In this Annual Report, the terms “we,” “us” and “our” refer to Allianz AktiengesellschaftSocietas Europaea (or Allianz AG,SE, and together with its consolidated subsidiaries, the Allianz Group), unless the context requires otherwise.

Unless otherwise indicated, when we use the term “consolidated financial statements,” we are referring to the consolidated financial statements (including the related notes) of Allianz AGSE as of December 31, 20052006 and 20042005 and for each of the years in the three-year period ended December 31, 2005,2006, which have been audited by KPMG Deutsche Treuhand-Gesellschaft AG Wirtschaftsprüfungsgesellschaft. The consolidated financial statements have been prepared in accordance with the new and revised International Financial Reporting Standards effective January 1, 2005,(or “IFRS”), as adopted under European Union regulations in accordance with clause 315a of the German Commercial Code, which we refer to herein as “IFRS” or “2005 IFRS.”Code. IFRS differsdiffer in certain respects from accounting principles generally accepted in the United States of America (U.S. GAAP)(“U.S. GAAP”). For a discussion of significant differences between IFRS and U.S. GAAP and a reconciliation of net income and shareholders’ equity under IFRS and U.S. GAAP, you should read Note 4753 to the consolidated financial statements. In addition, the amounts set forth in some of the tables may not add up to the total amounts given in those tables due to rounding.

References herein to “$”, “U.S.$” and “U.S. dollars”Dollar” are to United States dollarsDollars and references to “€” and “Euro” are to the Euro, the single currency established for participants in the third stage of the European Economic and Monetary Union (or EMU), commencing January 1, 1999. We refer to the countries participating in the third stage of the EMU as the “Euro zone.”

For convenience only (except where noted otherwise), some of the Euro figures have been translated into U.S. dollarsDollars at the rate of $1.2139 =€$1.3511 =

This annual report includes “forward-looking statements” within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These include statements under “Information on the Company,” “Operating and Financial Review and Prospects,” “Quantitative and Qualitative Disclosures About Market Risk” and elsewhere in this annual report relating to, among other things, our future financial performance, plans and expectations regarding developments in our business, growth and profitability, and general industry and business conditions applicable to the Allianz Group. These forward-looking statements can generally be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or other similar terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections about future events. These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements or those of our industry to be materially different from or worse than those expressed or implied by these forward-looking statements. These factors include, without limitation:

Not applicable.

ITEM 2. Offer Statistics and Expected Timetable

Not applicable.

ITEM 3. Key Information

Selected Consolidated Financial Data

We present below our selected financial data as of and for each of the years in the five-year period ended December 31, 2005.2006. We derived the selected financial data for each of the years in the five-year period ended December 31, 20052006 from our audited annual consolidated financial statements, including the notes to those financial statements. All the data should be read in conjunction with our consolidated financial statements and the notes thereto.

We prepare our annual audited consolidated financial statements in accordance with 2005 IFRS, which introduced a number of new and revised IFRS effectiveIFRS.

Effective January 1, 2005. Some2006, we implemented certain revisions to our consolidated financial statements to enhance the reader’s understanding of our financial results and to use a more consistent presentation with that of our peers. These revisions reflect certain reclassifications in our consolidated balance sheet and consolidated income statement, changes to our segment reporting, changes to operating profit methodology and changes to our consolidated cash flow statement. We applied these new and revised IFRS required retrospective applicationrevisions to all three years of a company’sthe Allianz Group’s consolidated financial statements. As a result, we have retrospectively applied these revisions to the Allianz Group’s consolidated financial statements as

Dividends

The following table sets forth the annual dividends paid per ordinary share and American Depositary Share (or “ADS”) equivalent for 20012002 through 2005.2006. The table does not reflect the related tax credits available to German taxpayers. See “Additional Information—Taxation—German Taxation—Taxation of Dividends.”

Although theThe ability to pay future dividends will depend upon our future earnings, financial condition (including our cash needs), prospects and other factors, we do not presently anticipate any changes to our current dividend policy. However, youfactors. You should not assume that any dividends will actually be paid or make any assumptions about the amount of dividends which will be paid in any given year. See “Financial Information—Dividend Policy.”

You should carefully review the following risk factors together with the other information contained in this annual report before making an investment decision. Our financial position and results of operations may be materially adversely affected by each of these risks. The market price of our ADSs may decline as a result of each of these risks and investors may lose the value of their investment in whole or in part. Additional risks not currently known to us or that we now deem immaterial may also adversely affect our business and your investment.

