The Allianz Group has entered into call options on Allianz AG stock to hedge its future obligations under the SAR plans. See Note 41 for further information.
_ issuing one Allianz AG share, or other equivalent equity instruments, per
RSUs may be exercised before the end of the vesting period when an
The total compensation expense related to the RSU plan is calculated as the amount of the quoted Allianz AG share price and is remeasured at each reporting period based on changes in the Allianz AG share price and is accrued over the five-year vesting period. As of December 31, 2004, the total compensation expense related to the 1,244,412 (2003: 541,394)
was established on December 31, 2004, and reported in other accrued liabilities, with a corresponding ¤18 mn (2003: ¤6 mn) of compensation expense recognized in 2004.
When acquiring PIMCO Advisors L.P. (subsequently renamed Allianz Global Investors LP) during the year ended December 31, 2000, Allianz AG
(the “Class B Plan”) for the benefit of members of the management of
Plan, participants acquired Class B equity units annually through 2004 for a total of 150,000 units. The holders of the Class B units have rights to a 15 % priority claim on the adjusted operating profits of PIMCO LLC.
The Class B equity units issued under the Class B Plan vest over three to five years and are subject to repurchase by Allianz Global Investors LP
to repurchase, a portion of the vested Class B equity units each year. At the repurchase date, the repurchase price will be based upon the determined value of the Class B equity units being repurchased.
During the year ending December 31, 2004, plan participants acquired 30,000 (2003: 35,375; 2002: 30,000) Class B equity units. In accordance with the provisions of SFAS 123, the value, as of grant date, of the Class B
equity units issued during the year ending December 31, 2004, was determined by the Allianz Group to be ¤253 mn (2003: ¤235 mn; 2002: ¤178 mn). The total number of Class B equity units held by plan participants as of December 31, 2004, was 145,305 (2003: 120,000). Compensation expense of ¤189 mn was recognized during the year ended December 31, 2004 (2003: ¤172 mn; 2002: ¤95 mn) related to the Class B Plan.
The AGF Group has awarded stock purchase options on AGF shares to eligible AGF Group executives and managers of subsidiaries, as well as to certain employees, whose performance justified grants. The primary objective of the stock option plan is to encourage the retention of key personnel of AGF Group and to link their compensation to the performance of AGF Group. These options are independent of the remuneration plans of the Allianz Group.
Grant date Vesting period RSUs granted RSUs RSUs years forfeited exercised
The AGF Group’s stock options granted, exercised and expired/forfeited as of December 31, 2004: Date Granted Vesting Options Options Options period granted exercised expired/ years forfeited
The AGF Group’s stock option activity during the periods indicated was as follows: Number of Weighted AGF Options Average Exercise Price
The following table summarizes information about the AGF Group’s stock op tions outstanding and exercisable as of December 31, 2004: Options Outstanding Options Exercisable
The AGF Group recorded compensation expense of ¤16 mn during the year ended December 31, 2004 (2003: ¤15 mn) related to these stock option awards.
The RAS Group has awarded eligible members of senior management with stock purchase options on RAS ordinary shares. Under these plans, options have been granted annually on January 31. Each of these award grants is subject to a vesting period of 18 months to 2 years and the options expire after a period of 6.5 to 7 years after the grant date.
The RAS Group’s stock options granted, exercised and expired/forfeited as of December 31, 2004: Date Granted Vesting Options Options Options period granted exercised expired/ years forfeited
The following table provides the weighted-average fair value of options granted as of the grant date and the assumptions used in calculating their fair value by application of the Black-Scholes option pricing model.
The average remaining period until expiration of the 2,261,000 (2003: 2,207,000) options still outstanding as of December 31, 2004, was 4.9 options were exercisable which had a weighted average exercise price of
Compensation of the Management Board As of December 31, 2004, the Management Board had 10 (2003: 11)
Compensation of the Management Board includes the basic salary as a fixed component as well as an annual bonus and a medium-term 3-year bonus as variable components. Other components are stock appreciation rights (SAR) and restricted stock units (RSU) which are awarded.
A detailed description and individual breakdown of the compensation of the Management Board is provided in the Compensation Report on pages 16 to 19 of this Annual Report. Information about the components of the stock-based compensation is provided on pages 181 and 186 of this
Out of the total variable compensation, ¤16 mn relate to services rendered during 2004. Of this amount, ¤3.7 mn are allocations to the reserves for the three-year bonus (2003: ¤3.9 mn). Whether the amounts set aside are actually paid to the Members of the Management Board upon expiration of the 3-year period, depends on whether the objectives for the entire underlying three-year period have been reached.
granted. The intrinsic value of the rights granted in the reporting year stood at ¤11.4 mn at year-end. Of this total, ¤2.1 mn correspond to the intrinsic value of stock appreciation rights (SAR) granted and ¤9.3 mn to the intrinsic value of restricted stock units (RSU) granted.
