B Corporate governance 63 Corporate Governance Report 69 Statement on Corporate Management pursuant to § 289a of the HGB 71 Takeover-related Statements and Explanations 74 Remuneration Report
Consider, for example, another owner of a Swabian-based mediumsized business who also has a few branches outside Germany. Through Allianz, Hiller set up a group contract for a company retirement plan for him. “After all, our global presence is one of Allianz’s special strengths,” he says. ”And thanks to Allianz’s international network we can provide outstanding support for many more clients.”
The Allianz Group is a global financial services provider. Approximately 78 million retail and commercial clients in more than 70 countries rely on our knowledge, global presence, financial strength and solidity. In fiscal year 2012, around 144,000 employees worldwide achieved total revenues of eur 106.4 BN and an operating profit of eur 9.5 BN. Allianz se, the parent company, is headquartered in Munich, Germany.
Dr. AnDreAs shell AlliAnz GlobAl CorporAte & speCiAlty (AGCS), MuniCh The 53-year-old has been adjusting industrial claims for Allianz for 20 years. Since 2006, he has headed claims adjustment for Property, Engineering, Energy and Marine Insurance at AGCS.
Maria Cecilia la Manna, Vice- President and Managing Director at Titan Italia, worked closely together with Allianz, so that we were able to act fast.
business, top management’s doors are wide open to them: “At PIMCO we manage assets worth a total of two trillion U.S. dollars. We have substantial bond holdings from many different companies – so many of these companies want to meet with us as much as we want to meet with them.”
As the world’s largest insurance group and one of the largest financial service providers, Allianz has to look to the future and correctly assess and evaluate risks like these in order to create value for our customers and shareholders. As Chief Risk Officer for the last five years, Tom Wilson has been responsible for making sure the risks Allianz takes are well structured, appropriately priced and managed within acceptable limits. More importantly, he has to ensure that Allianz recognizes not only the risks but focuses also on the opportunities.
The Chief Risk Officer and his colleagues must conduct very precise assessments to determine what the “right” risks are for Allianz to take.
The same also goes for risks that may arise with technological developments like nanotechnology, genetic engineering and digitalization. While the immediate benefits of these advances are clear, nobody knows with certainty the risks they may pose in the future in terms of product liability, cybercrime or breaches in data security. Good risk management and an underwriting culture give Allianz the confidence to underwrite these risks and capture the opportunities.
What does Wilson enjoy about his job? “Through risk management, being able to contribute to Allianz’s success and building together with our partners a company profitable on the long term and a strong financial community.”
At the 12 December 2012 meeting, the Board of Management informed us of the third-quarter results, further business developments and the situation of the Allianz Group. We also received reports on the impact of Storm Sandy and the impact of the U.S. drought on crop insurance. We then discussed planning for the 2013 fiscal year and the three-year period 2013-2015, as well as the remuner ation structures within the Allianz Group and the Declaration of Conformity with the Code. We further reviewed and approved the appropriateness of the remuneration of the Board of Management by a vertical and horizontal comparison. Based on a recommendation from the Personnel Committee, the Supervisory Board adopted a resolution to set yearly premiums for pension schemes for members of the Board of Management for the year 2013 and set targets for the variable remuneration of Board of Management members for 2013 as well as for the 2013-2015 Mid-term bonus. We also approved the revised objectives for the composition of the Supervisory Board following the changes to the Code. We carried out the regular review of efficiency of the Supervisory Board and adopted a resolution transferring responsibility for monitoring the effectiveness of the risk management system from the Audit Committee to the Risk Committee of the Supervisory Board. The meeting was followed by a separate information session in which members of the Board of Management gave presentations on current topics.
Dr. Paul acHleitner Finance until 31 May 2012 oliver Bäte Controlling, Reporting, Risk until 31 December 2012 Insurance Western & Southern Europe since 1 January 2013 manuel Bauer Insurance Growth Markets gary BHoJWani Insurance USA
Allianz share price Allianz highs and lows STOXX Europe 600 Insurance (indexed on the Allianz share price)
Market capitalization as of 31 December € Bn 47.8 33.7 40.4 39.6 34.0 Average number of shares traded per day (Xetra) mn 2.4 3.1 2.5 3.0 4.9
– In the “Investor Perception Study 2012” conducted by “ir Magazine”, Allianz’s ir work was chosen as the best in Germany, as well as the best within the European insurance sector.
internationaL exeCutive CoMMittee All members of the Board of Management of Allianz se and Managing Directors of the largest subsidiaries of Allianz Group
In accordance with the Agreement concerning the Participation of Employees in Allianz SE, the seats for the six employee representatives are allocated in proportion to the number of Allianz employees in the different countries. The Supervisory Board currently in office comprises four employee representatives from Germany and one each from France and Italy. The last election of the Supervisory Board took place in May 2012 for a term lasting until the end of the ordinary AGM in 2017.
