Details on each member’s participation at meetings of the Supervisory Board and its committees can be found in the Corporate Governance Report, starting on page 12. Members of the Supervisory Board who were unable to attend meetings of the Supervisory Board or its committees were excused and, as a rule, cast their votes in writing.
Employee representation within Allianz SE according to the Agreement concerning the Participation of Employees in Allianz SE contributes to diversity of work experience and cultural background. Pursuant to the provisions of the German SE Participation Act (SEBG) the number of women and men appointed as German employee representatives should be proportional to the number of women and men working in the German companies. However, the Supervisory Board does not have the right to select the employee representatives.
In addition to the expertise-related requirements for the individual members, the following shall apply with respect to expertise and experience of the entire Supervisory Board: – familiarity of members in their entirety with the insurance and financial services sector; – adequate expertise of the entire board with respect to investment management, insurance actuarial practice, and accounting; – at least one member with considerable experience in the insurance and financial services fields; – at least one member with comprehensive expertise in the fields of accounting or auditing; – specialist expertise or experience in other economic sectors; – managerial or operational experience.
When adopting resolutions, each share carries one vote. Shareholders can follow the AGM’s proceedings on the internet and be represented by proxies. These proxies exercise voting rights exclusively on the basis of instructions given by the shareholder. Shareholders are also able to cast their votes via the internet in the form of online voting. Allianz SE regularly promotes the use of internet services.
In compliance with special legal provisions that apply to insurance companies, the auditor of the annual financial statements and of the half-yearly financial report is appointed by the Supervisory
1. Allianz SE currently complies with all recommendations of the German Corporate
for the percentage of women up until 30 June 2017. This target was exceeded, as the percentage of women on the Board of Management was 22 %. As regards the proportion of women on the two management levels below the Board of Management, a target of 20 %
Management of the subsidiaries concerned have set target quotas for the relevant management levels of between 20 % and 33 % in each case to be reached by 31 December 2018. In the longer term,
Board of Management if there is an important reason (§ 84 (3) AktG).
The company’s share capital is conditionally increased by up to € 250,000,000 (Conditional Capital 2010/2014). This conditional capital increase will only be carried out to the extent that conversion or option rights are exercised (or conversion obligations fulfilled)
resulting from bonds issued by Allianz SE or its subsidiaries, based on the authorizations granted by the General Meeting on 5 May 2010
Variable remuneration components may not be paid, or payment may be restricted, in the case of a breach of the Allianz Code of
4_The equity-related remuneration that applied before 2010 consisted of two vehicles, virtual stock awards known as RSUs and virtual stock options known as “Stock Appreciation Rights” (SAR). Only RSUs have been awarded as of 1 January 2010. The remuneration system valid until December 2009 is disclosed in the Annual Report 2009 (starting on page 17). Whereas the GEI/RSU grants are automatically exercised at the vesting date, the GEI/SAR grants are exercised by the Board member within the exercise period following the vesting date. Hence the total payout from SARs depends on the individual decision by the Board member. SARs are released to plan participants upon expiry of the vesting period, assuming all other exercise hurdles are met. For SARs granted until and including 2008, the vesting period was two years and the exercise period five years. SARs can be exercised on the condition that the price of the Allianz SE stock is at least 20 % above the strike price at the time of grant. During the term of the plan, at least once on five consecutive trading days the Allianz SE stock must relatively appreciate at least 0.01 percentage points ahead of the appreciation of the Dow Jones EURO STOXX Price Index (600).
Dr. Dieter Wemmer (Appointed: 01/2012 - End of Service: 12/2017) Dr. Werner Zedelius (Appointed: 01/2002 - End of Service: 12/2017)6
Most of our insurance markets are served by local Allianz companies. However, some business lines – such as Allianz Global Corporate & Specialty (AGCS), Allianz Partners (AP) (formerly Allianz
BOARD OF MANAGEMENT AND ORGANIZATIONAL STRUCTURE Allianz SE has a divisional Board structure based on functional and business responsibilities. Business-related divisions reflect our business segments Property-Casualty, Life/Health, Asset Management, and Corporate and Other. In 2017 they were overseen by five Board members. The remaining four divisions (i.e. Chairman of the Board of
We organize our Corporate Responsibility strategy around three focus areas in which we address the relevant material issues that our stakeholders perceive as vital for business success and sustainability: 1_NPS is a measurement of customers’ willingness to recommend Allianz. Top-down NPS is measured regularly according to global cross-industry standards and allows benchmarking against competitors in the respective markets.
Business integration: integrating environmental, social, and governance (ESG) issues across our investment and insurance businesses; building trust through transparency, responsible sales, and data privacy.
For reporting purposes, we organize our approach around Allianz’s five key roles as a sustainable insurer, responsible investor, trusted company, attractive employer, and committed corporate citizen.
Our shareholders’ equity11 fell by € 1.5 bn to € 65.6 bn. During 2017, Allianz SE purchased approximately 16.8 million own shares as part of its share-buy-back program announced in February 2017 with a total volume of € 3.0 bn.12 Over the same period, our Solvency II
In addition, there were some minor reallocations between the reportable segments.
