The aggregate policy reserves for universal life-type insurance contracts are equal to the account balance, which represents premiums received and investment return credited to the policy less deductions for mortality costs and expense charges. The aggregate policy reserve for universal life-type contracts includes insurance reserves for unit-linked insurance contracts and investment contracts with discretionary participation features as well as liabilities for guaranteed minimum death and similar mortality and morbidity benefits related to non-traditional contracts with annuitization options.
The assumptions used for aggregate policy reserves are determined using current and historical client data, industry data, and in the case of assumptions for interest reflect expected earnings on assets, which back the future policyholder benefits. The information used by the Allianz Group’s actuaries in setting such assumptions includes, but is not limited to, pricing assumptions, available experience studies, and profitability analyses. The interest rate assumptions used in the calculation of deferred acquisition costs and aggregate policy reserves are as follows: iNterest rate assumptioNs
The profit participation allocated to participating policyholders or disbursed to them reduces the reserve for premium refunds.
Pensions and similar obligations For defined benefit plans, the Allianz Group uses the projected unit credit method to determine the present value of its defined benefit obligations and the related service cost and, where applicable, past service cost. Where benefits are linked to returns on specified assets, the defined benefit obligation is determined by reference to the fair value of the plan assets. All actuarial gains and losses are recognized in other comprehensive income (OCI). Service and interest costs are recognized in the profit or loss. The interest income on plan assets is calculated using the same interest rate used to discount the defined benefit obligation, i.e. high-quality corporate bonds at the end of the reporting period.
Share-based compensation plans The share-based compensation plans of the Allianz Group are classified as either equity-settled or cash-settled plans. Equity-settled plans are measured at fair value on the grant date and recognized as an expense, with a corresponding increase to shareholders’ equity, over the vesting period. Equity-settled plans include a best estimate of the number of equity instruments that are expected to vest in determining the amount of expense to be recognized. For cashsettled plans, the Allianz Group accrues the fair value of the award as a compensation expense over the vesting period. Upon vesting, any change in the fair value of any unexercised awards is also recognized as a compensation expense.
Restructuring provisions Restructuring provisions are recognized when programs materially change the scope of business performed by an operating entity or business unit or the manner in which business is conducted and when the main features of a detailed formal plan have been announced to those affected or the implementation of the restructuring plan has started.
CertifiCateD LiaBiLities aND suBorDiNateD LiaBiLities Certificated liabilities and subordinated liabilities are subsequently measured at amortized cost, using the effective interest method to amortize the premium or discount to the redemption value over the life of the liability.
EQUITY Issued capital represents the mathematical per share value received from the issuance of shares. Additional paid-in capital represents the premium, exceeding the issued capital, received from the issuance of shares.
Please refer to the above section on foreign currency translation, where foreign currency changes that are recognized in other comprehensive income are explained. The effective portion of gains and losses of hedging instruments designated as hedges of a net investment in a foreign operation is also recognized in foreign currency translation adjustments.
Premiums for long-duration insurance contracts are recognized as earned when due. Long-duration insurance contracts are contracts that are not cancelable by the insurance company, guaranteed to be renewable and expected to remain in force over an extended period of time.
INCOME FROM FINANCIAL ASSETS AND LIABILITIES CARRIED AT FAIR VALUE THROUGH INCOME (NET) Income from financial assets and liabilities carried at fair value through income (net) includes all investment income, and realized and unrealized gains and losses from financial assets and liabilities carried at fair value through income. In addition, commissions attributable to trading operations and related interest expenses as well as refinancing and transaction costs are included in this line item. Foreign currency gains and losses on monetary items are also reported within income from financial assets and liabilities carried at fair value through income (net).
FEE AND COMMISSION INCOME Fee and commission income primarily consists of asset management fees that are recognized when the service is provided.
CLAIMS AND INSURANCE BENEFITS INCURRED Benefits charged to expense consist of claims and insurance benefits incurred during the period, including benefit claims in excess of policy account balances and interest credited to policy account balances. Furthermore, it includes claim handling costs that are directly related to the processing and settlement of claims. Reinsurance recoveries are deducted from claims and insurance benefits.
INCOME TAxES Income tax expense consists of current taxes on taxable income actually charged to the individual Allianz Group companies and changes in deferred tax assets and liabilities. Expense and income from interest and penalties to or from tax authorities are included in current taxes.
Life/Health reserves are dependent on estimates and assumptions, especially on the life expectancy and health of an insured individual (mortality, longevity and morbidity risk) and on the development of interest rates and investment returns (asset-liability mismatch risk). These assumptions also have an impact on the presentation of costs arising from the origination of insurance business (acquisition costs and sales inducements) and the value of acquired insurance business (PVFP). To ensure consistency in the application of actuarial methods and assumptions in the Life/Health reserving process, the Allianz Group has designed a two-stage reserving process: Stage one: Life/Health reserves are calculated by qualified local staff experienced in the business of the subsidiaries. Actuaries in the local entities also conduct tests of the adequacy of the premiums and reserves to cover future claims and expenses (liability adequacy tests). The process follows group-wide standards for applying consistent and plausible assumptions. The appropriateness of the reserves and compliance with the group-wide standards is confirmed by the local actuary.
− reserves for insurance and investment contracts of € 463,334 mn mainly for the Life/Health operations, and
1 Please refer to note 2 Summary of significant accounting policies. For further details, please refer to note 12 Deferred acquisition costs, note 19 Reserves for loss and loss adjustment expenses and note 20 Reserves for insurance and investment contracts.
Stage two: The Allianz Group Actuarial Department forms an opinion on the adequacy of the reserves proposed by the local entities. The Allianz Group Actuarial Department challenges the operating entities’ selection through their continuous interaction with local teams and quarterly attendance in the local reserve committees. The ability to form a view on reserve adequacy is further enabled by regular reviews of the local reserving practices. Such reviews consist of an evaluation of the reserving process, appropriateness and consistency of assumptions and analysis of movement of reserves. Significant findings from such reviews are communicated in the Allianz Group Reserve Committee to initiate actions where necessary.
fair VaLue aND impairmeNts of fiNaNCiaL iNstrumeNts As of 31 December 2014, the Allianz Group reported financial instruments carried at fair value as follows:1
− € 171,131 mn of the financial assets and € 93,688 mn of the financial liabilities carried at fair value are classified within level 1 of the fair value hierarchy (unadjusted quoted prices in active markets)
being non-observable). Level 3 financial assets represent 2.5 % of the Allianz Group’s total financial assets carried at fair value. Financial liabilities classified as Level 3 represent 7.0 % of the Allianz Group’s total financial liabilities carried at fair value.
Annual Report 2014 Allianz Group 169 assessmeNt of the iNCLusioN methoD The relevant criteria for determining the appropriate inclusion method of a company are summarized in note 2 of this Annual Report. The determination of the appropriate inclusion method of some entities involves management judgment.
To determine control for investment funds managed by the Allianz Group, management considers in particular the remuneration to which the asset manager is entitled, the exposure to variability of returns from these investments and the rights held by other parties. When the exposure to variability of returns is within a certain range, significant judgment is required for the determination of the appropriate inclusion method of these investment funds.
For further details, please refer to the explanations to the list of participations of the Allianz Group from page 256 of this Annual Report onwards.
GooDWiLL As of 31 December 2014, the Allianz Group reported total goodwill of € 12,166 mn, of which:1
The Allianz Group’s processes and controls around the estimation of recoverable amounts are generally applied at the Allianz Group level and are designed to minimize subjectivity. For example, the assumptions used are required to be consistent with the parameters of the well-defined planning and controlling processes. Important input factors for those calculations are the business plan, the estimate of the sustainable returns and eternal growth rates, as is further explained in note 15. The Allianz Group also performs sensitivity tests 1 Please refer to note 2 Summary of significant accounting policies and note 15 Intangible assets for further details.
The analysis and forecasting required in this process, and as a result the determination of the deferred tax assets, is performed for individual jurisdictions by qualified local tax and financial professionals. Given the potential significance surrounding the underlying estimates and assumptions, Group-wide policies and procedures have been designed to ensure consistency and reliability around the recoverability assessment process. Forecasted operating results are based upon approved business plans which are themselves subject to a well-defined process of control. As a matter of policy, especially strong evidence supporting the recognition of deferred tax assets is required if an entity has suffered a loss in either the current or preceding period.
Recognition and recoverability of all significant deferred tax assets are reviewed by tax professionals at Group level and the Allianz Group Tax Committee.
peNsioN LiaBiLities aND simiLar oBLiGatioNs As of 31 December 2014, the Allianz Group reported a defined benefit obligation for defined benefit plans of € 22,767 mn which is offset by the fair value of plan assets of € 13,123 mn.2 1 Please refer to note 2 Summary of significant accounting policies and note 42 Income taxes for further details.
Due to changing market and economic conditions, the underlying assumptions may differ from actual developments. Potential financial impacts from deviations in certain critical assumptions based on respective sensitivity analyses are disclosed in note 48.
Financial assets carried at fair value through income 7,245 (585) 6,660
The impact of the adoption of IFRS 10 on the consolidated income statements, the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows is immaterial.
The revised version of IAS 28, Investments in Associates and Joint Ventures, superseded the former IAS 28, Investments in Associates. It defines ‘significant influence’, provides guidance on the application of the equity method of accounting and describes how impairment is assessed in associates and joint ventures. The adoption of the revised version of IAS 28 had no material impact on the financial position and financial results of the Allianz Group.
IFRS 12, Disclosure of Interests in Other Entities, contains disclosure requirements previously set out in IASs 27, 28 and 31. Furthermore, the new standard includes disclosure requirements regarding interests in unconsolidated structured entities. The disclosure requirements defined by IFRS 12 are initially presented in this Annual Report.
ias 16 and ias 38, Clarification of Acceptable Methods of Depreciation and Amortisation Annual periods beginning on or after 1 January 2016 (not yet endorsed by e.u.) iFrs 10 and ias 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
All subsidiaries, joint ventures and associates are individually listed in the list of participations of the Allianz Group from page 256 of this Annual Report onwards.
Life/Health / Asset Management – Acquisition 1 At the date of initial consolidation.
In the following section all significant acquisitions during the year ended 31 December 2014 are described.
and 470 employees. Effective 31 December 2014, the Allianz Group additionally received the Property-Casualty insurance in-force portfolio managed by the transferred agencies (“Portfolio”) after receipt of the approval by the Italian insurance regulator Istituto per la Vigilanza sulle Assicurazioni (IVASS).
The acquired business represents insurance activities with premiums equal to approximately € 0.9 Bn (for the full year 2014). It gives the Allianz Group the unique opportunity to further increase its share in a key profitable market.
The following table summarizes the recognized amounts of assets acquired and liabilities assumed related to the Distribution Activities and the Portfolio: property-casualty insurance Business oF unipolsai assicurazioni s.p.a. – identiFiaBle assets and liaBilities € mn Distribution
Cash and cash equivalents – 154 Deferred acquisition costs – 39 Deferred tax assets 4 – Other assets 28 49 Intangible assets 113 1 Total assets 145 243 Unearned premiums – (231) Other liabilities (27) (11) Total liabilities (27) (242) Total net identifiable assets 118 1
Intangible assets consist of the customer relationships related to the acquired agency network and the present value of the transferred inforce business.
Other assets mainly include receivables from policyholders for premiums due and receivables from agents.
− a contingent consideration of up to € 240 mn, calculated as a percentage of the premiums generated by (i) policies renewed by the Allianz Group during the second half of 2014 and (ii) policies transferred with the Portfolio. A payment of € 179 mn was processed on 20 February 2015.
As of 1 July 2014, the Allianz Group recognized an amount of € 175 mn for the contingent consideration arrangement attributable to the Distribution Activities and as of 31 December 2014 a further amount of € 1 mn attributable to the Portfolio. During the fourth quarter of 2014, the fair value of the contingent consideration attributable to the Distribution Activities was increased by € 5 mn to € 180 mn resulting in the recognition of a corresponding loss.
The fair value of the total contingent consideration of € 181 mn is based on information at the reporting date regarding policies renewed by the Allianz Group during the second half of 2014 and on information provided by the seller regarding policies transferred with the Portfolio. The latter were confirmed in the first quarter of 2015, leading to a final reduction of the contingent consideration to € 179 mn.
The acquired Distribution Activities comprise goodwill which was determined as follows as of 1 July 2014: property-casualty insurance Business oF unipolsai assicurazioni s.p.a. – determination oF goodwill € mn Fair value
The goodwill of € 257 mn consists largely of synergies, new business and cross-selling opportunities expected to be generated from the acquired network of agencies and is expected to be deductible for income tax purposes.
The impact of the acquired Property-Casualty insurance business of UnipolSai Assicurazioni S.p.A. on the Allianz Group’s total revenues and net income since the acquisition was € 211 mn and € (60) mn, respectively, impacted by non-recurring integration costs. It is impracticable to provide consistent information about the gross premiums written, total revenues and net income of the combined entity (Allianz Group including the acquired Property-Casualty insurance business of UnipolSai Assicurazioni S.p.A.) for the year ended 31 December 2014 because the Allianz Group did not have access to the UnipolSai database and systems for periods before 1 July 2014.
signiFicant disposals and deconsolidations During 2014 and 2013, no significant disposals or deconsolidations occurred.
Personal insurance business of Fireman’s Fund Insurance Company Corp., Novato At the end of the financial year 2014, the Allianz Group announced its decision to realign its Property-Casualty insurance business in the United States. One integral part of the reorganization is the sale of the personal insurance business to ACE which is expected to be executed in 2015. The sale, which will take place by means of a renewal rights arrangement, is still subject to regulatory approval of the California Department of Insurance. In addition, the realignment comprises the integration of Fireman’s Fund Insurance Company’s commercial business into Allianz Global Corporate & Specialty North America, as well as the internal transfer of the discontinued run-off business through a reinsurance agreement within the Allianz Group. The reorganization is expected to have a negative impact of approximately USD 0.2 Bn on the Allianz Group’s financial statements in 2015. Expenses in the context of the restructuring will comprise expenses for HR-related items, office buildings and IT infrastructure.
