Market capitalization at year end ¤ bn 64.2 – 34.5 98.0 19.8 81.8 18
Investments held on account and at risk of life insurance policy holders 24.7 22.8
_ Net income for the year amounted to 1.6 billion euros, more than 1.0 billion euros less than originally planned.
O V E R A L L B U S I N E S S D E V E L O P M E N T
”History”, he said, ”is the sum of all the events that could not be prevented.” How true. We could easily have done without many of the disturbances that upset the world and our industry in 2001 above all, the horrible terrorist attack on the World Trade Center, the symbol of a free and prosperous world economy.
Despite continued intensive efforts on the part of our nearly 180,000 employees as well as our agents and cooperation partners, all of whom have earned my sincere thanks for their unremitting efforts, our net income amounted to only 1.6 billion euros – a solid billion euros less than planned. Following excellent performance in the year 2000, Allianz shares lost 33 percent of their value in the course of the reporting year.
You might ask yourself whether a company that is already generating revenues of over 80 billion euros, 75 billion of which derive from insurance activities alone, can continue to grow profitably? My answer is an unqualified yes. Size does not necessarily lead to inflexibility or a loss of forward momentum. We think and act in global dimensions, but we essentially work at the local level. Our companies, which operate in vastly disparate markets, know and understand their customers; they realize what they have to do to become even leaner, faster and more customer-focused and they know that they can rely on the global resources of the entire Group to support this ongoing process of improvement. This proven approach to our business will help us continue to tap many new sources of further growth and greater efficiency in the future.
We are also focusing our attention on expanding and networking our core activities to create integrated financial services. The acquisition of Dresdner Bank, the largest in the history of Allianz, was a salient example last year. This major corporate milestone not only made your company larger but also enabled Allianz to assume a new quality. Together with Dresdner Bank,
In the year under review, we have come a long way, and you can read about it beginning on page 32 of this Annual Report. But we still have a lot to do. That is why the year 2002 will, more than anything else, be a year of consolidation. In this context, we will concentrate on three major projects. First of all, we will energetically pursue our efforts to integrate Dresdner
Please give us your continued trust. My colleagues and I have every confidence that we will earn this trust with reports on good entrepreneurial progress and significantly better results in a year's time.
L E O N H A R D H. F I S C H E R
H E R B E RT H A N S M E Y E R
D R. H O R S T M Ü L L E R
D R. G E R H A R D R U P P R E C H T
Acquisition and integration of Dresdner Bank The acquisition of Dresdner Bank was the major topic of discussion at the meetings of the Supervisory Board in the course of the year. This extremely complex transaction, which took the form of a public takeover offer, was completed as planned on July 23, 2001. Expeditious integration of Dresdner Bank and its subsidiaries into the Allianz Group now counts among the company’s most urgent priorities. As a result, we dealt in-depth with the measures involved in the integration process. The Board of Management kept us informed on the current situation, and we were able to ascertain that rapid progress is being made.
In particular, we received a detailed presentation of the new organization of the asset management division and the model for a single integrated marketing strategy in Germany. We were also provided with in-depth information on activities involved in restructuring of divisions of Dresdner Bank and measures taken to improve earning performance. We received a separate report on the newly formed Corporates & Markets division, which regroups Dresdner Bank’s corporate client and investment banking activities .
At the Allianz AG level, a Group Center was established to provide the holding company’s
The Group Center’s chief activities include definition of strategic goals and operational guidelines for the group.
Corporate Governance The Supervisory Board welcomed the recently adopted German Corporate Governance Code. Many of the standards for the proper and responsible management and supervision of a company set forth in this code have long been part of everyday business practice at Allianz. We will consider additional recommendations that concern the Supervisory Board in the near future. However, we reserve the right not to implement certain recommendations if there are good reasons not to do so.
Committee meetings The members of the Supervisory Board formed a Standing Committee, an Executive Committee and a Mediation Committee in compliance with the German Codetermination Act. A total of four meetings were held in the course of the year under review, at which the members of the Standing Committee dealt primarily with capital measures taken by the company, other projects requiring approval and appointment of the auditors for the annual financial statements. The Executive Committee, which is responsible for human resources issues, met three times in the course of the year. There was no need for the Mediation Committee to meet.
Bank into the Allianz Group. Employee representatives Karl Miller, Klaus Carlin, Reiner Lembke and Gerhard Renner resigned from the Supervisory Board. Mr. Miller was succeeded by
Mr. Horst Meyer as his elected substitute. Mr. Frank Ley was elected as the new Deputy Chairman of the Supervisory Board. Messrs. Hinrich Feddersen, Peter Haimerl and Uwe Plucinski were appointed by the court to replace Messrs. Carlin, Lembke and Renner on the Supervisory Board. On the shareholder side, Dr. Karl-Herrmann Baumann left the Supervisory Board on September 30, 2001. The Court of Registry appointed Dr. Gerhard Cromme as his successor. This appointment is to be confirmed by the Annual General Meeting on June 12, 2002.
Dr. Alfons Titzrath and Dr. Albrecht Schmidt resigned from their positions as shareholder representatives on the Supervisory Board effective as of the end of the Annual General Meeting on June 12, 2002. The Supervisory Board proposes that the Annual General Meeting elect
We have expressed our thanks to the former members of the Supervisory Board members for their valuable contribution to our work.
Mr. Herbert Hansmeyer, who was responsible for North and South America, retired from the Board of Management on December 31, 2001, and Mr. Michael Diekmann has assumed his functions. We have expressed our thanks to Mr. Hansmeyer for his many years of successful service. Dr. Werner Zedelius was appointed to the Board of Management effective January 1, 2002, and is now responsible for Growth Markets.
The Supervisory Board would like to take this opportunity to express its gratitude to all the employees of the individual Group companies for their efforts and motivation. The continued success of the Allianz Group is attributable to a large extent to their commitment.
D R . A L F O N S T I T Z R A T H Member of the Supervisory Board, Dresdner Bank AG, Deputy Chairman, until June 12, 2002
J Ü R G E N D O R M A N N Chairman of the Board of Management, Aventis S. A.
P E T E R H A I M E R L Employee, Dresdner Bank AG, since September 6, 2001
P R O F E S S O R D R . R U D O L F H I C K E L University Professor
H O R S T M E Y E R Employee, Hermes Kreditversicherungs-AG, since July 12, 2001
T H E A L L I A N Z S H A R E (incl. Financial Calendar) 16
C O R P O R A T E R E S P O N S I B I L I T Y 26
E C O N O M I C E N V I R O N M E N T 84
Dr. Henning Schulte-Noelle, this body discusses overall strategic issues at Group level.
B E R N D FA H R H O L Z Dresdner Bank, Frankfurt/Main
J O A C H I M FA B E R Allianz AG, Munich
M I C H A E L D I E K M A N N Allianz AG, Munich
H E L M U T P E R L E T Allianz AG, Munich
H O R S T M Ü L L E R Dresdner Bank, Frankfurt/Main
Allianz is one of the leading global service providers in insurance, banking and asset management.
The solidity, service and competence of our Group are backed by the commitment of our 179,946 employees worldwide.
■ Eurovida, S. A. Compañía de Seguros y Reaseguros S. A.
The takeover and integration of Dresdner Bank follows our decision to enlarge the Allianz
Our strategic objectives and our priorities reflect our commitment to making full use of the tremendous business opportunities brought about by this profound transformation of our markets. In this process, we are guided by five long-term business principles: 1. We believe that we can best serve our shareholders by giving priority to our clients.
Allianz stands for profitable growth. The global financial services market in which we operate changes with extraordinary speed. We shape this change through our strategies and our entrepreneurial decisions.
_ exploiting high-growth market opportunities by leveraging our traditional risk management 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.
In 2001, insurance stocks lagged behind general market indices. This is shown by the Dow
The downturn in 2001 is primarily attributable to the terrorist attack of September 11.
After this attack, airline and insurance stocks in particular came under heavy pressure. The
Allianz share suffered the same fate, because, as an insurer, we were directly affected by the attack on New York City. Losses amounting to 1.5 billion euros have impacted our balance sheet. Another determining factor for the Allianz share price was the traditionally high percentage of stocks in our investment portfolio. As capital markets deteriorated, the market value of these holdings depreciated considerably. The combination of these factors drove our share price down by 33.3 percent over the course of the year.
The economic downturn in the U.S. and the September 11 terrorist attack took their toll on the stock market in 2001. In this difficult environment, the Allianz share price fell by 33.3 percent – more than the DAX and Dow Jones EURO STOXX 50 indices. Although our market capitalization dropped from approximately 98 billion euros to 64 billion euros, Allianz is still one of the most highly valued corporations in Europe. We increased the free float of our shares to 64 percent. At present, Allianz has approximately 440,000 shareholders.
The following table shows that over the entire ten-year period, the value of the Allianz portfolio increased more than threefold.
Period of investment in years since December 31, 1991, in ¤ 1,000
With a market capitalization of 64 billion euros, Allianz is one of the most highly valued corporations in Europe. Our share is included in all the major European indices: DAX and Dow
Jones EURO STOXX 50, MSCI Europe and FTSE Eurotop 100. It is also used in calculating the MSCI World Index. We were particularly pleased to have been included in the Dow Jones
Sustainability Index as of September 2001. This index only lists companies that have demonstrated outstanding corporate strategy in their respective industries in regard to sustainability in economic, ecological and social parameters (see page 26 of this Annual Report for additional information).
Our earnings actually amounted to 1.6 billion euros. Based on an average of 243.6 million shares (not including treasury shares), this results in earnings per share (EPS) of 6.66 euros, a decrease of 52.8 percent from the previous year. For 2002, we are striving to produce earnings exceeding 3 billion euros.
Although our earnings were lower than expected because of the unforeseen terrorist attack, we propose to distribute a dividend of 1.50 euros per share to our shareholders for the year 2001. This means that the dividend remains at the same level as the previous year, after six successive increases, beginning in 1995. For the first time, the dividend paid in 2002 to shareholders taxable in Germany is taxed according to the “half-income” taxation method. This method eliminates the corporate tax credit but investors have to pay taxes only on 50 percent of the total dividend.