Interest rate volatility may adversely affect ourAllianz Group’s results of operations.

Changes in prevailing interest rates (including changes in the difference between the levels of prevailing short- and long-term rates) can affect ourAllianz Group’s insurance, asset management, banking and bankingcorporate results.

Over the past several years, movements in both short- and long-term interest rates have affected the level and timing of recognition of gains and losses on securities held in ourAllianz Group’s various investment portfolios. An increase in interest rates could substantially decrease the value of ourAllianz Group’s fixed income portfolio, and any unexpected change in interest rates could materially adversely affect ourAllianz Group’s bond and interest rate derivative positions. Results of ourAllianz Group’s asset management business may also be affected by movements in interest rates, sinceas management fees are generally based on the value of assets under management, which fluctuate with changes in the level of interest rates.

The short-term impact of interest rate fluctuations on ourAllianz Group’s life/health insurance business may be reduced in part by products designed to partly or entirely transfer ourAllianz Group’s exposure to interest rate movements to the policyholder. While product design reduces ourAllianz Group’s exposure to interest rate volatility, changes in interest rates will impact this business to the extent they result in changes to current interest income, impact the value of ourAllianz Group’s fixed income portfolio, and affect the levels of new product sales or surrenders of business in force. In addition,

securities available-for-sale are recorded directly in ourAllianz Group’s consolidated shareholders’ equity. Available-for-sale equity and fixed income securities, as well as securities classified as held-to-maturity, are reviewed regularly for impairment, with write-downs to fair value charged to income if there is objective evidence that the cost may not be recovered. See “Operating and Financial Review and Prospects—Review—Critical Accounting Policies and Estimates” and Note 2 to ourthe consolidated financial statements for further information concerning ourAllianz Group’s significant accounting and valuation policies.

Market and other factors could adversely affect goodwill, deferred policy acquisition costs and deferred tax assets; ourAllianz Group’s deferred tax assets are also potentially impacted by changes in tax legislation.

Business and market conditions may impact the amount of goodwill we carryAllianz Group carries in ourits consolidated financial statements. As of December 31, 2005, we have2006, Allianz Group has recorded goodwill in an aggregate amount of €12,023€12,007 million, of which €1,625€6,272 million relates to our banking business, €6,604 million to ourits asset management business, and €3,794€3,965 million relates to ourits insurance business.business, €1,626 million relates to its banking business, and €144 million relates to its corporate segment.

As the value of certain parts of ourAllianz Group’s businesses, including in particular ourAllianz Group’s banking and asset management businesses, are significantly impacted by such factors as the state of financial markets and ongoing operating performance, significant declines in financial markets or operating performance could also result in impairment of other goodwill carried by us and result in significant write-downs, which could be material. No impairments were recorded for goodwill in 2005.2006.

The assumptions weAllianz Group made with respect to recoverability of deferred policy acquisition costs (or “DAC”(“DAC”) are also affected by such factors as operating performance and market conditions. DAC is incurred in connection with the production of new and renewal insurance business and is deferred and amortized generally in proportion to profits or to premium income expected to be generated over the life of the underlying policies, depending on the classification of the product. If the assumptions on which expected profits are based

estimated ultimate cost necessary to bring all pending reported and IBNR claims to final settlement.

Reserves, including IBNR reserves, are subject to change due to a number of variables whichthat affect the ultimate cost of claims, such as changes in the legal environment, results of litigation, changes in medical costs, costs of repairs and other factors such as inflation and exchange rates, and ourAllianz Group’s reserves for asbestos and environmental and other latent claims are particularly subject to such variables. OurAllianz Group’s results of operations depend significantly upon the extent to which ourAllianz Group’s actual claims experience is consistent with the assumptions we useAllianz Group uses in setting the prices for products and establishing the liabilities for obligations for technical provisions and claims. To the extent that ourAllianz Group’s actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, weAllianz Group may be required to

increase ourits reserves, which may materially adversely affect ourits results of operations.

Established loss reserves estimates are periodically adjusted in the ordinary course of settlement, using the most current information available to management, and any adjustments resulting from changes in reserve estimates are reflected in current results of operations. WeAllianz Group also conductconducts reviews of various lines of business to consider the adequacy of reserve levels. Based on current information available to us and on the basis of ourAllianz Group’s internal procedures, ourAllianz Group’s management considers that theseAllianz Group’s reserves are adequate at December 31, 2005.2006. However, because the establishment of reserves for loss and loss adjustment expenses is an inherently uncertain process, there can be no assurance that ultimate losses will not materially exceed the established reserves for loss and loss adjustment expenses and have a material adverse effect on ourAllianz Group’s results of operations. See “Information on the Company—Property-Casualty Insurance Reserves.”

