Risk Report and Financial Control 118 Risk Report 148 Controls and Procedures
Total shareholder return, i.e. share price performance plus dividend distribution, amounted to 7.4 %. That is substantially better than many of our competitors performed and represents an impressive spread over ten-year German government bonds of around 4 percentage points. The positive results for 2010 mean that we are in a position to recommend a strong dividend increase to € 4.50 per share. This dividend payout also underscores the good health of your Allianz. It signals reliability to you as long-term investors, who are “conservative” in the best sense of the word.
– That’s why we acquired the asset manager PIMCO in 2000. Although the price we paid has been criticized in the interim you can see from the 2010 Annual Report how much profit the PIMCO acquisition has created, proving that it was and will continue to be the right strategic decision.
Meanwhile, new challenges are looming. As the global economic crisis slowly recedes, a new reality is dawning which will fundamentally change the way we work and operate our businesses around the world. Time gaps are becoming shorter and shorter, customers are networked and well informed, and a quantum leap is being made in digitalization. Supervision and regulation are in a state of flux and will soon coalesce into new policy frameworks. An unexpected amount of attention is being paid to the issue of financial security in old age.
Personnel Committee Dr. Henning SchulteNoelle (Chairman) Dr. Gerhard Cromme Rolf Zimmermann
Statement on Corporate Management 31 Takeover-related Statements and Explanations 35 Remuneration Report
The Board of Management’s committees – the Group Finance Committee, the Group Risk Committee and the Group Capital Committee – are comprised of members elected from within the Board itself.
An overview of the Board of Management’s members can be found on page 12.
Allianz follows the suggestion of the German Corporate Governance Code that the chairperson of the Audit Committee is expected to be independent and should not be a former member of the Board of Management whose term expired within the previous two years. Furthermore, at least one independent member of the Audit Committee must have expertise in the fields of accounting or auditing. The Supervisory Board has determined that Dr. Wulf H. Bernotat and Mr. Igor Landau satisfy these conditions. The Audit Committee has adopted rules of procedure, which specify in greater detail the committee’s tasks and functions in accordance with the Supervisory Board’s rules of procedure.
2. Allianz SE will comply with all recommendations made by the Government Commission on the German Corporate Governance Code in the version as of May, 26, 2010, with the following exception: The members of the Supervisory Board are currently receiving a fixed and a performance related compensation (No. 5.4.6 para. 2 of the German Corporate Governance Code). The Company contemplates proposing a new compensation structure to the Annual General Meeting 2011 which shall comprise a fixed remuneration only. In that respect, a deviation from No. 5.4.6 para. 2 sentence 1 of the German Corporate Governance Code is intended. The Company believes a fair fixed remuneration is more suitable to the control function of the Supervisory Board, irrespective of success of the Company.
September – Corporate Governance Code with focus on diversity December – Contractual agreement for Manuel Bauer
The remuneration system was presented to the Annual General Meeting 2010 for vote.
Annual bonus (short-term) 25 700 1,180 75 Three-year bonus (mid-term) 25 700 1,180
Allianz Group paid € 4 million (2009: € 4 million) to increase reserves for pensions and similar benefits for active members of the Board of Management. On December 31, 2010, reserves for pensions and similar benefits for members of the Board of Management active at that date amounted to € 38 million (2009: € 28 million).
– In accordance with regulation, a specific clause is now included in “target letters”, which confirms that variable remuneration components may not be paid, or that payment may be restricted, if the state supervisory authority requires this in accordance with its statutory powers.
Allianz operates an effective system of business, regional and country or operating entity level Compensation Committees that periodically review and decide on remuneration guidelines and practices below the Board. Based on the specific nature, scale and scope of each business the Board of Management has defined the appropriate level of Compensation Committee oversight.
– Deliver total rewards that are competitive in the relevant markets.
The outline below discusses each component’s purpose, performance link and operation.
Operation Base salary is expressed as an annual cash sum paid in monthly installments.
According to the general terms applying to all employees, senior executives who are not members of a Board of Management may also participate in the global Employee Stock Purchase Plan.
With this new streamlined content we offer more transparency and easier navigation to help our readers focus on the core business analysis. Not to mention the positive contribution this will make towards sustainable reporting.
Asset Management We are one of the largest active asset managers in the world. Our business activities in this segment consist of asset management products and services for third-party investors and the Allianz Group’s insurance operations.
Our “3+One” strategy aims to achieve these goals through well defined measures to protect and enhance our capital base, to strengthen our operating profitability, to reduce the complexity of our structure and our operating model, and to increase sustainable competitiveness.
