Henning Schulte-Noelle to Step Down As Allianz CEO

December 19, 2002

In a somewhat surprising, but not entirely unexpected move, Henning Schulte-Noelle announced he is stepping down from his position as the Chairman of the Board of Management of Allianz AG at the end of the Annual General Meeting on April 29, 2003. He will take a position on the Supervisory Board on that date.

His successor will be 47-year-old Michael Diekmann, a 15 year company veteran who is currently in charge of insurance activities in North and South America and holds group-wide responsibility for Human Resources. He has been a member of the Board of Management of Allianz AG since 1998.

In a written statement, published on the company’s Internet site, Schulte-Noelle explained that “Next year I will be 61 years old and with one exception I am already the longest-serving chairman among those of the German DAX companies. On top of this, the Supervisory Board is to be elected anew next year. Primarily in the interest of the company, in my view the coming year seems to be the right time for the succession regulation decided today.”

While the personal reasons given may be perfectly valid there are also some strong financial pressures behind his departure. Schulte-Noelle joins a growing list of European CEOs that have been forced to step down following less than stellar operating results that have led to a precipitous decline in company share prices – Rolf Hüppi at Zurich Financial Services, Lukas Mühlemann at Credit Suisse, Bob Mendelsohn at Royal & Sun Alliance, Gianfranco Gutty at Generali and Jacques Blondeau at SCOR – to name a few.

As the biggest insurer in Europe, Allianz suffered some of the biggest losses in 2002 – $2.575 billion in the third quarter. The causes are by now familiar. The company was forced to write down the value of its investment portfolio, as equity prices fell. It was hit by around half a billion in losses from this summer’s floods in Germany and Eastern Europe. It’s also had to increase reserves in the U.S., mainly at Fireman’s Fund, to cover potential asbestos related liabilities.

Perhaps most damaging of all, however, to Schulte-Noelle’s position has been the dismal performance of its Dresdner Bank subsidiary, which he had been instrumental in pushing through. Allianz has been unable to return it to profitability despite great efforts to do so, and has had to pour money into it as well in order to cover bad loans and shore up investments.

In addition the current weakness in the German economy has slowed growth throughout the country. Taking all those factors into account it makes Schulte-Noelle’s decision quite understandable.

After paying tribute to his about to be predecessor Diekmann said in a written statement, that “with almost five years of experience on the Board of Management,” he felt sure that there would be a smooth transition. He added that he was “already looking forward to carrying on working with this team which gathers experience in various disciplines. I have already worked with many of my colleagues before joining the board, and I have gotten to know and learned to value them. This longstanding cooperation creates mutual trust and respect, and that is one – if not the – substantial requirement in finding appropriate solutions.”

He warned, however that “I can’t and won’t present a ‘five-year plan’ to you now. I do not think you expected anything else. In the coming months I will prepare myself for the new task with the support of Dr. Schulte-Noelle and my colleagues. And I would be happy if you would allow me these five months until the Annual General Meeting to settle in and excuse an aloof public relations work from my side.”

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