Protecting
the Future
Allianz Group
Annual Report 2014
Content
A
To Our Investors
7
16
23
24
27
28
B
35
40
42
45
Letter to the Investors
Supervisory Board Report
Supervisory Board
Board of Management
International Executive Committee
Allianz Share
Corporate Governance
Corporate Governance Report
Statement on Corporate Management pursuant to § 289a of the HGB
Takeover-related Statements and Explanations
Remuneration Report
C
Group Management Report
62
Content
Your AlliAnz
63
70
73
Business Operations and Markets
Strategy and Steering
Progress in Sustainable Development
MAnAGeMent Discussion AnD AnAlYsis
Business Environment
79
Executive Summary of 2014 Results
81
Property-Casualty Insurance Operations
86
Life/Health Insurance Operations
92
Asset Management
99
Corporate and Other
102
Outlook 2015
104
Balance Sheet Review
109
Liquidity and Funding Resources
116
Reconciliations
121
risk AnD opportunitY report AnD FinAnciAl control
123
144
Risk and Opportunity Report
Controls over Financial Reporting and Risk Capital
D Consolidated Financial
Statements
150
151
152
153
154
155
157
E
269
270
271
272
273
277
Content
Consolidated Balance Sheets
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Further Information
Joint Advisory Council of the Allianz Companies
International Advisory Board
Mandates of the Members of the Supervisory Board
Mandates of the Members of the Board of Management
Glossary
Index
To go directly to any chapter,
simply click on the headline or
the page number.
Allianz at a glance
AnnuAl results
Income statement
Total revenues1
Operating profit2
Net income from continuing operations3
Net income (loss) from discontinued
operations, net of income taxes3
Net income (loss)
thereof: Attributable to shareholders
Balance sheet as of 31 December
Total assets4
Investments4
Total liabilities4
thereof: Reserves for insurance
and investment contracts
thereof: Reserves for loss and loss
adjustment expenses
Shareholders’ equity
Non-controlling interests
Share information
Basic earnings per share
Diluted earnings per share
Dividend per share
Total dividend
Share price as of 31 December
Market capitalization as of 31 December
Other data
Return on equity after income tax7,8
Conglomerate solvency9
Standard & Poor’s rating12
Total assets under management
as of 31 December13
thereof: Third-party assets under
Change
from
previous
year
2014
2013
2012
2011
2010
2009
2008
More
details on
page
€ Mn
€ Mn
€ Mn
€ Mn
€ Mn
€ Mn
€ Mn
€ Mn
€ Mn
122,253
10.4 %
110,773
106,383
103,560
106,451
97,385
92,568
10,402
6,603
–
6,603
6,221
3.3 %
4.1 %
–
4.1 %
3.8 %
10,066
6,343
–
6,343
5,996
9,337
5,558
–
5,558
5,231
7,764
2,853
–
2,853
2,591
8,243
5,209
–
5,209
5,053
7,044
4,650
(395)
4,255
4,207
7,455
4,268
(6,373)
(2,105)
(2,363)
805,787
486,445
742,085
13.3 %
18.3 %
12.7 %
711,079
411,148
658,230
694,411
401,711
641,448
641,322
350,645
595,575
624,945
334,618
578,383
583,717
294,252
541,488
954,999
258,812
917,715
€ Mn
463,334
14.7 %
404,072
390,984
361,956
349,793
323,801
298,057
€ Mn
€ Mn
€ Mn
€
€
€
€ Mn
€
€ Mn
%
%
68,989
60,747
2,955
13.71
13.64
6.855
3,1305,6
137.35
62,769
3.6 %
21.3 %
6.9 %
3.6 %
4.5 %
29.2 %
30.2 %
5.4 %
5.5 %
11.2
(0.7) %-p
18110
(1) %-p
AA
–
66,566
50,083
2,765
13.23
13.05
5.30
2,405
130.35
59,505
11.9
182
AA
72,540
50,388
2,576
11.56
11.48
4.50
2,039
104.80
47,784
68,832
43,457
2,290
66,474
44,491
2,071
64,441
40,108
2,121
63,924
33,720
3,564
5.74
5.58
4.50
2,037
73.91
11.20
11.12
4.50
2,032
88.93
9.33
9.30
4.10
1,850
87.15
(5.25)
(5.29)
3.50
1,580
75.00
33,651
40,419
39,557
33,979
11.1
197
AA
5.9
179
AA
11.9
173
AA
12.5
164
AA
9.9
15711
AA
€ Mn
1,801,178
1.8 %
1,769,551
1,852,332
1,656,993
1,517,538
1,202,122
950,548
82
82
–
–
84
84
110
190
110
209
204
109
217
253
253
29
83
29
29
–
109
125
99
100
76
management as of 31 December13
€ Mn
1,312,910
(3.5) %
1,360,759
1,438,425
1,281,256
1,163,982
Employees
147,425
(0.1) %
147,627
144,094
141,938
151,338
925,699
153,203
703,478
182,865
1
2
3
4
5
6
Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating
revenues in Asset Management and total revenues in Corporate and Other (Banking).
The Allianz Group uses operating profit as a key financial indicator to assess the performance of its business
segments and the Group as a whole.
Following the announcement of the sale on 31 August 2008, Dresdner Bank was classified as held for sale
and discontinued operations. Therefore, all revenue and profit figures presented for our continuing busi-
ness do not include the parts of Dresdner Bank that we sold to Commerzbank on 12 January 2009. The
results from these operations are presented in a separate net income line “Net income (loss) from dis-
continued operations, net of income taxes”.
As of 1 January 2013, figures have been restated to reflect the implementation of IFRS 10. Figures prior to
2012 have not been adjusted retrospectively. For further information, please refer to note 4 to the con-
solidated financial statements.
Proposal.
Total dividend based on total amount of shares. Actual dividend payment will be reduced by the dividend
amount attributable to treasury shares.
7
8
9
10
11
12
13
Based on average shareholders’ equity. Average shareholders’ equity has been calculated based upon
the average of the current and the preceding year’s shareholders’ equity as of 31 December.
Based on net income from continuing operations after non-controlling interests.
Solvency according to the E.U. Financial Conglomerates Directive. Off-balance sheet reserves are accepted
by the authorities as eligible capital only upon request. Allianz SE has not submitted an application so far.
Excluding off-balance sheet reserves, the solvency ratio as of 31 December 2014 and 2013 would be 172 %
and 173 %, respectively.
Conglomerate solvency ratio as of 31 December 2014 was adjusted for the potential calls of hybrid capi-
tal (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.
Pro-forma after sale of Dresdner Bank completed.
For further information about insurer financial strength ratings of Allianz SE, please refer to page 125.
Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset
Management to the reportable segments German Speaking Countries, Western & Southern Europe and
Growth Markets within the business segment Life/Health and to the reportable segment Banking.
Disclaimer regarding roundings
The consolidated financial statements are presented in millions of Euros (€ MN), unless otherwise stated. Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not
precisely reflect the absolute figures. Figures prior to 2013 have not been adjusted accordingly.
Allianz Group Annual Report 2014
Multichannel reporting
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this Annual Report or on the internet can be found.
On pages 273 to 276, you will find a glossary of selected
accounting, insurance and financial market terms used
in this report.
Allianz Human Resources Fact Book
HR
Fact Book
2014
HR Fact Book is the official and most comprehensive report on key
human resources facts and figures, highlighting major HR
achievements over the past year and revealing the outlook for 2015.
www.allianz.com/hrfactbook
Allianz Sustainability Report 2014
Our
sustainability
journey
Allianz Group
Sustainability Report 2014
The Allianz Group Sustainability Report covers our contribution to
the environment, society and economy. It provides full details of
our sustainability strategy, approach and progress as well as an
outlook for 2015.
www.allianz.com/sustainability
Group profile
Whatever tricks nature plays, whichever trends the financial markets
follow, whenever risks turn into an emergency or a loss, Allianz stands by
its clients, protecting them and helping them to realize their goals in
life – as it has done since its founding 125 YEARS AGO. Its CAPITAL
STRENGTH and INNOVATIVE POWER as well as the DEDICATION of
its 147,425 employees vouch for this.
€ bn 60.7
Shareholders’ equity
AA Standard & Poor's rating since 2007
page 109
€ bn122.3
Total revenues
page 82
€ 6.85
Dividend per share (proposal)
page 29
€ Mn10,402
Operating profit
page 82
€ Mn 6,221
181 %
Net income attributable to shareholders
page 84
Conglomerate solvency
page 109
Another of Allianz’s strengths is its five GLOBAL INSURANCE LINES.
Not everyone is familiar with the highly specialized products and
services of these units. But they have far-reaching implications for
prosperous societies and thus for everyone. In this report, we present
these business lines. With their profile. And their histories.
They include our international industrial insurance providers ALLIANZ
GLOBAL CORPORATE & SPECIALTY and EULER HERMES GROUP,
the world’s leading credit insurer. They also include ALLIANZ GLOBAL
ASSISTANCE, ALLIANZ GLOBAL AUTOMOTIVE and ALLIANZ
WORLDWIDE CARE, which started to collaborate closely as ALLIANZ
WORLDWIDE PARTNERS in 2014, further boosting their reach and
effectiveness.
WE PROTECT THE FUTURE locally, from multiple locations and
on a global scale. In this way, everyone who belongs to our financial
commu nity benefits.
2
Annual Report 2014
Allianz Group
Allianz
Global Corporate
& Specialty
Allianz Global Corporate & Specialty is the Allianz center of
expertise for global business insurance and large corporate
and specialty risks.
With a worldwide network in more than 160 countries, we
are one of the very few global insurers with an exclusive focus
on the needs of global corporate and specialty clients.
We offer our clients global business insurance through a
comprehensive service range including alternative risk transfer,
financial lines, aviation, international insurance programs,
captive and fronting services, liability, claims services, marine,
energy, property, engineering and risk consulting.
agcs.allianz.com
71
nationalities
More than 3,600 employees of over 70 nationalities.
One global team of dedicated specialists with extensive
multi-national experience.
28
countries
AGCS has teams in 28 key countries globally. Our network
of Allianz-owned offices in more than 70 countries,
plus network partners in other locations, means we can
service clients in more than 160 countries worldwide.
2,000
IIS
More than 2,000 International Insurance Solutions (IIS)
programs for our global clients‘ multi-national risks.
AlliAnz GlobAl CorporAte & SpeCiAlty
Allianz center of
excel lence for
large or complex
business risks
Allianz Cyber Protect to tackle emerging risks.
Allianz
Cyber
Protect
An increase in the frequency and severity of data breaches and IT glitches
threatening businesses has prompted the launch of Allianz Cyber Protect
to enable companies to protect themselves against potential financial
and reputational losses.
In 2013, more than 64,000 cyber crimes were registered in Germany. The
Ponemon Institute estimates that the annualized cyber crime cost is in
average USD 7.6 MN per company each year. The increased frequency and
severity of cyber crime in Asia’s tiger economies has also dominated
headlines. Singapore suffered the highest cyber losses per capita world-
wide in 2013, while financial losses from cyber crimes in Hong Kong have
tripled in the last three years, driving demand for such coverage.
According to Allianz experts, the most heightened risk awareness in 2014
was around cyber and loss of reputation issues. Cyber was the biggest
mover in the 2014 Allianz Risk Barometer, climbing from 15 to 8 in our
global rankings.
If cyber criminals steal data, introduce malware into networks or cause
servers to shut down because of denial of service attacks, businesses risk
damage running into millions of Euros, as well as reputational damage.
Allianz Cyber Protect insurance solution enables businesses to protect
themselves comprehensively against online risks. It covers a variety of first
and third-party damages sustained by businesses if they become victims
of cyber crime or if their customers hold them liable.
agcs.allianz.com/services/financial-lines/allianz-cyber-protect/
4
ART Weather Solutions to protect companies
against adverse weather impacts.
ART
Weather
Solutions
“Unfortunately, rain and frost resulted in a bad crop yield”
and “power production from our wind park has been
below our expectations due to a lack of wind” are typical
statements blaming the weather for dashed hopes.
Fortunately, Allianz has solutions at hand for these and
many other weather-related issues. For several years,
Allianz Risk Transfer (ART) has offered insurance against
adverse temperatures, precipitation, wind speed and sun
hours to protect companies in different industries against
financial losses due to lower sales or production. These cre-
ative and tailor-made weather insurance solutions are
transparent and offer favorable financing terms. In case of
losses, claims are handled quickly.
The ART Weather Team proactively tackles the challenges
of climate change. We are not able to influence the weather,
but we can protect our clients against its negative conse-
quences.
agcs.allianz.com/services/allianz-risk-transfer/
Allianz SpaceCo – a leading insurer
in the aerospace sector.
Allianz
SpaceCo
In 2014, AGCS insured 21 space launches through its space
underwriting team based in Paris, France. The launches
covered eight different types of launch vehicles from around
the world – the European Ariane V and Vega, the American
Atlas V and Falcon 9, the Russian Proton, Soyuz and Zenith 3,
and the Indian PSLV.
AGCS’ expertise covers pre-launch operations, the launches
themselves and their life in orbit. During the course of the
year, our satellite insurance primarily covered telecommuni-
cation satellites, but also earth observation and scientific
satellites and satellite constellations.
agcs.allianz.com/services/space/
55
A _ TO OuR InveSTORS
Pages 6 – 30
7
16
23
24
27
28
Letter to the Investors
Supervisory Board Report
Supervisory Board
Board of Management
International Executive Committee
Allianz Share
6
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
I wrote my first letter to you in our 2003 Annual Report. After a difficult
financial year in 2002, I promised you that nothing was more important for the
management team, the employees and for me personally than returning
your Allianz to the league of the most reputable international financial service
providers.
Allianz has long since secured its permanent place in this league. Since 2009,
Allianz has been the largest international insurance company in terms of
revenues and the best in terms of operating profit. In the past year, we were
able to further strengthen our leading position.
Overview of the 2014 financial year
2014 was characterized by extremely low interest rates, geopolitical tensions
in the Middle East and Ukraine, a sharp decline in the oil price and a weak
Euro against the U.S. Dollar. The number and scale of severe weather events
were, by contrast, lower than in previous years.
Revenues increased by more than 10 % and thereby exceeded the € 122 bn mark
for the first time. Operating profit improved again and is now at € 10.4 bn. This
means we achieved a result in the upper end of our target range. We generated
net income of € 6.6 bn, of which € 6.2 bn is attributable to shareholders.
Despite the prevailing low interest rates, our Life/Health business increased
revenues by 18.6 % and operating profit by 22.8 %. Growth was particularly
strong in the United States, Italy and Germany. This is confirmation from our
customers that our product offerings meet their needs.
The two subsidiaries in our Asset Management business developed differently.
While Allianz Global Investors recorded net inflows in all quarters, PIMCO
reported, in the wake of the resignation of its founder, net outflows that were
at the upper end of our expectations.
In our Property-Casualty business, we increased revenues by 3.7 % and improved
our operating profit to € 5.4 bn (+ 2.2 %). Our combined ratio remained stable at
a very good 94.3 %. In comparison to the previous year, the impact from natural
catastrophe events decreased. We also made progress with the expense ratio.
However, special circumstances at Fireman’s Fund, and in Russia and Brazil,
weighed on our results and neutralized some of the progress we made.
Two selected acquisitions in our property-casualty insurance business enabled
us to strengthen our position in countries where we are able to manage a
seamless integration into already well-established organizations. In Italy, we
8
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
took over part of the property insurance operations and distribution capacities
of UnipolSai, and in Australia we purchased the general insurance business
of the Territory Insurance Office.
In addition, your company made five important decisions in the past year.
These concerned:
– motor insurance in Russia,
– Fireman’s Fund,
– the organizational structure of PIMCO,
– our dividend policy, and
– the composition of the Board of Management of Allianz SE.
During the course of the financial year, we significantly scaled down the motor
insurance business in Russia. We are therefore now mainly active in the
commercial and health insurance business. In light of the continuing deteriora -
tion of the economic climate in the country, this was an appropriate decision
taken at the right time.
In the United States, we have decided to reorganize our property-casualty
insurance business. Since the results of our subsidiary Fireman’s Fund –
which had regularly been discussed at our Annual General Meetings (AGM)
– had shown no signs of sustainable improvement, we responded and agreed
to sell the retail business, in which we did not have the necessary scale.
The larger part of Fireman’s Fund is the commercial business, which we are
integrating into Allianz Global Corporate & Specialty so that we achieve
critical mass in this segment of the American market.
We are now managing the old in-force business that has traditionally been
problematic – for example asbestos liabilities – in a specialized liquidation
unit within our reinsurance business.
9
In the case of PIMCO, we had already introduced the new leadership structure
at the last AGM and were able to carry on working immediately after the depar-
ture of the founder in September. Despite the highly recognized management
team, we nonetheless experienced significant net outflows in the last few
months of the financial year. However, I am convinced that we now have the
right set-up to ensure the future sustainable development of PIMCO.
We have redefined our dividend strategy in the past year after greater clarity
emerged about capital requirements under the new Solvency II framework
that enters into force from 2016. Going forward, we will distribute 50 % of the
Group’s net profit as dividends (previously 40 %). Dividends per share should
always be at least at the level of the previous year. Every three years, we will
also consider whether to distribute any unused funds set aside for acquisi-
tions. In this way, we will ensure an adequate participation of shareholders in
corporate profits as well as a sound capitalization to fund future growth.
Since the beginning of 2015 there have been changes to the Board of Manage-
ment of Allianz SE. Dr. Theis has taken over responsibility for Global Lines
and for our companies in Great Britain and Ireland from Mr. Booth, who has
stepped down from the Board having reached retirement age. Mr. Balbinot
has recently joined Allianz and is responsible for our companies in southern
and western Europe. Due to the decision to reorganize our business in North
America, Mr. Bhojwani has stepped down from the Board of Management.
I would like to express my sincere thanks to Clement Booth and Gary Bhojwani
for their successful work in recent years.
At this year’s AGM, I will myself resign as Chairman of the Board of Manage-
ment of Allianz after exactly twelve years at the helm. The Supervisory Board
has chosen Oliver Bäte as my successor. Mr. Bäte has worked in various Board
of Management positions for Allianz over the last seven years. I am convinced
that the Supervisory Board has made an excellent choice in selecting Mr. Bäte,
and I wholeheartedly wish him the very best of luck.
10
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
Outlook
2015 began with high volatility on the capital markets, a further weakening of
the Euro, even lower interest rates and the announcement of a bond purchase
program by the European Central Bank. There is still no sustainable end in
sight to the geopolitical conflicts. 2015 will, therefore, be a difficult year for the
global economy, even if the low oil price promises to provide some growth
stimulus.
The European Central Bank will continue its low interest rate policy for the
foreseeable future. At the start of this year, the yield on 10-year German govern-
ment bonds dropped below 0.3 % for the first time and the yield on 5-year bonds
fell into negative territory. These developments represent a burden for all
savers, and therefore also for life insurers and – to a lesser extent – for property-
casualty insurers too. We do not expect a significant increase in interest rates
in the immediate future.
Our outlook for the 2015 financial year must be cautious in light of these
prevailing conditions, without losing sight of the strength of Allianz.
First and foremost, these are the employees of Allianz. Their skill and expertise
are the basis for our success. I am truly grateful for the unique commitment of
our people.
Furthermore, the strong results for 2014 give me confidence that we have set
the right course for further profitable growth in Allianz. I would like to explain
to you what my confidence is based on:
–
The capitalization of Allianz is solid. That is proven by our solvency ratio of
181 %. Our AA S & P rating with a stable outlook confirms this. Our excellent
capital base inspires confidence among our clients, who rely on our long-
term promises, above all in the life insurance business. This is where Allianz
11
draws particular benefit from its strong balance sheet and brand. Double-
digit growth in developed markets such as Italy, Germany and the United
States during 2014 is a clear sign of this.
–
We have laid the foundation for the future with successful product innova-
tions. I would like to highlight the new life insurance products that are offered
in Germany under the name “Perspektive”. Customers who choose reduced
guarantees may receive a higher share of investment income. More than
70,000 new contracts in 2014 demonstrate that we are on the right track with
such low capital-intensive products.
Further examples are our modular property insurance policies that, after
Italy, we are now offering in other markets. The customer receives highly
personalized, but also comprehensive insurance cover. At the same time,
these modules can be configured online by customers themselves. They are
therefore suitable for a purely internet-based distribution, as well as for
clients who do their own research online before finalizing their contract in a
personal meeting with their agent.
–
This brings me to the topic of digitalization, the greatest opportunity and
at the same time greatest challenge for the insurance industry in the coming
years. We have recently been able to bring some developments to the market.
I refer to our Telematic Solutions and our Fast Quote technology that allow
customers to receive a quotation on the internet in only a few short steps.
Digitalization is fundamentally changing the way in which we interact with
customers, who today expect to always be able to choose the most convenient
means of communication with their insurance company, be it by smart-
phone, by letter or in person in an agency. Switching between the different
12
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
channels, therefore, needs to be as seamless as possible. We also have the
opportunity to enter into much closer contact with our customers. If he or
she wishes, we not only pay in case of a claim, but also offer supplementary
assistance and services at all times.
–
The global increase in life expectancy and developments in medicine make
individual old-age provision more essential than ever. It would be disastrous
if the mistaken idea should take hold that saving is pointless given low
interest rates. In fact the opposite is true: precisely in times such as these,
people need professional insurance and investment advice in order to avoid
taking any undue risks. This is an area where Allianz is well placed both on
the product and sales side.
–
Finally, I would like to mention the dangers inherent in new technologies
(keyword cyber protection), which make insurance more relevant than ever.
Here, too, we are active in the market with innovative products for both
retail and commercial business.
These points prove to me that Allianz has an excellent foundation for further
growth. However, we do not target growth at any price, but focus our efforts on
those areas in which profitable insurance business is possible. In the case of
PIMCO, we will be aiming to stabilize third-party assets under management in
the current financial year in order to return to the growth path in the medium
term.
Overall, we are expecting an operating profit in 2015 of € 10.4 bn, plus or minus
€ 0.4 bn, and in doing so are targeting profit at the same level as the previous
year.
13
1890 – 2015: 125 years of Allianz
In the current financial year, we will be marking the 125th anniversary of the
founding of Allianz. We are placing this anniversary year under the heading
“Protecting the Future”. Our aim is to enter into dialogue with employees, politi-
cians, the wider public and of course with you, our investors, about two sig-
nificant challenges of the future: demography and climate change. These two
themes are not only of critical importance for our life and property insurance,
but will also affect all of us directly. We want to make a contribu tion to social
dialogue through a series of internal and external events. We see this as our
essential corporate social responsibility in this anniversary year.
Dear investors, our 2015 anniversary year is a special one in the history of
Allianz. I am confident that it will also be a good year for your Allianz in
financial terms. I would like to thank you for the trust you have placed in
Allianz and, over the last 12 years, in me personally. I would be pleased if you
remain part of your Allianz in the future.
Michael Diekmann
Chairman of the Board of Management
14
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
15
Supervisory Board Report
Ladies and Gentlemen,
During the 2014 fiscal year, the Supervisory Board fulfilled all its duties and obligations as laid out
in the company Statutes and applicable law. It monitored the management of the company and
advised the Board of Management regarding the conduct of business.
Overview
Within the framework of our monitoring and advisory activities, the Board of Management
informed us on a regular basis, and in a timely and comprehensive manner, both verbally and in
writing, on the course of business, as well as on the economic and financial development of the
Allianz Group and Allianz SE, including deviations in actual business developments from the
planning. Further key areas the Board of Management reported on were business strategy, capital
adequacy, the challenges facing the life insurance business due to persistently low interest rates
and any potential regulatory effects of Allianz SE’s classification as a Global Systemically Important
Insurer by the Financial Stability Board (FSB) and the International Association of Insurance Super
visors (IAIS). In addition, we were extensively involved in the Board of Management’s planning for
both the 2015 fiscal year and the threeyear period from 2015 to 2017. We devoted particular atten
tion in 2014 to personnel matters related to the Board of Management and ongoing developments
16
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
and personnel changes at PIMCO. Our further key areas of focus were the continuing reorganization
of the property/casualty business in the United States and Russia.
The Board of Management’s reports were supplemented by documents which each member of
the Supervisory Board received in preparation for each meeting. Likewise, the annual financial
statements of Allianz SE, the consolidated financial statements and the auditor’s reports were
also made available to us in time for the relevant meeting. The halfyearly and quarterly financial
reports and the results of the auditor’s review were provided in advance to members of the Audit
Committee.
In the 2014 fiscal year, the Supervisory Board held seven meetings. The regular meetings took place
in February, March, May, August, October and December. In addition, there was one extraordinary
meeting in November.
The Board of Management also informed us in writing of important events that occurred between
meetings. The chairmen of the Supervisory and Management Boards also had regular discussions
about major developments and decisions. 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 35.
issues discussed in the supervisOry BOard plenary sessiOns
In all of the Supervisory Board’s 2014 meetings, the Board of Management reported on Group
reve nues and results, developments in individual business segments and on the capital, financial
and risk situation. We were regularly informed by the Board of Management about the impact of
natural catastrophes, the status of major legal disputes and other essential developments.
In the meeting of 26 February 2014, the Supervisory Board dealt comprehensively with the provi
sional financial figures for the 2013 fiscal year and the Board of Management’s recommended
dividend. The appointed audit firm, KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), Munich,
reported in detail on the provisional results of their audit. In addition, the Board of Management
submitted its annual report on risk developments in 2013. During the further course of the meeting,
the Supervisory Board also reviewed the extent to which individual members of the Board of
Management had achieved their targets and set their variable remuneration for the 2013 fiscal year.
The Supervisory Board subsequently dealt with succession planning and the next steps to be
taken regarding the Board of Management contracts expiring in 2014. In light of the regulatory
requirements under Solvency II, we also amended the guidelines for the selection and appoint
ment of the Board of Management.
In the meeting of 13 March 2014, the Supervisory Board discussed the audited annual Allianz SE
and consolidated financial statements as well as the recommendation for the appropriation
of earnings by the Board of Management for the 2013 fiscal year. KPMG confirmed there were no
discrepancies to their February report and issued an unqualified auditor’s report for the individual
Annual Report 2014
Allianz Group
17
and consolidated financial statements. The Supervisory Board also dealt with the agenda for
the 2014 AGM of Allianz SE and approved the Supervisory Board’s proposals for resolution, which
included the proposal to elect Mr. Jim Hagemann Snabe as the successor to Mr. Igor Landau
on the Supervisory Board. In this context, we also adopted an amendment to the Declaration of
Conformity with the German Corporate Governance Code (Code) of 12 December 2013: As Mr. Snabe
was still a member of the Executive Board of SAP AG when elected to the Allianz SE Supervisory
Board in May, he exceeded the figure of three Supervisory Board mandates as recommended by
the Code for active Management Board members for a twoweek period. The Supervisory Board
also resolved to appoint KPMG as auditor for the individual and consolidated financial statements
for the 2014 fiscal year and for the auditor’s review of the 2014 halfyearly interim report. In addition,
the Chief Compliance Officer provided the annual report on the compliance organization and key
com pliancerelated matters. The Supervisory Board was also informed about the performance
of the global industrial insurer Allianz Global Corporate & Specialty SE. At this meeting, the Super
visory Board also dealt with the issue of succession for certain Board of Management positions.
On 7 May 2014, just before the AGM, the Board of Management briefed us on the first quarter 2014
performance and on the Group’s current situation, particularly the capital adequacy. Directly
after the AGM, we elected Mr. Jim Hagemann Snabe to the Audit Committee of the Supervisory
Board by means of a written resolution.
In our meeting on 7 August 2014, the Board of Management reported in depth on the halfyearly
results. We examined the performance of PIMCO and Allianz Russia, the planned restructuring
of the United States property/casualty business and the Life Insurance Reform Act in Germany.
We also dealt with the issuance of Allianz shares to employees of the Allianz Group. By way of a
presentation, we were informed about the requirements stemming from the Global Systemically
Important Insurers regulation, in particular the required recovery and resolution plans. In addi
tion, the Board of Management presented Allianz’s IT security program to us and the Supervisory
Board dealt with the upcoming personnel decisions for the Board of Management. The meeting
was followed by a separate information session for members of the Supervisory Board at which
Allianz managers gave presentations on current topics.
On 2 October 2014, we appointed Mr. Oliver Bäte as successor to Mr. Diekmann as Chairman of the
Board of Management with effect from 7 May 2015 and Dr. Axel Theis and Sergio Balbinot as new
members of the Board of Management. Mr. Manuel Bauer’s Board of Management mandate was
extended by one year until 31 December 2015 and Dr. Helga Jung was reappointed for another five
years until 31 December 2019. In addition, the mandates of Dr. Dieter Wemmer and Dr. Werner
Zedelius were both extended by three years until 31 December 2017. For all new appointments and
reappointments, we passed resolutions on the corresponding service contracts. Furthermore,
the Supervisory Board agreed to the early termination of Mr. Gary Bhojwani’s appointment and
service contract with effect from the end of 2014. In connection with the report on the business
performance to date, we devoted considerable attention to Mr. William Hunt Gross’s departure from
PIMCO and the consequences thereof. The Board of Management also reported on the development
of women in managerial positions at Allianz. Finally, we dealt extensively with the strategy of the
18
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
Allianz Group, in particular the operating priorities in individual business segments, the
management of regulatory and capital market risks, capital efficiency and the general aspects
of the dividend strategy.
At the extraordinary meeting on 6 November 2014, the Supervisory Board discussed the results
for the third quarter. We then focused on the Board of Management’s proposal on the dividend
policy and agreed to it.
At the 11 December 2014 meeting, the Board of Management provided us with detailed information
about the thirdquarter results, further business developments, the situation of the Allianz
Group and several other issues. We then discussed the planning for the 2015 fiscal year and the
2015 – 2017 threeyear period, as well as the remuneration structures within the Allianz Group and
the Declaration of Conformity with the German Corporate Governance Code. The Supervisory
Board reviewed and approved the appropriateness of the remuneration of the Board of Manage
ment by means of a vertical and horizontal comparison. The vertical comparison was based on
the 2013 resolved definitions of the “upper management” and “relevant workforce” groups. On the
recommendation of the Personnel Committee, the Supervisory Board adopted a resolution to
adjust the contributionbased pension plan. In addition, the regular age limit for Board of Manage
ment members born on or after 1 January 1958 was raised to 62. The annual premiums for pension
schemes for members of the Board of Management were set – taking into account the members’
targeted pension levels – for the year 2015, as were their targets. Finally, we took a detailed look at
the results of the Supervisory Board’s efficiency review and discussed potential improvements in
the way the Supervisory Board operates.
declaratiOn Of cOnfOrmity with the German cOrpOrate GOvernance cOde
On 11 December 2014, the Board of Management and the Supervisory Board issued the Declaration
of Conformity in accordance with § 161 of the German Stock Corporation Act (“Aktiengesetz”).
The Declaration was posted on the company website, where it is available to shareholders at all
times. Allianz SE fully complies and will continue to fully comply with the recommendations of the
German Corporate Governance Code Commission made in the Code’s version of 24 June 2014, with
one exception. Deviating from Item 5.3.2 of the Code, the Supervisory Board’s Risk Committee –
rather than the Audit Committee – will be responsible for monitoring the risk management system.
Further explanations of corporate governance in the Allianz Group can be found in the Corporate
Governance Report starting on
tO § 289a HGB starting on
on the Allianz website at
page 40. More information on corporate governance can also be found
www.allianz.com/corporate-governance.
page 35 and the Statement on Corporate Management pursuant
cOmmittee activities
The Supervisory Board has formed various committees in order to perform its duties efficiently:
the Standing Committee, the Personnel Committee, the Audit Committee, the Risk Committee and
the Nomination Committee. The committees prepare the discussion and adoption of resolutions
in the plenary sessions. Furthermore, in appropriate cases, the authority to adopt resolutions has
Annual Report 2014
Allianz Group
19
been delegated to the committees. There is no Conciliation Committee because the German
CoDetermination Act (“Mitbestimmungsgesetz”), which provides for such a committee, does not
apply to Allianz SE as a European Company (SE). Please find the composition of the committees at
the end of the reporting period on
page 21.
The Standing Committee held four meetings in 2014. These related primarily to corporate gover
nance issues, the preparation for the AGM, the Employee Stock Purchase Plan and an internal review
of the Supervisory Board’s efficiency. During the fiscal year the committee passed resolutions
requiring approval on the use of Authorized Capital 2014/II for the issue of shares to employees and
to approve loans to senior executives.
The Personnel Committee met four times in the 2014 fiscal year. One area of focus was the prepara
tion of the plenary session’s decisions on expiring Board of Management mandates, including
the appointment of a new Chairman. The committee dealt with other personnel matters for active
and former members of the Board of Management. In addition to reviewing target achievement
among Board of Management members for the 2013 fiscal year, the committee prepared the review
of the remuneration system, including the setting of targets for variable remuneration in 2014.
The committee also dealt with the mandates held by Board of Management members in the inter
ests of the Allianz Group.
The Audit Committee held five meetings in 2014. In the presence of the auditors, it discussed the
annual financial statements of Allianz SE and the consolidated financial statements of the Allianz
Group, the management reports and auditor’s reports. In addition, the committee reviewed the
halfyearly and quarterly financial reports and, together with the auditors, went through the details
of the auditor’s review of these financial statements. After carrying out these reviews, the Audit
Committee saw no reason to raise any objections. The committee also dealt with the auditor’s
engagement, established priorities for the annual audit and discussed assignments to the auditors
for services not connected to the audit itself. In addition, the committee dealt extensively with the
compliance system, the internal auditing system as well as the accounting process and internal
financial reporting control mechanisms, including the appropriateness of the respective systems
and processes. The committee received regular reports from the Head of Group Audit, from the
General Counsel and from the Chief Compliance Officer on the audit department’s work and on
legal and compliance issues. The committee approved the audit plan produced by Group Audit
for 2015.
The Risk Committee held three meetings in 2014, during which it discussed the current risk situation
of the Allianz Group with the Board of Management. The risk report and other riskrelated state
ments in the annual Allianz SE and consolidated financial statements and management and group
management reports were reviewed with the auditor and the Audit Committee was informed of
the result. The appropriateness of the early risk recognition system at Allianz was also discussed.
In addition, the committee looked in detail at the effectiveness of the risk management system,
including an examination of its compliance with minimum supervisory requirements. Other mat
ters considered were Solvency II, the risk strategy and insurance and credit risk. The Risk Committee
also focused on developments at PIMCO.
20
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
In February 2014, the Nomination Committee adopted a resolution by written procedure regarding
the proposal to elect Mr. Jim Hagemann Snabe as successor to Mr. Igor Landau on the Supervisory
Board.
The Supervisory Board was regularly and comprehensively informed of the committees’ work.
Chair and committees of the Supervisory Board – as of 31 December 2014
Chairman of the Supervisory Board: Dr. Helmut Perlet
Deputy Chairmen: Dr. Wulf H. Bernotat, Rolf Zimmermann
Standing Committee: Dr. Helmut Perlet (Chairman), Dr. Wulf H. Bernotat,
Prof. Dr. Renate Köcher, Gabriele BurkhardtBerg, Rolf Zimmermann
Personnel Committee: Dr. Helmut Perlet (Chairman), Christine Bosse, Rolf Zimmermann
Audit Committee: Dr. Wulf H. Bernotat (Chairman), Dr. Helmut Perlet, Jim Hagemann Snabe,
JeanJacques Cette, Ira GloeSemler
Risk Committee: Dr. Helmut Perlet (Chairman), Christine Bosse, Peter Denis Sutherland,
Dante Barban, Franz Heiß
Nomination Committee: Dr. Helmut Perlet (Chairman), Prof. Dr. Renate Köcher,
Peter Denis Sutherland
audit Of annual accOunts and cOnsOlidated financial statements
In compliance with the special legal provisions applying to insurance companies, the statutory
auditor and the auditor for the review of the halfyearly financial report are appointed by the
Supervisory Board of Allianz SE and not by the AGM. The Supervisory Board has appointed KPMG as
statutory auditor for the annual Allianz SE and consolidated financial statements as well as for
the review of the halfyearly financial report. KPMG audited the financial statements of Allianz SE
and the Allianz Group as well as the respective management reports. They issued an auditor’s
report without any reservations. The consolidated financial statements were prepared on the
basis of the international financial reporting standards (IFRS), as adopted in the European Union.
KPMG performed a review of the halfyearly and quarterly financial reports.
All Supervisory Board members received the documentation relating to the annual financial
statements and the auditor’s reports from KPMG for the 2014 fiscal year on schedule. The provisional
financial statements and KPMG’s audit results were discussed in the Audit Committee on 24 Feb
ruary 2015 and in the plenary session of the Supervisory Board on 25 February 2015. The final finan
cial statements and KPMG’s audit reports were reviewed on 12 March 2015 by the Audit Committee
and in the Supervisory Board plenary session. The auditors participated in these discussions
and presented the main results from the audit. No material weaknesses in the internal financial
reporting control process were discovered. There were no circumstances that might give cause for
concern about the auditor’s independence.
On the basis of our own reviews of the annual Allianz SE and consolidated financial statements,
the management and group management reports and the recommendation for appropriation
of earnings, we raised no objections and agreed with the results of the KPMG audit. We approved
the Allianz SE and consolidated financial statements prepared by the Board of Management. The
Annual Report 2014
Allianz Group
21
company’s financial statements are therefore adopted. We agree with the Board of Management’s
proposal on the appropriation of earnings.
The Supervisory Board would like to thank all Allianz Group employees for their great personal
commitment over the past year.
memBers Of the supervisOry BOard and BOard Of manaGement
Mr. Igor Landau left the Supervisory Board at the end of the Annual General Meeting on 7 May 2014
and Mr. Jim Hagemann Snabe was elected by the AGM as his successor. The current term of the
Supervisory Board will expire following the 2017 AGM.
Mr. Michael Diekmann will step down from the Board of Management following the AGM on 6 May
2015. Mr. Oliver Bäte will take over as Chairman of the Board of Management with effect from
7 May 2015. Mr. Clement Booth and Mr. Gary Bhojwani left the Board of Management with effect
from 31 December 2014. Dr. Axel Theis was appointed as Mr. Booth’s successor with effect from
1 January 2015. He is responsible for the insurance business in the Anglo Markets, with the exception
of Australia, and for the global industrial insurance and reinsurance businesses. Another new
appointment as of 1 January 2015 was Mr. Sergio Balbinot, who has taken over responsibility from
Mr. Bäte for Insurance Western & Southern Europe.
Munich, 12 March 2015
For the Supervisory Board:
Dr. Helmut Perlet
Chairman
22
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
Supervisory Board
Dr. Helmut Perlet
Chairman
Former Member of the Board of Management of
Allianz SE
ira Gloe-semler
Regional Representative Financial Services of
ver.di Hamburg
franZ Heiss
Employee of Allianz Beratungs- und Vertriebs-AG
Prof. Dr. renate köCHer
Head of Institut für Demoskopie Allensbach
(Allensbach Institute)
iGor lanDau
Member of the Board of Directors of Sanofi S.A.
until 7 May 2014
Jim HaGemann snaBe
Chairman of Centre for Global Industries,
World Economic Forum
since 7 May 2014
Peter Denis sutHerlanD
Chairman of Goldman Sachs International
Dr. Wulf H. Bernotat
Vice Chairman
Former Chairman of the Board of Management of
E.ON AG
rolf Zimmermann
Vice Chairman
Chairman of the (European) SE Works Council of
Allianz SE
Dante BarBan
Employee of Allianz S.p.A.
CHristine Bosse
Former Group Chief Executive Officer of
the Executive Management of Tryg
GaBriele BurkHarDt-BerG
Chairwoman of the Group Works Council of
Allianz SE
Jean-JaCques Cette
Chairman of the Group Works Council of
Allianz France S.A.
Annual Report 2014
Allianz Group
23
Board of Management
miCHael Diekmann
oliver Bäte
Dr. HelGa JunG
Dr. CHristof masCHer
Dr. Werner ZeDelius
24
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
Jay ralPH
serGio BalBinot
Dr. axel tHeis
Dr. Dieter Wemmer
manuel Bauer
Dr. maximilian Zimmerer
Annual Report 2014
Allianz Group
25
Board of Management
miCHael Diekmann
Chairman of the Board of Management
until 6 May 2015
Dr. HelGa JunG
Insurance Iberia & Latin America,
Legal & Compliance, Merger & Acquisitions
oliver Bäte
Insurance Western & Southern Europe
until 31 December 2014
Global Property-Casualty
until 6 May 2015
Chairman of the Board of Management
from 7 May 2015
serGio BalBinot
Insurance Western & Southern Europe
since 1 January 2015
manuel Bauer
Insurance Growth Markets
Gary BHoJWani
Insurance USA
until 31 December 2014
Clement BootH
Global Insurance Lines & Anglo Markets
until 31 December 2014
Dr. CHristof masCHer
Operations
Jay ralPH
Asset Management
U.S. Life Insurance
since 1 January 2015
Dr. axel tHeis
Global Insurance Lines & Anglo Markets
since 1 January 2015
Global Property-Casualty
from 7 May 2015
Dr. Dieter Wemmer
Finance, Controlling, Risk
Dr. Werner ZeDelius
Insurance German Speaking Countries, Banking,
Human Resources
Dr. maximilian Zimmerer
Investments, Global Life/Health
26
Annual Report 2014
Allianz Group
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
International Executive Committee
miCHael Diekmann
Chairman, Allianz SE
Germany
amer aHmeD
Allianz Re
Germany
solmaZ altin
Allianz Sigorta A.S.
Turkey
oliver Bäte
Allianz SE
Germany
serGio BalBinot
Allianz SE
Germany
manuel Bauer
Allianz SE
Germany
Gary BHoJWani
until 31 December 2014
Allianz SE
Germany
Clement BootH
until 31 December 2014
Allianz SE
Germany
eliZaBetH Corley
Allianz Global Investors
Germany
Jon Dye
Allianz Insurance PLC
United Kingdom
moHameD el-erian
Allianz SE
USA
roBert franssen
Allianz Benelux
Belgium
rÉmi Grenier
Allianz Global Assistance
France
DouG HoDGe
PIMCO
USA
HelGa JunG
Allianz SE
Germany
manfreD knof
Allianz SE – CEE
Germany
Wolfram littiCH
Allianz Elementar
Austria
CHristof masCHer
Allianz SE
Germany
severin moser
Allianz Suisse
Switzerland
niran Peiris
Allianz Australia
Australia
Jay ralPH
Allianz SE
Germany
JaCques riCHier
Allianz France
France
markus riess
Allianz Deutschland AG
Germany
klaus-Peter röHler
Allianz S.p.A.
Italy
GeorGe sartorel
Allianz SE – Asia-Pacific
Singapore
viCente tarDío Barutel
Allianz Companía de Seguros y Reaseguros
Spain
axel tHeis
Allianz SE
Germany
anDreW torranCe
Fireman’s Fund Insurance Company
USA
WilfrieD verstraete
Euler Hermes
France
Dieter Wemmer
Allianz SE
Germany
Walter WHite
Allianz Life Insurance Company of North America
USA
Werner ZeDelius
Allianz SE
Germany
maximilian Zimmerer
Allianz SE
Germany
Annual Report 2014
Allianz Group
27
Allianz Share
− Solid gains made by Allianz shares.
− Dividend increases to € 6.85.
Another double-digit total return
Despite the European Central Bank’s expansive monetary policy cre-
ating favorable conditions for stock markets in Europe, market appre-
ciation in the region was modest, something that can be traced back
to geopolitical crises and the Eurozone’s disappointing economic
development. With these conditions in mind, the performance of
Allianz’s share price was pleasing, rising by 5.4 % to € 137.35. Provided
the dividend was reinvested in Allianz shares, investments in the
company would have seen a double-digit value increase for the third
time in a row, namely +10.0 % in this reporting year. This was stimu-
lated by the strong performance of our business and the positive
response to our new dividend policy. However, it was dampened by
concerns over the potential ramifications of continually low interest
rates and in particular the future performance of our asset manager
PIMCO. As a result, the gains made by our shares fell short of those
made by the STOXX Europe 600 Insurance (+9.8 %). They nonetheless
significantly outclassed the value increase of cross-sector indices
such as the EURO STOXX 50 (+1.2 %). Following the publication of the
2014 results on 26 February 2015, 49 % of analysts issued a “buy” rec-
ommendation for Allianz shares – with an average price target of
€ 152. You can find the current analyst recommendations and profit
forecasts at
www.allianz.com/analystrecommendations.
The price gains made in 2014 also underpinned the appeal of a
long-term investment in Allianz shares. Investors who have kept our
shares in their portfolios for five years and opted to reinvest their
dividends in Allianz shares achieved an average annual performance
of 14.7 % over this period of time. Over the last ten years the corre-
sponding gain amounted to 7.5 %.
AlliAnz shAre performAnce in compArison
average annual performance in %
Allianz (excl. dividends)
Allianz (incl. dividends)
sToXX Europe 600 Insurance
eUro sToXX 50
DAX
Source: Thomson Reuters Datastream
1 year
2014
5 years
2010 – 2014
10 years
2005 – 2014
5.4
10.0
9.8
1.2
2.7
9.5
14.7
10.5
1.2
10.5
3.5
7.5
2.9
0.6
8.7
28
Annual Report 2014
Allianz Group
DevelopmenT of The AlliAnz shAre price versUs sToXX eUrope 600 insUrAnce
AnD eUro sToXX 50
indexed on the Allianz share price in €
€ 130.35
(12/31/2013)
150
140
130
120
€ 137.35
(12/31/2014)
1Q
2Q
3Q
4Q
Allianz
STOXX Europe 600 Insurance
EURO STOXX 50
Source: Thomson Reuters Datastream
shAre price DevelopmenT AgAinsT sToXX eUrope 600 insUrAnce
€
175
150
125
100
75
50
25
139.70
130.80
117.20
101.75
95.43
76.67
108.05
105.85
70.02
57.47
2010
2011
2012
2013
2014
Allianz share price
STOXX Europe 600 Insurance (indexed on the Allianz share price)
Allianz highs and lows
Source: Thomson Reuters Datastream
A
To Our Investors
7
Letter to the Investors
16 Supervisory Board Report
Supervisory Board
23
24 Board of Management
27 International Executive Committee
28 Allianz Share
Higher dividend
Shareholder structure
Given our new dividend policy, we will be proposing to the Annual
General Meeting a dividend increase of € 1.55 to € 6.85. This represents
a dividend yield of 5.0 % on the year-end share price. The payout ratio
will rise from 40 % to 50 %. You can find more detailed information on
the dividend policy in the Outlook 2015 chapter starting on
page 104 and at
www.allianz.com/dividend.
Weighting in major indices
The Allianz share is strongly represented in major German and Euro-
pean indices, as well as being included in important global indices.
WeighTing of AlliAnz shAres in mAjor inDices
as of 31 December 2014
DAX
eUro sToXX 50
sToXX Europe 600 Insurance
msci World Financials
msci World
Source: Deutsche Börse Group, STOXX Limited, MSCI
Weighting
in %
Ranking
Index
members
7.7
3.2
14.0
1.1
0.2
5
9
1
16
83
30
50
39
350
1,636
With more than 445,000 shareholders, Allianz is one of the most widely
held publicly-owned corporations in Europe. Apart from approxi-
mately 0.6 % of Allianz shares held in treasury, all our shares continue
to be held in free float. At the end of the year, 85 % were held by insti-
tutional investors and 15 % by private investors. The breakdown by
region shows that 74 % of Allianz shares were owned by Europeans and
26 % by non-Europeans. For up-to-date information on our shareholder
structure, please refer to
www.allianz.com/shareholders.
bAsic shAre informATion
Share type
Security codes
Bloomberg
Reuters
Registered shares with restricted transfer
Wkn 840 400
isin De 000 840 400 5
Alv gr
0#Alvg.DeU
Service and contact
Allianz Investor Line
Monday to Friday, 8 am to 8 pm CET
Phone: +49.89.3800-7555
E-mail: investor.relations@allianz.com
www.allianz.com/investor-relations
Allianz Investor Relations app for iOS and Android
Financial calendar: see back cover.
AlliAnz shAre key inDicATors AT A glAnce
Total number of issued shares as of 31 December
457,000,000
456,500,000
455,950,000
455,300,000
454,500,000
2014
2013
2012
2011
2010
Share price as of 31 December
High of the year
Low of the year
Share price performance in the year
Beta coefficient1
Market capitalization as of 31 December
Basic earnings per share
Price-earnings ratio
Dividend per share
Total dividend
Dividend yield as of 31 December
Payout ratio4
€
€
€
%
€ bn
€
€
€ mn
%
%
137.35
139.70
117.20
5.4
0.8
62.8
13.71
10.0
6.852
3,1302,3
5.02
502,3
130.35
130.80
101.75
24.4
1.3
59.5
13.23
9.9
5.30
2,405
4.1
40
104.80
105.85
70.02
41.8
1.1
47.8
11.56
9.2
4.50
2,039
4.3
39
73.91
108.50
57.47
(16.9)
1.5
33.7
5.74
13.1
4.50
2,037
6.1
79
88.93
95.43
76.67
2.0
0.9
40.4
11.20
7.9
4.50
2,032
5.1
40
1
2
In comparison with EURO STOXX 50, source: Bloomberg.
Proposal.
3
4
Total dividend based on total amount of shares. Actual dividend payment will be reduced by the dividend
amount attributable to treasury shares.
Based on net income after non-controlling interests.
Annual Report 2014
Allianz Group
29
30
Annual Report 2014
Allianz Group
Allianz
Global
Assistance
How can we help? An international leader in assistance,
travel insurance and health, life & home care services, today
Allianz Global Assistance’s global family counts more than
13,700 employees who live to help. They speak 58 different
languages and work throughout the world with a network
of 400,000 service providers and 180 correspondents. 250 mil-
lion people, or 4 % of the world’s total population, benefit from
its services, which are provided on five continents.
allianz-global-assistance.com
Allianz
Global
Assistance
Allianz
Global
Automotive
Allianz
Worldwide
Care
13,734
Employees who live to help.
250
MN
250 million people, or 4 % of the world’s total
population benefit from our services.
AlliAnz GlobAl AssistAnce
International leader in
assistance, travel insurance
and health, life and home
care services
With our international experience and
expertise in creating services we design innovative
and customized solutions.
Travel
Insurance
Australia
Australian residents Stephen and Joanne Connelly took
their four-year-old daughter, Freya, on a dream vacation to
Disneyland. They hadn’t had a holiday in three years so this
was a very special trip for them. A few days into the vaca-
tion, Freya suddenly became ill and was taken to hospital
where she was diagnosed with mycoplasma pneumonia
and a collapsed lung. To get the right paediatric care, Freya
needed to be evacuated by helicopter to another hospital
that could offer specialist care. After one call to the family’s
travel insurance provider, Allianz Global Assistance, the
medical team arranged for Freya’s medical evacuation to
another hospital and covered additional expenses including
accommodation and medical coverage. Because of her
condition, Freya had to remain in the United States for a
further two months until her condition improved and she
was deemed fit to return to Australia. “We got the best
medical care possible and we couldn’t have done that with-
out Allianz Global Assistance”, says Joanne Connelly.
allianz-assistance.com.au/corporate
32
We are here to help people
anytime, anywhere, around the corner
or in their home.
Property
Assistance
Italy
An Italian customer was on vacation in Sicily when she
received a call no one wants to receive when far from
home – a pipe had burst in her flat in Milan. The burst pipe
had severely damaged the walls, furniture, floors, electrical
system and had even damaged the neighbor’s ceiling
below. After calling her assistance provider, Allianz Global
Assistance, an Assistance Coordinator (AC) quickly worked
to provide emergency intervention. The AC had quickly
dispatched a team of experts – plumbers, electricians, up-
holsterers, plaster craftsman, decorators, and floor layers
to begin repairs immediately. Once back in Milan, Allianz
Global Assistance arranged for the customer to stay in a
hotel for a few days whilst the repairs were completed. The
customer was delighted, “I could have spent a great deal
of time trying to find the right experts and organising the
repairs, but thanks to Allianz Global Assistance, the entire
flat was perfectly restored in a matter of days, as was the
neighbour’s ceiling! It looked as good as new.”
allianz-global-assistance.it/corporate
Innovation is in our genes
– example Telematics.
Telematics
Service
China
Telematics, the use of computer technology to make cars more navigable
and drivers safer, is revolutionizing how we provide roadside assistance.
For example, at 10 pm on March 15, 2014 the emergency alarm went off at
Allianz Global Assistance’s call center. An Assistance Coordinator (AC)
immediately answered the call, but all he could hear was faint breathing.
Realizing the driver was injured, he used GPS to locate the position of the
car in Henan Province. The AC then started calling the emergency services,
notifying them of the serious accident and asking them to send an ambu-
lance as soon as possible.
The AC also kept phoning the driver, who finally answered back and told
him of his injury and the need for an ambulance. About 20 minutes later,
the emergency services arrived. Thanks to cutting-edge telematics and
our AC’s fast and accurate reaction, the driver was rescued and given timely
treatment.
allianz-assistance.com.cn/cn
33
B _ CoRPoRATE GovERnAnCE
Pages 34 – 58
35
40
42
45
Corporate Governance Report
Statement on Corporate Manage ment pursuant to § 289a of the HGB
(part of the Group Management Report)
Takeover-related Statements and Explanations
(part of the Group Management Report)
Remuneration Report
(part of the Group Management Report)
34
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
Corporate Governance Report
Good corporate governance is essential for sustainable business per-
formance. The Board of Management and the Supervisory Board of
Allianz SE thus attach great importance to complying with the recom-
mendations of the German Corporate Governance Code (referred to
hereinafter as the “Code”). The Declaration of Conformity with the
recommendations of the Code issued by the Board of Management
and the Supervisory Board on 11 December 2014 and the company’s
position regarding the Code’s suggestions can be found in the State-
ment on Corporate Management pursuant to § 289a HGB starting on
page 40.
Corporate Constitution
of the European Company (SE)
As a European Company, Allianz SE is subject to special European SE
regulations and the German SE Implementation Act (“SE-Ausführungs-
gesetz”) in addition to German stock corporation law. However, the
main features of a German stock corporation – in particular the two-
tier board system (Board of Management and Supervisory Board) and
the principle of equal employee representation on the Super visory
Board – have been maintained by Allianz SE.
Function of the Board of Management
The Board of Management manages Allianz SE and the Allianz Group.
During the reporting period it comprised eleven members. Its
responsibilities include setting business objectives and the strategic
direction, coordinating and supervising the operating entities, as
well as implementing and overseeing an efficient risk management
system. It is responsible for monitoring adherence to statutory provi-
sions and official regulations. The Board of Management also pre-
pares the quarterly and half-yearly financial reports, as well as the
Group’s consolidated financial statements and the annual financial
statements of Allianz SE.
The members of the Board of Management are jointly responsible
for management. Notwithstanding this overall responsibility, the
individual members of the Board head the departments they have
been assigned independently. There are divisional responsibilities
for business segments as well as functional responsibilities. The latter
include the Chairman’s division, the Finance-, Risk Management-
and Controlling-Function, Investments, Operations – including IT –,
Human Resources, Legal and Compliance, and Mergers & Acquisitions.
Business division – responsibilities focus on geographical regions or
operating segments, such as Asset Management. Rules of procedure
specify in more detail the work of the Board of Management and the
responsibilities of the Board departments. Details of the Board of
Management’s reporting to the Supervisory Board are laid down in
the reporting rules issued by the Supervisory Board.
Regular Board of Management meetings are led by the Chair-
man. Each member of the Board may request a meeting, providing
notification of the proposed subject. The Board takes decisions by a
simple majority of participating members. In the event of a tie, the
Chairman casts the deciding vote. The Chairman can also veto deci-
sions, but cannot impose any decisions against the majority vote.
Board of ManaGeMent and Group CoMMittees
In the financial year 2014, there were the following Board of Manage-
ment committees:
Board CoMMittees
Board CoMMittees
responsiBiLities
Group CapitaL CoMMittee
Michael Diekmann (Chairman),
Dr. Dieter Wemmer,
Dr. Maximilian Zimmerer
Group finanCe and risk CoMMittee
Dr. Dieter Wemmer (Chairman),
Dr. Helga Jung,
Oliver Bäte
(from 1 January 2015: Sergio Balbinot),
Clement Booth
(from 1 January 2015: Dr. Axel Theis),
Jay Ralph, Dr. Maximilian Zimmerer
Group it CoMMittee
Dr. Christof Mascher (Chairman),
Jay Ralph, Dr. Dieter Wemmer,
Dr. Werner Zedelius
Group MerGers
and aCquisitions CoMMittee
Dr. Helga Jung (Chairman),
Dr. Dieter Wemmer,
Dr. Maximilian Zimmerer
as of 31 December 2014
Proposals to the Board of Management
concerning risk capital management,
including Group-wide capital and
liquidity planning, as well as investment
strategy.
Implementing and overseeing the
principles of Group-wide capital and
liquidity planning, as well as investment
strategy and preparing risk strategy.
This includes, in particular, significant
individual investments and guidelines
for currency management, Group
financing and internal Group capital
management, as well as establishing
and overseeing a Group-wide risk
management and monitoring system
including dynamic stress tests.
Developing, proposing, implementing
and monitoring a Group-wide it
strategy, approval of relevant it
investments.
Managing and overseeing Group M & a
transactions, including approval of
individual transactions within certain
thresholds.
Besides Board committees, there are also Group committees whose
job it is to prepare decisions for the Board of Management of Allianz SE,
submit proposals for resolutions and ensure the smooth flow of infor -
mation within the Group.
Annual Report 2014
Allianz Group
35
In the financial year 2014, there were the following Group committees:
Group CoMMittees
Group CoMMittees
responsiBiLities
Group CoMpensation CoMMittee
Board members of Allianz se and
executives below Allianz se Board level
Group underwritinG CoMMittee
Members of the Board of Management,
executives below Allianz se Board level
and Chief Underwriting Officers of Group
companies
Group investMent CoMMittee
Members of the Board of Management
and executives below Allianz se Board
level
internationaL exeCutive CoMMittee
Chairman of the Allianz se Board of
Management (Chairman), all other
members of the Allianz se Board of
Management and Managing Directors of
major Group companies
Designing, monitoring and improving
Group-wide compensation systems in line
with regulatory requirements and sub -
mitting an annual report on the results of
its monitoring, along with proposals for
improvement.
Monitoring of the underwriting business
and related risk management, developing
an underwriting policy and strategy.
Implementing Group investment strategy,
including monitoring Group-wide
investment activities as well as approving
investment-related frameworks and
guidelines and individual investments
within certain thresholds.
Discussion of overall strategic issues
for the Allianz Group (for composition,
see page 27).
The responsibilities and composition of the Board of Management
and Group committees are set out in the respective Rules of Proce-
dure, which require the approval of the Board of Management.
The Allianz Group runs its operating entities and business seg-
ments via an integrated management and control process. The Hold-
ing and the operating entities first define the business strategies and
goals. On this basis, joint plans are then prepared for the Supervisory
Board’s consideration when setting targets for performance-based
remuneration of the members of the Board of Management (for
details, see the Remuneration Report starting on
page 45). When
filling management positions, the Board of Management takes diver-
sity into consideration, particularly to ensure that the percentage of
women in management positions continues to increase.
The Board of Management reports regularly and comprehen-
sively to the Supervisory Board on business development, the finan-
cial position and earnings, planning and achievement of objectives,
business strategy and risk exposure.
Certain important decisions of the Board of Management require
approval by the Supervisory Board. Some of these requirements are
stipulated by law or by decisions of the Annual General Meeting (AGM).
These include approval for the Board of Management to increase the
share capital (Authorized Capital), acquire treasury shares or issue
convertible bonds or bonds with warrants. In addition, the Statutes
also provide approval requirements for certain transactions, such as
intercompany agreements and the launch of new business segments
or closure of existing ones, insofar as such actions are material to the
Group. Approval is also required for acquisitions of companies and
holdings in companies as well as divestments of Group companies
36
Annual Report 2014
Allianz Group
which exceed certain threshold levels. The Agreement concerning the
Participation of Employees in Allianz SE requires the approval of the
Supervisory Board for the appointment of the member of the Board of
Management responsible for employment and social welfare.
Principles and function
of the Supervisory Board
The German Co-Determination Act (“Mitbestimmungsgesetz”) does
not apply to Allianz SE because it has the legal form of a European
Company (SE). The size and composition of the Supervisory Board are
instead determined by general European SE regulations. These regu-
lations are implemented in the Statutes and by the Agreement con-
cerning the Participation of Employees in Allianz SE dated 3 July 2014
(hereinafter “SE Agreement”).
The Supervisory Board comprises twelve members, whose six
share holder representatives are appointed by the AGM. The six employ-
ee representatives are appointed by the SE works council. The specific
procedure for their appointment is laid down in the SE Agreement.
This stipulates that the six employee representatives must be allo-
cated in proportion to the number of Allianz employees in the differ-
ent countries. The Supervisory Board currently in office comprises four
employee representatives from Germany and one each from France
and Italy. The last regular election of the Supervisory Board took place
in May 2012 for a term lasting until the end of the ordinary AGM in 2017.
The Supervisory Board oversees and advises the Board of Man-
agement on managing the business. It is also responsible for appoint-
ing the members of the Board of Management, determining their
overall remuneration and reviewing Allianz SE’s and the Allianz
Group’s annual financial statements. The Supervisory Board’s activi-
ties in the 2014 financial year are described in the Supervisory Board
Report starting on
page 16.
The Supervisory Board held six regular meetings and one extra-
ordinary meeting in the 2014 financial year and is scheduled to meet
three times each half calendar year in the future. Extraordinary meet-
ings may be convened as needed. The committees also hold regular
meetings. The Supervisory Board takes all decisions based on a simple
majority. The special requirements for appointing members to the
Board of Management contained in the German Co-Determination
Act and the requirement for a Conciliation Committee do not apply
to an SE. In the event of a tie, the casting vote lies with the Chairman
of the Supervisory Board, who at Allianz SE must be a shareholder
representative. If the Chairman is not present in the event of a tie, the
casting vote lies with the deputy chairperson from the shareholder
side. A second deputy chairperson is elected on the proposal of the
employee representatives.
The Supervisory Board regularly reviews the efficiency of its
activities. The Supervisory Board discusses recommendations for
improvements and adopts appropriate measures on the basis of rec-
ommendations from the Standing Committee.
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
supervisory Board CoMMittees
Part of the Supervisory Board’s work is carried out by its committees.
The composition of committees and the tasks assigned to them are
regulated by the Supervisory Board’s Rules of Procedure. The Supervi-
sory Board receives regular reports on the activities of its committees.
puBLiCation of detaiLs
of MeMBers’ partiCipation in MeetinGs
The Supervisory Board considers it good corporate governance to
publish the details of individual members’ participation in plenary
sessions and committee meetings.
supervisory Board CoMMittees
puBLiCation of detaiLs of MeMBers’ partiCipation in MeetinGs
supervisory Board
CoMMittees
standinG CoMMittee
5 members
− Chairman: Chairman
of the Supervisory Board
(Dr. Helmut Perlet)
− Two further shareholder
representatives (Prof. Dr. Renate
Köcher, Dr. Wulf H. Bernotat)
− Two employee represen tatives
(Gabriele Burkhardt-Berg,
Rolf Zimmermann)
audit CoMMittee
5 members
− Chairman: appointed
by the Supervisory Board
(Dr. Wulf H. Bernotat)
− Three shareholder represen -
tatives (in addition to Dr. Wulf
H. Bernotat: Dr. Helmut Perlet,
Jim Hagemann Snabe)
− Two employee represen tatives
(Ira Gloe-Semler,
Jean-Jacques Cette)
risk CoMMittee
5 members
− Chairman: appointed by
the Supervisory Board
(Dr. Helmut Perlet)
− Three shareholder
representatives (in addition to
Dr. Helmet Perlet: Christine
Bosse, Peter Denis Sutherland)
− Two employee represen tatives
(Dante Barban, Franz Heiß)
personneL CoMMittee
3 members
− Chairman: Chairman
of the Supervisory Board
(Dr. Helmut Perlet)
− One further shareholder
representative
(Christine Bosse)
− One employee represen tative
(Rolf Zimmermann)
noMination CoMMittee
3 members
− Chairman: Chairman
of the Supervisory Board
(Dr. Helmut Perlet)
− Two further shareholder
responsiBiLities
− Approval of certain transactions which require
the approval of the Supervisory Board, e.g. capital
measures, acquisitions and disposals of
participations
− Preparation of the Declaration of Conformity
pursuant to § 161 “Aktiengesetz” (German Stock
Corporation Act) and checks on corporate
governance
− Preparation of the efficiency review of the
Supervisory Board
− Initial review of the annual Allianz se and consol-
idated financial statements, management reports
(incl. Risk Report) and the dividend proposal,
review of half-yearly and quarterly financial
reports
− Monitoring of the financial reporting process, the
effectiveness of the internal control and audit
system and legal and compliance issues
− Monitoring of the audit procedures, including the
independence of the auditor and the services addi -
tionally rendered, awarding of the audit contract
and determining the focal points of the audit
− Monitoring of the general risk situation and
special risk developments in the Allianz Group
− Monitoring of the effectiveness of the risk
management system
− Initial review of the Risk Report and other
risk-related statements in the annual financial
statements and management reports of
Allianz se and the Allianz Group, informing the
Audit Committee of the results of such reviews
− Preparation of the appointment of Board of
Management members
− Preparation of plenary session resolutions on
the compensation system and the overall
compensation of Board of Management
members
− Conclusion, amendment and termination of
service contracts of Board of Management
members unless reserved for the plenary session
− Long-term succession planning for the Board of
Management
− Approval of the assumption of other mandates
by Board of Management members
− Setting of concrete objectives for the composition
of the Supervisory Board
− Establishment of selection criteria for shareholder
representatives on the Supervisory Board in
compliance with the Code’s recommendations
on the composition of the Supervisory Board
representatives (Prof. Dr. Renate
Köcher, Peter Denis Sutherland)
− Selection of suitable candidates for election to the
Supervisory Board as shareholder representatives
pLenary sessions of tHe supervisory Board
Dr. Helmut Perlet (Chairman)
Dr. Wulf H. Bernotat (Vice Chairman)
Rolf Zimmermann (Vice Chairman)
Dante Barban
Christine Bosse
Gabriele Burkhardt-Berg
Jean-Jacques Cette
Ira Gloe-Semler
Franz Heiß
Prof. Dr. Renate Köcher
Igor Landau
Jim Hagemann Snabe
Peter Denis Sutherland
standinG CoMMittee
Dr. Helmut Perlet (Chairman)
Dr. Wulf H. Bernotat
Gabriele Burkhardt-Berg
Prof. Dr. Renate Köcher
Rolf Zimmermann
personneL CoMMittee
Dr. Helmut Perlet (Chairman)
Christine Bosse
Rolf Zimmermann
audit CoMMittee
Dr. Wulf H. Bernotat (Chairman)
Jean-Jacques Cette
Ira Gloe-Semler
Igor Landau
Jim Hagemann Snabe
Dr. Helmut Perlet
risk CoMMittee
Dr. Helmut Perlet (Chairman)
Dante Barban
Christine Bosse
Franz Heiß
Peter Denis Sutherland
presenCe
in perCent
7/7
7/7
7/7
5/7
7/7
6/7
6/7
7/7
6/7
7/7
2/3 1
4/4 2
6/7
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
5/5
4/5
4/5
2/2 3
3/3 4
5/5
3/3
3/3
3/3
3/3
3/3
100
100
100
71.43
100
85.71
85.71
100
85.71
100
66.67
100
85.71
100
100
100
100
100
100
100
100
100
80
80
100
100
100
100
100
100
100
100
1
2
3
4
As Mr. Landau left the Supervisory Board during the year as at the end of the Annual General Meeting on
7 May 2014, only the February, March and May meetings were relevant.
As Mr. Snabe was elected to the Supervisory Board during the year by the Annual General Meeting on
7 May 2014, only the August, October and December meetings as well as the extraordinary meeting in
November were relevant.
As Mr. Landau left the Supervisory Board during the year, only two meetings of the Audit Committee
were relevant.
As Mr. Snabe joined the Supervisory Board during the year, only three meetings of the Audit Committee
were relevant.
Annual Report 2014
Allianz Group
37
oBjeCtives of tHe supervisory Board
reGardinG its CoMposition
In order to implement a recommendation by the Code, the Super-
visory Board specified the following objectives for its composition at
its meeting on 12 December 2012:
oBjeCtives of tHe supervisory Board reGardinG its CoMposition
“The aim of Allianz se’s Supervisory Board is to have members who are equipped with
the necessary skills and competence to properly supervise and advise Allianz se’s
management. Supervisory Board candidates should possess the professional
expertise and experience, integrity, motivation and commitment, independence and
personality required to successfully carry out the responsibilities of a Supervisory
Board member in a financial-services institution with international operations.
To promote additional cooperation among Supervisory Board members, care should
be taken in selecting the candidates to ensure that adequate attention is paid to
ensuring diversity in occupational backgrounds, professional expertise and
experience.
Employee representation within Allianz se, as provided for by the se Agreement
concerning the Participation of Employees dated 20 September 2006, contributes to
diversity of work experience and cultural background. Pursuant to § 6 (2) sentence 2
of the Act on the Participation of Employees in a European Company (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.
The following requirements and objectives apply to the composition of Allianz se’s
Supervisory Board:1
I.
Requirements relating to the individual members
of the Supervisory Board
II. Requirements relating to the composition
of the Board as a whole
1. Specialist knowledge
–
At least one member must have considerable experience in the insurance and
financial-services fields
At least one member must have expert knowledge of accounting and auditing as
defined by § 100 (5) of the German Stock Corporation Act (AktG).
– Specialist knowledge of, or experience in, other economic sectors.
–
2. International character
At least four of the members must, on the basis of their origin or function, represent
regions or cultural areas in which Allianz se conducts significant business.
Since the establishment of Allianz se as a Societas Europaea (European Company),
Allianz employees from different Member States of the eu are considered in the
distribution of Supervisory Board seats for employee representatives, according to
the Agreement concerning the Participation of Employees in Allianz se dated
20 September 2006.
3. Diversity and appropriate representation of women
The members of the Supervisory Board shall complement one another regarding their
background, professional experience and specialist knowledge, in order to provide
the Supervisory Board with the most diverse sources of experience and specialist
knowledge possible.
The aim is for at least 25 % of the Supervisory Board members to be women. The
representation of women is generally considered to be the joint responsibility of the
shareholder and employee representatives.”
1. General selection criteria
– Managerial or operational experience
– General knowledge of the insurance and financial services business
–
– Fulfillment of the regulatory requirements:
Willingness and ability to make sufficient commitments in time and substance
– Reliability
– Knowledge of the field of corporate governance and supervisory law1
– Knowledge of the main features of accounting and risk management1
Compliance with the limitation on the number of mandates as recommended by
the German Corporate Governance Code and required by § 7a (4) of the German
Insurance Supervision Act (“Versicherungsaufsichtsgesetz - vaG”).
–
2. Independence
At least eight members of the Supervisory Board should be independent as defined
by No. 5.4.2 of the Corporate Governance Code, i.e. they may not have any business
or personal relations with Allianz se or its Executive Bodies, a controlling shareholder
or an enterprise associated with the latter, which may cause a substantial and not
merely temporary conflict of interests. In case shareholder representatives and
employee representatives are viewed separately, at least four members should
be independent within the meaning of No. 5.4.2 of the Corporate Governance
Code. Regarding employee representatives, however, the mere fact of employee
representation and the existence of a working relationship with the company shall
not itself affect independence.
In addition, at least one member must be independent within the meaning of § 100 (5)
of the German Stock Corporation Act (AktG).
It must be taken into account that the possible emergence of conflicts of interest in
individual cases cannot, as a general rule, be excluded. Potential conflicts of interest
must be disclosed to the chairman of the Supervisory Board and will be resolved by
appropriate measures.
3. Retirement age
According to the Supervisory Board’s Rules of Procedure, its members may not, in
general, be older than 70 years of age.
1
See the BaFin notice on the monitoring of members of administrative and supervisory bodies pursuant
to the German Banking Act (KWG) and the German Insurance Supervision Act (“Versicherungsaufsichts-
gesetz – VAG”) dated 3 December 2012.
38
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
The composition of the Supervisory Board of Allianz SE reflects these
objectives. It has an appropriate number of independent members
with international backgrounds. With four female Supervisory Board
members, the goal of having 25 % female members and the intended
statutory quota of 30 % in the current draft legislation for equal par-
ticipation of women and men in leadership positions are both being
met. The objectives will be adjusted according to the final version of
the legislation. The current composition of the Supervisory Board
and its committees is described on
page 21.
capital transactions and the approval of intercompany agreements,
as well as the remuneration of the Supervisory Board and changes to
the company’s Statutes. In accordance with European regulations
and the Statutes, changes to the Statutes require a two-thirds major-
ity of votes cast in case less than half of the share capital is repre-
sented in the AGM. Each year, an ordinary AGM takes place at which
the Board of Management and Supervisory Board give an account of
the preceding financial year. For special decisions, the German Stock
Corporation Act provides for the convening of an extraordinary AGM.
Shares held by members of the Board of
Management and the Supervisory Board
The total holdings of members of the Board of Management and the
Supervisory Board of Allianz SE amounted to less than 1 % of the com-
pany’s issued shares as of 31 December 2014.
Directors’ dealings
Members of the Board of Management and the Supervisory Board are
obliged by the German Securities Trading Act (“Wertpapierhandels-
gesetz”) to disclose any transactions involving shares of Allianz SE or
financial instruments based on them to both Allianz SE and the Ger-
man Federal Financial Supervisory Authority should the value of the
shares acquired or divested by the member or a person closely asso-
ciated to the member amount to five thousand Euros or more within
a calendar year. Such disclosures are published on our website at
www.allianz.com/
www.allianz.com/management-board and
supervisory-board.
Annual General Meeting
Shareholders exercise their rights at the Annual General Meeting.
When adopting resolutions, each share carries one vote. In order to
facilitate the exercise of shareholders’ rights, Allianz SE allows share-
holders to follow the AGM’s proceedings on the internet and be rep-
resented by proxies appointed by Allianz SE. These proxies exercise
voting rights exclusively on the basis of instructions given by the
shareholder. Shareholders are also able to cast their votes by postal
voting. This option is also available via the internet in the form of
online voting. Allianz SE regularly promotes the use of e-mail and
internet services.
The AGM elects the shareholder representatives of the Super-
visory Board and approves the actions taken by the Board of Manage-
ment and the Supervisory Board. It decides on the use of profits,
Accounting and auditing
The Allianz Group prepares its accounts according to § 315a of the
German Commercial Code (“Handelsgesetzbuch – HGB”) on the basis
of IFRS international accounting standards as adopted within the
European Union. The annual financial statements of Allianz SE are
prepared in accordance with German law, in particular the HGB.
In compliance with special legal provisions that apply to insur-
ance companies, the auditor of the annual financial statements and
of the half-yearly financial report is appointed by the Supervisory
Board, and not by the AGM. The audit of the financial statements covers
the individual financial statements of Allianz SE and also the con-
solidated financial statements of the Allianz Group.
To ensure maximum transparency, we inform our shareholders,
financial analysts, the media and the general public of the company’s
situation on a regular basis and in a timely manner. The annual
financial statements of Allianz SE, the Allianz Group’s consolidated
financial statements and the respective management reports are
published within 90 days of the end of each financial year. Additional
information is provided in the Allianz Group’s quarterly and half-
yearly financial reports, which are reviewed by the auditor in advance.
Information is also made available at the AGM, at press and analysts’
conferences, as well as on the Allianz Group’s website. Our website
also provides a financial calendar listing the dates of major publica-
tions and events, such as annual reports, quarterly and half-yearly
financial reports and AGMs.
You can find the 2015 financial calendar on our website at
www.allianz.com/financialcalendar.
Outlook
The regulatory environment remains in a state of flux. We expect that
further regulatory requirements will be imposed in addition to Sol-
vency II as a result of the Allianz Group’s classification as a system-
ically important insurer. The Allianz Group will integrate these
requirements into its existing governance system.
Annual Report 2014
Allianz Group
39
Statement on Corporate Manage ment
pursuant to § 289a of the HGB
The Statement on Corporate Management pursuant to § 289a of the
German Commercial Code (“Handelsgesetzbuch – HGB”) forms part
of the Group Management Report. According to § 317 (2), sentence 3
of the HGB, this Statement does not have to be included within the
scope of the audit.
In addition, Allianz SE follows all the suggestions of the Code Com-
mission in its 24 June 2014 version and also followed all suggestions
in the previous version of 13 May 2013.
The Declaration of Conformity and further information on
corporate governance at Allianz can be found on our website at
Declaration of Conformity with the
German Corporate Governance Code
On 11 December 2014, the Board of Management and the Supervisory
Board issued the following Declaration of Conformity of Allianz SE
with the German Corporate Governance Code:
www.allianz.com/corporate-governance.
The listed Group company Oldenburgische Landesbank AG
issued its own Declaration of Conformity in December 2014, which
states that Oldenburgische Landesbank AG complies with all of the
recommendations of the German Corporate Governance Code in the
version of 24 June 2014 (as well as in the previous year’s version of
13 May 2013).
DECLARATION OF CONFORMITY WITH THE GERMAN CORPORATE GOVERNANCE CODE
Corporate governance practices
“Declaration of Conformity by the Management Board and the Supervisory Board of
Allianz SE with the recommendations of the German Corporate Governance Code
Commission in accordance with § 161 of the German Stock Corporation Act (AktG)
1. The recommendations of the German Corporate Governance Code
Commission (Code Commission) in the version of June 24, 2014 published in
the official section of the Federal Gazette (“Bundesanzeiger”) on September
30, 2014 have been complied with since their publication and will be complied
with except for the following:
According to Item 5.3.2 German Corporate Governance Code the Audit
Committee of the Supervisory Board shall be responsible for the monitoring
of the risk management system. The Supervisory Board of Allianz SE has
additionally established a specific Risk Committee, which is responsible for the
monitoring of the risk management system.
2. Since the last Declaration of Conformity as of December 12, 2013 and its
amendment in March 2014, all recommendations of the Code Commission
in the version of May 13, 2013 were complied with except for the above
mentioned deviation as well as the deviation declared in March 2014. In
deviation from Item 5.4.5 para. 1 sentence 2, Mr. Jim Hagemann Snabe was
member of the Management Board of SAP AG and held four Supervisory Board
mandates in external listed companies at the same time. However, such
deviation has expired with Mr. Snabe retiring from his office as Management
Board member of SAP AG with effect as of May 21, 2014.
Munich, 11 December 2014
Allianz SE
For the Board of Management:
Signed Michael Diekmann
Signed Dr. Helga Jung
For the Supervisory Board:
Signed Dr. Helmut Perlet”
INTERNAL CONTROL SYSTEMS
The Allianz Group has an effective internal control system for verify-
ing and monitoring its operating activities and business processes,
in particular the control of financial reporting. The requirements
placed on the internal control systems are essential not only for the
survival of the company, but also to maintain the confidence of the
capital market, our customers and the public. A comprehensive risk
management system regularly assesses the appropriateness of the
internal control system, taking not only qualitative and quantitative
guidelines into account, but also specific control instruments for
individual business activities. For further information on the risk
page 139. (For fur-
organization and risk principles, please refer to
ther information on the internal Controls over Financial Reporting
and Risk Capital, please refer to
page 144.)
In addition, the quality of the internal control system is assessed
by the Allianz Group’s internal audit staff. Internal Audit conducts
independent audit procedures, analyzing the structure and efficacy
of the internal control systems as a whole. In addition, it also exam-
ines the potential for additional value and improvement of our orga-
nization’s operations. Fully compliant with all international auditing
principles and standards, Internal Audit contributes to the evalua-
tion and improvement of the effectiveness of the risk management,
control and governance processes. Therefore, internal audit activities
are geared towards helping the company to mitigate risks and further
assist in strengthening its governance processes and structures.
40
Annual Report 2014
Allianz Group
DESCRIPTION OF THE FuNCTIONS OF THE BOARD OF
MANAGEMENT AND THE SuPERVISORY BOARD AND
OF THE COMPOSITION AND FuNCTIONS OF THEIR
COMMITTEES
A description of the composition of the Supervisory Board and its
committees can be found on
page 21 and 23 of the Annual Report.
A description of the composition of the Board of Management can be
found on
page 24 and 25, while the composition of the Committees
of the Board of Management is described in the Corporate Governance
page 35. This information is also available on our
Report starting on
website at
www.allianz.com/corporate-governance.
A general description of the functions of the Board of Manage-
ment, the Supervisory Board and their committees can be found in
the Corporate Governance Report starting on
page 35, and on our
website:
www.allianz.com/corporate-governance.
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
COMPLIANCE PROGRAM
The sustained success of the Allianz Group is based on the respon-
sible behavior of all Group employees, who embody trust, respect and
integrity. By means of the global compliance program coordinated by
its central compliance department, Allianz supports and follows
internationally and nationally recognized guidelines and standards
for rules-compliant and value-based corporate governance. These
include the principles of the United Nations (UN Global Compact),
the Guidelines of the Organization for Economic Co-operation and
Development (OECD guidelines) for Multinational Enterprises and
European and international standards on data and consumer protec-
tion, economic and financial sanctions and combating corruption,
bribery, money laundering and terrorism financing. Through its sup-
port for and acceptance of these standards, Allianz aims to avoid the
risks that might arise from non-compliance. The central compliance
department is responsible – in close cooperation with local compli-
ance departments – for ensuring the effective implementation and
monitoring of the compliance program within the Allianz Group, as
well as for investigating potential compliance infringements.
The standards of conduct established by the Allianz Group’s
Code of Conduct for Business Ethics and Compliance are obligatory
for all employees worldwide. The Code of Conduct is available on our
website at
www.allianz.com/corporate-governance.
The Code of Conduct and the internal guidelines derived from it
provide all employees with clear guidance on behavior that lives up
to the values of the Allianz Group. In order to transmit the principles
of the Code of Conduct and the internal compliance program based
on these principles, Allianz has implemented interactive training
programs around the world. These provide practical guidelines
which enable employees to come to their own decisions. The Code of
Conduct also forms the basis for guidelines and controls to ensure
fair dealings with Allianz Group customers (sales compliance).
There are legal provisions against corruption and bribery in
almost all countries in which Allianz has a presence. The global Anti-
Corruption Program of the Allianz Group ensures the continuous
monitoring and improvement of the internal anti-corruption controls
(more information on the Anti-Corruption Program can be found
under Progress in Sustainable Development starting on
page 73).
A major component of the Allianz Group’s compliance program
is a whistleblower system that allows employees to alert the relevant
compliance department confidentially about irregularities. No
employee voicing concerns about irregularities in good faith needs
to fear retribution, even if the concerns turn out to be unfounded at
a later date.
Annual Report 2014
Allianz Group
41
Takeover-related Statements and Explanations
Statements pursuant to § 289 (4) and § 315 (4) of the German Commercial Code
(“Handelsgesetzbuch – HGB”) and explanatory report.
Composition of share Capital
As of 31 December 2014, the share capital of Allianz SE was € 1,169,920,000.
It was divided into 457,000,000 registered and fully paid-up shares
with no-par value and a corresponding share capital amount of € 2.56
per share. All shares carry the same rights and obligations. Each no-
par-value share carries one vote.
restriCtions on voting rights and share
transfers; exerCise of voting rights in Case
of employee equity partiCipations
Shares may only be transferred with the consent of the company. The
company may withhold a duly applied approval only if it deems this
to be necessary in the interest of the company on exceptional grounds.
The applicant will be informed of the reasons.
Shares acquired by employees of the Allianz Group as part of the
Employee Stock Purchase Plan are in principle subject to a one-year
lock-up period. Outside Germany, the lock-up period may in some
cases be up to five years. In some countries, in order to ensure that
the lock-up period is observed, the employee shares are held through-
out that period by a bank, another natural person or a legal entity
acting as a trustee. Nevertheless, employees may instruct the trustee
to exercise voting rights or have power-of-attorney granted to them
to exercise such voting rights. Lock-up periods contribute to the
Employee Stock Purchase Plan’s aims of committing employees to
the company and letting them benefit from the performance of the
stock price.
interests in the share Capital
exCeeding 10 % of the voting rights
No direct or indirect interests in the share capital of Allianz SE that
exceed 10 % of the voting rights have been reported to Allianz SE; nor
are we otherwise aware of any such interests.
shares with speCial rights
Conferring powers of Control
There are no shares with special rights conferring powers of control.
legal and statutory provisions appliCable
to the appointment and removal of members of
the board of management and to amendments
of the statutes
The Supervisory Board appoints the members of Allianz SE’s Board of
Management for a maximum term of five years (Article 9 (1), Article
39 (2) and Article 46 of the SE Regulation, §§ 84, 85 of the German Stock
Corporation Act and § 5 (3) of the Statutes). Reappointments, in each
case for a maximum of five years, are permitted. A simple majority of
the votes cast in the Supervisory Board is required to appoint mem-
bers of the Board of Management. In the case of a tie vote, the Chair-
person of the Supervisory Board, who pursuant to Article 42 sentence 2
of the SE Regulation must be a shareholder representative, shall have
the casting vote (§ 8 (3) of the Statutes). If the Chairperson does not
participate in the vote, the Deputy Chairperson shall have the casting
vote, provided he or she is a shareholder representative. A Deputy
Chairperson who is an employee representative has no casting vote
(§ 8 (3) of the Statutes). If a required member of the Board of Manage-
ment is missing, in urgent cases the courts must appoint such mem-
ber upon the application of an interested party (§ 85 of the German
Stock Corporation Act). The Supervisory Board may dismiss mem-
bers of the Board of Management if there is an important reason
(§ 84 (3) of the German Stock Corporation Act).
According to § 5 (1) of the Statutes, the Board of Management
shall consist of at least two persons. Otherwise, the Supervisory Board
determines the number of members. The Supervisory Board has
appointed a Chairman of the Board of Management pursuant to
§ 84 (2) of the German Stock Corporation Act.
German insurance supervisory law requires that members of
the Board of Management have the reliability and professional com-
petence needed to manage an insurance company. A person cannot
become a member of the Board of Management if he or she is already
a manager of two other insurance undertakings, pension funds,
insurance holding companies or insurance special purpose vehicles.
However, the supervisory authority may permit more than two such
mandates if they are held within the same group (§§ 121a, 7a of the
German Insurance Supervision Act (“Versicherungsaufsichts gesetz”,
VAG)). The Federal Financial Services Supervisory Authority (“Bundes-
anstalt für Finanzdienstleistungsaufsicht”) must be notified about the
intention of appointing a Board of Management member pursuant
to §§ 121a, 13d No. 1 of the German Insurance Supervision Act.
42
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the hgb
42 Takeover-related Statements
and Explanations
45 Remuneration Report
Amendments to the Statutes must be adopted by the General
Meeting. § 13 (4) sentence 2 of the Statutes of Allianz SE stipulates that,
unless this conflicts with mandatory law, changes to the Statutes
require a two-thirds majority of the votes cast, or, if at least one half
of the share capital is represented, a simple majority of the votes cast.
The Statutes thereby make use of the option set out in § 51 sentence 1
of the SE Implementation Act (“SE-Ausführungsgesetz”) which is based
upon Article 59 (1) and (2) of the SE Regulation. A larger majority is,
inter alia, required for a change in the corporate object or the reloca-
tion of the registered office to another E.U. member state (§ 51 sen-
tence 2 of the SE Implementation Act). The Supervisory Board may
alter the wording of the Statutes (§ 179 (1) sentence 2 of the German
Stock Corporation Act and § 10 of the Statutes).
authorization of the board of management
to issue and repurChase shares
The Board of Management is authorized to issue shares as well as to
acquire and use treasury shares as follows:
It may increase the company’s share capital, on or before 6 May
2019, with the approval of the Supervisory Board, by issuing new reg-
istered no-par-value shares against contributions in cash and/or in
kind, on one or more occasions:
− Up to a total of € 550,000,000 (Authorized Capital 2014/I). In case
of a capital increase against cash contribution, the Board of
Management may exclude the shareholders’ subscription rights
for these shares with the consent of the Supervisory Board, (i) for
fractional amounts, (ii) in order to safeguard the rights pertain-
ing to holders of convertible bonds or bonds with warrants,
including mandatory convertible bonds, and (iii) in the event of
a capital increase of up to 10 % if the issue price of the new shares
is not significantly less than the stock market price. The Board of
Management may furthermore exclude the shareholders’ sub-
scription rights with the consent of the Supervisory Board, in the
event of a capital increase against contributions in kind.
− Up to a total of € 13,720,000 (Authorized Capital 2014/II). The
shareholders’ subscription rights can be excluded in order to
issue the new shares to employees of Allianz SE and its Group
companies as well as for fractional amounts.
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 resulting from bonds issued by Allianz SE or its subsid-
iaries on the basis of the authorization of the General Meeting of
5 May 2010 or on the basis of the authorization of the General Meeting
of 7 May 2014 are exercised, or that conversion obligations tied to
such bonds are fulfilled.
The Board of Management may buy back and use Allianz shares
for other purposes until 6 May 2019 on the basis of the authorization
of the General Meeting of 7 May 2014 (§ 71 (1) No. 8 of the German
Stock Corporation Act). Together with other treasury shares that are
held by Allianz SE or which are attributable to it under §§ 71a et seq.
of the German Stock Corporation Act, such shares may not exceed
10 % of the share capital at any time. The shares acquired pursuant to
this authorization may be used, under exclusion of the shareholders’
subscription rights, for any legally admissible purposes, and in par-
ticular those specified in the authorization. Furthermore, the acqui-
sition of treasury shares under this authorization may also be carried
out using derivatives such as put options, call options, forward pur-
chases or a combination thereof, provided such derivatives do not
relate to more than 5 % of the share capital.
Domestic or foreign banks that are majority owned by Allianz SE
may buy and sell Allianz shares for trading purposes (§ 71 (1) No. 7
and (2) of the German Stock Corporation Act) under an authorization
of the General Meeting valid until 6 May 2019. The total number of
shares acquired thereunder, together with treasury shares held by
Allianz SE or attributable to it under §§ 71a et seq. of the German Stock
Corporation Act, shall at no time exceed 10 % of the share capital of
Allianz SE.
essential agreements of allianz se with Change
of Control Clauses and Compensation agreements
providing for takeover sCenarios
The following essential agreements of the company are subject to a
change of control condition following a takeover bid:
− Our reinsurance contracts, in principle, include a clause under
which both parties to the contract have an extraordinary termi-
nation right in the case where the other party to the contract
merges or its ownership or control situation changes materially.
Agreements with brokers regarding services connected with the
purchase of reinsurance cover also provide for termination
rights in case of a change of control. Such clauses are standard
market practice.
− The exclusive bancassurance distribution agreement between
Allianz and HSBC for life insurance products in Asia (China, Indo-
nesia, Malaysia, Australia, Sri Lanka, Taiwan, Brunei, Philippines)
includes a clause under which both parties have an extraordi-
nary termination right in case there is a change of control of the
other party’s ultimate holding company.
− The exclusive bancassurance distribution agreement between
Allianz SE and HSBC for life insurance products in Turkey includes
a clause under which both parties have an extraordinary termi-
nation right in case there is a change of control of the other
party’s ultimate holding company.
Annual Report 2014
Allianz Group
43
− The framework agreements between Allianz SE and the subsi-
diaries of various car manufacturers (FCE Bank plc, Volkswagen
Financial Services AG, respectively) relating to the distribution
of car insurance by the respective car manufacturers each
include a clause under which each party has an extraordinary
termination right in case there is a change of control of the other
party.
− Bilateral credit agreements in some cases provide for termina-
tion rights if there is a change of control, mostly defined as the
acquisition of at least 30 % of the voting rights within the meaning
of § 29 (2) of the German Takeover Act (“Wertpapiererwerbs- und
Übernahmegesetz”, WpÜG). If such termination rights are exer-
cised, the respective credit lines have to be replaced by new
credit lines under conditions then applicable.
The company has entered into the following compensation agree-
ments with members of the Board of Management and employees
providing for the event of a takeover bid:
A change of control clause in the service contracts of the mem-
bers of Allianz SE’s Board of Management provides that, if within
twelve months after the acquisition of more than 50 % of the compa-
ny’s share capital by one shareholder or several shareholders acting
in concert (change of control), the appointment as a member of the
Board of Management is revoked unilaterally by the Supervisory
Board, or if the mandate is ended by mutual agreement, or if the Man-
agement Board member resigns his or her office because the respon-
sibilities as a Board member are significantly reduced through no
fault of the Board member, he or she shall receive his or her contrac-
tual remuneration for the remaining term of the service contract, but
limited, for the purpose hereof, to three years, in the form of a one-off
payment. The one-off payment is based on the fixed remuneration
plus 50 % of the variable remuneration, however, this basis being lim-
ited to the amount paid for the last fiscal year. To the extent that the
remaining term of the service contract is less than three years, the
one-off payment is generally increased in line with a term of three
years. This applies accordingly if, within two years of a change of con-
trol, a mandate in the Board of Management is coming to an end and
is not extended; the one-off payment will then be granted for the
period between the end of the mandate and the end of the three-year
period after the change of control. For further details, please refer to
the Remuneration Report starting on
page 45.
Under the Allianz Sustained Performance Plan (ASPP), Restricted
Stock Units (RSU) – i.e. virtual Allianz shares – are granted as a stock-
based remuneration component to senior management of the Allianz
Group worldwide. In addition, under the Group Equity Incentive (GEI)
scheme, Stock Appreciation Rights (SAR) – i.e. virtual options on
Allianz shares – were also granted until 2010. Some of these are still
outstanding. The conditions for these RSU and SAR contain change of
control clauses which apply if a majority of the voting share capital
in Allianz SE is acquired, directly or indirectly, by one or more third
parties which do not belong to the Allianz Group and which provide
for an exception from the usual exercise periods. The RSU will be exer-
cised, in line with their general conditions, by the company for the
relevant plan participants on the day of the change of control without
observing any vesting period that would otherwise apply. The cash
amount payable per RSU must be at least the price offered per Allianz
share in a preceding tender offer. In case of a change of control as
described above, SAR will be exercised, in line with their general con-
ditions, by the company for the relevant plan participants on the day
of the change of control without observing any vesting period. By
providing for the non-application of the blocking period in the event
of a change of control, the terms take into account the fact that the
conditions under which the share price moves are very different
when there is a change in control.
44
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
Remuneration Report
This report covers the remuneration arrangements for the Board of
Management and the Supervisory Board of Allianz SE.
− Alignment with shareholder interests: One third of the variable
remuneration is dependent upon share price performance.
The report is prepared in accordance with the requirements of
the German Commercial Code (HGB) and the International Financial
Reporting Standards (IFRS). It also takes into account § 64b Law on the
Supervision of Insurance Undertakings (“Versicherungsaufsichts
gesetz – VAG”), the requirements of the German Ministry of Finance’s
Insurance Remuneration Regulation (“VersicherungsVergütungs
verordnung – VersVergV”) and the recommendations of the German
Corporate Governance Code.
Allianz SE Board of Management
remuneration
GOVERNANCE SYSTEM
The remuneration of the Board of Management is decided upon by
the entire Supervisory Board based on proposals prepared by the Per
sonnel Committee. If required, outside advice is sought from inde
pendent external consultants. The Personnel Committee and the
Supervisory Board consult with the Chairman of the Board of Man
agement as appropriate in assessing the performance and remu
neration of members of the Board of Management. The Chairman of
the Board of Management is not present when his own remuneration
is discussed. Regarding the activities and decisions taken by the Per
sonnel Committee and the Supervisory Board, please refer to the
Supervisory Board Report section. The remuneration system for the
Board of Management was presented and approved at the 2010
Annual General Meeting.
REMUNERATION PRINCIPLES AND MARKET POSITIONING
The key principles of Board of Management remuneration are as
follows:
− Support of the Group’s strategy: Performance targets reflect the
Allianz Group’s business strategy.
− Alignment of pay and performance: The performancebased,
variable component forms a significant portion of the overall
remuneration.
− Variable remuneration focused on sustainability: Two thirds of
the variable remuneration reflect longerterm performance.
One third is a deferred payout after three years based on a sus
tainability assessment covering the threeyear period. The other
third rewards sustained performance through share price devel
opment with a deferred payout after five years.
The structure, weighting and level of remuneration is decided by the
Supervisory Board. Remuneration survey data is provided by external
consultants. The peer group consists primarily of other DAX 30 com
panies. Compensation levels are usually around the third quartile of
this group. The structure of the Allianz Group’s total remuneration is
more strongly weighted to variable, longerterm components than in
other DAX 30 companies. Remuneration and benefit arrangements
are also periodically compared with best practices. The Supervisory
Board takes remuneration levels within the Group into account when
assessing the appropriateness of the remuneration of the Board of
Management.
REMUNERATION STRUCTURE,
COMPONENTS AND TARGET SETTING PROCESS
There are four main remuneration components. Each has the same
weighting within annual target remuneration: base salary, annual
bonus, annualized midterm bonus (MTB) and equityrelated remu
neration. The target compensation of each variable component does
not exceed the base salary, with the total target variable compensa
tion not exceeding three times the base salary. In addition, Allianz
offers pensions and similar benefits and perquisites.
Base salary
Base salary is the fixed remuneration component, expressed as an
annual cash sum and paid in twelve monthly installments. It has
been harmonized for 2014 for all regular members of the Board of
Management. Those base salaries at € 700 THOU for 2013 were adjusted
to € 750 THOU.
Variable remuneration
Variable remuneration aims to balance shortterm performance,
longerterm success and sustained value creation.
Each year, the Supervisory Board agrees on performance targets
for the variable remuneration with the members of the Board of Man
agement. These are documented for the upcoming financial year.
Every three years, the MTB sustainability criteria are set for the follow
ing midterm period.
All variable awards are made under the rules and conditions of
the “Allianz Sustained Performance Plan” (ASPP). The grant of vari
able remuneration components is related to performance and can
vary between 0 % and 150 % of the respective target values with the cap
having been reduced from 165 % to 150 % from 2014 onwards. If perfor
mance was rated with 0 % no variable component is granted. Conse
quently, the minimum total direct compensation for a regular
Annual Report 2014
Allianz Group
45
member of the Board of Management equals the base salary of
€ 750 THOU (excluding perquisites). The maximum total direct com
pensation (excluding perquisites) is € 4,125 THOU: base salary
€ 750 THOU + € 3,375 THOU (150 % of the sum of all three variable com
pensation components at target).
Details on the variable compensation components:
− Annual bonus (shortterm): A cash payment which rewards the
achievement of quantitative and qualitative targets for the
respective financial year and is paid the year following the per
formance year. Quantitative targets represent 75 % and consist of
50 % Group targets (equally divided between annual operating
profit and annual net income) and 25 % divisional targets. For
members of the Board of Management with business division
responsibilities, divisional targets are set with the application of
the following split: 10 % annual operating profit, 10 % annual net
income before minorities and 5 % dividend. For members of the
Board of Management with a functional focus the divisional
quantitative targets are determined based on their key respon
sibilities. Qualitative targets represent 25 % and reflect the spe
cific individual priorities for 2014 per member of the Board of
Management.
Based on the 2014 target achievement for the Group, the
business division/corporate functions and the qualitative per
formance, the total annual bonus awards ranged between 96 %
and 138 % of the target with an average bonus award of 121 % of
the target.
The performance of the Chairman of the Allianz SE Board of
Management is determined by the average target achievement
of the other Board of Management members and can be adjusted
by the Supervisory Board based on the Chairman’s personal per
formance.
− MTB (midterm): A deferred award which reflects the achieve
ment of the annual targets by accruing an amount identical to
the annual bonus. The payout of the award at the end of a three
year cycle is subject to a sustainability assessment for these
three years. The following criteria are considered:
− adjusted capital growth vs. planned development in
light of risk capital employed (adjusted capital essentially
represents the fair value of the shareholders’ equity),
− balance sheet strength,
− comparison with peers,
− “partner of choice” for stakeholders,
− extraordinary events.
ILLUSTRATION Of THE PROCESS AND THE UNDERLYING TIMELINE Of THE MTB CYCLE, fROM TARGET SETTING TO fINAL PERfORMANCE ASSESSMENT1
€ THOU
Sustainability criteria
setting for the three-year
performance period
Notional accruals
Max: 3,300
150 %
Accrual
650
Accrual
620
Accrual
930
Total 2,200
Accrual
650
Accrual
620
Accrual
930
Initial accrued
amounts
±
Sustainability
assessment
=
Final payout
Target:
2,200
Min: 0
0 %
20163
Dec 2012
20132
20142
20152
Sustainability criteria setting
Performance period
Sustainability assessment & payout
Year 1
Year 2
Year 3
1
2
Example based on target values of a regular member of the Board of Management with an annual target
of € 700 THOU for 2013 and € 750 THOU for the MTB in 2014 and 2015. Accrual is only a notional indication.
Actual accrual for the MTB (mid-term) usually equals the annual bonus payout of the respective financial
year. Since the performance assessment and the final payout occur after completion of the performance
cycle, this value is only a notional indication.
3
Final payout is subject to the sustainability assessment of the Supervisory Board and may vary between
0 % and 150 % of the cumulative target values independent of the notional accruals.
46
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
− Equityrelated remuneration (longterm): A virtual share award,
known as “Restricted Stock Units” (RSUs). The grant value of the
RSUs allocated equals the annual bonus of the performance year.
The number of RSUs allocated is derived from dividing the grant
value by the fair market value of an RSU at the time of grant.
The fair market value is calculated based on the tenday
average Xetra closing price of the Allianz stock following the
financial press conference on the annual results. As RSUs are
virtual stocks without dividend payments, the average Xetra
closing price is reduced1 by the net present value of the expected
future dividend payments during the vesting period. The
expected dividend stream is discounted with the respective
swap rates as of the valuation day.
Following the end of the four year vesting period, the com
pany makes a cash payment based on the number of RSUs granted
and the tenday average Xetra closing price of the Allianz stock
following the annual financial press conference in the year of
expiry of the respective RSU plan. The RSU payout is capped at
200 % above grant price to avoid extreme payouts2. Outstanding
RSU holdings are forfeited should a Board member leave at his/
her own request or be terminated for cause.
Variable remuneration components may not be paid, or payment
may be restricted in the case of a breach of the Allianz Code of Conduct,
risk limits or compliance requirements. Additionally, a reduction or
cancellation of variable remuneration may occur if the supervisory
authority (BaFin) requires this in accordance with its statutory powers.
Pensions and similar benefits
To provide competitive and costeffective retirement and disability
benefits Board of Management members have participated in a con
tributionbased system since 1 January 2005. Before this date, Board
members participated in a defined benefit plan that provided fixed
benefits not linked to base salary increases. Benefits generated under
this plan were frozen at the end of 2004. Additionally, most Board
members participate in the Allianz Versorgungskasse VVaG (AVK), a
contributionbased pension plan, and the Allianz Pensionsverein e.V.
(APV), which provide pension benefits for salaries up to the German
social security ceiling.
Company contributions to the current pension plan depend on
the years of service on the Board of Management. They are invested
in a fund with a guaranteed minimum interest rate per year. On
retirement, the accumulated capital is converted into a lifetime
annuity. Each year the Supervisory Board decides whether, and to
what extent, a budget is provided, also taking into account the tar
geted pension level. This budget includes a risk premium paid to
cover death and disability. The earliest age a pension can be drawn
is 60, except for cases of occupational or general disability for medical
reasons. In these cases, it may become payable earlier and an increase
by projection may apply. In the case of death, a pension may be paid
to dependents. Surviving dependents normally receive 60 % (surviving
partner) and 20 % (per child) of the original Board member’s pension,
with the aggregate not to exceed 100 %. Should Board membership
cease before retirement age for other reasons, the accrued pension
rights are maintained if vesting requirements are met.
Perquisites
Perquisites mainly consist of contributions to accident and liability
insurances and the provision of a company car. Perquisites are not
linked to performance. Each member of the Board of Management is
responsible for the income tax on these perquisites. The Supervisory
Board reviews regularly the level of perquisites.
1
2
The fair market value of the RSUs is further subject to a small reduction of a few Euro cents due to the
200 % cap on the RSU payout. This reduction is calculated based on a standard option price formula.
The relevant share price used to determine the final number of RSUs granted and the 200 % cap is only
available after sign-off by the external auditors.
Annual Report 2014
Allianz Group
47
To make the remuneration related to the performance year 2014
more transparent the column “actual grant” was added and includes
fixed compensation accrual bonus paid for 2014, the MTB 2013 – 2015
tranche accrued for performance year 2014 and the fair value of the
RSU grant in 2015 for the performance year 2014.
REMUNERATION fOR 2014
The following remuneration disclosure is based on and compliant
with the German Corporate Governance Code and illustrates indi
vidual remuneration for 2013 and 2014, including fixed and variable
remuneration and pension service cost. The “grant” column below
shows the remuneration at target, minimum and maximum levels.
The “payout” column discloses the 2013 and 2014 payments. The base
salary, annual bonus and perquisites are linked to the reported per
formance years 2013 and 2014, whereas the Group Equity Incentive
(GEI) payouts result from grants related to the performance years
2008 – 2010.
INDIVIDUAL REMUNERATION: 2014 AND 2013
€ THOU
Michael Diekmann (Appointed: 10/1998; CEO since 04/2003)
Oliver Bäte (Appointed: 01/2008)
Manuel Bauer (Appointed: 01/2011)
Base Salary
Perquisites
Total fixed compensation
Annual Variable Compensation – Annual Bonus
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Pensions Service Cost4
Total
Grant
2014
Target
1,280
24
1,304
1,280
1,280
1,280
–
–
–
–
–
5,144
998
6,142
Min
1,280
24
1,304
–
–
–
–
–
–
–
–
1,304
998
2,302
Max
1,280
24
1,304
1,920
1,920
1,920
–
–
–
–
–
7,064
998
8,062
2013
Target
1,280
2915
1,571
1,180
1,180
–
1,180
–
–
–
–
5,111
914
6,025
Actual
Grant
2014
1,280
24
1,304
1,546
1,546
1,546
–
–
–
–
–
5,943
998
6,941
Payout1
2013
2014
1,280
2915
1,571
1,581
–
–
–
–
408
–
911
4,471
914
5,385
1,280
24
1,304
1,546
–
–
–
963
–
376
–
4,189
998
5,187
1
2
3
In accordance with the German Corporate Governance Code, the annual bonus is disclosed for performance
year 2014. It was paid in 2015 and for performance year 2013 in 2014. The payments for equity-related
deferred compensation (GEI), however, are disclosed for the year in which the actual payment was made.
Payout is capped at 200 % above grant price. The relevant share price used to determine the final number
of RSUs granted and the 200 % cap is only available after sign-off by the external auditors.
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” (SARs). Only RSUs have been
awarded since 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. For SARs granted in 2009 and 2010, the vesting period is four years and the exercise period
three years. SARs can be exercised on 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 above the appreciation
of the Dow Jones EURO STOXX Price Index (600).