In the course of the transactions resulting in the takeover of Dresdner Bank, we succeeded in considerably increasing the free float of our shares, from 58 to 64 percent. After completion of the forward sales agreed upon in this context, Munich Re – to name but one example –
now only holds an interest of some 20 percent in Allianz. Prior to this transaction, its holdings had amounted to 25 percent. A higher free float percentage increases the liquidity of our share and should further increase the weighting of Allianz in major indices, which will improve our stock market performance. Allianz shares owned by Dresdner Bank are offset against the Group’s retained earnings reserves.
Source: Publications of shareholders (long-term investments), Allianz AG share register (free float)
The higher free float also increased average trade volumes. Approximately 1 million Allianz shares are traded daily on the electronic trading system Xetra – an increase of 65 percent over the previous year. At present, almost one third of our share certificates are held by investors outside of Germany.
Since November 3, 2000, Allianz shares have also been traded on the New York Stock Exchange in the form of American Depository Receipts (ADR). Ten ADRs are the equivalent of one Allianz share.
(EVA) as the key indicator for measuring our business success. For more information on this subject, see page 136 of this Annual Report.
As an additional incentive for increasing Allianz market capitalization, our “Long-Term Incentive Plan” provides top-level management with a variable remuneration plan based on the allocation of stock appreciation rights. The amount allocated to each recipient is also linked to the EVA achieved. In addition, we consider the extent to which individual targets have been reached.
Share price increase in the year (excluding dividend) % – 33.3 19.3 5.5
The stock appreciation rights are issued over a seven-year term. They can be exercised for the first time after a period of two years, provided that our share price: _ outperforms the Dow Jones EURO STOXX Price Index (600) on each of at least five consecutive trading days and,
_ has increased at least 20 percent since issue of the stock appreciation rights.
In 2001, a total of 500 senior managers participated in the long-term incentive plan, including top-level managers of Dresdner Bank.
Meeting of their corporation on the Internet. The address by Dr. Schulte-Noelle had already been transmitted live since the 1999 Annual General Meeting. Now, shareholders with Internet access can change their instructions online during the meeting, provided voting has not yet begun.
We organized several road shows in the world’s leading financial centers, including Frankfurt,
London, Edinburgh, Paris, Zurich, Boston and New York. In addition, we informed institutional investors in numerous individual talks about the significant business opportunities resulting from the takeover of Dresdner Bank. To keep private investors informed, we set up a telephone Infoline as well as a special section of our website. Our comprehensive Infobook provides information on important details of the bank takeover.
1. Bonds 6.0 % bond issued by Allianz Finance B. V., Amsterdam
Security identification no. 230 600 3.0 % bond issued by Allianz Finance B. V., Amsterdam
Security identification no. 830 806 2. Exchangeable bonds 3.0 % exchangeable bond issued by Allianz Finance B. V., Amsterdam
Security identification no. 197 280 2.0 % exchangeable bond issued by Allianz Finance B. V., Amsterdam
Exchange ratio Relevant DAX reference price divided by the relevant reference price of the shares selected
In January 2001, we issued an index-linked exchangeable bond with a volume of 2.0 billion euros. Its value is linked to the performance of the German stock index DAX. In addition, investors receive an annual outperformance premium amounting to 1.25 percent of the DAX
The issue was given the top ratings “AAA” and “Aaa” by the international rating agencies
In December 2001, we issued an exchangeable bond with a volume of 1.1 billion euros.
March 21, 2003 Analysts’ meeting on the 2002 fiscal year in Munich
March 24, 2003 Analysts’ meeting on the 2002 fiscal year in London
Our goal is to keep you up to date and to provide you with a comprehensive information service. Simply call us or submit your questions by mail. Our shareholder Infoline
(+49 1802 2554269) is available around the clock, seven days a week. Our Investor Relations
We would be pleased to send you our interim reports and other Allianz Group publications as well.
_ on the other hand, we consider sustainable development to be a benchmark of a company’s social commitment and sense of responsibility. Although the criteria for defining sustainable development have been the subject of dispute for quite some time, the financial market has in recent years produced a series of viable instruments for measuring sustainability.
New sustainability indices permit comparison and encourage companies to make greater efforts to achieving sustainable development. Our company is also included in these indices, and we were able to celebrate several successes in the year 2001. In July, our shares were listed in the FTSE4Good Europe 50 Sustainability Index of the “Financial Times”. Additionally, Allianz shares were included in the leading Dow Jones Sustainability Group Index as of September.
We are convinced that corporate responsibility, which embodies our view of what constitutes ethical behavior, cannot be limited exclusively to economic goals. This is why we focus on the triple bottom line, which is a voluntary commitment to attach equal importance to economic, ecological and social considerations. As a result, we are committed to the advancement of sustainability, corporate citizenship and corporate governance. Similarly, we are intensely concerned with the economic and social implications of our activities, and this involvement is reflected in our perception of our purpose of business.
What were the driving factors behind this success? Initially, a considerable number of individual initiatives had been undertaken at virtually all levels within the Allianz Group. The International Executive Committee (see page 10 of this annual report) then created a working group to prepare a company-wide report on sustainability strategy. The purpose of this project was to improve coordination of ongoing activities and encourage new initiatives. The sustainability strategy group now includes representatives of Allianz AG, AGF, Cornhill, Dresdner
The years 2000 and 2001 witnessed impressive progress, as is shown by the performance reflected in the ratings of the Dow Jones Sustainability Group Index, which is published by
_ Group companies such as AGF and RAS will introduce environmental management systems, as has already been done in Germany.
_ we are working on an international environmental audit system to quantify the Allianz
Group’s progress in various areas, including power and energy consumption, use of water and paper, CO2 emissions and waste as well as reductions in business travel.
_ we will continue to improve health insurance benefits and health care within the Group.
(forum for sustainable development of the German Industry Association) initiatives, we will help to propagate the idea of sustainability.
Corporate Citizenship Our corporate involvement focuses on the following six areas of activity: _ education and science, _ society and the economy, _ health care, _ culture, _ social issues, and _ environmental concerns.
Ultimately, what we want to achieve is a cross-issue network devoted to social involvement encompassing the various initiatives that are put in place. This kind of network can provide better support for individual projects and at the same time help to advance social issues in a more efficient manner.
Foundation, which was created in 1990, is active in Germany. The Allianz Culture Foundation began its work in the course of the reporting period. Its activities cover all of Europe but are not limited exclusively to the EU. A third foundation, which will concern itself with social issues, will be created in North America. The one thing these foundations all have in common is that their work is based upon a philosophy of sustainability.
In addition to these foundations, broad-based projects in the six areas of activity mentioned above also reflect the social involvement of Allianz. In order to generate support for the major projects to which we have grown attached, we enter into alliances with others, for example, with the Stiftungszentrum Kinderfonds, which helps private individuals and companies to create their own foundations free of charge. As a result, this project represents a host of various types of social involvement. At the same time, it underscores the four values upon which our own involvement is based: individual initiative, individual responsibility, solidarity and sustainability.
Allianz Environment Foundation Since its inception 12 years ago, the Allianz Environment
A total of nearly 31 million euros was allocated for this purpose, which means this foundation ranks among the most important private initiatives in the environmental area. Principally, the foundation supports projects that: _ feature exceptional innovative ideas, _ encourage imitation, and _ ideally, create employment.
The foundation’s primary areas of activity include conservation and protection of endangered species, improvement of waterway environments and the spectrum of issues subsumed by the term “green cities”. Additional mainstay activities include gardening and landscaping as well as environmental education.
For example, the foundation supported a series of projects in the area of renewable energy, including one that involved providing approximately 100 schools with solar power plants. This project was, of course, intended to demonstrate the ecological and economic advantages of renewable energy. More importantly however, it provides a concrete example that makes it possible to encourage environmental awareness and responsibility in the classroom. Further information concerning the Allianz Environment Foundation is available online at www.allianzumweltstiftung. de or by contacting the Allianz Environment Foundation at Maria-Theresia-
Strasse 4a, D-81675 Munich (Phone +49 89 4107-336, Fax +49 89 4107-3370).
Allianz Culture Foundation The Allianz Culture Foundation has made it its purpose to encourage and support exchanges between young people and cultures as well as within Europe in general. Instead of reinforcing what already exists, it wants to kindle curiosity in experimentation. In order to achieve this goal, the criteria for receiving support are deliberately formulated vaguely. After all, we don’t want the work of our foundation to be inhibited by constraining formalities such as, for example, rigid definitions of what constitutes culture or be limited to specific types of activity. The foundation focuses its support on contemporary crossgenre and cross-media projects. We invite people to open new horizons, both in terms of overcoming mental barriers and redefining the future, to support our goals and to satisfy our hopes.
The following are the most important areas in which we provide assistance and support: _ music, _ theater, opera, dance, _ arts, _ cinema, new media, _ literature, _ architecture, urban planning, _ education, science, and _ discussion forums.
Further information concerning the Allianz Culture Foundation can be found online at www.allianz-kulturstiftung.de or by contacting Allianz Culture Foundation, Maria-Theresia-
Corporate guidance rules will make Germany a more attractive financial marketplace for international investors. A corporate governance code, the law governing the purchase of shares and takeovers that went into effect in January 2002, and pending legislation on transparency and corporate reporting, will represent a positive achievement and help to consolidate the stock market culture in Germany.
The Supervisory Board is principally in agreement with the creation of a Governance Committee and intensification of the work of its other committees. As a result, the Annual General
Purpose of Business We consider ourselves to be worldwide providers of integrated financial services and strive to give our customers financial security.
_ We provide protection against the material losses resulting from unforeseeable events that cause damage or injury to property and people.
_ We help our customers maintain the standard of living to which they aspire in all phases of life. We help make sure that they and their families can lead their lives and forge plans based on a solid financial foundation.
_ We offer products that help our customers establish and increase their assets.
The economic implications of our core competency – security – determine how we perceive responsibility. We make sure that we respect the principles of the market economy and that we make no compromises in the interest of individual customer relationships. This also applies to our actions following the terrorist attack on September 11, 2001. Working together with customers and government, we must find new solutions enabling us to handle claims of this unprecedented magnitude.
