Deutschland AG. In this context, the Board of Management also informed us about the merger of the Allianz Group companies
Banking. The objective of winning 300,000 new Dresdner Bank customers through the Allianz distribution organisation was even exceeded.
We were continuously involved in the further development of the corporate governance standards in the Company. Allianz AG is complying with all the recommendations of the German Corporate
Group companies for their great personal effort and commitment in the past year.
Supervisory Board and passes resolutions granting discharge to the Board of Management and the Supervisory Board. It decides on the appropriation of earnings, capital measures, approval of agreements between business enterprises, remuneration of the
For the reporting year, both merit-based remuneration components reached € 24,000, because corporate earnings per share rose by more than 16 % in 2005, and by more than 40 % between
The Sarbanes-Oxley Act (SOA) of 2002 in particular has a significant effect on our corporate governance. We have worked intensively also in the past year on the implementation of Section 404 of the SOA. This rule compels companies to document fully their financial reporting internal control system and to verify its effectiveness annually. Like most comparable companies, we have expended considerable resources in complying with these requirements. However, intensively examining and documenting the financial reporting control systems in this way also provides an opportunity to identify and remedy any weak points. For fiscal year 2006, for the first time, according to the rules of the U.S.
We steer our activities based on the following questions: How can we meet or surpass the expectation of our costumers, based on our products, customer service, and advisory services, so that we become costumers first choice?
What do we mean when we talk about the creation of value?
of its loan portfolio. The largest credit exposures to borrowers in Germany are loans to private individuals (including self-employed professionals ) at 58.2 %; this category represented 38.5 % of Dresdner
The particular distribution channels we use vary by product and geographic market. In Europe and the United States, AGI
Operating profit grew by 32.4 % to € 1.1 billion, thereby significantly surpassing our 2005 target. Commensurate with this development, we succeeded in consistently reducing our cost-income ratio2) during the course of 2005 to 58.5 %, a marked improvement of 4.4 percentage points. These achievements demonstrate our strong market position and attest to our superior performance as the overwhelming majority of the third-party assets we manage outperformed their respective benchmarks in 2005.
The following table sets forth the total revenues, operating profit and net income for each of our business segments for the years ended December 2005, 2004 and 2003, as well as consolidated net income of the Allianz Group1).
RAS Merger/European Company (SE)” for further information on the contemplated merger of RAS with and into Allianz AG.
In 2005, total assets increased by € 7.6 billion (0.8 %), while total liabilities decreased by € 1.8 billion (0.2 %). Increases within our total assets were primarily experienced within cash and cash equivalents due to our strong operating cash flow, as well as investments, where balances rose by € 16.0 billion (102.5 %) and € 34.6 billion (13.9 %), respectively. These increases were offset in part by declines predominantly in loans and advances to banks of € 30.2 billion (16.6 %). Additionally, investments in associated enterprises and joint ventures declined by € 3.7 billion (63.6 %).
At December 31, 2005 At December 31, 2004 (Total: ¤266.9 billion)1) (Total: ¤236.9 billion)1)
Allianz Group’s consolidated total revenues, operating profit and net income for the years ended December 31, 2004 and 2003.
Fund”) in the United States, increases across all lines of business were achieved, namely in our personal, commercial and specialty lines with a constant focus on disciplined underwriting and increased sales effectiveness in our chosen markets. In Switzerland, growth was driven primarily by Allianz Risk Transfer (or “ART”).
Further increases, albeit to a lesser degree, were also experienced in South America, Spain and Italy with gross premiums written increasing by 19.5 % (€ 117 million), 6.2 % (€ 110 million) and 1.9 % (€ 98 million), respectively. The growth in South America, specifically from AGF Seguros in Brazil, stemmed from, among other factors, our motor business as a result of increased sales of new cars. The beneficial development in Spain at Allianz Seguros was driven by all lines of business, namely our motor, personal and industrial lines. In Italy, the increase in gross premiums written at
In the United States, we are represented by Allianz Life, which contributed € 11.1 billion, or 23 %, to our total statutory premiums in 2005 and is the market leader in equity-indexed annuities, with approximately one-third of the market share based on statutory premiums in 20056). Allianz Life holds a 12 % share of the overall fixed annuity market and also maintains a 3 % market share of the large variable annuity market based on statutory premiums in 20056). Its smaller but growing lines of business include individual life, long-term care, and health excess of loss insurance. We believe Allianz Life is well positioned for the expected growth in demand for retirement income & longevity protection.
