SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rules 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended March 31, 2006
Commission file Number: 1-15154
ALLIANZ AKTIENGESELLSCHAFT
Königinstrasse 28
80802 Munich
Germany
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-13462) OF ALLIANZ AKTIENGESELLSCHAFT AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
Interim Report First Quarter of 2006 Allianz Group |
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Consolidated Financial Statements for the First Quarter of 2006 | |
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7.7% share price increase in the first quarter of 2006.
Allianz share price vs DJ EURO STOXX 50 and DJ EURO STOXX Insurance
January 1, 2005 March 31, 2006
in
Source: | Thomson Financial Datastream |
Current | information on the development of the Allianz share price is available at www.allianz.com/stock. |
Allianz Share Information
Share type: |
Registered share with restricted transfer | |
Denomination: |
No-par-value share | |
Stock exchanges: |
All German stock exchanges, London, New York, Paris, Zurich | |
Security codes: |
WKN 840 400 | |
ISIN DE 000 840 400 5 | ||
Bloomberg: |
ALV GY | |
Reuters: |
ALVG.DE |
Financial Calendar 2006/2007
Important dates for shareholders and analysts
August 11, 2006 |
Interim report first half of 2006 | |
November 10, 2006 |
Interim report first three quarters of 2006 | |
February 22, 2007 |
Financial press conference for the 2006 fiscal year | |
February 23, 2007 |
Analysts conference for the 2006 fiscal year | |
May 2, 2007 |
Annual General Meeting | |
May 11, 2007 |
Interim report first quarter of 2007 | |
August 10, 2007 |
Interim report first half of 2007 | |
November 14, 2007 |
Interim report first three quarters of 2007 |
As we cannot rule out changes to dates, we recommend that you check them at www.allianz.com/financialcalendar.
Allianz Group Selected Consolidated Financial Data
Through the implementation of various reporting changes effective January 1, 2006, and applied retrospectively, we aim to further improve transparency for the readers of our consolidated financial statements. Please see Note 2 to our consolidated financial statements for further information.
March 31, 2006 |
December 31, 2005 |
Change % |
|||||||||
Balance Sheet |
|||||||||||
Investments |
| mn | 285,585 | 285,015 | 0.2 | ||||||
Loans and advances to banks and customers |
| mn | 391,699 | 336,808 | 16.3 | ||||||
Total assets |
| mn | 1,038,035 | 988,584 | 5.0 | ||||||
Liabilities to banks and customers |
| mn | 355,253 | 310,316 | 14.5 | ||||||
Reserves for loss and loss adjustment expenses |
| mn | 66,069 | 67,005 | (1.4 | ) | |||||
Reserves for insurance and investment contracts |
| mn | 280,539 | 278,829 | 0.6 | ||||||
Shareholders equity |
| mn | 41,301 | 39,487 | 4.6 | ||||||
Minority interests |
| mn | 7,705 | 7,615 | 1.2 | ||||||
Three months ended March 31, |
2006 | 2005 | Change % |
||||||||
Income Statement |
|||||||||||
Total revenues1) |
| mn | 29,641 | 28,262 | 4.9 | ||||||
Operating profit |
| mn | 2,677 | 1,887 | 41.9 | ||||||
Income before incometaxes and minority interests in earnings |
| mn | 3,031 | 2,255 | 34.4 | ||||||
Net income |
| mn | 1,779 | 1,324 | 34.4 | ||||||
Returns |
|||||||||||
Return on shareholders equity after taxes2) |
% | 4.4 | 4.2 | 0.2 pts | |||||||
Segments Property-Casualty |
|||||||||||
Operating profit |
| mn | 1,386 | 1,214 | 14.2 | ||||||
Loss ratio |
% | 66.2 | 66.1 | 0.1 pts | |||||||
Expense ratio |
% | 28.5 | 27.9 | 0.6 pts | |||||||
Combined ratio |
% | 94.7 | 94.0 | 0.7 pts | |||||||
Life/Health |
|||||||||||
Operating profit |
| mn | 723 | 517 | 39.8 | ||||||
Statutory expense ratio |
% | 8.3 | 7.0 | 1.3 pts | |||||||
Banking (Dresdner Bank) |
|||||||||||
Operating profit |
| mn | 529 | 209 | 153.1 | ||||||
Cost-income ratio |
% | 73.7 | 81.0 | (7.3) pts | |||||||
Loan loss provisions |
| mn | 33 | (100 | ) | | |||||
Coverage ratio at March 313) |
% | 60.4 | 61.9 | (1.5) pts | |||||||
Asset Management (Allianz Global Investors) |
|||||||||||
Operating profit |
| mn | 300 | 229 | 31.0 | ||||||
Cost-income ratio |
% | 59.2 | 58.7 | 0.5 pts | |||||||
Third-party assets under management at March 31 |
| bn | 753 | 7434 | ) | 1.3 | |||||
Share Information |
|||||||||||
Basic earnings per share |
| 4.39 | 3.50 | 25.4 | |||||||
Diluted earnings per share |
| 4.32 | 3.48 | 24.1 | |||||||
Share price at March 31 |
| 137.78 | 127.944 | ) | 7.7 | ||||||
Market capitalization at March 31 |
| bn | 55.9 | 51.94 | ) | 7.7 | |||||
Allianz AG Ratings at March 31, 2006
Standard & Poors |
Moodys | A.M. Best |
||||||
Insurer financial strength |
AA- | Aa3 | A+ | |||||
Outlook |
Stable1 | ) | Stable | Stable | ||||
Counterparty credit |
AA- | Not | aa-2 | ) | ||||
Outlook |
Stable1 | ) | rated | Stable | ||||
Senior unsecured debt |
AA- | Aa3 | aa- | |||||
Outlook |
Stable | Stable | ||||||
Subordinated debt |
A/A-3 | ) | A2 | a+/a3 | ) | |||
Outlook |
Stable | Stable | ||||||
Commercial paper (short term) Outlook |
A-1+ | P-1 Stable |
Not rated |
|
1) | Outlook upgraded to Positive on April 20, 2006. |
2) | Issuer credit rating. |
3) | Ratings vary on the basis of maturity period and terms. |
Investor Relations
We endeavor to keep our shareholders up-to-date on all company developments. Our Investor Relations Team is pleased to answer any questions you may have.
Allianz AG
Investor Relations
Koeniginstrasse 28
80802 Munich
Germany
Investor Line: |
+49 1802 2554269 | |
+49 1802 ALLIANZ | ||
Fax: |
+49 89 3800 3899 | |
E-Mail: |
investor.relations@allianz.com | |
Internet: |
www.allianz.com/investor-relations |
Other Reports
All Allianz Group published quarterly and annual financial reports are available for download at www.allianz.com/investor-relations. Alternatively, you can order printed copies of our reports.
1) | Total revenues comprise Property-Casualty segments gross premiums written, Life/Health segments statutory premiums, Banking segments operating revenues and Asset Management segments operating revenues. |
2) | Based on average shareholders equity. Average shareholders equity has been calculated based upon the average of the current and preceding end of periods shareholders equity. |
3) | Represents total loan loss allowances as a percentage of total non-performing loans and potential problem loans. |
4) | At December 31, 2005. |
2
A very good start into 2006.
| In 1Q 2006, we were able to successfully capitalize on our operational strengths, the positive capital market developments and the absence of major natural catastrophes. |
| Operating profit rose 41.9% to 2.7 billion, thus establishing a good basis to attain our challenging 2006 targets. |
| Property-Casualty maintained its strong profitability level with a combined ratio of 94.7%. |
| Life/Health operating profit hit 723 million, a 39.8% rise. |
| Banking operating profit more-than-doubled to 547 million. |
| Asset Management had 14 billion in net inflows and increased operating profit by 31.6% to 304 million. |
1) | Total revenues comprise Property-Casualty segments gross premiums written, Life/Health segments statutory premiums, Banking segments operating revenues and Asset Management segments operating revenues. |
3
Allianz Groups Consolidated Results of Operations
Total Revenues1)
We experienced substantial growth in total revenues in our Life/Health, Banking and Asset Management segments, whereas total revenues from our Property-Casualty segment remained flat. Overall, our total revenues increased as planned by 4.9% to 29.6 billion. Internal growth amounted to 2.9%.
Property-Casualty With a clear and successful focus on profitability, we continue to allocate our resources with the purpose of balancing profit generation with volume accumulation and accepting only those risks which we believe will produce sufficient returns. Overall, our gross premiums written remained stable at 14.1 billion. On an internal growth basis, we experienced a slight decline of 1.0%.
Life/Health Our statutory premiums rose by 7.9% to 12.8 billion. Internal growth was 5.0%. We were successful in achieving increases in statutory premiums across all geographic regions, with particularly strong growth rates in Europe and Asia-Pacific.
Banking Operating revenues from our Banking segment experienced dynamic growth in the traditionally strong first quarter of the year, and increased by 15.3% to 1.9 billion. At Dresdner Bank, growth was even stronger at 16.1%. All revenue categories contributed to these developments.
Asset Management At March 31, 2006, third-party assets amounted to 753 billion, a 10 billion increase from December 31, 2005. Continued strong net inflows of 14 billion were offset by negative foreign currency impacts of a similar magnitude. Excluding foreign currency impacts, our third-party assets rose by 24 billion, or 3.2%, compared to December 31, 2005. Commensurate with this positive development, our operating revenues increased by 32.5% to 751 million, primarily reflecting higher net fee and commission income.
1) | Total revenues comprise Property-Casualty segments gross premiums written, Life/Health segments statutory premiums, Banking segments operating revenues, and Asset Management segments operating revenues. |
Operating Profit
Our consolidated operating profit grew by 41.9% to 2.7 billion, driven by strong improvements across all segments.
Property-Casualty We were successful in maintaining our strong profitability level and achieved an operating profit growth of 14.2% to 1.4 billion. Our combined ratio remains at a competitive level and, on a comparable basis, increased by 0.7 percentage points to 94.7%. This was driven by a 0.6 percentage point rise in our expense ratio to 28.5%, whereas our loss ratio remained relatively unchanged at 66.2% (1Q 2005: 66.1%), benefiting from improved risk management and the absence of significant losses from natural catastrophes.
Life/Health Our operating profit increased significantly by 39.8% to 723 million. The key factor in this development was the further margin improvement on our in-force business.
Banking We more-than-doubled our operating profit to 547 million, of which Dresdner Bank contributed 529 million. Driven by the strong increase in operating revenues and strict cost management, our Banking segments cost-income ratio improved significantly by 7.3 percentage points to 73.6% (Dresdner Bank: 7.3 percentage point improvement to 73.7%).
Asset Management Operating profit growth of 31.6% to 304 million reflected the strong increase in our operating revenues. Our Asset Management segments cost-income ratio of 59.5% remained nearly flat compared to 1Q 2005.
4
Non-Operating Items
Non-operating items contributed 354 million, slightly less than in 1Q 2005. We leveraged strong equity capital markets and generated in 1Q 2006 a disproportionate part of our capital gains target for 2006, although not at the prior years level. In aggregate, the impact from realized gains/losses (net) and impairments of investments (net) was 778 million. Approximately one-half of this development was offset by interest expense from external debt, acquisition-related expenses from our Asset Management segment and other non-operating items.
Net Income
Our net income grew significantly by 34.4% to 1.8 billion.
Income before income taxes and minority interests in earnings increased 776 million to 3.0 billion. Operating profit, with its growth of 790 million and reaching 2.7 billion, was the single main driver behind both the increase in, and magnitude of, income before income taxes and minority interests in earnings.
Largely as a result of our improved operating profit, our income taxes rose to 899 million, representing an effective income tax rate of 29.7% (1Q 2005: 26.0%). The increase in our effective income tax rate stemmed principally from the favorable taxation of a large gain in 1Q 2005 from the sale of the holding in Gecina S.A. at our Life/Health subsidiary AGF Vie, which was not repeated in 1Q 2006. Minority interests in earnings remained rather stable at 353 million, primarily due to significantly higher earnings at RAS in Italy, which more than compensated for the reduced shareholdings of third parties following the buy-out of minorities in late 2005.
The following graph sets forth our basic and diluted earnings per share for 1Q 2006 and 1Q 2005.
1) | See Note 35 to our consolidated financial statements for further details regarding the dilutive effect of certain outstanding securities. |
The following table summarizes the total revenues and operating profit for each of our segments for the three months ended March 31, 2006 and 2005, as well as IFRS consolidated net income of the Allianz Group.