As a result, we have once again included a magazine section in our annual report this year. Two articles convey an impression of how Allianz and Dresdner Bank are managing after the merger, and make clear just how much business potential lies therein. Two other articles, one concerning Italy and the other Germany, describe the reforms in state pension systems that are generating upward momentum in the markets for private retirement insurance and company pension plans. Finally, we take a look at Manhattan. The terrorist attack on the World Trade Center represents the greatest loss in the history of the insurance industry. What did we learn from this? How did our employees in New York experience this catastrophe? How is the world coming to grips with this new dimension of risk? Our closing article provides an insight into our concerns following the events of September 11, 2001.
We can’t provide any conclusive answers to these questions in our magazine. But we do hope that we have managed to give our readers an idea as to what Allianz and its employees stand for.
Euro zone The Gross Domestic Product (GDP) grew a modest 1.5 percent in the euro countries in the year 2001. This growth stemmed from a fairly robust performance in the first quarter, which was followed by a period of stagnation that started in the spring. The following chart shows the widely different performance of the various Western European economies (including
Switzerland and the U.K. as well as the euro zone countries).
The September 11 terrorist attack further undermined investor and consumer confidence, with the downturn accelerating in the fall. Given this situation, the central banks lowered their interest rates substantially. Stock markets recorded heavy losses. However, sentiment started to pick up again at the end of the year. The attack of September 11 represents a major setback for the insurance industry. The question as to how risks of terrorism can be insured in the future and what kind of division of labor between the private sector and government can be achieved in this respect, has triggered a new discussion of fundamental issues.
E C O N O M I C G R O W T H A N D F I N A N C I A L S E R V I C E P R O V I D E R S
The economic downturn halted the improvement on the labor market. Unemployment within the euro zone has been stagnating at approximately 8.5 percent since January 2001.
For the year as a whole, the inflation rate in the euro countries was 2.5 percent, up from 2.3 percent a year earlier.
Although the economy failed to show significant signs of recovery, the situation in most Western
September 11 terrorist attack. U.S. insurers, as well as various European companies, bore the brunt of these events. However, the attack in the U.S. can be expected to have a lasting indirect effect on the entire European insurance market, at least as far as coverage for acts of terrorism is concerned.
Interest in asset management waned for the same reason. Negative developments on the capital market caused more customers to opt for money market products in Germany. In this area, funds exhibited the highest growth. The current trend to market funds through external financial services providers is gaining ground throughout Western Europe.
The sluggish economy, weak stock markets and delays in the implementation of cost cutting plans squeezed earnings in the banking sector. The reporting period saw a substantial drop in the lucrative IPO, merger and acquisition business. In Germany in particular, there was increased pressure to consolidate in the banking industry.
U.S./NAFTA Region The North Atlantic Free Trade Association (NAFTA) consists of the United States of America,
With insurance claims expected to amount to 40 billion U.S. dollars or more, the attack on
South America As a result of various factors, such as the world economy’s failure to regain an upward momentum, growth dropped in the southern part of the American hemisphere from 4.0 to 0.4 percent. However, economic performance also suffered from the reticence of the international capital markets to grant further credits to these highly indebted countries. The fact that hardly any other South American country was infected by the crisis in Argentina represented a ray of hope. Nevertheless, most of South America’s population suffered from the recent cooling of the economy. Inflation averaged 5.4 percent for the year. The following chart provides an overview of the economies of our most important markets.
C A P I TA L M A R K E T S
Bond markets The development of fixed-interest securities markets was much less turbulent. The return on ten-year German government bonds fluctuated between 4.2 and 5.2 percent. At 4.9 percent at the end of the year, the return was the same as it had been at the beginning of the year. The yield of ten-year U.S. government bonds followed the same pattern. However, the variations were somewhat greater, ranging between 4.2 and 5.5 percent.
Currencies In the course of the year, the euro-dollar exchange rate varied less than it had during the preceding two years. The European currency traded between 0.84 and 0.95 U.S. dollars. The fact that the euro remained above the previous year’s low would seem to indicate its increasing stability. The euro actually increased in value against the yen.
_ Nevertheless, we propose to pay to our shareholders a dividend of 1.50 euros, the same amount as distributed the previous year.
The terrorist attack in the U.S. had a substantial effect upon our earnings performance in the year 2001. The attack not only resulted in the loss of thousands of lives but also destroyed insured property of unprecedented magnitude. Estimates of the damage range between 30 and 80 billion U.S. dollars, making this event by far the most severe loss ever incurred by the insurance industry. After deduction of receivables for reinsurance, we currently expect net claims costs in the amount of 1.5 billion euros.
The cost of acquiring the U.S. asset management company PIMCO contributed to this decrease, as was expected. In the case of PIMCO, expenses primarily reflected bonus payments and loyalty premiums.
Amortization of goodwill rose by 313 million euros to 808 million euros. This increase resulted primarily from the acquisition of the Dresdner Bank Group (108 million euros), Nicholas
Applegate and Zwolsche Allgemeene. In addition PIMCO was included for the first time in the financial statements for a full year and therefore also contributed to this increase. The U.S.
fund manager’s accounts were included in our previous years’ statements only as of May.
In the area of taxation, we had a benefit of 840 million euros. Two factors accounted for a substantial tax loss: _ claims in the U.S. in connection with the terrorist attack and
Premium income from insurance activities Gross sales from insurance activities increased by 6.5 billion euros or 9.4 percent to 75.1 billion euros. Property and casualty insurance sales were up 9.8 percent and life and health insurance sales rose 8.6 percent. Changes in consolidation, in particular the first-time consolidation of Zwolsche Allgemeene in the Netherlands and the acquisition of the HIH portfolio in
According to IAS guidelines, which recognize only the cost and risk elements as premium income in the case of investment-oriented life insurance products, gross premiums written increased by 6.4 percent to 61.6 billion euros.
Banking This new segment in our financial statements dates from the acquisition of the Dresdner Bank
Integration of Dresdner Bank It is indicative of the spirit of cooperation which exists within the Allianz Group that all decisions regarding the Dresdner Bank integration were made smoothy and rapidly. Many measures have already been implemented, and others are proceeding on schedule: _ joint marketing activities, which involve the sale of banking and insurance products through both the Allianz insurance agencies and the branch locations of the Dresdner Bank, have been launched throughout Germany.
_ we are moving full speed ahead with the creation of Allianz Dresdner Bauspar AG, which will handle the home-loan banking activities of both groups.
_ our goals in terms of synergies, which were announced in June 2001, were assigned to specific Group companies and are therefore now anchored in their respective business plans.
Market capitalization The price of Allianz shares was also impacted by the weakness of the capital markets. The terrorist attack on September 11 caused the stock markets to plunge. This downswing had an especially severe impact upon insurance shares, because this industry was directly affected by the events of September 11. On the final trading day of the year 2001, the market capitalization of Allianz AG amounted to 64.2 billion euros after deduction of treasury shares, which was 33.8 billion euros or 34.5 percent lower than the comparable 2000 figure. These figures are based upon the closing Xetra price on the final trading day of the year, which was 266 euros.
In the following breakdown by countries and regions, transactions between reporting units are not consolidated. In order to present a clear picture of our business operations, we have adjusted the results reported by eliminating the amortization of goodwill and, for fiscal 2000, extraordinary items relating primarily to tax regulations.
Travel insurance and assistance services 445 416 502 *) 2001: excluding own used real estate
Earnings after taxes*) 2001 2000 1999 ¤ mn ¤ mn ¤ mn
_ Premium income from property and casualty insurance was up 9.8 percent to 42.1 billion euros.
_ The combined ratio increased by 3.9 percentage points to 108.8 percent.
_ Reported net income decreased by 0.9 billion euros to 2.4 billion euros.
_ Disregarding extraordinary tax items in the preceding year, net income rose by 6.2 percent.
Premium adjustments in the area of automobile insurance, which we were able to achieve in
The claims ratio, which was strongly impacted by the September 11 attack in New York, increased by 3.2 percentage points to 81.1 percent. Most of the losses – we are expecting total claims of 1.5 billion euros after reinsurance – involved our property and casualty lines and, in particular, business interruption insurance. We initially underestimated the magnitude of these losses, as did the industry in general. All market participants were forced to realize that traditional loss models are incapable of assessing the full financial impact that events of this dimension can have on the insurance industry. In the future, it will be necessary to find new insurance solutions for risks of this magnitude, which are to a great extent incalculable.
Spain. However, the claims ratio was also impacted by other major losses, primarily in connection with industrial insurance, which continued to put a considerable strain on the earnings situation in this area of activity. We are nevertheless confident that our bottom line in this area of activity will show substantial improvement in the current fiscal year as a result of efforts to regroup and centralize international industrial activities under Allianz Global Risks.
The expense ratio climbed to 27.7 percent due to expenses incurred in connection with the acquisition of Dresdner Bank and the expansion of our IT systems.
Earnings before taxes and amortization of goodwill decreased by 1.4 billion euros to 2.8 billion euros. After amortization of goodwill, taxes and minority interests, net income came to 2.4 billion euros. This figure is 6.2 percent higher than that for the preceding year, in which we reported net income of 2.2 billion euros after adjustments for extraordinary tax effects.
Premium income from property and casualty insurance rose 9.8 percent to 42.1 billion euros. The share of total sales increased slightly to 55.2 percent. Disregarding effects of consolidation and currency translation differences, internal growth came to 8.6 percent.
_ We serve this market through the companies of the Allianz Sachgruppe Deutschland (SGD). With sales of 10.1 billion euros, SGD is the leading provider of property and casualty insurance in Germany.
Consolidation property/casualty insurance in Germany – 3,118 – 3,215 – 3,163
Property/casualty insurance in Germany*) 3,772.6 2,302.7 1,587.7 *) Including investment holdings
The expense ratio climbed to 26.9 (21.9) percent. This ratio is normally determined by reinsurance provisions, but expenses in connection with the acquisition and integration of Dresdner
Earnings after taxes improved to 2.5 (1.8) billion euros, primarily due to tax benefits of 409 million euros, after tax expenses of 176 million euros in the previous year.
