60 Reconciliations
62 Risk and Opportunity Report
75
Controls over Financial Reporting
Pages 1-12
Pages 13-34
Pages 35-76
D_Consolidated Financial Statements
78 Consolidated Balance Sheets
79 Consolidated Income Statements
Consolidated Statements of Comprehensive Income
80
81
Consolidated Statements of Changes in Equity
Pages 77-146
82 Consolidated Statements of Cash Flows
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
84 General Information
Annual Report 2016
A
TO OUR INVESTORS
Following the change in the E.U. Transparency Directive, Allianz Group adjusted its reporting
in 2016, including the discontinuation of the First Quarter and Third Quarter Interim Reports.
We have also taken this opportunity to enhance transparency, streamline our disclosures, and
remove redundancies wherever possible.
Further Information
The consolidated financial statements are presented in millions of Euros (€ MN) unless other-
wise stated. Due to rounding, numbers presented may not add up precisely to the totals
provided and percentages may not precisely reflect the absolute figures.
57 Liquidity and Funding Resources
Disclaimer regarding roundings
145 Responsibility Statement
Other Information
122
117 Notes to the Consolidated Income Statements
Notes to the Consolidated Balance Sheets
101
146 Auditor's Report
- Allianz Group
Balance Sheet Review
51
STRENGTH
CONTINUITY
CHANGE
Allianz Group
Annual Report 2016
Allianz (ill
►To go directly to any chapter, simply click
on the headline or the
page number.
CONTENT
All references to chapters, pages, notes,
internet pages, etc. within this report are also linked.
A_ To our Investors
2 Letter to the Investors
5 Supervisory Board Report
11 Mandates of the Members of the Supervisory Board
12
Mandates of the Members of the Board of Management
B_ Corporate Governance
14 Corporate Governance Report
19
Statement on Corporate Management pursuant to § 315 (5) and § 289a of the HGB
(part of the Group Management Report)
50 Corporate and Other
Asset Management
48
45
43 Property-Casualty Insurance Operations
Life/Health Insurance Operations
41 Executive Summary of 2016 Results
55
Business Environment
Business Operations
36
C Group Management Report
24 Remuneration Report (part of the Group Management Report)
Takeover-related Statements and Explanations (part of the Group Management Report)
21
39
1
Outlook 2017
OLIVER BÄTE
In all of the Supervisory Board's 2016 meetings, the Board of Management reported on Group
revenues and results as well as developments in individual business segments. The Board of
Management informed us on the course of business as well as on the development of the
Allianz Group and Allianz SE, including deviations in actual business developments from the
planning. Within the framework of our activities, the Board of Management reported to us on
a regular basis and in a timely and comprehensive manner, both verbally and in writing. Key
reporting issues were strategic topics, such as the implementation of the Renewal Agenda
and the portfolio strategy, the risk strategy and capital management, the ongoing challenges
facing the life insurance business due to the low interest rates, the divestment of the life
insurance business in South Korea, as well as the business development in the Asset Manage-
ment segment. In addition, we were extensively involved in the Board of Management's plan-
ning for both the fiscal year 2017 and the three-year period from 2017 to 2019. We dealt exten-
sively with the implementation of the audit reform legislation, in particular the preparation
of the audit firm rotation. Finally, we prepared for the election of the Supervisory Board in
spring 2017 and also took a look at the result of the review of the efficiency of the Supervisory
Board's activities carried out with the support of an external advisor.
In the fiscal year 2016, the Supervisory Board held six meetings. The meetings took place in
February, March, May, August, October and December. 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 us in writing of important events that occurred between meetings. The chair-
men of the Supervisory and Management Boards also had regular discussions about major
developments and decisions.
Details on each member's participation at meetings of the Supervisory Board and its com-
mittees can be found in the Corporate Governance Report, starting on ②> page 14. Members
of the Supervisory Board who were unable to attend meetings of the Supervisory Board or its
committees were excused and, as a rule, cast their votes in writing.
ISSUES DISCUSSED IN THE SUPERVISORY BOARD PLENARY SESSIONS
In the meeting of 18 February 2016, the Supervisory Board dealt comprehensively with the pro-
visional financial figures for the fiscal year 2015 and the Board of Management's recommended
dividend. The appointed audit firm, KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), Munich,
reported in detail on the provisional results of their audit. The Chief Compliance Officer then
gave his annual report on the compliance organization and key compliance-related matters.
During the further course of the meeting, the Supervisory Board also reviewed the extent to
Annual Report 2016 - Allianz Group
A - To Our Investors
5
A - To Our Investors
6
which individual members of the Board of Management had achieved their targets and set their
variable remuneration for the fiscal year 2015 as well as the mid-term bonus for the fiscal
years 2013-2015. In the course of the performance assessment, we also verified the fitness and
propriety of the members of the Board of Management.
In the meeting of 10 March 2016, the Supervisory Board dealt, firstly with personnel matters and
appointed Ms. Jacqueline Hunt to the Board of Management as successor to Mr. Jay Ralph with
effect from 1 July 2016, and Dr. Günther Thallinger as successor to Dr. Maximilian Zimmerer
with effect from 1 January 2017. The Supervisory Board also discussed the audited annual
Allianz SE and consolidated financial statements as well as the recommendation for the appro-
priation of earnings by the Board of Management for the fiscal year 2015. The auditor confirmed
that there were no discrepancies to their February report, and issued an unqualified auditor's
report for the individual and consolidated financial statements. In addition, the Board of
Management submitted its report on risk developments in 2015. The Supervisory Board also
dealt with the agenda and the proposals for resolution for the 2016 AGM of Allianz SE. It also
resolved to appoint KPMG as auditor for the individual and consolidated financial statements
for the fiscal year 2016 and for the auditor's review of the 2016 half-yearly financial report.
In addition, the Supervisory Board was also informed about the implementation status of
the Renewal Agenda and the consideration of environmental, social, and governance (ESG)
aspects in the investment and underwriting process.
On 4 May 2016, just before the AGM, the Board of Management briefed us on the first quarter
2016 performance and on the Group's current situation, in particular the capital adequacy,
the solvency ratio, and the planned sale of the life insurance business in South Korea. Because
of Ms. Ira Gloe-Semler's and Mr. Peter Denis Sutherland's resignation from the Supervisory
Board, a by-election for the committees had to be held. Ms. Martina Grundler was elected
to the Audit Committee, Dr. Friedrich Eichiner to the Risk Committee, and Mr. Jim Hagemann
Snabe to the Nomination Committee.
In the meeting of 4 August 2016, the Board of Management reported in depth on the half-yearly
results and also dealt with the potential impact of Brexit as well as the failed coup attempt in
Turkey, the situation in the Italian banking sector, the acquisition in Morocco, and planned
issuance of shares to employees. We then dealt extensively with the implementation status of
the Renewal Agenda, in particular in the main operating entities, regarding the topics True
Customer Centricity, Digital by Default, Technical Excellence, Growth Engines, and Inclusive
Meritocracy. The Board of Management also reported on the measures to promote women
and to increase employee mobility. Finally, the Supervisory Board dealt with the audit reform
legislation and the therefore required adjustments to the rules of procedure for the Supervisory
Board and individual committees, as well as the objectives for the composition of the Super-
visory Board. The meeting was preceded by a separate informational event for the members of
the Supervisory Board on the Group's digital strategy and its implementation.
A - To Our Investors
The main focus of the meeting on 7 October 2016 was the strategy of the Allianz Group, in parti-
cular the portfolio strategy and its integration into the Renewal Agenda, the risk strategy,
and capital management. In addition, the Supervisory Board dealt with the Group's ambitions
in the health insurance business. In its report on the results, the Board of Management also
addressed the divestment process for Oldenburgische Landesbank AG. Other topics discussed
in the meeting included amendments to the schedule of responsibilities of the Board of Man-
agement as well as the report of the Nomination Committee in the plenary session on the
proposed candidates for election to the Supervisory Board as shareholder representatives by
the 2017 AGM.
At the 15 December 2016 meeting, the Board of Management provided us with information
about the third-quarter results and further business developments as well as the current
situation of the Allianz Group. It also briefed us on the status of the divestment process in
South Korea and on the settlement of a SEC investigation at PIMCO. We also discussed the
planning for the fiscal year 2017 and the 2017 – 2019 three-year period, as well as the Declaration
of Conformity with the German Corporate Governance Code. The Supervisory Board reviewed
the appropriateness of the remuneration of the Board of Management based on a vertical and
horizontal comparison, set targets for the variable remuneration of the members of the Board
of Management and discussed general succession planning with regard to the Board of Man-
agement. The new CEO of PIMCO also introduced himself with initial considerations regarding
the future direction of PIMCO. Furthermore, we dealt extensively with the proposal made by
the Audit Committee regarding the mandatory audit firm rotation. In addition, the Supervisory
Board nominated the candidates for the 2017 Supervisory Board election in accordance with
the proposal made by the Nomination Committee and considering the objectives for the com-
position of the Supervisory Board. The new regulatory requirements regarding the composition
of the Supervisory Board were also discussed in this context. Finally, we took a detailed look
at the results of the Supervisory Board's efficiency review carried out with the support of an
external advisor.
A - To Our Investors
Annual Report 2016 - Allianz Group
The Risk Committee held two meetings in 2016, during which it discussed the current risk situ-
ation of the Allianz Group with the Board of Management. 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 the Audit
Committee was informed of the result. The appropriateness of the early risk recognition system
at Allianz and the result of further, voluntary risk assessments by the auditor were also dis-
cussed. The committee took a detailed look at the risk strategy and capital management, as
well as the effectiveness of the risk management system, in particular the limit system for
the Allianz Group and Allianz SE. The interest rate sensitivity in the life insurance business and
The Audit Committee held five regular and two extraordinary meetings, and adopted one
resolution by written procedure in 2016. In the presence of the auditors, it discussed the annual
financial statements of Allianz SE and the consolidated financial statements of the Allianz
Group, the management reports and auditor's reports as well as the half-yearly financial report.
The Audit Committee saw no reason to raise any objections. In addition, the Board of Manage-
ment submitted its report on the results of the first and third quarter. The committee also
dealt with the auditor's engagement and established priorities for the annual audit for the 2016
financial year. It also discussed assignments to the auditors for non-audit services. In addition,
it dealt extensively with the compliance system, the internal audit system as well as the inter-
nal financial reporting process and the internal controls over financial reporting. The com-
mittee received regular reports on legal and compliance issues and the work of the internal
audit function and initiated a review of the group-wide implementation status of the gover-
nance requirements according to Solvency II. The preparations for the audit firm rotation from
the fiscal year 2018 were one of the main areas of focus of the Audit Committee's work. A tender
procedure in accordance with the new legal requirements was carried out for this purpose and
a recommendation finally submitted to the plenary session.
The Personnel Committee held three meetings, one of which was by conference call, in 2016.
It dealt extensively with the successors to Mr. Ralph and Dr. Zimmerer. The committee also
looked at other mandate matters for active and former members of the Board of Manage-
ment. In addition to reviewing the target achievement among Board of Management members
for 2015, the committee prepared the review of the remuneration system and the setting of
targets for variable remuneration for 2017.
The Standing Committee held two meetings and adopted one resolution by written procedure
in 2016. These related primarily to corporate governance issues, in particular to the adjustments
to the rules of procedure for the Supervisory Board and its committees as a result of the new
auditing legislation, the preparation for the AGM, the Employee Stock Purchase Plan, and the
external review of the Supervisory Board's efficiency. During the fiscal year the committee also
passed resolutions to approve loans to senior executives.
OVERVIEW
The Supervisory Board has formed various committees in order to perform its duties efficiently.
The committees prepare the discussion and adoption of resolutions in the plenary sessions or
can adopt resolutions themselves.
8
A - To Our Investors
7
Annual Report 2016 - Allianz Group
Further explanations on corporate governance in the Allianz Group can be found in the Cor-
porate Governance Report starting on > page 14 and the Statement on Corporate Management
pursuant to § 315 (5) and § 289a HGB starting on > page 19. The Allianz website also provides
more details on corporate governance: ②> www.allianz.com/corporate-governance.
DECLARATION OF CONFORMITY WITH THE GERMAN CORPORATE GOVERNANCE CODE
On 15 December 2016, the Board of Management and the Supervisory Board issued the Decla-
ration of Conformity in accordance with § 161 of the German Stock Corporation Act ("Aktien-
gesetz”). The Declaration was posted on the company website, where it is available to share-
holders at all times. Allianz SE fully complies and will continue to fully comply with the
recommendations of the German Corporate Governance Code made in the Code's version of
5 May 2015.
COMMITTEE ACTIVITIES
During the fiscal year 2016, the Supervisory Board fulfilled all its duties and obligations as laid
out in the company Statutes and applicable law. It monitored the management of the company,
devoted particular attention to personnel matters related to the Board of Management, and
advised the Board of Management regarding the conduct of business.
Annual Report 2016 - Allianz Group
Supervisory Board Report
In Asset Management, the new PIMCO management team (with Emmanuel Roman as CEO
and Dan Ivascyn as CIO) produced excellent results: Despite the recent rise in U.S. Treasury
interest rates, we registered third-party net inflows in the last two quarters of 2016 - for
the first time since 2013. Furthermore, 88% of PIMCO's third-party assets under management
exceeded their respective benchmarks. Allianz Global Investors continued on its road to
success, achieving excellent results.
We are making good progress in shifting our Life portfolio towards capital-efficient
products; our new business margin has increased to 2.7%. And we continue to address
deficits in the existing portfolio just as rigorously, as the successful sale of our South
Korean business demonstrates.
Annual Report 2016 - Allianz Group
Photo: Wolfgang Stahr
2
A year after the introduction of the E.U. solvency guideline Solvency II, we can report a strong
Solvency II capitalization ratio of 218%.
Our strategy and our Renewal Agenda are taking effect: they strengthen Allianz and enhance
your company's competitiveness.
That said, our share price could not repeat the double-digit performance seen the previous
year, what with unprecedented negative interest rates, political instability, and a difficult
second quarter. But as the figures in our annual financial statements show, we are working
hard to sustainably increase your company's value to key stakeholder groups and to place
customers at the center of all our actions.
In last year's letter to you I stated that your company was positioned well to deliver impressive
results even in difficult times. This still holds true, as our results for 2016 demonstrate: our
operating profit improved by 0.9% to € 10.8 BN; our net income attributable to shareholders
was € 6.9 BN. A very good result, considering the persistent low interest rate environment, as
well as a fiscal period that has the entire business world holding its breath in the face of war,
terror, and sudden political changes.
-
Juvestors
Dear
Board of Management
Ladies and Gentlemen,
Chairman of the
In order to make a comparative assessment of our customer orientation, the measurement
of customers' willingness to recommend Allianz (Net Promoter Score) was harmonized
on a group-wide basis. Results for 2016 were quite gratifying: 55% of our businesses achieved
an NPS above the respective market average.
We also moved up the newly defined Inclusive Meritocracy Index, which measures progress
in establishing an inclusive performance culture: it stood at 70% in 2016, after 68% in 2015.
Our Property-Casualty segment – a business with relatively low capital requirements –
achieved a strong performance despite headwinds, with our units in Turkey and Germany
particularly standing out in terms of top-line growth.
Our commitment to being a sustainable business was rewarded by the Dow Jones Sustain-
ability Index, one of the most prestigious Responsible Business ratings. We achieved a gold
rating and were the highest-placed primary insurer. Over the last year, we continued to
take industry-leading steps including our divestment from coal-based industries and the
growth of our renewable energy portfolio to € 4.6 BN.
P.S.: Our financial reporting goes digital, too, and we are deliberately keeping this Annual
Report as brief as possible. For further details on our figures and plans, please refer to our
website at >www.allianz.com/investor-relations or our Allianz Investor Relations App.
ॐ
Chives Béle
Sincerely yours,
Dear investors, we greatly appreciate your ongoing loyalty and support. Please be assured that
in 2017, as in the past years, we will not rest on our laurels, and we are making good progress
despite all the uncertainties and challenges we are facing. It is not in our power, obviously, to
prevent low interest rates, strong market fluctuations, or natural catastrophes. But we can work
hard to achieve our ambitious goals, and to ensure that your Allianz will remain successful as
the world goes digital.
All of these women and men work hard and successfully to provide you with both robust
returns and superior capital efficiency, in keeping with our promise. And, as you may
remember, there is another promise we have made: any capital we don't use to expand our
business will be returned to our investors. We have kept this promise as well. At the same
time, we work to ensure we have the flexibility required to keep a sound balance between
Allianz's capital efficiency on the one hand and its balance sheet strength on the other.
4
Annual Report 2016 - Allianz Group
3
A - To Our Investors
Annual Report 2016 - Allianz Group
We are experiencing an exciting moment in the history of Allianz, with huge and tantalizing
challenges ahead. It makes me happy to see how, at the various Allianz entities, young talents
work with experienced veterans to take this proud global company further into the digital age.
I am very pleased that we have such talented employees, and I extend my warmest thanks to
them for their hard work and outstanding dedication. Special thanks also go to our sales part-
ners, in particular our capable Allianz representatives worldwide. I am sure I am expressing
these thanks on your behalf as well.
Well, the good results of 2016 are history now and it is time to look to the future. As stated
before, we want to use our present financial strength and solid balance sheet to strengthen
Allianz even further. When asked about the long-term growth prospects for your company,
I usually point out three things: first, over seven billion people wake up every day, and for
most of them it is a key concern to have their safety and well-being protected and be able to
appropriately partake in global prosperity. Second, only about one percent of these people are
our customers at present. Third, since we are one of the world's leading financial services
providers, we are in a better position than most to fulfil this basic need for financial security
and a share in prosperity. In other words, there are basically no limits to our growth - all we
need to do is tap these opportunities prudently and in sustainable ways.
A - To Our Investors
38,686
5
13,306
(25)
13,290
18
10,586
12,054
7,615
(3,695)
8,383
13,485
2,940
12,213
3,133
(2,994)
39,867
111,325
(22,223)
486,222
71,830
105,873
29
16
188
80
(1,904)
(1,712)
4,822
4,003
2,925
2,750
25,283
24,256
(22,710)
71,130
46,430
(50)
Life/Health
2016
2015
2016
2015
51,535
51,597
64,636
66,903
Total revenues¹
Premiums earned (net)
46,588
23,769
24,215
505,460
Property-Casualty
(50)
(29,826)
€ MN
BUSINESS SEGMENT INFORMATION - TOTAL REVENUES AND RECONCILIATION OF OPERATING PROFIT (LOSS)
TO NET INCOME (LOSS)
13,530
12,258
(32,018)
813,417
782,843
Total equity
70,392
66,099
Total liabilities and equity
883,809
848,942
Annual Report 2016 - Allianz Group
40
97
D - Consolidated Financial Statements
BUSINESS SEGMENT INFORMATION - TOTAL REVENUES AND RECONCILIATION OF OPERATING PROFIT (LOSS) TO NET INCOME (LOSS)
(195)
260
(57)
38,050
37,050
29
13,925
(2)
14,196
109
7,794
7,653
11
11
13,752
13,443
12,422
12,348
(15,772)
136,841
(14,965)
8,556
(54)
15,562
14,843
24,887
25,234
Operating investment result
294
936
1,395
(1,904)
(1,712)
1,003
1,394
2,924
2,677
9,626
156,483
(107,256)
(134,008)
10,737
9,207
21,777
(1,974)
(3,127)
13,038
25,531
(24)
(15)
21,360
20,660
(34)
(23)
72,373
72,003
(489)
(400)
750
615
8,424
883,809
848,942
Asset Management
2016
2015
Corporate and Other
2016
(196)
Consolidation
2015
2016
2015
2016
2015
174
174
Group
Interest and similar income
Restructuring charges
3,648
(236)
(223)
(227)
(18)
Subtotal
524
424
(121)
228
Income from fully consolidated private equity investments (net)
Interest expenses from external debt
Acquisition-related expenses
One-off effects from pension revaluation
Non-operating amortization of intangible assets
Reclassifications³
Non-operating impairments of investments (net)
Non-operating items
298
746
(149)
268
5,370
5,603
4,148
3,796
Operating profit (loss)
Non-operating investment result
Non-operating income from financial assets and liabilities carried at fair value
through income (net)
(53)
(99)
26
(51)
Non-operating realized gains/losses (net)
814
81
(181)
(13)
(60)
Income taxes
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Shareholders
1- Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating
revenues in Asset Management and total revenues in Corporate and Other (Banking).
2- For the year ended 31 December 2016, includes expenses for premium refunds (net) in Property-Casualty
of € (255) MN (2015: € (240) MN).
155
4,003
143
3,981
137
2,443
143
2,478
3- From the classification of the Korean life business as "held for sale" in the second quarter of 2016 until its
disposal in the fourth quarter of 2016, the total result was considered as non-operating. Furthermore tax
reclassifications are included in this line.
98
Annual Report 2016 - Allianz Group
Income (loss) before income taxes
2,621
2,581
4,124
(63)
(52)
(222)
(268)
465
181
(441)
(149)
(6)
5,784
3,707
3,790
(1,677)
4,158
(1,660)
(1,127)
(1,169)
5,835
3,476
(6)
Reclassifications³
(59)
(1,208)
(1,199)
Investment expenses
Subtotal
Fee and commission income
Other income
(376)
(365)
(1,205)
(1,125)
3,226
3,378
21,283
20,497
(51)
1,527
Operating impairments of investments (net)
(108)
18,204
18,520
Operating income from financial assets and liabilities carried at fair value
through income (net)
(23)
(25)
(1,012)
(2,050)
Operating realized gains/losses (net)
285
252
6,612
6,459
Interest expenses, excluding interest expenses from external debt
(85)
(72)
(108)
1,474
1,346
1,331
(6,922)
Fee and commission expenses
(1,407)
(1,367)
(655)
(599)
Operating amortization of intangible assets
(19)
(19)
(78)
(94)
(149)
(91)
(32)
Other expenses
(6,612)
(13,208)
(13,352)
excluding acquisition-related expenses and one-off effects from pension revaluation
21
232
70
9
(30,576)
(30,721)
(22,584)
(3)
(20,986)
(460)
(12,477)
(13,550)
Claims and insurance benefits incurred (net)
Change in reserves for insurance and investment contracts (net)²
Loan loss provisions
Acquisition and administrative expenses (net),
(561)
105,873
D - Consolidated Financial Statements
117,630
42
46
13,957
46
160
79
63
239
63
14,196
109
Oldenburgische Landesbank AG, Oldenburg
Other disposal groups
Total
13,282
8
18
13,290
18
OLDENBURGISCHE LANDESBANK AG, OLDENBURG
At the end of the fourth quarter of 2016, all requirements were fulfilled
to present Oldenburgische Landesbank AG, Oldenburg, as a disposal
group. Thus, the assets and liabilities of this consolidated entity,
which is allocated to the reportable segment Banking (Corporate and
Other), were classified as held for sale.
RECLASSIFIED ASSETS AND LIABILITIES
€ MN
Cash and cash equivalents
Financial assets carried at fair value through income
Investments
13,915
2015
2016
Liabilities of disposal groups classified
as held for sale
The recoverable amounts of all cash generating units (CGUS) to test
goodwill and other indefinite life intangible assets for impairment
are typically determined on the basis of value in use calculations. The
determination of a CGU's recoverable amount requires significant
judgment regarding the selection of appropriate valuation tech-
niques and assumptions. These assumptions include for example
the selection of input parameters for the projection of future earn-
ings. Assumptions may need to be changed as economic, market and
business conditions change. As such, the Allianz Group continu-
ously evaluates external conditions and the operating performances
of the CGUS. Further explanations on the valuation techniques and
significant assumptions are given in note 12 Intangible assets.
92
92
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
DEFERRED TAX ASSETS1
4- Consolidation and
Deferred tax assets are determined based on tax loss carry-forwards, classification as held for sale
unused tax credits, and deductible temporary differences between
the Allianz Group's carrying amounts of assets and liabilities in its
consolidated balance sheet and their tax bases. Deferred tax assets
are recognized only to the extent it is probable that sufficient future
taxable income will be available for their realization. Assessments as
to the recoverability of deferred tax assets require the use of judg-
ment regarding assumptions related to estimated future taxable
profits. This includes the character and amounts of taxable future
profits, the periods in which those profits are expected to occur, and
the availability of tax planning opportunities.
The analysis and forecasting required in this process, and as a
result the determination of the deferred tax assets, is performed for
individual jurisdictions by qualified local tax and financial profes-
sionals. Given the potential significance surrounding the underlying
estimates and assumptions, group-wide policies and procedures
have been designed to ensure consistency and reliability around the
recoverability assessment process. Forecast operating results are
based upon approved business plans, which are themselves subject
to a well-defined process of control. As a matter of policy, especially
strong evidence supporting the recognition of deferred tax assets is
required if an entity has suffered a loss in either the current or pre-
ceding period.
Recognition and recoverability of all significant deferred tax
assets are reviewed by tax professionals at Group level and the Allianz
Group Tax Committee.
PENSION LIABILITIES AND SIMILAR OBLIGATIONS
Liabilities for pension and similar obligations and related net pen-
sion expenses are determined in accordance with actuarial valua-
tion models. These valuations rely on extensive assumptions. Key
assumptions including discount rates, inflation rates, compensation
increases, pension increases and rates of medical cost trends are
defined centrally at the Allianz Group level, considering the circum-
stances in the particular countries. In order to ensure their thorough
and consistent determination, all input parameters are discussed
and defined taking into consideration economic developments, peer
reviews, and currently available market and industry data.
Loans and advances to banks and customers
Deferred tax assets
Due to changing market and economic conditions, the under-
lying assumptions may differ from actual developments. Potential
financial impacts from deviations in certain critical assumptions
based on respective sensitivity analyses are disclosed in note 40 Pen-
sions and similar obligations.
During 2016 and 2015, no significant acquisitions occurred.
SIGNIFICANT CHANGES IN NON-CONTROLLING INTERESTS
During 2016 and 2015, no significant changes in non-controlling
interests occurred.
CLASSIFICATION AS HELD FOR SALE
NON-CURRENT ASSETS AND DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
€ MN
as of 31 December
Assets of disposal groups classified as held for sale
Oldenburgische Landesbank AG, Oldenburg
Other disposal groups
Subtotal
Non-current assets classified as held for sale
Real estate held for investment
Real estate held for own use
Subtotal
Total
SIGNIFICANT ACQUISITIONS
Other assets
Total assets
Financial liabilities carried at fair value through income
Liabilities to banks and customers
Financial assets carried at fair value through income
Investments
Loans and advances to banks and customers
4
9,506
1,940
1,502
6
429
46
397
Financial assets for unit-linked contracts
€ MN
Reinsurance assets
Deferred tax assets
Other assets
Financial liabilities carried at fair value through income
(20)
Unearned premiums
(79)
Reserves for loss and loss adjustment expenses
(434)
Reserves for insurance and investments contracts
(10,878)
Financial liabilities for unit-linked contracts
Deferred acquisition costs
INDEFINITE LIFE INTANGIBLE ASSETS
IMPACT OF THE DISPOSAL
During the year ended 31 December 2016, the Allianz Group disposed
of Allianz Life Insurance Co. Ltd., Seoul, a 100% owned subsidiary of
the Allianz Group, allocated to the reportable segment Asia Pacific
(Life/Health). The entity had been classified as held for sale since the
beginning of the second quarter of 2016. The entity was deconsoli-
dated on 30 December 2016. The Allianz Group received proceeds
from the sale of € 2 MN and recognized a provision for obligations
relating to the sales agreement of € 46 MN.
Other liabilities
Certificated liabilities
Subordinated liabilities
Total liabilities
395
13
2,631
10,703
74
98
13,915
The impact of the disposal, net of cash disposed, on the consoli-
dated statement of cash flows for the year ended 31 December 2016
was as follows:
11
442
215
250
13,282
1- For further details regarding deferred tax assets, please refer to note 34 Income taxes.
Annual Report 2016 - Allianz Group
93
D - Consolidated Financial Statements
As of 31 December 2016, cumulative gains of € 60 MN were recorded in 5-Segment reporting
other comprehensive income relating to the disposal group classified
as held for sale. The sale is expected to occur in 2017. Upon measure-
ment of the disposal group at fair value less costs to sell, an impair-
ment loss of € 87 MN before taxes was recognized for the year ended
31 December 2016.
SIGNIFICANT DISPOSALS
12,365
(1,502)
GOODWILL AND OTHER
Pursuant to IFRS 11, investments in joint arrangements have to
be classified as either joint operations or joint ventures depending on
the contractual rights and obligations of each investor. The Allianz
Group has assessed the nature of all its joint arrangements and
determined them to be joint ventures.
89
D - Consolidated Financial Statements
NEW ACCOUNTING PRONOUNCEMENTS
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
The following amendments and revisions to existing standards
became effective for the Allianz Group's consolidated financial state-
ments as of 1 January 2016:
IAS 1, Disclosure initiative,
IAS 16 & IAS 38, Clarification of Acceptable Methods
of Depreciation and Amortisation,
IAS 19, Defined Benefit Plans: Employee Contributions,
IFRS 11, Accounting for Acquisitions of Interests in Joint
Operations,
Annual Improvements to IFRSS 2010-2012 Cycle,
Annual Improvements to IFRSS 2012-2014 Cycle.
No material impact arose on the financial results or the financial
position of the Allianz Group.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
IFRS 9, Financial Instruments
IFRS 9, Financial Instruments, was issued by the IASB in July 2014 and
will fully replace IAS 39. IFRS 9 provides a new approach on how to
classify financial instruments based on their cash flow characteristics
and the business model under which they are managed. Further-
more, the standard introduces a new impairment model for debt
instruments and provides new rules for hedge accounting. The effec-
tive date is 1 January 2018.
In 2016, the IASB issued an amendment to IFRS 4 which permits
insurers to apply IAS 39 rather than IFRS 9, for annual periods begin-
ning before 1 January 2021, provided certain preconditions are met.
These preconditions, relating to insurance being the dominant activ-
ity of a reporting entity, are fulfilled by the Allianz Group and it is
planned to carry out this option. It can be assumed that the main
impact from IFRS 9 will arise from the new classification rules leading
to more financial instruments being measured at fair value through
profit and loss as well as from the new impairment model. In this
context, interdependencies with the not-yet-issued IFRS 17 have to be
considered to come to a final conclusion on the combined impact of
both standards.
IFRS 15, Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, Revenue from Contracts with
Customers. IFRS 15 supersedes IAS 18, IAS 11, and a number of reve-
nue-related interpretations. With the introduction of IFRS 15, the IASB
pursued the objective of developing a single revenue standard con-
taining comprehensive principles for recognizing revenue. The effec-
tive date is 1 January 2018.
The Allianz Group has completed an initial assessment of the
potential impact of the adoption of IFRS 15 on its consolidated finan-
cial statements and does not expect that there will be a significant
impact. The Group plans to adopt IFRS 15 on the required effective
date by recognizing the cumulative effect of initially applying IFRS 15
as an adjustment to the opening balance of retained earnings in
accordance with the cumulative effect approach.
The Allianz Group is currently performing a detailed assessment
of the fee and commission income, primarily related to asset man-
agement fees, to determine the impact resulting from the application
of IFRS 15.
IFRS 16, Leases
In January 2016, the IASB issued IFRS 16, Leases, which supersedes IAS 17.
IFRS 16 eliminates the classification of leases as either operating or
finance leases for a lessee. Instead, all leases are treated in a similar
way to finance leases under IAS 17. IFRS 16 does not require a lessee to
recognize assets and liabilities for short-term leases and leases of
low-value assets.
The Allianz Group has started an initial assessment of the poten-
tial impact on its consolidated financial statements. So far, the most
significant impact identified is that the Allianz Group will recognize
new assets and liabilities for its operating leases of occupied prop-
erty. In addition, IFRS 16 replaces the straight-line operating lease
expenses with a depreciation charge for right-of-use assets and inter-
est expenses on lease liabilities. The Group has not yet decided
whether it will use the optional exemptions. No significant impact is
expected for the Group's finance leases.
The Allianz Group currently plans to apply IFRS 16 initially on
1 January 2019. The Allianz Group has not yet determined which tran-
sition approach to apply and has not yet quantified the impact on its
reported assets and liabilities of adoption of IFRS 16. The quantitative
effect will depend on, inter alia, the transition method chosen, the
extent to which the Allianz Group uses the practical expedients and
recognition exemptions, and any additional leases that the Allianz
Group enters into.
Annual Report 2016 - Allianz Group
Changes in deferred tax assets and liabilities are generally recog-
nized through profit and loss in the consolidated income statement,
except for changes recognized directly in equity.
Deferred tax assets or liabilities are calculated for temporary
differences between the tax bases and the financial statement carrying
amounts, including differences from consolidation, unused tax loss
carry-forwards, and unused tax credits. Measurement is based on
enacted or substantively enacted tax rates and tax rules. The Allianz
Group recognizes a valuation allowance for deferred tax assets when
it is unlikely that a corresponding amount of future taxable profit will
be available against which the deductible temporary differences, tax
loss carry forwards and tax credits can be utilized.
Current income taxes are calculated based on the respective local
taxable income and local tax rules for the period. In addition, current
income taxes presented for the period include adjustments for
uncertain tax payments or tax refunds for periods not yet finally
assessed, including interest expenses and penalties on the underpay-
ment of taxes. For the case that amounts included in the tax return
are considered unlikely to be accepted by the tax authorities (uncer-
tain tax positions), a provision for income taxes is recognized. The
amount is based on the best possible assessment of the expected tax
payment. Tax refund claims from uncertain tax positions are recog-
nized when it is probable that they can be realized.
111,325
Financial liabilities for puttable equity instruments
The Allianz Group records financial liabilities where non-controlling
investors have the right to put their equity instruments back to the
Allianz Group which primarily is the case for mutual funds controlled
but not wholly owned by the Allianz Group. These liabilities are gener-
ally required to be recorded at the redemption amount with changes
recognized in equity for put options over non-controlling interests
and in the income statement for redeemable fund units.
CERTIFICATED LIABILITIES
AND SUBORDINATED LIABILITIES
Certificated liabilities and subordinated liabilities are subsequently
measured at amortized cost, using the effective interest method to
amortize the premium or discount to the redemption value over the
life of the liability.
EQUITY
Issued capital represents the mathematical per-share value received
at the issuance of shares. Additional paid-in capital represents the
premium exceeding the issued capital received at the issuance of
shares.
Retained earnings comprise the net income of the current year,
earnings not yet distributed from prior years, treasury shares, and
any amounts directly recognized in equity according to IFRS. Treasury
shares are deducted from shareholders' equity. No gain or loss is rec-
ognized on the sale, issuance, acquisition or cancellation of these
shares. Any consideration paid or received is recorded directly in
shareholders' equity.
Please refer to the above section explaining foreign currency
changes that are recognized in equity. The effective portion of gains
and losses of hedging instruments designated as hedges of a net
investment in a foreign operation is recognized in foreign currency
translation adjustments.
Unrealized gains and losses (net) include unrealized gains and
losses from available-for-sale investments and from derivative
financial instruments that meet the criteria for cash flow hedge
accounting.
Further amendments and interpretations
Non-controlling interests represent equity in subsidiaries, not
attributable directly or indirectly, to Allianz SE as parent.
Premiums for short-duration insurance contracts are recognized as
revenues over the period of the contract in proportion to the amount
of insurance protection provided. Premiums for long-duration insur-
ance contracts are recognized as earned when due.
Revenues for universal life-type and investment contracts repre-
sent charges assessed against the policyholders' account balances
for front-end loads, net of the change in unearned revenue liabilities,
cost of insurance, surrenders and policy administration, and are
included within premiums earned (net).
Premiums ceded for reinsurance are deducted from premiums
written.
INTEREST AND SIMILAR INCOME AND INTEREST EXPENSES
Interest income and interest expenses are recognized on an accrual
basis. Interest income is recognized using the effective interest
method. This line item also includes dividends from available-for-
sale equity securities and income from investments in associates and
joint ventures. Dividends are recognized in income when the right to
receive the dividend is established. Share of earnings from invest-
ments in associates and joint ventures represents the share of net
income from entities accounted for using the equity method.
INCOME FROM FINANCIAL ASSETS AND LIABILITIES
CARRIED AT FAIR VALUE THROUGH INCOME (NET)
Income from financial assets and liabilities carried at fair value
through income (net) includes all investment income as well as real-
ized and unrealized gains and losses from financial assets and liabil-
ities carried at fair value through income. In addition, commissions
attributable to trading operations and related interest expenses as
well as refinancing and transaction costs are included in this line
item. Foreign currency gains and losses on monetary items are also
reported within income from financial assets and liabilities carried
at fair value through income (net).
FEE AND COMMISSION INCOME
Fee and commission income primarily consists of asset manage-
ment fees that are recognized when the service is provided. Perfor-
mance fees may not be recognized as fee income before the respec-
tive benchmark period is completed, because, before its completion,
the obligation to pay the fee is conditional, the fund performance is
regularly not reliably estimable, and related service is not fully per-
formed. In any case, performance-related fees from alternative
investment products (carried interest) are not recognized as revenue
prior to the date of the official declaration of distribution by the fund.
CLAIMS AND INSURANCE BENEFITS INCURRED
These expenses consist of claims and insurance benefits incurred
during the period, including benefit claims in excess of policy
account balances and interest credited to policy account balances.
Furthermore, it includes claim handling costs directly related to the
processing and settlement of claims. Reinsurance recoveries are
deducted from claims and insurance benefits.
INCOME TAXES
PREMIUMS
FURTHER AMENDMENTS AND INTERPRETATIONS
Standard/Interpretation
IFRS 2, Classification and Measurement
of Share-based Payment Transactions
IFRS 10 and IAS 28, Sale or Contribution
of Assets between an Investor and its
Associate or Joint Venture
The level 1 inputs of financial instruments that are traded in
active markets are based on unadjusted quoted market prices or
dealer price quotations for identical assets or liabilities on the last
exchange trading day prior to or at the reporting date, if the latter is
a trading day.
Level 2 applies if the market for a financial instrument is not
active or when the fair value is determined by using valuation tech-
niques based on observable input parameters. Such market inputs
are observable substantially over the full term of the asset or liability
and include references to formerly quoted prices for identical instru-
ments from an active market, quoted prices for identical instruments
from an inactive market, quoted prices for similar instruments from
active markets, and quoted prices for similar instruments from inac-
tive markets. Market observable inputs also include interest rate yield
curves, volatilities and foreign currency exchange rates.
Level 3 applies where not all input parameters are observable in
the market. Accordingly, the fair value is based on valuation tech-
niques using non-market observable inputs. Valuation techniques
include the discounted cash flow method, comparison to similar
instruments for which observable market prices exist and other valu-
ation models. Appropriate adjustments are for example made for
credit risks. In particular when observable market inputs are not
available, the use of estimates and assumptions may have a strong
impact on the valuation outcome.
Annual Report 2016 - Allianz Group
1- For further details regarding financial instruments, please refer to note 36 Financial instruments and fair
value measurement.
91
D - Consolidated Financial Statements
For fair value measurements categorized as level 2 and level 3,
the Allianz Group uses valuation techniques consistent with the
three widely used valuation techniques listed in IFRS 13:
-
Market approach: Prices and other relevant information gener-
ated by market transactions involving identical or comparable
assets or liabilities.
Cost approach: Amount that would currently be required to
replace the service capacity of an asset (replacement cost).
Income approach: Conversion of future amounts such as cash
flows or income to a single current amount (present value tech-
nique).
The Allianz Group carries certain financial instruments at fair value
and discloses the fair value of most other assets and liabilities. The
fair value of an asset or liability is defined as the price that would be
received to sell an asset, or paid to transfer a liability, in an orderly
transaction between market participants at the measurement date.
Assets and liabilities measured or disclosed at fair value in the
consolidated financial statements are measured and classified in
accordance with the fair value hierarchy in IFRS 13, which categorizes
the inputs to valuation techniques used to measure fair value into
three levels.
There is no one-to-one connection between valuation technique and
hierarchy level. Depending on whether valuation techniques are
based on significant observable or unobservable inputs, financial
instruments are classified in the fair value hierarchy.
The degree of judgment used in measuring the fair value of
financial instruments closely correlates with the level of non-market
observable inputs. The Allianz Group uses a maximum of observable
inputs and a minimum of non-market observable inputs when
measuring fair value. Observability of input parameters is influenced
by various factors such as type of the financial instrument, whether
a market is established for the particular instrument, specific trans-
action characteristics, liquidity, and general market conditions. If the
fair value cannot be measured reliably, amortized cost is used as a
proxy for determining fair values.
The evaluation of whether a financial debt instrument is
impaired requires analysis of the underlying credit risk/quality of the
relevant issuer and involves significant management judgment. In
particular, current publicly available information with regard to the
issuer and the particular security is considered relating to factors
including, but not limited to, evidence of significant financial diffi-
culty of the issuer and breach of contractual obligations of the secu-
rity, such as a default or delinquency on interest or principal pay-
ments. The Allianz Group also considers other factors which could
provide objective evidence of a loss event, including the probability
of bankruptcy and the lack of an active market due to financial diffi-
culty. The presence of either a decline in fair value below amortized
cost or the downgrade of an issuer's credit rating does not by itself
represent objective evidence of a loss event, but may represent objec-
tive evidence of a loss event when considered with other available
information.
ASSESSMENT OF THE INCLUSION METHOD
Determining the appropriate inclusion method of some entities
involves management judgment.
For some subsidiaries where the Allianz Group does not hold a
majority stake, management has assessed that the Allianz Group
controls these companies. The Allianz Group controls these entities
on the basis of distinctive rights stipulated by shareholder agree-
ments between the Allianz Group and the other shareholders in these
companies.
There are some companies where the Allianz Group holds a
majority stake but where management has assessed that the Allianz
Group does not control these entities because it has no majority rep-
resentation in the governing bodies and/or it requires at least the
confirmative vote of another investor to pass any decisions over rele-
vant activities.
Although the Allianz Group's share in some companies is below
20%, management has assessed that the Allianz Group has significant
influence over these companies because it is represented in the gov-
erning bodies that decide on the relevant activities of these companies.
To determine control for investment funds managed by Allianz
Group internal asset managers, management considers in particular
the remuneration to which the asset manager is entitled, the expo-
sure to variability of returns from these investments, and the rights
held by other parties. When the exposure to variability of returns is
within a certain range, significant judgment is required for the deter-
mination of the appropriate inclusion method of these investment
funds.
For certain investment funds managed by Allianz Group internal
asset managers in which the Allianz Group holds a minority stake,
management has assessed that the Allianz Group controls these
investment funds because of its asset management role combined
with its aggregate economic interest in these investment funds.
For certain investment funds managed by third parties where
the Allianz Group holds a majority stake, management has assessed
that the Allianz Group does not control these investment funds
because it has neither a majority representation in the governing
bodies of these investment funds nor any substantial removal rights
to replace the asset manager.
For certain investment funds in which the Allianz Group holds a
stake of above 20%, management has assessed that the Allianz Group
has no significant influence because it is not represented in the gov-
erning bodies of these investment funds.
Estimates and assumptions of fair values and hierarchies are
particularly significant when determining the fair value of financial
instruments for which at least one significant input is not based on
observable market data (classified within level 3 of the fair value hier-
archy). The availability of market information is determined by the
relative trading levels of identical or similar instruments in the market,
with emphasis placed on information that represents actual market
activity or binding quotations from brokers or dealers.
For further details, please refer to the explanations to note 45
List of participations of the Allianz Group as of 31 December 2016
according to § 313 (2) HGB.
OF FINANCIAL INSTRUMENTS1
Stage two: The Allianz Group Actuarial Department forms an
opinion on the adequacy of the reserves proposed by the local entities.
The Allianz Group Actuarial Department challenges the operating
entities' selection through their continuous interaction with local
teams and quarterly attendance in the local reserve committees. The
ability to form a view on reserve adequacy is further enabled by regu-
lar reviews of the local reserving practices. Such reviews consist of an
evaluation of the reserving process as well as of the appropriateness
and consistency of assumptions, and an analysis of movement of
reserves. Significant findings from such reviews are communicated
in the Allianz Group Reserve Committee to initiate actions where
necessary.
IFRS 15, Clarification to IFRS 15
IAS 7, Disclosure Initiative
IAS 12, Recognition of Deferred Tax Assets
for Unrealised Losses
IAS 40, Transfers of Investment Property
IFRIC 22, Foreign Currency Transactions
and Advance Consideration
Annual Improvements
to IFRSS 2014-2016 Cycle
Effective date
Annual periods beginning
on or after 1 January 2018
Annual periods beginning
on or after 1 January 2018
Annual periods beginning
on or after 1 January 2017
Annual periods beginning
on or after 1 January 2017
Annual periods beginning
on or after 1 January 2018
Annual periods beginning
on or after 1 January 2018
Annual periods beginning
on or after 1 January 2017/2018
The amendments and interpretations are not expected to have a
material impact on the financial position and financial results of the
Allianz Group. Early adoption is generally allowed but not intended
by the Allianz Group.
90
Annual Report 2016 - Allianz Group
FAIR VALUE AND IMPAIRMENTS
D - Consolidated Financial Statements
The following sections describe complex accounting areas that are
especially sensitive to the use of estimates and assumptions.
INSURANCE CONTRACTS
For Life/Health and Property-Casualty, the central oversight process
around reserve estimates includes the setting of group-wide standards
and guidelines, regular site visits, as well as regular quantitative and
qualitative reserve monitoring.
The oversight and monitoring of the Allianz Group's reserves
culminate in quarterly meetings of the Allianz Group Reserve Com-
mittee, which is the supervising body that governs all significant
reserves. It particularly monitors key developments across the Allianz
Group affecting the adequacy of reserves.
Life/Health reserves are dependent on estimates and assumptions,
especially on the life expectancy and health of an insured individual
(mortality, longevity and morbidity risk) and on the development of
interest rates and investment returns (asset-liability mismatch risk).
These assumptions also have an impact on the presentation of costs
arising from the origination of insurance business (acquisition costs
and sales inducements) and the value of acquired insurance busi-
ness (PVFP). To ensure consistency in the application of actuarial
methods and assumptions in the Life/Health reserving process, 1
Allianz Group has designed a two-stage reserving process:
the
Stage one: Life/Health reserves are calculated by qualified local
staff experienced in the subsidiaries' business. Actuaries in the local
entities also conduct tests of the adequacy of the premiums and
reserves to cover future claims and expenses (liability adequacy
tests). The process follows group-wide standards for applying consis-
tent and plausible assumptions. The appropriateness of the reserves
and their compliance with group-wide standards is confirmed by the
local actuary.
Stage two: The Allianz Group Actuarial Department regularly
reviews the local reserving processes, including the appropriateness
and consistency of assumptions, and analyzes the movements of
reserves. Any adjustments to reserves and other insurance-related
reporting items are reported to and analyzed together with the
Allianz Group Reserve Committee.
Property-Casualty reserves are set by leveraging the use of actu-
arial techniques and educated judgment. A two-stage process exists
for the setting of reserves in the Allianz Group:
Stage one: Property-Casualty reserves are calculated by local
reserving actuaries in the Allianz operating entities. Reserves are set
based on a thorough analysis of historical data, enhanced by inter-
actions with other business functions (e.g. Underwriting, Claims and
Reinsurance). Actuarial judgment is applied where necessary, espe-
cially in cases where data is unreliable, scanty or unavailable. The
judgment of Property-Casualty actuaries is based on past experience
of the characteristics of each line of business, the current stage of the
underwriting cycle and the external environment in which the sub-
sidiary operates. The reserves are proposed to a local reserve com-
mittee, whereat the rationale of the selections are discussed and
subsequently documented. A final decision on the reserve selection
is made in the reserve committee. Local actuaries are responsible for
their compliance with the Group Actuarial Standards and Guidelines.
3- Use of estimates and assumptions
Deferred tax liabilities
In addition to the above-mentioned accounting pronouncements
recently issued, the following amendments and revisions to stan-
dards and interpretations have been issued by the IASB but are not yet
effective for or adopted early by the Allianz Group.
Other liabilities (including a provision for obligations relating
to the sales agreement of € 46 MN)
14,407
490,876
472,010
Financial liabilities for unit-linked contracts
111,325
105,873
Deferred tax liabilities
2,674
2,482
3,836
3,137
Other liabilities
19,261
19,533
14,622
14,856
Liabilities of disposal groups classified as held for sale
15
3
3
Certificated liabilities
11
12
14,837
Reserves for insurance and investment contracts
10,857
10,790
Life/Health
2016
2015
2016
2015
LIABILITIES AND EQUITY
Financial liabilities carried at fair value through income
129
112
10,394
8,834
11
Liabilities to banks and customers
901
5,551
5,807
Unearned premiums
17,276
17,071
4,108
3,605
Reserves for loss and loss adjustment expenses
61,617
61,169
864
12
Subordinated liabilities
95
63
64
701
625
(398)
(495)
8,333
7,268
133
230
103,578
14,842
127,284
(108,454)
536,869
511,257
65
99
6,081
15,591
(5,427)
(6,980)
(40)
105,369
(84,295)
Property-Casualty
14,463
(187)
95
Total liabilities
116,668
115,702
651,611
625,088
96
Annual Report 2016 - Allianz Group
Asset Management
2016
2015
(541)
Corporate and Other
Consolidation
2015
2016
D - Consolidated Financial Statements
Group
2015
2016
2015
1,155
1,329
3,053
2016
as of 31 December
1,952
682,564
Prices for transactions between reportable segments are set on an
arm's length basis in a manner similar to transactions with third par-
ties. Transactions between reportable segments are eliminated in the
Consolidation. Financial information is recorded based on report-
able segments, cross-segmental country-specific information is not
determined.
REPORTABLE SEGMENTS MEASURE OF PROFIT OR LOSS
The Allianz Group uses operating profit to evaluate the performance
of its reportable segments as well as of the Allianz Group as a whole.
Operating profit highlights the portion of income before income
taxes that is attributable to the ongoing core operations of the Allianz
Group. The Allianz Group considers the presentation of operating
profit to be useful and meaningful to investors because it enhances the
understanding of the Allianz Group's underlying operating perfor-
mance and the comparability of its operating performance over time.
To better understand the ongoing operations of the business, the
Allianz Group generally excludes the following non-operating effects:
income from financial assets and liabilities carried at fair value
through income (net),
realized gains/losses (net) and impairments of investments (net),
income from fully consolidated private equity investments (net),
interest expenses from external debt,
acquisition-related expenses (from business combinations),
one-off effects from pension revaluation,
amortization of intangible assets and
profit (loss) of substantial subsidiaries classified as held for sale.
The following exceptions apply to this general rule:
In all reportable segments, income from financial assets and
liabilities carried at fair value through income (net) is treated as
operating profit if the income relates to operating business.
For life/health insurance business and property-casualty insur-
ance products with premium refunds, all items listed above are
included in operating profit if the profit sources are shared with
policyholders. This is also applicable to tax benefits, which are
shared with policyholders. IFRS requires that the consolidated
income statements present all tax benefits in the income taxes
line item, even when they belong to policyholders. In the segment
reporting, tax benefits are reclassified and shown within operat-
ing profit in order to adequately reflect the policyholder partici-
pation in tax benefits.
GENERAL SEGMENT REPORTING INFORMATION
Operating profit should be viewed as complementary to, and not as
a substitute for, income before income taxes or net income as deter-
mined in accordance with IFRS.
Some minor reallocations between the reportable segments have
been made.
95
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
BUSINESS SEGMENT INFORMATION - CONSOLIDATED BALANCE SHEETS
BUSINESS SEGMENT INFORMATION - CONSOLIDATED BALANCE SHEETS
€ MN
as of 31 December
Property-Casualty
Life/Health
2016
2015
RECENT ORGANIZATIONAL CHANGES
2016
The reportable segment Holding & Treasury includes the manage-
ment and support of the Allianz Group's businesses through its
strategy, risk, corporate finance, treasury, financial reporting, con-
trolling, communication, legal, human resources, technology and
other functions. The reportable segment Banking consists of the
banking activities in Germany, France, Italy, the Netherlands and
Bulgaria. The banks offer a wide range of products for corporate and
retail clients, with a primary focus on the latter. The reportable seg-
ment Alternative Investments provides global alternative investment
management services in the private equity, real estate, renewable
energy and infrastructure sectors, mainly on behalf of the Allianz
Group's insurance operations.
The reportable segment Asset Management operates as a global pro-
vider of institutional and retail asset management products and ser-
vices to third-party investors and provides investment management
services to the Allianz Group's insurance operations. The products
for retail and institutional customers include equity and fixed-
income funds as well as alternative products. The United States and
Germany as well as France, Italy and the Asia-Pacific region represent
the primary asset management markets.
Other comprehensive income
(109)
72
2,998
655,086
Realized loss from the disposal
(752)
(25)
Proceeds from sale of the subsidiary, net of cash disposed
1- Includes cash and cash equivalents at an amount of €9 MN which were disposed of with the entity.
(8)1
IDENTIFICATION OF REPORTABLE SEGMENTS
The business activities of the Allianz Group are first organized by
product and type of service: insurance activities, asset management
activities and corporate and other activities. Due to differences in the
nature of products, risks and capital allocation, insurance activities
are further divided into the business segments Property-Casualty and
Life/Health. In accordance with the responsibilities of the Board of
Management, each of the insurance business segments is grouped
into the following reportable segments:
German Speaking Countries and Central & Eastern Europe,
Western & Southern Europe, Middle East, Africa, India,
Iberia & Latin America,
CORPORATE AND OTHER
USA (Life/Health only),
Asia Pacific,
Allianz Worldwide Partners (Property-Casualty only).
Asset management activities represent a separate reportable seg-
ment. Due to differences in the nature of products, risks and capital
allocation, corporate and other activities are divided into three
reportable segments: Holding & Treasury, Banking and Alternative
Investments. In total, the Allianz Group has identified 16 reportable
segments in accordance with IFRS 8.
PROPERTY-CASUALTY
In the business segment Property-Casualty, reportable segments
offer a wide variety of insurance products to both private and corpo-
rate customers, including motor liability and own damage, accident,
general liability, fire and property, legal expense, credit and travel
insurance.
LIFE/HEALTH
In the business segment Life/Health, reportable segments offer a
comprehensive range of life and health insurance products on both
an individual and a group basis, including annuities, endowment
and term insurance, unit-linked and investment-oriented products,
as well as full private health, supplemental health and long-term care
insurance.
94
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
ASSET MANAGEMENT
Global Insurance Lines & Anglo Markets,
2015
The types of products and services from which the reportable
segments derive revenues are described below.
Cash and cash equivalents
Deferred acquisition costs
4,782
4,647
20,105
20,587
Deferred tax assets
1,175
1,107
537
310
Other assets
22,392
23,112
19,143
17,406
97
37
146
Intangible assets
2,870
Total assets
ASSETS
3,078
159,237
2,781
159,034
5,632
5,625
Non-current assets and assets of disposal groups classified as held for sale
9,265
Loans and advances to banks and customers
Financial assets carried at fair value through income
Financial assets for unit-linked contracts
3,429
3,635
8,467
539
643
7,427
6,431
102,430
7,014
Investments
100,026
Reinsurance assets
105,873
111,325
93,142
95,138
10,016
11,508
392,171
415,023
13,781
2016
2015
2016
512,268
488,365
as of 31 December
2015
1,349
2,399
95
2,745
Funds held by others under reinsurance
contracts assumed
Available-for-sale investments
912
Held-to-maturity investments
Financial assets held for trading
100
€ MN
70,357
Debt securities
70,645
10,833
10,735
7,250
6,987
1- Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating
revenues in Asset Management and total revenues in Corporate and Other (Banking).
as of 31 December
2- From the classification of the Korean life business as "held for sale" in the second quarter of 2016 until its
disposal in the fourth quarter of 2016, the total result was considered as non-operating.
Annual Report 2016 - Allianz Group
NOTES TO THE CONSOLIDATED BALANCE SHEETS
6- Financial assets carried
at fair value through income
7- Investments
D - Consolidated Financial Statements
FINANCIAL ASSETS CARRIED AT FAIR VALUE THROUGH INCOME
€ MN
INVESTMENTS
(204)
264
2,970
Investments in associates and joint ventures
2,645
Equity securities
Subtotal
Total
2,457
2,365
5,426
5,010
Debt securities
8,333
AVAILABLE-FOR-SALE INVESTMENTS
AVAILABLE-FOR-SALE INVESTMENTS
€ MN
as of 31 December
Amortized
cost
(16)
2016
2015
7,268
489
through income
511,257
7,161
5,056
Equity securities
210
187
Real estate held for investment
11,732
11,977
Financial assets designated at fair value
Derivative financial instruments
1,582
Subtotal
2,907
2,258
Fixed assets of renewable energy investments
Total
2,397
1,763
536,869
2,433
(23)
(10)
(365)
2,402
2,172
842
(83)
(326)
(224)
Consolidation
(924)
(666)
6
6
(10)
Total Life/Health
64,636
66,903
23,769
24,215
6,774
5,390
Asia Pacific
36
USA
11,856
Unrealized
10,475
1,144
1,193
960
841
4,148
685
Global Insurance Lines & Anglo Markets
587
634
390
494
30
47
25
594
125,190
3,796
2,621
575
74
94
9
70
39
37
21
36
5
(867)
(945)
(994)
(1,003)
Group
122,416
(328)
549
(1,110)
(1,029)
(1,076)
Asset Management
6,022
6,479
2,205
2,297
1,411
1,449
Holding & Treasury
2,581
Banking
Consolidation
2
2
Total Corporate and Other
551
577
Consolidation
(981)
Alternative Investments
gains
2-As of 31 December 2016, fair value and amortized cost of debt securities with a contractual maturity of
less than 12 months amount to € 294 MN (2015: € 397 MN) and € 287 MN (2015: € 365 MN), respectively.
Fair value
101
D - Consolidated Financial Statements
UNREALIZED LOSSES ON AVAILABLE-FOR-SALE
INVESTMENTS AND HELD-TO-MATURITY INVESTMENTS
DEBT SECURITIES
Total unrealized losses amounted to € 3,558 MN as of 31 December
2016. The Allianz Group holds a large variety of government bonds
and corporate bonds, mostly of or domiciled in OECD countries.
In general, the credit risk of government bonds is rather moderate
since they are backed by fiscal capacity of the issuers who typically
hold an investment-grade country- and/or issue-rating. During 2016,
interest rates of most government bonds decreased. The develop-
ment has been very volatile, however, leading to a slight increase in
unrealized losses on government bonds of € 198 MN.
The unrealized losses on the Allianz Group's investments in gov-
ernment bonds are spread over several countries with the main part
coming from Europe.
For the vast majority of corporate bonds, the issuer/the issues
have an investment grade. The decrease in unrealized losses of
€ 2,577 MN compared to 31 December 2015 is due to decreasing interest
rates.
The main impact from unrealized losses on corporate bonds
comes from the financial and energy sector.
Based on a detailed analysis of the underlying securities, the
Allianz Group did not consider these investments to be impaired as
of 31 December 2016.
EQUITY SECURITIES
As of 31 December 2016, unrealized losses amounted to € 192 MN
which is a decrease of € 209 MN compared to 31 December 2015. They
concern equity securities that did not meet the criteria of the Allianz
Group's impairment policy for equity instruments as described in
note 2 Accounting policies and new accounting pronouncements.
The major part of these unrealized losses has been in a continuous
loss position of less than 6 months.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As of 31 December 2016, loans to associates and joint ventures as well
as available-for-sale debt securities issued by associates and joint
ventures held by the Allianz Group amounted to € 1,381 MN (2015:
€ 2,195 MN).
ASSOCIATES AND JOINT VENTURES
€ MN
REAL ESTATE HELD FOR INVESTMENT
Annual Report 2016 - Allianz Group
REAL ESTATE HELD FOR INVESTMENT
€ MN
1 - Also include corporate mortgage-backed securities.
(5)
Total²
2,399
407
(1)
2,343
462
2,805
Amortized
cost
2,184
Unrealized
gains
Unrealized
losses
363
(2)
562
62
(3)
Fair value
2,544
621
2,745
425
3,165
2016
2015
Cost as of 1 January
(17)
(37)
59
40
11,732
11,977
2,959
3,136
14,691
15,113
Foreign currency translation adjustments
Depreciation
Impairments
Reversals of impairments
Carrying amount as of 31 December
Accumulated depreciation as of 31 December
Cost as of 31 December
As of 31 December 2016, real estate held for investment pledged as
security and other restrictions on title were € 36 MN (2015: € 36 MN).
157
FIXED ASSETS OF RENEWABLE ENERGY INVESTMENTS
(251)
(257)
218
(1)
15,113
14,403
Accumulated depreciation as of 1 January
Carrying amount as of 1 January
Additions
(3,136)
(3,054)
11,977
11,349
410
(1)
1,025
(1)
247
Disposals and reclassifications into non-current
assets and assets of disposal groups classified as
held for sale
Reclassifications
(425)
(330)
(14)
(283)
Changes in the consolidated subsidiaries
of the Allianz Group
65
398
342
202,023
MBS/ABS
21,258
441
(303)
21,396
21,042
609
(236)
21,414
Other
3,569
753
(17)
Subtotal²
428,787
44,259
(1,462)
26,398
177,087
198,914
Amortized
cost
Unrealized
gains
Unrealized
losses
Fair value
Debt securities
Corporate bonds
230,504
15,944
(3,557)
(1,575)
211,835
12,681
(4,149)
220,367
Government and government agency bonds¹
173,456
27,121
(1,663)
244,874
Unrealized
losses
4,305
469,489
588
488,365
1-As of 31 December 2016, fair value and amortized cost of bonds from countries with a rating below AA
amount to € 73,519 MN (2015: € 73,968 MN) and € 67,571 MN (2015: € 67,028 MN), respectively.
2-As of 31 December 2016, fair value and amortized cost of debt securities with a contractual maturity of
less than 12 months amount to € 30,420 MN (2015: € 28,952 MN) and € 29,807 MN (2015: € 28,361 MN),
respectively.
HELD-TO-MATURITY INVESTMENTS
HELD-TO-MATURITY INVESTMENTS
€ MN
as of 31 December
2016
2015
Amortized
Unrealized
cost
gains
Unrealized
losses
Fair value
Government and government agency bonds
Corporate bonds¹
2,001
(6,256)
52,396
442,226
512,268
(7)
3,938
Equity securities
30,323
12,649
(192)
42,779
413,320
28,906
3,357
40,276
447,742
12,119
(402)
40,624
Total
459,109
56,908
(3,750)
(5,854)
188
(5)
264
457
(3,734)
(3,777)
(19)
(19)
(1)
(41)
(9)
(186)
(231)
(2)
149
149
(8)
115
62
383
535
62
(745)
(1,523)
(135)
(55)
(13,173)
(14,065)
(46)
(60)
(46)
(60)
(3,817)
(4,141)
(1,466)
(1,489)
(58)
30
(25,303)
(25,729)
(1,382)
(825)
2,205
2,297
(867)
252
107
(181)
833
724
(52)
(8)
(60)
(858)
(849)
(858)
(849)
2
11
1
2
12
322
(268)
(681)
(27)
(945)
(23)
(16)
10,833
10,735
40
(58)
(1)
(51,702)
(10)
(219)
500
337
108
(170)
1,503
1,211
(217)
11
(53,156)
5
5
6
7
707
790
(244)
(321)
22,149
22,643
6
(8)
18
(15)
1
9
(1,010)
(2,089)
3
70,645
70,357
125,190
2015
FIXED ASSETS OF RENEWABLE ENERGY INVESTMENTS1
6,022
2015
Corporate and Other
2016
6,479
551
Consolidation
15
D - Consolidated Financial Statements
2015
2016
2015
2016
577
(328)
(365)
122,416
Group
(31)
6,900
(11)
24,433
7,401
8,011
1,066
974
(850)
(845)
10,491
10,945
3
4
160
149
(154)
(153)
100
241
25,125
333
370
237
(12)
(379)
(454)
235
270
(349)
(375)
(1,259)
6,726
(1,258)
(85)
376
360
(1,306)
(1,215)
1
(13)
245
(100)
224
(12)
(11)
1,846
1,560
1,512
Asia Pacific
745
774
490
501
58
74
41
55
Allianz Worldwide Partners
4,185
3,975
3,850
3,538
1,846
15,994
15,725
21,931
11,855
11,031
10,915
1,642
1,798
1,105
1,283
Iberia & Latin America
150
4,552
3,381
3,741
102
74
(38)
37
Global Insurance Lines & Anglo Markets
22,113
4,566
12,170
128
89
1,134
1,133
Western & Southern Europe, Middle East,
Africa, India
20,808
23,591
4,713
4,587
1,145
1,062
869
935
Iberia & Latin America
1,997
2,037
526
653
1,707
1,660
15,115
14,593
Consolidation
Total Property-Casualty
(6,695)
(5,565)
(2)
1
51,535
51,597
97
46,588
5,370
5,603
4,158
4,124
German Speaking Countries
and Central & Eastern Europe
24,922
24,058
46,430
231
Africa, India
1,147
10,292
10,196
(784)
(817)
420
374
126
63
(3,042)
(3,209)
1,411
1,449
(994)
(1,003)
95
(204)
7,250
(267)
(31)
(1,377)
(1,414)
(11)
(8)
(135)
(304)
(115)
(62)
(383)
(62)
6,987
(10)
(547)
(432)
(8)
(250)
(541)
(539)
2,194
2,266
(31)
Western & Southern Europe, Middle East,
66
Annual Report 2016 - Allianz Group
2016
2015
Operating profit (loss)
2016
Net income (loss)
2015
2016
2015
German Speaking Countries
and Central & Eastern Europe
14,465
14,061
12,111
11,741
1,573
1,683
1,394
2015
2016
Premiums earned (net)
Total revenues¹
71
1,378
12
(1,006)
14
(3)
(1,017)
99
1,344
(1)
(203)
371
6,883
6,616
99
D - Consolidated Financial Statements
RECONCILIATION OF REPORTABLE SEGMENTS TO ALLIANZ GROUP FIGURES
RECONCILIATION OF REPORTABLE SEGMENTS TO ALLIANZ GROUP FIGURES
€ MN
367
€ MN
2,448
2015
Middle East and Africa
655
654
Insurance Central and Eastern Europe
23
Insurance USA
481
471
Subtotal
2,117
2,087
7,702
7,566
12,372
12,101
ASSET MANAGEMENT
Total
Insurance Western & Southern Europe,
Valuation techniques
327
Health Germany
292
Global Insurance Lines & Anglo Markets
376
386
Specialty Lines I
39
39
Specialty Lines II
21
21
Subtotal
2,553
2016
LIFE/HEALTH
Insurance German Speaking Countries
629
611
330
23
The recoverable amounts for all CGUS are determined on the basis of
value in use calculations. The Allianz Group applies generally
acknowledged valuation principles to determine the value in use.
For all CGUS in the Property-Casualty business segment and for
the CGU Asset Management, the Allianz Group uses the discounted
earnings method to derive the value in use. Generally, the basis for
the determination of the discounted earnings value is the business
plan ("detailed planning period") as well as the estimate of the sus-
tainable returns and eternal growth rates, which can be assumed to
be realistic on a long-term basis ("terminal value") for the operating
entities included in the CGU. The discounted earnings value is calcu-
lated by discounting the future earnings using an appropriate dis-
count rate. The business plans applied in the value in use calculations
are the results of the structured management dialogues between the
Board of Management of the Allianz Group and the operating entities
in connection with a reporting process integrated into these dialogues.
Generally, the business plans comprise a planning horizon of three
years and are based on the current market environment.
11.5
3.5
9.2
1.5
8.5
1.0
7.9
1.0
8.0
1.0
1- The table provides an overview of weighted key parameters on CGU level of the country-specific discount
rates and eternal growth rates used.
106
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
For entities included in the CGUS of the business segment Life/Health,
the MCEV is the excess of assets over liabilities of the MVBS according
to the Solvency II requirements. Assets and liabilities included in the
MVBS are measured at their market value as of the reporting date.
Technical provisions are an essential part of the liabilities included
in the MVBS and generally consist of the best estimate plus a risk mar-
gin. The best estimate corresponds to the probability-weighted aver-
age of future cash flows considering the time value of money, using
the relevant risk-free interest rate term structure. The calculation of
the best estimate is based on assumptions made for demographic
factors (e.g. mortality, morbidity, lapse/surrender rates), expense
allowances, taxation, assumptions on market conditions for market
consistent projections (e.g. reference rates, volatilities) as well as
investment strategy and asset allocation of the entity. The risk margin
ensures that the value of the technical provisions is equivalent to the
amount that the entity would be expected to require in order to take
on and meet the insurance and reinsurance obligations.
Reference rates used for the calculation of the best estimate follow
EIOPA specifications for the Solvency II guidance.
The following table provides an overview of the reference rates
for the CGUS in the Life/Health business segment:
3.4
12.2
2.5
9.5
The terminal values are largely based on the expected profits of
the final year of the detailed planning period. Where necessary, the
planned profits are adjusted to reflect long-term sustainable earn-
ings. The financing of the assumed eternal growth in the terminal
values is accounted for by appropriate profit retention.
For all CGUS in the Life/Health business segment the value in use
is based on an Appraisal Value method which is derived from the
Embedded Value and new business value calculation. As a starting
point for the impairment test for the CGUS in the Life/Health business
segment, the Market Consistent Embedded Value (MCEV) and a mul-
tiple of the Market Consistent Value of New Business is used. MCEV is
an industry-specific valuation method to assess the current value of
the in-force portfolio. The Allianz Group uses an economic balance
sheet approach to derive the MCEV, which is directly taken out of the
market value balance sheet (MVBS) as determined using Solvency II
guidance. In case where no adequate valuation reflecting a long-term
view in line with management judgment and market experience
could be derived from market consistent methodology, the Appraisal
Value can be derived from a Traditional Embedded Value (TEV) which
was the case for the United States.
Significant assumptions
In determining the business plans, certain key assumptions were
made in order to project future earnings.
For entities included in the CGUS of the Property-Casualty busi-
ness segment, the business plans are mainly based on key assump-
tions including expense ratio, loss ratio, investment income, risk
capital, market share, premium rate changes and taxes. The basis for
determining the values assigned to the key assumptions are current
market trends and earnings projections.
The discount rate is based on the capital asset pricing model
(CAPM) and appropriate eternal growth rates. The assumptions,
including the risk-free interest rate, market risk premium, segment
beta and leverage ratio used to calculate the discount rates, are in
general consistent with the parameters used in the Allianz Group's
planning and controlling process. The discount rates and eternal
growth rates for the CGUS in the Property-Casualty business segment
are as follows:
DISCOUNT RATES AND ETERNAL GROWTH RATES FOR THE CGUS
IN THE PROPERTY-CASUALTY BUSINESS SEGMENT'
%
292
CGUS in the Property-Casualty business segment
Insurance German Speaking Countries
Insurance Western & Southern Europe,
Middle East and Africa
Insurance Central and Eastern Europe
Global Insurance Lines & Anglo Markets
Specialty Lines I
Specialty Lines II
Eternal
Discount rate
growth rate
7.7
1.0
Insurance Iberia & Latin America
Insurance Asia Pacific
Insurance Central and Eastern Europe
101
Insurance Asia Pacific
Additions
214
Disposals
Foreign currency translation adjustments
58
352
Impairments
Carrying amount as of 31 December
12,372
(171)
12,101
Accumulated impairments as of 31 December
Cost as of 31 December
440
12,812
976
13,077
2016
(316)
Additions are mainly related to goodwill arising from the acquisition
of Allianz Maroc S.A. (formerly Zurich Assurance Maroc S.A.), Casa-
blanca, effective 3 November 2016, Allianz C.P. General Insurance,
Bangkok, effective 3 October 2016, Rogge Global Partners Ltd., London,
effective 31 May 2016, several insurance portfolios in the Netherlands
and several windparks.
12,101
Carrying amount as of 1 January
(976)
Accumulated impairments as of 1 January
136
141
13,752
13,443
1- Primarily includes the long-term distribution agreements with Commerzbank AG of € 261 MN (2015:
€ 298 MN), Banco Popular S.A. of €371 MN (2015: € 389 MN), Yapı ve Kredi Bankası A.S. of € 96 MN (2015:
€ 122 MN), Philippine National Bank of € 83 MN (2015: €- MN) and HSBC Asia, HSBC Turkey, BTPN Indonesia
and Maybank Indonesia of € 133 MN (2015: € 79 MN).
2- Primarily includes the acquired business portfolio of Allianz Yasam ve Emeklilik A.S. of € 98 MN (2015:
€120 MN).
3-Primarily includes heritable building rights, land use rights, lease rights and brand names.
2015
GOODWILL
€ MN
(990)
12,166
70
2016
2015
Cost as of 1 January
13,077
13,156
GOODWILL
Sensitivity analysis
Additions are mainly related to goodwill arising from the acquisition
of the Property-Casualty insurance business of the Territory Insurance
Office, Darwin, effective 1 January 2015, as well as from the acquisition
of several windparks.
As a result of the impairment test, all of the goodwill of € 171 MN
allocated to the CGU Asia Pacific in the business segment Life/Health
was completely impaired.
ALLOCATION OF CARRYING AMOUNTS OF GOODWILL TO CGUS
€ MN
as of 31 December
PROPERTY-CASUALTY
2016
2015
281
1,327
21
81
Insurance German Speaking Countries
285
Insurance Western & Southern Europe,
Middle East and Africa
1,418
Insurance Iberia & Latin America
21
The carrying amounts of goodwill are allocated to the Allianz
Group's CGUS as of 31 December 2016 and 2015, as follows:
D - Consolidated Financial Statements
105
1- The following paragraphs only include the CGUS that contain goodwill.
IMPAIRMENT TEST FOR GOODWILL
Allocation principles
For the purpose of impairment testing, the Allianz Group has allo-
cated goodwill to CGUS¹. These CGUS represent the lowest level at
which goodwill is monitored for internal management purposes.