Property- Casualty |
Life/Health | Banking | Asset Management |
Corporate | Consolidation Adjustments |
Allianz Group | ||||||||||||||||||||||||||||||||||||
Three months ended |
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||||||||
mn | mn | mn | mn | mn | mn | mn | mn | mn | mn | mn | mn | mn | mn | |||||||||||||||||||||||||||||
Total revenues1) |
14,149 | 14,143 | 12,822 | 11,880 | 1,948 | 1,689 | 751 | 567 | | | (29 | ) | (17 | ) | 29,641 | 28,262 | ||||||||||||||||||||||||||
Operating profit |
1,386 | 1,214 | 723 | 517 | 547 | 229 | 304 | 231 | (180 | ) | (267 | ) | (103 | ) | (37 | ) | 2,677 | 1,887 | ||||||||||||||||||||||||
Non-operating items |
428 | 516 | 158 | 88 | 392 | 450 | (136 | ) | (164 | ) | (211 | ) | (123 | ) | (277 | ) | (399 | ) | 354 | 368 | ||||||||||||||||||||||
Income before income taxes and minority interests in earnings |
1,814 | 1,730 | 881 | 605 | 939 | 679 | 168 | 67 | (391 | ) | (390 | ) | (380 | ) | (436 | ) | 3,031 | 2,255 | ||||||||||||||||||||||||
Income taxes |
(524 | ) | (543 | ) | (219 | ) | (104 | ) | (245 | ) | (74 | ) | (65 | ) | (24 | ) | 154 | 153 | | 7 | (899 | ) | (585 | ) | ||||||||||||||||||
Minority interests in earnings |
(190 | ) | (191 | ) | (128 | ) | (122 | ) | (28 | ) | (26 | ) | (13 | ) | (13 | ) | (2 | ) | (1 | ) | 8 | 7 | (353 | ) | (346 | ) | ||||||||||||||||
Net income |
1,100 | 996 | 534 | 379 | 666 | 579 | 90 | 30 | (239 | ) | (238 | ) | (372 | ) | (422 | ) | 1,779 | 1,324 | ||||||||||||||||||||||||
1) | Total revenues comprise Property-Casualty segments gross premiums written, Life/Health segments statutory premiums, Banking segments operating revenues, and Asset Management segments operating revenues. |
5
Allianz Groups Invested Assets and Total Equity
Total Equity
In 1Q 2006, we continued to succeed in strengthening our capital base on a sustainable basis.
Compared to December 31, 2005, our total equity increased by 4.0% to 49.0 billion at March 31, 2006. The increase in shareholders equity was even stronger at 4.6% to 41.3 billion, whereas minority interests remained relatively flat at 7.7 billion.
The growth in shareholders equity was driven predominantly by our strong net income in 1Q 2006 and, to a lesser degree, increased unrealized gains on investments due to favorable equity market conditions. Partially offsetting these positive developments were higher negative foreign currency translation adjustments from a weaker U.S. Dollar compared to the Euro at March 31, 2006 as compared to December 31, 2005.
The following graph sets forth the development of our shareholders equity in 1Q 2006.
1) | Consists of the following developments (in mn): foreign currency translation adjustments (335); changes in the consolidated subsidiaries of the Allianz Group 12; treasury shares 255; net income 1,779; miscellaneous (259). |
Invested Assets
In the following, we present the breakdown of invested assets owned and managed by our Property-Casualty, Life/Health and Banking segments by category and instruments.
Invested Assets Property-Casualty: Allocation by Category and Instruments at March 31, 2006
1) | Held-to-maturity investments and real estate held for investment are stated at amortized cost. Investments in associates and joint ventures are stated at either amortized cost or equity, depending upon, among other factors, our ownership percentage. |
2) | Includes debt securities at 3.2 bn and equity securities at 0.4 bn. |
3) | Includes associates and joint ventures at 0.5 bn, but does not include affiliates at 9.1 bn. |
4) | Includes held-to-maturity investments at 0.6 bn. |
Invested Assets Life/Health: Allocation by Category and Instruments at March 31, 2006
1) | Held-to-maturity investments and real estate held for investment are stated at amortized cost. Investments in associates and joint ventures are stated at either amortized cost or equity, depending upon, among other factors, our ownership percentage. |
2) | Includes debt securities at 6.6 bn, equity securities at 2.6 bn and derivative financial instruments at (3.1) bn. |
3) | Includes associates and joint ventures at 1.0 bn, but does not include affiliates at 3.5 bn. |
4) | Includes held-to-maturity investments at 4.0 bn. |
Invested Assets Banking: Trading Portfolio Allocation at March 31, 2006
6
Corporate
Our Corporate segment is comprised of all holding activities which are exercised on behalf of the Allianz Group as a whole.
Operating revenues increased by 17.4% to 331 million, largely driven by fee and commission income stemming from Four Seasons Health Care Ltd. Mainly attributable to a significant decline in other operating expenses, specifically investment expenses, operating profit improved to a loss of 180 million. Investment expenses benefited from substantially lower foreign currency losses, resulting from a stronger U.S. Dollar in 1Q 2006.
Three months ended March 31, |
2006 | 2005 | ||||
mn | mn | |||||
Operating revenues |
299 | 258 | ||||
Interest expense, excluding interest expense from external debt1) |
(173 | ) | (173 | ) | ||
Acquisition and administrative expenses (net) |
(156 | ) | (121 | ) | ||
Other operating expenses |
(150 | ) | (231 | ) | ||
Operating expenses |
(479 | ) | (525 | ) | ||
Operating profit |
(180 | ) | (267 | ) | ||
Income from financial assets and liabilitiesheld for trading (net) |
(96 | ) | (4 | ) | ||
Realized gains/losses (net) |
70 | 106 | ||||
Impairments of investments (net) |
13 | (32 | ) | |||
Interest expense from external debt1) |
(198 | ) | (193 | ) | ||
Non-operating items |
(211 | ) | (123 | ) | ||
Income before income taxes and minority interests in earnings |
(391 | ) | (390 | ) | ||
1) | The total of these items equals interest expense in the segment income statement. |
Events After the Balance Sheet Date
See Note 39 to our consolidated financial statements.
7
Property-Casualty Insurance Operations
Strong operating profit growth at 14.2%.
| Putting profitability first, we maintained our gross premiums written at 14.1 billion. |
| Our combined ratio remained at a competitive level at 94.7%, increasing 0.7 percentage points. |
| Our operating profit rose to 1.4 billion. |
| Net income grew by 10.4% to 1.1 billion, founded on our robust operating profitability. |
Earnings Summary
1) | After elimination of transactions between Allianz Group companies in different geographic regions. |
1) | Before elimination of transactions between Allianz Group companies in different geographic regions. |
2) | Comprise Other Europe. |
Gross Premiums Written
With a clear and successful focus on profitability, we continue to allocate our resources with the purpose of balancing profit generation with volume accumulation and accepting only those risks which we believe will produce sufficient returns. In summary, our gross premiums written remained stable at 14,149 million and comparable to 1Q 2005. Based on internal growth, gross premiums written declined slightly by 1.0%.
Growth varied considerably across different markets in which we are active. Positive developments were primarily experienced by our operations in the United States, Australia and Spain with additional gross premiums written of 72 million (7.7%), 28 million (9.2%) and 26 million (4.1%), respectively. In the United States, our operations benefited from a stronger U.S. Dollar in 1Q 2006. The positive trend in Australia, where the growth of gross premiums written was well above the market average1), occurred primarily in our financial
1) | Source: Own calculations and estimates. |
8
institutions/direct line of business, where sales significantly increased after strengthened marketing and sales activities. All lines of business contributed to the increase of gross premiums written in Spain.
These increases were offset by decreased gross premiums written primarily in Germany and the United Kingdom where gross premiums written declined by 101 million (2.0%) and 53 million (8.4%), respectively.
In Germany, our largest market, we remained committed to our focus on profitability and not volume. Gross written premiums declined mainly due to lower average premiums in our motor business following the introduction of the new scoring tariff as well as higher no claims bonuses. Additionally, softer market conditions in the commercial property business also proved challenging, leading to a decline in gross written premiums. In the United Kingdom, the decline was related to lower premiums written in our personal and commercial lines, as we continued our cycle management efforts, through which we endeavor to balance volume and margin criteria.
Operating Profit
Our operating profit increased by 14.2% to 1,386 million. The top five contributing operating entities included Sachgruppe Deutschland (or SGD) in Germany at 321 million, Firemans Fund in the United States at 199 million, AGF in France at 127 million, RAS in Italy at 80 million and Allianz Cornhill in the United Kingdom at 60 million, which represent nearly all of our primary insurance markets. The strongest improvements occurred at AGR/AMA (108 million), our newly formed unit which combines the activities of Allianz Global Risks Re, Allianz Marine & Aviation and our German corporate customer business, as well as in France (73 million) and the United States (52 million).
Claims and insurance benefits incurred (net) increased by 2.4% to 6,182 million, due largely to a 137 million net increase in claims in 1Q 2006 on an accident year basis, while run-off related to prior periods remained relatively unchanged with a benefit of 181 million. As claims and insurance benefits incurred (net) increased relatively at the same rate as premiums earned (net), our loss ratio remained nearly unchanged at 66.2% (1Q 2005: 66.1%), benefiting from our improved risk management and the absence of significant claims from natural catastrophes.
Acquisition and administrative expenses (net) increased by 4.4% to 2,663 million. Thereof, acquisition costs increased by 7.1% to 1,507 million, largely due to higher commission payments. Administrative expenses increased slightly by 1.0% to 1,156 million. As a result of these effects, despite the increase in our premiums earned (net), our expense ratio rose by 0.6 percentage points to 28.5% (1Q 2005: 27.9%).
Driven largely by the rise in our expense ratio, our combined ratio was 94.7%, 0.7 percentage points higher than the prior year period, but continues to remain at a competitive level.
Interest and similar income increased by 6.3% to 922 million, reflecting primarily increased interest income at our operations in the United States and AGR/AMA, largely as a result of higher income from debt securities.
9
Non-Operating Items
Our non-operating items declined 17.1% to 428 million. This development was primarily attributable to a 16.4% decline in realized gains/losses (net), excluding realized gains/losses (net) on participating policies to 439 million largely as a result of large gains from the sale of MAN AG and Gecina S.A. in 1Q 2005.
Net Income
Net income increased by 10.4% to 1,100 million, driven by our robust operating profitability and an 88 million decline in our non-operating items.
Income taxes amounted to 524 million, resulting in an effective tax rate of 28.9% (2005: 31.4%).
Minority interests in earnings remained relatively stable at 190 million as the result of significantly higher earnings at RAS in Italy, which more than compensated for the reduced shareholdings of third parties following the buy-out of minorities in late 2005.
The following table sets forth our Property-Casualty insurance segments income statement and key operating ratios for the three months ended March 31, 2006 and 2005.
Three months ended March 31, |
2006 | 2005 | ||||
mn | mn | |||||
Gross premiums written1) |
14,149 | 14,143 | ||||
Ceded premiums written |
(1,712 | ) | (1,698 | ) | ||
Change in unearned premiums |
(3,096 | ) | (3,305 | ) | ||
Premiums earned (net) |
9,341 | 9,140 | ||||
Interest and similar income |
922 | 867 | ||||
Income from financial assets and liabilities designated at fair value through income (net)2) |
36 | 21 | ||||
Realized gains/losses (net) on participating policies3) |
25 | 14 | ||||
Fee and commission income |
252 | 216 | ||||
Other income |
14 | 4 | ||||
Operating revenues |
10,590 | 10,262 | ||||
Claims and insurance benefits incurred (net) |
(6,182 | ) | (6,040 | ) | ||
Changes in reserves for insurance and investment contracts (net) |
(72 | ) | (123 | ) | ||
Interest expense |
(63 | ) | (80 | ) | ||
Loan loss provisions |
(1 | ) | | |||
Impairments of investments (net) on participating policies4) |
(4 | ) | (2 | ) | ||
Investment expenses |
(48 | ) | (93 | ) | ||
Acquisition and administrative expenses (net) |
(2,663 | ) | (2,552 | ) | ||
Fee and commission expenses |
(170 | ) | (157 | ) | ||
Other expenses |
(1 | ) | (1 | ) | ||
Operating expenses |
(9,204 | ) | (9,048 | ) | ||
Operating profit |
1,386 | 1,214 | ||||
Income from financial assets and liabilities held for trading (net)2) |
4 | 5 | ||||
Realized gains/losses (net), excluding realized gains/losses (net) on participating policies3) |
439 | 525 | ||||
Impairments of investments (net), excluding impairments of investments (net) on participating policies4) |
(9 | ) | (5 | ) | ||
Amortization of intangible assets |
(4 | ) | (5 | ) | ||
Restructuring charges |
(2 | ) | (4 | ) | ||
Non-operating items |
428 | 516 | ||||
Income before income taxes and minority interests in earnings |
1,814 | 1,730 | ||||
Income taxes |
(524 | ) | (543 | ) | ||
Minority interests in earnings |
(190 | ) | (191 | ) | ||
Net income |
1,100 | 996 | ||||
Loss ratio5) in % |
66.2 | 66.1 | ||||
Expense ratio6) in % |
28.5 | 27.9 | ||||
Combined ratio7) in % |
94.7 | 94.0 | ||||
1) | For the Property-Casualty segment, total revenues are measured based upon gross written premiums. |
2) | The total of these items equals Income from financial assets and liabilities carried at fair value through income (net) in the segment income statement. |
3) | The total of these items equals Realized gains/losses (net) in the segment income statement. |
4) | The total of these items equals Impairments of Investments (net) in the segment income statement. |
5) | Represents claims and insurance benefits incurred (net) divided by premiums earned (net). |
6) | Represents acquisition and administrative expenses (net) divided by premiums earned (net). |
7) | Represents the total of acquisition and administrative expenses (net) and claims and insurance benefits incurred (net) divided by premiums earned (net). |
10
Property-Casualty Operations by Geographic Region
The following table sets forth our property-casualty gross premiums written, premiums earned (net), combined ratio, loss ratio, expense ratio and operating profit by geographic region. Consistent with our general practice, gross premiums written, premiums earned (net), combined ratio, loss ratio, expense ratio and operating profit by geographic region are presented before consolidation adjustments, representing the elimination of transactions between Allianz Group companies in different geographic regions and different segments.
