B Corporate Governance 35 Corporate Governance Report 40 Statement on Corporate Management pursuant to § 289a of the HGB 42 Takeover-related Statements and Explanations 45 Remuneration Report
4 As of 1 January 2013, figures have been restated to reflect the implementation of IFRS 10. Figures prior to 2012 have not been adjusted retrospectively. For further information, please refer to note 4 to the consolidated financial statements.
10 Conglomerate solvency ratio as of 31 December 2014 was adjusted for the potential calls of hybrid capital (subordinated bonds) of € 0.4 BN in 2015. Excluding this adjustment, the solvency ratio would be 182 % (including off-balance sheet reserves) as of 31 December 2014.
First and foremost, these are the employees of Allianz. Their skill and expertise are the basis for our success. I am truly grateful for the unique commitment of our people.
– The global increase in life expectancy and developments in medicine make individual old-age provision more essential than ever. It would be disastrous if the mistaken idea should take hold that saving is pointless given low interest rates. In fact the opposite is true: precisely in times such as these, people need professional insurance and investment advice in order to avoid taking any undue risks. This is an area where Allianz is well placed both on the product and sales side.
“Protecting the Future”. Our aim is to enter into dialogue with employees, politicians, the wider public and of course with you, our investors, about two significant challenges of the future: demography and climate change. These two themes are not only of critical importance for our life and property insurance, but will also affect all of us directly. We want to make a contribu tion to social dialogue through a series of internal and external events. We see this as our essential corporate social responsibility in this anniversary year.
Ladies and Gentlemen, During the 2014 fiscal year, the Supervisory Board fulfilled all its duties and obligations as laid out in the company Statutes and applicable law. It monitored the management of the company and advised the Board of Management regarding the conduct of business.
The Board of Management also informed us in writing of important events that occurred between meetings. The chairmen of the Supervisory and Management Boards also had regular discussions about major developments and decisions. Details on each member’s participation at meetings of the Supervisory Board and its committees can be found in the Corporate Governance Report, starting on page 35.
been delegated to the committees. There is no Conciliation Committee because the German Co­Determination Act (“Mitbestimmungsgesetz”), which provides for such a committee, does not apply to Allianz SE as a European Company (SE). Please find the composition of the committees at the end of the reporting period on page 21.
Dividend yield as of 31 December % 5.02 4.1 4.3 6.1 5.1 1 In comparison with EURO STOXX 50, source: Bloomberg.
The Allianz share is strongly represented in major German and European indices, as well as being included in important global indices.
Share type Registered shares with restricted transfer Security codes Wkn 840 400
Regular Board of Management meetings are led by the Chairman. Each member of the Board may request a meeting, providing notification of the proposed subject. The Board takes decisions by a simple majority of participating members. In the event of a tie, the Chairman casts the deciding vote. The Chairman can also veto decisions, but cannot impose any decisions against the majority vote.
Group MerGers and aCquisitions CoMMittee Dr. Helga Jung (Chairman), Dr. Dieter Wemmer, Dr. Maximilian Zimmerer
The responsibilities and composition of the Board of Management and Group committees are set out in the respective Rules of Procedure, which require the approval of the Board of Management.
− Initial review of the annual Allianz se and consol- idated financial statements, management reports (incl. Risk Report) and the dividend proposal, review of half-yearly and quarterly financial reports
− Approval of the assumption of other mandates by Board of Management members noMination CoMMittee 3 members − Chairman: Chairman of the Supervisory Board (Dr. Helmut Perlet)
The company’s share capital is conditionally increased by up to € 250,000,000 (Conditional Capital 2010/2014). This conditional capital increase will only be carried out to the extent that conversion or option rights resulting from bonds issued by Allianz SE or its subsidiaries on the basis of the authorization of the General Meeting of 5 May 2010 or on the basis of the authorization of the General Meeting of 7 May 2014 are exercised, or that conversion obligations tied to such bonds are fulfilled.
Domestic or foreign banks that are majority owned by Allianz SE may buy and sell Allianz shares for trading purposes (§ 71 (1) No. 7 and (2) of the German Stock Corporation Act) under an authorization of the General Meeting valid until 6 May 2019. The total number of shares acquired thereunder, together with treasury shares held by Allianz SE or attributable to it under §§ 71a et seq. of the German Stock Corporation Act, shall at no time exceed 10 % of the share capital of Allianz SE.
