CORRESP 1 filename1.htm Correspondence Letter

December 27, 2005

 

By EDGAR, “CORRESP” designation, with paper courtesy copies.

 

Mr. Jeffrey Riedler

Assistant Director,

Division of Corporation Finance,

Securities and Exchange Commission,

100 F Street, N.E.,

Washington, D.C. 20549.

 

Re:    Allianz Aktiengesellschaft
     Amendment No. 1 to Registration Statement on Form F-4
     File No. 333-128715

 

Dear Mr. Riedler:

 

On behalf of Allianz Aktiengesellschaft (“Allianz”) I am writing in response to the Staff’s comment of December 23, 2005 on Amendment No. 1 to the Registration statement on Form F-4 of Allianz, which was filed on December 12, 2005 (the “F-4”).

 

The following is Allianz’s response to the Staff’s comment:

 

1. We note your response to comment two. Please provide us with the detailed calculations for your investment and income tests that link back to the financial information provided in the filing. Please confirm whether the total GAAP purchase price that will be allocated to target assets and liabilities acquired was used for the investment test given that it does not appear that the exchange ratio has been established at this point in time. Provide a calculation of the GAAP purchase price based on the terms of the deal including any potential contingent consideration. Please be aware that significance should measured using U.S. GAAP amounts.

 

As requested, attached hereto is supplemental information detailing the calculations made by Allianz with respect to the investment and income tests under both IFRS and U.S. GAAP. The transaction in question is the acquisition of Allianz’s remaining 44% interest in RAS, for which the exchange ratio was publicly announced on September 11, 2005 as being between 0.153 and 0.161 Allianz shares per RAS share, and which was thereafter fixed on December 16, 2005 at 3 Allianz shares per 19 RAS shares (or approximately 0.1579). For purposes of the investment test, Allianz’s December 12, 2005 response to Comment 2 used a merger exchange ratio of 0.155, which was within the publicly-announced range,

 

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Mr. Jeffrey Riedler

Securities and Exchange Commission

     

 

along with the prices for the completed cash tender offer (which prices were also publicly announced in September, 2005) of Eur. 19 per RAS ordinary share and Eur. 55 per RAS savings share; as indicated in the attached, use of the final merger ratio only changes the investment test outcomes from 0.62% (IFRS) and 0.61% (U.S. GAAP) to 0.64% and 0.63%, respectively, in each case still well below the 20% threshold. The transaction did not involve any contingent consideration, and the attached indicates that the total purchase price will be € 2,734 million in respect of the cash tender offer (completed in November, 2005) plus 25,123,259 Allianz shares to be issued in connection with the merger on the basis of the final merger exchange ratio of 3 Allianz shares per 19 RAS shares. Further information on the transaction terms also appears in the F-4 on pages 43-48.

 

*        *        *

 

On behalf of Allianz, we would like to thank you for the cooperation you and the Staff are extending with the review of the F-4. Please do not hesitate to call me at (011) (331) 7304-5890 with any questions or comments on the foregoing.

 

Very truly yours,

/s/ William D. Torchiana

William D. Torchiana
(Sullivan & Cromwell LLP)

 

(Enclosures)

 

cc:    Paul M. Dudek, Esq.
     Craig C. Olinger
     Vanessa Robertson
     James Atkinson
     Sonia Barros
     (Securities and Exchange Commission)
     Burkhard Keese
     Dr. Susanne Kanngiesser
     Dr. Rainer Husmann
     Jonathan A. Wismer
     Jon Nielsen
     Dr. Peter Hemeling
     (Allianz AG)

 

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Mr. Jeffrey Riedler

Securities and Exchange Commission

     

 

Dr. Frank Ellenbürger, Partner – KPMG Deutsche Treuhand-Gesellschaft AG

Robert Overstreet, U.S. Filing Review Partner – KPMG LLP

 

-3-

Attachment

 

Significance Test F4 Filing for RAS Merger   

Allianz Group Accounting 27-12-2005

 

Contents

 

¨ Investment RAS

    Investment Test (Final)          

¨ Investment RAS

    Investment Test (Preliminary)          

¨ Assets RAS

    Asset Test          

¨ Income USGAAP

    Income Test          

¨ Income IFRS

    Income Test          

 

Overview of Tests (US-GAAP)

 