− Preparation of the self-evaluation of the Supervisory Board audit CoMMittee 5 members − Chairman: appointed by the Supervisory Board (Dr. Wulf Bernotat) − Three shareholder representatives (Dr. Wulf Bernotat, Igor Landau,
− Approval of the assumption of other mandates by Board of Management members noMination CoMMittee 3 members − Chairman: Chairman of the Supervisory Board (Dr. Helmut Perlet) − Two further shareholder representatives (Prof. Dr. Renate Köcher,
Members of the Board of Management and the Supervisory Board are obliged by the German Securities Trading Act to disclose any transactions involving shares of Allianz SE or financial instruments based on them to both Allianz SE and the German Federal Financial Supervisory Authority should the value of the shares acquired or divested by the member, or a person closely associated to the member, amount to five thousand Euro or more within a calendar year. Such disclosures are published on our website at www.allianz.com/management-board and www.allianz. com/supervisory-board.
Qualitative targets 25 % Specific individual priorities for 2012 per member of the Board of Management out of the five categories that are essential to the 2010 – 2012 Group strategy – “Partner of Choice” for stakeholders (customers, employees, investors, general public) – Profitable growth – Strengthening of competitiveness – Development of market management (e.g. sales channels, customer segments and profitable customer base growth) – Protection of shareholders’ equity
GOVERNANCE SYSTEM Allianz operates an effective system of Compensation Committees at the business, regional, country and operating entity levels. They periodically review and decide on remuneration guidelines and practices below the Board of Management level. Based on the specific nature, scale and scope of each business the Board of Management has defined the appropriate level of Compensation Committee oversight. A Group-wide framework governs Compensation Committee operations and ensures consistent adherence to both Allianz minimum standards and regulatory requirements.
Remuneration for mandates in other Allianz companies and for other functions As remuneration for their membership in the Supervisory Board of Allianz Deutschland AG Mrs. Gabriele BurkhardtBerg received € 60 THoU and Mr. Franz Heiß received € 17 THoU for the financial year 2012. Mr. Jörg Reinbrecht, who was a member of the Supervisory Board of Allianz SE until 9 May 2012, received a remuneration of € 40 THoU for his membership in the Allianz Deutschland AG Supervisory Board in 2012. All current employee representatives of the Supervisory Board except for Mrs. Ira Gloe-Semler are employed by Allianz Group companies and receive remuneration at arm’s length for their services.
Banking operations Our banking operations support our insurance business and complement the products we offer in Germany, Italy, France, the Netherlands and Bulgaria. As a division of Allianz Deutschland AG, Oldenburgische Landesbank AG (OLb) is Allianz’s main banking product and service provider in Germany. OLb, Germany’s largest private regional bank, covers the northwest of Germany with 177 branches selected product range asset management C 002 retail and institutional clients
In our commercial lines, we serve our customers with group life insurance and provide companies with services and solutions in connection with defined benefit pension arrangements and defined contribution plans. In 2012, we increased our new business market share for term life products mainly with individual contracts.
Through Allianz Private Kranken, we provide a wide range of health insurance products, including full private health care coverage, supplementary health and long-term care insurance as well as foreign travel medical insurance. We expect growing demand for supplementary insurance in the future and are well positioned with the existing range of products, in particular with our long-term care insurance offerings.
Our biggest and most important line of business in PropertyCasualty is Motor, with a 16 % market share. Besides Motor, our broad product range for private and commercial customers includes property, liability, accident and health solutions. In 2012, we were able to keep our level of profitability, despite strong price pressure – especially in motor
Uncertainties linked to the European sovereign debt crisis will continue to heavily influence the evolution of the Spanish and Portuguese economies, as well as their respective insurance markets. Unemployment remains at very high levels, particularly in Spain, and reforms in Portugal will keep the insurance market under pressure. Yet, we remain confident that our efficient operating platform and strong distribution capabilities in both countries will enable us to outperform the market.
Finance (until 31 December 2012) Investments (as of 1 January 2013)
Allianz strives to be the best-in-class and most trusted partner for our customers and has been recognized as the loyalty leader in a number of markets. Our employees’ commitment and ambition to provide excellent service to our customers are crucial to our success. As such, both customer and employee satisfaction are key steering metrics for Allianz and both board members and top management are incentivized to ensure focus and continual improvement in these areas. We also place great importance on fostering outstanding leadership and personal development. To support this, Allianz offers employee engagement opportunities through a variety of volunteering programs, leveraging our core competencies in sharing knowledge.