Earnings after taxes*) ¤ mn 1,659.9 835.2 534.5 *) Before profit transfer
We expect further acceleration in SGD’s premium growth in the current fiscal year. In particular, the performance of automobile insurance is expected to improve once again. Sales of commercial and corporate insurance are likely to show robust growth as well because the attack on the World Trade Center has significantly heightened risk awareness and made it possible, at least to some extent, to achieve significant premium increases. In the past, intensive competition had all but prevented this urgently needed adjustment of premiums to claim payouts.
Sales were driven by higher premiums in all business lines. Growth of our commercial and corporate lines received an additional boost from new contracts with major customers and a greater share of the French aviation insurance pool. The sales cooperation with Crédit Lyonnais generated further growth in business with private customers.
The claims ratio improved to 83.0 (85.8) percent, primarily due to a reduction in the number of claims in the area of automobile insurance. In addition, the average payout per claim decreased in the area of other private insurance. However, these positive trends were partially offset by several major industrial losses, such as the explosion at a plant in Toulouse and claims in connection with the attack on the World Trade Center.
The expense ratio rose to 29.3 (28.3) percent, primarily due to higher IT costs, and the introduction of the 35-hour work week required by law, which increased our personnel costs.
AGF will introduce new coverage concepts in the current fiscal year. Adjustment of premiums to claim requirements in the commercial and corporate areas and an even more selective underwriting policy are expected to result in a reduction of the claims ratio. We also expect the expense ratio to improve, primarily due to the increased cost effectiveness of our combined
_ These companies generated total premium income of 4.6 billion euros.
Automobile insurance generated a substantial portion of the 7.5 percent or 321 million euros increase in premium income. Like most market participants, we increased our rates in this line after the government had frozen third-party automobile insurance premiums for a year. This freeze, the legality of which was doubtful under European law, was lifted in March 2001. We were also able to increase the number of vehicles insured and our premiums for comprehensive automobile insurance. Together, automobile insurance contributed 238 million euros to premium growth in Italy. It grew by 8.8 percent.
Premium of Lloyd 1885, our Italian direct insurer, increased 46 percent to nearly 70 million euros. The company sells insurance policies by telephone and via the Internet. Online sales under the Genialloyd brand are progressing very well. In fiscal year 2001, premium income was up 85 percent. In the reporting year, more than 53,000 customers obtained insurance coverage through our Italian portal making Genialloyd Italy’s leading online insurer.
The claims ratio of our Italian companies showed an overall improvement. Since we have been underwriting automotive risks very selectively in recent years, our companies were able to lower the claims frequency even further. Long-overdue premium increases also helped us to reduce the claims ratio, particularly in the case of Lloyd Adriatico, which covers primarily automotive risks. The latter’s claims ratio fell to 68.5 (77.0) percent. The corresponding indicator for the RAS group was 79.7 (78.1) percent.
The expense ratio of the RAS Group increased to 23.7 (22.3) percent, primarily due to expenditures to improve IT systems and organizational structures. The expense ratio for Lloyd
Adriatico decreased to 19.2 (19.4) percent, primarily as a result of higher sales.
Earnings after taxes in Italy increased by 68 percent to 395 million euros. The RAS Group contributed 285 (173) million euros of the total and Lloyd Adriatico 110 (62) million euros.
We expect the growth of our Italian property and casualty insurance business to continue in the current fiscal year. Our companies’ earnings are also expected to show further improvement.
Premium income in local currency increased by 3.7 percent. This increase was primarily due to the fact that Swiss reinsurance sales in 2001 were for the first time recognized in the current fiscal year. Due to this change, our financial statements reflect reinsurance sales for two fiscal years.
Although the number and severity of natural catastrophes remained at a low level in 2001, the claims ratio increased to 79.8 (74.2) percent. This was primarily due to a one-time adjustment that had no effect upon earnings. An examination of cost allocations revealed that the share of expenses previously allocated for claims settlements was insufficient and had to be increased by 40 million euros. This drove up the claims ratio by 4 percentage points. In addition, claims from the collective health insurance business, which in Switzerland is carried in the property and casualty insurance segment, escalated, as did claims-related expenses in connection with the activities of what was formerly Allianz Schweiz.
This extraordinary effect in turn resulted in an improvement in the expense ratio, which fell to 27.2 (30.0) percent.
million euros. This drop is also attributable to the fact that investment income in the preceding year was boosted by the divestiture of foreign shareholdings.
Following the merger of our Swiss brands, the implementation of a common IT platform and substantial investment to reinforce our marketing organization, we expect sales and earnings in the current fiscal year to be considerably higher than in the preceding year.
Sales by our Allianz Risk Transfer (ART) company increased by 5.7 percent to 506 million euros. Most business volume originated from the sale of conventional reinsurance products. Income from the marketing of alternative risk transfer solutions stabilized at 102 million euros.
_ Our Cornhill subsidiary ranks sixth in the British property and casualty insurance market.
In local currency, we generated impressive sales growth of 21 percent. This growth was fueled by premium adjustments and substantial new business. We were able to achieve urgently needed premium increases in the area of automobile insurance as well as in other private and industrial lines.
The expense ratio also fell from 33.4 to 30.6 percent, primarily as a result of considerably higher sales.
Although earnings after taxes improved noticeably to 69 million euros after a loss of 11 million euros in the preceding year, performance in the area of industrial insurance remains unsatisfactory.
For the current fiscal year, we expect moderate overall premium growth, further stabilization of earnings from private and commercial insurance and substantially higher returns in the area of industrial insurance.
Premium income increased by a substantial 19.1 percent. After strategic reorientation and streamlining of our marketing organization in the preceding year, sales picked up considerably in 2001. With premium income growing by 21.8 percent, performance in the area of automobile insurance was particularly encouraging.
The claims ratio improved to 78.7 (81.1) percent. This is attributable to the risk-oriented premiums we have been able to introduce in recent years, resulting in a noticeable reduction in automobile insurance claims frequency.
Net investment income however fell to 59 (92) million euros in 2001. Earnings after taxes decreased to 32 (41) million euros.
In the current fiscal year, our Spanish insurer will not be able to maintain the high growth rate achieved in 2001. The claims and expense ratios are likely to show further improvement.
_ In most of these countries, our local companies rank among the five leading insurers.
Total premium income in the rest of Europe amounted to 4.3 (3.6) billion euros. Our largest sales were reported by the Netherlands with 873 million euros, followed by Austria with 844 million euros.
_ In Mexico, we are represented by Allianz México Companía de Seguros S. A.
Premium income in the NAFTA region increased by 5.1 percent to 6.8 billion euros (in local currency ), with the U.S. market accounting for 90 percent of this figure. Premium income generated in this market rose by 8.9 percent to 6.2 billion euros.
FFIC was by far the biggest source of sales in the United States, contributing 5.4 (4.8) billion euros. The growth of this company, 7.1 percent in local currency, is attributable to the following factors: _ we were able to achieve a significant increase in premiums in the areas of commercial and automobile insurance, primarily in the second half of the year. However, premiums remain less than adequate.
This increased the loss of this property and casualty insurer to 357 million euros.
Premium income of AIC, a company specializing in business with high-volume customers, decreased by 1.6 percent in local currency. Converted to euros, this decline translates into a slight improvement to 687 (675) million euros. AIC felt the effect of the attack on the World
All in all, the downturn of the financial markets and the aftermath of the attack on New York resulted in a loss of 1.0 billion euros for our activities in the NAFTA region.
_ We are represented by subsidiaries or joints ventures in almost all markets in this region, which holds considerable potential for growth.
The sizeable jump in the premium income of our Australian company from 0.6 to 1.0 billion euros is attributable to the acquisition of an insurance portfolio from HIH. Competition in the Australian market remains intense. Nevertheless, it was possible to improve the claims ratio by 3.4 percentage points to 83.3 percent. At the same time, the expense ratio deteriorated due to high expenses for upgrading the IT system in connection with the integration of
HIH. Earnings after taxes in Australia dropped to 5 (35) million euros.
_ Total premium income in these countries amounted to 962 million euros.
Brazil contributed 355 million euros in premium income to rank first in South America. Colombia followed, with sales of 267 million euros.
The claims ratio in South America improved substantially to 63.7 (70.9) percent. The primary reasons for this were the successful restructuring of our automobile insurance activities in
Colombia and Venezuela as well as premium increases in all property lines in the region.
The expense ratio increased to 39.7 (34.8) percent, driven by restructuring expenses at our company in Chile.
In fiscal 2001, our companies in Chile and Colombia reported losses totaling 9 million euros.
O T H E R M A R K E T S
_ We provide global credit insurance through the companies of our EULER and Hermes groups.
_ We rank either first or second in 17 of the 29 markets we serve.
_ With an overall market share of 36 percent, we are the world's leading credit insurer.
_ EULER concentrates its activities on France, Great Britain, Italy, Belgium, Spain, the
_ In addition, EULER handles our factoring activities, and Hermes is responsible for bond insurance and insurance against breaches of confidence worldwide.
Losses and costs combined also to reduce earnings after taxes, which amounted to 90 (158)
C R E D I T I N S U R A N C E
Sales grew by a total of 13.2 percent. In travel insurance, premiums were up 11.6 percent to 732 million euros. Fees from assistance services rose to 178 million euros, an increase of 20.1 percent. This improvement was primarily due to the first-time consolidation of our U.S. subsidiary World Access over the full fiscal year and to the integration of two newly acquired service providers, World Care Assist and Auto Assist. After restatement to exclude these one-time effects, assistance revenues were up 7.0 percent.
Taken together, travel insurance and assistance services generated after-tax earnings of 2.7
For the current fiscal year, we once again expect double-digit growth in sales volumes and substantial improvement in earnings.
T R AV E L I N S U R A N C E A N D A S S I S TA N C E S E R V I C E S
Asia-Pacific Region – 5 – 66 29 *) Earnings after taxes, before amortization of goodwill and minority interests, net of extraordinary tax items in 2000
_ Sales of investment-oriented life insurance products included in the total rose to 13.5 billion euros.
_ Net investment income decreased by 39 percent to 8.6 billion euros.
_ Reported net income fell 63 percent to 229 million euros.
Total life and health insurance sales increased by 8.6 percent to 33.7 billion euros.
The expense ratio for total sales (including investment-oriented products) increased slightly from 11.4 to 12.1 percent. In IAS accounts, the expense ratio increased by 2.8 percentage points to 20.2 percent.
