Edgar Filing: ALLIANZ AKTIENGESELLSCHAFT

Interim Report Second Quarter and First Half of 2006

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 June 30, 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ALLIANZ AKTIENGESELLSCHAFT AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.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 Second Quarter and First Half of 2006

Allianz Group

LOGO

Contents


4		Group Management Report

4		Executive Summary

10		Property-Casualty Insurance Operations

16		Life/Health Insurance Operations

22		Banking Operations

26		Asset Management Operations

30		Outlook

32		Consolidated Financial Statements for the Second Quarter and First Half of 2006

37		Notes to the Consolidated Financial Statements

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.

LOGO

Moderate share price development despite strong business performance.

Allianz share price vs. DJ EURO STOXX 50 and DJ EURO STOXX Insurance

January 1, 2005 – June 30, 2006

in €

LOGO

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


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


			June 30, 2006	December 31, 2005	Change %
Balance Sheet
Investments	€	mn	281,331	285,015	(1.3	)
Loans and advances to banks and customers	€	mn	393,970	336,808	17.0
Total assets	€	mn	1,022,672	988,584	3.4
Liabilities to banks and customers	€	mn	349,485	310,316	12.6
Reserves for loss and loss adjustment expenses	€	mn	65,702	67,005	(1.9	)
Reserves for insurance and investment contracts	€	mn	279,849	278,829	0.4
Shareholders’ equity	€	mn	40,323	39,487	2.1
Minority interests	€	mn	7,006	7,615	(8.0	)


			Three months ended June 30,				Change %		Six months ended June 30,			Change %
			2006		2005		Change %		2006	2005		Change %
Income Statement
Total revenues¹⁾	€	mn	24,067		23,693		1.6		53,708	51,955		3.4
Operating profit	€	mn	2,794		2,346		19.1		5,471	4,233		29.2
Income before income taxes and minority interests in earnings	€	mn	2,992		2,134		40.2		6,023	4,389		37.2
Net income	€	mn	2,279		1,390		64.0		4,058	2,714		49.5

Segments
Property-Casualty
Operating profit	€	mn	1,845		1,650		11.8		3,231	2, 864		12.8
Loss ratio		%	65.1		65.5		(0.4)pts		65.6	65.8		(0.2)pts
Expense ratio		%	26.8		26.6		0.2pts		27.7	27.2		0.5pts
Combined ratio		%	91.9		92.1		(0.2)pts		93.3	93.0		0.3pts
Life/Health
Operating profit	€	mn	527		472		11.7		1,250	989		26.4
Statutory expense ratio		%	9.9		8.9		1.0pts		9.0	7.9		1.1pts
Banking (Dresdner Bank)
Operating profit	€	mn	319		205		55.6		848	414		104.8
Cost-income ratio		%	81.0		88.6		(7.6)pts		77.2	84.4		(7.2)pts
Loan loss provisions	€	mn	(5	)	54		—		28	(46	)	—
Coverage ratio at June 30²⁾		%	58.5		62.1		(3.6)pts		58.5	62.1		(3.6)pts
Asset Management
(Allianz Global Investors)
Operating profit	€	mn	295		249		18.5		595	478		24.5
Cost-income ratio		%	58.9		60.7		(1.8)pts		59.0	59.8		(0.8)pts
Third-party assets under management at June 30	€	bn	721		7433	)	(3.0	)	721	743³	⁾	(3.0	)

Share Information
Basic earnings per share	€		5.62		3.61		55.7		10.02	7.11		40.9
Diluted earnings per share	€		5.51		3.59		53.5		9.83	7.06		39.2
Share price at June 30	€		123.52		127.94³	⁾	(3.5	)	123.52	127.94³	⁾	(3.5	)
Market capitalization at June 30	€	bn	50.2		51.9³	⁾	(3.3	)	50.2	51.9³	⁾	(3.3	)

¹⁾	Total revenues comprise Property-Casualty segment’s gross premiums written, Life/Health segment’s statutory premiums, Banking segment’s operating revenues and Asset Management segment’s operating revenues.

²⁾	Represents total loan loss allowances as a percentage of total non-performing loans and potential problem loans.

³⁾	At December 31, 2005.

Allianz AG Ratings at June 30, 2006¹⁾


	Standard & Poor’s		Moody’s	A.M. Best
Insurer financial strength	AA-		Aa3	A+
Outlook	Positive		Stable	Stable
Counterparty credit	AA-		Not	aa^-2	⁾
Outlook	Positive		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⁾	Includes ratings for securities issued by Allianz Finance B.V., Allianz Finance II B.V. and Allianz Finance Corporation.

²⁾	Issuer credit rating.

³⁾	Ratings vary on the basis of maturity period and terms.

Executive Summary

Momentum sustained in the second quarter.

•

Strong operating profit of €2.8 billion (+19.1% from a year ago) with all segments continuing to improve.

•

Combined ratio of 91.9% in Property-Casualty.

•

Double-digit growth of Life/Health operating profit, despite dip in sales.

•

Dresdner Bank grows operating revenues and operating profit dynamically.

•

Asset Management delivered seventh consecutive quarter of double-digit operating profit growth year-over-year.

•

Strong net income of €2.3 billion (+64.0%), after restructuring charges for our German insurance operations.

•

Full year outlook: Operating profit above €9.0 billion, net income between €5.5 billion and €6.0 billion.¹⁾


Total Revenues²⁾ in € bn		Net Income in € mn


Operating Profit in € mn		Shareholders’ Equity in € mn

¹⁾	However, as always, natural catastrophes and adverse developments in the capital markets, as well as the factors stated in our Outlook in the cautionary note regarding forward-looking statements, may severely impact our profitability.

²⁾	Total revenues comprise Property-Casualty segment’s gross premiums written, Life/Health segment’s statutory premiums, Banking segment’s operating revenues and Asset Management segment’s operating revenues.

Allianz Group’s Consolidated Results of Operations

Total Revenues¹⁾

Our total revenues were €24.1 billion in 2Q 2006, up 1.6% from a year ago (1H 2006: year-over-year increase of 3.4% to €53.7 billion). In 2Q 2006, we experienced dynamic growth in operating revenues from our Banking and Asset Management segments, compared to the prior year period. Our Property-Casualty segment’s gross premiums written grew modestly and our Life/Health segment’s statutory premiums showed a slight decline. Internal total revenue growth year-over-year amounted to 1.7% in 2Q 2006 (1H 2006: 2.3%).

Total Revenues – Segments

in € mn

LOGO

Property-Casualty We continued our commitment to focus on profitability and remained diligent in our risk selection. In 2Q 2006, this translated into an internal growth in gross premiums written year-over-year of 1.2% (1H 2006: decline of 0.1%), which was accompanied by another quarter of very strong underwriting profitability.

Life/Health Statutory premiums decreased 1.2% in 2Q 2006 compared to the prior year period. This was the net effect of the dynamic growth in statutory premiums in Europe and Asia-Pacific, which could, however, not fully compensate the marked shortfall in the United States. The decline in the United States occurred after several years of substantial rise and as a result of regulatory uncertainty concerning equity-indexed annuity products. On an internal growth basis, statutory premiums were down 1.4% (1H 2006: up 1.7%).

Banking Our Banking segment successfully sustained its operating revenue momentum and experienced dynamic growth to €1.7 billion in 2Q 2006, up 22.4% from a year earlier. Internal growth was comparable at 22.8% (1H 2006: 18.2%). At Dresdner Bank, all revenue categories and operating divisions contributed to this positive development.

¹⁾	Total revenues comprise Property-Casualty segment’s gross premiums written, Life/Health segment’s statutory premiums, Banking segment’s operating revenues and Asset Management segment’s operating revenues.

Asset Management In 1H 2006, we experienced net inflows of €15 billion and positive market effects of €3 billion, notwithstanding challenging market conditions. However, net inflows and positive market effects were more than offset by negative currency effects resulting in third-party assets of €721 billion at June 30, 2006. Strong net inflows throughout the previous quarters led to significant operating revenue growth year-over-year of 13.3% to €726 million in 2Q 2006. Internal growth was even higher at 16.0% (1H 2006: 19.3%).

Operating Profit

Operating profit improved significantly across all segments. Overall, growth compared to a year ago was 19.1% to €2.8 billion in 2Q 2006 (1H 2006: 29.2% year-over-year increase to €5.5 billion).

Operating Profit – Segments

in € mn

LOGO

Property-Casualty Operating profit grew markedly by 11.8% year-over-year to €1.8 billion in 2Q 2006, mainly as a result of favorable loss development and an increase in interest and similar income. Our combined ratio of 91.9% and 93.3% in 2Q and 1H 2006, respectively, (2Q 2005: 92.1%, 1H 2005: 93.0%) remained at a competitive level, despite claims from natural catastrophes of €109 million and €150 million, respectively, (2Q 2005: €– million, 1H 2005: €31 million) benefiting from our careful risk selection and the positive developments of claims from prior years.

Life/Health In 2Q 2006, we continued to substantially increase our operating profit by 11.7% compared to the prior year period. A higher investment result was the main driver behind this positive development, stemming from both an increased asset base due to the growth of the segment in recent years and from improved yields. Increased realized gains compensated for the restructuring charges related to our German organization.

Banking We experienced dynamic operating profit growth in 2Q and 1H 2006 compared to last year. Correspondingly, our Banking segment’s and Dresdner Bank’s cost-income ratio improved strongly. Non-revenue-linked personnel expenses in 2Q 2006 decreased from a year ago, excluding the positive one-off effect in 2Q 2005 stemming from the release of provisions for employment anniversary payments.

Asset Management We successfully achieved significant year-over-year operating profit growth in 2Q and 1H 2006. Similar to our operating revenue growth, our operating profit also benefited from strong net inflows to third-party assets throughout the previous quarters. As operating expenses increased at a much lower rate than operating revenues, our Asset Management segment’s cost-income ratio further improved above its already competitive level to 59.1% and 59.3% in 2Q and 1H 2006, respectively.

