Perlet: The year 2002 was undoubtedly the most difficult year with which Allianz and the financial sector in general have ever been confronted. A loss of 1.2 billion euros is more than disappointing, and there is no positive gloss to be applied here.

However, it was not a wasted year. In recent months, Allianz has done the groundwork for future developments and for enhancing the value of the company. We have managed to influence the factors that we are able to. But anxiety about war, recession and weak capital markets are factors over which we have no control.

Perlet: Our program is “back to basics", and we need to follow our aims consequently. We need to improve our operating result in order to regain profitability without gains on disposals.

For property and casualty insurance in 2002, we were already able to reduce the combined ratio by 3.1 percentage points to 105.7 percent. After adjustment for special factors, the combined ratio was 101.7 percent.

During the course of the current fiscal year, we want to bring this indicator below 100 percent. This will enable us to reach the goal originally set for 2004 ahead of time by one year.

Perlet: Many of our national companies already have a combined ratio of less than 100 percent. These companies include Lloyd Adriatico, Allianz Cornhill and Allianz Spain.

We have shed loss-making areas of our American insurer Fireman’s Fund , drastically cut costs and introduced substantial price increases. We are anticipating a combined ratio of about 100 for the fiscal year 2003.

In the industrial insurance segment, we have established two specialist units, Allianz Global Risks and Allianz Marine & Aviation. Both units have a clear focus and a specific strategic alignment. Here, we can already report significant improvements on the path leading to turnaround.

Perlet: Despite the difficult economic situation and the negative trend on the capital markets, Allianz is a financially sound and secure partner. Our ratings and financial capacity are top flight of the industry.

And, in uncertain times, customers go for the industry’s quality providers. Thus Allianz Lebensversicherung achieved the record result of a 30 percent increase in new policies. This shows that the Allianz quality and solid products and services are demanded by our customers more than ever.

Perlet: We are implementing a consistent turnaround program at Dresdner Bank. In 2002, the bank succeeded in achieving three key targets. Firstly, risk assets were decreased substantially from 189.8 to 142.7 billion euros. Secondly, administrative expenses at Dresdner Bank were reduced by 12.3 percent.

Furthermore, non-strategic and non-performing loan portfolios are being swiftly transferred from the bank to the Institutional Restructuring Unit. This will enable the bank to devote its full attention to improving operating business.

The specialist unit will then be handling a loan portfolio of around 22 billion euros (editor’s comment: the credit line amounts to 30 billion euros, of which 22 billion euros have been drawn). I emphasize here that the majority of loans are being serviced by interest payments and only a small proportion constitutes bad loans.

Perlet: We have learnt our lessons over the past two to three years and we are going to reduce our dependence on the capital markets by achieving an even better mix and spread for our investments on a sustained basis.

This does not mean that we now intend to withdraw completely from the equity markets as a major investor, particularly given the fact that we are now sustaining cyclical losses rather than gains. The Dresdner Bank transaction should be viewed in light of reducing the financial holdings in HypoVereinsbank and Munich Re, on the one hand, and building up holdings related to core businesses in Allianz Leben, BVB (the Bavarian Allianz) and Frankfurter Allianz, on the other.

We have also implemented changes in the industrial area. We will continue along these lines if action is appropriate in the context of managing our overall portfolio.

Perlet: In view of volatile financial markets and anxiety about the prospect of war, we are unable to make any concrete forecasts. We have set ourselves the goal of significantly improving earnings in 2003. Four factors will help us in the process:

Firstly, we will only underwrite insurance business at an adequate price. Through this we will bring down the combined ratio even further.

Secondly, we will reduce costs and increase efficiencies across all business segments.

Thirdly, we will consequently continue the Dresdner Bank’s Turnaround Program. Above all, this means getting a grip on the costs and reducing them further, in order to reduce the critical loan portfolio with the help of the Institutional Restructuring Unit and to increase operating income.

Fourthly, we will strengthen our capital base. Through this we will benefit from growth opportunities, which result from the customer’s need for solidity and safety. To bring these chances into a proportion we can take Allianz Leben, with record earnings in new business and an increased market share, as an example.

We will continue to concentrate on the things we can influence. Certainly, we want to become more independent from developments on the capital markets. But we must remain realistic. Capital markets are an important part of our business and will therefore always have some influence on our results.

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