After amortization of goodwill, taxes and minority interests, net income amounted to 229 million euros, down 63 percent from 625 million euros a year earlier.
_ Total premiums written of these companies amounted to 11.7 billion euros.
_ We are the market leader in life insurance and number three in health insurance.
Total premium income can be divided as follows: life insurance business accounted for 9.0 billion euros or 77 percent, while the sale of health insurance products contributed 2.7 billion euros or 23 percent. Total segment sales remained at the same level as for the previous year.
_ on the other hand, marketing capacities were to a great extent tied up by the sale of socalled “Riester products” (named after labor minister Walter Riester), which require extensive advising services. This led to the sale of over 320,000 contracts in this area of provision, most of which, however, will not generate premium income until 2002.
With a growth rate of 25.3 percent in new regular premiums, Allianz Leben clearly outperformed the market, which grew by an average of only 15.9 percent. However, due to a highvolume contract concluded in the previous year, single-payment premiums dropped by 8.2 percent. Annuity insurance now accounts for approximately two-thirds of new business with regular premium payments and over 90 percent of single-premium contracts.
Acquisition costs were inflated by the boom in new business. Since premium income dropped slightly during the same period, the expense ratio increased to 13.7 (11.1) percent. Administrative costs improved slightly to 2.4 percent and thus continue to stay clearly below the market average.
In the current fiscal year, Allianz Leben will considerably expand its business in statutory, statesupported private and corporate retirement products. In the first months of sales, the company captured a market share of over 20 percent with these products. As the leading full-service provider of corporate retirement provision products, it intends to offer all available options. In addition to the current pension scheme, a pension fund will be introduced. Allianz scored an initial big success by assuming leadership of the consortium set up to establish the “MetallRente”
In mandatory care insurance, for which the same conditions apply throughout the market, premium income fell by 3.0 percent. This decrease was caused by lower rates.
The number of persons insured increased slightly by 0.4 percent to 2.27 million.
Despite enhanced claims management, payouts rose to 1.9 billion euros (plus 6.8 percent) in 2001. As a result, the claims ratio increased to 73.1 (71.6) percent.
Total sales increased by 32.4 percent. The RAS Group reported premium income of 5 billion euros and Lloyd Adriatico 0.9 billion euros. Premium income in IAS accounts, which includes only a small fraction of investment-oriented life insurance products, amounted to 1.3 billion euros. The sales successes of our companies increased our share of the Italian health insurance market from 11.1 to 13.5 percent.
This growth was mainly attributable to bank-based sales of fund-linked life insurance products
_ A significant share of the high sales volume came from the ongoing expansion of the cooperation agreement with the Unicredito Group. The number of branch banks selling life insurance products increased substantially. This channel enabled us to increase premium income to 3.4 billion euros.
_ At the same time, Banca Antoniana Veneta Popolare Vita, a Lloyd Adriatico bancassurance joint venture, once again performed extremely well. The company boosted its sales by 53 percent to 542 million euros.
Higher depreciation and lower realized gains reduced net investment income to 842 (963) million euros.
Antoniana Veneta Popolare Vita will further strengthen our position in this growth market.
_ in fiscal 2000, we acquired a major group contract involving the off-balance sheet treatment of the pension provisions of an industrial company. This contract alone brought us 800 million euros in non-recurring income for which there is no equivalent on our books
In the current fiscal year, the demand for investment-oriented life insurance and savings products will again depend to a great extent on the development of the capital markets. Insofar as marketing and product range are concerned, we are well equipped to address our customers’
Since business with predominantly investment-oriented life insurance products grew disproportionately, the expense ratio, which is calculated exclusively on the basis of IAS sales, deteriorated to 22.6 (9.9) percent.
We are continuing to expand our network of financial advisors in Spain in the current fiscal year. In addition to funds, all types of life insurance are offered. This additional marketing channel is expected to give our business a further boost.
Earnings after taxes dropped substantially to 12 (97) million euros. To a great extent, this was attributable to sharply lower earnings in Belgium. Due to a substantial decrease in investment income, our Belgian company recorded a loss of 21 million euros.
The expense ratio increased slightly to 49.2 (48.2) percent, primarily as a result of our intensive efforts to stimulate sales of fund-linked annuity insurance.
Lower realized gains and considerably higher depreciation depressed net investment income to 468 (568) million euros.
Earnings were impacted not only by lower investment income but also by the cost of financing our substantial new business. All in all, we recorded an after-tax loss of 24 million euros, after earnings of 133 million euros in the previous year.
We are continuing to expand our marketing channels and to promote sales of fund-linked life insurance in the current fiscal year.
_ We also supply life and health insurance in Asia and are steadily expanding our business in the rapidly developing markets of this region.
With a total sales volume of 1.6 billion euros, our biggest company in this region is Allianz First
Life in South Korea. Having posted after-tax earnings of 26 million euros, this company generated a profit following a loss of 39 million euros the year before.
In Indonesia, we offer life and health insurance. In Malaysia, we sell life insurance through our subsidiary Allianz Life Insurance Malaysia Berhad. We also operate life insurance joint ventures in Taiwan, Thailand, China, the Philippines and (since 2001) India. In Singapore and
We also sell life insurance in Brazil, Colombia, Chile, Argentina and Venezuela. Total sales in these countries amounted to 356 million euros.
Worldwide recession, weak capital markets and the terrorist attack on the United States severely depressed earnings in the lending business. The banking business of Allianz also suffered from these influences.
We fully audited the loan portfolio. At year-end, total loan loss provisions amounted to 8.1 billion euros or 3.9 percent of total loans outstanding.
Loans and advances to customers and banks ¤ bn 277 14
Earnings in the trading business were conditioned by two opposing trends: in the bond, currency and precious metals business, we generated positive results; this also applies to trading in other financial instruments, primarily derivatives. Stock trading, however, produced a loss.
Total earnings before taxes and amortization of goodwill amounted to 297 million euros.
After amortization of goodwill, taxes and minority interests, a loss of 220 million euros was incurred. The Dresdner Bank Group accounted for 213 million euros of this loss. Given this performance, we clearly missed our original targets in the banking sector in 2001.
Equities and Private Equities. However, our Global Debt department and our corporate business in Germany generated significant income. Costs incurred in connection with these activities remained unsatisfactory, essentially due to bonus guarantees offered to key executives in the preceding year as an incentive to remain with the company. Loan loss provisions diminished earnings by 417 million euros. The high level of loan loss provisions was attributable not only to worldwide weak economic fundamentals, but also to our U.S. loan portfolio, which contained a significant volume of non-performing loans, for the most part loans to medium-sized companies. We have terminated our lending activities in this market segment in the year 2000.
_ Our assets under management increased by 67 percent to 1,172 billion euros.
_ The Dresdner Bank takeover contributed 414 billion euros to this total.
In terms of volume, the share of institutional investors is 75 percent. This clearly demonstrates that we are operating in a market environment with extremely high expectations regarding the quality of our products and services, which also benefits our private customers.
In terms of geographic distribution, 70 percent of our customers are based in the U.S.; approximately 25 percent live in Europe.
Fiscal 2001 was a year of integration. Although this process tied up many of our resources, we still achieved a number of outstanding successes in the course of the year.
_ The leading rating agency Standard & Poor’s awarded its highest rating to 21 funds managed by dit (Deutscher Investment Trust) and Allianz Kapitalanlagegesellschaft in Germany.
_ In the United States, we regrouped fund sales to private customers in PIMCO Advisory Services. This not only resulted in considerable cost reductions but also increased the cash inflow of our public funds by 70 percent. With total assets of 14.8 billion U.S. dollars, we improved our market position in this segment from 11th to 3rd place. In 2001, the PIMCO
Total Return Fund was the best-selling fund in all investment classes in the U.S., and no competitor challenged our leading position during the first months of 2002.
_ By founding Allianz Hedge Fund Partners, we considerably increased our product range for institutional investors.
We were less satisfied with the growth of our stock business. Sales of public funds, both through our own distribution channels and through third parties, also failed to meet our expectations.
Today, we are one of the world's leading fund managers in terms of assets under management. In the course of the coming years, we also want to become a leader in product quality and profitability. In order to compete in tomorrow’s market place, excellent products and outstanding service will make the decisive difference. That includes the know-how allowing us to offer our customers complex solutions for their investment needs. To achieve this objective, we strictly monitor the efficiency of all stages of the value-creation process. This ensures our sustained competitiveness and builds the foundation for meeting the long-term return expectations of our customers and shareholders.
In fiscal 2001, the Asset Management segment recorded an after-tax loss of 348 million euros. This includes acquisition-related expenses totaling 647 million euros. Thereof amortization of goodwill amounted to 243 million euros. We amortize goodwill of the ADAM companies by the straight-line method over twenty years.
Allianz Dresdner Asset Management Group, which came to 82 million euros.
In addition, we held investments with a current value of 350.0 billion euros. Of these, 322.2 billion euros were in securities available for sale. Fixed-income securities accounted for 75 percent and equity securities for 25 percent. A list of companies in which we hold at least 5 percent of the capital or in which our investment exceeds 100 million euros can be found on pages 80 to 88 of the Notes to the Financial Statements. Also shown in this list are the percentage of our interest in each company and the individual current market capitalization of our holdings. At the end of 2001, the market value of these holdings amounted to 56.2 billion euros.
Unrealized investment gains amounted to a total of 16.6 billion euros.
Investment structure by segments as of December 31, 2001 Current values in ¤ bn
Net investment income fell to 17.3 (21.5) billion euros as of December 31, 2001. This reduction is mainly attributable to the negative development in the capital markets.
Decentralized and centralized elements The controlling and planning of a global, integrated financial services group must first and foremost bear in mind the fact that successful distribution and customer relations in the insurance, asset management and banking businesses, are still to a great extent determined by local conditions. This is why our Group companies are responsible for the success of their national operations.
_ it fixes the global coordinates within which the individual companies establish their planning and ensure that the business models and strategies of the Group companies are in line with overall Group objectives.
_ in addition, the Group Center establishes the standards and methods of corporate governance that apply to all entities of the Group and ensures that these rules are applied worldwide.
