Annual Report • May 23, 2014
Annual Report
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| three months ended 31 March | 2014 | 2013 | Change from previous year |
More details on page |
|
|---|---|---|---|---|---|
| Income statement | |||||
| Total revenues1 | € mn | 33,964 | 32,048 | 6.0% | 6 |
| Operating profit2 | € mn | 2,723 | 2,797 | (2.6)% | 7 |
| Net income2 | € mn | 1,740 | 1,801 | (3.4)% | 7 |
| thereof: attributable to shareholders | € mn | 1,640 | 1,707 | (3.9)% | 7 |
| Business segments3 | |||||
| Property-Casualty | |||||
| Gross premiums written | € mn | 15,217 | 15,197 | 0.1% | 10 |
| Operating profit2 | € mn | 1,489 | 1,319 | 12.9% | 11 |
| Net Income2 | € mn | 645 | 1,017 | (36.6)% | 13 |
| Combined ratio | % | 92.6 | 94.3 | (1.7)%-p | 11 |
| Life/Health4 | |||||
| Statutory premiums | € mn | 17,163 | 14,837 | 15.7% | 16 |
| Operating profit2 | € mn | 880 | 855 | 2.9% | 17 |
| Net Income2 | € mn | 629 | 628 | 0.2% | 18 |
| Margin on reserves | bps | 73 | 74 | (1) | 18 |
| Asset Management4 | |||||
| Operating revenues | € mn | 1,517 | 1,911 | (20.6)% | 22 |
| Operating profit2 | € mn | 646 | 900 | (28.2)% | 22 |
| Net Income2 | € mn | 406 | 568 | (28.5)% | 22 |
| Cost-income ratio | % | 57.4 | 52.9 | 4.5%-p | 22 |
| Corporate and Other | |||||
| Total revenues | € mn | 139 | 148 | (6.1)% | – |
| Operating result2 | € mn | (222) | (239) | 7.1% | 24 |
| Net Income2 | € mn | 131 | (397) | n.m. | 24 |
| Balance sheet as of 31 March5 | |||||
| Total assets6 | € mn | 733,964 | 711,079 | 3.2% | 28 |
| Shareholders' equity | € mn | 53,525 | 50,084 | 6.9% | 27 |
| Non-controlling interests | € mn | 2,835 | 2,765 | 2.5% | 27 |
| Share information | |||||
| Basic earnings per share | € | 3.61 | 3.77 | (4.2)% | 83 |
| Diluted earnings per share | € | 3.55 | 3.69 | (3.8)% | 83 |
| Share price as of 31 March5 | € | 122.70 | 130.35 | (5.9)% | 1 |
| Market capitalization as of 31 March5 | € mn | 56,013 | 59,505 | (5.9)% | – |
| Other data | |||||
| Standard&Poor's rating7 | AA Stable outlook | AA Stable outlook | – | – | |
| Conglomerate solvency ratio5, 8 |
% | 184 | 182 | 2%-p | 27 |
| Total assets under management as of 31 March4, 5 |
€ Bn | 1,765 | 1,770 | (0.3)% | 20 |
thereof: third-party assets under management as of 31 March5 € Bn 1,342 1,361 (1.4)% 21
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).
5 2013 figures as of 31 December 2013.
7 Insurer financial strength rating, affirmed on 4 November 2013.
6 Prior year figure has been restated to reflect the implementation of IFRS 10. For further information, please refer to note 2 to the condensed consolidated interim financial statements.
2 The Allianz Group uses operating profit and net income as key financial indicators to assess the performance of its business segments and the Group as a whole. 3 The Allianz Group operates and manages its activities through four business segments: Property-Casualty,
Life/Health, Asset Management and Corporate and Other. For further information, please refer to note 3 to the condensed consolidated interim financial statements.
4 Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
8 Solvency according to the E.U. Financial Conglomerates Directive. Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request; Allianz SE has not submitted an application so far. Excluding off-balance sheet reserves, the solvency ratio as of 31 March 2014 would be 175% (31 December 2013: 173%).
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Development of the Allianz share price versus STOXX Europe 600 Insurance and EURO STOXX 50
| Security codes | WKN 840 400 |
|---|---|
| ISIN DE 000 840 400 5 | |
| Bloomberg | ALV GR |
| Reuters | 0#ALVG.DEU |
Pages 4 – 34
5 Executive Summary
23 Corporate and Other
20 Asset Management
25 Outlook
27 Balance Sheet Review 34 Reconciliations
First quarter 2014
Allianz SE and its subsidiaries (the Allianz Group) have operations in over 70 countries. The Group's results are reported by business segment: Property-Casualty insurance operations, Life/Health insurance operations, Asset Management and Corporate and Other.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Total revenues | 33,964 | 32,048 |
| Operating profit | 2,723 | 2,797 |
| Net income | 1,740 | 1,801 |
| Solvency ratio1, 2 in % |
184 | 182 |
Overall, global economic activity continued to trend moderately upwards early in the year. Sentiment indices and hard economic indicators such as industrial production data supported this view, in particular in the Eurozone. In contrast, unusually cold winter conditions were the main reason behind the U.S. economy's somewhat rocky start to 2014.
Improving macro conditions and low catastrophe losses helped the insurance industry make a successful start to 2014. But it has not been straightforward progress – slowing price gains as well as persistent low yields remained formidable headwinds.
In the first quarter of 2014, developments in emerging markets were the main reason for increased volatility in international financial markets. In late January numerous emerging market currencies came under intense pressure as investors started to prepare for a gradual normalization in U.S. central bank monetary policy. This change of tack on the part of investors has hit countries that rely heavily on the inflow of foreign capital particularly hard. Rising tensions between Russia and Ukraine, including the annexation of Crimea by Russia, unsettled the markets in the second half of the first quarter.
Spreads on government bonds in the Eurozone periphery continued to narrow, despite lower benchmark bond yields. Recent doubts over growth in the United States and China, questions surrounding monetary policies, and Ukraine-related geopolitical risks have had almost no effect on this narrowing trend. Yields on 10-year German government bonds closed the quarter at 1.6%, 30 basis points lower than at the beginning of this year. European equity markets oscillated around their 2013 year-end levels for much of the first quarter of 2014. Within the Eurozone, the recovery and rising confidence in peripheral countries have been the standout features, with equity markets in Greece, Portugal and Italy all rising over 10%.
In the United States, the first quarter of 2014 was driven by notable net inflows in fixed income, equity and alternative assets along with increased investor confidence and continued outflows from emerging markets to industrialized countries.
1 Solvency according to the E.U. Financial Conglomerates Directive. Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request. Allianz SE has not submitted an application so far. Excluding off-balance sheet reserves, the solvency ratio as of 31 March 2014 would be 175% (31 December 2013: 173%). 2 2013 figure as of 31 December 2013.
Our total revenues grew 6.0% to € 34.0 bn, despite the challenges of operating in a persistently low interest rate environment. On an internal basis1, revenues increased by 7.4%. This favorable development was driven by the strong revenue growth in our Life/Health business segment, supported by stable revenues in our Property-Casualty business segment. Lower operating revenues in our Asset Management business segment partly offset this growth.
Our operating profit decreased 2.6% to € 2,723 mn. The operating profit decline in our Asset Management business segment as a result of expected lower performance fees more than offset the growth in the other business segments. Our Property-Casualty business recorded a higher underwriting result largely due to an improvement in the loss ratio. Our Life/Health business recorded a solid operating performance. The operating result from the Corporate and Other business segment improved due to the closure of the Allianz Bank's business operations in Germany in mid-2013.
Our net income decreased 3.4% to € 1,740 mn, mainly driven by a lower operating profit and slightly higher effective tax rate. The nonoperating result was stable. Net income attributable to shareholders and non-controlling interests was € 1,640 mn (1Q 2013: € 1,707 mn) and € 100 mn (1Q 2013: € 94 mn), respectively.
Our capitalization remained strong and shareholders' equity increased by € 3.4 bn to € 53.5 bn compared to 31 December 2013. Our conglomerate solvency ratio strengthened by 2 percentage points to 184%.
� mn
Property-Casualty gross premiums written amounted to € 15.2 BN. On an internal basis, gross premiums written increased by 1.9 %, supported by positive price and volume effects. Most of this growth stemmed from our subsidiaries in Germany, Turkey, Allianz Worldwide Partners and AGCS.
Life/Health statutory premiums amounted to € 17.2 BN, an increase of 16.4 % on an internal basis. Strong single premium increases from savings products contributed to this growth, mainly driven by the United States, Germany and Benelux.
Asset Management operating revenues went down by € 394 mn to € 1,517 mn. This was mainly because of a decrease in performance fees but also reflects the allocation of certain entities to other business segments3. On an internal basis, operating revenues decreased by 16.4 %. Our performance fees decreased by € 257 mn – mainly as a result of exceptionally high performance fees from private funds in the first quarter of 2013. We recorded net outflows of € 20 bn, mainly driven by the United States.
Total revenues from our Banking operations (reported in our Corporate and Other business segment) decreased by € 9 mn to € 139 mn, mainly due to the mid-2013 closure of the Allianz Bank's business operations in Germany.
2 Total revenues comprise statutory gross premiums written in Property-Casualty and in Life/Health, operating revenues in Asset Management and total revenues in Corporate and Other (Banking).
1 Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions and disposals. Please refer to page 34 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.
3 Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
A Interim Group Management Report
5 Executive Summary
20 Asset Management
23 Corporate and Other
27 Balance Sheet Review 34 Reconciliations
Operating profit
Our Property-Casualty operating profit went up by € 170 mn, or 12.9%, to € 1,489 mn. The underwriting result increased by € 165 mn to € 705 mn, largely driven by the improvement in our loss ratio. Our operating investment income (net) decreased by € 16 mn to € 747 mn.
Life/Health operating profit increased by € 25 mn to € 880 mn. While our operating performance was stable, the improvement reflects the contribution from entities transferred from Asset Management.
Asset Management operating profit declined to € 646 mn, a contraction of 28.2%. On an internal basis, operating profit decreased by 23.8 % mainly due to lower performance fees but also due to lower average assets under management. The cost-income ratio deteriorated by 4.5 percentage points to 57.4%.
Benefiting from the mid-2013 closure of the Allianz Bank's business operations in Germany, our operating result in Corporate and Other improved by € 17 mn to a loss of € 222 mn.
Our non-operating result was flat at a loss of € 116 mn. The positive impact from lower interest expenses from external debt and the oneoff effect from pension revaluation offset the decrease in the nonoperating investment result. This decrease was driven by lower nonoperating realized gains and losses (net) and non-operating income from financial assets and liabilities carried at fair value through income (net).
Non-operating income from financial assets and liabilities carried at fair value through income (net) decreased by € 64 mn to a loss of € 68 mn, mainly due to unfavorable impacts from hedging instruments on investments in financial sector assets.
Non-operating realized gains and losses (net) decreased from € 267 mn to € 126 mn as a result of higher realizations on equities largely due to the disposal of The Hartford shares as well as higher realizations on real estate investments in the first quarter of 2013.
Non-operating interest expenses from external debt improved from € 241 mn to € 204 mn. New issuances have had lower funding costs compared to bonds that matured or were redeemed.
Non-operating acquisition-related expenses improved from € 25 mn to a gain of € 4 mn, mainly due to lower PIMCO B-unit expenses.
For further information on the one-off effect from pension revaluation of € 116 mn, please refer to note 3 to the condensed consolidated interim financial statements.
Non-operating amortization of intangible assets improved from € 41 mn to € 19 mn, largely due to impairments in the first quarter of 2013. For further information, please refer to note 11 to the condensed consolidated interim financial statements.
Income taxes decreased by € 10 mn to € 867 mn, driven by a € 71 mn lower income before income taxes compared to the first quarter of 2013. The effective tax rate increased to 33.3% (1Q 2013: 32.7%), mainly due to lower tax-exempt income in the first quarter of 2014.
Net income decreased by € 61 mn to € 1,740 mn, driven by our lower operating result. Net income attributable to shareholders and noncontrolling interests amounted to € 1,640 mn (1Q 2013: € 1,707 mn) and € 100 mn (1Q 2013: € 94 mn), respectively. The largest non-controlling interests in net income related to Euler Hermes and PIMCO.
Basic earnings per share decreased from € 3.77 to € 3.61 and diluted earnings per share decreased from € 3.69 to € 3.55. For further information on earnings per share, please refer to note 38 to the condensed consolidated interim financial statements.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Total revenues1 | 33,964 | 32,048 |
| Premiums earned (net) | 16,686 | 16,672 |
| Operating investment result | ||
| Interest and similar income | 5,139 | 5,167 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
(251) | (221) |
| Operating realized gains/losses (net) | 780 | 879 |
| Interest expenses, excluding interest expenses from external debt |
(98) | (110) |
| Operating impairments of investments (net) | (296) | (63) |
| Investment expenses | (199) | (208) |
| Subtotal | 5,075 | 5,444 |
| Fee and commission income | 2,408 | 2,754 |
| Other income | 78 | 60 |
| Claims and insurance benefits incurred (net) | (11,809) | (11,638) |
| Change in reserves for insurance and investment contracts (net)2 |
(3,440) | (4,099) |
| Loan loss provisions | (9) | (14) |
| Acquisition and administrative expenses (net), excluding acquisition-related expenses and one-off |
||
| effect from pension revaluation | (5,450) | (5,464) |
| Fee and commission expenses | (782) | (778) |
| Operating amortization of intangible assets | (5) | – |
| Restructuring charges | 1 | (94) |
| Other expenses | (30) | (46) |
| Operating profit (loss) | 2,723 | 2,797 |
| Non-operating investment result | ||
| Non-operating income from financial assets and liabilities carried at fair value through income (net) |
(68) | (4) |
| Non-operating realized gains/losses (net) | 126 | 267 |
| Non-operating impairments of investments (net) | (66) | (71) |
| Subtotal | (8) | 192 |
| Income from fully consolidated private equity investments (net) |
(5) | (4) |
| Interest expenses from external debt | (204) | (241) |
| Acquisition-related expenses | 4 | (25) |
| One-off effect from pension revaluation | 116 | – |
| Non-operating amortization of intangible assets | (19) | (41) |
| Non-operating items | (116) | (119) |
| Income (loss) before income taxes | 2,607 | 2,678 |
| Income taxes | (867) | (877) |
| Net income (loss) | 1,740 | 1,801 |
| Net income (loss) attributable to: | ||
| Non-controlling interests Shareholders |
100 1,640 |
94 1,707 |
| Basic earnings per share in € | 3.61 | 3.77 |
| Diluted earnings per share in € | 3.55 | 3.69 |
1 Total revenues comprise statutory gross premiums written in Property-Casualty and in Life/Health, operating revenues in Asset Management and total revenues in Corporate and Other (Banking).
2 For the three months ended 31 March 2014, expenses for premium refunds (net) in the business segment Property-Casualty of € (59) mn (1Q 2013: € (63) mn) are included.
Risk management is an integral part of our business and supports our value-based management. For further information, please refer to the Risk and Opportunity Report in our Annual Report 2013. 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. The risk profile described in the latest Risk and Opportunity Report remains unchanged. As a reminder, Allianz continues to be exposed to two external forces which affect our risk profile and would not normally be associated with our core operating activities: the European sovereign debt crisis and regulatory developments – especially the European solvency directive, Solvency II.
The European sovereign debt crisis remained subdued and the Eurozone returned to moderate growth. In the first quarter several European sovereign ratings or rating outlooks improved and against this backdrop a growth of debt issuance by E.U. peripherals was observable. Especially for Italian and Spanish bond markets, yields hardly changed around the time of government bond auctions, which often used to cause bigger spread movements. Despite the stabilization of financial markets in 2013 and the first quarter of 2014, many of the root causes of the sovereign debt crisis remain unresolved and markets could fluctuate widely again in the future, having adverse implications for Allianz's balance sheet.
Our management continuously monitors and responds to these external developments. This is supported by operational contingency planning for Allianz SE and its operating entities, with scenario analysis being conducted regularly for both the United States and Europe. In addition, we further seek to optimize our product design and pricing in the Life/Health business segment with respect to guarantees and surrender conditions. Looking forward, our robust actions to deal with the various crisis scenarios have bolstered our financial and operational resilience to strong shock scenarios. Continuous monitoring remains a priority to ensure the sustained effectiveness of our contingency measures.
In July 2013, the Financial Stability Board designated Allianz as one of nine G-SII firms (Global Systemically Important Insurers). In November 2013, the European Trialogue process involving the Council of the European Union and the European Parliament came to an agreement on the Solvency II "Omnibus II" directive, allowing the new risk-based solvency capital framework for the E.U. to proceed with a planned introduction date of January 2016. This was approved by the European Parliament in March 2014. Although details of future regulatory requirements, especially Solvency II and those applying to G-SIIs, are
20 Asset Management
27 Balance Sheet Review
25 Outlook
becoming clearer, the final rules are still evolving. This creates some uncertainties in terms of the ultimate capital requirements for Allianz.
In addition, due to the market value balance sheet approach, the Solvency II regime will lead to higher volatility in regulatory capital requirements compared to Solvency I. Finally, the potential for a multiplicity of different regulatory regimes, capital standards and reporting requirements will increase operational costs.
For information on events after the balance sheet date, please refer to note 40 to the condensed consolidated interim financial statements.
The Allianz Group's business operations and structure are described in the Business Operations and Markets chapter in our Annual Report 2013. Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
The Allianz Group's strategy is described in the Strategy and Steering chapter in our Annual Report 2013. There have been no material changes to our Group strategy.
