Filed by Allianz AG
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Riunione Adriatica di Sicurtà S.p.A.
Exchange Act File Number 1-15154
Allianz-RAS Merger
Milan,
September 12, 2005
Disclaimer
The following statements are subject to the disclaimer provided below.
No Offer
This communication is for informational purposes only. It shall not constitute an offer to purchase or buy or the solicitation of an offer to sell or exchange any securities of RAS S.p.A. or Allianz AG nor shall there be any sale of securities in any jurisdiction (including the United States of America, Canada, Japan and Australia) in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe any such restrictions. In the United States of America, the solicitation of offers to exchange RAS S.p.A. securities for Allianz AG shares will only be made pursuant to a prospectus that Allianz expects to send holders of RAS S.p.A. securities. Any solicitation of offers to sell RAS S.p.A. securities will only be made pursuant to a tender offer document approved under and pursuant to Article 102 of the Italian Securities Act. Regarding the anticipated merger Allianz and RAS S.p.A. will be required to make available certain documents for their respective shareholders in order to put them into a position to vote on the merger. Investors and holders of RAS S.p.A. securities and/or investors or holders of Allianz AG securities are urged to read the various documents cited above including any registration statement (when available) and other relevant documents that, if required by the applicable rules and regulations, will be filed with the U.S. Securities and Exchange Commission (“SEC”), as well as any amendments or supplements to those documents, because they will contain important information. Investors and holders of RAS S.p.A. securities will receive information at an appropriate time on how to obtain transaction-related documents for free from Allianz, including any registration statement (when available). The registration statement and other relevant documents, if filed with the SEC, will also be obtainable for free at the SEC’s Internet web site at www.sec.gov.
Forward-Looking Statements
Certain statements made in this communication are forward-looking statements. Although Allianz’ management believes that the expectations reflected in such forward-looking statements are reasonable, readers are cautioned that these forward-looking statements by their nature involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including those listed in our Annual Report on Form 20-F filed with the SEC on April 19, 2005. We undertake no obligation to update forward-looking statements.
No duty to update
The company assumes no obligation to update any information contained herein.
1
Agenda
1. Transaction overview and rationale
2. Italian opportunity
3. Organizational streamlining
4. Financial merits and transaction details
5. Summary observations
2
5
12
17
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2
1. Transaction overview and rationale
Transaction summary
RAS Group will be fully integrated in Allianz Group through a statutory merger of RAS S.p.A. into Allianz AG
Based on preliminary valuation analysis merger exchange ratio is expected to be between 0.153 and 0.161 Allianz AG shares per RAS S.p.A. share
Prior to the merger, a cash tender will be offered to RAS S.p.A. shareholders which is beneficial for both Allianz AG and RAS S.p.A. shareholders
Offer price for RAS S.p.A. ordinary shares EUR 19 implies a 15% premium to 3M average RAS S.p.A. share price
Equity financing for tender offer will be fully secured through upfront equity offering to institutional investors
Financing structure allows fine-tuning of equity component
Transaction entails several organizational changes
Allianz will convert from a German AG into a German SE (“Societas Europaea”)
Internationalization of Allianz SE management and supervisory board
Simplification of European insurance holdings
Bundling of German insurance operations
Transaction supported by RAS and Allianz boards
3
1. Transaction overview and rationale
Key rationale for the transaction
Increasing exposure to attractive Italian insurance market
Italy is Allianz’ second largest European market and shows strong profitable growth potential
RAS has an excellent market position in Italy and offers access to additional European markets
Platform for rationalization of Italian operations
Expands Allianz’ European presence
Streamlining Allianz’ organizational structure
SE structure as platform for European operations
Enhances corporate governance
Facilitates group-wide Sustainability Program
Financially attractive
Benefits all aspects of 3+one
1 Enhances capital base
2 Strengthens profitability
3 Reduces complexity
+ Improves competitiveness and shareholder value