Grant
Actual
Grant
Payout1
Grant
Actual
Grant
Payout1
2013
2014
2014
2013
2014
2013
2014
2014
2013
2014
Target
Target
Target
Target
750
53
803
700
700
700
–
–
–
–
–
750
7
757
750
750
750
–
–
–
–
–
Min
750
7
757
–
–
–
–
–
–
–
–
Max
750
7
757
–
–
–
–
–
750
7
757
750
53
803
750
7
757
1,125
1,009
1,003
1,009
1,125
1,125
1,009
1,009
–
–
–
–
–
–
–
–
–
–
242
531
2,579
350
2,929
–
–
–
–
–
438
228
2,432
368
2,800
4
Pension Service Cost in accordance with IAS 19: represents the company cost, not the actual entitlement
or a payment. However, according to the German Corporate Governance Code, the Pension Service Cost
is to be included in all columns.
5
Michael Diekmann received a payment of € 267 THOU in 2013 for 25 years of service at Allianz.
700
16
716
700
700
700
–
–
–
–
–
750
15
765
750
750
750
–
–
–
–
–
Min
750
15
765
–
–
–
–
–
–
–
–
Max
750
15
765
1,125
1,125
1,125
–
–
–
–
–
750
15
765
778
778
778
–
–
–
–
–
700
16
716
927
–
–
–
–
–
–
–
750
15
765
778
–
–
–
–
–
–
–
2,903
350
3,253
3,007
368
3,375
757
368
1,125
4,132
368
4,500
3,783
368
4,151
2,816
298
3,114
3,015
317
3,332
765
317
1,082
4,140
317
4,457
3,100
317
3,417
1,643
298
1,941
1,543
317
1,860
48
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
INDIVIDUAL REMUNERATION: 2014 AND 2013
Annual Variable Compensation – Annual Bonus
Base Salary
Perquisites
Total fixed compensation
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Total
Pensions Service Cost4
€ THOU
Michael Diekmann (Appointed: 10/1998; CEO since 04/2003)
Oliver Bäte (Appointed: 01/2008)
Manuel Bauer (Appointed: 01/2011)
Grant
2014
Min
1,280
24
1,304
Target
1,280
24
1,304
1,280
1,280
1,280
–
–
–
–
–
Max
1,280
24
1,304
1,920
1,920
1,920
–
–
–
–
–
–
–
–
–
–
–
–
–
Actual
Grant
2014
1,280
24
1,304
1,546
1,546
1,546
–
–
–
–
–
5,144
998
6,142
1,304
998
2,302
7,064
998
8,062
5,943
998
6,941
2013
Target
1,280
2915
1,571
1,180
1,180
1,180
–
–
–
–
–
5,111
914
6,025
Payout1
2013
2014
1,280
2915
1,571
1,581
–
–
–
–
–
408
911
4,471
914
5,385
1,280
24
1,304
1,546
–
–
–
–
–
963
376
4,189
998
5,187
Grant
Actual
Grant
Payout1
Grant
Actual
Grant
Payout1
2013
2014
2014
2013
2014
2013
2014
2014
2013
2014
Target
Target
750
53
803
700
700
–
700
–
–
–
–
2,903
350
3,253
750
7
757
750
750
750
–
–
–
–
–
3,007
368
3,375
Min
750
7
757
Max
750
7
757
750
7
757
750
53
803
750
7
757
–
1,125
1,009
1,003
1,009
–
–
–
–
–
–
–
757
368
1,125
1,125
1,125
–
–
–
–
–
4,132
368
4,500
1,009
1,009
–
–
–
–
–
3,783
368
4,151
–
–
–
–
242
–
531
2,579
350
2,929
–
–
–
438
–
228
–
2,432
368
2,800
Target
Target
700
16
716
700
700
–
700
–
–
–
–
2,816
298
3,114
750
15
765
750
750
750
–
–
–
–
–
3,015
317
3,332
Min
750
15
765
Max
750
15
765
–
1,125
–
–
–
–
–
–
–
765
317
1,082
1,125
1,125
–
–
–
–
–
4,140
317
4,457
750
15
765
778
778
778
–
–
–
–
–
3,100
317
3,417
700
16
716
927
–
–
–
–
–
–
–
1,643
298
1,941
750
15
765
778
–
–
–
–
–
–
–
1,543
317
1,860
1
In accordance with the German Corporate Governance Code, the annual bonus is disclosed for performance
the GEI/SAR grants are exercised by the Board member within the exercise period following the vesting
year 2014. It was paid in 2015 and for performance year 2013 in 2014. The payments for equity-related
date. Hence, the total payout from SARs depends on the individual decision by the Board member. SARs
deferred compensation (GEI), however, are disclosed for the year in which the actual payment was made.
are released to plan participants upon expiry of the vesting period, assuming all other exercise hurdles
2
Payout is capped at 200 % above grant price. The relevant share price used to determine the final number
are met. For SARs granted until and including 2008, the vesting period was two years and the exercise
of RSUs granted and the 200 % cap is only available after sign-off by the external auditors.
period five years. For SARs granted in 2009 and 2010, the vesting period is four years and the exercise period
3
The equity-related remuneration that applied before 2010 consisted of two vehicles: virtual stock awards
three years. SARs can be exercised on condition that the price of the Allianz SE stock is at least 20 % above
known as RSUs and virtual stock options known as “Stock Appreciation Rights” (SARs). Only RSUs have been
the strike price at the time of grant. During the term of the plan, at least once on five consecutive trading
awarded since 2010. The remuneration system valid until December 2009 is disclosed in the Annual Report
days the Allianz SE stock must relatively appreciate at least 0.01 percentage points above the appreciation
2009 (starting on page 17). Whereas the GEI/RSU grants are automatically exercised at the vesting date,
of the Dow Jones EURO STOXX Price Index (600).
4
5
Pension Service Cost in accordance with IAS 19: represents the company cost, not the actual entitlement
or a payment. However, according to the German Corporate Governance Code, the Pension Service Cost
is to be included in all columns.
Michael Diekmann received a payment of € 267 THOU in 2013 for 25 years of service at Allianz.
Annual Report 2014
Allianz Group
49
INDIVIDUAL REMUNERATION: 2014 AND 2013
€ THOU
Base Salary
Perquisites
Total fixed compensation
Annual Variable Compensation – Annual Bonus
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Pensions Service Cost4
Total
Gary Bhojwani5 (Appointed: 01/2012)
Clement Booth6 (Appointed: 01/2006)
Dr. Helga Jung (Appointed: 01/2012)
Grant
2013
2014
Target
Target
700
70
770
700
700
–
700
–
–
–
–
2,870
196
3,066
750
40
790
750
750
750
–
–
–
–
–
3,040
210
3,250
Min
750
40
790
Max
750
40
790
–
1,125
–
–
–
–
–
–
–
790
210
1,000
1,125
1,125
–
–
–
–
–
4,165
210
4,375
Actual
Grant
2014
750
40
790
718
718
718
–
–
–
–
–
2,945
210
3,155
Payout1
2013
2014
700
70
770
942
–
–
–
–
–
–
–
1,712
196
1,908
750
40
790
718
–
–
–
–
–
–
–
1,508
210
1,718
€ THOU
Dr. Christof Mascher (Appointed: 09/2009)
Jay Ralph (Appointed: 01/2010)
Dr. Dieter Wemmer (Appointed: 01/2012)
Base Salary
Perquisites
Total fixed compensation
Annual Variable Compensation – Annual Bonus
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Pensions Service Cost4
Total
Grant
2013
2014
Target
Target
700
27
727
700
700
–
700
–
–
–
–
2,827
304
3,131
750
1627
912
750
750
750
–
–
–
–
–
3,162
339
3,501
Min
750
1627
912
Max
750
1627
912
–
1,125
–
–
–
–
–
–
–
912
339
1,251
1,125
1,125
–
–
–
–
–
4,287
339
4,626
Actual
Grant
2014
750
1627
912
907
907
907
–
–
–
–
–
3,633
339
3,972
Payout1
2013
2014
700
27
727
899
–
–
–
–
1658
–
–
1,791
304
2,095
750
1627
912
907
–
–
–
–
–
1318
–
1,950
339
2,289
Grant
Actual
Grant
Payout1
Grant
Actual
Grant
Payout1
2013
2014
2014
2013
2014
2013
2014
2014
2013
2014
Target
Target
Target
Target
2,935
410
3,345
3,054
444
3,498
804
444
1,248
4,179
444
4,623
3,915
444
4,359
2,814
279
3,093
3,014
302
3,316
764
302
1,066
4,139
302
4,441
3,052
302
3,354
1,618
279
1,897
1,527
302
1,829
Min
750
54
804
Max
750
54
804
1,125
1,037
1,125
1,125
1,037
1,037
–
–
–
–
–
750
85
835
700
700
700
–
–
–
–
–
700
28
728
700
700
700
–
–
–
–
–
750
54
804
750
750
750
–
–
–
–
–
750
30
780
750
750
750
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Min
750
30
780
Max
750
30
780
1,125
1,125
1,125
–
–
–
–
–
750
54
804
–
–
–
–
–
750
30
780
912
912
912
–
–
–
–
–
750
85
835
945
–
–
–
–
–
299
531
2,610
410
3,020
700
28
728
948
–
–
–
–
–
–
–
750
54
804
1,037
–
–
–
–
–
–
307
2,148
444
2,592
750
30
780
912
–
–
–
–
–
–
–
700
14
714
700
700
700
–
–
–
–
–
700
14
714
700
700
700
–
–
–
–
–
750
14
764
750
750
750
–
–
–
–
–
750
17
767
750
750
750
–
–
–
–
–
Min
750
14
764
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Min
750
17
767
Max
750
14
764
1,125
1,125
1,125
–
–
–
–
–
Max
750
17
767
1,125
1,125
1,125
–
–
–
–
–
750
14
764
763
763
763
–
–
–
–
–
750
17
767
996
996
996
–
–
–
–
–
700
14
714
904
–
–
–
–
–
–
–
700
14
714
978
–
–
–
–
–
–
–
750
14
764
763
–
–
–
–
–
–
–
750
17
767
996
–
–
–
–
–
–
–
Grant
Actual
Grant
Payout1
Grant
Actual
Grant
Payout1
2013
2014
2014
2013
2014
2013
2014
2014
2013
2014
Target
Target
Target
Target
2,828
236
3,064
3,030
254
3,284
780
254
1,034
4,155
254
4,409
3,515
254
3,769
1,676
236
1,912
1,692
254
1,946
2,814
230
3,044
3,017
249
3,266
767
249
1,016
4,142
249
4,391
3,756
249
4,005
1,692
230
1,922
1,763
249
2,012
1
2
3
In accordance with the German Corporate Governance Code, the annual bonus is disclosed for performance
year 2014. It was paid in 2015 and for performance year 2013 in 2014. The payments for equity-related
deferred compensation (GEI), however, are disclosed for the year in which the actual payment was made.
Payout is capped at 200 % above grant price. The relevant share price used to determine the final number
of RSUs granted and the 200 % cap is only available after sign-off by the external auditors.
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” (SARs). Only RSUs have been
awarded since 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. For SARs granted in 2009 and 2010, the vesting period is four years and the exercise period
three years. SARs can be exercised on 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 above the appreciation
of the Dow Jones EURO STOXX Price Index (600).
4
Pension Service Cost in accordance with IAS 19: represents the company cost, not the actual entitlement
6
Clement Booth retired on 31 December 2014. According to his service contract, he will receive his fixed
or a payment. However, according to the German Corporate Governance Code, the Pension Service Cost
salary of € 62.5 THOU per month for a period of 6 months from July 2015 as a transition payment which will
is to be included in all columns.
be set off against the regular pension payment. As part of the transition payment, he will receive 25 % of
5
Gary Bhojwani’s base salary and variable compensation is denominated in USD. The contractually agreed
the annual variable target compensation (€ 562.5 THOU) in spring 2016.
USD/€ exchange rate of 1.347910 (2011 fourth quarter average) was applied. According to his cancellation
Dr. Christof Mascher received a payment of € 156 THOU in 2014 for 25 years of service at Allianz.
agreement, Gary Bhojwani received a payment of € 3,750 THOU in January 2015 for his remaining term of
Dr. Christof Mascher joined the Board of Management in September 2009. His payout from the GEI 2009
7
8
contract (until 31 December 2016). His variable remuneration components for 2014 and the pro rata MTB
plans are shown pro rata temporis.
(2013 – 2015) will be paid out according to plan conditions. He does not receive pension contributions into
the Allianz SE pension plans, but only under his Allianz of America employment agreement.
50
Annual Report 2014
Allianz Group
INDIVIDUAL REMUNERATION: 2014 AND 2013
€ THOU
Annual Variable Compensation – Annual Bonus
Base Salary
Perquisites
Total fixed compensation
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Total
Pensions Service Cost4
Base Salary
Perquisites
Total fixed compensation
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Total
Pensions Service Cost4
Annual Variable Compensation – Annual Bonus
Grant
2013
2014
Target
Target
Actual
Grant
2014
Payout1
2013
2014
Min
750
40
790
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Min
750
1627
912
Max
750
40
790
1,125
1,125
1,125
–
–
–
–
–
Max
750
1627
912
1,125
1,125
1,125
–
–
–
–
–
750
40
790
718
718
718
–
–
–
–
–
750
1627
912
907
907
907
–
–
–
–
–
750
40
790
750
750
750
–
–
–
–
–
750
1627
912
750
750
750
–
–
–
–
–
700
70
770
700
700
700
–
–
–
–
–
700
27
727
700
700
700
–
–
–
–
–
2,870
196
3,066
3,040
210
3,250
790
210
1,000
4,165
210
4,375
2,945
210
3,155
1,712
196
1,908
1,508
210
1,718
Grant
2013
2014
Target
Target
Actual
Grant
2014
Payout1
2013
2014
700
70
770
942
–
–
–
–
–
–
–
700
27
727
899
–
–
–
–
–
–
1658
750
40
790
718
–
–
–
–
–
–
–
750
1627
912
907
–
–
–
–
–
–
1318
1,950
339
2,289
2,827
304
3,131
3,162
339
3,501
912
339
1,251
4,287
339
4,626
3,633
339
3,972
1,791
304
2,095
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
Gary Bhojwani5 (Appointed: 01/2012)
Clement Booth6 (Appointed: 01/2006)
Dr. Helga Jung (Appointed: 01/2012)
Grant
Actual
Grant
Payout1
Grant
Actual
Grant
Payout1
2013
2014
2014
2013
2014
2013
2014
2014
2013
2014
Target
Target
750
85
835
700
700
–
700
–
–
–
–
2,935
410
3,345
750
54
804
750
750
750
–
–
–
–
–
3,054
444
3,498
Min
750
54
804
Max
750
54
804
750
54
804
–
1,125
1,037
–
–
–
–
–
–
–
804
444
1,248
1,125
1,125
–
–
–
–
–
4,179
444
4,623
1,037
1,037
–
–
–
–
–
3,915
444
4,359
750
85
835
945
–
–
–
–
299
–
531
2,610
410
3,020
750
54
804
1,037
–
–
–
–
–
307
–
2,148
444
2,592
Target
Target
700
14
714
700
700
–
700
–
–
–
–
2,814
279
3,093
750
14
764
750
750
750
–
–
–
–
–
3,014
302
3,316
Min
750
14
764
Max
750
14
764
–
1,125
–
–
–
–
–
–
–
764
302
1,066
1,125
1,125
–
–
–
–
–
4,139
302
4,441
750
14
764
763
763
763
–
–
–
–
–
3,052
302
3,354
700
14
714
904
–
–
–
–
–
–
–
1,618
279
1,897
750
14
764
763
–
–
–
–
–
–
–
1,527
302
1,829
€ THOU
Dr. Christof Mascher (Appointed: 09/2009)
Jay Ralph (Appointed: 01/2010)
Dr. Dieter Wemmer (Appointed: 01/2012)
Grant
Actual
Grant
Payout1
Grant
Actual
Grant
Payout1
2013
2014
2014
2013
2014
2013
2014
2014
2013
2014
Target
Target
700
28
728
700
700
–
700
–
–
–
–
2,828
236
3,064
750
30
780
750
750
750
–
–
–
–
–
3,030
254
3,284
Min
750
30
780
Max
750
30
780
–
1,125
–
–
–
–
–
–
–
780
254
1,034
1,125
1,125
–
–
–
–
–
4,155
254
4,409
750
30
780
912
912
912
–
–
–
–
–
3,515
254
3,769
700
28
728
948
–
–
–
–
–
–
–
1,676
236
1,912
750
30
780
912
–
–
–
–
–
–
–
1,692
254
1,946
Target
Target
700
14
714
700
700
–
700
–
–
–
–
2,814
230
3,044
750
17
767
750
750
750
–
–
–
–
–
3,017
249
3,266
Min
750
17
767
Max
750
17
767
–
1,125
–
–
–
–
–
–
–
767
249
1,016
1,125
1,125
–
–
–
–
–
4,142
249
4,391
750
17
767
996
996
996
–
–
–
–
–
3,756
249
4,005
700
14
714
978
–
–
–
–
–
–
–
1,692
230
1,922
750
17
767
996
–
–
–
–
–
–
–
1,763
249
2,012
1
In accordance with the German Corporate Governance Code, the annual bonus is disclosed for performance
the GEI/SAR grants are exercised by the Board member within the exercise period following the vesting
year 2014. It was paid in 2015 and for performance year 2013 in 2014. The payments for equity-related
date. Hence, the total payout from SARs depends on the individual decision by the Board member. SARs
deferred compensation (GEI), however, are disclosed for the year in which the actual payment was made.
are released to plan participants upon expiry of the vesting period, assuming all other exercise hurdles
2
Payout is capped at 200 % above grant price. The relevant share price used to determine the final number
are met. For SARs granted until and including 2008, the vesting period was two years and the exercise
of RSUs granted and the 200 % cap is only available after sign-off by the external auditors.
period five years. For SARs granted in 2009 and 2010, the vesting period is four years and the exercise period
3
The equity-related remuneration that applied before 2010 consisted of two vehicles: virtual stock awards
three years. SARs can be exercised on condition that the price of the Allianz SE stock is at least 20 % above
known as RSUs and virtual stock options known as “Stock Appreciation Rights” (SARs). Only RSUs have been
the strike price at the time of grant. During the term of the plan, at least once on five consecutive trading
awarded since 2010. The remuneration system valid until December 2009 is disclosed in the Annual Report
days the Allianz SE stock must relatively appreciate at least 0.01 percentage points above the appreciation
2009 (starting on page 17). Whereas the GEI/RSU grants are automatically exercised at the vesting date,
of the Dow Jones EURO STOXX Price Index (600).
4
5
Pension Service Cost in accordance with IAS 19: represents the company cost, not the actual entitlement
or a payment. However, according to the German Corporate Governance Code, the Pension Service Cost
is to be included in all columns.
Gary Bhojwani’s base salary and variable compensation is denominated in USD. The contractually agreed
USD/€ exchange rate of 1.347910 (2011 fourth quarter average) was applied. According to his cancellation
agreement, Gary Bhojwani received a payment of € 3,750 THOU in January 2015 for his remaining term of
contract (until 31 December 2016). His variable remuneration components for 2014 and the pro rata MTB
(2013 – 2015) will be paid out according to plan conditions. He does not receive pension contributions into
the Allianz SE pension plans, but only under his Allianz of America employment agreement.
6
7
8
Clement Booth retired on 31 December 2014. According to his service contract, he will receive his fixed
salary of € 62.5 THOU per month for a period of 6 months from July 2015 as a transition payment which will
be set off against the regular pension payment. As part of the transition payment, he will receive 25 % of
the annual variable target compensation (€ 562.5 THOU) in spring 2016.
Dr. Christof Mascher received a payment of € 156 THOU in 2014 for 25 years of service at Allianz.
Dr. Christof Mascher joined the Board of Management in September 2009. His payout from the GEI 2009
plans are shown pro rata temporis.
Annual Report 2014
Allianz Group
51
INDIVIDUAL REMUNERATION: 2014 AND 2013
€ THOU
Dr. Werner Zedelius (Appointed: 01/2002)
Grant
2013
2014
Base Salary
Perquisites
Total fixed compensation
Annual Variable Compensation – Annual Bonus
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Pensions Service Cost4
Total
Target
Target
750
16
766
700
700
–
700
–
–
–
–
2,866
527
3,393
750
17
767
750
750
750
–
–
–
–
–
3,017
576
3,593
Actual
Grant
2014
750
17
767
Min
750
17
767
Max
750
17
767
–
1,125
1,032
–
–
–
–
–
–
–
767
576
1,343
1,125
1,125
–
–
–
–
–
4,142
576
4,718
1,032
1,032
–
–
–
–
–
3,864
576
4,440
€ THOU
Dr. Maximilian Zimmerer (Appointed: 06/2012)
Base Salary
Perquisites
Total fixed compensation
Annual Variable Compensation – Annual Bonus
Deferred Compensation
MTB (2013 – 2015)
AEI 2015/RSU2
AEI 2014/RSU2
GEI 2010/SAR3
GEI 2009/SAR3
GEI 2009/RSU2,3
GEI 2008/RSU2,3
Total
Pensions Service Cost4
Total
Grant
2013
2014
Target
Target
700
1505
850
700
700
–
700
–
–
–
–
2,950
369
3,319
750
10
760
750
750
750
–
–
–
–
–
3,010
409
3,419
Min
750
10
760
Max
750
10
760
–
1,125
–
–
–
–
–
–
–
760
409
1,169
1,125
1,125
–
–
–
–
–
4,135
409
4,544
Actual
Grant
2014
750
10
760
909
909
909
–
–
–
–
–
3,487
409
3,896
Payout1
2013
2014
750
16
766
910
–
–
–
–
1,272
–
664
3,612
527
4,139
750
17
767
1,032
–
–
–
187
–
1,048
–
3,034
576
3,610
Payout1
2013
2014
700
1505
850
924
–
–
–
–
–
–
–
1,774
369
2,143
750
10
760
909
–
–
–
–
–
–
–
1,669
409
2,078
1
2
3
In accordance with the German Corporate Governance Code, the annual bonus is disclosed for performance
year 2014. It was paid in 2015 and for performance year 2013 in 2014. The payments for equity-related
deferred compensation (GEI), however, are disclosed for the year in which the actual payment was made.
Payout is capped at 200 % above grant price. The relevant share price used to determine the final number
of RSUs granted and the 200 % cap is only available after sign-off by the external auditors.
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” (SARs). Only RSUs have been
awarded since 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. For SARs granted 2009 and 2010, the vesting period is four years and the exercise period
three 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).
Pension Service Cost in accordance with IAS 19: represents the company cost, not the actual entitlement
nor a payment, however, according to the German Corporate Governance Code, the Pension Service Cost
is to be included in all columns.
Dr. Maximilian Zimmerer received a payment of € 146 THOU in 2013 for 25 years of service at Allianz.
4
5
52
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
GERMAN ACCOUNTING STANDARD 17 DISCLOSURE
The total remuneration to be disclosed in accordance with German
Accounting Standard 17 for 2014 and 2013 (in parentheses) is defined
differently than in the German Corporate Governance Code and is
composed of the base salary, perquisites, annual bonus and the fair
value of the RSU grant, but excludes the notional annual accruals of
the MTB 2013 – 2015 and the pension service cost:
Michael Diekmann € 4,397 (4,734) THOU,
Oliver Bäte € 2,774 (2,808) THOU,
Manuel Bauer € 2,322 (2,570) THOU,
Gary Bhojwani1 € 2,227 (2,655) THOU,
Clement Booth € 2,878 (2,725) THOU,
Dr. Helga Jung € 2,290 (2,522) THOU,
Dr. Christof Mascher € 2,726 (2,524) THOU,
Jay Ralph € 2,603 (2,623) THOU,
Dr. Dieter Wemmer € 2,760 (2,671) THOU,
Dr. Werner Zedelius € 2,831 (2,587) THOU,
Dr. Maximilian Zimmerer € 2,578 (2,698) THOU.
The sum of the total remuneration of the Board of Management for
2014, excluding the notional accruals of the MTB 2013 – 2015 and
excluding the pension service cost, amounts to € 30 MN (2013: € 31 MN).
The corresponding amount, including pension service cost, equals
€ 35 MN (2013: € 35 MN).
EqUITY-RELATED REMUNERATION
In accordance with the approach described earlier, a number of RSUs
were granted to each member of the Board of Management in March
2015 which will vest and be settled in 2019.
GRANTS, OUTSTANDING HOLDINGS AND EqUITY COMPENSATION ExPENSE UNDER THE ALLIANz EqUITY PROGRAM
Board members
Michael Diekmann (Chairman)
Oliver Bäte
Manuel Bauer
Gary Bhojwani3
Clement Booth
Dr. Helga Jung
Dr. Christof Mascher
Jay Ralph
Dr. Dieter Wemmer
Dr. Werner Zedelius
Dr. Maximilian Zimmerer
Total
RSU
Number of RSU
granted on
3/12/20151
12,889
8,405
6,487
6,459
8,643
6,357
7,560
7,598
8,303
8,603
7,576
SAR
Number of RSU
held at
12/31/20141
Number of SAR
held at
12/31/2014
Strike Price Range
€
Equity Compensation
2
Expense 2014
€ THOU
76,439
47,728
32,250
49,135
46,482
26,089
41,280
43,388
20,652
45,164
30,344
17,930
10,459
9,375
5,039
26,031
5,707
13,869
16,493
–
23,074
11,705
139,682
117.38
117.38
87.36 –117.38
117.38
87.36 – 117.38
87.36 – 117.38
87.36 – 117.38
87.36 – 117.38
–
87.36 – 117.38
87.36 – 117.38
2,828
1,633
1,185
1,701
1,790
966
1,531
1,625
746
2,471
1,152
–
17,628
88,880
458,951
1
The relevant share price used to determine the final number of RSUs granted is only available after sign-off
of the Annual Report by the external auditors, thus numbers are based on a best estimate. As disclosed
in the Annual Report 2013, the equity-related grant in 2014 was made to participants as part of their 2013
remuneration. The disclosure in the Annual Report 2013 was based on a best estimate of the RSU grants.
The actual grants deviated from the estimated values and have to be disclosed accordingly. The actual
RSU grants as of 13 March 2014 under the Allianz equity program are as follows: Michael Diekmann: 15,384,
Oliver Bäte: 9,756, Manuel Bauer: 9,020, Gary Bhojwani: 9,079, Clement Booth: 9,194, Dr. Helga Jung: 8,794,
Dr. Christof Mascher: 8,744, Jay Ralph: 9,220, Dr. Dieter Wemmer: 9,517, Dr. Werner Zedelius: 8,858,
Dr. Maximilian Zimmerer: 8,993.
2
3
Grants of equity-related remuneration are accounted for as cash settled awards. The fair value of the
granted RSUs and SARs is remeasured at each reporting date and accrued as a compensation expense
proportionately over the vesting and service period. Upon vesting, any subsequent changes in the fair
value of the unexercised SARs are also recognized as a compensation expense.
Gary Bhojwani’s RSU grant will be based on his annual bonus amount of € 718 THOU. The number of RSUs
will be calculated in line with the process for other USD participants by application of the 2014 fourth
quarter average USD/€ exchange rate of 1.24938.
1
Gary Bhojwani’s total remuneration is denominated in USD. The contractually agreed USD/€ exchange
rate of 1.347910 (2011 fourth quarter average) was applied.
Annual Report 2014
Allianz Group
53
The Allianz Group paid € 4 MN (2013: € 4 MN) to increase reserves
for pensions and similar benefits for active members of the Board of
Management. As of 31 December 2014, reserves for pensions and
similar benefits for active members of the Board of Management
amounted to € 56 MN (2013: € 41 MN). This increase is predominantly
a result of the significant decrease in interest rates.
PENSIONS
Company contributions in the current plan remained unchanged
from 2013 and are 27.98 % of base salary, increasing to 34.98 % after five
years and to 41.98 % after ten years of service on the Board of Manage
ment. These are invested in a fund and have a minimum guaranteed
interest rate of 2.75 % each year. If the net annual return of the AVK
exceeds 2.75 %, the full increase in value is credited in the same year.
For members with pension rights in the frozen defined benefit plan,
the above contribution rates are reduced by an amount equivalent to
19 % of the expected annual pension from that plan.
INDIVIDUAL PENSIONS: 2014 AND 2013
Total might not sum up due to rounding
€ THOU
Board members
Michael Diekmann
(Chairman)
Oliver Bäte
Manuel Bauer
Gary Bhojwani7
Clement Booth
Dr. Helga Jung
Dr. Christof Mascher
Jay Ralph
Dr. Dieter Wemmer
Dr. Werner Zedelius
Dr. Maximilian Zimmerer
Defined benefit pension plan
(frozen)1
Current pension plan
AVK/APV2
Transition
payment3
Total
Annual
pension
payment4
337
337
–
–
57
57
164 8
243
–
–
62
62
–
–
–
–
–
–
225
225
161
161
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
SC5
DBO6
SC5
DBO6
SC5
DBO6
SC5
DBO6
SC5
DBO6
306
285
–
–
58
54
–
–
–
–
43
40
–
–
–
–
–
–
170
157
118
108
9,963
7,527
–
–
1,678
1,261
1189
109
–
–
1,175
806
–
–
–
–
–
–
5,700
4,128
3,869
2,759
577
585
322
318
249
234
21010
196
321
325
251
231
273
253
251
233
247
228
350
346
232
212
6,373
4,867
2,722
1,839
1,818
1,306
–
–
3,452
2,655
1,629
1,099
2,802
2,035
1,618
1,086
905
509
3,823
2,866
2,524
1,877
10
9
3
3
9
9
–
–
3
3
9
9
3
3
3
3
2
2
10
9
9
9
253
192
26
16
162
120
–
–
54
19
221
152
29
19
17
10
9
3
268
194
264
188
105
35
44
29
–
–
–
–
120
82
–
–
63
49
–
–
–
–
47
15
49
39
1,278
1,114
284
194
–
1
–
–
851
693
–
–
453
337
1
1
1
1
618
522
627
522
998
914
368
350
317
298
210
196
444
410
302
279
339
304
254
236
249
230
576
527
409
369
17,867
13,699
3,032
2,049
3,658
2,688
118
109
4,357
3,367
3,025
2,057
3,284
2,392
1,635
1,096
915
513
10,409
7,709
7,285
5,346
1
2
3
4
5
6
For Gary Bhojwani the frozen Allianz Retirement Plan (ARP) and the frozen Supplemental Retirement Plan
(SRP).
Plan participants contribute 3 % of their relevant salary to the AVK. For the AVK the minimum guaranteed
interest rate is 2.75 % – 3.50 % depending on the date of joining Allianz. In general, the company funds the
balance required via the APV. Before Allianz’s founding of the APV in 1998, both Allianz and the plan par-
ticipants were contributing to the AVK.
For details on the transition payment, see section termination of service. In any event a death benefit is
included.
Expected annual pension payment at assumed retirement age (age 60), excluding current pension plan.
SC = service cost. Service costs are calculatory costs for the DBO related to the reported business year.
DBO = defined benefit obligation, end of year. The figures show the obligation for Allianz resulting from
defined benefit plans taking into account realistic assumptions with regard to interest rate, dynamics and
biometric probabilities.
7
8
9
10
Gary Bhojwani only holds pension plans subject to his Allianz of America employment agreement,
denominated in USD. All amounts in the table are € amounts derived by applying the contractually
agreed USD/€ exchange rate of 1.347910. The Allianz Retirement Plan (ARP) and the Supplemental Retire-
ment Plan (SRP) are two completely frozen DB plans, i.e. there are no future accruals in these plans.
Current pension plans for Gary Bhojwani include the Deferred Compensation Plan (DCP) and the 401(k)
plan. Both current plans are defined contribution plans. Their contributions are included in the table.
In the ARP he can choose between a lump sum payment or an annuity. The lump sum benefit amount
projected with actual interest rates is USD 120 THOU (2013: USD 120 THOU) and likely to change when he
retires. Following his termination effective 31 December 2014, he receives in the SRP a payment of total
USD 101 THOU in three annual installments of USD 33.7 THOU in January 2015, 2016 and 2017.
The DBO for the ARP is USD 58 THOU (2013: USD 54 THOU) and for the SRP USD 101 THOU (2013: USD 93 THOU).
The contribution for the DCP is USD 265 THOU (2013: USD 246 THOU) and to the 401(k) plan USD 18 THOU
(2013: USD 18 THOU). There is no DBO as both plans are DC plans.
54
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
In 2014, remuneration and other benefits totaling € 6 MN (2013: € 9 MN)
were paid to former members of the Board of Management and
dependents, while reserves for current pension obligations and
accrued pension rights totaled € 102 MN (2013: € 100 MN).
LOANS TO MEMBERS Of THE BOARD Of MANAGEMENT
As of 31 December 2014, there were no outstanding loans granted by
Allianz Group companies to members of the Board of Management.
TERMINATION Of SERVICE
Board of Management contracts are limited to a period of five years.
For new appointments, in compliance with the German Corporate
Governance Code, a shorter period is typical.
Arrangements for termination of service including retirement are as
follows:
Termination of service –
details of the payment arrangements
Transition payment (appointment before 1 January 2010)
Board members receiving a transition payment are subject to a six
months noncompete clause.
The payment is calculated based on the last base salary (paid for
a period of six months) and 25 % of the target variable remuneration
at the date when notice is given. A Board member with a base salary
of € 750 THOU would receive a maximum of € 937.5 THOU.
An Allianz pension, where immediately payable, is taken into
account in adjusting transition payment amounts.
Severance payment cap
Payments to Board members for early termination with a remaining
term of contract of more than two years are capped at two years’ com
pensation.
1. Board members who were appointed before 1 January 2010 – and
who have served a term of at least five years – are eligible for a six
month transition payment after leaving the Board of Management.
Whereby the annual compensation:
1. is calculated on the basis of the previous year’s annual base
salary plus 50 % of the target variable remuneration (for a Board
member with a fixed base salary of € 750 THOU, the annual com
pensation would amount to € 1,875 THOU; hence, he/she would
receive a maximum severance payment of € 3,750 THOU); and
2. shall not exceed the latest year’s actual total compensation.
In case the remaining term of contract is less than two years the pay
ment is prorated according to the remaining term of the contract.
Change of control
In case of early termination as a result of a change of control, sever
ance payments made to Board members generally amount to three
years’ compensation (annual compensation as defined above) and
shall not exceed 150 % of the severance payment cap (a Board mem
ber with a base salary of € 750 THOU would receive a maximum of
€ 5,625 THOU). Consequently, the payout is less than two years’ total
remuneration at target (which would be € 6,000 THOU).
2. Severance payments made to Board members in case of an early
termination comply with the German Corporate Governance Code.
3. Special terms, also compliant with the German Corporate Gover
nance Code, apply if service is ended as a result of a “change of
control”. This requires that a shareholder of Allianz SE, acting alone
or together with other shareholders, holds more than 50 % of voting
rights in Allianz SE. Termination as a result of a change of control
occurs
if within twelve months after a change of control
a. the Management Board appointment is unilaterally revoked by
the Supervisory Board, or
b. the Board member resigns due to a substantial decrease in man
agerial responsibilities and without giving cause for termination,
or
c. a Management Board appointment is terminated by mutual
agreement, or
if the mandate expires and is not renewed within two years of the
change of control.
Contracts do not contain provisions for any other cases of early ter
mination from the Board of Management.
Board members who were appointed before 1 January 2011 are eli
gible to use a company car for a period of one year after their retirement.
Annual Report 2014
Allianz Group
55
MISCELLANEOUS
Remuneration of the Supervisory Board
Internal and external Board appointments
When a member of the Board of Management holds an appointment
in another company within the Allianz Group, the full remuneration
amount is transferred to Allianz SE. In recognition of the benefits to
the organization, Board of Management members are allowed to
accept a limited number of nonexecutive supervisory roles in appro
priate external organizations. In these cases, 50 % of the remunera
tion received is paid to Allianz SE. A Board member retains the full
remuneration only when the Supervisory Board qualifies the appoint
ment as a personal one. Remuneration paid by external organizations
is shown in the annual reports of the companies concerned. The
remuneration relating to the external appointment is set by the gov
erning body of the relevant organization.
OUTLOOK fOR 2015
The Supervisory Board approved the following changes to the remu
neration of the Board of Management in December 2014:
− The remuneration of the new regular members of the Board of
Management, Mr. Sergio Balbinot and Dr. Axel Theis, has been
set at the same level as for the other regular members of the
Board of Management.
− The base salary for Oliver Bäte continues to be € 750 THOU until
and including 6 May 2015 and is set at € 1,125 from 7 May 2015,
when he will become the new Chief Executive Officer of Allianz SE.
The target amounts for each of the variable components are
aligned with the base salary.
− A new pension system called “My Allianz Pension” has been
introduced for new entrants beginning as of 1 January 2015 with
a guarantee for the contributions paid, but no interest guaran
tee. In addition, the new system allows for more flexibility, for
example a lumpsum payment. For members of the Board of
Management with existing grandfathered pension plans who
were born after 31 December 1957, elements of the new pension
plan are adopted as far as possible, mainly with respect to future
service. In addition, for such Board of Management members,
the relevant age for pension and retirement was raised to 62. The
new pension plan is not applicable to those who were born
before 1 January 1958. However, they are now also eligible for a
lumpsum payment.
− The pension contributions as a percentage of base salary paid by
the company to the contributionbased pension plan remain
unchanged.
The remuneration of the Supervisory Board is governed by the Statutes
of Allianz SE and the German Stock Corporation Act. The structure of
the Supervisory Board’s remuneration is regularly reviewed with
respect to German, European and international corporate gover
nance recommendations and regulations.
REMUNERATION PRINCIPLES
− Set total remuneration at a level aligned with the scale and
scope of the Supervisory Board’s duties and appropriate to the
company’s activities and business and financial situation.
− Set a remuneration structure that takes into account the indi
vidual functions and responsibilities of Supervisory Board mem
bers, such as chair, vicechair or committee mandates.
− Set a remuneration structure to allow for proper oversight of
business as well as for adequate decisions on executive personnel
and remuneration.
REMUNERATION STRUCTURE AND COMPONENTS
The remuneration structure, which comprises fixed and committee
related remuneration only, was approved by the Annual General
Meeting 2011 and is laid down in the Statutes of Allianz SE.
Fixed annual remuneration
The remuneration of a Supervisory Board member consists of a fixed
cash amount paid after the end of each business year for services
rendered over that period. As in 2013, a regular Supervisory Board
member receives a fixed remuneration of € 100 THOU per year. Each
deputy Chairperson receives € 150 THOU and the Chairperson
€ 200 THOU.
Committee-related remuneration
The Chairperson and members of the Supervisory Board committees
receive additional committeerelated remuneration. The committee
related remuneration is as follows:
COMMITTEE-RELATED REMUNERATION
€ THOU
Committee
Personnel Committee, Standing
Committee, Risk Committee
Audit Committee
Nomination Committee
Chair
Member
40
80
–
20
40
–
56
Annual Report 2014
Allianz Group
B
Corporate Governance
35
40
Corporate Governance Report
Statement on Corporate Management
pursuant to § 289a of the HGB
42 Takeover-related Statements
and Explanations
45 Remuneration Report
Attendance fees and expenses
In addition to the fixed and committeerelated remuneration, mem
bers of the Supervisory Board receive an attendance fee of € 750 for
each Supervisory Board or committee meeting they attend. Should
several meetings be held on the same or consecutive days, the atten
dance fee will be paid only once. Allianz SE reimburses the members
of the Supervisory Board for their outofpocket expenses and the VAT
payable on their Supervisory Board activity. For the performance of
his duties, the Chairman of the Supervisory Board is furthermore
entitled to an office with secretarial support and use of the Allianz
carpool service. In the financial year 2014, Allianz SE reimbursed
expenses totaling € 54,294.
REMUNERATION fOR 2014
The total remuneration for all Supervisory Board members, including
attendance fees, amounted to € 2,035 THOU in 2014 (€ 2,018 THOU in
2013). The following table shows the individual remuneration for 2014
and 2013:
INDIVIDUAL REMUNERATION: 2014 AND 2013
Total might not sum up due to rounding
€ THOU
Members of the Supervisory Board
Dr. Helmut Perlet
(Chairman)
Dr. Wulf H. Bernotat
(Deputy Chairman)
Rolf Zimmermann
(Deputy Chairman)
Dante Barban
Christine Bosse
Gabriele Burkhardt-Berg
Jean-Jacques Cette
Ira Gloe-Semler
Franz Heiß
Prof. Dr. Renate Köcher
Igor Landau2
Jim Hagemann Snabe3
Peter Denis Sutherland
Total4
Committees1
P
C
C
M
M
M
M
S
C
C
M
M
M
M
M
M
M
M
R
C
C
M
M
M
M
M
M
M
M
A
M
M
C
C
M
M
M
M
M
M
M
N
C
C
M
M
M
M
Fixed
remu ne ration
Commit tee
remu ne ration
Atten dance
fees
Total
remu neration
200.0
200.0
150.0
150.0
150.0
150.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
41.7
100.0
66.7
–
100.0
100.0
160.0
160.0
100.0
100.0
40.0
40.0
20.0
20.0
40.0
40.0
20.0
20.0
40.0
40.0
40.0
40.0
20.0
20.0
20.0
20.0
16.7
40.0
26.7
–
20.0
20.0
8.2
6.0
6.0
6.0
6.0
4.5
3.7
4.5
6.0
4.5
4.5
4.5
5.2
6.0
5.2
4.5
4.5
4.5
4.5
3.0
2.2
6.0
3.8
–
3.7
3.7
368.2
366.0
256.0
256.0
196.0
194.5
123.7
124.5
146.0
144.5
124.5
124.5
145.2
146.0
145.2
144.5
124.5
124.5
124.5
123.0
60.6
146.0
97.2
–
123.7
123.7
1,408.4
1,400.0
563.4
560.0
63.5
57.8
2,035.3
2,017.8
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Legend: C = Chairperson of the respective committee, M = Member of the respective committee.
1
2
Abbreviations: A – Audit, N – Nomination, P – Personnel, R – Risk, S – Standing.
Until 7 May 2014.
3
4
Since 7 May 2014.
The total remuneration reflects the remuneration of the full Supervisory Board in the respective year.
Annual Report 2014
Allianz Group
57
Remuneration for mandates in other
Allianz companies and for other functions
All current employee representatives of the Supervisory Board except
for Mrs. Ira Gloe Semler are employed by Allianz Group companies
and receive a marketaligned remuneration for their services.
Loans to members of the Supervisory Board
On 31 December 2014 there was one outstanding loan granted by
Allianz Group companies to members of the Supervisory Board of
Allianz SE. One member received a mortgage loan of € 80 THOU from
Allianz Bank in 2010. The loan has a duration of ten years and was
granted at a normal market interest rate.
58
Annual Report 2014
Allianz Group
Allianz
Global
Automotive
40
car
brands
Currently working with over 40 car brands in more
than 30 countries.
Allianz Global Automotive is the leading strategic partner of
automotive manufacturers in the provision of insurance and
mobility services, currently working with over 40 car brands
in more than 30 countries. Automotive manufacturers, finan
cial services and car dealerships can choose from a portfolio
of customized products and service solutions in the fields of
motor insurance, warranty, assistance and ancillary products.
Allianz Global Automotive provides expertise and support
along the entire automotive value chain: from research &
development to sales and aftersales, thus enabling the devel
op ment of globally applicable solutions for partners and
customers. The rapidly growing global business unit is present
in all major automotive markets.
The ambition of Allianz Global Automotive is to be recognized
as the Tier1 Partner to the automotive industry for insurance
and mobility solutions, with a holistic business model as well
as a deep understanding of the automotive industry.
Allianz
Global
Assistance
Allianz
Global
Automotive
Allianz
Worldwide
Care
AlliAnz GlobAl Automotive
Expertise and
support along the
entire auto motive
value chain.
Competence Center to boost automotive
expertise and innovations in the fields
of telematics, engineering and insights.
Automotive
Intelligence
Center
In 2014, Allianz Global Automotive set up the Automotive
Intelligence Center as an integral part of its value creation
within the automotive industry. The aim is to boost inno
vations and expertise along the entire automotive value
chain, from vehicle development to connectivity services,
dealership business, aftersales and mobility solutions. The
Automotive Intelligence Center, which is based in Munich,
consists of three key areas: Telematics, Engineering and
Insights/Innovations. The experts are working globally with
both inhouse Allianz and external partners from the auto
motive industry in interdisciplinary project teams.
60
Strategic partnerships with global
leaders – example BMW.
The global cooperation with BMW, which has been in
place since 2009, was extended by another five years in
September 2014. Since the partnership was launched,
the joint business volume of insurance policies sold at
the point of sale has more than tripled. Today, BMW
and Allianz are collaborating in 27 markets worldwide
with more than 50 joint BMWbranded products. As far
as the upcoming international cooperation cycle is con
cerned, the focus is on expanding the business with
innovative insurance solutions in the emobility, used car
and driver assistance system segments.
Global
Partnership
with BMW
Focused expansion in growing
markets – example Asia.
Footprint
in
Asia
With a “one size does not fit all” approach, Allianz Global
Automotive has been able to effectively localize its global
strategy in the Asian markets. The year 2014 saw the busi
ness unit increase its footprint in South East Asia by com
pleting market entries in Indonesia, Thailand and Singapore
with the launch of several programs in partnership with
automotive manufacturers and financial service units. With
these successful developments and an ever evolving product
and service basket, automotive partners are now able to rely
on Allianz Global Automotive to provide them with inte
grated solutions in most major markets in South East Asia.
Furthermore, in China the business volume was expanded
and the business model could be further developed by the
setup of a Chinawide dealer distribution network through
collaboration with Chinese insurance market leaders.
61
C _ GRouP MAnAGeMenT RePoRT
Pages 62 – 146
Your AlliAnz
63
business operations and markets
Allianz Group structure
Insurance operations
Asset Management
Corporate and Other
63
63
64
64
65 Worldwide presence and business segments
66
Our markets
70
Strategy and Steering
72
Our steering
73
Progress in Sustainable Development
73
73
76
76
77
78
Sustainability management and governance
Trusted company
Committed corporate citizen
Attractive employer
Sustainable insurer
Responsible investor
MAnAgeMent Discussion AnD AnAlYsis
79
business environment
79
79
Economic environment 2014
Business environment 2014: insurance and asset management industry
81
executive Summary of 2014 Results
81
82
82
83
83
83
83
84
84
85
Earnings summary
Total revenues
Operating profit
Non-operating result
Income taxes
Net income
Proposal for appropriation of net earnings
Events after the balance sheet date
Other information
Other parts of the Group Management Report
86
Property-Casualty insurance operations
86
88
89
90
Gross premiums written
Operating profit
Net income
Property-Casualty insurance operations by reportable segments
92
life/Health insurance operations
92
93
93
94
96
98
Statutory premiums
Premiums earned (net)
Present value of new business premiums (PVNBP)
Operating profit
Net income
Life/Health insurance operations by reportable segments
62
Annual Report 2014
Allianz Group
99
Asset management
99
101
101
101
Assets under management
Operating revenues
Operating profit
Net income
102
Corporate and other
103
103
Earnings summary
Operating earnings summaries by reportable segments
104
outlook 2015
104
105
105
106
106
106
107
108
108
108
Overview: 2014 results versus previous year outlook
Economic outlook 2015
Insurance industry outlook
Asset management industry outlook
Outlook for the Allianz Group
Overview: outlook and assumptions 2015
Management’s assessment of expected revenues and earnings for 2015
Financing and liquidity development and capitalization
Expected dividend development
Management’s overall assessment of the current economic situation
of the Allianz Group
109
balance Sheet Review
109
109
110
115
Shareholders’ equity
Regulatory capital adequacy
Total assets and total liabilities
Off-balance sheet arrangements
116
liquidity and Funding Resources
116
116
116
120
Organization
Liquidity management of our operating entities
Liquidity management and funding of Allianz SE
Allianz Group consolidated cash flows
121
Reconciliations
121
121
122
Composition of total revenues
Composition of total revenue growth
Life/Health Insurance Operations
risk AnD opportunitY report
AnD FinAnciAl control
123
Risk and opportunity Report
123
124
127
130
139
141
142
Allianz risk profile and management assessment
Capitalization
Internal risk capital framework
Internal risk assessment
Risk governance
Risk management priorities for 2015
Further future challenges and opportunities
144
Controls over Financial Reporting and Risk Capital
144
145
Internal controls over financial reporting
Risk capital controls
C
Group Management Report
Your Allianz
Business Operations and Markets
63
70 Strategy and Steering
73 Progress in Sustainable Development
Business Operations and Markets
Allianz offers a comprehensive range of insurance and asset management
products and services and has now 85 million insured customers.
Allianz Group structure
Allianz SE and its subsidiaries (the Allianz Group) offer property-
casualty insurance, life/health insurance and asset management
products and services in over 70 countries, with the largest of its
operations in Europe. Allianz SE, as the parent company of the Allianz
Group, has its headquarters in Munich, Germany.
The Allianz Group structure reflects both business segments
and geographical regions. The business activities are first organized
by product and type of service based on how these are strategically
managed: insurance activities, asset management activities and cor-
porate and other activities. Due to differences in the nature of products,
risks and capital allocation, insurance activities are further divided
into property-casualty and life/health categories. In accordance with
the responsibilities of the Board of Management, each of the insurance
categories is grouped into regional reportable segments. Corporate
and other activities are divided into three different reportable seg-
ments in order to differentiate between the respective products, risks
and capital allocation. In 2014, the Allianz Group had 17 reportable
segments.1
AlliAnz Group structure – business seGments And reportAble seGments
property-cAsuAlty
life/HeAltH
Asset mAnAGement
corporAte And otHer
– German Speaking Countries
– Western & Southern Europe
– Iberia & Latin America
– USA1
– Global Insurance Lines & Anglo Markets
– Growth Markets
– Allianz Worldwide Partners
– German Speaking Countries
– Western & Southern Europe
– Iberia & Latin America
– USA
– Global Insurance Lines & Anglo Markets
– Growth Markets
– Asset Management
– Holding & Treasury
– Banking
– Alternative Investments
Insurance operations
selected product rAnGe insurAnce
We offer a wide range of property-casualty and life/health insurance
products to both retail and corporate customers. We are the leading
property-casualty insurer globally and rank among the top five in the
life/health insurance business. Our key markets based on premiums
are Germany, France, Italy and the United States.
Most of our insurance markets are served by local Allianz com-
panies. However, some business lines – such as Allianz Global Corpo-
rate & Specialty (AGCS), Allianz Worldwide Partners (AWP) and Credit
Insurance – are run globally. Based on premiums, the split between
retail and corporate clients is approximately equal for our Property-
Casualty business segment. In Life/Health, the proportion of our
business with retail clients is significantly higher than that with cor-
porate clients.
1
At the end of the financial year 2014, Allianz announced its decision to realign its property-casualty insur-
ance business in the United States. For further information, please refer to the Our markets section starting
on page 66. Respective changes in the group structure will become effective in 2015. For further informa-
tion, please refer to Executive Summary of 2014 Results starting on page 81.
property-cAsuAlty
Retail Clients
Corporate Clients
– Motor (liability/own damage)
– Liability
– Property
– Accident
– Travel and assistance
– Property
– Liability
– Motor fleets
– Directors’ and Officers’ liability
– Credit
– Marine, aviation and transport
life/HeAltH
Retail Clients
Corporate Clients
– Endowment
– Annuity
– Term
– Disability
– Investment-oriented products
– Private health insurance
– Group life products
– Group health and disability products
– Pension products for employees
Annual Report 2014
Allianz Group
63
Asset Management
Corporate and Other
Our two major investment management businesses, PIMCO and
AllianzGI, operate under Allianz Asset Management (AAM). With
€ 1,801 BN total assets under management (AuM) (including those of
the Allianz Group), we are one of the largest asset managers in the
world actively managing assets. 64 % of third-party assets are from
institutional investors, while 36 % are from retail clients. Our core
markets are the United States, Germany, France, Italy, the United King-
dom and the Asia-Pacific region.
selected product rAnGe Asset mAnAGement
Equity
Fixed Income
Alternatives
Solutions
retAil And institutionAl clients
– Systematic
– Sector/theme funds
– Region /country funds
– Style funds
– Small cap funds
– Stocks plus
– Money market
– Low duration
– Real return
– Global
– Investment grade
– Structured products
– Commodity funds
– Certificate funds
– Currency funds
– Life-cycle concepts
– Multi-asset solution
– Variable annuity
solutions
– Diversified income
– High yield
– Emerging markets
– Convertible bonds
– Equity long/short
– Relative value
– Infrastructure debt/
equity
– Asset/liability
management
– Risk management
concepts
The Corporate and Other business segment’s activities include the
management and support of the Allianz Group’s businesses through
its central holding functions, as well as Banking and Alternative
Investments.
HoldinG & treAsury operAtions
Holding & Treasury includes the management and support of the
Group’s businesses through its strategy, risk, corporate finance,
treasury, financial reporting, controlling, communication, legal,
human resources, technology and other functions.
bAnkinG operAtions
Our banking operations support our insurance business and comple-
ment 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 own banking product and ser-
vice provider in Germany. OLB, Germany’s largest private regional
bank, covers the northwest of Germany and focuses on retail and
corporate clients.
AlternAtiVe inVestments operAtions
Alternative Investments provides global alternative investment man-
agement services in the private equity, real estate, renewable energy
and infrastructure sectors, mainly on behalf of our insurance opera-
tions. The Alternative Investments reportable segment also includes
a fully consolidated private equity investment.
64
Annual Report 2014
Allianz Group
C
Group Management Report
Your Allianz
Business Operations and Markets
63
70 Strategy and Steering
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Worldwide presence and business segments
mArket positions of our business operAtions1
insurAnce GermAn speAkinG countries
GlobAl insurAnce lines & AnGlo mArkets
insurAnce GroWtH mArkets
◼ I.
◼ I.
◼
Germany
◼ II. ◼ III.
◼ II. ◼ II.
Austria
Switzerland
insurAnce Western & soutHern europe
◼ II.
◼ II. ◼ –
◼ II.
◼ II.
◼ I.
United Kingdom
Australia
Ireland
Allianz Global Corporate & Specialty
Credit Insurance
Middle East and North Africa
◼ III. ◼ II.
Egypt
◼ III. ◼ II.
◼ ◼
III.
Lebanon
Saudi Arabia
Europe
◼ II. ◼ II. ◼
◼ III. ◼ III.
◼
II. ◼ I.
◼ II. ◼ III. ◼
Italy
Greece
Turkey
France
◼
III. ◼ III.
Belgium
◼ II. ◼ III. ◼
The Netherlands
◼ II. ◼ III.
Luxembourg
Africa
◼ II.
◼ II. ◼ II.
◼ II. ◼ I.
◼ I.
◼ II.
◼ IV.
◼ II. ◼ II.
◼ II. ◼ II.
◼ II.
◼ II. ◼ II.
◼ II.
Benin
Burkina Faso
Cameroon
Central Africa
Congo Brazzaville
Ghana
Ivory Coast
Madagascar
Mali
Senegal
Togo
insurAnce iberiA & lAtin AmericA
◼ II. ◼ II.
◼ II. ◼ III.
Spain
Portugal
Latin America
◼ III.
◼ III. ◼ –
◼ II. ◼ III.
◼ IV. ◼ III.
Argentina
Brazil
Colombia
Mexico
◼ IV. ◼ –
Reinsurance
insurAnce usA
AlliAnz WorldWide pArtners
◼ IV. ◼ iii.
United States
◼ –
◼ –
Allianz Worldwide Partners
Asset mAnAGement
insurAnce GroWtH mArkets
Asia
◼ –
◼ II. ◼ IV.
◼ –
◼ II. ◼ II.
◼ IV. ◼ II.
◼ –
◼ I.
◼ I.
◼ –
◼ II.
◼ –
◼ IV.
◼ III. ◼ III.
◼ III.
◼ IV. ◼ III.
Brunei2
China3
Hong Kong2
India3
Indonesia
Japan2
Laos
Malaysia
Pakistan
Singapore2
South Korea
Sri Lanka
Taiwan
Thailand
Central and Eastern Europe
◼
◼ II. ◼ I.
Bulgaria
◼ II. ◼ I.
◼ II. ◼ III.
◼ I.
◼ II.
◼ II. ◼ IV.
◼ II. ◼ II.
◼ III. ◼ III.
◼ I.
◼ II.
◼ IV.
Croatia
Czech Republic
Hungary
Poland
Romania
Russia
Slovakia
Ukraine
North and Latin America
◼
◼
United States
◼
◼
◼
◼
Europe
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
Asia-Pacific
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
◼
Canada
Brazil
Germany
France
Italy
Spain
Switzerland
Belgium
The Netherlands
United Kingdom
Nordics
Japan
Hong Kong
Taiwan
Singapore
South Korea
China
Australia
◼ Property-Casualty ◼ Life/Health ◼ Banking ◼ Retail Asset Management ◼ Institutional Asset Management
Insurance market position by gross premiums written: 4
III. Position 6 to 10
II. Position 2 to 5
I. Position 1
IV. Not in the top 10
1
2
This overview is based on our organizational structure in place as of 31 December 2014. For further informa-
tion about changes effective 2015, please refer to the Executive Summary of 2014 Results starting on page 81.
Property-Casualty business belongs to Allianz Global Corporate & Specialty.
3
4
Based on total market ranking (including domestic competitors), China Property-Casualty ranked in cate-
gory IV. and India Property-Casualty and Life/Health both in category III., respectively.
Source: Own local estimations as of 2013.
Annual Report 2014
Allianz Group
65
Our markets
The following sections provide an overview of our business opera-
tions in certain insurance markets by business division and of our
Asset Management business. We focus on our activities in core insur-
ance markets and comment on material developments in selected
insurance markets and our asset management market, since these
account for the major developments in our operating results.
insurAnce core mArkets1
insurAnce core mArkets
Core markets
Germany
France
Italy
United States
I.
II.
II.
IV.
I.
III.
II.
III.
Statutory/
gross premiums
written
Operating
profit
Number of
customers
€ mn
31,791
12,489
15,528
13,798
€ mn
2,591
883
1,105
504
mn
20.3
5.8
6.7
1.2
Market position ◼ Property-Casualty ◼ Life/Health
Market position by gross premiums written:
II. Position 2 to 5
I. Position 1
III. Position 6 to 10
IV. Not in the top 10
Germany
We provide our customers in Germany with a full range of insurance
and financial services through Allianz Deutschland AG. Our products
are mainly provided by Allianz Versicherungs-AG (Allianz Sach),
Allianz Lebensversicherungs-AG (Allianz Leben) and Allianz Private
Krankenversicherungs-AG (Allianz Private Kranken). They are mostly
distributed through a network of full-time tied agents. Allianz Bera-
tungs- und Vertriebs-AG serves as our distribution company.
As the market leader in the German property-casualty market,
we offer a wide variety of insurance products for retail and commercial
customers. Germany is a rather mature market for property-casualty
business, with intense competition. In 2014, our premiums grew
mostly in motor business and commercial non-motor business. In
September 2014, the new retail motor product ‘digital+’ was launched
in order to reach so-called hybrid customers who are not addressed
by our existing products ‘Mein Auto’ and ‘AllSecur’. These customers
switch between the online and offline world, doing their research
online but making the final purchase offline or doing both their
research and purchase online, merely requiring personal help in the
case of claims. Although the property-casualty market continued to
be competitive, our ongoing strategic focus on strengthening sales,
improving our claims management and reducing the expense ratio
has led to premium growth and improved profitability. Furthermore,
we will continue to extend our cooperation with the automotive
industry and increase our position in the direct market under the
‘AllSecur’ brand.
For our life insurance business, we are active in retail and com-
mercial markets and provide a comprehensive range of products.
The main classes of coverage offered include annuity, endowment,
term, disability and long-term care insurance. Many customers have
been rethinking risk and return factors in their retirement arrange-
ment. For years we have been successfully enlarging our product
range and in the summer of 2013 we launched our new “Perspektive”
offering. This has separate guarantees in the savings and payout
phases, from which our customers can expect higher returns as a
result of much less stringent capital adequacy requirements. In 2014,
new business for “Perspektive” through our tied agents channel
accounted for 24.3 % of our retirement arrangement-related retail
business. In our commercial lines, we serve our customers with
group life insurance and provide companies with services and solu-
tions in connection with defined benefit pension arrangements and
defined contribution plans.
As in the previous year, our single premium business grew
strongly again in 2014. We expect, however, that this exceptional
growth will not reoccur in 2015.
Through Allianz Private Kranken, we provide a wide range of
health insurance products, including full private health care cover-
age, supplementary health and long-term care insurance as well as
foreign travel medical insurance. After satisfactory demand in 2014,
we expect slightly higher demand for both full private health care
coverage and supplementary insurance in the future. This should be
supported by our financial strength and by the very good external
ratings we received recently for both our full private health care cov-
erage and our supplementary insurance.
Italy
Our Italian insurance entity Allianz S.p.A. is strongly dedicated to the
agent channel. We also offer our products through Genialloyd – the
leading company in Italian direct business – the broker channel,
Allianz Bank Financial Advisors S.p.A. and through bancassurance,
with UniCredit as our main distribution partner.
In our property-casualty business, Allianz Italy significantly out-
performed its market in terms of premium growth and profitability.
In a market that experienced an estimated contraction of approxi-
mately 3 %, Allianz premium volume grew by 4.1 % in 2014 (including
gross premiums written from acquired parts of the insurance busi-
ness of UnipolSai Assicurazioni S.p.A., Bologna)2, which allowed us
to increase our market share for a third consecutive year. In terms of
1
The following sections do not cover our global insurance lines, e. g. Allianz Global Corporate & Specialty,
our credit insurer Euler Hermes or Allianz Worldwide Partners, even if those entities also operate in the
respective market.
2
Excluding these premiums, we recorded a contraction of 1.2 % in gross premiums written. However, this
represents a gain in our market share even organically.
66
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profitability, the combined ratio remained at low levels, reflecting our
strong technical capabilities achieved through continuous investment
and innovation. The latest statistics show Allianz with a significant
combined ratio advantage versus the market.
This achievement was strongly supported by the performance of
our agent network. In 2014, the network expanded by almost half
through the acquisition of parts of the insurance business of Unipol-
Sai Assicurazioni S.p.A. including 725 agencies which were success-
fully integrated subsequently. The introduction of the common digi-
tal platform Digital Agency has been instrumental in this integration,
with the new agencies running it exclusively, benefiting from simple,
mobile and paperless processes. Another driver of innovation in the
agent network has been the introduction of ‘Allianz1’, which provides
modular family coverage against most risks. Its success has greatly
exceeded expectations, with more than 100,000 contracts written in
2014, paid on an affordable monthly basis. Monthly premium sched-
ules have also been successfully introduced for motor.
In direct, Genialloyd grew premiums by 10.5 % in a contracting
market and contributed to our strong performance in property-casu-
alty. Property-casualty bancassurance premiums also grew strongly,
aided by the launch of a retail motor product distributed through
Italian branches of UniCredit.
In our life business, we increased our premium volume by 34.4 %
and AuM by 15 %. This growth was particularly supported by our banc-
assurance cooperation with UniCredit, which helped premiums rise
by 58.3 %, and benefited further from additional branches distributing
our products. Our unit-linked product market share increased again,
with sales of low-capital-consuming unit-linked products accounting
for 63 % of GWP, compared to an estimated market average of below
30 %. Our highly successful decumulation product, Progetto Reddito,
has been extended to the bancassurance channel and generated over
€ 1.6 BN of new business in 2014. We also completed the reduction of
minimum guarantees to 0 % for virtually all new products, lowering
capital absorption in the low interest rate environment.
In the next years, we aim to accelerate our digital transforma-
tion and to reap economies of scale from our increased business
volumes. In our life business, we strive to further rebalance our port-
folio by improving our business mix and to optimize returns on
capital.
France
Allianz France S.A. is a major provider of insurance and financial ser-
vices in the French retail and commercial markets, offering a broad
range of property-casualty and life/health products for individuals
and corporate customers. These include liability insurance, disability
cover and investment and savings products. We distribute these offer-
ings mostly via agents, life and health consultants, brokers and inde-
pendent financial advisors, as well as selected external partners. In
addition, our customers can research and buy products online – either
through ‘eAllianz’ or via our direct sales channel ‘AllSecur’. A new
strategic plan for 2015-2020, ‘Innovation & Trust’, has just been
launched which capitalizes on several innovative successes Allianz
France achieved in 2014. Examples include offering fast-quote and
the new life product ‘Vie Génération’ as the first insurer in the French
market as well as securing innovative partnerships with drivy (car
sharing), TomTom (telematics) and Nest Protect (fire protection).
The French retail property-casualty market has seen limited
growth of below 3 % in recent years and remains highly competitive.
Competition is likely to remain tough, with expected higher customer
churn due to local regulatory changes regarding cancellation rules.
In this context, we have decided to become an innovation and tech-
oriented company leaning on five major pillars: digital development,
implementation of a multi-access strategy, personalized offers, com-
petitive rates and brand promotion.
In addition, we concentrate on increasing the efficiency of our
company structures, enhancing our technical excellence, simplifying
our product range and processes and rebuilding our IT platform, with
a view to delivering state-of-the-art digital solutions and high-quality
claims services. This constant focus allows us to grow our customer
base, for example in motor insurance. Thanks to the full integration
of Gan Eurocourtage, which specializes in distributing its products
via brokers, we are now one of the leaders in the midcorp market
(ranked as third in midcorp and second in commercial property-
casualty insurance).
Concerning the life market in France, we anticipate a continued
period of low interest rates, reinforcing the need to focus on technical
margins and cost optimization to maintain the attractiveness of our
offer. We have responded to the needs of our clients with a range of
traditional and unit-linked products in both group and individual
business, combining financial strength with the opportunity for
more attractive yields. Evidence of the success of this strategy is the
increase in the unit-linked proportion of our business mix from 34 %
in 2013 to 39 % in 2014.
We also hold a strong position in the health market, often com-
bining elements of life, health and disability insurance as compre-
hensive solutions for individual and commercial customers. Recent
regulatory changes have created new opportunities for the develop-
ment of our group business. In response, we have created a new
employee benefits institution (B2V) which aims to take advantage of
these new opportunities.
Our retail insurance activities are complemented by Allianz ‘Pat-
rimoine’, which allows us to offer one-stop solutions, in particular for
our high-net-worth individual life customers.
In all major segments we will capitalize on our ability to com-
bine growth and strong profitability.
Annual Report 2014
Allianz Group
67
United States
Our property-casualty insurance business in the United States was
conducted through Fireman’s Fund Insurance Company (FFIC). Our
life and annuity business is managed through Allianz Life Insurance
Company of North America (Allianz Life).
Through FFIC, we underwrote personal and commercial lines
and sold these products through independent agents and brokers.
We also participated in a crop insurance program through a reinsur-
ance arrangement. Our personal business unit focused on affluent
and high-net-worth individuals while our commercial business unit
offered specialized property-casualty coverage for small and medium-
sized businesses. FFIC was one of the few carriers in the United States
that had a nationwide personal and commercial lines presence.
In 2014, we saw a continued stabilization of the U.S. property-
casualty insurance market, leading to an estimated market revenue
growth of 4.2 %.
At FFIC, while personal lines showed a stable premium develop-
ment, we were impacted by low commodity prices in crop insurance
and slowing rate increases in commercial lines which unfavorably
impacted our premiums. A deterioration in accident year results and
further reserve strengthening led to disappointing business results.
At the end of the financial year 2014, Allianz announced its deci-
sion to realign its property-casualty insurance business in the United
States. The reorganization comprises the integration of Fireman’s
Fund Insurance Company’s (FFIC) commercial business into Allianz
Global Corporate & Specialty North America (AGCS NA), the sale of the
personal insurance business to the global insurance company ACE,
as well as the internal transfer of the discontinued run-off business
through a reinsurance agreement within the Allianz Group. The
realignment and sale are expected to be executed in 2015 and to have
a negative impact of approximately USD 0.2 BN on the Allianz Group’s
financial statements. Expenses in the context of the restructuring
will comprise expenses for human resources-related items, office
buildings and IT infrastructure. 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. These steps
enable us to operate under the Allianz brand only as well as allow a
strengthening of our property-casualty business in the United States
– a market we remain committed to.
Our life and annuity business primarily underwrites fixed index
and variable annuities and fixed index universal life insurance prod-
ucts – all of which are sold through independent distribution channels,
as well as large financial institutions such as banks and wire houses.
Despite a competitive market environment in 2014 we expanded
our position as market leader in the fixed index annuity market as a
result of an innovative index strategy and higher penetration into the
Securities and Exchange Commission (SEC) licensed broker-dealer
channel. Although the persisting low interest rate environment
remains challenging, we actively manage our product pricing strategy
to maintain profitability.
We anticipate continued economic uncertainty, equity market
volatility and a low interest rate environment in the long term. On the
upside, we continue to believe that U.S. demographic trends present
us with an excellent opportunity in the retirement market. In order
to reap these benefits, we will continuously strengthen our distribu-
tion network and value proposition to our customers through prod-
uct innovation and high-quality services.
selected insurAnce mArkets
Australia
Allianz Australia Insurance Ltd. serves the Australian and New Zea-
land property-casualty and life insurance markets. Based on market
share Allianz Australia is the fourth largest property-casualty insurer
in Australia, providing insurance coverage for both retail and corpo-
rate segments.
Allianz Australia also operates in certain niche markets, which
include premium financing, agriculture, heavy motor and pleasure
craft insurance. The company is one of Australia’s leading Workers’
Compensation insurers, serving approximately one in five Australian
employees.
With its disciplined underwriting approach and investments in
risk prevention and accumulation controls, Allianz Australia success-
fully responded to a number of natural disasters in both Australia
and New Zealand between 2010 and 2014.
Effective 1 January 2015, Allianz Australia acquired the insur-
ance operations of the Territory Insurance Office (TIO) from the
regional government of the Northern Territory. Besides adding
approximately AUD 130 MN in written premiums, the acquisition
brings the company increased geographic diversification and forms
the basis for future growth in Northern Australia. The acquisition
also brings Allianz Australia a significant new source of revenue for
managing the Government’s Motor Injury scheme.
By leveraging its multi-distribution approach as well as exploit-
ing new business opportunities, Allianz Australia grew the number
of insured risks by 5.8 % in 2014. A continuation of this distribution-
focused strategy will enable Allianz Australia to remain well placed for
further profitable growth despite considerable rate pressure in com-
mercial lines and increasing competition from new market entrants.
United Kingdom
We serve the U.K. market mainly via our subsidiary Allianz Insurance
plc, which is the fifth largest general property-casualty insurer in the
United Kingdom and offers a wide range of commercial and personal
insurance products. Our commercial products cover a broad spectrum
of customers, from sole traders to large commercial organizations.
We also provide engineering inspection services distributed princi-
pally through brokers. In personal lines we distribute our broad selec-
tion of products via a multi-channel approach through brokers, affin-
ity partners, veterinary practices and direct channels.
68
Annual Report 2014
Allianz Group
Asset mAnAGement mArket
2014 was another favorable year for the asset management industry
as a whole. Markets showed net inflows into actively-managed AuM.
There was also a significant shift to passive products visible in the
markets, especially in the United States. For equity and fixed income
strategies the main net inflow drivers were global equities and taxable
bonds in more mid to shorter-term as well as floating rate strategies.
High yield and emerging market bond strategies recorded net outflows.
For further information on the asset management industry busi-
ness environment, please refer to
page 80.
AllianzGI recorded strong net inflows in fixed income and multi-
asset. PIMCO suffered net outflows throughout 2014 with a receding
trend until nearly the end of September 2014. With the departure of
PIMCO’s Chief Investment Officer (CIO) on 26 September 2014, the net
outflows spiked in the last quarter of 2014, but came down to the end
of the fourth quarter of 2014. Immediately after the resignation of the
CIO, the new PIMCO investment management leadership was appoint-
ed following the orderly succession protocol.
In 2014, AllianzGI followed up the implementation of its ‘One
Firm’ strategy, while at the same time further expanding its product
offerings in equities, fixed income and alternative assets. Besides,
AllianzGI is developing new approaches for client interaction, lever-
aging the opportunities of the digital space.
PIMCO continues to focus on delivering returns and managing
risks on behalf of clients across a growing range of investment solu-
tions. It is also following its longer-term development plan to broaden
its product offerings into areas such as the alternatives platform,
income solutions, equities and ETFs.
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Despite the persistence of a very competitive insurance market
we have doubled our brand awareness amongst our target audience
in the last two years, driven by an increase in multimedia advertising
and sponsorship programs. These successful brand building activi-
ties, our differentiated portfolio and our market-leading underwriting
capability in commercial lines allowed us to outgrow the market
while delivering superior underwriting results.
Looking ahead, we aim to gain further market share despite con-
tinuing challenging market conditions and to preserve our combined
ratio advantage via further investments in digital transformation,
process efficiency and in our Indian offshore service center.
Latin America (with focus on Brazil)
Allianz operates in the Latin American region with a presence in Brazil,
Colombia, Argentina and Mexico. It is a strong player in the property-
casualty segment, with motor as the predominant line of business
(except in the Mexican market) followed by industrial lines. Life prod-
ucts are also distributed in the Mexican, Colombian and Brazilian
markets. The company follows a regional strategy based on excellence
of services and processes, efficiency and product simplicity, that
allows the entities to leverage the brokers and the agents network
and to focus on continuously increasing the customer base.
With 110 years of history in Brazil and a strong reputation as a
top insurer, Allianz represents a very strong brand in the insurance
market, reinforced in 2014 with the sponsorship of Allianz Parque
Arena. At the beginning of 2014, the IT platform (which already oper-
ates successfully in our Spanish, Portuguese and Colombian subsid-
iaries) was launched in Allianz Brazil as a key part of our overall strat-
egy in the region. Unfortunately, operational issues arose during the
implementation and start-up phase, leading to temporarily dimin-
ished levels of customer service. As a result, Allianz’s market share
shrank by about one percentage point in the property-casualty insur-
ance business in 2014. In response, we have implemented various
initiatives targeting a recovery.
The Brazilian insurance market has been continuously growing
over the last decade, from 1.8 % of GDP in 2003 to 3.0 % in 2013 (with
Brazilian GDP also rising considerably during the same period). How-
ever, the more recent deceleration of the local economy represents
further headwind for our growth in this region. Despite this, we
believe that insurance penetration will continue to increase in the
Brazilian market.
In the long term, Allianz Brazil aims to take advantage of the
local market growth, leveraging the new IT platform to integrate all
processes under one single system, and improve service levels to
agents, insureds and providers.
Annual Report 2014
Allianz Group
69
Strategy and Steering
Our longer-term vision is unchanged: to be the world’s strongest financial
community. 2014 was another milestone on this journey, with the Allianz Group
achieving further revenue growth and another strong operating result.
In an uncertain and volatile business environment, we will protect the pillars of
our business strategy – our integrity, financial strength, operational excellence
and talent base – and continue to leverage our size to offer outstanding products
and services to our customers and business partners.
Living up to our ambition
Property-Casualty
We aim to be the leading property-casualty insurer in terms of reve-
nue and profitability. In 2014, Allianz finished among the top-3 in our
global peer group in premium growth and Combined Ratio (as a mea-
sure of profitability), defending our position as the world’s largest and
one of the most profitable international property-casualty insurers.
The Group has taken further action to strengthen its property-
casualty portfolio: we completed bolt-on acquisitions in two of our
strongest markets, Italy and Australia. At the same time we reduced
our exposure to the Russian retail market and are restructuring our
U.S. commercial activities into one carrier, AGCS in the United States,
to ensure scale and build a competitive and profitable platform for
our business in the world’s largest property-casualty market. Further,
it was also agreed to sell the personal insurance business in the United
States, where we expect the transaction to close in the first half of 2015.
Accelerating organic growth will remain a priority. We continue
to invest in the digitalization of our business to capture new oppor-
tunities, such as the growing number of hybrid buyers and the shift
in customer behavior towards convenience, mobility and an individu-
alized offering. At the same time we are going to strengthen further
our capabilities to serve customers through any channel they choose
to approach us.
Life/Health
We aim to be one of the three most profitable life and health insurers
among our global peer group. Our 2014 business segment operating
result increased and puts the Group in the top-4 among our global
peers in terms of operating profit. Still, we recognize that capital
returns in the business segment will continue to be under pressure
as interest rates remain close to zero in our major markets.
To protect and increase the segment’s profitability in this environ-
ment, we are working to improve returns both in the new and in-force
business. We will continue to grow the share of our health and pro-
tection business and of non-traditional, capital-efficient savings
products, supported by innovations such as the “Perspektive” product
in the German market. In addition, we have launched in-force man-
agement programs across our major Life companies, aiming to realize
the profit potential in our existing books of business and explore
ways to optimize the capital tied up there.
Asset Management
We aim to be the number one active asset manager by revenues and
profitability. In 2014, Allianz defended its place among the world’s
top-4 largest asset managers, irrespective of significant net outflows
in the aftermath of the leadership transition at PIMCO.
We have since confirmed a broader investment leadership team
at PIMCO. Meanwhile Allianz Global Investors has had its best year
since the implementation of our two-pillar asset management strat-
egy at the beginning of 2012, consolidating its position in the top of
the European rankings by assets under management, driven by third-
party net inflows and market returns.
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In order to maintain growth in the segment we are constantly
extending our product offering across asset classes (for example
solution business, global strategies such as emerging market
debt & equity and alternative investments like infrastructure).
Besides, we are working on strengthening our global footprint and
testing novel distribution models that will make it easier for our insti-
tutional and retail customers to access our products.
our operating environment
and focus going forward
In 2014, our operating environment was characterized by relative
macro stability, thanks to the ongoing support of sovereign debt mar-
kets and financial markets overall by the central banks. Major stock
markets reported gains, while spreads in selected fixed income mar-
kets tightened even further. In consequence, the related risks have
been growing (please refer to the Risk and Opportunity Report starting
on
page 123). In particular, we monitor the risk to Allianz from:
− Consequences of the current ultra-low interest rate environ-
ment, in particular the risk-return profile of financial assets;
− Worsening financial strength of sovereign borrowers and the
market volatility and central bank interference related to it;
− Ongoing regulatory uncertainty both at the level of local super-
vision and macro-regulation (e.g. Solvency II, additional require-
ments for global systemically important insurers and European
consumer regulation).
In this environment we aim to preserve the strength of our balance
sheet and ensure efficient use of our capital (for details regarding our
new dividend policy please refer to the Expected dividend develop-
ment section on
page 108). At the same time we see unique oppor-
tunities for Allianz due to the strength of our franchise in the world’s
leading insurance and asset management markets, of our people,
brand and capital. As a consequence, the focus of our segment strat-
egies will be on organic growth and portfolio management in Prop-
erty-Casualty, protecting the profitability in Life/Health and position-
ing Asset Management for continued performance and leadership.
As we prepare to celebrate 125 years of Allianz with our customers
and employees this year, we look ahead with confidence – confident
that we will progress ever closer towards our vision: to be the world’s
strongest financial community.
Annual Report 2014
Allianz Group
71
Our steering
board of management
and organiZationaL structure1
Allianz SE has a divisional Board structure that is split into functional
and business responsibilities. The business-related divisions reflect
our business segments Property-Casualty, Life/Health, Asset Manage-
ment and Corporate and Other. These were overseen by seven board
members, with six members concentrating on the insurance business
segments and one on Asset Management as a stand-alone segment.
The remaining four divisions (i.e. Chairman of the Board of Manage-
ment, Finance, Investments and Operations) focus on Group func-
tions, along with business-related responsibilities.
members of the board of management and their responsibiLities in 2014 (incLuding changes in 2015)
board members
responsibiLities
Michael Diekmann (until 6 May 2015)
Chairman of the Board of Management (until 6 May 2015)
Oliver Bäte
Insurance Western & Southern Europe (until 31 December 2014), Global Property-Casualty (until 6 May 2015)
Chairman of the Board of Management (from 7 May 2015)
Sergio Balbinot (since 1 January 2015)
Insurance Western & Southern Europe (since 1 January 2015)
Manuel Bauer
Insurance Growth Markets; Insurance Australia (since 1 January 2015)
Gary Bhojwani (until 31 December 2014)
Insurance USA (until 31 December 2014)
Clement Booth (until 31 December 2014)
Global Insurance Lines & Anglo Markets (until 31 December 2014)
Dr. Helga Jung
Dr. Christof Mascher
Jay Ralph
Insurance Iberia & Latin America, Legal & Compliance, Mergers & Acquisitions
Operations, Allianz Worldwide Partners
Asset Management; U.S. Life Insurance (since 1 January 2015)
Dr. Axel Theis (since 1 January 2015)
Global Insurance Lines & Anglo Markets (since 1 January 2015), Global Property-Casualty (from 7 May 2015)
Dr. Dieter Wemmer
Dr. Werner Zedelius
Finance, Controlling, Risk
Insurance German Speaking Countries, Banking, Human Resources
Dr. Maximilian Zimmerer
Investments, Global Life/Health
target setting and monitoring
The Allianz Group steers its operating entities and business seg-
ments via an integrated management and control process. This
starts with the definition of a business-specific strategy and goals,
which are discussed and agreed between the Holding and operating
entities. According to this strategy, a three-year plan is prepared by
the operating entities and aggregated to form the financial plans for
the business divisions and the Allianz Group. This plan also forms
the basis for our capital management. The Supervisory Board then
approves the plan and sets corresponding targets for the Board of
Management. The performance-based remuneration of the Board of
Management is linked to short-, mid- and long-term targets to ensure
effectiveness and emphasize sustainability. For further details about
the remuneration structure, including target setting and perfor-
mance assessment, please refer to the Remuneration Report starting
on
page 45.
We continuously monitor our business performance against
these targets through monthly reviews to ensure that appropriate
measures can be taken in the event of negative developments. During
these reviews, we monitor key operational and financial metrics.
Operating profit and net income are the main financial performance
indicators across all business segments for the Allianz Group. In
addition, we also use segment-specific figures such as the combined
ratio for Property-Casualty, in-force and new business margins and
margin on reserves for Life/Health and the cost-income ratio for Asset
Management. Furthermore, we use Return on Risk Capital (RoRC) for
new business steering purposes in the Property-Casualty and Life/
Health business segments. For a comprehensive view of our segment
performance, please refer to the Management Discussion and Analy-
sis starting on
page 79.
Besides performance steering, we also have a risk steering pro-
cess in place, which is described in the Risk and Opportunity Report
starting on
page 123.
Non-financial key performance indicators (KPIs) are mainly
used for the sustainability assessment of the mid-term bonus. Under
the category “partner of choice” mainly the following KPIs are consid-
ered: Allianz Engagement Survey and Net Promoter Score results,
brand performance (measured by the Funnel Performance Index),
diversity development, organizational transparency (as measured by
the Transparency International Corporate Reporting ranking) and
sustainable development (as measured by widely-recognized indices
and rankings).
1
For further information about changes to the structure of the Board of Management effective 2015, please
refer to the Executive Summary of 2014 Results on page 84.
72
Annual Report 2014
Allianz Group
C
Group Management Report
Your Allianz
Business Operations and Markets
63
70 Strategy and Steering
73 Progress in Sustainable Development
Progress in Sustainable Development
Allianz continues to build on its 125-year-old foundations that sup-
port us in doing business in a sustainable way. To us, sustainable
development means combining long-term economic value creation
with a forward-thinking approach to corporate governance, environ-
mental stewardship and social responsibility.
Our sustainability activities focus on material issues relevant to
our business and stakeholders. We have many different stakeholder
groups, and engaging with them has enabled us to gather specific
opinions, expectations and ideas, and consider these in relation to
our business operations. It also helps provide a better understanding
of the impacts of current or future global challenges on stakeholders,
and how we can manage these by finding and developing effective
solutions.
As a multi-faceted organization we play a number of different
roles, whether that be as a company, a corporate citizen, an employ-
er, an insurer or an investor. We take our responsibility for environ-
mental and social issues seriously, regardless of the role that we play.
Our commitment is also reflected in national and international ini-
tiatives we support: In early 2014, we became a signatory to the United
Nations (UN) Principles for Sustainable Insurance, which comple-
ments our existing commitment to the UN Principles for Responsible
Investment.
The following pages highlight some of our key sustainability
approaches and major developments in 2014. The Allianz Group Sus-
tainability Report, with full details of our sustainability strategy,
approach and progress, is available on our sustainability website1.
Sustainability management
and governance
Sustainability is a constantly evolving, strategic business issue,
which continues to increase in importance for all stakeholder groups.
We therefore continually review and adapt our strategy, governance
and organizational structures and the way we manage risks and
opportunities. The Group ESG Board is a committee with Board Mem-
ber leadership, with responsibility for promoting environmental,
social and governance (ESG) aspects in our insurance and investment
activities. Our Group-level sustainability functions deal largely with
new and emerging issues in close cooperation with specific func-
tional departments and local entities. They are comprised of two
centers of competence – Allianz4Good and the ESG Office.
ESG procESS for inSurancE and invEStmEntS
Strengthening the governance and integration of environmental and
social aspects in our core business processes continued to be a prior-
ity in 2014. This commitment covers both our insurance business and
how we invest our own and third-party assets.
Dialogues with non-governmental organizations (NGOs) and an
ongoing internal stakeholder engagement process have enabled us,
for example, to identify 13 sensitive business areas for both under-
writing and investments where we could have significant business
risks across regions and lines of business. In 2014, we further devel-
oped our approach to screening sensitive countries and human
rights risks, to complement our existing sensitive business guide-
lines.
We do not exclude certain businesses by default, instead, we
analyze each risk on a case-by-case basis and see if and how the risk
can be mitigated. When an ESG risk is detected in one of the sensitive
business areas during due diligence, a mandatory referral process is
triggered, which can result in an escalation up to Board level. Over
the course of 2014, Allianz assessed a wide range of sensitive business
for ESG considerations. Overall, 150 transactions were reviewed
across our insurance and investment business. 81 % of transactions
were approved, 10 % were given conditional approval subject to further
information or mitigating actions being taken and 9 % declined.
Integrating ESG considerations into existing core processes
allows for quicker implementation and adoption by our underwriters
and investment and asset managers. During 2014, we integrated our
sensitive business areas and sensitive countries list into the core
underwriting and investment standards for alternative investments
of own assets and our overarching risk management framework2.
Trusted company
In our role as a company, we aim for transparency in business activi-
ties and treat customers, employees and partners with integrity and
honesty. We are committed to minimizing our environmental impact
and are constantly working to achieve low-carbon operations.
1
www.allianz.com/sustainability
2
For more information on risk management, please refer to page 123.
Annual Report 2014
Allianz Group
73
cuStomEr rELationSHip manaGEmEnt
Digital technology has completely changed the way consumers make
purchasing decisions and buy insurance or investment products. We
seek to provide our customers with convenient access to Allianz,
making it easy for them to shift seamlessly between physical and
digital interaction and with the required flexibility in adapting our
products and services to their changing needs.
We therefore aim for real-time customer interaction and invest
in the technology needed to easily and efficiently provide persona-
lized offers and services, combining face-to-face advice from Allianz
agents and partners with customer service centers and online tools.
In an increasing number of markets, Allianz customers can get an
insurance offer simply and quickly over the internet by providing
only a few pieces of data and can then decide to buy directly online
or finalize their purchase at an agency. This innovative “FastQuote”
approach reflects our customers’ preference for easy online access to
insurance products. With “ Allianz1”, for example, a modular offering
launched in Italy in 2014, customers can tailor their insurance cover
to their individual requirements and personal budget by choosing
from 13 modules ranging from home and accident insurance to life
and health cover as well as assistance services.
Meeting our customers’ needs through relevant products and
services and earning their loyalty is vital for our sustainable growth.
The Net Promoter Score (NPS) is our measurement of customers’ will-
ingness to recommend Allianz. It has been established as our key
global metric for customer loyalty in about 40 Allianz companies
worldwide, representing around 90 % of gross premiums written. Top-
down NPS is measured annually according to global cross-industry
standards and allows benchmarking against competitors in respec-
tive markets.
In 2014, 47 % of Allianz businesses significantly outperformed
their local peer average and 32 % achieved loyalty leadership in their
market. While we did improve our performance in many markets, so
too did our local peers. In 2015, by leveraging successful customer
experience initiatives among our local entities, we expect that more
Allianz companies will outperform their local peer average with their
NPS performance.
To steadily improve our customer service, we apply bottom-up
NPS: asking our customers for direct feedback after key interactions
with Allianz – such as sales and claims handling. This helps us to
identify areas for improvement and continuously monitor the impact
of measures taken.
cuStomEr BaSE
Overall, the number of customers insured by Allianz worldwide grew
from more than 83 million in 2013 to 85 million in 2014. Organic
growth contributed with 1 million customers.
cuStomErS By rEGion/country1
as of 31 December 2014 [31 December 2013] in %
Anglo Markets 8.0 [7.9]
USA 1.4 [1.4]
Growth Markets 30.6 [32.3]
Rest of Europe &
Latin America 18.8 [18.5]
Germany 23.9 [24.0]
Rest of German Speaking
Countries 2.6 [2.6]
France 6.8 [6.0]
Italy 7.9 [7.3]
1
Customer figures exclude clients in microinsurance, pension funds and all Global Lines.
For more information on our customer base, read
page 65.
aLLianZ Brand1
Our brand plays a key role in driving the growth of our business in the
long term. It fosters close bonds with our customers – even more so
in the digital context – and consequently helps us to build sustain-
able relationships. In many countries around the globe our brand is
well-established: Allianz stands for a trusted partner in peoples’ lives,
helping them to make the right decisions and gain confidence to
achieve their goals. In 2014, our Allianz-branded revenues stood at 83 %
(2013: 82 %) of total revenues. Our “One-Brand” strategy leaves room
for our renowned specialty brands such as PIMCO and Euler Hermes
that use Allianz as their reference.
As part of our global brand management process, we use a stan-
dardized market research design to monitor and benchmark the
performance of the Allianz brand regularly against local competitors.
This research covers over 38,000 consumers in 26 countries. Our
brand performance was again acknowledged in 2014: In the annual
100 Best Global Brands Ranking from Interbrand, Allianz remains one
of the strongest growing financial services brands, with our brand
value increasing by 15 % to approximately USD 7.7 BN (2013: USD 6.7 BN).
In 2014, we continued to invest in our brand. Building on our
successful global brand communication framework “ONE”, which
has been rolled out in over 30 countries to date, we also launched a
dedicated brand campaign in Asia to strengthen Allianz as the trusted
1
Our Allianz trademark is registered and protected worldwide, as are our domain names. Furthermore,
we have registered our corporate design and brand claim “Allianz. With you from A-Z.” in relevant coun-
tries worldwide. In order to maintain the distinctiveness and strength of our Allianz brand, we continuously
monitor possible infringements of our trademark applications and registrations by third parties.
74
Annual Report 2014
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Group Management Report
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Business Operations and Markets
63
70 Strategy and Steering
73 Progress in Sustainable Development
insurance and investment partner in the region. The global cam-
paign was extended with local brand activities in Indonesia, Malaysia,
Thailand and Taiwan. Through our strong presence in digital plat-
forms, including social media, we achieved high consumer engage-
ment overall with our brand and business.
With our established sponsorship portfolio, we anchor corpo-
rate responsibility as a vital component in our strategy: for example
through our commitment to the Paralympic Movement, which
was highlighted by the Paralympic Winter Games 2014 in Sochi,
or our partnerships in Formula 1TM and our Road Safety program with
36 local entities participating in 2014. As a long-term investment in
the Allianz brand, we strengthened our successful partnership with
FC Bayern München, acquiring an 8.33 % share. With the opening of
Allianz Parque in Sao Paulo in 2014 and the Allianz Stadion in Vienna,
which will be built by 2016 as the new home ground for the Austrian
football team SK Rapid Wien, we now have six members in our family
of stadiums. Our global stadium sponsorship and naming rights
strategy was acknowledged at TheStadiumBusiness Awards 2014 by
receiving the Sponsorship, Sales & Marketing Award as well as the
Sustainability Award for Allianz Park in London. Furthermore, our
partnership with world-renowned pianist Lang Lang and his Lang
Lang International Music Foundation received the International
Sponsoring Award for its innovative approach in combining youth
education with a brand ambassador.
EnvironmEntaL manaGEmEnt
As a business, we are committed to reducing our environmental
impact and have formalized this in our Carbon Reduction Strategy.
The target is to reduce our carbon emissions per employee by 35 % by
2015 against a 2006 baseline. Since 98.3 % of the Group’s emissions
come from energy, travel and paper, we focus our activities on these
three areas. Because energy use is the largest contributor to our car-
bon footprint, we also have a specific energy target: to reduce energy
consumption per employee by 10 % by 2015 against a 2010 baseline. As
our current target period will end in 2015, we are in the process of
developing post-2015 environmental targets.
BrEakdown of co2 EmiSSionS1
as of 31 December 2014 in %
Energy
Travel
Paper
Water
Waste
2014
53.9
40.3
4.1
0.2
1.5
1
KPMG Wirtschaftsprüfungsgesellschaft AG has provided limited assurance on the 2014 environmental
performance information. For further information, please refer to www.allianz.com/sustainability.
We continued to reduce the carbon footprint of our business in 2014.
Our overall CO2 reduction since 2006 now stands at 41.3 % per employee
and energy reduction since 2010 is now 27.2 % per employee. As part
of our overarching Climate Change Strategy, and in addition to our
carbon reduction target, we have been a carbon-neutral business
since 2012 by offsetting our remaining emissions through direct
investments in carbon projects.
EnvironmEntaL footprint1
as of 31 December
Total emissions
Per employee emissions
Total energy consumption
thereof: Renewables
Total travel – plane, train, car
Total paper consumption
in metric
tons co2e
in metric
tons co2e
in GJ
in %
in tkm
in metric
tons
2014
2013
2012
322,529
348,6612
344,776
2.20
2,596,317
40.0
963,958
2.392
2.40
3,084,6012 3,079,897
39.2
931,356
38.92
967,210
19,774
18,2552
20,193
1
2
KPMG Wirtschaftsprüfungsgesellschaft AG has provided limited assurance on the 2014 environmental
performance information. For further information, please refer to www.allianz.com/sustainability.
2013 figures were adjusted for error corrections.
compLiancE manaGEmEnt
Allianz’s Compliance Management System aims to ensure compli-
ance with internationally recognized laws, rules and regulations, and
to promote a culture of integrity in order to safeguard the company’s
reputation. In 2014, we continued with measures to further strengthen
the effectiveness of compliance management by enhancing quality
assurance, global reporting on compliance risks and independent
reviews of key elements of our compliance program1.
A high level of data privacy has been established throughout the
Group. During 2014, the Allianz Group Data Protection function sup-
ported subsidiaries in implementing the Allianz Standard for Data
Protection and Privacy and establishing appropriate data privacy
management systems by providing, for example, awareness materials
or risk assessment templates. The most important step is the assess-
ment of all the processes that collect and manage personal data, in
order to check their legal feasibility as well as the necessity for spe-
cific privacy controls.
1
For further information on our compliance program, please refer to the Statement on Corporate Manage-
ment pursuant to § 289a of the HGB on page 41.
Annual Report 2014
Allianz Group
75
Committed corporate citizen
Attractive employer1
Allianz aspires to be a committed corporate citizen by contributing
to the communities in which we operate. We strive to advance local
social well-being and support informed decision-making at a govern-
mental level as part of our vision to build the strongest financial com-
munity. As a global company, we take our role in society very serious-
ly and see this as more than “just” making donations. We therefore
offer our employees the possibility of donating their skills and experi-
ence to advance social well-being in our local communities.
Globally, we employ 147,425 (2013: 147,627)2 people in over 70 coun-
tries. Our business strategy requires us to have the best people in
place in order to deliver success today and over the long term. Our
aim is to create a consistent approach to HR management across the
Group and we do this by providing Allianz companies with strategic
HR frameworks, principles and tools covering key areas such as talent
management, rewards and performance, employee engagement and
diversity.
poLiticaL EnGaGEmEnt
As a company headquartered in Germany, Allianz contributes to
democratic political parties that support the social market economy.
In 2014, as in the previous year, we contributed equal amounts to
political parties in Germany representing a variety of views within
the political spectrum: the Green Party (Bündnis 90/Die Grünen),
Christian Democrats (CDU), Christian Social Union (CSU), Liberals
(FDP) and Social Democrats (SPD). To support their activities during
the European Parliament elections in May 2014 these political parties
received a one-time donation of € 20,000. We also donated € 10,000 to
each of the junior organizations of the Green Party (Green Youth),
CDU (Junge Union), CSU (Young Union in Bavaria), the FDP (JuLis) and
SPD (Young Socialists).
community EnGaGEmEnt
In 2014, we donated € 21 MN (2013: € 19 MN) to assist local communi-
ties and offered further support through our international network
of 14 Allianz-affiliated corporate foundations. We also offer a number
of employee volunteering opportunities in local communities. For
example, My Finance Coach fosters financial literacy among young
people, and reached more than 219,000 students in Germany alone
in 2014. The leadership development program Social OPEX saw
48 employees from 12 Allianz subsidiaries share their expertise with
21 socially-committed organizations.
taLEnt manaGEmEnt
We take a common and systematic approach to developing talent
across all Allianz companies. To ensure the quality and performance
of our employees, we focus on managing and developing talent and
careers by assessing performance and potential, providing appropri-
ate development actions and ensuring robust succession plans. We
develop both leadership and functional skills to ensure our employees
can achieve current and future business and personal development
goals. In order to meet future staff needs, we promote the necessity
of lifelong learning. Also, our Strategic Workforce Planning proac-
tively supports strategic HR decision-making by supplying forecasts
on economic, demographic and socio-cultural trends.
traininG kEy fiGurES1
Total expenses in training
Training expenses per employee
€ mn
€
Average training days per employee, staff
2014
2013
2012
91
668
3.0
86
629
3.0
93
707
2.6
1
Figures based on the number of employees in Allianz’s core business. Excluded are fully consolidated
companies which are considered as pure financial investments, non-profit organizations e.g. founda-
tions and companies classified as held for sale.
divErSity
Allianz recognizes the importance of having a diverse, inclusive
workforce that is made up of employees from different backgrounds.
We understand that promoting diversity is necessary to be successful
as a global company and have implemented a number of initiatives
to support this. Consistent with our Code of Conduct, Allianz has a
zero-tolerance policy against discrimination and harassment in the
workplace.
1
2
For more information on HR management, read the chapters in our Sustainability Report 2014 (www.
allianz.com/sustainability) as well as the HR fact book 2014 (www.allianz.com/hrfactbook).
Total number of employees with an employment contract of all affiliated companies (core and non-core
business).
76
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70 Strategy and Steering
73 Progress in Sustainable Development
As part of our efforts to advance women at Allianz, in 2008 we set
ourselves the global target of increasing the share of women in the
talent pool for executive positions to 30 % by 2015. A top management
sponsorship program for women and flexible work-life programs,
such as part-time employment or job sharing, are part of our sup-
porting actions taken in several countries.
womEn acroSS tHE aLLianZ Group1
in %
Women in executive positions2
Female managers3
Share of women in overall workforce
2014
23.1
36.2
52.9
2013
21.2
35.5
52.8
2012
19.4
33.9
52.5
1
2
3
Figures based on the number of employees in Allianz’s core business. Excluded are fully consolidated
companies which are considered as pure financial investments, non-profit organizations e.g. founda-
tions and companies classified as held for sale.
Including women at all executive positions below the Board of Management.
Including women functionally responsible for other staff, regardless of level, e.g. division, department,
and team managers.
We continue to help the integration of employees with disabilities
into the workplace. Group-wide guidelines ensure that buildings,
workstations and websites are accessible to wheelchair users, the
blind and visually impaired. A number of our subsidiaries actively
recruit graduates with disabilities for underwriter positions, for
example, and others hire visually impaired call-center operators.
SuStainaBLE vaLuE approacH to rEmunEration
Our remuneration and incentive structures are designed to encour-
age sustainable value creation and are guided by clear frameworks
that promote strong governance. We use an appropriate mix of mon-
etary and non-monetary rewards for our workforce, taking into
account the particular role of an employee, business activities and
local remuneration and regulatory environments.
The Allianz Group paid a total of € 9.0 BN (2013: € 9.1 BN) to its
employees worldwide in 2014. Of this, approximately 29 % was for
performance-related (variable) remuneration elements. € 2.5 BN
(2013: € 2.4 BN) was spent on social security contributions, pensions
and other social benefits.
EmpLoyEE EnGaGEmEnt
The Group-wide Allianz Engagement Survey (AES) gathers employee
feedback on a range of relevant issues, including factors identified as
promoting a high-performance culture within Allianz. In 2014, over
120,000 employees from 67 Allianz companies were invited to partici-
pate, with 84 % responding. The Employee Engagement Index is a key
measure of employee satisfaction, loyalty, advocacy and pride. The
results of the AES are directly linked to the performance objectives of
the Group’s Board of Management.
EmpLoyEE EnGaGEmEnt indEx
Employee Engagement Index
2014
72
2013
73
2012
70
Sustainable insurer
We are one of the world’s leading industrial insurers and our product
portfolio includes a wide range of Property-Casualty and Life/Health
insurance products for both retail and corporate customers. As a sus-
tainable insurer, we understand that integrating environmental,
social and governance (ESG) issues in our risk analysis presents a
major opportunity to reduce risks in underwriting – for us and our
customers. Furthermore, we offer a selection of products and services
that enable economic development, support a low-carbon economy
and foster financial inclusion.
ESG in undErwritinG
We apply our ESG Guidelines on Sensitive Business Areas to all insur-
ance businesses globally, focusing on corporate customers. They are
relevant to all contracts, whether we act as lead insurer or as part of
a panel, whether it is for single projects, multi-site risks or supporting
complex global insurance client needs. In 2014, we set up a support
function in Allianz Global Corporate & Specialty (AGCS), our indus-
trial insurer, to pre-screen business before escalation for Group
review on sensitive business. The unit offers ESG support for insur-
ance transactions and acts as a center of competence for Property-
Casualty insurance, as well as providing proactive screening of ESG
risks in portfolios. Training is a key part of successfully implementing
our ESG approach and in 2014 we integrated the ESG risk escalation
process into global training modules for underwriters and delivered
a range of trainings to our engineering and liability underwriters.
Annual Report 2014
Allianz Group
77
GrEEn SoLutionS
As part of our Climate Change Strategy, we continue to offer more
“green” solutions to our customers worldwide that support the transi-
tion to a low-carbon economy, protect the environment and help
customers prepare for the negative effects of climate change and
mitigate associated risks. In 2014, we offered 156 such solutions, with
revenues of € 1.3 BN (2013: € 1.2 BN)1, reaching more than 4.7 MN cus-
tomers (2013: 4.3 MN).
microinSurancE
The people most vulnerable to risks associated with natural disasters,
accidents and illness are those with low incomes, living in developing
countries. Microinsurance offers an affordable way of protecting
against these risks, with premiums that start from as low as € 1 a year.
Allianz offers microinsurance products in eleven countries in Asia,
Africa and Latin America and our products range from life insurance
to crop index insurance. 2014 saw continued strong growth and we
now insure 44.6 million people (2013: 26.1 million)1, with revenues of
€ 114 MN (2013: € 86 MN)2. For more information on future risks and
opportunities, please refer to the Risk and Opportunity Report from
page 123.
Responsible investor
Our responsibilities as an investor are two-fold: Firstly, we invest our
own assets, which include premiums collected from our insurance
customers, and we systematically integrate ESG issues into our own
investment processes. Secondly, in our third-party asset manage-
ment business, we invest on behalf of our asset management cus-
tomers. We aim to tailor products, solutions and distribution that
best meet our clients’ needs and further strengthen the brand of our
asset management subsidiaries, Allianz Global Investors ( AllianzGI)
and PIMCO, and offer a growing number of Sustainable and Respon-
sible Investment (SRI) products.
ESG in invEStmEnt of own aSSEtS
As large institutional investors, insurance companies play an impor-
tant role in funding a low-carbon economy. Climate-related invest-
ments, such as renewable energy, are an attractive growth market as
they contribute to greater portfolio diversification. They also provide
sound and stable long-term returns that are generally not linked to
the ups and downs of the financial markets – which fits in well with our
investment strategy for life insurance premiums. We are one of the
leading investors in renewable energy globally, with more than € 2 BN
invested to the end of 2014 (2013: € 1.7 BN). We are steadily expanding
in this sector, with planned investments of around € 400 MN per year.
In our real estate investment, Allianz Real Estate has a compre-
hensive sustainability program. We apply specific sustainability
metrics in investment and property management processes and
actively engage with tenants. In 2014, we started a pilot project to
track sustainability indicators in order to evaluate the progress of our
sustainability program.
ESG in tHird-party aSSEt manaGEmEnt
Embedding ESG issues into asset management and offering corre-
sponding products and services are common practice in both
AllianzGI and PIMCO. Building strong ESG research capabilities,
engaging with the companies they invest in and pursuing active
share ownership through proxy voting are at the heart of their ESG
strategies. The SRI portfolio has been growing over the last few years.
At the end of 2014, assets under management in our SRI funds totaled
€ 95.4 BN (2013: € 78.2 BN) for PIMCO and € 22.0 BN (2013: € 17.5 BN) for
AllianzGI, bringing the total to € 117.4 BN – which is 7 % of our total
third-party assets under management.
1
2
2013 figure was adjusted for error corrections.
Figures include non-consolidated entities (i.e. India).
78
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Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Business Environment
Economic environment 2014
ANOTHER YEAR WITH ONLY
MODERATE ECONOMIC GROWTH
Global economic performance in 2014 can be described as overall
moderate expansion, with rather divergent developments in the indi-
vidual countries and regions. Economic output also varied widely
between the respective quarters. In the United States, for example,
the exceptionally cold winter put such a damper on domestic
demand that overall output contracted in the first quarter. As a result,
catch-up effects contributed to a significant rebound in the second
quarter. In Central and Eastern Europe many countries benefitted
from the modest recovery in the Eurozone. Countries like Hungary
and Poland registered average growth of more than 3 % in 2014. By
contrast, Russia’s economy suffered severely from structural problems,
economic sanctions linked to the Ukraine conflict and the collapse
in oil prices. As a result, the country slipped into recession in late 2014.
All in all, global economic output is likely to have grown by 2.5 % in
2014, marginally higher than in 2013 when output increased by 2.3 %.
Gross domestic product (GDP) in industrialized countries rose
by about 1.6 % on average last year. While the United States registered
fairly solid growth of 2.4 %, real GDP in Japan more or less stagnated,
weighed down by weak domestic demand in the wake of last year’s
VAT hike. Real GDP in the Eurozone increased on average by 0.9 % in
2014, the first positive result in three years. The overall Eurozone fig-
ure conceals some major differences, however. For the first time in
several years all member countries that underwent severe macroeco-
nomic adjustments finally returned to growth. Spain, for example,
registered growth of 1.4 % last year, following a protracted spell of
economic contraction. Irish GDP expanded by more than 4 %. At 1.6 %
the German economy recorded moderate growth, but fears that the
deterioration in sentiment in the summer might trigger a downswing
did not materialize. By their standards, emerging markets expanded
by a rather disappointing 4.0 % on average, with economic growth in
emerging Asian markets coming in at 6.1 %.
