Allianz SE
Annual Report 2020

Plain-text annual report

OUTPERFORM TRANSFORM REBALANCE ANNUAL REPORT 2020 ALLIANZ SE  To go directly to any chapter, simply click on the headline or the page number.  All references to chapters, notes, internet pages, etc. within this report are also linked. CONTENT A _ To Our Investors 2 Supervisory Board Report 9 Mandates of the Members of the Supervisory Board 10 Mandates of the Members of the Board of Management Pages 1 – 10 B _ Management Report of Allianz SE Pages 11 – 64 12 Executive Summary and Outlook 16 Operations by Reinsurance Lines of Business 18 Balance Sheet Review 20 Liquidity and Funding Resources 21 Risk and Opportunity Report 34 35 Statement on Corporate Management 42 Remuneration Report 62 Other Information Integrated Risk and Control System for Financial Reporting C _ Financial Statements of Allianz SE Pages 65 – 96 FINANCIAL STATEMENTS 66 Balance Sheet 68 Income Statement NOTES TO THE FINANCIAL STATEMENTS 69 Nature of Operations and Basis of Preparation 69 Accounting, Valuation, and Calculation Methods 72 Supplementary Information on Assets 76 Supplementary Information on Equity and Liabilities 83 Supplementary Information on the Income Statement 86 Other Information 89 List of Participations of Allianz SE, Munich as of 31 December 2020 according to § 285 No. 11 and 11b HGB in conjunction with § 286 (3) No. 1 HGB D _ Further Information 98 ResponsibilityStatement 99 Independent Auditor's Report Pages 97 – 103 Disclaimer regarding roundings Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. TO OUR INVESTORS Annual Report 2020 – Allianz SE 1 A _ To our Investors SUPERVISORY BOARD REPORT Ladies and Gentlemen, During the financial year 2020, the Supervisory Board fulfilled all its duties and obligations as laid out in the company statutes and applicable law. It monitored the activities of the company’s Board of Management, dealt with the succession planning for the Board of Management and advised it on business management issues. The Supervisory Board discussed the status and impact of the COVID-19 pandemic at each meeting. OVERVIEW In the financial year 2020, the Supervisory Board held six regular meetings as well as one extraordinary meeting. The regular meetings took place in February, March, May, June, September, and December, and the extraordinary meeting took place in April. In all of the meetings in 2020, the Board of Management reported on Group revenues and results as well as busi- ness developments in the individual business segments. The Board of Management informed the Supervisory Board on the course of business as well as on the development of Allianz SE and the Allianz Group, including deviations in actual business developments from the planning. In this context, the adequacy of capitalization, the solvency ratio, and the respective stress and risk scenarios were discussed. The annual Allianz SE and the Group’s consolidated financial statements including the respective auditor‘s reports, the half-yearly as well as the quarterly reports were reviewed in detail by the Supervisory Board after preparation by the Audit Committee. Other focal points of reporting, in addition to the status and impact of the COVID-19 pandemic, were strategic topics such as the implementation of the Allianz strategy “Simplicity Wins” with its three pillars “Outperform”, “Transform” and “Rebalance”, the risk strategy, the Allianz Customer Model (ACM), and the IT strategy. In addition, the Supervisory Board was intensively involved in the Board of Management’s planning for both the fiscal year 2021 and the three-year period from 2021 to 2023. Cyber risk security and developments of the life insurance business in the continuous low-interest environment were also regularly discussed. Implications of Brexit for Allianz and the trade conflict between the United States and China were other ongoing topics. Furthermore, the Supervi- sory Board dealt in depth with personnel matters relating to the Board of Management, the requirements of the new German Corporate Governance Code, which came into effect in 2020, and the Act Implementing the Second Shareholders’ Rights Directive (ARUG II). Further, the Supervisory Board discussed the sustainability concept (ESG concept) of the Allianz Group with the Board of Management and debated its adequate treatment in the context of the work of the Supervisory Board. The Supervisory Board received regular, timely, and comprehensive reports from the Board of Management. The Board of Management’s verbal reports at the meetings were accompanied by written documents, which were sent to each member of the Supervisory Board in time for the relevant meeting. The Board of Management also informed the Supervisory Board in writing about important events that occurred between meetings. The chairmen of the Supervisory and Management Boards had regular discussions about major developments and decisions. The Chairman of the Supervisory Board also had individual discussions with each member of the Board of Man- agement about their respective half-year as well as full-year performance. Also in the financial year 2020, individual trainings and group sessions were held on the basis of an agreed devel- opment plan for continued training of the members of the Supervisory Board, for example on underwriting topics and the implications of the new IFRS accounting standards IFRS 9 and 17. 2 Annual Report 2020 − Allianz SE A _ To our Investors ISSUES DISCUSSED IN THE SUPERVISORY BOARD PLENARY SESSIONS In the meeting of 20 February 2020, the Supervisory Board comprehensively dealt with the preliminary financial figures for the financial year 2019 as well as the Board of Management’s dividend proposal. The appointed audit firm, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC), Munich, reported in detail on the preliminary results of their audit. In the further course of the meeting, the Supervisory Board also discussed the target achievement of each individual member of the Board of Management and, on this basis, set their variable remuneration for the financial year 2019, subject to the approval of the annual financial statements. As part of this performance assessment, the fitness and propriety of the members of the Board of Management were confirmed. The Supervisory Board also dealt with the remuneration systems for the Board of Management and the Supervisory Board and received reports on the strategy of Allianz Partners and the IT strategy. Finally, the Supervisory Board appointed Dr. Klaus-Peter Röhler to the Board of Management of Allianz SE with effect from 1 April 2020 as successor to Dr. Axel Theis, who had resigned his mandate with effect from 31 March 2020. In the meeting of 5 March 2020, the Supervisory Board discussed and approved the audited annual Allianz SE and consolidated Group financial statements, including market value balance sheets, as well as the Board of Management’s recommendation for the appropriation of earnings for the financial year 2019. The auditors con- firmed that there were no discrepancies compared to their February report and issued an unqualified auditor’s report for the individual and consolidated financial statements. The Supervisory Board also reviewed and approved the separate non-financial report for both Allianz SE and the Group, taking into account the report of the external auditor. Further presentations included the Board of Management’s report on risk development in 2019, the annual compliance report, and the annual report of the Head of Group Audit. Next, the Supervisory Board reviewed the agenda and proposals for resolution for Allianz SE’s 2020 Annual General Meeting (AGM). At the recommendation of the Audit Committee, the Supervisory Board appointed PwC as auditor for the 2020 indi- vidual and consolidated financial statements, the auditor’s review of the 2020 half-yearly financial report, and the assurance engagement of the combined separate non-financial report. Furthermore, the Supervisory Board dealt with and approved the control and profit transfer agreement with Allianz Africa Holding GmbH. The Supervisory Board further received reports on the strategy in the area of “business customers” as well as the Allianz X invest- ment unit. Furthermore, the Supervisory Board discussed the succession planning for the Board of Management. In an extraordinary conference call meeting on 2 April 2020, the Board of Management first reported on the impact of the COVID-19 pandemic on employees, distributors and customers, the financial situation and the planned dividend payment. The Supervisory Board also approved the cancellation of the already scheduled AGM and the convening of a virtual AGM, which was made possible at short notice by the legislator, with the corresponding stipulations of the Board of Management. The specific succession planning for the Board of Management was also discussed further at this meeting. On 6 May 2020, just before the AGM, the Board of Management briefed the Supervisory Board on business per- formance in the first quarter of 2020 as well as on the current situation of both the Allianz Group and Allianz SE, in particular with regard to share price development, capitalization, and capital as well as liquidity management. In addition to the update on the COVID-19 pandemic, the meeting also dealt with the withdrawal of the profit target for the 2020 financial year, which had been published in an ad hoc announcement. In the meeting of 25 June 2020, the Board of Management first reported in detail on the course of business in fiscal year 2020 to date and provided an outlook on the expected half-year results. In addition, the Board of Management reported on various M&A activities, such as the acquisition of the property insurance business of SulAmérica in Brazil, and the cooperation in the bancassurance channel with BBVA in Spain. Furthermore, the Board of Management reported on the impact of the COVID-19 pandemic on Allianz Group employees and the individual business units, business closure and business interruption insurance and reinsurance. Other topics covered in the report were the current status of the cyber security insurance business and Allianz’s ESG concept and related reporting. The Supervisory Board discussed the overall economic impact of the COVID-19 pandemic, including the consequences for the insurance industry. The Board of Management then presented the first part of the annual strategy presentation (trends and implications) for discussion. In addition, the Board of Management provided its regular status report on the issue of cyber risk security as well as the life insurance business strategy. Annual Report 2020 − Allianz SE 3 A _ To our Investors Furthermore, the Supervisory Board dealt in detail with personnel matters relating to the Board of Management. Dr. Barbara Karuth-Zelle was appointed to the Board of Management with effect from 1 January 2021 to replace Dr. Christof Mascher, who left the Board of Management at the end of 2020. The mandates of Mr. de la Sota and Mr. Terzariol, which were to expire at the end of 2020, were extended by five years, and the mandate of Mr. Balbinot, which was also expiring, was extended by two years. Finally, the Supervisory Board reviewed the key criteria for the selection of Board of Management members and amended them accordingly by the competencies leadership, employee engagement and change management. The meeting on 25 September 2020 focused on the continuation of the presentation on the strategic direction of Allianz Group and Allianz SE (solo). The main focus here was on implementation under the slogan “Simply Deliver” and the definition of priorities within the framework of the Allianz strategy. In this context, the key HR initiatives to support the strategy were also presented. The Supervisory Board also discussed the transformation at Allianz Global Investors, corporate governance issues and the self-evaluation of the Supervisory Board required by supervisory law and the development plan drawn up on this basis. In addition, the Supervisory Board decided on the succession of Mr. Niran Peiris, who retired from the Board of Management on 31 December 2020, and appointed Mr. Christopher Townsend to the Board of Management with effect from 1 January 2021. In addi- tion, the status of the COVID-19 pandemic and the Board of Management’s measures with respect to the handling of the second wave of infections were in focus of the discussion. In the meeting of 10 December 2020, the Board of Management first provided information about the third- quarter results, the further course of business, and the situation of Allianz Group. Furthermore, the Supervisory Board discussed the planning for fiscal year 2021 and the three-year plan for 2021 to 2023. In the context of the three-year plan the Board of Management reported on the updated risk strategy. The Supervisory Board ascer- tained that both elements are closely interlinked. With the Africa strategy and the initiative “push-to-pull”, the Board of Management presented further elements of the Allianz strategy. In addition, the Board of Manage- ment provided a status report on the issue of cyber risk security. The Supervisory Board discussed the declaration of conformity with the German Corporate Governance Code and various corporate governance topics. In this context, the Supervisory Board agreed to propose to the 2021 AGM an amendment to the Articles of Association regarding the reduction of Supervisory Board members’ term of office to four years. The Supervisory Board dis- cussed in depth the Board of Management remuneration system and the appropriateness of the Board of Man- agement remuneration. The system of Supervisory Board remuneration was also reviewed for appropriateness on the basis of an external benchmark analysis. Furthermore, the Supervisory Board set targets for the variable remuneration of members of the Board of Management for 2021. As part of the individual target-setting process, the climate strategy was added as a new indicator. The Supervisory Board reviewed the succession planning for the Board of Management. Finally, the results of this year’s efficiency review of the Supervisory Board’s activities were addressed. DECLARATION OF CONFORMITY WITH THE GERMAN CORPORATE GOVERNANCE CODE On 10 December 2020, 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 in its version of 16 December 2019. Since the last Declaration of Conformity as of 13 December 2019, all recommendations of the Code in the version of 7 February 2017 have been complied with. Further explanations on corporate governance in the Allianz Group can be found in the Statement on Corporate Management. More details on corporate governance are provided on the Allianz website, specifically: www.allianz.com/corporate-governance. 4 Annual Report 2020 − Allianz SE A _ To our Investors COMMITTEE ACTIVITIES The Supervisory Board has formed various committees in order to perform its duties efficiently. The committees prepare the consultations in plenary sessions as well as the adoption of resolutions. They can also adopt their own resolutions. The composition of the committees can be found in the Statement on Corporate Management. The Standing Committee held five meetings in 2020 and adopted two written resolutions. In doing so, the Com- mittee primarily dealt with corporate governance topics, the preparations for the AGM, the Supervisory Board self- evaluation as required by supervisory law and associated development plan, and the efficiency review of the Supervisory Board. Collective and, if necessary, individual trainings are continuously carried out as part of the implementation of the development plan. In addition, the Standing Committee has passed resolutions approving the granting of loans to senior executives. In November, the Standing Committee gave its approval by written procedure to the exclusion of subscription rights in connection with the issue of certain financial instruments (Per- petual Fixed Rate Resettable Restricted Tier 1 bonds). The Personnel Committee held six meetings in 2020 and dealt in detail with the succession to the Board of Man- agement for Dr. Mascher and Mr. Peiris as well as the extension to the mandates of Mr. Balbinot, Mr. de la Sota and Mr. Terzariol. Other key topics included the preparatory review of the Board of Management’s remuneration system, target achievement of the Board of Management members in the financial year 2019, and the definition of the targets for the 2021 variable remuneration. The committee also looked at various mandate matters of individual board members and at further succession planning for the Board of Management. The Audit Committee held six regular meetings in 2020. In the presence of the auditors, the committee discussed both Allianz SE’s annual financial statements and the Allianz Group’s consolidated financial statements as well as the management and auditor’s reports and the half-yearly financial report. These reviews revealed no reasons for objection. The Board of Management reported on the quarterly results and discussed them in detail with the Audit Committee together with the results of the auditor’s review. One focus of the Audit Committee’s activities was the regular review of the impact of the COVID-19 pandemic on all areas of the Allianz Group. In this context, the Audit Committee held an additional extraordinary meeting in May and dealt with the withdrawal of the profit target for 2020 by the Board of Management and the proposal for the appropriation of net earnings submitted to the AGM. Furthermore, it prepared the engagement of the external auditor and defined key audit areas for the 2020 financial year and assessed the quality of the audit. The committee also discussed the awarding of non- audit services to the auditor and approved an updated positive list of pre-approved audit and non-audit services. In addition, it discussed in depth the compliance system, the internal audit system, and the financial reporting processes as well as the respective internal controls and held intensive discussions with the Board of Management on short and midterm measures to improve and further develop systems and processes. At all regular meetings reports on legal and compliance issues in the Group, including lawsuits filed against Allianz Global Investors in a court in New York, as well as on the work of the Internal Audit department were discussed in detail. Furthermore, the head of the actuarial function (Group Actuarial, Planning & Controlling) presented his annual report. In ad- dition, the Audit Committee discussed the internal audit plan for 2021 and had the head of the Group Taxation Department explain the processes and procedures for tax compliance. The Risk Committee held two meetings in 2020, in March and September. In both meetings, the committee discussed the current risk situation of the Allianz Group and Allianz SE with the Board of Management. In the March meeting, the risk report and other risk-related statements in the annual Allianz SE and consolidated financial statements as well as management and group management reports were reviewed with the auditor and approved. The Audit Committee was recommended to include the Risk Report as presented in the Annual Report. The appropriateness of the early risk recognition system at Allianz SE and Allianz Group and the result of further risk assessments by the auditor were discussed. The committee took a detailed look at the risk strategy, including risk appetite and capital management, the external rating as well as the effectiveness of the risk man- agement system for the Allianz Group and Allianz SE. Other matters for discussion were the report on Allianz’s own risk and solvency assessment (ORSA), and the changes to the internal Solvency II model. Moreover, the Risk Committee intensively discussed the consequences of the COVID-19 pandemic with regard to business develop- ment and the risk situation. In this context, the quality of the solvency model and the calculation of the corre- sponding sensitivities were discussed. In addition, at the request of the Risk Committee, the Board of Management reported on various measures already implemented and possible further measures to safeguard the solvency ratio. Annual Report 2020 − Allianz SE 5 A _ To our Investors In addition, special regulatory topics, such as the EIOPA review of Solvency II, as well as business strategy topics, such as the further development of the life insurance business, the realignment of industrial insurance, the product governance in the property insurance business and the effects of the strong volatility on the capital market on link of the business strategy and the risk strategy was financial reviewed in depth in the Supervisory Board meeting on 10 December 2020. investments were discussed. The The Technology Committee held two meetings in the fiscal year 2020 in which it continued to discuss the compre- hensive IT transformation. In its first meeting, in addition to an update on the IT strategy, the committee looked in particular at Allianz’s “Data Fitness” – a program that analyses the completeness, quality and accessibility of data. In addition, the committee discussed how to deal with disruptive trends in a forward-looking way and how to integrate them into the business model. In the second meeting, the Technology Committee discussed the progress of key strategic IT transformation initiatives, such as the implementation of the Business Master Platform (BMP), the legacy system decommissioning strategy, and infrastructure modernization. In this context the external evalu- ation of the status of the implementation of the transformation measures was presented and discussed. Further- more, against the background of the many initiatives, the objectives and planning for the next three years were discussed. At one meeting in the fiscal year 2020, the Nomination Committee reviewed the objectives for the composition of the Supervisory Board and its actual composition. In addition, the preparation for the Supervisory Board elections at the AGM 2022 was discussed in detail as was succession planning for the Supervisory Board. The nomination of substitute candidates for the Chairperson of the Supervisory Board and the Chairpersons of the Technology and Audit Committee in case they need to be replaced at short notice formed another focus. Subsequently, their preparedness to step in was agreed with the substitute candidates and first conversations with potential succes- sion candidates were held. The Supervisory Board was informed regularly and comprehensively of the committees’ work. OVERVIEW OF THE MEMBER PARTICIPATION IN SUPERVISORY BOARD AND COMMITTEE MEETINGS FOR THE FISCAL YEAR 2020 Publication of details of members’ participation in meetings Presence % Presence % PLENARY SESSIONS OF THE SUPERVISORY BOARD Michael Diekmann (Chairman) Gabriele Burkhardt-Berg (Vice Chairwoman) Jim Hagemann Snabe (Vice Chairman) Sophie Boissard Christine Bosse Dr. Friedrich Eichiner Jean-Claude Le Goaër Martina Grundler Herbert Hainer Godfrey Hayward Frank Kirsch Jürgen Lawrenz STANDING COMMITTEE Michael Diekmann (Chairman) Jean-Claude Le Goaër Herbert Hainer Jürgen Lawrenz Jim Hagemann Snabe PERSONNEL COMMITTEE Michael Diekmann (Chairman) Gabriele Burkhardt-Berg Herbert Hainer AUDIT COMMITTEE Dr. Friedrich Eichiner (Chairman) Sophie Boissard Michael Diekmann Jean-Claude Le Goaër Martina Grundler RISK COMMITTEE Michael Diekmann (Chairman) Christine Bosse Dr. Friedrich Eichiner Godfrey Hayward Frank Kirsch TECHNOLOGY COMMITTEE Jim Hagemann Snabe (Chairman) Gabriele Burkhardt-Berg Michael Diekmann Dr. Friedrich Eichiner Jürgen Lawrenz NOMINATION COMMITTEE Michael Diekmann (Chairman) Christine Bosse Jim Hagemann Snabe 7/7 7/7 7/7 7/7 7/7 7/7 7/7 7/7 7/7 7/7 7/7 7/7 5/5 5/5 5/5 5/5 5/5 6/6 6/6 6/6 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 6/6 6/6 6/6 6/6 6/6 2/2 2/2 2/2 2/2 2/2 2/2 2/2 2/2 2/2 2/2 1/1 1/1 1/1 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 6 Annual Report 2020 − Allianz SE A _ To our Investors 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 half-yearly financial report are appointed by the Supervisory Board of Allianz SE, not by the AGM. The Supervisory Board appointed PwC as statutory auditor for the annual Allianz SE and consoli- dated financial statements as well as for the review of the half-yearly financial report of the financial year 2020. PwC 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 pre- pared on the basis of the International Financial Reporting Standards (IFRS) as adopted in the European Union. The annual financial statements of Allianz SE were prepared in accordance with German law and accounting standards. PwC performed a review of the half-yearly financial report. In addition, PwC was also mandated to perform an audit of the market value balance sheet according to Solvency II as of 31 December 2020 for Allianz SE and the Allianz Group. All Supervisory Board members received the documentation relating to the annual financial statements and the auditor’s reports from PwC on schedule. The preliminary financial statements and PwC’s preliminary audit results were discussed in the Audit Committee on 17 February 2021 as well as in the Supervisory Board’s plenary session on 18 February 2021. The finalized financial statements and PwC’s audit reports (dated 22 February 2021) were reviewed by the Audit Committee on 3 March 2021 and in the Supervisory Board plenary session on 4 March 2021. The auditors participated in the discussions and presented key results from their audit. Particular emphasis was placed on the key audit matters described in the auditor’s report and on the audit procedures performed. No material weaknesses in the internal financial reporting control process were discovered. There were no circum- stances that might give cause for concern about the auditor’s independence. In addition, the market value bal- ance sheets dated 31 December 2020 for both Allianz SE and the Allianz Group as well as the respective PwC reports were reviewed by the Audit Committee and the Supervisory Board. On the basis of its own reviews of the annual Allianz SE and consolidated financial statements, the management and group management reports, and the recommendation for the appropriation of earnings, the Supervisory Board has raised no objections and agreed with the results of the PwC audit. It has also approved the Allianz SE and consolidated financial statements prepared by the Board of Management. The financial statements have thus been formally adopted. The Supervisory Board agrees with the Board of Management’s proposal on the appropriation of earnings. The Supervisory Board would like to express its special thanks to all Allianz Group employees for their great per- sonal commitment over the past fiscal year under the difficult conditions caused by the pandemic. ASSURANCE ENGAGEMENT OF THE COMBINED SEPARATE NON-FINANCIAL REPORT In the financial year 2020, the company was required to issue a separate non-financial report. This report was combined for Allianz SE and the Allianz Group. The Supervisory Board commissioned PwC to perform an assur- ance engagement of this report. All Supervisory Board members received the combined separate non-financial report and the independent practitioner’s assurance report in due time. The report and PwC’s assurance report were discussed in the plenary session of the Supervisory Board on 4 March 2021. PwC participated in these dis- cussions and presented the results of their assurance engagement. Based on its own review of the combined sep- arate non-financial report, the Supervisory Board did not raise any objections and approved by acknowledge- ment the results of the PwC assurance engagement. Annual Report 2020 − Allianz SE 7 A _ To our Investors MEMBERS OF THE SUPERVISORY BOARD AND BOARD OF MANAGEMENT There were no changes in the composition of the Supervisory Board in fiscal year 2020. Dr. Klaus-Peter Röhler was appointed to the Board of Management of Allianz SE with effect from 1 April 2020. He succeeded Dr. Axel Theis, who resigned from office as of 31 March 2020. Furthermore, Dr. Christof Mascher and Mr. Niran Peiris left the Board of Management as of 31 December 2020. Dr. Barbara Karuth-Zelle and Mr. Christopher Townsend were appointed as new members of the Board of Management with effect from 1 January 2021. Munich, 4 March 2021 For the Supervisory Board: Michael Diekmann Chairman 8 Annual Report 2020 − Allianz SE A _ To our Investors MANDATES OF THE MEMBERS OF THE SUPERVISORY BOARD MICHAEL DIEKMANN Chairman Member of various Supervisory Boards Membership in other statutory supervisory boards and SE administrative boards in Germany Fresenius Management SE Fresenius SE & Co. KGaA Siemens AG JIM HAGEMANN SNABE Vice Chairman Member of various Supervisory Boards Membership in other statutory supervisory boards and SE administrative boards in Germany Siemens AG (Chairman) Membership in comparable1 supervisory bodies A.P. Møller-Mærsk A/S (Chairman) GABRIELE BURKHARDT-BERG Vice Chairwoman Chairwoman of the Group Works Council of Allianz SE MARTINA GRUNDLER National Representative Insurances, ver.di Berlin HERBERT HAINER Member of various Supervisory Boards Membership in other statutory supervisory boards and SE administrative boards in Germany Deutsche Lufthansa AG until 5 May 2020 FC Bayern München AG (Chairman) Membership in comparable1 supervisory bodies Accenture Plc GODFREY ROBERT HAYWARD Employee of Allianz Insurance plc FRANK KIRSCH Employee of Allianz Beratungs- und Vertriebs-AG JÜRGEN LAWRENZ Employee of Allianz Technology SE Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Technology SE SOPHIE BOISSARD Chairwoman of the Board of Management of Korian S.A. Membership in other statutory supervisory boards and SE administrative boards in Germany Korian Deutschland AG (Chairwoman) Korian Management AG (Chairwoman) Membership in comparable1 supervisory bodies Over SpA since 21 January 2020 Segesta SpA (Korian Group company) Senior Living Group NV (Korian Group company) CHRISTINE BOSSE Member of various Supervisory Boards Membership in comparable1 supervisory bodies Coop Amba since 25 April 2020 P/F BankNordik (Chairwoman) until 26 March 2020 DR. FRIEDRICH EICHINER Member of various Supervisory Boards Membership in other statutory supervisory boards and SE administrative boards in Germany Festo AG (Chairman) until 18 January 2021 Festo Management SE (Chairman) Infineon Technologies AG since 20 February 2020 JEAN-CLAUDE LE GOAËR Employee of Allianz Informatique G.I.E. Membership in comparable1 supervisory bodies Membership in Group bodies Allianz France S.A. 1_Generally, 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 2020 – Allianz SE 9 A _ To our Investors MANDATES OF THE MEMBERS OF THE BOARD OF MANAGEMENT OLIVER BÄTE Chairman of the Board of Management Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Deutschland AG (Chairman since 19 March 2020) SERGIO BALBINOT Insurance Western & Southern Europe, Asia Pacific Membership in comparable1 supervisory bodies UniCredit S.p.A. Bajaj Allianz General Insurance Company Ltd. Bajaj Allianz Life Insurance Company Ltd. Membership in Group bodies Allianz (China) Insurance Holding Company Ltd. (Chairman) Allianz France S.A. Allianz Sigorta A.S. Allianz Yasam ve Emeklilik A.S. JACQUELINE HUNT Asset Management, US Life Insurance Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Life Insurance Company of North America (Chairwoman) DR. BARBARA KARUTH-ZELLE since 1 January 2021 Operations, Allianz Services Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Technology SE (Chairwoman) Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Partners S.A.S. DR. CHRISTOF MASCHER until 31 December 2020 Operations and IT Membership in other statutory supervisory boards and SE administrative boards in Germany Volkswagen Autoversicherung AG Membership in Group bodies Allianz Technology SE (Chairman) Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Partners S.A.S. NIRAN PEIRIS until 31 December 2020 Global Insurance Lines & Anglo Markets, Reinsurance, Middle East, Africa 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 p.l.c. DR. GÜNTHER THALLINGER Investment Management Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Deutschland AG since 19 March 2020 Allianz Investment Management SE (Chairman) Allianz Lebensversicherungs-AG Allianz Private Krankenversicherungs-AG Allianz Versicherungs-AG KLAUS-PETER RÖHLER since 1 April 2020 Insurance German Speaking Countries and Central & Eastern Europe Membership in other statutory supervisory boards and SE administrative boards in Germany EUROKAI GmbH & Co. KGaA Membership in Group bodies Allianz Beratungs- und Vertriebs-AG (Chairman) Allianz Lebensversicherungs-AG (Chairman) Allianz Private Krankenversicherungs-AG (Chairman) Allianz Versicherungs-AG (Chairman) Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Suisse Lebensversicherungs-Gesellschaft AG since 28 April 2020 Allianz Suisse Versicherungs-Gesellschaft AG since 28 April 2020 IVAN DE LA SOTA Business Transformation, Insurance Iberia & Latin America, Allianz Partners Membership in other statutory supervisory boards and SE administrative boards in Germany Volkswagen Autoversicherung AG since 1 January 2021 Membership in Group bodies Allianz Deutschland AG since 19 March 2020 Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Compañía de Seguros y Reaseguros S.A., Spain Allianz Partners S.A.S. (Chairman) Allianz Seguros S.A., Brazil (Chairman) Companhia de Seguros Allianz Portugal S.A. GIULIO TERZARIOL Finance, Controlling, Risk Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Deutschland AG since 19 March 2020 DR. AXEL THEIS until 31 March 2020 Insurance German Speaking Countries and Central & Eastern Europe Membership in other statutory supervisory boards and SE administrative boards in Germany Gemeinnützige ProCurand GmbH (Chairman) Membership in Group bodies Allianz Deutschland AG (Chairman) until 19 March 2020 Allianz Investment Management SE Membership in comparable1 supervisory bodies Membership in Group bodies Allianz Elementar Lebensversicherungs-AG (Chairman) Allianz Elementar Versicherungs-AG (Chairman) Allianz Investmentbank AG Allianz Suisse Lebensversicherungs-Gesellschaft AG Allianz Suisse Versicherungs-Gesellschaft AG CHRISTOPHER TOWNSEND since 1 January 2021 Global Insurance Lines & Anglo Markets, Reinsurance, Middle East, Africa 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 p.l.c. RENATE WAGNER Human Resources, Legal, Compliance, Mergers & Acquisitions Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Allianz Global Investors GmbH until 30 June 2020 1_Generally, we regard memberships in other supervisory bodies as comparable if the company is listed on a stock exchange or has more than 500 employees. 10 Annual Report 2020 – Allianz SE MANAGEMENT REPORT OF ALLIANZ SE Annual Report 2020 – Allianz SE 11 B _ Management Report of Allianz SE EXECUTIVE SUMMARY AND OUTLOOK Earnings summary CONDENSED INCOME STATEMENT € mn Gross premiums written Premiums earned (net) Claims (net) Underwriting expenses (net) Other technical reserves (net) Net underwriting result Change in claims equalization and similar reserves Net technical result Investment result Allocated interest return Other non-technical result Non-technical result Net operating income Taxes Net income 2020 2019 12,228 12,384 Change (156) 10,888 (7,574) (3,161) (13) 140 (363) (223) 5,258 (23) (891) 4,344 4,121 486 4,608 11,436 (8,291) (3,558) 15 (397) 172 (225) 5,929 (19) (1,514) 4,396 4,170 433 4,603 (548) 717 396 (28) 538 (535) 2 (671) (4) 623 (52) (49) 54 4 NET UNDERWRITING RESULT Gross premiums written decreased by 1.3 % to € 12,228 mn (2019: € 12,384 mn). The decrease was mainly driven by the intra-group transfer of the reinsurance business with Liverpool Victoria Insurance Company, a lower premium volume from Allianz Global Corporate & Specialty SE as well as effects from the COVID-19 pandemic. In total, € 11,685 mn (2019: € 11,911 mn) of gross premiums came from Property-Casualty reinsurance and € 543 mn (2019: € 473 mn) from Life/Health reinsurance. The net retention ratio decreased to 91.8 % (2019: 93.9 %). Pre- miums earned (net) decreased to € 10,888 mn (2019: € 11,436 mn), mainly driven by the development of gross premiums written and higher ceded premiums for retrocession. Natural catastrophes before retrocessions € mn Losses for Allianz SE Major Events in 2020 Storm Sabine/Ciara, Europe Storms, Eastern Australia Storms, South Eastern Queensland, Australia Storms, Eastern Queensland, Australia Storm Gloria, Southern Europe Severe Weather, Germany Flooding, France Thunderstorms, United Kingdom Tornado and Hail, North Italy Other Total Major Events in 2019 Storms Jörn/Klaus, Germany Typhoon Hagibis, Japan Typhoon Faxai, Japan Storm Eberhard, Northern and Western Europe Bushfires, Australia Storm Bernd, Germany Tornado, Northern Italy Storm Bennet, Northern and Western Europe Hailstorm, France Flooding, Southern France Other Total 68 59 19 18 14 10 8 8 8 8 220 Losses for Allianz SE 111 50 50 38 37 24 12 8 7 6 12 355 The run-off result (net) amounted to € 400 mn (2019: € (204) mn) and was mainly influenced by fire and property reinsurance (€ 218 mn), credit and bond reinsurance (€ 81 mn) as well as liability reinsurance (€ 71 mn). As a result, the calendar year claims ratio (net) in Property- Casualty reinsurance decreased to 69.0 % (2019: 72.3 %). The accident year claims ratio (net) in Property-Casualty reinsur- ance increased to 72.7 % (2019: 70.4 %). This was mainly driven by ad- ditional COVID-19 losses. The natural catastrophe losses of € 220 mn were under the prior year’s amount (2019: € 355 mn)1. The expense ratio (net) in Property-Casualty reinsurance decreased to 29.5 % (2019: to 30.7 %), driven by a lower commission ratio of 28.6 % (2019: 29.8 %). The administrative expense ratio slightly increased to 1.0 % (2019: 0.9 %). In Life/Health reinsurance, the net underwriting result increased to € 60 mn (2019: € (36) mn), mainly due to lower commissions. The total net underwriting result amounted to € 140 mn (2019: € (397) mn), mainly driven by the positive development of the calendar year loss ratio in Property-Casualty reinsurance in 2020. 1_Based on Group definition for large losses. 12 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE NET TECHNICAL RESULT In 2020, the change in claims equalization and similar reserves amounted to € (363) mn (2019: € 172 mn). This was mainly driven by the claims development in motor business. After the increase of equalization and similar reserves, the net technical result amounted to € (223) mn (2019: € (225) mn). NON-TECHNICAL RESULT INVESTMENT RESULT € mn Investment income Income from profit transfer agreements Income from affiliated enterprises and participations Income from other investments Realized gains Income from reversal of impairments Subtotal Investment expenses Expenses for the management of investments, interest, and other investment- related expenses Depreciation and impairments of investments Realized losses Expenses for losses taken over Subtotal Investment result 2020 2019 Change 2,373 4,487 525 302 25 7,712 2,625 4,046 521 265 94 7,551 (1,022) (1,041) (552) (167) (714) (2,454) 5,258 (245) (173) (163) (1,622) 5,929 (252) 441 4 37 (69) 161 19 (307) 6 (551) (832) (671) The investment result decreased by € 671 mn to € 5,258 mn. Income from profit transfer agreements went down by € 252 mn to € 2,373 mn, primarily due to lower profit transfers from Allianz Argos 14 GmbH and from Allianz Asset Management GmbH, which declined by € 305 mn to € 671 mn and by € 66 mn to € 396 mn, respectively. This was partly offset by a higher profit transfer from Allianz Deutsch- land AG, which rose by € 126 mn to € 1,284 mn. Income from affiliated enterprises and participations grew by € 441 mn to € 4,487 mn, mainly because the dividend payment re- ceived from our subsidiary Allianz Europe B.V. increased by € 550 mn to € 3,950 mn in 2020. Income from other investments went up slightly by € 4 mn to € 525 mn, mainly consisting of income from bonds (€ 225 mn), funds held by others under reinsurance business assumed (€ 150 mn) and in- tra-group loans (€ 101 mn). Realized gains grew by € 37 mn to € 302 mn. This increase is pri- marily attributable to realized gains from the sale of bonds, which went up by € 39 mn to € 296 mn. Income from reversal of impairments declined by € 69 mn to € 25 mn, fully stemming from write-ups related to our bond portfolio (€ 25 mn). Expenses for the management of investments, interest, and other investment-related expenses declined by € 19 mn to € 1,022 mn. This reduction was driven by lower interest expenses (€ 55 mn) as a re- sult of lower refinancing rates for the rollover of matured debt instru- ments. The overall decrease of this position was partly offset by higher investment-related expenses (€ 36 mn). Depreciation and impairments of investments rose by € 307 mn to € 552 mn. The impairments in 2020 were particularly attributable to write-downs on shares in affiliated enterprises (€ 251 mn), bonds (€ 152 mn) and investment funds (€ 141 mn). Realized losses slightly went down by € 6 mn to € 167 mn and were completely related to the sale of bonds (€ 167 mn). Expenses for losses taken over significantly increased by € 551 mn to € 714 mn. This was primarily due to a higher loss taken over from Allianz Global Corporate & Specialty SE, which grew by € 506 mn to € 518 mn. A higher loss taken over from our service pro- vider Allianz Technology SE, which went up by € 22 mn to € 163 mn and a loss taken over from Allianz Direct Versicherungs-AG amounting to € 31 mn (2019: profit transfer of € 6 mn) also contributed to this increase. OTHER NON-TECHNICAL RESULT The other non-technical result improved significantly by € 623 mn to € (891) mn. This development was primarily driven by the foreign cur- rency translation result, which improved by € 486 mn. For further infor- mation regarding other income and expenses, please refer to note 25. TAXES AND NET INCOME As far as legally permissible, Allianz SE acts as the controlling company (“Organträger”) of the German tax group that most German subsidiar- ies belong to. As the controlling company, Allianz SE is liable for the income taxes of this German tax group. After being offset against tax losses, the current tax charge of Allianz SE amounted to € (250) mn (2019: € (67) mn). Moreover, Allianz SE received a tax allocation of € 732 mn (2019: € 485 mn) by Allianz SE tax group companies that recorded taxable income. Taking into account other taxes, the income from taxes amounted to € 486 mn (2019: € 433 mn). Net income increased by € 5 mn to € 4,608 mn (2019: € 4,603 mn). Annual Report 2020 – Allianz SE 13 B _ Management Report of Allianz SE Economic outlook1 2021 will be the year of the vaccine. The progress of the global vac- cination campaign will be the decisive factor for the economic recovery from the pandemic. After a lackluster start into 2021 – due to new COVID-19 restrictions in Europe and other parts of the world – a suc- cessful vaccination of vulnerable populations (20 - 40 % of the total) should set the stage for moderate growth in the second half of 2021. Main driver of the rebound will be the return of confidence, helping to restart the service economy, to unleash forced and precautionary sav- ings, and to resume corporate investments. All in all, we expect global gross domestic product to expand by 4.6 % in 2021, with China setting the pace (+ 8.4 %) and the United States and the Eurozone registering more modest growth of 3.6 % and 4.3 %, respectively. The downside risks are sizeable. First and foremost, vaccination hurdles on the demand side (vaccination skepticism) as well as the supply side (production and distribution bottlenecks) could easily derail the recovery; in that respect, the slow start to the vaccination rollout in Europe is not promising. Other risks include an unexpected strong bout of inflation, a premature withdrawal of fiscal and mone- tary support, a spike in insolvencies and social unrest in response to rising inequalities and poverty in the aftermath of the pandemic. In our base case scenario, however, we expect policymakers to step up support to limit long-term scarring to the economy and provide a tailwind to the recovery. On the fiscal side, in Europe, safety net measures look set to be extended while in the United States stimulus spending will be stepped up in 2021. Meanwhile, central banks will continue with their bond purchases to ensure favorable refinancing rates to the public and the private sectors, with the U.S. Federal Reserve and European Central Bank maintaining record-low interest rates for the time being. At the beginning of 2021, equity markets have already consumed most of the optimism story and high valuations provide very little cush- ion against unexpected bad news. On the other hand, markets for safe assets, i.e., government bonds, embrace a more cautious stance. Our baseline scenario assumes a slight increase in yields due to reflation- ary expectations as the economic recovery unfolds. Insurance industry outlook The expected economic recovery and heightened risk awareness after the pandemic should give insurance markets some tailwinds in 2021. Premiums are likely to increase in some lines of business. One of the legacies of the pandemic that will shape 2021 (and the following years) is accelerated digitalization: digital processes and distribution channels will continue to become more relevant. Another legacy, less pleasant, are low or even negative interest rates, which have become even more entrenched. Thus, falling investment returns will impact industry profitability in 2021 and beyond. In the non-life sector, premium growth is expected to return to pre- crisis levels, with emerging markets – and particularly China – outper- forming advanced markets by a wide margin. Besides the recovery, another supportive factor is the ongoing hard market in commercial lines. On the other hand, investment income will remain under pressure and in some business lines claims from COVID-19 are likely to drag on. 1_The information presented in the sections “Economic outlook” and “Insurance industry outlook” is based on our own esti- mates. 