Net Promoter Score (NPS) NPS is a key tool in our Customer Focus activities and we mainly use it in two ways: – to benchmark ourselves every year for customer loyalty against competitors in each market – totaling 57 regional markets worldwide in 2010
Remuneration The Allianz Group paid a total of € 8.3 billion (2009: € 7.7 billion) to its employees worldwide in 2010. Of this, approximately 24 %, was accounted for by performance­related (variable) remuneration elements. € 2.2 billion (2009: € 2.2 billion) was spent on social security contributions, pensions and other social benefits.
67 58 Your Allianz 65 Management Discussion and Analysis 118 Risk Report and Financial Control
an ag em en t R ep or t corporate bond spreads and rising stock markets created capital gains, record low interest rates depressed operating investment returns. Overall, non-life profitability improved slightly but remained feeble due to low price levels and low fixed-income investment yields.
1 Solvency according to the E.U. Financial Conglomerates Directive. Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request; Allianz SE has not submitted an application so far. The solvency ratio excluding off-balance sheet reserves would be 164 % (2009: 155 %).
Reclassification of tax benefits 71 774 24 Operating profit (loss) 8,243 7,044 7,455
Floodings in Australia Since January 10, 2011, floodings have caused great damage in Queensland, Australia. Based on current information net claims are expected to amount to approximately € 87 million before income taxes.
The expense ratio increased by 0.2 percentage points to 28.1 %. Of this increase, 0.2 percentage points were due to one-off effects on overhead costs such as the write-down of reinsurance receivable for a large claim in Russia and the centralization of our Swiss back-offices. Additional 0.2 percentage points resulted from the ad hoc introduction of a financial crisis tax in Hungary as well as in relation to our compliance with the German Accounting Law Modernization Act (BilMoG). We managed to improve our expense ratio by approximately 0.2 percentage points by taking strong actions to reduce the cost level in our core markets Germany, France, Italy and the United States. However, this improvement was offset by a volume decline in premiums as a result of our measures to ensure profitability. A further improvement of 0.2 percentage points was due to the favorable development of the commission ratio which has to be seen as a one-off effect.
Gross premiums written Premiums earned (net) Operating profit/ loss internal 1 € mn € mn € mn € mn € mn € mn € mn € mn € mn € mn € mn
Third-party assets under management by regions/countries as of December 31, 2010 (December 31, 2009) 1
1 Represents interest and similar income less interest expenses. 2 Represents operating expenses divided by operating revenues.
For the next three years we plan to strengthen our drive for profitable growth.
The cost-income ratio is expected to remain below 65 %. Cost-income ratio of 58.7 %.
97 58 Your Allianz 65 Management Discussion and Analysis 118 Risk Report and Financial Control
The U.S. economy, whose fiscal policy is unlikely to shift towards consolidation until 2012, is expected to grow by 2.5 to 3 % in 2011 and by an estimated 2.5 % in 2012. Consequently, we expect to see an only moderate economic uptrend. The same is true for the Eurozone, with increasingly restrictive fiscal policy set to dampen economic momentum. GDP is expected to rise by between 1.5 and 2 % in 2011 and by around 2 % in 2012. The German economy looks poised to record above-average growth in the region of 2.5 to 3 % in 2011, before falling back more or less into line with the European average again in 2012.
Investment income will remain under pressure due to the short duration of investments in this segment combined with the low interest rate environment. Nevertheless, we will continuously strive to adapt our investment strategy to the current market conditions.
A growing middle class population in emerging markets such as China, India, Brazil and Indonesia, also provides growth opportunities in all business segments. With a strong presence and experience in these markets, and supported by our globally esteemed brand, the Allianz Group stands to benefit from this growing pool of potential future customers.
Climate change: With their expertise in loss reduction and risk management, insurance companies are well placed to make a vital contribution towards finding global climate solutions. To date, the Allianz Group has developed more than 70 products and services that help mitigate climate change or take its environmental impact into account. For example, hybrid car owners can benefit from discounted insurance, and special property insurance provides cover for using renewable energies or upgrading a property to be “green”.
Investments in distribution will focus on the development and transformation of our proprietary distribution network, as well as the further acceleration of our performance in the broker channel. Our aim to achieve and maintain world leading underwriting and claims discipline is underlined by dedicated initiatives in the Property-Casualty business to identify issues, to reinforce execution capabilities to fully exploit market opportunities, to keep and extend state-of-the-art technical skills and to foster staff development.
