0.8
AstraZeneca PLC, London.....................................       201        0.2
Aventis S.A., Schiltigheim..................................       593        1.0
AXA-UAP S.A., Paris.........................................       490        1.2
</Table>

                                      F-128
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OTHER SELECTED HOLDINGS IN LISTED COMPANIES(1)                  E(MN)     % OWNED(2)
----------------------------------------------                ---------   ----------
<S>                                                           <C>         <C>
Banca Intesa BCI S.p.A., Milan..............................       375        2.1
Banco Atlantico S.A., Barcelona.............................        42        5.6
Banco Bilbao Vizcaya Argentaria, Bilbao.....................       318        0.7
Banco Popular Espanol S.A., Madrid..........................       466        5.8
Banco Santander Central Hispanico S.A., Madrid..............       146        0.3
Barclays Bank PLC, London...................................       108        0.2
BNP Paribas, Paris..........................................       568        1.3
Bollore Investissement S.A., Puteaux........................       188       16.0
BP Amoco PLC, London........................................       436        0.2
Banco Portugues de Investimento (BPI-SGPS) S.A., Porto......       129        8.9
Carrefour Supermarche S.A., Paris...........................       267        0.6
CGNU PLC (ex CGU plc), London...............................       247        0.8
Citigroup Inc., New York, NY................................       203        0.1
Credit Lyonnais S.A., Paris.................................     1,272        9.9
Credit Suisse Group, Zurich.................................       258        0.4
CRH PLC, Dublin.............................................       205        2.0
Dixons Group PLC, Hertfordshire.............................       124        1.6
DMC Dollfus-Mieg et Cie S.A., Paris.........................        12       10.7
Electronic Data Systems Corp., Plano, TX....................       107        0.3
Endesa S.A., Madrid.........................................       135        0.7
ENI S.p.A., Rome............................................       512        0.9
Exxon Mobil Corp., Irving, TX...............................       182        0.1
Fannie Mae Inc., Washington, DC.............................       101        0.1
FleetBoston Financial Corp., Boston, MA.....................       100        0.2
Fortis N.V., Utrecht........................................       354        0.7
France Telecom S.A., Paris..................................       232        0.4
General Electric Co. Inc., Fairfield, CT....................       217        0.1
Geodis S.A., Paris..........................................        11        8.5
GlaxoSmithKline PLC, Greenford, Middlesex...................       491        0.3
Groupe Danone S.A., Paris...................................       230        1.1
Hana Bank, Seoul............................................       225       12.5
Harwanne S.A., Geneva.......................................        14       18.8
HSBC Holdings PLC, London...................................       209        0.2
IBM Corp., Armonk, NY.......................................       177        0.1
Immobiliere Marseillaise, Marseille.........................        58        8.5
ING Group N.V., Amsterdam...................................       499        0.9
Intel Corp., Santa Clara, CA................................       132        0.1
Kon. Ahold N.V., Amsterdam..................................       314        1.1
Lloyds TSB Group PLC, Edinburgh.............................       371        0.5
L'Oreal S.A., Paris.........................................       211        0.4
Mediobanca S.p.A., Milan....................................       157        1.7
Microsoft Corp., Redmond, WA................................       285        0.1
Nestle S.A., Vevey..........................................       853        0.9
Nokia Oyi., Nokia...........................................       988        0.7
</Table>

                                      F-129
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OTHER SELECTED HOLDINGS IN LISTED COMPANIES(1)                  E(MN)     % OWNED(2)
----------------------------------------------                ---------   ----------
<S>                                                           <C>         <C>
Novartis AG, Basel..........................................       818        0.8
Olivetti S.p.A., Ivrea......................................       216        1.7
Pechiney S.A., Paris........................................       298        6.4
PepsiCo Inc., Purchase, NY..................................       121        0.1
Peugeot S.A., Paris.........................................       143        1.2
Pfizer Inc., New York, NY...................................       244        0.1
Pharmacia Corp, Peapack, NJ.................................       101        0.2
Philip Morris Companies Inc., New York, NY..................       106        0.1
Philips Electronics N.V., Amsterdam.........................       397        0.9
Pinault-Printemps-Redoute S.A., Paris.......................       222        1.3
Pirelli & Co. S.p.A., Milan.................................        83        5.1
Prudential Corporation PLC, London..........................       180        0.7
Rolo Banca 1473 S.p.A., Bologna.............................       281        3.4
Royal Bank Scotland Group PLC, Edinburgh....................       125        0.2
Royal Dutch Petroleum, The Hague............................       701        0.6
San Paolo IMI S.p.A., Turin.................................       162        0.9
Sanofi- Synthelabo S.A., Paris..............................       161        0.3
Schneider S.A., Boulogne-Billancourt........................       179        1.4
</Table>

---------------
(1) Market value >= E100 million or percentage of shares owned >= 5% without
    trading portfolio of banking business.