14 Social inflation and impacts from natural catastrophes are other fac- tors that could drive claims higher and thus require thorough claims management to preserve underwriting profitability. In the life sector, premium income should largely rebound in 2021. This optimism is based on two observations: the pandemic should have raised the awareness of the need for risk cover, especially for healthcare and life insurance, and the lockdowns have swollen the amount of excess savings, parts of which might be used to bolster old-age provi- sions. But there are also reasons to be cautious: first and foremost, ultra-low interest rates, which will not only impact profitability but also continue to weigh on the demand for savings-type insurance products. Business outlook Our outlook assumes no significant deviations from our underlying assumptions – specifically:  Expected global economic recovery,  Interest rates to remain at the current level,  No major disruptions in the capital markets,  No disruptive fiscal or regulatory interference,  Level of claims from natural catastrophes at expected average levels,  An average U.S. Dollar to Euro exchange rate of 1.17. Allianz SE provides a wide range of reinsurance coverage, primarily to Allianz insurance entities (group-internal business), but also to third- party customers (external business). This includes Property-Casualty as well as Life/Health business on both a proportional and a non- proportional basis. Due to the broad spread of exposures underwritten by line of business and geography, Allianz SE’s portfolio is well diversified. Allianz Group uses Allianz SE, in particular, as a vehicle for actively managing its overall exposure to catastrophes. Under a group-wide risk management framework, each operating entity is responsible for controlling its exposure to individual catastrophes and defining its local reinsurance requirements, based on its local risk appetite and capital position. The respective cover is then provided by Allianz SE or one of its subsidiaries. At the Group level, the Allianz SE Board reviews and approves the risk appetite. The reinsurance division is then responsible for designing and implementing Group catastrophe protection within given exposure limits. These covers take various forms and aim to protect the Group against excessive losses from major natural or man-made catastrophes. However, despite measures to limit or mitigate our risks there is still the potential for an unexpected frequency and/or severity of catastrophic events that may materially impact the results of Allianz SE. The top five residual risk exposures at the Group level are summarized in the paragraph „Premium risk“ in the Risk and Opportunity Report. Compared to the previous year plan for 2020, net premiums earned were approximately 2 % lower than expected, mainly due to lower than planned quota share cessions from European Allianz entities. Driven by COVID-19 related losses, the combined ratio exceeded plan by approximately 2 percentage points and, Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE Management’s overall assessment of the current economic situation of Allianz SE At the date of issuance of this Annual Report, and based on current information regarding natural catastrophes and capital market trends – in particular foreign currency, interest rates, and equities – the Board of Management has no indication that Allianz SE is facing any major adverse developments. consequently, the net underwriting result before change in claims equalization and similar reserves was lower than plan. After several years of rate decreases, rates started moderately hardening in 2020. Following pandemic-related underwriting losses during the course of 2020 and expected global natural catastrophe events at the 10-year average level, the trend of moderate price increases has continued with 2021 renewals. We expect further improvements in risk-adjusted prices during the course of the year 2021. Allianz SE’s technical result largely depends on group-internal cessions resulting from quota share agreements with European Allianz entities. Based on our estimates, we expect slightly higher premiums and an improved net underwriting result before change in claims equalization and similar reserves for the property and casualty reinsurance in 2021. It should be noted that the actual result may vary significantly as the reinsurance business is, by nature, volatile in terms of frequency and severity of losses. Compared to our outlook, the underwriting result and the investment result deviated negatively for 2020 while we achieved an other non-technical result above plan. Overall, this resulted in both net income as well as net earnings being below our expectations. For 2021, we predict a slightly decreasing net income with almost stable net earnings. Based on our current expectation, increases in the underwriting result and the investment result will be more than offset by a decrease in the other non-technical result. We are not planning a specific foreign currency result, nor are we able to anticipate any net gains/losses from derivatives. These, however, could considerably impact the net income of Allianz SE. Given the susceptibility of our non- technical result to adverse capital market developments, we do not provide a precise outlook for the development of our net income. Nevertheless, we are ultimately planning and managing the Allianz SE net earnings in line with the Allianz Group’s dividend policy. To this end, we take advantage of the opportunity to make use of the dividends of our subsidiaries, in particular those of Allianz Europe B.V., in order to generate net earnings for Allianz SE that match the dividend policy of Allianz Group. For more detailed information on our dividend policy, see the www.allianz.com/dividend. Allianz Group’s Annual Report 2020 and Cautionary note regarding forward-looking statements This document includes forward-looking statements, such as prospects or expectations, that are based on management's current views and assumptions and subject to known and unknown risks and uncertainties. Actual results, performance figures, or events may differ significantly from those expressed or implied in such forward-looking statements. Deviations may arise due to changes in factors including, but not limited to, the following: (i) the general economic and competitive situation in the Allianz Group's core business and core markets, (ii) the performance of financial markets (in particular market volatility, liquidity, and credit events), (iii) the frequency and severity of insured loss events, including those resulting from natural catastrophes, 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, most notably the EUR/USD exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions including and related integration issues and reorganization measures, and (xi) the general competitive conditions that, in each individual case, apply at a local, regional, national, and/or global level. Many of these changes can be exacerbated by terrorist activities. No duty to update The Allianz Group assumes no obligation to update any information or forward-looking statement contained herein, save for any information we are required to disclose by law. Annual Report 2020 – Allianz SE 15 B _ Management Report of Allianz SE OPERATIONS BY REINSURANCE LINES OF BUSINESS Gross premiums written decreased by 1.3 % to € 12,228 mn (2019: € 12,384 mn). All in all, 87.8 % (2019: 87.7 %) of premiums written origi- nated from the Allianz Group’s internal business. In addition, Allianz SE continued to write business from selected external partners in order to diversify the internal portfolio. Gross premiums written and net technical result by reinsurance lines of business Gross premiums written 2020 € mn 4,823 3,401 2019 € mn 4,989 3,316 Motor Fire and property reinsurance thereof: Household and homeowner 1,118 1,080 Fire Engineering Business interruption Other property reinsurance Liability Personal accident Marine and aviation Life Legal expenses Credit and bond Health Other lines Total 894 420 255 714 868 415 236 718 1,169 1,295 416 382 375 262 198 167 1,034 12,228 403 373 317 265 314 156 957 12,384 1_For lines of business on the basis of the accurate, non-rounded amount. Combined ratio Property-Casualty Change in claims equalization and similar reserves Net technical result Change %1 (3.3) 2.6 3.5 3.1 1.3 8.1 (0.5) (9.7) 3.2 2.3 18.4 (1.0) (36.9) 7.4 8.1 (1.3) 2020 % 94.4 102.3 83.0 77.1 91.6 234.2 123.3 100.8 84.3 76.3 n/a 118.9 87.8 n/a 114.5 98.5 2019 % 105.2 98.3 90.1 99.1 97.0 108.1 109.1 113.3 75.9 113.4 n/a 102.0 90.5 n/a 103.9 102.9 2020 € mn (416) (74) - (74) - - - 12 2 (65) - 31 135 - 11 (363) 2019 € mn 24 (28) - (28) - - - 161 1 42 - 9 6 - (43) 172 2020 € mn (231) (148) 190 78 34 (315) (135) (8) 68 10 58 (18) 164 2 2019 € mn (257) 23 103 (22) 12 (17) (53) (5) 93 (6) (34) 5 35 (1) (120) (223) (77) (225) in motor reinsurance decreased by 3.3 % to Premiums written € 4,823 mn (2019: € 4,989 mn), mainly driven by an intra-group transfer of the reinsurance business with Liverpool Victoria Insurance Company. The combined ratio improved to 94.4 % (2019: 105.2 %), mainly due to a sharp decline in the accident year claims ratio to 68.2 % (2019: 77.6 %). The decline is mainly influenced by a lower claims frequency. A strengthening of the equalization reserve by € 416 mn (2019: release of € 24 mn) led to a net technical result of € (231) mn (2019: € (257) mn). The household and homeowner reinsurance portfolio increased by 3.5 %, with gross premiums written of € 1,118 mn (2019: € 1,080 mn), mainly coming from business with Allianz IARD S.A. and Allianz Versi- cherungs-AG. The combined ratio improved to 83.0 % (2019: 90.1 %), driven by a decline in the accident year claims ratio to 54.6 % (2019: increased to € 190 mn (2019: 61.4 %). The net technical result € 103 mn). The increase of the fire reinsurance portfolio is mainly caused by higher internal business volume. The combined ratio improved to 77.1 % (2019: 99.1 %), driven by a decrease of the calendar year claims ratio to 54.5 % (2019: 69.6 %) due to a higher run-off result of € 253 mn (2019: € 100 mn) as well as a lower expense ratio of 22.7% (2019: 29.6 %). After a further strengthening of the equalization reserve by € 74 mn (2019: € 28 mn), the net technical result amounted to € 78 mn (2019: € (22) mn). Engineering reinsurance premiums written mainly increased due to its business with Allianz Benelux N.V. The combined ratio was at 91.6 % (2019: 97.0 %) and thus below the previous year and mainly driven by a positive run-off result of € 31 mn (2019: € (9) mn). The net technical result rose to € 34 mn (2019: € 12 mn). The written premiums in the business interruption reinsurance in- creased by 8.1 % to € 255 mn (2019: € 236 mn) due to a higher external business volume. The combined ratio rose significantly to 234.2 % (2019: 108.1 %), mainly due to the increase of the accident year claims ratio to 199.6 % (2019: 48.4 %) caused by the COVID-19 pandemic. The net technical result amounted to € (315) mn (2019: € (17) mn). Other property reinsurance includes extended coverage for fire and business interruption as well as hail, storm, water damage, live- stock, burglary, and glass reinsurance. The premiums written declined slightly by 0.5 % due to a lower external business volume. Driven by a negative run-off result of € (55) mn (2019: € 54 mn), the combined ra- tio increased to 123.3 % (2019: 109.1 %). The net technical result amounted to € (135) mn (2019: € (53) mn). Premiums written for liability reinsurance declined by 9.7 % to € 1,169 mn (2019: € 1,295 mn), mainly driven by Allianz Global Corporate & Specialty SE which caused a decrease of the written premiums by € 130 mn. The combined ratio improved to 100.8 % (2019: 113.3 %), mainly due to a positive run-off result of € 71 mn (2019: € (350) mn). Driven by a release of the equalization reserve of € 12 mn (2019: € 161 mn), the net technical result amounted to € (8) mn (2019: € (5) mn). The premium revenue of personal accident reinsurance rose by 3.2 %, mainly driven by internal business. The combined ratio worsened to 84.3 % (2019: 75.9 %), driven by a lower run-off result of € 17 mn 16 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE (2019: € 47 mn). The net technical result decreased to € 68 mn (2019: € 93 mn). The gross premium written in marine and aviation reinsurance increased by 2.3 %. The combined ratio declined mainly due to a positive run-off result of € 55 mn (2019: € (27) mn). Despite a strengthening of the equalization reserve of € 65 mn (2019: release of € 42 mn), the net technical result was positive at € 10 mn (2019: € (6) mn). In life reinsurance, the premium revenue increased to € 375 mn (2019: € 317 mn), mainly driven by external business. The net technical result rose to € 58 mn (2019: € (34) mn), mainly driven by a decline of the commission costs that were negatively influenced by an initial com- mission for a new reinsurance contract last year. The premium revenue of legal expenses reinsurance declined slightly by 1.0 % to € 262 mn (2019: € 265 mn), driven by Allianz Ele- mentar Versicherungs-AG (€ (10) mn). On the other hand the premium income with Allianz Versicherungs-AG increased by € 7 mn. The com- bined ratio increased to 118.9 % (2019: 102.0 %) due to an increase in the calendar year claims ratio to 82.8 % (2019: 66.7 %), stemming from a higher accident year claims ratio and a lower run-off result. Despite a release of the equalization reserve with an amount of € 31 mn (2019: € 9 mn), the net technical result decreased to € (18) mn (2019: € 5 mn). Gross premiums written in credit and bond reinsurance decreased by 36.9 % to € 198 mn (2019: € 314 mn) mainly caused by the decline of the premium income amounting to € 119 mn from Euler Hermes Reinsurance AG. This development resulted mainly from the Corona- related state scheme (“Corona-Schutzschirm”) granted by the German government. Driven by a lower calendar year claims ratio of 36.2 % (2019: 50.2 %), the combined ratio improved to 87.8 % (2019: 90.5 %). The net technical result amounted to € 164 mn (2019: € 35 mn) after a higher release of the equalization reserve of € 135 mn (2019: € 6 mn). In health reinsurance the premium revenue increased by 7.4 % to € 167 mn (2019: € 156 mn), mainly driven by external business. The net technical result rose slightly to € 2 mn (2019: € (1) mn). Other reinsurance lines include:  emergency assistance,  fidelity & political risk,  motor extended warranty,  other property and casualty business. Annual Report 2020 – Allianz SE 17 B _ Management Report of Allianz SE BALANCE SHEET REVIEW Condensed balance sheet € mn as of 31 December ASSETS Intangible assets Investments Receivables Other assets Deferred charges and prepaid expenses Excess of plan assets over pension and similar obligations Total assets EQUITY AND LIABILITIES Shareholders’ equity Subordinated liabilities Insurance reserves Other provisions Funds held with reinsurance business ceded Payables on reinsurance business Other financial liabilities Deferred income 2020 2019 22 121,110 4,782 396 271 - 20 115,132 5,393 801 266 13 126,580 121,626 40,382 16,633 18,715 8,506 3,121 411 38,806 7 40,428 13,390 17,852 8,446 1,603 461 39,441 3 Total equity and liabilities 126,580 121,626 Investments € mn as of 31 December Real estate Investments in affiliated enterprises and participations Other investments Funds held by others under reinsurance business assumed 2020 272 73,489 34,220 13,129 2019 264 74,458 29,373 11,037 Total investments 121,110 115,132 The book value of investments in affiliated enterprises and participa- tions decreased by € 1.0 bn to € 73.5 bn, driven by a reduction of shares in affiliated enterprises (€ 1.8 bn), which was partly offset by a higher book value of participations (€ 0.8 bn). More details regarding this position are explained in note 5 to our financial statements. Other investments rose from € 29.4 bn to € 34.2 bn, reflecting in- creases in debt securities (€ 3.7 bn), investment funds (€ 0.6 bn), loans (€ 0.4 bn) and deposits with banks (€ 0.2 bn). At the end of 2020, € 28.5 bn of other investments were invested in debt securities, of which € 11.3 bn were government bonds. We raised our overall government bond exposure by € 1.4 bn compared to year-end 2019, thereby increasing our investments in Spanish and Italian government bonds from € 0.8 bn to € 0.9 bn and from € 0.3 bn to € 0.8 bn, respectively. Funds held by others under reinsurance business assumed increased to € 13.1 bn (2019: € 11.0 bn). This increase was mainly due to a new life reinsurance contract with Allianz Compañía de Seguros y Reaseguros S.A. Allianz SE completely retroceded this portfolio. As of 31 December 2020, the fair value of investments amounted to € 148.6 bn (2019: € 139.8 bn), compared to a carrying amount of € 121.1 bn (2019: € 115.1 bn). The increase of valuation reserves to € 27.5 bn (2019: € 24.7 bn) is primarily driven by higher fair values of bonds held by Allianz SE directly and by our subsidiaries due to the de- cline of market interest rates. Accordingly, the overall rise of valuation reserves is mostly attributable to higher net asset values of our shares in affiliated enterprises. Receivables Receivables decreased from € 5.4 bn to € 4.8 bn, driven by a decline of € 0.3 bn in other receivables and of € 0.4 bn in receivables on reinsur- ance business. The reduction in other receivables mainly resulted from lower cash pool receivables of € 0.1 bn. Shareholders’ equity As of 31 December 2020, our shareholders’ equity remained at the prior year level and amounted to € 40.4 bn (2019: € 40.4 bn). A buy- back of own shares at acquisition costs of nearly € 0.8 bn led to a de- crease. The shares were cancelled without reducing the issued capital. This decrease was partly offset by a rise of € 0.7 bn, due to net income being higher than the dividend paid and due to the sale of own shares for Employee Stock Purchase Plans. The net income remained at the prior year level and amounted to € 4.6 bn. A lower investment result was offset by a better other non-technical result. € 0.8 bn (2019: € 0.9 bn) were transferred from the net income to the revenue reserves. The Board of Management proposes to use the net earnings of € 4,376 mn for dividend payments in the amount of € 3,956 mn.1 The unappropriated earnings of € 420 mn will be carried forward. Our disclosures concerning treasury shares as required in our financial statements in accordance with § 160 (1) No. 2 AktG can be found in note 12. 18 Annual Report 2020 – Allianz SE 1_The proposal reflects the number of shares entitled to the dividend as of 31 December 2020. B _ Management Report of Allianz SE Development of shareholders’ equity and of issued shares as of 31 December 2019 Own shares: cancellation Own shares Own shares: realized gains Dividend payment for 2019 Net income Issued shares Issued capital Number 417,172,859 (4,879,731) - - - - € thou 1,169,920 - - - - - Mathematical value of own shares € thou (1,671) - 968 - - - Additional paid-in capital € thou 27,998,146 - - 33,561 - - Revenue reserves € thou 6,781,177 (759,720) 23,817 - - 760,000 Net earnings as of 31 December € thou 4,480,282 - - - (3,952,296) 3,847,731 € thou 40,427,854 (759,720) 24,785 33,561 (3,952,296) 4,607,731 as of 31 December 2020 412,293,128 1,169,920 (702) 28,031,707 6,805,274 4,375,717 40,381,915 Insurance reserves and other provisions For information on insurance reserves and other provisions, please re- fer to notes 14 and 15 to our financial statements. Financial liabilities As of 31 December 2020, Allianz SE had the following outstanding financial liabilities: Financial liabilities € mn as of 31 December Intra-group subordinated liabilities Third-party subordinated liabilities Subordinated liabilities Bonds issued to Group companies Liabilities to banks Other intra-group financial liabilities Other third-party financial liabilities Other financial liabilities Total financial liabilities 2020 2,481 14,151 16,633 2,743 - 34,528 1,534 38,806 2019 2,481 10,909 13,390 2,750 250 34,415 2,026 39,441 55,438 52,832 Of these financial liabilities, € 39.8 bn (2019: € 39.6 bn) were intra- group liabilities. Subordinated liabilities increased to € 16.6 bn (2019: € 13.4 bn). Details regarding this position are explained in note 13 to our financial statements. Liabilities to banks went down to € 0 bn (2019: € 0.3 bn) following the termination of short-term repurchase agreements amounting to € 0.3 bn. Other intra-group financial increased to € 34.5 bn (2019: € 34.4 bn) and were composed of the following posi- tions: liabilities slightly Other intra-group financial liabilities € mn as of 31 December Intra-group loans Cash pool liabilities Miscellaneous 2020 23,482 9,751 1,295 2019 24,508 9,052 855 Other intra-group financial liabilities 34,528 34,415 While liabilities from intra-group cash pooling climbed from € 9.1 bn to € 9.8 bn and miscellaneous intra-group liabilities grew from € 0.9 bn to € 1.3 bn, liabilities from intra-group loans declined from € 24.5 bn to € 23.5 bn, mostly offsetting the overall increase. In 2020, other third-party financial liabilities amounted to € 1.5 bn (2019: € 2.0 bn). This decrease was mainly driven by lower short-term liabilities from unsettled security transactions which went down by € 0.8 bn to € 0.1 bn., while the increase of margin payments received in connection with financial derivative transactions by € 0.3 bn to € 0.4 bn partially offset this decline. Annual Report 2020 – Allianz SE 19 B _ Management Report of Allianz SE LIQUIDITY AND FUNDING RESOURCES The responsibility for managing the funding needs of the Group, as well as for maximizing access to liquidity sources and minimizing bor- rowing costs, lies with Allianz SE. Allianz SE has the option to increase its share capital base according to authorizations provided by the AGM. The following table outlines Allianz SE’s capital authorizations as of 31 December 2020: Liquidity Resources and Uses Allianz SE ensures adequate access to liquidity and capital for our op- erating subsidiaries. Main sources of liquidity available to Allianz SE are dividends and funds received from subsidiaries, reinsurance pre- miums received, and funding provided by capital markets. Liquidity resources are defined as readily available assets – specifically cash, money market investments, and highly liquid government bonds. Funds are primarily used for paying interest expenses on our debt funding, claims arising from the reinsurance business, operating costs, internal and external growth investments, and dividends to our share- holders. 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 are both equity and debt funding. Equity can be raised by issuing ordinary no-par value shares. The issuance of debt in various maturities as well as group-wide liquidity management are the main sources of our debt funding. SHARE CAPITAL As of 31 December 2020, the share capital registered at the Commer- cial Register was € 1,169,920,000. This was divided into 412,293,128 no-par value shares. As of 31 December 2020, Allianz SE held 247,489 (2019: 595,677) own shares. Capital authorizations of Allianz SE Capital authorization Nominal amount Authorized Capital 2018/I1 Authorized Capital 2018/II2 Conditional Capital 2010/20183 € 334,960,000 € 15,000,000 € 250,000,000 Expiry date of the authorization 8 May 2023 8 May 2023 8 May 2023 1_For issuance of shares against contribution in cash and/or in kind, with the authorization to exclude shareholders’ subscription rights. 2_For issuance of shares to employees with exclusion of shareholders’ subscription rights. 3_To cover convertible bonds, bonds with warrants, convertible participation rights, participation rights, and subordinated financial instruments, each with the authorization to exclude shareholders’ subscription rights. For further details on Allianz SE’s authorized and conditional capital, please refer to note 12 to our financial statements. DEBT FUNDING The cost and availability of debt funding may be negatively affected by general market conditions or by matters specific to the financial services industry or to Allianz SE. Our main sources of debt funding are senior and subordinated bonds. Among others, money market securi- ties, letter-of-credit facilities and bank credit lines allow Allianz SE to fine-tune its capital structure. In 2020, we issued a € 1.0 bn subordinated bond in May and a dual tranche of subordinated bonds in November amounting to € 1.25 bn and USD 1.25 bn each. Subordinated liabilities overall increased to € 16.6 bn (2019: € 13.4 bn) at year-end. Other financial liabilities decreased to € 38.8 bn (2019: € 39.4 bn), mainly as a result of lower other third-party financial liabilities. For further details on Allianz SE’s financial liabilities, please refer to notes 13 and 16 to our financial statements. 20 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE RISK AND OPPORTUNITY REPORT Target and strategy of risk management Allianz SE aims to ensure that it is adequately capitalized at all times for the benefit of both shareholders and policyholders. This includes meeting the Solvency II regulatory capital requirements resulting from the internal model. We closely monitor the capital position and risk concentrations of Allianz SE and apply regular stress tests (including standardized, his- torical and reverse stress test scenarios). These analyses allow us to take appropriate measures to preserve our continued capital and sol- vency strength. For example, risk capital is allocated to reinsurance business segments and reflected as cost of capital in our pricing tools. Furthermore, we ensure a close alignment of the risk and business strategy by the fact that business decisions to achieve our set targets are taken within the determined risk appetite. Implemented sound processes to steer the business and assess and manage associated risks ensure a continous alignment between the risk and business strat- egy and enable us to detect and address any potential deviations. In addition, the liquidity risk management framework of Allianz SE ensures that our liquidity risks are managed and a sufficient liquidity position is maintained under both market conditions (expected as well as stressed) and business conditions. Risk governance system RISK MANAGEMENT FRAMEWORK As the holding company of the Allianz Group and as a global reinsurer, we consider risk management to be a core competency and an inte- gral part of our business. Our risk management framework covers all operations and business units of Allianz SE in proportion to the in- herent risks of the activities, ensuring that risks across Allianz SE are consistently identified, analyzed, assessed, and adequately managed. The key elements of our risk management framework are: Risk strategy and risk appetite: Our risk strategy defines our risk appetite consistently with our business strategy. It ensures that rewards are appropriate based on the taken risks and the required capital. It also ensures that delegated decision-making authorities are in line with our overall risk-bearing capacity and strategy. Risk reporting and monitoring: Our comprehensive qualitative and quantitative risk monitoring and reporting framework provides management with the transparency needed to assess whether our risk profile remains within the approved limits, and to identify emerging issues and risks quickly. For example, risk dashboard and limit utiliza- tion reports as well as scenario analyses and stress tests are regularly prepared and communicated. Communication and transparency: Transparent risk disclosure provides the basis for communicating our strategy and performance to internal and external stakeholders, ensuring a sustainable positive impact on valuation and financing. It also strengthens risk awareness and our risk culture throughout Allianz SE. Our strategy Allianz SE’s business strategy is aligned with and mainly driven by the strategy of Allianz Group. Allianz SE’s main tasks are the ownership of legal entities, in particular subsidiaries, the provision of central financing functions, and offering reinsurance services to mostly inter- nal but also external counterparties. ALLIANZ GROUP’S BUSINESS ASPIRATIONS The Board of Management of Allianz SE has defined the following objectives for Allianz Group’s medium-term strategy with the motto “Simplicity wins”:  Outperform: We seek to move ahead of our competitors, both traditional businesses and disruptors.  Transform: We seek to become simpler and deeply digital, and to  Promotion of a strong risk management culture, supported by a make our businesses more scalable. robust risk governance structure.   Consistent application of an integrated risk capital framework to protect our capital base and support effective capital management. Integration of risk considerations and capital needs into manage- ment and decision-making processes by attributing risk and allo- cating capital to the business units. Our risk management system is based on the following four pillars: Risk identification and underwriting: A robust system of risk iden- tification and underwriting forms the foundation for adequate risk and management decisions. Supporting activities include standards for underwriting, valuation methods, individual transaction approvals, emerging-/operational-/top-risk assessments, liquidity risk and sce- nario analyses, among others.  Rebalance: We seek to build leading positions in large, profitable, and fast-growing geographies as well as in new areas of business. The COVID-19 pandemic has accelerated some trends that shape the insurance markets. The altered environment has reinforced many of the strategic priorities of Allianz Group and therefore also for Allianz SE as the Holding Company. These are, for example, digital by default, simplification, rebalancing of product portfolios, and transformation towards higher resilience and agility. The COVID-19 pandemic also affects the reinsurance business segment. The extent to which claims from the pandemic are covered by existing reinsurance strongly depends on individual contract wording. However, reinsurance rates are rising in general as the market is characterized by an overall hardening. Business areas such as cyber coverage are experiencing greater demand. Cover for pandemic risks is generally not in the risk appetite of the reinsurance division and is only granted after a strict review and with clear limits. Annual Report 2020 – Allianz SE 21 B _ Management Report of Allianz SE ALLIANZ GROUP’S BUSINESS STRATEGY With regard to these strategic objectives, the Allianz SE’s Board of Management has defined a number of strategic priorities for Allianz Group, and is implementing initiatives and programs to address the five dimensions of the Renewal Agenda also for Allianz SE:  True Customer Centricity: Design intuitive products and processes to achieve loyalty leadership in our core markets.  Digital by Default: Build legacy-free platforms with automated core processes.  Technical Excellence: Move to data-driven product design, pricing, and claims handling.  Growth Engines: Systematically exploit new sources for profitable  growth. Inclusive Meritocracy: Reinforce a culture where both people and performance matter. Allianz SE’s Board of Management has also defined a strategy for the management of risks. This risk strategy places particular emphasis on protecting the Allianz brand and reputation, remaining solvent even in the event of extremely adverse scenarios, maintaining sufficient liquid- ity to meet financial obligations, and providing resilient profitability. OPPORTUNITIES The Allianz Group’s and Allianz SE’s financial strength, coupled with ongoing transformation, renders us resilient and allows us to benefit from new opportunities in a fast-changing business environment. Allianz SE’s role – as laid out in our business strategy – includes providing central financing functions to Allianz Group companies, and acting as a reinsurer with predominantly group-internal business. Op- portunities management is principally a responsibility for the Allianz Group’s primary insurance and asset management entities. Allianz SE’s activities in support of Allianz Group’s opportunity manage- ment fall mainly in the following areas: Larger risk concentrations are actively managed via retrocessions on a per risk and per event basis in order to protect our capital and increase the return on equity. Due to the vast amount of expert know-how at Allianz SE im- portant services to Group companies are provided, for example, via the reinsurance division for the MidCorp business segment with tools for pricing, accumulation management and loss control engineering services, or via the Global P&C and Global Life units for their respective business segments. In 2020, Allianz SE also supported Group efforts for simplification and digitalization, among others by building centralized expertise in product development, digital distribution platforms, and claims management. For further details on opportunities envisaged by Allianz SE, please refer to the section “Business Outlook”. Risk governance structure SUPERVISORY BOARD AND BOARD OF MANAGEMENT Allianz SE’s approach to risk governance ensures that our risk profile remains consistent with both our risk strategy and our capacity to bear risks. Within our risk governance system, Allianz SE’s Supervisory Board and the Board of Management have both Allianz SE and group-wide responsibilities. The Board of Management formulates business objectives and a corresponding risk strategy; the core ele- ments of the risk framework are set out in the Allianz Group Risk Policy approved by the Board of Management, which together with the Allianz SE-specific appendix also serves as the master risk policy for Allianz SE. The Supervisory Board advises, challenges, and supervises the Board of Management in the execution of its manage- ment activities. The following committees support the Board of Management and the Supervisory Board on risk issues.  Supporting the companies’ efforts for better customer understand- ing and evolving data analytics techniques via development of centralized expertise in data analytics, product design, and distri- bution platforms.  Supporting Allianz Group’s growth strategy via provision of fi- nancing for acquisition of M&A targets.  Reinsurance Pooling from Group companies and optimization via retrocessions, as well as reinsurance solutions to optimize their capital needs. SUPERVISORY BOARD RISK COMMITTEE The Risk Committee reports to the Supervisory Board, where the infor- mation and the findings are discussed with the Board of Management. It monitors the effectiveness of Allianz SE’s risk management frame- work. Furthermore, it focuses on risk-related developments as well as the general risks and specific risk exposures and ensures that the busi- ness strategy is aligned with the risk strategy. For more information please refer to the paragraph “Risk Com- mittee” in the Supervisory Board Report. For a detailed description of the Allianz Group’s opportunities see the annual reports of our subsidiaries. The pooling of internal reinsurance on the balance sheet of Allianz SE is an important strategic initiative which has been pursued for many years. As a Group reinsurer, the reinsurance division not only provides guidance and tools to Group companies to manage exposures as effectively as possible, but also provides most of the re- insurance covers to Group companies. The large and well diversified portfolio at Allianz SE allows for acceptances of a wide range of rein- surance structures including proportional and non-proportional con- tracts. Furthermore, net quota shares as well as adverse development covers (ADC) contribute to a very balanced portfolio at Allianz SE. GROUP FINANCE AND RISK COMMITTEE The Group Finance and Risk Committee (GFRC) provides oversight of the Group’s and Allianz SE’s risk management framework, 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. Additionally, the GFRC defines risk standards, is the limit-setting authority within the framework set by the Board of Management, and approves major financing, reinsurance and capital management transactions. Finally, the GFRC supports the Board of Management with recommendations regarding Allianz SE’s capital 22 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE Allianz SE’s actuarial function contributes towards assessing and managing risks in line with regulatory requirements, in particular for those risks whose management requires actuarial expertise. The range of tasks includes, among others, the calculation and monitoring of technical provisions, technical actuarial assistance in business plan- ning, reporting and monitoring of the results, and supporting the effec- tive implementation of the risk management system. Risk-based steering and risk management Allianz SE is exposed to a variety of risks through its holding function and reinsurance activities, including market, credit, underwriting, busi- ness, operational, strategic, liquidity, and reputational risks. Allianz SE considers diversification across different lines of busi- ness and regions to be an important element in managing our risks efficiently, as it limits the economic impact of any single event and con- tributes to relatively stable results. Our aim is to maintain a balanced risk profile without any disproportionately large risk concentrations and accumulations. With Solvency II being the regulatory regime relevant for Allianz SE since 1 January 2016, our risk profile is measured and steered based on our approved Solvency II internal model. We have introduced a target solvency ratio in accordance with Solvency II, supplemented by ad-hoc scenarios, historical and reverse stress tests, and sensitivity analyses. By that, we allow for a consistent view on risk steering and capitalization in line with the Solvency II framework. Allianz SE steers its portfolio taking a comprehensive view at risk and return, which is based on the internal model and is supported by scenario analyses. Risk and concentrations are actively restricted by limits based on our internal model or other considerations. Further- more, a comprehensive analysis of the return on risk capital1 (RoRC) is regularly conducted and translated for the underwriting of property and casualty reinsurance business. The RoRC is an indicator for new business and allows us to identify profitable lines of new business on a sustainable basis, and thus is a key criterion for capital allocation decisions. As a consequence, the internal model is fully integrated in busi- ness steering, and its application satisfies the so-called “use test” requirement under Solvency II. MARKET RISK As the holding company of the Allianz Group and as a global reinsurer, Allianz SE holds and uses a broad range of financial instruments, which are reflected on our balance sheet as both assets and liabilities. For our holding activities (i.e., to hold participations, provide financing for Group companies, cover internal pension liabilities, invest cash pooled from subsidiaries, and as the lender of last resort within Allianz Group), Allianz SE predominantly invests in participations and fixed-income assets. As an inherent part of our reinsurance operations, we collect premiums from our customers and invest them in a wide variety of assets. The resulting reinsurance investment portfolio backs the future claims and benefits to our cedents. In addition, we also invest shareholders’ capital, which is required to support the underwritten risks and the holding activities. Our market risk from liabilities primarily relates to fixed-income instruments held for financing as well as to structure, capital allocation, liquidity position, and investment strategy, including the sub-portfolio strategic asset allocations. 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, 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. As a general principle, the responsibility for the “First Line of De- fense” rests with business managers in the business units of Allianz SE. They are responsible for both the risks taken and the returns from their decisions. Our “Second Line of Defense” is made up of independent oversight functions including Risk, Actuarial, Compliance, and Legal, which support the Board of Management in defining the risk frame- work within which the business can operate. Audit forms the “Third Line of Defense”, independently and regularly reviewing Allianz SE’s risk governance implementation, compliance with risk principles, per- forming quality reviews of risk processes, and testing adherence to framework. the business standards, Allianz SE has established dedicated responsibilities for the three lines of defense at its departments (including reinsurance). internal control including RISK MANAGEMENT FUNCTION The function of the Chief Risk Officer for both the Allianz Group and Allianz SE is performed by the same person. Independent risk over- sight for Allianz SE is performed by risk control units within Group Risk and within the reinsurance department of Allianz SE. The risk manage- ment function supports Allianz SE’s Board of Management, including its committees, by performing various analyses, communicating risk management related information, and in preparing and implement- ing committee decisions. The risk management function also supports the Board of Management in developing the risk management framework – which covers risk governance, risk strategy, and appetite – and risk moni- toring and reporting. The risk management function’s operational responsibilities encompass assessing risks and monitoring limits and accumulations of specific risks across business units and business lines, including natural and man-made disasters and exposures to financial markets and counterparties. OTHER FUNCTIONS AND BODIES In addition to the risk management function for Allianz SE, Allianz SE’s legal, compliance, and actuarial functions constitute additional com- ponents of the “Second Line of Defense”. Allianz SE’s legal and compliance functions seek to mitigate legal risks for Allianz SE with support from other departments. The objec- tives of both functions 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 affecting Allianz SE, and to provide legally appropriate solutions for transac- tions and business processes. In addition, Compliance – in conjunction with Legal and other experts involved – is responsible for integrity management, which aims to protect Allianz SE and employees from regulatory risks. 1_The return on risk capital is defined as the present value of future real world profits on the capital requirement (including a buffer to regulatory requirements). Annual Report 2020 – Allianz SE 23 B _ Management Report of Allianz SE internal pensions and reinsurance liabilities. Finally, we use derivatives for various purposes. A principal example would be the hedging of planned dividend income from non-Euro subsidiaries against adverse currency market movements. In the case of high capital market vola- tility, or especially adverse market conditions, Allianz SE may also undertake hedge overlays to support the solvency of Allianz Group. Generally, the use of derivatives at Allianz SE is for the purpose of risk reduction. Guidelines are in place regarding the use of derivatives, for which adherence is monitored by the risk management function of Allianz SE. Asset/liability management (ALM) decisions are taken based on the internal model, considering both the risks and the returns on the financial markets. As the fair values of our assets and liabilities depend on changes in the financial markets, we are exposed to the risk of adverse financial market developments. Allianz SE’s most important market risk results from changes in the value of its participations in Group companies. The long-dated internal pension liabilities of German Group companies on Allianz SE’s balance sheet contribute to interest rate risk, in particular as they cannot be fully matched by available investments due to long maturities. In addition, we are also exposed to adverse changes in equity and real estate prices, credit spread levels, inflation, implied volatilities, and currency values, which might impact the value of our assets and liabilities. To measure these market risks, real-world stochastic models1 for the relevant risk factors are calibrated using historical time series to generate possible future market developments. After the scenarios for all risk factors are generated, the asset and liability positions are revalued under each scenario. The worst-case outcome of the portfolio profit and loss distribution at a confidence level of 99.5 % defines the market Value at Risk (VaR). Market risk from Allianz SE’s material M&A transactions is evaluated by assessing risk capital implications. Strategic asset allocation benchmarks are defined for several sub-portfolios of Allianz SE’s investment portfolio. Furthermore, we have risk limits in place, including financial VaR, stand-alone equity and interest rate sensitivity limits, and foreign-exchange exposure limits. Limits are closely monitored and, if a breach occurs, countermeasures are implemented which may include the escalation to certain decision- making bodies and/or the closing of positions. Finally, guidelines are in place regarding certain investments, new investment products, and the use of derivatives. EQUITY RISK Allianz SE’s equity risk predominantly results from the performance of our strategic insurance participations. Other material risk exposures reflect listed and unlisted equities, equity derivatives, own shares, and management incentive plans. Risks from changes in equity prices are normally associated with decreasing share prices and increasing equity price volatilities. As the performance of our participations might exceed expectations and stock values also might increase, opportunities may arise from partici- pations and other equity investments. In 2020, Allianz SE had in place profit-and-loss transfer agree- ments with fourteen German subsidiaries. These are listed in the paragraph „Legal obligations” in the appendix. Risk from these con- tracts is reflected via the risk capital calculation on participations. INTEREST RATE RISK If the duration of our assets is shorter than our liabilities, we may suffer an economic loss in the event of falling interest rates as we reinvest maturing assets at lower rates prior to the maturity of liability contracts. By contrast, opportunities may arise when interest rates increase. Interest rate risk is managed within our ALM process and controlled via an interest rate sensitivity limit. CREDIT SPREAD RISK Fixed-income assets such as bonds may lose value if credit spreads widen. However, our risk appetite for credit spread risk takes into account the underlying economics of our reinsurance business model. As a liability-driven investor, we typically hold fixed-income assets covering reinsurance liabilities until maturity. This implies that we are economically less affected by short-term changes in market prices. INFLATION RISK As the holding company of the Allianz Group and as a reinsurance company, we are exposed to changing inflation rates. Since inflation increases reinsurance claims and costs as well as internal pension obligations, higher inflation rates will lead to greater liabilities. Inflation assumptions are taken into account in our reinsurance underwriting. However, an unexpected rising rate of inflation will increase both future claims and expenses, leading to higher liabilities. Conversely, if future inflation rates were to be lower than assumed, liabilities would be lower than anticipated. The risk of changing infla- tion rates is incorporated in our internal model. CURRENCY RISK The major part of Allianz SE’s foreign currency risk results from our ownership of non-Euro Group companies. In addition to this risk, Allianz SE’s currency risk is driven by its non-Euro reinsurance exposure, as well as by the use of foreign currency bonds as external financing instruments. If the Euro strengthens, the Euro-equivalent net asset value of our foreign subsidiaries and the value of our non-EUR financing instru- ments will decline from Allianz SE's perspective; at the same time, how- ever, capital requirements in Euro will decrease, partially mitigating the total impact on the capitalization of Allianz SE. An additional important source of currency risk is the planned dividend income from non-Euro subsidiaries. Allianz SE’s currency risk is monitored and managed based on our foreign exchange management limit framework. CREDIT RISK Credit risk is measured as the potential economic loss in the value of our portfolio that would result from either changes in the credit quality of our counterparties (“migration risk”) or the inability or unwillingness of a counterparty to fulfill contractual obligations (“default risk”). Allianz SE’s credit risk profile comes from three sources: our invest- ment portfolio, guarantees and retrocession. 1_Internal pensions are evaluated and modeled based on deterministic models, following IAS 19 principles. 24 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE Investment portfolio: Credit risk results from our investments in fixed-income bonds, loans, derivatives, cash positions, and receivables, whose value may decrease depending on the credit quality of the obligor. Guarantees: Credit risk is caused by the potential default of Group companies on commitments from contracts with external stake- holders, which are backed with guarantees from Allianz SE. Retrocession: Credit risk to external reinsurers arises when parts of Allianz SE’s reinsurance business are retroceded to external rein- surance companies to mitigate risks. Credit risk arises from potential losses from non-recoverability of reinsurance receivables, or due to default on benefits under in-force reinsurance treaties. Our retroces- sion partners are carefully selected by a team of specialists. Besides focusing on companies with a strong credit rating, we may further require letters of credit, cash deposits, or other financial measures to further mitigate our exposure to credit risk. The internal credit risk capital model takes into account the major drivers of credit risk for each instrument, including exposure at default, rating, seniority, collateral, 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 using a clearly defined assignment process. Central components of this assignment process are long-term ratings from external rating agencies and internal rating models in case of specific internal investment strategies. If available, a dynamic adjust- ment using market-implied ratings and the most recent qualitative information available is applied. The loss profile of the portfolio is obtained using a Monte Carlo simulation, taking into account interdependencies and exposure concentrations per obligor segment. To ensure effective credit risk management, a credit VaR limit is derived from our internal risk capital framework, and rating bucket benchmarks are used to define our risk appetite for exposures in the lower investment grade and non-investment grade area. Our group-wide country and obligor group limit management framework (CRisP1) allows us to manage counterparty concentration risk, covering both credit and equity exposures at the levels of the Group and of Allianz SE. This limit framework forms the basis for dis- cussions on credit actions. Clearly defined processes ensure that expo- sure concentrations and limit utilizations are appropriately monitored and managed. UNDERWRITING RISK Allianz SE’s underwriting risk consists of premium risk and reserve risk in the Property-Casualty reinsurance business as well as of biometric risk from internal pensions and the Life/Health reinsurance business. Premium risk into three categories: natural catastrophe risk, terror risk, and non-catastrophe risk including man- made catastrophes. is subdivided Allianz SE actively manages premium risk. The assessment of risks as part of the underwriting process is a key element of our risk management framework. There are clear underwriting guidelines, limits, and restrictions in place. Excessive risks are mitigated by external retrocession agreements. All these measures contribute to a limitation of risk accumulation. We also monitor concentrations and accumulation of non-market risks on a stand-alone basis (i.e., before diversification effects) within an Allianz Group global limit framework in order to avoid substantial losses from single events such as natural catastro- phes and from man-made catastrophes such as terror or large indus- trial risk accumulations. Premium risk is estimated based on actuarial models that are used to derive claims distributions and consider the features of our reinsurance contracts (e.g., shares, limits, reinstatements, and commis- sions). Non-catastrophe risks are modeled using attritional loss models for frequency losses as well as frequency and severity models for large losses. Natural disasters, such as earthquakes, storms, and floods, represent a significant challenge for risk management due to their high accumulation potential for higher return periods. For natural catastrophe risks, we use special modeling techniques which combine portfolio data (geographic location, characteristics of insured objects, and their values) with simulated natural disaster scenarios to estimate the magnitude and frequency of potential losses. For significant expo- sures where such stochastic models do not exist, we use deterministic, scenario-based approaches to estimate potential losses. Similar approaches are used to evaluate risk concentrations for terror and man-made catastrophes including losses from cyber incidents and industrial concentrations. These loss distributions are then used within the internal model to calculate potential losses with a predefined confidence level of 99.5 %. Reserve risk represents the risk of adverse developments in best- estimate reserves over a one-year time horizon, resulting from fluc- tuations in the timing and/or amount of claims settlement. Allianz SE estimates and holds reserves for claims resulting from past events that have not yet been settled. In case of unexpected negative develop- ments, we would experience a financial loss. Reserve risk can also be mitigated by retrocession. We constantly monitor the development of reserves for reinsurance claims on a line-of-business level. In addition, Allianz SE conducts annual reserve uncertainty analyses based on similar methods used for reserve risk calculations. Where appropriate, the expertise and analysis of other Group entities is leveraged. The Allianz Group performs regular inde- pendent reviews of these analyses. PROPERTY-CASUALTY Our Property-Casualty reinsurance business is exposed to premium risk related to adverse developments in the current year’s new and renewed business as well as to reserve risk related to the business in force. Similar to premium risk, reserve risk is calculated based on ac- tuarial models. The reserve distributions derived are then used within the internal model to calculate potential losses based on a predefined confidence level of 99.5 %. As part of our Property-Casualty reinsurance operations, we receive premiums from our customers and provide insurance protection in return. Premium risk is the risk that actual claims for the business in the current year develop adversely relative to expected claims ratios. LIFE/HEALTH Underwriting risks in Allianz SE’s Life/Health reinsurance operations and from our internal pension obligations (biometric risks) include mortality, disability, morbidity, and longevity risks. Mortality, disability, and morbidity risks are associated with an unexpected increase in the 1_Credit Risk Platform. Annual Report 2020 – Allianz SE 25 B _ Management Report of Allianz SE occurrence of death, disability, or medical claims. Longevity risk is the risk that the reserves covering life annuities and pension contracts might not be sufficient due to longer life expectancies of the insured persons. Life/Health underwriting risk arises from profitability being lower than expected. As profitability calculations are based on several parameters – such as historical loss information and assumptions on inflation, mortality or morbidity – parameters realized may differ from the ones used for the calculation of pension liabilities and for under- writing. For example, higher-than-expected inflation may lead to higher medical claims in the future. However, beneficial deviations are also possible; for example, a lower morbidity rate than expected will most likely result in lower claims. We measure risks within our internal risk capital model, distinguishing, where appropriate, between risks affecting the abso- lute level and trend development of actuarial parameter assumptions on the one hand and pandemic risk scenarios on the other. function, in their capacity as the “Second Line of Defense”, identify and evaluate relevant operational risks and control deficiencies via a dialog with the “First Line of Defense”, and in close interaction with both the other “Second Line of Defense” functions at Allianz SE and with the audit function. In the IRCS approach, risk identification, assessment and controls vary between the different operational risk sources reporting, compliance and operations. For example, compliance risks are addressed via written policies. The risk of financial misstatement is mitigated by a system of internal controls covering financial reporting. Outsourcing risks are covered by an Outsourcing Policy, by Service Level Agreements, and by Business Continuity and Crisis Management programs to protect critical business functions from these events. Cyber risks are mitigated through investments in cyber security, cyber insurance Allianz SE buys from third party insurers, and a variety of ongoing control activities. Operational risk events are reported in a central database. OPERATIONAL RISK Operational risks represent losses resulting from inadequate or failed internal processes, human errors, system failures, and external events, and can stem from a wide variety of sources, for example: BUSINESS RISK Allianz SE’s business risk comprises of cost risk from Property-Casualty reinsurance business as well as policyholder behavior risk from both Life/Health and Property-Casualty reinsurance.  