We will never stop testing whether the good we have achieved is good enough. Perhaps there is still just a bit more potential somewhere that can be harnessed to create additional value for you, our investors. The most obvious change, even to a casual observer, let alone a watchful insider, is the change that Allianz is undergoing as a team. The company has become more transnational and more nimble; we are now able to work together effectively and smoothly, across borders, units and hierarchies. This is good news for you, the shareholder.
Board and on the basis of reporting by the Board of Management, we discussed in detail the business development and important decisions and business transactions and, as far as required by law or the Articles of Association, passed resolutions. In addition, we dealt with the planning of the Board of Management for fiscal year 2006 and medium-term planning. For the past fiscal year, explanations of any deviations from plans and objectives in the course of business were presented to us and taken into account by us.
We dealt with the planned acquisition of a participation in the
In the year under review, the Standing Committee held three meetings, dealing mainly with the merger of RAS into Allianz
The issues addressed were the personnel issues involved in the change in the Board of Management, individual rules in the Board of Management contracts and the structure and amount of the remuneration of the Board of Management. There was no need for the Mediation Committee to convene.
The Supervisory Board was regularly informed about the work of the committees.
In this context we have revised our Group-wide “Code of Conduct ”. It establishes obligatory rules of conduct for all employees.
The composition of the Supervisory Board and its committees is shown on pages 8 and 10.
tries. They will be named according to the rules effective in their respective countries, and later be elected by the first General
Furthermore, we comply with all but one of the non-binding suggestions of the German Corporate Governance Code. The exception is that the shareholder representatives on the Supervisory
They essentially include insurance coverage generally granted in the industry and the use of a company car. In 2005, incomeequivalent ancillary benefits amounted to € 0.2 million (2004: The members of the Board of Management either receive no remuneration from mandates at Allianz Group companies or the remuneration paid to them from such mandates is turned over to the company in full. Of the remuneration received from positions in companies outside the Allianz Group, 50 % is turned over to the company and, in the year under review, this amounted to € 0.5 million (2004: € 0.5 million). This remuneration is shown in the annual reports of the companies concerned. A list of supervisory mandates in companies outside the Allianz Group is provided on pages 210 to 211 of this Annual Report.
This means first taking over the minority interests in RAS, merging
Through Allianz AG, our holding company, we assign available capital on the basis of the risk-return profile and the value proposition of our operating companies. In this process, only those operating entities which operate in a profitable market or business segment, which transform their market position into sustainable creation of value and achieve a leading market position; whose orientation and competency fit within the long-term strategy of the Allianz Group; and which are able to generate distributable earnings that are at least equal to their capital costs can count on growth capital.
Since the end of 2000, Allianz shares have also been traded on the New York Stock Exchange in the form of American
Our web portal was expanded and restructured in 2005, so that investors could find the information which is important to them even more quickly. The pages contain the online annual report and supplementary information on our strategy, business, share and management. We report on analyst and investor conferences, and provide presentations and important publications for download. We broadcast our analyst conferences and teleconferences live over the Internet. There is a “Shareholder Service” section, in which we answer frequently asked questions and publish newsletters. Beyond this, we offer services online in relation to the
assumed 39.6 %, 37.6 % and 39.1 %, respectively, of all reinsurance ceded by Allianz Group companies, while Munich Re is our primary third-party reinsurer. Allianz AG also provides centralized advice to subsidiaries on structuring their own reinsurance programs and establishing lists of permitted reinsurers. In addition, the Allianz Group, through Allianz AG, has a pooling concept in place whereby natural catastrophe reinsurance cover is offered to
Please see “Banking Operations” for a breakdown of our banking operations by division and geographic region, respectively.
Paris and Milan, as well as San Francisco, San Diego and Newport
Our Annual Report for the year ended December 31, 2004 was prepared in conformity with IFRS effective as of December 31, 2004 as adopted under EU regulations in accordance with clause 292a of the German Commercial Code (or “HGB”), which we refer to below as “pre-2005 IFRS.” Effective January 1, 2005, a number of new and revised IFRS were introduced, some of which required retrospective application to all years presented within our consolidated financial statements. Our Annual Report for the year ended December 31, 2005 is prepared in accordance with the new and revised IFRS effective January 1, 2005 as adopted under
As a result of the adoption of IFRS 2, the PIMCO LLC Class B
North and South America Rest of Europe Asia-Pacific & Rest of World Germany
Growth varied considerably across different markets. Positive developments were primarily experienced by our operations in the United States, our Swiss operations, Allianz Marine & Aviation within our specialty lines, and Allianz Australia with additional gross premiums written of € 355 million (7.7 %), € 196 million spectively. At Fireman’s Fund Insurance Company (or “Fireman’s
were relatively unchanged, as our strong operating profitability allowed us to reduce the realization of net capital gains by € 538 million, while net impairments were € 519 million lower due to strong capital markets and the absence of a large real estate impairment recorded in 2004.
