SE Königinstrasse 28, D-80802 Muenchen, Germany

AMB #: 085014 NAIC #: N/A AIIN#: AA-1340026

Phone: 49-89-3800-0 Fax: 49-89-3800-3425 Website: www.allianz.com

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Allianz SE

Credit Report

Report Release Date: Group Members Rating Effective Date: September 5, 2018 August 30, 2018

Disclosure Information: Refer to rating unit members for each company’s Rating Disclosure Form

Analytical Contacts

A.M. Best Europe - Rating Services Ltd.

Timothy Prince Catherine Thomas Director-Analytics Senior Director-Analytics [email protected] [email protected] +44 207 397 0320 +44 207 397 0281

Associated Ultimate Parent: 085449 - Allianz SE A.M. Best Rating Unit: 085014 - Allianz SE

Best's Credit Ratings for Group Members: Rating Effective Date: August 30, 2018 Best's Financial Best's Issuer Strength Ratings Credit Ratings AMB# Company Rating Outlook Action Rating Outlook Action 085014 Allianz SE Rating Unit 085449 Allianz SE A+ Stable Affirmed aa Stable Affirmed 002268 AGCS Marine Company A+ Stable Affirmed aa Stable Affirmed 093686 AWP Health & Life S.A. A+ Stable Affirmed aa Stable Affirmed 078025 AWP P&C S.A. A+ Stable Affirmed aa Stable Affirmed 087997 Allianz Global Corp & Spec SE A+ Stable Affirmed aa Stable Affirmed 093335 Allianz Global Corp & Special A+ Stable Affirmed aa Stable Affirmed 000407 Allianz Global Risks US Ins Co A+ Stable Affirmed aa Stable Affirmed 073713 Allianz Risk Transfer (BM) Ltd A+ Stable Affirmed aa Stable Affirmed 077703 Allianz Risk Transfer AG A+ Stable Affirmed aa Stable Affirmed 085309 Allianz S.p.A. A+ Stable Affirmed aa Stable Affirmed 002618 Allianz Underwriters Ins Co A+ Stable Affirmed aa Stable Affirmed 002176 American Automobile Ins Co A+ Stable Affirmed aa Stable Affirmed 002177 American Insurance Company A+ Stable Affirmed aa Stable Affirmed 002178 Associated Indemnity Corp A+ Stable Affirmed aa Stable Affirmed 002266 Chicago Insurance Company A+ Stable Affirmed aa Stable Affirmed 002097 Euler Hermes NA Insurance Co. A+ Stable Affirmed aa Stable Upgraded 001892 Fireman's Fund Indemnity Corp A+ Stable Affirmed aa Stable Affirmed 002717 Fireman's Fund Ins Co of HI A+ Stable Affirmed aa Stable Affirmed

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Best's Credit Ratings for Group Members: (Continued...)

Best's Financial Best's Issuer Strength Ratings Credit Ratings AMB# Company Rating Outlook Action Rating Outlook Action 002179 Fireman's Fund Insurance Co A+ Stable Affirmed aa Stable Affirmed 002267 Interstate Fire & Casualty Co A+ Stable Affirmed aa Stable Affirmed 004001 Jefferson Insurance Company A+ Stable Affirmed aa Stable Affirmed 002182 National Surety Corporation A+ Stable Affirmed aa Stable Affirmed

Rating Rationale: Balance Sheet Strength: Strongest

• Balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as a sophisticated and conservative capital management approach. • Strong liquidity and sound asset-liability management, enhanced by the capabilities of the group’s asset management division. • Financial flexibility is considered excellent, due to a track record of strong capital generation, moderate financial leverage, good coverage ratios and a good standing in capital markets. • Prudent reserving practices and a sophisticated programme for tail risk reduction. Operating Performance: Strong

• Track record of strong and stable operating performance, demonstrated by a ten-year (2008-2017) weighted average return on equity of 9.6% (as calculated by A.M. Best). • Diversified earnings profile by line of business and geography. Results are enhanced by asset management and investment income. • Strong performance in 2017 and the first half of 2018 from the three main business segments. • In spite of the high occurrence of natural catastrophes in the year, the property/casualty segment demonstrated a robust performance in 2017, reporting a combined ratio of 95.2%. • Despite pressure from the persisting low interest rate environment, operating performance is expected to remain strong over the medium term. Business Profile: Very Favorable

• Allianz SE (Allianz) is one of the largest insurance groups in the world, and it has excellent diversification by product and geography, with a mix of property/casualty, life/health and asset management businesses. • Despite a competitive environment, the group maintains leading positions in its core markets, helped by its vast scale, strong brand and technical excellence. • Solid revenue growth, with a 10-year compound annual growth rate of 2% over the period 2007-2017. In 2017, the group grew its revenue by 3% despite a significant negative foreign exchange translation effect. • The insurer is expected to remain one of the leading groups in the global insurance market, supported by its forward-looking business strategy and its drive to enhance the insurance value chain through digitalisation. Enterprise Risk Management: Very Strong

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• Sophisticated enterprise risk management (ERM) framework embedded throughout the organisation, resulting in a risk-aware culture at all levels. • Risk strategy and appetite form an integral part of business strategy formulation and planning, supported by forward-looking risk identification and stress testing. • Allianz is considered to have a relatively high risk profile, which is matched by its excellent risk management tools and capabilities. Outlook

The stable outlooks are underpinned by the expectation that risk-adjusted capitalisation will remain at the strongest level as measured by BCAR, supported by conservative capital management and excellent financial flexibility. The insurer is expected to remain one of the leaders in the global insurance market and to continue demonstrating a strong operating performance, supported by superior diversification by line of business and geography.