Investment

    RAS    0.63 %

Asset

    RAS    7.58 %

Income US-GAAP

    RAS    13.93 %

Income IFRS

    RAS    14.91 %

 

-4-

Investment Test - Final Exchange Ratio    Allianz Group Accounting 27-12-2005

 

Transaction Volume for acquired Share (44,33%) of RAS:

 

Current Investment:

    RAS    55.67 %   6,585    Mio EUR

Acquired Investment:

               5,900    Mio EUR
               
    

Total Investment in RAS after Acquisition:

               12,485    Mio EUR

 

Acquired Investment (Details)

 

Tender Offer

    2,734

Remaining RAS-Shares after TenderOffer

    159,113,971

Exchange Ratio (3 AZ for 19 RAS)

    0.157894737

Assumed Allianz StockPrice (in EUR)

    126

Exchanged Allianz Shares

    25,123,259

Acquisition Costs (in Mio EUR)

    3,166

Total Acquisition Costs

    5,900

 

Group Consolidated Assets (Based on F-1 and F-121 of Form 20F 2004)

 

     USGAAP
     IFRS Reformatted
     IFRS
  
    

2004

Mio EUR

   

2003

Mio EUR

    

2004

Mio EUR

   

2003

Mio EUR

    

2004

Mio EUR

   

2003

Mio EUR

  

Allianz Group

    1,011,330    924,622 (1)   976,179    919,586 (1)   990,318    933,213 (2)

without RAS

    940,107    861,499     905,103    856,546     919,242    870,173  

RAS

   71,223    63,123 (4)   71,076    63,040 (3)   71,076    63,040 (3)

 

Source:

    (1 )   Form F4 Page F-136
     (2 )   Form F4 Page F-4
     (3 )   Form F4 Page F-157
           RAS SubGroup Allianz IFRS StandAlone
     (4 )   Figures from (3) plus Total Effect of US GAAP Adjustments on Equity (Form F4 Page F-208)

 

Cross-Check with IFRS figures from RAS perspective (Italien IFRS)

 

RAS

    73,622    —  

 

Comparison

 

A. Comparison of Allianz Group Consolidated Assets (without RAS) to Total Investment (12.485 Mio EUR) in RAS after Acquisition

 

     USGAAP
     IFRS Reformatted
     IFRS
  
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
  

RAS

   1.33 %   1.45 %   1.38 %   1.46 %   1.36 %   1.43 %

 

B. Comparison of Allianz Group Consolidated Assets (without RAS) to acquired Investment (5.900 Mio EUR) in RAS

 

     USGAAP
     IFRS Reformatted
     IFRS
  
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
  

RAS

   0.63 %   0.68 %   0.65 %   0.69 %   0.64 %   0.68 %

 

-5-

Investment Test - Preliminary Exchange Ratio    Allianz Group Accounting 12-12-2005

 

Transaction Volume for acquired Share (44,33%) of RAS:

 

Current Investment:

    RAS    55.67 %   6,585    Mio EUR

Acquired Investment:

               5,743    Mio EUR
               
    

Total Investment in RAS after Acquisition:

               12,328    Mio EUR

 

Acquired Investment (Details)

 

Tender Offer

    2,734

Remaining RAS-Shares after TenderOffer

    159,113,971

Exchange Ratio

    0.155

Assumed Allianz StockPrice (in EUR)

    122

Exchanged Allianz Shares

    24,662,666

Acquisition Costs (in Mio EUR)

    3,009

Total Acquisition Costs

    5,743

 

Group Consolidated Assets (Based on F-1 and F-121 of Form 20F 2004)

 

     USGAAP
     IFRS Reformatted
     IFRS
  
    

2004

Mio EUR

   

2003

Mio EUR

    

2004

Mio EUR

   

2003

Mio EUR

    

2004

Mio EUR

   

2003

Mio EUR

  

Allianz Group

    1,011,330    924,622 (1)   976,179    919,586 (1)   990,318    933,213 (2)

without RAS

    940,107    861,499     905,103    856,546     919,242    870,173  

RAS

    71,223    63,123 (4)   71,076    63,040 (3)   71,076    63,040 (3)

 

Source:    (1)    Form F4 Page F-136
     (2)    Form F4 Page F-4
     (3)    Form F4 Page F-157
          RAS SubGroup Allianz IFRS StandAlone
     (4)    Figures from (3) plus Total Effect of US GAAP Adjustments on Equity (Form F4 Page F-208)

