Board was extensively involved in the Board of Management’s planning for both the fiscal year 2020 and the three-year period from 2020 to 2022. Cyber risk security and developments of life business in the current lowinterest environment were also regularly discussed. Implications of Brexit for Allianz and economic sanctions were other ongoing topics. Furthermore, the Supervisory Board dealt extensively with personnel matters relating to the
“Simplicity Wins” with its three pillars “Outperform”, “Transform” and “Rebalance”, and set out an overview of the next steps required for growth and value creation. The Supervisory Board also dealt in detail with current market trends in China, in particular recent regulatory developments and the successful acquisition of a holding license as the first foreign insurance company to do so. The Board of Management also reported on the offer of IT
The Personnel Committee held four meetings in 2019 and adopted two written resolutions. The Committee dealt in detail with the succession to the Board of Management for Dr. Helga Jung and the extensions to the terms of
Management’s remuneration system, target achievement of the Board of Management members in the financial year 2018, and defining the targets for the 2020 variable remuneration. The committee also looked at various mandate matters of individual board members and at further succession planning for the Board of Management.
SOPHIE BOISSARD Chairwoman of the Board of Management of Korian S.A.
Applying such definition, at least eight members of the Supervisory Board shall be independent. In case shareholder representatives and employee representatives are viewed separately, at least four of each should be independent.
– they can attend at least four, usually six ordinary Supervisory Board meetings per year, each of which requires adequate preparation; – they have sufficient time for the audit of the annual and consolidated financial statements; – they can attend the General Meeting; – depending on possible membership in one or more of the current six Supervisory Board special committees, this involves extra time planning to participate in these Committee meetings and do the necessary preparation for these meetings; this applies in particular for the Audit and risk Committees; – they can attend extraordinary meetings of the Supervisory Board or of a special committee to deal with special matters as and when required.
Members of the Board of Management and the Supervisory Board, as well as persons closely associated with them, are obliged by the E.U.
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
Annual Report 2019 − Allianz Group 19 bly and with integrity in all situations. By participating in the United Nations Global Compact, the world’s largest and most important initiative for responsible corporate leadership, and respecting the Guidelines of the Organization for Economic Cooperation and Development
Compliance Act (FATCA). For further information on these compliance risk areas, please refer to the Combined Separate Non-Financial
COMPLIANCE TRAINING In order to convey the principles of the Code of Conduct and the compliance programs based on these principles, Allianz has implemented interactive training programs around the world. These provide practical guidance that enables employees to make their own decisions based on internal and external requirements as well as ethical principles. Training programs comprise in-person and e-learning trainings and are delivered in several languages.
Board aims for an adequate ‘Diversity of Minds’. This comprises broad diversity with regard to gender, internationality, and educational as well as professional background.
Furthermore, the acquisition of treasury shares under this authorization may also be carried out using derivatives, provided such derivatives do not relate to more than 5 % of the share capital.
(IFRS). It also takes into account the relevant regulatory provisions and the recommendations contained in the German Corporate Governance Code.
(“Allianz TSR”) and the total performance of the STOXX Europe 600 Insurance Performance Index (“Index TSR”) between start and end of the four-year contractual vesting period.
•RSU grant based on share price at grant (€ 200), reduced by the net present value of estimated future dividends (€ 40) 8,229 -
The Grant column specifies the target, minimum, and maximum remuneration. The Payout column discloses the 2018 and 2019 payments. The base salary, annual bonus, and perquisites are linked to the performance reporting years, 2018 and 2019, whereas the Allianz
4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors.
5_The MTB figure included in the column “Actual grant 2018” shows the annual accrual before any adjustments that may follow from the sustainability assessment. The payout 2018 figure includes the payout for the performance years 2016–2018, as adjusted based on the sustainability assessment. The MTB 2016–2018 was paid out in spring 2019.
7_Niran Peiris received a one-time payment of € 50 thou to reimburse him for relocation cost.
Board members to an extent reasonable for carrying out their Supervisory Board duties.
 Target: Reduce carbon emissions by 2 % per employee by 2020, against a 2016 baseline1.
DATA PRIVACY CONCEPTS Digitalization enables more people to access insurance products. We embrace the resulting opportunities through our Digital by Default strategy, which was implemented along with our Data Privacy Renewal
Since 2015, we require our vendors to sign a Vendor Code of Conduct, which stipulates the fair labor requirements our vendors must meet, the aim being to prevent modern slavery in the supply chain and to ensure compliance with the Declaration of Human Rights. All vendors with a spend volume greater than € 250,000 undergo a vendor integrity screening based on the requirements of the Allianz Standard for Procurement. As of 2017, the Vendor Code of Conduct as well as a series of questions related to ESG risks have been established as prerequisites for our sourcing activities and for contracting into the supplier onboarding process in our supply chain management system. Screening data and information on compliance with the Code of Conduct forms part of the Procurement KPI Reporting.
to measure progress towards a culture where both people and performance matter, in order to enable employees to reach their full potential.