Antoniana Veneta Popolare Assicurazioni S.p.A., Trieste 20 September 2013 50.0 9 – (9) pt Asuransi Allianz Utama Indonesia Ltd., Jakarta 12 November 2013 22.8 9 (4) (5) Yapı Kredi Sigorta a.Ş., Istanbul from 14 October
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 into the business segments Property-Casualty and Life/Health. In accordance with the responsibilities of the Board of Management, each of the insurance business segments is grouped into the following reportable segments: − German Speaking Countries, − Western & Southern Europe, − Iberia & Latin America, − USA, − Global Insurance Lines & Anglo Markets, − Growth Markets, − Allianz Worldwide Partners (Property-Casualty only).
Asset management activities represent a separate reportable segment. Due to differences in the nature of products, risks and capital allocation, corporate and other activities are divided into three reportable segments: Holding & Treasury, Banking and Alternative Investments. In total, the Allianz Group has identified 17 reportable segments in accordance with IFRS 8, Operating Segments.
The types of products and services from which the reportable segments derive revenue are described below.
Life/Health In the business segment Life/Health, reportable segments offer a comprehensive range of life and health insurance products on both an individual and a group basis, including annuities, endowment and term insurance, unit-linked and investment-oriented products, as well as full private health, supplemental health and long-term care insurance.
To better understand the ongoing operations of the business, the Allianz Group generally excludes the following non-operating effects: − acquisition-related expenses and the amortization of intangible assets, as these relate to business combinations,
Financial assets carried at fair value through income 601 638 5,238 5,548 46 635 511 307 (521) (468) 5,875 6,660
Non-current assets and assets of disposal groups classified as held for sale 61 131 92 – – 16 83 – – – 235 147 € mn Property-Casualty Life/Health Asset Management Corporate and Other Consolidation Group lIabIlItIes and eQuItY Financial liabilities carried at fair value through income 129 78 8,240 5,869 – 1 648 534 (521) (469) 8,496 6,013 Liabilities to banks and customers 878 1,189 4,273 2,260 174 1,315 20,749 21,337 (3,057) (2,991) 23,015 23,109
Reserves for loss and loss adjustment expenses 58,925 56,614 10,081 9,960 – – – – (18) (9) 68,989 66,566 Reserves for insurance and investment contracts 14,276 13,389 449,263 390,873 – – – – (205) (190) 463,334 404,072 Financial liabilities for unit-linked contracts – – 94,564 81,064 – – – – – – 94,564 81,064
Liabilities of disposal groups classified as held for sale – – – – – – 102 – – – 102 –
Acquisition and administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation (12,400) (11,942) (5,860) (5,603) (3,787) (3,994) (1,310) (1,295) 7 3 (23,351) (22,831)
Operating amortization of intangible assets – – (19) – – – – – – – (19) –
Income from fully consolidated private equity investments (net) – – – – – – (42) (17) 19 2 (23) (15) Interest expenses from external debt – – – – – – (846) (901) – – (846) (901)
One-off effect from pension revaluation (537) – (7) – (14) – 558 – – – – – Non-operating amortization of intangible assets (49) (32) (36) (15) (11) (26) (8) (106) – 44 (104) (136) Reclassification of tax benefits – – – – – – – – (901) – (901) –
Anglo Markets Growth Markets Allianz Worldwide Partners Consolidation and Other2 Property-Casualty
Operating income from financial assets and liabilities carried at fair value through income (net) 5 (52) (8) 15 8 6 (2) (1) 4 (45) (1) 1 – – – – 6 (75) Operating realized gains/losses (net) 186 70 – – – – – – – – – – – – – – 186 70
Net income (loss) attributable to: 1 The reserve strengthening for asbestos risks in 2014 at Fireman’s Fund Insurance Company of € 79 mn had no impact on the financial results of the Allianz Group and Fireman’s Fund’s combined ratio under IFRS.
3 Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
4 Represents acquisition and administrative expenses (net), excluding one-off effect from pension revaluation, divided by premiums earned (net).
Operating impairments of investments (net) (20) (11) – – – – – – – – – – – – – – (20) (11)
Operating income from financial assets and liabilities carried at fair value through income (net) 375 (1,141) (67) 138 32 21 (1,641) (781) (58) (54) 7 (16) (15) 2 (1,367) (1,832) Operating realized gains/losses (net) 2,365 2,648 742 487 26 16 57 106 – – 17 37 (3) – 3,204 3,294
Annual Report 2014 Allianz Group 185 reportable segments – lIfe/health reportable segments – lIfe/health € mn
Deposits from insurance and investment contracts (8,269) (6,350) (17,742) (14,183) (1,185) (1,078) (10,734) (6,312) – – (3,712) (3,300) – – (41,643) (31,223)
Claims and insurance benefits incurred (net) (14,507) (13,139) (3,826) (4,113) (605) (626) (84) (93) (288) (337) (1,465) (1,788) – – (20,775) (20,096) Changes in reserves for insurance and investment contracts (net) (8,615) (9,273) (2,178) (2,364) (100) (99) (672) (1,346) (25) (1) (973) (472) – – (12,563) (13,555)
Non-operating income from financial assets and liabilities carried at fair value through income (net) – – (5) (5) – – (126) 33 – – – – – – (131) 27 Non-operating realized gains/losses (net) – – 153 36 1 – (6) 28 – – 35 25 – – 183 88 Non-operating impairments of investments (net) – – (17) (13) – – – – – – (4) (4) – – (21) (17) One-off effect from pension revaluation (7) – – – – – – – – – – – – – (7) – Non-operating amortization of intangible assets (1) (1) (11) (5) (16) – – (1) – – (7) (8) – – (36) (15)
Net income attributable to: Margin on reserves2 in basis points 59 53 52 53 256 201 81 70 76 111 87 49 –3 –3 65 58 1 Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurer’s home jurisdiction.
Administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation (3,787) (3,994) Restructuring charges 3 (6) Operating expenses (3,784) (4,001)
Realized gains/losses (net) 4 2 Acquisition-related expenses 6 (32) One-off effect from pension revaluation (14) – Amortization of intangible assets (11) (26) Non-operating items (15) (55)
Income before income taxes 2,588 3,106 Income taxes (967) (1,181) Net income 1,621 1,925
Annual Report 2014 Allianz Group 189 reportable segments – corporate and other reportable segments – corporate and other € mn Holding & Treasury Banking Alternative Investments Consolidation Corporate and Other
Non-operating income from financial assets and liabilities carried at fair value through income (net) (32) (44) – – – – – (3) (33) (46)
One-off effect from pension revaluation 563 – (1) – (4) – – – 558 –
Notes to the coNsolidated balaNce sheets 8 – Financial assets carried at fair value through income
FInancIal assets carrIed at FaIr value through Income € mn as of 31 December 2014 2013
Financial assets held for trading Debt securities 402 360 Equity securities 195 139 Derivative financial instruments 1,618 2,013
Debt securities Government and agency mortgage-backed securities (residential and commercial) 3,548 192 (2) 3,738 2,515 103 (16) 2,602 Corporate mortgage-backed securities (residential and commercial) 13,685 546 (44) 14,186 11,226 693 (86) 11,833
Government and government agency bonds 1 Include bonds issued by Spanish banks with a fair value of € 472 MN (2013: € 418 MN), thereof subordinated bonds with a fair value of € 134 MN (2013: € 115 MN).
Government and government agency bonds 2,398 379 – 2,777 2,411 375 (4) 2,782 1 Also include corporate mortgage-backed securities.
Government and government agency bonds Total unrealized losses amounted to € 338 mn as of 31 December 2014. The Allianz Group holds a large variety of government bonds, mostly of OECD countries (Organization of Economic Cooperation and Development ). In general, the credit risk of government and government agency bonds is rather moderate since they are backed by the fiscal capacity of the issuers who typically hold an “investment grade” country- and/or issue-rating.
The unrealized losses on the Allianz Group’s investment in government bonds were spread over many countries, in particular coming from emerging markets. During 2014, government and government agency bond performance has been largely positive, due to a decreasing interest rate level, resulting in a decrease of unrealized losses of € 1,125 mn. Based on a detailed analysis of the underlying securities, the Allianz Group did not consider these invest - ments to be impaired as of 31 December 2014.
Equity securities As of 31 December 2014, unrealized losses from equity securities amounted to € 255 mn. These unrealized losses concern equity securities that did not meet the criteria of the Allianz Group’s impairment policy for equity securities as described in note 2. The major part of the unrealized losses have been in a continuous loss position for less than 6 months.
contractual term to maturIty The amortized cost and fair value of available-for-sale debt securities and held-to-maturity debt securities as of 31 December 2014, by contractual term to maturity, are as follows: contractual term to maturIty € mn as of 31 December 2014 Amortized Cost Fair Value avaIlable-For-sale debt securItIes Due in 1 year or less 26,410 27,589 Due after 1 year and up to 5 years 102,012 108,272 Due after 5 years and up to 10 years 117,230 130,046 Due after 10 years 134,104 162,837 held-to-maturIty debt securItIes Due in 1 year or less 367 396 Due after 1 year and up to 5 years 1,519 1,621 Due after 5 years and up to 10 years 723 835 Due after 10 years 1,360 1,857
Actual maturities may deviate from the contractually defined maturities because certain security issuers have the right to call or repay certain obligations ahead of schedule, with or without redemption or early repayment penalties. Investments that are not due at a single maturity date are, in general, not allocated over various maturity buckets, but are shown within their final contractual maturity dates.
Investments In assocIates and joInt ventures As of 31 December 2014, loans to associates and joint ventures and available-for-sale debt securities issued by associates and joint ventures held by the Allianz Group amounted to € 654 mn (2013: € 577 mn).
Changes in the consolidated subsidiaries of the Allianz Group – 806
Reclassifications into non-current assets classified as held for sale (99) (117) Foreign currency translation adjustments 57 (43)
As of 31 December 2014, real estate held for investment pledged as security and other restrictions on title were € 36 mn (2013: € 36 mn).
As of 31 December 2014, impaired loans amounted to € 728 mn (2013: € 786 mn). The interest income recognized on these impaired loans amounted to € 2 mn (2013: € 8 mn).
11 – Reinsurance assets reInsurance assets € mn as of 31 December 2014 2013
Unearned premiums 1,519 1,538 Reserves for loss and loss adjustment expenses 6,947 6,494 Aggregate policy reserves 4,998 4,463 Other insurance reserves 123 115
Deferred acquisition costs Property-Casualty 4,595 4,354 Life/Health 16,089 15,837 Asset Management1 – 159
Carrying amount as of 31 December 16,089 15,837 asset management – 159
The Allianz Group reinsures a portion of the risks it underwrites in an effort to control its exposure to losses and events and to protect its capital resources. For natural catastrophe events, the Allianz Group maintains a centralized program that pools exposures from its subsidiaries by internal reinsurance agreements. Allianz SE limits exposures in this portfolio through external reinsurance. For other risks, the subsidiaries of the Allianz Group have individual reinsurance programs in place. Allianz SE participates with up to 100 % on an arm’s length basis in these cessions, in line with local requirements. The risk coming from these cessions is also limited by external retrocessions.
Annual Report 2014 Allianz Group196 13 – Other assets other assets € mn as of 31 December 2014 2013
Other assets 1,437 1,280 1 Includes other assets due within one year of € 28,069 MN (2013: € 27,547 MN).
Reversals of impairments 2 – Carrying amount as of 31 December 2,566 2,423 Accumulated depreciation as of 31 December 1,071 1,074 Cost as of 31 December 3,637 3,497
Carrying amount as of 31 December1 2,142 1,832 Accumulated amortization as of 31 December 4,218 3,800 Cost as of 31 December 6,360 5,632 1 As of 31 December 2014, includes € 1,398 MN (2013: € 1,122 MN) for self-developed software and € 743 MN (2013: € 710 MN) for software purchased from third parties.
Changes in the consolidated subsidiaries of the Allianz Group 18 10
Intangible assets with finite useful lives Distribution agreements2 948 996 Customer relationships3 231 149 1 Include primarily the brand name of Selecta aG, Muntelier. 2 Include primarily the long-term distribution agreements with Commerzbank aG of € 335 MN (2013: € 372 MN), Banco Popular s.a. of € 353 MN (2013: € 370 MN), Yapı Kredi Bank of € 147 MN (2013: € 151 MN) and hsbc Asia, hsbc Turkey and btPN Indonesia of € 90 MN (2013: € 78 MN).
3 Include primarily customer relationships from the acquisition of UnipolSai Assicurazioni S.p.A. of € 100 MN (2013: € – MN), Selecta of € 85 MN (2013: € 118 MN), Assurances Médicales s.a. of € 18 MN (2013: € – MN) and Yapı Kredi of € 8 MN (2013: € 10 MN).
Annual Report 2014 Allianz Group198 14 – Non-current assets and assets and liabilities of disposal groups classified as held for sale non-current assets and assets and lIabIlItIes oF dIsPosal grouPs classIFIed as held For sale € mn as of 31 December 2014 2013
Non-current assets classified as held for sale Investments in associates and joint ventures – 131 Real estate held for investment 92 – Real estate held for own use 61 16
Münsterländische Bank Thie & Co. kg, Münster 102 – Total 102 –
non-current assets classIFIed as held For sale As of 31 December 2014, real estate held for investment classified as held for sale comprised several office buildings allocated to the reportable segment German Speaking Countries (Life/Health). The sale of these buildings is expected to be completed by the end of the first quarter of 2015. Upon measurement of these buildings at fair value less costs to sell, no impairment loss was recognized for the year ended 31 December 2014.
As of 31 December 2014, real estate held for own use classified as held for sale comprised several office buildings allocated to the reportable segment Global Insurance Lines & Anglo Markets (Property- Casualty). Upon measurement of these buildings at fair value less costs to sell, an impairment loss of € 18 mn was recognized for the year ended 31 December 2014. The sale of these buildings will be completed by the end of the third and fourth quarter of 2015, respectively.
Real estate held for own use classified as held for sale comprised as of 31 December 2013 an office building allocated to the reportable segment Asset Management, which was sold as expected during the first quarter of 2014.