Non-Operating Items

In aggregate, non-operating items amounted to an income of €198 million in 2Q 2006, compared to a charge of €212 million a year ago, only contributing approximately 7% to our income before income taxes and minority interests in earnings. The improvement in non-operating items was despite a €404 million negative impact from restructuring charges related primarily to our German insurance operations – with another €118 million being part of operating profit, more than compensated by higher realized capital gains.

In 2Q 2006, significant realized gains stemmed from the sale of our shareholdings in Schering AG. Similarly, in 1Q 2006, we leveraged strong equity capital markets and generated already more than our initial capital gains target for 2006. Overall, non-operating income from realized gains/losses (net) and impairments of investments (net) was €1.3 billion in 2Q 2006 and €2.1 billion in 1H 2006.

The impact from restructuring charges on non-operating items rose to €404 million in 2Q 2006 and €408 million in 1H 2006 (from €78 million and €83 million a year ago). This was primarily a result of restructuring charges at Allianz Deutschland AG in 2Q 2006 in connection with the reorganization of our German insurance operations. This reorganization is intended to help us to improve our competitiveness and offer our customers better service, while operating more efficiently. The structural changes at our German insurance operations announced in detail on June 22, 2006, are in line with with our repositioning plan as announced in September 2005 and the objectives of our “3+One” program.

Interest expense from external debt, acquisition-related expenses from our Asset Management segment, and other non-operating items, in aggregate, were up to €694 million in 2Q 2006 and €1.1 billion in 1H 2006 (2Q 2005: €572 million, 1H 2005: €941 million).

Net Income

We achieved a 64.0% year-over-year growth in our net income, which reached €2.3 billion in 2Q 2006. Similarly, net income for 1H 2006 was €4.1 billion, a 49.5% increase over the prior year period.

Income tax expenses in 2Q 2006 were down slightly by €48 million from a year earlier, albeit on a substantially higher income before income taxes and minority interests in earnings, reflecting a lower effective income tax rate of 11.9% (2Q 2005: 18.9%). Our income taxes and effective income tax rate in 2Q 2006 benefited from the tax-exemption of the significant capital gain in connection with the sale of our shareholdings in Schering previously mentioned. In 1H 2006, income taxes were €1.3 billion, up €266 million from a year ago, with a reduced effective income tax rate of 20.8% (1H 2005: 22.6%). The smaller decrease in our effective income tax rate in 1H 2006 compared to that in 2Q 2006 stemmed principally from the favorable taxation of a large gain in 1Q 2005 from the sale of our shareholdings in Gecina S.A.

Minority interests in earnings remained rather stable at €356 million in 2Q 2006 and at €709 million in 1H 2006.

The following graph sets forth the development of our basic and diluted earnings per share.

Earnings per Share

in €

LOGO

¹⁾	See Note 35 to our consolidated financial statements for further details regarding the dilutive effect.

The following tables summarize the total revenues and operating profit for each of our segments for the three and six months ended June 30, 2006 and 2005, respectively, 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 June 30,	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⁾	9,682		9,597		11,931		12,072		1,706		1,394		726		641		—		—		22		(11	)	24,067		23,693

Operating profit	1,845		1,650		527		472		266		215		297		252		(74	)	(190	)	(67	)	(53	)	2,794		2,346
Non-operating items	440		100		(17	)	37		12		217		(134	)	(173	)	184		(381	)	(287	)	(12	)	198		(212	)

Income before income taxes and minority interests in earnings	2,285		1,750		510		509		278		432		163		79		110		(571	)	(354	)	(65	)	2,992		2,134

Income taxes	(466	)	(442	)	(90	)	(46	)	(89	)	(155	)	(62	)	8		80		231		270		(1	)	(357	)	(405	)
Minority interests in earnings	(237	)	(205	)	(92	)	(106	)	(27	)	(25	)	(11	)	(10	)	(7	)	(6	)	18		13		(356	)	(339	)

Net income	1,582		1,103		328		357		162		252		90		77		183		(346	)	(66	)	(53	)	2,279		1,390


	Property- Casualty				Life/Health				Banking				Asset Management				Corporate				Consolidation Adjustments				Allianz Group
Six months ended June 30,	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⁾	23,831		23,740		24,753		23,952		3,654		3,083		1,477		1,208		—		—		(7	)	(28	)	53,708		51,955

Operating profit	3,231		2,864		1,250		989		813		444		601		483		(254	)	(457	)	(170	)	(90	)	5,471		4,233
Non-operating items	868		616		141		125		404		667		(270	)	(337	)	(27	)	(504	)	(564	)	(411	)	552		156

Income before income taxes and minority interests in earnings	4,099		3,480		1,391		1,114		1,217		1,111		331		146		(281	)	(961	)	(734	)	(501	)	6,023		4,389

Income taxes	(990	)	(985	)	(309	)	(150	)	(334	)	(229	)	(127	)	(16	)	234		384		270		6		(1,256	)	(990	)
Minority interests in earnings	(427	)	(396	)	(220	)	(228	)	(55	)	(51	)	(24	)	(23	)	(9	)	(7	)	26		20		(709	)	(685	)

Net income	2,682		2,099		862		736		828		831		180		107		(56	)	(584	)	(438	)	(475	)	4,058		2,714

¹⁾	Total revenues comprise Property-Casualty segment’s gross premiums written, Life/Health segment’s statutory premiums, Banking segment’s operating revenues and Asset Management segment’s operating revenues.

Allianz Group’s Shareholders’ Equity and Invested Assets

Shareholders’ Equity

Since December 31, 2005, our shareholders’ equity has increased by 2.1% to €40.3 billion at June 30, 2006. Our strong net income more than compensated for significant negative market effects and dividends paid of €811 million. Due to the substantial decreases in market values of our available-for-sale debt securities, following the increase in market interest rates, our unrealized gains and losses (net) declined. Additionally, a weaker U.S. Dollar compared to the Euro at June 30, 2006 resulted in a rise in negative foreign currency translation adjustments from that at December 31, 2005.

The following graph sets forth the development of our shareholders’ equity in the first half of 2006.

Shareholders’ Equity

in € mn

LOGO

¹⁾	Consists of the following developments (in € mn): foreign currency translation adjustments (894); changes in the consolidated subsidiaries of the Allianz Group 21; treasury shares 1,275; net income 4,058; dividends paid (811); miscellaneous (347).

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 June 30, 2006

Fair Values¹⁾ in € bn (Total: €96.8 bn)

LOGO

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 €3.3 bn, equity securities at €0.3 bn and derivative financial instruments at €0.7 bn.

³⁾	Includes associates and joint ventures at €0.5 bn, but does not include affiliates at €9.2 bn.

⁴⁾	Includes held-to-maturity investments at €0.6 bn.

Invested Assets – Life/Health: Allocation by Category and Instruments at June 30, 2006

Fair Values¹⁾ in € bn (Total: €274.3 bn)

LOGO

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 €7.1 bn, equity securities at €2.9 bn and derivative financial instruments at €0.7 bn.

³⁾	Includes associates and joint ventures at €1.2 bn, but does not include affiliates at €3.1 bn.

⁴⁾	Includes held-to-maturity investments at €4.0 bn.

Invested Assets – Banking: Trading Portfolio Allocation at June 30, 2006

Fair Values in € bn

LOGO

Corporate Segment

Operating profit improved to a loss of €74 million in 2Q 2006 and €254 million in 1H 2006 from a loss of €190 million and €457 million, respectively, in the prior year periods, reflecting substantially higher operating revenues while operating expenses were relatively stable. The increase in operating revenues stemmed primarily from higher interest and similar income, due to higher dividends received from investments.


	Three months ended June 30,				Six months ended June 30,
	2006		2005		2006		2005
	€ mn		€ mn		€ mn		€ mn
Operating revenues	426		331		725		589
Interest expense, excluding interest expense from external debt¹⁾	(142	)	(226	)	(315	)	(399	)
Acquisition and administrative expenses (net)	(167	)	(96	)	(323	)	(217	)
Other operating expenses	(191	)	(199	)	(341	)	(430	)

Operating expenses	(500	)	(521	)	(979	)	(1,046	)

Operating profit	(74	)	(190	)	(254	)	(457	)

Income from financial assets and liabilities held for trading (net)	(56	)	(149	)	(152	)	(153	)
Realized gains/losses (net)	427		2		497		108
Impairments of investments (net)	9		(4	)	22		(36	)
Interest expense from external debt¹⁾	(196	)	(230	)	(394	)	(423	)
Non-operating items	184		(381	)	(27	)	(504	)

Income before income taxes and minority interests in earnings	110		(571	)	(281	)	(961	)

¹⁾	The total of these items equals interest expense in the segment income statement in Note 3 to the consolidated financial statements.

Events After the Balance Sheet Date

See Note 39 to our consolidated financial statements.

Property-Casualty Insurance Operations

Continued underwriting excellence.

•

Selective volume growth with a focus on profitability delivers results.

•

Combined ratio of 91.9% in 2Q 2006 reflects underwriting discipline and favorable loss development.

•

High interest and dividend income.

•

Particularly high operating profit growth at our operations in the United States and France.

Earnings Summary

Gross Premiums Written by Region¹⁾

in € bn

LOGO

¹⁾	After elimination of transactions between Allianz Group companies in different geographic regions and different segments. Gross premiums written from our speciality lines have been allocated to the respective geographic regions.

Gross Premiums Written – Growth Rates¹⁾

LOGO

¹⁾	Before elimination of transactions between Allianz Group companies in different geographic regions and different segments.

²⁾	Comprise “Other Europe”.