We continuously monitor our business performance against these targets through monthly reviews – which cover key operational and financial metrics – to ensure we can move quickly and take appropriate measures in the event of negative developments. The Allianz Group uses operating profit and net income as key financial performance indicators across all its business segments. Other indicators include segment -specific figures, such as the combined ratio for Property-Casualty, return on equity2 for Life/Health, and the cost-income ratio for Asset Management. We also use new business margins for Life/Health.
A record high level of uncertainty was the main feature of the year 2019. The trade conflict between the US and China rapidly escalated.
Saudi Arabia and Iran and between the US and Iran. In this environment of high uncertainty, political risk is expected to remain high over the medium-term.
Trade war, Brexit, street protests, geopolitical tensions, negative interest rates: Headwinds blew fiercely in 2019 for the insurance industry.
yields – and premium growth was relatively robust, although weakening trade and industrial dynamics had a negative impact on certain business lines. As usual, emerging markets powered ahead, driven in part by double-digit growth in the heavyweights China and India and the recovery in Latin America. Overall and at a global scale, premiums rose by an estimated 4 % to 5 % in 2019 (in nominal terms and adjusted for foreign currency translation effects).
5_Represents the ratio of net income attributable to shareholders to the average shareholders’ equity excluding unrealized gains/losses on bonds, net of shadow accounting, at the beginning of the year and at the end of the year.
2_The operating investment income (net) of our Property-Casualty business segment consists of the operating investment result – as shown in note 4 to the Consolidated Financial Statements – and expenses for premium refunds (net)
Loadings from reserves as % of average reserves 1,2 0.3 0.3 -
PIMCO, due to strong market effects and net inflows. On an internal basis,1 operating revenues grew by 1.8 %.
Our operating result improved strongly in 2019 – mainly because our internal IT service provider developed favorably, but also because administrative expenses were lower than the year before.
Asset Management Moderate increase in total AuM due to moderate third-party net inflows, supported by an overall slightly positive market return in a volatile market environment.
ALLIANZ GROUP Operating profit of € 12.0 bn, plus or minus € 0.5 bn.
LIFE/HEALTH Continue to focus on profitable growth; keep developing capital-efficient products; expand to new markets. Revenues expected to be in the range of € 71.0 bn to € 77.0 bn.
LIFE/HEALTH INSURANCE Our Life/Health operating profit was € 4.7 bn in 2019, exceeding the target range. Main reasons included the investment margin, a one-off effect due to the increase of the DAC amortization period in the United 1_Operating revenues adjusted for foreign currency translation and (de)consolidation effects.
The Allianz management is committed to having shareholders participate in the economic development of the Group through dividend payments.
Type of investment € bn € bn € bn % % %-p
ASSET MANAGEMENT OPERATIONS Within our Asset Management operations, the most important sources of liquidity are fees generated from asset management activities.
We believe that an understanding of our total revenue performance is enhanced when the effects of foreign currency translation as well as acquisitions, disposals, and transfers (or “changes in scope of consolidation ”) are analyzed separately. Accordingly, in addition to presenting nominal total revenue growth, we also present internal growth, which excludes these effects.
Strategic asset allocation benchmarks and risk limits, including financial VaR, stand-alone interest rate and equity sensitivity limits, and foreign exchange exposure limits, are defined for the Group and related undertakings. Limits are closely monitored and, if a breach occurs, countermeasures are implemented which may include escalation to the respective decision-making bodies and/or the closing of positions. Furthermore, we have put in place standards for hedging activities, due to the exposure to fair-value options embedded in our life insurance products. Finally, guidelines are provided by the Group regarding certain investments, new investment products, and the use of derivatives. Compliance with these guidelines is controlled by the respective risk and controlling functions.
To ensure effective credit risk management, credit VaR limits are derived from our internal risk capital framework, and rating bucket benchmarks are used to define our risk appetite for exposures in the lower investment grade and non-investment-grade area.
As part of our Property-Casualty business operations, we receive premiums from our customers and provide insurance protection in return.