Allianz Group's asset portfolio as of December 31, 2010: � 444.9 billion (as of December 31, 2009: � 408.7 billion)
Our exposure in this asset class is well-diversified with more than 60 % allocated to governments and covered bonds. Approximately 94 % is invested in investmentgrade bonds and loans. In line with our operating business profile, 65 % of our fixed income portfolio is invested in Eurozone bonds and loans.
3 These do not include affiliates of € 10.3 bn and € 10.9 bn as of December 31, 2010 and December 31, 2009, respectively.
4 These include cash and cash equivalents as stated in our segment balance sheet of € 2.5 bn and € 2.3 bn and receivables from cash pooling amounting to € 3.0 bn and € 2.1 bn net of liabilities from securities lending and derivatives of € (0.2) bn and € 0.001 bn as of December 31, 2010 and December 31, 2009, respectively.
Life/Health reserves for insurance and investment contracts increased by € 25.9 billion or 8 % in 2010. € 19.5 billion of the increase was driven by market returns and higher net inflows resulting in higher aggregate policy reserves. Our entities in Germany, the U.S.A., Italy and France were the main contributors. Reserves for premium refund were essentially unchanged at € 23.8 billion.
Interest expenses on senior bonds increased to € 262.2 million (2009: € 220.9 million) due to a senior bond issue of € 1.5 billion in July 2009; for subordinated bonds they increased to € 543.8 million (2009: € 525.1 million) driven by the appreciation of the U.S. Dollar in 2010.
Senior and subordinated bonds issued or guaranteed by Allianz SE: As of December 31, 2010 2009
Group Risk, which reports to the Chief Financial Officer, develops methods and processes for identifying, assessing and monitoring risks across the Allianz Group based on systematic qualitative and quantitative analysis. This is the basis for informing the Board of Management of Allianz SE and senior management of the Group’s risk profile on a quarterly basis. Group Risk develops the Allianz risk management framework and oversees the operating entities’ adherence to the framework. The core elements of the risk framework are set down in the Allianz Group Risk Policy, which has been approved by the Board of Management of Allianz SE. It defines the minimum requirements for all operating entities within the Group. Additional risk standards, such as those related to specific segments or risk categories, are in place for our operating entities
Changes related to credit risk modeling For credit risk capital calculations, modeling has been improved by the inclusion of rating migration risk, higher granularity in terms of loss given default estimates and a more sophisticated correlation model using a country and industry classification for obligors as well as their asset size. In addition, exposure concentrations at the Group level are better captured.
Changes related to business risk modeling With the introduction of the new internal risk capital framework, we also aligned our approach to measure operational risk with the current proposal of the European Insurance and Occupational Pensions Authority (EIOPA).
At the Group level, we generally identify and measure concentration risks consistently across the business segments in terms of pre-diversified internal risk capital and in line with the risk categories covered by our internal risk capital model. Within the individual categories, we use supplementary approaches to manage concentration risks, which are described in the remainder of this section. In the subsequent sections all risks are presented on a pre-diversified and Group diversified basis and concentrations of single sources of risk are discussed accordingly.
an ag em en t R ep or t a significant level of policyholder participation, limiting major sources of risk, including market, credit, underwriting and cost risks.1
In 2010, the Allianz Group defined standards for hedging activities to mitigate its exposure to market risk due to options and guarantees or to fair value options embedded in life insurance products. All life and health operating entities are required to follow these standards.
Total Group diversified internal business risk capital rose significantly in the Asset Management segment mainly driven by an increase in third-party assets under management.
After the successful implementation of our new risk analysis infrastructure and related risk reporting processes at the beginning of 2010, we are now shifting focus to the further refinement of our internal risk capital model methodology in line with guidance from EIOPA to ensure compliance with Solvency II requirements.
Cash and cash equivalents at end of period 8,747 6,089 39,196 Cash and cash equivalents reclassified to assets of disposal groups classified as held for sale — — 30,238 Cash and cash equivalents at end of period of continuing operations 8,747 6,089 8,958
Financial liabilities within the scope of IAS 39 are either classified as
Financial instruments are generally recognized and derecognized on trade date, i. e. when the Allianz Group commits to purchase or sell securities or incur a liability.