Brand names The position brand names consists primarily of the brand name
CGUs in the Property-Casualty business segment are: − Insurance German Speaking Countries, − Insurance Western & Southern Europe including France, the
− Global Insurance Lines & Anglo Markets including the United Kingdom, Ireland and Australia,
− Specialty Lines I including Allianz Re, Allianz Global Corporate & Specialty and Credit Insurance,
CGUs in the Life/Health business segment2 are: − Insurance German Speaking Countries, − Health Germany, − Insurance Western & Southern Europe including France, the
The carrying amounts of goodwill and brand names are allocated to the Allianz Group’s CGUs as of 31 December 2014 and 2013 as follows: allocatIon oF carryIng amounts oF goodwIll and brand names to cgus € mn as of 31 December 2014 2013 cgu Goodwill Brand names Goodwill Brand names
corPorate and other 1 Some Asset Management entities have been allocated to the Life/Health business segment. Please refer to note 6 – Segment reporting for details.
The discount rate is based on the capital asset pricing model (CAPm) and appropriate eternal growth rates. The assumptions, including the risk free interest rate, market risk premium, segment beta and leverage ratio, used to calculate the discount rates are in general consistent with the parameters used in the Allianz Group’s 1 The cFo Forum published MceV Principles for the determination of MceV in order to increase consistency among the European Insurers. They are especially designed to bring a shareholders’ perspective on value, a market consistent approach to financial risk, a greater focus on the disclosure of cash emerging from covered business and disclosure of combined Group MceV information.
Health Germany Euro swap curve minus 10 bPs credit risk adjustment plus 13 bPs volatility adjustment
Euro swap curve minus 10 bPs credit risk adjustment plus 13 bPs volatility adjustment
Local swap curve minus 10 bPs credit risk adjustment (South Korea only) plus 5 bPs volatility adjustment (South Korea only)
For those entities reporting in eur: Euro swap curve minus 10 bPs credit risk adjustment plus 23 bPs volatility adjustment For other entities: Local swap curve minus 10 bPs credit risk adjustment plus volatility adjustment for the following currencies only (hrk: 28 bPs, czk: 4 bPs, Pln: 18 bPs)
For the CGUs in the business segments Property-Casualty and Asset Management, sensitivity analyses were performed in respect to the long-term sustainable combined ratios and cost-income ratios. For all CGUs, excluding Property-Casualty Asia-Pacific and Middle East as well as Property-Casualty Central and Eastern Europe, discounted earnings value sensitivities still exceeded their respective carrying values. For the CGU Central and Eastern Europe and the CGU Asia Pacific and Middle East an increase of more than 0.5 % points in the discount rate or the combined ratio may result in the recoverable amount of the CGU getting close to its respective carrying value.
IntangIble assets wIth FInIte useFul lIves The long-term distribution agreements with Commerzbank AG have useful lives of 13.5 years and 15 years, which were determined by contractual agreements. They are amortized on a straight-line basis over the remaining useful life of 9 years. The long-term distribution agreements with Banco Popular S.A. have useful lives of 25 years, which were determined by contractual agreements. They are amortized on a straight-line basis over the remaining useful lives of 22 years. The long-term distribution agreements with Hongkong & Shanghai Banking Corporation Holdings PLC (HSBC) in Asia and Turkey have useful lives of 11 years and 10 years, which were determined by contractual agreements. They are amortized on a straight-line basis over the remaining useful lives of 9 years and 8.5 years. The long-term distribution agreements with Yapı Kredi Bank have useful lives of 15 years, which were determined by contractual agreements. They are amortized on a straight-line basis over the remaining useful lives of 13.5 years.
The customer relationships of Selecta AG have useful lives of 10 years, which were determined by the multi-period excess earnings method. They are amortized on a straight-line basis over the remaining useful lives of 2.5 years. The customer relationships of Assurances Médicales S.A. have useful lives of 13 years, which were determined by the discounted cash flow method. They are armortized on a straight-line basis over the remaining useful lives of 12 years. The customer relationships coming from the acquisition of Yapı Kredi Sigorta A.Ş. have useful lives of 8 years, which were determined by reference to customer churn rates that reflect the period over which the Allianz Group expects to receive economic benefits. They are amortized on a straight-line basis over the remaining useful lives of 6 years. The customer relationships acquired from UnipolSai Assicurazioni S.p.A. have useful lives of 10 years, which were determined by reference to customer churn rates that reflect the period over which the Allianz Group expects to receive economic benefits. They are amortized in relation to the expected decrease of the customer relationships over the remaining useful lives of 9.5 years.
Annual Report 2014 Allianz Group 203 16 – Financial liabilities carried at fair value through income
Financial liabilities held for trading Derivative financial instruments 8,493 6,010 Other trading liabilities 3 3 17 – Liabilities to banks and customers liabilities to banks and customers € mn as of 31 December 2014 2013
Collateral received from securities lending transactions and derivatives 2,715 – 2,715 2,216 – 2,216 liabilities to banks and customers by contractual maturity liabilities to banks and customers by contractual maturity € mn as of 31 December 2014 Up to 3 months > 3 months up to 1 year > 1 year up to 3 years > 3 years up to 5 years Greater than 5 years Total
Balance carry forward of discounted loss reserves 3,207 (306) 2,901 – – –
1 Include effects of foreign currency translation adjustments for prior years claims of gross € 1,534 mn (2013: € (1,371) mn) and of net € 1,282 mn (2013: € (1,184) mn) and for current year claims of gross € 165 mn (2013: € (295) mn) and of net € 130 mn (2013: € (253) mn). Other changes include for 2014 an increase in reserves due to the reclassification of the French International Health business of gross € 410 mn and of net € 285 mn.
Prior years’ net loss and loss adjustment expenses incurred reflect the changes in estimation charged or credited to the consolidated income statement in each year with respect to the reserves for loss and loss adjustment expenses established as of the beginning of that year. During the year ended 31 December 2014, the Allianz Group recorded additional income of € 1,385 mn (2013: € 1,689 mn) net in respect of losses occurring in prior years. During the year ended 31 December 2014, this amount as a percentage of the net balance of the beginning of the year was 2.6 % (2013: 3.0 %).
The run-off triangle, also known as the “loss triangle”, is a tabular representation of loss-related data (such as payments, loss reserves, ultimate losses) in two, time-related dimensions. One of these is the calendar year, while the other is the accident year (year of loss occurrence). Run-off triangles – as the basis for measuring loss reserves – make clear how the loss reserves change over the course of time due to payments made and new estimates of the expected ultimate loss at the respective balance sheet date.
The run-off triangles are not prepared on a currency-adjusted basis. This means all figures are translated from the respective local currency into the Allianz Group presentation currency (Euro), consistently using the exchange rates applicable at the reporting date. This ensures that the reserves reconcile with reserves in the consolidated balance sheet.
Accident year changes in reserves For loss and lae during 2014
Fire and other damage to property insurance 5,060 5,575 329 5.9
changes in reserves For loss and lae during 2014 As noted above, prior year loss and LAE reserves of the Allianz Group developed favorably during 2014 by € 1,385 mn net of reinsurance, representing 2.6 % of net reserves as of 31 December 2013. The following table provides a breakdown of these amounts by line of business.
€ 120 mn at Allianz Australia due to actual claims inflation being lower than expected in 2014.
General liability insurance For general liability insurance, net loss and LAE reserves developed unfavorably during 2014 by € 86 mn, or 0.6 % of reserves at 31 December 2013. This overall minor development consists of several offsetting developments at different operating entities. An unfavorable development of € (255) mn was observed at Fireman’s Fund Insurance Company due to a continued adverse trend in severities which has been recognized in the reassessment of reserves.
The following table summarizes the gross and net loss and LAE reserves for A & E claims.
Aggregate policy reserves 399,227 365,519 Reserves for premium refunds 63,026 37,772 Other insurance reserves 1,081 781 aggregate policy reserves changes in aggregate policy reserves € mn
As of 1 January 365,519 350,244 Balance carry forward of discounted loss reserves (3,207) –
concentration oF insurance risk in the liFe/health business segment per reportable segment € mn as of 31 December
Global Insurance Lines & Anglo Markets 108 1,690 – 6 1,696 – 1,696
Amounts already allocated under local statutory or contractual regulations As of 1 January 13,231 11,979 Foreign currency translation adjustments (7) (5) Changes in the consolidated subsidiaries of the Allianz Group (1) –
As of 31 December 2014 and 2013, the Allianz Group’s deferred acquisition costs and reserves for insurance and investment contracts for the business segment Life/Health per reportable segment are summarized as follows:
The majority of the Allianz Group’s Life/Health business segment operations are conducted in Europe. Insurance laws and regulations in Europe have historically been characterized by legal or contractual minimum participation of contract holders in the profits of the insurance company issuing the contract. In particular, Germany, Switzerland and Austria, which comprise approximately 48 % (2013: 49 %) of the Allianz Group’s reserves for insurance and investment contracts as of 31 December 2014, include a substantial level of policyholder participation in all sources of profit including mortality/morbidity, investment and expense. As a result of this policyholder participation, the Allianz Group’s exposure to insurance, investment and expense risk is mitigated.
Group’s traditional contracts issued in France and Italy do not incorporate significant insurance risk, although they are accounted for as insurance contracts because of their discretionary participation features. Similarly, a significant portion of the Allianz Group’s unitlinked contracts in France and Italy do not incorporate significant insurance risk.
The Allianz Group’s Life/Health business segment is exposed to significant investment risk as a result of guaranteed minimum interest rates included in most of its non-unit-linked contracts. The weighted average guaranteed minimum interest rates of the Allianz Group’s largest operating entities in the business segment Life/ Health (comprising 87 % of non-unit-linked reserves in both 2014 and 2013) can be summarized by country as follows: weighted average guaranteed minimum interest rates oF liFe insurance entities as of 31 December 2014 2013
21 – Financial liabilities for unit-linked contracts changes in Financial liabilities For unit-linked insurance contracts and unit-linked investment contracts € mn
1 These reclassifications mainly relate to insurance contracts when policyholders change their contract from a unit-linked to a universal life-type contract.
Future policy benefits As of 31 December 2014, benefits for insurance and investment contracts which are expected to be due in 2015 amounted to € 48 Bn, those which are expected to be due between 2016 and 2019 amounted to € 168 Bn and those which are expected to be due after 2019 to € 914 Bn.
Deposits retained for reinsurance ceded 1,843 1,874 Derivative financial instruments used for hedging that meet the criteria for hedge accounting and firm commitments 281 158 Financial liabilities for puttable equity instruments 1,793 2,612 Other liabilities 7,520 6,514 1 Includes other liabilities due within one year of € 25,013 mn (2013: € 24,915 mn).
Contractual interest rate 0.30 % – – – – – – –
Contractual interest rate – – – – – 5.44 % – –
Contractual interest rate – – – – – 4.63 % – – Hybrid equity
Shareholders’ equity Issued capital 1,170 1,169 Additional paid-in capital 27,758 27,701 Retained earnings1 19,878 17,786 Foreign currency translation adjustments (1,977) (3,313) Unrealized gains and losses (net)2 13,917 6,742
In addition, Allianz SE has authorized capital (Authorized Capital 2014/II) for the issuance of shares against cash until 6 May 2019. The shareholders’ subscription rights can be excluded in order to issue new shares to employees of Allianz SE and its Group companies. As of 31 December 2014, the Authorized Capital 2014/II amounted to € 14 MN (5,359,375 shares).
Further, as of 31 December 2014, Allianz SE had conditional capital totaling € 250 MN (97,656,250 shares) (Conditional Capital 2010/2014). This conditional capital increase will only be carried out if conversion or option rights attached to bonds which Allianz SE or its Group companies have issued against cash payments according to the resolutions of the AGM on 5 May 2010 or 7 May 2014 are exercised or the conversion obligations under such bonds are fulfilled, and only insofar as no other methods are used in serving these rights.
Convertible subordinated notes totaling € 500 MN which may be converted into Allianz shares were issued against cash in July 2011. Within 10 years after the issuance a mandatory conversion of the notes into Allianz shares at the then prevailing share price may apply if certain events occur, subject to a floor price of at least € 74.90 per share. Within the same period, the investors have the right to convert the notes into Allianz shares at a price of € 187.26 per share. Both conversion prices are subject to anti-dilution provisions. The subscription rights of shareholders for these convertible notes have been excluded with the consent of the Supervisory Board and pursuant to the authorization of the AGM on 5 May 2010. The granting of new shares to persons entitled under such convertible notes is secured by the Conditional Capital 2010/2014. On or before 31 December 2014, there was no conversion of any such notes into new shares.
Issued shares outstanding as of 1 January 453,736,619 453,171,976 Capital increase for employee shares 500,000 550,000 Change in treasury shares held for non-trading purposes 11,420 14,643 Issued shares outstanding as of 31 December 454,248,039 453,736,619 Treasury shares 2,751,961 2,763,381 Total number of issued shares 457,000,000 456,500,000
In October 2014, 500,000 (2013: 550,000) shares were issued for cash out of the Authorized Capital 2014/II at a price of € 117.80 (2013: € 99.45) per share, enabling employees of Allianz Group subsidiaries in Germany and abroad to purchase shares. As a result, issued capital increased by € 1 MN and additional paid-in capital by € 58 MN. The Authorized Capital 2014/II was created to enable Allianz SE to issue new shares for such employee offerings. To be able to offer the new shares to employees, the shareholders’ subscription rights to these new shares were excluded with the consent of the Supervisory Board pursuant to the authorization granted by the AGM on 7 May 2014.
All shares issued during the years ending 31 December 2014 and 2013 are qualifying shares from the beginning of the year of issue.
dividends For the year ending 31 December 2014, the Board of Management will propose to shareholders at the AGM the distribution of a dividend of € 6.85 per qualifying share. For the year ended 31 December 2013, Allianz SE paid a dividend of € 5.30 per qualifying share.
treasury shares As of 31 December 2014, Allianz SE held 2,751,360 (2013: 2,761,795) own shares. Of these, 145,191 (2013: 155,626) were held for covering subscriptions by employees of the Allianz Group in the context of the Employee Stock Purchase Plan 2015, whereas 2,606,169 (2013: 2,606,169) were held as a hedge for obligations from the Allianz Equity Incentive Program (former Group Equity Incentive Program).