The category “execution, delivery and process management” describes potential losses arising from transaction or process management failures. Examples include interest and penalties from non-payment or underpayment of taxes. These losses tend to occur with little financial impact (although single large loss events can occur).  The category “clients, products & business practices” includes potential losses due to a failure to meet the professional obliga- tions, or from the design of transactions. Examples include anti- trust behavior, data protection, sanctions and embargoes. These losses can have a high financial impact; however, they tend to occur rarely. “Other operational risks” include, for example, internal and ex- ternal fraud, financial misstatement risk, and information security incidents causing business disruption or fines. Potential failures at our outsourcing partners can also cause a disruption to our working environment.  In view of Allianz SE’s tasks as holding company for Allianz Group and reinsurer, the operational risk capital of Allianz SE is dominated by the risk of potential losses within the areas of “execution, delivery and process management” and “clients, products & business prac- tices”. Operational risk capital is calculated using a scenario approach based on expert judgment as well as internal and external operational loss data. The estimates for frequency and severity of potential loss events for each material operational risk category are assessed and used as the basis for our internal model calibration. Allianz SE has implemented a group-wide operational risk management framework that focuses on the early recognition and proactive management of material operational risks. The framework defines roles and responsibilities as well as management processes and methods. An important component of this framework is the Inte- grated Risk and Control System (IRCS), which ensures that effective controls or other risk mitigation activities are in place for all significant operational risks. Risk managers in the Allianz SE risk management Cost risk is associated with the risk that administration expenses are higher than expected, or that the new business volume decreases to a level that does not allow Allianz SE to cover its fixed costs. Assumptions on policyholder behavior are set in line with accepted actuarial methods and are based on our own historical data, if and as available. If there is no historical data, assumptions are based on industry data or expert judgment. Reflecting the business model of Allianz SE as primarily a group- internal reinsurer, business risk is minor. OTHER RISKS (NOT COVERED BY THE INTERNAL MODEL) There are certain risks which, due to their nature, cannot be adequately addressed or mitigated by additional capital and are therefore not considered in the internal risk capital model. For the identification, analysis, assessment, monitoring, and management of these risks, we also use a systematic approach, with risk assessment generally based on qualitative criteria or scenario analyses. The most important of these other risks are strategic, liquidity and reputational risk. STRATEGIC RISK Strategic risk is the risk of a decrease in the company’s value arising from adverse management decisions on business strategies and their implementation. Strategic risks are identified and evaluated as part of the Allianz Group’s and Allianz SE’s Top Risk Assessment processes and discussed in various Board of Management-level committees (e.g., the Group Finance and Risk Committee). We also monitor market and competitive conditions, capital market requirements, regulatory condi- tions, etc., to decide if strategic adjustments are necessary. The most important strategic risks are directly addressed through Allianz’s Renewal Agenda, which focuses on True Customer Centricity, Digital by Default, Technical Excellence, Growth Engines and Inclusive Meritocracy. Progress on mitigating strategic risks and meeting the Renewal Agenda objectives are monitored and evaluated in the 26 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE All affected Allianz SE functions cooperate in identifying reputational risk. Group Communications and Reputation1 assesses reputational risk for Allianz SE based on a group-wide methodology, covering all areas of reputational risk including Environmental, Social, and Governance (ESG) risks. The identification and assessment of reputational risks is part of the annual Top Risk Assessment process. As part of this process, senior management approves the risk management strategy for the most significant risks facing the company, including those with a potentially severe reputational impact. In addition, significant ESG and other reputational risks identified in the course of business (direct reputa- tional risk) are managed on a case-by-case basis. CLIMATE CHANGE Climate change has the potential to materially affect the global economy and the business of Allianz Group and Allianz SE, especially in the long run. Risks arising from climate change can be seen already today and their relevance will increase over the mid- and long-term. These can for instance be acute and chronic physical risks such as warming temperatures, extreme weather events, rising sea levels, intensifying heatwaves and droughts, or a change in vector-borne diseases, with impacts on property or health. The risks also result from the cross-sectoral structural change stemming from the transition towards a low-carbon economy. These include changes in climate policy, technology, or market sentiment, and impact thereof on the market value of financial assets as well as impact resulting from climate change litigation. Climate change also creates opportunities, be it in connection with financing a low-carbon and climate-resilient future (e.g., by investing in renewable energy, energy efficiency in real estate, and electric vehicle infrastructure), or by providing insurance solutions to protect against physical climate impacts and to support low-carbon business models. Climate change impacts the reinsurance business of Allianz SE in two key ways:  First, through the provided cover, e.g., for health impacts, property damage, and other losses and  Second, through changes in market sectors and business models Furthermore, Allianz Group and Allianz SE are affected as large-scale institutional investors. Allianz has significant stakes in various econo- mies, companies, infrastructure, and real estate that might be affected by the physical impact of climate change and by the transition to a low-carbon economy. This can directly influence the ability of assets to generate long-term value. We address immediate risks from climate change factors fol- lowing the management approach for the primary underlying risks, e.g., building on Allianz’s long-term expertise in the modeling of extreme weather events or analyzing emission profiles of our proprie- tary investments. On a forward-looking basis, we consider risks from climate change factors under emerging risks, where we closely monitor the development of the risk landscape supported by selective analyses on our portfolios. course of the Strategic and Planning Dialogue between Allianz SE’s Board of Management and the operative functions of Allianz SE. LIQUIDITY RISK Liquidity risk is defined as the risk that current or future payment obli- gations cannot be met or can only be met on the basis of adversely altered conditions. Liquidity risk can arise primarily if there are mis- matches in the timing of cash in- and outflows. The investment strategy of Allianz SE particularly focuses on the quality of investments and ensures a significant portion of liquid assets in the portfolio (for example, high-rated government or covered bonds). We employ actuarial methods for estimating our liabilities aris- ing from reinsurance and internal pension contracts. In our liquidity planning process, we reconcile liquidity sources (such as dividends received from subsidiaries, cash from investments and premiums) and liquidity needs (including payments due to dividends to shareholders, reinsurance claims and expenses) under a best-estimate plan as well as under idiosyncratic and systemic adverse liquidity scenarios. The main goal of planning and managing Allianz SE’s liquidity position is to ensure that we are always in a position to meet payment obligations. To comply with this objective, the liquidity position of Allianz SE is monitored and forecasted on a daily basis. Allianz SE’s short-term liquidity is managed within Allianz SE’s cash pool, which serves as a central tool also for investing the excess liquidity of other Group companies. The accumulated short-term liquidity forecast is updated daily. The cash position in this portfolio is subject to an absolute minimum liquidity threshold and an absolute target liquidity threshold. Both thresholds are defined for the Allianz SE cash pool in order to be protected against short-term liquidity crises. As part of our liquidity stress testing framework, contingent liquidity requirements and sources of liquidity are taken into account to ensure that Allianz SE is able to meet any future payment obliga- tions even under adverse conditions. Major contingent liquidity requirements include non-availability of external capital markets, combined market and catastrophe risk scenarios for subsidiaries as well as lower than expected profit transfers and dividends from subsidiaries. In order to protect Allianz Group against the liquidity impact of adverse risk events beyond those covered by the capital and liquidity buffers at our subsidiaries, Allianz SE holds a strategic liquidity reserve for which the target level is re-evaluated annually. The strategic liquidity planning for Allianz SE covering the time horizons of one calendar year (more granular) and three calendar years is regularly reported to the Board of Management. REPUTATIONAL RISK Allianz SE’s reputation as a well-respected and socially aware holding and reinsurance company is influenced by our behavior in a range of areas, such as financial performance, quality of reinsurance underwriting and customer service, corporate governance, employee relations, intellectual capital and corporate responsibility. Reputational risk is the risk of an unexpected drop in the value of the Allianz share price, the value of the in-force business, or the value of the future business caused by a decline in our reputation in internal or external stakeholders’ judgement. 1_As of 1 January 2021, Group Communications and Corporate Responsibility was renamed into Group Communications and Reputation. Annual Report 2020 – Allianz SE 27 B _ Management Report of Allianz SE Internal risk capital framework ASSUMPTIONS AND LIMITATIONS We define internal risk capital as the capital required to protect us against unexpected, extreme economic losses. It forms the basis for determining our Solvency II regulatory capitalization. We calculate Allianz SE’s internal risk capital on a quarterly basis in total as well as for all contributing business units. During periods of financial market turbulence, we also project the risk capital requirements for one reporting period more frequently. GENERAL APPROACH We utilize an approach that reflects the Solvency II rules for the management of our risk profile and solvency position. INTERNAL 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 portfolio value in scope of the model within a specified timeframe (“holding period”, set at one year) and probability of occurrence (“confidence level”, set at 99.5 %). We simu- late risk events from all risk categories modeled (“sources of risk”) and calculate the portfolio value based on the net fair value of assets minus liabilities, including risk-mitigating measures like retrocession or derivatives, under each scenario. The required risk capital is defined as the difference between the current portfolio value and the portfolio value under adverse condi- tions at the 99.5 % confidence level. As we simultaneously consider the impact of a negative or positive event on all covered businesses, diver- sification 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. We also analyze several pre-defined stress scenarios, representing historical events, reverse stress tests and adverse scenarios relevant for our portfolio. Furthermore, we conduct ad-hoc stress tests to reflect current political and financial developments and to analyze specific non-financial risks more closely. COVERAGE OF THE RISK CAPITAL CALCULATIONS Allianz SE’s internal risk capital model to calculate the Solvency Capital Requirement (SCR) covers the activities of Allianz SE as the holding company for Allianz Group as well as its activities as a reinsurer. Whereas the model treats most subsidiaries as participations, it applies a look-through rule for 35 subsidiaries and investment funds, which are ancillary to Allianz SE’s operations (mainly by holding assets), and reflects their risks on a granular level either completely or partially. The risk capital model covers all relevant assets (including fixed- income instruments, equities, real estate, and derivatives) and liabili- ties (including the run-off of all technical provisions as well as deposits, issued debt and other liabilities such as guarantees). Therefore, Allianz SE’s risk capital framework covers all material and quantifiable risks. Risks specifically not covered by our internal model include strategic, liquidity, and reputational risks. 1_Due to late availability of the EIOPA publication, the risk-free interest rate term structure used might slightly differ from the one published by EIOPA. RISK FREE RATE AND VOLATILITY ADJUSTMENT When calculating the fair values of assets and liabilities (excluding pensions obligations), the assumptions regarding the underlying risk- free yield curve are crucial in determining and discounting future cash flows. For extrapolation of the risk-free interest rate curves beyond the last liquid tenor, we apply the methodology provided by the European Insurance and Occupational Pensions Authority (EIOPA) in its technical documentation (EIOPA BoS-20/109).1 In addition, we partially adjust the risk-free yield curves of the reinsurance portfolio using a volatility adjustment (VA) for most mar- kets where a volatility adjustment is defined by EIOPA and approved by BaFin. This is done to better reflect the underlying economics of our business. The advantage of being a long-term investor is the opportunity to invest in bonds yielding spreads over the risk-free return and earning this additional yield component over the duration of the bonds. Being a long-term investor mitigates much of the risk of forced selling of debt instruments at a loss prior to maturity. The approach of the Allianz Group to model the volatility adjust- ment with the help of a dynamic component differs methodologically from replicating the EIOPA VA methodology. To account for deviations with respect to the EIOPA VA methodology, the Allianz Group applies a more conservative, reduced application ratio for the dynamic vola- tility adjustment. DIVERSIFICATION AND CORRELATION ASSUMPTIONS Our internal model considers concentration, accumulation, and corre- lation effects when aggregating results for Allianz SE. The resulting diversification reflects the fact that all potential worst-case losses are not likely to materialize at the same time. Diversification typically occurs when looking at combined risks that are not, or only partly, interdependent. Important diversification factors include regions (for example, windstorm in Australia versus windstorm in Germany), risk categories (for example, market risk versus underwriting risk), and subcategories within the same risk category (for example, equity risk versus interest rate risk). Ultimately, diversification is driven by the specific features of the investments or reinsurance transactions in question and their respective risk expo- sures. For example, an operational risk event at the Allianz SE branch in Singapore can be considered to be highly independent of a change in the credit spread for a French government bond held in Allianz SE’s reinsurance investment portfolio in Munich. Where possible, the Allianz Group derives correlation parameters for each pair of market risks through statistical analysis of historical market data, considering observations over more than a decade. In case historical data or other portfolio-specific observations are insuf- ficient or unavailable, correlations are set by the Allianz Group Corre- lation Setting Committee, which combines the expertise of risk and business experts in a well-defined and controlled process. In general, when using expert judgment, we set the correlation parameters to represent the joint movement of risks under adverse conditions. Based on these correlations, the Allianz Group uses an industry-standard approach, the Gaussian copula, to determine the dependency structure of quantifiable sources of risk within the applied Monte Carlo simulation. 28 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE ACTUARIAL ASSUMPTIONS Our internal model also includes assumptions on claims trends, liability inflation, mortality, morbidity, longevity, policyholder behavior, expenses, etc. We use our own internal historical data for actuarial assumptions wherever possible, leverage expertise of other Allianz Group companies in the scope of the internal model, and also consider recommendations from the insurance industry, supervisory authorities, and actuarial associations. The derivation of our actuarial assumptions is based on generally accepted actuarial methods. Within our internal risk capital and financial reporting framework, comprehensive processes and controls exist for ensuring the reliability of these assumptions. MODEL LIMITATIONS As the internal model is based on a 99.5 % confidence level, there is a low statistical probability of 0.5 % that actual losses could exceed this threshold at the Allianz SE 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 were to differ substantially from the past, for example in an unprecedented crisis, our VaR approach might be too conservative or too liberal in ways that are difficult to predict. In order to mitigate reliance on historical data, we complement our VaR analysis with stress testing. Furthermore, we validate the model and parameters through sensitivity analyses, independent internal peer reviews, and – where appropriate – independent external reviews, focusing on methods for selecting parameters and control processes. Overall, we believe that our validation efforts are effective and that the model adequately assesses the risks to which we are exposed. Since the internal model takes into account the change in the economic fair value of our assets and liabilities, it is crucial to estimate the market value of each item accurately. For some assets and liabili- ties it may be difficult, if not impossible – notably in distressed financial markets – to either obtain a current market price or to apply a meaningful mark-to-market approach. For such assets we apply a mark-to-model approach. For some of our liabilities, the accuracy of their values additionally depends on the quality of the actuarial cash flow estimates. Despite these limitations, we believe the estimated fair values are appropriately assessed. While the aggregate risk capital is exactly modeled, the whole account stop loss construction1 leads to the use of approximations when reporting contributory risk capital figures for the sub-categories of underwriting risk as the individual contributions have to be approximated based on the underlying distributions. MODEL CHANGES IN 2020 In 2020, our internal model has been further enhanced based on regulatory developments, model validation results, and feedback received by Allianz Group in the course of consultations with the regu- lator. Overall, the model changes implemented in 2020 decreased the Solvency II risk capital of Allianz SE by € 420 mn. In the subsequent sections, the risk figures for 2019 after model changes will form the basis for the analysis of the changes in our risk profile in 2020. Allianz SE: Impact of model changes; Allocated risk according to the risk profile € mn as of 31 December Market risk Credit risk Underwriting risk Business risk Operational risk Diversification Total Allianz SE 2019¹ 36,998 566 3,474 48 660 (3,798) 37,948 2019² 37,524 559 3,407 48 657 (3,827) 38,368 1_2019 risk profile figures recalculated based on model changes in 2020. 2_2019 risk profile figures as reported previously. The changes to our internal model affected the risk categories and diversification as follows: MARKET, CREDIT AND UNDERWRITING RISK The implementation of several model changes, together with updates of the central correlation matrix and real world scenarios (including new random numbers) decreased market risk by € 526 mn, also led to an increase in credit risk by € 7 mn, and caused an increase in under- writing risk by € 67 mn. OPERATIONAL RISK Operational risk increased by € 3 mn, driven by the updates of the central correlation matrix and the real world scenarios. DIVERSIFICATION The update of the correlation matrix, together with the indirect impact of various other model changes, reduced the risk capital relief from the diversification between risk categories by € 29 mn. Risk profile and management assessment RISK PROFILE AND MARKET ENVIRONMENT The quantitative risk profile of Allianz SE is primarily dominated by market risk that results from its non-traded insurance participations when measured in a manner consistent with the treatment of par- ticipations under Solvency II (e.g., without looking through to the under- lying risks behind the participations). In order to provide greater trans- parency, the Group risk figures as reflected in the Allianz Group Annual Report can be interpreted as a “look-through” view at the consolidated risk profile represented by all of the Group’s participations as well as those risks unique to Allianz SE. The second largest risk for Allianz SE from an internal model perspective is the underwriting risk arising from its reinsurance business and from internal pension obligations. 1_Whole account stop loss reinsurance contract between Allianz SE and Allianz Re Dublin dac. Annual Report 2020 – Allianz SE 29 B _ Management Report of Allianz SE From a broad perspective, the overall risk profile of Allianz SE has remained and is expected to remain stable. “Stable” in this context means a relatively very high exposure to market risk, in particular from participations equity generated by our holding of Allianz Group subsidiaries, a high exposure to underwriting risk and moderate exposures to operational risk and credit risk (i.e., measured as a share of the Allianz SE’s Solvency II risk capital). Please refer to the section “Solvency II regulatory capitalization” for further details. To support the development of a risk appetite and a risk management framework for these core risks, Allianz SE has elaborated the following risk management philosophy:  Financial risks: Allianz SE’s objective is to support the Group strategy while ensuring that financial risk taking is in line with its risk bearing capacity. To manage financial risk effectively, it is essential to clearly identify, measure, monitor and control the risks inherent especially in the investment portfolios, financing transac- tions, the reinsurance portfolio and the internal pension obliga- tions.  Underwriting risks: Exposures to these risks are accepted when acting as a reinsurer for predominantly Group-internal business. Quality control mechanisms are applied to ensure adherence to Allianz Group’s underwriting standards and to monitor the quality of the portfolio, the underwriting and retrocession processes. These processes must support sustainable and profitable business deci- sions, and need to be aligned with the risk appetite of Allianz SE and the Group as well as avoid undesired and/or excessive risks and accumulations. The full economic consequences of a pan- demic event such as COVID-19 are uninsurable. The required capital for effective protection against such an accumulation of risks would require premium rates that are unattractive for the customers, if not unaffordable. In addition, a pandemic affects multiple lines of business such as business interruption, travel, event cancellations, but also liability lines as well as increases in medical costs and mortality. On top the impact on capital markets needs consideration.  Other non-financial risks: These risks are inherent to Allianz SE as holding company and reinsurer for Allianz Group, and need to be carefully managed via continuous improvements in risk identifica- tion, risk assessment and control environments. This occurs through elements of the risk management framework such as the Top Risk Assessment (TRA), Integrated Risk and Control System (IRCS), Reputational Risk Management Framework, and Liquidity Risk Management. POTENTIAL RISKS IN THE FINANCIAL MARKETS AND IN OPERATING ENVIRONMENT Financial markets are characterized by historically low interest rates and low risk premiums, prompting some investors to look for higher- yielding – and potentially higher-risk – investments. In addition to sustained low interest rates, the challenges of implementing long- term structural reforms in key Eurozone countries, the uncertainty about future monetary and fiscal policies, rising populism, amplified geopolitical tensions and economic nationalism amid the pan- demic, which weigh on global trade with the potential of prompting long-term structural shifts in global supply chains, may lead to increasing market volatility. The increasing reliance on digital technologies, which has been greatly accelerated by the COVID-19 pandemic – to ensure business continuity and enhance efficiency and competitiveness – increases the risk of technology obsoles- cence, cyber-attacks, data breaches and system failures. There is also the risk of noncompliance with increasing regulation covering IT related business processes. The uncertainty around the evolution of the COVID-19 pandemic remains a significant risk. The approval, production, distribution, and correct administration of the vaccines are critical in alleviating the social, economic, and financial repercussions of the pandemic. The steps are subject to a number of challenges such as the efficacy of the vaccines, high-quality mass production, potential long-term side effects and the willingness of a majority of the population to get vac- cinated. Full economic recovery is not expected to occur until the health concerns are forcefully and credibly addressed, i.e., the herd immunity is achieved. Global vaccination is expected to be eventually successful; however, the timing and progress appear uncertain. Residual risks will remain such as further virus mutations, emerging side effects, length of the immunity, or refusal to take vaccines by the majority of the population as most authorities do not intend to make vaccination compulsory. The extended containment (lockdown) measures risk delaying economic recovery, with significant credit impli- cations in some industries. The pace and timing of recovery, the overall economic cost, and credit implications will depend on an effective transition to post-COVID policies, as less supportive fiscal packages could hurt employment and the solvency of small or more exposed businesses. Another strain is the future relationship between the United King- dom and the European Union as the Trade and Cooperation Agree- ment negotiated between them enters into force in 2021. Therefore, we continue to closely monitor political and financial developments as well as the global trade situation to manage our overall risk profile to specific event risks. REGULATORY DEVELOPMENTS Our approved internal model has been applied since the beginning of the year 2016, when Solvency II became effective. In addition, future Solvency II capital requirements might change depending on the outcome of the 2020 review of the Solvency II framework by EIOPA. Concrete effects of the Solvency II review for Allianz SE, however, can only be assessed after final results are available, which is not expected before end of 2022. MANAGEMENT ASSESSMENT Allianz SE’s management feels comfortable with Allianz SE’s overall risk profile and is confident that the effectiveness of its risk manage- ment framework meets both the challenges of a rapidly changing environment and the day-to-day business needs. This confidence is based on several factors:  Due to its effective capital management, Allianz SE is well capi- talized. We have met our internal and regulatory solvency targets as of 31 December 2020.  As a result of COVID-19 pandemic, Allianz SE and Allianz Group experienced the following: 30 Annual Report 2020 – Allianz SE  Losses in the Property-Casualty (re-)insurance business seg- ment resulted from business interruption coverage and accu- mulations from the entertainment sector.  There is a potentially higher market risk, mainly due to the volatility of equity prices and interest rates. Allianz SE has supported Allianz Group’s risk mitigating measures, for example via implementing an overlay credit default swap (CDS) protection.  Elevated reputational risk, as lawsuits with respect to business interruption policies of Allianz Group companies could affect Allianz SE’s and Allianz Group’s purpose statement depending on media coverage and public perception. In addition increased regulatory pressure can be observed regarding dividend pay- ments of insurance companies and insurance holdings.  Business continuity and employer liability remain a focus area. The implementation of a new work model is key to addressing employer liability risks resulting from the accelerated trend by COVID-19 to work from home. This is accompanied with respective changes in IT risk management.  Allianz SE is well positioned to deal with potentially adverse future events such as from the COVID-19 pandemic – due to our strong internal limit framework, stress testing, internal model, and risk management practices.  Allianz SE has a conservative investment profile and disciplined business practices in the reinsurance business, leading to sustaina- ble operating earnings with a well-balanced risk-return profile. Based on the information available to us at the moment of report completion, including the known impacts of COVID-19, we expect Allianz SE to continue to be sufficiently capitalized and compliant with both the regulatory Solvency Capital Requirement and the Minimum Capital Requirement. We also expect to maintain a robust liquidity buffer in case of short term market volatility. However, we are care- fully monitoring the development of the COVID-19 pandemic and managing our investment portfolio to ensure that Allianz SE has suf- ficient resources to meet its solvency capital and liquidity needs. SOLVENCY II REGULATORY CAPITALIZATION Allianz SE’s own funds and capital requirements are based on the market value balance sheet approach consistent with the economic principles of Solvency II.1 Our regulatory capitalization is shown in the following table: Allianz SE: Solvency II regulatory capitalization B _ Management Report of Allianz SE As of 31 December 2020, the Solvency II capitalization of Allianz SE is at 257 %. The increase by 15 percentage points in year 2020 was caused by a € 1.4 bn decrease in risk capital requirements, combined with a € 2.1 bn increase in eligible own funds. The Allianz Group companies Allianz Lebensversicherungs-AG and Allianz Private Krankenversicherungs-AG have been granted approval for the application of transitionals on technical provisions. The resulting change in participation values impacts Allianz SE’s own funds and capital requirements. Including the application of transi- tional measures for technical provisions at these Allianz Group compa- nies, Allianz SE’s own funds and capital requirement amounted to € 108.6 bn and € 41.5 bn, leading to a Solvency II ratio of 262 %. How- ever, the general capital steering for both Allianz Group and Allianz SE continues to focus on the previous approach, i.e., excluding the ap- plication of transitional measures for technical provisions at Allianz Group companies. Consequently, the figures in all subsequent sections exclude transitional measures applied at Allianz Group com- panies unless otherwise stated. Quantifiable risks and opportunities by risk category This Risk and Opportunity Report outlines Allianz SE’s risk figures, reflecting its risk profile based on pre-diversified risk figures and Allianz SE diversification effects. We measure and steer risk based on an approved internal model, which measures the potential adverse developments of Own Funds. The results provide an overview of how our risk profile is distributed over different risk categories, and determine the regulatory capital requirements in accordance with Solvency II. The pre-diversified risk figures reflect the diversification effects within each modeled risk category (i.e., within market, credit, under- writing, business, and operational risk) but do not include the diversifi- cation effects across risk categories. The Allianz SE diversified risk also captures the diversification effects across all risk categories. The Allianz SE diversified risk is broken down as follows: Allianz SE: Allocated risk according to the risk profile € mn as of 31 December Market risk Credit risk Underwriting risk Business risk Operational risk 2020 35,876 636 3,709 42 632 (3,893) 37,003 2019 36,998 566 3,474 48 660 (3,798) 37,948 as of 31 December Own funds Capital requirement Capitalization ratio € bn € bn % 2020¹ 95.0 37.0 257 2019² Diversification Total Allianz SE 92.9 38.4 242 1_Excluding the application at other Allianz Group companies of transitional measures for the valuation of technical provisions. 2_2019 risk profile figures as reported previously. As of 31 December 2020, Allianz SE’s diversified risk capital amounted to € 37.0 bn (2019: € 37.9 bn). This represents a slight increase in the diversification benefit by 0.4 % to 9.5 %. 1_Own funds and capital requirement are calculated under consideration of volatility adjustment and yield curve extension, as described in section “Risk free rate and volatility adjustment assumptions”. Annual Report 2020 – Allianz SE 31 B _ Management Report of Allianz SE The decrease in Solvency II capital requirements was mainly due to lower market risk. The following sections outline the evolution of the risk profile per modeled risk category. All risks are presented on a pre-diversified basis and concentrations of single sources of risk are discussed accordingly. MARKET RISK The following table presents the market risk of Allianz SE related to the source of risk: Allianz SE: Risk profile – Market risk by source of risk pre-diversified, € mn as of 31 December Interest rate Inflation Credit spread Equity Real estate Currency 2020 30 (333) 247 35,668 123 141 2019 23 (329) 344 37,145 200 (385) Total Allianz SE 35,876 36,998 For Allianz SE, the pre-diversified market risk as of year-end 2020 shows a decrease of € 1,122 mn driven by a reduction in equity risk. INTEREST RATE RISK In 2020, the interest rate risk of Allianz SE increased by € 7 mn, mainly caused by diversification effects. As of 31 December 2020, Allianz SE’s interest-rate-sensitive assets amounting to a market value of € 48.1 bn would have gained € 2.5 bn or lost € 2.2 bn in value, in the event of interest rates changing by -100 and +100 basis points, respectively. INFLATION RISK The € 4 mn increase in the market risk relief that results from inflation risk in 2020 mainly results from the impact of lower interest rates. EQUITY RISK In 2020, Allianz SE’s equity risk decreased by € 1,477 mn, reflecting, among other things, a change in the value of participations in Allianz Group companies. As of 31 December 2020, those of our investment assets that are sensitive to changing equity markets would have lost € 208 mn in value, assuming equity markets declined by 30 %. CREDIT SPREAD RISK Allianz SE’s credit spread risk is € 97 mn lower than in 2019, mainly reflecting the implementation of an overlay credit default swap (CDS) protection. REAL ESTATE RISK The € 77 mn decrease in 2020 primarily reflects diversification effects. CURRENCY RISK Allianz SE’s € 141 mn currency risk at year-end 2020 results from net open positions in several currencies, dominated by the U.S. Dollar. The € 526 mn increase in the contribution to market risk is mainly caused by diversification effects. CREDIT RISK Allianz SE’s credit risk slightly increased by € 70 mn in 2020, mainly reflecting additional bond investments. UNDERWRITING RISK The following table presents the pre-diversified risk calculated for underwriting risks stemming from our reinsurance business and internal pensions:1 Allianz SE: Risk Profile – Underwriting risk by source of risk pre-diversified, € mn as of 31 December Premium natural catastrophe Premium non-catastrophe and terror Reserve Biometric Total Allianz SE 2020 332 1,544 1,647 186 2019 371 1,496 1,465 143 3,709 3,474 For Allianz SE, the pre-diversified underwriting risk showed an increase of € 235 mn, driven by an increase in reserve risk. PROPERTY-CASUALTY Premium risk In 2020, Allianz SE’s natural catastrophe risk decreased by € 39 mn. The top five scenarios contributing to Allianz SE’s natural catas- trophe risk as of 31 December 2020 were a windstorm in Europe, a flood in Germany, a tropical cyclone in Australia, an earthquake in Turkey, and an earthquake in Australia. Allianz SE’s non-catastrophe and terror premium risk increased by € 48 mn in 2020. Reserve risk Among others, the € 182 mn increase in Allianz SE’s reserve risk in 2020 reflects an increase in reserves from group-internal quota shares. LIFE/HEALTH In 2020, Allianz SE’s biometric risk is € 43 mn higher than in 2019. The main driver is an increase in longevity risk from internal pension obligations reflecting lower interest rates. 1_Impact of whole account stop loss reinsurance contract between Allianz SE and Allianz Re Dublin dac on pre-diversified insurance risks: For premium natural catastrophe risk rise of € 74 mn (2019: € 44 mn), for premium non-catastrophe and terror risk rise of € 347 mn (2019: € 177 mn). 32 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE BUSINESS RISK Business risk decreased by € 6 mn, mainly due to lower lapse risk from quota shares. OPERATIONAL RISK The decrease of € 28 mn shown in the operational risk mainly results from a reassessment of potential tax-related operational losses. LIQUIDITY RISK Detailed information regarding Allianz SE’s liquidity risk exposure, liquidity, and funding – including changes in cash and cash equivalents – are provided in the chapter Liquidity and Funding Resources. As in- ferred from the section on the management of liquidity risks, they are quantified and monitored through regular stress test reporting and properly managed but are not quantified for risk capital purposes. Annual Report 2020 – Allianz SE 33 B _ Management Report of Allianz SE INTEGRATED RISK AND CONTROL SYSTEM FOR FINANCIAL REPORTING The following information is provided pursuant to § 289 (4) of the HGB. In line with both our prudent approach to risk governance and compliance with regulatory requirements, we have created a frame- work and processes to identify and mitigate the risk of material errors in our financial statements (this also includes market value balance sheet and risk capital controls). Allianz SE’s Integrated Risk and Con- trol System (IRCS) is regularly reviewed and updated. It differenti- ates between three areas: Financial Reporting, Compliance and other operational risks (including IT risks). The IT controls are based on COBIT 5 and include, for example, controls for access rights man- agement, and for IT project and change management. The IRCS also covers external service providers. Additionally, our Entity Level Control Assessment (ELCA) framework contains controls to monitor the effectiveness of the system of governance. Accounting Processes The accounting processes we use to produce financial statements are based on a group-wide IT solution and local general ledger. Access rights to accounting systems are managed according to strict authori- zation procedures. Internal controls are embedded in the accounting processes to safeguard the accuracy, completeness, and consistency of the infor- mation provided in our financial statements. Integrated internal Risk and Control System Approach Our approach can be summarized as follows:  We use a centrally developed risk catalogue that is linked to indi- vidual accounts. This risk catalogue is reviewed on a yearly basis and is the starting point for the definition of the Group’s as well as of Allianz SE’s scope of financial reporting risks. The methodology is described in the IRCS-Guideline. During the scoping process, both materiality and susceptibility to a misstatement are considered simultaneously. In addition to the quantitative calculation, we also consider qualitative criteria.  Based on the centrally provided risk catalogue, we identify risks that could lead to material financial misstatements.  Preventive and detective key controls to address financial re- porting risks have been put in place to reduce the likelihood and impact of financial misstatements. If a potential risk materializes, actions are taken to reduce the impact of the financial misstatement. Given the strong dependence of financial reporting processes on IT systems, we have also implemented IT controls.  Last but not least, we ensure that controls are appropriately designed and effectively executed to mitigate risk. We conduct an annual assessment of our control system to maintain and con- tinuously enhance its effectiveness. Internal audit ensures that the overall quality of our control system is subject to regular control testing, to assure reasonable design and operating effectiveness. 