ALLIANZ GROUP 160 Insurance companies in the Allianz Group use derivatives to man- age their investments efficiently on the basis of general investment targets. The most important aspect of these instruments is hedging against adverse market movements for selected securities or for parts of a portfolio. In our banking business, derivatives are used partic- ularly for trading purposes and to hedge interest-rate, currency and other price risks of the banking book. The settlement risk is virtually excluded in the case of exchange- traded products, which are standardized products. By contrast, over- the-counter products, which are individually traded contracts, carry a theoretical credit risk amounting to the positive market values. The Allianz Group therefore closely monitors the credit rating of coun- terparties for OTC derivatives. The following table shows the distribution of derivative positions on the balance sheet date: Maturity as of 12/31/2003 2003 2002 Up to 1 – 5 Over Notional Positive Negative Notional Positive Negative 1 year years 5 years principal  market market principal market market amounts values values amounts values values ¤  mn ¤  mn ¤  mn ¤  mn ¤  mn ¤  mn ¤  mn ¤  mn ¤  mn Interest rate contracts 3,721 9,967 4,767 18,455 113 – 139 13,011 133 – 172 OTC Forwards – – – – – – 1,258 2 – 6 Swaps 191 2,994 1,134 4,319 96 – 84 3,293 104 – 93 Swaptions 3,530 106 – 3,636 14 – 136 11 – Caps – 6,867 3,288 10,155 3 – 50 7,581 – – 62 Options – – 325 325 – – 4 383 1 – 10 Exchange traded Futures – – – – – – 340 3 – Options – – 20 20 – – 1 20 12 – 1 Swaps – – – – – – – – – Equity/Index contracts 15,948 11,038 274 27,260 1,059 – 1,432 25,027 1,565 – 1,217 OTC  Forwards 56 19 – 75 14 – 2 2,581 1,105 – 24 Swaps 760 587 – 1,347 – – 25 1,352 2 – 388 Options 12,652 7,518 214 20,384 650 – 1,366 16,414 323 – 776 Warrants – – 60 60 5 – 1 – – – Exchange traded  Futures 299 – – 299 3 – 7 2,084 80 – 1 Options 1,192 2,911 – 4,103 9 – 31 2,596 55 – 28 Forwards 989 – – 989 375 – – – – Warrants – 3 – 3 3 – – – – Foreign exchange contracts 1,729 1,278 93 3,100 179 – 60 5,227 282 – 62 OTC  Forwards 1,712 – – 1,712 22 – 52 3,322 135 – 59 Swaps 17 1,278 93 1,388 157 – 8 1,787 146 – 3 Options – – – – – – 94 – – Exchange traded  Futures – – – – – – 24 1 – Credit contracts – – 48 48 10 – 7 79 3 – 13 OTC Swaps – – 48 48 10 – 7 79 3 – 13 Total 21,398 22,283 5,182 48,862 1,361 – 1,638 43,344 1,983 – 1,464 *) Positive and negative market values are shown on a gross basis, i.e. not taking into account netting effects Notional principal amounts and market values of open derivative positions as of December 31 *) Insurance Segments Property/Casualty and Life/Health