 

Cross-Check with IFRS figures from RAS perspective (Italien IFRS)

 

RAS

    73,622    —  

 

Comparison

 

A. Comparison of Allianz Group Consolidated Assets (without RAS) to Total Investment (12.328 Mio EUR) in RAS after Acquisition

 

     USGAAP
     IFRS Reformatted
     IFRS
  
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
  

RAS

   1.31 %   1.43 %   1.36 %   1.44 %   1.34 %   1.42 %

 

B. Comparison of Allianz Group Consolidated Assets (without RAS) to acquired Investment (5.743 Mio EUR) in RAS

 

     USGAAP
     IFRS Reformatted
     IFRS
  
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
  

RAS

    0.61 %   0.67 %   0.63 %   0.67 %   0.62 %   0.66 %

 

-6-

Asset Test            Allianz Group Accounting 12-12-2005

 

Acquired Share of Total Assets

 

     Current GroupShare
          Acquired Share
          Target Share
  

RAS

    55.67 %   +    44.33 %   =    100.00 %

 

Group Consolidated Assets

 

     USGAAP
     IFRS Reformatted
     IFRS
  
    

2004

Mio EUR

   

2003

Mio EUR

    

2004

Mio EUR

   

2003

Mio EUR

    

2004

Mio EUR

   

2003

Mio EUR

  

Allianz Group

   1,011,330    924,622 (1)   976,179    919,586 (1)   990,318    933,213 (2)

without RAS

   940,107    861,499     905,103    856,546     919,242    870,173  

RAS (100%)

   71,223    63,123 (4)   71,076    63,040 (3)   71,076    63,040 (3)

acquired Share (44,33%)

    31,573    27,982     31,508    27,946     31,508    27,946  

 

Source:    (1)    Form F4 Page F-136
     (2)    Form F4 Page F-4
     (3)    Form F4 Page F-157
          RAS SubGroup Allianz IFRS StandAlone
     (4)    Figures from (3) plus Total Effect of US GAAP Adjustments on Equity (Form F4 Page F-208)

 

Cross-Check with IFRS figures from RAS perspective (Italien IFRS)

 

RAS

    73,622    —  

 

Comparison

 

A. Comparison of Allianz Group Consolidated Assets (without RAS) to acquired Share (44,33%) of RAS’s Total Assets

 

     USGAAP
     IFRS Reformatted
     IFRS
  
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
  

RAS

   3.36 %   3.25 %   3.48 %   3.26 %   3.43 %   3.21 %

 

B. Comparison of Allianz Group Consolidated Assets (without RAS) to 100% of RAS’s Total Assets

 

     USGAAP
     IFRS Reformatted
     IFRS
  
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
     Ratio 2004
     Ratio 2003
  

RAS

   7.58 %   7.33 %   7.85 %   7.36 %   7.73 %   7.24 %

 

-7-

Income Test (US-GAAP)    Allianz Group Accounting 12-12-2005

 

Net Income US-GAAP before Taxes, Extraordinary Items and Cumulative Effect of Changes in Accounting Principles

 

Source:    Form F4 Page 3 / Form 20F 2004, 2003 and earlier
     Form F4 Page F-126 Condensed Income Statement Information

 

Allianz Group

   

2004

Mio EUR

   

2003

Mio EUR

   

2002

Mio EUR

   

2001

Mio EUR

   

2000

Mio EUR

   

1999

Mio EUR

    Average 00-04
Mio EUR

Net Income US-GAAP

    2,881    2,245    -1,260    4,246    6,519    2,870     

Income Taxes

(Negative Sign = Tax Benefit)

    1,441    -163    -1,077    -4,350    -3,870    635     
    
  
  
  
  
  
  

Net Income US-GAAP before Taxes

    4,322    2,082    -2,337    -104    2,649    3,505    1,811
    
  
  
  
  
  
  
        IFRS Net Income    2,266          
     + IFRS Taxes (Reformatted)    1,609          
     + US-GAAP-Adjustments (before Tax)    407          
     + US-GAAP-Adjustments Minorities    40          
                        
         
     = US-GAAP Net Income before Taxes    4,322          

 

Acquired Share

 

     Current GroupShare
          Acquired Share
          Target Share
  

RAS

    55.67 %   +    44.33 %   =    100.00 %

 

