Allianz in growth markets

Helmut Perlet Allianz in growth markets UBS Global Insurance Conference London, June 25th, 2009

Agenda 1 Allianz at a glance 2 Financial crisis thoughts 3 Allianz in growth markets 2

Key figures 2008 Split of revenues, operating profit and customers 3 EUR 93bn total revenues 28% 31% 26% EUR 703bn 1 3rd party AuM EUR 7.4bn operating profit 161% solvency ratio 2 EUR 34bn 1 market cap 17% 19% 8% Anglo-Broker-Markets Germany 35% 30%28% Western Europe 4.5%4.6% 9.7% New Europe 6.9% 1.8% 26% 75mn 1 customers 1.6%1.6%2.3% Latin America 0.2% 0.2% 0.2% Asia-Pacific Revenues Operating profit Retail customers 1 Africa, Middle East 6.5% 10.5% n.a. Specialty insurers 4 1) 12/2008 2) Regulatory solvency (FCD) as of 31.12.2008 (pro-forma after closing of Dresdner Bank sale) 3) Including non-consolidated companies 4) Allianz Global Corporate & Specialty, Euler Hermes, Mondial Assistance, ART 3

A world class franchise... Excellent business positions Largest P/C insurer worldwide Largest single fund by PIMCO No. 7 in Life business worldwide Largest global Assistance provider Worldwide leader in Credit Insurance Best Global Primary Insurance Company 1 Attractive setup Strong profitability and cash flow Defensive investment portfolio Excellent capital position Strong ratings Strong brand Well diversified (region, business mix, customer base, distribution) Allianz franchises set to benefit from a global flight to quality 1) Reactions Global Award 2008 4

... with a clear focus... 1 Protect and enhance capital base FCD solvency ratio (%) critical 161 2002 2008 1 2 Substantially strengthen operating profitability Operating profit (EUR bn) 1.4 2 7.4 3 Reduce complexity 2002 2008 Minority buyouts Dresdner Bank disposal Centralized investment management (AIM) Harmonized business model (TOM) +One : Increase sustainable competitiveness and shareholder value 1) Regulatory solvency (FCD) as of 31.12.2008 (pro-forma after closing of Dresdner Bank sale) 2) As-if calculation for continued operations using the 2002 definition for operating profit 5

... and an attractive strategy for profitable growth Value creation Cross-border optimization Industrialization of insurance changes anatomy of value Cross-segment optimization Increasing competitiveness over local peers Substantial increase in operational leverage 2003 Segment optimization Key initiatives 2005 2008 2011 Key initiatives Key initiatives Improving resilience in adverse market conditions Strong capital generation 3+One Restructuring -FFIC -Dresdner -AGF -AGR 3+One Sustainability CFI Local TOM Eurofficiency Cross-border synergies Growth initiatives Global positioning 6

Agenda 1 Allianz at a glance 2 Financial crisis thoughts 3 Allianz in growth markets 7

Dramatic decline of GDP has impacted many of our markets... Real GDP growth 2006 2010e (%) USA 2.9 2.6 EMU 0.8 1.6 Eastern Europe 6.7 6.9 4.7 1.8 7.4 8.1 Russia 5.6 2.5 2.8 2.0 2.1 1.1-3.2 2006 2007 2008 2009e 2010e -3.5 2006 2007 2008 2009e 2010e -5.0 2006 2007 2008 2009e 2010e -2.3 2006 2007 2008 2009e 2010e Asia 11.7 11.9 China 8.8 9.0 9.0 6.3 5.6 6.5 7.0 2.7 2006 2007 2008 2009e 2010e 2006 2007 2008 2009e 2010e Source: Allianz Group Economic Research and Corporate Development 8

... but does not alter key attractions of emerging markets Favorable demographics only 9% older than 65 years vs.18% in Europe GDP growth prospects demographics and global trade to boost per capita income with increasing demand for insurance High savings ratio underdeveloped social security requires high provision for health care and old age Improving political stability globalization and sensible economic policy increase economic and political stability Deregulation prospects uncertain but potential quantum leaps may happen e.g. motor insurance in China 9

Agenda 1 Allianz at a glance 2 Financial crisis thoughts 3 Allianz in growth markets 10

Allianz growth markets strategy Our growth markets value proposition Profitable Growth as Leading Player in Chosen Markets with Superior Business Models Worldwide competence for our international clients Multi local partner with international background and local commitment for our retail and commercial customers Multi channel proposition and broad product range, designed for the client s preferences and requirements Build on the principles of strong reciprocal relationships, mutual trust and integrity 11