No active markets – valuation techniques: If the market for a financial instrument is not active, the fair value is determined by using valuation techniques. The valuation techniques used are based on market observable inputs when available. Such market inputs include references to formerly quoted prices for identical instruments from an active market, quoted prices for identical instruments from an inactive market, quoted prices for similar instruments from active markets and quoted prices for similar instruments from inactive markets. Market observable inputs also include interest rate yield curves, option volatilities and foreign currency exchange rates. Where observable market inputs are not available, fair value is based on appropriate valuation techniques using nonmarket observable inputs. Valuation techniques include net present value techniques, the discounted cash flow method, comparison to similar instruments for which observable market prices exist and other valuation models. In the process, appropriate adjustments are 162 Allianz Group Annual Report 2010 Consolidated Financial Statements
Available-for-sale investments Available-for-sale investments comprise debt and equity securities that are designated as available-for-sale or are not classified as held-to-maturity, loans and advances to banks and customers, or financial assets carried at fair value through income. Available-for-sale investments are measured at fair value. Unrealized gains and losses, which are the difference between fair value and cost or amortized cost, are recognized as a separate component of other comprehensive income, net of deferred taxes and the latent reserve for premium refunds to the extent that policyholders will participate in such gains and losses on the basis of statutory or contractual regulations when they are realized. When an available-for-sale investment is derecognized or determined to be impaired, the cumulative gain or loss previously recorded in other comprehensive income is transferred and recognized in the consolidated income statement. Realized gains and losses on securities are generally determined by applying the average cost method at the subsidiary level.
Impairment of financial assets Impairment of held-to-maturity and available-forsale debt securities and of loans A held-to-maturity or available-for-sale debt security, as well as loan is impaired if there is objective evidence that a loss event has occurred after initial recognition of the security and up to the relevant date of the Allianz Group’s consolidated balance sheet, and that loss event has negatively affected the estimated future cash flows, i. e. all amounts due according to the contractual terms of the security are not considered collectible.
Fair value hedges Fair value hedges are hedges of a change in the fair value of a recognized financial asset or liability or a firm commitment due to a specified risk. Changes in the fair value of a derivative financial instrument, together with the change in fair value of the hedged item attributable to the hedged risk are recognized in income from financial assets and liabilities carried at fair value through income (net).
Costs for repairs and maintenance are expensed as incurred, while improvements, if they extend the useful life of the asset, provide additional functionality or otherwise enhance the value of the asset, are capitalized.
Goodwill and other intangible assets Intangible assets include intangible assets with indefinite useful lives like goodwill and brand names and intangible assets with finite useful lives like long-term distribution agreements and customer relationships.
The oversight and monitoring of the Allianz Group’s reserves culminate in quarterly meetings of the Allianz Group Reserve Committee, which is the supervising body that governs all significant reserves. It particularly monitors key developments across the Allianz Group affecting the adequacy of loss reserves.
Recently issued accounting pronouncements (effective on or after January 1, 2011 and not early adopted) IFRS 9, Financial Instruments: Classification and Measurement In November 2009, the IASB issued IFRS 9, Financial Instruments: Classification and Measurement. The publication of the IFRS represents the first part of the project to replace IAS 39 with a new standard – IFRS 9. The IASB’s work on the other phases is ongoing and comprises impairment of financial instruments and hedge accounting, with a view to replacing IAS 39 in its entirety by 2011.
Net income from continuing operations 4,740 (90) 4,650 4,186 82 4,268 Net income (loss) from discontinued operations, net of income taxes (395) — (395) (6,373) — (6,373)
Deferred tax assets 14 8 Other assets 42 41 Intangible assets 239 — Total assets 529 283 Deferred tax liabilities 72 1 Other liabilities 147 128 Participation certificates and subordinated liabilities 57 50 Total equity 253 104 Total liabilities and equity 529 283
Corporate and Other The reportable segment Holding & Treasury includes the management and support of the Allianz Group’s businesses through its strategy, risk, corporate finance, treasury, financial control, communication, legal, human resources and technology functions.
Identification of reportable segments The business activities of the Allianz Group are first organized by product and type of service: insurance activities, asset management activities and corporate and other activ ities. Due to differences in the nature of products, risks and capital allocation, insurance activities are further divided between Property-Casualty and Life/Health cat egories. In accordance with the responsibilities of the Board of Management, each of the insurance categories is grouped into the following reportable segments: – German Speaking Countries – Europe incl. South America – NAFTA Markets – Global Insurance Lines & Anglo Markets – Growth Markets – Assistance (Mondial) (Property-Casualty only)
Recent Organizational Changes At the beginning of 2010, the Allianz Group reorganized the structure of its insurance activities to reflect the changes in the responsibilities of the Board of Management. European insurance operations have been combined while Global Insurance Lines & Anglo Markets are shown separately from NAFTA Markets, respectively for both Property-Casualty and Life/Health insurance activities. Furthermore, Assistance (Mondial) now comprises a separate reportable segment within Property-Casualty insurance activities. Previously reported information has been restated to reflect this change in the composition of the Allianz Group’s reportable segments.