Variable remuneration components may not be paid, or payment may be restricted in the case of a breach of the Allianz Code of Conduct, risk limits or compliance requirements. Additionally, a reduction or cancellation of variable remuneration may occur if the supervisory authority (BaFin) requires this in accordance with its statutory powers.
2 Payout is capped at 200 % above grant price. The relevant share price used to determine the final number of RSUs granted and the 200 % cap is only available after sign-off by the external auditors.
8 In the ARP he can choose between a lump sum payment or an annuity. The lump sum benefit amount projected with actual interest rates is USD 120 THOU (2013: USD 120 THOU) and likely to change when he retires. Following his termination effective 31 December 2014, he receives in the SRP a payment of total USD 101 THOU in three annual installments of USD 33.7 THOU in January 2015, 2016 and 2017.
LOANS TO MEMBERS Of THE BOARD Of MANAGEMENT As of 31 December 2014, there were no outstanding loans granted by Allianz Group companies to members of the Board of Management.
Change of control In case of early termination as a result of a change of control, sever­ ance payments made to Board members generally amount to three years’ compensation (annual compensation as defined above) and shall not exceed 150 % of the severance payment cap (a Board mem­ ber with a base salary of € 750 THOU would receive a maximum of € 5,625 THOU). Consequently, the payout is less than two years’ total remuneration at target (which would be € 6,000 THOU).
Remuneration for mandates in other Allianz companies and for other functions All current employee representatives of the Supervisory Board except for Mrs. Ira Gloe Semler are employed by Allianz Group companies and receive a market­aligned remuneration for their services.
In this environment we aim to preserve the strength of our balance sheet and ensure efficient use of our capital (for details regarding our new dividend policy please refer to the Expected dividend development section on page 108). At the same time we see unique opportunities for Allianz due to the strength of our franchise in the world’s leading insurance and asset management markets, of our people, brand and capital. As a consequence, the focus of our segment strategies will be on organic growth and portfolio management in Property -Casualty, protecting the profitability in Life/Health and positioning Asset Management for continued performance and leadership.
The following pages highlight some of our key sustainability approaches and major developments in 2014. The Allianz Group Sustainability Report, with full details of our sustainability strategy, approach and progress, is available on our sustainability website1.
Dialogues with non-governmental organizations (NGOs) and an ongoing internal stakeholder engagement process have enabled us, for example, to identify 13 sensitive business areas for both underwriting and investments where we could have significant business risks across regions and lines of business. In 2014, we further developed our approach to screening sensitive countries and human rights risks, to complement our existing sensitive business guidelines.
EnvironmEntaL manaGEmEnt As a business, we are committed to reducing our environmental impact and have formalized this in our Carbon Reduction Strategy. The target is to reduce our carbon emissions per employee by 35 % by 2015 against a 2006 baseline. Since 98.3 % of the Group’s emissions come from energy, travel and paper, we focus our activities on these three areas. Because energy use is the largest contributor to our carbon footprint, we also have a specific energy target: to reduce energy consumption per employee by 10 % by 2015 against a 2010 baseline. As our current target period will end in 2015, we are in the process of developing post-2015 environmental targets.
We are one of the world’s leading industrial insurers and our product portfolio includes a wide range of Property-Casualty and Life/Health insurance products for both retail and corporate customers. As a sustainable insurer, we understand that integrating environmental, social and governance (ESG) issues in our risk analysis presents a major opportunity to reduce risks in underwriting – for us and our customers. Furthermore, we offer a selection of products and services that enable economic development, support a low-carbon economy and foster financial inclusion.
Net income rose 4.1 % to € 6,603 MN. This was mainly driven by our strong operating performance and an extraordinary tax benefit, but slightly dampened by the development of our non-operating result. Net income attributable to shareholders and non-controlling interests was € 6,221 MN (2013: € 5,996 MN) and € 381 MN (2013: € 347 MN), respectively.
Property-Casualty Life/Health Asset Management Corporate and Other Internal growth 1 Total revenues include € (344) mn (2013: € (302) mn) from consolidation.
Net income increased by € 260 MN – from € 6,343 MN to € 6,603 MN – primarily driven by our overall strong operating performance. Net income attributable to shareholders and non-controlling interests amounted to € 6,221 MN (2013: € 5,996 MN) and € 381 MN (2013: € 347 MN), respectively. Our largest non-controlling interests in net income related to Euler Hermes and PIMCO.