Rating Drivers

A sustained improvement of operating performance would result in positive rating pressure.

Significant weakening of risk-adjusted capitalisation would put negative pressure on the ratings.

A sustained deterioration of operating performance could result in negative rating actions.

Financial Data Notes:

Time Period: Annual - 2017 Status: A.M. Best Quality Cross Checked

Key Financial Indicators:

Key Financial Indicators (000) Year End 2017 2016 2015 2014 2013 Premiums Direct Premiums Written - combined ...... 72,186,000 70,253,000 68,772,000 Direct premiums written - non life ...... 47,638,000 45,238,000 43,967,000 Direct premiums written - life ...... 24,548,000 25,015,000 24,804,000 Gross premiums written - combined 77,345,000 76,331,000 76,724,000 73,883,000 72,051,000 Gross premiums written - non life 52,263,000 51,535,000 51,597,000 48,322,000 46,579,000 Net premiums written - combined 72,433,000 71,430,000 71,188,000 69,420,000 67,510,000 Net premiums written - non life 47,821,000 47,138,000 46,664,000 44,361,000 42,597,000 Net premiums written - life 24,613,000 24,291,000 24,524,000 25,058,000 24,913,000 Capital & Surplus 65,553,000 67,083,000 63,144,000 60,747,000 50,084,000 Total Assets 901,300,000 883,809,000 848,942,000 805,787,000 711,079,000 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

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Key Financial Indicators: (Continued...)

Key Financial Indicators - A.M. Best Ratios (%) Year End 2017 2016 2015 2014 2013 Combined Ratio 95.2 94.3 94.6 94.3 94.3 Net Premiums Written to Equity 110.5 106.5 112.7 114.3 134.8 Liquidity Liquid Assets to Total Liabilities 79.0 78.6 78.2 77.7 74.1 Total Investments to Total Liabilities 93.5 93.4 93.5 93.4 91.4 Source: Bestlink - Best's Statement File - Global

(*) Data reflected within all tables of this report has been compiled from the consolidated financial statements of this company (Source: Company Financial Statement).

Best's Capital Adequacy Ratio Summary - AMB Rating Unit (%) Confidence Level 95.0 99.0 99.5 99.6 BCAR Score 62.0 51.0 47.0 46.0 Source: Best's Capital Adequacy Ratio Model - Universal

Credit Analysis: Balance Sheet Strength: Strongest

The balance sheet strength of Allianz is underpinned by risk-adjusted capitalisation, which is comfortably at the strongest level, as measured by the BCAR. The group's high exposure to market risk (interest rate, equity and credit spread risk amongst others) is addressed by conservative capital management and sound asset-liability management practices, enhanced by the capability of its asset managers. Financial flexibility is considered excellent, due to a track record of strong capital generation, moderate financial leverage, good coverage ratios and a good standing in the capital markets. Balance sheet strength is also supported by prudent reserving and a sophisticated reinsurance programme for tail risk reduction. An offsetting factor is some constraints on capital fungibility - a typical regulatory impediment for life insurers - which is, however, mitigated by the group's strategy of maintaining excess liquidity at the holding company.

Capitalization:

The BCAR scores presented under the “Best's Capital Adequacy Ratio Summary” section of this report are based on Allianz's year-end 2017 consolidated audited financial statements.

Allianz's risk-adjusted capitalisation (RAC) is expected to remain at the strongest level, as measured by the BCAR, with strong earnings generation and retention likely to offset an increase in capital requirements due to business growth. As a result of Allianz's considerable life operations in Europe and the United States, it manages a large balance sheet and is exposed to considerable market risk, which subjects RAC to potential volatility. However, the group's conservative capital management approach, which incorporates significant capital buffers, as well as its prudent risk management practices, reduce the likelihood of RAC falling below the strongest level.

The overall quality of the group's capital is supportive of the strongest balance sheet strength assessment, in spite of the significant volume of soft elements included in adjusted capital and surplus in BCAR, such as a credit for the value of in-force business.

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Capitalization: (Continued...)

In 2014, Allianz revised its dividend policy to allocate net income after tax as follows: 50% for regular payment to shareholders, 20% to fund external growth, 20% to fund internal growth and 10% as a buffer for corporate purposes. This was modified during 2017, with the regular pay-out remaining 50% of net income, but with the use of the other 50% of net income becoming more flexible. The group has committed to maintain the dividend per share at least at the level paid in the prior year. In line with its dividend policy and due to the external growth budget being largely unused, the company implemented several share buybacks in 2017 and 2018, totaling EUR 6 billion.

Allianz has a robust record of capital growth over its recent history, with its total capital (including minority interest) increasing at a 10-year compound annual growth rate of 7% over the period 2007-2017. Financial flexibility is considered excellent due to Allianz's track record of successfully accessing capital markets, its moderate debt leverage and good interest coverage ratios. As at 2017 year-end, Allianz held EUR 8.5 billion of senior debt and EUR 13.3 billion of subordinated debt on its balance sheet.