Gross Premiums Written

2006 to 2005 Three Month Comparison

Notwithstanding an environment where price depression was prevalent in some markets, profitability remained our focus. We accept only those risks which we believe will produce adequate returns. As a result of these continued and successful efforts, our gross premiums written grew only modestly from €9,597 million to €9,682 million. Based on internal growth, gross premiums written increased 1.2%.

Positive developments were primarily experienced by our entities in the United States, Spain, South America and New Europe, our growth markets in Central and Eastern Europe, with additional gross premiums written of €51 million (5.1%), €38 million (8.9%), €37 million (23.1%) and €28 million (7.1%), respectively. In 2Q 2006, our growth markets in Asia-Pacific and in New Europe, together with the markets in South America accounted for 11% of our gross premiums written in the segment.

In the United States, our operations benefited from growth in our crop line, largely as a result of earlier underwriting of a significant book of business. The positive trend in Spain occurred primarily within our industrial lines, where we established sound growth with customers in the engineering and transportation sectors. In South America, growth mainly stemmed from Brazil, driven by a good performance of the fleet business and the increase of new car sales. Additionally, foreign currency effects, in particular the appreciation of the Brazilian Real compared to the Euro, contributed to the growth in gross premiums written in South America. Largely as a result of strong sales performance within the Polish and Romanian motor markets, we continued to expand our presence within New Europe.

These increases were offset by decreased gross premiums written in other countries, where keeping up profitability in more difficult market conditions required concessions to volume growth.

In France, our third largest property-casualty market, AGF’s gross premiums written declined by 3.4% to €1,132 million, mainly as a result of price pressure negatively affecting our large client business and, to a lesser degree, lower volume in our individual motor business.

The decline under specialty lines by €294 million (12.9%) was almost exclusively due to lower assumed gross premiums written at Allianz Re. Allianz Re primarily comprises the reinsurance business assumed by Allianz AG, in particular from our property-casualty subsidiaries. Gross premiums written volume at Allianz Re declined €260 million to €648 million, mainly impacted by the change of an intra-Allianz Group reinsurance contract, resulting in increased aggregate loss retention levels of participating entities. This effect, however, is consolidated at the segment level and therefore eliminated.

Within our German property-casualty business, our primary market, gross premiums written were challenged by lower volume within our motor business, compensated by sound development in our casualty line, leaving our gross premiums written relatively stable at €1,698 million.

2006 to 2005 Six Month Comparison

For the first six months of 2006, our gross premiums written remained stable at €23,831 million. However, we were able to achieve growth particularly in the United States, Spain and South America. While maintaining our strategy of selective and profitable growth, our German and United Kingdom operations recorded slight decreases. Based on internal growth, our gross premiums written declined marginally by 0.1%.

Operating Profit

in € mn

LOGO

2006 to 2005 Three Month Comparison

Our operating profit increased markedly by 11.8% to €1,845 million, as a result of a favorable calendar year loss development and an increase in interest and similar income. Our top five contributing entities included Allianz Sach in Germany at €350 million, Fireman’s Fund in the United States at €227 million, RAS in Italy at €169 million, AGF in France at €139 million and our credit insurance activities combined within our Euler Hermes brand at €122 million. The strongest improvements, by markets, occurred in our operations within the United States (€61 million), France (€57 million) and at our credit insurance operations (€31 million).

Premiums earned (net) declined slightly to €9,358 million, due to increased reinsurance rates for our industrial and marine & aviation business, following the significant natural catastrophe losses in 2005.

Interest and similar income exhibited a considerable increase of 12.2% to €1,257 million, primarily reflecting growth in income at our operations in Germany and France as a result of higher dividend and bond yields.

Claims and insurance benefits incurred (net) decreased slightly by 0.9% to €6,090 million, a consequence of favorable loss development of reserves concerning prior years, especially in the United States at Fireman’s Fund and at Allianz Re. In the context of our sustainability program we have reviewed and improved our claims management process in many companies, which has begun to pay off. Our calendar year loss ratio declined to 65.1% (2Q 2005: 65.5%). On an accident year basis, claims slightly increased by 2.2% to €6,512 million, producing an accident year loss ratio of 69.6% (2Q 2005: 67.9%), mainly driven by claims from natural catastrophes of €109 million (2Q 2005: €– million) and single large claims from our industrial business.

Acquisition and administrative expenses (net) remained relatively stable at €2,511 million, with only a slight rise in administrative expenses at Fireman’s Fund in the United States as well as within our German operations. This development, together with a marginal depression in our premiums earned (net) as a result of hardened reinsurance pricing conditions, caused our expense ratio to rise slightly by 0.2 percentage points to 26.8% (2Q 2005: 26.6%).

Driven by the improvement of our loss ratio, our combined ratio reached 91.9%, 0.2 percentage points lower, further solidifying our competitive position within the property-casualty market.

2006 to 2005 Six Month Comparison

Consistent with our 2Q success, we succeeded in increasing operating profit in the first six months of 2006 by 12.8% to €3,231 million. A major driver was the growth in interest and similar income, in particular at our German property-casualty business and AGF in France. Conversely, our combined ratio in the first six months of 2006 increased marginally to 93.3%, largely due to the increase in our expense ratio in 1Q 2006 from higher commission payments.

Non-Operating Items

2006 to 2005 Three Month Comparison

Income from our non-operating items increased to €440 million. This development was primarily attributable to significantly increased realized gains/losses (net) from investments, not shared with policyholders, largely as the result of gains from the sale of our participation in Schering AG. To a lesser degree, we realized gains in Austria through the sale of our real estate portfolio and at our subsidiary Lloyd Adriatico in Italy, where we disposed of Banca Antonveneta shares. Conversely, impairments of investments (net), not shared with policyholders increased from €25 million to €80 million, as stock markets around the world trended lower.

The increased realizations of investments gains were partially offset by overall costs of €354 million recorded as restructuring charges. At an amount of €333 million, these charges were incurred in connection with the reorganization of our German insurance operations, which unites our German property-casualty and life/health businesses within the new entity Allianz Deutschland AG (or “ADAG”). This reorganization is intended to help us to improve our competitiveness and offer better service to our customers, while operating more efficiently. The structural changes, which were announced in detail on June 22, 2006, are in line with our repositioning plan as announced in September 2005 and the objectives of our “3+One” program. Additionally, RAS in Italy recorded restructuring costs of €21 million.

2006 to 2005 Six Month Comparison

Income from our non-operating items for the first-half of 2006 was driven by similar measures as those previously mentioned for 2Q. In particular, by increased realized gains/losses (net) from investments, not shared with policyholders, especially through our sale of our participation in Schering AG in 2Q. Additionally, while restructuring charges, primarily in connection with the reorganization of our German operations, resulted in charges of €356 million, net realizations on investments proved a compensating balance, driving our non-operating income up by 40.9% to €868 million.

Net Income

2006 to 2005 Three Month Comparison

Net income increased by 43.4% to €1,582 million, driven both by our marked growth in operating profit and a significantly improved non-operating income.

Income tax expenses amounted to €466 million, rising slightly. However, largely due to higher tax-exempt income, in particular the realized gain from the sale of our participation in Schering AG, our effective tax rate declined to 20.4% (2Q 2005: 25.3%).

Minority interests in earnings rose slightly to €237 million as a result of significantly higher earnings at AGF in France, which more than compensated lower earnings attributable to third-party shareholders at RAS in Italy following the buy-out of minorities in late 2005.

2006 to 2005 Six Month Comparison

Driven both by our further enhanced operating profitability and significantly improved non-operating income, our net income for the first six months of 2006 was up significantly by 27.8% to €2,682 million. Due to the effects of a relatively higher share of tax-exempt income, our effective tax rate decreased to 24.2% (1H 2005: 28.3%).

The following table sets forth our Property-Casualty insurance segment’s income statement, loss ratio, expense ratio and combined ratio for the three and six months ended June 30, 2006 and 2005, respectively.


	Three months ended June 30,				Six months ended June 30,
	2006		2005		2006		2005
	€ mn		€ mn		€ mn		€ mn
Gross premiums written¹⁾	9,682		9,597		23,831		23,740
Ceded premiums written	(1,230	)	(1,161	)	(2,942	)	(2,859	)
Change in unearned premiums	906		950		(2,190	)	(2,355	)

Premiums earned (net)	9,358		9,386		18,699		18,526
Interest and similar income	1,257		1,120		2,179		1,987
Income from financial assets and liabilities designated at fair value through income (net)²⁾	6		35		42		56
Realized gains/losses (net) from investments, shared with policyholders³⁾	11		72		36		86
Fee and commission income	265		270		517		486
Other income	24		17		38		21

Operating revenues	10,921		10,900		21,511		21,162

Claims and insurance benefits incurred (net)	(6,090	)	(6,144	)	(12,272	)	(12,184	)
Changes in reserves for insurance and investment contracts (net)	(121	)	(211	)	(193	)	(334	)
Interest expense	(66	)	(115	)	(129	)	(195	)
Loan loss provisions	(2	)	—		(3	)	—
Impairments of investments (net), shared with policyholders⁴⁾	(13	)	(2	)	(17	)	(4	)
Investment expenses	(67	)	(102	)	(115	)	(195	)
Acquisition and administrative expenses (net)	(2,511	)	(2,496	)	(5,174	)	(5,048	)
Fee and commission expenses	(205	)	(175	)	(375	)	(332	)
Other expenses	(1	)	(5	)	(2	)	(6	)

Operating expenses	(9,076	)	(9,250	)	(18,280	)	(18,298	)

Operating profit	1,845		1,650		3,231		2,864

Income from financial assets and liabilities held for trading (net)²⁾	(1	)	(6	)	3		(1	)
Realized gains/losses (net) from investments, not shared with policyholders³⁾	878		193		1,317		718
Impairments of investments (net), not shared with policyholders⁴⁾	(80	)	(25	)	(89	)	(30	)
Amortization of intangible assets	(3	)	(4	)	(7	)	(9	)
Restructuring charges	(354	)	(58	)	(356	)	(62	)

Non-operating items	440		100		868		616

Income before income taxes and minority interests in earnings	2,285		1,750		4,099		3,480

Income taxes	(466	)	(442	)	(990	)	(985	)
Minority interests in earnings	(237	)	(205	)	(427	)	(396	)

Net income	1,582		1,103		2,682		2,099

Loss ratio⁵⁾in %	65.1		65.5		65.6		65.8
Expense ratio⁶⁾in %	26.8		26.6		27.7		27.2

Combined ratio⁷⁾in %	91.9		92.1		93.3		93.0

¹⁾	For the Property-Casualty segment, total revenues are measured based upon gross premiums written.