One
4
Agenda
1. Transaction overview and rationale
2. Italian opportunity
3. Organizational streamlining
4. Financial merits and transaction details
5. Summary observations
2
5
12
17
25
5
2. Italian opportunity
Italy is our second most important European market
Premium income1 as % of total Allianz Group in 2004
Germany 29.4%
Italy 15.8%
France 11.7%
Switzerland 4.1%
8.5bn 3.4%
UK
Benelux 2.8% 75.5%
Europe
5.4bn 24.5%
RoW
Spain 2.8%
CEE 2.3%
P/C
L/H
Austria 1.4%
18.8% 12.6% 1.1%
Ireland Portugal
0.5%
Total premium income1
EUR 88.2bn
Greece 0.2%
1) P/C: gross written premiums, L/H: statutory premiums; after eliminating intra-Allianz Group transactions between segments
All figures stated in this document according to Allianz IFRS accounting unless otherwise stated
6
2. Italian opportunity
Italian insurance market shows strong profitable growth
Premium growth (in EUR bn)
Profitability (return on equity) 13.8%
67.1 65.3 57.4 10.6% 10.6% 48.5 8.9%
Life 41.8
CAGR 12.6%
6.7%
CAGR 5.3%
Non-Life 38.6
37.7 36.1 33.3 31.4
2003 2002 2001 2000
2004 2003 2002 2001 2000 2004
Source: ANIA, Prometeia, McKinsey
7
2. Italian opportunity
RAS has a strong position in Italy and exposure to additional attractive European markets Italian distribution network
Key facts (2004, in EUR)
European presence
Current market cap 11.8bn
Ownership structure 55.4% owned by Allianz AG 44.6% free float
#2 in Italian Life market
#4 in Italian P/C market
Total stat. premiums1 16.1bn
P/C: 7.3bn (in Italy 3.9bn)
Life: 8.8bn (in Italy 7.0bn)
Shareholders’ equity1 4.7bn
Net income1 0.7bn
~ 5m customers
Number of agencies / IFAs
663 / 1,161
289 / 294
205 / 476
Austria
Portugal
Switzerland
+ RasBank
+ Genialloyd
+ Joint ventures with Unicredit
Italy
Spain
1) Source: RAS annual report 2004
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2. Italian opportunity
Even though our Italian operations are both already outperformers in our group . . .
Lloyd Adriatico
RAS 36%
GPW growth
Strategic
Growers 15% 15%
Out-performers
14% 11% 10% 0%
Profit
seekers/Optimizers
Under-performers
RoEN RoEN P/C 04 RoEN
Life 04 RoEN P/C 04
RoEN Life 04
CAGR GPW 99-04 8.15% CoC CAGR GPW 99-04
RoEN = Normalized return on assigned capital
(assigned capital = risk adjusted capital + locked excess capital)
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2. Italian opportunity
. . . a combination would allow to further improve
our market position
Italian Life market (2004, in EUR)
Comments
Rank
Market share
GWP
Company
Merger provides platform to evaluate a subsequent rationalization of the Italian operations Integration would strengthen consolidated market position as #2 composite insurer (prior merger completion required)
Comparable domestic mergers suggest further potential
24.9% 13.2% 10.5% 9.0% 8.6% 6.7% 5.1% 4.5%
. . .
2.7% 16.5bn 8.8bn 7.0bn 6.0bn 5.7bn 4.4bn 3.4bn 3.0bn
. . .
1.8bn 1 2 2 3 4 5 6 7
. . .
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Generali
Combined
RAS
San Paolo IMI
Unipol
Poste Italiane
Cattolica
Fondiaria-SAI
. . .
Lloyd Adriatico
Italian P/C market (2004, in EUR)
Market share
GWP
Company
Rank
Fondiaria-SAI
Generali
Combined
Unipol
RAS
Toro
Reale Mutua
Cattolica
Zurich Italy
Lloyd Adriatico
19.0% 15.8% 14.3% 10.9% 10.7% 6.1% 4.9% 3.8% 3.7% 3.6% 7.0bn
5.8bn 5.2bn 4.0bn 3.9bn 2.3bn 1.8bn 1.4bn 1.3bn 1.3bn
1 2 3 3 4 5 6 7 8 9
Not subject of today’s transaction announcement
-
No synergies included in financial calculations
Source: ANIA, McKinsey
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2. Italian opportunity
Merger with RAS strengthens Allianz’ foothold in
European home market Acquired stakes
Insurance penetration1 (Premiums as % of GDP 2004) Legal view3
P/C Life Economic view4
+21.6% +48.3%
3.3 Allianz Seguros
2.4 Spain
5.7 Attractive growth potential
+50.1%
3.3 Allianz Elementar Austria
2.6 5.9
+22.3% 7.0
3.1 Germany
3.9 +64.9%
3.2 Allianz Portugal
7.9 4.7
Portugal
+28.9%
+44.6%
2.9
RAS
7.9 5.0
Italy
+44.6%
9.3
4.2
USA 5.1 9.7 6.4
France 3.3 10.4 8.2
Japan 2.2 10.5 5.6
Netherlands
4.9 10.8 6.6
Belgium2
4.2 +69.8% 5.0
Allianz Suisse 11.7 6.7
Switzerland +31.1%
4.9 13.8 8.9
UK+
+50.0%
Mondial Assistance
+22.3%
1) Source: McKinsey
2) 2003 data
3) Additional stakes that Allianz SE will directly hold after completion of merger and planned restructurings
4) Additional stakes that Allianz SE will own calculated by reflecting that Allianz indirectly already held a stake in the operating entity (OE) prior to the merger
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Agenda
1. Transaction overview and rationale
2. Italian opportunity
3. Organizational streamlining
4. Financial merits and transaction details
5. Summary observations
2
5
12
17
25
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3. Organizational streamlining
Planned organizational changes . . .