Allianz retains the vast majority of its underwriting risks. The group's outwards reinsurance largely relates to fronting business and to coverage for reduction of peak risks. Outwards reinsurance purchasing is relatively sophisticated and is centralised through Allianz Re, a business unit within Allianz SE.

Sophisticated capital management is a positive factor for the balance sheet strength assessment. Capital management guidelines relating to its Solvency Capital Requirement (SCR) under Solvency II (SII) are published, with the group defining its target range as between 180% and 220%. According to its guidelines, a dip in the SCR ratio below 160% would trigger an adjustment to group's dividend policy, and a fall below 145% would lead to capital actions. As at second quarter of 2018 Allianz's SII ratio was above its target range at 230%.

As a part of the group's capital management strategy, additional capital is maintained at the group level in liquid funds. These funds fluctuate between EUR 4-5 billion and are available to support subsidiaries when their individual RAC is under pressure.

Over time, A.M. Best expects the group's SII ratio to benefit from discontinuation of capital intensive business.

Capital Generation Analysis (000) Year End 2017 2016 2015 2014 2013 Capital & surplus brought forward 70,135,000 66,099,000 63,702,000 52,849,000 52,963,000 Change in share capital ...... 59,000 55,000 Change in non-distributable reserves 41,000 2,000 63,000 -1,000 -2,000 Change in other reserves -3,340,000 35,000 243,000 -41,000 -20,000 Currency exchange gains -1,986,000 164,000 1,050,000 1,336,000 -1,239,000 Profit or loss for the year 7,207,000 7,329,000 6,987,000 6,603,000 6,343,000 Capital gains or (losses) 344,000 910,000 -2,997,000 7,176,000 -3,381,000 Dividend to shareholders -3,661,000 -3,646,000 -3,382,000 -2,716,000 -2,303,000 Other changes -138,000 -758,000 433,000 -1,563,000 433,000 Total change in capital & surplus -1,533,000 4,036,000 2,397,000 10,853,000 -114,000 Capital & surplus carried forward 68,602,000 70,135,000 66,099,000 63,702,000 52,849,000 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Asset Liability Management – Investments:

In line with the geographical split of its insurance business, the majority of Allianz's fixed-income portfolio is invested in European bonds and loans, the vast majority of which are of investment-grade. Allianz's exposure to sovereign bonds issued by Spain, Greece, Ireland, Portugal and Italy has significantly reduced in recent years. Of these countries, Italy and Spain represent the largest exposures with shares of 3.9% and 1.9% respectively of the overall debt instruments portfolio as at 2017 year end.

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Asset Liability Management – Investments: (Continued...)

In A.M. Best's view, Allianz has ample resources to meet its liquidity needs. The majority of its investment portfolio consists of highly rated fixed income securities, which are easily marketable. Cash flow requirements are constantly monitored on a group-wide basis, and the group's subsidiaries benefit from access to a group-wide cash pooling facility. Allianz's active asset-liability management minimises its liquidity risks.

Reserve Adequacy:

Allianz prudently sets its reserves in line with best market practices. Over the last ten years, P/C reserves for the majority of the group's accident years have developed positively.

Operating Performance: Strong

Allianz has an excellent record of strong and stable overall results over an extended period of time, supported by highly diversified operations. The group has failed to report an overall profit on only two occasions in the past fifteen years and only once in the past ten years. During this period the group has been exposed to numerous large insured losses and severe macro-economic crises. In 2017, the group reported a return on equity (RoE) (including minority interest) of 10.8%, which is higher than its 5 year and 10 year average RoE of 9.6%. Net income for the year slightly decreased to EUR 7.2 billion while its capital decreased by 2% to EUR 68.6 billion (including minority interests) following share buybacks. This resulted in a relatively flat RoE compared to the prior year. Allianz has set itself a target RoE for 2018 of 13% (excluding unrealised capital gains/losses on bonds), and, based on the financial results for the first half of 2018, is on track to achieve it.

The group's operating profits are typically well diversified by business unit. In 2017, the group's net income after tax of EUR 7.2 billion was divided between P/C 56%, L/H 44%, asset management 23%, and corporate and other (including effects of consolidation) minus 16%. The prolonged low interest rate environment is having a negative impact on Allianz's investment yield, which continues to fall. However, strong performance of its insurance operations partly alleviates pressure to increase risk appetite in order to improve investment yield. Allianz's asset management operations provide solid cash flows and operating profits that are not directly correlated with the results of its insurance businesses.

A.M. Best expects Allianz to continue to report a strong performance for the foreseeable future. Challenging conditions in one of the group's major markets has the potential to negatively impact the group's overall earnings in the short term, with Europe-wide economic volatility likely to have the largest impact. However, over the longer-term, diversified and uncorrelated revenue streams are expected to support the maintenance of strong and relatively stable earnings.

Underwriting Results

Allianz's P/C and L/H divisions have both generated a good level of underwriting earnings in each of the past fourteen years. Owing to the group's focus on profitability, A.M. Best expects underwriting performance to remain at a strong level for the foreseeable future. Modest positive and negative variations are likely due to the group's wide-ranging exposures, but these are not expected to be material.

