The Allianz Group achieved its goal of profitable growth with an increase in earnings of nearly 23 percent (adjusted for extraordinary effects: 11 percent) in 1999. Shareholders at this year’s General Meeting will receive a proposal to increase the dividend by 11 percent from 1.12 to 1.25 euros. Gross premium income increased during the first quarter of fiscal 2000 by 7.5 percent from 15.7 to 16.8 billion euros. Growth in sales of 4 percent and growth in earnings of 10 percent are anticipated by year-end. With a focus on its customers Allianz is launching an Internet offensive and a global branding campaign.

Premium Income up by 16.4 Percent

Premium income climbed worldwide by 16.4 percent from 46.2 billion euros to 53.8 billion euros. Around 82 percent of income was written in the domestic European market. Nearly two thirds of total premiums came from the Property and Casualty insurance business (36 billion euros, + 16.7 percent).

Loss expenses related to natural catastrophes rose significantly, particularly in our companies in Germany, France, Switzerland and Austria. Two storms alone – “Lothar” and “Martin” – incurred expenses of more than 260 million euros after reinsurance. Earthquakes in Turkey, Greece and Taiwan also impacted on the Allianz Group.

Sales rose by 16.3 percent in the Life and Health insurance business to 18.5 billion euros. The favourable development of business in Germany played a major role in bringing about a noticeable increase in premiums written. This development was driven by the sustained political debate surrounding the future of the state pension insurance system and the plans discussed by the German government to tax the capital gains of life insurance policies.

Net Investment Income up by 24.5 Percent

Assets under Management of the Allianz Group reached a value of 384 billion euros in 1999. This represents a rise of 42 billion euros or 11 percent as compared to 1998. The total assets under management include investments of 30 billion euros managed for private and institutional customers. This business segment achieved a net income of 53 million euros. The overall result from the Group’s own assets under management increased by 24.5 percent from 14.8 to 18.4 billion euros.

Adjusted Net Income up by 11 Percent

Earnings before taxes and amortization of goodwill increased by 11.6 percent from 4.4 billion euros to 4.8 billion euros. After deduction of the amortization of goodwill and the minority interests in earnings, and after taxes that were reduced as a result of fiscal changes, net income for the year came out at 2.2 billion euros. Adjusted for extraordinary effects amounting to 213 million euros after taxes and minority interests, net income for the year rose by 11 percent to 2 billion euros (1998: 1.8 billion euros).

Recommendation for Dividend Increase of 11 Percent

The improved earning power generated a rise in earnings per share amounting to 9.11 euros. This translates to 8.24 euros per share (1998: 7.50 euros) after the adjustments for the extraordinary effects referred to. At the Annual General Meeting a dividend increase will therefore be proposed for the sixth consecutive year, this time by 11 percent from 1.12 to 1.25 euros.

Free Float Increases

The number of shareholders rose by more than one third, from 197,000 to 262,000. With a market capitalization of 81.8 billion euros at the end of 1999 the Allianz Group is one of Europe’s most highly valued stock corporations.

51 percent of Allianz shares are now in free float. The planned reduction in cross holdings by Allianz and Munich Re will again significantly increase the free float over the coming years from 51 percent to 56 percent. This makes the Allianz share an even more attractive proposition for private investors.

First Quarter and Outlook for Fiscal 2000

Gross premium income increased during the first quarter of fiscal 2000 by 7.2 percent to 16.8 billion euros. This growth rate was favoured by consolidation and currency effects. Premiums written in property and casualty insurance rose by 5.3 percent from 11.3 to 11.9 billion euros. Sales in life and health insurance went up by 11.9 percent from 4.4 to 4.9 billion euros.

Allianz anticipates an increase in sales for the current fiscal year of 4 percent by the end of 2000. The current perspective indicates that growth in earnings should be around 10 percent. This figure excludes extraordinary effects for 1999. It is consequently based on an adjusted value of 2 billion euros for 1999. This estimate is, however, subject to the reservation that no major burdens arise from natural catastrophes or major claims, and that there are no significant upheavals on the capital markets.

Ongoing Internationalization and Investment in Core Business

Allianz consistently pursued a strategy of internationalization and expansion of its core businesses in 1999. Alongside the successful integration of the French AGF Group, the acquisition of the American asset manager PIMCO represented another milestone. The PIMCO transaction, for which legal formalities were completed this spring, has taken Allianz a quantum leap forward to rank sixth in the Global League of asset managers.

Active Portfolio Management

As an institutional investor, Allianz will continue to make long-term equity investments. This form of investment offers attractive returns and also fulfils an important macroeconomic purpose – providing capital for entrepreneurial growth. In the expectation that the government’s fiscal reform plans will come to fruition, Allianz will, however, take a generally more proactive and flexible approach in the management of its portfolio. The advent of the euro also allows Allianz to pursue an investment policy focused on Europe rather than on Germany. “We will make full use of the increased flexibility and the scope for wider investment to further improve our performance and reallocate capital into our core business activities”, said Dr. Henning Schulte-Noelle, Chairman of the Board of Management at Allianz AG.

Service and Internet Offensive

Allianz is the first insurer to provide its customers worldwide with a patent liability insurance that affords protection against financial loss. Allianz is also one of the first insurers to launch a liability insurance against Internet and computer risks. There are also innovations in asset management: The fund of funds family “Horizont” which will be launched this May will already contain funds managed by PIMCO.

With annual investments in the triple-digit millions of euros Allianz is pursuing a number of Internet activities. Strategic partner for these activities will be Cisco Systems – the leading supplier of hard and software for networking equipment. Allianz customers will have additional information, service, and purchasing opportunities via the Internet. Among other steps, Allianz is planning to set up a global Allianz portal where individual Group companies will be able to target their specific markets and customers.

Global sponsoring activities

Allianz is planning to raise its global profile with new branding activities. Yesterday Allianz signed a partnership contract with the BMWWilliamsF1 team and a letter of intent with the FIA (Fédération Internationale de l’Automobile). This initiative is a continuation of the international “The power on your side” image campaign launched last year. The joint venture is groundbreaking in Formula 1, as it encompasses a cooperation in risk management and an associated knowledge transfer between the BMWWilliamsF1 team and the Allianz Center for Technology.