(subject to approval by respective bodies)
Transformation of Allianz AG into SE (“Societas Europaea”)
Maintain two-tier board and co-determination on a parity basis but
Reduce supervisory board to 12 members
Internationalize management and supervisory board
Streamlining of European insurance activities
Full ownership of Italy, Austria, Switzerland
Direct ownership of majority stake in Spain and Portugal
Combination of German insurance activities under joint holding
More effective coordination of distribution / products
More efficient through joint functions / back-office integration
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3. Organizational streamlining
. . . allows us to reduce complexity and build a more effective organization . . .
Post-transaction structure
Pre-transaction structure RAS Allianz SE
Allianz AG 55.4% 91%
Germany Holding German Life
100%
German Health RAS
100%
German P/C 99.7% 100%
Lloyd Adriatico 100% 99.7%
Allianz Suisse BVB 69.8% 30.2% 90% 100%
Allianz Elementar
Allianz Suisse
Frankfurter 100% 49.9%
Allianz Elementar 64.9% 50.1%
Allianz Portugal
Allianz Portugal 62.1% 64.9%
AGF 3.3% 51.7%
Allianz Seguros 48.3% 62.1%
AGF 48.3%
Allianz Seguros 48.3%
100%
14
3. Organizational streamlining
. . . based on a new (but proven) management team with clear responsibilities
CEO Regions
Global lines/Programs
G. Rupprecht
M. Diekmann
W. Zedelius
Strategy, Branding,
Human Resources, Audit, Communication Growth Markets: Central and Eastern Europe, Russia,
Asia Germany: Insurance Labor Director, IT-Commission E. Cucchiani C. Booth
Anglo Broker Markets: UK, Ireland, Australia Europe 1: Italy, Spain, Switzer-land, Austria, Portugal, Turkey, Greece P/C Sustainability Allianz Global Risks, Marine/Aviation, Allianz Risk Transfer, Reinsurance Functions H. Walter J.-P. Thierry
P. Achleitner
Worldwide
Europe 2: France, Benelux,
Middle East + Africa, South America
Finance:
Corporate Finance & Treasury,
M&A, Investment Strategy,
Investor Relations, Legal,
Alternative Investments
Life Sustainability,
Credit, Assistance
Banking
J. Carendi
H. Perlet
J. Faber
Controlling, Reporting, Risk:
Financial Reporting,
Risk Controlling,
Planning & Controlling,
Tax, Actuaries, Compliance
Worldwide
NAFTA:
North America,
Mexico
Customer Focus
Asset Management
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3. Organizational streamlining
Additional benefit: Facilitation of group-wide
Sustainability Program
Program scope
Expected profit1 contribution
Approach
730
Best internal experts drawn
from Allianz’ worldwide operations . . .
