Creation of an Authorized Capital 2010/I

§ 2 (3) of the Statutes of Allianz SE provides for an authorized capital (Authorized Capital 2006/I). The Authorized Capital 2006/I was created by the Extraordinary General Meeting on February 8, 2006 and amounted to EUR 450,000,000. After partial utilization, it now amounts to EUR 406,545,646.08. The Authorized Capital 2006/I is valid up until February 7, 2011.

The Management Board and Supervisory Board therefore propose to the Annual General Meeting that a new Authorized Capital 2010/I amounting to EUR 550,000,000 be created. The Authorized Capital 2006/I shall be cancelled as soon as the new Authorized Capital 2010/I becomes effective.

By the increase to EUR 550,000,000, we intend to make better use of the possible framework for creating authorized capital, this framework having been expanded by capital increases. The proposed framework of EUR 550,000,000 accounts for approximately 47% of the current capital stock.

The Authorized Capital 2010/I is proposed because Allianz SE has, at all times, to be in a position to act in a quick and flexible manner for the benefit of its shareholders according to changing market conditions. The Management Board therefore believes that it is its duty to ensure that the Company always has the required instruments to raise capital, regardless of any current and precise plans for utilization. In most cases, the tight timeframe for decisions regarding capital needs does not allow the Company to be dependent on the cycle of the Annual General Meetings. The instrument of authorized capital has therefore been created by law to address this issue. The most common purposes for authorized capital are strengthening a Company's equity basis and financing acquisitions.

If the Authorized Capital 2010/I is utilized by way of cash capital increases, shareholders generally have subscription rights.

However, upon the approval of the Supervisory Board, it should be possible to exclude shareholders' subscription rights in the case of a capital increase against contributions in cash when the issue price is not substantially lower than the market price, as provided for by § 186 (3) sentence 4 of the German Stock Corporation Act. This authorization enables the Company to take advantage, in a quick and flexible manner, of market opportunities in the various areas of its business activities and to meet capital needs at very short notice when necessary. By excluding subscription rights, the Company is given the ability to quickly respond and to place shares at a price close to the market price, i.e. without the discounts usually necessary in connection with the issue of subscription rights. As a result, the Company benefits from higher proceeds. Furthermore, new investor groups may be attracted by such issues. When utilizing this authorization, the Management Board will fix the discount as low as possible in light of the market conditions existing at the time of the placement, and in no event in excess of 5% of the then prevailing market price when utilizing the Authorized Capital 2010/I. Furthermore, pursuant to § 186 (3) sentence 4 of the German Stock Corporation Act, the number of shares issued without subscription rights may not exceed 10% of the existing capital stock, neither at the time of this authorization becoming effective, nor at the time of its exercise.

The sale of treasury stock will be counted towards this limitation if the sale occurs during the term of this authorization and if subscription rights are excluded pursuant to § 186 (3) sentence 4 of the German Stock Corporation Act. In addition, shares issued or required to be issued with respect to bonds (including participation rights) carrying conversion or option rights or conversion obligations will also count towards this limit, if the bonds (or participation rights) are issued during the term of this authorization under exclusion of subscription rights in corresponding application of § 186 (3) sentence 4 of the German Stock Corporation Act. These requirements ensure compliance with the legal provisions governing the protection of shareholders against dilution. Each shareholder has, in principle, the opportunity to acquire via the stock exchange the shares necessary to avoid dilution on substantially similar terms, given that the issue price of the new shares is close to the market price and the size of the placement without subscription rights is restricted. This ensures that the economic and voting rights of shareholders are adequately protected when shares are issued from the Authorized Capital 2010/I under exclusion of subscription rights, while granting the Company flexibility for the benefit of all of its shareholders.