In the fourth quarter of 2014, 500,000 (2013: 550,000) new Allianz shares were issued in the context of a capital increase for the Employee Stock Purchase Plan 2014. In 2014, 510,435 (2013: 565,643) shares were sold to employees of Allianz SE and its subsidiaries. Of these, 155,626 (2013: 171,269) originated from the capital increase for the Employee Stock Purchase Plan in 2013 and 354,809 (2013: 394,374) from the capital increase for the Employee Stock Purchase Plan in 2014. Employees of the Allianz Group purchased shares at prices ranging from € 93.52 (2013: € 71.03) to € 111.33 (2013: € 100.84) per share. The remaining 145,191 (2013: 155,626) shares from the capital increase in 2014 will be used for the Employee Stock Purchase Plan of Allianz SE and its subsidiaries in 2015. The total change of holdings in Allianz SE own shares for the year ending 31 December 2014 amounted to a decrease of 10,435 (2013: decrease of 15,643) shares, which corresponds to € 26,714 (2013: € 40,046) or 0.002 % (2013: 0.003 %) of issued capital.
non-controlling interests non-controlling interests € mn as of 31 December 2014 2013
Unrealized gains and losses (net) 189 93 Share of earnings 381 347 Other equity components 2,385 2,325
On 1 January 2005, the Financial Conglomerates Directive (FCD), a supplementary European Union (E.U.) directive, became effective in Germany. Under this directive, a financial conglomerate is defined as any financial parent holding company that, together with its subsidiaries, has significant cross-border and cross-sector activities. The Allianz Group is a financial conglomerate within the scope of the directive and the related German laws. The directive requires that the financial conglomerate calculates the capital needed to meet the respective solvency requirement on a consolidated basis.
Going forward, with the planned introduction of Solvency II in January 2016, the Allianz Group expects the Solvency II rules to become the binding regulatory constraint for the Group and thereby also form the basis for the FCD capital requirements. In this context the Allianz Group is going to apply for internal model approval at the beginning of 2015 in order to be able to determine capital requirements under Solvency II based on its internal model.
2 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.
insurance reserves, investment risks, mortality risks, credit risks, underwriting risks and off-balance sheet risks.
As of 31 December 2014, the Allianz Group’s insurance subsidiaries were in compliance with all applicable regulatory solvency and capital adequacy requirements.
Income (expenses) from financial assets and liabilities held for trading (net) 33 (567) – 30 5 (499) Income (expenses) from financial assets and liabilities designated at fair value through income (net) 28 277 62 1 (1) 367 Income (expenses) from financial liabilities for puttable equity instruments (net) (19) (138) (49) – – (207) Foreign currency gains and losses (net) (92) (1,376) – (37) – (1,506)
Investments in associates and joint ventures1 27 73 Real estate held for investment 141 147 Loans and advances to banks and customers 287 412 Non-current assets classified as held for sale 32 104 realized losses Available-for-sale investments
Annual Report 2014 Allianz Group 221 30 – Fee and commission income fee and commission income € mn
ProPerty-casualty Fees from credit and assistance business 790 753 Service agreements 471 473 life/health Service agreements 97 75 Investment advisory 919 571 Other 1 –
Income from real estate held for own use Realized gains from disposals of real estate held for own use 24 34 Other income from real estate held for own use 2 –
Income from alternative investments 187 169 32 – Income and expenses from fully consolidated private equity investments income and exPenses from fully consolidated Private equity investments € mn
Expenses Cost of goods sold (216) (219) General and administrative expenses (469) (492) Interest expenses (54) (32)
Claims and insurance benefits paid (30,797) (20,946) 47 (51,696) Change in loss and loss adjustment expenses (224) (231) 12 (444)
Net Claims and insurance benefits paid (28,702) (20,571) 5 (49,268) Change in loss and loss adjustment expenses (175) (204) (2) (382)
Ceded Aggregate policy reserves 7 246 – 253 Other insurance reserves (1) 11 – 10 Expenses for premium refunds 5 11 (1) 15
Net Aggregate policy reserves (231) (5,943) – (6,174) Other insurance reserves – (241) – (240) Expenses for premium refunds (307) (6,379) (828) (7,514)
Other insurance reserves 7 (209) – (202) Expenses for premium refunds (161) (5,959) (46) (6,165)
Ceded Aggregate policy reserves 3 140 – 143 Other insurance reserves (1) 9 – 9 Expenses for premium refunds (1) 7 – 6
Annual Report 2014 Allianz Group 223 35 – Interest expenses interest expenses € mn
Investments in associates and joint ventures – (108) Real estate held for investment (24) (54) Loans and advances to banks and customers (16) (24) Non-current assets classified as held for sale (5) (31)
Investment management expenses (561) (527) Depreciation of real estate held for investment (232) (211) Other expenses from real estate held for investment (168) (167)
Commissions and profit received on reinsurance business ceded 88 67 Deferrals of acquisition costs 3,502 2,980 Amortization of deferred acquisition costs (2,648) (2,571)
1 Include one-off effect from pension revaluation. Please refer to note 6 for further details.
40 – Fee and commission expenses fee and Commission expenses € mn property-Casualty Fees from credit and assistance business (820) (755) Service agreements (360) (386)
Corporate and other Service agreements (269) (231) Investment advisory and banking activities (298) (263)
During the year ended 31 December 2014, current income taxes included income of € 485 mn (2013: expenses of € 138 mn) related to prior years.
Income before income taxes 8,848 9,643 Applied weighted income tax rate 29.8 % 29.9 % Calculated income taxes 2,636 2,882 Trade tax and similar taxes 210 244 Net tax exempt income (2) (185) Effects of tax losses 142 9 Other effects (740) 351 Effective income taxes 2,245 3,300
For the year ended 31 December 2014, the write-down of deferred taxes on tax losses increased the tax expenses by € 167 mn (2013: € 21 mn). The reversal of write-down of deferred tax assets on tax losses carried forward resulted in deferred tax income of € 6 mn (2013: € – mn). Due to the use of tax losses carried forward, for which deferred tax assets were previously written off, the current income tax expenses decreased by € 9 mn (2013: € 3 mn). Deferred tax income increased by € 10 mn (2013: € 9 mn) due to the use of tax losses carried forward, for which deferred tax assets were previously written off. The above-mentioned effects are shown in the reconciliation statement as “effects of tax losses”.
The tax rates used in the calculation of the Allianz Group’s deferred taxes are the applicable national rates, which in 2014 ranged from 10.0 % to 40.0 %. Changes to tax rates already adopted on 31 December 2014 are taken into account. In 2014, Spain enacted a tax rate decrease from 30 % to 28 % in 2015 and to 25 % from 2016 onwards, which led to deferred tax income of € 26 mn.
Deferred acquisition costs 4,824 4,335 Other assets 1,017 725 Intangible assets 410 400 Insurance reserves 2,691 2,691 Pensions and similar obligations 2,609 2,430 Other liabilities 450 754 Total deferred tax liabilities 21,773 17,225 Effect of netting (16,841) (14,047) Net deferred tax liabilities 4,932 3,178 Net deferred tax assets (liabilities) (3,886) (1,670)
Taxable temporary differences associated with investments in Allianz Group companies for which no deferred tax liabilities are recognized as the Allianz Group is able to control the timing of their reversal and which will not reverse in the foreseeable future, amounted to € 707 mn (2013: € 757 mn). Deductible temporary differences arising from investments in Allianz Group companies for which no deferred tax assets are recognized as it is not probable that they will reverse in the foreseeable future amounted to € 191 mn (2013: € 183 mn).
tax losses Carried forward Tax losses carried forward at 31 December 2014 of € 10,521 mn (2013: € 9,885 mn) resulted in recognition of deferred tax assets to the extent that there is sufficient certainty that the unused tax losses will be utilized. € 9,422 mn (2013: € 8,848 mn) of the tax losses carried forward can be used without time limitation.
Exchange traded Futures – – – – – – 3 – –
Derivative financial instruments useD in accounting heDges As of 31 December 2014, derivatives which form part of hedge accounting relationships, included in the line items other assets and other liabilities, had a notional amount of € 7.5 bn (2013: € 5.3 bn), as well as a positive fair value of € 477 mn (2013: € 75 mn) and a negative fair value of € 281 mn (2013: € 158 mn). These hedging instruments mainly include interest rate forwards with a total positive fair value of € 395 mn (2013: € 44 mn).
For the year ended 31 December 2014, the Allianz Group recognized for fair value hedges a net loss of € 30 mn (2013: net gain of € 36 mn) on the hedging instruments and a net gain of € 35 mn (2013: net loss of € 54 mn) on the hedged items attributable to the hedged risk.
Credit risk associated with netting arrangements is further mitigated by collateral. For further information on collateral, please refer to note 44 – Financial instruments and fair value measurement.
Annual Report 2014 Allianz Group 229 44 – Financial instruments and fair value measurement Certain risk disclosure requirements of IFRS 7 are reflected in the following sections within the Risk and Opportunity Report in the Group Management Report: − Internal risk capital model including all subsections, − Limitations,
− Risk profile and risk management, − Quantifiable risks including all subsections other than Business risk and Operational risk, − Liquidity risk.
fair values anD carrying amounts of financial instruments The following table compares the carrying amount with the fair value of the Allianz Group’s financial assets and financial liabilities: fair values anD carrying amounts of financial instruments € mn as of 31 December 2014 2013
Carrying amount Fair value Carrying amount Fair value financial assets Cash and cash equivalents 13,863 13,863 11,207 11,207 Financial assets held for trading 2,214 2,214 2,512 2,512 Financial assets designated at fair value through income 3,660 3,660 4,148 4,148 Available-for-sale investments 465,914 465,914 392,233 392,233 Held-to-maturity investments 3,969 4,710 4,140 4,647 Investments in associates and joint ventures 4,059 4,820 3,098 3,597 Real estate held for investment 11,349 16,323 10,783 15,625 Loans and advances to banks and customers 117,075 140,238 116,800 129,528 Financial assets for unit-linked contracts 94,564 94,564 81,064 81,064 Derivative financial instruments and firm commitments included in other assets 477 477 75 75 Real estate held for own use 2,566 3,646 2,423 3,626 financial liabilities Financial liabilities held for trading 8,496 8,496 6,013 6,013 Liabilities to banks and customers 23,015 23,607 23,109 23,282 Financial liabilities for unit-linked contracts 94,564 94,564 81,064 81,064 Derivative financial instruments and firm commitments included in other liabilities 281 281 158 158 Financial liabilities for puttable equity instruments 1,793 1,793 2,612 2,612
The Allianz Group carries certain financial instruments at fair value and discloses the fair value of most other assets and liabilities. The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The maximum exposure to credit risk of financial assets, without taking collateral into account, is represented by their carrying amount, except for available-for-sale financial assets, for which it is represented by the amortized cost amount.
Quoted prices in active markets – Fair value level 1: The level 1 inputs of financial instruments that are traded in active markets are based on unadjusted quoted market prices or dealer price quotations for identical assets or liabilities on the last exchange trading day prior to or at the balance sheet date, if the latter is a trading day.
Financial assets for unit-linked contracts 91,885 2,511 166 94,564 Derivative financial instruments and firm commitments included in other assets 2 476 – 477 financial liabilities Financial liabilities held for trading
fair value hierarchy as of 31 December 2013 (items carrieD at fair value)
Valuation methodologies of financial instruments carried at fair value For fair value measurements categorized within level 2 and level 3, the Allianz Group uses valuation techniques consistent with the three widely used classes of valuation techniques listed in IFRS 13: − Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
− Income approach: Conversion of future amounts such as cash flows or income to a single current amount (present value technique).
For level 3, derivatives are mainly priced by third-party vendors. Controls are in place to monitor the valuations of these derivatives. Valuations are mainly derived based on the income approach.
Financial assets designated at fair value through income – Equity securities For level 2, the fair value is determined using the market approach. For level 3, equity securities mainly represent unlisted equity securities measured at cost.
Available-for-sale investments – Debt securities Debt securities include: − Government and agency mortgage-backed securities (residential and commercial),
For level 3, the fair value is mainly determined using net asset values. The net asset values are based on the fair value meas urement of the underlying investments and are mainly provided by fund managers. For certain level 3 equity securities, the invested capital is considered to be a reasonable proxy for the fair value.
For level 3, the fair value is mainly determined based on the income approach using deterministic discounted cash flow models. A significant proportion of derivative liabilities represent derivatives embedded in certain life insurance and annuity contracts. Significant non-market observable input parameters include mortality rates and surrender rates.
Significant transfers of financial instruments carried at fair value In general, financial assets and liabilities are transferred from level 1 to level 2 when liquidity, trade frequency and activity are no longer indicative of an active market. Conversely, the same policy applies for transfers from level 2 to level 1.
For some listed infrastructure debt investments, market prices are available through broker quotes although the trading activity of these investments decreased to a very low level after the issuance period. To harmonize the valuation technique for the entire asset class, prices for all infrastructure debt investments are derived from discounted cash flow models including significant unobservable inputs. The review of the valuation technique led to the need to reclassify € 809 mn of available-for-sale infrastructure debt investments from level 1 or level 2 to level 3.
Description Fair value as of 31 December 2014 Valuation technique(s) Non-market observable input(s) Range
Fixed-indexed annuities 5,501 Discounted cash flow method Annuitizations 0 % – 25 %
Variable annuities 1,451 Discounted cash flow method Surrenders 0.5 % – 35 %
Reconciliation of level 3 financial instruments The following tables show a reconciliation of the financial instruments carried at fair value and classified as level 3.
Net losses (gains) in profit or loss attributable to a change in unrealized gains or losses for financial liabilities held at the reporting date financial liabilities Financial liabilities held for trading
Government and government agency bonds 56 31 – (26) – 1 – 4 (27) 39 –
fair value information about financial assets anD liabilities not carrieD at fair value fair value hierarchy as of 31 December 2014 (items not carrieD at fair value)
Level 3 – Non-market observable inputs Total financial assets Held-to-maturity investments 981 3,664 2 4,647 Investments in associates and joint ventures 316 54 3,227 3,597 Real estate held for investment – – 15,625 15,625 Loans and advances to banks and customers 402 90,443 38,683 129,528 Real estate held for own use – – 3,626 3,626 financial liabilities Liabilities to banks and customers 6,588 1,977 14,717 23,282
reclassification of financial assets On 31 January 2009, certain USD-denominated CDOs were reclassified from financial assets held for trading to loans and advances to banks and customers in accordance with IAS 39.