In 2014, financial markets stood under the twin spell of monetary
policy and geopolitical tensions – like the conflict between Russia
and Ukraine. In the United States, the Federal Reserve Bank started a
gradual exit from its ultra-loose monetary policy by completely phas-
ing out its bond purchasing program in the course of 2014. By con-
trast, the European Central Bank continued to ease its monetary
policy stance, amongst other measures by further lowering its key
interest rate to 0.05 %. Yields on 10-year German government bonds
ended 2014 at 0.5 %, a decline of about 140 basis points compared with
a year earlier. Spreads on sovereign bonds of debt-ridden Eurozone
member countries continued to narrow substantially, with the
exception of Greece. The performance of major stock market indices
was mixed, with gains in the Eurozone more muted than in 2013. The
Euro depreciated considerably against the U.S. Dollar in the second
half of 2014. The diverging monetary policies of the Federal Reserve
Bank and the European Central Bank were a key factor behind this
downward correction. The massive drop in oil prices that started in
mid-2014 exacerbated the economic crisis in Russia, prompting a
steep slide in the Ruble against major currencies. Against the Euro
the Russian currency lost 33 % in the course of 2014.
Business environment 2014:
insurance and asset management industry
Against the backdrop of subdued economic growth and rising geo-
political tensions, the insurance industry as a whole weathered the
year 2014 rather well, with premium growth and profitability remain-
ing more or less stable. However, this stability conceals considerable
differences between business lines and markets. In the property-
casualty sector, premium growth eased up, mainly due to the eco-
nomic slowdown in the emerging markets. On the other hand, pre-
mium growth in the life sector picked up, led by strong demand in
China and the rebound in the United States. The relative stable prof-
itability, too, masks different trends: while the gradual strengthening
of premium rates and a benign claims environment were positives in
2014, the investment environment remained challenging, to say the
least. The prolonged period of low interest rates increased the rein-
vestment risk as assets had to be reinvested at lower rates, putting
returns under pressure.
In the property-casualty sector, premium growth in advanced mar-
kets was basically unchanged from the previous year. Slightly lower
growth in the United States was compensated by some strengthening
in Europe, although some markets in southern Europe such as Spain,
Italy and Greece remained in the doldrums. In emerging markets,
weaker economic activity took its toll on premium growth too: many
markets, first and foremost in Eastern Europe, showed significantly
slower growth than in the previous year. The notable exception was
the Chinese market, which was buoyed by a strong motor business.
Overall, according to our own estimates and based on preliminary
figures, global premiums grew by around 4 % in 2014 (in nominal
terms and adjusted for foreign currency translation effects).
Annual Report 2014
Allianz Group
79
Underwriting profitability remained on average stable, with
combined ratios in most markets clearly below 100 %, reflecting a gen-
eral positive rate development and a benign claims environment:
global catastrophe losses remained low for a third year in a row. How-
ever, overall profitability was restrained by the challenging invest-
ment environment. Hopes for rising yields were dashed again in 2014
as interest rates fell even further, driving investment returns lower.
In the life sector, premium income growth in advanced markets was
markedly higher than in the previous year. The main drivers were the
rebound of the U.S. market from its dip in 2013 and the strong perfor-
mance of some European markets, notably Italy and France. Premium
growth in emerging markets remained on average strong. In particular,
the Chinese and Indian markets returned to form, putting some
weaker years firmly behind them. However, markets in Latin America
and Eastern Europe grew rather below their trend growth of recent
years. In total, according to our own estimates and based on pre-
liminary figures, global premiums grew by around 5 % in 2014 (in
nominal terms and adjusted for foreign currency translation effects).
The prevailing low yield environment posed the greatest chal-
lenge for profitability in the life sector as it caused the spread between
returns on assets and guaranteed rates to shrink. Life insurers reacted
to this spread compression by enhancing asset-liability manage-
ment, increasing reserves and shifting the portfolio mix toward less
liquid assets such as infrastructure. Moreover, many insurers started
to de-risk their product design by restructuring their business
towards less interest-sensitive products with reduced or flexible
guarantees. All in all, life insurers managed to maintain their rela-
tively high profitability and keep their robust capital position.
General economic growth in 2014 again lagged behind the long-term
trend in OECD countries, with correspondingly subdued growth pros-
pects for the asset management industry. For the asset management
industry as a whole, it was a year of surprises, varying from falling
long-term interest rates, a rising U.S. Dollar, political instability in
various regions of the world and a sharp decline in oil prices in the
last quarter. In addition, as for most of the past six years, capital mar-
kets were also driven by the actions of central banks.
Persistently low interest rates are having a major impact on
interest-bearing investments. Contrary to the expectations of many
market participants, 2014 did not see a broad rise in interest rates. On
the one hand, yields on maturities of 10 years and longer were down,
especially in the United States and in Europe. The yield on 10-year U.S.
government bonds, for instance, fell from 3 % at the beginning of the
year to around 2 % at the end of December. On the other hand, yields
on shorter maturities continued to rise during the last months of 2014.
Stock markets were highly volatile and European indices were
particularly prone to strong fluctuations in the second half of 2014. At
the end of the year equity markets reacted negatively to falling oil
prices, to the prospects of an interest rate hike from the Federal
Reserve in the first half of 2015 and to market expectations of addi-
tional monetary stimulus in the Eurozone and Japan.
Overall, markets recorded continuing net inflows into equity
and fixed income as money provided by central banks in Western
countries was flooding the markets in search of safety or returns – in
particular into global equity as well as taxable and tax-exempt bonds.
Most active asset managers were able to capture a portion of the
organic growth, but there was also a significant shift to passive prod-
ucts visible in the markets, especially in the United States. The flow
development, as well as rising assets under management, drove rev-
enues and profits higher.
80
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Executive Summary of 2014 Results
− Revenues increased to € 122.3 BN.
− Operating profit grew 3.3 % to € 10,402 MN.
− Net income increased to € 6,603 MN.
− Solvency ratio remained strong at 181 %.1
Allianz Group overview
Allianz SE and its subsidiaries (the Allianz Group) have opera-
tions in over 70 countries. The Group’s results are reported by
business segment: Property-Casualty insurance operations,
Life/Health insurance operations, Asset Management and
Corporate and Other.
Key figures
key figures AlliAnz group
€ mn
Total revenues
Operating profit
Net income
Solvency ratio1 in %
2014
122,253
10,402
6,603
181
2013
110,773
10,066
6,343
182
Net income rose 4.1 % to € 6,603 MN. This was mainly driven by our
strong operating performance and an extraordinary tax benefit, but
slightly dampened by the development of our non-operating result.
Net income attributable to shareholders and non-controlling interests
was € 6,221 MN (2013: € 5,996 MN) and € 381 MN (2013: € 347 MN), respec-
tively.
Our shareholders’ equity increased by € 10.7 BN to € 60.7 BN. Our
conglomerate solvency ratio remained strong at 181 %1.
Earnings summary
mAnAgement’s Assessment of 2014 results
Our total revenues grew 10.4 % – or 10.6 % on an internal basis2 – reach-
ing € 122.3 BN. However, the operating environment remains chal-
lenging, especially for our Life/Health business. Our revenue growth
was mainly driven by our Life/Health business, supported by a strong
increase in our Property-Casualty revenues. Revenues in our Corpo-
rate and other business remained flat, while operating revenues in
our Asset Management business declined.
Our operating profit went up 3.3 % to € 10,402 MN, which is within
the upper end of our target range. The main driver of this was the
strong investment margin in our Life/Health business. In our Corpo-
rate and Other business, the recovery in the banking segment was the
biggest driver of the improvement, while our Property-Casualty busi-
ness benefited from strong premium growth and a stable combined
ratio. Our Asset Management business, however, was impacted by
lower operating revenues.
1
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. Off-balance sheet reserves are accepted
by the authorities as eligible capital only upon request. Allianz SE has not submitted an application so far.
Excluding off-balance sheet reserves, the solvency ratio as of 31 December 2014 would be 172 % (31 De-
cember 2013: 173 %).
2
Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions
and disposals. Please refer to page 121 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.
Annual Report 2014
Allianz Group
81
Total revenues1
Operating profit
totAl revenues – Business segments
operAting profit – Business segments
� mn
140,000
120,000
100,000
80,000
60,000
40,000
20,000
+ 10.6 %
(2.2) %
(8.5) %
+ 19.5 %
122,2531
556
6,388
67,331
+ 3.0 %
48,322
� mn
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
110,7731
551
7,162
56,784
46,579
2013
2014
10,0661
3,161
2,709
5,267
(1,004)
2013
+ 3.3 %
(17.6) %
+ 22.8 %
+ 2.2 %
+ 18.3 %
10,4021
2,603
3,327
5,382
(820)
2014
Property-Casualty
Internal growth
Total revenues include € (344) mn (2013: € (302) mn) from consolidation.
Asset Management
Life/Health
1
Corporate and Other
Property-Casualty gross premiums written grew 3.7 % and totaled
€ 48.3 BN. Internal growth2 of 3.0 % was entirely volume driven.
Life/Health statutory premiums amounted to € 67.3 BN3, an
increase of 19.5 % on an internal basis2. This growth was largely driven
by our fixed-indexed annuity product business in the United States,
strong sales of unit-linked and savings products in Italy and an
increase in the single premium business with reduced guarantees in
Germany.
Asset Management operating revenues amounted to € 6.4 BN, a
decrease of 8.5 % compared to 2013 on an internal basis2. This was
mainly due to lower performance fees, which were exceptionally high
in 2013 and thus fell by € 235 MN to € 275 MN in 2014, as well as lower
average assets under management. The allocation of certain entities
to other business segments4 also contributed to the decrease in oper-
ating revenues.
Total revenues in our Banking operations (reported in our Cor-
porate and Other business segment) were flat at € 556 MN.
1
2
3
4
Total revenues comprise statutory gross premiums written in Property-Casualty and in Life/Health, oper-
ating revenues in Asset Management and total revenues in Corporate and Other (Banking).
Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions
and disposals. Please refer to page 121 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 fourth quarter of 2014, our French International Health business was transferred from France (Life/
Health) to the reportable segment Allianz Worldwide Partners effective 1 January 2014.
Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset
Management to the reportable segments German Speaking Countries, Western & Southern Europe and
Growth Markets within the business segment Life/Health and to the reportable segment Banking.
82
Annual Report 2014
Allianz Group
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Growth
Total operating profit includes € (91) mn (2013: € (68) mn) from consolidation.
1
Our Property-Casualty operating profit amounted to € 5,382 MN – up
by € 115 MN or 2.2 % – driven by strong premium growth and a stable
combined ratio. The underwriting result grew by € 80 MN to € 2,251 MN
due to significantly lower losses from natural catastrophe events.
The Life/Health operating profit increased by € 618 MN to
€ 3,327 MN3, mainly driven by an improved investment margin due to
gains from using derivatives to lengthen duration and a recovery in
the foreign currency result after the losses in 2013 on partially hedged
emerging markets bonds. The allocation of certain entities previously
reflected in the business segment Asset Management to the business
segment Life/Health contributed € 113 MN to this development.
Asset Management operating profit fell by € 558 MN to € 2,603 MN,
a decrease of 14.6 % on an internal basis5. The main driver of this
development was the decline in operating revenues, outpacing the
decline in operating expenses. The cost-income ratio deteriorated by
3.4 percentage points to 59.2 %, mainly driven by the sharply lower
performance fees compared to 2013 and lower assets under manage-
ment driven income.
Our operating result in Corporate and Other improved by
€ 183 MN to a loss of € 820 MN. This was mainly because of the costs
related to the closure of the Allianz Bank’s business operations in
mid-2013.
5
Operating profit adjusted for foreign currency translation and (de-)consolidation effects.
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Non-operating result
Net income
Our non-operating result decreased by € 1,131 MN to a loss of € 1,554 MN,
mainly driven by a € 901 MN reclassification of tax benefits attribut-
able to policyholders, but also by a decreased non-operating invest-
ment result.
Our non-operating investment result declined by € 350 MN to
€ 312 MN, mainly due to a decrease in income from financial assets
and liabilities carried at fair value through income.
Non-operating income from financial assets and liabilities carried
at fair value through income (net) decreased by € 326 MN to a loss of
€ 303 MN mainly due to unfavorable hedging results.
Non-operating realized gains and losses (net) were down by
€ 141 MN to € 812 MN due to a reduction in realizations on equities.
This was only partly offset by higher realizations on debt securities
mainly within our Property-Casualty business segment.
Net income increased by € 260 MN – from € 6,343 MN to € 6,603 MN –
primarily driven by our overall strong operating performance. Net
income attributable to shareholders and non-controlling interests
amounted to € 6,221 MN (2013: € 5,996 MN) and € 381 MN (2013:
€ 347 MN), respectively. Our largest non-controlling interests in net
income related to Euler Hermes and PIMCO.
Basic earnings per share rose from € 13.23 to € 13.71 in 2014 and
diluted earnings per share increased from € 13.05 to € 13.64. For further
information on earnings per share, please refer to note 51 to the con-
solidated financial statements.
Proposal for appropriation of net earnings
Non-operating impairments of investments (net) decreased by
€ 116 MN to € 197 MN. An increase in impairments on debt securities
was more than offset by a respective decrease on equities.
The Board of Management and the Supervisory Board propose that
the net earnings (“Bilanzgewinn”) of Allianz SE of € 3,786,745,743.20
for the 2014 fiscal year shall be appropriated as follows:
Non-operating interest expenses from external debt improved by
€ 55 MN to € 846 MN reflecting lower expenses on subordinated bonds.
Reclassification of tax benefits had a negative impact on our non-
operating result of € 901 MN in favor of the operating result. Thereof,
€ 892 MN are related to a favorable Federal Fiscal Court decision, initi-
ated by Allianz Leben in Germany, concerning tax deductibility of
equity losses. For the Life/Health business segment reporting, the tax
benefits are reclassified and shown within the operating profit in
order to adequately reflect policyholder participation. Thus, the non-
operating result is reduced. For the Allianz Group reporting, the tax
benefits are presented according to IAS 12 in the income tax line.
Income taxes
Income taxes decreased by € 1,055 MN to € 2,245 MN. The effective tax
rate decreased to 25.4 % (2013: 34.2 %). The decrease in income taxes
and effective tax rate was in particular due to the extraordinary tax
benefits for current and previous years from the previously-men-
tioned favorable court decision amounting to € 1,120 MN. The policy-
holder share in the tax benefits amounted to € 892 MN. Without
policy holder participation1, the Allianz Group’s effective tax rate
attributable to the shareholders would be approximately 32 %.
− Distribution of a dividend of € 6.85 per no-par share entitled
to a dividend: € 3,111,752,678.40
− Unappropriated earnings carried forward: € 674,993,064.80
The proposal for appropriation of net earnings reflects the 2,729,536
treasury shares held directly and indirectly by the company at the
time of the publication of the convocation of the Annual General
Meeting in the Federal Gazette. Such treasury shares are not entitled
to the dividend pursuant to § 71b of the German Stock Corporation Act
(AktG). Should there be any change in the number of shares entitled
to the dividend by the date of the Annual General Meeting, the above
proposal will be amended accordingly and presented for resolution
on the appropriation of net earnings at the Annual General Meeting,
with an unchanged dividend of € 6.85 per each share entitled to
dividend.
Munich, 24 February 2015
Allianz SE
1
Tax benefits for prior years allocated to policyholders of € 627 mn.
Annual Report 2014
Allianz Group
83
totAl revenues And reConCiliAtion of operAting profit (loss)
to net inCome (loss)
Events after the balance sheet date
The Allianz Group was not subject to any subsequent events which
could significantly impact the Group financial results after the bal-
ance sheet date and before the financial statements were authorized
for issue.
Other information
ChAnges in segment struCture
Effective 1 January 2014, the Allianz Group allocated certain entities
from the reportable segment Asset Management to the reportable
segments German Speaking Countries, Western & Southern Europe
and Growth Markets within the business segment Life/Health and to
the reportable segment Banking.
In the fourth quarter of 2014, the French International Health
business was transferred from the reportable segment West-
ern & Southern Europe (Life/Health) to the reportable segment
Allianz Worldwide Partners effective 1 January 2014 to reflect the
change in management responsibility and to bundle the interna-
tional health business to provide a comprehensive product range to
the customers.
BoArd of mAnAgement struCture 2015
The Supervisory Board of Allianz SE agreed to the request of Michael
Diekmann to not further extend his board appointment beyond the
Annual General Meeting (AGM) on 6 May 2015. He will remain Chair-
man of the Board of Management up to that day. Oliver Bäte has been
appointed as new CEO of Allianz SE with effect from 7 May 2015. His
contract has been extended until 30 September 2019. Oliver Bäte will
continue to be responsible for Global Property and Casualty up to the
AGM 2015. The Supervisory Board also agreed to the request of Clement
Booth to not further extend his board appointment. His mandate
ended on 31 December 2014. Upon mutual agreement and in keeping
with his request, the board mandate of Gary Bhojwani ended on
31 December 2014. The Supervisory Board appointed Sergio Balbinot
as a member of the Board of Management of Allianz SE for a duration
of four years starting 1 January 2015. Sergio Balbinot takes over
responsibility for the insurance business in the countries of western
and southern Europe (France, Benelux, Italy, Greece, Turkey and
Africa). Also effective beginning of this year Dr. Axel Theis has been
appointed as a member of the Board of Management of Allianz SE
with a duration of four years. He is in charge of the global industrial
insurance business, credit insurance, reinsurance and the insurance
€ mn
Total revenues1
Premiums earned (net)
Operating investment result
Interest and similar income
Operating income from financial assets and liabilities
carried at fair value through income (net)
Operating realized gains/losses (net)
Interest expenses, excluding interest expenses from
external debt
Operating impairments of investments (net)
Investment expenses
Subtotal
Fee and commission income
Other income
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment
contracts (net)2
Loan loss provisions
Acquisition and administrative expenses (net),
excluding acquisition-related expenses
Fee and commission expenses
Operating amortization of intangible assets
Restructuring charges
Other expenses
Reclassification of tax benefits
Operating profit (loss)
Non-operating investment result
Non-operating income from financial assets and
liabilities carried at fair value through income (net)
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
Subtotal
Income from fully consolidated private equity
investments (net)
Interest expenses from external debt
Acquisition-related expenses
Non-operating amortization of intangible assets
Reclassification of tax benefits
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
Basic earnings per share in €
Diluted earnings per share in €
2014
2013
122,253
110,773
68,274
66,628
21,443
20,918
(1,301)
3,205
(415)
(697)
(961)
21,274
10,119
216
(49,650)
(13,929)
(45)
(23,351)
(3,238)
(19)
(16)
(135)
901
10,402
(303)
812
(197)
312
(23)
(846)
7
(104)
(901)
(1,554)
8,848
(2,245)
6,603
381
6,221
13.71
13.64
(1,868)
3,334
(421)
(298)
(905)
20,761
10,492
209
(47,802)
(13,990)
(86)
(22,831)
(3,038)
–
(170)
(106)
–
10,066
23
952
(313)
662
(15)
(901)
(34)
(136)
–
(423)
9,643
(3,300)
6,343
347
5,996
13.23
13.05
1
2
Total revenues comprise statutory gross premiums written in Property-Casualty and in Life/Health,
operating revenues in Asset Management and total revenues in Corporate and Other (Banking).
Includes expenses for premium refunds (net) in Property-Casualty of € (307) mn (2013: € (162) mn).
84
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
business in Ireland and Great Britain. Starting 7 May 2015 he will also
take over responsibility for Global Property and Casualty from Oliver
Bäte. Manuel Bauer’s appointment has been extended for another
year until the end of 2015. The appointments of Dr. Dieter Wemmer
and Dr. Werner Zedelius have been extended by three years and the
appointment of Dr. Helga Jung by five years. At 1 January 2015 Manuel
Bauer also took over responsibility for the insurance business in Aus-
tralia and as of the same date Jay Ralph took over responsibility for
the life insurance business in the United States in addition to prior
responsibilities.
For further information on the current composition of the Board
of Management, please refer to Strategy and Steering starting on
page 70.
new dividend poliCy with
inCreAsed pAy-out rAtio of 50 %
During the last quarter of 2014 the Board of Management and the
Supervisory Board of Allianz SE decided to alter their dividend policy
to target an increase in pay-out ratio from 40 to 50 % of the
Allianz Group net income (attributable to shareholders). In the inter-
est of dividend continuity, the objective is to keep the dividend per
share at least at the level paid in the previous year. It is further intend-
ed to evaluate and return to the shareholders the unused budget
earmarked for external growth every three years. The first evaluation
would take place at the end of 2016. The dividend policy is subject to
a sustainable Solvency II ratio above 160 %.
This dividend policy represents the current intention of the
Board of Management and the Supervisory Board and may be revised
in the future. Also, the dividend payment in any given year is subject
to specific dividend proposals by the Board of Management and the
Supervisory Board, each of which may elect to deviate from this divi-
dend policy if appropriate under the then prevailing circumstances,
as well as to the decision of the Annual General Meeting.
Other parts of the
Group Management Report
The following information also forms part of the Group Management
Report:
− Statement on Corporate Management pursuant to § 289a of the
HGB starting on
page 40,
− Takeover-related Statements and Explanations starting on
page 42 and the
− Remuneration Report starting on
page 45.
Annual Report 2014
Allianz Group
85
Property-Casualty Insurance Operations
− Gross premiums written grew 3.7 % reaching € 48.3 BN.
− Operating profit increased 2.2 % to € 5,382 MN benefiting from strong premium
growth and a stable combined ratio of 94.3 %.
Business segment overview
Key figures
Our Property-Casualty business offers a wide range of products
and services for both private and corporate clients. Our offerings
cover many insurance classes such as motor, accident/disability,
property and general liability. We conduct business worldwide
in more than 70 countries. We are also a global leader in travel
insurance, assistance services and credit insurance. We distrib-
ute our products via a broad network of agents, brokers, banks
and other strategic partners, as well as through direct channels.
key figures property-casualty
€ mn
Gross premiums written
Operating profit
Net income
Loss ratio in %
Expense ratio in %
Combined ratio in %
2014
48,322
5,382
3,448
66.0
28.3
94.3
2013
46,579
5,267
3,817
65.9
28.4
94.3
Gross premiums written1
On a nominal basis, we recorded gross premiums written of
€ 48,322 MN, an increase of € 1,744 MN or 3.7 % compared to 2013. Nega-
tive foreign currency translation effects amounted to € 640 MN, large-
ly due to the depreciation of the Australian Dollar, the Argentine Peso
and the Turkish Lira against the Euro. This was partly offset by posi-
tive effects from the British Pound.2 Consolidation/deconsolidation
effects were positive at € 963 MN, mainly because of the acquisition of
a part of the insurance business of UnipolSai, the transfer of the
French International Health business to the reportable segment
Allianz Worldwide Partners3 and the acquisition of Yapı Kredi Sigorta
in Turkey in 2013.
On an internal basis, our gross premiums written grew 3.0 % fully
driven by a favorable volume effect.
Analyzing internal premium growth in terms of price and volume,
we use four clusters based on 2014 internal growth over 2013:
Cluster 1:
Overall growth – both price and volume effects are positive.
Cluster 2:
Overall growth – either price or volume effects are positive.
Cluster 3:
Overall decline – either price or volume effects are negative.
Cluster 4:
Overall decline – both price and volume effects are negative.
1
2
3
We comment on the development of our gross premiums written on an internal basis; meaning adjusted
for foreign currency translation and (de-)consolidation effects in order to provide more comparable
information.
Based on the average exchange rates in 2014 compared to 2013.
In the fourth quarter of 2014, our French International Health business was transferred from France (Life/
Health) to the reportable segment Allianz Worldwide Partners effective 1 January 2014.
86
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
gross premiums written by region/country1
Year 2014 [2013] in %
Asia-Pacific and Rest of World 8.2 [8.1]
USA and
Latin America 12.1 [13.0]
Other Europe 16.7 [16.3]
In our Credit Insurance business, gross premiums rose to
€ 2,158 MN. The internal growth of 2.7 % stemmed from higher vol-
umes in our growth markets primarily in the Americas, Asia and the
Middle East.
In Latin America gross premiums were € 2,101 MN. The internal
growth of 2.3 % was driven by growth in Argentina across all lines of
business. However, this was partly offset by negative volume effects
in Brazil.
In France gross premiums went up 0.7 % on an internal basis and
Germany 26.4 [27.5]
France 13.8 [12.5]
Spain 4.2 [4.2]
Italy 8.7 [8.7]
reached € 4,248 MN driven by tariff increases.
cluster 3
In the United States gross premiums were € 1,958 MN. The decrease of
4.6 % on an internal basis was largely driven by adverse volume effects
in our commercial lines and lower commodity prices for crop.
In Italy we recorded gross premiums of € 4,196 MN. On an internal
basis, gross premiums dropped 1.2 %, mainly due to a negative price
effect in our motor business, which could not be offset by volume
increases in our non-motor business.
cluster 4
In Central and Eastern Europe gross premiums were down 5.2 % on an
internal basis to € 2,227 MN. This was largely due to negative volume
effects from the downscaling of our retail business – in particular our
motor business – in Russia. Favorable volume effects in our motor
business in the Czech Republic and Romania partly offset the overall
negative impact from Russia.
Switzerland 4.3 [4.8]
United Kingdom 5.7 [5.0]
1
After elimination of transactions between Allianz Group companies in different countries and different
reportable segments. Gross premiums written from our specialty lines have been allocated to the respective
geographic regions.
cluster 1
In the United Kingdom gross premiums increased 12.0 % on an internal
basis to € 2,684 MN. This was mainly due to higher volumes in our
motor retail and pet insurance business.
Allianz Worldwide Partners recorded gross premiums of
€ 3,341 MN. The main drivers of the internal growth of 9.9 % were posi-
tive volume effects in our travel business in the United States and
United Kingdom as well as in our international health business.
In Ireland gross premiums amounted € 439 MN – up 6.7 % on an
internal basis. This was largely due to higher volumes in our personal
lines.
In Germany gross premiums climbed to € 9,532 MN – an increase
of 2.6 % on an internal basis. This growth was generated by our motor
retail and commercial non-motor business with favorable price and
volume effects.
cluster 2
In Asia-Pacific we recorded a 13.1 % increase in gross premiums to
€ 722 MN. The internal growth was mainly due to higher volumes in
our motor and health business.
At AGCS gross premiums stood at € 5,389 MN – a rise of 8.1 % on an
internal basis. The strong volume effects in our liability and engineer-
ing lines were partly offset by negative price effects in our energy and
aviation lines of business.
In Australia gross premiums totaled € 2,763 MN. The internal
growth of 3.7 % was mainly due to higher volumes in our motor busi-
ness, which could not be offset by slightly negative price effects in our
domestic motor and commercial property business.
In Spain gross premiums grew 2.9 % on an internal basis to
€ 2,015 MN. This increase was mainly generated by positive volume
effects across all our lines of business.
Annual Report 2014
Allianz Group
87
The following operations contributed positively to the development
of our accident year loss ratio:
Germany: 1.6 percentage points. This was largely because of a
reduced burden from natural catastrophe events compared to the
previous year – which was severely impacted by storm Andreas and
the Frederic floods. The improvement was further supported by a
lower attritional claims ratio and favorable price momentum, par-
ticularly in our retail motor and commercial non-motor business.
France: 0.3 percentage points. This was driven by an improve-
ment in the attritional loss ratio supported by lower claim frequen-
cies and less impact from single large losses.
Reinsurance: 0.3 percentage points. The improvement resulted
from lower losses from natural catastrophes.
The following operations contributed negatively to the development
of our accident year loss ratio:
Latin America: 0.4 percentage points. The negative impact
stemmed mainly from Brazil.
AGCS: 0.2 percentage points. This was driven by a higher impact
of single large losses.
United States: 0.2 percentage points. The negative development
was largely driven by commercial liability, crop and higher losses
from natural catastrophes.
Our run-off result decreased by € 304 MN to € 1,385 MN – resulting in a
run-off ratio of 3.2 % – 0.9 percentage points lower than in 2013.
Reserve releases across most of our operating entities were reduced
by a 0.7 percentage point negative impact from reserve strengthening
in the United States, Russia and Brazil.
Total expenses amounted to € 12,400 MN in 2014, compared to
€ 11,942 MN in the previous year. Our expense ratio improved slightly
to 28.3 %, positively impacted by the removal of the fire levy in Austra-
lia amongst other effects. Receivable write-offs in Brazil and integra-
tion costs for the acquisition of a part of the insurance business of
UnipolSai in Italy dampened the positive development.
Operating profit
operating profit
€ mn
Underwriting result
Operating investment income (net)
Other result1
Operating profit
2014
2,251
3,066
66
5,382
2013
2,170
3,049
48
5,267
1
Consists of fee and commission income/expenses, other income/expenses and restructuring charges.
Operating profit increased by € 115 MN to € 5,382 MN. This was mainly
driven by strong growth in premiums earned and a stable combined
ratio.
Our underwriting result grew by € 80 MN to € 2,251 MN. Signifi-
cantly lower losses from natural catastrophe events were partially
offset by a higher impact from single large claims and a lower run-off
contribution compared to last year. Overall, the combined ratio was
unchanged at 94.3 %.
underwriting result
€ mn
Premiums earned (net)
Accident year claims
Previous year claims (run-off)
Claims and insurance benefits incurred (net)
Acquisition and administrative expenses (net)
Change in reserves for insurance and investment
contracts (net) (without expenses for premium
refunds)1
Underwriting result
2014
43,759
(30,263)
1,385
(28,878)
(12,400)
2013
42,047
(29,402)
1,689
(27,713)
(11,942)
(231)
2,251
(223)
2,170
1
Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of
“change in reserves for insurance and investment contracts (net)”. For further information, please refer
to note 34 to the consolidated financial statements.
Our accident year loss ratio stood at 69.2 % – a 0.8 percentage point
improvement compared to the previous year’s figure. This was pre-
dominantly the result of lower losses from natural catastrophes from
€ 1,218 MN to € 400 MN, a decrease of 2.0 percentage points to 0.9 %.
Excluding losses from natural catastrophes, our accident year
loss ratio was 68.2 %, up 1.2 percentage points compared to the previ-
ous year. This increase was mainly driven by Brazil and by single large
claims at AGCS, which offset the favorable development in attritional
losses in France and Germany.
88
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
operating investment income (net)1
€ mn
Interest and similar income
(net of interest expenses)
Operating income from financial assets and
liabilities carried at fair value through income (net)
Operating realized gains/losses (net)
Operating impairments of investments (net)
Investment expenses
Expenses for premium refunds (net)2
Operating investment income (net)
2014
2013
3,525
6
186
(20)
(323)
(307)
3,066
3,542
(75)
70
(11)
(315)
(162)
3,049
1
2
The operating investment income (net) for our Property-Casualty business segment consists of the
operating investment result – as shown in note 6 to the consolidated financial statements – and expenses
for premium refunds (net) (policyholder participation) as shown in note 34 to the consolidated financial
statements.
Refers to policyholder participation, mainly from APR (accident insurance with premium refunds) business,
and consists of the investment-related part of “change in reserves for insurance and investment con-
tracts (net)”. For further information, please refer to note 34 to the consolidated financial statements.
Operating investment income (net) amounted to € 3,066 MN – up by
€ 17 MN. This was mainly driven by a higher foreign currency result
net of hedging.
Interest and similar income (net of interest expenses) decreased
slightly by € 17 MN to € 3,525 MN resulting from reduced interest
income on debt securities due to lower interest rates, partially com-
pensated by higher income on equities. The average asset base1 stood
at € 104.6 BN – up 1.9 % from € 102.6 BN compared to the previous year.
Operating income from financial assets and liabilities carried at
fair value through income (net) grew by € 81 MN from € (75) MN to
€ 6 MN. This was largely due to an improved foreign exchange result
net of hedging compared to 2013.
Operating realized gains and losses (net) increased by € 116 MN
to € 186 MN. This reflects the higher realized gains on equities in Ger-
many mainly within the APR (accident insurance with premium
refunds) business.
Expenses for premium refunds (net) increased by € 146 MN to
€ 307 MN. The change is driven by a higher policyholder participation,
mainly from the higher realized gains attributable to our APR business.
other result
€ mn
Fee and commission income
Other income
Fee and commission expenses
Other expenses
Restructuring charges
Other result
2014
1,260
60
2013
1,226
47
(1,180)
(1,141)
(45)
(30)
66
(21)
(62)
48
Net income
Net income went down by € 369 MN to € 3,448 MN compared to the
previous year. The higher operating profit was more than offset by a
non-operating one-off effect from the inter-segment pension revalu-
ation2 recorded in the first quarter of 2014.
property-casualty business segment information
€ mn
Gross premiums written1
Ceded premiums written
Change in unearned premiums
Premiums earned (net)
Interest and similar income
Operating income from financial assets and
liabilities carried at fair value through income (net)
Operating realized gains/losses (net)
Fee and commission income
Other income
Operating revenues
2014
48,322
(3,961)
(602)
43,759
3,595
6
186
1,260
60
48,867
2013
46,579
(3,981)
(550)
42,047
3,594
(75)
70
1,226
47
46,908
Claims and insurance benefits incurred (net)
(28,878)
(27,713)
Change in reserves for insurance and investment
contracts (net)
Interest expenses
Operating impairments of investments (net)
Investment expenses
Acquisition and administrative expenses (net),
excluding one-off effect from pension revaluation
Fee and commission expenses
Restructuring charges
Other expenses
Operating expenses
(538)
(71)
(20)
(323)
(12,400)
(1,180)
(30)
(45)
(384)
(52)
(11)
(315)
(11,942)
(1,141)
(62)
(21)
(43,485)
(41,641)
Operating profit
5,382
5,267
Non-operating items
Income before income taxes
Income taxes
Net income
Loss ratio2 in %
Expense ratio3 in %
Combined ratio4 in %
(406)
4,976
(1,528)
3,448
66.0
28.3
94.3
296
5,563
(1,746)
3,817
65.9
28.4
94.3
1
2
3
4
For the Property-Casualty business segment, total revenues are measured based upon gross premiums
written.
Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
Represents acquisition and administrative expenses (net), excluding one-off effect from pension revalua-
tion, divided by premiums earned (net).
Represents the total of acquisition and administrative expenses (net), excluding one-off effect from
pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).
1
Including French health business, excluding fair value option and trading.
2
A respective offsetting effect was recorded in our Corporate and Other business segment. For further
information on the one-off effect from pension revaluation, please refer to note 6 to the consolidated
financial statements.
Annual Report 2014
Allianz Group
89
Property-Casualty insurance operations by reportable segments
ProPerty-Casualty insuranCe oPerations by rePortable segments
€ mn
Gross premiums written
Premiums earned (net)
Operating profit (loss)
internal1
Germany2,3
Switzerland
Austria
German Speaking Countries3
Italy4
France
Benelux5
Turkey6
Greece
Africa
Western & Southern Europe7
Latin America
Spain
Portugal
Iberia & Latin America
United States
USA8
Allianz Global Corporate & Specialty
Reinsurance PC 2
Australia
United Kingdom
Credit Insurance
Ireland
Global Insurance Lines & Anglo Markets9
Russia
Poland
Hungary
Slovakia
Czech Republic
Romania
Bulgaria
Croatia
Ukraine
Central and Eastern Europe10
Asia-Pacific
Middle East and North Africa
Growth Markets
Allianz Global Assistance
Allianz Worldwide Care
Allianz Worldwide Partners11
Consolidation and Other12,13
Total
2014
9,532
1,489
976
11,997
4,196
4,248
1,135
1,082
108
96
10,865
2,101
2,015
320
4,437
1,958
1,958
5,389
3,738
2,763
2,684
2,158
439
17,172
537
419
263
330
286
199
92
89
13
2,227
722
74
3,022
2,142
1,108
3,341
2013
9,261
1,489
966
11,748
4,032
4,174
1,165
978
111
87
10,547
2,350
1,958
312
4,620
2,058
2,058
4,999
3,345
2,847
2,274
2,092
412
15,969
808
427
268
321
276
186
82
93
16
2,477
667
68
3,211
1,972
452
2,507
2014
9,487
1,476
976
11,939
3,985
4,248
1,135
1,017
108
96
10,589
2,405
2,015
320
4,740
1,963
1,963
5,404
3,738
2,952
2,547
2,131
439
17,211
622
418
273
330
304
201
92
89
19
2,347
754
75
3,176
2,129
1,108
3,329
2013
9,247
1,489
966
11,702
4,032
4,217
1,163
978
111
88
10,588
2,350
1,958
312
4,620
2,058
2,058
4,999
3,340
2,847
2,274
2,076
412
15,948
808
427
268
321
276
186
82
93
16
2,477
667
68
3,211
1,972
975
3,030
2014
7,824
1,428
831
10,083
3,906
3,926
1,065
906
89
65
9,956
1,622
1,806
271
3,699
1,874
1,874
3,162
3,118
2,180
2,439
1,482
385
12,766
528
348
223
267
238
154
68
75
8
1,909
443
49
2,401
1,987
926
2,981
2013
7,611
1,422
814
9,861
3,949
3,804
1,087
753
87
55
9,735
1,737
1,804
269
3,810
1,988
1,988
2,927
2,880
2,235
2,122
1,435
372
11,970
598
345
230
266
228
150
63
77
7
1,964
377
46
2,388
1,842
419
2,296
(4,469)
48,322
(4,081)
46,579
(4,475)
48,473
(4,104)
47,052
–
43,759
–
42,047
2014
1,303
198
75
1,575
932
428
96
90
16
11
1,580
(147)
255
(4)
104
(151)
(151)
560
464
353
178
401
85
2,044
(194)
17
22
67
44
9
7
10
(1)
(27)
57
8
39
102
53
105
86
5,382
2013
661
194
62
916
1,127
402
77
69
17
11
1,712
133
236
26
395
154
154
428
317
378
201
407
62
1,785
(38)
12
27
53
44
5
19
13
–
127
67
8
201
96
30
102
2
5,267
1
2
3
This reflects gross premiums written on an internal basis, adjusted for foreign currency translation and
(de-)consolidation effects.
The 2013 combined ratio for Germany and Reinsurance PC was impacted by a one-off effect related to the
commutation of internal reinsurance resulting in a 0.9 percentage point improvement in the combined
ratio for Germany and an increase of 2.3 percentage points for Reinsurance PC. This had no impact at Group
level.
Starting from 2014, “Münchener und Magdeburger Agrarversicherung AG” is included in Germany with
gross premiums written of € 35 MN, premiums earned (net) of € 15 MN and operating profit of € 7 MN. Prior-
year numbers were not adjusted. Contribution to German Speaking Countries before consolidation in 2013
4
5
6
7
was gross written premiums of € 32 MN, premiums earned (net) of € 14 MN of and operating loss of € 1 MN.
Effective 1 July 2014, the Allianz Group acquired parts of the insurance business of UnipolSai Assicurazioni
S.p.A., Bologna.
Belgium and the Netherlands are presented as the combined region Benelux. All prior periods are presented
accordingly.
On 12 July 2013, Allianz Turkey acquired Yapı Kredi Bank’s shareholding in the Turkish property-casualty
insurance company Yapı Kredi Sigorta.
Contains € 7 MN and € 11 MN operating profit for 2014 and 2013, respectively, from a management holding
located in Luxembourg.
90
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
%
Germany2,3
Switzerland
Austria
German Speaking Countries3
Italy4
France
Benelux5
Turkey6
Greece
Africa
Western & Southern Europe7
Latin America
Spain
Portugal
Iberia & Latin America
United States
USA8
Allianz Global Corporate & Specialty
Reinsurance PC 2
Australia
United Kingdom
Credit Insurance
Ireland
Global Insurance Lines & Anglo Markets9
Russia
Poland
Hungary
Slovakia
Czech Republic
Romania
Bulgaria
Croatia
Ukraine
Central and Eastern Europe10
Asia-Pacific
Middle East and North Africa
Growth Markets
Allianz Global Assistance
Allianz Worldwide Care
Allianz Worldwide Partners11
Consolidation and Other12,13
Total
Combined ratio
Loss ratio
Expense ratio
2014
91.5
91.0
94.4
91.7
82.5
96.3
97.6
97.8
86.1
92.6
91.0
116.1
89.9
105.7
102.6
120.0
120.0
93.1
88.6
94.6
97.6
78.6
84.7
91.2
141.6
99.5
102.7
79.5
85.0
100.3
92.5
93.8
114.9
106.8
95.2
97.4
104.4
96.0
93.1
96.6
–
94.3
2013
99.5
91.1
96.5
98.0
78.2
97.6
97.6
96.1
83.9
95.7
89.4
98.3
90.9
95.0
94.6
103.5
103.5
95.0
92.8
93.5
96.0
79.3
90.1
92.5
112.0
100.9
100.4
86.2
84.5
102.9
72.1
89.3
124.8
99.5
91.2
95.6
98.1
96.1
93.3
96.7
–
94.3
2014
65.7
67.8
69.0
66.2
55.0
67.6
67.6
75.1
51.1
48.4
63.1
79.7
68.8
82.7
74.6
85.6
85.6
65.2
60.5
69.7
65.9
48.8
55.6
62.7
98.7
64.0
62.4
53.2
56.9
70.1
66.6
54.1
62.3
71.2
64.5
62.6
69.8
61.8
72.7
65.6
–
66.0
2013
73.4
67.9
70.5
72.3
53.1
68.9
68.4
71.4
50.2
52.0
62.4
66.3
70.0
72.6
68.5
69.2
69.2
67.3
61.2
68.1
64.5
50.5
59.2
63.3
69.7
65.8
60.0
54.8
56.6
72.6
44.9
50.1
59.9
62.9
60.1
61.4
62.5
61.0
73.5
63.5
–
65.9
2014
25.9
23.2
25.4
25.4
27.5
28.7
30.0
22.6
35.0
44.2
27.9
36.5
21.1
23.0
28.0
34.4
34.4
27.9
28.0
24.9
31.6
29.7
29.2
28.4
42.9
35.5
40.3
26.3
28.1
30.2
26.0
39.6
52.6
35.6
30.6
34.7
34.6
34.2
20.4
31.0
–
28.3
2013
26.1
23.2
26.0
25.7
25.1
28.7
29.2
24.7
33.8
43.6
27.1
31.9
20.9
22.4
26.0
34.3
34.3
27.7
31.6
25.4
31.5
28.9
30.9
29.2
42.3
35.1
40.4
31.4
27.9
30.3
27.3
39.2
64.9
36.6
31.1
34.1
35.7
35.1
19.8
33.2
–
28.4
8
9
10
11
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’s and Fireman’s Fund’s combined ratio under IFRS.
Contains € 3 MN operating profit and € 7 MN operating loss for 2014 and 2013, respectively, from AGF UK.
Contains income and expense items from a management holding and consolidations between countries
in this region.
The reportable segment Allianz Worldwide Partners includes the business of Allianz Global Assistance
and Allianz Worldwide Care as well as the reinsurance business of Allianz Global Automotive and income
and expenses of a management holding. In the fourth quarter of 2014, the French International Health
business was transferred from France (Life/Health) to the reportable segment Allianz Worldwide Partners
effective 1 January 2014. The reinsurance business of Allianz Global Automotive contributed gross premiums
written of € 91 MN, premiums earned (net) of € 67 MN and an operating loss of € 28 MN for 2014 and with
gross premiums written of € 82 MN, premiums earned (net) of € 35 MN and an operating loss of € 24 MN
for 2013.
Represents elimination of transactions between Allianz Group companies in different geographic
regions.
The 2014 analysis of the Allianz Group’s asbestos risks resulted in a reduction of reserves and a positive
run-off result of € 86 MN reflected in the operating profit for 2014.
12
13
Annual Report 2014
Allianz Group
91
Life/Health Insurance Operations
− Statutory premiums grew strongly by € 10.5 bn to € 67.3 bn.
− Operating profit increased 22.8 % to € 3,327 mn.
Business segment overview
Key figures
Allianz offers a broad range of life, health, savings and invest-
ment-oriented products, including individual and group life
insurance contracts. Via our distribution channels – mainly tied
agents, brokers and bank partnerships – we offer life and health
products to both retail and corporate clients. As one of the
worldwide market leaders in life business, we serve customers
in more than 45 countries.
Key figures life/health
€ mn
Statutory premiums1
Operating profit1,2
Net income1,2
Margin on reserves (bps)1,2,3
2014
67,331
3,327
2,320
65
2013
56,784
2,709
1,941
58
Statutory premiums4,5
In 2014, statutory premiums amounted to € 67,331 mn, an increase of
€ 10,547 mn. On an internal basis5, premiums increased by 19.5 % or
€ 10,963 mn. This excludes unfavorable foreign currency translation
effects of € 192 mn and adverse consolidation/deconsolidation effects
of € 224 mn, largely from the transfer – effective 1 January 2014 – of our
French International Health business to the reportable segment
Allianz Worldwide Partners in the business segment Property-Casu-
alty in the fourth quarter of 2014.
We recorded premium growth in all core markets – largely driven
by our single premium business. These favorable developments were
also supported by our broker channel in the United States and the
successful cooperation with our bancassurance channel in Italy. We
experienced strong premium growth in fixed-indexed annuity prod-
ucts in the United States, strong sales of unit-linked and savings
products in Italy and an increase in the single premium business
with savings products (in particular “Perspektive”) in Germany. This
was partly offset by sizeable declines in variable annuity business in
the United States, and to a lesser extent in some Eastern European
countries, where profitability and risk management actions limited
volumes.
1
2
3
In the fourth quarter of 2014, we transferred our French International Health business to the reportable
segment Allianz Worldwide Partners effective 1 January 2014.
Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset
Management to the reportable segments German Speaking Countries, Western & Southern Europe and
Growth Markets within the business segment Life/Health and to the reportable segment Banking.
Represents operating profit divided by the average of the current and previous year-end net reserves,
where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and
investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
4
5
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.
In the following section, we comment on the development of our statutory gross premiums written on
an internal basis, i.e. adjusted for foreign currency translation and (de-)consolidation effects in order to
provide more comparable information.
92
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
statutory premiums by region/country1
Year 2014 [2013] in %
Asia-Pacific and
Rest of World 8.9 [9.4]
Latin America 0.5 [0.6]
USA 17.6 [12.9]
Other Europe 10.8 [10.9]
Belgium 1.6 [1.7]
Spain 1.9 [2.2]
Switzerland 2.5 [2.8]
Germany 33.4 [36.1]
France 10.3 [13.2]
Italy 12.5 [10.4]
1
After elimination of transactions between Allianz Group companies in different countries and different
reportable segments.
Premiums in the United States increased to € 11,840 mn, representing
growth of 61.6 %. This was driven by strong fixed-indexed annuity
sales as a result of an innovative index strategy and higher penetra-
tion into the broker and dealer channel. However, as anticipated, in
the second half of the year it was below the level in the first half due
to the impact of pricing changes in response to the decreasing inter-
est rate environment. This growth was partly offset by a decrease in
the variable annuity business.
Premiums in Italy increased 34.4 % to € 11,332 mn. This growth
was mainly due to the strong contribution of unit-linked and savings
products distributed via our bancassurance channel. To further
improve our product design and pricing, the sale of traditional guar-
antee savings products was largely replaced by savings products with
0 %-guarantees from the third quarter of 2014.
In Asia-Pacific, premiums grew 15.0 % to € 5,732 mn. This was
driven by favorable developments in all markets, in particular due to
increased sales of single premium unit-linked products in Taiwan
and higher sales of single premium investment-oriented products
distributed via the bancassurance channel in South Korea.
In our German life business, premiums grew 11.8 % to € 19,014 mn.
This growth was driven by an increase in our single premium busi-
ness with savings products while regular premiums were relatively
flat. In particular the product “Perspektive” – which was launched in
the second quarter of 2013 and balances reduced guarantees and
higher expected returns for the policyholder with lower capital
requirements for the shareholder – contributed most of this premium
growth. Statutory premiums in our German health business decreased
0.6 % to € 3,245 mn due to a lower contribution from full health care
coverage business.
In Benelux1, we recorded premiums of € 2,518 mn, an increase of
8.3 %. This growth stemmed from both Belgium, with our 0 %-guarantee
products, and Luxembourg.
Premiums in France increased 3.2 % to € 8,241 mn. This was main-
ly attributable to our individual life business, where we recorded
growth in unit-linked products. In our protection and health busi-
ness we also recorded a solid increase.
In Switzerland, premiums totaled € 1,655 mn. The increase of
2.3 % was primarily driven by our single premium business in group
life. This was partly offset by a decrease in our individual life business
from both single and regular premiums.
Premiums in Central and Eastern Europe grew 2.2 % to € 909 mn.
This increase was largely because of positive business developments
in Poland, driven by unit-linked sales via bancassurance. This more
than compensated for the decline in premiums in Russia resulting
from the termination of one bancassurance partnership and in Hun-
gary due to a shifting focus from short- and mid-term single premi-
um products to regular premium unit-linked pension products.
In Spain, premiums totaled € 1,259 mn. The increase of 2.0 % was
primarily driven by unit-linked products.
Premiums earned (net)
Premiums earned (net) decreased by € 66 mn to € 24,514 mn. This was
mainly driven by the transfer of our French International Health busi-
ness to the reportable segment Allianz Worldwide Partners. The
growth in premiums in Asia-Pacific mainly due to product mix
changes and an increase in the United States because of rider charg-
es on parts of the variable annuity business partly offset the decrease.
Present value of new business premiums
(PVNBP)2
Present value of new business premiums (PVNBP), as an indicator for
the volume of new business, increased by € 13.1 bn to € 61.0 bn. This
was largely driven by the increase in our single premium fixed-
indexed annuity business in the United States and the premium
growth in Italy and Germany. This was supported by our Asia-Pacific
business with higher sales in Taiwan, South Korea, Indonesia and
favorable foreign exchange rate developments in Thailand and
Malaysia. Overall, the growth was dominated by the broker and banc-
assurance channel.
1
2
Belgium, Luxembourg and the Netherlands are presented as the combined region Benelux. All prior
periods are presented accordingly.
PVNBP before non-controlling interests.
Annual Report 2014
Allianz Group
93
The guaranteed savings & annuities line of business accounted
for the largest part of PVnbP, mostly from the products family with
reduced or minimized interest rate risk and innovative products
such as the index strategy product in the United States. The transfer
of our French International Health business to the reportable seg-
ment Allianz Worldwide Partners slightly decreased the PVnbP in our
protection & health line of business.
Overall, the single premium share in PVnbP increased from 60 %
in 2013 to 64 % in 2014.
present value of new business premiums (pvnbp) by lines of business
Year 2014 [2013] in %
Unit-linked
without guarantee 18.8 [18.5]
Protection
& health 10.7 [14.0]
Loadings and fees
Loadings and fees includes premium and reserve based fees, unit-
linked management fees and policyholder participation in expenses.
loaDings anD fees
€ mn
Loadings from premiums
Loadings from reserves
Unit-linked management fees
Loadings and fees
Loadings from premiums as %
of statutory premiums
Loadings from reserves as % of average reserves1
Unit-linked management fees as %
of average unit-linked reserves2
2014
3,430
1,094
626
5,151
5.1
0.2
0.6
2013
3,251
1,001
458
4,709
5.7
0.2
0.6
Guaranteed savings
& annuities 70.5 [67.5]
1
2
Aggregate policy reserves and unit-linked reserves.
Calculation based on only unit-linked management fees, excluding Asset Management fees, on unit-
linked reserves.
Operating profit
operating profit by profit sources
The objective of the Life/Health operating profit sources analysis is to
explain movements in IFRS results by analyzing underlying drivers of
performance on a Life/Health business segment consolidated basis.
Our loadings and fees increased by € 441 mn to € 5,151 mn.
The increase of loadings from premiums by € 179 mn to € 3,430 mn
largely resulted from higher sales in Germany and Asia-Pacific. Only
minor contributions within loadings from premiums stemmed from
the growing business in the United States as it is priced differently
and expenses are financed through other profit sources, mainly
investment margin. Loadings from premiums as a percentage of
statutory premiums decreased by 63 basis points as a result of a
higher proportion of single premium business and sales of products
in Italy with relatively lower loadings. This was partially offset by the
transfer of our French International Health business to the report-
able segment Allianz Worldwide Partners.
The increase of loadings from reserves by € 93 mn to € 1,094 mn
was driven by a higher reserve volume.
operating profit by profit sources
€ mn
Loadings and fees
Investment margin
Expenses
Technical margin
Impact of change in Dac
Operating profit
2014
5,151
2,972
(6,410)
1,190
425
3,327
2013
4,709
2,386
(5,752)
1,289
77
2,709
The growth in unit-linked management fees by € 169 mn to
€ 626 mn was largely a result of the allocation of certain entities previ-
ously reflected in the business segment Asset Management to the
business segment Life/Health, which contributed € 140 mn in 2014.
Unit-linked management fees as a percentage of unit-linked reserves
decreased by 4 basis points. This was driven by a higher share of unit-
linked management fees from Italy, where average fees decreased.
Our operating profit increased by € 618 mn to € 3,327 mn. This develop-
ment was driven by Germany, the United States and the allocation of
certain entities previously reflected in the business segment Asset
Management to the business segment Life/Health.
94
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Investment margin
Investment margin is defined as IFRS investment income net of
expenses less interest credited to IFRS reserves and policyholder par-
ticipation (including policyholder participation beyond contractual
and regulatory requirements for German life business).
Expenses
Expenses include acquisition expenses and commissions (excluding
commission clawbacks, which are allocated to the technical margin)
as well as administrative and other expenses.
investment margin
€ mn
Interest and similar income
Operating income from financial assets and
liabilities carried at fair value through income (net)
Operating realized gains/losses (net)
Interest expenses
Operating impairments of investments (net)
Investment expenses
Other1
Technical interest
Policyholder participation
Investment margin
expenses
€ mn
2014
17,307
2013
16,767
Acquisition expenses and commissions
Administrative and other expenses
(1,367)
(1,832)
Expenses
3,204
(107)
(677)
(903)
224
(8,713)
(5,996)
2,972
3,294
(81)
(331)
(839)
272
(8,650)
(6,215)
2,386
Acquisition expenses and commissions
as % of pvnbp1
Administrative and other expenses
as % of average reserves2
1
2
PVNBP before non-controlling interests.
Aggregate policy reserves and unit-linked reserves.
2014
(4,833)
(1,577)
(6,410)
(7.9)
(0.3)
2013
(4,233)
(1,519)
(5,752)
(8.8)
(0.4)
Investment margin2 in basis points
80
69
1
2
Other comprises the delta of out-of-scope entities, which are added here with their respective operating
profit and different line item definitions compared to the financial statements, such as interest paid on
deposits for reinsurance, fee and commission income and expenses excluding unit-linked management
fees.
Investment margin divided by the average of current and previous year-end aggregate policy reserves.
Our investment margin increased by € 586 mn to € 2,972 mn, even con-
sidering the low interest rate environment. Consequently, the invest-
ment margin as a percentage of reserves increased by 12 basis points
to 80 basis points. This growth was predominantly driven by Germany
and the United States. In Germany, the investment margin improved
due to gains from using derivatives to lengthen duration and a recov-
ery in the foreign currency result after the losses in 2013 on partially
hedged emerging markets bonds. The policyholder participation of
€ 5,996 mn also includes € 625 mn of policyholder benefits beyond con-
tractual or regulatory requirements for the German life business in
2014. A higher investment spread for the increased fixed-indexed
annuity portfolio contributed in the United States.
Our expenses increased by € 658 mn to € 6,410 mn. This was mainly
due to increased acquisition expenses driven by strong fixed-indexed
annuity sales in the United States and products with alternative guar-
antees in Germany and Asia-Pacific.
The allocation of certain entities previously reflected in the busi-
ness segment Asset Management to the business segment Life/Health
increased the segment’s administrative expenses by € 45 mn in 2014.
In France, a litigation fine of € 50 mn imposed by the regulator
increased administrative expenses.
Technical margin
Technical margin comprises risk result (risk premiums less benefits
in excess of reserves less policyholder participation), lapse result
(surrender charges and commission clawbacks) and reinsurance
result.
Our technical margin decreased by € 99 mn to € 1,190 mn, largely
driven by a regulatory change (“Lebensversicherungsreformgesetz”)
for the German life business to increase the policyholder participa-
tion in the technical margin.
Overall, lapse margin and reinsurance margin remained stable.
Annual Report 2014
Allianz Group
95
Impact of change in Dac
Impact of change in DAC (deferred acquisition costs) includes effects
of change in DAC, unearned revenue reserves (URR) and value of busi-
ness acquired (VObA) and is the net impact of deferral and amortiza-
tion of acquisition costs and front-end loadings on operating profit.
Net income
Net income increased by € 379 mn to € 2,320 mn, consistent with our
operating performance, while a slightly improved effective tax rate
also contributed positively.
life/health business segment information1
impact of change in Dac
€ mn
Capitalization of Dac
Amortization, unlocking and true-up of Dac
Impact of change in DAC1
2014
1,937
(1,513)
425
€ mn
2013
1,596
Statutory premiums2
(1,519)
Ceded premiums written
77
Change in unearned premiums
Statutory premiums (net)
1
Impact of change in DAC includes effects of change in DAC, URR and VOBA and is the net impact of deferral
and amortization of acquisition costs and front-end loadings on operating profit and therefore deviates
to the financial statements.
Deposits from insurance and investment contracts
Premiums earned (net)
Our impact of change in DAC improved from € 77 mn to € 425 mn. Cap-
italization of DAC offset higher acquisition expenses as a result of
increased fixed-indexed annuity sales in the United States. Amortiza-
tion of DAC remained stable.
operating profit by lines of business
Loadings and fees
Loadings from premiums
Loadings from reserves
Unit-linked management fees
Investment margin
Investment margin net of policyholder
participation
2014
67,331
(630)
(544)
66,157
(41,643)
24,514
5,151
3,430
1,094
626
2,972
2,972
2013
56,784
(648)
(332)
55,803
(31,223)
24,580
4,709
3,251
1,001
458
2,386
2,386
operating profit by lines of business
€ mn
Guaranteed savings & annuities
Protection & health
Unit-linked without guarantee
Operating profit
Expenses
Acquisition expenses and commissions
Administrative and other expenses
(6,410)
(4,833)
(1,577)
(5,752)
(4,233)
(1,519)
Technical margin
1,190
1,289
2013
1,884
657
168
2,709
Operating profit before change in DAC
2,903
2,632
2014
2,385
654
288
3,327
The operating profit increase in the guaranteed savings & annuities
line of business was largely driven by the higher investment margin
mainly in Germany and the United States.
Operating profit in the protection & health line of business was
rather stable. However, it was marginally impacted by a slightly lower
technical margin due to a lower risk result compared to last year.
Operating profit in the unit-linked without guarantee line of
business increased. This was mainly driven by the € 113 mn effect of
the allocation of certain entities previously reflected in the business
segment Asset Management to the business segment Life/Health.
margin on reserves
Our margin on reserves increased from 58 to 65 basis points.
Impact of change in DAC3
Capitalization of Dac
Amortization, unlocking and true-up of Dac
Operating profit
Non-operating items
Income before income taxes
Income taxes
Net income
425
1,937
(1,513)
3,327
(12)
3,316
(996)
2,320
77
1,596
(1,519)
2,709
83
2,793
(852)
1,941
Margin on reserves4 in basis points
65
58
1
2
3
4
Profit sources are based on in-scope operating entities with coverage of 97.3 % of statutory premiums.
Operating profit from operating entities that are not in-scope is included in investment margin.
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.
Impact of change in DAC includes effects of change in DAC, URR and VOBA and is the net impact of deferral
and amortization of acquisition costs and front-end loadings on operating profit and therefore deviates
to the financial statements.
Represents operating profit divided by the average of the current and previous year-end net reserves,
where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and
investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
96
Annual Report 2014
Allianz Group
588
577
371
640
575
436
(338)
(128)
(466)
71
268
121
(290)
(95)
(385)
83
141
114
(88)
27
168
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
life/health operating profit by profit sources anD lines of business1
€ mn
Loadings from premiums
Loadings from reserves
Unit-linked management fees
Loadings and fees
Life/Health
Guaranteed
savings & annuities
Protection
& health
Unit-linked
without guarantee
2014
3,430
1,094
626
5,151
2013
3,251
1,001
458
4,709
2014
1,804
961
266
2013
1,707
913
223
2014
1,423
86
–
2013
1,365
69
–
3,030
2,842
1,510
1,434
2014
203
47
361
611
2013
179
20
235
433
Investment margin (net of policyholder participation)
2,972
2,386
2,881
2,312
39
64
52
10
Acquisition expenses and commissions
Administrative and other expenses
Expenses
Technical margin
(4,833)
(1,577)
(6,410)
(4,233)
(1,519)
(5,752)
(3,306)
(1,078)
(4,384)
(2,750)
(1,054)
(3,804)
(1,189)
(1,193)
(370)
(370)
(1,559)
(1,562)
1,190
1,289
531
565
Operating profit before change in DAC
Capitalization of Dac
2,903
1,937
2,632
1,596
2,058
1,445
1,915
1,045
Amortization, unlocking and true-up of Dac
(1,513)
(1,519)
(1,118)
(1,077)
(294)
(354)
(101)
Impact of change in DAC2
Operating profit
425
3,327
77
2,709
327
2,385
(31)
1,884
78
654
82
657
20
288
1
Profit sources are based on in-scope operating entities with coverage of 97.3 % of statutory premiums.
Operating profit from operating entities that are not in-scope is included in investment margin.
2
Impact of change in DAC includes effects of change in DAC, URR and VOBA and is the net impact of deferral
and amortization of acquisition costs and front-end loadings on operating profit and therefore deviates
to the financial statements.
Annual Report 2014
Allianz Group
97
Life/Health insurance operations by reportable segments
Life/HeaLtH insurance operations by reportabLe segments
€ mn
Statutory premiums1
Premiums earned (net) Operating profit (loss) Margin on reserves2 (bps)
Germany Life
Germany Health
Switzerland
Austria
German Speaking Countries
Italy
France5
Benelux6
Greece
Turkey7
Africa
Western & Southern Europe
Latin America
Spain
Portugal
Iberia & Latin America
United States
USA
Reinsurance LH
Global Insurance Lines & Anglo Markets
South Korea
Taiwan
Indonesia
Malaysia
Japan
Other
Asia-Pacific
Poland
Slovakia
Hungary
Czech Republic
Russia
Croatia
Bulgaria
Romania
Central and Eastern Europe8
Middle East and North Africa
Global Life
Growth Markets
Consolidation10
Total
internal3
2014
2013
2014
2013
2014
2013
20144
19,014
3,245
1,655
405
24,319
11,332
8,241
2,518
88
854
57
23,090
338
1,259
247
1,844
11,840
11,840
537
537
1,646
2,026
700
423
–
938
5,732
185
252
138
147
52
71
40
23
909
176
4
6,820
17,000
3,264
1,602
385
22,251
8,430
8,510
2,326
90
419
54
19,830
329
1,224
232
1,786
7,317
7,317
515
515
1,354
1,745
686
381
–
926
5,093
127
245
165
172
84
62
35
23
913
163
6
6,174
19,014
3,245
1,640
405
24,304
11,332
8,241
2,518
88
622
57
22,858
355
1,249
247
1,851
11,822
11,822
537
537
1,583
2,071
795
437
–
969
5,855
185
252
144
155
62
71
40
24
933
179
4
6,971
17,000
3,264
1,602
385
22,251
8,430
7,987
2,326
90
419
54
19,307
329
1,224
232
1,786
7,317
7,317
515
515
1,354
1,745
686
381
–
926
5,093
127
245
165
172
84
62
35
23
913
163
6
6,174
11,468
3,244
519
325
15,557
478
3,100
520
51
148
28
4,326
123
437
83
643
984
984
398
398
509
201
285
187
6
721
1,909
73
210
42
74
49
70
34
14
566
132
1
2,607
11,538
3,264
488
282
15,572
483
3,401
541
53
81
25
4,583
145
455
83
684
883
883
430
430
494
152
247
200
6
636
1,735
40
209
46
77
83
61
30
14
560
132
2
2,429
1,079
209
83
37
1,408
173
455
132
–
26
6
791
16
191
22
229
656
656
14
14
(51)
2
61
18
3
72
104
21
38
12
15
1
17
13
6
119
24
1
247
(1,120)
67,331
(1,089)
56,784
(1,120)
67,224
(1,089)
56,261
–
24,514
–
24,580
(17)
3,327
2013
862
201
78
33
1,174
216
420
89
2
3
4
735
8
129
21
158
487
487
23
23
(129)
–
60
18
7
79
36
16
29
9
17
–
4
4
1
78
17
–
131
2
2,709
20144
2013
55
77
62
80
59
32
56
85
–9
106
212
52
177
257
374
256
81
81
76
76
(48)
3
478
147
15
196
43
374
303
332
253
27
529
806
867
339
352
–9
87
–9
65
48
80
60
77
53
45
56
61
65
25
185
53
109
196
403
201
70
70
111
111
(130)
–9
505
167
39
230
16
270
243
244
303
–9
132
302
221
228
304
–9
49
–9
58
1
2
3
4
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.
Represents operating profit (loss) divided by the average of the current and previous year-end net reserves,
where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and invest-
ment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
Statutory premiums adjusted for foreign currency translation and (de-)consolidation effects.
Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset
Management to the reportable segments German Speaking Countries, Western & Southern Europe and
Growth Markets within the business segment Life/Health and to the reportable segment Banking.
5
6
7
8
9
10
In the fourth quarter of 2014, we transferred our French International Health business to the reportable
segment Allianz Worldwide Partners in the business segment Property-Casualty effective 1 January 2014.
Belgium, Luxembourg and the Netherlands are presented as the combined region Benelux. All prior
periods are presented accordingly.
On 12 July 2013, the Allianz Group acquired Yapı Kredi Bank’s 93.94 % shareholding in the Turkish property-
casualty insurance company Yapı Kredi Sigorta, including its life and pension insurance subsidiary Yapı
Kredi Emeklilik.
Contains income and expense items from a management holding and consolidations between countries
in this region.
Presentation not meaningful.
Represents elimination of transactions between Allianz Group companies in different geographic regions.
98
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Asset Management
− Operating profit decreased 17.6 % to € 2,603 MN.
− Cost-income ratio at 59.2 %.
− Total assets under management grew 1.8 % to € 1,801 BN.
− Third-party net outflows of € 226 BN.
Business segment overview
Key figures
Allianz offers Asset Management products and services for
third-party investors and the Allianz Group’s insurance opera-
tions. We serve a wide range of retail and institutional clients
worldwide with investment and distribution capacities in all
major markets. Based on total assets under management, we
are one of the largest asset managers in the world that manages
third-party assets with active investment strategies.
key figures asset management1
€ mn
Operating revenues
Operating profit
Cost-income ratio in %
Net income
Total assets under manage ment
as of 31 December in € bn
thereof: Third-party assets under manage ment
as of 31 December in € bn
2014
6,388
2,603
59.2
1,621
1,801
1,313
2013
7,162
3,161
55.9
1,925
1,770
1,361
Assets under management
Development of total assets unDer management1
€ bn
Total AuM
(as of 12/31/2013)
Net flows
Market effects
Consolidation, deconsoli-
dation and other effects
F/X effects
Total AuM
(as of 12/31/2014)
1,571
1,572
197
1
1,770
(221)
+ 111
(13)
229
0
+ 155
1,801
0
500
1,000
1,500
2,000
Fixed income
Equities
Other
Changes
1
Based on legal entity view.
1
Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset
Management to the reportable segments German Speaking Countries, Western & Southern Europe and
Growth Markets within the business segment Life/Health and to the reportable segment Banking.
Annual Report 2014
Allianz Group
99
As of 31 December 2014, total assets under management (AuM)
amounted to € 1,801 BN. Of this, € 1,313 BN related to our third-party
AuM and € 488 BN to Allianz Group assets.
The regional allocation of third-party AuM shifted slightly in favor of
Europe and the Asia-Pacific region. This was primarily due to strong
outflows at PIMCO in the United States.
In 2014, we experienced net outflows of total AuM of € 221 BN. Net
outflows from third-party AuM of € 226 BN were strongly driven by
PIMCO in the United States and – to a lesser extent – the United King-
dom, while PIMCO Canada and Japan recorded net inflows in 2014. 59 %
of our net outflows were driven by traditional fixed income products.
At the end of the third quarter and in the fourth quarter of 2014, PIMCO
experienced heightened third-party net outflows in conjunction with
the market’s reaction to the departure of PIMCO’s Chief Investment
Officer, who resigned on 26 September 2014. AllianzGI recorded net
inflows for the eighth consecutive quarter.
Market effects contributed € 111 BN to total AuM, with € 81 BN at
PIMCO and € 31 BN at AllianzGI. For further information regarding
market developments, please refer to Business Environment starting
on
page 79.
As of 1 January 2014, the Allianz Group allocated certain entities to
other business segments which resulted in a decrease of € 32 BN in AuM
at the beginning of 2014.1 This was partially compensated for by a
change in reporting to include third-party fund of fund AuM in our
total AuM. These effects were the main drivers of the net decline in
total AuM of € 13 BN, reported as consolidation, deconsolidation and
other effects.
We recorded favorable foreign currency translation effects of
€ 155 BN, in particular on fixed income assets, mainly as a result of the
appreciation of the U.S. Dollar against the Euro.2
In the following section, we focus on the development of third-party
AuM.
As of 31 December 2014, the share of third-party AuM by business
unit was 80.2 % attributable to PIMCO and 19.8 % attributable to
AllianzGI.
thirD-party assets unDer management by region/country1
as of 31 December 2014 [31 December 2013] in %
Asia-Pacific 10.8 [9.8]
Other 2 0.0 [2.3]
America 3 60.0 [61.5]
Europe 29.2 [26.4]
The relative share of our third-party AuM increased by three per-
centage points in favor of equities. This development was mainly
driven by strong fixed income outflows at PIMCO. This resulted in a
85 % share attributable to fixed income and a 15 % share attributable
to equities as of 31 December 2014.
The share of third-party AuM between our retail and institutional
clients3 changed slightly – down one percentage point for retail clients
(36 %) and up one percentage point for institutional clients (64 %).
three-year rolling investment performance of pimco anD allianzgi1
PIMCO
AllianzGI
96
90
88
(4)
(10)
(12)
62
55
55
(38)
(45)
(45)
%
100
80
60
40
20
0
(20)
(40)
2012
2013
2014
2012
2013
2014
Outperforming third-party assets under management
Underperforming third-party assets under management
1
The investment performance is based on Allianz Asset Management account-based, asset-weighted
three-year investment performance of third-party assets versus the primary target including all accounts
managed by portfolio managers of Allianz Asset Management. For some retail funds, the net of fee
performance is compared to the median performance of the corresponding Morningstar peer group
(first and second quartile mean outperformance). For all other retail funds and for all institutional
accounts, the gross of fee perfor mance (revaluated based on closing prices) is compared to the respective
benchmark based on different metrics.
The overall three-year rolling investment performance of our Asset
Management business remained on a high level, with 84 % of our
assets outperforming their respective benchmarks (31 December
2013: 85 %). 88 % of PIMCO assets outperformed their respective bench-
marks, while 55 % of AllianzGI assets did so.
1
2
3
Based on the location of the asset management company.
“Other” consists of third-party assets managed by other Allianz Group companies which were allocated
to other business segments as of 1 January 2014.
“America” consists of the United States, Canada and Brazil (approximately € 772 BN, € 15 BN and € 1 BN
third-party AuM as of 31 December 2014, respectively).
1
2
3
The third-party AuM that were reallocated with the entities amounted to € 35 BN as of 31 December 2014.
Based on the closing rates on the respective balance sheet dates.
Client group classification is driven by investment vehicle types.
100
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Operating revenues
Net income
Our operating revenues went down by € 774 MN – or 10.8 % – to
€ 6,388 MN. This was mainly due to lower performance fees and lower
average third-party AuM. The allocation of certain entities to other
business segments also contributed to this development. On an
internal basis1, operating revenues declined by 8.5 %.
Net fee and commission income decreased by € 747 MN – or 10.5 %
– to € 6,380 MN. This mainly reflects lower fee income due to decreased
average third-party AuM at PIMCO and lower margins on our AuM. Our
performance fees fell by € 235 MN to € 275 MN in 2014. This can be
explained by the exceptionally high carried interest income of
€ 219 MN in the first half of 2013.
Operating profit
Operating profit dropped by € 558 MN – or 17.6 % – to € 2,603 MN, reflect-
ing the decline in operating revenues and a less pronounced decline
in operating expenses. On an internal basis1, operating profit went
down by 14.6 %.
Administrative expenses fell by € 207 MN – or 5.2 % – to € 3,787 MN,
mainly driven by lower performance-driven variable personnel
expenses and lower AuM-related expenses. In the fourth quarter of
2014 PIMCO introduced the Special Performance Award (SPA), as an
enhancement to the regular year-end compensation process, in
order to secure performance and retain talent. The SPA had an impact
of € 24 MN on operating profit.
Our cost-income ratio went up by 3.4 percentage points to 59.2 %
mainly as a result of the strong decrease of performance fees and
AuM-driven income outpacing the decline in operating expenses.
Our net income decreased by € 304 MN – or 15.8 % – to € 1,621 MN, which
is largely consistent with our operating profit development.
asset management business segment information
€ mn
Management and loading fees
Performance fees
Other
Fee and commission income
Commissions
Other
Fee and commission expenses
Net fee and commission income
Net interest income1
Income from financial assets and liabilities
carried at fair value through income (net)
Other income
Operating revenues
Administrative expenses (net),
excluding acquisition-related expenses
Restructuring charges
Operating expenses
2014
7,505
275
46
7,825
(1,301)
(145)
(1,445)
6,380
(3)
5
6
2013
8,032
510
69
8,611
(1,403)
(81)
(1,484)
7,127
12
12
10
6,388
7,162
(3,787)
3
(3,784)
(3,994)
(6)
(4,001)
Operating profit
2,603
3,161
Non-operating items
Income before income taxes
Income taxes
Net income
(15)
2,588
(967)
1,621
(55)
3,106
(1,181)
1,925
Cost-income ratio2 in %
59.2
55.9
1
2
Represents interest and similar income less interest expenses.
Represents operating expenses divided by operating revenues.
1
Operating revenues/operating profit adjusted for foreign currency translation and (de-) consolidation
effects.
Annual Report 2014
Allianz Group
101
Corporate and Other
Operating loss reduced by € 183 mn to € 820 mn, mainly driven by the recovery in
Banking.
Business segment overview
Key figures
Corporate and Other encompasses the reportable segments
Holding & Treasury, Banking and Alternative Invest ments. Hold-
ing & Treasury includes the management of and support for the
Allianz Group’s businesses through its strategy, risk, corporate
finance, treasury, financial reporting, controlling, communica-
tion, legal, human resources, technology and other functions.
Our banking products offered in Germany, Italy, France, the
Nether lands and Bulgaria complement our insurance product
port folio. We also provide global alternative investment man-
agement services in the private equity, real estate, renewable
energy and infrastructure sectors, mainly on behalf of the
Allianz Group.
Key figures Corporate and other1
€ mn
Operating revenues
Operating expenses
Operating result
2014
1,750
(2,571)
(820)
2013
1,631
(2,635)
(1,004)
Net income (loss)
(657)
(1,334)
Key figures reportable segments
€ mn
holding & treasury
Operating revenues
Operating expenses
Operating result
banKing
Operating revenues
Operating expenses
Operating result
alternative investments
Operating revenues
Operating expenses
Operating result
2014
2013
469
(1,386)
(917)
1,114
(1,047)
66
176
(146)
30
361
(1,301)
(939)
1,096
(1,187)
(91)
175
(151)
24
1
Consolidation included. For further information about our Corporate and Other business segment, please
refer to note 6 to the consolidated financial statements.
102
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
banKing3
Our operating result recovered from a loss of € 91 mn to an operating
profit of € 66 mn. This improvement was driven by the closure of the
Allianz Bank’s business operations in mid-2013 and the non-recur-
rence of restructuring charges of € 88 mn related to this closure
incurred in the preceding year. Lower loan loss provisions in our
ongoing banking businesses also contributed to the improvement.
In the following section, we focus on the development of our
ongoing Banking business. To make the figures comparable, we have
excluded the closed business operations of Allianz Bank.
Our net interest, fee and commission result improved by € 25 mn
to € 534 mn. Our net interest result increased by € 7 mn to € 329 mn,
driven by a higher loan volume and lower interest expenses resulting
from decreased interest rates. Our net fee and commission income
increased from € 188 mn to € 206 mn. This was driven by increased
management fee income in line with the growth in assets under
management. The allocation of a former Asset Management entity to
the reportable segment Banking in Italy also contributed to this
increase.
Administrative expenses went up by € 31 mn to € 429 mn primarily
because of higher commissions paid to financial agents and costs for
the opening of new financial agents’ offices in Italy. The above-men-
tioned allocation also contributed to this development.
Our loan loss provisions decreased by € 36 mn to € 47 mn. This was
mainly because of lower loan loss provisions related to our ship
financing business in Germany.
Our operating income from financial assets and liabilities carried
at fair value through income (net) remained unchanged at € 4 mn.
alternative investments
Our operating profit increased by € 6 mn to € 30 mn due to higher
interest income and lower administrative expenses. This was only
partly offset by minor decreases in our net fee and commission
income and income from financial assets and liabilities carried at
fair value.
Earnings summary
Our operating result improved by € 183 mn to an operating loss of
€ 820 mn. While all reportable segments contributed to this improve-
ment, the Banking development contributed most of the increase.
Our net loss more than halved from € 1,334 mn to € 657 mn. This
was largely driven by a € 558 mn one-off benefit in our non-operating
result from pension revaluation with our German subsidiaries1. Fur-
thermore, in 2013, we recorded a € 96 mn goodwill impairment on a
fully consolidated private equity investment.
Operating earnings summaries by
reportable segments
holding & treasury
Overall, our operating loss decreased from € 939 mn to € 917 mn.
Other income increased from € 0 mn to € 116 mn. This positive
impact on income was due to policyholder participation related to
the pension revaluation with our German subsidiaries.1
Our net interest result improved by € 11 mn to a loss of € 52 mn as
the decrease in interest and similar income was more than offset by
a decrease in the respective expenses. Interest and similar income
decreased by € 13 mn to € 265 mn, as the previous year’s figure bene-
fited from interest payments on our silent participation in Commerz-
bank, which was redeemed in 2013. This effect was only partly com-
pensated for by increases in interest income from a larger volume of
debt instruments and dividend income from equities. Our interest
expenses, excluding interest expenses from external debt, were down
by € 24 mn to € 317 mn. This was due to lower interest expenses on
internal debt and was only partly offset by higher expenses related to
an increased cash pool.
Our net fee and commission result deteriorated from a loss of
€ 178 mn to a loss of € 205 mn. This was the result of higher IT invest-
ment costs in accordance with our strategic initiatives to further
digitalize our business.2
Administrative expenses (net), excluding acquisition-related
expenses, increased by € 51 mn to € 736 mn. This was primarily driven
by higher pension costs.
In 2014 we further reduced provisions for restructuring plans
mainly related to our global data center consolidation project by
€ 4 mn, € 30 mn less than last year.
Investment expenses were down by € 7 mn to € 72 mn.
1
2
Respective offsetting effects were recorded within our other business segments, mainly within Property-
Casualty. For further information on the one-off effect from pension revaluation, please refer to note 6 to
the consolidated financial statements.
For further information on our strategy, please refer to Strategy and Steering starting on page 70.
3
Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset
Management to the reportable segments German Speaking Countries, Western & Southern Europe and
Growth Markets within the business segment Life/Health and to the reportable segment Banking.
Annual Report 2014
Allianz Group
103
Outlook 2015
− Global economic activity is likely to expand moderately in 2015.
− Allianz Group operating profit outlook in the range of € 10.4 BN,
plus or minus € 0.4 BN.
Overview: 2014 results versus previous year outlook1
2014 results versus previous year outlook for 2014
outlook 2014 – as per annual report 2013
results 2014
allianz Group
Operating profit of € 10.0 Bn, plus or minus € 0.5 Bn.
Operating profit of € 10.4 Bn.
Protection of shareholders’ investments, while continuing to provide
attractive returns and dividends.
Selective profitable growth.
property-Casualty
Growth in gross premiums written by more than 3.0 %.
Operating profit in the range of € 5.1 Bn to € 5.7 Bn.
Return on equity after income taxes of 11.2 % (2013: 11.9 %).
Proposed dividend at € 6.85 (2013: € 5.30) per share. Increase in payout
ratio to 50 % (2013: 40 %).
Property-Casualty with continued sound risk selection and selective
external growth, Life/Health with growing asset base and attractive new
business margins, Asset Management with net outflows.
Gross premiums written increased by 3.7 % supported by both internal
and external growth, despite a negative foreign currency impact.
Operating profit of € 5.4 Bn is at the mid-point of our target range, with a
low impact from natural catastrophes offset by lower than expected results
in Brazil, Russia and the United States.
Combined ratio below 96 % over the cycle.
Combined ratio was stable at a favorable 94.3 %.
Pressure on operating investment income (net) due to reinvestments
in a low interest rate environment.
Operating investment income (net) was stable this year after a 5.6 %
decline in 2013.
life/HealtH
Revenues in the range of € 52.0 Bn to € 56.0 Bn.
Statutory premiums of € 67.3 Bn. Exceptional growth driven by the United
States and Germany where we offered innovative products with managed
minimum guarantees that addressed customers changing preference for
safety.
Operating profit between € 2.7 Bn and € 3.3 Bn.
Operating profit of € 3.3 Bn at top end of target range.
Margin on reserves between 50 and 70 basis points.
Margin on reserves at 65 basis points.
Pressure on investment income due to low interest rates and continued
capital market uncertainty.
Operating investment result increased by 2.8 % to € 17.5 Bn, supported by
capital market-driven fair value gains.
Prioritizing profitability over growth, taking further product and pricing
actions as necessary.
New business profitability improved and our selective growth strategy
focused on managed guaranteed products.
asset ManaGeMent
Slight growth in total assets under management (AuM) due to positive
equity, but subdued fixed income product inflows.
Increase of total AuM by 1.8 % driven by positive market and foreign
currency impacts and mostly offset by fixed income net outflows at piMCo.
Operating profit in the range of € 2.5 Bn to € 2.9 Bn.
Operating profit of € 2.6 Bn – below the mid-point of the outlook range
mainly due to lower average AuM and a lower AuM-driven margin.
Cost-income ratio at or below 60.0 %.
Cost-income ratio deteriorated by 3.4 percentage points to 59.2 %.
1
For more detailed information on the previous year outlook for 2014, please see the Annual Report 2013 starting on page 87.
104
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Economic outlook 2015
At the beginning of 2015 the economic picture is somewhat mixed.
On the one hand, the unexpectedly drastic slide in oil prices is likely
to provide an important stimulus for the global economy. As oil con-
sumers make the most of their increased purchasing power and
domestic demand in oil-producing countries is only partially curbed
in response to lower oil revenues, global demand is likely to be bol-
stered. On the other hand, economic prospects for a number of coun-
tries have deteriorated significantly in recent months. One example
is Russia, which is likely to experience a sharp recession in 2015 pri-
marily due to the economic sanctions and the collapse in oil prices.
Overall, global output is likely to expand by close to 3 % this year, fol-
lowing an increase of 2.5 % last year. This acceleration is attributable
in full to industrialized countries, while growth in many major
emerging market economies continues to be dampened by struc-
tural problems. Nevertheless, with an expected real GDP increase of
4.0 % in 2015, growth in these countries will still be considerably higher
than in the industrialized world. In the Eurozone, the economic
recovery is likely to continue this year, supported by Euro deprecia-
tion and the fall in energy prices. We expect growth in most crisis-
ridden member states to outpace last year’s performance, although
uncertainty about the economic policies of certain member states
could weigh on sentiment. Supported by brighter economic condi-
tions in the Eurozone and a favorable environment for private con-
sumption, the German economy could expand by 2 % in 2015. Infla-
tion is likely to remain subdued on a global level, not least due to the
recent sharp drop in energy prices and the dire unemployment situ-
ation in many industrialized countries, which keeps the lid on wages.
Financial market developments in 2015 will primarily be driven
by monetary policy and geopolitical tensions, such as the conflict
between Russia and Ukraine. Barring a major downside surprise on
growth, the Federal Reserve Bank will likely start to push up interest
rates this year. In contrast, in an effort to stem deflationary pressures
and stimulate growth in the Eurozone, the European Central Bank
has further loosened its monetary policy stance with the announce-
ment of a bond purchasing program with a monthly volume of
€ 60 BN. This program will not only weigh on European government
benchmark bond yields, but also exert considerable downward pres-
sure on bond spreads of debt-ridden Eurozone countries. Ongoing
reform and consolidation efforts are needed to support the econom-
ic recovery and avoid a renewed flare-up of the sovereign debt crisis
in the Eurozone.
With short-term rates practically at zero, there are limited pros-
pects of markedly higher yields on longer-term bonds. We expect
yields on 10-year German and U.S. government bonds to climb only
modestly to 0.5 % and 2.2 % respectively by the end of 2015. In the early
months of 2015 a number of factors, such as diverging monetary
policies of the Federal Reserve Bank and the European Central Bank,
will weigh on the Euro. Once it becomes evident that the economic
recovery in the Eurozone is getting back onto a firmer footing, the
Euro is likely to stabilize.
Insurance industry outlook
With economic growth forecasts more positive for 2015, demand for
insurance is expected to increase slightly, supporting premium
growth. At the same time, differences in growth levels between mar-
kets will become wider, reflecting specific political, regulatory and
economic conditions. As a result, we will see not only the usual
growth gap between emerging and industrialized countries but also
a widening gulf within these groups, namely between America and
Europe on the one hand and Asia and other emerging markets on the
other. The outlook for profitability is somewhat more subdued as
many challenges remain, for example low investment returns and a
more demanding regulatory environment.
In the property-casualty sector, we anticipate premium growth
in 2015 to be slightly above the level of the previous year. In advanced
markets, increasing economic activity is a positive factor but the
expected slight softening of the market might dampen growth per-
spectives. However, differences in pricing in individual markets will
remain significant, with the U.S. market likely to see the highest pric-
ing pressure. On the other hand, emerging markets are mainly driven
by economic growth. As in previous years, the strongest increases are
expected in Asia, with China in the lead. Overall, we expect global
premium revenue to rise between 4.5 % and 5.5 % in 2015 (in nominal
terms, adjusted for foreign currency translation effects).
Assuming weather-related claims are at previous years’ levels,
overall underwriting profitability should remain more or less stable
as reduced pricing power is offset by low – or even negative – claims
inflation. On the other hand, investment returns are expected to
remain low: interest rates will rise only modestly and impact returns
very slowly.
In the life sector, we expect premium growth to continue to
recover. In advanced markets, slowly improving employment pros-
pects and a new product mix will help to support top-line growth. In
emerging markets, strong growth will be mainly driven by rising
incomes and social security reforms, boosting demand for pension
products. At the same time, with financial markets continuously
developing, consumers increasingly ask for more sophisticated sav-
ings products beyond simple bank deposits. All in all, we expect that
global premium revenue will rise in the 4 % to 5 % range in 2015 (in
nominal terms, adjusted for foreign currency translation effects).
Annual Report 2014
Allianz Group
105
Low interest rates will remain a major headwind in 2015. There-
fore, companies will have to continue to adapt their business models
to the challenging environment. Besides a stronger focus on the pro-
tection business – including health – new and more flexible guarantee
concepts are set to come to the forefront in the savings business. At
the same time, insurers will continue to de-risk their balance sheets
and look for new, long-term investment opportunities, paying special
attention to infrastructure investments. These adjustments should
enable the insurance industry to cope with low interest rates and
more stringent capital and reserve requirements. All things consid-
ered, profitability is set to remain at levels seen in previous years.
Asset management industry outlook
life/HealtH
Markets have shown some volatility in recent months and with inves-
tors anticipating an increase in U.S. interest rates we expect this
volatility to continue in equity as well as in fixed income markets.
However, if the longer-term trend is indeed towards moderately
higher interest rates – especially in the United States – coupled with
global demographic developments, then bonds should remain
attractive. This holds true in particular for liability-driven investors
and for the growing number of retirees in the developed world look-
ing for a stable stream of income.
A continuing improvement of economic conditions – in particular
in the United States – as well as trends in client demand, still repre-
sent a positive environment for further asset management industry
growth. Nevertheless, the industry has to deal with several challenges
that will also put pressure on profitability: flows into passive pro-
ducts as well as rising distribution or marketing costs will tighten
operating margins and increased regulatory oversight and reporting
will take their toll.
Therefore, several factors are of vital importance for an asset
manager’s ability to grow – notably above benchmark investment
results and innovative client-focused investment solutions and pro-
ducts. In addition, appropriate responses to clients’ needs as well as
efficient operations and a sufficient business volume are important.
Outlook for the Allianz Group
As discussed earlier, world economic growth is expected to be mod-
erately higher in 2015. Growth dynamics, however, vary significantly
across the globe and there are clear risks for 2015. Geopolitical ten-
sions, a renewed flare-up of the European sovereign debt crisis and
currency or trade wars all could jeopardize economic development.
However, the outlook provided here assumes the absence of such
shocks.
106
Annual Report 2014
Allianz Group
Overview: outlook and assumptions 2015
outlook 2015
allianz Group
Operating profit of € 10.4 Bn, plus or minus € 0.4 Bn.
Protection of shareholders’ investments, while continuing to
provide attractive returns and dividends.
Selective profitable growth.
property-Casualty
Growth in gross premiums written by approximately 3.0 %.
Operating profit in the range of € 5.2 Bn to € 5.8 Bn.
Combined ratio below 96 % over the cycle.
Pressure on operating investment income (net) due to
reinvestments in a low interest rate environment.
Prioritizing profitability over growth, taking further product
and pricing actions to address the prolonged low yield
environment. As a result, revenues are expected to be in the
range of € 59.0 Bn to € 65.0 Bn.
Operating profit between € 3.0 Bn and € 3.6 Bn.
Margin on reserves between 50 and 70 basis points.
Pressure on investment income due to low interest rates and
continued capital market uncertainty.
asset ManaGeMent
Slight decrease in total AuM due to continued, but receding,
expected net outflows at piMCo.
Operating profit in the range of € 2.2 Bn to € 2.8 Bn.
Underlying cost-income ratio of 60.0 % or below.
assuMptions
Our outlook assumes no significant deviations from the following
underlying assumptions:
− Moderately higher global economic growth.
− Continued low interest rate environment.
− No dramatic interest rate movements.
− A 100 basis point increase or decrease in interest rates would,
respectively, either raise or lower operating profits by approx-
imately € 0.1 BN in the first year following the rate change. This
does not include fair value changes in interest rate-sensitive
positions that are reported in our income statement.
− No disruptive fiscal or regulatory interference.
− Level of claims from natural catastrophes at expected average
levels.
− Average U.S. Dollar to Euro exchange rate of 1.20.
− A 10 % weakening or strengthening of the U.S. Dollar versus our
planned exchange rate of 1.20 to the Euro would have a nega-
tive or positive impact on operating profits of approximately
€ 0.3 BN, respectively.
We expect our business mix and profitability to remain largely
unchanged compared to 2014. Our Property-Casualty business seg-
ment will carry on making up the majority of our operating profit. We
anticipate that the Asset Management business segment will continue
to be a significant source of operating profit, even though at a slightly
reduced level. This reduction is mainly due to lower average AuM and
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
expenses associated with the Special Performance Award at PIMCO
introduced in the fourth quarter of 2014, partially compensated by
higher expected performance fees. In the Life/Health business seg-
ment, operating profitability will remain under pressure due to low
yields. However, we expect a stable development compared to the
2014 results, mainly supported by growth in our underlying asset base.
Although the global economy is showing signs of recovery,
investment results are likely to remain under pressure due to low
interest rates and the continued uncertainty surrounding a flare-up
of the European sovereign debt crisis. This will be offset by an increase
in our operating asset base.
Management’s assessment of expected
revenues and earnings for 2015
In 2014, our total revenues amounted to € 122.3 BN, representing a
10.4 % and a 10.6 % increase on a nominal and internal basis, respec-
tively, compared to last year. After the exceptional growth in 2014, we
expect a slight decrease in 2015, with Property-Casualty advancing,
while Life/Health and Asset Management revenues are likely to be
under pressure due to our selective focus on profitable growth and
the uncertain financial market outlook, respectively.
In 2014, our operating profit neared the upper end of our outlook
range, hitting € 10.4 BN. In 2015, we envisage operating profit of
€ 10.4 BN, plus or minus € 0.4 BN, as we expect a slightly higher operat-
ing profit in the Property-Casualty business segment, a moderately
lower operating profit in the Asset Management business segment
and a largely unchanged operating profit in the Life/Health business
segment.
Our net income attributable to shareholders increased in line
with the operating profit, reaching € 6.2 BN in 2014. Consistent with
our disclosure practice in the past and given the susceptibility of our
non-operating results to adverse capital market developments, we do
not provide a precise outlook for net income. However, since our out-
look presumes no major disruptions of capital markets, we antici-
pate a slight rise in net income for 2015.
property-Casualty insuranCe
We expect our revenues to increase by approximately 3.0 % in 2015
(2014: 3.7 %) on a nominal basis, supported by favorable volume and
to a lesser extent price effects as well as external growth. A major
driver of the latter is the acquisition of a part of the insurance busi-
ness of UnipolSai in Italy at the beginning of the third quarter of 2014.
Premium growth in 2015 is expected mainly from our global
insurance lines as well as the Anglo markets. Top line development
will be further supported by positive trends in most of our European
core markets, such as Germany and France.
We believe the overall slow rise in prices we witnessed in a num-
ber of markets in 2014 will continue in 2015. However, as in previous
years, we will keep our focus on achieving outstanding underwriting
results by adhering to our strict underwriting discipline and will be
willing to accept a lower top line if target margins cannot be achieved.
For 2015, we anticipate keeping the combined ratio below 96 %
over the cycle (2014: 94.3 %). This rests on our expectation that the
aggregate effect of improvements in pricing, claims management
and productivity will compensate for any underlying claims inflation.
Despite the high volatility of natural catastrophes in recent years, we
assume such claims will be in line with their expected average level
in 2015.
As the low interest rate environment is likely to persist, invest-
ment income will remain under pressure due to the rather short
duration of investments in the Property-Casualty business segment.
We will continue to take measures to adapt our investment strategy
to ongoing market conditions.
Overall, we expect our 2015 operating profit to be in the range of
€ 5.2 BN to € 5.8 BN (2014: € 5.4 BN).
life/HealtH insuranCe
In 2014, our operating profit of € 3.3 BN reached the upper end of our
target range, mainly due to capital market-related gains. For 2015, we
expect operating profit in our Life/Health segment to be between
€ 3.0 BN and € 3.6 BN, mainly supported by growth in our underlying
asset base. Our outlook reflects a margin on reserves ranging between
50 and 70 basis points.
We will continue to prioritize profitability over growth in 2015
and we expect revenues to be lower than 2014, which showed excep-
tional growth. This reflects our enhanced efforts to selectively write
profitable business, given current interest rate developments and the
competitive landscape.
In 2015, we will continue to actively work on product and distri-
bution actions, expense management and asset/liability manage-
ment in order to mitigate the impacts of the difficult market condi-
tions, particularly low interest rates. On top, we will keep exploring
options to further optimize our capital usage. Still, it must be noted
that market and accounting volatility, along with the level of net har-
vesting, can significantly affect the Life/Health segment results and
make precise predictions difficult.
asset ManaGeMent
Although the environment for the asset management industry is
rather positive, we expect continued but receding net outflows in
2015. We also anticipate a slight decline in our operating profit. Lower
management and loading fees due to lower average AuM, expenses
associated with the Special Performance Award at PIMCO and invest-
ments for future growth will weigh on the operating profit. On the
other hand, we expect an increased level of performance fees, mainly
stemming from illiquid alternatives vehicles. Therefore, we envisage
our operating profit to be in the range of € 2.2 BN and € 2.8 BN in 2015
(2014: € 2.6 BN).
Annual Report 2014
Allianz Group
107
We expect to maintain an underlying cost income ratio of 60.0 %
or below in 2015 (2014: 59.2 %), supported by our focus on expense
discipline and operational excellence.
Corporate and otHer
Our Corporate and Other business segment recorded an operating
loss of € 0.8 BN in 2014. Due to slightly deteriorating operating results
of the Holding & Treasury reportable segment – mainly attributable
to higher pension costs – we predict an operating loss in the range of
€ 0.8 BN to € 1.0 BN for Corporate and Other (including consolidation)
in 2015.
Financing and liquidity development
and capitalization
The Allianz Group maintains a healthy liquidity position combined
with superior financial strength and capitalization well above what
supervisory authorities currently require.
We expect to have steady access to financial markets at reason-
able costs in order to maintain our strong financial flexibility. This is
supported by prudent steering of our liquidity resources and a matu-
rity profile focusing on a long-dated average remaining term. Based
on current interest rate expectations, our average capital market
financing costs in 2015 should be broadly in line with 2014.
We closely monitor the capital positions of the Group and at the
operating entity level. Additionally, we will continue to optimize our
interest rate and spread sensitivities through asset/liability manage-
ment and life product design.
Expected dividend development1
In November 2014, the Board of Management and the Supervisory
Board of Allianz SE decided on a new allocation of net income in its
dividend policy. Starting with the financial year 2014, the intention is
to propose an increased regular pay-out to Allianz shareholders of
50 % of Allianz Group net income (attributable to shareholders).
1
This dividend policy represents the current intention of the Board of Management and the Supervisory
Board and may be revised in the future. Also, the dividend payment in any given year is subject to specific
dividend proposals by the Board of Management and the Supervisory Board, each of which may elect to
deviate from this dividend policy if appropriate under the then prevailing circumstances, as well as to the
decision of the Annual General Meeting.
108
Annual Report 2014
Allianz Group
In the interest of dividend continuity, the objective is to keep the
dividend per share at least at the level paid in the previous year. The
dividend policy of the Allianz Group continues to aim for a healthy
balance between an attractive yield and investments in profitable
growth. To assure capital discipline, management further intends to
evaluate and pay out any unused capital budget earmarked for exter-
nal growth every three years. The first evaluation will take place at the
end of 2016. In 2014, out of a budget of € 1.2 BN for external growth
(equals 20 % of the net income attributable to shareholders for the
year 2013) investments of € 0.6 BN were made resulting in additional
capital consumption of € 0.3 BN. The dividend policy is subject to a
sustainable Solvency II ratio above 160 %. This new policy is reflected
in our proposed dividend of € 6.85 per share.
Management’s overall assessment
of the current economic situation of
the Allianz Group
Overall, at the date of issuance of this Annual Report and given cur-
rent information regarding natural catastrophes and capital market
trends – in particular foreign currency, interest rates and equities –
the Board of Management has no indication that the Allianz Group is
facing any major adverse developments.
Cautionary note regarding forward-looking statements
The statements contained herein may include prospects, statements of future expectations
and other forward-looking statements that are based on management’s current views and
assumptions and involve known and unknown risks and uncertainties. Actual results, perfor-
mance or events may differ materially from those expressed or implied in such forward-
looking statements.
Such deviations may arise due to, without limitation, (i) changes of the general economic
conditions and competitive situation, particularly in the Allianz Group’s core business and
core markets, (ii) performance of financial markets (particularly market volatility, liquidity and
credit events) (iii) frequency and severity of insured loss events, including from natural catas-
trophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends,
(v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults,
(vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange
rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisi-
tions, including related integration issues, and reorganization measures, and (xi) general
competitive factors, in each case on a local, regional, national and/or global basis. Many of these
factors may be more likely to occur, or more pronounced, as a result of terrorist activities and
their consequences.
No duty to update
The company assumes no obligation to update any information or forward-looking statement
contained herein, save for any information required to be disclosed by law.
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Balance Sheet Review
− Shareholders’ equity increased by € 10.7 bn to € 60.7 bn.
− Solvency ratio remained strong at 181 %.1
Shareholders’1equity 2
Regulatory capital adequacy
The Allianz Group is a financial conglomerate within the scope of the
E.U. Financial Conglomerates Directive and the related German law
in force since 2005. The law requires that financial conglomerates
calculate the capital available to meet their solvency requirements
on a consolidated basis, which we refer to as “eligible capital”.
+ 21.3 %
60,747
13,917
17,901
28,928
Conglomerate SolvenCy1
€ bn
182 %
181 %2
50
40
30
20
10
46.5
49.8
25.6
27.6
12/31/2013
12/31/2014
Solvency ratio
Eligible capital
Requirement
1
2
Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request. Allianz SE
has not submitted an application so far. Excluding off-balance sheet reserves, the solvency ratio as of
31 December 2014 would be 172 % (31 December 2013: 173 %).
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.
Compared to year-end 2013, our conglomerate solvency ratio
remained strong. In 2014, the Group’s eligible capital for solvency
purposes increased by € 3.3 bn to € 49.8 bn, which includes off-bal-
ance sheet reserves of € 2.3 bn (31 December 2013: € 2.3 bn) and was
adjusted for the potential calls of hybrid capital (subordinated
bonds) in 2015. This increase in eligible capital was largely driven by
our net income (net of accrued dividends and accounting for a 50 %
ShareholderS’ equity
€ mn
70,000
60,000
50,000
40,000
30,000
20,000
10,000
50,083
6,742
14,473
28,869
12/31/2013
12/31/2014
Paid-in capital
Unrealized gains/losses (net)
Retained earnings (includes foreign currency translation adjustments)
In 2014, shareholders’ equity increased by € 10,663 mn to € 60,747 mn
as of 31 December 2014. Unrealized gains were up by € 7,176 mn,
mainly due to higher fair values of debt securities triggered by
declines in all major government bond yields – in particular within
the Eurozone. Our net income attributable to shareholders of
€ 6,221 mn also contributed to this growth. A € 1,336 mn increase in
foreign currency translation adjustments, mainly driven by the sig-
nificant depreciation of the Euro against the U.S. Dollar – which was
only minimally offset by the depreciation of the Russian ruble against
the Euro – also contributed. These upward movements in sharehold-
ers’ equity were only partly offset by our € 2,405 mn dividend payout
in May 2014 and actuarial losses on defined benefit plans recorded in
other comprehensive income of € 1,571 mn in 2014.
1
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. Off-balance sheet reserves are accepted
by the authorities as eligible capital only upon request. Allianz SE has not submitted an application so far.
Excluding off-balance sheet reserves, the solvency ratios as of 31 December 2014 and 2013 would be 172 %
and 173 %, respectively.
This does not include non-controlling interests of € 2,955 mn and € 2,765 mn as of 31 December 2014 and
31 December 2013, respectively. For further information, please refer to note 25 to the consolidated financial
statements. Retained earnings include foreign currency translation adjustments of € (1,977) mn and
€ (3,313) mn as of 31 December 2014 and 31 December 2013, respectively.
Annual Report 2014
Allianz Group
109
dividend payout ratio as recently introduced1) of € 3.1 bn. The issu-
ance of two subordinated bonds in the first and third quarter of
€ 1.9 bn in total was partly offset by the redemption of a € 1.0 bn sub-
ordinated bond in January 2015 and the potential call of hybrid capital
of € 0.4 bn in 2015. An increase in actuarial losses on the valuation of
our pension benefit obligation was in part offset by higher unrealized
gains on equities (we have not elected to use unrealized gains on
debt securities as eligible capital) and favorable foreign currency
translation adjustments. The required funds increased by € 2.0 bn to
€ 27.6 bn, mainly due to higher aggregate policy reserves in Life/
Health. As a result, our eligible capital surpassed the minimum
legally stipulated level by € 22.2 bn.
Total assets and total liabilities
As of 31 December 2014, total assets amounted to € 805.8 bn and total
liabilities were € 742.1 bn. Compared to year-end 2013, total assets
and total liabilities increased by € 94.7 bn and € 83.9 bn, respectively.
The following section mainly focuses on our financial invest-
ments in debt instruments, equities, real estate and cash, since these
reflect the major developments in our asset base.
StruCture of inveStmentS – portfolio overview
The following portfolio overview covers the Allianz Group assets held
for investment, which are mainly driven by our insurance businesses.
Compared to year-end 2013, our investment portfolio increased by
€ 77.7 bn to € 614.6 bn as of 31 December 2014 with no material change
in the overall asset allocation.
Our gross exposure to equities increased by € 5.6 bn to € 41.2 bn
due to new investments and to a lesser extent positive developments
in almost all major stock markets in 2014. This exposure still account-
ed for 7 % of our investment portfolio. Our equity gearing2 remained
stable at 25 %, although we have an upswing in shareholders’ equity.
Our direct exposure to real estate increased by € 0.6 bn to € 11.3 bn
due to new investments.
Our cash and other investments were up by € 2.4 bn to € 12.2 bn.
For further information on our liquidity position, please refer to
Liquidity and Funding Resources starting on
page 116.
Our exposure to debt instruments grew by € 69.1 bn – or 14.4 % – to
€ 549.8 bn and represented 89 % of our total investment portfolio,
almost stable compared to last year. The increase in absolute terms
was driven by higher fair values as a result of decreased interest rates
as well as new investments. Furthermore, foreign currency effects
were also significant, mainly driven by the appreciation of the U.S.
Dollar against the Euro.
fixed inCome portfolio
Total fixed income portfolio as of 31 December 2014: € 549.8 bn
[as of 31 December 2013: € 480.7 bn] in %
Banks 6 [7]
Other 10 [10]
aSSet alloCation
Investment portfolio as of 31 December 2014: € 614.6 bn
[as of 31 December 2013: € 536.8 bn] in %
Real estate 2 [2]
Equities 7 [7]
Other corporate
bonds 26 [24]
Cash/Other 2 [2]
Government bonds 38 [37]
Covered bonds 20 [21]
Debt instruments 89 [90]
The allocation of our well-diversified fixed income portfolio remained
rather stable, with modest increases in the share of corporate bonds
and government bonds accompanied by minor reductions in the por-
tion of covered bonds and banks. About 95 % of this portfolio of debt
instruments was invested in investment-grade bonds and loans.3
Our government bond exposure increased by € 29.7 bn compared
to year-end 2013 and amounted to € 209.3 bn as of 31 December 2014.
The allocation of our government and government-related bond
exposure remained rather stable, with a marginal decrease in the
share of German government bonds reflecting the decision not to
1
This dividend policy represents the current intention of the Board of Management and the Supervisory
Board and may be revised in the future. Also, the dividend payment in any given year is subject to specific
dividend proposals by the Board of Management and the Supervisory Board, each of which may elect to
deviate from this dividend policy if appropriate under the then prevailing circumstances, as well as to the
decision of the Annual General Meeting. For further information on our new dividend policy, please refer
to Outlook 2015 starting on page 104.
