Operations We operate in the German property-casualty market through operating entities combined under the umbrella of Allianz Versicherungs-Aktiengesellschaft (or “Allianz Sach”). Allianz Sach is the market leader in Germany based on gross premiums written in 2006.(1) Our results of operations presented under Germany also include our property-casualty assumed reinsurance business, primarily attributable to Allianz SE.
Products and Distribution We offer a wide variety of insurance products, of which our main lines of business include motor liability and own damage, general liability, homeowner and accident. Allianz Sach distributes its products mainly through a network of full-time tied agents. However, distribution through Dresdner Bank branches and the internet is increasing in relative importance.
Outlook With Germany being a rather mature market with a high degree of competition, one of the key challenges is managing the trade-off between achieving growth while maintaining profitability. We are currently reorganizing our major German operating entities. The new structure is designed to further develop our leading position in the German insurance market by a joint presence, thus allowing us to provide an enhanced customer orientation and improved service, while at the same time cutting costs in the long-term through reduced complexity.(2)
France
Through the companies of AGF Group, we ranked third in the property-casualty market in France, based on gross premiums written in 2005.(3)
Products and Distribution The broad range of “AGF” brand products for both individuals and corporate customers, including property, injury and liability insurance, are distributed primarily through a network of general agents, brokers and other direct sales channels.
Outlook Operating in a market that has seen limited growth in recent years, we seek to focus on maintaining operating profitability while simultaneously implementing selective initiatives aimed to generate growth. One such initiative is the introduction of a new motor tariff at the end of 2006, which we expect will have a beneficial impact on our business development in the coming years.
The proposed acquisition of the minority interest in AGF is expected to reduce the complexity of our organization and allows us to further implement Allianz Group-wide programs and initiatives, as well as to strengthen our market position in France.(4)
Italy
Operations We operate in the Italian market through our “RAS”, “Lloyd Adriatico” and “Allianz Subalpina” brands. Jointly, we continued to rank third in the Italian property-casualty market, based on gross premiums written in 2005.(5)
Products and Distribution The RAS Group operates in most major personal and commercial property-casualty lines in Italy, while Lloyd Adriatico S.p.A. underwrites mainly personal lines. The RAS Group’s most important business line is motor. Other important businesses include fire, general liability and personal accident.
Outlook The Italian non-motor market, which has a lower penetration rate for insurance products compared to other European markets, represents a potential market for growth. Among other channels, we also view distribution through direct operations as a growth channel.
RAS S.p.A., Lloyd Adriatico S.p.A. and Allianz Subalpina S.p.A. have launched the project to integrate the Allianz Group’s operations in Italy. The integration is designed to allow Allianz to serve the Italian market, its second largest based on gross premiums written 2006, with a broad range of insurance and financial products and with more effective customer service. We are also implementing this integration to seek to benefit from the announced deregulation of insurance distribution in Italy.
United Kingdom
Operations We serve the market in the United Kingdom primarily through our subsidiary Allianz Cornhill Insurance plc. (or “Allianz Cornhill”) and rank seventh based on gross premiums written in 2005.(6) In 2006, Allianz Cornhill further strengthened its market position in the United Kingdom through the acquisition of the remaining interest in PremierLine Direct Ltd. and the acquisition of Home & Legacy Holdings Ltd.
Products and Distribution We offer a broad range of property-casualty products, including a number of specialty products, which we offer through our personal, commercial and specialty lines and through a range of distribution channels, including affinity groups.
Outlook Operating in a highly competitive market, Allianz Cornhill has concentrated on active cycle management as a measure to support its operating profitability.
Effective April 30, 2007, Allianz Cornhill Insurance plc. will change its company name to Allianz Insurance plc. in order to benefit from the “Allianz” brand.
Switzerland
Operations In the Swiss market we are represented by the Allianz Suisse brand and Allianz Risk Transfer AG. Allianz Suisse acts as the umbrella brand for our four general property-casualty legal entities in Switzerland. Based on gross premiums written in 2005, Allianz Suisse ranks fourth in Switzerland.(7)
Products and Distribution While Allianz Suisse operates in the general property-casualty market in Switzerland, Allianz Risk Transfer AG offers conventional reinsurance and a variety of alternative risk transfer products. The most important line of business for Allianz Suisse is motor, comprising approximately 42% of its gross premiums written in 2006.
Outlook In the very competitive market environment in Switzerland, we will continue to put profitability first while expecting to achieve attractive growth.
Spain
Operations We serve the Spanish market through our operating entities Allianz Compañía de Seguros y Reaseguros S.A. and Fénix Directo S.A. We currently rank third in the Spanish market, based on gross premiums written in 2006.(8)
Products and Distribution In Spain, we offer a wide variety of personal and commercial property-casualty insurance products, with an emphasis on motor business, comprising approximately two-thirds of our gross premiums written in Spain in 2006.
Outlook Market conditions in Spain are characterized by the continuation of intense price competition in motor business.
Western and Southern Europe
Operations We conduct property-casualty operations in most of the other Western and Southern European countries, of which, based on gross premiums written in 2006, the largest are our operations in the Netherlands, Austria and Ireland.
Products and Distribution The most important lines of business of Allianz Nederland Schadeverzekering N.V. in the Netherlands are motor and fire insurance. Our Dutch subsidiary distributes its products through independent agents and brokers.
Allianz Elementar Versicherungs-Aktiengesellschaft in Austria offers a broad range of products to individual and group customers primarily through salaried sales forces, tied agents and brokers.
Our subsidiary Allianz Irish Life Holdings p.l.c. offers a wide variety of products, mainly motor and property insurance for both commercial and private customers in Ireland, and distributes predominantly through brokers and banks as well as telephone- and internet-based direct sales channels.