CGUS in the Property-Casualty business segment are:
Insurance German Speaking Countries,
Insurance Western & Southern Europe, Middle East and Africa,
including Belgium, France, Greece, Italy, Luxembourg, the Nether-
lands, Turkey, Middle East and Africa,
Insurance Iberia & Latin America, including Mexico, Portugal,
South America and Spain,
Insurance Asia Pacific,
Disposals relate mainly to the sale of Selecta Group S.à r.l., Luxem-
bourg during the fourth quarter of 2015.
Insurance Central and Eastern Europe, including Bulgaria, Croatia,
Czech Republic, Hungary, Poland, Romania and Slovakia,
Global Insurance Lines & Anglo Markets, including Australia,
Ireland, Russia, Ukraine and the United Kingdom,
Specialty Lines II, including Allianz Worldwide Partners.
CGUS in the Life/Health business segment are:
Insurance German Speaking Countries,
Health Germany,
Insurance Western & Southern Europe, Middle East and Africa,
including Belgium, France, Greece, Italy, Luxembourg, the Nether-
lands, Turkey, Middle East and Africa,
Insurance Central and Eastern Europe, including Bulgaria, Croatia,
Czech Republic, Hungary, Poland, Romania and Slovakia, and
Insurance USA.
The business segment Asset Management is represented by the CGU
Asset Management, including mainly Allianz Global Investors and
PIMCO.
Annual Report 2016 - Allianz Group
Specialty Lines I, including Allianz Re, Allianz Global Corporate &
Specialty and Credit Insurance, and
Sensitivity analyses were performed with regard to discount rates
and key value drivers of the business plans.
For the CGUS in the business segment Property-Casualty and for
the CGU Asset Management, sensitivity analyses were performed in
respect to the long-term sustainable combined ratios and cost-
income ratios. For all CGUS, excluding Property-Casualty Asia Pacific,
discounted earnings value sensitivities still exceeded their respective
carrying amounts. The recoverable amount of the CGU Asia Pacific in
the business segment Property-Casualty slightly exceeds its carrying
amount. An increase of less than 50 basis points in the discount rate
or the combined ratio results in the recoverable amount of the CGU
getting close to its carrying amount.
In the business segment Life/Health sensitivity analyses were
performed based on MCEV sensitivity testing on the reference rate.
The analyses have shown that in case of a decrease in reference rates
by 50 basis points the appraisal value of each CGU still exceeds its
carrying amount.
(2,287)
30,721
Loss and loss adjustment expenses paid
Current year
Prior years
Subtotal
Foreign currency translation adjustments and other changes¹
Changes in the consolidated subsidiaries of the Allianz Group
Subtotal
Ending balance of discounted loss reserves
As of 31 December
(17,291)
883
(16,409)
(17,123)
832
(16,291)
(15,640)
33,008
30,576
(2,296)
32,872
(6,903)
55,619
Loss and loss adjustment expenses incurred
Current year
35,402
(2,741)
32,661
35,381
646
(2,735)
Prior years
Subtotal
(2,530)
445
(2,084)
(2,373)
448
(1,924)
32,646
62,522
(14,994)
1,331
65,051
(7,560)
57,492
(4,055)
61,617
298
(8,119)
(3,757)
(3,882)
332
(3,550)
53,497
61,169
(7,228)
53,942
1- Include effects of foreign currency translation adjustments for prior years' claims of gross € 116 MN (2015:
€1,423 MN) and of net € (41) MN (2015: € 1,272 MN) and for current year claims of gross € (55) MN (2015:
€ (234) MN) and of net € (68) MN (2015: € (195) MN).
108
Annual Report 2016 - Allianz Group
57,254
(8,417)
65,671
(38)
(13,740)
(32,932)
1,529
(31,403)
(32,194)
2,163
(30,031)
407
(15,071)
(84)
1,755
(534)
1,221
272
(7)
265
(39)
1
323
116
57,492
65,051
13 — Liabilities to banks and customers
LIABILITIES TO BANKS AND CUSTOMERS
€ MN
as of 31 December
2016
2015
Payable on demand and other deposits
897
5,405
Repurchase agreements and collateral received
from securities lending transactions and derivatives
4,040
6,495
Other
8,101
13,631
Total¹
D - Consolidated Financial Statements
107
Annual Report 2016 - Allianz Group
For entities included in the CGU of the Asset Management busi-
ness segment, key assumptions include assets under management
growth, cost-income ratio and risk capital. The key assumptions are
based on the current market environment. The discount rate for the
CGU Asset Management is 9.7% and the eternal growth rate is 1.0%.
REFERENCE RATES FOR THE CGUS IN THE LIFE/HEALTH BUSINESS SEGMENT
CGUS in the Life/Health
business segment
Insurance German
Speaking Countries
Health Germany
Insurance Western &
Southern Europe,
Middle East and Africa
Insurance Central
and Eastern Europe
Insurance USA
Reference rate for entities
with Appraisal Value based on MCEV
13,038
Euro swap curve minus 10 bps credit risk adjustment
plus 13 bps volatility adjustment
Euro swap curve minus 10 bps credit risk adjustment
plus 13 bps volatility adjustment
Euro swap curve minus 10 bps credit risk adjustment
plus 13 bps volatility adjustment
For those entities reporting in Euro:
Euro swap curve minus 10 bps credit risk adjustment
plus 13 bps volatility adjustment
For other entities:
Local swap curve minus 10 bps credit risk adjustment
plus volatility adjustment for the following currencies
only (HRK: 9 bps, CZK: 1 bps, PLN: 18 bps)
Local swap curve minus 15 bps credit risk adjustment
plus 52 bps volatility adjustment
The new business value calculation is based on a best estimate of one
year of value of new business, multiplied by a factor (multiple) to
capture expected future new business. The best estimate of new busi-
ness is generally derived from the achieved value of new business.
The new business multiple accounts for the risk and the growth asso-
ciated with future new business in analogy to the discount rate and
the growth rate in a discounted earnings method. For all CGUS in the
Life/Health business segment, a multiple of not more than ten times
the value of new business is applied.
CHF Swap curve minus 10 bps credit risk adjustment
plus 5 bps volatility adjustment
(7,560)
25,531
14 Unearned premiums
Gross
Ceded
Net
As of 1 January
61,169
(7,228)
53,942
58,925
(6,577)
52,348
Balance carry forward of discounted loss reserves
Subtotal
3,882
(332)
3,550
3,597
(326)
3,271
Net
Ceded
Gross
2015
UNEARNED PREMIUMS
€ MN
as of 31 December
Property-Casualty
Life/Health
Consolidation
2016
2015
1- Consists of liabilities to banks and customers due within one year of € 10,193 MN (2015: € 19,968 MN),
1-5 years of €2,256 MN (2015: € 3,404 MN) and over 5 years of € 590 MN (2015: € 2,159 MN).
17,276
4,108
(24)
21,360
3,605
(15)
20,660
15 – Reserves for loss and loss adjustment
expenses
As of 31 December 2016, the reserves for loss and loss adjustment
expenses of the Allianz Group amounted in total to € 72,373 MN (2015:
€ 72,003 MN). The following table reconciles the beginning and ending
reserves for the Property-Casualty business segment for the years
ended 31 December 2016 and 2015.
CHANGE IN THE RESERVES FOR LOSS AND LOSS ADJUSTMENT EXPENSES IN THE PROPERTY-CASUALTY BUSINESS SEGMENT
€ MN
2016
17,071
2016
122
172
397
Present value of future profits
544
613
Changes recorded in the consolidated income
Deferred sales inducements
781
1,033
statements
175
183
Total
24,887
25,234
Other changes
(422)
(212)
92
Carrying amount as of 31 December
Foreign currency translation adjustments
23,562
as of 31 December
2016
2015
Deferred acquisition costs
CHANGES IN AGGREGATE POLICY RESERVES CEDED TO REINSURERS
€ MN
Property-Casualty
4,782
4,647
2016
2015
Life/Health
18,780
18,941
Carrying amount as of 1 January
5,366
4,998
Subtotal
23,588
5,211
5,366
The reserves for loss and loss adjustment expenses ceded to reinsurers
in the business segment Property-Casualty amounted as of 31 Decem-
ber 2016 to € 8,119 MN (2015: € 7,228 MN). Their change is shown in the
respective table in note 15 Reserves for loss and loss adjustment
expenses.
103
D - Consolidated Financial Statements
11- Other assets
OTHER ASSETS
€ MN
as of 31 December
Receivables
Policyholders
2016
2015
5,938
6,013
Agents
4,217
4,379
Reinsurers
2,755
Annual Report 2016 - Allianz Group
25,234
24,887
Carrying amount as of 31 December
The Allianz Group reinsures a portion of the risks it underwrites
in an effort to control its exposure to losses and events and to protect
its capital resources. For natural catastrophe events, the Allianz
Group maintains a centralized program that pools exposures from
its subsidiaries by internal reinsurance agreements. Allianz SE limits
exposures in this portfolio through external reinsurance. For other
CHANGES IN DEFERRED ACQUISITION COSTS
€ MN
Carrying amount as of 1 January
Additions
2016
25,234
2015
22,262
9,663
9,524
€ MN
Changes in the consolidated subsidiaries
of the Allianz Group
Foreign currency translation adjustments
Changes in shadow accounting
Amortization
Reclassifications
257
908
(754)
2,279
(9,544)
(9,589)
(151)
31
Changes in aggregate policy reserves ceded to reinsurers are as follows:
DEFERRED ACQUISITION COSTS
10-Deferred acquisition costs
387
2,868
2,151
1- Include fixed assets of wind parks and solar parks.
Foreign currency translation adjustments
Depreciation
2016
2015
Share of earnings
290
292
Share of other comprehensive income
Share of total comprehensive income
9
80
299
371
102
Annual Report 2016 - Allianz Group
472
1,763
2,397
Carrying amount as of 31 December
Accumulated depreciation as of 31 December
Cost as of 31 December
Cost as of 1 January
2,151
2,284
Accumulated depreciation as of 1 January
Carrying amount as of 1 January
Additions
(387)
(819)
1,763
1,465
D - Consolidated Financial Statements
719
Changes in the consolidated subsidiaries
of the Allianz Group
Disposals
2
(197)
(3)
(3)
5
(83)
(130)
622
2,264
8-Loans and advances
LOANS AND ADVANCES TO BANKS AND CUSTOMERS
€ MN
as of 31 December
2016
Unearned premiums
1,543
1,655
Reserves for loss and loss adjustment expenses
8,685
Aggregate policy reserves
5,211
7,712
5,366
Other insurance reserves
124
Total
15,562
110
14,843
risks, the subsidiaries of the Allianz Group have individual reinsur-
ance programs in place. Allianz SE participates with up to 100% on an
arm's length basis in these cessions, in line with local requirements.
The risk coming from these cessions is also limited by external retro-
cessions.
Reinsurance involves credit risk and is subject to aggregate loss
limits. Reinsurance does not legally discharge the respective Allianz
company from primary liability under the reinsured policies.
Although the reinsurer is liable to this company to the extent of the
business ceded, the Allianz company remains primarily liable as the
direct insurer on all the risks it underwrites, including the share that
is reinsured. The Allianz Group monitors the financial condition of
its reinsurers on a regular basis and reviews its reinsurance arrange-
ments periodically in order to evaluate the reinsurer's ability to fulfill
its obligations to the Allianz Group companies under existing and
planned reinsurance contracts. The Allianz Group's evaluation crite-
ria, which include the degree of creditworthiness, capital levels and
marketplace reputation of its reinsurers, are such that the Allianz
Group believes that its reinsurance credit risk is not significant, and
historically has not experienced noteworthy difficulty in collecting
claims from its reinsurers. Additionally, and as appropriate, the
Allianz Group may also require letters of credit, deposits, or other
financial guarantees to further minimize its exposure to credit risk.
In certain cases, however, the Allianz Group does establish an allow-
ance for doubtful amounts related to reinsurance as appropriate,
although this amount was not significant as of 31 December 2016 and
2015. The Allianz Group primarily maintains business relations with
highly rated reinsurers.
2015
€ MN
REINSURANCE ASSETS
9 — Reinsurance assets
as of 31 December
2016
Short-term investments and certificates of deposit
3,699
Loans
99,883
Other
1,884
to banks and customers
Subtotal
Loan loss allowance
Total¹
(97)
105,369
2015
3,106
113,573
1,258
117,936
(307)
117,630
1-Includes loans and advances to banks and customers due within one year of € 11,677 MN (2015:
€ 11,216 MN).
As of 31 December 2016, impaired loans amounted to € 160 MN (2015:
€ 515 MN). The interest income recognized on these impaired loans
amounted to € 0.4 MN (2015: € 1 MN).
105,466
Other
5,126
4,340
8
30
Depreciation/Amortization
Impairments
Reversals of impairments
(76)
(491)
(275)
(74)
(430)
(278)
(3)
(9)
(1)
(38)
(13)
13
16
3
2
(18)
15
84
(15)
63
Disposals and reclassifications into non-current assets and assets
of disposal groups classified as held for sale
(152)
(35)
(129)
4
(110)
(94)
Reclassifications
Foreign currency translation adjustments
(41)
26
47
593
(10)
(102)
(31)
Carrying amount as of 31 December
2,6402
D - Consolidated Financial Statements
12- Intangible assets
INTANGIBLE ASSETS
€ MN
as of 31 December
Goodwill
Distribution agreements¹
Acquired business portfolios²
Customer relationships
Other³
Total
2015
2016
12,372
12,101
951
899
Annual Report 2016 - Allianz Group
104
2-As of 31 December 2016, includes € 1,708 MN (2015: € 1,534 MN) for self-developed software and € 932 MN
(2015: € 827 MN) for software purchased from third parties.
1-As of 31 December 2016, assets pledged as security and other restrictions on title were € 121 MN (2015:
€ 121 MN).
1,477
3,261
2,361
1,426
Accumulated depreciation as of 31 December
Cost as of 31 December
971
4,643
3,0241
2,904
4,310
2,828
3,995
7,283
4,381
4,345
6,671
4,254
1,084
186
(56)
796
Derivative financial instruments used for hedging
that meet the criteria for hedge accounting and
firm commitments
677
565
Property and equipment
Real estate held for own use
Software
Equipment
Subtotal
Other assets
Total¹
3,024
3,261
2,640
2,361
1,477
328
390
Prepaid expenses
7,887
Less allowances for doubtful accounts
(632)
(647)
Subtotal
17,404
16,349
Tax receivables
Income taxes
1,426
1,809
Other taxes
1,615
1,512
Subtotal
3,424
3,210
Accrued dividends, interest and rent
7,257
1,698
435
7,141
1,756
3,637
6,360
(1,071)
(4,218)
3,867
(2,576)
3,261
2,361
1,426
2,566
2,142
1,291
Additions
Changes in the consolidated subsidiaries of the Allianz Group
94
818
392
183
4,254
(2,828)
6,671
(4,310)
4,345
(1,084)
Carrying amount as of 1 January
1,664
38,050
37,050
1-Includes other assets due within one year of € 32,767 MN (2015: € 31,068 MN).
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT
€ MN
2016
7,048
2015
Real estate held
Software
Equipment
for own use
Software
Equipment
Cost as of 1 January
Accumulated depreciation as of 1 January
Real estate held
for own use
Asset Management
Total
Subtotal
Changes due to valuation differences charged
As of 1 January
425,312
399,227
to income
5,220
4,743
2015
Balance carry forward of discounted loss reserves
(3,597)
As of 31 December
54,563
44,332
Subtotal
421,430
395,631
(3,882)
2016
(8,629)
4,980
731
351
As of 31 December
16,101
15,400
Latent reserves for premium refunds
As of 1 January
AGGREGATE POLICY RESERVES
44,332
48,006
Foreign currency translation adjustments
41
211
CHANGES IN AGGREGATE POLICY RESERVES
€ MN
Changes in the consolidated subsidiaries
of the Allianz Group
(10)
Changes due to fluctuations in market value
Total
70,664
59,732
Foreign currency translation adjustments
(1,643)
Portfolio acquisitions and disposals
Other changes¹
(9)
1,757
429,693
421,430
Ending balance of discounted loss reserves
As of 31 December
4,055
433,748
3,882
425,312
90
1,368
(16,145)
(1,652)
(270)
1,108
1- Mainly relate to insurance contracts when policyholders change their contract from a unit-linked to a
universal life-type contract.
CONCENTRATION OF INSURANCE RISK
IN THE LIFE/HEALTH BUSINESS SEGMENT
The Allianz Group's Life/Health business segment provides a wide
variety of insurance and investment contracts to individuals and
groups in over 30 countries around the world. Individual contracts
include both traditional contracts and unit-linked contracts. Without
taking policyholder participation into account, traditional contracts
generally incorporate significant investment risk for the Allianz
Group, while unit-linked contracts generally result in the contract
holder assuming the investment risk. Traditional contracts include
life, endowment, annuity and health contracts. Traditional annuity
contracts are issued in both deferred and immediate types. In addition,
the Allianz Group's life insurance operations in the United States
issue a significant amount of equity-indexed deferred annuities. In
certain markets, the Allianz Group also issues group life, group
health and group pension contracts.
As of 31 December 2016 and 2015, the Allianz Group's reserves for
insurance and investment contracts for the business segment Life/
Health are summarized per reportable segment as follows:
Policyholder charges
Changes
(15,719)
1,224
2,820
9,358
Changes in the consolidated subsidiaries
of the Allianz Group
(10,287)
Changes recorded in the consolidated income
statement
196
Premiums collected
25,945
2,546
24,076
Separation of embedded derivatives
(555)
Interest credited
4,535
5,319
Dividends allocated to policyholders
Releases upon death, surrender and withdrawal
486,222
(36)
of the Allianz Group
71.1
72.9
68.9
70.3
70.0
2015
46,430
71.4
70.1
71.1
72.7
68.3
70.1
69.8
70.3
2016
46,588
70.2
71.1
71.6
2014
71.9
75.0
2012
41,705
72.3
71.2
71.9
74.2
72.0
2013
42,047
71.9
70.6
71.1
72.8
69.2
69.9
43,759
CONCENTRATION OF INSURANCE RISK IN THE LIFE/HEALTH BUSINESS SEGMENT PER REPORTABLE SEGMENT
69.9
72.4
Other insurance reserves
2016
2015
Amounts already allocated under local statutory
or contractual regulations
2016
2015
As of 1 January
Total
433,748
70,664
1,048
505,460
425,312
Foreign currency translation adjustments
15,400
7
15,020
29
59,732
Changes in the consolidated subsidiaries
1,178
Reserves for premium refunds
70.8
Aggregate policy reserves
€ MN
67.9
69.5
69.1
69.4
71.1
The ultimate loss of an accident year comprises all payments made
for that accident year up to the reporting date, plus the loss reserve
at the reporting date. Given complete information regarding all losses
incurred up to the reporting date, the ultimate loss for each accident-
year period would remain unchanged. In practice, however, the ulti-
mate loss (based on estimates) is exposed to fluctuations that reflect
the increase in knowledge regarding the loss cases. The loss ratio
presented above deviates from the reported loss ratio because the
ultimate loss in the table above is based on the sum of the payments
plus the loss reserve, not the incurred loss from the consolidated
income statement. This means that effects like changes in consoli-
dated subsidiaries, foreign currency translation and reclassification
of unwinding of discounted loss reserves are presented differently.
CONTRACTUAL CASH FLOWS
As of 31 December 2016, reserves for loss and loss adjustment expenses,
which are expected to be due in 2017 amounted to € 16,849 MN, while
those expected to be due between 2018 and 2021 amounted to
€ 13,779 MN and those expected to be due after 2021 amounted to
€ 26,626 MN.
110
Annual Report 2016 - Allianz Group
16-Reserves for insurance
and investment contracts
D - Consolidated Financial Statements
RESERVES FOR PREMIUM REFUNDS
RESERVES FOR PREMIUM REFUNDS
€ MN
RESERVES FOR INSURANCE AND INVESTMENT CONTRACTS
as of 31 December
€ MN
as of 31 December
German Speaking Countries and Central & Eastern Europe
75.6
1.7
12.0
95.3
1.8
11.7
94.6
2.6
8.8
93.9
2.8
8.9
94.8
1- Total reserves are the sum of aggregate policy reserves and financial liabilities for unit-linked contracts.
112
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
80.5
In most of these markets, the effective interest rates earned on the
0.7
90.1
97.2
2.7
161.6
97.3
0.4
54.9
72.4
0.4
55.0
73.7
1.7
29.9
46.1
1.9
29.6
48.3
0.6
77.4
168.0
investment portfolio exceed these guaranteed minimum interest
FUTURE POLICY BENEFITS
1,182
(10,547)
(10,653)
(1,857)
(1,934)
(25)
(46)
(1,841)
(1,403)
111,325
105,873
1-These reclassifications mainly relate to insurance contracts when policyholders change their contract
from a unit-linked to a universal life-type contract.
2- Consists of € 71,706 MN (2015: € 67,894 MN) unit-linked insurance contracts and € 39,620 MN (2015: € 37,979
MN) unit-linked investment contracts.
18 Other liabilities
OTHER LIABILITIES
€ MN
as of 31 December
Payables
3,994
rates. In addition, the operations in these markets may also have sig-
nificant mortality and expense margins. However, the Allianz Group's
Life/Health operations in Switzerland, Belgium and Taiwan have high
guaranteed minimum interest rates on older contracts in their port-
folios and, as a result, may be sensitive to declines in investment
rates or a prolonged low interest rate environment.
20,948
1
As of 31 December 2016, benefits for insurance and investment con-
tracts which are expected to be due in 2017 amounted to € 58 BN, while
those expected to be due between 2018 and 2021 amounted to € 219 BN
and those expected to be due after 2021 amounted to € 1,009 BN.
The resulting total benefits for insurance and investment con-
tracts in the amount of € 1,286 BN include contracts where the timing
and amount of payments are considered fixed and determinable, and
contracts which have no specified maturity dates and may result in
a payment to the contract beneficiary, depending on mortality and
morbidity experience and the incidence of surrenders, lapses or
maturities. Furthermore, the amounts are undiscounted and do not
include any expected future premiums; therefore they exceed the
reserves for insurance and investment contracts presented in the
consolidated balance sheet.
For contracts without fixed and determinable payments, the
Allianz Group has made assumptions in estimating the undiscounted
cash flows of contractual policy benefits including mortality, mor-
bidity, interest crediting rates, policyholder participation in profits
and future lapse rates. These assumptions represent current best
estimates and may differ from the estimates used to establish the
reserves for insurance and investment contracts in accordance with
the Allianz Group's established accounting policy. Due to the uncer-
tainty of the assumptions used, the amount presented could be
materially different from the actual incurred payments in future
periods.
17- Financial liabilities
for unit-linked contracts
CHANGES IN FINANCIAL LIABILITIES FOR UNIT-LINKED INSURANCE CONTRACTS
AND UNIT-LINKED INVESTMENT CONTRACTS
€ MN
As of 1 January
Foreign currency translation adjustments
Changes in the consolidated subsidiaries
of the Allianz Group
Premiums collected
Interest credited
Releases upon death, surrender and withdrawal
Policyholder charges
Portfolio acquisitions and disposals
Reclassifications¹
As of 31 December²
2016
105,873
620
2015
94,564
3,215
(1,079)
16,189
71.2
2.5
United States
254,552
9,025
263,577
110,407
59,826
9,590
505
90,094
26,294
10,095
116,388
9,359
454
80,506
25,999
170,233
9,813
106,505
1,038
1,038
Total
1,947
Financial
liabilities for
unit-linked
contracts
Total
281,708
176,811
Western & Southern Europe, Middle East, Africa, India
Iberia & Latin America
USA
Global Insurance Lines & Anglo Markets
Asia Pacific
Consolidation
Total
Annual Report 2016 - Allianz Group
2016
2015
Reserves for
insurance and
investment
contracts
Financial
liabilities for
unit-linked
contracts
272,181
9,526
112,109
64,702
Reserves for
insurance and
investment
contracts
Switzerland
Belgium
1,947
10,298
Guaranteed
rate
Aggregate
policy reserves
% of total
reserves¹
Guaranteed
rate
Aggregate
policy reserves
% of total
reserves¹
%
€ BN
%
%
€ BN
%
Germany
France
Italy
2015
9,277
2016
traditional contracts issued in France and Italy do not incorporate
significant insurance risk, although they are accounted for as insur-
ance contracts because of their discretionary participation features.
Similarly, a significant portion of the Allianz Group's unit-linked con-
tracts in France and Italy do not incorporate significant insurance risk.
As a result of the considerable diversity in types of contracts
issued, including the offsetting effects of mortality risk and longevity
risk inherent in a combined portfolio of life insurance and annuity
products, the geographic diversity of the Allianz Group's Life/Health
business segment and the substantial level of policyholder participa-
tion in mortality/morbidity risk in certain countries in Western
Europe, the Allianz Group does not believe its Life/Health segment has
any significant concentrations of insurance risk, nor does it believe its
net income or shareholders' equity is highly sensitive to insurance risk.
The Allianz Group's Life/Health business segment is exposed to
significant investment risk as a result of guaranteed minimum interest
rates being included in most of its non-unit-linked contracts. The
weighted average guaranteed minimum interest rates of the Allianz
Group's largest operating entities in the business segment Life/Health,
comprising 86% (2015: 84%) of the aggregate policy reserves in this
business segment in 2016, can be summarized by country as follows:
19,575
18,864
10,568
29,432
(3,413)
(3,413)
(3,625)
(3,625)
490,876
111,325
602,202
472,010
105,873
111
D - Consolidated Financial Statements
The majority of the Allianz Group's Life/Health business segment
operations are conducted in Western Europe. Insurance laws and
regulations in Europe have historically been characterized by legal or
contractual minimum participation of contract holders in the profits
of the insurance company issuing the contract. In particular, life
insurance business in Germany, Switzerland and Austria, which
comprises approximately 49% (2015: 47%) of the Allianz Group's
reserves for insurance and investment contracts as of 31 December
2016, includes a substantial level of policyholder participation in all
sources of profit, including mortality/morbidity, investment and
expense. As a result of this policyholder participation, the Allianz
Group's exposure to insurance, investment and expense risk is miti-
gated.
Furthermore, all of the Allianz Group's annuity policies issued in
the United States meet the criteria for classification as insurance con-
tracts under IFRS 4, because they include options for contract holders
to elect a life-contingent annuity. These contracts currently do not
expose the Allianz Group to significant longevity risk, nor are they
expected to do so in the future, as the projected and observed annui-
tization rates are very low. Additionally, many of the Allianz Group's
WEIGHTED AVERAGE GUARANTEED MINIMUM INTEREST RATES OF LIFE INSURANCE ENTITIES
as of 31 December
Policyholders
Reinsurance
73.3
2011
2009
2010
2011
2012
2013
2014
2015
2008
2016
48,677
Total
48,677
2008
33,574
14,222
47,796
2009
2007
prior
as of 31 December
2007 &
30,031
2016
1,939
217
260
364
546
727
1,004
2,007
7,929
16,409
31,403
RESERVES FOR LOSS AND LOSS ADJUSTMENT EXPENSES
FOR THE INDIVIDUAL ACCIDENT YEARS AT THE RESPECTIVE REPORTING DATE (NET)
RESERVES FOR LOSS AND LOSS ADJUSTMENT EXPENSES FOR THE INDIVIDUAL ACCIDENT YEARS AT THE RESPECTIVE REPORTING DATE (NET)
€ MN
Accident year
26,845
7,620
14,074
48,539
2013
17,503
2,601
3,117
3,837
5,190
7,239
13,957
53,445
2014
16,220
2,198
2,492
3,105
4,066
5,223
7,101
55,807
16,291
15,564
5,238
2010
23,000
5,666
7,456
14,729
50,850
2011
20,538
4,337
5,147
7,218
15,596
52,836
2012
19,833
3,249
4,061
7,861
7,564
1,850
1,054
2016
2007
24,886
Total
24,886
2008
12,005
13,130
25,135
2009
5,449
7,350
13,368
26,167
2010
3,525
2,151
6,688
2015
14,094
2014
2012
D - Consolidated Financial Statements
Prior years' net loss and loss adjustment expenses incurred reflect
the changes in estimation charged or credited to the consolidated
income statement in each year with respect to the reserves for loss
and loss adjustment expenses established as of the beginning of that
year. During the year ended 31 December 2016, the Allianz Group
recorded additional income of € 2,084 MN (2015: € 1,924 MN) net in
respect of losses occurring in prior years. During the year ended
31 December 2016, this amount, expressed as a percentage of the net
balance of the beginning of the year, was 3.6% (2015: 3.5%).
CHANGES IN HISTORICAL RESERVES
FOR LOSS AND LOSS ADJUSTMENT EXPENSES (LAE)
The analysis of loss and LAE reserves by actuaries and management
is conducted by line of business and separately for specific claim
types such as asbestos and environmental claims. The origin year of
losses is taken into consideration by analyzing each line of business
by accident year. While this determines the estimates of reserves for
loss and LAE by accident year, the effect in the consolidated income
statement in the respective calendar year combines the accident year
loss ratio for the current year with the favorable or adverse develop-
ment from prior years (run-off).
Although discounted loss reserves have been reclassified to
"Reserves for insurance and investment contracts" in the balance
sheet, the underlying business development of these non-life reserves
is still considered in the loss ratio. Therefore the tables below show
the loss development by accident year including the business devel-
opment of discounted loss reserves.
The run-off triangle, also known as the “loss triangle", is a tabular
representation of loss-related data (such as payments, loss reserves,
ultimate losses) in two, time-related dimensions. One of these is the
calendar year, while the other is the accident year (year of loss occur-
rence). Run-off triangles – as the basis for measuring loss reserves -
make clear how the loss reserves change over the course of time due
to payments made and new estimates of the expected ultimate loss
at the respective reporting date.
The run-off triangles are not prepared on a currency-adjusted
basis. This means all figures are translated from the respective local
currency into the Allianz Group presentation currency (Euro), con-
sistently using the exchange rates applicable at the respective report-
ing date. This ensures that the reserves reconcile with reserves in the
consolidated balance sheet.
LOSS PAYMENTS FOR THE INDIVIDUAL ACCIDENT YEARS (PER CALENDAR YEAR, NET)
LOSS PAYMENTS FOR THE INDIVIDUAL ACCIDENT YEARS (PER CALENDAR YEAR, NET)
€ MN
Accident year
Calendar year
2007 &
prior
2008
2009
2010
2011
2013
15,215
26,459
2,525
28,979
2014
1,728
303
465
729
1,169
1,890
7,009
15,410
28,702
2015
1,365
262
395
476
775
15,449
2011
7,181
1,113
1,034
1,725
6,945
14,316
26,545
2012
2,156
716
1,107
1,972
7,434
14,443
27,828
2013
1,938
497
712
2,090
55,619
2015
14,700
Surplus¹
3,613
197
997
988
1,019
1,673
201
381
438
Reduction 2016 to 2015²
327
136
79
109
97
164
33,116
285
32,211
29,206
2015
70,277
27,292
26,524
27,943
28,990
28,498
29,490
30,560
32,649
2016
69,950
27,156
26,445
27,834
28,893
28,334
30,244
30,625
315
9,507
1,951
%
%
%
%
%
2008
38,213
71.6
2009
37,828
73.5
72.5
2010
39,303
74.1
72.7
73.3
%
438
%
%
1- Includes effects from foreign currency translation adjustments and other changes.
2- The total development 2016 to 2015 of € 1,951 MN represents the cumulative surplus from reestimating
the ultimate loss for prior year claims. Considering foreign currency translation adjustments of net
€ (41) MN as well as changes in the consolidated subsidiaries of the Allianz Group and other changes of
in total € 174 MN, this leads to an effective run-off result of net € 2,084 MN, which can be found in the table
"Change in the reserves for loss and loss adjustment expenses" within this note.
3-Presentation not meaningful.
2008
2009
CALENDAR YEAR PREMIUMS EARNED AND ULTIMATE LOSS RATIO
FOR THE INDIVIDUAL ACCIDENT YEARS AT THE RESPECTIVE REPORTING DATE (NET)
CALENDAR YEAR PREMIUMS EARNED AND ULTIMATE LOSS RATIO FOR THE INDIVIDUAL ACCIDENT YEARS AT THE RESPECTIVE REPORTING DATE (NET)
Premiums
earned
(net)
Accident year
2010
2011
2012
2013
2014
2015
2016
€ MN
%
39,898
29,560
29,074
Annual Report 2016 - Allianz Group
109
D - Consolidated Financial Statements
ULTIMATE LOSS FOR THE INDIVIDUAL ACCIDENT YEARS AT THE RESPECTIVE REPORTING DATE (NET)
ULTIMATE LOSS FOR THE INDIVIDUAL ACCIDENT YEARS AT THE RESPECTIVE REPORTING DATE (NET)
€ MN
Accident year
as of 31 December
2007 &
prior
2008
2009
2010
2011
2012
2013
2014
2015
57,254
2016
16,708
5,262
1,850
2,064
2,614
3,208
3,931
5,182
7,585
16,358
57,492
2016
12,433
1,496
1,725
2,141
2,564
3,040
3,894
7,991
28,736
Total
73,562
26,950
28,250
29,610
30,007
2013
69,987
27,478
26,718
27,962
29,029
28,863
29,407
2014
70,432
27,378
26,557
27,958
27,630
2007
70,380
29,912
2008
70,464
27,353
2009
69,185
28,100
27,442
2010
68,866
28,297
27,512
28,823
2011
68,929
28,002
26,928
28,257
2012
Agents
577,883
2015
REALIZED GAINS
Available-for-sale investments
2016
2016
Equity securities
2,445
3,349
Dividends from available-for-sale investments
1,816
1,895
Debt securities
5,765
4,486
Interest from available-for-sale investments
14,020
14,276
Subtotal
INTEREST AND SIMILAR INCOME
€ MN
8,211
2015
€ MN
Net
46,664
24,524
71,188
Change in
unearned premiums (net)
(234)
(309)
Premiums earned (net)
46,430
24,215
1- These foreign currency gains and losses arise subsequent to initial recognition on all assets and liabilities
denominated in a foreign currency that are monetary items and not measured at fair value through
income.
22-Interest and similar income
(543)
70,645
24-Realized gains/losses (net)
REALIZED GAINS/LOSSES (NET)
2016
(5,536)
7,834
4,550
Subtotal
Other
Subtotal
Total
(397)
(267)
(781)
(866)
(1,178)
(1,133)
(107)
(11)
(1,284)
(1,144)
8,403
7,937
Annual Report 2016 - Allianz Group
117
Debt securities
Interest from loans to banks and customers
Equity securities
REALIZED LOSSES
4,731
Loans and advances to banks and customers
1,042
876
Rent from real estate held for investment
890
Other
Total
872
22,149
896
846
22,643
Other
435
370
Subtotal
9,687
9,081
Available-for-sale investments
D - Consolidated Financial Statements
110
(4,933)
Casualty
Health
Consoli-
dation
Group
23 - Income from financial assets
and liabilities carried at fair value through
income (net)
INCOME FROM FINANCIAL ASSETS AND LIABILITIES
CARRIED AT FAIR VALUE THROUGH INCOME (NET)
2016
€ MN
Premiums written
Gross
51,535
24,929
(134)
2016
2015
76,331
Life/
Ceded
Property-
PREMIUMS EARNED (NET)
Total
3,052
2,422
2,955
CAPITAL REQUIREMENTS
The Allianz Group's capital requirements primarily depend on the
type of business that it underwrites, the industry and geographic
locations in which it operates and the allocation of the Allianz
Group's investments. During the Allianz Group's annual planning
dialogues with its operating entities, internal capital requirements
are determined through business plans regarding the levels and tim-
ing of capital expenditures and investments. These plans also form
the basis for the Allianz Group's capital management. Internal capital
requirements are determined by explicitly taking stress resilience
into account. Regulators impose minimum capital requirements at
the level of the Allianz Group's operating entities and the Allianz
Group as a whole. For further details on how Allianz Group manages
its capital, please refer to the the section “Target and strategy of risk
management" of the Risk and Opportunity Report.
With Solvency II being the binding regulatory regime since 1 Jan-
uary 2016 and the approval of the partial internal model¹, risk is mea-
sured and steered based on the risk profile underlying the regulatory
capital requirement which is based on the internal model. The
Allianz Group's own funds as well as capital requirements are based
on the market value balance sheet approach as the major economic
principle of Solvency II rules². In order to determine the eligible own
funds, the MVBS excess of assets over liabilities as the basis for the
own funds compilation is derived mainly by deducting goodwill and
intangible assets and adding valuation adjustments to the IFRS equity.
To arrive at the eligible own funds, mainly subordinated liabilities are
added to and foreseeable dividends and transferability deductions
are subtracted from the MVBS excess of assets over liabilities. Com-
pared to year-end 2015, the Solvency II capitalization of the Allianz
Group increased by 18 percentage points to 218%. This was driven by
an increase in own funds mainly due to strong Solvency II earnings
and the sale of the South Korean life business. This was partially offset
by market movements mainly due to decreased interest rates as well
as dividend accrual and changes in transferable amount of own funds
resulting from changed risk capital requirements. For further infor-
mation on the Solvency II capitalization, please refer to the section
"Solvency II regulatory capitalization" of the Risk and Opportunity
Report.
The Allianz Group is a financial conglomerate within the scope
of the Financial Conglomerates Directive (FCD). The FCD does not
impose a materially different capital requirement on Allianz Group
compared to Solvency II.
Insurance subsidiaries of the Allianz Group including Allianz SE
prepare individual financial statements based on local laws and
regulations. Local regulations establish additional restrictions on the
minimum level of capital and the amount of dividends that may be
paid to shareholders. The respective local minimum capital require-
ments are based on various criteria including, but not limited to, the
volume of premiums written or claims paid, amount of insurance
reserves, investment risks, mortality risks, credit risks, and under-
writing risks.
As of 31 December 2016, the Allianz Group believes that there are
no outstanding regulatory capital or compliance matters that would
have a material adverse effect on the financial position or the results
of operations of the Allianz Group.
Some insurance subsidiaries are subject to regulatory restric-
tions on the amount of dividends which can be remitted to Allianz SE
without prior approval by the appropriate regulatory body. Such
restrictions require that a company may only pay dividends up to an
amount in excess of certain regulatory capital levels, or based on the
levels of undistributed earned surplus or current year income or a
percentage thereof. The Allianz Group believes that these restrictions
will not affect the ability of Allianz SE to pay dividends to its share-
holders in the future.
116
1- From a formalistic perspective, the German Supervisory Authority deems the model to be "partial"
because it does not cover all of the operations: some of the smaller operations report under the standard
model and others under the deduction and aggregation approach.
2-Own funds and capital requirement are calculated under consideration of volatility adjustment and yield
curve extension, as described in Yield curve and volatility adjustment assumptions on page 67.
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
NOTES TO THE CONSOLIDATED INCOME STATEMENTS
21-Premiums earned (net)
€ MN
(713)
(4,397)
134
Income from financial liabilities for puttable equity
instruments (net)
6
13
Foreign currency gains and losses (net)1
1,272
1,604
Total
(999)
(2,307)
2015
Premiums written
Gross
51,597
25,237
(110)
76,723
Ceded
70,357
(638)
23,769
Premiums earned (net)
(4,901)
Income from financial assets and liabilities held for
trading (net)
(2,416)
(3,936)
Net
47,139
24,291
71,430
Income from financial assets and liabilities
Change in
designated at fair value through income (net)
139
12
unearned premiums (net)
(550)
(522)
(1,073)
46,588
2,510
25 - Fee and commission income
€ MN
14
(12,792)
315
(135)
(13,502)
329
Net
(561)
(12,477)
(135)
(13,173)
2015
OTHER INCOME
Gross
(470)
(13,901)
(55)
(14,425)
Ceded
€ MN
(575)
2016
741
Subtotal
1,066
974
€ MN
CONSOLIDATION
Total
(850)
(845)
10,491
10,945
26-Other income
CHANGE IN RESERVES FOR INSURANCE AND INVESTMENT CONTRACTS (NET)
Property-
Casualty
Life/
Health
Consoli-
dation
Group
Gross
735
Ceded
2016
(170)
(207)
Deposits retained for reinsurance ceded
(45)
(47)
Certificated liabilities
(286)
(294)
Subordinated liabilities
(595)
(580)
Other
Total
(111)
(97)
(1,207)
(1,224)
Annual Report 2016 - Allianz Group
Liabilities to banks and customers
9
2015
€ MN
2015
Net
(460)
352
(13,550)
361
(55)
(14,065)
Income from real estate held for own use
Other
100
36
2061
Total
100
241
1 - Includes a net gain of € 0.2 BN on the sale of the personal insurance business of Fireman's Fund Insurance
Company to ACE Limited. The sale was an integral part of the reorganization of Allianz Group's Property-
Casualty insurance business in the United States.
118
29-Interest expenses
INTEREST EXPENSES
2016
FEE AND COMMISSION INCOME
Investment advisory and banking activities
330
Gross
(32,872)
(23,122)
81
(55,914)
LIFE/HEALTH
Ceded
2,296
538
(76)
2,758
Service agreements
Investment advisory
Subtotal
120
93
Net
2016
(30,576)
1,474
Subtotal
27-Claims and insurance benefits
incurred (net)
2016
2015
CLAIMS AND INSURANCE BENEFITS INCURRED (NET)
€ MN
PROPERTY-CASUALTY
Fees from credit and assistance business
1,051
995
Property-
Casualty
Life/
Health
Consoli-
dation
Group
Service agreements
476
478
1,527
234
(22,584)
(53,156)
5
(51,702)
Loading and exit fees
485
575
Performance fees
474
607
Other
39
34
Subtotal
7,401
8,011
28- Change in reserves for insurance
and investment contracts (net)
CORPORATE AND OTHER
Service agreements
(20,986)
5
(30,721)
6,795
1,226
1,237
1,346
1,331
2015
Gross
ASSET MANAGEMENT
Ceded
(33,008)
2,287
(21,536)
72
(54,472)
550
(67)
2,770
Management and advisory fees
6,403
Net
Other equity components
2015
367
Contractual interest rate
Floating rate
Current interest rate
Hybrid equity7
Floating rate
Current interest rate
Total subordinated liabilities
Fixed rate4
1- Except for interest rates. Interest rates represent the weighted average.
3- Relates to certificated liabilities issued by banking subsidiaries.
4- Change due to the issuance of a € 1.4 BN subordinated bond in the third quarter of 2016.
3,157
3,157
1,9675
4.74%
1,400 6
2- Includes € 122 MN certificated liabilities issued by banking subsidiaries.
Subordinated bonds
8,383
7,615
3,840
6,574
6,8332
2.84%
3.22%
2743
Money market securities
Fixed rate
1,041
1,041
1,276
Contractual interest rate
0.70%
Total certificated liabilities
1,041
2,734
3,840
8,929
10,328
10,246
4.38%
2013
EUR
500
1.375
13 March 2018
DE000A1AKHB8
2009
EUR
1,500
4.750
DE000A180B72
2016
EUR
750
0.000
22 July 2019
21 April 2020
DE000A1HG1J8
2,734
Allianz Finance II B.V., Amsterdam
Maturity date
4.47%
1,400
45
45
45
1.22%
12,131
5- Includes € 251 MN subordinated bonds issued by banking subsidiaries.
13,530
12,258
6-On 3 January 2017, Allianz Finance II B.V. called for redemption the €1.4 BN 4.375 % Subordinated bond
effective 17 February 2017.
7- Relates to hybrid equity issued by subsidiaries.
BONDS OUTSTANDING AS OF 31 DECEMBER 2016
€ MN
ISIN
Year of Issue
Currency
Notional
amount
Coupon in %
Certificated liabilities
2015
2016
5 years
3,181
Accrued interest and rent
564
579
Unearned income
440
374
Provisions
Pensions and similar obligations
9,401
9,149
Employee related
2,551
2,599
Share-based compensation plans
431
527
3,287
Restructuring plans
Subtotal
1,452
4,908
5,006
1,745
1,413
1,616
1,625
Subtotal
8,269
8,043
Payables for social security
478
428
Tax payables
Income taxes
1,836
1,732
Other taxes
1,450
DE000A1GORU9
95
Other provisions
113
D - Consolidated Financial Statements
19 - Certificated and subordinated liabilities
CERTIFICATED AND SUBORDINATED LIABILITIES
€ MN1
Senior bonds
Fixed rate
Contractual interest rate
Floating rate
Contractual maturity date
> 1 year up to
5 years
Up to 1 year
as of
as of
Over
31 December
31 December
1-Includes other liabilities due within one year of € 26,981 MN (2015: € 25,568 MN).
112
Annual Report 2016 - Allianz Group
39,867
2,121
1,840
Subtotal
14,599
14,227
Deposits retained for reinsurance ceded
2,254
1,636
Derivative financial instruments used for hedging
that meet the criteria for hedge accounting and
firm commitments
159
472
Financial liabilities for puttable equity instruments
Other liabilities
2,894
371
6,922
7,159
Total¹
38,686
2012
2,585
1,500
11,830
10,920
Subtotal
67,341
Non-controlling interests
3,052
63,144
2,955
Total
70,392
66,099
1-As of 31 December 2016, include € (157) MN (2015: € (159) MN) related to treasury shares.
2-As of 31 December 2016, include € 297 MN (2015: € 239 MN) related to cash flow hedges.
3- For further information, please refer to the consolidated statements of changes in equity, note 2 Accounting
policies and new accounting pronouncements and note 7 Investments.
Convertible subordinated notes totaling € 500 MN, which may be
converted into Allianz shares, were issued against cash in July 2011.
Within 10 years after the issuance a mandatory conversion of the
notes into Allianz shares at the then prevailing share price may apply
if certain events occur, subject to a floor price of at least € 74.90 per
share. Within the same period, the investors have the right to convert
the notes into Allianz shares at a price of € 187.26 per share. Both con-
version prices are subject to anti-dilution provisions. The subscrip-
tion rights of shareholders for these convertible notes have been
excluded with the consent of the Supervisory Board and pursuant to
the authorization of the AGM on 5 May 2010. The granting of new
shares to persons entitled under such convertible notes is secured by
the Conditional Capital 2010/2014. On or before 31 December 2016,
there was no conversion of any such notes into new shares.
CHANGES IN THE NUMBER
OF ISSUED SHARES OUTSTANDING
ISSUED CAPITAL
Issued capital as of 31 December 2016 amounted to € 1,170 MN divided
into 457,000,000 registered shares. The shares have no-par value but
a mathematical per-share value of € 2.56 each as a proportion of the
issued capital.
AUTHORIZED CAPITAL
Unrealized gains and losses (net) 2,3
As of 31 December 2016, Allianz SE had authorized capital for the issu-
ance of 214,843,750 shares until 6 May 2019, with a notional amount of
€ 550 MN (Authorized Capital 2014/1). The shareholders' subscription
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 provide for
mandatory conversion. The subscription rights for new shares from
the Authorized Capital 2014/1 and the Conditional Capital 2010/2014
may only be excluded for the proportionate amount of the share
capital of up to € 234 MN (corresponding to 20% of the share capital at
year-end 2013).
(926)
Foreign currency translation adjustments
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
20- Equity
EQUITY
€ MN
as of 31 December
2016
2015
1,170
Shareholders' equity
Issued capital
1,170
Additional paid-in capital
27,758
27,758
Retained earnings¹
27,336
24,222
(754)
114
In addition, Allianz SE has authorized capital (Authorized Capital
2014/11) for the issuance of shares against cash until 6 May 2019. The
shareholders' subscription rights can be excluded in order to issue
new shares to employees of Allianz SE and its Group companies. As
of 31 December 2016, the Authorized Capital 2014/II amounted to
€ 14 MN (5,359,375 shares).
As of 31 December 2016, Allianz SE had conditional capital totaling
€ 250 MN (97,656,250 shares) (Conditional Capital 2010/2014). This
conditional capital increase will only be carried out if conversion or
option rights attached to bonds which Allianz SE or its Group compa-
nies have issued against cash payments according to the resolutions
of the AGM on 5 May 2010 or 7 May 2014, are exercised or the conver-
sion 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.
115
D - Consolidated Financial Statements
In the year ending 31 December 2016, 617,084 (2015: 575,584)
shares were sold to employees of Allianz SE, as well its subsidiaries in
Germany and abroad in the context of the Employee Stock Purchase
Plan. These shares were taken from the stock of treasury shares ded-
icated to this purpose. In 2016, as in the previous year, no capital
increase for the purpose of Employee Stock Purchase Plans was
undertaken. Employees of the Allianz Group purchased shares at
prices ranging from € 94.54 (2015: € 98.42) to € 121.84 (2015: € 125.84)
per share. As of 31 December 2016, the remaining treasury shares of
Allianz SE held for covering subscriptions by employees in the context
of the Employee Stock Purchase Plan of Allianz SE and its subsidiaries
in Germany and abroad amounted to 905,648 shares.
In July 2016, Allianz SE purchased 1,189,514 treasury shares at an
average price of €122.08 for the purpose of hedging obligations from
the Allianz Equity Incentive Program. For reasons of hedge accounting,
Allianz SE reduced this position of treasury shares in August 2016 by
816,529 shares at an average price of € 129.78 and, at the same time,
entered into corresponding forward transactions on Allianz shares at
an identical reference price. As of 31 December 2016, the remaining
treasury shares of Allianz SE held as a hedge for obligations from the
Allianz Equity Incentive Program amounted to 1,026,029 shares.
In the year ending 31 December 2016, the total number of treasury
shares of Allianz SE decreased by 244,099 (2015: decrease of 575,584)
shares, which corresponds to € 624,893 (2015: € 1,473,495) or 0.05%
(2015: 0.126 %) of issued capital.
The treasury shares of Allianz SE and its subsidiaries represent
€ 5 MN (2015: € 6 MN) or 0.42% (2015: 0.48 %) of the issued capital.
NON-CONTROLLING INTERESTS
NON-CONTROLLING INTERESTS
162
€ MN
as of 31 December
2016
2015
Unrealized gains and losses (net)
174
Share of earnings
EUR
Annual Report 2016 - Allianz Group
CONDITIONAL CAPITAL
As of 31 December 2016, Allianz SE held 1,931,677 (2015: 2,175,776) trea-
sury shares. Of these, 905,648 (2015: 1,522,732) were held for covering
future subscriptions by employees in Germany and abroad in the
context of Employee Stock Purchase Plans, whereas 1,026,029 (2015:
653,044) were held as a hedge for obligations from the Allianz Equity
Incentive Program (former Group Equity Incentive Program).
The proposal for appropriation of net earnings reflects the 1,932,203
treasury shares held directly and indirectly by the company at the
time of the preparation (“Aufstellung”) of the annual financial state-
ments by the Board of Management on 14 February 2017. Such trea-
sury shares are not entitled to the dividend pursuant to § 71b of the
German Stock Corporation Act (AktG). Should there be any change in
the number of shares entitled to the dividend by the date of the
Annual General Meeting, the above proposal will be amended accord-
ingly and presented for resolution on the appropriation of net earnings
at the Annual General Meeting, with an unchanged dividend of € 7.60
per each share entitled to dividend.
NUMBER OF ISSUED SHARES OUTSTANDING
Number of issued shares outstanding
as of 1 January
Changes in number of treasury shares
Number of issued shares outstanding
as of 31 December
Treasury shares¹
Total number of issued shares
1-Thereof 1,931,677 (2015: 2,175,776) own shares held by Allianz SE.
2016
2015
454,823,638
244,099
455,067,737
454,823,638
1,932,263
457,000,000
2,176,362
457,000,000
PROPOSAL FOR APPROPRIATION OF NET EARNINGS
The Board of Management and the Supervisory Board propose that
the net earnings ("Bilanzgewinn") of Allianz SE of € 3,855,866,165.01
for the 2016 fiscal year shall be appropriated as follows:
-
Distribution of a dividend of € 7.60 per no-par share
entitled to a dividend: € 3,458,515,257.20
Unappropriated earnings carried forward: € 397,350,907.81
TREASURY SHARES
Perpetual
454,248,039
575,599
800
DE000A1RE1Q3
2012
EUR
1,500
5.625
17 October 2042
DE000A14J9N8
2015
EUR
1,500
2.241
7 July 2045
XS0857872500
2012
USD
1,000
5.500
Subordinated liabilities
Allianz SE, Munich
Perpetual
13 March 2043
750
3.500
5.375
14 February 2022
DE000A1HG1K6
2013
EUR
750
3.000
13 March 2028
DE000A180B80
2016
EUR
750
1.375
21 April 2031
2013
GBP
4.500
DE000A1YCQ29
DE000A1HG1L4
EUR
Perpetual
Allianz Finance II B.V., Amsterdam
DE000A1GNAH1
2011
EUR
2,000
8 July 2041
XS0211637839
2005
EUR
1,400
4.375
Perpetual
DE000A0GNPZ3
2013
2006
EUR
3.875
1,500
5.750
2016
Perpetual
4.750
USD
CH0234833371
2014
CHF
500
3.250
DE000A13R7Z7
Perpetual
2014
XS1485742438
EUR
1,500
Perpetual
1,500
3.375
(1,466)
(25,301)
30
(1,264)
(1,264) 1
Total
(1,466)
(25,718)
(58)
1- Include one-off effects from pension revaluation.
(2,889)
Deferred income taxes
Total
2016
2015
(2,666)
(376)
(320)
Of the deferred income taxes for the year ended 31 December
2016, expenses of € 322 MN (2015: € 309 MN) are attributable to the rec-
ognition of deferred taxes on temporary differences, and expenses of
€ 41 MN (2015: € 12 MN) are attributable to tax losses carried forward.
Changes of applicable tax rates due to changes in tax law produced
deferred tax expenses of € 13 MN (2015: tax income of € 1 MN).
CONSOLIDATION
During the year ended 31 December 2016, current income taxes
included expenses of € 178 MN (2015: income of € 73 MN) related to
prior years.
(3,042)
(3,209)
Annual Report 2016 - Allianz Group
Subtotal
Administrative expenses
CORPORATE AND OTHER
(10,307)
(3,044)
Administrative expenses
119
Subtotal
(13,352)
(10,214)
(3,175)1
(13,388)
LIFE/HEALTH
Acquisition costs
(4,782)
(5,215)
(1,829)
(1,720) 1
Subtotal
(6,612)
(6,934)
ASSET MANAGEMENT
Personnel expenses
(2,292)
(2,576)1
Non-personnel expenses
(1,522)
(1,585)
Subtotal
(3,815)
(4,161)
Administrative expenses
D - Consolidated Financial Statements
Deferred acquisition costs
Other assets
Intangible assets
INCOME TAXES RELATING TO COMPONENTS
For the year ended 31 December 2016, the write-down of deferred
taxes on tax losses increased the tax expenses by € 103 MN (2015:
€ 113 MN). The reversal of write-down of deferred tax assets on tax
losses carried forward resulted in deferred tax income of € 9 MN (2015:
€-MN). Due to the use of tax losses carried forward, for which
deferred tax assets were previously written off, the current income
tax expenses decreased by € 1 MN (2015: € 3 MN). Deferred tax income
increased by € 32 MN (2015: € 28 MN) due to the use of tax losses carried
forward, for which deferred tax assets were previously written off. The
above-mentioned effects are shown in the reconciliation statement
as "effects of tax losses".
The tax rates used in the calculation of the Allianz Group's
deferred taxes are the applicable national rates, which in 2016 ranged
from 10.0% to 45.0%, with changes to tax rates that had already been
adopted in France, Hungary, Luxembourg, Slovakia and the United
Kingdom until 31 December 2016 taken into account.
Deferred tax assets on losses carried forward are recognized to the
extent to which it is more likely than not that sufficient future taxable
profits will be available for realization. Entities which suffered a tax
loss in either the current or the preceding period recognized deferred
tax assets in excess of deferred tax liabilities amounting to € 334 MN
(2015: € 466 MN), as there was convincing other evidence that sufficient
taxable profit will be available.
DEFERRED TAX ASSETS AND LIABILITIES
DEFERRED TAX ASSETS AND LIABILITIES
€ MN
as of 31 December
DEFERRED TAX ASSETS
Financial assets carried at fair value
through income
Investments
Tax losses carried forward
2016
2015
The effective tax rate is determined on the basis of the effective
income tax expenses on income before income taxes.
80
4,558
4,995
1,204
967
1,566
1,435
254
170
2,373
Acquisition costs
2,252
136
For the years ended 31 December 2016 and 2015, the income
taxes relating to components of other comprehensive income consist
of the following:
The recognized income taxes for the year ended 31 December 2016 are
€ 32 MN below (2015: € 155 MN above) the calculated income taxes,
which are determined by multiplying the respective income before
income taxes with the applicable country-specific tax rates. The fol-
lowing table shows the reconciliation from the calculated income
taxes to the effectively recognized income taxes of the Allianz Group.
The Allianz Group's reconciliation is a summary of the individual
company-related reconciliations, which are based on the respective
country-specific tax rates taking into consideration consolidation
effects with an impact on the Group result. The applicable tax rate
used in the reconciliation for domestic Allianz Group companies
includes corporate tax, trade tax and the solidarity surcharge, and
amounted to 31.0% (2015: 31.0%).
148
(724)
OF OTHER COMPREHENSIVE INCOME
€ MN
Items that may be reclassified to profit or loss
in future periods
Foreign currency translation adjustments
Available-for-sale investments
Cash flow hedges
Share of other comprehensive income
of associates and joint ventures
Miscellaneous
Items that may never be reclassified to profit or loss
Actuarial gains and losses on
defined benefit plans
(228)
1,679
Total
2015
119
(28)
(807)
1,775
(33)
34
10
(1)
(14)
(19)
2016
PROPERTY-CASUALTY
(1,367)
2016
(1,407)
Subtotal
(1,683)
(1,500)
Other
(46)
(74)
LIFE/HEALTH
Non-current assets and assets of disposal groups
Service agreements
classified as held for sale
Subtotal
(315)
Subtotal
(2,043)
(1,575)
Subtotal
(53)
(46)
(602)
(553)
(655)
(599)
Reversals of impairments
Investment advisory
103
(344)
Debt securities
783
EFFECTIVE TAX RATE
D - Consolidated Financial Statements
30 – Impairments of investments (net)
IMPAIRMENTS OF INVESTMENTS (NET)
€ MN
33 Fee and commission expenses
FEE AND COMMISSION EXPENSES
€ MN
2016
2015
(122)
2016
Impairments
PROPERTY-CASUALTY
Available-for-sale investments
Equity securities
(1,560)
(1,156)
Fees from credit and assistance business
Service agreements
(1,043)
(999)
(364)
(367)
2015
48
Total
(1,940)
Investment management expenses
(735)
(676)
Total
Expenses from real estate held for investment
(418)
(418)
(3,734)
(3,777)
Expenses from fixed assets of renewable energy
investments
457
(153)
Total
(1,306)
(1,215)
34- Income taxes
32 Acquisition and
administrative expenses (net)
INCOME TAXES
€ MN
Current income taxes
ACQUISITION AND ADMINISTRATIVE EXPENSES (NET)
€ MN
(121)
535
CONSOLIDATION
2015
(1,526)
ASSET MANAGEMENT
Commissions
Other
Subtotal
(1,307)
(1,440)
(75)
(83)
(1,382)
(1,523)
31 – Investment expenses
CORPORATE AND OTHER
Service agreements
(526)
(410)
INVESTMENT EXPENSES
€ MN
Investment advisory and banking activities
(299)
(335)
Subtotal
(825)
(745)
2016
2015
€ MN
1,018
5,258
159,999
41,977
198,914
339
165,099
33,476
Government and government agency bonds
47
220,367
182,185
28,428
244,874
14,152
201,489
29,233
Corporate bonds
9,754
202,023
MBS/ABS
175
11,365
Financial assets are pledged as collateral as part of sales and repur-
chases, securities borrowing, and transactions with derivatives,
under terms that are usual and customary for such activities. In addi-
tion, as part of these transactions, the Allianz Group has received col-
lateral that it is permitted to sell or repledge in the absence of default.
As of 31 December 2016, the Allianz Group has received collateral,
consisting of fixed income and equity securities, with a fair value of
€ 3,799 MN (2015: € 2,349 MN), which the Allianz Group has the right to
sell or repledge. For the years ended 31 December 2016 and 2015, no
previously received collateral was sold or repledged by the Allianz
Group.
As of 31 December 2016, the Allianz Group received cash collat-
eral with a carrying amount of € 163 MN (2015: € 212 MN).
37-Interests in unconsolidated
structured entities
NATURE, PURPOSE AND ROLE
OF THE ALLIANZ GROUP IN STRUCTURED ENTITIES
Under IFRS 12, a structured entity is defined as an entity that has been
designed so that voting rights or similar rights are not the dominant
factor in deciding who controls the entity, such as when any voting
rights relate to administrative tasks only and the relevant activities
are directed by means of contractual arrangements.
The Allianz Group engages in some business activities that
involve entities that fit the above-mentioned definition of structured
entities. Primarily, the Allianz Group is involved with such entities
due to its investment activities in the insurance business and due to
its asset management activities. Furthermore, structured entities are
used by the Allianz Group to source out certain risks to investors as
part of its reinsurance business. Generally, the classification of enti-
ties as structured entities may require significant judgment.
In the following, the business activities involving unconsolidated
structured entities are described.
128
Annual Report 2016 - Allianz Group
Other
21,414
532
20,673
210
21,396
519
20,702
Available-for-sale investments
12,677
7,268
3,055
9
2,451
447
Financial assets held for trading
Financial assets carried at fair value through income
FINANCIAL ASSETS
Total
2,907
Level 3 3
Level 11
Total
Level 3 3
Level 22
Level 1 1
2016
2015
Level 22
192
2,018
47
4,027
8,333
187
3,494
4,652
Subtotal
5,010
137
1,037
3,836
5,426
178
1,043
4,205
income
Financial assets designated at fair value through
2,258
184
2,295
3,810
2,295
51
Subordinated liabilities
14,256
Total
7,113
26,788
1,946
8,479
8,530
14,256
35,847
583
9,208
12,829
271
8,574
25,392
13,905
8,625
Certificated liabilities
25,563
13,051
136,397
7,446
81,647
65,544
154,637
7,018
84,405
72,156
163,579
FINANCIAL LIABILITIES
Liabilities to banks and customers
7,113
4,053
1,896
13,062
8,574
3,938
13,100
47,871
1-Quoted prices in active markets
2-Market observable inputs
3-Non-market observable inputs
Investments
Loans and advances to banks and customers
Subtotal
Collaterals with right to resell or repledge
Investments
Subtotal
Total
2016
2015
9
7
6,240
6,337
2,618
2,726
8,867
9,070
3,810
Collaterals without right to resell or repledge
Financial assets carried at fair value
through income
as of 31 December
as of 31 December
The carrying amounts of the assets pledged as collateral are dis-
played in the following table:
HELD-TO-MATURITY INVESTMENTS
For level 2 and level 3, the fair value is mainly determined based on
the market approach, using quoted market prices, and the income
approach using deterministic discounted cash flow models.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
For level 2 and level 3, fair values are mainly based on an income
approach using a discounted cash flow method or net asset values as
provided by third-party vendors.
REAL ESTATE
Fair values are mainly determined using the market or the income
approach. The valuation techniques applied for the market approach
include market prices of identical or comparable assets in markets
that are not active. The fair values are either calculated internally and
validated by external experts, or derived from expert appraisals with
internal controls in place to monitor these valuations.
Annual Report 2016 - Allianz Group
127
D - Consolidated Financial Statements
LOANS AND ADVANCES TO BANKS AND CUSTOMERS
For loans and advances to banks and customers, quoted market
prices are rarely available. Level 1 mainly consists of highly liquid
advances, e.g. short-term investments. The fair value for these assets
in level 2 and level 3 is mainly derived based on the income approach
using deterministic discounted cash flow models.
LIABILITIES TO BANKS AND CUSTOMERS
Level 1 mainly consists of highly liquid liabilities, e.g. payables on
demand. The fair value for liabilities in level 2 and level 3 is mainly
derived based on the income approach, using future cash flows dis-
counted with risk-specific interest rates. Main non-market observable
inputs include credit spreads. In some cases, the carrying amount
(amortized cost) is considered to be a reasonable estimate of the fair
value.
CERTIFICATED LIABILITIES
AND SUBORDINATED LIABILITIES
For level 2, the fair value is mainly determined based on the market
approach, using quoted market prices, and based on the income
approach, using present value techniques. For level 3, fair values are
mainly derived based on the income approach, using deterministic
cash flows with credit spreads as primary non-market observable
inputs. In some cases, the carrying amount (amortized cost) is con-
sidered to be a reasonable estimate for the fair value.
TRANSFERS OF FINANCIAL ASSETS
As of 31 December 2016, the Allianz Group substantially retained all
the risks and rewards out of the ownership of transferred assets.
There have not been any transfers of financial assets that were derec-
ognized in full or partly, in which Allianz continues to control the
transferred assets. Transfers of financial assets mainly relate to secu-
rities lending and repurchase agreement transactions. Transferred
financial assets in repurchase agreement and securities lending
transactions are mainly available-for-sale debt and equity securities
for which substantially all of the risks and rewards are retained. As
of 31 December 2016, the carrying amount of the assets transferred
for securities lending transactions amounted to € 6,526 MN (2015:
€ 5,294 MN). For repurchase agreements, the carrying amount of
the assets transferred amounted to € - MN (2015: € 1,394 MN) and the
carrying amount of the associated liabilities amounted to € - MN
(2015: € 1,410 MN) due to the reclassification of the Oldenburgische
Landesbank AG as disposal group classified as held for sale.
ASSETS PLEDGED AND COLLATERAL
ASSETS PLEDGED AS COLLATERAL
€ MN
48,505
€ MN
The following table presents the fair value hierarchy for financial
instruments carried at fair value in the consolidated balance sheets
as of 31 December 2016 and 2015:
2016
as of 31 December
FAIR VALUES AND CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS
€ MN
The following table compares the carrying amount and fair value of
the Allianz Group's financial assets and financial liabilities:
FAIR VALUES AND CARRYING AMOUNTS
Market risk, credit risk and liquidity risk in the section quanti-
fiable risks and opportunities by risk category.
Allianz risk profile and management assessment,
2015
Risk based steering and risk management,
Certain risk disclosure requirements of IFRS 7 are reflected in the
following sections of the Risk and Opportunity Report within the
Group Management Report:
36 Fair values and carrying amounts
of financial instruments
Credit risk associated with netting arrangements is further miti-
gated by collateral. For further information on collateral, please refer
to note 36 Fair values and carrying amounts of financial instruments.
The Allianz Group mainly enters into enforceable master netting
arrangements and similar arrangements for derivatives transactions.
None of these enforceable master netting arrangements or similar
arrangements meet the requirements for offsetting in line with IAS 32.
OFFSETTING
HEDGE OF NET INVESTMENT IN FOREIGN OPERATIONS
As of 31 December 2016, the Allianz Group hedges part of its U.S. Dollar,
British Pound, Australian Dollar, Czech Koruna, and Swiss Franc net
investments through the issuance of British Pound and Swiss Franc
denominated liabilities with a nominal amount of GBP 0.8 BN and
CHF 0.5 BN, as well as the use of forward sales of U.S. Dollar, British
Pound, Australian Dollar, Czech Koruna and Swiss Franc with a
notional of USD 0.5 BN, GBP 0.4 BN, AUD 0.4 BN, CZK 1.4 BN and CHF 0.2 BN.
The total positive fair value in 2016 was € 6 MN (2015: € 9 MN).
During the year ended 31 December 2016, cash flow hedges were used
to hedge the exposure to the variability of cash flows arising from
interest rate or exchange rate fluctuations as well as inflation. As of
31 December 2016, the derivative instruments utilized had a total
positive fair value of € 540 MN (2015: € 177 MN). Unrealized gains and
losses (net) in shareholders' equity increased by € 58 MN (2015:
decreased by € 49 MN). Amounts accumulated in the other compre-
hensive income are reclassified to profit or loss in the periods when
the hedged item affects profit or loss. This is the case when the fore-
cast transactions that are hedged take place.
Internal risk capital framework including all subsections,
Carrying amount
Fair value Carrying amount
Fair value
Available-for-sale investments
5,010
5,010
5,426
5,426
2,258
2,258
2,907
2,907
14,842
14,842
14,463
14,463
Financial assets designated at fair value through income
Financial assets held for trading
Cash and cash equivalents
FINANCIAL ASSETS
CASH FLOW HEDGES
512,268
D - Consolidated Financial Statements
122
5
5
Total
Subtotal
OTC
Real estate contracts
(132)
6
11
(20)
5
3,843
993
2,155
695
Subtotal
2,783
5
5
6
For the year ended 31 December 2016, the Allianz Group recog-
nized for fair value hedges a net loss of € - MN (2015: net gain of € 3 MN)
on the hedging instruments and a net gain of € 1 MN (2015: net loss of
€9 MN) on the hedged items attributable to the hedged risk.
Additionally, the Allianz Group uses fair value hedges to hedge
its equity portfolio against equity market risk. As of 31 December 2016,
the derivatives used as hedging instruments in the related fair value
hedges had a total positive fair value of € 11 MN (2015: € 84 MN).
The Allianz Group uses fair value hedges to hedge the exposure to
changes in the fair value of financial assets due to movements in inter-
est or exchange rates. As of 31 December 2016, the derivative financial
instruments used for the related fair value hedges of the Allianz
Group had a total negative fair value of € 39 MN (2015: € 177 MN). With-
in the Allianz Group's banking business, derivatives to hedge against
interest rate changes are implemented for individual transactions
(micro hedges) or for a portfolio of similar assets or liabilities (macro
hedges).
FAIR VALUE HEDGES
As of 31 December 2016, derivatives which form part of hedge
accounting relationships, which are included in the line items other
assets and other liabilities, had a notional amount of € 17.3 BN (2015:
€ 19.8 BN) as well as a positive fair value of € 677 MN (2015: € 565 MN)
and a negative fair value of € 159 MN (2015: € 472 MN). These hedging
instruments mainly include interest rate forwards with a total posi-
tive fair value of € 422 MN (2015: € 76 MN).
DERIVATIVE FINANCIAL INSTRUMENTS
USED IN ACCOUNTING HEDGES
FREESTANDING DERIVATIVE FINANCIAL INSTRUMENTS
As of 31 December 2016, freestanding derivatives, included in the line
item financial assets and liabilities held for trading, had a notional
principal amount of € 426.1 BN (2015: € 292.1 BN) as well as a positive
fair value of € 2.4 BN (2015: € 1.6 BN) and a negative fair value of € 10.7 BN
(2015: € 9.2 BN). Out of the total allocated to the freestanding deriva-
tives, € 265.9 BN (2015: € 202.9 BN) of the notional principal relate to
annuity products or derivatives to hedge the annuity products. Annu-
ity products are equity-indexed or contain certain embedded options
or guarantees which are considered embedded derivatives under
IAS 39. For these embedded derivatives, the notional principal
amounts included in the table refer to the account value of the related
insurance contracts. The total negative fair value of these embedded
derivatives amounts to € 9.4 BN (2015: € 7.8 BN). Further information
on the fair value measurement of these derivatives can be found in
note 36 Fair values and carrying amounts of financial instruments.
The table shows the fair value and notional amounts of all freestand-
ing derivatives as well as derivatives for which hedge accounting is
applied by the Allianz Group as of 31 December 2016 and 2015, respec-
tively. The notional principal amounts indicated in the table are
cumulative, as they include the absolute value of the notional princi-
pal amounts of derivatives with positive and negative fair values.
Although these notional principal amounts reflect the degree of the
Allianz Group's involvement in derivative transactions, they do not
represent amounts exposed to risk. Further information on the use
of derivatives to hedge risk can be found in the sections on market
and credit risk of the Risk and Opportunity Report, which forms part
of the Group Management Report.
(9,675)
2,146
311,883
(10,893)
3,110
443,400
121,350
31,897
290,153
Annual Report 2016 - Allianz Group
512,268
488,365
488,365
8,530
7,615
Subordinated liabilities
Certificated liabilities
2,585
2,585
2,894
8,383
2,894
472
159
159
Derivative financial instruments and firm commitments included in other liabilities
Financial liabilities for puttable equity instruments
105,873
105,873
111,325
472
9,208
13,530
14,256
Financial liabilities for puttable equity instruments.
in other assets and other liabilities, and
Derivative financial instruments and firm commitments included
Financial assets and liabilities for unit-linked contracts,
Available-for-sale investments,
Financial assets and liabilities designated at fair value through
income,
Financial assets and liabilities held for trading,
The following financial assets and liabilities are carried at fair value
on a recurring basis:
FAIR VALUE MEASUREMENT ON A RECURRING BASIS
D - Consolidated Financial Statements
123
Annual Report 2016 - Allianz Group
€ 58 MN (2015: € 62 MN) were sold. The gains and losses from these
disposals were immaterial.
ended 31 December 2016, such investments with carrying amounts of
As of 31 December 2016, fair values could not be reliably measured for
equity investments with carrying amounts totaling € 100 MN (31 De-
cember 2015: € 216 MN). These investments are primarily investments
in privately held corporations and partnerships. During the year
13,100
12,258
111,325
Financial liabilities for unit-linked contracts
9,207
25,563
25,531
105,369
Loans and advances to banks and customers
17,810
11,977
18,380
11,732
Real estate held for investment
6,207
5,056
9,031
7,161
Investments in associates and joint ventures
3,165
2,745
2,805
2,399
Held-to-maturity investments
124,422
FAIR VALUE HIERARCHY (ITEMS CARRIED AT FAIR VALUE)
117,630
Financial assets for unit-linked contracts
13,062
13,038
Liabilities to banks and customers
9,207
10,737
10,737
Financial liabilities held for trading
FINANCIAL LIABILITIES
565
565
677
677
Derivative financial instruments and firm commitments included in other assets
105,873
105,873
111,325
111,325
136,397
(132)
82,913
124,422
are priced by Bloomberg functions, such as Black-Scholes Option
Pricing or the swap manager tool.