2
3
Equity gearing is defined as the ratio of our equity holdings allocated to the shareholder after policyholder
participation and hedges to shareholders’ equity plus off-balance sheet reserves less goodwill.
Excluding self-originated German private retail mortgage loans. For 2 %, no ratings were available.
110
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
reinvest in those bonds at the low yield levels. The overall increase in
our government bond exposure was primarily driven by positive mar-
ket effects. Our sovereign debt exposure in Italy and Spain equaled
5.7 % and 1.1 % of our fixed income portfolio, reflecting minor realiza-
tions in Italy and new investments in Spain during 2014. The corre-
sponding unrealized gains (gross) amounted to € 5,587 mn in Italy
and € 945 mn in Spain. Furthermore, we restored our exposure to Irish
government bonds – representing 0.1 % of our fixed income portfolio
– which was substantially reduced in 2012 and 2013. Our government
bond exposure in Portugal remained limited, with small unrealized
gains. We continued to have virtually no exposure to Greek and no
exposure to Ukrainian government bonds. The respective exposure
to Russia was relatively small in the context of our overall portfolio.
Our covered bond portfolio was up by € 5.1 bn to € 107.6 bn. Its
fixed income portfolio share decreased slightly to 20 %. 44 % (31 Decem-
ber 2013: 47 %) of this portfolio was German Pfandbriefe, backed by
either public sector loans or mortgage loans. Another 16 %, 10 % and
7 % of the covered bonds were attributable to France, Spain and Italy,
respectively. Covered bonds provide a cushion against real estate
price deterioration and payment defaults through minimum
required security buffers and overcollateralization.
Our corporate bonds grew by € 28.7 bn to € 145.1 bn – representing
an increase from 24 % as of 31 December 2013 to 26 % of our fixed income
portfolio as of year-end 2014. This was primarily driven by new invest-
ments and to a lesser extent by decreased interest rates leading to
fair value increases. The corporate bond portfolio weighting experi-
enced a slight regional shift from Eurozone corporate bonds to bonds
of the North-American region, which was driven by new investments
as well as value increases in U.S. Dollar-denomi nated exposures.
Our exposure to bank securities – including the exposure to sub-
ordinated securities in banks – remained almost unchanged at
€ 32.4 bn (31 December 2013: € 33.1 bn). Given the growth in our total
fixed income portfolio, the portfolio share of this exposure decreased
one percentage point to 6 %. The portfolio share in U.S. banks slightly
increased as matured bank securities – mainly from Germany – have
been reinvested with a higher percentage going to the United States.
The exposure to subordinated securities in banks slightly increased
from € 4.8 bn to € 5.3 bn.
Our exposure to asset-backed securities (AbS) went up by € 4.5 bn
to € 22.9 bn and still accounted for 4 % of our fixed income portfolio.
The increase was largely related to new investments. About 72 % of our
AbS portfolio was related to mortgage-backed securities (mbS). mbS
issued by U.S. agencies, which are backed by the U.S. government,
increased by two percentage points and accounted for 15 % of the AbS
portfolio. Overall, 98 % of the AbS portfolio received an investment
grade rating, with 86 % rated “AA” or better.
inveStment reSult
inveStment inCome (net)
€ mn
Operating investment result
2014
2013
Delta
Interest and similar income (net)1
21,028
20,497
531
Operating income from financial
assets and liabilities carried at fair
value through income (net)
Operating realized gains/losses (net)
Operating impairments of
investments (net)
Investment expenses
Subtotal
Non-operating investment result
Non-operating income from financial
assets and liabilities carried at fair
value through income (net)
Non-operating realized
gains/losses (net)
Non-operating impairments
of investments (net)
Subtotal
Total investment income (net)
(1,301)
3,205
(697)
(961)
21,274
(303)
812
(197)
312
21,586
(1,868)
3,334
(298)
(905)
20,761
23
952
(313)
662
21,423
567
(129)
(399)
(56)
514
(326)
(141)
116
(350)
163
1
Net of interest expenses (excluding interest expenses from external debt).
Our total investment income (net) went up slightly to € 21,586 mn as
the decrease in our non-operating investment result was more than
compensated for by the increase in our operating investment result,
which are analyzed in the following two sections.
Operating investment result
Our operating investment income (net) increased by € 514 mn to
€ 21,274 mn due to higher interest and similar income (net) and oper-
ating income from financial assets and liabilities carried at fair value
through income (net).
Interest and similar income (net)1 increased by € 531 mn – or 2.6 %
– to € 21,028 mn. This was driven by higher income from equities in
line with our increased exposure to this asset class, but also from
higher interest income from debt securities resulting from a higher
asset base. This was predominantly due to our Life/Health business
segment.
Operating income from financial assets and liabilities carried at
fair value through income (net) improved by € 567 mn to a loss of
€ 1,301 mn. The previous year’s result was considerably impacted by
losses from the net of foreign currency translation effects and finan-
cial derivatives, mainly within our German Life/Health business.
De rivatives are used to protect against equity and foreign currency
1
Net of interest expenses (excluding interest expenses from external debt).
Annual Report 2014
Allianz Group
111
fluctuations as well as to manage duration and other interest rate-
related exposures.
Our operating impairments of investments (net) increased from
their comparatively low level by € 399 mn to € 697 mn. This was mainly
driven by higher impairments on emerging market debt funds trig-
gered by unfavorable currency movements of emerging markets cur-
rencies in the second half of 2013. This led to impairments in 2014 due
to respective accounting policies for impairments. Higher impair-
ments on equities also contributed to the increase and were driven
by various single equity investments.
Operating realized gains and losses (net) decreased by € 129 mn
to € 3,205 mn. This was driven by lower realizations on debt securities,
but also on real estate. Realized gains on equities were around the
same level as the previous year.
Investment expenses increased by € 56 mn to € 961 mn, mainly
due to the higher asset base and higher expenses for the extended
real estate exposure.
Non-operating investment result
Our non-operating investment income (net) more than halved from
€ 662 mn to € 312 mn. This was mainly due to the worsening of non-
operating income from financial assets and liabilities carried at fair
value through income (net).
Non-operating income from financial assets and liabilities car-
ried at fair value through income (net) decreased by € 326 mn to a loss
of € 303 mn, mainly due to unfavorable hedging results.
Non-operating realized gains and losses (net) were down by
€ 141 mn to € 812 mn due to a reduction in realizations on equities.
This was only partly offset by higher realizations on debt securities,
mainly within our Property-Casualty business segment.
Non-operating impairments of investments (net) decreased by
€ 116 mn to € 197 mn. An increase in impairments on debt securities
was more than offset by a respective decrease on equities.
aSSetS and liabilitieS of
the property-CaSualty buSineSS Segment
Property-Casualty assets
Compared to year-end 2013, the Property-Casualty asset base
increased by € 8.2 bn to € 109.2 bn. This was primarily driven by higher
debt securities, but also by increased equities – both resulting from
new investments and increased fair values.
CompoSition of aSSet baSe – fair valueS1
€ bn
as of 31 December
Financial assets and liabilities carried
at fair value through income
Equities
Debt securities
Other2
Subtotal
Investments3
Equities
Debt securities
Cash and cash pool assets4
Other
Subtotal
Loans and advances to banks and customers
2014
2013
0.4
0.1
–
0.5
6.3
72.4
5.6
9.5
93.8
15.0
0.4
0.1
–
0.6
5.0
67.0
4.9
7.5
84.4
16.1
Property-Casualty asset base
109.2
101.1
1
2
3
4
Loans and advances to banks and customers, held-to-maturity investments and real estate held for
investment are stated at amortized cost. Investments in associates and joint ventures are stated at either
amortized cost or equity, depending on – among other factors – our ownership percentage.
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
2014 and 31 December 2013, respectively.
These do not include affiliates of € 8.9 bn and € 8.9 bn as of 31 December 2014 and 31 December 2013,
respectively.
Including cash and cash equivalents, as stated in our business segment balance sheet of € 3.7 bn and
€ 2.8 bn and receivables from cash pooling amounting to € 4.2 bn and € 3.4 bn, net of liabilities from
securities lending and derivatives of € (0.1) bn and € (0.3) bn, as well as liabilities from cash pooling of
€ (2.1) bn and € (1.0) bn as of 31 December 2014 and 31 December 2013, respectively.
AbS within the Property-Casualty asset base was up slightly from
€ 3.7 bn to € 4.0 bn, representing an almost unchanged 3.7 % of the busi-
ness segment’s asset base.
112
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Property-Casualty liabilities
development of reServeS for loSS and loSS adjuStment expenSeS1
aSSetS and liabilitieS of
the life/health buSineSS Segment
€ bn
As of 1 January 2014
Balance carry forward of discounted
loss reserves2
Subtotal
Loss and loss adjustment expenses
paid in current year relating to
previous years
Loss and loss adjustment expenses
incurred in previous years
Foreign currency translation
adjustments and other changes
Changes in reserves for loss and loss
adjustment expenses in current year
Subtotal
Ending balance of discounted loss
reserves2
As of 31 December 2014
Gross
56.6
3.2
59.8
(14.7)
(1.8)
2.5
16.7
62.5
(3.6)
58.9
Ceded
(6.1)
(0.3)
(6.4)
1.4
0.4
(0.5)
(1.8)
(6.9)
0.3
(6.6)
Net
50.5
2.9
53.4
(13.3)
(1.4)
2.0
14.9
55.6
(3.3)
52.3
1
2
For further information about changes in the reserves for loss and loss adjustment expenses for the
Property-Casualty business segment, please refer to note 19 to the consolidated fin an cial statements.
Although discounted loss reserves have been reclassified to “Reserves for insurance and investment
contracts” in the balance sheet in 2013, the underlying business development of these Property-Casualty
reserves is still considered in the loss and loss adjustment expenses and in the loss ratio and is therefore
included in the development of the reserves above.
As of 31 December 2014, the business segment’s gross reserves for
loss and loss adjustment expenses and discounted loss reserves
amounted to € 62.5 bn – an increase of € 2.7 bn compared to year-end
2013. On a net basis, our reserves – including discounted loss reserves
– increased from € 53.4 bn to € 55.6 bn. Foreign currency translation
effects and other changes amounted to an increase of € 2.0 bn on a
net basis.
Life/Health assets
The Life/Health asset base increased by € 78.9 bn – or 16.2 % – to
€ 565.4 bn. To a large extent, this was driven by an increased exposure
to debt securities but also higher equities and was in line with the
developments in our overall investment portfolio – reflecting both
new investments and increased fair values. Higher financial assets
for unit-linked contracts also contributed to this growth.
CompoSition of aSSet baSe – fair valueS
€ bn
as of 31 December
Financial assets and liabilities carried
at fair value through income
Equities
Debt securities
Other1
Subtotal
Investments2
Equities
Debt securities
Cash and cash pool assets3
Other
Subtotal
Loans and advances to banks and customers
Financial assets for unit-linked contracts4
Life/Health asset base
2014
2013
1.8
2.0
(6.8)
(3.0)
32.2
331.8
8.0
10.4
382.4
91.4
94.6
565.4
1.4
2.5
(4.2)
(0.3)
28.9
269.3
7.5
10.0
315.8
89.9
81.1
486.5
1
2
3
4
This comprises assets of € 1.4 bn and € 1.7 bn and liabilities (including the market value lia bility option) of
€ (8.2) bn and € (5.9) bn as of 31 December 2014 and 31 December 2013, respectively.
These do not include affiliates of € 0.2 bn and € 0.8 bn as of 31 December 2014 and 31 December 2013,
respectively.
Including cash and cash equivalents, as stated in our business segment balance sheet, of € 7.6 bn and
€ 5.8 bn and receivables from cash pooling amounting to € 3.1 bn and € 3.5 bn, net of liabilities from
securities lending and derivatives of € (2.6) bn and € (1.7) bn, as well as liabilities from cash pooling of
insignificant amounts as of 31 December 2014 and 31 December 2013, respectively.
Financial assets for unit-linked contracts represent assets owned by, and managed on behalf of, policy-
holders of the Allianz Group, with all appreciation and depreciation in these assets accruing to the benefit
of policyholders. As a result, the value of financial assets for unit-linked contracts in our balance sheet
corresponds to the value of financial liabilities for unit-linked contracts. The International Financial Report-
ing Standards (IFRS) require the classification of any contract written by an insurance company either as
an insurance contract or as an investment contract, depending on whether an insurance component is
included. This requirement also applies to unit-linked products. In contrast to unit-linked investment
contracts, unit-linked insurance contracts include coverage for significant mortality or morbidity risk.
AbS within the Life/Health asset base grew by € 3.0 bn, mainly due to
new investments, and amounted to € 16.9 bn. This exposure repre-
sented 3.0 % (31 December 2013: 2.8 %) of the business segment’s asset
base.
Annual Report 2014
Allianz Group
113
finanCial aSSetS for unit-linked ContraCtS1
€ bn
aSSetS and liabilitieS of
the aSSet management buSineSS Segment
Asset Management assets
The Asset Management business segment’s results are derived pri-
marily from asset management for third-party investors and the
Allianz Group’s insurance operations . In this section, we refer only
to the business segment’s own assets.2
The business segment’s asset base decreased from € 4.5 bn to
€ 2.6 bn – mainly from debt securities as a result of the allocation of
certain entities to other reportable segments. Cash and cash pool
assets are now the remaining main component of the business seg-
ment’s asset base.
Asset Management liabilities
Liabilities in our Asset Management business segment decreased
from € 4.0 bn as of year-end 2013 to € 2.4 bn, primarily due to the
above-mentioned allocation.
aSSetS and liabilitieS of
the Corporate and other buSineSS Segment
Corporate and Other assets
The Corporate and Other asset base increased by € 3.4 bn to € 44.7 bn.
This was due to a greater volume of debt securities and, to a lesser
extent, equities as well as an improvement in our net position of cash
and cash pool assets. It was partly offset by decreased loans and
advances to banks and customers.
As of 1 January 2014
Net premium inflows (outflows)
Changes in fund value
Foreign currency translation
adjustments
Other changes
As of 31 December 2014
Unit-linked
insurance
contracts
Unit-linked
investment
contracts
55.4
2.7
3.7
3.6
(2.7)
62.7
25.7
4.4
1.8
0.2
(0.2)
31.9
Total
81.1
7.1
5.5
3.8
(2.9)
94.6
1
Financial assets for unit-linked contracts represent assets owned by, and managed on behalf of, policy-
holders of the Allianz Group, with all appreciation and depreciation in these assets accruing to the benefit
of policyholders. As a result, the value of financial assets for unit-linked contracts in our balance sheet
corresponds to the value of financial liabilities for unit-linked contracts. The International Financial Re-
porting Standards (IFRS) require the classification of any contract written by an insurance company either
as an insurance contract or as an investment contract, depending on whether an insurance component
is included. This requirement also applies to unit-linked products. In contrast to unit-linked investment
contracts, unit-linked insurance contracts include coverage for significant mortality or morbidity risk.
Financial assets for unit-linked contracts increased by € 13.5 bn – or
16.7 % – to € 94.6 bn. Unit-linked insurance contracts went up by
€ 7.3 bn to € 62.7 bn due to good fund performance (€ 3.7 bn) and pre-
mium inflows exceeding outflows by € 2.7 bn. This was partly offset
by transfers to the general account in France (€ (1.1) bn). Unit-linked
investment contracts increased by € 6.2 bn to € 31.9 bn, with premium
inflows significantly exceeding outflows (net € 4.4 bn). Currency
effects were driven by the stronger U.S. Dollar (€ 3.1 bn) and Asian cur-
rencies (€ 0.6 bn).1
Life/Health liabilities
In 2014, Life/Health reserves for insurance and investment contracts
increased by € 58.4 bn – or 14.9 % – to € 449.3 bn. The € 23.8 bn increase
in aggregate policy reserves was mainly driven by our operations in
Germany (€ 9.9 bn), the United States (€ 7.5 bn before currency
effects), Italy (€ 2.1 bn), France (€ 0.8 bn) and Luxembourg (€ 0.7 bn).
Reserves for premium refund increased by € 24.7 bn due to higher
unrealized gains to be shared with policyholders. Currency impacts
resulted from the stronger U.S. Dollar (€ 8.2 bn), Asian currencies
(€ 1.5 bn) and the Swiss Franc (€ 0.2 bn).1
1
Based on the closing rates on the respective balance sheet dates.
114
Annual Report 2014
Allianz Group
2
For further information on the development of these third-party assets, please refer to Asset Management
starting on page 99. Effective 1 January 2014, the Allianz Group allocated certain entities from the report-
able segment Asset Management to the reportable segments German Speaking Countries, Western
& Southern Europe and Growth Markets within the business segment Life/Health and to the reportable
segment Banking.
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Off-balance sheet arrangements
In the normal course of business, the Allianz Group may enter into
arrangements that do not lead to the recognition of assets and liabil-
ities in the consolidated financial statements under IFRS. Since the
Allianz Group does not rely on off-balance sheet arrangements as a
significant source of revenue or financing, our off-balance sheet
exposure to loss is immaterial relative to our financial position.
The Allianz Group enters into various commitments including
loan and leasing commitments, purchase obligations and other
commitments. Please refer to note 47 to the consolidated financial
statements for more details.
The Allianz Group has also entered into contractual relation-
ships with various types of structured entities. They have been
designed in such a way that their relevant activities are directed by
means of contractual arrangements instead of voting or similar
rights. Typically, structured entities have been set up in connection
with asset-backed financings, certain investment fund products,
commercial mortgage loans and collateralized debt obligations. For
more details on our involvement with structured entities, please refer
to note 45 to the consolidated financial statements.
Please refer to the Risk and Opportunity Report from
page 123
onwards for a description of the main concentrations of risk and
other relevant risk positions.
CompoSition of aSSet baSe – fair valueS
€ bn
as of 31 December
Financial assets and liabilities carried
at fair value through income
Equities
Debt securities
Other1
Subtotal
Investments2
Equities
Debt securities
Cash and cash pool assets3
Other
Subtotal
Loans and advances to banks and customers
Corporate and Other asset base
2014
2013
0.1
0.2
(0.5)
(0.1)
2.7
28.4
(4.1)
0.3
27.3
17.5
44.7
–
–
(0.2)
(0.2)
1.7
26.4
(5.0)
0.3
23.4
18.2
41.3
1
2
3
This comprises assets of € 0.2 bn and € 0.3 bn and liabilities of € (0.6) bn and € (0.5) bn as of 31 December
2014 and 31 December 2013, respectively.
These do not include affiliates of € 77.2 bn and € 75.4 bn as of 31 December 2014 and 31 December 2013,
respectively.
Including cash and cash equivalents, as stated in our business segment balance sheet, of € 2.0 bn and
€ 1.5 bn and receivables from cash pooling amounting to € 1.7 bn and € 0.7 bn, net of liabilities from
securities lending and derivatives of € (0.0) bn and € (0.2) bn, as well as liabilities from cash pooling of
€ (7.9) bn and € (7.1) bn as of 31 December 2014 and 31 December 2013, respectively.
AbS within the Corporate and Other asset base expanded by € 1.1 bn to
€ 2.0 bn. This represented an increase from 2.2 % to 4.5 % of the Corpo-
rate and Other’s asset base and was mainly due to new investments.
Corporate and Other liabilities
Compared to 31 December 2013, other liabilities increased by € 4.4 bn
to € 28.0 bn as of 31 December 2014. Most of this increase was related
to higher pension obligations. Over the same period, subordinated
liabilities were up by € 0.5 bn to € 12.0 bn as the redemption of a
€ 1.5 bn perpetual bond was more than offset by the issuance of two
perpetual subordinated bonds with a volume of CHF 0.5 bn and
€ 1.5 bn in the first and third quarter of 2014, respectively. Certificated
liabilities decreased by € 1.0 bn to € 12.2 bn.1
1
For further information on Allianz SE debt as of 31 December 2014, please refer to notes 23 and 24 to the
consolidated financial statements.
Annual Report 2014
Allianz Group
115
Liquidity and Funding Resources
Asset mAnAgement operAtions
Within our Asset Management operations, the most important sour-
ces of liquidity are fees generated from asset management activities.
These are primarily used to cover operating expenses.
BAnking operAtions
The major sources of liquidity in our Banking operations include cus-
tomer deposits, interbank loans and interest and similar income
from our lending transactions. The most important uses of funds are
the issuance of new loans and investments in fixed income securities.
The liquidity of our Banking operations is largely dependent on the
ability of our private and corporate customers to meet their payment
obligations arising from loans and other outstanding commitments.
Our ability to retain our customers’ deposits is also equally important
to us.
Liquidity management
and funding of Allianz SE
The responsibility for managing the funding needs of the Group,
maximizing access to liquidity sources and minimizing borrowing
costs lies with Allianz SE. We therefore comment on the liquidity and
funding resources of Allianz SE in the following sections. Restrictions
on the transferability of capital within the Group result mainly from
the capital maintenance rules under applicable company laws and
the regulatory solvency capital requirements for regulated group
companies.
LiQUiDitY resoUrCes AnD Uses
Allianz SE ensures adequate access to liquidity and capital for our
operating subsidiaries. The main sources of liquidity available for
Allianz SE are dividends received from subsidiaries and funding pro-
vided by capital markets. Liquidity resources are defined as readily
available assets – specifically cash, money market investments and
highly liquid government bonds. Our funds are primarily used for pay-
ing interest expenses on our debt funding, operating costs, internal
and external growth investments and dividends to our shareholders.
Organization
The Allianz Group’s liquidity management is based on policies and
guide lines approved by the Allianz SE Board of Management.
Allianz SE and each of the operating entities are responsible for man-
aging their respective liquidity positions, while Allianz SE provides
central liquidity pooling for the Group. Capital allocation is steered
by Allianz SE for the entire Group. This structure allows the efficient
use of liquidity and capital resources and for Allianz SE to achieve the
desired liquidity and capitalization levels for the Group and its oper-
ating units.
Liquidity management
of our operating entities
insUrAnCe operAtions
The major sources of liquidity for our operational activities are pri-
mary and reinsurance premiums received, reinsurance receivables
collected, investment income and proceeds generated from the
maturity or sale of investments. These funds are mainly used to pay
claims arising from the property-casualty insurance business and
related expenses, life policy benefits, surrenders and cancellations,
acquisition costs and operating costs.
We receive a large part of premiums before payments of claims
or policy benefits are required, generating solid cash flows from our
insurance operations. This allows us to invest the funds in the inter-
im to create investment income.
Our insurance operations also carry a high proportion of liquid
investments, which can be converted into cash to pay for claims.
Generally, our investments in fixed income securities are sequenced
to mature when funds are expected to be needed.
The overall liquidity of our insurance operations depends on
capital market developments, interest rate levels and our ability to
realize the market value of our investment portfolio to meet insur-
ance claims and policyholder benefits. Other factors affecting the
liquidity of our Property-Casualty insurance operations include the
timing, frequency and severity of losses underlying our policies and
policy renewal rates. In our Life operations, liquidity needs are gener-
ally influenced by trends in actual mortality rates compared to the
assumptions underlying our life insurance reserves. Market returns,
crediting rates and the behavior of our life insurance clients – for
example regarding the level of surrenders and withdrawals – can also
have significant impacts.
116
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
fUnDing soUrCes
Allianz SE’s access to external funds depends on various factors such
as capital market conditions, access to credit facilities, credit ratings
and credit capacity. The financial resources available to Allianz SE in
the capital markets for short-, mid- and long-term funding needs are
described below. In general, mid- to long-term financing is covered
by issuing senior or subordinated bonds or ordinary shares.
Equity funding
As of 31 December 2014, the issued capital registered at the Commer-
cial Register was € 1,169,920,000. This was divided into 457,000,000
registered shares with restricted transferability. As of 31 December
2014, the Allianz Group held 2,751,961 (2013: 2,763,381) own shares.
Allianz SE has the option to increase its equity capital base
according to authorizations provided by our shareholders. The follow-
ing table outlines Allianz SE’s capital authorizations as of 31 Decem-
ber 2014:
CApitAL AUthorizAtions of ALLiAnz se
CApitAL AUthorizAtion
nominAL AmoUnt
Authorized Capital 2014/i
Authorized Capital 2014/ii
Authorization to issue
bonds carrying conversion
and/or option rights
€ 550,000,000
(214,843,750 shares)
€ 13,720,000
(5,359,375 shares)
€ 10,000,000,000
(nominal bond value)
Conditional Capital
2010/2014
€ 250,000,000
(97,656,250 shares)
expirY DAte of
the AUthorizAtion
6 May 2019
6 May 2019
6 May 2019
(issuance of bonds)
No expiry date for
Conditional Capital
2010/2014 (issuance in
case option or conversion
rights are exercised)
Please refer to
repurchase shares.
page 43 regarding authorizations to issue and
mAtUritY strUCtUre of ALLiAnz se’s senior AnD sUBorDinAteD BonDs As of 31 DeCemBer 2014
nominal value in € Bn
7
6
5
4
3
2
1
1.01
1.5
1.5
0.5
1.5
6.4
2.5
0.75
1.5
1.0
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2041
2042
2043
perpetual
Senior bonds
Subordinated bonds
1
€ 1.0 bn subordinated bond called for redemption effective 13 January 2015.
Long-term debt funding
As of 31 December 2014, Allianz SE had senior and subordinated
bonds in a variety of maturities outstanding, reflecting our focus on
long-term financing. As the cost and availability of external funding
may be negatively affected by general market conditions or by matters
specific to the financial services industry or the Allianz Group, we
seek to reduce refinancing risk by actively steering the maturity profile
of our funding structure.
Interest expenses on senior bonds increased to € 264 MN (2013:
€ 261 MN). This was due to slightly higher outstanding volumes on
average and the appreciation of the British Pound against the Euro.
For subordinated bonds, interest expenses declined to € 554 MN (2013:
€ 610 MN). This was primarily driven by lower funding costs on new
issuances compared to subordinated bonds that matured in 2014.
Annual Report 2014
Allianz Group
117
Short-term debt funding
Short-term funding sources available are the Medium-Term Note Pro-
gram and the Commercial Paper Program. As of 31 December 2014,
Allianz SE had money market securities outstanding with a carrying
value of € 1,041 MN, a € 172 MN increase in the use of commercial
paper compared to the previous year-end. Interest expenses on
money market securities decreased to € 3 MN (2013: € 4 MN) due to a
lower level of short-term interest rates on average in 2014.
moneY mArket seCUrities of ALLiAnz se
as of 31 December
2014
Money market securities
2013
Money market securities
Carrying value
€ mn
1,041
869
Interest
expense
€ mn
3
4
Average
interest rate
%
0.3
0.4
The Group maintained its A-1+/Prime-1 ratings for short-term issues.
Thus we can continue funding our liquidity under the Euro Commer-
cial Paper Program at an average rate below Euribor and under
the U.S. Dollar Commercial Paper Program at an average rate below
U.S. Libor.
Further potential sources of short-term funding allowing the
Allianz Group to fine-tune its capital structure are letter of credit
facilities and bank credit lines.
senior AnD sUBorDinAteD BonDs issUeD or gUArAnteeD BY ALLiAnz se1
as of 31 December
2014
Senior bonds
Subordinated bonds
Total
2013
Senior bonds
Subordinated bonds
Total
Nominal
value
€ mn
Carrying
value
€ mn
Interest
expense
€ mn
6,716
11,442
18,159
6,651
10,926
17,577
6,653
11,371
18,024
6,581
10,856
17,437
264
554
818
261
610
871
Weighted
average
interest rate2
%
3.9
5.3
4.8
4.0
5.9
5.2
1
2
For further information on Allianz SE debt (issued or guaranteed) as of 31 December 2014, please refer to
notes 23 and 24 to the consolidated financial statements.
Based on nominal value.
The table below details the long-term debt issuances and redemp-
tions of Allianz SE during 2014 and 2013:
issUAnCes AnD reDemptions of ALLiAnz se’s senior AnD sUBorDinAteD BonDs
€ mn
as of 31 December
Issuances1
Redemptions1
Issuances net of
redemptions
2014
Senior bonds
Subordinated bonds
2013
Senior bonds
Subordinated bonds
1
Based on nominal value.
–
1,916
2,151
1,500
–
1,500
1,500
1,517
–
416
651
(17)
Funding in currencies other than the Euro enables us to diversify our
investor base or to take advantage of favorable funding costs in those
markets. Funds raised in non-Euro currencies are incorporated in our
general hedging strategy. As of 31 December 2014, approximately
12.2 % (2013: 9.3 %) of long-term debt was issued or guaranteed by
Allianz SE in currencies other than the Euro.
CUrrenCY ALLoCAtion of ALLiAnz se’s senior AnD sUBorDinAteD BonDs
nominal value in € mn
as of 31 December
2014
Euro
Non-Euro
Total
Senior and sub ordinated bonds
15,950
2,209
18,159
2013
Senior and sub ordinated bonds
15,950
1,627
17,577
118
Annual Report 2014
Allianz Group
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
ALLiAnz se BonDs1 oUtstAnDing As of 31 DeCemBer 2014 AnD interest expenses in 2014
1. senior BonDs2
4.0 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
1.375 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
4.75 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
3.5 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
3.0 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
4.5 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
Total interest expenses for senior bonds
2. sUBorDinAteD BonDs3
6.5 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
5.75 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
€ 1.5 Bn
2006
11/23/2016
xs 027 588 026 7
€ 0.5 Bn
2013
3/13/2018
De 000 A1h g1J 8
€ 1.5 Bn
2009
7/22/2019
De 000 A1A khB 8
€ 1.5 Bn
2012
2/14/2022
De 000 A1g 0rU 9
€ 0.75 Bn
2013
3/13/2028
De 000 A1h g1k 6
gBp 0.75 Bn
2013
3/13/2043
De 000 A1h g1L 4
€ 1.0 Bn
2002
1/13/2025
xs 015 952 750 5
€ 2.0 Bn
2011
7/8/2041
De 000 A1g nAh 1
€ 62 mn
€ 7 mn
€ 74 mn
€ 54 mn
€ 24 mn
€ 43 mn
€ 264 mn
€ 66 mn
€ 116 mn
1
2
For further information on Allianz SE debt (issued or guaranteed) as of 31 December 2014, please refer
to notes 23 and 24 to the consolidated financial statements.
Senior bonds provide for early termination rights in case of non-payment of amounts due under the bond
(interest and principal) as well as in case of insolvency.
5.625 % bond issued by Allianz se
Volume
Year of issue
Maturity date
isin
Interest expenses
4.375 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
5.375 % bond issued by Allianz Finance ii B.V., Amsterdam
Volume
Year of issue
Maturity date
isin
Interest expenses
5.5 % bond issued by Allianz se
Volume
Year of issue
Maturity date
isin
Interest expenses
4.75 % bond issued by Allianz se
Volume
Year of issue
Maturity date
isin
Interest expenses
3.25 % bond issued by Allianz se
Volume
Year of issue
Maturity date
isin
Interest expenses
3.375 % bond issued by Allianz se
Volume
Year of issue
Maturity date
isin
Interest expenses
Total interest expenses for subordinated bonds
3. issUes reDeemeD in 2014
5.5 % bond issued by Allianz se
Volume
Year of issue
Maturity date
isin
Interest expenses
Sum of interest expenses1
Interest expenses from external debt
not presented in the table
Total interest expenses from external debt
€ 1.5 Bn
2012
10/17/2042
De 000 A1r e1Q 3
€ 1.4 Bn
2005
perpetUAL BonD
xs 021 163 783 9
€ 0.8 Bn
2006
perpetUAL BonD
De 000 A0g npz 3
UsD 1.0 Bn
2012
perpetUAL BonD
xs 085 787 250 0
€ 1.5 Bn
2013
perpetUAL BonD
De 000 A1Y CQ2 9
Chf 0.5 Bn
2014
perpetUAL BonD
Ch 023 483 337 1
€ 1.5 Bn
2014
perpetUAL BonD
De 000 A13 r7z 7
€ 1.5 Bn
2004
perpetUAL BonD
xs 018 716 232 5
€ 86 mn
€ 63 mn
€ 43 mn
€ 44 mn
€ 72 mn
€ 13 mn
€ 15 mn
€ 519 mn
€ 3 mn
€ 786 mn
€ 59 mn
€ 846 mn
3
The terms of the subordinated bonds do not explicitly provide for early termination rights in favor of the
bondholder. Interest payments are subject to certain conditions which are linked, inter alia, to our net
income, and may have to be deferred. Nevertheless, the terms of the relevant bonds provide for alternative
settlement mechanisms which allow us to avoid an interest deferral using cash raised from the issuance
of specific newly issued instruments.
Annual Report 2014
Allianz Group
119
Allianz Group consolidated cash flows
AnnUAL ChAnges in CAsh AnD CAsh eQUiVALents
€ mn
40,000
30,000
20,000
10,000
0
(10,000)
(20,000)
(30,000)
32,232
23,239
2,656
(1,436) (3,189)
(1,230)
(22,801)
(26,927)
Net cash flow
provided
by operating
activities
Net cash flow
used in investing
activities
Net cash flow
used in financing
activities
Change in cash
and cash
equivalents1
Net cash outflow used in investing activities amounted to
€ 26.9 bN, up by € 4.1 bN compared to the previous year. This rise was
attributable to lower net cash inflows from loans and advances to
banks and customers, especially in our Life/Health business in the
United States, Germany and Korea. In addition, we recorded net cash
outflows from financial assets designated at fair value through income,
mainly in our Life/Health business in France and at Allianz SE.
Net cash outflows for available-for-sale investments further
increased. This stemmed primarily from our Life/Health operation in
the United States and was only partially offset by our Banking opera-
tion in Italy and Allianz SE.
Net cash outflow used in financing activities increased by € 1.8 bN
to € 3.2 bN in 2014. Net cash outflows from liabilities to banks and
customers (after net cash inflows in 2013) contributed to this devel-
opment and were mainly attributable to our Banking operations in
Italy and Germany. We also recorded higher dividend payments to
our shareholders. Higher net cash inflows from our refinancing activi-
ties1 partly offset these effects.
Cash and cash equivalents grew by € 2.7 bN to € 13.9 bN as of
31 December 2014. This mainly stemmed from our insurance opera-
tions in the United States and Allianz SE.
2013
2014
1
Includes effects of exchange rate changes on cash and cash equivalents of € 541 Mn and € (232) Mn in
2014 and 2013, respectively.
CAsh AnD CAsh eQUiVALents
€ mn
as of 31 December
Balances with banks payable on demand
Balances with central banks
Cash on hand
Treasury bills, discounted treasury notes, similar
treasury securities, bills of exchange and checks
Total cash and cash equivalents
2014
6,657
397
184
6,625
13,863
2013
6,574
449
202
3,982
11,207
Net cash flow provided by operating activities increased by € 9.0 bN to
€ 32.2 bN in 2014. This consists of net income plus adjustments for
non-cash charges, credits and other items included in net earnings
and cash flows related to the net change in operating assets and lia-
bilities. Net income after adding back non-cash charges and similar
items rose by € 2.1 bN to € 10.9 bN in 2014. To a large extent this was
driven by higher valuation results on our assets and liabilities held
for trading. Operating cash flows from net changes in operating assets
and liabilities, including other items, grew by € 6.9 bN to € 21.3 bN.
This was largely due to higher reserves for insurance and investment
contracts in our Life/Health business, mainly in the United States,
Germany and Italy. We also recorded higher reserves for losses and
loss adjustment expenses, in particular in our Property-Casualty busi-
ness in the United States, Switzerland, Germany and Australia. Nega-
tive net changes from our operating receivables/payables partially
offset these effects.
120
Annual Report 2014
Allianz Group
1
Refers to cash flows from certified liabilities and subordinated liabilities.
C
Group Management Report
Management Discussion and Analysis
Business Environment
79
81 Executive Summary of 2014 Results
86
Property-Casualty Insurance Operations
92 Life/Health Insurance Operations
99 Asset Management
102 Corporate and Other
104 Outlook 2015
109 Balance Sheet Review
116 Liquidity and Funding Resources
121 Reconciliations
Reconciliations
The previous analysis is based on our consolidated financial state-
ments and should be read in conjunction with them. In addition to
our stated figures according to the International Financial Reporting
Standards (IFRS), the Allianz Group uses operating profit and internal
growth to enhance the understanding of our results. These additional
measures should be viewed as complementary to, and not as a sub-
stitute for, our figures determined according to IFRS.
For further information, please refer to note 6 to the consolidated
financial statements.
Composition of total revenue growth
We believe that an understanding of our total revenue performance
is enhanced when the effects of foreign currency translation as well
as acquisitions and disposals (or “changes in scope of consolida-
tion”) are analyzed separately. Accordingly, in addition to presenting
nominal total revenue growth, we also present internal growth,
which excludes these effects.
reConCiliation of nominal total revenue growth
to internal total revenue growth
Composition of total revenues
Total revenues comprise statutory gross premiums written in Property-
Casualty and Life/Health, operating revenues in Asset Management,
and total revenues in Corporate and Other (Banking).
%
2014
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Allianz Group
2013
2014
2013
48,322
46,579
Property-Casualty
Life/Health
67,331
56,784
Asset Management
Corporate and Other
6,388
7,162
Allianz Group
Internal
growth
Changes in
scope of
consolidation
Foreign
currency
translation
Nominal
growth
3.0
19.5
(8.5)
(2.2)
10.6
(0.3)
9.1
8.5
(6.7)
4.7
2.1
(0.4)
(2.5)
3.2
0.5
2.0
0.5
(0.1)
0.0
1.1
(1.4)
(0.3)
0.0
0.0
(0.8)
(2.3)
(1.1)
(2.9)
0.0
(1.7)
3.7
18.6
(10.8)
1.0
10.4
(0.7)
8.5
5.5
(6.7)
4.1
Composition of total revenues
€ mn
Property-Casualty
Gross premiums written
Life/Health
Statutory premiums
Asset Management
Operating revenues
consisting of:
Net fee and commission income
Net interest income1
Income from financial assets and liabilities
carried at fair value through income (net)
Other income
Corporate and Other
Total revenues (Banking)
consisting of:
Interest and similar income
Income from financial assets and liabilities
carried at fair value through income (net)
Fee and commission income
Interest expenses, excluding interest expenses
from external debt
Fee and commission expenses
Consolidation effects
(Banking within Corporate and Other)
Consolidation
Allianz Group total revenues
1
Represents interest and similar income less interest expenses.
6,380
(3)
5
6
556
590
10
513
(255)
(305)
3
(344)
122,253
7,127
12
12
10
551
613
8
475
(281)
(263)
(2)
(302)
110,773
Annual Report 2014
Allianz Group
121
Life/Health Insurance Operations
statutory premiums
The objective of the Life/Health operating profit sources analysis is to
explain movements in IFRS results by analyzing underlying drivers of
performance on a Life/Health business segment consolidated basis.
Loadings & fees includes premium and reserve-based fees, unit-
linked management fees and policyholder participation on expenses.
operating profit
The reconciling item scope comprises the effects from out-of-scope
entities in the profit sources reporting compilation. Operating profit
from operating entities that are not in-scope entities is included in
the investment margin. Currently, 19 entities comprising 97.3 % of
Life/Health total statutory premiums are in-scope.
Expenses
Expenses comprise acquisition expenses and commissions as well as
administrative and other expenses.
The delta shown as definitions in acquisition expenses and com-
missions represents commission clawbacks, which are allocated to
the technical margin. The delta shown as definitions in administra-
tive and other expenses mainly represents restructuring charges,
which are presented in a separate line item in the group income
statement.
aCquisition, administrative, Commissions and other expenses
€ mn
URR capitalized: Capitalization amount of unearned revenue
reserves (URR) and deferred profit liabilities (DPL) for FAS 97 LP.
URR amortized: Total amount of URR amortized includes sched-
uled URR amortization, true-up and unlocking.
Both capitalization and amortization is included in the line item
premiums earned (net) in the group income statement.
Policyholder participation is included within change in reserves
for insurance and investment contracts (net) in the group income
statement.
Capitalization and amortization of daC
€ mn
Capitalization of daC (as per md&a)
Definition: urr capitalized
Definition: policyholder participation1
Scope
Capitalization of DAC (as per Notes)
Amortization, unlocking and true-up of daC
(as per md&a)
Definition: urr amortized
Definition: policyholder participation1
Scope
2014
1,937
456
908
200
3,502
(1,513)
13
(1,033)
(115)
2013
1,596
377
822
186
2,980
(1,519)
(174)
(777)
(101)
Amortization, unlocking and true-up of DAC
(as per Notes)
(2,648)
(2,571)
1
For German Speaking Countries, policyholder participation on revaluation of DAC/URR capitalization/
amortization.
2014
2013
(4,833)
28
(398)
(4,233)
35
(393)
(5,203)
(4,591)
reConCiliation to notes
€ mn
Acquisition expenses and commissions (as per
md&a)
Administrative and other expenses (as per md&a)
(1,577)
115
(150)
14
(1,519)
158
(135)
Capitalization of daC (as per md&a)
Amortization, unlocking and true-up of daC
(as per md&a)
Acquisitions and administrative expenses
8
Definitions
Scope
(1,599)
(1,487)
Commissions and profit received on reinsurance
business ceded
Administrative expenses on reinsurance business
ceded
Acquisitions and administrative expenses (net)
(as per Notes)1
2014
2013
(4,833)
(1,577)
1,937
(1,513)
(5,985)
488
(464)
88
14
(4,233)
(1,519)
1,596
(1,519)
(5,675)
440
(443)
67
8
(5,860)
(5,603)
1
Excluding one-off effect from pension revaluation. For further details, please refer to note 6 to the con-
solidated financial statements.
Acquisition expenses and commissions (as per
Management Discussion and Analysis (md&a))
Definitions
Scope
Acquisition costs incurred and commissions
(as per Notes)
Administrative and other expenses (as per md&a)
Definitions
Scope
Administrative expenses on reinsurance business
ceded
Administrative and other expenses (net)
(as per Notes)1
1
Excluding one-off effect from pension revaluation. For further details, please refer to note 6 to the con-
solidated financial statements.
Impact of change in Deferred Acquisition Costs (daC)
Impact of change in DAC includes effects of change in DAC, unearned
revenue reserves (URR) and value of business acquired (VOBA) and is
the net impact of the deferral and amortization of acquisition costs
and front-end loadings on operating profit.
122
Annual Report 2014
Allianz Group
C
Group Management Report
Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
Risk and Opportunity Report
− The Allianz risk management approach is designed to add value by focusing
on both risk and return.
− The Allianz Group is well capitalized and its solvency ratios are resilient.
Allianz risk profile
and management assessment
Risk pRofile and maRket enviRonment
The Allianz Group is exposed to a variety of risks through its core
insurance and asset management activities. These include market,
credit, insurance, operational, business and strategic risks. The three
largest risks in terms of their contribution to Allianz’s risk profile are:
− Market risk, especially interest rate risk due to the duration
mismatch between assets and liabilities for long-term savings
products as well as equity risk, which we take to participate from
the expected risk premium;
− Credit and credit spread risk driven by assets backing long-term
savings products;
− Property-Casualty premium and reserve risk, resulting from
natural and man-made catastrophes as well as from claims
uncertainty.
Allianz’s risk profile is driven by our strategic risk appetite and
steered by the risk management practices and limits which are
described later in this report. The risk profile and relative contribu-
tions have changed in 2014 due to changes in the market environ-
ment and due to model changes necessary to enhance our model to
provide a basis for our internal model application for Solvency II pur-
poses. These Solvency II-driven model changes reflect our current
understanding of forthcoming requirements which are described in
the section on model changes.
In the following paragraphs we provide an overview of major
developments and risks that may affect Allianz’s portfolio.
Financial markets and operating environment
Many countries within the Eurozone currently face weak economic
growth and low inflation rates. The economic malaise is being
addressed by the ECB through its expansive monetary policy. As a
result, financial markets are characterized by historically low interest
rates and risk premia, prompting investors to look for higher yielding
(and potentially higher risk) investments. In addition to sustained
low interest rates, the weakening of the Eurozone’s growth momen-
tum, the challenges of implementing long-term structural reforms
in key Eurozone countries and the uncertainty about the future path
of monetary policy may lead in the future to higher market volatility
accompanied by a flight to quality and a scenario with falling equity
and bond prices due to rising spread levels accompanied by even
lower interest rates.
Rising geopolitical risks
The increase in geopolitical risks during 2014, including the conflicts
in the Middle East as well as between Russia and Ukraine – and the
resulting international sanctions against Russia, are manageable for
Allianz Group because our direct exposure to these regions remains
relatively small in the context of our overall portfolio. Nevertheless,
we are monitoring these developments since a significant deteriora-
tion – for example an escalating conflict between the West and Rus-
sia – may lead to spill-over effects on the global financial markets,
triggering indirect effects which may have a negative impact on our
business and risk profile.
Over the past years Allianz Group and its operating entities have
developed operational contingency plans for various crisis scenarios
and continue to conduct scenario analysis on a regular basis to bolster
our financial and operational resilience to strong shock scenarios. In
addition, we continue to optimize our product design and pricing in
the Life/Health business segment with respect to guarantees and sur-
render conditions. Continuous monitoring as well as prudent risk
positions and contingency planning remain priorities for our man-
agement.
Regulatory developments
In March 2014, the European Parliament approved the Solvency II
“Omnibus II” directive, allowing the new risk-based solvency frame-
work for the E.U. to proceed with a planned introduction date of Janu-
ary 2016. Although a new version of the European Commission’s draft
for the delegated regulation of Solvency II was published in October
2014, some of the important final requirements remain unclear. This
situation creates some uncertainty with respect to Allianz’s ultimate
Solvency II capital requirements, especially under the application of
our internal model in case the final rules deviate from our current
understanding of these rules.
Annual Report 2014
Allianz Group
123
In addition to Solvency II uncertainty, the future capital require-
ments applicable for Global Systemically Important Insurers (so-
called G-SIIs) are also unclear, contributing to uncertainty in terms of
the ultimate capital requirements for Allianz. Finally, the potential
for a multiplicity of different regulatory regimes, capital standards
and reporting requirements will increase operational complexity
and costs.
In any case, due to the market value balance sheet approach, the
Solvency II regime will lead to higher volatility in solvency ratios com-
pared to Solvency I.
management assessment
The Allianz Group’s management feels comfortable with the Group’s
overall risk profile and has confidence in the effectiveness of its risk
management framework to meet the challenges of a rapidly changing
environment as well as day-to-day business needs. This confidence
is based on several factors, which are outlined in more detail in the
sections that follow and are summarized here:
− The Allianz Group is well capitalized and met its internal-, rating
agency- and regulatory-solvency targets as of 31 December 2014.
Allianz is also confident that it will meet the capital require-
ments under the new regulatory regimes and will apply for
approval of an internal model in early 2015. Allianz remains one
of the highest-rated insurance groups in the world, as reflected
by our external rating agencies.
− The Group’s management also believes that Allianz is well posi-
tioned to deal with potential future adverse events, in part due
to our strong internal limit framework defined by the Group’s
risk appetite and risk management practices.
− The Group has a conservative investment profile and disciplined
business practices in the Property-Casualty, Life/Health and
Asset Management business segments, leading to sustainable
operating earnings with a well-balanced risk-return profile.
− Finally, the Group has the additional advantage of being well
diversified, both geographically and across a broad range of
businesses and products.
Capitalization
For the benefit of shareholders and policyholders alike, Allianz’s aim
is to ensure that the Group is adequately capitalized at all times and
that all operating entities meet their respective regulatory capital
requirements. Furthermore, risk capital and cost of capital are
important aspects for business decisions.
Our risk capital model reflecting our internal risk profile plays a
significant role in the management of capital across the Group. In
addition, we take into account the external requirements of regula-
tors and rating agencies. While capital requirements imposed by
regulators constitute a binding constraint, meeting rating agencies’
capital requirements and maintaining strong credit ratings are stra-
tegic business objectives of the Allianz Group.
We closely monitor the capital position of the Group and operat-
ing entities along each of these dimensions and apply regular stress
tests based on standard adverse scenarios. This allows us to take
appropriate measures to ensure our continued capital and solvency
strength. Due to our effective capital management, the Allianz Group
is well capitalized and met its internal-, rating agency- and regulatory
-solvency targets as of 31 December 2014.
RegulatoRy capital adequacy
The Allianz Group is a financial conglomerate within the scope of the
E.U. Financial Conglomerates Directive and the related German law
in force since 1 January 2005. The law requires that a financial con-
glomerate calculates the capital available to meet its solvency
requirements on a consolidated basis, which we refer to as “eligible
capital”. Currently, the requirements for our insurance business are
based on Solvency I. These capital requirements, as well as the defini-
tion and calculation of eligible capital, will be replaced by the Sol-
vency II rules once the new regulation becomes binding in January
2016. Allianz expects to be well capitalized also under these future
regulatory requirements.
conglomeRate solvency1
€ Bn
as of 31 December
Eligible capital
Requirement
Solvency ratio
2014
49.8
27.6
181 %
2013
46.5
25.6
182 %
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 off-balance sheet reserves would
be 173 % as of 31 December 2013 and additionally adjusted by € 0.4 bn for the potential calls of hybrid
capital (subordinated bonds) in 2015, 172 % as of 31 December 2014.
The conglomerate solvency ratio decreased slightly by one percentage
point.1
exteRnal Rating agency capital adequacy
Rating agencies apply their own models to evaluate the relationship
between the required risk capital of a company and its available
capital resources. An assessment of capital adequacy is usually an
integral part of the rating process. In November 2014, Moody’s
1
For further details on changes in eligible capital and solvency requirement, please refer to Balance Sheet
Review from page 109.
124
Annual Report 2014
Allianz Group
C
Group Management Report
Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
affirmed the Allianz Group’s “Aa3” rating and revised the outlook from
“negative” to “stable”, recognizing our capital strength and diverse
business profile. Standard & Poor’s reconfirmed the "AA" rating.
The Allianz Group has one of the highest ratings amongst its
peers. The following table provides the ratings of the Allianz Group
awarded by major rating agencies.
economic principle of Solvency II rules.1 Our objective is to maintain
available capital at the Group level that is significantly above the
minimum indicated requirements. Our Solvency ratio based on
these requirements is shown in the following table. Note, for 2014 our
U.S. based life business, Allianz Life of North America (AZ Life), is
included on the basis of third country equivalence treatment2.
Ratings of allianz gRoup
allianz gRoup: solvency ii RegulatoRy capitalization
Ratings1
Insurer financial
strength rating
Counterparty credit
rating
Commercial paper
(short-term) rating
2014
2013
2014
2013
2014
2013
A–1+
AA
Stable
outlook
A–1+
(affirmed
December
2014)
Aa3
Negative
outlook2
Prime –1
(affirmed
November
2014)
Prime –1
aa–
Not rated Not rated
Standard
& Poor’s
Moody’s
A.M. Best
AA
Stable
outlook
(affirmed
December
2014)
Aa3
Stable
outlook
(affirmed
November
2014)
A+
Stable
outlook
(affirmed
August
2014)
AA
Stable
outlook
Aa3
Negative
outlook
A+
AA
Stable
outlook
(affirmed
December
2014)
Aa3
Stable
outlook
(outlook
changed
March
2014)2
aa–
Stable
outlook3
(affirmed
August
2014)
1
2
3
Includes ratings for securities issued by Allianz Finance II b.V. and Allianz Finance Corporation.
Rating reflects Senior unsecured debt.
Issuer Credit rating.
As part of the long-term financial strength rating, Standard & Poor’s
has a rating for “Enterprise Risk Management” (ERM). Since 2013 Stan-
dard & Poor’s has assigned Allianz its highest possible rating – “very
strong” – for the ERM capabilities of our insurance operations. This
indicates that Standard & Poor’s regards it as “unlikely that Allianz
Group will experience major losses outside its risk tolerance”. Stan-
dard & Poor’s stated that the assessment is based on Allianz’s strong
risk management culture, strong controls for the majority of key risks
and strong strategic risk management. In addition, Standard & Poor’s
reviewed our internal capital model initially in 2012 and since then
on an annual basis. Based on this review Standard & Poor’s has given
further credit to the capital position of the Allianz Group since the
fourth quarter of 2012 by taking our internal model results into
account when determining the capital requirements in order to meet
specific rating classes.
solvency ii RegulatoRy capitalization
The Allianz Group’s own funds as well as the capital requirements
are based on the market value balance sheet approach as the major
€ Bn
as of 31 December
Own funds
Capital requirement
Capitalization ratio
2014
66.0
34.6
191 %
2013
52.4
23.6
222 %
Our Solvency II capitalization decreased by 31 percentage points to
191 %, which was driven by an increase in risk capital partly compen-
sated by an increase in own funds. This change was driven by two
effects, model changes to reflect our current understanding of the
forthcoming Solvency II rules and financial market movements.
Impacts of model changes on our internal risk profile are presented
in the section “Internal model updates in 2014”. Model changes also
had a positive impact on own funds which were mainly driven by
changes in transferability restrictions, the treatment of surplus funds
in Germany, the third country equivalence treatment of AZ Life as well
as actuarial model changes, including the adoption of the volatility
adjustment in the Solvency II valuation yield curve.
With regards to financial markets-driven movements, in particu-
lar the decrease in interest rates affected the value and sensitivities
of options and guarantees in our traditional life business. In addition,
decreasing spreads increased our exposure to credit and credit
spread-sensitive investments and rising equity markets outside the
Eurozone, as well as a weakened Euro, led to higher exposures to
equity risk, which also contributed to higher capital requirements.
The following table summarizes our disclosed Solvency II regula-
tory capitalization ratios over the course of the year 2014.
allianz gRoup: solvency ii RegulatoRy capitalization Ratios
%
31 De-
cember
2014
30 Sep-
tember
2014
30 June
2014
31 March
2014
1 January
2014
31 De-
cember
2013
model
update
Capitalization
ratio
191
202
205
203
194
222
1
2
Own funds and capital requirement are calculated under consideration of volatility adjustment and yield
curve extension as described in Yield curve and volatility adjustment assumptions on page 127.
Third country equivalence treatment for AZ Life means that the entity is included at Group level with 100 %
of its local statutory capital requirement and the local statutory available funds, overall benefiting the
Solvency II ratio by +15 percentage points.
Annual Report 2014
Allianz Group
125
The model update as per 1 January 2014 reflected our best estimate of
forthcoming Solvency II rules and related model changes at the
beginning of 2014. All subsequent quarterly disclosures were based
on these model assumptions. Additional model changes implement-
ed for the year-end 2014 reflect our current best estimate and under-
standing of the forthcoming Solvency II rules.
The following table presents the sensitivity of our predicted Sol-
vency II capitalization ratio under certain standard financial sce-
narios. These are defined by reasonably possible individual move-
ments in key market parameters while keeping all other parameters
constant with the effects impacting both the available capital and
internal risk capital.
allianz gRoup: solvency ii RegulatoRy capitalization Ratios1
%
as of 31 December
Base capitalization ratio
Interest rate up by 0.5 %2
Interest rate down by 0.5 %2
Equity prices up by 30 %
Equity prices down by 30 %
Combined scenario:
Interest rate down by 0.5 %2
Equity prices down by 30 %
2014
191
205
170
199
179
2013
222
228
202
232
210
158
191
1
2
AZ Life is included in 2014 on the basis of third country equivalence with 100 % of its local statutory capital
requirement and the local statutory available funds taken into account at Group level.
Non-parallel interest rate shifts due to extrapolation of the yield curve beyond the last liquid point in line
with forthcoming Solvency II rules.
The model used at the year-end 2014 will also be the basis for our
internal model application under Solvency II. Nevertheless, any fur-
ther regulatory guidance may still impact our future internal model
results. In addition, the internal model still needs to be approved by
regulatory authorities.
inteRnal Risk pRofile
The internal risk profile through the eyes of management includes
AZ Life in the internal model calculation instead of applying third
country equivalence. This is the only difference between the Solvency II
figures and the internal risk profile reported here. By that we allow for
a consistent risk steering across all major entities within the
Allianz Group based on the same model as applied at Group level
supplemented by economic business scenarios and sensitivities.
This Risk and Opportunity Report outlines the Group’s risk fig-
ures reflecting its internal risk profile based on pre-diversified risk
figures and Group-diversification effects. Pre-diversified risk figures
reflect the diversification effect within each modeled risk category
(i.e. market, credit, underwriting, business and operational risk), but
does not comprise the diversification effects across risk categories.
Group-diversified risk figures also capture the diversification effect
across all risk categories.
As of 31 December 2014, the Group-diversified risk reflecting our
internal risk profile before non-controlling interests of € 38.4 Bn (2013:
€ 29.6 Bn1) represented a diversification benefit2 of approximately 30 %
(2013: 30 %1) across risk categories and business segments. The
Group-diversified risk is broken down as follows:
allianz gRoup: allocated Risk accoRding to inteRnal Risk pRofile (total poRtfolio BefoRe non-contRolling inteRests)
€ mn
Market risk
Credit risk
Underwriting risk
Business risk
Operational risk
Diversification
Total
as of 31 December
2014
20131
2014
20131
2014
20131
2014
20131
2014
20131
2014
20131
2014
20131
Property-Casualty
Life/Health
6,120
5,388
18,569
14,098
Asset Management
521
621
Corporate and Other
2,891
2,591
2,374
7,817
128
699
2,067
5,589
152
555
9,619
1,626
–
65
8,811
1,063
–
94
917
909
4,404
3,630
–
–
–
–
1,797
2,035
668
645
1,833
(7,246)
(6,729)
13,582
12,278
1,975 (10,161)
(7,651)
24,291
18,703
586
679
–
–
(883)
(829)
1,317
3,417
1,359
3,090
Total Group
28,102
22,698
11,018
8,363
11,311
9,967
5,321
4,538
5,146
5,073 (18,291)
(15,209)
42,607
35,430
Tax
Total Group
(4,180)
(5,820)
38,427
29,610
1
2013 risk profile figures recalculated based on model changes in 2014 as described in Internal model
updates in 2014 from page 129.
Detailed discussions of movements in respective risks are provided
in the sections that follow.
126
Annual Report 2014
Allianz Group
1
2
2013 risk profile figures recalculated based on model changes in 2014 as described in Internal model
updates in 2014 from page 129.
Diversification before tax.
C
Group Management Report
Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
Internal risk capital framework
We define internal risk capital as the capital required to protect us
against unexpected, extreme economic losses, which forms the basis
for determining our Solvency II regulatory capitalization and our
internal risk profile. On a quarterly basis, we calculate and aggregate
internal risk capital across all business segments based on a com-
mon standard for measuring and comparing risks across the wide
range of different activities that we undertake as an integrated finan-
cial services provider.
geneRal appRoach
We utilize an internal risk capital model for the management of our
risk profile and solvency position, reflecting our current understand-
ing of the forthcoming Solvency II rules. Our model is based on a best
practice technical platform with an up-to-date methodology cover-
ing all modeled sources of quantifiable risks.
inteRnal Risk capital model
Our internal risk capital model is based on a Value-at-Risk (VaR)
approach using a Monte Carlo simulation. Following this approach,
we determine the maximum loss in the portfolio value of our busi-
nesses in the scope of the model within a specified timeframe (“hold-
ing period”) and probability of occurrence (“confidence level”). We
assume a confidence level of 99.5 % and apply a holding period of one
year. In the risk simulation, we consider risk events from all modeled
risk categories (“sources of risk”) and calculate the portfolio value
based on the net fair value of assets and liabilities under potentially
adverse conditions.
The internal risk capital is defined as the difference between the
current portfolio value and the portfolio value under adverse condi-
tions dependent on the 99.5 % confidence level. Because we consider
the impact of a negative or positive event on all sources of risks and
covered businesses at the same time, diversification effects across
products and regions are taken into account. The results of our Monte
Carlo simulation allow us to analyze our exposure to each source of
risk, both separately and in aggregate. In addition, in particular for
market risks, we analyze several pre-defined stress scenarios either
based on historically observed market movements or on hypothetical
market movement assumptions. This modeling approach, therefore,
also enables us to identify scenarios that have a positive impact on
our solvency situation.
Yield curve and volatility adjustment assumptions
When calculating the fair values of assets and liabilities, the assump-
tions regarding the underlying risk-free yield curve are crucial in
determining future cash flows and their discounting. We apply the
methodology provided by the European Insurance and Occupational
Pensions Authority (EIOPA) based on the insurance stress test for 2014
for the extension of the risk-free interest rate curves beyond the last
liquid tenor.
In addition, we adjust the risk-free yield curves by a volatility
adjustment for all business segments except unit-linked business.
This is done to better reflect the underlying economics of our business
as the cash flows of our insurance liabilities are, to a large degree,
predictable. The advantage of being a long-term investor, therefore,
gives us the opportunity to invest in bonds yielding spreads over the
risk-free return and earning this additional yield component. Being
a long-term investor mitigates to a great extent the risk of forced sell-
ing at a loss of debt instruments prior to maturity. Therefore, we
reflect this mitigation in our model using a volatility adjustment
spread risk offset and view the more relevant risk to be default and
migration risk rather than credit spread risk.
Valuation assumption: replicating portfolios
Since efficient valuation and complex, timely analysis is required, we
replicate the liabilities of our Life/Health insurance business. This
technique enables us to represent all options and guarantees, both
contractual and discretionary, by means of standard financial instru-
ments. In the risk calculation we use the replicating portfolio to
determine and revalue these liabilities under all potentially adverse
Monte Carlo scenarios.
Diversification and correlation assumptions
Our internal risk capital model considers concentration, accumula-
tion and correlation effects when aggregating results at Group level.
This reflects the fact that not all potential worst-case losses are likely
to materialize at the same time. This effect is known as diversifica-
tion and forms a central element of our risk management framework.
We strive to diversify the risks to which we are exposed in order
to limit the impact of any single source of risk and help increase the
chances that the positive developments outweigh the negative. The
degree to which diversification can be realized depends in part on the
level of relative concentration of those risks and the joint movement
of sources of risk.
Where possible, we derive correlation parameters for each pair
of market risks through statistical analysis of historical market data,
considering quarterly observations over several years. In case his-
torical market data or other portfolio-specific observations are insuf-
ficient or not available, correlations are set according to a well-
defined, Group-wide process. Correlations are determined by the
Correlation Settings Committee, which combines the expertise of
Annual Report 2014
Allianz Group
127
risk and business experts. In general, we set the correlation param-
eters to represent the joint movement of risks under adverse condi-
tions. Based on these correlations, we use an industry-standard
approach, the Gaussian copula approach, to determine the depen-
dency structure of quantifiable sources of risk within the applied
Monte Carlo simulation.
Actuarial assumptions
Our internal risk capital model also includes assumptions on claims
trends, liability inflation, mortality, longevity, morbidity, policyholder
behavior, expense, etc. We use our own internal historical data for
actuarial assumptions wherever possible and also consider recom-
mendations from the insurance industry, supervisory authorities
and actuarial associations. The derivation of our actuarial assump-
tions is based on generally accepted actuarial methods. Within our
internal risk capital and financial reporting framework, comprehen-
sive processes and controls exist for ensuring the reliability of these
assumptions.1
scope
By design, our internal risk capital model takes into account the fol-
lowing risk categories: market risk, credit risk, underwriting risk,
business risk and operational risk whenever these risks are present.
A further breakdown of the risk categories can be found in the section
on internal risk assessment. With the exception of the Asset Manage-
ment business segment, all business segments are exposed to the
full range of stated risk categories. By contrast, the Asset Manage-
ment business segment is mainly exposed to market, credit and
operational risk.
Coverage of the internal risk capital model
Allianz’s internal risk capital model covers all major insurance oper-
ations2. This includes the relevant assets (including bonds, loans,
mortgages, investment funds, equities and real estate) and liabilities
(including the cash flow run-off profile of all technical reserves as
well as deposits, issued debt and other liabilities). For with-profit
products in the Life/Health business segment, options and guaran-
tees embedded in insurance contracts – including policyholder par-
ticipation rules – are taken into account.3
At Group level, the capital requirements for smaller insurance
operating entities outside the European Economic Area that have
only an immaterial impact on the Group’s risk profile are treated with
book value deduction.
1
2
3
For additional information regarding our internal controls over financial reporting, please refer to Controls
over Financial Reporting and Risk Capital from page 144.
As mentioned under Solvency II capitalization and internal risk profile, AZ Life is taken into account by
means of third country equivalence into the Group capitalization, but included based on the internal risk
capital model for the reporting of the internal risk profile.
For further information about participating life business, please refer to note 20 to the consolidated financial
statements.
Risk capital related to our European banking operations is allo-
cated to the Corporate and Other business segment based on the
approach applied by banks under the local requirements with respect
to the Basel regulation (Basel standards). Capital requirements for
banks represent an insignificant amount of approximately 1.4 %
(2013: 1.4 %4) of our total pre-diversified internal risk. Therefore, risk
management with respect to banking operations is not discussed in
more detail.
For our Asset Management business segment we assign internal
risk capital requirements based on the sectorial regulatory capital
requirements as envisaged in Solvency II. Asset Management busi-
ness is mainly affected by operational risks. However, since most of
our Asset Management business is not located within the Eurozone,
at the Group level it also bears foreign exchange rate risk. Our Asset
Management business is covered by adequate risk controlling pro-
cesses including regular reporting and qualitative risk assessments
(such as Top Risk Assessment) to the Group. However, since it is
mainly affected by the previously mentioned two risk types (opera-
tional and foreign exchange rate), and due to the fact that the impact
on total pre-diversified internal risk capital is minor, risk manage-
ment with respect to Asset Management is not discussed in more
detail.
Limitations
Our internal risk capital model expresses the potential “worst-case”
amount in economic value that we might lose at a certain confidence
level. However, there is statistically a low probability of 0.5 % that
actual losses could exceed this threshold at Group level in the course
of one year.
We use model and scenario parameters derived from historical
data, where available, to characterize future possible risk events. If
future market conditions differ substantially from the past, for exam-
ple in an unprecedented crisis, our VaR approach may be too conser-
vative or too liberal in ways that are too difficult to predict. In order
to mitigate reliance on historical data, we complement our VaR
analysis with stress testing. Our ability to back-test the model’s accu-
racy is limited because of the high confidence level of 99.5 %, the one-
year holding period as well as limited data for some insurance risk
events – such as natural catastrophes – being available.
Furthermore, as historical data is used where possible to cali-
brate the model, historical data cannot be used for validation. Instead,
we validate the model and parameters through sensitivity analyses,
independent internal peer reviews and, where appropriate, external
reviews by independent consulting firms, focusing on methods for
selecting parameters and control processes. To ensure proper valida-
tion we established an Independent Validation Unit (IVU) within
Group Risk responsible for validating our internal model within a
4
2013 risk profile figures recalculated based on model changes in 2014 as described in Internal model
updates in 2014 from page 129.
128
Annual Report 2014
Allianz Group
C
Group Management Report
Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
comprehensive model validation process. Overall, we trust that our
validation efforts are effective and that our model adequately assesses
the risks to which we are exposed.
As described in a previous section, insurance liability values in
the risk calculation are derived from replicating portfolios of stan-
dard financial market instruments in order to allow for effective risk
management. This replication is subject to the set of available repli-
cating instruments and might, therefore, be too simple or too restric-
tive to capture all factors affecting the change in value of liabilities.
As with other model components, the replications are subject to inde-
pendent validation and to suitability assessments as well as to strin-
gent data and process quality controls. Therefore, we believe that the
liabilities are adequately represented by the replicating portfolios.
Since the internal risk capital model takes into account the
change in the economic fair value of our assets and liabilities, it is
crucial to accurately estimate the market value of each item. For some
assets and liabilities it may be difficult, if not impossible – notably in
distressed financial markets – to obtain either a current market price
or to apply a meaningful mark-to-market approach. For such assets
we apply a mark-to-model approach. Non-standardized derivative
instruments – such as derivatives embedded in structured financial
products – are represented by the most comparable standard deriva-
tive types or by means of sensitivities, because the volume of non-
standard instruments is not material at either the local or Group
level. For some of our liabilities, the accuracy of fair values depends
on the quality of the actuarial cash flow estimates. Despite these
limitations, we believe the estimated fair values are appropriately
assessed.
inteRnal model updates in 2014
In 2014, we updated our internal model in order to incorporate
Allianz’s current understanding of the forthcoming Solvency II rules.
The model updates are mainly driven by regulatory developments as
well as feedback that Allianz received during the ongoing consulta-
tions with regulators and supervisors in the internal model pre-
approval process. As described above, due to ongoing regulatory
developments and supervisory feedback throughout 2014, we imple-
mented model changes at different points in time, i.e. at the begin-
ning of the year and at year-end. For the sake of clarity, however, all
model changes are presented jointly within this section. Although we
cannot rule out any late changes to the Solvency II rules, the updated
model used for the year-end 2014 reporting will be the basis for our
Solvency II internal model application in 2015.
In this section we provide an overview of these model changes
and the resulting changes on our internal risk profile based on the
year-end 2013 data under the updated model. In all subsequent sec-
tions the figures after the model change will form the basis for the
movement analysis of our internal risk profile in 2014.
allianz gRoup: allocated Risk accoRding to inteRnal Risk pRofile (total poRtfolio BefoRe non-contRolling inteRests)
€ mn
Market risk
Credit risk
Underwriting risk
Business risk
Operational risk
Diversification
Total
as of 31 December
20131
20132
20131
20132
20131
20132
20131
20132
20131
20132
20131
20132
20131
20132
Property-Casualty
Life/Health
Asset Management
3,669
5,388
11,653
14,098
685
621
Corporate and Other
1,987
2,591
1,881
3,590
169
277
2,067
5,589
152
555
9,627
801
–
191
8,811
1,063
–
94
992
909
1,268
1,833
(6,437)
(6,729)
11,000
12,278
3,743
3,630
–
–
–
–
917
586
385
1,975
(6,447)
(7,651)
14,258
18,703
586
679
(2)
–
(532)
(829)
1,439
2,308
1,359
3,090
Total Group
17,994
22,698
5,918
8,363
10,620
9,967
4,735
4,538
3,155
5,073 (13,418) (15,209)
29,004
35,430
Tax
(5,367)
(5,820)
Total Group
23,637
29,610
1
2
2013 risk profile figures as reported previously.
2013 risk profile figures recalculated based on new model.
The model changes focused mostly on the following risk categories:
Market risk
The market risk correlation settings were updated to reflect higher
systemic risk across financial markets in adverse market scenarios.
Furthermore, we enhanced our interest rate modeling to better
reflect the risk profile of Allianz’s traditional Life/Health business
under the current low yield environment. In addition, we introduced
the modeling of the volatility adjustment to mitigate credit spread
risk in line with updated regulatory guidance. We also included inter-
nal pension obligations into our Solvency II framework, following
regulatory guidance, and changed the modeling of the surplus funds
in Germany. Finally, we enhanced the modeling of inflation risk and
introduced it as a separate risk type – mainly reflecting the risk arising
from property, casualty and health liabilities as well as inflation risk
in Allianz’s internal pension obligations.
Annual Report 2014
Allianz Group
129
The model changes increased market risk overall by € 4.7 Bn to
€ 22.7 Bn on a pre-diversified basis. This resulted in a number of sig-
nificant changes in the market risk types. The newly introduced risk
type of inflation risk contributed € 3.4 Bn. Equity risk increased by
€ 2.1 Bn, mainly due to changed correlations to reflect systemic
behavior, due to the modeling of internal pension obligations and
due to a refinement of hedge models for variable annuity business.
Credit spread risk increased due to the correlation update better
reflecting systemic market events. However, the increase was par-
tially offset by the introduction of the volatility adjuster-based spread
risk offset (net impact: an increase of € 0.7 Bn to € 5.1 Bn). Finally,
interest rate risk decreased by € 0.9 Bn, predominantly driven by
increased diversification with the newly modeled inflation risk as
well as due to updated correlations. The decrease in interest rate risk
was partly offset by the modeling of internal pension obligations.
Credit risk
The treatment of sovereign exposures has been revised to include
capital requirements for sovereigns in the same way as for corpo-
rates. However, in accordance with European Insurance and Occupa-
tional Pensions Authority’s (EIOPA) advice on Solvency II implementa-
tion measures, domestically held exposures towards European
Economic Area sovereigns issued in their own currency are treated
favorably. This model change led to an increase in Allianz’s credit risk
of € 2.0 Bn. Further changes are a new methodology for setting cor-
relation and valuation parameters. These changes improve the gran-
ularity of the model in order to meet regulatory requirements. In total,
credit risk increased on a pre-diversified basis by € 2.4 Bn to € 8.4 Bn
– mainly driven by the changed treatment of sovereigns.
Underwriting risk
The increase in underwriting risk in the Life/Health business seg-
ment is mainly due to the inclusion of internal pension obligations,
which led to an increase in longevity risk as well as a change in the
methodology for longevity stress calibration. The decrease in the
Property-Casualty business segment was mainly due to a reduced
reserve risk. This was mainly driven by a changed modeling approach
of Group health and protection business using life techniques.
Operational risk
In order to increase consistency across the Group, the risk granular-
ity level has been changed to reflect standards in line with Basel II,
which has a negative impact on diversification within the operation-
al risk model. Moreover, to be in line with historical experience and
to meet regulatory expectations, conservative assumptions regarding
loss severity distributions were introduced centrally. These changes
led to an overall increase in operational risk of € 1.9 Bn to € 5.1 Bn.
130
Annual Report 2014
Allianz Group
Treatment of smaller insurance entities
In addition, we applied a book value deduction treatment for smaller
insurance entities resulting in a decrease in risk figures of € 2.0 Bn,
mostly affecting market risk (with a decrease of € 1.1 Bn), underwrit-
ing risk (with a decrease of € 0.5 Bn) and credit risk (with a decrease
of € 0.3 Bn).
Internal risk assessment
Risk pRofile and Risk management
As we are an integrated financial services provider offering a variety
of products across different business segments and geographic
regions, diversification is key to our business model. Diversification
is a key element in managing our risks efficiently by limiting the eco-
nomic impact of any single event and by contributing to relatively
stable results and our risk profile in general. Therefore, our aim is to
maintain a balanced risk profile without any disproportionately large
risk concentrations and accumulations.
With respect to investments, top-down indicators such as stra-
tegic asset allocations are defined and closely monitored to ensure
balanced investment portfolios. Furthermore, we have a limit system
in place which is defined at Group level separately for the Life/Health
and the Property-Casualty business segments as well as at operating
entity level. The limits comprise economic limits, in particular finan-
cial VaR and credit VaR as derived from the internal model framework,
complemented by stand-alone interest rate and equity sensitivity
limits as well as by limits on foreign exchange exposures.
Our limit-setting process ensures that prevailing statutory
restrictions regarding the composition of investments are taken into
account. Most statutory restrictions apply at the local level, where the
statutory restrictions as binding constraints enter the limit setting
processes. In addition, guidelines are derived by the Group centers
for certain investments, for example concerning the use of derivatives,
and compliance with the guidelines is controlled by the respective
risk and controlling functions.
In order to further limit the impact of any financial market
changes and to ensure that assets adequately back policyholder lia-
bilities, we have additional measures in place. One of these is asset/
liability management linked to the internal model framework incor-
porating risks as well as return aspects stemming from our insur-
ance obligations. In addition, we are using derivatives mostly to either
hedge our portfolio against adverse market movements or to reduce
our reinvestment risk – for example by using forwards or swaptions.
Furthermore, we have put in place standards for hedging activi-
ties due to exposures to fair value options embedded in life insurance
products. Life/Health operating entities carrying these exposures are
required to follow these standards, including making a conscious
decision on the amount of hedging.1 The hedging of risks stemming
1
For further information about the risk concentration in the Life/Health business segment, please refer to
note 20 to the consolidated financial statements.
C
Group Management Report
Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
from investments is also an element applied to manage and limit
risks efficiently. For example, protective puts are used to limit the
downward exposure of certain investments1.
We also closely monitor concentrations and accumulation of
non-market risks already on a stand-alone basis (i.e. before diversifi-
cation effects) within a global limit framework in order to avoid sub-
stantial losses from single events such as natural catastrophes, terror
or credit events.
In order to manage counterparty concentration risk, we run a
Group-wide country and obligor group limit management frame-
work (CRisP2), which covers credit and equity exposures and is based
on data used by the investment and risk experts at the Group and
operating entity levels. This limit framework forms the basis for dis-
cussions on credit actions and provides notification services with a
quick and broad communication of credit-related decisions across
the Group. Clearly defined processes ensure that exposure concen-
trations and limit utilizations are appropriately monitored and man-
aged. The setting of country and obligor exposure limits from the
Group’s perspective (i.e. the maximum concentration limit) takes
into account the Allianz Group’s portfolio size and structure as well
as our overall risk strategy.
It is the ultimate responsibility of the Board of Management to
decide upon limit budgets. The Board of Management delegates
authorities for limit setting and modification to the Group Finance
and Risk Committee and Group Chief Risk Officer by clearly defining
maximum limit amounts. All limits are subject to annual review and
approval according to the delegated authorities.
Risk Based steeRing
Allianz steers its portfolio on a comprehensive view of risk and return,
i.e. results based on the internal risk model including scenario-based
analyses are used actively for decision making: on the one hand, eco-
nomic risk and concentrations are actively restricted by means of
limits as outlined above and on the other hand, there is a compre-
hensive analysis of the return on risk capital (RoRC). The latter allows
us to identify sustainably profitable lines of business and products,
which provide reasonable profits on allocated risk capital over the life
time of the products. Therefore, it is a key criterion for capital alloca-
tion decisions.
In 2014, Allianz also updated its dividend policy, increasing the
payout ratio and defining explicit budgets for external growth and
linking central elements of the dividend policy to the internal model
capitalization according to Solvency II. This shows that the internal
model is fully integrated in the business steering of Allianz and that
the planned application of the internal model satisfies the so-called
“use-test” under Solvency II.
In the following sections we explain the evolution of the risk pro-
file per modeled risk category. All risks are presented on a pre-diver-
sified basis and concentrations of single sources of risk are discussed
accordingly.
quantifiaBle Risks
Market risk
As an inherent part of our insurance operations, we collect premiums
from our customers and invest them in a wide variety of assets.
Thereby, the Allianz Group holds and uses many different financial
instruments. The resulting investment portfolios back the future
claims and benefits to our customers. In addition, we invest share-
holders’ capital, which is required to support the risks underwritten.
As the fair values of our investment portfolios depend on financial
markets, which may change over time, we are exposed to market
risks. The following table presents our Group-wide internal risk fig-
ures related to market risks by business segment and source of risk.
allianz gRoup: inteRnal Risk pRofile – maRket Risk By Business segment and souRce of Risk (total poRtfolio BefoRe tax and non-contRolling inteRests)
pre-diversified, € mn
as of 31 December
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Total Group
Interest rate
Inflation
Credit spread
Equity
Real estate
Currency
Total
2014
497
2013
2014
2013
372
3,466
2,834
2014
574
2013
503
2014
929
2013
942
2014
596
2013
635
6,038
3,432
1
469
1
548
481
–
228
321
5,016
4,314
5,484
4,730
1,420
1,035
–
282
–
447
–
265
24
1,352
7,789
29
1,034
6,735
5
99
6
130
2,119
1,806
7,005
4,353
4,175
3,437
6,038
5,082
2014
2013
2014
2013
57
129
491
297
975
103
266
585
332
6,120
5,388
18,569
14,098
521
621
2,891
2,591
1,286
28,102
22,698
Share of total Group pre-diversified internal risk
46.2 %
44.8 %
1
2
For further information on derivatives used for hedging, please refer to note 43 to the consolidated financial
statements.
Credit Risk Platform.
Annual Report 2014
Allianz Group
131
Our total pre-diversified market risk showed a strong increase, mainly
driven by market movements. In particular, the decreasing interest
rates in 2014, combined with an increase in implied interest rate
volatilities, led to higher sensitivities of options and guarantees in
our Life/Health business segment. In addition, the historically low
interest rates also created significant cross effects to other risk types
in the Life/Health business segment due to profit sharing mecha-
nisms and by that also increasing respective risk, for example equity
and spread risk. In addition, equity risk increased due to higher expo-
sure resulting from increasing equity markets outside the Eurozone
and a weakened Euro against almost all currencies.
Interest rate risk
As interest rates may fall below the rates guaranteed to policyholders
in some Life/Health markets and given the long duration of insur-
ance obligations, we are specifically exposed to interest rate risk,
because we have to reinvest maturing assets prior to the maturity of
life contracts. This interaction of investment strategy and obligations
to policyholders forms an integral part of our internal risk capital
model. In addition, our asset/liability management approach is
closely linked to the internal risk capital framework and designed to
achieve investment returns over the long-term in excess of the obli-
gations related to insurance and investment contracts.
These risks are reflected in the internal risk profile and managed
by interest rate sensitivity limits. A significant part of the Life/Health
business segment’s pre-diversified interest rate risk lies in Western
Europe – 80.9 % as of 31 December 2014 (2013: 81.3 %) – mainly to cover
traditional life insurance products with guarantees.
We manage interest rate risk from a comprehensive corporate
perspective: While the potential payments related to our liabilities in
the Property-Casualty business segment are typically shorter in
maturity than the financial assets backing them, the opposite usually
holds true for our Life/Health business segment due to the long-term
life insurance contracts. In part, this provides us with a natural hedge
on an economic basis at the Group level.
As of 31 December 2014, our interest rate-sensitive investments
excluding unit-linked business – amounting to a market value of
€ 509.9 Bn1 – would have gained € 33.7 Bn or lost € 37.0 Bn in value in case
of interest rates changing by -100 and +100 basis points, respectively.
As described above, the risk related to interest rates lies in the
fact that in the long run yields that can be achieved by reinvesting
may not be sufficient enough to cover the guaranteed rates. In con-
trast, opportunities may materialize when interest rates increase.
This may result in higher returns from reinvestments than the guar-
anteed rates.
Inflation risk
As an insurance company we are exposed to changing inflation rates,
predominantly due to our non-life insurance obligations. In addition,
internal pension obligations contribute to our exposure to inflation.
Since inflation increases both claims and costs, higher inflation rates
will lead to greater liabilities. Inflation assumptions are already taken
into account in our product development and pricing and the risk of
changing inflation rates is incorporated in our internal model. As of
31 December 2014, inflation risk amounted to € 4.2 Bn, showing a
change of € 0.7 Bn, mainly due to lower discount rates resulting in
higher market values of inflation-sensitive liabilities and internal
pension liabilities.
Equity risk
The Allianz Group’s insurance operating entities usually hold equity
investments to diversify their portfolios and take advantage of
expected long-term returns. Strategic asset allocation benchmarks
and investment limits are used to manage and monitor these expo-
sures. In addition, equity investments fall within the scope of CRisP
to avoid a disproportionately large concentration of risk.
As of 31 December 2014, our investments excluding unit-linked
business that are sensitive to changing equity markets – amounting
to a market value of € 38.9 Bn2 – would have lost € 10.2 Bn in value
assuming equity markets declined by 30 %.
Risks from changes in equity prices are normally associated with
decreasing share prices and increasing equity price volatilities. As
stock markets also might increase, opportunities may arise from
equity investments.
Credit spread risk
Our internal model framework fully acknowledges the risk of declin-
ing market values for our fixed income assets – such as bonds – due
to the widening of credit spreads. However, for internal risk manage-
ment and appetite we also take into account the underlying econom-
ics of our business model. For example, the application of the volatil-
ity adjustment in our internal risk model to partially mitigate spread
risk as described in the section on yield curve assumptions.
The advantage of being a long-term investor therefore gives us
the opportunity to invest in bonds yielding spreads over the risk-free
return and earning this additional yield component.
1
The stated market value includes all investments whose market value is sensitive to interest rate move-
ments (excluding unit-linked business) and therefore is not based on classifications given by accounting
principles.
2
The stated market value includes all investments whose market value is sensitive to equity movements
(excluding unit-linked business) and therefore is not based on classifications given by accounting
principles.
132
Annual Report 2014
Allianz Group
C
Group Management Report
Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
Currency risk
Based on our foreign exchange management limit framework, cur-
rency risk is monitored and managed at the operating entity and
Group level. As our operating entities are typically invested in assets
of the same currency as their liabilities, the major part of foreign cur-
rency risk results from the economic value of our non-Euro operating
entities. If non-Euro foreign exchange rates decline against the Euro
from a Group perspective, the Euro equivalent net asset values also
decrease. However, at the same time the capital requirements in Euro
terms from the respective non-Euro entity also decrease, partially
mitigating the total impact on the capitalization.
Real estate risk
Despite the risk of decreasing real estate values, real estate is a suit-
able addition to our investment portfolio due to good diversification
benefits as well as due to the contribution of relatively predictable
cash-flows in the long-term. As of 31 December 2014, about 3.5 %
(2013: 3.6 %) of the total pre-diversified risk was related to real estate
exposures.
Credit risk
The Allianz Group monitors and manages credit risk exposures and
concentrations to ensure it is able to meet policyholder obligations
when they are due. This objective is supported by the internal credit
risk model and the CRisP as described under the section on the risk
profile. Group-wide credit data is collected following a centralized
process and using standard obligor and obligor group mappings.
Credit risk is measured as the potential economic loss in the
value of our portfolio due to changes in the credit quality of our coun-
terparts (“migration risk”) or the inability or unwillingness of the
counterparty to fulfill contractual obligations (“default risk”). Our
internal credit risk-modeling framework covers counterparty risk
and country risk. Counterparty risk arises from our fixed income
investments, cash positions, derivatives, structured transactions,
receivables from Allianz agents and other debtors – as well as rein-
surance recoverables and credit insurance. Country risk exposure is
calculated as cross-border exposure to all obligors domiciled abroad
from the respective operating entities’ perspective.
The internal credit risk capital model is a state-of-the-art tool
which provides bottom-up analysis. The major drivers of credit risk
for each instrument are exposure at default, ratings, seniority, col-
lateral and maturity. Additional parameters assigned to obligors are
migration probabilities and obligor asset correlations reflecting
dependencies within the portfolio. Ratings are assigned to single
obligors via an internal rating approach which is based on long-term
ratings from rating agencies. It is dynamically adjusted using mar-
ket-implied ratings and the most recently available information.
The loss profile of a given portfolio is obtained through a Monte-
Carlo simulation taking into account interdependencies and expo-
sure concentrations per obligor segment. To reflect portfolio specific
diversification effects, the loss profiles are calculated at different
levels of the Allianz Group structure (pre-diversified). They are then
fed into the overall internal risk capital model for further aggregation
across sources of risk to derive Group-diversified internal credit risk.
By managing our credit risk on the basis of our limit manage-
ment and credit risk modeling frameworks, we have composed a
well-diversified credit portfolio. Our long-term investment strategy
to hold investments through the cycle to maturity enables us to keep
our portfolio stable, even under adverse market conditions. It also
gives us the opportunity to earn planned excess returns throughout
the entire holding period of the investments. In our credit insurance
business, proactive credit management offers opportunities to keep
losses from single credit events below expected levels and therefore
strongly supports writing business that contributes to a balanced
Group credit portfolio.
allianz gRoup: inteRnal Risk pRofile – allocated inteRnal cRedit Risk
By Business segment (total poRtfolio BefoRe tax and non-contRolling
inteRests)
pre-diversified, € mn
as of 31 December
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Total Group internal credit risk
Share of total Group pre-diversified internal risk
2014
2,374
7,817
128
699
11,018
18.1 %
2013
2,067
5,589
152
555
8,363
16.5 %
Throughout the year the credit environment was mostly stable. There
were limited rating actions as the economic situation and outlook
was already reflected in current rating levels compared to the eco-
nomic disruptions of previous years. Credit risk for the Group
increased – mainly due to the secondary effects of lower interest
rates. Especially long dated assets in the Life/Health business seg-
ment have gained significantly in value and, in turn, also loss poten-
tial. Additionally, the lower interest rates reduced the loss-absorbing
capacity of technical provisions in the traditional life business, which
further increased the credit risk after policyholder participation.
Finally, for the purpose of asset/liability management under the low
yield environment the amount of long duration assets has grown,
which contributed to the increase of credit risk, particularly in the
Life/Health business segment.
Annual Report 2014
Allianz Group
133
The following table displays the sensitivities of credit risk to
certain scenarios: deterioration of credit quality measured by issuer
rating1 downgrades and the decline of recovery rates in the event of
a default (Loss-Given-Default, LGD). The sensitivities are calculated
by applying each scenario to all exposures individually, but keeping
all other parameters constant.2
allianz gRoup: impact of selected cRedit scenaRios on inteRnal cRedit Risk1
pre-diversified, € mn
as of 31 December
Base case
Rating down by 1 notch
Rating down by 2 notches
lgd up by 10 %
Total
2014
11,018
12,106
13,595
11,703
20132
8,363
9,483
11,075
9,036
1
2
A notch is referred to rating sub-classes, such as "AA+", "AA", "AA-" at Standard & Poor’s scale or "Aa1",
"Aa2", "Aa3" at Moody’s scale.
2013 risk profile figures recalculated based on model changes in 2014.
The majority of Credit Risk and impact of sensitivity analysis can be
allocated to long-term sovereign debt as well as senior unsecured
bonds with lower investment grade borrowers.
Credit risk – investment
As of 31 December 2014, credit risk arising from the investment port-
folio accounted for 92.7 % (2013: 91.0 %) of our total Group pre-diversi-
fied internal credit risk. Credit Risk in the Life/Health business seg-
ment is primarily driven by long-term assets covering long-term
liabilities. Typical investments are government bonds, senior corpo-
rate bonds, covered bonds, self-originated mortgages and loans as
well as a modest amount of derivatives. Due to the nature of the busi-
ness, the fixed income securities in the Property-Casualty business
segment tend to be short- to mid-term, which explains the lower
Credit Risk consumption in this segment.3
Allianz has a well-diversified portfolio of Exchange- and OTC
traded derivatives that are used as part of an efficient exposure man-
agement. The counterparty credit risk arising from derivatives is low,
since the derivatives usage is governed by the Group-wide internal
guidelines for collateralization of derivatives that stipulate master
netting- and collateral-agreements with each counterparty and
require high quality and liquid collateral. In addition, Allianz closely
monitors the credit ratings of counterparties and exposure move-
ments. Central clearing of certain classes of OTC-derivatives as
required by the European Market Infrastructure Regulation (EMIR)
and additional reporting duties will contribute to further reducing
counterparty credit risk and operational risk at Allianz.
The different components of Allianz credit risk exposure are
As of 31 December 2014, the rating distribution of our fixed
described in the table below:
income portfolio was as follows:
allianz components of cRedit Risk exposuRe
investment poRtfolio
Premiums collected from our customers and shareholders’ capital, which is required
to support the risks under written, are invested to a great extent in fixed income
instruments. These investment portfolios ultimately cover the future claims to our
customers. However, for certain life insurance products, losses due to credit events can
be shared with the policyholder, as described in the context of market risks.
ReinsuRance poRtfolio
Credit risk to external reinsurers appears when insurance risk exposures are transferred
by us to external reinsurance companies to mitigate insurance risk. Potential losses can
arise either due to non-recoverability of reinsurance receivables already present at the
as-of date or default on benefits that are under reinsurance treaties in-force.
cRedit insuRance poRtfolio
Credit risk arises from potential claim payments on limits granted by Euler Hermes to
its policyholders. Euler Hermes protects its policyholders (partially) from credit risk
associated with short-term trade credits advanced to clients of the policyholder. If the
client of the policyholder is unable to meet its payment obligations then Euler Hermes
indemnifies the loss to the policyholder.
1
2
Credit risk calculations are based on issuer (borrower) ratings as opposed to issue (instrument) ratings.
The difference between issue and issuer ratings is primarily due to collateralization and seniority and is
reflected in Loss-Given-Default (LGD).
Scenarios are applied only to investment and reinsurance exposure positions in portfolios of Allianz
operating entities.
3
Additionally, 2.4 % (2013: 3.5 %) of our total Group pre-diversified internal credit risk is allocated to receiv-
ables and potential future exposure for derivatives and reinsurance.
134
Annual Report 2014
Allianz Group
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Risk and Opportunity Report and Financial Control
Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
Rating distRiBution of allianz gRoup’s fixed income poRtfolio1 – faiR value
€ Bn
Type of
issuer
as of
31 December
AAA
AA
A
BBB
BB
B
CCC
CC
C
D
Not rated
Total
Government &
Agency
Covered Bond
Corporate
Banks
ABS / MBS
Short-term Loan
Other
Total
2014
51.8
84.0
15.5
50.9
2.7
0.8
–
–
–
0.1
3.4
2013
46.2
69.8
12.9
44.2
2.1
0.5
–
–
–
–
2014
57.2
20.2
23.1
6.0
1.0
0.1
–
–
–
–
2013
61.5
21.0
14.1
5.1
0.7
–
–
–
–
–
3.9
0.1
0.1
2014
1.1
10.3
45.6
72.8
7.2
3.2
0.1
0.1
0.1
0.4
4.3
2013
2014
2013
2.0
9.0
35.3
56.4
6.3
2.6
0.2
0.1
–
0.4
3.9
1.5
6.6
16.8
5.6
1.5
0.1
0.1
–
–
–
3.8
8.1
14.3
5.6
1.0
0.2
–
–
–
–
0.2
32.4
0.1
33.1
2014
17.3
2013
13.8
2.4
2.0
0.7
0.1
0.1
–
0.2
0.1
–
–
2.3
1.3
0.6
0.1
0.1
–
0.2
–
–
–
22.9
18.4
2014
2013
2014
2013
2014
2013
–
1.4
0.9
0.6
0.2
–
–
–
–
–
0.3
3.6
–
1.4
0.6
0.5
0.4
–
–
–
–
–
0.3
3.3
–
0.1
0.9
0.6
–
–
–
–
–
–
–
0.1
1.0
0.4
–
–
–
–
–
–
1.7
3.3
1.4
2.9
128.8
125.2
104.8
137.2
12.7
4.3
0.3
0.3
0.1
0.5
10.0
127.4
111.7
79.5
112.8
10.7
3.4
0.3
0.3
–
0.4
9.6
524.3
456.1
209.3
179.6
107.6
102.5
145.1
116.3
1
In accordance with the Group Management Report stated figures include investments of Banking and
Asset Management. Table excludes private loans.
Credit risk – reinsurance
As of 31 December 2014, 0.4 % (2013: 0.7 %) of our total Group pre-diver-
sified internal credit risk was allocated to reinsurance exposures – of
which 58.5 % (2013: 59.4 %) was related to reinsurance counterparties
in the United States and Germany.
A dedicated team selects our reinsurance partners focusing on
companies with strong credit profiles. We may also require letters of
credit, cash deposits or other financial measures to further mitigate
our exposure to credit risk. As of 31 December 2014, 82.9 % (2013: 80.6 %)
of the Allianz Group’s reinsurance recoverables were distributed
among reinsurers that had been assigned at least an “A” rating by
Standard & Poor’s or A.M. Best. As of 31 December 2014, non-rated
reinsurance recoverables represented 15.7 % (2013: 17.9 %). Reinsur-
ance recoverables without a Standard & Poor’s rating include expo-
sures to brokers, companies in run-off and pools – where no rating is
available.
Credit risk – credit insurance
Our credit insurance portfolio is modeled by Euler Hermes based on
a proprietary model component, which is a local adaptation of the
central internal credit risk module and is reviewed by Group Risk. The
result is integrated in the Group’s internal credit risk to capture the
concentration and diversification effects. As of 31 December 2014,
4.5 % (2013: 4.8 %) of our total Group pre-diversified internal credit risk
was allocated to Euler Hermes credit insurance exposures.
Underwriting risk
Underwriting risk consists of premium and reserve risks in the Prop-
erty-Casualty business segment as well as biometric risks in the Life/
Health business segment. For the Asset Management business seg-
ment and our banking operations, underwriting risks are not rele-
vant. The following table presents the pre-diversified internal risk
calculated for underwriting risks stemming from our insurance.1
ReinsuRance RecoveRaBles By Rating class1
€ Bn
as of 31 December
AAA
AA+ to AA-
A+ to A-
BBB+ to BBB-
Non-investment grade
Not assigned
Total
2014
0.03
6.06
4.35
0.17
–
1.97
12.59
2013
0.02
5.99
3.38
0.18
–
2.08
11.65
1
Represents gross exposure broken down by reinsurer.
1
2013 risk profile figures recalculated based on model changes in 2014.
Annual Report 2014
Allianz Group
135
allianz gRoup: inteRnal Risk pRofile – allocated undeRwRiting Risk
By Business segment and souRce of Risk (total poRtfolio BefoRe non-contRolling inteRests)1
pre-diversified, € mn
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Total Group
Premium
natural catastrophe
Premium
terror
Premium
non-catastrophe
Reserve
Biometric
Total
2014
451
–
–
–
2013
535
–
–
–
451
535
2014
24
–
–
–
24
2013
2014
2013
2014
2013
22
4,349
3,627
4,679
4,564
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2014
115
2013
63
1,626
1,062
–
65
–
94
2014
9,619
1,626
–
65
22
4,350
3,627
4,679
4,564
1,807
1,219
11,311
Share of total Group pre-diversified internal risk
18.6 %
2013
8,811
1,063
–
94
9,967
19.7 %
1
As risks are measured by an integrated approach on an economic basis, internal risk profile takes reinsur-
ance effects into account.
For biometric risk the main driver was longevity risk due to the inclu-
sion of risks from internal pensions and due to decreased interest
rates, which affect the risks for long-term products by increasing the
cost of longevity subsidization.
Underwriting risk Property-Casualty
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.
Premium risk
As part of our Property-Casualty business operations, we receive pre-
miums from our customers and provide insurance protection in
return. Changes in profitability over time are measured based on loss
ratios and their fluctuations.1
We face the risk that underwriting profitability is lower than
expected. The volatility of the underwriting profitability measured
over one year defines our premium risk for the Allianz Group.
pRopeRty-casualty loss Ratios1 foR the past ten yeaRs
%
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Loss ratio
66.0 65.9 68.3 69.9 69.1 69.5 68.0 66.1 65.0 67.2
Loss ratio
excluding
natural
catastrophes
65.1 63.0 66.6 65.5 65.9 68.4 66.3 64.1 64.4 64.3
1
Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
1
Please refer to the section Property-Casualty Insurance Operations – Property-Casualty operations by
reportable segments from page 90 for a regional breakdown of loss ratios over the past two years.
136
Annual Report 2014
Allianz Group
Premium risk is subdivided into natural catastrophe risk, terror risk
and non-catastrophe risk. We calculate premium risk based on actu-
arial models that are used to derive loss distributions. Premium risk
is actively managed by the Allianz Group and its local operating enti-
ties. Assessing the risks as part of the underwriting process is a key
element of our risk management framework. There are clear under-
writing limits and restrictions are centrally defined and in place
across the Group. In addition to the centrally-defined underwriting
limits, the local operating entities have limits in place that take into
account their business environments. Excessive risks are mitigated
by external reinsurance agreements. All these measures contribute
to a limitation on risk accumulation.
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 mea-
sure such risks and better estimate the potential effects of natural
disasters, we use special modeling techniques in which we combine
portfolio data (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, we use determin-
istic, scenario-based approaches to estimate potential losses.
The top five perils contributing to the natural catastrophe risk as
of December 2014 were: Europe windstorm, U.S. hurricane, Germany
hail, Australia hail and California earthquake.
Reserve risk
We estimate and hold reserves for claims resulting from past events
that have not yet been settled. If the reserves are not sufficient to
cover claims to be settled in the future due to unexpected changes,
we would experience losses. The volatility of past claims measured
over a one-year time horizon defines our reserve risk.
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Risk and Opportunity Report
123
144 Controls over Financial Reporting and
Risk Capital
In general, our operating entities constantly monitor the devel-
opment of reserves for insurance claims on a line of business level.1
In addition, the operating entities generally conduct annual reserve
uncertainty analyses based on similar methods used for reserve risk
calculations. The Allianz Group performs regular independent
reviews of these analyses and Group representatives participate in
the local reserve committees’ meetings.
In the Life/Health business segment, policyholder behavior risks
are risks related to the unpredictability and adverse behavior of
policyholders in exercising their different contractual options: early
termination of contracts, surrenders, partial withdrawals, renewals
and annuity take-up options. Assumptions on policyholder behavior
are set in line with accepted actuarial methods and are based on our
own historical data, to the extent available. If data is not available,
assumptions are based on industry data or expert judgment.
Underwriting risk Life/Health
Underwriting risks in our Life/Health operations (biometric risks)
include mortality, disability, morbidity, and longevity risks. Mortality,
disability, and morbidity risks are associated with the unexpected
increase in the occurrence of death, disability or medical claims on
our insurance products. Longevity risk is the risk that due to chang-
ing biometric assumptions, the reserves covering life annuities and
group pension products might not be sufficient.
We measure these risks within our internal risk capital model by
distinguishing between the different sub-components, whenever rel-
evant or material: absolute level, trend, volatility around the best
estimate assumptions and pandemic risks. Depending on the nature
and complexity of the risk involved, our health business is represent-
ed in the internal model according to Property-Casualty or Life/
Health calculation methods and is therefore included in the relevant
Property-Casualty and Life/Health figures accordingly. However,
most of our health business is attributable to the Life/Health busi-
ness segment. Due to effective product design and the diversity of our
products, there were no significant concentrations of underwriting
risks within our Life/Health business segment as of 31 December 2014.2
Life/Health underwriting risk arises from lower profitability than
expected due to changes in actuarial parameters. As profitability
calculations are based on several parameters – like historical loss
information, assumptions on inflation or on mortality and morbidity
– the realized parameters may differ from the ones used for calcula-
tion. For example, higher inflation than that incorporated in the cal-
culations may lead to a loss. However, deviations can also occur in
the opposite direction and be beneficial and lead to additional profit.
For example, a lower morbidity rate than expected will most likely
result in lower claims.
Business risk
Business risks include cost risks and policyholder behavior risks and
are mostly driven by the Life/Health business segment and to a lesser
extent by the Property-Casualty business segment. Cost risks are
associated with the risk that expenses incurred in administering
policies are higher than expected or that new business volume
decreases to a level that does not allow Allianz to absorb its fixed costs.
1
2
For further information, please refer to note 19 to the consolidated financial statements.
For further information about insurance risk in the Life/Health business segment, please refer to note 20
to the consolidated financial statements.
allianz gRoup: inteRnal Risk pRofile – allocated Business Risk By Business
segment (total poRtfolio BefoRe tax and non-contRolling inteRests)
pre-diversified, € mn
as of 31 December
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Total Group internal business risk
Share of total Group pre-diversified internal risk
2014
917
4,404
–
–
5,321
8.7 %
2013
909
3,630
–
–
4,538
9.0 %
For business risk in our Life/Health business segment the main drivers
were the decreased interest rates – which affect the cost risk and the
lapse risk due to discounting and effects from dynamic policyholder
behavior assumptions.
As for underwriting risks, a positive deviation from the under-
lying parameters will lead to additional returns. For example, lower
than expected expenses in our Property-Casualty business will lead
to an improved combined ratio.
Operational risk
Operational risks represent losses resulting from inadequate or
failed internal processes, from personnel and systems, or from exter-
nal events – including legal and compliance risk, but excluding losses
from strategic and reputational risk.
Allianz has developed a consistent Group-wide operational risk
management framework that focuses on the early recognition and
proactive management of operational risks in all first line of defense
functions. The framework defines roles and responsibilities, risk pro-
cesses and methods and has been implemented in our operating
entities. Local risk managers as the second line of defense ensure this
framework is implemented in their respective operating entity. They
identify and evaluate relevant operational risks and control weak-
nesses via a dialogue between the first line of defense and the risk
function. Furthermore, operational risk events are collected in a cen-
tral risk event database. In 2014, Allianz became a member of a global
operating loss data consortium, which will start to operate in 2015.
Annual Report 2014
Allianz Group
137
An analysis of the causes of losses exceeding € 1 Mn is carried out to
provide comprehensive and timely information to senior manage-
ment and to share with operating entities so they can implement
measures aimed at avoiding or reducing future losses.
The risks related to non-compliance or other misconduct are
addressed via various dedicated compliance programs. Written poli-
cies detail the Allianz Group’s approach towards the management of
these areas of risk. The implementation and communication of those
compliance programs are monitored by the Group Compliance func-
tion at Allianz SE. In close cooperation with the Risk function of the
Group, the risk-mitigating measures are taken and enforced by a
global network of dedicated compliance functions throughout the
Allianz Group. With respect to financial statements, our internal con-
trol system is designed to mitigate operational risks.1
allianz gRoup: inteRnal Risk pRofile – allocated opeRational Risk By Business
segment (total poRtfolio BefoRe tax and non-contRolling inteRests)
pre-diversified, € mn
as of 31 December
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Total Group internal operational risk
Share of total Group pre-diversified internal risk
2014
1,797
2,035
668
645
5,146
8.4 %
2013
1,833
1,975
586
679
5,073
10.0 %
Major failures and disasters which could cause a severe disruption to
our working environment, facilities and personnel represent signifi-
cant operational risks for the Allianz Group, its employees and its
operating entities. Our Business Continuity and Crisis Management
framework strives to protect critical business functions from these
shocks and enables them to carry out their core tasks on time and at
the highest standard. Regularly enhanced, business continuity and
crisis activities are embedded in the company’s risk management
processes.
Allianz has launched a Cyber and Information Security program
to better respond to current external developments and to further
strengthen the internal control environment around related opera-
tional risks.
1
For additional information regarding our internal control over financial reporting, please refer to Controls
over Financial Reporting and Risk Capital from page 144.
138
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Allianz Group
otheR Risks
There are certain risks that cannot be fully quantified across the
Group using our internal risk capital model. For these risks we also
pursue a systematic approach with respect to identification, analysis,
assessment, monitoring and steering. In general, the risk assessment
is based on qualitative criteria or scenario analyses. The most impor-
tant of these other risks are strategic, liquidity and reputational risk.
Strategic risk
Strategic risk is the risk of an unexpected negative change in the
company’s value arising from the adverse effect of management
decisions regarding business strategies and their implementation.
This risk is evaluated and analyzed quarterly in the same way as
reputational risk as described below. To ensure proper implementa-
tion of strategic goals in the current business plan, strategic controls
are carried out by monitoring respective business targets. We also
constantly monitor market and competitive conditions, capital
market requirements, regulatory conditions, etc. to decide whether
to make strategic adjustments. In addition, strategic decisions are
discussed in various Board of Management level committees (e.g.
Group Capital Committee, Group Finance and Risk Committee). The
assessment of the associated risks is a fundamental element in these
discussions.
Liquidity risk
Liquidity risk is defined as the risk that requirements from current or
future payment obligations cannot be met or can only be met on the
basis of adversely altered conditions. Liquidity risk can arise primar-
ily if there are mismatches in the timing of cash-flows on the asset
and liability side. Detailed information regarding the Allianz Group’s
liquidity risk exposure, liquidity and funding – including changes in
cash and cash equivalents – is provided in Liquidity and Funding
Resources from
page 116 onwards and notes 17, 23, 24 and 43 to
the consolidated financial statements.
The main goal of planning and managing Allianz SE’s liquidity
position is to ensure that we are always able to meet payment obliga-
tions. To comply with this objective, the liquidity position of Allianz SE
is monitored and forecasted on a daily basis. Strategic liquidity plan-
ning over time horizons of 12 months and three years is reported to
the Board of Management regularly.