Property-Casualty Life/Health € mn € mn € mn € mn € mn € mn
Income (loss) from continuing operations before income taxes 4,320 4,142 5,936 2,783 2,613 799 Income taxes (1,216) (1,363) (1,489) (934) (656) (304) Net income (loss) from continuing operations 3,104 2,779 4,447 1,849 1,957 495 Net income (loss) from discontinued operations, net of income taxes — — — — — — Net income (loss) 3,104 2,779 4,447 1,849 1,957 495
Change in reserves for insurance and investment contracts (net) — — — (300) (355) 3
Alternative Investments Consolidation Corporate and Other € mn € mn € mn € mn € mn € mn € mn € mn € mn
Changes in the consolidated subsidiaries of the Allianz Group (4) — (13) Foreign currency translation adjustments 151 54 (85)
Cost as of January 1, 3,828 3,400 3,946 Accumulated amortization as of January 1, (2,531) (2,284) (2,781) Carrying amount as of January 1, 1,297 1,116 1,165
Changes in the consolidated subsidiaries of the Allianz Group (5) (2) (10)
As a result of the impairment test in 2010, the goodwill of the CGU Property-Casualty Central and Eastern Europe was impaired by € 140 mn, the goodwill of the CGU manroland AG was impaired by € 115 mn and the goodwill of the CGU Banking Europe was impaired by € 51 mn.
– South America, – Asia-Pacific and Middle East, – Central and Eastern Europe, including Bulgaria, Croatia, the Czech Republic, Hungary, Slovakia, Poland, Romania and Russia,
The discount rates and eternal growth rates for the CGU are as follows: Discount rate
Changes in historical reserves for loss and loss adjustment expenses (LAE) The analysis of loss and LAE reserves by actuaries and management is conducted by line of business and separately for specific claim type topics like asbestos claims. The origin year of losses is taken into consideration by analyzing each line of business also by accident year. While this determines the estimates of reserves for loss
Companies acquired or divested during the period shown in the table, can lead to distortions in the cumulative surplus or deficiency. The table starts with the presentation of net and gross liabilities for unpaid claims and claims expenses as accounted, as of the respective date of the balance sheet. Over time, these liabilities are re-estimated. In addition, these liabilities will change if, through either acquisition, sale of a company or reclassification, entire new portfolios of claim payments and reserves are added to or subtracted from the data. In addition, changes in currency exchange rates can lead to distortions in the cumulative surplus or deficiency.
The following table breaks down the loss and LAE reserves of the Allianz Group, in total and separately by IBNR and case reserves, gross of reinsurance, by line of business for the years ending December 31, 2010, 2009 and 2008.
Changes in aggregate policy reserves for participating life insurance contracts and traditional long-duration insurance contracts for the years ended December 31, 2010 and 2009 were as follows: Partici pating life insurance contracts
% of non-unitlinked reserves in % € bn in % in % € bn in %
Fi na nc ia l S ta te m en ts 27 Interest and similar income € mn € mn € mn
1 Beginning 2010, income and expenses from alternative investments are shown gross in other income and other expenses.
Aggregate policy reserves (146) (8,126) — (8,272) Other insurance reserves 3 (255) — (252) Expenses for premium refunds (185) (5,010) (242) (5,437)
Loans and advances to banks and customers: For loans and advances to banks and customers quoted market prices are not available as there are no active markets where these instruments are traded. The fair value is determined using generally accepted valuation techniques with current market parameters. For shortterm loans the carrying amount represents a reasonable estimate of the fair value. For long-term loans the fair value is estimated by discounting future contractual cash flows using risk-adjusted discount rates. Additionally, the individually assessed component of the allowance for loan losses and the recoverable amounts of collateral is considered in the fair value determination of loans.
Government and agency mortgage-backed securities (residential and commercial) 280 8,074 4 8,358 Corporate mortgage-backed securities (residential and commercial) 36 7,658 54 7,748 Other asset-backed securities 64 3,493 330 3,887 Government and government agency bonds 103,991 9,922 39 113,952
2 For the purpose of this disclosure to match the disclosures made in note 9, the Allianz Group‘s unlisted equity securities and investments in limited partnerships of € 375 mn, which are measured at cost less impairment charges because the fair value cannot be reliably measured, are included.