Actuarial experience and other factors could differ from that assumed in the calculation of life/health actuarial reserves and pension liabilities.

The assumptions we makeAllianz Group makes in assessing ourits life/health insurance reserves may differ from what we experience in the future. WeAllianz Group derive ourits life/health insurance reserves using “best estimate” actuarial practices and assumptions. These

events such as hurricanes, windstorms, hailstorms, earthquakes, fires, industrial explosions, freezes, riots, floods and other man-made or natural disasters, including acts of terrorism. The incidence and severity of these catastrophes in any given period are inherently unpredictable.

Although we monitor ourthe Allianz Group monitors its overall exposure to catastrophes and other unpredictable events in each geographic region, each of ourAllianz Group’s subsidiaries independently determines, within the Allianz Group’s limit framework, its own underwriting limits related to insurance coverage for losses from catastrophic events. We generally seek to reduce our exposure toAllianz Group’s potential losses from these events through the purchase of reinsurance, selective underwriting practices and by monitoring risk accumulation. However, such efforts to reduce exposure may not be successful and claims relating to catastrophes may result in unusually high levels of losses and could have a material adverse effect on ourAllianz Group’s financial position or results of operations.

We have significant counterparty risk exposure.

We are subject to a variety of counterparty risks, including:

General Credit Risks.Risks. Third-parties that owe us money, securities or other assets may not pay or perform under their obligations. These parties include the issuers whose securities we hold, borrowers under loans made, customers, trading counterparties, counterparties under swaps, credit default and other derivative contracts, clearing agents, exchanges, clearing houses and other financial intermediaries. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, downturns in the economy or real estate values, operational failure or other reasons.

Reinsurers.Reinsurers. We transfer our exposure to certain risks in ourits property-casualty and life/health insurance business to others through reinsurance arrangements. Under these arrangements, other insurers assume a portion of ourAllianz Group’s losses and expenses associated with reported and unreported losses in exchange for a portion of policy premiums. The availability, amount and cost of reinsurance depend on general market conditions and may vary significantly. Any decrease in the amount of ourAllianz Group’s reinsurance will increase ourits risk of loss.

ratings downgrades will not occur, whether due to changes in our performance, changes in rating agencies’ industry views or ratings methodologies, or a combination of such factors.

If our asset management business underperforms, it may experience a decline in assets under management and related fee income.

While the assets under management in our asset management segment include a significant amount of funds related to our insurance operations, third-party assets under management, particularly following the acquisitions of PIMCO in May 2000, Nicholas-Applegate in January 2001 and Dresdner Bank in July 2001, represent the majority. Results of our asset management activities are affected by share prices, share valuation, interest rates and market volatility. In addition, third-party funds are subject to withdrawal in the event our investment performance is not competitive with other asset management firms. Accordingly, fee income from the asset management business might decline if the level of our third-party assets under management were to decline due to investment performance or otherwise.

The individual or combined impact of any of the events mentioned above could also cause an impairment of goodwill and result in significant write-downs, which could be material.

Increased geopolitical risks following the terrorist attack of September 11, 2001, and any future terrorist attacks, could have a continuing negative impact on our businesses.

After September 11, 2001, reinsurers generally either put terrorism exclusions into their policies or drastically increased the price for such coverage. Although we have attempted to exclude terrorist coverage from policies we write, this has not been possible in all cases, including as a result of legislative developments such as the Terrorism Risk Insurance Act (or “TRIA”) in the United States. Furthermore, even if terrorism exclusions are permitted in our primary insurance policies, we may still have liability for fires and other consequential damage claims that follow an act of terrorism itself. As a result we may have liability under primary insurance policies for acts of terrorism and may not be able to recover a portion or any of our losses from our reinsurers.

At this time, we cannot assess the future effects of terrorist attacks, potential ensuing military and other responsive actions, and the possibility of further terrorist attacks, on our businesses. Such matters have significantly adversely affected general economic, market and political conditions, increasing many of the risks in our businesses noted in the

rulings. Regulators and other authorities have the power to bring administrative or judicial proceedings against us, which could result, among other things, in significant adverse publicity and reputational harm, suspension or revocation of our licenses, cease-and-desist orders, fines, civil penalties, criminal penalties or other disciplinary action whichthat could materially harm our results of operations and financial condition.

