Results 2007 hit historical high in difficult environment

Fiscal year 2007 was another very successful year for the Allianz Group. Based on preliminary figures, the Group increased revenues, operating profit and net income compared to the previous year, despite a challenging financial markets environment in the second half of 2007.

All business segments contributed to the successful overall results. However, parts of the investment banking business were significantly impacted by the credit crisis. Both Life and Health insurance and Asset Management generated profitable growth, while operating profit in Property and Casualty insurance remained strong. Total revenues of the Allianz Group increased to 102.6 billion euros from 101.1 billion euros in the previous year.

In 2007, operating profit climbed by 9 percent to 10.9 billion euros, from 10.0 billion euros adjusted for the below-normal NatCat level in 2006. Net income rose by 13.5 percent from 7 billion euros in 2006 to 8 billion euros. Shareholders’ equity, at 48 billon euros, was again on a high level compared with 50 billion euros in 2006. Total customers worldwide increased by 7 percent from 75 million to 80 million in 2007.

"Despite challenging conditions in 2007, we were able to further improve our operating efficiency and profitable growth, and to achieve a record result for the year," said Michael Diekmann, CEO of Allianz SE. "Thanks to the well-diversified business activities of the Group, we were less vulnerable to shocks and cycles in individual markets and segments," he added.

For the Property and Casualty business, premium income increased from 43.7 billion euros in 2006 to 44.3 billion euros. Operating profit of 6.3 billion euros was at previous-year level. The combined ratio reached 93.6 percent in 2007 compared to 92.9 percent in 2006. Thus the combined ratio remained under the 94 percent target level, and despite 774 million euros in claims from natural catastrophes.

"Sustainable profitable growth remains our focus. We achieved high growth rates in Central and Eastern Europe, Asia-Pacific and South America in 2007, while maintaining our position in mature markets and without compromising profitability," explained Helmut Perlet, CFO of Allianz SE.

In the Life and Health business, operating profit rose from 2.6 billion euros in 2006 to a record level of almost 3 billion euros. Total revenue growth adjusted for exchange rate effects amounted to 6.3 percent on a year-on-year basis. Premium income, especially in Germany, France and Italy, was strong in 2007. Revenues in Asia-Pacific and Central and Eastern Europe grew by nearly 27 percent compared to 2006.

"We have made terrific progress in the life business and achieved a three-year CAGR of 20 percent for operating profit. Additionally taking our growing asset base into account, we expect profitable growth to continue in the future," said Helmut Perlet.

Operating profit at Dresdner Bank remained positive at 730 million euros in 2007, compared to 1.4 billion euros in 2006. While all other banking divisions performed well, only some parts of the investment banking business were affected by the dislocation of the credit markets. Significant mark-downs of 1.3 billion euros were recorded in the ABS trading books of the investment bank. As a result, the 89.0 percent cost-income ratio was clearly impacted in 2007 compared to 79.7 percent in 2006.

"We are focusing on our long-term capability for value creation, and we are confident that our banking segment will fulfill this requirement," emphasized Perlet.

In Asset Management the positive development of the past few years continued in 2007, supported by the segment's long-term orientation and growing demand for innovative products. Operating profit increased again from 1.29 billion euros in 2006 to 1.36 billion euros in 2007. Adjusted for exchange rate effects, this reflects an increase of 12.8 percent. The cost-income ratio for 2007 reached 58.3 percent compared with 57.6 percent in 2006.

"This outstanding cost-income ratio shows that we are focused, efficient and in a good position for the future," said Perlet. Assets under Management for third parties increased from 764 billion euros at year-end 2006 to 765 billion euros at year-end 2007. Growth of third party assets under management was at 8.1 percent based on constant exchange rates.

The Board of Management will submit a proposal to increase the dividend of 3.80 euros by 45 percent to 5.50 euros per share to the Supervisory Board of Allianz SE. "We are increasing the dividend for the fourth year in a row as a part of delivering what we promised. Provided AGM approval, this will be a major step towards a payout ratio at peer group level," said Michael Diekmann.

"In 2007 we achieved high quality results despite a turbulent financial markets environment, which demonstrates our sustainable underlying profitability. Allianz is well positioned to also master the challenges in 2008 and again deliver on its medium term targets. However, financial markets and their future development will have a stronger impact on our business results than usual," said Michael Diekmann.


The above statements are subject to the proviso that no extraordinary natural disasters or adverse developments in the capital markets restrict our profitability.

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