2 Includes expenses for premium refunds (net) in Property-Casualty of € (307) mn (2013: € (162) mn).
Claims and insurance benefits incurred (net) (28,878) (27,713) Acquisition and administrative expenses (net) (12,400) (11,942) Change in reserves for insurance and investment contracts (net) (without expenses for premium refunds)1 (231) (223) Underwriting result 2,251 2,170 1 Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of “change in reserves for insurance and investment contracts (net)”. For further information, please refer to note 34 to the consolidated financial statements.
United States: 0.2 percentage points. The negative development was largely driven by commercial liability, crop and higher losses from natural catastrophes.
Operating investment income (net) amounted to € 3,066 MN – up by € 17 MN. This was mainly driven by a higher foreign currency result net of hedging.
Gross premiums written1 48,322 46,579 Ceded premiums written (3,961) (3,981) Change in unearned premiums (602) (550) Premiums earned (net) 43,759 42,047 Interest and similar income 3,595 3,594 Operating income from financial assets and liabilities carried at fair value through income (net) 6 (75) Operating realized gains/losses (net) 186 70 Fee and commission income 1,260 1,226 Other income 60 47 Operating revenues 48,867 46,908
Loadings and fees 5,151 4,709 Loadings from premiums 3,430 3,251 Loadings from reserves 1,094 1,001 Unit-linked management fees 626 458
2 Impact of change in DAC includes effects of change in DAC, URR and VOBA and is the net impact of deferral and amortization of acquisition costs and front-end loadings on operating profit and therefore deviates to the financial statements.
Fee and commission expenses (1,445) (1,484) Net fee and commission income 6,380 7,127 Net interest income1 (3) 12 Income from financial assets and liabilities carried at fair value through income (net) 5 12 Other income 6 10 Operating revenues 6,388 7,162
Corporate and Other Operating loss reduced by € 183 mn to € 820 mn, mainly driven by the recovery in Banking.
1 Respective offsetting effects were recorded within our other business segments, mainly within PropertyCasualty. For further information on the one-off effect from pension revaluation, please refer to note 6 to the consolidated financial statements.
In the following section, we focus on the development of our ongoing Banking business. To make the figures comparable, we have excluded the closed business operations of Allianz Bank.
Return on equity after income taxes of 11.2 % (2013: 11.9 %). Proposed dividend at € 6.85 (2013: € 5.30) per share. Increase in payout ratio to 50 % (2013: 40 %).
At the beginning of 2015 the economic picture is somewhat mixed. On the one hand, the unexpectedly drastic slide in oil prices is likely to provide an important stimulus for the global economy. As oil consumers make the most of their increased purchasing power and domestic demand in oil-producing countries is only partially curbed in response to lower oil revenues, global demand is likely to be bolstered. On the other hand, economic prospects for a number of countries have deteriorated significantly in recent months. One example is Russia, which is likely to experience a sharp recession in 2015 primarily due to the economic sanctions and the collapse in oil prices. Overall, global output is likely to expand by close to 3 % this year, following an increase of 2.5 % last year. This acceleration is attributable in full to industrialized countries, while growth in many major emerging market economies continues to be dampened by structural problems. Nevertheless, with an expected real GDP increase of 4.0 % in 2015, growth in these countries will still be considerably higher than in the industrialized world. In the Eurozone, the economic recovery is likely to continue this year, supported by Euro depreciation and the fall in energy prices. We expect growth in most crisisridden member states to outpace last year’s performance, although uncertainty about the economic policies of certain member states could weigh on sentiment. Supported by brighter economic conditions in the Eurozone and a favorable environment for private consumption, the German economy could expand by 2 % in 2015. Inflation is likely to remain subdued on a global level, not least due to the recent sharp drop in energy prices and the dire unemployment situation in many industrialized countries, which keeps the lid on wages.
Therefore, several factors are of vital importance for an asset manager’s ability to grow – notably above benchmark investment results and innovative client-focused investment solutions and products. In addition, appropriate responses to clients’ needs as well as efficient operations and a sufficient business volume are important.
For 2015, we anticipate keeping the combined ratio below 96 % over the cycle (2014: 94.3 %). This rests on our expectation that the aggregate effect of improvements in pricing, claims management and productivity will compensate for any underlying claims inflation. Despite the high volatility of natural catastrophes in recent years, we assume such claims will be in line with their expected average level in 2015.