- - Property / Casualty - -

Allianz's P/C combined ratio of 95.2% in 2017 was slightly above the 5-year weighted average combined ratio of 94.6%, but remained under the 10-year weighted average combined ratio of 95.8%. Profitability was slightly affected by natural catastrophe losses, which contributed 2.4 percentage points to the combined ratio, above the 5-year average of 1.8. The entities making the largest contribution to operating profit included Germany, Italy, France and Euler Hermes, which together accounted for 56% of overall P/C operating profit.

The majority of Allianz's reported business units generated favourable combined ratios during 2017. Of note were Germany and Italy, which together accounted for over one-quarter of P/C GWP and recorded combined ratios of 95.3% and 80.8%, respectively. AGCS was notably affected by natural catastrophe losses and reported a combined ratio of 105.2%. The United Kingdom also reported an underwriting loss, with loss reserve strengthening associated with the personal injury discount rate change pushing the combined ratio up to 100.4%.

The expense ratio has been stable in recent years at approximately 28%. This is not expected to change materially and prospective variation in the group's combined ratio is most likely to come from the impact of large claims, catastrophe events or sustained improvement in pricing.

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In recent years, Allianz has had only a small number of P/C business units with poor performance track records. Of these the US, Russia, Turkey and Latin America (LATAM) have been the most significant. Allianz has taken action to address its under-performing business units either by selling them, closing them or by instructing new management. Challenges with the group's LATAM operations, which represent only a small proportion of Allianz's business, are due to macro-economic issues in various countries and may take several years to address. In the US, a significant restructuring of the group's Fireman's Fund business unit took place during 2015 and improved results are expected over the coming years.

- - Life / Health - -

Allianz's L/H operating profit increased by EUR 0.1 billion in 2017 to EUR 4.4 billion. This follows an increase of EUR 0.3 billion in the prior year. The improvement was driven by a better technical margin and higher fee income. The group's L/H results are heavily reliant on the performance of its business units in Germany, France and the US, which together have accounted for above two thirds of L/H operating profit in each of the past four years. These are distinct mature life markets where the group has a strong and sustainable competitive position.

Persistence of the low interest rate environment would add negative pressure to the profitability of Allianz's L/H operations. Although the group is actively selling new capital efficient products with lower guarantees, it carries reserves for a large volume of business with material embedded guarantees.

The basis of Allianz's Market Consistent Embedded Value (MCEV), a measure of the shareholders' economic value of in-force life and pension business, changed in 2015 to better reflect Solvency II principles. In 2017, MCEV increased by 14% to EUR 36.2 billion driven by a 42% increase in the Value In Force (VIF), largely relating to business in the German speaking countries and the USA. This was largely a result of a higher contribution of new (more profitable) business mix and narrowing of credit spreads.

The group's Value of New Business (VNB) increased by 30% to EUR 1.8 billion in 2017, driven by improvements from most operating entities. The New Business Margin (NBM) increased by 70 basis points to 3.4% in 2017, due to the group's strategy of steering away from traditional savings towards capital efficient products, as well as lower rates of guarantees in the new traditional business. In addition, the NBM benefited from slight recovery of interest rates and reduction of volatility across all regions during the year.

Investment Results

In recent years Allianz has lowered the risk of its fixed income portfolio by actively managing its sovereign bond investments and reducing its investment exposure to the banking sector. At the same time, the group has increased its exposure to real assets (including equities, real estate, infrastructure and renewable energy). Allianz's investment strategy is coordinated by Allianz Investment Management (AIM), which seeks to enhance the group's capability to invest proactively on a global scale. AIM aims to contribute to capital efficiencies by achieving optimum risk-adjusted returns. AIM sets guidelines for the whole group regarding maximum exposure. Of the group's invested assets, approximately 15 to 20% are expected to be placed into real assets over the medium term. While these assets are generally more risky and are likely to attract higher capital changes than traditional fixed income investments, they allow the group to match their liabilities with assets that generate relatively high returns.

Principally as a result of declining global interest rates, Allianz's investment return (excluding capital gains) declined to 2.8% in 2017 from 2.9% in 2016, 3.0% in 2015, 3.2% in 2014 and 3.3% in 2013. This downward trend is expected to gradually flatten as interest rates edge up in developed markets. Capital gains have been beneficial to Allianz's overall investment return in each of the past 5 years. Although an increase in global interest rates is likely to benefit the group's reinvestment rate, it may have a negative impact on its shareholders' equity in the short term, through unrealised losses on available-for-sale securities.

Financial Performance Summary (000)

Year End 2017 2016 2015 2014 2013 Pre-Tax Income 10,148,000 10,413,000 10,196,000 8,848,000 9,643,000 Net income (after noncontrolling interests) 6,803,000 6,962,000 6,616,000 6,222,000 5,996,000 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Page 8 of 18 Print Date: October 24, 2018 Credit Analysis 085014 - Allianz SE

A.M. Best Ratios (%) Year End 2017 2016 2015 2014 2013 Overall Performance: Return on Assets 0.9 1.0 1.0 1.0 1.0 Return on Equity 10.3 10.7 10.7 11.2 11.9 Non-Life Performance: Loss & LAE Ratio 66.5 65.6 66.2 66.0 65.9 Expense Ratio 28.7 28.7 28.4 28.3 28.4 Combined Ratio 95.2 94.3 94.6 94.3 94.3 Combined less Investment Ratio 89.9 88.9 88.7 88.3 87.5 Source: Bestlink - Best's Statement File - Global

Combined Ratio (%)

100 94.3 94.3 94.6 94.3 95.2

80 65.9 66.0 66.2 65.6 66.5 60

40 28.4 28.3 28.4 28.7 28.7

20

0 2013 2014 2015 2016 2017

- Combined Ratio - Loss & LAE Ratio - Expense Ratio

Business Profile: Very Favorable

Allianz maintains a very favorable business profile as a leading global financial services provider, offering life and non-life insurance products, as well as asset management services. It is one of the largest insurance groups in the world, writing gross written premiums of EUR 77.3 billion and total revenues of EUR 126.1 billion against shareholders' equity of EUR 65.6 billion in 2017.