– Interbrand: Allianz ranked as the “Best Global Green Brand” in Financial Services.
– Transparency International: Transparency International ranked Allianz 10th out of the 105 top public corporations – thereby achieving a top ranking among the most transparent multinational companies.
Our brand as a business asset The Allianz brand 1 plays a key role in driving the future growth of our business. In countries where we are well- established, our brand secures the loyalty of our customers and generates interest in a wider range of products and services. In newer markets, it can grow market share via a combination of local presence and global positioning. In 2012, we continued to strengthen our brand as reflected by the following: − With operating businesses in over 70 countries worldwide, and the rebranding of Mondial Assistance 2, Colseguros and Rosno, our Allianz branded revenues stood at approximately 83 % (2011: 80 %) of total revenues. Our one-brand vision for Allianz leaves room for renowned specialty brands such as PIMCO, one of the largest fixed income asset managers and Euler Hermes, the world’s number one credit insurer.
− Allianz is ranked among the top performers in the financial services sector in the Interbrand 100 Best Global Brands ranking. In 2012, we demonstrated the highest growth rate among all assessed European financial services providers, with a brand value growth of +16 %, increasing from USD 5.3 bn in 2011 to approximately USD 6.2 bn in 2012.
coMMitted to inVesting resPonsibly We are committed to integrating environmental, social and governance (ESG) factors into our proprietary investment strategies and third-party asset management. Customer demand, a growing recognition of the importance of ESG factors and better risk-adjusted returns are sound business reasons for integrating ESG factors in our investments. By scrutinizing investments from an ESG perspective, we endeavor to identify long-term risks and opportunities that are not fully reflected in market prices and seek to capitalize on them for the benefit of shareholders, customers and other stakeholders. This is especially relevant to us, because as an insurance company we manage and carry risk over very long time horizons.
To ensure effective implementation of the compliance controls, a Group-wide Compliance Quality Assurance program was rolled out in 2012. The Program consists of self-assessments, onsite reviews and monitoring via reporting. It verifies the implementation and effectiveness of Allianz’s Compliance Management System, which includes the Anti- Corruption Program, across the Group.
Political donations As a corporate citizen of significant size and headquartered in Germany, Allianz SE is committed to the country’s vibrant democracy. For this reason, we contribute to democratic political parties that are represented in the German Parliament (Bundestag) and support the social market economy. We acknowledge the important role labor and industry have played in the creation of the modern German state. Consequently, we have a policy governing corporate donations to political parties in Germany. Our donation activities are strongly driven by the premise of transparency and to deliver this level of transparency, we publish a press release outlining our political donations. All contributions are made annually on 1 July to ensure that they are in no manner connected, or perceived to be connected, to any legislative initiatives or elections.
As opposed to the previous year, the asset management industry in 2012 was characterized by a positive flow development across most asset classes, with only money market funds experiencing major redemptions. In Europe, equity mutual funds continued to see outflows while other asset classes recorded inflows. In the United States, redemptions of money market funds continued but were more than compensated by strong net inflows into other asset classes. Similar to 2011, Asia recorded robust inflows across all asset classes – except for some minor outflows from balanced funds. On a global scale, fixed income again absorbed the majority of the new money invested, accounting for close to 90 % of the total net inflows into long-term mutual funds.
2 Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions and disposals. Please refer to page 183 for a reconciliation of nominal total revenue growth to internal total revenue growth for each of our segments and the Allianz Group as a whole.
In the life insurance industry, global premium growth remained sluggish. Apart from some European markets – such as France, Italy and Spain – which struggled the most under the current economic conditions, premium growth in advanced markets like Germany was almost flat. Declining annuity sales as a result of shrinking return guarantees in the U.S. market were partly offset by the recovery of the premium growth in emerging markets in particular in China and Latin America. The persistent low-yield environment impacted customer demand for long-term insurance saving products.
Our capitalization remained strong and shareholders’ equity grew € 8.6 bn to € 53.6 bn compared to 31 December 2011. Our conglomerate solvency further strengthened by 18 percentage points to 197 %.
Non-operating realized gains and losses (net) decreased from € 1,215 mn to € 1,112 mn. This was mainly due to lower realizations on real estate investments. However, realized gains from equity and debt securities remained broadly stable at € 619 mn and € 402 mn, respectively.
– and changed the segment Asset Management, which consists of two major distinct investment management businesses, PImCO and AllianzGI, operating under Allianz Asset Management (AAm).
Property-Casualty Insurance Operations − Gross premiums written increased 4.7 % to € 46.9 BN. − Operating profit grew to € 4,719 MN, driven by the strong underwriting result.