In 2015, we will continue to actively work on product and distribution actions, expense management and asset/liability management in order to mitigate the impacts of the difficult market conditions, particularly low interest rates. On top, we will keep exploring options to further optimize our capital usage. Still, it must be noted that market and accounting volatility, along with the level of net harvesting, can significantly affect the Life/Health segment results and make precise predictions difficult.
Balance Sheet Review − Shareholders’ equity increased by € 10.7 bn to € 60.7 bn. − Solvency ratio remained strong at 181 %.1
In 2014, shareholders’ equity increased by € 10,663 mn to € 60,747 mn as of 31 December 2014. Unrealized gains were up by € 7,176 mn, mainly due to higher fair values of debt securities triggered by declines in all major government bond yields – in particular within the Eurozone. Our net income attributable to shareholders of € 6,221 mn also contributed to this growth. A € 1,336 mn increase in foreign currency translation adjustments, mainly driven by the significant depreciation of the Euro against the U.S. Dollar – which was only minimally offset by the depreciation of the Russian ruble against the Euro – also contributed. These upward movements in shareholders ’ equity were only partly offset by our € 2,405 mn dividend payout in May 2014 and actuarial losses on defined benefit plans recorded in other comprehensive income of € 1,571 mn in 2014.
Our gross exposure to equities increased by € 5.6 bn to € 41.2 bn due to new investments and to a lesser extent positive developments in almost all major stock markets in 2014. This exposure still accounted for 7 % of our investment portfolio. Our equity gearing2 remained stable at 25 %, although we have an upswing in shareholders’ equity.
Our exposure to debt instruments grew by € 69.1 bn – or 14.4 % – to € 549.8 bn and represented 89 % of our total investment portfolio, almost stable compared to last year. The increase in absolute terms was driven by higher fair values as a result of decreased interest rates as well as new investments. Furthermore, foreign currency effects were also significant, mainly driven by the appreciation of the U.S. Dollar against the Euro.
The allocation of our well-diversified fixed income portfolio remained rather stable, with modest increases in the share of corporate bonds and government bonds accompanied by minor reductions in the portion of covered bonds and banks. About 95 % of this portfolio of debt instruments was invested in investment-grade bonds and loans.3
2 Senior bonds provide for early termination rights in case of non-payment of amounts due under the bond (interest and principal) as well as in case of insolvency.
Reconciliations The previous analysis is based on our consolidated financial statements and should be read in conjunction with them. In addition to our stated figures according to the International Financial Reporting Standards (IFRS), the Allianz Group uses operating profit and internal growth to enhance the understanding of our results. These additional measures should be viewed as complementary to, and not as a substitute for, our figures determined according to IFRS.
Commissions and profit received on reinsurance business ceded 88 67 Administrative expenses on reinsurance business ceded 14 8 Acquisitions and administrative expenses (net) (as per Notes)1 (5,860) (5,603)
solvency ii RegulatoRy capitalization The Allianz Group’s own funds as well as the capital requirements are based on the market value balance sheet approach as the major economic principle of Solvency II rules.1 Our objective is to maintain available capital at the Group level that is significantly above the minimum indicated requirements. Our Solvency ratio based on these requirements is shown in the following table. Note, for 2014 our U.S. based life business, Allianz Life of North America (AZ Life), is included on the basis of third country equivalence treatment2.
The following table summarizes our disclosed Solvency II regulatory capitalization ratios over the course of the year 2014.
Coverage of the internal risk capital model Allianz’s internal risk capital model covers all major insurance operations2. This includes the relevant assets (including bonds, loans, mortgages, investment funds, equities and real estate) and liabilities (including the cash flow run-off profile of all technical reserves as well as deposits, issued debt and other liabilities). For with-profit products in the Life/Health business segment, options and guarantees embedded in insurance contracts – including policyholder participation rules – are taken into account.3
Risk pRofile and Risk management As we are an integrated financial services provider offering a variety of products across different business segments and geographic regions, diversification is key to our business model. Diversification is a key element in managing our risks efficiently by limiting the economic impact of any single event and by contributing to relatively stable results and our risk profile in general. Therefore, our aim is to maintain a balanced risk profile without any disproportionately large risk concentrations and accumulations.