Effective January 2005, reinsurance companies in Germany such as Allianz AGSE are subject to specific legal requirements regarding the assets covering their technical reserves. These assets are required to be appropriately diversified to prevent a reinsurer from relying excessively on any particular asset. The introduction of these requirements anticipated the implementation of EU Reinsurance Directive (2005/68/EC) which was adopted in November 2005. The implementationAll of the directive’s provisions that have not yetfinally been

implemented in Germany effective January 2006 is expected to occur by the end of 2006.June 2, 2007. Although Allianz AGSE expects to meet the new requirements, of the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or “BaFin”) once fully implemented, there can be no assurances as to the impact on Allianz AGSE of any future amendments to or changes in the interpretation of the laws and regulations regarding assets covering technical reserves of reinsurance companies, which could require Allianz AGSE to change the composition of its asset portfolio covering its technical reserves or take other appropriate measures.

In addition, currently discussions on a new solvency regime for insurance companies in the EU (Solvency II) are ongoing. As those discussions are in a preliminary stage, its potential future impact for capital requirements can not currently be assessed. For more information, see “Information on the Company—Regulation“Regulation and Supervision.”

In addition, changes to tax laws may affect the attractiveness of certain of our products that currently receive favorable tax treatment. Governments in jurisdictions in which we do business may consider changes to tax laws whichthat could adversely affect such existing tax advantages, and if enacted, could result in a significant reduction in the sale of such products.

While our non-Euro assets and liabilities, and revenues and related expenses, are generally denominated in the same currencies, we do not generally engage in hedging transactions with respect to dividends or cash flows in respect of our non-Euro subsidiaries.

The share price of Allianz AGSE has been and may continue to be volatile.

The share price of Allianz AGSE has been volatile in the past and may continue to be volatile due in part to the high volatility in the securities markets generally, and in financial institutions’ shares in particular, as well as developments which impact our financial results. Factors other than our financial results that may affect our share price include but are not limited to: market expectations of the performance and capital adequacy of financial institutions generally; investor perception of as well as the actual performance of other financial institutions; investor perception of the success and impact of our strategy;strategy, including the acquisition of Assurances Générales de France S.A. (or “AGF”, and together with its subsidiaries, the “AGF Group”), a downgrade or rumored downgrade of our credit ratings; potential litigation or regulatory action involving the Allianz Group or any of the industries we have exposure to through our

insurance, banking and asset management activities; announcements concerning the bankruptcy or other similar reorganization proceedings involving, or any investigations into the accounting practices of, other insurance or reinsurance companies, banks or asset management companies; and general market volatility.

The benefits that Allianz AGSE may realize from the contemplatedcompleted merger with RAS S.p.A. and from Allianz AG’s conversion into a European Company (Societas Europaea) in connection therewith could be materially different from our current expectations.

The benefits that Allianz AGSE may realize from the merger with its Italian subsidiary, RAS S.p.A., and from Allianz AG’s conversion into a European Company (Societas(Societas Europaea,, or “SE”) SE) in connection therewith and the subsequent reorganization of its European operations could be materially different from our current expectations. For more information about this transaction and reorganization, see “Information on the Company – Allianz-RAS Merger /Company—Legal Structure:

Aktiengesellschaft in Berlin, Germany on February 5, 1890.1890 and converted to a European Company on October 13, 2006. Our registered office is located at KöniginstrasseKoeniginstrasse 28, 80802 Munich, Germany, telephone (49)(89)+49(0)89 3800-0. See “– Allianz-RAS Merger / European Company (SE)” for information on the conversion⁽¹⁾

The Allianz Group’s Business Model

As an integrated and globally operating financial services provider we are able to offer our clients considerable value by providing a wide range of Allianz AG into a European Company (SE) upon completion of the contemplated merger with Riunione Adriatica di Sicurtà S.p.A. (or “RAS”)insurance and finance products as well as extensive advisory capacity through our subsidiaries under strong and well-known brands. We operate and manage our activities primarily through four operating segments: Property-Casualty, Life/Health, Banking and Asset Management. We are well-positioned to become Allianz SE.anticipate and successfully respond to competitive forces within our various operations.

