Alternative Outlets Provide Boost For U.S. Advertising Spending

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Despite the continuing circulation slump experienced by top U.S. newspaper publishers, advertising spending for the medium has risen steadily throughout the last quarter according to global trade credit insurer Euler Hermes ACI.

Despite circulation woes, newspaper ads continue to increase

Despite the continuing circulation slump experienced by top U.S. newspaper publishers, advertising spending for the medium has risen steadily throughout the last quarter according to global trade credit insurer Euler Hermes ACI. Meanwhile, advertisers have been turning more to alternate outlets to reach consumers.

A recent study by Euler Hermes ACI said the newspaper industry continues to suffer from circulation problems according to circulation numbers for the six-month period to September 2005, with reported declines for 18 of the 20 largest U.S. newspapers. “The subscription declines have come at a period when there are many more news outlets in the U.S. – such as cable television news networks, Internet sites, and email and cell phone alerts,” said Euler Hermes VP-Risk Industry Manager Tony Clary. “This freedom of choice did not exist 20 years ago and has led the print media to try and capitalize on the new outlets. For example, many newspapers have substantial and free online sites offering much of what is also offered in print.” Clary added that the newspaper websites do not adversely affect overall readership, but can reduce the newspaper's paying audience.

While the newspapers are highly dependent on advertising income, a look at the U.S. advertising expenditures suggests that advertisers are not nearly as dependent on newspapers. Total advertising spending has increased for each of the past three years and also to date in 2005. Despite the circulation drop, advertising spending in local and national newspapers has actually increased for each of the past two years.

However, the real growth for advertising spending appears to focus on the Internet. For example, national newspaper advertising spending increased by 5.8% in 2003 and 6.6% in 2004. Meanwhile, Internet advertising spending saw increases of 15.7% and 21.4% for the same period.

“The alternative advertising avenues that are resulting in reduced newspaper circulation are actually proving to be fortunate for the advertising companies," said Clary, who oversees the risk industry team responsible for tracking trends in advertising, as well as the metals, automotive, lumber, building products, and paper industries.

Euler Hermes ACI is the U.S. subsidiary of the Euler Hermes group – with offices in 40 countries around the world – and a company of Allianz. Through its worldwide network, the Group monitors the credit worthiness of 40 million companies involved in numerous industries around the globe. The Group also tracks global insolvencies through its proprietary annual Business Failure Index, helping to steer policyholders in the right direction when it comes to shipping product either domestically or abroad.

For more information on Euler Hermes ACI and its risk mitigation products and services, visit http://www.eulerhermes.com/usa.

Euler Hermes is the worldwide leader in credit insurance and one of the leaders in bonding and guarantees. With 5,400 employees in 40 countries, Euler Hermes offers a complete range of services for the management of customer receivables and posted a consolidated turnover of 1.9 billion euros in 2004. The North American subsidiary (Euler Hermes ACI) is headquartered in Owings Mills, MD. For more information visit http://www.eulerhermes.com/usa.

Euler Hermes, a subsidiary of AGF and a member of Allianz, is listed on Euronext Paris. Standard & Poor’s rates the group and its principal credit insurance subsidiaries AA-.

Press Contact:

Rick Ostopowicz

Euler Hermes ACI Public Relations and Communications Specialist

Phone: (410) 753-0652

Email: rick.ostopowicz@eulerhermes.com

These assessments are, as always, subject to the disclaimer provided below.

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Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words ‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue’ and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group's core business and core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults (vii) interest rate levels, (viii) currency exchange rates including the Euro-U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.

The matters discussed herein may also involve risks and uncertainties described from time to time in Allianz AG’s filings with the U.S. Securities and Exchange Commission. The Group assumes no obligation to update any forward-looking information contained herein.

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Rick Ostopowicz