Synergy management The holding company organizes the global transfer of know-how, identifies potential synergies and makes sure that these are transformed into added value. Emphasis is placed on products, operating procedures and marketing models.
_ At the beginning of February, the holding company’s Board of Management reviews the long-term strategies for increasing corporate value and updates them. On this basis, strategic measures are decided and resources are allocated. Group EVA targets are discussed and then used as a basis for defining provisional top-down objectives for the individual Group companies.
_ By mid-year, the Group companies must present the strategic sub-objectives they have derived for their specific operations, the measures they intend to take and the basic plan data they have developed. These proposals are discussed with the Board in a strategic dialogue.
It compares the profit generated with our capital costs. The positive or negative difference –
Since fiscal 2000, we have also determined the EVA of individual segments such as products, customer groups, or distribution channels. That way, we can increase the shareholder value of the Allianz Group even more purposefully.
Management remuneration A substantial proportion of the remuneration paid to top management and local company management is contingent on meeting EVA targets (see pages 21 to 22 of this Annual Report for more details).
However, one essential difference remains: in our internal accounts, net investment income is determined by a standardized performance basis. This enables us to eliminate the effects of fluctuations in the capital markets and of profit realisation. This is important because otherwise short-term changes in the financial markets could, for example, trigger the wrong measures, which would jeopardize achievement of our core objective of steady, profitable growth.
Responsibilities In our business, successful management essentially means controlling risks in order to increase the value of the Allianz Group. This is done through risk-adequate allocation of capital resources and activities required to achieve sustainable growth. As a result, the Board of Management formulates the business objectives of the Allianz Group on the basis of return and risk criteria. These objectives are implemented by the Allianz Group Center and the local operational units. Our risk-control strategy involves assignment of responsibility for risk management to local entities, which operate within the legal frameworks applicable for 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.
In the area of life insurance, actuarial risks arise because we are committed to making guaranteed long-term payments in return for fixed insurance premium calculated in advance even though the biometric data of the population may change over time (e.g., longer life expectancy as a result of medical progress).
Market risks Market risks result from portfolio valuation fluctuations due to changes in share prices, interest rates or exchange rates. Also risk relevant are changes observed in the variation behaviour (volatility) of an asset price, for example.
and risk capital are the most important parameters used in the context of our risk-based controlling process.
These risks are primarily evaluated on the basis of the financial strength or rating class of our reinsurance partners.
Premium risks Premium risks are controlled primarily with the help of actuarial models used to calculate premiums and monitor claim patterns. In addition, we issue guidelines for concluding insurance contracts and assuming insurance risks. In the case of life insurance, we essentially concentrate on biometric risks – e.g., life expectancy, disability, illness and long-term care requirements. We also focus on risks that could arise from future policy cancellations.
Group companies use comprehensive rating information for the active management of credit risks. This information is either in the public domain or gathered through internal investigations.
Investment risks Investments are an integral part of insurance coverage. They ensure our ability to meet the payment commitments we make in our insurance contracts. The tight link between insurance obligations and investment of the capital related to these obligations is investigated by using specific models. This also enables us to manage risks arising from interest guarantees provided to our customers.
We selectively use derivative financial instruments such as swaps, options and futures to hedge against changes in prices or interest rates. Group companies are end-users of derivatives. Our internal investment and monitoring rules are considerably stricter than the regulations imposed by supervisory authorities.
Risk capital At the end of fiscal year 2001, risk capital before minority interests in property and casualty insurance amounted to 13.3 billion euros for actuarial risks, 1.0 billion euros for credit and counterparty risks and 5.3 billion euros for investment risks. Risk capital in the area of life insurance came to a total of 10.3 billion euros as of December 31, 2001.
Risk controlling in the banking business In this business segment, different types of risks are controlled separately. These include primarily credit and counterparty risks, counterparty risks from trading activities, country risks, market risks, interest rate risks, currency risks and liquidity risks.
Credit and counterparty risks When granting credits in the banking business, we pay particular attention to the client’s creditworthiness. The bank controls this 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 weighting 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 very conservative selection of our trading partners and deal only with counterparties with top-quality credit ratings.
Potential risks in the lending business are contained by limit systems and closely monitored on a day-to-day basis.
Country risks We control these risks by using internal country ratings. These ratings are based upon macroeconomic data and key qualitative indicators. The latter take into account the 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.
Authority (BaKred). Dresdner Bank belongs to the group of banks holding a leading position in the measurement of market risks. 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 supervisory authority 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.
¤ mn ¤ mn ¤ mn ¤ mn ¤ mn 1) Since maximum and minimum values were taken at different dates, no diversification effect applies. 2) At year-end 2001 for the first time including specific interest rates
As compared with the preceding year, the risks from Dresdner Bank’s trading activities increased in 2001. In the second quarter, value-at-risk 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, value-at-risk continued to increase after the terrorist attack of September 11, since this event increased volatility even more by destabilizing the markets.
To validate the quality of the value-at-risk model, Dresdner Bank performs regular backtesting. 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 risk-at-value model used provides an adequate assessment of the risks.
Currency risks Dresdner Bank limits these risks in the non-trading portfolio by applying a principle that involves refinancing or reinvesting all loans and deposits in foreign currencies in the same currency with matching maturities.
Group operational risks Operational risks are risks that arise in connection with the internal processes of an organization. These may result from inadequacies or faults in business processes, projects or controls, technical problems or employees, operational structures or external influences. We intend to minimize such risks by installing a comprehensive system of internal controls and security systems in each operating unit. Operational risks are limited by a wide range of technical and organizational measures such as redundant hardware configurations, communications equipment and systems, back-up computing facilities, and data backups to maintain IT capability in emergencies. In addition, procedures are in place for safeguarding the confidentiality and integrity of stored data and information. For this purpose, high-performance firewall systems were introduced to protect the network against external interference along with complex access authorization procedures, supervision and control processes. The principle of dual control is adhered to in the case of operating procedures. The purpose of these measures is to ensure and document an adequate standard for Group-internal processes.
Legal risks result from contractual agreements or the overall legal situation. They include risks from the adoption of new statutory regulations, disadvantageous amendments to existing legislation or regulations or prejudicial changes in their interpretation. Legal risks also take into account the possibility that contractual agreements may not be enforceable through legal action or court proceedings. The limitation of legal risks is an important task of the legal department.
Outlook We are continually enhancing our risk control models at the Group level and across all risk categories by systematically evaluating our internal data. Two years ago, we launched a comprehensive project to expand the scope of internal risk analysis in the insurance business. In the course of 2002, this project will be concluded by a period of thorough testing. Upon implementation of the new procedures, risk control will have an even broader base within the
Risk monitoring by third parties Supervisory authorities and rating agencies are additional risk monitoring bodies. Supervisory authorities specify the minimum precautions that must be taken in individual countries and at international level. Rating agencies determine the relationship between a company’s risk exposure and the precautions it has taken. The internationally respected rating agencies Standard & Poor’s and A. M. Best have given the Allianz
In 2001, we informed more than 220 specifically selected applicants at this career fair about beginning and continuing careers within the Allianz group.
International Careers The international exchange of employees and managers is a key program at Allianz. Why do we promote cross-border mobility?
_ At the same time, staff exchanges strengthen contact and knowledge networks. This form of networking creates additional value within the Group.
_ Vacant positions are to be filled primarily from an internal pool. They can only be achieved through an international policy for the advancement of our employees.
We offer our staff the possibility of working on our ever increasing number of international project groups. But there are also short-term assignments, international training programs and traditional postings to foreign countries for several years. One unique feature is the “Allianz
Program” for highly talented junior executives and a “Campus Program”, in which international top executives discuss strategic topics with members of the Board of Management.
New media We use the Intranet and the Internet to bring more transparency to our human resources management. Since 2001, we have instituted a cross-border internal job market. It shows which mid-level management positions are available worldwide. Any employee can apply online, regardless of the country in which he or she is currently working.
In most Group companies, employees save time by obtaining job and career related information electronically through the Internet. For example, employees of Lloyd Adriatico, Allianz
Canada and PIMCO have online access to their personal data and can perform administrative tasks on their own. Additional features of this type will be added in the near future.
Internet and Intranet are also used to a growing extent for on-the-job training and continuing education programs. Interactive learning programs offer more flexibility to the individual employee and limit costs. In 2001, more than 580 employees of Dresdner Bank in Germany passed a qualified English test online.
At Fireman’s Fund, staff members have been using the services of a new call center since 2001. This center provides them with advice on management, leadership, training and continuing education issues as well as on career possibilities.
Compensation and performance Total wages and salaries paid to our Group employees amounted to 6.8 (4.8) billion euros in 2001. A further 1.6 (1.6) billion euros were spent on social security contributions, pensions and other employee benefits. We are committed to performance- and result-based remuneration and our compensation systems are continually re-examined from this standpoint.
On the other hand, major economic indicators in Europe and in the U.S. point to recovery.
Low interest rates and moderate oil prices contributed to this encouraging situation. In Europe, we expect a growth of 1.5 to 2 percent in 2002 and in the U.S. of 2.5 to 3 percent. International organizations and most economic research institutes concur.
The various pension reforms in Europe and a stock market performance pointing towards economic recovery can be expected to lend fresh momentum to asset management activities. Improvement in the economy indicates a brighter future for banks.
The prospects for sustained improvement in the economic situation of South America are rather dim. These economies are too dependent on foreign capital and the performance of the world’s commodities markets. The upward potential for life insurance and funds in this part of the world is limited by the generally low household savings rate despite ongoing implementation of reforms in the social security system.
Net income should show substantial improvement and rise to a solid 3 billion euros.
Cautionary Note Regarding Forward-Looking Statements Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words “may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue ” and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group's core business and core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates including the Euro – U.S. dollar exchange rate, (viii) changing levels of competition, (ix) changes in laws and regulations, including monetary convergence and the European Monetary Union, (x) changes in the policies of central banks and/or foreign governments, (xi) the impact of acquisitions (e.g., Dresdner Bank), including related integration issues, and (xii) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of the events on, and following, September 11th.
The matters discussed in this release may also involve risks and uncertainties described from time to time in Allianz AG’s filings with the U.S. Securities and Exchange Commission. Allianz AG assumes no obligation to update any forward-looking information contained in this release.