The group's vast scale and substantial global resources stand it apart from all but a small number of global competitors. Revenue and earnings are highly diversified by geography, by operating unit and by line of business. Although developed western insurance markets account for a significant proportion of Allianz's revenue, no single market is critical to its success. Excellent diversification enables the group to withstand challenges as they occur and reduces the likelihood that a disturbance in any particular market will impact its overall financial performance. In 2017, the group's largest markets by revenue were Germany (27%), Italy (12%), France (10%), the United States (8%) and Allianz Global Corporate and Specialty SE (AGCS) (6%). No other single country accounted for more than 5%. Within the majority of developed insurance markets, the group offers a wide range of products, with business often split between life and non-life insurance operations. The United States (US) is a notable exception of this, where the group has a robust position in the life savings sector but is

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virtually absent from P/C personal lines market. In addition to its insurance operations, Allianz benefits from a strong global asset management platform, which accounted for 5% of its total revenue and 22% of its operating profit in 2017.

One competitive advantage of Allianz lies in its ability to adjust to local markets through high quality local management and internal knowledge sharing. Furthermore, the group has centralized its global product lines and corporate business within AGCS, its global affinity business within Allianz Partners (AzP) and its global risk accumulation management and reinsurance business within Allianz Re. Centralizing major business functions allows the group to concentrate its expertise and improve efficiencies.

Allianz maintains a leading competitive position in numerous insurance markets around the world and its brand is recognized globally. This is often an advantage for the group's new ventures. The Allianz brand is utilized for the majority of the group's business, with exception of Euler Hermes (a global credit insurer) and PIMCO (a leading asset manager).

A.M. Best views Allianz's management quality positively. The competence of management has been demonstrated through a track record of consistent and strong performance, in line with set targets. The group's CEO retired in May 2015 and was replaced by Oliver Baete, an existing member of the senior management team who has been with the group since 2009.

Notable recent developments include the completion of the buyout of Euler Hermes Group S.A. (Euler Hermes), a global credit insurer, of which Allianz already owned 63%, as well as the formation of a joint venture with Liverpool Victoria Friendly Society (LV=), a U.K. personal lines insurer. The Euler Hermes buyout helps to grow the group's presence in P/C and provides diversification benefits. The LV= joint venture seeks to increase the group's share in the U.K. P/C market, a segment where Allianz was previously underweight.

In the final months of 2015 Allianz announced a three-year strategic plan. Along with articulating the group's longer term aspirations, it also quantified targets relating to growth, performance, capital management and customer relations. The strategy, which reinforced the group's ambitions to overhaul the mix of new life insurance products, has been implemented successfully. Management is expected to announce a new three-year strategic plan in late 2018.

Allianz reports three main business segments: Property/Casualty (P/C), Life/Health (L/H) and Asset Management (there is also one smaller segment named Corporate and Other). In 2017, the group's total revenue was split between these segments as follows: P/C 42%, L/H 53%, and Asset Management 5%.

- - Property/Casualty - -

Allianz's P/C division reported gross written premiums (GWP) of EUR 52.3 billion in 2017, a slight increase from the prior year. Adjusting for the impact of foreign exchange translation effects, growth of approximately 2.3% was in line with experience in the prior year. The group reports details of its P/C operations separately for some of its major operating units, which include:

Germany (19% of P/C GWP), Allianz Global Corporate and Specialty (AGCS) (global markets and corporate business) (14%), Italy (9%), France (8%), Allianz Partners (business-to-business-to-client business) (9%), Australia (6%), UK (5%), Spain (5%), credit insurance (via Euler Hermes) (4%), and Latin America (4%). Combined, these major business units accounted for over four-fifths of the group's P/C GWP.

Allianz has developed a strong competitive position in many primary P/C insurance markets across Europe, Asia and numerous emerging markets. The combination of excellent diversification and strong competitive positioning allows Allianz to better absorb the impact of insurance cycles in individual insurance markets. Allianz operates as a domestic insurer in all of its major markets, with experienced local management teams.

Allianz's global P/C insurance business is predominantly managed via subsidiaries AGCS, Allianz Partners and Euler Hermes. AGCS is responsible for the group's corporate business and all global insurance lines (such as aviation, energy and marine risks). Although nearly half of AGCS's premium revenue emanates from North America, it has a well-diversified book of business. The business unit has a strong competitive position globally. However, it has been affected by a deterioration in market conditions due to an influx of capacity.

Allianz Partners (previously Allianz Worldwide Partners) consolidates the group's global assistance (for example motor and travel assistance products) and international medical insurance business. Historically, this business has experienced strong profitable growth and Allianz Partners is considered important to the group's strategic vision, due in part to its role in providing complimentary services to Allianz customers to improve overall customer satisfaction.