Profitable growth in emerging markets means being in the right markets at the right time Penetration (total premiums as % of GDP) 14 12 Taiwan Mature, mixed growth Korea Japan 10 8 High growth Hong Kong Singapore 6 Malaysia Australia 4 Thailand Slovakia Ukraine India Poland Czech Republic China Hungary 2 Immature Croatia Bulgaria Russia Indonesia 0 KazakhstanRomania 100 1,000 10,000 100,000-2 New Europe Asia-Pacific Capacity (GDP/capita in USD) Source: Swiss Re Sigma 2005; Industry/country figures 12

We are strong in growth markets... 2008 New Europe, Asia-Pacific and Middle East/North Africa EUR 12.3bn GPW (stat.) 1 EUR 0.8bn operating profit 1 33 markets >29mn clients 2 50,000 employees >320,000 agents GWP (stat.) 1 : EUR 12.3bn L/H 6.8 P/C 5.5 Middle East /North Africa Asia-Pacific New Europe + Russia 55% 45% 1) incl. non-consolidated companies (Thailand, India) 2) Insurance clients only 13

where growth GPW (stat.) 1 EUR bn 12.5 EUR 12.3bn 10.0 7.5 New Europe EUR 4.2bn CAGR 24.0% 5.0 2.5 Asia-Pacific and MENA EUR 8.1bn CAGR 32.1% 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1) Including non-consolidated OEs (India, Thailand, ROSNO [until 2/2007]) and Australia 14

meets profitability GPW(stat.) 1 Combined ratio 1,2 Operating Profit 1 EVA 1 EUR bn in % EUR mn EUR mn CAGR +9% +2.5%-p +1.3%-p CAGR +13% CAGR -8% 985 10.3 12.8 12.3 2.4 8.8 7.0 5.7 90.2 94.2 92.7 97.7 96.4 96.3 608 336 170 3 498 776 76 353 317 159 451 123 3 185 270 25 55 347 4.2 272 317 4.0 3.3 2006 2007 2008 06 07 08 06 07 08 2006 2007 2008 158 143 190 2006 2007 2008 1) Including non-consolidated OEs (India, Thailand, Rosno [until 2/2007]) and Australia 2) CR Asia 2006-2008 incl. India 3) One-off impact from reserve release in Korea New Europe Asia-Pacific MENA 15

Balancing growth and profitability Revenue growth Above hurdle rate Below hurdle rate Asia-Pacific New Europe MENA Other 1 Strategic Growers 12 2007 3 2007-10%-p +/-0%-p 2 2008 3 2008 Underperformers Value Growers 9-4%-p 2007 2008 CoC 15% 5 2007 +21%-p Optimizers Outperformers RoRAC N Optimizers + Same capital allocation principles apply for mature and emerging markets! 5 26 2008 Hurdle rates for revenue growth: P/C 2%, L/H 7%, Banking 6%, Asset Management 10% 42 2007 29 +5%-p -12%-p 47 2008 17 2007 2008 95% of allocated capital in emerging markets earns at least cost of capital Over half of capital employed in emerging markets achieved superior growth - despite the global crisis More capital allocated in Asia as overall growth prospects are superior 1) largely represented by Latin America 16

Markets and customers: A future scenario Emerging markets Mature markets 2008 29mn 38% 46mn 76.5bn 62% 80% 12.5bn 13% Clients Premium 1 6.1bn 81% 0.6bn 8% Operating Profit 1 Emerging markets Mature markets Clients (CAGR) 10% 1% 2013e 50% 50% 61% 30% Clients Premium 1 1) in EURm; incl. South America; AGCS/Euler Hermes global business not included 18% 72% Operating Profit 1 17

Allianz in New Europe: The leader among international players! 2008 GPW (sta.) EUR mn Market pos. 2008 CEE-14 Top 5 Total Insurance Market 1 Hungary Poland Russia 728 888 840 1 5 4 P/C EUR 33.7bn L/H EUR 18.5bn Slovakia 638 1 7.1% 20.1% Czech Rep. 380 3 Romania Croatia 379 155 1 2 9.0% 6.2% Bulgaria Ukraine 143 23 2 24 7.6% 7.0% Kazakhstan Azerbaijan Slovenia New Europe 14 new since 2008 4,188 13 > 40,000 tied agents 6.7% - 7.0% 11.2% 1) CEE / CIS incl. Baltic States, BG, CZ, HR, HU, PL, RO, RU, Serbia, SK, SLO and UA 18

Allianz in Asia-Pacific: One of the leading international players 2008 GPW (stat.) EUR mn Clients ( 000) Market pos. 08 Korea Australia Taiwan Malaysia Thailand Indonesia 1,580 1,484 997 362 340 270 1,215 2,948 276 1,020 833 541 5 4 7 6 3 7 L NL L L China Others 1 257 449 162 135 5 2 -- Asia 5,739 7,130 Allianz Asia-Pacific 2008 12 different countries About 7mn clients 66,000 tied agents 1) Others include: Brunei, Hong Kong, Japan, Laos, Singapore 2) Private insurance sector/among foreign JV s 19