(2) Including shares held by dependent subsidiaries (incl. consolidated
investment fund).

<Table>
<Caption>
                                                              EQUITY IN
OTHER SELECTED HOLDINGS IN LISTED COMPANIES(1)                  E(MN)     % OWNED(2)
----------------------------------------------                ---------   ----------
<S>                                                           <C>         <C>
Schweizer Ruckversicherungs-Gesellschaft AG, Zurich.........       151        0.4
Shell Transport & Trading Co. PLC, London...................       109        0.1
Societe Generale S.A., Paris................................       747        2.8
STMicroelectronics N.V., Geneva.............................       167        0.5
Suez Lyonnaise des Eaux S.A., Paris.........................       335        1.0
Telecom Italia S.p.A., Rome.................................       371        0.6
Telefonica S.A., Madrid.....................................       360        0.5
Tesco PLC, Cheshunt, Hertfordshire..........................       228        0.8
TIM S.p.A., Turin...........................................       321        0.6
Total Fina Elf S.A., Paris..................................       925        0.8
Tyco International Ltd., Pembroke Bermuda...................       146        0.1
UBS AG, Zurich..............................................       580        0.8
UniCredito Italiano S.p.A., Milan...........................     1,134        5.0
Unilever N.V., Rotterdam....................................       183        0.5
Verizon Communication Inc. (ex. Bell Atl.), New York, NY....       132        0.1
Vivendi Universal, Paris....................................       538        0.8
Vodafone Group PLC, Newbury.................................       618        0.3
Voest-Alpine AG, Linz.......................................        83        8.2
Wal-Mart Stores Inc., Bentonville, AR.......................       188        0.1
</Table>

                                      F-130
<PAGE>
                                 ALLIANZ GROUP

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              EQUITY IN
OTHER SELECTED HOLDINGS IN LISTED COMPANIES(1)                  E(MN)     % OWNED(2)
----------------------------------------------                ---------   ----------
<S>                                                           <C>         <C>
Worms et Cie, Paris.........................................       346       15.2
Zagrebacka Banka d.d., Zagreb...............................        75        9.9
Zurich Financial Services AG, Zurich........................       113        0.5
</Table>

---------------
(1) Market value >= E100 million or percentage of shares owned >= 5% without
    trading portfolio of banking business

(2) Including shares held by dependent subsidiaries (incl. consolidated
    investment fund).

OTHER INTERESTS

     Associated or other non-consolidated asset management companies hold the
following shareholdings in the listed companies shown below.

<Table>
<Caption>
                                                       EQUITY INVESTMENTS HELD BY     INTEREST OF THE
                                                            ASSET MANAGEMENT          ALLIANZ GROUP IN
                                                                COMPANIES                THE ASSET
                                                       ---------------------------       MANAGEMENT
                                                        MARKET VALUE                     COMPANIES
                                                           E(MN)          % OWNED         % OWNED
                                                       --------------    ---------    ----------------
<S>                                                    <C>               <C>          <C>
Deutsche Lufthansa AG, Cologne......................         576            10.0             50
Heidelberger Druckmaschinen AG, Heidelberg..........         872            23.9             50
Hochtief AG, Essen..................................         111            10.0             50
MAN AG, Munich......................................         947            25.8             50
</Table>

DISCLOSURE OF EQUITY INVESTMENTS

     Information is filed separately with the Commercial Register in Munich.