Euler Hermes offers on a global basis and is a market leader in its niche.

Growth of Allianz's P/C business is expected to be driven by development of the group's competitive position in mature markets and by expansion in growth markets. Considering the wide scope of Allianz's P/C operations, challenges in individual markets are unlikely to negatively impact the prospects of the overall group.

- - Life / Health - -

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Allianz's L/H division registered statutory gross written premiums (SGWP) of EUR 67.3 billion and net earned premiums (NEP) reported under International Financial Reporting Standards (IFRS) of EUR 24.2 billion in 2017. SGWP includes all premium revenue of life operations whereas IFRS figures do not include revenue from capital-light savings products which carry little or no insurance risk. IFRS and statutory figures grew by approximately 2% and 4%, respectively, compared to the prior year.

The growth in SGWP was mainly attributable to capital-efficient and unit-linked products sales in Germany, Italy and France, partially offset by the reduction of fixed-indexed annuity business in the U.S.

The group's life operations have a good level of geographic diversification in spite of some concentration in Europe (over 70% of statutory premium revenue). Germany is the group's most significant L/H market, accounting for 31% of total life revenue. In Germany the group has an excellent competitive position and benefits from diversification between life (86% of German life revenue) and health insurance (14%). Allianz Lebensversicherungs-AG, the group's principal life operating entity within Germany, is a material part of the group, managing policyholder reserves of over EUR 180 billion, approximately one third of the group's total life reserves. Allianz's other major life insurance markets include Italy (17% of statutory premium revenue), the United States (14%), and France (13%). The group maintains a strong competitive position in each of these markets.

Allianz has focused on reducing its exposure to capital-intensive life insurance products across its portfolio for several years. As a result, in 2017, approximately 76% of new business was attributable to capital-light products. Although there remain significant challenges to overcome, A.M. Best believes that Allianz is positioning itself well to manage what is likely to be a prolonged period of low interest rates and market volatility.

- - Asset Management - -

Allianz is one of the largest fund managers in the world, with assets under management (AuM) of EUR 2 trillion as at 2017 year end. Of the total AuM, a little over one quarter related to assets of the Allianz group, with the remainder being third party assets.

Allianz operates on a global basis with investment and distribution capacities in all major markets. Pacific Investment Management Company LLC (PIMCO) is the group's largest fund manager, accounting for approximately 77% of its third party AuM. The remaining third party AuM is managed by (AllianzGI). Allianz encountered significant challenges at PIMCO during 2014 and 2015, when its founder and Chief Investment Officer resigned from the company. This resulted in large net AuM outflows. Although the effects of foreign exchange translation and asset appreciation have been positive and have offset AuM net outflows, significant resources have been invested and a new CEO was announced in July 2016 in order to stabilize the company. Net AuM outflows amounted to EUR 28 billion during 2016. However, during 2017 this trend reversed and the segment reported third-party net inflows of EUR 150 billion for the year.

Enterprise Risk Management: Very Strong

Allianz has a sophisticated enterprise risk management framework that is embedded throughout the organisation. The group's relatively high risk profile is matched by superior risk management tools and capabilities. The risk culture is well-developed and entrenched throughout the organisation. All of the group's operating entities have self-sufficient appropriate ERM functions, and there is an additional layer of oversight from the group.

The group has well-defined quantitative and qualitative risk appetite statements, covering its solvency and material risk exposures. The risk appetite forms an integral part of the business planning process, which is usually done for three years, translated into financial and non- financial targets, Solvency II ratios and risk limits.

At the core of the group's ERM is the internal capital model, which is fully integrated in the insurer's business strategy and used for key decisions, such as dividend policy, risk and business strategy, asset allocation. The group has a well-defined capital management policy, with associated management actions. A comprehensive stress testing framework substantiates the business strategy, supporting a forward- looking risk assessment approach.

Page 11 of 18 Print Date: October 24, 2018 Credit Analysis 085014 - Allianz SE

Financial Statements:

Balance Sheet:

Balance Sheet:

Assets 12/31/2017 12/31/2017 12/31/2017 EUR(000) % of total USD(000) Cash & deposits with credit institutions 12,150,000 1.3 14,556,186 Bonds & other fixed interest securities 474,925,000 52.7 568,979,147 Shares & other variable interest instruments 53,866,000 6.0 64,533,623 Assets held to cover linked liabilities 119,141,000 13.2 142,735,684 Liquid assets 660,082,000 73.2 790,804,639 Mortgages & loans 98,796,000 11.0 118,361,560 Real Estate 11,419,000 1.3 13,680,419 Inter-company investments 9,010,000 1.0 10,794,340 Other investments 2,461,000 0.3 2,948,376 Total investments 781,768,000 86.7 936,589,335 Reinsurers' share of technical reserves - unearned premiums 1,504,000 0.2 1,801,852 Reinsurers' share of technical reserves - claims 9,587,000 1.1 11,485,609 Reinsurers' share of technical reserves - life 5,158,000 0.6 6,179,490 Reinsurers' share of technical provisions - other 126,000 ... 150,953 Total reinsurers share of technical reserves 16,375,000 1.8 19,617,905 Deposits with ceding companies 836,000 0.1 1,001,561 Insurance/reinsurance debtors 17,269,000 1.9 20,688,953 Total debtors 17,269,000 1.9 20,688,953 Prepayments & accrued income 24,760,000 2.7 29,663,470 Other assets 17,009,000 1.9 20,377,462 Banking/real estate assets 43,283,000 4.8 51,854,765 Total assets 901,300,000 100.0 1,079,793,452

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Balance Sheet: (Continued...)