1 For the Property-Casualty segment, total revenues are measured based upon gross premiums written.
Global Insurance Lines & Anglo Markets 9 16,577 15,291 14,848 16,003 15,290 12,564 11,613 11,293 1,833 1,469 1,833
Middle East and North Africa 15 9 12 300 223 399 3 Statutory premiums adjusted for foreign currency translation and (de-)consolidation effects. 4 From the first quarter of 2011 on, the variable annuity business of Allianz Global Life is shown within Germany, France and Italy, respectively. Prior year figures have not been adjusted.
Operating profit of € 4.7 bn towards the higher end of our range, driven by a lower level of claims from natural catastrophes.
Net inflows of total assets under management of €114.7 bn, compared to € 34.7 bn in 2011, mainly into fixed income products.
1 For more detailed information on the previous year outlook for 2012, please see the Annual Report 2011 starting on page 123.
1 The information presented in the sections Economic outlook, Insurance industry outlook and Asset management industry outlook is based on our own estimates.
Besides a possible renewed escalation of the sovereign debt crisis, there are other risks that could severely dampen the economic outlook. This holds true, in particular, for the polit­ ical situation in North Africa and the Middle East regions, where we assume no dramatic escalation, although the political situation will remain tense.
In the following, we provide the outlook for 2013 and 2014 for the Group and each segment, together with the main sensitivity factors and their possible impacts. In addition, we outline our revenue and claims expectations and esti­ mates of key ratios and income statement positions. The outlook for the Group, especially the operating profit out­ look, reflects a stabilizing diversification effect that is inherent in our global, multi­segment portfolio.
As the low interest rate environment is expected to persist, investment income will remain under pressure due to the rather short duration of the investments in the Property­ Casualty segment. We will continue to take measures to adapt our investment strategy to current market conditions.
Although these factors are likely to have a lasting impact on Allianz and other financial services providers, we believe we are well prepared to meet the potential challenges. Just as we did in 2012, we will continue to redesign and reprice our products in response to the changing economic environment, relentlessly pursue strong underwriting results and strive for operational excellence across all business segments. We will maintain our focus on asset/liability management, while further executing the derisking programs that we have already started and continuously look for new investment opportunities beyond traditional asset classes.
Management’s overall assessment of the current economic situation of the Allianz Group
2 This comprises assets of € 0.1 bn and € 0.1 bn and liabilities of € (0.1) bn and € (0.1) bn as of 31 December 2012 and 31 December 2011, respectively.
Please refer to page 72 regarding authorizations to issue and repurchase shares.
Total revenues comprise statutory gross premiums written in Property­Casualty and Life/Health, operating revenues in Asset Management, and total revenues in Corporate and Other (Banking).
Yield curve and liquidity premium assumptions When calculating the fair values of assets and liabilities, the assumptions regarding the underlying risk-free yield curve are crucial in determining future cash flows and how to discount them. We apply the same methodology as provided by the European Insurance and Occupational Pensions Authority (EIOPA) in the fifth quantitative impact study (QIS 5) – except for the Euro yield curve where we follow their latest guidance on Solvency II.
2 For further information about additional risk disclosure regarding derivative financial instruments, please refer to note 43 to the consolidated financial statements.
Tax impact The tax impact decreased by € 0.4 bn as a direct consequence of the model changes (i.e. a lower risk capital before tax).
For credit risk concentration, we run a Group­wide country and obligor group limit management framework (CRisP 1), which is based on data used by the investment and risk ex­ perts at the Group and the operating entity levels. It forms the basis for discussions on credit actions and provides notification services for a quick and broad communication of credit­related decisions across the Group.
Underwriting risk Underwriting risks consist of premium and reserve risks in the Property-Casualty segment as well as biometric risks in our Life/Health segment. For the Asset Management segment and our banking operations, underwriting risks are not relevant. Risks transferred by internal reinsurance to the Group are generally allocated to the Property-Casualty or the Life/Health segment. However the Corporate and Other segment provides a “Keep Well Commitment” that transfers small parts of the underwriting risk from Fireman ’s Fund Insurance Co.
Our Property-Casualty insurance businesses are exposed to premium risk related to the current year’s new and renewed business as well as reserve risks related to the business in force. A substantial portion of the Property-Casualty segment’s pre-diversified internal underwriting risk capital arises from our entities operating locally in Germany, Italy, France and the United States (about 41 %) as well as from our global operating entities AGCS, Allianz Re and Euler Hermes (about 34 %) as of 31 December 2012.
Natural disasters, such as earthquakes, storms and floods, represent a significant challenge for risk management due to their accumulation potential and occurrence volatility. In order to measure such risks and better estimate the potential effects of natural disasters, we use special modeling techniques in which we combine data about our portfolio (such as the geographic distribution and characteristics of insured objects and their values) with simulated natural disaster scenarios to estimate the magnitude and frequency of potential losses. Where such stochastic models do not exist (e. g. flood risk in Italy), we use deterministic scenariobased approaches to estimate probable losses.