For an overview of the products and services offered by the Allianz Group, as well as sales channels, please refer to the Business Operations and Markets chapter in our Annual Report 2013. Information on our brand can also be found in the Progress in Sustainable Development chapter in our Annual Report 2013.
First quarter 2014
Our Property-Casualty business offers a wide range of products and services for both private and corporate clients. Our offerings cover many insurance classes such as motor, accident/disability, property and general liability. We conduct business worldwide in more than 50 countries. We are also a global leader in travel insurance, assistance services and credit insurance. We distribute our products via a broad network of agents, brokers, banks and other strategic partners, as well as through direct channels.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Gross premiums written | 15,217 | 15,197 |
| Operating profit | 1,489 | 1,319 |
| Net income | 645 | 1,017 |
| Loss ratio in % | 64.6 | 66.1 |
| Expense ratio in % | 28.0 | 28.2 |
| Combined ratio in % | 92.6 | 94.3 |
On a nominal basis, we recorded gross premiums written of € 15,217 MN, up € 20 MN – or 0.1% – compared to the first quarter of 2013. Unfavorable foreign currency translation effects were € 374 MN, largely due to the depreciation of the Australian Dollar, the Brazilian Real, the Turkish Lira and the Russian Ruble against the Euro.2 Consolidation/deconsolidation effects were positive and amounted to € 101 MN. These mainly stemmed from our acquisition of Yapı Kredi Sigorta in Turkey in 3Q 2013.
On an internal basis, our gross premiums written increased by 1.9% consisting of a positive price effect of 0.5% and a positive volume effect of 1.4%. We experienced solid growth in Germany, Turkey, at Allianz Worldwide Partners and AGCS.
Analyzing internal premium growth in terms of price and volume, we use four clusters based on 1Q 2014 internal growth over 1Q 2013:
Overall growth – both price and volume effects are positive.
Overall growth – either price or volume effects are positive.
Overall decline – either price or volume effects are negative.
Overall decline – both price and volume effects are negative.
Cluster 4 is not shown in this quarter as none of our operating entities represented here recorded both negative price and volume effects.
2 Based on the average exchange rates in 2014 compared to 2013.
1 We comment on the development of our gross premiums written on an internal basis; meaning adjusted for foreign currency translation and (de-)consolidation effects in order to provide more comparable information.
5 Executive Summary
20 Asset Management
25 Outlook
27 Balance Sheet Review 34 Reconciliations
In Turkey we generated gross premiums of € 290 MN. The main drivers for the strong internal growth of 17.5% were our motor and health lines.
At Allianz Worldwide Partners gross premiums amounted to € 785 MN. On an internal basis, we expanded by 8.9% with most of the growth stemming from our assistance business. We experienced higher volumes mainly in our U.S., German, U.K. and French business and price increases primarily in our Australian subsidiary.
In the United Kingdom gross premiums increased to € 638 MN. Our internal growth of 4.4% benefited from higher volumes – mainly in our commercial motor line – as well as tariff increases in all commercial lines of business.
In our Credit Insurance business, gross premiums went up to € 612 MN. The growth of 3.4% on an internal basis was driven by new business coming from Emerging Markets and new products.
In Asia-Pacific gross premiums rose to € 183 MN. The 12.8% increase on an internal basis was mainly due to the strong growth in our Malaysian motor business. The overall price effect was negative.
In Central and Eastern Europe gross premiums climbed to € 713 MN, up 11.4% on an internal basis. This growth was largely driven by higher volumes in our personal accident, property and motor lines – which more than offset a negative price effect.
At AGCS gross premiums amounted to € 1,589 MN. The internal growth of 2.6% was mainly attributable to higher volumes in our financial and liability lines. The overall price effect was slightly negative.
In Germany gross premiums totaled € 4,090 MN – up 2.1% on an internal basis. This was supported by price increases – mainly in our motor and commercial property and liability lines – and was partly offset by negative volume effects, particularly in our retail non-motor business.
In Australia we recorded gross premiums of € 574 MN. The increase of 0.7% on an internal basis benefited from higher volumes in our motor and property business – which outweighed declining prices in most of our lines.
In Spain gross premiums were flat at € 614 MN. Despite the challenging market environment, we generated higher volumes in all lines of business. However, this could not compensate for the effect of declining tariffs.
In Switzerland gross premiums went down to € 944 MN – a decline of 1.3% on an internal basis. The main driver was a shift to more flexible renewal dates in our motor business.
In France gross premiums dropped to € 1,443 MN, down 1.5% on an internal basis. This was driven by volume losses across all lines of business except for personal motor and was partly compensated for by tariff increases.
In Italy gross premiums decreased to € 961 MN. On an internal basis, gross premiums dipped by 1.7%, largely due to falling prices, mainly in our motor business. Although regulatory changes weighed on volumes, increases in our motor business – particularly in our direct channel – resulted in a slightly positive volume effect.
United States gross premiums amounted to € 416 MN. The decrease of 4.6 %, on an internal basis was mainly attributable to declines in our commercial lines, which continued to be impacted by our strict underwriting discipline, and to lower volumes in our crop business. The overall price effect was positive.
In Latin America we recorded gross premiums of € 399 MN, down 10.9% on an internal basis. We experienced volume reductions mainly in Brazil due to the stabilization phase of a new IT platform.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Underwriting result | 705 | 540 |
| Operating investment income (net) | 747 | 763 |
| Other result1 | 37 | 16 |
| Operating profit | 1,489 | 1,319 |
1 Consists of fee and commission income/expenses, other income/expenses and restructuring charges.
Operating profit amounted to € 1,489 MN, – up € 170 MN or 12.9% – and was driven by a stronger underwriting result.
Our underwriting result grew by € 165 MN to € 705 MN. This increase was largely due to an improvement in our accident year loss ratio of 0.5 percentage points – supported by continued positive price momentum and lower claims from natural catastrophes – and a more favorable run-off.
The combined ratio improved by 1.7 percentage points to 92.6%.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Premiums earned (net) | 10,410 | 10,312 |
| Accident year claims | (6,980) | (6,964) |
| Previous year claims (run-off) | 253 | 151 |
| Claims and insurance benefits incurred (net) | (6,727) | (6,813) |
| Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation |
(2,912) | (2,909) |
| Change in reserves for insurance and investment contracts (net) (without expenses for premium refunds)1 |
(66) | (50) |
| Underwriting result | 705 | 540 |
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 condensed consolidated interim financial statements.
Our accident year loss ratio stood at 67.0 %, down 0.5 percentage points compared to the first quarter of the previous year. Net losses from natural catastrophes dropped from € 70 MN to € 54 MN, decreasing their impact by 0.2 percentage points to 0.5%.
Excluding natural catastrophes, our accident year loss ratio was 66.5%, a 0.3 percentage point improvement on the first quarter of 2013. This was driven by continued positive price momentum, reduced attritional claims severity and our strict underwriting discipline.
The following operations contributed positively to the development of our accident year loss ratio:
Germany: 0.4 percentage points. The positive impact was mainly driven by a favorable price momentum – particularly in our motor business – and lower attritional claims, despite a higher burden from large losses.
Reinsurance: 0.3 percentage points. This was entirely due to lower losses from natural catastrophes, although the impact from large claims increased slightly.
France: 0.3 percentage points. This was supported by a reduced burden from large claims and the improved pricing environment especially in our motor business.
AGCS: 0.2 percentage points. The positive impact primarily resulted from lower large losses.
Australia: 0.2 percentage points. This was entirely driven by lower losses from natural catastrophe claims, as the first quarter of 2013 was burdened by the impact of floods.
The following operations contributed negatively to the development of our accident year loss ratio:
United States: 0.2 percentage points. The negative impact stemmed largely from winter storms claims.
Our run-off result grew by € 102 mn to € 253 mn, an increase of 1.0 percentage points in the run-off ratio primarily reflecting the previous year quarter's particularly low level of run-off.
In the first quarter of 2014, total expenses stood at € 2,912 mn, compared to € 2,909 mn in the previous year. Our expense ratio improved slightly by 0.2 percentage points to 28.0 %. This mainly reflects the positive effects of the changes in our business portfolio mix, the absence of the fire levy in Australia and improvements in productivity.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Interest and similar income (net of interest expenses) |
840 | 872 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
14 | 8 |
| Operating realized gains/losses (net) | 26 | 15 |
| Operating impairments of investments (net) | (5) | (1) |
| Investment expenses | (69) | (68) |
| Expenses for premium refunds (net)2 | (59) | (63) |
| Operating investment income (net) | 747 | 763 |
1 The operating investment income (net) for our Property-Casualty business segment consists of the operating investment result – as shown in note 3 to the condensed consolidated interim financial statements – and expenses for premium refunds (net) (policyholder participation) as shown in note 28 to the condensed consolidated interim financial statements.
2 Refers to policyholder participation, mainly from UBR (accident insurance with premium refunds) business, 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 condensed consolidated interim financial statements.
Operating investment income (net) amounted to € 747 MN, down by € 16 MN. This was mainly due to decreased interest and similar income (net of interest expenses).
Interest and similar income (net of interest expenses) dropped by € 32 MN driven by lower income on debt securities – largely because of lower average volumes and unfavorable foreign currency translation effects. The average asset base1 decreased by 4.0% from € 106.6 BN in the first quarter of 2013 to € 102.3 BN in the first quarter of 2014.
5 Executive Summary
20 Asset Management
27 Balance Sheet Review 34 Reconciliations
Operating income from financial assets and liabilities carried at fair value through income (net) amounted to € 14 MN, up by € 6 MN. This increase was due to various effects from derivatives and hedging related activities.
Operating realized gains and losses (net) grew by € 11 MN to € 26 MN mainly because of higher realizations on equities.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Fee and commission income | 306 | 290 |
| Other income | 29 | 8 |
| Fee and commission expenses | (291) | (275) |
| Other expenses | (6) | (5) |
| Restructuring charges | (1) | (2) |
| Other result | 37 | 16 |
Net income decreased by € 372 MN to € 645 MN, reflecting the effect of the lower non-operating realized gains and losses (net) and a one-off effect from inter-segment pension revaluation recorded in the nonoperating administrative expenses. For further information, please refer to note 3 to the condensed consolidated interim financial statements.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Gross premiums written1 | 15,217 | 15,197 |
| Ceded premiums written | (1,227) | (1,310) |
| Change in unearned premiums | (3,580) | (3,575) |
| Premiums earned (net) | 10,410 | 10,312 |
| Interest and similar income | 853 | 887 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
14 | 8 |
| Operating realized gains/losses (net) | 26 | 15 |
| Fee and commission income | 306 | 290 |
| Other income | 29 | 8 |
| Operating revenues | 11,638 | 11,520 |
| Claims and insurance benefits incurred (net) | (6,727) | (6,813) |
| Change in reserves for insurance and investment | ||
| contracts (net) | (125) | (113) |
| Interest expenses | (13) | (15) |
| Operating impairments of investments (net) | (5) | (1) |
| Investment expenses | (69) | (68) |
| Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation |
(2,912) | (2,909) |
| Fee and commission expenses | (291) | (275) |
| Restructuring charges | (1) | (2) |
| Other expenses | (6) | (5) |
| Operating expenses | (10,149) | (10,201) |
| Operating profit | 1,489 | 1,319 |
| Non-operating items | (576) | 128 |
| Income before income taxes | 913 | 1,447 |
| Income taxes | (268) | (430) |
| Net income | 645 | 1,017 |
| Loss ratio2 in % | 64.6 | 66.1 |
| Expense ratio3 in % | 28.0 | 28.2 |
| Combined ratio4 in % | 92.6 | 94.3 |
1 For the Property-Casualty business segment, total revenues are measured based upon gross premiums written.
2 Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
3 Represents acquisition and administrative expenses (net), excluding one-off effect from pension revaluation, divided by premiums earned (net).
4 Represents the total of acquisition and administrative expenses (net), excluding one-off effect from pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net).
| € mn | ||||||||
|---|---|---|---|---|---|---|---|---|
| Gross premiums written | Premiums earned (net) | Operating profit (loss) | ||||||
| internal1 | ||||||||
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Germany2, 3 |
4,090 | 4,000 | 4,090 | 4,005 | 1,871 | 1,851 | 330 | 319 |
| Switzerland | 944 | 952 | 940 | 952 | 368 | 369 | 61 | 59 |
| Austria | 350 | 350 | 350 | 350 | 209 | 199 | 16 | 18 |
| German Speaking Countries3 | 5,384 | 5,310 | 5,380 | 5,307 | 2,448 | 2,423 | 407 | 398 |
| Italy | 961 | 978 | 961 | 978 | 958 | 966 | 213 | 206 |
| France | 1,443 | 1,465 | 1,443 | 1,465 | 976 | 934 | 128 | 103 |
| Benelux4 | 399 | 414 | 399 | 414 | 267 | 274 | 22 | 19 |
| Turkey5 | 290 | 211 | 248 | 211 | 214 | 130 | 23 | 17 |
| Greece | 31 | 30 | 31 | 30 | 22 | 20 | 7 | 4 |
| Africa | 41 | 38 | 41 | 38 | 16 | 14 | 4 | 1 |
| Western&Southern Europe6 | 3,165 | 3,136 | 3,123 | 3,136 | 2,453 | 2,338 | 399 | 354 |
| Latin America | 399 | 567 | 505 | 567 | 410 | 440 | 41 | 39 |
| Spain | 614 | 614 | 614 | 614 | 440 | 447 | 67 | 51 |
| Portugal | 116 | 117 | 116 | 117 | 66 | 65 | 5 | 4 |
| Iberia&Latin America | 1,129 | 1,298 | 1,235 | 1,298 | 916 | 952 | 113 | 94 |
| United States | 416 | 452 | 431 | 452 | 405 | 463 | 24 | 47 |
| USA | 416 | 452 | 431 | 452 | 405 | 463 | 24 | 47 |
| Allianz Global Corporate&Specialty | 1,589 | 1,566 | 1,606 | 1,566 | 721 | 730 | 143 | 92 |
| Reinsurance PC2 | 1,568 | 1,454 | 1,568 | 1,452 | 748 | 734 | 162 | 44 |
| Australia | 574 | 685 | 690 | 685 | 520 | 599 | 50 | 65 |
| United Kingdom | 638 | 595 | 621 | 595 | 561 | 517 | 30 | 55 |
| Credit Insurance | 612 | 599 | 614 | 594 | 378 | 344 | 112 | 88 |
| Ireland | 120 | 112 | 120 | 112 | 90 | 93 | 5 | 7 |
| Global Insurance Lines&Anglo Markets7 | 5,101 | 5,011 | 5,219 | 5,004 | 3,018 | 3,017 | 501 | 351 |
| Russia | 231 | 220 | 276 | 220 | 150 | 146 | (51) | – |
| Poland | 113 | 109 | 114 | 109 | 86 | 85 | 4 | 3 |
| Hungary | 87 | 86 | 91 | 86 | 53 | 56 | 5 | 6 |
| Slovakia | 107 | 105 | 107 | 105 | 64 | 66 | 20 | 13 |
| Czech Republic | 74 | 74 | 80 | 74 | 57 | 57 | 15 | 6 |
| Romania | 53 | 49 | 54 | 49 | 36 | 36 | 2 | 1 |
| Bulgaria | 16 | 15 | 16 | 15 | 16 | 17 | 5 | 5 |
| Croatia | 28 | 28 | 28 | 28 | 19 | 19 | 3 | 3 |
| Ukraine | 5 | 6 | 6 | 6 | 2 | 2 | (1) | 1 |
| Central and Eastern Europe8 | 713 | 692 | 771 | 692 | 483 | 484 | – | 36 |
| Asia-Pacific | 183 | 180 | 203 | 180 | 100 | 89 | 24 | 19 |
| Middle East and North Africa | 20 | 20 | 21 | 20 | 12 | 12 | 1 | 2 |
| Growth Markets | 916 | 892 | 995 | 892 | 595 | 585 | 25 | 57 |
| Allianz Global Assistance | 566 | 526 | 565 | 526 | 454 | 435 | 22 | 14 |
| Allianz Worldwide Care | 202 | 177 | 202 | 177 | 112 | 97 | 10 | 8 |
| Allianz Worldwide Partners9 | 785 | 720 | 784 | 720 | 575 | 534 | 21 | 18 |
| Consolidation10 | (1,679) | (1,622) | (1,681) | (1,616) | – | – | (1) | – |
| Total | 15,217 | 15,197 | 15,486 | 15,193 | 10,410 | 10,312 | 1,489 | 1,319 |
1 This reflects gross premiums written on an internal basis, adjusted for foreign currency translation and (de-)consolidation effects.
period figures were not adjusted. Contribution to German Speaking Countries before consolidation in 1Q 2013 was gross written premiums of € 8 mn, premiums earned (net) of € 4 mn and operating profit of € 2 mn.
2 The combined ratio 1Q 2013 at Germany and Reinsurance PC was impacted by a one-off effect related to the commutation of internal reinsurance resulting in a 3.5 percentage point improvement in the combined ratio for Germany and an increase of 8.9 percentage points in Reinsurance PC. This had no impact at Group level.
3 Starting from 2014 "Münchener und Magdeburger Agrarversicherung AG" is included in Germany with gross premiums written of € 3 mn, premiums earned (net) of € 3 mn and operating profit of € 1 mn. Prior 4 Belgium and the Netherlands are presented as the combined region Benelux. All prior periods are presented accordingly.