As of 31 December 2013, the carrying amount and fair value of the CDOs was € 166 mn and € 156 mn, respectively. As of 31 December 2014, the carrying amount and fair value of the CDOs was € 167 mn and € 169 mn, respectively. For the year ended 31 December 2014, the net profit related to the CDOs was not significant.
transfers of financial assets As of 31 December 2014, the Allianz Group substantially retained all the risks and rewards out of the ownership of transferred assets. There were no transfers of financial assets that were derecognized in full or partly, in which Allianz continues to control the transferred assets. Transfers of financial assets mainly relate to securities lending and repurchase agreement transactions. Transferred financial assets in repurchase agreement and securities lending transactions are mainly available-for-sale debt and equity securities for which substantially all of the risks and rewards are retained. As of 31 December 2014, the carrying amount of the assets transferred for securities lending trans actions amounted to € 7,596 mn (2013: € 6,836 mn). For repurchase agreements, the carrying amount of the assets transferred amounted to € 1,119 mn (2013: € 991 mn) and the carrying amount of the associated liabilities amounted to € 1,168 mn (2013: € 1,001 mn).
Collaterals without right to resell or repledge Financial assets carried at fair value through income – 3
As of 31 December 2014, the Allianz Group has received collateral, consisting of fixed income and equity securities, with a fair value of € 2,501 mn (2013: € 2,170 mn), which the Allianz Group has the right to sell or repledge. For the years ended 31 December 2014 and 2013, no pre viously received collateral was sold or repledged by the Allianz Group.
As of 31 December 2014, the Allianz Group received cash collateral with a carrying amount of € 15 mn (2013: € 191 mn).
Under IFRS 12 a structured entity is defined as an entity that has been designed so that voting rights or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.
Investments in asset backed securities (abs) and mortgage backed securities (mbs) issued by securitization vehicles The Allianz Group acts as investor in AbS or mbS issuing securitization vehicles which purchase pools of assets including commercial mortgage loans (CmbS), residential mortgage loans (RmbS), auto loans, credit card receivables and others. These securitization vehicles refinance the purchase of assets by issuing tranches of AbS or mbS, whose repayment is linked to the performance of the assets held by the vehicles.
Income derived from investments in securitization vehicles mainly includes interest income generated from AbS and mbS as well as realized gains and losses from disposals of these securities.
Investment funds launched by group internal asset managers can be considered to be sponsored by the Allianz Group. As a sponsor, the Allianz Group through its asset management subsidiaries is involved in the legal set-up and marketing of internally managed investment funds. This may include providing seed capital to the funds and providing administrative services to ensure the investment funds’ operation. Investment funds managed by group internal asset managers can be reasonably associated with the Allianz Group. The use of the Allianz name for investment funds is another indicator that the Allianz Group has acted as a sponsor for the respective funds. Information on the management fees generated in the asset management business are disclosed in note 30 of this annual report.
Reinsurance business The Allianz Group also uses structured entities in the reinsurance business, where hurricane and earthquake risks are sourced to external investors via the issuance of catastrophe bonds issued by bankruptcy remote structured entities. The performance of the issued bonds is linked to the occurrence or non-occurrence of specific catastrophe events. The cash received from the issued bonds is invested into low-risk structured notes. In parallel, the structured entities enter into derivative contracts with the Allianz Group under which the underlying risks are transferred from Allianz Group to the structured entities. Thus, the Allianz Group transfers exposure to variable returns into the structured entities instead of exposing itself to them. Since the Allianz Group is not exposed to the variable returns of these entities, they are not consolidated within the consolidated financial statements of the Allianz Group.
Interests in asset backed securities (abs) and mortgage backed securities (mbs) issued by securitization vehicles carrying amounts of abs anD mbs investments by type of category € mn as of 31 December 2014
Credit card – 871 – 871 carrying amounts of abs anD mbs investments by rating € mn as of 31 December 2014
Out of the total investment fund exposure, investments of € 10.0 bn (55 %) relate to listed investment funds, whereas investments of € 8.1 bn (45 %) relate to unlisted investment funds .
The carrying amounts mentioned before represent the maximum exposure to loss for the Allianz Group from these investments. In the reporting period, the Allianz Group has not provided any financial or other support to these entities, nor has it the intention to provide such support in the future.
47 – Litigation, guarantees and other contingencies and commitments litigation Allianz Group companies are involved in legal, regulatory, and arbitration proceedings in Germany and a number of foreign jurisdictions, including the United States. Such proceedings arise in the ordinary course of business, including, amongst others, their activities as insurance, banking and asset management companies, employers, investors and taxpayers. It is not feasible to predict or determine the ultimate outcome of the pending or threatened proceedings. Management does not believe that the outcome of these proceedings, including those discussed below, will have a material adverse effect on the financial position and the results of operations of the Allianz Group, after consideration of any applicable reserves.
Allianz Life Insurance Company of North America (Allianz Life) has been named as a defendant in class action lawsuits in connection with the marketing and sale of deferred annuity products. Two of those lawsuits in California, which have been certified as class actions and have been consolidated, generally allege that the defendant engaged in, among other practices, deceptive trade practices and misleading advertising in connection with the sale of such products.
The parties reached a settlement agreement in the consolidated action in the very low three-digit U.S. Dollar millions range and the settlement received approval by the court. Allianz Life has made a provision for the estimated cost of the settlement. The ultimate outcome of the other cases cannot yet be determined.
Besides the above-mentioned investments in investment funds, the Allianz Group also holds investment funds to fund unit-linked insurance contracts. However, these holdings are held on behalf and for the benefit of unit-linked policyholders only. For that reason, these holdings are not included in the above-mentioned table. As at 31 December 2014 the volume of unit-linked assets amounted to € 94,564 mn. The maximum exposure to loss on these investments is covered by liabilities recorded for unit-linked contracts.
Reinsurance business As of 31 December 2014, the outstanding volume of catastrophe bonds linked to hurricane and earthquake risks sponsored by the Allianz Group amounted to € 343 mn. The aggregated fair value of the derivatives between the Allianz Group and the structured entities issuing the catastrophe bonds amounted to € (4) mn.
As of 31 December 2014, the financial guarantees amount to € 434 mn (2013: € 455 mn), € 389 mn of which are due within one year. The collateral held amounts to € 49 mn (2013: € 72 mn). Nearly all customers of the letters of credit have no external credit rating.
In connection with the sale of various of the Allianz Group’s former private equity investments, subsidiaries of the Allianz Group provided indemnities to the respective buyers in the event that certain contractual warranties arise. The terms of the indemnity contracts cover ordinary contractual warranties, environmental costs and any potential tax liabilities the entity incurred while owned by the Allianz Group.
As of 31 December 2014, the indemnification contracts amount to € 108 mn (2013: € 91 mn), which are almost entirely due after five years. No collateral was held. Nearly all customers of the indemnification contracts have an external credit rating of A.
Performance guarantees Performance guarantees are given by the Allianz Group to ensure third-party entitlements if certain performance obligations of the guarantee recipient are not fulfilled.
Allianz and HT1 Funding GmbH have signed a Contingent Indemnity Agreement in July 2006, pursuant to which Allianz may, in certain circumstances, be obliged to make payments to HT1 Funding GmbH. HT1 Funding GmbH issued nominal € 1,000 mn Tier 1 Capital Securities with an annual coupon of 6.352 % (as of 30 June 2017, the coupon will be 12-month EURIbOR plus a margin of 2.0 % p.a.). The contingent payment obligation of the Allianz Group was reduced in 2012 following a reduction of the nominal amount of the Tier 1 Capital Securities from € 1,000 mn to € 416 mn. The securities have no scheduled maturity and the security holders have no right to call for their redemption. The securities may be redeemed at the option of the issuer on 30 June 2017, and thereafter. The expected impact in the foreseeable future has been recognized in other provisions, however, it is not possible for the Allianz Group to predict the ultimate potential payment obligations at this point in time.
Loan commitments The Allianz Group engages in various lending commitments to meet the financing needs of its customers. They consist of advances, standby facilities, guarantee credits, mortgage loans and public-sector loans. As of 31 December 2014, the total of loan commitments amount to € 953 mn (2013: € 868 mn) and represents the amounts at risk should customers draw fully on all facilities and then default, excluding the effect of any collateral. Since the majority of these commitments may expire without being drawn upon, these loan commitments are not representative of actual liquidity requirements for such commitments.
In addition, as of 31 December 2014, the Allianz Group has other purchase obligations of € 743 mn (2013: € 477 mn) mainly referring to maintenance, real estate development, sponsoring and other obligations.
In December 2002, Protektor Lebensversicherungs-Aktiengesellschaft (“Protektor”), a life insurance company whose role is to protect policyholders of all German life insurers, was founded. Allianz Lebensversicherungs -Aktiengesellschaft and some of its subsidiaries are obligated to provide additional funds either to the mandatory insurance guarantee scheme or to Protektor, in the event that the funds provided to the mandatory insurance guarantee scheme are not sufficient to handle an insolvency case. Such obligation is based on a maximum of 1 % of the sum of the net underwriting reserves with deduction of payments already provided to the insurance guarantee scheme. As of 31 December 2014, and under inclusion of the contributions to the mandatory insurance scheme mentioned above and assuming that no life insurer is exempted from payments, the aggregate out standing commitment of Allianz LebensversicherungsAktiengesellschaft and its subsidiaries to the insurance guarantee scheme and to Protektor is € 1,420 mn (2013: € 1,252 mn).
Typically associated with defined benefit plans are biometric risks like longevity, disability and death as well as economic risks like interest rates, inflation and compensation increases. The Allianz Group continued to mitigate the risk impact by implementing a benefits rule as part of the standard for HR. New plans are primarily based on contributions and may include in some cases guarantees like preservation of contributions or minimum interest rate.
The employee has a choice between lump sum payments and annuities in the AVK and the bPV, whereas the other vehicles provide annuities. VVW entitled agents have the option to capitalize up to one third of the pension amount as a lump sum payment.
United Kingdom The U.K. accounts for 8.1 % of the Allianz Group’s defined benefit obligation and 12.4 % of the Allianz Group’s plan assets.
Net amount recognized as of 1 January 7,500 8,010 Changes in the consolidated subsidiaries of the Allianz Group (3) 6 Foreign currency translation adjustments 21 (13) Recognized expenses 662 661 oci recognition (before deferred taxes) 2,264 (522) Net amount recognized as of 31 December 9,707 7,500 thereof assets (58) (94) thereof liabilities 9,765 7,594
Changes in demographic assumptions 6 40 Changes in financial assumptions 3,227 (554) Experience adjustments (111) 35
Past service costs (4) (7) Foreign currency translation adjustments 197 (82) Benefits paid (680) (629) Changes in the consolidated subsidiaries of the Allianz Group (4) 9
2 As of 31 December 2014, € 8,271 mn (2013: € 6,673 mn) of the defined benefit obligation are wholly unfunded, while € 14,496 mn (2013: € 12,437 mn) are wholly or partly funded. As for other plans where benefits are linked to variable returns on specified assets, the defined benefit obligation for a part of the Allianz Pensionsverein was determined as of 31 December 2014 by reference to the fair value of the plan assets. Without this, the defined benefit obligation would have been € 890 mn higher.
During the years ended 31 December 2014 and 2013, the defined benefit costs related to post-retirement health benefits were not significant.
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 89.0 years for women and 86.5 years for men. An increase in life expectancy by one year would lead to an increase of the defined benefit obligation by € 605 mn.
The discount rate assumption is the most significant risk for the defined benefit obligation. It reflects the 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 Internal Controls Over Financial Reporting (ICOFR) certified Allianz Global Risk Parameters (GRIPS) methodology is an internal development of the Nelson-Siegel model and consistently used by Group Risk, Group Audit, AIm and PImCO.
An increase (or decrease) in the discount rate by 50 basis points would lead to a decrease of € 1.6 bn (or increase of € 1.9 bn) in the defined benefit obligation.
An increase of pre-retirement benefit assumptions (e.g. salary increase) of 25 basis points would have an effect of € 67 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 affect the defined benefit obligation by € 491 mn.
Due to a well-diversified portfolio of more than 140,000 plan participants, there is no reasonable uncertainty of future cash flows expected that could have an impact on the liquidity of the Allianz Group.
Contributions For the year ending 31 December 2015, the Allianz Group expects to contribute € 301 mn to its defined benefit plans and to pay € 323 mn directly to participants in its defined benefit plans.
DefineD contribution plans Defined contribution plans are funded through independent pension funds or similar organizations. Contributions fixed in advance (e.g. based on salary) are paid to these institutions and the beneficiary’s right to benefits exists against the pension fund. The employer has no obligation beyond payment of the contributions.
During the year ended 31 December 2014, the Allianz Group recognized expenses for defined contribution plans of € 224 mn (2013: € 213 mn). Additionally, the Allianz Group paid contributions for state pension schemes of € 344 mn (2013: € 335 mn).
49 – Share-based compensation plans group eQuity incentive plans The Group Equity Incentive plans (GEI plans) of the Allianz Group help focus senior management, in particular the Board of Management, on the long-term increase in the value of the Allianz Group. Until 2010, the GEI plans included grants of stock appreciation rights (SAR) and restricted stock units (RSU). From the 2011 grant onwards, the Allianz Equity Incentive plan (AEI plan) has replaced the GEI plans. With the AEI Plan, only restricted stock units (RSU) are granted to the plan participants.
In addition, upon the death of a plan participant, a change of control or notice for operational reasons, the SAR vest immediately and will be exercised by the company provided the above market conditions have been attained.