Gross premiums written |
Premiums earned (net) |
Combined ratio | Loss ratio | Expense ratio | Operating Profit | |||||||||||||||||||||||||||||||
mn | mn | % | % | % | mn | |||||||||||||||||||||||||||||||
Three months ended March 31, |
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||||
Germany1) |
4,853 | 4,954 | 2,412 | 2,440 | 92.7 | 89.9 | 59.6 | 60.2 | 33.1 | 29.7 | 369 | 408 | ||||||||||||||||||||||||
France |
1,713 | 1,695 | 1,114 | 1,103 | 101.0 | 104.7 | 74.3 | 77.3 | 26.7 | 27.4 | 78 | 5 | ||||||||||||||||||||||||
Italy |
1,247 | 1,242 | 1,205 | 1,189 | 96.8 | 98.2 | 72.9 | 71.6 | 23.9 | 26.6 | 108 | 115 | ||||||||||||||||||||||||
United Kingdom |
579 | 632 | 457 | 480 | 99.0 | 96.0 | 67.9 | 65.1 | 31.1 | 30.9 | 56 | 67 | ||||||||||||||||||||||||
Switzerland |
958 | 993 | 436 | 425 | 96.3 | 95.1 | 70.2 | 67.9 | 26.1 | 27.2 | 63 | 37 | ||||||||||||||||||||||||
Spain |
657 | 631 | 395 | 364 | 91.4 | 92.8 | 72.7 | 74.0 | 18.7 | 18.8 | 58 | 49 | ||||||||||||||||||||||||
Other Europe, thereof: |
1,655 | 1,649 | 1,040 | 1,017 | 95.2 | 91.8 | 67.3 | 63.9 | 27.9 | 27.9 | 136 | 166 | ||||||||||||||||||||||||
Netherlands |
318 | 310 | 198 | 200 | 93.4 | 93.7 | 59.5 | 63.1 | 33.9 | 30.6 | 27 | 27 | ||||||||||||||||||||||||
Austria |
357 | 359 | 192 | 189 | 109.8 | 98.1 | 86.4 | 73.2 | 23.4 | 24.9 | (6 | ) | 21 | |||||||||||||||||||||||
Ireland |
198 | 215 | 153 | 161 | 91.8 | 90.4 | 67.7 | 68.2 | 24.1 | 22.2 | 27 | 30 | ||||||||||||||||||||||||
Belgium |
121 | 118 | 74 | 71 | 101.7 | 103.1 | 65.4 | 65.9 | 36.3 | 37.2 | 9 | 8 | ||||||||||||||||||||||||
Portugal |
84 | 88 | 66 | 70 | 87.3 | 88.9 | 65.5 | 65.6 | 21.8 | 23.3 | 11 | 10 | ||||||||||||||||||||||||
Greece |
19 | 19 | 11 | 11 | 95.1 | 85.6 | 65.6 | 54.4 | 29.5 | 31.2 | 1 | 2 | ||||||||||||||||||||||||
Western and Southern Europe |
1,097 | 1,109 | 694 | 702 | 98.0 | 94.5 | 70.2 | 67.4 | 27.8 | 27.1 | 744 | ) | 974 | ) | ||||||||||||||||||||||
Hungary |
192 | 185 | 127 | 132 | 91.9 | 88.9 | 64.6 | 62.0 | 27.3 | 26.9 | 27 | 31 | ||||||||||||||||||||||||
Slovakia |
93 | 123 | 62 | 62 | 80.2 | 74.8 | 46.9 | 35.0 | 33.3 | 39.8 | 17 | 20 | ||||||||||||||||||||||||
Czech Republic |
81 | 75 | 43 | 37 | 90.1 | 92.7 | 67.3 | 72.9 | 22.8 | 19.8 | 5 | 5 | ||||||||||||||||||||||||
Poland |
72 | 61 | 47 | 36 | 96.4 | 89.4 | 65.5 | 56.2 | 30.9 | 33.2 | 3 | 5 | ||||||||||||||||||||||||
Romania |
71 | 54 | 36 | 28 | 89.6 | 89.8 | 71.4 | 64.8 | 18.2 | 25.0 | 3 | 3 | ||||||||||||||||||||||||
Bulgaria |
20 | 20 | 17 | 8 | 80.3 | 116.1 | 49.8 | 54.5 | 30.5 | 61.6 | 5 | 3 | ||||||||||||||||||||||||
Croatia |
22 | 17 | 13 | 11 | 96.5 | 94.7 | 65.7 | 59.9 | 30.8 | 34.8 | 1 | 1 | ||||||||||||||||||||||||
Russia |
7 | 5 | 1 | 1 | 60.3 | 37.1 | 28.2 | 0.9 | 32.1 | 36.2 | 1 | 1 | ||||||||||||||||||||||||
Central and Eastern Europe |
558 | 540 | 346 | 315 | 89.6 | 86.0 | 61.6 | 56.2 | 28.0 | 29.8 | 62 | 69 | ||||||||||||||||||||||||
NAFTA, thereof: |
1,202 | 1,105 | 925 | 842 | 89.8 | 90.7 | 60.2 | 61.0 | 29.6 | 29.7 | 221 | 165 | ||||||||||||||||||||||||
United States |
1,002 | 930 | 886 | 816 | 90.5 | 91.7 | 60.1 | 61.4 | 30.4 | 30.3 | 199 | 147 | ||||||||||||||||||||||||
Allianz Global Risks US |
149 | 146 | 14 | 7 | 52.4 | 108.7 | 42.6 | 83.6 | 9.8 | 25.1 | 19 | 15 | ||||||||||||||||||||||||
Mexico |
51 | 29 | 25 | 19 | 108.8 | 62.0 | 84.0 | 36.6 | 24.8 | 25.4 | 3 | 3 | ||||||||||||||||||||||||
Asia-Pacific, thereof: |
418 | 381 | 339 | 309 | 101.8 | 98.4 | 75.5 | 72.8 | 26.3 | 25.6 | 40 | 50 | ||||||||||||||||||||||||
Australia |
334 | 306 | 300 | 277 | 102.5 | 98.6 | 77.6 | 74.6 | 24.9 | 24.0 | 38 | 48 | ||||||||||||||||||||||||
Other |
84 | 75 | 39 | 32 | 94.9 | 93.8 | 59.0 | 56.3 | 35.9 | 37.5 | 2 | 2 | ||||||||||||||||||||||||
South America |
226 | 153 | 152 | 106 | 101.4 | 98.5 | 75.4 | 73.2 | 26.0 | 25.3 | 41 | 50 | ||||||||||||||||||||||||
Other |
41 | 39 | 12 | 16 | 2 | ) | 2 | ) | 2 | ) | 2 | ) | 2 | ) | 2 | ) | 1 | 1 | ||||||||||||||||||
Specialty Lines |
||||||||||||||||||||||||||||||||||||
Credit Insurance |
468 | 473 | 260 | 242 | 81.1 | 70.5 | 53.9 | 46.3 | 27.2 | 24.2 | 95 | 96 | ||||||||||||||||||||||||
AGR/AMA1) |
906 | 952 | 375 | 404 | 85.0 | 96.7 | 63.4 | 72.1 | 21.6 | 24.6 | 127 | 19 | ||||||||||||||||||||||||
Travel Insurance and Assistance Services |
266 | 253 | 231 | 213 | 101.5 | 95.8 | 61.8 | 63.1 | 39.7 | 32.7 | 22 | 20 | ||||||||||||||||||||||||
Subtotal |
15,189 | 15,152 | 9,353 | 9,150 | | | | | | | 1,415 | 1,248 | ||||||||||||||||||||||||
Consolidation adjustments3) |
(1,040 | ) | (1,009 | ) | (12 | ) | (10 | ) | | | | | | | (29 | ) | (34 | ) | ||||||||||||||||||
Total |
14,149 | 14,143 | 9,341 | 9,140 | 94.7 | 94.0 | 66.2 | 66.1 | 28.5 | 27.9 | 1,386 | 1,214 | ||||||||||||||||||||||||
1) | With effect from 1Q 2006, we have combined the activities of the former Allianz Global Risk Re and Allianz Marine & Aviation, as well as the corporate customer business of Sachgruppe Deutschland, which was formerly included within Germany. Prior year balances have been adjusted to reflect this reclassification and allow for comparability across periods. Gross premiums written are presented before consolidation within AGR/AMA. |
2) | Presentation not meaningful. |
3) | Represents elimination of transactions between Allianz Group companies in different geographic regions. |
4) | Contains run-off of a former operating entity located in Luxembourg of 5 mn in 2006 and (1) mn in 2005. |
11
Life/Health Insurance Operations
Very strong operating profit growth of 39.8%.
| Overall 7.9% increase in statutory premiums to 12.8 billion, driven by France and South Korea. |
| Operating profit reached 723 million, reflecting further margin increases on in-force business. |
| Net income rose 40.9% to 534 million. |
Earnings Summary
1) | After elimination of transactions between Allianz Group companies in different geographic regions. |
1) | Before elimination of transactions between Allianz Group companies in different geographic regions. |
2) | Comprise Other Europe. |
Statutory Premiums
Our statutory premiums rose by 7.9% to 12,822 million, with particularly strong growth in France at 252 million (20.9%) and South Korea at 222 million (63.4%). Based on internal growth, our statutory premiums increased by 5.0%.
At Germany Life, statutory premiums remained relatively unchanged at 3,128 million, despite a prior year period that had seen a strong increase in statutory premiums from the carryover effect of contracts executed in late 2004 following the introduction of legislation, which reduced the favorable tax treatment of life insurance contracts with effect from January 1, 2005. In the United States, statutory premiums increased 1.7% to 2,772 million compared to a strong 1Q 2005, aided by a comparably stronger U.S. Dollar.
In France, dynamic statutory premiums growth of 20.9% to 1,460 million at AGF was well above plan. This success was driven by strong sales of individual life insurance policies, a development caused by favorable tax changes, which took effect in January 2006. Allianz Life Insurance Korea Ltd., Seoul (or Allianz Life Korea), with a growth in statutory premiums of 63.4% to 572 million, again enjoyed successful sales from variable life products, thus continuing the sales momentum experienced throughout 2005.
12
Conversely, in Italy, statutory premiums fell by 3.3% to 2,268 million due to lower production from our banking joint-venture.
Operating Profit
Our operating profit increased significantly by 39.8% to 723 million. Further margin increases on our in-force business were a key factor in this development.
The top five contributing operating entities were Allianz Lebensversicherungs-AG (or Allianz Leben) within Germany Life at 133 million, AGF Vie in France at 124 million, Allianz Life of North America (or Allianz Life) at 121 million, our German Health subsidiary Allianz Private Krankenversicherungs-AG (or APKV) at 53 million and Allianz Life Korea at 25 million. The strongest improvements occurred at our operations in the United States, France and Italy, with increases of 85 million, 55 million and 38 million, respectively.
Interest and similar income developed favorably with an increase of 8.4% to 3,047 million, driven by both increased investment yields and an increased investment base as the result of positive business developments producing significant cash inflows from policyholders in recent years.
Realized gains/losses (net), excluding strategic investments declined 19.3% to 1,103 million. This was primarily the result of decreased realizations at our German Life operating entities, where net realized gains/losses declined by 258 million, largely as a result of the gain from the sale of MAN AG in 1Q 2005. Additionally, the decline was driven by lower net realized gains/losses of 41 million at AGF, also owing to the fact that 1Q 2005 had encompassed a significant gain on the sale of Gecina S.A.
Changes in reserves for insurance and investment contracts (net) declined 15.7% to 2,648 million. This decrease was attributable primarily to our German life operating entities, as a result of lower capital gains, higher acquisition related expenses, triggered by a true-up for deferred acquisition costs, and lower interest expenses for reduced reinsurance.
Acquisition and administrative expenses (net) increased markedly by 28.8% to 1,042 million, driven by a 241 million increase in acquisition expenses. This development was mainly attributable to Germany Life, in the context of the aforementioned true-up, and to a lesser extent to increased acquisition expenses at Allianz Life, AGF and RAS.