Other important business lines include fire, general liability and personal accident. Among other channels, distribution through direct telephone and the Internet exhibit signs of healthy growth and profitability. On a combined basis, RAS and Lloyd Adriatico continued to rank third in Italy based on gross written premiums in 20044). Although operating in a highly competitive market, our
Group, we are among the world’s largest providers of travel insurance and assistance services based on gross premiums written in 2005 of €1.0 billion.
Our statutory premiums rose by 6.5 % to € 48.1 billion, with particularly strong growth in our key European markets resulting from our solid market positions, our ability to reach our customers through a variety of distribution channels and increasing demand for retirement products. Based on internal growth, our statutory premiums increased by 6.0 %. The strongest growth rates were achieved within Germany Life at 11.8 % (€ 1,293 million), France at 12.0 % (€ 567 million), Italy at 6.6 % (€ 575 million) and the
Likewise, in the United States, statutory premiums remained strong at € 11,115 million. Conversely, in Spain, statutory premiums at Allianz Seguros declined by 19.1 % to € 547 million primarily due to a large pension contract we acquired in 1Q 2004.
This increase was largely attributable to additional aggregate policy reserves mirroring the development in net premiums earned and an overall increase in expenses for premium refunds, attributable to policyholders, due to improved results of operations at
in 2005, also driven by the acquisition of AVIP and Martin Maurel
The following table sets forth our banking operating revenues, cost-income ratio, as well as earnings after taxes and before minority interests in earnings, which we refer to herein as “earnings after taxes and before minority interests”, by division. Applicable only for 2004 and 2003, earnings after taxes and before minority interests by division excludes amortization of goodwill. Consistent with our general practice, operating revenues, cost-income ratio and earnings after taxes and before minority interests by division are presented before consolidation adjustments, representing the elimination of transactions between Allianz Group companies in different segments.
and 55 % of total assets under management of the Allianz Group at December 31, 2005 and 2004, respectively. We operate our third-party asset management business primarily through AGI. At
In this context, approximately € 1.1 billion was placed out of authorized capital without pre-emptive rights and a € 1.1 billion equitylinked loan was executed with a variable redemption amount linked to the share price of Allianz AG, which can be settled, at the Allianz Group’s option, in cash or 10.7 million Allianz AG
Allianz AG. This merger is part of a comprehensive transaction, resulting in the full acquisition of RAS by Allianz AG. In connection with this transaction Allianz AG will convert into a European
Group equivalent to an “AA” rating from Standard & Poor’s. Risk balancing effects result from the fact that not all potential losses are realized at the same time. With the internal risk capital model, we are able to evaluate risks more precisely and optimize allocation of capital within the Allianz Group.
Value-at-risk is only one of the instruments used to characterize and control the risk profile of Dresdner Bank. In addition, Dresdner
We are monitoring the Solvency II Project to prepare for the anticipated changes to the European insurance solvency requirements. In particular, we are continuously improving the methodology of our internal risk model to meet future requirements on internal models (Solvency II).
Our capital requirements are primarily dependent on our growth and the type of business that we underwrite, as well as the industry and geographic locations in which we operate. In addition, the allocation of our investments plays an important role. During our annual management planning dialogues with our operating entities, capital requirements are forecasted through business plans regarding the levels and timing of capital expenditures and investments. Regulators impose minimum capital rules on the level of both our operating entities and the Allianz Group as a whole.
Allianz AG to maintain its status as a “financial holding company”
While Allianz AG receives internal funding from Allianz Group operating entities through the payment of dividends, it also paid dividends of € 674 million and € 551 million to our shareholders in 2005 and 2004 with respect to the fiscal years 2004 and 2003, respectively. The Board of Management and the Supervisory Board propose to pay a dividend of € 2.00 per eligible share in 2006 for fiscal year 2005, which will approximate € 811 million of dividend payments in 2006.
Total wages and salaries paid by the Allianz Group in 2005 to its employees worldwide amounted to € 9.6 billion (2004: € 9 billion ). Of this amount, € 1.6 billion or 16.7 % was performance-related. Social security contributions, pensions and other employee benefits amounted to € 2.3 billion (2004: € 2.1 billion).
We have modified this method and adapted it to the requirements of a financial service provider. 450 of our employees around the world have already received training in applying this approach and have been certified. We shall significantly increase this number, so that we are able to rapidly and competently improve the processes and methods employed in our work environment on a continuous and sustainable basis.
The table set forth below contains the aggregate fees billed for each of the last two fiscal years by KPMG DTG or KPMG DTG and the worldwide member firms of KPMG International (or “KPMG”)