Furthermore, it shall be possible to exclude shareholders' subscription rights to the extent this is necessary to grant subscription rights to new shares to holders of bonds (including participation rights) already issued or to be issued in the future that carry conversion and/or option rights or a conversion obligation, if the terms and conditions of these bonds (or participation rights) provide for such subscription rights. Such bonds (or participation rights) usually provide for protection against dilution. If, in the ensuing period, shares with subscription rights are issued at a price that is lower than the current stock exchange price of the share, the value of the individual shares will be diluted in mathematical terms. This means that, assuming all of the other conditions remain the same, the value of the option/conversion rights of the holders of bonds (or convertible participation rights) would be reduced. Therefore, in order to prevent this disadvantage in terms of value, as a general rule the dilution protection applies. This stipulates that, in the event of subsequent share issues with shareholders' subscription rights, the holders are granted a discount on the option/conversion price. Alternatively, the terms and conditions of the bonds/convertible participation rights can generally also grant the holders subscription rights to new shares such as those granted to the shareholders. The holders are thus placed in the same position as if they had already exercised their option or conversion rights or if a conversion obligation had been fulfilled. To enable the Company to grant the holders such subscription rights, shareholders' subscription rights must be excluded. The option of granting shares to the holders of bonds that carry conversion and/or option rights or convertible participation rights as opposed to a discount on the option or conversion price may be a more cost-efficient option for the Company. By granting shares instead of reducing the option/conversion prices, the Company can realize a higher issue price for the shares to be issued in connection with the exercise of a conversion or option right.

Furthermore, the Management Board shall be authorized, upon the approval of the Supervisory Board, to exclude shareholders' subscription rights with respect to fractional amounts. This enables the Company to increase the capital stock in round numbers. The technical handling of an issue will be facilitated by such authorization. The fractional shares excluded from the subscription rights will be sold in a way most efficient for the Company.

Also, an authorization to exclude shareholders' subscription rights shall be given in the case of a capital increase against contributions in kind. This authorization enables the Management Board to deliver shares of the Company, as appropriate in the individual cases, in connection with the acquisition of companies or interests in companies, or other assets. In negotiations, there may be situations in which consideration is to be required in the form of shares rather than in cash. This option will increase the Company's competitive position with respect to potential acquisition targets and increase its flexibility to take advantage of opportunities to acquire companies, interests in companies or other assets while maintaining its liquidity levels. Using shares as acquisition currency can also be advantageous when optimizing the financing structure. The recommended authorization is not disadvantageous to the Company as the issue of shares against contributions in kind is only permissible if such contributions in kind represent a fair value compared to the delivered shares.

Within the framework of the exclusion of subscription rights in the event of capital increases against contributions in kind, the Management Board shall further be authorized to issue shares using the Authorized Capital 2010/I, instead of providing cash settlement, to satisfy, in part or in whole, securitized or non-securitized monetary claims against the Company. The Company is thus granted additional flexibility to settle such cash claims by the issue of shares even in instances where it had initially agreed to pay in cash (e.g. for an acquisition target).

Moreover, under the Authorized Capital 2010/I, it shall be possible – under the exclusion of shareholders' subscription rights – to issue shares for the settlement of bonds carrying conversion or option rights (or participation rights) originally issued not against contributions in cash but against contributions in kind. This creates the possibility to also use bonds carrying conversion and option rights (or convertible participation rights) as acquisition currency in connection with the acquisition of companies, interests in companies, or other assets and therefore also increases the Company's competitive position with respect to attractive acquisition targets.

The total shares issued pursuant to this authorization, excluding subscription rights, in return for contributions in cash or contributions in kind may not exceed a pro rata amount of the capital stock of EUR 232,396,800 (corresponds to 20% of the current capital stock); shares that have been/are issued during the term of this authorization to meet obligations arising from bonds (or participation rights) carrying conversion or option rights or from a conversion obligation shall count towards this limitation, provided that the bonds (or participation rights) were issued, excluding subscription rights, in exercise of the authorization set out in Agenda item 9 of the Annual General Meeting held on May 5, 2010. This means that the Management Board can only exclude subscription rights to the extent that the exclusion of subscription rights pursuant to the Authorized Capital 2010/I that is to be resolved pursuant to Agenda item 7 and the authorization on the issue of bonds carrying conversion and/or option rights (including convertible participation rights) to be resolved under Agenda item 9 relates, in total, to shares accounting for a maximum of EUR 232,396,800 of the capital stock (corresponds to 20% of the current capital stock). This restriction ensures a corresponding upper limit on the exclusion of subscription rights, and limits possible dilution for the shareholders excluded from subscription rights.

The Management Board will carefully analyze in each case whether to exclude shareholders' subscription rights when raising capital pursuant to this authorization. This option will only be used if, following the assessment of the Management Board and the Supervisory Board, it is deemed to be in the best interest of the Company, and, therefore, of its shareholders.

The Management Board will report on the use of the authorization at each General Meeting following such use.