The accumulated short-term liquidity forecast is updated daily
and is subject to an absolute minimum strategic cushion amount
and an absolute minimum liquidity target. Both are defined for the
Allianz SE cash pool in order to be protected against short-term
liquidity crises. As part of our strategic planning, contingent liquidity
requirements and sources of liquidity are taken into account to
ensure that Allianz SE is able to meet any future payment obligations
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144 Controls over Financial Reporting and
Risk Capital
even under adverse conditions. Major contingent liquidity require-
ments include non-availability of external capital markets, com-
bined market and catastrophe risk scenarios for subsidiaries as well
as lower than expected profits and dividends from subsidiaries.
Our insurance operating entities manage liquidity risk locally,
using asset/liability management systems designed to ensure that
assets and liabilities are adequately matched. The local investment
strategies particularly focus on the quality of investments and ensure
a significant portion of liquid assets (e.g. high-rated government
bonds or covered bonds) in the portfolios. This also allows us to meet
increased liquidity requirements in the case of unlikely events. We
employ actuarial methods for estimating our liabilities arising from
insurance contracts. In the course of standard liquidity planning we
reconcile the cash flows from our investment portfolio with the esti-
mated liability cash flows. These analyses are performed at the oper-
ating entity level and aggregated at the Group level.
Regarding our Asset Management business, forecasting and
managing liquidity is a regular process designed to meet both regula-
tory requirements and Group standards. This process is supported
by the liquidity management framework implemented in Allianz
Asset Management.
Reputational risk
Allianz’s reputation as a well-respected and socially aware provider
of financial services is influenced by our behavior in a range of areas
such as product quality, corporate governance, financial perfor-
mance, customer service, employee relations, intellectual capital
and corporate responsibility. Reputational risk is the risk of an unex-
pected drop in the value of the Allianz SE share price, the value of the
in-force business or the value of future business caused by a decline
in our reputation.
With the support of Group Communications, Group Compliance
and the ESG Office1, Group Risk defines sensitive business areas and
applicable risk guidelines, which are mandatory for all operating
entities in the Allianz Group. All affected Group and operating entity
functions cooperate in the identification of reputational risk. Group
Communications is responsible for the risk assessment, based on a
Group-wide methodology.
Single reputational risk management decisions are integrated
in the overall risk management framework and reputational risks are
identified and assessed as part of a yearly Top Risk Assessment, dur-
ing which senior management also decides on a risk management
strategy and related actions. This is supplemented by quarterly
updates. In addition, reputational risk is managed on a case-by-case
basis. Single cases with a potential impact on other operating entities
or the Group have to be reported to the Allianz Group for pre-approval.
1
The Allianz Environmental, Social, Governance (ESG) Board and ESG office are constituted as advisor to
the Board of Management of Allianz SE and will further elevate environmental, social and governance
aspects in corporate governance and decision-making processes of the Allianz Group.
Risk governance
Risk management fRamewoRk
As a provider of financial services, we consider risk management to
be one of our core competencies. It is therefore an integral part of our
business process. Our risk management framework covers, on a risk-
based approach, all operations including IT, processes, products and
departments/subsidiaries within the Group. The key elements of our
risk management framework are:
− Promotion of a strong risk management culture, supported by a
robust risk governance structure.
− Consistent application of an integrated risk capital model
framework across the Group to protect our capital base and sup-
port effective capital management.
− Integration of risk considerations and capital needs into man-
agement and decision-making processes through the attribu-
tion of risk and allocation of capital to the various segments.
This comprehensive framework ensures that risks are identified, ana-
lyzed, assessed and managed in a consistent manner across the
Group. Our risk appetite is defined by a clear risk strategy and limit
structure. Close risk monitoring and reporting allows us to detect
potential deviations from our risk tolerance at an early stage at both
the Group and operating entity levels.
For the benefit of shareholders and policyholders alike, our risk
management framework adds value to Allianz SE and its operating
entities through the following four primary components:
Risk underwriting and identification: A sound risk underwriting
and identification framework forms the foundation for adequate risk
taking and management decisions such as individual transaction
approvals, new product approvals and strategic asset allocations.
The framework includes risk assessments, risk standards, valuation
methods and clear minimum standards for underwriting.
Risk reporting and monitoring: Our comprehensive qualitative
and quantitative risk reporting and monitoring framework provides
senior management with the transparency and risk indicators to
help them decide our overall risk profile and whether it falls within
delegated limits and authorities. For example, risk dashboards, inter-
nal risk allocation and limit consumption reports are regularly pre-
pared, communicated and monitored.
Annual Report 2014
Allianz Group
139
Risk strategy and risk appetite: Our risk strategy clearly defines
our risk appetite. It ensures that rewards are appropriate for the risks
taken and that the delegated authorities are in line with our overall
risk-bearing capacity. The risk-return profile is improved through the
integration of risk considerations and capital needs into decision-
making processes. This also keeps risk strategy and business objec-
tives consistent with each other and allows us to take opportunities
within our risk tolerance.
Communication and transparency: Finally, transparent and
robust risk disclosure provides the basis for communicating this
strategy to our internal and external stakeholders, ensuring a sustain-
able positive impact on valuation and financing. It also strengthens
the risk awareness and risk culture throughout the entire Group.
Risk goveRnance stRuctuRe
As a key element of our risk management framework, Allianz’s
approach to risk governance enables integrated management of
local and global risks and ensures that our risk profile remains con-
sistent with our risk strategy and our capacity to bear risks.
Supervisory Board and Board of Management
Within our risk governance system, the Supervisory Board and Board
of Management of Allianz SE have both Allianz SE and Group-wide
responsibilities and have set up committees to provide them with
support. Examples include:
Supervisory Board
The Risk Committee of the Supervisory Board monitors the effective-
ness of the Allianz risk management and monitoring framework.
Furthermore, it focuses on risk-related developments as well as gen-
eral risks and specific risk exposures.
Board of Management
The Board of Management formulates business objectives and a cor-
responding, consistent risk strategy. The core elements of the risk
framework are set out in the Allianz Group Risk Policy, which is
approved by the Board of Management. In 2014, the Board of Manage-
ment Committee structure was streamlined.
− The Group Capital Committee supports the Board of Manage-
ment with recommendations regarding the capital structure,
capital allocation and the investment strategy, including the
strategic asset allocation.
− The Group Finance and Risk Committee (GFRC) ensures over-
sight of the Group’s and Allianz SE’s risk management frame-
work, acting as a primary early warning function by monitoring
the Allianz Group’s and Allianz SE’s risk profiles, as well as the
availability of capital. The GFRC also ensures that an adequate
relationship between return and risk is maintained. Addition-
ally, the GFRC defines risk standards, forms the limit-setting
authority within the framework set by the Board of Management
and approves major single financing and reinsurance trans-
actions.
Overall risk organization and roles in risk management
A comprehensive system of risk governance is achieved by setting
standards related to organizational structure, risk strategy and appe-
tite, written policies, limit systems, documentation and reporting.
These standards ensure the accurate and timely flow of risk-related
information and a disciplined approach towards decision-making
and execution at both the global and local level.
As a general principle, the “first line of defense” rests with busi-
ness managers in the local operating entities and Allianz Investment
Management units. They are responsible, in the first instance, for
both the risks of and returns on their decisions. Our “second line of
defense” is made up of our independent, global oversight functions
such as Risk, Compliance and Legal. Audit forms the “third line of
defense”. On a periodic basis, Group Audit independently reviews risk
governance implementation, performs quality reviews of risk pro-
cesses and tests adherence to business standards, including the
internal control framework.
Group Risk
Group Risk is managed by the Group Chief Risk Officer who reports
to the Board member responsible for Finance, Controlling and Risk.
Group Risk supports the aforementioned Allianz Group committees
responsible for risk oversight through the analysis and communica-
tion of risk management-related information and by facilitating the
communication and implementation of committee decisions. For
example, Group Risk is operationally responsible for monitoring the
limits and accumulation of specific types of risks across business
lines, such as natural disasters and exposures to financial markets
and counterparties.
In addition, Group Risk independently supports the adequacy of
the operating entities’ risk management through the development of
a common risk management framework and by monitoring adher-
ence to Group minimum requirements for methods and processes.
Group Risk strengthens and maintains the Group’s risk network
through regular and close interaction with the operating entities’
management and key areas such as the local finance, risk, actuarial
and investment departments. A strong risk network across the Group
allows us to identify risks early and bring them to the attention of
management.
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123
144 Controls over Financial Reporting and
Risk Capital
Operating entities
Operating entities are responsible for their own risk management,
including adherence to both external requirements (for example,
those imposed by local regulators) and internal Group-wide stan-
dards. The operating entities’ Board of Management is responsible
for setting and approving a local risk strategy during the annual Stra-
tegic and Planning Dialogues with the Group and ensuring operating
entities’ adherence to their risk strategy.
All business line management functions with a direct profit and
loss responsibility (i.e. first line of defense, or “risk-taking units”) are
in charge of active risk-return management through adherence to
delegated limits and the operating entity’s policy framework. Second
line of defense functions support, challenge and have the oversight
of business functions through proactive risk management.
A risk function that is independent from the business line man-
agement is established by each operating entity. This function oper-
ates under the direction of the operating entity’s Chief Risk Officer. In
addition, a local Risk Committee supports both the operating entity’s
Board of Management and the Chief Risk Officer by acting as the pri-
mary 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.
Other functions and bodies
In addition to Group Risk and the operating entities’ risk functions,
legal and compliance and actuarial functions have been established
at both the Group and operating entity level, constituting additional
components of the "second line of defense".
Group Legal and Compliance seeks to mitigate legal risks with
support from other departments. Legal risks include legislative
changes, major litigation and disputes, regulatory proceedings and
contractual clauses that are unclear or construed differently by the
courts. Compliance risk is the risk of legal or regulatory sanctions,
material financial loss or loss to reputation that an undertaking may
suffer as a result of not complying with applicable laws, regulations
and administrative provisions. The objectives of Group Legal and
Compliance are to ensure that laws and regulations are observed, to
react appropriately to all impending legislative changes or new court
rulings, to attend to legal disputes and litigation, and to provide
legally appropriate solutions for transactions and business processes.
In addition, Group Legal and Compliance is responsible for integrity
management, which aims to protect the Allianz Group, our operating
entities and employees from regulatory risks.
Group Actuarial contributes towards assessing and managing
risks in line with regulatory requirements. These risks stem from the
risk-taking/mitigating activities involving professional actuarial
experience and interaction. The role includes, but is not limited to,
the activities of:
− Calculation and oversight of technical reserves for accounting
and regulatory purposes;
− Pricing and profitability oversight;
− Technical actuarial support of business planning, reporting and
result monitoring;
− Contribution to the effective implementation of the risk man-
agement system.
In order to adapt to a continually changing environment, the Global
Issues Forum (GIF) supports the Group in the assessment of long-
term trend changes in the risk landscape on a timely basis. As an
active participant of the Emerging Risk Initiative of the Chief Risk
Officer Forum, we monitor with other chief risk officers of major
European insurance companies and financial conglomerates the
industry-wide risk landscape and raise awareness of major risks for
the insurance industry.
Risk management priorities for 2015
In addition to maintaining our high standards and practices in day-
to-day risk management and controlling, we have set the following
priorities for 2015.
Our first priority is to get the approval for our Solvency II internal
model. To this end, we will continue to actively participate in the pre-
approval process for Solvency II with the relevant European super-
visors and file the final internal model application in 2015. In addition,
we will prepare for any potential late guidance and changes to the
Solvency II regulation and for any regulatory feedback on the internal
model application to be ready for the final implementation of Sol-
vency II in 2016.
Regarding regulatory developments, our second priority is to
ensure that we meet the emerging requirements for G-SII (Global
Systemically Important Insurers). Therefore, we will continue to par-
ticipate in the capital field-testing exercise conducted by the IAIS
(International Association of Insurance Supervisors). In addition, we
aim to further strengthen our liquidity risk management framework.
Our third priority will be to further enhance systemic risk man-
agement, first by focusing specifically on stress testing and scenario
analysis in the context of managing and steering Allianz’s risk profile
and, second, by continuing to strengthen the risk culture and the
Group-wide risk network to further enhance efficient and effective
steering also in systemic crisis situations.
Annual Report 2014
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141
Further future challenges
and opportunities1
The success of our business is heavily affected by a variety of global,
long-term issues. To ensure our sustainable and profitable growth,
our strategy places a high priority on monitoring, analyzing and
responding to the challenges and opportunities these issues present,
today and tomorrow.
By consistently following our Group strategy, we are confident
that the Allianz Group is in a privileged position to deal with the chal-
lenges and opportunities ahead. The most important of these are
outlined below.
digital, climate and demogRaphic challenges
The digital revolution has completely changed the way our custom-
ers make purchasing decisions and buy insurance products. The
boundaries between buying online and offline are quickly fading.
Social networks and other online channels are gaining in importance.
In parallel, expectations of service levels are increasing. We are con-
tinuously adapting to this new digital lifestyle to stay connected with
our stakeholders and improve customer service. In the framework of
the Allianz Digital Target Picture program we leverage the opportuni-
ties that changing customer preferences provide. We are developing
web-based and multi-access customer interaction tools to address
changing customer behaviors. On the operational side, we are har-
monizing systems across the Group to reduce complexity and
improve efficiency.
Global warming threatens to alter our climate and such changes
could result in a range of risks and opportunities that affect our entire
business. We have a Group-wide strategy covering climate-related
risks and opportunities for our business and our customers: we
finance and insure low-carbon energy projects, such as wind and
solar, offer customers a range of "Green" Solutions and provide them
with advice on weather-related risk reduction. As a company we con-
tinually reduce and offset our own carbon emissions. We also incor-
porate not only environmental, but also social and governance fac-
tors into our investment and underwriting processes as well as asset
management.
Demographic changes are also creating both opportunities and
challenges for financial services providers. While the urban popula-
tions of Asia and Africa are expanding and their middle classes grow-
ing, Western populations are aging and their workforces shrinking.
With more people over 60 years old than ever before and declining
birth rates, social security systems are under pressure and demand
is growing for additional pension provisions. We are responding to
these trends by providing integrated insurance and asset manage-
ment solutions. Our solid market position in continental Europe and
the United States, as well as our strong brand and well-diversified
product portfolio, put us in an excellent position to develop solutions
to meet the needs of the retirement, health care and assistance
markets.
In addition, many of the world's industrialized nations are reliant
on infrastructure that is 30 to 50 years old and yet public-sector
investments in this area have been declining across the board. In
order to upgrade this aging infrastructure, billions of Euros are
required per year – figures that most governments are not able to
cover, especially considering the increase in social security spending
due to demographic effects. At the same time, the current workforce
is faced first and foremost with the need to accumulate adequate
funds for retirement, which is proving very difficult in the sustained
low interest rate environment. We are at the forefront of bringing
these two challenges together to find solutions for the long term:
bridging the public sector infrastructure investment gap and provid-
ing profitable retirement provisions. But more still needs to be done
in the political sphere to make this investment environment more
stable and transparent for institutional investors such as Allianz.
In emerging economies, the need for formal social security sys-
tems is growing due to the weakening of traditional family ties and
support networks. From life to health and crop insurance, our growing
microinsurance portfolio helps low-income families in developing
countries protect themselves against – and better manage – the risks
in life to build a more secure future. Although financial returns from
microinsurance are lower than from traditional products, we believe
that satisfied microinsurance policyholders will bring mid- to long-
term pay-offs as many of them move up the economic ladder and are
able to purchase regular Allianz products.
For more information, please refer to Progress in Sustainable
Development from
page 73.
1
For further information on the Cautionary note regarding forward-looking statements, please refer to
Outlook 2015 from page 104.
142
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Allianz Group
Strategic Investments: Strategic investments also open up new
business opportunities. For example, Allianz is growing its Business to
Business to Customer (B2B2C) area. By pairing up value propositions
– Automotive with Roadside Assistance, and International Health with
Corporate Assistance – under the roof of Allianz Worldwide Partners,
we are taking a distinctive position in the B2B2C market. One major
advantage for us is to extend agreements with distributors across
global markets in a seamless manner. Allianz also operates an incuba-
tor to develop and pilot innovative ideas before they are implemented
across the Group.
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144 Controls over Financial Reporting and
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stRategic Risk and oppoRtunity management
As previously described, the Group has a well-established strategy
and planning process with all its operating entities, which allows us
to understand and respond to local risks and opportunities. This
strong diversification across markets, business segments and cus-
tomer groups gives Allianz a powerful lever to identify new opportu-
nities and manage risks.
In addition to these joint efforts, Allianz has built four opera-
tional and strategic pillars to help the Group create opportunities on
a wider basis:
Digitalization, enabling us to take advantage of new products to
new markets at lower cost: Digitalization is one of our major Group
initiatives and affects all areas of Allianz, including our customers
and our employees. This initiative spans everything from the design of
new modular products, to new forms of access, to servicing existing
customers in a better way. We will continue to invest in technology at
the local and Group level. We see technology as the key enabler for
our business, both in the infrastructure (networks, data centers,
underwriting and processing systems), but also at the customer
interface (“digital”): Related investments in 2014 totaled more than
€ 800 Mn. Digitalization is also the basis for enhanced management
information systems to improve steering. When driving digitaliza-
tion, security and data confidentiality remain a major priority.
Capital allocation, ensuring that capital is available and allo-
cated appropriately to finance growth initiatives and leveraging the
Group's diversification benefits: We will move further towards greater
capital efficiency while preparing for the go-live of Solvency II on
1 January 2016. This means we will optimize the capitalization of our
local entities towards a more efficient capital base, actively improve
new business capital allocation between operating entities and lines
of business as well as sharpen the distinction between business we
run for growth and portfolios or lines of business from which we will
look to extract capital.
Leverage Group synergies: We continue to leverage Group syner-
gies via know-how and best practice sharing in underwriting, product
development and operations through Global Property-Casualty and
Global Life/Health units. We recognize both increasing risk in our
operating and regulatory environment and great opportunities in the
fast-changing preferences and behavior of our customers. In this
spirit, we are reviewing our Group organization structures to take
account of the need for strong central governance in some areas, but
also greater local entrepreneurship and decision-making in others.
Annual Report 2014
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143
Controls over Financial Reporting and Risk Capital
Statements pursuant to § 289 (5) and § 315 (2) no. 5 of the German Commercial
Code (“Handelsgesetzbuch – HGB”) and explanatory report.
accountIng and consolIdatIon processes
The accounting and consolidation processes we use to produce con-
solidated financial statements are based on a central consolidation
and reporting IT solution and local general ledger solutions. The latter
are largely harmonized throughout the Group, using standardized
processes, master data, posting logics and interfaces for data delivery
to the Holding. Access rights to accounting systems are managed
according to strict authorization procedures.
Accounting rules for the classification, valuation and disclosure
of all items in the balance sheet, income statement and related notes
of the annual and interim financial statements are primarily defined
in our Group accounting manual. Internal controls are embedded in
the accounting and consolidation processes to safeguard the accuracy,
completeness and consistency of the information provided in the
financial statements.
Internal controls over financial reporting
In line with both our prudent approach to risk governance and com-
pliance with regulatory requirements, we have created a structure to
identify and mitigate the risk of material errors in our consolidated
financial statements. Our internal control system over financial
reporting (ICOFR) is based on the revised framework developed by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in 2013 and is regularly reviewed and updated. Our approach
also includes the following five interrelated components: Control
Environment, Risk Assessment, Control Activities, Information and
Communication, and Monitoring. These five components are covered
by an Entity Level Control Assessment Process (ELCA), IT General
Controls (ITGC) and controls at process levels. The ELCA framework
contains controls such as a compliance program or committee gover-
nance structure. In the ITGC framework we implemented, for example,
controls regarding access right management and project and change
management controls.
Internal control system approach
Internal control system approach
Scoping
Identify risks
Implement key controls
Assessment
Determination of significant accounts
and operating entities to be covered by
system of internal control
Identification of risk scenarios that
could result in a material financial
misstatement
Implementation of key controls
that prevent or detect errors or
fraud resulting from risk scenarios
Assessment of the design and operating
effectiveness of key controls
process
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144 Controls over Financial Reporting and
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Our approach can be summarized as follows:
− We use a top-down, risk-based approach to determine the
accounts and operating entities that should fall under the scope
of our internal control system over financial reporting. The meth-
odology is described in our ICOFR manual. During the scoping
process, materiality and susceptibility to a misstatement are
considered simultaneously. The final results are documented in
the list of operating entities under the scope of ICOFR as well as
in the list of significant accounts. In addition to the quantitative
ICOFR calculation, we also consider qualitative criteria – such as
expected increase in business volume – which are provided by
different Group Centers, Group Audit and external Audit.
− Then, our local entities identify risks that could lead to material
financial misstatements including all relevant root causes (i.e.
human processing errors, fraud, system weaknesses, external
factors, etc.). After identifying and analyzing the risks, the poten-
tial impacts and occurrence probabilities are evaluated.
− Preventive and detective key controls over the financial reporting
process have been put in place to reduce the likelihood and the
impact of financial misstatements. If a potential risk material-
izes, actions are taken to reduce the impact of the financial mis-
statement. Given the strong dependence of financial reporting
processes upon information technology systems, we also imple-
ment IT controls.
− Finally, we focus on ensuring that controls are appropriately
designed and effectively executed to mitigate risk. We have set
consistent documentation requirements across the Allianz
Group for elements such as processes, related key controls and
their execution. We conduct an annual assessment of our control
system to maintain and continuously enhance its effectiveness.
Group Audit and local internal audit functions ensure that the
overall quality of our control system is subjected to regular con-
trol-testing, to assure reasonable design and operating effective-
ness. Internal Audit does so through a comprehensive risk-based
approach, which holistically assesses the key controls of the
company’s internal procedures and processes, including local
and Group internal controls over financial reporting.
governance
Responsibility for ensuring the completeness, accuracy and reliability
of our consolidated financial statements rests with the Chairman of
the Board of Management and the board member responsible for
Finance, Controlling and Risk of Allianz SE, supported by Group Center
functions, the Group Disclosure Committee and operating entities.
The Group Disclosure Committee ensures that these board
members are made aware of all material information that could
affect our disclosures and assesses the completeness and accuracy
of the information provided in the quarterly and annual financial
reports. The committee meets on a quarterly basis before the financial
reports are issued.
Subsidiaries within the scope of our control system are individu-
ally responsible for adhering to the Group’s internal governance and
control policy and for creating local Disclosure Committees that are
similar to the Group-level committee. The entities’ CEOs and CFOs
provide periodic sign-offs to the management of Allianz SE, certifying
the effectiveness of their local system of internal controls as well as
the completeness, accuracy and reliability of financial data reported
to the Holding.
Further control mechanIsms
In our opinion, a strong internal control environment is key to manage
our company successfully and to reinforce trust with our stakeholders.
In addition to ICOFR, for example, we have implemented an enhanced
internal control environment across our largest Life insurance oper-
ating entities for the Market Consistent Embedded Value (MCEV)
reporting process.
Risk capital controls
Similar to our ICOFR framework, we have also established a robust
and comprehensive control concept in the risk capital calculation and
aggregation process, since our internal risk capital calculations
incorporate economic factors that are not fully reflected in the
accounting results. We have put in place additional controls within
our management reporting processes to ensure that these additional
estimates are adequately controlled and that the data quality is
accurate, consistent and complete.
These controls include the validation of models and assumptions
by independent reviews and continuous benchmarking to market and/
or peer assumptions and practices. We benchmark and explain our
non-market assumptions against practices in the industry, actuarial
associations and guidance from supervisory authorities.
During 2014, we further strengthened the internal control environ-
ment around the computation of our internal risk capital in anticipa-
tion of the future Solvency II regime.
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Annual Report 2014
Allianz Group
Allianz
Worldwide
Care
48
hours
Medical claims are processed within 48 hours.
95
% client
retention rate
95 % of our clients choose to renew their insurance with us.
Allianz Worldwide Care is the international health insurance
division of Allianz Worldwide Partners, providing insurance
solutions for health, life and disability on a global scale.
The company’s focus is on earning and maintaining client
loyalty by providing a market-leading product range, level
of service and support. Allianz Worldwide Care’s multicultural
staff, made up of 63 nationalities and collectively speaking
28 languages, mirrors the global nature of its client base.
allianzworldwidecare.com
Allianz
Global
Assistance
Allianz
Global
Automotive
Allianz
Worldwide
Care
AlliAnz WorldWide CAre
Allianz Worldwide
Care continues
to build a reputation
for service excellence
MyHealth app offers fastest and easiest way
to submit medical claims.
Allianz
MyHealth
App
In August 2014, Allianz Worldwide Care launched a mobile
app that allows its members to submit medical claims
more quickly and easily than ever before, by-passing the
need to complete a traditional claim form. The MyHealth
app makes it possible to:
Send medical claims via a mobile device
Check the status of previously submitted claims and
payments
Find the closest hospitals and get directions to them
using GPS
View key medical terms in 17 languages
Access latest policy documents, even offline
The MyHealth app is available in English, German, French,
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allianzworldwidecare.com/myhealth
148
Looking after the people
who look after our clients.
Award-winning
health and
wellbeing
Allianz Worldwide Care was one of the winners of
the Allianz Group’s Global Innovation Awards
scheme in July 2014, in recognition of its employee
health and well being program.
The company’s health and wellbeing initiative
included weekly onsite yoga sessions, the establish-
ment of sports clubs, women’s and men’s health
information sessions and health screenings.
The Capuchin Day Centre, a Dublin-based charity,
provides 1,000 food parcels and 6,000 hot meals
weekly to those expe riencing poverty. It was the bene -
ficiary chosen to receive the award fund of € 10,000.
Staff from Allianz Worldwide Care, which employs
900 staff worldwide, 700 of whom are in Dublin,
regularly volunteer at the Capuchin Day Centre,
including at weekends and bank holidays.
capuchindaycentre.ie
Creative solutions for client care.
Planes,
trains and
automobiles
Allianz Worldwide Care’s Medical Director has a job that
requires a lot of creative thinking. One particularly
challeng ing case was in 2011 when an Icelandic ash cloud
grounded flights across Europe and a client who had
suffered a stroke in a remote region of Kazakhstan needed
to be flown home to Portugal for rehabilitation.
Airports in Ireland, where Allianz Worldwide Care’s primary
support center is located, were closed and the company’s air
ambulance partners were also hampered by airport closures.
Allianz Worldwide Care’s medical escort team took a ferry
to the U.K., got a train to Paris and then flew via Azerbaijan
to reach the patient.
On the return journey, Paris airport was closed. So the team
flew to Frankfurt instead, and then on to Lisbon. It really
was a case of planes, trains and automobiles, resulting in a
very moving outcome when the patient’s wife and children
were able to welcome him home.
allianzworldwidecare.com/member-services
149
D _ ConsoliDATeD
FinAnCiAl sTATeMenTs
151 Consolidated BalanCe sheets
152 Consolidated inCome statements
153
154
155
Consolidated statements of Comprehensive inCome
Consolidated statements of Changes in equity
Consolidated statements of Cash flows
157
notes to the Consolidated finanCial statements
General information
notes to the Consolidated income Statements
Pages 150 – 264
157
157
166
171
173
176
1 Nature of operations and basis of presentation
2 Summary of significant accounting policies
3 Use of estimates and assumptions
4
5 Consolidation
6 Segment reporting
Recently adopted and issued accounting pronouncements
notes to the Consolidated Balance Sheets
190
190
190
194
194
195
196
198
198
203
203
204
204
209
212
213
214
215
215
Financial assets carried at fair value through income
Investments
Loans and advances to banks and customers
7 Cash and cash equivalents
8
9
10
11 Reinsurance assets
12 Deferred acquisition costs
13 Other assets
14
Non-current assets and assets and liabilities of disposal groups
classified as held for sale
Intangible assets
Financial liabilities carried at fair value through income
Liabilities to banks and customers
15
16
17
18 Unearned premiums
19 Reserves for loss and loss adjustment expenses
20 Reserves for insurance and investment contracts
21
Financial liabilities for unit-linked contracts
22 Other liabilities
23 Certificated liabilities
24
25
Subordinated liabilities
Equity
150
Annual Report 2014
Allianz Group
219
219
220
220
221
221
221
222
222
223
223
223
223
223
224
224
224
26 Premiums earned (net)
27
28
Interest and similar income
Income from financial assets and liabilities carried
at fair value through income (net)
Fee and commission income
29 Realized gains/losses (net)
30
31 Other income
32
Income and expenses from fully consolidated
private equity investments
33 Claims and insurance benefits incurred (net)
34
Change in reserves for insurance and investment
contracts (net)
Interest expenses
Loan loss provisions
Impairments of investments (net)
Investment expenses
35
36
37
38
39 Acquisition and administrative expenses (net)
40
41 Other expenses
42
Income taxes
Fee and commission expenses
other information
227
229
240
242
242
244
248
251
253
253
255
256
263
264
Litigation, guarantees and other contingencies and commitments
Financial instruments and fair value measurement
Interests in unconsolidated structured entities
43 Derivative financial instruments
44
45
46 Related party transactions
47
48 Pensions and similar obligations
49 Share-based compensation plans
50 Restructuring plans
51
Earnings per share
52 Other information
53 Subsequent events
List of participations of the Allianz Group as of
31 December 2014 according to § 313 (2) HGB
Responsibility statement
Auditor’s report
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Consolidated balanCe sheets
consolidated balance sheets
€ mn
assets
Cash and cash equivalents
Financial assets carried at fair value through income
Investments
Loans and advances to banks and customers
Financial assets for unit-linked contracts
Reinsurance assets
Deferred acquisition costs
Deferred tax assets
Other assets
Non-current assets and assets of disposal groups classified as held for sale
Intangible assets
Total assets
liabilities and eQUitY
Financial liabilities carried at fair value through income
Liabilities to banks and customers
Unearned premiums
Reserves for loss and loss adjustment expenses
Reserves for insurance and investment contracts
Financial liabilities for unit-linked contracts
Deferred tax liabilities
Other liabilities
Liabilities of disposal groups classified as held for sale
Certificated liabilities
Subordinated liabilities
Total liabilities
Shareholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
as of
31 December
2014
as of
31 December
2013
note
as of
1 January
2013
7
8
9
10
11
12
42
13
14
15
16
17
18
19
20
21
42
22
14
23
24
25
13,863
5,875
486,445
117,075
94,564
13,587
22,262
1,046
37,080
235
13,755
805,787
8,496
23,015
19,800
68,989
11,207
6,660
411,148
116,800
81,064
12,609
22,203
1,508
34,632
147
13,100
711,079
6,013
23,109
18,212
66,566
12,437
7,165
401,711
119,369
71,197
13,254
19,452
1,526
35,196
15
13,090
694,411
5,397
22,425
17,939
72,540
463,334
404,072
390,984
94,564
4,932
38,609
102
8,207
12,037
742,085
60,747
2,955
63,702
81,064
3,178
36,431
–
8,030
11,554
658,230
50,083
2,765
52,849
71,197
4,034
37,357
–
7,960
11,614
641,448
50,388
2,576
52,963
805,787
711,079
694,411
Annual Report 2014
Allianz Group
151
Consolidated inCome statements
consolidated income statements
€ mn
Gross premiums written
Ceded premiums written
Change in unearned premiums
Premiums earned (net)
Interest and similar income
Income from financial assets and liabilities carried at fair value through income (net)
Realized gains/losses (net)
Fee and commission income
Other income
Income from fully consolidated private equity investments
Total income
Claims and insurance benefits incurred (gross)
Claims and insurance benefits incurred (ceded)
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment contracts (net)
Interest expenses
Loan loss provisions
Impairments of investments (net)
Investment expenses
Acquisition and administrative expenses (net)
Fee and commission expenses
Amortization of intangible assets
Restructuring charges
Other expenses
Expenses from fully consolidated private equity investments
Total expenses
Income before income taxes
Income taxes
Net income
Net income attributable to:
Non-controlling interests
Shareholders
Basic earnings per share (€)
Diluted earnings per share (€)
152
Annual Report 2014
Allianz Group
note
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
15
50
41
32
42
51
51
2014
73,883
(4,463)
(1,146)
68,274
21,443
(1,604)
4,017
10,119
216
696
2013
72,051
(4,541)
(882)
66,628
20,918
(1,845)
4,286
10,492
209
726
103,161
101,415
(52,140)
(50,178)
2,490
(49,650)
(13,929)
(1,261)
(45)
(894)
(961)
(23,343)
(3,238)
(123)
(16)
(135)
(720)
2,376
(47,802)
(13,990)
(1,322)
(86)
(611)
(905)
(22,865)
(3,038)
(136)
(170)
(106)
(740)
(94,314)
(91,772)
8,848
(2,245)
6,603
9,643
(3,300)
6,343
381
6,221
13.71
13.64
347
5,996
13.23
13.05
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Consolidated statements of Comprehensive inCome
consolidated statements of comprehensive income
€ mn
Net income
Other comprehensive income
Items that may be reclassified to profit or loss in future periods
Foreign currency translation adjustments
Reclassifications to net income
Changes arising during the year
Subtotal
Available-for-sale investments
Reclassifications to net income
Changes arising during the year
Subtotal
Cash flow hedges
Reclassifications to net income
Changes arising during the year
Subtotal
Share of other comprehensive income of associates and joint ventures
Reclassifications to net income
Changes arising during the year
Subtotal
Miscellaneous
Reclassifications to net income
Changes arising during the year
Subtotal
Items that may never be reclassified to profit or loss
Actuarial gains and losses on defined benefit plans
Total other comprehensive income
2014
6,603
2013
6,343
2
1,428
1,431
(641)
7,817
7,176
34
50
85
–
54
54
–
(151)
(151)
(1,607)
6,988
(1)
(1,305)
(1,307)
(817)
(2,537)
(3,354)
10
(63)
(53)
–
(82)
(82)
–
105
105
362
(4,327)
Total comprehensive income
13,590
2,016
Total comprehensive income attributable to:
Non-controlling interests
Shareholders
534
13,056
310
1,706
For further details concerning income taxes relating to components
of the other comprehensive income, please see note 42.
Annual Report 2014
Allianz Group
153
Consolidated statements of Changes in equity
Foreign
currency
translation
adjustments
(2,073)
(1,234)
–
–
(5)
–
(3,313)
1,340
–
–
(4)
–
Unrealized
gains and losses
(net)
Shareholders’
equity
Non-
controlling
interests
Total equity
10,123
(3,382)
–
–
1
–
6,742
7,176
–
–
–
–
50,388
1,706
55
(2)
(24)
(2,039)
50,083
13,056
59
(1)
(45)
(2,405)
60,747
2,576
310
–
–
144
(264)
2,765
534
–
–
(33)
(311)
2,955
52,963
2,016
55
(2)
120
(2,303)
52,849
13,590
59
(1)
(78)
(2,716)
63,702
(1,977)
13,917
consolidated statements of changes in eQUitY
€ mn
Balance as of 1 January 2013
Total comprehensive income1
Paid-in capital
Treasury shares
Transactions between equity holders
Dividends paid
Balance as of 31 December 2013
Total comprehensive income1
Paid-in capital
Treasury shares
Transactions between equity holders
Dividends paid
Paid-in capital
28,815
–
55
–
–
–
28,869
–
59
–
–
–
Balance as of 31 December 2014
28,928
Retained
earnings
13,524
6,323
–
(2)
(20)
(2,039)
17,786
4,540
–
(1)
(41)
(2,405)
19,878
1
Total comprehensive income in shareholders’ equity for the year ended 31 December 2014 comprises
net income attributable to shareholders of € 6,221 mn (2013: € 5,996 mn).
154
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Consolidated statements of Cash flows
consolidated statements of cash flows
€ mn
sUmmarY
Net cash flow provided by operating activities
Net cash flow used in investing activities
Net cash flow used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
cash flow from operating activities
Net income
Adjustments to reconcile net income to net cash flow provided by operating activities
Share of earnings from investments in associates and joint ventures
Realized gains/losses (net) and impairments of investments (net) of:
2014
2013
32,232
(26,927)
(3,189)
541
2,656
11,207
13,863
23,239
(22,801)
(1,436)
(232)
(1,230)
12,437
11,207
6,603
6,343
(196)
(146)
Available-for-sale and held-to-maturity investments, investments in associates and joint ventures, real estate held for investment,
loans and advances to banks and customers, non-current assets and assets and liabilities of disposal groups classified as held for sale
(3,105)
(3,676)
Other investments, mainly financial assets held for trading and designated at fair value through income
Depreciation and amortization
Loan loss provisions
Interest credited to policyholder accounts
Net change in:
Financial assets and liabilities held for trading
Reverse repurchase agreements and collateral paid for securities borrowing transactions
Repurchase agreements and collateral received from securities lending transactions
Reinsurance assets
Deferred acquisition costs
Unearned premiums
Reserves for loss and loss adjustment expenses
Reserves for insurance and investment contracts
Deferred tax assets/liabilities
Other (net)
Subtotal
Net cash flow provided by operating activities
2,537
1,159
45
3,879
375
107
466
(218)
(1,219)
1,120
1,039
23,036
(10)
(3,384)
25,629
32,232
963
1,108
86
4,163
300
227
95
(207)
(720)
832
(1,071)
12,004
375
2,562
16,896
23,239
Annual Report 2014
Allianz Group
155
Consolidated statements of Cash flows – Continued
consolidated statements of cash flows
€ mn
cash flow from investing activities
Proceeds from the sale, maturity or repayment of:
Financial assets designated at fair value through income
Available-for-sale investments
Held-to-maturity investments
Investments in associates and joint ventures
Non-current assets and assets and liabilities of disposal groups classified as held for sale
Real estate held for investment
Loans and advances to banks and customers (purchased loans)
Property and equipment
Subtotal
Payments for the purchase or origination of:
Financial assets designated at fair value through income
Available-for-sale investments
Held-to-maturity investments
Investments in associates and joint ventures
Non-current assets and assets and liabilities of disposal groups classified as held for sale
Real estate held for investment
Loans and advances to banks and customers (purchased loans)
Property and equipment
Subtotal
Business combinations (note 5):
Proceeds from sale of subsidiaries, net of cash disposed
Acquisitions of subsidiaries, net of cash acquired
Change in other loans and advances to banks and customers (originated loans)
Other (net)
Net cash flow used in investing activities
cash flow from financing activities
Net change in liabilities to banks and customers
Proceeds from the issuance of certificated liabilities and subordinated liabilities
Repayments of certificated liabilities and subordinated liabilities
Cash inflow from capital increases
Transactions between equity holders
Dividends paid to shareholders
Net cash from sale or purchase of treasury shares
Other (net)
Net cash flow used in financing activities
sUpplementarY information on the consolidated statements of cash flows
Income taxes paid
Dividends received
Interest received
Interest paid
156
Annual Report 2014
Allianz Group
2014
2013
1,335
124,855
1,347
120,507
579
709
146
329
8,345
119
836
397
24
663
9,863
200
136,416
133,837
(1,693)
(719)
(149,120)
(144,082)
(331)
(1,271)
–
(963)
(5,005)
(1,692)
(653)
(825)
–
(1,504)
(6,940)
(1,484)
(160,076)
(156,207)
–
(200)
(2,403)
(665)
81
(416)
(695)
599
(26,927)
(22,801)
(873)
3,823
873
6,236
(3,435)
(6,204)
51
(78)
47
12
(2,716)
(2,303)
6
35
(3,189)
(3,081)
1,555
18,851
(1,326)
7
(104)
(1,436)
(3,672)
1,355
18,657
(1,308)
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Notes to the Consolidated Financial Statements
General InformatIon
1 – Nature of operations
and basis of presentation
Nature of operatioNs
Allianz SE and its subsidiaries (the Allianz Group) maintain Property-
Casualty insurance, Life/Health insurance and Asset Management
operations in over 70 countries, with the largest of its operations in
Europe. The Allianz Group’s headquarters and Allianz SE as its parent
company are located in Munich, Germany. Allianz SE is recorded in
the Commercial Register of the municipal court in Munich under its
registered address at Koeniginstraße 28, 80802 Munich.
Allianz SE is a stock corporation in the form of a European Com-
pany (Societas Europaea). Allianz SE shares are listed on all German
stock exchanges and Allianz SE American Depositary Receipts (ADRs)
are traded in the U.S. over the counter on OTCQX.
The consolidated financial statements of the Allianz Group for
the year ended 31 December 2014 were authorized for issue by the
Board of Management on 24 February 2015.
Basis of preseNtatioN
The consolidated financial statements of the Allianz Group have
been prepared in conformity with International Financial Reporting
Standards (IFRS), as adopted under European Union (E.U.) regula-
tions in accordance with § 315a of the German Commercial Code
(HGB). Within these consolidated financial statements, the Allianz
Group has applied all standards and interpretations issued by the
IASB and endorsed by the E.U. that are compulsory as of 31 December
2014. IFRS comprise International Financial Reporting Standards
(IFRS), International Accounting Standards (IAS) and interpretations
developed by the IFRS Interpretations Committee (formerly called the
IFRIC) or the former Standing Interpretations Committee (SIC).
IFRS do not provide specific guidance concerning all aspects of
the recognition and measurement of insurance contracts, reinsur-
ance contracts and investment contracts with discretionary partici-
pation features. Therefore, as envisioned in IAS 8, Accounting Policies,
Changes in Accounting Estimates and Errors, to those aspects where
specific guidance is not provided by IFRS 4, Insurance Contracts, the
provisions embodied under accounting principles generally accept-
ed in the United States of America (US GAAP) as at first-time adoption
of IFRS 4 on 1 January 2005 have been applied.
The accounting policies adopted are consistent with those of the
previous financial year, except for recently adopted IFRS effective
1 January 2014.
The consolidated financial statements are prepared as of and for
the year ended 31 December and presented in millions of Euro (€ mn),
unless otherwise stated. Due to rounding, numbers presented may
not add up precisely to the totals provided and percentages may not
precisely reflect the absolute figures. Previously published figures
have been adjusted accordingly.
2 – Summary of significant
accounting policies
priNCipLes of CoNsoLiDatioN
Scope of consolidation
In line with IFRS 10, the consolidated financial statements of the
Allianz Group comprise the financial statements of Allianz SE and its
subsidiaries (including certain investment funds and structured
entities) over which the Allianz Group has control. The Allianz Group
controls a subsidiary when it is exposed to, or has rights to, variable
returns from its involvement with the subsidiary and has the ability
to affect those returns through its power over the subsidiary. Power
over a subsidiary arises when the Allianz Group has existing rights
that give it the current ability to direct the relevant activities of the
subsidiary. This is usually the case when the Allianz Group owns
more than half of the voting rights or similar rights. In order to deter-
mine whether control exists, potential voting rights that are cur-
rently exercisable or convertible are taken into consideration. Where
subsidiaries have been designed so that voting or similar rights are
not the dominant factor of control, such as when any voting rights
relate to administrative tasks only and returns are directed by means
of contractual arrangements, control is assessed on the basis of the
Allianz Group’s level of involvement in defining the terms and fea-
tures of these contractual arrangements, as is the case for structured
entities. In the case of investment funds managed by Allianz Group
internal asset managers, the control assessment considers whether
the Allianz Group is in a principal or agent role with a view to the
investment funds assessed. This assessment takes into account kick
out rights held by third-party investors as well as the aggregate eco-
nomic interest of the Allianz Group in the investment funds assessed.
Subsidiaries are consolidated as from the date on which control
is obtained by the Allianz Group, up to the date on which the Allianz
Group no longer maintains control. Accounting policies of subsid-
iaries are adjusted where necessary to ensure consistency with the
accounting policies adopted by the Allianz Group. The effects of
intra- Allianz Group transactions are eliminated.
Annual Report 2014
Allianz Group
157
Third-party assets held in an agency or fiduciary capacity are not
assets of the Allianz Group and are not presented in these consoli-
dated financial statements.
In some jurisdictions the ability of subsidiaries to transfer funds
to the parent company in the form of dividends or to repay loans is
subject to local corporate or insurance laws and regulations and sol-
vency requirements.
Business combinations including acquisitions
and disposals of non-controlling interests
Business combinations are accounted for using the acquisition
method. Non-controlling interests in the acquiree can be measured
either at the acquisition date fair value or at the non-controlling
interest’s proportionate share of the acquired’s identifiable net
assets. This option is exercised on a case-by-case basis.
Investments in associates and joint arrangements
In general, if the Allianz Group holds 20 % or more of voting power in
an investee but does not control the investee, it is assumed to exer-
cise significant influence, unless it can be clearly demonstrated that
this is not the case. Investments in associates over which the Allianz
Group exercises significant influence are generally accounted for
using the equity method.
Joint arrangements are structures over which the Allianz Group
and one or more other parties contractually sharing control require
unanimous consent when decisions over the relevant activities are
to be made. Joint arrangements whereby the Allianz Group has rights
to the net assets of the arrangement (joint venture) are generally
accounted for using the equity method.
The Allianz Group accounts for all material investments in asso-
ciates on a time lag of no more than three months. Income from
investments in associates and joint arrangements, which reflects the
earnings rather than the distributions of the associate or jointly con-
trolled entity, is included in interest and similar income. Profits or
losses resulting from transactions between the Allianz Group and the
associate or joint arrangement are eliminated to the extent of the
interest in the associate or joint arrangement. Accounting policies of
associates and joint arrangements are adjusted where necessary to
ensure consistency with the accounting policies adopted by the
Allianz Group.
In some jurisdictions the ability of associates and joint arrange-
ments to transfer funds to the Allianz Group in the form of dividends
or to repay loans is subject to local corporate or insurance laws and
regulations and solvency requirements.
foreiGN CurreNCY traNsLatioN
Translation from any foreign currency
to the functional currency
The individual financial statements of each of the Allianz Group’s
subsidiaries are prepared in the prevailing currency in the primary
economic environment where the subsidiary conducts its ordinary
activities (its functional currency). Transactions recorded in curren-
cies other than the functional currency (foreign currencies) are
recorded at the exchange rate prevailing on the date of the trans-
action. At the balance sheet date, monetary assets and liabilities
denominated in foreign currencies are translated into the functional
currency using the closing exchange rate. Non-monetary assets and
liabilities denominated in foreign currencies that are measured at
historical cost are translated at historical rates and non-monetary
items that are measured at fair value are translated using the closing
rate. Foreign currency gains and losses arising from foreign currency
transactions are reported in income from financial assets and liabil-
ities carried at fair value through income (net), except when the gain
or loss on a non-monetary item measured at fair value is recognized
in other comprehensive income. In this case, any foreign exchange
component of that gain or loss is also recognized in other compre-
hensive income.
Translation from the functional currency to the
presentation currency
For the purposes of the consolidated financial statements, the results
and financial position of each of the Allianz Group’s subsidiaries are
expressed in Euro, the presentation currency of the Allianz Group.
Assets and liabilities of subsidiaries not reporting in Euro are trans-
lated at the closing rate on the balance sheet date and income and
expenses are translated at the quarterly average exchange rate. Any
foreign currency translation differences, including those arising
from the equity method, are recorded in other comprehensive
income.
priNCipLes of aCCouNtiNG
for fiNaNCiaL iNstrumeNts
Recognition
Financial assets are generally recognized and derecognized on the
trade date, i.e. when the Allianz Group commits to purchase or sell
securities or incur a liability.
Financial instruments are initially recognized at fair value plus,
in the case of financial instruments not carried at fair value through
income, directly attributable transaction costs.
158
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Offsetting
Financial assets and liabilities are offset and the net amount is pre-
sented in the balance sheet only when there is a legally enforceable
right to offset the recognized amounts and there is an intention to
either settle on a net basis, or to realize the asset and settle the liabil-
ity simultaneously.
Derecognition
A financial asset is derecognized when the contractual rights to the
cash flows from the financial asset expire or the Allianz Group trans-
fers the asset and substantially all of the risks and rewards of owner-
ship. A financial liability is derecognized when it is extinguished.
Securities lending and repurchase agreements
The Allianz Group enters into securities lending transactions and
repurchase agreements. If all of the risks and rewards of the securi-
ties remain substantially with the Allianz Group these securities are
not derecognized. Cash received as collateral in securities lending
transactions is recognized together with a corresponding liability,
whereas securities received as collateral are not recognized under
the terms of the agreements if risks and rewards have not been trans-
ferred.
For repurchase agreements, the proceeds received from the sale
are reported under liabilities to banks or customers. Interest expenses
from repo transactions are accrued over the duration of the agree-
ments and reported in interest expenses. If for reverse repo trans-
actions all of the risks and rewards of the securities remain substan-
tially with the counterparty over the entire lifetime of the agreement
of the transaction, the securities concerned are not recognized as
assets. The amounts of cash disbursed are recorded under loans and
advances to banks and customers. Interest income on reverse repo
agreements is accrued over the duration of the agreements and is
reported in interest and similar income.
Securities borrowing transactions generally require the Allianz
Group to deposit cash with the security’s lender. Fees paid are reported
as interest expenses.
Impairments of available-for-sale and held-to-maturity
investments as well as loans and advances to banks and
customers
A held-to-maturity or available-for-sale debt security, as well as a
loan, is impaired if there is objective evidence that a loss event has
occurred after initial recognition of the security and up to the rele-
vant date of the Allianz Group’s consolidated balance sheet, and that
loss event has negatively affected the estimated future cash flows, i.e.
amounts due according to the contractual terms of the security are
not considered collectible. For available-for-sale debt securities, the
cumulative loss recognized in the other comprehensive income is
reclassified to profit or loss. The cumulative loss corresponds to the
difference between amortized cost and the current fair value of the
investment. Further declines in fair value are recognized in other
comprehensive income unless there is further objective evidence
that such declines are due to a credit-related loss event. If in subse-
quent periods objective evidence results in a fair value increase after
the impairment loss was recognized, the impairment loss is reversed
through the income statement. The reversal is measured as the lesser
of the full original impairment loss previously recognized in the
income statement and the subsequent increase in fair value. For
held-to-maturity investments and loans, the impairment loss is
measured as the difference between the amortized cost and the
expected future cash flows using the original effective interest rate. If
the amount of the impairment of a held-to-maturity debt security or
a loan subsequently increases or decreases due to an event occurring
after the initial measurement of impairment, the change is recorded
in the income statement.
For banking entities, valuation allowances of their loan book are
reported as loan loss allowances. For all non-banking entities, loans
to banks and customers have an investment character and valuation
allowances are reported as ‘impairments of investments’. For the
loan loss allowance reported by banking entities, please refer to notes
10 and 36. Allowances for loans to banks and customers by non-bank-
ing entities are reported in note 37.
An available-for-sale equity security is considered to be impaired
if there is objective evidence that the cost may not be recovered.
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 consid-
ers a decline to be significant if the fair value is below the weighted
average cost by more than 20 %. A decline is considered to be pro-
longed if the fair value is below the weighted average cost for a period
of more than nine months. If an available-for-sale equity security is
impaired, any further declines in the fair value at subsequent report-
ing dates are recognized as impairments. Therefore, at each report-
ing period, for an equity security that was determined to be impaired,
additional impairments are recognized for the difference between
the fair value and the original cost basis, less any previously recog-
nized impairment. Reversals of impairments of available-for-sale
equity securities are not recorded through the income statement but
recycled out of other comprehensive income when sold.
Please refer to note 3, where the processes and controls for
ensuring an appropriate use of estimates and assumptions are
explained.
Hedge accounting
For derivative financial instruments used in hedge transactions that
meet the criteria for hedge accounting, the Allianz Group designates
the derivative as a hedging instrument in a fair value hedge, cash flow
hedge, or hedge of a net investment in a foreign operation. The
Allianz Group documents the hedge relationship, as well as its risk
management objective and strategy for entering into the hedge
Annual Report 2014
Allianz Group
159
transaction. The Allianz Group assesses, both at the hedge’s incep-
tion and on an ongoing basis, whether the hedging instruments that
are used are expected to be highly effective in offsetting changes in
fair values or cash flows of the hedged items.
Fair value hedges are hedges of a change in the fair value of a
recognized financial asset or liability or an unrecognized firm com-
mitment due to a specified risk. Changes in the fair value of a deriva-
tive financial instrument, together with the change in fair value of the
hedged item attributable to the hedged risk, are recognized in
income from financial assets and liabilities carried at fair value
through income (net).
Cash flow hedges offset the exposure to variability in expected
future cash flows that is attributable to a particular risk associated
with a recognized asset or liability or a highly probable forecasted
transaction. Changes in the fair value of a derivative financial instru-
ment that represent an effective hedge are recorded in unrealized
gains and losses (net) in other comprehensive income, and are trans-
ferred to the consolidated income statement when the offsetting gain
or loss associated with the hedged item is recognized. Any ineffec-
tiveness of the cash flow hedge is recognized directly in income from
financial assets and liabilities carried at fair value through income
(net).
Furthermore, hedge accounting may be applied to derivative
financial instruments used to hedge the foreign currency risk associ-
ated with a net investment in a foreign operation. The effective pro-
portion of gains or losses arising from the measurement of the deriv-
ative financial instrument is recognized in foreign currency
translation adjustments in other comprehensive income, while any
ineffectiveness is recognized directly in income from financial assets
and liabilities carried at fair value through income (net).
The Allianz Group discontinues hedge accounting prospectively
when the hedge is no longer expected to be highly effective, when the
derivative financial instrument or the hedged item expires, or is sold,
terminated or exercised, or when the Allianz Group decides that
hedge accounting is no longer appropriate.
Derivative financial instruments designated in hedge accounting
relationships are included in the line item other assets and liabilities.
Freestanding derivatives are included in the line item financial
assets or liabilities held for trading. For further information on deriv-
atives, please refer to note 43.
Disclosures relating to financial instruments
The following table summarizes the relationship between the balance
sheet positions and the classes of financial instruments according to
IFRS 7. The balance sheet positions are the same as the IAS 39 categories
except when noted in parentheses.
BaLaNCe sheet LiNe items,
ias 39 CateGories aND ifrs 7 CLasses of fiNaNCiaL iNstrumeNts
fiNaNCiaL assets
Cash and cash equivalents
Financial assets carried at fair value through income
Financial assets held for trading
Financial assets designated at fair value through income
Investments
Available-for-sale investments
Held-to-maturity investments
Loans and advances to banks and customers
(Loans and receivables)
Financial assets for unit-linked contracts
Other assets
Measurement basis
Nominal value
Fair value
Fair value
Fair value
Amortized cost
Amortized cost
Fair value
Derivative financial instruments used for hedging that meet
the criteria for hedge accounting and firm commitments
Fair value
fiNaNCiaL LiaBiLities
Financial liabilities carried at fair value through income
Financial liabilities held for trading
Financial liabilities designated at fair value through income
Fair value
Fair value
Liabilities to banks and customers (Other liabilities)
Amortized cost
Reserves for insurance and investment contracts
Non-unit-linked investment contracts
Financial liabilities for unit-linked contracts
Other liabilities
Amortized cost
Fair value
Derivative financial instruments used for hedging that meet
the criteria for hedge accounting and firm commitments
Fair value
Financial liabilities for puttable equity instruments
Redemption amount
Certificated liabilities (Other liabilities)
Subordinated liabilities (Other liabilities)
off-BaLaNCe sheet
Financial guarantees
Irrevocable loan commitments
Amortized cost
Amortized cost
Nominal value
Nominal value
Please refer to note 44 for details on fair value measurement and
further disclosures under IFRS 7. Please refer to note 3, where the pro-
cesses and controls for ensuring an appropriate use of estimates and
assumptions are explained.
Cash aND Cash eQuiVaLeNts
Cash and cash equivalents include balances with banks payable on
demand, balances with central banks, cash on hand, treasury bills to
the extent they are not included in financial assets held for trading,
as well as checks and bills of exchange which are eligible for refinanc-
ing at central banks, subject to a maximum term of three months
from the date of acquisition.
160
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
fiNaNCiaL assets aND LiaBiLities
CarrieD at fair VaLue throuGh iNCome
Financial assets and liabilities carried at fair value through income
include financial assets and liabilities held for trading and financial
assets and liabilities designated at fair value through income. Finan-
cial assets and liabilities held for trading consist of debt and equity
securities that have been principally acquired for the purpose of gen-
erating a profit from short-term fluctuations in price or for the pur-
pose of selling in the near future as well as of derivative financial
instruments, which include bifurcated embedded derivatives of hybrid
financial instruments and of insurance contracts.
Financial assets and liabilities are designated at fair value
through income to eliminate or significantly reduce an accounting
mismatch. Subsidiaries must reach out to the Allianz Group Account-
ing and Reporting Department for approval before designating any
financial asset or liability as at fair value through income.
iNVestmeNts
Available-for-sale investments
Available-for-sale investments comprise debt and equity securities
that are designated as available-for-sale or are not classified as held-
to-maturity, loans and advances, or financial assets carried at fair
value through income. Available-for-sale investments are initially
recognized and subsequently measured at fair value. Unrealized
gains and losses, which are the difference between fair value and cost
or amortized cost, are recognized as a separate component of other
comprehensive income, net of deferred taxes and the latent reserve
for premium refunds to the extent that policyholders will participate
in such gains and losses on the basis of statutory or contractual reg-
ulations when they are realized. When an available-for-sale invest-
ment is derecognized or determined to be impaired, the cumulative
gain or loss previously recorded in other comprehensive income is
transferred and recognized in the consolidated income statement.
Realized gains and losses on securities are generally determined by
applying the average cost method at the subsidiary level.
Held-to-maturity investments
Held-to-maturity investments are debt securities with fixed or deter-
minable payments and fixed maturities for which the Allianz Group
has the positive intent and ability to hold to maturity. These securities
are initially recognized at fair value and subsequently measured at
amortized cost using the effective interest method.
Funds held by others under reinsurance contracts assumed
Funds held by others under reinsurance contracts assumed relate to
cash deposits to which the Allianz Group is entitled, but which the
ceding insurer retains as collateral for future obligations of the
Allianz Group. The cash deposits are recorded at face value, less any
impairment for balances that are deemed not to be recoverable.
Investments in associates and joint ventures
Please see the section principles of consolidation for details on the
accounting for investments in associates and joint ventures.
Real estate held for investment
Real estate held for investment (i.e. real estate and rights equivalent
to real property and buildings, including buildings on leased land) is
carried at cost less accumulated depreciation and impairments. Real
estate held for investment is depreciated on a straight-line basis over
its estimated life, with a maximum of 50 years. At each reporting date
or whenever there are any indications that the carrying amount may
not be recoverable, real estate is tested for impairment by determin-
ing its recoverable amount. Subsequent costs are capitalized if they
extend the useful life or increase the value of the asset; otherwise they
are expensed as incurred.
LoaNs aND aDVaNCes to BaNks aND Customers
Loans and advances are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and
which are not classified as financial assets held for trading, desig-
nated at fair value through income or designated as available for sale.
Loans and advances are initially recognized at fair value. Subse-
quently, they are measured at amortized cost using the effective
interest method. Interest income is accrued on the unpaid principal
balance, net of impairments. Using the effective interest method, net
deferred fees and premiums or discounts are recorded as an adjust-
ment of other interest income yield over the lives of the related loans.
fiNaNCiaL assets for uNit-LiNkeD CoNtraCts
Financial assets for unit-linked contracts are recorded at fair value
with changes in fair value recorded in the income statement togeth-
er with the offsetting changes in fair value of the corresponding finan-
cial liabilities for unit-linked contracts.
reiNsuraNCe assets
Assets and liabilities related to reinsurance are reported on a gross
basis. Reinsurance assets include balances expected to be recovered
from reinsurance companies. The amount of reserves ceded to re-
insurers is estimated in a manner consistent with the claim liability
associated with the reinsured risks. To the extent that the assuming
reinsurers are unable to meet their obligations, the respective ceding
insurers of the Allianz Group remain liable to its policyholders for the
portion reinsured. Consequently, allowances are made for receivables
on reinsurance contracts which are deemed uncollectible.
Annual Report 2014
Allianz Group
161
Shadow accounting
For insurance contracts and investment contracts with discretionary
participation features, shadow accounting is applied to DAC, PVFP
and deferred sales inducements in order to include the effect of unre-
alized gains or losses in the measurement of these 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.
DeferreD taX assets
The calculation of deferred tax assets is based on tax loss carry for-
wards, unused tax credits and on deductible temporary differences
between the Allianz Group’s carrying amounts of assets or liabilities
in its consolidated balance sheet and their tax bases. The tax rates
used for the calculation of deferred taxes are the local rates applicable
in the countries concerned; changes to tax rates which have been
substantively enacted prior to or as of the consolidated balance sheet
date are taken into account. Deferred tax assets are recognized only
to the extent it is probable that sufficient future taxable income will
be available for their realization.
Please refer to note 3, where the processes and controls for
ensuring an appropriate use of estimates and assumptions are
explained.
other assets
Other assets primarily consist of receivables, accrued dividends,
interest and rent as well as own-used property and equipment.
Receivables are generally recorded at face value less any pay-
ments received, net of valuation allowances.
Own-used property and equipment generally is carried at cost
less accumulated depreciation and impairments. The assets are
depreciated on a straight-line basis over their estimated useful lives.
Software, which includes software purchased from third parties
or developed internally, is initially recorded at cost and amortized on
a straight-line basis over the estimated useful service lives or contrac-
tual terms.
The Allianz Group also records the fixed assets of its fully con-
solidated private equity investments and alternative investments
within property and equipment. These assets are carried at cost less
accumulated depreciation and impairments. Depreciation is gener-
ally computed using the straight-line method over the estimated use-
ful lives of the assets.
DeferreD aCQuisitioN Costs
Deferred acquisition costs (DaC)
Costs that vary with and are directly related to the acquisition and
renewal of insurance contracts and investment contracts with dis-
cretionary participation features are deferred by recognizing a DAC
asset. DAC generally consists of commissions, underwriting expenses
and policy issuance costs. At inception, DAC is tested to ensure that it
is recoverable over the life of the contracts. Subsequently, loss recog-
nition tests at the end of each reporting period ensure that only the
amount of DAC that is covered by future profits is carried on the con-
solidated balance sheet. Please refer to the section reserves for insur-
ance and investment contracts, where details on the corresponding
liability adequacy test are explained.
For short-duration, traditional long-duration, and limited-pay-
ment insurance contracts, DAC is amortized in proportion to premium
revenue recognized. For universal life-type and participating life
insurance contracts as well as investment contracts with discretion-
ary participation features, DAC is generally amortized over the life of
a book of contracts based on estimated gross profits (EGP) or estimated
gross margins (EGm), respectively. EGP and EGm are based on best
estimate assumptions which are reviewed at the end of each reporting
period; the effect of changes is recognized in the reporting period’s
income statement.
Acquisition costs for unit-linked investment contracts without
discretionary participation features accounted for under IAS 39 at fair
value are deferred in accordance with IAS 18 if the costs are incremen-
tal. For non-unit-linked investment contracts without discretionary
participation features accounted for under IAS 39 at amortized cost,
acquisition costs that meet the definition of transaction costs under
IAS 39 are considered in the aggregate policy reserves.
Please refer to note 3, where the processes and controls for ensur-
ing an appropriate use of estimates and assumptions are explained.
Present value of future profits (pVfp)
The value of an insurance business or an insurance portfolio acquired
is measured by the PVFP, which is the present value of net cash flows
anticipated in the future from insurance contracts in force at the date
of acquisition. It is amortized over the life of the related contracts.
Deferred sales inducements
Sales inducements on insurance contracts are deferred and amor-
tized using the same methodology and assumptions as for deferred
acquisition costs when they meet the following criteria: the sales
inducements are recognized as part of the reserves, are explicitly
identified in the contract at inception and incremental to amounts
credited on similar contracts without sales inducements and higher
than the contract’s expected ongoing crediting rates for periods after
the inducement.
162
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
The table below summarizes estimated useful lives for real
estate held for own use, equipment, software and fixed assets of alter-
native investments.
priNCipLes of aCCouNtiNG for iNsuraNCe,
iNVestmeNt aND reiNsuraNCe CoNtraCts
estimateD usefuL LiVes (iN Years)
Real estate held for own use
Software
Equipment
Fixed assets of alternative investments
Insurance and investment contracts
Insurance contracts under which the Allianz Group accepts signifi-
cant insurance risk and investment contracts with discretionary par-
ticipating features are accounted for under the insurance accounting
provisions of US GAAP as at first-time adoption of IFRS 4 on 1 January
2005 when IFRS 4 does not provide specific guidance. Investment con-
tracts without discretionary participation features are accounted for
as financial instruments in accordance with IAS 39.
Years
max. 50
2 – 10
2 – 10
4 – 25
iNtaNGiBLe assets
Intangible assets with indefinite useful lives mainly consist of good-
will resulting from business combinations. It is initially determined
as the excess of the consideration transferred in a business combina-
tion and any non-controlling interest over the net identifiable assets
acquired. Goodwill is not amortized. It is evaluated at least annually
whether the goodwill is deemed recoverable. Goodwill is allocated to
each of the Allianz Group’s cash gener ating units expected to benefit
from the synergies of the business combination. The Allianz Group
conducts an annual impairment test of goodwill during the fourth
quarter or more frequently if there is an indication that goodwill is
not recoverable. The impairment test includes comparing the recov-
erable amount to the carrying amount, including goodwill, of all rel-
evant cash generating units. A cash generating unit is impaired if the
carrying amount is greater than the recoverable amount. The impair-
ment amount is allocated to first reduce any goodwill, followed by
allocation to the carrying amount of any remaining non-financial
assets of the cash generating unit. Impairments of goodwill are not
reversed. Gains or losses realized on the disposal of subsidiaries
include any related goodwill.
Intangible assets with finite useful lives primarily consist of dis-
tribution agreements. They are initially recorded at cost which gener-
ally is the purchase price plus directly attributable costs or, when
acquired with business combinations, at fair value if the intangible
asset is separable or arises from contractual or other legal rights and
its fair value can be measured reliably. Distribution agreements are
subsequently recorded at cost less accumulated depreciation and
impairments. The assets are generally depreciated on a straight-line
basis over their useful lives or contractual term.
Please refer to note 3, where the processes and controls for
ensuring an appropriate use of estimates and assumptions are
explained.
Reinsurance contracts
The Allianz Group’s consolidated financial statements reflect the
effects of ceded and assumed reinsurance contracts. Assumed rein-
surance refers to the acceptance of certain insurance risks by the
Allianz Group that other companies have underwritten. Ceded rein-
surance refers to the transfer of insurance risk, along with the respec-
tive premiums, to one or more reinsurers who will share in the risks.
When the reinsurance contracts do not transfer significant insur-
ance risk, deposit accounting is applied as required under the related
reinsurance accounting provisions of US GAAP or under IAS 39.
Assumed reinsurance premiums, commissions and claim settle-
ments, as well as the reinsurance element of technical provisions are
accounted for in accordance with the conditions of the reinsurance
contracts and with consideration of the original contracts for which
the reinsurance was concluded.
Insurance liability adequacy testing
Liability adequacy tests are performed for each insurance portfolio
on the basis of estimates of future claims, costs, premiums earned
and proportionate investment income. For short-duration contracts,
a premium deficiency is recognized if the sum of expected claim
costs and claim adjustment expenses, expected dividends to policy-
holders, DAC, and maintenance expenses exceeds related unearned
premiums while considering anticipated investment income.
For traditional long-duration contracts and limited-payment
contracts, if actual experience regarding investment yields, mortality,
morbidity, terminations or expense indicate that existing contract
liabilities, along with the present value of future gross premiums, will
not be sufficient to cover the present value of future benefits and to
recover DAC, a premium deficiency is recognized.
For other long-duration contracts, if the present value of esti-
mated gross profits or margins, plus unearned revenue liability, if
applicable, will not be sufficient to recover DAC, a premium deficiency
is recognized.
Please refer to note 3, where the processes and controls for ensur-
ing an appropriate use of estimates and assumptions are explained.
Annual Report 2014
Allianz Group
163
uNearNeD premiums
For short-duration insurance contracts, like most of the property and
casualty contracts, premiums to be earned in future years are recorded
as unearned premiums. These premiums are earned in subsequent
periods in relation to the insurance coverage provided.
Amounts charged as consideration for origination of certain
long-duration insurance contracts (i.e. initiation or front-end fees)
are reported as unearned revenue which are included in unearned
premiums. These fees are recognized using the same amortization
methodology as DAC.
reserVes for Loss aND Loss aDJustmeNt eXpeNses
Reserves are established for the payment of losses and loss adjust-
ment expenses (LAE) on claims which have occurred but are not yet
settled. Reserves for loss and loss adjustment expenses fall into two
categories: case reserves for reported claims and reserves for incurred
but not reported losses (IBnR).
Case reserves for reported claims are based on estimates of
future payments that will be made with respect to claims, including
LAE relating to such claims. The estimates reflect the informed judg-
ment of claims personnel based on general insurance reserving prac-
tices and knowledge of the nature and value of a specific type of claim.
These case reserves are regularly re-evaluated in the ordinary course
of the settlement process and adjustments are made as new informa-
tion becomes available.
IBnR reserves are established to recognize the estimated cost of
losses that have occurred but where the Allianz Group has not yet
been notified. IBnR reserves, similar to case reserves for reported
claims, are established to recognize the estimated costs, including
expenses, necessary to bring claims to final settlement. The Allianz
Group relies on its past experience, adjusted for current trends and
any other relevant factors to estimate IBnR reserves. IBnR reserves are
estimates based on actuarial and statistical projections of the
expected cost of the ultimate settlement and administration of
claims. The analyses are based on facts and circumstances known at
the time, predictions of future events, estimates of future inflation
and other societal and economic factors. Trends in claim frequency,
severity and time lag in reporting are examples of factors used in
projecting the IBnR reserves. IBnR reserves are reviewed and revised
periodically as additional information becomes available and actual
claims are reported.
In general, reserves for loss and loss adjustment expenses are
not discounted, except when payment amounts are fixed and timing
is reasonably determinable. Discounted loss reserves as well as their
unwinding are presented within reserves for insurance and invest-
ment contracts to better reflect the nature of the reserves and to only
reflect the net underwriting result within the key performance indi-
cator combined ratio.
reserVes for iNsuraNCe aND iNVestmeNt CoNtraCts
Reserves for insurance and investment contracts include aggregate
policy reserves, reserves for premium refunds and other insurance
reserves.
Aggregate policy reserves
The aggregate policy reserves for participating life insurance con-
tracts are calculated using the net level premium method based on
assumptions for mortality, morbidity and interest rates that are guar-
anteed in the contract or used in determining the policyholder divi-
dends (or premium refunds).
For traditional long-duration insurance contracts, such as tradi-
tional life and health products, aggregate policy reserves are com-
puted using the net level premium method based on best estimate
assumptions adjusted for a provision for adverse deviation for mor-
tality, morbidity, expected investment yields, surrenders and expen-
ses at the policy inception date, which remain locked in thereafter
unless a premium deficiency occurs.
The aggregate policy reserves for universal life-type insurance
contracts are equal to the account balance, which represents premi-
ums 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 con-
tracts 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.
Universal life-type and investment-type insurance contracts
features which are not closely related to the underlying insurance
contracts are bifurcated from the insurance contracts and accounted
for as derivatives in line with IFRS 4 and IAS 39.
The assumptions used for aggregate policy reserves are deter-
mined 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 experi-
ence 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
Deferred acquisition costs
Aggregate policy reserves
Traditional
long-duration
insurance contracts
Participating life
insurance contracts
2.5 – 6.0 %
2.5 – 6.0 %
2.2 – 5.0 %
0.8 – 4.3 %
164
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
The Allianz Group has recognized all rights and obligations related
to issued insurance contracts according to its accounting policies,
and thus has not separately recognized an unbundled deposit com-
ponent in respect of any of its insurance contracts.
Non-unit-linked investment contracts without discretionary
participating features are accounted for under IAS 39. The aggregate
policy reserve for those contracts is initially recognized at fair value,
or the amount of the deposit by the contract holder, net of the trans-
action costs that are directly attributable to the issuance of the con-
tract. Subsequently, those contracts are measured at amortized cost
using the effective interest rate method.
Please refer to note 3, where the processes and controls for ensur-
ing an appropriate use of estimates and assumptions are explained.
Reserves for premium refunds
Reserves for premium refunds include the amounts allocated under
the relevant local statutory/contractual regulations or at the entity’s
discretion to the accounts of the policyholders and the amounts
resulting from the differences between these IFRS-based financial
statements and the local financial statements (latent reserve for pre-
mium refunds), which will reverse and enter into future profit par-
ticipation calculations. Unrealized gains and losses recognized for
available-for-sale investments are recognized in the latent reserve for
premium refunds to the extent that policyholders will participate in
such gains and losses on the basis of statutory or contractual regula-
tions when they are realized, based on and similar to shadow account-
ing. The profit participation allocated to participating policyholders
or disbursed to them reduces the reserve for premium refunds.
fiNaNCiaL LiaBiLities for uNit-LiNkeD CoNtraCts
The fair value measurement of financial liabilities for unit-linked
contracts is equal to the fair value measurement of the financial
assets for unit-linked contracts.
DeferreD taX LiaBiLities
Deferred tax liabilities are recognized for temporary differences be-
tween the Allianz Group’s carrying amounts of assets or liabilities in
its consolidated balance sheet and their tax bases.
other LiaBiLities
Other liabilities primarily consist of payables, provisions for pensions
and similar obligations, employee-related provisions, deposits
retained for reinsurance ceded, and financial liabilities for puttable
equity instruments.
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.
Please refer to note 3, where the processes and controls for
ensuring an appropriate use of estimates and assumptions are
explained.
Share-based compensation plans
The share-based compensation plans of the Allianz Group are classi-
fied 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 cash-
settled 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 restructur-
ing plan has started.
Please refer to note 3, where the processes and controls for ensur-
ing an appropriate use of estimates and assumptions are explained.
Financial liabilities for puttable equity instruments
Financial liabilities for puttable equity instruments primarily in-
clude the non-controlling interests in the net assets of controlled
mutual funds. These interests qualify as a financial liability of the
Allianz Group, as they give the holder the right to put the instrument
back to the Allianz Group for cash or another financial asset (putta-
ble instrument). These liabilities are generally required to be record-
ed at the redemption amount with changes recognized in the income
statement.
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.
Annual Report 2014
Allianz Group
165
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.
Retained earnings comprise the net income of the current year,
not yet distributed earnings of prior years and treasury shares as
well as any amounts directly recognized in equity according to IFRS.
Treasury shares are deducted from shareholders’ equity. No gain or
loss is recognized on the sale, issuance, acquisition or cancellation
of these shares. Any consideration paid or received is recorded
directly in shareholders’ equity.
Please refer to the above section on foreign currency translation,
where foreign currency changes that are recognized in other compre-
hensive income are explained. The effective portion of gains and
losses of hedging instruments designated as hedges of a net invest-
ment in a foreign operation is also recognized in foreign currency
translation adjustments.
Unrealized gains and losses (net) include unrealized gains and
losses from available-for-sale investments and derivative financial
instruments that meet the criteria for cash flow hedge accounting.
Non-controlling interests represent equity in subsidiaries, not
attributable directly or indirectly, to Allianz as parent.
PREMIUMS
Premiums for short-duration insurance contracts are recognized as
revenues over the period of the contract in proportion to the amount
of insurance protection provided. Unearned premiums are calculated
separately for each individual policy to cover the unexpired portion of
written premiums.
Premiums for long-duration insurance contracts are recognized
as earned when due. Long-duration insurance contracts are con-
tracts that are not cancelable by the insurance company, guaranteed
to be renewable and expected to remain in force over an extended
period of time.
Revenues for universal life-type and investment contracts repre-
sent charges assessed against the policyholders’ account balances
for the front-end loads, net of the change in unearned revenue liability,
cost of insurance, surrenders and policy administration, and are
included within premiums earned (net).
Premiums ceded for reinsurance are deducted from premiums
earned.
INTEREST AND SIMILAR INCOME AND INTEREST ExPENSES
Interest income and interest expenses are recognized on an accrual
basis. Interest income is recognized using the effective interest
method. This line item also includes dividends from available-for-
sale equity securities and income from investments in associates
and joint ventures. Dividends are recognized in income when the
right to receive the dividend is established. Share of earnings from
investments in associates and joint ventures represents the share of
net income from entities accounted for using the equity method.
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 manage-
ment 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 bal-
ances. 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.
Please refer to note 3, where the processes and controls for
ensuring an appropriate use of estimates and assumptions are
explained.
3 – Use of estimates and assumptions
The preceding note 2 describes the accounting policies that the
Allianz Group follows in preparing its consolidated financial state-
ments. The section below describes how certain reported figures can
be significantly affected by the use of estimates and assumptions,
and the processes the Allianz Group has in place to control the judg-
ments which are made.
Both sides of the Allianz Group’s balance sheet have a high
degree of estimation and numerous assumptions embedded in the
valuation of assets and liabilities. The estimation process and selec-
tion of appropriate assumptions requires significant judgment to be
166
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
applied and management decisions to be taken in order to establish
appropriate values for these assets and liabilities. Any change in the
assumptions and estimates could, in certain circumstances, signifi-
cantly affect the reported results and values because the range of
reasonable judgment in some cases may be very large. The Allianz
Group understands the degree of impact that these judgments may
have and has established a strong system of governance as well as
controls, procedures and guidelines to ensure consistency and
soundness over these judgments.
Subsidiaries of the Allianz Group are required to establish con-
trols which promote a culture of good judgment and sound decision-
making around accounting estimates. These include providing train-
ing programs, hiring people with the right background for the job (i.e.
certified or experienced accountants, actuaries and finance profes-
sionals), and providing formalized policies and procedures manuals
for accounting and internal controls.
At the Allianz Group level, processes and committees have been
established to ensure sound judgment and consistent application of
the Allianz Group’s standards. Furthermore, the Allianz Group has a
culture that is strongly committed to reliability, encourages open and
transparent discussions, provides a venue for asking questions and
admitting mistakes, recognizes experts and expertise, and respects
the four eyes principle of review. Committees, none of which are
chaired by the CFO of the Allianz Group, ensure that judgmental deci-
sions and selection of assumptions are discussed in an open setting
among experts and that inconsistencies are identified and resolved.
Complex accounting areas that are especially sensitive to the
estimates and assumptions are described in the following sections.
reserVes for Loss aND Loss aDJustmeNt eXpeNses,
reserVes for iNsuraNCe aND iNVestmeNt CoNtraCts
aND DeferreD aCQuisitioN Costs
As of 31 December 2014, the Allianz Group reported:1
− reserves for loss and loss adjustments expenses of € 68,989 mn
mainly for the Property-Casualty operations, including run-off
business and reinsurance business assumed,
− reserves for insurance and investment contracts of € 463,334 mn
mainly for the Life/Health operations, and
− deferred acquisition costs of € 22,262 mn.
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.
For Life/Health and for Property-Casualty the central oversight pro-
cess includes the following key components:
Group-wide standards and guidelines: They define the reserving
practices which must be conducted by each subsidiary including
aspects of assumptions and estimates. This includes the organiza-
tion and structure, data, methods, and reporting. The Allianz Group
Actuarial Department monitors compliance with these standards
and guidelines.
Regular site visits: The Allianz Group Actuarial Department regu-
larly visits Allianz subsidiaries in order to ensure that they apply the
group-wide standards and guidelines. The on-site review focuses on
all significant changes in assumptions and methodologies as well as
on procedures and professional practices relevant for the reserving
process. Furthermore, these meetings are to update knowledge of the
underlying local business developments.
Regular quantitative and qualitative reserve monitoring: On a
quarterly basis, the Allianz Group Actuarial Department monitors
reserve levels, movements and trends across the Allianz Group. This
monitoring is conducted on the basis of quarterly data submitted
by the subsidiaries as well as through frequent dialogue with local
actuaries.
The oversight and monitoring of the Allianz Group’s reserves
culminate in quarterly meetings of the Allianz Group Reserve Com-
mittee, which is the supervising body that governs all significant
reserves. It particularly monitors key developments across the Allianz
Group affecting the adequacy of loss reserves.
Life/Health reserves are dependent on estimates and assump-
tions, especially on the life expectancy and health of an insured indi-
vidual (mortality, longevity and morbidity risk) and on the develop-
ment of interest rates and investment returns (asset-liability
mismatch risk). These assumptions also have an impact on the pre-
sentation 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 consis-
tent and plausible assumptions. The appropriateness of the reserves
and compliance with the group-wide standards is confirmed by the
local actuary.
Stage two: The Allianz Group Actuarial Department regularly
reviews the local reserving processes, including the appropriateness
and consistency of assumptions, and analyzes the movements of
reserves. Any adjustments to reserves and other insurance-related
reporting items are reported to and analyzed together with the
Allianz Group Reserve Committee.
Annual Report 2014
Allianz Group
167
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.
Estimates and assumptions are particularly significant when deter-
mining the fair value of financial instruments for which at least one
significant input is not based on observable market data (classified
within level 3 of the fair value hierarchy). The availability of market
information is determined by the relative trading levels of identical
or similar instruments in the market, with emphasis placed on infor-
mation that represents actual market activity or binding quotations
from brokers or dealers. When appropriate, values are adjusted on
the basis of available market information including pricing, credit-
related factors, volatility levels, and liquidity considerations. If suffi-
cient market information is unavailable, management’s best esti-
mate of a particular input is used to determine the value.
The evaluation of whether a financial debt security is impaired
requires analysis of the underlying credit risk/ quality of the relevant
issuer and involves significant management judgment. In particular,
current publicly available information relating to the issuer and the
particular security is considered relating to factors including, but not
limited to, evidence of significant financial difficulty of the issuer and
breach of contractual obligations of the security, such as a default or
delinquency on interest or principal payments. The Allianz Group
also considers other factors which could provide objective evidence
of a loss event, including the probability of bankruptcy and the lack
of an active market due to financial difficulty. The presence of either
a decline in fair value below amortized cost or the downgrade of an
issuer’s credit rating does not by itself represent objective evidence
of a loss event, but may represent objective evidence of a loss event
when considered with other available information.
In general, the subsidiaries assume responsibility for assessing
fair values and evaluating impairments of financial instruments.
This process is consistent with the decentralized organizational
structure and reflects the fact that local managers are often best
suited to analyze securities trading in local markets. Nevertheless,
the subsidiaries are responsible for adhering to the Allianz Group’s
internal control policy regarding impairment assessment, mea-
surement and disclosure. Subsidiaries must report all impairment
decisions on debt securities to the Allianz Group Accounting and
Reporting department, which then reviews them for consistency and
resolves discrepancies.
Property-Casualty reserves are set by leveraging the use of actu-
arial 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 in the Allianz operating entities. Reserves are set
based on a thorough analysis of historical data, enhanced by interac-
tions with other business functions (e.g. Underwriting, Claims and
Reinsurance). Actuarial judgment is applied where necessary, espe-
cially in the cases where data is unreliable, scanty or unavailable. The
judgment of Property-Casualty actuaries is based on past experience
of the characteristics of each line of business, the current stage of the
underwriting cycle and the external environment in which the sub-
sidiary operates. The reserves are proposed to a local reserve com-
mittee, whereby the rationale of the selections are discussed and
subsequently documented. A final decision on the reserve selection
is made in the reserve committee. Local actuaries are responsible for
their compliance with the Group Actuarial Standards and Guidelines.
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 regu-
lar 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 instru-
ments 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)
− € 381,659 mn of the financial assets and € 4,135 mn of the financial
liabilities carried at fair value are classified within level 2 of the
fair value hierarchy (valuation techniques with mainly observ-
able market inputs)
− € 14,037 mn of the financial assets and € 7,310 mn of the financial
liabilities carried at fair value are classified within level 3 of the
fair value hierarchy (valuation techniques with significant input
1
Please refer to the consolidated financial statements note 2 Summary of significant accounting policies,
note 37 Impairments of investments (net) and note 44 Financial instruments for further details regarding
financial instruments and impairments.
168
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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.
For some subsidiaries where the Allianz Group does not hold a
majority stake, management has assessed that the Allianz Group
controls these companies. The Allianz Group controls these entities
on the basis of distinctive rights stipulated by shareholder agree-
ments between the Allianz Group and the other shareholders in
these companies.
There are some companies where the Allianz Group holds a
majority stake but where management has assessed that the Allianz
Group does not control these entities because it has no majority
representation in the governing bodies and/or it requires at least the
confirmative vote of another investor to pass any decisions over rel-
evant activities.
Although the Allianz Group’s share in some companies is below
20 %, management has assessed that the Allianz Group has signifi-
cant influence over these companies because it is represented in the
governing bodies that decide on the relevant activities of these com-
panies.
To determine control for investment funds managed by the
Allianz Group, management considers in particular the remunera-
tion 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 appro-
priate inclusion method of these investment funds.
For certain investment funds managed by the Allianz Group in
which the Allianz Group holds a minority stake, management has
assessed that the Allianz Group controls these investment funds
because of its asset management role combined with its aggregate
economic interest in these investment funds.
For certain investment funds managed by third parties where
the Allianz Group holds a majority stake, management has assessed
that the Allianz Group does not control these investment funds
because it has neither a majority representation in the governing
bodies of these investment funds nor any substantial removal rights
to replace the asset manager.
For certain investment funds in which the Allianz Group holds
a stake of above 20 %, management has assessed that the Allianz
Group has no significant influence because it is not represented in
the governing bodies of these investment funds.
Pursuant to IFRS 11, investments in joint arrangements have to
be classified as either joint operations or joint ventures depending
on the contractual rights and obligations of each investor. The Allianz
Group has assessed the nature of all its joint arrangements and
determined them to be joint ventures.
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
− € 2,440 mn related to the business segment Property-Casualty
− € 2,232 mn related to the business segment Life/Health
− € 7,187 mn related to the business segment Asset Management
and
− € 307 mn related to the business segment Corporate and Other.
Goodwill represents the excess of the consideration transferred in a
business combination and any non-controlling interest over the net
identifiable assets acquired. Upon acquisition, goodwill is allocated
to the cash generating units (CGUs) that are expected to benefit from
the synergies of the acquisition. Since goodwill is not amortized, the
Allianz Group must evaluate at least annually whether the carrying
value per CGU is deemed recoverable. This is assumed as long as the
carrying value is not in excess of the unit’s estimated recoverable
amount. If it is not deemed recoverable, the excess goodwill will need
to be impaired.
The recoverable amounts of all cash generating units are typi-
cally determined on the basis of value in use calculations. The deter-
mination of a CGU’s recoverable amount requires significant judg-
ment regarding the selection of appropriate valuation techniques
and assumptions. These assumptions include selection of appropri-
ate discount rates, planning horizons, capitalization requirements
and the expected future business results. Assumptions may need to
change as economic, market and business conditions change. As
such, the Allianz Group continuously evaluates external conditions
and the operating performances of the CGUs.
The Allianz Group’s processes and controls around the estima-
tion 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 param-
eters of the well-defined planning and controlling processes. Impor-
tant input factors for those calculations are the business plan, the esti-
mate 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.
Annual Report 2014
Allianz Group
169
with regard to key value drivers, such as projected long-term com-
bined ratios or discount rates. Furthermore, the Allianz Group
reviews market-based business transaction multiples where avail-
able. This information is used to assess reasonableness since directly
comparable market value information is not generally available. The
Allianz Group believes that the controls over assessing the recover-
ability of goodwill ensure both consistent and reliable results.
DeferreD taX assets
As of 31 December 2014, the Allianz Group reported deferred tax
assets of € 1,046 mn. The deferred tax assets before netting with
deferred tax liabilities amounted to € 17,887 mn. € 1,585 mn thereof
resulted from tax losses which are carried forward to future periods.1
Deferred tax assets are determined based on tax loss carry for-
wards, unused tax credits and on deductible temporary differences
between the Allianz Group’s carrying amounts of assets and liabili-
ties in its consolidated balance sheet and their tax bases. Deferred
tax assets are recognized only to the extent it is probable that suffi-
cient future taxable income will be available for their realization.
Assessments as to the recoverability of deferred tax assets require the
use of judgment regarding assumptions related to estimated future
taxable profits. This includes the character and amounts of taxable
future profits, the periods in which those profits are expected to occur
as well as the availability of tax planning opportunities.
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 profes-
sionals. 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 pre-
ceding 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
Liabilities for pension and similar obligations and related net
pension expenses are determined in accordance with actuarial valu-
ation models. These valuations rely on extensive assumptions. Key
assumptions including discount rates, inflation rates, compensation
increases, pension increases and rates of medical cost trends are
defined centrally at the Allianz Group level considering the circum-
stances in the particular countries. In order to ensure their thorough
and consistent determination, all input parameters are discussed
and defined, taking into consideration economic developments, peer
reviews as well as currently available market and industry data. The
discount rate assumptions are determined by reference to yields of
high-quality corporate bonds of appropriate duration and currency
at the balance sheet date. In countries where there is no deep market
in such bonds, market yields on government bonds are generally
used as discount rates.
Due to changing market and economic conditions, the under-
lying 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.
restruCturiNG proVisioNs
As of 31 December 2014, the Allianz Group reported a provision for
restructuring programs of € 109 mn.3
Provisions for restructuring programs are recognized when the
Allianz Group has a detailed formal plan for the restructuring and
has raised a valid expectation in those affected that it will carry out
the restructuring by starting to implement the plan or by announcing
its main features. The detailed formal plan of a restructuring pro-
gram is based on several estimates and assumptions, such as the
number of employees to be dismissed, amount of severance pay-
ments, impacts of onerous contracts, possibilities of sub-leases, tim-
ing of the various steps of the program and in consequence timing of
the expected cash flows.
Generally, the subsidiaries which are undertaking the restruc-
turing program, set up a formal plan and determine all underlying
estimates and assumptions. Therefore, it is the Allianz Group’s policy
that the subsidiaries are responsible for an adequate planning pro-
cess, controlling the execution of the program, and for the fulfillment
of all requirements of IFRS. The respective documentation has to be
submitted to the Allianz Group Accounting and Reporting depart-
ment, where qualified staff members review all restructuring pro-
grams. This includes a review of all estimates and assumptions, and
an assessment of whether all requirements for setting up a restruc-
turing provision are satisfied, including which cost components can
be treated as restructuring charges.
1
2
Please refer to note 2 Summary of significant accounting policies and note 42 Income taxes for further
details.
Please refer to note 2 Summary of significant accounting policies and note 48 Pensions and similar obliga-
tions for further details.
3
Please refer to note 2 Summary of significant accounting policies and note 50 Restructuring plans for
further details.
170
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
4 – Recently adopted and issued
accounting pronouncements
recently adopted accounting pronouncements
effective 1 January 2014
iFrss 10, 11, 12, Amendments to ias 27 and 28
– Consolidation
As of 1 January 2014, the Allianz Group implemented IFRSs 10, 11 and
12 as well as amendments to IAS 27 and IAS 28.
IFRS 10, Consolidated Financial Statements, superseded the
requirements of IAS 27, Consolidated and Separate Financial State-
ments and SIC-12, Consolidation – Special Purpose Entities. IFRS 10
establishes a single control concept as the basis for determining
which entities are to be included in the consolidated financial state-
ments because they are controlled by the reporting entity. The exis-
tence of control is based on the following three elements:
− power over the investee,
− exposure, or rights, to variable returns from the involvement
with the investee, and
− the ability to use power over the investee to affect the amount of
the investor’s returns.
The following table presents the impacts of the implementation of
IFRS 10 on the consolidated balance sheet as of 31 December 2013.
cHange oF consolidated Balance sHeet as oF 31 decemBer 2013
relating to tHe implementation oF iFrs 10
€ mn
as of 31 December 2013
Financial assets carried at
fair value through income
Investments
Total assets
Other liabilities
Total liabilities
As previously
reported
Adoption of
iFrs 10
As reported
7,245
411,015
711,530
36,883
658,682
(585)
133
(452)
(452)
(452)
6,660
411,148
711,079
36,431
658,230
Total liabilities and equity
711,530
(452)
711,079
Allianz Group. In total, these changes in the scope of consolidation
led to a reduction of the balance sheet total of € 452 mn as of the date
IFRS 10 was adopted.
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 consoli-
dated statements of cash flows is immaterial.
IFRS 11, Joint Arrangements, superseded IAS 31, Interests in Joint
Ventures, and SIC-13, Jointly Controlled Entities – Non-Monetary Con-
tributions by Ventures. The IFRS requires a party to a joint arrangement
to determine the type of joint arrangement in which it is involved by
assessing its rights and obligations arising from the arrangement.
The IFRS classifies joint arrangements into two types: joint operations
and joint ventures. For joint operations the reporting entity has to
recognize and measure the assets and liabilities (and recognize the
related revenues and expenses) in relation to its interest in the
arrangement in accordance with relevant IFRSs applicable to the par-
ticular assets, liabilities, revenues and expenses. In contrast, for joint
ventures the reporting entity has to recognize an investment and to
account for that investment using the equity method in accordance
with IAS 28. The application of IFRS 11 had no material impact on the
financial position and the financial results of the Allianz Group.
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 posi-
tion and financial results of the Allianz Group.
IFRS 12, Disclosure of Interests in Other Entities, contains disclo-
sure requirements previously set out in IASs 27, 28 and 31. Further-
more, 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.
Further adopted accounting pronouncements
In addition to the implementation of IFRSs 10, 11, 12 and the amend-
ments to IAS 27 and IAS 28 the following amendments and revisions
to existing standards became effective for the Allianz Group’s con-
solidated financial statements as of 1 January 2014:
The adoption of IFRS 10 required the additional consolidation of cer-
tain investment funds where the Allianz Group has the ability to
direct the relevant asset management activities without having a
majority investment. In contrast, numerous third-party managed
investment funds in which the Allianz Group has invested were
deconsolidated to the extent that the Allianz Group cannot exercise
power. Furthermore, IFRS 10 led to the deconsolidation of certain
investment funds related to unit-linked contracts because invest-
ment decisions over these assets are not in the discretion of the
− IAS 36, Recoverable Amount Disclosures for Non-Financial Assets,
− IAS 32, Offsetting Financial Assets and Financial Liabilities,
− IAS 39, Novation of Derivatives and Continuation of Hedge
Accounting.
The Allianz Group adopted the revisions and amendments as of
1 January 2014, with no material impact on its financial results or
financial position.
Annual Report 2014
Allianz Group
171
reCentlY issued aCCountinG pronounCements
effective on or after 1 January 2015 and not adopted early
iFrs 9, Financial Instruments
IFRS 9, Financial Instruments, was issued by the IASB in July 2014 and
will replace IAS 39 with a new standard. IFRS 9 provides a new
approach on how to classify financial instruments based on their
cash flow characteristics and the business model under which they
are managed. Furthermore, the standard introduces a new impair-
ment model for debt instruments based on expected credit losses,
while equity investments will no longer be subject to impairment
under IFRS 9. The new hedge accounting rules in IFRS 9 provide more
opportunities to apply hedge accounting and aim to better align risk
management and accounting in order to improve the information
about risk management.
The effective date announced by the IASB is 1 January 2018, while
early application is permitted. However, IFRS 9 has not yet been
endorsed by the European Union. The Allianz Group is currently
evaluating the impact of adopting IFRS 9 on its consolidated financial
statements.
Further amendments and interpretations
standard/interpretation
iFriC 21, Levies
ias 1, Disclosure Initiative
ias 19, Defined Benefit Plan: Employee Contributions
Annual Improvements to iFrss 2010 – 2012
Annual Improvements to iFrss 2011 – 2013
Annual Improvements to iFrss 2012 – 2014
iFrs 15, Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, Revenue from Contracts with
Customers. IFRS 15 supersedes IAS 18, Revenue, IAS 11, Construction
Contracts, and a number of revenue-related interpretations. With the
introduction of IFRS 15, the IASB pursued the objective of developing
a single revenue standard containing comprehensive principles for
recognizing revenue. As the core IFRS 15 principle an entity recog-
nizes revenue from contracts with customers when and to the extent
that it transfers promised goods or services to the customer. The new
standard includes a set of quantitative and qualitative disclosure
requirements providing information about the nature, amount, tim-
ing and uncertainty of revenue and cash flows arising from the entity’s
contracts with customers.
The new standard is generally effective for periods beginning on
or after 1 January 2017; earlier application is permitted. The Allianz
Group is currently evaluating the impact of IFRS 15 on its consoli-
dated financial statements. Allianz Group will decide on the applica-
tion date of IFRS 15 once it has been endorsed by the E.U.
Further amendments and interpretations
In addition to the above-mentioned recently issued accounting pro-
nouncements, the following amendments and revisions to standards
and interpretations have been issued by the IASB but are not yet
effective for or adopted early by the Allianz Group.
eFFeCtiVe date
Annual periods beginning on or after 17 June 2014
Annual periods beginning on or after 1 January 2016 (not yet endorsed by e.u.)
Annual periods beginning on or after 1 July 2014
Annual periods beginning on or after 1 July 2014
Annual periods beginning on or after 1 July 2014
Annual periods beginning on or after 1 January 2016 (not yet endorsed by e.u.)
iFrs 11, Accounting for Acquisitions of Interests in Joint Operations
Annual periods beginning on or after 1 January 2016 (not yet endorsed by e.u.)
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
Annual periods beginning on or after 1 January 2016 (not yet endorsed by e.u.)
The amendments and interpretations are not expected to have a
material impact on the financial position and financial results of the
Allianz Group. Early adoption is generally allowed but not intended
by the Allianz Group.
other reClassiFiCations
Certain prior-period amounts have been reclassified to conform to
the current period presentation.
172
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
5 – Consolidation
scope oF consolidation
The number of entities by type listed in the table below is included in
the scope of consolidation in addition to the parent company
Allianz SE.
scope oF consolidation
Number of fully consolidated entities (subsidiaries)
Germany
Other countries
Subtotal
Number of fully consolidated investment funds
Germany
Other countries
Subtotal
Total number of fully consolidated entities
Number of joint ventures valued at equity
Number of associates valued at equity
2014
2013
131
695
826
37
40
77
903
26
58
130
690
820
38
38
76
896
23
108
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.
signiFicant acquisitions
signiFicant acquisitions
Equity interest
Date of initial
consolidation
Segment
2014
Part of Property-Casualty insurance business of UnipolSai
Assicurazioni S.p.A., Bologna
2013
HsBc Taiwan Life branch, Taipei
Yapı Kredi Sigorta a.Ş., Istanbul
Business portfolios from Pastor Vida s.a. de Seguros y
Reaseguros, Madrid
1
At the date of initial consolidation.
Goodwill1
€ mn
Transaction
%
–
–
1 July 2014
Property-Casualty
257
Acquisition
21 June 2013
Life/Health
94.0
12 July 2013
Property-Casualty
–
31 December 2013
Life/Health /
Asset Management
–
222
–
Acquisition
Acquisition
Acquisition
In the following section all significant acquisitions during the year
ended 31 December 2014 are described.
Part of Property-Casualty insurance business of UnipolSai
Assicurazioni S.p.A., Bologna
Effective 1 July 2014, the Allianz Group acquired specific distribution
activities of the Property-Casualty insurance business of UnipolSai
Assicurazioni S.p.A., Bologna (“Distribution Activities”). The acquired
Distribution Activities include, inter alia, a network of 725 agencies
Annual Report 2014
Allianz Group
173
and 470 employees. Effective 31 December 2014, the Allianz Group
additionally received the Property-Casualty insurance in-force port-
folio 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 pre-
miums 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
Cash and cash equivalents
Deferred acquisition costs
Deferred tax assets
Other assets
Intangible assets
Total assets
Unearned premiums
Other liabilities
Total liabilities
Total net identifiable assets
Distribution
Activities
as of 1 July 2014
Portfolio as of
31 December
2014
–
–
4
28
113
145
–
(27)
(27)
118
154
39
–
49
1
243
(231)
(11)
(242)
1
the Allianz Group during the second half of 2014 and (ii) policies
transferred with the Portfolio. A payment of € 179 mn was pro-
cessed 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
Total consideration allocated to the Distribution Activities consisting
of € 200 mn initial payment plus € 175 mn contingent consideration
Total net identifiable assets of the Distribution Activities
Goodwill
Fair value
375
118
257
Intangible assets consist of the customer relationships related to the
acquired agency network and the present value of the transferred in-
force business.
Other assets mainly include receivables from policyholders for
premiums due and receivables from agents.
Other liabilities comprise mainly payables to agents and
employees. The assumed other liabilities related to the Distribution
Activities are provisional due to the pending receipt of the final valu-
ations of those liabilities.
The carrying amounts allocated to the identifiable assets and
liabilities of the Portfolio are provisional due to pending receipt of the
final valuations of those assets and liabilities.
The aggregate consideration for the acquired Property-Casualty
insurance business of UnipolSai Assicurazioni S.p.A. amounted to a
maximum of € 440 mn. It includes:
− a payment of € 200 mn processed on 30 June 2014; plus
− a contingent consideration of up to € 240 mn, calculated as a per-
centage of the premiums generated by (i) policies renewed by
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.
Acquisition-related costs in the amount of € 8 mn (including
€ 6 mn registration taxes and € 2 mn legal and consulting fees) are
included in administrative expenses. Further acquisition-related
costs in the amount of € 6 mn are expected to be incurred in the first
quarter of 2015.
The impact of the acquired Property-Casualty insurance busi-
ness 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 insur-
ance 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.
174
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
signiFicant acquisition aFter tHe reporting date
Property-Casualty insurance business of
the Territory Insurance Office (tio), Darwin
Effective 1 January 2015, the Allianz Group acquired the Property-
Casualty insurance business of the Territory Insurance Office (TIO
Business), Darwin, and entered into a 10-year agreement to manage
the compulsory motor accidents compensation scheme (mAC Con-
tract). The acquired TIO Business includes, inter alia, all relevant
insurance assets and liabilities, operations, employees and the brand
related to the TIO Business.
The acquired TIO Business represents insurance activities with
premiums equal to approximately € 88 mn (for the year 2014). It pro-
vides the necessary scale for the Allianz Group to implement a
growth strategy in Northern Australia and to respond to the relation-
ship challenges in existing financial institution and broker partner-
ships because of a current lack of presence.
The preliminary total consideration paid in cash amounts to
€ 154 mn. This preliminary consideration was partly determined by
reference to the net asset value of the TIO Business as of 30 June 2014
and is subject to change according to the movements in the net asset
value of the TIO Business until 31 December 2014.
Total identifiable assets and liabilities expected to be recognized
as of 1 January 2015 amount to approximately € 0.3 Bn and € 0.2 Bn,
respectively. At the time the consolidated financial statements were
authorized for issue, the purchase accounting for the business com-
bination was not entirely completed due to the pending receipt of the
final valuations for investments, intangible assets, insurance liabili-
ties and reinsurance assets, deferred taxes, and other liabilities.
It is expected that goodwill will result from the business combi-
nation which will reflect largely the benefits associated with cost and
reinsurance synergies and the ability to revert to an existing infra-
structure in a new geographical market.
None of this goodwill that will be recognized is expected to be
deductible for income tax purposes.
Acquisition-related costs in the amount of € 1 mn are included
in administrative expenses.
signiFicant disposals and deconsolidations
During 2014 and 2013, no significant disposals or deconsolidations
occurred.
signiFicant disposal aFter tHe reporting date
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 reor-
ganization 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.
signiFicant cHanges in non-controlling interests
acquisitions oF signiFicant non-controlling interests
Date of acquisition
Equity
interest change
Costs of acquisition
Increase / (decrease)
in shareholders’
equity
Decrease in
non-controlling
interests
2014
Euler Hermes Group s.a., Paris
2013
Protexia France s.a., Paris
Antoniana Veneta Popolare Assicurazioni S.p.A., Trieste
pt Asuransi Allianz Utama Indonesia Ltd., Jakarta
Yapı Kredi Sigorta a.Ş., Istanbul
31 March 2014 and
30 June 2014
5 March 2013
20 September 2013
12 November 2013
from 14 October
until 18 November
2013
Annual Report 2014
Allianz Group
%
0.3
34.0
50.0
22.8
5.8
€ mn
€ mn
€ mn
17
22
9
9
41
(5)
(11)
–
(4)
(12)
(12)
(11)
(9)
(5)
(29)
175
6 – Segment reporting
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 seg-
ment. 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.
Property-Casualty
In the business segment Property-Casualty, reportable segments offer
a wide variety of insurance products to both private and corporate
customers, including motor liability and own damage, accident, gen-
eral liability, fire and property, legal expense, credit and travel insurance.
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.
Asset Management
The reportable segment Asset Management operates as a global pro-
vider of institutional and retail asset manage ment products and ser-
vices to third-party investors and provides investment management
services to the Allianz Group’s insurance operations. The products
for retail and institutional customers include equity and fixed-
income funds as well as alternative products. The United States and
Germany as well as France, Italy and the Asia-Pacific region represent
the primary asset management markets.
Corporate and Other
The reportable segment Holding & Treasury includes the management
and support of the Allianz Group’s businesses through its strategy,
risk, corporate finance, treasury, financial reporting, controlling,
communication, legal, human resources, technology and other func-
tions. The reportable segment Banking consists of the banking activ-
ities in Germany, France, Italy, the Netherlands and Bulgaria. The
banks offer a wide range of products for corporate and retail clients,
with a primary focus on the latter. The reportable segment Alternative
Investments provides global alternative investment management
services in the private equity, real estate, renewable energy and infra-
structure sectors, mainly on behalf of the Allianz Group’s insurance
operations. The reportable segment Alternative Investments also
includes a fully consolidated private equity investment. The income
and expenses of this investment are included in the non-operating
result.
general segment reportIng InformatIon
Prices for transactions between reportable segments are set on an
arm’s length basis in a manner similar to trans actions with third
parties. Transactions between reportable segments are eliminated in
the Consolidation. For the reportable segment Asset Management,
interest revenues are reported net of interest expenses. Financial
infor mation is recorded based on reportable segments. Cross-seg-
mental country-specific information is not determined.
reportable segments measure of profIt or loss
The Allianz Group uses operating profit to evaluate the performance
of its reportable segments and the Allianz Group as a whole. Operating
profit highlights the portion of income before income taxes attribut-
able to the ongoing core operations of the Allianz Group. The Allianz
Group considers the presentation of operating profit to be useful and
meaningful to investors because it enhances the understanding of
the Allianz Group’s underlying operating performance and the com-
parability of its operating performance over time.
176
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
To better understand the ongoing operations of the business, the
Allianz Group generally excludes the following non-operating effects:
The following exceptions apply to this general rule:
− acquisition-related expenses and the amortization of intangible
assets, as these relate to business combinations,
− In all reportable segments, income from financial assets and
liabilities carried at fair value through income (net) is treated as
operating profit if the income relates to operating business.
− For Life/Health insurance business and Property-Casualty insur-
ance products with premium refunds, all items listed above are
included in operating profit if the profit sources are shared with
policyholders. This is also applicable to tax benefits, which are
shared with policyholders. 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 seg-
ment reporting, the tax benefits are reclassified and shown
within operating profit in order to adequately reflect the policy-
holder participation in tax benefits.
Operating profit should be viewed as complementary to, and not as
a substitute for, income before income taxes or net income as deter-
mined in accordance with IFRS.
recent organIzatIonal changes
Effective 1 January 2014, the Allianz Group prospectively allocated
certain entities from the reportable segment Asset Management to
the reportable segments German Speaking Countries, Western &
Southern Europe and Growth Markets within the business segment
Life/Health and to the reportable segment Banking.