Outstanding Group Equity Incentives are valued on a quarterly basis and posted on the Allianz Group website. In 2004, relating to equity-based compensation granted in 2004 and prior years, an amount of ¤5.4 mn
Income-equivalent ancillary benefits vary with the function and position of the recipient and are subject to personal income tax. They essentially include insurance coverage generally granted in the industry and the use of a company car. In the reporting year, ¤0.3 mn (2003: ¤0.2 mn) were granted in income-equivalent benefits in kind.
The members of the Management Board are either not receiving remuneration from mandates at Group companies or the remuneration paid to members of the Board of Management from such mandates is turned over to the company in full.
At December 31, 2004, the reserve for current pensions and future pensions for former members of the Management Board and their surviving dependents was ¤36.5 mn (2003: ¤39.8 mn).
This body has 20 members, 10 of which are elected by the shareholders and ten by the employees.
Eggert-Lehmann was paid ¤45,000, Peter Haimerl was paid ¤61,875, Sultan Salam was paid ¤45,000, Margit Schoffer was paid ¤33,750 and Dr.
On January 12, 2005, Regina Verwaltungsgesellschaft, comprising the Allianz Group, Munich Re and Commerzbank, sold its 24.2 % shareholdings of MAN at ¤29 per share, totaling approximately ¤1 bn, to institutional investors primarily within Germany and the United Kingdom.
(or „Basket Index Tracking Equity-linked Securities“), is linked to the performance of the DAX Index and was issued at a DAX-reference level of 4,205.115. During the three-year term of this instrument, the Allianz
Group may choose to redeem the bond with shares of BMW AG, Munich
_ Reduction of non-strategic assets by Dresdner Bank: Dresdner Bank accomplished a further step in its strategy of reducing its non-strategic equity holdings. Dresdner Bank sold 17,155,008 Allianz AG shares at
DEUTSCHER INVESTMENT-TRUST Gesellschaft für Wertpapieranlagen mbH, Frankfurt am Main 101 100.0
Vereinte Spezial Versicherung AG, Munich 45 100.0 1) Percentage includes equity participations held by dependent enterprises in full, even if the Allianz Group’s share in the dependent enterprise is under 100 %.
Allianz Subalpina Società di Assicurazioni e Riassicurazioni S. p. A., Turin 252 97.9
A L L I A N Z G R O U P 191
Russian People’s Insurance Society „Rosno“, Moskow 55 45.7 1) 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 or not. The presented associated enterprises represent 90 % of total carrying amount of investments in associated enterprises.
2) Including shares held by dependent subsidiaries. 3) Voting rights below 50.0 % 4) (Only) significant influence
¤ mn % ¤ mn ¤ mn date mg technologies ag, Frankfurt am Main 171 10.1 1,705 (198 ) 12/31/2003
Associated or other non-consolidated asset management companies hold the following shareholdings in the listed companies shown below.
(HRB 7158) and published on our website together with the documentation for the Annual General Meeting.
We have audited the consolidated financial statements, comprising the balance sheet, the income statement and the statements of changes in shareholders’ equity and cash flows as well as the notes to the financial statements prepared by Allianz Aktiengesellschaft, Munich, for the business year from January 1 to December 31, 2004. The preparation and the content of the consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
Institut der Wirtschaftsprüfer (IDW, Institute of Independent Auditors), and in supplementary compliance with Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit such that it can be assessed with reasonable assurance whether the consolidated financial statements are free of material misstatements. Knowledge of the business activities and the economic and legal environment of the Group and the evaluations of possible misstatements are taken into account in the determination of audit procedures.
In our opinion, the consolidated financial statements give a true and fair view of the net assets, financial position, results of operations and cash flows of the Group for the business year in accordance with International
Prof. Dr. h. c. Hans-Olaf Henkel President Wissenschaftsgemeinschaft Gottfried Wilhelm Leibniz e. V.
Dr. Hartmut Mehdorn Chairman of the Board of Management Deutsche Bahn AG
Dr. h. c. Rudolf Rupprecht Former Chairman of the Board of Management MAN Aktiengesellschaft
Prof. Dr. Dr. h. c. Horst Siebert until December 31, 2004
Dr. h. c. Heinrich Weiss Chairman of the Board of Management SMS GmbH
Belmiro de Azevedo Presidente Sonae S. G. P. S., S. A.
Dr. Marco Tronchetti Provera Chairman and CEO Pirelli S. p. A.