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 in Note 3 to the consolidated financial statements.

³⁾	The total of these items equals realized gains/losses (net) in the segment income statement in Note 3 to the consolidated financial statements.

⁴⁾	The total of these items equals impairments of investments (net) in the segment income statement in Note 3 to the consolidated financial statements.

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).

Property-Casualty Operations by Geographic Region

The following tables set forth our property-casualty gross premiums written, premiums earned (net), combined ratio, loss ratio, expense ratio and operating profit by geographic region for the three and six months ended June 30, 2006 and 2005, respectively. 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 June 30,	2006		2005		2006	2005	2006		2005		2006		2005		2006		2005		2006		2005
Germany¹⁾	1,698		1,681		1,866	1,763	92.8		89.4		66.8		64.3		26.0		25.1		350		372
France	1,132		1,172		1,092	1,092	98.6		101.9		71.1		73.3		27.5		28.6		139		82
Italy	1,373		1,355		1,242	1,229	93.5		96.4		70.3		71.0		23.2		25.4		250		231
United Kingdom	648		658		462	478	94.6		94.3		65.6		63.1		29.0		31.2		71		80
Switzerland	284		260		432	429	94.9		88.3		72.8		69.8		22.1		18.5		54		62
Spain	464		426		417	384	90.0		91.5		70.6		71.2		19.4		20.3		64		53

Other Europe, thereof:	1,199		1,207		1,026	1,035	84.9		91.6		57.1		63.4		27.8		28.2		271		195
Netherlands	227		247		206	210	87.3		92.3		55.1		59.4		32.2		32.9		47		42
Austria	200		204		188	195	96.9		100.5		70.1		75.7		26.8		24.8		36		24
Ireland	176		184		153	165	65.9		80.7		42.5		57.9		23.4		22.8		68		44
Belgium	85		84		75	73	98.7		103.0		63.3		63.3		35.4		39.7		14		9
Portugal	68		74		64	69	86.5		93.5		60.9		67.4		25.6		26.1		13		8
Greece	19		18		12	11	78.0		86.7		49.1		53.0		28.9		33.7		3		2

Western and Southern Europe	775		811		698	723	86.0		93.0		57.6		64.5		28.4		28.5		186³	⁾	128³	⁾

Hungary	124		134		123	124	83.2		102.9		55.9		70.5		27.3		32.4		36		18
Slovakia	59		52		60	60	64.3		62.0		36.9		41.9		27.4		20.1		27		28
Czech Republic	57		56		44	40	82.1		91.0		63.0		68.1		19.1		22.9		9		5
Poland	71		60		49	37	83.8		86.9		49.8		54.7		34.0		32.2		9		6
Romania	67		49		24	29	103.8		83.3		97.9		66.2		5.9		17.1		1		5
Bulgaria	23		23		15	9	88.9		56.4		50.7		21.4		38.2		35.0		2		4
Croatia	18		17		13	11	95.0		98.6		62.5		63.4		32.5		35.2		1		1
Russia	5		5		—	2	90.4		70.6		37.8		19.6		52.6		51.0		—		—

New Europe	424		396		328	312	82.4		88.4		55.9		60.7		26.5		27.7		85		67

NAFTA, thereof:	1,094		1,051		862	848	83.9		89.6		50.3		59.5		33.6		30.1		232		168
United States	1,053		1,002		838	827	83.7		90.2		49.8		60.0		33.9		30.2		227		166
Mexico	41		49		24	21	93.5		65.0		69.5		39.6		24.0		25.4		5		2

Asia-Pacific, thereof:	447		431		336	321	86.7		82.4		59.5		56.1		27.2		26.3		88		102
Australia	368		363		301	291	85.9		82.1		60.1		56.9		25.8		25.2		83		96
Other	79		68		35	30	93.5		87.5		54.1		50.2		39.4		37.3		5		6

South America	197		160		148	119	102.0		94.4		64.8		61.4		37.2		33.0		15		15

Other	30		25		14	8	— ⁴	⁾	— ⁴	⁾	— ⁴	⁾	— ⁴	⁾	— ⁴	⁾	— ⁴	⁾	3		2

Specialty Lines
Alllianz Re¹⁾	648		908		564	746	94.3		88.4		72.2		65.6		22.1		22.8		75		70
Credit Insurance	398		425		283	251	77.3		81.9		50.9		50.4		26.4		31.5		122		91
Allianz Global Corporate & Specialty¹⁾	687		690		368	432	103.1		91.0		72.0		66.2		31.1		24.8		66		78
Travel Insurance and Assistance Services	249		253		239	241	98.9		93.0		58.5		56.3		40.4		36.7		25		26

Subtotal	10,548		10,702		9,351	9,376	—		—		—		—		—		—		1,825		1,627

Consolidation adjustments²⁾	(866	)	(1,105	)	7	10	—		—		—		—		—		—		20		23

Total	9,682		9,597		9,358	9,386	91.9		92.1		65.1		65.5		26.8		26.6		1,845		1,650

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 Allianz Sach, which was formerly included within Germany. Additionally, with effect from 2Q 2006, we have included Allianz Global Re US, which was formerly presented within NAFTA, within the newly combined entity Allianz Global Corporate & Specialty. Further, with effect from 2Q 2006, we present our property-casualty assumed reinsurance business, primarily attributable to Allianz AG and formerly included within Germany, as Allianz Re within our specialty lines. Prior year balances have been adjusted to reflect this reclassification and allow for comparability across periods.

²⁾	Represents elimination of transactions between Allianz Group companies in different geographic regions.

³⁾	Contains run-off of a former operating entity located in Luxembourg of €5 mn in 2006 and €(1) mn in 2005.

⁴⁾	Presentation not meaningful.


	Gross premiums written				Premiums earned (net)		Combined ratio				Loss ratio			Expense ratio				Operating profit
	€ mn				€ mn		%				%			%				€ mn
Six months ended June 30,	2006		2005		2006	2005	2006		2005		2006	2005		2006		2005		2006		2005
Germany¹⁾	5,896		5,987		3,558	3,477	91.9		89.4		64.2	62.2		27.7		27.2		670		686
France	2,845		2,867		2,206	2,195	99.8		103.3		72.7	75.3		27.1		28.0		216		87
Italy	2,620		2,596		2,447	2,418	95.1		97.3		71.6	71.3		23.5		26.0		358		346
United Kingdom	1,227		1,290		919	958	96.7		95.1		66.7	64.1		30.0		31.0		127		148
Switzerland	1,241		1,253		868	854	95.6		91.7		71.5	68.9		24.1		22.8		118		100
Spain	1,121		1,057		812	748	90.7		92.1		71.6	72.5		19.1		19.6		123		102

Other Europe, thereof:	2,854		2,855		2,067	2,051	89.9		91.8		62.1	63.7		27.8		28.1		406		359
Netherlands	545		558		403	410	90.3		93.0		57.3	61.2		33.0		31.8		74		70
Austria	557		563		380	383	103.3		99.3		78.3	74.5		25.0		24.8		29		45
Ireland	374		399		306	326	78.8		85.5		55.1	63.0		23.7		22.5		95		73
Belgium	206		202		149	144	100.2		103.1		64.3	64.6		35.9		38.5		23		16
Portugal	152		162		130	139	86.9		91.2		63.2	66.5		23.7		24.7		24		17
Greece	38		37		23	22	86.4		86.2		57.2	53.7		29.2		32.5		4		4

Western and Southern Europe	1,872		1,921		1,391	1,424	92.0		93.8		63.8	66.0		28.2		27.8		259³	⁾	223³	⁾

Hungary	316		319		250	256	87.6		95.7		60.3	66.1		27.3		29.6		63		49
Slovakia	152		175		122	122	72.4		68.4		42.0	38.4		30.4		30.0		44		48
Czech Republic	139		130		87	78	86.0		91.8		65.1	70.4		20.9		21.4		14		11
Poland	143		120		97	73	90.0		88.2		57.5	55.5		32.5		32.7		12		11
Romania	138		103		60	57	95.3		86.4		82.1	65.5		13.2		20.9		4		8
Bulgaria	43		43		31	16	81.1		64.1		47.4	25.4		33.7		38.7		7		8
Croatia	40		34		27	22	95.8		96.7		64.1	61.7		31.7		35.0		2		1
Russia	11		10		2	3	69.0		57.0		31.0	12.0		38.0		45.0		1		—

New Europe	982		934		676	627	85.6		87.3		58.6	58.5		27.0		28.8		147		136

NAFTA, thereof:	2,146		2,011		1,772	1,684	87.4		90.2		55.5	60.1		31.9		30.1		434		318
United States	2,054		1,932		1,723	1,643	87.0		90.9		54.9	60.7		32.1		30.2		426		313
Mexico	92		79		49	41	101.3		63.5		76.9	38.1		24.4		25.4		8		5

Asia-Pacific, thereof:	860		807		670	626	94.2		90.5		67.5	64.6		26.7		25.9		130		151
Australia	703		669		601	568	94.1		90.1		68.8	65.5		25.3		24.6		121		143
Other	157		138		69	58	94.3		93.8		55.9	55.4		38.4		38.4		9		8

South America	423		312		300	225	102.5		97.3		65.7	62.3		36.8		35.0		27		31

Other	72		63		26	23	— ⁴	⁾	— ⁴	⁾	—	— ⁴	⁾	— ⁴	⁾	— ⁴	⁾	4		3

Specialty Lines
Allianz Re¹⁾	2,377		2,645		1,279	1,467	94.7		89.8		63.0	63.1		31.7		26.7		145		163
Credit Insurance	866		898		543	492	79.1		76.4		52.3	48.4		26.8		28.0		217		186
Allianz Global Corporate & Specialty¹⁾	1,557		1,594		757	843	92.8		93.5		67.2	69.2		25.6		24.3		211		112
Travel Insurance and Assistance Services	515		505		470	453	100.2		94.3		60.1	59.5		40.1		34.8		47		46

Subtotal	26,620		26,740		18,694	18,514	—		—		—	—		—		—		3,233		2,838

Consolidation adjustments²⁾	(2,789	)	(3,000	)	5	12	—		—		—	—		—		—		(2	)	26

Total	23,831		23,740		18,699	18,526	93.3		93.0		65.6	65.8		27.7		27.2		3,231		2,864

¹⁾

²⁾	Represents elimination of transactions between Allianz Group companies in different geographic regions.