D R . K L A U S L I E S E N
Membership in other statutory supervisory boards in Germany Allianz Versorgungskasse VVaG
Vereinsbank AG (until May 23, 2002), Beiersdorf AG, Continental AG, Karstadt Quelle AG, KM Europa Metal AG, mg technologies ag
Membership in comparable*) management bodies Assurances Générales de France, Banco Popular Español,
K L A U S C A R L I N until July 11, 2001
Membership in other statutory supervisory boards in Germany Deutsche Lufthansa AG (since January 1, 2002),
Membership in comparable*) management bodies ABB AG (until March 12, 2002), Suez S. A., Thales S. A.
J Ü R G E N D O R M A N N
Membership in other statutory supervisory boards in Germany Basler Versicherung Beteiligungsgesellschaft mbH (Deputy Chairman), Deutscher Ring Lebensversicherungs-AG (Deputy Chairman)
Membership in other statutory supervisory boards in Germany Dresdner Bank AG
R E I N E R L E M B K E until September 1, 2001
K A R L M I L L E R until July 11, 2001
Membership in comparable*) management bodies BVV Versicherungsverein des Bankgewerbes a. G.
G E R H A R D R E N N E R until July 11, 2001
Membership in other statutory supervisory boards in Germany DaimlerChrysler AG, Linde AG, METRO AG , RWE AG
J Ü R G E N E . S C H R E M P P
Membership in comparable*) management bodies New York Stock Exchange (NYSE), South African Coal,
Membership in other statutory supervisory boards in Germany BASF AG, E.ON AG, Linde AG (Deputy Chairman),
Membership in comparable*) management bodies Membership in Group bodies Assurances Générales de France
Membership in other statutory supervisory boards in Germany MAN AG, RWE AG Membership in Group bodies
Membership in other statutory supervisory boards in Germany ABB AG (Deutschland),
Riunione Adriatica di Sicurtà S. p. A., Royal Nederland Verzekeringsgroep, Zwolsche Algemeene N. V.
Membership in other statutory supervisory boards in Germany Berlinwasser Holding AG,
Infineon Technologies AG Membership in Group bodies ADVANCE Holding AG (Deputy Chairman), Allianz Bauspar AG
Membership in other statutory supervisory boards in Germany Deutsche Börse AG (Deputy Chairman),
Membership in other statutory supervisory boards in Germany E.ON Energie AG, Schering AG, Steag AG,
ThyssenKrupp Steel AG Membership in Group bodies ADVANCE Holding AG, Allianz Global Risks Rückversicherungs-AG,
VEBA OEL AG Membership in Group bodies Dresdner Bank Lateinamerika AG
British-American Tobacco (Germany) GmbH, British-American Tobacco (Industrie) GmbH, Buderus AG, Europa Carton
GmbH (Chairman) Membership in Group bodies DEGI Deutsche Gesellschaft für Immobilienfonds mbH (Chairman),
Membership in comparable*) management bodies BVV Versicherungsverein des Bankgewerbes a. G. (Deputy Chairman), debis AirFinance B. V.
Membership in other statutory supervisory boards in Germany Heidelberger Druckmaschinen AG, Quelle AG,
Membership in comparable*) management bodies Membership in Group bodies Allianz Elementar Lebensversicherungs -AG, Allianz Elementar Versicherungs-AG, Allianz First Life Insurance Co. Ltd., Allianz Life Insurance Company of
Membership in comparable*) management bodies Membership in Group bodies Allianz Australia Ltd.,
Allianz First Life (Chairman), Allianz Hungária (Chairman), T. U. Allianz Polska S. A. (Leben) (Chairman),
T. U. Allianz Polska S. A. (Sach) (Chairman), Allianz poistòvna a.s., Ayudhya Allianz C. P. Life , Rosno *) We regard foreign memberships as “comparable”, if the foreign company is listed on the stock exchange or has more than 500 employees.
D R . D R . H E I N R I C H V O N P I E R E R President and CEO Siemens AG, Chairman
D R . U M B E R T O A G N E L L I Vice Chairman and CEO IFI S. p. A.
D O N A L D R . A R G U S A O Chairman Broken Hill Proprietary Company Ltd.
B E L M I R O D E A Z E V E D O Presidente Sonae S.G.P. S., S. A.
A N T O N Y B U R G M A N S Chairman Unilever N. V.
A A R N O U T L O U D O N Chairman Supervisory Board Akzo Nobel N. V.
M I N O R U M A K I H A R A Chairman Mitsubishi Corporation
D R . M A R C O T R O N C H E T T I P R O V E R A Chairman and CEO Pirelli S. p. A.
A N T H O N Y S A L I M President and CEO Salim Group
S I R I A I N V A L L A N C E Chairman Emeritus British Telecommunications Plc.
J A V I E R V A L L S T A B E R N E R Presidente del Consejo Banco Popular Español
D R . D I E T E R H U N D T Managing Partner, Allgaier Werke GmbH
D R . J Ü R G E N F. K A M M E R Chairman of the Board of Management, Süd-Chemie AG
H A R T M U T M E H D O R N Chairman of the Board of Management, Deutsche Bahn AG
D R . G E O R G O B E R M E I E R
D R . h . c . R U D O L F R U P P R E C H T Chairman of the Board of Management, MAN AG
P R O F E S S O R D R . E K K E H A R D S C H U L Z Chairman of the Board of Management, ThyssenKrupp AG
P R O F E S S O R D R . D R . h . c . H O R S T S I E B E R T President, Institute for World Economics, Kiel University
D R . R O N S O M M E R Chairman of the Board of Management, Deutsche Telekom AG
H A N S P E T E R S T I H L Former President, Deutscher Industrie- und Handelstag
Allianz Dresdner Asset Management GmbH Nymphenburger Straße 112-116 80636 München Tel.: +49 891220-70 Fax: +49 891220-7900 www.allianz-vermoegen.de
Dr. Gerhard Creutz Dr. Andreas Rösner Rüdiger Wiechers Members of the Board of Management
AGIS Allianz Gesellschaft für Informatik Service mbH Gutenbergstraße 8 85774 Unterföhring www.allianz-agis.de
DREGIS Dresdner Global IT-Services Gesellschaft mbH Windmühlstraße 14 60627 Frankfurt am Main
Dr. Karl Ludwig Freiherr von Freyberg Chairman of the Board of Management
Dr. Michael Albert Chairman of the Board of Management dbi dresdnerbank investment management Kapitalanlagegesellschaft mbH Mainzer Landstraße 11-13 60329 Frankfurt am Main
Dr. Klaus Dauner Chairman of the Board of Management dit DEUTSCHER INVESTMENT-TRUST Gesellschaft für Wertpapieranlagen mbH Mainzer Landstraße 11-13 60329 Frankfurt am Main www.dit.de
Allianz Elementar Lebensversicherungs-AG Hietzinger Kai 101-105 Postfach 1500 1130 Wien Tel.: +43187807-0 Fax: +43187807-5390 und -2703 www.allianz-elementar.at
Stanislas H. Haine S. A. 1 Prins Boudewijnlaan 43 2650 Edegem
AGF Allianz South America Ltda. Caixa Postal 51506 Rua Luíz Coelho, n° 26 01309-900 Consolaçao São Paulo-SP Tel.: +551131716-000 Fax: +551131716-171 www.agf.com.br
AGF Brasil Seguros S. A. (Vida) Caixa Postal 51506 Rua Luíz Coelho, n° 26 - 7° andar 01309-900 Consolaçao São Paulo-SP Tel.: +551131716-000 Fax: +551131716-171 www.agf.com.br
Mondial Assistance Brazil (Mercosul) Alameda Santos, 745 01419-00 Bairro Jardim Paulista São Paulo-SP Tel.: +551143315-150 Fax: +551143315-245
AGF Allianz Argentina Compañía de Seguros de Vida S. A. San Martín 550 2° piso 1004 Buenos Aires Tel.: +54114320380-0 Fax: +54114320380-2 www.agf.com.ar
Allianz Asset Management Australia Ltd. Level 14, 2 Market Street Sydney NSW 2000 Tel.: +612 93906-012 Fax: +612 98605219
9/F, One International Finance Center One Harbour View Street Central Hong Kong Tel.: +852 22804114 Fax: +852 25014353
Allianz Guangzhou Representative Office RM 1234-7 Garden Tower Garden Hotel Huanshi Donglu 368 Guangzhou 510064
Allianz Shanghai Representative Office Jin Mao Tower, Unit 3902 88 Century Boulevard Pudong New Area Shanghai 200120 Tel.: +86 215049-4950 Fax: +86 215049-4847 www.allianz.com.cn
Arab International Insurance Company Saridar Building 92 Tahrir Street, Dokki Cairo www.aiic.com.eg
Assurances Générales de France IART 87, rue de Richelieu 75113 Paris Cedex 02 Tel.: +33144862-000 Fax: +33144862-951 www.agf.fr
EULER Group 1, rue Euler 75008 Paris Tel.: +331407050-50 Fax: +331407050-17 www.eulergroup.com
Allianz General Representative Office China Office C 211 B Beijing Lufthansa Center 50 Liangmaqiao Road Beijing 100016
Allianz General Insurance Company S. A. Kifissias Ave. 124 11526 Athen Tel.: +3010 69-05500 Fax: +3010 69-11150 www.allianz.gr
Allianz Life Insurance Company S. A. Kifissias Ave. 124 11526 Athen Tel.: +3010 69-05500 Fax: +3010 69-11150 www.allianz.gr
Bajaj Allianz General Insurance Company Ltd. GE Plaza Airport Road, Yerawada Pune 411006 Tel.: +9140 2666-6 Fax: +9140 2666-7
P. T. Asuransi Allianz Life Indonesia Summitmas II, 20th Floor Jl. Jend. Sudirman Kav. 61-62 Jakarta 12190 Tel.: +62 212526-690 Fax: +62 212526-580
Mondial Assistance France S. A. 2, rue Fragonard 75807 Paris Cedex 17 Tel.: +33140255-494 Fax: +33140255-248
OGAR Vie 546, boulevard Triomphal Omar Bongo B.P. 201 Libreville Tel.: +241760495 Fax: +241744643
Cornhill Insurance PLC London Head Office 32 Cornhill London EC3V 3LJ
Guildford Head Office 57 Ladymead Guildford, Surrey GU1 1DB Tel.: +441483 568161 Fax: +441483 302681
Riunione Adriatica di Sicurtà S. p. A. Corso Italia 23 20122 Milano www.ras.it
AGF Life Luxembourg S. A 14, Boulevard Franklin Roosevelt 2450 Luxemburg Tel.: +352 472346-1 Fax: +352 472346-235
Allianz Irish Life Holdings Plc. Burlington House Burlington Road Dublin 4 Tel.: +3531613-3000 Fax: +3531613-4444 www.allianz.ie
Allianz Worldwide Care Ltd. 20 D Beckett Way Park West Business Campus Nangor Road Dublin 12 Tel.: +353163013-00 Fax: +353163013-99 www.allianzworldwidecare.com