34 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE STATEMENT ON CORPORATE MANAGEMENT The Statement on Corporate Management forms part of the Group Management Report. According to § 317 (2) sentence 6 of the German Commercial Code (“Handelsgesetzbuch – HGB”), the audit of the dis- closures is limited to whether the relevant disclosures have been made. Declaration of Conformity in accordance with § 161 of the German Stock Corporation Act 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) 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-Ausfüh- rungsgesetz”) in addition to the German SE Employee Involvement Act (“SE-Beteiligungsgesetz”). Notwithstanding, 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 Supervisory Board – have been maintained by Allianz SE. The Corporate Constitution of Allianz SE is laid down in its Statutes. The current version of the Statutes is available www.allianz.com/statutes. on our website at Regulatory requirements The regulatory requirements for corporate governance (system of governance) applicable for insurance companies, insurance groups, and financial conglomerates apply. Specifically, they include the establishment and further design of significant control functions (independent risk control function, actuarial function, compliance function, and internal audit) as well as general principles for a sound business organization. These regulatory requirements are applicable throughout the Group in accordance with the principle of pro- portionality. The implementation of the regulatory requirements is supported by written guidelines issued by the Board of Management of Allianz SE. Furthermore, Solvency II requires the publication of qualitative and quantitative information including a market value balance sheet. Details on the implementation of the regulatory requirements for corporate governance by Allianz SE and by the Allianz Group can be found in the Solvency and Financial Condition Report of Allianz SE and of the Allianz Group, which are published on our website at www.allianz.com/sfcr. Declaration of Conformity with the German Corporate Governance Code Good corporate governance is essential for sustainable business per- formance. The Board of Management and the Supervisory Board of Allianz SE therefore attach great importance to complying with the recommendations of the German Corporate Governance Code (hereinafter referred to as the “Code”). On 10 December 2020, the Board of Management and the Supervisory Board issued the fol- lowing Declaration of Conformity of Allianz SE with the Code: Allianz SE currently complies with all recommendations of the German Corporate Governance Code (Code) in the version of December 16, 2019 and will comply with them in the future. Since the last Declaration of Conformity as of December 13, 2019, Allianz SE has complied with all recommendations of the German Corporate Governance Code in the version of February 7, 2017. Munich, December 10, 2020 Allianz SE For the Management Board: Signed Oliver Bäte Signed Renate Wagner For the Supervisory Board: Signed Michael Diekmann In addition, Allianz SE follows all the suggestions of the Code in its 16 December 2019 version. The Declaration of Conformity and further information on cor- porate governance at Allianz can be found on our website at www.allianz.com/corporate-governance. Function of the Board of Management and the composition and functions of committees The Board of Management of Allianz SE has ten members. Its mem- bers may not, in general, be older than 62 years of age. The Board of Management is responsible for setting business objectives and the strategic direction, for coordinating and supervising the operating entities, and for implementing and overseeing an effi- cient risk management system. The Board of Management also pre- pares the annual financial statements of Allianz SE, the Allianz Group’s consolidated financial statements, the market value balance sheet, and the interim report. The members of the Board of Management are jointly respon- sible for management and for complying with legal requirements. Not- withstanding this overall responsibility, the individual members head the departments they have been assigned independently. There are divisional responsibilities for business segments as well as functional responsibilities. The latter include the Finance, Risk Management and Controlling Functions, Investments, Operations and IT, Human Resources, Legal, Compliance, Internal Audit, or Mergers & Acquisi- tions. Business division responsibilities focus on geographical regions or Global Lines. Rules of procedure specify in more detail the structure and departmental responsibilities of the Board of Management. Board of Management meetings are led by the Chairman. Each member of the Board may request a meeting, providing notification of the proposed subject. The Board makes decisions by a simple majority of participating members. In the event of a tie, the Chairman casts the Annual Report 2020 – Allianz SE 35 B _ Management Report of Allianz SE deciding vote. The Chairman can also veto decisions, but he cannot impose any decisions against the majority vote. BOARD OF MANAGEMENT AND GROUP COMMITTEES In the financial year 2020, the following Board of Management committees were in place: Board committees Board committees Responsibilities GROUP FINANCE AND RISK COMMITTEE Giulio Terzariol (Chairman), Niran Peiris, Dr. Klaus-Peter Röhler, Dr. Günther Thallinger. GROUP IT COMMITTEE Dr. Christof Mascher (Chairman), Niran Peiris, Dr. Klaus-Peter Röhler, Ivan de la Sota, Giulio Terzariol, Dr. Günther Thallinger. GROUP MERGERS AND ACQUISITIONS COMMITTEE Renate Wagner (Chairwoman), Oliver Bäte, Niran Peiris, Giulio Terzariol. As of 31 December 2020 Preparing the capital and liquidity planning for the Group and Allianz SE, implementing and overseeing the principles of group-wide capital and liquidity management as well as risk standards and preparing risk strategy. This includes, in particular, significant individual financing transactions and guidelines for derivatives, Group financing and internal Group capital management as well as establishing and overseeing a group-wide risk management and monitoring system including stress tests. Developing and proposing a group-wide IT strategy, monitoring its implementation and, approving local and group-wide IT investments as well as reviewing and overseeing individual IT projects. Managing and overseeing Group M&A transactions, including approval of individual transactions within certain thresholds. In addition to Board committees, there are also Group committees. They are responsible for preparing decisions for the Board of Manage- ment of Allianz SE, submitting proposals for resolutions, and ensuring a smooth flow of information within the Group. In the financial year 2020, the following Group committees were in place: Group committees Group committees Responsibilities GROUP COMPENSATION COMMITTEE Board members of Allianz SE and executives below Allianz SE Board level. GROUP INVESTMENT COMMITTEE Board members of Allianz SE and Allianz Group executives. As of 31 December 2020 Designing, monitoring, and improving group-wide compensation systems in line with regulatory requirements and submitting an annual report on the monitoring results, along with proposals for improvement. Specifying the strategic asset allocation for the Group to enable consistent implementation by the operating units, particularly in relation to alternative assets, monitoring of performance across all asset classes and ensuring consistent organization of the Investment Management function and Investment Governance across the Group. The Allianz Group runs its operating entities and business segments via an integrated management and control process. First, the Holding and the operating entities define the business strategies and goals. On this basis, joint plans are then prepared for the Supervisory Board’s consideration when setting targets for the performance-based remu- neration of the members of the Board of Management. For details, please refer to the Remuneration Report. The Board of Management reports regularly and comprehen- sively to the Supervisory Board on business development, the com- pany’s financial position and earnings, planning and achievement of objectives, business strategy, and risk exposure. Details on the Board of Management’s reporting to the Supervisory Board are laid down in the information rules issued by the Supervisory Board. Important decisions of the Board of Management require approval by the Supervisory Board. These requirements are stipulated by law, by the Statutes, or in individual cases by decisions of the Annual General Meeting (AGM). Supervisory Board approval is required, for example, for certain capital transactions, intercompany agreements, and the launch of new business segments or the closure of existing ones. Approval is also required for acquisitions of companies and holdings in companies as well as for divestments of Group companies that exceed certain threshold levels. The Agreement concerning the Participation of Employees in Allianz SE, in the version dated 3 July 2014 (hereinafter “SE Agreement”), requires the approval of the Supervisory Board for the appointment of the member of the Board of Management responsible for employment and social welfare. The composition of the Board of Management is described in Mandates of the Members of the Board of Management or on our website at www.allianz.com/management-board. A general description of the function of the Board of Management can also be found there. Diversity concept for the Board of Management and succession planning In accordance with the legislation on the implementation of the Eu- ropean guidelines as regards the disclosure of non-financial and di- versity information (CSR Directive), the diversity concept for the Board of Management, its objectives, implementation, and results achieved are to be reported for the 2020 financial year. The Supervisory Board adopted the following diversity concept for the Board of Management of Allianz SE: “For the composition of the Management Board, the Supervisory Board aims for an adequate ‘Diversity of Minds’. This comprises broad diversity with regard to gender, internationality, and educational as well as professional background. The Supervisory Board assesses the achievement of such target, inter alia, on the basis of the following specific indicators:  Adequate proportion of women on the Management Board: at least 30 % by 31 December 2021;  Adequate share of members with an international background (e.g., based on origin or extensive professional experience abroad), ideally with a connection to the regions in which Allianz Group is operating;  Adequate diversity with regard to educational and professional background, taking into account the limitations for the Supervisory Board by regulatory requirements (fitness).” This diversity concept is implemented in the appointment procedure for members of the Board of Management by the Supervisory Board. For the purpose of long-term succession planning, a list of candidates 36 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE is prepared and updated on an ongoing basis by the Chairman of the Board of Management in consultation with the Chairman of the Supervisory Board. It is ensured that lists of successors will comprise appropriate percentages of female candidates as well as of candi- dates with international experience. The Personnel Committee takes this into consideration especially in succession planning. The list of can- didates includes internal and external candidates who generally meet the requirements for a mandate in the Board of Management. In the event of a vacancy on the Board of Management, the Personnel Committee, after a thorough examination, recommends a suitable candidate to the Supervisory Board plenary session and reports on the selection process and, if necessary, alternative candidates. Prior to an appointment to the Board of Management, all members of the Supervisory Board are given the opportunity to meet the candidate in person. Currently there are three women on the Management Board representing a share of 30 %. Five members of the Management Board have international backgrounds. There is an adequate degree of variety as regards educational and professional backgrounds. The Board of Management of Allianz SE is thus composed in accordance with the diversity concept. Corporate governance practices INTERNAL CONTROL SYSTEM The Allianz Group has an effective internal risk and control system for verifying and monitoring its operating activities and business processes, in particular financial reporting, as well as compliance with regulatory requirements. The requirements placed on the internal control system are essential not only for the resilience and franchise value of the company, but also to maintain the confidence of the capital market, our customers, and the public. An assessment of the adequacy and effectiveness of the internal control system as part of the System of Governance is conducted regularly in the course of the review of the business organization. For further information on our risk organization and risk principles, please refer to the section “Risk governance system” in the Risk and Opportunity Report. For further information on our Integrated Risk and Control System for Financial Reporting, please refer to the respective chapter. In addition, the quality of our internal control system is assessed by the Allianz Group’s Internal Audit function. This function conducts independent, objective assurance activities, analyzing the structure and efficiency of the internal control system as a whole. In addition, it also examines the potential for additional value and improvement of our organization’s operations. Fully compliant with all international auditing principles and standards, Internal Audit contributes to the eval- uation 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 as- sist in strengthening its governance processes and structures. COMPLIANCE MANAGEMENT SYSTEM Integrity is at the core of our compliance programs and the basis for the trust of our customers, shareholders, business partners, and employees. The compliance function fosters a corporate culture of individual and collective responsibility for ethical conduct and adher- ence to the rules by:  Advising the Board of Management, managers, and employees  on business conduct that is lawful and ethical; Identifying and assessing material compliance risks and oversee- ing the implementation of adequate and effective internal con- trols to mitigate them;  Providing a speak-up facility that employees and third parties can use to confidentially report possible illegal or inappropriate behavior;  Communicating transparently and trustfully with supervisory authori- ties. The global compliance programs coordinated by Allianz SE’s central Group Compliance function support our employees, managers, and executive board members to act responsibly and with integrity in all situations. Moreover, Allianz SE’s central Group Compliance function is responsible – in close cooperation with local compliance functions – for ensuring the effective implementation and monitoring of the com- pliance programs within the Allianz Group as well as for investigating potential compliance infringements. Furthermore, as a key function, the compliance function carries out the advisory, risk identification and assessment, monitoring, and early warning tasks required under the Solvency II regime. CODE OF CONDUCT Our Code of Conduct and the internal Compliance policies and guidelines derived from it provide all employees, managers, and executive board members with clear and practical guidance, enabling them to act in line with the values of the Allianz Group. The rules of conduct established by the Code of Conduct are binding for all employees worldwide and build the basis for our compliance programs. We did not identify any material violations of the Code of Conduct in 2020. The Code of Conduct is available on our website at www.allianz.com/compliance. SPEAK UP A major component of the Allianz Group’s compliance management system is a speak-up facility that allows employees and third parties to notify the relevant compliance department confidentially about potential illegal or inappropriate conduct. No employee voicing concerns about irregularities in good faith needs to fear retribution, even if the concerns later turn out to be unfounded. Third parties can contact the compliance department via an electronic mailbox on our website www.allianz.com/complaint-system. COMPLIANCE PROGRAMS Allianz SE’s central Group Compliance function has set up inter- nal guidelines for the following identified compliance risk areas: financial crime, market integrity, customer protection, and compliance with legal requirements. For further information on the compliance risk areas, please refer to the Combined Separate Non-Financial Report for Allianz Group and Allianz SE of the Allianz Group’s Annual Report 2020 and the Sustainability Report on our website at www.allianz.com/sustainability. COMPLIANCE TRAINING In order to convey the principles of the Code of Conduct and the com- pliance programs based on these principles, Allianz has implemented interactive training programs around the world. These provide Annual Report 2020 – Allianz SE 37 B _ Management Report of Allianz SE practical guidance that enables employees to make their own deci- sions based on internal and external requirements as well as ethical principles. Training programs comprise in-person and e-learning train- ings and are delivered in several languages. Training courses to prevent corruption and money laundering are mandatory for all Allianz employees worldwide. The same is true for the antitrust training to exposed employees. Further trainings exist for the other compliance programs. Function of the Supervisory Board and the composition and functions of committees The German Co-Determination Act (“Mitbestimmungsgesetz”) does not apply to Allianz SE because it has the legal form of a European Company (SE). Instead, the size and composition of the Supervisory Board is determined by general European SE regulations. These regu- lations are implemented in the Statutes and via the SE Agreement. The Supervisory Board comprises twelve members, including six shareholder representatives appointed by the AGM. The six employee representatives are appointed by the SE works council. The specific procedure for their appointment is laid down in the SE Agreement. This agreement stipulates that the six employee representatives must be allocated in proportion to the number of Allianz employees in the different countries. The Supervisory Board currently in office includes four employee representatives from Germany and one each from France and the United Kingdom. According to § 17 (2) of the German SE Implementation Act (“SE-Ausführungsgesetz”), the Supervisory Board of Allianz SE shall be composed of at least 30 % women and at least 30 % men. It is to be proposed to the AGM on 5 May 2021 that the regular term of appointment for the Supervisory Board of Allianz SE be shortened to four years in the future. The Supervisory Board oversees and advises the Board of Manage- ment on managing the business. It is also responsible for appointing the members of the Board of Management, determining their overall remuneration, succession planning for the Board of Management, and reviewing Allianz SE’s and the Allianz Group’s annual financial state- ments. The Supervisory Board’s activities in the 2020 financial year, including an individualized disclosure of the meeting participation, are described in the Supervisory Board Report. The Supervisory Board makes all decisions based on a simple majority. The special requirements for appointing members to the Board of Management, as stipulated in the German Co-Determi- nation Act, and the requirement to have 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 vice chairperson from the shareholder side. A second vice chairperson is elected at the employee representatives’ proposal. The Supervisory Board regularly reviews the efficiency of its activities. The review is carried out either on the basis of a self- evaluation using a questionnaire or by consulting an external con- sultant. The entire Supervisory Board discusses recommendations for improvements and adopts appropriate measures on the basis of recommendations from the Standing Committee. In addition, the fit- ness and propriety of the individual members of the Supervisory Board are reviewed as part of an annual self-evaluation required by supervisory law, and a development plan for the Supervisory Board is drawn up on this basis. SUPERVISORY BOARD COMMITTEES Part of the Supervisory Board’s work is carried out by its commit- tees. The Supervisory Board receives regular reports on the activities of its committees. The composition of committees and the tasks assigned to them are regulated by the Supervisory Board’s Rules of Procedure, which can be found on our website at www.allianz.com/supervisory-board. Supervisory Board committees Supervisory Board committees Responsibilities STANDING COMMITTEE 5 members – Chairman: Chairman of the Supervisory Board (Michael Diekmann) – Two further shareholder representatives (Herbert Hainer, Jim Hagemann Snabe) – Two employee representatives (Jürgen Lawrenz, Jean-Claude Le Goaër) AUDIT COMMITTEE 5 members – Chairman: appointed by the Supervisory Board (Dr. Friedrich Eichiner) – Three shareholder representatives (in addition to Dr. Friedrich Eichiner: Sophie Boissard, Michael Diekmann) – Two employee representatives (Jean-Claude Le Goaër, Martina Grundler) RISK COMMITTEE 5 members – Chairman: appointed by the Supervisory Board (Michael Diekmann) – Three shareholder representatives (in addition to Michael Diekmann: Christine Bosse, Dr. Friedrich Eichiner) – Two employee representatives (Godfrey Hayward, Frank Kirsch) PERSONNEL COMMITTEE 3 members – Chairman: Chairman of the Supervisory Board (Michael Diekmann) – One further shareholder representative (Herbert Hainer) – One employee representative (Gabriele Burkhardt-Berg) NOMINATION COMMITTEE 3 members – Chairman: Chairman of the Supervisory Board (Michael Diekmann) – Two further shareholder representatives (Christine Bosse, Jim Hagemann Snabe) TECHNOLOGY COMMITTEE 5 members – Chairman: appointed by the Supervisory Board (Jim Hagemann Snabe) – Three shareholder representatives (in addition to Jim Hagemann Snabe: Michael Diekmann, Dr. Friedrich Eichiner) – Two employee representatives (Gabriele Burkhardt-Berg, Jürgen Lawrenz) As of 31 December 2020 – 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 consoli- dated financial statements, management reports (including Risk Report) and the dividend proposal, review of half-yearly reports or, where applicable, quarterly financial reports or statements – 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 additionally 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 – Selection of suitable candidates for election to the Supervisory Board as shareholder representatives – Regular exchange regarding technological developments – In-depth monitoring of the Board of Management’s technology and innovation strategy – Support of the Supervisory Board in monitoring the implementation of the Board of Management’s technology and innovation strategy 38 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE OBJECTIVES OF THE SUPERVISORY BOARD REGARDING ITS COMPOSITION; DIVERSITY CONCEPT The objectives for the composition of the Supervisory Board in the version of June 2020, as specified to implement legal requirements and a recommendation by the Code, are set out below. In addition to the skills profile for the overall Supervisory Board, the diversity concept Objectives of Allianz SE’s 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. These objectives take into account the regulatory requirements for the composition of the Supervisory Board as well as the relevant recommendations of the German Corporate Governance Code (“GCGC”). In addition to the requirements for each individual member, a profile of skills and expertise (“Kompetenzprofil”) as well as a diversity concept are provided for the entire Supervisory Board. I. Requirements relating to the individual members of the Supervisory Board in accordance with the legislation on the implementation of the European guideline as regards the disclosure of non-financial and diversity information (CSR Directive) is also included. The objectives for the composition of the Supervisory Board can be found on our website at www.allianz.com/supervisory-board. Employee representation within Allianz SE, according to the Agreement concerning the Participation of Employees in Allianz SE, contributes to the diversity of work experience and cultural background. Pursuant to the provisions of the German SE Participation Act (SEBG), the number of women and men appointed as German employee representatives should be proportional to the number of women and men working in the German companies. However, the Supervisory Board does not have the right to select the employee representatives. The following requirements and objectives apply to the composition of Allianz SE’s Supervisory Board: 1. Propriety The members of the Supervisory Board must be proper as defined by the regulatory provisions. A person is assumed to be proper as long as no facts are to be known which may cause impropriety. Therefore, no personal circumstances shall exist which – according to general experience – lead to the assumption that the diligent and orderly exercise of the mandate may be affected (in particular, administrative offenses or violation of criminal law, esp. in connection with commercial activity). – they can attend the General Meeting; – depending on possible membership in one or more of the current six Supervisory Board special committees, this involves extra time planning to participate in these Committee meetings and do the necessary preparation for these meetings; this applies in particular for the Audit and risk Committees; – they can attend extraordinary meetings of the Supervisory Board or of a special committee to deal with special matters as and when required. 2. Fitness The members of the Supervisory Board must have the expertise and experience necessary for a diligent and autonomous exercise of the Allianz SE Supervisory Board mandate, in particular for exercising control of and giving advice to the Board of Management as well as for the active support of the development of the company. This comprises in particular: – adequate expertise in all business areas; – adequate expertise in the insurance and finance sector or comparable relevant experience and expertise in other sectors; – adequate expertise in the regulatory provisions material for Allianz SE (supervisory law, including Solvency II regulation, corporate and capital markets law, corporate governance); – ability to assess the business risks; – knowledge of accounting and risk management basics. 3. Independence The GCGC defines a person as independent who, in particular, does 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 interest. To further specify the definition of independence, the Supervisory Board of Allianz SE states the following: – former members of the Allianz SE Board of Management shall not be deemed independent during the mandatory corporate law cooling-off period. – members of the Supervisory Board of Allianz SE in office for more than 12 years shall not be deemed independent. – regarding employee representatives, the mere fact of employee representation and the existence of a working relationship with the company shall not in itself affect the independence of the employee representatives. Applying such definition, at least eight members of the Supervisory Board shall be independent. In case shareholder representatives and employee representatives are viewed separately, at least four of each should be independent. It has to be considered that the possible emergence of conflicts of interests in individual cases cannot generally be excluded. Potential conflicts of interest must be disclosed to the Chairman of the Supervisory Board and will be resolved by appropriate measures. 4. Time of availability Each member of the Supervisory Board must ensure that they have sufficient time to dedicate to the proper fulfilment of the mandate of this Supervisory Board position. In addition to the mandatory mandate limitations and the GCGC recommendation for active Management Board members of listed companies (max. two mandates), the common capital markets requirements shall be considered. With respect to the Allianz SE mandate, the members shall ensure that – they can attend at least four, usually six ordinary Supervisory Board meetings per year, each of which requires adequate preparation; – they have sufficient time for the audit of the annual and consolidated financial statements; 5. Retirement age The members of the Supervisory Board shall, as a rule, not be older than 70 years of age. 6. Term of membership The continuous period of membership for any member of the Supervisory Board should, as a rule, not exceed 12 years. 7. Former Allianz SE Management Board members Former Allianz SE Management Board members are subject to the mandatory corporate law cooling- off period of two years. According to regulatory provisions, no more than two former Allianz SE Management Board members shall be members of the Supervisory Board. II. Requirements for the entire Supervisory Board 1. Profile of skills and expertise for the entire Supervisory Board In addition to the expertise-related requirements for the individual members, the following shall apply with respect to the expertise and experience of the entire Supervisory Board: – familiarity of members in their entirety with the insurance and financial services sector; – adequate expertise of the entire board with respect to investment management, insurance actuarial practice, accounting, technology and employee engagement; – at least one member with considerable experience in the fields of insurance and financial services; – at least one member with comprehensive expertise in the fields of accounting or auditing; – at least one member with comprehensive expertise in the field of digital transformation; – specialist expertise or experience in other economic sectors; – managerial or operational experience. 2. Diversity concept To promote an integrative cooperation among the Supervisory Board members, the Supervisory Board strives for an adequate diversity with respect to gender, internationality, different occupational backgrounds, professional expertise, and experience: – the Supervisory Board shall be composed of at least 30 % women and at least 30 % men. The representation of women is generally considered to be the joint responsibility of the shareholder and employee representatives. – 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. For Allianz SE as a Societas Europaea, the agreement concerning the participation of employees in Allianz SE provides the following: Allianz employees from different EU member states be considered in the allocation of employee representatives’ Supervisory Board seats. – in order to provide the Board with the most diverse sources of experience and specialist knowledge possible, the members of the Supervisory Board shall complement each other with respect to their background, professional experience, and specialist knowledge.” The Supervisory Board pursues these objectives, and thus also the diversity concept, when nominating candidates for shareholder repre- sentatives. As employee representatives are appointed according to different national provisions, there is only limited potential influence to the selection of employee representatives. The Supervisory Board of Allianz SE is currently composed in accordance with these objectives, including the diversity concept. According to the assessment by the Supervisory Board, all shareholder representatives, i.e., Ms. Boissard, Ms. Bosse as well as Mr. Diekmann, Dr. Eichiner, Mr. Hainer and Mr. Snabe, are independent within the meaning of the objectives Annual Report 2020 – Allianz SE 39 B _ Management Report of Allianz SE (see No. I.3). With four female and eight male Supervisory Board members, the current legislation for equal participation of women and men in leadership positions (statutory gender quota of 30 %) is being met. In addition, the Supervisory Board has five members with international backgrounds. The skills profile is also met by all current members of the Supervisory Board. Based on the objectives regarding its composition, the Supervisory Board of Allianz SE has developed the following skill matrix. From the 2021 financial year onwards, it will be expanded to include “Environment, Social & Governance” (ESG). Supervisory Board of Allianz SE: skill matrix Diekmann Snabe Boissard Bosse Eichiner Hainer Burkhardt- Berg Le Goaër Grundler Hayward Kirsch Lawrenz Tenure Joined Board in 2017 2014 2017 2012 2016 2017 2012 2018 2016 2017 2018 2015 Personal appro- priate- ness Diversity Expertise Regulatory requirement (Fit & Proper) Independence1 No Overboarding1 Gender Nationality Accounting Insurance Actuarial Practice Investment Management Technology Digital Transformation Employee Engagement North America Regional Expertise Growth Markets Europe (EU) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ male male German Danish female French female Danish male male female German German German male French female German male British male male German German ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ - - ✓ ✓ ✓ ✓ ✓ ✓ ✓ - - ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ - ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ - - ✓ - ✓ ✓ ✓ ✓ ✓ - - ✓ ✓ ✓ ✓ ✓ ✓ ✓ - - ✓ ✓ ✓ ✓ - ✓ ✓ - - ✓ ✓ ✓ ✓ - ✓ ✓ - - ✓ ✓ ✓ ✓ ✓ ✓ ✓ - - ✓ ✓ Criteria met. Expertise criteria based on yearly self-assessment. Tick means at least “Good knowledge” and implies the capacity to well understand the relevant matters and to take educated decisions. Good knowledge may result from existing qualifications and from the training measures regularly attended by all members of the Supervisory Board. On a scale from A-E this requires at least grade B. 1_According to German Corporate Governance Code. The current composition of the Supervisory Board can be found in the Supervisory Board Report. In addition, the composition of the Super- visory Board as well as a general description of the functions of the Supervisory Board and its committees can be found on our website at www.allianz.com/supervisory-board. Directors’ dealings Members of the Board of Management and the Supervisory Board as well as persons closely associated with them, are obliged by the E.U. Market Abuse Directive to disclose to both Allianz SE and the German Federal Financial Supervisory Authority any transactions involving shares or debt securities of Allianz SE or financial derivatives or other instruments based on them, as soon as the value of the securities acquired or divested by the member amounts to twenty thousand Euros or more within a calendar year. These disclosures are published on our website at www.allianz.com/directorsdealings. 40 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE Annual General Meeting Shareholders exercise their rights at the AGM. When adopting resolu- tions, each share carries one vote. Shareholders can follow the AGM’s proceedings on the internet and be represented by proxies. These proxies exercise voting rights exclusively on the basis of instructions given by the shareholder. Shareholders are also able to cast their votes via the internet in the form of online voting. Allianz SE regularly pro- motes the use of internet services. The AGM elects the shareholder representatives of the Supervisory Board and approves the actions taken by the Board of Management and the Supervisory Board. It decides on the appropriation of net earn- ings, capital transactions, the approval of intercompany agreements, also on the approval of the remuneration system presented by the Supervisory Board for the members of the Board of Management and the remuneration of the Supervisory Board, as well as changes to the company’s Statutes. Resolutions of the AGM shall be passed, unless mandatory legal provisions require otherwise, by a simple majority of the valid votes cast. In accordance with European regulations and the Statutes, changes to the Statutes require a two-thirds majority of votes cast, which at the same time represents the majority of the capital stock represented at the time of the resolution, in case less than half of the share capital is represented in the AGM. Each year, an ordinary AGM takes place at which the Board of Management and the Supervisory Board give an account of the preceding financial year. For special decisions, the German Stock Corporation Act provides for the con- vening of an extraordinary AGM. Accounting and auditing The Allianz Group prepares its accounts according to § 315e of the German Commercial Code (“Handelsgesetzbuch – HGB”) on the basis of the International Financial Reporting Standards (IFRS) adopted by the European Union. The annual financial statements of Allianz SE are prepared in accordance with German law and accounting rules. In compliance with the special legal provisions that apply to in- surance companies, the auditor of the annual financial statements and of the half-yearly financial report is appointed by the Supervisory Board, not the AGM. The audit of the financial statements covers the individual financial statements of Allianz SE and the consolidated financial statements of the Allianz Group. We inform our shareholders, financial analysts, the media, and the general public about 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 publicly available within 90 days of the end of each financial year. Additional information is provided in the Allianz Group’s half-yearly financial reports and quarterly statements. Information is also made available at the AGM, at telephone con- ferences for analysts and journalists, and on the Allianz Group’s web- site. Our website also provides a financial calendar listing the dates of major publications and events, such as annual reports, half-yearly financial reports, and quarterly statements, AGMs, and analyst conference calls as well as financial press conferences. You can find the 2021 financial calendar on our website at www.allianz.com/financialcalendar. Information in accordance with the German Act on Equal Participation of Women and Men in Executive Positions in the Private and the Public Sector This section outlines the targets set for Allianz SE and the other companies of the Allianz Group in Germany that are subject to co- determination (the “subsidiaries concerned”) for the Supervisory Board, the Board of Management, and the two management levels below the Board of Management. Article 17 (2) of the German SE Implementation Act stipulates that as of 1 January 2016, the share of women and men among the members of the Supervisory Board of Allianz SE must each total up to 30 % at least. The Supervisory Board currently in office fulfils this re- quirement as it includes four women (33 %) and eight men (67 %). In August 2017, the Supervisory Board set a target for the percentage of women on Allianz SE’s Board of Management at 30 % to be achieved by 31 December 2021. As of 31 December 2020, the percentage of women on Allianz SE’s Board of Management was to 20 %. As regards the proportion of women on the first and second management levels below the Board of Management, the Board of Management of Allianz SE has set a target of 20 % and 30 %, respec- tively, to be met by 31 December 2021. As of 31 December 2020, this target was already met for the first management level, with a per- centage of women of 28 %, but could not yet be met on the second level with a percentage of 23 %. The first two management levels below the Board of Management comprise a very small comparative group of executives. No suitable female candidates could be identified for the very few positions that became vacant in the period considered. In the longer term, Allianz aims to place women in at least 30 % of the positions at these two management levels throughout the Group. With regard to the Supervisory Boards of the subsidiaries con- cerned, the target quotas for eight out of nine subsidiaries concerned were set at 30 % and the target quota for the remaining subsidiary concerned was set at 33 % for 31 December 2021. Seven of the nine subsidiaries already reached this target as of 31 December 2020. The target quotas for the respective Board of Management of the sub- sidiaries concerned were between 20 % and 30 % (24 % on average) for 31 December 2021 and were met by six of the nine companies as of 31 December 2020. For the two management levels below the Board of Management, the respective Boards of Management of the subsidiaries concerned had set target quotas between 17 % and 33 % (23 % on average) for 31 December 2021 for the first manage- ment level and target quotas between 20 % and 33 % (26 % on average) for 31 December 2021 for the second management level below the Board of Management. As of 31 December 2020, the targets were met by five of the nine subsidiaries concerned at the first management level, while five of the nine companies likewise met the targets set for the second management level. Despite increased efforts to promote women in the Allianz Group and also at the indi- vidual subsidiaries, it was not possible to achieve the targets ahead of time in these cases, as it was not always possible to identify suitable female candidates for all vacant positions. Allianz continues to work to achieve these targets. Annual Report 2020 – Allianz SE 41 B _ Management Report of Allianz SE REMUNERATION REPORT The remuneration report describes the remuneration structure and arrangements for the Board of Management and the Supervisory Board of Allianz SE. All information provided here concerning the remuneration of the Allianz SE Board of Management as well as some additional information can also be found on our remuneration website at www.allianz.com/remuneration. Remuneration of the Allianz SE Board of Management KEY PRINCIPLES OF THE BOARD REMUNERATION Remuneration is designed to be appropriate compared to peers, given the Allianz Group’s range of business activities, operating environment, and business results achieved. The aim is to ensure and promote sus- tainable and value-oriented management of the company that is in line with our corporate strategy. The key principles of Board of Man- agement remuneration are as follows:  Support of the Group’s strategy: The design of variable compen- sation and in particular of performance targets reflects the busi- ness strategy and sustainable long-term development of the Allianz Group.  Alignment of pay and performance: The performance-based variable component of the board members’ remuneration forms a significant portion of the overall remuneration, corresponding to 70 % of the target compensation.  Sustainability of performance and alignment with shareholder interests: A major part of the variable remuneration reflects longer-term performance, with deferred payout (64 %), and is linked to the absolute and relative performance of the Allianz share. DETERMINATION OF THE REMUNERATION SYSTEM The Board of Management’s remuneration is decided upon by the entire Supervisory Board, based on proposals prepared by the Super- visory Board’s Personnel Committee. If required, the Supervisory Board may seek outside advice from independent external con- sultants. The Personnel Committee and the Supervisory Board consult with the Chairman of the Board of Management, in assessing the performance and remuneration of Board of Management members. The Chairman of the Board of Management is generally not involved in the discussion about his own remuneration. The Supervisory Board designs the remuneration system for the members of the Board of Management in accordance with the requirements of the German Stock Corporation Act (AktG) in its currently valid version as well as with regulatory requirements and the recommendations of the German Corporate Governance Code, while ensuring clarity and com- prehensibility. Feedback from investors is also considered. DETERMINATION OF AND ADEQUACY OF THE BOARD OF MANAGEMENT REMUNERATION Based on the remuneration system, the Supervisory Board determines the target total compensation and regularly reviews the appropriate- ness of the remuneration. This is based on both a horizontal compari- son (i.e., with peer companies) and a vertical comparison (in relation to Allianz employees). Again, the Supervisory Board’s Personnel Committee develops respective recommendations, if necessary with the assistance of external consultants. The structure, weighting, and level of each remuneration com- ponent should be adequate and appropriate. HORIZONTAL APPROPRIATENESS The Supervisory Board regularly benchmarks the Allianz SE Board of Management’s remuneration against other DAX companies and selected international competitors, taking into account the situation of the Allianz Group as well as its longer-term performance, relative size, complexity, and global reach. The horizontal comparison has shown that the ratio of the Chair- man of the Board of Management’s target compensation to that of a regular member of the Board of Management is equivalent to a factor of 1.75, whereas the average factor in the DAX is 1.96. Furthermore, Allianz is well above average relative to size (revenue, number of em- ployees, and market capitalization) compared to the DAX companies, while the level of target compensation for Allianz SE’s Chairman of the Board of Management is average. For 2021, it was therefore decided to propose to the Annual Shareholders’ Meeting to adjust the Chair- man of the Board of Management’s target compensation Outlook for 2021. VERTICAL APPROPRIATENESS This comparison is based on the total direct compensation of a member of the Board of Management and the average direct compensation of an employee of the Allianz workforce in Germany. The Supervisory Board’s decision in December is based on the factor resulting from this comparison for the previous fiscal year. For the fiscal year 2019, the factor for the Chairman of Board of Management to employee is “77” and the factor regular board member to employee is “42”. For the fiscal year 2020, the respective factor for the Chairman of Board of Manage- ment to employee is “66” and the factor regular board member to employee is “36”. REMUNERATION STRUCTURE The structure of the remuneration system of the Board of Manage- ment became effective on 1 January 2019. It was approved by Allianz SE’s Annual Shareholder Meeting on 8 May 2019 on the basis of the former § 120 (4) AktG, with a majority vote of 92 %. 42 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE REMUNERATION COMPONENTS AND TARGET SETTING PROCESS BASE SALARY The base salary, which is not performance-related, is paid in twelve equal monthly installments. PERQUISITES Perquisites mainly consist of contributions to accident and liability insurances, tax consultant fees (if in the interest of Allianz) and the provision of a company car. Perquisites are not linked to performance. Each member of the Board of Management is responsible for paying the income tax due on these perquisites. The Supervisory Board reg- ularly reviews the level of perquisites; a contractual annual cap ap- plies. If an appointment to the Board of Management requires a change of residence, relocation expenses are reimbursed to an ap- propriate extent. VARIABLE REMUNERATION Variable remuneration aims for balance between short-term perfor- mance, longer-term success and sustained value creation; the pay- out of two-thirds of this compensation components are deferred. It is designed to balance risk and opportunity while promoting the sus- tainable implementation of the Allianz Group’s strategy. The Su- pervisory Board ensures that the targets underlying the variable compensation are challenging, sustainable and ambitious. Target achievement factor to determine the variable remuneration In line with the overarching strategic objective “simplicity wins”, the calculation of variable remuneration follows a simple system. The an- nual bonus and LTI allocation are based on only two Group financial targets for the relevant fiscal year: operating profit and net income at- tributable to shareholders, each at 50 %. The resulting target achieve- ment is adjusted by an individual contribution factor (ICF) in the range of 0.8 to 1.2, which reflects both the results of the business division and the performance of the individual board member. If targets are not met, the variable compensation can be reduced to zero. If targets are significantly exceeded, the target achievement is limited to 150 %. Annual Report 2020 – Allianz SE 43 B _ Management Report of Allianz SE GROUP FINANCIAL TARGETS The Group financial targets are based on equally weighted targets for Group operating profit and Group net income attributable to share- holders. Adjustments are only applied to acquisitions and disposals that account for more than 10 % of the Group’s operating profit or net income attributable to shareholders or have a value-adding effect from a risk management perspective (e.g. portfolio transfers) and were not yet known at the time the plan was prepared. This regulation is intended to prevent meaningful transactions from having a negative impact on the remuneration of the Management Board. Operating profit highlights the underlying performance of ongoing core oper- ations. Net income attributable to shareholders is the profit after tax and non-controlling interests (minorities). Furthermore, the net income forms the basis for the dividend payout and for the return on equity cal- culation. Both key performance indicators (KPIs) are important steer- ing parameters for the Allianz Group and therefore reflect the level of implementation of the Group’s strategy. The Group’s financial target achievement is limited to a maximum of 150 % and can drop to zero. The minimum, target, and maximum values for the Group finan- cial targets are set annually by the Supervisory Board. These are documented for the respective next fiscal year and published ex-post in the compensation report. INDIVIDUAL CONTRIBUTION FACTOR (ICF) The Group financial target achievement is multiplied by the ICF for each board member. The ICF is based on an assessment by the Allianz SE Su- pervisory Board, resting upon KPIs reflecting the respective board member’s area of responsibility and his or her personal contribution. 1_Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld. Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld. The ICF takes into account each board member’s individual contribution to the implementation of the business strategy. Since the performance is determined without a specified weighting, the ICF covers a narrow range of 0.8 to 1.2. The concept of non-specified weighting allows the Supervisory Board to react appro- priately to changes in priorities during the year.  Business division targets: For board members with business- related division responsibilities, the contribution to the financial performance considers various indicators of profitability (e.g., operating profit and net income) and productivity (e.g., expense ratio) for the respective business division. For board members with a functional focus, division-specific performance targets are deter- mined based on their key responsibilities and qualitatively as- sessed.  Non-financial targets: Non-financial targets take into account customer satisfaction (e.g., Net Promoter Score (NPS1)), employee engagement (e.g., Allianz Engagement Survey) and leadership quality, including strategic priorities. The assessment of the indi- vidual leadership quality also includes a review of behavioral aspects, such as customer orientation, collaborative leadership, entrepreneurship, and trust (e.g., corporate social responsibility, integrity, diversity, and sustainability as measured by the reduction of the carbon footprint, greenhouse gas reduction, and a step- by-step plan to achieve net-zero compliant asset allocation until 2050 at the latest). For further information, please refer to the Combined Separate Non-Financial Report for the Allianz Group and Allianz SE. 44 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE Variable remuneration components The performance-related variable remuneration consists of an annual bonus and a long-term compensation (Long-Term Incentive – LTI). ANNUAL BONUS The annual bonus is derived by multiplying the target achievement factor by the target amount for the annual bonus and is paid out in cash after the end of the relevant fiscal year, with payment limited to a maximum of 150 % of the target amount. LONG-TERM INCENTIVE (LTI) The long-term, share-based compensation component makes up the largest portion of variable compensation. It promotes alignment with shareholders and reflects the sustainable implementation of the company’s long-term strategy. The LTI is based on the performance in absolute and relative terms (i.e., versus competitors) of the Allianz share. Furthermore, the long-term development of KPIs is reflected in the deferred sustainability assessment following the four-year contrac- tual vesting period.  Grant and contractual vesting period: The LTI is granted annually in the form of virtual Allianz shares, so-called restricted stock units (RSUs). The number of RSUs to be granted corresponds to the LTI allocation amount divided by the allocation value of an RSU at grant:  The LTI allocation amount is derived by multiplying the LTI target amount by the annual bonus achievement factor and capped at 150 % of the target level.  The RSU allocation value is based on the ten-day-average Xetra closing price of the Allianz stock following the annual financial media conference1. As RSUs are virtual stock without dividend payments, the relevant share price is reduced by the net present value of the expected future dividend payments during the four-year contractual vesting period. The LTI grant is followed by a contractual vesting period of four years. After that period, the LTI amount to be paid is determined based on the relative performance of the Allianz share, the relevant share price, and the results of the sustainability assessment.  Relative performance versus peers: Besides the absolute share- price development, the LTI payout takes the relative performance of the Allianz share into account. The total shareholder return (TSR) of the Allianz share is benchmarked against the TSR of the STOXX Europe 600 insurance index by reflecting the relation of the total performance of the Allianz share (“Allianz TSR”) and the total performance of the STOXX Europe 600 insurance index (“Index TSR”) between the start and end of the four-year contrac- tual vesting period. The payout will be based on the TSR perfor- mance factor which is calculated as follows:  At the end of the contractual vesting period the difference between the Allianz TSR and the Index TSR is determined in percentage points; the result is multiplied with “2”: As the comparison with competitors and the market is of out- standing importance, the outperformance/underperformance is weighted twofold.  To determine the factor, 100 percentage point are added to the result. Example: 1 percentage point outperformance results in a relative performance factor of 102 %, 1 percentage point underperformance results in a relative performance factor of 98 %. 1_For accounting purposes, the determination of the fair value of RSUs is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index, their correlation, and the expected dividends. The value of the RSUs used for the board members compensation may deviate from this IFRS value, as a simplified calculation method was applied to increase transparency and traceability. Annual Report 2020 – Allianz SE 45 B _ Management Report of Allianz SE In order to avoid incentivizing excessive risk-taking, the relative TSR performance factor is limited: it can vary between zero (for under- performance of the index by - 50 percentage points or lower) and 200 % (for outperformance of the index by + 50 percentage points or higher).  