³⁾	Contains run-off of a former operating entity located in Luxembourg of €10 mn in 2006 and €(2) mn in 2005.

⁴⁾	Presentation not meaningful.

Life/Health Insurance Operations

Operating profit up 11.7%.

•

Dynamic statutory premium growth in Asia-Pacific and Europe could not fully compensate the dip in sales in the United States.

•

Higher investment result drove operating profit.

•

Restructuring charges fully funded.

Earnings Summary

Statutory Premiums by Regions¹⁾

in € bn

LOGO

¹⁾	After elimination of transactions between Allianz Group companies in different geographic regions and different segments.

Statutory Premiums – Grouth Rates¹⁾

LOGO

¹⁾	Before elimination of transactions between Allianz Group companies in different geographic regions and different segments.

²⁾	Comprise “Other Europe”.

Statutory Premiums

2006 to 2005 Three Month Comparison

Our statutory premiums base remains sound; we experienced a slight decline in 2Q by 1.2% to €11,931 million. This was the net result of a quarter during which most of our major life insurance markets continued to enjoy very dynamic growth, offset by declines particularly in the United States and to a lesser degree in Italy. Based on internal growth, our statutory premiums decreased by 1.4%.

At Germany Life, our operating entities experienced strong production of new business leading to a total statutory premiums growth in 2Q of 20.7% to €3,075 million, after an already excellent 2Q 2005. This success was primarily driven by the sale of single premium products, including the limited offer of an innovative and very successful equity-indexed product on the German market. Additionally, recurring premiums picked up significantly due to the sales success of our government-sponsored pension products and unit linked contracts.

In France, our entities continued to enjoy the sales momentum achieved through our proprietary financial advisors network and through partnerships with independent advisors, driving a 6.9% rise with statutory premiums written reaching €1,474 million. Our Korean entity, Allianz Life Insurance Co. Ltd., furthered its successful marketing efforts, as evidenced by a significant increase in statutory premiums written of 49.1% to €522 million, also driven by the launch of equity-indexed products.

Within New Europe, our growth markets in Central and Eastern Europe, our Polish operations continued to benefit from a successful sales campaign with a bank partner in 1Q 2006, evidenced by statutory premiums written which tripled to €62 million in 2Q.

Conversely, in the United States, statutory premiums written decreased by 27.4% to €2,204 million compared to a strong 2Q 2005, as the sale of equity-indexed annuity products fell short of their prior year success. This development was largely due to uncertainty in part of our broker-dealer distribution channel following the introduction of new regulation by the National Association of Securities Dealers on the supervision of sales of equity-indexed annuities. However, the statutory premium written volume in the United States continues to maintain a sound base and remains a key market for us. In Italy, the picture was mixed: RAS maintained strong statutory premium volume in a market environment prevalent with lower sales of unit linked life products due to uncertainty among investors in response to the high volatility of capital markets in 2Q 2006. At Lloyd Adriatico, we experienced a slowdown of sales through the bancassurance channel, which ultimately led to a decline in statutory premiums written in Italy of 8.6% to €2,362 million.

2006 to 2005 Six Month Comparison

In contrast to the overall development in 2Q, our statutory premiums written increased by 3.3% to €24,753 million, driven in particular by strong sales within Germany Life, France, South Korea and New Europe. However, the trend in statutory premiums written in the United States and Italy did not vary from that of 2Q. Based on internal growth, our statutory premiums written increased by 1.7 %.

Operating Profit

in € mn

LOGO

2006 to 2005 Three Month Comparison

Our operating profit rose by 11.7% to €527 million in 2Q, despite restructuring charges related to the reorganization of our German insurance business. This development was primarily the result of a significant rise in investment income, which was due to both a higher asset base and increased yields.

The markets which contributed strongest to operating profit were our German Life subsidiaries at €113 million, Italy at €109 million, France at €101 million and Germany Health at €46 million. The strongest improvements occurred within our primary market of Germany at our life and health operations, with increases of €100 million and €16 million, respectively.

Interest and similar income developed favorably with an increase of 11.8% to €3,698 million, driven by higher dividend distributions from equity investments at Germany Life, as well as higher interest income from bonds at our French and American entities through increased yields and larger investment volumes.

Within income from financial assets and liabilities carried at fair value through income (net) especially our French operating entities exhibited negative fair value changes, leading to an overall increase of charges by €189 million to €216 million.

Our realized gains/losses (net) from investments, shared with policyholders more-than-tripled to €947 million in 2Q, as we maximized opportunities within the capital markets for the realization of capital gains. The increase was in particular due to the sale of our participation in Schering AG within Germany Life. To a lesser degree, our French entities also benefited from a rise in realized investment gains.

Conversely, impairments of investments (net), shared with policyholders rose substantially from €31 million to €210 million, as stock markets around the world trended lower. Similarly, investment expenses increased significantly to €211 million, primarily from disproportionately higher foreign exchange losses than foreign exchange gains on available-for-sale debt securities at Germany Life, driven by the year-on-year decline of the U.S. Dollar to the Euro.

Changes in reserves for insurance and investment contracts (net) rose by 26.2% to €2,950 million. This increase was primarily attributable to the sale of our participation in Schering AG within Germany Life, of which the associated realized gain is allocated largely to our policyholders. Additionally, though to a lesser degree, this movement was driven by new business volume both from traditional and investment-oriented policies, especially within our German operations.

Acquisition and administrative expenses (net) increased markedly by 9.9% to €1,153 million, caused in particular by a rise in acquisition expenses due to new business written at our German Life operations as well as higher amortization of deferred acquisition costs due to the business in force volume growth of recent years. Consequently, our statutory expense ratio increased by 1.0 percentage points to 9.9% (2Q 2005: 8.9%).

Overall charges of €118 million were recorded for operating restructuring charges. These charges were incurred in connection with the reorganization of our German insurance operations, which unites our German property-casualty and life/health businesses within the new entity Allianz Deutschland AG (or “ADAG”). This reorganization is intended to help us to improve our competitiveness and offer better service to our customers, while operating more efficiently. The structural changes, which were announced in detail on June 22, 2006, are in line with our repositioning plan as announced in September 2005 and the objectives of our “3+One” program. Of the total amount, €71 million was recorded within Germany Life and €47 million within Germany Health.

2006 to 2005 Six Month Comparison

Operating profit was up by 26.4% to €1,250 million. Favorable developments were experienced in particular by our German and French life entities. One of the key drivers of this development was interest and similar income, which showed a significant increase, primarily through higher dividend payments from equity investments. To a lesser degree, operating profit was up due to higher realized gains/losses (net) from investments, shared with policyholders, especially from the sales transaction of Schering AG shares in 2Q 2006.

Non-Operating Items

2006 to 2005 Three Month Comparison

Non-operating items were down by €54 million to a charge of €17 million. This development resulted from charges for non-operating restructuring charges of €43 million in connection with the restructuring of our German life and health businesses, as previously indicated. To a lesser degree, the decline in non-operating items was also attributable to lower realized gains/losses (net) from investments, not shared with policyholders, which fell €29 million to €27 million as a result of lower gains at our Italian, Dutch and South Korean life entities.

2006 to 2005 Six Month Comparison

In contradiction to the development in 2Q, during the first six months of 2006 we recorded an €16 million increase in non-operating income to €141 million, primarily from increased realized gains/losses (net) from investments, not shared with policyholders, as we had recorded gains in 1Q 2006 from the sale of a strategic equity portfolio and a sales company at Allianz Life in the United States. However, non-operating restructuring charges in 2Q 2006 within our German life and health businesses were an offsetting measure to this development.

Net Income

2006 to 2005 Three Month Comparison

Despite a stable income before income taxes and minority interests in earnings, our net income declined by 8.1% to €328 million, impacted primarily by higher income taxes in 2Q 2006 resulting from the absence of a favorable tax settlement which occurred in the prior year period.

Income taxes nearly doubled to €90 million, significantly driving up our effective tax rate to 17.6% (2Q 2005: 9.0%). In 2Q 2005, our income taxes benefited from a favorable tax settlement at Allianz Life in the United States.

Minority interests in earnings were down 13.2% to €92 million, mainly through lower minority interest at RAS in Italy resulting from the buy-out of minority shares at our Italian subsidiary in late 2005.

2006 to 2005 Six Month Comparison

Net income for the first six months of 2006 rose by 17.1%, driven by a strong operating profit development, primarily caused by increased dividend income from equity investments. At the same time, our non-operating items were also up over the first six months 2005, as increased realized gains/losses (net) from investments, not shared with policyholders more-than-offset higher non-operating restructuring charges for our German reorganization.

