1 Outlook

Looking ahead

To build a promising future, we must be attentive to the movements of today and view the opportunities that exist even in the face of the most challenging moments. The year 2016 begins under the strong impacts of the current political and economic situation in Brazil and has presented new obstacles, such as an increase in loss ratio. Even so, the market expects to close the year with growth, albeit more modest than in previous periods. In these 112 years operating in Brazil, Allianz has experienced several scenarios. The lessons learned in this long journey have been the foundation for the company to find innovative alternatives to remain firm in its purpose to provide the best service to society – moving beyond selling insurance and protecting the capital of its customers in the face of adversity – and remain a reference in this highly promising market.

Brazil is and will continue to be strategic for the Allianz Group because of its endless possibilities. An example of this potential is the homeowners insurance market. From North to South, there are 68 million households, but only 9.1 million have home insurance. For 2016, Allianz believes in the development of businesses related to mass market products. Earlier this year, we introduced to the market the product Allianz Residência with new coverage and assistance plans. There's room for growth, and we believe in at least a slight acceleration in this segment through pricing and services consistent with the current reality.

Another major opportunity is in the agribusiness sector, which represents one quarter of the Brazilian GDP. Brazil is responsible for the production of approximately 8% of foods in the world, ranking 6th in productivity. In 2015, the country marketed BRL 89 billion worth of grains. In spite of all this, only 12% of plantations are insured, which represents a huge market to conquer.

Even the automotive segment, which dropped 26.5% in sales of new vehicles in 2015, remains solid, considering that only 17.5 million vehicles in Brazil are insured and that another 20 million, between 5 and 20 years of age, still do not have any kind of coverage. Allianz is aware of all these possibilities and, more than offering competitive products, the company innovated with the launch of Allianz Auto Ayrton Senna in 2015, the first product in the insurance market to associate a social benefit with insurance.

In the first year of the partnership between Allianz and the Ayrton Senna Institute, donations originating from contracting this insurance benefited nearly 15,000 children and young adults. In 2016, the company expanded the Allianz Auto Ayrton Senna by offering differentiated coverage to cater to the most diverse profiles of policyholders. In addition, the proposals became even more competitive, with the goals of maintaining a profitable portfolio, increasing market share, and helping 75,000 students along the 5-year-contract with the Institute.

It is this view into opportunities and the focus toward current demands of customers that have underscored Allianz's performance in 2016. The company continues to invest strongly in platforms and activities that it believes will make a difference both to society and to the success of its business and the business of its partners – brokers.

In 2016, the company maintained its plan for investments in social responsibility, through the Charity Association of the Employees of the Allianz Group (ABA) and through projects such as My Finance Coach (reported in Section 3 - Stakeholder Relations). Allianz continues to firmly invest in the Allianz Parque arena, providing all Brazilians with a modern venue for entertainment, bringing memorable moments in sports and cultural events and contributing to this financial gear that ensures the sustainability of sports clubs, athletes and artists.

This quest for closer relationship with all its stakeholders is constant in the Allianz Group worldwide. The company wants to be a transformation force in the communities where it operates. And in this sense, here in Brazil, the year 2016 brings out the fundamental need to innovate and advance toward digital platforms to streamline the operations of its business partners. An evolution already started with the development of web services and apps that will soon provide tangible results in brokers' productivity and operations and will positively impact Allianz's entire value chain: clients, brokers, workshops and network of services providers in general.

It is through the strength of all these players, who help build the company on a daily basis and ensure its success, and relying on the commitment and competence of its professionals that Allianz is convinced that it will continue to be a driving force for growth for the next few decades for both Brazilian society and the Allianz Group. After all, challenges are meant to be overcome.