                                      F-131
<PAGE>

                                                                      SCHEDULE I

                                 ALLIANZ GROUP

                            SUMMARY OF INVESTMENTS*
                               DECEMBER 31, 2001

<Table>
<Caption>
                                                                                      AMOUNT
                                                                                     SHOWN IN
                                                             AMORTIZED     FAIR      BALANCE
                                                               COST        VALUE      SHEET
                                                               E(MN)       E(MN)      E(MN)
                                                             ---------    -------    --------
<S>                                                          <C>          <C>        <C>
Fixed maturities:
  Bonds:
     German government.....................................    54,421      55,591     55,588
     US government.........................................     6,805       6,890      6,871
     French government.....................................    10,849      10,943     10,952
     Austrian government...................................       997       1,010      1,010
     UK government.........................................     1,200       1,241      1,241
     Italian government....................................    14,365      14,643     14,643
     Swiss government......................................     2,110       2,121      2,115
     Netherlands government................................       659         666        661
     Spanish government....................................     5,001       5,206      5,200
     Canadian government...................................       534         546        546
     Other government......................................    10,886      11,059     10,970
Public utilities...........................................     8,427       8,592      8,592
Convertibles and bonds with warrant attached...............       357         386        386
All other corporate bonds..................................    71,448      73,312     73,312
Certificate of deposit.....................................    14,252      14,252     14,252
                                                              -------     -------    -------
          Total fixed maturities...........................   202,311     206,458    206,339
                                                              -------     -------    -------
Equity securities:
  Common stocks:
     Public utilities......................................     2,118       2,468      2,468
     Banks, trusts and insurance companies.................    10,934      12,744     12,744
     Industrial, miscellaneous and all other...............    56,829      66,233     66,233
     Non-redeemable preferred stocks.......................        15          18         18
                                                              -------     -------    -------
          Total equity securities..........................    69,896      81,463     81,463
                                                              -------     -------    -------
Mortgage loans on real estate..............................    11,771      11,771     11,771
Real Estate................................................    12,004      16,731     16,731
Policy loans...............................................     1,337       1,337      1,337
Other long-term investments................................    27,081      27,612     27,661
                                                              -------     -------    -------
          Total investments................................   324,400     345,372    345,302
                                                              =======     =======    =======
</Table>

---------------

* Includes all Group investments except trading portfolios.

                                       S-1
<PAGE>

                                                                     SCHEDULE II

                           ALLIANZ AKTIENGESELLSCHAFT

                PARENT ONLY CONDENSED BALANCE SHEETS (IAS BASIS)
                         AT DECEMBER 31, 2001 AND 2000

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)     E(MN)
                                                              ------    ------
<S>                                                           <C>       <C>
Assets:
Investment in subsidiaries..................................  52,692    43,290
Cash........................................................   2,212        78
Other invested assets.......................................  17,641    19,687
Other assets................................................   4,760     3,338
                                                              ------    ------
                                                              77,305    66,393
                                                              ======    ======
Liabilities & Shareholders' Equity:
Assumed reinsurance reserves................................  12,190    11,318
Other liabilities...........................................  33,451    19,472
                                                              ------    ------
                                                              45,641    30,790
Shareholders' equity........................................  31,664    35,603
                                                              ------    ------
                                                              77,305    66,393
                                                              ======    ======
</Table>

                                       S-2
<PAGE>

                                                                     SCHEDULE II

                           ALLIANZ AKTIENGESELLSCHAFT

             PARENT ONLY CONDENSED STATEMENTS OF INCOME (IAS BASIS)
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                               2001      2000      1999
                                                              E(MN)     E(MN)     E(MN)
                                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
Revenues:
  Underwriting income.......................................  3,503     3,543     3,753
  Investment income.........................................  3,541     2,454     2,621
  Other income..............................................    517        57        36
                                                              -----     -----     -----
                                                              7,561     6,054     6,410
Expenses:
  Underwriting expense......................................  4,594     4,158     3,871
  Investment expense........................................  1,416       908     1,041
  Other expense.............................................    694       343       352
                                                              -----     -----     -----
                                                              6,704     5,409     5,264
                                                              -----     -----     -----
Income before tax...........................................    857       645     1,146
  Income tax................................................   (572)     (272)      213
                                                              -----     -----     -----
Income before equity in undistributed net income of
  subsidiaries..............................................  1,429       917       933
Equity in undistributed net income of subsidiaries..........    194     2,543     1,384
                                                              -----     -----     -----
     Net Income.............................................  1,623     3,460     2,317
                                                              =====     =====     =====
</Table>

