ALLIANZ GROUP 72 U.S.A.  In local currency, revenues increased by 6.3 percent compared to 2002. We attribute this impressive success to the following factors:  _ Allianz Life presides over a high-performance distribution net- work. In 2003, we further strengthened our ties to indepen- dent agents and brokers. We regard these salespeople as clients and realize the importance of strengthening our ties to them through high-quality training and exceptional service. Even more than in the past, brokers and other financial inter- mediaries are paying attention to the financial strength and rating of the companies whose life insurance products they are selling. As a financially strong company, this is advantageous to us. _ Product portfolio and flexibility enable our company to re- spond at all times to fluctuations in demand between classic retirement insurance and unit-linked retirement insurance and thus gear its activities to client needs.  _  Our life insurer in the United States of America is Allianz Life of North America. _  Total premium income dropped from 9.5 billion euros to 8.6 billion euros.  Although fixed annuity sales in the U.S.A. were down signifi- cantly over the previous year, the sales volume at Allianz Life was down only 2 percent. This expanded our market share and moved us up to the number two position in fixed annuity sales in 2003. The interest rate environment posed substantial chal- lenges to us as well as fixed annuity writers in general. We re- sponded with lower profit participation, lower commissions for our agents and by withdrawing products from the market, if their profitability could not be maintained at acceptable levels. In the third quarter of 2003, we lowered the guaranteed inter- est rate for all fixed annuity products, which enabled us to re- store reasonable profitability levels across the board. The continuing expansion of our distribution network and the revival of the U.S. equity market gave our variable annu- ities business an uplift. In local currency, variable annuity sales increased by 41 percent, thereby strengthening our market share. After the sustained growth of the past years, we are now poised to reach critical mass in the unit-linked life insurance segment. In the  current fiscal year , we expect a moderate expansion of premium income. We have confidence in a business policy that does not hesitate in adjusting the range of products and tariffs to new market conditions. *) In relation to total premiums earned (net). 2003 2002 2001 Total revenues ¤ mn 8,566 9,530 4,982 Gross premiums ¤ mn 1,078 1,411 1,478 Premiums earned (net) ¤ mn 598 924 1,068 Expense ratio *) % 4.6 4.8 11.5 Earnings after taxes ¤ mn 164.9 – 17.7 – 23.7 Investments ¤ mn 16,774 15,903 11,825 Employees 2,218 1,997 1,750 Allianz Life Earnings after taxes reflect a pronounced turnaround in profits: after the previous year’s loss of 18 million euros, Allianz Life generated a profit of 165 million euros in the reporting year. Our life reinsurance activities in the U.S.A. were sold in re- sponse to our decision to concentrate on our core divisions. The transaction was concluded in the fourth quarter of 2003. Pro- ceeds amounting to 264 million dollars were deferred and will be allocated to profit in tranches over the coming years. Net investment income increased to 1,024 (561) million euros. It profited from a significantly larger investment portfolio and an upturn in the financial markets, which led to lower write- offs on securities as well as higher realized gains.  The  expense ratio declined from 4.8 percent to 4.6 percent, the fruit of our continuing efforts to improve organizational struc- tures and workflows. 