Global Compact and Sustainability Risks

Climate change, nanotechnology and viruses with the potential to cause a pandemic are present-day risks to which a financial enterprise could be particularly susceptible. Detecting such risks at an early stage is not only a requirement for our risk management but is also part of our social responsibility for sustainable development.

In our risk management we also constantly analyze fundamental political and economic trends that impact on our business and the risks to which our customers are exposed. This is aimed at enabling us to take countermeasures in good time if a pre-determined danger level is reached. Our risk policy, which applies to the whole Group, stipulates these tolerance limits for the entire risk portfolio (more details in chapter Risk Report of this Annual Report).

As insurers we are also trustees. This gives rise to a particular duty we have to comply with sustainability criteria. We are true to our word in respect of our customers and shareholders, our employees, and society as a whole. In meeting this responsibility we are guided by the ten principles of the UN’s Global Compact (for more information about this, visit www.unglobalcompact.org). These relate to environmental protection, human rights and transparency of corporate management.

Climate change

The particularly destructive natural disasters in fiscal year 2005, which are partially attributable to climate change, have led us to adjust our risk management to the new risk exposure. At the same time, new regulations relating to climate change open up additional business opportunities. In order to be in a better position to assess risks and opportunities, and because we are convinced that transparency also benefits our customers in this regard, we urge disclosure of climate-related risks. We are signatories to the Carbon Disclosure Project (for more information about this, visit www.cdproject.net) and make use of the Enhanced Analytics Initiative (further information at www.enhancedanalytics.com) so that, as an investor, we are in a better position to identify risks that are not apparent from financial figures but which are nonetheless of material significance.

In January 2006, Allianz adopted a climate strategy involving an action program containing about 80 measures, applicable to the whole Group. We set ourselves three objectives:

1. We wish to improve our identification of climate-related risks in the insurance, banking and asset management lines of business and to quantify them as precisely as possible. This will be achieved by the end of 2007. We will be guided by sustainability criteria throughout this process.

2. We are working on tapping into new business opportunities resulting from climate change (for example, investment in renewable energy or in trading emissions rights).

3. We sponsor cooperation with scientific institutes with an acknowledged involvement in these areas.

The Allianz Climate Core Group, comprising managers from the relevant business units, is responsible for the action program. The “task force” is chaired by the Chief Risk Officer at Dresdner Bank. He reports to the chairman of Allianz SE and to a Holding Board for each of the business segments Insurance and Asset Management. Further information on the subject is available on our website at www.allianz.com/sustainability and www.allianz.com/climate.