The calculations are based on current actuarially calculated mortality tables, projected turnover depending on age and length of service, and internal Allianz Group retirement projections. Although this represents the best estimate as of today, considering a further increase in life expectancy could be reasonable. The weighted average life expectancy of a currently 65-year-old plan participant is about 89.3 (2018: 89.2) years for women and 86.5 (2018: 86.5) years for men. An increase in life expectancy by one year would lead to an increase of the defined benefit obligation by € 833 mn (2018: € 678 mn).
Allianz Group’s defined benefit plans used to determine the defined benefit obligation and the recognized expense are as follows:
The discount rate assumption is the most significant risk for the defined benefit obligation. It reflects market yields at the balance sheet date of high-quality fixed income investments corresponding to the currency and duration of the liabilities. In the Eurozone, the decision for the discount rate is based on AA-rated financial and corporate bonds, provided by Allianz Investment Data Services (IDS), and a standardized cash flow profile for a mixed population. The
An increase in the discount rate by 50 basis points would lead to a decrease of € 1.7 bn (2018: € 1.5 bn) in the defined benefit obligation, whereas a decrease in the discount rate by 50 basis points would lead to an increase of € 2.0 bn (2018: 1.7 bn).
An increase of pre-retirement benefit assumptions (e.g. a salary increase) of 25 basis points would have an effect of € 73 mn (2018: € 62 mn) on the defined benefit obligation. However, the increase of post-retirement assumptions (e.g. inflation-linked increases of pension payments) of 25 basis points would increase the defined benefit
An increase in the medical cost trend rate by 100 basis points would have an effect of € 1 mn (2018: € 1 mn) on the defined benefit obligation and like last year no material effect on the defined benefit costs.
In addition to the plan assets of € 16.2 bn (2018: € 14.6 bn), the
Allianz Group has dedicated assets at Group level amounting to € 9.3 bn as of 31 December 2019 (2018: € 8.6 bn), which are likewise managed according to Allianz ALM standards.
CONTRIBUTIONS For the year ending 31 December 2020, the Allianz Group expects to contribute € 341 mn to its defined benefit plans (2018: € 292 mn for the year ending 31 December 2019) and to pay € 335 mn directly to participants in its defined benefit plans (2018: € 323 mn for the year
share on the vesting day, or to convert one RSU into one Allianz SE
In addition, upon the death of a plan participant, a change of control or notice for operational reasons, the RSUs vest immediately and are exercised by the company.
The following table shows the assumptions used in calculating the fair value of the RSUs at grant date: Assumptions of AEI plans
2_The assumptions for RSU grants delivered in March 2020 are based on best estimate.
Allianz Group intends to settle in cash. Therefore, the Allianz Group accrues the fair value of the RSUs as compensation expenses over the
As of 31 December 2019, the Allianz Group recorded provisions of € 426 mn (2018: € 383 mn) for these RSUs in Other liabilities.
LONG-TERM INCENTIVE PLAN (LTI PLAN) Under the LTI plan, awards are granted in the form of index-linked restricted stock units (RSUs) which are part of a new remuneration policy1 for the members of the Allianz SE’s Board of Management.
RSUs granted to the members of the Board of Management obligate Allianz SE to pay per RSU a cash amount equal to the ten-day average Xetra closing price of the Allianz SE share on the last day of the contractual vesting period, multiplied by a performance factor which reflects the total performance of the Allianz stock relative to the total performance of the Stoxx Europe 600 Insurance Index during the fouryear contractual vesting period.
between share price performance and relative performance compared to the index as well as the relevant caps and thresholds as defined in the payout formula. The expected future payout is determined on the basis of observable market data as of the valuation date and market standard simulation techniques.
The following table shows the assumptions used in calculating the fair value of the index-linked RSUs at grant date: Assumptions of LTI plans
As of 31 December 2019, the Allianz Group recorded provisions of € 3 mn for these index-linked RSUs in Other liabilities.
PIMCO LLC. Participants in the plan are granted options to acquire an own class of equity instruments (M-units), which vest in one-third increments on approximately the third, fourth, and fifth anniversary of the option grant date. Upon vesting, options will automatically be exercised in a cashless transaction, provided they are in the money. Participants may elect to defer the receipt of M-units through the M-unit
Deferral Plan until termination of their service at the latest. With the
As of 31 December 2019, the aggregate intrinsic value of share options outstanding was € 571 mn (2018: € 356 mn).
As of 31 December 2019, the M-unit options outstanding have an exercise price between € 10,083.74 and € 14,776.84 and a weightedaverage remaining contractual life of 2.87 years.
The share options settled by delivery of PIMCO LLC shares are accounted for as equity-settled plans. Therefore, PIMCO LLC measures the total compensation expense to be recognized for the equitysettled shares based on their fair value as of the grant date. The total compensation expense is recognized over the vesting period.
During the year ended 31 December 2019, the Allianz Group recorded compensation expenses of € 13 mn (2018: € 14 mn) related to these share options.