The future uncertainty regarding potential losses is significantly driven by the risks underwritten. In general, our operating entities constantly monitor the development of reserves for insurance claims on a line of business level.3 Results are discussed by local reserve committees at least on a quarterly basis. If necessary, we re-estimate reserves in line with actuarial standards. In addition, the operating entities generally conduct annual reserve uncertainty analyses. The approaches applied are similar to the methods used for reserve risk calculations. The Allianz Group performs regular independent reviews of these analyses and Group representatives participate in the local reserve committee meetings. Similar to premium risk, reserve risk at the Group level is positively affected by the diversification effect between different lines of business at the local level and different markets at the Group level.
Liquidity risk Liquidity risk has two aspects: the risk that short-term current or future payment obligations cannot be met or can only be met on the basis of altered conditions, and the risk that in the event of a company liquidity crisis, refinancing is only possible at higher interest rates or by liquidating assets at a discount. Liquidity risk can arise primarily if there are mismatches in the timing of cash payments and funding obligations. However, it does not include the risk of a change in market prices due to a worsening of the market liquidity of assets, as this is a component of market risk analyzed through our internal risk capital model (e. g. the assumed volatility of real estate investments takes historical observations into account). Funding risk, a particular form of liquidity risk, arises when the necessary liquidity to fund illiquid asset positions cannot be obtained at the expected terms and when required.
Communication and transparency: Finally, transparent and robust risk disclosure provides the basis for communicating this strategy to our internal and external stakeholders, ensuring a sustainable positive impact on valuation and financing.
A risk function that is independent from the business line management has to be established by the operating entity. This function operates under the direction of the operating entity CRO who is responsible for overseeing the risk function. In addition, a local Risk Committee supports both the operating entity Board of Management and the CRO by acting as the primary risk controlling body. Group Risk is also represented on the local Risk Committees to enhance the risk dialogue between the Group and the operating entities.
Claims and insurance benefits incurred (gross) (51,745) (51,376) (48,038) Claims and insurance benefits incurred (ceded) 2,871 2,509 1,942 Claims and insurance benefits incurred (net) 33 (48,874) (48,867) (46,096) Change in reserves for insurance and investment contracts (net) 34 (14,359) (10,993) (13,871)
Net cash flow provided by operating activities 17,793 16,642 15,414 1 Includes reclassifications from loans and advances to banks and customers to cash and cash equivalents at the u.s. subsidiaries.
Change in other loans and advances to banks and customers (originated loans) 330 (2,181) 3,696
Consolidated statements of Cash flows – Continued consolidated statements of cash flows D 005 € mn sUpplementarY information on the consolidated statements of cash flows Income taxes paid (2,233) (2,073) (1,347)
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration – which is deemed to be an asset or a liability – will be recognized in accordance with the applicable IFRS. If the contingent consideration is classified as equity, it will not be remeasured and its subsequent settlement will be accounted for within equity.
When the Allianz Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.
Held-to-maturity investments Held-to-maturity investments are debt securities with fixed or determinable payments and fixed maturities for which the Allianz Group has the positive intent and ability to hold to maturity. These securities are recorded at amortized cost using the effective interest method over the life of the security, less any impairment losses. Amortization of a premium or discount is included in interest and similar income.
Impairment of available-for-sale equity securities If there is objective evidence that the cost may not be recovered, an available-for-sale equity security is considered to be impaired. Objective evidence that the cost may not be recovered, in addition to qualitative impairment criteria, includes a significant or prolonged decline in the fair value below cost. The Allianz Group’s policy considers a significant decline to be one in which the fair value is below the weighted average cost by more than 20 %. A prolonged decline is considered to be one in which the fair value is below the weighted average cost for a period of more than nine months.
BalaNce sHeet liNe iteMs, ias 39 cateGories aNd ifrs 7 classes of fiNaNcial iNstruMeNts D 006
Shadow Accounting For insurance contracts and investment contracts with discretionary participation features, shadow accounting is applied to DAC, PVFP and deferred sales inducements. The Allianz Group uses EGPs or EGMs, which include realized gains and losses in measuring these assets. Shadow accounting is applied in order to include the effect of unrealized gains or losses in the measurement of these intangible assets in the same way as it is done for realized gains or losses. Accordingly, the assets are adjusted with corresponding charges or credits recognized directly in other comprehensive income as a component of the related unrealized gain or loss. When the gains or losses are realized, they are recorded in the income statement through recycling and prior adjustments due to shadow accounting are reversed.
practices and knowledge of the nature and value of a specific type of claim. These case reserves are regularly reevaluated in the ordinary course of the settlement process and adjustments are made as new information becomes available.