In the fourth quarter of 2014, the French International Health
business was reclassified from the reportable segment Western &
Southern Europe (Life/Health) to the reportable segment Allianz
Worldwide Partners effective as of 1 January 2014 to reflect the change
in management responsibility and to bundle the international health
business to provide a comprehensive product range to the customers.
− interest expenses from external debt, as these relate to the capital
structure of the Allianz Group,
− income from fully consolidated private equity investments (net),
as this represents income from industrial holdings, which is out-
side the Allianz Group’s normal scope of operating business,
− income from financial assets and liabilities carried at fair value
through income (net), as this does not reflect the Allianz Group’s
long-term performance,
− realized capital gains and losses (net) or impairments of invest-
ments (net), as the timing of sales that would result in such real-
ized gains or losses is largely at the discretion of the Allianz
Group and impairments are largely dependent on market cycles
or issuer-specific events over which the Allianz Group has little
or no control and which can vary, sometimes materially, through
time,
− one-off effect from pension revaluation. Allianz SE has a joint
liability for a large part of the pension provisions of its German
subsidiaries. Service costs incurred in this context are reim-
bursed by the German subsidiaries of Allianz SE, resulting in
corresponding service revenues at Allianz SE. Effective 1 January
2014, the German subsidiaries of Allianz SE changed the applica-
tion of the option provided by article 67 (1) sentence 1 of the
Introductory Act to the German Commercial Code (EGHGB) to
distribute the conversion expenses due to the first-time applica-
tion of the German Accounting Law Modernization Act ( BilMoG)
in 2010 over a period of up to 15 years in the way that the conver-
sion expenses were fully recognized in the first quarter of 2014.
The resulting one-off expenses at the German subsidiaries and
one-off income at Allianz SE are shown as non-operating items.
In case of policyholder participation within the Life/Health
insurance business, the one-off expenses and the corresponding
one-off income at Allianz SE are presented within operating
profit. On the Allianz Group level, the one-off expenses and
income offset each other. The only impact on the Allianz Group
level is the related policyholder participation, which had a posi-
tive impact of € 116 mn on operating profit and income before
income taxes in 2014.
Annual Report 2014
Allianz Group
177
busIness segment InformatIon – consolIdated balance sheets
busIness segment InformatIon – consolIdated balance sheets
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Consolidation
2014
2013
2014
2013
2014
2013
2014
2013
3,668
601
97,129
14,963
–
8,466
4,595
1,013
23,494
61
2,722
156,710
2,773
638
88,432
16,131
–
7,922
4,354
1,083
21,664
131
2,478
145,607
7,555
5,238
374,589
91,411
94,564
5,176
17,667
240
18,723
92
3,063
618,318
5,828
5,548
309,037
89,922
81,064
4,717
17,690
261
17,850
–
2,640
534,557
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Consolidation
2014
2013
2014
129
878
16,595
58,925
14,276
–
2,681
19,445
–
38
–
78
1,189
15,367
56,614
13,389
–
2,154
17,127
–
37
–
8,240
4,273
3,222
10,081
449,263
94,564
4,226
13,739
–
13
95
2013
5,869
2,260
2,855
9,960
390,873
81,064
2,420
14,009
–
12
95
112,969
105,956
587,714
509,417
(838)
(521)
(94,048)
(6,917)
(752)
(468)
(91,189)
(7,868)
(55)
(30)
(2,167)
(16,684)
(1,684)
(14,526)
–
–
–
–
–
–
–
–
(121,229)
(116,517)
2014
1,449
46
106
72
–
–
–
–
177
2,951
7,286
12,087
–
–
–
–
–
2
–
–
–
2,231
2,407
2013
1,860
635
1,140
449
–
–
159
167
2,188
16
7,268
13,883
1
–
–
–
–
–
–
123
2,591
14
4,043
2,028
511
108,669
17,547
1,782
8,595
83
685
139,900
–
–
–
–
–
–
–
1,497
307
103,727
18,166
1,680
7,457
714
133,549
–
–
–
–
–
–
–
–
–
2014
2013
2014
2013
2014
2013
174
1,315
648
20,749
534
21,337
(521)
(3,057)
(17)
(18)
(205)
–
–
(2,167)
(24,834)
(4,075)
(50)
(34,943)
(469)
(2,991)
(10)
(9)
(190)
–
–
(1,684)
(20,900)
(5,205)
(64)
(31,521)
Total equity
Total liabilities and equity
189
28,028
102
12,231
11,992
73,938
164
23,605
13,186
11,509
70,335
Group
2014
13,863
5,875
486,445
117,075
94,564
13,587
22,262
1,046
37,080
235
13,755
805,787
Group
2014
8,496
23,015
19,800
68,989
463,334
94,564
4,932
38,609
102
8,207
12,037
742,085
63,702
805,787
2013
11,207
6,660
411,148
116,800
81,064
12,609
22,203
1,508
34,632
147
13,100
711,079
2013
6,013
23,109
18,212
66,566
404,072
81,064
3,178
36,431
–
8,030
11,554
658,230
52,849
711,079
€ mn
as of 31 December
assets
Cash and cash equivalents
Financial assets carried at fair value through income
Investments
Loans and advances to banks and customers
Financial assets for unit-linked contracts
Reinsurance assets
Deferred acquisition costs
Deferred tax assets
Other assets
Non-current assets and assets of disposal groups classified as held for sale
Intangible assets
Total assets
€ mn
as of 31 December
lIabIlItIes and eQuItY
Financial liabilities carried at fair value through income
Liabilities to banks and customers
Unearned premiums
Reserves for loss and loss adjustment expenses
Reserves for insurance and investment contracts
Financial liabilities for unit-linked contracts
Deferred tax liabilities
Other liabilities
Liabilities of disposal groups classified as held for sale
Certificated liabilities
Subordinated liabilities
Total liabilities
178
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
busIness segment InformatIon – consolIdated balance sheets
busIness segment InformatIon – consolIdated balance sheets
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Consolidation
2014
1,449
46
106
72
–
–
–
177
2,951
–
7,286
12,087
2013
1,860
635
1,140
449
–
–
159
167
2,188
16
7,268
13,883
2014
2013
2014
2013
2,028
511
108,669
17,547
–
–
–
1,782
8,595
83
685
1,497
307
103,727
18,166
–
–
–
1,680
7,457
–
714
(838)
(521)
(94,048)
(6,917)
–
(55)
–
(2,167)
(16,684)
–
–
(752)
(468)
(91,189)
(7,868)
–
(30)
–
(1,684)
(14,526)
–
–
139,900
133,549
(121,229)
(116,517)
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Consolidation
2014
–
174
–
–
–
–
2
2,231
–
–
–
2,407
2013
1
1,315
–
–
–
–
123
2,591
–
–
14
4,043
2014
2013
2014
2013
648
20,749
–
–
–
–
189
28,028
102
12,231
11,992
73,938
534
21,337
–
–
–
–
164
23,605
–
13,186
11,509
70,335
(521)
(3,057)
(17)
(18)
(205)
–
(2,167)
(24,834)
–
(4,075)
(50)
(34,943)
Total equity
Total liabilities and equity
(469)
(2,991)
(10)
(9)
(190)
–
(1,684)
(20,900)
–
(5,205)
(64)
(31,521)
Financial assets carried at fair value through income
Investments
Loans and advances to banks and customers
Financial assets for unit-linked contracts
Non-current assets and assets of disposal groups classified as held for sale
€ mn
as of 31 December
assets
Cash and cash equivalents
Reinsurance assets
Deferred acquisition costs
Deferred tax assets
Other assets
Intangible assets
Total assets
€ mn
as of 31 December
lIabIlItIes and eQuItY
Financial liabilities carried at fair value through income
Liabilities to banks and customers
Unearned premiums
Reserves for loss and loss adjustment expenses
Reserves for insurance and investment contracts
Financial liabilities for unit-linked contracts
Liabilities of disposal groups classified as held for sale
Deferred tax liabilities
Other liabilities
Certificated liabilities
Subordinated liabilities
Total liabilities
2014
2013
2014
2013
3,668
601
97,129
14,963
–
8,466
4,595
1,013
23,494
61
2,722
156,710
129
878
16,595
58,925
14,276
–
2,681
19,445
38
–
–
2,773
638
88,432
16,131
–
7,922
4,354
1,083
21,664
131
2,478
145,607
78
1,189
15,367
56,614
13,389
–
2,154
17,127
37
–
–
7,555
5,238
374,589
91,411
94,564
5,176
17,667
240
18,723
92
3,063
618,318
8,240
4,273
3,222
10,081
449,263
94,564
4,226
13,739
–
13
95
2014
2013
2014
5,828
5,548
309,037
89,922
81,064
4,717
17,690
261
17,850
–
2,640
534,557
2013
5,869
2,260
2,855
9,960
390,873
81,064
2,420
14,009
–
12
95
112,969
105,956
587,714
509,417
Group
2014
13,863
5,875
486,445
117,075
94,564
13,587
22,262
1,046
37,080
235
13,755
805,787
Group
2014
8,496
23,015
19,800
68,989
463,334
94,564
4,932
38,609
102
8,207
12,037
742,085
63,702
805,787
2013
11,207
6,660
411,148
116,800
81,064
12,609
22,203
1,508
34,632
147
13,100
711,079
2013
6,013
23,109
18,212
66,566
404,072
81,064
3,178
36,431
–
8,030
11,554
658,230
52,849
711,079
Annual Report 2014
Allianz Group
179
busIness segment InformatIon – total revenues and reconcIlIatIon of operatIng profIt (loss)
to net Income (loss)
busIness segment InformatIon – total revenues and reconcIlIatIon of operatIng profIt (loss) to net Income (loss)
€ mn
Total revenues1
Premiums earned (net)
Operating investment result
Interest and similar income
Operating income from financial assets and liabilities carried at fair value
through income (net)
Operating realized gains/losses (net)
Interest expenses, excluding interest expenses from external debt
Operating impairments of investments (net)
Investment expenses
Subtotal
Fee and commission income
Other income
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment contracts (net)2
Loan loss provisions
Acquisition and administrative expenses (net),
excluding acquisition-related expenses and one-off effect from pension revaluation
Fee and commission expenses
Operating amortization of intangible assets
Restructuring charges
Other expenses
Reclassification of tax benefits
Operating profit (loss)
Non-operating investment result
Non-operating income from financial assets and liabilities carried at fair value
through income (net)
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
Subtotal
Income from fully consolidated private equity investments (net)
Interest expenses from external debt
Acquisition-related expenses
One-off effect from pension revaluation
Non-operating amortization of intangible assets
Reclassification of tax benefits
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Consolidation
Group
2014
48,322
43,759
3,595
6
186
(71)
(20)
(323)
3,373
1,260
60
(28,878)
(538)
–
(12,400)
(1,180)
–
(30)
(45)
–
5,382
(114)
463
(168)
180
–
–
–
(537)
(49)
–
(406)
4,976
(1,528)
3,448
159
3,290
2013
46,579
42,047
3,594
(75)
70
(52)
(11)
(315)
3,210
1,226
47
(27,713)
(384)
–
(11,942)
(1,141)
–
(62)
(21)
–
5,267
25
520
(217)
328
–
–
–
–
(32)
–
296
5,563
(1,746)
3,817
167
3,650
2014
67,331
24,514
17,307
(1,367)
3,204
(107)
(677)
(903)
17,457
1,017
156
(20,775)
(12,563)
–
(5,860)
(387)
(19)
3
(217)
–
3,327
(131)
183
(21)
31
–
–
–
(7)
(36)
–
(12)
3,316
(996)
2,320
122
2,198
2013
56,784
24,580
16,767
(1,832)
3,294
(81)
(331)
(839)
16,979
646
157
(20,096)
(13,555)
–
(5,603)
(251)
–
(50)
(98)
–
2,709
27
88
(17)
99
–
–
–
–
(15)
–
83
2,793
(852)
1,941
80
1,861
342
332
2,603
(820)
(1,004)
2014
6,388
2013
7,162
(10)
(28)
7,825
8,611
–
40
12
–
–
–
25
10
–
–
–
(3,994)
(1,484)
(6)
–
–
–
3,161
–
2
–
2
–
–
–
–
(32)
(26)
(55)
3,106
(1,181)
1,925
93
1,832
(3,787)
(1,445)
–
7
5
–
–
–
2
6
–
–
–
–
3
–
–
–
4
–
4
–
–
6
–
(14)
(11)
(15)
2,588
(967)
1,621
86
1,535
2014
556
–
876
33
–
–
(573)
(77)
259
724
117
(45)
(1,310)
(567)
–
–
–
8
–
(7)
(33)
184
(7)
144
(42)
(846)
1
558
(8)
–
(192)
(1,013)
356
(657)
15
(673)
2013
551
903
40
(623)
(82)
238
687
–
–
–
1
–
–
(86)
(1,295)
(493)
(53)
(2)
–
–
(46)
346
(80)
220
(17)
(901)
(2)
(106)
–
–
(806)
(1,810)
476
(1,334)
7
(1,341)
2014
(344)
–
(342)
22
(184)
346
–
342
183
(707)
(124)
(828)
3
–
7
–
–
–
–
–
–
–
134
901
(91)
(25)
(22)
(47)
19
(901)
(929)
(1,020)
890
(129)
–
(129)
(1,301)
(1,868)
2013
(302)
–
(386)
(14)
(30)
363
44
332
309
(678)
(6)
(50)
7
–
3
–
–
–
15
(68)
17
(4)
–
13
2
–
–
–
44
–
59
(9)
3
(6)
–
(6)
2014
122,253
68,274
21,443
3,205
(415)
(697)
(961)
21,274
10,119
216
(49,650)
(13,929)
(45)
(23,351)
(3,238)
(19)
(16)
(135)
901
10,402
(303)
812
(197)
312
(23)
(846)
7
–
(104)
(901)
(1,554)
8,848
(2,245)
6,603
381
6,221
2013
110,773
66,628
20,918
3,334
(421)
(298)
(905)
20,761
10,492
209
(47,802)
(13,990)
(86)
(22,831)
(3,038)
(170)
(106)
–
–
10,066
23
952
(313)
662
(15)
(901)
(34)
(136)
–
–
(423)
9,643
(3,300)
6,343
347
5,996
1
Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating
revenues in Asset Management and total revenues in Corporate and Other (Banking).
2
For the year ended 31 December 2014, includes expenses for premium refunds (net) in Property-Casualty
of € (307) mn (2013: € (162) mn).
180
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Consolidation
Group
2014
6,388
–
7
5
–
(10)
–
–
2
7,825
6
–
–
–
(3,787)
(1,445)
–
3
–
–
2,603
–
4
–
4
–
–
6
(14)
(11)
–
(15)
2,588
(967)
1,621
86
1,535
2013
7,162
–
40
12
–
(28)
–
–
25
8,611
10
–
–
–
(3,994)
(1,484)
–
(6)
–
–
3,161
–
2
–
2
–
–
(32)
–
(26)
–
(55)
3,106
(1,181)
1,925
93
1,832
2014
556
–
876
33
–
(573)
–
(77)
259
724
117
–
–
(45)
(1,310)
(567)
–
8
(7)
–
2013
551
–
903
40
–
(623)
–
(82)
238
687
1
–
–
(86)
(1,295)
(493)
–
(53)
(2)
–
(820)
(1,004)
(33)
184
(7)
144
(42)
(846)
1
558
(8)
–
(192)
(1,013)
356
(657)
15
(673)
(46)
346
(80)
220
(17)
(901)
(2)
–
(106)
–
(806)
(1,810)
476
(1,334)
7
(1,341)
2014
(344)
–
(342)
22
(184)
346
–
342
183
(707)
(124)
3
(828)
–
7
342
–
–
134
901
(91)
(25)
(22)
–
(47)
19
–
–
–
–
(901)
(929)
(1,020)
890
(129)
–
(129)
1
Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating
2
For the year ended 31 December 2014, includes expenses for premium refunds (net) in Property-Casualty
revenues in Asset Management and total revenues in Corporate and Other (Banking).
of € (307) mn (2013: € (162) mn).
Annual Report 2014
Allianz Group
2013
(302)
–
(386)
(14)
(30)
363
44
332
309
(678)
(6)
7
(50)
–
3
332
–
–
15
–
(68)
17
(4)
–
13
2
–
–
–
44
–
59
(9)
3
(6)
–
(6)
2014
122,253
68,274
21,443
2013
110,773
66,628
20,918
(1,301)
(1,868)
3,205
(415)
(697)
(961)
21,274
10,119
216
(49,650)
(13,929)
(45)
(23,351)
(3,238)
(19)
(16)
(135)
901
10,402
(303)
812
(197)
312
(23)
(846)
7
–
(104)
(901)
(1,554)
8,848
(2,245)
6,603
381
6,221
3,334
(421)
(298)
(905)
20,761
10,492
209
(47,802)
(13,990)
(86)
(22,831)
(3,038)
–
(170)
(106)
–
10,066
23
952
(313)
662
(15)
(901)
(34)
–
(136)
–
(423)
9,643
(3,300)
6,343
347
5,996
181
busIness segment InformatIon – total revenues and reconcIlIatIon of operatIng profIt (loss)
busIness segment InformatIon – total revenues and reconcIlIatIon of operatIng profIt (loss) to net Income (loss)
to net Income (loss)
€ mn
Total revenues1
Premiums earned (net)
Operating investment result
Interest and similar income
Investment expenses
Subtotal
Fee and commission income
Other income
Operating income from financial assets and liabilities carried at fair value
through income (net)
Operating realized gains/losses (net)
Interest expenses, excluding interest expenses from external debt
Operating impairments of investments (net)
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment contracts (net)2
Loan loss provisions
Acquisition and administrative expenses (net),
excluding acquisition-related expenses and one-off effect from pension revaluation
Fee and commission expenses
Operating amortization of intangible assets
Restructuring charges
Other expenses
Reclassification of tax benefits
Operating profit (loss)
Non-operating investment result
Non-operating income from financial assets and liabilities carried at fair value
through income (net)
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
Subtotal
Income from fully consolidated private equity investments (net)
Interest expenses from external debt
Acquisition-related expenses
One-off effect from pension revaluation
Non-operating amortization of intangible assets
Reclassification of tax benefits
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
2014
48,322
43,759
3,595
6
186
(71)
(20)
(323)
3,373
1,260
60
(28,878)
(538)
(12,400)
(1,180)
(30)
(45)
5,382
(114)
463
(168)
180
–
–
–
–
–
–
–
(537)
(49)
(406)
4,976
(1,528)
3,448
159
3,290
2013
46,579
42,047
3,594
(75)
70
(52)
(11)
(315)
3,210
1,226
47
(27,713)
(384)
(11,942)
(1,141)
(62)
(21)
5,267
25
520
(217)
328
–
–
–
–
–
–
–
–
(32)
296
5,563
(1,746)
3,817
167
3,650
2014
67,331
24,514
17,307
(1,367)
3,204
(107)
(677)
(903)
17,457
1,017
156
(20,775)
(12,563)
–
3
–
(5,860)
(387)
(19)
(217)
3,327
(131)
183
(21)
31
–
–
–
–
(7)
(36)
(12)
3,316
(996)
2,320
122
2,198
2013
56,784
24,580
16,767
(1,832)
3,294
(81)
(331)
(839)
16,979
646
157
(20,096)
(13,555)
(5,603)
(251)
(50)
(98)
2,709
–
–
–
–
–
–
–
–
27
88
(17)
99
(15)
83
2,793
(852)
1,941
80
1,861
reportable segments – propertY-casualtY
reportable segments – propertY-casualtY
€ mn
Gross premiums written
Ceded premiums written
Change in unearned premiums
Premiums earned (net)
Interest and similar income
Operating income from financial assets and liabilities carried at fair value
through income (net)
Operating realized gains/losses (net)
Fee and commission income
Other income
Operating revenues
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment contracts (net)
Interest expenses
Operating impairments of investments (net)
Investment expenses
Acquisition and administrative expenses (net),
excluding one-off effect from pension revaluation
Fee and commission expenses
Restructuring charges
Other expenses
Operating expenses
Operating profit (loss)
Non-operating income from financial assets and liabilities carried at fair value
through income (net)
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
One-off effect from pension revaluation
Amortization of intangible assets
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
Loss ratio3 in %
Expense ratio4 in %
Combined ratio5 in %
German Speaking Countries Western & Southern Europe
Iberia & Latin America
Growth Markets
Allianz Worldwide Partners
Consolidation and Other2
Property-Casualty
USA1
Global Insurance Lines &
Anglo Markets
2014
11,997
(1,879)
(35)
10,083
1,118
5
186
133
30
2013
11,748
(1,882)
(5)
9,861
1,124
(52)
70
149
34
2014
2013
10,865
10,547
(806)
(103)
9,956
870
(8)
–
39
8
(725)
(87)
9,735
880
15
–
23
7
2014
4,437
(705)
(33)
3,699
197
8
–
–
18
2013
4,620
(738)
(72)
3,810
203
6
–
–
–
11,554
11,186
10,866
10,660
3,922
4,019
2,112
2,224
14,344
13,484
2,618
2,630
3,544
2,802
(6,680)
(460)
(8)
(20)
(103)
(2,564)
(121)
(4)
(19)
(7,134)
(322)
(20)
(11)
(97)
(2,534)
(132)
(3)
(16)
(6,281)
(6,070)
(2,758)
(2,611)
(1,603)
(1,376)
(8,010)
(7,574)
(1,676)
(1,491)
(1,956)
(1,457)
(28,878)
(27,713)
(40)
(17)
–
(106)
(40)
(11)
–
(98)
(6)
(3)
–
(14)
(4)
(3)
–
(14)
(2,782)
(2,637)
(1,035)
(992)
(644)
(683)
(39)
(17)
(5)
(35)
(53)
(4)
–
–
(1)
–
–
–
(3,631)
(502)
(6)
(18)
(3,493)
(498)
(7)
–
(831)
(54)
–
(2)
(851)
(72)
–
(1)
(9,979)
(10,270)
(9,286)
(8,948)
(3,818)
(3,624)
(2,263)
(2,070)
(12,300)
(11,699)
(2,579)
(2,428)
(3,439)
(2,700)
1,575
916
1,580
1,712
104
395
(151)
154
2,044
1,785
39
201
105
102
5,382
5,267
(49)
121
(35)
(530)
(2)
(495)
1,080
(271)
810
(3)
812
66.2
25.4
91.7
12
114
(32)
–
(2)
93
1,009
(283)
726
(4)
730
72.3
25.7
98.0
(45)
172
(98)
–
(34)
(6)
1,575
(600)
975
14
960
63.1
27.9
91.0
12
216
(150)
–
(17)
60
1,773
(684)
1,088
15
1,073
62.4
27.1
89.4
2
13
(2)
–
(2)
11
115
(12)
103
(1)
105
74.6
28.0
102.6
5
18
(15)
–
(2)
6
401
(127)
274
7
267
68.5
26.0
94.6
2014
1,958
(115)
31
1,874
240
2013
2,058
(125)
56
1,988
236
(2)
(1)
–
–
–
(8)
–
–
(3)
(3)
–
–
(3)
15
(7)
–
–
6
(146)
63
(83)
–
(83)
85.6
34.4
120.0
(9)
–
–
(3)
–
–
–
–
–
–
2
5
–
–
–
7
161
(34)
127
–
127
69.2
34.3
103.5
2014
17,172
(4,015)
(391)
12,766
977
4
–
–
597
(7)
(38)
–
(87)
(13)
127
(19)
(7)
(9)
79
2,123
(597)
1,526
119
1,407
62.7
28.4
91.2
2013
15,969
(3,841)
(158)
11,970
970
(45)
590
–
–
(10)
(26)
–
(92)
(6)
153
(16)
–
(7)
124
1,909
(529)
1,380
119
1,261
63.3
29.2
92.5
2014
3,022
(663)
42
2,401
158
(1)
–
56
4
(4)
(4)
–
(9)
(6)
12
(7)
–
(7)
(8)
31
(55)
(25)
27
(52)
69.8
34.6
104.4
2013
3,211
(673)
(150)
2,388
161
1
–
78
2
–
(3)
–
(9)
–
10
(4)
–
(8)
(2)
199
(53)
146
28
118
62.5
35.7
98.1
2014
3,341
(247)
(113)
2,981
38
–
–
–
526
(13)
(1)
–
(2)
(924)
(544)
–
–
–
3
–
–
–
3
108
(27)
81
3
78
65.6
31.0
96.6
2013
2,507
(78)
(133)
2,296
33
–
–
1
471
(2)
–
–
(1)
(763)
(478)
1
–
–
3
–
–
–
4
106
(36)
70
2
68
63.5
33.2
96.7
2014
2013
2014
2013
(4,469)
(4,081)
4,469
4,081
(2)
(13)
48,322
(3,961)
(602)
43,759
3,595
6
186
1,260
60
48,867
(538)
(71)
(20)
(323)
46,579
(3,981)
(550)
42,047
3,594
(75)
70
1,226
47
46,908
(384)
(52)
(11)
(315)
(12,400)
(11,942)
(1,180)
(1,141)
(30)
(45)
(62)
(21)
(43,485)
(41,641)
4,976
5,563
(1,528)
(1,746)
3,448
3,817
(114)
463
(168)
(537)
(49)
(406)
159
3,290
66.0
28.3
94.3
25
520
(217)
–
(32)
296
167
3,650
65.9
28.4
94.3
(84)
(96)
13
11
73
–
–
98
–
–
–
–
1
–
–
–
–
2
–
–
–
–
4
4
6
–
6
–
6
–6
–6
–6
–
–
–
–
(90)
–
(92)
86
–
1
–
–
11
79
–
–
178
86
–
–
–
–
4
4
90
(30)
60
–
60
–6
–6
–6
1
2
3
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.
The 2014 analysis of the Allianz Group’s asbestos risks resulted in a reduction of reserves and a positive
run-off result of € 86 mn reflected in the operating profit for 2014.
Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
4
5
6
Represents acquisition and administrative expenses (net), excluding one-off effect from pension revalu-
ation, divided by premiums earned (net).
Represents the total of acquisition and administrative expenses (net), excluding one-off effect from
pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).
Presentation not meaningful.
182
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Growth Markets
Allianz Worldwide Partners
Consolidation and Other2
Property-Casualty
11,554
11,186
10,866
10,660
3,922
4,019
2,112
2,224
14,344
13,484
2,618
2,630
2014
3,022
(663)
42
2,401
158
(1)
–
56
4
2013
3,211
(673)
(150)
2,388
161
1
–
78
2
2014
3,341
(247)
(113)
2,981
38
–
–
526
–
3,544
2013
2,507
(78)
(133)
2,296
33
–
–
471
1
2,802
USA1
Global Insurance Lines &
Anglo Markets
2014
1,958
(115)
31
1,874
240
2013
2,058
(125)
56
1,988
236
(2)
(1)
–
–
–
–
–
–
2014
17,172
(4,015)
(391)
12,766
977
4
–
597
–
2013
15,969
(3,841)
(158)
11,970
970
(45)
–
590
–
reportable segments – propertY-casualtY
reportable segments – propertY-casualtY
€ mn
Gross premiums written
Ceded premiums written
Change in unearned premiums
Premiums earned (net)
Interest and similar income
through income (net)
Operating realized gains/losses (net)
Fee and commission income
Other income
Operating revenues
Operating income from financial assets and liabilities carried at fair value
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment contracts (net)
Interest expenses
Investment expenses
Operating impairments of investments (net)
Acquisition and administrative expenses (net),
excluding one-off effect from pension revaluation
Fee and commission expenses
Restructuring charges
Other expenses
Operating expenses
Operating profit (loss)
Non-operating income from financial assets and liabilities carried at fair value
through income (net)
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
One-off effect from pension revaluation
Amortization of intangible assets
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
Loss ratio3 in %
Expense ratio4 in %
Combined ratio5 in %
German Speaking Countries Western & Southern Europe
Iberia & Latin America
2014
2013
10,865
10,547
2014
11,997
(1,879)
(35)
10,083
1,118
5
186
133
30
(6,680)
(460)
(8)
(20)
(103)
(2,564)
(121)
(4)
(19)
(49)
121
(35)
(530)
(2)
(495)
1,080
(271)
810
(3)
812
66.2
25.4
91.7
2013
11,748
(1,882)
(5)
9,861
1,124
(52)
70
149
34
(7,134)
(322)
(20)
(11)
(97)
(2,534)
(132)
(3)
(16)
12
114
(32)
–
(2)
93
1,009
(283)
726
(4)
730
72.3
25.7
98.0
(806)
(103)
9,956
870
(8)
–
39
8
(40)
(17)
–
(106)
(39)
(17)
(5)
(45)
172
(98)
–
(34)
(6)
1,575
(600)
975
14
960
63.1
27.9
91.0
(725)
(87)
9,735
880
15
–
23
7
(40)
(11)
–
(98)
(35)
(53)
(4)
12
216
(150)
–
(17)
60
1,773
(684)
1,088
15
1,073
62.4
27.1
89.4
2014
4,437
(705)
(33)
3,699
197
8
–
–
18
(6)
(3)
–
(14)
–
–
(1)
2
13
(2)
–
(2)
11
115
(12)
103
(1)
105
74.6
28.0
102.6
2013
4,620
(738)
(72)
3,810
203
6
–
–
–
–
–
–
(4)
(3)
–
(14)
5
18
(15)
(2)
–
6
401
(127)
274
7
267
68.5
26.0
94.6
1
The reserve strengthening for asbestos risks in 2014 at Fireman’s Fund Insurance Company of € 79 mn had
4
Represents acquisition and administrative expenses (net), excluding one-off effect from pension revalu-
no impact on the financial results of the Allianz Group and Fireman’s Fund’s combined ratio under IFRS.
ation, divided by premiums earned (net).
2
The 2014 analysis of the Allianz Group’s asbestos risks resulted in a reduction of reserves and a positive
5
Represents the total of acquisition and administrative expenses (net), excluding one-off effect from
run-off result of € 86 mn reflected in the operating profit for 2014.
pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).
3
Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
6
Presentation not meaningful.
(6,281)
(6,070)
(2,758)
(2,611)
(1,603)
(1,376)
(8,010)
(7,574)
(1,676)
(1,491)
(1,956)
(1,457)
(8)
–
–
(3)
(9)
–
–
(3)
(2,782)
(2,637)
(1,035)
(992)
(644)
(683)
–
(3)
–
–
–
–
(7)
(38)
–
(87)
(3,631)
(502)
(6)
(18)
(10)
(26)
–
(92)
(3,493)
(498)
(7)
–
(4)
(4)
–
(9)
(831)
(54)
–
(2)
–
(3)
–
(9)
(851)
(72)
–
(1)
(13)
(1)
–
(2)
(924)
(544)
–
–
–
(2)
–
(1)
(763)
(478)
1
–
(9,979)
(10,270)
(9,286)
(8,948)
(3,818)
(3,624)
(2,263)
(2,070)
(12,300)
(11,699)
(2,579)
(2,428)
(3,439)
(2,700)
1,575
916
1,580
1,712
104
395
(151)
154
2,044
1,785
39
201
105
102
(3)
15
(7)
–
–
6
(146)
63
(83)
–
(83)
85.6
34.4
120.0
2
5
–
–
–
7
161
(34)
127
–
127
69.2
34.3
103.5
(13)
127
(19)
(7)
(9)
79
2,123
(597)
1,526
119
1,407
62.7
28.4
91.2
(6)
153
(16)
–
(7)
124
1,909
(529)
1,380
119
1,261
63.3
29.2
92.5
(6)
12
(7)
–
(7)
(8)
31
(55)
(25)
27
(52)
69.8
34.6
104.4
–
10
(4)
–
(8)
(2)
199
(53)
146
28
118
62.5
35.7
98.1
–
3
–
–
–
3
108
(27)
81
3
78
65.6
31.0
96.6
–
3
–
–
–
4
106
(36)
70
2
68
63.5
33.2
96.7
Annual Report 2014
Allianz Group
2014
2013
2014
2013
(4,469)
(4,081)
4,469
4,081
–
–
(2)
–
–
(90)
–
(92)
86
–
1
–
–
11
79
–
–
178
86
–
–
–
–
4
4
90
(30)
60
–
60
–6
–6
–6
–
–
(13)
–
–
(84)
1
(96)
–
–
13
–
–
11
73
–
–
98
2
–
–
–
–
4
4
6
–
6
–
6
–6
–6
–6
48,322
(3,961)
(602)
43,759
3,595
6
186
1,260
60
48,867
46,579
(3,981)
(550)
42,047
3,594
(75)
70
1,226
47
46,908
(28,878)
(27,713)
(538)
(71)
(20)
(323)
(384)
(52)
(11)
(315)
(12,400)
(11,942)
(1,180)
(1,141)
(30)
(45)
(62)
(21)
(43,485)
(41,641)
5,382
5,267
(114)
463
(168)
(537)
(49)
(406)
25
520
(217)
–
(32)
296
4,976
5,563
(1,528)
(1,746)
3,448
3,817
159
3,290
66.0
28.3
94.3
167
3,650
65.9
28.4
94.3
183
reportable segments – lIfe/health
reportable segments – lIfe/health
€ mn
Statutory premiums1
Ceded premiums written
Change in unearned premiums
Statutory premiums (net)
Deposits from insurance and investment contracts
Premiums earned (net)
Interest and similar income
Operating income from financial assets and liabilities carried at fair value through income (net)
Operating realized gains/losses (net)
Fee and commission income
Other income
Operating revenues
Claims and insurance benefits incurred (net)
Changes in reserves for insurance and investment contracts (net)
Interest expenses
Operating impairments of investments (net)
Investment expenses
Fee and commission expenses
Operating amortization of intangible assets
Restructuring charges
Other expenses
Operating expenses
Operating profit
Non-operating income from financial assets and liabilities carried at fair value through income (net)
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
One-off effect from pension revaluation
Non-operating amortization of intangible assets
Non-operating items
Income before income taxes
Income taxes
Net income
Net income attributable to:
Non-controlling interests
Shareholders
Margin on reserves2 in basis points
(14,507)
(13,139)
(8,615)
(9,273)
(81)
(376)
(603)
(98)
(275)
(557)
(3,826)
(2,178)
(22)
(293)
(225)
(1,817)
(249)
–
(4)
(13)
(4,113)
(2,364)
(24)
(76)
(213)
(1,795)
(208)
–
(16)
(10)
German Speaking Countries Western & Southern Europe
Iberia & Latin America
USA
Growth Markets
Consolidation
Life/Health
Global Insurance Lines &
Anglo Markets
2014
2013
2014
2013
24,319
(151)
(342)
23,826
(8,269)
15,557
9,108
375
2,365
82
132
22,251
(167)
(163)
21,922
(6,350)
15,572
8,936
(1,141)
2,648
49
126
23,090
(1,015)
(7)
22,068
19,830
(1,086)
22
18,766
(17,742)
(14,183)
(1,185)
(1,078)
(10,734)
(6,312)
(3,712)
(3,300)
(41,643)
(31,223)
4,326
3,864
(67)
742
531
21
4,583
3,878
138
487
437
31
27,620
26,189
9,417
9,554
1,215
1,095
2,542
3,022
3,703
3,366
(65)
44,832
43,613
(1,060)
(1,054)
(68)
(88)
(5,860)
(5,603)
(24)
(24)
2014
1,844
(12)
(4)
1,828
643
374
32
26
140
–
(605)
(100)
(2)
(1)
(7)
(202)
(70)
–
–
–
–
1
–
–
(16)
(15)
213
(48)
165
44
121
256
2013
1,786
(19)
(4)
1,762
684
371
21
16
3
–
(626)
(99)
(3)
(1)
(7)
(201)
(1)
–
–
–
–
–
–
–
–
–
158
(47)
112
23
89
201
2014
11,840
(115)
(8)
11,717
984
3,030
(1,641)
57
113
–
(84)
(672)
(8)
–
(38)
–
–
–
–
–
–
(126)
(6)
(131)
524
(154)
371
–
371
81
2013
7,317
(115)
(7)
7,195
883
2,733
(781)
106
80
–
(93)
(1,346)
(7)
23
(34)
–
–
–
487
33
28
–
–
(1)
59
546
(148)
398
–
398
70
2014
537
(110)
(29)
398
–
398
57
(58)
(1)
–
–
396
(288)
(25)
(1)
–
–
–
–
–
–
–
–
–
–
–
–
14
(9)
5
–
5
76
(337)
(1,465)
(1,788)
(973)
(472)
(20,775)
(20,096)
(12,563)
(13,555)
2013
515
(82)
(4)
430
–
430
76
(1)
–
–
451
(54)
(1)
(1)
–
–
–
–
–
–
–
–
–
–
–
–
23
(7)
16
–
16
111
2014
6,820
(347)
(154)
6,319
2,607
914
7
17
154
3
(34)
(7)
(30)
(937)
(14)
–
8
(5)
247
–
35
(4)
–
(7)
24
271
(56)
215
45
171
87
2013
6,174
(269)
(177)
5,728
2,429
836
(16)
37
81
–
(10)
(2)
(29)
(902)
(1)
(31)
–
–
–
25
(4)
–
(8)
13
144
(32)
111
37
75
49
2014
2013
(1,120)
(1,089)
1,120
1,089
–
–
–
–
–
–
–
–
2
3
–
–
–
–
–
–
–
–
–
–
–
(41)
(15)
(3)
(3)
–
(63)
41
(17)
(17)
(17)
(64)
(3)
–
–
63
–
–
–
–
–
–
2
–
–
2
2
–
–
–
2
–
–
–
–
–
–
2
–
2
–
2
(1,367)
(1,832)
2014
67,331
(630)
(544)
66,157
24,514
17,307
3,204
1,017
156
(107)
(677)
(903)
(387)
(19)
3
(217)
(131)
183
(21)
(7)
(36)
(12)
3,316
(996)
2,320
2013
56,784
(648)
(332)
55,803
24,580
16,767
3,294
646
157
(81)
(331)
(839)
(251)
–
(50)
(98)
27
88
(17)
–
(15)
83
2,793
(852)
1,941
122
2,198
80
1,861
–3
–3
65
58
229
158
656
14
23
131
(17)
3,327
2,709
(26,212)
(25,015)
(8,627)
(8,819)
(987)
(937)
(1,886)
(2,535)
(383)
(428)
(3,455)
(3,235)
45
66
(41,504)
(40,904)
1,408
1,174
–
–
–
(7)
(1)
(8)
1,400
(478)
922
(1)
923
59
–
–
–
–
(1)
(1)
1,173
(410)
763
–
763
53
791
(5)
153
(17)
–
(11)
119
910
(251)
659
33
626
52
735
(5)
36
(13)
–
(5)
12
747
(208)
539
21
518
53
(32)
(19)
(1)
(199)
(19)
–
(3)
(88)
Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation
(1,778)
(1,564)
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.
2
3
Represents operating profit divided by the average of the current and previous year-end net reserves,
where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and
investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
Presentation not meaningful.
184
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
German Speaking Countries Western & Southern Europe
Iberia & Latin America
USA
Global Insurance Lines &
Anglo Markets
Growth Markets
Consolidation
Life/Health
Deposits from insurance and investment contracts
(17,742)
(14,183)
(1,185)
(1,078)
(10,734)
(6,312)
27,620
26,189
9,417
9,554
1,215
1,095
2,542
3,022
643
374
32
26
140
–
684
371
21
16
3
–
984
3,030
(1,641)
57
113
–
883
2,733
(781)
106
80
–
2014
1,844
(12)
(4)
1,828
2013
1,786
(19)
(4)
1,762
2014
11,840
(115)
(8)
11,717
2013
7,317
(115)
(7)
7,195
2014
537
(110)
(29)
398
–
398
57
(58)
–
(1)
–
396
(288)
(25)
(1)
–
–
2013
515
(82)
(4)
430
–
430
76
(54)
–
(1)
–
451
2014
6,820
(347)
(154)
6,319
2013
6,174
(269)
(177)
5,728
(3,712)
(3,300)
2,607
914
7
17
154
3
2,429
836
(16)
37
81
–
3,703
3,366
(337)
(1,465)
(1,788)
(1)
(1)
–
–
(88)
–
–
–
–
(973)
(472)
(34)
(7)
(30)
(937)
(14)
–
8
(5)
(10)
(2)
(29)
(902)
(1)
–
(31)
–
2014
2013
(1,120)
(1,089)
1,120
1,089
–
–
–
–
(41)
(15)
(3)
(3)
–
(63)
–
–
41
–
–
2
3
–
–
–
–
–
–
–
(64)
2
–
(3)
–
(65)
–
–
63
–
–
2
2
–
–
–
2014
67,331
(630)
(544)
66,157
2013
56,784
(648)
(332)
55,803
(41,643)
(31,223)
24,514
17,307
24,580
16,767
(1,367)
(1,832)
3,204
1,017
156
3,294
646
157
44,832
43,613
(20,775)
(20,096)
(12,563)
(13,555)
(107)
(677)
(903)
(81)
(331)
(839)
(5,860)
(5,603)
(387)
(19)
3
(217)
(251)
–
(50)
(98)
(605)
(100)
(2)
(1)
(7)
(202)
(70)
–
–
–
(626)
(99)
(3)
(1)
(7)
(201)
(1)
–
–
–
(84)
(672)
(8)
–
(38)
(93)
(1,346)
(7)
23
(34)
(1,060)
(1,054)
(68)
(24)
(24)
–
–
–
–
–
–
–
–
–
–
(26,212)
(25,015)
(8,627)
(8,819)
(987)
(937)
(1,886)
(2,535)
(383)
(428)
(3,455)
(3,235)
45
66
(41,504)
(40,904)
1,408
1,174
229
158
656
–
1
–
–
(16)
(15)
213
(48)
165
44
121
256
–
–
–
–
–
–
158
(47)
112
23
89
201
(126)
(6)
–
–
–
(131)
524
(154)
371
–
371
81
487
33
28
–
–
(1)
59
546
(148)
398
–
398
70
14
23
–
–
–
–
–
–
14
(9)
5
–
5
76
–
–
–
–
–
–
23
(7)
16
–
16
111
247
–
35
(4)
–
(7)
24
271
(56)
215
45
171
87
131
(17)
–
–
–
–
–
–
(17)
–
(17)
–
(17)
–
25
(4)
–
(8)
13
144
(32)
111
37
75
49
2
–
–
–
–
–
–
2
–
2
–
2
3,327
2,709
(131)
183
(21)
(7)
(36)
(12)
3,316
(996)
2,320
27
88
(17)
–
(15)
83
2,793
(852)
1,941
122
2,198
80
1,861
–3
–3
65
58
Annual Report 2014
Allianz Group
185
Operating income from financial assets and liabilities carried at fair value through income (net)
Claims and insurance benefits incurred (net)
Changes in reserves for insurance and investment contracts (net)
Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation
(1,778)
(1,564)
Non-operating income from financial assets and liabilities carried at fair value through income (net)
reportable segments – lIfe/health
reportable segments – lIfe/health
€ mn
Statutory premiums1
Ceded premiums written
Change in unearned premiums
Statutory premiums (net)
Premiums earned (net)
Interest and similar income
Operating realized gains/losses (net)
Fee and commission income
Other income
Operating revenues
Interest expenses
Investment expenses
Operating impairments of investments (net)
Fee and commission expenses
Operating amortization of intangible assets
Restructuring charges
Other expenses
Operating expenses
Operating profit
Non-operating realized gains/losses (net)
Non-operating impairments of investments (net)
One-off effect from pension revaluation
Non-operating amortization of intangible assets
Non-operating items
Income before income taxes
Income taxes
Net income
Net income attributable to:
Non-controlling interests
Shareholders
Margin on reserves2 in basis points
2014
2013
2014
2013
24,319
(151)
(342)
23,826
(8,269)
15,557
9,108
375
2,365
82
132
22,251
(167)
(163)
21,922
(6,350)
15,572
8,936
(1,141)
2,648
49
126
(14,507)
(13,139)
(8,615)
(9,273)
(81)
(376)
(603)
(32)
(19)
(1)
(199)
–
–
–
(7)
(1)
(8)
1,400
(478)
922
(1)
923
59
(98)
(275)
(557)
(19)
–
(3)
(88)
–
–
–
–
(1)
(1)
1,173
(410)
763
–
763
53
23,090
(1,015)
(7)
22,068
4,326
3,864
(67)
742
531
21
(3,826)
(2,178)
(22)
(293)
(225)
(1,817)
(249)
–
(4)
(13)
791
(5)
153
(17)
–
(11)
119
910
(251)
659
33
626
52
19,830
(1,086)
22
18,766
4,583
3,878
138
487
437
31
(4,113)
(2,364)
(24)
(76)
(213)
(1,795)
(208)
–
(16)
(10)
735
(5)
36
(13)
–
(5)
12
747
(208)
539
21
518
53
1
Statutory premiums are gross premiums written from sales of life and health insurance policies, as well
2
Represents operating profit divided by the average of the current and previous year-end net reserves,
as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with
where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and
the statutory accounting practices applicable in the insurer’s home jurisdiction.
investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
3
Presentation not meaningful.
reportable segments – asset management
reportable segments – asset management
€ mn
Net fee and commission income1
Net interest income2
Income from financial assets and liabilities carried at fair value through income (net)
Other income
Operating revenues
Administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation
Restructuring charges
Operating expenses
Operating profit
Realized gains/losses (net)
Acquisition-related expenses
One-off effect from pension revaluation
Amortization of intangible assets
Non-operating items
Income before income taxes
Income taxes
Net income
Net income attributable to:
Non-controlling interests
Shareholders
Cost-income ratio3 in %
1
2
3
Represents fee and commission income less fee and commission expenses.
Represents interest and similar income less interest expenses.
Represents operating expenses divided by operating revenues.
2014
6,380
(3)
5
6
6,388
(3,787)
3
(3,784)
2013
7,127
12
12
10
7,162
(3,994)
(6)
(4,001)
2,603
3,161
4
6
(14)
(11)
(15)
2,588
(967)
1,621
86
1,535
59.2
2
(32)
–
(26)
(55)
3,106
(1,181)
1,925
93
1,832
55.9
186
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Annual Report 2014
Allianz Group
187
reportable segments – corporate and other
reportable segments – corporate and other
€ mn
Interest and similar income
Operating income from financial assets and liabilities carried at fair value through income (net)
Fee and commission income
Other income
Operating revenues
Interest expenses, excluding interest expenses from external debt
Loan loss provisions
Investment expenses
Administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation
Fee and commission expenses
Restructuring charges
Other expenses
Operating expenses
Operating profit (loss)
Non-operating income from financial assets and liabilities carried at fair value through income (net)
Realized gains/losses (net)
Impairments of investments (net)
Income from fully consolidated private equity investments (net)
Interest expenses from external debt
Acquisition-related expenses
One-off effect from pension revaluation
Amortization of intangible assets
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
Holding & Treasury
Banking
Alternative Investments
Consolidation
Corporate and Other
2014
265
27
61
116
469
(317)
–
(72)
(736)
(266)
4
–
2013
278
31
53
–
361
(341)
–
(78)
(684)
(231)
34
–
(1,386)
(1,301)
(1,047)
(1,187)
(146)
(151)
(917)
(32)
171
(6)
–
(846)
1
563
(8)
(157)
(1,074)
389
(685)
–
(685)
(939)
(44)
295
(79)
–
(901)
(2)
–
(10)
(741)
(1,680)
456
(1,224)
–
(1,224)
Cost-income ratio1 for the reportable segment Banking in %
1
Represents investment expenses, administrative expenses (net), excluding acquisition-related expenses
and one-off effect from pension revaluation, restructuring charges 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.
188
Annual Report 2014
Allianz Group
2014
590
10
513
–
1,114
(255)
(45)
(1)
(438)
(305)
3
(7)
66
–
13
(1)
–
–
–
(1)
–
11
77
(24)
53
7
45
79.9
2013
613
475
8
–
1,096
(281)
(86)
–
(468)
(263)
(88)
(2)
(91)
–
23
(1)
–
–
–
–
–
22
(69)
20
(49)
5
(54)
100.9
(137)
(145)
(42)
(17)
2013
12
(1)
163
1
175
(2)
–
(5)
–
1
–
24
–
–
–
–
–
–
(96)
(112)
(88)
5
(83)
2
(85)
2014
22
(4)
157
–
176
(2)
–
(8)
30
–
1
–
–
–
–
–
–
(4)
–
(46)
(16)
(9)
(25)
8
(33)
2014
(1)
(7)
(8)
–
–
–
1
–
3
1
3
–
–
8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2013
–
3
–
(4)
(2)
–
–
1
2
–
–
–
4
3
–
–
–
–
–
–
(3)
27
25
27
(5)
22
–
22
2014
876
33
724
117
1,750
(573)
(45)
(77)
(1,310)
(567)
8
(7)
(2,571)
(820)
(33)
184
(7)
(42)
(846)
1
558
(8)
(192)
(1,013)
356
(657)
15
(673)
2013
903
40
687
1
1,631
(623)
(86)
(82)
(1,295)
(493)
(53)
(2)
(2,635)
(1,004)
(46)
346
(80)
(17)
(901)
(2)
–
(106)
(806)
(1,810)
476
(1,334)
7
(1,341)
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
reportable segments – corporate and other
reportable segments – corporate and other
€ mn
Operating income from financial assets and liabilities carried at fair value through income (net)
Interest expenses, excluding interest expenses from external debt
Administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation
Non-operating income from financial assets and liabilities carried at fair value through income (net)
Income from fully consolidated private equity investments (net)
Interest and similar income
Fee and commission income
Other income
Operating revenues
Loan loss provisions
Investment expenses
Fee and commission expenses
Restructuring charges
Other expenses
Operating expenses
Operating profit (loss)
Realized gains/losses (net)
Impairments of investments (net)
Interest expenses from external debt
Acquisition-related expenses
One-off effect from pension revaluation
Amortization of intangible assets
Non-operating items
Income (loss) before income taxes
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
2014
265
27
61
116
469
(317)
(72)
(736)
(266)
–
4
–
(917)
(32)
171
(6)
–
1
(846)
563
(8)
(157)
(1,074)
389
(685)
–
(685)
2013
278
31
53
–
361
(341)
–
(78)
(684)
(231)
34
–
(939)
(44)
295
(79)
–
(901)
(2)
–
(10)
(741)
(1,680)
456
(1,224)
–
(1,224)
Cost-income ratio1 for the reportable segment Banking in %
1
Represents investment expenses, administrative expenses (net), excluding acquisition-related expenses
income (net), fee and commission income, other income, interest expenses, excluding interest expenses
and one-off effect from pension revaluation, restructuring charges and other expenses divided by interest
from external debt, and fee and commission expenses.
and similar income, operating income from financial assets and liabilities carried at fair value through
Holding & Treasury
Banking
Alternative Investments
Consolidation
Corporate and Other
2014
590
10
513
–
1,114
(255)
(45)
(1)
(438)
(305)
3
(7)
2013
613
8
475
–
1,096
(281)
(86)
–
(468)
(263)
(88)
(2)
2014
22
(4)
157
–
176
(2)
–
(8)
2013
12
(1)
163
1
175
(2)
–
(5)
(137)
(145)
–
1
–
–
1
–
(1,386)
(1,301)
(1,047)
(1,187)
(146)
(151)
66
–
13
(1)
–
–
–
(1)
–
11
77
(24)
53
7
45
79.9
(91)
–
23
(1)
–
–
–
–
–
22
(69)
20
(49)
5
(54)
100.9
30
–
–
–
(42)
–
–
(4)
–
(46)
(16)
(9)
(25)
8
(33)
24
–
–
–
(17)
–
–
–
(96)
(112)
(88)
5
(83)
2
(85)
2014
(1)
–
(7)
–
(8)
1
–
3
1
3
–
–
8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2013
–
3
(4)
–
(2)
–
–
1
2
–
–
–
4
3
(3)
27
–
–
–
–
–
–
25
27
(5)
22
–
22
2014
876
33
724
117
1,750
(573)
(45)
(77)
(1,310)
(567)
8
(7)
(2,571)
(820)
(33)
184
(7)
(42)
(846)
1
558
(8)
(192)
(1,013)
356
(657)
15
(673)
2013
903
40
687
1
1,631
(623)
(86)
(82)
(1,295)
(493)
(53)
(2)
(2,635)
(1,004)
(46)
346
(80)
(17)
(901)
(2)
–
(106)
(806)
(1,810)
476
(1,334)
7
(1,341)
Annual Report 2014
Allianz Group
189
Notes to the coNsolidated balaNce sheets
7 – Cash and cash equivalents
9 – Investments
cash and cash equIvalents
€ mn
as of 31 December
Balances with banks payable on demand
Balances with central banks
Cash on hand
Treasury bills, discounted treasury notes, similar
treasury securities, bills of exchange and checks
Total
2014
6,657
397
184
6,625
13,863
Investments
2013
€ mn
as of 31 December
6,574
Available-for-sale investments
449
202
Held-to-maturity investments
Funds held by others under reinsurance
contracts assumed
3,982
Investments in associates and joint ventures
11,207
Real estate held for investment
Total
2014
465,914
3,969
1,154
4,059
11,349
486,445
2013
392,233
4,140
893
3,098
10,783
411,148
8 – Financial assets carried
at fair value through income
FInancIal assets carrIed at FaIr value through Income
€ mn
as of 31 December
Financial assets held for trading
Debt securities
Equity securities
Derivative financial instruments
Subtotal
Financial assets designated at fair value
through income
Debt securities
Equity securities
Subtotal
Total
2014
2013
402
195
1,618
2,214
1,887
1,773
3,660
5,875
360
139
2,013
2,512
2,278
1,870
4,148
6,660
190
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
avaIlable-For-sale Investments
avaIlable-For-sale Investments
€ mn
as of 31 December
Debt securities
Government and agency mortgage-backed
securities (residential and commercial)
Corporate mortgage-backed securities
(residential and commercial)
Other asset-backed securities
Government and government agency bonds
France
Italy
Germany
United States
South Korea
Belgium
Austria
Spain
Switzerland
Netherlands
Hungary
Ireland
Russia
Portugal
Greece
Supranationals
All other countries
Subtotal
Corporate bonds1
Other
Subtotal
Equity securities2
Total
2014
2013
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
3,548
13,685
4,313
31,113
25,203
12,900
10,574
6,156
5,866
5,476
5,055
4,695
4,102
868
620
472
198
1
15,726
33,401
162,426
193,315
2,471
379,757
26,113
405,870
192
546
284
9,509
5,557
2,152
875
882
1,818
1,698
944
610
506
105
28
–
29
2
3,202
2,013
29,928
18,807
499
50,255
11,313
61,568
(2)
(44)
(46)
(21)
(5)
(5)
(34)
–
–
(1)
(1)
–
(1)
–
–
(71)
–
–
(3)
(196)
(338)
(837)
(2)
(1,269)
(255)
(1,524)
3,738
2,515
14,186
4,552
40,601
30,755
15,048
11,415
7,038
7,684
7,173
5,997
5,305
4,607
972
648
401
227
3
18,925
35,217
192,016
211,284
2,968
428,743
37,171
465,914
11,226
3,460
31,410
26,304
14,852
8,411
5,798
5,968
4,941
2,813
4,376
3,627
773
38
839
196
1
14,571
30,015
154,933
168,353
2,230
342,717
23,022
365,739
103
693
210
2,471
2,001
918
239
427
613
468
178
330
159
60
1
10
2
2
663
934
9,476
9,212
324
20,018
9,623
29,641
(16)
(86)
(40)
(177)
(91)
(46)
(171)
(26)
(3)
(23)
(35)
(80)
(26)
–
–
(19)
(2)
–
(56)
(704)
(1,459)
(1,397)
(4)
(3,002)
(146)
(3,148)
2,602
11,833
3,630
33,704
28,214
15,724
8,479
6,199
6,578
5,386
2,956
4,626
3,760
833
39
830
196
3
15,178
30,245
162,950
176,168
2,550
359,733
32,499
392,233
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).
2
Include shares invested in Spanish banks with a fair value of € 408 MN (2013: € 402 MN).
held-to-maturIty Investments
held-to-maturIty Investments
€ mn
as of 31 December
2014
2013
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Government and government agency bonds
Corporate bonds1
Total
2,398
1,571
3,969
379
362
741
–
(1)
(1)
2,777
1,933
4,710
2,411
1,729
4,140
375
144
519
(4)
(8)
(12)
2,782
1,865
4,647
1
Also include corporate mortgage-backed securities.
Annual Report 2014
Allianz Group
191
unrealIzed losses on avaIlable-For-sale
Investments and held-to-maturIty Investments
The following table sets forth gross unrealized losses on available-
for-sale investments and held-to-maturity investments and the
related fair value, broken down by investment category and length of
time such investments have been in a continuous unrealized loss
position as of 31 December 2014 and 2013.
unrealIzed losses on avaIlable-For-sale Investments and held-to-maturIty Investments
€ mn
as of 31 December
2014
Debt securities
Government and agency mortgage-backed securities
(residential and commercial)
Corporate mortgage-backed securities (residential and commercial)
Other asset-backed securities
Government and government agency bonds
Corporate bonds
Other
Subtotal
Equity securities
Total
2013
Debt securities
Government and agency mortgage-backed securities
(residential and commercial)
Corporate mortgage-backed securities (residential and commercial)
Other asset-backed securities
Government and government agency bonds
Corporate bonds
Other
Subtotal
Equity securities
Total
Up to 12 months
Greater than 12 months
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
46
1,087
722
6,871
13,782
126
22,633
3,566
26,200
608
1,114
668
36,119
37,148
77
75,734
2,661
78,395
(1)
(17)
(10)
(141)
(550)
(1)
(720)
(250)
(970)
(15)
(31)
(30)
(1,258)
(1,094)
(3)
(2,431)
(144)
(2,575)
63
1,049
900
3,579
4,086
3
9,680
11
9,691
12
817
224
2,217
3,651
12
6,933
81
7,014
(1)
(27)
(36)
(197)
(288)
–
(550)
(5)
(554)
(1)
(55)
(10)
(205)
(311)
(1)
(583)
(2)
(585)
109
2,136
1,621
10,450
17,868
130
32,314
3,577
35,891
620
1,931
892
38,336
40,799
89
82,667
2,742
85,409
(2)
(44)
(46)
(338)
(837)
(2)
(1,270)
(255)
(1,525)
(16)
(86)
(40)
(1,463)
(1,405)
(4)
(3,014)
(146)
(3,160)
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 Devel-
opment). 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 gov-
ernment bonds were spread over many countries, in particular com-
ing from emerging markets. During 2014, government and govern-
ment 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.
192
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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 ven-
tures held by the Allianz Group amounted to € 654 mn (2013: € 577 mn).
assocIates and joInt ventures
€ mn
Share of earnings
Share of other comprehensive income
Share of total comprehensive income
2014
196
54
250
2013
146
(82)
64
real estate held For Investment
real estate held For Investment
€ mn
Cost as of 1 January
Accumulated depreciation as of 1 January
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Disposals
Reclassifications
Reclassifications into non-current assets
classified as held for sale
Foreign currency translation adjustments
Depreciation
Impairments
Reversals of impairments
Carrying amount as of 31 December
Accumulated depreciation as of 31 December
Cost as of 31 December
2014
13,837
(3,053)
10,783
983
–
(192)
30
(99)
57
(232)
(24)
44
11,349
3,054
14,403
2013
12,443
(2,796)
9,646
706
806
(349)
377
(117)
(43)
(211)
(54)
22
10,783
3,053
13,837
As of 31 December 2014, real estate held for investment pledged as
security and other restrictions on title were € 36 mn (2013: € 36 mn).
Corporate bonds
Total unrealized losses amounted to € 837 mn as of 31 December 2014.
The Allianz Group holds a large variety of bonds issued by corpora-
tions mostly domiciled in OECD countries. For the vast majority of the
Allianz Group’s corporate bonds, issuers and/or issues are of “invest-
ment grade”. The decrease in unrealized losses of € 568 mn is spread
over almost all sectors, due to a decreasing interest environment.
Based on a detailed analysis of the underlying securities, the Allianz
Group did not consider these investments 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 secu-
rities 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 con-
tractual term to maturity, are as follows:
contractual term to maturIty
€ mn
as of 31 December 2014
avaIlable-For-sale debt securItIes
Due in 1 year or less
Due after 1 year and up to 5 years
Due after 5 years and up to 10 years
Due after 10 years
Total
held-to-maturIty debt securItIes
Due in 1 year or less
Due after 1 year and up to 5 years
Due after 5 years and up to 10 years
Due after 10 years
Total
Amortized Cost
Fair Value
26,410
102,012
117,230
134,104
379,757
367
1,519
723
1,360
3,969
27,589
108,272
130,046
162,837
428,743
396
1,621
835
1,857
4,710
Actual maturities may deviate from the contractually defined matur-
ities 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.
Annual Report 2014
Allianz Group
193
10 – Loans and advances to banks and customers
loans and advances to banks and customers
€ mn
as of 31 December
Short-term investments and certificates of deposit
Reverse repurchase agreements
Collateral paid for securities borrowing transactions and derivatives
Loans
Other
Subtotal
Loan loss allowance
Total
1
Primarily include covered bonds.
2014
Customers
–
4
–
55,950
12
55,966
(298)
55,668
Banks
3,622
121
696
56,4141
555
61,407
–
61,407
Total
3,622
125
696
112,363
567
117,373
(298)
117,075
2013
Customers
–
–
–
51,595
15
51,611
(194)
51,416
Banks
3,275
613
315
60,5111
670
65,383
–
65,383
Total
3,275
613
315
112,106
686
116,994
(194)
116,800
loans and advances to banks and customers by contractual maturIty
loans and advances to banks and customers by contractual maturIty
€ mn
as of 31 December 2014
Loans and advances to banks
Loans and advances to customers
Total
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
3,281
2,856
6,137
4,312
3,394
7,706
8,075
5,476
13,551
10,996
7,052
18,048
34,743
37,188
71,931
Total
61,407
55,966
117,373
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
Unearned premiums
Reserves for loss and loss adjustment expenses
Aggregate policy reserves
Other insurance reserves
Total
2014
1,519
6,947
4,998
123
2013
1,538
6,494
4,463
115
13,587
12,609
194
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Changes in aggregate policy reserves ceded to reinsurers are as follows:
12 – Deferred acquisition costs
changes In aggregate PolIcy reserves ceded to reInsurers
deFerred acquIsItIon costs
€ mn
Carrying amount as of 1 January
Foreign currency translation adjustments
Changes recorded in the consolidated income
statements
Other changes
Carrying amount as of 31 December
2014
4,463
430
114
(9)
4,998
2013
4,295
(131)
10
289
4,463
€ mn
as of 31 December
Deferred acquisition costs
Property-Casualty
Life/Health
Asset Management1
Subtotal
Present value of future profits
Deferred sales inducements
Total
2014
2013
4,595
16,089
–
20,685
870
708
22,262
4,354
15,837
159
20,350
1,046
807
22,203
1
The respective entities have been prospectively reclassified, effective 1 January 2014, from the business
segment Asset Management to the business segment Life/Health. For further information, please see
note 6.
deFerred acquIsItIon costs
changes In deFerred acquIsItIon costs
€ mn
ProPerty-casualty
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Foreign currency translation adjustments
Amortization
Carrying amount as of 31 December
lIFe/health
Carrying amount as of 1 January
Reclassification of entities from
Asset Management to Life/Health
Additions
Foreign currency translation adjustments
Changes in shadow accounting
Amortization
Carrying amount as of 31 December
asset management
Total
2014
2013
4,354
5,847
39
82
(5,727)
4,595
4,323
5,530
(3)
(135)
(5,361)
4,354
15,837
13,521
159
3,350
892
(1,832)
(2,318)
16,089
–
20,685
–
2,813
(390)
2,204
(2,310)
15,837
159
20,350
Changes in the reserves for loss and loss adjustment expenses ceded
to reinsurers in the business segment Property-Casualty are shown
in the respective table in note 19.
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 reinsur-
ance 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 retro-
cessions.
Reinsurance involves credit risk and is subject to aggregate loss
limits. Reinsurance does not legally discharge the respective Allianz
company from primary liability under the reinsured policies.
Although the reinsurer is liable to this company to the extent of the
business ceded, the Allianz company remains primarily liable as the
direct insurer on all the risks it underwrites, including the share that
is reinsured. The Allianz Group monitors the financial condition of
its reinsurers on a regular basis and reviews its reinsurance arrange-
ments periodically in order to evaluate the reinsurer’s ability to fulfill
its obligations to the Allianz Group companies under existing and
planned reinsurance contracts. The Allianz Group’s evaluation crite-
ria, which include the degree of creditworthiness, capital levels and
marketplace reputation of its reinsurers, are such that the Allianz
Group believes that its reinsurance credit risk is not significant, and
historically has not experienced noteworthy difficulty in collecting
claims from its reinsurers. Additionally, and as appropriate, the
Allianz Group may also require letters of credit, deposits, or other
financial guarantees to further minimize its exposure to credit risk.
In certain cases, however, the Allianz Group does establish an allow-
ance for doubtful amounts related to reinsurance as appropriate,
although this amount was not significant as of 31 December 2014 and
2013. The Allianz Group primarily maintains business relations with
highly rated reinsurers.
Annual Report 2014
Allianz Group
195
Present value oF Future ProFIts
13 – Other assets
Present value oF Future ProFIts
€ mn
Cost as of 1 January
Accumulated amortization as of 1 January
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Foreign currency translation adjustments
Changes in shadow accounting
Amortization
Carrying amount as of 31 December
Accumulated amortization as of 31 December
Cost as of 31 December
deFerred sales Inducements
deFerred sales Inducements
€ mn
Carrying amount as of 1 January
Additions
Foreign currency translation adjustments
Changes in shadow accounting
Amortization
Carrying amount as of 31 December
2014
2,954
(1,908)
1,046
–
–
27
(34)
(170)
870
2,151
3,021
2013
2,783
(1,838)
945
40
214
(57)
20
(115)
1,046
1,908
2,954
2014
807
121
142
(203)
(158)
708
2013
524
114
(47)
347
(131)
807
other assets
€ mn
as of 31 December
Receivables
Policyholders
Agents
Reinsurers
Other
Less allowance for doubtful accounts
Subtotal
Tax receivables
Income taxes
Other taxes
Subtotal
Accrued dividends, interest and rent
Prepaid expenses
Interest and rent
Other prepaid expenses
Subtotal
Derivative financial instruments used for hedging
that meet the criteria for hedge accounting and
firm commitments
Property and equipment
Real estate held for own use
Software
Equipment
Fixed assets of alternative investments
Subtotal
Other assets
Total1
2014
2013
5,846
4,348
1,951
4,711
(693)
16,163
1,996
1,426
3,422
7,836
25
256
281
477
2,566
2,142
1,291
1,465
7,464
1,437
5,489
4,424
1,844
4,160
(720)
15,197
2,159
1,215
3,374
7,706
13
255
268
75
2,423
1,832
1,173
1,304
6,732
1,280
37,080
34,632
1
Includes other assets due within one year of € 28,069 MN (2013: € 27,547 MN).
196
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
ProPerty and equIPment
Real estate held for own use
real estate held For own use
€ mn
Cost as of 1 January
Accumulated depreciation as of 1 January
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Disposals
Reclassifications
Reclassifications into non-current assets classified
as held for sale
Foreign currency translation adjustments
Depreciation
Reversals of impairments
Carrying amount as of 31 December
Accumulated depreciation as of 31 December
Cost as of 31 December
2014
3,497
(1,074)
2,423
346
–
(35)
(32)
(81)
11
(68)
2
2,566
1,071
3,637
2013
4,021
(1,135)
2,885
93
17
(66)
(379)
(16)
(43)
(68)
–
2,423
1,074
3,497
Equipment
equIPment
€ mn
Cost as of 1 January
2014
3,828
2013
3,640
Accumulated depreciation as of 1 January
(2,655)
(2,673)
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Disposals
Reclassifications
Foreign currency translation adjustments
Depreciation
Impairments
Carrying amount as of 31 December
Accumulated depreciation as of 31 December
Cost as of 31 December
Fixed assets of alternative investments
FIxed assets oF alternatIve Investments1
As of 31 December 2014, assets pledged as security and other restric-
tions on title were € 113 mn (2013: € 108 mn).
€ mn
Cost as of 1 January
Accumulated depreciation as of 1 January
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Disposals
Foreign currency translation adjustments
Depreciation
Impairments
Carrying amount as of 31 December
Accumulated depreciation as of 31 December
Cost as of 31 December
1
Include fixed assets of wind parks, solar parks and Selecta.
Software
soFtware
€ mn
Cost as of 1 January
2014
5,632
2013
5,057
Accumulated amortization as of 1 January
(3,800)
(3,467)
Carrying amount as of 1 January
Additions
Changes in the consolidated subsidiaries
of the Allianz Group
Disposals
Foreign currency translation adjustments
Amortization
Impairments
Carrying amount as of 31 December1
Accumulated amortization as of 31 December
Cost as of 31 December
1,832
691
9
(7)
15
(393)
(4)
2,142
4,218
6,360
1,590
657
6
(19)
(17)
(384)
(1)
1,832
3,800
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.
Annual Report 2014
Allianz Group
1,173
349
18
(52)
1
35
(226)
(5)
1,291
2,580
3,871
2014
2,005
(701)
1,304
279
–
(4)
(1)
(114)
(1)
1,465
815
2,280
966
534
10
(74)
6
(27)
(242)
(1)
1,173
2,655
3,828
2013
1,804
(579)
1,225
48
161
(7)
(2)
(120)
–
1,304
701
2,005
197
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 com-
pleted 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.
15 – Intangible assets
IntangIble assets
€ mn
as of 31 December
Intangible assets with indefinite useful lives
Goodwill
Brand names1
Subtotal
Intangible assets with finite useful lives
Distribution agreements2
Customer relationships3
Other4
Subtotal
Total
2014
2013
12,166
289
12,455
948
231
121
1,300
13,755
11,544
296
11,840
996
149
115
1,260
13,100
1
2
3
4
Include primarily the brand name of Selecta aG, Muntelier.
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).
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).
Include primarily acquired business portfolios of € 64 MN (2013: € 76 MN) and heritable building rights of
€ 17 MN (2013: € 17 MN).
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
Assets of disposal groups classified as held for sale
Münsterländische Bank Thie & Co. kg, Münster
Subtotal
Non-current assets classified as held for sale
Investments in associates and joint ventures
Real estate held for investment
Real estate held for own use
Subtotal
Total
Liabilities of disposal groups classified
as held for sale
Münsterländische Bank Thie & Co. kg, Münster
Total
2014
2013
83
83
–
92
61
152
235
102
102
–
–
131
–
16
147
147
–
–
assets and lIabIlItIes oF dIsPosal grouPs
classIFIed as held For sale
During the fourth quarter of 2014, the Allianz Group decided to dis-
pose of Münsterländische Bank Thie & Co. KG, Münster. Thus, the
assets and liabilities of this consolidated entity allocated to the
reportable segment Banking were reclassified as held for sale. As of
31 December 2014, no cumulative gains or losses were recognized in
other comprehensive income relating to the disposal group classified
as held for sale. The sale is expected to occur during the first quarter
of 2015. Upon remeasurement of the disposal group at fair value less
costs to sell, no impairment loss was recognized for the year ended
31 December 2014.
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.
The investment in an associated Italian real estate company
allocated to the reportable segment Western & Southern Europe
(Property-Casualty) was sold as expected during the third quarter of
2014.
198
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
IntangIble assets wIth IndeFInIte useFul lIves
Impairment test for goodwill
and intangible assets with indefinite useful lives
Goodwill
goodwIll
€ mn
Cost as of 1 January
Accumulated impairments as of 1 January
Carrying amount as of 1 January
Additions
Disposals
Foreign currency translation adjustments
Impairments
Carrying amount as of 31 December
Accumulated impairments as of 31 December
Cost as of 31 December
2014
12,534
(990)
11,544
290
–
331
–
12,166
990
13,156
2013
12,573
(894)
11,679
226
–
(265)
(96)
11,544
990
12,534
2014
Additions in 2014 are related to goodwill arising from the acquisition
of specific distribution activities of the Property-Casualty insurance
business of UnipolSai Assicurazioni S.p.A., Bologna, the acquisition
of Assurances Médicales S.A., Paris, as well as the acquisition of sev-
eral windparks.
2013
Additions of 2013 mainly include goodwill from the acquisition of
93.94 % in Yapı Kredi Sigorta A.Ş., Istanbul.
The allocated goodwill of the cash generating unit (CGU) Selecta
AG was in 2013 impaired by € 96 mn in the business segment Corpo-
rate and Other. This impairment was triggered by a slower recovery
of Selecta’s major European vending markets and lower multiples.
Brand names
The position brand names consists primarily of the brand name
“Selecta”. The brand name “Selecta” has an indefinite life, as there is
no foreseeable end to its economic life. The fair value of this brand
name, registered as a trade name, was determined using a royalty
savings approach.
Due to the rebranding activities of the Allianz Group in the Rus-
sian market, the brand name of the Russian People’s Insurance Soci-
ety “Rosno” was amortized by € 4 mn in 2014. The brand name will be
completely amortized in 2015.
Allocation principles
For the purpose of impairment testing, the Allianz Group has allo-
cated goodwill to CGUs1. These CGUs represent the lowest level at
which goodwill is monitored for internal management purposes.
CGUs in the Property-Casualty business segment are:
− Insurance German Speaking Countries,
− Insurance Western & Southern Europe including France, the
Netherlands, Turkey, Belgium, Italy, Greece, Luxembourg and
Africa,
− Insurance Iberia & Latin America including South America,
Mexico, Portugal and Spain,
− Asia-Pacific and Middle East,
− Central and Eastern Europe including Bulgaria, Croatia, Czech
Republic, Hungary, Slovakia, Poland, Romania, Ukraine and Rus-
sia,
− Global Insurance Lines & Anglo Markets including the United
Kingdom, Ireland and Australia,
− Specialty Lines I including Allianz Re, Allianz Global Corpo-
rate & Specialty and Credit Insurance,
− Specialty Lines II including Allianz Worldwide Partners.
CGUs in the Life/Health business segment2 are:
− Insurance German Speaking Countries,
− Health Germany,
− Insurance Western & Southern Europe including France, the
Netherlands, Turkey, Belgium, Italy, Greece, Luxembourg and
Africa,
− Asia-Pacific and Middle East,
− Central and Eastern Europe including Bulgaria, Croatia, Czech
Republic, Hungary, Slovakia, Poland, Romania, Ukraine and Rus-
sia,
− Insurance USA.
The business segment Asset Management is represented by the CGU
Asset Management, including mainly Allianz Global Investors and
PImCO.
The CGU in the Corporate and Other business segment consists of the
CGU Selecta AG.
1
2
The following paragraphs include all cGUs that contain goodwill.
Some Asset Management entities have been allocated to the Life/Health business segment. Please refer
to note 6 – Segment reporting for details.
Annual Report 2014
Allianz Group
199
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
cgu
ProPerty-casualty
Insurance German Speaking
Countries
Insurance Western &
Southern Europe
Insurance Iberia & Latin
America
Asia-Pacific and Middle East
Central and Eastern Europe
Global Insurance Lines &
Anglo Markets
Specialty Lines I
Specialty Lines II
Subtotal
lIFe/health
Insurance German Speaking
Countries
Health Germany
Insurance Western &
Southern Europe
Asia-Pacific and Middle East
Central and Eastern Europe1
Insurance usa
Subtotal
asset management
corPorate and other
Selecta ag
Subtotal
Total
2014
2013
Goodwill
Brand
names
Goodwill
Brand
names
287
1,358
21
86
307
321
38
21
2,440
602
326
656
171
23
454
2,232
7,187
–
–
–
–
3
–
–
–
3
–
–
–
–
–
–
–
–
284
1,086
21
83
427
314
38
20
2,273
593
326
633
171
–
436
2,159
6,806
–
–
–
–
10
–
–
–
10
–
–
–
–
–
–
–
–
307
307
12,166
286
286
289
307
307
11,544
286
286
296
1
Some Asset Management entities have been allocated to the Life/Health business segment. Please refer
to note 6 – Segment reporting for details.
Valuation techniques
The recoverable amounts for all CGUs are determined on the basis of
value in use calculations. The Allianz Group applies generally
acknowledged valuation principles to determine the value in use.
For all CGUs in the Property-Casualty business segment and for
the CGU Asset Management, the Allianz Group uses the discounted
earnings method to derive the value in use. Generally, the basis for
the determination of the discounted earnings value is the business
plan (“detailed planning period”) as well as the estimate of the sus-
tainable returns and eternal growth rates which can be assumed to
be realistic on a long-term basis (“terminal value”) for the operating
entities included in the CGU. The discounted earnings value is calcu-
lated by discounting the future earnings using an appropriate dis-
count rate. The business plans applied in the value in use calcula-
tions are the results of the structured management dialogues
between the Board of Management of the Allianz Group and the
operating entities in connection with a reporting process integrated
into these dialogues. Generally, the business plans comprise a plan-
ning horizon of three years and are based on the current market
environment.
The terminal values are largely based on the expected profits of
the final year of the detailed planning period. Where necessary, the
planned profits are adjusted to reflect long-term sustainable earn-
ings. The financing of the assumed eternal growth in the terminal
values is accounted for by appropriate profit retention.
For all CGUs in the Life/Health business segment the value in use
is based on an Appraisal Value method which is derived from the
Embedded Value and new business value calculation.
As a starting point for the impairment test for the CGUs in the
Life/Health business segment, the Market Consistent Embedded
Value (mCEV) and a multiple of the Market Consistent Value of New
Business is used. The mCEV is an industry-specific valuation method
to assess the current value of the in-force portfolio and is in compli-
ance with the general principles of the discounted earnings methods.
The mCEV approach applied is based on the CFO Forum Principles1
and the Allianz Group’s Embedded Value guidelines. It is a risk-
neutral valuation that includes explicit allowance for non-financial
risk as well as allowance for options and guarantees using market-
consistent stochastic simulations that are in line with market prices
for similar financial instruments.
Significant assumptions
In determining the business plans, certain key assumptions were
made in order to project future earnings.
For entities included in the CGUs of the Property-Casualty busi-
ness segment, the business plans are mainly based on key assump-
tions 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.
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.
200
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
planning and controlling process. The discount rates and eternal
growth rates for the CGUs in the Property-Casualty business segment
are as follows:
dIscount rates and eternal growth rates For the cgus
In the ProPerty-casualty busIness segment
%
reFerence rates For the cgus In the lIFe/health busIness segment
cgus in the Life/Health
business segment
Reference rate for entities with Appraisal Value
based on mcev
Insurance German
Speaking Countries
Euro swap curve minus 10 bPs credit risk adjustment plus
13 bPs volatility adjustment
chF swap curve minus 10 bPs credit risk adjustment plus
4 bPs volatility adjustment
cgus in the Property-Casualty business segment
Discount rate
Eternal
growth rate
Health Germany
Euro swap curve minus 10 bPs credit risk adjustment plus
13 bPs volatility adjustment
Insurance German Speaking Countries
Insurance Western & Southern Europe
Insurance Iberia & Latin America
Asia-Pacific and Middle East
Central and Eastern Europe
Global Insurance Lines & Anglo Markets
Specialty Lines I
Specialty Lines II
7.8
8.1
16.5
10.8
9.3
9.0
8.0
8.0
1.0
1.0
4.0
3.0
1.5
1.5
1.0
1.0
For entities included in the CGUs of the business segment Life/Health,
the projection of profits underlying the mCEV calculations is based on
assumptions set with allowance for profit-sharing as well as a projec-
tion of unrealized capital gains and unallocated premium reserves.
The profits estimated for the mCEV calculations consist of premium
income, investment return on technical reserves, expenses, commis-
sions, death and morbidity claims, surrender claims, maturity claims,
increases in technical reserves, taxation and levies. For projecting
future profits, assumptions have to be made on the asset perfor-
mance of the operating entity. This requires consideration of the
development of the market together with assumptions on the operat-
ing entity’s investment strategy as well as the current asset portfolio
and allocation. The projection of investment returns includes the
consideration of projection of returns for the current asset portfolio
and a projection of returns for reinvestments. All assumptions have
been developed by management under consideration of internal and
external sources.
For the calculation of the mCEV the projected future profits are
discounted using risk-neutral discount rates, as the risks are already
explicitly allowed for in the market-consistent valuation. Time-
dependent and scenario-dependent discount factors are applied. As
a reference rate, the swap yield curve with appropriate adjustments
for, e.g., credit risk and illiquidity, was used for determining the mCEV.
The following table provides an overview of the discount rates for the
CGUs in the Life/Health business segment:
Insurance Western &
Southern Europe
Euro swap curve minus 10 bPs credit risk adjustment plus
13 bPs volatility adjustment
Asia-Pacific and
Middle East
Central and Eastern
Europe
Insurance usa
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)
Local swap curve minus 11 bPs credit risk adjustment plus
50 bPs volatility adjustment
The new business value calculation is based on a best estimate of one
year of value of new business, multiplied by a factor (multiple) to
capture expected future new business. The best estimate of new busi-
ness is generally derived from the achieved value of new business.
The new business multiple accounts for the risk and the growth asso-
ciated with future new business in analogy to the discount rate and
the growth rate in a discounted earnings method. For all CGUs in the
Life/Health business segment, a multiple of not more than ten times
the value of new business is applied.
For entities included in the CGU of the Asset Management busi-
ness segment, key assumptions include assets under management
growth, cost-income ratio and risk capital. The key assumptions are
based on the current market environment. The discount rate is 9.6 %
and the eternal growth rate is 1.0 % for the CGU Asset Management.
For the CGU Selecta AG, the calculation of the recoverable
amount is based on the higher of a multiple valuation and a value in
use. The discount rate applied to determine the value in use is 9.6 %.
The value in use results from the discounted expected sales proceeds,
assuming a sale to occur in the mid-term future. The sale proceeds
are estimated by using a multiple valuation. The multiple is derived
from industry peer companies and management judgment and is
applied to projected results derived from the internal business plan,
which is mainly based on expectations regarding future economic
developments in Selecta’s core markets.
Annual Report 2014
Allianz Group
201
Sensitivity analysis
Sensitivity analyses were performed with regard to discount rates
and key value drivers of the business plans.
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, dis-
counted 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.
In the Life/Health business segment sensitivity analyses were
performed based on mCEV sensitivity testing on the reference rate.
The analyses have shown that in case of a decrease in reference rates
by 50 basis points the appraisal value of each CGU still exceeds its
carrying value.
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 remain-
ing useful lives of 2.5 years. The customer relationships of Assur-
ances Médicales S.A. have useful lives of 13 years, which were deter-
mined 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 Assi-
curazioni 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.
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 con-
tractual agreements. They are amortized on a straight-line basis over
the remaining useful life of 9 years. The long-term distribution agree-
ments 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 Bank-
ing 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 distri-
bution agreements with Yapı Kredi Bank have useful lives of 15 years,
which were determined by contractual agreements. They are amor-
tized on a straight-line basis over the remaining useful lives of 13.5
years.
202
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
16 – Financial liabilities
carried at fair value through income
Financial liabilities carried at Fair value through income
€ mn
as of 31 December
Financial liabilities held for trading
Derivative financial instruments
Other trading liabilities
Total
2014
2013
8,493
3
8,496
6,010
3
6,013
17 – Liabilities to banks and customers
liabilities to banks and customers
€ mn
as of 31 December
Payable on demand
Savings deposits
Term deposits and certificates of deposit
Repurchase agreements
Collateral received from securities lending transactions and derivatives
Other
Total
2014
Banks
Customers
69
–
971
1,197
2,715
4,278
9,230
4,803
2,846
1,946
–
–
4,191
13,786
Total
4,872
2,846
2,916
1,197
2,715
8,469
23,015
2013
Banks
Customers
696
–
980
1,028
2,216
5,050
9,970
4,473
2,873
2,157
3
–
3,634
13,140
liabilities to banks and customers by contractual maturity
liabilities to banks and customers by contractual maturity
€ mn
as of 31 December 2014
Liabilities to banks
Liabilities to customers
Total
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
4,222
10,592
14,814
1,090
689
1,779
1,124
1,573
2,697
1,248
182
1,429
1,546
750
2,296
Annual Report 2014
Allianz Group
Total
5,169
2,873
3,136
1,031
2,216
8,684
23,109
Total
9,230
13,786
23,015
203
18 – Unearned premiums
unearned premiums
€ mn
as of 31 December
Property-Casualty
Life/Health
Consolidation
Total
19 – Reserves for loss
and loss adjustment expenses
reserves For loss and loss adjustment expenses
€ mn
as of 31 December
Property-Casualty
Life/Health
Consolidation
Total
2014
58,925
10,081
(18)
68,989
2013
56,614
9,960
(9)
66,566
2014
16,595
3,222
(17)
19,800
2013
15,367
2,855
(10)
18,212
Reserves for loss and loss adjustment expenses for the Property-
Casualty business segment are described in detail in the following
sections.
change in reserves For loss
and loss adjustment expenses
The following table reconciles the beginning and ending reserves of
the Allianz Group, including the effect of reinsurance ceded, for the
Property-Casualty business segment for the years ended 31 Decem-
ber 2014 and 2013.
change in the reserves For loss and loss adjustment expenses in the property-casualty business segment
€ mn
As of 1 January
Balance carry forward of discounted loss reserves
Subtotal
Loss and loss adjustment expenses incurred
Current year
Prior years
Subtotal
Loss and loss adjustment expenses paid
Current year
Prior years
Subtotal
Foreign currency trans lation adjustments and other changes1
Changes in the consolidated subsidiaries of the Allianz Group
Subtotal
Ending balance of discounted loss reserves
As of 31 December
Gross
56,614
3,207
59,821
32,773
(1,752)
31,021
(16,113)
(14,684)
(30,797)
2,477
–
62,522
(3,597)
58,925
2014
Ceded
(6,070)
(306)
(6,376)
(2,510)
367
(2,143)
703
1,392
2,095
(478)
–
(6,903)
326
(6,577)
Net
50,544
2,901
53,445
30,263
(1,385)
28,878
(15,410)
(13,292)
(28,702)
1,999
–
55,619
(3,271)
52,349
2013
Ceded
(6,904)
–
Gross
62,711
–
62,711
(6,904)
31,831
(2,185)
29,646
(16,136)
(15,099)
(31,235)
(1,434)
132
59,821
(3,207)
56,614
(2,429)
496
(1,933)
687
1,569
2,256
266
(59)
(6,376)
306
(6,070)
Net
55,807
–
55,807
29,402
(1,689)
27,713
(15,449)
(13,530)
(28,979)
(1,168)
72
53,445
(2,901)
50,544
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.
204
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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 %).
changes in historicaL reserves
for Loss and Loss adjustment expenses (Lae)
The analysis of loss and LAE reserves by actuaries and management
is conducted by line of business and separately for specific claim
types such as asbestos and environmental claims. The origin year of
losses is taken into consideration by analyzing each line of business
by accident year. While this determines the estimates of reserves for
loss and LAE by accident year, the effect in the consolidated income
statement in the respective calendar year combines the accident year
loss ratio for the current year with the favorable or adverse develop-
ment from prior years (run-off).
Although discounted loss reserves have been reclassified to
“Reserves for insurance and investment contracts” in the balance
sheet, the underlying business development of these non-life reserves
is still considered in the loss ratio. Therefore the tables below show
the loss development by accident year including the business devel-
opment of discounted loss reserves.
The run-off triangle, also known as the “loss triangle”, is a tabu-
lar 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 ulti-
mate 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), con-
sistently using the exchange rates applicable at the reporting date.
This ensures that the reserves reconcile with reserves in the consoli-
dated balance sheet.
Loss payments for the individual accident years (per calendar year, net)
Loss payments for the individuaL accident years (per caLendar year, net)
€ mn
Accident year
Calendar year
2005 & Prior
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
22,597
12,242
5,851
3,965
2,750
2,005
1,441
1,408
1,348
1,355
11,760
6,403
1,643
955
586
397
265
266
162
12,631
6,397
1,744
934
687
483
323
211
13,130
7,350
2,151
1,034
716
497
303
13,368
6,688
1,725
1,107
712
465
14,094
6,945
1,972
1,113
729
14,316
7,434
2,090
1,169
14,443
7,181
1,890
15,449
7,009
15,410
Annual Report 2014
Allianz Group
22,597
24,002
24,886
25,135
26,167
26,459
26,545
27,828
28,979
28,702
205
Reserves for loss and loss adjustment expenses for the individual accident years at the respective reporting date (net)
reserves For loss and loss adjustment expenses For the individual accident years at the respective reporting date (net)
€ mn
Accident year
as of 31 December
2005 & Prior
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
49,656
35,483
27,052
21,637
18,376
16,274
15,126
15,390
13,887
13,138
13,848
7,612
4,488
3,432
2,815
2,440
2,026
1,662
1,508
14,012
7,449
5,038
3,911
2,973
2,417
1,953
1,574
14,222
7,620
5,666
4,337
3,249
2,601
2,198
14,074
7,456
5,147
4,061
3,117
2,492
14,729
7,218
5,238
3,837
3,105
15,596
7,861
5,190
4,066
15,564
7,239
5,223
13,957
7,101
15,215
49,656
49,331
48,677
47,796
48,539
50,850
52,836
55,807
53,445
55,619
Ultimate loss for the individual accident years at the respective reporting date (net)
ultimate loss For the individual accident years at the respective reporting date (net)
€ mn
Accident year
as of 31 December
2005 & Prior
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Surplus1
Reduction/(increase)
2014 to 20132
72,253
70,322
67,743
66,293
65,780
65,684
65,977
67,649
67,494
68,101
4,152
25,609
25,776
24,295
24,194
24,164
24,185
24,037
23,939
23,947
1,662
26,643
26,477
25,810
25,617
25,367
25,294
25,153
24,984
1,659
27,353
28,100
28,297
28,002
27,630
27,478
27,378
(25)
(606)
(8)
169
100
27,442
27,512
26,928
26,950
26,718
26,557
885
161
28,823
28,257
28,250
27,962
27,958
865
29,912
29,610
29,029
29,074
838
30,007
28,863
28,736
1,271
29,407
29,560
(153)
4
(45)
127
(153)
30,625
– 3
– 3
11,153
(251)
1
2
Includes effects from foreign currency translation adjustments and other changes.
The total development 2014 to 2013 of € (251) mn represents the cumulative surplus from reestimating
the ultimate loss for prior year claims. Considering foreign currency translation adjustments of net
€ 1,282 mn as well as changes in the consolidated subsidiaries and other changes of in total € 354 mn, this
leads to an effective run-off result of net € 1,385 mn, which can be found in the table “Change in the
reserves for loss and loss adjustment expenses” within this note.
Presentation not meaningful.
3
206
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Calendar year premiums earned and ultimate loss ratio
for the individual accident years at the respective reporting date (net)
calendar year premiums earned and ultimate loss ratio For the individual accident years at the respective reporting date (net)
as of 31 December
2006
2007
2008
2009
2010
2011
2012
2013
2014
Premiums
earned
(net)
€ mn
37,950
38,553
38,213
37,828
39,303
39,898
41,705
42,047
43,759
2006
%
67.5
67.9
64.0
63.8
63.7
63.7
63.3
63.1
63.1
2007
%
69.1
68.7
66.9
66.4
65.8
65.6
65.2
64.8
2008
%
71.6
73.5
74.1
73.3
72.3
71.9
71.6
Accident year
2009
%
2010
%
2011
%
2012
%
2013
%
2014
%
72.5
72.7
71.2
71.2
70.6
70.2
73.3
71.9
71.9
71.1
71.1
75.0
74.2
72.8
72.9
72.0
69.2
68.9
69.9
70.3
70.0
The ultimate loss of an accident year comprises all payments made
for that accident year up to the reporting date, plus the loss reserve
at the reporting date. Given complete information regarding all losses
incurred up to the balance sheet date, the ultimate loss for each
accident-year period would remain the same. In practice, however,
the ultimate loss (based on estimates) is exposed to fluctuations that
reflect the increase in knowledge regarding the loss cases. The loss
ratio presented above deviates from the reported loss ratio because
the ultimate loss in the table above is based on the sum of the pay-
ments plus the loss reserve, and not the incurred loss from the profit
or loss account. This means that effects like changes in consolidated
subsidiaries, foreign currency translation and reclassification of
unwinding of discounted loss reserves are presented differently.
contractual cash Flows
As of 31 December 2014, reserves for loss and loss adjustment expenses,
which are expected to be due in 2015 amounted to € 18,172 mn, those
which are expected to be due between 2016 and 2019 amounted to
€ 18,462 mn and those which are expected to be due after 2019 to
€ 18,985 mn.
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, rep-
resenting 2.6 % of net reserves as of 31 December 2013. The following
table provides a breakdown of these amounts by line of business.
changes in reserves For loss and lae during 2014
Net reserves
as of
31 December
2014
Net reserves
as of
31 December
2013
Net
development
related to
prior years
€ mn
€ mn
15,737
15,249
14,743
8,836
14,046
7,791
5,060
5,575
4,641
1,500
1,142
1,071
2,890
55,619
4,469
1,461
1,204
1,145
2,505
53,445
€ mn
346
(86)
470
329
3
105
42
(13)
189
1,385
Motor vehicle
liability insurance
General liability
insurance
Reinsurance
Fire and other
damage to property
insurance
Worker's
compensation
insurance
Marine, aviation and
transport insurance
Income protection
insurance
Other motor
insurance
Other
Allianz Group
1
In % of net reserves as of 31 December 2013.
% 1
2.3
(0.6)
6.0
5.9
0.1
7.2
3.5
(1.1)
7.5
2.6
The major highlights of the reserve developments in 2014 are dis-
cussed by line of business below. The discussion is based on net loss
and LAE reserves of the relevant local operating entity before consoli-
dation and converted into Euro for uniform presentation. Only sig-
nificant developments for the Allianz Group’s major operating entities
are included and therefore the amounts do not fully reconcile to the
line of business totals in the above table.
Annual Report 2014
Allianz Group
207
asbestos and environmental (a & e) loss reserves
There are significant uncertainties in estimating A & E reserves for
loss and LAE. Reserves for asbestos-related illnesses and environmen-
tal clean-up losses cannot be estimated using traditional actuarial
techniques due to the long latency period and changes in the legal,
socio-economic and regulatory environment.
Case reserves are established when sufficient information is
available to indicate the involvement of a specific insurance policy.
In addition, IBnR reserves are established to cover additional expo-
sures on both known and not yet reported claims. To the extent pos-
sible, A & E loss reserve estimates are based not only on claims reported
to date, but also on a survey of policies that may be exposed to claims
reported in the future (i.e. an exposure analysis).
In establishing liabilities for A & E claims, the management con-
siders facts currently known and the current state of the law and
coverage litigation. However, given the expansion of coverage and
liability by the courts and the legislatures in the past and the possi-
bilities of similar interpretation in the future, there is significant
uncertainty regarding the extent of insurer liability. As a result, the
range of reasonable potential outcomes for A & E liabilities provided
in these analyses is particularly large. Given this inherent uncertainty
in estimating A & E liabilities, significant deviation from the currently
carried A & E reserve position is possible.
While the U.S. A & E claims still represent a majority of the total
A & E claims reported to the Allianz Group, the insurance industry is
facing an increased prominence in exposures to A & E claims on a
global basis. The Allianz Group continues to monitor these A & E expo-
sures. During 2014, A & E liabilities decreased from € 2,711 mn to
€ 2,679 mn due to claim payments of € 212 mn partially offset by claims
development and foreign exchange rate effects of € 181 mn.
Motor vehicle liability insurance
For motor vehicle liability insurance, net loss and LAE reserves devel-
oped favorably during 2014 by € 346 mn, or 2.3 % of reserves at
31 De cember 2013. Favorable development was seen for different
effects across several operating entities. The following subsidiaries
were the largest contributors:
€ 176 mn at Allianz Italy. The reduction was driven by favorable
claim settlements due to the economic environment as well as
ongoing effects of claim initiatives.
€ 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 Decem-
ber 2013. This overall minor development consists of several offset-
ting 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.
Reinsurance
For reinsurance, net loss and LAE reserves developed favorably during
2014 by € 470 mn, or 6.0 % of reserves at 31 December 2013. Favorable
development was seen for different effects across several operating
entities. The following subsidiaries were the largest contributors:
€ 277 mn at Allianz Global Corporate & Specialty mainly related
to the German corporate liability, property, marine and aviation
segments, due to the release of IBnR based on better than expected
experience.
€ 84 mn presented as reinsurance at Euler Hermes Re originating
from credit business at Euler Hermes entities.
Fire and other damage to property insurance
For fire and other damage to property insurance, net loss and LAE
reserves developed favorably during 2014 by € 329 mn, or 5.9 % of
reserves at 31 December 2013. Favorable development was seen for
different effects across several operating entities.
The largest contributor was Fireman’s Fund Insurance Company
with a favorable development of € 134 mn mainly due to a better than
expected development for hurricane Sandy claims.
208
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
The following table summarizes the gross and net loss and LAE
reserves for A & E claims.
gross and net reserves For loss and lae For a & e claims
€ mn
as of 31 December
a & e net reserves
a & e gross reserves
As percentage of the Allianz Group’s
Property-Casualty gross reserves
2014
2,173
2,679
4.5 %
2013
2,303
2,711
4.8 %
aggregate policy reserves
changes in aggregate policy reserves
€ mn
As of 1 January
Balance carry forward of discounted loss reserves
Subtotal
Foreign currency translation adjustments
Changes in the consolidated subsidiaries
of the Allianz Group
Changes recorded in the consolidated income
statement
The following table shows total A & E loss activity for the years ended
31 December 2014 and 2013.
Premiums collected
Separation of embedded derivatives
change in a & e gross reserves For loss and loss adjustment expenses
€ mn
Reserves for loss and LAE as of 1 January
Loss and lae payments
Change in reserves for loss and lae
Reserves for loss and LAE as of 31 December
2014
2,711
(212)
181
2,679
2013
3,066
(282)
(73)
2,711
Interest credited
Dividends allocated to policyholders
Releases upon death, surrender and withdrawal
Policyholder charges
Portfolio acquisitions and disposals
Other changes1
Subtotal
Ending balance of discounted loss reserves
As of 31 December
2014
365,519
(3,207)
362,312
9,600
2013
350,244
–
350,244
(3,441)
–
168
3,514
28,085
972
3,879
1,356
(13,711)
(1,628)
(52)
1,302
395,630
3,597
399,227
4,827
18,833
960
4,163
1,360
(13,527)
(1,292)
(383)
400
362,312
3,207
365,519
20 – Reserves for insurance
and investment contracts
reserves For insurance and investment contracts
€ mn
as of 31 December
Aggregate policy reserves
Reserves for premium refunds
Other insurance reserves
Total
2014
399,227
63,026
1,081
463,334
2013
365,519
37,772
781
404,072
1
Mainly relate to insurance contracts when policyholders change their contract from a unit-linked to a
universal life-type contract.
As of 31 December 2014, participating life business represented
approximately 54 % (2013: 56 %) of the Allianz Group’s gross insurance
in force. During the year ended 31 December 2014, participating poli-
cies represented approximately 65 % (2013: 65 %) of gross statutory
premiums written and 64 % (2013: 64 %) of life premiums earned.
discounting oF reserves For loss
and loss adjustment expenses
In general, reserves for loss and loss adjustment expenses are not
discounted, except when payment amounts are fixed and timing is
reasonably determinable. As of 31 December 2014, the Allianz Group’s
consolidated Property-Casualty reserves included discounted
reserves of € 3,597 mn (2013: € 3,207 mn) with a total amount of the
discount of € 2,232 mn (2013: € 1,957 mn). The interest rates used for
discounting were in the range from 0.1 % to 5.7 % (2013: 0.6 % to 5.5 %)
as of 31 December 2014.
Annual Report 2014
Allianz Group
209
reserves For premium reFunds
reserves For premium reFunds
€ mn
Amounts already allocated under local statutory
or contractual regulations
As of 1 January
Foreign currency translation adjustments
Changes in the consolidated subsidiaries
of the Allianz Group
Changes
As of 31 December
Latent reserves for premium refunds
As of 1 January
Foreign currency translation adjustments
Changes in the consolidated subsidiaries
of the Allianz Group
2014
2013
13,231
(7)
(1)
1,797
15,020
24,541
51
–
11,979
(5)
–
1,257
13,231
28,052
(48)
10
Changes due to fluctuations in market value
21,338
(4,337)
Changes due to valuation differences charged
to income
As of 31 December
Total
2,077
48,006
63,026
864
24,541
37,772
concentration oF insurance risk
in the liFe/health business segment
The Allianz Group’s Life/Health business segment provides a wide
variety of insurance and investment contracts to individuals and
groups in over 30 countries around the world. Individual contracts
include both traditional contracts and unit-linked contracts. Without
taking policyholder participation into account, traditional contracts
generally incorporate significant investment risk for the Allianz
Group, while unit-linked contracts generally result in the contract
holder assuming the investment risk. Traditional contracts include
life, endowment, annuity, and health contracts. Traditional annuity
contracts are issued in both deferred and immediate types. In addition,
the 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.
As of 31 December 2014 and 2013, the Allianz Group’s deferred
acquisition costs and reserves for insurance and investment con-
tracts for the business segment Life/Health per reportable segment
are summarized as follows:
concentration oF insurance risk in the liFe/health business segment per reportable segment
€ mn
as of 31 December
2014
German Speaking Countries
Western & Southern Europe
Iberia & Latin America
USA
Global Insurance Lines & Anglo Markets
Growth Markets
Consolidation
Total
2013
German Speaking Countries
Western & Southern Europe
Iberia & Latin America
USA
Global Insurance Lines & Anglo Markets
Growth Markets
Consolidation
Total
Deferred
acquisition
costs
Aggregate
policy
reserves
Reserves for
premium
refunds
Other
insurance
reserves
Total
non-unit-linked
reserves
Liabilities for
unit-linked
contracts
8,231
2,377
56
4,385
108
2,511
–
17,667
8,566
2,508
55
4,321
73
2,167
–
17,690
196,981
97,911
7,845
67,335
1,690
18,806
(3,414)
387,154
186,627
92,856
7,395
51,699
1,877
16,357
(2,985)
353,826
46,839
12,435
1,449
–
–
470
(1)
61,192
29,706
5,903
505
–
–
297
(1)
36,410
223
241
–
–
6
452
(5)
917
204
291
–
–
6
142
(5)
637
244,043
110,588
9,294
67,335
1,696
19,728
(3,420)
449,263
216,536
99,050
7,900
51,699
1,883
16,796
(2,991)
390,873
6,830
51,500
158
25,445
–
10,631
–
94,564
6,228
43,170
106
22,314
–
9,247
–
81,064
Total
250,873
162,088
9,452
92,780
1,696
30,359
(3,420)
543,826
222,764
142,220
8,005
74,013
1,883
26,042
(2,991)
471,937
210
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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 contrac-
tual 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 policy-
holder participation in all sources of profit including mortality/mor-
bidity, investment and expense. As a result of this policyholder par-
ticipation, the Allianz Group’s exposure to insurance, investment
and expense risk is mitigated.
Furthermore, all of the Allianz Group’s annuity policies issued
in the United States meet the criteria for classification as insurance
contracts under IFRS 4, because they include options for contract
holders to elect a life-contingent annuity. These contracts currently
do not expose the Allianz Group to significant longevity risk, nor are
they expected to do so in the future, as the projected and observed
annuitization rates are very low. Additionally, many of the Allianz
Group’s traditional contracts issued in France and Italy do not incor-
porate significant insurance risk, although they are accounted for as
insurance contracts because of their discretionary participation fea-
tures. Similarly, a significant portion of the Allianz Group’s unit-
linked contracts in France and Italy do not incorporate significant
insurance risk.
As a result of the considerable diversity in types of contracts
issued, including the offsetting effects of mortality risk and longevity
risk inherent in a combined portfolio of life insurance and annuity
products, and the geographic diversity of the Allianz Group’s Life/
Health business segment, as well as the substantial level of policy-
holder participation in mortality/morbidity risk in certain countries
in Western Europe, the Allianz Group does not believe its Life/Health
segment has any significant concentrations of insurance risk, nor
does it believe its net income or shareholders’ equity is highly sensi-
tive to insurance risk.
The Allianz Group’s Life/Health business segment is exposed to
significant investment risk as a result of guaranteed minimum inter-
est 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
Germany
France
Italy
United States
Switzerland
South Korea
Belgium
Guaranteed
rate
Non-unit-linked
reserves
% of
non-unit-linked
reserves
Guaranteed
rate
Non-unit-linked
reserves
% of
non-unit-linked
reserves
%
2.8
0.5
2.1
0.9
2.1
4.5
2.9
€ bn
155.1
55.0
29.7
72.9
10.3
9.7
8.5
%
97.3
76.0
53.1
74.1
93.5
89.4
95.4
%
3.0
0.6
2.3
1.1
2.1
4.7
3.2
€ bn
146.8
53.4
27.7
55.9
9.8
8.5
8.0
%
97.5
77.5
56.9
71.5
92.7
89.3
96.1
In most of these markets, the effective interest rates earned on the
investment portfolio exceed these guaranteed minimum interest
rates. In addition, the operations in these markets may also have sig-
nificant mortality and expense margins. However, the Allianz Group’s
Life/Health operations in Switzerland, Belgium, South Korea and Tai-
wan have high guaranteed minimum interest rates on older con-
tracts in their portfolios and, as a result, may be sensitive to declines
in investment rates or a prolonged low interest rate environment. As
of 31 December 2014, the Allianz Group has written off deferred acqui-
sition costs and established premium deficiency reserves on the
most endangered part of the portfolio in South Korea, with an overall
impact of € (64) mn on the consolidated income statement. If current
interest rate levels persist, further reserve strengthening for certain
portfolios may become necessary.
Annual Report 2014
Allianz Group
211
Future policy benefits
As of 31 December 2014, benefits for insurance and investment con-
tracts 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.
The resulting total benefits for insurance and investment con-
tracts in the amount of € 1,130 Bn include contracts where the timing
and amount of payments are considered fixed and determinable, and
contracts which have no specified maturity dates and may result in
a payment to the contract beneficiary depending on mortality and
morbidity experience and the incidence of surrenders, lapses or
maturities. Furthermore, the amounts are undiscounted and do not
include any expected future premiums; therefore they exceed the
reserves for insurance and investment contracts presented in the
consolidated balance sheet.
For contracts without fixed and determinable payments, the
Allianz Group has made assumptions in estimating the undiscounted
cash flows of contractual policy benefits including mortality, morbid-
ity, interest crediting rates, policyholder participation in profits and
future lapse rates. These assumptions represent current best esti-
mates and may differ from the estimates used to establish the
reserves for insurance and investment contracts in accordance with
the Allianz Group’s established accounting policy. Due to the uncer-
tainty of the assumptions used, the amount presented could be
materially different from the actual incurred payments in future
periods.