Sustainability assessment: Prior to the payout of each LTI tranche, the Supervisory Board determines, following a preliminary assess- ment by the Personnel Committee and the external auditor, whether there are any sustainability-related concerns regarding a full payout. If so, payment of the tranche may be canceled in full or in part. Subject of the sustainability assessment are:  Compliance breaches,  Balance sheet issues such as reserve strength, solvency, indebtedness, and ratings,  KPIs entailed in the individual board members’ targets, such as NPS, employee satisfaction, and climate targets. The assessment is made applying a comparable basis, i.e., any regulatory changes, changes in accounting regulations, or changes in calculation methods for the KPIs in question are taken into account.  Allianz share performance, payout, and cap: Following the end of the four-year contractual vesting period, the granted RSUs are settled in cash based on the ten-day average Xetra closing price of the Allianz SE share following the annual financial media con- ference in the year the respective RSU plan vests, multiplied by the relative TSR performance factor and adjusted by the sustainability assessment, if necessary. The relevant share price is capped at 200 % of the grant price. Likewise, the relative TSR performance factor is capped at a maximum of 200 %. Taking into account the overall compensation cap (€ 6,000 thou for a regular board mem- ber and € 10,000 thou for the Chairman of the Board of Manage- ment), the LTI payout in relation to the LTI target – which deviates from the individual LTI component caps – is limited to 255 % for the Chairman of the Board of Management and 272 % for a regular board member. See also Sensitivity of total compensation. Outstanding RSU holdings are forfeited, should a board member leave at his/her own request or be terminated for cause. 46 Annual Report 2020 – Allianz SE Illustrative Examples LTI payout: Performance exceeds expectation (scenario 1) Illustrative example for RBM Initial grant based on: • LTI target • LTI allocation value: annual bonus achievement factor applied to LTI target • RSU grant (listed share price: € 200, for the calculation of the allocation relevant share price: € 160 (= reduced by the net present value of estimated future dividends of € 40)) LTI payout at vesting based on: • RSUs x share price at vesting (€ 250) • TSR relative performance factor: 2 x (TSR Allianz: 45 % – TSR Stoxx Europe 600 Insurance: 40 %) + 100 % Payout LTI payout: Performance remains below expectation (scenario 2) Illustrative example for RBM Initial grant based on: • LTI target • LTI allocation value: annual bonus achievement factor applied to LTI target • RSU grant (listed share price: € 200, for the calculation of the allocation relevant share price: € 160 (= reduced by the net present value of estimated future dividends of € 40)) LTI payout at vesting based on: • RSUs x share price at vesting (€ 190) • TSR relative performance factor: 2 x (TSR Allianz: 15 % – TSR Stoxx Europe 600 Insurance: 40 %) + 100 % Payout B _ Management Report of Allianz SE % Number RSUs € thou 10,058 110 110 1,463 1,609 2,515 2,766 % Number RSUs € thou 8,229 90 50 1,463 1,317 1,564 782 Malus/Clawback Variable remuneration components may not be paid, or payment may be restricted, in the case of a significant breach of the Allianz Code of Conduct or regulatory Solvency II policies or standards, including risk limits. In the same way, variable remuneration components al- ready paid may be subject to a clawback for three years after payout. Additionally, a reduction or cancellation of variable remuneration may occur if the supervisory authority (BaFin) requires this in ac- cordance with its statutory powers. PENSION CONTRIBUTION AND SIMILAR BENEFITS To provide competitive and cost-effective retirement and disability benefits, company contributions to the defined-contribution pension plan “My Allianz Pension” are invested with a guarantee for the contri- butions paid, but no further interest guarantee. Each year the Super- visory Board decides whether a budget is provided and, if so, to what extent. The current pension contribution generally represents 15 % of the target compensation of the board members. Apart from cases of occupational or general disability for medical reasons, the earliest age a pension can be drawn is 62. Should board membership cease before the retirement age is reached, accrued pension rights are maintained if vesting requirements are met. Members of the Board of Management may have additional pension entitlements under former pension plans based on previous positions in the Allianz Group or due to membership of the Board of Management prior to 2015. Payments of social insurance contribu- tions abroad required by Allianz in individual cases may also give rise to additional pension entitlements. SENSITIVITY OF TOTAL COMPENSATION The variable remuneration is designed to help achieve the operational targets and to reward sustainable performance. Therefore, payout of almost two thirds of the annual variable compensation will not occur for a period of four years; such payout is subject to sustainability assessment adjustments. A failure to meet targets may result in a maximum reduction of the variable compensation to zero, with the overall payout being capped: The sum of variable compensation and base salary payout including pension service cost, which is paid in relation to one financial performance year, will be capped at a maximum amount of € 6,000 thou for a regular member of the Board of Management and at € 10,000 thou for the Chairman of the Board of Management: Annual Report 2020 – Allianz SE 47 B _ Management Report of Allianz SE Compensation sensitivity € thou CEO/RBM SHAREHOLDING REQUIREMENTS AND SHAREHOLDING EXPOSURE Members of the Board of Management must build share ownership within three years, with the minimum levels defined as follows:  Chairman of the Board of Management: two times base salary, i.e. € 3,412 thou,  Regular Board of Management member: one time base salary, i.e. € 975 thou. Holding is required for the entire term of service on the Board of Management. Shares will be acquired through mandatory pay com- ponent conversion. In case of a base salary increase, the shareholding obligation increases accordingly. The holding obligation ceases with the end of the mandate. In combination with the virtual shares (RSU) accumulated over four years through the LTI plan, the Allianz SE Board of Management has significant economic exposure to the Allianz stock: It amounts to approx. 800 % of base salary for the Chairman and approx. 700 % of base salary for a regular board member: TERMINATION OF SERVICE Board of Management contracts are limited to a period of five years. For new appointments, a shorter period of up to three years is provided based on the recommendation by the German Corporate Governance Code. Severance payments made to board members in case of early termination are restricted according to the German Corporate Governance Code. SEVERANCE PAYMENT CAP Payments for early termination to board members with a remaining term of contract of more than two years are capped at twice the annual compensation, consisting of last financial year’s base salary and 100 % of the variable target compensation. If the remaining term of contract is less than two years, the payment is pro-rated for the remaining term of the contract. Contracts do not contain provisions for any other cases of early termination of Board of Management service. In the event of a contractually agreed non-compete clause, a severance payment is offset against compensation resulting from the non-compete clause in case of premature termination of service. TRANSITION PAYMENT Board members appointed before 1 January 2010 are eligible for a transition payment after leaving the Board of Management. The transition payment comprises an amount corresponding to the most recent base salary (paid for a period of six months), plus a one-time payment of 25 % of the target variable remuneration at notice date. Where an Allianz pension is due at the same time, such pension is deducted from the monthly transition payments. In the event of a contractually agreed non-compete clause, the remittance of the transitional payment will be offset against the payment resulting from the non-compete clause. 48 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE MISCELLANEOUS INTERNAL AND EXTERNAL BOARD APPOINTMENTS When a member of the Board of Management simultaneously holds an appointment at another company within the Allianz Group or their joint ventures with outside partners, the full amount of the respective remuneration is transferred to Allianz SE. In recognition of related benefits to the organization and subject to prior approval by the Supervisory Board of Allianz SE, board members are also allowed to accept a limited number of non-executive supervisory roles at appropriate external organizations. In these cases, 50 % of the remu- neration received is paid to Allianz SE. The respective board member will retain the full remuneration for that position only if the Allianz SE Supervisory Board classifies the appointment as a personal one (ad personam). Any remuneration paid by external organizations will Group financial target achievement level be itemized in those organizations’ annual reports; its level will be determined by the governing body of the relevant organization. TARGET ACHIEVEMENT FOR 2020 GROUP FINANCIAL TARGETS The combined target achievement level of the Group’s financial targets is calculated as the simple average of the achievement of the targets for the Group operating profit and Group net income attributable to shareholders. The targets set for both indicators were not achieved. This was due to the COVID-19 pandemic and its effects; the overall achievement of these Group targets was only 75.58 %. If the effects of COVID-19 had been eliminated, the results would have been at least at the target level1. Financial Group targets 0 % - Floor in € bn 100 % - Target in € bn 150 % - Max in € bn Actual in € bn Achievement level in % Weight in % Operating profit Net income attributable to shareholders 2020 6.00 2019 5.80 2020 12.00 2019 11.50 2020 15.00 2019 14.35 2020 10.75 2019 11.86 2020 79.19 2019 106.24 2020 50.00 2019 50.00 4.00 3.80 7.90 7.50 9.85 9.35 6.81 7.91 71.97 111.19 50.00 50.00 Achievement level combined in % 2020 2019 75.58 108.72 INDIVIDUAL CONTRIBUTION FACTOR AND VARIABLE COMPENSATION 2020 To calculate the annual bonus, the combined level of target achieve- ment for the financial Group targets is multiplied by the individual contribution factor (ICF) determined for each board member by the Supervisory Board. In view of the unusual circumstances presented with the COVID-19 crisis, the financial performance of the Board of Management, in- cluding stabilizing the Group’s solvency, has been rated as very strong for the financial year 2020. All business divisions are close to target or even slightly above. As in the previous year, the only exception is the business division comprising the Global Insurance Lines, Anglo-Saxon Markets, MENA, and Africa; consequently, it is almost the only area weighing down the Group’s target achievement level. The Board’s overall strong performance was achieved on a sus- tainable basis. On the one hand, both employees and customers rated its crisis management as excellent, as reflected by indicators such as the Net Promoter Score, the Inclusive Meritocracy Index, and the Work Well Index Plus; on the other hand, Allianz fully achieved the target for reducing CO2 emissions. As a result, the combined ICF for the Board of Management was above 1. In the assessments of the individual board members’ perfor- mance, the underperformance of Niran Peiris’ business division has been addressed. However, in the area of credit insurance, one note- worthy achievement was the joint development of a protective shield for German manufacturers and suppliers in cooperation with the German government. The divisions of Ivan de la Sota, Sergio Balbinot, Dr. Klaus-Peter Röhler, until 31 March 2020 under the responsibility of Dr. Axel Theis, and Jacqueline Hunt have carried the Group’s operating result through the crisis. Giulio Terzariol as CFO ensured the balance sheet strength of the Allianz Group and thus secured the dividend payment to shareholders in the difficult crisis environment. His achieve- ments in capital market communications were also highly recognized by the investment community when he was voted “Best CFO” in the European insurance sector. Renate Wagner and the functional units she leads – Human Resources, Legal, Compliance, and M&A units – have also managed to contribute positively. One particular achievement was the fast implementation of specific supporting measures to help the organization weather the crisis, such as flexible remote working models, digital training and development offerings, and the creation of the necessary legal requirements for the virtual Annual Sharehold- ers’ Meeting. In addition, the fact that Allianz was able to go through with several acquisitions in Latin America, Spain, and Australia, despite the difficult conditions, also stands out positively. Dr. Christof Mascher’s foresighted planning was another key factor in the smooth transition to remote working models, ensuring a high level of system stability. At peak times, up to 90 % of employees worked from home. At the same time, Dr. Günther Thallinger continued to manage Allianz assets pro- fessionally and with a steady hand, in particular through the periods of considerable capital market volatility. Last but not least, Oliver Bäte steered the overall company prudently and firmly, providing his Board of Management team with just the right impetus to defy the cri- sis. He was a true role model to the entire Allianz management team. In addition to mastering the operational challenges, the Board of Management has also invested in the future: firstly, by improving the Property-Casualty retail and commercial lines and, secondly, by repo- sitioning Allianz Global Investors and redefining the Life strategy in the view of the continued drop of interest rates. The digitalization strategy was accelerated, and the risk and business strategies were adapted to the changed market conditions and aligned even more closely. 1_Group target achievement is based on an operating profit of € 10,751,118.35 (2019: 11,855,449.63) thou and net income attributable to shareholders of € 6,806,669.99 (2019: 7,914,009.88) thou.  Annual Report 2020 – Allianz SE 49 B _ Management Report of Allianz SE Furthermore, the ambitious climate strategy developed by the Board of Management was published on 14 January 2021. For further information, please refer to the Combined Separate Non-Financial Report for the Allianz Group and Allianz SE. Variable compensation 2020 With regard to the assessment of quantitative Group target achievement, no modifications have been made. Target achievement 2020 Oliver Bäte Sergio Balbinot Jacqueline Hunt Dr. Christof Mascher Niran Peiris Dr. Klaus-Peter Röhler Ivan de la Sota Giulio Terzariol Dr. Günther Thallinger Dr. Axel Theis Renate Wagner Group financial performance in % ICF range: 0.8 - 1.2 Target achievement factor in % Annual bonus payout in € thou LTI allocation value in € thou 75.58 75.58 75.58 75.58 75.58 75.58 75.58 75.58 75.58 75.58 75.58 1.17 1.16 1.14 1.12 0.80 1.15 1.11 1.14 1.14 1.15 1.14 88.43 87.67 86.16 84.65 60.46 86.92 83.89 86.16 86.16 86.92 86.16 1,257 713 700 688 492 531 682 700 700 176 700 2,263 1,283 1,261 1,238 885 956 1,227 1,261 1,261 316 1,261 REMUNERATION FOR 2020 AND 2019 The following table shows the individual board members’ remunera- tion for 2020 and 2019, including fixed and variable remuneration components and pension service cost. The Grant column specifies the target, minimum, and maximum remuneration. The Payout column lists the 2020 and 2019 payments. The base salary, annual bonus, and perquisites are linked to the performance reporting years 2020 and 2019, whereas the Allianz Equity Incentive (AEI) payouts result from grants related to performance years 2015 and 2014. The column “Actual grant” is compliant with the disclosure require- ments stipulated by the applicable German Accounting Standard No. 17. It includes the fixed compensation components, the annual bonuses paid for both performance years, and the fair value of the RSU grant for 2020 and 2019. It shows that the compensation system breathes with business development: The compensation reported for 2020 is significantly lower than in the previous year. The actual 2020 payout, on the other hand, may be higher for members of the Board of Management who were already appointed in 2015, as the payment of share-based compensation was due and the good share price per- formance had an impact on payout. The sum of the total remuneration of the Board of Management for 2020, excluding pension service cost, amounts to € 32 mn (2019: € 39 mn). The corresponding amount including pension service cost is € 38 mn (2019: € 44 mn). 50 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE Oliver Bäte (Appointed: 01/2008; CEO since 05/2015) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Min 1,706 11 1,717 - - - - - 1,717 1,041 Max 1,706 11 1,717 1,706 20 1,726 1,706 11 1,717 1,706 20 1,726 1,706 11 1,717 2,133 1,747 1,257 1,747 1,257 3,534 - - - 7,384 1,041 - 3,143 - - 6,616 891 2,348 - - - 5,323 1,041 - - - 1,585 5,058 891 - - 2,375 - 5,350 1,041 Sergio Balbinot (Appointed: 01/2015)6 Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Min 975 74 1,049 - - - - - 1,049 472 Max 975 74 1,049 975 74 1,049 975 74 1,049 975 74 1,049 975 74 1,049 1,220 981 713 981 713 2,069 - - - 4,337 472 - 1,795 - - 3,826 435 1,345 - - - 3,107 472 - - - - 2,030 435 - - 1,883 - 3,644 472 2019 Target 1,706 20 1,726 Target 1,706 11 1,717 1,422 1,422 - 2,637 - - 5,785 891 2,620 - - - 5,759 1,041 2019 Target 975 74 1,049 Target 975 74 1,049 813 813 - 1,516 - - 3,378 435 1,512 - - - 3,374 472 6,676 6,800 2,758 8,425 7,507 6,364 5,949 6,391 Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total 3,813 3,845 1,520 4,809 4,260 3,578 2,465 4,116 1_The disclosed LTI target/min/max and LTI actual figures of 2020 and 2019 represent the LTI fair values, which differ from the LTI allocation values. The determination of the LTI fair values is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index and their correlation. 2_The column “Actual grant“ is in line with the disclosure requirements under the German Accounting Standard No. 17. 3_The annual bonus disclosed for performance year 2020 is paid in 2021 and for performance year 2019 in 2020. The payments for share-based deferred compensation (AEI and LTI), however, are disclosed for the year in which the actual payment was made. 4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors. 5_Pension service cost in accordance with IAS 19: represents the company cost, not the actual entitlement or a payment. 6_Sergio Balbinot received a buyout award in 2015 to compensate for forfeited grants from his previous employer. Half of this compensation was granted in the form of RSUs, which vested in March 2019. A payment of € 4,807 thou was made. Annual Report 2020 – Allianz SE 51 B _ Management Report of Allianz SE Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Jacqueline Hunt (Appointed: 07/2016) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 2019 Target 975 20 995 813 - 1,516 - - 3,324 449 Target 975 23 998 813 1,512 - - - 3,323 458 Min 975 23 998 - - - - - 998 458 Max 975 23 998 1,220 2,069 - - - 4,287 458 975 20 995 972 - 1,781 - - 3,748 449 975 23 998 700 1,324 - - - 3,023 458 975 20 995 972 - - - - 1,967 449 3,773 3,781 1,456 4,744 4,197 3,481 2,416 975 23 998 700 - - - - 1,699 458 2,156 Dr. Christof Mascher (Appointed: 09/2009; end of service: 12/2020)6 Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Target 975 3 978 813 1,512 - - - 3,303 479 Min 975 3 978 - - - - - 978 479 Max 975 3 978 1,220 2,069 - - - 4,266 479 975 9 984 946 - 1,737 - - 3,666 489 975 3 978 688 1,302 - - - 2,968 479 975 9 984 946 - - - 1,426 3,356 489 975 3 978 688 - - 1,619 - 3,285 479 2019 Target 975 9 984 813 - 1,516 - - 3,313 489 3,801 3,782 1,457 4,745 4,155 3,447 3,844 3,764 1_The disclosed LTI target/min/max and LTI actual figures of 2020 and 2019 represent the LTI fair values, which differ from the LTI allocation values. The determination of the LTI fair values is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index and their correlation. 2_The column “Actual grant“ is in line with the disclosure requirements under the German Accounting Standard No. 17. 3_The annual bonus disclosed for performance year 2020 is paid in 2021 and for performance year 2019 in 2020. The payments for share-based deferred compensation (AEI and LTI), however, are disclosed for the year in which the actual payment was made. 4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors. 5_Pension service cost in accordance with IAS 19: represents the company cost, not the actual entitlement or a payment. 6_The appointment of Dr. Christof Mascher as member of the Board of Management of Allianz SE ended as of 31 December 2020. On the basis of a post-contractual one-year non-compete clause already provided for in his service agreement, Dr. Christof Mascher is entitled to an allowance (“Karenzentschädigung”) of 50% of his annual target compensation (sum of base salary and variable target compensation), i.e. a total of € 1,625.5 thou. Dr. Christof Mascher waived payment of the transitional allowance to which he would have been entitled. In any case, the transitional allowance would have been set-off against the non-compete allowance. 52 Annual Report 2020 – Allianz SE Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total B _ Management Report of Allianz SE Niran Peiris (Appointed: 01/2018; end of service: 12/2020)6 Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 2019 Target 975 47 1,022 Target 975 40 1,015 813 813 - 1,516 - - 3,351 413 1,512 - - - 3,340 429 Min 975 40 1,015 - - - - - 1,015 429 Max 975 40 1,015 975 47 1,022 975 40 1,015 975 47 1,022 975 40 1,015 1,220 707 492 707 492 2,069 - - - 4,303 429 - 1,331 - - 3,060 413 942 - - - 2,448 429 - - - - 1,730 413 - - - - 1,507 429 1,936 3,764 3,769 1,444 4,733 3,473 2,877 2,143 Dr. Klaus-Peter Röhler (Appointed: 04/2020) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Target 731 23 754 611 1,136 - - - 2,501 390 Min 731 23 754 - - - - - 754 390 Max 731 23 754 916 1,555 - - - 3,225 390 2,891 1,144 3,615 - - - - - - - - - - - 731 23 754 531 1,017 - - - 2,302 390 2,692 - - - - - - - - - - - 731 23 754 531 - - - - 1,285 390 1,675 2019 Target - - - - - - - - - - - 1_The disclosed LTI target/min/max and LTI actual figures of 2020 and 2019 represent the LTI fair values, which differ from the LTI allocation values. The determination of the LTI fair values is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index and their correlation. 2_The column “Actual grant“ is in line with the disclosure requirements under the German Accounting Standard No. 17. 3_The annual bonus disclosed for performance year 2020 is paid in 2021 and for performance year 2019 in 2020. The payments for share-based deferred compensation (AEI and LTI), however, are disclosed for the year in which the actual payment was made. 4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors. 5_Pension service cost in accordance with IAS 19: represents the company cost, not the actual entitlement or a payment. 6_The appointment of Niran Peiris as member of the Board of Management of Allianz SE ended as of 31 December 2020. On the basis of a post-contractual one-year non-compete clause already provided for in his service agreement, Niran Peiris is entitled to an allowance (“Karenzentschädigung”) of 50% of his annual target compensation (sum of base salary and variable target compensation), i.e. a total of € 1,625.5 thou. Annual Report 2020 – Allianz SE 53 B _ Management Report of Allianz SE Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Ivan de la Sota (Appointed: 04/2018) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Target 975 60 1,035 813 1,512 - - - 3,360 560 Min 975 60 1,035 - - - - - 1,035 560 Max 975 60 1,035 1,220 2,069 - - - 4,324 560 975 18 993 840 - 1,562 - - 3,395 488 975 60 1,035 682 1,290 - - - 3,007 560 975 18 993 840 - - - - 1,833 488 3,810 3,920 1,595 4,884 3,883 3,567 2,321 Giulio Terzariol (Appointed: 01/2018) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Target 975 18 993 813 1,512 - - - 3,318 556 Min 975 18 993 - - - - - 993 556 Max 975 18 993 975 26 1,001 1,220 946 2,069 - - - 4,282 556 - 1,737 - - 3,683 483 975 18 993 700 1,322 - - - 3,016 556 975 26 1,001 946 - - - - 1,946 483 2019 Target 975 18 993 813 - 1,516 - - 3,322 488 2019 Target 975 26 1,001 813 - 1,516 - - 3,329 483 975 60 1,035 682 - - - - 1,717 560 2,277 975 18 993 700 - - - - 1,694 556 2,250 3,812 3,874 1,550 4,838 4,166 3,572 2,429 1_The disclosed LTI target/min/max and LTI actual figures of 2020 and 2019 represent the LTI fair values, which differ from the LTI allocation values. The determination of the LTI fair values is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index and their correlation. 2_The column “Actual grant“ is in line with the disclosure requirements under the German Accounting Standard No. 17. 3_The annual bonus disclosed for performance year 2020 is paid in 2021 and for performance year 2019 in 2020. The payments for share-based deferred compensation (AEI and LTI), however, are disclosed for the year in which the actual payment was made. 4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors. 5_Pension service cost in accordance with IAS 19: represents the company cost, not the actual entitlement or a payment. 54 Annual Report 2020 – Allianz SE Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total B _ Management Report of Allianz SE Dr. Günther Thallinger (Appointed: 01/2017) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 2019 Target 975 6 981 813 - 1,516 - - 3,310 473 Target 975 2 977 813 1,512 - - - 3,302 535 Min 975 2 977 - - - - - 977 535 Max 975 2 977 1,220 2,069 - - - 4,266 535 975 6 981 946 - 1,737 - - 3,664 473 975 2 977 700 1,322 - - - 3,000 535 975 6 981 946 - - - - 1,926 473 3,783 3,837 1,512 4,800 4,137 3,535 2,400 975 2 977 700 - - - - 1,678 535 2,212 Dr. Axel Theis (Appointed: 01/2015; end of service: 03/2020)6 Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Target 244 1 244 202 376 - - - 822 150 972 Min 244 1 244 - - - - - 244 150 394 Max 244 1 244 975 32 1,007 303 981 514 - - - 1,062 150 - 1,787 - - 3,775 564 1,212 4,340 244 1 244 176 336 - - - 756 150 906 975 32 1,007 981 - - - - 1,988 564 2,552 244 1 244 176 - - 1,801 - 2,221 150 2,371 2019 Target 975 32 1,007 813 - 1,516 - - 3,336 564 3,900 1_The disclosed LTI target/min/max and LTI actual figures of 2020 and 2019 represent the LTI fair values, which differ from the LTI allocation values. The determination of the LTI fair values is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index and their correlation. 2_The column “Actual grant“ is in line with the disclosure requirements under the German Accounting Standard No. 17. 3_The annual bonus disclosed for performance year 2020 is paid in 2021 and for performance year 2019 in 2020. The payments for share-based deferred compensation (AEI and LTI), however, are disclosed for the year in which the actual payment was made. 4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors. 5_Pension service cost in accordance with IAS 19: represents the company cost, not the actual entitlement or a payment. 6_The appointment of Dr. Axel Theis as member of the Board of Management of Allianz SE ended as of 31 March 2020. On the basis of a post-contractual one-year non-compete clause already provided for in his service agreement, Dr. Axel Theis is entitled to an allowance (“Karenzentschädigung”) of 50% of his annual target compensation (sum of base salary and variable target compensation), i.e. a total of € 1,625.5 thou. Dr. Axel Theis waived payment of the transitional allowance to which he would have been entitled. In any case, the transitional allowance would have been set-off against the non-compete allowance. Annual Report 2020 – Allianz SE 55 B _ Management Report of Allianz SE Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Base salary Perquisites Total fixed compensation Annual variable compensation Annual bonus Deferred compensation LTI 2020 – 2021/RSU4 LTI 2019 – 2020/RSU4 AEI 2016/RSU4 AEI 2015/RSU4 Total Pension service cost5 Total Renate Wagner (Appointed: 01/2020) Grant1 2020 Actual grant1, 2 Payout3 2019 2020 2019 2020 Target 975 32 1,007 813 1,512 - - - 3,332 477 Min 975 32 1,007 - - - - - 1,007 477 Max 975 32 1,007 1,220 2,069 - - - 4,296 477 3,809 1,484 4,773 - - - - - - - - - - - 975 32 1,007 700 1,324 - - - 3,032 477 3,508 - - - - - - - - - - - 975 32 1,007 700 - - - - 1,708 477 2,185 2019 Target - - - - - - - - - - - 1_The disclosed LTI target/min/max and LTI actual figures of 2020 and 2019 represent the LTI fair values, which differ from the LTI allocation values. The determination of the LTI fair values is based on an option pricing model taking into account additional input parameters, including the term structure of interest rates and the expected relative performance of the Allianz share price compared to the peer index. For the latter, simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, the volatility of the peer index and their correlation. 2_The column “Actual grant“ is in line with the disclosure requirements under the German Accounting Standard No. 17. 3_The annual bonus disclosed for performance year 2020 is paid in 2021 and for performance year 2019 in 2020. The payments for share-based deferred compensation (AEI and LTI), however, are disclosed for the year in which the actual payment was made. 4_The share price related value increase is capped at 200 % above grant price for the AEI/RSU and at 100 % above grant price for the LTI/RSU. Furthermore, the value increase is limited by the overall payout cap. The relevant share price used to determine the RSU value, and hence the final number of RSUs granted, and the caps are only available after sign-off by the external auditors. 5_Pension service cost in accordance with IAS 19: represents the company cost, not the actual entitlement or a payment. 56 Annual Report 2020 – Allianz SE SHARE-BASED REMUNERATION AND SHAREHOLDINGS In accordance with the method described earlier, a number of RSU were granted to each member of the Board of Management in March 2021. They will vest and be settled in 2025. Grants and outstanding holdings under the Allianz Equity Program (AEI, until and including for financial year 2018) and the LTI from the financial year 2019 Board members RSU Number of RSU granted on 5/3/20211 Number of RSU held at 31/12/20201 Oliver Bäte Sergio Balbinot Jacqueline Hunt Dr. Christof Mascher Niran Peiris Dr. Klaus-Peter Röhler Ivan de la Sota Giulio Terzariol Dr. Günther Thallinger Dr. Axel Theis Renate Wagner Total 14,749 8,360 8,216 8,072 5,765 6,228 7,999 8,216 8,216 2,060 8,216 49,935 30,361 26,077 27,732 20,691 18,394 21,592 21,049 24,767 29,990 5,159 86,097 275,747 1_The relevant value of an RSU is only available after sign-off of the Annual Report by the external auditors, therefore numbers are based on a best estimate. As disclosed in the Annual Report 2019, the share-based grant in 2020 was made to participants as part of their 2019 remuneration. The disclosure in the Annual Report 2019 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 6 March 2020 under the LTI are as follows: Oliver Bäte: 19,588, Sergio Balbinot: 11,001, Jacqueline Hunt: 10,902, Dr. Christof Mascher: 10,604, Niran Peiris: 7,929, Ivan de la Sota: 9,415, Giulio Terzariol: 10,604, Dr. Günther Thallinger: 10,604, Dr. Axel Theis: 11,001. Under the shareholding requirements, members of the Board of Management must build share ownership within three years shareholding requirements. Shareholding exposure as of 31 December 2020 € thou Board members Oliver Bäte Sergio Balbinot Jacqueline Hunt Dr. Christof Mascher Niran Peiris Dr. Klaus-Peter Röhler Ivan de la Sota Giulio Terzariol Dr. Günther Thallinger Dr. Axel Theis Renate Wagner B _ Management Report of Allianz SE Shareowner- ship portfolio1 RSU portfolio2 Total portfolio 2,611 10,022 12,633 746 746 746 746 - 746 746 746 - - 6,093 5,234 5,566 4,153 3,692 4,334 4,225 4,971 6,019 1,035 6,839 5,980 6,312 4,899 3,692 5,080 4,971 5,717 6,019 1,035 Proportion of total portfolio value on base salary in % 741 701 613 647 502 379 521 510 586 617 106 1_Based of the XETRA closing price of the Allianz share as of 30 December 2020. Shareholdings as of 31 December 2020: Oliver Bäte: 13,011 shares, Sergio Balbinot, Jacqueline Hunt, Dr. Christof Mascher, Niran Peiris, Ivan de la Sota, Giulio Terzariol and Dr. Günther Thallinger: 3,717 shares each. As part of the shareownership guideline, the first acquisition for Dr. Klaus-Peter Röhler and Renate Wagner will take place in 2021. 2_Based on the XETRA closing price of the Allianz share as of 30 December 2020 and the portfolio as of 31 December 2020 shown in the table reporting the share-based compensation. Annual Report 2020 – Allianz SE 57 B _ Management Report of Allianz SE PENSIONS Company contributions to the current pension plan “My Allianz Pension” are generally 15 % of total target direct compensation, reduced by an amount covering the death and occupational or general disability risk. They are invested in a fund with a guarantee on the contributions paid, but no further interest guarantee. For members with pension rights under the now frozen defined benefit plan, the above contribution rates are reduced by 19 % of the expected annual pension from that frozen plan. In 2020, Allianz Group paid € 6 mn (2019: € 5 mn) to increase reserves for pensions and similar benefits for active members of the Board of Management. As of 31 December 2020, reserves for pen- sions and similar benefits for active members of the Board of Manage- ment amounted to € 35 mn (2019: € 41 mn). In 2020, former members of the Board of Management and their dependents received remunerations and other benefits totaling € 8 mn (2019: € 7 mn), while reserves for current pension obligations and accrued pension rights totaled € 166 mn (2019: € 153 mn). Individual pensions: 2020 and 2019 € thou (total might not sum up due to rounding) Defined benefit pension plan (frozen) Contribution-based pension plan (frozen)1 Current pension plan AVK/APV2 Transition payment3 Total Board of Management Oliver Bäte Sergio Balbinot Jacqueline Hunt Dr. Christof Mascher7 Niran Peiris Dr. Klaus-Peter Röhler Ivan de la Sota Giulio Terzariol Dr. Günther Thallinger Dr. Axel Theis8 Renate Wagner Expected annual pension payment4 SC5 DBO6 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 - - - - - - - - - - 17 - 14 14 19 19 - - 120 120 - - - - - - - - - - - - 15 - 13 11 17 14 - - 26 92 - - - - - - - - - - - - 486 - 407 377 429 387 - - - 3,479 - - SC5 151 82 5 4 - - 9 6 - - 22 - 74 42 61 30 63 38 10 34 9 - DBO6 4,255 3,898 34 32 - - 4,010 3,770 - - 1,783 - 73 61 739 660 1,885 1,700 - 2,910 250 - SC5 812 750 464 429 458 449 464 429 429 413 346 - 462 426 462 425 464 429 110 406 464 - DBO6 3,765 2,868 2,354 1,836 1,720 1,270 2,417 1,897 1,188 751 1,302 - 1,197 710 1,427 935 1,927 1,420 - 1,712 683 - SC5 DBO6 7 6 3 3 - - 6 6 - - 8 - 11 9 17 14 7 7 3 11 4 - 51 46 11 9 - - 58 52 - - 249 - 137 122 297 277 47 42 - 330 15 - SC5 72 53 - - - - - DBO6 1,332 1,201 - - - - - 49 912 - - - - - - - - - - - 22 - - - - - - - - - - - - - 896 - - SC5 1,041 891 472 435 458 449 479 489 429 413 390 - 560 488 556 483 535 473 150 564 477 - DBO6 9,403 8,013 2,400 1,877 1,720 1,270 6,485 6,631 1,188 751 3,821 - 1,814 1,270 2,891 2,260 3,860 3,162 - 9,327 948 - 1_The service cost of the frozen contribution-based pension plan reflects the continued death and disability cover. 2_Plan participants contribute 3 % of their relevant salary to the AVK. For the AVK the minimum guaranteed interest rate is 1.75 % – 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 participants were contributing to the AVK. 3_For details on the transition payment, see section “Termination of service”. In any event a death benefit is included. 4_Expected annual pension payment at assumed retirement age for the frozen defined benefit pension plan, excluding payments for the current pension plan. 5_SC = service cost. Service costs are calculatory costs for the DBO related to the business year reported. 6_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_Dr. Christof Mascher waived the transitional allowance to which he would have been entitled. Such transitional allowance would have been set-off against the non-compete allowance (“Karenzentschädigung”) in any case. 8_As Dr. Axel Theis retired on 31 March 2020, his employer-financed DBO of € 9,141 thou (of which € 3,748 thou for the frozen defined benefit pension plan, € 3,087 thou for the frozen contribution-based pension plan, € 1,858 thou for the current pension plan and € 448 thou AVK/APV) as of 31 December 2020, is taken into account at the former board members. He waived the transitional allowance to which he would have been entitled. In any case, the transitional allowance would have been set-off against the non-compete allowance. OUTLOOK FOR 2021 NEW BOARD MEMBERS The remuneration of the new regular members of the Board of Management of Allianz SE, Dr. Barbara Karuth-Zelle and Christopher Townsend, has been set at the same level as for the other regular members of the Board of Management. TARGET COMPENSATION ADJUSTMENT FOR THE CHAIRMAN OF THE BOARD OF MANAGEMENT OF ALLIANZ SE The Supervisory Board has decided to adjust the total target and overall compensation cap of the Chairman of the Board of Management effective 1 January 2021. The increase of the target compensation was actually already planned for 2020 due to the contract extension of Oliver Bäte on 1 October 2019 and is in line with the usual approach at Allianz to increase the target compensation of the Chairman of the Board to market level only if – as in the case of Oliver Bäte – performance and success prove 58 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE assessment principles, and the determination of any payout and pay- ment dates. The duration of the deviation shall be determined by the Supervisory Board at its due discretion, but should not exceed a period of four years. In a crisis situation, for example, this provision is intended to allow the appointment of a new board member, e.g., with crisis management expertise, with a compensation structure that tempo- rarily deviates from the remuneration structure. The Supervisory Board is also entitled to take appropriate account of extraordinary unforeseeable developments when deter- mining the amount of the variable compensation. This rule takes up a recommendation of the German Corporate Governance Code and allows to adjust the remuneration in rare unforeseeable exceptional cases. Conceivable cases of application include, for example, signifi- cant changes in accounting rules or in the tax or regulatory framework, as well as catastrophic events not yet known at the time of target set- ting. The application of this rule may also lead to a reduction in the variable compensation. The Supervisory Board may also adjust the target compensation of the members of the Board of Management insofar as this is appro- priate to ensure that the compensation of the Chairman of the Board of Management or a regular member of the Board of Management is appropriate with regard to their duties and performance. In doing so, it shall take into account the comparison of board compensation horizontally and vertically. The aim of this rule is to adjust board compensation moderately on the basis of horizontal and vertical compensation trends and thus avoid major compensation increases. It does not constitute an automatic adjustment, but requires a justified decision by the Supervisory Board in each case. Such a moderate adjustment of the target compensation does not in itself represent a significant change to the compensation system. These adjustments or deviations must be justified in detail in the respective remuneration report for the reported financial year. The remuneration report is prepared in accordance with ARUG II and submitted to the Annual Shareholders’ Meeting for approval. By way of clarification, it is mentioned that members of the Board of Management appointed for the first time may be granted corresponding payments or benefit commitments in connection with the commencement of their appointment to the Board of Management of Allianz SE in order to compensate for compensation or pension entitlements forfeited with previous employers. Such compensation commitments are important for the possibility of attracting external candidates for the Board of Management. Payments made on the basis of these commitments are by their nature not considered with regard to the calculation of the overall compensation cap. to be sustainable. The increase was postponed and the originally planned resolution on the Board of Management remuneration system was not submitted to the Annual Shareholders’ Meeting for approval in 2020 in order to be able to update the horizontal comparison once again on the basis of the remuneration reports of peer companies published in 2020. This horizontal comparison has led to the following conclusion: The annual target compen- sation excluding pension contributions will be increased from € 5,687 thou to € 6,371 thou, and the overall compensation cap will be adjusted from € 10,000 thou to € 11,750 thou respectively. The ratio of the Chairman of the Board’s target compensation to that of an regular board member has thus been set at 1.96, up from the previous factor of 1.75. This factor corresponds to the average ratio of regular board members to board chairmen in the DAX. In addition, the compensation of the Board of Manage- ment was subjected to a horizontal comparison with DAX com- panies and international competitors. This showed that Allianz is in the 86th percentile of DAX companies relative to its size (reve- nue, number of employees and market capitalization). The Super- visory Board has set the 75th percentile as the appropriate level of target compensation in terms of the horizontal comparison. The target compensation of the regular board members is at the 75th percentile and was therefore found to be appropriate, while the target compensation of the Chairman of the Board is only at the 55th percentile and was therefore not appropriate. The new target compensation of the Chairman of the Board is also at the 75 t h percentile. The adjustment of the target compen- sation of the Chairman was made with the consent of the social partners (employee representatives of the Supervisory Board) of Allianz SE. ADJUSTMENT OF THE BOARD OF MANAGEMENT’S REMUNERATION SYSTEM OF ALLIANZ SE At its meeting on 18 February 2021, the Supervisory Board adopted the current remuneration system for the Board of Management of Allianz SE. It differs only slightly from the system applicable until 2020 and takes into account, among other things, the current requirements of the German Stock Corporation Act (ARUG II) and the German Corporate Governance Code through technical adjustments. The remuneration system for the Board of Management thus adopted will be submitted to the 2021 Annual Shareholders’ Meeting for approval. The first change relates to the possibility of temporarily deviating from the remuneration system in exceptional circumstances in accordance with the statutory provision (§ 87a (2) German Stock Corporation Act), if this is necessary in the interests of the long-term welfare of the company. The assessment may take into account both macroeconomic and company-related exceptional circumstances, such as impairment of the long-term viability and profitability of the company. Any deviation requires a prior proposal by the Personnel Committee. The components of the remuneration system from which deviations may be made in exceptional cases include in particular the base salary, the annual bonus and the long-term incentive (LTI), in- cluding their relationship to each other, their respective assessment bases where applicable, the target setting and target achievement Annual Report 2020 – Allianz SE 59 B _ Management Report of Allianz SE Remuneration of the Allianz SE Supervisory Board 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 regard to its compliance with German, European, and international corporate governance recommendations and regulations. REMUNERATION PRINCIPLES  In view of the activities and its business and financial situation of Allianz, the amount of the remuneration for the Supervisory Board is based on the fourth quartile of the Supervisory Board remu- neration of the companies reported in the DAX.  The remuneration structure takes into account the individual functions and responsibilities of Supervisory Board members, such as chair, vice chair, or committee mandates.  The remuneration structure allows proper oversight of business as well as independent decisions on executive personnel and re- muneration. REMUNERATION STRUCTURE AND COMPONENTS The remuneration structure, which comprises fixed and committee- related remuneration only, was approved by the Annual General Meeting in 2018 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 pro rata temporis after the end of the respective quarter of the business year for services rendered over that period. In 2020, each regular Supervisory Board member received a fixed compensation amounting to € 125 thou per year. The Chairperson received € 250 thou, each Vice Chairperson received € 187.5 thou. COMMITTEE-RELATED REMUNERATION The Chairperson and members of the Supervisory Board committees receive additional committee-related remuneration. The committee- related remuneration is as follows: ATTENDANCE FEES AND EXPENSES In addition to the fixed and committee-related remuneration, members of the Supervisory Board receive an attendance fee of € 1,000 for each Supervisory Board or committee meeting they attend. Should several meetings be held on the same or consecutive days, the attendance fee will only be paid once. In addition, Allianz SE reimburses the Super- visory Board members for their out-of-pocket expenses and the VAT payable on their Supervisory Board service. The company provides in- surance coverage and technical support to the Supervisory Board members to an extent reasonable for carrying out their Supervisory Board duties. In the course of the latest change to the German Corpo- rate Governance Code, the recommendation for a 10 % deductible for members of the Supervisory Board in the D&O insurance was deleted without replacement. In light of the reasons of the respective Code Commission for this change, i.e., that a deductible would not present a suitable means to increase the sense of responsibility and motivation of Supervisory Board members, it was decided to waive the deductible when signing a new D&O insurance contract in 2020. 