Allianz and AGF complete creation of EULER & HERMES

Through this transaction, credit insurance becomes one of the core businesses of the AGF within the Allianz Group. The combined entity will be named EULER & HERMES S.A.

This move naturally concludes several years of co-operation between the two insurers who had already combined their company risk databases to form one of the most extensive and effective files in the world (jointly EULER and HERMES have information on more than 40 million companies internationally); they had also developed their global business operations in a coordinated way.

"EULER and HERMES have both proven their ability to be successful. With their highly qualified teams they are able to offer comprehensive risk insurance against bad commercial debt losses worldwide," stresses Dr. Reiner Hagemann, Member of the Board of Management of Allianz AG and Chairman of the Supervisory Board of HERMES Kreditversicherungs-AG. "EULER & HERMES will reach an indisputably leading position with a strong presence all over the world in a specialty business which is now core to the Group," adds Jean-Philippe Thierry, Chairman and Chief Executive of AGF Group and Chairman of the Supervisory Board of EULER.

The transaction values HERMES, the leading German credit insurer, at 550 million Euro for its entire share capital. This value represents a multiple of 1.5 times the adjusted net asset value of HERMES. The final price might be subject to adjustment should the adjusted net asset value at year-end 2001 be materially different from the one used in the valuation. EULER will buy 97.3 percent of HERMES from Allianz during the first quarter of 2002.

The financing will be provided through a capital increase with preferred rights of approximately 170 million Euro (scheduled for the second quarter of 2002), and the issuance of subordinated shareholder debts of 100 million Euro, the balance being financed by bank borrowing and the sale of part of EULER’s existing treasury shares. The transaction is EPS accretive from year 1, before goodwill amortization and synergies for both EULER and AGF.

Following this transaction, on the assumption that every current shareholder takes up all the shares offered to him in conjunction with the shares issue, AGF will hold at least 56 percent of the share capital in the new group and Allianz 10 percent. AGF is already committed to ensuring the success of the capital increase.

Both AGF’s Transactions Committee and independent members sitting on the Supervisory Board of EULER reviewed the work done by an independent expert and approved the terms of the transaction which they regarded as fair, appropriate and respectful of the interests of minority shareholders. Deloitte & Touche Corporate Finance has to issue a fairness opinion on the transaction price.

Mr. Jean Lanier will continue to be the Chairman of the Board of Management of EULER & HERMES, which also comprises of Mr. Gérard Barthélémy and Mr. Jean-Marc Pillu, at present members of the Board of Management of EULER, and Mr. Clemens Freiherr von Weichs, currently a member of the Board of Management of HERMES. Mr. Bodo Goschler, presently Chairman of the Board of Management of HERMES will retire as of June 30, 2002. It is being proposed to the Supervisory Board of HERMES to appoint Mr. Clemens Freiherr von Weichs as Chairman of the Board of Management of HERMES as of July 1, 2002. Dr. Reiner Hagemann will stay as Chairman of the Supervisory Board of HERMES. The chairman of the Supervisory Board of EULER & HERMES will remain Mr. Jean-Philippe Thierry, Chairman and Chief Executive of AGF Group.

The new group is expected to enhance value creation through both cost and revenue synergies in many areas. First, the implementation of a common business model should improve the risk underwriting. Common credit risk assessment standards and procedures as well as common risk transparency and control will have positive impacts on loss and cost ratios. Harmonized product development and marketing will reduce internal as well as external costs and lead to a comprehensive and coherent product and services offer and cross-selling opportunities for the EULER & HERMES customers. Cost reductions are also expected in reinsurance through the concentration of the reinsurance program and a harmonized market approach including the use of a broader capital base. In addition, economies of scale in IT could be envisaged as well as enlarged transfer of best practices, these also being a source of higher efficiency. The new group will offer to its employees wider national and international career opportunities.

With sales of 1.8 billion Euro (pro forma 2000), EULER & HERMES will be uniquely positioned in the credit insurance, factoring and bonding sectors to gain maximum benefit. Due to an optimal geographic fit in the presence of the two insurers, EULER & HERMES will hold leading positions in most developed and emerging markets in Europe, North America and in the high growth countries of Asia and South America.

Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue” and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group's business and markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates including the Euro – U.S. dollar exchange rate, (viii) changing levels of competition, (ix) changes in laws and regulations, including monetary convergence and the European Monetary Union, (x) changes in the policies of central banks and/or foreign governments, (xi) the impact of our acquisition of Dresdner Bank, including related integration issues, and (xii) general competitive factors, in each case on a local, regional, national and / or global basis. The matters discussed in this release may also involve risks and uncertainties described from time to time in Allianz AG’s filings with the U.S. Securities and Exchange Commission. Allianz AG assumes no obligation to update any forward-looking information contained in this release.