Tax payables are calculated in accordance with relevant local tax regulations.
− € 2,164 MN related to the Property-Casualty business − € 2,175 MN related to the Life/Health business − € 6,937 MN related to the Asset Management business − € 403 MN related to the business segment Corporate and Other
Further amendments and interpretations In addition to the above mentioned recently issued accounting pronouncements, the following amendments and revisions to standards and interpretations have been issued by the IASB but are not yet effective for or early adopted by the Allianz Group.
IAS 32 Financial Instruments Presentation: Amendments to Offsetting Financial Assets and Financial Liabilities
Scope oF conSolIdAtIon In addition to Allianz SE, the consolidated financial statements for the period ended 31 December 2012 generally include all German and foreign operating companies in which Allianz SE directly or indirectly holds a majority of voting rights, or whose activities it can in some other way control. The companies are consolidated from the date on which Allianz SE is able to exercise control.
Cash and cash equivalents 15 Loans and advances to banks and customers 78 Other assets 8 Intangible assets 368 Total assets 469 Deferred tax liabilities 111 Other liabilities 17 Total equity 341 Total liabilities and equity 469
Alba Allgemeine Versicherungs-Gesellschaft AG (Alba), Basel, Phenix Compagnie d’assurances SA (Phenix), Lausanne, and Phenix Compagnie d’assurances sur la vie SA (Phenix Vie), Lausanne On 1 November 2010, the Allianz Group sold Alba, Phenix and Phenix Vie. The impact of the disposal, net of cash disposed, on the consolidated statement of cash flows for the year ended 31 December 2010, was: AlbA + phenIx – ImpAct on the conSolIdAted StAtement oF cASh FlowS D 023 € mn
Investments 686 Reinsurance assets 29 Deferred acquisition costs 16 Other assets 39 Unearned premiums (38) Reserves for insurance and investment contracts (548) Other liabilities (80) Other comprehensive income (27) Realized gain from the disposal 130 Consolidation (7) Disposal of subsidiaries, net of cash disposed 200 2011 significant disposals and deconsolidations
Against this general rule, the following exceptions apply: − in all segments, income from financial assets and liabil­ ities carried at fair value through income (net) is treated as operating profit if the income refers to operating business; − for Life/Health insurance business and Property­Casualty insurance products with premium refunds, all items listed above are included in operating profit if the profit sources are shared with policyholders. This is also ap­ plicable to tax benefits, which are shared with policy­ holders. IFRS requires that the consolidated income statements present all tax benefits in the income taxes line item, even though these belong to policyholders. In the segment reporting, the tax benefits are reclassified and shown within operating profit in order to adequate­ ly reflect the policyholder participation in tax benefits.
Fee and commission income 1,165 1,154 1,099 534 538 539 Other income 35 31 22 154 99 81 Claims and insurance benefits incurred (net) (28,492) (27,920) (27,141) (20,386) (20,947) (18,955) Change in reserves for insurance and investment contracts (net) 2 (430) (272) (300) (13,970) (10,618) (13,329) Loan loss provisions – – – – – 6 Acquisition and administrative expenses (net), excluding acquisition-related expenses (11,673) (11,115) (11,044) (5,316) (5,027) (5,175) Fee and commission expenses (1,089) (1,070) (1,024) (228) (210) (258) Operating restructuring charges – – – (16) (1) (8) Other expenses (23) (14) (10) (88) (76) (55) Reclassification of tax benefits – – – – – –
Cost-income ratio 1 for the reportable segment Banking in % 87.0 90.7 101.4 1 Represents investment expenses, administrative expenses (net), excluding acquisitionrelated expenses and other expenses divided by interest and similar income, operating income from financial assets and liabilities carried at fair value through income (net), fee and commission income, other income, interest expenses, excluding interest expenses from external debt and fee and commission expenses.
Changes in the consolidated subsidiaries of the Allianz Group 2 1 (4) Foreign currency translation adjustments 3 (5) 151
Derivative financial instruments used for hedging that meet the criteria for hedge accounting and firm commitments 129 430 Property and equipment
Fixed assets of Alternative Investments 1,225 1,113 1 As of 31 December 2012, includes prepaid benefit costs for defined benefit plans of € 490 MN (2011: € 385 MN).
Real estate held for own use real estate held For own use D 054 € mn
liFe/health German Speaking Countries 592 – 592 – Health Germany 325 – 325 – Insurance Western & Southern Europe 645 – 642 – Asia-Pacific and Middle East 171 – 171 – Insurance usa 442 – 444 –
loss payments For the individual accident years (per calendar year, net) D 071 € mn Accident year
The following table breaks down the loss and LAE reserves of the Allianz Group in total and separately by IBnR and case reserves, gross of reinsurance, by line of business for the years ended 31 December 2012, 2011 and 2010.