                                       S-3
<PAGE>

                                                                     SCHEDULE II

                           ALLIANZ AKTIENGESELLSCHAFT

           PARENT ONLY CONDENSED STATEMENT OF CASH FLOWS (IAS BASIS)
                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<Table>
<Caption>
                                                               2001      2000
                                                              E(MN)      E(MN)
                                                              ------    -------
<S>                                                           <C>       <C>
Cash flows from operating activities:
  Net income................................................   1,623      3,460
  Adjustments to reconcile net income to cash provided by
     operating activities:
     Change in assumed reinsurance reserves.................     872        917
     Change in other assets.................................  (1,422)    (1,429)
     Change in other liabilities............................  13,979      2,593
                                                              ------    -------
Net cash provided by operating activities...................  15,052      5,541
                                                              ------    -------
Cash flows from investing activities:
  Change in investments in subsidiaries.....................  (9,402)   (10,450)
  Change in other invested assets...........................   2,046      2,224
                                                              ------    -------
Net cash used in investing activities.......................  (7,356)    (8,226)
                                                              ------    -------
Cash flows from financing activities:
  Net proceeds from issuance of common stocks and additional
     paid in capital........................................     275        184
  Other changes on shareholders' capital....................  (5,164)     2,896
  Dividends paid............................................    (673)      (613)
                                                              ------    -------
Net cash provided by financing activities...................  (5,562)     2,467
                                                              ------    -------
Net (decrease) increase in cash.............................   2,134       (218)
Cash at beginning of year...................................      78        296
                                                              ------    -------
Cash at end of year.........................................   2,212         78
                                                              ======    =======
</Table>

                                       S-4
<PAGE>

                                                                    SCHEDULE III

                                 ALLIANZ GROUP

                      SUPPLEMENTARY INSURANCE INFORMATION*
                       DECEMBER 31, 2001, 2000, AND 1999

<Table>
<Caption>
                                                   FUTURE
                                                   POLICY                     OTHER
                                  DEFERRED       BENEFITS,                    POLICY
                                   POLICY         LOSSES,                   CLAIMS AND    PREMIUM
                                 ACQUISITION     CLAIMS AND     UNEARNED     BENEFITS     REVENUE
                                    COSTS       LOSS EXPENSE    PREMIUMS     PAYABLE      (EARNED)
                                    GROSS          GROSS         GROSS        GROSS         NET
                                    E(MN)          E(MN)         E(MN)        E(MN)        E(MN)
                                 -----------    ------------    --------    ----------    --------
<S>                              <C>            <C>             <C>         <C>           <C>
At and for the year ended
  December 31, 2001:
Life/Health....................      8,327         195,004           241       20,010       18,979
Property-Casualty..............      3,169          69,333        12,150        2,774       33,766
                                  --------       ---------      --------     --------     --------
          Total................     11,496         264,337        12,391       22,784       52,745
                                  ========       =========      ========     ========     ========
At and for the year ended
  December 31, 2000:
Life/Health....................      7,325         181,433           284       27,103       19,077
Property-Casualty..............      3,108          62,466        10,859        2,679       30,830
                                  --------       ---------      --------     --------     --------
          Total................     10,433         243,899        11,143       29,782       49,907
                                  ========       =========      ========     ========     ========
At and for the year ended
  December 31, 1999:
Life/Health....................      6,631         166,621         1,633       27,811       17,058
Property-Casualty..............      2,594          59,163        10,172        2,664       29,124
                                  --------       ---------      --------     --------     --------
          Total................      9,225         225,784        11,805       30,475       46,182
                                  ========       =========      ========     ========     ========
</Table>

---------------

* After eliminating intra-group transactions between segments.

                                       S-5
<PAGE>

                                                                    SCHEDULE III

                                 ALLIANZ GROUP

                      SUPPLEMENTARY INSURANCE INFORMATION*
                        DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                                 BENEFITS     AMORTIZATION
                                                 CLAIMS,      OF DEFERRED
                                                LOSSES AND       POLICY         OTHER
                                  INVESTMENT    SETTLEMENT    ACQUISITION     OPERATING    PREMIUMS
                                    INCOME       EXPENSES        COSTS        EXPENSES     WRITTEN
                                     NET           NET            NET            NET         NET
                                    E(MN)         E(MN)          E(MN)          E(MN)       E(MN)
                                  ----------    ----------    ------------    ---------    --------
<S>                               <C>           <C>           <C>             <C>          <C>
At and for the year ended
  December 31, 2001:
Life/Health.....................      7,981        22,679         2,523          2,772       18,960
Property-Casualty...............      6,707        27,475         4,983          8,495       34,790
                                   --------      --------       -------       --------     --------
          Total.................     14,688        50,154         7,506         11,267       53,750
                                   ========      ========       =======       ========     ========
At and for the year ended
  December 31, 2000:
Life/Health.....................     13,541        27,092         2,056          3,436       19,080
Property-Casualty...............      7,777        24,646         5,228          6,585       31,178
                                   --------      --------       -------       --------     --------
          Total.................     21,318        51,738         7,284         10,021       50,258
                                   ========      ========       =======       ========     ========
At and for the year ended
  December 31, 1999:
Life/Health.....................     12,787        25,049         1,677          3,054       17,297
Property-Casualty...............      7,457        23,282         4,642          6,541       29,462
                                   --------      --------       -------       --------     --------
          Total.................     20,244        48,331         6,319          9,595       46,759
                                   ========      ========       =======       ========     ========
</Table>

---------------

* After eliminating intra-group transactions between segments.