Our statutory expense ratio increased by 1.3 percentage points to 8.3% (1Q 2005: 7.0%), resulting largely from the aforementioned developments within acquisition and administrative expenses (net). Through the effects of the true-up, the statutory expense ratio of our German Life operating entities rose by 3.7 percentage points to 8.7%. Excluding the true-up effects in 1Q 2006 and 1Q 2005, our Germany Life statutory expense ratio would have improved by 2.1 percentage points, from 9.2% to 7.1%.
Non-Operating Items
Our non-operating items increased by 70 million to 158 million. This development was primarily related to an increase in realized gains/losses (net) from strategic investments, which is attributable to shareholders, of 68 million to 159 million, driven by Allianz Life in the United States, where we recorded an increase of 50 million stemming from gains from the sale of equity securities and an intra-Allianz Group sale of a participation in a sales company.
Net Income
Driven by strong operating profitability, our net income grew significantly by 40.9% to 534 million.
Income taxes more-than-doubled to 219 million. In addition to the significant growth in operating profit in 1Q 2006, income taxes in 1Q 2005 included the favorable tax treatment of a large gain from the sale of the holding in Gecina S.A. at AGF, which was not repeated in 1Q 2006. Hence, our effective tax rate increased to 24.9% from 17.2%.
Minority interests in earnings increased slightly to 128 million, as the result of significantly higher earnings at RAS in Italy, which more than compensated for the reduced shareholdings of third parties following the buy-out of minorities in late 2005.
13
The following table sets forth our Life/Health insurance segments income statement and key operating ratio for the three months ended March 31, 2006 and 2005.
Three months ended March 31, |
2006 | 2005 | ||||
mn | mn | |||||
Statutory premiums1) |
12,822 | 11,880 | ||||
Ceded premiums written |
(196 | ) | (231 | ) | ||
Change in unearned premiums |
(58 | ) | (29 | ) | ||
Statutory premiums (net) |
12,568 | 11,620 | ||||
Deposits from SFAS 97 insurance and investment contracts |
(7,472 | ) | (6,453 | ) | ||
Premiums earned (net) |
5,096 | 5,167 | ||||
Interest and similar income |
3,047 | 2,812 | ||||
Income from financial assets and liabilities carried at fair value through income (net) |
31 | 23 | ||||
Realized gains/losses (net), excluding strategic investments2) |
1,103 | 1,367 | ||||
Fee and commission income |
129 | 92 | ||||
Other income |
6 | 9 | ||||
Operating revenues |
9,412 | 9,470 | ||||
Claims and insurance benefits incurred (net) |
(4,693 | ) | (4,722 | ) | ||
Changes in reserves for insurance and investment contracts (net) |
(2,648 | ) | (3,143 | ) | ||
Interest expense |
(64 | ) | (104 | ) | ||
Loan loss provisions |
| (1 | ) | |||
Impairments of investments (net), excluding strategic investments |
(35 | ) | (22 | ) | ||
Investment expenses |
(157 | ) | (122 | ) | ||
Acquisition and administrative expenses (net) |
(1,042 | ) | (809 | ) | ||
Fee and commission expenses |
(50 | ) | (30 | ) | ||
Operating expenses |
(8,689 | ) | (8,953 | ) | ||
Operating profit |
723 | 517 | ||||
Realized gains/losses (net) from strategic investments2) |
159 | 91 | ||||
Amortization of intangible assets |
(1 | ) | (3 | ) | ||
Non-operating items |
158 | 88 | ||||
Income before income taxes and minority interests in earnings |
881 | 605 | ||||
Income taxes |
(219 | ) | (104 | ) | ||
Minority interests in earnings |
(128 | ) | (122 | ) | ||
Net income |
534 | 379 | ||||
Statutory expense ratio3) in % |
8.3 | 7.0 | ||||
1) | For the Life/Health segment, total revenues are measured based upon statutory premiums. Statutory premiums are gross premiums written from sales of life insurance policies as well as gross receipts from sales of unit linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurers home jurisdiction. |
2) | The total of these items equals Realized gains/losses (net) in the segment income statement. |
3) | Represents acquisition and administrative expenses (net) divided by statutory premiums (net). |
14
Life/Health Operations by Geographic Region
The following table sets forth our life/health statutory premiums, premiums earned (net), statutory expense ratio and operating profit by geographic region. Consistent with our general practice, statutory premiums, premiums earned (net), statutory expense ratio and operating profit by geographic region are presented before consolidation adjustments, representing the elimination of transactions between Allianz Group companies in different geographic regions and different segments.
Statutory premiums1) |
Premiums earned (net) |
Statutory expense ratio |
Operating Profit |
||||||||||||||||||
mn | mn | % | mn | ||||||||||||||||||
Three months ended March 31, |
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||
Germany Life |
3,128 | 3,117 | 2,581 | 2,699 | 8.7 | 5.0 | 133 | 156 | |||||||||||||
Germany Health2) |
770 | 756 | 770 | 756 | 7.1 | 9.5 | 53 | 45 | |||||||||||||
Italy |
2,268 | 2,345 | 242 | 256 | 5.8 | 5.0 | 94 | 56 | |||||||||||||
France |
1,460 | 1,208 | 373 | 392 | 14.1 | 15.0 | 174 | 119 | |||||||||||||
Switzerland |
519 | 488 | 209 | 196 | 5.5 | 5.8 | 15 | 12 | |||||||||||||
Spain |
142 | 136 | 100 | 117 | 8.4 | 7.8 | 21 | 16 | |||||||||||||
Other Europe, thereof: |
740 | 500 | 321 | 304 | 11.7 | 16.4 | 65 | 41 | |||||||||||||
Netherlands |
124 | 102 | 38 | 34 | 12.3 | 13.8 | 10 | 7 | |||||||||||||
Austria |
102 | 91 | 68 | 63 | 9.6 | 6.7 | 13 | 8 | |||||||||||||
Belgium |
179 | 152 | 75 | 87 | 8.0 | 14.4 | 16 | 14 | |||||||||||||
Portugal |
19 | 20 | 17 | 17 | 13.7 | 22.7 | 7 | 4 | |||||||||||||
Luxembourg |
10 | 9 | 7 | 6 | 17.4 | 21.0 | 1 | 1 | |||||||||||||
Greece |
26 | 23 | 15 | 13 | 24.2 | 23.1 | 2 | (1 | ) | ||||||||||||
Western and Southern Europe |
460 | 397 | 220 | 220 | 10.7 | 14.0 | 49 | 33 | |||||||||||||
Hungary |
23 | 20 | 19 | 18 | 26.7 | 26.1 | 4 | 3 | |||||||||||||
Slovakia |
43 | 36 | 32 | 32 | 19.7 | 17.7 | 6 | 2 | |||||||||||||
Czech Republic |
18 | 13 | 14 | 10 | 22.6 | 25.4 | 2 | 1 | |||||||||||||
Poland |
169 | 17 | 19 | 12 | 7.4 | 41.8 | 2 | 1 | |||||||||||||
Romania |
10 | 3 | 2 | 1 | 31.3 | 45.1 | | (1 | ) | ||||||||||||
Bulgaria |
5 | 4 | 5 | 4 | 14.5 | 11.7 | 1 | 1 | |||||||||||||
Croatia |
10 | 10 | 8 | 7 | 26.0 | 21.2 | 1 | 1 | |||||||||||||
Russia |
2 | | 2 | | 39.2 | | | | |||||||||||||
Central and Eastern Europe |
280 | 103 | 101 | 84 | 13.4 | 25.3 | 16 | 8 | |||||||||||||
United States |
2,772 | 2,725 | 88 | 113 | 5.7 | 3.1 | 121 | 36 | |||||||||||||
Asia-Pacific, thereof: |
929 | 516 | 302 | 290 | 8.7 | 17.0 | 31 | 11 | |||||||||||||
South Korea |
572 | 350 | 255 | 245 | 11.0 | 20.4 | 25 | 5 | |||||||||||||
Taiwan |
299 | 126 | 14 | 20 | 1.1 | 5.3 | 4 | 7 | |||||||||||||
Malaysia |
22 | 19 | 19 | 15 | 17.8 | 16.6 | 2 | | |||||||||||||
Indonesia |
15 | 17 | 9 | 7 | 34.7 | 21.7 | | | |||||||||||||
Other |
21 | 4 | 4 | 3 | 18.1 | 59.2 | | (1 | ) | ||||||||||||
South America |
46 | 32 | 13 | 7 | 10.9 | 13.2 | | | |||||||||||||
Other4) |
113 | 64 | 98 | 37 | 34.0 | 17.0 | 61 | 27 | |||||||||||||
Subtotal |
12,887 | 11,887 | 5,097 | 5,167 | | | 768 | 519 | |||||||||||||
Consolidation adjustments3) |
(65 | ) | (7 | ) | (1 | ) | | | | (45 | ) | (2 | ) | ||||||||
Total |
12,822 | 11,880 | 5,096 | 5,167 | 8.3 | 7.0 | 723 | 517 | |||||||||||||
1) | Statutory premiums are gross premiums written from sales of life insurance policies as well as gross receipts from sales of unit linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurers home jurisdiction. |
2) | Loss ratios were 75.7% and 74.9%, for the three months ended March 31, 2006 and 2005, respectively. |
3) | Represents elimination of transactions between Allianz Group companies in different geographic regions. |
4) | Contains, among others, the life/health business assumed by Allianz AG, which was previously reported under Germany in the Property-Casualty segment. Prior year balances have been adjusted to reflect this reclassification and allow for comparability across periods. |
15
Strong first quarter.
| Operating revenues rose 15.3% to 1.9 billion. |
| Operating profit more-than-doubled to 547 million. |
| Cost-income ratio strengthened by 7.3 percentage points both of Dresdner Banks operating divisions contributed strongly. |
Earnings Summary
The 547 million operating profit of our Banking segment is almost exclusively represented by Dresdner Bank, accounting for 96.7% of our total Banking segments operating revenues and operating profit in 1Q 2006 (1Q 2005: 96.1% and 91.3%). Accordingly, the discussion of our Banking segments results of operations relates solely to the operations of Dresdner Bank.
Operating Revenues
Operating revenues experienced increases across all categories producing an aggregate increase of 16.1% to 1,884 million. This positive development, which benefited from a favorable market environment in the first quarter, was primarily driven by a significant increase in net fee and commission income to 793 million. Within the Private & Business Clients (or PBC) division, there was a strong increase in the securities business, especially from equities, investment funds and certificates. Additionally, within the Corporate & Investment Banking (or CIB) division, revenues from corporate finance and advisory services more-than-doubled. As a result of substantial increases in equity and foreign currency trading, considerable growth occurred in income from financial assets and liabilities carried at fair value through income (net), reaching 487 million. Additionally, and largely attributable to a much lower negative impact from the accounting for derivative financial instruments which do not qualify for hedge accounting, as well as increased revenues from our structured finance activities, net interest income grew to 578 million.
Operating Profit
Operating profit more-than-doubled to 529 million both PBC and CIB contributed to this positive development, which was primarily due to the strengthening of the said divisions operating revenues. An additional factor, albeit to a lesser degree, was a net release of loan loss provisions of 33 million. While gross releases and recoveries continued to decrease, the decline in gross new additions to specific loan loss allowances was again even stronger. This resulted from the improved credit quality within our private and corporate customer portfolios, due to improved credit processes. An additional factor influencing this development was the decline in the number of individuals filing for bankruptcy in Germany in 1Q 2006.1) Our coverage ratio remained relatively stable at 60.4% at March 31, 2006 (March 31, 2005: 61.9%).
While our operating revenues within our PBC and CIB divisions increased 11.6% and 28.8%, respectively, our administrative expenses only rose by 5.3%. Specifically, personnel expenses increased by 10.0% to 891 million reflecting higher performance-related payments in our CIB division, offset in part by a slight decline in non-personnel expenses by 2.2% to 490 million. As a consequence of the strong operating revenue development, Dresdner Banks cost-income ratio improved significantly to 73.7% (1Q 2005: 81.0%).
1) | Source: Own calculations and estimates. |
16
Non-Operating Items
Our non-operating items declined by 12.9% to 392 million due to lower realized gains/losses (net) of 414 million (1Q 2005: 492 million). Realized gains/losses (net) in 1Q 2006 included a tax-exempt gain of 282 million from the sale of Dresdner Banks remaining 2.3 % shareholdings in Munich Re to Allianz AG as well as a significant gain from the disposal of our remaining participation in Eurohypo AG.
Net Income
Founded on the favorable developments within operating profit, net income improved by 15.2% to 658 million.
Due primarily to increased operating profit, income taxes rose significantly to 238 million with an effective tax rate of 25.8% (1Q 2005: 10.3%). In 1Q 2005, a similar tax-exempt gain from the sale of Munich Re shares was realized, which had a larger impact on the 1Q 2005 effective tax rate due to a lower income before taxes and minority interests in earnings.