€ 36 mn in environmental claims driven by higher defence costs and higher severity for more serious diseases and € 35 mn in Construction Defect coverages was observed.
gross and net reserves For loss and lae For a&e claims D 079 € mn
Current interest rate – – – – – 1.08 % – –
Current interest rate 1.18 % – – – – – – –
1 Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request; Allianz SE has not submitted an application so far. The solvency ratio excluding offbalance sheet reserves would be 188 % (2011: 170 %).
Furthermore, the amounts presented in the table above are undiscounted and therefore exceed the reserves for insurance and investment contracts presented in the consolidated balance sheet that reflect the time value of the money.
Information on the remuneration of Board members and transactions with these persons can be found in the “Remuneration Report”, starting on page 74.
Guarantees A summary of guarantees issued by the Allianz Group by maturity and related collateral-held is as follows: Nearly all customers of the letters of credit and of the indemnification contracts have no external credit ranking.
Actuarial (gains)/ losses from experience adjustments on: Assumptions The assumptions for the actuarial computation of the defined benefit obligation and the expense recognized in profit or loss depend on the circumstances in the par ticular country where the plan has been established.
During the year ended 31 December 2012, the Allianz Group recognized expenses for defined contribution plans of € 196 mn (2011: € 185 mn; 2010: € 163 mn). Additionally, the Allianz Group paid contributions for state pension schemes of € 328 mn (2011: € 332 mn; 2010: € 367 mn).
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 2012, the Allianz Group recognized compensation expenses related to the unexercised SAR of € 59 mn (2011: income of € 10 mn; 2010: expenses of € 5 mn).
Allianz se share option plan of former Ras Group (modified Ras Group share option plan 2005) The former RAS Group awarded eligible members of senior management with share purchase options on RAS ordinary shares.
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 1 to 5 years. During the year ended 31 December 2012, the number of shares sold to employees under these plans was 627,118 (2011: 878,233; 2010: 623,412). During the year ended 31 December 2012, 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, of € 6 mn (2011: € 12 mn; 2010: € 10 mn) as compensation expenses.
The sum of total remuneration of Allianz SE Board of Management for 2012, including the payment of the Three-year bonus, amounts to € 53 Mn (2011 excluding the notional accruals for the Three-year bonus: € 22 Mn 1).
The total remuneration for all Supervisory Board members, including attendance fees, amounted to € 2.1 Mn (2011: € 2.0 Mn).
Allianz Investments II Luxembourg S.à r.l., Luxembourg 100.0 Allianz Investments III Luxembourg S.à r.l., Luxembourg 100.0 Allianz Investments IV Luxembourg S.à r.l., Luxembourg 100.0 Allianz Irish Life Holdings p.l.c., Dublin 66.5 Allianz kontakt s.r.o., Prague 100.0 Allianz Leasing Bulgaria, Sofia 51.0 Allianz Life & Annuity Company, Minneapolis, MN 100.0 Allianz Life (Bermuda) Ltd., Hamilton 100.0 Allianz Life Assurance Company-Egypt S.A.E., Cairo 100.0 Allianz Life Financial Services LLC, Minneapolis, MN 100.0 Allianz Life Insurance Co. Ltd., Seoul 100.0 Allianz Life Insurance Company of Missouri, Clayton, MO 100.0 Allianz Life Insurance Company of New York, New York, NY 100.0 Allianz Life Insurance Company of North America, Minneapolis, MN 100.0 Allianz Life Insurance Japan Ltd., Tokyo 100.0 Allianz Life Insurance Lanka Ltd., Colombo 100.0 Allianz Life Insurance Malaysia Berhad p.l.c., Kuala Lumpur 100.0 Allianz Life Luxembourg S.A., Luxembourg 100.0 Allianz Long Short Equity, Paris 70.5 3 Allianz Madagascar, Antananarivo 100.0 Allianz Malaysia Berhad p.l.c., Kuala Lumpur 72.7 Allianz Mali dommages SA, Bamako 77.0 Allianz Managed Operations and Services Netherlands B.V., Rotterdam 100.0 Allianz Management Services Limited, Guildford 100.0 Allianz Marine & Transit Underwriting Agency Pty Ltd., Sydney 65.0 Allianz Marine (UK) Ltd., Ipswich 100.0 Allianz Mena Holding Bermuda Ltd., Beirut 99.9 Allianz Mena Holding Co. SPC, Manama 100.0 Allianz México S.A. Compañía de Seguros, Mexico City 100.0 Allianz Multi Actions Europe, Paris 98.2 3 Allianz Multi Actions