FINANCIAL LIABILITIES HELD FOR TRADING
- DERIVATIVE FINANCIAL INSTRUMENTS
For level 2, the fair value is mainly determined using the income
approach. Valuation techniques applied for the income approach
mainly include discounted cash flow models as well as the Black-
Scholes-Merton model. Main observable input parameters include
volatilities, yield curves observable at commonly quoted intervals,
and credit spreads observable in the market.
For level 3, the fair value is mainly determined based on the
income approach using deterministic discounted cash flow models.
A significant proportion of derivative liabilities represent derivatives
embedded in certain life insurance and annuity contracts. Significant
non-market observable input parameters include mortality rates and
surrender rates.
FINANCIAL LIABILITIES HELD FOR TRADING
- OTHER TRADING LIABILITIES
AND FIRM COMMITMENTS INCLUDED IN OTHER ASSETS
The fair value of the derivatives is mainly determined based on the
income approach using present value techniques. Primary inputs
include yield curves observable at commonly quoted intervals. The
derivatives are mainly used for hedging purposes. Certain derivatives
The fair value is mainly determined based on the income approach
using present value techniques. Primary inputs comprise swap
curves, share prices, and dividend estimates.
FIRM COMMITMENTS INCLUDED IN OTHER LIABILITIES
For level 2, the fair value is mainly determined using the income
approach. Primary inputs include interest rates and yield curves
observable at commonly quoted intervals.
FINANCIAL LIABILITIES
FOR PUTTABLE EQUITY INSTRUMENTS
Financial liabilities for puttable equity instruments are generally
required to be recorded at the redemption amount with changes
recognized in income. For level 2 and level 3, the fair value is mainly
determined using present value techniques.
SIGNIFICANT TRANSFERS OF FINANCIAL INSTRUMENTS
CARRIED AT FAIR VALUE
In general, financial assets and liabilities are transferred from level 1
to level 2 when liquidity, trade frequency, and activity are no longer
indicative of an active market. The same policy applies for transfers
from level 2 to level 1.
SIGNIFICANT LEVEL 3 PORTFOLIOS
DERIVATIVE FINANCIAL INSTRUMENTS AND
DERIVATIVE FINANCIAL INSTRUMENTS
Financial liabilities for unit-linked contracts are valued based on
their corresponding assets.
For level 3, the fair value is mainly determined based on the net
asset value.
D - Consolidated Financial Statements
Financial assets designated at fair value through income
- Equity securities
For level 2, the fair value is determined using the market approach.
For level 3, equity securities mainly represent unlisted equity securi-
ties measured at cost.
AVAILABLE-FOR-SALE INVESTMENTS
Available-for-sale investments - Debt securities
Debt securities include:
Government and agency mortgage-backed securities
(residential and commercial),
Corporate mortgage-backed securities
(residential and commercial),
Other asset-backed securities,
Government and government agency bonds,
Corporate bonds, and
Other debt securities.
The valuation techniques for these debt securities are similar. For
level 2 and level 3, the fair value is determined using the market and
the income approach. Primary inputs for the market approach are
quoted prices for identical or comparable assets in active markets
where the comparability between security and benchmark defines
the fair value level. The income approach in most cases means that
a present value technique is applied where either the cash flow or the
discount curve is adjusted to reflect credit risk and liquidity risk.
Depending on the observability of these risk parameters in the market,
the security is classified as level 2 or level 3.
Available-for-sale investments - Equity securities
For level 2, the fair value is mainly determined using the market
approach or net asset value techniques for funds. For certain private
equity investments, the funds are priced based on transaction prices
using the cost approach. As there are only few holders of these funds,
the market is not liquid and transactions are only known to partici-
pants.
For level 3, the fair value is mainly determined using net asset
values. The net asset values are based on the fair value measurement
of the underlying investments and are mainly provided by fund man-
agers. For certain level 3 equity securities, the capital invested is con-
sidered to be a reasonable proxy for the fair value.
FINANCIAL ASSETS FOR UNIT-LINKED CONTRACTS
For level 2, the fair value is determined using the market or the income
approach. Valuation techniques applied for the income approach
mainly include discounted cash flow models as well as the Black-
Scholes-Merton model.
- NARRATIVE DESCRIPTION AND SENSITIVITY ANALYSIS
Annual Report 2016 - Allianz Group
Available-for-sale investments - Equity securities
Equity securities within available-for-sale investments classified as
level 3 mainly comprise private equity fund investments as well as
alternative investments of the Allianz Group, and in most cases are
delivered as net asset values by the fund managers (€ 6.2 BN). The net
asset values are calculated using material, non-public information
about the respective private equity companies. The Allianz Group has
only limited insight into the specific inputs used by the fund man-
agers and hence a narrative sensitivity analysis is not applicable. The
fund's asset manager generally prices the underlying single portfolio
companies in line with the International Private Equity and Venture
Capital Valuation (IPEV) guidelines using discounted cash flow
(income approach) or multiple methods (market approach). For
125
6,205
Net asset value
n/a
7,283
Discounted cash flow method
Option-adjusted spread
n/a
n/m1
Range
8,943
Discounted cash flow method
2,275
Discounted cash flow method
2-Presentation not meaningful. Mortality assumptions are mainly derived from the Annuity 2000 Mortality Table.
Reconciliation of level 3 financial instruments
The following tables show reconciliations of the financial instruments
carried at fair value and classified as level 3:
RECONCILIATION OF LEVEL 3 FINANCIAL ASSETS
6,668
Non-market
observable input(s)
Valuation technique(s)
31 December 2016
D - Consolidated Financial Statements
certain investments, the capital invested is considered to be a rea-
sonable proxy for the fair value. In these cases, sensitivity analyses are
also not applicable.
Available-for-sale investments - Corporate bonds
Corporate bonds within available-for-sale investments classified as
level 3 are mainly priced based on the income approach. The primary
non-market observable input used in the discounted cash flow meth-
od is an option-adjusted spread taken from a benchmark security
(€ 7.3 BN). A significant yield increase of the benchmark securities in
isolation could result in a decreased fair value, while a significant
yield decrease could result in an increased fair value. However, a 10%
stress of the main non-market observable inputs has only immaterial
impact on fair value.
Financial liabilities held for trading
Financial liabilities held for trading mainly include embedded
derivative financial instruments relating to annuity products that are
priced internally, using discounted cash flow models (€ 8.9 BN). A sig-
nificant decrease (increase) in surrender rates, in mortality rates, or
in the utilization of annuitization benefits could result in a higher
(lower) fair value. For products with a high death benefit, surrender
rates may show an opposite effect. However, a 10% stress of the main
non-market observable inputs has only immaterial impact on fair
value.
Quantification of significant non-market observable inputs
The following table shows the quantitative description of the valua-
tion technique(s) and input(s) used for the level 3 portfolios described
above:
QUANTITATIVE DESCRIPTION OF VALUATION TECHNIQUE(S) AND NON-MARKET OBSERVABLE INPUT(S) USED
€ MN
Description
Available-for-sale investments
Equity securities
Corporate bonds
Financial liabilities held for trading
Derivative financial instruments
Fixed-indexed annuities
Variable annuities
1-Presentation not meaningful.
Fair value as of
Annual Report 2016 - Allianz Group
124
The fair value is mainly determined based on net asset values for
funds and the market approach.
Financial assets designated at fair value through income
- Debt securities
512,268
377
111,325
104,174
102,954
365,396
2,755
18,796
164
488,365
25,342
105,873
commitments included in other assets
Total
193,560
677
413,137
25,906
677
632,603
211,155
Derivative financial instruments and firm
389,089
19,877
91,071
Financial assets for unit-linked contracts
2,504
4,305
627
1,762
1,548
3,938
Equity securities
34,169
781
7,829
42,779
32,932
776
6,915
40,624
Subtotal
97,836
565
371,770
19,145
565
602,071
FINANCIAL LIABILITIES
159
2,894
125,117
472
472
2,496
105,478
71
4,343
19
8,317
2,585
118,137
1-Quoted prices in active markets
Insurance reserves
3-Non-market observable inputs
FINANCIAL ASSETS CARRIED
AT FAIR VALUE THROUGH INCOME
Financial assets held for trading - Debt and equity securities
The fair value is mainly determined using the market approach. In
some cases, it is determined based on the income approach, using
interest rates and yield curves observable at commonly quoted
intervals.
Financial assets held for trading
- Derivative financial instruments
The fair value is mainly determined based on the income approach,
using present value techniques and the Black-Scholes-Merton model.
Primary inputs for the valuation include volatilities, interest rates,
yield curves, and foreign exchange rates observable at commonly
quoted intervals.
145
9,686
€ MN
21,664
156
92
Financial liabilities held for trading
36
Financial liabilities for unit-linked contracts
91,071
1,538
19,877
9,163
377
10,737
111,325
28
102,954
1,046
2,755
8,134
164
9,207
105,873
Derivative financial instruments and firm
commitments included in other liabilities
3
Financial liabilities for puttable equity instruments
Total
2,657
93,767
4,978
Annuitizations
Surrenders
Mortality
346
346
Changes in the consolidated subsidiaries of the Allianz Group
(3)
118
115
Carrying value (fair value) as of 31 December 2016
Foreign currency translation adjustments
9,163
145
9,686
Net gains (losses) in profit or loss attributable to a change in unrealized
gains or losses for financial liabilities held at the reporting date
1,391
2
1,394
FAIR VALUE MEASUREMENT ON A NON-RECURRING BASIS
Certain financial assets are measured at fair value on a non-recurring
basis when events or changes in circumstances indicate that the
carrying amount may not be recoverable.
377
874
2
872
Financial liabilities
for unit-linked
contracts
Financial liabilities
for puttable equity
instruments
Total
8,134
164
19
8,317
1,857
103
144
2,104
(26)
(2,016)
(6)
(32)
(4)
(18)
(2,038)
If financial assets are measured at fair value on a non-recurring
basis at the time of impairment, or if fair value less cost to sell is used
as the measurement basis under IFRS 5, corresponding disclosures
can be found in note 30 Impairments of investments (net).
Financial liabilities
held for trading
FAIR VALUE INFORMATION ABOUT FINANCIAL ASSETS AND LIABILITIES NOT CARRIED AT FAIR VALUE
€ MN
1,677
362
1,452
36
3,165
40
5,806
6,207
9,031
Real estate held for investment
18,380
17,810
17,810
Loans and advances to banks and customers
Total
5,913
80,130
38,378
18,380
8,784
148
99
as of 31 December
2016
Level 1 1
Level 2 2
Level 3 3
Total
Level 1 1
2015
Level 2 2
Level 3 3
Total
FINANCIAL ASSETS
Held-to-maturity investments
1,434
1,368
3
2,805
Investments in associates and joint ventures
FAIR VALUE HIERARCHY (ITEMS NOT CARRIED AT FAIR VALUE)
D - Consolidated Financial Statements
Impairments
Net gains (losses) recognized in other comprehensive income
19,145
2,079
103
7,821
Net transfers into (out of) level 3
(30)
Disposals through sales and settlements
164
(43)
38
(6)
50
(1,026)
(4)
(2,261)
Net gains (losses) recognized in consolidated income statement
Net gains (losses) recognized in other comprehensive income
Impairments
47
(1,189)
6,915
11,881
5,621
19
0%-25%
Withdrawal benefit election
Volatility
Surrenders
n/a 2
0%-50%
n/a
0.5% -35%
Mortality
n/a 2
Financial assets
carried at fair value
through income
Available-for-sale
investments -
Debt securities¹
Available-for-sale
investments -
Equity securities
Financial assets
for unit-linked
contracts
Total
Carrying value (fair value) as of 1 January 2016
Additions through purchases and issues
184
21
(38)
84
2
377
25,906
Net gains (losses) in profit or loss attributable to a change
in unrealized gains or losses for financial assets held at the
reporting date
6
(15)
2
(6)
1- Primarily include corporate bonds.
126
Annual Report 2016 - Allianz Group
RECONCILIATION OF LEVEL 3 FINANCIAL LIABILITIES
€ MN
Carrying value (fair value) as of 1 January 2016
Additions through purchases and issues
Net transfers into (out of) level 3
Disposals through sales and settlements
Net gains (losses) recognized in consolidated income statement
7,829
0%-25%
17,513
235
68
593
159
752
(38)
(214)
(252)
Foreign currency translation adjustments
2
314
32
348
Changes in the consolidated subsidiaries of the Allianz Group
Carrying value (fair value) as of 31 December 2016
34
322
(239)
118
187
11
2-Market observable inputs
9,139
(275)
78,826
1,008
(626)
Exchange-traded
12,933
12,933
4,195
Subtotal
18,990
24,826
87,757
131,573
1,201
(275)
83,022
1,008
(626)
Equity/Index contracts
OTC
160,223
3,110
31,681
1,201
118,640
87,757
24,826
€ MN
as of 31 December
2016
2015
Maturity by notional amount
Up to 1 year 1-5 years
Over
5 years
Notional
principal
amounts
Positive
Negative
fair
195,014
fair
Positive
fair
Negative
fair
values
values
amounts
values
values
Interest rate contracts
OTC
6,057
Notional
principal
931
(10,032)
160,973
(424)
Exchange-traded
8
8
Subtotal
50,151
1,566
919
52,636
545
(534)
482
46,988
(424)
Credit contracts
OTC
695
2,155
993
3,843
5
(20)
2,783
175
482
DERIVATIVE FINANCIAL INSTRUMENTS
46,988
545
571
(8,492)
Exchange-traded
60,089
240
60,329
428
Subtotal
220,312
3,350
31,681
(534)
255,343
18,112
73
179,085
644
(8,492)
Foreign exchange contracts
OTC
50,143
1,566
919
52,628
1,359
35 - Derivative financial instruments
(32)
(10,064)
D - Consolidated Financial Statements
Total deferred tax liabilities
524
597
Other liabilities
2,674
2,635
Pensions and similar obligations
2,808
3,084
Insurance reserves
661
804
Intangible assets
1,267
1,388
Other assets
4,958
4,991
Deferred acquisition costs
9,357
10,181
Investments
31.5%
23,867
22,483
Effect of netting
(19,045)
OTHER INFORMATION
106
147
116
12
2016
Total
Unlimited
>10 years
2022-2026
2020-2021
29.6%
2018-2019
€ MN
TAX LOSSES CARRIED FORWARD
Tax losses carried forward are scheduled according to their expiry
periods as follows:
Tax losses carried forward at 31 December 2016 of € 9,697 MN (2015:
€ 10,395 MN) resulted in the recognition of deferred tax assets to the
extent that there is sufficient certainty that the unused tax losses will
be utilized. At the reporting date, this prerequisite was not fulfilled
for a partial amount of € 3,010 MN (2015: € 2,835 MN). According to tax
legislation as of 31 December 2016, an amount of € 2,801 MN (2015:
€2,487 MN) of these tax losses may be carried forward indefinitely and
in unlimited amounts whereas an amount of € 209 MN (2015: € 348 MN)
of these tax losses carried forward will expire over the next 20 years if
not utilized.
TAX LOSSES CARRIED FORWARD
Taxable temporary differences associated with investments in Allianz
Group companies for which no deferred tax liabilities are recognized,
as the Allianz Group is able to control the timing of their reversal, and
which will not reverse in the foreseeable future, amounted to € 1,150 MN
(2015: € 585 MN). Deductible temporary differences arising from
investments in Allianz Group companies for which no deferred tax
assets are recognized, as it is not probable that they will reverse in the
foreseeable future, amounted to € 97 MN (2015: € 98 MN).
Annual Report 2016 - Allianz Group
120
4,822
(3,819)
Net deferred tax assets (liabilities)
Net deferred tax liabilities
2017
Effective tax rate
(18,480)
4,003
(2,609)
187
3,074
Calculated income taxes
30.0%
29.9%
Applied weighted income tax rate
20,633
20,855
Total deferred tax assets
10,196
10,292
Income before income taxes
3,054
1,214
2015
2016
4,455
4,551
Pensions and similar obligations
4,888
9,697
D - Consolidated Financial Statements
235
Annual Report 2016 - Allianz Group
121
Other liabilities
Non-recognition or valuation allowance for
deferred tax assets on tax losses carried forward
1,133
(759)
through income
3,042
(807)
Effective income taxes
Financial assets carried at fair value
(3)
23
DEFERRED TAX LIABILITIES
82
61
Effects of tax losses
1,394
Other effects
1,003
Trade tax and similar taxes
193
184
Effect of netting
(19,045)
(18,480)
3,209
Net tax exempt income
(309)
(108)
Net deferred tax assets
ASSUMPTIONS OF AEI PLANS
Upon the expiration date, any unexercised SARS will be exercised
automatically if the above market conditions have been attained. The
SARS are forfeited if the plan participant ceases to be employed by the
Allianz Group or if the exercise conditions are not attained by the
expiration date.
The fair value of the SARS at grant date is measured using a Cox-
Ross-Rubinstein binomial tree option pricing model. Volatility was
derived from observed historical market prices. In the absence of
historical information regarding employee stock appreciation exer-
cise patterns, the expected life has been estimated to equal the term
to maturity of the SARS.
The SARS are accounted for as cash-settled plans by the Allianz
Group. Therefore, the Allianz Group accrues the fair value of the SARS
as a compensation expense over the vesting period. Upon vesting,
any changes in the fair value of the unexercised SARS are recognized
as a compensation expense. During the year ended 31 December
2016, the Allianz Group recognized compensation expenses related
to the unexercised SARS of € (3) MN (2015: € 18 MN).
As of 31 December 2016, the Allianz Group recorded provisions
of € 13 MN (2015: € 26 MN) in Other liabilities for the unexercised SARS.
ALLIANZ EQUITY INCENTIVE PLAN
Since the 2011 grant year, the Allianz Equity Incentive plan (AEI plan)
has replaced the GEI plans. The AEI plan is granted in the form of
restricted stock units (RSUS) and is part of a new variable compensa-
tion component for the plan beneficiaries.
The RSU granted to a plan participant obligate the Allianz Group
to pay in cash the average closing price of an Allianz SE share on the
last day of the vesting period and the prior nine trading days, or to
convert one RSU into one Allianz SE share. The payout is capped at a
200% share price growth above the grant price.
The RSUs are subject to a vesting period of four years and will be
released on the last day of the vesting period. The Allianz Group can
choose the settlement method for each unit.
Share price
Average dividend yield
Average interest rate
Expected volatility
The RSUs are virtual stocks without dividend payments and a
capped payout. The fair value is calculated by subtracting the net
present value of expected future dividend payments until maturity as
well as the fair value of the cap from the prevailing share price as of
the valuation date. The cap is valued as a European short call option,
using prevailing market data as of the valuation date.
The following table provides the assumptions used in calculating
the fair value of the RSUs at grant date:
20171
157.15
In addition, upon the death of a plan participant, a change of control,
or notice for operational reasons, the SARS vest immediately and will
be exercised by the company provided the above market conditions
have been attained.
In addition, upon the death of a plan participant, a change of
control or notice for operational reasons, the RSUS vest immediately
and will be exercised by the company.
41 - Share-based compensation plans
During their contractual term, the market price of the Allianz SE
share has outperformed the Dow Jones EURO STOXX Price Index at
least once for a period of five consecutive trading days; and
CONTRIBUTIONS
In addition to the plan assets of € 14.0 BN, the Allianz Group has
dedicated assets at Group level amounting to € 7.4 BN as of 31 December
2016, which are likewise managed according to Allianz ALM standards.
2016
For the year ending 31 December 2017, the Allianz Group expects to
contribute € 278 MN to its defined benefit plans and to pay € 301 MN
directly to participants in its defined benefit plans.
DEFINED CONTRIBUTION PLANS
Defined contribution plans are funded through independent pension
funds or similar organizations. Contributions fixed in advance (e.g.
based on salary) are paid to these institutions and the beneficiary's
right to benefits exists against the pension fund. The employer has
no obligation beyond payment of the contributions.
the Allianz SE market price is in excess of the reference price by at
least 20% on the exercise date.
During the year ended 31 December 2016, the Allianz Group re-
cognized expenses for defined contribution plans of € 316 MN (2015:
€ 242 MN). Additionally, the Allianz Group paid contributions for state
pension schemes of € 335 MN (2015: € 385 MN).
The Group Equity Incentive plans (GEI plans) of the Allianz Group
help senior management, in particular the Board of Management,
focus on the long-term increase in the value of the Allianz Group.
Until 2010, the GEI plans included grants of stock appreciation rights
(SARS). Since 2011, the Allianz Equity Incentive plan (AEI plan) has
replaced the GEI plans.
The SARS granted to a plan participant obligate the Allianz Group
to pay in cash the excess of the market price of an Allianz SE share
over the reference price on the exercise date for each right granted.
The excess is capped at 150% of the reference price. The reference price
represents the average of the closing prices of an Allianz SE share for
the ten trading days following the Financial Press Conference of
Allianz SE in the year of issue. SAR which were granted up to 2008 vest
after two years and expire after seven years. From the 2009 grant
onwards, SARS vest after four years and also expire after seven years.
Annual Report 2016 - Allianz Group
135
D - Consolidated Financial Statements
Upon vesting, SARS may be exercised by the plan participant if the
following market conditions are attained:
GROUP EQUITY INCENTIVE PLANS
2015
D - Consolidated Financial Statements
%
The fair value of the underlying M-unit options was measured
using the Black-Scholes option pricing model. Volatility was derived
in part by considering the average historical and implied volatility of
a selected group of peers. The expected life of one granted option was
calculated based on treating the three vesting tranches (one third in
years 3, 4, and 5) as three separate awards.
136
1- For further details regarding the description and the conditions of the PIMCO LLC Class B-Unit Purchase
Plan, please refer to the Annual Report 2015, note 49 Share-based compensation plans.
Annual Report 2016 - Allianz Group
The following table provides the assumptions used in calculating
the fair value of the M-unit options at grant date:
ASSUMPTIONS OF CLASS M-UNIT PLAN
Amaximum of 250,000 M-units are authorized for issuance under
the M-unit Plan.
Weighted-average fair value of options granted
Expected term (years)
Expected volatility
Expected dividend yield
Risk free rate of return
The bulk of the plan assets are held by Allianz Versorgungskasse
VVaG, Munich, which is not part of the Allianz Group. Plan assets do
not include any real estate used by the Allianz Group and include only
€ 8.9 MN of own transferable financial instruments.
2016
Assumptions:
141.15
In 2008, AllianzGI L.P. launched a new management share-based pay-
ment incentive plan for certain senior level executives and affiliates
of PIMCO LLC. Participants in the plan are granted options to acquire
a new class of equity instruments (M-units), which vest in one-third
increments on approximately the third, fourth and fifth anniversary
of the option grant date. Upon vesting, options will automatically be
exercised in a cashless transaction, but only if they are in the money.
Participants may elect to defer the receipt of M-units through the
M-unit Deferral Plan until termination of their service at the latest.
With the M-unit Plan, participants can directly participate in PIMCO'S
performance. Class M-units are non-voting common equity with lim-
ited information rights. They bear quarterly distributions equal to a
pro-rata share of PIMCO's net distributable income. Deferred M-units
have a right to receive a quarterly cash compensation equal to and in
lieu of quarterly dividend payments.
OF SUBSIDIARIES OF THE ALLIANZ GROUP
4.9
5.4
154.50
4.6
%
(0.2)
(0.2)
PIMCO LLC CLASS B-UNIT PURCHASE PLAN¹
During the year ended 31 December 2016, the Allianz Group called the
remaining 473 Class B equity units to terminate the Class B-Unit Pur-
chase plan. The total amount paid related to the call of these Class B
equity units was € 14 MN. For 2015, the Allianz Group recorded a liabil-
ity for the outstanding Class B equity units of € 15 MN in Other liabili-
ties.
0.1
23.5
21.7
18.7
1-The RSUS 2017 are deemed to have been granted to participants as part of their 2016 remuneration.
Consequently, the assumptions for RSU grants delivered in March 2017 are based on best estimation.
The RSUs are accounted for as cash-settled plans, as the Allianz Group
intends to settle in cash. Therefore, the Allianz Group accrues the fair
value of the RSUS as a compensation expense over the service period
of one year and afterwards over the vesting period. During the year
ended 31 December 2016, the Allianz Group recognized compensa-
tion expenses related to the AEI plans of € 113 MN (2015: € 238 MN).
As of 31 December 2016, the Allianz Group recorded provisions
of € 405 MN (2015: € 470 MN) for these RSUS in Other liabilities.
SHARE-BASED COMPENSATION PLANS
%
Due to a well-diversified portfolio of 136,000 plan participants,
there is no reasonable uncertainty of future cash flows to be expected
that could have an impact on the liquidity of the Allianz Group. The
chart below shows the asset allocation:
2015
An increase of pre-retirement benefit assumptions (e.g. salary
increase) of 25 basis points would have an effect of € 71 MN on the
defined benefit obligation. However, the increase of post-retirement
assumptions (e.g. inflation-linked increases of pension payments) of
25 basis points would affect the defined benefit obligation by € 550 MN.
A change in the medical cost trend rate by 100 basis points would
have an effect of € 1 MN on the defined benefit obligation and no
material effect on the defined benefit costs.
Quoted
5,470
5,089
Discount rate
1.9
2.4
2016
This includes the following rates:
2,071
2,049
Real estate
657
632
Germany
Non-quoted
Annuity contracts
4
1,683
259.64
The weighted average values of the assumptions for the Allianz
Group's defined benefit plans used to determine the defined benefit
obligation and the recognized expense are as follows:
ASSET ALLOCATION OF PLAN ASSETS
€ MN
as of 31 December
Equity securities
ASSUMPTIONS FOR DEFINED BENEFIT PLANS
1,665
%
Quoted
Non-quoted
Debt securities
D - Consolidated Financial Statements
2016
2015
as of 31 December
3,121
2,980
-long duration
1.0
Rate of compensation increase
1.8
2.1
Rate of pension increase
1.5
0.8
1.8
1.3
1.0
The recognized expense is recorded based on the assumptions of the
corresponding previous year.
The discount rate assumption is the most significant risk for the
defined benefit obligation. It reflects market yields at the balance
sheet date of high-quality fixed income investments corresponding
to the currency and duration of the liabilities. In the Eurozone, the
decision for the discount rate is based on AA-rated financial and cor-
porate bonds, provided by Allianz Investment Data Services (IDS), and
a standardized cash flow profile for a mixed population. The Internal
Controls Over Financial Reporting (ICOFR) certified Allianz Global
Risk Parameters (GRIPS) methodology is an internal development of
the Nelson-Siegel model and consistently used by Group Risk, Group
Audit, AIM and PIMCO.
The range for the sensitivity calculations was derived by ana-
lyzing the average volatility over a five-year period.
An increase (or decrease) in the discount rate by 50 basis points
would lead to a decrease of € 1.7 BN (or increase of € 1.9 BN) in the
defined benefit obligation.
Rate of medical cost trend
Switzerland
13,333
14,048
1.8
2.3
Life insurance investment products
868
728
- short duration
1.4
2.0
Other
175
190
U.K.
2.9
3.9
Total
PLAN ASSETS/ASSET LIABILITY MANAGEMENT (ALM)
Based on the estimated future cash flows of € 711 MN for 2017, € 745 MN
for 2018, € 770 MN for 2019, € 789 MN for 2020, € 842 MN for 2021 and
€ 4,448 MN for 2022-2026, the weighted duration of the defined benefit
obligation is 15.5 years. The Allianz Group uses, based on the liability
profiles of the defined benefit obligation and on the regulatory fund-
ing requirements, stochastic asset liability models to optimize the
asset allocation from a risk-return perspective.
3.84
Tax services
24.8
KPMG worldwide
thereof: KPMG AG
2016
2015
2016
Audit services
2015
48.0
14.7
9.8
Other attestation
services
6.4
6.2
40.3
4.8
€ MN
For services rendered by KPMG AG and the worldwide member
firms of KPMG International (KPMG), the following fees were recog-
nized as an expense in the fiscal year:
Expenses for pensions
and other post-retirement benefits
Total
1,187
1,402
11,735
12,367
KPMG FEES
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
ISSUANCE OF THE DECLARATION OF COMPLIANCE
WITH THE GERMAN CORPORATE GOVERNANCE CODE
ACCORDING TO § 161 AKTG
On 15 December 2016, the Board of Management and the Supervisory
Board of Allianz SE issued the Declaration of Compliance according
to § 161 AktG, which has been made permanently available to share-
holders on the company's website.
The Declaration of Compliance of the publicly traded group
company Oldenburgische Landesbank AG was issued in December
2016 and has been made available to shareholders on a permanent
basis.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG AG) is the external
auditing firm for the Allianz Group.
137
4.9
Annual Report 2016 - Allianz Group
1.5
RSU with a total fair value of € 8.9 MN (2015: € 9.7 MN) were granted
to the Board of Management for the year ended 31 December 2016.
In 2016, remuneration and other benefits totaling € 7 MN (2015:
€ 7 MN) were paid to former members of the Board of Management
and dependents, while reserves for current pension obligations and
accrued pension rights totaled € 126 MN (2015: € 122 MN).
The total remuneration for all Supervisory Board members,
including attendance fees, amounted to € 2.0 MN (2015: € 2.0 MN).
Board of Management and Supervisory Board compensation by
individual is included in the Remuneration Report. The information
provided there is considered part of these consolidated financial
statements.
44- Subsequent events
CHANGES IN SUBORDINATED BONDS
The equity-related remuneration is comprised in 2016 of 66,694¹
(2015: 79,6722) Restricted Stock Units (RSU).
In January 2017, Allianz Finance II B.V. called for redemption a € 1.4 BN
4.375% subordinated bond. The bond has been redeemed on 17 Febru-
ary 2017 in accordance with the terms and conditions of the bond.
Furthermore, in January 2017 Allianz SE issued a subordinated
bond in the amount of € 1.0 BN with a scheduled maturity in July 2047,
but with ordinary call rights of Allianz beginning in July 2027. The
coupon of 3.099 % is fixed until July 2027.
SHARE BUY-BACK PROGRAM AND CAPITAL MANAGEMENT
On 16 February 2017, Allianz SE has decided to launch a share buy-back
program with a volume of up to € 3 BN and to simplify capital manage-
ment to make it more flexible. For further details, please refer to the
section "Expected dividend development" of the chapter Outlook 2017
within the Group Management Report.
138
1- The relevant share price used to determine the final number of RSUS granted is only available after sign-off
of the Annual Report by the external auditors, thus numbers are based on a best estimate.
2- The disclosure in the Annual Report 2015 was based on a best estimate of the RSU grants. The figure shown
here for 2015 now includes the actual fair value as of the grant date (4 March 2016). The value therefore
differs from the amount disclosed last year.
Annual Report 2016 - Allianz Group
Also in January 2017, Allianz SE issued a subordinated bond in
the amount of USD 0.6 BN with a scheduled maturity in January 2049,
but with ordinary call rights of Allianz beginning in January 2029. The
coupon of 5.1% is fixed until January 2029.
The sum of the total remuneration of the Allianz SE Board of
Management for 2016, excluding the notional accruals of the MTB
2016-2018 and excluding the pension service cost, amounts to
€26 MN (2015, including the payout of the MTB 2013-2015: € 57 MN).
As of 31 December 2016, the Board of Management is comprised of
9 members. The following values reflect the full Board of Manage-
ment active in the respective year.
REMUNERATION FOR THE BOARD OF MANAGEMENT
AND THE SUPERVISORY BOARD
1.8
0.6
0.3
Other services¹
8.7
6.2
4.8
3.0
Total
64.6
54.5
24.9
18.0
1-Primarily general consulting services.
The fees for audit services primarily relate to services rendered for the
audit of the Allianz Group's consolidated financial statements and
for the audit of the statutory financial statements of Allianz SE and its
subsidiaries. Due to the initial application of IDW RS HFA 36 revised,
the fees for the reviews of the consolidated interim financial state-
ments are presented under audit services. Prior-year figures were
adjusted accordingly.
1,376
%
1,351
9,589
€ MN
2016
2015
price
€
Outstanding as of 1 January
Weighted-
average
exercise
Granted
Forfeited
Outstanding
114,898 20,043.67
49,161 10,731.45
(39,769) 18,952.51 (18,059) 19,852.60
(10,098) 20,236.85 (42,403) 16,525.91
175,360 17,212.31
Net income attributable to shareholders - basic
Effect of potentially dilutive common shares
Net income used attributable to
shareholders- diluted
6,883
Exercised
6,616
Number of
options
Number of
options
%
14.9
%
1.3
2015
The number and weighted-average exercise price of the M-unit
options outstanding and exercisable are as follows:
Weighted-
average
exercise
price
RECONCILIATION OF OUTSTANDING M-UNIT OPTIONS
The Allianz Group has other local share-based compensation plans,
including share option and employee share purchase plans, none of
which, individually or in the aggregate, are material to the consoli-
dated financial statements. During the year ended 31 December 2016,
the total expenses recorded for these plans were € 4 MN (2015: € 3 MN).
42-Earnings per share
Earnings per share are calculated by dividing net income attributable
to shareholders by the weighted average number of common shares
outstanding (excluding treasury shares of 2,300,630 for 2016 (2015:
2,632,723)). For the calculation of diluted earnings per share, nomina-
tor and denominator are adjusted for the effects of potentially dilu-
tive common shares. These effects arise from various share-based
compensation plans of the Allianz Group.
2016
2015
EARNINGS PER SHARE
OTHER SHARE OPTION AND SHAREHOLDING PLANS
(22)
(5)
6,861
43 Other information
NUMBER OF EMPLOYEES
15.14
15.00
14.56
14.55
As of 31 December 2016, the Allianz Group employed 140,253 (2015:
142,459) people, thereof in Germany 40,167 (2015: 40,600). The average
total number of employees for the year ended 31 December 2016 was
142,066.
Basic earnings per share (€)
Diluted earnings per share (€)
PERSONNEL EXPENSES
€ MN
Salaries and wages
Social security contributions
2016
2015
9,197
PERSONNEL EXPENSES
The Allianz Group offers Allianz SE shares in 20 countries to entitled
employees at favorable conditions. The shares have a minimum
holding period of one to five years. During the year ended 31 Decem-
ber 2016, the number of shares sold to employees under these plans
was 617,084 (2015: 575,584). During the year ended 31 December 2016,
the Allianz Group recognized the difference between the issue price
charged to the subsidiaries of the Allianz Group and the discounted
price of the shares purchased by employees, amounting to € 20 MN
(2015: € 18 MN) as compensation expenses.
EMPLOYEE STOCK PURCHASE PLANS
During the year ended 31 December 2016, the Allianz Group
recorded compensation expenses of € 21 MN (2015: € 31 MN) related to
these share options.
6,611
Weighted average number of common shares
outstanding-basic
454,699,370
as of 31 December
114,192 17,000.84
114,898 20,043.67
Exercisable as of 31 December
Potentially dilutive common shares
Weighted average number of common shares
outstanding-diluted
2,743,620
454,367,277
61,755
457,442,990
454,429,033
The aggregate intrinsic value of share options outstanding was € - MN
for the years ended 31 December 2016 and 2015, respectively.
As of 31 December 2016, the M-unit options outstanding have an
exercise price of between € 10,731.45 and € 22,765.58 and a weighted-
average remaining contractual life of 2.75 years.
The share options settled by delivery of PIMCO LLC shares are
accounted for as equity-settled plans by PIMCO LLC. Therefore, PIMCO
LLC measures the total compensation expense to be recognized for
the equity-settled shares based on their fair value as of the grant date.
The total compensation expense is recognized over the vesting period.
and employee assistance
134
The carrying amounts in the tables listed above correspond to an
aggregated amortized cost amount of € 18,279 MN (2015: € 16,196 MN).
This amortized cost amount represents the maximum exposure to
loss for the Allianz Group from these investments. In the reporting
period, the Allianz Group has not provided any financial or other sup-
port to these entities, nor does it have the intention to provide such
support in the future.
The assumptions for the actuarial computation of the defined benefit
obligation and the recognized expense depend on the circumstances
in the particular country where the plan has been established.
867
3,019
6,625
3,886
Private equity funds
7
7,326
7,333
Property funds
3,330
3,330
Other funds
271
401
Total
1,648
20,198
672
21,846
2015
Debt funds
499
5,399
5,898
Stock funds
881
2,984
3,865
Private equity funds
Stock funds
6,122
503
Debt funds
558
Non-investment grade
As of the reporting date, the Allianz Group has receivables from
unconsolidated investment funds, which are mainly due in return for
asset management services, amounting to € 803 MN (2015: € 723 MN).
Furthermore, the Allianz Group has commitments to invest in private
equity funds and similar financial instruments totaling € 9,640 MN as
of 31 December 2016 (2015: € 5,460 MN).
2
328
4
Not rated
1
14
28
44
Total
4
1
21,419
21,616
The carrying amounts in the tables listed above correspond to an
aggregated amortized cost amount of € 21,425 MN (2015: € 21,244 MN).
This amortized cost amount represents the maximum exposure to
loss for the Allianz Group from these investments. In the reporting
period, the Allianz Group has not provided any financial or other sup-
port to these entities, nor does it have the intention to provide such
support in the future.
INVESTMENTS IN INVESTMENT FUNDS
INVESTMENTS IN INVESTMENT FUNDS BY ASSET CLASS
€ MN
as of 31 December
2016
Financial
assets
carried at
fair value
through
income Investments
Total
193
6,360
6,361
Property funds
Performance guarantees are given by the Allianz Group to ensure
third-party entitlements if certain performance obligations of the
guarantee recipient are not fulfilled.
As of 31 December 2016, the performance guarantees amount to
€ 74 MN (2014: € 31 MN), € 44 MN of which are due within one year. The
collateral held amounts to € 25 MN (2015: € 31 MN).
COMMITMENTS
LOAN COMMITMENTS
The Allianz Group engages in various lending commitments to meet
the financing needs of its customers. They consist of advances, stand-
by facilities, guarantee credits, mortgage loans and public-sector
loans. As of 31 December 2016, the total of loan commitments
amounts to € 1,229 MN (2015: € 1,045 MN) and represents the amounts
at risk in the event that customers draw fully on all facilities and then
default, excluding the effect of any collateral. Since the majority of
these commitments may expire without being drawn upon, these
loan commitments are not representative of actual liquidity require-
ments for such commitments.
LEASING COMMITMENTS
The Allianz Group occupies property in many locations under various
long-term operating leases as well as one long-term finance lease
and has entered into various operating leases covering the long-term
use of data processing equipment and other office equipment.
As of 31 December 2016, the future minimum lease payments
under non-cancelable operating and finance leases were as follows:
Operating leases
FUTURE MINIMUM LEASE PAYMENTS - OPERATING LEASES
€ MN
Due in 1 year or less
Due after 1 year and up to 5 years
Due after 5 years
PERFORMANCE GUARANTEES
Subtotal
2016
403
1,322
1,465
3,190
333
2,857
For the year ended 31 December 2016, rental expenses totaled
€ 352 MN (2015: € 347 MN), net of sublease rental income received of
€ 11 MN.
Annual Report 2016 - Allianz Group
131
D - Consolidated Financial Statements
Finance lease
Subleases
Total
BBB
As of 31 December 2016, the indemnification contracts amount
to € 29 MN (2015: € 89 MN). This amount is almost entirely due after five
years.
. The collateral held amounts to € 5 MN (2015: € - MN). Nearly all
customers of the indemnification contracts have an external credit
rating of BB.
Indemnification contracts are executed by the Allianz Group with
various counterparties under existing service, lease or acquisition
transactions. Such contracts may also be used to indemnify counter-
parties under various contingencies, such as changes in laws and
regulations or litigation claims.
2,633
Other funds
242
1,623
288
17,665
Total
2,633
530
19,288
Out of the total investment fund exposure, investments of € 10.2 BN
(2015: € 10.1 BN) relate to listed investment funds, whereas invest-
ments of € 11.6 BN (2015: € 9.2 BN) relate to unlisted investment funds.
38-Related party transactions
Information on the remuneration of Board members and transactions
with these persons can be found in the Remuneration Report, starting
on page 24.
Transactions between Allianz SE and its subsidiaries that are to
be deemed related parties have been eliminated in the consolidation
and are not disclosed in the notes.
Business relations with joint ventures and associates are set on
an arm's length basis.
39- Litigation, guarantees and
other contingencies and commitments
In connection with the sale of various of the Allianz Group's for-
mer private equity investments, subsidiaries of the Allianz Group
provided indemnities to the respective buyers in the event that certain
contractual warranties arise. The terms of the indemnity contracts
cover ordinary contractual warranties, environmental costs, and any
potential tax liabilities the entity incurred while owned by the Allianz
Group.
LITIGATION
130
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
for a court review of the appropriate amount of the cash settlement
in a mediation procedure (“Spruchverfahren”). In September 2013,
the district court ("Landgericht") of Frankfurt dismissed the minor-
ity shareholders' claims in their entirety. This decision has been
appealed to the higher regional court (“Oberlandesgericht”) of Frank-
furt. In the event that a final decision were to determine a higher
amount as an appropriate cash settlement, this would affect all of the
approximately 16 MN shares that were transferred to Allianz.
In September 2015 and in January 2017, two separate putative
class action complaints were filed against Allianz Life Insurance
Company of North America (Allianz Life) making allegations similar
to those made in prior class actions regarding the sale of Allianz Life's
annuity products, including allegations of breach of contract and
violation of California unfair competition law. The ultimate outcome
of the cases cannot yet be determined.
Pacific Investment Management Company LLC (PIMCO) and
Allianz Asset Management of America, L.P. (AAM US), have been named
as defendants in litigation in California brought by William H. Gross,
a former employee of PIMCO, in October 2015. Mr. Gross's complaint
alleges that, even though Mr. Gross resigned, he is entitled to addi-
tional profit sharing payments from PIMCO of at least USD 200 MN.
Allianz believes that this lawsuit is without merit. The ultimate out-
come of this matter cannot yet be determined.
GUARANTEES
The guarantees issued by the Allianz Group consist of financial guar-
antees, indemnification contracts and performance contracts.
FINANCIAL GUARANTEES
The majority of the Allianz Group's financial guarantees are issued to
customers through the normal course of banking business in return
for fee and commission income, which is generally determined based
on rates subject to the nominal amount of the guarantees and inher-
ent credit risks. Once a guarantee has been drawn upon, any amount
paid by the Allianz Group to third parties is treated as a loan to the
customer and is, therefore, basically subject to the credit risk of the
customer or the collateral pledged, respectively.
As of 31 December 2016, the financial guarantees amount to
€ 437 MN (2015: € 454 MN), € 376 MN of which are due within one year.
The collateral held amounts to € 44 MN (2015: € 57 MN). Nearly all cus-
tomers of the letters of credit have no external credit rating.
INDEMNIFICATION CONTRACTS
The calculations are based on current actuarially calculated
mortality tables, projected turnover depending on age and length of
service and internal Allianz Group retirement projections. Although
this represents the best estimate as of today, considering a further
increase in life expectancy could be reasonable. The weighted aver-
age life expectancy of a currently 65-year-old plan participant is
about 89.2 years for women and 86.8 years for men. An increase in life
expectancy by one year would lead to an increase of the defined ben-
efit obligation by € 739 MN.
Allianz Group companies are involved in legal, regulatory, and arbi-
tration proceedings in Germany and a number of foreign juris-
dictions, including the United States. Such proceedings arise in the
ordinary course of businesses, including, amongst others, their activ-
ities as insurance, banking and asset management companies,
employers, investors and taxpayers. It is not feasible to predict or
determine the ultimate outcome of the pending or threatened pro-
ceedings. Management does not believe that the outcome of these
proceedings, including those discussed below, will have a material
adverse effect on the financial position and the results of operations
of the Allianz Group, after consideration of any applicable provision.
On 24 May 2002, pursuant to a statutory squeeze-out procedure,
the general meeting of Dresdner Bank AG resolved to transfer shares
from its minority shareholders to Allianz as principal shareholder in
return for payment of a cash settlement amounting to € 51.50 per
share. Allianz established the amount of the cash settlement on the
basis of an expert opinion, and its adequacy was confirmed by a court
appointed auditor. Some of the former minority shareholders applied
1,723
A
161
through
carried at
fair value
Financial
assets
CARRYING AMOUNTS OF ABS AND MBS INVESTMENTS BY RATING
€ MN
D - Consolidated Financial Statements
129
Annual Report 2016 - Allianz Group
24
21,616
193
21,419
4,126
28
Loans and
advances to
banks and
4,096
284
468
468
3,721
165
3,554
2
9,433
9,433
3,584
3,584
Other
Total
Credit card
284
Auto
as of 31 December
customers
16,000
2,957
1,723
558
335
20
21,563
119
21,443
Total
14
5
1
Not rated
297
4
293
income Investments
Non-investment grade
532
BBB
935
A
2,288
101
2,187
AA
17,491
17,491
AAA
2016
Total
935
532
FUTURE MINIMUM LEASE PAYMENTS - FINANCE LEASE
€ MN
CMO/CDO
U.S. AGENCY
2016
as of 31 December
CARRYING AMOUNTS OF ABS AND MBS INVESTMENTS BY TYPE OF CATEGORY
€ MN
INTERESTS IN ASSET-BACKED SECURITIES (ABS)
AND MORTGAGE-BACKED SECURITIES (MBS) ISSUED
BY SECURITIZATION VEHICLES
NATURE OF RISKS ASSOCIATED WITH
UNCONSOLIDATED STRUCTURED ENTITIES
Investment funds launched by group-internal asset managers
can be considered to be sponsored by the Allianz Group. As a sponsor,
the Allianz Group through its asset management subsidiaries is
involved in the legal set-up and marketing of internally managed
investment funds. This may include providing seed capital to the
funds and providing administrative services to ensure the investment
funds' operation. Investment funds managed by group-internal asset
managers can be reasonably associated with the Allianz Group. The
use of the Allianz name for investment funds is another indicator that
the Allianz Group has acted as a sponsor for the respective funds.
Information on the management fees generated in the asset manage-
ment business are disclosed in note 25 Fee and commission income
of this Annual Report.
Income derived from the management of investment funds
includes mainly asset management fees and performance based
fees.
Within the asset management business, investment funds are estab-
lished and managed to accommodate retail and institutional clients'
requirements to hold investments in specific assets, market segments
or regions. Within the insurance business, policyholder money is
partly invested in investment funds, which include funds managed
by Allianz Group internal asset managers as well as funds set up and
managed by third parties. Investment funds managed or invested in
by Allianz Group may include mutual funds, special funds and other
funds.
FUND MANAGEMENT ACTIVITIES
With regard to investment activities, income mainly includes
distributions from the funds as well as realized gains and losses from
disposals.
Investment funds are generally subject to stringent regulatory
requirements from financial authorities in all jurisdictions across the
world. Comprehensive regulation of funds protects fund investors
and also helps to limit investment risk. These mechanisms result in
a legal set-up of funds, agreed and accepted by investors and invest-
ment managers, that may lead to a classification as structured enti-
ties under IFRS 12.
Considering the broad variety of investment funds across different
jurisdictions, the classification of investment funds as structured
entities based on the definition in IFRS 12 and current industry prac-
tice is judgmental. As a general rule, the relevant activities of an
investment fund are dedicated to the fund manager via asset manage-
ment agreements. In contrast, influence from investors on the rele-
vant activities of unconsolidated funds is usually either precluded by
legal or regulatory provisions or is not deemed to be substantial.
INVESTMENTS IN INVESTMENT FUNDS
U.S. Agency
CMBS
CMO/CDO
Income derived from the management of securitization vehicles
comprises asset management fees.
Income derived from investments in securitization vehicles
mainly includes interest income generated from ABS and MBS, as well
as realized gains and losses from disposals of these securities.
Securitization vehicles invested in by the Allianz Group have
been set up by third parties. Furthermore, the Allianz Group has nei-
ther transferred any assets to these vehicles nor has it provided any
further credit enhancements to them.
The Allianz Group acts as investor in ABS- or MBS-issuing securitiza-
tion vehicles which purchase pools of assets including commercial
mortgage loans (CMBS), auto loans, credit card receivables and oth-
ers. These securitization vehicles refinance the purchase of assets by
issuing tranches of ABS or MBS, whose repayment is linked to the per-
formance of the assets held by the vehicles.
AND MORTGAGE-BACKED SECURITIES (MBS) ISSUED
BY SECURITIZATION VEHICLES
INVESTMENTS IN ASSET-BACKED SECURITIES (ABS)
D - Consolidated Financial Statements
Besides the above-mentioned investments in investment funds,
the Allianz Group also holds investment funds to fund unit-linked
insurance contracts. However, these holdings are held on behalf and
for the benefit of unit-linked policyholders only. For that reason, these
holdings are not included in the above-mentioned table. As of
31 December 2016, the volume of unit-linked assets amounted to
€ 111,325 MN (2015: € 105,873 MN). The maximum exposure to loss on
these investments is covered by liabilities recorded for unit-linked
contracts.
2015
AAA
16,000
AA
2,796
Within the asset management business, the Allianz Group acts
as asset manager for some securitization vehicles. The assets under
management of these vehicles amounted to € 1,597 MN as of 31 Decem-
ber 2016 (2015: € 1,753 MN). Some of the affected vehicles have been set
up by the Allianz Group whereas others have been set up by third
parties. In this respect, the role of the Allianz Group is limited to asset
management. The Allianz Group has not invested in these vehicles
being managed.
CMBS
Financial
assets
carried at
through
2015
21,563
119
21,443
1
Total
5,115
14
5,100
1
Other
206
206
fair value
Credit card
606
Auto
3,019
105
2,914
8,030
8,030
4,587
4,587
Total
customers
Loans and
advances to
banks and
income Investments
606
as of 31 December
PIMCO LLC CLASS M-UNIT PLAN
Due after 1 year and up to 5 years
686
545
(1)
(101)
(302)
(313)
493
512
495
447
9,707
9,062
63
67
13,123
2015
2016
2015
2016
2015
2016
302
313
986
857
(1)
(101)
Expenses recognized in the
consolidated income statements
Actuarial (gains)/losses due to
Changes in demographic assumptions
1,268
income (before deferred taxes)
consolidated statements of comprehensive
Remeasurements recognized in the
(2)
(2)
(37)
Change in effect of asset ceiling in excess of interest
(28)
(657)
28
657
than interest income on plan assets
302
Return on plan assets greater/(less)
(105)
(47)
(105)
Experience adjustments
(664)
1,382
(664)
1,382
Changes in financial assumptions
20
(9)
20
(9)
(47)
313
492
511
Additionally, the Allianz Group offers a deferred compensation
program, “Pensionszusage durch Entgeltumwandlung (PZE)", for
active employees. Within some boundaries they convert at their dis-
cretion parts of their gross income and receive in exchange a pension
commitment of equal value. PZE is qualified as a defined benefit plan
with minor risk exposure.
Disability benefits are granted until retirement pension is paid.
In the case of death in the previous plans, surviving dependents nor-
mally receive 60% (widow/widower) and 20% (per child) of the origi-
nal employee's pension, in total not to exceed 100%. In “My Allianz
Pension” the surviving dependents gain the accrued capital.
Pension increases apart from AVK and APV are guaranteed at
least with 1% p.a. Depending on legal requirements, some pension
increases are linked to inflation. In AVK the complete surplus share of
the retirees is used to increase their pension. The period in which a
retirement benefit can be drawn is usually between age 60 and age 67.
There is also a partly funded defined benefit pension plan for
agents (VertreterVersorgungsWerk, vvw), which has been closed for
new entrants as of 31 December 2011. A part of the pension plan serves
as a replacement for the compensatory claim of agents according to
German Commercial Code (§ 89b). VVW is close to a final salary ben-
efit plan and pension increases are broadly linked to inflation.
joining the Allianz Group, and for the closed part of the contribution-
based pension plan it is 2.75%.
Employees who entered Allianz before 1 January 2015 participate
in the Allianz Versorgungskasse VVaG (AVK), financed through
employee contributions, and the Allianz Pensionsverein e.V. (APV),
financed by the employer. Both pension funds provide pension ben-
efits for the base salary up to the GSSC and are wholly funded along
local regulatory requirements and were closed for new entrants,
effective 31 December 2014. AVK and APV are legally separate admin-
istered pension funds with trustee boards being responsible for the
investment of the assets and the risk management. AVK is subject to
German insurance regulation. The assets of the contribution-based
pension plans are allocated to a trust (Methusalem Trust e.V.) and
managed by a board of trustees. For the AVK the annual minimum
interest rate guaranteed is 1.75%-3.50%, depending on the date of
Most active German employees participate in contribution-based
plans using different vehicles to cover the base salary both below and
above the German social security ceiling (GSSC). Since 1 January 2015,
Allianz Group contributes for new entrants and for the majority of
contribution-based pension plan beneficiaries above the GSSC to the
low-risk pension plan “My Allianz Pension", where only contributions
are preserved. For salary above the GSSC, the Allianz Group decides
each year whether and to which extent a budget for the contribution-
based pension plans is provided. Independently of this decision, an
additional risk premium is paid to cover death and disability. Gener-
ally the accruals of the contribution-based pension plans are wholly
funded, whereas the grandfathered plans are funded to a minor
extent. On retirement, the accumulated capital is paid as a lump sum
or converted to a lifetime annuity.
GERMANY
Pension plans in Germany, the U.K. and Switzerland are described
in more detail regarding key risks and regulatory environment, as
each of them contributes more than 5% to the Allianz Group's defined
benefit obligation or its plan assets.
In the Pension Task Force, the heads of Group HR, Group Account-
ing and Reporting, Group Treasury and Corporate Finance, Group
Planning and Controlling, Group Risk and AIM met four times to pro-
vide global governance and pre-align pension-related topics such as
risk management and Solvency II prior to relevant Group Committee
meetings.
Typically associated with defined benefit plans are biometric
risks like longevity, disability and death as well as economic risks like
interest rates, inflation and compensation increases. New plans are
primarily based on contributions and may include, in some cases,
guarantees such as the preservation of contributions or minimum
interest rates.
The Allianz Group provides competitive and cost-effective retire-
ment and disability benefits using risk appropriate vehicles. The
plans may vary from country to country due to the different legal,
fiscal and economic environment.
Retirement benefits in the Allianz Group, which are granted to
employees and in Germany also to agents, are either in the form of
defined benefit or defined contribution plans. For defined benefit
plans, the beneficiary is granted a defined benefit by the employer or
via an external entity. In contrast to defined contribution arrange-
ments, the future cost to the employer of a defined benefit plan is not
known with certainty in advance.
UNITED KINGDOM
OVERVIEW
D - Consolidated Financial Statements
Annual Report 2016 - Allianz Group
132
The mandatory insurance guarantee scheme (Sicherungsfonds)
for health insurers levies only special contributions following the
take-over of insurance contracts. Up until the reporting date, no con-
tributions have been requested. As of 31 December 2016, the potential
liabilities of Allianz Private Krankenversicherungs-AG for special con-
tributions to the insurance guarantee scheme amount to € 54 MN
(2015: € 52 MN).
The insurance guarantee scheme for life insurers levies annual
contributions and, under certain circumstances, special contribu-
tions. As of 31 December 2016, the future liabilities of Allianz Lebens-
versicherungs-AG and its subsidiaries to the insurance guarantee
scheme pursuant to the SichLVFinV amount to annual contributions
of € 11.2 MN (2015: € 11.9 MN) and potential special contributions of,
in principle, € 194 MN (2015: € 157 MN) per year. In addition, Allianz
Lebensversicherungs-AG and some of its subsidiaries have assumed
a contractual obligation to provide, if required, further funds to Pro-
tektor Lebensversicherungs-AG ("Protektor”), a life insurance com-
pany that has assumed the task of the mandatory insurance guaran-
tee scheme for life insurers. Such obligation is, in principle, based on
a maximum of 1% of the sum of the net underwriting reserves with
deduction of payments already provided to the insurance guarantee
scheme. As of 31 December 2016, and under inclusion of the contribu-
tions to the mandatory insurance scheme mentioned above for a
limited period of time, and assuming that no other life insurer is
exempted from payments, the aggregate outstanding commitment of
Allianz Lebensversicherungs-AG and its subsidiaries to the insurance
guarantee scheme and to Protektor is € 1,755 MN (2015: € 1,424 MN).
Pursuant to §§ 221 ff. of the German Insurance Supervision Act ("Ver-
sicherungsaufsichtsgesetz" - VAG), mandatory insurance guarantee
schemes ("Sicherungsfonds") for life insurers as well as for health
insurers are implemented in Germany, which are financed through
their member undertakings.
Other commitments
HT1 Funding GmbH issued nominal € 1,000 MN Tier 1 Capital Securi-
ties with an annual coupon of 6.352% (as of 30 June 2017, the coupon
will be 12-month EURIBOR plus a margin of 2.0% p.a.). The contingent
payment obligation of the Allianz Group was reduced in 2012 follow-
ing a reduction of the nominal amount of the Tier 1 Capital Securities
from € 1,000 MN to € 416 MN. The securities have no scheduled matu-
rity and the security holders have no right to call for their redemption.
The securities may be redeemed annually on 30 June at the option of
the issuer, starting on 30 June 2017. It has been communicated that
the securities will not be redeemed in June 2017. The expected obliga-
tions for Allianz SE for the foreseeable future have been recognized in
other provisions. However, it is not possible for the Allianz Group to
predict the ultimate payment obligations at this point in time.
Allianz and HT1 Funding GmbH have signed a Contingent Indem-
nity Agreement in July 2006, pursuant to which Allianz may, in certain
circumstances, be obliged to make payments to HT1 Funding GmbH.
In accordance with § 5 (10) of the Statutes of the Joint Fund for Secur-
ing Customer Deposits (“Einlagensicherungsfonds”), Allianz SE has
undertaken to indemnify the Federal Association of German Banks
("Bundesverband deutscher Banken e.V.") for any losses it may incur
by reason of supporting measures taken in favor of Oldenburgische
Landesbank AG (OLB) and Münsterländische Bank Thie & Co. KG. With
respect to Münsterländische Bank Thie & Co. KG, the declaration has
been withdrawn in January 2016.
2,762
14,313
5,460
1,958
Due in 1 year or less
40 - Pensions and similar obligations
(691)
The U.K. operates a funded pension scheme, the Allianz Retirement
and Death Benefits Fund ("the Fund"). The trustee board is required
by law to act in the best interests of members and is responsible for
setting certain policies (e.g. investment and contribution policies) of
the Fund.
The Fund provides pension increases broadly linked to U.K. inflation.
Since 1 July 2015, contributions to the Fund are made only by the
employer in respect of the deficit of the Fund.
495
447
13,333
22,767
22,327
2015
2016
Other²
Interest income
Interest expenses
Current service costs
Balance as of 1 January
Net defined benefit balance
(1-11+111)
The Fund is a defined benefit pension scheme. From 1 July 2015,
the Fund closed to future accrual and no more defined benefit bene-
fits are accrued beyond that date. A new Group Personal Pension Plan
(GPPP) outside of the Fund was established in 2015 and all future
accrual of benefits has been via the GPPP from 1 July 2015.
III
Effect of asset ceiling'
Fair value of plan assets
Defined benefit obligation
€ MN
RECONCILIATION OF DEFINED BENEFIT OBLIGATION, FAIR VALUE OF PLAN ASSETS, EFFECT OF ASSET CEILING AND NET DEFINED BENEFIT BALANCE
The following table sets out the changes in the defined benefit obli-
gation, in the fair value of plan assets, in the effect of the asset ceiling
as well as in the net defined benefit balance for the various Allianz
Group defined benefit plans:
DEFINED BENEFIT PLANS
D - Consolidated Financial Statements
133
Annual Report 2016 - Allianz Group
If employees contract out of the Allianz Suisse pension plan, they
have to take their vested pension capital ("Freizügigkeitsleistung") to
the next employer, which implies a small liquidity risk.
In Switzerland there are obligatory corporate pension plans, eligible
for all employees. The plans are wholly funded through legally sepa-
rate trustee-administered pension funds, with the trustee board
being responsible for the investment of the assets and risk manage-
ment. The plans are contribution-based and cover the risks of longe-
vity, disability and death. Employees contribute only a small amount
whereas the employer contributes for the complete risk coverage and
a large part of the savings components. The interest rate is decided
annually by the board of the pension funds. For the mandatory part,
the minimum interest rate is regulated by law and reviewed annually
(1.25% in 2016, 1.00% in 2017). At retirement, beneficiaries can choose
between a lump sum payment, an annuity or a combination of both
where the part which is not granted as a lump sum is converted to a
fixed annuity according to the rules of the pension fund, taking into
account legal requirements.
SWITZERLAND
||
657
(37)
(37)
ASSUMPTIONS
During the year ended 31 December 2016, the defined benefit
costs related to post-retirement health benefits amounted to € 1 MN
(2015: gain € 1 MN).
As of 31 December 2016, post-retirement health benefits included in
the defined benefit obligation and in the net amount recognized
amounted to € 10 MN (2015: € 11 MN) and € 10 MN (2015: € 11 MN), respec-
tively.
6-As of 31 December 2016, € 8,071 MN (2015: € 7,857 MN) of the defined benefit obligation are wholly
unfunded, while € 15,245 MN (2015: € 14,470 MN) are wholly or partly funded.
5- For 2015, these include € 204 MN (defined benefit obligation) and € 183 MN (fair value of plan assets) for
the deconsolidated subsidiary Selecta.
4- For 2016, includes € 50 MN for the Enhanced Value Transfer program in Ireland; for 2015, € 225 MN for the
plan restructuring in the U.K.
3-Relates to the reclassification of the assets and liabilities of Oldenburgische Landesbank AG as held for
sale.
1- The asset ceiling is determined by taking the reduction of future contributions into account.
2- Includes €31 MN for the conversion rate decrease in Switzerland and for Ireland € 72 MN from the
Enhanced Value Transfer program, excluding the additional contribution of € 35 MN for the new contri-
bution based plan which is shown under Defined contribution plans.
12
3
132
152
8,425
OTHER COMMITMENTS AND CONTINGENCIES
8,683
32
1,350
1,382
1,309
1,353
1,564
1,641
1,696
28
8,382
8,926
16,807
17,609
52
Switzerland
20,887
2,413
Due after 5 years
Total
2016
Gross amount
5
22
1,092
1,120
Present value
5
22
192
219
As of 31 December 2016, the net carrying amount of the finance lease
obligation, which is included in other liabilities, amounted to € 150 MN
(2015: € 111 MN). Gross minimum lease payments were reduced by
imputed interest in the amount of € 901 MN (2015: € 890 MN) to receive
the present value of minimum lease payments. The underlying con-
tract expires as of 31 December 2111.
Total
PURCHASE OBLIGATIONS
€ MN
as of 31 December
2016
Mortgage loans and multi-tranche loans
4,855
2015
4,133
Investment in private equity funds
and similar instruments
9,640
Investment in real estate and infrastructure
3,979
Maintenance, IT-services, sponsoring
and other obligations
PURCHASE OBLIGATIONS
United Kingdom
1,793
thereof alloted to:
(229)
(50)
Settlement payments/Assets distributed on
settlement4
(240)
(46)
Germany
Divestitures³
(280)
(287)
(413)
(413)
(693)
(700)
(50)
Benefits paid
112
111
112
Plan participants' contributions
(316)
(334)
316
334
Employer contributions
(722)
574
(2)
Other contingencies
111
(229)
(286)
(213)
9,149
9,401
thereof liabilities
(87)
(102)
thereof assets
Foreign currency translation adjustments
9,300
67
32
13,333
14,048
22,327
23,316
9,062
(23)
Balance as of 31 December
275
(192)
272
(20)
9
15
Changes in the consolidated subsidiaries
of the Allianz Group5
1
(200)
(178)
1
Allianz Popular Pensiones EGFP S.A., Madrid
100.0
100.0
Minneapolis, MN
100.0
Allianz UK Infrastructure Debt GP Limited, London
Allianz Ukraine LLC, Kiev
100.0
100.0
Allianz Investmentbank Aktiengesellschaft, Vienna
100.0
Allianz Popular S.L., Madrid
60.0
Burbank, CA
100.0
Allianz Underwriters Insurance Company Corp.,
Allianz Popular Asset Management SGIIC S.A., Madrid
Allianz Invest Kapitalanlagegesellschaft mbH, Vienna
100.0
100.0
Allianz Services (UK) Limited, London
74.55
Allianz Multi Horizon Long Terme, Paris
Allianz Infrastructure Czech HoldCo II S.à r.I.,
100.0
96.8
Allianz Sénégal Assurances Vie SA, Dakar
Luxembourg
75.35
Allianz Multi Horizon Court Terme, Paris
Allianz Infrastructure Czech HoldCo I S.à r.I.,
83.2
Allianz Sénégal Assurances SA, Dakar
100.05
Allianz Multi Horizon 2039-2041, Paris
100.0
Allianz Informatique G.I.E., Paris la Défense
85.95
Allianz Selectie Fonds, Rotterdam
100.05
Allianz Multi Horizon 2036-2038, Paris
100.0
Minneapolis, MN
100.0
Luxembourg
100.0
Allianz Multi Opportunités, Paris
99.35
Allianz Infrastructure Norway Holdco I S.à r.l.,
100.0
Luxembourg
100.0
100.0
Barcelona
Allianz Sociedad Anónima A.S. Agencia de Seguros,
Allianz Mutual Funds Management Company S.A.,
Athens
Allianz Infrastructure Luxembourg I S.à r.l.,
100.0
Luxembourg
100.0
Allianz Seguros S.A., Bogotá D.C.
Allianz SNA s.a.l., Beirut
Allianz Multi Sérénité, Paris
Allianz Infrastructure Luxembourg Holdco II S.A.,
96.2
Allianz Sigorta A.S., Istanbul
89.15
Allianz Multi Rendement Réel, Paris
100.0
100.05
Senningerberg
Allianz Multi Rendement Premium (R), Paris
Allianz Infrastructure Luxembourg Holdco IS.A.,
Luxembourg
Allianz Short Duration Global Real Estate Bond,
99.85
Allianz Nederland Asset Management B.V.,
100.05
Allianz Seguros S.A., São Paulo
Allianz Multi Dynamisme, Paris
100.0
Allianz Hungária Biztosító Zrt., Budapest
100.0
Allianz SAS S.A.S., Bogotá D.C.
100.05
Allianz Multi Croissance, Paris
100.03
Allianz Hospitaliers Valeurs Durables, Paris
owned¹
owned¹
owned¹
%
%
%
D - Consolidated Financial Statements
Annual Report 2016 - Allianz Group
140
100.03
Allianz Hospitaliers Euro, Paris
100.0
Allianz Equity Investments Ltd., Guildford
75.45
Allianz Actions France, Paris
100.0
94.55
Allianz Saúde S.A., São Paulo
100.0
Allianz HY Investor GP LLC, Wilmington, DE
100.05
100.0
Allianz Seguros de Vida S.A., Bogotá D.C.
63.25
Allianz Multi Horizon 2027-2029, Paris
Allianz Multi Horizon 2030-2032, Paris
Allianz Multi Horizon 2033-2035, Paris
Allianz Individual Insurance Group LLC,
54.75
Allianz Immo, Paris
100.03
Allianz IARD Vintage, Paris
100.05
Allianz Sécurité, Paris
100.0
58.85
100.0
89.55
Allianz Secteur Europe Immobilier, Paris
48.42,5
Allianz Multi Horizon 2021-2023, Paris
100.0
Allianz HY Investor LP, Wilmington, DE
Allianz IARD S.A., Paris la Défense
95.45
Allianz Secteur Euro Immobilier, Paris
98.25
Allianz Multi Equilibre, Paris
100.0
Allianz Multi Horizon 2024-2026, Paris
Allianz Investment Management LLC,
Rotterdam
100.0
Allianz Invest Alternativ, Vienna
100.0
Allianz Telematics S.p.A., Rome
100.0
Allianz Pensionskasse Aktiengesellschaft, Vienna
100.05
Allianz Invest 50, Vienna
99.7
Allianz Taiwan Life Insurance Co. Ltd., Taipei
100.0
Allianz Pension Fund Trustees Ltd., Guildford
100.0³
Allianz Invest 12 Division Leben/Kranken, Vienna
100.0
Wallisellen
Allianz Suisse Versicherungs-Gesellschaft AG,
91.45
Allianz Pacific Aandelen Fonds, Rotterdam
100.03
Allianz Invest 11 Division Leben/Kranken, Vienna
100.0
100.0
Wallisellen
Allianz p.l.c., Dublin
100.0³
100.05
Allianz penzijní spolecnost a.s., Prague
100.0
Allianz Tiriac Asigurari SA, Bucharest
Allianz Polska Services Sp. z o.o., Warsaw
100.03
Allianz Invest Spezial 3, Vienna
100.03
Allianz UK Credit Fund, Paris
100.0
Allianz pojistovna a.s., Prague
95.85
Allianz Invest Ostrent, Vienna
97.9
Allianz Togo Assurances SA, Lome
51.0
Allianz Invest 10 Division S/U, Vienna
Allianz PNB Life Insurance Inc., Makati City
100.0
a fondurilor de pensii private S.A., Bucharest
97.35
Allianz Pimco Mortgage, Vienna
100.0
Allianz Invest d.o.o., Zagreb
Allianz Tiriac Pensii Private Societate de administrare
81.85
Allianz Pimco Corporate, Vienna
84.95
Allianz Invest Cash, Vienna
52.2
100.0
Allianz Sociedade Gestora de Fundos de Pensões
S.A., Lisbon
Allianz Suisse Lebensversicherungs-Gesellschaft AG,
Allianz Osmea 4, Paris
100.0
Allianz New Zealand Limited, Auckland
100.0
Allianz Insurance Company of Ghana Limited, Accra
Allianz Insurance Company of Kenya Limited, Nairobi
Allianz Insurance Company-Egypt S.A.E., New Cairo
Allianz Insurance Lanka Limited, Colombo
100.0
100.03
Allianz Special Opportunities Alternative Fund, Milan
Allianz Specialised Investments Limited, London
100.0
Allianz New Europe Holding GmbH, Vienna
100.0
Luxembourg
Allianz Infrastructure Spain Holdco II S.à r.I.,
100.0
100.0
100.0
Allianz Société Financière S.à r.l., Luxembourg
Allianz South America Holding B.V., Amsterdam
Allianz Nederland Levensverzekering N.V.,
Rotterdam
100.0
Luxembourg
100.0
Allianz Nederland Groep N.V., Rotterdam
Allianz Infrastructure Spain Holdco I S.à r.I.,
100.0
Luxembourg
88.6
Allianz Strategy Select 50, Senningerberg
59.05
100.0
Allianz of America Inc., Wilmington, DE
100.0
Allianz Inversiones S.A., Bogotá D.C.
100.0
Allianz Suisse Immobilien AG, Wallisellen
100.03
Allianz Opéra, Paris
100.0
Allianz International Ltd., Guildford
98.1
Allianz Subalpina Holding S.p.A., Turin
100.0
55.95
100.05
Allianz Structured Return, Senningerberg
Allianz One Beacon GP LLC, Wilmington, DE
Allianz One Beacon LP, Wilmington, DE
100.0
Allianz Insurance plc, Guildford
100.0
72.25
Allianz Structured Alpha 250, Senningerberg
100.05
Allianz Offensief Mix Fonds, Rotterdam
95.0
100.05
Allianz Strategy Select 75, Senningerberg
100.0
100.0
91.25
100.0
Allianz Popular Vida Compañía de Seguros y
100.0
CEPE de Langres Sud S.à r.l., Versailles
100.0
APK US Investment GP LLC, Wilmington, DE
100.0
100.0
100.0
CEPE de Haut Chemin S.à r.I., Versailles
CEPE de la Baume S.à r.I., Versailles
CEPE de la Forterre S.à r.l., Versailles
99.63
APEH Europe VI, Paris
100.0
Ann Arbor Annuity Exchange Inc., Ann Arbor, MI
100.0
AMOS of America Inc., Wilmington, DE
owned¹
owned¹
owned¹
%
%
APK US Investment LP, Wilmington, DE
%
100.0
100.0
100.0
APP Broker S.r.I., Trieste
100.0
100.0
Euler Hermes Services Tunisia S.à r.l., Tunis
CEPE de Vieille Carrière S.à r.I., Versailles
100.0
APKV US Private REIT LP, Wilmington, DE
100.0
100.0
Euler Hermes Services Sp. z o.o., Warsaw
CEPE de Sambres S.à r.I., Versailles
100.0
APKV US Private REIT GP LLC, Wilmington, DE
100.0
100.0
100.0
100.0
Euler Hermes Services S.A.S., Paris la Défense
Euler Hermes Services Schweiz AG, Wallisellen
Euler Hermes Services Slovensko s.r.o., Bratislava
Euler Hermes Services South Africa Ltd., Johannes-
burg
CEPE de Mont Gimont S.à r.l., Versailles
CEPE des Portes de la Côte d'Or S.à r.l., Versailles
D - Consolidated Financial Statements
Annual Report 2016 - Allianz Group
98.9
Allianz Maroc S.A., Casablanca
100.0
AMOS European Services SAS, Paris
100.0
Allianz Risk Transfer Inc., New York, NY
100.0
100.0
Allianz Marine (UK) Ltd., Ipswich
AMOS Austria GmbH, Vienna
100.0
Allianz Risk Transfer AG, Schaan
75.0
Pty Ltd., Sydney
100.0
American Financial Marketing Inc., Minneapolis, MN
100.0
Allianz Risk Transfer (UK) Limited, London
Allianz Marine & Transit Underwriting Agency
Allianz Risk Transfer N.V., Amsterdam
141
100.0
100.0
100.0
AMOS Italy S.p.c.A., Milan
100.05
100.03
Allianz Mid Cap Loans FCT, Paris
Allianz Saint Marc CL, Paris
100.0
AMOS IT Suisse AG, Wallisellen
100.0
100.0
Allianz S.p.A., Trieste
Mexico City
100.0
Allianz México S.A. Compañía de Seguros,
AMOS International B.V., Amsterdam
100.0
Allianz S.A. de C.V., Mexico City
99.9
Allianz Mena Holding Bermuda Ltd., Beirut
AMOS IberoLatAm S.L., Barcelona
100.0
Euler Hermes Services UK Limited, London
100.0
100.03
Consultatio Renta Mixta F.C.I., Buenos Aires
100.05
Avip Top Croissance, Paris
Avip Actions 60, Paris
100.0
Eurosol Invest S.r.l., Udine
100.0
100.0
Euro Garantie AG, Pfäffikon
Compañía Colombiana de Servicio Automotriz S.A.,
Bogotá D.C.