The following table sets forth the income statements and cost-income ratios for both our Banking segment as a whole and Dresdner Banks contribution to 1Q 2006 and 1Q 2005.
Three months ended March 31, |
2006 | 2005 | ||||||||||
Banking Segment |
Dresdner Bank |
Banking Segment |
Dresdner Bank |
|||||||||
mn | mn | mn | mn | |||||||||
Net interest income1) |
601 | 578 | 549 | 531 | ||||||||
Net fee and commission income2) |
832 | 793 | 702 | 666 | ||||||||
Income from financial assets and liabilities carried at fair value through income (net) |
490 | 487 | 438 | 426 | ||||||||
Other income |
25 | 26 | | | ||||||||
Operating revenues3) |
1,948 | 1,884 | 1,689 | 1,623 | ||||||||
Administrative expenses |
(1,428 | ) | (1,381 | ) | (1,366 | ) | (1,311 | ) | ||||
Investment expenses |
(6 | ) | (7 | ) | (7 | ) | (10 | ) | ||||
Other expenses |
| | 6 | 7 | ||||||||
Operating expenses |
(1,434 | ) | (1,388 | ) | (1,367 | ) | (1,314 | ) | ||||
Loan loss provisions |
33 | 33 | (93 | ) | (100 | ) | ||||||
Operating profit |
547 | 529 | 229 | 209 | ||||||||
Realized gains/losses (net) |
414 | 414 | 492 | 492 | ||||||||
Impairments of investments (net) |
(20 | ) | (20 | ) | (42 | ) | (42 | ) | ||||
Restructuring charges |
(2 | ) | (2 | ) | | | ||||||
Non-operating items |
392 | 392 | 450 | 450 | ||||||||
Income before income taxes and minority interests in earnings |
939 | 921 | 679 | 659 | ||||||||
Income taxes |
(245 | ) | (238 | ) | (74 | ) | (68 | ) | ||||
Minority interests in earnings |
(28 | ) | (25 | ) | (26 | ) | (20 | ) | ||||
Net income |
666 | 658 | 579 | 571 | ||||||||
Cost-income ratio4) in % |
73.6 | 73.7 | 80.9 | 81.0 | ||||||||
1) | Represents interest and similar income less interest expense. |
2) | Represents fee and commission income less fee and commission expense. |
3) | For the Banking segment, total revenues are measured based upon operating revenues. |
4) | Represents operating expenses divided by operating revenues. |
17
Banking Operations by Division
The following table sets forth our banking operating revenues, operating profit and cost-income ratio by division. Consistent with our general practice, operating revenues, operating profit and cost-income ratio by division are presented before consolidation adjustments, representing the elimination of transactions between Allianz Group companies in different segments.
Three months ended March 31, |
2006 | 2005 | ||||||||||||||
Operating revenues |
Operating profit |
Cost-income ratio |
Operating revenues |
Operating profit |
Cost-income ratio |
|||||||||||
mn | mn | % | mn | mn | % | |||||||||||
Private & Business Clients1) |
892 | 270 | 68.4 | 799 | 142 | 76.3 | ||||||||||
Corporate & Investment Banking1) |
967 | 263 | 76.3 | 751 | 107 | 80.3 | ||||||||||
Corporate Other2) |
25 | (4 | ) | 3 | ) | 73 | (40 | ) | 3 | ) | ||||||
Dresdner Bank |
1,884 | 529 | 73.7 | 1,623 | 209 | 81.0 | ||||||||||
Other Banks4) |
64 | 18 | 71.9 | 66 | 20 | 80.3 | ||||||||||
Total |
1,948 | 547 | 73.6 | 1,689 | 229 | 80.9 | ||||||||||
1) | Effective 1Q 2006, we have reorganized our banking business within Dresdner Bank. Our newly formed Private & Business Clients division combines all banking activities formerly provided by the Personal Banking and Private & Business Banking divisions. Additionally, our Corporate Banking and Dresdner Kleinwort Wasserstein (or DrKW) divisions have been combined within a single organizational unit, Corporate & Investment Banking. |
2) | The Corporate Other division contains income and expense items that are not assigned to Dresdner Banks operating divisions. These items include, in particular, impacts from the accounting for derivative financial instruments which do not qualify for hedge accounting, provisioning requirements for country and general risks, as well as realized gains and losses from Dresdner Banks non-strategic investment portfolio. In 1Q 2006, the impact from the accounting for derivative financial instruments which do not qualify for hedge accounting on Corporate Others operating revenues amounted to a charge of 23 mn (1Q 2005: charge of 20 mn). With effect from 1Q 2006, the majority of expenses for support functions and central projects previously included within Corporate Other have been allocated to the operating divisions. Additionally, the non-strategic Institutional Restructuring Unit (or IRU) was closed down effective September 30, 2005 having successfully completed its mandate to free-up risk capital through the reduction of risk-weighted assets. Furthermore, effective in 1Q 2006, and as a result of Dresdner Bank restructuring its divisions, the IRUs 2005 results of operation were reclassified into Corporate Other. Prior year balances have been adjusted to reflect these reclassifications and allows for comparability across periods. |
3) | Presentation not meaningful. |
4) | Consists of non-Dresdner Bank banking operations within our Banking segment. |
18
Net inflows of 14 billion.
| Compared to December 31, 2005, our third-party assets rose by 3.2%, excluding foreign currency impactshence, we are well on track to achieve our growth target for 2006. |
| Growth above 30% in both operating revenues and operating profit. |
| Net income tripled versus 1Q 2005, reaching 90 million. |
Third-Party Assets Under Management
In 1Q 2006, net inflows to third-party assets under management amounted to 14 billion. Market-related appreciation was 10 billion, primarily attributable to favorable equity capital markets and, to a lesser extent, bond capital markets worldwide. Hence, at March 31, 2006, and excluding foreign currency impacts, third-party assets were 24 billion, or 3.2%, higher compared to December 31, 2005. These achievements further strengthened our position as one of the worlds largest asset managers, based on total assets under management.1) A major success factor has been our competitive performance, as the overwhelming majority of the third-party assets we manage continued to outperform in 1Q 2006. Negative effects of 14 billion from exchange rate movements partly offset the growth in third-party assets, resulting primarily from the weaker U.S. Dollar versus the Euro at March 31, 2006, as compared to December 31, 2005.
Our major developments in 1Q 2006 included:
United States
| Allianz/PIMCO Funds were named Best Mutual Fund Family of 2005 in the annual Lipper/Barrons Fund Families Survey. |
| Particularly strong net inflows of approximately 3 billion at our equity fund manager NFJ Investment Group. |
Germany
| Allianz Global Investors (or AGI) ranked first among German asset management companies, based on net inflows in retail equity products.2) |
| Feri Rating & Research gave Deutscher Investment-Trust (or dit) a five star rating as a top asset management company 2005. |
1) | Source: Own internal analysis and estimates. |
2) | Source: Bundesverband Investment und Asset Management (or BVI), an association representing the German investment fund industry. |
We operate our third-party asset management business primarily through AGI. At March 31, 2006, AGI managed approximately 94.7% (December 31, 2005: 95.2%) of our third-party assets. The remaining assets are managed by Dresdner Bank (approximately 2.7% and 2.3% at March 31, 2006 and December 31, 2005, respectively) and other Allianz Group companies (approximately 2.6% and 2.5% at March 31, 2006 and December 31, 2005, respectively).
The following graphs present the third-party assets managed by the Allianz Group by geographic region, investment category and investor class at March 31, 2006 and December 31, 2005, respectively.
Third-party Assets Under Management Fair Values by Geographic Region1)
1) | Based on the origination of the assets. |
2) | Consists of third-party assets managed by Dresdner Bank (approximately 20 bn and 17 bn at March 31, 2006 and December 31, 2005, respectively) and by other Allianz Group companies (approximately 20 bn and 19 bn at March 31, 2006 and December 31, 2005, respectively). |
19
Third-party Assets Under Management Fair Values by Investment Category
in bn
1) | Includes primarily investments in real estate. |
Third-party Assets Under Management Fair Values by Investor Class
in bn
Earnings Summary
The results of operations of our Asset Management segment are almost exclusively represented by AGI, accounting for 97.9% and 98.7% of our total Asset Management segments operating revenues and operating profit, respectively, for 1Q 2006 (1Q 2005: 97.9% and 99.1%). Accordingly, the discussion of our Asset Management segments results of operations relates solely to the operations of AGI.
Operating Revenues
Our operating revenues increased by 32.4% to 735 million, primarily reflecting the strong growth of our third-party assets since March 31, 2005.
Net fee and commission income improved by 28.7% to 704 million, as AGIs third-party assets at March 31, 2006 were 129 billion higher compared to March 31, 2005. The following table sets forth the composition of AGIs net fee and commission income.
Three months ended March 31, |
2006 | 2005 | ||||
mn | mn | |||||
Fee and commission income, thereof: |
1,015 | 792 | ||||
Management fees |
829 | 647 | ||||
Loading and exit fees |
91 | 77 | ||||
Performance fees |
16 | 9 | ||||
Other |
79 | 59 | ||||
Fee and commission expenses, thereof: |
(311 | ) | (245 | ) | ||
Commissions |
(226 | ) | (187 | ) | ||
Other |
(85 | ) | (58 | ) | ||
Net fee and commission income |
704 | 547 | ||||
Income from financial assets and liabilities carried at fair value through income (net) increased by 13 million to 14 million, predominantly due to mark to market valuation of seed money in the United States.
Operating Profit
Operating profit increased significantly by 31.0% to 300 million, primarily resulting from the growth in our operating revenues. Operating profit development was particularly strong in the United States.
Operating expenses grew by 33.4% to 435 million. Thereof, personnel expenses rose to 285 million, an increase of 27.6%, due largely to increased performance-related compensation in the United States as a result of our strong business developments. Further, non-personnel expenses increased to 150 million, due to, among other factors, the growth of third-party assets.
As a result, our cost-income ratio increased moderately by 0.5 percentage points to 59.2%.
Operating Profit Allianz Global Investors
in mn
20
Non-Operating Items
Acquisition-related expenses remained flat at 138 million. Thereof, 136 million was due to the deferred purchases of interests in PIMCO related to the PIMCO LLC Class B Unit Purchase Plan (or Class B Plan), which increased by 7.1%. The rise was commensurate with the strong operating profit development at PIMCO. During 1Q 2006, the Allianz Group called a further 6,294 Class B equity units from both former and current members of management of PIMCO. The total amount paid related to the call was 89 million. Of the 150,000 Class B equity units, which the plan participants had originally acquired annually through December 31, 2004, the Allianz Group, in aggregate, has acquired 11,721 units as of March 31, 2006.
Amortization of intangible assets decreased by 30 million, benefiting from the expiration of amortization charges in 2005 relating to capitalized bonuses for PIMCO management.
Net Income
Net income reached 87 million, a 60 million improvement from the prior year period.
Income taxes increased by 39 million to 64 million. This development was predominantly driven by our improved operating profit. Overall, AGIs effective income tax rate rose to 39.4% (1Q 2005: 38.4%).
21
The following table sets forth the income statements and key operating ratio for both our Asset Management segment as a whole and AGI on a stand-alone basis for 1Q 2006 and 1Q 2005.
Three months ended March 31, |
2006 | 2005 | ||||||||||
Asset Management Segment |
Allianz Global Investors |
Asset Management Segment |
Allianz Global Investors |
|||||||||
mn | mn | mn | mn | |||||||||
Net fee and commission income1) |
717 | 704 | 556 | 547 | ||||||||
Net interest income2) |
17 | 14 | 3 | 4 | ||||||||
Income from financial assets and liabilities carried at fair value through income (net) |
14 | 14 | 5 | 1 | ||||||||
Other income |
3 | 3 | 3 | 3 | ||||||||
Operating revenues3) |
751 | 735 | 567 | 555 | ||||||||
Administrative expenses, excluding acquisition-related expenses4) |
(447 | ) | (435 | ) | (336 | ) | (326 | ) | ||||
Operating expenses |
(447 | ) | (435 | ) | (336 | ) | (326 | ) | ||||
Operating profit |
304 | 300 | 231 | 229 | ||||||||
Realized gains/losses (net) |
2 | 1 | 2 | | ||||||||
Acquisition-related expenses, thereof:4) |
||||||||||||
Deferred purchases of interests in PIMCO |
(136 | ) | (136 | ) | (127 | ) | (127 | ) | ||||
Other acquisition-related expenses5) |
(2 | ) | (2 | ) | (9 | ) | (9 | ) | ||||
Subtotal |
(138 | ) | (138 | ) | (136 | ) | (136 | ) | ||||
Amortization of intangible assets6) |
| | (30 | ) | (30 | ) | ||||||
Non-operating items |
(136 | ) | (137 | ) | (164 | ) | (166 | ) | ||||
Income before income taxes and minority interests in earnings |
168 | 163 | 67 | 63 | ||||||||
Income taxes |
(65 | ) | (64 | ) | (24 | ) | (25 | ) | ||||
Minority interests in earnings |
(13 | ) | (12 | ) | (13 | ) | (11 | ) | ||||
Net income |
90 | 87 | 30 | 27 | ||||||||
Cost-income ratio7) in % |
59.5 | 59.2 | 59.3 | 58.7 | ||||||||
1) | Represents fee and commission income less fee and commission expense. |
2) | Represents interest and similar income less interest expense and investment expenses. |
3) | For the Asset Management segment, total revenues are measured based upon operating revenues. |
4) | The total of these items equals acquisition and administrative expenses (net) in the segment income statement. |
5) | Consists of retention payments for the management and employees of PIMCO and Nicholas Applegate of 2 mn and 9 mn for 1Q 2006 and 1Q 2005, respectively. These retention payments largely expired in 2005. |
6) | Consists of amortization charges relating to capitalized bonuses for PIMCO management of mn and 29 mn for 1Q 2006 and 1Q 2005, respectively. These amortization charges expired in 2005. Until December 31, 2005, these amortization charges were classified as acquisition-related expenses. Prior year balances have been reclassified to allow for comparability across periods. |
7) | Represents operating expenses divided by operating revenues. |
22
Well on track to achieving our targets.