The SAR are accounted for as cash-settled plans by the Allianz Group. Therefore, the Allianz Group accrues the fair value of the SAR as a compensation expense over the vesting period. Upon vesting, any changes in the fair value of the unexercised SAR are recognized as a compensation expense. During the year ended 31 December 2014, the Allianz Group recognized compensation expenses related to the unexercised SAR of € 7 mn (2013: € 62 mn).
As of 31 December 2014, the Allianz Group recorded a provision of € 54 mn (2013: € 86 mn) in other liabilities for the unexercised SAR.
The RSU are accounted for as cash-settled plans as the Allianz Group intends to settle in cash. Therefore, the Allianz Group accrues the fair value of the RSU as a compensation expense over the vesting period. During the year ended 31 December 2014, the Allianz Group recognized a compensation expense related to the non-vested RSU of € 24 mn (2013: € 58 mn).
As of 31 December 2014, the Allianz Group recorded a provision of € 90 mn (2013: € 141 mn) in other liabilities for the non-vested RSU.
In addition, upon the death of a plan participant, a change of control or notice for operational reasons, the RSU vest immediately and will be exercised by the company.
The RSU 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.
The following table provides the assumptions used in calculating the fair value of the RSU at grant date: assumptions of aei plans 1 The rSU 2015 are deemed to have been granted to participants as part of their 2014 remuneration. Consequently, the assumptions for rSU grants delivered in March 2015 are based on best estimation.
The RSU are accounted for as cash-settled plans as the Allianz Group intends to settle in cash. Therefore, the Allianz Group accrues the fair value of the RSU as a compensation expense over the service period of one year and afterwards over the vesting period. During the year ended 31 December 2014, the Allianz Group recognized a compensation expense related to the AEI plans of € 160 mn (2013: € 132 mn).
As of 31 December 2014, the Allianz Group recorded a provision of € 399 mn (2013: € 248 mn) for these RSU in other liabilities.
The total recognized compensation expense for Class B equity units that are outstanding is recorded as a liability in other liabilities. As of 31 December 2014, the Allianz Group recorded a liability for the Class B equity units of € 47 mn (2013: € 196 mn).
The fair value of the underlying M-unit options was measured using the Black-Scholes option pricing model. Volatility was derived in part by considering the average historical and implied volatility of a selected group of peers. The expected life of one granted option was calculated based on treating the three vesting tranches (one third in years 3, 4, and 5) as three separate awards.
The aggregate intrinsic value of share options outstanding was € 65 mn and € 232 mn for the years ended 31 December 2014 and 2013, respectively.
employee stock purchase plans The Allianz Group offers Allianz SE shares in 19 countries to qualified employees at favorable conditions. The shares have a minimum holding period of one to five years. During the year ended 31 December 2014, the number of shares sold to employees under these plans was 510,435 (2013: 565,643). During the year ended 31 December 2014, the Allianz Group recognized the difference between the issue price charged to the subsidiaries of the Allianz Group and the discounted price of the shares purchased by employees, amounting to € 7 mn (2013: € 7 mn) as compensation expenses.
other share option anD shareholDing plans The Allianz Group has other local share-based compensation plans, including share option and employee share purchase plans, none of which, individually or in the aggregate, are material to the consoli- dated financial statements. During the year ended 31 December 2014, the total expense recorded for these plans was € 2 mn (2013: € 7 mn).
As of 1 January 214 304 New provisions 8 166 Additions to existing provisions 24 19 Release of provisions recognized in prior years (28) (53) Utilization of provisions via payments (75) (104) Utilization of provisions via transfers (35) (116) Foreign currency translation adjustments 2 (2) As of 31 December 109 214
allianz bank’s restructuring plan Allianz Bank did not grow as profitably as expected in a highly competitive retail banking environment. As a result of this, Allianz Bank was closed on 30 June 2013. The closure of operations was executed swiftly. Mutual agreements were found with almost all employees affected by the restructuring. About 400 employees left the Group.
In 2014, a release of restructuring provisions for the closure of Allianz Bank of € 6 mn was recorded. As of 31 December 2014, the restructuring provision amounted to € 4 mn.
allianz italy’s restructuring plan In December 2014, Allianz Italy extended the restructuring plan that was initiated in the fourth quarter of 2013. Allianz Italy aims to adapt its business model and significantly streamline its processes. A unified platform for all agencies including a digital agency will be implemented.
The program will result in a reduction of complexity and higher automation of processes, in particular for underwriting activities, especially after the acquisition of the former book of business and agency network from UnipolSai Assicurazioni S.p.A. By implementing voluntary early retirement plans, headcount will be reduced by an additional 180 employees.
During the year ended 31 December 2014, restructuring charges of € 20 mn were recorded. As of 31 December 2014, Allianz Italy recorded restructuring provisions of € 40 mn related to this plan.
allianz benelux’ restructuring plan Following the integration of Allianz Belgium and Allianz Nederland into a regional structure (Benelux), Allianz Benelux initiated a restructuring program in December 2013 to improve profitability and cost competitiveness. An organizational restructuring plan is being executed in order to eliminate redundancies between countries and improve efficiency. The program will result in a net reduction of headcount by about 100 full-time equivalents (FTE). In addition, the program resulted in the write-off of certain assets.
allianz germany group’s restructuring plan The Allianz Germany Group launched the restructuring program
In 2012, the project “Optimierung Stäbe” was implemented as part of the restructuring program “Zukunftsprogramm Sachversicherung ” in order to reduce personnel and operating expenses by increasing efficiency in the Allianz Germany Group’s head office. From the original objective of reducing approximately 380 FTE, approximately 9 FTE remain as of 31 December 2014.
In addition, clearly defined activities in the area of operational functions have been transferred to newly founded service companies with their own employees. From originally approximately 200 FTE affected by the program, a reduction of 40 FTE remains as of 31 December 2014.
During the year ended 31 December 2014, restructuring charges of € 1 mn were recorded. As of 31 December 2014, the Allianz Germany Group recorded restructuring provisions of € 8 mn related to this program.
Net income attributable to shareholders used to calculate basic earnings per share 6,221 5,996
For the year ended 31 December 2014, the weighted average number of common shares excludes 2,738,082 (2013: 2,753,127) treasury shares.
52 – Other information numBer of employees numBer of employees as of 31 December 2014 2013
Salaries and wages 9,037 9,105 Social security contributions and employee assistance 1,293 1,304 Expenses for pensions and other post-retirement benefits 1,186 1,107 issuance of the Declaration of compliance with the german corporate governance coDe accorDing to § 161 aktg On 11 December 2014, the Board of Management and the Supervisory Board of Allianz SE issued the Declaration of Compliance according to § 161 AktG, which was made permanently available to the share­ holders on the company’s website.
The Declaration of Compliance of the publicly traded group company Oldenburgische Landesbank AG was issued in December 2014 and was made available to the shareholders on a permanent basis.
Fees billed by KPMG AG and KPMG International (KPMG) are dis­ closed in four categories. Effective 1 October 2014, the operational structure of KPMG changed. KPMG AG was part of KPMG Europe LLP, which was dissolved. Therefore, as of 31 December 2014, KPMG AG no longer has “affiliated entities”. To reflect the change, previous year figures have been adjusted accordingly.
Audit-related fees KPMG charged the Allianz Group an aggregate of € 7.9 Mn (2013: € 8.3 Mn) for assurance and services that are reasonably re lated 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 finan­ cial reporting standards and financial due diligence services.
Tax fees KPMG fees for professional services, rendered for tax advice and tax compliance, amounted to € 2.8 Mn (2013: € 4.8 Mn) and resulted pri­ marily from tax advice.
All services provided by KPMG to Allianz Group companies must be approved by the Audit Committee of the Allianz SE Supervisory Board. Services other than audit services must be pre­approved by the Audit Committee. The Audit Committee pre­approval process is based on the use of a “Positive List” of activities decided by the Audit Committee and, in addition, a “Guiding Principles and User Test” is applied. Group Compliance and KPMG report to the Audit Committee periodi­ cally with respect to services performed.
The equity­related remuneration is comprised in 2014 of 88,8801 (2013: 106,5592) Restricted Stock Units (RSU).
In 2014, remuneration and other benefits totaling € 6 Mn (2013: € 9 Mn) were paid to former members of the Board of Management and dependents, reserves for current pension obligations and accrued pension rights totaled € 102 Mn (2013: € 100 Mn).
The total remuneration for all Supervisory Board members, including attendance fees, amounted to € 2.0 Mn (2013: € 2.0 Mn).
2 The disclosure in the Annual Report 2013 was based on a best estimate of the RSU grants. The figure shown here for 2013 now includes the actual fair value as of the grant date (13 March 2014). The value therefore differs from the amount disclosed last year.
Germany Consolidated affiliates ACP GmbH & Co. Beteiligungen KG, Munich 0.0 2 ACP GmbH & Co. Beteiligungen KG II, Munich 0.0 2 ACP Vermögensverwaltung GmbH & Co. KG Nr. 4, Munich 100.0 ACP Vermögensverwaltung GmbH & Co. KG Nr. 4a, Munich 100.0 ACP Vermögensverwaltung GmbH & Co. KG Nr. 4c, Munich 100.0 ACP Vermögensverwaltung GmbH & Co. KG Nr. 4d, Munich 100.0 ACP Vermögensverwaltung GmbH Nr. 4 d. 1, Munich 99.3 ADEUS Aktienregister-Service-GmbH, Frankfurt am Main 79.6 AGA Service Deutschland GmbH, Aschheim 100.0 Alida Grundstücksgesellschaft mbH & Co. KG, Hamburg 94.8 Allianz AADB Fonds, Frankfurt am Main 100.0 3 Allianz ABS Fonds, Frankfurt am Main 100.0 3 Allianz AKR Fonds, Frankfurt am Main 100.0 3 Allianz ALD Fonds, Frankfurt am Main 100.0 3 Allianz ALIK Fonds, Frankfurt am Main 100.0 3 Allianz APAV Fonds, Frankfurt am Main 100.0 3 Allianz APKR Fonds, Frankfurt am Main 100.0 3 Allianz Asset Management AG, Munich 100.0 Allianz Automotive Services GmbH, Unterföhring 100.0 Allianz AVM-B Fonds, Frankfurt am Main 100.0 3 Allianz AZL Vermögensverwaltung GmbH & Co. KG, Munich 100.0 Allianz Beratungs- und Vertriebs-AG, Munich 100.0 Allianz Capital Partners GmbH, Munich 100.0 5 Allianz Capital Partners Verwaltungs GmbH, Munich 100.0 Allianz Climate Solutions GmbH, Munich 100.0 Allianz Deutschland AG, Munich 100.0 Allianz Digital Accelerator GmbH, Munich 100.0 Allianz DLVR Fonds, Frankfurt am Main 100.0 3 Allianz EEE Fonds, Frankfurt am Main 100.0 3 Allianz Esa cargo & logistics GmbH, Bad Friedrichshall 100.0 Allianz Esa EuroShip GmbH, Bad Friedrichshall 51.0 Allianz FAD Fonds, Frankfurt am Main 100.0 3 Allianz Finanzbeteiligungs GmbH, Munich 100.0 Allianz Global Corporate & Specialty SE, Munich 100.0 Allianz Global Investors GmbH, Frankfurt am Main 100.0 Allianz GLR Fonds, Frankfurt am Main 100.0 3 Allianz GLRS Fonds, Frankfurt am Main 100.0 3 Allianz GLU Fonds, Frankfurt am Main 100.0 3 Allianz GRGB Fonds, Frankfurt am Main 100.0 3 Allianz Handwerker Services GmbH, Aschheim 95.0 Allianz Investment Management SE, Munich 100.0 5 Allianz LAD Fonds, Frankfurt am Main 100.0 3 Allianz Leben Private Equity Fonds 1998 GmbH, Munich 100.0 Allianz Leben Private Equity Fonds 2001 GmbH, Munich 100.0 Allianz Leben Private Equity Fonds 2008 GmbH, Munich 100.0 Allianz Leben Private Equity Fonds Plus GmbH, Munich 100.0 Allianz LEBENCO Fonds, Frankfurt am Main 100.0 3 Allianz Lebensversicherungs-Aktiengesellschaft, Stuttgart 100.0 Allianz LFE Fonds, Frankfurt am Main 100.0 3 Allianz Managed Operations & Services SE, Munich 100.0 Allianz of Asia-Pacific and Africa GmbH, Munich 100.0 Allianz Pension Partners GmbH, Munich 100.0 Allianz Pensionsfonds Aktiengesellschaft, Stuttgart 100.0 Allianz Pensionskasse Aktiengesellschaft, Stuttgart 100.0 Allianz Private Equity GmbH, Munich 100.0