Monde, Paris 93.9 3 Allianz Multi Croissance, Paris 99.4 3 Allianz Multi Dynamic, Paris 100.0 3 Allianz Multi Dynamisme, Paris 99.0 3 Allianz Multi Equilibre, Paris 98.0 3 Allianz Multi Horizon 2012-2013, Paris 73.8 3 Allianz Multi Horizon 2014-2015, Paris 65.9 3 Allianz Multi Horizon 2016-2017, Paris 64.6 3 Allianz Multi Horizon 2018-2020, Paris 79.3 3 Allianz Multi Horizon 2021-2023, Paris 68.8 3 Allianz Multi Horizon 2024-2026, Paris 95.9 3 Allianz Multi Horizon 2027-2029, Paris 96.4 3 Allianz Multi Horizon 2030-2032, Paris 96.5 3 Allianz Multi Horizon 2033-2035, Paris 96.8 3 Allianz Multi Horizon 2036-2038, Paris 97.0 3 Allianz Multi Horizon 2039-2041, Paris 96.5 3 Allianz Multi Horizon Court Terme, Paris 73.6 3 Allianz Multi Horizon Long Terme, Paris 62.3 3 Allianz Multi Opportunités, Paris 99.3 3 Allianz Multi Rendement Premium (R), Paris 79.7 3 Allianz Multi Rendement Réel, Paris 89.3 3 Allianz Multi Sérénité, Paris 98.9 3 Allianz Multi Top Défensif, Paris 92.1 3 Allianz Mutual Funds Management Hellas 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
Dr. Kurt BocK Chairman of the Board of Executive Directors BASF SE
Dr.-ing. e. H. HeinricH WeiSS Chief Executive Officer SMS Holding GmbH
DR. DiETER WEMMER Insurance Western & Southern Europe until 31 December 2012 Finance, Controlling, Risk since 1 January 2013 Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Asset Management AG since 1 January 2013 Allianz Investment Management SE since 1 January 2013 Membership in comparable 1 supervisory bodies Membership in Group bodies Allianz France S.A. until 31 December 2012 Allianz Hayat ve Emeklilik A.S. until 31 December 2012 Allianz Hellas Insurance Company S.A. until 31 December 2012 Allianz S.p.A. until 31 December 2012 Allianz Sigorta A.S.
Glossary The accounting terms explained here are intended to help the reader under stand this Annual Report. Most of these terms concern the balance sheet or the income statement. Terminology relating to particular segments has not been included.
At Amortized cost Under this accounting principle the difference between the acquisition cost and redemption value (of an investment) is added to or subtracted from the original cost figure over the period from acquisition to maturity and credited or charged to income over the same period.
Reinsurance PC 135 Remuneration of the Supervisory Board 87ff. Reserves 171ff. Results 2012 actual versus prior year outlook for 2012 154 Risk Committee 45ff., 66
C 098 Allocated internal underwriting risk capital (total portfolio before tax and non-controlling interests) as of 31 December 2012 [31 December 2011] 203
C 099 Average, high and low allocated internal underwriting risk capital by source of risk (total portfolio before non-controlling interests and after Group diversification) 204
D – ConsoliDaTeD FinanCial sTaTeMenTs D 001 Consolidated balance sheets 219 D 002 Consolidated income statements 220 D 003 Consolidated statements of comprehensive income 221 D 004 Consolidated statements of changes in equity 222 D 005 Consolidated statements of cash flows 223 D 006 Balance sheet line items, IAS 39 categories and IFRS 7 classes of financial instruments 235
D 065 Liabilities to banks and customers 288 D 066 Liabilities to banks and customers by contractual maturity 288 D 067 Liabilities to banks and customers by type of customer and geographic region 289
Annual General Meeting _______________________________ 7 May 2013 Interim Report 1Q ____________________________________ 15 May 2013 Interim Report 2Q ____________________________________ 2 August 2013 Interim Report 3Q ____________________________________ 8 November 2013 Financial Results 2013 __________________________________ 27 February 2014 Annual Report 2013 ___________________________________ 14 March 2014 Annual General Meeting _______________________________ 7 May 2014
Allianz SE – Königinstrasse 28 – 80802 Munich – Germany – Telephone +49. 89. 3800 0 – info@allianz.com – www.allianz.com Annual Report on the internet – www.allianz.com/annualreport – Design / Concept: hw.design GmbH – Photography: Andreas Pohlmann (Board of Management, Chairman of the Supervisory Board), Andreas Keil (pages 1, 32), Julia Baier and Anika Büssemeier (Magazine for the Annual Report 2012) This is a translation of the German Annual Report of Allianz Group. In case of any divergences, the German original is legally binding.