60 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE REMUNERATION FOR 2020 The total remuneration for all Supervisory Board members, including attendance fees, amounted to € 2,652 thou (2019: € 2,685 thou). The following table shows the individual remuneration for 2020 and 2019: Individual remuneration: 2020 and 2019 € thou (total might not sum up due to rounding) Committees1 N C C M M M M A M M M M C C M M M M P C C M M M M Members of the Supervisory Board Michael Diekmann (Chairman) Jim Hagemann Snabe (Vice Chairman) Gabriele Burkhardt-Berg (Vice Chairwoman) Sophie Boissard Christine Bosse Dr. Friedrich Eichiner Jean-Claude Le Goaër Martina Grundler Herbert Hainer Godfrey Robert Hayward Frank Kirsch Jürgen Lawrenz Total2 R C C M M M M M M M M S C C M M M M M M M M T M M C C M M M M M M Fixed remunera- tion Committee remunera- tion 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 250.0 250.0 187.5 187.5 187.5 187.5 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0 225.0 225.0 75.0 75.0 50.0 50.0 50.0 50.0 25.0 25.0 150.0 150.0 75.0 75.0 50.0 50.0 50.0 50.0 25.0 25.0 25.0 25.0 50.0 50.0 Attend- ance fees 11.0 9.0 4.0 6.0 3.0 6.0 3.0 9.0 3.0 6.0 6.0 9.0 3.0 9.0 4.0 7.0 5.0 6.0 2.0 6.0 4.0 6.0 4.0 6.0 Total remunera- tion 486.0 484.0 266.5 268.5 240.5 243.5 178.0 184.0 153.0 156.0 281.0 284.0 203.0 209.0 179.0 182.0 180.0 181.0 152.0 156.0 154.0 156.0 179.0 181.0 2020 2019 1,750.0 1,750.0 850.0 850.0 52.0 85.0 2,652.0 2,685.0 Legend: C = Chairperson of the respective committee, M = Member of the respective committee 1_Abbreviations: A - Audit, N - Nomination, P - Personnel, R - Risk, S - Standing, T - Technology 2_The total reflects the remuneration of the full Supervisory Board in the respective year. REMUNERATION FOR MANDATES IN OTHER ALLIANZ COMPANIES AND FOR OTHER FUNCTIONS Mr. Jürgen Lawrenz did not receive any remuneration for his service on the Supervisory Board of Allianz Technology SE. All current employee representatives of the Supervisory Board, except for Ms. Martina Grundler, are employed by Allianz Group companies and receive market- based remuneration for their services. OUTLOOK 2021 The remuneration of the Supervisory Board of Allianz SE was last amended by the Annual General Meeting on 9 May 2018. In light of the statutory provisions, the Annual General Meeting of Allianz SE will vote on the Supervisory Board’s Remuneration System on 5 May 2021, which will also entail remuneration for members of the Nomination Committee. The remuneration is set at half of the usual committee remuneration and amounts to € 25 thou for the Chairper- son and € 12.5 thou for a regular member. This remuneration takes into account the increased tasks in the selection of suitable candi- dates for the election of shareholder representatives on the Super- visory Board as well as the increased selection frequency due to the proposed shortening of the term of office of shareholder representa- tives on the Supervisory Board from five to four years. In 2021, the Supervisory Board will also set up a Sustainability Committee, in particular, to closely monitor the sustainability strategy of the Allianz SE Board of Management. The remuneration is set at the usual committee remuneration level of € 50 thou for the Chairperson and € 25 thou for a regular member. Annual Report 2020 – Allianz SE 61 B _ Management Report of Allianz SE OTHER INFORMATION Our steering BOARD OF MANAGEMENT AND ORGANIZATIONAL STRUCTURE Allianz SE has a divisional Board structure based on functional and business responsibilities. Business-related divisions reflect our business segments Property-Casualty, Life/Health, Asset Management, and Corporate and Other. In 2020, they were overseen by five board members. The following divisions focus on Group functions and come with business-related responsibilities: Chairman of the Board of Management; Finance, Controlling and Risk; Investment Manage- ment; Operations and Allianz Services; Human Resources, Legal, Compliance and M&A; and Business Transformation1. For further information on Board of Management members and their responsibilities, please refer to Mandates of the Members of the Board of Management. TARGET SETTING AND MONITORING For Allianz SE the same key performance indicators and target values as for the Allianz Group apply. In particular the key financial perfor- mance indicators are based on IFRS. The Allianz Group steers its operating entities and business seg- ments via an integrated management and control process. It begins with the definition of a business-specific strategy and goals, which are discussed and agreed upon between the Holding and operating enti- ties. Based on this strategy, our operating entities prepare three-year plans, which are then aggregated to form the financial plans for the business divisions and for the Allianz Group as a whole. This plan also forms the basis for our capital management. The Supervisory Board 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-term and long-term targets to ensure effectiveness and emphasize sustainability. For further details about our remuneration structure, including target setting and performance assessment, please refer to the Remuneration Report. We continuously monitor our business performance against these targets through monthly reviews – which cover key operational and financial metrics – to ensure we can move quickly and take appropriate measures in the event of negative developments. The Allianz Group uses operating profit and net income as key financial performance indicators across all its business segments. Other indi- cators include segment-specific figures, such as the combined ratio for Property-Casualty, return on equity2 and new business margins for Life/Health, and the cost-income ratio for Asset Management. Besides performance steering, we also have a risk steering pro- cess in place, which is described in the Risk and Opportunity Report. Non-financial key performance indicators (KPIs) are used to assess the organizational health of Allianz and are reflected in the annual bonus of the Board of Management. In line with our Renewal Agenda 2.0 motto “Simplicity Wins”, Customer Centricity and employee commitment – the two key levers identified – are reflected in two KPIs: the Net Promoter Score (NPS3) and the Inclusive Meritocracy Index. For further information on non-financial KPIs, please refer to the Combined Separate Non-Financial Report for the Allianz Group and Allianz SE (according to § 289b (3) in conjunction with § 298 (2) of the HGB) of the Allianz Group’s Annual Report 2020. For an overview of the development and expected develop- ment of the most important financial and non-financial KPIs, please refer to the Outlook 2021 of the Allianz Group’s Annual Report 2020. Branches In 2020, Allianz SE operated its business from Munich and from branch offices in Rome (Italy), Casablanca (Morocco), Singapore, Labuan (Malaysia), Wallisellen (Switzerland), Vienna (Austria) and Dublin (Ireland). Takeover-related Statements and Explanations The following information is provided pursuant to § 289a of the German Commercial Code (“Handelsgesetzbuch – HGB”) and § 176 (1) of the German Stock Company Act (“Aktiengesetz – AktG”). COMPOSITION OF SHARE CAPITAL As of 31 December 2020, the share capital of Allianz SE was € 1,169,920,000. It was divided into 412,293,128 registered and fully paid-up shares with no par value. 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. An approval duly applied for may only be withheld if it is deemed neces- sary in the company’s interest 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 generally subject to a three-year lock-up period. During the lock-up period, employees can exercise their voting rights. INTERESTS IN THE SHARE CAPITAL EXCEEDING 10 % OF THE VOTING RIGHTS Allianz SE is not aware of any direct or indirect interests in the share capital that exceed 10 % of the voting rights. SHARES WITH SPECIAL RIGHTS CONFERRING POWERS OF CONTROL There are no shares with special rights conferring powers of control. 1_This member of the Board of Management also oversees Insurance Iberia & Latin America and Allianz Partners. 2_Excluding unrealized gains/losses on bonds net of shadow accounting. 3_NPS is a measurement of customers’ willingness to recommend Allianz. Top-down NPS is measured regularly according to global cross-industry standards and allows benchmarking against competitors in the respective markets. 62 Annual Report 2020 – Allianz SE B _ Management Report of Allianz SE LEGAL AND STATUTORY PROVISIONS APPLICABLE TO THE APPOINTMENT AND REMOVAL OF MEMBERS OF THE BOARD OF MANAGEMENT AND TO AMENDMENTS OF THE STATUTES The appointment and removal of members of Allianz SE’s Board of Management is governed by Articles 9 (1), 39 (2) and 46 of the SE Regulation, §§ 84, 85 AktG, § 24 (3) and § 47 No. 1 German Insurance Supervision Act (“Versicherungsaufsichtsgesetz – VAG”), and the Statutes. According to the Statutes, the Board of Management shall consist of at least two persons; the Supervisory Board determines the number of any additional members (§ 5 (1) of the Statutes). The members of the Board of Management are appointed by the Super- visory Board for a term of up to five years; reappointment is permitted for a maximum of five years in each case (§ 5 (3) of the Statutes). A simple majority of the votes cast in the Supervisory Board is required to appoint members of the Board of Management. In the case of a tie vote, the Chairperson of the Supervisory Board, who pursuant to Article 42 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 Vice Chairperson shall have the casting vote, provided he or she is a shareholder representative. A Vice Chairperson who is an employee representative has no casting vote (§ 8 (3) of the Statutes). Amendments to the Statutes are governed by Article 59 SE Regu- lation, § 179 AktG, and the Statutes. § 13 (4) of the Statutes of Allianz SE stipulates that, unless mandatory law requires otherwise, changes to the Statutes require a two-thirds majority of the votes cast at a General Meeting or, if at least one half of the share capital is represented, a simple majority of the votes cast. Where the law requires a majority in capital for a shareholder resolution, a simple majority of the capital represented at the General Meeting is sufficient, provided this is in line with legal requirements. The Supervisory Board may alter the wording of the Statutes (§ 179 (1) AktG 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 8 May 2023, with the approval of the Supervisory Board, by issuing new registered no-par value shares against contributions in cash and/or in kind, on one or more occasions:  Up to a total of € 334,960,000 (Authorized Capital 2018/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 pertaining 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 below the stock market price. The Board of Manage- ment may furthermore exclude the shareholders’ subscription rights with the consent of the Supervisory Board in the event of a capital increase against contributions in kind.  Up to a total of € 15,000,000 (Authorized Capital 2018/II): The shareholders’ subscription rights are excluded. New shares may only be issued to employees of Allianz SE and its Group companies. The company’s share capital is conditionally increased by up to € 250,000,000 (Conditional Capital 2010/2018). This conditional capital increase will only be carried out to the extent that the holders of convertible bonds, bonds with warrants, convertible participation rights, participation rights, and subordinated financial instruments issued against cash by Allianz SE or its subsidiaries, based on the authorizations granted by the General Meeting on 5 May 2010 or 9 May 2018, exercise their conversion or option rights, or to the extent that conversion obligations from such bonds are fulfilled, and to such extent that treasury shares or shares from authorized capital are not used for such purpose. Under an authorization by the General Meeting on 9 May 2018, the Board of Management may, until 8 May 2023, buy back Allianz shares corresponding to up to 10 % of the lower of (i) the share capital at the moment of the shareholder resolution and (ii) the share capital at the moment of the buy-back, and to use those shares for other purposes (§ 71 (1) No. 8 AktG). Together with other treasury shares that are held by Allianz SE, or which are attributable to it under §§ 71a et seq. AktG, 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, in particular those specified in the authorization. Furthermore, the acquisition of treasury shares under this authoriza- tion may also be carried out using derivatives, provided such deriva- tives 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) AktG) under an authorization of the General Meeting valid until 8 May 2023. The total number of shares acquired thereunder, together with treasury shares held by Allianz SE or attributable to it under §§ 71a et seq. AktG, 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 termina- tion right, if and when the counterparty merges with another entity or its ownership or control situation changes materially. Agree- ments with brokers regarding services connected with the pur- chase of reinsurance cover also provide for termination rights in case of a change of control. Such clauses are standard market practice.  Allianz SE is also party to various bancassurance distribution agreements for insurance products in various regions. These dis- tribution agreements normally include a clause under which the parties have an extraordinary termination right in the event of a change of control of the other party’s ultimate holding company.  Shareholder agreements and joint ventures to which Allianz SE is a party often contain change-of-control clauses that provide, as the case may be, for the termination of the agreement, or for put or call rights that one party can exercise with regard to the joint Annual Report 2020 – Allianz SE 63 B _ Management Report of Allianz SE venture or the target company, if there is a change of control of the other party.  The framework agreements between Allianz SE and the subsidiaries of various car manufacturers 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 termination rights in the event of 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”). Where such termination rights are exercised, the respective credit lines have to be replaced by new credit lines under conditions then applicable.  Under the Allianz Sustained Performance Plan (ASPP), Restricted Stock Units (RSUs) – i.e. virtual Allianz shares – are granted to senior management of the Allianz Group worldwide as a stock-based remuneration component. The conditions for these RSUs contain change-of-control clauses, which apply when a majority of the voting share capital in Allianz SE is directly or indirectly acquired by one or more third parties who do not belong to the Allianz Group, and which provide for an exception from the usual vesting and exercise periods. In line with the relevant general conditions, the company will release the RSUs to 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 equal or exceed the average market value of the Allianz share and the price offered per Allianz share in a preceding tender offer. By providing for the non-application of the vesting period in the event of a change of control, the terms take into account the fact that the conditions influencing the share price are sub- stantially different when there is a change of control. 64 Annual Report 2020 – Allianz SE FINANCIAL STATEMENTS OF ALLIANZ SE Annual Report 2020 – Allianz SE 65 C _ Financial Statements of Allianz SE FINANCIAL STATEMENTS BALANCE SHEET € thou as of 31 December ASSETS A. Intangible assets I. Self-created industrial property rights and similar rights and assets II. Licenses acquired against payment, industrial property rights, and similar rights and assets as well as licenses for such rights and assets III. Advance payments made B. Investments I. Real estate, real estate rights, and buildings, including buildings on land not owned by Allianz SE II. Investments in affiliated enterprises and participations III. Other investments IV. Funds held by others under reinsurance business assumed C. Receivables I. Accounts receivable on reinsurance business thereof from affiliated enterprises: € 237,924 thou (2019: € 614,161 thou) thereof from participations¹: € 16,381 thou (2019: € 20,172 thou) II. Other receivables thereof from affiliated enterprises: € 3,801,735 thou (2019: € 3,998,026 thou) thereof from participations¹: € 1,777 thou (2019: € 1,751 thou) D. Other assets I. Tangible fixed assets and inventories II. Cash with banks, checks, and cash on hand III. Miscellaneous assets E. Deferred charges and prepaid expenses I. Accrued interest and rent II. Other deferred charges and prepaid expenses F. Excess of plan assets over pension and similar obligations Total Assets 1_Companies in which we hold a participating interest. Note 2020 2020 2019 1, 2 1, 3 – 6 21,321 350 85 271,612 73,488,859 34,220,402 13,128,990 21,756 18,864 1,010 85 19,960 264,130 74,458,220 29,373,172 11,036,788 121,109,863 115,132,310 776,520 1,132,058 7 4,005,553 4,261,362 4,782,073 5,393,420 13,332 293,025 89,246 206,171 64,829 8 9 10 395,603 271,001 - 14,135 351,186 435,586 800,907 197,887 68,592 266,478 12,509 126,580,295 121,625,585 66 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Note 2020 2020 2020 2019 12 1,169,920 702 1,169,218 28,031,707 6,805,274 4,375,717 2,098,572 536,438 13,397,194 23,673 2,571,764 87,127 1,229 6,804,045 2,119,617 21,044 2,308,453 1,772,015 15,786,832 2,389,638 23,681 8 87,127 - 1,169,920 1,671 1,168,249 27,998,146 1,229 6,779,948 6,781,177 4,480,282 40,381,915 40,427,854 16,632,819 13,390,097 1,842,823 44,080 1,798,743 614,790 28,711 586,079 15,742,376 2,539,816 13,202,561 27,423 9 27,414 2,208,537 29,150 - 29,150 18,714,769 17,852,484 8,506,049 3,121,192 8,446,272 1,603,237 411,163 461,375 2,743,109 2,750,117 287 36,062,254 250,375 36,440,949 39,216,813 39,902,816 6,738 2,824 126,580,295 121,625,585 13, 16 14 15 16 16 16 € thou as of 31 December EQUITY AND LIABILITIES A. Shareholders’ equity I. Issued capital Less: mathematical value of own shares II. Additional paid-in capital III. Revenue reserves 1. Statutory reserve 2. Other revenue reserves IV. Net earnings B. Subordinated liabilities C. Insurance reserves I. Unearned premiums 1. Gross 2. Less: amounts ceded II. Aggregate policy reserves 1. Gross 2. Less: amounts ceded III. Reserves for loss and loss adjustment expenses 1. Gross 2. Less: amounts ceded IV. Reserves for premium refunds 1. Gross 2. Less: amounts ceded V. Claims equalization and similar reserves VI. Other insurance reserves 1. Gross 2. Less: amounts ceded D. Other provisions E. Funds held with reinsurance business ceded F. Other liabilities I. Accounts payable on reinsurance business thereof to affiliated enterprises: € 254,729 thou (2019: € 328,252 thou) thereof to participations¹: € 12 thou (2019: € 6 thou) II. Bonds thereof to affiliated enterprises: € 2,743,109 thou (2019: € 2,750,117 thou) III. Liabilities to banks IV. Miscellaneous liabilities thereof for taxes: € 14,117 thou (2019: € 18,456 thou) thereof for social security: € 2 thou (2019: € 4 thou) thereof to affiliated enterprises: € 34,527,802 thou (2019: € 34,415,254 thou) thereof to participations¹: € 0 thou (2019: € 2 thou) G. Deferred income Total equity and liabilities 1_Companies in which we hold a participating interst. Annual Report 2020 – Allianz SE 67 C _ Financial Statements of Allianz SE INCOME STATEMENT € thou I. Technical account 1. Premiums earned (net) a) Gross premiums written b) Ceded premiums written c) Change in gross unearned premiums d) Change in ceded unearned premiums Premiums earned (net) 2. Allocated interest return (net) 3. Other underwriting income (net) 4. Loss and loss adjustment expenses (net) a) Claims paid aa) Gross ab) Amounts ceded in reinsurance b) Change in reserve for loss and loss adjustment expenses (net) ba) Gross bb) Amounts ceded in reinsurance Loss and loss adjustment expenses (net) 5. Change in other insurance reserves (net) 6. Expenses for premium refunds (net) 7. Underwriting expenses (net) 8. Other underwriting expenses (net) 9. Subtotal (net underwriting result) 10. Change in claims equalization and similar reserves 11. Net technical result II. Non-technical account 1. Investment income 2. Investment expenses 3. Investment result 4. Allocated interest return 5. Other income 6. Other expenses 7. Other non-technical result 8. Non-technical result 9. Net operating income 10. Income Taxes Amounts charged to other Group companies 11. Other taxes 12. Taxes 13. Net income 14. Unappropriated earnings carried forward 15. Transfer to revenue reserves To other revenue reserves Notes 2020 2020 2020 2019 12,228,142 (1,005,252) (316,496) (18,408) (7,651,758) 441,663 (347,834) (15,701) 11,222,890 (334,905) (7,210,095) (363,536) 18 19 20 21 22 23 24 7,712,099 (2,454,138) 5,257,961 (22,651) 2,957,837 (3,848,947) 12,384,252 (758,707) 11,625,546 (170,812) (19,104) (189,916) 10,887,985 11,435,629 16,255 - 17,912 1 (7,322,103) 875,494 (6,446,609) (1,658,675) (185,265) (1,843,940) (7,573,630) (8,290,549) (9,090) 3,474 21,410 (639) (3,161,360) (3,557,564) (23,319) 140,314 (363,227) (222,913) 5,235,310 (23,654) (397,454) 172,179 (225,275) 7,550,956 (1,622,082) 5,928,874 (18,860) 5,910,013 2,129,025 (3,643,275) 25 (891,111) (1,514,251) 26 (250,000) 731,924 481,924 4,521 4,344,199 4,121,286 486,445 4,395,763 4,170,487 (66,668) 485,184 418,516 14,373 432,889 4,607,731 4,603,376 527,986 776,906 (760,000) (760,000) 4,375,717 (900,000) (900,000) 4,480,282 16. Net earnings 27 68 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE NOTES TO THE FINANCIAL STATEMENTS NATURE OF OPERATIONS AND BASIS OF PREPARATION NATURE OF OPERATIONS Allianz SE, the holding and reinsurance company of the Allianz Group, is located at Königinstraße 28, 80802 Munich, and registered in the Commercial Register of the municipal court in Munich under HRB 164232. The annual financial statements of Allianz SE and the consoli- dated financial statements of the Allianz Group are published digitally in the Federal Gazette (“Bundesanzeiger”). BASIS OF PREPARATION Our financial statements and the management report have been pre- pared in accordance with the regulations of the German Commercial Code (HGB), the German Stock Corporation Act (AktG), the Law on the Supervision of Insurance Enterprises (VAG), and the Government Order on the External Accounting Requirements of Insurance Enterprises (RechVersV). All amounts in these financial statements are presented in thou- sands of Euros (€ thou), unless otherwise stated. ACCOUNTING, VALUATION, AND CALCULATION METHODS INTANGIBLE ASSETS Intangible assets are recorded at acquisition or construction cost less depreciation. They are amortized on a straight-line basis over a useful life of generally three to five years. In case of a permanent impairment, an unscheduled write-down is recognized. Based on the capitalization option in accordance with § 248 (2) sentence 1 of the German Com- mercial Code, the internally generated intangible assets are capital- ized. REAL ESTATE, REAL ESTATE RIGHTS, AND BUILDINGS, INCLUDING BUILDINGS ON LAND NOT OWNED BY ALLIANZ SE These items are recorded at acquisition or construction cost less depre- ciation. Depreciation is measured mainly using a straight-line method according to ordinary useful life. The useful life of newly acquired properties is based on the remaining useful life in the purchase report. For all other assets, we use tax depreciation tables. In case of a per- manent impairment, the values of these items are adjusted through unscheduled write-downs. INVESTMENTS IN AFFILIATED ENTERPRISES AND PARTICIPATIONS SHARES IN AFFILIATED ENTERPRISES AND PARTICIPATIONS These are recorded at cost less impairments, in accordance with § 341b (1) of the German Commercial Code in conjunction with § 253 (3) sen- tence 5 of the German Commercial Code. Impairments are measured either as the difference between the acquisition cost and the respective value, in accordance with IDW RS HFA 10 in conjunction with IDW S1, or as the difference between the acquisition cost and the lower share price as of 31 December 2020, or in some cases as the difference between the acquisition cost and the net asset value. Wherever the market value on the balance sheet date is higher than the previous year’s valuation, the value is written up to no more than the historical acquisition cost. LOANS IN AFFILIATED ENTERPRISES AND PARTICIPATIONS These items are normally recorded at cost less impairments, in accord- ance with § 253 (3) sentence 5 of the German Commercial Code. How- ever, when converting foreign currency loans into Euros at the report- ing date, the strict lower of cost or market value principle is applied. OTHER INVESTMENTS STOCKS, INTERESTS IN FUNDS, DEBT SECURITIES AND OTHER FIXED AND VARIABLE INCOME SECURITIES, MISCELLANEOUS INVESTMENTS These items are generally valued in accordance with § 341b (2) of the German Commercial Code in conjunction with § 253 (1), (4), and (5) of the German Commercial Code, using either the acquisition cost or the stock exchange or market value on the balance sheet date, whichever is lower. We calculate the acquisition cost by averaging the different acquisition costs for securities of the same type. REGISTERED BONDS, DEBENTURES AND LOANS These items are recorded at cost less impairments in accordance with § 253 (3) sentence 5 of the German Commercial Code. In accordance with § 341c of the German Commercial Code, amortized cost accounting is applied and the difference between acquisition cost and the re- demption amount is amortized over the remaining period, based on the effective interest method. ASSETS TO MEET LIABILITIES RESULTING FROM RETIREMENT PROVISION COMMITMENTS These assets are recorded at fair value in accordance with § 253 (1) of the German Commercial Code, and offset against the liabilities in Annual Report 2020 – Allianz SE 69 C _ Financial Statements of Allianz SE accordance with § 246 (2) of the German Commercial Code. Group life insurance contracts are recorded at asset value. If the liabilities exceed the fair value, the exceeding amount will be shown under other provisions. If the fair value of the assets exceeds the liabilities, the exceeding amount is shown as an excess of plan assets over pensions and similar obligations. The accounting and valuation method of the excess of plan assets over pension and similar obligations is the same as described in the section „Other provisions”. TANGIBLE FIXED ASSETS, INVENTORIES, AND MISCELLANEOUS ASSETS These items are recorded at acquisition cost less depreciation on a straight-line basis. The expected useful life is based on the tax depre- ciation tables. Low-value assets worth up to € 250 are written off im- mediately. A compound item for tax purposes formed in accordance with § 6 (2a) of the German Income Tax Act (EStG) for assets from € 250 to € 1,000 is depreciated by one fifth each year. DEFERRED TAX ASSETS When calculating deferred taxes, deferred tax assets and liabilities are offset. Based on the capitalization option in accordance with § 274 (1) sentence 2 of the German Commercial Code, the surplus of deferred tax assets over deferred tax liabilities is not recognized. REMAINING ASSETS These consist of the following: funds held by others under reinsurance business assumed,   bank deposits,  accounts receivable on reinsurance business,  other receivables,  cash with banks and cash on hand. These items are recorded at face value less repayments and impair- ments. INSURANCE RESERVES These consist of the following:  unearned premiums,  aggregate policy reserves,    claims equalization and similar reserves,  other insurance reserves. reserves for loss and loss adjustment expenses, reserves for premium refunds, Insurance reserves are set up according to the German Commercial Code and RechVersV requirements. The primary goal is to ensure our ongoing ability to satisfy reinsurance contract liabilities in all cases. Generally, reinsurance reserves are booked according to the cedent’s statements. For claims incurred but not yet reported, or not sufficiently reported, additional reserves are calculated using actuarial techniques. Insurance reserves in the ceded reinsurance business are calcu- lated according to the terms of the retrocession contracts. Unearned premiums are accrued premiums already written for future risk periods. They are calculated in accordance with German accounting principles, partly on the basis of information received from the cedents and partly using nominal percentages. Where unearned premiums are calculated using such percentages, these are based on many years of experience and the latest information available. Aggregate policy reserves for Life/Health reinsurance are generally recorded according to the amounts in the cedent’s statements. Reserves for loss and loss adjustment expenses are established for the payment of losses and loss adjustment expenses on claims that have occurred but are not yet settled. Reserves for loss and loss ad- justment expenses fall into two categories: case reserves for reported claims and reserves for losses incurred but not reported yet, or not sufficiently reported. Reserves for premium refunds are generally recorded according to the amounts in the cedent’s statements. For Property-Casualty reinsurance, the equalization reserve, the reserve for nuclear plants, the product liability reserve for major phar- maceutical risks, and reserves for risks relating to terrorist attacks are calculated according to § 341h of the German Commercial Code in conjunction with § 29 and § 30 RechVersV. The reserves are set up to moderate substantial fluctuations in the claims of individual lines of business. In cases where above-average or below-average claims occur, changes in the reserves mitigate the technical result for the individual lines of business. Other insurance reserves are generally recorded according to the amounts in the cedent’s statements. OTHER PROVISIONS Pension provisions are calculated applying actuarial principles. Other obligations such as provisions for jubilee payments, birthday pay- ments, early retirement payments and phased-in early retirement benefits are also calculated in accordance with actuarial principles. According to § 253 (2) sentence 1 of the German Commercial Code (HGB), the discount rate used for calculating the pension obli- gations has to be derived from a 10-year-average, for calculating other obligations it has to be derived from a 7-year-average. § 253 (6) sentence 2 of the German Commercial Code states that a positive difference resulting from the calculation of pension obliga- tions with the discount rate of 7-year-average versus 10-year-average is subject to the restriction on dividend payout. Apart from that, with respect to the discount rate, the simplifica- tion option set out in § 253 (2) sentence 2 of the German Commercial Code has still been applied (duration of fifteen years). The effect re- sulting from the change in the discount rate is reported under other non-technical result. For further information regarding the accounting for pensions and similar obligations, please refer to note 15 to our financial state- ments. Remaining other provisions are recognized at the settlement amount. Long-term provisions are discounted applying the net approach in accordance with IDW RS HFA 34. REMAINING LIABILITIES These consist of the following: subordinated liabilities, funds held with reinsurance business ceded,    other liabilities. 70 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE These items are valued at the settlement amount. Annuities are recorded at present value. gains/losses calculated for these asset classes and is disclosed in the investment result. PREPAID EXPENSES AND DEFERRED INCOME Accrued interest and rent are valued at nominal amounts. Premiums and discounts carried forward as prepaid income and expenses are amortized over the remaining life of the related financial instruments. CURRENCY TRANSLATION Transactions are generally recorded in the original currency and converted into Euros at the relevant daily rate (middle forex spot rate). Loans to affiliated enterprises denominated in foreign currencies are converted into Euros using the middle forex spot rate as of the reporting date and applying the strict lower of cost or market value principle. The valuation of foreign currency shares in affiliated enterprises and participations, stocks, interests in funds, and other variable and fixed-income securities is performed by converting their value from the original currency into Euro, using the middle forex spot rate as of the reporting date. Comparing the acquisition cost in Euros with the value in Euro as described above, the moderate lower-value principle is applied for affiliated enterprises and participations. For other investments, the strict lower of cost or market value principle is applied. As a result of this valuation method, currency gains and losses are not separately determined and shown as foreign-exchange gains/losses in the other non-technical result. Instead, the net effect of both changes (exchange rate and value in original currency) is re- flected in the impairments/reversals of impairments and in the realized Issued debt securities and borrowings denominated in foreign currencies are converted into Euro at the middle forex spot rate as of the reporting date. Unrealized losses are recognized immediately in the income statement, while unrealized gains are not. All other monetary assets and liabilities with a remaining term of one year or less recorded in foreign currency are valued at the middle forex spot rate as of the reporting date. Both unrealized losses and gains resulting from the valuation of these foreign currency posi- tions are reflected immediately in the other non-technical result as neither § 253 (1) sentence 1 nor § 252 (1) number 4 clause 2 of the German Commercial Code (HGB) are applicable. VALUATION UNITS Allianz SE made use of the option of forming valuation units as defined in § 254 of the German Commercial Code. This option is used for de- rivative contracts in which Allianz SE acts as an intra-group clearing agency. In this function, Allianz SE enters into derivative transactions with other Group companies and hedges the exposure resulting from these transactions by entering into mirror positions with the same term and structure but with different partners. Opposing positions whose performance completely offset each other have been combined into valuation units and form a perfect micro hedge. When accounting for valuation units, we apply the “freezing” method, which means that mutually offsetting changes in value of opposing positions (i.e., within valuation units) are not recorded in the income statement. More details regarding derivative transactions combined into valuation units are explained in note 17 to our financial statements. Annual Report 2020 – Allianz SE 71 C _ Financial Statements of Allianz SE SUPPLEMENTARY INFORMATION ON ASSETS 1 _ Change of assets A., B.I. through B.III. A. Intangible assets 1. Self-created industrial property rights and similar rights and assets 2. Licenses acquired against payment, industrial property rights, and similar rights and assets as well as licenses for such rights and assets 3. Advance payments made Subtotal A. B.I. Real estate, real estate rights, and buildings, including buildings on land not owned by Allianz SE B.II. Investments in affiliated enterprises and participations 1. Shares in affiliated enterprises 2. Loans to affiliated enterprises 3. Participations 4. Loans to participations Subtotal B.II. B.III. Other investments 1. Stocks, interests in funds and other variable-income securities 2. Debt securities and other fixed-income securities 3. Other loans a) Registered bonds b) Loans and promissory notes 4. Bank deposits Subtotal B.III. Subtotal B.I. – B.III. Total 2 _ Intangible assets Values stated as of 1 January 2020 € thou 18,864 1,010 85 19,960 264,130 72,731,869 1,134,420 590,432 1,500 74,458,220 1,233,848 24,819,884 2,029,921 271,905 1,017,614 29,373,172 104,095,523 104,115,483 % 0.3 69.9 1.1 0.6 - 71.5 1.2 23.8 2.0 0.3 1.0 28.2 100.0 The book value of intangible assets totaled € 22 mn (2019: € 20 mn) and mainly consists of internally generated software. The increase was primarily driven by the research and development costs of internally generated software, which amounted to € 2 mn. 3 _ Market value of investments Fair values and carrying amounts of the investments, subdivided into individual asset categories, were as follows: Book values and market values of investments € bn as of 31 December Real estate Equity securities Debt securities Loans Bank deposits Funds held by others under reinsurance business assumed Total Book value Market value Valuation reserve 2020 0.3 74.1 28.5 3.9 1.2 13.1 2019 0.3 74.6 24.8 3.4 1.0 11.0 2020 1.0 99.5 29.7 4.0 1.2 13.1 2019 0.9 97.5 25.7 3.6 1.0 11.0 2020 0.7 25.4 1.2 0.2 - - 2019 0.6 23.0 0.9 0.2 - - 121.1 115.1 148.6 139.8 27.5 24.7 72 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Net additions (+) Net disposals (-) Values stated as of 31 December 2020 Additions (+) € thou 7,161 105 - 7,266 13,273 645,739 538,212 801,996 - 1,985,947 856,171 33,771,203 1,520,590 172,672 228,120 36,548,755 38,547,975 38,555,241 Transfers € thou Disposals (-) € thou Revaluation (+) € thou Depreciation (-) € thou - - - - - - - (3,094) - (3,094) 3,094 - - - - 3,094 - - - 643 - 643 - 2,212,390 456,914 30,192 - 2,699,495 108,969 29,986,580 1,320,531 19,948 - 31,436,028 34,135,523 34,136,166 - - - - - - - - - - - 24,737 - - - 24,737 24,737 24,737 € thou 21,321 350 85 21,756 271,612 70,914,595 1,215,718 1,357,046 1,500 € thou 2,456 (661) - 1,796 7,482 4,705 123 - 4,828 5,792 250,623 (1,817,274) - 2,097 - 81,298 766,614 - 252,720 (969,362) 73,488,859 141,379 151,949 - - - 293,328 551,839 556,667 608,916 3,657,411 200,059 152,725 228,120 4,847,230 3,885,350 3,887,146 1,842,763 28,477,295 2,229,980 424,630 1,245,734 34,220,402 107,980,873 108,002,629 % 0.3 65.7 1.1 1.3 - 68.1 1.7 26.4 2.1 0.4 1.2 31.7 100.0 VALUATION METHODS USED TO DETERMINE THE MARKET VALUE REAL ESTATE Land and buildings are valued using the Discounted Cash Flow method or, for new buildings, at cost. The fair value was determined during the fiscal year. EQUITY SECURITIES Investments in companies quoted on the stock exchange are generally measured by the stock exchange price quoted on the last trading day of 2020. Non-quoted companies are valued at their net asset value calculated by the German Association for Financial Analysis and Asset Management’s (DVFA) method. For recent transactions the transac- tion prices were used. DEBT SECURITIES These items are measured at the stock exchange value quoted on the last trading day of 2020 or, if there is no active market, at the prices obtained from brokers or pricing services. LOANS Loans are valued using the Discounted Cash Flow method. Relevant discount rates are derived from observable market parameters and reflect the remaining life and credit risk of the instruments. In excep- tional cases, the carrying amount is used as fair value. BANK DEPOSITS AND FUNDS HELD BY OTHERS UNDER REINSURANCE BUSINESS ASSUMED There are no differences between the book value and the fair value of those items. Annual Report 2020 – Allianz SE 73 C _ Financial Statements of Allianz SE 4 _ Real estate, real estate rights and buildings 6 _ Interests in investment funds The book value of own property for own use amounted to € 161 mn (2019: € 153 mn). Details on interests in investment funds in accordance with § 285 (26) of the German Commercial Code: 5 _ Investments in affiliated enterprises and participations € bn as of 31 December Shares in affiliated enterprises Loans to affiliated enterprises Participations Total 2020 70.9 1.2 1.4 73.5 2019 72.7 1.1 0.6 74.5 Change (1.8) 0.1 0.8 (1.0) The book value of shares in affiliated enterprises went down by € 1.8 bn to € 70.9 bn (2019: € 72.7 bn). This decrease resulted from the following:  Book value decrease of € 1.9 bn due to the intra-group sale of shares in our subsidiary Euler Hermes Group S.A.,  Disposal of our real estate investment company Allianz Sakura Multifamily Lux SCSp, Luxembourg, declining the book value by € 0.2 bn,  Various capital increases of Group companies leading to book value increases of € 0.6 bn, partially offset by € 0.3 bn book value decreases due to impairments. Driven by the purchase of shares in Taikang Insurance Group Inc., Shanghai, the book value of participations went up by € 0.8 bn to € 1.4 bn (2019: € 0.6 bn). € thou as of 31 December 2020 Book value Fair value Valuation reserve Dividend distribution Equity funds Allianz China A-Shares Equity Fund Subtotal equity funds Bond funds Allianz RE Asia Fund Allianz SE – PD Fund Allianz Selective Global High Yield Allianz SE Ashmore Emerging Markets Corporates Fund Subtotal bond funds Mixed funds Allianz Voyager Asia Subtotal mixed funds 3,968 3,968 4,912 4,912 944 944 - - 1,063,715 663,271 1,094,193 663,271 4,334 4,334 100,000 1,831,320 110,950 1,872,748 4,500 4,500 5,386 5,386 30,478 12,348 - - 10,950 41,428 886 886 - - - 12,348 - - Total 1,839,788 1,883,046 43,258 12,348 Allianz SE holds more than 10.0 % of the respective shares of these investment funds. The fund shares can be redeemed each trading day. 7 _ Other receivables As of 31 December 2020, other receivables amounted to € 4,006 mn (2019: € 4,261 mn). They mainly comprise receivables from profit transfer agreements amounting to € 3,121 mn (2019: € 3,165 mn), re- ceivables from cash pooling of € 570 mn (2019: € 716 mn) and tax re- ceivables of € 183 mn (2019: € 241 mn). 74 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE 8 _ Miscellaneous assets At the end of the fiscal year, this position mainly included variation mar- in connection with financial derivative transactions gins paid (€ 78 mn). 9 _ Deferred charges and prepaid expenses This item includes accrued interest in the amount of € 206 mn (2019: € 198 mn), which mainly results from our investments in debt securities and loans as well as other deferred charges and prepaid expenses amounting to € 65 mn (2019: € 69 mn). The latter comprise the dis- count on borrowings from affiliated enterprises, issued bonds, and subordinated liabilities. 10 _ Excess of plan assets over pension and similar obligations A part of the pension obligations is secured by group life insurance contracts and offsettable plan assets. As a fixed discount rate is partly applied for the calculation of these plan assets, this resulted in an excess of plan assets over pension and similar obligations for some pension plans of € 13 mn in 2019. As of 31 December 2020 no excess of plan assets over pension and similar obligations exists. 11 _ Collateral Assets amounting to € 171 mn (2019: € 51 mn), of which € 44 mn (2019: € 48 mn) were in favor of affiliated enterprises, were pledged as collateral for liabilities. Annual Report 2020 – Allianz SE 75 C _ Financial Statements of Allianz SE SUPPLEMENTARY INFORMATION ON EQUITY AND LIABILITIES 12 _ Shareholders’ equity ISSUED CAPITAL Issued capital as of 31 December 2020 amounted to € 1,169,920,000, divided into 412,293,128 fully paid registered shares. The shares have no-par value but a mathematical per-share value as a proportion of the issued capital.1 AUTHORIZED CAPITAL As of 31 December 2020, Allianz SE had authorized capital with a notional amount of € 334,960,000 for the issuance of new shares until 8 May 2023 (Authorized Capital 2018/I). The shareholders’ subscrip- tion rights can be excluded for capital increases against contribution in kind. For a capital increase against contributions in cash, the share- holders’ 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 Corporation Act (Aktiengesetz) do not exceed 10 % of the share capital, and (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 pro- vide for mandatory conversion. The subscription rights for new shares from the Authorized Capital 2018/I and the Conditional Capital 2010/2018 may only be excluded for the proportionate amount of the share capital of up to € 116,992,000 (corresponding to 10 % of the share capital at year-end 2020). In addition, Allianz SE has authorized capital (Authorized Capital 2018/II) for the issuance of new shares against contributions in cash until 8 May 2023. The shareholders’ subscription rights are excluded. The new shares may only be offered to employees of Allianz SE and its Group companies. As of 31 December 2020, the Authorized Capital 2018/II amounted to € 15,000,000. CONDITIONAL CAPITAL As of 31 December 2020, Allianz SE had conditional capital totaling € 250,000,000 (Conditional Capital 2010/2018). This conditional capital increase will only be carried out if conversion or option rights attached to convertible bonds, bonds with warrants, convertible par- ticipation rights, participation rights, and subordinated financial instru- ments, which Allianz SE or its Group companies have issued against cash payments according to the resolutions of the Annual General Meeting (AGM) on 5 May 2010 or 9 May 2018, are exercised or the conversion obligations under such bonds are fulfilled, and only to the extent that the conversion or option rights or conversion obligations are not serviced through treasury shares or through shares from authorized capital. Convertible subordinated notes totaling € 500,000,000, 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, investors have the right to convert the notes into Allianz shares at a price of € 187.26 per share. Both conversion prices are as of inception and subject to antidilution provisions. The subscription rights of shareholders for these convertible notes have been excluded with the consent of the Supervisory Board and pursuant to the authorization of the AGM on 5 May 2010. The granting of new shares to persons entitled under such convertible notes is secured by the Conditional Capital 2010/2018. On or before 31 December 2020, there was no conversion of any such notes into new shares. CHANGES IN THE NUMBER OF ISSUED SHARES OUTSTANDING Number of issued shares outstanding Number of issued shares outstanding as of 1 January Changes in number of treasury shares Cancellation of issued shares Number of issued shares outstanding as of 31 December Treasury shares1 2020 416,577,182 348,188 (4,879,731) 412,045,639 247,489 2019 423,498,025 365,959 (7,286,802) 416,577,182 595,677 Total number of issued shares 412,293,128 417,172,859 1_Thereof 247,489 (2019: 595,677) own shares held by Allianz SE. PROPOSAL FOR APPROPRIATION OF NET EARNINGS The Board of Management and the Supervisory Board propose that the net earnings (“Bilanzgewinn”) of Allianz SE of € 4,375,716,820.22 for the 2020 fiscal year shall be appropriated as follows:  Distribution of a dividend of € 9.60 per no-par share entitled to a dividend: € 3,955,638,134.40  Unappropriated earnings carried forward: € 420,078,685.82 The proposal for appropriation of net earnings reflects the 247,489 treasury shares held directly and indirectly by the company as of 31 December 2020. Such treasury shares are not entitled to the divi- dend 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 € 9.60 per each share entitled to div- idend. TREASURY SHARES As of 31 December 2020, Allianz SE held 247,489 (2019: 595,677) treasury shares. Of these, 47,489 (2019: 395,677) were held for covering future subscriptions by employees in Germany and abroad in the context of Employee Stock Purchase Plans, whereas 200,000 (2019: 200,000) were held as a hedge for obligations from the Allianz Equity Incentive Program. In 2020, 748,482 (2019: 365,959) treasury shares were trans- ferred to employees of Allianz SE and its subsidiaries in Germany and abroad. This number includes 74,873 granted free shares. The 395,677 1_Mathematical per-share value € 2.84 (rounded). 76 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE treasury shares earmarked for these purposes were fully consumed. In addition, 400,294 treasury shares were acquired from the market. As in the previous years, no capital increase for the purpose of Employee Stock Purchase Plans was carried out in 2020. Employees of the Allianz Group purchased approximately 75 % of the shares of the purchase plan at a reference price of € 167.76 (2019: € 210.21) per share and were allocated one additional share per three shares pur- chased, which is equivalent to a discount of approximately 25 %. The shares were sold to employees at a mean price of € 125.82 (2019: be- tween € 157.66 and € 161.59). As of 31 December 2020, the remaining treasury shares of Allianz SE held for covering subscriptions by employ- ees in the context of the Employee Stock Purchase Plans of Allianz SE and its subsidiaries in Germany and abroad amounted to 47,489 shares. In the year ending 31 December 2020, the total number of treas- ury shares of Allianz SE decreased by 348,188 (2019: a decrease of 365,959), which corresponds to € 988,015.75 (2019: € 1,026,295.80) or 0.08 % (2019: 0.09 %) of issued capital as of 31 December 2020. The treasury shares of Allianz SE and its subsidiaries represented € 702,273.00 (2019: € 1,670,517.20) or 0.06 % (2019: 0.14 %) of the issued capital as of 31 December 2020. SHARE BUY-BACK PROGRAM 2020 In its meeting on 20 February 2020, the Board of Management of Allianz SE resolved to carry out a share buy-back program in an amount of up to € 1.5 bn within a period between March 2020 and 31 December 2020 (Share Buy-Back Program 2020) based on the authorization granted by the Annual General Meeting on 9 May 2018. In the period between 9 March 2020 and 28 April 2020, a total of 4,879,731 treasury shares with a market value of € 749,999,985.35 were acquired for an average price of € 153.70. By resolution dated 4 November 2020, the Board of Management of Allianz SE decided to cancel the execution of the second tranche of the Share Buy-Back Program 2020 in the amount of € 750,000,000. All of the treasury shares acquired within the Share Buy-Back Program 2020 have been redeemed according to the simplified procedure without reduction of the share capital. Additional paid-in capital € thou As of 31 December 2019 Own shares: realized gains As of 31 December 2020 27,998,146 33,561 28,031,707 Revenue reserves € thou as of 31 December 1. Statutory reserve 2. Other revenue reserves2 Total 2019 1,229 6,779,948 6,781,177 Own shares exceeding mathematical value - 23,817 23,817 Own shares: cancellation1 Transfer to revenue reserves - (759,720) (759,720) - 760,000 760,000 2020 1,229 6,804,045 6,805,274 1_Share buy-back program 2020: Acquisition costs of the repurchased and cancelled shares of Allianz SE. 2_Thereof reserves for own shares € 702 thou (2019: € 1,671 thou). RESTRICTIONS ON DIVIDEND PAYOUT The unappropriated reserves plus the unappropriated earnings car- ried forward are not fully available for the distribution of a dividend due to legal restrictions. The unappropriated reserves of Allianz SE correspond to the other revenue reserves. Of the unappropriated reserves plus the unappropriated earnings carried forward, a total of € 891,432 thou (2019: € 910,065 thou) is exempt from dividend distribution. Of this amount, € 868,005 thou (2019: € 888,178 thou) are due to the legal requirement for discounting pension obligations according to § 253 (2) sentence 1 in connection with § 253 (6) of the German Commercial Code. Another € 21,321 thou (2019: € 18,864 thou) account for inter- nally generated intangible assets according to § 268 (8) sentence 1 of the German Commercial Code and € 1,404 thou (2019: € 1,352 thou) account for the surplus of the fair value of pension plan assets and phased-in early retirement plan assets compared to the acquisition costs according to § 268 (8) sentence 3 of the German Commercial Code. Another, € 702 thou (2019: € 1,671 thou) correspond to the mathematical value of own shares deducted from issued capital according to § 272 (1a) of the German Commercial Code. 13 _ Subordinated liabilities liabilities increased to € 16.6 bn in 2020 (2019: Subordinated € 13.4 bn). Of these, € 14.2 bn (2019: € 10.9 bn) were external subor- dinated liabilities resulting from bonds directly issued by Allianz SE. In 2020, Allianz SE placed a new subordinated bond with a volume of € 1.0 bn and issued a dual tranche restricted tier 1 (RT1) bond com- prising a USD tranche of USD 1.25 bn (€ 1.1 bn) and a EUR tranche of € 1.25 bn. This increase was slightly offset by a book value decline of € 0.1 bn due to the foreign currency revaluation of our subordinated liabilities denominated in USD. Further, liabilities amounting intra-group subordinated to € 2.5 bn (2019: € 2.5 bn) were attributable to subordinated bonds is- sued by Allianz Finance II B.V., an affiliated enterprise that usually transfers the proceeds from these issues to Allianz SE via intra-group loans. Allianz SE provides a financial guarantee for the total amount of bonds issued by Allianz Finance II B.V. Annual Report 2020 – Allianz SE 77 C _ Financial Statements of Allianz SE 14 _ Insurance reserves € thou as of 31 December 2020 Motor Fire and property reinsurance Liability Personal accident Marine and aviation Life Legal expenses Credit and bond Health Other lines Total Unearned premiums Aggregate policy reserves 799,169 592,484 216,197 43,768 31,026 65,684 50,590 9,006 1,897 288,752 - - - 42,233 - 492,744 - - 1,461 - Reserves for loss and loss adjustment expenses 3,969,805 2,455,076 4,333,643 601,397 464,899 165,136 411,129 324,196 10,639 661,275 Reserves for premium refunds Claims equalization and similar reserves Other insurance reserves - 4,805 2,897 793 - - - 765,541 736,076 245,037 146 101,466 - - 15,043 315,510 - 135 - 407,988 53,074 9,689 11,985 2,598 4,992 1,105 900 533 21 Total 5,587,589 3,798,130 4,809,760 690,935 602,382 724,670 462,620 664,287 14,018 2,229 1,360,379 2,098,572 536,438 13,397,194 23,673 2,571,764 87,127 18,714,769 The development of the insurance reserves was mainly driven by the strengthened claims equalization and similar reserves as well as by an increase in the unearned premiums. AGGREGATE POLICY RESERVES Aggregate policy reserves declined by € 50 mn to € 536 mn, which was mainly attributable to the Life reinsurance. RESERVES FOR LOSS AND LOSS ADJUSTMENT EXPENSES Reserves for loss and loss adjustment expenses increased slightly by 1.5 % to € 13,397 mn. Mainly the provisions for business interruptions, which is part of the fire and property reinsurance, increased from € 154 mn to € 511 mn due to the COVID-19 pandemic. Provisions for motor reinsurance in particular declined. CLAIMS EQUALIZATION AND SIMILAR RESERVES In 2020, claims equalization and similar reserves increased by € 363 mn to € 2,572 mn. This was mainly driven by a lower claims frequency in the motor reinsurance and the impact of the COVID-19 pandemic on the credit and bond reinsurance. Due to the sharp decline in the accident year claims ratio from 77.6 % to 68.2 %, the claims equalization and similar reserves increased by € 416 mn in motor reinsurance. In credit and bond reinsurance, on the other hand, a decline of € 135 mn was recorded. This was mainly due to the decline in the premiums earned (net) because of the Corona-related state scheme (“Corona-Schutzschirm”) granted by the German government. 