1 Allianz / Message from the President

Change to Win (G4-1)

Albeit a very challenging year, 2015 represented, for Allianz Brazil, a preparation period to resume growth of the company in the Brazilian market, both for us and for the insurance sector as a whole.

We had two distinct moments in the course of the year. There was a promising increase in the volume of business in the first half, followed by a trend in the opposite direction in the second half of the year, brought about by a series of foreign and domestic factors. Deceleration of the Chinese economy - associated with depreciation of commodities and the sharp appreciation of the dollar, in addition to Brazil's critical political-economic scenario - led to a drop in the country's production of wealth and increased unemployment rates.

In this challenging scenario, competition in the insurance market became so fierce that prices below what we consider sustainable were observed. We opted not to engage in this dispute, and closed the year with the same level of sales as the previous year. This was a careful decision intended to mitigate future risks in loss ratio for the company and to preserve the sustainability of our business and the competitiveness required once the market recovers its balance - which, fortunately, is already occurring.

Even facing so many challenges, we did not cease to innovate. One of the highlights for 2015 was, unquestionably, the launch of Allianz Auto Instituto Ayrton Senna, a pioneer product in the insurance market that combines quality and social responsibility. When acquiring auto insurance from Allianz, policyholders automatically contribute with the work of the Ayrton Senna Institute, since part of the amount paid in each policy issued goes to this organization.

At the end of 2015 and early 2016, we initiated the program Mudar para Vencer (Change to Win), which builds the new culture in our company and is based on three pillars: determination to do a good job in what is instrumental in our field of business; strengthening of the high-performance culture for our company; and the will to continuously evolve in serving our customers. This strategy relies on financial capabilities, technological resources, competitive products, a successful brand, and especially, good professionals.

We also seek to reinforce the value we assign to sustainability. Insurance deals with situations of crisis and allows for companies and society to continue performing normally amidst adversity. The culture of preventing and mitigating risks, and ensuring stability of our customers, whether a family or an industry, has been in our DNA for more than one century. It is also part of our culture to generate jobs, ensure ethical and sustainable practices, invest in cultural venues, and provide education opportunities for young adults through ABA, Charity Association of the Employees of the Allianz Group.

Allianz has been in Brazil for 112 years, and has obviously faced many periods of market downturn such as the one we are currently experiencing. In all these occasions, the company made the necessary adjustments to emerge from these situations even stronger - and advanced. This time it will not be different. Brazil is the largest country in Latin America and its market is strategic for us, in addition to offering excellent opportunities to expand the insurance sector.

Miguel Pérez Jaime

President of Allianz Brazil