Lord Vallance of Tummel Vice Chairman The Royal Bank of Scotland Group plc
Axel Springer AG, Deutsche Lufthansa AG, E.ON AG, E.ON Ruhrgas AG,
BASF AG, Infineon Technologies AG (since January 25, 2005), MAN AG
Crédit Commercial de France, Essilor S. A., Sanofi-Aventis S. A., Thomson
Dr. Albrecht E. H. Schäfer from May 5, 2004 until May 4, 2005
As of December 31, 2004 or (with members who resigned) day of resignation *) We regard memberships in other supervisory bodies as ”comparable“, if the company is listed on a stock exchange or has more than 500 employees.
President ), Riunione Adriatica di Sicurtà S. p. A. (Vice President )
Membership in Group bodies Allianz Global Investors AG, Allianz Immobilien GmbH (Chairman)
Banco Popular Español S. A., Banco Portugues de Investimento S. A.
(Chairman), T. U. Allianz Polska S. A. (Chairman), T. U. Allianz Zycie
The accounting terms explained here are intended to help the reader understand this Annual Report. Most of these terms concern the balance sheet or the income statement. Terminology relating to particular segments of the insurance or banking business has not been included.
Assets under management The total of all investments, valued at current market value, which the
Capital relating to participating certificates Amount payable on redemption of participating certificates issued. The participating certificates of Allianz AG carry distribution rights based on the dividends paid, and subscription rights when the capital stock is increased; but they carry no voting rights, no rights to participate in any proceeds of liquidation, and no rights to be converted into shares.
Deferred acquisition costs Expenses of an insurance company which are incurred in connection with the acquisition of new insurance policies or the renewal of existing policies.
Defined benefit plans Under defined benefit plans, the enterprise or an external pension fund pledges to pay the beneficiary a benefit at a particular level; unlike the defined contribution plans, the level of the contributions payable by the enterprise are not fixed from the start. To determine the expense over the period, accounting regulations require that actuarial calculations are carried out according to fixed set of rules.
This effectively releases the enterprise from any further obligations beyond the contributions payable and at the same time precludes the enterprise from participating in the investment success of the contributions.
Fair value The amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Market value The amount obtainable from the sale of an investment in an active market.
Minority interests in earnings That part of net earnings for the year which is not attributable to the
Premiums written/earned Premiums written represent all premium revenues in the year under review. Premiums earned represent that part of the premiums written used to provide insurance coverage in that year. In the case of life insurance products where the policyholder carries the investment risk (e.g. variable annuities), only that part of the premiums used to cover the risk insured and costs involved is treated as premium income.
Reinsurance Where an insurer transfers part of the risk which he has assumed to another insurer.
Repurchase and reverse repurchase agreements A repurchase (“repo”) transaction involves the sale of securities by the
Securities held-to-maturity Securities held-to-maturity comprise debt securities held with the intent and ability that they will be held-to-maturity. They are valued at amortized cost.
(essentially derivatives, note loans und precious metals holding) which have been acquired solely for sale in the near term. They are shown in the balance sheet at fair value.
Allianz AG 46, 54 Allianz Australia 56 Allianz Cornhill 49 Allianz Global Investors 77–81 Allianz Global Risks Re 58 Allianz Global Risks U.S. 54 Allianz Leben 63-64 Allianz Life of North America 68 Allianz Marine & Aviation 59 Allianz Private Krankenversicherung 63, 64 Allianz Risk Transfer 50, 51 Allianz Seguros 51, 66 Allianz AG shares 31 Allianz Suisse 50, 66 Annual General Meeting 13, 29
Combined ratio 35, 42 Corporate culture 4 Corporate Governance 8, 12–15 Creation of Value 24–25 Crédit Lyonnais 47 Currencies 37 Customer orientation 23 Czech Republic 35
E Earnings per share 40 Economic Value Added (EVA®) 24-25, 28, 95 eLearning 95 Employees 94–95 Equity quota 2 Equity remuneration plans 16–18 Euler Hermes 57
Remuneration 95 Remuneration of the Supervisory Board 18–19 Return on equity 22, 25 Risk capital 25, 88 Risk management 29, 87–93 Russia 23
Liabilities to banks and customers ¤ bn 349 4.7 333 285 313 15 14 16
Return on equity after taxes % 7.4 (0.1) % pt 7.5 (5.6) 4.7 10.6 8.5 9.8
Share price at year-end3) ¤ 97.6 (2.5) 100.1 80.8 237.1 355.3 297.7 282.1
Market capitalization at year-end4) ¤ bn 35.9 (2.2) 36.7 22.0 64.2 98.0 81.8 77.6