The strategic liquidity planning process addresses future potential liquidity needs and manages available liquidity sources in an efficient and effective manner. The annual and high-level three-year cash flow plan for the Holding and Treasury reportable segment of the
(ESG) risks – which are closely related to reputational risk – is supported by a dedicated Group ESG Board and Group ESG Office,1 which help steer the integration of ESG aspects into core investment and insurance activities. Significant ESG and other reputational risks identified in the course of business are escalated to experts from Group
Economic Area with only immaterial impact on the Group’s risk profile are accounted for by means of book value deduction.3
Capital Requirement, risk management for the banking operations is not discussed in greater detail.
For our Asset Management business segment, we assign internal risk capital requirements based on sectoral regulatory capital requirements. The Asset Management business is affected mainly by operational risks. However, since most of our Asset Management business is not located in the Eurozone, at Group level its participation value bears a foreign exchange rate risk. Our Asset Management business is covered by adequate risk controlling processes, including qualitative risk assessments (such as the Top Risk Assessment) and regular reporting to the Group. As the impact on the Group’s total Solvency Capital
Occupational Pensions Authority (EIOPA) as part of its technical documentation (EIOPA-BoS-15/035) to extrapolate the risk-free interest rate curves beyond the last liquid tenor.1
REGULATORY DEVELOPMENTS As Solvency II became effective in 2016, our approved internal model has been applied since the beginning of that year. There is still some uncertainty about future regulatory requirements, as potential future capital requirements for Internationally Active Insurance Groups (socalled IAIG) as well as Global Systemically Important Insurers (socalled G-SIIs) are yet to be finalized by the International Association of
1_Own Funds and capital requirement are calculated under consideration of volatility adjustment and yield curve extension, as described in section “Risk-free rate and volatility adjustment”.
 The Group has a conservative investment profile and disciplined business practices in the Property-Casualty, Life/Health, and Asset
Financial Statements. As can be inferred from the section on the management of liquidity risks, while these are quantified and monitored through regular stress test reporting as well as properly managed, they are not quantified for risk capital purposes.
Cash and cash equivalents reclassified to assets of disposal groups held for sale in 2019 (145) -
Financial assets are generally recognized and derecognized on the trade date, i.e. when the Allianz Group commits to purchase or sell securities.
the inputs to valuation techniques used to measure fair value into three levels.
The oversight and monitoring of the Allianz Group’s reserves culminate in quarterly meetings of the Allianz Group Reserve Committee, which is the supervising body that governs all significant reserves. It particularly monitors key developments across the Allianz Group affecting the adequacy of reserves.
Property-Casualty reserves are set by leveraging the use of actuarial techniques and educated judgment. A two-stage process exists for the setting of reserves in the Allianz Group: Stage one: Property-Casualty reserves are calculated by local reserving actuaries at the Allianz operating entities. The reserves are set based on a thorough analysis of historical data, enhanced by interactions with other business functions (e.g. Underwriting, Claims and
A final decision on the reserve selection is made in the reserve committee. Local actuaries are responsible for their compliance with the Group
The Allianz Group as a lessee measures its lease liability at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The lease liability is measured at amortized cost using the effective interest method.
On transition to IFRS 16, the Allianz Group recognized an additional € 2.3 bn of right-of-use assets in other assets and € 2.6 bn of lease liabilities in other liabilities, recognizing the difference against prepaid rent, deferred rent, and onerous contract provisions.
Variable lease payments based on an index or an (interest) rate 10
New lease contracts with commencement date after 1 January 2019 (205)
Lease liabilities recognized at 1 January 2019 2,628 1_Compared to note 37 of the Allianz Group's Annual Report 2018, the operating lease commitments were adjusted by € 797 mn for commitments not included.
In addition to the above-mentioned accounting pronouncements recently issued, the following amendments and revisions to standards and interpretations have been issued by the IASB but are not yet effective for or have not been adopted early by the Allianz Group.
The fair value of the acquired identifiable intangible assets of € 300 mn is provisional pending completion of the valuations for those assets.
German Speaking Countries and Central & Eastern Europe 15,919 15,514 1,884 1,641 1,624 1,207
Global Insurance Lines & Anglo Markets, Middle East and Africa 1,182 538
Changes in the consolidated subsidiaries of the Allianz Group 2,006 (480) 1,526 135 (68) 67
In most of these markets, the effective interest rates earned on the investment portfolio exceed these guaranteed minimum interest rates.
Allianz Finance II B.V., Amsterdam DE000A1GNAH1 2011 EUR 1,096 5.750 8 July 2041
ISSUED CAPITAL Issued capital as of 31 December 2019 amounted to € 1,170 mn, divided into 417,172,859 fully paid registered shares. The shares have no-par value but a mathematical per-share value as a proportion of the issued capital.1 1_Mathematical per-share value € 2.80 (rounded).