100.05
Avip Actions 100, Paris
100.0
Assurances Médicales SA, Metz
100.0
Eurl 20/22 Le Peletier, Paris la Défense
64.8
Companhia de Seguros Allianz Portugal S.A., Lisbon
FAI Allianz Ltd., Sydney
100.0
Allianz Holdings plc, Guildford
Corn Investment Ltd., London
Creactif Allocation, Paris
100.0
100.03
FCT Rocade L2 Marseille, Paris
CPRN Thailand Ltd., Bangkok
100.0
AWP Contact Center Italia S.r.l., Milan
99.5
São Paulo
96.95
Avip Top Harmonie, Paris
100.03
FCT CIMU 92, Pantin
Corsetec Assessoria e Corretagem de Seguros Ltda.,
98.85
Avip Top Defensif, Paris
100.05
FCP LBPAM IDR, Paris
100.0
99.05
100.0
Associated Indemnity Corporation, Los Angeles, CA
Euler Hermes, Mierzejewska-Kancelaria Prawna Sp.k,
Warsaw
100.0
100.0
Euler Hermes Singapore Services Pte Ltd., Singapore
100.0
Château Larose Trintaudon S.A., Saint Laurent Médoc
100.05
100.0
Euler Hermes Sigorta A.S., Istanbul
100.0
CEPE du Bois de la Serre S.à r.l., Versailles
100.0
Arges Investments I N.V., Amsterdam
Arcalis Retraite S.A., Paris la Défense
Arcalis UN, Paris
100.0
Euler Hermes Serviços de Gestão de Riscos Ltda.,
São Paulo
100.0
CEPE du Blaiseron S.à r.I., Versailles
100.0
Arab Gulf Health Services LLC, Dubai
Chicago Insurance Company Corp., Chicago, IL
100.0
100.0
100.0
100.0
COF II CIV LLC, Wilmington, DE
100.0
Réassurance S.A., Courbevoie
100.0
Club Marine Limited, Sydney
Assistance Courtage d'Assurance et de
100.0
Euler Hermes World Agency SASU, Paris la Défense
100.0
Climmolux Holding SA, Luxembourg
100.0
Asit Services S.R.L., Bucharest
100.0
Euler Hermes Taiwan Services Limited, Taipei
100.0
CIC Allianz Insurance Ltd., Sydney
100.0
Arges Investments II N.V., Amsterdam
Euler Hermes South Express S.A., Brussels
Earth City, MO
100.0
Allianz Risk Transfer (Bermuda) Ltd., Hamilton
Allianz Worldwide Partners Chile Limitada, Santiago
100.0
100.0
Allianz Properties Limited, Guildford
Allianz Life (Bermuda) Ltd., Hamilton
100.0
Hong Kong
100.0
Allianz Private Equity UK Holdings Limited, London
100.0
Allianz Life & Annuity Company, Minneapolis, MN
Allianz Worldwide Partners (Hong Kong) Ltd.,
100.03
Allianz Private Equity Partners V, Milan
51.0
Allianz Leasing Bulgaria AD, Sofia
100.0
Allianz Worldwide Care Services Ltd., Dublin
100.03
100.0
Allianz Private Equity Partners IV, Milan
Allianz Life Assurance Company-Egypt S.A.E.,
99.85
Allianz ZB d.o.o. Company for the Management of
100.0
Allianz Real Estate of America LLC, New York, NY
100.0
Allianz Life Insurance Company Ltd., Moscow
Allianz Life Insurance Company of Ghana Limited,
Accra
83.2
Allianz Zagreb d.d., Zagreb
100.0
Allianz Real Estate France SAS, Paris
100.0
Allianz Life Financial Services LLC, Minneapolis, MN
80.0
Allianz Yasam ve Emeklilik A.S., Istanbul
100.0
Allianz Re Dublin dac, Dublin
100.0
New Cairo
100.0
Allianz Worldwide Partners S.A.S., Saint-Ouen
Allianz Prudence, Paris
100.0
100.05
100.0
Allianz US Private REIT LP, Wilmington, DE
Allianz Investments III Luxembourg S.à r.l.,
100.0
Allianz Presse US REIT GP LLC, Wilmington, DE
100.0
Luxembourg
100.0
Allianz US Private REIT GP LLC, Wilmington, DE
100.05
Allianz Potential, Paris
Allianz Investments II Luxembourg S.à r.I.,
100.0
Allianz US Investment LP, Wilmington, DE
100.0
Reaseguros S.A., Madrid
100.0
Luxembourg
100.0
Allianz US Investment GP LLC, Wilmington, DE
100.0
Allianz Langlopend Obligatie Fonds, Rotterdam
Luxembourg
Allianz Presse US REIT LP, Wilmington, DE
Allianz Vorsorgekasse AG, Vienna
99.63
100.0
Allianz Vie S.A., Paris la Défense
92.03
Allianz Private Equity Partners Europa II, Milan
Allianz Private Equity Partners Europa III, Milan
100.0
Allianz kontakt s.r.o., Prague
100.03
Allianz Jewel Fund ICAV, Dublin
100.0
Allianz Vermogen B.V., Rotterdam
86.83
Allianz Private Equity Partners Europa I, Milan
66.5
Allianz Irish Life Holdings p.l.c., Dublin
50.35
Allianz Valeurs Durables, Paris
100.0
100.0
Allianz Renewable Energy Fund Management 1 Ltd.,
London
Obligatory Pension Funds, Zagreb
51.0
100.0
77.0
67.55
AllianzGI Multi-Asset Real Return Fund, Boston, MA
Allianz Renewable Energy Partners VI Limited,
London
Allianz Mali Assurances SA, Bamako
75.0
Allianz Malaysia Berhad p.l.c., Kuala Lumpur
100.05
AllianzGI Global Small-Cap Opportunity Portfolio,
Boston, MA
100.0
Allianz Renewable Energy Partners V plc., London
100.0
Allianz Madagascar Assurances SA, Antananarivo
100.0
97.85
AllianzGI Global Megatrends Fund, Boston, MA
Allianz Renewable Energy Partners of America LLC,
Wilmington, DE
100.0
AllianzGI U.S. Equity Hedged Fund, Boston, MA
Allianz Life Luxembourg S.A., Luxembourg
37.12,5
B.V., Rotterdam
100.0
American Automobile Insurance Company Corp.,
Allianz Management Services Limited, Guildford
100.0
Allianz Risk Consultants Inc., Los Angeles, CA
100.0
Thailand Co. Ltd., Bangkok
99.6
Allianz-Slovenská poist'ovna a.s., Bratislava
100.0
London
Allianz Managed Operations & Services
100.0
Allianz-Slovenská DSS a.s., Bratislava
100.0
AllianzGo S.r.l., Trieste
100.0
Allianz Renewable Energy Partners VII LP, London
Allianz Renewable Energy Partners VIII Limited,
100.0
Allianz Managed Operations & Services Netherlands
100.0
Kuala Lumpur
94.65
56.35
AllianzGI China Equity Fund, Boston, MA
100.0
Pottenbrunn
100.0
New York, NY
90.45
Boston, MA
Allianz Renewable Energy Management AT II GmbH,
Allianz Life Insurance Company of New York,
AllianzGI Best Styles Emerging Markets Equity Fund,
100.0
51.0
Allianz ZB d.o.o. Company for the Management
of Voluntary Pension Funds, Zagreb
Allianz Renewable Energy Management AT GmbH,
Pottenbrunn
100.0
Clayton, MO
Allianz Life Insurance Company of Missouri,
100.0
Allianz Life Insurance Company of North America,
Allianz Renewable Energy Partners | LP, London
100.0
AllianzGI Discovery US Portfolio, Boston, MA
MA
98.8
AllianzGI Global Fundamental Strategy Fund, Boston,
Allianz Renewable Energy Partners IV Limited,
London
Allianz Life Insurance Malaysia Berhad p.l.c.,
100.0
Allianz Life Insurance Lanka Ltd., Colombo
47.12,5
AllianzGI Europe Equity Dividend, Boston, MA
Allianz Investments | Luxembourg S.à r.l.,
98.8
100.0
Allianz Life Insurance Japan Ltd., Tokyo
41.62,5
AllianzGI Emerging Markets Debt Fund, Boston, MA
100.0
Allianz Renewable Energy Partners II Limited, London
100.0
Minneapolis, MN
100.05
Allianz Renewable Energy Partners III LP, London
100.03
Allianz Argentina RE S.A., Buenos Aires
67.55
AZ-Argos 57 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
Allianz Lebensversicherungs-Aktiengesellschaft,
Stuttgart
100.0
100.0
100.0
100.0
Windpark Eckolstädt GmbH & Co. KG, Sehestedt
Windpark Emmendorf GmbH & Co. KG, Sehestedt
AZ-Argos 51 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
Allianz Leben Private Equity Fonds Plus GmbH,
Munich
100.0
Windpark Freyenstein-Halenbeck GmbH & Co. KG,
100.0
Windpark Dahme GmbH & Co. KG, Sehestedt
AZ-Argos 50 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
Allianz Leben Private Equity Fonds 2008 GmbH,
Munich
100.0
100.0
Windpark Cottbuser See GmbH & Co. KG, Sehestedt
100.0
100.0
Windpark Calau GmbH & Co. KG, Sehestedt
AZ-Argos 44 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
100.0
Allianz Leben Private Equity Fonds 2001 GmbH,
Munich
Sehestedt
100.0
Windpark Pröttlin GmbH & Co. KG, Sehestedt
AZ-Argos 64 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
100.0
Allianz of Asia-Pacific and Africa GmbH, Munich
100.0
Allianz Managed Operations & Services SE, Munich
100.0
Windpark Kittlitz GmbH & Co. KG, Sehestedt
100.0
mbH & Co. KG, Munich
100.0
100.0
AZ-Argos 61 Vermögensverwaltungsgesellschaft
100.03
Allianz L-PD Fonds, Frankfurt am Main
100.0
100.0
Windpark Kesfeld-Heckhuscheid GmbH & Co. KG,
Sehestedt
AZ-Argos 58 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
100.03
Allianz LFE Fonds, Frankfurt am Main
100.0
Windpark Kirf GmbH & Co. KG, Sehestedt
100.0
100.0
100.0
Auros II GmbH, Munich
100.0
UfS Beteiligungs-GmbH, Munich
100.0
100.03
Allianz GLU Fonds, Frankfurt am Main
Auros GmbH, Munich
100.0
Spherion Objekt GmbH & Co. KG, Stuttgart
100.0
Allianz GRGB Fonds, Frankfurt am Main
Allianz Handwerker Services GmbH, Aschheim
Allianz Investment Management SE, Munich
Allianz LAD Fonds, Frankfurt am Main
Allianz Leben Direkt Infrastruktur GmbH, Munich
Allianz Leben Infrastrukturfonds GmbH, Munich
Allianz Leben Private Equity Fonds 1998 GmbH,
Munich
100.03
94.9
Spherion Beteiligungs GmbH & Co. KG, Stuttgart
Atropos Vermögensverwaltungsgesellschaft mbH,
Munich
100.03
Allianz GLR Fonds, Frankfurt am Main
94.9
Signa 12 Verwaltungs GmbH, Düsseldorf
100.0
100.0
ARE Brep Acht Vermögensbeteiligungsgesellschaft
mbH & Co. KG, Munich
Allianz GLRS Fonds, Frankfurt am Main
100.03
100.0
VLS Versicherungslogistik GmbH, Berlin
Windpark Büttel GmbH & Co. KG, Sehestedt
AZ-Argos 41 Vermögensverwaltungsgesellschaft
mbH, Munich
100.0
100.0
Windpark Berge-Kleeste GmbH & Co. KG, Sehestedt
100.0
100.0
Windpark Aller-Leine-Tal GmbH & Co. KG, Sehestedt
AZ-Argos 14 Vermögensverwaltungsgesellschaft
mbH, Munich
100.0
100.03
49.02
Braunschweig
100.0
Volkswagen Autoversicherung Holding GmbH,
AZ-Arges Vermögensverwaltungsgesellschaft mbH,
Munich
100.04
100.0
Volkswagen Autoversicherung AG, Braunschweig
100.0
100.0
AWP Service Deutschland GmbH, Aschheim
100.0
100.0
100.0
Windpark Quitzow GmbH & Co. KG, Sehestedt
100.0
AZ-Argos 56 Vermögensverwaltungsgesellschaft
mbH, Munich
100.0
AZ-SGD Infrastrukturfonds GmbH, Munich
100.03
Allianz PV-RD Fonds, Frankfurt am Main
100.0
AZ-SGD Direkt Infrastruktur GmbH, Munich
100.03
Allianz PV WS Fonds, Frankfurt am Main
100.0
100.0
AZ Beteiligungs-Management GmbH, Munich
Munich
100.03
Allianz PV 1 Fonds, Frankfurt am Main
100.0
Allianz Pension Consult GmbH, Stuttgart
AZS-Arges Vermögensverwaltungsgesellschaft mbH,
100.0
Allianz ProzessFinanz GmbH, Munich
100.0
Allianz Objektbeteiligungs-GmbH, Stuttgart
100.0
Annual Report 2016 - Allianz Group
139
D - Consolidated Financial Statements
Allianz Alapkezelő Zrt., Budapest
70.8
41.62,5
Allianz Euro Bond Plus, Paris
100.05
Allianz Air France IFC, Paris
100.0
IDS GmbH - Analysis and Reporting Services, Munich
Infrastruktur Putlitz Ost GmbH & Co. KG, Husum
manroland AG, Offenbach am Main
88.05
Allianz EURECO Equity, Paris
100.0
Allianz Africa Services SA, Abidjan
100.0
100.03
Allianz Equity Large Cap EMU, Paris
100.0
Allianz Africa S.A., Paris la Défense
Grundstücksgesellschaft der Vereinten Versicherun-
gen mbH, Munich
owned¹
%
%
owned¹
owned¹
%
100.03
100.0
AZRE AZD P&C Master Fund, Munich
schaft, Munich
mbH & Co.KG, Munich
100.0
Windpark Waltersdorf GmbH & Co. KG Renditefonds,
Sehestedt
100.0
AZ-Argos 71 Vermögensverwaltungsgesellschaft
Allianz Pensionskasse Aktiengesellschaft, Stuttgart
100.0
100.0
100.0
Windpark Schönwalde GmbH & Co. KG, Sehestedt
100.0
AZ-Argos 70 Vermögensverwaltungsgesellschaft
mbH & Co. KG, Munich
100.0
Allianz Pension Service GmbH, Munich
100.0
Windpark Redekin-Genthin GmbH & Co. KG,
Sehestedt
100.0
AZ-Argos 69 Vermögensverwaltungsgesellschaft
mbH, Munich
100.0
Allianz Pension Partners GmbH, Munich
100.0
Allianz Pension Direkt Infrastruktur GmbH, Munich
Allianz Pensionsfonds Aktiengesellschaft, Stuttgart
Allianz PK-PD Fonds, Frankfurt am Main
100.0³
AZ-GARI Vermögensverwaltungsgesellschaft
100.0
Allianz Global Benefits GmbH, Stuttgart
100.0
gesellschaft mbH, Munich
Allianz Private Krankenversicherungs-Aktiengesell-
55.3
AERS Consortio Aktiengesellschaft, Stuttgart
AZL-Argos 73 Vermögensverwaltungs-
100.0
100.0
AZL PE Nr. 1 GmbH, Munich
Allianz Private Equity Partners Verwaltungs GmbH,
Munich
Non-consolidated affiliates
100.0
AZL AI Nr. 1 GmbH, Munich
100.0
Allianz Private Equity GmbH, Munich
100.0
mbH & Co. KG, Munich
100.03
Allianz PKV-PD Fonds, Frankfurt am Main
100.0
Windpark Werder Zinndorf GmbH & Co. KG,
Sehestedt
100.0
100.0
Allianz Global Investors GmbH, Frankfurt am Main
100.0
Allianz Stromversorgungs-GmbH, Munich
AGCS Vermögensverwaltungsgesellschaft mbH
& Co. KG, Munich
100.0
Euler Hermes Aktiengesellschaft, Hamburg
100.0
100.03
Allianz SOA Fonds, Frankfurt am Main
100.0
79.6
Donator Beteiligungsverwaltung GmbH, Munich
100.0
100.0
Donator Beratungs GmbH, Munich
100.03
100.0
Berlin
100.03
Deutsche Lebensversicherungs-Aktiengesellschaft,
100.0
Allianz Risk Consulting GmbH, Munich
Allianz SDR Fonds, Frankfurt am Main
Allianz SE-PD Fonds, Frankfurt am Main
Allianz Service Center GmbH, Munich
99.3
ACP Vermögensverwaltung GmbH Nr. 4 d. 1, Munich
ADEUS Aktienregister-Service-GmbH, Munich
AGCS Infrastrukturfonds GmbH, Munich
100.0
100.0
Euler Hermes Collections GmbH, Potsdam
100.0
100.0
Kaiser X Labs GmbH, Munich
Allianz Venture Partners Beteiligungs GmbH, Munich
100.03
Allianz AADB Fonds, Frankfurt am Main
94.8
100.0
100.03
InnoSolutas GmbH, Bad Friedrichshall
Allianz VAE Fonds, Frankfurt am Main
100.0
Alida Grundstücksgesellschaft mbH & Co. KG,
Hamburg
95.0
Euler Hermes Rating Deutschland GmbH, Hamburg
GA Global Automotive Versicherungsservice GmbH,
Halle (Saale)
100.03
Allianz UGD 1 Fonds, Frankfurt am Main
100.0
100.0
Allianz Treuhand GmbH, Stuttgart
AGCS-Argos 76 Vermögensverwaltungsgesellschaft
mbH, Munich
99.5
Allianz Taunusanlage GbR, Stuttgart
100.0
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4d,
Munich
100.0
100.03
100.0
100.0
AZ-SGD Private Equity Fonds 2 GmbH, Munich
AZ-SGD Private Equity Fonds GmbH, Munich
AZT Automotive GmbH, Ismaning
100.0
Allianz Real Estate GmbH, Munich
0.02
100.0
Allianz Real Estate Germany GmbH, Stuttgart
100.03
Allianz Re Asia, Frankfurt am Main
100.0
ACP GmbH & Co. Beteiligungen KG II, Munich
Consolidated affiliates
GERMANY
owned¹
owned¹
%
%
owned¹
%
D - Consolidated Financial Statements
45 — List of participations of the Allianz Group as of 31 December 2016
according to § 313 (2) HGB
ACP GmbH & Co. Beteiligungen KG, Munich
0.02
Allianz Rechtsschutz-Service GmbH, Munich
100.0
dbi-Fonds WE, Frankfurt am Main
100.0³
Allianz RFG Fonds, Frankfurt am Main
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4c,
Munich
100.0³
dbi-Fonds DAV, Frankfurt am Main
100.0
Co. KG, Sehestedt
100.0
100.03
dbi-Fonds Ammerland, Frankfurt am Main
Allianz Renewable Energy Subholding GmbH &
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4a,
Munich
94.8
BrahmsQ Objekt GmbH & Co. KG, Stuttgart
100.0
Sehestedt
100.0
100.0
gesellschaft mbH, Munich
Allianz Renewable Energy Management GmbH,
ACP Vermögensverwaltung GmbH & Co. KG Nr. 4,
Munich
AZV-Argos 72 Vermögensverwaltungs-
100.0
Allianz Versicherungs-Aktiengesellschaft, Munich
100.0
KomfortDynamik Sondervermögen, Frankfurt am
Allianz EEE Fonds, Frankfurt am Main
80.0
REC Frankfurt Objekt GmbH & Co. KG, Hamburg
APK-Argos 75 Vermögensverwaltungsgesellschaft
mbH, Munich
100.0³
Allianz DLVR Fonds, Frankfurt am Main
100.04
PIMCO Deutschland GmbH, Munich
100.0
APK Infrastrukturfonds GmbH, Munich
100.0
100.0
90.2
Oldenburgische Landesbank Aktiengesellschaft,
Oldenburg
100.0
AllSecur Deutschland AG, Munich
100.0
Allianz Climate Solutions GmbH, Munich
36.82,5
100.0
My Finance Coach Stiftung GmbH, Munich
AllianzGI-Fonds APF Renten, Frankfurt am Main
Allianz Deutschland AG, Munich
100.03
Allianz Esa cargo & logistics GmbH, Bad Friedrichshall
APKV Direkt Infrastruktur GmbH, Munich
Allianz Global Corporate & Specialty SE, Munich
100.0
75.6
Roland Holding GmbH, Munich
APKV-Argos 74 Vermögensverwaltungsgesellschaft
mbH, Munich
100.0
Allianz Finanzbeteiligungs GmbH, Munich
100.0
risklab GmbH, Munich
100.03
100.0
APKV Private Equity Fonds GmbH, Munich
Allianz FAD Fonds, Frankfurt am Main
100.0
51.0
RehaCare GmbH, Munich
100.0
Allianz Esa EuroShip GmbH, Bad Friedrichshall
APKV Infrastrukturfonds GmbH, Munich
60.0
REC Frankfurt zweite Objektverwaltungsgesellschaft
mbH, Hamburg
100.0
100.0
100.0
Seine GmbH, Munich
Allianz Capital Partners Verwaltungs GmbH, Munich
100.0
Lola Vermögensverwaltungsgesellschaft mbH & Co.
KG, Munich
100.03
Allianz APAV Fonds, Frankfurt am Main
Allianz VKRD Fonds, Frankfurt am Main
100.03
100.03
Allianz ALIK Fonds, Frankfurt am Main
Allianz VKA Fonds, Frankfurt am Main
100.0
KVM ServicePlus - Kunden- und Vertriebsmanage-
ment GmbH, Halle (Saale)
100.0
100.03
Allianz ALD Fonds, Frankfurt am Main
Allianz VGL Fonds, Frankfurt am Main
100.03
100.03
Allianz AKR Fonds, Frankfurt am Main
95.15
Allianz VGI 1 Fonds, Frankfurt am Main
Main
100.03
Allianz ABS Fonds, Frankfurt am Main
100.03
100.03
Allianz V-PD Fonds, Frankfurt am Main
Allianz Asset Management AG, Munich
Aktiengesellschaft, Munich
Allianz X GmbH, Munich
100.04
Allianz Capital Partners GmbH, Munich
Münchener und Magdeburger Agrarversicherung
100.0
Allianz Warranty GmbH, Unterföhring
100.0
Allianz Beratungs- und Vertriebs-AG, Munich
100.0
Mondial Kundenservice GmbH, Nuremberg
100.03
Allianz VW AV Fonds, Frankfurt am Main
100.0
100.0
MileBox UG (haftungsbeschränkt), Munich
100.03
Allianz VSR Fonds, Frankfurt am Main
Allianz AZL Vermögensverwaltung GmbH & Co. KG,
Munich
100.0
100.0
META Finanz-Informationssysteme GmbH, Munich
100.03
100.0
Allianz Equity Emerging Markets 1, Paris
Allianz Euro Bond Strategy, Senningerberg
100.0 6,7
AGA Service Company Corp., Richmond, VA
100.05
Senningerberg
100.0
Allianz Congo Assurances SA, Brazzaville
100.0
AGA Insurance Broker (Thailand) Co. Ltd., Bangkok
Allianz Global Dynamic Multi Asset Income,
99.9
100.05
100.0
Allianz Global Credit, Senningerberg
80.1
100.0
100.0
Ltd., Johannesburg
94.25
Allianz Combinatie Fonds, Rotterdam
100.0
Allianz Global Corporate & Specialty South Africa
100.0
Allianz Colombia S.A., Bogotá D.C.
Allianz Compañía de Seguros y Reaseguros S.A.,
Barcelona
AGA Assistance Australia Pty Ltd., Toowong
AGA Assistance Beijing Services Co. Ltd., Beijing
AGA Assistance Japan Co. Ltd., Tokyo
Allianz Cornhill Information Services Private Ltd.,
AGA Service Italia S.c.a.r.l., Milan
100.03
Allianz Creactions 1, Paris
97.0
AGA Servis Hizmetleri A.S., Istanbul
100.0
Allianz Global Investors Asia Pacific Ltd., Hong Kong
71.0
Allianz Côte d'Ivoire Assurances Vie SA, Abidjan
97.6
AGA Services (Thailand) Co. Ltd., Bangkok
Allianz Global Emerging Markets Equity Dividend,
100.0
Allianz Global Investors (Shanghai) Limited,
74.1
Allianz Côte d'Ivoire Assurances SA, Abidjan
100.0
AGA Services (India) Private Limited, Gurgaon
52.05
Senningerberg
100.0
Trivandrum
100.0
Shanghai
100.0
100.0
Ltd., Hamilton
100.0
Auckland
Allianz Cash SAS, Paris la Défense
100.0
Allianz Global Assistance New Zealand Limited,
100.0
490 Lower Unit GP LLC, Wilmington, DE
51.0
Allianz General Laos Ltd., Vientiane
100.0
490 Lower Unit LP, Wilmington, DE
Allianz Capital Partners of America Inc., New York, NY
Allianz Carbon Investments B.V., Amsterdam
490 Fulton REIT LP, Wilmington, DE
96.5
100.0
Berhad p.l.c., Kuala Lumpur
75.8
490 Fulton JV LP, Wilmington, DE
Allianz Cameroun Assurances Vie SA, Douala
Allianz General Insurance Company (Malaysia)
100.0
75.4
100.0
100.0
100.0
Allianz Centrafrique Assurances SA, Bangui
51.0
Allianz China Life Insurance Co. Ltd., Shanghai
AGA Assistance (India) Private Limited, Gurgaon
Allianz Global Corporate & Specialty of Bermuda
100.0
AGA Alarmcentrale NL B.V., Amsterdam
100.0
Guangzhou
100.0
(Proprietary) Ltd., Johannesburg
Allianz China General Insurance Company Ltd.,
100.0
Aero-Fonte S.r.l., Catania
Allianz Global Corporate & Specialty of Africa
100.0
Allianz Chicago Private Reit LP, Wilmington, DE
100.03
Privado, São Paulo
100.0
Participações Ltda., Rio de Janeiro
Advanz Fundo de Investimento Renda Fixa Crédito
88.3
Allianz Global Corporate & Specialty do Brasil
Allianz Global Investors Distributors LLC, Dover, DE
100.0
AGA Sigorta Aracilik Hizmetleri LS, Istanbul
100.0
82.15
Allianz Actio France, Paris
100.0
Vienna
100.0
100.05
Allianz Groen Rente Fonds, Rotterdam
Allianz Elementar Versicherungs-Aktiengesellschaft,
Allianz (UK) Limited, Guildford
100.0
Allianz Hayat ve Emeklilik A.S., Istanbul
Chicago, IL
Allianz Global Risks US Insurance Company Corp.,
Allianz Elementar Lebensversicherungs-Aktiengesell-
schaft, Vienna
100.0
AIM Underwriting Limited, Toronto, ON
100.0
AIM Singapore Pte Ltd., Singapore
100.0
Allianz Global Life dac, Dublin
100.0
100.0
100.0
89.0
Allianz EM Loans S.C.S., Luxembourg
100.0
Allianz Actions Euro MidCap, Paris
100.0
Allianz Holding France SAS, Paris la Défense
100.0
Guildford
91.75
Allianz Actions Euro Convictions, Paris
100.0
Allianz Holding eins GmbH, Vienna
Allianz Engineering Inspection Services Limited,
81.95
Allianz Actions Euro, Paris
100.0
Allianz Hold Co Real Estate S.à r.l., Luxembourg
90.05
Senningerberg
93.85
Allianz Actions Emergentes, Paris
Allianz Emerging Markets Flexible Bond,
100.0
Allianz Hellas Insurance Company S.A., Athens
67.75
Allianz Actions Aéquitas, Paris
Allianz Global Investors U.S. LLC, Dover, DE
3 Mentors Inc., Suwanee, GA
Allianz Egypt for Financial Investments Company
S.A.E., New Cairo
AIM Equity US, Paris
100.0
Allianz Global Investors Nominee Services Ltd.,
Allianz Digital Corporate Ventures S.à r.l.,
Luxembourg
AGF Benelux S.A., Luxembourg
100.0
AGCS Resseguros Brasil S.A., São Paulo
100.0
Allianz Global Investors Korea Limited, Seoul
100.05
Allianz Defensief Mix Fonds, Rotterdam
100.0
100.0
100.0
Allianz Global Investors Japan Co. Ltd., Tokyo
100.05
Allianz Crowdfunding Fund I FPCI, Paris
100.0
AGCS International Holding B.V., Amsterdam
100.0
Allianz Global Investors Ireland Ltd., Dublin
100.03
Allianz Creactions 2, Paris
AGCS Marine Insurance Company, Chicago, IL
George Town
100.0
AGF FCR, Paris
100.03
AIM Equity Europe PG Vie, Paris
100.0
100.0
Allianz Global Investors U.S. Holdings LLC, Dover, DE
Allianz Edukacja S.A., Warsaw
100.03
AIM Equity Europe Cantons, Paris
100.0
100.0
Allianz Global Investors Singapore Ltd., Singapore
Allianz Global Investors Taiwan Ltd., Taipei
49.2 2,5
100.0
Allianz do Brasil Participações Ltda., São Paulo
Allianz Duurzaam Wereld Aandelen Fonds,
Rotterdam
100.0
AGF Inversiones S.A., Buenos Aires
100.0
AGF Holdings (UK) Limited, Guildford
100.0
Allianz Global Investors Schweiz AG, Zurich
54.05
Allianz Discovery Asia Strategy, Senningerberg
100.05
100.03
57.35
85.05
100.0
100.0
Allianz Finance IV Luxembourg S.à r.l., Luxembourg
100.0
Sydney
51.09
AV Packaging GmbH, Munich
100.0
Allianz Finance III B.V., Amsterdam
Allianz Australia Employee Share Plan Pty Ltd.,
100.0
DCSO Deutsche Cyber-Sicherheitsorganisation
GmbH, Berlin
Allianz Finance II Luxembourg S.à r.l., Luxembourg
Allianz Australia Claim Services Pty Limited, Sydney
100.0
Allianz Finance II B.V., Amsterdam
100.0
Allianz Australia Advantage Ltd., Sydney
30.08
Associates
SPN Service Partner Netzwerk GmbH, Munich
100.0
Allianz Finance Corporation, Wilmington, DE
100.0
100.0
Allianz Australia Insurance Limited, Sydney
Allianz Finance Pty Ltd., Sydney
100.0
100.0
Allianz Fire and Marine Insurance Japan Ltd., Tokyo
Allianz Australia Services Pty Limited, Sydney
handel Beteiligungs- und Verwaltungs GmbH,
100.0
Sydney
63.75
100.0
Allianz Finance VIII Luxembourg S.A., Luxembourg
Allianz FinanzPlan 2055, Senningerberg
100.0
Mühl Product & Service und Thüringer Baustoff-
40.0
100.0
Allianz Australia Limited, Sydney
esa EuroShip GmbH & Co. KG Underwriting for
Shipping, Bad Friedrichshall
100.0
Allianz Finance VII Luxembourg S.A., Luxembourg
100.0
Allianz Australia Life Insurance Limited, Sydney
25.0
100.0
Allianz Australia Partnership Services Pty Limited,
Dover, DE
50.0
PNE WIND Park III GmbH & Co. KG, Cuxhaven
AWP France SAS, Saint-Ouen
100.0
78.65
Allianz Europa Aandelen Fonds, Rotterdam
OLB-Service GmbH, Oldenburg
100.0
Generales S.A., Buenos Aires
100.0
48.82,5
Allianz Euroland Equity SRI, Senningerberg
100.0
Allianz Argentina Compañía de Seguros
35.42,5
Allianz Euro Tactique, Paris
100.0
Allianz Annuity Company of Missouri, Clayton, MO
100.07
manroland Vertrieb und Service GmbH, Mühlheim
am Main
37.62,5
Allianz Euro Inflation-linked Bond, Senningerberg
91.95
Allianz Amerika Aandelen Fonds, Rotterdam
OLB-Immobiliendienst-GmbH, Oldenburg
Allianz Europa Obligatie Fonds, Rotterdam
86.05
Allianz Asac Actions, Paris
50.65
Allianz European Equity Dividend, Senningerberg
100.0
100.0
Allianz Europe Ltd., Amsterdam
Allianz Asset Management of America LLC, Dover, DE
Allianz Asset Management U.S. Holding II LLC,
50.0
50.0
Dealis Fund Operations GmbH, Frankfurt am Main
PNE WIND Infrastruktur Calau II GmbH, Cuxhaven
100.0
74.55
Allianz Europe Income and Growth, Senningerberg
Allianz Asset Management of America L.P., Dover, DE
50.0
99.45
Allianz Europe Conviction Equity, Senningerberg
100.0
Allianz Asset Management of America Holdings Inc.,
Dover, DE
BEG Weser-Ems Baugrund- und Erschließungsgesell-
schaft mbH & Co. OHG, Oldenburg
100.0
Allianz Europe B.V., Amsterdam
Joint ventures
100.03
Kranichfeld
25.0
Reisegarant GmbH, Hamburg
Allianz Australia Workers Compensation (NSW)
66.2
Allianz Bulgaria Holding AD, Sofia
100.0
Allianz Fund Investments Inc., Wilmington, DE
8.8
100.03
MLP AG, Wiesloch
Allianz Bonds Euro High Yield, Paris
100.0
Luxembourg
Protektor Lebensversicherungs-AG, Berlin
8.3
100.03
FC Bayern München AG, Munich
Allianz Bonds Diversified Euro, Paris
16.0
83.5
100.0
Rotterdam
Allianz Bénin Assurances SA, Cotonou
EXTREMUS Versicherungs-Aktiengesellschaft,
Cologne
Allianz Fund Administration and Management B.V.,
Allianz Fund Investments 2 S.A. (Compartment),
10.0
Allianz Fund Investments S.A., Luxembourg
100.0
Allianz C.P. General Insurance Co. Ltd., Bangkok
Allianz Cameroun Assurances SA, Douala
99.0
114 Venture LP, Wilmington, DE
100.05
Allianz Garantiefonds 5%, Rotterdam
100.0
Consolidated affiliates
Allianz business services s.r.o., Bratislava
100.05
FOREIGN ENTITIES
Allianz Garantiefonds 3,35%, Rotterdam
100.0
Allianz Business Services Limited, Lancaster
99.55
Allianz Garantie Fonds 4,75%, Rotterdam
71.8
Allianz Burkina Assurances Vie SA, Ouagadougou
100.05
14.3
Allianz Garantie Fonds 3%, Rotterdam
60.3
Allianz Burkina Assurances SA, Ouagadougou
Sana Kliniken AG, Ismaning
100.0
Allianz Geldmarkt Fonds, Rotterdam
Allianz Benelux S.A., Brussels
100.0
T&R Real Estate GmbH, Bonn
100.03
Allianz Australian Real Estate Trust, Sydney
25.0
T&R MLP GmbH, Bonn
100.03
Allianz France Favart I, Paris
100.0
Limited, Melbourne
25.0
25.0
T&R Investment GmbH & Co. KG, Bonn
Allianz Foncier, Paris
Allianz Australia Workers Compensation (Victoria)
25.0
T&R GP Management GmbH, Bonn
100.0
100.0
Budapest
Limited, Sydney
24.0
Allianz Foglalkoztatói Nyugdíjszolgáltató Zrt.,
59.25
Allianz Aviation Managers LLC, Burbank, CA
100.0
Allianz France Investissement OPCI, Paris la Défense
Allianz France Real Estate Invest SPPICAV, Paris la
Allianz France US REIT LP, Wilmington, DE
100.0
Allianz Banque S.A., Puteaux
Other participations between 5 and 20%
100.0
Allianz France US REIT GP LLC, Wilmington, DE
100.0
Allianz Bank Financial Advisors S.p.A., Milan
100.0
100.0
Allianz France Richelieu 1 S.A.S., Paris la Défense
Allianz France S.A., Paris la Défense
99.9
Allianz Bank Bulgaria AD, Sofia
50.09
Neumagen-Dhron
62.6
Allianz Ayudhya Assurance Public Company Limited,
Bangkok
Windkraft Kirf Infrastruktur GmbH,
25.4
Umspannwerk Putlitz GmbH & Co. KG, Oldenburg
100.0
Défense
100.0
of voting rights
100.05
Fusion Company Inc., Richmond, VA
95.0
100.0
100.0
Real FR Haussmann SAS, Paris la Défense
100.0
PIMCO Australia Management Limited, Sydney
Viveole SAS, Versailles
100.0
100.0
Redoma S.à r.l., Luxembourg
100.0
PIMCO Australia Pty Ltd., Sydney
Volta, Paris
100.0
Rhea SA, Luxembourg
100.05
Vigny Depierre Conseils SAS, Archamps
PIMCO Asia Pte Ltd., Singapore
100.0
Real Faubourg Haussmann SAS, Paris la Défense
PGREF V 1301 Sixth Investors I LP, Wilmington, DE
TU Allianz Zycie Polska S.A., Warsaw
100.0
100.0
RB Fiduciaria S.p.A., Milan
100.0
PIMCO (Schweiz) GmbH, Zurich
100.0
UP 36 SA, Brussels
100.0
RCM Dynamic Multi-Asset Plus VIT, Boston, MA
56.95
PIMCO Asia Ltd., Hong Kong
100.0
VertBois S.à r.I., Luxembourg
100.0
100.0
100.0
PIMCO Canada Corp., Toronto, ON
Vordere Zollamtsstraße 13 GmbH, Vienna
100.0
Windpark Ladendorf GmbH, Vienna
100.0
Triskelion Property Holding Designated Activity
Company, Dublin
50.0
Windpark Les Cent Jalois SAS, Versailles
Windpark PL GmbH, Pottenbrunn
100.0
100.0
VGP European Logistics S.à r.I., Senningerberg
Waterford Blue Lagoon LP, Wilmington, DE
50.0
49.08
Windpark Scharndorf GmbH, Pottenbrunn
100.0
Windpark Zistersdorf GmbH, Pottenbrunn
Associates
Windpark GHW GmbH, Pottenbrunn
owned¹
owned¹
%
100.0
PIMCO COF II LLC, Wilmington, DE
100.0
Risikomanagement und Softwareentwicklung
GmbH, Vienna
100.0
WFC Investments Sp. z o.o., Warsaw
87.5
100.0
PIMCO Covered Bond Source UCITS ETF, Dublin
100.03
Windpark AO GmbH, Pottenbrunn
100.0
Annual Report 2016 - Allianz Group
143
D - Consolidated Financial Statements
%
40.42,5 Rivage Richelieu 1 FCP, Paris
100.0
Rävaberget Nät AB, Stockholm
100.0
Parc Eolien des Joyeuses SAS, Versailles
Top Immo A GmbH & Co. KG, Vienna
100.0
100.0
PTE Allianz Polska S.A., Warsaw
100.0
Top Immo Besitzgesellschaft B GmbH & Co. KG,
Parc Eolien des Mistandines SAS, Paris
100.0
Q 207 GP S.à r.I., Luxembourg
100.0
Vienna
100.0
Parc Eolien des Quatre Buissons SAS, Paris
100.0
100.0
PT Blue Dot Services, Jakarta
100.0
100.0
Protexia France S.A., Paris la Défense
100.0
Parc Eolien de Pliboux SAS, Versailles
100.0
PT Asuransi Allianz Life Indonesia p.l.c., Jakarta
Three Pillars Business Solutions Limited, Guildford
Ticket Guard Small Amount & Short Term Insurance
100.0
Q207 S.C.S., Luxembourg
99.8
100.0
Co. Ltd., Tokyo
100.0
PT Asuransi Allianz Utama Indonesia Ltd., Jakarta
97.8
Tihama Investments B.V., Amsterdam
Parc Eolien des Barbes d'Or SAS, Versailles
Parc Eolien de Remigny SAS, Versailles
100.0
94.0
100.0
100.0
Warsaw
100.0
PFP Holdings Inc., Dover, DE
100.0
Quintet Properties Ltd., Dublin
100.0
PGA Global Services LLC, Dover, DE
Trafalgar Insurance Public Limited Company,
Guildford
100.0
100.0
RAS Antares, Milan
100.03
PGREF V 1301 Sixth Investors I LLC, Wilmington, DE
TU Allianz Polska S.A., Warsaw
Questar Capital Corporation, Minneapolis, MN
100.0
Pet Plan Ltd., Guildford
Towarzystwo Ubezpieczen Euler Hermes S.A.,
Parc Eolien du Bois Guillaume SAS, Paris
100.0
Quality 1 AG, Bubikon
100.0
Top Versicherungsservice GmbH, Vienna
100.0
Parc Eolien Les Treize SAS, Paris
Top Logistikwerkstatt Assistance GmbH, Vienna
100.0
100.0
Top Vorsorge-Management GmbH, Vienna
75.0
Personalized Brokerage Service LLC, Topeka, KS
100.0
Questar Asset Management Inc., Ann Arbor, MI
100.0
Questar Agency Inc., Minneapolis, MN
Wm. H McGee & Co. (Bermuda) Ltd., Hamilton
Adriatic Motorways d.d., Zagreb
33.3
100.0
Carlyle China Rome Logistics L.P., George Town
Chicago Parking Meters LLC, Wilmington, DE
CPIC Allianz Health Insurance Co. Ltd., Shanghai
Data Quest SAL, Beirut
63.3 5.9
49.9
22.9
36.0
Joint ventures
Douglas Emmett Partnership X LP, Wilmington, DE
Dr. Ignaz Fiala GmbH, Vienna
28.6
33.3
A&A Centri Commerciali S.r.l., Milan
50.0
Allee-Center Kft., Budapest
50.0
AMLI-Allianz Investment LP, Wilmington, DE
Ancilyze Technologies LLC, Oakbrook Terrace, IL
AS Gasinfrastruktur Beteiligung GmbH, Vienna
Atenction Integral a la Dependencia S.L., Cordoba
AZ/JH Co-Investment Venture (DC) LP,
Wilmington, DE
Top Versicherungs-Vermittler Service GmbH, Vienna
100.0
Courbevoie
Société Immobilière de l'Avenue du Roule SAS,
99.6
Broker on-line de Productores de Seguros S.A.,
Buenos Aires
30.0
RE-AA SA, Abidjan
97.5
Brunei National Insurance Company Berhad Ltd.,
SCI AVIP de Camp Laurent, Courbevoie
75.08
Bandar Seri Begawan
100.0
SCI Vilaje, Courbevoie
Carlyle China Realty L.P., George Town
15.05,9
100.0
SIFCOM Assur S.A., Abidjan
60.0
25.0
Dakar
E.ON Distributie România S.A., Târgu Mures
European Outlet Mall Fund FCP-FIS, Luxembourg
Four Oaks Place LP, Wilmington, DE
25.85
Shanghai
49.08
Dorcasia Ltd., Sydney
50.0
Dundrum Car Park GP Limited, Dublin
50.0
OeKB EH Beteiligungs- und Management AG, Vienna
OVS Opel VersicherungsService GmbH, Vienna
PGREF V 1301 Sixth Holding LP, Wilmington, DE
Professional Agencies Reinsurance Limited, Hamilton
Residenze CYL S.p.A., Milan
49.0
40.0
24.5
14.09
33.3
Dundrum Car Park Limited Partnership, Dublin
50.0
SAS Alta Gramont, Paris
CPPIC Euler Hermes Insurance Sales Co. Ltd.,
50.0
30.0
NGI Group Holdings LLC, Wilmington, DE
49.0
50.0
Helios Silesia Holding B.V., Amsterdam
60.08
50.0
80.08
Henderson UK Outlet Mall Partnership LP, Edinburgh
IPE Tank and Rail Investment 1 S.C.A., Luxembourg
Lennar Multifamily Venture LP, Wilmington, DE
Medgulf Allianz Takaful B.S.C., Seef
45.0
30.0
48.8
13.59
25.0
AZ/JH Co-Investment Venture (IL) LP, Wilmington, DE
Bajaj Allianz Financial Distributors Limited, Pune
Companhia de Seguro de Créditos S.A., Lisbon
80.08
New Path S.A., Buenos Aires
40.0
50.0
19.59
Office Sénégalais de Conseils en Assurance SARL,
20.0
Berkshire India Private Limited, New Delhi
29.15
ZAD Energia, Sofia
51.0
ZiOst Energy GmbH & Co. KG, Pottenbrunn
Allianz Saudi Fransi Cooperative Insurance Company,
Riyadh
100.0
Allianz Securicash SRI, Paris
32.5
17.05,9
Archstone Multifamily Partners AC JV LP,
Non-consolidated affiliates
Wilmington, DE
40.0
AGF Pension Trustees Ltd., Guildford
100.0
Archstone Multifamily Partners AC LP,
Allianz Invest Vorsorgefonds, Vienna
99.0
ZAD Allianz Bulgaria Zhivot, Sofia
87.4
100.0
Wm. H McGee & Co. Inc., New York, NY
Allianz EFU Health Insurance Ltd., Karachi
100.0
49.0
YAO Investment S.à r.l., Luxembourg
Allianz Europe Small Cap Equity, Senningerberg
Allianz America Latina S.C. Ltda., Rio de Janeiro
21.95
Yorktown Financial Companies Inc., Minneapolis, MN
100.0
Allianz Fóndika S.A. de C.V., Mexico City
26.8
ZAD Allianz Bulgaria, Sofia
Allianz France Investissement IV, Paris
73.35,9
100.0
100.0
Wilmington, DE
28.6
100.0
COGAR S.à r.I., Paris
100.0
AWP Insurance Brokerage (Beijing) Co. Ltd., Beijing
Bajaj Allianz General Insurance Company Ltd., Pune
Bajaj Allianz Life Insurance Company Ltd., Pune
Bazalgette Equity Ltd., London
100.09
26.0
26.0
business lounge GmbH, Vienna
34.3
100.0
ICC Evaluation SARL, Paris
Berkshire Hathaway Services India Private Limited,
New Delhi
100.0
20.0
Knightsbridge Allianz LP, Bartlesville, OK
99.55
Gesellschaft für Vorsorgeberatung AG, Bern
100.0
100.0
100.0
Allianz Financial Services S.A., Athens
100.0
Areim Fastigheter 2 AB, Stockholm
23.3
Allianz Global Corporate & Specialty SE Escritório
Areim Fastigheter 3 AB, Stockholm
26.2
Assurance France Aviation S.A., Paris
de Representação no Brasil Ltda., Rio de Janeiro
Assurcard N.V., Haasrode
20.0
Allianz Insurance Services Ltd., Athens
100.0
Autoelektro tehnicki pregledi d.o.o., Vojnić
49.0
Allianz Northern Ireland Limited, Belfast
100.0
49.0
Parc Eolien de Ly-Fontaine SAS, Versailles
The MI Group Limited, Guildford
Sättravallen Wind Power AB, Strömstad
100.0
100.0
Mondial Assistance Services (Malaysia) Sdn. Bhd.,
PIMCO GP XIII LLC, Wilmington, DE
Saudi NEXTCARE LLC, Al Khobar
52.0
100.0
Kuala Lumpur
100.0
PIMCO GP XIV LLC, Wilmington, DE
SC Tour Michelet, Paris la Défense
100.0
100.0
Mondial Assistance Services Hellas A.E., Athens
PIMCO GP XII LLC, Wilmington, DE
100.0
Mondial Assistance Service España S.A., Madrid
100.0
100.0
Mondial Assistance Ireland Ltd., Dublin
PIMCO GP VII LLC, Wilmington, DE
100.0
100.0
SAS Passage des princes, Paris la Défense
100.0
51.0
Mondial Assistance Portugal Serviços de
100.0
SAS Société d'Exploitation du Parc Eolien
Assistência Lda., Lisbon
100.0
PIMCO GP XI LLC, Wilmington, DE
de Nélausa, Paris
100.0
PIMCO GP X LLC, Wilmington, DE
100.0
PIMCO GP XIX LLC, Wilmington, DE
100.0
100.0
PIMCO GP XVIII LLC, Wilmington, DE
SCI Allianz Messine, Paris la Défense
100.0
100.0
Mondial Service - Belgium S.A., Brussels
100.0
PIMCO GP XX LLC, Wilmington, DE
SCI AVIP SCPI Selection, Courbevoie
100.0
100.0
SCI ESQ, Paris la Défense
75.0
Mondial Service Argentina S.A., Buenos Aires
100.0
São Bernardo do Campo
100.0
Mondial Protection Corretora de Seguros Ltda.,
100.0
100.0
Mondial Assistance Sp. z o.o., Warsaw
Fénix Directo Compañía de Seguros y
PIMCO GP XV LLC, Wilmington, DE
SCI Allianz ARC de Seine, Paris la Défense
100.0
100.0
SCI 46 Desmoulins, Paris la Défense
Mondial Assistance United Kingdom Ltd.,
SCI Allianz Chateaudun, Paris la Défense
100.0
100.0
Croydon Surrey
100.0
PIMCO GP XVII LLC, Wilmington, DE
SCI Allianz Invest Pierre, Paris la Défense
PIMCO GP XVI LLC, Wilmington, DE
PIMCO Investments LLC, Dover, DE
SAS Madeleine Opéra, Paris la Défense
PIMCO GP V LLC, Wilmington, DE
100.0
Luxembourg
100.0
San Francisco Reinsurance Company, Los Angeles, CA
100.0
Maevaara Vind AB, Stockholm
100.0
PIMCO Global Advisors (Resources) LLC, Dover, DE
100.0
SAS 20 pompidou, Paris la Défense
100.0
Magdeburger Sigorta A.S., Istanbul
100.0
PIMCO Global Advisors LLC, Dover, DE
100.0
Maevaara Vind 2 AB, Stockholm
100.0
Saint-Barth Assurances S.à r.l., St. Barts
PIMCO Global Advisors (Luxembourg) S.A.,
100.0
100.0
LLC "Progress-Med", Moscow
100.0
SA Carène Assurance, Paris
PIMCO GIS Global Libor Plus Bond Fund, Dublin
80.25
SAS Allianz Etoile, Paris la Défense
100.0
100.0
PIMCO Global Advisors (Ireland) Ltd., Dublin
Saarenkylä Tuulipuisto Oy, Oulu
100.0
100.0
Lloyd Adriatico Holding S.p.A., Trieste
99.9
LLC "Risk Audit", Moscow
100.0
100.0
100.0
100.0
Toowong
100.0
PIMCO GP IX LLC, Wilmington, DE
100.0
SAS Allianz Serbie, Paris la Défense
100.0
Mondial Assistance France Services à la personne
SAS, Saint-Ouen
100.0
PIMCO GP S.à r.I., Luxembourg
100.0
SAS Angel Shopping Centre, Paris la Défense
90.0
Mondial Assistance GmbH, Vienna
SAS Allianz Rivoli, Paris la Défense
100.0
PIMCO GP III LLC, Wilmington, DE
Mondial Assistance Australia Holding Pty Ltd.,
PIMCO Global Holdings LLC, Dover, DE
100.0
SAS Allianz Forum Seine, Paris la Défense
100.0
Medi24 AG, Bern
100.0
PIMCO GP I LLC, Wilmington, DE
Marofinac S.à r.I., Casablanca
100.0
100.0
Mombyasen Wind Farm AB, Halmstad
100.0
PIMCO GP II S.à r.I., Luxembourg
100.0
SAS Allianz Platine, Paris la Défense
100.0
SAS Allianz Logistique, Paris la Défense
100.0
SCI Stratus, Courbevoie
Mondial Service Colombia SAS, Bogotá D.C.
48.2 2,5
Société Nationale Foncière S.A.L., Beirut
66.0
79.45
SOFE One Ltd., Bangkok
100.0
82.25
SOFE Two Ltd., Bangkok
100.0
69.95
Sofiholding S.A., Brussels
100.0
85.25
South City Office Broodthaers SA, Brussels
100.0
100.0
Société Foncière Européenne B.V., Amsterdam
43.52,5
56.0
Orsa Maggiore PV S.r.I., Milan
100.0
Orsa Minore PV S.r.I., Milan
100.0
Pacific Investment Management Company LLC,
Dover, DE
95.7
Parc Eolien de Bonneuil S.à r.l., Versailles
85.75
100.0
100.0
PIMCO RealPath Blend 2020 Fund, Wilmington, DE
PIMCO RealPath Blend 2025 Fund, Wilmington, DE
PIMCO RealPath Blend 2030 Fund, Wilmington, DE
PIMCO RealPath Blend 2035 Fund, Wilmington, DE
PIMCO RealPath Blend 2040 Fund, Wilmington, DE
PIMCO RealPath Blend 2045 Fund, Wilmington, DE
PIMCO RealPath Blend 2050 Fund, Wilmington, DE
PIMCO RealPath Blend 2055 Fund, Wilmington, DE
PIMCO RealPath Blend Income Fund, Wilmington, DE
PIMCO REIT Management LLC, Wilmington, DE
PIMCO Select U.S. High Yield BB-B Bond Fund, Dublin
PIMCO-World Bank Gemloc Fund, Luxembourg
62.35
Vadalle SAS, Paris
100.0
76.65
Société Européenne de Protection et de Services
d'Assistance à Domicile S.A., Paris
Parc Eolien de Bruyère Grande SAS, Versailles
100.0
SpaceCo S.A., Paris
100.0
The American Insurance Company Corp.,
Cincinnati, OH
100.0
100.0
Primacy Underwriting Management Pty Ltd.,
Melbourne
100.0
Parc Eolien de la Sole du Bois SAS, Paris
100.0
The Annuity Store Financial & Insurance Services LLC,
Sacramento, CA
100.0
Prosperaz Fundo de Investimento Renda Fixa
Parc Eolien de Longchamps SAS, Versailles
100.0
Crédito Privado, São Paulo
100.03
100.0
Wellington
100.0
Primacy Underwriting Management Limited,
Standard General Agency Inc., Dallas, TX
100.0
46.02,5
StocksPLUS Management Inc., Dover, DE
100.0
100.05
Téléservices et Sécurité "TEL2S" SARL, Chatillon
100.0
99.9
100.0
POD Allianz Bulgaria AD, Sofia
65.9
TFI Allianz Polska S.A., Warsaw
100.0
Parc Eolien de Croquettes SAS, Versailles
Parc Eolien de Fontfroide SAS, Versailles
Parc Eolien de Forge SAS, Paris
100.0
Parc Eolien de Chaourse SAS, Versailles
Orione PV S.r.I., Milan
100.0
OPCI Allianz France Angel, Paris la Défense
75.45
Silex Gas Management AS, Oslo
100.0
Neoasistencia Manoteras S.L., Madrid
100.0
Nextcare Bahrain Ancillary Services Company B.S.C.,
Manama
100.0
PIMCO RAE Fundamental Europe Fund, Dublin
PIMCO RAE Fundamental Global Developed Fund,
Dublin
71.25
Silex Gas Norway AS, Oslo
100.0
Sion Hall Services Ltd., London
35.52,5
100.0
NEXTCARE Egypt LLC, New Cairo
100.0
SDIII Energy GmbH & Co. KG, Pottenbrunn
PIMCO RAE Fundamental Emerging Markets Fund,
Dublin
100.0
100.0
PIMCO Japan Ltd., Road Town
100.0
100.0
SCI Via Pierre 1, Paris la Défense
Mondial Serviços Ltda., São Bernardo do Campo
100.0
100.0
PIMCO Latin America Administradora de
Morgan Stanley Italian Office Fund, Milan
100.03
Carteiras Ltda., Rio de Janeiro
100.0
SCI Volnay, Paris la Défense
100.0
National Surety Corporation, Chicago, IL
100.0
Sirius S.A., Luxembourg
94.8
NEXTCARE Holding WLL, Manama
Société d'Energie Eolien Cambon SAS, Versailles
100.0
Northstar Mezzanine Partners VI U.S. Feeder II L.P.,
Dover, DE
100.03
PIMCO RealPath 2055 Fund, Boston, MA
71.15
80.05
Société d'Exploitation du Parc Eolien d'Aussac
100.0
Ontario Limited, Toronto, ON
100.0
000 Euler Hermes Credit Management, Moscow
100.0
000 Mondial Assistance, Moscow
100.0
OJSC "My Clinic", Moscow
99.4
100.0
PIMCO Real Return Limited Duration Fund,
Boston, MA
75.0
NEXTCARE Lebanon SAL, Beirut
100.0
PIMCO RAE Fundamental Global Equities Plus
Fundo de Investimento Multimercado Investimento
no Exterior, Rio de Janeiro
SLC "Allianz Life Ukraine", Kiev
100.0
100.05
Moulaine SAS, Versailles
Società Agricola San Felice S.p.A., Milan
Nextcare Tunisia S.à r.I., Tunis
100.0
PIMCO RAE Fundamental US Fund, Dublin
54.45
Société de Production D'électricité D'harcourt
NFJ Investment Group LLC, Dover, DE
100.0
100.0
Dundrum Retail GP Designated Activity Company,
100.0
SCI Bercy Village, Paris
100.0
99.63
Owings Mills, MD
BPS Mesagne 214 S.r.l., Lecce
InnovAllianz, Paris
Euler Hermes North America Holding Inc.,
100.0
BPS Brindisi 222 S.r.l., Lecce
100.0
Inforce Solutions LLC, Woodstock, GA
100.0
Euler Hermes New Zealand Limited, Auckland
100.0
BPS Brindisi 213 S.r.l., Lecce
100.0
100.0
BPS Mesagne 215 S.r.l., Lecce
100.0
Euler Hermes North America Insurance Company Inc.,
Owings Mills, MD
International Film Guarantors LLC, Santa Monica, CA
100.0
Euler Hermes Ré SA, Luxembourg
100.0
BPS Mesagne 223 S.r.I., Lecce
100.0
International Film Guarantors Limited, London
ImWind GHW GmbH & Co. KG, Pottenbrunn
100.0
100.0
BPS Mesagne 216 S.r.l., Lecce
100.0
Intermediass S.r.l., Milan
100.0
100.0
Insurance CJSC "Medexpress", Saint Petersburg
Euler Hermes Patrimonia SA, Brussels
100.0
100.0
100.0
100.0
Helviass Verzekeringen B.V., Rotterdam
100.0
Euler Hermes Japan Services Ltd., Tokyo
Biuro Informacji Gospodarczej Euler Hermes S.A.,
Warsaw
100.0
100.0
Havelaar & van Stolk B.V., Rotterdam
Euler Hermes Hong Kong Service Limited, Hong Kong
66.0
Bilan Services S.N.C., Nanterre
100.0
100.0
100.0
Euler Hermes Hellas Credit Insurance SA, Athens
100.0
Euler Hermes Korea Non-life Broker Company
Home & Legacy Insurance Services Limited, London
100.0
BPS Brindisi 211 S.r.l., Lecce
100.0
Immovalor Gestion S.A., Paris la Défense
100.0
Luxembourg
100.0
Botanic Building SPRL, Brussels
Euler Hermes Magyar Követeleskezelő Kft., Budapest
100.0
Euler Hermes Luxembourg Holding S.à r.l.,
100.0
100.0
Hunter Premium Funding Ltd., Sydney
100.0
Limited, Seoul
Borgo San Felice S.r.l., Castelnuovo Berardenga
(Siena)
IEELV GP S.à r.I., Luxembourg
Sanayi ve Ticaret A.S., Ankara
BPS Mesagne 224 S.r.l., Lecce
Euler Hermes Real Estate SPPICAV, Paris la Défense
Kaishi Beijing Limited, Beijing
100.0
Euler Hermes Services Belgium S.A., Brussels
100.0
Calobra Investments Sp. z o.o., Warsaw
100.0
JSC Insurance Company Allianz, Moscow
100.0
Euler Hermes Services B.V., 's-Hertogenbosch
100.0
Bureau d'Expertises Despretz S.A., Brussels
100.0
Jouttikallio Wind Oy, Kotka
100.0
Euler Hermes Service AB, Stockholm
100.0
Calypso S.A., Paris la Défense
100.0
Euler Hermes Services Bulgaria EOOD, Sofia
Central Shopping Center a.s., Bratislava
93.2
Caroline Berlin S.C.S., Luxembourg
67.8
Kaishi Pte. Ltd., Singapore
100.0
Euler Hermes Services G.C.C. Limited, Dubai
98.4
100.0
100.0
Shanghai
100.0
Euler Hermes Services Ceská republika s.r.o., Prague
CAP Rechtsschutz-Versicherungsgesellschaft AG,
Kaishi Information Technology (Shanghai) Co. Ltd.,
100.0
Wallisellen
100.0
Bulgaria Net AD, Sofia
Joukhaisselän Tuulipuisto Oy, Oulu
100.0
Bright Mission Berhad Ltd., Kuala Lumpur
100.0
Investitori SGR S.p.A., Milan
100.0
100.03
Investitori Real Estate Fund, Milan
Euler Hermes Recouvrement France S.A.S.,
Paris la Défense
100.0
Bravo II CIV LLC, Wilmington, DE
100.0
Brasil de Imóveis e Participações Ltda., São Paulo
100.0
Interstate Fire & Casualty Company, Chicago, IL
60.0
Euler Hermes Reinsurance AG, Wallisellen
100.0
Järvsö Sörby Vindkraft AB, Danderyd
100.0
100.0
Euler Hermes Seguros de Crédito S.A., São Paulo
100.0
BSMC (Thailand) Limited, Bangkok
100.0
Jefferson Insurance Company Corp., New York, NY
100.0
100.0
Euler Hermes S.A., Brussels
Brobacken Nät AB, Stockholm
40.02
JCR Intertrade Ltd., Bangkok
100.0
Euler Hermes Risk Yönetimi A.S., Istanbul
100.0
British Reserve Insurance Co. Ltd., Guildford
100.0
81.0
Global Transport & Automotive Insurance Solutions
Pty Limited, Sydney
63.9
Energie Eolienne Lusanger S.à r.l., Versailles
100.0
AWP Solutions CR a SR s.r.o., Prague
Fireman's Fund Insurance Company Corp.,
100.0
EF Solutions LLC, Wilmington, DE
100.0
AWP Servicios Mexico S.A. de C.V., Mexico City
100.0
Corner, NJ
100.0
Minneapolis, MN
Fireman's Fund Indemnity Corporation, Liberty
100.0
Dresdner Kleinwort Pfandbriefe Investments II Inc.,
100.0
Los Angeles, CA
100.0
AWP USA Inc., Richmond, VA
AZ Jupiter 10 B.V., Amsterdam
100.0
Etablissements J. Moneger SA, Dakar
Fireman's Fund Insurance Company of Ohio Corp.,
100.0
AZ Euro Investments S.à r.l., Luxembourg
100.0
AWP Services Singapore Pte. Ltd., Singapore
EP Tactical GP LLC, Wilmington, DE
Honolulu, HI
100.0
AZ Euro Investments II S.à r.I., Luxembourg
Fireman's Fund Insurance Company of Hawaii Inc.,
100.0
Eolica Erchie S.r.l., Lecce
100.0
100.0
Cincinnati, OH
100.0
Fireman's Fund Financial Services LLC, Dallas, TX
AWP Mexico S.A. de C.V., Mexico City
100.0
Versailles
50.02
CreditRas Vita S.p.A., Milan
100.0
AWP Indian Ocean LLC, Ebene
Ferme Eolienne de Villemur-sur-Tarn S.à r.l.,
50.02
CreditRas Assicurazioni S.p.A., Milan
100.0
AWP Health & Life S.A., Paris la Défense
100.0
Reaseguros S.A., Madrid
Dublin
Darta Saving Life Assurance Ltd., Dublin
100.0
100.0
Ferme Eolienne des Jaladeaux S.à r.l., Versailles
100.0
Diamond Point a.s., Prague
AWP Romania S.A., Bucharest
100.0
100.0
Financière Callisto SAS, Paris la Défense
100.0
100.0
AWP Réunion SAS, Saint-Denis
100.0
Financière Aldebaran SAS, Paris la Défense
100.0
50.1
Deeside Investments Inc., Wilmington, DE
AWP P&C S.A., Saint-Ouen
100.0
Delta Technical Services Ltd., London
100.0
100.0
Euler Hermes Acmar SA, Casablanca
Euler Hermes Crédit France S.A.S., Paris la Défense
100.0
AZL PF Investments Inc., Minneapolis, MN
100.0
Genialloyd S.p.A., Milan
100.0
Shanghai
52.5
Generation Vie S.A., Courbevoie
Euler Hermes Consulting (Shanghai) Co. Ltd.,
55.0
100.0
100.0
GamePlan Financial Marketing LLC, Woodstock, GA
Euler Hermes Collections Sp. z o.o., Warsaw
100.0
Gestion de Téléassistance et de Services S.A.,
AZOA C.V., Amsterdam
100.0
Beykoz Gayrimenkul Yatirim Insaat Turizm
Euler Hermes Group SA, Paris la Défense
100.0
Rotterdam
100.0
Owings Mills, MD
Beleggingsmaatschappij Willemsbruggen B.V.,
100.0
100.0
Euler Hermes Excess North America LLC,
100.0
AZOA Services Corporation, New York, NY
100.0
Chatillon
100.0
Euler Hermes Emporiki Services Ltd., Athens
GIE Euler Hermes SFAC Services, Paris la Défense
AZGA Insurance Agency Canada Ltd., Kitchener, ON
AZGA Service Canada Inc., Kitchener, ON
100.0
100.05
100.0
Friederike MLP S.à r.l., Luxembourg
Euler Hermes Asset Management France S.A.,
Paris la Défense
100.0
AZ Jupiter 9 B.V., Amsterdam
100.0
100.0
100.0
Fragonard Assurance S.A., Paris
100.0
Euler Hermes Acmar Services SARL, Casablanca
100.0
100.03
Fondo Chiuso Allianz Infrastructure Partners I, Milan
AZ Jupiter 4 B.V., Amsterdam
55.0
AZ Jupiter 8 B.V., Amsterdam
100.0
Fu An Management Consulting Co. Ltd., Beijing
AZ Real Estate GP LLC, New York, NY
Gaipare Action, Paris
Owings Mills, MD
100.0
AZ Vers US Private REIT LP, Wilmington, DE
100.0
100.0
Euler Hermes Canada Services Inc., Montreal, QC
Euler Hermes Collections North America Company,
1.02
100.0
100.0
100.0
Fusion Brokerage Inc., Richmond, VA
AZ Servisni centar d.o.o., Zagreb
100.0
Euler Hermes Australia Pty Limited, Sydney
100.0
AZ Vers US Private REIT GP LLC, Wilmington, DE
Euler Hermes Services India Private Limited, Mumbai
Euler Hermes Services Ireland Limited, Dublin
Hauteville Insurance Company Limited, St Peter Port
Ken Tame & Associates Pty Ltd., Sydney
HR
Fact Book
2016
Allianz ⑪
The HR Fact Book is the official and most comprehensive report on
key human resources facts and figures, highlighting major HR
achievements over the past year and revealing the outlook for 2017.
Date of publication: 27 March 2017.
www.allianz.com/hrfactbook
GUIDELINE ON ALTERNATIVE PERFORMANCE MEASURES
Further information on the definition of our Alternative Performance
Measures and their components, as well as the basis of calculation
adopted.
www.allianz.com/results
Financial calendar
Important dates for shareholders and analysts¹
Annual General Meeting
Financial Results 1Q.
Financial Results 20/Interim Report 6M
Financial Results 3Q
ALLIANZ HUMAN RESOURCES FACT BOOK 2016
Financial Results 2017
Annual General Meeting
3 May 2017
12 May 2017
4 August 2017
10 November 2017
16 February 2018
9 March 2018
9 May 2018
1 - The German Securities Trading Act ("Wertpapierhandelsgesetz") obliges issuers to announce immediately any information which may have a substantial price impact. Therefore we cannot exclude that we have to
announce key figures related to quarterly and fiscal year results ahead of the dates mentioned above. As we can never rule out changes of dates, we recommend checking them on the internet at www.allianz.com/
financialcalendar.
MIX
Allianz SE - Königinstrasse 28 - 80802 Munich - Germany - Phone +49 89 38000- info@allianz.com - www.allianz.com
Annual Report on the internet: www.allianz.com/annualreport - Front page design: hw.design GmbH - Date of publication: 10 March 2017
This is a translation of the German Annual Report of Allianz Group. In case of any divergences, the German original is legally binding.
Annual Report 2017
This sign indicates where to find additional information
in this Annual Report or on the internet.
>
ORIENTATION GUIDE
Wirtschaftsprüfer
(Independent Auditor)
chaffte
Dr. Pfaffenzeller
Wirtschaftsprüfer
(Independent Auditor)
146
Annual Report 2016 - Allianz Group
Orientation
MULTICHANNEL REPORTING
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Further Allianz publications
ALLIANZ SUSTAINABILITY REPORT 2016
EMBRACING
THE FUTURE
ENCOURAGING SOLUTIONS
FOR TOMORROW'S CLIMATE
AND A MORE INCLUSIVE
SOCIETY
SUSTANABUTY REPORT 2016
Allianz ⑪
The Allianz Group Sustainability Report "Embracing the future"
covers our contribution to the environment, society and economy.
It provides full details of our sustainability strategy, approach and
progress as well as an outlook for 2017.
Date of publication: 5 April 2017.
www.allianz.com/sustainability
Paper from
FSC
www.fsc.org
responsible sources
FSC® C002390
International Shopping Centre Investment S.A.,
Luxembourg
16.79
Tellsid Holdings Limited, Saint Helier
49.08
30.0
Solveig Gas Holdco AS, Oslo
Guotai Jun'an Allianz Fund Management Co. Ltd.,
Shanghai
49.0
SNC Société d'aménagement de la Gare de l'Est, Paris
50.18
Fiumaranuova S.r.I., Genoa
49.0
SNC Alta CRP La Valette, Paris
83.35,8
Europe Logistics Venture 1 FCP-FIS, Luxembourg
49.0
50.0
SNC Alta CRP Gennevilliers, Paris
Euromarkt Center d.o.o., Ljubljana
100.0
50.0
SK Versicherung AG, Vienna
Dundrum Retail Limited Partnership, Dublin
50.0
49.0
Wildlife Works Carbon LLC, San Francisco, CA
Becker
10.09
Israel Credit Insurance Company Ltd., Tel Aviv
NRF (Finland) AB, Västeras
11.7
50.0
Zagrebacka banka d.d., Zagreb
NET4GAS Holdings s.r.o., Prague
16.8
Bangkok
50.05
Market Street Trust, Sydney
Sri Ayudhya Capital Public Company Limited,
45.08
LBA IV-PPII-Retail Venture LLC, Dover, DE
8.5
Banco BPI S.A., Porto
45.08
LBA IV-PPII-Office Venture LLC, Dover, DE
18.0
Al Nisr Al Arabi, Amman
45.08
LBA IV-PPI Venture LLC, Dover, DE
of voting rights
50.0
Italian Shopping Centre Investment S.r.I., Milan
Other participations between 5 and 20%
50.0
50.0
пл
25.8
KPMG AG
%
%
owned¹
owned¹
%
owned¹
LCF IDR, Paris
100.05
PIMCO Emerging Markets Bond Fund III,
Rogge Alternative Investment Company Ltd., London
100.0
Les Vignobles de Larose S.A.S., Saint Laurent Médoc
LLC "IC Euler Hermes Ru", Moscow
100.0
George Town
41.62,5
Rogge Global Partners Asia Pte. Ltd., Singapore
100.0
PIMCO Euro Low Duration Investment Grade
Corporate Fund, Dublin
100.03
Rogge Global Partners Inc., Wilmington, DE
100.0
LLC "Medexpress-service", Saint Petersburg
100.0
PIMCO Europe Ltd., London
Rogge Global Partners Ltd., London
50.0
D - Consolidated Financial Statements
Podium Fund HY REIT Owner LP, Wilmington, DE
Annual Report 2016 - Allianz Group
100.0
Wirtschaftsprüfungsgesellschaft
100.0
100.0
Kiinteistö OY Eteläesplanadi 2, Helsinki
100.0
Centrale Photovoltaique de Saint Marcel
Euler Hermes Services Italia S.r.l., Rome
100.0
Königinstrasse I S.à r.I., Luxembourg
100.0
sur aude SAS, Paris
100.0
Euler Hermes Services North America LLC,
Kuolavaara-Keulakkopään Tuulipuisto Oy, Oulu
100.0
Centrale Photovoltaique de Valensole SAS, Paris
CEPE de Bajouve S.à r.I., Versailles
100.0
Owings Mills, MD
100.0
La Rurale SA, Courbevoie
99.9
100.0
Euler Hermes Services Romania S.R.L., Bucharest
100.0
LAD Energy GmbH & Co. KG, Pottenbrunn
142
44.38
100.0
30.08
Tokio Marine Rogge Asset Management Ltd., London
Top Torony Ingatlanhasznosító Zrt., Budapest
8- Classified as joint venture according to IFRS 11.
49.98
The State-Whitehall Company LP, Dover, DE
50.0
7-Insolvent.
Solunion Compañía Internacional de Seguros y
Reaseguros SA, Madrid
6-Group share through indirect holder Roland Holding GmbH,
Munich: 75.6%.