EMPLOYEE STOCK PURCHASE PLANS The Allianz Group offers Allianz SE shares in 40 countries to entitled employees at favorable conditions. The shares have a minimum holding period of three to five years. During the year ended 31 December 2019, the number of shares sold to employees under these plans was 365,959 (2018: 407,495 ). From 2018 onwards, the employees receive one bonus share for three shares bought. For the year ended 31 December 2019, these bonus shares had an equivalent value of
NUMBER OF EMPLOYEES As of 31 December 2019, the Allianz Group employed 147,268 (2018: 142,460) people, thereof 38,412 (2018: 38,089) in Germany. The average total number of employees for the year ended 31 December 2019
ISSUANCE OF THE DECLARATION OF COMPLIANCE WITH THE GERMAN CORPORATE GOVERNANCE CODE ACCORDING TO § 161 AKTG On 13 December 2019, the Board of Management and the Supervisory Board of Allianz SE issued the Declaration of Compliance according to § 161 AktG, which has been made permanently available to shareholders on the company’s website.
As of 31 December 2019, there were no outstanding loans granted by Allianz Group companies to members of the Board of Management or the Supervisory Board.
(PwC GmbH) is the external auditing firm for the Allianz Group.
For services rendered by PwC GmbH and the worldwide member firms of PricewaterhouseCoopers International Limited (PwCIL), the following fees were recognized as an expense in the fiscal year: PwC fees € mn
Allianz Group’s consolidated financial statements, the audit of the statutory financial statements of Allianz SE and its subsidiaries, the audit of the Allianz Group’s solvency balance sheet as well as the solvency balance sheets of Allianz SE and its subsidiaries. In addition, a review of the Allianz Group’s consolidated interim financial statements was performed.
The non-interest bearing bond in the amount of € 0.5 bn has a scheduled maturity in January 2025. The bond in the amount of € 0.75 bn with a fixed coupon of 0.5 % has a scheduled maturity in January 2031.
SALE OF ALLIANZ POPULAR The disposal group Allianz Popular, Madrid, was sold to Banco Santander on 31 January 2020. The disposal gain realized on that date
SHARE BUY-BACK PROGRAM 2020 In March 2020, Allianz SE has started a new share buy-back program with a volume of up to € 1.5 bn. For further information, please refer to the section “Expected dividend development” of the chapter Outlook 2020 within the Group Management Report.
44 _ List of participations of the Allianz Group as of 31 December 2019 according to § 313 (2) HGB
Die BrückenKöpfe X BKX GmbH & Co. Invest KG, Berlin 50.0 3
Consolidated affiliates 2media GmbH, Wallisellen 100.0 35° East SAS, Paris la Défense 100.0 490 Fulton JV LP, Wilmington, DE 96.5 490 Fulton REIT LP, Wilmington, DE 100.0 490 Lower Unit GP LLC, Wilmington, DE 100.0 490 Lower Unit LP, Wilmington, DE 100.0
Advanz Fundo de Investimento Renda Fixa Crédito Privado, São Paulo 100.0 3
Allianz Allvest Invest SICAV-SIF - Allvest Active Invest, Luxembourg 100.0 3
Allianz ZB d.o.o. Mandatory and Voluntary Pension Funds Management Company, Zagreb 51.0
AllianzGI Structured Alpha Large Cap Equity 350 GP LLC, Wilmington, DE 100.0
CEPE des Portes de la Côte d'Or S.à r.l., Versailles 100.0
PIMCO Global Financials Credit FIC FIM IE, Rio de Janeiro 54.0 3
PIMCO RAFI Dynamic Multi-Factor Emerging Markets Equity Fund, Dublin 100.0 3
Prosperaz Fundo de Investimento Renda Fixa Crédito Privado, São Paulo 100.0 3
Columbia REIT - 333 Market Street LP, Wilmington, DE 44.7 7
Alpha Asia Macro Trends Fund III Private Limited, Singapore 27.7 3
5_Group share through indirect holder Roland Holding GmbH, Munich: 6_Insolvent. 7_Classified as joint venture according to IFRS 11. 8_Classified as associate according to IAS 28.
AUDIT OPINIONS We have audited the consolidated financial statements of Allianz SE,
Munich, and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2019, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the financial year from 1 January to 31 December 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies. In addition, we have audited the group management report of Allianz SE for the financial year from 1 January to 31 December 2019. In accordance with the German legal requirements, we have not audited the content of those parts of the group management report listed in the “Other Information ” section of our auditor’s report.
 the accompanying group management report as a whole provides an appropriate view of the Group’s position. In all material respects, this group management report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the group management report does not cover the content of those parts of the group management report listed in the “Other Information” section of our auditor’s report.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the group management report.
Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
Our responsibilities under those requirements and principles are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and of the Group Management Report ” section of our auditor’s report. We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other
In our view, the matters of most significance in our audit were as follows: ❶ Measurement of certain technical assets and liabilities as well as certain financial liabilities carried at fair value (level 3) in life and health insurance ❷ Measurement of certain technical provisions in property-casualty insurance
❶ Measurement of certain technical assets and liabilities as well as certain financial liabilities carried at fair value (Level 3) in life and health insurance
Against this background and due to the material significance of the amounts for the assets, liabilities and financial performance of the Group and the complex process for determining the underlying assumptions and estimates of the executive directors, the measurement of these technical assets and liabilities as well as of the financial liabilities carried at fair value (Level 3) was of particular significance in the context of our audit.
