Weak capital markets impact Allianz Group results

In light of the continuing weak capital markets and the resulting impact on the performance of the capital holdings and the banking business the Allianz Group is adjusting its profit outlook for fiscal 2002 to the changed environment. The previous forecast for the full fiscal 2002 of 3 billion euros (after 1.62 billion euros for the year 2001) was based on the assumption that the equity market would stabilize at the level reached at the start of the year. It is clear that in current market conditions the forecast cannot be achieved while maintaining the expected quality of earnings.

In the first half-year of fiscal 2002 the Allianz Group has achieved a profit of around 1.6 billion euros. However, due to the weakness of the capital markets a loss of about 350 million euros had to be registered in the second quarter.

Besides the investment portfolio, which had to absorb high write-downs, the banking segment was especially affected. Here the difficult condition of the capital markets resulted in a significant drop in earnings; the cost reduction measures implemented and executed so far have not been able to compensate for the shortfall. Furthermore, a limited number of large-scale insolvencies and the ongoing difficulties in Latin America continue to weigh on the credit portfolio. It is to be expected that the result in this business segment will be clearly negative and therefore significantly below expectations.

The other core business segments of the Allianz Group have performed well. In property and casualty insurance as well as in life and health insurance the premium growth was significantly ahead of budget. The operational indicators improved as well. Thus it was possible to reduce the combined ratio to around 102 percent. The asset management segment saw a positive net asset inflow despite the difficult market situation and is therefore ahead of budget.

The Allianz Group is committed to achieving sustainable increase in value in all its business segments. In order to achieve this goal over the medium and long term in the banking segment too, Dresdner Bank deliberately refrains from extraordinary asset disposals through interest sales and is concentrating on measures which will lead to a sustainable increase in the profitability of the banking segment. In this context the Board of Management of Dresdner Bank has today decided on a comprehensive action program.

It comprises three main measures:

1. The withdrawal from the non-European credit business which is not in the strategic focus of the bank was initiated in 2000. The remaining credit portfolio will be separated out and managed as an independent profit center. This measure is expected to free up to almost 3 billion euros in risk capital which can be redeployed in other parts of the Allianz Group.

2. The reorganization of the bank into two business divisions (Private Customers and Corporate Customers as well as Corporates & Markets) initiated in 2000 will be taken a step further. Therefore important central service functions will be integrated in these divisions. In this context some tasks will be transferred to the Allianz Group Center, leading to a substantial slimming of the bank's Corporate Center. This way the profit centers and reporting lines of the two separate units will be further streamlined and strengthened.

3. In addition to the cost savings potential generated by these measures further steps toward cost reductions are being undertaken. Together with the measures announced earlier this results in a cost reduction program of almost 2 billion euros per year and will in most cases begin to take effect in 2003. The additional measures will have no significant impact on the operational efficiency of the bank.

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.