Balance Sheet: (Continued...)

Liabilities 12/31/2017 12/31/2017 12/31/2017 EUR(000) % of total USD(000) Capital 1,170,000 0.1 1,401,707 Paid-up capital 1,170,000 0.1 1,401,707 Non-distributable reserves 37,184,000 4.1 44,547,919 Retained earnings 27,199,000 3.0 32,585,490 Capital & surplus 65,553,000 7.3 78,535,116 Minority interests 3,049,000 0.3 3,652,824 Gross provision for unearned premiums 17,039,000 1.9 20,413,404 Gross provision for outstanding claims 62,093,000 6.9 74,389,898 Gross provision for outstanding claims - life 11,199,000 1.2 13,416,850 Gross provision for long term business - life 517,104,000 57.4 619,511,276 Gross provision for linked liabilities - life 119,141,000 13.2 142,735,684 Gross provision for other technical reserves 984,000 0.1 1,178,871 Total gross technical reserves 727,560,000 80.7 871,645,982 Other borrowings 87,000 ... 104,229 External borrowings 87,000 ... 104,229 Deposits received from reinsurers 2,025,000 0.2 2,426,031 Insurance/reinsurance creditors 7,777,000 0.9 9,317,157 Total creditors 7,777,000 0.9 9,317,157 Accruals & deferred income 4,649,000 0.5 5,569,688 Other liabilities 41,286,000 4.6 49,462,279 Banking/real estate liabilities 49,314,000 5.5 59,080,145 Total liabilities & surplus 901,300,000 100.0 1,079,793,452 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Page 13 of 18 Print Date: October 24, 2018 Credit Analysis 085014 - Allianz SE

Summary of Operations:

Statement of Income (000)

General technical account: 12/31/2017 12/31/2017 EUR(000) USD(000) Gross premiums written 52,263,000 62,613,165 Reinsurance ceded 4,442,000 5,321,694 Net premiums written 47,821,000 57,291,471 Increase/(decrease) in gross unearned premiums 579,000 693,665 Net premiums earned 47,242,000 56,597,806 Other technical income 1,616,000 1,936,033 Total underwriting income 48,858,000 58,533,838 Net claims paid 30,778,000 36,873,275 Net increase/(decrease) in claims provision 647,000 775,132 Net claims incurred 31,425,000 37,648,407 Management expenses 3,259,000 3,904,412 Acquisition expenses 10,278,000 12,313,455 Net operating expenses 13,537,000 16,217,867 Other technical expenses 1,994,000 2,388,892 Total underwriting expenses 46,956,000 56,255,166 Balance on general technical account 1,902,000 2,278,672 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Life technical account: 12/31/2017 12/31/2017 EUR(000) USD(000) Gross premiums written 25,212,000 30,204,984 Reinsurance ceded 599,000 717,626 Net premiums written 24,613,000 29,487,359 Increase/(decrease) in gross unearned premiums 428,000 512,761 Net premiums earned 24,185,000 28,974,597 Net investment income 15,273,000 18,297,665 Realised capital gains/(losses) 5,333,000 6,389,147 Unrealised capital gains/(losses) -634,000 -759,557 Other technical income 1,454,000 1,741,950 Total revenue 45,611,000 54,643,802 Net claims paid 19,797,000 23,717,598 Net claims incurred 19,797,000 23,717,598 Net increase/(decrease) in long term business provision 13,938,000 16,698,282 Management expenses 1,858,000 2,225,958 Acquisition expenses 4,707,000 5,639,174 Net operating expenses 6,565,000 7,865,133

Page 14 of 18 Print Date: October 24, 2018 Credit Analysis 085014 - Allianz SE

Summary of Operations: (Continued...)

Statement of Income (000) (Continued...)

Life technical account: 12/31/2017 12/31/2017 EUR(000) USD(000) Other technical expenses 700,000 838,628 Total expenses 41,000,000 49,119,640 Balance on long-term technical account 4,611,000 5,524,162 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Combined technical account: 12/31/2017 12/31/2017 EUR(000) USD(000) Gross premiums written 77,345,000 92,662,404 Reinsurance ceded 4,912,000 5,884,772 Net premiums written 72,433,000 86,777,631 Increase/(decrease) in gross unearned premiums 1,006,000 1,205,228 Net premiums earned 71,427,000 85,572,403 Net investment income 15,667,000 18,769,693 Realised capital gains/(losses) 5,402,000 6,471,812 Unrealised capital gains/(losses) -688,000 -824,252 Other technical income 3,070,000 3,677,983 Total revenue 94,878,000 113,667,639 Net claims paid 50,570,000 60,584,883 Net increase/(decrease) in claims provision 647,000 775,132 Net claims incurred 51,217,000 61,360,015 Net increase/(decrease) in long term business provision 13,937,000 16,697,083 Net increase/(decrease) in other technical provisions 429,000 513,959 Management expenses 5,197,000 6,226,214 Acquisition expenses 14,985,000 17,952,629 Net operating expenses 20,182,000 24,178,843 Other technical expenses 2,209,000 2,646,470 Total underwriting expenses 87,974,000 105,396,371 Balance on combined technical account 6,904,000 8,271,268 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Non-technical account: 12/31/2017 12/31/2017 EUR(000) USD(000) Net investment income 2,889,000 3,461,138 Realised capital gains/(losses) 1,051,000 1,259,140

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Summary of Operations: (Continued...)