. . . identify internal + industry best practice (bottom-up)
. . . customize best practice to OE specifics
. . . develop solutions for cross-OE initiatives
. . . systematically support and monitor implementation in OEs
. . . institutionalize group-wide skills building
Performance transformation program targeted at all insurance entities and all functional areas
Focus on bottom-line
impact
Levers: Claims ratio, expense ratio, growth
Short/medium-term objectives:
Quick wins
Best practice becomes common practice
Medium/long-term objective: Develop superior business model
Ongoing, started a year ago
in EUR m
250 270 480 210
Life2
P/C3 60
2005 2008
Ramp-up of 1st wave includes4 only 11 countries only motor in P/C not all functional areas no staff functions / overhead
1) Before tax and minorities, after restructuring and recurring implementation costs; based on potential committed by management
2) OEs: AGF, AZ Leben, AZ Life, RAS, Suisse; after policyholder participation; one-time profit contribution of EUR 120m not included in 2005
3) OEs: AGF, Australia, Austria, Cornhill, FFIC, Lloyd Adriatico, Netherlands, Seguros, Suisse, SGD (incl. reinsurance share AZAG), Turkey
4) In addition, other OEs, LoBs, functions, staff functions/overhead to be tackled in future workstreams
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Agenda
1. Transaction overview and rationale
2. Italian opportunity
3. Organizational streamlining
4. Financial merits and transaction details
5. Summary observations
2
5
12
17
25
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4. Financial merits and transaction details
Review of financial implications
Transaction impact on earnings
Transaction impact on capital
Minority interests reduced
Improves quality of capital base
Accretive by 2% to Allianz’ earnings1 per share in 2006
Positive effect on current cash flows
Any additional benefits from synergies come on top
No material impact on financial leverage
1) Assumptions:
IBES EPS forecast for Allianz / RAS
No synergies, no restructuring costs
Allianz AG / RAS S.p.A. number of shares fully diluted
No PGAAP adjustments
Financing structure of the transaction with EUR 2bn equity component
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4. Financial merits and transaction details
Key elements of the transaction
Merger
Allianz plans to fully integrate RAS Group through a statutory merger
Cross-border merger leads to a conversion of Allianz AG into a SE
Merger is the only structure to provide high degree of certainty for a 100% integration
Exchange ratio is determined on the basis of a standardized valuation procedure (“IDW ES 1”) and expected to be between 0.153 and 0.161 based on preliminary valuation on an ex-dividend basis
Exchange ratio is in line with the exchange ratio implied by current market prices
Final exchange ratio has to be confirmed by German and Italian court appointed auditors
Cash tender offer
Allianz AG is going to launch a voluntary cash tender offer to provide RAS S.p.A. shareholders with an attractive exit option and price certainty
Offer price of EUR 19 per RAS S.p.A. ordinary share, a premium of 15% to 3M and of 14% to 6M average price
Offer price above the current market value of the expected merger consideration
Cash tender offer for all RAS S.p.A. shares not owned by Allianz; EUR 5.7bn total offer value
Financing
Financing of cash tender offer to be fully secured upfront and designed to avoid
“excess equity generation”
~ EUR 2bn from placement of Allianz AG shares through accelerated bookbuilt offering
~50% of equity component is variable to allow for fine-tuning depending on final financing need
~ EUR 2.5bn new hybrid and senior debt instruments
~ EUR 1.2bn financing from existing funds
Financial advisors
Allianz is being advised in the transaction by Goldman Sachs, Mediobanca and Dresdner Kleinwort Wasserstein
RAS is being advised by Merrill Lynch, which rendered a fairness opinion with respect to certain aspects of the transaction
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4. Financial merits and transaction details
Overview of merger process
Integration will be effected through a statutory merger under the Council Regulation EC 2157/2001
(“SE-Regulation”) complemented by German and Italian merger laws
RAS S.p.A. will be merged into Allianz AG by conversion of Allianz into a SE
Merger must be approved by Allianz and RAS EGM2 as well as RAS S.p.A. savings shareholders’ meeting
For regulatory reasons, RAS’ operations will be hived down into an Italian OpCo
Legal structure1
German best practice requires that the exchange ratio is based on a standardized dividend discount model valuation (“IDW ES 1”) prepared by accountants
Allianz has mandated Ernst & Young to calculate the exchange ratio based on IDW ES 1 valuation standard
The final merger valuation will be confirmed by two independent, court appointed merger auditors (“Verschmelzungsprüfer”), an Italian one for RAS and a German one for Allianz
Valuation
RAS S.p.A. shareholders that vote against the merger, abstain from voting or do not participate at all in the EGM have the right to receive a cash compensation instead of the merger consideration (“cash exit right”)
Cash exit right can be exercised after EGM
Value of cash exit right is determined as the average share price of RAS S.p.A. during the six months preceding the invitation to the EGM