5 On 12 July 2013, Allianz Group acquired Yapı Kredi Bank's shareholding in the Turkish property-casualty insurance company Yapı Kredi Sigorta.
%
5 Executive Summary
25 Outlook
27 Balance Sheet Review
34 Reconciliations
| Combined ratio | Loss ratio | Expense ratio | ||||
|---|---|---|---|---|---|---|
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Germany2, 3 |
90.6 | 91.4 | 64.6 | 68.3 | 26.0 | 23.1 |
| Switzerland | 89.1 | 89.7 | 66.9 | 68.6 | 22.2 | 21.1 |
| Austria | 96.1 | 96.4 | 68.7 | 68.8 | 27.4 | 27.6 |
| German Speaking Countries3 | 90.8 | 91.5 | 65.3 | 68.4 | 25.5 | 23.1 |
| Italy | 83.7 | 85.6 | 57.5 | 61.4 | 26.2 | 24.2 |
| France | 93.6 | 96.5 | 67.0 | 70.0 | 26.6 | 26.5 |
| Benelux4 | 98.0 | 98.3 | 68.3 | 69.9 | 29.7 | 28.4 |
| Turkey5 | 96.0 | 92.0 | 72.9 | 66.3 | 23.1 | 25.7 |
| Greece | 70.8 | 84.2 | 39.3 | 49.5 | 31.5 | 34.7 |
| Africa | 77.3 | 95.7 | 54.1 | 65.7 | 23.2 | 30.0 |
| Western&Southern Europe6 | 90.1 | 91.9 | 63.6 | 66.1 | 26.5 | 25.8 |
| Latin America | 101.4 | 97.6 | 70.1 | 65.3 | 31.3 | 32.3 |
| Spain | 89.1 | 92.9 | 68.6 | 72.8 | 20.5 | 20.1 |
| Portugal | 96.2 | 99.4 | 74.1 | 75.8 | 22.1 | 23.6 |
| Iberia&Latin America | 95.1 | 95.5 | 69.7 | 69.6 | 25.4 | 25.9 |
| United States | 106.9 | 101.5 | 70.6 | 65.6 | 36.3 | 35.9 |
| USA | 106.9 | 101.5 | 70.6 | 65.6 | 36.3 | 35.9 |
| Allianz Global Corporate&Specialty | 91.9 | 97.3 | 64.4 | 69.4 | 27.5 | 27.9 |
| Reinsurance PC2 | 81.8 | 96.3 | 53.2 | 54.1 | 28.6 | 42.2 |
| Australia | 99.7 | 99.5 | 75.4 | 73.7 | 24.3 | 25.8 |
| United Kingdom | 99.7 | 95.2 | 68.2 | 63.4 | 31.5 | 31.8 |
| Credit Insurance | 77.8 | 84.9 | 49.1 | 57.7 | 28.7 | 27.2 |
| Ireland | 100.9 | 98.8 | 67.1 | 64.6 | 33.8 | 34.2 |
| Global Insurance Lines&Anglo Markets7 | 90.8 | 95.9 | 62.4 | 64.1 | 28.4 | 31.8 |
| Russia | 139.6 | 105.3 | 91.4 | 64.7 | 48.2 | 40.6 |
| Poland | 99.6 | 101.0 | 65.5 | 66.8 | 34.1 | 34.2 |
| Hungary | 105.4 | 103.9 | 62.1 | 63.4 | 43.3 | 40.5 |
| Slovakia | 75.9 | 87.2 | 45.3 | 57.2 | 30.6 | 30.0 |
| Czech Republic | 76.1 | 90.3 | 48.5 | 63.9 | 27.6 | 26.4 |
| Romania | 102.2 | 101.5 | 71.7 | 71.8 | 30.5 | 29.7 |
| Bulgaria | 71.9 | 71.2 | 48.1 | 40.7 | 23.8 | 30.5 |
| Croatia | 91.0 | 90.9 | 54.5 | 54.6 | 36.5 | 36.3 |
| Ukraine | 128.3 | 105.5 | 63.2 | 54.6 | 65.1 | 50.9 |
| Central and Eastern Europe8 | 106.1 | 98.4 | 68.0 | 63.1 | 38.1 | 35.3 |
| Asia-Pacific | 84.2 | 87.9 | 54.4 | 57.2 | 29.8 | 30.7 |
| Middle East and North Africa | 98.7 | 95.5 | 61.3 | 62.9 | 37.4 | 32.6 |
| Growth Markets | 102.2 | 96.8 | 65.6 | 62.3 | 36.6 | 34.5 |
| Allianz Global Assistance | 95.8 | 98.5 | 60.8 | 63.4 | 35.0 | 35.1 |
| Allianz Worldwide Care | 92.0 | 92.2 | 75.4 | 75.4 | 16.6 | 16.8 |
| Allianz Worldwide Partners9 | 96.7 | 98.3 | 64.2 | 65.5 | 32.5 | 32.8 |
| Consolidation10 | – | – | – | – | – | – |
| Total | 92.6 | 94.3 | 64.6 | 66.1 | 28.0 | 28.2 |
6 Contains € 2 mn and € 4 mn operating profit for 1Q 2014 and 1Q 2013, respectively, from a management holding located in Luxembourg.
7 Contains € 1 mn and € 0.2 mn operating loss for 1Q 2014 and 1Q 2013, respectively, from AGF UK.
8 Contains income and expense items from a management holding and consolidations between countries in this region.
9 The reportable segment Allianz Worldwide Partners includes the business of Allianz Global Assistance and Allianz Worldwide Care as well as the reinsurance business of Allianz Global Automotive and income and expenses of a management holding. The set-up of this division will be further enhanced during the following quarters. The reinsurance business of Allianz Global Automotive contributed with gross premiums written of € 17 mn, premiums earned (net) of € 9 mn and an operating loss of € 8 mn for 1Q 2014 and with gross premiums written of € 17 mn, premiums earned (net) of € 2 mn and an operating loss of € 3 mn for 1Q 2013.
10 Represents elimination of transactions between Allianz Group companies in different geographic regions.
First quarter 2014
Allianz offers a broad range of life, health, savings and investment-oriented products, including individual and group life insurance contracts. Via our distribution channels – mainly tied agents, brokers and bank partnerships – we offer life and health products to both private and corporate clients. As one of the worldwide market leaders in life business we serve customers in more than 45 countries.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Statutory premiums | 17,163 | 14,837 |
| Operating profit1 | 880 | 855 |
| Net income1 | 629 | 628 |
| Margin on reserves (bps)1, 2 |
73 | 74 |
In the first quarter of 2014, statutory premiums amounted to € 17,163 mn, an increase of € 2,326 mn. Excluding unfavorable foreign currency translation effects of € 229 mn and positive consolidation/deconsolidation effects of € 125 mn – largely from our acquisition of Yapı Kredi in Turkey – premiums increased by 16.4%, or € 2,430 mn, on an internal basis.
We recorded premium growth across all core markets – largely driven by our single premium business. Premium growth was particularly strong in the United States, Germany and Benelux. These favorable developments were mainly due to the successful cooperation with and distribution via our bancassurance channel in many European markets and our broker channel in the United States.
Premiums in the United States increased to € 2,556 mn, representing growth of 69.8%. This was driven by stronger fixed-indexed annuity sales as a result of an innovative index strategy and the successful penetration into the broker and dealer channel. This growth was partly offset by a decrease in the variable annuity business.
In Benelux5, we recorded premiums of € 1,084 mn, an increase of 57.3%. This growth largely resulted from cooperation between Allianz companies in Luxembourg and France, as well as our distribution partners in those countries, with investment-oriented products. In Belgium, our zero-guarantee products also contributed to this growth.
Premiums in Italy increased 13.1% to € 2,370 mn. Sustained by a favorable market environment, this growth was mainly driven by our single premium savings business via bancassurance and some large contracts. We recorded a decrease in single premium unit-linked business via the financial advisors channel as the first quarter of 2013 significantly benefited from the launch of a new product.
1 Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
2 Represents annualized operating profit divided by the average of the current quarter-end and previous year-end net reserves, where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
3 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.
4 In the following section, we comment on the development of our statutory gross premiums written on an internal basis, i.e. adjusted for foreign currency translation and (de-)consolidation effects in order to provide more comparable information.
5 Belgium, Luxembourg and the Netherlands are presented as the combined region Benelux. All prior periods are presented accordingly.
5 Executive Summary 20 Asset Management
27 Balance Sheet Review 34 Reconciliations
Premiums in Spain increased 12.8% to € 353 mn. As a result of the gradual economic recovery, we recorded growth in single and recurring premiums in all business lines across the major distribution channels.
In our German life business, premiums grew 11.5% to € 4,980 mn. This was driven by a strong increase in single premium business with savings products via our bancassurance channel but with relatively flat recurring premiums. Statutory premiums in our German health business decreased 2.8% to € 808 mn due to premium reductions in supplementary coverage and a lower contribution from full health care coverage business.
In Asia-Pacific, we recorded premiums of € 1,339 mn, a growth of 11.4%. This was driven by favorable developments in all markets, but in particular due to increased sales of single premium unit-linked products in Taiwan and higher sales of single premium investmentoriented products via the bancassurance channel in South Korea.
Premiums in France increased to € 2,472 mn, up 9.0%. This was mainly attributable to the cooperation between Allianz companies in France and Luxembourg, supported by our distribution partners in those countries. In our individual life business we recorded growth in unit-linked products and a solid increase in our health and protection business.
In Switzerland, premiums totaled € 951 mn. The increase of 3.3% was entirely driven by single and recurring premiums in our group life business.
Premiums in Central and Eastern Europe declined to € 236 mn, representing a drop of 5.1%. This largely relates to the timing of a sales campaign in Hungary and stronger sales of investment-oriented products in the Czech Republic in the first quarter of 2013. This adverse development was partially compensated for by the increase of unit-linked product revenues distributed via bancassurance in Poland.
Operating profit increased by € 25 mn to € 880 mn, mainly as a result of the allocation of certain entities previously reflected within the reportable segment Asset Management to the business segment Life/ Health. Excluding this effect, our operating profit was stable despite a lower operating investment result compared to the first quarter of 2013.
Interest and similar income (net of interest expenses) grew by € 76 mn to € 4,134 mn, mainly due to higher interest income from debt investments as a result of an increased asset base.
Operating income from financial assets and liabilities carried at fair value through income (net) decreased by € 25 mn to a loss of € 269 mn. This was mainly driven by a negative valuation impact related to financial derivatives in France but was partly offset by gains from the net of foreign currency translation effects and financial derivatives in Germany. These derivatives are used to manage duration and other interest rate related exposures as well as to protect against equity and foreign currency fluctuations.
Operating realized gains and losses (net) decreased by € 72 mn to € 827 mn. This was mainly the result of lower realizations on equities.
Operating impairments of investments (net) increased by € 229 mn to € 291 mn. This was driven by higher impairments on our emerging market debt funds due to the depreciation of corresponding currencies over the past nine months as well as higher impairments on equities.
Fee and commission income increased by € 89 mn to € 229 mn, mainly due to income generated by entities transferred from the reportable segment Asset Management.
Claims and insurance benefits incurred (net) increased by € 255 mn to € 5,081 mn, largely because of higher payments for maturities in Germany.
Change in reserves for insurance and investment contracts (net) decreased by € 687 mn to € 3,314 mn. Largely related to Germany, this decline was driven by a lower change in reserves for premium refunds due to the decreased investment result and the one-off effect from pension revaluation. Additionally, we had a lower increase in aggregate policy reserves because of higher maturities and lower net premiums earned.
Acquisition and administrative expenses (net) remained broadly stable at € 1,253 mn.
Other expenses increased by € 117 mn to € 140 mn. This was mainly the result of the one-off effect from pension revaluation. For further information on the one-off effect from pension revaluation, please refer to note 3 to the condensed consolidated interim financial statements.
Margin on reserves was broadly flat at 73 basis points.
Overall, the major driver of the increase in our operating profit was higher unit-linked management fees mainly driven by the first time inclusion of the transferred entities from the reportable segment Asset Management. Reserve-driven fees were moderately higher, while the investment margin (i.e. investment income net of hedged item movements and policyholder participation) decreased mainly due to a lower harvesting result in Germany and Italy. Strong fixedindexed annuity business in the United States increased acquisition expenses, which were largely offset by higher capitalization of deferred acquisition costs.
Net income was flat at € 629 mn. Lower income before income taxes was offset by lower taxes. The effective tax rate amounted to 28.8% (1Q 2013: 29.8%).
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Statutory premiums1 | 17,163 | 14,837 |
| Ceded premiums written | (162) | (157) |
| Change in unearned premiums | (183) | (114) |
| Statutory premiums (net) | 16,818 | 14,566 |
| Deposits from insurance and investment contracts | (10,542) | (8,206) |
| Premiums earned (net) | 6,276 | 6,360 |
| Interest and similar income | 4,159 | 4,077 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
(269) | (244) |
| Operating realized gains/losses (net) | 827 | 899 |
| Fee and commission income | 229 | 140 |
| Other income | 49 | 49 |
| Operating revenues | 11,271 | 11,281 |
| Claims and insurance benefits incurred (net) | (5,081) | (4,826) |
| Change in reserves for insurance and investment contracts (net) |
(3,314) | (4,001) |
| Interest expenses | (25) | (19) |
| Operating impairments of investments (net) | (291) | (62) |
| Investment expenses | (195) | (190) |
| Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation |
(1,253) | (1,248) |
| Fee and commission expenses | (87) | (56) |
| Operating amortization of intangible assets | (5) | – |
| Restructuring charges | – | (1) |
| Other expenses | (140) | (23) |
| Operating expenses | (10,391) | (10,426) |
| Operating profit | 880 | 855 |
| Non-operating items | 4 | 40 |
| Income before income taxes | 884 | 895 |
| Income taxes | (255) | (267) |
| Net income | 629 | 628 |
| Margin on reserves2 in basis points | 73 | 74 |
1 Statutory premiums are gross premiums written from sales of life and health insurance policies as well as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction.
2 Represents annualized operating profit divided by the average of the current quarter-end and previous year-end net reserves, where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
27 Balance Sheet Review 34 Reconciliations
| € mn | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Statutory premiums1 | Premiums earned (net) | Operating profit (loss) | Margin on reserves2 (BPS) | |||||||
| internal3 | ||||||||||
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 20144 | 2013 | 20144 | 2013 |
| Germany Life | 4,980 | 4,466 | 4,980 | 4,466 | 2,931 | 3,053 | 276 | 344 | 59 | 78 |
| Germany Health | 808 | 831 | 808 | 831 | 809 | 832 | 24 | 31 | 37 | 49 |
| Switzerland | 951 | 917 | 947 | 917 | 234 | 232 | 21 | 20 | 63 | 59 |
| Austria | 117 | 114 | 117 | 114 | 89 | 87 | 12 | 9 | 111 | 86 |
| German Speaking Countries | 6,856 | 6,328 | 6,852 | 6,328 | 4,063 | 4,204 | 333 | 404 | 58 | 74 |
| Italy | 2,370 | 2,095 | 2,370 | 2,095 | 131 | 131 | 47 | 81 | 38 | 71 |
| France | 2,472 | 2,268 | 2,472 | 2,268 | 839 | 824 | 145 | 115 | 74 | 61 |
| Benelux5 | 1,084 | 689 | 1,084 | 689 | 130 | 132 | 32 | 26 | 84 | 73 |
| Greece | 24 | 25 | 24 | 25 | 14 | 14 | – | (1) | –8 | (91) |
| Turkey6 | 161 | 33 | 45 | 33 | 31 | 9 | 4 | – | 83 | –8 |
| Africa | 16 | 18 | 16 | 18 | 8 | 8 | 1 | 1 | 213 | 204 |
| Western&Southern Europe | 6,127 | 5,128 | 6,011 | 5,128 | 1,153 | 1,118 | 229 | 222 | 63 | 65 |
| Latin America | 71 | 76 | 79 | 76 | 28 | 26 | 1 | 1 | 31 | 85 |
| Spain | 353 | 313 | 353 | 313 | 100 | 85 | 48 | 33 | 276 | 201 |
| Portugal | 52 | 48 | 52 | 48 | 21 | 20 | 3 | 5 | 217 | 420 |
| Iberia&Latin America | 476 | 437 | 484 | 437 | 149 | 131 | 52 | 39 | 247 | 204 |
| United States | 2,556 | 1,562 | 2,652 | 1,562 | 227 | 208 | 169 | 101 | 94 | 58 |
| USA | 2,556 | 1,562 | 2,652 | 1,562 | 227 | 208 | 169 | 101 | 94 | 58 |
| Reinsurance LH | 126 | 132 | 126 | 132 | 82 | 121 | 11 | 7 | 229 | 135 |
| Global Insurance Lines&Anglo Markets | 126 | 132 | 126 | 132 | 82 | 121 | 11 | 7 | 229 | 135 |
| South Korea | 393 | 361 | 402 | 361 | 120 | 130 | 5 | 5 | 20 | 21 |
| Taiwan | 502 | 486 | 535 | 486 | 40 | 27 | 3 | 3 | 24 | 20 |
| Indonesia | 134 | 157 | 169 | 157 | 53 | 34 | 17 | 22 | 578 | 657 |
| Malaysia | 95 | 85 | 106 | 85 | 50 | 55 | 7 | 4 | 236 | 149 |
| Japan | – | – | – | – | 1 | 1 | (1) | 4 | (12) | 71 |
| Other | 215 | 211 | 236 | 211 | 162 | 165 | 20 | 25 | 242 | 265 |
| Asia-Pacific | 1,339 | 1,300 | 1,448 | 1,300 | 426 | 412 | 51 | 63 | 91 | 107 |
| Poland | 48 | 27 | 49 | 27 | 18 | 12 | 3 | 4 | 252 | 251 |
| Slovakia | 66 | 61 | 66 | 61 | 49 | 50 | 8 | 8 | 270 | 282 |
| Hungary | 38 | 78 | 40 | 78 | 11 | 13 | 4 | 1 | 397 | 135 |
| Czech Republic | 33 | 44 | 35 | 44 | 19 | 19 | 4 | 5 | 272 | 387 |
| Russia | 15 | 16 | 18 | 16 | 14 | 16 | – | (1) | –8 | (222) |
| Croatia | 22 | 17 | 22 | 17 | 22 | 16 | 4 | 1 | 481 | 121 |
| Bulgaria | 9 | 8 | 9 | 8 | 8 | 7 | 4 | 1 | 932 | 253 |
| Romania | 5 | 6 | 5 | 6 | 3 | 3 | 2 | – | 879 | –8 |
| Central and Eastern Europe7 | 236 | 257 | 244 | 257 | 145 | 136 | 27 | 19 | 310 | 230 |
| Middle East and North Africa | 40 | 40 | 43 | 40 | 30 | 30 | 5 | 4 | 331 | 279 |
| Global Life | 1 | 1 | 1 | 1 | 1 | – | – | – | –8 | –8 |
| Growth Markets | 1,616 | 1,598 | 1,736 | 1,598 | 602 | 578 | 83 | 86 | 125 | 126 |
| Consolidation9 | (594) | (348) | (594) | (348) | – | – | 3 | (4) | –8 | –8 |
| Total | 17,163 | 14,837 | 17,267 | 14,837 | 6,276 | 6,360 | 880 | 855 | 73 | 74 |
1 Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction. 2 Represents annualized operating profit (loss) divided by the average of the current quarter-end and previous
year-end net reserves, where net reserves equal reserves for loss and loss adjustment expenses, reserves
5 Belgium, Luxembourg and the Netherlands are presented as the combined region Benelux. All prior periods are presented accordingly.
