_  Allianz México Compañía de Seguros S.A. operates in Mexico. It is mainly active in commercial business.  _  In Canada, we are represented by Allianz Insurance Company of Canada and Trafalgar Insurance Company of Canada; their focus is on private client business.  _  Allianz Global Risks U.S.A., formerly Allianz Insurance Company, specializes in business with major clients. _  Fireman’s Fund Insurance Company (FFIC) provides insurance to private and commercial customers in the U.S.A. NAFTA REGION ALLIANZ GROUP 56 In 2003 our companies in the North American Free Trade Agreement (NAFTA) region continued on their consolidation course.  Premium income declined by 10.8 percent to 5.3 billion euros. In local currency terms, premiums dropped by 6.4 per- cent.  FFIC has again reduced the percentage of equities in its invest- ment portfolio to 4 (8) percent in order to further dilute the in- fluence of equity market fluctuations on our capital and earn- ings.  Net investment income to improve to 401 (411) million euros.  FFIC , our largest company in this region, generated revenues of 3.9 (4.5) billion euros or a three percent increase in original cur- rency. Having eliminated unprofitable activities from the port- folio, the company is concentrating solely on business with com- mercial clients and high net worth individuals, on transporta- tion and crop insurance as well as on professional liability in- surance. FFIC scored impressive results in the continuing core business. After the turnaround, the company generated  earnings after taxes of 155 million euros, compared to a loss of 666 million euros in the previous year. The  combined ratio improved 29.2 percentage points to 99.4 percent, despite the considerable impact of a single large claim amounting to 198 million euros in the discontinued area of surety. The combined ratio in the continued insurance lines clearly improved to 88.3 (105) percent. In each of the core in- surance lines, the combined ratio was 103.5 percent or better. The progress in the combined ratio is, on the one hand, the re- sult of a better  claims ratio , which was inflated in the previous year by a substantial increase of our reserves for asbestos-related and environmental risks (A&E reserves). In the absence of this charge, rate increases and a risk-oriented underwriting policy brought down the combined ratio to 69.9 (94.1) percent. More- over, the  expense ratio , which improved to 29.5 (34.5) percent, also helped to improve the combined ratio. In addition to a sub- stantial reduction of restructuring costs, stringent cost man- agement initiatives, including the shedding of 721 jobs, also had a positive impact on this figure. Fireman’s Fund Insurance Company NAFTA 2003 2002 2001 Gross premiums ¤ mn 3,919 4,547 5,366 Premiums earned (net) ¤ mn 3,503 4,139 4,518 Claims ratio % 69.9 94.1 84.7 Expense ratio % 29.5 34.5 29.6 Earnings after taxes ¤ mn 155.1 – 666.1 – 356.7 Investments ¤ mn 8,642 10,198 12,053 Employees 4,986 5,707 7,093 2003 2002 2001 Gross premiums ¤ mn 5,344 5,992 6,822 Premiums earned (net) ¤ mn 4,037 4,689 5,177 Claims ratio % 70.0 94.6 99.9 Expense ratio % 28.2 32.9 29.2 Earnings after taxes ¤ mn 221.1 – 702.4 – 889.4 Investments ¤ mn 10,358 12,334 14,111 Employees 6,464 7,140 8,585