List of participations of the Allianz Group as of 31 December 2014 according to § 313 (2) HGB
AZL PE Nr. 1 GmbH, Munich 100.0 AZRE AZD P & C Master Fund, Munich 100.0 3 AZS-Arges Vermögensverwaltungsgesellschaft mbH, Munich 100.0 AZ-SGD Private Equity Fonds 2 GmbH, Munich 100.0 AZ-SGD Private Equity Fonds GmbH, Munich 100.0 AZT Automotive GmbH, Ismaning 100.0 BCA Betriebs-Catering GmbH Verpflegungsdienste, Sulzbach 100.0 Brahms Beteiligungs GmbH & Co. KG, Stuttgart 94.9 BrahmsQ Objekt GmbH & Co. KG, Stuttgart 95.0 Bürgel Wirtschaftsinformationen GmbH & Co. KG, Hamburg 50.1 Bürgel Wirtschaftsinformationen VerwaltungsGmbH, Hamburg 50.4 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 Deutsche Lebensversicherungs-Aktiengesellschaft, Berlin 100.0 Donator Beratungs GmbH, Munich 100.0 Donator Beteiligungsverwaltung GmbH, Munich 100.0 Euler Hermes Aktiengesellschaft, Hamburg 100.0 Euler Hermes Collections GmbH, Potsdam 100.0 Euler Hermes Rating Deutschland GmbH, Hamburg 100.0 GA Global Automotive Versicherungsservice GmbH, Halle (Saale) 100.0 InnoSolutas GmbH, Bad Friedrichshall 100.0 KVM ServicePlus - Kunden- und Vertriebsmanagement GmbH, Halle (Saale) 100.0 Mondial Kundenservice GmbH, Nuremberg 100.0 Münchener und Magdeburger Agrarversicherung Aktiengesellschaft, Munich 100.0 Münsterländische Bank Thie & Co. KG, Münster 100.0 My Finance Coach Stiftung GmbH, Munich 100.0 Objekt Burchardplatz GmbH & Co. KG, Stuttgart 100.0 Oldenburgische Landesbank Aktiengesellschaft, Oldenburg 90.2 PIMCO Deutschland GmbH, Munich 100.0 5 REC Frankfurt Objekt GmbH & Co. KG, Hamburg 80.0 REC Frankfurt zweite Objektverwaltungsgesellschaft mbH, Hamburg 60.0 RehaCare GmbH, Munich 100.0 risklab GmbH, Munich 100.0 Roland Holding GmbH, Munich 74.2 Selecta Deutschland GmbH, Sulzbach 100.0 Selecta Holding GmbH, Sulzbach 100.0 Signa 12 Verwaltungs GmbH, Düsseldorf 94.9 Spherion Beteiligungs GmbH & Co. KG, Stuttgart 94.9 Spherion Objekt GmbH & Co. KG, Stuttgart 100.0 UfS Beteiligungs-GmbH, Munich 100.0 VLS Versicherungslogistik GmbH, Berlin 100.0 Volkswagen Autoversicherung AG, Braunschweig 100.0 Volkswagen Autoversicherung Holding GmbH, Braunschweig 49.0 2 W. Fortmann & Söhne KG, Oldenburg 100.0 Windpark Aller-Leine-Tal GmbH & Co. KG, Sehestedt 100.0 Windpark Berge-Kleeste GmbH & Co. KG, Sehestedt 100.0 Windpark Büttel GmbH & Co. KG, Sehestedt 100.0 Windpark Calau GmbH & Co. KG, Sehestedt 100.0 Windpark Cottbuser See GmbH & Co. KG, Sehestedt 100.0 Windpark Dahme GmbH & Co. KG, Sehestedt 100.0 Windpark Eckolstädt GmbH & Co. KG, Sehestedt 100.0 Windpark Emmendorf GmbH & Co. KG, Sehestedt 100.0 Windpark Freyenstein-Halenbeck GmbH & Co. KG, Sehestedt 100.0 Windpark Kesfeld-Heckhuscheid GmbH & Co. KG, Sehestedt 100.0 Windpark Kirf GmbH & Co. KG, Sehestedt 100.0
Non-consolidated affiliates AERS Consortio Aktiengesellschaft, Stuttgart 55.3 Allianz Global Benefits GmbH, Stuttgart 100.0 Allianz Objektbeteiligungs-GmbH, Stuttgart 100.0 Allianz Pension Consult GmbH, Stuttgart 100.0 AZ Beteiligungs-Management GmbH, Munich 100.0 AZ-Argos 56 Vermögensverwaltungsgesellschaft mbH, Munich 100.0 Bürgel Beteiligungs GmbH, Hamburg 100.0 Elbe Forderungsmanagement GmbH, Hamburg 100.0 EURO-PRO Gesellschaft für Data Processing mbH, Grävenwiesbach 75.2 Grundstücksgesellschaft der Vereinten Versicherungen mbH, Munich 100.0 IDS GmbH - Analysis and Reporting Services, Munich 100.0 Infrastruktur Putlitz Ost GmbH & Co. KG, Husum 70.8 Lola Vermögensverwaltungsgesellschaft mbH & Co. KG, Munich 100.0 manroland AG, Offenbach am Main 100.0 6,9 manroland Vertrieb und Service GmbH, Mühlheim am Main 100.0 9 META Finanz-Informationssysteme GmbH, Munich 100.0 OLB-Immobiliendienst-GmbH, Oldenburg 100.0 OLB-Service GmbH, Oldenburg 100.0 Supercheck GmbH, Cologne 100.0
Other participations between 5 and 20 % of voting rights EXTREMUS Versicherungs-Aktiengesellschaft, Cologne 16.0 FC Bayern München AG, Munich 8.3 MLP AG, Wiesloch 8.9 Protektor Lebensversicherungs-AG, Berlin 10.0 Sana Kliniken AG, Ismaning 13.9
Allianz Emerging Markets Local Currency Bond, Senningerberg 100.0 4 Allianz Engineering Services Limited, Guildford 100.0 Allianz Equity Emerging Markets 1, Paris 100.0 3 Allianz Equity Investments Ltd., Guildford 100.0 Allianz Equity Large Cap EMU, Paris 100.0 3 Allianz EURECO Equity, Paris 97.1 4 Allianz Euro Bond Plus, Paris 58.8 4 Allianz Euro Credit SRI, Paris 41.9 2,4 Allianz Euro Inflation-linked Bond, Senningerberg 90.4 4 Allianz Euro Oblig 1-3 Plus, Paris 58.2 4 Allianz Euro Obligations Crédit ISR, Paris 89.0 4 Allianz Euro Tactique, Paris 40.0 2,4 Allianz Euroland Equity SRI, Senningerberg 84.3 4 Allianz Europa Aandelen Fonds, Rotterdam 75.4 4 Allianz Europa Obligatie Fonds, Rotterdam 87.3 4 Allianz Europe B.V., Amsterdam 100.0 Allianz Europe Ltd., Amsterdam 100.0
Allianz Multi Dynamisme, Paris 94.1 4 Allianz Multi Equilibre, Paris 98.0 4 Allianz Multi Horizon 2018-2020, Paris 57.0 4 Allianz Multi Horizon 2021-2023, Paris 45.4 2,4 Allianz Multi Horizon 2024-2026, Paris 56.8 4 Allianz Multi Horizon 2027-2029, Paris 100.0 4 Allianz Multi Horizon 2030-2032, Paris 100.0 4 Allianz Multi Horizon 2033-2035, Paris 100.0 4 Allianz Multi Horizon 2036-2038, Paris 100.0 4 Allianz Multi Horizon 2039-2041, Paris 100.0 4 Allianz Multi Horizon Court Terme, Paris 78.8 4 Allianz Multi Horizon Long Terme, Paris 72.9 4 Allianz Multi Opportunités, Paris 98.8 4 Allianz Multi Rendement Premium (R), Paris 97.0 4 Allianz Multi Rendement Réel, Paris 88.7 4 Allianz Multi Sérénité, Paris 99.7 4 Allianz Mutual Funds Management Company S.A., Athens 100.0 Allianz Nederland Administratie B.V., Utrecht 100.0 Allianz Nederland Asset Management B.V., Nieuwegein 100.0 Allianz Nederland Groep N.V., Rotterdam 100.0 Allianz Nederland Levensverzekering N.V., Rotterdam 100.0 Allianz New Europe Holding GmbH, Vienna 100.0 Allianz New Zealand Limited, Auckland 100.0 Allianz Obligations Court Terme, Paris 92.9 4 Allianz Obligations Internationales, Paris 79.6 4 Allianz Obligations Monde, Paris 99.8 4 Allianz of America Inc., Novato, CA 100.0 Allianz Offensief Mix Fonds, Rotterdam 100.0 4 Allianz One Beacon GP LLC, Wilmington, DE 100.0 Allianz One Beacon LP, Wilmington, DE 100.0 Allianz Opéra, Paris 100.0 3 Allianz Optéo, Paris 99.3 4 Allianz Osmea 4, Paris 100.0 4 Allianz p.l.c., Dublin 100.0 Allianz Pacific Aandelen Fonds, Rotterdam 86.3 4 Allianz Pan Asian REITs Fund Segregated Portfolio, George Town 100.0 3 Allianz Participations B.V., Amsterdam 100.0 Allianz Pension Fund Trustees Ltd., Guildford 100.0 Allianz Pensionskasse Aktiengesellschaft, Vienna 100.0 Allianz penzijní spolecnost a.s., Prague 100.0 Allianz Pimco Corporate, Vienna 75.5 4 Allianz Pimco Mortgage, Vienna 96.2 4 Allianz pojistovna a.s., Prague 100.0 Allianz Polska Services Sp. z o.o., Warsaw 100.0 Allianz Popular Asset Management SGIIC S.A., Madrid 100.0 Allianz Popular Pensiones EGFP S.A., Madrid 100.0 Allianz Popular S.L., Madrid 60.0 Allianz Popular Vida Compañía de Seguros y Reaseguros S.A., Madrid 100.0 Allianz Potential, Paris 100.0 4 Allianz Primio 2015, Paris 100.0 4 Allianz Private Equity Partners Europa I, Milan 86.8 3 Allianz Private Equity Partners Europa II, Milan 92.0 3 Allianz Private Equity Partners Europa III, Milan 99.6 3 Allianz Private Equity Partners IV, Milan 100.0 3 Allianz Private Equity UK Holdings Limited, London 100.0 Allianz Properties Limited, Guildford 100.0 Allianz Prudence, Paris 99.5 4 Allianz Re Dublin Limited, Dublin 100.0 Allianz Real Estate France SAS, Paris 100.0 Allianz Real Estate of America LLC, New York, NY 100.0 Allianz Renewable Energy Fund Management 1 Ltd., London 100.0 Allianz Renewable Energy Partners I LP, London 100.0 Allianz Renewable Energy Partners II Limited, London 100.0 Allianz Renewable Energy Partners III LP, London 98.5 Allianz Renewable Energy Partners IV Limited, London 98.5 Allianz Renewable Energy Partners V plc., London 100.0
Euler Hermes Credit Management Services Ireland Ltd., Dublin 100.0 Euler Hermes Credit Services (JP) Ltd., Tokyo 100.0 Euler Hermes Excess North America LLC, Owings Mills, MD 100.0 Euler Hermes Group SA, Paris la Défense 69.9 Euler Hermes Hellas Credit Insurance SA, Athens 100.0 Euler Hermes Hellas Services Ltd., Athens 100.0 Euler Hermes Hong Kong Service Limited, Hong Kong 100.0 Euler Hermes Korea Non-life Broker Company Limited, Seoul 100.0 Euler Hermes Luxembourg Holding S.à r.l., Luxembourg 100.0 Euler Hermes Magyar Követeleskezelö Kft., Budapest 100.0 Euler Hermes North America Holding Inc., Owings Mills, MD 100.0 Euler Hermes North America Insurance Company Inc., Baltimore, MD 100.0 Euler Hermes Patrimonia SA, Brussels 100.0 Euler Hermes Ré SA, Luxembourg 100.0 Euler Hermes Real Estate SPPICAV, Paris 60.0 Euler Hermes Recouvrement France S.A.S., Paris la Défense 100.0 Euler Hermes Reinsurance AG, Wallisellen 100.0 Euler Hermes Risk Yönetimi A.S., Istanbul 100.0 Euler Hermes S.A., Brussels 100.0 Euler Hermes Seguros de Crédito S.A., São Paulo 100.0 Euler Hermes Service AB, Stockholm 100.0 Euler Hermes Services AG, Wallisellen 100.0 Euler Hermes Services B.V., 's-Hertogenbosch 100.0 Euler Hermes Services Belgium S.A., Brussels 100.0 Euler Hermes Services Bulgaria EOOD, Sofia 100.0 Euler Hermes Services G.C.C. Limited, Dubai 100.0 Euler Hermes Services India Privat Limited, Mumbai 100.0 Euler Hermes Services S.A.S., Paris la Défense 100.0 Euler Hermes Services South Africa Ltd., Johannesburg 100.0 Euler Hermes Services Sp. z o.o., Warsaw 100.0 Euler Hermes Services Tunisia S.à r.l., Tunis 100.0 Euler Hermes Services UK Limited, London 100.0 Euler Hermes Servicii Financiare S.R.L., Bucharest 100.0 Euler Hermes Serviços Ltda., São Paulo 100.0 Euler Hermes Servis s.r.o., Bratislava 100.0 Euler Hermes Sigorta A.S., Istanbul 100.0 Euler Hermes Singapore Services Pte Ltd., Singapore 100.0 Euler Hermes South Express S.A., Brussels 100.0 Euler Hermes Taiwan Services Limited, Taipei 100.0 Euler Hermes Tech SAS, Paris la Défense 100.0 Euler Hermes Trade Credit Limited, Auckland 100.0 Euler Hermes Trade Credit Underwriting Agents Pty Ltd., Sydney 100.0 Euler Hermes UMA, Louisville, KY 100.0 Euler Hermes World Agency SASU, Paris la Défense 100.0 Euler Hermes, Mierzejewska-Kancelaria Prawna Sp.k, Warsaw 100.0 Eurl 20/22 Le Peletier, Paris 100.0 Euro Garantie AG, Pfäffikon 100.0 Eurosol Invest S.r.l., Udine 100.0 FAI Allianz Ltd., Sydney 100.0 FCP LBPAM IDR, Paris 100.0 4 FCT CIMU 92, Pantin 100.0 3 FCT Rocade L2 Marseille, Marseille 100.0 3 Fenix Directo Compania de Seguros y Reaseguros S.A., Madrid 100.0 Ferme Eolienne de Villemur-sur-Tarn S.à r.l., Versailles 100.0 Ferme Eolienne des Jaladeaux S.à r.l., Versailles 100.0 Fiduciaria Colseguros S.A., Bogotá D.C. 100.0 Financière Aldebaran SAS, Paris la Défense 100.0 Financière Callisto SAS, Paris la Défense 100.0 Fireman's Fund Financial Services LLC, Dallas, TX 100.0 Fireman's Fund Indemnity Corporation, Liberty Corner, NJ 100.0 Fireman's Fund Insurance Company Corp., Novato, CA 100.0
Fireman's Fund Insurance Company of Bermuda, Hamilton 100.0 Fireman's Fund Insurance Company of Hawaii Inc., Honolulu, HI 100.0 Fireman's Fund Insurance Company of Ohio Corp., Cincinnati, OH 100.0 Fondo Chiuso Allianz Infrastructure Partners I, Milan 100.0 3 Fragonard Assurance S.A., Paris 100.0 Friederike MLP S.à r.l., Luxembourg 100.0 Fusion Brokerage Inc., Richmond, VA 100.0 Fusion Company Inc., Richmond, VA 80.0 Gaipare Action, Paris 100.0 4 GamePlan Financial Marketing LLC, Woodstock, GA 100.0 Generation Vie S.A., Courbevoie 52.5 Genialloyd S.p.A., Milan 100.0 Gestion de Téléassistance et de Services S.A., Chatillon 100.0 GIE Euler Hermes SFAC Services, Paris la Défense 100.0 Global Transport & Automotive Insurance Solutions Pty Limited, Sydney 73.1 Hauteville Insurance Company Limited, St Peter Port 100.0 Havelaar et Van Stolk B.V., Rotterdam 100.0 Helviass Verzekeringen B.V., Rotterdam 100.0 Home & Legacy (Holdings) Limited, London 100.0 Home & Legacy Insurance Services Limited, London 100.0 Hunter Premium Funding Ltd., Sydney 100.0 IDR Actions Euros, Paris 100.0 4 Immovalor Gestion S.A., Paris 100.0 Inforce Solutions LLC, Woodstock, GA 100.0 Insurance CJSC "Medexpress", Saint Petersburg 99.8 Intermediass S.r.l., Milan 100.0 International Film Guarantors Limited, London 100.0 International Film Guarantors LLC, Santa Monica, CA 100.0 Interpolis Kredietverzekeringen N.V., 's-Hertogenbosch 100.0 Interstate Fire & Casualty Company, Chicago, IL 100.0 Investitori Real Estate Fund, Milan 100.0 3 Investitori SGR S.p.A., Milan 100.0 ITEB B.V., Rotterdam 100.0 JCR Intertrade Ltd., Bangkok 40.0 2 Jefferson Insurance Company Corp., New York, NY 100.0 Ken Tame & Associates Pty Ltd., Sydney 69.0 Kiinteistö OY Eteläesplanadi 2, Helsinki 100.0 Königinstrasse I S.à r.l., Luxembourg 100.0 La Rurale SA, Paris 99.9 LCF IDR, Paris 100.0 4 Les Vignobles de Larose S.A.S., Saint Laurent Médoc 100.0 Life Sales LLC, Novato, CA 100.0 LLC "Medexpress-service", Saint Petersburg 100.0 LLC "Progress-Med", Moscow 100.0 LLC "Risk Audit", Moscow 100.0 Lloyd Adriatico Holding S.p.A., Trieste 99.9 Magdeburger Sigorta A.S., Istanbul 100.0 Magyar Posta Rövid Kötvény Befektetési Alap, Budapest 37.1 2,4 Martin Maurel Vie SA, Courbevoie 100.0 Medi24 AG, Bern 100.0 Mondial Assistance Asia Pte Ltd., Singapore 100.0 Mondial Assistance Australia Holding Pty Ltd., Toowong 100.0 Mondial Assistance France SAS, Paris 95.0 Mondial Assistance France Services à la personne SAS, Paris 100.0 Mondial Assistance GmbH, Vienna 100.0 Mondial Assistance Indian Ocean LLC, Ebene 100.0 Mondial Assistance Ireland Ltd., Dublin 100.0 Mondial Assistance Mexico S.A. de C.V., Mexico City 100.0 Mondial Assistance Portugal Serviços de Assistência Lda., Paco de Aros 100.0 Mondial Assistance Réunion S.A., Saint Denis 100.0 Mondial Assistance s.r.o., Prague 100.0 Mondial Assistance Service España S.A., Madrid 100.0 Mondial Assistance Services Hellas A.E., Athens 51.0 Mondial Assistance Sp. z o.o., Warsaw 100.0