However, as always, natural catastrophes and adverse developments in the capital markets, as well as the factors stated below in our cautionary note regarding forward-looking statements, may severely impact our profitability.
Cautionary Note Regarding Forward-Looking Statements
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on managements 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 Groups core business and core 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) 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 company assumes no obligation to update any forward-looking information contained herein.
23
The previous analysis is based on our consolidated financial statements and should be read in conjunction with those statements. We evaluate the results of our Property-Casualty, Life/Health, Banking, Asset Management and Corporate segments using a financial performance measure we refer to herein as operating profit. We define our segment operating profit as income before income taxes and minority interests in earnings, excluding, as applicable for each respective segment, all or some of the following items: income from financial assets and liabilities held for trading (net), realized gains/losses (net), impairments of investments (net), amortization of intangible assets, acquisition-related expenses and restructuring charges.
While these excluded items are significant components in understanding and assessing our consolidated financial performance, we believe that the presentation of operating results enhances the understanding and comparability of the performance of our segments by highlighting net income attributable to ongoing segment operations and the underlying profitability of our businesses. For example, we believe that trends in the underlying profitability of our segments can be more clearly identified without the fluctuating effects of the realized gains/losses or impairments of investments, as these are largely dependent on market cycles or issuer specific events over which we have little or no control, and can and do vary, sometimes materially, across periods. Further, the timing of sales that would result in such gains or losses is largely at our discretion. Operating profit is not a substitute for income before income taxes and minority interests in earnings or net income as determined in accordance with International Financial Reporting Standards (or IFRS). Our definition of operating profit may differ from similar measures used by other companies, and may change over time. For further information on operating profit, as well as the particular reconciling items between operating profit and net income, see Note 3 to our consolidated financial statements.
In the previous analysis, we analyze the Allianz Groups consolidated results of operations for the three months ended March 31, 2006 (or 1Q 2006) as compared to the three months ended March 31, 2005 (or 1Q 2005), using operating profit and net income as the relevant performance measures, as permitted under IFRS.
We further believe that an understanding of our total revenue performance is enhanced when the effects from foreign currency translation as well as acquisitions and disposals (or changes in scope of consolidation) are excluded. Accordingly, in addition to presenting nominal growth, internal growth, which excludes the effects from foreign currency translation and changes in scope of consolidation, is also provided. The following table sets forth the reconciliation of nominal total revenue growth to internal total revenue growth for each of our segments and the Allianz Group as a whole for 1Q 2006 as compared to 1Q 2005.
Composition of Total Revenues1) Growth for the Three Months Ended March 31, 2006
Segment2) |
Nominal growth |
Changes in scope of consolidation |
Foreign currency translation |
Internal growth |
||||||
% | % | % | % | |||||||
Property- Casualty |
| (0.1 | ) | 1.1 | (1.0 | ) | ||||
Life/ Health |
7.9 | | 2.9 | 5.0 | ||||||
Banking |
15.3 | | 0.8 | 14.5 | ||||||
thereof: Dresdner Bank |
16.1 | | 0.9 | 15.2 | ||||||
Asset Management |
32.5 | 0.9 | 8.7 | 22.9 | ||||||
thereof: Allianz Global Investors |
32.4 | 0.9 | 8.5 | 23.0 | ||||||
Allianz Group |
4.9 | | 2.0 | 2.9 | ||||||
1) | Total revenues comprise Property-Casualty segments gross premiums written, Life/Health segments statutory premiums, Banking segments operating revenues, and Asset Management segments operating revenues. |
2) | Before the elimination of transactions between Allianz Group companies in different segments. |
24
Consolidated Financial Statements
Contents
26 | Consolidated Balance Sheets |
27 | Consolidated Income Statements |
28 | Consolidated Statements of Changes in Equity |
29 | Consolidated Statements of Cash Flows |
Notes to the Consolidated Financial Statements
30 | 1 | Basis of presentation | ||
30 | 2 | Changes in the presentation of the consolidated financial statements | ||
34 | 3 | Segment reporting |
Supplementary Information to the Consolidated Balance Sheets
Supplementary Information to the Consolidated Income Statements
Other Information
60 | 36 | Supplemental information on the Banking Segment | ||
60 | 37 | Supplemental information on the consolidated statements of cash flows | ||
61 | 38 | Other information | ||
61 | 39 | Subsequent events |
25
As of March 31, 2006 and as of December 31, 2005
ASSETS |
Note | As of March 31, 2006 |
As of December 31, 2005 | |||
mn | mn | |||||
Cash and cash equivalents |
32,897 | 31,647 | ||||
Financial assets carried at fair value through income |
4 | 173,191 | 180,346 | |||
Investments |
5 | 285,585 | 285,015 | |||
Loans and advances to banks and customers |
6 | 391,699 | 336,808 | |||
Financial assets for unit linked contracts |
57,690 | 54,661 | ||||
Reinsurance assets |
7 | 20,872 | 22,120 | |||
Deferred acquisition costs |
8 | 18,447 | 17,437 | |||
Deferred tax assets |
5,217 | 5,299 | ||||
Other assets |
9 | 39,534 | 42,293 | |||
Intangible assets |
10 | 12,903 | 12,958 | |||
Total assets |
1,038,035 | 988,584 | ||||
LIABILITIES AND EQUITY |
Note | As of March 31, 2006 |
As of December 31, 2005 | |||
mn | mn | |||||
Financial liabilities carried at fair value through income |
11 | 88,267 | 86,842 | |||
Liabilities to banks and customers |
12 | 355,253 | 310,316 | |||
Unearned premiums |
16,900 | 13,303 | ||||
Reserves for loss and loss adjustment expenses |
13 | 66,069 | 67,005 | |||
Reserves for insurance and investment contracts |
14 | 280,539 | 278,829 | |||
Financial liabilities for unit linked contracts |
57,690 | 54,661 | ||||
Deferred tax liabilities |
5,065 | 5,324 | ||||
Other liabilities |
15 | 48,450 | 51,315 | |||
Certificated liabilities |
16 | 55,630 | 59,203 | |||
Participation certificates and subordinated liabilities |
17 | 15,166 | 14,684 | |||
Total liabilities |
989,029 | 941,482 | ||||
Shareholders equity |
41,301 | 39,487 | ||||
Minority interests |
7,705 | 7,615 | ||||
Total equity |
18 | 49,006 | 47,102 | |||
Total liabilities and equity |
1,038,035 | 988,584 | ||||
26
Consolidated Income Statements
For the three months ended March 31, 2006 and 2005
Note | 2006 | 2005 | ||||||
mn | mn | |||||||
Premiums earned (net) |
19 | 14,437 | 14,307 | |||||
Interest and similar income |
20 | 5,691 | 5,124 | |||||
Income from financial assets and liabilities carried at fair value through income (net) |
21 | 500 | 487 | |||||
Realized gains/losses (net) |
22 | 1,895 | 2,219 | |||||
Fee and commission income |
23 | 2,403 | 1,938 | |||||
Other income |
24 | 39 | 13 | |||||
Total income |
24,965 | 24,088 | ||||||
Claims and insurance benefits incurred (net) |
25 | (10,875 | ) | (10,762 | ) | |||
Change in reserves for insurance and investment contracts (net) |
26 | (2,712 | ) | (3,281 | ) | |||
Interest expense |
27 | (1,600 | ) | (1,392 | ) | |||
Loan loss provisions |
28 | 32 | (94 | ) | ||||
Impairments of investments (net) |
29 | (55 | ) | (103 | ) | |||
Investment expenses |
30 | (183 | ) | (299 | ) | |||
Acquisition and administrative expenses (net) |
31 | (5,843 | ) | (5,290 | ) | |||
Fee and commission expenses |
32 | (688 | ) | (567 | ) | |||
Amortization of intangible assets |
(5 | ) | (38 | ) | ||||
Restructuring charges |
(4 | ) | (5 | ) | ||||
Other expenses |
33 | (1 | ) | (2 | ) | |||
Total expenses |
(21,934 | ) | (21,833 | ) | ||||
Income before income taxes and minority interests in earnings |
3,031 | 2,255 | ||||||
Income taxes |
34 | (899 | ) | (585 | ) | |||
Minority interests in earnings |
(353 | ) | (346 | ) | ||||
Net income |
1,779 | 1,324 | ||||||
| | |||||||
Basic earnings per share |
35 | 4.39 | 3.50 | |||||
Diluted earnings per share |
35 | 4.32 | 3.48 | |||||
27
Consolidated Statements of Changes in Equity
For the three months ended March 31, 2006 and 2005
Paid-in capital |
Revenue reserves |
Foreign currency translation adjustments |
Unrealized gains and losses (net) |
Shareholders equity |
Minority interests |
Total equity |
||||||||||||||
mn | mn | mn | mn | mn | mn | mn | ||||||||||||||
Balance as of December 31, 2004 |
19,433 | 5,893 | (2,634 | ) | 7,303 | 29,995 | 7,696 | 37,691 | ||||||||||||
Foreign currency translation adjustments |
| | 538 | 29 | 567 | (1 | ) | 566 | ||||||||||||
Capital paid in |
174 | | | | 174 | | 174 | |||||||||||||
Treasury shares |
| 1,611 | | | 1,611 | | 1,611 | |||||||||||||
Unrealized gains and losses (net) |
| | | 24 | 24 | 94 | 118 | |||||||||||||
Net income |
| 1,324 | | | 1,324 | 346 | 1,670 | |||||||||||||
Dividends paid |
| | | | | (23 | ) | (23 | ) | |||||||||||
Miscellaneous |
| (105 | ) | | | (105 | ) | (113 | ) | (218 | ) | |||||||||
Balance as of March 31, 2005 |
19,607 | 8,723 | (2,096 | ) | 7,356 | 33,590 | 7,999 | 41,589 | ||||||||||||
Balance as of December 31, 2005 |
21,616 | 8,579 | (1,032 | ) | 10,324 | 39,487 | 7,615 | 47,102 | ||||||||||||
Foreign currency translation adjustments |
| | (335 | ) | (13 | ) | (348 | ) | (110 | ) | (458 | ) | ||||||||
Changes in the consolidated subsidiaries of the Allianz Group |
| 12 | | (4 | ) | 8 | 28 | 36 | ||||||||||||
Treasury shares |
| 255 | | | 255 | | 255 | |||||||||||||
Unrealized gains and losses (net) |
| | | 379 | 379 | (162 | ) | 217 | ||||||||||||
Net income |
| 1,779 | | | 1,779 | 353 | 2,132 | |||||||||||||
Dividends paid |
| | | | | (15 | ) | (15 | ) | |||||||||||
Miscellaneous |
| (259 | ) | | | (259 | ) | (4 | ) | (263 | ) | |||||||||
Balance as of March 31, 2006 |
21,616 | 10,366 | (1,367 | ) | 10,686 | 41,301 | 7,705 | 49,006 | ||||||||||||
28
Consolidated Statements of Cash Flows
For the three months ended March 31, 2006 and 2005
Three months ended March 31, |
2006 | 2005 | ||||
mn | mn | |||||
Operating activities |
||||||
Net income |
1,779 | 1,324 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
Minority interests in earnings |
353 | 346 | ||||
Share of earnings from investments in associates and joint ventures |
(74 | ) | (76 | ) | ||
Realized gains/losses (net) and impairments of investments (net) |
(1,978 | ) | (2,274 | ) | ||
Depreciation and amortization |
148 | 199 | ||||
Loan loss provisions |
(32 | ) | 94 | |||
Net change in: |
||||||
Financial assets and liabilities held for trading |
8,587 | (8,828 | ) | |||
Reverse repurchase agreements and collateral paid for securities borrowing transactions |
(46,705 | ) | 41,409 | |||
Repurchase agreements and collateral received for securities lending transactions |
38,953 | (25,206 | ) | |||
Reinsurance assets |
(177 | ) | (328 | ) | ||
Deferred acquisition costs |
(730 | ) | (1,097 | ) | ||
Unearned premiums |
3,724 | 3,870 | ||||
Reserves for loss and loss adjustment expenses |
(373 | ) | 628 | |||
Reserves for insurance and investment contracts |
1,586 | 2,265 | ||||
Deferred tax assets and liabilities |
422 | 460 | ||||
Other (net) |
(194 | ) | (537 | ) | ||
Net cash flow provided by operating activities |
5,289 | 12,249 | ||||
Investing activities |
||||||
Net change in: |
||||||
Financial assets designated at fair value through income |
(111 | ) | (2,702 | ) | ||
Available-for-sale investments |
(2,641 | ) | (4,550 | ) | ||
Held-to-maturity investments |
42 | 74 | ||||
Investments in associates and joint ventures |
(346 | ) | 2,340 | |||
Assets held for sale |
1,416 | | ||||
Real estate held for investment |
96 | (78 | ) | |||
Loans and advances to banks and customers |
(8,296 | ) | (11,222 | ) | ||
Other (net) |
(317 | ) | (189 | ) | ||
Net cash flow used in investing activities |
(10,157 | ) | (16,327 | ) | ||
Financing activities |
||||||
Net change in: |
||||||
Liabilities to banks and customers |
6,050 | 3,485 | ||||
Aggregate policy reserves for universal-life type insurance and investment contracts |
2,463 | 2,288 | ||||
Participation certificates and subordinated liabilities |
494 | 1,915 | ||||
Certificated liabilities |
(2,798 | ) | (2,240 | ) | ||
Capital paid in |
| 174 | ||||
Dividends paid |
(15 | ) | (23 | ) | ||
Other (net) |
(49 | ) | 839 | |||
Net cash flow provided by financing activities |
6,145 | 6,438 | ||||
Effect of exchange rate changes on cash and cash equivalents |
(27 | ) | 28 | |||
Change in cash and cash equivalents |
1,250 | 2,388 | ||||
Cash and cash equivalents at beginning of period |
31,647 | 15,628 | ||||
Cash and cash equivalents at end of period |
32,897 | 18,016 | ||||
29
Notes to the Consolidated Financial Statements
The consolidated financial statements have been prepared in conformity with International Financial Reporting Standards (IFRS) as adopted under European Union regulations in accordance with clause 315a of the German Commercial Code (HGB). Since 2002, the designation IFRS applies to the overall framework of all standards approved by the International Accounting Standards Board. Already approved standards continue to be cited as International Accounting Standards. For years through 2004, IFRS did not provide specific guidance concerning the reporting of insurance and reinsurance contracts. Therefore, as envisioned in the IFRS Framework, the provisions embodied under accounting principles generally accepted in the United States of America have been applied. The financial statements are presented in million Euros ( mn).