50.0
SES Shopping Center FP 1 GmbH, Salzburg
50.0
SES Shopping Center AT1 GmbH, Salzburg
5-Mutual, private equity or special fund.
50.0
Group's consolidated financial statements.
4-Releasing impact according to § 264 (3) HGB through the Allianz
3-Investment fund.
2-Controlled by the Allianz Group.
SC Holding SAS, Paris
56.08
RMPA Holdings Limited, Colchester
50.0
Queenspoint S.L., Madrid
9- Classified as associate according to IAS 28.
50.0
50.0
144
Munich, 1 March 2017
In our opinion, based on the findings of our audit, the consoli-
dated financial statements comply with IFRSS, as adopted by the EU,
the additional requirements of German commercial law pursuant to
§ 315a para. 1 HGB and supplementary provisions of the articles of
incorporation and give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance with
these requirements. The group management report is consistent
with the consolidated financial statements, complies with the Ger-
man statutory requirements, and as a whole provides a suitable view
of the Group's position and suitably presents the opportunities and
risks of future development.
Our audit has not led to any reservations.
We conducted our audit of the consolidated financial state-
ments in accordance with § 317 HGB and German generally accepted
standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer [Institute of Public Auditors in Ger-
many] (IDW). Those standards require that we plan and perform the
audit such that misstatements materially affecting the presentation
of the net assets, financial position and results of operations in the
consolidated financial statements in accordance with the applicable
financial reporting framework and in the group management report
are detected with reasonable assurance. Knowledge of the business
activities and the economic and legal environment of the Group and
expectations as to possible misstatements are taken into account in
the determination of audit procedures. The effectiveness of the
accounting-related internal control system and the evidence sup-
porting the disclosures in the consolidated financial statements and
the group management report are examined primarily on a test basis
within the framework of the audit. The audit includes assessing the
annual financial statements of those entities included in consolida-
tion, the determination of entities to be included in consolidation,
the accounting and consolidation principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements and group
management report. We believe that our audit provides a reasonable
basis for our opinion.
We have audited the consolidated financial statements prepared by
Allianz SE, Munich, comprising the consolidated balance sheets, the
consolidated income statements, the consolidated statements of
comprehensive income, the consolidated statements of changes in
equity, the consolidated statements of cash flows and the notes,
together with the group management report for the business year
from 1 January to 31 December 2016. The preparation of the consoli-
dated financial statements and the group management report in
accordance with IFRSS, as adopted by the EU, and the additional
requirements of German commercial law pursuant to § 315a para. 1
HGB [Handelsgesetzbuch “German Commercial Code"] and supple-
mentary provisions of the articles of incorporation are the responsi-
bility of the parent company's management. Our responsibility is to
express an opinion on the consolidated financial statements and on
the group management report based on our audit.
AUDITOR'S REPORT
D - Consolidated Financial Statements
145
Annual Report 2016 - Allianz Group
D - Consolidated Financial Statements
зли
50.0
had Theis Duits alumn
Moscher fath
n. piny
the
Porterbrook Holdings I Limited, London
The Board of Management
Allianz SE
Munich, 14 February 2017
the group.
To the best of our knowledge, and in accordance with the applicable
reporting principles, the consolidated financial statements give a
true and fair view of the assets, liabilities, financial position and
profit or loss of the group, and the group management report includes
a fair review of the development and performance of the business and
the position of the group, together with a description of the material
opportunities and risks associated with the expected development of
RESPONSIBILITY STATEMENT
Annual Report 2016 - Allianz Group
for
Previndustria - Fiduciaria Previdenza Imprenditori
S.p.A., Milan
Chimes Béla Sergio Ballinst
1- Percentage includes equity participations held by dependent enti-
ties in full, even if the Allianz Group's share in the dependent
entity is below 100%.
PERSONNEL COMMITTEE
-Initial review of the Risk Report and other
-Monitoring of the general risk situation and
special risk developments in the Allianz Group
-Monitoring of the effectiveness of the risk
management system
- 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
- Initial review of the annual Allianz SE and consoli-
dated financial statements, management reports
(incl. 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
- Preparation of the efficiency review of the
Supervisory Board
- Preparation of the Declaration of Conformity
pursuant to § 161 "Aktiengesetz" (German Stock
Corporation Act) and checks on corporate
governance
-Approval of certain transactions which require
the approval of the Supervisory Board, e.g. capital
measures, acquisitions and disposals of
participations
RESPONSIBILITIES
until 4 May 2016, Jim Hagemann
Snabe from 4 May 2016)
representatives (Prof. Dr. Renate
Köcher, Peter Denis Sutherland
- Two further shareholder
of the Supervisory Board
(Dr. Helmut Perlet)
-Chairman: Chairman
3 members
NOMINATION COMMITTEE
- One employee representative
(Rolf Zimmermann)
(Christine Bosse)
representative
- One further shareholder
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
(Dr. Helmut Perlet)
- Preparation of the appointment 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
IN %
PRESENCE
Peter Denis Sutherland
Jim Hagemann Snabe
Prof. Dr. Renate Köcher
Jürgen Lawrenz
Ira Gloe-Semler
Martina Grundler
Dr. Friedrich Eichiner
Jean-Jacques Cette
4/4
- Preparation of plenary session resolutions on the
compensation system and the overall compen-
sation of Board of Management members
Gabriele Burkhardt-Berg
Dante Barban
Rolf Zimmermann (Vice Chairman)
Dr. Wulf H. Bernotat (Vice Chairman)
Dr. Helmut Perlet (Chairman)
PLENARY SESSIONS OF THE SUPERVISORY BOARD
- Selection of suitable candidates for election to the
Supervisory Board as shareholder representatives
- 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
- Setting of concrete objectives for the composition
of the Supervisory Board
-Approval of the assumption of other mandates
by Board of Management members
Christine Bosse
6/6
of the Supervisory Board
3 members
SUPERVISORY BOARD COMMITTEES
PUBLICATION OF DETAILS OF MEMBERS' PARTICIPATION IN MEETINGS
The Supervisory Board considers it good corporate governance to
publish the details of individual members' participation in plenary
sessions and committee meetings.
OF MEMBERS' PARTICIPATION IN MEETINGS
PUBLICATION OF DETAILS
Part of the Supervisory Board's work is carried out by its committees.
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.
SUPERVISORY BOARD COMMITTEES
B - Corporate Governance
15
SUPERVISORY BOARD
Annual Report 2016 - Allianz Group
The Supervisory Board takes all decisions based on a simple
majority. The special requirements for appointing members to the
Board of Management, as stipulated in the German Co-Determina-
tion 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 on the pro-
posal of the employee representatives.
The Supervisory Board oversees and advises the Board of Man-
agement on managing the business. It is also responsible for appoint-
ing the members of the Board of Management, determining their
overall remuneration and reviewing Allianz SE's and the Allianz
Group's annual financial statements. The Supervisory Board's activi-
ties in the 2016 financial year are described in the Supervisory Board
Report starting on > page 5.
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
comprises four employee representatives from Germany and one
each from France and Italy. The last regular election of the Super-
visory Board took place in May 2012 for a term lasting until the end of
the ordinary AGM in 2017. 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 as of 1 January 2016.
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 are determined by general European SE regulations. These
regulations are implemented in the Statutes and by the SE Agree-
ment.
of the Supervisory Board
Important decisions of the Board of Management require
approval by the Supervisory Board. These requirements are stipu-
lated 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 compa-
nies and holdings in companies, as well as for divestments of Group
companies which 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 Board of Management reports regularly and comprehen-
sively to the Supervisory Board on business development, the finan-
cial position and earnings, planning and achievement of objectives,
business strategy and risk exposure. Details on the Board of Manage-
ment's reporting to the Supervisory Board are laid down in the report-
ing rules issued by the Supervisory Board.
The Allianz Group runs its operating entities and business segments
via an integrated management and control process. The Holding and
the operating entities first define the business strategies and goals.
On this basis, joint plans are then prepared for the Supervisory
Board's consideration when setting targets for the performance-
based remuneration of the members of the Board of Management.
For details, see the Remuneration Report starting on > page 24.
Implementing Group investment strategy,
including monitoring group-wide invest-
ment activities as well as approving invest-
ment-related frameworks and guidelines
and individual investments within certain
thresholds.
The Supervisory Board regularly reviews the efficiency of its
activities. The Supervisory Board discusses recommendations for
improvements and adopts appropriate measures on the basis of rec-
ommendations from the Standing Committee. The efficiency review
also includes an evaluation of the fitness and propriety of the indi-
vidual members.
-Chairman: Chairman
COMMITTEES
5 members
PERSONNEL COMMITTEE
- Two employee representatives
(Dante Barban, Jürgen Lawrenz)
-Chairman: appointed by
the Supervisory Board
(Dr. Helmut Perlet)
- Three shareholder
representatives (in addition to
Dr. Helmut Perlet: Christine
Bosse, Peter Denis Sutherland
until 4 May 2016, Dr. Friedrich
Eichiner from 4 May 2016)
RISK COMMITTEE
5 members
4 May 2016)
Ira Gloe-Semler until 31 March
2016, Martina Grundler from
representatives (in addition to
Dr. Wulf H. Bernotat: Dr. Helmut
Perlet, Jim Hagemann Snabe)
- Two employee representatives
(Jean-Jacques Cette,
- Three shareholder
by the Supervisory Board
(Dr. Wulf H. Bernotat)
STANDING COMMITTEE
- Chairman: appointed
AUDIT COMMITTEE
Rolf Zimmermann)
(Gabriele Burkhardt-Berg,
- Two employee representatives
representatives (Prof. Dr. Renate
Köcher, Dr. Wulf H. Bernotat)
- Two further shareholder
(Dr. Helmut Perlet)
of the Supervisory Board
- Chairman: Chairman
5 members
100
6/6
100
100
4/43
100
2/22
100
3/3
100
Christine Bosse
3/3
5/6
100
3/3
100
AUDIT COMMITTEE
Monitoring of the underwriting business,
of the related risk management and
strategy as well as developing an under-
writing policy.
Dr. Wulf H. Bernotat (Chairman)
7/7
100
Jean-Jacques Cette
5/7
Rolf Zimmermann
71
83
100
100
2/2
Rolf Zimmermann
50
1/2
Prof. Dr. Renate Köcher
100
2/2
Gabriele Burkhardt-Berg
6/6
100
Dr. Wulf H. Bernotat
100
2/2
Dr. Helmut Perlet (Chairman)
STANDING COMMITTEE
66
2/34
83
5/6
2/2
Ira Gloe-Semler
2/22
100
Dr. Friedrich Eichiner
Jürgen Lawrenz
Peter Denis Sutherland
NOMINATION COMMITTEE
Dr. Helmut Perlet (Chairman)
Prof. Dr. Renate Köcher
Peter Denis Sutherland
Jim Hagemann Snabe
4/4
100
0/14
3/31
6/6
100
6/6
66
4/6
100
6/6
100
6/6
100
100
2/2
100
Martina Grundler
100
4/53
80
6/7
86
7/7
100
Jim Hagemann Snabe
Dr. Helmut Perlet
RISK COMMITTEE
Dr. Helmut Perlet (Chairman)
2/2
100
Dante Barban
2/2
100
Christine Bosse
2/2
100
1/11
Dr. Helmut Perlet (Chairman)
Designing, monitoring and improving
group-wide compensation systems in line
with regulatory requirements and sub-
mitting an annual report on the results of
its monitoring, along with proposals for
improvement.
Annual Report 2016 - Allianz Group
GROUP INVESTMENT COMMITTEE
Members of the Board of Management
and executives below Allianz SE Board
level
Employee of Allianz Managed Operations & Services SE
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Membership in Group bodies
Allianz Managed Operations & Services SE
JIM HAGEMANN SNABE
Member of various Supervisory Boards
Membership in other statutory supervisory boards
and SE administrative boards in Germany
SAP SE
Siemens AG
Membership in comparable' supervisory bodies
A.P. Møller-Mærsk A/S
JÜRGEN LAWRENZ
since 12 April 2016
Danske Bank A/S
until 17 March 2016
PETER DENIS SUTHERLAND
until 4 May 2016
Member of various Supervisory Boards
Membership in comparable¹ supervisory bodies
BW Group Ltd.
Koç Holding A.Ş.
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 2016 - Allianz Group
11
A - To Our Investors
Bang & Olufsen A/S
Mandates of the Members
Robert Bosch GmbH
Infineon Technologies AG
DR. GÜNTHER THALLINGER
Allianz Life Insurance Company of North America
(Chairman)
Asset Management, US Life Insurance
Membership in comparable¹ supervisory bodies
Membership in Group bodies
until 30 June 2016
JAY RALPH
Allianz Worldwide Partners S.A.S.
Allianz Managed Operations & Services SE (Chairman)
Membership in comparable¹ supervisory bodies
Membership in Group bodies
DR. CHRISTOF MASCHER
Operations, Allianz Worldwide Partners
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Volkswagen Autoversicherung AG
Membership in Group bodies
Companhia de Seguros Allianz Portugal S.A.
Nestlé Deutschland AG
Regional Representative Financial Services
MARTINA GRUNDLER
since 1 April 2016
National Representative Insurances, ver.di Berlin
PROF. DR. RENATE KÖCHER
Head of "Institut für Demoskopie Allensbach"
(Allensbach Institute)
Membership in other statutory supervisory boards
and SE administrative boards in Germany
BMW AG
of ver.di Hamburg
of the Board of Management
OLIVER BÄTE
Chairman of the Board of Management
since 1 July 2016
Asset Management, US Life Insurance
Membership in comparable¹ supervisory bodies
Membership in Group bodies
Allianz Life Insurance Company of North America
(Chairwoman)
since 22 July 2016
DR. HELGA JUNG
Insurance Iberia & Latin America, Legal, Compliance,
Mergers & Acquisitions
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Deutsche Telekom AG
JACQUELINE HUNT
since 25 May 2016
Allianz Asset Management AG (Chairwoman)
Allianz Deutschland AG
since 11 March 2016
Allianz Global Corporate & Specialty SE
Membership in comparable¹ supervisory bodies
UniCredit S.p.A.
until 31 May 2016
Membership in Group bodies
1/24
Membership in Group bodies
Allianz Yasam ve Emeklilik A.S.
Allianz Sigorta A.S.
until 22 July 2016
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Membership in Group bodies
Allianz Deutschland AG
Membership in comparable' supervisory bodies
Membership in Group bodies
Allianz France S.A.
until 5 May 2016
SERGIO BALBINOT
Insurance Western & Southern Europe
Insurance Middle East, Africa
Asia Pacific
since 1 January 2017
Membership in comparable¹ supervisory bodies
Bajaj Allianz General Insurance Co. Ltd.
since 12 January 2016
Bajaj Allianz Life Insurance Co. Ltd.
since 12 January 2016
UniCredit S.p.A.
Allianz Compañía de Seguros y Reaseguros S.A.
since 9 June 2016
Membership in Group bodies
Allianz France S.A.
Allianz S.p.A.
since 1 January 2017
RESPONSIBILITIES
Investment Management
Allianz Asset Management AG
Dr. Christof Mascher (Chairman),
Jay Ralph until 30 June 2016,
Jacqueline Hunt from 1 July 2016,
Dr. Axel Theis,
GROUP IT COMMITTEE
Dr. Maximilian Zimmerer.
Dr. Axel Theis,
Dr. Helga Jung until 6 July 2016,
Jay Ralph until 30 June 2016,
Dr. Dieter Wemmer (Chairman),
Sergio Balbinot,
GROUP FINANCE AND RISK COMMITTEE
Dr. Maximilian Zimmerer.
Dr. Dieter Wemmer,
Dr. Dieter Wemmer,
(dissolved effective as of 1 July 2016)
Oliver Bäte (Chairman),
BOARD COMMITTEES
BOARD COMMITTEES
BOARD OF MANAGEMENT AND GROUP COMMITTEES
In the financial year 2016, there were the following Board of Manage-
ment committees:
Regular Board of Management meetings are led by the Chair-
man. Each member of the Board may request a meeting, providing
notification of the proposed subject. The Board takes decisions by a
simple majority of participating members. In the event of a tie, the
Chairman casts the deciding vote. The Chairman can also veto deci-
sions, but cannot impose any decisions against the majority vote.
The members of the Board of Management are jointly responsible
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 func-
tional responsibilities. The latter include the Finance-, Risk Manage-
ment- and Controlling-Function, Investments, Operations – includ-
ing IT-, Human Resources, Legal and Compliance, Internal Audit and
Mergers & Acquisitions. Business division responsibilities focus on
geographical regions or Global Lines, such as Asset Management.
Rules of procedure specify in more detail the structure and depart-
mental responsibilities of the Board of Management.
The Board of Management of Allianz SE comprises nine members. It
is responsible for setting business objectives and the strategic direc-
tion, coordinating and supervising the operating entities, as well as
implementing and overseeing an efficient risk management system.
The Board of Management also prepares the Group's consolidated
financial statements and the annual financial statements of Allianz SE,
including the market value balance sheet, as well as interim reports.
Function of the Board of Management
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 stock corporation Act. How-
ever, 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.
of the European Company (SE)
GROUP CAPITAL COMMITTEE
Corporate Constitution
Dr. Werner Zedelius.
AND ACQUISITIONS COMMITTEE
Dr. Helga Jung (Chairwoman),
Oliver Bäte from 7 July 2016,
Dr. Dieter Wemmer,
Members of the Board of Management,
executives below Allianz SE Board level
and Chief Underwriting Officers of Group
companies
(continued as a functional committee
within Dr. Theis' area of responsibility
effective as of 1 July 2016)
GROUP UNDERWRITING COMMITTEE
GROUP COMPENSATION COMMITTEE
Board members of Allianz SE and
executives below Allianz SE Board level
GROUP COMMITTEES
GROUP COMMITTEES
tees:
In the financial year 2016, there were the following Group commit- Principles and function
B - Corporate Governance
GROUP MERGERS
Annual Report 2016 - Allianz Group
Besides Board committees, there are also Group committees whose
job it is to prepare decisions for the Board of Management of Allianz SE,
submit proposals for resolutions, and ensure the smooth flow of
information within the Group.
Managing and overseeing Group M & A
transactions, including approval of
individual transactions within certain
thresholds.
Developing, proposing, implementing
and monitoring a group-wide IT strategy,
approval of relevant IT investments.
stress tests.
Preparation of the capital and liquidity
planning for the Group and Allianz SE,
implementing and overseeing the
principles of group-wide capital and
liquidity planning, as well as investment
strategy and preparing risk strategy.
This includes, in particular, significant
individual investments and guidelines for
currency management, Group financing
and internal Group capital management,
as well as establishing and overseeing a
group-wide risk management and
monitoring system including dynamic
Proposals to the Board of Management
concerning risk capital management,
including group-wide capital and liquidity
planning, as well as investment strategy.
RESPONSIBILITIES
as of 31 December 2016
Dr. Maximilian Zimmerer until 6 July 2016.
14
Good corporate governance is essential for sustainable business per-
formance. The Board of Management and the Supervisory Board of
Allianz SE thus attach great importance to complying with the recom-
mendations of the German Corporate Governance Code (referred to
hereinafter as the “Code”). The Declaration of Conformity with the
recommendations of the Code, issued by the Board of Management
and the Supervisory Board on 15 December 2016, and the company's
position regarding the Code's suggestions can be found in the State-
ment on Corporate Management pursuant to § 315 (5) and § 289a of
the HGB starting on > page 19.
Corporate Governance Report
B - Corporate Governance
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Insurance German Speaking Countries and
Central & Eastern Europe
DR. WERNER ZEDELIUS
since 10 May 2016
Membership in comparable¹ supervisory bodies
UBS Group AG
Allianz Investment Management SE
Allianz Asset Management AG
Membership in Group bodies
Membership in other statutory supervisory boards
and SE administrative boards in Germany
FC Bayern München AG
Finance, Controlling, Risk
Euler Hermes Group S.A. (Chairman since 25 May 2016)
Allianz Insurance plc (Chairman)
Allianz Irish Life Holdings plc
Allianz Australia Ltd.
Allianz Global Corporate & Specialty SE (Chairman)
Membership in comparable¹ supervisory bodies
Membership in Group bodies
Global Insurance Lines & Anglo Markets
Membership in other statutory supervisory boards
and SE administrative boards in Germany
ProCurand GmbH & KGaA (Chairman)
Membership in Group bodies
DR. AXEL THEIS
since 22 July 2016
Allianz S.p.A.
Allianz Investment Management SE (Chairman)
Membership in comparable¹ supervisory bodies
Membership in Group bodies
DR. DIETER WEMMER
Membership in Group bodies
Allianz Deutschland AG (Chairman)
Allianz Investment Management SE
13
- Allianz Group
Annual Report 2016
B
CORPORATE GOVERNANCE
12
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.
Allianz Investment Management SE (Chairman)
Allianz Lebensversicherungs-AG
Allianz Asset Management AG
Membership in Group bodies
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Insurance Asia Pacific
Investments, Global Life/Health
until 31 December 2016
DR. MAXIMILIAN ZIMMERER
since 31 January 2017
Allianz Tiriac Asigurari S.A.
Allianz Suisse Lebensversicherungs-Gesellschaft AG
Allianz Suisse Versicherungs-Gesellschaft AG
Allianz Elementar Lebensversicherungs-AG (Chairman)
Allianz Elementar Versicherungs-AG (Chairman)
Allianz Investmentbank AG
Membership in Group bodies
Membership in comparable¹ supervisory bodies
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Membership in Group bodies
50
IRA GLOE-SEMLER
100
A - To Our Investors
DR. HELMUT PERLET
Chairman
Member of various Supervisory Boards
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Commerzbank AG
GEA Group AG (Chairman since 20 April 2016)
DR. WULF H. BERNOTAT
Vice Chairman
Member of various Supervisory Boards
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Bertelsmann Management SE
Bertelsmann SE & Co. KGaA
Deutsche Telekom AG
Vonovia SE (Chairman)
ROLF ZIMMERMANN
Vice Chairman
Chairman of the (European) SE Works Council
of Allianz SE
Membership in comparable¹ supervisory bodies
Membership in Group bodies
of Allianz France S.A.
Chairman of the Group Works Council
JEAN-JACQUES CETTE
since 1 September 2016
Chairwoman of the Group Works Council of Allianz SE
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Allianz Deutschland AG
of the Supervisory Board
GABRIELE BURKHARDT-BERG
P/F BankNordik (Chairwoman)
Membership in comparable' supervisory bodies
Member of various Supervisory Boards
CHRISTINE BOSSE
Employee of Allianz S.p.A.
DANTE BARBAN
TDC A/S
Allianz France S.A.
Mandates of the Members
Chairman
until 1 April 2016
2/25
measures to reduce it were also dealt with in detail. Other matters considered were the risk
strategy of Allianz SE and of the Allianz Group, the risk categories “operational risk” and
"credit risk", the effects of the prevailing low-interest environment, and the rules for Global
Systematically Important Insurers (G-SII).
The Nomination Committee held four meetings, two of which by conference call in 2016, in
which it dealt comprehensively with the proposals made by the shareholders for the election
of the Supervisory Board by the 2017 AGM.
The Supervisory Board was regularly and comprehensively informed of the committees' work.
CHAIR AND COMMITTEES OF THE SUPERVISORY BOARD - as of 31 December 2016
Chairman: Dr. Helmut Perlet
Standing Committee: Dr. Helmut Perlet (Chairman), Dr. Wulf H. Bernotat,
Gabriele Burkhardt-Berg, Prof. Dr. Renate Köcher, Rolf Zimmermann
Personnel Committee: Dr. Helmut Perlet (Chairman), Christine Bosse, Rolf Zimmermann
Audit Committee: Dr. Wulf H. Bernotat (Chairman), Jean-Jacques Cette, Martina Grundler,
Dr. Helmut Perlet, Jim Hagemann Snabe
Risk Committee: Dr. Helmut Perlet (Chairman), Dante Barban, Christine Bosse,
Dr. Friedrich Eichiner, Jürgen Lawrenz
Nomination Committee: Dr. Helmut Perlet (Chairman), Prof. Dr. Renate Köcher,
Jim Hagemann Snabe
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 the AGM. The Supervisory Board has appointed KPMG as
statutory auditor for the annual Allianz SE and consolidated financial statements, as well as
for the review of the half-yearly financial report of the fiscal year 2016. KPMG audited the finan-
cial statements of Allianz SE and the Allianz Group as well as the respective management
reports. They issued an auditor's report without any reservations. The consolidated financial
statements were prepared on the basis of the International Financial Reporting Standards (IFRS),
as adopted in the European Union. KPMG performed a review of the half-yearly financial report.
The third-quarter results were subject to a voluntary review by KPMG. In addition, KPMG was
also mandated to perform an audit of the market value balance sheet according to Solvency II.
All Supervisory Board members received the documentation relating to the annual financial
statements and the auditor's reports from KPMG on schedule. The provisional financial state-
ments and KPMG's audit results were discussed in the Audit Committee on 15 February 2017
and in the plenary session of the Supervisory Board on 16 February 2017. The final financial
statements and KPMG's audit reports were reviewed on 9 March 2017 by the Audit Committee
and in the Supervisory Board plenary session. The auditors participated in these discussions
and presented the main results from the audit. No material weaknesses in the internal financial
Annual Report 2016 - Allianz Group
Dr. Helmut Perlet
10
10
For the Supervisory Board:
Munich, 9 March 2017
As already mentioned, the 2016 financial year also saw personnel changes within Allianz SE's
Board of Management. Mr. Jay Ralph and Dr. Maximilian Zimmerer stepped down from
the Board of Management with effect from 30 June 2016 and 31 December 2016, respectively.
Ms. Jacqueline Hunt was appointed as successor to Mr. Ralph with effect from 1 July 2016.
Dr. Zimmerer was replaced by Dr. Günther Thallinger with effect from 1 January 2017.
Annual Report 2016 - Allianz Group
Ms. Ira Gloe-Semler resigned from her office of employee representative on the Supervisory
Board effective 31 March 2016, due to her change of function with the union ver.di. The SE
Works Council appointed Ms. Martina Grundler, also a representative of the union ver.di, as her
successor. Mr. Peter Denis Sutherland stepped down from the Supervisory Board following the
AGM on 4 May 2016, having reached retirement age. Dr. Friedrich Eichiner was elected to the
Supervisory Board as his successor by the AGM.
The Supervisory Board would like to thank all Allianz Group employees for their great personal
commitment over the past year.
On the basis of our own reviews of the annual Allianz SE and consolidated financial state-
ments, the management and group management reports and the recommendation for appro-
priation of earnings, we raised no objections and agreed with the results of the KPMG audit.
We approved the Allianz SE and consolidated financial statements prepared by the Board of
Management. We agree with the Board of Management's proposal on the appropriation of
earnings.
reporting control process were discovered. There were no circumstances that might give
cause for concern about the auditor's independence. In addition, the market-value balance
sheet as of 31 December 2016 as well as the relevant KPMG report, were addressed by the Audit
Committee and Supervisory Board.
A - To Our Investors
9
A - To Our Investors
MEMBERS OF THE SUPERVISORY BOARD AND BOARD OF MANAGEMENT
DR. FRIEDRICH EICHINER
since 4 May 2016
Vice Chairmen: Dr. Wulf H. Bernotat, Rolf Zimmermann
Membership in comparable' supervisory bodies
Festo Management AG
Members of the Supervisory Board may not, in general, be older than 70 years of age.
4. Retirement age
extraordinary meetings of the Supervisory Board or of a committee may be
necessary to deal with special matters.
depending on possible memberships in one or more of the currently five Super-
visory Board committees, extra time planning to participate in the committee
meetings and to prepare for such meetings is required; this applies in particular to
the Audit and Risk Committees;
Employee representation within Allianz SE, as provided for by the SE Agreement con-
cerning the Participation of Employees dated 3 July 2014, contributes to diversity of
work experience and cultural background. Pursuant to § 6 (2) sentence 2 of the Act on
the Participation of Employees in a European Company (SEBG), the number of women
and men appointed as German employee representatives should be proportional to
the number of women and men working in the German companies. However, the
Supervisory Board does not have the right to select the employee representatives.
The following requirements and objectives apply to the composition of Allianz SE'S
Supervisory Board:¹
- attendance of the General Meeting is required;
- sufficient time has to be dedicated for the audit of the annual and consolidated
financial statements;
- there at least four, but usually six ordinary Supervisory Board meetings per year,
each of which requires adequate preparation;
Each member of the Supervisory Board must ensure that it has sufficient time to
dedicate to the proper fulfilment of the Supervisory Board mandate. It has to be taken
into account that
3. Time of availability
It must be taken into account that the possible emergence of conflicts of interest in
individual cases cannot, as a general rule, be excluded. Potential conflicts of interest
must be disclosed to the chairman of the Supervisory Board and will be resolved by
appropriate measures.
At least eight members of the Supervisory Board should be independent as defined
by No. 5.4.2 of the Corporate Governance Code, i.e. they may not have any business
or personal relations with Allianz SE or its Executive Bodies, a controlling shareholder
or an enterprise associated with the latter, which may cause a substantial and not
merely temporary conflict of interests. In case shareholder representatives and
employee representatives are viewed separately, at least four members should be
independent within the meaning of No. 5.4.2 of the Corporate Governance Code.
Regarding employee representatives, however, the mere fact of employee repre-
sentation and the existence of a working relationship with the company shall not
itself affect independence.
2. Independence
- Compliance with the limitation on the number of mandates as recommended by
the German Corporate Governance Code and required by § 24 (4) of the German
Insurance Supervision Act 2016 ("Versicherungsaufsichtsgesetz - VAG").
- Knowledge of the field of corporate governance and supervisory law
- Knowledge of the main features of accounting and risk management
- Reliability
General knowledge of the insurance and financial services business
Willingness and ability to make sufficient commitments on substance
Fulfillment of the regulatory requirements, in particular¹:
16
Member of various Supervisory Boards
Membership in other statutory supervisory boards
and SE administrative boards in Germany
Festo AG
116
1 - Dr. Eichiner joined the Supervisory Board on 4 May 2016.
2- Ms. Gloe-Semler left the Supervisory Board on 31 March 2016.
3- Ms. Grundler joined the Supervisory Board on 1 April 2016.
4- Mr. Sutherland left the Supervisory Board on 4 May 2016.
5-Mr. Snabe joined the Nomination Committee on 4 May 2016.
Annual Report 2016 - Allianz Group
REGARDING ITS COMPOSITION
5. Term of membership
The objectives for the composition of the Supervisory Board (in the
version from August 2016) to implement a recommendation by the
Code, are as follows:
B - Corporate Governance
"The aim of Allianz SE's Supervisory Board is to have members who are equipped with
the necessary skills and competence to properly supervise and advise Allianz SE's
management. Supervisory Board candidates should possess the professional expertise
and experience, integrity, motivation and commitment, independence and personality
required to successfully carry out the responsibilities of a Supervisory Board member
in a financial-services institution with international operations. To promote additional
cooperation among Supervisory Board members, care should be taken in selecting the
candidates to ensure that adequate attention is paid to ensuring diversity in occupa-
tional backgrounds, professional expertise and experience.
I. Requirements relating to the individual members
of the Supervisory Board
1. General selection criteria
- Managerial or operational experience
OBJECTIVES OF ALLIANZ SE'S SUPERVISORY BOARD REGARDING ITS COMPOSITION
The continuous period of membership for any member of the Supervisory Board
should, as a rule, not exceed 15 years.
OBJECTIVES OF THE SUPERVISORY BOARD
1. Specialist knowledge
II. Requirements relating to the composition of the Board as a whole
The regulatory requirements for corporate governance as set out in
Solvency II are additionally important. These requirements, which
became effective as of 1 January 2016, include, in particular, the
establishment and further design of significant control functions
(risk management, actuarial function, compliance and internal
audit) as well as general principles for a sound business organiza-
tion. The regulatory requirements are applicable throughout the
Group and have been implemented using written guidelines issued
by the Board of Management of Allianz SE. For the financial year 2016
it was required to prepare for the first time a market value balance
sheet at the individual and Group level, for this to be audited by the
auditor and separately reported on.
Annual Report 2016 - Allianz Group
When adopting resolutions, each share carries one vote. Shareholders
can follow the AGM's proceedings on the internet and be represented
by proxies. These proxies exercise voting rights exclusively on the
basis of instructions given by the shareholder. Shareholders are also
able to cast their votes via the internet in the form of online voting.
Allianz SE regularly promotes the use of internet services.
Shareholders exercise their rights at the Annual General Meeting. Regulatory requirements
To ensure maximum transparency, we inform our shareholders,
financial analysts, the media and the general public about the com-
pany's situation on a regular basis and in a timely manner. The annu-
al financial statements of Allianz SE, the Allianz Group's consolidated
financial statements and the respective management reports are
published within 90 days of the end of each financial year. Additional
information is provided in the Allianz Group's half-yearly financial
reports and quarterly statements. Information is also made available
at the AGM, at press and analysts' conferences, as well as on the Allianz
Group's website. Our website also provides a financial calendar list-
ing the dates of major publications and events, such as annual
reports, quarterly statements and half-yearly financial reports, AGMS
as well as analyst conference calls and Financial press conferences.
You can find the 2017 financial calendar on our website at
> www.allianz.com/financialcalendar.
In compliance with special legal provisions that apply to insur-
ance companies, the auditor of the annual financial statements and
of the half-yearly financial report is appointed by the Supervisory
Board, and not by the AGM. The audit of the financial statements cov-
ers the individual financial statements of Allianz SE and also the con-
solidated financial statements of the Allianz Group.
The Allianz Group prepares its accounts according to § 315a of the
German Commercial Code ("Handelsgesetzbuch- HGB") on the basis
of International Financial Reporting Standards (IFRS) as adopted
within the European Union. The annual financial statements of
Allianz SE are prepared in accordance with German law, in particular
the HGB.
Annual General Meeting
Members of the Board of Management and the Supervisory Board are
obliged by the E.U. Market Abuse Directive to disclose to both Allianz SE
and the German Federal Financial Supervisory Authority any trans-
actions 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 five
thousand Euros or more within a calendar year. These disclosures are
published on our website at: ②> www.allianz.com/directorsdealings.
Directors' dealings
The total holdings of members of the Board of Management and the
Supervisory Board of Allianz SE amounted to less than 1% of the com-
pany's issued shares as of 31 December 2016.
Shares held by members of the Board of
Management and the Supervisory Board
objectives. It has an appropriate number of independent members
with international backgrounds. With four female Supervisory Board
members, the current legislation for equal participation of women
and men in leadership positions (statutory gender quota of 30%) is
being met. The current composition of the Supervisory Board and its
committees is described on > page 9.
The composition of the Supervisory Board of Allianz SE reflects these Accounting and auditing
The AGM elects the shareholder representatives of the Super-
visory Board and approves the actions taken by the Board of Manage-
ment and the Supervisory Board. It decides on the use of profits,
capital transactions and the approval of intercompany agreements,
as well as the remuneration of the Supervisory Board and changes to
the company's Statutes. In accordance with European regulations
and the Statutes, changes to the Statutes require a two-thirds major-
ity of votes cast in case less than half of the share capital is repre-
sented in the AGM. Each year, an ordinary AGM takes place at which
the Board of Management and Supervisory Board give an account of
the preceding financial year. For special decisions, the German Stock
Corporation Act provides for the convening of an extraordinary AGM.
17
-
B - Corporate Governance
Make certain that the members in their entirety are familiar with the insurance
and financial-services industry as defined under Article 100 (5) of the German Stock
Corporation Act (AktG).
At least one member must have considerable experience in the insurance and
financial-services fields
At least one member must have expert knowledge of accounting and auditing as
defined by § 100 (5) of the German Stock Corporation Act.
Specialist knowledge of, or experience in, other economic sectors.
2. International character
18
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.
1- For further details, please see BaFin Guidance Notice on Vetting Members of Administrative and Super-
visory Bodies in accordance with the German Banking Act and the German Insurance Supervision Act in
its respective effective version.
The members of the Supervisory Board shall complement one another regarding their
background, professional experience and specialist knowledge, in order to provide the
Supervisory Board with the most diverse sources of experience and specialist
knowledge possible.
The 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 Allianz SE as a Societas Europaea (European Company), Allianz employees from
different Member States of the E.U. are considered in the distribution of Supervisory
Board seats for employee representatives, according to the Agreement concerning the
Participation of Employees in Allianz SE dated 3 July 2014.
3. Diversity and appropriate representation of women
Annual Report 2016 - Allianz Group
14
14
Perquisites
750
750
Max
750
750
750
750
750
Base Salary
Target
Target
B - Corporate Governance
2016
2015
2016
2016
Payout¹
Grant
Grant
Actual
Dr. Helga Jung (Appointed: 01/2012)
14
INDIVIDUAL REMUNERATION: 2016 AND 2015
€ THOU (total might not sum up due to rounding)
Min
2015
750
14
889
27
1,125
750
GEI 2010/RSU4
AEI 2011/RSU4
AEI 2016/RSU4
AEI 2017/RSU4
MTB (2013-2015)3
MTB (2016-2018)²
Deferred Compensation
889
758
14
889
750
Annual Bonus
Annual Variable Compensation
764
764
764
764
764
764
764
Total fixed compensation
14
14
1,125
Annual Report 2016 - Allianz Group
4,095
10-Jacqueline Hunt received an off-cycle one time payment of € 120 THOU to reimburse her for relocation
3,255
365
222
365
365
365
365
222
1,765
2,781
3,730
4,157
782
3,032
3,033
750
983
1,125
750
999
750
983
1,125
750
377
983
750
3,397
1,147
4,522
3,003
9- Jacqueline Hunt joined Allianz on 1 July 2016. She received a pro-rated base salary, annual bonus, MTB
tranche, and equity-related compensation. The different pro-rated amounts for base salary and target
amounts result from different pro-rating methodologies, which are generally applied. In addition to the
amounts disclosed in the table, Jacqueline Hunt received a buyout award of € 170 THOU to compensate
for forfeited grants from her previous employer.
8- In addition to the amounts disclosed in the table, Sergio Balbinot received a buyout award of € 6 MN to
compensate for forfeited grants from his previous employer: € 3 MN in cash and € 3 MN in RSUS. 50% of
the cash amount was paid in February 2015 and 50% was paid in 2016 and are subject to clawback.
7- For performance year 2015, Oliver Bäte's base salary and his target for the annual bonus, the MTB tranche,
and equity-related compensation are disclosed based on his pro-rated base salary of € 750 THOU until
6 May 2015 and his pro-rated base salary of € 1,125 THOU from 7 May 2015. The different pro-rated
amounts for base salary and target amounts result from different pro-rating methodologies, which are
generally applied.
1,126
159
967
2,039
2,368
670
1,801
159
159
159
cost.
159
2,209
511
1,642
456
566
377
456
566
377
456
456
566
2,130
1,880
2,534
778
1,125
GEI 2010/RSU4
AEI 2011/RSU4
AEI 2012/RSU4
750
973
1,125
750
956
750
973
1,125
750
AEI 2016/RSU4
AEI 2017/RSU4
MTB (2013-2015)3
MTB (2016-2018)²
Deferred Compensation
973
956
973¦
1,125
750
750
Annual Bonus
Annual Variable Compensation
777
778
GEI 2010/SAR5
GEI 2008/SAR5
Total
Pensions Service Cost
6-Pension Service Cost in accordance with IAS 19: represents the company cost not the actual entitlement
nor a payment, however, according to the German Corporate Governance Code the Pension Service Cost
is to be included in all columns.
Annual Report 2009 (starting on page 17). Whereas the GEI/RSU grants are automatically exercised at the
vesting date, the GEI/SAR grants are exercised by the Board member within the exercise period following
the vesting date. Hence, the total payout from SARS depends on the individual decision by the Board
member. SARS are released to plan participants upon expiry of the vesting period, assuming all other
exercise hurdles are met. For SARS granted until and including 2008, the vesting period was two years and
the exercise period five years. SARS can be exercised on the condition that the price of the Allianz SE stock
is at least 20% above the strike price at the time of grant. During the term of the plan, at least once on five
consecutive trading days the Allianz SE stock must relatively appreciate at least 0.01 percentage points
ahead of the appreciation of the Dow Jones EURO STOXX Price Index (600).
5-The equity-related remuneration that applied before 2010 consisted of two vehicles, virtual stock awards
known as RSUs and virtual stock options known as "Stock Appreciation Rights" (SAR). Only RSUs have been
awarded as of 1 January 2010. The remuneration system valid until December 2009 is disclosed in the
3- The payout 2015 figure includes the 2015 allocation and the accruals from the performance years 2013
and 2014, as adjusted by the sustainability assessment. The MTB 2013-2015 was paid out in spring 2016.
4-Payout is capped at 200% above grant price. The relevant share price used to determine the fair market
value, and hence the final number of RSUS granted, and the 200% cap are only available after sign-off by
the external auditors.
2- The MTB figure included in the "Actual Grant" column shows the annual accrual.
1- In accordance with the German Corporate Governance Code, the annual bonus disclosed for perfor-
mance year 2016 is paid in 2017 and for performance year 2015 in 2016. The payments for equity related
deferred compensation (GEI and AEI), however, are disclosed for the year in which the actual payment
was made.
2,233
3,086
4,179
4,635
1,260
3,510
3,424
778
482
482
482
482
482
397
1,751
2,689
3,697
4,153
778
3,028
3,027
Total
397
750
778
777
4,330
3,850
4,559
1,184
3,434
3,288
Total
420
274
420
420
420
420
274
Pensions Service Cost
1,653
4,056
3,430
4,139
764
3,014
3,014
Total
GEI 2008/SAR5
GEI 2010/SAR5
750
889
2,073
Dr. Axel Theis (Appointed: 01/2015)
Actual
Grant
Total fixed compensation
28
27
28
28
28
28
27
Perquisites
750
750
750
750
778
750
750
Base Salary
Max
Min
Target
Target
2016
2015
2016
2016
2015
Payout¹
Grant
750
AEI 2012/RSU4
Target
750
Alignment of pay and performance: The performance-based,
variable component forms a significant portion of the overall
remuneration.
Variable remuneration focused on sustainability and aligned with
shareholder interests: Two thirds of the variable remuneration
reflect longer-term performance. One third is a deferred payout
after three years, based on a sustainability assessment covering
the three-year period. The other third rewards the sustained per-
formance of the share price with a deferred payout four years
after grant.
The structure, weighting and level of the Allianz SE Board of Manage-
ment remuneration is decided upon by the Supervisory Board. Remu-
neration survey data of DAX 30 companies and international insur-
ance peers is provided by external consultants. Compensation levels
are around the third quartile of this group, which we deem appropriate
given the relative size, complexity and sustained performance of
Allianz within that peer group. The structure of the remuneration is
more strongly weighted towards variable, longer-term components
than it is in most DAX 30 companies. Remuneration and benefit
arrangements are also periodically compared with best practices. In
addition, the Supervisory Board takes into account remuneration
levels within the Allianz Group when reviewing the adequateness and
appropriateness of the Board of Management's remuneration.
REMUNERATION STRUCTURE,
COMPONENTS AND TARGET SETTING PROCESS
There are four main remuneration components. Each has the same
weighting within annual target remuneration: base salary, annual
bonus, annualized mid-term bonus (MTB), and equity-related remu-
neration. The target compensation of each variable component does
not exceed the base salary, with the total target variable compensation
not exceeding three times the base salary. In addition, Allianz offers
pensions and similar benefits and perquisites.
Support of the Group's strategy: Performance targets reflect the
Allianz Group's business strategy.
BASE SALARY
VARIABLE REMUNERATION
Variable remuneration is designed to balance short-term perfor-
mance, longer-term success and sustained value creation. Each year,
the Supervisory Board agrees with members of the Board of Manage-
ment on performance targets for the variable remuneration com-
ponent. These are documented for the upcoming financial year.
Every three years, the MTB sustainability criteria, as described on
> page 25, are set for the following mid-term period. All variable
awards are made under the rules and conditions of the "Allianz Sus-
tained Performance Plan" (ASPP). The grant of variable remuneration
components is related to performance and can vary between 0% and
150% of the respective target values. If performance was rated at 0%
no variable component would be granted. Consequently, the mini-
mum total direct compensation for a regular member of the Board of
Management equals the base salary of € 750 THOU (excluding perqui-
sites and pension contributions). The maximum total direct com-
pensation (excluding perquisites and pension contributions) is
€ 4,125 THOU: base salary € 750 THOU plus € 3,375 THOU (150% of the sum
of all three variable compensation components at target).
Details on the variable compensation components:
Annual bonus (short-term): A cash payment which rewards the
achievement of quantitative and qualitative targets for the
respective financial year and is paid in the year following the per-
formance year. Under the "Inclusive Meritocracy" approach, the
cultural change element of the Renewal Agenda, Group-related
targets account for 50% (equally divided between annual operat-
ing profit and annual net income). The other 50% are linked to
individual performance, which consists of quantitative and qual-
itative criteria. For members of the Board of Management with
business division responsibilities, respective quantitative targets
comprise operating profit, net income, Property-Casualty reve-
nues and Life New Business Value. For members of the Board of
Management with a functional focus, the divisional quantitative
targets are determined based on their key responsibilities. The
Chairman of the Allianz SE Board of Management does not have
divisional quantitative targets. In all cases, the personal contribu-
tion to the Renewal Agenda is assessed alongside behavioral
24
24
Annual Report 2016 - Allianz Group
B - Corporate Governance
The base salary is the fixed remuneration component, expressed as
an annual cash sum and paid in twelve monthly installments.
aspects. The latter is framed in a common standard ("People Let-
ter") designed to drive cultural change across the Group, namely:
REMUNERATION PRINCIPLES AND MARKET POSITIONING
The key principles of Board of Management remuneration are as
follows:
GOVERNANCE SYSTEM
Statement on Corporate Management pursuant
to § 315 (5) and § 289a of the HGB
B - Corporate Governance
983
22
Annual Report 2016 - Allianz Group
remuneration for the remaining term of the service contract, but lim-
ited, for the purpose hereof, to three years, in the form of a one-off
payment. The one-off payment is based on the fixed remuneration
plus 50% of the variable remuneration, however, this basis being lim-
ited to the amount paid for the last fiscal year. To the extent that the
remaining term of the service contract is less than three years, the
one-off payment is generally increased in line with a term of three
years. This applies accordingly if, within two years of a change of con-
trol, a mandate in the Board of Management comes to an end and is
not extended; the one-off payment will then be granted for the period
between the end of the mandate and the end of the three-year period
after the change of control. For further details, please refer to the
Remuneration Report starting on ②> page 24.
-
The remuneration of the Board of Management is decided upon by
the entire Supervisory Board, based on proposals prepared by the
Personnel Committee. If required, outside advice is sought from
independent external consultants. The Personnel Committee and
the Supervisory Board consult with the Chairman of the Board of
Management, as appropriate, in assessing the performance and
remuneration of members of the Board of Management. The Chair-
man of the Board of Management is not present when his own remu-
neration is discussed. Regarding the activities and decisions taken by
the Personnel Committee and the Supervisory Board, please refer to
the Supervisory Board Report starting on > page 5.
Under the Allianz Sustained Performance Plan (ASPP), Restricted
Stock Units (RSU) – i.e. virtual Allianz shares - are granted as a stock-
based remuneration component to senior management of the Allianz
Group worldwide. In addition, under the Group Equity Incentive (GEI)
scheme, Stock Appreciation Rights (SAR) – i.e. virtual options on
Allianz shares were also granted until 2010. Some of these are still
outstanding. The conditions for these RSU and SAR contain change-
of-control clauses, which apply if a majority of the voting share capital
in Allianz SE is acquired, directly or indirectly, by one or more third
parties who do not belong to the Allianz Group and which provide for
an exception from the usual vesting and exercise periods. The RSU
will be released, in line with their general conditions, by the company
for the relevant plan participants on the day of the change of control
without observing any vesting period that would otherwise apply. The
cash amount payable per RSU must equal the average market value
of the Allianz share and be equal to or above the price offered per
Allianz share in a preceding tender offer. In case of a change of control
as described above, SAR will be exercised, in line with their general
conditions, by the company for the relevant plan participants on the
day of the change of control, without observing any vesting period. By
providing for the non-application of the vesting period in the event of
a change of control, the terms take into account the fact that the con-
ditions under which the share price moves are very different when
there is a change of control.
B - Corporate Governance
23
B - Corporate Governance
Remuneration Report
This report covers the remuneration arrangements for the Board of
Management and the Supervisory Board of Allianz SE.
The report has been prepared in accordance with the require-
ments of the German Commercial Code (HGB), The German Accounting
Standard 17 and the International Financial Reporting Standards (IFRS).
It also takes into account the relevant regulatory provisions and the
recommendations of the German Corporate Governance Code.
Allianz SE Board of Management
remuneration
Annual Report 2016 - Allianz Group
The Statement on Corporate Management pursuant to § 315 (5) and Corporate governance practices
Customer and Market Excellence,
Collaborative Leadership,
Entrepreneurship,
To support the assessment of People Letter behaviors, a so-called
"multi-rater" process has been introduced. Each member of the
Board of Management collects feedback from the Chairman of
the Allianz SE Board of Management, the other Board members
and direct reports. The resulting analysis supports the assess-
ment of the behavioral part of performance and additionally
provides a sound basis for feedback and personal development
discussions. Based on the 2016 target achievement for the Group,
the business division/corporate functions, and the qualitative
performance, the total annual bonus awards ranged between
100% and 131% of the target, with an average bonus award of 123%
of the target.
From 1 January 2005 until 31 December 2014, most Board of Man-
agement members have participated in a contribution-based system
which was frozen as of 31 December 2014 and is now only covering
disability and death. Before 2005 a defined benefit plan provided fixed
benefits which were not linked to base salary increases. Benefits gen-
erated under this plan were frozen at the end of 2004. Additionally,
most Board members participated in the Allianz Versorgungskasse
VVaG, a contribution-based pension plan, and the Allianz Pensions-
verein e.V. which were closed for new entries as of 1 January 2015.
PERQUISITES
Perquisites mainly consist of contributions to accident and liability
insurances and the provision of a company car. Perquisites are not
linked to performance. Each member of the Board of Management is
responsible for the income tax on these perquisites. The Supervisory
Board regularly reviews the level of perquisites.
1- The fair market value of the RSUs is further subject to a small reduction of a few Euro cents due to the
200% cap on the RSU payout. This reduction is calculated based on a standard option pricing formula.
2-The relevant share price used to determine the final number of RSUS granted and the 200% cap is available
only after sign-off by the external auditors.
Annual Report 2016 - Allianz Group
25
For members of the Allianz SE Board of Management who were
born before 1 January 1958, and for the rights accrued before 2015, the
guaranteed minimum interest rate remains at 2.75% and the retire-
ment age is still 60.
B - Corporate Governance
The following remuneration disclosure is based on and compliant
with the German Corporate Governance Code and shows the indi-
vidual Board members' remuneration for 2015 and 2016, including
fixed and variable remuneration and pension service cost. The
"Grant" column below shows the remuneration at target and mini-
mum and maximum levels. The “Payout" column discloses the 2015
and 2016 payments. The base salary, annual bonus and perquisites
are linked to the reported performance years 2015 and 2016, whereas
the Group Equity Incentive (GEI) and Allianz Equity Incentive (AEI)
payouts result from grants related to the performance years
2008-2011. To enhance transparency remuneration related to the
performance year 2016, the additional column "Actual grant" includes
the 2016 fixed compensation, the annual bonus paid for 2016, the MTB
2016-2018 tranche accrued for the performance year 2016, and the
fair value of the RSU grant in 2017 for the performance year 2016.
INDIVIDUAL REMUNERATION: 2016 AND 2015
€ THOU (total might not sum up due to rounding)
Oliver Bäte? (Appointed: 01/2008; CEO since 05/2015)
Actual
Grant
Grant
REMUNERATION FOR 2016
Trust.
ments are met.
PENSIONS AND SIMILAR BENEFITS
MTB (mid-term): A deferred award which reflects the achieve-
ment of the annual targets by accruing an amount identical to
the annual bonus. The payout of the award at the end of a three-
year cycle is subject to a sustainability assessment for these three
years. The MTB 2016-2018 comprises sustainability (performance
and health) indicators, which are aligned with the Group's external
targets:
Performance indicators:
Sustainable improvement/stabilization of Return on Equity
(Return on Equity excluding unrealized gains/losses on
bonds net of shadow accounting),
Compliance with economic capitalization guidance (capi-
talization level and volatility limit);
Health indicators (aligned with the Renewal Agenda):
-
True Customer Centricity,
To provide competitive and cost-effective retirement and disability
benefits, company contributions to the current pension plan “My
Allianz Pension" are invested in a fund with a guarantee for the con-
tributions paid, but no further interest guarantee. On retirement, the
accumulated capital is paid out as lump sum or can be converted into
a lifetime annuity. Each year the Supervisory Board decides whether
and to what extent a budget is provided, also taking into account the
targeted pension level. This budget includes a risk premium paid to
cover death and disability. The earliest age a pension can be drawn is
62, except for cases of occupational or general disability for medical
reasons. In these cases, it may become payable earlier and an
increase by projection may apply. In the case of death, a lump sum,
which can be converted into an annuity, will be paid to dependents.
Should Board membership cease before retirement age for other
reasons, the accrued pension rights are maintained if vesting require-
Digital by Default,
Growth Engines,
Inclusive Meritocracy (including gender diversity - women
in leadership).
Equity-related remuneration (long-term): A virtual share award,
known as "Restricted Stock Units" (RSUS). The grant value of the
RSUS allocated equals the annual bonus of the performance year.
The number of RSUS allocated is derived from dividing the grant
value by the fair market value of an RSU at the time of grant.
The fair market value is calculated based on the ten-day
average Xetra closing price of the Allianz stock following the
financial press conference on the annual results. As RSUs are vir-
tual stocks without dividend payments, the average Xetra closing
price is reduced¹ by the net present value of the expected future
dividend payments during the vesting period. The expected divi-
dend stream is discounted with the respective swap rates as of
the valuation day. Following the end of the four-year vesting
period, the company makes a cash payment based on the number
of RSUS granted and the ten-day average Xetra closing price of the
Allianz stock following the annual financial press conference in
the year of expiry of the respective RSU plan. The RSU payout is
capped at 200% above grant price to avoid extreme payouts². Out-
standing RSU holdings are forfeited should a Board member leave
at his/her own request or be terminated for cause.
Variable remuneration components may not be paid, or payment
may be restricted, in the case of a breach of the Allianz Code of Con-
duct, risk limits, or compliance requirements. Additionally, a reduc-
tion or cancellation of variable remuneration may occur if the super-
visory authority (BaFin) requires this in accordance with its statutory
powers.
Technical Excellence,
Payout¹
§ 289a of the German Commercial Code ("Handelsgesetzbuch- HGB")
forms part of the Group Management Report. According to § 317 (2),
sentence 4 of the HGB, this Statement does not have to be included
within the scope of the audit.
On 15 December 2016, the Board of Management and the Supervisory
Board issued the following Declaration of Conformity of Allianz SE
with the German Corporate Governance Code (hereinafter the "Code"):
Annual Report 2016 - Allianz Group
Amendments to the Statutes must be adopted by the General
Meeting. § 13 (4) of the Statutes of Allianz SE stipulates that, unless this
conflicts with mandatory law, changes to the Statutes require a two-
thirds majority of the votes cast, or, if at least one half of the share
capital is represented, a simple majority of the votes cast. The Sta-
tutes thereby make use of the option set out in § 51 of the SE Imple-
mentation Act (“SE-Ausführungsgesetz – SEAG”), which is based upon
Article 59 (1) and (2) of the SE Regulation. A larger majority is required,
inter alia, for a change in the corporate object or the relocation of the
registered office to another E.U. member state (§ 51 SEAG). The Super-
visory Board may alter the wording of the Statutes (§ 179 (1) AktG and
§ 10 of the Statutes).
German insurance supervisory law requires that members of the
Board of Management have the reliability and professional compe-
tence needed to manage an insurance company. A person cannot
become a member of the Board of Management if he or she is already
a manager of two other insurance undertakings, pension funds,
insurance holding companies or insurance special purpose vehicles.
However, the supervisory authority may permit more than two such
mandates if they are held within the same group (§ 24(3) of the German
Insurance Supervision Act ("Versicherungsaufsichtsgesetz – VAG”)).
The Federal Financial Services Supervisory Authority ("Bundesanstalt
für Finanzdienstleistungsaufsicht – BaFin”) must be notified about
the intention of appointing a Board of Management member pursuant
to § 47 No. 1 VAG.
According to §5 (1) of the Statutes, the Board of Management
shall consist of at least two persons. Apart from that, the Supervisory
Board determines the number of members. The Supervisory Board
has appointed a Chairman of the Board of Management pursuant to
§ 84(2) AktG.
The Supervisory Board appoints the members of Allianz SE's Board of
Management for a maximum term of five years (Articles 9(1), 39(2)
and 46 of the SE Regulation, §§ 84, 85 AktG and § 5 (3) of the Statutes).
Reappointments, for a maximum of five years each, are permitted. 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). If a required member of the Board of Man-
agement is missing, in urgent cases the courts must appoint such
member upon the application of an interested party (§ 85 AktG). The
Supervisory Board may dismiss members of the Board of Manage-
ment if there is an important reason (§ 84 (3) AktG).
LEGAL AND STATUTORY PROVISIONS APPLICABLE
TO THE APPOINTMENT AND REMOVAL OF MEMBERS OF
THE BOARD OF MANAGEMENT AND TO AMENDMENTS
OF THE STATUTES
There are no shares with special rights conferring powers of control.
21
SHARES WITH SPECIAL RIGHTS
CONFERRING POWERS OF CONTROL
EXCEEDING 10% OF THE VOTING RIGHTS
INTERESTS IN THE SHARE CAPITAL
Shares acquired by employees of the Allianz Group as part of the
Employee Stock Purchase Plan are, in principle, subject to a one-year
lock-up period. Outside Germany, the lock-up period may in some
cases be up to five years. In some countries, in order to ensure that the
lock-up period is observed, the employee shares are held throughout
that period by a bank, another natural person or a legal entity acting
as a trustee. Nevertheless, employees may instruct the trustee to exer-
cise voting rights, or have power of attorney granted to them to exer-
cise such voting rights. Lock-up periods contribute to the Employee
Stock Purchase Plan's aims of committing employees to the company
and letting them benefit from the performance of the share price.
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.
RESTRICTIONS ON VOTING RIGHTS AND
As of 31 December 2016, the share capital of Allianz SE was € 1,169,920,000.
It was divided into 457,000,000 registered and fully paid-up shares with
no-par value and a corresponding share capital amount of € 2.56 per
share. All shares carry the same rights and obligations. Each no-par
value share carries one vote.
COMPOSITION OF SHARE CAPITAL
We are not aware of any direct or indirect interests in the share capital
of Allianz SE that exceed 10% of the voting rights.
The following information is given pursuant to § 289 (4) and § 315 (4)
of the German Commercial Code (“Handelsgesetzbuch – HGB") and
§ 176 (1) of the German Stock Company Act ("Aktiengesetz – AktG”).
B - Corporate Governance
The Board of Management is authorized to issue shares as well as to
acquire and use treasury shares as follows:
22
A change-of-control clause in the service contracts of the mem-
bers of Allianz SE's Board of Management provides that, if within
twelve months after the acquisition of more than 50% of the compa-
ny's share capital by one shareholder or several shareholders acting
in concert (change of control) the appointment as a member of the
Board of Management is revoked unilaterally by the Supervisory
Board, or if the mandate is ended by mutual agreement, or if the
Management Board member resigns because his or her responsibi-
lities as a Board member are significantly reduced through no fault
of the Board member, he or she shall receive his or her contractual
The company has entered into the following compensation agree-
ments with members of the Board of Management and certain
employees providing for the event of a takeover bid:
Bilateral credit agreements in some cases provide for termina-
tion rights if there is a change of control, mostly defined as the
acquisition of at least 30% of the voting rights within the meaning
of § 29(2) of the German Takeover Act ("Wertpapiererwerbs- und
Übernahmegesetz -WpÜG"). If such termination rights are exer-
cised, the respective credit lines have to be replaced by new
credit lines under conditions then applicable.
The framework agreements between Allianz SE and the subsi-
diaries 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 termina-
tion right in case there is a change of control of the other party.
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
venture or the target company, if there is a change of control of
the other party.
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 case there is a
change of control of the other party's ultimate holding company.
AUTHORIZATION OF THE BOARD OF MANAGEMENT
TO ISSUE AND REPURCHASE SHARES
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 or its ownership
or control situation changes materially. Agreements with brokers
regarding services connected with the purchase of reinsurance
cover also provide for termination rights in case of a change of
control. Such clauses are standard market practice.
ESSENTIAL AGREEMENTS OF ALLIANZ SE WITH CHANGE
OF CONTROL CLAUSES AND COMPENSATION AGREEMENTS
PROVIDING FOR TAKEOVER SCENARIOS
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 6 May 2019. The total number of shares acquired thereunder,
together with treasury shares held by Allianz SE or attributable to it
under §§ 71a et seq. AktG, shall at no time exceed 10% of the share
capital of Allianz SE.
The Board of Management may buy back and use Allianz shares
for other purposes until 6 May 2019 on the basis of the authorization
of the General Meeting of 7 May 2014 (§ 71 (1) No. 8 AktG). Together with
other treasury shares that are held by Allianz SE, or which are attribut-
able 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' sub-
scription rights, for any legally admissible purposes, and in particular
those specified in the authorization. Furthermore, the acquisition of
treasury shares under this authorization may also be carried out
using derivatives such as put options, call options, forward purchases
or a combination thereof, provided such derivatives do not relate to
more than 5% of the share capital.
The company's share capital is conditionally increased by up to
€ 250,000,000 (Conditional Capital 2010/2014). This conditional capital
increase will only be carried out to the extent that conversion or
option rights are exercised (or conversion obligations fulfilled)
resulting from bonds that have been issued by Allianz SE or its sub-
sidiaries based on the authorizations granted by the General Meeting
on 5 May 2010 and 7 May 2014.
Up to a total of € 13,720,000 (Authorized Capital 2014/11). The share-
holders' subscription rights can be excluded in order to issue the
new shares to employees of Allianz SE and its Group companies
as well as for fractional amounts.
Up to a total of € 550,000,000 (Authorized Capital 2014/1). In case
of a capital increase against cash contribution, the Board of Man-
agement 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.
It may increase the company's share capital, on or before 6 May
2019, with the approval of the Supervisory Board, by issuing new reg-
istered no-par value shares against contributions in cash and/or in
kind, on one or more occasions:
The following essential agreements of the company are subject to a
change of control condition following a takeover bid:
Declaration of Conformity with the
German Corporate Governance Code
Takeover-related Statements and Explanations
Annual Report 2016 - Allianz Group
The standards of conduct established by the Allianz Group's
Code of Conduct for Business Ethics and Compliance are obligatory
for all employees worldwide. The Code of Conduct is available on our
website at www.allianz.com/corporate-governance.
The sustained success of the Allianz Group is based on the respon-
sible behavior of all Group employees, who embody trust, respect and
integrity. By means of the global compliance program coordinated by
its central compliance function, Allianz supports and follows interna-
tionally and nationally recognized guidelines and standards for rules-
compliant and value-based corporate governance. These include the
principles of the United Nations (UN Global Compact), the Guidelines
of the Organization for Economic Co-operation and Development
(OECD guidelines) for Multinational Enterprises, and European and
international standards on data and consumer protection, econom-
ic and financial sanctions and combating corruption, bribery, money
laundering and terrorism financing. Through its support for and
acceptance of these standards, Allianz aims to avoid the risks that
might arise from non-compliance. The central compliance function
is responsible - in close cooperation with local compliance depart-
ments - for ensuring the effective implementation and monitoring
of the compliance program within the Allianz Group, as well as for
investigating potential compliance infringements.
COMPLIANCE PROGRAM
In addition, the quality of the internal control system is assessed
by the Allianz Group's internal audit staff. Internal Audit conducts
independent audit procedures, analyzing the structure and efficacy
of the internal control systems as a whole. It also examines the poten-
tial for additional value and improvement of our organization's
operations. Fully compliant with all international auditing principles
and standards, Internal Audit contributes to the evaluation and
improvement of the effectiveness of the risk management, control
and governance processes. Therefore, internal audit activities are
geared towards helping the company to mitigate risks and further
assist in strengthening its governance processes and structures.
The Allianz Group has an effective internal control system for verify-
ing and monitoring its operating activities and business processes,
in particular the control of financial reporting. The requirements for
the internal control systems are essential not only for the survival of
the company, but also to maintain the confidence of the capital mar-
ket, our customers and the public. A comprehensive risk manage-
ment system regularly assesses the appropriateness of the internal
control system, taking into account not only qualitative and quanti-
tative guidelines, but also specific controls for individual business
activities. For further information on the risk organization and risk
principles, please refer to::: :::: page 62. For further information on the
internal Controls over Financial Reporting, please refer to > page 75.
INTERNAL CONTROL SYSTEMS
The listed Group company Oldenburgische Landesbank AG
issued its own Declaration of Conformity in December 2016, which
states that Oldenburgische Landesbank AG complies with all of the
recommendations of the Code in the version of 5 May 2015.
Annual Report 2016 - Allianz Group
The Declaration of Conformity and further information on cor-
porate governance at Allianz can be found on our website at ②> www.
allianz.com/corporate-governance.
Signed Dr. Helga Jung
For the Supervisory Board:
Signed Dr. Helmut Perlet"
For the Board of Management:
Signed Oliver Bäte
Munich, December 15, 2016
Allianz SE
"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)
Since the last Declaration of Conformity as of December 10, 2015, Allianz SE has
complied with all recommendations of the German Corporate Governance Code
in the version of May 5, 2015 and will comply with them in the future.
WITH § 161 OF THE GERMAN STOCK CORPORATION ACT
DECLARATION OF CONFORMITY IN ACCORDANCE
In addition, Allianz SE follows all the suggestions of the Code in its
5 May 2015 version.
B - Corporate Governance
19
The Code of Conduct and the internal guidelines derived from it
20
20
§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 to at least 30%.
The Supervisory Board currently in office fulfills this requirement
currently comprising four women (33%). If the Annual General Meet-
ing 2017 elects the Supervisory Board in accordance with the Super-
visory Board's nominations, this requirement will also remain ful-
filled in the future. The listed Oldenburgische Landesbank AG also
meets the statutory quota. The supervisory boards of the other, non-
listed German Allianz companies subject to co-determination have
set an average minimum share of 29% for the prescribed target quota
by the middle of 2017.
The boards of managements of Allianz SE and the other German
Allianz companies that are either listed or subject to co-determina-
tion have set a target of at least 20% regarding the percentage of
women in the first and second management levels below the Board
of Management. This target is applicable provided that a higher share
has not already been reached in individual companies. Over the lon-
ger term, Allianz aims to fill with women at least 30% of the positions
at these two management levels.
The Supervisory Board adopted a resolution in August 2015 set-
ting the target for the percentage of women on Allianz SE's Board of
Management at 11%. However, the Supervisory Board of Allianz SE had
additionally declared its intention to increase the percentage of
women on the Board of Management of Allianz SE to at least 20% by
the end of 2018. With the appointment of Ms. Jacqueline Hunt as of
1 July 2016 the share of women in the Board of Management is cur-
rently 22%. As a result, this broader aim has already been achieved as
well. The target quotas for the boards of management of the other
Allianz companies in Germany that are either listed or subject to co-
determination have been set at 18% on average.
To implement the German Act on Equal Participation of Women and
Men in Executive Positions in the Private and the Public Sector,
Allianz SE and the other German companies of the Allianz Group that
are either listed or subject to co-determination have set the following
targets for the percentage of women on the Board of Management
and the two management levels below the Board of Management,
which are to be achieved by 30 June 2017.
German Act on Equal Participation
of Women and Men in Executive Positions
in the Private and the Public Sector
B - Corporate Governance
A general description of the functions of the Board of Manage-
ment, the Supervisory Board and their committees can be found in
the Corporate Governance Report starting on ②> page 14, and on our
website at www.allianz.com/corporate-governance.
COMMITTEES
DESCRIPTION OF THE FUNCTIONS OF THE BOARD OF
MANAGEMENT AND THE SUPERVISORY BOARD AND OF
THE COMPOSITION AND FUNCTIONS OF THEIR
A major component of the Allianz Group's compliance program
is a whistleblower system that allows employees to alert the rele-
vant compliance department confidentially about irregularities. No
employee voicing concerns about irregularities in good faith needs
to fear retribution, even if the concerns turn out to be unfounded at
a later date.
There are legal provisions against corruption and bribery in
almost all countries in which Allianz has a presence. The global Anti-
Corruption Program of the Allianz Group ensures the continuous
monitoring and improvement of the internal anti-corruption con-
trols. More information on the Anti-Corruption Program can be found
in the Sustainability Report on our website at: :D:D:D:D: www.allianz.com/
sustainability.
of the Code of Conduct and the internal compliance program based
on these principles, Allianz has implemented interactive training
programs around the world. These provide practical guidelines
which enable employees to come to their own decisions. The Code of
Conduct also forms the basis for guidelines and controls to ensure
fair dealings with Allianz Group customers (sales compliance).
to the values of the Allianz Group. In order to transmit the principles
provide all employees with clear guidance on behavior that lives up
A description of the composition of the Supervisory Board and its
committees can be found on D①> page 9 and 11 of the Annual Report.
A description of the composition of the Board of Management can be
found on page 12, while the composition of the Committees of the
Board of Management is described in the Corporate Governance
Report starting on > page 14. This information is also available on
our website at www.allianz.com/corporate-governance.
1,125
2015
2016
Grant
Payout¹
2015
2016
2016
2015
2016
Grant
2015
2016
2015
2016
Target
Target
Min
Max
20 16
Target
Payout¹
Grant
6,201
9,151
4,588
1- In accordance with the German Corporate Governance Code, the annual bonus disclosed for perfor-
mance year 2016 is paid in 2017 and for performance year 2015 in 2016. The payments for equity related
deferred compensation (GEI and AEI), however, are disclosed for the year in which the actual payment
was made.
2- The MTB figure included in the "Actual Grant" column shows the annual accrual.
3- The payout 2015 figure includes the 2015 allocation and the accruals from the performance years 2013
and 2014, as adjusted by the sustainability assessment. The MTB 2013-2015 was paid out in spring 2016.
4-Payout is capped at 200% above grant price. The relevant share price used to determine the fair market
value, and hence the final number of RSUS granted, and the 200% cap are only available after sign-off by
the external auditors.
5-The equity-related remuneration that applied before 2010 consisted of two vehicles, virtual stock awards
known as RSUS and virtual stock options known as "Stock Appreciation Rights" (SAR). Only RSUS have been
awarded as of 1 January 2010. The remuneration system valid until December 2009 is disclosed in the
Grant
Annual Report 2009 (starting on page 17). Whereas the GEI/RSU grants are automatically exercised at the
vesting date, the GEI/SAR grants are exercised by the Board member within the exercise period following
the vesting date. Hence, the total payout from SARS depends on the individual decision by the Board
member. SARS are released to plan participants upon expiry of the vesting period, assuming all other
exercise hurdles are met. For SARS granted until and including 2008, the vesting period was two years and
the exercise period five years. SARS can be exercised on the condition that the price of the Allianz SE stock
is at least 20% above the strike price at the time of grant. During the term of the plan, at least once on five
consecutive trading days the Allianz SE stock must relatively appreciate at least 0.01 percentage points
ahead of the appreciation of the Dow Jones EURO STOXX Price Index (600).
26
Annual Report 2016 - Allianz Group
B - Corporate Governance
Sergio Balbinot (Appointed: 01/2015)
Jacqueline Hunt⁹ (Appointed: 07/2016)
Actual
Actual
6-Pension Service Cost in accordance with IAS 19: represents the company cost not the actual entitlement
nor a payment, however, according to the German Corporate Governance Code the Pension Service Cost
is to be included in all columns.
6,844
Min
750
136 10
136 10
136 10
783
782
782
782
136 10
782
782
511
511
511
511
511
750
783
Max
136 10
33
750
750
750
750
750
750
375
32
375
375
375
33
32
32
32
32
375
2016
1,780
4,480
30
30
15
30
1,155
1,155
1,009
30
1,155
1,155
Annual Bonus
996
1,125
1,688
1,474
1,260
1,474
Annual Variable Compensation
Deferred Compensation
1,155
Total fixed compensation
2015
2016
Target
Target
Min
Max
Base Salary
1,009
Perquisites
1,125
1,125
1,125
1,125
994
1,125
30
994
15
5,155
MTB (2016-2018)2
AEI 2017/RSU4
916
263
3,997
4,530
1,155
6,219
5,576
1,704
8,668
483
625
625
625
625
483
625
3,963
MTB (2013-2015)³
1,334
1,474
AEI 2016/RSU4
AEI 2012/RSU4
AEI 2011/RSU4
GEI 2010/RSU4
GEI 2010/SAR5
GEI 2008/SAR5
Total
996
Pensions Service Cost
1,125
1,688
1,474
996
3,516
1,125
1,688
Total
999
Annual Report 2016 - Allianz Group
28
M
366.7
6.7
160.0
200.0
2016
C
C
C
C
M
fees remuneration
Total
Attendance
Committee
remuneration
M
C
C
C
C
254.5
4.5
100.0
150.0
2016
Fixed
remuneration
M
366.7
6.7
160.0
200.0
2015
C
C
M
S
P
B - Corporate Governance
33
Annual Report 2016 - Allianz Group
In addition to the fixed and committee-related remuneration, mem-
bers of the Supervisory Board receive an attendance fee of € 750 for
each Supervisory Board or committee meeting they attend. Should
several meetings be held on the same or consecutive days, the atten-
dance fee will be paid only once. Allianz SE reimburses the members
of the Supervisory Board for their out-of-pocket expenses and the VAT
payable on their Supervisory Board activity. For the performance of
40
20
40
his duties, the Chairman of the Supervisory Board is furthermore
entitled to an office with secretarial support and use of the Allianz
carpool service. In the financial year 2016, Allianz SE reimbursed
expenses totaling € 51,935.