Outlook The Dutch insurance market is characterized by intense competition, with expected price decreases in the motor business. In Ireland, we expect the market will become more favorable in 2007, both in commercial and in personal lines.
New Europe
Operations We are the leading international insurance company in Central and Eastern Europe, based on gross premiums written in 2005(9) which we believe is one of the fastest growing insurance markets in the world. We serve the market through our operating subsidiaries in Hungary, the Czech Republic, Slovakia, Poland, Bulgaria, Romania and Croatia. We also sell property-casualty insurance in Russia through our subsidiaries embraced under Allianz Russia and our participation in Russian People’s Insurance Society “Rosno”.
Products and Distribution The primary products sold in these countries are mandatory motor third-party liability and motor own damage coverage.
Outlook Motor business and increasingly other personal lines products continue to be the primary sources of our profitable growth, while we also expect to expand and further develop our sales network. We believe we are well-positioned to capture the opportunities from the expected growth in demand for property-casualty insurance products.
On February 21, 2007, the Allianz Group announced the purchase of further interest in Rosno, increasing our holding to approximately 97%. With this acquisition we are expanding our position as the number one insurer in Central and Eastern Europe.
United States
Operations Our operations in the United States are organized under the umbrella of Allianz of America Inc., which comprises a group of operating entities underwriting a wide, but focused, variety of lines of business.
Products and Distribution Through Fireman’s Fund Insurance Company (or “Fireman’s Fund”), we underwrite personal, commercial and specialty lines. Fireman’s Fund’s business strategy focuses on specific markets. The personal lines address the needs of high net worth customers. The commercial business targets a core set of industries offering specialized products and services. Our specialty products are sold through local distribution channels which allows us to tailor our products and services to our customer’s needs.
Outlook Fireman’s Fund expects to continue to grow in these target markets by enhancing customer solutions. We plan to upgrade customer service capabilities, introduce new products and services, and leverage cross-selling through strengthened distribution management.
In addition, we are currently undertaking certain reorganization measures in the United States. We expect these measures will help us to strengthen our market position.(10)
Asia-Pacific
Operations In Asia-Pacific, the large majority of our business is generated by Allianz Australia, which serves the markets of Australia and New Zealand. We also maintain operations in Malaysia, Indonesia, as well as other Asia-Pacific countries, including China, Thailand, Japan, Hong Kong, Singapore, Laos and India.
Products and Distribution Our Australian insurance operations include a variety of products and services, with particularly strong positions in the workers compensation market, as well as in rehabilitation and occupational health, safety and environment services. We also operate in certain niche markets, including premium financing and pleasure craft insurance. Allianz Australia markets our products through brokers and non-tied agents as well as directly to customers.
Outlook Allianz Australia expects to continue to employ market segmentation technique, which includes diversifying its portfolio outside of the traditionally cyclical areas.
South America
Operations We conduct our property-casualty operations in Brazil through our subsidiary AGF Brasil Seguros S.A. Based on gross premiums written in 2006, we are the seventh-largest property-casualty insurance provider in Brazil.(10) We also sell property-casualty products in Colombia, Argentina and Venezuela.
Products and Distribution In Brazil, we write primarily automobile insurance, but also fire, transportation and other lines. Distribution is organized primarily through independent agents and brokers. In Colombia, Venezuela and Argentina we also market a broad range of products.
Outlook We expect growth to continue, primarily in Brazil and Argentina, mainly driven by the motor market.
Specialty Lines
Operations Through our subsidiary Euler Hermes, the largest credit insurer in the world, based on gross premiums written in 2005(9), we underwrite credit insurance in major markets around the world.
Allianz Global Corporate & Specialty primarily combines the Allianz Group’s international corporate insurance business.(11)
Through Mondial Assistance Group, we are among the world’s largest providers of travel insurance and assistance services based on gross premiums written in 2005.(9)
Products and Distribution Euler Hermes provides enterprises protection against the risk of non-payment of receivables and customer insolvency. Thereby, we help companies of all sizes, wherever they trade, to safeguard and grow their business. In addition, through Allianz Global Corporate & Specialty, we offer a variety of other specialty lines of business, namely marine, aviation and industrial transport insurance, international industrial risks reinsurance, and through Mondial Assistance Group, we offer travel insurance and assistance services. In contrast to our other insurance businesses, we manage and offer these services on a worldwide basis.
Outlook Through the recent combination of our international corporate business within Allianz Global Corporate & Specialty, which manages a diversified portfolio of risk management solutions and services, we expect to realize synergies and increase efficiency.
At Mondial Assistance Group, we seek to enter in new markets and develop new products. A variety of sales channels including the internet is used to achieve this goal.
(1) Source: German Insurance Association, GDV. (2) Please see “ Allianz Group Success Factors – Important Group Organizational Changes – Reorganization of German Insurance Operations” for further information. (3) Source: French Insurers Association, FFSA. (4) Please see “Executive Summary and Outlook – Outlook – Significant Expected Investments” for further information. (5) Source: Italian Insurers Association, ANIA. (6) Source: Financial Services Authority, FSA. (7) Source: Statistics of the Swiss Federal Bureau of Private Insurers. (8) Source: Research and Statistics Bureau of Spanish Insurers and Pension Funds, ICEA. (9) Source: Own estimate based on published annual reports. (10) Please see “Allianz Group Success Factors – Important Group Organizational Changes – Reorganization in the United States” for further information. (11) Please see “Allianz Group Success Factors – Important Group Organizational Changes – Merger of Industrial Insurance Business within Allianz Global Corporate & Specialty” for further information on this newly created subsidiary.