Property-Casualty and Life/Health Insurance Operations⁽²⁾

In our Property-Casualty segment, we provide a wide arrayour product range consists of, products, including, among others, individual motor, homeowners, travelinjury, liability, homeowner and other personal lines products.accident insurance. Furthermore, we are a leading provider of commercial and industrial coverage to enterprises of all sizes, including many of the world’s largest companies. Through our specialty lines of business,

launched two comprehensive programs for our insurance segments: the Sustainability Program and the Customer Focus Initiative. Under our Sustainability Program, we systematically search for the best practices in product and geographic market. Withinservice offerings, and processes across our primary marketorganization. The highest standard is then made obligatory for all Allianz Group companies. The objective of Germany,our Customer Focus Initiative is to take a more customer-oriented approach towards our product and service offerings, and our flexibility awareness. In addition, we rely predominantly on full-time tied agents. Our insurance products are marketed in Germany primarily under the “Allianz” brand name. In other countries, we operate through our subsidiary insurers’ brand names, which are identified as part of the Allianz Group.undertaking various reorganization measures.⁽¹⁾

Allianz AG, the parent company of the Allianz Group, acts asSE, the Allianz Group’s parent company, acts on an arm’s length basis as our reinsurer for almost allmost of our insurance operations, other than international industrial risks reinsurance. For the years ended December 31, 2005, 2004Allianz SE assumed 33.3%, 35.6% and 2003, Allianz AG assumed 39.6%, 37.6% and 39.1%, respectively,38.1% of all reinsurance ceded by Allianz Group companies whilefor the years ended December 31, 2006, 2005 and 2004, respectively. Allianz SE also assumes a relatively small amount of reinsurance from external cedents. We also cede risk to third-party reinsurers, of which Munich Re is our primary third-party reinsurer. partner.

Allianz AGSE also provides centralized advice to subsidiaries on structuring their own reinsurance programs and establishing lists of permitted reinsurers. In addition the Allianz Group through Allianz AG, has a pooling concept via Allianz SE in place whereby natural catastropheoffering reinsurance cover is offered to the Allianz Group’s subsidiaries allowing the Allianzagainst natural catastrophes, which provides Group to benefit from internal diversification effects. Allianz AG also assumes a relatively small amount of reinsurance from external cedents.

Please see the respective sections of “Operating and Financial Review and Prospects” for breakdowns of our insurance operations by geographic region,including gross premiums written, statutory premiums, earnings and various key performance indicators, as well as a description of our largest property-casualty and life/health markets and companies.benefits.

Banking Operations⁽²⁾

Our banking operations consist primarily of those

Investors”. In our institutional asset management business, we operate under the brand names of our investment management entities; AGIAllianz Global Investors serves as an endorsement brand. Please see “– International Presence” for a breakdown of selected operating entities within our primary markets and others.

We serve a comprehensive range of retail and institutional asset management clients. Our institutional clientscustomers include corporate and public pension funds, insurance and other financial services companies, governments and charities, and financial advisors and private individuals.advisors.

The particularUnited States and Germany as well as France, Italy and the Asia-Pacific region are our primary asset management markets.

Our distribution channels we use vary by product and geographic market. In Europe and in the United States, AGIAllianz Global Investors markets and services its institutional products through specialized personnel located primarily in its Frankfurt, London, Munich, Paris, and Milan, as well as San Francisco, San Diego and Newport Beach (California) offices. European retail distribution is provided primarily. Retail products in Europe are mostly distributed through the proprietary channels of the Allianz Group includingchannels such as branch bank advisors, full-time agents employed by affiliated insurance companies and other Allianz Group financial planners and advisors. With the merger of Deutscher Investment-Trust Gesellschaft für Wertpapieranlagen mbH (or “dit”) and dresdner bank investment management Kapitalanlagegesellschaft mbH (or “dbi”) into Allianz Global Investors Kapitalanlagegesellschaft mbH, we combined our institutional business with our retail business in Germany in order to implement the existing integrated asset management business model into one entity.

In the United States, AGIAllianz Global Investor’s local asset managers alsomanagement operating entities offer a wide range of retail products. AGI hasWe have committed substantial resources to the expansion of the third-party asset management business in the Asia-Pacific region with offices in Tokyo, Hong Kong, Shanghai, Singapore, Taipei, Seoul and Sydney. We expect this region to become an increasingly important market.

For a discussion ofIn the asset management business, we experience competition from all major international financial institutions and peer insurance companies that also offer asset management products and services and compete for retail and institutional clients.

Our competitive investment portfoliosperformance has resulted in the majority of our insurance, banking and asset management operations, which we refer to as “group’s own investments”, see “Operating and Financial Review and Prospects – Executive Summary – Allianz Group’s Consolidated Assets, Liabilities and Shareholders’ Equity – Group Asset Allocation.”third-party assets outperforming their respective benchmarks in 2006.