6 On 12 July 2013, the Allianz Group acquired Yapı Kredi Bank's 93.94% shareholding in the Turkish propertycasualty insurance company Yapı Kredi Sigorta, including its life and pension insurance subsidiary Yapı Kredi Emeklilik.
for insurance and investment contracts and financial liabilities for unit-linked contracts less reinsurance 7 Contains income and expense items from a management holding and consolidations between countries in this region.
8 Presentation not meaningful.
9 Represents elimination of transactions between Allianz Group companies in different geographic regions.
assets. 3 Statutory premiums adjusted for foreign currency translation and (de-)consolidation effects.
4 Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
First quarter 2014
Allianz offers Asset Management products and services for third-party investors and the Allianz Group's insurance operations. We serve a wide range of retail and institutional clients worldwide with investment and distribution capacities in all major markets. Based on total assets under management, we are one of the largest asset managers in the world that manages third-party assets with active investment strategies.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Operating revenues1 | 1,517 | 1,911 |
| Operating profit1 | 646 | 900 |
| Cost-income ratio1 in % | 57.4 | 52.9 |
| Net income1 | 406 | 568 |
| Total assets under management1 as of 31 March in € bn |
1,765 | 1,934 |
| thereof: Third-party assets under management as of 31 March in € bn |
1,342 | 1,517 |
1 Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
5 Executive Summary
27 Balance Sheet Review 34 Reconciliations
As of 31 March 2014, total assets under management amounted to € 1,765 bn. Of this, € 1,342 bn related to our third-party assets under management and € 423 bn to Allianz group assets. We show the development of total assets under management based on asset classes as they are relevant for the business segment's development.
In the first three months of 2014, we recorded net outflows of total assets under management of € 20 bn, which were almost entirely related to third-party assets under management. Net outflows stemmed from fixed income products and were mainly driven by the United States, while our equities recorded net inflows.
Favorable market effects contributed € 37 bn in total assets under management, with € 35 bn driven by fixed income and € 2 bn by equities.
These positive effects were partly offset by negative effects of € 23 bn. This was due to the allocation of certain entities to other business segments which resulted in a decrease of € 32 bn in assets under management partially offset by a change in reporting to include third-party fund of fund assets under management.
Foreign currency translation effects were not significant given the relatively unchanged value of the U.S. Dollar against the Euro.1
In the following section, we focus on the development of third-party assets under management.
As of 31 March 2014 the share of third-party assets under management by business unit was 83.1% attributable to PIMCO and 16.9% to AllianzGI.
1 Based on the location of the asset management company.
2 "America" consists of the United States, Canada and Brazil (approximately € 824 bn, € 12 bn and € 3 bn third-party assets under management as of 31 March 2014, respectively).
3 "Other" consists of third-party assets managed by other Allianz Group companies which were allocated to other business segments as of 1 January 2014.
The regional allocation of third-party assets under management shifted slightly also due to the allocation of certain entities to other business segments. Europe's share rose by 1.3 percentage points, also due to the change in reporting of fund of fund assets and positive market effects.
The split of third-party assets under management remained the same compared to 31 December 2013, with 87% attributable to fixed income and 13% to equities.
The share of third-party assets under management between our retail and institutional clients2 changed slightly – down one percentage point for retail clients (36 %) and up one percentage point for institutional clients (64%).
Outperforming third-party assets under management Underperforming third-party assets under management
benchmark based on different metrics.
1 The investment performance is based on Allianz Asset Management account-based, asset-weighted three-year investment performance of third-party assets versus the primary target including all accounts managed by portfolio managers of Allianz Asset Management. For some retail funds, the net of fee performance is compared to the median performance of the corresponding Morningstar peer group (first and second quartile mean outperformance). For all other retail funds and for all institutional accounts, the gross of fee performance (revaluated based on closing prices) is compared to the respective
The overall three-year rolling investment performance of our Asset Management business was on a high level, with 83 % of our assets outperforming their respective benchmarks (31 December 2013: 85%). 88% of PIMCO assets outperformed their respective benchmarks while 53% of AllianzGI assets outperformed their respective benchmarks.
1 Based on the closing rate on the respective balance sheet date.
Operating revenues went down by € 394 mn, or 20.6 %, to € 1,517 mn. This was mainly driven by a decrease in performance fees but also reflects the allocation of certain entities to other business segments. On an internal basis1, operating revenues decreased by 16.4%.
Net fee and commission income went down by € 381 mn, or 20.1% to € 1,516 mn due to the decline in performance fees and lower average third-party assets under management. Our performance fees decreased by € 257 mn – mainly as a result of exceptionally high performance fees from private funds in the first quarter of 2013.
Our income from financial assets and liabilities carried at fair value through income (net) was down by € 8 mn due to a swing of valuation effects from seed money compared to the first quarter of 2013.
Our operating profit declined to € 646 MN, a contraction of € 254 MN, or 28.2 %. On an internal basis1, operating profit decreased by 23.8 % mainly due to lower performance fees.
Administrative expenses fell by € 135 mn to € 873 mn, which was generally in line with the decline in operating revenues and lower assets under management related expenses.
Our cost-income ratio deteriorated by 4.5 percentage points to 57.4% mainly due to the decrease in performance fees. Excluding the effect of performance fees and restructuring expenses, the costincome ratio increased by 1.3 percentage points to 57.9 % compared to the first quarter of 2013.
Our net income decreased by € 162 MN, or 28.5% to € 406 MN. This was largely consistent with our operating profit.
| € MN | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Management and loading fees | 1,825 | 1,983 |
| Performance fees | 19 | 276 |
| Other | 17 | 27 |
| Fee and commission income | 1,861 | 2,286 |
| Commissions | (307) | (376) |
| Other | (38) | (13) |
| Fee and commission expenses | (345) | (389) |
| Net fee and commission income | 1,516 | 1,897 |
| Net interest income1 | – | 4 |
| Income from financial assets and liabilities carried at fair value through income (net) |
(1) | 7 |
| Other income | 2 | 3 |
| Operating revenues | 1,517 | 1,911 |
| Administrative expenses (net), excluding acquisition-related expenses |
(873) | (1,008) |
| Restructuring charges | 2 | (3) |
| Operating expenses | (871) | (1,011) |
| Operating profit | 646 | 900 |
| Non-operating items | (14) | (31) |
| Income before income taxes | 632 | 869 |
| Income taxes | (226) | (301) |
| Net income | 406 | 568 |
| Cost-income ratio2 in % | 57.4 | 52.9 |
1 Represents interest and similar income less interest expenses.
2 Represents operating expenses divided by operating revenues.
1 Operating revenues/operating profit adjusted for foreign currency translation and (de-) consolidation effects.
5 Executive Summary
20 Asset Management 23 Corporate and Other
27 Balance Sheet Review 34 Reconciliations
First quarter 2014
Operating loss decreased by € 17 mn to € 222 mn as the recovery of our Banking result more than offset the drop in Holding&Treasury.
Corporate and Other encompasses the reportable segments Holding&Treasury, Banking and Alternative Investments. Holding&Treasury includes the management of and support for Allianz Group businesses through its strategy, risk, corporate finance, treasury, financial reporting, controlling, communication, legal, human resources and technology functions. Our banking products offered in Germany, Italy, France, the Netherlands and Bulgaria complement our insurance product portfolio. We also provide global alternative investment management services in the private equity, real estate, renewable energy and infrastructure sectors, mainly on behalf of the Allianz Group.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Operating revenues | 377 | 461 |
| Operating expenses | (599) | (700) |
| Operating result | (222) | (239) |
| Net income (loss) | 131 | (397) |
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Holding & Treasury | ||
| Operating revenues | 68 | 138 |
| Operating expenses | (316) | (305) |
| Operating result | (248) | (167) |
| Banking | ||
| Operating revenues | 268 | 281 |
| Operating expenses | (250) | (364) |
| Operating result | 18 | (83) |
| Alternative Investments | ||
| Operating revenues | 41 | 44 |
| Operating expenses | (33) | (33) |
| Operating result | 8 | 11 |
1 Consolidation included. For further information about our Corporate and Other business segment, please refer to note 3 to the condensed consolidated interim financial statements.
Our operating result improved by € 17 mn to a loss of € 222 mn. A € 101 mn recovery in operating profit in our Banking segment more than compensated for € 81 mn and € 3 mn lower results in Holding&Treasury and Alternative Investments, respectively.
Our net result increased from a loss of € 397 mn to income of € 131 mn. This was driven by a one-off benefit from pension revaluation with our German subsidiaries.1
Our operating loss increased by € 81 mn to € 248 mn, primarily due to a lower net interest result and – to a lesser extent – a decreased net fee and commission result.
Our net interest result dropped from € 32 mn to a loss of € 24 mn as the decrease in interest and similar income was only partly offset by lower interest expenses. Interest and similar income was down by € 67 mn to € 54 mn, as the previous year's quarter benefited from interest payments on our silent participation in Commerzbank, which was redeemed in 2013. To a much lesser extent, lower income from associates also contributed to the decline. Interest expenses, excluding interest expenses from external debt, decreased by € 11 mn to € 78 mn due to lower interest rates.
Our net fee and commission result was down by € 13 mn to a loss of € 55 mn. This was the result of higher IT project startup costs.
Administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation, increased by € 9 mn to € 155 mn. This was due to the non-recurrence of service revenues as a result of the one-off effect from pension revaluation with our German subsidiaries.1
Investment expenses went down by € 4 mn to € 14 mn.
Our operating result recovered from a loss of € 83 mn to an operating profit of € 18 mn. This improvement was mainly attributable to the non-recurrence of restructuring charges of € 88 mn incurred in the first quarter of 2013 related to the pending closure of the Allianz Bank's business operations in mid-2013. It was also supported by lower administration expenses as a result of the aforementioned closure.
In the following section, we focus on the development of our ongoing Banking business. To make the figures comparable, we have excluded the closed business operations of Allianz Bank.
Excluding these operations, the operating profit in Banking improved marginally by € 1 mn to € 18 mn.
Our net interest, fee and commission result remained almost stable at € 133 mn (1Q 2013: € 131 mn). The net interest result slightly increased by € 2 mn to € 82 mn as lower interest and similar income was more than compensated for by decreased interest expenses while the net fee and commission result was flat.
Our loan loss provisions decreased by € 3 mn to € 9 mn primarily due to lower loan loss provisions at our German subsidiary Oldenburgische Landesbank.
Administrative expenses went up from € 103 mn to € 107 mn mainly as a result of costs to modernize the distribution channel and implementation of a new sales structure at Oldenburgische Landesbank and the allocation of a former Asset Management entity to the reportable segment Banking in Italy.
Our operating income from financial assets and liabilities carried at fair value through income (net) stood unchanged at € 2 mn.
Our operating result declined by € 3 mn to € 8 mn due to a slightly lower net fee and commission income.
1 For further information on the one-off effect from pension revaluation, please refer to note 3 to the condensed consolidated interim financial statements.
2 Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
27 Balance Sheet Review 34 Reconciliations
The global economy regained some momentum in the course of 2013. One of the areas where this trend left its mark was industrial production, which rose by 2.4% on average last year. Global output grew by 2.3% in the same period. There is a good chance that the economic recovery that started to emerge in 2013 will continue this year. This view is supported by the favorable readings of the purchasing managers' indices for the manufacturing industry, in particular in industrialized countries. Given the expected acceleration in growth in the industrialized world, global output is likely to expand by 3% in 2014. Fears that economic development in emerging markets would deteriorate substantially look unfounded. Nevertheless, they have lost steam since 2012 and will not return to their pre-crisis growth rates. However, with an expected real GDP increase of 4.5% in 2014, growth in these countries will still be considerably higher than in the industrialized world. In the Eurozone, the economy is also starting to get back on its feet in crisis-ridden member states, narrowing the "northsouth divide". Both sentiment indices and hard economic indicators such as industrial production data suggest the economic recovery is set to continue, albeit at a moderate pace. For 2014 as a whole, we expect real GDP growth of 1.5%. Supported by brighter economic conditions in the Eurozone, the German economy could expand by about 2% this year. Inflation is likely to remain subdued on a global level, not least due to the dire unemployment situation in many industrialized countries, which keeps the lid on wages. Despite the overall favorable growth picture, risks for the global economy should not be disregarded. In this respect, an escalation of the ongoing conflict between Russia and Ukraine – which might eventually lead to a spiral of sanctions and corresponding counter-sanctions – ranks first on the list.
Financial markets will probably remain under the twin spell of the Russian-Ukrainian tensions and monetary policy in 2014. Regarding the latter, we expect to see a gradual exit from crisis mode, led by the U.S. central bank reining in its asset purchases. Nevertheless, given its concerns about money market rates, banking liquidity and lending growth, the European Central Bank might actually ease slightly further – despite the recovery in the Eurozone – before eventually starting to exit from its very expansionary policy stance in 2015. Even though monetary policy would still remain highly accommodative, the steps towards an exit could well be accompanied by pronounced swings in the equity, bond and currency markets. Although the sovereign debt crisis in the Eurozone is not yet over, we expect it to continue to gradually subside.
With short-term rates close to zero, there are limited prospects of markedly higher yields on longer-term bonds. We expect yields on 10-year German and U.S. government bonds to climb only modestly to about 2% and slightly above 3%, respectively, by the end of 2014. With growth in the United States set to outpace that in the Eurozone, the U.S. Dollar is likely to appreciate moderately against the Euro.
Our insurance industry outlook remains unchanged. For full details, please refer to page 88 of the Allianz Group Annual Report 2013.
Our asset management industry outlook remains unchanged. For full details, please refer to page 89 of the Allianz Group Annual Report 2013.
1 The information presented in the section Economic outlook is based on our own estimates.
20 Asset Management
We are confident about staying on course towards profitable growth during the rest of 2014 and currently see no need to adjust our published Allianz Group operating profit outlook for 2014 of € 10.0 BN, plus or minus € 0.5 BN. However, as we witnessed in 2013, unfavorable developments in the business environment can have adverse impacts on aspects of our performance. It would therefore be inappropriate to simply annualize the current quarter's operating profit and net income to arrive at an expected result for the full year.
As always, natural catastrophes and adverse developments in the capital markets, as well as factors stated in our cautionary note regarding forward-looking statements, may severely affect the results of our operations.
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, performance or events may differ materially from those expressed or implied in such forward-looking statements.
Such deviations may arise due to, without limitation, (i) changes of the general economic conditions and competitive situation, particularly in the Allianz Group's core business and core markets, (ii) performance of financial markets (particularly market volatility, liquidity and credit events) (iii) frequency and severity of insured loss events, including from natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions, 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.
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.
50,000 40,000 30,000 20,000 10,000
Paid-in-capital Retained earnings (includes foreign currency translation adjustments) Unrealized gains/losses (net)
Compared to year-end 2013, shareholders' equity increased by € 3,441 mn and amounted to € 53,525 mn as of 31 March 2014. Net income attributable to shareholders contributed € 1,640 mn to this growth. In addition, unrealized gains increased by € 2,185 mn, mainly due to higher fair values of debt securities triggered by declines in government bond yields – in particular within the Eurozone. Foreign currency translation adjustments remained stable.