5_Represents the total of acquisition and administrative expenses (net) and claims and insurance benefits incurred (net)
Our South Korean business was disposed of at the end of 2016. In order to best reflect the actual underlying drivers, operating profit was reported in 2016 excluding South Korea, and the South Korean operating loss specified as a separate item. Similarly, the figures for present value of new business premiums are shown without effects from the South Korean business. To ensure consistency with the Group income statement, however, prior year statutory premiums are presented including premiums collected from our South Korean business. 2,3,4,5,6,
Present value of new business premiums (PVNBP)8,9,10 Our PVNBP increased by € 2,267 mn to € 59,469 mn, largely because our business with unit-linked insurance products without guarantees generated higher sales in Italy and the Asia-Pacific region, as did our capital-efficient products in the German life business. This was partly offset by a sales decline in our business with fixed-indexed annuities in the United States.
Our operating profit rose, supported by an improved technical margin in France and higher unit-linked management fees in Italy.
As of 31 December 2017, the shares of third-party AuM by business unit were 76.8 % (31 December 2016: 76.1 %) attributable to
and AllianzGI, improving from 88 % to 95 % and from 63 % to 75 %, respectively.
Our net loss widened, which primarily resulted from the impairment driven by the recognition of a liability in connection with the expected loss from the sale of Oldenburgische Landesbank AG.3
Life/Health Continue with selective focus on profitable growth and further shift new business mix towards capital efficient, unit-linked, and protection products. Considering the disposal of our South Korean business, revenues are expected to be in the range of € 60.0 bn to € 66.0 bn.
Reserve rate-hiking cycle will weigh on the Euro, a number of other factors will support it, among them the solid recovery in the Eurozone.
In addition, Allianz SE has decided to launch a share buy-back program with a volume of up to € 2.0 bn as part of a previously announced policy to return capital to its shareholders on a flexible basis. The share buy-back program is based on the authorization granted by the Annual General Meeting on 7 May 2014. The buyback program, which started in January 2018, is envisaged to be executed in the first six months of 2018. Allianz SE will cancel all repurchased shares.
Officer must be consulted on decisions regarding the staffing of local
Agreements, and Business Continuity and Crisis Management programs to protect critical business functions from these events. Cyber risks are mitigated through investments in cyber security and a variety of ongoing control activities.
Diversification typically occurs when looking at combined risks that are not, or only partly, interdependent. Important diversification factors include regions (e.g. windstorm in Australia vs. windstorm in
MODEL LIMITATIONS As the internal model is based on a 99.5 % confidence level, there is a low statistical probability of 0.5 % that actual losses could exceed this threshold at Group level in the course of one year.
Other immaterial credit risk model changes introduced in 2017 were mainly related to the introduction of new internal rating models for specific asset classes.
− The Group’s management also believes that Allianz is well positioned to deal with potentially adverse future events – due, in part, to our strong internal limit framework, which is defined by the Group’s risk appetite, and our risk management practices which include our approved internal model.
INTEREST RATE RISK As of 31 December 2017, our interest rate sensitive investments excluding unit-linked business – amounting to a market value of 1_Diversification before tax.
CREDIT RISK The following table presents our group-wide risk figures related to credit risks by business segment.
Allianz Group: Risk profile – allocated credit risk by business segment
Income from financial assets and liabilities carried at fair value through income (net) 22 (1,204) (850)
Change in other loans and advances to banks and customers (originated loans) (4,517) (4,848)
Securities received as collateral under lending transactions are not recognized, and securities sold under repurchase agreements are not derecognized, if risks and rewards have not been transferred. Securities borrowing transactions generally require the Allianz Group to deposit cash with the security’s lender. Fees paid are reported as interest expenses.
Allianz Group documents the hedge relationship, as well as its risk management objective and strategy for entering into the hedge transaction. The Allianz Group assesses, both at the hedge’s inception and on an ongoing basis, whether the hedging instruments used are expected to be highly effective in offsetting changes in fair values or cash flows of the hedged items.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS The following amendments and revisions to existing standards became effective for the Allianz Group’s consolidated financial statements as of 1 January 2017: − IAS 7, Disclosure Initiative,
The Allianz Group currently plans to apply IFRS 16 initially on 1 January 2019, using the modified retrospective approach.
IAS 40, Transfers of Investment Property Annual periods beginning on or after 1 January 2018
Since then, the Allianz Group has acquired additional Euler Hermes shares on the market at a price of € 122 per share, increasing its ownership to 93.86 % (excluding the treasury shares) of Euler Hermes
Reserves for loss and loss adjustment expenses 62,093 61,617 11,256 10,790
Liabilities of disposal groups classified as held for sale 6 - - 3
Disposals and reclassifications into non-current assets and assets of disposal groups classified as held for sale (46) (10) (82) (152) (35) (129)
Generally, the business plans comprise a planning horizon of three years and are based on the current market environment.