Based on our audit procedures, we were able to satisfy ourselves that the methods and assumptions used by the executive directors are appropriate overall for measuring certain technical assets and liabilities as well as the financial liabilities carried at fair value (Level 3).
③ The Company's disclosures on the measurement of certain technical assets and liabilities as well as the measurement of certain financial liabilities carried at fair value (Level 3) in life and health insurance are included in sections 2 and 15 and sections 2 and 34, respectively, of the notes to the consolidated financial statements.
① In the consolidated financial statements of the Company, technical provisions (so called "claims provisions") amounting to € 77,541 mn (7.7 % of consolidated total assets) are reported under the "Reserves for loss and loss adjustment expenses" balance sheet item. Of this amount, € 65,414 mn is attributable to the
Due to the material significance of these provisions for the assets, liabilities and financial performance of the Group as well as the considerable scope for judgment on the part of the executive directors and the associated uncertainties in the estimations made, the measurement of the technical provisions in propertycasualty insurance was of particular significance to our audit.
② As part of our audit, we evaluated the appropriateness of selected controls established by the Company for the purpose of selecting actuarial methods, determining assumptions and making estimates for the measurement of certain technical provisions in property -casualty insurance.
With the support of our property-casualty insurance valuation specialists, we have compared the respective actuarial methods applied and the material assumptions with generally recognized actuarial methods and industry standards and examined to what extent these are appropriate for the valuation. Our audit also included an evaluation of the plausibility and integrity of the data
Repor t and assumptions used in the valuation and a reconstruction of the claims settlement processes. Furthermore, we recalculated the amount of the provisions for selected lines of products, in particular lines of products with large reserves or increased estimation uncertainties. For these lines of products we compared the recalculated provisions with the provisions calculated by the Company and evaluated any differences. We also examined whether any adjustments to estimates in loss reserves at Group level were adequately documented and substantiated. Our audit also included an evaluation of the Group's Actuarial department's reporting to the Group Reserve Committee.
OTHER INFORMATION The executive directors are responsible for the other information. The other information comprises the following non-audited parts of the group management report:  the statement on corporate governance pursuant to § 289f HGB
 the separate non-financial report pursuant to § 289b Abs. 3 HGB
 is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in the audit, or
Furthermore, the executive directors are responsible for the preparation of the group management report that, as a whole, provides an appropriate view of the Group’s position and is, in all material respects, consistent with the consolidated financial statements, complies with
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the
 Conclude on the appropriateness of the executive directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor ’s report to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
 Perform audit procedures on the prospective information presented by the executive directors in the group management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information.
Independent Practitioner’s Report on a Reasonable Assurance Engagement on Nonfinancial Reporting
We have performed a reasonable assurance engagement on the combined separate non-financial report pursuant to §§ [Articles] 341a Abs.
RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS The executive directors of the Company are responsible for the preparation of the Non-financial Report in accordance with §§ 315c in conjunction with 289c to 289e HGB.
This responsibility of the Company’s executive directors includes the selection and application of appropriate methods of non-financial reporting as well as making assumptions and estimates related to individual non-financial disclosures which are reasonable in the circumstances. Furthermore, the executive directors are responsible for such internal control as they have considered necessary to enable the preparation of a Non-financial Report that is free from material misstatement whether due to fraud or error.
INDEPENDENCE AND QUALITY CONTROL OF THE AUDIT FIRM We have complied with the German professional provisions regarding independence as well as other ethical requirements.
Our audit firm applies the national legal requirements and professional standards – in particular the Professional Code for German
A reasonable assurance engagement involves performing procedures to obtain sufficient appropriate evidence whether the Non-financial Report has been prepared in accordance with §§ 315c in conjunction with 289c to 289e HGB. The assurance procedures selected depend on the practitioner’s judgment.
 Inquiries of personnel involved in the preparation of the Non-financial Report regarding the preparation process, the internal control system relating to this process and selected disclosures in the Non-financial Report.
 Evaluation of the internal control system regarding the preparation process of the Non-financial Report.
 Performance of site visits on a sample basis as part of the inspection of processes for collecting, controlling, analyzing and aggregating selected data.
 Evaluation of the presentation of the information in the Non-financial Report.
INTENDED USE OF THE ASSURANCE REPORT We issue this report on the basis of the engagement agreed with the
This sign indicates where to find additional infor­ mation in this Annual Report or on the internet.
Allianz SE – Königinstrasse 28 – 80802 Munich – Germany – Phone +49 89 3800 0 – info@allianz.com – www.allianz.com Front page design: hw.design GmbH – Photography: Andreas Pohlmann – Typesetting: Produced in­house with SmartNotes – Printing: G. Peschke Druckerei GmbH – Annual Report on the internet: www.allianz.com/annualreport – Date of publication: 6 March 2020 This is a translation of the German Annual Report of Allianz Group. In case of any divergences, the German original is legally binding.