12/31/2013
28,870
14,473 6,741
2 This does not include non-controlling interests of € 2,835 mn and € 2,765 mn as of 31 March 2014 and 31 December 2013, respectively. For further information, please refer to note 19 to the condensed consolidated interim financial statements. Retained earnings include foreign currency translation adjustments of € (3,297) mn and € (3,312) mn as of 31 March 2014 and 31 December 2013, respectively.
The Allianz Group is a financial conglomerate within the scope of the E.U. Financial Conglomerates Directive and the related German law in force since 2005. The law requires that financial conglomerates calculate the capital available to meet their solvency requirements on a consolidated basis, which we refer to as "eligible capital".
12/31/2013
Solvency ratio Eligible capital Requirement
1 Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request. Allianz SE has not submitted an application so far. Excluding off-balance sheet reserves, the solvency ratio as of 31 March 2014 would be 175% (31 December 2013: 173%).
Compared to year-end, our conglomerate solvency ratio increased two percentage points to 184%. The Group's eligible capital for solvency purposes rose by € 1.3 bn to € 47.8 bn, including off-balance sheet reserves of € 2.3 bn (31 December 2013: € 2.3 bn). This increase was primarily attributable to our net income (net of accrued dividends) of € 1.0 bn. The issuance of a new subordinated bond and higher unrealized gains on equities further contributed to the increase. These developments were partly offset by higher actuarial losses on the valuation of our pension benefit obligation following a decrease in discount rates. The required funds increased by € 0.4 bn
20 Asset Management 23 Corporate and Other 25 Outlook
| Shareholders'1equity2 | ||
|---|---|---|
| Shareholders' equity | ||
| € mn | ||
| 70,000 | +6.9% | |
| 60,000 | 50,084 |
10 Property-Casualty Insurance Operations 16 Life/Health Insurance Operations
5 Executive Summary
27 Balance Sheet Review 34 Reconciliations
3/31/2014
184%
to € 26.0 bn, mainly due to higher aggregate policy reserves in Life/ Health. As a result, our eligible capital surpassed the minimum legally stipulated level by € 21.8 bn.
As of 31 March 2014, total assets amounted to € 734.0 bn and total liabilities were € 677.6 bn. Compared to year-end 2013, total assets and total liabilities increased by € 22.9 bn and € 19.4 bn, respectively.
The following section mainly focuses on our financial investments in debt instruments, equities, real estate and cash and other since these reflect the major developments of our asset base.
The following portfolio overview covers the Allianz Group assets held for investment, which are mainly driven by our insurance business.1
Compared to year-end 2013, our investment portfolio grew by € 19.3 bn to € 556.1 bn as of 31 March 2014. This was mainly due to debt securities.
Our gross exposure to equities increased by € 1.5 bn to € 37.1 bn due to new investments and, to a lesser extent, positive market developments. This exposure still accounted for 7% of our investment portfolio. Given the upswing in shareholders' equity, our equity gearing2 decreased one percentage point to 24%.
Our exposure to real estate stood almost unchanged at € 10.9 bn (31 December 2013: € 10.8 bn) and still accounted for 2% of our investment portfolio.
Our cash and other investments went up from € 9.8 bn to € 10.7 bn.
The vast majority of our investment portfolio is comprised of diversified debt instruments, which amounted to € 497.4 bn as of 31 March 2014 compared to € 480.6 bn as of year-end 2013. The increase of € 16.8 bn was driven by higher fair values as a result of lower interest rates and new investments. The portfolio share of debt instruments remained unchanged at 89%.
The allocation of our well-diversified fixed income portfolio remained stable, with marginal increases in the share of corporate and government bonds and minor reductions in the portion of banks and other. About 95% of this portfolio of debt instruments was invested in investment-grade bonds and loans.3
3 Excluding self-originated German private retail mortgage loans. For 2%, no ratings were available.
1 Effective from the Annual Report 2013, we changed the presentation of our investment portfolio in our Group Management Report. This also applies to our Interim Group Management Reports. Now, we also include investments of banking and asset management, which were excluded in the former presentation. We believe this will simplify a comparison with the figures presented in the notes to the condensed consolidated interim financial statements.
2 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.
5 Executive Summary
20 Asset Management
Compared to year-end, our government bond exposure increased by € 7.7 bn to € 187.3 bn and accounted for 38 % (31 December 2013: 37%) of our fixed income portfolio. The allocation of government and government-related bond exposure remained almost unchanged, with a marginal increase in supranational bonds. Our sovereign debt exposure in Italy and Spain equaled 6.0% and 0.9% of our fixed income portfolio, respectively. The corresponding unrealized gains (gross) amounted to € 3,264 mn in Italy and € 389 mn in Spain while our government bond exposure in Portugal remained limited.
Our covered bonds increased from € 102.5 bn to € 105.5 bn as of 31 March 2014 – still representing 21% of our fixed income portfolio. 46% of this portfolio was German Pfandbriefe, backed by either public sector loans or mortgage loans. Another 16% and 9% of the covered bonds were attributable to France and Spain, respectively. Covered bonds provide a cushion against real estate price deterioration and payment defaults through minimum required security buffers and over-collateralization.
Our corporate bond portfolio grew by € 6.4 bn to € 122.7 bn and accounted for 25 % of our fixed income portfolio – representing an uptick of one percentage point compared to year-end. This increase was attributable to both new investments and lower yields leading to fair value increases.
Our exposure to subordinated securities in banks remained stable at € 4.9 bn (31 December 2013: € 4.8 bn).
Our exposure to asset-backed securities (ABS) was up by € 0.5 bn to € 18.9 bn and still accounted for 4% of our fixed income portfolio. This increase was mainly related to positive market effects. About 73% of our ABS portfolio was related to mortgage backed securities (MBS). MBS issued by U.S. agencies, which are backed by the U.S. government, had an unchanged share of 13% in the ABS portfolio. Overall, 97% of the ABS portfolio received an investment grade rating, with 87% rated "AA" or better.
| € mn | |||
|---|---|---|---|
| Group | |||
| three months ended 31 March | 2014 | 2013 | Delta |
| Interest and similar income (net)1 | 5,041 | 5,057 | (16) |
| Income from financial assets and liabilities carried at fair value through income (net) |
(319) | (225) | (94) |
| Realized gains/losses (net) | 906 | 1,146 | (240) |
| Impairments of investments (net) | (362) | (134) | (228) |
| Investment expenses | (199) | (208) | 9 |
| Investment income (net) | 5,067 | 5,636 | (569) |
1 Net of interest expenses (excluding interest expenses from external debt).
Our investment income (net) decreased by € 569 mn to € 5,067 mn mainly due to lower realized gains and higher impairments.
Realized gains and losses (net) declined by € 240 mn to € 906 mn as a result of lower realizations on equities compared to the previous year's quarter. Realizations on debt securities were about at the same level as the first quarter of 2013.
Impairments (net) increased by € 228 mn to € 362 mn. This increase was primarily driven by higher impairments on emerging market debt funds related to unfavorable currency movements, which amounted to € 198 mn compared to insignificant amounts in the previous year's quarter. Slightly higher impairments on equities were almost offset by lower impairments on real estate investments.
Income from financial assets and liabilities carried at fair value through income (net) contracted by € 94 mn to a loss of € 319 mn. This was mainly driven by a negative valuation impact related to financial derivatives in France and was partly offset by gains from the net of foreign currency translation effects and financial derivatives in Germany. These derivatives are used to manage duration and other interest rate related exposures as well as to protect against equity and foreign currency fluctuations.
Our interest and similar income (net)1 held up well in the lowyield environment and remained stable at € 5,041 mn (1Q 2013: € 5,057 mn). Slightly increased income from real estate investments and equities almost offset the small decrease in interest income – which suffered from the low interest yield environment and to a larger extent from the non-recurrence of interest payments on our silent participation in Commerzbank, which was redeemed in 2013.
Investment expenses decreased by € 9 mn to € 199 mn.
1 Net of interest expenses (excluding interest expenses from external debt).
In the following sections, we analyze important developments in the balance sheets of our business segments – including our insurance reserves and external financing.
Compared to year-end, the Property-Casualty asset base increased by € 3.5 bn to € 104.6 bn. This was mainly driven by higher cash and cash pool assets and greater exposure to debt securities.
| € bn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Financial assets and liabilities carried at fair value through income |
||
| Equities | 0.3 | 0.5 |
| Debt securities | 0.1 | 0.1 |
| Other2 | – | – |
| Subtotal | 0.4 | 0.6 |
| Investments3 | ||
| Equities | 5.6 | 5.0 |
| Debt securities | 68.4 | 67.0 |
| Cash and cash pool assets4 | 6.8 | 4.9 |
| Other | 7.3 | 7.5 |
| Subtotal | 88.1 | 84.4 |
| Loans and advances to banks and customers | 16.1 | 16.1 |
| Property-Casualty asset base | 104.6 | 101.1 |
1 Loans and advances to banks and customers, held-to-maturity investments and real estate held for investment are stated at amortized cost. Investments in associates and joint ventures are stated at either amortized cost or equity, depending on – among other factors – our ownership percentage.
2 This comprises assets of € 0.1 bn and € 0.1 bn and liabilities of € (0.1) bn and € (0.1) bn as of 31 March 2014 and 31 December 2013, respectively.
3 These do not include affiliates of € 8.9 bn and € 8.9 bn as of 31 March 2014 and 31 December 2013, respectively.
4 Including cash and cash equivalents, as stated in our business segment balance sheet of € 3.9 bn and € 2.8 bn and receivables from cash pooling amounting to € 4.3 bn and € 3.4 bn, net of liabilities from securities lending and derivatives of € (0.3) bn and € (0.3) bn, as well as liabilities from cash pooling of € (1.1) bn and € (1.0) bn as of 31 March 2014 and 31 December 2013, respectively.
As of 31 March 2014, ABS of € 3.9 bn (31 December 2013: € 3.7 bn) represented 3.7% of the Property-Casualty asset base.
| € bn | |||
|---|---|---|---|
| Gross | Ceded | Net | |
| As of 1 January 2014 | 56.6 | (6.1) | 50.5 |
| Balance carry forward of discounted loss reserves2 |
3.2 | (0.3) | 2.9 |
| Subtotal | 59.8 | (6.4) | 53.4 |
| Loss and loss adjustment expenses paid in current year relating to previous years |
(5.3) | 0.4 | (4.9) |
| Loss and loss adjustment expenses incurred in previous years |
(0.4) | 0.1 | (0.3) |
| Foreign currency translation adjustments and other changes |
0.3 | – | 0.3 |
| Changes in reserves for loss and loss adjustment expenses in current year |
5.5 | (0.5) | 5.0 |
| Subtotal | 59.9 | (6.4) | 53.5 |
| Ending balance of discounted loss reserves2 |
(3.4) | 0.3 | (3.1) |
| As of 31 March 2014 | 56.5 | (6.1) | 50.4 |
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 14 to the condensed consolidated interim financial statements.
2 Although discounted loss reserves have been reclassified to 'Reserves for insurance and investment contracts' in the balance sheet in 2013, the underlying business development of these Property-Casualty reserves is still considered in the loss and loss adjustment expenses and in the loss ratio and is therefore included in the development of the reserves above.
As of 31 March 2014, the segment's gross reserves for loss and loss adjustment expenses and discounted loss reserves amounted to € 59.9 bn – an increase of € 0.1 bn compared to the end of 2013. On a net basis, our reserves including discounted loss reserves increased from € 53.4 bn to € 53.5 bn. Foreign currency translation effects and other changes amounted to a plus of € 0.3 bn on a net basis.
27 Balance Sheet Review 34 Reconciliations
Assets and liabilities of
The Life/Health asset base grew by € 19.1 bn – or 3.9% – to € 505.6 bn. € 15.4 bn of this increase was attributable to higher debt securities which went up mainly as a result of higher fair values and new investments. Increased financial assets for unit-linked contracts and higher equities also contributed to this growth.
| € bn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Financial assets and liabilities carried at fair value through income |
||
| Equities | 1.9 | 1.4 |
| Debt securities | 2.3 | 2.5 |
| Other1 | (4.5) | (4.2) |
| Subtotal | (0.3) | (0.3) |
| Investments2 | ||
| Equities | 29.6 | 28.9 |
| Debt securities | 284.8 | 269.4 |
| Cash and cash pool assets3 | 8.0 | 7.5 |
| Other | 10.2 | 10.0 |
| Subtotal | 332.6 | 315.8 |
| Loans and advances to banks and customers | 90.4 | 89.9 |
| Financial assets for unit-linked contracts4 | 82.9 | 81.1 |
| Life/Health asset base | 505.6 | 486.5 |
1 This comprises assets of € 1.3 bn and € 1.7 bn and liabilities (including the market value liability option) of € (5.8) bn and € (5.9) bn as of 31 March 2014 and 31 December 2013, respectively.
| € Bn | |||
|---|---|---|---|
| Unit-linked insurance contracts |
Unit-linked investment contracts |
Total | |
| As of 1 January 2014 | 55.4 | 25.7 | 81.1 |
| Net premium inflows (outflows) | 0.7 | 0.5 | 1.2 |
| Changes in fund value | 1.0 | 0.3 | 1.3 |
| Foreign currency translation adjustments |
– | – | – |
| Other changes | (0.7) | – | (0.7) |
| As of 31 March 2014 | 56.4 | 26.5 | 82.9 |
1 Financial assets for unit-linked contracts represent assets owned by, and managed on behalf of, policyholders of the Allianz Group, with all appreciation and depreciation in these assets accruing to the benefit of policyholders. As a result, the value of financial assets for unit-linked contracts in our balance sheet corresponds to the value of financial liabilities for unit-linked contracts. The International Financial Reporting Standards (IFRS) require the classification of any contract written by an insurance company either as an insurance contract or as an investment contract, depending on whether an insurance component is included. This requirement also applies to unit-linked products. In contrast to unit-linked investment contracts, unit-linked insurance contracts include coverage for significant mortality or morbidity risk.
Financial assets for unit-linked contracts were up by € 1.8 bn, or 2.2%, to € 82.9 bn. Unit-linked insurance contracts increased by € 1.0 bn to € 56.4 bn due to a good fund performance of € 1.0 bn and premium inflows exceeding outflows by € 0.7 bn. This was partly offset by transfers to the general account in France (€ (0.3) bn). Unit-linked investment contracts increased by € 0.8 bn to € 26.5 bn, with net premium inflows of € 0.5 bn. Currency effects were comparably small and largely offset each other.1
In the first quarter of 2014, Life/Health reserves for insurance and investment contracts increased by € 12.6 bn, or 3.2%, to € 403.5 bn. The aggregate policy reserves increased by € 7.1 bn – mainly driven by our operations in Germany (€ 2.9 bn), the United States (€ 1.7 bn before currency effects), Switzerland (€ 0.6 bn before currency effects), Luxembourg (€ 0.5 bn) and Italy (€ 0.4 bn). Reserves for premium refund increased by € 5.6 bn due to higher unrealized gains to be shared with policyholders. Currency effects were relatively small and largely offset each other.1
1 Based on the closing rate on the respective balance sheet dates.
2 These do not include affiliates of € 0.4 bn and € 0.8 bn as of 31 March 2014 and 31 December 2013, respectively.
3 Including cash and cash equivalents, as stated in our business segment balance sheet, of € 6.5 bn and € 5.8 bn and receivables from cash pooling amounting to € 3.5 bn and € 3.4 bn, net of liabilities from securities lending and derivatives of € (1.9) bn and € (1.7) bn, as well as liabilities from cash pooling of € (0.1) bn and € (0.0) bn as of 31 March 2014 and 31 December 2013, respectively.
4 Financial assets for unit-linked contracts represent assets owned by, and managed on behalf of, policyholders of the Allianz Group, with all appreciation and depreciation in these assets accruing to the benefit of policyholders. As a result, the value of financial assets for unit-linked contracts in our balance sheet corresponds to the value of financial liabilities for unit-linked contracts. The International Financial Reporting Standards (IFRS) require the classification of any contract written by an insurance company either as an insurance contract or as an investment contract, depending on whether an insurance component is included. This requirement also applies to unit-linked products. In contrast to unit-linked investment contracts, unit-linked insurance contracts include coverage for significant mortality or morbidity risk.
The Asset Management business segment's results are derived primarily from third-party asset management. In this section, we refer only to the business segment's own assets.1
The business segment's asset base decreased from € 4.4 bn to € 2.1 bn – mainly from debt securities as a result of the allocation of certain entities to other reportable segments. Cash and cash pool assets are now the remaining main component of the business segment's asset base.
Liabilities in our Asset Management business segment halved from € 4.0 bn to € 2.0 bn, primarily due to the above-mentioned allocation.
Our Corporate and Other asset base remained almost unchanged as an increase in debt securities was offset by decreased loans and advances to banks and customers and cash and cash pool assets.
| € bn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Financial assets and liabilities carried at fair value through income |
||
| Equities | 0.1 | – |
| Debt securities | – | – |
| Other1 | (0.4) | (0.2) |
| Subtotal | (0.3) | (0.2) |
| Investments2 | ||
| Equities | 1.9 | 1.7 |
| Debt securities | 28.0 | 26.3 |
| Cash and cash pool assets3 | (5.7) | (5.0) |
| Other | 0.3 | 0.3 |
| Subtotal | 24.5 | 23.3 |
| Loans and advances to banks and customers | 17.3 | 18.2 |
| Corporate and Other asset base | 41.5 | 41.3 |
1 This comprises assets of € 0.1 bn and € 0.3 bn and liabilities of € (0.5) bn and € (0.5) bn as of 31 March 2014 and 31 December 2013, respectively.