Non-consolidated affiliates A. Diffusion S.A., Nanterre 99.9 AGF Pension Trustees Ltd., Guildford 100.0 Allianz America Latina S.C. Ltda., Rio de Janeiro 100.0 Allianz Financial Services S.A., Athens 100.0 Allianz Global Corporate & Specialty AG Escritorio de Representacao no Brasil Ltda., São Paulo 100.0 Allianz Insurance Services Ltd., Athens 100.0 Allianz Northern Ireland Limited, Belfast 100.0 Allianz Risk Consultants B.V., Rotterdam 100.0 Assurance France Aviation S.A., Paris 99.9 business lounge GmbH, Vienna 100.0 COGAR S.à r.l., Paris 100.0 First Rate Direct Limited, Belfast 100.0 Gesellschaft für Vorsorgeberatung AG, Bern 100.0 ICC Evaluation SARL, Paris 100.0 Knightsbridge Allianz LP, Bartlesville, OK 99.5 4 Office Sénégalais de Conseils en Assurance SARL, Dakar 99.6
2 Controlled by the Allianz Group. 3 Investment fund. 4 Mutual, private equity or special fund. 5 Releasing impact according to § 264 (3) HGB through the Allianz
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements, in accordance with generally accepted accounting principles, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the group management report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the Group.
We have audited the consolidated financial statements prepared by Allianz SE, Munich, comprising the consolidated balance sheets, the consolidated income statements, the consolidated statements of comprehensive income, the consolidated statements of changes in equity, the consolidated statements of cash flows and the notes, together with the group management report for the business year from 1 January to 31 December 2014. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs, as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a para. 1 HGB [Handelsgesetzbuch “German Commercial Code”] and supplementary provisions of the articles of incorporation are the responsibility of the parent company’s management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs, as adopted by the E.U., the additional requirements of German commercial law pursuant to § 315a para. 1 HGB and supplementary provisions of the articles of incorporation and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.
Its financial strength, risk analysis and integrated global structure enable Euler Hermes to provide companies of all sizes with domestic and export market knowledge and support, fa cilitating successful trade receivables management and sales expansion in changing economic environments.
Euler Hermes is a subsidiary of Allianz, listed on Euronext Paris (ELE.PA) and rated AA- by Standard & Poor’s and Dagong Europe.
Christian Greisberger, Acer’s Senior Corp. Director – Global Credit Risk Management, says, “Euler Hermes World Agency teams honestly and genuinely take the time to get to know our business, talk to our senior executives and visit our buyers. Not just so they can understand the risks, but also so they can understand our specific position and business model. It is about having an honest and open relationship, where their team is seen very much as part of our own team, operating with a shared mission.”
A collaborative approach to risk management and the sharing of essential knowledge, information and experience.
ambaSSaDor Prof. Dr. Wolfgang iScHinger since 1 January 2015 Chairman of Munich Security Conference
Prof. Dr.-ing. Dr.-ing. e.H. HanS-Peter Keitel Vice-President of BDI-Federation of German Industries
Dr.-ing. Dr.-ing. e.H. norbert reitHofer Chairman of the Board of Management BMW AG
KaSPer rorSteD Chairman of the Board of Management Henkel AG & Co. KGaA
Jim Hagemann Snabe until 6 May 2014 General Manager Snabe ApS
Dr. mario monti President of Bocconi University, Chairman of the High-level Group on Own Resources of the European Union
JacqueS a. naSSer Chairman of BHP Billiton, Senior Consultant of One Equity Partners
Dr. gianfelice rocca Chairman of Techint Group of Companies angel ron Chairman of Banco Popular antHoni Salim President and Chief Executive Officer of Salim Group louiS ScHWeitzer Président d’Honneur de Renault
Dr. marco troncHetti Provera until 31 December 2014 Chairman and Chief Executive Officer of Pirelli & C. S.p.A.
alfonSo cortina De alcocer Vice Chairman of Rothschild Europe BV, Senior Advisor at Texas Pacific Group ambaSSaDor robert m. Kimmitt Senior International Counsel of Wilmer Cutler Pickering Hale and Dorr
Dr. franz b. Humer Chairman of DIageo plc, Retired Chairman of Roche Holding Ltd izumi KobayaSHi since 3 January 2015 Member of the Board of Directors of ANA Holdings Inc., Director of Mitsui & Co., Ltd lorD iain vallance of tummel Chairman of Amsphere Ltd
iGoR LanDaU until 7 May 2014 Member of the Board of Directors of Sanofi S.A. Membership in other statutory supervisory boards and SE administrative boards in Germany adidas AG (Chairman) Membership in comparable1 supervisory bodies Sanofi S.A.
PETER DEniS SUTHERLanD Chairman of Goldman Sachs International Membership in comparable1 supervisory bodies BW Group Ltd. Goldman Sachs International (Chairman) Koç Holding A.Ş.
Allianz S.p.A. (Vice Chairman until 6 February 2015) Allianz Sigorta A.S. (Vice Chairman) until 1 January 2015 Allianz Yasam ve Emeklilik A.S. until 1 January 2015 Yapi Kredi Sigorta A.S. (Vice Chairman) until 30 September 2014
GaRy BHoJWani until 31 December 2014 Insurance USA Membership in comparable1 supervisory bodies Hormel Foods Corp.
CLEMEnT BooTH until 31 December 2014 Global Insurance Lines & Anglo Markets Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Global Corporate & Specialty SE (Chairman) Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Australia Ltd.
DR. axEL THEiS since 1 January 2015 Global Insurance Lines & Anglo Markets Global Property-Casualty from 7 May 2015 Membership in other statutory supervisory boards and SE administrative boards in Germany ProCurand GmbH & KGaA (Chairman) Membership in Group bodies Allianz Global Corporate & Specialty SE (Chairman) Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Insurance plc Allianz Irish Life Holdings plc Fireman’s Fund Insurance Company Euler Hermes S.A.
DR. WERnER ZEDELiUS Insurance German Speaking Countries, Banking, Human Resources Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Deutschland AG (Chairman) Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Elementar Lebensversicherungs-AG (Chairman) Allianz Elementar Versicherungs-AG (Chairman) Allianz Investmentbank AG (Vice Chairman) Allianz Suisse Lebensversicherungs-Gesellschaft AG (Vice Chairman) Allianz Suisse Versicherungs-Gesellschaft AG (Vice Chairman)
E Further Information 269 Joint Advisory Council of the Allianz Companies 270 International Advisory Board 271 Mandates of the Members of the Supervisory Board 272 Mandates of the Members of the Board of Management 273 Glossary 277 Index
Acquisition cost The amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition.
business combinAtion A business combination is a transaction or event in which an acquirer obtains control of one or more businesses. Business combinations are accounted for using the acqui­ sition method.
current employer service cost Net expense incurred in connection with a defined benefit plan less any contributions made by the beneficiary to a pension fund.
defined contribution plAns Defined contribution plans are funded through indepen­ dent pension funds or similar organizations. Contributions fixed in advance (e.g. based on salary) are paid to these institutions and the beneficiary’s right to benefits exists against the pension fund. The employer has no obligation beyond payment of the contributions and does not par­ ticipate in the investment success of the contributions.
equity method The equity method is a method of accounting whereby the investment is initially recognized at cost and adjusted thereafter for the post­acquisition change in the investor’s share of the investee’s net assets.
expense rAtio Represents acquisition and administrative expenses (net), excluding one­off effect from pension revaluation, divided by premiums earned (net).
fAir vAlue The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
funds held by others under reinsurAnce contrActs Assumed/deposits retAined for reinsurAnce ceded Funds held by others are funds to which the reinsurer is entitled but which the ceding insurer retains as collateral for future obligations of the reinsurer. The ceding insurer shows these amounts as “deposits retained for reinsur­ ance ceded”.
life/heAlth lines of business Guaranteed savings & annuities: Guaranteed savings and annuities are life insurance obligations that always relate to the length of human life. Life obligations may be related to guarantees offering life and/or death coverage of the insured in the form of single or multiple payments to a beneficiary. Protection & health: Protection and health insurance cov­ ers different risks which are linked to events affecting the physical or mental integrity of a person.
life/heAlth operAting profit sources The objective of the Life/Health operating profit sources analysis is to explain movements in ifrs results by analyz­ ing underlying drivers of performance on a Life/Health business segment consolidated basis.
loss rAtio Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
otc derivAtives Derivative financial instruments which are not standard­ ized and not traded on an exchange but are traded directly between two counterparties via over­the­counter (otc) transactions.
present vAlue of new business premiums (pvnbp) Present value of projected new regular premiums, discounted with risk­free rates, plus the total amount of single premiums received.
replicAting portfolio Representation of the liabilities of the Life/Health insur­ ance business via standard financial instruments. This form of representation mimics the behavior of these liabilities under different market conditions and allows for efficient risk calculations on the basis of Monte Carlo simulations.
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.
segment reporting Financial information based on the consolidated financial statements, reported by business segments (Property­ Casualty, Life/Health, Asset Management and Corporate and Other) as well as by reportable segments.
vAlue of the business Acquired (vobA) vobA refers to the present value of future profits asso­ ciated with a block of business purchased.
Board of Management 24ff., 35f., 42ff., 72, 84f., 272 Board of Management Remuneration 45ff. Board of Management Committees 35f. Brand 74f.
Conglomerate solvency 81, 109f.124 Corporate and Other 64, 82, 102f., 108, 114f. Corporate governance and declaration 19, 40, 253 Corporate governance report 35ff. Corporate Social Responsibility 73ff.
Employee stock purchase plan 251 Executive remuneration principles 45ff. Executive summary 81ff.
Intangible Assets 163, 198ff. Internal controls over financial reporting 144f. International Executive Committee 27 Investment result 82ff., 89, 104ff., 111f. Investor Relations 29 Investors 28f.
Management’s assessment of 2014 results 81 Management’s overall assessment of the current economic situation 108 Market position 65ff., 70, 142 Markets 65ff.
Performance fees 101 Personnel Committee 19ff, 37 Products and services 63ff. Property-Casualty 63, 82, 86ff., 104ff., 112f. Publication date Cover
Rating 124f., 133ff. Regulatory changes 67 Reinsurance PC 88 Remuneration of the Supervisory Board 56ff. Reportable segments 63, 90f., 98 Reserves 113f.
Statement on Corporate Management pursuant to §289 a of the German Commercial Code 40f.
Subsequent events 84 Supervisory Board 16ff., 23, 36ff. Sustainable development 73ff.
1 The German Securities Trading Act (“Wertpapierhandelsgesetz”) obliges issuers to announce immediately any information which may have a substantial price impact. Therefore we cannot exclude that we have to announce key figures related to quarterly and fiscal year results ahead of the dates mentioned above. As we can never rule out changes of dates, we recommend checking them on the internet at www.allianz.com/financialcalendar.