21 – Financial liabilities for unit-linked contracts
changes in Financial liabilities For unit-linked insurance contracts and unit-linked investment contracts
€ mn
As of 1 January
Foreign currency translation adjustments
Changes in the consolidated subsidiaries of the Allianz Group
Premiums collected
Interest credited
Releases upon death, surrender and withdrawal
Policyholder charges
Portfolio acquisitions and disposals
Reclassifications1
As of 31 December
Unit-linked
insurance
contracts
2014
Unit-linked
investment
contracts
55,357
3,602
–
7,868
3,693
(5,140)
(1,551)
23
(1,196)
62,656
25,707
210
–
8,860
1,786
(4,453)
(99)
(75)
(27)
31,907
Unit-linked
insurance
contracts
2013
Unit-linked
investment
contracts
50,078
(1,909)
–
8,066
5,524
(4,689)
(1,466)
(31)
(215)
55,357
21,119
(347)
1,477
6,989
601
(3,993)
(98)
(19)
(22)
25,707
Total
81,064
3,811
–
16,728
5,479
(9,593)
(1,650)
(53)
(1,223)
94,564
Total
71,197
(2,256)
1,477
15,055
6,125
(8,682)
(1,564)
(51)
(237)
81,064
1
These reclassifications mainly relate to insurance contracts when policyholders change their contract
from a unit-linked to a universal life-type contract.
212
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
22 – Other liabilities
other liabilities
€ mn
as of 31 December
Payables
Policyholders
Reinsurance
Agents
Subtotal
Payables for social security
Tax payables
Income taxes
Other taxes
Subtotal
Accrued interest and rent
Unearned income
Interest and rent
Other
Subtotal
Provisions
Pensions and similar obligations
Employee related
Share-based compensation plans
Restructuring plans
Loan commitments
Contingent losses from non-insurance business
Other provisions
Subtotal
Deposits retained for reinsurance ceded
Derivative financial instruments used for hedging
that meet the criteria for hedge accounting and
firm commitments
Financial liabilities for puttable equity instruments
Other liabilities
Total1
2014
2013
4,934
1,460
1,615
8,009
420
1,801
1,387
3,187
613
24
283
307
9,765
2,327
606
109
12
134
1,684
14,637
1,843
281
1,793
7,520
38,609
4,911
1,170
1,604
7,685
395
2,580
1,269
3,849
681
16
261
277
7,594
2,104
685
214
42
131
1,617
12,386
1,874
158
2,612
6,514
36,431
1
Includes other liabilities due within one year of € 25,013 mn (2013: € 24,915 mn).
Annual Report 2014
Allianz Group
213
23 – Certificated liabilities
certiFicated liabilities
€ mn1
Allianz se2
Senior bonds
Fixed rate
Contractual interest rate
Money market securities
Fixed rate
Contractual interest rate
Total Allianz SE2
Banking subsidiaries
Senior bonds
Fixed rate
Contractual interest rate
Floating rate
Current interest rate
Total banking subsidiaries
Total
Contractual maturity date
2015
2016
2017
2018
2019
Thereafter
as of
31 December
2014
as of
31 December
2013
–
–
1,041
0.30 %
1,041
63
1.51 %
–
–
63
1,496
4.00 %
–
–
1,496
79
1.41 %
–
–
79
1,104
1,575
–
–
–
–
–
44
0.93 %
–
–
44
44
499
1.38 %
–
–
499
–
–
–
–
–
1,484
4.75 %
3,174
3.68 %
–
–
–
–
1,484
3,174
–
–
–
–
–
–
–
327
0.46 %
327
3,501
499
1,484
6,653
–
1,041
–
7,694
186
–
327
–
513
6,581
–
869
–
7,450
193
–
387
–
580
8,207
8,030
1
2
Except for the interest rates. The interest rates represent the weighted average.
Includes senior bonds issued by Allianz Finance II B.V., guaranteed by Allianz SE and money market securi-
ties issued by Allianz Finance Corporation, a wholly owned subsidiary of Allianz SE, which are fully and
unconditionally guaranteed by Allianz SE.
214
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
24 – Subordinated liabilities
subordinated liabilities
€ mn1
Allianz se2
Subordinated bonds3
Fixed rate
Contractual interest rate
Floating rate
Current interest rate
Total Allianz SE2
Banking subsidiaries
Subordinated bonds
Fixed rate
Contractual interest rate
Total banking subsidiaries
All other subsidiaries
Subordinated liabilities
Fixed rate
Contractual interest rate
Hybrid equity
Floating rate
Current interest rate
Total all other subsidiaries
Total
Contractual maturity date
2015
2016
2017
2018
2019
Thereafter
–
–
1,000 4
6.50 %
1,000
–
–
–
–
–
–
–
–
1,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15
5.61 %
15
83
4.27 %
83
20
4.35 %
20
–
–
–
–
–
15
–
–
–
–
–
83
–
–
–
–
–
20
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,621
5.44 %
8,750
4.84 %
10,371
103
4.47 %
103
400
4.63 %
45
1.70 %
445
10,919
as of
31 December
2014
as of
31 December
2013
1,621
–
9,750
–
1,519
–
9,337
–
11,371
10,856
221
–
221
400
–
45
–
445
254
–
254
399
–
45
–
444
12,037
11,554
1
2
Except for interest rates. Interest rates represent the weighted average.
Includes subordinated bonds issued by Allianz Finance II B.V. and guaranteed by Allianz SE.
3
4
Change due to redemption of a € 1.5 Bn bond and the issuance of a CHF 0.5 Bn bond in the first quarter of
2014, and due to the issuance of a € 1.5 Bn bond in the third quarter of 2014.
€ 1.0 Bn subordinated bond called for redemption effective 13 January 2015.
25 – Equity
equity
€ mn
as of 31 December
Shareholders’ equity
Issued capital
Additional paid-in capital
Retained earnings1
Foreign currency translation adjustments
Unrealized gains and losses (net)2
Subtotal
Non-controlling interests
Total
2014
2013
1,170
27,758
19,878
(1,977)
13,917
60,747
2,955
63,702
1,169
27,701
17,786
(3,313)
6,742
50,083
2,765
52,849
1
2
As of 31 December 2014, include € (222) mn (2013: € (220) mn) related to treasury shares.
As of 31 December 2014, include € 288 mn (2013: € 203 mn) related to cash flow hedges.
issued capital
Issued capital as of 31 December 2014 amounted to € 1,170 mn divided
into 457,000,000 registered shares. The shares have no par value but
a mathematical per share value of € 2.56 each as a proportion of the
issued capital.
authorized capital
As of 31 December 2014, Allianz SE had authorized capital for the issu-
ance of 214,843,750 shares until 6 May 2019, with a notional amount
of € 550 mn (Authorized Capital 2014/I). The shareholders’ subscrip-
tion rights can be excluded for capital increases against contribu-
tions in kind. For a capital increase against contributions in cash, the
shareholders’ subscription rights can be excluded: (i) for fractional
amounts (ii) if the issue price is not significantly below the market
price and the shares issued under exclusion of the subscription
rights pursuant to § 186 (3) sentence 4 of the German Stock Corpora-
tion Law (Aktiengesetz) do not exceed 10 % of the share capital, and
Annual Report 2014
Allianz Group
215
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 sub-
scriptions 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 cor-
responds to € 26,714 (2013: € 40,046) or 0.002 % (2013: 0.003 %) of issued
capital.
(iii) to the extent necessary to grant a subscription right for new
shares to the holders of bonds that carry conversion or option rights
or provide for mandatory conversion. An overall limit for the exclu-
sion of subscription rights of up to € 234 MN (corresponding to 20 % of
the share capital at year-end 2013) applies for the Authorized Capital
2014/I and the Conditional Capital 2010/2014.
In addition, Allianz SE has authorized capital (Authorized Capi-
tal 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 cap-
ital 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 exer-
cised 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 con-
version prices are subject to anti-dilution provisions. The subscrip-
tion 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.
Changes in the number
of issued shares outstanding
number of issued shares outstanding
2014
2013
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
Total number of issued shares
2,751,961
2,763,381
457,000,000
456,500,000
216
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Changes in the treasury shares were:
changes in treasury shares
as of 31 December
Acquisition
costs
€ mn
2014
Allianz se
Other
Total
2013
Allianz se
Other
Total
222
–
222
220
–
220
2,751,360
601
2,751,961
2,761,795
1,586
2,763,381
Number
of shares
Issued capital
%
0.60
–
0.60
0.61
–
0.61
non-controlling interests
non-controlling interests
€ mn
as of 31 December
Unrealized gains and losses (net)
Share of earnings
Other equity components
Total
2014
189
381
2,385
2,955
2013
93
347
2,325
2,765
The share of earnings attributable to non-controlling interests mainly
consists of Euler Hermes Group companies of € 92 mn (2013: € 99 mn),
PImCO of € 86 mn (2013: € 72 mn), CreditRas Vita of € 27 mn (2013:
€ 18 mn) and Allianz Ayudhya of € 28 mn (2013: € 31 mn). The other
equity components of non-controlling interests mainly consists of
Euler Hermes Group companies of € 688 mn (2013: € 672 mn), PImCO of
€ 235 mn (2013: € 179 mn), CreditRas Vita of € 269 mn (2013: € 274 mn)
and Allianz Ayudhya of € 141 mn (2013: € 91 mn). Further information
about companies with non-controlling interests are given in the list
of participations of the Allianz Group.
capital requirements
The Allianz Group’s capital requirements are primarily dependent on
the type of business that it underwrites, the industry and geographic
locations in which it operates and the allocation of the Allianz
Group’s investments. During the Allianz Group’s annual planning
dialogues with its operating entities, capital requirements are deter-
mined through business plans regarding the levels and timing of
capital expenditures and investments. Regulators impose minimum
capital requirements at the level of the Allianz Group’s operating
entities and the Allianz Group as a whole.
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 sub-
sidiaries, 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.
As of 31 December 2014, the Allianz Group’s eligible capital for the
solvency margin, required for the insurance segments and the Asset
Management and Banking business, was € 49.8 Bn (2013: € 46.5 Bn)
including off-balance sheet reserves1 of € 2.3 Bn (2013: € 2.3 Bn), sur-
passing the minimum legally stipulated level by € 22.2 Bn (2013:
€ 20.9 Bn). This margin resulted in a preliminary cover ratio of 181 %
(2013: 182 %) as of 31 December 2014.2
In addition to regulatory capital requirements, Allianz SE also
uses an internal risk capital model to determine how much capital is
required to absorb any unexpected volatility in results of operations
and to steer its operations.
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 require-
ments under Solvency II based on its internal model.
Insurance subsidiaries of the Allianz Group including Allianz SE
prepare individual financial statements based on local laws and
regulations. These laws establish to some extent additional restric-
tions on the minimum level of capital and the amount of dividends
that may be paid to shareholders. The respective local minimum
capital requirements are based on various criteria including, but not
limited to, volume of premiums written or claims paid, amount of
1
2
Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request. Allianz SE
has not submitted an application so far. Excluding off-balance sheet reserves, the reported solvency ratio
as of 31 December 2014 would be 172 % (31 December 2013: 173 %).
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.
Annual Report 2014
Allianz Group
217
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 subsidiar-
ies were in compliance with all applicable regulatory solvency and
capital adequacy requirements.
Some insurance subsidiaries are subject to regulatory restric-
tions on the amount of dividends which can be remitted to Allianz SE
without prior approval by the appropriate regulatory body. Such
restrictions require that a company may only pay dividends up to an
amount in excess of certain regulatory capital levels or based on the
levels of undistributed earned surplus or current year income or a
percentage thereof. By way of example only, the operations of the
Allianz Group’s insurance subsidiaries located in the United States
are subject to limitations on the payment of dividends to their parent
company under applicable state insurance laws. Dividends paid in
excess of these limitations generally require the prior approval of the
insurance commissioner of the state of domicile. The Allianz Group
believes that these restrictions will not affect the ability of Allianz SE
to pay dividends to its shareholders in the future.
With respect to dividend payments, Allianz also updated its
dividend policy in 2014 by increasing the payout ratio, defining
explicit budgets for external growth and linking central elements to
the internal model capitalization according to Solvency II, which is
expected to become regulatory binding. For further information on
the dividend policy update please refer to the Outlook 2015 in the
Group Management Report.
218
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Notes to the CoNsolidated iNCome statemeNts
26 – Premiums earned (net)
27 – Interest and similar income
2014
166
1,562
13,609
196
848
4,868
193
21,443
2013
182
1,354
13,202
146
791
5,067
176
20,918
Premiums earned (net)
€ mn
2014
Premiums written
Direct
Assumed
Subtotal
Ceded
Net
Change in
unearned premiums
Direct
Assumed
Subtotal
Ceded
Net
Premiums earned
Direct
Assumed
Subtotal
Ceded
Net
2013
Premiums written
Direct
Assumed
Subtotal
Ceded
Net
Change in
unearned premiums
Direct
Assumed
Subtotal
Ceded
Net
Premiums earned
Direct
Assumed
Subtotal
Ceded
Net
Property-
Casualty
Life/Health
Consoli-
dation
Group
interest and similar income
€ mn
Interest from held-to-maturity investments
Dividends from available-for-sale investments
Interest from available-for-sale investments
Share of earnings from investments in associates
and joint ventures
Rent from real estate held for investment
–
(100)
(100)
70,253
3,630
73,883
45,238
3,084
48,322
(3,961)
44,362
(408)
(107)
(515)
(88)
(602)
44,830
2,978
47,808
(4,048)
43,759
43,967
2,612
46,579
(3,981)
42,597
(442)
(71)
(512)
(37)
(550)
43,525
2,541
46,066
(4,019)
42,047
25,015
646
25,660
(602)
25,058
(523)
(21)
(544)
–
(544)
24,492
624
25,116
(602)
24,514
24,804
725
25,530
(617)
24,913
(324)
(7)
(331)
(2)
(332)
24,481
719
25,199
(619)
24,580
100
(4,463)
Interest from loans to banks and customers
–
–
5
5
(5)
–
–
(95)
(95)
95
–
–
(58)
(58)
58
–
–
(1)
(1)
1
–
–
(59)
(59)
59
–
69,420
Other interest income
Total
(931)
(123)
(1,053)
(93)
(1,146)
69,322
3,508
72,829
(4,555)
68,274
68,771
3,279
72,051
(4,541)
67,510
(765)
(79)
(844)
(38)
(882)
68,006
3,200
71,206
(4,579)
66,628
Annual Report 2014
Allianz Group
219
28 – 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)
€ mn
2014
Property-
Casualty
Life/Health
Asset
Management
Corporate
and Other Consolidation
Income (expenses) from financial assets and liabilities held for trading (net)
(313)
(3,472)
(1)
(141)
Income (expenses) from financial assets and liabilities designated at fair value
through income (net)
Income (expenses) from financial liabilities for puttable equity instruments (net)
Foreign currency gains and losses (net)
Total
2013
Income (expenses) from financial assets and liabilities held for trading (net)
Income (expenses) from financial assets and liabilities designated at fair value
through income (net)
Income (expenses) from financial liabilities for puttable equity instruments (net)
Foreign currency gains and losses (net)
Total
2
(4)
206
161
(88)
1,901
(108)
(1,497)
33
28
(19)
(92)
(50)
(567)
277
(138)
(1,376)
(1,804)
2
–
3
5
–
62
(49)
–
12
18
–
123
–
30
1
–
(37)
(6)
Group
(3,928)
182
(91)
2,234
(1)
(1)
–
–
(3)
(1,604)
5
(1)
–
–
3
(499)
367
(207)
(1,506)
(1,845)
Foreign currency gains and losses are reported within income from
financial assets carried at fair value through income (net) (2014:
income of € 2,234 MN; 2013: expenses of € 1,506 MN). These foreign cur-
rency gains and losses arise subsequent to initial recognition on all
assets and liabilities denominated in a foreign currency that are
monetary items and not measured at fair value through income. The
Allianz Group uses freestanding derivatives, included in the line item
income (expenses) from financial assets and liabilities held for trad-
ing (net), to hedge against foreign currency fluctuations (2014:
expenses of € 2,502 MN; 2013: income of € 653 MN).
Additionally included in the business segment Life/Health are
derivative financial instruments from German entities which relate
to duration management (2014: income of € 780 MN; 2013: expenses of
€ 317 MN) and protection against equity fluctuations (2014: expenses
of € 125 MN; 2013: income of € 34 MN), and from U.S. entities which
relate to fixed-indexed annuity products and guaranteed benefits
under unit-linked contracts (2014: expenses of € 1,783 MN; 2013:
expenses of € 790 MN).
29 – Realized gains/losses (net)
realized gains/losses (net)
€ mn
realized gains
Available-for-sale investments
Equity securities
Debt securities
Subtotal
Investments in associates and joint ventures1
Real estate held for investment
Loans and advances to banks and customers
Non-current assets classified as held for sale
2014
2013
1,736
2,296
4,033
27
141
287
32
2,104
2,308
4,412
73
147
412
104
Subtotal
4,519
5,147
realized losses
Available-for-sale investments
Equity securities
Debt securities
Subtotal
Investments in associates and joint ventures2
Real estate held for investment
Loans and advances to banks and customers
Non-current assets classified as held for sale
Subtotal
Total
(205)
(279)
(484)
(12)
(4)
(1)
(1)
(502)
4,017
(253)
(578)
(831)
(12)
(11)
(4)
(3)
(861)
4,286
1
2
During the year ended 31 December 2014, include realized gains from the disposal of subsidiaries and
businesses of € 1 mN (2013: € 48 mN).
During the year ended 31 December 2014, include realized losses from the disposal of subsidiaries and
businesses of € 1 mN (2013: € – mN).
220
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
30 – Fee and commission income
32 – Income and expenses from fully
consolidated private equity investments
fee and commission income
€ mn
ProPerty-casualty
Fees from credit and assistance business
Service agreements
Subtotal
life/health
Service agreements
Investment advisory
Other
Subtotal
asset management
Management fees
Loading and exit fees
Performance fees
Other
Subtotal
corPorate and other
Service agreements
Investment advisory and banking activities
Subtotal
consolidation
Total
31 – Other income
other income
€ mn
Income from real estate held for own use
Realized gains from disposals of real estate held
for own use
Other income from real estate held for own use
Subtotal
Income from alternative investments
Other
Total
2014
2013
income and exPenses from fully consolidated Private equity investments
€ mn
Income
Sales and service revenues
Subtotal
Expenses
Cost of goods sold
General and administrative expenses
Interest expenses
Subtotal
Consolidation1
Total
2014
2013
696
696
(216)
(469)
(54)
(738)
19
(23)
726
726
(219)
(492)
(32)
(743)
2
(15)
1
This consolidation effect results from the deferred policyholder participation recognized in the result
from fully consolidated private equity investments within operating profit in the Life/Health business
segment that was reclassified to expenses from fully consolidated private equity investments in non-
operating profit to ensure the consistent presentation of the Allianz Group‘s operating profit.
790
471
1,260
97
919
1
1,017
6,834
670
275
46
7,825
70
654
724
(707)
10,119
753
473
1,226
75
571
–
646
7,317
715
510
69
8,611
62
625
687
(678)
10,492
2014
2013
24
2
26
187
2
216
34
–
35
169
5
209
Annual Report 2014
Allianz Group
221
33 – Claims and insurance benefits
incurred (net)
34 – Change in reserves for insurance
and investment contracts (net)
Claims and insuranCe benefits inCurred (net)
Change in reserves for insuranCe and investment ContraCts (net)
€ mn
2014
Gross
Claims and insurance
benefits paid
Change in loss and loss
adjustment expenses
Subtotal
Ceded
Claims and insurance
benefits paid
Change in loss and loss
adjustment expenses
Subtotal
Net
Claims and insurance
benefits paid
Change in loss and loss
adjustment expenses
Total
2013
Gross
Claims and insurance
benefits paid
Change in loss and loss
adjustment expenses
Subtotal
Ceded
Claims and insurance
benefits paid
Change in loss and loss
adjustment expenses
Subtotal
Net
Claims and insurance
benefits paid
Change in loss and loss
adjustment expenses
Total
Property-
Casualty
Life/Health
Consoli-
dation
Group
(30,797)
(20,946)
47
(51,696)
(224)
(231)
(31,021)
(21,177)
12
58
(444)
(52,140)
2,095
49
2,143
375
27
402
(42)
2,428
(14)
(56)
62
2,490
€ mn
2014
Gross
Property-
Casualty
Life/Health
Consoli-
dation
Group
Aggregate policy reserves
(238)
(6,189)
Other insurance reserves
2
(252)
–
–
(6,427)
(250)
Expenses for premium
refunds
Subtotal
Ceded
Aggregate policy reserves
Other insurance reserves
Expenses for premium
refunds
Subtotal
Net
Total
2013
Gross
(313)
(6,390)
(827)
(7,529)
(549)
(12,830)
(827)
(14,206)
7
(1)
5
10
246
11
11
268
–
–
(1)
(1)
253
10
15
277
–
–
(6,174)
(240)
(307)
(6,379)
(828)
(7,514)
(538)
(12,563)
(828)
(13,929)
(28,702)
(20,571)
5
(49,268)
Aggregate policy reserves
(231)
(5,943)
Other insurance reserves
–
(241)
(175)
(204)
(2)
(382)
(28,878)
(20,775)
3
(49,650)
Expenses for premium
refunds
(31,235)
(20,216)
32
(51,419)
1,589
(353)
(29,646)
(20,568)
4
37
1,240
(50,178)
2,256
(322)
1,933
462
10
472
(27)
2,691
(3)
(30)
(315)
2,376
Aggregate policy reserves
(232)
(7,545)
Other insurance reserves
7
(209)
(4)
–
(7,781)
(202)
Expenses for premium
refunds
Subtotal
Ceded
Aggregate policy reserves
Other insurance reserves
Expenses for premium
refunds
Subtotal
(161)
(5,959)
(386)
(13,712)
(46)
(50)
(6,165)
(14,148)
3
(1)
(1)
2
140
9
7
157
–
–
–
–
143
9
6
158
(28,979)
(19,753)
1,267
(343)
(27,713)
(20,096)
5
1
7
(48,727)
Net
925
(47,802)
Aggregate policy reserves
(229)
(7,404)
Other insurance reserves
7
(199)
(4)
–
(7,638)
(193)
Expenses for premium
refunds
Total
(162)
(5,951)
(384)
(13,555)
(46)
(50)
(6,159)
(13,990)
222
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
35 – Interest expenses
38 – Investment expenses
interest expenses
€ mn
Liabilities to banks and customers
Deposits retained for reinsurance ceded
Certificated liabilities
Subordinated liabilities
Other
Total
investment expenses
€ mn
Investment management expenses
Depreciation of real estate held for investment
Other expenses from real estate
held for investment
Total
2014
(241)
(48)
(285)
(585)
(102)
2013
(259)
(49)
(272)
(642)
(100)
(1,261)
(1,322)
2014
(561)
(232)
(168)
(961)
2013
(527)
(211)
(167)
(905)
37 – Impairments of investments (net)
36 – Loan loss provisions
loan loss provisions
€ mn
Additions to allowances including direct
impairments
Amounts released
Recoveries on loans previously impaired
Total
impairments of investments (net)
€ mn
impairments
Available-for-sale investments
Equity securities
Debt securities
Subtotal
Investments in associates and joint ventures
Real estate held for investment
Loans and advances to banks and customers
Non-current assets classified as held for sale
Subtotal
reversals of impairments
Available-for-sale investments
Debt securities
Real estate held for investment
Loans and advances to banks and customers
Subtotal
Total
39 – Acquisition and
administrative expenses (net)
aCquisition and administrative expenses (net)
2014
(133)
68
20
(45)
2013
€ mn
(166)
62
18
(86)
property-Casualty
Acquisition costs
Incurred
Commissions and profit received on reinsurance
business ceded
Deferrals of acquisition costs
Amortization of deferred acquisition costs
Subtotal
Administrative expenses
Subtotal
life/health
Acquisition costs
Incurred
2014
2013
Commissions and profit received on reinsurance
business ceded
Deferrals of acquisition costs
Amortization of deferred acquisition costs
Subtotal
Administrative expenses
Subtotal
asset management
Personnel expenses
(391)
(56)
(448)
(108)
(54)
(24)
(31)
(665)
Non-personnel expenses
Subtotal
18
22
15
55
Corporate and other
Administrative expenses
Subtotal
Consolidation
Total
(894)
(611)
(553)
(345)
(898)
–
(24)
(16)
(5)
(944)
–
44
6
51
2014
2013
(10,102)
(9,828)
448
6,138
(6,035)
(9,551)
(3,386)1
479
5,868
(5,705)
(9,186)
(2,755)
(12,937)
(11,942)
(5,203)
(4,591)
88
3,502
(2,648)
(4,261)
(1,606)1
(5,868)
(2,380)1
(1,415)
(3,795)
67
2,980
(2,571)
(4,115)
(1,487)
(5,603)
(2,607)
(1,419)
(4,026)
(750)1
(750)
(1,297)
(1,297)
7
3
(23,343)
(22,865)
1
Include one-off effect from pension revaluation. Please refer to note 6 for further details.
Annual Report 2014
Allianz Group
223
40 – Fee and commission expenses
42 – Income taxes
fee and Commission expenses
€ mn
property-Casualty
Fees from credit and assistance business
Service agreements
Subtotal
life/health
Service agreements
Investment advisory
Subtotal
asset management
Commissions
Other
Subtotal
Corporate and other
Service agreements
Investment advisory and banking activities
Subtotal
Consolidation
Total
41 – Other expenses
other expenses
€ mn
Realized losses from disposals of real estate held
for own use
Expenses from alternative investments
Expenses from non-current assets classified
as held for sale1
Other
Total
inCome taxes
€ mn
Current income taxes
Deferred income taxes
Total
2014
2013
(820)
(360)
(755)
(386)
(1,180)
(1,141)
2014
(2,454)
209
(2,245)
2013
(2,899)
(401)
(3,300)
(34)
(353)
(387)
(1,301)
(145)
(1,445)
(269)
(298)
(567)
342
(39)
(212)
(251)
During the year ended 31 December 2014, current income taxes
included income of € 485 mn (2013: expenses of € 138 mn) related to
prior years.
Of the deferred income taxes for the year ended 31 December
2014, income of € 198 mn (2013: expenses of € 47 mn) are attributable
to the recognition of deferred taxes on temporary differences, and
expenses of € 15 mn (2013: € 356 mn) are attributable to tax losses car-
ried forward. Additionally, changes of applicable tax rates due to
changes in tax law produced deferred tax income of € 26 mn (2013:
€ 2 mn).
For the years ended 31 December 2014 and 2013, the income
taxes relating to components of other comprehensive income consist
of the following:
(1,403)
(81)
(1,484)
(231)
(263)
(493)
332
(3,238)
(3,038)
inCome taxes relating to Components of other Comprehensive inCome
€ mn
Items that may be reclassified to profit
or loss in future periods
Foreign currency translation adjustments
Available-for-sale investments
Cash flow hedges
Share of other comprehensive income
of associates and joint ventures
Miscellaneous
Items that may never be reclassified
to profit or loss
Actuarial gains (losses) on defined benefit plans
Total
2014
2013
124
(2,820)
(40)
(1)
(160)
695
(2,201)
(23)
1,451
21
6
96
(171)
1,379
2014
(7)
(103)
(18)
(7)
(135)
2013
(2)
(85)
–
(19)
(106)
1
For the year ended 31 December 2014, consist of impairments of real estate held for own use classified
as held for sale in the amount of € (18) mn. The fair value is classified as level 3 in the fair value hierarchy
and based on an income approach.
The recognized income taxes for the year ended 31 December 2014
are € 391 mn below (2013: € 418 mn above) the calculated income
taxes based on income before income taxes multiplied by the respec-
tive applicable country-specific tax rates. The following table shows
the reconciliation from the calculated income taxes based on income
before income taxes multiplied by the respective applicable country-
specific tax rates to the effectively recognized taxes of the Allianz
Group. The Allianz Group’s reconciliation is a summary of the indi-
vidual company-related reconciliations which are based on the
224
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
respective country-specific tax rates after taking into consideration
consolidation effects with an impact on the Group result. The appli-
cable tax rate used in the reconciliation for domestic Allianz Group
companies includes corporate tax, trade tax and the solidarity sur-
charge, and amounted to 31.0 % (2013: 31.0 %).
The effective tax rate is determined on the basis of the effective
income tax expenses on income before income taxes.
effeCtive tax rate
€ mn
Income before income taxes
Applied weighted income tax rate
Calculated income taxes
Trade tax and similar taxes
Net tax exempt income
Effects of tax losses
Other effects
Effective income taxes
Effective tax rate
2014
8,848
29.8 %
2,636
210
(2)
142
(740)
2,245
25.4 %
2013
9,643
29.9 %
2,882
244
(185)
9
351
3,300
34.2 %
In 2014, Allianz Leben received a favorable decision of the German
Federal Tax Court (BFH) effecting that losses recognized in 2002 on
equity investments held via investment funds were considered tax
deductible. This court decision led in 2014 to a tax benefit for the
Group of € 229 mn and for the policyholders of € 892 mn. The tax ben-
efit from this court decision consisted of current taxes and deferred
taxes (mainly on tax losses carried forward) in respect of the finan-
cial year 2014 and previous years. In the tax reconciliation for 2014,
the other effects of € (740) mn include € (846) mn current and deferred
taxes for prior years resulting from the above-mentioned court deci-
sion. The tax benefits for prior years resulting from this court decision
led to a reduction of the effective tax rate 2014 by 9 %, of which 7 % was
allocated to the policyholders and 2 % remained with the shareholders.
The effective tax rate 2014 remaining with shareholders is 32 %.
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 De-
cember 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 tax assets on losses carried forward are recognized to the
extent to which it is more likely than not that sufficient future taxable
profits will be available for realization. Entities which suffered a tax
loss in either the current or the preceding period recognized deferred
tax assets in excess of deferred tax liabilities amounting to € 375 mn
(2013: € 149 mn).
deferred tax assets and liabilities
deferred tax assets and liabilities
€ mn
as of 31 December
Deferred tax assets
Financial assets carried at fair value
through income
Investments
Deferred acquisition costs
Other assets
Intangible assets
Tax losses carried forward
Insurance reserves
Pensions and similar obligations
Other liabilities
Total deferred tax assets
Non-recognition or valuation allowance for
deferred tax assets on tax losses carried forward
Effect of netting
Net deferred tax assets
Deferred tax liabilities
Financial assets carried at fair value
through income
Investments
Deferred acquisition costs
Other assets
Intangible assets
Insurance reserves
Pensions and similar obligations
Other liabilities
Total deferred tax liabilities
Effect of netting
Net deferred tax liabilities
Net deferred tax assets (liabilities)
2014
2013
53
3,202
1,759
1,283
166
2,435
4,616
4,353
871
23
3,092
1,158
1,363
119
2,213
3,862
3,317
1,059
18,738
16,206
(850)
(652)
(16,841)
(14,047)
1,046
1,508
128
9,643
4,824
1,017
410
2,691
2,609
450
159
5,732
4,335
725
400
2,691
2,430
754
21,773
(16,841)
4,932
(3,886)
17,225
(14,047)
3,178
(1,670)
Annual Report 2014
Allianz Group
225
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.
Tax losses carried forward are scheduled according to their expiry
periods as follows:
tax losses Carried forward
€ mn
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
>10 years
Unlimited
Total
2014
33
75
46
64
98
46
26
61
79
291
282
9,422
10,521
226
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Other InfOrmatIOn
43 – Derivative financial instruments
Derivative financial instruments
€ mn
as of 31 December
2014
Maturity by notional amount
Up to 1 year
1 – 5 years Over 5 years
Notional
principal
amounts
Positive
fair
values
Negative
fair
values
Notional
principal
amounts
2013
Positive
fair
values
Negative
fair
values
Interest rate contracts
OTC
Forwards
Swaps
Swaptions
Caps
Options
Exchange traded
Futures
Forwards
Subtotal
Equity/Index contracts
OTC
Forwards
Swaps
Options
Warrants
Exchange traded
Futures
Forwards
Options
Warrants
Subtotal
Foreign exchange contracts
OTC
Futures
Forwards
Swaps
Options
Exchange traded
Futures
Subtotal
Credit contracts
OTC
Swaps
Options
Floors
Exchange traded
Swaps
Subtotal
Real estate contracts
OTC
Options
Subtotal
Total
575
681
7,907
–
19
5,189
78
14,450
834
4,751
143,678
–
20,560
–
6,347
2,678
2,065
4,186
19,243
4,937
–
–
–
95
26,637
5,077
2
–
–
–
30,432
31,811
2,735
31,504
32,228
4,939
19
5,189
78
76,693
424
556
120
–
–
34
3
–
(397)
–
(18)
(3)
(8)
–
1,136
(426)
1,605
24,171
30,501
4,952
–
4,521
–
65,750
77
342
404
1
–
1
–
(14)
(949)
(18)
(3)
–
(44)
–
825
(1,028)
42
279
2,143
–
–
–
–
6
50
1,302
1,604
4,513
926
6,332
147,424
4,513
149
20,709
–
–
–
–
6,347
2,684
65
34
469
–
86
–
84
51
(15)
(39)
(7,315)
(181)
646
3,080
106,639
2,679
(65)
12,607
–
–
–
15
7,819
1,627
178,848
2,469
7,618
188,936
789
(7,616)
135,112
411
32,828
172
–
–
33,411
310
793
218
34
–
1,356
–
–
246
–
–
721
33,621
637
34
–
246
35,013
947
2,395
683
4,025
1
–
–
–
–
–
–
–
7
2
–
7
948
2,395
690
4,033
5
5
–
–
–
–
6
6
1
121
19
8
–
148
19
–
–
3
22
1
1
(16)
(663)
(27)
–
–
553
34,106
228
46
3
(706)
34,936
(26)
2,508
–
–
–
–
1
6
(26)
2,515
–
–
6
6
124
6
469
3
95
–
61
126
884
1
332
6
11
–
350
26
–
–
3
29
–
–
(10)
(51)
(4,671)
(143)
(109)
–
(30)
–
(5,014)
(21)
(74)
(7)
–
–
(102)
(23)
–
(1)
–
(24)
–
–
227,662
36,653
40,366
304,681
2,096
(8,774)
238,319
2,088
(6,168)
Annual Report 2014
Allianz Group
227
Additionally, the Allianz Group uses fair value hedges to hedge
its equity portfolio against equity market risk. As of 31 December 2014,
the derivatives used as hedging instruments in the related fair value
hedges had a total positive fair value of € 21 mn (2013: total fair value
of € – mn).
For the year ended 31 December 2014, the Allianz Group recog-
nized 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.
Cash flow hedges
During the year ended 31 December 2014, cash flow hedges were used
to hedge the exposure to the variability from cash flows arising from
interest rate or exchange rate fluctuations as well as inflation. As of
31 December 2014, the derivative instruments utilized had a total
positive fair value of € 412 mn (2013: € 41 mn). Unrealized gains and
losses (net) in shareholders’ equity increased by € 84 mn (2013:
decreased by € 53 mn). Amounts accumulated in the other compre-
hensive income are reclassified to profit or loss in the periods when
the hedged item affects profit or loss. This is the case when the fore-
cast transactions that are hedged take place.
Hedge of net investment in foreign operations
As of 31 December 2014, the Allianz Group hedges part of its U.S. Dollar,
British Pound and Swiss Franc net investments through the issuance
of U.S. Dollar, British Pound and Swiss Franc denominated liabilities
with a nominal amount of USD 1.0 bn, GbP 0.8 bn and CHF 0.5 bn as
well as the use of forward sales of USD and GbP with a notional of
USD 1.5 bn and GbP 0.4 bn. The total negative fair value in 2014 was
€ 80 mn (2013: total positive fair value of € 2 mn).
offsetting
The Allianz Group mainly enters into enforceable master netting
arrangements and similar arrangements for derivatives transactions.
None of these enforceable master netting arrangements or similar
arrangements meet the requirements for offsetting in line with IAS 32.
Credit risk associated with netting arrangements is further mit-
igated by collateral. For further information on collateral, please refer
to note 44 – Financial instruments and fair value measurement.
The table above shows the fair value and notional amounts for all
freestanding derivatives as well as derivatives for which hedge
accounting is applied by the Allianz Group as of 31 December 2014
and 2013, respectively. The notional principal amounts indicated in
the table are cumulative as they include the absolute value of the
notional principal amounts of derivatives with positive and negative
fair values. Although these notional principal amounts reflect the
degree of the Allianz Group’s involvement in derivative transactions,
they do not represent amounts exposed to risk. Further information
on the use of derivatives to hedge risks can be found in the sections
on market and credit risk in the Risk and Opportunity Report which
forms part of the Group Management Report.
freestanDing Derivative financial instruments
As of 31 December 2014, freestanding derivatives, included in the line
item financial assets and liabilities held for trading, had a notional
principal amount of € 297.2 bn (2013: € 233.0 bn), as well as a positive
fair value of € 1.6 bn (2013: € 2.0 bn) and a negative fair value of € 8.5 bn
(2013: € 6.0 bn). Out of the total allocated to the freestanding deriva-
tives, € 189.2 bn (2013: € 115.6 bn) of the notional principal relate to
annuity products. These products are equity-indexed or contain cer-
tain embedded options or guarantees which are considered embed-
ded derivatives under IAS 39. For these embedded derivatives, the
notional principal amounts included in the table refer to the account
value of the related insurance contracts. The total negative fair value
of these embedded derivatives amounts to € 6.7 bn (2013: € 4.2 bn).
Further information on the fair value measurement of these deriva-
tives, can be found in note 44 – Financial instruments and fair value
measurement.
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).
Fair value hedges
The Allianz Group uses fair value hedges to hedge the exposure to
changes in the fair value of financial assets due to movements in
interest or exchange rates. As of 31 December 2014, the derivative
financial instruments used for the related fair value hedges of the
Allianz Group had a total negative fair value of € 157 mn (2013: € 126 mn).
Within the Allianz Group’s Banking business, derivatives to hedge
against interest rate changes are implemented for individual trans-
actions (micro hedges) or for a portfolio of similar assets or liabilities
(macro hedges).
228
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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 Busi-
ness 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
financial assets
Cash and cash equivalents
Financial assets held for trading
Financial assets designated at fair value through income
Available-for-sale investments
Held-to-maturity investments
Investments in associates and joint ventures
Real estate held for investment
Loans and advances to banks and customers
Financial assets for unit-linked contracts
Derivative financial instruments and firm commitments included in other assets
Real estate held for own use
financial liabilities
Financial liabilities held for trading
Liabilities to banks and customers
Financial liabilities for unit-linked contracts
Derivative financial instruments and firm commitments included in other liabilities
Financial liabilities for puttable equity instruments
Certificated liabilities
Subordinated liabilities
2014
2013
Carrying amount
Fair value
Carrying amount
Fair value
13,863
2,214
3,660
465,914
3,969
4,059
11,349
117,075
94,564
477
2,566
8,496
23,015
94,564
281
1,793
8,207
12,037
13,863
2,214
3,660
465,914
4,710
4,820
16,323
140,238
94,564
477
3,646
8,496
23,607
94,564
281
1,793
9,293
13,253
11,207
2,512
4,148
392,233
4,140
3,098
10,783
116,800
81,064
75
2,423
6,013
23,109
81,064
158
2,612
8,030
11,554
11,207
2,512
4,148
392,233
4,647
3,597
15,625
129,528
81,064
75
3,626
6,013
23,282
81,064
158
2,612
8,576
12,323
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.
The degree of judgment used in measuring the fair value of
financial instruments closely correlates with the level of non-market
observable inputs. The Allianz Group maximizes the use of observable
inputs and minimizes the use of non-market observable inputs when
measuring fair value. Observability of input parameters is influenced
by various factors such as type of the financial instrument, whether
a market is established for the particular instrument, specific trans-
action characteristics, liquidity as well as general market conditions.
If the fair value cannot be measured reliably, amortized cost is
used as a proxy for determining fair values. As of 31 December 2014,
fair values could not be reliably measured for equity investments
with carrying amounts totaling € 189 mn (31 December 2013: € 214 mn).
These investments are primarily investments in privately held corpo-
rations and partnerships. During the year ended 31 December 2014,
such investments with carrying amounts of € 78 mn (2013: € 35 mn)
were sold. The gains and losses from these disposals were immaterial.
Annual Report 2014
Allianz Group
229
Valuation techniques – Non-market observable inputs
– Fair value level 3:
Where observable market inputs are not available, the fair value is
based on valuation techniques using non-market observable inputs.
Valuation techniques include the discounted cash flow method,
comparison to similar instruments for which observable market
prices exist and other valuation models. Appropriate adjustments
are made for credit risks. In particular, when observable market
inputs are not available, the use of estimates and assumptions may
have a high impact on the valuation outcome.
fair value measurement on a recurring basis
The following financial assets and liabilities are carried at fair value
on a recurring basis:
− Financial assets and liabilities held for trading,
− Financial assets and liabilities designated at fair value through
income,
− Available-for-sale investments,
− Financial assets and liabilities for unit-linked contracts,
− Derivative financial instruments and firm commitments included
in other assets and other liabilities and
− Financial liabilities for puttable equity instruments.
fair value hierarchy
Assets and liabilities measured or disclosed at fair value in the con-
solidated financial statements are measured and classified in
accordance with the fair value hierarchy in IFRS 13, which categorizes
the inputs to valuation techniques used to measure fair value into
three levels.
In general, the subsidiaries assume responsibility for assessing
fair values and hierarchies of assets and liabilities. This is consistent
with the decentralized organizational structure of the Allianz Group
and reflects market insights of local managers. Estimates and
assumptions are particularly significant when determining the fair
value of financial instruments for which at least one significant input
is not based on observable market data (classified within level 3 of
the fair value hierarchy). The availability of market information is
determined by the relative trading levels of identical or similar instru-
ments in the market, with emphasis placed on information that
represents actual market activity or binding quotations from brokers
or dealers. If no sufficient market information is available, manage-
ment’s best estimate of a particular input is used to determine the
value.
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.
Valuation techniques – Market observable inputs
– Fair value level 2:
Level 2 applies if the market for a financial instrument is not active
or when the fair value is determined by using valuation techniques
based on observable input parameters. Such market inputs are
observable substantially over the full term of the asset or liability and
include references to formerly quoted prices for identical instru-
ments from an active market, quoted prices for identical instruments
from an inactive market, quoted prices for similar instruments from
active markets and quoted prices for similar instruments from inactive
markets. Market observable inputs also include interest rate yield
curves, volatilities and foreign currency exchange rates.
230
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
The following tables present the fair value hierarchy for financial
instruments carried at fair value in the consolidated balance sheets
as of 31 December 2014 and 31 December 2013.
fair value hierarchy as of 31 December 2014 (items carrieD at fair value)
€ mn
financial assets
Financial assets carried at fair value through income
Financial assets held for trading
Debt securities
Equity securities
Derivative financial instruments
Subtotal
Financial assets designated at fair value through income
Debt securities
Equity securities
Subtotal
Subtotal
Available-for-sale investments
Government and agency mortgage-backed securities (residential and commercial)
Corporate mortgage-backed securities (residential and commercial)
Other asset-backed securities
Government and government agency bonds
Corporate bonds
Other debt securities
Equity securities
Subtotal
Financial assets for unit-linked contracts
Derivative financial instruments and firm commitments included in other assets
Total
financial liabilities
Financial liabilities held for trading
Derivative financial instruments
Other trading liabilities
Subtotal
Financial liabilities for unit-linked contracts
Derivative financial instruments and firm commitments included in other liabilities
Financial liabilities for puttable equity instruments
Total
Level 1 –
Quoted prices in
active markets
Level 2 –
Market
observable inputs
Level 3 –
Non-market
observable inputs
79
47
260
385
887
1,624
2,512
2,897
43
–
259
29,810
15,885
273
30,077
76,347
91,885
2
171,131
49
–
49
91,885
–
1,754
93,688
323
133
1,336
1,792
981
38
1,018
2,810
3,695
14,146
4,075
162,166
188,946
1,966
868
375,862
2,511
476
381,659
1,315
3
1,319
2,511
281
24
4,135
–
15
22
38
19
110
129
167
–
40
218
39
6,452
729
6,226
13,704
166
–
14,037
7,129
–
7,129
166
–
15
7,310
Total
402
195
1,618
2,214
1,887
1,773
3,660
5,875
3,738
14,186
4,552
192,016
211,284
2,968
37,171
465,914
94,564
477
566,830
8,493
3
8,496
94,564
281
1,793
105,134
Annual Report 2014
Allianz Group
231
fair value hierarchy as of 31 December 2013 (items carrieD at fair value)
€ mn
financial assets
Financial assets carried at fair value through income
Financial assets held for trading
Debt securities
Equity securities
Derivative financial instruments
Subtotal
Financial assets designated at fair value through income
Debt securities
Equity securities
Subtotal
Subtotal
Available-for-sale investments
Government and agency mortgage-backed securities (residential and commercial)
Corporate mortgage-backed securities (residential and commercial)
Other asset-backed securities
Government and government agency bonds
Corporate bonds
Other debt securities
Equity securities
Subtotal
Financial assets for unit-linked contracts
Derivative financial instruments and firm commitments included in other assets
Total
financial liabilities
Financial liabilities held for trading
Derivative financial instruments
Other trading liabilities
Subtotal
Financial liabilities for unit-linked contracts
Derivative financial instruments and firm commitments included in other liabilities
Financial liabilities for puttable equity instruments
Total
Level 1 –
Quoted prices in
active markets
Level 2 –
Market
observable inputs
Level 3 –
Non-market
observable inputs
–
22
284
306
–
1,867
1,867
2,173
–
–
–
35,570
18,939
–
26,013
80,522
78,230
–
160,925
136
–
136
78,230
–
2,595
80,961
360
103
1,691
2,154
2,278
–
2,278
4,432
2,602
11,800
3,418
127,324
154,080
1,777
765
301,766
2,655
75
308,928
1,447
3
1,450
2,655
158
18
4,281
–
14
38
52
1
3
4
56
–
33
212
56
3,149
773
5,722
9,945
179
–
10,180
4,427
–
4,427
179
–
–
4,606
Total
360
139
2,013
2,512
2,278
1,870
4,148
6,660
2,602
11,833
3,630
162,950
176,168
2,550
32,499
392,233
81,064
75
480,033
6,010
3
6,013
81,064
158
2,612
89,848
232
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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:
Available-for-sale investments
Available-for-sale investments – Debt securities
Debt securities include:
− Market approach: Prices and other relevant information gener-
ated by market transactions involving identical or comparable
assets or liabilities.
− Cost approach: Amount that would be currently required to
replace the service capacity of an asset (replacement cost).
− Income approach: Conversion of future amounts such as cash
flows or income to a single current amount (present value
technique).
There is no one-to-one connection between valuation technique and
hierarchy level. Depending on whether the valuation techniques are
based on significant observable or unobservable inputs, financial
instruments are classified in the fair value hierarchy.
Financial assets carried at fair value through income
Financial assets held for trading – Debt and equity securities
The fair value is mainly determined using the market approach. In
some cases, the fair value is determined based on the income
approach using interest rates and yield curves observable at com-
monly quoted intervals.
Financial assets held for trading – Derivative financial
instruments
For level 2, the fair value is mainly determined based on the income
approach using present value techniques and the Black-Scholes-
Merton model. Primary inputs to the valuation include volatilities,
interest rates, yield curves, and foreign exchange rates observable at
commonly quoted intervals.
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
– Debt securities
The fair value is determined using the market 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 securi-
ties measured at cost.
− Government and agency mortgage-backed securities
(residential and commercial),
− Corporate mortgage-backed securities
(residential and commercial),
− Other asset-backed securities,
− Government and government agency bonds,
− Corporate bonds, and
− Other debt securities.
The valuation techniques for these debt securities are similar. For
level 2 and level 3, the fair value is determined using the market and
the income approach. Primary inputs to the market approach are
quoted prices for identical or comparable assets in active markets
where the comparability between security and benchmark defines
the fair value level. The income approach in most cases means a
present value technique where either the cash flow or the discount
curve is adjusted to reflect credit risk and liquidity risk. Depending on
the observability of these risk parameters in the market, the security
is classified in level 2 or level 3.
Available-for-sale investments – Equity securities
For level 2, the fair value is mainly determined using the market
approach or net asset value techniques for funds. For certain pri vate
equity investments, the funds are priced based on transaction prices
using the cost approach. As there are only few holders of these funds,
the market is not liquid and transactions are only known to partici-
pants.
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.
Financial assets for unit-linked contracts
For level 2, the fair value is determined using the market or the
income approach. For the income approach, primary observable
inputs include yield curves observable at commonly quoted intervals.
For level 3, the fair value is mainly determined based on the net
asset value.
Financial liabilities for unit-linked contracts are valued based on
their corresponding assets.
Annual Report 2014
Allianz Group
233
Derivative financial instruments
and firm commitments included in other assets
The fair value of the derivatives is mainly determined based on the
income approach using present value techniques. Primary inputs
include yield curves observable at commonly quoted intervals. The
derivatives are mainly used for hedging purposes. Certain derivatives
are priced by Bloomberg functions, such as Black-Scholes Option
Pricing or the swap manager tool.
Financial liabilities held for trading – Derivative financial
instruments
For level 2, the fair value is mainly determined using the income
approach. Valuation techniques applied for the income approach
mainly include discounted cash flow models as well as the Black-
Scholes-Merton model. Main observable input parameters include
volatilities, yield curves observable at commonly quoted intervals
and credit spreads observable in the market.
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. Signifi-
cant non-market observable input parameters include mortality
rates and surrender rates.
Financial liabilities held for trading – Other trading
liabilities
The fair value is mainly determined based on the income approach
using present value techniques. Primary inputs comprise swap
curves, share prices and dividend estimates.
Derivative financial instruments
and firm commitments included in other liabilities
For level 2, the fair value is mainly determined using the income
approach. Primary inputs include interest rates and yield curves
observable at commonly quoted intervals.
Financial liabilities for puttable equity instruments
Financial liabilities for puttable equity instruments are generally
required to be recorded at the redemption amount with changes
recognized in income. For level 2, the fair value is mainly determined
based on the market approach and the income approach.
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 invest-
ments from level 1 or level 2 to level 3.
Significant level 3 portfolios – Narrative description
and sensitivity analysis
Available-for-sale investments – Equity securities
Equity securities within available-for-sale investments classified as
level 3 mainly comprise private equity fund investments as well as
alternative investments of the Allianz Group and are in most cases
delivered as net asset values by the fund managers (€ 5.2 bn). The net
asset values are calculated using material, non-public information
about the respective private equity companies. The Allianz Group has
only limited insight into the specific inputs used by the fund man-
agers and hence a narrative sensitivity analysis is not applicable. The
fund’s asset manager generally prices the underlying single portfolio
companies in line with the International Private Equity and Venture
Capital Valuation (IPEV) guidelines using discounted cash flow
(income approach) or multiple methods (market approach). For
certain investments, the invested capital is considered to be a rea-
sonable proxy for the fair value. In these cases, sensitivity analyses
are also not applicable.
Available-for-sale investments – Corporate bonds
Corporate bonds within available-for-sale investments classified as
level 3 are mainly priced based on the income approach (€ 4.7 bn).
The primary non-market observable input used in the discounted
cash flow method is an option adjusted spread taken from a bench-
mark security. A significant yield increase of the benchmark securities
in isolation could result in a decreased fair value, while a significant
yield decrease could result in an increased fair value. However, a 10 %
stress of the main non-market observable inputs has only an imma-
terial impact on fair value.
234
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Financial liabilities held for trading
Financial liabilities held for trading mainly include embedded
de rivative financial instruments relating to annuity products that are
priced internally using discounted cash flow models (€ 7.0 bn). A sig-
nificant decrease (increase) in surrender rates, mortality rates or the
utilization of annuitization benefits could result in a higher (lower)
fair value. For products with a high death benefit, surrender rates
may show an opposite effect. However, a 10 % stress of the main non-
market observable inputs has only an immaterial impact on fair
value.
Quantification of significant non-market observable inputs
The following table shows the quantitative description of valuation
technique(s) and input(s) used for the level 3 portfolios described
above.
Quantitative Description of valuation techniQue(s) anD non-market observable input(s) useD
€ mn
Description
Available-for-sale investments
Equity securities
Corporate bonds
Financial liabilities held for trading
Derivative financial instruments
Fixed-indexed annuities
Fair value as of
31 December 2014 Valuation technique(s)
Non-market
observable input(s)
5,168 Net asset value
n/a
Range
n/a
4,686 Discounted cash flow method
Option adjusted spread
0 bps – 725 bps
6,952
5,501 Discounted cash flow method
Annuitizations
Variable annuities
1,451 Discounted cash flow method
Surrenders
Mortality
Withdrawal benefit election
Volatility
Surrenders
Mortality
0 % – 25 %
0 % – 25 %
0 % – 100 %
0 % – 50 %
n/a
0.5 % – 35 %
0 % – 100 %
Annual Report 2014
Allianz Group
235
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.
reconciliation of level 3 financial assets
€ mn
financial assets
Financial assets carried at fair value through income
Financial assets held for trading
Debt securities
Equity securities
Derivative financial instruments
Subtotal
Financial assets designated at fair value through income
Debt securities
Equity securities
Subtotal
Available-for-sale investments
Corporate mortgage-backed securities (residential and commercial)
Other asset-backed securities
Government and government agency bonds
Corporate bonds
Other debt securities
Equity securities
Subtotal
Financial assets for unit-linked contracts
Total financial assets at fair value
reconciliation of level 3 financial liabilities
€ mn
financial liabilities
Financial liabilities held for trading
Derivative financial instruments
Financial liabilities for unit-linked contracts
Financial liabilities for puttable equity instruments
Total financial liabilities at fair value
236
Annual Report 2014
Allianz Group
Carrying value
(fair value) as of
1 January 2014
Additions through
purchases and issues
Net transfers
into (out of) level 3
Disposals through
sales and settlements
Net gains (losses)
recognized in
consolidated
Net gains (losses)
recognized in other
Foreign currency
subsidiaries of the
Changes in the
consolidated
Carrying value
(fair value) as of
income statement
comprehensive income
Impairments
transla tion adjustments
Allianz Group
31 December 2014
–
14
38
52
1
3
4
33
212
56
3,149
773
5,722
9,945
179
10,180
–
22
14
35
3
110
113
–
4
31
1,980
137
1,020
3,172
5
3,325
–
–
–
–
–
–
–
(4)
–
–
974
6
–
975
1
976
–
–
(188)
(188)
–
–
–
(4)
(51)
(26)
(445)
(49)
(1,034)
(1,609)
(15)
(1,811)
Carrying value
(fair value) as of
1 January 2014
Additions through
purchases and issues
Net transfers
into (out of) level 3
Disposals
through sales and
settlements
Net losses (gains)
recognized in
consolidated
Net losses (gains)
recognized in other
Foreign currency
transla tion
adjustments
Changes in the
consolidated
subsidiaries of the
Carrying value
(fair value) as of
income statement
comprehensive income
Impairments
Allianz Group
31 December 2014
4,427
179
–
4,606
1,377
5
3
1,385
–
1
–
1
(516)
(15)
–
(531)
–
(3)
156
153
1
–
1
3
7
–
35
1
23
69
–
223
1,059
–
12
1,071
–
–
–
–
–
–
–
8
30
1
207
(24)
569
791
(4)
787
–
(4)
–
(3)
(1)
(21)
(129)
(151)
–
(151)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
2
–
–
–
4
16
4
515
7
(29)
517
–
519
782
–
–
782
Net gains (losses) in
profit or loss
attributable to a change
in unrealized gains or
losses for financial
assets held at the
reporting date
(17)
–
–
(17)
14
(3)
11
–
–
(27)
35
(101)
85
(7)
–
(12)
–
15
22
38
19
110
129
40
218
39
6,452
729
6,226
13,704
166
14,037
–
–
2
2
–
–
–
–
–
–
–
–
–
–
–
2
Net losses (gains) in
profit or loss
attributable to a change
in unrealized gains or
losses for financial
liabilities held at the
reporting date
–
–
–
–
7,129
166
15
7,310
2,202
–
–
2,202
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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.
reconciliation of level 3 financial assets
€ mn
financial assets
Financial assets carried at fair value through income
Financial assets held for trading
Debt securities
Equity securities
Derivative financial instruments
Subtotal
Debt securities
Equity securities
Subtotal
Available-for-sale investments
Financial assets designated at fair value through income
Corporate mortgage-backed securities (residential and commercial)
Other asset-backed securities
Government and government agency bonds
Corporate bonds
Other debt securities
Equity securities
Subtotal
Financial assets for unit-linked contracts
Total financial assets at fair value
reconciliation of level 3 financial liabilities
€ mn
financial liabilities
Financial liabilities held for trading
Derivative financial instruments
Financial liabilities for unit-linked contracts
Financial liabilities for puttable equity instruments
Total financial liabilities at fair value
–
14
38
52
1
3
4
33
212
56
3,149
773
5,722
9,945
179
10,180
–
22
14
35
3
110
113
–
4
31
1,980
137
1,020
3,172
5
3,325
–
–
–
–
–
–
–
–
–
6
–
1
(4)
974
975
976
–
1
–
1
(188)
(188)
–
–
–
–
–
(4)
(51)
(26)
(445)
(49)
(1,034)
(1,609)
(15)
(1,811)
(516)
(15)
–
(531)
Carrying value
(fair value) as of
1 January 2014
purchases and issues
into (out of) level 3
sales and settlements
Additions through
Net transfers
Disposals through
Net gains (losses)
recognized in
consolidated
income statement
Net gains (losses)
recognized in other
comprehensive income
Impairments
Foreign currency
transla tion adjustments
Changes in the
consolidated
subsidiaries of the
Allianz Group
Carrying value
(fair value) as of
31 December 2014
Net gains (losses) in
profit or loss
attributable to a change
in unrealized gains or
losses for financial
assets held at the
reporting date
–
(3)
156
153
1
–
1
3
7
–
35
1
23
69
–
223
–
–
–
–
–
–
–
8
30
1
207
(24)
569
791
(4)
787
–
–
–
–
–
–
–
–
–
–
(1)
(21)
(129)
(151)
–
(151)
–
–
2
2
–
–
–
4
16
4
515
7
(29)
517
–
519
–
(17)
–
(17)
14
(3)
11
–
–
(27)
35
(101)
85
(7)
–
(12)
–
15
22
38
19
110
129
40
218
39
6,452
729
6,226
13,704
166
14,037
–
–
2
2
–
–
–
–
–
–
–
–
–
–
–
2
Carrying value
(fair value) as of
1 January 2014
purchases and issues
into (out of) level 3
settlements
Additions through
Net transfers
through sales and
Disposals
Net losses (gains)
recognized in
consolidated
income statement
Net losses (gains)
recognized in other
comprehensive income
Foreign currency
transla tion
adjustments
Changes in the
consolidated
subsidiaries of the
Allianz Group
Carrying value
(fair value) as of
31 December 2014
Impairments
4,427
179
–
4,606
1,377
5
3
1,385
1,059
–
12
1,071
–
(4)
–
(3)
–
–
–
–
782
–
–
782
–
–
–
–
7,129
166
15
7,310
Annual Report 2014
Allianz Group
Net losses (gains) in
profit or loss
attributable to a change
in unrealized gains or
losses for financial
liabilities held at the
reporting date
2,202
–
–
2,202
237
fair value measurement on a non-recurring basis
Certain financial assets are measured at fair value on a non-recurring
basis when events or changes in circumstances indicate that the
carrying amount may not be recoverable.
If financial assets are measured at fair value on a non-recurring
basis at the time of impairment or if fair value less cost to sell is used
as the measurement basis under IFRS 5, corresponding disclosures
can be found in note 37 – Impairments of investments (net) or note 41
– Other expenses.
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)
€ mn
Level 1 –
Quoted prices in
active markets
Level 2 –
Market
observable inputs
Level 3 –
Non-market
observable inputs
1,182
330
–
494
–
2,006
7,984
–
–
7,984
3,525
18
–
96,339
–
99,882
1,608
8,618
13,012
23,239
2
4,472
16,323
43,403
3,646
67,846
14,015
675
241
14,931
Level 1 –
Quoted prices in
active markets
Level 2 –
Market
observable inputs
Level 3 –
Non-market
observable inputs
981
316
–
402
–
1,699
6,588
–
–
6,588
3,664
54
–
90,443
–
94,161
1,977
7,863
12,042
21,882
2
3,227
15,625
38,683
3,626
61,163
14,717
713
281
15,711
Total
4,710
4,820
16,323
140,238
3,646
169,737
23,607
9,293
13,253
46,154
Total
4,647
3,597
15,625
129,528
3,626
157,023
23,282
8,576
12,323
44,181
financial assets
Held-to-maturity investments
Investments in associates and joint ventures
Real estate held for investment
Loans and advances to banks and customers
Real estate held for own use
Total assets
financial liabilities
Liabilities to banks and customers
Certificated liabilities
Subordinated liabilities
Total liabilities
fair value hierarchy as of 31 Decmeber 2013 (items not carrieD at fair value)
€ mn
financial assets
Held-to-maturity investments
Investments in associates and joint ventures
Real estate held for investment
Loans and advances to banks and customers
Real estate held for own use
Total assets
financial liabilities
Liabilities to banks and customers
Certificated liabilities
Subordinated liabilities
Total liabilities
238
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Held-to-maturity investments
For level 2, the fair value is mainly determined based on the income
approach using deterministic discounted cash flow models. For
level 3, the carrying amount (amortized cost) is considered to be a
rea sonable estimate for the fair value.
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.
Investments in associates and joint ventures
For level 2, fair values are mainly derived based on the market
approach using market multiples derived from a set of comparables
as the valuation technique. For level 3, fair values are mainly based
on an income approach using a discounted cash flow method or net
asset values as provided by third-party vendors.
Real estate
Fair values are mainly determined based on the income approach. In
some cases, a market approach is applied using market prices of
identical or comparable assets in markets which are not active. The
fair values are either calculated internally and validated by external
experts or derived from expert appraisals with internal controls in
place to monitor these valuations.
Loans and advances to banks and customers
For loans and advances to banks and customers, quoted market
prices are rarely available. Level 1 consists mainly of highly liquid
advances, e.g. short-term investments. The fair value for these assets
in level 2 and level 3 is mainly derived based on the income approach
using deterministic discounted cash flow models.
Liabilities to banks and customers
Level 1 consists mainly of highly liquid liabilities, e.g. payables on
demand. The fair value for liabilities in level 2 and level 3 is mainly
derived based on the income approach using future cash flows dis-
counted with risk-specific interest rates. Main non-market observ-
able inputs include credit spreads. In some cases, the carrying
amount (amortized cost) is considered to be a reasonable estimate
of the fair value.
Certificated liabilities and subordinated liabilities
For level 2, the fair value is mainly determined based on the market
approach using quoted market prices and the income approach
using deterministic discounted cash flow models. For level 3, fair
values are mainly derived based on the income approach using
deterministic cash flows with credit spreads as primary non-market
observable inputs. In some cases, the carrying amount (amortized
cost) is considered to be a reasonable estimate for the fair value.
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.
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 lend-
ing 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 Decem-
ber 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 trans-
ferred 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).
assets pleDgeD anD collateral
The carrying amounts of the assets pledged as collateral are dis-
played in the following table:
assets pleDgeD as collateral
€ mn
as of 31 December
Collaterals without right to resell or repledge
Financial assets carried at fair value through
income
Investments
Loans and advances to banks and customers
Subtotal
Collaterals with right to resell or repledge
Investments
Subtotal
Total
2014
2013
–
4,734
2,877
7,611
2,628
2,628
10,239
3
4,034
2,941
6,978
2,112
2,112
9,090
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 collat-
eral with a carrying amount of € 15 mn (2013: € 191 mn).
Annual Report 2014
Allianz Group
239
45 – Interests in unconsolidated
structured entities
nature, purpose anD role of the allianz group
in structureD entities
To improve transparency and to meet requirements of regulators and
other financial authorities, IFRS 12 introduced additional disclosure
requirements for unconsolidated structured entities often referred
to as off-balance sheet activities. Unconsolidated structured entities,
particularly securitization vehicles and asset-backed financings,
were identified by regulators as forming part of such activities.
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 dom-
inant 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.
The Allianz Group engages in some business activities that
involve entities that fit to the above-mentioned definition of struc-
tured entities. Primarily, the Allianz Group is involved with such enti-
ties due to its investment activities in the insurance business and due
to its asset management activities. Furthermore, structured entities
are used by the Allianz Group to source out certain risks to investors
as part of its reinsurance business. Generally, the classification of
entities as structured entities may require significant judgment.
In the following, the business activities involving unconsolidated
structured entities are described.
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 mort-
gage loans (CmbS), residential mortgage loans (RmbS), auto loans,
credit card receivables and others. These securitization vehicles refi-
nance 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.
Securitization vehicles invested in by the Allianz Group have
been set up by third parties. Furthermore, the Allianz Group has
neither transferred any assets to these vehicles nor has it provided
any further credit enhancements to them.
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.
Within the asset management business, the Allianz Group acts
as asset manager for some securitization vehicles. The assets under
management of these vehicles amounted to € 2,202 mn as at
31 December 2014. Some of the affected vehicles have been set up by
the Allianz Group whereas others have been set up by third parties.
In this respect, the role of the Allianz Group is limited to the asset
management activity. The Allianz Group has not invested in these
vehicles being managed.
Income derived from the management of securitization vehicles
comprises asset management fees.
Investments in investment funds
Considering the broad variety of investment funds across different
jurisdictions, the classification of investment funds as structured
entities based on the definition in IFRS 12 and current industry prac-
tice is judgmental. As a general rule, the relevant activities of an
investment fund are dedicated to the fund manager via asset man-
agement agreements. In contrast, influence from investors on the
relevant activities of unconsolidated funds is usually either precluded
by legal or regulatory provisions or is not deemed to be substantial.
Investment funds are generally subject to stringent regulatory
requirements from financial authorities in all jurisdictions across
the world. Comprehensive regulation of funds protects fund inves-
tors and also serves to limit investment risk. These mechanisms
result in a legal set-up of funds, agreed and accepted by investors and
investment managers, that may lead to a classification as structured
entities under IFRS 12.
With regard to investment activities, income mainly includes
distributions from the funds as well as realized gains and losses from
disposals.
Fund management activities
Within the asset management business, investment funds are estab-
lished and managed to accommodate retail and institutional clients’
requirements to hold investments in specific assets, market seg-
ments or regions. Within the insurance business, policyholder mon-
ey is partly invested in investment funds, which include funds man-
aged by Allianz Group internal asset managers as well as funds set
up and managed by third parties. Investment funds managed or
invested in by Allianz Group may include mutual funds, special
funds and other funds.
Income derived from the management of investment funds
includes asset management fees and performance based fees as far
as own managed funds are concerned.
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 invest-
ment 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 man-
agement business are disclosed in note 30 of this annual report.
240
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Reinsurance business
The Allianz Group also uses structured entities in the reinsurance
business, where hurricane and earthquake risks are sourced to exter-
nal investors via the issuance of catastrophe bonds issued by bank-
ruptcy remote structured entities. The performance of the issued
bonds is linked to the occurrence or non-occurrence of specific catas-
trophe 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 struc-
tured 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.
Income derived from the involvement in these structured entities
is only driven by the valuation of the derivatives under which insur-
ance risks are transferred. According to the purpose those derivatives
are held to maturity. They are treated as freestanding derivatives and
are thus measured at fair value through profit or loss.
nature of risks associateD with
unconsoliDateD structureD entities
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
u.s. agency
cmbs
rmbs
cmo/cDo
Auto
Credit card
Other
Total
Financial
assets carried
at fair value
through
income
Loans and
advances to
banks and
customers
Investments
–
–
–
3
–
–
16
19
3,445
10,347
2,435
940
270
871
4,178
22,485
–
–
215
192
–
–
–
407
Total
3,445
10,347
2,649
1,135
270
871
4,194
22,912
carrying amounts of abs anD mbs investments by rating
€ mn
as of
31 December 2014
Financial
assets carried
at fair value
through
income
aaa
aa
a
bbb
Non-investment grade
Not rated
Total
Loans and
advances to
banks and
customers
–
112
103
–
164
28
407
Total
17,266
2,413
2,021
695
476
40
22,912
Investments
17,253
2,301
1,917
695
309
11
13
–
1
–
3
1
19
22,485
The carrying amounts in the tables listed above represent the maxi-
mum exposure to loss for the Allianz Group from these investments.
In the reporting period, the Allianz Group has not provided any finan-
cial or other support to these entities, nor has it the intention to pro-
vide such support in the future.
Investments in investment funds
investments in investment funDs by asset class
€ mn
as of
31 December 2014
Debt funds
Stock funds
Private equity funds
Property funds
Other funds
Total
Financial
assets carried
at fair value
through
income
340
884
–
–
196
1,420
Investments
5,908
3,370
5,685
1,531
238
Total
6,248
4,254
5,685
1,531
433
16,731
18,150
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 .
As of the reporting date, the Allianz Group has receivables to
unconsolidated investment funds being due for asset management
services amounting to € 724 mn. Furthermore, the Allianz Group has
commitments to invest in private equity funds and similar financial
instruments totaling € 4,388 mn as of 31 December 2014.
The carrying amounts mentioned before represent the maxi-
mum 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.
Annual Report 2014
Allianz Group
241
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.
46 – Related party transactions
Information on the remuneration of Board members and transac-
tions with these persons can be found in the Remuneration Report,
starting on
page 45.
Transactions between Allianz SE and its subsidiaries that are to
be deemed related parties have been eliminated in the consolidation
and are not disclosed in the notes.
Business relations with joint ventures and associates are set on
an arm’s length basis.
47 – Litigation, guarantees and other
contingencies and commitments
litigation
Allianz Group companies are involved in legal, regulatory, and arbi-
tration proceedings in Germany and a number of foreign jurisdic-
tions, including the United States. Such proceedings arise in the
ordinary course of business, including, amongst others, their activi-
ties 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 pro-
ceedings. 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.
On 24 May 2002, pursuant to a statutory squeeze-out procedure,
the general meeting of Dresdner Bank AG resolved to transfer shares
from its minority shareholders to Allianz as principal shareholder in
return for payment of a cash settlement amounting to € 51.50 per
share. Allianz established the amount of the cash settlement on the
basis of an expert opinion, and its adequacy was confirmed by a court
242
Annual Report 2014
Allianz Group
appointed auditor. Some of the former minority shareholders applied
for a court review of the appropriate amount of the cash settlement
in a mediation procedure (“Spruchverfahren”). In September 2013,
the district court (“Landgericht”) of Frankfurt dismissed the minor-
ity shareholders’ claims in their entirety. This decision has been
appealed to the higher regional court (“Oberlandesgericht”) of Frank-
furt. In the event that a final decision were to determine a higher
amount as an appropriate cash settlement, this would affect all of the
approximately 16 mn shares that were transferred to Allianz.
The U.S. Department of Justice (DOJ) is conducting an investiga-
tion into whether certain employees of Fireman’s Fund Insurance
Company (FFIC), a subsidiary of Allianz SE, engaged in a violation of
the False Claims Act in connection with FFIC’s involvement as a pro-
vider of federal crop insurance from 1997 to 2003. The investigation
concerns the issue of whether FFIC employees submitted false claims
to the government through various practices, including backdating
and inappropriately designating new producer status. Two former
FFIC claims employees and one contract adjuster have pled guilty to
assisting farmers in asserting fraudulent crop claims. The DOJ and
FFIC are in negotiations to reach a final resolution of this matter. FFIC
has made a proper provision for this matter.
Allianz Life Insurance Company of North America (Allianz Life)
has been named as a defendant in class action lawsuits in connec-
tion 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 defen-
dant engaged in, among other practices, deceptive trade practices
and misleading advertising in connection with the sale of such prod-
ucts. 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 out-
come of the other cases cannot yet be determined.
guarantees anD other contingencies
Guarantees
The guarantees issued by the Allianz Group consist of financial guar-
antees, indemnification contracts and performance contracts.
Financial guarantees
The majority of the Allianz Group’s financial guarantees are issued
to customers through the normal course of banking business in
return for fee and commission income, which is generally deter-
mined based on rates subject to the nominal amount of the guaran-
tees and inherent credit risks. Once a guarantee has been drawn
upon, any amount paid by the Allianz Group to third parties is treated
as a loan to the customer, and is, therefore, basically subject to the
credit risk of the customer or the collateral pledged, respectively.
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
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.
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.
Indemnification contracts
Indemnification contracts are executed by the Allianz Group with
various counterparties under existing service, lease or acquisition
transactions. Such contracts may also be used to indemnify counter-
parties under various contingencies, such as changes in laws and
regulations or litigation claims.
In connection with the sale of various of the Allianz Group’s for-
mer 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 indemnifica-
tion 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.
As of 31 December 2014, the performance guarantees amount to
€ 43 mn (2013: € 169 mn), € 25 mn of which are due within one year. The
collateral held amounts to € 55 mn (2013: € 36 mn).
Other contingencies
In accordance with § 5 (10) of the Statutes of the Joint Fund for Secur-
ing Customer Deposits (“Einlagensiche rungsfonds”), Allianz SE has
undertaken to indemnify the Federal Association of German Banks
(“Bundesverband deutscher Banken e.V.”) for any losses it may incur
by reason of supporting measures taken in favor of Oldenburgische
Landes bank AG (OLb), Münster ländische Bank Thie & Co. KG and Bank-
haus W. Fortmann & Söhne KG.
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 Capi-
tal Securities from € 1,000 mn to € 416 mn. The securities have no
scheduled maturity and the security holders have no right to call for
commitments
Loan commitments
The Allianz Group engages in various lending commitments to meet
the financing needs of its customers. They consist of advances, stand-
by 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.
Leasing commitments
The Allianz Group occupies property in many locations under various
long-term operating leases and has entered into various operating
leases covering the long-term use of data processing equipment and
other office equipment.
As of 31 December 2014, the future minimum lease payments
under non-cancelable operating leases were as follows:
future minimum lease payments
€ mn
Due in 1 year or less
Due after 1 year and up to 5 years
Due after 5 years
Subtotal
Subleases
Total
2014
338
1,116
1,156
2,610
(53)
2,558
For the year ended 31 December 2014, rental expenses totaled € 322 mn
(2013: € 350 mn), net of sublease rental income received of € 15 mn.
Purchase obligations
The Allianz Group has commitments for mortgage loans and to buy
multi-tranche loans of € 3,388 mn (2013: € 2,810 mn) as well as to invest
in private equity funds and similar financial instruments totaling
€ 4,388 mn (2013: € 2,978 mn) as of 31 December 2014. As of 31 Decem-
ber 2014, commitments outstanding to invest in real estate used by
third parties or used by the Allianz Group for its own activities and for
infra structure investments amount to € 1,209 mn (2013: € 860 mn).
Annual Report 2014
Allianz Group
243
In addition, as of 31 December 2014, the Allianz Group has
other purchase obligations of € 743 mn (2013: € 477 mn) mainly refer-
ring to maintenance, real estate development, sponsoring and other
obligations.
Other commitments
Within the Allianz Group several entities are obliged to make contri-
butions to an industry-specific compensation scheme. The most
important ones are the following:
Pursuant to §§ 124 ff. of the German Insurance Supervision Act
(“Versicherungsaufsichtsgesetz” – VAG), a mandatory insurance
guarantee scheme (“Sicherungsfonds”) for life insurers is imple-
mented in Germany. Each member of the scheme is obliged to make
annual contributions to the scheme as well as special payments
under certain circumstances. The exact amount of obligations for
each member is calculated according to the provisions of a Federal
Regulation (“Sicherungsfonds-Finanzierungs-Verordnung (Leben)”
– SichLVFinV). As of 31 December 2014, the future liabilities of Allianz
Lebens versicherungs-Aktiengesellschaft and its subsidiaries to the
insurance guarantee scheme pursuant to the SichLVFinV amount to
annual contributions of € 10.3 mn (2013: € 9.7 mn) and an obligation for
special payments of, in principle, € 157 mn (2013: € 138 mn) per year.
In accordance with §§ 124 ff. of the German Insurance Super-
vision Act (“Versicherungsaufsichtsgesetz” - VAG), Allianz Private
Krankenversicherungs-AG is a member of the mandatory insurance
guarantee scheme (Sicherungsfonds) for German health insurers. In
case the guarantee scheme has to resume responsibility for insur-
ance contracts, it will collect special payments from its members to
fulfill its tasks. Until today, no contributions have been requested by
the scheme. As of 31 December 2014, the potential liabilities of Allianz
Private Krankenversicherungs-AG to the insurance guarantee scheme
amount to an obligation for special payments of € 51 mn (2013: € 48 mn).
In December 2002, Protektor Lebensversicherungs-Aktiengesell-
schaft (“Protektor”), a life insurance company whose role is to protect
policyholders of all German life insurers, was founded. Allianz Lebens-
versicherungs-Aktiengesellschaft and some of its subsidiaries are
obligated to provide additional funds either to the mandatory insur-
ance guarantee scheme or to Protektor, in the event that the funds
provided to the mandatory insurance guarantee scheme are not suf-
ficient 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 contribu-
tions to the mandatory insurance scheme mentioned above and
assuming that no life insurer is exempted from payments, the aggre-
gate out standing commitment of Allianz Lebensversicherungs-
Aktiengesellschaft and its subsidiaries to the insurance guarantee
scheme and to Protektor is € 1,420 mn (2013: € 1,252 mn).
According to the German Deposit Guarantee and Investor Com-
pensation Act (EAEG – “Einlagensicherungs- und Anlegerentschädi-
gungsgesetz”) all credit institutions, investment companies and
financial services institutions licensed to do business in Germany
must adhere to a statutory compensation scheme. Allianz Global
Investors GmbH, PImCO Deutschland GmbH and risklab GmbH are
currently members of EdW (“Entschädigungseinrichtung der Wert-
papierhandelsunternehmen”, Berlin). The annual contribution is
determined in consideration of each member’s scope of business. In
addition, EdW may levy special contributions from its members, if
the funds available to EdW are insufficient to satisfy all eligible
claims. Special contributions are determined by reference to the pre-
ceding yearly contribution. For 2014, the yearly contributions for
above-mentioned entities have been determined by notification from
the EdW in the amount of € 2 mn (2013: € – mn). With respect to the
insolvency of Phoenix Kapitaldienst GmbH, the German Federal
Financial Supervisory Authority (“Bundesanstalt für Finanzdienst-
leistungsaufsicht” – BaFin) has determined that certain investor
claims will be covered under the compensation scheme and special
contributions have been levied. In this regard, special contributions
were notified by EdW to above-mentioned entities in 2014 in the
amount of € 5 mn (2013: € 2 mn). The above-mentioned entities have
appealed the special contributions. For received, but not yet paid
notifications, and for the estimated special contribution for 2014,
adequate provisions have been accrued.
48 – Pensions and similar obligations
overview
Retirement benefits in the Allianz Group, which are granted to
employees and in Germany also to agents, are either in the form of
defined benefit or defined contribution plans. For defined benefit
plans, the beneficiary is granted a defined benefit by the employer or
via an external entity. In contrast to defined contribution arrange-
ments, the future cost to the employer of a defined benefit plan is not
known with certainty in advance.
The Allianz Group provides competitive and cost effective retire-
ment and disability benefits using risk appropriate vehicles. The
plans may vary from country to country due to the different legal, fiscal
and economic environment.
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 ben-
efits 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.
244
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
In the Pension Task Force the heads of Group HR, Group Account-
ing and Reporting, Group Treasury and Corporate Finance, Group
Planning and Controlling, Group Risk and AIm met four times to pro-
vide global governance and pre-align pension-related topics prior to
relevant Group Committee meetings.
Pension plans in Germany, the U.K. and Switzerland are
described in more detail regarding key risks and regulatory environ-
ment, as each of them contributes more than 5 % to the Allianz
Group’s defined benefit obligation or its plan assets.
Germany
Germany accounts for 75.2 % of the Allianz Group’s defined benefit
obligation and 62.1 % of the Allianz Group’s plan assets.
Most active German employees participate in a contribution-
based system using different vehicles to cover the base salary both
below and above the German social security ceiling. The Allianz Ver-
sorgungskasse VVaG (AVK) financed through employee contributions
and the Allianz Pensionsverein e.V. (APV) financed by the employer,
provide pension benefits for the base salary up to the German social
security ceiling. Both plans are wholly funded. AVK and APV are legal-
ly separate administered pension funds with trustee boards being
responsible for the investment of the assets and the risk manage-
ment. AVK is subject to German insurance regulation.
Additionally, for salary above the German social security ceiling,
the Allianz Group contributes to the Beitragsorientierter Pensions-
vertrag (bPV). On retirement the accumulated capital is converted to
a lifetime annuity. The Allianz Group decides each year whether and
to which extent a bPV budget is provided. Independently from this
decision an additional risk premium is paid to cover death and dis-
ability. The bPV was implemented as of 1 January 2005. Formerly exist-
ing plans were transferred to the bPV, taking the retained rights into
account as appropriate. In the bPV generally the accruals after 2005
are wholly funded, whereas the grandfathered plan is funded to a
minor extent. The assets, which are allocated to a trust (Methusalem
Trust e.V.), are managed by a board of trustees.
There is also a partly funded defined benefit pension plan for
agents (VertreterVersorgungsWerk, VVW), which has been closed for
new entrants since 31 December 2011. A part of the pension plan
serves as a replacement for the compensatory claim of agents accord-
ing to German Commercial Code (§ 89b). The pension amount guar-
anteed is based on the individual agents’ insurance portfolio, which
is regularly reassessed although there is no legal obligation. VVW is
close to a final salary benefit and pension increases are broadly
linked to inflation.
For the AVK the annual minimum interest rate guaranteed is
1.75 % – 3.50 % depending on the date of joining the Allianz Group and
for the bPV it is 2.75 %. Pension increases apart from AVK are guaran-
teed at least with 1 % p.a. Depending on legal requirements some pen-
sion increases are linked to inflation. In AVK the complete surplus
share of the retirees is used to increase their pension.
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.
The period in which a retirement pension can be drawn is usu-
ally between age 60 and age 67. Disability benefits are granted prior
to retirement in the event of an occurrence of a qualifying disability.
In the case of death, a pension may be paid to dependents. Sur-
viving dependents normally receive 60 % (widow/widower) and 20 %
(per child) of the original employee’s pension, in total not to exceed
100 %.
Additionally, the Allianz Group offers a deferred compensation
program, Pensionszusage durch Entgeltumwandlung (PZE), for
active employees. Within some boundaries they convert at their dis-
cretion parts of their gross income and receive in exchange a pension
commitment of equal value. PZEs qualify almost as defined contribu-
tion plans with minor risk exposure.
United Kingdom
The U.K. accounts for 8.1 % of the Allianz Group’s defined benefit obli-
gation and 12.4 % of the Allianz Group’s plan assets.
The U.K. operates a funded pension scheme, the Allianz Retire-
ment and Death Benefits Fund. The trustee board is required by law
to act in the best interests of members and is responsible for setting
certain policies (e.g. investment and contribution policies) of the
principal U.K. scheme. Contributions are made by both the employer
and employees.
The fund has a defined benefit pension section and a defined
contribution section. The defined contribution section was estab-
lished on 1 April 2001, from which date the defined benefit section
was closed to new entrants. The defined benefit section provides final
salary benefits. Pension increases are broadly linked to Retail Prices
Index (RPI) inflation.
From 1 July 2012, benefit changes were made to the defined ben-
efit section. Following these benefit changes, increases to pensiona-
ble pay are capped at RPI and, in 2015, the defined benefit section will
close to future accrual and all members will switch to the defined
contribution section.
Annual Report 2014
Allianz Group
245
Switzerland
Switzerland accounts for 4.8 % of the Allianz Group’s defined benefit
obligation and 8.9 % of the Allianz Group’s plan assets.
There are obligatory corporate pension plans in Switzerland, eli-
gible for all employees. The plans are wholly funded through legally
separate trustee-administered pension funds, with the trustee board
being responsible for the investment of the assets and risk manage-
ment. The plans are contribution-based and cover the risks of longev-
ity, disability and death. Employees contribute only a small amount
whereas the employer contributes for the complete risk coverage and
a large part of the savings components. The interest rate is decided
annually by the board of the pension funds. For the mandatory part
the minimum interest rate is regulated by law and reviewed annu-
ally (1.75 % in 2014). At retirement beneficiaries can choose between
a lump sum payment, an annuity or a combination of both where the
part which is not granted as a lump sum is converted to a fixed annu-
ity according to the rules of the pension fund, taking legal require-
ments into account.
If employees contract out of the Allianz Suisse pension plan,
they have to take their vested pension capital (“Freizügigkeitsleis-
tung”) to the next employer, which implies a small liquidity risk.
DefineD benefit plans
Amounts recognized in the Allianz Group’s consolidated balance
sheet for defined benefit plans are as follows:
reconciliation of DefineD benefit plans on the balance sheet
€ mn
Net amount recognized as of 1 January
Changes in the consolidated subsidiaries of the
Allianz Group
Foreign currency translation adjustments
Recognized expenses
Payments
oci recognition (before deferred taxes)
Net amount recognized as of 31 December
thereof assets
thereof liabilities
2014
7,500
(3)
21
662
(737)
2,264
9,707
(58)
9,765
2013
8,010
6
(13)
661
(642)
(522)
7,500
(94)
7,594
The following table sets out the changes in the defined benefit obli-
gation, in the fair value of plan assets and in the effect of the asset
ceiling for the various Allianz Group defined benefit plans:
reconciliation of DefineD benefit obligation,
plan assets anD effect of asset ceiling
€ mn
change in DefineD benefit obligation
Defined benefit obligation as of 1 January
19,110
19,161
2014
2013
Current service costs
Interest expenses
Plan participants’ contributions
Actuarial (gains)/losses due to
Changes in demographic assumptions
Changes in financial assumptions
Experience adjustments
Past service costs
Foreign currency translation adjustments
Benefits paid
Changes in the consolidated subsidiaries
of the Allianz Group
Divestitures
Settlement gain/(loss)
Settlement payments1
Defined benefit obligation as of 31 December2
change in fair value of plan assets
398
663
107
6
3,227
(111)
(4)
197
(680)
(4)
(5)
15
(152)
22,767
414
619
106
40
(554)
35
(7)
(82)
(629)
9
(1)
–
(1)
19,110
Fair value of plan assets as of 1 January
11,668
11,206
Interest income on plan assets
Return on plan assets greater/(less) than interest
income on plan assets
Employer contributions
Plan participants’ contributions
Foreign currency translation adjustments
Benefits paid3
Changes in the consolidated subsidiaries
of the Allianz Group
Divestitures
Assets distributed on settlement
411
860
317
107
177
(381)
(4)
(1)
(31)
366
46
364
106
(70)
(351)
3
(1)
(1)
Fair value of plan assets as of 31 December
13,123
11,668
change in effect of asset ceiling4
Effect of asset ceiling as of 1 January
Interest expenses on effect of asset ceiling
Change in effect of asset ceiling in excess of
interest
Foreign currency translation adjustments
Effect of asset ceiling as of 31 December
58
1
2
1
63
55
1
3
(1)
58
1
2
3
4
These include a settlement payment of € 121 mn in South Korea for a plan change into a defined contribu-
tion pension plan.
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.
In addition, the Allianz Group paid € 306 mn (2013: € 283 mn) directly to plan participants.
The asset ceiling is determined by taking the reduction of future contributions into account.
246
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
As of 31 December 2014, post-retirement health benefits included in
the defined benefit obligation and in the net amount recognized
amounted to € 13 mn (2013: € 13 mn) and € 13 mn (2013: € 13 mn),
respectively.
During the years ended 31 December 2014 and 2013, the defined
benefit costs related to post-retirement health benefits were not
significant.
Assumptions
The assumptions for the actuarial computation of the defined benefit
obligation and the recognized expense depend on the circumstances
in the particular country where the plan has been established.
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 aver-
age 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 ben-
efit obligation by € 605 mn.
The weighted average values of the assumptions for the Allianz
Group’s defined benefit plans used to determine the defined benefit
obligation and the recognized expense are as follows:
The range for the sensitivity calculations was derived by analyzing
the average volatility over a five-year period.
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.
A change in the medical cost trend rate by 100 basis points would
have an effect of € 1 mn on the defined benefit obligation and no
material effect on the defined benefit costs.
Plan Assets/Asset Liability Management (alm)
Based on the estimated future cash flows of € 719 mn for 2015, € 716 mn
for 2016, € 737 mn for 2017, € 756 mn for 2018, € 804 mn for 2019 and
€ 4,262 mn for 2020 – 2024, the weighted duration of the defined benefit
obligation is 19.4 years. The Allianz Group uses, based on the liability
profiles of the defined benefit obligation and on the regulatory fund-
ing requirements, stochastic asset liability models to optimize the
asset allocation from a risk-return perspective.
Due to a well-diversified portfolio of more than 140,000 plan par-
ticipants, there is no reasonable uncertainty of future cash flows
expected that could have an impact on the liquidity of the Allianz
Group.
The target allocation for the plan assets compares to the current
assumptions for DefineD benefit plans
%
as of 31 December
Discount rate
Rate of compensation increase
Rate of pension increase
Rate of medical cost trend
2014
2.2
2.1
1.8
2.6
2013
asset allocation as follows:
asset allocation of plan assets
3.5
2.2
2.0
3.7
The recognized expense is recorded based on the assumptions of the
corresponding previous year.
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 cor-
porate 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.
as of 31 December
Equity securities
Quoted
Non-quoted
Debt securities
Quoted
Non-quoted
Real estate
Annuity contracts
Other
Total
Target
allocation
Real
allocation
%
15.1
%
14.9
Real
allocation
2014
Real
allocation
2013
€ mn
€ mn
58.2
52.9
6.1
19.1
1.5
5.0
17.0
10.2
1,955
–
4,816
2,125
654
2,232
1,341
1,594
–
4,212
1,927
561
2,071
1,303
100.0
100.0
13,123
11,668
Annual Report 2014
Allianz Group
247
The bulk of the plan assets are held by the Allianz Versorgungskasse
VVaG, Munich, which is not part of the Allianz Group.
Plan assets do not include any real estate used by the Allianz
Group and include only € 5.2 mn of own transferable financial
instruments.
In addition to the plan assets of € 13.1 bn, the Allianz Group has
dedicated assets at Group level amounting to € 3.2 bn as of 31 Decem-
ber 2014, which are likewise managed according to Allianz ALm stan-
dards.
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 re-
cognized 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 Manage-
ment, 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.
Stock appreciation rights
The SAR granted to a plan participant obligate the Allianz Group to
pay in cash the excess of the market price of an Allianz SE share over
the reference price on the exercise date for each right granted. The
excess is capped at 150 % of the reference price. The reference price
represents the average of the closing prices of an Allianz SE share for
the ten trading days following the Financial Press Conference of
Allianz SE in the year of issue. SAR which were granted up to 2008 vest
after two years and expire after seven years. From the 2009 grant
onwards, the SAR vest after four years and also expire after seven
years. Upon vesting, the SAR may be exercised by the plan participant
if the following market conditions are attained:
− during their contractual term, the market price of the Allianz SE
share has outperformed the Dow Jones EURO STOXX Price Index
at least once for a period of five consecutive trading days; and
− the Allianz SE market price is in excess of the reference price by
at least 20 % on the exercise date.
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.
Upon the expiration date, any unexercised SAR will be exercised
automatically if the above market conditions have been attained. The
SAR are forfeited if the plan participant ceases to be employed by the
Allianz Group or if the exercise conditions are not attained by the
expiration date.
The fair value of the SAR at grant date is measured using a Cox-
Ross-Rubinstein binomial tree option pricing model. Volatility was
derived from observed historical market prices. In the absence of
historical information regarding employee stock appreciation exer-
cise patterns (for the year ended 31 December 2014, the plan issued
in 2008 is “out of the money”), the expected life has been estimated
to equal the term to maturity of the SAR.
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.
Restricted stock units
The RSU granted to a plan participant obligate the Allianz Group to
pay in cash the average market price of an Allianz SE share in the ten
trading days preceding the vesting date or to issue one Allianz SE
share, or other equivalent equity instrument, for each unit granted.
The RSU vest after five years. The Allianz Group will exercise the RSU
on the first stock exchange day after their vesting date. On the exer-
cise date, the Allianz Group can choose the settlement method for
each unit.
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.
248
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
The RSU are virtual stocks without dividend payments. The fair
value is calculated by subtracting the net present value of expected
future dividend payments until maturity of the RSU from the prevail-
ing share price as of the valuation date.
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.
allianz eQuity incentive plan
Since the 2011 grant year, the Allianz Equity Incentive plan (AEI plan)
has replaced the GEI plans. The AEI plan is granted in the form of
restricted stock units (RSU) and is part of a new variable compensa-
tion component for the plan beneficiaries.
The RSU granted to a plan participant obligate the Allianz Group
to pay in cash the average closing price of an Allianz SE share on the
last day of the vesting period and the prior nine trading days or to
convert one RSU into one Allianz SE share. The payout is capped at a
200 % share price growth above the grant price.
The RSU are subject to a vesting period of four years and will be
released on the last day of the vesting period. The Allianz Group can
choose the settlement method for each unit.
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
Share price
Average dividend yield
Average interest rate
Expected volatility
20151
2014
2013
148.75
120.65
110.40
4.8
0.2
19.3
4.5
0.5
20.0
4.6
0.5
20.9
€
%
%
%
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 compensa-
tion 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.
share-baseD compensation plans
of subsiDiaries of the allianz group
pimco llc Class B Unit Purchase Plan
When acquiring Allianz Global Investors of America L.P. ( AllianzGI L.P.)
during the year ended 31 December 2000, Allianz SE caused Pacific
Investment Management Company LLC (PImCO LLC), a subsidiary of
AllianzGI L.P., to enter into a Class B Purchase Plan (the “Class B Plan”)
for the benefit of members of the management of PImCO LLC. The plan
participants of the Class B Plan have rights to a 15 % priority claim on
the adjusted operating profits of PImCO LLC.
The Class B equity units issued under the Class B Plan vest over
3 to 5 years and are subject to repurchase by AllianzGI L.P. upon the
death, disability or termination of the participant prior to vesting.
Starting 1 January 2005, AllianzGI L.P. has the right to repurchase, and
the participants have the right to cause AllianzGI L.P. to repurchase,
a portion of the vested Class B equity units each year. The call or put
right is exercisable for the first time 6 months after the initial vesting
of each grant. On the repurchase date, the repurchase price will be
based on the determined value of the Class B equity units being
repurchased. As the Class B equity units are puttable by the plan par-
ticipants, the Class B Plan is accounted for as a cash-settled plan.
Therefore, the Allianz Group accrues the fair value of the Class B
equity units as a compensation expense over the vesting period.
Upon vesting, any changes in the fair value of the Class B equity units
are recognized as a compensation expense. During the year ended
31 December 2014, the Allianz Group recognized a compensation
expense related to the Class B equity units of € (10) mn (2013: € 15 mn).
In addition, the Allianz Group recognized an expense related to the
priority claim on the adjusted operating profits of PImCO LLC of € 3 mn
(2013: € 16 mn). The Allianz Group called a total of 3,254 Class B equity
units during the year ended 31 December 2014. The total amount paid
related to the call of the Class B equity units was € 143 mn.
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).
Annual Report 2014
Allianz Group
249
pimco llc Class M-unit Plan
In 2008, Allianz Global Investors of America L.P. ( AllianzGI L.P.)
launched a new management share-based payment incentive plan
for certain senior level executives and affiliates of PImCO LLC. Partici-
pants in the plan are granted options to acquire a new class of equity
instruments (M-units), which vest in one-third increments on
approximately the third, fourth and fifth anniversary of the option
grant date. Upon vesting, options will be automatically exercised in
a cashless trans action, but only if they are in the money. Participants
may elect to defer the receipt of M-units through the M-unit Deferral
Plan until termination of their service at the lastest. With the M-unit
Plan, participants can directly participate in PImCO’S performance.
Class M-units are non-voting common equity with limited informa-
tion rights. They bear quarterly distributions equal to a pro-rata
share of PImCO’S net distributable income. Deferred M-units have a
right to receive a quarterly cash compensation equal to and in lieu of
quarterly dividend payments.
A maximum of 250,000 M-units are authorized for issuance
under the M-unit Plan.
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 following table provides the assumptions used in calculating
the fair value of the M-unit options at grant date:
assumptions of class m-unit plan
Weighted average fair value of options granted
Assumptions:
Expected term (years)
Expected volatility
Expected dividend yield
Risk free rate of return
2014
2013
567.49
1,047.87
3.84
24.9
13.3
1.1
3.84
31.6
13.2
0.7
€
%
%
%
The number and weighted average exercise price of the M-unit
options outstanding and exercisable are as follows:
reconciliation of outstanDing m-unit options
2014
2013
Number of
options
Weighted
average
exercise
price
€
Number of
options
Weighted
average
exercise
price
€
Outstanding as of 1 January
214,109
13,709.98
204,091
12,597.93
Granted
Exercised
Forfeited
Outstanding as of
31 December
Exercisable as of
31 December
48,894
19,749.44
50,600
16,959.07
(43,321)
12,508.00
(30,412)
8,213.51
(44,322)
16,879.96
(10,170)
13,069.76
175,360
17,212.31
214,109
13,709.98
–
–
–
–
The aggregate intrinsic value of share options outstanding was
€ 65 mn and € 232 mn for the years ended 31 December 2014 and 2013,
respectively.
As of 31 December 2014, the M-unit options outstanding have an
exercise price of between € 11,938.35 and € 19,843.81 and a weighted
average remaining contractual life of 2.77 years.
The shares settled by delivery of PImCO LLC shares are accounted
for as equity-settled plans by PImCO LLC. Therefore, PImCO LLC meas-
ures the total compensation expense to be recognized for the equity-
settled shares based on their fair value as of the grant date. The total
compensation expense is recognized over the vesting period.
During the year ended 31 December 2014, the Allianz Group
recorded a compensation expense of € 31 mn (2013: € 74 mn) related
to these share options.
Allianz France share option plan
Allianz France, formerly AGF, awarded options on its former Holding
(AGF S.A.) quoted shares to eligible AGF Group executives, managers
of subsidiaries, and some employees whose performance justified
grants.
During the year ended 31 December 2007, Allianz acquired all of
the remaining AGF shares from non-controlling interests in the con-
text of the Tender Offer and Squeeze-out. Under the terms of an agree-
ment (the “Liquidity Agreement”) between Allianz SE, AGF and the
beneficiaries of the AGF share option plans 2003 – 2006 (AGF employ-
ees), Allianz has the right to purchase all AGF shares issued through
the exercise of these AGF share option plans after the put period
(where the beneficiaries have the right to sell to Allianz). The price
payable by Allianz per AGF share is a cash consideration equal to the
Allianz 20-day average share price prior to the date the right to buy or
250
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
to sell is exercised, multiplied by a ratio representing the consider-
ation proposed in the Tender Offer for each AGF share (€ 126.43) divided
by the Allianz share price on 16 January 2007 (€ 155.72). This ratio is
subject to adjustments in case of transactions impacting Allianz or
AGF share capital or net equity. The cash settlement is based on the
initial offer proposed for each AGF share during the Tender Offer. As
of 31 December 2007, all shares issued under these plans were fully
vested and exercisable.
Due to the change in settlement arising from the Liquidity
Agreement, the Allianz Group accounts for the AGF share option
plans as cash-settled plans, as all AGF employees will receive cash for
their AGF shares. Therefore, the Allianz Group recognizes any change
in the fair value of the unexercised plans as a compensation expense.
During the year ended 31 December 2014, the Allianz Group rec-
ognized total compensation expenses related to the modified share
option plans of € (1) mn (2013: € 2 mn). As of 31 December 2014, the
Allianz Group recorded a provision for these plans of € 3 mn (2013:
€ 8 mn).
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 Decem-
ber 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).
50 – Restructuring plans
As of 31 December 2014, the Allianz Group has provisions for restruc-
turing resulting from a number of restructuring programs in various
segments. These provisions for restructuring primarily include per-
sonnel costs, which result from severance payments for employee
terminations, and contract termination costs, including those relat-
ing to the termination of lease contracts that will arise in connection
with the implementation of the relevant initiatives.
The following table shows the changes in the provisions for
restructuring plans.
provisions for restructuring plans
€ mn
As of 1 January
New provisions
Additions to existing provisions
Release of provisions recognized in prior years
Utilization of provisions via payments
Utilization of provisions via transfers
Foreign currency translation adjustments
As of 31 December
2014
214
8
24
(28)
(75)
(35)
2
109
2013
304
166
19
(53)
(104)
(116)
(2)
214
The development of the restructuring provisions reflects the imple-
mentation status of the restructuring initiatives. Based on the spe-
cific IFRS guidance, restructuring provisions are recognized prior to
when they qualify to be recognized under the guidance for other
types of provisions. In order to reflect the timely implementation of
the various restructuring initiatives, restructuring provisions, as far
as they are already “locked in”, are transferred to the provision type
that would have been used if a restructuring initiative was not in
place. This applies for each single contract. For personnel costs, at
the time an employee has contractually agreed to leave the Allianz
Group by signing either an early retirement, a partial retirement
(Altersteilzeit, which is a specific type of an early retirement program
in Germany), or a termination arrangement, the respective part of
the restructuring provision is transferred to employee-related provi-
sions. In addition, provisions for vacant office spaces that result from
restructuring initiatives are transferred to “other” provisions after
the offices have been completely vacated.
allianz bank’s restructuring plan
Allianz Bank did not grow as profitably as expected in a highly com-
petitive 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.
Annual Report 2014
Allianz Group
251
allianz germany group’s restructuring plan
The Allianz Germany Group launched the restructuring program
“Zukunftsprogramm Sachversicherung” in order to generate further
growth impulses. The program is expected to be completed with the
objective of cost savings, improved claims management and higher
growth of revenue, thereby increasing the competitiveness and prof-
itability of Allianz Germany’s future property and casualty business.
In 2012, the project “Optimierung Stäbe” was implemented as
part of the restructuring program “Zukunftsprogramm Sachversi-
cherung” 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 Decem-
ber 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.
effect of the reversal of Discounting
For the year ended 31 December 2014, there was no effect of the rever-
sal of discounting arising from the passage of time (2013: € 4 mn).
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.
olDenburgische lanDesbank’s restructuring plan
A change in customer demand concerning distribution channels of
retail banking and a rise of regulatory costs for banking business led
to a restructuring program being launched in the third quarter of
2014 in order to implement a more efficient consultancy and service
structure.
For this program, restructuring charges of € 4 mn were recorded
in 2014. As of 31 December 2014, restructuring provisions 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 uni-
fied platform for all agencies including a digital agency will be imple-
mented. The program will result in a reduction of complexity and
higher automation of processes, in particular for underwriting activ-
ities, especially after the acquisition of the former book of business
and agency network from UnipolSai Assicurazioni S.p.A. By imple-
menting 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.
During the year ended 31 December 2014, restructuring charges
of € 1 mn were recorded. As of 31 December 2014, restructuring provi-
sions for this program amounted to € 12 mn.
252
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
51 – Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing net income attrib
utable to shareholders by the weighted average number of common
shares outstanding for the period.
52 – Other information
numBer of employees
numBer of employees
as of 31 December
Germany
Rest of Europe
Basic earnings per share
€ mn
Net income attributable to shareholders used
to calculate basic earnings per share
2014
6,221
2013
Asia Pacific & Africa
America
5,996
Total
2014
40,692
70,346
21,366
15,021
2013
40,537
71,927
20,157
15,006
147,425
147,627
Weighted average number of common shares
outstanding
453,841,370
453,297,832
Basic earnings per share (€)
13.71
13.23
The average total number of employees for the year ended 31 Decem
ber 2014 was 147,444.
DiluteD earnings per share
Diluted earnings per share are calculated by dividing net income
attributable to shareholders by the weighted average number of com
mon shares outstanding for the period, both adjusted for the effects
of potentially dilutive common shares. These effects arise from vari
ous sharebased compensation plans of the Allianz Group.
DiluteD earnings per share
€ mn
Net income attributable to shareholders
Effect of potentially dilutive common shares
Net income used to calculate diluted earnings
per share
Weighted average number of common shares
outstanding
Potentially dilutive common shares resulting from
assumed conversion of:
2014
6,221
(24)
6,197
2013
5,996
(76)
5,920
453,841,370
453,297,832
Share-based compensation plans
425,532
189,395
Weighted average number of common shares
outstanding after assumed conversion
454,266,902
453,487,227
Diluted earnings per share (€)
13.64
13.05
For the year ended 31 December 2014, the weighted average number
of common shares excludes 2,738,082 (2013: 2,753,127) treasury shares.
personnel expenses
personnel expenses
€ mn
Salaries and wages
Social security contributions and employee
assistance
Expenses for pensions and other post-retirement
benefits
Total
2014
9,037
1,293
1,186
11,515
2013
9,105
1,304
1,107
11,516
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.
Annual Report 2014
Allianz Group
253
principal accountant fees anD services
KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG AG) serves as the
external auditing firm for the Allianz Group.
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.
kpmg fees
€ mn
Audit fees
Audit-related fees
Tax fees
All other fees
Total
kpmg worldwide
thereof: kpmg ag
2014
38.1
7.9
2.8
6.0
54.8
2013
36.3
8.3
4.8
8.1
57.5
2014
9.9
6.5
1.2
2.9
20.5
2013
9.7
6.6
3.0
7.0
26.2
Audit fees
KPMG billed the Allianz Group an aggregate of € 38.1 Mn (2013: € 36.3 Mn)
in connection with professional services rendered for the audit of the
Allianz Group’s consolidated financial statements, statutory audits
of the financial statements of Allianz SE and its subsidiaries and ser
vices normally provided by KPMG in connection with statutory and
regulatory filings or engagements. These services consisted mainly
of periodic review engagements and the annual audit.
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.
All other fees
KPMG invoiced the Allianz Group an aggregate of € 6.0 Mn (2013:
€ 8.1 Mn) for other products and services, which consisted primarily
of services under the guidance of Allianz Group management and
general consulting services.
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.
KPMG is the main auditing firm for the Allianz Group and is
assigned in more than 73 % of all auditrelated tasks. Auditing firms
other than KPMG billed the Allianz Group an aggregate of € 16.4 Mn
(2013: € 15.0 Mn).
remuneration for the BoarD of management
As of 31 December 2014, the Board of Management is comprised of
11 members. The following values reflect the full Board of Manage
ment active in the respective year.
The sum of the total remuneration of the Allianz SE Board of
Management for 2014, excluding the notional accruals of the MTB
2013 – 15 and excluding the pension service cost, amounts to € 30 Mn
(2013: € 31 Mn).
The equityrelated remuneration is comprised in 2014 of 88,8801
(2013: 106,5592) Restricted Stock Units (RSU).
RSU with a total fair value of € 10.6 Mn (2013: € 11.0 Mn) were
granted to the Board of Management for the year ended 31 December
2014.
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).
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.
Board of Management and Supervisory Board compensation by
individual is included in the Remuneration Report. The information
provided there is considered part of these consolidated financial
statements.