CONDITIONAL CAPITAL As of 31 December 2019, Allianz SE had conditional capital totaling € 250 mn (Conditional Capital 2010/2018). This conditional capital increase will only be carried out if conversion or option rights attached to convertible bonds, bonds with warrants, convertible participation rights, participation rights, and subordinated financial instruments which Allianz SE or its Group companies have issued against cash payments according to the resolutions of the Annual General Meeting
held for covering subscriptions by employees in the context of the
In the year ending 31 December 2019, the total number of treasury shares of Allianz SE decreased by 365,959 (2018: decrease of or 0.09 % (2018: 0.10 %) of issued capital as of 31 December 2019.
Allianz SE resolved to carry out a share buy-back program in an amount of up to € 1.5 bn within a period between 1 March 2019 and 31 December 2019 (Share Buy-Back Program 2019) based on the authorization granted by the Annual General Meeting on 9 May 2018.
138 Annual Report 2019 − Allianz Group 20 _ Premiums earned (net)
(2018: € 525 mn), as there was convincing other evidence that sufficient future taxable profit will be available.
HEDGE OF NET INVESTMENT IN FOREIGN OPERATIONS As of 31 December 2019, the Allianz Group hedges part of its foreign currency net investments through the issuance of several foreign currency denominated liabilities and the use of forward sales. The total negative fair value in 2019 was € 310 mn (2018: € 191 mn).
 Market risk, credit risk, and liquidity risk in the section Quantifiable risks and opportunities by risk category.
Loans and advances to banks and customers 112,672 131,216 108,270 121,839
 Financial assets and liabilities designated at fair value through income,
Financial liabilities held for trading 130 4,832 13,087 18,049 36 1,568 10,023 11,626
Primary inputs for the market approach are quoted prices for identical or comparable assets in active markets where comparability between the security and the benchmark defines the fair value level. The income
Transfers into/out of level 3 may occur due to a reassessment of input parameters.
Net losses (gains) recognized in other comprehensive income - - - -
AG, which is related to the Tier 1 Capital Securities. Allianz SE expects that the Tier 1 Capital Securities will be redeemed on 30 June 2020 and does not expect to be obliged to make any future payment under the contingent indemnity agreement, which automatically terminates upon the repayment of the Tier 1 Capital Securities.
During the year ended 31 December 2019, the defined benefit costs related to post-retirement health benefits amounted to € - mn
Allianz Global Risk Parameters (GRIPS) methodology is an internal development of the Nelson-Siegel model and consistently used by
PLAN ASSETS/ASSET LIABILITY MANAGEMENT (ALM) Based on the estimated future cash flows of € 819 mn for 2020, € 859 mn for 2021, € 898 mn for 2022, € 937 mn for 2023, € 967 mn for 2024, and € 4,818 mn for 2025 – 2029, the weighted duration of the defined benefit obligation is 17.5 (2018: 17.2) 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.
Average dividend yield of Allianz SE share % 4.7 4.9 4.8
The fair value of the index-linked RSUs is calculated as the present value of the expected future payout, taking into account the link 1_For detailed information regarding the LTI plans and the new remuneration policy for the members of the Allianz SE’s
REMUNERATION FOR THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD ACCORDING TO § 314 (6) HGB As of 31 December 2019, the Board of Management is comprised of ten members. The following values reflect the full Board of Management active in the respective year.
DCSO Deutsche Cyber-Sicherheitsorganisation GmbH, Berlin 25.0 esa EuroShip GmbH & Co. KG Underwriting for Shipping, Bad Friedrichshall 40.0 owned1
Allianz Allvest Invest SICAV-SIF - Allvest Passive Invest, Luxembourg 100.0 3
Allianz Global Corporate & Specialty do Brasil Participações Ltda., Rio de Janeiro 100.0 owned1
Assurances Médicales SA, Metz 100.0 atpacvc LLC, Wilmington, DE 100.0 owned1 atpacvc Ltd., London 100.0
Euler Hermes North America Insurance Company Inc., Owings Mills, MD 100.0
 the accompanying consolidated financial statements comply, in all material respects, with the IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to
KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the financial year from 1 January to 31 December 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.
In preparing the consolidated financial statements, the executive directors are responsible for assessing the Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.
 Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e Abs.
[paragraph] 1a and 341j Abs. 4 in conjunction with 289b Abs. 3 and 315b Abs. 3 HGB ["Handelsgesetzbuch": "German Commercial Code"]