For entities included in the CGUs of the Property-Casualty business segment, the business plans are mainly based on key assumptions including expense ratio, loss ratio, investment income, risk capital, market share, premium rate changes, and taxes. The basis for determining the values assigned to the key assumptions are current market trends and earnings projections.
Health Germany Euro swap curve minus 10 bps credit risk adjustment plus 4 bps volatility adjustment
Repurchase agreements and collateral received from securities lending transactions and derivatives 3,821 4,040 1_Consists of liabilities to banks and customers due within one year of € 10,995 mn (2016: € 10,193 mn), 1 – 5 years of € 1,097 mn (2016: € 2,256 mn) and over 5 years of € 654 mn (2016: € 590 mn).
CONTRACTUAL CASH FLOWS As of 31 December 2017, the reserves for loss and loss adjustment expenses which are expected to be due in 2018 amounted to € 16,935 mn, while those expected to be due between 2019 and 2022 amounted to € 13,320 mn and those expected to be due after 2022 amounted to € 26,060 mn.
Allianz Group’s life insurance operations in the United States issue a significant amount of equity-indexed deferred annuities. In certain markets, the Allianz Group also issues group life, group health and group pension contracts.
Hybrid equity3 1_Except for interest rates. Interest rates represent the weighted average.
CAPITAL REQUIREMENTS The Allianz Group’s capital requirements primarily depend on the type of business that it underwrites, the industry and geographic locations in which it operates, and the allocation of the
Group since 1 January 2016, our risk profile is measured and steered based on our approved Solvency II internal model1. We have introduced a target Solvency II ratio based on pre-defined shock scenarios on the level of both the Group and related undertakings, supplemented by economic scenarios and sensitivity analysis.
Rent from real estate held for investment 900 890 22 _ Income from financial assets and liabilities carried at fair value through income (net)
Change in reserves for insurance and investment contracts (net) € mn
For the year ended 31 December 2017, the write-down of deferred taxes on tax losses increased the tax expenses by € 52 mn (2016: € 103 mn). The reversal of write-down of deferred tax assets on tax losses carried forward resulted in deferred tax income of € 49 mn
As of 31 December 2017, the future minimum lease payments under non-cancelable operating and finance leases were as follows:
In the Pension Task Force, the heads of Group HR, Group
Group Planning and Controlling, Group Risk and AIM met four times to provide global governance and pre-align pension-related topics such as risk management and Solvency II prior to relevant Group
During the year ended 31 December 2017, the defined benefit costs related to post-retirement health benefits amounted to € 1 mn
Risk Parameters (GRIPS) methodology is an internal development of the Nelson-Siegel model and consistently used by Group Risk, Group
PLAN ASSETS/ASSET LIABILITY MANAGEMENT (ALM) Based on the estimated future cash flows of € 740 mn for 2018, € 772 mn for 2019, € 780 mn for 2020, € 842 mn for 2021, € 876 mn for 2022, and € 4,526 mn for 2023 – 2027, the weighted duration of the defined benefit obligation is 15.7 years. Based on the liability profiles of the defined benefit obligation and on the regulatory funding requirements, the Allianz Group uses stochastic asset liability models to optimize the asset allocation from a risk-return perspective.
NUMBER OF EMPLOYEES As of 31 December 2017, the Allianz Group employed 140,553 (2016: 140,253) people, thereof 40,149 (2016: 40,167) in Germany. The average total number of employees for the year ended 31 December
RSU with a total fair value of € 8.4 mn (2016: € 8.9 mn) were granted to the Board of Management for the year ended
The total remuneration for all Supervisory Board members, including attendance fees, amounted to € 2.2 mn (2016: € 2.0 mn).
156 Annual Report 2017 − Allianz Group for insurance and investment contracts' and 'Deferred acquisition costs'. Further disclosures are also made on the financial statement items under note 15 and under note 9. Risk disclosures are included in the risks and opportunities report of the group management report.
at local level, they check whether the balance from the aggregate policy reserves and the deferred acquisition costs, taking the future premiums still expected from the portfolio as a base, is appropriate as a whole to satisfy the liabilities incurred. There is dependence on numerous assumptions which are subject to judgement. The groupwide standards for the application of consistent and plausible assumptions are relevant in this regard.
To support the audit of reserves for insurance and investment contracts in the Life/Health segment and deferred acquisition costs, we engaged our own actuaries. We performed the following substantial audit procedures: − We recorded the process for determining the reserve and the valuation of the deferred acquisition costs, identified the key performed controls and tested these in respect of their design and effectiveness. This included controls for the valuation of reserves and the valuation of the deferred acquisition costs as well as controls of the completeness and accuracy of the data used.
The measurement of the reserves of insurance and investment contracts and deferred acquisition costs in the Life/Health segment is appropriate as a whole. The measurement assumptions used are appropriate as a whole. The explanatory notes and disclosures in the notes to the consolidated financial statements are sufficiently detailed and appropriate.
− is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in the audit, or
Group to express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction, supervision and performance of the group audit.