1
2
The relevant share price used to determine the final number of RSUs granted is only available after sign-off
of the Annual Report by the external auditors, thus numbers are based on a best estimate.
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.
254
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
53 – Subsequent events
The Allianz Group was not subject to any subsequent events that sig
nificantly impacted the Group financial results after the balance sheet
date and before the financial statements were authorized for issue.
Munich, 24 February 2015
Allianz SE
The Board of Management
Annual Report 2014
Allianz Group
255
List of participations of the Allianz Group as of 31 December 2014
according to § 313 (2) HGB
%
owned 1
%
owned 1
Germany
Consolidated affiliates
ACP GmbH & Co. Beteiligungen KG, Munich
ACP GmbH & Co. Beteiligungen KG II, Munich
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4,
Munich
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4a,
Munich
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4c,
Munich
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4d,
Munich
ACP Vermögensverwaltung GmbH Nr. 4 d. 1, Munich
ADEUS Aktienregister-Service-GmbH, Frankfurt am
Main
AGA Service Deutschland GmbH, Aschheim
Alida Grundstücksgesellschaft mbH & Co. KG,
Hamburg
Allianz AADB Fonds, Frankfurt am Main
Allianz ABS Fonds, Frankfurt am Main
Allianz AKR Fonds, Frankfurt am Main
Allianz ALD Fonds, Frankfurt am Main
Allianz ALIK Fonds, Frankfurt am Main
Allianz APAV Fonds, Frankfurt am Main
Allianz APKR Fonds, Frankfurt am Main
Allianz Asset Management AG, Munich
Allianz Automotive Services GmbH, Unterföhring
Allianz AVM-B Fonds, Frankfurt am Main
Allianz AZL Vermögensverwaltung GmbH & Co. KG,
Munich
Allianz Beratungs- und Vertriebs-AG, Munich
Allianz Capital Partners GmbH, Munich
Allianz Capital Partners Verwaltungs GmbH, Munich
Allianz Climate Solutions GmbH, Munich
Allianz Deutschland AG, Munich
Allianz Digital Accelerator GmbH, Munich
Allianz DLVR Fonds, Frankfurt am Main
Allianz EEE Fonds, Frankfurt am Main
Allianz Esa cargo & logistics GmbH, Bad Friedrichshall
Allianz Esa EuroShip GmbH, Bad Friedrichshall
Allianz FAD Fonds, Frankfurt am Main
Allianz Finanzbeteiligungs GmbH, Munich
Allianz Global Corporate & Specialty SE, Munich
Allianz Global Investors GmbH, Frankfurt am Main
Allianz GLR Fonds, Frankfurt am Main
Allianz GLRS Fonds, Frankfurt am Main
Allianz GLU Fonds, Frankfurt am Main
Allianz GRGB Fonds, Frankfurt am Main
Allianz Handwerker Services GmbH, Aschheim
Allianz Investment Management SE, Munich
Allianz LAD Fonds, Frankfurt am Main
Allianz Leben Private Equity Fonds 1998 GmbH,
Munich
Allianz Leben Private Equity Fonds 2001 GmbH,
Munich
Allianz Leben Private Equity Fonds 2008 GmbH,
Munich
Allianz Leben Private Equity Fonds Plus GmbH, Munich
Allianz LEBENCO Fonds, Frankfurt am Main
Allianz Lebensversicherungs-Aktiengesellschaft,
Stuttgart
Allianz LFE Fonds, Frankfurt am Main
Allianz Managed Operations & Services SE, Munich
Allianz of Asia-Pacific and Africa GmbH, Munich
Allianz Pension Partners GmbH, Munich
Allianz Pensionsfonds Aktiengesellschaft, Stuttgart
Allianz Pensionskasse Aktiengesellschaft, Stuttgart
Allianz Private Equity GmbH, Munich
0.0 2
0.0 2
100.0
100.0
100.0
100.0
99.3
79.6
100.0
94.8
100.0 3
100.0 3
100.0 3
100.0 3
100.0 3
100.0 3
100.0 3
100.0
100.0
100.0 3
100.0
100.0
100.0 5
100.0
100.0
100.0
100.0
100.0 3
100.0 3
100.0
51.0
100.0 3
100.0
100.0
100.0
100.0 3
100.0 3
100.0 3
100.0 3
95.0
100.0 5
100.0 3
100.0
100.0
100.0
100.0
100.0 3
100.0
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
256
Annual Report 2014
Allianz Group
Allianz Private Equity Partners Verwaltungs GmbH,
Munich
Allianz Private Krankenversicherungs-Aktiengesell-
schaft, Munich
Allianz ProzessFinanz GmbH, Munich
Allianz PV 1 Fonds, Frankfurt am Main
Allianz PV WS Fonds, Frankfurt am Main
Allianz PV-RD Fonds, Frankfurt am Main
Allianz Re Asia, Frankfurt am Main
Allianz Real Estate Germany GmbH, Stuttgart
Allianz Real Estate GmbH, Munich
Allianz Rechtsschutz-Service GmbH, Munich
Allianz Renewable Energy Management GmbH,
Sehestedt
Allianz Renewable Energy Subholding GmbH & Co. KG,
Sehestedt
Allianz RFG Fonds, Frankfurt am Main
Allianz Risk Consulting GmbH, Munich
Allianz SDR Fonds, Frankfurt am Main
Allianz Service Center GmbH, Munich
Allianz SOA Fonds, Frankfurt am Main
Allianz Taunusanlage GbR, Stuttgart
Allianz Treuhand GmbH, Stuttgart
Allianz UGD 1 Fonds, Frankfurt am Main
Allianz VAE Fonds, Frankfurt am Main
Allianz Venture Partners Beteiligungs GmbH, Munich
Allianz Versicherungs-Aktiengesellschaft, Munich
Allianz VGI 1 Fonds, Frankfurt am Main
Allianz VGL Fonds, Frankfurt am Main
Allianz VKA Fonds, Frankfurt am Main
Allianz VKRD Fonds, Frankfurt am Main
Allianz VSR Fonds, Frankfurt am Main
Allianz VW AV Fonds, Frankfurt am Main
AllianzGI-Fonds APF Renten, Frankfurt am Main
AllSecur Deutschland AG, Munich
APKV Private Equity Fonds GmbH, Munich
Atropos Vermögensverwaltungsgesellschaft mbH,
Munich
AUG. PRIEN Immobilien PE Verwaltung Brahms-
Quartier GmbH, Stuttgart
Auros GmbH, Munich
Auros II GmbH, Munich
AZ-Arges Vermögensverwaltungsgesellschaft mbH,
Munich
AZ-Argos 14 Vermögensverwaltungsgesellschaft
mbH, Munich
AZ-Argos 41 Vermögensverwaltungsgesellschaft
mbH, Munich
AZ-Argos 44 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 50 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 51 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 57 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 58 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 61 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 64 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZ-Argos 67 Vermögensverwaltungsgesellschaft
mbH, Munich
AZ-Argos 68 Vermögensverwaltungsgesellschaft
mbH, Munich
AZ-Argos 69 Vermögensverwaltungsgesellschaft
mbH, Munich
AZ-GARI Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
AZL AI Nr. 1 GmbH, Munich
100.0
100.0
100.0
100.0 3
100.0 3
100.0 3
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0 3
100.0
100.0 3
100.0
100.0 3
99.5
100.0
100.0 3
100.0 3
100.0
100.0
100.0 3
100.0 3
100.0 3
100.0 3
100.0 3
100.0 3
43.7 2,4
100.0
100.0
100.0
94.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
AZL PE Nr. 1 GmbH, Munich
AZRE AZD P & C Master Fund, Munich
AZS-Arges Vermögensverwaltungsgesellschaft mbH,
Munich
AZ-SGD Private Equity Fonds 2 GmbH, Munich
AZ-SGD Private Equity Fonds GmbH, Munich
AZT Automotive GmbH, Ismaning
BCA Betriebs-Catering GmbH Verpflegungsdienste,
Sulzbach
Brahms Beteiligungs GmbH & Co. KG, Stuttgart
BrahmsQ Objekt GmbH & Co. KG, Stuttgart
Bürgel Wirtschaftsinformationen GmbH & Co. KG,
Hamburg
Bürgel Wirtschaftsinformationen Verwaltungs-
GmbH, Hamburg
dbi-Fonds Ammerland, Frankfurt am Main
dbi-Fonds DAV, Frankfurt am Main
dbi-Fonds WE, Frankfurt am Main
Deutsche Lebensversicherungs-Aktiengesellschaft,
Berlin
Donator Beratungs GmbH, Munich
Donator Beteiligungsverwaltung GmbH, Munich
Euler Hermes Aktiengesellschaft, Hamburg
Euler Hermes Collections GmbH, Potsdam
Euler Hermes Rating Deutschland GmbH, Hamburg
GA Global Automotive Versicherungsservice GmbH,
Halle (Saale)
InnoSolutas GmbH, Bad Friedrichshall
KVM ServicePlus - Kunden- und Vertriebsmanage-
ment GmbH, Halle (Saale)
Mondial Kundenservice GmbH, Nuremberg
Münchener und Magdeburger Agrarversicherung
Aktiengesellschaft, Munich
Münsterländische Bank Thie & Co. KG, Münster
My Finance Coach Stiftung GmbH, Munich
Objekt Burchardplatz GmbH & Co. KG, Stuttgart
Oldenburgische Landesbank Aktiengesellschaft,
Oldenburg
PIMCO Deutschland GmbH, Munich
REC Frankfurt Objekt GmbH & Co. KG, Hamburg
REC Frankfurt zweite Objektverwaltungsgesellschaft
mbH, Hamburg
RehaCare GmbH, Munich
risklab GmbH, Munich
Roland Holding GmbH, Munich
Selecta Deutschland GmbH, Sulzbach
Selecta Holding GmbH, Sulzbach
Signa 12 Verwaltungs GmbH, Düsseldorf
Spherion Beteiligungs GmbH & Co. KG, Stuttgart
Spherion Objekt GmbH & Co. KG, Stuttgart
UfS Beteiligungs-GmbH, Munich
VLS Versicherungslogistik GmbH, Berlin
Volkswagen Autoversicherung AG, Braunschweig
Volkswagen Autoversicherung Holding GmbH,
Braunschweig
W. Fortmann & Söhne KG, Oldenburg
Windpark Aller-Leine-Tal GmbH & Co. KG, Sehestedt
Windpark Berge-Kleeste GmbH & Co. KG, Sehestedt
Windpark Büttel GmbH & Co. KG, Sehestedt
Windpark Calau GmbH & Co. KG, Sehestedt
Windpark Cottbuser See GmbH & Co. KG, Sehestedt
Windpark Dahme GmbH & Co. KG, Sehestedt
Windpark Eckolstädt GmbH & Co. KG, Sehestedt
Windpark Emmendorf GmbH & Co. KG, Sehestedt
Windpark Freyenstein-Halenbeck GmbH & Co. KG,
Sehestedt
Windpark Kesfeld-Heckhuscheid GmbH & Co. KG,
Sehestedt
Windpark Kirf GmbH & Co. KG, Sehestedt
%
owned 1
100.0
100.0 3
100.0
100.0
100.0
100.0
100.0
94.9
95.0
50.1
50.4
100.0 3
100.0 3
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
90.2
100.0 5
80.0
60.0
100.0
100.0
74.2
100.0
100.0
94.9
94.9
100.0
100.0
100.0
100.0
49.0 2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Windpark Kittlitz GmbH & Co. KG, Sehestedt
Windpark Pröttlin GmbH & Co. KG, Sehestedt
Windpark Quitzow GmbH & Co. KG, Sehestedt
Windpark Redekin-Genthin GmbH & Co. KG,
Sehestedt
Windpark Schönwalde GmbH & Co. KG, Sehestedt
Windpark Waltersdorf GmbH & Co. KG Renditefonds,
Sehestedt
Windpark Werder Zinndorf GmbH & Co. KG,
Sehestedt
Non-consolidated affiliates
AERS Consortio Aktiengesellschaft, Stuttgart
Allianz Global Benefits GmbH, Stuttgart
Allianz Objektbeteiligungs-GmbH, Stuttgart
Allianz Pension Consult GmbH, Stuttgart
AZ Beteiligungs-Management GmbH, Munich
AZ-Argos 56 Vermögensverwaltungsgesellschaft
mbH, Munich
Bürgel Beteiligungs GmbH, Hamburg
Elbe Forderungsmanagement GmbH, Hamburg
EURO-PRO Gesellschaft für Data Processing mbH,
Grävenwiesbach
Grundstücksgesellschaft der Vereinten Versicherun-
gen mbH, Munich
IDS GmbH - Analysis and Reporting Services, Munich
Infrastruktur Putlitz Ost GmbH & Co. KG, Husum
Lola Vermögensverwaltungsgesellschaft mbH & Co.
KG, Munich
manroland AG, Offenbach am Main
manroland Vertrieb und Service GmbH, Mühlheim
am Main
META Finanz-Informationssysteme GmbH, Munich
OLB-Immobiliendienst-GmbH, Oldenburg
OLB-Service GmbH, Oldenburg
Supercheck GmbH, Cologne
Joint ventures
BEG Weser-Ems Baugrund- und Erschließungsgesell-
schaft mbH & Co. OHG, Oldenburg
Dealis Fund Operations GmbH, Frankfurt am Main
Associates
AV Packaging GmbH, Munich
esa EuroShip GmbH & Co. KG Underwriting for
Shipping, Bad Friedrichshall
Kapitalbeteiligungsgesellschaft der Deutschen Versi-
cherungswirtschaft Aktiengesellschaft, Berlin
Mühl Product & Service und Thüringer Baustoff-
handel Beteiligungs- und Verwaltungs GmbH,
Kranichfeld
Reisegarant GmbH, Hamburg
Umspannwerk Putlitz GmbH & Co. KG, Frankfurt
am Main
Other participations between 5 and 20 %
of voting rights
EXTREMUS Versicherungs-Aktiengesellschaft,
Cologne
FC Bayern München AG, Munich
MLP AG, Wiesloch
Protektor Lebensversicherungs-AG, Berlin
Sana Kliniken AG, Ismaning
ForeiGn entities
Consolidated affiliates
490 Fulton JV LP, New York, NY
490 Fulton REIT LP, New York, NY
490 Lower Unit GP LLC, New York, NY
490 Lower Unit LP, New York, NY
A.V.I.P. Assurance Vie de Prévoyance SA, Courbevoie
AB Servicios Selecta Espana S.L., Madrid
ACMAR SA, Casablanca
Administradora de Inversión Colseguros S.A.,
Bogotá D.C.
Annual Report 2014
Allianz Group
%
owned 1
%
owned 1
%
owned 1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
55.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.2
100.0
100.0
70.8
100.0
100.0 6,9
100.0 9
100.0
100.0
100.0
100.0
50.0
50.1 7
51.0 8
40.0
39.4
25.0
24.0
25.4
16.0
8.3
8.9
10.0
13.9
96.5
100.0
100.0
100.0
100.0
100.0
55.0
100.0
Advanz Fundo de Investimento Renda Fixa Crédito
Privado, São Paulo
Aero-Fonte S.r.l., Catania
AGA Alarmcentrale NL B.V., Amsterdam
AGA Assistance (India) Private Limited, Gurgaon
AGA Assistance Australia Pty Ltd., Toowong
AGA Assistance Beijing Services Co. Ltd., Beijing
AGA Assistance Japan Co. Ltd., Tokyo
AGA Inc., Richmond, VA
AGA Insurance Broker (Thailand) Co. Ltd., Bangkok
AGA Service Company Corp., Richmond, VA
AGA Service Italia S.c.a.r.l., Milan
AGA Services (India) Private Limited, Gurgaon
AGA Services (Thailand) Co. Ltd., Bangkok
AGA Servis Hizmetleri A.S., Istanbul
AGA Sigorta Aracilik Hizmetleri LS, Istanbul
AGCS Marine Insurance Company, Chicago, IL
AGCS Resseguros Brasil S.A., Rio de Janeiro
AGF Benelux S.A., Luxembourg
AGF FCR, Paris
AGF Holdings (UK) Limited, Guildford
AGF Insurance Limited, Guildford
AGF Inversiones S.A., Buenos Aires
AGR Services Pte Ltd., Singapore
AIM Equity EMU 1, Paris
AIM Equity US, Paris
AIM Singapore Pte Ltd., Singapore
AIM Underwriting Limited, Toronto, ON
Allegiance Marketing Group LLC, North Palm Beach, FL
Allianz (UK) Limited, Guildford
Allianz Actio France, Paris
Allianz Actions Aéquitas, Paris
Allianz Actions Emergentes, Paris
Allianz Actions Euro, Paris
Allianz Actions Euro Convictions, Paris
Allianz Actions Euro MidCap, Paris
Allianz Actions France, Paris
Allianz Actions Indice Japon (couvert), Paris
Allianz Actions Indice US (couvert), Paris
Allianz Actions Internationales, Paris
Allianz Actions Japon, Paris
Allianz Actions US, Paris
Allianz Africa S.A., Paris
Allianz Air France IFC, Paris
Allianz Alapkezelõ Zrt., Budapest
Allianz America Holding B.V., Amsterdam
Allianz Amerika Aandelen Fonds, Rotterdam
Allianz Annuity Company of Missouri, Clayton, MO
Allianz Argentina Compañía de Seguros Generales
S.A., Buenos Aires
Allianz Argentina RE S.A., Buenos Aires
Allianz Asac Actions, Paris
Allianz Asset Management of America Holdings Inc.,
Dover, DE
Allianz Asset Management of America L.P., Dover, DE
Allianz Asset Management of America LLC, Dover, DE
Allianz Asset Management U.S. Holding II LLC,
Dover, DE
Allianz Australia Advantage Ltd., Sydney
Allianz Australia Employee Share Plan Pty Ltd.,
Sydney
Allianz Australia Insurance Limited, Sydney
Allianz Australia Life Insurance Limited, Sydney
Allianz Australia Limited, Sydney
Allianz Australia Partnership Services Limited, Sydney
Allianz Australia Services Pty Limited, Sydney
Allianz Australia Workers Compensation (NSW)
Limited, Sydney
Allianz Australia Workers Compensation (Victoria)
Limited, Melbourne
Allianz Australian Claims Services Limited, Sydney
Allianz Aviation Managers LLC, Burbank, CA
Allianz Ayudhya Assurance Public Company Limited,
Bangkok
100.0 3
100.0
100.0
100.0
100.0
100.0
80.1
100.0
100.0
100.0
100.0
100.0
97.6
97.0
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
100.0
100.0
100.0 3
100.0 3
100.0
100.0
100.0
100.0
78.0 4
70.1 4
94.3 4
84.3 4
92.1 4
61.3 4
73.1 4
57.1 4
98.4 4
99.2 4
55.2 4
81.7 4
100.0
100.0 4
100.0
100.0
83.0 4
100.0
100.0
100.0
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
62.6
Allianz Bank Bulgaria AD, Sofia
Allianz Bank Financial Advisors S.p.A., Milan
Allianz Banque S.A., Courbevoie
Allianz Benelux N.V., Brussels
Allianz Bénin Assurances SA, Cotonou
Allianz Bonds Diversified Euro, Paris
Allianz Bonds Euro High Yield, Paris
Allianz Bulgaria Holding AD, Sofia
Allianz Burkina Assurances SA, Ouagadougou
Allianz Burkina Assurances Vie SA, Ouagadougou
Allianz Business Services Limited, Lancaster
Allianz business services s.r.o., Bratislava
Allianz Cameroun Assurances SA, Douala
Allianz Cameroun Assurances Vie SA, Douala
Allianz Cap ISR 2016, Paris
Allianz Capital Partners of America Inc., New York, NY
Allianz Carbon Investments B.V., Amsterdam
Allianz Cash SAS, Paris
Allianz Centrafrique Assurances SA, Bangui
Allianz Chicago Private Reit LP, Wilmington, DE
Allianz China General Insurance Company Ltd.,
Guangzhou
Allianz China Life Insurance Co. Ltd., Shanghai
Allianz Citizen Care SRI, Paris
Allianz Clearing S.N.C., Paris
Allianz Colombia S.A., Bogotá D.C.
Allianz Combinatie Fonds, Rotterdam
Allianz Compagnia Italiana Finanziamenti S.p.A.,
Milan
Allianz Compañía de Seguros y Reaseguros S.A.,
Barcelona
Allianz Congo Assurances SA, Brazzaville
Allianz Cornhill Information Services Private Ltd.,
Trivandrum
Allianz Côte d'Ivoire Assurances SA, Abidjan
Allianz Côte d'Ivoire Assurances Vie SA, Abidjan
Allianz Creactions 1, Paris
Allianz Creactions 2, Paris
Allianz Defensief Mix Fonds, Rotterdam
Allianz Discovery Asia Strategy, Senningerberg
Allianz do Brasil Participações Ltda., São Paulo
Allianz Duurzaam Wereld Aandelen Fonds,
Rotterdam
Allianz Dynamic Asia High Yield, Senningerberg
Allianz Dynamic Global Bond, George Town
Allianz EDUKACJA S.A., Białobrzegi
Allianz Efficio, Paris
Allianz Efficio Plus, Paris
Allianz Egypt for Financial Investments Company
S.A.E., New Cairo
Allianz Elementar Lebensversicherungs-Aktiengesell-
schaft, Vienna
Allianz Elementar Versicherungs-Aktiengesellschaft,
Vienna
Allianz Emerging Markets Flexible Bond, Sennin-
gerberg
Allianz Emerging Markets Local Currency Bond,
Senningerberg
Allianz Engineering Services Limited, Guildford
Allianz Equity Emerging Markets 1, Paris
Allianz Equity Investments Ltd., Guildford
Allianz Equity Large Cap EMU, Paris
Allianz EURECO Equity, Paris
Allianz Euro Bond Plus, Paris
Allianz Euro Credit SRI, Paris
Allianz Euro Inflation-linked Bond, Senningerberg
Allianz Euro Oblig 1-3 Plus, Paris
Allianz Euro Obligations Crédit ISR, Paris
Allianz Euro Tactique, Paris
Allianz Euroland Equity SRI, Senningerberg
Allianz Europa Aandelen Fonds, Rotterdam
Allianz Europa Obligatie Fonds, Rotterdam
Allianz Europe B.V., Amsterdam
Allianz Europe Ltd., Amsterdam
99.9
100.0
100.0
100.0
83.5
100.0 3
100.0 3
66.2
60.3
71.8
100.0
100.0
75.4
75.8
99.9 4
100.0
100.0
100.0
88.3
100.0
100.0
51.0
76.0 4
100.0
100.0
93.9 4
100.0
99.9
100.0
100.0
74.1
71.0
100.0 3
100.0 3
100.0 4
47.0 2,4
100.0
55.1 4
44.8 2,4
98.2 4
100.0
99.9 4
100.0 4
100.0
100.0
100.0
100.0 4
100.0 4
100.0
100.0 3
100.0
100.0 3
97.1 4
58.8 4
41.9 2,4
90.4 4
58.2 4
89.0 4
40.0 2,4
84.3 4
75.4 4
87.3 4
100.0
100.0
257
%
owned 1
%
owned 1
Allianz Finance Corporation, Novato, CA
Allianz Finance II B.V., Amsterdam
Allianz Finance II Luxembourg S.à r.l., Luxembourg
Allianz Finance III B.V., Amsterdam
Allianz Finance IV Luxembourg S.à r.l., Luxembourg
Allianz Finance Obligations Monde, Paris
Allianz Finance Pty Ltd., Sydney
Allianz Finance VII Luxembourg S.A., Luxembourg
Allianz Finance VIII Luxembourg S.A., Luxembourg
Allianz FinanzPlan 2055, Senningerberg
Allianz Fire and Marine Insurance Japan Ltd., Tokyo
Allianz Foncier, Paris
Allianz Formuléo ISR, Paris
Allianz France Favart I, Paris
Allianz France Investissement OPCI, Paris
Allianz France Real Estate Invest SPPICAV, Paris
Allianz France Richelieu 1 S.A.S., Paris
Allianz France S.A., Paris
Allianz Fund Investments Inc., Wilmington, DE
Allianz Fund Investments S.A., Luxembourg
Allianz Garantie Fonds 3%, Rotterdam
Allianz Garantie Fonds 4.75%, Rotterdam
Allianz Garantiefonds 3.35%, Rotterdam
Allianz Garantiefonds 5%, Rotterdam
Allianz Geldmarkt Fonds, Rotterdam
Allianz General Insurance Company (Malaysia)
Berhad p.l.c., Kuala Lumpur
Allianz General Laos Ltd., Vientiane
Allianz generalni sluzby s.r.o., Prague
Allianz Global Assistance International SA, Paris
Allianz Global Assistance New Zealand Limited,
Auckland
Allianz Global Corporate & Specialty do Brasil Partici-
pações Ltda., Rio de Janeiro
Allianz Global Corporate & Specialty of Africa (Propri-
etary) Ltd., Johannesburg
Allianz Global Corporate & Specialty South Africa Ltd.,
Johannesburg
Allianz Global Equity Selection, Senningerberg
Allianz Global Investors Distributors LLC, Dover, DE
Allianz Global Investors Fund Management LLC,
Dover, DE
Allianz Global Investors Hong Kong Ltd., Hong Kong
Allianz Global Investors Ireland Ltd., Dublin
Allianz Global Investors Japan Co. Ltd., Tokyo
Allianz Global Investors Korea Limited, Seoul
Allianz Global Investors Nominee Services Ltd.,
George Town
Allianz Global Investors Schweiz AG, Zurich
Allianz Global Investors Singapore Ltd., Singapore
Allianz Global Investors Taiwan Ltd., Taipei
Allianz Global Investors U.S. Holdings LLC, Dover, DE
Allianz Global Investors U.S. LLC, Dover, DE
Allianz Global Life Ltd., Dublin
Allianz Global Risks US Insurance Company Corp.,
Chicago, IL
Allianz Grenelle SAS, Paris
Allianz Groen Rente Fonds, Rotterdam
Allianz Hayat ve Emeklilik A.S., Istanbul
Allianz Hellas Insurance Company S.A., Athens
Allianz Hold Co Real Estate S.à r.l., Luxembourg
Allianz Holding eins GmbH, Vienna
Allianz Holding France SAS, Paris
Allianz Holdings plc, Guildford
Allianz Hospitaliers Euro, Paris
Allianz Hospitaliers Monde, Paris
Allianz Hospitaliers Valeurs Durables, Paris
Allianz Hungária Biztosító Zrt., Budapest
Allianz IARD S.A., Paris
Allianz IARD Vintage, Paris
Allianz Immo, Paris
Allianz Indiceo 2015, Paris
Allianz Individual Insurance Group LLC,
Minneapolis, MN
100.0
100.0
100.0
100.0
100.0
95.4 4
100.0
100.0
100.0
83.0 4
100.0
60.3 4
99.8 4
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
99.5 4
100.0 4
100.0 4
62.8 4
100.0
51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
89.0
100.0
100.0
100.0
100.0
100.0
100.0 3
100.0 3
100.0 3
100.0
100.0
100.0 3
50.5 4
100.0 4
100.0
258
Annual Report 2014
Allianz Group
Allianz Informatique G.I.E., Paris
Allianz Informatyka Sp. z o.o., Warsaw
Allianz Infrastructure Czech HoldCo I S.à r.l.,
Luxembourg
Allianz Infrastructure Czech HoldCo II S.à r.l.,
Luxembourg
Allianz Infrastructure Luxembourg Holdco I S.A.,
Luxembourg
Allianz Infrastructure Luxembourg Holdco II S.A.,
Luxembourg
Allianz Infrastructure Luxembourg I S.à r.l., Luxem-
bourg
Allianz Infrastructure Spain Holdco I S.à r.l.,
Luxembourg
Allianz Insurance (Hong Kong) Ltd., Hong Kong
Allianz Insurance Company Ghana Limited, Accra
Allianz Insurance Company Lanka Limited, Saram
Allianz Insurance Company-Egypt S.A.E., Cairo
Allianz Insurance plc, Guildford
Allianz International Equity Growth, Senningerberg
Allianz International Ltd., Guildford
Allianz Inversiones S.A., Bogotá D.C.
Allianz Invest 10 Division S/U, Vienna
Allianz Invest 11 Division Leben/Kranken, Vienna
Allianz Invest 12 Division Leben/Kranken, Vienna
Allianz Invest 50, Vienna
Allianz Invest Alternativ, Vienna
Allianz Invest d.o.o., Zagreb
Allianz Invest Kapitalanlage GmbH, Vienna
Allianz Invest Ostrent, Vienna
Allianz Invest Spezial 3, Vienna
Allianz Investment Management LLC, Minneapolis, MN
Allianz Investmentbank Aktiengesellschaft, Vienna
Allianz Investments I Luxembourg S.à r.l., Luxem-
bourg
Allianz Investments II Luxembourg S.à r.l., Luxem-
bourg
Allianz Investments III Luxembourg S.à r.l., Luxem-
bourg
Allianz Investments IV Luxembourg S.à r.l., Luxem-
bourg
Allianz Irish Life Holdings p.l.c., Dublin
Allianz kontakt s.r.o., Prague
Allianz Leasing Bulgaria AD, Sofia
Allianz Life & Annuity Company, Minneapolis, MN
Allianz Life (Bermuda) Ltd., Hamilton
Allianz Life Assurance Company-Egypt S.A.E., Cairo
Allianz Life Financial Services LLC, Minneapolis, MN
Allianz Life Insurance Co. Ltd., Seoul
Allianz Life Insurance Company Ltd., Moscow
Allianz Life Insurance Company of Missouri,
Clayton, MO
Allianz Life Insurance Company of New York,
New York, NY
Allianz Life Insurance Company of North America,
Minneapolis, MN
Allianz Life Insurance Japan Ltd., Tokyo
Allianz Life Insurance Lanka Ltd., Colombo
Allianz Life Insurance Malaysia Berhad p.l.c., Kuala
Lumpur
Allianz Life Luxembourg S.A., Luxembourg
Allianz Madagascar Assurances SA, Antananarivo
Allianz Malaysia Berhad p.l.c., Kuala Lumpur
Allianz Mali Assurances SA, Bamako
Allianz Managed Operations & Services Thailand
Co. Ltd., Bangkok
Allianz Managed Operations & Services Netherlands
B.V., Rotterdam
Allianz Management Services Limited, Guildford
Allianz Marine & Transit Underwriting Agency Pty
Ltd., Sydney
Allianz Marine (UK) Ltd., Ipswich
Allianz Mena Holding Bermuda Ltd., Beirut
Allianz México S.A. Compañía de Seguros,
Mexico City
Allianz Multi Actions Monde, Paris
Allianz Multi Croissance, Paris
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
89.0
100.0
79.0 4
100.0
100.0
100.0 3
100.0 3
100.0 3
100.0 4
100.0 4
100.0
100.0
95.6 4
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
66.5
100.0
51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
77.0
100.0
100.0
100.0
65.0
100.0
99.9
100.0
95.1 4
99.9 4
Allianz Multi Dynamisme, Paris
Allianz Multi Equilibre, Paris
Allianz Multi Horizon 2018-2020, Paris
Allianz Multi Horizon 2021-2023, Paris
Allianz Multi Horizon 2024-2026, Paris
Allianz Multi Horizon 2027-2029, Paris
Allianz Multi Horizon 2030-2032, Paris
Allianz Multi Horizon 2033-2035, Paris
Allianz Multi Horizon 2036-2038, Paris
Allianz Multi Horizon 2039-2041, Paris
Allianz Multi Horizon Court Terme, Paris
Allianz Multi Horizon Long Terme, Paris
Allianz Multi Opportunités, Paris
Allianz Multi Rendement Premium (R), Paris
Allianz Multi Rendement Réel, Paris
Allianz Multi Sérénité, Paris
Allianz Mutual Funds Management Company S.A.,
Athens
Allianz Nederland Administratie B.V., Utrecht
Allianz Nederland Asset Management B.V., Nieu-
wegein
Allianz Nederland Groep N.V., Rotterdam
Allianz Nederland Levensverzekering N.V.,
Rotterdam
Allianz New Europe Holding GmbH, Vienna
Allianz New Zealand Limited, Auckland
Allianz Obligations Court Terme, Paris
Allianz Obligations Internationales, Paris
Allianz Obligations Monde, Paris
Allianz of America Inc., Novato, CA
Allianz Offensief Mix Fonds, Rotterdam
Allianz One Beacon GP LLC, Wilmington, DE
Allianz One Beacon LP, Wilmington, DE
Allianz Opéra, Paris
Allianz Optéo, Paris
Allianz Osmea 4, Paris
Allianz p.l.c., Dublin
Allianz Pacific Aandelen Fonds, Rotterdam
Allianz Pan Asian REITs Fund Segregated Portfolio,
George Town
Allianz Participations B.V., Amsterdam
Allianz Pension Fund Trustees Ltd., Guildford
Allianz Pensionskasse Aktiengesellschaft, Vienna
Allianz penzijní spolecnost a.s., Prague
Allianz Pimco Corporate, Vienna
Allianz Pimco Mortgage, Vienna
Allianz pojistovna a.s., Prague
Allianz Polska Services Sp. z o.o., Warsaw
Allianz Popular Asset Management SGIIC S.A., Madrid
Allianz Popular Pensiones EGFP S.A., Madrid
Allianz Popular S.L., Madrid
Allianz Popular Vida Compañía de Seguros y Rease-
guros S.A., Madrid
Allianz Potential, Paris
Allianz Primio 2015, Paris
Allianz Private Equity Partners Europa I, Milan
Allianz Private Equity Partners Europa II, Milan
Allianz Private Equity Partners Europa III, Milan
Allianz Private Equity Partners IV, Milan
Allianz Private Equity UK Holdings Limited, London
Allianz Properties Limited, Guildford
Allianz Prudence, Paris
Allianz Re Dublin Limited, Dublin
Allianz Real Estate France SAS, Paris
Allianz Real Estate of America LLC, New York, NY
Allianz Renewable Energy Fund Management 1 Ltd.,
London
Allianz Renewable Energy Partners I LP, London
Allianz Renewable Energy Partners II Limited, London
Allianz Renewable Energy Partners III LP, London
Allianz Renewable Energy Partners IV Limited,
London
Allianz Renewable Energy Partners V plc., London
%
owned 1
94.1 4
98.0 4
57.0 4
45.4 2,4
56.8 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
78.8 4
72.9 4
98.8 4
97.0 4
88.7 4
99.7 4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
92.9 4
79.6 4
99.8 4
100.0
100.0 4
100.0
100.0
100.0 3
99.3 4
100.0 4
100.0
86.3 4
100.0 3
100.0
100.0
100.0
100.0
75.5 4
96.2 4
100.0
100.0
100.0
100.0
60.0
100.0
100.0 4
100.0 4
86.8 3
92.0 3
99.6 3
100.0 3
100.0
100.0
99.5 4
100.0
100.0
100.0
100.0
100.0
100.0
98.5
98.5
100.0
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Allianz Risk Consultants Inc., Los Angeles, CA
Allianz Risk Transfer (Bermuda) Ltd., Hamilton
Allianz Risk Transfer (UK) Limited, London
Allianz Risk Transfer AG, Zurich
Allianz Risk Transfer Inc., New York, NY
Allianz Risk Transfer N.V., Amsterdam
Allianz S.A. de C.V., Mexico City
Allianz S.p.A., Trieste
Allianz Saint Marc CL, Paris
Allianz SAS S.A.S., Bogotá D.C.
Allianz Saúde S.A., São Paulo
Allianz Scalinvest, Puteaux
Allianz Secteur Euro Immobilier, Paris
Allianz Secteur Europe Immobilier, Paris
Allianz Sécurité, Paris
Allianz Seguros de Vida S.A., Bogotá D.C.
Allianz Seguros S.A., Bogotá D.C.
Allianz Seguros S.A., São Paulo
Allianz Selectie Fonds, Rotterdam
Allianz Selection European Equity Dividend,
Hong Kong
Allianz Selection Income and Growth, Hong Kong
Allianz Selection Total Return Asian Equity, Hong Kong
Allianz Selection US High Yield, Hong Kong
Allianz Selection US Income, Hong Kong
Allianz Sénégal Assurances SA, Dakar
Allianz Sénégal Assurances Vie SA, Dakar
Allianz Services (UK) Limited, London
Allianz Sigorta A.S., Istanbul
Allianz SNA s.a.l., Beirut
Allianz Sociedad Anónima A.S. Agencia de Seguros,
Barcelona
Allianz Sociedade Gestora de Fundos de Pensões
S.A., Lisbon
Allianz Société Financière S.à r.l., Luxembourg
Allianz South America Holding B.V., Amsterdam
Allianz Specialised Investments Limited, London
Allianz Specjalistyczny Fundusz Inwestycyjny Otwarty
Subfunduszu Allianz 1, Warsaw
Allianz Specjalistyczny Fundusz Inwestycyjny Otwarty
Subfunduszu Allianz 2, Warsaw
Allianz Subalpina Holding S.p.A., Turin
Allianz Suisse Immobilien AG, Wallisellen
Allianz Suisse Lebensversicherungs-Gesellschaft AG,
Wallisellen
Allianz Suisse Rückversicherungs AG, Zurich
Allianz Suisse Versicherungs-Gesellschaft AG,
Wallisellen
Allianz Taiwan Life Insurance Co. Ltd., Taipei
Allianz Telematics S.p.A., Rome
Allianz Tiriac Asigurari SA, Bucharest
Allianz Tiriac Pensii Private Societate de administrare
a fondurilor de pensii private S.A., Bucharest
Allianz Togo Assurances SA, Lome
Allianz UK Credit Fund, Paris
Allianz UK Infrastructure Debt GP Limited, London
Allianz Ukraine LLC, Kiev
Allianz Underwriters Insurance Company Corp.,
Burbank, CA
Allianz US Equity Dividend, Senningerberg
Allianz US Investment GP LLC, Wilmington, DE
Allianz US Investment LP, Wilmington, DE
Allianz US Private REIT GP LLC, Wilmington, DE
Allianz US Private REIT LP, Wilmington, DE
Allianz Valeurs Durables, Paris
Allianz Vie S.A., Paris
Allianz Worldwide Care S.A., Paris
Allianz Worldwide Care Services Ltd., Dublin
Allianz Worldwide Partners S.A.S., Paris
Allianz Yasam ve Emeklilik A.S., Istanbul
Allianz Zagreb d.d., Zagreb
Allianz ZB d.o.o. Company for the Management of
Obligatory Pension Funds, Zagreb
%
owned 1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
98.0 4
95.3 4
90.9 4
97.4 4
100.0
100.0
100.0
85.3 4
82.4 4
35.2 2,4
97.1 4
92.3 4
99.8 4
83.2
95.5
100.0
94.0
100.0
100.0
85.6
100.0
100.0
100.0
100.0 3
100.0 3
98.1
100.0
100.0
100.0
100.0
99.7
100.0
52.2
100.0
97.9
100.0 3
100.0
100.0
100.0
90.0 4
100.0
100.0
100.0
100.0
54.7 4
100.0
100.0
100.0
100.0
80.0
83.2
51.0
Allianz ZB d.o.o. Company for the Management of
Voluntary Pension Funds, Zagreb
AllianzGI Best Styles Emerging Markets Equity Fund,
Boston, MA
AllianzGI China Equity Fund, Boston, MA
AllianzGI Emerging Markets Consumer Fund,
Boston, MA
AllianzGI Emerging Markets Debt Fund, Boston, MA
AllianzGI Emerging Markets Small-Cap Fund,
Boston, MA
AllianzGI Europe Equity Growth, São Paulo
AllianzGI Global Fundamental Strategy Fund,
Boston, MA
AllianzGI Global Growth Allocation Fund, Boston, MA
AllianzGI Global Small-Cap Opportunity Portfolio,
Boston, MA
AllianzGI Global Sustainability Fund, Boston, MA
AllianzGI Multi-Asset Real Return Fund, Boston, MA
AllianzGI NFJ Emerging Markets Value Fund,
Boston, MA
AllianzGI Retirement 2055 Fund, Boston, MA
AllianzGI Small-Cap Blend Fund, Boston, MA
AllianzGI U.S. Unconstrained Equity Portfolio,
Boston, MA
AllianzGo S.r.l., Trieste
Allianz-Slovenská DSS a.s., Bratislava
Allianz-Slovenská poist'ovna a.s., Bratislava
Amaya Compania de Seguros y Reaseguros S.A.,
Madrid
American Automobile Insurance Company Corp.,
Earth City, MO
American Financial Marketing Inc., Minneapolis, MN
AMOS Austria GmbH, Vienna
AMOS European Services SAS, Paris
AMOS IT Suisse AG, Wallisellen
AMOS Italy S.p.c.A., Milan
AMOS of America LLC, Novato, CA
Ann Arbor Annuity Exchange Inc., Ann Arbor, MI
Antoniana Veneta Popolare Vita S.p.A., Trieste
APEH Europe VI, Paris
APKV US Private REIT GP LLC, New York, NY
APKV US Private REIT LP, New York, NY
APP Broker S.r.l., Trieste
Approfrais SA, Evreux
Arab Gulf Health Services LLC, Dubai
Arcalis Assur 5, Paris
Arcalis SA, Courbevoie
Arcalis UN, Paris
Arges Investments I N.V., Amsterdam
Arges Investments II N.V., Amsterdam
AS Selecta s.r.o., Bratislava
Asit Services S.R.L., Bucharest
Assistance Courtage d'Assurance et de Réassurance
S.A., Paris
Associated Indemnity Corporation, Novato, CA
Assurances Médicales SA, Paris
Automaty Servis Selecta s.r.o., Prague
Avip Actions 100, Paris
Avip Actions 60, Paris
Avip Top Croissance, Paris
Avip Top Defensif, Paris
Avip Top Harmonie, Paris
AWP Romania S.A., Bucharest
AZ Euro Investments II S.à r.l., Luxembourg
AZ Euro Investments S.à r.l., Luxembourg
AZ Jupiter 4 B.V., Amsterdam
AZ Jupiter 8 B.V., Amsterdam
AZ Jupiter 9 B.V., Amsterdam
AZ Real Estate GP LLC, New York, NY
AZ Servisni centar d.o.o., Zagreb
AZ Vers US Private REIT GP LLC, New York, NY
AZ Vers US Private REIT LP, New York, NY
AZGA Insurance Agency Canada Ltd., Kitchener, ON
AZGA Service Canada Inc., Kitchener, ON
%
owned 1
51.0
93.7 4
84.9 4
100.0 4
99.9 4
100.0 4
66.1 4
97.3 4
53.5 4
100.0 4
100.0 4
81.1 4
35.7 2,4
55.5 4
92.1 4
100.0 4
100.0
100.0
99.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0 2
99.6 3
100.0
100.0
100.0
100.0
100.0
99.9 4
100.0
100.0 4
100.0
100.0
100.0
100.0
100.0
100.0
65.0
100.0
100.0 4
100.0 4
99.2 4
98.8 4
94.7 4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
AZL PF Investments Inc., Minneapolis, MN
AZOA Services Corporation, Novato, CA
BAWAG Allianz Vorsorgekasse AG, Vienna
Beleggingsmaatschappij Willemsbruggen B.V.,
Rotterdam
Bilan Services S.N.C., Nanterre
Borgo San Felice S.r.l., Castelnuovo Berardenga
(Siena)
Botanic Building SPRL, Brussels
BPS Brindisi 211 S.r.l., Lecce
BPS Brindisi 213 S.r.l., Lecce
BPS Brindisi 222 S.r.l., Lecce
BPS Mesagne 214 S.r.l., Lecce
BPS Mesagne 215 S.r.l., Lecce
BPS Mesagne 216 S.r.l., Lecce
BPS Mesagne 223 S.r.l., Lecce
BPS Mesagne 224 S.r.l., Lecce
Brasil de Imóveis e Participações Ltda., São Paulo
Bright Mission Berhad Ltd., Kuala Lumpur
British Reserve Insurance Co. Ltd., Guildford
BSMC (Thailand) Limited, Bangkok
Bulgaria Net AD, Sofia
Bureau d'Expertises Despretz S.A., Brussels
Calobra Investments Sp. z o.o., Warsaw
Calypso S.A., Paris
CAP Rechtsschutz-Versicherungsgesellschaft AG,
Wallisellen
Centrale Photovoltaique de Saint Marcel sur aude
SAS, Paris
Centrale Photovoltaique de Valensole SAS, Paris
CEPE de Haut Chemin S.à r.l., Versailles
CEPE de Langres Sud S.à r.l., Versailles
CEPE de Mont Gimont S.à r.l., Versailles
CEPE des Portes de la Côte d'Or S.à r.l., Versailles
CEPE du Bois de la Serre S.à r.l., Versailles
Château Larose Trintaudon S.A., Saint Laurent Médoc
Chicago Insurance Company Corp., Chicago, IL
CIC Allianz Insurance Ltd., Sydney
Club Marine Limited, Sydney
Colisee S.à r.l., Luxembourg
Companhia de Seguros Allianz Portugal S.A., Lisbon
Compañía Colombiana de Servicio Automotriz S.A.,
Bogotá D.C.
Consultatio Renta Mixta F.C.I., Buenos Aires
Corn Investment Ltd., London
Corsetec Assessoria e Corretagem de Seguros Ltda.,
São Paulo
CPRN Thailand Ltd., Bangkok
CPRN-Holdings Limited, Bangkok
Creactif Allocation, Paris
CreditRas Assicurazioni S.p.A., Milan
CreditRas Vita S.p.A., Milan
Darta Saving Life Assurance Ltd., Dublin
Deeside Investments Inc., Wilmington, DE
Delta Technical Services Ltd., London
Diamond Point a.s., Prague
Dresdner Kleinwort Pfandbriefe Investments II Inc.,
Minneapolis, MN
EF Solutions LLC, Wilmington, DE
Emerald Global Investments, Paris
Energie Eolienne Lusanger S.à r.l., Versailles
Eolica Erchie S.r.l., Lecce
Etablissements J. Moneger SA, Dakar
Euler Gestion, Paris la Défense
Euler Hermes ACI Services LLP, Baltimore, MD
Euler Hermes ACMAR Services SARL, Casablanca
Euler Hermes Asset Management France S.A., Paris
la Défense
Euler Hermes Canada Services Inc., Montreal, QC
Euler Hermes Cescob Service s.r.o., Prague
Euler Hermes Collections Sp. z o.o., Warsaw
Euler Hermes Consulting (Shanghai) Co. Ltd.,
Shanghai
Euler Hermes Crédit France S.A.S., Paris la Défense
Annual Report 2014
Allianz Group
%
owned 1
100.0
100.0
50.0 2
100.0
66.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
64.8
100.0
100.0 3
100.0
99.5
100.0
100.0
100.0 4
50.0 2
50.0 2
100.0
50.1
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
100.0
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
259
%
owned 1
%
owned 1
%
owned 1
Euler Hermes Credit Management Services Ireland
Ltd., Dublin
Euler Hermes Credit Services (JP) Ltd., Tokyo
Euler Hermes Excess North America LLC, Owings
Mills, MD
Euler Hermes Group SA, Paris la Défense
Euler Hermes Hellas Credit Insurance SA, Athens
Euler Hermes Hellas Services Ltd., Athens
Euler Hermes Hong Kong Service Limited, Hong Kong
Euler Hermes Korea Non-life Broker Company
Limited, Seoul
Euler Hermes Luxembourg Holding S.à r.l., Luxem-
bourg
Euler Hermes Magyar Követeleskezelö Kft., Budapest
Euler Hermes North America Holding Inc., Owings
Mills, MD
Euler Hermes North America Insurance Company
Inc., Baltimore, MD
Euler Hermes Patrimonia SA, Brussels
Euler Hermes Ré SA, Luxembourg
Euler Hermes Real Estate SPPICAV, Paris
Euler Hermes Recouvrement France S.A.S., Paris la
Défense
Euler Hermes Reinsurance AG, Wallisellen
Euler Hermes Risk Yönetimi A.S., Istanbul
Euler Hermes S.A., Brussels
Euler Hermes Seguros de Crédito S.A., São Paulo
Euler Hermes Service AB, Stockholm
Euler Hermes Services AG, Wallisellen
Euler Hermes Services B.V., 's-Hertogenbosch
Euler Hermes Services Belgium S.A., Brussels
Euler Hermes Services Bulgaria EOOD, Sofia
Euler Hermes Services G.C.C. Limited, Dubai
Euler Hermes Services India Privat Limited, Mumbai
Euler Hermes Services S.A.S., Paris la Défense
Euler Hermes Services South Africa Ltd., Johannes-
burg
Euler Hermes Services Sp. z o.o., Warsaw
Euler Hermes Services Tunisia S.à r.l., Tunis
Euler Hermes Services UK Limited, London
Euler Hermes Servicii Financiare S.R.L., Bucharest
Euler Hermes Serviços Ltda., São Paulo
Euler Hermes Servis s.r.o., Bratislava
Euler Hermes Sigorta A.S., Istanbul
Euler Hermes Singapore Services Pte Ltd., Singapore
Euler Hermes South Express S.A., Brussels
Euler Hermes Taiwan Services Limited, Taipei
Euler Hermes Tech SAS, Paris la Défense
Euler Hermes Trade Credit Limited, Auckland
Euler Hermes Trade Credit Underwriting Agents
Pty Ltd., Sydney
Euler Hermes UMA, Louisville, KY
Euler Hermes World Agency SASU, Paris la Défense
Euler Hermes, Mierzejewska-Kancelaria Prawna
Sp.k, Warsaw
Eurl 20/22 Le Peletier, Paris
Euro Garantie AG, Pfäffikon
Eurosol Invest S.r.l., Udine
FAI Allianz Ltd., Sydney
FCP LBPAM IDR, Paris
FCT CIMU 92, Pantin
FCT Rocade L2 Marseille, Marseille
Fenix Directo Compania de Seguros y Reaseguros
S.A., Madrid
Ferme Eolienne de Villemur-sur-Tarn S.à r.l.,
Versailles
Ferme Eolienne des Jaladeaux S.à r.l., Versailles
Fiduciaria Colseguros S.A., Bogotá D.C.
Financière Aldebaran SAS, Paris la Défense
Financière Callisto SAS, Paris la Défense
Fireman's Fund Financial Services LLC, Dallas, TX
Fireman's Fund Indemnity Corporation, Liberty
Corner, NJ
Fireman's Fund Insurance Company Corp., Novato, CA
100.0
100.0
100.0
69.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
100.0 3
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
260
Annual Report 2014
Allianz Group
Fireman's Fund Insurance Company of Bermuda,
Hamilton
Fireman's Fund Insurance Company of Hawaii Inc.,
Honolulu, HI
Fireman's Fund Insurance Company of Ohio Corp.,
Cincinnati, OH
Fondo Chiuso Allianz Infrastructure Partners I, Milan
Fragonard Assurance S.A., Paris
Friederike MLP S.à r.l., Luxembourg
Fusion Brokerage Inc., Richmond, VA
Fusion Company Inc., Richmond, VA
Gaipare Action, Paris
GamePlan Financial Marketing LLC, Woodstock, GA
Generation Vie S.A., Courbevoie
Genialloyd S.p.A., Milan
Gestion de Téléassistance et de Services S.A.,
Chatillon
GIE Euler Hermes SFAC Services, Paris la Défense
Global Transport & Automotive Insurance Solutions
Pty Limited, Sydney
Hauteville Insurance Company Limited, St Peter Port
Havelaar et Van Stolk B.V., Rotterdam
Helviass Verzekeringen B.V., Rotterdam
Home & Legacy (Holdings) Limited, London
Home & Legacy Insurance Services Limited, London
Hunter Premium Funding Ltd., Sydney
IDR Actions Euros, Paris
Immovalor Gestion S.A., Paris
Inforce Solutions LLC, Woodstock, GA
Insurance CJSC "Medexpress", Saint Petersburg
Intermediass S.r.l., Milan
International Film Guarantors Limited, London
International Film Guarantors LLC, Santa Monica, CA
Interpolis Kredietverzekeringen N.V., 's-Hertogen-
bosch
Interstate Fire & Casualty Company, Chicago, IL
Investitori Real Estate Fund, Milan
Investitori SGR S.p.A., Milan
ITEB B.V., Rotterdam
JCR Intertrade Ltd., Bangkok
Jefferson Insurance Company Corp., New York, NY
Ken Tame & Associates Pty Ltd., Sydney
Kiinteistö OY Eteläesplanadi 2, Helsinki
Königinstrasse I S.à r.l., Luxembourg
La Rurale SA, Paris
LCF IDR, Paris
Les Vignobles de Larose S.A.S., Saint Laurent Médoc
Life Sales LLC, Novato, CA
LLC "Medexpress-service", Saint Petersburg
LLC "Progress-Med", Moscow
LLC "Risk Audit", Moscow
Lloyd Adriatico Holding S.p.A., Trieste
Magdeburger Sigorta A.S., Istanbul
Magyar Posta Rövid Kötvény Befektetési Alap,
Budapest
Martin Maurel Vie SA, Courbevoie
Medi24 AG, Bern
Mondial Assistance Asia Pte Ltd., Singapore
Mondial Assistance Australia Holding Pty Ltd.,
Toowong
Mondial Assistance France SAS, Paris
Mondial Assistance France Services à la personne
SAS, Paris
Mondial Assistance GmbH, Vienna
Mondial Assistance Indian Ocean LLC, Ebene
Mondial Assistance Ireland Ltd., Dublin
Mondial Assistance Mexico S.A. de C.V., Mexico City
Mondial Assistance Portugal Serviços de Assistência
Lda., Paco de Aros
Mondial Assistance Réunion S.A., Saint Denis
Mondial Assistance s.r.o., Prague
Mondial Assistance Service España S.A., Madrid
Mondial Assistance Services Hellas A.E., Athens
Mondial Assistance Sp. z o.o., Warsaw
100.0
100.0
100.0
100.0 3
100.0
100.0
100.0
80.0
100.0 4
100.0
52.5
100.0
100.0
100.0
73.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
99.8
100.0
100.0
100.0
100.0
100.0
100.0 3
100.0
100.0
40.0 2
100.0
69.0
100.0
100.0
99.9
100.0 4
100.0
100.0
100.0
100.0
100.0
99.9
100.0
37.1 2,4
100.0
100.0
100.0
100.0
95.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
100.0
Mondial Assistance United Kingdom Ltd., Croydon
Surrey
Mondial Chile Asistencia Veinticuatro Horas y Viajes
Limitada, Santiago
Mondial Contact Center Italia S.r.l., Milan
Mondial Protection Corretora de Seguros Ltda., São
Bernardo do Campo
Mondial Service - Belgium S.A., Brussels
Mondial Service Argentina S.A., Buenos Aires
Mondial Service Colombia SAS, Bogotá D.C.
Mondial Servicios S.A. de C.V., Mexico City
Mondial Serviços Ltda., São Bernardo do Campo
Morgan Stanley Italian Office Fund, Milan
National Surety Corporation, Chicago, IL
Neoasistencia Manoteras S.L., Madrid
Nextcare Bahrain Ancillary Services Company B.S.C.,
Manama
NEXtCARE Egypt LLC, Cairo
NEXtCARE Holding WLL, Manama
NEXtCARE Lebanon SAL, Beirut
Nextcare Tunisia S.à r.l., Tunis
NFJ Investment Group LLC, Dover, DE
Northstar Mezzanine Partners VI U.S. Feeder II L.P.,
Dover, DE
OJSC "My Clinic", Moscow
OJSC Insurance Company Allianz, Moscow
OJSC Insurance Company ROSNO-MS, Moscow
Omega Thai Investment Holding B.V., Amsterdam
Ontario Limited, Toronto, ON
OOO "IC Euler Hermes Ru", Moscow
OOO Euler Hermes Credit Management, Moscow
OOO Mondial Assistance, Moscow
OPCI Allianz France Angel, Paris
Oppenheimer Group Inc., Dover, DE
Orione PV S.r.l., Milan
Orsa Maggiore PV S.r.l., Milan
Orsa Minore PV S.r.l., Milan
OY Selecta AB, Helsinki
Pacific Investment Management Company LLC,
Dover, DE
Paramount Group Real Estate Special Situations
Fund-A L.P., New York, NY
Parc Eolien de Bonneuil S.à r.l., Versailles
Parc Eolien de Bruyère Grande SAS, Versailles
Parc Eolien de Croquettes SAS, Versailles
Parc Eolien de Fontfroide SAS, Versailles
Parc Eolien de Forge SAS, Paris
Parc Eolien de la Sole du Bois SAS, Paris
Parc Eolien de Longchamps SAS, Versailles
Parc Eolien des Barbes d´Or SAS, Versailles
Parc Eolien des Joyeuses SAS, Versailles
Parc Eolien des Mistandines SAS, Paris
Parc Eolien des Quatre Buissons SAS, Paris
Parc Eolien du Bois Guillaume SAS, Paris
Parc Eolien Les Treize SAS, Paris
Personalized Brokerage Service LLC, Topeka, KS
Pet Plan Ltd., Guildford
PFP Holdings Inc., Dover, DE
PGA Global Services LLC, Dover, DE
PGREF V 1301 Sixth Investors I LLC, Wilmington, DE
PGREF V 1301 Sixth Investors I LP, Wilmington, DE
PGRESS-A Equity GP LLC, Wilmington, DE
PGRESS-A Equity REIT LP, Wilmington, DE
PIMCO (Schweiz) GmbH, Zurich
PIMCO Asia Local Bond Fund, Dublin
PIMCO Asia Ltd., Hong Kong
PIMCO Asia Pte Ltd., Singapore
PIMCO Australia Pty Ltd., Sydney
PIMCO California Municipal Bond Fund, Boston, MA
PIMCO Canada Corp., Toronto, ON
PIMCO Canada Credit Bond Trust, Toronto, ON
PIMCO Canada Credit Long Bond Trust, Toronto, ON
PIMCO Canadian Real Return Bond Fund, Toronto, ON
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 3
100.0
100.0
100.0
100.0
75.0
100.0
100.0
100.0
100.0 3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
95.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
92.0 4
100.0
100.0
100.0
38.4 2,4
100.0
100.0 4
100.0 4
53.8 4
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
%
owned 1
99.9 4
75.0 4
100.0 3
100.0
49.1 2,4
100.0
100.0
100.0
100.0
94.2 4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
100.0
51.2 4
57.3 4
54.2 4
99.7 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0 4
100.0
94.9 4
99.9 4
65.9
100.0
100.0
100.0
100.0 3
100.0
99.8
97.8
100.0
100.0
94.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 3
100.0
100.0
100.0
100.0
PIMCO Cayman Global Credit Alpha Fund, George
Town
PIMCO Covered Bond Source UCITS ETF, Dublin
PIMCO Euro Low Duration Investment Grade Corpo-
rate Fund, Dublin
PIMCO Europe Ltd., London
PIMCO German Government Bond Index Source
UCITS ETF, Dublin
PIMCO Global Advisors (Ireland) Ltd., Dublin
PIMCO Global Advisors (Luxembourg) S.A.,
Luxembourg
PIMCO Global Advisors (Resources) LLC, Dover, DE
PIMCO Global Advisors LLC, Dover, DE
PIMCO Global Bond Strategy Fund, George Town
PIMCO Global Holdings LLC, Dover, DE
PIMCO GP I LLC, Wilmington, DE
PIMCO GP III LLC, Wilmington, DE
PIMCO GP IX LLC, Wilmington, DE
PIMCO GP V LLC, Wilmington, DE
PIMCO GP VII LLC, Wilmington, DE
PIMCO GP X LLC, Wilmington, DE
PIMCO GP XI LLC, Wilmington, DE
PIMCO GP XII LLC, Wilmington, DE
PIMCO GP XIII LLC, Wilmington, DE
PIMCO GP XIV LLC, Wilmington, DE
PIMCO International Dividend Fund, Wilmington, DE
PIMCO Investments LLC, Dover, DE
PIMCO Japan Ltd., Road Town
PIMCO Latin America Administradora de Carteiras
Ltda., Rio de Janeiro
PIMCO Low Duration Euro Corporate Bond Source
UCITS ETF, Dublin
PIMCO Low Duration Global Investment Grade Credit
Fund, Dublin
PIMCO Low Duration US Corporate Bond Source
UCITS ETF, Dublin
PIMCO Multi Strategy Alternative Fund, Boston, MA
PIMCO Real Path Blend 2020 Fund, Wilmington, DE
PIMCO Real Path Blend 2025 Fund, Wilmington, DE
PIMCO Real Path Blend 2030 Fund, Wilmington, DE
PIMCO Real Path Blend 2035 Fund, Wilmington, DE
PIMCO Real Path Blend 2040 Fund, Wilmington, DE
PIMCO Real Path Blend 2045 Fund, Wilmington, DE
PIMCO Real Path Blend 2050 Fund, Wilmington, DE
PIMCO Real Path Blend 2055 Fund, Wilmington, DE
PIMCO Real Path Blend Income Fund, Wilmington, DE
PIMCO Real Retirement 2055 Fund, Boston, MA
PIMCO REIT Management LLC, Wilmington, DE
PIMCO Select UK Retirement Strategy Fund, Dublin
PIMCO U.S. Dividend Fund, Wilmington, DE
POD Allianz Bulgaria AD, Sofia
Primacy Holdings Pty Ltd., Melbourne
Primacy Underwriting Management Ltd., Wellington
Primacy Underwriting Management Pty Ltd.,
Melbourne
Prosperaz Fundo de Investimento Renda Fixa Crédito
Privado, São Paulo
Protexia France S.A., Paris
PT Asuransi Allianz Life Indonesia p.l.c., Jakarta
PT Asuransi Allianz Utama Indonesia Ltd., Jakarta
PTE Allianz Polska S.A., Warsaw
Q 207 GP S.à r.l., Luxembourg
Q207 S.C.S., Luxembourg
Quality 1 AG, Bubikon
Queenspoint S.L., Madrid
Questar Agency Inc., Minneapolis, MN
Questar Asset Management Inc., Ann Arbor, MI
Questar Capital Corporation, Minneapolis, MN
Quintet Properties Ltd., Dublin
RAS Antares, Milan
RB Fiduciaria S.p.A., Milan
RCM Asia Pacific Ltd., Hong Kong
Real Faubourg Haussmann SAS, Paris
Real FR Haussmann SAS, Paris
Annual Report 2014
Allianz Group
%
owned 1
%
owned 1
Redoma S.à r.l., Luxembourg
Retail Vending Ltd., Birmingham
Rhea SA, Luxembourg
Risikomanagement und Softwareentwicklung
GmbH, Vienna
Roster Financial LLC, Mount Laurel, NJ
SA Carène Assurance, Paris
Saint-Barth Assurances S.à r.l., St. Barts
San Francisco Reinsurance Company Corp., Novato, CA
SAS 20 pompidou, Paris
SAS Allianz Etoile, Paris
SAS Allianz Forum Seine, Paris
SAS Allianz Logistique, Paris
SAS Allianz Platine, Paris
SAS Allianz Rivoli, Paris
SAS Allianz Serbie, Paris
SAS Angel Shopping Centre, Paris
SAS Madeleine Opéra, Paris
SAS Passage Des Princes, Paris
SAS Société d'Exploitation du Parc Eolien de Nélausa,
Paris
Sättravallen Wind Holding AB, Strömstad
Saudi NEXtCARE LLC, Al Khobar
SC Tour Michelet, Paris
SCI 46 Desmoulins, Paris
SCI Allianz ARC de Seine, Paris
SCI Allianz Chateaudun, Paris
SCI Allianz Messine, Paris
SCI AVIP La Templerie, Courbevoie
SCI AVIP SCPI Selection, Courbevoie
SCI ESQ, Paris
SCI Prelloyd, Paris
SCI Stratus, Courbevoie
SCI Via Pierre 1, Paris
SCI Volnay, Paris
Selecta A/S, Rodovre
Selecta AB, Stockholm
Selecta AG, Muntelier
Selecta AS, Oslo
Selecta B.V., Waardenburg
Selecta Betriebsverpflegungs GmbH, Vienna
Selecta Eesti Osauhing OÜ, Tallinn
Selecta Group B.V., Amsterdam
Selecta Group S.à r.l., Luxembourg
Selecta Holding AB, Stockholm
Selecta Holding B.V., Amsterdam
Selecta Holding Ltd., London
Selecta Holding SAS, Paris
Selecta Hungary Automataüzemeltetö Kft., Budapest
Selecta Luxembourg SA, Leudelange
Selecta Management AG, Zug
Selecta Nordic Holding AB, Stockholm
Selecta Purchasing AG, Zug
Selecta Refreshments Ltd., Dublin
Selecta SA, Zaventem
Selecta SA, Paris
Selecta TMP AG, Zug
Selecta UK Ltd., Birmingham
SI 173-175 Boulevard Haussmann SAS, Paris
SIA Baltic Payment Systems, Riga
SIA Selecta, Riga
Siac Services S.r.l., Rome
Silex Gas Management AS, Oslo
Silex Gas Norway AS, Oslo
Sirius S.A., Luxembourg
SLC "Allianz Life Ukraine", Kiev
Società Agricola San Felice S.p.A., Milan
Société de Production D'électricité D'harcourt
Moulaine SAS, Versailles
Société d'Energie Eolien Cambon SAS, Versailles
Societe d'Exploitation du Parc Eolien d'Aussac Vadalle
SAS, Paris
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
52.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
94.8
100.0
100.0
100.0
100.0
100.0
Société Européenne de Protection et de Services
d'Assistance à Domicile S.A., Paris
Société Foncière Européenne B.V., Amsterdam
Société Nationale Foncière S.A.L., Beirut
SOFE One Ltd., Bangkok
SOFE Two Ltd., Bangkok
Sofiholding S.A., Brussels
South City Office Broodthaers SA, Brussels
SpaceCo S.A., Paris
Standard General Agency Inc., Dallas, TX
StocksPLUS Management Inc., Dover, DE
Téléservices et Sécurité "TEL2S" SARL, Chatillon
TFI Allianz Polska S.A., Warsaw
The American Insurance Company Corp.,
Cincinnati, OH
The Annuity Store Financial & Insurance Services LLC,
Sacramento, CA
The MI Group Limited, Guildford
Three Pillars Business Solutions Limited, Guildford
Ticket Guard Small Amount & Short Term Insurance
Co. Ltd., Tokyo
Tihama Investments B.V., Amsterdam
Top Assistance Service GmbH, Vienna
Top Immo A GmbH & Co. KG, Vienna
Top Immo Besitzgesellschaft B GmbH & Co. KG,
Vienna
Top Versicherungsservice GmbH, Vienna
Top Vorsorge-Management GmbH, Vienna
Towarzystwo Ubezpieczen Euler Hermes S.A.,
Warsaw
Trafalgar Insurance Public Limited Company,
Guildford
TU Allianz Polska S.A., Warsaw
TU Allianz Zycie Polska S.A., Warsaw
UAB Selecta, Vilnius
UP 36 SA, Brussels
UTE Gesecopri Servecarve S.r.l., Madrid
Vendcare (Holdings) Limited, Birmingham
Vendcare Services Ltd., Birmingham
VermögensManagement 2027 Plus, Senningerberg
VertBois S.à r.l., Luxembourg
Vigny Depierre Conseils SAS, Archamps
Viveole SAS, Versailles
Volta, Paris
WFC Investments Sp. z o.o., Warsaw
Windpark Les Cent Jalois SAS, Versailles
Wm. H McGee & Co. (Bermuda) Ltd., Hamilton
Wm. H McGee & Co. Inc., New York, NY
Wm. H McGee & Co. of Puerto Rico Inc., San Juan
YAO Investment S.à r.l., Luxembourg
Yorktown Financial Companies Inc., Minneapolis, MN
ZAD Allianz Bulgaria, Sofia
ZAD Allianz Bulgaria Zhivot, Sofia
ZAD Energia, Sofia
Non-consolidated affiliates
A. Diffusion S.A., Nanterre
AGF Pension Trustees Ltd., Guildford
Allianz America Latina S.C. Ltda., Rio de Janeiro
Allianz Financial Services S.A., Athens
Allianz Global Corporate & Specialty AG Escritorio de
Representacao no Brasil Ltda., São Paulo
Allianz Insurance Services Ltd., Athens
Allianz Northern Ireland Limited, Belfast
Allianz Risk Consultants B.V., Rotterdam
Assurance France Aviation S.A., Paris
business lounge GmbH, Vienna
COGAR S.à r.l., Paris
First Rate Direct Limited, Belfast
Gesellschaft für Vorsorgeberatung AG, Bern
ICC Evaluation SARL, Paris
Knightsbridge Allianz LP, Bartlesville, OK
Office Sénégalais de Conseils en Assurance SARL,
Dakar
56.0
100.0
66.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.9
100.0
100.0
100.0
99.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 4
100.0
100.0
100.0
100.0 4
87.5
100.0
100.0
100.0
100.0
100.0
100.0
87.4
99.0
51.0
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.9
100.0
100.0
100.0
100.0
100.0
99.5 4
99.6
261
Data Quest SAL, Beirut
Douglas Emmett Partnership X LP, Santa Monica, CA
Dr. Ignaz Fiala GmbH, Vienna
European Outlet Mall Fund FCP-FIS, Luxembourg
Foncière des 6e et 7e arrondissements de Paris (SIIC)
SA, Paris
Four Oaks Place LP, Wilmington, DE
Graydon Holding N.V., Amsterdam
Helios Silesia Holding B.V., Amsterdam
Henderson UK Outlet Mall Partnership LP, Edinburgh
IPE Tank and Rail Investment 1 S.C.A., Luxembourg
JPMorgan IIF UK1 LP, Dublin
Medgulf Allianz Takaful B.S.C., Seef
New Path S.A., Buenos Aires
OeKB EH Beteiligungs- und Management AG, Vienna
OJSC "Avariinyi Comissar", Moscow
OVS Opel VersicherungsService GmbH, Vienna
P H R V Paris Hotels Roissy Vaugirard SA, Paris
PAR Holdings Limited, Hamilton
PGREF V 1301 Sixth Holding LP, Wilmington, DE
PGRESS Debt Holdings LP, Wilmington, DE
PGRESS Equity Holdings LP, Wilmington, DE
Residenze CYL S.p.A., Milan
SAS Alta Gramont, Paris
SCI Bercy Village, Paris
SK Versicherung AG, Vienna
SNC Alta CRP Gennevilliers, Paris
SNC Alta CRP La Valette, Paris
SNC Société d'aménagement de la Gare de l'Est, Paris
Société de Distribution Automatique SA, Tunis
Sodor Holdings I Limited, London
Solveig Gas Holdco AS, Oslo
Wildlife Works Carbon LLC, San Francisco, CA
Other participations between 5 and 20 %
of voting rights
Al Nisr Al Arabi, Amman
Banco BPI S.A., Porto
Sri Ayudhya Capital Public Company Limited,
Bangkok
Zagrebacka banka d.d., Zagreb
%
owned 1
36.0
28.6
33.3
25.1 4
26.5
49.0
27.5
45.0
19.5 8
48.8
24.2
25.0
40.0
49.0
23.3
40.0
30.6
22.0
24.5
20.0
20.0
33.3
49.0
49.0
25.8
49.0
49.0
49.0
49.0
30.0
30.0
10.0 8
18.0
8.8
16.8
11.7
1
2
3
4
5
6
7
8
9
Percentage includes equity participations held by dependent
entities in full, even if the Allianz Group's share in the dependent
entity is below 100 %.
Controlled by the Allianz Group.
Investment fund.
Mutual, private equity or special fund.
Releasing impact according to § 264 (3) HGB through the Allianz
Group's consolidated financial statements.
Group share through indirect holder Roland Holding GmbH,
Munich: 74.2 %.
Classified as joint venture according to IFRS 11.
Classified as associate according to IAS 28.
Insolvent.
RE-AA SA, Abidjan
SA Immobilière de L'Avenue du Roule, Courbevoie
SCI champ laurent, Courbevoie
SCI J.T., Courbevoie
SCI Paris X, Courbevoie
SCI Vilaje, Courbevoie
SIFCOM Assur S.A., Abidjan
Top Versicherungs-Vermittler Service GmbH, Vienna
Jonit ventures
A & A Centri Commerciali S.r.l., Milan
Allee-Center Kft., Budapest
Allianz C.P. General Insurance Co. Ltd., Bangkok
Ancilyze Technologies LLC, Oakbrook Terrace, IL
Atenction Integral a la Dependencia S.L., Cordoba
AZ/JH Co-Investment Venture (DC) LP,
Wilmington, DE
AZ/JH Co-Investment Venture (IL) LP,
Wilmington, DE
Bajaj Allianz Financial Distributors Limited, Pune
Companhia de Seguro de Créditos S.A., Lisbon
Dorcasia Ltd., Sydney
Euromarkt Center d.o.o., Ljubljana
Europe Logistics Venture 1 FCP-FIS, Luxembourg
Fiumaranuova S.r.l., Genoa
Guotai Jun'an Allianz Fund Management Co. Ltd.,
Shanghai
International Shopping Centre Investment S.A.,
Luxembourg
Israel Credit Insurance Company Ltd., Tel Aviv
Market Street Trust, Sydney
NET4GAS Holdings s.r.o., Prague
NRF (Finland) AB, Västeras
One Beacon Joint Venture LP, Wilmington, DE
Previndustria - Fiduciaria Previdenza Imprenditori
S.p.A., Milan
SC Holding SAS, Paris
SES Shopping Center AT1 GmbH, Salzburg
Solunion Compania Internacional de Seguros y
Reaseguros SA, Madrid
TopTorony Ingatlanhasznosító Zrt., Budapest
Associates
Adriatic Motorways d.d., Zagreb
Allianz EFU Health Insurance Ltd., Karachi
Allianz Euro Emprunts d'Etat, Paris
Allianz Euro Oblig Court Terme ISR, Paris
Allianz Fóndika S.A. de C.V., Mexico City
Allianz Invest Cash, Vienna
Allianz Invest Eurorent Liquid, Vienna
Allianz Invest Osteuropa, Vienna
Allianz Invest Vorsorgefonds, Vienna
Allianz Saudi Fransi Cooperative Insurance Company,
Riyadh
Allianz Securicash SRI, Paris
Archstone Multifamily Partners AC JV LP,
Engelwood, CO
Archstone Multifamily Partners AC LP, Wilmington, DE
Areim Fastigheter 2 AB, Stockholm
Assurcard N.V., Haasrode
Autoelektro tehnicki pregledi d.o.o., Vojni´c
Bajaj Allianz General Insurance Company Ltd., Pune
Bajaj Allianz Life Insurance Company Ltd., Pune
Berkshire Hathaway Services India Private Limited,
New Delhi
Berkshire India Private Limited, New Delhi
Broker on-line de productores de seguros S.A.,
Buenos Aires
Brunei National Insurance Company Berhad Ltd.,
Bandar Seri Begawan
Capimmovalor SCPI, Paris
Chicago Parking Meters LLC, Wilmington, DE
CJSC "MedCentreStrakh", Moscow
CPIC Allianz Health Insurance Co. Ltd., Shanghai
%
owned 1
97.5
100.0
100.0
100.0
100.0
100.0
60.0
100.0
50.0
50.0
50.0
50.0
50.0
80.0 7
80.0 7
50.0
50.0
50.0
50.0
83.3 4,7
50.1 7
49.0 7
50.0
50.0
50.0 4
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
33.3
49.0
32.4 4
32.4 4
26.8
29.0 4
29.4 4
29.9 4
29.0 4
32.5
23.4 4
40.0
28.6
23.3
20.0
49.0
26.0
26.0
20.0
20.0
30.0
25.0
33.6
49.9
36.4
22.9
262
Annual Report 2014
Allianz Group
D
Consolidated Financial Statements
151 Consolidated Balance Sheets
152 Consolidated Income Statements
153 Consolidated Statements of
Comprehensive Income
154 Consolidated Statements of
157 Notes to the Consolidated Financial
Changes in Equity
Statements
155 Consolidated Statements of
Cash Flows
Responsibility statement
To the best of our knowledge, and in accordance with the applicable
reporting principles, the consolidated financial statements, in accor-
dance 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 posi-
tion of the group, together with a description of the principal oppor-
tunities and risks associated with the expected development of the
Group.
Munich, 24 February 2015
Allianz SE
The Board of Management
Annual Report 2014
Allianz Group
263
In our opinion, based on the findings of our audit, the consoli-
dated 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.
Munich, 2 March 2015
KPMG AG
Wirtschaftsprüfungsgesellschaft
Becker
Wirtschaftsprüfer
(Independent Auditor)
Dr. Pfaffenzeller
Wirtschaftsprüfer
(Independent Auditor)
auditoR’s RepoRt
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 consoli-
dated 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 supple-
mentary provisions of the articles of incorporation are the responsi-
bility 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.
We conducted our audit of the consolidated financial state-
ments in accordance with § 317 HGB and German generally accepted
standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer [Institute of Public Auditors in Ger-
many] (IDW). Those standards require that we plan and perform the
audit such that misstatements materially affecting the presentation
of the net assets, financial position and results of operations in the
consolidated financial statements in accordance with the applicable
financial reporting framework and in the group management report
are detected with reasonable assurance. Knowledge of the business
activities and the economic and legal environment of the Group and
expectations as to possible misstatements are taken into account in
the determination of audit procedures. The effectiveness of the
accounting-related internal control system and the evidence sup-
porting the disclosures in the consolidated financial statements and
the group management report are examined primarily on a test basis
within the framework of the audit. The audit includes assessing the
annual financial statements of those entities included in consolida-
tion, the determination of entities to be included in consolidation,
the accounting and consolidation principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements and group
management report. We believe that our audit provides a reasonable
basis for our opinion.
Our audit has not led to any reservations.
264
Annual Report 2014
Allianz Group
Euler
Hermes
Euler Hermes, the world’s leading provider of trade-related
insurance solutions, helps customers worldwide trade wisely
and develop their business safely. With more than 100 years
of experience, the company offers business-to-business (B2B)
clients financial services to support cash and trade receivables
management. It is the global leader in trade credit insurance
and a recognized specialist in the areas of bonding, guarantees
and collections. Its proprietary intelligence network tracks
and analyzes daily changes in corporate solvency among
companies active in markets representing 92 % of global GDP.
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.
eulerhermes.com
6,000
Euler Hermes employs more than 6,000 people.
50
countries
The company is present in over 50 countries.
EulEr HErmEs
The global leader
in trade credit
insurance
A collaborative approach to risk manage-
ment and the sharing of essential knowledge,
information and experience.
Acer
Partnership is often an over-used word in business, yet it
perfectly captures the relationship between Acer, the global
IT giant, and Euler Hermes, the world’s leading trade credit
insurer.
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.”
266
Protecting margins and securing
sales development.
Couleurs
de
Tollens
Couleurs de Tollens, a French paint distributor, has had
its credit insured by Euler Hermes for over 20 years. How-
ever, this partnership goes beyond compensation for
unpaid invoices. A crucial part of the relationship is the
ongoing financial health check, where information about
both customers and business prospects is exchanged.
The availability of accurate solvency data on a daily basis
from Euler Hermes’ extensive network is particularly
valuable, as Tollens’ portfolio of their clients’ accounts receiv-
able involves complex and voluminous credit lines. Further-
more, credit insurance helps disseminate both customer
credit awareness and a culture of risk management across
the Tollens group.
eulerhermes.fr/couleurs-de-tollens
Time is money: using credit insurance
to increase efficiency.
Hadco
Metal
Trading
Hadco Metal Trading is a U.S.-based company operating
in the competitive metal supply industry. For this inter-
national business, the ability to make quick and accurate
credit decisions can mean the difference between deals
won and deals lost. Credit insurance has transformed the
way Hadco does business and makes decisions. By lever-
aging the risk protection of its Euler Hermes policy, the
company could begin to offer open terms to buyers that
it would not have considered before. With Euler Hermes, the
firm receives comprehensive company, sector and geo-
graphic information and analyses that help it decide how
and where to grow.
eulerhermes.us/hadco-metal-trading
267
E _ fuRTHER InfoRMATIon
Pages 268 – 277
Joint Advisory Council of the Allianz Companies
International Advisory Board
269
270
271 Mandates of the Members of the Supervisory Board
272 Mandates of the Members of the Board of Management
273
277
Glossary
Index
268
Annual Report 2014
Allianz Group
E
Further Information
269 Joint Advisory Council of the
271 Mandates of the Members of
Allianz Companies
the Supervisory Board
273 Glossary
277 Index
270 International Advisory Board
272 Mandates of the Members of
the Board of Management
Joint Advisory Council of the Allianz Companies
Dr. Helmut Perlet
Chairman
Chairman of the Supervisory Board
Allianz SE
Dr. Kurt bocK
Chairman of the Board of Executive Directors
BASF SE
Dr. tHomaS enDerS
Chief Executive Officer
Airbus Group
franz feHrenbacH
Managing Partner
Robert Bosch Industrietreuhand KG
Chairman of the Supervisory Board
Robert Bosch GmbH
Prof. Dr. Dieter HunDt,
Senator e.H.
Chairman of the Supervisory Board
Allgaier Werke GmbH
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. nicola leibinger-Kammüller
Chief Executive Officer
TRUMPF GmbH & Co. KG
Dr. rüDiger grube
Chairman of the Board and Chief Executive Officer
Deutsche Bahn AG
Dr. tHomaS rabe
CEO & Chairman of the Executive Board
Bertelsmann SE & Co. KGaA
Herbert Hainer
Chairman of the Board of Management
adidas AG
Dr. Jürgen HeraeuS
Chairman of the Supervisory Board
Heraeus Holding GmbH
Dr.-ing. Dr.-ing. e.H.
norbert reitHofer
Chairman of the Board of Management
BMW AG
Harry roelS
KaSPer rorSteD
Chairman of the Board of Management
Henkel AG & Co. KGaA
Dr. manfreD ScHneiDer
Chairman of the Supervisory Board
RWE AG
Linde AG
Jim Hagemann Snabe
until 6 May 2014
General Manager
Snabe ApS
Prof. Dr. DenniS J. SnoWer
President of the Kiel Institute for the World Economy
Peter terium
Chief Executive Officer
RWE AG
Dr.-ing. e.H. HeinricH WeiSS
Chairman of the Supervisory Board
SMS Holding GmbH
manfreD Wennemer
President of the Administrative Board
Sulzer AG
Annual Report 2014
Allianz Group
269
International Advisory Board
Dr. Paul acHleitner
Chairman of the Supervisory Board of
Deutsche Bank AG
minoru maKiHara
until 31 December 2014
Senior Corporate Advisor of Mitsubishi Corporation
Paulo De azeveDo
Chief Executive Officer of Sonae SGPS, S.A.
cHriStoPHe De margerie
† 20 October 2014
Chairman and Chief Executive Officer of Total S.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
Peter coStello
Chairman of ECG Financial Pty Ltd
Dr. Jürgen HambrecHt
Chairman of the Supervisory Board of BASF SE
Dr. freD Hu
Founder and Partner of Primavera Capital Group
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
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.
270
Annual Report 2014
Allianz Group
E
Further Information
269 Joint Advisory Council of the
271 Mandates of the Members of
Allianz Companies
the Supervisory Board
273 Glossary
277 Index
270 International Advisory Board
272 Mandates of the Members of
the Board of Management
Mandates of the Members
of the Supervisory Board
DR. HELMUT PERLET
Chairman
Former Member of the Board of Management of
Allianz SE
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Commerzbank AG
GEA Group AG
DR. WULf H. BERnoTaT
Vice Chairman
Former Chairman of the Board of Management of
E.ON AG
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Bertelsmann Management SE
Bertelsmann SE & Co. KGaA
Deutsche Annington Immobilien SE (Chairman)
Deutsche Telekom AG
METRO AG
RoLf ZiMMERMann
Vice Chairman
Chairman of the (European) SE Works Council of
Allianz SE
DanTE BaRBan
Employee of Allianz S.p.A.
CHRiSTinE BoSSE
Former Group Chief Executive Officer of the Executive
Management of Tryg
Membership in comparable1 supervisory bodies
Aker ASA
Flügger A/S (Chairwoman)
until 18 September 2014
TDC A/S
GaBRiELE BURKHaRDT-BERG
Chairwoman of the Group Works Council of Allianz SE
JEan-JaCQUES CETTE
Chairman of the Group Works Council of
Allianz France S.A.
Membership in comparable1 supervisory bodies
Membership in Group bodies
Allianz France S.A.
iRa GLoE-SEMLER
Regional Representative Financial Services of
ver.di Hamburg
fRanZ HEiSS
Employee of Allianz Beratungs- und Vertriebs-AG
PRof. DR. REnaTE KöCHER
Head of Institut für Demoskopie Allensbach
(Allensbach Institute)
Membership in other statutory supervisory boards
and SE administrative boards in Germany
BMW AG
Infineon Technologies AG
Nestlé Deutschland AG
Robert Bosch GmbH
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.
JiM HaGEMann SnaBE
since 7 May 2014
Chairman of Centre for Global Industries,
World Economic Forum
Membership in other statutory supervisory boards
and SE administrative boards in Germany
SAP SE
since 7 July 2014
Siemens AG
Membership in comparable1 supervisory bodies
Bang & Olufsen A/S (Vice Chairman)
Danske Bank A/S
SAP Labs LLC (Group mandate SAP)
until 21 May 2014
Success Factors Inc. (Group mandate SAP)
until 21 May 2014
Syclo LLC (Group mandate SAP)
until 21 May 2014
PETER DEniS SUTHERLanD
Chairman of Goldman Sachs International
Membership in comparable1 supervisory bodies
BW Group Ltd.
Goldman Sachs International (Chairman)
Koç Holding A.Ş.
1
We regard memberships in other supervisory bodies as “comparable” if the company is listed on a stock exchange or has more than 500 employees.
Annual Report 2014
Allianz Group
271
Mandates of the Members
of the Board of Management
MiCHaEL DiEKMann
until 6 May 2015
Chairman of the Board of Management
Membership in other statutory supervisory boards
and SE administrative boards in Germany
BASF SE (Vice Chairman)
Linde AG (Vice Chairman)
Siemens AG
Membership in Group bodies
Allianz Asset Management AG (Chairman)
until 23 February 2015
Allianz Deutschland AG
Membership in comparable1 supervisory bodies
Membership in Group bodies
Allianz France S.A. (Vice Chairman)
Allianz S.p.A.
oLivER BäTE
Insurance Western & Southern Europe
until 31 December 2014
Global Property-Casualty
until 6 May 2015
Chairman of the Board of Management
from 7 May 2015
Membership in comparable1 supervisory bodies
Membership in Group bodies
Allianz France S.A.
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
SERGio BaLBinoT
since 1 January 2015
Insurance Western & Southern Europe
Membership in comparable1 supervisory bodies
Membership in Group bodies
Allianz France S.A.
Allianz S.p.A. (Vice Chairman since 7 February 2015)
Allianz Sigorta A.S.
Allianz Yasam ve Emeklilik A.S.
ManUEL BaUER
Insurance Growth Markets
Membership in comparable1 supervisory bodies
Bajaj Allianz General Insurance Co. Ltd.
Bajaj Allianz Life Insurance Co. Ltd.
Membership in Group bodies
Allianz Hungária Biztosító Zrt. (Chairman)
Allianz-Slovenská poist‘ovna a.s. (Chairman)
until 11 December 2014
Allianz Tiriac Asigurari S.A. (Chairman)
OJSC IC Allianz (Chairman)
until 16 March 2014
TUiR Allianz Polska S.A. (Chairman)
until 30 October 2014
TU Allianz Życie Polska S.A. (Chairman)
until 30 October 2014
GaRy BHoJWani
until 31 December 2014
Insurance USA
Membership in comparable1 supervisory bodies
Hormel Foods Corp.
since 28 July 2014
Membership in Group bodies
Allianz Life Insurance Company of North America
(Chairman)
Allianz of America, Inc. (Chairman)
AZOA Services Corp. (Chairman)
Fireman’s Fund Insurance Company (Chairman)
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.
Allianz Insurance plc (Chairman)
Allianz Irish Life Holdings plc
Euler Hermes S.A. (Chairman)
DR. HELGa JUnG
Insurance Iberia & Latin America, Legal & Compliance,
Mergers & Acquisitions
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Membership in Group bodies
Allianz Asset Management AG (Chairwoman)
since 23 February 2015
Allianz Global Corporate & Specialty SE (Vice Chairwoman)
Membership in comparable1 supervisory bodies
Unicredit S.p.A.
Membership in Group bodies
Allianz Compañía de Seguros y Reaseguros S.A.
Companhia de Seguros Allianz Portugal S.A.
DR. CHRiSTof MaSCHER
Operations
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Volkswagen Autoversicherung AG
Membership in Group bodies
Allianz Managed Operations and Services SE (Chairman)
Membership in comparable1 supervisory bodies
Membership in Group bodies
Allianz Worldwide Partners SAS (Chairman)
Jay RaLPH
Asset Management
U.S. Life Insurance
since 1 January 2015
Membership in comparable1 supervisory bodies
Membership in Group bodies
Allianz Life Insurance Company of North America
(Chairman)
since 1 January 2015
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.
from 27 May 2015
DR. DiETER WEMMER
Finance, Controlling, Risk
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Membership in Group bodies
Allianz Asset Management AG
Allianz Investment Management SE
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)
DR. MaxiMiLian ZiMMERER
Investments, Global Life/Health
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Membership in Group bodies
Allianz Asset Management AG
Allianz Investment Management SE (Chairman)
Allianz Lebensversicherungs-AG (Vice Chairman)
1
We regard memberships in other supervisory bodies as “comparable” if the company is listed on a stock exchange or has more than 500 employees.
272
Annual Report 2014
Allianz Group
E
Further Information
269 Joint Advisory Council of the
271 Mandates of the Members of
Allianz Companies
the Supervisory Board
273 Glossary
277 Index
270 International Advisory Board
272 Mandates of the Members of
the Board of Management
Glossary
The accounting terms explained here are intended to help the reader
understand this Annual Report. Most of these terms concern the balance sheet
or the income statement.
A
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.
ActuAriAl gAins And losses
Actuarial gains and losses are changes in the present
value of the defined benefit obligation resulting from
experience adjustments (i.e. the effects of differences
between the previous actuarial assumptions and what
has actually occurred) and the effects of changes in
actuarial assumptions (e.g. changes in demographic
and in financial assumptions).
AffiliAtes
The parent company of the Group and all subsidiaries.
Subsidiaries are entities where the parent company can
exercise a significant influence over their corporate
strategy in accordance with the control concept. This is
possible, for example, where the parent company holds,
directly or indirectly, a majority of the voting rights, has
the power to appoint or remove a majority of the mem
bers of the Board of Management or equivalent govern
ing body, or where there are contractual rights of control.
AggregAte policy reserves
Policies in force – especially in life, health, and personal
accident insurance – give rise to potential liabilities for
which funds have to be set aside. The amount required is
calculated actuarially.
AllowAnce for loAn losses
The overall volume of provisions includes allowances for
credit losses – deducted from the asset side of the balance
sheet – and provisions for risks associated with contin
gencies, such as guarantees, loan commitments or other
obligations, which are stated as liabilities. Where it is
determined that a loan cannot be repaid, the uncollect
able amount is written off against any existing specific
loan loss allowance, or directly recognized as an expense
in the income statement. Recoveries on loans previously
written off are recognized in the income statement under
net loan loss provisions.
Assets under mAnAgement
Assets under management are assets or securities port
folios, valued at current market value, for which Allianz
Asset Management companies provide discretionary
investment management decisions and have the port
folio management responsibility. They are managed on
behalf of third parties as well as on behalf of the Allianz
Group.
AssociAtes
All entities, over which the Allianz Group has significant
influence, i.e. the power to participate in the financial
and operating policy decisions of these entities, but no
control or joint control of those policies.
Amortized cost
The amortized cost of a financial asset or financial liability
is the amount at which the financial instrument is mea
sured at initial recognition minus principal repayments,
plus or minus the cumulative amortization using the
effective interest method of any difference between that
initial amount and the maturity amount.
AvAilAbleforsAle investments
Availableforsale investments are securities which are
neither held to maturity nor have been acquired for sale in
the near term; availableforsale investments are carried
at fair value in the balance sheet.
B
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.
certificAted liAbilities
Certificated liabilities comprise debentures and other
liabilities for which transferable certificates have been
issued.
collAterAlized debt obligAtion
(cdo)
A way of packaging credit risk. Several classes of securities
(known as tranches) are created from a portfolio of bonds.
Rules determine how the cost of defaults are allocated to
the classes.
combined rAtio
Represents the total of acquisition and administrative
expenses (net), excluding oneoff effect from pension
revaluation, and claims and insurance benefits incurred
(net) divided by premiums earned (net).
contingent liAbilities
Financial obligations not shown as liabilities on the bal
ance sheet because the probability of a liability actually
being incurred is low. Example: guarantee obligations.
costincome rAtio
Represents operating expenses divided by operating
revenues.
credit risk
The risk of a loss incurring due to a counterparty’s dete
rioration of credit quality or its default.
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.
C
D
cAsh flow stAtement
Statement showing movements of cash and cash equi
valents during a reporting period, classified by three
types of activity: operating activities, investing activities
and financing activities.
deferred Acquisition costs (dAc)
Expenses of an insurance company which are incurred
in connection with the acquisition of new insurance
policies or the renewal of existing policies. They include
commissions paid, underwriting expenses and policy
issuance costs.
Annual Report 2014
Allianz Group
273
deferred tAx Assets/liAbilities
The calculation of deferred taxes is based on tax loss
carry forwards, tax credit carry forwards and temporary
differences between the carrying amounts of assets or
liabilities in the published balance sheet and their tax
base, and on differences arising from applying uniform
valuation policies for consolidation purposes. The tax
rates used for the calculation are the local rates appli
cable in the countries of the entities included in the con
solidation; changes to tax rates already adopted on the
balance sheet date are taken into account.
defined benefit plAns
For defined benefit plans, the participant is granted a
defined benefit by the employer or via an external entity.
In contrast to defined contribution arrangements, the
future cost of a defined benefit to the employer plan is
not known with certainty in advance. To determine the
expense over the period, accounting regulations require
that actuarial calculations are carried out according to a
fixed set of rules.
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.
derivAtive finAnciAl
instruments
Financial contracts, the values of which move in relation
ship to the price of an underlying asset. Derivative finan
cial instruments can be classified in relation to their un
derlying assets (e.g. interest rates, share prices, foreign
currency exchange rates or prices of goods). Important
examples of derivative financial instruments are options,
futures, forwards and swaps.
E
eArnings per shAre (eps)
Ratio calculated by dividing the net income for the year
attributable to shareholders by the weighted average
number of shares outstanding (basic eps). In order to
calculate diluted earnings per share, the number of com
mon shares outstanding and the net income for the year
attributable to shareholders are adjusted by the effects
of potentially dilutive common shares which could still
be exercised. Potentially dilutive common shares arise in
connection with sharebased compensation plans
(diluted eps).
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).
F
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.
finAnciAl Assets cArried
At fAir vAlue through income
Financial assets carried at fair value through income in
clude financial assets held for trading and financial assets
designated at fair value through income.
finAnciAl liAbilities cArried
At fAir vAlue through income
Financial liabilities carried at fair value through income
include financial liabilities held for trading and financial
liabilities designated at fair value through income.
finAnciAl vAr
Financial Value at Risk (VaR) is the aggregation of market
risk and credit risk taking diversification benefits into
account.
forwArds
The parties to this type of transaction agree to buy or
sell at a specified future date. The price of the underlying
assets is fixed when the deal is struck.
functionAl currency
The functional currency is the prevailing currency in the
primary economic environment where the subsidiary
conducts its ordinary activities.
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”.
futures
Standardized contracts for delivery on a future date,
traded on an exchange. Normally, rather than actually
delivering the underlying asset on that date, the differ
ence between the closing market value and the exercise
price is paid.
G
goodwill
Difference between the cost of acquisition and the fair
value of the net assets acquired.
gross/net
In insurance terminology the terms gross and net mean
before and after deduction of reinsurance, respectively.
In investment terminology the term “net” is used where
the relevant expenses have already been deducted from
the respective income.
H
hedging
The use of special financial contracts, especially derivative
financial instruments, to reduce losses which may arise
as a result of unfavorable movements in rates or prices.
held for sAle
A noncurrent asset is classified as held for sale if its
carrying amount will be recovered principally through
sale rather than through continuing use. On the date a
noncurrent asset meets the criteria as held for sale, it
is measured at the lower of its carrying amount and fair
value less costs to sell.
heldtomAturity investments
Heldtomaturity investments comprise debt securities
held with the intent and ability that they will be heldto
maturity. They are valued at amortized cost.
I
iAs
International Accounting Standards.
ifrs
International Financial Reporting Standards. Since 2002,
the designation ifrs applies to the overall framework of
all standards approved by the International Accounting
Standards Board. Already approved standards will con
tinue to be cited as International Accounting Standards
(iAs).
ifrs frAmework
The framework for International Financial Reporting
Standards (ifrs) which sets out the concepts that underlie
the preparation and presentation of financial statements
for external users.
274
Annual Report 2014
Allianz Group
E
Further Information
269 Joint Advisory Council of the
271 Mandates of the Members of
Allianz Companies
the Supervisory Board
273 Glossary
277 Index
270 International Advisory Board
272 Mandates of the Members of
the Board of Management
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 realized and
unrealized gains and losses including interest and divi
dend income from financial assets and financial liabilities
carried at fair value through income, the income (net)
from financial liabilities for puttable equity instruments
and the foreign currency gains and losses (net).
issued cApitAl And AdditionAl
pAidin cApitAl
This heading comprises the capital stock, the premium
received on the issue of shares, and amounts allocated
when option rights are exercised.
J
Joint venture
A joint venture is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to
the net assets of the arrangement.
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.
Loadings & fees: Includes premium and reserve based
fees, unitlinked management fees and policyholder
participation in expenses.
Investment margin: Is defined as ifrs investment income
net of expenses less interest credited to ifrs reserves and
policyholder participation.
Expenses: Includes commissions, acquisition expenses
and administration expenses.
Technical margin: Comprises risk result (risk premiums
less benefits in excess of reserves less policyholder partici
pation), lapse result (surrender charges and commission
clawbacks) and reinsurance result.
Impact of change in DAC: Includes effects of change in
dAc, urr and vobA and is the net impact of deferral and
amortization of acquisition costs and frontend loadings
on operating profit.
loss rAtio
Represents claims and insurance benefits incurred (net)
divided by premiums earned (net).
L
N
life/heAlth – definition of terms
Further wordings used in the Life/Health business
segment performance analysis:
Front-end load products: Products with a commission
applied at the time of the initial recognition.
Commission clawbacks: Commission recovered from
intermediaries on lapse of (typically newer) contracts.
True-up: Retrospective update of assumptions for dAc
calculation.
Unlocking: Prospective update of assumptions for dAc
calculation.
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.
Unit-linked without guarantee: Conventional unitlinked
products are those where all of the benefits provided by
a contract are directly linked to the value of assets
contained in an internal or external fund held by the in
surance undertakings. Performance is linked to a separate
account and the investment risk is borne by the policy
holder rather than the insurer.
noncontrolling interests
Those parts of the equity of affiliates which are not
owned by companies of the Allianz Group.
net income AttributAble
to noncontrolling interests
That part of net income for the year which is not attribut
able to the shareholders of the Allianz Group but to other
third parties who hold shares in affiliates.
O
options
Derivative financial instruments where the holder is
entitled – but not obliged – to buy (call option) or sell
(put option) the underlying asset at a predetermined
price sometime in the future. The grantor (writer) of the
option, on the other hand, is obliged to transfer or buy
the asset and receives a premium for granting the option
to the purchaser.
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.
P
pension And similAr obligAtions
Reserves for current and future postemployment ben
efits formed for the defined benefit plans of active and
former employees. These also include reserves for health
care benefits.
premiums written/eArned
Premiums written represent all premium revenues in
the respective year. Premiums earned represent that
part of the premiums written used to provide insurance
coverage in that year. In the case of life insurance prod
ucts where the policyholder carries the investment risk
(e.g. variable annuities), only that part of the premiums
used to cover the risk insured and costs involved is treated
as premium income.
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.
R
reinsurAnce
An insurance company transfers part of its insurance risk
assumed to another insurance company.
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.
repurchAse And reverse
repurchAse Agreements
A repurchase (repo) transaction involves the sale of
securities by the Group to a counterparty, subject to the
simultaneous agreement to repurchase these securities
at a certain later date, at an agreed price. The securities
concerned are retained in the Group’s balance sheet for
the entire lifetime of the transaction, and are valued in
accordance with the accounting principles for financial
assets carried at fair value through income or investment
securities, respectively. The proceeds of the sale are
reported in liabilities to banks or to customers, as appro
priate. A reverse repo transaction involves the purchase
of securities with the simultaneous obligation to sell
these securities at a future date, at an agreed price. Such
transactions are reported in loans and advances to banks,
or loans and advances to customers, respectively. Interest
income from reverse repos and interest expenses from
repos are accrued evenly over the lifetime of the trans
actions and reported under interest and similar income
or interest expenses.
Annual Report 2014
Allianz Group
275
U
uneArned premiums
Premiums written attributable to income of future years.
The amount is calculated separately for each policy and
for every day that the premium still has to cover.
uneArned revenue reserves
(urr)
urr contain premium components that refer to future
periods, which are reserved and released over the lifetime
of the corresponding contracts.
us gAAp
Generally Accepted Accounting Principles in the United
States of America.
V
vAlue of the business Acquired
(vobA)
vobA refers to the present value of future profits asso
ciated with a block of business purchased.
vAriAble Annuities
The benefits payable under this type of life insurance
depend primarily on the performance of the investments
in a mutual fund. The policyholder shares equally in the
profits or losses of the underlying investments.
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.
reserves for premium refunds
That part of the surplus which will be distributed to policy
holders in the future. This refund of premiums is made
on the basis of statutory, contractual, or company bylaw
obligations, or voluntary undertaking.
retAined eArnings
In addition to the reserve required by law in the financial
statements of the Group parent company, this item con
sists mainly of the undistributed profits of Group entities
and amounts transferred from consolidated net income.
risk Appetite
The level of risk that an organization is prepared to accept,
before action is deemed necessary to reduce it. Risk
appetite is therefore clearly and comprehensively defined
by using target and minimum risk indicators, (quantita
tive) limit systems, or adequate policies, standards and
guidelines to determine the “boundaries” of the Group’s
business operations.
S
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.
subordinAted liAbilities
Liabilities which, in the event of liquidation or bankruptcy,
are not settled until after all other liabilities.
surplus funds
According to Solvency ii guidance surplus funds are
deemed to be accumulated profits, which have not been
made available for distribution to policyholders and
beneficiaries.
swAps
Agreements between two counterparties to exchange
payment streams over a specified period of time. Impor
tant examples include currency swaps (in which payment
streams and capital in different currencies are exchanged)
and interest rate swaps (in which the parties agree to
exchange normally fixed interest payments for variable
interest payments in the same currency).
276
Annual Report 2014
Allianz Group
Index
A
Accounting Policies 157ff.
AGCS 87f.
Allianz Worldwide Partners 87
Alternative Investments 64, 103
Analysts 28
Asia-Pacific 87, 93
Asset Management 64, 69, 70f., 78ff., 82, 99ff., 106f.,
114, 116
Audit Committee 20f., 37
Australia 68, 87
B
Banking 64, 103, 116
Basic earnings per share 83, 253
BeNeLux 93, 252
Board of Management 24ff., 35f., 42ff., 72, 84f., 272
Board of Management Remuneration 45ff.
Board of Management Committees 35f.
Brand 74f.
Business environment 79f.
Business operations 63ff.
C
Cash Flows 120, 155f.
Central and Eastern Europe 87, 93
Changes 48ff., 68, 84f., 108
Climate Change 75, 78
Combined Ratio 86ff.
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.
Cost-income Ratio 99, 101, 104, 106, 108
Credit Insurance 87, 135
Customers 63ff., 70f., 73ff.
D
Demographic Change 142
Digitalization 12f., 143
Directors’ dealings 39
Distribution 63ff.
Diversity 76f.
Dividend 10, 28f.
E
Economic Environment 79
Employees 76f.
Employee stock purchase plan 251
Executive remuneration principles 45ff.
Executive summary 81ff.
F
Financial Calendar Cover
France 67, 87f., 93, 250f.
Funding 116ff.
G
General Meeting 39, 83
Germany 66, 87f., 252
H
Holding & Treasury 64, 102f., 108
Insurance Markets 63ff.
I
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.
Italy 66f., 87, 93, 252
Investments 75, 78, 110ff.
K
Key financial indicator/Key performance indicator
Cover, 72
L
Latin America 69, 87, 88
Letter to the investors 7ff.
Life/Health 63, 80, 82, 92ff., 105, 107 , 113f.
Liquidity 108, 116ff.
Loss adjustment expenses 113, 164, 167, 204ff.
Low interest rate environment 67f., 71, 79f., 95, 105ff.,
123, 142, 211
M
Management’s assessment of 2014 results 81
Management’s overall assessment of the current
economic situation 108
Market position 65ff., 70, 142
Markets 65ff.
Microinsurance 78, 142
Multi-year review Cover
N
Net Promoter Score (NPS) 74
Nomination Committee 21, 37
O
Off-balance sheet arrangements 115
Outlook 104ff.
P
Performance fees 101
Personnel Committee 19ff, 37
Products and services 63ff.
Property-Casualty 63, 82, 86ff., 104ff., 112f.
Publication date Cover
R
Rating 124f., 133ff.
Regulatory changes 67
Reinsurance PC 88
Remuneration of the Supervisory Board 56ff.
Reportable segments 63, 90f., 98
Reserves 113f.
Results 2014 actual versus prior year outlook for
2014 104
Risk Committee 19ff., 35, 37
S
Statement on Corporate Management pursuant to
§289 a of the German Commercial Code 40f.
Share 28f.
Shareholders’ equity 109
Shareholder structure 29
Solvency II 17, 39, 123ff., 141, 143, 145, 217f.
Spain 87, 93
Standing Committee 19ff., 37
Strategy 70ff.
Subsequent events 84
Supervisory Board 16ff., 23, 36ff.
Sustainable development 73ff.
Switzerland 93, 246
T
Takeover-related statements and explanations 42ff.
Talent management 76
Third-party assets under management 100
Three-year bonus 45ff.
Total assets under management 99f.
U
United Kingdom 68f., 87, 245
United States 68, 79f., 87, 88, 93
Financial calendar
Important dates for shareholders and analysts1
Annual General Meeting _______________________________ 6 May 2015
Interim Report/Financial Results 1Q ______________________ 12 May 2015
Interim Report/Financial Results 2Q ______________________ 7 August 2015
Interim Report/Financial Results 3Q ______________________ 6 November 2015
Financial Results 2015 __________________________________ 19 February 2016
Annual Report 2015 ___________________________________ 11 March 2016
Annual General Meeting _______________________________ 4 May 2016
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.
Allianz SE – Königinstrasse 28 – 80802 Munich – Germany – Phone +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) – Date of publication: 13 March 2015
This is a translation of the German Annual Report of Allianz Group. In case of any divergences, the German original is legally binding.