2 Changes in the presentation of the consolidated financial statements
During 2005, the Allianz Group comprehensively reviewed its financial reporting methodology to improve the transparency of its financial results and ensure consistency with its peers. As a result of this review, the Allianz Group implemented numerous changes to its financial reporting that are effective on January 1, 2006. The Allianz Groups financial reporting reflects reclassifications in the consolidated balance sheet and consolidated income statement, changes to segment reporting, changes to operating profit methodology and changes to the cash flow statement.
Reclassifications
A significant portion of these changes to financial reporting resulted from the implementation of changes to the structure of the Allianz Groups consolidated balance sheet and consolidated income statement. These changes were implemented to improve transparency and result in the following:
- | The line items in the consolidated income statement include aggregations of items which are similarly aggregated as the line items utilized for determining operating profit. |
- | The line items in the consolidated income statement include aggregations of items that allow the Allianz Groups key performance indicators to be directly derived from the Allianz Groups external financial results. |
- | The line items in the consolidated income statement include aggregations of items which are based more on the nature rather than the function. |
- | The line items in the consolidated balance sheet include aggregations of items which are similarly aggregated as the line items in the consolidated income statement. |
- | The line items in the consolidated balance sheet are relatively displayed in a liquidity format as required by IAS 1. |
As a result, the Allianz Groups previously reported consolidated balance sheets and consolidated income statements were reclassified to ensure consistency and comparableness with the presentation as implemented on January 1, 2006. These reclassifications did not have an impact on the Allianz Groups net income or shareholders equity for any previously reported period.
The key changes to the previous presentation in the Allianz Groups consolidated balance sheets are:
- | Financial assets and liabilities for unit linked contracts are presented as separate line items. |
- | Investments in associates and joint ventures have been reclassified to investments. |
- | Deferred acquisition costs, including present value of future profits and deferred sales inducements, are presented as a separate line item. |
- | Unearned premiums and reserves for loss and loss adjustment expenses are presented as separate line items. |
- | Financial liabilities for puttable equity instruments have been reclassified to other liabilities. |
- | Deferred tax assets and deferred tax liabilities are presented on a net basis to the extent the requirements of IAS 12 for offset are met. |
The key changes to the previous presentation in the Allianz Groups consolidated income statements are:
- | Interest and similar income includes share of earnings from investments in associates and joint ventures. |
- | Realized gains and realized losses are presented net as a separate line item. Realized gains/losses (net) include realized gains and losses from disposals of associates and subsidiaries and loans and advances to banks and customers. |
- | Impairments and reversals of impairments are presented net as a separate line item. Impairments of investments (net) include impairments and reversals of impairments of investments in associates and joint ventures. |
- | Changes in reserves for insurance and investment contracts (net) are presented as a separate line item. |
- | Fee and commission expenses and investment expenses are presented as separate line items. |
- | Foreign currency gains and losses and depreciation of real estate held for investment are included in investment expenses. |
- | Amortization of intangible assets includes amortization of intangible assets previously included in other expenses. |
- | Restructuring charges are presented as a separate line item. Restructuring charges were previously presented in other expenses. |
- | Acquisition and administrative expenses (net) includes a significant portion of the amounts previously reported in other income and other expense. Acquisition and administrative expenses (net) includes other taxes previously included in taxes. |
30
Summary of the impact of the reclassifications on the consolidated balance sheet as of December 31, 2005:
Balance as of December 31, 2005 as previously reported |
Reclassifications | Balance as of December 31, 2005 | |||||
mn | mn | mn | |||||
Cash and cash equivalents |
31,647 | | 31,647 | ||||
Financial assets carried at fair value through income |
235,007 | (54,661 | ) | 180,346 | |||
Investments1) |
285,015 | | 285,015 | ||||
Loans and advances to banks and customers2) |
336,808 | | 336,808 | ||||
Financial assets for unit linked contracts |
| 54,661 | 54,661 | ||||
Reinsurance assets3) |
22,120 | | 22,120 | ||||
Deferred acquisition costs |
| 17,437 | 17,437 | ||||
Deferred tax assets |
14,596 | (9,297 | ) | 5,299 | |||
Other assets |
57,303 | (15,010 | ) | 42,293 | |||
Intangible assets |
15,385 | (2,427 | ) | 12,958 | |||
Total assets |
997,881 | (9,297 | ) | 988,584 | |||
Financial liabilities carried at fair value through income |
144,640 | (57,798 | ) | 86,842 | |||
Liabilities to banks and customers4) |
310,316 | | 310,316 | ||||
Unearned premiums |
| 13,303 | 13,303 | ||||
Reserves for loss and loss adjustment expenses |
| 67,005 | 67,005 | ||||
Reserves for insurance and investment contracts |
359,137 | (80,308 | ) | 278,829 | |||
Financial liabilities for unit linked contracts |
| 54,661 | 54,661 | ||||
Deferred tax liabilities |
14,621 | (9,297 | ) | 5,324 | |||
Other liabilities5) |
48,178 | 3,137 | 51,315 | ||||
Certificated liabilities |
59,203 | | 59,203 | ||||
Participation certificates and subordinated liabilities |
14,684 | | 14,684 | ||||
Total liabilities |
950,779 | (9,297 | ) | 941,482 | |||
Shareholders equity |
39,487 | | 39,487 | ||||
Minority interests |
7,615 | | 7,615 | ||||
Total equity |
47,102 | | 47,102 | ||||
Total liabilities and equity |
997,881 | (9,297 | ) | 988,584 | |||
1) | Includes investments in associated enterprises and joint ventures previously reported as a separate balance sheet line item. |
2) | Includes loans and advances to banks and loans and advances to customers previously reported as two separate balance sheet line items. |
3) | Formerly Amounts ceded to reinsurers from reserves for insurance and investment contracts. |
4) | Includes liabilities to banks and liabilities to customers previously reported as two separate balance sheet line items. |
5) | Includes other accrued liabilities, other liabilities and deferred income previously reported as three separate balance sheet line items. |
31
Summary of the impact of the reclassifications on the consolidated income statement for the three months ended March 31, 2005:
Balance as of March 31, 2005 as previously reported |
Reclassifications | Balance as of March 31, 2005 |
|||||||
mn | mn | mn | |||||||
Premiums earned (net) |
14,307 | | 14,307 | ||||||
Interest and similar income |
5,048 | 76 | 5,124 | ||||||
Income from investments in associated enterprises and joint ventures (net) |
713 | (713 | ) | | |||||
Income from financial assets and liabilities carried at fair value through income (net) |
487 | | 487 | ||||||
Realized gains/losses (net)1) |
1,598 | 621 | 2,219 | ||||||
Fee and commission income2) |
1,864 | 74 | 1,938 | ||||||
Other income |
629 | (616 | ) | 13 | |||||
Total income |
24,646 | (558 | ) | 24,088 | |||||
Claims and insurance benefits incurred (net)3) |
(14,015 | ) | 3,253 | (10,762 | ) | ||||
Change in reserves for insurance and investment contracts (net) |
| (3,281 | ) | (3,281 | ) | ||||
Interest expense4) |
(1,390 | ) | (2 | ) | (1,392 | ) | |||
Loan loss provisions |
(94 | ) | | (94 | ) | ||||
Impairments of investments (net) |
(258 | ) | 155 | (103 | ) | ||||
Investment expenses |
| (299 | ) | (299 | ) | ||||
Acquisition costs and administrative expenses (net) |
(5,642 | ) | 352 | (5,290 | ) | ||||
Fee and commission expenses |
| (567 | ) | (567 | ) | ||||
Amortization of intangible assets5) |
| (38 | ) | (38 | ) | ||||
Restructuring charges |
| (5 | ) | (5 | ) | ||||
Other expenses |
(981 | ) | 979 | (2 | ) | ||||
Total expenses |
(22,380 | ) | 547 | (21,833 | ) | ||||
Income before income taxes and minority interests in earnings |
2,266 | (11 | ) | 2,255 | |||||
Income taxes6) |
(596 | ) | 11 | (585 | ) | ||||
Minority interests in earnings |
(346 | ) | | (346 | ) | ||||
Net income |
1,324 | | 1,324 | ||||||
1) | Formerly Other income from investments. |
2) | Formerly Fee and commission income, and income from service activities. |
3) | Formerly Insurance and investments contract benefits (net). |
4) | Formerly Interest and similar expenses. |
5) | Formerly Amortization of goodwill. |
6) | Formerly Taxes. |
32
Segment Reporting
Effective January 1, 2006, the Allianz Group introduced a Corporate segment. The Corporate segment includes all group activities which are not allocated to a specific subsidiary. Further, the Corporate segment includes group funding and risk management activities, such as the senior bonds, subordinated bonds and money market securities issued or guaranteed by Allianz AG and the related derivative financial instruments held by Allianz AG or one of its subsidiaries. The activities included in the Corporate segment were previously reported in the Property-Casualty segment.
In addition, the Allianz Group reclassified its life and health reinsurance assumed business to the Life/Health segment. This business was previously reported in the Property-Casualty segment.
Finally, the Allianz Group changed the accounting for intra-Allianz Group dividends. Intra-Allianz Group dividends are now eliminated by the subsidiary receiving the dividend. Intra-Allianz Group dividends were previously eliminated within the segment if the dividend involved subsidiaries within the same segment or eliminated in the consolidation adjustments if the dividend involved subsidiaries in different segments.
The effects of all of these changes to segment reporting were implemented retrospectively; therefore, all previously reported segment balance sheets and segment income statements were reclassified to ensure consistency and comparableness with the presentation as implemented on January 1, 2006.
