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Allianz Annual Report 2012

Mexico In Mexico, our company ­Allianz México, S.A. Compañía de Seguros sells property-casualty and life/health products. We have a solid position in the Mexican commercial and personal market segments with distribution primarily ­carried out by brokers. Our Mexican unit recorded stronger than average growth in recent years, most notably in life/ healthproductlines.WeviewMexicoasanattractivemarket due to its strong market growth and regulatory effective- ness and see potential for growth in insurance demand. Insurance USA United States Our property-casualty insurance business in the United States is conducted through Fireman’s Fund Insurance Company (FFIC). Our life and annuity business is managed through ­Allianz Life Insurance Company of North America (Allianz Life U.S.). Through FFIC, we underwrite personal and commercial lines, selling these products through independent agents and brokers. We also participate in a crop insurance pro- gram through a reinsurance arrangement. Our personal business unit focuses on affluent and high-net-worth indi- viduals while our commercial business unit offers special- ized property-casualty coverage for small and medium- sized businesses. FFIC is one of the few carriers in the United States that has a nationwide personal and commer- cial lines presence. While the first half of 2012 was a benign year in the U.S. property-casualty insurance market, the second half was impacted by a severe drought in the Midwest as well as Storm Sandy that hit the East Coast. At FFIC ongoing portfo- lio action to address profitability concerns and change the business mix led to a shrinking portfolio during 2012. In addition, the state of the economy, the low interest rate ­environment and only moderate price increases continued to put pressure on profits. Finally, adverse loss emergence in liability lines led to significant reserve increases, resulting in a challenging year for the company. Insurance USA C 007 Selected markets  Motor/non-motor as % of total property-casualty gross premiums Traditional/ investment-oriented as % of total life statutory premiums Statutory/gross premiums written Operating profit Number of customers  Proprietary net­works Number of brokers Number of employees € mn € mn mn thou thou thou United States IV. 95 %5 % III. 13 % 87 % 10,839 (93) 1.2 – 137.2 4.6 ◼  Property-Casualty  ◼  Life/Health Market position by gross premiums written:  I. Position 1  II. Position 2 to 5  III. Position 6 to 10  IV. Not in the top 10 Our life and annuity business primarily underwrites fixed, fixed-indexed and variable annuities, and fixed-indexed universal life insurance products which are sold through independent distribution channels, as well as large finan- cial institutions such as banks and wire houses. Redesign activity across product categories continued within the industry in 2012 and business dynamics were impacted by new competitors as well as shifts in the market leader peer group. In this environment, we continued to create and ­offer value-added products to help our customers address their financial needs, particularly in the retirement market. Our flexible fee structures and profitability management levers again allowed us to respond to the difficult market conditions which persisted in 2012. As a result, our life and annuity insurance business performed well overall and we were able to expand both product portfolio and distribu- tion partnerships. A restructuring of the reinsurance program for crop insur- ance business will reduce our expected premiums for this business line in 2013. Also, given the uncertain economic climate and further portfolio action, we expect an overall decrease in our U.S. property-casualty business in 2013. However focusing on niche markets, enhancing customer service and improving FFIC’s core underwriting strength should allow us to better position ourselves in this com- petitive market over time. C Group Management Report Your Allianz 93 Business Operations and Markets 106 Our Strategy 109 Our Progress in Sustainable Development Annual Report 2012    Allianz Group 101