Middle East and North Africa: Our 3rd Growth Region 2008 GWP (stat.) EUR mn Clients ( 000) Market pos. 08 India 2,245 14,345 2 1 L+NL Egypt 83 68 4 L Lebanon Saudi Arabia Sri Lanka Pakistan Jordan 56 64 63 50 2 L 9 countries About 14.5mn clients 220,000 tied agents Bahrain UAE MENA 2,447 14,527 1) Private insurance sector/among foreign JV s 20

Our priorities going forward Strengthening Distribution More and better agents Multi channel Improving Market Management Aiming at additional customer segments Optimizing cross-selling and attrition management Initiating market campaigns focused on our core competences Optimizing Operations Centralization of back-office functions Further standardization of core insurance processes Applying our international expertise as one of the world s leading investors Continuing with our conservative risk management approach 21

Distribution: Enhance capacity and quality Initiatives Agent channel Region Target (examples) Expand sales capacity Asia e.g. Taiwan: 1,600 tied agents (today) to 3000 by end of 2010 Exploit Flight to quality Asia Attract new agents exploiting capital strength and Allianz brand Enhance productivity New Europe 10% productivity increase by 2011 New agency formats New Europe Develop financial advisor network e.g. in Hungary Enhance quality of advice MENA Training and development of 220,000 tied agents Initiatives Bank channel Expand existing bancassurance New Europe Growth in Allianz New Europe above market, New bancassurance partnerships Asia Add partners in Asia Initiatives Alternative channels Expand direct business New Europe Grow market share to 10% of total direct market in the region by 2015 22

Market Management Initiative Region Target (examples) Focus on traditional life products Regional SME strategy Regional mystery shopping Switch from single to regular premiums and from unit linked to traditional life products New Europe New Europe New Europe Asia Increase operating profit in L/H by > 20% in 2009 Regional market share of 15% by 2011 Increase quality and conduct active attrition management Meet customer requirements and decrease volatility of premium income 23

Increasing efficiency and effectiveness in operations (examples) New Europe Shared Service Center Asia TOM roll out Operations First Shared Service Center (SSC) within the Allianz Group and also within the CEE insurance industry SSC supports today 6 New Europe countries offering services such as finance, accounting and web hosting 90 employees from 10 countries Approximately 2,000 different transactions per day with focus on Efficiency Effectiveness Value add Initiatives Automation of underwriting and claims handling Customer services Performance measurement and management 24

Key take-aways Growth meets profitability Growing contribution to overall Allianz portfolio Unique market leader franchise in New Europe Diversified but selected multi-country presence in Asia More local than the internationals more international than the locals 25

Appendix 26

Short and medium term economic outlook Real GDP Consumer Prices chg. YoY (%) 2008 2009e 2010e 2011e- 2015e 2008 2009e 2010e 2011e- 2015e Industrial countries 0.7-3.2 1.6 1.9 3.3 0.5 1.7 2.1 EMU 1.3-3.9 2.4 2.0 2.8 0.4 1.3 1.9 Germany 1.1-2.3 2.1 1.8 3.8-0.5 1.6 2.8 USA -0.7-6.5 1.7 1.5 1.4-0.7 0.2 1.2 Japan Emerging markets Asia 6.2 2.8 5.6 7.0 6.1 1.7 2.9 3.7 China 9.0 6.5 7.0 9.0 5.9-0.5 1.5 3.0 Latin America Eastern Europe 3.9 4.6-3.0-3.9 1.9 1.7 3.7 4.0 7.7 9.6 6.4 7.6 5.4 6.8 4.0 5.8 Source: Allianz Group Economic Research and Corporate Development 27

Strategic initiatives Sustainability Global identification and implementation of best-practice technical skills Positive impact on Growth Claims Target Operating Model (TOM) Global harmonization of production process in order to achieve a modular, customer-centric workflow Expenses Net bottom-line impact subject to Operational Transformation Program (OTP) Cost reduction driven by TOM and other efficiency-optimization measures Cycle management Inflation Investments (restructuring, marketing) Customer Focus Initiative (CFI) Installation of customer satisfaction as standardized compulsory key performance indicator Economic environment Distribution mix 28

Disclaimer These assessments are, as always, subject to the disclaimer provided below. Cautionary Note Regarding Forward-Looking Statements The statements contained herein may include 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 core business and core markets, (ii) performance of financial markets, including emerging markets, and including market volatility, liquidity and credit events (iii) the frequency and severity of insured loss events, including from natural catastrophes and including the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures, and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. The matters discussed herein may also be affected by risks and uncertainties described from time to time in Allianz SE s filings with the U.S. Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statement. No duty to update The company assumes no obligation to update any information contained herein. 29