G ROUP MANAGEMENT REPORT Property and Casualty Insurance 51 France ITALY  $^{*)}$2001 including Allianz Marine & Aviation In the  current fiscal year , AGF is expected to expand business in line with the market by 3.5 percent. Leaner and more effi- cient workflows should help to bring down the expense ratio once again. The continuation of the reassessment of the port- folio adjustments started last year as well as additional rate in- creases are expected to further improve the claims ratio. 2003 2002 2001 *) Gross premiums ¤ mn 5,367 4,941 5,392 Premiums earned (net) ¤ mn 4,453 4,066 4,083 Claims ratio % 79.8 84.5 83.0 Expense ratio % 24.4 26.4 29.3 Earnings after taxes ¤ mn 293.6 383.0 30.9 Investments ¤ mn 22,123 20,468 20,579 Employees 13,345 13,797 14,313 _  We are represented in the Italian market by our property and casualty insurers RAS Group and Lloyd Adriatico. _  Together, these companies jointly increased revenues by 3.6 percent to 5.1 billion euros.  _  We therefore rank number three in Italy. this figure, cost management at RAS Group is still one of the best in the Italian insurance industry. Premium income of the RAS Group grew 3.5 percent to 3.8 bil- lion euros. Lloyd Adriatico – which mainly sells automobile in- surance – increased revenues by 3.8 percent to 1.3 billion eu- ros. Rate adjustment in automobile insurance and generally good new business continued to fuel the growth of our Italian companies. At the same time they maintained their selective underwriting policy. The strong surge in business at our Italian direct insurer Ge- nialloyd continued to gather momentum as its growth rate jumped by over 54 percent to 170 million euros. At present, al- most 40 percent of its premium volume is generated through the Internet, which once again strengthenes Genialloyd’s posi- tion as Italy’s undisputed leader in this market segment. The  claims ratio of our Italian companies continued to improve to 65.0 (69.3) at Lloyd Adriatico and to 73.1 (76.8) percent at RAS. This is the result of our risk-oriented underwriting policy and our continued efforts to eliminate bad risks from our port- folio, aided by the market-wide decline of loss figures. The lower claims ratio at RAS also reflects a revised rate structure and port- folio restructurings in liability insurance.  2003 2002 2001 Gross premiums ¤ mn 3,793 3,663 3,396 Premiums earned (net) ¤ mn 3,389 3,295 3,063 Claims ratio % 73.1 76.8 79.7 Expense ratio % 23.9 23.9 23.7 Earnings after taxes ¤ mn 278.1 741.8 284.9 Investments ¤ mn 7,782 7,975 7,735 Employees 5,105 5,029 5,300 2003 2002 2001 Gross premiums ¤ mn 1,323 1,275 1,189 Premiums earned (net) ¤ mn 1,256 1,195 1,118 Claims ratio % 65.0 69.3 68.5 Expense ratio % 19.8 18.9 19.2 Earnings after taxes ¤ mn 124.3 100.6 109.7 Investments ¤ mn 2,667 2,427 2,250 Employees 1,260 1,316 1,321 Lloyd Adriatico RAS Group Rigorous cost management kept the  expense ratio of RAS Group at previous year’s level of 23.9 (23.9) percent, despite weaker growth and continued investments aimed at strengthening brand awareness. Higher IT expenses pushed the expense ratio of Lloyd Adriatico to 19.8 (18.9) percent. However, even with