In order to further limit the impact of any financial market changes and to ensure that assets adequately back policyholder liabilities, we have additional measures in place. One of these is asset/ liability management linked to the internal model framework incorporating risks as well as return aspects stemming from our insurance obligations. In addition, we are using derivatives mostly to either hedge our portfolio against adverse market movements or to reduce our reinvestment risk – for example by using forwards or swaptions.
pre-diversified, € mn Interest rate Inflation Credit spread Equity Real estate Currency Total
Our total pre-diversified market risk showed a strong increase, mainly driven by market movements. In particular, the decreasing interest rates in 2014, combined with an increase in implied interest rate volatilities, led to higher sensitivities of options and guarantees in our Life/Health business segment. In addition, the historically low interest rates also created significant cross effects to other risk types in the Life/Health business segment due to profit sharing mechanisms and by that also increasing respective risk, for example equity and spread risk. In addition, equity risk increased due to higher exposure resulting from increasing equity markets outside the Eurozone and a weakened Euro against almost all currencies.
1 The stated market value includes all investments whose market value is sensitive to interest rate movements (excluding unit-linked business) and therefore is not based on classifications given by accounting principles.
Premium risk is subdivided into natural catastrophe risk, terror risk and non-catastrophe risk. We calculate premium risk based on actuarial models that are used to derive loss distributions. Premium risk is actively managed by the Allianz Group and its local operating entities. Assessing the risks as part of the underwriting process is a key element of our risk management framework. There are clear underwriting limits and restrictions are centrally defined and in place across the Group. In addition to the centrally-defined underwriting limits, the local operating entities have limits in place that take into account their business environments. Excessive risks are mitigated by external reinsurance agreements. All these measures contribute to a limitation on risk accumulation.
− The Group Capital Committee supports the Board of Management with recommendations regarding the capital structure, capital allocation and the investment strategy, including the strategic asset allocation.
Operating entities Operating entities are responsible for their own risk management, including adherence to both external requirements (for example, those imposed by local regulators) and internal Group-wide standards. The operating entities’ Board of Management is responsible for setting and approving a local risk strategy during the annual Strategic and Planning Dialogues with the Group and ensuring operating entities’ adherence to their risk strategy.
Controls over Financial Reporting and Risk Capital Statements pursuant to § 289 (5) and § 315 (2) no. 5 of the German Commercial Code (“Handelsgesetzbuch – HGB”) and explanatory report.
Airports in Ireland, where Allianz Worldwide Care’s primary support center is located, were closed and the company’s air ambulance partners were also hampered by airport closures.
Gross premiums written 73,883 72,051 Ceded premiums written (4,463) (4,541) Change in unearned premiums (1,146) (882) Premiums earned (net) 26 68,274 66,628 Interest and similar income 27 21,443 20,918 Income from financial assets and liabilities carried at fair value through income (net) 28 (1,604) (1,845) Realized gains/losses (net) 29 4,017 4,286 Fee and commission income 30 10,119 10,492
Acquisition and administrative expenses (net) 39 (23,343) (22,865) Fee and commission expenses 40 (3,238) (3,038) Amortization of intangible assets 15 (123) (136)
Share of earnings from investments in associates and joint ventures (196) (146) Realized gains/losses (net) and impairments of investments (net) of: Available-for-sale and held-to-maturity investments, investments in associates and joint ventures, real estate held for investment, loans and advances to banks and customers, non-current assets and assets and liabilities of disposal groups classified as held for sale (3,105) (3,676) Other investments, mainly financial assets held for trading and designated at fair value through income 2,537 963
Third-party assets held in an agency or fiduciary capacity are not assets of the Allianz Group and are not presented in these consolidated financial statements.
For banking entities, valuation allowances of their loan book are reported as loan loss allowances. For all non-banking entities, loans to banks and customers have an investment character and valuation allowances are reported as ‘impairments of investments’. For the loan loss allowance reported by banking entities, please refer to notes 10 and 36. Allowances for loans to banks and customers by non-banking entities are reported in note 37.
Fair value hedges are hedges of a change in the fair value of a recognized financial asset or liability or an unrecognized 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).