Derivative financial instruments 3,698 269 — (330) Investment contracts with policyholders 1 431 236 — (247) Financial liabilities for unit-linked contracts 13 19 131 (8) Financial liabilities for puttable equity instruments 61 — — — Liabilities held in trust — 56 — (35) Total financial liabilities at fair value 4,203 580 131 (620)
Financial liabilities Financial liabilities carried at fair value through income please refer to note 44 Liabilities to banks and customers 1 14,096 4,409 2,650 21,155 Derivative financial instruments and firm commitments included in other liabilites please refer to note 44 Financial liabilities for puttable equity instruments 3,111 — — 3,111 Certificated liabilities, participation certificates and subordinated liabilities 1 1,874 2,815 12,538 17,227 Insurance liabilities
As of December 31, 2010, the Allianz Group recorded for the non-vested RSUs a provision of € 121 mn (2009: € 123 mn) in other liabilities.
The RSUs are virtual stocks without dividend payments and a capped payout. The fair value is calculated by subtracting the net present value of expected future dividend payments until maturity and the fair value of the cap from the prevailing share price as of the valuation date. The cap is valued as a European short call option, using prevailing market data as of the valuation date.
In 2010, the ABV AG announced a restructuring plan for the reorganization of the sales channel via part-time insurance agents in Germany that will be completed in 2014. The main objectives of the restructuring program are to increase quality and efficiency of the part-time insurance agents’ supervision and support and to raise the attractiveness of this sales channel. As of the year ended December 31, 2010 the restructuring plan includes a reduction of approximately 454 positions of district managers. The reduction of staff within this program shall mainly occur in consent with the employees. Some early retirement agreements (Altersteilzeit) were concluded before the restructuring provision was recorded and are therefore not part of the restructuring plan.
As of December 31, 2010, the Euler Hermes Group restructuring provision was € 57 mn. During the year ended December 31, 2010, Euler Hermes Group recorded restructuring charges of € 73 mn.
Fi na nc ia l S ta te m en ts 52 Other information
Audit-related fees KPMG charged the Allianz Group an aggregate of € 5.0 mn (2009: € 5.0 mn) for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements and are not reported within audit fees. These services consisted primarily of advisory and consulting services related to accounting and financial reporting standards and financial due diligence services.
Sale of Industrial and Commercial Bank of China (ICBC) shares In January 2011, the Allianz Group sold 0.2bn ICBC shares with a capital gain of approximately € 0.1 bn.
Allianz Global Investors Europe Holding GmbH, Munich 100.0 Allianz Global Investors Kapitalanlagegesellschaft mbH, Frankfurt am Main 100.0
DBI-FONDS ADPF2, Frankfurt am Main 100.0 3 dbi-Fonds Ammerland, Frankfurt am Main 100.0 3 dbi-Fonds DAV, Frankfurt am Main 100.0 3 dbi-Fonds WE, Frankfurt am Main 100.0 3
Allianz Global Investors Asian Value Opportunities Segregated Portfolio, Grand Cayman 100.0 3
Zagrebacka banka d.d., Zagreb 11.7 1 Percentage includes equity participations held by dependent enterprises in full, even if the Allianz Group’s share in the dependent enterprise is under 100 %.
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB [Handelsgesetzbuch „German Commercial Code“] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany ] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accountingrelated internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and group management report. We believe that our audit provides a reasonable basis for our opinion.
Dr. Rüdiger Grube Chairman of the Board of Management, Deutsche Bahn AG
Forwards The parties to this type of transaction agree to buy or sell at a specified future date. The price of the underlying assets is fixed when the deal is struck.
Held for sale A non-current asset is classified as held for sale if its carrying amount will be recovered principally through sale rather than though continuing use. On the date a non-current asset meets the criteria as held for sale, it is measured at the lower of its carrying amount and fair value less costs to sell.
Options Derivative financial instruments where the holder is entitled – but not obliged – to buy (call option) or sell (put option) the underlying asset at a predetermined price sometime in the future. The grantor (writer) of the option, on the other hand, is obliged to transfer or buy the asset and receives a premium for granting the option to the purchaser.
M Management’s assessment of 2010 results 68 Management’s overall assessment of the current economic situation 104 Management’s views on future challenges and opportunities 102 Market positions 58