15 _ Other provisions Development of other provisions € thou Provisions for pensions and similar liabilities Tax provisions Miscellaneous 1. Anticipated losses 2. Remaining provisions Total 1_Including currency translation effects. Provision 1 January 2020 7,207,002 466,951 318,447 453,872 8,446,272 Use (-) 285,754 104,793 213,784 197,899 802,231 Release1 (-) 154,545 - 50,240 33,269 238,054 Additions1 (+) 54,610 54,904 116,423 233,472 459,409 Reversal of Discounting Provision (+) 31 December 2020 636,000 - 2,817 1,836 7,457,314 417,061 173,662 458,011 640,653 8,506,049 The total of other provisions rose by € 60 mn. This growth resulted mainly from a net increase of pension liabilities by € 250 mn, which was partially offset by a decline of miscellaneous provisions by € 141 mn, driven nearly solely by the reduction of provisions for antici- pated losses (€ 145 mn). The tax provisions went down by € 50 mn. Allianz SE has made pension promises for which pension provi- sions are recognized. Part of these pension obligations are secured by “Contractual Trust Arrangements” (Methusalem Trust e.V.). Nearly all of these trust assets constitute offsettable plan assets, with the asset value/market value being used as the fair value. 78 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE In 1985, the pension provisions of the German subsidiaries were centralized by transferring the corresponding assets to Allianz SE. As a result, Allianz SE has a joint liability for a large part of these old pension promises. The German subsidiaries reimburse the costs, with Allianz SE assuming responsibility for settlement. Consequently, these pension provisions are reported by Allianz SE. As of 1 January 2015, Allianz SE completely assumed the obliga- tions resulting from the agents pension fund (“Vertreterversorgungs- werk” – VVW) from Allianz Beratungs- und Vertriebs-AG. Effective from 1 January 2017, the German subsidiaries reimburse only the service costs for their employees. There is no cost reimbursement anymore for the risks arising from changes in interest rate, inflation, and mortality tables. The following table shows a breakdown of pension provisions: Settlement amount of the offset liabilities € thou as of 31 December 2020 2019 Old pension promises of the German subsidiaries 1,920,002 1,913,742 Pension promises of Allianz SE agents pension fund (VVW) old pension promises to employees contribution-based pension plans deferred compensation Total 5,522,013 5,282,603 231,523 284,216 138,286 227,147 243,748 132,172 8,096,040 7,799,411 The settlement amount is calculated on the basis of the projected unit credit method and/or reported as the present value of the entitle- ments acquired. In the case of security-linked pension plans, the fair value of the offset assets is shown. Due to the fact that there is no employment relationship between the tied agents and Allianz SE, and since Allianz Beratungs- und Ver- triebs-AG no longer reimburses any costs, the pension obligations re- sulting from the VVW are recorded at their full present value. Contrary to the above rates, part of the pension promises are calcu- lated using a guaranteed pension increase rate of 1.00 % p.a. of these pension promises. The mortality tables used are the Heubeck’s RT2005G tables, which have been adjusted with respect to mortality, disability and labor turnover to reflect company-specific circumstances. The adjustment was installed in 2010 and reviewed and revised in 2018. The retirement age applied is the contractual or legal retirement age. Supplementary information € thou as of 31 December Historical costs of the offset assets Settlement amount of the offset liabilities (-) Fair value of the offset assets 2020 637,348 2019 603,850 8,096,040 638,513 7,799,411 604,918 Net amount of pension provisions and excess of plan assets over pension and similar obligations 7,457,526 7,194,494 Allianz SE has obligations resulting from jubilee payments, birthday payments, early retirement and phased-in early retirement, which are reported under remaining provisions. The obligations resulting from a long-term credit account are shown under provisions for pensions and similar liabilities. These obligations are basically calculated in the same way as pension obligations, using the same actuarial assump- tions (except for the discount rate). Offsettable plan assets are held at Methusalem Trust e.V. to secure the phased-in early retirement and long-term credit account obligations. The asset value/market value is used as the fair value. The following table shows a breakdown of the offset assets and liabilities that result from phased-in early retirement and long-term credit account obligations. Information on the offset assets and liabilities € thou Actuarial parameters % as of 31 December Applied discount rate (10-year-average) Applied discount rate (7-year-average) Rate of assumed pension trend Rate of assumed salary increase (inclusive average career trend) as of 31 December Historical costs of the offset assets 2019 Settlement amount of the offset liabilities Fair value of the offset assets 2.71 1.97 1.50 3.25 2020 2.30 1.60 1.30 3.25 2020 21,591 21,530 21,830 2019 21,657 21,837 21,941 Annual Report 2020 – Allianz SE 79 C _ Financial Statements of Allianz SE 16 _ Maturity of financial liabilities The residual terms of subordinated liabilities, bonds issued, and miscellaneous liabilities are as follows: Maturity table as of 31 December 2020 € thou Subordinated liabilities (B.) Intra-group transmission of proceeds from third-party financing Subordinated bonds issued by Allianz SE Subtotal Subordinated liabilities (B.) Bonds (intra-group – F.II.) Liabilities to banks (F.III.) Miscellaneous liabilities (F.IV.) Intra-group transmission of proceeds from third-party financing Other intra-group liabilities1 Subtotal intra-group miscellaneous liabilities Liabilities to third parties Subtotal Miscellaneous liabilities (F.IV.) Total Total Term < 1 year Term 1 – 5 years Term > 5 years 2,481,474 14,151,345 16,632,819 2,743,109 287 85,674 136,781 222,455 147,109 287 - - - 137,000 - 2,395,800 14,014,564 16,410,364 2,459,000 - 6,906,831 292,427 27,620,972 13,944,608 2,750,000 7,014,000 3,864,404 6,662,364 34,527,802 14,237,035 9,764,000 10,526,767 1,534,451 1,534,451 - - 36,062,254 15,771,486 9,764,000 10,526,767 55,438,469 16,141,338 9,901,000 29,396,131 1_As of 31 December 2020, other intra-group liabilities due within one year amounted to € 13.9 bn. Thereof, cash pool and intra-group loans accounted for € 9.8 bn and € 3.1 bn, respectively. Upon maturity, intra-group loans are rolled forward by Allianz SE on a regular basis. Maturity table as of 31 December 2019 € thou Subordinated liabilities (B.) Intra-group transmission of proceeds from third-party financing Subordinated bonds issued by Allianz SE Subtotal Subordinated liabilities (B.) Bonds (intra-group – F.II.) Liabilities to banks (F.III.) Miscellaneous liabilities (F.IV.) Intra-group transmission of proceeds from third-party financing Other intra-group liabilities1 Subtotal intra-group miscellaneous liabilities Liabilities to third parties Subtotal Miscellaneous liabilities (F.IV.) Total Total Term < 1 year Term 1 – 5 years Term > 5 years 2,481,240 10,908,857 13,390,097 2,750,117 250,375 85,440 121,226 206,666 154,117 250,375 - 1,500,000 1,500,000 137,000 - 2,395,800 9,287,631 11,683,431 2,459,000 - 6,929,060 1,543,948 27,486,194 19,122,194 2,250,000 8,264,000 3,135,112 100,000 34,415,254 20,666,141 10,514,000 3,235,112 2,025,695 2,025,695 - - 36,440,949 22,691,837 10,514,000 3,235,112 52,831,538 23,302,995 12,151,000 17,377,543 1_As of 31 December 2019, other intra-group liabilities due within one year amounted to € 19.1 bn. Thereof, cash pool and intra-group loans accounted for € 9.1 bn and € 9.4 bn, respectively. Upon maturity, intra-group loans are rolled forward by Allianz SE on a regular basis. Of the total financial liabilities, other intra-group liabilities with a residual term of less than one year amounting to € 0.9 bn (2019: € 0.9 bn) were secured by assets pledged as collateral as of 31 De- cember 2020. 80 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE 17 _ Information about derivative financial instruments Options dealing in shares and share indices as of 31 December 2020 Nominal Fair value Book value Underlying Balance sheet position Class Long call Short call € thou 41,958 41,958 € thou 7,183 (7,183) € thou 4,345 4,345 Share index Share index Assets D.III. Liabilities F.IV. The options on share indices are held in the context of hedging activities of Allianz companies with Allianz SE. Allianz SE hedged these positions by entering into countertrades at the market. Both intra-group and group-external positions were combined to valuation units (“Bewertungseinheiten”). The average remaining term of the call options is seven years. the closing price on the valuation date. Yield curves are derived from the swap rates prevailing on the valuation date. The future dividend yield is estimated on the basis of market information on the valuation date. Volatility is estimated based on currently traded implicit volatility, taking into account the residual term and the ratio between the strike price and the prevailing share price. European-type options are valued using the Black-Scholes model and American-type options using the binomial model, both based on Forward contracts in shares, share indices and hedge RSU as of 31 December 2020 Nominal Fair value Book value Underlying Balance sheet position Class Long forward Long forward Long forward Short forward Short forward Hedge RSU € thou 404,133 181,423 19,890 181,423 19,890 270,349 € thou 74,419 (11.862) 17,012 11,862 (17,012) (343,261) € thou – – – – – 343,261 Allianz SE share UniCredit S.p.A. share Lemonade Inc. share UniCredit S.p.A. share Lemonade Inc. share Allianz SE share – – – – – Liabilities F.IV. Positions in long forwards on Allianz SE shares and in hedge RSU are held in the context of hedging the Allianz Equity Incentive Plans. For the purpose of hedging the share price risk, our subsidiary Al- lianz Finance II Luxembourg S.à.r.l. entered into short forwards on UniCredit S.p.A. shares with Allianz SE. For the same purpose, our subsidiary Allianz Strategic Investments S.à.r.l. entered into short for- wards on shares of Lemonade Inc. with Allianz SE. Allianz SE hedged these positions by entering into countertrades at the market. Both intra- group and group-external positions were combined to valuation units. The remaining term of these forwards is less than one year. The fair value of a forward contract is determined as the difference between the underlying closing price on the valuation date and the discounted forward price. The net present value of dividend payments due before maturity of the forward contract is also taken into account, unless the dividends are subject to a pass-through agree- ment. Liabilities from hedge RSU, which the Group companies acquire from Allianz SE in order to hedge their liabilities from the Group Equity Incentive programs, are valued on the basis of the Allianz closing price on the valuation date, minus the net present value of estimated future dividends due before maturity of the respective hedge RSU. Applicable discount rates are derived from interpolated swap rates. Forward contracts in bonds as of 31 December 2020 Class Long forward Short forward Nominal € thou 875,467 875,467 Fair value Book value Underlying Balance sheet position € thou 26,262 (26,262) € thou – – Bonds Bonds – – For the purpose of hedging the interest rate risk of investments, Allianz Benelux N.V. entered into forward transactions on bonds with Allianz SE. Allianz SE hedged these positions by entering into counter- trades at the market. Both intra-group and group-external positions were combined to valuation units. The average remaining term of these forwards is less than one year. The fair value of a forward bond contract is determined as the difference between the market price of the underlying bond (including accrued interest) on the valuation date and the discounted forward price, taking into account the net present value of all interest payments occurring between the valuation date and the expiry date of the forward contract. Annual Report 2020 – Allianz SE 81 C _ Financial Statements of Allianz SE Forward currency contracts as of 31 December 2020 Class Long forward Short forward Nominal € thou Fair value € thou 14,128,185 461 21,663,216 127,986 Book value € thou 73,106 96,834 Underlying Balance sheet position AED, AUD, BRL, CAD, CHF, CNY, COP, CZK, GBP, HKD, HUF, ILS, INR, JPY, KRW, NOK, PLN, RON, SEK, SGD, TRY, TWD, USD, ZAR AED, AUD, BRL, CAD, CHF, CNY, COP, CZK, DKK, GBP, HKD, HUF, INR, JPY, NOK, PLN, RON, SEK, SGD, TRY, TWD, USD, ZAR Liabilities D. Liabilities D. Allianz SE holds long and short positions in various currencies in order to manage foreign exchange risk within Allianz SE and other entities of the Allianz Group. The fair value of a forward currency contract is the difference between the discounted forward price and the spot rate in Euros. The discounted forward price is calculated by applying the Euro interest rate as a discount rate and the foreign currency interest rate as a compound interest rate. Long forwards and short forwards with a nominal value of €  9.2 bn and a fair value of €  56.7 mn, respectively, were aggregated to valuation units, each comprising intra-group positions offset by countertrades at the market. The average remaining term of the forwards in valuation units is less than one year. Interest rate swap contracts as of 31 December 2020 Class Receiver swap EUR Receiver swap EUR Nominal € thou 1,500,000 650,000 Fair value Book value Underlying Balance sheet position € thou 72,860 (7,213) € thou – 3,722 Long-term interest rate positions – Long-term interest rate positions Liabilities D. Allianz SE holds EUR receiver swaps for the purpose of managing duration and hedging interest rate risk arising from interest rate posi- tions in the pension portfolio of Allianz SE. The fair value of an interest rate swap is the aggregate net present value of all expected incoming and outgoing cash flows of the respective swap transaction. Our financial participations include put and call options on company shares, which are linked to certain conditions. Due to the lack of quoted prices on active markets for these financial participations and the uncertainty regarding the occurrence of the option conditions, the fair value of such options cannot be determined reliably. Wherever feasible, contractual arrangements including the option agreements were taken into account when determining the fair value of the finan- cial participation. However, no stand-alone valuation of the options as derivative financial instruments was performed. Embedded in a retrocession agreement covering the retrocession of life business to an external reinsurance partner, Allianz SE has provided the retrocessionaire with credit protection related to the issuer risk associated with ceded future cash flows arising from a corporate bond. The agreement obliges Allianz SE to pay an amount of € 87 mn to the retrocessionaire as compensation for safeguarding the reinsurance partner against default risk arising from a bond. At the End of 2020, the fair value of this credit derivative amounted to € 1 mn. 82 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE SUPPLEMENTARY INFORMATION ON THE INCOME STATEMENT 18 _ Gross premiums written 21 _ Change in other insurance reserves (net) € thou Property-Casualty reinsurance Life/Health reinsurance Total € thou 2020 2019 11,685,402 11,911,333 Change in aggregate policy reserves (net) 542,740 472,920 Other insurance reserves (net) 12,228,142 12,384,252 Total 2020 49,086 (58,176) (9,090) 2019 26,841 (5,431) 21,410 Gross premiums written decreased by 1.3 % to € 12,228 mn. In particular, the motor reinsurance and credit and bond reinsurance lines were affected by the COVID-19 pandemic. The change in aggregate policy reserves (net) was mainly driven by the life reinsurance. The other insurance reserves (net) mostly include reserves for mo- tor reinsurance. 19 _ Allocated interest return (net) The allocated interest return (net) mainly corresponds to the agreed interest rate for deposited provisions and is therefore transferred from the non-technical section to the technical section. It reduced to € 16 mn (2019: € 18 mn). 20 _ Run-off result 22 _ Underwriting expenses (net) € thou Gross underwriting expenses Less: commission received on retroceded business Net 2020 2019 (3,445,229) (3,599,956) 283,869 42,392 (3,161,360) (3,557,564) In 2020, the run-off result amounted to € 400 mn (2019: € (204) mn) influenced by fire and property reinsurance and was mainly (€ 218 mn), credit and bond reinsurance (€ 81 mn) as well as liability reinsurance (€ 71 mn). The decrease of underwriting expenses (net) mainly resulted from the premium development. The expense ratio (net) in Property-Casualty reinsurance decreased to 29.5 % (2019: 30.7 %), driven by a lower commission ratio of 28.6 % (2019: 29.8 %). Annual Report 2020 – Allianz SE 83 C _ Financial Statements of Allianz SE 23 _ Investment income 25 _ Other non-technical result € thou a) Income from participations thereof from affiliated enterprises: € 4,485,589 thou (2019: € 4,004,912 thou) b) Income from other investments thereof from affiliated enterprises: € 249,456 thou (2019: € 212,828 thou) aa) Income from real estate, real estate rights, and buildings including buildings on land not owned by Allianz SE bb) Income from other investments (see below) c) Income from reversal of impairments d) Realized gains e) Income from profit transfer agreements Total bb) Income from other investments Debt securities Funds held by others under reinsurance business assumed Loans to affiliated enterprises Receivables from intra-group cash pooling Interests in funds Other Total 24 _ Investment expenses € thou a) Expenses for the management of investments, interest, and other investment-related expenses aa) Interest expenses (see below) ab) Other b) Depreciation and impairments of investments c) Realized losses d) Expenses from losses taken over Total aa) Interest expenses Subordinated bonds issued by Allianz SE Liabilities from intra-group loans Intra-group subordinated liabilities (intra-group transmission of proceeds from third-party financing) Liabilities from intra-group cash pooling Liabilities from intra-group bonds Liabilities from commercial paper issues Other Total 2020 2019 4,487,046 4,045,911 € thou Other Income Gains on derivatives Currency gains Other service revenues from group companies Income from the release of other provisions Intercompany income Service revenues from pensions charged to group companies Interest and similar income thereof from affiliated enterprises: € 0 thou (2019: € 67 thou) Other Total other income Other expenses Expenses for derivatives Currency losses Interest and similar expenses thereof from reversal of discounting miscellaneous provisions: € (2,912) thou (2019: € (1,410) thou) thereof from affiliated enterprises: € (686) thou (2019: € (1,112) thou) Other HR-related expenses Other administrative expenses 13,717 511,685 24,737 301,942 12,808 508,602 94,191 264,651 2,372,971 2,624,794 7,712,099 7,550,956 2020 2019 224,697 257,266 149,894 101,001 21,879 12,398 1,816 125,322 86,469 21,513 12,540 5,492 511,685 508,602 Other service expenses to group companies Anticipated losses on derivatives Pension expenses Service expenses from pensions charged to group companies Other Total other expenses Other non-technical Result 2020 2019 1,443,382 1,051,480 224,267 185,910 35,773 10,046 1,125,093 555,349 206,565 175,975 39,294 12,185 2,901 4,078 10,694 3,869 2,957,837 2,129,025 (1,431,569) (708,129) (974,077) (698,360) (703,928) (306,359) (264,255) (224,267) (119,240) (75,004) (10,046) (6,151) (803,309) (314,859) (313,972) (206,565) (210,244) (107,053) (12,185) (2,651) (3,848,947) (3,643,275) (891,111) (1,514,251) 2020 2019 (904,078) (117,605) (551,839) (166,997) (713,618) (959,124) (81,986) (245,288) (172,798) (162,887) (2,454,138) (1,622,082) 2020 2019 (429,834) (195,571) (413,171) (235,039) (145,212) (186,418) (58,451) (56,649) (5,019) (13,342) (41,870) (56,638) (16,883) (9,105) (904,078) (959,124) The other non-technical result amounted to € (891) mn compared to € (1,514) mn in 2019. This is mainly attributable to a significant improvement of the result from foreign currency translation by € 486 mn, turning the result positive to € 343 mn after a € (143) mn loss in the previous year. Main drivers of this development were improved foreign currency translation results of liabilities denominated in USD (€ 360 mn) and GBP (€ 126 mn) caused by a stronger Euro in 2020. Allianz SE has a joint liability for a large part of the pension provisions of its German subsidiaries (see note 15 for more details). Expenses incurred in this context are recognized as service expenses from pension plans charged to group companies, as they are reim- bursed by the German subsidiaries according to the cost allocation contract and result in corresponding service revenues. Income from the release of other provisions refers to income from the release of pension provisions of € 142 mn in 2020. The reason is the decrease in the pension trend parameter of 1.5 % p.a. to 1.3 % p.a. Depreciation and impairments of investments include unscheduled write-downs of € 251 mn (2019: € 140 mn) on holdings in affiliated enterprises. 84 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Furthermore, other income/expenses include the following offset income and expenses: € thou Actual return of the offset assets Imputed interest cost for the settlement amount of the offset liabilities Effect resulting from the change in the discount rate for the settlement amount Net amount of the offset income and expenses 2020 2019 Pensions and similar obligations Other obligations Pensions and similar obligations Other obligations (16,874) 208,769 444,098 635,993 (265) 291 8 34 (19,351) 234,913 502,444 718,006 (585) 596 7 18 FEES TO THE AUDITOR PricewaterhouseCoopers GmbH (PwC GmbH) is the external auditing firm for the Allianz Group. Wirtschaftsprüfungsgesellschaft Audit services primarily relate to services rendered for the audit of the Allianz Group’s consolidated financial statements, the audit of the statutory financial statements of Allianz SE and its subsidiaries, the audit of the Allianz Group’s Solvency II market value balance sheet as well as those of Allianz SE and its subsidiaries. In addition, a review of the Allianz Group’s consolidated interim financial statements was performed. Tax services primarily refer to tax compliance services, other services mainly refer to consulting services. Details of the fees to the auditor for services to Allianz SE, pursuant to § 285 (17) of the German Commercial Code, can be found in the notes to the Allianz Group’s consolidated financial statements. 26 _ Income taxes In 2020, our tax income, most of which is net operating income, increased to € 482 mn (2019: € 419 mn). As the controlling company (“Organträger”) of the tax group, Allianz SE files a consolidated tax return with most of its German affiliated enterprises. As long as the corporate income tax loss carried forward is not fully utilized, the tax compensation payments of € 732 mn (2019: € 485 mn) received from members of the tax group result in a tax income. The greatest differences between accounting and tax-based valuation concern the balance sheet items “pension accruals”, “reserves for loss and loss adjustment expenses”, and “provisions for anticipated losses” resulting in deferred tax assets. In addition, the existing corporate tax loss increases the surplus of deferred tax assets. The valuation of the domestic deferred taxes is based on the following tax rates:  31.0 % differences in balance sheet items,  15.8 % corporate tax losses,  15.2 % trade tax losses. 27 _ Net earnings € thou Net income Unappropriated earnings carried forward Transfer to other revenue reserves Net earnings 2020 4,607,731 527,986 (760,000) 2019 4,603,376 776,906 (900,000) 4,375,717 4,480,282 Annual Report 2020 – Allianz SE 85 C _ Financial Statements of Allianz SE OTHER INFORMATION Contingent liabilities, other financial commitments, and litigation CONTINGENT LIABILITIES GUARANTEES The following guarantees have been provided by Allianz SE to Allianz Group companies as well as to third parties with regard to the liabilities of certain Allianz Group companies:  Bonds issued by Allianz Finance II B.V. and Allianz Finance III B.V. for € 10.5 bn, of which € 2.4 bn were on a subordinated basis,  Commercial papers issued by Allianz Finance Corporation. As of 31 December 2020, USD 0.2 bn in commercial papers were issued as part of the program,  Letters of credit issued to various Allianz Group companies amounting to € 0.9 bn. Guarantee declarations totaling € 1.0 bn have also been made for life policies signed by Allianz Compañía de Seguros y Reaseguros S.A. Contingent liabilities exist because of indirect pension promises organized via pension funds (Allianz Versorgungskasse VVaG) and support funds (Allianz Pensionsverein e.V.). The adjustment obligation according to Section 16 BetrAVG is not funded in the APV old tariff. Due to this and because of the sharp decrease of the discount rate, the plan assets of the support funds are less than the pension obligations. As of 31 December 2020, the resulting deficit amounts to € 20 mn (2019: € 19 mn). In addition, Allianz SE has a joint liability of € 531 mn for a part of the pension promises of its German subsidiaries. In the context of the sale of investments, guarantees were given in individual cases to cover counterparty exposure or the various bases used to determine purchase prices. In addition, Allianz SE has issued guarantees to various Allianz Group companies totaling € 0.7 bn. Allianz SE enters into contingent liabilities only after careful con- sideration of the risks involved. On the basis of a continuous evaluation of the risk situation of the contingent liabilities entered into, and taking into account the knowledge gained up to the preparation date, it can be assumed that the obligations underlying the contingent liabilities can be met by the respective principal debtors. As of today, and to the best of our knowledge, Allianz SE assesses the probability of a loss resulting from contingent liabilities to be extremely remote. LEGAL OBLIGATIONS Legal obligations to assume any losses arise on account of manage- ment control agreements and/or profit transfer agreements with the following companies:  Allianz Africa Holding GmbH,  Allianz Argos 14 GmbH,  Allianz Asset Management GmbH,  Allianz Climate Solutions GmbH,  Allianz Deutschland AG,  Allianz Direct Versicherungs-AG,  Allianz Finanzbeteiligungs GmbH,  Allianz Global Corporate & Specialty SE,  Allianz Global Health GmbH,  Allianz Investment Management SE,  Allianz Real Estate GmbH (until 31 December 2020),  Allianz Technology SE,  AZ-Arges Vermögensverwaltungsgesellschaft mbH,  IDS GmbH-Analysis and Reporting Services. OTHER FINANCIAL COMMITMENTS There are financial obligations of € 492 mn, which result from adver- tising agreements (€ 468 mn) and payment obligation arising from investments (€ 24 mn). LITIGATION Allianz SE is involved in legal, regulatory, and arbitration proceedings in Germany and foreign jurisdictions, including the United States. Such proceedings arise in the ordinary course of business, including, amongst others, Allianz SE’s activities as a reinsurance company, employer, in- vestor and taxpayer. While it is not feasible to predict or determine the ulti-mate outcome of such proceedings, they may result in substantial dam-ages or other payments or penalties or result in adverse publicity and damage to Allianz SE’s reputation. As a result, such proceedings could have an adverse effect on Allianz SE’s business, financial condi- tion and results of operations. Apart from the proceedings discussed below, Allianz SE is not aware of any threatened or pending legal, regu- latory or arbitration proceedings which may have, or have had in the recent past, significant effects on its financial position or profitability. Material proceedings in which Allianz SE is involved are in particular the following: 86 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Since July 2020, multiple complaints have been filed in the U.S. Federal Court for the Southern District of New York (the “S.D.N.Y.”), and also in certain U.S. State Courts against Allianz Global Investors U.S. LLC (“AllianzGI U.S. LLC”) and in certain complaints, against certain of AllianzGI U.S. LLC’s affiliates, including Allianz SE and Allianz Asset Management GmbH (“Affiliate Allianz Defendants”), in connection with losses suffered by investors in AllianzGI U.S. LLC’s Structured Alpha funds (“Funds”) during the COVID-19 related market downturn. The ac- tions brought to date have included institutional investor plaintiffs and individual plaintiffs with certain plaintiffs asserting claims on behalf of putative classes. An investment consultant has also asserted third- party claims against AllianzGI U.S. LLC. Plaintiffs in the pending actions have alleged losses of several billion dollars. In exchange for a tolling agreement, plaintiffs in the actions filed in the S.D.N.Y. have agreed to voluntarily dismiss claims against the Affiliate Allianz Defendants. In addition to the complaints filed to date, other investors in the Funds, or other third parties, may bring similar actions. Allianz intends to de- fend vigorously against the allegations contained in the complaints. AllianzGI U.S. LLC has also received information requests from the U.S. Securities and Exchange Commission (“SEC”) regarding an SEC inves- tigation of the Funds, and is fully cooperating with the SEC's investiga- tion. The ultimate outcome of the court proceedings as well as the SEC investigation cannot yet be determined. Board Members The disclosures required in accordance with § 285 No. 10 HGB for the Supervisory Board and Board of Management can be found in the chapters Mandates of the Members of the Supervisory Board and Mandates of the Members of Board of Management. Board of Management remuneration1 As of 31 December 2020, the Board of Management was comprised of ten members. The following expenses reflect the full Board of Manage- ment active in the respective year. The remuneration of the Board of Management includes fixed and variable components. The variable remuneration consists of the annual bonus (short- term) and the equity-related remuneration (long-term). In 2020, the equity-related remuneration was comprised of 86,0972 (2019: 112,2523) Restricted Stock Units (RSU). Board of Management remuneration € thou Base salary Annual bonus Perquisites Subtotal Base salary, Annual bonus and Perquisites Fair value of RSU at grant date Subtotal equity-related remuneration Total 2020 (10,481) (7,341) (287) (18,109) (13,873) (13,873) 2019 (10,481) (10,011) (267) (20,759) (18,346) (18,346) (31,982) (39,105) The total remuneration of the Board of Management of Allianz SE for 2020 amounted to € 31,982 thou (2019: € 39,105 thou). EQUITY-RELATED REMUNERATION The remuneration system as of 1 January 2019 only awards RSUs under the long-term incentive plan. For 2020, the fair value of the RSUs at the date of grant was € 13,873 thou (2019: € 18,346 thou). BENEFITS TO RETIRED MEMBERS OF THE BOARD OF MANAGEMENT In 2020, remuneration and other benefits of € 8 mn (2019: € 7 mn) were paid to retired members of the Board of Management and to surviving dependents of deceased former Board members. The pension obligations for former members of the Board of Management and their surviving dependents are as follows: € thou as of 31 December Fair value of the offset assets Settlement amount of the offset liabilities Pension provisions 2020 129,322 138,815 9,493 2019 123,739 128,064 4,325 Supervisory Board remuneration4 Fixed remuneration Committee-related remuneration Attendance fees Total 2020 2019 € thou (1,750) (850) (52) % 66.0 32.0 2.0 € thou (1,750) (850) (85) % 65.2 31.7 3.2 (2,652) 100.0 (2,685) 100.0 1_For detailed information regarding the Board of Management remuneration, please refer to the Remuneration Report. 2_The relevant share price to determine the final number of RSUs granted is only available after the sign-off by the external auditors, thus numbers are based on a best estimate. 3_The disclosure in the Annual Report 2019 was based on a best estimate of the RSU grants. The figure shown here for 2019 now includes the actual fair value as of the grant date (6 March 2020), including the Board members who left as of 31 December 2019. The value therefore differs from the value disclosed last year. 4_For detailed information regarding the Supervisory Board remuneration, please refer to the Remuneration Report. Annual Report 2020 – Allianz SE 87 C _ Financial Statements of Allianz SE Average number of employees Information pursuant to § 160 (1) No. 8 AktG Excluding members of the Board of Management, trainees, interns, employees in the passive phase of early retirement and on early retire- ment, and employees on maternity leave or voluntary military/federal voluntary service. Full-time staff Part-time staff Total Staff expenses 2020 1,586 223 1,809 2019 1,488 223 1,711 Including members of the Board of Management, trainees, interns, employees in the passive phase of early retirement, and employees on maternity leave or voluntary military/federal voluntary service. € thou Wages and salaries Statutory welfare contributions and expenses for optional support payments Expenses for pensions and other post-retirement benefits Total expenses 2020 2019 (331,934) (326,780) (26,732) (26,489) (25,113) (26,535) (385,156) (378,428) Events after the balance sheet date The Allianz SE was not subject to any subsequent events that signifi- cantly impacted Allianz SE’s financial results after the balance sheet date and before the financial statements were authorized for issue. The following major shareholdings exist and were reported pursuant to § 20 (1) or (4) AktG or pursuant to §§ 33, 34 WpHG: By way of a letter dated 28 December 2020, BlackRock Inc., Wilmington, Delaware, United States of America, notified in the course of a voluntary group notification with triggered threshold on subsidiary level its voting rights pursuant to §§ 33, 34 WpHG as of 22 De- cember 2020, amounted to 6.69 % (representing 27,582,556 shares), its holdings in instruments pursuant to § 38 (1) No. 1 WpHG as of 22 December 2020, amounted to 0.01 % (representing 47,272 voting rights absolute), and its holdings in instruments pursuant to § 38 (1) No. 2 WpHG as of 22 December 2020, amounted to 0.01 % (repre- senting 43,549 voting rights absolute). The total position as notified on 28 December 2020 amounted to 6.71 %. By way of a letter dated 5 March 2020, DWS Investment GmbH, Frankfurt am Main, Germany, notified that its voting rights pursuant to §§ 33, 34 WpHG have crossed 3 % as of 2 March 2020 and amounted to 3.85 % (representing 16,060,512 shares). As of 2 March 2020 its holdings in instruments pursuant to § 38 (1) No. 1 WpHG amounted to 0 % (representing 0 voting rights absolute), and its holdings in instru- ments pursuant to § 38 (1) No. 2 WpHG amounted to 0 % (representing 0 voting rights absolute). The total position notified on 5 March 2020 amounted to 3.85 %. Declaration of Conformity with the German Corporate Governance Code On 10 December 2020, the Board of Management and the Super- visory Board of Allianz SE issued the Declaration of Conformity with the German Corporate Governance Code required by § 161 AktG and made it permanently available on the company’s website at www.allianz.com/corporate-governance. 88 Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE LIST OF PARTICIPATIONS OF ALLIANZ SE, MUNICH AS OF 31 DECEMBER 2020 ACCORDING TO § 285 NO. 11 AND 11B HGB IN CONJUNCTION WITH § 286 (3) NO. 1 HGB Owned1 % Equity € thou Net Earnings € thou Owned1 % Equity € thou Net Earnings € thou GERMAN ENTITIES Affiliates ACP Vermögensverwaltung GmbH & Co. KG Nr. 4a, Munich ADAC Autoversicherung AG, Munich ADEUS Aktienregister-Service-GmbH, Munich AGCS Infrastrukturfonds GmbH, Munich AGCS-Argos 76 Vermögensverwaltungsgesellschaft mbH, Munich AGCS-Argos 86 Vermögensverwaltungsgesellschaft mbH, Munich ALIDA Grundstücksgesellschaft mbH & Co. KG, Hamburg Allianz Africa Holding GmbH, Munich Allianz Argos 14 GmbH, Munich Allianz Asset Management GmbH, Munich 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 Deutschland AG, Munich Allianz Digital Health GmbH, Munich Allianz Direct Versicherungs-AG, Munich Allianz Finanzbeteiligungs GmbH, Munich Allianz Focus Teleport Beteiligungs-GmbH & Co. KG, Stuttgart Allianz Global Corporate & Specialty SE, Munich Allianz Global Investors GmbH, Frankfurt am Main Allianz Handwerker Services GmbH, Aschheim Allianz Investment Management SE, Munich Allianz Leben Direkt Infrastruktur GmbH, Munich Allianz Leben Infrastrukturfonds GmbH, Munich Allianz Leben Private Equity Fonds 2001 GmbH, Munich Allianz Leben Private Equity Fonds Plus GmbH, Munich Allianz Lebensversicherungs-Aktiengesellschaft, Stuttgart Allianz of Asia-Pacific and Africa GmbH, Munich Allianz Partners Deutschland GmbH, Aschheim Allianz Pensionsfonds Aktiengesellschaft, Stuttgart Allianz Pensionskasse Aktiengesellschaft, Stuttgart Allianz Private Equity GmbH, Munich Allianz Private Krankenversicherungs- Aktiengesellschaft, Munich Allianz Real Estate GmbH, Munich Allianz Renewable Energy Subholding GmbH & Co. KG, Sehestedt Allianz Taunusanlage GbR, Stuttgart Allianz Technology SE, Munich Allianz Versicherungs-Aktiengesellschaft, Munich Allianz X GmbH, Munich APK Infrastrukturfonds GmbH, Munich Annual Report 2020 – Allianz SE APK-Argos 75 Vermögensverwaltungsgesellschaft mbH, Munich APK-Argos 85 Vermögensverwaltungsgesellschaft mbH, Munich 4 (5,712) 2,710 APKV Direkt Infrastruktur GmbH, Munich APKV Infrastrukturfonds GmbH, Munich APKV Private Equity Fonds GmbH, Munich - - - 10,996 - - - (58) - - (74) - - - - (43) - - 4,809 - - - - - - 7,211 563 447 17,698 - - - 1,390 4,397 - - 901 - APKV-Argos 74 Vermögensverwaltungsgesellschaft mbH, Munich APKV-Argos 84 Vermögensverwaltungsgesellschaft mbH, Munich ARE Funds APKV GmbH, Munich ARE Funds AZL GmbH, Munich ARE Funds AZV GmbH, Munich atpacvc Fund GmbH & Co. KG, Munich Atropos Vermögensverwaltungsgesellschaft mbH, Munich AZ ATLAS GmbH & Co. KG, Stuttgart AZ ATLAS Immo GmbH, Stuttgart AZ Northside GmbH & Co. KG, Stuttgart AZ-Arges Vermögensverwaltungsgesellschaft mbH, Munich AZL-Argos 73 Vermögensverwaltungsgesellschaft mbH, Munich AZL-Argos 83 Vermögensverwaltungsgesellschaft mbH, Munich AZL-Argos 89 Vermögensverwaltungsgesellschaft mbH, Munich AZL-Private Finance GmbH, Stuttgart AZ-SGD Classic Infrastrukturfonds GmbH, Munich AZ-SGD Direkt Infrastruktur GmbH, Munich AZ-SGD Infrastrukturfonds GmbH, Munich AZ-SGD Private Equity Fonds 2 GmbH, Munich AZ-SGD Private Equity Fonds GmbH, Munich AZV-Argos 72 Vermögensverwaltungsgesellschaft mbH, Munich AZV-Argos 77 Vermögensverwaltungsgesellschaft mbH, Munich AZV-Argos 82 Vermögensverwaltungsgesellschaft mbH, Munich AZV-Argos 87 Vermögensverwaltungsgesellschaft mbH, Munich BrahmsQ Objekt GmbH & Co. KG, Stuttgart Deutsche Lebensversicherungs-Aktiengesellschaft, Berlin EASTSIDE Joint Venture GmbH & Co. KG, Frankfurt am Main EASTSIDE TAMARA GmbH, Frankfurt am Main Euler Hermes Aktiengesellschaft, Hamburg finanzen.de Vermittlungsgesellschaft für Verbraucherverträge GmbH, Berlin manroland AG, Offenbach am Main manroland Vertrieb und Service GmbH, Mühlheim am Main MAWISTA GmbH, Wendlingen am Neckar Mercato Leadmanagement Investments Holdings GmbH, Berlin 100.0 51.0 80.0 100.0 2 5,674 132,764 8,340 34,042 100.0 2 66,088 100.0 2 67,805 95.0 3 100.0 2 100.0 2 100.0 2,3 100.0 100.0 2 100.0 2,3 100.0 100.0 2 100.0 2 100.0 2 100.0 2 100.0 3 100.0 2,3 100.0 2,3 100.0 3 100.0 2 100.0 2 100.0 2 388,025 207,042 4,515,397 3,308,358 409,276 8,605 27,388 55,899 7,274,341 14,466 44,813 860,411 9,999 1,144,237 307,838 40,204 5,882 184,257 1,522,286 100.0 2 5,785,028 100.0 2 18,306 100.0 100.0 100.0 3 100.0 100.0 100.0 2 100.0 2,3 100.0 2 100.0 3 100.0 3 100.0 2,3 100.0 2 100.0 100.0 2 2,991,344 805,502 10,870 60,536 315,192 30,003 337,731 21,237 13,580 167,125 338,218 887,569 7,665 22,928 - - - - - - - - - - (6,258) 2,084 2,813 181 13 - - - - - - - - - - - - - - 2,021 - (192) 968 15,083 100.0 2 69,776 100.0 2 100.0 2 100.0 2 100.0 2 115,648 35,096 206,985 742,622 100.0 2 187,097 100.0 2 100.0 2,3 100.0 2,3 100.0 2,3 100.0 100.0 95.0 3 100.0 2,3 94.0 3 401,386 278,711 2,771,757 12,057 34,371 481,500 101,236 140,167 18,050 100.0 2 172,158 100.0 2 1,206,653 100.0 2 2,859,487 100.0 2 100.0 2 100.0 2 100.0 2 100.0 2 100.0 2 100.0 2 26,921 200,100 11,435 33,787 176,249 18,538 786,631 100.0 2 76,474 100.0 2 29,323 100.0 2 171,425 100.0 2 95.0 3 108,250 79,981 100.0 2 44,991 65,267 25,968 102,780 50.0 3 50.0 3 100.0 3 100.0 3 100.0 4.5 100.0 4.5 100.0 3 94,224 (11,965) 148,289 (179,129) 5,155 5,930 - 3,272 100.0 3 94,224 (11,965) 89 C _ Financial Statements of Allianz SE PIMCO Europe GmbH, Munich REC Frankfurt Objekt GmbH & Co. KG, Hamburg Seine GmbH, Munich Seine II GmbH, Munich Spherion Objekt GmbH & Co. KG, Stuttgart Syncier GmbH, Munich Volkswagen Autoversicherung AG, Braunschweig Volkswagen Autoversicherung Holding GmbH, Braunschweig 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 Freyenstein-Halenbeck GmbH & Co. KG, Sehestedt Windpark Kesfeld-Heckhuscheid GmbH & Co. KG, Sehestedt 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 Joint ventures AQ Focus Teleport GmbH & Co. KG, Hamburg AQ Überseehaus GmbH & Co. KG, Hamburg Dealis Fund Operations GmbH, Frankfurt am Main UGG TopCo GmbH & Co. KG, Ismaning VGP Park München GmbH, Vaterstetten-Baldham Associates Arabesque S-Ray GmbH, Frankfurt am Main Autobahn Tank & Rast Gruppe GmbH & Co. KG, Bonn AV Packaging GmbH, Munich DCSO Deutsche Cyber-Sicherheitsorganisation GmbH, Berlin SDA SE Open Industry Solutions, Hamburg T&R Real Estate GmbH, Bonn Verimi GmbH, Berlin Other participations below 20% voting rights EXTREMUS Versicherungs-Aktiengesellschaft, Cologne FC Bayern München AG, Munich GDV Dienstleistungs-GmbH, Hamburg La Famiglia Fonds I GmbH & Co. KG, Munich MLP AG, Wiesloch N26 GmbH, Berlin Protektor Lebensversicherungs-AG, Berlin Sana Kliniken AG, Ismaning Simplesurance GmbH, Berlin STEMMER IMAGING AG, Puchheim 90 Owned1 % 100.0 2 80.0 3 100.0 100.0 100.0 3 97.0 3 100.0 2 49.0 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 Equity € thou 51,968 287,817 264,055 60,155 66,485 5,147 112,561 Net Earnings € thou - 10,221 (5,173) (2,448) 3,379 (4,111) - 143,349 26,095 19,278 9,350 21,395 41,287 9,034 19,782 32,076 100.0 3 22,006 2,691 100.0 3 17,125 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 18,957 6,962 13,097 13,048 22,662 14,956 100.0 3 8,581 50.0 3 40.0 3 50.0 3 42.0 49.0 3 11.0 3 25.0 3 100.0 25.0 3 25.0 3 25.0 3 20.0 3 16.0 3 8.0 3 9.0 3 6.0 3 10.0 3 6.0 3 10.0 3 15.0 3 14.0 3 6.0 3 18,467 5,725 32,914 9,922 65,455 15,958 194,821 16,485 7,516 6,771 140,898 33,006 64,100 481,926 28,941 22,827 437,392 214,474 7,851 1,017,094 7,885 71,600 FOREIGN ENTITIES Affiliates 490 Lower Unit LP, Wilmington, DE Aero-Fonte S.r.l., Catania AGA Service Company Corp., Richmond, VA AGCS International Holding B.V., Amsterdam AGCS Marine Insurance Company, Chicago, IL AGCS Resseguros Brasil S.A., São Paulo Allianz (UK) Limited, Guildford Allianz Africa SAS, Paris la Défense Allianz Alapkezelõ Zrt., Budapest Allianz Argentina Compañía de Seguros Generales S.A., Buenos Aires Allianz Argentina RE S.A., Buenos Aires Allianz Asia Holding Pte. Ltd., Singapore 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 Insurance Limited, Sydney Allianz Australia Life Insurance Holdings Limited, Sydney Allianz Australia Life Insurance Limited, Sydney Allianz Australia Limited, Sydney Allianz Ayudhya Assurance Public Company Limited, Bangkok Allianz Ayudhya Capital Public Company Limited, Bangkok Allianz Ayudhya General Insurance Public Company Limited, Bangkok Allianz Bank Bulgaria AD, Sofia Allianz Bank Financial Advisors S.p.A., Milan Allianz Banque S.A., Puteaux Allianz Benelux S.A., Brussels Allianz Bulgaria Holding AD, Sofia Allianz Cameroun Assurances SA, Douala Allianz Carbon Investments B.V., Amsterdam Allianz Cash SAS, Paris la Défense Allianz Chicago Private Reit LP, Wilmington, DE Allianz China Insurance Holding Limited, Shanghai Allianz China Life Insurance Co. Ltd., Shanghai Allianz Colombia S.A., Bogotá D.C. Allianz Compañía de Seguros y Reaseguros S.A., Madrid Allianz Côte d'Ivoire Assurances SA, Abidjan Allianz Côte d'Ivoire Assurances Vie SA, Abidjan Allianz Direct S.p.A., Milan Allianz do Brasil Participações Ltda., São Paulo Allianz Elementar Lebensversicherungs- Aktiengesellschaft, Vienna Allianz Elementar Versicherungs-Aktiengesellschaft, Vienna Allianz EM Loans S.C.S., Luxembourg Allianz Engineering Inspection Services Limited, Guildford Allianz Equity Investments Ltd., Guildford Allianz Europe B.V., Amsterdam Allianz Europe Ltd., Amsterdam Allianz Finance Corporation, Wilmington, DE Allianz Finance II Luxembourg S.à r.l., Luxembourg Allianz Finance IX Luxembourg S.A., Luxembourg 856 1,413 1,180 2,164 1,653 4,011 1,752 1,599 472 601 1,704 1,630 1,325 1,018 729 (1,543) (810) (61) 77 (7,122) (3,469) (59,419) (279) (2,721) 92 85 (26,623) 42 42,653 1,511 (965) 36,925 (216,937) 7 66,685 (10,992) 4,800 Allianz Finance VII Luxembourg S.A., Luxembourg Owned1 % Equity € thou Net Earnings € thou 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 100.0 100.0 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 127,756 17,201 6,819 (723) 2,721 1,486 1,258,137 12,689 141,130 266,939 1,841,845 43,588 5,458 115,064 16,294 5,065 2,472 8,480 93 (4,107) 2,524 51,542 5,345 5 713,789 1,483,843 6,493,935 1,828,789 245,732 1,777,624 132,010 105,477 1,758,570 73,385 237,872 - (19,423) 238,427 83.0 3 811,433 58,821 49.0 3 373,077 13,154 100.0 3 100.0 3 100.0 100.0 3 100.0 3 66.0 3 75.0 3 100.0 3 100.0 3 100.0 3 100.0 3 51.0 3 100.0 3 100.0 3 74.0 3 71.0 3 100.0 3 100.0 3 75,362 120,423 249,980 116,413 944,592 61,615 10,998 11,440 5,965 179,049 385,636 275,888 105,080 (8,041) 16,898 13,523 2,791 167,401 19,015 3,438 (557) 294 (89) (5,101) 89,285 9,977 864,268 142,364 7,485 8,524 418,819 293,858 7,521 3,241 32,201 76,003 100.0 100,964 14,936 100.0 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 513,148 231,788 17,877 186,996 156,718 13,920 3,381 19,870 45,032,709 3,395,910 4,017,362 184,045 4,547,445 1,139,487 3,255,458 43,634 10 139,645 5,423 60,268 Annual Report 2020 – Allianz SE Owned1 % 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 51.0 3 Equity € thou 984,805 20,814 136,210 1,345,216 534,522 6,142,162 119,761 303,533 25,185 460,918 8,323 100.0 3 59,390 100.0 3 12,732 11,997 36,368 32,636 24,675 18,649 19,770 41,216 135,219 79,946 144,074 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 89.0 3 100.0 3 100.0 3 100.0 100.0 3 100.0 3 100.0 3 83.0 3 100.0 100.0 3 100.0 3 Net Earnings € thou 19,831 Allianz Insurance Company of Kenya Limited, Nairobi 2,712 5,412 51,525 (3,999) 979,460 119 Allianz Insurance Company-Egypt S.A.E., New Cairo Allianz Insurance Lanka Limited, Colombo Allianz Insurance plc, Guildford Allianz Inversiones S.A., Bogotá D.C. Allianz Invest Kapitalanlagegesellschaft mbH, Vienna Allianz Investment Management LLC, Minneapolis, MN 15,046 Allianz Investmentbank Aktiengesellschaft, Vienna 7,235 Allianz Investments III Luxembourg S.A., Luxembourg 59,205 Allianz Jingdong General Insurance Company Ltd., Guangzhou 980 Allianz Leasing Bulgaria AD, Sofia 1,828 1,514 809 10,653 Allianz Leben Real Estate Holding I S.à r.l., Luxembourg Allianz Leben Real Estate Holding II S.à r.l., Luxembourg Allianz Life (Bermuda) Ltd., Hamilton Allianz Life Assurance Company-Egypt S.A.E., New Cairo 2,840 Allianz Life Financial Services LLC, Minneapolis, MN (6,045) Allianz Life Insurance Company Ltd., Moscow 3,557 3,725 22,042 96,700 87,069 13,011 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 Malaysia Berhad, Kuala Lumpur 1,539,747 (157,506) Allianz Life Luxembourg S.A., Luxembourg 19,053 162,558 298,798 2,767,491 1,671 3,663 13,350 420,465 9,152,290 1,098,804 61,518 2 2,749,513 318,920 155,135 139,510 378,851 15,610 62,529 1,616 Allianz Malaysia Berhad, Kuala Lumpur Allianz Marine (UK) Ltd., Ipswich Allianz Maroc S.A., Casablanca Allianz MENA Holding (Bermuda) Ltd., Hamilton Allianz México S.A. Compañía de Seguros, Mexico City Allianz Nederland Groep N.V., Rotterdam Allianz New Europe Holding GmbH, Vienna Allianz New Zealand Limited, Auckland Allianz Nigeria Insurance Limited, Lagos Allianz of America Inc., Wilmington, DE 1,832,702 217,333 Allianz p.l.c., Dublin Allianz Partners S.A.S., Saint-Ouen 100.0 3 197,441 (68) Allianz PCREL US Debt S.A., Luxembourg 100.0 3 179,139 94,993 100.0 3 179,633 95,574 Allianz Pensionskasse Aktiengesellschaft, Vienna Allianz penzijní spolecnost a.s., Prague Allianz PNB Life Insurance Inc., Makati City Allianz pojistovna a.s., Prague 100.0 3 2,908,301 21,569 Allianz Polska Services Sp. z o.o., Warsaw 100.0 3 607,460 4,490 100.0 3 846,077 100.0 3 208,877 (18) (18) 100.0 3 4,015,496 39,746 Allianz Presse Infra S.C.S., Luxembourg Allianz Presse US REIT LP, Wilmington, DE Allianz Properties Limited, Guildford Allianz Re Dublin dac, Dublin Allianz Real Estate Investment S.A., Luxembourg Allianz Real Estate of America LLC, Wilmington, DE Allianz Reinsurance America Inc., Los Angeles, CA 100.0 3 1,060,399 10,825 Allianz Renewable Energy Partners I LP, London 100.0 3 48,901 14,439 Allianz Renewable Energy Partners II Limited, London Allianz Renewable Energy Partners III LP, London 100.0 3 50,186 4,041 Allianz Renewable Energy Partners IV Limited, London 100.0 3 463,515 (33) Allianz Renewable Energy Partners of America 2 LLC, Wilmington, DE Allianz Finance VIII Luxembourg S.A., Luxembourg Allianz Fire and Marine Insurance Japan Ltd., Tokyo Allianz France Investissement OPCI, Paris la Défense Allianz France Real Estate Invest SPPICAV, Paris la Défense Allianz France Richelieu 1 S.A.S., Paris la Défense Allianz France S.A., Paris la Défense Allianz France US REIT LP, Wilmington, DE Allianz Fund Investments Inc., Wilmington, DE Allianz General Insurance Co. Ltd., Bangkok Allianz General Insurance Company (Malaysia) Berhad, Kuala Lumpur Allianz General Laos Co. Ltd., Vientiane Allianz Global Corporate & Specialty do Brasil Participações Ltda., Rio de Janeiro Allianz Global Corporate & Specialty of Africa (Proprietary) Ltd., Johannesburg Allianz Global Corporate & Specialty South Africa Ltd., Johannesburg Allianz Global Investors Asia Pacific Ltd., Hong Kong Allianz Global Investors Distributors LLC, Dover, DE Allianz Global Investors Holdings Ltd., London Allianz Global Investors Japan Co. Ltd., Tokyo 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 dac, Dublin Allianz Global Risks US Insurance Company Corp., Chicago, IL Allianz Hayat ve Emeklilik A.S., Istanbul Allianz Hellas Single Member Insurance S.A., Athens Allianz Hold Co Real Estate S.