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Allianz and Dresdner Bank AcquisitionSubmitted By-Preeti GargNirmal AgrawalOverview - Allianz AGShareholding pattern of Allianz AG

Allianz was part of web of cross ownership between banks, insurers and large corporations.This system of interlocking ownership was often referred to as Deutschland AG.Motive--Stable market economy-Defend against hostile takeoverAt the end of 2000, Allianz group had market capitalization of 98 billion euros and a total premium income came from insurance of 68 billion euros.

Regarded as one of the top 3 insurers in the world.

Offered insurance products to retail as well as corporate segments.

In Germany, Allianz had 17.8 million customers divided among private, corporate and industrial clients.

Sold products through 12000 tied agents and 3600 customer service representatives through cooperation agreements with banks.Allianz core line of business

Allianz Balance Sheet

Allianz Income Statement Allianz Banks financials:Net income of 2.4 bn in year 200080% of group premium income from Europe55% of income came from P&C713.3 billion of AUMAcquired PIMCO in 2000 and Nicholas Applegate

German Insurance industry:Riester reforms to kick in from 2002Impact of globalization

Allianz Income Statement Overview Dresdner BankGermanys third largest private commercial bankAssets of 483.5 bn eurosNet income: 1.7 billion euros (FY 2000)More than 50000 employees; 1300 branchesMerged with U.S. investment bank Wasserstein Persella

Corporate ClientsAsset ManagementPrivate ClientsReal Estate

Dresdner Financials

Dresdner Financials German Banking SectorHistorically, banks across the world were labelled by their primary functions :Commercial BanksSaving and loan associationInvestment banks

Allfinaz Banks provide financial and consulting services for all financial needs of their clients.Bancassurance concept of fusing insurance business with a strong bankGerman retail banking sector was overcrowded with poor profitability.Intricate cross holdings and tax on selling corporate holdings slowed consolidation between banks.

Mittlestand independent, unlisted medium sized family owned business.

Relied heavily on flexible credit by the regional state banks. This notion was known as Hausbank meaning from cradle to grave

Contradictory to Anglo American style characterized by shareholder value, transparency, external ratings etc.

Strategic Rationale for Allianz to acquire Dresdner bankUpcoming reforms to state pension systemRiester reforms shift the burden of pension from state to individual and company based retirement planscreate opportunity for pensions and asset management products

50% capital gains tax on corporate disposal of shareholdings in other companies would be scrapped

Distribution and Sales

SWOT Analysis

Individual Business Segment Synergies

So did the merger take place??Deal detailsAllianz bought Dresdner Bank for 24 bn As part of the transaction, Allianz agreed to sell its 13.5 per cent stake in HypoVereinsbank to Munich Re, and to acquire Munich Re's 40 per cent stake in Allianz LebenFollowing completion of the acquisition, Allianz and Dresdner Bank combined their asset management activities by forming Allianz Global Investors.Do you think they lived happily thereafter ??This marriage is considered to be the worst in the history of banking.Reasons : 35.5 bn of bad debts : Dresdner Banks exposure to Americas : Fall in stock-markets led to writing down of portfolio by its investment bank

Aftermath :

Allianz sold Dresdner Bank for 8.8 bn to Commerzbank in 2008.