Zwolsche Algemeene N. V. Buizerdlaan 12 Postbus 8 3430 AA Niewegein Tel: +3130 60-77911 Fax: +3130 60-39347
Allianz EFU Health Insurance Ltd. D-74, Block No. 5 KDA Scheme No. 5 Clifton 75530 Karachi Tel.: +92 2158640-61 Fax: +92 2158640-20 www.allianzefu.com
Dresdner Bank Polska S. A. Al. Jerzo Limskie 123 02-017 Warsaw
Allianz General Insurance Malaysia Berhad Level 40, Menara Citibank 165 Jalan Ampang P.O. Box 12485 50780 Kuala Lumpur www.allianz.com.my
SNAS Vie Avenue Abdoulaye Fadiga x Rue de Thann P.P. 2610 Dakar Tel.: +2218494400 Fax: +2218231078
Allianz Asset Management (Singapore) Ltd. 6 Battery Road #28-01 Singapore 049909 Tel.: +656 31180-80 Fax: +656 31180-95
Allianz Insurance Management Asia Pacific Pte. Ltd. #3, Temasek Avenue #09-01 Centennial Towers Singapore 039190 Tel.: +656 297-8801 Fax: +656 297-1527
Companhia de Seguros Allianz Portugal S. A. Rua Andrade Corvo, 32 1069-014 Lisboa Tel.: +351213165300 Fax: +351213576224 www.allianz.pt
Dresdner Bank ZAO Malaya Morskaya Str. 23 190000 St. Petersburg Tel.: +7 8121185151
AGF Phénix Assurances 4, avenue de la Gare 1001 Lausanne Tel.: +4121340040-4 Fax: +4121340040-5
Allianz Hedge Fund Partners, LP 2, Place du Rhone, 5th Floor 1204 Geneva Tel.: +412 281692-20 Fax: +412 281692-99
Hana Allianz Investment Trust Management Co. Ltd. 11th Floor Hana Securities Bldg. 23-3 Yoido-dong Youngdungpo-gu Seoul 150-709 www.hanaallianz.com
Geschäftssitz Madrid Paseo de la Castellana, 39 28046 Madrid Tel.: +34 91596889-5 Fax: +34 91596889-3 www.allianz.es
Koç Allianz Sigorta A. S. Baǧlarbas̨i, Kisikli Cad. No. 11 81180 Istanbul-Altunizade www.kocallianz.com.tr
Allianz Hedge Fund Partners, LP 4 Embarcadero Center, 32nd Floor San Francisco, CA 94111-4189 Tel.: +1415 95453-56 Fax: +1415 95453-93
Allianz President General Insurance Co., Ltd. 11/F No. 69 Ming Sheng E Road Section 3 Taipei 104 www.allianz.com.tw
Securities Investment Consulting Co., Ltd. 7F, No. 378, Fu Hsing N. Road, Taipei, 104 Taiwan, R.O.C.
Jefferson Insurance Company of New York Monticello Insurance Company Newport Tower 525 Washington Boulevard Jersey City, NJ 07310-1693 Tel.: +1201222-8666 Fax: +1201222-9161 www.jeffgroup.com
Nicholas-Applegate Capital Management 600 W. Broadway San Diego, CA 92101 Tel.: +1619 6878000 Fax: +1619 7448091 www.nicholas-applegate.com
World Access Service Corporation One Holland Place 2235 Staples Mill Road Suite 300 Richmond, VA 23230 Tel.: +1804 2853300 Fax: +1804 8733570 www.worldaccess.com
Adriática de Seguros C. A. Edificio Adriàtica de Seguros Vicepresidencia Ejecutiva, Piso 1 Avenida Andrés Bello (next to Cruz Roja Venezolana) Caracas 1011A
Dresdner Kleinwort Wasserstein Securities LLC 1301 Ave. of the Americas New York, NY 10019 Tel.: +1212 969-2700 Fax: +1212 969-7836 www.drkw.com
Michael Diekmann Chairman Jeffrey H. Post President and Chief Executive Officer
Affiliated enterprises The parent company of the Group and all consolidated subsidiaries. Subsidiaries are enterprises where the parent company can exercise a dominant influence over their corporate strategy in accordance with the control concept. This is possible, for example, where the parent Group holds, directly or indirectly, a majority of the voting rights, has the power to appoint or remove a majority of the members of the Board of Management or equivalent governing body, or where there are contractual rights of control.
Aggregate policy reserve Policies in force – especially in life, health, and personal accident insurance – give rise to potential liabilities for which funds have to be set aside. The amount required is calculated actuarially.
Where it is determined that a loan cannot be repaid, the uncollectable amount is first written off against any existing specific loan loss allowance, or directly recognized as expense in the income statement. Recoveries on loans previously written off are recognized in the income statement under net loan loss provisions.
Assets under management The total of all investments, valued at current market value, which the Group has under management with responsibility for maintaining and improving their performance. In addition to the
Associated enterprises All enterprises, other than affiliated enterprises, in which the Group has an interest of between 20 percent and 50 percent, regardless of whether a significant influence is actually exercised or not.
Capital relating to participating certificates Amount payable on redemption of participating certificates issued. The participating certificates of
Report. Most of these terms concern the balance sheet or the income statement.
Derivative financial instruments (derivatives) Financial contracts, the values of which move in relationship to the price of an underlying asset.
Derivative financial instruments can be classified in relation to their underlying assets (e.g. interest rates, share prices, exchange rates or prices of goods). Important examples of derivative financial instruments are options, futures, forwards and swaps.
FAS U.S. Financial Accounting Standards on which the details of U.S. GAAP (Generally Accepted Accounting Principles) are based.
Gross/Net In insurance terminology the terms gross and net mean before and after deduction of reinsurance respectively. (Net is also referred to as “for own account”). In connection with income from interests in affiliated enterprises, joint ventures and associated enterprises, the term “net” is used where the relevant expenses (e.g. depreciations and losses on the disposal of assets) have already been deducted. In the context of investments the term “net” is used where the relevant expenses
(e.g. for investment management or valuation write-downs) have already been deducted from the income. This means that investment income (net) from investments in affiliated enterprises, joint ventures and associated enterprises signifies the net result from these investments.
Investments held on account and at risk of life insurance policyholders Mainly investments funding variable annuities plus investments to cover obligations under policies where the benefits are index-linked. Policyholders are entitled to the gains recorded on these investments, but also have to carry any losses.
Underwriting costs Commissions, salaries, general expenses and other expenses relating to the acquisition and ongoing administration of insurance policies. The net figure is after expenses recovered from reinsurers have been deducted.
Allianz AG 27, 100 Allianz Companía de Seguros y Reaseguros 106-107 Allianz Culture Foundation 29-30 Allianz Dresdner Asset Management 46, 55, 93, 130-132 Allianz Dresdner Bausparkasse 46, 55, 93 Allianz Dresdner Pension Consult 44, 46 Allianz Environment Foundation 28-29 Allianz Global Risks Rückversicherungs-AG 5, 77, 83, 98 Allianz Hedge Fund Partners 131 Allianz Hungária 108
B Banca Antoniana Veneta Popolare Vita 120 Bank integration 34-55, 93-94
Building insurance 80-81 Bulgaria 107 Business interruption insurance 98 Business principles 14
L Liability insurance 79 Life and health insurance 85-88, 114-126, 138, 150
Thailand Auto Assist 113 Travel insurance 113 Triple Bottom Line 26
W World Access 113 World Business Council for Sustainable Development 28 World Care Assist 113
To get some ideas on how we can make our next Annual Report even better, we would be very grateful if you could give us your reactions and let us know which additional subjects we should cover. If you reply by mail, we'll be glad to pay the postage.
In the interest of our shareholders, we want to make the distribution of this Annual Report as efficient as possible. To avoid unnecessary printing and distribution costs and to demonstrate our concern for the environment, we need to update our distribution list from time to time.
If you send us your name and your current address, it will be our pleasure to mail you next year’s Annual Report as well.
Company: Name, first Name: Address: Please send me the following publications: ● Annual Report 2002
Net revenues from banking ¤ bn 3.9 0.2 0.2 – –
Participation certificates, subordinated liabilities ¤ bn 12 1 1 1 1
Return on equity after taxes % 4.8 10.6 8.5 9.8 8.8
Earnings per share before amortization of goodwill ¤ 9.98 16.12 11.44 9.99 7.96
S U M M A R Y O F R E C E N T Y E A R S
Minority interests in earnings ¤ mn – 1,044 – 18.2 – 1,277 31.1 – 974
Return on equity after taxes % 4.8 – 54.5 10.6 25.2 8.5 1) Adjusted to U.S. Listing and IAS SIC 12
T H E A L L I A N Z S H A R E 2001 Change from 2000 Change from 1999 More previous year previous year information in % in % on page
The Allianz Group is rated A++ by A.M. Best and AA+ by Standard & Poor’s. *) See Consolidated Financial Statements 2001
Please see the TA B L E O F C O N T E N T S on page 9.
_Assets under management increased by 67 percent to 1,172 billion euros.
_Net income for the year amounted to 1.6 billion euros, more than 1.0 billion euros less than originally planned.
Market capitalization at year end¤bn64.298.081.877.654.8 1999 without IAS SIC 12 and SEC adjustment