2 These do not include affiliates of € 76.5 bn and € 75.4 bn as of 31 March 2014 and 31 December 2013, respectively.
3 Including cash and cash equivalents, as stated in our business segment balance sheet, of € 1.4 bn and € 1.5 bn and receivables from cash pooling amounting to € 0.5 bn and € 0.7 bn, net of liabilities from securities lending and derivatives of € (0.1) bn and € (0.2) bn, as well as liabilities from cash pooling of € (7.5) bn and € (7.0) bn as of 31 March 2014 and 31 December 2013, respectively.
Within our Corporate and Other asset base ABS amounted to € 1.0 bn, representing 2.4% of the segment's asset base.
Compared to year-end, subordinated liabilities decreased by € 1.1 bn to € 10.4 bn as of 31 March 2014 as the redemption of a € 1.5 bn perpetual bond was only partly offset by the issuance of an undated subordinated bond with a volume of CHF 500 mn. Other liabilities increased from € 23.6 bn to € 24.9 bn. This was almost equally driven by higher taxes payable, liabilities from cash pooling and other provisions mainly related to pension obligations. Certificated liabilities remained almost unchanged.2
2 For further information on Allianz SE debt as of 31 March 2014, please refer to notes 17 and 18 to the condensed consolidated interim financial statements.
1 For further information on the development of these third-party assets, please refer to the Asset Management chapter. Effective 1 January 2014, the Allianz Group allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western&Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
| 4.0% bond issued by Allianz Finance II B.V., Amsterdam | ||
|---|---|---|
| Volume | € 1.5 BN | |
| Year of issue | 2006 | |
| Maturity date | 11/23/2016 | |
| ISIN | XS 027 588 026 7 | |
| Interest expenses | € 15.3 mn | |
| 1.375% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 0.5 bn | |
| Year of issue | 2013 | |
| Maturity date | 3/13/2018 | |
| ISIN | DE 000 A1H G1J 8 | |
| Interest expenses | € 1.8 mn | |
| 4.75% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 1.5 BN | |
| Year of issue | 2009 | |
| Maturity date | 7/22/2019 | |
| ISIN | DE 000 A1A KHB 8 |
|
| Interest expenses | € 18.1 mn | |
| 3.5% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 1.5 BN | |
| Year of issue | 2012 | |
| Maturity date | 2/14/2022 | |
| ISIN | DE 000 A1G 0RU 9 | |
| Interest expenses | € 13.3 mn | |
| 3.0% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 0.75 bn | |
| Year of issue | 2013 | |
| Maturity date | 3/13/2028 | |
| ISIN | DE 000 A1H G1K 6 | |
| Interest expenses | € 5.8 mn | |
| 4.5% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | GBP 0.75 bn |
|
| Year of issue | 2013 | |
| Maturity date | 3/13/2043 | |
| ISIN | DE 000 A1H G1L 4 | |
| Interest expenses | € 10.0 mn | |
| Total interest expenses for senior bonds | € 64.3 mn | |
| 2. Subordinated bonds3 | ||
| 6.5% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 1.0 BN | |
| Year of issue | 2002 | |
| Maturity date | 1/13/2025 | |
| ISIN | XS 015 952 750 5 | |
| Interest expenses | € 16.4 mn | |
| 5.75% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 2.0 BN | |
| Year of issue | 2011 | |
| Maturity date | 7/8/2041 | |
| ISIN | DE 000 A1GNAH 1 |
|
1 For further information on Allianz SE debt (issued or guaranteed) as of 31 March 2014, please refer to notes 17 and 18 to the condensed consolidated interim financial statements.
Interest expenses € 28.7 mn
2 Senior bonds provide for early termination rights in case of non-payment of amounts due under the bond (interest and principal) as well as in case of insolvency.
| 5.625% bond issued by Allianz SE | ||
|---|---|---|
| Volume | € 1.5 bn | |
| Year of issue | 2012 | |
| Maturity date | 10/17/2042 | |
| ISIN | DE 000 A1RE1Q3 | |
| Interest expenses | € 21.3 mn | |
| 4.375% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 1.4 BN | |
| Year of issue | 2005 | |
| Maturity date | Perpetual Bond | |
| ISIN | XS 021 163 783 9 | |
| Interest expenses | € 15.7 mn | |
| 5.375% bond issued by Allianz Finance II B.V., Amsterdam | ||
| Volume | € 0.8 BN | |
| Year of issue | 2006 | |
| Maturity date | Perpetual Bond | |
| ISIN | DE 000 A0G NPZ 3 |
|
| Interest expenses | € 10.6 mn | |
| 5.5% bond issued by Allianz SE | ||
| Volume | USD 1.0 BN | |
| Year of issue | 2012 | |
| Maturity date | Perpetual Bond | |
| ISIN | XS 085 787 250 0 | |
| Interest expenses | € 10.3 mn | |
| 4.75% bond issued by Allianz SE | ||
| Volume | € 1.5 BN | |
| Year of issue | 2013 | |
| Maturity date | Perpetual Bond | |
| ISIN | DE 000 A1Y CQ2 9 | |
| Interest expenses | € 17.7 mn | |
| 3.25% bond issued by Allianz SE | ||
| Volume | CHF 0.5 bn | |
| Year of issue | 2014 | |
| Maturity date | perpetual bond | |
| ISIN | CH 023 483 337 1 | |
| Interest expenses | € 2.2 mn | |
| Total interest expenses for subordinated bonds | € 122.9 mn | |
| 3. Issues redeemed in 2014 | ||
| 5.5% bond issued by Allianz SE | ||
| Volume | € 1.5 BN | |
| Year of issue | 2004 | |
| Maturity date | Perpetual Bond | |
| ISIN | XS 018 716 232 5 | |
| Interest expenses | € 3.2 mn |
Sum of interest expenses1 € 190.4 mn Interest expenses from external debt not presented in the table € 14.2 mn Total interest expenses from external debt € 204.6mn
3 The terms of the subordinated bonds do not explicitly provide for early termination rights in favor of the bondholder. Interest payments are subject to certain conditions which are linked, inter alia, to our net income, and may have to be deferred. Nevertheless, the terms of the relevant bonds provide for alternative settlement mechanisms which allow us to avoid an interest deferral using cash raised from the issuance of specific newly issued instruments.
The previous analysis is based on our condensed consolidated interim financial statements and should be read in conjunction with them. In addition to our stated figures according to the International Financial Reporting Standards (IFRS), the Allianz Group uses operating profit and internal growth to enhance the understanding of our results. These additional measures should be viewed as complementary to, and not as a substitute for, our figures determined according to IFRS.
For further information, please refer to note 3 to the condensed consolidated interim financial statements.
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).
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Property-Casualty | ||
| Gross premiums written | 15,217 | 15,197 |
| Life/Health | ||
| Statutory premiums | 17,163 | 14,837 |
| Asset Management | ||
| Operating revenues | 1,517 | 1,911 |
| consisting of: | ||
| Net fee and commission income | 1,516 | 1,897 |
| Net interest income | – | 4 |
| Income from financial assets and liabilities carried at fair value through income (net) |
(1) | 7 |
| Other income | 2 | 3 |
| Corporate and Other | ||
| Total revenues (Banking) | 139 | 148 |
| consisting of: | ||
| Interest and similar income | 150 | 157 |
| Income from financial assets and liabilities carried at fair value through income (net) |
2 | 2 |
| Fee and commission income | 116 | 120 |
| Interest expenses, excluding interest expenses from external debt |
(66) | (73) |
| Fee and commission expenses | (65) | (60) |
| Consolidation effects (Banking within Corporate and Other) |
2 | 2 |
| Consolidation | (72) | (45) |
| Allianz Group total revenues | 33,964 | 32,048 |
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.
| % | ||||
|---|---|---|---|---|
| three months ended 31 March |
Internal growth |
Changes in scope of consolidation |
Foreign currency translation |
Nominal growth |
| 2014 | ||||
| Property-Casualty | 1.9 | 0.7 | (2.5) | 0.1 |
| Life/Health | 16.4 | 0.8 | (1.5) | 15.7 |
| Asset Management | (16.4) | (2.0) | (2.2) | (20.6) |
| Corporate and Other | (8.8) | 2.7 | – | (6.1) |
| Allianz Group | 7.4 | 0.6 | (2.0) | 6.0 |
| 2013 | ||||
| Property-Casualty | 1.3 | 2.3 | (0.9) | 2.7 |
| Life/Health | 8.5 | – | (0.2) | 8.3 |
| Asset Management | 33.9 | (0.2) | (0.9) | 32.8 |
| Corporate and Other | (4.5) | – | – | (4.5) |
| Allianz Group | 6.1 | 1.1 | (0.6) | 6.6 |
Pages 36–85
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
€ mn
| note | as of 31 March 2014 |
as of 31 December 2013 |
|
|---|---|---|---|
| ASSETS | |||
| Cash and cash equivalents | 12,167 | 11,207 | |
| Financial assets carried at fair value through income | 4 | 5,889 | 6,661 |
| Investments | 5 | 430,291 | 411,148 |
| Loans and advances to banks and customers | 6 | 116,039 | 116,800 |
| Financial assets for unit-linked contracts | 82,870 | 81,064 | |
| Reinsurance assets | 7 | 12,962 | 12,609 |
| Deferred acquisition costs | 8 | 22,179 | 22,203 |
| Deferred tax assets | 1,568 | 1,508 | |
| Other assets | 9 | 36,797 | 34,632 |
| Non-current assets classified as held for sale | 10 | 143 | 147 |
| Intangible assets | 11 | 13,059 | 13,100 |
| Total assets | 733,964 | 711,079 |
| Financial liabilities carried at fair value through income | 12 | 5,957 | 6,013 |
|---|---|---|---|
| Liabilities to banks and customers | 13 | 22,319 | 23,109 |
| Unearned premiums | 22,299 | 18,212 | |
| Reserves for loss and loss adjustment expenses | 14 | 66,566 | 66,566 |
| Reserves for insurance and investment contracts | 15 | 417,033 | 404,072 |
| Financial liabilities for unit-linked contracts | 82,870 | 81,064 | |
| Deferred tax liabilities | 3,949 | 3,178 | |
| Other liabilities 16 |
38,099 | 36,432 | |
| Certificated liabilities | 17 | 8,046 | 8,030 |
| Subordinated liabilities | 18 | 10,466 | 11,554 |
| Total liabilities | 677,604 | 658,230 | |
| Shareholders' equity | 53,525 | 50,084 | |
| Non-controlling interests | 2,835 | 2,765 | |
| Total equity | 19 | 56,360 | 52,849 |
| Total liabilities and equity | 733,964 | 711,079 |
| € mn three months ended 31 March |
note | 2014 | 2013 |
|---|---|---|---|
| Gross premiums written | 21,811 | 21,805 | |
| Ceded premiums written | (1,362) | (1,445) | |
| Change in unearned premiums | (3,763) | (3,688) | |
| Premiums earned (net) | 20 | 16,686 | 16,672 |
| Interest and similar income | 21 | 5,139 | 5,167 |
| Income from financial assets and liabilities carried at fair value through income (net) | 22 | (319) | (225) |
| Realized gains/losses (net) | 23 | 906 | 1,146 |
| Fee and commission income | 24 | 2,408 | 2,754 |
| Other income | 25 | 78 | 60 |
| Income from fully consolidated private equity investments | 26 | 169 | 178 |
| Total income | 25,067 | 25,752 | |
| Claims and insurance benefits incurred (gross) | (12,332) | (12,182) | |
| Claims and insurance benefits incurred (ceded) | 523 | 544 | |
| Claims and insurance benefits incurred (net) | 27 | (11,809) | (11,638) |
| Change in reserves for insurance and investment contracts (net) | 28 | (3,440) | (4,099) |
| Interest expenses | 29 | (302) | (351) |
| Loan loss provisions | 30 | (9) | (14) |
| Impairments of investments (net) | 31 | (362) | (134) |
| Investment expenses | 32 | (199) | (208) |
| Acquisition and administrative expenses (net) | 33 | (5,330) | (5,489) |
| Fee and commission expenses | 34 | (782) | (778) |
| Amortization of intangible assets | (24) | (41) | |
| Restructuring charges | 1 | (94) | |
| Other expenses | 35 | (30) | (46) |
| Expenses from fully consolidated private equity investments | 26 | (174) | (182) |
| Total expenses | (22,460) | (23,074) | |
| Income before income taxes | 2,607 | 2,678 | |
| Income taxes | 36 | (867) | (877) |
| Net income | 1,740 | 1,801 | |
| Net income attributable to: | |||
| Non-controlling interests | 100 | 94 | |
| Shareholders | 1,640 | 1,707 | |
| Basic earnings per share (€) | 38 | 3.61 | 3.77 |
| Diluted earnings per share (€) | 38 | 3.55 | 3.69 |
37 Consolidated Balance Sheets 38 Consolidated Income Statements 39 Consolidated Statements of Comprehensive Income
40 Consolidated Statements of Changes in Equity
| € mn | |
|---|---|
| three months ended 31 March 2014 |
2013 |
| Net income 1,740 |
1,801 |
| Other comprehensive income | |
| Items that may be reclassified to profit or loss in future periods | |
| Foreign currency translation adjustments | |
| Reclassifications to net income – |
– |
| Changes arising during the period 16 |
289 |
| Subtotal 16 |
289 |
| Available-for-sale investments | |
| Reclassifications to net income (94) |
(177) |
| Changes arising during the period 2,314 |
(276) |
| Subtotal 2,220 |
(453) |
| Cash flow hedges | |
| Reclassifications to net income (2) |
(1) |
| Changes arising during the period 5 |
7 |
| Subtotal 3 |
6 |
| Share of other comprehensive income of associates | |
| Reclassifications to net income – |
– |
| Changes arising during the period 9 |
21 |
| Subtotal 9 |
21 |
| Miscellaneous | |
| Reclassifications to net income – |
– |
| Changes arising during the period (29) |
84 |
| Subtotal (29) |
84 |
| Items that may never be reclassified to profit or loss | |
| Actuarial gains and losses on defined benefit plans (356) |
(41) |
| Total other comprehensive income 1,863 |
(94) |
| Total comprehensive income 3,603 |
1,707 |
| Non-controlling interests | 142 | 136 |
|---|---|---|
| Shareholders | 3,461 | 1,571 |
For further details concerning income taxes relating to components of the other comprehensive income, please see note 36.
| € mn | |||||||
|---|---|---|---|---|---|---|---|
| Paid-in capital | Retained earnings |
Foreign currency translation adjustments |
Unrealized gains and losses (net) |
Shareholders' equity |
Non controlling interests |
Total equity | |
| Balance as of 1 January 2013 | 28,815 | 13,524 | (2,073) | 10,122 | 50,388 | 2,575 | 52,963 |
| Total comprehensive income1 | – | 1,750 | 272 | (451) | 1,571 | 136 | 1,707 |
| Paid-in capital | – | – | – | – | – | – | – |
| Treasury shares | – | 1 | – | – | 1 | – | 1 |
| Transactions between equity holders | – | (11) | – | 1 | (10) | 13 | 3 |
| Dividends paid | – | – | – | – | – | (53) | (53) |
| Balance as of 31 March 2013 | 28,815 | 15,264 | (1,801) | 9,672 | 51,950 | 2,671 | 54,621 |
| Balance as of 1 January 2014 | 28,870 | 17,785 | (3,312) | 6,741 | 50,084 | 2,765 | 52,849 |
| Total comprehensive income1 | – | 1,262 | 14 | 2,185 | 3,461 | 142 | 3,603 |
| Paid-in capital | – | – | – | – | – | – | – |
| Treasury shares | – | 2 | – | – | 2 | – | 2 |
| Transactions between equity holders | – | (23) | 1 | – | (22) | 6 | (16) |
| Dividends paid | – | – | – | – | – | (78) | (78) |
| Balance as of 31 March 2014 | 28,870 | 19,026 | (3,297) | 8,926 | 53,525 | 2,835 | 56,360 |
1 Total comprehensive income in shareholders' equity for the three months ended 31 March 2014 comprises net income attributable to shareholders of € 1,640 mn (2013: € 1,707 mn).