Statement of Income (000) (Continued...)

Non-technical account: 12/31/2017 12/31/2017 EUR(000) USD(000) Unrealised capital gains/(losses) -185,000 -221,637 Other income/(expense) -511,000 -612,198 Profit/(loss) before tax 10,148,000 12,157,710 Taxation 2,941,000 3,523,436 Profit/(loss) after tax 7,207,000 8,634,274 Dividend to shareholders 3,410,000 4,085,316 Exceptional income/(expense) -3,281,000 -3,930,769 Minority interests 404,000 484,008 Retained Profit/(loss) for the financial year 112,000 134,180 Retained Profit/(loss) brought forward 27,087,000 32,451,309 Retained Profit/(loss) carried forward 27,199,000 32,585,490 Source: Bestlink - Best's Statement File - Global Local Currency: Euro US $ per Local Currency Unit 1.19804 = 1 Euro (EUR)

Page 16 of 18 Print Date: October 24, 2018 Company Information 085014 - Allianz SE

Allianz SE

Report Revision Date: September 19, 2018

Company Attributes:

Industry: Insurance Business Type: Composite Entity Type: Operating Company Organization Type: Stock Business Status: In Business - Actively Underwriting Marketing Type: Not Available

Company History:

Date Incorporated: N/A Date Commenced: 1890 Domicile: Germany

The holding company of the group was licensed as Allianz Versicherungs-Aktiengesellschaft on January 13, 1890 in Berlin, Germany, and registered on February 5, 1890. Its initial capital totalled EUR 2,045,000. Shares were first quoted December 12, 1895 on the Berlin Stock Exchange. In 1949, the company moved its headquarters from Berlin to Munich. The group began as a specialty carrier for personal accident business and rapidly expanded into other property/casualty lines of business. In 1922, the group entered the life insurance market. While Allianz established branch offices in other European countries, it was not until 1976 that it established Allianz of America and began its global expansion. In 1984, Allianz acquired an interest in Riunione Adriatica de Sicurta (RAS), a major Italian insurance group. In 1986, Cornhill Insurance PLC, London was acquired. Fireman's Fund Insurance companies were added to the group in 1990. Starting in 1995, Allianz and began to unwind some of their crossholdings allowing each group to consolidate increased shares in their assets. Hermes Kreditversicherungen, a leading credit insurer, was acquired in 1996 through an exchange of shareholdings with Munich Re.

In 1998, the Allianz Group purchased 51% of Assurances Generales de France (AGF) via a tender offer supported by AGF. Shareholders were offered the choice of an outright sale of their shares or the right to sell their shares at a later date, with the sales price contingent on specific conditions. The offer was successful. In 2007 Allianz SE announced the minority buyout in AGF.

In 2006 Allianz changed its legal form to a Societas Europaea and was from then on named Allianz SE. The parent company became the first company in the Dow Jones EURO STOXX 50 Index to adopt that new European legal form for stock corporations. Allianz SE remains headquartered in Munich, Germany. With more than 140 thousand employees worldwide (as of December 2017), the Allianz Group serves more than 85 million customers in over 70 countries.

Regulatory:

Auditor: KPMG AG Wirtschaftsprüfungsgesellschaft

An independent audit of the company's affairs through December 31, 2017, was conducted by KPMG AG Wirtschaftsprüfungsgesellschaft.

Additional Resources:

Related News Rating Activity and Announcements Company Overview

Page 17 of 18 Print Date: October 24, 2018 Company Information 085014 - Allianz SE

Additional Resources: (Continued...)

Archived Best's Credit Report Corporate Changes & Retirements BestAlert Service Best's Credit Ratings Mobile Application

A Best's Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance obligations. The ratings are not assigned to specific insurance policies or contracts and do not address any other risk, including, but not limited to, an insurer's claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. A Financial Strength Rating is not a recommendation to purchase, hold or terminate any insurance policy, contract or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser.

A Best's Issue/Issuer Credit Rating is an opinion regarding the relative future credit risk of an entity, a credit commitment or a debt or debt-like security.

Credit risk is the risk that an entity may not meet its contractual, financial obligations as they come due. These credit ratings do not address any other risk, including but not limited to liquidity risk, market value risk or price volatility of rated securities. The rating is not a recommendation to buy, sell or hold any securities, insurance policies, contracts or any other financial obligations, nor does it address the suitability of any particular financial obligation for a specific purpose or purchaser.

In arriving at a rating decision, A.M. Best relies on third-party audited financial data and/or other information provided to it. While this information is believed to be reliable, A.M. Best does not independently verify the accuracy or reliability of the information. Any and all ratings, opinions and information contained herein are provided "as is," without any express or implied warranty.

Visit http://www.ambest.com/ratings/notice.asp for additional information or http://www.ambest.com/terms.html for details on the Terms of Use.

Page 18 of 18 Print Date: October 24, 2018