80
Member
Chair
ATTENDANCE FEES AND EXPENSES
Audit Committee
Personnel Committee, Standing
Committee, Risk Committee
Committee
40
REMUNERATION FOR 2016
The total remuneration for all Supervisory Board members, including
attendance fees, amounted to € 2,025 THOU in 2016 (2015: € 2,021 THOU).
The following table shows the individual remuneration for 2016 and
2015:
N
A
Gabriele Burkhardt-Berg
Christine Bosse
Dante Barban
(Vice Chairman)
Rolf Zimmermann
(Vice Chairman)
Dr. Wulf H. Bernotat
(Chairman)
Dr. Helmut Perlet
Members of the Supervisory Board
Committees¹
€ THOU (total might not sum up due to rounding)
INDIVIDUAL REMUNERATION: 2016 AND 2015
R
€ THOU
2015
100.0
20.0
100.0
2015
M
124.5
4.5
4.5
20.0
2016
M
145.2
5.2
40.0
100.0
100.0
124.5
Jean-Jacques Cette
M
66.6
2016
M
Dr. Friedrich Eichiner²
146.0
6.0
40.0
100.0
2015
M
146.0
6.0
40.0
100.0
2016
2015
150.0
M
144.5
5.2
40.0
150.0
2015
M
M
195.2
194.5
40.0
150.0
2016
M
254.5
4.5
4.5
M
2016
100.0
4.5
40.0
100.0
2016
M
M
124.5
4.5
20.0
100.0
2015
M
124.5
4.5
20.0
M
13.3
COMMITTEE-RELATED REMUNERATION
COMMITTEE-RELATED REMUNERATION
1,190
282
1
8
4
278 1,181
Dr. Werner Zedelius
2015
479
10
2
477 1,832
2016
Dr. Dieter Wemmer
1,842
2016
225
207
2016
Dr. Maximilian Zimmerer
398
5,751
213
225
2015
12,375
661
678
14
222
9
431 5,090
6,385
6,471
141
397
78
Dr. Axel Theis
1,884
283
1
23
5
2016
1,860
2015
368
3
357
8
2016
278
120
107
3,422
214
10
7,493
482
774
25
233
9
535
334
6 2,528
199 2,450
3,085
110
120
2015
722
The Chairperson and members of the Supervisory Board committees
receive additional committee-related remuneration. The committee-
related remuneration is as follows:
146
2015
Payments to Board members for early termination with a remaining
term of contract of more than two years are capped at two years' com-
pensation.
Severance payment cap
Where an Allianz pension is immediately payable, transition
payment amounts are set off accordingly.
The payment is calculated based on the last base salary (paid for
a period of six months) and 25% of the target variable remuneration
at the date when notice is given. A Board member with a base salary
of € 750 THOU would receive a maximum of € 937.5 THOU.
Transition payment (appointment before 1 January 2010)
Board members receiving a transition payment are subject to a six-
month non-compete clause.
DETAILS OF THE PAYMENT ARRANGEMENTS
Whereby the annual compensation:
TERMINATION OF SERVICE -
Contracts do not contain provisions for any other cases of early ter-
mination from the Board of Management.
B - Corporate Governance
Annual Report 2016 - Allianz Group
32
32
3. Special terms, also compliant with the German Corporate Gover-
nance Code, apply if service is ended as a result of a “change of
control". This requires that a shareholder of Allianz SE, acting
alone or together with other shareholders, holds more than 50% of
voting rights in Allianz SE.
Board members who were appointed before 1 January 2011 are
eligible to use a company car for a period of one year after their
retirement.
1. is calculated on the basis of the previous year's annual base salary
plus 50% of the target variable remuneration (annual bonus,
accrued MTB and equity-related remuneration: For a Board mem-
ber with a fixed base salary of € 750 THOU, the annual compensa-
tion would amount to € 1,875 THOU. Hence, he/she would receive
a maximum severance payment of € 3,750 THOU) and
2. shall not exceed the latest year's actual total compensation.
If the remaining term of contract is less than two years, the payment
is pro-rated according to the remaining term of the contract.
The remuneration of a Supervisory Board member consists of a fixed
cash amount paid after the end of each business year for services
rendered over that period. As in 2015, a regular Supervisory Board
member receives a fixed remuneration of € 100 THOU per year. Each
Vice Chairperson receives € 150 THOU and the Chairperson € 200 THOU.
FIXED ANNUAL REMUNERATION
REMUNERATION STRUCTURE AND COMPONENTS
The remuneration structure, which comprises fixed and committee-
related remuneration only, was approved by the Annual General
Meeting 2011 and is laid down in the Statutes of Allianz SE.
Set a remuneration structure to allow for proper oversight of busi-
ness as well as for adequate decisions on executive personnel and
remuneration.
Set a remuneration structure that takes into account the indi-
vidual functions and responsibilities of Supervisory Board mem-
bers, such as chair, vice chair or committee mandates.
Set total remuneration at a level aligned with the scale and scope
of the Supervisory Board's duties, and appropriate to the com-
pany's activities and business and financial situation.
REMUNERATION PRINCIPLES
The remuneration of the Supervisory Board is governed by the Statutes
of Allianz SE and the German Stock Corporation Act. The structure of
the Supervisory Board's remuneration is regularly reviewed with
respect to German, European and international corporate gover-
nance recommendations and regulations.
Remuneration of the Supervisory Board
The remuneration of the new regular member of the Board of Man-
agement, Dr. Günther Thallinger, has been set at the same level as for
the other regular members of the Board of Management.
OUTLOOK FOR 2017
INTERNAL AND EXTERNAL BOARD APPOINTMENTS
When a member of the Board of Management holds an appointment
in another company within the Allianz Group, the full remuneration
amount is transferred to Allianz SE. In recognition of the benefits to the
organization, Board of Management members are allowed to accept
a limited number of non-executive supervisory roles in appropriate
external organizations. In these cases, 50% of the remuneration
received is paid to Allianz SE. A Board member retains the full remu-
neration only when the Supervisory Board qualifies the appointment
as a personal one. Remuneration paid by external organizations is
shown in the annual reports of the companies concerned. The remu-
neration relating to the external appointment is set by the governing
body of the relevant organization.
MISCELLANEOUS
In case of early termination as a result of a change of control, sever-
ance payments made to Board members generally amount to three
years' compensation (annual compensation as defined above) and
shall not exceed 150% of the severance payment cap (a Board mem-
ber with a base salary of € 750 THOU would receive a maximum of
€ 5,625 THOU).
Change of control
2. Severance payments made to Board members in case of an early
termination comply with the German Corporate Governance
Code.
4,078
ment.
Arrangements for termination of service including retirement are as
follows:
9
519
327
10,746
646
641
214
26
9
4,151
2,783
2,672
5
191
3,897
150
161
203
300
938
786 8,532
1- The 2015 amount includes bonus payments made to Clement Booth in 2015 which were already shown
as variable compensation for 2014. The amount shown for 2016 excludes compensation that was paid for
active Board membership and disclosed as compensation of the respective performance year.
Board of Management contracts are limited to a period of five years.
For new appointments, in compliance with the German Corporate
Governance Code, a shorter period is typical.
TERMINATION OF SERVICE
LOANS TO MEMBERS OF THE BOARD OF MANAGEMENT
As of 31 December 2016, there were no outstanding loans granted by
Allianz Group companies to members of the Board of Management.
In 2016, remuneration and other benefits totaling € 7 MN (2015: € 7 MN)¹
were paid to former members of the Board of Management and
dependents, while reserves for current pension obligations and
accrued pension rights totaled € 126 MN (2015: € 122 MN).
7-As Jay Ralph left Allianz on 1 July 2016, his employer-financed DBO of €2,437 THOU (thereof €1,755 THOU
for the frozen DB-Pension-Plan, € 636 THOU for the contribution based pension plan and € 25 THOU for the
Current Pension Plan, AVK/APV) is covered under former Board members.
4-Expected annual pension payment at assumed retirement age (age 60), excluding current pension plan.
5-SC=service cost. Service costs are calculatory costs for the DBO related to the reported business year.
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.
3- For details on the transition payment, see section "Termination of service". In any event a death benefit
is included.
2-Plan participants contribute 3% of their relevant salary to the AVK. For the AVK the minimum guaranteed
interest rate is 2.75%-3.50% depending on the date of joining Allianz. In general, the company funds the
balance required via the APV. Before Allianz's founding of the APV in 1998, both Allianz and the plan par-
ticipants were contributing to the AVK.
1-The service cost of the frozen contribution-based pension plan reflects the continued death and disability
cover.
386 7,422
656
36
196
9
1. Board members who were appointed before 1 January 2010 – and
who have served a term of at least five years - are eligible for a six-
month transition payment after leaving the Board of Manage-
2.2
82.1
2015
Mali
Pakistan
■
Madagascar
Malaysia
◉
◉
Kenya
Ivory Coast
--
Philippines
Singapore³
Hong Kong3
Indonesia
Japan³
Brunei³
China
Allianz Worldwide Partners
INSURANCE ASIA PACIFIC
Laos
Ghana
Morocco
--
Luxembourg
Germany
France
Europe
--
--
North and Latin America
United States
Canada
Brazil
ASSET MANAGEMENT
"
INSURANCE IBERIA & LATIN AMERICA
India
Taiwan
Thailand
■
Togo
Sri Lanka
Senegal
--
Congo Brazzaville
Central Africa
Cameroon
Belgium
-
France
---
Turkey
--
■■The Netherlands
Greece
Europe
INSURANCE WESTERN & SOUTHERN
EUROPE, INSURANCE MIDDLE EAST,
AFRICA, INDIA
MARKET PRESENCE OF OUR BUSINESS OPERATIONS¹
Worldwide presence and business segments Our steering
C - Group Management Report
Annual Report 2016 - Allianz Group
■■■ Italy
Luxembourg
Middle East and North Africa
Egypt
Lebanon
Burkina Faso
--
Benin
Africa
--
Saudi Arabia
ALLIANZ WORLDWIDE PARTNERS
Ukraine
Russia
Corporate & Specialty
Credit Insurance
Reinsurance
Allianz Global
Ireland
United Kingdom
Australia
United States
GLOBAL INSURANCE LINES &
ANGLO MARKETS
US LIFE INSURANCE
Iberia
Spain
Portugal
Latin America
Argentina
For further information on Board of Management members and
their responsibilities, please refer to Mandates of the Members of the
Board of Management starting and D②>> page 12.
Allianz SE has a divisional Board structure based on functional and
business responsibilities. Business-related divisions reflect our busi-
ness segments Property-Casualty, Life/Health, Asset Management,
and Corporate and Other, and in 2016 were overseen by five Board
members. The remaining four divisions (i.e. Chairman of the Board
of Management, Finance, Investments, and Operations) focus on
Group functions, along with business-related responsibilities.
AND ORGANIZATIONAL STRUCTURE
BOARD OF MANAGEMENT
1- This overview is based on our organizational structure in place as of 31 December 2016.
2- Oldenburgische Landesbank AG in Germany is classified as "held for sale".
3- Property-Casualty business belongs to Allianz Global Corporate & Specialty.
4-Classified as "held for sale".
Property-Casualty Life/Health Banking Retail Asset Management
■Institutional Asset Management
TARGET SETTING AND MONITORING
Australia
Singapore
Hong Kong
Taiwan
The Netherlands
United Kingdom
Sweden
--
--
Slovakia
South Korea4
China
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
entities. 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, mid-term, and long-term tar-
gets 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 starting on > page 24.
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 equity¹ for Life/Health, and the cost-
income ratio for Asset Management. To steer and control new busi-
ness in our business segments Property-Casualty and Life/Health, we
use Return on Risk Capital (RoRC). For a comprehensive view of our
business segment performance, please refer to the chapters from
page 39 onwards.
Besides performance steering, we also have a risk steering process
in place, which is described in the Risk and Opportunity Report starting
on > page 62.
Please refer to our 2016 Group Sustainability Report (to be
published on 5 April 2017) for full details of our corporate responsi-
bility strategy, approach and performance: :D:D:D:D:D :: www.allianz.com/
sustainability.
For reporting purposes, we organize our approach around
Allianz's five key roles as sustainable insurer, responsible investor,
trusted company, attractive employer, and committed corporate
citizen.
In 2016, we surveyed over 6,000 stakeholders to identify our most
material issues as well as the relative importance of the solutions we
provide. The results show that the most important megatrends and
risks Allianz faces across those target groups and countries surveyed
are climate change & environment, personal customer safety, digita-
lization, societal change, and fiscal crisis. We will continue to integrate
our stakeholders' views in both our sustainability strategy and our
reporting approach.
Business integrity: integrating environmental, social and governance
(ESG) issues across our investment and insurance businesses; building
trust through transparency, responsible sales, and data privacy.
Social inclusion: supporting the social inclusion of children and youth
through our Future Generations program; developing solutions for
customers in emerging markets; promoting diversity and wellbeing
among our employees.
Low-carbon economy: supporting renewable energy and decarbon-
ization through our investments; providing green insurance solutions;
reducing our environmental footprint.
Our Corporate Responsibility Strategy contributes to our Renewal
Agenda and focuses on our most material sustainability issues:
As an international financial services company, we find it vital to
ensure that our growth is both sustainable and profitable. We want
to create long-term value by strategically embedding sustainability
in our core business and by enabling our customers to address
tomorrow's challenges. This requires us to continually adapt our
business strategy in response to our stakeholders' and working part-
ners' needs, to the most pressing sustainability issues, and to the
activities of national and international sustainability bodies and ini-
tiatives, in order to deliver on global commitments such as the United
Nations Sustainable Development Goals.
Our Corporate Responsibility approach
C - Group Management Report
37
2-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.
1-Excluding unrealized gains/losses on bonds net of shadow accounting.
Annual Report 2016 - Allianz Group
Non-financial key performance indicators (KPIs) are mainly used
for the sustainability assessment that we conduct when determining
mid-term bonus levels. In line with our Renewal Agenda, KPIs mainly
represent three key levers: True Customer Centricity, Digital by Default,
and Inclusive Meritocracy. Examples include the Allianz Engagement
Survey and Net Promoter Score (NPS²) results, diversity development,
and the share of digital retail products/digital client communication.
Romania
36
Poland
Hungary
Spain
--
CENTRAL & EASTERN EUROPE
COUNTRIES, INSURANCE
--
INSURANCE GERMAN SPEAKING
--
Ireland
Italy
Mexico
--
Colombia
--
Brazil
--
Switzerland
German Speaking Countries
--
--
Czech Republic
--
--
Croatia
--
Japan
■■Bulgaria
Asia Pacific
Central & Eastern Europe
-
Switzerland
Austria
■■Germany²
Belgium
--
Most of our insurance markets are served by local Allianz com-
panies. However, some business lines – such as Allianz Global Corpo-
rate & Specialty (AGCS), Allianz Worldwide Partners (AWP) and Credit
Insurance - are run globally.
We offer a wide range of property-casualty and life/health insurance
products to both retail and corporate customers. For the Property-
Casualty business segment, these include motor, accident, property,
general liability, travel insurance and assistance services; the Life/
Health business segment offers savings and investment-oriented
products in addition to life and health insurance. We are the leading
property-casualty insurer worldwide and rank among the top five in
the life/health insurance business. Our key markets (in terms of pre-
miums) are Germany, France, Italy, and the United States.
Insurance operations
M
Jim Hagemann Snabe
52.2
2.2
8.3
41.7
M
2015
124.5
4.5
20.0
100.0
2016
M
M
2016
100.0
40.0
1.5
8.3
41.6
2016
M
M
Peter Denis Sutherland6
145.2
5.2
40.0
100.0
2015
M
145.2
5.2
Jürgen Lawrenz5
51.4
124.5
20.0
6.0
40.0
100.0
2015
36.5
1.5
146.0
10.0
2016
M
M
M
Martina Grundler4
Ira Gloe-Semler³
25.0
2016
75.0
26.6
100.0
2015
M
M
123.7
3.7
20.0
100.0
2016
M
M
Prof. Dr. Renate Köcher
2015
106.1
4.5
4.5
Jay Ralph
M
2015
- Asset Management
ASSET MANAGEMENT
- Allianz Worldwide Partners
- Asia Pacific
- Global Insurance Lines &
Anglo Markets
- Iberia & Latin America
LIFE/HEALTH
Middle East, Africa, India
- German Speaking Countries
and Central & Eastern Europe
PROPERTY-CASUALTY
BUSINESS SEGMENTS AND REPORTABLE SEGMENTS
ALLIANZ GROUP STRUCTURE -
other activities. Due to differences in the nature of products, risks,
and capital allocation, insurance activities are further divided into
property-casualty and life/health categories. In accordance with the
responsibilities of the Board of Management, each of the insurance
categories is grouped into regional reportable segments. Corporate
and other activities are divided into three different reportable seg-
ments in order to differentiate between the respective products, risks,
and capital allocation. In 2016, the Allianz Group had 16 reportable
segments.
insurance activities, asset management activities, and corporate and Corporate and Other
- Western & Southern Europe,
- German Speaking Countries
and Central & Eastern Europe
- Western & Southern Europe,
Middle East, Africa, India
Alternative Investments provides global alternative investment
management services in the private equity, real estate, renewable
energy, and infrastructure sectors, mostly on behalf of our insurance
operations.
ALTERNATIVE INVESTMENTS
Our banking operations, which place a primary focus on retail clients,
support our insurance business and complement the products we
offer in Germany, Italy, France, the Netherlands, and Bulgaria.
BANKING
Holding & Treasury manages and supports the Group's businesses
through its strategy, risk, corporate finance, treasury, financial
reporting, controlling, communication, legal, human resources,
technology, and other functions.
HOLDING & TREASURY
The Corporate and Other business segment's activities include the
management and support of the Allianz Group's businesses through
its central holding functions, as well as Banking and Alternative
Investments.
- Alternative Investments
- Banking
- Holding & Treasury
CORPORATE AND OTHER
- USA
- Asia Pacific
- Global Insurance Lines &
Anglo Markets
- Iberia & Latin America
Our two major investment management businesses, PIMCO and
AllianzGI, operate under Allianz Asset Management (AAM). We are one
of the largest asset managers in the world that actively manage
assets. Our offerings cover a wide range of equity, fixed income, and
alternative investment products and solutions. Our core markets here
are the United States, Germany, France, Italy, the United Kingdom,
and the Asia-Pacific region.
M
Asset Management
Allianz SE and its subsidiaries (the Allianz Group) offer property-
casualty insurance, life/health insurance and asset management
products and services in over 70 countries, with the largest of our
operations located in Europe. The Allianz Group insures 86.3 million
customers. Allianz SE, the parent company of the Allianz Group, has
its headquarters in Munich, Germany.
60.7
560.0
1,400.0
2015
2,025.2
58.5
2,020.7
558.2
2016
Total7
123.7
3.7
20.0
100.0
1,408.2
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.
2- Since 4 May 2016.
3- Until 31 March 2016.
Allianz Group structure
Business Operations
C - Group Management Report
55
35
C
GROUP MANAGEMENT REPORT
Annual Report 2016 - Allianz Group
Annual Report 2016 - Allianz Group
34
LOANS TO MEMBERS OF THE SUPERVISORY BOARD
As of 31 December 2016, there was one outstanding loan granted by
Allianz Group companies to members of the Supervisory Board of
Allianz SE. One member received a mortgage loan of € 80 THOU from
Allianz Bank in 2010. The loan has a duration of ten years and was
granted at a normal market interest rate.
REMUNERATION FOR MANDATES IN OTHER
ALLIANZ COMPANIES AND FOR OTHER FUNCTIONS
As remuneration for her membership in the Supervisory Board
of Allianz Deutschland AG Ms. Gabriele Burkhardt-Berg received
€ 20.9 THOU for the financial year 2016. Mr. Jürgen Lawrenz did not
receive a separate remuneration for his membership in the Super-
visory Board of Allianz Managed Operations & Services SE. All current
employee representatives of the Supervisory Board except for
Ms. Martina Grundler (until 31 March 2016 Ms. Ira Gloe-Semler) are
employed by Allianz Group companies and receive a market-aligned
remuneration for their services.
7- The total reflects the remuneration of the full Supervisory Board in the respective year.
5-Since 1 August 2015.
6-Until 4 May 2016.
4-Since 1 April 2016.
The Allianz Group structure reflects both our business segments
and geographical regions. Business activities are organized by product
and type of service, based on how these are strategically managed:
3,562
348
508
18
18
19
15
16
15
18
15
15
16
750
750
750
750
15
750
18
18
750
768
769
768
768
768
19
768
765
766
765
765
765
766
769
750
750
750
2016
2015
2016
2016
2015
Payout¹
2015
Actual
Grant
Payout¹
Grant
Grant
Actual
Dr. Werner Zedelius (Appointed: 01/2002)
Dr. Dieter Wemmer (Appointed: 01/2012)
Grant
20 16
2016
2015
750
750
750
750
750
750
Max
Min
Target
Target
Max
Min
Target
Target
2016
750
1,125
954
961
282
479
479
479
479
282
479
2,805
3,631
4,143
768
3,018
3,019
1,719
8,443
646
661
661
4,804
1,429
3,679
3,665
2,198
5,165
4,107
4,619
1,244
3,494
3,298
661
646
661
661
4,883
2,897
3,628
765
1,125
750
954
1,125
3,156
954
954
1,125
750
750
750
750
750
954
5,5
959
954
750
3,015
3,016
328
591
1,225
1,505
1,083
750
954
1,125
750
3,066
750
954
1,125
4,140
7,821
1,879
2,443
11
11
19
2
2
2
11
2
2
2
375
750
375
375
2
11
19
11
750
386
769
386
386
386
386
769
752
752
752¦
752
752
752
752
375
750
375
750
2016
2015
2016
2016
2015
Payout¹
2015
Actual
Grant
Payout¹
Actual
Grant
Grant
Jay Ralph (Appointed: 01/2010; End of service: 06/2016)
B - Corporate Governance
Dr. Christof Mascher (Appointed: 09/2009)
Grant
2016
2016
2015
750
750
750
750
750
750
Max
Min
Target
Target
Max
Min
Target
Target
2016
750
4,292
1,125
859
418
418
418
2,529
7,538
1,511
418
2,075
1,511
3,019
2,777
6,673
3,362
4,127
386
348
418
283
754
1,879
3,302
3,195
7,021
3,780
4,545
1,170
3,420
368
283
368
368
368
368
752
870
3,002
719
375
563
750
870
1,125
750
870
2,885
870
1,125
750
375
750
870
750
3757
375
563
876
1,520
1,018
1,584
593
☐
1,155
750
3757
375
563
375
2,784
750
3757
375
3,002
348
3,350
9,089
3,466
7-Jay Ralph left Allianz on 30 June 2016. He received a pro-rated base salary and an amount of €1,125 THOU
in lieu of his pro-rated 2016 annual bonus, MTB tranche and equity-related compensation (€ 375 THOU
each) which was paid in August 2016. According to his separation agreement, he received an amount of
€1,000 THOU in return, specifically, for a non-poaching and non-competition agreement.
SC 5
DBO 6
SC 5
DBO 6
SC5
DBO 6
DBO 6
SC5
Board of Management
pension
Annual
Total
Transition
payment³
AVK/APV²
payment4
SC5
DBO 6
SC 5
2015
(Chairman since 7 May 2015)
4,511
625
594
51
36
5
818
536
3,063
33
2016
Oliver Bäte
DBO 6
Current pension
plan
283
Contribution-
based pension
plan (frozen)¹
INDIVIDUAL PENSIONS: 2016 AND 2015
€ THOU
1,318
37,688
7,457
770
24,366
7,604
7,457
1,095
967
87.36
7,892
33,885
6,798
1,041
35,681
36,582
1,128
7,677
mum interest rate remains at 2.75 % p.a.). For members with pension
rights in the frozen defined benefit plan, the above contribution rates
are reduced by 19% of the expected annual pension from that frozen
plan. The Allianz Group paid € 5 MN (2015: € 4 MN) to increase reserves
for pensions and similar benefits for active members of the Board of
Management. As of 31 December 2016, reserves for pensions and
similar benefits for active members of the Board of Management
amounted to € 44 MN (2015: € 38 MN).
Company contributions for the current pension plan are set at 50% of
the base salary reduced by the cover for disability and death. They are
invested in a fund and have a guarantee for the contributions paid,
but no further interest guarantee (for members of the Board of Man-
agement who were born before 1 January 1958, the guaranteed mini-
PENSIONS
B - Corporate Governance
31
Annual Report 2016 - Allianz Group
1-Including the payout of Jay Ralph's MTB tranche for 2016 of € 375 THOU.
2-Grants of equity-related remuneration are accounted for as cash-settled awards. The fair market value of
the granted RSUS and SARS is remeasured at each reporting date and accrued, as a compensation expense,
proportionately over the vesting and service period. Upon vesting, any subsequent changes in the fair
value of the unexercised SARS are also recognized as a compensation expense.
1-The relevant share price used to determine the fair market value, and hence the final number of RSUS
granted, is only available after sign-off of the Annual Report by the external auditors, thus numbers are
based on a best estimate. As disclosed in the Annual Report 2015, the equity-related grant in 2016 was
made to participants as part of their 2015 remuneration. The disclosure in the Annual Report 2015 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 4 March 2016 under the Allianz Equity Incen-
tive are as follows: Oliver Bäte: 11,733, Sergio Balbinot: 9,300, Dr. Helga Jung: 7,053, Dr. Christof Mascher:
7,999, Jay Ralph: 8,098, Dr. Axel Theis: 8,896, Dr. Dieter Wemmer: 8,948, Dr. Werner Zedelius: 8,926,
Dr. Maximilian Zimmerer: 8,746.
9,852
11,059
308,410
66,694
1,081
33,420
Defined benefit pension plan
(frozen)
87.36
2,916
31
147
8
1,800
210
1,187
56
274 3,134
62
3,878
420
159
8
558
345
2015
Dr. Christof Mascher
2016
12
63
37
5
3,016
280
2015
4,377
418
583
43
42
5
637
357
3,115
12 1,813
6
1,347
62
365
1
4
2
582
357
626
39
2016
Sergio Balbinot
3,442
483
495
194
5
2015
219
243
2016
Dr. Helga Jung
2015
159
159
159
159
2016
Jacqueline Hunt
246
222
1
1
2
2
54
38
3,167
6,944
MTB (2016-2018)²
Deferred Compensation
983
940
983
1,125
MTB (2013-2015)³
750
Annual Bonus
Annual Variable Compensation
766
766
766
766
750
AEI 2017/RSU4
AEI 2016/RSU4
AEI 2012/RSU4
Total
GEI 2008/SAR5
GEI 2010/SAR5
750
983
1,125
750
2,993
750
983
1,125
750
55
GEI 2010/RSU4
AEI 2011/RSU4
766
Pensions Service Cost
766
Total fixed compensation
Target
2016
2015
2016
2016
2015
Target
Payout¹
Grant
Dr. Maximilian Zimmerer? (Appointed: 06/12; End of service: 12/2016)
INDIVIDUAL REMUNERATION: 2016 AND 2015
€ THOU (total might not sum up due to rounding)
B - Corporate Governance
29
Annual Report 2016 - Allianz Group
Actual
Grant
Min
Max
Base Salary
16
16
16
16
16
16
16
Perquisites
750
750
750
750
750
750
750
766
31,997
Total
3,016
Dr. Dieter Wemmer
Dr. Axel Theis
Jay Ralph
Dr. Christof Mascher
Dr. Helga Jung
Sergio Balbinot
Jacqueline Hunt
Dr. Werner Zedelius
Oliver Bäte
GRANTS, OUTSTANDING HOLDINGS, AND EQUITY COMPENSATION EXPENSE UNDER THE ALLIANZ EQUITY PROGRAM
Dr. Maximilian Zimmerer €2,731 (5,638) THOU.
Dr. Werner Zedelius €2,677 (5,753) THOU,
Dr. Dieter Wemmer € 2,674 (5,844) THOU,
In accordance with the approach described earlier, a number of RSUS
were granted to each member of the Board of Management in March
2017, which will vest and be settled in 2021.
EQUITY-RELATED REMUNERATION
Board members
Dr. Maximilian Zimmerer
Total
Number of RSU
granted on
3 March 20171
3,565
1,174
34,120
1,277
40,671
€ THOU
31 December 2016
Equity Compensation
Expense 2016²
Strike Price
Number of SAR
held at
Number of RSU
held at
31 December 2016¹
SAR
RSU
7,677
11,515
The sum of the total remuneration of the Board of Management for
2016, excluding the notional accruals of the MTB 2016-2018 and
excluding the pension service cost, amounts to € 26 MN¹ (2015, includ-
ing the payout of the MTB 2013-2015: € 57 MN). The corresponding
amount, including pension service cost, equals € 30 MN (2015, includ-
ing the payout of the MTB 2013-2015: € 61 MN).
3,016
Dr. Axel Theis € 2,724 (3,644) THOU,
Dr. Helga Jung € 2,542 (4,813) THOU,
3,802
3,402
786
386
786
786
1,552
786
386
1,749
4,699
3,714
4,141
766
786
4,927
4,500
5,085
Oliver Bäte € 4,103 (7,046) THOU,
Sergio Balbinot € 2,747 (3,780) THOU,
Jacqueline Hunt € 1,423 (-) THOU,
The total remuneration to be disclosed for 2016 in accordance with
German Accounting Standard 17 is defined differently than in the
German Corporate Governance Code and is composed of the base
salary, perquisites, annual bonus and the fair value of the RSU grant,
but excludes the notional annual accruals of the MTB 2016-2018. The
figures for 2015 (in parentheses) include the payout of the MTB
2013-2015. Both figures exclude the pension service cost:
GERMAN ACCOUNTING STANDARD 17 DISCLOSURE
B - Corporate Governance
Annual Report 2016 - Allianz Group
30
2018.
7- Dr. Maximilian Zimmerer left the Allianz SE Board of Management upon his retirement effective 31 Decem-
ber 2016. According to his contract, he receives a transition payment of € 937.5 THOU. The payment is
calculated based on the latest base salary, which is paid for a further six months starting 1 July 2017, and
a final lump-sum payment of 25% of the target variable remuneration. The payable pension takes into
account the monthly payments over the six-month period. The lump-sum payment will be paid in spring
6-Pension Service Cost in accordance with IAS 19: represents the company cost not the actual entitlement
nor a payment, however, according to the German Corporate Governance Code the Pension Service Cost
is to be included in all columns.
member. SARS are released to plan participants upon expiry of the vesting period, assuming all other
exercise hurdles are met. For SARS granted until and including 2008, the vesting period was two years and
the exercise period five years. SARS can be exercised on the condition that the price of the Allianz SE stock
is at least 20% above the strike price at the time of grant. During the term of the plan, at least once on five
consecutive trading days the Allianz SE stock must relatively appreciate at least 0.01 percentage points
ahead of the appreciation of the Dow Jones EURO STOXX Price Index (600).
5- The equity-related remuneration that applied before 2010 consisted of two vehicles, virtual stock awards
known as RSUs and virtual stock options known as "Stock Appreciation Rights" (SAR). Only RSUs have been
awarded as of 1 January 2010. The remuneration system valid until December 2009 is disclosed in the
Annual Report 2009 (starting on page 17). Whereas the GEI/RSU grants are automatically exercised at the
vesting date, the GEI/SAR grants are exercised by the Board member within the exercise period following
the vesting date. Hence, the total payout from SARS depends on the individual decision by the Board
3- The payout 2015 figure includes the 2015 allocation and the accruals from the performance years 2013
and 2014, as adjusted by the sustainability assessment. The MTB 2013-2015 was paid out in spring 2016.
4-Payout is capped at 200% above grant price. The relevant share price used to determine the fair market
value, and hence the final number of RSUS granted, and the 200% cap are only available after sign-off by
the external auditors.
2- The MTB figure included in the "Actual Grant" column shows the annual accrual.
1- In accordance with the German Corporate Governance Code, the annual bonus disclosed for perfor-
mance year 2016 is paid in 2017 and for performance year 2015 in 2016. The payments for equity related
deferred compensation (GEI and AEI), however, are disclosed for the year in which the actual payment
was made.
2,535
Dr. Christof Mascher €2,492 (5,356) THOU,
Jay Ralph €1,511¹ (5,293) THOU,
Annual Report 2016 - Allianz Group
765
108
339
Investment margin
Investment margin³.4 in basis points
107
104
3
Our operating profit went up, mainly driven by a higher investment
margin in the United States as well as favorable DAC unlocking effects
in France.
LOADINGS AND FEES3
1- Current and prior year figures are presented excluding effects from the South Korean business.
2- Other comprises the delta of out-of-scope entities, which are added here with their respective operating
profit and different line item definitions compared to the financial statements, such as interest paid on
deposits for reinsurance, fee and commission income, and expenses excluding unit-linked management
fees.
3-Investment margin divided by the average of current and previous year-end aggregate policy reserves.
4-Yields are pro rata.
LOADINGS AND FEES¹
€ MN
2016
2015
Loadings from premiums
3,716
3,584
Loadings from reserves
4,062
1,143
4,401
(7,428)
(244)
162
Other²
402
152
250
4,148
Operating profit
1 - The 2016 figure represents the operating loss of the first quarter only, as the negative result for the rest
of 2016 was considered as non-operating.
Policyholder participation
3,796
352
Technical interest
(8,757)
(8,689)
(68)
(8,084)
(656)
1,125
Delta
133
18
Unit-linked management fees
Unit-linked management fees as %
of average unit-linked reserves³,4
0.6
0.6
(0.1)
1- Current and prior year figures are presented excluding effects from the South Korean business.
2-Aggregate policy reserves and unit-linked reserves.
3-Yields are pro rata.
Acquisition expenses and commissions
Administrative and other expenses
Expenses
(4,927)
(4,754)
(173)
(1,760) (1,636)
(124)
(6,687)
(6,390)
(297)
4-Unit-linked management fees, excluding asset management fees, divided by unit-linked reserves.
Acquisition expenses and commissions
as % of PVNBP²
Delta
2015
2016
0.2
750
770
(20)
Loadings and fees
5,609
5,479
130
The increase in our investment margin was largely driven by a higher
spread margin in our fixed-indexed annuity business and by favor-
able hedging-related impacts in our traditional variable annuity
business in the United States.
(82)
EXPENSES5
of statutory premiums
5.9
0.4
EXPENSES1
Loadings from reserves as %
€ MN
of average reserves2,3
0.2
Loadings from premiums as %
(8.6)
(81)
(1,192)
8- Current and prior year figures are presented excluding effects from the South Korean business.
Annual Report 2016 - Allianz Group
45
C - Group Management Report
Operating profit
OPERATING PROFIT BY PROFIT SOURCES1.2
INVESTMENT MARGIN4
INVESTMENT MARGIN¹
€ MN
2016
2015
Delta
OPERATING PROFIT BY PROFIT SOURCES
€ MN
Interest and similar income
17,749
18,030
7- Prior year figures changed in order to reflect the roll out of profit source reporting to China and the inclusion
of the capital-efficient products line of business.
(281)
6-PVNBP before non-controlling interests.
5- Our comments in the following section on the development of our statutory gross premiums written
refer to figures determined "on an internal basis", i.e. adjusted for foreign currency translation and (de-)
consolidation effects, in order to provide more comparable information.
28.5
35.0
(6.5)
14.4
12.3
2.1
20.1
24.9
(4.8)
37.0
27.7
9.3
100.0
100.0
1 - For further information on Allianz Life/Health figures, please refer to note 5 to the consolidated financial
statements.
2- Statutory premiums are gross premiums written from sales of life and health insurance policies, as well
as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with
the statutory accounting practices applicable in the insurer's home jurisdiction.
3- From the classification of our South Korean life business as "held for sale" in the second quarter of 2016 until
its disposal in the fourth quarter of 2016, the total result of € (268) MN was considered as non-operating.
4- Represents the ratio of net income to the average total equity, excluding unrealized gains/losses on
bonds, net of shadow accounting, at the beginning of the year and at the end of the year.
1- Current and prior year figures are presented excluding effects from the South Korean business.
2016
2015
Delta
(6,687)
(6,390)
(297)
Interest expenses
(105)
(106)
955
1,046
(91)
Operating impairments of investments (net)
(1,208)
(1,199)
(9)
(48)
(158)
110
Investment expenses
149
6,461
6,610
Operating realized gains/losses (net)
Operating income from financial assets
and liabilities carried at fair value through
Loadings and fees
5,609
5,479
130
income (net)
(1,013)
(1,111)
(2,049)
Investment margin
Expenses
Technical margin
Impact of change in DAC
Operating loss-South Korea'
4,401
4,062
339
1,035
(8.0)
(0.6)
Administrative and other expenses
as of 31 December
€ BN
1,871
1,763
thereof:
Third-party assets under
management as of 31 December
€ BN
1,361
1,276
85
Assets under management
COMPOSITION OF TOTAL ASSETS UNDER MANAGEMENT
€ BN
Type of asset class
Fixed income
Equities
Total assets under management
Multi-assets¹
(39)
1,411
2016
2015
Operating revenues
€ MN
6,022
6,479
Operating profit
€ MN
2,205
2,297
Cost-income ratio²
%
63.4
64.5
(1.1)%-p
Net income
€ MN
1,449
Other²
Total
Delta
2- Other is composed of asset classes other than equity, fixed income and multi-assets, e.g. money markets,
commodities, real estate investment trusts, infrastructure investments, private equity investments,
hedge funds, etc.
Net outflows³ of total assets under management (AUM) amounted to
€ 28 BN in 2016. Thereof, € 20 BN were attributable to third-party AuM
net outflows (2015: € 107 BN). A major share of this year's outflows
were PIMCO's third-party AuM net outflows - mainly in the United
States and the United Kingdom –, which could only partly be offset by
third-party AuM net inflows that primarily occurred in Japan. PIMCO'S
third-party AuM net outflows occurred in the first half of 2016, and
turned into net inflows in the second half. AllianzGI recorded minor
third-party AuM net outflows, mostly in the United States.
Favorable effects from Market and Other amounted to € 76 BN,
which made them the biggest driver of the upswing in total AuM.
Again, much of this development was due to PIMCO, where the effects
amounted to € 64 BN, and mainly concerned fixed income assets.
An upswing of total AuM of € 31 BN from consolidation, decon-
solidation and other adjustments was almost entirely driven by the
acquisition of Rogge Global Partners (Rogge) by AllianzGI.
Favorable effects from foreign currency translation caused an
increase of total AuM of € 29 BN. This was mainly due to the apprecia-
tion of the U.S. Dollar against the Euro.
In the following section we focus on the development of third-party
assets under management.
As of 31 December 2016, the share of third-party AuM by business
unit was 76.1% (31 December 2015: 77.3%) attributable to PIMCO and
23.9% (31 December 2015: 22.7%) attributable to AllianzGI.
The share of fixed income assets rose from 74.0 % at the beginning
of the year to 75.5%, mainly due to positive market effects and con-
solidation effects due to the Rogge acquisition. The share of equities
declined from 11.8% to 10.3%, primarily driven by third-party AuM net
outflows which were only partly offset by positive effects from equity
markets. The shares of multi-assets and other were roughly stable at
10.0% and 4.2% (31 December 2015: 10.5% and 3.7%, respectively).
The shares in third-party assets of both mutual funds and sepa-
rate accounts³ were quite steady compared to the end of 2015, with
mutual funds at 57.8% (31 December 2015: 58.3%) and separate
accounts at 42.2% (31 December 2015: 41.7%).
As for the regional allocation of third-party AuM6, shares did not
shift remarkably: America 55.3%, Europe 32.8% and the Asia-Pacific
region 11.9% (31 December 2015: 56.0%, 32.7% and 11.3%). All three
regions contributed to the increase in third-party AuM. However, pri-
marily due to positive effects in Japan as well as third-party AuM net
outflows in the United States and the United Kingdom, the regional
allocation shifted slightly in favor of the Asia-Pacific region.
1- For further information about our Asset Management business segment, please refer to note 5 to the
consolidated financial statements.
2- Represents operating expenses divided by operating revenues.
3- Net flows represent the sum of new client assets, additional contributions from existing clients-including
dividend reinvestment-withdrawals of assets from, and termination of, client accounts and distributions
to investors. Reinvested dividends amounted to € 10 BN.
4- Market and Other represents current income earned on, and changes in the fair value of, securities held
in client accounts. It also includes dividends from net investment income and from net realized capital
gains to investors of open ended mutual funds and of closed end funds.
5-Mutual funds are investment vehicles (in the United States, investment companies subject to the U.S.
code; in Germany, vehicles subject to the "Standard-Anlagerichtlinien des Fonds" Investmentgesetz)
where the money of several individual investors is pooled into one account to be managed by the asset
manager, e.g. open-end funds, closed-end funds. Separate accounts are investment vehicles where
the money of a single investor is directly managed by the asset manager in a separate dedicated account
(e.g. public or private institutions, high net worth individuals, and corporates).
6- Based on the location of the asset management company.
48
Annual Report 2016 - Allianz Group
1- Multi-assets is a combination of several asset classes (e.g. bonds, stocks, cash and real property) used as
an investment. Multi-assets class investments increase the diversification of an overall portfolio by
distributing investments throughout several asset classes.
2
108
1,763
104
as of
as of
31 December
31 December
2016
2015
1,489
Delta
(457)
(93)
1,385
176
(11)
153
151
63
51
12
1,871
166
KEY FIGURES ASSET MANAGEMENT¹
Key figures
Asset Management
IMPACT OF CHANGE IN DAC¹
Return on equity
As of 2016 onwards, margin on reserves has been replaced by return
on equity to better reflect the way we steer our Life/Health insurance
operations.
Our return on equity decreased by 0.5 percentage points to 10.3%,
mainly resulting from the unfavorable net income development of
the South Korean business.
€ MN
2016
2015
Delta
Capitalization of DAC
1,868
1,721
147
Amortization, unlocking and true-up of DAC
(1,916)
(1,878)
(38)
Impact of change in DAC
IN DEFERRED ACQUISITION COSTS (DAC)²
IMPACT OF CHANGE
land.
Our technical margin declined, driven by one-off reserve adjustments
predominantly in the United States and increased claims in Switzer-
as % of average reserves³,4
(0.3)
(0.3)
The rise in loadings and fees was primarily due to the increased load-
ings from premiums and was driven by the higher single premium
sales in the German life business as well as by higher production with
a favorable business mix shift in Indonesia and Thailand.
1-Current and prior year figures are presented excluding effects from the South Korean business.
2-PVNBP before non-controlling interests.
3-Aggregate policy reserves and unit-linked reserves.
4-Yields are pro rata.
Our acquisition expenses and commissions increased, predominantly
due to higher sales in the United States and in our German life busi-
ness.
(48)
Administrative and other expenses remained stable in relation to
1 - Prior year figures changed in order to reflect the roll out of profit source reporting to China and the inclusion
of the capital-efficient products line of business.
2- The purpose of the Life/Health operating profit sources analysis is to explain movements in IFRS results
by analyzing underlying drivers of performance on a Life/Health business segment consolidated basis.
3-Loadings and fees include premium and reserve based fees, unit-linked management fees, and policy-
holder participation in expenses.
4-The investment margin is defined as IFRS investment income net of expenses, less interest credited to
IFRS reserves and policyholder participation (including policyholder participation beyond contractual and
regulatory requirements mainly for the German life business).
5-Expenses include acquisition expenses and commissions (excluding commission clawbacks, which are
allocated to the technical margin) as well as administrative and other expenses.
46
Annual Report 2016 - Allianz Group
C - Group Management Report
TECHNICAL MARGIN¹
reserves.
Delta
(158)
1- Current and prior year figures are presented excluding effects from the South Korean business.
913
805
109
Operating loss-South Korea¹
(82)
(244)
162
Operating profit
4,148
3,796
352
1- The 2016 figure represents the operating loss of the first quarter only, as the negative result for the rest
of 2016 was considered as non-operating.
The operating profit rise in our guaranteed savings & annuities line of
business was mainly due to positive hedging-related impacts in our
traditional variable annuity business in the United States as well as
favorable DAC unlocking effects in France. Operating profit in the pro-
tection & health line of business dropped, largely driven by a lower
investment margin in the German health business and one-off effects
in the United States. Our operating profit in the unit-linked without
guarantee line of business went down, primarily due to a reduction
of unit-linked performance fees in Italy. An increase in operating
profit in the capital-efficient products line was largely attributable to
a higher spread margin in the United States.
1- Technical margin comprises risk result (risk premiums less benefits in excess of reserves less policyholder
participation), lapse result (surrender charges and commission clawbacks) and reinsurance result.
2- Impact of change in DAC includes effects of change in DAC, unearned revenue reserves (URR) and value
of business acquired (VOBA). It represents the net impact of deferral and amortization of acquisition costs
and front-end loadings on operating profit and therefore deviates from the IFRS financial statements.
3- Prior year figures changed in order to reflect the roll out of profit source reporting to China and the inclusion
of the capital-efficient products line of business.
Annual Report 2016 - Allianz Group
47
C - Group Management Report
Capital-efficient products
(41)
381
339
The improvement in the impact of change in DAC was largely due to
higher capitalization of DAC, resulting mainly from increased sales in
fixed-indexed and non-traditional variable annuities in the United
States as well as in capital-efficient products in Germany.
OPERATING PROFIT BY LINES OF BUSINESS³
Net income
A slight decrease in our net income was largely driven by the negative
net impact of our business in South Korea in 2016 as well as lower real-
izations compared to a high base in 2015, mainly in Italy.
OPERATING PROFIT BY LINES OF BUSINESS
€ MN
2016
2015
110
Delta
2,306
2,090
216
Protection & health
672
764
(93)
Unit-linked without guarantee
Guaranteed savings & annuities
2015
5.5
Total
The following operations contributed negatively to internal growth:
Italy: Gross premiums were at € 4,572 MN, a decline of 3.9% on an
internal basis. Main drivers were negative price and volume effects in
our motor insurance business.
United Kingdom: Gross premiums amounted to € 2,623 MN, a
decline of 3.6% on an internal basis. Positive price developments in
our retail motor and pet insurance businesses were more than offset
by negative volume effects, mostly in our retail motor insurance busi-
ness.
Credit Insurance: We recorded gross premiums of € 2,200 MN, a
decline of 0.5% on an internal basis. This decrease resulted from
negative price and volume effects mainly in Germany and Asia.
Operating profit
2016
2015
Gross premiums written
€ MN
51,535
51,597
Operating profit
€ MN
5,370
5,603
(62)
(233)
Net income
Delta
€ MN
C - Group Management Report
Key figures
9- For further information on the impairment loss on the Oldenburgische Landesbank AG, and the disposal
of Allianz Life Insurance Co. Ltd., Seoul, please refer to note 4 to the consolidated financial statements.
Annual Report 2016 - Allianz Group
41
C - Group Management Report
Other information
During the year ended 31 December 2016, the Allianz Group disposed
of its South Korean Life/Health business (Allianz Life Insurance Co.
Ltd., Seoul), a 100% owned subsidiary of the Allianz Group. The entity
had been classified as held for sale since the beginning of the second
quarter of 2016. The entity was deconsolidated on 30 December 2016.
At the end of the fourth quarter of 2016, all requirements were fulfilled
to present Oldenburgische Landesbank AG, Oldenburg, as a disposal
group. Thus, the assets and liabilities of this consolidated entity,
which are allocated to the reportable segment Banking (Corporate
and Other), were classified as held for sale.
For further information please refer to note 4 to the consolidated
financial statements.
Other parts of the
Group Management Report
The following information also forms part of the Group Management
Report:
Statement on Corporate Management pursuant to § 315 (5)
and § 289a of the HGB starting on ②> page 19,
Takeover-related Statements and Explanations starting on
>page 21, and the
Remuneration Report starting on > page 24.
42
42
Annual Report 2016 - Allianz Group
Property-Casualty Insurance Operations
KEY FIGURES PROPERTY-CASUALTY1
4,158
4,124
34
2015
Delta
Underwriting result
2,354
2,281
73
Operating investment income (net)
2,971
3,138
(167)
45
184
(139)
Operating profit
5,370
5,603
(233)
2016
€ MN
OPERATING PROFIT
AGCS: Gross premiums stood at € 7,592 MN. The internal growth
of 0.5% was largely generated by positive volume effects at Allianz Risk
Transfer, much of which was offset by negative price impacts across
both our corporate and specialty lines of business.
Loss ratio²
%
65.6
Expense ratio³
%
28.7
Combined ratio4
%
8- Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions
and disposals. Please refer to page 60 for a reconciliation of nominal total revenue growth to internal total
revenue growth for each of our business segments and the Allianz Group as a whole.
94.3
Gross premiums written5
On a nominal basis, gross premiums written were almost stable com-
pared to 2015.
Unfavorable foreign currency translation effects amounted to
€ 1,138 MN, largely due to the depreciation of the British Pound, the
Argentine Peso, and the Turkish Lira against the Euro.6
Consolidation/deconsolidation effects were negative, amount-
ing to € 519 MN. This was largely attributable to the sale of the Fire-
man's Fund personal insurance business to ACE limited in 2015.
On an internal basis, our growth was strong at 3.1% driven by a
positive volume effect of 2.0% and a positive price effect of 1.1%.
The following operations contributed positively to internal growth:
Turkey: Gross premiums reached € 1,695 MN. The internal growth
of 43.0% was driven by positive volume and price contributions in our
motor third-party liability insurance business.
Germany: We recorded gross premiums of €9,902 MN, an
increase of 2.8% on an internal basis. This was mainly due to favorable
price effects in our motor insurance business, and supported by
favorable volume effects in our non-motor commercial insurance
business.
Allianz Worldwide Partners: Gross premiums increased to
€ 4,185 MN. The internal growth of 4.7% was mainly driven by our U.S.
travel business and our assistance business in France.
66.2 (0.5)%-p
28.4 0.2%-p
94.6 (0.3)%-p
7- Represents the ratio of net income attributable to shareholders to the average shareholders' equity,
excluding unrealized gains/losses on bonds, net of shadow accounting, at the beginning of the year and
at the end of the year.
6- Risk capital figures are group diversified at 99.5% confidence level. Allianz Life us included based on third
country equivalence with 150% of RBC CAL since 30 September 2015.
5-Changed regulatory tax treatment of German life sector reduced our year-end Solvency II capitalization
ratio from 200% to 196 % on 1 January 2016.
This was a disruptive year for the asset management industry. Global
equity markets started 2016 with a sharp drop, then made a broad
recovery in the following months. Emerging-market and U.S. equities
finished the year particularly strong; European indices lagged a bit
and exhibited higher volatility, particularly after the Brexit vote, but
still finished the year in positive territory.
Continued accommodative monetary policy across major econ-
omies led to falling yields and rising bond prices through most of the
year. This resulted in very strong returns for bond indices in both
Europe and the United States - until the results of the U.S. election
sent yields soaring, as prospects of a more supportive fiscal policy
and a tightening labor market raised inflation expectations. There
was also some spill-over into the Eurozone, causing yields to rise late
in the year, albeit to a lesser extent than in the United States. Bond
indices in both the United States and Europe still finished the year
with positive returns.
Currencies proved highly volatile during the year, with the British
Pound weakening significantly after the Brexit vote. The U.S. Dollar
strengthened markedly after the U.S. election and a subsequent spike
in yields.
The shift in investor preference towards passively managed
funds continued throughout 2016 and was especially pronounced in
the United States, where active equity mutual funds were particu-
larly hard-hit. Actively managed taxable bond mutual funds in the
United States finished the year with positive flows, but were also
notably outstripped by their passive counterparts. Investors showed
a general preference for bonds over actively managed equities most
of the year, though this trend reversed towards year-end as yields rose
and U.S. equity markets rallied following the election. European
investors directed flows predominately into active fixed income
funds and to a lesser extent into passive equity and fixed income
products.
40
40
2016
Executive Summary of 2016 Results
C - Group Management Report
Key figures
KEY FIGURES ALLIANZ GROUP1
Delta
2016
2015
Total revenues²
€ MN
122,416
The current low-yield environment also presented the greatest
challenge in the life sector, impairing the profitability of in-force
business. Insurers responded by continuing to shift the product mix
towards less capital-intensive products, for example by offering lower
or more flexible guarantees. At the same time, the focus moved from
traditional savings to protection business. To boost investment
income, insurers increasingly turned to non-traditional investments
such as infrastructure. These actions notwithstanding, overall profit-
ability is likely to have drifted downward slightly.
In the life sector, premium growth was very strong in emerging mar-
kets or, more precisely, in emerging Asian markets: Life premiums
rose by more than 20 percent there, mainly due to the extraordinary
growth experienced in the Chinese market. The other two emerging
regions show a totally different picture: Premium growth in Latin
America flattened, reflecting the economic troubles of its biggest
market, Brazil; Eastern Europe remained in the doldrums, not least
due to changes in the tax regime for life products in some key markets.
For advanced markets, too, 2016 proved to be a rather difficult year.
Premium growth slowed - or even turned negative - in many markets
as the ongoing low-yield environment continued to pose problems
for the savings-type core insurance business. In total, according to
our own estimates, global premiums grew by almost 5% in 2016 (in
nominal terms and adjusted for foreign currency translation effects).
in Japan, severe storms and floods in Germany and France, and Hur-
ricane Matthew in the United States. Insurers' investment income
remained weak as investment returns were challenged by very low
interest rates. As a result, overall profitability is likely to have slipped
marginally in 2016.
more costly natural catastrophes, such as the Kumamoto Earthquake for the asset management industry
C - Group Management Report
Business Environment
Economic environment 2016¹
In 2016 the global economy proved to be remarkably resilient in the
face of heightened political and economic uncertainty. Neither con-
cerns about a slowdown of the Chinese economy, which prompted
some turmoil on the equity markets in early 2016, nor major political
surprises - including the outcome of the Brexit vote in June and the
U.S. presidential elections in November - managed to derail the global
economy from its moderate growth path. Compared with 2015, eco-
nomic growth in the industrialized countries decelerated in 2016.
Real gross domestic product rose by 1.6% (2015: 2.1 %). In the United
States, the loss in economic momentum in 2016, compared to the
average pace in the current cycle, primarily reflects weakness in busi-
ness investment. By contrast, private consumption continued to grow
robustly. In the Eurozone, the economic recovery continued, albeit at
a slightly slower pace than in 2015. Real gross domestic product
expanded by 1.7% (2015: 1.9%). Private consumption was supported
by both low inflation and a gradual labor market improvement. With
an increase of 1.9%, the German economy recorded a slightly higher
growth rate than the Eurozone as a whole.
In the emerging markets, growth deceleration finally came to an
end in the course of 2016. Commodity-exporting emerging markets
benefited from the uptick in commodity prices. Most Eastern Euro-
pean E.U. member states continued to benefit from the ongoing recov-
ery in the Eurozone. Russia saw its economy stabilizing, following a
severe recession in 2015. Thanks primarily to fiscal stimulus, China's
growth decelerated only marginally from 6.9% in 2015 to 6.7% in 2016.
As a whole, the emerging-market group expanded by a rather disap-
pointing 3.6% - the same rate as in 2015 and well below the long-term
average of roughly 5.5% per year. Overall, the world economy grew by
an estimated 2.4%, somewhat slower than in 2015, when global output
rose by 2.7%. Global merchandise trade registered its lowest growth
rate since the Great Recession in 2009: less than 1%. The pace of global-
ization in merchandise trade has evidently abated considerably.
Financial market developments in 2016 continued to be charac-
terized by very low interest rates, a strong U.S. Dollar, and relatively low
stock-market volatility - the latter despite high political uncertainty.
In the United States, the Federal Reserve raised the target federal
funds rate to 0.50%-0.75% in December; this was its second move
since ending the zero-interest policy in late 2015. By contrast, the
European Central Bank continued to ease its monetary policy stance
with a bundle of measures, including the extension of the bond pur-
chasing program at least until the end of 2017. Yields on 10-year Ger-
man government bonds reached 0.2% at year-end 2016, a decrease of
40 basis points compared to the previous year. Major stock-market
indices, following a negative start, registered gains in the course of
2016. The Euro lost further ground against the U.S. Dollar, closing the
year at 1.05 U.S. Dollar to Euro - almost 4% below the level seen at the
beginning of 2016. The diverging monetary policies of the Federal
Reserve and the European Central Bank were a key factor behind this
downward correction. In terms of portfolio flows, emerging markets
had a difficult year: net non-resident capital inflows to bond and equity
markets fell below USD 28 BN - the lowest annual inflow since 2008 -,
which was mainly due to rising U.S. yields.
125,190 (2,774)
Business environment 2016
for the insurance industry
And these are only the macroeconomic challenges. Even more
daunting were events in the microeconomy, first and foremost the
digital revolution. Not only will digitization, big data, and artificial
intelligence fundamentally transform the industry – in addition,
highly connected technologies have begun to cause a radical shift in
the nature of risks faced by society. As a result, the industry is con-
fronted with new demands: It has to find new solutions that allow
people to take new risks – for example in the sharing economy - and
also promote the use of new technologies. So, in the short term, the
need to innovate and adjust its current business model will put addi-
tional pressure on the industry. In the longer run, however, the digital
economy should offer plenty of opportunities to expand the business,
as is already exemplified by the rapid rise in cyber-insurance (albeit
from a very low base). Against this backdrop of macro- and micro-
challenges, the industry proved remarkably resilient in 2016. Premium
income was more or less stable; profitability was under pressure but
dropped just a notch or two.
In the property-casualty sector, premium growth decelerated slightly
in advanced markets, reflecting some weaknesses in Japan and North
America. Western Europe, on the other hand, kept more or less pace
thanks to the ongoing economic recovery, but overall the market
remained rather weak. As in the past, premiums grew much faster in
the emerging markets, driven by a robust growth in Asia. The other
two major emerging regions fared quite differently: Whereas the
slowdown in Latin America continued in 2016, Eastern Europe showed
clear signs of a recovery. Pricing continued to be a concern in nearly all
markets, particularly in the commercial insurance segment. Premi-
ums, overall and at a global level, rose by an estimated 4% in 2016 (in
nominal terms and adjusted for foreign currency translation effects).
1-At the date of the publication of this report, not all general market data for the year 2016 used in the
chapter Business Environment was final. Furthermore, the information provided in this chapter is based
on our own estimates.
Annual Report 2016 - Allianz Group
39
C - Group Management Report
Underwriting profitability suffered from more frequent and
Business environment 2016
2016 was an eventful year for the insurance industry, with most of
these events having more downsides than upsides. The macroeco-
nomic environment presented significant headwinds: the recovery of
the world economy continued, but with reduced momentum. 2016
also marked the end of a three-year streak of relatively low losses
from natural catastrophes: Not only did the number of events
increase further - among them an unusually high number of flood
events-but losses jumped to levels more than 50 percent higher than
the previous year's. On the regulatory front, the industry as a whole
managed to adjust smoothly to the new Solvency II regime which had
come into force as of 2016. Regulatory pressure remained high, how-
ever, in particular with regard to reserve requirements, stress testing,
or reporting.
Other result¹
Operating profit³
10,833
15.00
14.55
0.45
Earnings summary
0.58
MANAGEMENT'S ASSESSMENT OF 2016 RESULTS
Our total revenues decreased by 2.2% this past business year, a drop
of 0.8% on an internal basis compared to 2015. Much of this decrease
was attributable to our Life/Health business segment, where we con-
tinued our targeted shift towards preferred lines of business. Both
lower other net fee and commission income, mainly due to lower
third-party assets under management-driven margins, and a decrease
in performance fees in our Asset Management business segment
further contributed to the decline. Our Property-Casualty business
segment enjoyed internal premium growth, mainly arising from
Turkey, Germany and Allianz Worldwide Partners.
Our operating investment result increased by € 692 MN to
€ 25,125 MN, mainly due to gains from the net of foreign currency
translation effects and financial derivatives, with the latter being
used to protect against equity and foreign currency fluctuations as
well as to manage duration and other exposures related to interest
rates. This was partly offset by lower interest and similar income,
driven by the low interest rates.
Our operating profit was near the upper end of our 2016 target
range and increased by 0.9% compared to 2015. Our Life/Health busi-
ness segment recorded an increase in operating profit, mainly due to
a higher investment margin in the United States as well as favorable
DAC unlocking effects in France. The operating result in our Corporate
and Other business segment also improved, primarily as a result of
lower pension costs. The operating profit generated by our Property-
Casualty business segment declined, reflecting the impact of lower
interest yields on our investment result. In addition, 2015 included a
€0.1 BN net gain (net of related expenses and restructuring charges)
from the sale of the Fireman's Fund personal insurance business. The
business segment's underwriting result, however, improved. In our
Asset Management business segment, a reduction in operating
expenses could only partially compensate for lower operating reve-
nues, resulting in a decline in operating profit.
Our non-operating result was stable at a loss of € 541 MN, with a
number of offsetting effects. On the one hand we had significant
impairments (net), partly due to the impairment losses on our South
Korean Life/Health business as well as on the Oldenburgische Landes-
bank AG⁹ upon classification as held for sale at the beginning of the
second quarter of 2016 and end of 2016, respectively. In addition, the
negative result that the South Korean Life/Health business generated
until its disposal in the fourth quarter of 2016 was considered as non-
operating, as it is no longer part of the ongoing core operations of the
Allianz Group⁹. On the other hand, non-operating realized gains (net)
increased following portfolio rebalancing. We also reported higher
non-operating income from financial assets and liabilities carried at
fair value through income (net), mainly due to favorable impacts
from hedging-related activities.
Income taxes fell by € 167 MN to € 3,042 MN, mainly driven by
higher tax-exempted income. The effective tax rate decreased to 29.6%
(2015: 31.5%).
The increase in our net income was driven by the higher operating
profit and lower effective tax rate.
Our shareholders' equity rose by € 4.2 BN to € 67.3 BN, compared
to 31 December 2015. Over the same period our Solvency II capitaliza-
tion ratio strengthened from 200% to 218%.
For a more detailed description of the results generated by our
business segments - specifically, Property-Casualty insurance opera-
tions, Life/Health insurance operations, Asset Management, and Cor-
porate and Other - please consult the respective chapters on the fol-
lowing pages.
1- For further information on Allianz Group figures, please refer to note 5 to the consolidated financial
statements.
2- Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating
revenues in Asset Management, and total revenues in Corporate and Other (Banking).
3- The Allianz Group uses operating profit and net income as key financial indicators to assess the performance
of its business segments and of the Group as a whole.
4-Figures as of 31 December.
€
Diluted earnings per share
14.56
15.14
10,735
Net income³
€ MN
7,250
6,987
thereof: attributable to shareholders
€ MN
6,883
€ MN
6,616
%
218
Return on equity?
%
12.0
98
263
267
200
18%-p
12.5 (0.5)%-p
Earnings per share
€
Solvency II capitalization ratio4,5,6
1- Consists of fee and commission income/expenses, other income/expenses, and restructuring charges.
Annual Report 2016 - Allianz Group
Our underwriting result increased thanks to a higher contribu-
tion from run-off as well as lower losses from natural catastrophes
and weather-related events, compared to 2015, resulting in an
improvement in our combined ratio.
Investment expenses
(376)
(365)
(11)
Expenses for premium refunds (net)²
(255)
(240)
(15)
Operating investment income (net)
2,971
3,138
(167)
1-The operating investment income (net) of our Property-Casualty business segment consists of the
operating investment result-as shown in note 5 to the consolidated financial statements - and expenses
for premium refunds (net) (policyholder participation).
2- Refers to policyholder participation, mainly from APR (accident insurance with premium refunds) busi-
ness, and consists of the investment-related part of "change in reserves for insurance and investment
contracts (net)". For further information, please refer to note 28 to the consolidated financial statements.
44
Annual Report 2016 - Allianz Group
Life/Health Insurance Operations
8
C - Group Management Report
(59)
Operating impairments of investments (net)
2015
Delta
Interest and similar income
(net of interest expenses)
3,391
3,576
(185)
Operating income from financial assets
and liabilities carried at fair value through
income (net)
(23)
(25)
3
Operating realized gains/losses (net)
285
252
33
(51)
Key figures
KEY FIGURES LIFE/HEALTH¹
Statutory premiums²
In France, statutory premiums fell to € 7,956 MN, a slight decrease
of 1.2% on an internal basis, largely due to a decline in our individual
life business.
In the Asia-Pacific region, statutory premiums stood at € 5,383 MN,
a 19.2% drop on an internal basis, its main cause being a decrease in
unit-linked sales in Taiwan. Statutory premiums in South Korea
decreased to € 1,307 MN, or by 21.4% on an internal basis.
from our South Korean business.
Statutory premiums5
On a nominal basis, statutory premiums went down by 3.4%. This
includes unfavorable foreign currency translation effects of € 347 MN
and positive (de-)consolidation effects of € 138 MN.
On an internal basis5, statutory premiums dropped by € 2,058 MN
- or 3.1% - to € 64,947 MN, mainly due to lower unit-linked single pre-
miums in Italy and Taiwan as well as declining traditional business
both in Germany and Italy. The increase in our fixed-indexed and
non-traditional variable annuity sales in the United States and the
premium growth in capital-efficient products in Germany partly
compensated for this development. In line with our changed product
strategy, premiums continued to shift towards capital-efficient prod-
ucts.
Premiums earned (net) went down by € 446 MN to € 23,769 MN, result-
ing from a decline in our business with traditional life products in
Germany.
Present value of new business premiums
(PVNBP)6,7,8
PVNBP fell by € 1,976 MN to € 57,168 MN, largely due to lower sales in our
business with unit-linked insurance products without guarantees in
Italy and in Taiwan.
PRESENT VALUE OF NEW BUSINESS PREMIUMS (PVNBP) IN %
BY LINES OF BUSINESS1
%
Guaranteed savings & annuities
Protection & health
Unit-linked without guarantee
Capital-efficient products
The decrease in operating profit was mainly driven by the expected
decline in investment result due to the current low-yield environ-
ment. Furthermore, our 2015 operating profit had included a € 0.1 BN
net gain (net of related expenses and restructuring charges) from the
sale of the Fireman's Fund personal insurance business.
In Italy we recorded statutory premiums of € 9,529 MN. The
decrease of 20.2% on an internal basis was largely attributable to
lower unit-linked single premium sales - as a result of higher finan-
cial market volatility – and a decrease in traditional life business.
In the United States, statutory premiums increased to € 11,856 MN,
or by 13.0% on an internal basis. This was largely driven by higher
fixed-indexed and non-traditional variable annuity sales, mainly as
a result of our marketing activities in the first half of 2016.
Statutory premiums in the German life business amounted to
€ 18,876 MN, a 6.4% increase on an internal basis. This resulted main-
ly from a growth in our business with capital-efficient products. It
more than offset the decline in sales of traditional life products,
which include long-term interest rate guarantees. Statutory premi-
ums in the German health business increased to € 3,289 MN, repre-
senting an internal growth of 1.0%, driven by the acquisition of new
customers in the supplementary health care coverage.
To ensure consistency with the group income statement, how-
Operating profit³
352
2016
2015
€ MN
64,636 66,903
Delta
(2,267)
€ MN
2016
4,148
Net income
€ MN
Return on equity4
%
2,581
10.3
2,621
(40)
10.8 (0.5) %-p
At the beginning of the second quarter of 2016, all requirements were
fulfilled to present our South Korean business – until its disposal in
the fourth quarter of 2016 – as held for sale. Consequently, the nega-
tive result of € 268 MN that the South Korean business generated was
considered as non-operating, as the entity is no longer part of our
ongoing core operations. In order to better reflect the true underlying
drivers of our operating profit, we report it by profit sources and by
lines of business for both 2015 and 2016 excluding South Korea, and
specify the South Korean operating loss as a separate item.
Similarly, the figures for present value of new business premi-
ums are shown without effects from the South Korean business.
3,796
€ MN
ever, statutory premiums are presented including premiums collected Premiums earned (net)
Net income
(13,208)
(144)
Change in reserves for insurance
and investment contracts (net)
(without expenses for premium refunds)¹
(306)
(220)
(86)
Underwriting result
2,354
2,281
73
1- For further information on Allianz Property-Casualty figures, please refer to note 5 to the consolidated
financial statements.
2-Represents claims and insurance benefits incurred (net), divided by premiums earned (net).
3-Represents acquisition and administrative expenses (net), excluding one-off effects from pension
revaluation divided by premiums earned (net).
4- Represents the total of acquisition and administrative expenses (net), excluding one-off effects from
pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).
5- We comment on the development of our gross premiums written on an internal basis, which means
figures have been adjusted for foreign currency translation and (de-)consolidation effects in order to
provide more comparable information.
6- Based on the average exchange rates in 2016 compared to 2015.
1- Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of
"change in reserves for insurance and investment contracts (net)". For further information, please refer
to note 28 to the consolidated financial statements.
(13,352)
expenses (net), excluding one-off effects
from pension revaluation
Acquisition and administrative
Previous year claims (run-off)
UNDERWRITING RESULT
Net income increased, driven by a higher non-operating result, which
benefited from the absence of negative effects from pension revalu-
ation and an increase in the non-operating investment result, thus
offsetting the decline in operating profit.
€ MN
Premiums earned (net)
Claims and insurance benefits incurred (net)
2016
2015
Delta
Our accident year loss ratio stood at 70.1% - a 0.2 percentage point
improvement compared to the previous year. It was driven by a slight
decrease in losses from natural catastrophes from € 738 MN to
€ 689 MN, representing a reduced combined ratio impact from 1.6 per-
centage points in 2015 to 1.5 percentage points in 2016.
46,588
(32,661)
(15)
2,084
1,924
160
(30,576)
(30,721)
145
Accident year claims
46,430
(32,646)
Annual Report 2016 - Allianz Group
159
C - Group Management Report
54
21
232
(211)
(1,407)
(1,367)
(40)
(3)
1,474
(6)
(94)
55
45
184
(139)
In 2015 we recorded a € 0.1 BN net gain (net of related expenses
restructuring charges) from the sale of the Fireman's Fund personal
insurance business.
43
and
3
1,527
(149)
2015
Delta
United Kingdom: 0.2 percentage points. The accident year loss
ratio benefited from a very low impact of natural catastrophes in 2016.
AGCS: 0.1 percentage points. The improvement stemmed from
lower losses in the property and marine lines of business, while lower
large losses were offset by higher natural catastrophes compared to
2015.
Spain: 0.1 percentage points. This was driven by portfolio clean-
ing actions in loss making lines of business and price increases
across the portfolio.
France: 0.2 percentage points. The deterioration was driven by a
combination of higher large losses as well as higher losses from natu-
ral catastrophes compared to the previous year.
The higher run-off result led to an increased run-off ratio amounting
to 4.5% (2015: 4.1%), driven by reserve releases across most of the port-
folio. In particular France and Australia delivered more run-off com-
pared to the prior year, due to a beneficial development in their long
tail business.
The increase in our expense ratio was driven, in equal parts, by a
higher acquisition ratio and a higher administrative expense ratio.
OPERATING INVESTMENT INCOME (NET)1
The following operation contributed negatively to the development
of our accident year loss ratio:
The following operations contributed positively to the development
of our accident year loss ratio:
OTHER RESULT
Excluding losses from natural catastrophes, our accident year
loss ratio improved to 68.6%. This was predominantly due to a com-
bination of lower losses from weather-related events and profitabil-
ity programs we conducted across the Allianz Group.
€ MN
Fee and commission income
Other income
2016
Our operating investment income (net) declined, mainly due to lower
interest and similar income, essentially driven by debt securities as
a result of the low yield environment.
Fee and commission expenses
Other expenses
Restructuring charges
Other result
52
52
Slight increase in total AuM due to positive market return,
supported by moderate net inflows at PIMCO and at AllianzGI.
Operating profit in the range of € 2.0 BN to € 2.6 BN.
Cost-income ratio well below 65%.
Pressure on investment income due to low interest rates
and continued capital market uncertainty.
RoE between 10.0% and 12.0%.
while continuing to provide attractive returns and dividends.
Selective profitable growth.
Continue with selective focus on profitable growth and further
shift new business mix towards capital efficient, unit-linked,
and protection products. Considering the disposal of our
South Korean business, revenues are expected to be in the
range of € 60.0 BN to € 66.0 BN.
Progress towards our combined ratio ambition of 94%
or better by 2018.
Operating profit in the range of € 5.0 BN to € 5.6 BN.
for foreign currency translation effects). To safeguard profitability,
Annual Report 2016 - Allianz Group
Growth in gross premiums written: approximately 2%
on a nominal basis.
Operating profit of € 10.8 BN, plus or minus € 0.5 BN.
Protection of shareholders' investments,
Operating profit between € 3.7 BN and € 4.3 BN.
Pressure on operating investment income (net) to continue
due to reinvestments in a consistently low interest rate
environment.
A 100 basis point increase or decrease in interest rates would,
respectively, either raise or lower operating profits by approx-
imately € 0.1 BN in the first year following the rate change.
No major disruptions of capital markets.
ASSUMPTIONS
Our operating profit was near the upper end of our target range
in 2016, hitting € 10.8 BN. As of 2017, we will update our operating
profit definition and exclude restructuring charges from the operat-
ing profit unless they are shared with policyholders. Under this
updated definition, our operating profit for 2016 would have been
€ 10.9 BN, with the delta of € 0.1 BN essentially attributable to the Prop-
erty-Casualty business segment. For 2017, we envisage an operating
profit of € 10.8 BN, plus or minus € 0.5 BN, as we expect a slightly nega-
tive development in the Property-Casualty and Life/Health business
segments and a slightly positive development in the Asset Manage-
ment and Corporate and Other business segments - all based on the
updated operating profit definition.