Intangible assets with finite useful lives primarily consist of distribution agreements. They are initially recorded at cost which generally is the purchase price plus directly attributable costs or, when acquired with business combinations, at fair value if the intangible asset is separable or arises from contractual or other legal rights and its fair value can be measured reliably. Distribution agreements are subsequently recorded at cost less accumulated depreciation and impairments. The assets are generally depreciated on a straight-line basis over their useful lives or contractual term.
reserVes for Loss aND Loss aDJustmeNt eXpeNses Reserves are established for the payment of losses and loss adjustment expenses (LAE) on claims which have occurred but are not yet settled. Reserves for loss and loss adjustment expenses fall into two categories: case reserves for reported claims and reserves for incurred but not reported losses (IBnR).
iFrs 15, Revenue from Contracts with Customers In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers. IFRS 15 supersedes IAS 18, Revenue, IAS 11, Construction Contracts, and a number of revenue-related interpretations. With the introduction of IFRS 15, the IASB pursued the objective of developing a single revenue standard containing comprehensive principles for recognizing revenue. As the core IFRS 15 principle an entity recognizes revenue from contracts with customers when and to the extent that it transfers promised goods or services to the customer. The new standard includes a set of quantitative and qualitative disclosure requirements providing information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.
The carrying amounts allocated to the identifiable assets and liabilities of the Portfolio are provisional due to pending receipt of the final valuations of those assets and liabilities.
Property-Casualty In the business segment Property-Casualty, reportable segments offer a wide variety of insurance products to both private and corporate customers, including motor liability and own damage, accident, general liability, fire and property, legal expense, credit and travel insurance.
Income (loss) before income taxes 4,976 5,563 3,316 2,793 2,588 3,106 (1,013) (1,810) (1,020) (9) 8,848 9,643
Claims and insurance benefits incurred (net) (6,680) (7,134) (6,281) (6,070) (2,758) (2,611) (1,603) (1,376) (8,010) (7,574) (1,676) (1,491) (1,956) (1,457) 86 – (28,878) (27,713) Change in reserves for insurance and investment contracts (net) (460) (322) (40) (40) (6) (4) (8) (9) (7) (10) (4) – (13) – – – (538) (384)
5 Represents the total of acquisition and administrative expenses (net), excluding one-off effect from pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).
Cost-income ratio3 in % 59.2 55.9 1 Represents fee and commission income less fee and commission expenses. 2 Represents interest and similar income less interest expenses. 3 Represents operating expenses divided by operating revenues.
Available-for-sale investments 465,914 392,233 Held-to-maturity investments 3,969 4,140 Funds held by others under reinsurance contracts assumed 1,154 893 Investments in associates and joint ventures 4,059 3,098 Real estate held for investment 11,349 10,783
Share of earnings 196 146 Share of other comprehensive income 54 (82) Share of total comprehensive income 250 64 real estate held For Investment real estate held For Investment € mn
Reversals of impairments 44 22 Carrying amount as of 31 December 11,349 10,783 Accumulated depreciation as of 31 December 3,054 3,053 Cost as of 31 December 14,403 13,837
D Consolidated Financial Statements 151 Consolidated Balance Sheets 152 Consolidated Income Statements 153 Consolidated Statements of Comprehensive Income 154 Consolidated Statements of Changes in Equity 155 Consolidated Statements of Cash Flows 157 Notes to the Consolidated Financial Statements
Carrying amount as of 31 December 4,595 4,354 lIFe/health Carrying amount as of 1 January 15,837 13,521 Reclassification of entities from Asset Management to Life/Health 159 –
Changes in aggregate policy reserves ceded to reinsurers are as follows: changes In aggregate PolIcy reserves ceded to reInsurers € mn
As of 31 December 2014, assets pledged as security and other restrictions on title were € 113 mn (2013: € 108 mn).
The largest contributor was Fireman’s Fund Insurance Company with a favorable development of € 134 mn mainly due to a better than expected development for hurricane Sandy claims.
Total all other subsidiaries – – – – – 445 445 444 1 Except for interest rates. Interest rates represent the weighted average. 2 Includes subordinated bonds issued by Allianz Finance II B.V. and guaranteed by Allianz SE.