Alternative exit right
Allianz SE shall be listed in Italy prior to the completion of the merger
After fixing of co-determination, merger is expected to be completed mid of July 2006 with economically retroactive effect as of January 1, 2006
Timing
1) Subject to regulatory approvals
2) Extraordinary general meeting
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4. Financial merits and transaction details
Overview of tender offer
Offer price EUR 19 in cash per RAS S.p.A. ordinary share
Offer price EUR 26.5 in cash per RAS S.p.A. savings share
Total offer value EUR 5.7bn Offer price
Offer price represents a 10% premium to last week’s average, a 15% premium to 3M average and a 14% premium to 6M average price of RAS S.p.A. ordinary shares
Offer price represents a premium of 5-10% to the current market value of the merger consideration
(adjusted for dividends) Offer premiums
Cash tender offer for all RAS S.p.A. shares not owned by Allianz
No minimum acceptance rate Offer conditions
Tender offer will be launched post approval of tender offer documentation by Consob
Expected tender offer period mid October until late November
Timing
Provides RAS S.p.A. shareholders with an attractive exit option and price certainty
Allows Allianz AG shareholders to benefit from flexible financing structure
21
4. Financial merits and transaction details
Shareholder friendly, flexible financing structure
Outright merger would entail 100% new equity financing Prior voluntary cash tender allows Allianz to reduce equity financing requirement and leverage transaction according to the planned financing structure1:
~ EUR 2bn equity (~35%)
~ EUR 1.5bn hybrid debt (~26%)
~ EUR 1bn senior debt (~18%)
~ EUR 1.2bn financing from existing funds (~21%)
Required equity financing will be fully secured through upfront ~ EUR 2bn accelerated bookbuilt offering
~ EUR 1bn primary shares from authorized share capital2
~ EUR 1bn shares underlying a variable loan by banks
Variable loan allows fine-tuning of new equity financing depending on actual tender uptake
Allianz can settle variable loan in cash or Allianz AG shares dependent on merger result
50% of equity financing is flexible
1) Assuming 90% - 100% tender offer acceptance
2) Issued without pre-emptive rights
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4. Financial merits and transaction details
Financing structure reflects shareholder orientation
In EUR bn ~1.0 ~1.5 ~57.7 ~1.2 ~2.0 53.2 ~9.0
16%4
Senior debt1
15%4 8.0 ~8.8
Hybrid debt
7.3 ~39.9 37.9
Shareholders’ equity2
Senior debt Hybrid debt
Equity3 Internal funds Group financing mix post transaction
(pro forma) Group financing mix pre transaction
~ max. EUR 5.7bn financing requirement for tender offer
1) Excl. BITES 2) Shareholders’ equity excl. minorities, fully diluted
3) Assuming 90% - 100% tender offer acceptance 4) Senior debt / Total capital after minorities
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4. Financial merits and transaction details
Indicative transaction timetable
Announcement of transaction
11 September 2005 Calling of RAS extraordinary general meeting (EGM)
Mid/Late September 2005
Mid Oct to Late Nov 2005
Tender offer period
Until Mid-December 2005
Finalization of merger documentation and valuation
Late Jan/Early Feb 2006
EGMs incl. savings shareholders’ EGM approving merger
Cash exit payment
Late March 2006
Completion of transaction
Mid July 20061
1) After fixing of co-determination
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5. Summary observations
Agenda
1. Transaction overview and rationale
2. Italian opportunity
3. Organizational streamlining
4. Financial merits and transaction details
5. Summary observations
2
5
12
17
25
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5. Summary observations
Review of our achievements with 3+one program:
A promise is a promise
6M 05 6M 04 6M 03 CAGR
Protect and enhance capital base
1 18.0
Risk capital surplus (in EUR bn)
15.7 8.5 +45.5%
Substantially strengthen operating profitability
2 Operating profit (in EUR m) +37.1%
Reduce complexity
3 2,579 + 1,739
Increase sustainable competitiveness and shareholder value
Net income
(in EUR m)
one
+142.4%
439
Pro forma1
1) Net income contained goodwill amortization (net of tax)
2,234 3,222 4,201
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5. Summary observations
Summary: Transaction is logical next step in 3+one program Benefits of the transaction
Protect and enhance capital base
Reduces minority interests
Capital base strengthened
1 Substantially strengthen operating profitability
2 EPS1 accretive by 2% in 2006 even without any synergies Reduce complexity
3 Full ownership of operations in Italy, Austria, Switzerland Direct ownership of majority stake in Spain and Portugal Platform for rationalization of Italian operations Enhances European corporate governance structure
+ Increase sustainable competitiveness and shareholder value
Strengthens our market position in European home market and particularly in the fast growing and highly profitable Italian market
Enables full impact of Sustainability Program and other
3+1 initiatives
one
1) Assumptions: IBES EPS forecast for Allianz / RAS; no synergies, no restructuring costs; Allianz AG / RAS S.p.A. number of shares fully diluted;
no PGAAP adjustments; financing structure of the transaction with EUR 2bn equity component
27