Our net income attributable to shareholders increased, reaching
€ 6.9 BN in 2016. Consistent with our disclosure practice in the past
and given the susceptibility of our non-operating results to adverse
capital market developments, we do not provide a precise outlook
for net income. However, since our outlook presumes no major dis-
ruptions of capital markets, we anticipate a rather stable net income
for 2017.
PROPERTY-CASUALTY INSURANCE
In 2016, our total revenues amounted to € 122.4 BN, a 2.2% decrease on
a nominal and a 0.8% decrease on an internal basis compared to 2015.
We expect a rather flat revenue development in 2017, with Property-
Casualty and Asset Management revenues advancing, while Life/
Health revenues are likely to be under pressure due to our selective
focus on profitable growth.
In the life sector the overall picture is quite similar. Specifically,
we expect advanced markets to maintain their (modest) growth as
demand benefits from rising employment and new product offers.
Emerging markets, on the other hand, will show stronger perfor-
mance. Asia might shift down a little after the extraordinary growth
spurt seen in 2016; on a general note, however, rising incomes, urban-
ization, and social security reforms should remain strong engines for ASSET MANAGEMENT
growing insurance demand. All in all, we expect global premium
revenue to increase by 4.0% to 5.0% in 2017 (in nominal terms, adjusted
expected revenues and earnings for 2017
C - Group Management Report
Management's assessment of
Average U.S. Dollar to Euro exchange rate of 1.11.
No disruptive fiscal or regulatory interference.
Level of claims from natural catastrophes at expected average
levels.
Modest rise in interest rates expected.
Global economic growth is set to continue.
-
Our outlook assumes no significant deviations from the following
underlying assumptions:
A 10% weakening or strengthening of the U.S. Dollar versus
our planned exchange rate of 1.11 to the Euro would have
a negative or positive impact on operating profits of approxi-
mately € 0.3 BN, respectively.
LIFE/HEALTH
51
ALLIANZ GROUP
upward movement in oil prices and rising inflation will weigh on pri-
vate consumption, household spending will be supported by rising
employment. The group of emerging market economies is set for a
moderate acceleration of growth, mainly driven by a gradual stabiliza-
tion in the group's heavyweights, Russia and Brazil, and by a recovery
in commodity-exporting countries. Overall, global output is likely to
expand by about 2.8% in 2017, compared with 2.4% in 2016. Industrial-
ized countries are expected to register gross domestic product
growth of 1.9%, while in emerging markets growth could increase to
4.1% from the 3.6% seen in 2016.
2- The information presented in the sections "Economic outlook", "Insurance industry outlook", and "Asset
management industry outlook" is based on our own estimates.
1- For more detailed information on the previous year's outlook for 2016, please see the Annual Report 2015
from page 92 onward.
Following a slight acceleration in the final quarter of 2016, the world
economy currently finds itself in fairly good shape and has made a
positive start into the year 2017. In the industrialized countries,
growth prospects are quite favorable overall. In the United States,
despite the fact that there is still not much clarity about the specifics
of economic policy under the new U.S. administration, a change in the
policy mix is on the horizon: Monetary policy will provide somewhat
less stimulus for the economic development, whereas fiscal policy
will do more as the new U.S. administration is expected to deliver on
the promise to cut taxes and launch investment initiatives. In the
course of 2017, these measures are expected to buoy economic
growth, despite some dampening effects such as higher inflation. All
in all, the U.S. economy is likely to expand by 2.2% this year. In the
Eurozone, the economic recovery is likely to continue. We expect real
gross domestic product to increase by 1.8% (2016: 1.7%). While the
Economic outlook?
1- Represents the ratio of net income to the average total equity, excluding unrealized gains/losses on bonds, net of shadow accounting, at the beginning of the year and at the end of the year.
The uncertain global economic and political environment (e.g.
rise of populism, high emerging market indebtedness, risk of E.U. dis-
integration) is likely to result in higher financial-market volatility this
year. As far as monetary policy is concerned, assuming that the labor
market remains tight and inflation rates continue to move up, the
Federal Reserve is likely to continue to hike interest rates this year. By
contrast, we do not see any major change in the European Central
Bank's expansionary monetary policy stance.
Operating profit amounted to € 2.2 BN and meets the mid-point of the target range.
With a cost-income ratio of 63.4% our Asset Management business segment came in well
below 65%.
Operating investment result reached € 21.3 BN, as lower interest and similar income was
compensated by higher realized gains.
Operating profit of € 4.1 BN above target range, driven by favorable investment margin
supported by higher level of net harvesting from further portfolio de-risking actions.
ROE¹ at 10.3% above mid-point of target range.
We expect our revenues to increase by approximately 2% in 2017
(2016: (0.1) %), supported by favorable volume effects and - to a lesser
extent - price effects. This growth is supported by the acquisition of
the commercial portfolio of Aegon in mid-2016, strengthening our
position in the attractive Benelux property-casualty market.
Revenues of € 64.6 BN at the mid-point of outlook. Strong growth from capital-efficient products
in Germany and the United States was more than offset by lower unit-linked sales in Italy and
Taiwan.
Property-Casualty with continued sound risk selection and strong internal growth, Life/Health
with growing asset base and solid new business margins, but Asset Management with net outflows.
Gross premiums slightly declined by 0.1%, hence almost remained stable. A strong internal
growth of 3.1% was offset by negative foreign currency translation effects as well as by
divestitures such as the sale of Fireman's Fund personal insurance business.
Operating profit of € 5.4 BN is slightly below the mid-point of our target range. A low impact of
natural catastrophes was partially compensated by large losses. Although Argentina and Brazil
improved during 2016, the delay of their turnaround impacted the underwriting result.
Combined ratio was strong at 94.3% and on track towards our ambition for 2018.
As expected, operating investment income (net) declined across our subsidiaries due to the
low interest rate environment.
Total AuM grew by € 108 BN to € 1,871 BN as of 31 December 2016. The increase was driven by
positive market returns and foreign currency translation effects. The consolidation of Rogge
Global Partners in the second quarter of 2016 added € 32 BN of third-party AuM. In the course of
2016, our Asset Management business segment saw third-party AuM net outflows of € 20 BN
coming from both entities. However, as expected, PIMCO third-party net flows turned positive
for the last two quarters of 2016.
PROPERTY-CASUALTY
Modestly rising yields on 10-year U.S. government bonds and
higher inflation rates in the Eurozone will exert some upward pressure
on European benchmark bond yields in 2017. However, with short-
term rates at zero, there are limited prospects of markedly higher
yields on longer-term bonds. For 10-year German government bonds,
C - Group Management Report
OUTLOOK 2017
Overview: outlook and assumptions 2017
for the Allianz Group
2017 is expected to be another challenging and disruptive year
for the asset management industry. Markets are volatile and there is
some political uncertainty. In addition, industry profitability remains
under pressure from both continuous flows into passive products
and rising distribution costs. However, digital channels are expected
to continue gaining prominence. Measures aimed at strengthening
regulatory oversight and reporting could also affect profitability in
the asset management sector. In order to continue growing, it is
vital for asset managers to keep sufficient business volumes, ensure
efficient operations, and maintain strong investment performance.
Global economic and political divergence creates uncertainty
and volatility thus involving risks, but it also provides opportunities.
For instance, strong economic trends, such as job and wage growth,
as well as a pick-up in inflation should allow the Federal Reserve to
continue with gradual rate increases, driving treasury yields higher.
Bonds are particularly interesting for the growing number of retirees
in developed countries who are looking for a stable stream of income;
also, liability-driven investors may look to further de-risk into bonds
as yields become more attractive.
After a sometimes rocky but ultimately benign year for global equities
in 2016, 2017 brings the prospect of increased volatility. This is due in
particular to geopolitical uncertainty, as the new administration
comes to power in the United States and elections are held across
Europe.
Asset management industry outlook
Annual Report 2016 - Allianz Group
insurers will continue to review both their product mixes and their
investment portfolios. As a result, overall profitability should not
deteriorate any further.
To sum up: In 2017, the industry's top line will continue to grow
modestly- though some lines of business such as trade-dependent
marine and rate-sensitive savings might struggle - while the bottom
line remains under pressure from weak investment income and the
need to build new, digital business models.
While the macroeconomic environment, despite all the uncer-
tainties, offers some glimpses of hope, the challenges on the micro-
economic front remain formidable: As technological progress and
the digitization of our life gather speed, established business models
get under enormous pressure. The industry has to adapt quickly to
defend its franchise against new competitors. In combination with
the new regulatory regime (Solvency II), which brings more clarity on
capital positions, this restructuring process could act as a possible
catalyst for more industry consolidation.
In 2017, things are likely to start moving in the right direction for the
insurance industry: The global economy is set to shift up a gear, infla-
tion will return - which will set the scene for monetary normalization
- and last but not least, interest rates are expected to rise. That said,
the overall momentum will probably be too weak to finally escape the
low-growth, low-yield environment; so, for the time being, we expect
premium growth to remain modest and investment income to
remain under pressure. Moreover, political risks could easily derail
the economy and knock markets from their path to normalization.
_
Insurance industry outlook
we predict yields to climb modestly towards 1% in the course of 2017;
for 10-year U.S.government bonds, yields may end the year in a range
between 2.5% and 3%. While the expected Federal Reserve rate hikes
will weigh on the Euro, a number of other factors will support it;
above all, the expected rise in the U.S. current-account deficit as well
as the speculation - which is likely to increase towards year-end -
about the timing and manner of the European Central Bank's exit
from its bond purchasing program. We expect the Dollar-to-Euro
exchange rate to close the year at about 1.10 (2016: 1.05).
In the property-casualty sector, growth in advanced markets
should remain rather stable: The ongoing recovery supports demand,
but pricing is still a concern. For advanced markets, political insta-
bility could prove to be the biggest challenge in 2017, as growing pro-
tectionism and the looming Brexit drive structural changes in the
industry. The outlook for emerging markets is much brighter: Asia is
expected to roar ahead, Latin America will stabilize, and Eastern
Europe will continue its recovery. Overall, we expect global premium
revenue growth to range between 4.0% and 5.0% in 2017 (in nominal
terms, adjusted for foreign currency translation effects). Given the
still challenging pricing outlook and weak investment income, overall
profitability might not improve but stay more or less flat.
Most of the premium growth in 2017 is expected to come from
our European core markets, including the United Kingdom, Germany,
and Spain. Top-line development will further be supported by positive
trends at Allianz Worldwide Partners, where our B2B2C business
activities are bundled.
54
In 2016, our combined ratio was 94.3%. We expect to at least
maintain it at this level in 2017, before reaching our 2018 ambition of
94% or better. This rests on our expectation that the aggregate effect
of improvements in pricing, claims management, and productivity
will compensate for any underlying claims inflation. Despite the high
volatility of natural catastrophes in recent years, we have assumed
that impacts will be in line with our historic claims experience.
Paid-in capital
Shareholders' equity
Delta
2015
as of
2016
as of
€ MN
Shareholders' equity1
Balance Sheet Review
C - Group Management Report
Annual Report 2016 - Allianz Group
The company assumes no obligation to update any information or forward-looking statement
contained herein, save for any information required to be disclosed by law.
No duty to update
SHAREHOLDERS' EQUITY
Such deviations may arise due to, without limitation, (i) changes of the general economic
conditions and competitive situation, particularly in the Allianz Group's core business and core
markets, (ii) performance of financial markets (particularly market volatility, liquidity and
credit events), (iii) frequency and severity of insured loss events, including natural catas-
trophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends,
(v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults,
(vii) interest rate levels, (viii) currency exchange rates, including the Euro/u.s. Dollar exchange
rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisi-
tions, including related integration issues and reorganization measures, and (xi) general
competitive factors, in each case on a local, regional, national, and/or global basis. Many of
these factors may be more likely to occur, or more pronounced, as a result of terrorist activities
and their consequences.
31 December 31 December
28,928
10,920
Total
Return on equity (ROE)1 amounted to 12.0% (2015: 12.5%). Proposed dividend at € 7.60
(2015: € 7.30) per share. Stable payout ratio of 50%.
11,830
Unrealized gains and losses (net)
172
28,928
(926)
adjustments
Foreign currency translation
3,114
24,222
27,336
Retained earnings
(754)
We believe the overall slow rise in prices we witnessed in a num-
ber of markets in 2016 will continue in 2017. However, as in previous
years, we will keep our focus on achieving strong underwriting results
by adhering to our strict underwriting discipline and will accept a
lower top line if target margins cannot be achieved.
The statements contained herein may include prospects, statements of future expectations,
and other forward-looking statements that are based on management's current views and
assumptions and involve known and unknown risks and uncertainties. Actual results, perfor-
mance, or events may differ materially from those expressed or implied in such forward-
looking statements.
statements.
CORPORATE AND OTHER
C - Group Management Report
53
Annual Report 2016 - Allianz Group
In 2017, we expect a cost-income ratio of well below 65% (2016:
63.4%), supported by our focus on expense discipline and operational
excellence. Mid-term we expect our cost-income ratio to be at 60%.
We see a challenging environment for the asset management industry
again in 2017. That said, we expect the positive trend in PIMCO's third-
party AuM net inflows that we observed over the last two quarters of
2016 to continue into 2017, supported by net inflows from AllianzGI
in 2017. Market returns are expected to contribute moderately to a
positive development of total AuM. While performance fees are
expected to decrease slightly, an increase in management and loading
fees should lead to a slight increase in operating revenues, which
should more than offset a moderate increase of operating expenses.
Therefore, we envisage our operating profit to be in the range of € 2.0 BN
and € 2.6 BN in 2017 (2016: € 2.2 BN).
-
ASSET MANAGEMENT
We will remain focused on shifting our new business mix
towards capital-efficient, unit-linked, and protection products –
thereby addressing customer needs in light of the prolonged low-
yield environment – while maintaining strong shareholder returns,
and building on our strong track record of product innovation.
Furthermore, we will continue to actively manage both our new and
in-force business through continuous repricing, expense manage-
ment, asset/liability management, and crediting strategies in order
to mitigate the impacts of difficult market conditions, particularly
the low interest rates, and maintain our profitability targets.
As pointed out in 2015, ROE is one of the key performance indica-
tors for the steering of our Life/Health business. In 2017, we expect the
ROE of the Life/Health business segment to be between 10.0% and 12.0%.
In 2016, our operating profit of € 4.1 BN exceeded our target range. For
2017, we expect operating profit in our Life/Health business segment
to be between € 3.7 BN and € 4.3 BN.
LIFE/HEALTH INSURANCE
Overall, we expect our 2017 operating profit to be in the range of
€ 5.0 BN to € 5.6 BN (2016: € 5.5 BN, based on the updated operating
profit definition, i.e. excluding € 0.1 BN restructuring charges).
As the low-interest-rate environment is likely to persist, invest-
ment income will remain under pressure due to the rather short
duration of investments in the Property-Casualty business segment.
We will continue to take measures to adapt our investment strategy
to ongoing market conditions.
It must be noted, however, that market volatility, along with the
level of net harvesting, can significantly affect the Life/Health busi-
ness segment results.
Cautionary note regarding forward-looking statements
Our Corporate and Other business segment recorded an operating
loss of € 0.9 BN in 2016. As we expect an improvement in the operating
result of the Holding & Treasury reportable segment – mainly attrib-
utable to lower administrative expenses -, we predict an operating
loss in the range of € 0.7 BN to € 0.9 BN for Corporate and Other (includ-
ing consolidation) in 2017.
development and capitalization
2- For further information on subsequent events, please refer to note 44 to the consolidated financial
1 - This represents the management's current intention and may be revised in the future. Also, the decision
regarding dividend payments in any given year is subject to specific dividend proposals by the Manage-
ment and Supervisory Boards, each of which may elect to deviate if appropriate under the then prevailing
circumstances, as well as to the approval of the Annual General Meeting.
Overall, at the date of issuance of this Annual Report and given cur-
rent information regarding natural catastrophes and capital market
trends - in particular foreign currency, interest rates, and equities –
the Board of Management has no indication that the Allianz Group is
facing any major adverse developments.
of the current economic situation of
the Allianz Group
Management's overall assessment
All of the above remains subject to a sustainable Solvency II ratio
above 160%, which is substantially below our current level of 218%
and 20 percentage points lower than our day-to-day Solvency II ratio
target range of 180 to 220%.
Financing and liquidity
Allianz also aims to keep the regular dividend per share at least
at the level paid in the previous year. However, the Board of Manage-
ment and the Supervisory Board of Allianz SE have decided to simplify
Group capital management to make it more flexible. Going forward,
Allianz will return capital to its shareholders on a flexible basis,
rather than following a formulaic approach. Return of capital to share-
holders will no longer be coupled to the unused budget for external
growth and a three-year timeframe.
In addition, Allianz SE has decided to launch a share buy-back
program with a volume of up to € 3.0 BN as part of a previously
announced plan to return unused capital from the Group's external
growth budget from the period 2014 to 2016. The buy-back program
started in February 2017 and is envisaged to last no longer than 12
months. Allianz SE will cancel all repurchased shares.
For 2016, the Board of Management and the Supervisory Board of
Allianz SE propose a dividend of € 7.60 per share.
Expected dividend development1,2
We closely monitor the capital positions of the Group and at the
operating entity level. Additionally, we will continue to optimize our
interest rate and spread sensitivities through asset/liability manage-
ment and life product design.
We expect to have steady access to financial markets at reason-
able cost in order to maintain our strong financial flexibility. This is
supported by prudent steering of our liquidity resources and a matu-
rity profile focusing on a long-dated average remaining term.
The Allianz Group maintains a healthy liquidity position, combined
with superior financial strength and capitalization well above what
supervisory authorities currently require.
Through capital management, Allianz Group aims for a healthy
balance between an attractive yield and investment in profitable
growth. We will continue to return 50% of Allianz Group's net income
(attributable to shareholders) to shareholders in the form of a regular
dividend.
Operating profit of € 10.8 BN.
52
Operating profit in the range of € 1.9 BN to € 2.5 BN.
Cost-income ratio of well below 65%.
2,205
2,297
(93
Operating profit
Net income
We recorded a 2.7% decline in net income, reflecting the decrease in
operating profit, which was partly compensated by the absence of the
negative effect from the adapted cost allocation scheme for the pen-
sion provisions.
1- Operating revenues/operating profit adjusted for foreign currency translation and (de-)consolidation
effects.
Annual Report 2016 - Allianz Group
49
50
50
C - Group Management Report
Corporate and Other
Key figures
KEY FIGURES CORPORATE AND OTHER¹
€ MN
2016
Net income (loss)
78
(945)
(867)
Operating result
26
364
(2,844)
Operating expenses
1,899
1,951
Operating revenues
Delta
2015
(2,818)
(4,182)
(3,818)
Operating expenses
607
474
Performance fees
Delta
2015
2016
(133)
Other net fee and commission income went down primarily
because of lower third-party AuM-driven margins at both PIMCO and
AllianzGI. The main cause for this were outflows from higher-margin
assets at PIMCO. To a lesser extent, lower average third-party AuM con-
tributed to the decrease in other net fee and commission income.
Our operating revenues decreased by 7.1%, which corresponds to a
drop of 7.5% on an internal basis¹.
Operating revenues
The overall three-year rolling investment performance of our Asset
Management business improved significantly, with 83% of third-
party assets outperforming their respective benchmarks (31 Decem-
ber 2015:69%). The increase was driven by PIMCO's rolling investment
performance, which strengthened towards the end of the year.
ASSET MANAGEMENT BUSINESS SEGMENT INFORMATION
€ MN
Our cost-income ratio declined slightly, as the relative decrease
in operating expenses outpaced the relative decrease in operating
revenues. The SPA effect contributed 0.7 percentage points to the cost-
income ratio- net of the impact on variable compensation.
67,341
We recorded lower performance fees, mainly due to decreased
carried interest from a large private fund at PIMCO.
(994)
Other net fee and commission income
Other operating revenues
Operating revenues
5,881
40
(41)
(1)
324
(4,141)
(3,817)
5,545
Administrative expenses (net),
excluding acquisition-related expenses
Other operating expenses
6,479
6,022
12
(8)
3
(336)
(457)
(1,003)
9
KEY FIGURES REPORTABLE SEGMENTS
Annual Report 2016 - Allianz Group
refer to note 5 to the consolidated financial statements.
1-Consolidation included. For further information about our Corporate and Other business segment, please
Banking's operating result decreased. The year was burdened by
a further tightening of interest rate spreads, which led to lower net
interest results in almost all our banking units. A reduction in our
loan loss provisions could not fully offset this development.
The operating result generated by Alternative Investments
remained stable.
In Holding & Treasury, our operating result increased. This was
mainly driven by lower administrative expenses, caused by a decline
in pension costs. Also, our income from financial assets and liabilities
carried at fair value increased due to the valuation of seed money
funds.
Our net loss remained at the previous year's level, as various
effects offset one another. We recorded a higher non-operating invest-
ment result as well as lower income taxes, offset by the absence of
positive effects from an adapted cost allocation scheme for the pen-
sion provisions.
Outlook 2017
Our operating result improved in 2016 due to the positive develop-
ment in Holding & Treasury which by far overcompensated the decline
in Banking.
2
37
39
Operating result
(30)
(176)
Earnings summary
(206)
Overview: 2016 results versus previous year's outlook¹
2016 RESULTS VERSUS PREVIOUS YEAR OUTLOOK FOR 2016
Slight increase in total assets under management (AuM)
due to positive market return, supported by a return to
positive net flows at PIMCO and continued solid net
inflows at AllianzGI.
Pressure on investment income due to low interest rates
and continued capital market uncertainty.
ROE¹ between 9.0% and 11.0%.
Prioritizing profitability over growth and continuing to
shift new business mix towards unit-linked, capital-
efficient and protection products. Addressing customer
needs in the prolonged low yield environment. Revenues
are expected to be in the range of € 62.0 BN to € 68.0 BN.
Operating profit between € 3.3 BN and € 3.9 BN.
Pressure on operating investment income (net) to
continue due to reinvestments in a consistently low
interest rate environment.
Progress towards our combined ratio ambition
of 94% or better by 2018.
C - Group Management Report
Operating profit in the range of € 5.2 BN to € 5.8 BN.
Operating profit of € 10.5 BN, plus or minus € 0.5 BN.
Protection of shareholders' investments, while
continuing to provide attractive returns and dividends.
Selective profitable growth.
OUTLOOK 2016 - AS PER ANNUAL REPORT 2015
ASSET MANAGEMENT
LIFE/HEALTH
PROPERTY-CASUALTY
ALLIANZ GROUP
Growth in gross premiums written by
approximately 2.0%.
RESULTS 2016
Operating expenses
213
(981)
Operating result
121
(25)
(1,639)
(1,664)
Operating expenses
(1,076)
562
Operating revenues
Delta
2015
2016
HOLDING & TREASURY
€ MN
683
32
96
Operating revenues
245
Operating revenues
ALTERNATIVE INVESTMENTS
(20)
94
74
BANKING
Operating result
(1,032)
(955)
Operating expenses
(98)
1127
1,029
78
63,144
1.5
The main driver for the increase in shareholders' equity was the net
income attributable to shareholders, amounting to € 6,883 MN. The
increase was supported by an upswing in unrealized gains, primarily
on debt securities, which resulted from a further drop in interest
rates. It was partly offset, however, by the dividend payout in May
2016, which totaled € 3,320 MN.
Authorization to issue
bonds carrying conversion
and/or option rights
Conditional Capital
2010/2014
Nominal amount
€ 550,000,000
(214,843,750 shares)
€ 13,720,000
(5,359,375 shares)
€ 10,000,000,000
(nominal bond value)
€ 250,000,000
(97,656,250 shares)
Expiry date of
the authorization
6 May 2019
6 May 2019
6 May 2019
(issuance of bonds)
No expiry date for
Conditional Capital
2010/2014 (issuance in
case option or conversion
rights are exercised)
Senior bonds
4.5
830
18,673
18,797
Total
4.8
Authorized Capital 2014/11
560
12,080
Subordinated bonds
4.0
270
6,711
6,716
11,962
Authorized Capital 2014/1
Capital authorization
CAPITAL AUTHORIZATIONS OF ALLIANZ SE
Weighted
average
interest rate²
Interest
expense
€ MN
€ MN
€ MN
as of 31 December
Carrying
value
%
Nominal
value
Allianz SE has the option to increase its equity capital base
according to authorizations provided by our shareholders. The fol-
lowing table outlines Allianz SE's capital authorizations as of
31 December 2016:
As of 31 December 2016, the issued capital registered at the Commer-
cial Register was € 1,169,920,000. This was divided into 457,000,000
registered shares with restricted transferability. As of 31 December
2016, the Allianz Group held 1,932,263 (2015: 2,176,362) own shares.
EQUITY FUNDING
C - Group Management Report
40
57
SENIOR AND SUBORDINATED BONDS ISSUED OR GUARANTEED BY ALLIANZ SE1
1- For further information on Allianz SE debt (issued or guaranteed) as of 31 December 2016, please refer to
note 19 to the consolidated financial statements.
2- Based on nominal value.
2016
6,629
2015
4.2
845
20,059
20,165
Total
Senior bonds
4.6
13,485
13,537
Subordinated bonds
3.5
262
6,574
584
The table below details the long-term debt issuances and redemptions
of Allianz SE during 2016 and 2015:
ISSUANCES AND REDEMPTIONS OF ALLIANZ SE'S
SENIOR AND SUBORDINATED BONDS
€ MN
For further information on our share capital and regarding authori-
zations to issue and repurchase shares, please refer to the chapter
Takeover-related Statements and Explanations (part of the Group
Management Report) starting on > page 21.
16,450
Senior and subordinated bonds
2015
15,925
2,734
1,400
2,347
Total
1,400 2
20,165
3,715
16,450
Subordinated bonds
Senior and subordinated bonds
12,086
3,840
18,797
Senior bonds
Other operating expenses dropped due to lower restructuring
charges.
Interest expenses on senior bonds decreased, mainly due to the
depreciation of the British Pound against the Euro. For subordinated
bonds, the increase of interest expenses was primarily driven by
higher outstanding volumes on average in 2016.
2- € 1.4 BN subordinated bond called for redemption effective 17 February 2017.
15,189
1,985
1,498
2015
11,962
1,985
1,498
1 Based on nominal value.
1- Based on carrying value.
Total
Subordinated bonds
3,227
Annual Report 2016 - Allianz Group
2,734
2016
2015
1,422
1,422
Subordinated bonds
1,500
1,500
Senior bonds
Issuances¹ Redemptions of redemptions
Senior bonds
2016
as of 31 December
MATURITY STRUCTURE OF ALLIANZ SE'S SENIOR AND SUBORDINATED BONDS¹
€ MN
As of 31 December 2016, Allianz SE had senior and subordinated
bonds with a variety of maturities outstanding, reflecting our focus
on long-term financing. As the cost and availability of external fund-
ing may be negatively affected by general market conditions or by
matters specific to the financial services industry or the Allianz
Group, we seek to reduce refinancing risk by actively steering the
maturity profile of our funding structure.
LONG-TERM DEBT FUNDING
Issuances net
Senior bonds
Subordinated bonds
1,500
2016
Total
Non-Euro
Euro
as of 31 December
CURRENCY ALLOCATION OF ALLIANZ SE'S SENIOR AND SUBORDINATED BONDS'
€ MN
1 Based on nominal value.
Over 5 years
Up to 1 year
as of 31 December
Contractual maturity date
Funding in non-Euro currencies enables us to diversify our investor
base or to take advantage of favorable funding costs in those markets.
Funds raised in non-Euro currencies are incorporated in our general
hedging strategy. As of 31 December 2016, approximately 18.4%
(2015: 12.5%) of long-term debt was issued or guaranteed by Allianz SE
in currencies other than the Euro.
500
1,000
> 1 year up to
5 years
910
4,196
Allianz SE's access to external funds depends on various factors such
as capital market conditions, access to credit facilities, credit ratings,
and credit capacity. The financial resources available to Allianz SE in
the capital markets for short-, mid- and long-term funding needs are
described below. In general, mid- to long-term financing is covered
by issuing senior or subordinated bonds or ordinary shares.
Allianz SE ensures adequate access to liquidity and capital for our
operating subsidiaries. The main sources of liquidity available for
Allianz SE are dividends received from subsidiaries and funding pro-
vided by capital markets. Liquidity resources are defined as readily
available assets - specifically cash, money market investments, and
highly liquid government bonds. Our funds are primarily used for
interest payments on our debt funding, operating costs, internal and
external growth investments, and dividends to our shareholders.
37.0
38.3
(1.3)
Covered bonds
89.9
98.7
(8.8)
15.6
17.4
(1.8)
Corporate bonds (excl. banks)
189.5
164.9
24.6
32.8
29.0
3.8
Equities
(0.9)
9.8
8.9
(4.3)
55.7
(4.0)
51.4
0.2
5.5
5.7
31.3
32.9
Banks
Other
217.5
213.6
Government bonds
2015
2016
31 December
as of
as of
31 December
31 December
Delta
31 December
as of
ASSET ALLOCATION AND FIXED INCOME PORTFOLIO OVERVIEW
STRUCTURE OF INVESTMENTS - PORTFOLIO OVERVIEW
The following portfolio overview covers the Allianz Group assets held
for investment, which are mainly driven by our insurance businesses.
The following section mainly focuses on our financial invest-
ments in debt instruments, equities, real estate, and cash, as these
reflect the major developments in our asset base.
As of 31 December 2016, total assets amounted to € 883.8 BN and total
liabilities were at € 813.4 BN. Compared to year-end 2015, this repre-
sented an increase of € 34.9 BN for total assets and of € 30.6 BN for total
liabilities.
Total assets and total liabilities
as of
Real estate
2016
Delta
(0.4)
88.8
88.4
9.1
568.1
577.3
2015
Debt instruments; thereof:
%
%
€ BN
€ BN
€ BN
Type of investment
%-P
Cash/other
Total
49.9
45.7
Annual Report 2016 - Allianz Group
56
1- For further information about changes in the reserves for loss and loss adjustment expenses for the
Property-Casualty business segment, please refer to note 15 to the consolidated financial statements.
page 62
For details on the regulatory capitalization of the Allianz Group,
please refer to the Risk and Opportunity Report from
onwards.
gische Landesbank AG as held for sale. Other liabilities increased by
€ 1.0 BN, mainly due to higher liabilities from cash pooling. The € 1.3 BN
increase in subordinated liabilities was mainly caused by the issuance
of a subordinated bond. Certificated liabilities decreased by € 1.5 BN.
C - Group Management Report
This shift was primarily driven by the classification of the Oldenbur- Regulatory capital adequacy
The Allianz Group has also entered into contractual relation-
ships with various types of structured entities. They have been
designed in such a way that their relevant activities are directed by
means of contractual arrangements instead of voting or similar
rights. Typically, structured entities have been set up in connection
with asset-backed financings and certain investment fund products.
For more details on our involvement with structured entities, please
refer to note 37 to the consolidated financial statements.
The Allianz Group enters into various commitments including
loan and leasing commitments, purchase obligations and other com-
mitments. Please refer to note 39 to the consolidated financial state-
ments for more details.
In the normal course of business, the Allianz Group may enter into
arrangements that do not lead to the recognition of assets and liabil-
ities in the consolidated financial statements under IFRS. Since the
Allianz Group does not rely on off-balance sheet arrangements as a
significant source of revenue or financing, our off-balance sheet
exposure to loss is immaterial relative to our financial position.
Off-balance sheet arrangements
In comparison to year-end 2015, we recorded a drop in liabilities to
banks and customers amounting to € 13.4 BN, and an upswing in
liabilities of disposal groups classified as held for sale of € 13.3 BN.
CORPORATE AND OTHER LIABILITIES
Please refer to the Risk and Opportunity Report from > page 62
onwards for a description of the main concentrations of risk and
other relevant risk positions.
Life/Health reserves for insurance and investment contracts
increased by € 18.9 BN to € 490.9 BN. The € 5.3 BN increase in aggregate
policy reserves and other reserves before foreign currency translation
effects was mainly driven by our operations in Germany (€ 7.5 BN) and
the United States (€ 6.8 BN, before foreign currency translation effects)
and partly offset by the sale of our South Korean business (€ (10.8) BN,
before foreign currency translation effects). Reserves for premium
refunds increased by € 10.7 BN, due to higher unrealized gains to be
shared with policyholders. Favorable foreign currency translation
effects mainly resulted from the stronger U.S. Dollar (€ 2.8 BN).
Liquidity and Funding Resources
The Allianz Group's liquidity management is based on policies and
guidelines approved by the Allianz SE Board of Management.
Allianz SE and each of the operating entities are responsible for man-
aging their respective liquidity positions, while Allianz SE provides
central cash pooling for the Group. Capital allocation is steered by
Allianz SE for the entire Group. This structure allows the efficient use
of liquidity and capital resources and enables Allianz SE to achieve
the desired liquidity and capitalization levels for the Group and its
operating entities.
LIQUIDITY RESOURCES AND USES
The responsibility for managing the funding needs within the Group,
maximizing access to liquidity sources, and minimizing borrowing
costs lies with Allianz SE. We therefore comment on the liquidity and
funding resources of Allianz SE in the following sections. Restrictions
on the transferability of capital within the Group result mainly from
the capital maintenance rules under applicable company laws as
well as from the regulatory solvency capital requirements for regu-
lated Group companies.
and funding of Allianz SE
Liquidity management
The major sources of liquidity in our Banking operations include
customer deposits, interbank loans, and interest and similar income
from our lending transactions. The most important uses of funds are
the issuance of new loans and investments in fixed income securities.
The liquidity of our Banking operations is largely dependent on the
ability of our private and corporate customers to meet their payment
obligations arising from loans and other outstanding commitments.
Our ability to retain our customers' deposits is equally important to us.
BANKING OPERATIONS
Organization
Within our Asset Management operations, the most important sources
of liquidity are fees generated from asset management activities.
These are primarily used to cover operating expenses.
The overall liquidity of our insurance operations depends on
capital market developments, interest rate levels, and our ability to
realize the market value of our investment portfolio to meet insur-
ance claims and policyholder benefits. Other factors affecting the
liquidity of our Property-Casualty insurance operations include the
timing, frequency, and severity of losses underlying our policies and
policy renewal rates. In our Life operations, liquidity needs are gener-
ally influenced by trends in actual mortality rates compared to the
assumptions underlying our life insurance reserves. Market returns,
crediting rates and the behavior of our life insurance clients - for
example regarding the level of surrenders and withdrawals - can also
have significant impacts.
Our insurance operations also carry a high proportion of liquid
investments, which can be converted into cash to pay for claims.
Generally, our investments in fixed income securities are sequenced
to mature when funds are expected to be needed.
We receive a large part of premiums before payments of claims
or policy benefits are required, generating solid cash flows from our
insurance operations. This allows us to invest the funds in the interim
to create investment income.
The major sources of liquidity for our operational activities are pri-
mary and reinsurance premiums received, reinsurance receivables
collected, investment income, and proceeds generated from the
maturity or sale of investments. These funds are mainly used to pay
claims arising from the Property-Casualty insurance business and
related expenses, life policy benefits, surrenders and cancellations,
acquisition costs, and operating costs.
INSURANCE OPERATIONS
Liquidity management
of our operating entities
ASSET MANAGEMENT OPERATIONS
FUNDING SOURCES
LIFE/HEALTH LIABILITIES
PROPERTY-CASUALTY LIABILITIES
2.2
(0.1)
14.3
14.2
(0.1)
1.9
2.2
1.8
12.0
11.7
0.5
7.1
7.6
4.3
(0.2)
As of 31 December 2016, the business segment's gross reserves for
loss and loss adjustment expenses and discounted loss reserves
amounted to € 65.7 BN, compared to € 65.1 BN at year-end 2015. On a
net basis, our reserves, including discounted loss reserves were
almost unchanged at € 57.3 BN.¹
(0.1)
640.1
LIABILITIES
C - Group Management Report
55
Annual Report 2016 - Allianz Group
3- Equity gearing is defined as the ratio of our equity holdings allocated to the shareholder after policyholder
participation and hedges to shareholders' equity plus off-balance sheet reserves less goodwill.
2- Excluding self-originated German private retail mortgage loans. For 3%, no ratings were available.
653.1
1- This does not include non-controlling interests of € 3,052 MN and € 2,955 MN as of 31 December 2016 and
31 December 2015, respectively. For further information, please refer to note 20 to the consolidated financial
statements.
and 0.2%, with unrealized gains (gross) of € 3,862 MN, € 1,188 MN and
€ 40 MN. Our covered bonds portfolio contained 41% (31 December
2015: 42%) German Pfandbriefe, backed by either public-sector loans
or mortgage loans. The portfolio shares of French, Spanish and Italian
covered bonds were at 16%, 9% and 8% (31 December 2015: 16%, 10%
and 8%).
Our well-diversified exposure to debt instruments went up
mainly due to a further decrease in interest rates – from their already
low level of year-end 2015. However, the increase was partly offset by
realizations. About 94% of this portfolio was invested in investment-
grade bonds and loans.² Our government bonds portfolio contained
– amongst others – bonds from Italy, Spain and the United Kingdom,
representing shares of our debt instruments portfolio of 4.3%, 2.0%
Our overall asset allocation remained almost unchanged, compared
to 31 December 2015. The increase in assets was caused by unrealized
gains in debt instruments and – to a lesser extent – in equities, mainly
following general market developments in 2016.
100.0
100.0
13.0
Our exposure to equities increased due to positive developments
on major equity markets. Our equity gearing³ remained almost
unchanged at 23% (31 December 2015: 24%), as the increase in this
exposure was accompanied by increases in shareholders' equity and
hedging of the risen exposure against share price declines.
Administrative expenses could be lowered significantly, mainly
due to decreased personnel expenses. The latter decreased primarily
because of a 15.0% drop in variable compensation, which strongly
reflected the lower expenses associated with the Special Performance
Award (SPA). The SPA was introduced in the fourth quarter of 2014 at
PIMCO to secure performance and retain talent. The decrease in per-
sonnel expenses was supported by lower average full time equivalents.
In addition, lower non-personnel expenses also contributed to the
decrease in overall administrative expenses.
58
Operating profit
69
PIMCO
88
40
40
20
0
20
40
60
80
100
THREE-YEAR ROLLING INVESTMENT PERFORMANCE OF PIMCO AND ALLIANZGI¹
as of 31 December in %
C - Group Management Report
Operating profit declined by 4.4% on an internal basis¹. While operat-
ing revenues declined, the corresponding impact on operating profit
was mitigated by reduced operating expenses.
88
55
Annual Report 2016 - Allianz Group
70
AllianzGI
1- Three-year rolling investment performance reflects the mandate-based and volume-weighted three-
year investment success of all third-party assets that are managed by Allianz Asset Management's
portfolio-management units. For separate accounts and mutual funds, the investment success (valued
on the basis of the closing prices) is compared with the investment success prior to cost deduction of
the respective benchmark, based on various metrics. For some mutual funds, the investment success,
reduced by fees, is compared with the investment success of the median of the respective Morningstar
peer group (a position in the first and second quartile is equivalent to outperformance).
2015
2014
37.
30
45
Outperforming third-party assets under management
Underperforming third-party assets under management
2016
12
2015
31
2014
12
| | | | | |
2016
63
139
(213)
119
(194)
Administrative expenses
on reinsurance business ceded
Administrative expenses4
4
(1,829)
(1,707) 5
1- Prior year figures changed in order to reflect the roll out of profit source reporting to China.
2-As per Group Management Report.
3- For German Speaking Countries, policyholder participation on revaluation of DAC/URR capitalization/
amortization.
Scope
4
Definitions
on reinsurance business ceded
(1,760)
Scope
(409)
(374)
Amortization, unlocking and true-up of DAC
(3,142)
(3,432)
(1,636)
Commissions and profit received
77
115
Acquisition costs4
(4,782)
(5,215)
Administrative and other expenses²
4-As per notes to the consolidated financial statements.
5- Excluding one-off effects from pension revaluation.
For this the risk management system described in the following
is applied.
61
2. Digital by Default: moving from selected leading assets to become
"Digital by Default" everywhere,
1. True Customer Centricity: making superior customer experience
the top priority for all our actions,
In order to achieve these aspirations the Board of Management of
Allianz SE has defined a clear business strategy consisting of five
pillars:
OUR BUSINESS STRATEGY
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Annual Report 2016 - Allianz Group
62
These aspirations have been translated into clear ambitions for 2018.
With regard to financial performance, we strive for a return on equity
(excluding unrealized gains/losses on bonds net of shadow account-
ing) of 13%, while growing our earnings per share at a compound
annual growth rate of 5%. To ensure the sustainability of our perfor-
mance, we have set ourselves health targets for customer loyalty and
employee engagement: We expect at least 75% of our businesses to
be or become rated by their customers as Loyalty Leader or above-
market in terms of Net Promoter Score (NPS). At the same time, we
aim to increase our Inclusive Meritocracy Index to 72 % (2016: 70%). We
are making good progress in achieving these objectives.
customer centricity: practicing relentless execution centered on
customers while outperforming competition.
market leadership: maintaining a commanding position in each
market with superior skills and scale,
portfolio strength: establishing a strong and high-quality portfolio
in large and attractive markets,
The Allianz Group seeks to position itself as the world's most trusted
financial institution through a focus on the following:
OUR STRATEGY
Communication and transparency: Finally, transparent and
robust risk disclosure provides the basis for communicating this
strategy to our internal and external stakeholders, ensuring a sustain-
able positive impact on valuation and financing. It also strengthens
the risk awareness and risk culture throughout the entire Group.
Risk reporting and monitoring: Our comprehensive qualitative
and quantitative risk reporting and monitoring framework provides
senior management with the transparency and risk indicators to help
them decide on our overall risk profile and assess whether it falls
within delegated limits and authorities. For example, risk dash-
boards, internal risk allocation, and limit consumption reports are
regularly prepared, communicated and monitored.
4-Excluding one-off effects from pension revaluation.
Risk underwriting and identification: A sound risk underwriting
and identification framework forms the foundation for adequate risk-
taking and management decisions such as individual transaction
approvals, new product approvals, and strategic asset allocations.
The framework includes risk assessments, risk standards, valuation
methods, and clear minimum standards for underwriting.
C - Group Management Report
Risk and Opportunity Report
Target and strategy of risk management
For the benefit of shareholders and policyholders alike, Allianz's aim
is to ensure that the Group is adequately capitalized at all times and
that all operating entities at least meet their respective regulatory
capital requirements. Furthermore, risk capital – reflecting our risk
profile - and cost of capital are important aspects taken into account
in business decisions.
In addition, we take into account the requirements of regulators
and rating agencies. While capital requirements imposed by regula-
tors constitute a binding constraint, meeting rating agencies' capital
requirements and maintaining strong credit ratings are strategic
business objectives of the Allianz Group.
We closely monitor the capital position of the Group and its
operating entities along each of these dimensions, and apply regular
stress tests (standardized, historical, and reverse stress test scenarios
as well as monthly stress scenarios focusing on current and possible
future developments). This allows us to take appropriate measures to
ensure our continued capital and solvency strength.
Annual Report 2016 - Allianz Group
Risk governance
As a provider of financial services, we consider risk management to
be one of our core competencies. It is therefore an integral part of our
business process. Our risk management framework is risk-based and
covers all operations including IT, processes, products, and depart-
ments as well as subsidiaries within the Group. The key elements of
our risk management framework are:
Promotion of a strong risk management culture, supported by a
robust risk governance structure.
Consistent, proportional application of an integrated risk capital
framework across the Group to protect our capital base and sup-
port 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 various business segments, products, and
strategies.
This comprehensive framework ensures that risks are identified, ana-
lyzed, assessed, and managed consistently across the Group. Our risk
appetite is defined by a clear limit structure and a risk strategy con-
sistent with the underlying business strategy of the Group. Close risk
monitoring and reporting allows us to detect potential deviations
from our risk tolerance at an early stage at both the Group and oper-
ating entity levels.
Our risk management system is based on the following four
essential elements:
RISK MANAGEMENT FRAMEWORK
Risk strategy and risk appetite: Our risk strategy clearly defines
our risk appetite. It ensures that rewards are appropriate considering
the risks taken and that the delegated authorities are in line with our
overall risk-bearing capacity. The risk-return profile is improved by
integrating the risk considerations and capital needs into decision-
making processes. This also keeps risk strategy and business objec-
tives consistent with each other and allows us to take opportunities
within our risk tolerance.
4
3- As per notes to the consolidated financial statements.
(825)
Scope
(5,262)
(5,304)
Acquisition costs incurred and commissions
362
867
Definitions
(524)
(390)
Scope
(6,548)
(6,735)
Acquisition and administrative expenses
16
13
Definitions
Administrative and other expenses²
(1,760)
(1,636)
2016
2015
Capitalization of DAC²
(855)
1,868
Acquisition expenses and commissions²
(4,927)
(4,754)
Amortization, unlocking and true-up of DAC²
(1,916)
(1,878)
1,721
Capitalization of DAC²
1,868
1,721
4
(6,922)
4
Capitalization of DAC
3,586
3,364
(6,612)
Amortization, unlocking and true-up of DAC²
(1,878)
Definition: URR amortized
64
Definition: policyholder participation³
(881)
(175)
(1,006)
(1,916)
1- Prior year figures changed in order to reflect the roll out of profit source reporting to China.
2-As per Group Management Report.
3. Technical Excellence: creating superior margins, innovation, and
growth through best talents and state-of-the-art skills,
236
Commissions and profit received
Definition: URR capitalized
509
528
on reinsurance business ceded
77
Acquisition and administrative expenses (net)³
115
1,022
880
Administrative expenses
on reinsurance business ceded
Scope
187
Definition: policyholder participation³
4. Growth Engines: systematically exploiting new sources for profit-
able growth,
Operating entities are responsible for their own risk management,
including adherence to both external requirements (for example,
those imposed by local regulators) and internal group-wide standards.
The operating entities' Boards of Management are responsible for
setting and approving a local risk strategy during the annual Strategic
and Planning Dialogues with the Group and for ensuring operating
entities' adherence to their risk strategy.
The Board of Management of Allianz SE has also defined a strategy
for the management of risks that the Allianz Group faces during the
pursuit of its business strategy. This risk strategy places particular
emphasis on protecting the Allianz brand and reputation, remaining
solvent even in the event of extreme worst-case scenarios, maintain-
ing sufficient liquidity to always meet financial obligations, and pro-
viding resilient profitability.
ASSUMPTIONS AND LIMITATIONS
For our Asset Management business segment, we assign internal
risk capital requirements based on the sectorial regulatory capital
requirements as defined under Solvency II. The Asset Management
business is mainly affected by operational risks. However, since most
of our Asset Management business is not located within the Euro-
zone, at the Group level it also bears foreign exchange rate risk. Our
Asset Management business is covered by adequate risk controlling
processes, including regular reporting and qualitative risk assess-
ments (such as Top Risk Assessment) to the Group. However, since it
is mainly affected by the two risk types previously mentioned (opera-
tional and foreign exchange rate), and due to the fact that the impact
on total pre-diversified risk capital is minor, risk management with
respect to Asset Management is not discussed in more detail.
Risk capital related to our European banking operations is allo-
cated to the Corporate and Other business segment, based on the
approach applied by banks under the local requirements with respect
to the Basel regulation (Basel standards). Capital requirements for
banks represent an insignificant amount of approximately 1.7%
(2015: 1.5%) of our total pre-diversified risk. Therefore, risk manage-
ment with respect to banking operations is not discussed in more
detail.
Smaller entities within the European Economic Area which are
not covered by the partial internal model are reflected based on their
standard model results. At Group level, the capital requirements for
smaller insurance operating entities outside the European Economic
Area that have only an immaterial impact on the Group's risk profile
are treated with book value deduction³.
COVERAGE OF THE RISK CAPITAL CALCULATIONS
Allianz's partial internal risk capital model covers all major insur-
ance operations¹. This includes the relevant assets (including bonds,
loans, mortgages, investment funds, equities, and real estate) and
liabilities (including the cash flow run-off profile of all technical
reserves as well as deposits, issued debt, and other liabilities). For
with-profit products in the Life/Health business segment, options
and guarantees embedded in insurance contracts - including policy-
holder participation rules - are taken into account.?
Furthermore, there are monthly stress test meetings where
world-wide political and financial developments are examined in
order to understand their potential effects on the Group and to pro-
vide appropriate actions or recommendations to management.
Risk capital is defined as the difference between the current port-
folio value and the portfolio value under adverse conditions depen-
dent on the 99.5% confidence level. Because we consider the impact
of a negative or positive event on all sources of risks and covered busi-
nesses at the same time, diversification effects across products and
regions are taken into account. The results of our Monte Carlo simu-
lation allow us to analyze our exposure to each source of risk, both
separately and in aggregate. In addition, in particular for market
risks, we analyze several pre-defined stress scenarios, based on either
historically observed market movements or hypothetical market
movement assumptions. This modeling approach, therefore, also
enables us to identify scenarios that may have a positive impact on
our solvency situation.
Our partial internal risk capital model is based on a VaR approach
using a Monte Carlo simulation. Following this approach, we deter-
mine the maximum loss in the portfolio value of our businesses in the
scope of the model within a specified timeframe (“holding period”)
and probability of occurrence ("confidence level"). We assume a con-
fidence level of 99.5% and apply a holding period of one year. In the risk
simulation, we consider risk events from all modeled risk categories
("sources of risk") and calculate the portfolio value based on the net
fair value of assets and liabilities under potentially adverse conditions,
including risk mitigating measures like reinsurance contracts or
derivatives.
INTERNAL RISK CAPITAL MODEL
C - Group Management Report
Annual Report 2016 - Allianz Group
1- The Allianz Environmental, Social, Governance (ESG) Board and ESG office are constituted as advisor to
the Board of Management of Allianz SE and will further elevate environmental, social, and governance
aspects in corporate governance and decision-making processes at the Allianz Group.
2-Allianz Life us included based on third country equivalence with 150% of RBC CAL since 30 September 2015.
We utilize an approach for the management of our risk profile and
solvency position that reflects the Solvency II rules. This comprises
our approved partial internal model covering all major insurance
operations. Other entities are reflected based on their standard
model results as well as on sectoral or local requirements, in accor-
dance with the Solvency II framework.
GENERAL APPROACH
We define internal risk capital as the capital required to protect us
against unexpected, extreme economic losses, which forms the basis
for determining our Solvency II regulatory capitalization and the
associated risk profile. On a quarterly basis, we calculate and consis-
tently aggregate internal risk capital across all business segments.
We also project risk capital requirements on a bi-weekly basis during
periods of financial market turbulence.
Our insurance operating entities manage liquidity risk locally,
using asset/liability management systems designed to ensure that
assets and liabilities are adequately matched. In the course of stan-
dard liquidity planning, we reconcile the cash flows from our invest-
ment portfolio-containing a significant portion of liquid assets (e.g.
government bonds or mortgage bonds with a very good credit rating)
- with the estimated liability cash flows. These analysis are per-
formed at the operating entity level and aggregated at the Group
level.
The accumulated short-term liquidity forecast is updated daily
and is subject to an absolute minimum strategic cushion amount
and an absolute minimum liquidity target. Both are defined for the
Allianz SE cash pool in order to be protected against short-term
liquidity crises. As part of our strategic planning, contingent liquidity
requirements and sources of liquidity are taken into account to
ensure that Allianz SE is able to meet any future payment obligations
even under adverse conditions. Major contingent liquidity require-
ments include non-availability of external capital markets, combined
market and catastrophe risk scenarios for subsidiaries, as well as
lower-than-expected profits and dividends from subsidiaries.
Allianz works on a Cyber and Information Security program on
an ongoing basis, in order to better respond to external develop-
ments and to further strengthen the internal control environment for
related operational risks.
OTHER RISKS
There are certain risks that cannot be fully quantified across the
Group using our partial internal risk capital model. For these risks we
also pursue a systematic approach with respect to identification,
analysis, assessment, monitoring, and steering. In general, the risk
assessment is based on qualitative criteria or scenario analyses. The
most important of these other risks are strategic, liquidity and repu-
tational risk.
STRATEGIC RISK
Strategic risks are evaluated and analyzed in the strategic and plan-
ning dialogue between the Allianz Group and its operating entities
and controlled by monitoring the respective business goals. We also
monitor market and competitive conditions, capital market require-
ments, regulatory conditions, etc., to decide whether to make strate-
gic adjustments.
LIQUIDITY RISK
YIELD CURVE AND VOLATILITY ADJUSTMENT ASSUMPTIONS
When calculating the fair values of assets and liabilities, the assump-
tions regarding the underlying risk-free yield curve are crucial in deter-
mining and discounting future cash flows. We apply the methodology
provided by the European Insurance and Occupational Pensions
Authority (EIOPA) within the technical documentation (EIOPA-
BOS-15/035) for the extension of the risk-free interest rate curves
beyond the last liquid tenor.4
The main goal of planning and managing Allianz SE's liquidity posi-
tion is to ensure that we are always able to meet payment obligations.
To comply with this objective, the liquidity position of Allianz SE is
REPUTATIONAL RISK
Allianz's reputation as a well-respected and socially aware provider
of financial services is influenced by our behavior in a range of areas
such as product quality, corporate governance, financial perfor-
mance, customer service, employee relations, intellectual capital,
and corporate responsibility.
With the support of Group Communications and Corporate
Responsibility (GCORE), Group Compliance, and the ESG Office¹, Group
Risk defines sensitive business areas and applicable risk guidelines
which are mandatory for all operating entities in the Allianz Group.
All Group and operating entity functions affected cooperate in the
identification of reputational risk. GCORE is responsible for risk
assessment based on a group-wide methodology. Since 2015, Allianz
has embedded conduct risk triggers for fair products and services
into the reputational risk management process.
The identification and assessment of reputational risks are part
of a yearly Top Risk Assessment, during which senior management
also decides on a risk management strategy and related actions. This
is supplemented by quarterly updates. In addition, reputational risk
is managed on a case-by-case basis. Single cases with a potential
impact on other operating entities or the Group have to be reported
to the Allianz Group for pre-approval.
monitored and forecast on a daily basis. Strategic liquidity planning Internal risk capital framework
over time horizons of 12 months and three years is reported to the
Board of Management regularly.
In 2016, we rolled out a newly developed group-wide liquidity risk
framework in order to further strengthen the Allianz liquidity risk
management within Allianz Group and the resilience to stress sce-
narios. This framework considers liquidity sources (e.g. cash flows
from investments and premiums) and liquidity needs (e.g. payments
due to insurance claims) and explicitly takes stress situations for
liquidity sources and needs into account to assess the liquidity and
allows for a group-wide consistent view on liquidity risks.
In addition, we adjust the risk-free yield curves by a volatility
adjustment in most markets where a volatility adjustment is defined
by EIOPA and approved by the local regulator. This is done to better
reflect the underlying economics of our business, as the cash flows of
our insurance liabilities are, to a large degree, predictable. The advan-
tage of being a long-term investor, therefore, 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 considerably mitigates the risk of forced selling
of debt instruments at a loss prior to maturity. Therefore, we reflect
this mitigation using a volatility adjustment spread risk offset, and
view the more relevant risk to be default risk rather than credit spread
risk.
VALUATION ASSUMPTIONS: REPLICATING PORTFOLIOS
Since efficient valuation and complex, timely analysis are required
within the context of our partial internal model, we replicate the
liabilities of our Life/Health insurance business as well as for our
internal pension obligations. This technique enables us to represent
all product related options and guarantees, both contractual and dis-
cretionary, by means of standard financial instruments. In the risk
calculation we use the replicating portfolio to determine and revalue
these liabilities under all potentially adverse Monte Carlo scenarios.
DIVERSIFICATION AND CORRELATION ASSUMPTIONS
Our partial internal risk capital model considers concentration, accu-
mulation, and correlation effects when aggregating results at Group
level. This reflects the fact that not all potential worst-case losses are
likely to materialize at the same time. This effect is known as diversi-
fication and forms a central element of our risk management frame-
work.
MODEL CHANGES IN 2016
At the beginning of the year, a regulatory change in the tax treatment
for the German life sector resulted in a decrease of the risk capital
requirement of € 0.3 BN. There were no major model changes in 2016.
Minor and immaterial model changes during the year slightly
decreased the capital requirement by € 0.4 BN, leading to an overall
negative impact of regulatory and model changes of € 0.7 BN.
Allianz risk profile
and management assessment
RISK PROFILE AND MARKET ENVIRONMENT
As mentioned earlier, the Allianz Group is exposed to a variety of
risks. The largest risks in terms of their contribution to Allianz's risk
profile are:
accuracy of their values also depends on the quality of the actuarial
cash flow estimates. Despite these limitations, we believe the esti-
mated fair values are appropriately assessed.
Market risk, especially interest rate risk, due to the duration mis-
match between assets and liabilities for long-term savings prod-
ucts, equity risk, credit and credit spread risks driven by assets
backing long-term liabilities, which we take to benefit from the
expected risk premium;
The risk profile and relative contributions have changed in 2016, pre-
dominantly due to changes in the market environment and manage-
ment actions such as the disposal of our South Korean life business.
FINANCIAL MARKETS AND OPERATING ENVIRONMENT
Financial markets are characterized by historically low interest rates
and risk premiums, prompting investors to look for higher-yielding
- and potentially higher-risk - investments. In addition to sustained
low interest rates, the challenges of implementing long-term struc-
tural reforms in key Eurozone countries and the uncertainty about
the future path of monetary policy may lead to continued market
volatility. This could be accompanied by a flight to quality, combined
with falling equity and bond prices due to rising spread levels, even
in the face of potentially lower interest rates. Also, possible asset
bubbles (as observed in the Chinese equity market) might spill over
to other markets, contributing to increasing volatility. Therefore,
we continue to closely monitor the political and financial develop-
ments in the Eurozone - such as Brexit in the United Kingdom and
the "No" vote to constitutional reforms in Italy - in order to manage
our overall risk profile to specific event risks.
REGULATORY DEVELOPMENTS
Following the approval of our partial internal model in November
2015, the model has been fully applied since the beginning of 2016,
starting with the Solvency II day one reporting. Nevertheless, some
uncertainty about the future capitalization requirements of Allianz
remains, since the future capital requirements applicable for Global
Systemically Important Insurers (so-called G-SII) are still not final-
68
Annual Report 2016 - Allianz Group
Property-casualty premium and reserve risks resulting from
natural and man-made catastrophes as well as from claims
uncertainty.
Major failures and disasters at our outsourcing providers which
could cause a severe disruption to our working environment may
represent significant operational risks for the Allianz Group. Our
Business Continuity and Crisis Management framework strives to
protect critical business functions from these events and enables
them, for example, to carry out their core tasks on time and at the
highest standard also in a crisis event.
Since the partial internal risk capital 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 liabilities it may be difficult, if not impossible – notably in
distressed financial markets - to either obtain a current market price
or apply a meaningful mark-to-market approach. For such assets we
apply a mark-to-model approach. For some of our liabilities, the
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. To ensure proper valida-
tion we established an Independent Validation Unit (IVU) within
Group Risk responsible for validating our partial internal model
within a comprehensive model validation process. Overall, we believe
that to the extent possible our validation efforts are effective and that
the model adequately assesses the risks to which we are exposed.
1- As mentioned under Internal risk capital framework, Allianz Life us is based on third country equivalence.
2- For further information about participating life business, please refer to note 16 to the consolidated financial
statements.
3- Under book value deduction, the book value of the respective entity is deducted from eligible own funds
of the Group.
4-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.
Annual Report 2016 - Allianz Group
67
The construction and application of the mentioned replicating
portfolios is subject to the set of available replicating instruments
and might, therefore, be too simple or too restrictive to capture all
factors affecting the change in value of liabilities. As with other model
components, the replications are subject to independent validation
and to suitability assessments as well as to stringent data and pro-
cess quality controls. Therefore, we believe that the liabilities are
adequately represented by the replicating portfolios.
40
Where possible, we derive correlation parameters for each pair
of market risks through statistical analysis of historical market data,
considering quarterly observations over several years. In case histori-
cal market data or other portfolio-specific observations are insuffi-
cient or not available, correlations are set according to a well-defined
group-wide process. Correlations are determined by the Correlation
Settings Committee, which combines the expertise of risk and busi-
ness experts. In general, we set the correlation parameters to represent
the joint movement of risks under adverse conditions. Based on these
correlations, we use an industry-standard approach, the Gaussian
copula approach, to determine the dependency structure of quanti-
fiable sources of risk within the applied Monte Carlo simulation.
ACTUARIAL ASSUMPTIONS
Our partial internal risk capital model also includes assumptions on
claims trends, liability inflation, mortality, longevity, morbidity,
policyholder behavior, expense, etc. We use our own internal historical
data for actuarial assumptions wherever possible, and also consider
recommendations from the insurance industry, supervisory author-
ities, 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 reli-
ability of these assumptions.
LIMITATIONS
Because of the 99.5% confidence level, there is a low statistical prob-
ability of 0.5% that actual losses could exceed this threshold at Group
level in the course of one year.
We use model and scenario parameters derived from historical
data, where available, to characterize future possible risk events. If
future market conditions differ substantially from the past, for exam-
ple in an unprecedented crisis, our VaR approach may be too conser-
vative or too liberal in ways that are difficult to predict. In order to
mitigate reliance on historical data, we complement our VaR analysis
with stress testing.
C - Group Management Report
5. Inclusive Meritocracy: re-inforcing a culture where both people
and performance matter.
C - Group Management Report
66
With Solvency II being the binding regulatory regime since 1 Jan-
uary 2016 and the approval of our partial internal model¹, risk is mea-
sured and steered based on the risk profile underlying our regulatory
capital requirement. We introduced capitalization limits defining a
target capitalization according to Solvency II after applying shock
scenarios on both the Group and the operating entity level. By that
we allow for a consistent view on risk steering and capitalization
under the Solvency II framework. This is supplemented by economic
scenarios and sensitivities.
The Allianz Group is exposed to a variety of risks through its core
insurance and asset management activities. These include market,
credit, underwriting, business, operational, strategic, liquidity, and
reputational risks.
Risk based steering and risk management
In order to adapt to a continually changing environment, the
Global Issues Forum (GIF) supports the Group in the assessment of
long-term trend changes in the risk landscape on a timely basis.
Group Actuarial contributes towards assessing and managing
risks in line with regulatory requirements. These risks stem from the
risk-taking/mitigating activities involving professional actuarial
experience. The range of tasks includes, among others, the calculation
and monitoring of technical provisions, technical actuarial assis-
tance in business planning, reporting and monitoring the results,
and supporting the effective implementation of the risk management
system.
Group Legal and Compliance seeks to mitigate legal risks with
support from other departments. The objectives of Group Legal and
Compliance are to ensure that laws and regulations are observed, to
react appropriately to all impending legislative changes or new court
rulings, to attend to legal disputes and litigation, and to provide
legally appropriate solutions for transactions and business processes.
In addition, Group Legal and Compliance is responsible for integrity
management, which aims to protect the Allianz Group, our operating
entities and employees from regulatory risks.
In addition to Group Risk and the operating entities' risk functions,
legal and compliance and actuarial functions have been established
at both the Group and operating entity level, constituting additional
components of the "second line of defense".
Other functions and bodies
C - Group Management Report
64
19
63
80
Annual Report 2016 - Allianz Group
In addition, a risk function which is independent from the busi-
ness line management is established by each operating entity. This
function operates under the direction of the operating entity's Chief
Risk Officer. In addition, a local Risk Committee supports both the
operating entity's Board of Management and the Chief Risk Officer by
acting as the primary risk controlling body. Group Risk is also repre-
sented on the local Risk Committees to enhance the risk dialogue
between the Group and the operating entities.
€ MN
Operating entities
RISK GOVERNANCE STRUCTURE
SUPERVISORY BOARD AND BOARD OF MANAGEMENT
Within our risk governance system, the Supervisory Board and Board
of Management of Allianz SE have both, Allianz SE and group-wide
responsibilities and have set up committees to provide them with
support. Examples include:
Supervisory Board
The Risk Committee of the Supervisory Board monitors the effective-
ness of the Allianz risk management and monitoring framework.
Furthermore, it focuses on risk-related developments as well as gen-
eral risks and specific risk exposures.
Board of Management
The Board of Management formulates business objectives and a cor-
responding, consistent risk strategy. The core elements of the risk
framework are set out in the Allianz Group Risk Policy, which is
approved by the Board of Management.
Allianz steers its portfolio using a comprehensive view of risk and
return, i.e. results based on the partial internal risk model including
scenario-based analysis are actively used for decision-making: On the
one hand, economic risk and concentrations are actively restricted by
the limits outlined above; on the other hand, there is a comprehen-
sive analysis of the return on risk capital (RORC). The latter allows us
to identify profitable lines of business and products on a sustainable
basis, which provide reasonable profits on allocated risk capital over
the life time of the products. Therefore, it is a key criterion for capital
allocation decisions.
The Group Finance and Risk Committee (GFRC) ensures over-
sight 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, forms the limit-setting authority within the framework set
by the Board of Management and approves major financing and rein-
surance transactions. Finally, the GFRC supports the Board of Man-
agement with recommendations regarding the capital structure, and
the capital allocation and investment strategy, including strategic
asset allocation.
AND ROLES IN RISK MANAGEMENT
A comprehensive system of risk governance is achieved by setting
standards related to organizational structure, risk strategy and appe-
tite, written policies, limit systems, documentation, and reporting.
These standards ensure the accurate and timely flow of risk-related
information and a disciplined approach towards decision-making
and execution at both the global and local level.
As a general principle, the "first line of defense" rests with busi-
ness managers in the local operating entities and Allianz Investment
Management units. They are responsible, in the first instance, for
both the risks of and returns on their decisions. Our "second line of
defense" is made up of our independent, global oversight functions
such as Risk, Actuarial, Compliance and Legal. Audit forms the “third
line of defense". On a periodic basis, Group Audit independently
reviews risk governance implementation, as well as compliance with
risk principles, performs quality reviews of risk processes, and tests
adherence to business standards, including the internal control
framework.
Group Risk
Group Risk is managed by the Group Chief Risk Officer, who reports
to the board member responsible for Finance, Controlling, and Risk.
Group Risk supports the aforementioned Allianz Group committees
responsible for risk oversight through the analysis and communica-
tion of risk management-related information and by facilitating the
communication and implementation of committee decisions. For
example, Group Risk is operationally responsible for monitoring the
limits for risks that accumulate, including natural disasters and
exposures to financial markets and counterparties.
In addition, Group Risk independently supports the adequacy of
the operating entities' risk management through the development of
a common risk management framework and by monitoring adher-
ence to Group minimum requirements for methods and processes.
Group Risk strengthens the Group's risk network through regular and
close interaction with the operating entities' management and with
key areas such as the local finance, risk, actuarial, and investment
departments.
OVERALL RISK ORGANIZATION
As an integrated financial services provider, we consider diversi-
fication across different business segments and regions to be a key
element in managing our risks efficiently by limiting the economic
impact of any single event and by contributing to relatively stable
1- From a formalistic perspective, the German Supervisory Authority deems our model to be "partial" because
it does not cover all of our operations: some of our smaller operations report under the standard model
and others under the deduction and aggregation approach.
results and risk profile in general. Therefore, our aim is to maintain a
balanced risk profile without bearing any disproportionately large
risk concentrations and accumulations.
We also monitor concentrations and accumulation of non-mar-
ket risks on a stand-alone basis (i.e. before diversification effects)
within a global limit framework in order to avoid substantial losses
from single events such as natural catastrophes and from man-made
catastrophes such as terror or large industrial accumulations.
Natural disasters, such as earthquakes, storms and floods, rep-
resent a significant challenge for risk management due to their accu-
mulation potential and occurrence volatility. In order to measure such
risks and better estimate the potential effects of natural disasters, we
use special modeling techniques in which we combine portfolio data
(such as the geographic distribution and characteristics of insured
objects and their values) with simulated natural disaster scenarios
to estimate the magnitude and frequency of potential losses. Where
such stochastic models do not exist, we use deterministic, scenario-
based approaches to estimate potential losses. Similar models and
scenario-based approaches are used to evaluate risk concentrations
and man-made catastrophes, including losses from terrorism and
industrial concentrations, etc.
In general, our operating entities constantly monitor the devel-
opment of reserves for insurance claims on a line-of-business level.²
In addition, the operating entities generally conduct annual reserve
uncertainty analyses. Allianz SE performs regular independent
reviews of these analysis and Allianz SE representatives participate in
the local reserve committees' meetings.
LIFE/HEALTH
Underwriting risks in our Life/Health operations (biometric risks)
include mortality, disability, morbidity, and longevity risks. Mortality,
disability, and morbidity risks are associated with the unexpected
increase in the occurrence of death, disability, or medical claims on
our insurance products. Longevity risk is the risk that, due to changing
biometric assumptions, the reserves covering life annuities and
group pension products might not be sufficient.
Premium risk is subdivided into natural catastrophe risk, terror
risk, and non-catastrophe risk. We calculate premium risk based on
actuarial models that are used to derive loss distributions. Premium
risk is actively managed by the Allianz Group and its local operating
entities. The assessment of risks as part of the underwriting process
are key elements of our risk management framework. There are clear
underwriting limits and restrictions, centrally defined and in place
across the Group. In addition to the underwriting limits which are
defined centrally, local operating entities have limits in place that
take into account their business environments. Excessive risks are
mitigated by external reinsurance agreements. All these measures
contribute to a limitation on risk accumulation.
We measure these risks within our partial internal risk capital
model by distinguishing between the different sub-components
whenever relevant or material: absolute level, trend, volatility around
best-estimate assumptions, and pandemic risks. Depending on the
nature and complexity of the risk involved, our health business is
represented in the partial internal model, according to Property-
Casualty or Life/Health calculation methods, and is therefore included
in the relevant Property-Casualty and Life/Health figures accordingly.
However, most of our health business is attributable to the Life/
Health business segment.
Allianz has developed a consistent group-wide operational risk man-
agement framework that focuses on the early recognition and pro-
active management of operational risks in all "first line of defense"
functions. Local risk managers as the “second line of defense" ensure
this framework is implemented in their respective operating entities.
They identify and evaluate relevant operational risks and control
weaknesses via a dialogue between the "first line of defense" and the
risk function. Furthermore, operational risk events are collected in a
central risk event database. Since 2015, Allianz also delivers anony-
mized internal loss data to the "Operational Riskdata eXchange Asso-
ciation (ORX)", a global operational loss data insurance consortium,
to improve our internal control system and to validate operational
risk parameters.
The risks related to non-compliance or other misconduct are
addressed via various dedicated compliance programs. Written poli-
cies detail the Allianz Group's approach towards the management of
these areas of risk. The implementation and communication of those
compliance programs are monitored by the Group Compliance func-
tion at Allianz SE. In close cooperation with the Risk function of the
Group, risk-mitigating measures are taken and enforced by a global
network of dedicated compliance functions throughout the Allianz
Group. With respect to financial statements, our internal control
system is designed to mitigate operational risks.³
1-Credit Risk Platform.
Annual Report 2016 - Allianz Group
2- For further information, please refer to note 15 to the consolidated financial statements.
3-For additional information regarding our internal controls over financial reporting, please refer to Controls
over Financial Reporting from page 75 onward.
65
OPERATIONAL RISK
99
Our Property-Casualty insurance businesses are mainly exposed to
premium risk and reserve risks as part of the underwriting risk.
UNDERWRITING RISK
In addition, central elements of Allianz's dividend policy are
linked to the Solvency II capitalization based on our partial internal
model. This shows that the partial internal model is fully integrated
in the business steering of Allianz and that the application of the par-
tial internal model satisfies the so-called "use-test" under Solvency II.
MARKET RISK
With respect to investments, top-down indicators such as strategic
asset allocations are defined and closely monitored to ensure bal-
anced investment portfolios. Furthermore, we have a limit system in
place which is defined at Group level – separately for the Life/Health
and the Property-Casualty business segments - as well as at operating
entity level. The limits comprise economic limits, in particular finan-
cial Value-at-Risk (VaR) and credit VaR as derived from the internal
risk capital framework, complemented by stand-alone interest rate
and equity sensitivity limits as well as by limits on foreign exchange
exposures.
In order to further limit the impact of any financial market
changes and to ensure that assets adequately back policyholder
liabilities, we have additional measures in place. One of these is asset/
liability management, linked to the internal risk capital framework,
which incorporates risks as well as return aspects stemming from our
insurance obligations. In addition, we are using derivatives mostly to
either hedge our portfolio against adverse market movements or reduce
our reinvestment risk - for example, by using forwards or swaptions.
In addition, guidelines are derived by the Group center for certain
investments - for example, concerning the use of derivatives – and
compliance with the guidelines is controlled by the respective risk
and controlling functions.
Furthermore, we have put in place standards for hedging activi-
ties due to exposures to fair value options embedded in life insurance
products.
CREDIT RISK
PROPERTY-CASUALTY
The Allianz Group monitors and manages credit risk exposures and
concentrations to ensure we are able to meet policyholder obligations
when they are due. Credit risks are reflected by the internal credit risk
model as well as the obligor group limit management system. Group-
wide credit data is collected following a centralized process and using
standard obligor and obligor group mappings.
The loss profile of a given portfolio is obtained through a Monte
Carlo simulation, taking into account interdependencies and expo-
sure concentrations per obligor segment. To reflect portfolio-specific
diversification effects, the loss profiles are calculated at different
levels of the Allianz Group structure (pre-diversified). They are then
fed into the overall partial internal risk capital model for further
aggregation across sources of risk to derive group-diversified internal
credit risk.
Annual Report 2016 - Allianz Group
C - Group Management Report
Our credit insurance portfolio is modeled by Euler Hermes based
on a proprietary model component, which is a local adaptation of the
central internal credit risk module and is reviewed by Group Risk.