à r.l., Luxembourg Allianz Holding eins GmbH, Vienna Allianz Holding France SAS, Paris la Défense Allianz Holdings p.l.c., Dublin Allianz Holdings plc, Guildford Allianz Hrvatska d.d., Zagreb Allianz Hungária Biztosító Zrt., Budapest Allianz HY Investor LP, Wilmington, DE Allianz IARD S.A., Paris la Défense Allianz Individual Insurance Group LLC, Minneapolis, MN 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 Holdco III S.A., Luxembourg Allianz Infrastructure Luxembourg Holdco IV S.A., Luxembourg Allianz Infrastructure Luxembourg I S.à r.l., Luxembourg Allianz Infrastructure Luxembourg II S.à r.l., Luxembourg Allianz Infrastructure Norway Holdco I S.à r.l., Luxembourg Allianz Infrastructure Spain Holdco I S.à r.l., Luxembourg Allianz Infrastructure Spain Holdco II S.à r.l., Luxembourg Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Owned1 % 100.0 3 95.0 3 100.0 3 100.0 3 100.0 3 100.0 100.0 3 100.0 100.0 3 50.0 3 100.0 3 Equity € thou 8,896 21,165 47,431 1,104,502 6,377 8,775 9,484 27,239 1,776,402 160,032 5,705 Net Earnings € thou (337) 4,867 8,058 75,456 586 3,226 54,343 2,725 98,878 585 1,085 100.0 3 885,503 40,180 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 3,311,983 5,375 58,259 33,927 83,884 46,312 (292) 10,649 (4,561) 12,224 100.0 3 315,716 4,234 100.0 3 189,878 (3,409) 100.0 3 100.0 3 100.0 3 75.0 3 100.0 3 99.0 3 100.0 3 100.0 3 100.0 3 100.0 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 100.0 3 51.0 3 100.0 3 100.0 3 92.0 3 92.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 99.0 3 99.0 3 11,391,674 913,177 278,414 109,789 218,770 11,371 75,820 42,747 160,049 1,933,786 961,345 37,071 16,511 47,792 17,211 42,282 80 (6,082) 9,162 32,334 252,775 221,584 2,083 (7,792) 14,127,950 2,094,961 411,576 822,751 8,549 12,703 42,902 31,521 292,143 14,133 45,891 55,923 230,767 1,086,129 411,820 22,633 408,949 145,316 99,649 125,247 646,704 43,794 145,133 26,896 227 5,364 (4,923) 56,145 (524) (316) 255 1,598 8,457 (4,856) 1,056 17,476 7,446 (6,731) 6,787 (34,270) 100.0 286,253 20,421 91 C _ Financial Statements of Allianz SE Allianz Renewable Energy Partners of America LLC, Wilmington, DE Allianz Renewable Energy Partners V plc., London Allianz Renewable Energy Partners VI Limited, London Allianz Renewable Energy Partners VIII Limited, London Allianz Risk Transfer (Bermuda) Ltd., Hamilton Allianz Risk Transfer AG, Schaan Allianz Risk Transfer Inc., New York, NY Allianz S.p.A., Milan Allianz Sakura Multifamily 1 Pte. Ltd., Singapore Allianz Sakura Multifamily 2 Pte. Ltd., Singapore Allianz Sakura Multifamily Lux SCSp, Luxembourg Allianz Saúde S.A., São Paulo Allianz Saudi Fransi Cooperative Insurance Company, Riyadh Allianz Seguros de Vida S.A., Bogotá D.C. Allianz Seguros S.A., Bogotá D.C. Allianz Seguros S.A., São Paulo Allianz Sénégal Assurances SA, Dakar Allianz Sénégal Assurances Vie SA, Dakar Allianz Services (UK) Limited, London Allianz Services Mauritius LLC, Ebene Allianz Services Private Ltd., Thiruvananthapuram Allianz Servizi S.p.A., Milan Allianz Sigorta A.S., Istanbul Allianz SNA s.a.l., Beirut Allianz Société Financière S.à r.l., Luxembourg Allianz South America Holding B.V., Amsterdam Allianz Strategic Investments S.à r.l., Luxembourg Allianz Suisse Lebensversicherungs-Gesellschaft AG, Wallisellen Allianz Suisse Versicherungs-Gesellschaft AG, Wallisellen Allianz Taiwan Life Insurance Co. Ltd., Taipei Allianz Technology (Thailand) Co. Ltd., Bangkok Allianz Technology AG, Wallisellen Allianz Technology GmbH, Vienna Allianz Technology S.L., Barcelona Allianz Technology SAS, Paris Allianz Tiriac Asigurari SA, Bucharest Allianz Underwriters Insurance Company Corp., Burbank, CA Allianz US Investment LP, Wilmington, DE Allianz US Private REIT LP, Wilmington, DE Allianz Vermogen B.V., Rotterdam Allianz Vie S.A., Paris la Défense Allianz Vorsorgekasse AG, Vienna Allianz Yasam ve Emeklilik A.S., Istanbul Allianz ZB d.o.o. Mandatory and Voluntary Pension Funds Management Company, Zagreb Allianz-Slovenská DSS a.s., Bratislava Allianz-Slovenská poist'ovňa a.s., Bratislava American Automobile Insurance Company Corp., Earth City, MO APK US Investment LP, Wilmington, DE APKV US Private REIT LP, Wilmington, DE Appia Investments S.r.l., Milan Arges Investments I N.V., Amsterdam Asit Services S.R.L., Bucharest Owned1 % 100.0 100.0 100.0 100.0 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 51.0 3 100.0 3 100.0 3 100.0 3 83.0 3 99.0 3 100.0 3 100.0 3 100.0 3 100.0 3 96.0 3 100.0 3 100.0 3 100.0 3 100.0 3 Equity € thou 723,379 582,812 789,266 302,732 84,424 476,645 20,047 Net Earnings € thou 47,057 26,232 20,719 7,161 10,887 3,212 27,991 2,208,205 703,037 491,953 245,243 498,201 38,175 79,439 56,553 45,768 288,157 6,401 5,388 7,204 7,010 23,810 16,709 483,973 27,022 1,179,250 450,899 597,634 (99) (98) (205) 2,657 7,562 6,620 3,193 79,212 (1,555) (1,599) (178) 525 6,411 905 114,328 (14,107) 53,257 (622) 100.0 3 781,492 52,226 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 52.0 3 750,932 533,185 9,422 11,812 22,284 64,184 47,230 194,848 315,623 60,259 1,116 3,672 (1,028) (4,775) 1,798 31,985 Assistance Courtage d'Assurance et de Réassurance S.A., Courbevoie Associated Indemnity Corporation, Los Angeles, CA Assurances Médicales SA, Metz AWP Assistance (India) Private Limited, Gurgaon AWP Australia Holdings Pty Ltd., Toowong AWP Australia Pty Ltd., Toowong AWP Business Services Co. Ltd., Beijing AWP France SAS, Saint-Ouen AWP Health & Life S.A., Saint-Ouen AWP MEA Holdings Co. W.L.L., Manama AWP P&C S.A., Saint-Ouen AWP Service Brasil Ltda., São Bernardo do Campo AWP Services NL B.V., Amsterdam AWP USA Inc., Richmond, VA AZ Euro Investments II S.à r.l., Luxembourg AZ Euro Investments S.A., Luxembourg AZ Jupiter 10 B.V., Amsterdam AZ Jupiter 11 B.V., Amsterdam AZ Jupiter 8 B.V., Amsterdam AZ Jupiter 9 B.V., Amsterdam AZ Vers US Private REIT LP, Wilmington, DE AZGA Service Canada Inc., Kitchener, ON AZL PF Investments Inc., Minneapolis, MN AZOA Services Corporation, New York, NY Beleggingsmaatschappij Willemsbruggen B.V., Rotterdam Beykoz Gayrimenkul Yatirim Insaat Turizm Sanayi ve Ticaret A.S., Ankara Calobra Investments Sp. z o.o., Warsaw CAP Rechtsschutz-Versicherungsgesellschaft AG, Wallisellen Caroline Berlin S.C.S., Luxembourg Castle Field Limited, Hong Kong Central Shopping Center a.s., Bratislava CEPE de la Forterre S.à r.l., Versailles CEPE de Langres Sud S.à r.l., Versailles CEPE de Mont Gimont S.à r.l., Versailles CEPE de Sambres S.à r.l., Versailles CEPE de Vieille Carrière 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 (51,697) BN Infrastruktur GmbH, St. Pölten 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 80.0 3 51.0 3 100.0 3 100.0 100.0 3 100.0 3 100.0 3 58.0 100.0 3 100.0 3 54,578 2,094,412 2,173,185 7,155 1,606 Chicago Insurance Company Corp., Chicago, IL (12,805) (13,138) CIC Allianz Insurance Ltd., Sydney Climmolux Holding SA, Luxembourg 2,900 Club Marine Limited, Sydney 3,072,993 300,894 Companhia de Seguros Allianz Portugal S.A., Lisbon 39,544 126,531 21,690 52,376 417,742 72,628 106,330 312,261 698,894 51,290 26,810 8,373 56,558 7,602 10,371 92,472 1,237 286 (317) Corn Investment Ltd., London Cova Beijing Zpark Investment Pte. Ltd., Singapore CPRN Thailand Ltd., Bangkok CreditRas Assicurazioni S.p.A., Milan CreditRas Vita S.p.A., Milan Darta Saving Life Assurance dac, Dublin Delta Technical Services Ltd., London Diamond Point a.s., Prague Dresdner Kleinwort Pfandbriefe Investments II Inc., Minneapolis, MN (92,386) Elite Prize Limited, Hong Kong 3,387 917 Enertrag-Dunowo Sp. z o.o., Szczecin Eolica Erchie S.r.l., Lecce Owned1 % 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 95.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 98.0 3 100.0 3 100.0 3 100.0 3 55.0 3 100.0 3 100.0 3 Equity € thou 6,057 83,544 6,502 5,954 6,889 6,617 18,747 55,683 467,170 35,552 413,082 29,107 5,819 293,067 383,631 Net Earnings € thou 5,402 1,505 3,733 2,125 - 4,342 3,817 39,176 34,743 12,110 40,908 1,008 (3,436) 16,202 21,177 3,471,184 285,860 390,782 334,854 3,308,933 301,770 108,367 25,446 545,632 11,514 6,522 50,207 (227) 50,919 173 (4,258) - (8,915) 100.0 3 111,443 1,830 100.0 3 75.0 100.0 3 100.0 3 93.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 65.0 3 100.0 98.0 3 100.0 3 50.0 3 50.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 126,833 30,284 136,894 41,257 176,807 8,457 56,605 9,339 23,524 21,329 10,033 5,641 9,544 5,092 59,599 26,704 76,951 5,924 204,127 20,671 17,776 99,859 114,770 613,476 384,961 46,893 12,182 669,332 16,704 51,461 8,272 15,302 (12) 1,991 9,484 2,558 (1,194) 3,100 293 4,526 (70) (5,308) (1,410) (934) (1,639) 353 (220) 2,435 1,180 40,605 (7,520) 3,739 35,657 15,590 131,816 68,036 1,618 881 21,922 2,235 (1,792) 1,070 Allianz Tiriac Pensii Private Societate de administrare a fondurilor de pensii private S.A., Bucharest 100.0 3 27,288 (3,735) 92 Annual Report 2020 – Allianz SE 234,899 (54,537) NEXtCARE Claims Management LLC, Dubai Owned1 % 100.0 3 100.0 3 100.0 3 100.0 3 Equity € thou 6,312 13,372 116,985 Net Earnings € thou 575 1,136 8,073 1,638,768 447,676 100.0 3 102,961 (21) 100.0 3 177,573 14,707 34,536 11,099 - 7,278 14,924 195,357 71,603 10,397 13,975 5,538 756 688 1,126 684 1,487 750 100.0 3 100.0 3 100.0 3 60.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 237,866 355,813 61,055 240,052 27,541 940,056 770,272 28,851 15,658 100.0 3 11,293 6,088 6,591 8,009 29,226 50,149 9,367 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 40,788 5,713 10,707 (5,724) 332 2,664 100.0 3 5,617 (621) 100.0 3 13,837 269 100.0 3 100.0 3 100.0 3 100.0 3 95.0 3 100.0 3 53.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 1,151,225 26,171 66,486 29,228 116,278 89,550 22,001 79,999 140,993 176,070 20,234 59,816 288,960 347,640 9,344 66,188 255,339 23,975 12,247 9,434 7,166 13,190 67,233 96,803 15,744 (9) 736 38,328 5,027 3,605 3,507 (14) (189) 4,685 605 (7,526) - 1,972 (8) 1,949 20,791 6,943 2,170 1,609 239 2,345 3,305 4,481 Järvsö Sörby Vindkraft AB, Danderyd Jefferson Insurance Company Corp., New York, NY Joukhaisselän Tuulipuisto Oy, Oulu Jouttikallio Wind Oy, Kotka JSC Insurance Company Allianz, Moscow KAIGO Hi-Tech Development (Beijing) Co. Ltd., Beijing KaiLong Greater China Real Estate Fund II S.C.Sp., Luxembourg Kensington Fund, Milan Keyeast Pte. Ltd., Singapore Kiinteistöosakeyhtiö Eteläesplanadi 2 Oy, Helsinki Kohlenberg & Ruppert Premium Properties S.à r.l., Luxembourg Kuolavaara-Keulakkopään Tuulipuisto Oy, Oulu Lincoln Infrastructure USA Inc., Wilmington, DE Liverpool Victoria General Insurance Group Limited, Guildford Liverpool Victoria Insurance Company Limited, Guildford LLC "IC Euler Hermes Ru", Moscow LV Repair Services Limited, Guildford Maevaara Vind 2 AB, Stockholm Maevaara Vind AB, Stockholm Medi24 AG, Bern Mombyasen Wind Farm AB, Halmstad Morningchapter S.A., Grandaços Multiasistencia S.A., Madrid National Surety Corporation, Chicago, IL NEXtCARE Lebanon SAL, Beirut Niederösterreichische Glasfaserinfrastrukturgesellschaft mbH, St. Pölten öGIG GmbH, St. Pölten OPCI Allianz France Angel, Paris la Défense Orione PV S.r.l., Milan Orsa Maggiore PV S.r.l., Milan Pacific Investment Management Company LLC, Dover, DE Parc Eolien de Chaourse SAS, Versailles Parc Eolien de Chateau Garnier SAS, Versailles Parc Eolien de Dyé SAS, Versailles Parc Eolien de Fontfroide SAS, Versailles Parc Eolien de la Sole du Bois SAS, Paris Parc Eolien des Barbes d´Or SAS, Versailles Pet Plan Ltd., Guildford PFP Holdings Inc., Dover, DE PGA Global Services LLC, Dover, DE PIMCO (Schweiz) GmbH, Zurich PIMCO Asia Ltd., Hong Kong PIMCO Asia Pte Ltd., Singapore PIMCO Australia Management Limited, Sydney PIMCO Australia Pty Ltd., Sydney PIMCO Canada Corp., Toronto, ON PIMCO Europe Ltd., London PIMCO Global Advisors (Ireland) Ltd., Dublin PIMCO Global Advisors (Resources) LLC, Dover, DE PIMCO Global Advisors LLC, Dover, DE PIMCO Global Holdings LLC, Dover, DE PIMCO Investments LLC, Dover, DE PIMCO Japan Ltd., Road Town PIMCO Taiwan Ltd., Taipei Euler Hermes Collections North America Company, Owings Mills, MD Euler Hermes Collections Sp. z o.o., Warsaw Euler Hermes Crédit France S.A.S., Paris la Défense Euler Hermes Group SA, Paris la Défense Euler Hermes Luxembourg Holding S.à r.l., Luxembourg Euler Hermes North America Holding Inc., Owings Mills, MD Euler Hermes North America Insurance Company Inc., Owings Mills, MD Euler Hermes Patrimonia SA, Brussels Euler Hermes Ré SA, Luxembourg Euler Hermes Real Estate SPPICAV, Paris la Défense Euler Hermes Recouvrement France S.A.S., Paris la Défense Euler Hermes Reinsurance AG, Wallisellen Euler Hermes S.A., Brussels Euler Hermes Service AB, Stockholm Euler Hermes Services Italia S.r.l., Rome Euler Hermes Services North America LLC, Owings Mills, MD Euler Hermes Serviços de Gestão de Riscos Ltda., São Paulo Euler Hermes Sigorta A.S., Istanbul Euler Hermes Singapore Services Pte. Ltd., Singapore Euler Hermes South Express S.A., Brussels Eurl 20/22 Le Peletier, Paris la Défense Eurosol Invest S.r.l., Udine Fairmead Insurance Limited, Guildford Fénix Directo Compañía de Seguros y Reaseguros S.A., Madrid Ferme Eolienne des Jaladeaux S.à r.l., Versailles FinOS Technology Holding Pte. Ltd., Singapore FinOS Technology Vietnam Single-Member Limited Liability Company, Ho Chi Minh City Fireman's Fund Indemnity Corporation, Liberty Corner, NJ Fireman's Fund Insurance Company Corp., Los Angeles, CA Flying Desire Limited, Hong Kong Foshan Geluo Storage Services Co. Ltd., Foshan Fragonard Assurance S.A., Paris Franklin S.C.S., Luxembourg Galore Expert Limited, Hong Kong Generation Vie S.A., Courbevoie Global Azawaki S.L., Madrid Global Carena S.L., Madrid Grupo Multiasistencia S.A., Madrid Harro Development Praha s.r.o., Prague Highway Insurance Company Limited, Guildford Highway Insurance Group Limited, Guildford Home & Legacy Insurance Services Limited, Guildford Humble Bright Limited, Hong Kong ICON Immobilien GmbH & Co. KG, Vienna ICON Inter GmbH & Co. KG, Vienna Immovalor Gestion S.A., Paris la Défense ImWind PDV GmbH & Co. KG, Pottenbrunn ImWind PL GmbH & Co. KG, Pottenbrunn Insurance CJSC "Medexpress", Saint Petersburg Interstate Fire & Casualty Company, Chicago, IL Investitori Logistic Fund, Milan Investitori SGR S.p.A., Milan Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Owned1 % 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 Equity € thou 113,082 356,207 9,116 9,178 75,725 17,776 70,778 244,462 66,192 31,199 111,420 19,462 9,807 Net Earnings € thou 4,299 31,920 (394) (224) 14,536 3,739 (514) 10,890 (18) 1,791 5,395 (656) 452 100.0 3 773,880 106,121 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 100.0 3 100.0 3 100.0 3 95.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 856,183 18,697 17,360 36,104 81,303 5,549 37,281 12,680 7,863 68,659 17,772 9,670 26,707 19,526 111,762 8,867 18,813 82,443 4,494 15,554 1,449 (9,743) 2,466 1,148 (335) 6,824 943 7,243 3,459 (5,765) (1,929) 4,262 455 1,916 595,710 1,900,645 7,421 5,545 5,073 7,313 7,515 5,083 17,696 260,406 6,962 19,890 28,779 19,554 5,420 30,216 18,888 159,851 33,873 5,319 391,577 31,206 94,578 36,826 5,025 (449) (949) (1,210) 910 1,050 1,245 88 8,000 2,615 5,976 (4,933) 8,678 173 24,372 23,668 169,956 17,894 17 261,652 25,158 250,175 36,519 (4,111) 93 C _ Financial Statements of Allianz SE POD Allianz Bulgaria AD, Sofia Protexia France S.A., Paris la Défense PT Asuransi Allianz Life Indonesia, Jakarta PT Asuransi Allianz Utama Indonesia, Jakarta PTE Allianz Polska S.A., Warsaw Q207 S.C.S., Luxembourg Real Faubourg Haussmann SAS, Paris la Défense Real FR Haussmann SAS, Paris la Défense Rokko Development Praha s.r.o., Prague SA Carène Assurance, Paris SA Vignobles de Larose, Saint-Laurent-Médoc Saarenkylä Tuulipuisto Oy, Oulu SAS 20 pompidou, Paris la Défense SAS Allianz Etoile, Paris la Défense SAS Allianz Forum Seine, Paris la Défense SAS Allianz Logistique, Paris la Défense SAS Allianz Platine, Paris la Défense SAS Allianz Prony, Paris la Défense SAS Allianz Rivoli, Paris la Défense SAS Allianz Serbie, Paris la Défense SAS Angel Shopping Centre, Paris la Défense SAS Chaponnay Mérieux Logistics, Paris la Défense SAS Madeleine Opéra, Paris la Défense SAS Passage des princes, Paris la Défense Sättravallen Wind Power AB, Strömstad SC Tour Michelet, Paris la Défense SCI 46 Desmoulins, Paris la Défense SCI Allianz Arc de Seine, Paris la Défense SCI Allianz Immobilier Durable, Paris la Défense SCI Allianz Invest Pierre, Paris la Défense SCI Allianz Messine, Paris la Défense SCI Allianz Value Pierre, Paris la Défense SCI AVIP SCPI Selection, Paris la Défense SCI ESQ, Paris la Défense SCI Onnaing Escaut Logistics, Paris la Défense SCI Pont D'Ain Septembre Logistics, Paris la Défense SCI Réau Papin Logistics, Paris la Défense SCI Via Pierre 1, Paris la Défense Servicios Compartidos Multiasistencia S.L., Madrid Silex Gas Norway AS, Oslo Sirius S.A., Luxembourg Società Agricola San Felice S.p.A., Milan Société d'Energie Eolien Cambon SAS, Versailles Société Foncière Européenne B.V., Amsterdam Société Nationale Foncière S.A.L., Beirut Sofiholding S.A., Brussels South City Office Broodthaers SA, Brussels Stam Fem Gångaren 11 AB, Stockholm StocksPLUS Management Inc., Dover, DE Syncier Consulting GmbH, Vienna TFI Allianz Polska S.A., Warsaw The American Insurance Company Corp., Cincinnati, OH Three Pillars Business Solutions Limited, Guildford Top Immo A GmbH & Co. KG, Vienna Top Immo Besitzgesellschaft B GmbH & Co. KG, Vienna Top Versicherungsservice GmbH, Vienna Towarzystwo Ubezpieczen Euler Hermes S.A., Warsaw Trafalgar Insurance Limited, Guildford 94 Owned1 % 66.0 3 100.0 3 100.0 3 98.0 3 100.0 3 94.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 90.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 75.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 95.0 3 100.0 3 100.0 3 100.0 3 66.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 100.0 100.0 100.0 3 100.0 3 Equity € thou 33,027 49,891 417,845 59,563 48,117 88,070 Net Earnings € thou 10,711 13,702 74,445 (568) 4,736 2,935 TU Allianz Zycie Polska S.A., Warsaw TUiR Allianz Polska S.A., Warsaw UK Logistics PropCo I S.à r.l., Luxembourg UK Logistics PropCo II S.à r.l., Luxembourg UK Logistics S.C.Sp., Luxembourg Vailog Hong Kong DC17 Limited, Hong Kong 805,400 (4,421) Vailog Hong Kong DC19 Limited, Hong Kong 63,203 7,764 16,477 48,084 7,712 113,642 105,563 234,843 803,669 266,287 75,764 97,945 233,283 276,564 5,679 634,789 191,685 51,139 55,195 115,811 218,130 62,100 653,934 221,014 112,004 45,706 106,378 28,616 69,048 76,825 261,195 143,473 57,921 336,589 21,053 8,425 216,827 7,483 18,852 52,396 82,801 5,341 5,746 9,490 62,341 5,728 5,954 9,043 17,843 21,499 46,662 3,043 (458) 1,186 Valderrama S.A., Luxembourg Vanilla Capital Markets S.A., Luxembourg VertBois S.à r.l., Luxembourg 521 Viveole SAS, Versailles (448) 4,691 940 9,985 28,807 11,495 (636) 3,123 4,177 3,038 781 16,970 2,344 3,661 1,513 4,333 7,411 339 4,282 8,606 245 3,665 3,114 212 29 79 10,385 16,098 1,311 1,328 (92) 618 2,758 (103) 266 1,465 2,497 71 209 1,895 1,289 (9) 657 1,187 (1,633) 3,509 397 Vordere Zollamtsstraße 13 GmbH, Vienna Weihong (Shanghai) Storage Services Co. Ltd., Shanghai Weilong (Hubei) Storage Services Co. Ltd., Ezhou Weilong (Jiaxing) Storage Services Co. Ltd., Jiaxing Weiyi (Shenyang) Storage Services Co. Ltd., Shenyang Windpark AO GmbH, Pottenbrunn Windpark EDM GmbH & Co. KG, Pottenbrunn Windpark EDM GmbH, Pottenbrunn Windpark GHW GmbH, Pottenbrunn Windpark Ladendorf GmbH, Vienna Windpark Les Cent Jalois SAS, Versailles Windpark LOI GmbH, Pottenbrunn Windpark PDV GmbH, Pottenbrunn Windpark PL GmbH, Pottenbrunn Windpark Zistersdorf GmbH, Pottenbrunn YAO NEWREP Investments S.A., Luxembourg Yorktown Financial Companies Inc., Minneapolis, MN ZAD Allianz Bulgaria Zhivot, Sofia ZAD Allianz Bulgaria, Sofia ZAD Energia, Sofia Joint ventures 114 Venture LP, Wilmington, DE 1515 Broadway Realty LP, Dover, DE 1800 M Street Venture LP, Wilmington, DE 30 HY WM REIT Owner LP, Wilmington, DE 53 State JV L.P., Wilmington, DE A&A Centri Commerciali S.r.l., Milan Allee-Center Kft., Budapest AMLI-Allianz Investment LP, Wilmington, DE AS Gasinfrastruktur Beteiligung GmbH, Vienna Austin West Campus Student Housing LP, Wilmington, DE AZ/JH Co-Investment Venture (DC) LP, Wilmington, DE AZ/JH Co-Investment Venture (IL) LP, Wilmington, DE BCal Houston JV L.P., Wilmington, DE Chapter Master Limited Partnership, London Columbia REIT – 221 Main Street LP, Wilmington, DE Columbia REIT - 333 Market Street LP, Wilmington, DE Columbia REIT-University Circle LP, Wilmington, DE Companhia de Seguro de Créditos S.A., Lisbon CPIC Fund Management Co. Ltd., Shanghai Daiwater Investment Limited, London Dundrum Car Park Limited Partnership, Dublin Dundrum Retail Limited Partnership, Dublin Elton Investments S.à r.l., Luxembourg Enhanzed Reinsurance Ltd., Hamilton Owned1 % 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 100.0 3 94.0 3 100.0 3 99.0 3 87.0 3 51.0 3 50.0 3 50.0 3 43.0 3 49.0 3 49.0 3 50.0 3 50.0 3 75.0 3 56.0 3 Equity € thou 109,890 295,653 55,630 40,636 33,324 17,152 6,683 150,007 316,426 19,820 13,979 70,545 25,000 9,470 16,547 16,189 11,766 9,782 11,250 7,770 7,181 7,394 11,285 10,241 6,366 6,579 161,383 148,781 52,000 53,022 14,734 167,582 954,474 379,271 418,372 328,709 151,673 104,463 88,197 338,981 Net Earnings € thou 17,846 40,407 (1,683) (77) (2) 622 3,602 (752) 1,545 913 1,728 2,136 238 1,119 237 (1,074) (728) (922) (183) (357) (563) 1,051 (1,461) (599) (457) (691) (124) 4 3,654 9,321 3,913 (495) 10,305 5,967 113 4,061 4,407 11,850 2,923 23,447 45.0 3 401,990 (24,252) 80.0 3 80.0 3 40.0 3 46.0 3 45.0 3 45.0 3 45.0 3 50.0 3 49.0 3 37.0 3 50.0 3 50.0 3 33.0 3 25.0 3 310,210 253,594 220,439 925,083 11,221 435,186 474,224 49,314 65,704 17,576 3,365 (574) 7,682 7,118 14,450 18,938 7,049 2,656 740,133 (109,080) 34,762 1,419 1,000,204 (111,324) 529,572 372,177 222,201 86,693 Annual Report 2020 – Allianz SE Owned1 % 50.0 3 50.0 3 50.0 3 50.0 3 45.0 3 45.0 3 50.0 3 50.0 3 45.0 3 45.0 3 45.0 3 32.0 3 50.0 3 50.0 3 50.0 3 60.0 3 50.0 3 24.0 3 44.0 3 30.0 3 50.0 3 56.0 3 50.0 3 36.0 3 50.0 3 50.0 3 50.0 3 50.0 3 40.0 3 50.0 3 31.0 3 50.0 3 50.0 3 50.0 3 50.0 3 50.0 3 30.0 3 49.0 3 40.0 3 40.0 3 29.0 3 23.0 3 32.0 3 26.0 3 26.0 3 34.0 3 16.0 3 Equity € thou 112,898 53,036 152,463 90,059 176,906 122,856 53,690 16,922 332,634 28,233 40,696 250,082 389,017 203,200 451,916 435,080 485,456 Net Earnings € thou (1,883) Douglas Emmett Partnership X LP, Wilmington, DE 9,168 5,307 11,137 (2,166) (6,329) Four Oaks Place LP, Wilmington, DE Global Stream Limited, Hong Kong Glory Basic Limited, Hong Kong Helios Silesia Holding B.V., Amsterdam Jumble Succeed Limited, Hong Kong 9,136 Lennar Multifamily Venture LP, Wilmington, DE (6,228) Long Coast Limited, Hong Kong 7,500 2,051 Luxury Gain Limited, Hong Kong Medgulf Takaful B.S.C.(c), Manama 30 MFM Holding Ltd., London 8,490 Milvik AB, Stockholm 216,474 Modern Diamond Limited, Hong Kong 19,810 38,294 MTech Capital Fund (EU) SCSp, Luxembourg New Try Limited, Hong Kong 183,315 Ocean Properties LLP, Singapore 6,208 OeKB EH Beteiligungs- und Management AG, Vienna 1,716,951 (16,807) Praise Creator Limited, Hong Kong 775,135 1,306,720 112,158 9,401 13,582 (7,395) 93,106 Prime Space Limited, Hong Kong Quadgas Holdings Topco Limited, Saint Helier 8,811 Residenze CYL S.p.A., Milan 11,325 SAS Alta Gramont, Paris 1,461 SCI Bercy Village, Paris 5,928,139 279,936 Sierra European Retail Real Estate Assets Holdings B.V., Amsterdam Sino Phil Limited, Hong Kong SNC Alta CRP Gennevilliers, Paris SNC Alta CRP La Valette, Paris SNC Société d'aménagement de la Gare de l'Est, Paris Summer Blaze Limited, Hong Kong Supreme Cosmo Limited, Hong Kong Sure Rainbow Limited, Hong Kong Tikehau Real Estate III SPPICAV, Paris UK Outlet Mall Partnership LP, Edinburgh Wildlife Works Carbon LLC, San Francisco, CA Other participations below 20% voting rights 50.0 3 121,037 27,454 90,790 220,113 104,690 1,219,899 98,481 314,279 176,957 30,212 23,297 51,495 189,926 62,634 351,436 (147) (211) 9,405 2,772 7,816 37,438 697 (44,930) 10,675 8,402 (90) (1,408) (10,021) 55,946 Agrupación Española de Entidades Aseguradoras de los Seguros Agrarios Combinados S.A., Madrid 3,475 Al-Nisr Al-Arabi Insurance Company, Amman ALTRO Invest S.C.A., Weiswampach Autostrade per l’Italia S.p.A., Rome 28,531 (4,258) B3i Services AG, Zurich 48,445 82,187 145,860 186,066 721,132 1,497,664 601,522 20,034 295 Blackstone Property Partners Asia (Lux) SCSp, Luxembourg (15,231) China Pacific Insurance (Group) Co. Ltd., Shanghai 92,810 CLF Fund I LP, Singapore 933 Commercial Bank of Cameroon LC, Douala 98,674 57,733 Drone Racing League Inc., Wilmington, DE Formula E Holdings Limited, Hong Kong - Fundbox Ltd., Tel Aviv 8,432 Geodis SACS, Levallois-Perret IDI SCA, Paris 25.0 3 175,898 (1,552) Italo - Nuovo Trasporto Viaggiatori S.p.A., Rome 25.0 3 23.0 3 30.0 3 16.0 3 12,477 150,556 663,300 17,023 2,205 1,070 Logistis Luxembourg Feeder S.A., Luxembourg Meiji Yasuda Asset Management Company Ltd., Tokyo (8,714) Nauto Inc., Dover, DE 5,772 Oddo et Cie SCA, Paris ESR India Logistics Fund Pte. Ltd., Singapore Euromarkt Center d.o.o., Ljubljana Fiumaranuova S.r.l., Genoa GBTC I LP, Singapore Helios SCC Sp. z o.o., Katowice Hudson One Ferry JV L.P., Wilmington, DE Israel Credit Insurance Company Ltd., Tel Aviv Italian Shopping Centre Investment S.r.l., Milan LBA IV-PPI Venture LLC, Dover, DE LBA IV-PPII-Office Venture LLC, Dover, DE LBA IV-PPII-Retail Venture LLC, Dover, DE LPC Logistics Venture One LP, Wilmington, DE NET4GAS Holdings s.r.o., Prague NRF (Finland) AB, Västeras NRP Nordic Logistics Fund AS, Oslo Ophir-Rochor Commercial Pte. Ltd., Singapore Orion MF TMK, Tokyo Piaf Bidco B.V., Amsterdam Podium Fund HY REIT Owner LP, Wilmington, DE Porterbrook Holdings I Limited, London Queenspoint S.L., Madrid RMPA Holdings Limited, Colchester SC Holding SAS, Paris Scape Investment Operating Company No. 3 Pty Ltd., Sydney SCI Docks V2, Paris la Défense SCI Docks V3, Paris la Défense SES Shopping Center AT1 GmbH, Salzburg SES Shopping Center FP 1 GmbH, Salzburg Solunion Compañía Internacional de Seguros y Reaseguros SA, Madrid Spanish Gas Distribution Investments S.à r.l., Luxembourg SPREF II Pte. Ltd., Singapore Terminal Venture LP, Wilmington, DE The FIZZ Student Housing Fund S.C.S., Luxembourg The State-Whitehall Company LP, Dover, DE TopTorony Ingatlanhasznosító Zrt., Budapest VGP European Logistics 2 S.à r.l., Senningerberg VGP European Logistics S.à r.l., Senningerberg VISION (III) Pte Ltd., Singapore Waterford Blue Lagoon LP, Wilmington, DE Associates Allianz Life Insurance Japan Ltd., Tokyo Archstone Multifamily Partners AC JV LP, Wilmington, DE Archstone Multifamily Partners AC LP, Wilmington, DE Areim Fastigheter 2 AB, Stockholm Areim Fastigheter 3 AB, Stockholm Bajaj Allianz General Insurance Company Ltd., Pune Bajaj Allianz Life Insurance Company Ltd., Pune Bazalgette Equity Ltd., London Best Regain Limited, Hong Kong Blue Vista Student Housing Select Strategies Fund L.P., Dover, DE Brunei National Insurance Company Berhad Ltd., Bandar Seri Begawan CPIC Allianz Health Insurance Co. Ltd., Shanghai Delgaz Grid S.A., Târgu Mures Delong Limited, Hong Kong Annual Report 2020 – Allianz SE C _ Financial Statements of Allianz SE Owned1 % 28.0 3 49.0 3 16.0 3 16.0 3 45.0 3 16.0 3 11.0 3 16.0 3 16.0 3 25.0 3 37.0 3 35.0 3 16.0 3 27.0 3 16.0 3 20.0 3 49.0 3 16.0 3 16.0 3 13.0 3 33.0 3 49.0 3 49.0 3 25.0 3 16.0 3 49.0 3 49.0 3 49.0 3 16.0 3 16.0 3 16.0 3 12.0 3 20.0 3 9.0 3 Equity € thou 20,722 467,340 19,016 14,141 60,382 25,418 Net Earnings € thou 3,066 9,867 11,000 8,214 (2,155) 21,482 2,124,044 157,124 17,730 18,380 16,283 87,655 8,409 6,771 14,668 9,282 1,537,456 120,857 11,558 27,867 4,826,813 84,845 246,162 40,102 165,261 23,479 27,457 14,554 11,631 14,759 12,654 9,148 234,941 488,869 6,652 9,436 11,782 7 (2,012) (20,120) 4,612 (1,630) 3,766 69,509 9,678 5,716 26,430 (14,818) (670) 1,265 8,402 102,631 18,309 1,708 4,583 3,107 9,689 7,510 4,450 23,007 38,151 308 7.0 3 18.0 3 20.0 3 7.0 3 10.0 3 6.0 3 1.0 3 12.0 3 10.0 3 3.0 3 4.0 3 3.0 3 5.0 3 5.0 3 10.0 3 20.0 3 7.0 3 3.0 3 2.0 3 13,125 28,005 5,324 658 3,581 (17) 2,220,424 (268,433) 22,081 7,004 1,085,745 90,349 22,819,670 3,587,186 1,820,622 23,532 23,230 20,456 102,869 3,845 (21,952) 3,808 124,552 (48,858) 1,185,000 223,998 1,763,611 1,650,121 79,434 40,937 819,491 12,000 82,835 151,420 332,588 7,384 (44,720) 61,194 95 1QB Information Technologies Inc., Vancouver, BC 5.0 3 8,246 (8,949) C _ Financial Statements of Allianz SE PERILS AG, Zurich Pollen Inc., Wilmington, DE Portima SCRL, Brussels PT Aplikasi Karya Anak Bangsa, Jakarta PT Asuransi Andika Raharja Putera, Jakarta PT Polinasi Iddea Investama, Jakarta Quantemplate Technologies Limited, Gibraltar Rothschild & Co SCA, Paris Société Africaine de Réassurance Limited, Lagos Société d'Assurances de Consolidation des Retraites de l'Assurance S.A., Paris Société Générale de Banque au Cameroun LC, Douala Société Générale de Banques en Côte d'Ivoire S.A., Abidjan SOFIDY Pierre Europe SPPICAV, Évry SONACO SA, Abidjan Tecnologías de la Información y Redes para las Entidades Aseguradoras S.A., Las Rozas de Madrid UniCredit S.p.A., Milan Wayhome Ltd., London Wealthsimple Financial Corporation, Toronto, ON Zagrebacka banka d.d., Zagreb Owned1 % 10.0 3 5.0 3 11.0 3 1.0 3 8.0 3 2.0 3 2.0 3 3.0 3 8.0 3 21.0 3 16.0 3 6.0 3 9.0 3 12.0 3 6.0 3 1.0 3 20.0 3 10.0 3 12.0 3 Equity € thou 9,948 104,657 10,420 Net Earnings € thou 190 (14,039) 1,357 958,827 (1,524,061) 68,758 45,479 7,665 1,957,587 868,773 291,610 102,043 321,748 69,828 10,821 8,250 28,513 4,264 309,401 89,247 14,003 24,143 76,610 1,546 (191) 43,076 4,495 61,416,000 3,373,000 6,229 56,404 2,215,871 (3,573) (42,618) 210,563 1_Percentage includes equity participations held by dependent entities in full, even if the Allianz Group’s share in the dependent entity is below 100%. 2_Profit and loss transfer agreement. 3_As per annual financial statement 2019. 4_Insolvent. Dependent entities are shown in a way, which reflects the state as of the date of filing for insolvency. 5_As per annual financial statement 2010. This is only applicable for manroland AG and their subsidiaries. 96 Annual Report 2020 – Allianz SE FURTHER INFORMATION Annual Report 2020 – Allianz SE 97 D _ Further Information RESPONSIBILITY STATEMENT To the best of our knowledge, and in accordance with the applicable reporting principles, the financial statements of Allianz SE give a true and fair view of the assets, liabilities, financial position, and profit or loss of the company, and the management report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal opportunities and risks associated with the expected development of the company. Munich, 16 February 2021 Allianz SE The Board of Management Oliver Bäte Sergio Balbinot Jacqueline Hunt Dr. Barbara Karuth-Zelle Dr. Klaus-Peter Röhler Ivan de la Sota Giulio Terzariol Dr. Günther Thallinger Christopher Townsend Renate Wagner 98 Annual Report 2020 – Allianz SE D _ Further Information INDEPENDENT AUDITOR’S REPORT To Allianz SE, Munich Report on the Audit of the Annual Financial Statements and of the Management Report AUDIT OPINIONS We have audited the annual financial statements of Allianz SE, Munich, which comprise the balance sheet as at 31 December 2020, and the income statement for the financial year from 1 January to 31 December 2020, and notes to the financial statements, including the presentation of the recognition and measurement policies. In addition, we have audited the management report of Allianz SE for the financial year from 1 January to 31 December 2020. In accordance with the German legal requirements, we have not audited the content of those parts of the management report listed in the “Other Infor- mation” section of our auditor’s report. In our opinion, on the basis of the knowledge obtained in the audit,   the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law and give a true and fair view of the assets, liabilities and finan- cial position of the Company as at 31 December 2020 and of its financial performance for the financial year from 1 January to 31 December 2020 in compliance with German Legally Required Accounting Principles, and the accompanying management report as a whole provides an appropriate view of the Company's position. In all material respects, this management report is consistent with the annual financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. Our audit opinion on the management report does not cover the content of those parts of the management report listed in the “Other Information” section of our auditor’s report. Pursuant to § 322 (3) sentence 1 HGB of the German Commercial Code (“Handelsgesetzbuch – HGB”), we declare that our audit has not led to any reservations relating to the legal compliance of the annual finan- cial statements and of the management report. BASIS FOR THE AUDIT OPINIONS We conducted our audit of the annual financial statements and of the management report in accordance with § 317 HGB and the EU Audit Regulation (number 537/2014, referred to subsequently as "EU Audit Regulation") in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany – IDW). Our responsibilities under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the Annual Financial Statements and of the Management Report" section of our auditor's report. We are independent of the Company in ac- cordance with the requirements of European law and German com- mercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the annual financial state- ments and on the management report. KEY AUDIT MATTERS IN THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial state- ments for the financial year from 1 January to 31 December 2020. These matters were addressed in the context of our audit of the annual financial statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters. In our view, the matter of most significance in our audit was as follows:  Measurement of reserves for loss and loss adjustment expenses Our presentation of this key audit matter has been structured as follows:  Matter and issue  Audit approach and findings  Reference to further information Hereinafter, we present the key audit matter: MEASUREMENT OF RESERVES FOR LOSS AND LOSS ADJUSTMENT EXPENSES Matter and issue In the annual financial statements of the Company, technical pro- visions (so called “claims provisions”) amounting to € 13,397 mn (10.6 % of total assets) are reported under the “Reserves for loss and loss adjustment expenses” balance sheet item. Insurance companies are required to recognize technical provisions to the extent necessary in accordance with reasonable business judgment to ensure that they can meet their obligations from insurance contracts on a continuous basis. Defining assumptions for the purpose of measuring the technical provisions requires the Company's executive directors, in addition to complying with the requirements of commercial and regulatory law, to make estimations of future events and to apply appropriate measurement methods. This also includes the expected effects of the ongoing COVID-19 pandemic on the recognition of the claims provisions of the affected lines of business. The gross provision is generally determined on the basis of the cedents' information or, in the case of outstanding settlements, on the basis of an estimate. The Company reviews the appropriateness of the cedents' information and, if necessary, makes appropriate increases to the amounts. The methods used to determine the amount of the claims provi- sions and the calculation parameters are based on judgments and Annual Report 2020 – Allianz SE 99 D _ Further Information assumptions made by the executive directors. In particular, the lines of products with long claims settlement periods, low loss frequency or high individual losses are usually subject to increased estimation uncertainties and usually require a high degree of judgment by the Company's executive directors. Minor changes to those assumptions and to the methods used may have a material impact on the measurement of the claims provisions. Due to the material significance of the amounts of these provisions in relation to the assets, liabilities and financial performance of the Company as well as the considerable scope for judgment on the part of the executive directors and the associated uncertainties in the estimations made, the measurement of the claims provisions was of particular significance in the context of our audit. Audit approach and findings As part of our audit, we evaluated the appropriateness of selected controls established by the Company for the purpose of selecting actuarial methods, determining assumptions and making estimates for the measurement of provisions for unsettled claims in property- casualty insurance. With the support of our property-casualty insurance valuation specialists, we have compared the respective actuarial methods applied and the material assumptions with generally recognized actuarial practices and industry standards and examined to what extent these are appropriate for the valuation. Our audit also included an evaluation of the plausibility and integrity of the data and assumptions used in the valuation and an analysis of the claims settlement processes and the reconciliation of the information provided by the cedents. In this connection, we also evaluated the assessment of the executive directors regarding the effects of the COVID-19 pandemic on the affected lines of business. Furthermore, we recalculated the amount of the provisions for selected lines of products, in particular lines of products with large reserves or increased estimation uncertainties. For these lines of products we compared the recalculated provisions with the provisions calculated by the Company and evaluated any differences. Based on our audit procedures, we were able to satisfy ourselves that the estimates and assumptions made by the executive directors are appropriate overall for measuring the technical provisions in property-casualty insurance. Reference to further information The Company's disclosures on the measurement of provisions for unsettled claims are contained in section Accounting, Valuation, and Calculation Methods in the notes to the financial statements. OTHER INFORMATION The executive directors are responsible for the other information. The other information comprises the following non-audited parts of the management report:   the statement on corporate governance pursuant to § 289f HGB included in section Statement on Corporate Management of the management report the separate non-financial report pursuant to § 289b (3) HGB and § 315b (3) HGB The other information comprises further the remaining parts of the annual report – excluding cross-references to external information – with the exception of the audited annual financial statements, the audited management report, and our auditor’s report. Our audit opinions on the annual financial statements and on the management report do not cover the other information, and consequently we do not express an audit opinion or any other form of assurance conclusion thereon. In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other infor- mation  is materially inconsistent with the annual financial statements, with the management report or with our knowledge obtained in the audit, or  otherwise appears to be materially misstated. RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE SUPERVISORY BOARD FOR THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT The executive directors are responsible for the preparation of the annual financial statements that comply, in all material respects, with the requirements of German commercial law, and that the annual financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German Legally Required Accounting Principles. In addition, the executive directors are responsible for such internal con- trol as they, in accordance with German Legally Required Accounting Principles, have determined necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error. In preparing the annual financial statements, the executive directors are responsible for assessing the Company's ability to con- tinue as a going concern. They also have the responsibility for disclos- ing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern ba- sis of accounting, provided no actual or legal circumstances conflict therewith. Furthermore, the executive directors are responsible for the preparation of the management report that as a whole provides an appropriate view of the Company’s position and is, in all material respects, consistent with the annual financial statements, complies with German legal requirements, and appropriately presents the oppor- tunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the prepara- tion of a management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the management report. The supervisory board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial statements and of the management report. AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS AND OF THE MANAGEMENT REPORT Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material 100 Annual Report 2020 – Allianz SE D _ Further Information misstatement, whether due to fraud or error, and whether the manage- ment report as a whole provides an appropriate view of the Company’s position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our audit opinions on the annual financial statements and on the management report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual financial statements and this management report. We exercise professional judgment and maintain professional scep- ticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.  Obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures (systems) relevant to the audit of the management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems of the Company.  Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness of estimates made by the executive directors and related disclosures.  Conclude on the appropriateness of the executive directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw atten- tion in the auditor's report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to be able to continue as a going concern.  Evaluate the overall presentation, structure, and content of the annual financial statements, including the disclosures, and whether the annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true and fair view of the assets, liabilities, financial position, and financial performance of the Company in compliance with German Legally Required Accounting Principles.  Evaluate the consistency of the management report with the annual financial statements, its conformity with German law, and the view of the Company's position it provides.  Perform audit procedures on the prospective information pre- sented by management in the management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ mate- rially from the prospective information. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter. Other Legal and Regulatory Requirements ASSURANCE REPORT IN ACCORDANCE WITH § 317 (3B) HGB ON THE ELECTRONIC REPRO-DUCTION OF THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT PREPARED FOR PUBLICATION PURPOSES REASONABLE ASSURANCE CONCLUSION We have performed an assurance engagement in accordance with § 317 (3b) HGB to obtain reasonable assurance about whether the reproduction of the annual financial statements and the manage- ment report (hereinafter the “ESEF documents”) contained in the attached electronic file Allianz SE_AG_JA+LB_ESEF-2021-02-22.zip and prepared for publication purposes complies in all material respects with the requirements of § 328 (1) HGB for the electronic reporting format (“ESEF format”). In accordance with German legal requirements, this assurance engagement only extends to the conver- sion of the information contained in the annual financial statements and the management report into the ESEF format and therefore relates neither to the information contained within this reproduction nor to any other information contained in the above-mentioned elec- tronic file. In our opinion, the reproduction of the annual financial statements and the management report contained in the above-mentioned Annual Report 2020 – Allianz SE 101 D _ Further Information attached electronic file and prepared for publication purposes com- plies in all material respects with the requirements of § 328 (1) HGB for the electronic reporting format. We do not express any opinion on the information contained in this reproduction nor on any other infor- mation contained in the above-mentioned electronic file beyond this reasonable assurance conclusion and our audit opinion on the ac- companying annual financial statements and the accompanying management report for the financial year from 1 January to 31 De- cember 2020 contained in the “Report on the Audit of the Annual Financial Statements and on the Management Report” above. BASIS FOR THE REASONABLE ASSURANCE CONCLUSION We conducted our assurance engagement on the reproduction of the annual financial statements and the management report con- tained in the above mentioned attached electronic file in accordance with § 317 (3b) HGB and the Exposure Draft of IDW Assurance Standard: Assurance in Accordance with § 317 (3b) HGB on the Electronic Reproduction of Financial Statements and Management Reports Prepared for Publication Purposes (ED IDW AsS 410) and the International Standard on Assurance Engagements 3000 (Revised). Accordingly, our responsibilities are further described below in the “Auditor’s Responsibilities for the Assurance Engagement on the ESEF Documents” section. Our audit firm has applied the IDW Standard on Quality Management: Requirements for Quality Management in the Audit Firm (IDW QS 1). RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE SUPERVISORY BOARD FOR THE ESEF DOCUMENTS The executive directors of the Company are responsible for the prepa- ration of the ESEF documents including the electronic reproduction of the annual financial statements and the management report in accordance with § 328 (1) sentence 4 number 1 HGB. In addition, the executive directors of the Company are respon- sible for such internal control as they have considered necessary to enable the preparation of ESEF documents that are free from material non-compliance with the requirements of § 328 (1) HGB for the elec- tronic reporting format, whether due to fraud or error. The executive directors of the Company are also responsible for the submission of the ESEF documents together with the auditor's report and the attached audited annual financial statements and audited management report as well as other documents to be pub- lished to the operator of the German Federal Gazette [Bundesanzeiger]. The supervisory board is responsible for overseeing the prepara- tion of the ESEF documents as part of the financial reporting process. AUDITOR'S RESPONSIBILITIES FOR THE ASSURANCE ENGAGEMENT ON THE ESEF DOCUMENTS Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material non-compliance with the requirements of § 328 (1) HGB, whether due to fraud or error. We exercise professional judgment and maintain professional skepticism throughout the assurance engagement. We also:  Identify and assess the risks of material non-compliance with the requirements of § 328 (1) HGB, whether due to fraud or error, design and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appro- priate to provide a basis for our assurance conclusion.  Obtain an understanding of internal control relevant to the as- surance engagement on the ESEF documents in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing an assurance conclusion on the effectiveness of these controls.  Evaluate the technical validity of the ESEF documents, i.e., whether the electronic file containing the ESEF documents meets the requirements of the Delegated Regulation (EU) 2019/815 in the version applicable as at the balance sheet date on the technical specification for this electronic file.  Evaluate whether the ESEF documents enables a XHTML repro- duction with content equivalent to the audited annual financial statements and to the audited management report. FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF THE EU AUDIT REGULATION We were elected as auditor by the supervisory board on 5 March 2020. We were engaged by the supervisory board on 11 May 2020. We have been the auditor of the Allianz SE, Munich, without interruption since the financial year 2018. We declare that the audit opinions expressed in this auditor's report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report). German Public Auditor Responsible for the Engagement The German Public Auditor responsible for the engagement is Frank Trauschke. Munich, 22 February 2021 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Richard Burger Frank Trauschke Wirtschaftsprüfer (German Public Auditor) Wirtschaftsprüfer (German Public Auditor) 102 Annual Report 2020 – Allianz SE D _ Further Information This page intentionally left blank. Annual Report 2020 – Allianz SE 103 Allianz SE – Königinstrasse 28 – 80802 Munich – Germany – Phone + 49 89 3800 0 – info@allianz.com – www.allianz.com Front page design: hw.design GmbH – Typesetting: Produced in-house with SmartNotes Annual Report on the internet: www.allianz.com/annualreport – Date of publication: 5 March 2021 This is a translation of the German Annual Report of Allianz SE. In case of any divergences, the German original is legally binding.   

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