Earning from ordinary Activities before Taxes of acquired Entity

 

    

2004

Mio EUR

  

Earnings from ordinary Activities before Taxes (IFRS)

    1,113 (5)

Effect of US GAAP Adjustments before Taxes and Minorities

    43 (5)

Earnings from ordinary Activities before Taxes (US-GAAP)

    1,156  

 

Form F4 Page F-208

 

     IFRS
    Reco
    USGAAP

Earnings

    1113    43    1156

Taxes

    -293    -1    -294

Minorities

    -144    4    -140
    
  
  

Net Income

    676    46    722
    
  
  

 

-8-

Acquired Share of Net Income

before Taxes and before Minorities

  

100% of Net Income

before Taxes and before Minorities

  

Current Share of Net Income

before Taxes and before Minorities

       

2004

Mio EUR

          

2004

Mio EUR

          

2004

Mio EUR

RAS

   44.33%   512   RAS   100.00%   1,156   RAS   55.67%   644

 

Source:    (5)    Form F4 Page F-158 / F-208
          RAS SubGroup Allianz IFRS StandAlone
          Line Item: Earning from ordinary Activities before Taxes

 

Comparison

 

A. Compare acquired Share of RAS Net Income to AZ Group Net Income (excluding acquired Share of Net Income from RAS)

 

    

Income

Mio EUR

    Ratio
  

AZ Group

    4,322       

- RAS Net Income (44,33%)

    512       
    
      
     3,810       

RAS (44,33%)

    512    13.45 %

 

B. Compare acquired Share of RAS Net Income to AZ Group Net Income (excluding current AZ Group Share of Net Income from RAS)

 

    

Income

Mio EUR

    Ratio
  

AZ Group

    4,322       

- RAS Net Income (55,67%)

    644       
    
      
     3,678       

RAS (44,33%)

    512    13.93 %

 

-9-

Income Test (IFRS)    Allianz Group Accounting 12-12-2005

 

Net Income IFRS before Taxes, Extraordinary Items and Cumulative Effect of Changes in Accounting Principles

 

Source: Form F4 Page 3 / AZ Group Consolidated Financial Statements 2004 and earlier

 

Allianz Group

   

2004

Mio EUR

   

2003

Mio EUR

   

2002

Mio EUR

   

2001

Mio EUR

   

2000

Mio EUR

   

1999

Mio EUR

   

Average 00-04

Mio EUR

Net Income IFRS

    2,266    2,691    -3,243    1,585    3,448    2,317     

Income Taxes

(Positive Sign = Tax Benefit)

    -1,662    -249    1,073    1,106    -170    1,513     
    
  
  
  
  
  
  

Net Income IFRS before Taxes

    3,928    2,940    -4,316    479    3,618    804    2,193
    
  
  
  
  
  
  

 

Acquired Share

 

     Current GroupShare
          Acquired Share
          Target Share
  

RAS

    55.67 %   +    44.33 %   =    100.00 %

 

Earning from ordinary Activities before Taxes of acquired Entity

 

Acquired Share of Net Income before

Taxes and before Minorities

  

100% of Net Income

before Taxes and before Minorities

  

Current Share of Net Income

before Taxes and before Minorities

       

2004

Mio EUR

          

2004

Mio EUR

          

2004

Mio EUR

RAS

   44.33%   493   RAS   100.00%   1,113(3)   RAS   55.67%   620

 

Source:    (3)    Form F4 Page F-158
          RAS SubGroup Allianz IFRS StandAlone
          Line Item: Earning from ordinary Activities before Taxes

 

-10-

Comparison

 

A. Compare acquired Share of RAS Net Income to AZ Group Net Income (excluding acquired Share of Net Income from RAS)

 

    

Income

Mio EUR

    Ratio
  

AZ Group

    3,928       

- RAS Net Income (44,33%)

    493       
    
      
     3,435       

RAS (44,33%)

    493    14.37 %

 

B. Compare acquired Share of RAS Net Income to AZ Group Net Income (excluding current AZ Group Share of Net Income from RAS)

 

    

Income

Mio EUR

    Ratio
  

AZ Group

    3,928       

- RAS Net Income (55,67%)

    620       
    
      
     3,308       

RAS (44,33%)

    493    14.91 %

 

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