Euler Hermes's loss profile is integrated in the Group's internal credit
risk model to capture the concentration and diversification effects. In
our credit insurance business, proactive credit management offers
opportunities to keep losses from single credit events below expected
levels and therefore strongly supports writing business that contrib-
utes to a balanced Group credit portfolio.
To ensure effective credit risk management, credit VaR limits are
derived from our internal risk capital framework, as well as from rat-
ing bucket benchmarks which 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. It covers credit and equity exposures and is based on data used
by the investment and risk experts at the Group and operating entity
levels. This limit framework forms the basis for discussions on credit
actions and provides notification services with a quick and broad
communication of credit-related decisions across the Group. Clearly
defined processes ensure that exposure concentrations and limit
utilizations are appropriately monitored and managed. The setting
of country and obligor exposure limits from the Group's perspective
(i.e. the maximum concentration limit) takes into account the
Allianz Group's portfolio size and structure as well as our overall risk
strategy.
The internal credit risk capital model considers the major drivers
of credit risk for each instrument, such as exposure at default, ratings,
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 via an internal rating approach which is based on
long-term ratings from rating agencies. It is dynamically adjusted
using market-implied ratings and the most recently available quali-
tative information.
(4,754)
OUR BUSINESS ASPIRATIONS
Acquisition expenses and commissions²
Changes in
scope of
consolidation
Internal
growth
Asset Management
Statutory premiums
Life/Health
Gross premiums written
Property-Casualty
€ MN
COMPOSITION OF TOTAL REVENUES
2016
Foreign
currency
translation
Total revenues comprise statutory gross premiums written in Property-
Casualty and Life/Health, operating revenues in Asset Management,
and total revenues in Corporate and Other (Banking).
RECONCILIATION OF NOMINAL TOTAL REVENUE GROWTH
TO INTERNAL TOTAL REVENUE GROWTH
%
We believe that an understanding of our total revenue performance
is enhanced when the effects of foreign currency translation as well
as acquisitions, disposals, and transfers (or “changes in scope of
consolidation") are analyzed separately. Accordingly, in addition to
presenting nominal total revenue growth, we also present internal
growth, which excludes these effects.
Composition of total revenue growth
For further information, please refer to note 5 to the consolidated
financial statements.
The previous analysis in our Group Management Report is based on
our consolidated financial statements and should be read in conjunc-
tion with them. In addition to our figures stated in accordance with
the International Financial Reporting Standards (IFRS), the Allianz
Group uses operating profit and internal growth to enhance the under-
standing of our results. These additional measures should be viewed
as complementary to, rather than a substitute for, our figures deter-
mined according to IFRS.
Reconciliations
C - Group Management Report
59
1- Refers to cash flows from certified liabilities and subordinated liabilities.
Annual Report 2016 - Allianz Group
Composition of total revenues
Nominal
growth
Property-Casualty
(1.2)
(0.3)
(0.8)
Allianz Group
(4.4)
0.0
0.0
(4.4)
Corporate and Other
(7.1)
0.1
0.3
(7.5)
Asset Management
(3.4)
(0.5)
0.2
(3.1)
Life/Health
(0.1)
(2.2)
(1.0)
3.1
Net cash flow provided by operating activities decreased in 2016. This
consists of net income plus adjustments for non-cash charges, cred-
its and other items included in net earnings, and cash flows related
to the net change in operating assets and liabilities. Net income after
adding back non-cash charges and similar items went down by
€ 1.4 BN to € 9.1 BN in 2016. In addition, operating cash flows from net
changes in operating assets and liabilities, including other items, fell
by € 0.8 BN to € 12.4 BN. This was driven by net cash outflows (after net
cash inflows in 2015) from repurchase agreements and collateral
received from securities lending transactions - in particular at
Allianz SE. Higher reserves for insurance and investment contracts
in our Life/Health business segment, mainly in the United States,
Germany and France, partially offset this effect.
1- Includes effects of exchange rate changes on cash and cash equivalents of € 52 MN and € 548 MN in 2016
and 2015, respectively.
(963)
979
Net cash outflow used in investing activities declined compared
to the previous year. This was primarily a consequence of net cash
inflows (after net cash outflows in 2015) from financial assets and
liabilities designated at fair value through income, especially in our
Life/Health business segment in Germany and France. Moreover, we
recorded lower net cash outflows from our activities in real estate
held for investment, in particular from our German Life/Health busi-
ness segment. Lower net cash inflows from loans and advances to
banks and customers partly compensated these effects.
Further potential sources of short-term funding allowing the
Allianz Group to fine-tune its capital structure are letter of credit
facilities and bank credit lines.
The Group maintained its A-1+/Prime-1 ratings for short-term issu-
ances. Thus we can continue funding our liquidity under the Euro
Commercial Paper Program at an average rate for each tranche below
Euribor, and under the U.S. Dollar Commercial Paper Program at an
average rate for each tranche below U.S. Libor.
0.4
6
Money market securities
2015
0.7
9
1,041
Money market securities
2016
%
Average
interest rate
Interest
expense
€ MN
€ MN
Carrying
value
as of 31 December
MONEY MARKET SECURITIES OF ALLIANZ SE
Short-term funding sources available are the Medium-Term Note
Program and the Commercial Paper Program. Money market securities
decreased in the use of commercial paper compared to the previous
year-end. Interest expenses on money market securities increased
mainly due to higher funding costs on average in 2016.
SHORT-TERM DEBT FUNDING
C - Group Management Report
(4,927)
Net cash outflow used in financing activities decreased, mainly
due to higher net cash inflows from our refinancing activities¹ as well
as higher net cash inflows from liabilities to banks and customers,
especially from our banking business. Higher dividend payments to
our shareholders partly offset these effects.
(2.2)
Cash and cash equivalents, including cash and cash equivalents
reclassified to assets of disposal groups held for sale, increased in
For further information on the consolidated statements of cash
flows, please refer to
page 82.
16
equivalents¹
Change in cash and cash
1,105
(2,837)
(1,732)
used in financing activities
Net cash flow
629
(20,394)
(19,765)
used in investing activities
Net cash flow
(2,202)
23,663
21,461
provided by operating activities
Net cash flow
Delta
2015
2016
ANNUAL CHANGES IN CASH AND CASH EQUIVALENTS
€ MN
Allianz Group consolidated cash flows
2016.
2016
1,276
2015
(365)
(328)
Consolidation
2
2
and Other
Consolidation effects within Corporate
(340)
(308)
Fee and commission expenses
122,416
(212)
from external debt
Interest expenses, excluding interest expenses
565
540
16
14
Fee and commission income
carried at fair value through income (net)²
Income from financial assets and liabilities
546
(172)
125,190
Allianz Group total revenues
1-Represents interest and similar income less interest expenses.
ACQUISITION, ADMINISTRATIVE, CAPITALIZATION,
AND AMORTIZATION OF DAC¹
2015
2015
2016
€ MN
RECONCILIATION TO NOTES¹
statement.
Policyholder participation is included within change in reserves
for insurance and investment contracts (net) in the group income
Both capitalization and amortization is included in the line item
premiums earned (net) in the group income statement.
URR amortized: Total amount of URR amortized includes scheduled
URR amortization, true-up and unlocking.
URR capitalized: Capitalization amount of unearned revenue
reserves (URR) and deferred profit liabilities (DPL) for FAS 97 LP.
IN DEFERRED ACQUISITION COSTS (DAC)
IMPACT OF CHANGE
The delta shown as definitions in acquisition expenses and com-
missions represents commission clawbacks, which are allocated to the
technical margin. The delta shown as definitions in administrative
and other expenses mainly represents restructuring charges, which
are stated in a separate line item in the group income statement.
Expenses comprise acquisition expenses and commissions as well
as administrative and other expenses.
EXPENSES
The reconciling item scope comprises the effects from out-of-scope
entities in the profit sources reporting compilation. Operating profit
from operating entities that are not in-scope entities is included in
the investment margin. Currently, 20 entities comprising 97.5% of
Life/Health total statutory premiums are in scope.
OPERATING PROFIT
Life/Health Insurance Operations
C - Group Management Report
Annual Report 2016 - Allianz Group
60
2-Includes trading income.
474
Interest and similar income
Impact of change in DAC includes effects of change in DAC, unearned
revenue reserves (URR), and value of business acquired (VOBA), and is
the net impact of the deferral and amortization of acquisition costs
and front-end loadings on operating profit.
577
(0.7)
4.5
Corporate and Other
66,903
64,636
1.4
12.8
0.0
(11.4)
Asset Management
0.0
(0.6)
0.0
(4.9)
51,597
51,535
6.8
3.2
0.7
Property-Casualty
consisting of:
2.9
4.2
3.7
Life/Health
Corporate and Other
Allianz Group
4
3
Other income
(8)
carried at fair value through income (net)
Income from financial assets and liabilities
(5)
551
(5)
Net interest income¹
6,488
6
Net fee and commission income
(2.1)
6,019
0.3
4.2
2.4
6,022
thereof: Total revenues (Banking)
6,479
Operating revenues
consisting of:
0.1
0.4
CC
0.1
0.1
0.1
0.1
0.1
0.1
0.2
C
0.1
0.1
D
0.1
0.4
0.1
0.8
0.1
1.6
0.3
0.1
0.1
0.2
0.5
0.2
13.3
15.8
B
2.1
1.6
1.3
3.0
0.1
0.1
0.1
3.6
4.8
CCC
0.7
0.1
Not rated
21.6
2.5
3.0
4.7
4.3 555.8 541.4
1- In accordance with the Group Management Report, figures stated include investments of Banking and
Asset Management. Table excludes private loans. Stated market values include investments not in scope
of the Solvency II framework. Predominantly based on external ratings. For some cases where no external
rating is available internal ratings are applied.
CREDIT RISK - REINSURANCE
Credit risk to external reinsurers arises when we transfer insurance
risk exposures to external reinsurance companies to mitigate insur-
ance risks. Potential losses can arise either due to non-recoverability
of reinsurance receivables already present at the as-of date or due to
default on benefits under in-force reinsurance treaties.
As of 31 December 2016, 0.5% (2015: 0.4%) of our total Group pre-
diversified internal credit risk was allocated to reinsurance exposures
- of which 46.8% (2015: 52.0%) was related to reinsurance counter-
parties in the United States and Germany.
We focus on companies with strong credit profiles. We may also
require letters of credit, cash deposits, or other financial measures to
further mitigate our exposure to credit risk. As of 31 December 2016,
84.0% (2015: 86.0%) of the Allianz Group's reinsurance recoverables
were distributed among reinsurers that had been assigned at least an
"A-" rating by Standard & Poor's or A.M. Best. As of 31 December 2016,
reinsurance recoverables not rated represented 15.1 % (2015: 13.3%).
REINSURANCE RECOVERABLES BY RATING CLASS¹
€ BN
as of 31 December
AAA
AA+ to AA-
A+ to A-
BBB+ to BBB-
0.9
Non-investment grade
1-Represents gross exposure broken down by reinsurer.
Not assigned
Total
3.7
1.9
21.6
32.9
0.1
0.3
8.7
6.2
0.6
0.4
1.2
0.5
3.7
2.8
16.3
12.7
Total
213.6
217.5
90.0
98.7
189.5
164.9
31.3
9.5
23.8
0.5
44.8
57.9
57.7
1.5
2.4
1.6
1.1
17.5
42.3
16.0
0.1
120.9 122.1
AA
95.0
95.9
18.6
20.9
11.3
0.1
AAA
2015
2016
Total
Other
2016
as of
31 December
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
6.0
6.2
2.3
3.0
52.9
4.2
5.0
93.9
81.9
8.3
7.3
0.5
0.6
0.8
0.5
Deferred acquisition costs
0.5
157.8
148.7
BB
5.3
3.9
0.3
49.8
6.5
BBB
98.9
1.1
1.1
0.1
144.0 141.4
A
17.1
15.8
8.8
11.4
55.8
49.8
15.4
14.6
0.9
1.7
0.2
0.6
0.7
0.8
94.6
2015
73
0.04
105,369
8
Loans and advances to banks and customers
511,257
536,869
7
7,268
8,333
117,630
6
14,463
Investments
Financial assets carried at fair value through income
Cash and cash equivalents
ASSETS
2015
2016
note
14,842
Financial assets for unit-linked contracts
111,325
105,873
64.2 64.6 65.1 63.0 66.6 65.5 65.9 68.4 66.3
64.1
1- Represents claims and insurance benefits incurred (net), divided by premiums earned (net).
The top five perils contributing to the natural catastrophe risk as of
31 December 2016 were: a windstorm in Europe, a flood in Germany,
a hurricane in the U.S., a hailstorm in Germany, and an earthquake in
Australia.
Reserve risk
We estimate and hold reserves for claims resulting from past events
that have not yet been settled. If our reserves turn out not the be suf-
ficient to cover claims to be settled in the future, due to unexpected
changes, we will experience losses. Conversely, if reserves turn out to
be too conservative there is a chance of positive returns. The volatility
of past claims measured over a one-year time horizon defines our
reserve risk.
LIFE/HEALTH
Life/Health underwriting risk arises from profitability being lower
than expected due to changes in actuarial parameters. As profitabil-
ity calculations are based on several parameters – such as historical
loss information, assumptions on inflation or on mortality, and mor-
bidity - the realized parameters may differ from the ones used for
calculation. For example, inflation which is higher than what we
incorporated in the calculations may lead to a loss. However, devia-
tions can also be beneficial and lead to additional profit. For example,
a lower morbidity rate than expected will most likely result in lower
claims.
Due to effective product design and the diversity of our products,
there were no significant concentrations of underwriting risks within
our Life/Health business segment as of 31 December 2016.1
Annual Report 2016 - Allianz Group
1- For further information about insurance risk in the Life/Health business segment, please refer to note 16
to the consolidated financial statements.
C - Group Management Report
BUSINESS RISK
Business risks include cost risks and policyholder behavior risks and
are mostly driven by the Life/Health business segment and to a lesser
extent by the Property-Casualty business segment. Cost risks are
associated with the risk that expenses incurred in administering
policies are higher than expected or that new business volume
decreases to a level that does not allow Allianz to absorb its fixed
costs.
In the Life/Health business segment, policyholder behavior risks
are risks related to the unpredictability and adverse behavior of
policyholders in exercising their different contractual options: early
termination of contracts, surrenders, partial withdrawals, renewals,
and annuity take-up options. Assumptions on policyholder behavior
are set in line with accepted actuarial methods and are based on our
own historical data, to the extent available. If data is not available,
assumptions are based on industry data or expert judgment.
14,843
15,562
9
Reinsurance assets
as of 31 December
natural
catastrophes
€ MN
CONSOLIDATED BALANCE SHEETS
The accounting and consolidation processes we use to produce con-
solidated financial statements are based on a central consolidation
and reporting IT solution and local general ledger solutions. The latter
are largely harmonized throughout the Group, using standardized
processes, master data, posting logics, and interfaces for data delivery
to the Holding. Access rights to accounting systems are managed
according to strict authorization procedures.
ACCOUNTING AND CONSOLIDATION PROCESSES
In line with both our prudent approach to risk governance and com-
pliance with regulatory requirements, we have created a structure to
identify and mitigate the risk of material errors in our consolidated
financial statements (this also includes market value balance sheet
and risk capital controls). Our internal control system over financial
reporting (ICOFR) is based on the revised framework developed by the
Committee of Sponsoring Organizations of the Treadway Commission
(coso) in 2013 and is regularly reviewed and updated. Our approach
also includes the following five interrelated components: control
environment, risk assessment, control activities, information and
communication, and monitoring. These five components are covered
by an Entity-Level Control Assessment Process (ELCA), IT General
Controls (ITGC) and controls at process levels. The ELCA framework
contains controls to monitor the system of governance effectiveness.
In the ITGC framework we have implemented, for example, controls for
access-right management and for project and change management.
The following information is given pursuant to § 289 (5) and § 315 (2)
no. 5 of the German Commercial Code ("Handelsgesetzbuch- HGB").
Controls over Financial Reporting
C - Group Management Report
Annual Report 2016 - Allianz Group
74
Accounting rules for the classification, valuation, and disclosure
of all items in the balance sheet, the income statement, and notes
related to the annual and interim financial statements are defined
primarily in our Group accounting manual. Internal controls are
embedded in the accounting and consolidation processes to safe-
guard the accuracy, completeness, and consistency of the information
provided in our financial statements.
As inferred from the section on management of liquidity risks
and interest rate risks, they are properly managed and monitored but
not quantified.
Liquidity risk is defined as the risk that requirements from current or
future payment obligations cannot be met or can only be met on the
basis of adversely altered conditions. Liquidity risk can arise primarily
if there are mismatches in the timing of cash flows on the asset and
liability side. Detailed information regarding the Allianz Group's
liquidity risk exposure, liquidity, and funding - including changes in
cash and cash equivalents – is provided in Liquidity and Funding
Resources from ②> page 57 onwards and in notes 13, 19 and 35 to the
consolidated financial statements.
LIQUIDITY RISK
The decrease shown in the operational risk is driven by the regu-
lar update of local parameters. Foreign currency translation effects
(mainly Euro/U.S. Dollar) play a secondary role. There were no central
operational risk model changes in 2016.
Operational risks represent losses resulting from inadequate or failed
internal processes, from personnel and systems, or from external
events – including legal and compliance risk, but excluding losses
from strategic and reputational risk. The operational risk capital is
calculated on a scenario-based approach. Operational internal and
external loss data is used, among others, for the selection of the risk
driving scenarios and is applied for validation purposes.
OPERATIONAL RISK
As for underwriting risks, a positive deviation from the under-
lying parameters will lead to additional returns. For example, lower-
than-expected expenses in our Property-Casualty business will lead
to an improved combined ratio.
Short-term loan
There was a minor movement in business risk for our Life/Health
business segment, driven by the sale of our South Korean life business.
-
INTERNAL CONTROL SYSTEM APPROACH
Our approach can be summarized as follows:
We use a top-down, risk-based approach to determine the accounts
and operating entities that should fall under the scope of our
internal control system over financial reporting. The methodology
is described in our ICOFR manual. During the scoping process,
both materiality and susceptibility to a misstatement are consid-
ered simultaneously. The final results are documented in the list
of operating entities under the scope of ICOFR as well as in the list
of significant accounts. In addition to the quantitative ICOFR cal-
culation, we also consider qualitative criteria – such as expected
increase in business volume – which are provided by different
Group Centers, Group Audit, and external Audit.
Then, our local entities identify risks that could lead to material
financial misstatements including all relevant root causes (i.e.
human processing errors, fraud, system shortcomings, external
factors, etc.). After identifying and analyzing the risks, their
potential impacts and probabilities of occurrence are evaluated.
Preventive and detective key controls over the financial reporting
process 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 misstate-
ment. Given the strong dependence of financial reporting pro-
cesses on information technology systems, we also implement IT
controls.
D - Consolidated Financial Statements
77
Annual Report 2016 - Allianz Group
D
FINANCIAL STATEMENTS
CONSOLIDATED
Allianz Group
-
Annual Report 2016
76
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C - Group Management Report
75
Annual Report 2016 - Allianz Group
Subsidiaries within the scope of our control system are individu-
ally responsible for adhering to the Group's internal governance and
control policy and for creating local Disclosure Committees that are
similar to the Group-level committee. The entities' CEOS and CFOS
provide periodic sign-offs to the management of Allianz SE, certifying
the effectiveness of their local system of internal controls as well as
the completeness, accuracy, and reliability of financial data reported
to the Holding.
The Group Disclosure Committee ensures that these board
members are made aware of all material information that could affect
our disclosures, and assesses the completeness and accuracy of the
information provided in the quarterly statements, half-year, and
annual financial reports. In 2016, the Group Disclosure Committee
met on a quarterly basis before the quarterly statements and financial
reports were issued.
Responsibility for ensuring the completeness, accuracy, and reliability
of our consolidated financial statements rests with the Chairman of
the Allianz SE Board of Management, as well as the board member
responsible for Finance, Controlling, and Risk, supported by Group
Center functions, the Group Disclosure Committee, and operating
entities.
GOVERNANCE
Finally, we focus on ensuring that controls are appropriately
designed and effectively executed to mitigate risk. We have set
consistent documentation requirements across the Allianz
Group for elements such as processes, related key controls, and
execution. We conduct an annual assessment of our control system
to maintain and continuously enhance its effectiveness. Group
Audit and local internal audit functions ensure that the overall
quality of our control system is subjected to regular control-test-
ing, to assure reasonable design and operating effectiveness.
Internal Audit does so through a comprehensive risk-based
approach, which holistically assesses the key controls of the com-
pany's internal procedures and processes, including local and
group-internal controls over financial reporting.
CONSOLIDATED BALANCE SHEETS
excluding
Loss ratio
2007
Asset Management
Corporate and Other
Total Group
C - Group Management Report
Premium
natural catastrophe
Premium
terror
Premium
non-catastrophe
Reserve
Life/Health
Biometric
2016
2015
2016
2015
616
543
24
17
Total
Property-Casualty
as of 31 December
pre-diversified, € MN
6.41
6.64
4.62
4.68
0.12
0.08
1.99
1.76
13.18
13.19
CREDIT RISK - CREDIT INSURANCE
Credit risk arises from potential claim payments on limits granted by
Euler Hermes to its policyholders. Euler Hermes protects its policy-
holders (partially) from credit risk associated with short-term trade
credits advanced to clients of the policyholder. If the client of the
policyholder is unable to meet its payment obligations, Euler Hermes
indemnifies the loss to the policyholder.
1- Additionally, 5.7% (2015: 4.8%) of our total Group pre-diversified internal credit risk is allocated to receiv-
ables, potential future exposure for derivatives and reinsurance, and other off-balance sheet exposures.
72
Annual Report 2016 - Allianz Group
As of 31 December 2016, 7.4% (2015: 6.5%) of our total Group pre-
diversified internal credit risk was allocated to Euler Hermes credit
insurance exposures, for which the relative increase is primarily
driven by the lower credit risk of the investment portfolio.
UNDERWRITING RISK
Underwriting risk consists of premium and reserve risks in the Pro-
perty-Casualty business segment as well as biometric risks in the
Life/Health business segment. For the Asset Management business
segment and our banking operations, underwriting risks are not rel-
evant.
The following table presents the pre-diversified risk calculated
for underwriting risks stemming from our insurance business.
ALLIANZ GROUP: RISK PROFILE - ALLOCATED UNDERWRITING RISK BY BUSINESS SEGMENT AND SOURCE OF RISK
(TOTAL PORTFOLIO BEFORE NON-CONTROLLING INTERESTS)¹
2016
4,410
2015
2016
2015
179
5,233
1,526
Share of total Group pre-diversified risk
355
179
355
1,894
11,809
22.6%
11,958
21.1%
Property-Casualty risk changes are mainly driven by exposure and
model updates as well discounting effects. For biometric risk there
was a slight reduction, mainly driven by a minor model change and
the sale of our South Korean life business.
PROPERTY-CASUALTY
Our Property-Casualty insurance businesses are exposed to premium
risk related to the current year's new and renewed business, as well
as reserve risks related to the business in force.
Premium risk
As part of our Property-Casualty business operations, we receive ] pre-
miums from our customers and provide insurance protection in
return. Changes in profitability over time are measured based on loss
ratios and their fluctuations.
We face the risk that underwriting profitability is lower than
expected. The volatility of the underwriting profitability measured
over one year defines our premium risk for the Allianz Group.
PROPERTY-CASUALTY LOSS RATIOS¹ FOR THE PAST TEN YEARS
%
66.1
2016
Loss ratio
2015 2014 2013 2012 2011 2010 2009 2008
65.6 66.2 66.0 65.9 68.3 69.9 69.1 69.5 68.0
4,926
0.04
1-As risks are measured in an integrated approach and on an economic basis, internal risk profile takes
reinsurance effects into account.
4,410
2016
2015
2016
2015
4,579
5,233
4,926
24
37
10,307
10,101
1,323
1,502
1,323
1,502
616
543
24
17
4,579
ABS/MBS
0.3
Corporate
On a pro-forma basis, the recognition of negative interest rates
on solvency capital calculations would have had a negative impact on
the Solvency ratio of around 3 percentage points as of 31 December
2016.
The following table summarizes our Solvency II regulatory capi-
talization ratios as disclosed over the course of the year 2016.
ALLIANZ GROUP: SOLVENCY II REGULATORY CAPITALIZATION RATIOS
%
31 Decem-
ber 2016
30 Septem-
ber 2016
30 June
2016
of our South Korean life business but also to measures taken to
reduce our exposure to market risks, including hedging of equity
exposure and improving our interest rate risk profile. In addition,
changes in the regulatory tax treatment of the German life sector as
well as minor model changes also slightly contributed to a decreased
capital requirement. This effect, however, was partly offset by market
movements as well as higher exposure due to business growth.
31 March
2016
Capitalization
ratio
186
186
186
218
200
The following table presents the sensitivity of our predicted Solvency II
capitalization ratio under certain standard financial scenarios.
ALLIANZ GROUP: PREDICTED SOLVENCY II REGULATORY CAPITALIZATION
AFTER STRESS SCENARIOS
31 Decem-
ber 2015
1- Own funds and capital requirement are calculated under consideration of volatility adjustment and yield
curve extension, as described in Yield curve and volatility adjustment assumptions on page 67.
Compared to year-end 2015, our Solvency II capitalization increased
by 18 percentage points to 218%. This was driven by an increase in
own funds mainly due to strong Solvency II earnings and the sale of
our South Korean life business. This was partly offset by market move-
ments mainly due to decreased interest rates, as well as by dividend
accrual and changes in transferable amount of own funds resulting
from changed risk capital requirements. A decrease in risk capital
also contributed to the overall increase in Solvency II capitalization.
This was predominantly due to management actions like the disposal
1-Changed regulatory tax treatment of German life sector reduced our year-end Solvency II capitalization
ratio from 200% to 196 % on 1 January 2016.
Finally, the Group has the additional advantage of being well
diversified, both geographically and across a broad range of busi-
nesses and products.
SOLVENCY II REGULATORY CAPITALIZATION
The Allianz Group's own funds and capital requirements are based
on the market value balance sheet approach as the major economic
principle of Solvency II rules.¹ Our regulatory capitalization is shown
in the following table.
ALLIANZ GROUP: SOLVENCY II REGULATORY CAPITALIZATION
as of 31 December
Own funds
Capital requirement
Capitalization ratio
2016
2015
€ BN
75.3
72.7
€ BN
34.6
36.4
%
218
2001
%
as of 31 December
Base capitalization ratio
Interest rates up by 0.5%¹
Interest rates down by 0.5%¹
Equity prices up by 30%
Equity prices down by 30%
Combined scenario:
Interest rate down by 0.5%¹
Equity prices down by 30%
ALLIANZ GROUP: ALLOCATED RISK ACCORDING TO THE RISK PROFILE (TOTAL PORTFOLIO BEFORE NON-CONTROLLING INTERESTS)
€ MN
Market risk
Credit risk
Underwriting risk
Business risk
Operational risk
Diversification
Total
as of 31 December
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
With the exception of the Asset Management business segment, all
business segments are exposed to the full range of risk categories stated.
By contrast, the Asset Management business segment is mainly exposed
to operational and market risk and to a lesser extent to credit risk. The
group-diversified risk is broken down as follows:
The Group has a conservative investment profile and disciplined
business practices in the Property-Casualty, Life/Health, and
Asset Management business segments, leading to sustainable
operating earnings with a well-balanced risk-return profile.
C - Group Management Report
Annual Report 2016 - Allianz Group
2016
2015
218
200
220
208
207
185
224
208
216
190
203
176
1- Non-parallel interest rate shifts due to extrapolation of the yield curve beyond the last liquid point in line
with Solvency II rules.
The Allianz Group is a financial conglomerate within the scope of the
Financial Conglomerate Directive (FCD). The FCD does not impose a
materially different capital requirement on Allianz Group compared
to Solvency II.
Quantifiable risks and opportunities
by risk category
This Risk and Opportunity Report outlines the Group's risk figures,
reflecting its risk profile based on pre-diversified risk figures and
group diversification effects. Pre-diversified risk figures reflect the
diversification effect within each modeled risk category (i.e. market,
credit, underwriting, business, and operational risk) but does not
comprise the diversification effects across risk categories. Group-
diversified risk figures also capture the diversification effect across
all risk categories. As of 31 December 2016, the group-diversified risk
reflecting our risk profile before non-controlling interests of € 34.6 BN
(2015: € 36.4 BN) represented a diversification benefit² of approxi-
mately 25% (2015: 27%) across risk categories and business segments.
2- Diversification before tax.
69
2016
The Group's management also believes that Allianz is well posi-
tioned to deal with potentially adverse future events, in part due
to our strong internal limit framework defined by the Group's risk
appetite and risk management practices including our approved
partial internal model.
The Allianz Group's management feels comfortable with the Group's
overall risk profile and has confidence in the effectiveness of its risk
management framework to meet the challenges of a rapidly changing
environment as well as day-to-day business needs. This confidence
is based on several factors, which are summarized below:
8,383
7,615
19
Certificated liabilities
18
13,290
4
Liabilities of disposal groups classified as held for sale
Subordinated liabilities
38,686
18
Other liabilities
4,003
4,822
34
Deferred tax liabilities
105,873
111,325
39,867
19
13,530
Total liabilities
Banks
Annual Report 2016 - Allianz Group
78
848,942
883,809
66,099
70,392
20
2,955
3,052
63,144
67,341
1-Include mainly derivative financial instruments.
Total liabilities and equity
Total equity
Non-controlling interests
Shareholders' equity
12,258
782,843
813,417
17
Financial liabilities for unit-linked contracts
486,222
505,460
12
Intangible assets
109
24,887
14,196
4
Non-current assets and assets of disposal groups classified as held for sale
37,050
38,050
11
Other assets
1,394
1,003
34
Deferred tax assets
25,234
C - Group Management Report
ized. Finally, the potential for a multiplicity of different regulatory
regimes, capital standards, and reporting requirements will increase
operational complexity and costs.
MANAGEMENT ASSESSMENT
13,752
Due to its effective capital management, the Allianz Group is well
capitalized and met its internal-, rating agency- and regulatory-
solvency targets as of 31 December 2016. Allianz is also confident
that it will be able to meet the capital requirements under new
regulatory regimes. Allianz remains one of the highest rated
insurance groups in the world, as reflected by our external ratings.
13,443
883,809
16
Reserves for insurance and investment contracts
72,003
72,373
15
Reserves for loss and loss adjustment expenses
20,660
21,360
14
25,531
13,038
13
9,207
10,737
Unearned premiums
Liabilities to banks and customers
Financial liabilities carried at fair value through income¹
LIABILITIES AND EQUITY
848,942
Total assets
2015
10
2015
2015
55 5,805 5,690
45 12,824 16,516
86
163
146
224 2,753 2,922
410
Our total pre-diversified market risk showed a decrease of € 3.7 BN
mainly driven by interest rate and equity risk in the Life/Health busi-
ness segment. The decrease in interest rate risk was driven by the
disposal of our South Korean life business as well as by management
actions to improve our interest rate risk profile by asset/liability man-
agement (ALM) measures. Equity risk also decreased due to manage-
ment actions, in particular derivative hedging programs. For credit
spread risk, the decrease was driven by exposure changes, due to ALM
measures, and the corresponding effects on the liability side.
INTEREST RATE RISK
As interest rates may fall below the rates guaranteed to policyholders
in some Life/Health markets, and given the long duration of insur-
ance obligations, we are specifically exposed to interest rate risk
because we have to reinvest maturing assets prior to the maturity of
life contracts. This interaction of our investment strategy and obliga-
tions to policyholders forms an integral part of our internal risk cap-
ital framework. In addition, our ALM approach is closely linked to the
internal risk capital framework and designed to achieve investment
returns over the long term in excess of the obligations related to
insurance and investment contracts.
70
10
Annual Report 2016 - Allianz Group
C - Group Management Report
21,546 25,274
Share of total Group pre-diversified risk 41.2% 44.6%
We manage interest rate risk from a comprehensive corporate
perspective: While the potential payments related to our liabilities in
the Property-Casualty business segment are typically shorter in
maturity than the financial assets backing them, the opposite usually
holds true for our Life/Health business segment, due to the long-term
life insurance contracts. In part, this provides us with a natural hedge
on an economic basis at the Group level. As of 31 December 2016, our
interest-rate-sensitive investments excluding unit-linked business
- amounting to a market value of € 428.5 BN¹ - would have gained
€ 31.4 BN or lost € 36.1 BN in value in the event of interest rates changing
by (100) and +100 basis points, respectively.
rates.
INFLATION RISK
As an insurance company we are exposed to changing inflation rates,
predominantly due to our non-life insurance obligations. In addition,
internal pension obligations contribute to our exposure to inflation.
Since inflation increases both claims and costs, higher inflation rates
will lead to greater liabilities. Inflation assumptions are already taken
into account in our product development and pricing, and the risk of
changing inflation rates is incorporated in our partial internal model.
In case future inflation rates (sustainably) fall short of assumptions,
liabilities would be less than anticipated.
EQUITY RISK
Risks from changes in equity prices are normally associated with
decreasing share prices and increasing equity price volatilities. As
stock-market prices also might increase, opportunities may arise
from equity investments. As of 31 December 2016, our investments
excluding unit-linked business that are sensitive to changing equity
markets - amounting to a market value of € 47.0 BN² – would have lost
€ 12.4 BN in value assuming equity markets declined by 30%.
CREDIT SPREAD RISK
Our internal risk capital framework fully acknowledges the risk of
declining market values for our fixed income assets, such as bonds,
due to the widening of credit spreads. However, for our risk manage-
ment and appetite we also take into account the underlying economics
of our business model; for example, the application of the volatility
adjustment in our internal risk capital framework to partially mitigate
spread risk, as described in the section on yield curve and volatility
adjustment assumptions.
CURRENCY RISK
As described above, the risk related to interest rates lies in the
fact that, in the long run, yields that can be achieved by reinvesting
may not be sufficient to cover the guaranteed rates. In contrast,
opportunities may materialize when interest rates increase. This may
result in higher returns from reinvestments than the guaranteed
527
1,746 1,986
6,891 8,078
Asset Management
Corporate and Other
Total Group
22
20
22
20
22
20
96
557
3,876
643
5,207
364
451
3,025 3,618 5,481
796
541
5,975
680
977
95
86
261
As our operating entities are typically invested in assets of the same
currency as their liabilities, the major part of foreign currency risk
results from the economic value of our non-Euro operating entities.
If non-Euro foreign exchange rates decline against the Euro from a
Group perspective, the Euro-equivalent net asset values also decrease.
1- The stated market value includes all investments whose market value is sensitive to interest rate move-
ments (excluding unit-linked business) in line with the Solvency II framework, and therefore is not based
on classifications given by accounting principles.
2- The stated market value includes all investments whose market value is sensitive to equity movements
(excluding unit-linked business) in line with the Solvency II framework, and therefore is not based on
classifications given by accounting principles.
However, at the same time the capital requirements in Euro terms
from the respective non-Euro entity also decrease, partially mitigat-
ing the total impact on our capitalization.
%
8,763
16.8
9,240
16.3
Throughout 2016 the credit environment was mostly stable. Overall
credit risk for the Group decreased compared to last year, primarily
driven by the Life/Health business segment due to the disposal of our
South Korean life business as well as an increased loss-absorbing
capacity of technical provisions in the traditional life business, which
decreased the credit risk after policyholder participation. Addition-
ally, active de-risking measures were taken to reduce sovereign
counterparty exposure concentrations. Annual updates based on
extended time series were performed for credit risk parameters like
the transition matrix and asset correlations, which also had a slightly
positive effect on credit risk. These effects were partially offset by the
declining interest rate environment, which generally increased credit
risk exposures and correspondingly credit risk.
Credit risk comprises risks resulting from the investment port-
folio, from the reinsurance portfolio, and from our credit insurance
business.
CREDIT RISK - INVESTMENT
We invest premiums from our customers into a variety of assets,
which largely consist of fixed income instruments. As the portfolio
value of our investments depends on the credit quality of the port-
folio, we are exposed to credit risk. However, for certain life insurance
products, losses due to credit events can be shared with the policy-
holder.
Annual Report 2016 - Allianz Group
71
C - Group Management Report
As of 31 December 2016, the credit risk arising from our invest-
ment portfolio accounted for 86.4% (2015: 88.2%) of our total Group
pre-diversified internal credit risk. Credit Risk in the Life/Health busi-
ness segment is primarily driven by long-term assets covering long-
term liabilities. Typical investments are government bonds, senior
corporate bonds, covered bonds, self-originated mortgages and
loans, as well as a modest amount of derivatives. Due to the nature of
the business, the fixed income securities in the Property-Casualty
business segment tend to be short- to mid-term, which explains the
lower Credit Risk consumption in this segment.'
The counterparty credit risk arising from derivatives is low, since
derivatives usage is governed by the group-wide internal guidelines for
collateralization of derivatives that stipulate master netting and col-
lateral agreements with each counterparty and require high quality
and liquid collateral. In addition, Allianz closely monitors the credit
ratings of counterparties and exposure movements.
As of 31 December 2016, the rating distribution based on issue
(instrument) ratings of our fixed income portfolio was as follows:
RATING DISTRIBUTION OF ALLIANZ GROUP'S FIXED INCOME PORTFOLIO¹ - FAIR VALUE
Type of
issuer
Government &
agency
2016
Covered bond
€ MN
101
667
€ MN
REAL ESTATE RISK
Despite the risk of decreasing real estate values, real estate is a suit-
able addition to our investment portfolio, due to good diversification
benefits as well as to the contribution of relatively predictable cash-
flows in the long term. As of 31 December 2016, about 3.3% (2015: 3.5%)
of the total pre-diversified risk was related to real estate exposures.
CREDIT RISK
Credit risk is measured as the potential economic loss in the value of
our portfolio that is due to either changes in the credit quality of our
counterparts ("migration risk") or the inability or unwillingness of
the counterparty to fulfill contractual obligations ("default risk”).
Credit risk arises from our fixed income investments, cash positions,
derivatives, structured transactions, receivables from Allianz agents
and other debtors, credit insurance, and reinsurance recoverables.
The following table presents our group-wide risk figures related to
credit risks.
ALLIANZ GROUP: RISK PROFILE - ALLOCATED CREDIT RISK BY BUSINESS SEG-
MENT (TOTAL PORTFOLIO BEFORE TAX AND NON-CONTROLLING INTERESTS)
pre-diversified
as of 31 December
Property-Casualty
Life/Health
Asset Management
Corporate and Other
Total Group
Share of total Group pre-diversified risk
2016
2015
€ MN
2,502
2,406
€ MN
5,550
6,141
€ MN
29
26
683
1,326
€ BN
6,085
857
Corporate and Other
2,753
2,922
683
667
179
Total Group
22,081
21,546
8,763
9,240
11,809
355
11,958
617
4,473 4,623
5,661
580 (689) (924) 3,543
5,559 (13,008) (15,371)
25,274
14,745
2,248 2,274 (6,606) (6,663) 15,193
2,028 2,019 (5,713) (7,784) 19,549
768
686
960
26
1,025
Property-Casualty
5,690
5,805
2,406
10,307
Life/Health
12,824
16,516
5,550
6,141
1,323
10,101
1,502
937
3,536
937
3,687
Asset Management
163
146
29
3,600
39,244 41,283
2,502
(4,664) (4,860)
2016
2015
2016
Property-Casualty
412
415
Life/Health
2,884
2015
4,129
905
3,780
739
1,215
996
604
554
4,694
Tax
Total Group
2,600 2,931
61
237
2016
69
2016
34,580 36,423
2015
The following sections outline the evolution of the risk profile per risk
category modeled. All risks are presented on a pre-diversified basis
and concentrations of single sources of risk are discussed accord-
ingly.
MARKET RISK
As an inherent part of our insurance operations, we collect premiums
from our customers and invest them in a wide variety of assets. The
resulting investment portfolios back future claims and benefits to
our customers. In addition, we invest shareholders' capital, which is
required to support the risks underwritten. As the fair values of our
investment portfolios depend on financial markets, which may
change over time, we are exposed to market risks. The following table
presents our group-wide risk figures related to market risks by busi-
ness segment and source of risk.
Interest rate
Inflation
ALLIANZ GROUP: RISK PROFILE - MARKET RISK BY BUSINESS SEGMENT AND SOURCE OF RISK (TOTAL PORTFOLIO BEFORE TAX AND NON-CONTROLLING INTERESTS)
pre-diversified, € MN
Credit spread
Equity
4,973
Currency
Real estate
2016
2015
2016
2015
Total
2016
as of 31 December
2015
2,955
63
63
63
Total comprehensive income¹
Balance as of 31 December 2015
Dividends paid
Treasury shares
Paid-in capital
5,617
243
5,202
(3,001)
1,053
7,151
63,702
Transactions between equity holders
414
99
4
405
60,747
7,480
914
168
6,397
66,099
2,955
(3)
63,144
(926)
28,928
(3,382)
(270)
(3,112)
(3,112)
(144)
244
10,920
24,222
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(1,977)
5,617
7,884
470
(1,370)
634
(335)
23
(127)
23
(127)
80
9
79
(4)
1
13
(48)
57
405
7,480
414
5,202
Annual Report 2016 - Allianz Group
19,878
28,928
Total equity
controlling
interests
Shareholders'
equity
losses (net)
Non-
Unrealized
gains and
13,917
currency
translation
adjustments
earnings
Paid-in capital
Retained
Total comprehensive income¹
Balance as of 1 January 2015
D - Consolidated Financial Statements
€ MN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Foreign
7,884
CASH FLOW FROM OPERATING ACTIVITIES
Treasury shares
Adjustments to reconcile net income to net cash flow provided by operating activities
6,987
7,250
Net income
14,842
14,463
(395)
13,863
14,842
979
16
548
52
(2,837)
(1,732)
(20,394)
(19,765)
Share of earnings from investments in associates and joint ventures
(288)
(290)
Realized gains/losses (net) and impairments of investments (net) of:
(41)
Reserves for loss and loss adjustment expenses
Unearned premiums
Deferred acquisition costs
Reinsurance assets
Repurchase agreements and collateral received from securities lending transactions
Reverse repurchase agreements and collateral paid for securities borrowing transactions
Financial assets and liabilities held for trading
23,663
Net change in:
Loan loss provisions
Depreciation and amortization
3,460
2,710
Other investments, mainly financial assets held for trading and designated at fair value through income
(6,407)
(6,540)
Available-for-sale and held-to-maturity investments, investments in associates and joint ventures, real estate held for investment,
loans and advances to banks and customers, non-current assets and disposal groups classified as held for sale
Interest credited to policyholder accounts
21,461
2015
2016
27,336
28,928
Balance as of 31 December 2016
(3,646)
(325)
(3,320)
(3,320)
Dividends paid
(754)
52
35
(4)
4
352
Transactions between equity holders
2
2
2
17
Paid-in capital
11,830
3,052
Cash and cash equivalents at end of period
Cash and cash equivalents reclassified to assets of disposal groups held for sale
Cash and cash equivalents at beginning of period
Change in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Net cash flow used in financing activities
Net cash flow used in investing activities
Net cash flow provided by operating activities
67,341
SUMMARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
D - Consolidated Financial Statements
81
Annual Report 2016 - Allianz Group
income attributable to shareholders of € 6,883 MN (2015: € 6,616 MN).
2- Includes income taxes.
1- Total comprehensive income in shareholders' equity for the year ended 31 December 2016 comprises net
70,392
€ MN
74
(154)
(17)
Interest expenses
(14,065)
(13,173)
28
Change in reserves for insurance and investment contracts (net)
(51,702)
(53,156)
27
Claims and insurance benefits incurred (net)
2,770
2,758
Claims and insurance benefits incurred (ceded)
(54,472)
(55,914)
Claims and insurance benefits incurred (gross)
110,836
110,500
29
(1,207)
(1,224)
Loan loss provisions
(3,777)
(3,734)
33
Fee and commission expenses
(25,718)
(25,301)
32
Acquisition and administrative expenses (net)
Total income
(1,215)
31
Investment expenses
(1,526)
(1,940)
30
Impairments of investments (net)
(60)
(46)
(1,306)
Amortization of intangible assets
732
100
Premiums earned (net)
(543)
(1,073)
Change in unearned premiums (net)
(5,536)
(4,901)
Ceded premiums written
76,723
76,331
Gross premiums written
2015
2016
note
D - Consolidated Financial Statements
€ MN
CONSOLIDATED INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENTS
21
70,357
70,645
Interest and similar income
26
Income from fully consolidated private equity investments
Other income
10,945
10,491
25
Fee and commission income
7,937
241
8,403
Realized gains/losses (net)
(2,307)
(999)
23
Income from financial assets and liabilities carried at fair value through income (net)
22,643
22,149
22
24
Reserves for insurance and investment contracts
(322)
Restructuring charges
Changes in actuarial gains and losses on defined benefit plans
Items that may never be reclassified to profit or loss
Subtotal
Changes arising during the year
Reclassifications to net income
Miscellaneous
Subtotal
Changes arising during the year
Share of other comprehensive income of associates and joint ventures
Reclassifications to net income
Subtotal
Changes arising during the year
Reclassifications to net income
Cash flow hedges
Subtotal
Changes arising during the year
Reclassifications to net income
Available-for-sale investments
Total other comprehensive income
Total comprehensive income
Total comprehensive income attributable to:
Non-controlling interests
Shareholders
(2,973)
875
(1,694)
2,552
(1,279)
(1,678)
1,078
156
Subtotal
993
85
13
6,987
7,250
2015
2016
taxes.
For further details on the income taxes associated with different com-
ponents of other comprehensive income, please see note 34 Income
143
Changes arising during the year
Reclassifications to net income
Foreign currency translation adjustments
(3,209)
(3,042)
7,250
34
10,196
10,292
Net income
Income taxes
Income before income taxes
6,987
(100,640)
Total expenses
(792)
Expenses from fully consolidated private equity investments
(8)
(5)
Other expenses
(231)
(186)
(100,208)
(7)
Net income attributable to:
Non-controlling interests
Shareholders
371
6,616
Items that may be reclassified to profit or loss in future periods
Other comprehensive income
Net income
€ MN
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
D - Consolidated Financial Statements
80
367
6,883
80
Annual Report 2016 - Allianz Group
14.55
15.00
42
Basic earnings per share (€)
Diluted earnings per share (€)
14.56
15.14
42
79
1,345
(151)
46
86
98
85
Annual Report 2016 - Allianz Group
Financial assets and liabilities carried at fair value through income
include financial assets and liabilities held for trading as well as
financial assets and liabilities designated at fair value through
income. While the former category includes trading instruments and
CARRIED AT FAIR VALUE THROUGH INCOME
FINANCIAL ASSETS AND LIABILITIES
Cash and cash equivalents include balances with banks payable on
demand, balances with central banks, cash on hand, treasury bills to
the extent they are not included in financial assets held for trading,
and checks and bills of exchange that are eligible for refinancing at
central banks, subject to a maximum term of three months from the
date of acquisition.
CASH AND CASH EQUIVALENTS
Derivative financial instruments designated in hedge accounting
relationships are included in the line items Other assets and Other
liabilities. Freestanding derivatives are included in the line item
financial assets or liabilities held for trading. For further information
on derivatives, please refer to note 35 Derivative financial instru-
ments.
For derivative financial instruments used in hedge transactions that
meet the criteria for hedge accounting, the Allianz Group designates
the derivative as a hedging instrument in a fair value hedge, cash flow
hedge, or hedge of a net investment in a foreign operation. The Allianz
Group documents the hedge relationship, as well as its risk manage-
ment objective and strategy for entering into the hedge transaction.
The Allianz Group assesses, both at the hedge's inception and on an
ongoing basis, whether the hedging instruments used are expected
to be highly effective in offsetting changes in fair values or cash flows
of the hedged items.
Hedge accounting
Reversals of impairments of available-for-sale equity securities
are not recorded through the income statement but recycled out of
other comprehensive income when sold.
An available-for-sale equity security is considered to be impaired
if there is objective evidence that the cost may not be recovered. The
Allianz Group's policy considers a decline to be significant if the fair
value is below the weighted average cost by more than 20%. A decline
is considered to be prolonged if the fair value is below the weighted
average cost for a period of more than nine consecutive months. If
an available-for-sale equity security is impaired, any further declines
in the fair value at subsequent reporting dates are recognized as
impairments.
For held-to-maturity investments and loans, the impairment
loss is measured as the difference between the amortized cost and the
expected future cash flows using the original effective interest rate.
Once impairment is triggered for an available-for-sale debt
instrument, the cumulative loss recognized in the other comprehen-
sive income is reclassified to profit or loss. The cumulative loss cor-
responds to the difference between amortized cost and the current
fair value of the investment. Further declines in fair value are recog-
nized in other comprehensive income unless there is further objec-
tive evidence that such declines are due to a credit-related loss event.
If in subsequent periods the impairment loss is reversed, the reversal
is measured as the lesser of the full original impairment loss previ-
ously recognized in the income statement and the subsequent
increase in fair value.
The evaluation of whether a financial debt instrument is impaired
requires analysis of the underlying credit risk/quality of the relevant
issuer and involves significant management judgment. The presence
of either a decline in fair value below amortized cost or the down-
grade of an issuer's credit rating does not by itself represent objective
evidence of a loss event, but may represent objective evidence of a
loss event when considered with other available information.
D - Consolidated Financial Statements
financial derivatives, the latter category is mainly designated at fair
value to avoid accounting mismatches.
INVESTMENTS
Available-for-sale investments
DEFERRED ACQUISITION COSTS
Assets and liabilities related to reinsurance are reported on a gross
basis. Reinsurance assets include balances expected to be recovered
from reinsurance companies. The amount of reserves ceded to re-
insurers is estimated in a manner consistent with the claim liability
associated with the reinsured risks. To the extent that the assuming
reinsurers are unable to meet their obligations, the respective ceding
insurers of the Allianz Group remain liable to its policyholders for the
portion reinsured. Consequently, allowances are made for receiv-
ables on reinsurance contracts which are deemed uncollectible.
REINSURANCE ASSETS
together with the offsetting changes in fair value of the corresponding
financial liabilities for unit-linked contracts.
Financial assets for unit-linked contracts are recorded at fair value,
with changes in fair value recognized in the income statement
FOR UNIT-LINKED CONTRACTS
FINANCIAL ASSETS AND LIABILITIES
LOANS AND ADVANCES TO BANKS AND CUSTOMERS
Loans and advances are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and
which are not classified as financial assets held for trading, desig-
nated at fair value through income, or designated as available for
sale. These assets are initially measured at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, they
are measured at amortized cost using the effective interest rate
method.
Impairments
These assets are accounted for as property, plant and equipment in
line with IAS 16. Hence, they are carried at cost less accumulated
depreciation and impairments.
Real estate held for investment is carried at cost less accumulated
depreciation and impairments. Real estate held for investment is
depreciated on a straight-line basis over its useful life, with a maxi-
mum of 50 years and regularly tested for impairment.
Real estate held for investment
For details on the accounting for investments in associates and joint
ventures please see the section principles of consolidation.
Investments in associates and joint ventures
Funds held by others under reinsurance contracts assumed
Funds held by others under reinsurance contracts assumed relate to
cash deposits to which the Allianz Group is entitled, but which the
ceding insurer retains as collateral for future obligations of the
Allianz Group. The cash deposits are recorded at face value, less any
impairment for balances that are deemed not to be recoverable.
Held-to-maturity investments are debt securities with fixed or deter-
minable payments and fixed maturities, for which the Allianz Group
has the positive intent and ability to hold to maturity. These assets
are initially measured at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, they are measured
at amortized cost using the effective interest rate method.
Held-to-maturity investments
Available-for-sale investments comprise debt and equity instru-
ments that are designated as available for sale or do not fall into the
other measurement categories. These investments are measured at
fair value through other comprehensive income. When an invest-
ment is derecognized or determined to be impaired, the cumulative
gain or loss previously recorded in other comprehensive income is
transferred and recognized in the consolidated income statement.
Realized gains and losses on those instruments are generally deter-
mined by applying the average cost method at the subsidiary level.
Fixed assets of renewable energy investments
Deferred acquisition costs (DAC)
The Allianz Group enters into securities lending transactions and
repurchase agreements. Cash received in the course of those trans-
actions is recognized together with a corresponding liability. Securities
received as collateral under lending transactions are not recognized
and securities sold under repurchase agreements are not derecog-
nized if risks and rewards have not been transferred. Securities bor-
rowing transactions generally require the Allianz Group to deposit
cash with the security's lender. Fees paid are reported as interest
expenses.
Financial assets and liabilities are offset and the net amount is pre-
sented in the balance sheet only when there is a legally enforceable
right to offset the recognized amounts and there is an intention to
either settle on a net basis, or to realize the asset and settle the liability
simultaneously.
internal asset managers. In such cases, the investment fund qualifies
as subsidiary if the Allianz Group is in a principal instead of an agent
role with regard to the investment fund. This qualification takes into
account, in particular, kick-out rights held by third-party investors as
well as the aggregate economic interest of the Allianz Group in the
investment funds.
Scope of consolidation and consolidation procedures
In accordance with IFRS 10, the consolidated financial statements of
the Allianz Group include the financial statements of Allianz SE and
its subsidiaries. The Allianz Group controls a subsidiary when it is
exposed to, or has rights to, variable returns from its involvement
with the subsidiary and has the ability to affect those returns through
its power over the subsidiary. Subsidiaries are usually entities where
Allianz SE, directly or indirectly, owns more than half of the voting
rights or similar rights with the ability to affect the returns of the sub-
sidiaries for its own benefit. In order to determine whether entities
qualify as subsidiaries, potential voting rights that are currently
exercisable or convertible are taken into consideration. For certain
entities, voting or similar rights are not the dominant factor of con-
trol, such as when any voting rights relate to administrative tasks
only and returns are directed by means of contractual arrangements,
as is the case mainly for investment funds managed by Allianz Group
PRINCIPLES OF CONSOLIDATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
new accounting pronouncements
2-Accounting policies and
The Allianz Group offers Property-Casualty insurance, Life/
Health insurance and Asset Management products and services in
over 70 countries.
The consolidated financial statements were authorized for issue
by the Board of Management on 14 February 2017.
The consolidated financial statements are prepared as of and for
the year ended 31 December 2016. The Allianz Group's presentation
currency is the Euro (€). Amounts are rounded to the nearest million
(€ MN) unless otherwise stated.
In accordance with the provisions of IFRS 4 insurance contracts
are recognized and measured on the basis of accounting principles
generally accepted in the United States of America (US GAAP) as at
first-time adoption of IFRS 4 on 1 January 2005.
They have been prepared in conformity with International
Financial Reporting Standards (IFRS), as adopted under European
Union (E.U.) regulations in accordance with § 315a (1) of the German
Commercial Code (HGB). Within these consolidated financial state-
ments, the Allianz Group has applied all standards and interpreta-
tions issued by the IASB and endorsed by the E.U. that are compulsory
as of 31 December 2016.
The accompanying consolidated financial statements present the
operations of Allianz SE with its registered office in Königinstrasse 28,
80802 Munich, Germany, and its subsidiaries (the Allianz Group).
Allianz SE is recorded in the Commercial Register of the municipal
court in Munich under the number HRB 164232.
1 – Nature of operations
and basis of presentation
Notes to the Consolidated Financial Statements
D - Consolidated Financial Statements
83
Annual Report 2016 - Allianz Group
Subsidiaries are consolidated as from the date on which control
is obtained by the Allianz Group, up to the date on which the Allianz
Group no longer maintains control. Accounting policies of subsid-
iaries are adjusted where necessary to ensure consistency with the
accounting policies adopted by the Allianz Group. The effects of intra-
Allianz Group transactions are eliminated.
Business combinations and measurement
of non-controlling interests
Where newly acquired subsidiaries are subject to business combina-
tion accounting, the provisions of IFRS 3 are applied. Any non-control-
ling interests in the acquiree can be measured either at its fair value
at the acquisition date or at the non-controlling interest's propor-
tionate share of the acquiree's identifiable net assets. This option is
exercised on a case-by-case basis.
Associates and joint arrangements
Offsetting
A financial asset is derecognized when the contractual rights to
the cash flows from the financial asset expire or the Allianz Group
transfers the asset and substantially all of the risks and rewards of
ownership. A financial liability is derecognized when it is extin-
guished.
Financial assets are generally recognized and derecognized on the
trade date, i.e. when the Allianz Group commits to purchase or sell
securities or incur a liability.
Recognition and Derecognition
FINANCIAL INSTRUMENTS
For the purposes of the consolidated financial statements, the results
and financial position of each of the Allianz Group's subsidiaries are
expressed in Euro, the presentation currency of the Allianz Group.
Assets and liabilities of subsidiaries not reporting in Euro are trans-
lated at the closing rate on the balance sheet date and income and
expenses are translated at the quarterly average exchange rate. Any
foreign currency translation differences, including those arising from
the equity method, are recorded in other comprehensive income.
to the presentation currency
Translation from the functional currency
Securities lending and repurchase agreements
denominated in foreign currencies and measured at historical cost
are translated at historical rates, non-monetary items measured at
fair value are translated using the closing rate. Foreign currency gains
and losses arising from foreign currency transactions are reported in
income from financial assets and liabilities carried at fair value
through income (net), except when the gain or loss on a non-monetary
item measured at fair value is recognized in other comprehensive
income. In this case, any foreign exchange component of that gain or
loss is also recognized in other comprehensive income.
Annual Report 2016 - Allianz Group
84
The individual financial statements of each of the Allianz Group's
subsidiaries are prepared in the currency prevailing in the primary
economic environment where the subsidiary conducts its ordinary
activities (its functional currency). Transactions recorded in curren-
cies other than the functional currency (foreign currencies) are
recorded at the exchange rate prevailing on the date of the trans-
action. At the balance sheet date, monetary assets and liabilities
denominated in foreign currencies are translated into the functional
currency using the closing exchange rate. While non-monetary items
Translation from any foreign currency
to the functional currency
FOREIGN CURRENCY TRANSLATION
The Allianz Group accounts for all material investments in asso-
ciates and joint arrangements with a time lag of no more than three
months. Income from investments in associates and joint arrange-
ments - excluding distributions – is included in interest and similar
income. Accounting policies of associates and joint arrangements are
adjusted where necessary to ensure consistency with the accounting
policies adopted by the Allianz Group.
Joint arrangements are structures over which the Allianz Group
and one or more other parties contractually agreed to share control,
which exists only when decisions over the relevant activities require
the unanimous consent of the parties sharing control. Joint arrange-
ments whereby the Allianz Group has rights to the net assets of the
arrangement (joint ventures) are generally accounted for using the
equity method.
Associates are entities over which the Allianz Group can exercise sig-
nificant influence. In general, if the Allianz Group holds 20% or more
of the voting power in an investee but does not control the investee,
it is assumed to have significant influence, unless it can be clearly
demonstrated that this is not the case. Investments in associates are
generally accounted for using the equity method.
D - Consolidated Financial Statements
Costs that vary with and are directly related to the acquisition and
renewal of insurance contracts and investment contracts with dis-
cretionary participation features are deferred by recognizing a DAC
asset. At inception, DAC is tested to ensure that it is recoverable over
the life of the contracts. Subsequently, loss recognition tests at the
end of each reporting period ensure that the DAC is covered by future
profits.
For short-duration, traditional long-duration, and limited-pay-
ment insurance contracts, DAC is amortized in proportion to premium
revenue recognized. For universal life-type and participating life
insurance contracts as well as investment contracts with discretionary
participation features, DAC is generally amortized over the life of a
book of contracts based on estimated gross profits (EGP) or estimated
gross margins (EGM), respectively.
Acquisition costs for unit-linked investment contracts are
deferred in accordance with IAS 18 if the costs are incremental. For
non-unit-linked investment contracts accounted for under IAS 39 at
amortized cost, acquisition costs that meet the definition of transac-
tion costs under IAS 39 are considered in the aggregate policy reserves.
The aggregate policy reserves for universal life-type insurance
contracts are equal to the account balance, which represents premi-
ums received and investment return credited to the policy less
deductions for mortality costs and expense charges. The aggregate
policy reserve also includes reserves for investment contracts with
discretionary participation features and liabilities for guaranteed
minimum mortality and morbidity benefits related to non-traditional
contracts with annuitization options and unit-linked insurance
contracts.
For traditional long-duration insurance contracts, such as tradi-
tional life and health products, aggregate policy reserves are com-
puted using the net level premium method, based on best-estimate
assumptions adjusted for a provision for adverse deviation for mortal-
ity, morbidity, expected investment yields, surrenders, and expenses
at the policy inception date, which remain locked in thereafter unless
a premium deficiency occurs.
The aggregate policy reserves for participating life insurance contracts
are calculated using the net level premium method based on assump-
tions for mortality, morbidity and interest rates that are guaranteed
in the contract or used in determining the policyholder dividends (or
premium refunds).
Aggregate policy reserves
reserves.
RESERVES FOR INSURANCE AND INVESTMENT CONTRACTS
Reserves for insurance and investment contracts include aggregate
policy reserves, reserves for premium refunds and other insurance
Reserves for loss and loss adjustment expenses are not discount-
ed, except when payment amounts are fixed and timing is reasonably
determinable.
are reviewed and revised periodically as additional information
becomes available and actual claims are reported.
D - Consolidated Financial Statements
40
87
Annual Report 2016 - Allianz Group
IBNR reserves are estimates based on actuarial and statistical
projections of the expected cost of the ultimate settlement and
administration of claims. The analyses are based on facts and cir-
cumstances known at the time, predictions of future events, esti-
mates of future inflation and other societal and economic factors.
Trends in claim frequency, severity and time lag in reporting are
examples of factors used in projecting the IBNR reserves. IBNR reserves
IBNR reserves are established to recognize the estimated cost of
losses that have occurred but where the Allianz Group has not yet
been notified. IBNR reserves, similar to case reserves for reported
claims, are established to recognize the estimated costs, including
expenses, necessary to bring claims to final settlement. The Allianz
Group relies on its past experience, adjusted for current trends and
any other relevant factors to estimate IBNR reserves.
Case reserves for reported claims are based on estimates of
future payments that will be made with respect to claims, including
LAE relating to such claims. The estimates reflect the informed judg-
ment of claims personnel based on general insurance reserving prac-
tices and knowledge of the nature and value of a specific type of
claim. These case reserves are regularly re-evaluated in the ordinary
course of the settlement process and adjustments are made as new
information becomes available.
RESERVES FOR LOSS AND LOSS ADJUSTMENT EXPENSES
Reserves are established for the payment of losses and loss adjust-
ment expenses (LAE) on claims which have occurred but are not yet
settled. Reserves for loss and loss adjustment expenses fall into two
categories: case reserves for reported claims and reserves for incurred
but not reported losses (IBNR).
Amounts charged as consideration for origination of certain
long-duration insurance contracts (i.e. initiation or front-end fees)
are reported as unearned revenue which are included in unearned
premiums. These fees are recognized using the same amortization
methodology as DAC including shadow accounting.
Insurance contract features which are not closely related to the
underlying insurance contracts are bifurcated from the insurance
contracts and accounted for as derivatives in line with IFRS 4 and IAS 39.
The assumptions used for aggregate policy reserves are deter-
mined using current and historical client data, industry data, and in
the case of assumptions for interest reflect expected earnings on
assets, which back the future policyholder benefits. The information
used by the Allianz Group's actuaries in setting such assumptions
includes, but is not limited to, pricing assumptions, available experi-
ence studies, and profitability analyses.
The interest rate assumptions used in the calculation of deferred
acquisition costs and aggregate policy reserves are as follows:
INTEREST RATE ASSUMPTIONS
Annual Report 2016 - Allianz Group
88
The share-based compensation plans of the Allianz Group are classi-
fied as either equity-settled or cash-settled plans. Equity-settled
plans are measured at fair value on the grant date (grant-date fair
value) and the grant-date fair value is recognized as an expense over
the vesting period. Where equity-settled plans involve equity instru-
ments of Allianz SE, a corresponding increase in shareholders' equity
is recognized. Where equity-settled plans involve equity instruments
of subsidiaries of the Allianz Group, the corresponding increase is
recognized in non-controlling interests. Equity-settled plans include
a best estimate of the number of equity instruments that are expected
to vest in determining the amount of expense to be recognized. For
cash-settled plans, the Allianz Group accrues the fair value of the
award as a compensation expense over the vesting period. Upon vest-
ing, any change in the fair value of any unexercised awards is also
recognized as a compensation expense. Where expected tax deduc-
tions differ in amount and timing from the cumulative share-based
payment expense recognized in profit or loss, deferred taxes are rec-
ognized on temporary differences.
Share-based compensation plans
Pensions and similar obligations are usually measured at present
value and presented net of plan assets by applying the provisions of
IAS 19. This particularly requires calculating an interest income on
plan assets with the same interest rate used to discount the defined
benefit obligation. The resulting net interest expense or income is
recognized in profit or loss under administrative expenses in the con-
solidated income statement. The interest rates for discounting are
determined by reference to market yields on high-quality corporate
bonds in the respective markets at the end of the reporting period. For
maturities where no high-quality corporate bonds are available as a
benchmark, discount factors are estimated by extrapolating current
market rates along the yield curve.
Pensions and similar obligations
OTHER LIABILITIES
Reserves for premium refunds include the amounts allocated under
the relevant local statutory/contractual regulations or at the entity's
discretion to the accounts of the policyholders and the amounts
resulting from the differences between these IFRS-based financial
statements and the local financial statements (latent reserves for
premium refunds), which will reverse and enter into future profit
participation calculations. Unrealized gains and losses recognized
for available-for-sale investments are recognized in the latent
reserves for premium refunds to the extent that policyholders will
participate in such gains and losses on the basis of statutory or con-
tractual regulations when they are realized, based on and similar to
shadow accounting. The profit participation allocated to participat-
ing policyholders or disbursed to them reduces the reserves for pre-
mium refunds.
For short-duration insurance contracts, such as most of the property
and casualty contracts, premiums to be earned in future years are
recorded as unearned premiums. These premiums are earned in sub-
sequent periods in relation to the insurance coverage provided.
Reserves for premium refunds
Non-unit-linked investment contracts without discretionary
participating features are accounted for under IAS 39. The aggregate
The Allianz Group has recognized all rights and obligations related
to issued insurance contracts according to its accounting policies,
and thus has not separately recognized an unbundled deposit com-
ponent in respect of any of its insurance contracts.
Participating life
insurance contracts
2.2-5.0
0.8-4.3
2.5-6.0
2.5-6.0
insurance contracts
Traditional
long-duration
Deferred acquisition costs
Aggregate policy reserves
%
policy reserves for those contracts are initially recognized at fair
value, or the amount of the deposit by the contract holder, net of the
transaction costs that are directly attributable to the issuance of the
contract. Subsequently, those contracts are measured at amortized
cost using the effective interest rate method.
UNEARNED PREMIUMS
DAC.
For long-duration contracts a premium deficiency is recognized,
if actual experience regarding investment yields, mortality, morbidity,
terminations or expense indicates that existing contract liabilities,
along with the present value of future gross premiums, will not be
sufficient to cover the present value of future benefits and to recover
max. 50
2-10
2-10
Years
INTANGIBLE ASSETS AND GOODWILL
Equipment
Software
Real estate held for own use
ESTIMATED USEFUL LIVES (IN YEARS)
The table below summarizes estimated useful lives for real
estate held for own use, equipment and software.
Intangible assets with finite useful lives are measured at cost less
accumulated amortization and impairments. Intangible assets with
indefinite useful lives are tested annually for impairment and when-
ever there is a triggering event. They are also reviewed annually to
determine whether the indefinite-life classification is still appropriate.
Other assets primarily consist of receivables, accrued dividends,
interest and rent as well as own-used property and equipment.
Depreciation is generally computed using the straight-line method
over the estimated useful lives of the assets.
D - Consolidated Financial Statements
Annual Report 2016 - Allianz Group
For insurance contracts and investment contracts with discretionary
participation features, shadow accounting is applied to DAC, PVFP and
deferred sales inducements in order to include the effect of unreal-
ized gains or losses in the measurement of these assets in the same
way as it is done for realized gains or losses. When the gains or losses
are realized they are recognized in the income statement through
recycling and prior adjustments due to shadow accounting are
reversed.
Shadow accounting
Sales inducements on non-traditional insurance contracts are
deferred and amortized using the same methodology and assump-
tions as for deferred acquisition costs.
Deferred sales inducements
The value of an insurance business or an insurance portfolio acquired
is measured by the PVFP, which is the present value of net cash flows
anticipated in the future from insurance contracts in force at the date
of acquisition. It is amortized over the life of the relevant contracts.
Present value of future profits (PVFP)
OTHER ASSETS
14,842
The table below summarizes estimated useful lives and the
amortization methods for each class of intangible assets with finite
useful lives.
Long-term distribution agreements
Liability adequacy tests are performed for each insurance portfolio
on the basis of estimates of future claims, costs, premiums earned,
and proportionate investment income. For short-duration contracts,
a premium deficiency is recognized if the sum of expected claim
costs and claim adjustment expenses, expected dividends to policy-
holders, DAC, and maintenance expenses exceeds related unearned
premiums while considering anticipated investment income.
Liability adequacy tests
accordance with the conditions of the reinsurance contracts, and in
consideration of the original contracts for which the reinsurance was
concluded. When the reinsurance contracts do not transfer significant
insurance risk, deposit accounting is applied as required under the
related reinsurance accounting provisions of US GAAP or under IAS 39.
The Allianz Group's consolidated financial statements reflect the
effects of ceded and assumed reinsurance contracts. Assumed rein-
surance premiums, commissions and claim settlements, as well as
the reinsurance element of technical provisions are accounted for in
Reinsurance contracts
Insurance contracts and investment contracts with discretionary
participating features are accounted for under the insurance
accounting provisions of US GAAP, as at first-time adoption of IFRS 4
on 1 January 2005 have been applied, where IFRS 4 does not provide
specific guidance. Investment contracts without discretionary par-
ticipation features are accounted for as financial instruments in
accordance with IAS 39.
Insurance and investment contracts
AND REINSURANCE CONTRACTS
ESTIMATED USEFUL LIVES (IN YEARS) AND AMORTIZATION METHODS
INSURANCE, INVESTMENT
straight-line or in relation
to customer churn rates
consumption of future
economic benefit
6-13
in proportion to the
13-42
Useful lives Amortization method
10-25 straight-line considering
contractual terms
Customer relationships
Acquired business portfolios
Goodwill is recognized for business combinations in the amount of
the consideration transferred in excess of the fair values assigned to
the identifiable assets acquired and liabilities assumed. Goodwill is
accounted for at the acquiree in the acquiree's functional currency.
There is an at least annual evaluation whether it is deemed recover-
able.
1,359
14,463
6,241
11,465
8,409
2
3
522
407
187
156
513
850
3,218
466
151,470
156,085
1,529
2,224
62
128
126
168,728
169,032
Subtotal
Property and equipment
Loans and advances to banks and customers (purchased loans)
Fixed assets of renewable energy investments
Real estate held for investment
Non-current assets and disposal groups classified as held for sale
Investments in associates and joint ventures
Held-to-maturity investments
82
Available-for-sale investments
Payments for the purchase or origination of:
2015
2016
€ MN
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
D - Consolidated Financial Statements
Annual Report 2016 - Allianz Group
Financial assets designated at fair value through income
Business combinations (note 4):
Subtotal
Fixed assets of renewable energy investments
2,040
622
775
909
202
(588)
(806)
(587)
2,365
(1,278)
(61)
(696)
(3,250)
(2,877)
5,319
4,535
60
16,569
14,031
Deferred tax assets/liabilities
361
Real estate held for investment
Non-current assets and disposal groups classified as held for sale
Investments in associates and joint ventures
Held-to-maturity investments
Available-for-sale investments
Financial assets designated at fair value through income
23,663
21,461
Loans and advances to banks and customers (purchased loans)
Property and equipment
16,676
(2,383)
(33)
Proceeds from the sale, maturity or repayment of:
CASH FLOW FROM INVESTING ACTIVITIES
Net cash flow provided by operating activities
Subtotal
Other (net)
262
14,211
(2,193)
(2,300)
(174,302)
(1,185)
Interest paid
19,412
19,263
Interest received
1,878
1,809
Dividends received
(2,609)
(2,933)
Income taxes paid
SUPPLEMENTARY INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(2,837)
(1,732)
Net cash flow used in financing activities
(157)
4
(1,265)
SIGNIFICANT NON-CASH TRANSACTIONS
Transfer of profit participating notes
Investments in associates and joint ventures
Treasury bills, discounted treasury notes, similar treasury securities, bills of exchange and checks
Total
225
94
Cash on hand
388
1,273
Balances with central banks
7,764
Other (net)
6,855
2015
2016
as of 31 December
€ MN
CASH AND CASH EQUIVALENTS
(815)
815
Loans and advances to banks and customers
Balances with banks payable on demand
64
44
Net cash from sale or purchase of treasury shares
19
(8)
Proceeds from sale of subsidiaries, net of cash disposed
(184,595)
(183,676)
(1,411)
(1,335)
(5,461)
Acquisitions of subsidiaries, net of cash acquired
(3,007)
(720)
(1,273)
(409)
(1)
(884)
(1,557)
(2,474)
(170,170)
(622)
6,465
Change in other loans and advances to banks and customers (originated loans)
Other (net)
38
99
(3,382)
(3,646)
52
Dividends paid to shareholders
Transactions between equity holders
Cash inflow from capital increases
(5,044)
(6,155)
(4,848)
Repayments of certificated liabilities and subordinated liabilities
7,059
Proceeds from the issuance of certificated liabilities and subordinated liabilities
911
Net change in liabilities to banks and customers
CASH FLOW FROM FINANCING ACTIVITIES
(4,142)
(708)
(20,394)
(19,765)
Net cash flow used in investing activities
365
5,217
GENERAL INFORMATION