                                       S-6
<PAGE>

                                                                     SCHEDULE IV

                                 ALLIANZ GROUP

                     SUPPLEMENTARY REINSURANCE INFORMATION*
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<Table>
<Caption>
                                   DIRECT      CEDED TO      ASSUMED
                                    GROSS        OTHER      FROM OTHER       NET       AMOUNT
                                   AMOUNT      COMPANIES    COMPANIES      AMOUNT      ASSUMED
                                    E(MN)        E(MN)        E(MN)         E(MN)      TO NET
                                  ---------    ---------    ----------    ---------    -------
<S>                               <C>          <C>          <C>           <C>          <C>
2001:
Life insurance in force.........    352,535      (32,261)      98,502       418,776     23.52%
                                  =========    =========     ========     =========
Premiums earned:
  Life/Health insurance(1)......     19,375       (1,169)         773        18,979      4.07%
  Property-Casualty insurance,
     including title
     insurance(2)...............     32,626       (6,668)       7,808        33,766     23.12%
                                  ---------    ---------     --------     ---------
          Total premiums........     52,001       (7,837)       8,581        52,745     16.27%
                                  =========    =========     ========     =========
2000:
Life insurance in force.........    354,204      (31,406)      98,968       421,766     23.47%
                                  =========    =========     ========     =========
Premiums earned:
  Life/Health insurance(1)......     20,202       (1,125)          --        19,077      0.00%
  Property-Casualty insurance,
     including title
     insurance(2)...............     37,329       (6,499)          --        30,830      0.00%
                                  ---------    ---------     --------     ---------
          Total premiums........     57,531       (7,624)          --        49,907      0.00%
                                  =========    =========     ========     =========
1999:
Life insurance in force.........    296,018      (34,874)      98,325       359,468     27.35%
                                  =========    =========     ========     =========
Premiums earned:
  Life/Health insurance(1)......     18,206       (1,147)          --        17,059      0.00%
  Property-Casualty insurance,
     including title
     insurance(2)...............     35,214       (6,091)          --        29,123      0.00%
                                  ---------    ---------     --------     ---------
          Total premiums........     53,420       (7,238)          --        46,182      0.00%
                                  =========    =========     ========     =========
</Table>

---------------

(1)Life/Health have been combined for this schedule.

(2) Title insurance has been combined with Property-Casualty insurance.

  * After eliminating intra-group transactions between segments.

                                       S-7
<PAGE>

                                   SIGNATURES

     The registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused and authorized the undersigned to sign this
annual report on its behalf.

                                       ALLIANZ AKTIENGESELLSCHAFT

                                       By: /s/ Helmut Perlet
                                         ---------------------------------------
                                           Name: Dr. Helmut Perlet
                                           Title: Member of the Management Board

                                           /s/ Stephan Theissing
                                         ---------------------------------------
                                           Name: Stephan Theissing
                                           Title:Prokurist and Head of Corporate
                                                 Finance

Date: June 25, 2002
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER                              DOCUMENT
-------                             --------
<C>       <S>
  1.1     Articles of Association
  4.1     Principles of Cooperation between Allianz AG and Munich Re,
          dated May 2000*
  4.2     Letter of Intent between Allianz AG and Munich Re, dated May
          4, 2000**
  4.3     Agreement in Principle between Allianz AG and Munich Re,
          dated April 4, 2001***
  4.4     Basic Agreement between Allianz AG and Dresdner Bank, dated
          March 31, 2001****
  4.5     Supplement to Principles of Cooperation between Allianz AG
          and Munich Re, dated December 2001
  8.1     List of subsidiaries
 10.1     Consent of KPMG Deutsche Treuhand-Gesellschaft
          Aktiengesellschaft Wirtschaftsprufungsgesellschaft
</Table>

---------------
    *Incorporated by reference to Exhibit 3.1 to the Registrant's Registration
     Statement on Form 20-F (File No. 1-15154).

  **Incorporated by reference to Exhibit 3.2 to the Registrant's Registration
    Statement on Form 20-F (File No. 1-15154).

 ***Incorporated by reference to Exhibit 4.3 to the Registrant's Annual Report
    on Form 20-F for the year ended December 31, 2000.

****Incorporated by reference to Exhibit 4.4 to the Registrant's Annual Report
    on Form 20-F for the year ended December 31, 2000.
<PAGE>

                      [THIS PAGE INTENTIONALLY LEFT BLANK]