Some insurance subsidiaries are subject to regulatory restrictions on the amount of dividends which can be remitted to Allianz SE without prior approval by the appropriate regulatory body. Such restrictions require that a company may only pay dividends up to an amount in excess of certain regulatory capital levels or based on the levels of undistributed earned surplus or current year income or a percentage thereof. By way of example only, the operations of the Allianz Group’s insurance subsidiaries located in the United States are subject to limitations on the payment of dividends to their parent company under applicable state insurance laws. Dividends paid in excess of these limitations generally require the prior approval of the insurance commissioner of the state of domicile. The Allianz Group believes that these restrictions will not affect the ability of Allianz SE to pay dividends to its shareholders in the future.
deferred tax assets and liabilities deferred tax assets and liabilities € mn as of 31 December 2014 2013
Hedge of net investment in foreign operations As of 31 December 2014, the Allianz Group hedges part of its U.S. Dollar, British Pound and Swiss Franc net investments through the issuance of U.S. Dollar, British Pound and Swiss Franc denominated liabilities with a nominal amount of USD 1.0 bn, GbP 0.8 bn and CHF 0.5 bn as well as the use of forward sales of USD and GbP with a notional of USD 1.5 bn and GbP 0.4 bn. The total negative fair value in 2014 was € 80 mn (2013: total positive fair value of € 2 mn).
Level 3 – Non-market observable inputs Total financial assets Financial assets carried at fair value through income
Available-for-sale investments Equity securities 5,168 Net asset value n/a n/a Corporate bonds 4,686 Discounted cash flow method Option adjusted spread 0 bps – 725 bps
Purchase obligations The Allianz Group has commitments for mortgage loans and to buy multi-tranche loans of € 3,388 mn (2013: € 2,810 mn) as well as to invest in private equity funds and similar financial instruments totaling € 4,388 mn (2013: € 2,978 mn) as of 31 December 2014. As of 31 December 2014, commitments outstanding to invest in real estate used by third parties or used by the Allianz Group for its own activities and for infra structure investments amount to € 1,209 mn (2013: € 860 mn).
From 1 July 2012, benefit changes were made to the defined benefit section. Following these benefit changes, increases to pensionable pay are capped at RPI and, in 2015, the defined benefit section will close to future accrual and all members will switch to the defined contribution section.
Real allocation 2013 as of 31 December % % € mn € mn
In addition to the plan assets of € 13.1 bn, the Allianz Group has dedicated assets at Group level amounting to € 3.2 bn as of 31 December 2014, which are likewise managed according to Allianz ALm standards.
Expected dividend yield % 13.3 13.2 Risk free rate of return % 1.1 0.7
The number and weighted average exercise price of the M-unit options outstanding and exercisable are as follows: reconciliation of outstanDing m-unit options
As of 31 December 2014, the Allianz Group has provisions for restructuring resulting from a number of restructuring programs in various segments. These provisions for restructuring primarily include personnel costs, which result from severance payments for employee terminations, and contract termination costs, including those relating to the termination of lease contracts that will arise in connection with the implementation of the relevant initiatives.
Audit fees KPMG billed the Allianz Group an aggregate of € 38.1 Mn (2013: € 36.3 Mn) in connection with professional services rendered for the audit of the Allianz Group’s consolidated financial statements, statutory audits of the financial statements of Allianz SE and its subsidiaries and ser­ vices normally provided by KPMG in connection with statutory and regulatory filings or engagements. These services consisted mainly of periodic review engagements and the annual audit.