The following table sets forth our Life/Health insurance segment’s income statement and statutory expense ratio for the three and six months ended June 30, 2006 and 2005, respectively.


	Three months ended June 30,				Six months ended June 30,
	2006		2005		2006		2005
	€ mn		€ mn		€ mn		€ mn
Statutory premiums¹⁾	11,931		12,072		24,753		23,952
Ceded premiums written	(213	)	(211	)	(409	)	(442	)
Change in unearned premiums	(28	)	(25	)	(86	)	(54	)

Statutory premiums (net)	11,690		11,836		24,258		23,456
Deposits from SFAS 97 insurance and investment contracts	(6,874	)	(7,231	)	(14,346	)	(13,684	)

Premiums earned (net)	4,816		4,605		9,912		9,772
Interest and similar income	3,698		3,309		6,745		6,121
Income from financial assets and liabilities carried at fair value through income (net)	(216	)	(27	)	(185	)	(4	)
Realized gains/losses (net) from investments, shared with policyholders²⁾	947		277		2,050		1,644
Fee and commission income	162		114		291		206
Other income	7		20		13		29

Operating revenues	9,414		8,298		18,826		17,768

Claims and insurance benefits incurred (net)	(4,103	)	(4,132	)	(8,796	)	(8,854	)
Changes in reserves for insurance and investment contracts (net)	(2,950	)	(2,337	)	(5,598	)	(5,480	)
Interest expense	(73	)	(119	)	(137	)	(223	)
Loan loss provisions	1		(2	)	1		(3	)
Impairments of investments (net), shared with policyholders	(210	)	(31	)	(245	)	(53	)
Investment expenses	(211	)	(124	)	(368	)	(246	)
Acquisition and administrative expenses (net)	(1,153	)	(1,049	)	(2,195	)	(1,858	)
Fee and commission expenses	(70	)	(32	)	(120	)	(62	)
Operating restructuring charges³⁾	(118	)	—		(118	)	—

Operating expenses	(8,887	)	(7,826	)	(17,576	)	(16,779	)

Operating profit	527		472		1,250		989

Realized gains/losses (net) from investments, not shared with policyholders²⁾	27		56		186		147
Amortization of intangible assets	(1	)	(4	)	(2	)	(7	)
Non-operating restructuring charges³⁾	(43	)	(15	)	(43	)	(15	)

Non-operating items	(17	)	37		141		125

Income before income taxes and minority interests in earnings	510		509		1,391		1,114

Income taxes	(90	)	(46	)	(309	)	(150	)
Minority interests in earnings	(92	)	(106	)	(220	)	(228	)

Net income	328		357		862		736

Statutory expense ratio⁴⁾in %	9.9		8.9		9.0		7.9

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 insurer’s home jurisdiction.

²⁾	The total of these items equals realized gains/losses (net) in the segment income statement in Note 3 to the consolidated financial statements.

³⁾	The total of these items equals restructuring charges in the segment income statement in Note 3 to the consolidated financial statements.

⁴⁾	Represents acquisition and administrative expenses (net) divided by statutory premiums (net).

Life/Health Operations by Geographic Region

The following tables set forth our life/health statutory premiums, premiums earned (net), statutory expense ratio and operating profit by geographic region for the three and six months ended June 30, 2006 and 2005, respectively. 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 June 30,	2006		2005		2006	2005	2006		2005		2006		2005
Germany Life	3,075		2,547		2,317	2,043	9.5		9.2		113		13
Germany Health²⁾	772		762		772	762	7.6		8.9		46		30
Italy	2,362		2,584		280	233	6.9		5.6		109		127
France	1,474		1,379		425	406	15.1		14.4		101		117
Switzerland	178		204		80	93	12.8		14.2		13		6
Spain	174		149		122	126	9.3		6.4		20		17

Other Europe, thereof:	536		480		313	295	16.6		16.2		60		49
Netherlands	104		95		35	38	11.9		16.3		12		7
Austria	83		78		64	65	15.5		10.0		9		9
Belgium	116		144		69	69	14.2		10.5		16		18
Portugal	25		17		16	13	16.2		20.2		5		4
Luxembourg	12		7		8	6	13.4		27.6		1		1
Greece	24		23		16	14	22.1		23.4		—		—

Western and Southern Europe	364		364		208	205	14.4		13.3		43		39

Hungary	22		23		18	18	27.4		25.1		4		4
Slovakia	45		36		34	32	19.2		22.6		7		1
Czech Republic	19		17		13	13	19.3		18.9		2		2
Poland	62		22		21	13	19.8		35.7		2		1
Romania	5		4		4	2	46.8		23.2		—		1
Bulgaria	6		4		5	4	17.2		9.4		1		1
Croatia	11		10		8	8	23.6		26.7		1		—
Russia	2		—		2	—	4.7		— ⁵	⁾	—		—

New Europe	172		116		105	90	21.2		25.0		17		10

United States	2,204		3,037		80	145	7.6		4.4		32		90

Asia-Pacific, thereof:	1,043		798		308	293	11.0		13.8		20		1
South Korea	522		350		248	242	15.8		24.3		13		1
Taiwan	445		393		27	20	3.3		3.0		5		(1	)
Malaysia	28		33		22	18	23.7		17.5		2		1
Indonesia	19		16		7	8	29.3		22.7		1		—
Other	29		6		4	5	18.4		30.2		(1	)	—

South America	42		33		12	8	18.1		19.4		(1	)	(1	)

Other³⁾	129		207		105	200	— ⁵	⁾	— ⁵	⁾	38		24

Subtotal	11,989		12,180		4,814	4,604	—		—		551		473

Consolidation adjustments⁴⁾	(58	)	(108	)	2	1	—		—		(24	)	(1	)

Total	11,931		12,072		4,816	4,605	9.9		8.9		527		472

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 insurer’s home jurisdiction.

²⁾	Loss ratios were 63.7% and 68.5% for the three months ended June 30, 2006 and 2005, respectively.

³⁾	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.

⁴⁾	Represents elimination of transactions between Allianz Group companies in different geographic regions.

⁵⁾	Presentation not meaningful.


	Statutory premiums¹⁾				Premiums earned (net)		Statutory expense ratio				Operating profit
	€ mn				€ mn		%				€ mn
Six months ended June 30,	2006		2005		2006	2005	2006		2005		2006		2005
Germany Life	6,204		5,665		4,898	4,742	9.1		6.9		246		169
Germany Health²⁾	1,541		1,517		1,542	1,518	7.3		9.2		99		75
Italy	4,631		4,928		522	489	6.4		5.3		203		183
France	2,934		2,587		798	798	14.6		14.6		275		236
Switzerland	697		692		289	289	7.4		8.3		27		18
Spain	316		285		222	243	8.9		7.1		41		33

Other Europe, thereof:	1,274		981		636	599	13.8		16.2		124		91
Netherlands	228		197		73	72	12.2		15.0		22		14
Austria	184		169		132	129	12.5		8.4		22		16
Belgium	295		296		145	155	10.4		12.5		32		32
Portugal	45		37		33	30	15.1		21.6		12		8
Luxembourg	21		16		15	12	15.2		23.9		3		2
Greece	50		46		31	27	23.1		23.2		2		—

Western and Southern Europe	823		761		429	425	12.3		13.5		93		72

Hungary	44		44		37	35	27.1		25.6		8		8
Slovakia	88		71		67	64	19.5		20.2		14		4
Czech Republic	38		30		27	24	20.9		21.7		4		3
Poland	231		40		40	25	10.7		38.4		3		2
Romania	15		7		6	3	39.1		32.2		—		—
Bulgaria	11		8		10	8	15.9		10.6		1		1
Croatia	20		20		16	15	24.7		23.9		1		1
Russia	4		—		4	—	17.4		— ⁵	⁾	—		—

New Europe	451		220		207	174	16.4		25.1		31		19

United States	4,976		5,761		168	258	6.5		3.8		153		126

Asia-Pacific, thereof:	1,972		1,312		609	584	9.9		15.1		51		14
South Korea	1,094		699		503	486	13.3		22.4		38		6
Taiwan	744		519		41	41	2.5		3.6		9		6
Malaysia	50		52		41	33	21.2		17.2		4		1
Indonesia	34		33		16	15	31.9		22.2		1		1
Other	50		9		8	9	18.3		41.4		(1	)	—

South America	88		65		25	15	14.3		16.3		(1	)	(1	)

Other³⁾	242		271		203	237	— ⁵	⁾	— ⁵	⁾	99		50

Subtotal	24,875		24,064		9,912	9,772	—		—		1,317		994

Consolidation adjustments⁴⁾	(122	)	(112	)	—	—	—		—		(67	)	(5	)

Total	24,753		23,952		9,912	9,772	9.0		7.9		1,250		989

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 insurer’s home jurisdiction.

²⁾	Loss ratios were 69.7% and 71.7% for the six months ended June 30, 2006 and 2005, respectively.

³⁾	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.

⁴⁾	Represents elimination of transactions between Allianz Group companies in different geographic regions.

⁵⁾	Presentation not meaningful.

Banking Operations

Another strong quarter.

•

Operating revenues and operating profit momentum sustained, attaining dynamic growth.

•

Cost-income ratio strongly improved.

•

On track to achieve ambitious full year targets.

Earnings Summary

The results of operations of our Banking segment are almost exclusively represented by Dresdner Bank, accounting for 98.3% of our total Banking segment’s operating revenues in 1H 2006 (1H 2005: 95.8%). Accordingly, the discussion of our Banking segment’s results of operations relates solely to the operations of Dresdner Bank.

Operating Revenues

2006 to 2005 Three Month Comparison

Operating revenues, at €1,709 million, experienced dynamic growth of 28.5%. All revenue categories and both operating divisions, Private & Business Clients (or “PBC”) and Corporate & Investment Banking (or “CIB”), contributed to this development.