Comprehensive Income
in Equity
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Summary | ||
| Net cash flow provided by operating activities | 11,817 | 9,814 |
| Net cash flow used in investing activities | (8,593) | (7,726) |
| Net cash flow used in financing activities | (2,262) | (289) |
| Effect of exchange rate changes on cash and cash equivalents | (2) | 73 |
| Change in cash and cash equivalents | 960 | 1,872 |
| Cash and cash equivalents at beginning of period | 11,207 | 12,437 |
| Cash and cash equivalents at end of period | 12,167 | 14,309 |
| Cash flow from operating activities | ||
| Net income | 1,740 | 1,801 |
| Adjustments to reconcile net income to net cash flow provided by operating activities | ||
| Share of earnings from investments in associates and joint ventures | (37) | (27) |
| Realized gains/losses (net) and impairments of investments (net) of: | ||
| 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 |
(544) | (1,012) |
| Other investments, mainly financial assets held for trading and designated at fair value through income | 115 | 847 |
| Depreciation and amortization | 278 | 268 |
| Loan loss provisions | 9 | 14 |
| Interest credited to policyholder accounts | 1,060 | 751 |
| Net change in: | ||
| Financial assets and liabilities held for trading | 632 | 683 |
| Reverse repurchase agreements and collateral paid for securities borrowing transactions | 240 | (228) |
| Repurchase agreements and collateral received from securities lending transactions | 352 | 525 |
| Reinsurance assets | (351) | (352) |
| Deferred acquisition costs | (767) | (597) |
| Unearned premiums | 4,069 | 4,155 |
| Reserves for loss and loss adjustment expenses | (131) | (802) |
| Reserves for insurance and investment contracts | 6,038 | 3,755 |
| Deferred tax assets/liabilities | (49) | 108 |
| Other (net) | (837) | (75) |
| Subtotal | 10,077 | 8,013 |
| Net cash flow provided by operating activities | 11,817 | 9,814 |
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Cash flow from investing activities | ||
| Proceeds from the sale, maturity or repayment of: | ||
| Financial assets designated at fair value through income | 154 | 472 |
| Available-for-sale investments | 32,800 | 30,387 |
| Held-to-maturity investments | 203 | 178 |
| Investments in associates and joint ventures | 151 | 152 |
| Non-current assets classified as held for sale | 16 | 24 |
| Real estate held for investment | 65 | 112 |
| Loans and advances to banks and customers (purchased loans) | 2,940 | 1,642 |
| Property and equipment | 45 | 49 |
| Subtotal | 36,374 | 33,016 |
| Payments for the purchase or origination of: | ||
| Financial assets designated at fair value through income | (241) | (240) |
| Available-for-sale investments | (41,342) | (37,684) |
| Held-to-maturity investments | (159) | (121) |
| Investments in associates and joint ventures | (298) | (155) |
| Non-current assets classified as held for sale | (7) | – |
| Real estate held for investment | (266) | (155) |
| Loans and advances to banks and customers (purchased loans) | (1,393) | (1,411) |
| Property and equipment | (308) | (221) |
| Subtotal | (44,014) | (39,987) |
| Business combinations: | ||
| Proceeds from sale of subsidiaries, net of cash disposed | – | – |
| Acquisitions of subsidiaries, net of cash acquired | – | – |
| Change in other loans and advances to banks and customers (originated loans) | (925) | (565) |
| Other (net) | (28) | (190) |
| Net cash flow used in investing activities | (8,593) | (7,726) |
| Cash flow from financing activities | ||
| Net change in liabilities to banks and customers | (1,063) | (558) |
| Proceeds from the issuance of certificated liabilities and subordinated liabilities | 896 | 2,973 |
| Repayments of certificated liabilities and subordinated liabilities | (1,980) | (2,637) |
| Cash inflow from capital increases | – | – |
| Transactions between equity holders | (16) | 3 |
| Dividends paid to shareholders | (78) | (53) |
| Net cash from sale or purchase of treasury shares | 2 | 2 |
| Other (net) | (23) | (19) |
| Net cash flow used in financing activities | (2,262) | (289) |
| Supplementary information to the consolidated statements of cash flows | ||
| Income taxes paid | (448) | (534) |
| Dividends received | 298 | 298 |
| Interest received | 5,270 | 5,086 |
| Interest paid | (521) | (572) |
37 Consolidated Balance Sheets 38 Consolidated Income Statements 39 Consolidated Statements of Comprehensive Income
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
The condensed consolidated interim financial statements of the Allianz Group – comprising the consolidated balance sheets, consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity, consolidated statements of cash flows and selected explanatory notes – are presented in accordance with the requirements of IAS 34, Interim Financial Reporting, and have been prepared in conformity with International Financial Reporting Standards (IFRS), as adopted under European Union (E.U.) regulations in accordance with § 315a of the German Commercial Code (HGB). IFRS comprise the International Financial Reporting Standards (IFRS), the International Accounting Standards (IAS) and the interpretations developed by the IFRS Interpretations Committee (formerly called the IFRIC) or the former Standing Interpretations Committee (SIC).
Within these condensed consolidated interim financial statements, the Allianz Group has applied all IFRS issued by the IASB that are endorsed by the E.U. and are compulsory as of 1 January 2014. For further information please see note 2.
For existing and unchanged IFRS, the accounting policies for recognition, measurement, consolidation and presentation applied in the preparation of the condensed consolidated interim financial statements are consistent with the accounting policies that have been applied in the preparation of the consolidated financial statements for the year ended 31 December 2013. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Allianz Group Annual Report 2013.
IFRS do not provide specific guidance concerning all aspects of the recognition and measurement of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features. Therefore, as envisioned in IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to those aspects where specific guidance is not provided by IFRS 4, Insurance Contracts, the provisions embodied under accounting principles generally accepted in the United States of America (US GAAP) as at first-time adoption of IFRS 4 on 1 January 2005, have been applied.
The condensed consolidated interim financial statements are presented in millions of Euros (€ mn), unless otherwise stated.
These condensed consolidated interim financial statements of the Allianz Group were authorized for issue by the Board of Management on 13 May 2014.
effective 1 January 2014
As of 1 January 2014 the Allianz Group implemented IFRSs 10 and 11 as well as amendments to IAS 27 and IAS 28.
IFRS 10, Consolidated Financial Statements, superseded the requirements of IAS 27, Consolidated and Separate Financial Statements and SIC-12, Consolidation – Special Purpose Entities. IFRS 10 establishes a single control concept as the basis for determining which entities are to be included in the consolidated financial statements because they are controlled by the reporting entity. The existence of control is based on the following three elements:
The following table presents the impacts of the implementation of IFRS 10 on the consolidated balance sheet as of 31 December 2013.
| CHANGE OF CONSOLIDATED BALANCE SHEET as of 31 December 2013 |
|---|
| RELATING TO IFRS 10 |
| € mn | |||
|---|---|---|---|
| as of 31 December 2013 | As previously reported |
Adoption of IFRS 10 |
As reported |
| Financial assets carried at fair value through income |
7,245 | (584) | 6,661 |
| Investments | 411,015 | 133 | 411,148 |
| Total assets | 711,530 | (451) | 711,079 |
| Other liabilities | 36,883 | (451) | 36,432 |
| Total liabilities | 658,681 | (451) | 658,230 |
| Total liabilities and equity | 711,530 | (451) | 711,079 |
The adoption of IFRS 10 required the additional consolidation of a few investment funds, where the Allianz Group has the ability to direct the relevant asset management activities, without having a majority investment. In contrast, numerous third-party managed investment funds in which the Allianz Group is invested in were deconsolidated to the extent the Allianz Group cannot exercise power. Furthermore, IFRS 10 led to the deconsolidation of certain investment funds which mainly hold assets related to unit-linked contracts because investment decisions over these assets are not in the discretion of the Allianz Group. In total, these changes in the scope of consolidation led to a reduction of the balance sheet total of € 451 mn as of the date IFRS 10 was adopted.
The impact of the adoption of IFRS 10 on the consolidated income statements, the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows is immaterial.
IFRS 11, Joint Arrangements, superseded IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities – Non-Monetary Contributions by Ventures. The IFRS requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement. The IFRS classifies joint arrangements into two types: joint operations and joint ventures. For joint operations the reporting entity has to recognize and measure the assets and liabilities (and recognize the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant IFRSs applicable to the particular assets, liabilities, revenues and expenses. In contrast, for joint ventures the reporting entity has to recognize an investment and to account for that investment using the equity method in accordance with IAS 28. The application of IFRS 11 had no material impact on the financial position and the financial results of the Allianz Group.
The revised version of IAS 28, Investments in Associates and Joint Ventures, superseded the former IAS 28, Investments in Associates. It defines 'significant influence', provides guidance on the application of the equity method of accounting and describes how impairment is assessed in associates and joint ventures. The adoption of the revised version of IAS 28 had no material impact on the financial position and financial results of the Allianz Group.
IFRS 12, Disclosure of Interests in Other Entities, contains disclosure requirements previously set out in IASs 27, 28 and 31. Furthermore, the new standard includes disclosure requirements regarding interests in unconsolidated structured entities. The disclosure requirements defined by IFRS 12 are initially to be presented in the annual report 2014.
Certain prior-period amounts have been reclassified to conform to the current period presentation.
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:
Asset management activities represent a separate reportable segment. Due to differences in the nature of products, risks and capital allocation, corporate and other activities are divided into three reportable segments: Holding&Treasury, Banking and Alternative Investments. In total, the Allianz Group has identified 17 reportable segments in accordance with IFRS 8, Operating Segments.
The types of products and services from which the reportable segments derive revenue are described below.
In the business segment Property-Casualty, reportable segments offer a wide variety of insurance products to both private and corporate customers, including motor liability and own damage, accident, general liability, fire and property, legal expense, credit and travel insurance.
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 and supplemental health and long-term care insurance.
The reportable segment Asset Management operates as a global provider of institutional and retail asset management products and services 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 fixedincome 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.
Comprehensive Income
40 Consolidated Statements of Changes in Equity
The reportable segment Holding&Treasury includes the management and support of the Allianz Group's businesses through its strategy, risk, corporate finance, treasury, financial reporting, controlling, communication, legal, human resources and technology 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 segment 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 Alternative Investments also includes a fully consolidated private equity investment. The income and expenses of this investment are included in the non-operating result.
Prices for transactions between reportable segments are set on an arm's length basis in a manner similar to transactions with third parties. Transactions between reportable segments are eliminated in the Consolidation. For the reportable segment Asset Management, interest revenues are reported net of interest expenses. Financial information is recorded based on reportable segments. Cross-segmental country-specific information is not determined.
The Allianz Group uses operating profit to evaluate the performance of its reportable segments and the Allianz Group as a whole. Operating profit highlights the portion of income before income taxes 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 performance 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), as this does not reflect the Allianz Group's long-term performance,
− realized capital gains and losses (net) or impairments of investments (net), as the timing of sales that would result in such realized gains or losses is largely at the discretion of the Allianz Group and impairments are largely dependent on market cycles or issuer-specific events over which the Allianz Group has little or no control and which can and do vary, sometimes materially, through time.
Against this general rule, the following exceptions apply:
Operating profit should be viewed as complementary to, and not as a substitute for, income before income taxes or net income as determined in accordance with IFRS.
Effective 1 January 2014, the Allianz Group prospectively allocated certain entities from the reportable segment Asset Management to the reportable segments German Speaking Countries, Western& Southern Europe and Growth Markets within the business segment Life/Health and to the reportable segment Banking.
| as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
as of 31 December 2013 |
|---|---|---|---|
| 3,858 | 2,773 | 6,508 | 5,828 |
| 519 | 639 | 5,438 | 5,548 |
| 90,180 | 88,432 | 324,996 | 309,037 |
| 16,134 | 16,131 | 90,388 | 89,922 |
| – | – | 82,870 | 81,064 |
| 8,279 | 7,922 | 4,720 | 4,717 |
| 4,746 | 4,354 | 17,433 | 17,690 |
| 1,198 | 1,083 | 245 | 261 |
| 23,784 | 21,664 | 18,061 | 17,850 |
| 138 | 131 | 5 | – |
| 2,449 | 2,478 | 3,010 | 2,640 |
| 151,285 | 145,607 | 553,674 | 534,557 |
| Property-Casualty | Life/Health |
€ mn Property-Casualty Life/Health Asset Management Corporate and Other Consolidation Group as of 31 March 2014 as of 31 December 2013 as of 31 March 2014 as of 31 December 2013 LIABILITIES AND EQUITY Financial liabilities carried at fair value through income 91 78 5,795 5,869 – 1 437 534 (366) (469) 5,957 6,013 Liabilities to banks and customers 1,123 1,189 3,701 2,260 187 1,314 20,648 21,337 (3,340) (2,991) 22,319 23,109 Unearned premiums 19,332 15,367 2,980 2,855 – – – – (13) (10) 22,299 18,212 Reserves for loss and loss adjustment expenses 56,478 56,614 10,100 9,961 – – – – (12) (9) 66,566 66,566 Reserves for insurance and investment contracts 13,690 13,389 403,535 390,873 – – – – (192) (190) 417,033 404,072 Financial liabilities for unit-linked contracts – – 82,870 81,064 – – – – – – 82,870 81,064 Deferred tax liabilities 2,325 2,154 2,976 2,420 3 124 171 164 (1,526) (1,684) 3,949 3,178 Other liabilities 16,370 17,128 14,668 14,008 1,773 2,591 24,913 23,605 (19,625) (20,900) 38,099 36,432 Certificated liabilities 37 37 12 12 – – 13,202 13,186 (5,205) (5,205) 8,046 8,030 Subordinated liabilities – – 109 95 – 14 10,421 11,509 (64) (64) 10,466 11,554 Total liabilities 109,446 105,956 526,746 509,417 1,963 4,044 69,792 70,335 (30,343) (31,522) 677,604 658,230
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
as of 31 December 2013 |
| 1,559 | 1,861 | 1,382 | 1,497 | (1,140) | (752) | 12,167 | 11,207 |
| 111 | 635 | 187 | 307 | (366) | (468) | 5,889 | 6,661 |
| 129 | 1,141 | 106,776 | 103,727 | (91,790) | (91,189) | 430,291 | 411,148 |
| 129 | 449 | 17,320 | 18,166 | (7,932) | (7,868) | 116,039 | 116,800 |
| – | – | – | – | – | – | 82,870 | 81,064 |
| – | – | – | – | (37) | (30) | 12,962 | 12,609 |
| – | 159 | – | – | – | – | 22,179 | 22,203 |
| 158 | 167 | 1,493 | 1,681 | (1,526) | (1,684) | 1,568 | 1,508 |
| 2,065 | 2,188 | 6,268 | 7,457 | (13,381) | (14,527) | 36,797 | 34,632 |
| – | 16 | – | – | – | – | 143 | |
| 6,889 | 7,268 | 711 | 714 | – | – | 13,059 | 13,100 |
| 11,040 | 13,884 | 134,137 | 133,549 | (116,172) | (116,518) | 733,964 | 711,079 |
| Group | Consolidation | Corporate and Other | Asset Management | ||||
|---|---|---|---|---|---|---|---|
| 31 December | as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
as of 31 December 2013 |
as of 31 March 2014 |
| 5,957 | (469) | (366) | 534 | 437 | 1 | – | |
| 22,319 | (2,991) | (3,340) | 21,337 | 20,648 | 1,314 | 187 | |
| 22,299 | (10) | (13) | – | – | – | – | |
| 66,566 | (9) | (12) | – | – | – | – | |
| 417,033 | (190) | (192) | – | – | – | – | |
| 82,870 | – | – | – | – | – | – | |
| 3,949 | (1,684) | (1,526) | 164 | 171 | 124 | 3 | |
| 38,099 | (20,900) | (19,625) | 23,605 | 24,913 | 2,591 | 1,773 | |
| 8,046 | (5,205) | (5,205) | 13,186 | 13,202 | – | – | |
| 10,466 | (64) | (64) | 11,509 | 10,421 | 14 | – | |
| 677,604 | (31,522) | (30,343) | 70,335 | 69,792 | 4,044 | 1,963 | |
| 56,360 | Total equity | ||||||
| 733,964 | Total liabilities and equity |
| € mn | Property-Casualty | Life/Health | ||
|---|---|---|---|---|
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 |
| Total revenues1 | 15,217 | 15,197 | 17,163 | 14,837 |
| Premiums earned (net) | 10,410 | 10,312 | 6,276 | 6,360 |
| Operating investment result | ||||
| Interest and similar income | 853 | 887 | 4,159 | 4,077 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
14 | 8 | (269) | (244) |
| Operating realized gains/losses (net) | 26 | 15 | 827 | 899 |
| Interest expenses, excluding interest expenses from external debt | (13) | (15) | (25) | (19) |
| Operating impairments of investments (net) | (5) | (1) | (291) | (62) |
| Investment expenses | (69) | (68) | (195) | (190) |
| Subtotal | 806 | 826 | 4,206 | 4,461 |
| Fee and commission income | 306 | 290 | 229 | 140 |
| Other income | 29 | 8 | 49 | 49 |
| Claims and insurance benefits incurred (net) | (6,727) | (6,813) | (5,081) | (4,826) |
| Change in reserves for insurance and investment contracts (net)2 | (125) | (113) | (3,314) | (4,001) |
| Loan loss provisions | – | – | – | – |
| Acquisition and administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation |
(2,912) | (2,909) | (1,253) | (1,248) |
| Fee and commission expenses | (291) | (275) | (87) | (56) |
| Operating amortization of intangible assets | – | – | (5) | – |
| Restructuring charges | (1) | (2) | – | (1) |
| Other expenses | (6) | (5) | (140) | (23) |
| Operating profit (loss) | 1,489 | 1,319 | 880 | 855 |
| Non-operating investment result Non-operating income from financial assets and liabilities carried at fair value |
||||
| through income (net) | (59) | (9) | – | 13 |
| Non-operating realized gains/losses (net) | 83 | 156 | 26 | 34 |
| Non-operating impairments of investments (net) | (57) | (16) | (6) | (4) |
| Subtotal | (33) | 131 | 20 | 43 |
| Income from fully consolidated private equity investments (net) | – | – | – | – |
| Interest expenses from external debt | – | – | – | – |
| Acquisition-related expenses | – | – | – | – |
| One-off effect from pension revaluation | (537) | – | (8) | – |
| Non-operating amortization of intangible assets | (6) | (3) | (8) | (3) |
| Non-operating items | (576) | 128 | 4 | 40 |
| Income (loss) before income taxes | 913 | 1,447 | 884 | 895 |
| Income taxes | (268) | (430) | (255) | (267) |
| Net income (loss) | 645 | 1,017 | 629 | 628 |
| Net income (loss) attributable to: | ||||
| Non-controlling interests | 44 | 43 | 31 | 23 |
| Shareholders | 601 | 974 | 598 | 605 |
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 three months ended 31 March 2014, includes expenses for premium refunds (net) in Property-Casualty of € (59) mn (2013: € (63) mn).