AZL PF Investments Inc., Minneapolis, MN 100.0 AZOA Services Corporation, Novato, CA 100.0 BAWAG Allianz Vorsorgekasse AG, Vienna 50.0 2 Beleggingsmaatschappij Willemsbruggen B.V., Rotterdam 100.0 Bilan Services S.N.C., Nanterre 66.0 Borgo San Felice S.r.l., Castelnuovo Berardenga (Siena) 100.0 Botanic Building SPRL, Brussels 100.0 BPS Brindisi 211 S.r.l., Lecce 100.0 BPS Brindisi 213 S.r.l., Lecce 100.0 BPS Brindisi 222 S.r.l., Lecce 100.0 BPS Mesagne 214 S.r.l., Lecce 100.0 BPS Mesagne 215 S.r.l., Lecce 100.0 BPS Mesagne 216 S.r.l., Lecce 100.0 BPS Mesagne 223 S.r.l., Lecce 100.0 BPS Mesagne 224 S.r.l., Lecce 100.0 Brasil de Imóveis e Participações Ltda., São Paulo 100.0 Bright Mission Berhad Ltd., Kuala Lumpur 100.0 British Reserve Insurance Co. Ltd., Guildford 100.0 BSMC (Thailand) Limited, Bangkok 100.0 Bulgaria Net AD, Sofia 98.4 Bureau d'Expertises Despretz S.A., Brussels 100.0 Calobra Investments Sp. z o.o., Warsaw 100.0 Calypso S.A., Paris 100.0 CAP Rechtsschutz-Versicherungsgesellschaft AG, Wallisellen 100.0 Centrale Photovoltaique de Saint Marcel sur aude SAS, Paris 100.0 Centrale Photovoltaique de Valensole SAS, Paris 100.0 CEPE de Haut Chemin S.à r.l., Versailles 100.0 CEPE de Langres Sud S.à r.l., Versailles 100.0 CEPE de Mont Gimont S.à r.l., Versailles 100.0 CEPE des Portes de la Côte d'Or S.à r.l., Versailles 100.0 CEPE du Bois de la Serre S.à r.l., Versailles 100.0 Château Larose Trintaudon S.A., Saint Laurent Médoc 100.0 Chicago Insurance Company Corp., Chicago, IL 100.0 CIC Allianz Insurance Ltd., Sydney 100.0 Club Marine Limited, Sydney 100.0 Colisee S.à r.l., Luxembourg 100.0 Companhia de Seguros Allianz Portugal S.A., Lisbon 64.8 Compañía Colombiana de Servicio Automotriz S.A., Bogotá D.C. 100.0 Consultatio Renta Mixta F.C.I., Buenos Aires 100.0 3 Corn Investment Ltd., London 100.0 Corsetec Assessoria e Corretagem de Seguros Ltda., São Paulo 99.5 CPRN Thailand Ltd., Bangkok 100.0 CPRN-Holdings Limited, Bangkok 100.0 Creactif Allocation, Paris 100.0 4 CreditRas Assicurazioni S.p.A., Milan 50.0 2 CreditRas Vita S.p.A., Milan 50.0 2 Darta Saving Life Assurance Ltd., Dublin 100.0 Deeside Investments Inc., Wilmington, DE 50.1 Delta Technical Services Ltd., London 100.0 Diamond Point a.s., Prague 100.0 Dresdner Kleinwort Pfandbriefe Investments II Inc., Minneapolis, MN 100.0 EF Solutions LLC, Wilmington, DE 100.0 Emerald Global Investments, Paris 100.0 4 Energie Eolienne Lusanger S.à r.l., Versailles 100.0 Eolica Erchie S.r.l., Lecce 100.0 Etablissements J. Moneger SA, Dakar 100.0 Euler Gestion, Paris la Défense 100.0 3 Euler Hermes ACI Services LLP, Baltimore, MD 100.0 Euler Hermes ACMAR Services SARL, Casablanca 100.0 Euler Hermes Asset Management France S.A., Paris la Défense 100.0 Euler Hermes Canada Services Inc., Montreal, QC 100.0 Euler Hermes Cescob Service s.r.o., Prague 100.0 Euler Hermes Collections Sp. z o.o., Warsaw 100.0 Euler Hermes Consulting (Shanghai) Co. Ltd., Shanghai 100.0 Euler Hermes Crédit France S.A.S., Paris la Défense 100.0
RE-AA SA, Abidjan 97.5 SA Immobilière de L'Avenue du Roule, Courbevoie 100.0 SCI champ laurent, Courbevoie 100.0 SCI J.T., Courbevoie 100.0 SCI Paris X, Courbevoie 100.0 SCI Vilaje, Courbevoie 100.0 SIFCOM Assur S.A., Abidjan 60.0 Top Versicherungs-Vermittler Service GmbH, Vienna 100.0
Partnership is often an over-used word in business, yet it perfectly captures the relationship between Acer, the global IT giant, and Euler Hermes, the world’s leading trade credit insurer.
collAterAlized debt obligAtion (cdo) A way of packaging credit risk. Several classes of securities (known as tranches) are created from a portfolio of bonds. Rules determine how the cost of defaults are allocated to the classes.
Unit-linked without guarantee: Conventional unit­linked products are those where all of the benefits provided by a contract are directly linked to the value of assets contained in an internal or external fund held by the in­ surance undertakings. Performance is linked to a separate account and the investment risk is borne by the policy­ holder rather than the insurer.
Takeover-related statements and explanations 42ff. Talent management 76 Third-party assets under management 100 Three-year bonus 45ff.