Net interest income was up 17.9% to €631 million. In 2Q 2006, the impact of accounting for derivative financial instruments which do not qualify for hedge accounting was marginal, whereas 2Q 2005 was negatively affected to a significant extent. Excluding this impact as well as lower income from associated companies as a result of the sale of our shareholdings in Eurohypo AG in the prior two quarters, net interest income was stable.

Net fee and commission income increased 3.3% to €680 million. Despite a challenging market environment our PBC division managed to expand its securities business, especially from equities, investment funds and certificates. Our CIB division exhibited a decline, however, exclusively due to a large client IPO in 2Q 2005.

Trading income (net) was the main contributor to the increase in operating revenues and almost tripled to €381 million amongst a volatile market environment in 2Q 2006. This development resulted from our strong business performance in 2Q 2006, which compares to a weak second quarter a year earlier. In the same quarter, the accounting for derivative financial instruments which do not qualify for hedge accounting had a significant positive impact. Excluding this impact, growth in trading income (net) was even stronger.

2006 to 2005 Six Month Comparison

Operating revenues increased by 21.7% to €3,593 million. The strong growth resulted principally from the developments previously described, with net fee and commission income evolving even more favorably for the first six months of 2006.

Operating Profit

2006 to 2005 Three Month Comparison

Operating profit experienced substantial growth to €319 million, up 55.6% from a year ago. Our PBC and CIB divisions both contributed to this positive development, which was primarily due to the strengthening of the divisions’ operating revenues.

Operating expenses increased 17.5%, almost entirely influenced by the development of administrative expenses, which amounted to €1,386 million, a rise of 20.0%. This increase almost exclusively refers to revenue-linked personnel expenses, which predominantly were incurred from the dynamic operating revenue growth within our CIB division. As a result, personnel expenses were up 45.8% to €892 million, as the weak 2Q 2005 included only marginal bonus accruals for CIB. Further, personnel expenses last year benefited from a one-off effect as a result of the release of provisions for employee anniversary payments. Non-personnel expenses decreased by 9.0% to €494 million in 2Q 2006. This development was mainly attributable to lower expenses for office space and information technology. As a consequence of the dynamic operating revenue growth, our cost-income ratio improved significantly by 7.6 percentage points to 81.0%.

Loan loss provisions resulted in a net charge of €5 million, compared to a net release of €54 million a year ago. Adequate reserving for current risks was broadly offset by significant recoveries of loans and releases of provisions of, in aggregate, €101 million. Gross new additions to loan loss provisions amounted to €106 million, in line with our qualitatively improved loan portfolio following the successful completion of the wind-down of our Institutional Restructuring Unit’s (or “IRU”) portfolio in September 2005.

2006 to 2005 Six Month Comparison

Operating profit doubled to €848 million. This positive development is largely attributable to the dynamic operating revenue growth, which drove our cost-income ratio down 7.2 percentage points to 77.2%. Further, loan loss provisions resulted in a net release of €28 million in 1H 2006, compared to a net charge of €46 million a year ago. Similar to 2Q 2006, significantly higher recoveries of loans was a key factor in this development. At June 30, 2006, our coverage ratio was 58.5%, down 3.6 percentage points from a year earlier.

Operating Profit – Dresdner Bank

in € mn

LOGO

Non-Operating Items

2006 to 2005 Three Month Comparison

Income from non-operating items was €12 million, down €206 million from a year earlier. This development is almost exclusively attributable to the decline in realized gains/losses (net), which, in the prior year period, included significant gains from sales, including our shareholdings in Bilfinger Berger AG.

2006 to 2005 Six Month Comparison

The decrease in non-operating items in 1H 2006 was of a similar magnitude compared to that in 2Q 2006. Realized gains/losses (net) in 1Q 2006 included a tax-exempt gain of €282 million from the sale of Dresdner Bank’s 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

2006 to 2005 Three Month Comparison

Net income was down 19.5% to €198 million. This development – despite strong operating profit growth – reflected the impact of the substantial decrease in non-operating items. Income taxes declined to €112 million from €156 million with a relatively stable effective income tax rate of 33.8% (2Q 2005: 36.9%).

2006 to 2005 Six Month Comparison

Net income increased 4.8% to €856 million. Backed by strong operating profit growth, income taxes rose by €126 million to €350 million. Our effective income tax rate was 27.9%, considerably higher from 20.6% a year earlier. In 1Q 2005, a tax-exempt gain similar to 1Q 2006 from the sale of Munich Re shares was realized, which had a larger impact on the 1Q 2005 effective income tax rate due to a lower income before income 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 Bank for the three and six months ended June 30, 2006 and 2005, respectively.


	Three months ended June 30,								Six months ended June 30,
	2006				2005				2006				2005
	Banking Segment¹⁾		Dresdner Bank		Banking Segment¹⁾		Dresdner Bank		Banking Segment¹⁾		Dresdner Bank		Banking Segment¹⁾		Dresdner Bank
	€ mn		€ mn		€ mn		€ mn		€ mn		€ mn		€ mn		€ mn
Net interest income²⁾	652		631		555		535		1,253		1,209		1,104		1,066
Net fee and commission income³⁾	728		680		695		658		1,560		1,473		1,397		1,324
Trading income (net)⁴⁾	308		381		135		128		795		865		582		563
Income from financial assets and liabilities designated at fair value through income (net)⁴⁾	18		18		5		5		21		21		(4	)	(4	)
Other income	—		(1	)	4		4		25		25		4		4

Operating revenues⁵⁾	1,706		1,709		1,394		1,330		3,654		3,593		3,083		2,953

Administrative expenses	(1,436	)	(1,386	)	(1,209	)	(1,155	)	(2,864	)	(2,767	)	(2,575	)	(2,466	)
Investment expenses	(10	)	(12	)	(8	)	(9	)	(16	)	(19	)	(15	)	(19	)
Other expenses	13		13		(14	)	(15	)	13		13		(8	)	(8	)

Operating expenses	(1,433	)	(1,385	)	(1,231	)	(1,179	)	(2,867	)	(2,773	)	(2,598	)	(2,493	)

Loan loss provisions	(7	)	(5	)	52		54		26		28		(41	)	(46	)

Operating profit	266		319		215		205		813		848		444		414

Realized gains/losses (net)	32		30		237		237		446		444		729		729
Impairments of investments (net)	(12	)	(12	)	(15	)	(14	)	(32	)	(32	)	(57	)	(56	)
Amortization of intangible assets	(1	)	—		—		—		(1	)	—		—		—
Restructuring charges	(7	)	(6	)	(5	)	(5	)	(9	)	(8	)	(5	)	(5	)

Non-operating items	12		12		217		218		404		404		667		668

Income before income taxes and minority interests in earnings	278		331		432		423		1,217		1,252		1,111		1,082

Income taxes	(89	)	(112	)	(155	)	(156	)	(334	)	(350	)	(229	)	(224	)
Minority interests in earnings	(27	)	(21	)	(25	)	(21	)	(55	)	(46	)	(51	)	(41	)

Net income	162		198		252		246		828		856		831		817

Cost-income ratio⁶⁾in %	84.0		81.0		88.3		88.6		78.5		77.2		84.3		84.4

¹⁾	Consists of Dresdner Bank and non-Dresdner Bank banking operations within our Banking segment, as well as the elimination of trading income (net) of €81 mn at Dresdner Bank resulting from Dresdner Bank’s trading activities in Allianz AG shares in 2Q and 1H 2006.

²⁾	Represents interest and similar income less interest expense.

³⁾	Represents fee and commission income less fee and commission expense.

⁴⁾	The total of these items equals income from financial assets and liabilities carried at fair value through income (net) in the segment income statement in Note 3 to the consolidated financial statements.

⁵⁾	For the Banking segment, total revenues are measured based upon operating revenues.

⁶⁾	Represents operating expenses divided by operating revenues.

Banking Operations by Division

The following tables set forth our banking operating revenues, operating profit and cost-income ratio by division for the three and six months ended June 30, 2006 and 2005, respectively. 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 June 30,	2006						2005
	Operating revenues		Operating profit		Cost- income ratio		Operating revenues	Operating profit		Cost- income ratio
	€ mn		€ mn		%		€ mn	€ mn		%
Private & Business Clients¹⁾	774		160		77.3		730	146		75.8
Corporate & Investment Banking¹⁾	979		220		76.6		558	91		85.5
Corporate Other²⁾	(44	)	(61	)	— ³	⁾	42	(32	)	— ³	⁾

Dresdner Bank	1,709		319		81.0		1,330	205		88.6

Other Banks⁴⁾	(3	)	(53	)	— ³	⁾	64	10		84.3

Total	1,706		266		84.0		1,394	215		88.3


Six months ended June 30,	2006						2005
	Operating revenues		Operating profit		Cost- income ratio		Operating revenues	Operating profit		Cost- income ratio
	€ mn		€ mn		%		€ mn	€ mn		%
Private & Business Clients¹⁾	1,666		430		72.6		1,529	288		76.1
Corporate & Investment Banking¹⁾	1,946		483		76.4		1,309	198		82.5
Corporate Other²⁾	(19	)	(65	)	— ³	⁾	115	(72	)	— ³	⁾

Dresdner Bank	3,593		848		77.2		2,953	414		84.4

Other Banks⁴⁾	61		(35	)	— ³	⁾	130	30		80.8

Total	3,654		813		78.5		3,083	444		84.3

¹⁾

Our reporting by divisions reflects the organizational changes within Dresdner Bank in 1H 2006 resulting in two operating divisions. Private & Business Clients combines all banking activities for private and corporate customers formerly provided by the Personal Banking and Private & Business Banking divisions. Furthermore, Corporate & Investment Banking combines the former Corporate Banking and Dresdner Kleinwort Wasserstein divisions. Following a decision taken in late June 2006, we will integrate our business activities with medium-sized business clients into that with private and corporate customers. In the table above, our medium-sized business clients are still included in Corporate & Investment Banking. The final new business model with two new organizational units Private & Corporate Clients and Investment Banking is not reflected in the table above.