Operating Profit Methodology
As a result of the reclassifications and changes in segment reporting, as well as improving the consistency of external financial reporting with internal financial reporting, the methodology for defining operating profit was changed effective January 1, 2006. A summary of the key changes is as follows:
- | Amortization of intangible assets and restructuring charges are non-operating items for all segments. |
- | Realized gains/losses (net) and impairments of investments (net) on participating policies are included in operating profit for the Property-Casualty segment. |
- | Realized gains/losses (net) and impairments of investments (net) are included in operating profit for the Life/Health segment, with the exception of strategic investments. |
Summary of the impact of the changes to operating profit by segment for the three months ended March 31, 2005:
Three months ended March 31, 2005 |
As previously reported |
Changes | Balance | |||||
mn | mn | mn | ||||||
Property-Casualty |
1,004 | 210 | 1,214 | |||||
Life/Health |
357 | 160 | 517 | |||||
Banking |
228 | 1 | 229 | |||||
Asset Management |
231 | | 231 | |||||
Corporate |
| (267 | ) | (267 | ) | |||
Consolidation adjustments |
| (37 | ) | (37 | ) | |||
Allianz Group |
1,820 | 67 | 1,887 | |||||
Cash Flow Statement
As a result of the reclassifications to the consolidated balance sheet and consolidated income statement discussed above, the Allianz Group made corresponding reclassifications to the consolidated statements of cash flows. In addition, the Allianz Group reclassified the following line items from operating activities to investing or financing activities in order to consistently present changes in interest bearing assets and liabilities:
- | Loans and advances to banks and customers are reclassified to investing activities. |
- | Liabilities to banks and customers are reclassified to financing activities. |
- | Aggregate policy reserves for universal-life type insurance and investment contracts are reclassified to financing activities. |
- | Certificated liabilities are reclassified to financing activities. |
33
Segment Information Consolidated Balance Sheets
As of March 31, 2006 and as of December 31, 2005
ASSETS |
Property-Casualty | Life/Health | Banking | |||||||||
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 |
As of 2006 |
As of 2005 | |||||||
mn | mn | mn | mn | mn | mn | |||||||
Cash and cash equivalents |
4,068 | 3,793 | 6,323 | 5,874 | 22,304 | 21,848 | ||||||
Financial assets carried at fair value through income |
4,289 | 2,243 | 9,857 | 10,564 | 157,247 | 165,928 | ||||||
Investments |
89,999 | 87,587 | 184,307 | 183,350 | 15,591 | 17,323 | ||||||
Loans and advances to banks and customers |
15,548 | 15,873 | 84,737 | 84,072 | 300,715 | 249,212 | ||||||
Financial assets for unit linked contracts |
| | 57,690 | 54,661 | | | ||||||
Reinsurance assets |
12,811 | 12,728 | 8,177 | 9,494 | | | ||||||
Deferred acquisition costs |
3,721 | 3,563 | 14,711 | 13,847 | | | ||||||
Deferred tax assets |
1,859 | 1,775 | 632 | 567 | 1,903 | 2,016 | ||||||
Other assets |
18,413 | 16,607 | 13,386 | 12,505 | 8,217 | 12,273 | ||||||
Intangible assets |
1,608 | 1,595 | 2,389 | 2,390 | 2,285 | 2,283 | ||||||
Total segment assets |
152,316 | 145,764 | 382,209 | 377,324 | 508,262 | 470,883 | ||||||
EQUITY AND LIABILITIES |
Property-Casualty | Life/Health | Banking Asset Management | Corporate Consolidation Adjustments | ||||||||
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 |
As of 2006 |
As of 2005 | |||||||
mn | mn | mn | mn | mn | mn | |||||||
Financial liabilities carried at fair value through income |
719 | 132 | 3,725 | 3,517 | 82,591 | 82,080 | ||||||
Liabilities to banks and customers |
4,966 | 4,383 | 6,812 | 5,479 | 345,584 | 301,586 | ||||||
Unearned premiums |
16,471 | 12,945 | 430 | 360 | | | ||||||
Reserves for loss and loss adjustment expenses |
59,315 | 60,259 | 6,831 | 6,806 | | | ||||||
Reserves for insurance and investment contracts |
9,228 | 9,161 | 271,570 | 269,950 | | 2 | ||||||
Financial liabilities for unit linked contracts |
| | 57,690 | 54,661 | | | ||||||
Deferred tax liabilities |
4,098 | 4,155 | 1,641 | 1,800 | 355 | 405 | ||||||
Other liabilities |
16,778 | 16,491 | 17,392 | 18,454 | 9,975 | 12,557 | ||||||
Certificated liabilities |
416 | 412 | 4 | 4 | 46,855 | 50,719 | ||||||
Participation certificates and subordinated liabilities |
1,634 | 1,634 | 141 | 141 | 7,192 | 7,428 | ||||||
Total segment liabilities |
113,625 | 109,572 | 366,236 | 361,172 | 492,552 | 454,777 | ||||||
34
ASSETS |
Asset Management | Corporate | Consolidation Adjustments |
Alllianz Group | ||||||||||||||||
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 | |||||||||||||
mn | mn | mn | mn | mn | mn | mn | mn | |||||||||||||
Cash and cash equivalents |
657 | 476 | 172 | 166 | (627 | ) | (510 | ) | 32,897 | 31,647 | ||||||||||
Financial assets carried at fair value through income |
1,093 | 1,031 | 1,109 | 956 | (404 | ) | (376 | ) | 173,191 | 180,346 | ||||||||||
Investments |
795 | 832 | 83,589 | 88,130 | (88,696 | ) | (92,207 | ) | 285,585 | 285,015 | ||||||||||
Loans and advances to banks and customers |
400 | 477 | 5,415 | 2,180 | (15,116 | ) | (15,006 | ) | 391,699 | 336,808 | ||||||||||
Financial assets for unit linked contracts |
| | | | | | 57,690 | 54,661 | ||||||||||||
Reinsurance assets |
| | | | (116 | ) | (102 | ) | 20,872 | 22,120 | ||||||||||
Deferred acquisition costs |
15 | 27 | | | | | 18,447 | 17,437 | ||||||||||||
Deferred tax assets |
205 | 213 | 1,734 | 1,840 | (1,116 | ) | (1,112 | ) | 5,217 | 5,299 | ||||||||||
Other assets |
3,491 | 3,567 | 4,950 | 5,331 | (8,923 | ) | (7,990 | ) | 39,534 | 42,293 | ||||||||||
Intangible assets |
6,621 | 6,690 | | | | | 12,903 | 12,958 | ||||||||||||
Total segment assets |
13,277 | 13,313 | 96,969 | 98,603 | (114,998 | ) | (117,303 | ) | 1,038,035 | 988,584 | ||||||||||
EQUITY AND LIABILITIES |
Allianz Group | |||||||||||||||||||
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 |
As of March 31, 2006 |
As of December 31, 2005 | |||||||||||||
mn | mn | mn | mn | mn | mn | mn | mn | |||||||||||||
Financial liabilities carried at fair value through income |
| | 1,661 | 1,492 | (429 | ) | (379 | ) | 88,267 | 86,842 | ||||||||||
Liabilities to banks and customers |
750 | 667 | 9,465 | 9,985 | (12,324 | ) | (11,784 | ) | 355,253 | 310,316 | ||||||||||
Unearned premiums |
| | | | (1 | ) | (2 | ) | 16,900 | 13,303 | ||||||||||
Reserves for loss and loss adjustment expenses |
| | | | (77 | ) | (60 | ) | 66,069 | 67,005 | ||||||||||
Reserves for insurance and investment contracts |
| | (40 | ) | (78 | ) | (219 | ) | (206 | ) | 280,539 | 278,829 | ||||||||
Financial liabilities for unit linked contracts |
| | | | | | 57,690 | 54,661 | ||||||||||||
Deferred tax liabilities |
52 | 54 | 34 | 22 | (1,115 | ) | (1,112 | ) | 5,065 | 5,324 | ||||||||||
Other liabilities |
3,806 | 3,876 | 12,989 | 11,931 | (12,490 | ) | (11,994 | ) | 48,450 | 51,315 | ||||||||||
Certificated liabilities |
4 | 4 | 9,144 | 8,956 | (793 | ) | (892 | ) | 55,630 | 59,203 | ||||||||||
Participation certificates and subordinated liabilities |
| | 7,142 | 6,428 | (943 | ) | (947 | ) | 15,166 | 14,684 | ||||||||||
Total segment liabilities |
4,612 | 4,601 | 40,395 | 38,736 | (28,391 | ) | (27,376 | ) | 989,029 | 941,482 | ||||||||||
Total equity |
49,006 | 47,102 | ||||||||||||||||||
Total liabilities and shareholders equity |
1,038,035 | 988,584 | ||||||||||||||||||
35
Segment Information Consolidated Income Statements
For the three months ended March 31, 2006 and 2005
Property-Casualty | Life/Health | Banking | ||||||||||||||||
Three months ended March 31, |
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||
mn | mn | mn | mn | mn | mn | |||||||||||||
Premiums earned (net) |
9,341 | 9,140 | 5,096 | 5,167 | | | ||||||||||||
Interest and similar income |
922 | 867 | 3,047 | 2,812 | 1,880 | 1,601 | ||||||||||||
Income from financial assets and liabilities carried at fair value through income (net) |
40 | 26 | 31 | 23 | 490 | 438 | ||||||||||||
Realized gains/losses (net) |
464 | 539 | 1,262 | 1,458 | 414 | 492 | ||||||||||||
Fee and commission income |
252 | 216 | 129 | 92 | 992 | 823 | ||||||||||||
Other income |
14 | 4 | 6 | 9 | 25 | | ||||||||||||
Total income |
11,033 | 10,792 | 9,571 | 9,561 | 3,801 | 3,354 | ||||||||||||
Claims and insurance benefits incurred (net) |
(6,182 | ) | (6,040 | ) | (4,693 | ) | (4,722 | ) | | | ||||||||
Change in reserves for insurance and investment contracts (net) |
(72 | ) | (123 | ) | (2,648 | ) | (3,143 | ) | | | ||||||||
Interest expense |
(63 | ) | (80 | ) | (64 | ) | (104 | ) | (1,279 | ) | (1,052 | ) | ||||||
Loan loss provisions |
(1 | ) | | | (1 | ) | 33 | (93 | ) | |||||||||
Impairments of investments (net) |
(13 | ) | (7 | ) | (35 | ) | (22 | ) | (20 | ) | (42 | ) | ||||||
Investment expenses |
(48 | ) | (93 | ) | (157 | ) | (122 | ) | (6 | ) | (7 | ) | ||||||
Acquisition and administrative expenses (net) |
(2,663 | ) | (2,552 | ) | (1,042 | ) | (809 | ) | (1,428 | ) | (1,366 | ) | ||||||
Fee and commission expenses |
(170 | ) | (157 | ) | (50 | ) | (30 | ) | (160 | ) | (121 | ) | ||||||
Amortization of intangible assets |
(4 | ) | (5 | ) | (1 | ) | (3 | ) | | | ||||||||
Restructuring charges |
(2 | ) | (4 | ) | | | (2 | ) | | |||||||||
Other expenses |
(1 | ) | (1 | ) | | | | 6 | ||||||||||
Total expenses |
(9,219 | ) | (9,062 | ) | (8,690 | ) | (8,956 | ) | (2,862 | ) | (2,675 | ) | ||||||
Income before income taxes and minority interests in earnings |
1,814 | 1,730 | 881 | 605 | 939 | 679 | ||||||||||||
Income taxes |
(524 | ) | (543 | ) | (219 | ) | (104 | ) | (245 | ) | (74 | ) | ||||||
Minority interests in earnings |
(190 | ) | (191 | ) | (128 | ) | (122 | ) | (28 | ) | (26 | ) | ||||||
Net income |
1,100 | 996 | 534 | 379 | 666 | 579 | ||||||||||||
36
Asset Management | Corporate | Consolidation Adjustments |
Alllianz Group | |||||||||||||||||||||
Three months ended March 31, |
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||
mn | mn | mn | mn | mn | mn | mn | mn | |||||||||||||||||
Premiums earned (net) |
| | | | | | 14,437 | 14,307 | ||||||||||||||||
Interest and similar income |
25 | 17 | 94 | 98 | (277 | ) | (271 | ) | 5,691 | 5,124 | ||||||||||||||
Income from financial assets and liabilities carried at fair value through income (net) |
14 | 5 | (96 | ) | (4 | ) | 21 | (1 | ) | 500 | 487 | |||||||||||||
Realized gains/losses (net) |
2 | 2 | 70 | 106 | (317 | ) | (378 | ) | 1,895 | 2,219 | ||||||||||||||
Fee and commission income |
1,031 | 805 | 192 | 160 | (193 | ) | (158 | ) | 2,403 | 1,938 | ||||||||||||||
Other income |
3 | 3 | 13 | | (22 | ) | (3 | ) | 39 | 13 | ||||||||||||||
Total income |
1,075 | 832 | 273 | 360 | (788 | ) | (811 | ) | 24,965 | 24,088 | ||||||||||||||
Claims and insurance benefits incurred (net) |
| | | | | | (10,875 | ) | (10,762 | ) | ||||||||||||||
Change in reserves for insurance and investment contracts (net) |
| | | | 8 | (15 | ) | (2,712 | ) | (3,281 |