DrKW’s net trading income increased significantly, driven primarily by strong client and customer business.
increased significantly to € 1,003 million, including a tax-exempt gain of € 343 million from the transfer of 5 % of Dresdner
Commerzbank AG and of the majority of our real estate portfolio in 4Q 2005, largely of which was subsequently leased back.
The absence of significant and the elimination of goodwill amortization (2004: charge of € 244 million)
the Allianz Group by geographic region, investment category and investor class at December 31 for the years indicated.
The exchange ratio for the remaining RAS shares is 3 Allianz
European insurance market after Germany. The Allianz Group is represented in Italy by RAS and Lloyd Adriatico. Taken together,
Group Finance Committee, which is comprised of the members of the Board of Management of Allianz AG, delegates broad decision -making authority to the regional Finance Committees, which monitor the activities in their respective regions or countries.
In addition, Group Risk Control ensures that the risk governance principles of the Allianz Group are fully adhered to and further develops these principles. Group Risk Control is also responsible for the centralized monitoring of accumulation risk over all business
(such as raw materials); Possible losses caused by the inability to pay or a downgrade in the credit rating of debtors or counterparties; Unexpected financial losses from the sale of insurance protection; and
In individual cases, we use derivative financial instruments to hedge against price risks, credit risks and risks associated with interest rate changes. We include derivative risks within our investment and monitoring guidelines, which, in our insurance segments, are based on the stricter regulations imposed by supervisory authorities for banks.
2005 was characterized by a large number of violent hurricanes in the Atlantic Ocean. The three largest hurricanes, Katrina,
At December 31, 2005, approximately 87 % of overall limits in the trading and banking portfolios of Dresdner Bank were included in rating classes I to VI, compared to 86 % at December 31, 2004. Furthermore, approximately 13 % were included in rating classes VII to XVI (2004: 14 %). Dresdner Bank’s trading business represented 70 % of the overall limits and approximately 86 %
Decisions as to which operating entities should receive additional capital, including the amount thereof, or whether capital should rather be withdrawn, are taken by the Board of Management of
lines (or “Basle Accord”) promulgated by the Basle Committee on Banking Supervision (or “BIS-rules”) and therefore calculates and reports under such guidelines to the German Federal Financial Supervisory Authority (the Bundesanstalt für Finanzdienstleistungsaufsicht, or “BaFin”) and the Deutsche Bundesbank, the
The principal sources of liquidity for our operating activities within our insurance operations include primary and reinsurance premiums collected (primarily from our operating entities), collected reinsurance receivables, as well as investment income and proceeds generated from the sale of investments. Our major uses of funds within our insurance operations include paying propertycasualty claims and related claims expenses, providing life policy
Allianz AG refinanced part of its 2005 € 2.7 billion maturing bonds through the issuance of a subordinated bond in the amount of € 1.4 billion. The subordinated bond bears a coupon of 4.375 % for the first twelve years and was issued at a price of 98.923 %, yielding 4.493 %. While this is a perpetual bond, it is callable by Allianz AG for the first time in 2017. Attached to the bond are 11.2 million warrants on
AG shares at € 88.75 per share to an investment bank, which placed these shares in the form of a Mandatory Exchangeable.
In March 2006, Allianz Finance II B.V. issued € 800 million of subordinated perpetual bonds, guaranteed by Allianz AG, with a coupon rate of 5.375 %. Allianz Finance II B.V. has the right to call the bonds after five years.
are nearing retirement age. While this transition will occur in the
Foundation, the Allianz Cultural Foundation, the Allianz Foundation of North America and Allianz Direct Help. Our subsidiaries also hold the Jürgen-Ponto-Stiftung, RAS Fondazione Umana