²⁾

The Corporate Other division contains income and expense items that are not assigned to Dresdner Bank’s 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 Bank’s non-strategic investment portfolio. For the three and six months ended June 30, 2006, the impact from the accounting for derivative financial instruments which do not qualify for hedge accounting on Corporate Other’s operating revenues amounted to a gain of €9 mn and a charge of €14 mn, respectively (2005: gain of €93 mn and €73 mn, respectively). 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 divisons. 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 IRU’s 2005 results of operations were reclassified into Corporate Other. Prior year balances have been adjusted to reflect these reclassifications and allow for comparability across periods.

³⁾	Presentation not meaningful.

⁴⁾	Consists of non-Dresdner Bank banking operations within our Banking segment, as well as the elimination of trading income (net) of €81 mn at Dresdner Bank resulting from Dresdner Bank’s trading activities in Allianz AG shares in 2Q and 1H 2006.

Asset Management Operations

Strong operating profit development continues.

•

Double-digit operating profit growth year-over-year for the seventh consecutive quarter.

•

Net inflows of €15 billion in the first half of 2006 despite a challenging market environment.

•

Net inflows and positive market effects more than offset by negative currency effects resulting in third-party assets under management of €721 billion.

Third-Party Assets Under Management

Overall, in the first half of 2006, we were faced with a challenging market environment. Whereas in 1Q 2006, capital markets worldwide developed favorably, 2Q 2006 showed substantial declines in market values, particularly within the equity capital markets. Additionally, net flows in the fixed income mutual fund market in the United States and Germany turned negative in 2Q 2006.

Despite this challenging market environment in the first six months of the year, we achieved net inflows to third-party assets of €15 billion. Both fixed income and equity products contributed to the positive development, which affirms our strong position as one of the world’s largest asset managers, based on total assets under management.¹⁾A key success factor continues to be our competitive investment performance. The overwhelming majority of the third-party assets we manage again outperformed their respective benchmarks. Market-related appreciation was €3 billion. Net inflows and positive market effects were more than offset by negative effects of €40 billion from exchange rate movements, resulting primarily from a weaker U.S. Dollar versus the Euro. As a consequence, on a Euro-basis, our third-party assets decreased €22 billion to €721 billion at June 30, 2006, compared to December 31, 2005.

Our major achievements in the first half of 2006 included:

United States

•

Allianz/PIMCO Funds were named “Best Mutual Fund Family of 2005” in the annual Lipper/Barron’s Fund Families Survey.

•

Particularly strong net inflows of approximately €4 billion at our equity fund manager NFJ Investment Group.

•

PIMCO was named “Investor of the Year 2005” by Securitization News.

Germany

•

Allianz Global Investors (or “AGI”) ranked first among German asset management companies, based on net inflows in retail equity products.²⁾

•

Germany´s equity management platform ranked first among “Best German Asset Managers” and achieved twelve individual top 3 rankings.³⁾

¹⁾	Source: Own internal analysis and estimates.

²⁾	Source: Bundesverband Investment und Asset Management (or “BVI”), an association representing the German investment fund industry.

³⁾	Source: Handelsblatt and Thomson Extel Surveys, June 22, 2006.

We operate our third-party asset management business primarily through AGI. At June 30, 2006, AGI managed approximately 94.6% (December 31, 2005: 95.2%) of our third-party assets. The remaining assets are managed by Dresdner Bank (approximately 2.8% and 2.3% at June 30, 2006 and December 31, 2005, respectively) and other Allianz Group companies (approximately 2.6% and 2.5% at June 30, 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 June 30, 2006 and December 31, 2005, respectively.

Third-party Assets Under Management – Fair Values by Geographic Region¹⁾

in € bn

LOGO

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 June 30, 2006 and December 31, 2005, respectively) and by other Allianz Group companies (approximately €19 bn and €19 bn at June 30, 2006 and December 31, 2005, respectively).

Third-party Assets Under Management – Fair Values by Investment Category

in € bn

LOGO

¹⁾	Includes primarily investments in real estate.

Third-party Assets Under Management – Fair Values by Investor Class

in € bn

LOGO

Earnings Summary

The results of operations of our Asset Management segment are almost exclusively represented by AGI, accounting for 98.8% and 99.3% of our total Asset Management segment’s operating revenues and operating profit, respectively, for 2Q 2006 (2Q 2005: 98.9% and 98.8%). Accordingly, the discussion of our Asset Management segment’s results of operations relates solely to the operations of AGI.

Operating Revenues

2006 to 2005 Three Month Comparison

Our operating revenues rose by 13.1% to €717 million. Internal growth was even stronger at 15.9%. Higher asset-based management fees, reflecting both net inflows, particularly in the United States, and rising financial markets throughout the previous quarters, contributed largely to this performance. In addition, we experienced positive impacts from our strengthened equity business.

2006 to 2005 Six Month Comparison

Operating revenues reached €1,452 million, up €263 million (22.1%) from a year ago. On an internal growth basis, operating revenues rose by 19.1%. The increase resulted principally from the factors previously described. Further, income from financial assets and liabilities carried at fair value through income (net) increased by €14 million to €12 million, predominantly due to the mark-to-market valuation of seed money in the United States.

The following table sets forth the composition of AGI’s net fee and commission income.


	Three months ended June 30,				Six months ended June 30,
	2006		2005		2006		2005
	€ mn		€ mn		€ mn		€ mn
Fee and commission income, thereof:	1,015		868		2,030		1,660
Management fees	823		707		1,652		1,354
Loading and exit fees	86		80		177		157
Performance fees	9		13		25		22
Other	97		68		176		127
Fee and commission expenses, thereof:	(314	)	(253	)	(625	)	(498	)
Commissions	(223	)	(190	)	(449	)	(377	)
Other	(91	)	(63	)	(176	)	(121	)

Net fee and commission income	701		615		1,405		1,162

Operating Profit

2006 to 2005 Three Month Comparison

We experienced an operating profit growth of 18.5% to €295 million, primarily resulting from the increase in our operating revenues. In addition, exchange rate movements also proved beneficial, predominantly stemming from a stronger U.S. Dollar compared to the Euro. Excluding the effects related to currencies, operating profit would have improved by €44 million, or 17.7%. In line with our continued positive business performance in the United States, our U.S.-based operations contributed substantially to our operating profit growth. On a Euro-basis, operating profit in the United States rose by 12.9% to €223 million.

Operating expenses were €422 million, up 9.6% from a year earlier. Thereof, personnel expenses reached €265 million, up 12.9%. This increase resulted largely from higher performance-linked compensation, rising in line with operating profit. In addition, increased headcount following our business growth over the previous quarters also contributed to the rise in operating expenses. Non-personnel expenses increased 4.2% to €157 million, coupled with, among other factors, the impact of a higher asset base on our administrative expenses.

As a result, our cost-income ratio improved by 1.8 percentage points to 58.9%.

2006 to 2005 Six Month Comparison

Operating profit improved by 24.5% to €595 million. Effects from exchange rate movements contributed €25 million, or 5.2%. Operating expenses at €857 million were 20.5% higher compared to a year ago. The developments in the six months comparison resulted principally from the factors previously described in the three months comparison. Consequently, our cost-income ratio improved by 0.8 percentage points to 59.0%.

Operating Profit – Allianz Global Investors

in € mn

LOGO

Non-Operating Items

2006 to 2005 Three Month Comparison

Acquisition-related expenses and amortization of intangible assets, in aggregate, decreased 24.6% to €132 million. This decline was mainly driven by a lower number of outstanding PIMCO LLC Class B Units (or “Class B Units”). As of June 30, 2006, the Allianz Group has acquired 11,721 of the 150,000 units originally outstanding.

Going forward, we expect acquisition-related expenses to be mainly driven by our operating profit development.

2006 to 2005 Six Month Comparison

Acquisition-related expenses and amortization of intangible assets, in aggregate, decreased 20.8% to €270 million. In addition to a lower number of outstanding Class B Units previously mentioned, the expiration of amortization charges relating to capitalized loyalty bonuses for PIMCO management in 2Q 2005 also contributed to this development.

Net Income

2006 to 2005 Three Month Comparison

Net income reached €90 million, up 18.4% from a year earlier. Currency-related effects contributed 2.6%, or €2 million, to this increase. Income taxes amounted to an expense of €62 million after a tax benefit of €8 million in 2Q 2005. This tax benefit stemmed predominantly from a one-off deferred tax credit of €37 million in the United States related to tax deductible goodwill amortization.

2006 to 2005 Six Month Comparison

Net income grew significantly by 71.8% to €177 million. Excluding the effects related to exchange rate movements, net income would have improved by €65 million, or 63.1%. Income taxes rose to €126 million from €17 million a year earlier due to significantly increased taxable income in the United States and the one-off deferred tax credit in 2Q 2005, previously mentioned.

The following table sets forth the income statements and cost-income ratios for both our Asset Management segment as a whole and AGI for the three and six months ended June 30, 2006 and 2005, respectively.


	Three months ended June 30,								Six months ended June 30,
	2006				2005				2006		2005
	Asset Management Segment		Allianz Global Investors		Asset Management Segment	Allianz Global Investors			Asset Management Segment	Allianz Global Investors	Asset Management Segment	Allianz Global Investors
	€ mn		€ mn		€ mn	€ mn			€ mn	€ mn	€ mn	€ mn
Net fee and commission income¹⁾	712		701		624	615			1,429	1,405	1,180	1,162
Net interest income²⁾	13		15		14	19			30	29	17	23
Income from financial assets and liabilities carried at fair value through income (net)	(2	)	(2	)	—	(3	)		12	12	5	(2	)
Other income	3		3		3	3			6	6	6	6

Operating revenues³⁾	726		717		641	634		<

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents