Growth Agenda for the Insurance Industry Dr. Volker Deville, Allianz SE International Insurance Society Berlin, July 10, 2007

Agenda Trends Growth Strategies

Trends drive of our industry Snapshots on selected trends Legend Threat Opportunity Both Threat and Opportunity Terrorism Threat Flu Pandemic Nuclear Proliferation Islamic Extremism Very High Migration Bioeconomy Climate Change Transnational Compliance Nano- technology Wealth Decumulation Pervasive Computing German Health Reforms EU Regulatory Harmonization US Pension Reforms Demography Urbanization Energy US Litigation EU Pension Reforms Social Security Build Up Depletion of Natural Resources Banking System Vulnerability Potential Impact High Private Public Partnerships New Sales Channels Consumer Protection Middle East Financial Markets Alternative Engines Water Scarcity Housing Markets Japan Financial Sector China Instability Genetic Testing North Korea Collapse Medical Treatment Abroad China overtakes US Indian Brain Drain Moral Liability Middle East Instability Customer Sophistication Medium 1 year 2-4 years 5-10 years 11-20 years Time Horizon

Three examples of mega trends 31 Three examples of mega trends Legend Threat Opportunity Both Threat and Opportunity Very High 1 Climate Change 2 Demography Potential Impact High 3 Digitalized Globe Medium 1 year 2-4 years 5-10 years 11-20 years Time Horizon

Temperature increase (°C) 31 Climate change: Impact on risk profile and investments Prognosis on global warming Strong evidence regarding human influence in global warming drives awareness Government incentives for non-polluting technologies (hybrid engines, biofuels) Investment opportunities in alternative technologies, e.g. proportion of hybrid- based vehicles to increase from 0.9 to 2.8% until 2017 Changes in perceived risk profile, e.g. damages by natural catastrophes become more difficult to calculate Temperature increase (°C) Shift from contained confrontation between states to disperse, unpredictable acts of violence by non state actors Growing impact of global warming will trigger an increasing number of natural incidents and catastrophes Increasingly stronger evidence regarding human influence in global warming, together with increasing vulnerability of existing energy supplies, will drive general environmental awareness Impact on financial services Stronger demand for property and casualty insurance covering random acts of violence in high risk regions Stricter regulatory requirements for customer identification in banking to prevent terrorism financing and money laundry activities Increased cost of conducting business in high risk regions Increased need for financial institutions to flex their business models Change in perceived risk profile of different sectors (e.g. alternative technologies will become more attractive to insure vs. natural resources or oil and gas) Sources: OECD Paris, BBC, December 2006, Winterberichte SLF United Nations

Demography: Fundamental changes in “need structure” ahead (billion) (in %) Development of world population 0 - 14 Dependency ratio 15 - 64 80+ 65 - 79 Old age dependency ratio The world population will increase from 6.6 billion people today to 9.2 billion in 2050 In 2050, more than 400 million people will be aged 80 and above Longevity risk increases Reform of social systems triggers regulatory amendments worldwide Continuously growing demand for old age care and health care Sources: UN Department of Economic and Social Affairs, Allianz SE

Digitalized Globe: Virtual technology drives markets 31 Digitalized Globe: Virtual technology drives markets Decreasing equipment cost (e.g. 50 € computer) Proportion of internet users will increase from 21 to 39% until 2017 worldwide Proportion of broadband subscribers in world population will increase from 7 to 17% until 2017 Increased demand for online information about retail financial products (consumer lending, savings and investments) Increase disintermediation of distributors with customers acquiring similar services online Easier access to customer segments in emerging countries through direct channels

Mega trends drive the future in different regions Old Europe New Europe US/ Can. Latin Amer. Mature Asia China India S.East Asia Arab./ Africa Climate Change Demography Digitalized Globe Legend Relevant impact Strong impact Exceptional impact Other mega trends: Increased customer empowerment; tighter requirements for treating customers fairly; health care infrastructure; rise of emerging countries; unpredicted shocks

Agenda Trends Growth Strategies

Growth could be realized in many dimensions. : Allianz Focus Individual countries/ regions Backward integration Forward integration Global expansion Utilizing core competencies at the markets Global expansion New market needs: 55+ New geographical markets New parts of the value chain New market needs Internet New generation of products New distribution channels New business segments Direct Indirect New customer segments New products New business models New business model: TOM Splitting of current segments Customer Focus Product development Real innovation Cross selling Segments not yet explored Product related services: Assistance Product-related services New segments Product amendments Sources : Allianz SE, according to “Wege zu nachhaltig profitablem Wachstum”, J.F. Seidenstricker, Bain, Swiss Journal of Business Research and Practice, 4/2005

Growth segments for financial services providers Absolute global premiums/revenues by line of business Banking 1,060 bn € Asset Management 216 bn € Life & Health Insurance 1,699 bn € Property & Casualty Insur. 491 bn € CAGR ≥ 7.5% CAGR 5.0–7.5% CAGR < 5.0% Americas Europe Asia-Pacific 1,463 bn € 943 bn € 1,060 bn € Source: Allianz SE

Impact on business model: Reach customers via multiple distribution channels Bank- assurance Banking Distribution channel Bank 1 2 Insurance & Asset Management 3 Distribution channel Insurance Assur- banking 3 Insurance products, investment funds Banking products Components of insurance, old age provision, asset management are to be increasingly combined

Product innovation: Allianz Schutzbrief55Plus Customer needs Product Assistance services + Cash benefits Living actively at home in retirement P/C Accident Schutzbrief 55Plus for assistance and care at home Accident Not being a burden to the family Health Market Management Care Nursing care Remaining independent Health Health Support in critical situations Death Death benefit Life

Allianz strategy at a glance: Sustainable profitable growth Market capitalization Our Vision Be one of the top 10 global financial services providers. Future growth Future profitability > GDP growth > Cost of capital Our Mission A customer-centric organization. Trusted to deliver in moments of truth. Current growth Pipeline of initiatives Current profitability Our Business Providing solutions for customers around insurance, banking and asset management focusing on Europe, USA and selected Asian markets.

The Allianz pipeline of initiatives July 2007 Sustainability Restructuring . New growth markets . Culture Pipeline gibt Snapshot zum aktuellen Stand der Initiativen und Maßnahmen an Anpassung Pipeline unterliegt dynamischem, kontinuierlichem Prozess Bei Allianz: Regelmäßige Überprüfung der Pipeline + Anpassung, mindestens zwei bis viermal im Jahr Customer Focus

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