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| Asset Management | Corporate and Other | Consolidation | Group | |||||
|---|---|---|---|---|---|---|---|---|
| 2014 2013 |
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| 17,163 14,837 |
1,517 | 1,911 | 139 | 148 | (72) | (45) | 33,964 | 32,048 |
| 6,360 | – | – | – | – | – | – | 16,686 | 16,672 |
| 4,077 | 2 | 11 | 208 | 282 | (83) | (90) | 5,139 | 5,167 |
| (244) | (1) | 7 | 2 | 9 | 3 | (1) | (251) | (221) |
| 899 | – | – | – | – | (73) | (35) | 780 | |
| (19) | (2) | (7) | (144) | (163) | 86 | 94 | (98) | (110) |
| (62) | – | – | – | – | – | – | (296) | (208) |
| (190) | – | – | (16) | (19) | 81 | 69 | (199) | |
| 4,461 | (1) | 11 | 50 | 109 | 14 | 37 | 5,075 | |
| 140 | 1,861 | 2,286 | 167 | 168 | (155) | (130) | 2,408 | |
| 49 | 2 | 3 | – | 2 | (2) | (2) | 78 | |
| (4,826) | – | – | – | – | (1) | 1 | (11,809) | |
| (4,001) | – | – | – | – | (1) | 15 | (3,440) | |
| – | – | – | (9) | (14) | – | – | (9) | |
| (1,248) | (873) | (1,008) | (296) | (303) | (116) | 4 | (5,450) | |
| (56) | (345) | (389) | (134) | (112) | 75 | 54 | (782) | |
| – | – | – | – | – | – | – | (5) | |
| 2 | (3) | – | (88) | – | – | 1 | ||
| (1) (23) |
– | – | – | (1) | 116 | (17) | (30) | |
| 646 | 900 | (222) | (239) | (70) | (38) | 2,723 | ||
| – | – | (6) | (8) | (3) | – | (68) | ||
| – | – | 17 | 82 | – | (5) | 126 | ||
| – | – | |||||||
| (3) | (51) | – | – | (66) | ||||
| – | – | 8 | 23 | (3) | (5) | (8) | ||
| – | – | (7) | (7) | 2 | 3 | (5) | ||
| – | – | (204) | (241) | – | – | (204) | ||
| 34 (4) 43 – – – |
3 | (25) | 1 | – | – | – | 4 | |
| – | (14) | – | 675 | – | – | – | 116 | |
| (3) | (3) | (6) | (2) | (50) | – | 21 | (19) | |
| (14) | (31) | 471 | (275) | (1) | 19 | (116) | ||
| 632 | 869 | 249 | (514) | (71) | (19) | 2,607 | ||
| (226) | (301) | (118) | 117 | – | 4 | (867) | ||
| 406 | 568 | 131 | (397) | (71) | (15) | 1,740 | ||
| 40 895 (267) 628 23 |
21 | 26 | 4 | 2 | – | – | 100 |
€ mn
| German Speaking Countries | Western&Southern Europe | Iberia&Latin America | ||||
|---|---|---|---|---|---|---|
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Gross premiums written | 5,384 | 5,307 | 3,165 | 3,136 | 1,129 | 1,298 |
| Ceded premiums written | (817) | (799) | (245) | (239) | (169) | (178) |
| Change in unearned premiums | (2,119) | (2,085) | (467) | (559) | (44) | (168) |
| Premiums earned (net) | 2,448 | 2,423 | 2,453 | 2,338 | 916 | 952 |
| Interest and similar income | 282 | 290 | 194 | 196 | 50 | 54 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
4 | 4 | 1 | 7 | 8 | 2 |
| Operating realized gains/losses (net) | 26 | 15 | – | – | – | – |
| Fee and commission income | 29 | 33 | 10 | 6 | – | – |
| Other income | 9 | 6 | 2 | 1 | 17 | – |
| Operating revenues | 2,798 | 2,771 | 2,660 | 2,548 | 991 | 1,008 |
| Claims and insurance benefits incurred (net) | (1,599) | (1,657) | (1,562) | (1,544) | (638) | (662) |
| Change in reserves for insurance and investment contracts (net) | (106) | (90) | (13) | (11) | (2) | (1) |
| Interest expenses | (2) | (9) | (4) | (3) | (1) | (1) |
| Operating impairments of investments (net) | (5) | (1) | – | – | – | – |
| Investment expenses | (23) | (19) | (22) | (23) | (3) | (3) |
| Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation |
(625) | (560) | (649) | (604) | (233) | (247) |
| Fee and commission expenses | (27) | (33) | (10) | (8) | – | – |
| Restructuring charges | – | – | – | – | – | – |
| Other expenses | (4) | (4) | (1) | (1) | (1) | – |
| Operating expenses | (2,391) | (2,373) | (2,261) | (2,194) | (878) | (914) |
| Operating profit | 407 | 398 | 399 | 354 | 113 | 94 |
| Non-operating income from financial assets and liabilities carried at fair value through income (net) |
(25) | (9) | (23) | – | 1 | – |
| Non-operating realized gains/losses (net) | 35 | 30 | 18 | 40 | 3 | 10 |
| Non-operating impairments of investments (net) | (8) | (5) | (44) | (9) | (1) | (1) |
| One-off effect from pension revaluation | (530) | – | – | – | – | – |
| Amortization of intangible assets | – | (1) | (3) | (3) | – | – |
| Non-operating items | (528) | 15 | (52) | 28 | 3 | 9 |
| Income (loss) before income taxes | (121) | 413 | 347 | 382 | 116 | 103 |
| Income taxes | 45 | (119) | (124) | (137) | (34) | (34) |
| Net income (loss) | (76) | 294 | 223 | 245 | 82 | 69 |
| Net income (loss) attributable to: | ||||||
| Non-controlling interests | – | 1 | 6 | 4 | 1 | 1 |
| Shareholders | (76) | 293 | 217 | 241 | 81 | 68 |
| Loss ratio1 in % | 65.3 | 68.4 | 63.6 | 66.1 | 69.7 | 69.6 |
| Expense ratio2 in % | 25.5 | 23.1 | 26.5 | 25.8 | 25.4 | 25.9 |
| Combined ratio3 in % | 90.8 | 91.5 | 90.1 | 91.9 | 95.1 | 95.5 |
1 Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
2 Represents acquisition and administrative expenses (net), excluding one-off effect from pension revaluation, divided by premiums earned (net).
3 Represents the total of acquisition and administrative expenses (net), excluding one-off effect from pension revaluation, and claims and insurance benefits incurred (net) divided by premiums earned (net). 4 Presentation not meaningful.
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| Iberia&Latin America | USA | Global Insurance Lines& Anglo Markets |
Growth Markets | Allianz Worldwide Partners | Consolidation | Property-Casualty | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| 1,298 | 416 | 452 | 5,101 | 5,011 | 916 | 892 | 785 | 720 | (1,679) | (1,619) | 15,217 | 15,197 | |
| (178) | (31) | (29) | (1,402) | (1,460) | (212) | (198) | (30) | (26) | 1,679 | 1,619 | (1,227) | (1,310) | |
| (168) | 20 | 40 | (681) | (534) | (109) | (109) | (180) | (160) | – | – | (3,580) | (3,575) | |
| 952 | 405 | 463 | 3,018 | 3,017 | 595 | 585 | 575 | 534 | – | – | 10,410 | 10,312 | |
| 56 | 58 | 226 | 247 | 39 | 41 | 6 | 7 | – | (6) | 853 | 887 | ||
| (1) | (1) | 2 | (5) | – | 1 | – | – | – | – | 14 | |||
| – | – | – | – | – | – | – | – | – | – | 26 | 15 | ||
| – | – | 145 | 146 | 18 | 17 | 115 | 111 | (11) | (23) | 306 | 290 | ||
| – | – | – | – | 1 | – | – | 1 | – | – | 29 | |||
| 460 | 520 | 3,391 | 3,405 | 653 | 644 | 696 | 653 | (11) | (29) | 11,638 | 11,520 | ||
| (286) | (304) | (1,883) | (1,932) | (390) | (364) | (369) | (350) | – | – | (6,727) | (6,813) | ||
| (662) (1) |
(2) | (2) | (1) | (9) | (1) | (1) | – | 1 | – | – | (125) | (113) | |
| – | – | (5) | (7) | (1) | (1) | – | – | – | 6 | (13) | (15) | ||
| – | – | – | – | – | – | – | – | – | – | (5) | (1) | ||
| (1) | (1) | (18) | (20) | (2) | (2) | – | – | – | – | (69) | (68) | ||
| (147) | (166) | (857) | (960) | (218) | (202) | (187) | (175) | 4 | 5 | (2,912) | (2,909) | ||
| (247) – |
– | – | (125) | (124) | (16) | (17) | (119) | (111) | 6 | 18 | (291) | (275) | |
| – | – | (1) | (2) | – | – | – | – | – | – | (1) | |||
| – | – | – | – | – | – | – | – | – | – | (6) | |||
| (436) | (473) | (2,890) | (3,054) | (628) | (587) | (675) | (635) | 10 | 29 | (10,149) | (10,201) | ||
| 24 | 47 | 501 | 351 | 25 | 57 | 21 | 18 | (1) | – | 1,489 | 1,319 | ||
| (1) | – | (9) | – | (1) | – | (1) | – | – | – | (59) | |||
| – 10 |
1 | 4 | 25 | 70 | 1 | 2 | – | – | – | – | 83 | ||
| (1) | – | – | (4) | – | – | (1) | – | – | – | – | (57) | ||
| – | – | (7) | – | – | – | – | – | – | – | (537) | |||
| – | – | (2) | 2 | (2) | (2) | – | – | 1 | 1 | (6) | |||
| – | 4 | 3 | 72 | (2) | (1) | (1) | – | 1 | 1 | (576) | |||
| 24 | 51 | 504 | 423 | 23 | 56 | 20 | 18 | – | 1 | 913 | 1,447 | ||
| 103 (34) |
(5) | (14) | (139) | (105) | (5) | (17) | (6) | (4) | – | – | (268) | (430) | |
| 19 | 37 | 365 | 318 | 18 | 39 | 14 | 14 | – | 1 | 645 | 1,017 | ||
| – | – | 28 | 29 | 9 | 7 | – | 1 | – | – | 44 | |||
| 19 | 37 | 337 | 289 | 9 | 32 | 14 | 13 | – | 1 | 601 | |||
| 69.6 | 70.6 | 65.6 | 62.4 | 64.1 | 65.6 | 62.3 | 64.2 | 65.5 | –4 | –4 | 64.6 | ||
| 36.3 | 35.9 | 28.4 | 31.8 | 36.6 | 34.5 | 32.5 | 32.8 | –4 | –4 | 28.0 |
€ mn
| German Speaking Countries | Western&Southern Europe | |||
|---|---|---|---|---|
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 |
| Statutory premiums1 | 6,856 | 6,328 | 6,127 | 5,128 |
| Ceded premiums written | (39) | (45) | (597) | (344) |
| Change in unearned premiums | (62) | (30) | (14) | (13) |
| Statutory premiums (net) | 6,755 | 6,253 | 5,516 | 4,771 |
| Deposits from insurance and investment contracts | (2,692) | (2,049) | (4,363) | (3,653) |
| Premiums earned (net) | 4,063 | 4,204 | 1,153 | 1,118 |
| Interest and similar income | 2,264 | 2,203 | 891 | 891 |
| Operating income from financial assets and liabilities carried at fair value through income (net) | 31 | (24) | (50) | 42 |
| Operating realized gains/losses (net) | 498 | 714 | 306 | 142 |
| Fee and commission income | 19 | 12 | 118 | 92 |
| Other income | 42 | 33 | 5 | 16 |
| Operating revenues | 6,917 | 7,142 | 2,423 | 2,301 |
| Claims and insurance benefits incurred (net) | (3,519) | (3,197) | (998) | (974) |
| Change in reserves for insurance and investment contracts (net) | (2,266) | (2,974) | (489) | (567) |
| Interest expenses | (25) | (23) | (5) | (6) |
| Operating impairments of investments (net) | (113) | (39) | (177) | (23) |
| Investment expenses | (128) | (123) | (49) | (50) |
| Acquisition and administrative expenses (net), excluding one-off effect from pension revaluation | (385) | (354) | (420) | (409) |
| Fee and commission expenses | (9) | (7) | (53) | (47) |
| Operating amortization of intangible assets | (5) | – | – | – |
| Restructuring charges | – | (1) | – | – |
| Other expenses | (134) | (20) | (3) | (3) |
| Operating expenses | (6,584) | (6,738) | (2,194) | (2,079) |
| Operating profit | 333 | 404 | 229 | 222 |
| Non-operating income from financial assets and liabilities carried at fair value through income (net) | – | – | (4) | 4 |
| Non-operating realized gains/losses (net) | – | – | 25 | 21 |
| Non-operating impairments of investments (net) | – | – | (5) | (3) |
| One-off effect from pension revaluation | (8) | – | – | – |
| Non-operating amortization of intangible assets | – | – | (3) | – |
| Non-operating items | (8) | – | 13 | 22 |
| Income before income taxes | 325 | 404 | 242 | 244 |
| Income taxes | (109) | (148) | (58) | (58) |
| Net income | 216 | 256 | 184 | 186 |
| Net income attributable to: | ||||
| Non-controlling interests | – | – | 9 | 6 |
| Shareholders | 216 | 256 | 175 | 180 |
| Margin on reserves2 in basis points | 58 | 74 | 63 | 65 |
1 Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction.
2 Represents annualized operating profit divided by the average of the current quarter-end and previous year-end net reserves, where net reserves equal reserves for loss and loss adjustment expenses, reserves for insurance and investment contracts and financial liabilities for unit-linked contracts less reinsurance assets.
3 Presentation not meaningful.
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| Iberia&Latin America | USA | Global Insurance Lines& Anglo Markets |
Growth Markets | Consolidation | Life/Health | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| 476 | 437 | 2,556 | 1,562 | 1,616 | 1,598 | (594) | (348) | 17,163 | 14,837 | |||
| (4) | (10) | (29) | (30) | (74) | (65) | 594 | 348 | (162) | (157) | |||
| (34) | (30) | (3) | (1) | (31) | – | (39) | (40) | – | – | (183) | (114) | |
| 438 | 397 | 2,524 | 1,531 | 82 | 121 | 1,503 | 1,493 | – | – | 16,818 | 14,566 | |
| (289) | (266) | (2,297) | (1,323) | – | 126 132 (13) (11) – 82 121 19 19 (5) (18) – – – – – – 96 122 (75) (98) 15 5 (1) – – – – – (24) (22) – – – – – – – – (85) (115) 11 7 – – – – – – – – |
(915) | – | – | (10,542) | (8,206) | ||
| 149 | 131 | 227 | 208 | 602 | 578 | – | – | 6,276 | 6,360 | |||
| 94 | 92 | 692 | 678 | 215 | 210 | (16) | (16) | 4,159 | 4,077 | |||
| 1 | 6 | (245) | (251) | (4) | 5 | 3 | (4) | (269) | (244) | |||
| 4 | 2 | 9 | 19 | 10 | 22 | – | – | 827 | 899 | |||
| 34 | 1 | 23 | 16 | 35 | 20 | – | (1) | 229 | 140 | |||
| – | – | – | – | 2 | – | – | – | 49 | ||||
| 282 | 232 | 706 | 670 | 860 | 835 | (13) | (21) | 11,271 | 11,281 | |||
| (139) | (139) | (25) | (22) | (325) | (396) | – | – | (5,081) | (4,826) | |||
| (22) | (4) | (338) | (317) | (214) | (144) | – | – | (3,314) | (4,001) | |||
| (1) | (1) | (2) | (2) | (7) | (2) | 16 | 15 | (25) | ||||
| – | – | – | – | (1) (7) |
– | – | – | (291) | ||||
| (1) | (1) | (10) | (8) | – – – – 11 7 (3) (2) |
(8) | – | – | (195) | ||||
| (50) | (48) | (158) | (217) | (216) (4) |
(199) | – | 1 | (1,253) | ||||
| (17) | – | (4) | (3) | – | – | 1 | (87) | |||||
| – | – | – | – | – | – | – | (5) | |||||
| – | – | – | – | – | – | – | – | – | ||||
| – | – | – | – | (3) | – | – | – | (140) | ||||
| (230) | (193) | (537) | (569) | (777) | (749) | 16 | 17 | (10,391) | ||||
| 52 | 39 | 169 | 101 | 83 | 86 | 3 | (4) | 880 | ||||
| – | – | 4 | 9 | – | – | – | – | – | ||||
| – | – | – | – | 1 | 13 | – | – | 26 | ||||
| – | – | – | – | (1) | (1) | – | – | (6) | ||||
| – | – | – | – | – | – | – | – | (8) | ||||
| (4) | – | – | – | (1) | (3) | – | – | (8) | ||||
| (4) | – | 4 | 9 | (1) | 9 | – | – | 4 | ||||
| 48 | 39 | 173 | 110 | 82 | 95 | 3 | (4) | 884 | ||||
| (14) | (11) | (54) | (30) | (17) | (18) | – | – | (255) | ||||
| 34 | 28 | 119 | 80 | 8 | 5 | 65 | 77 | 3 | (4) | 629 | ||
| 9 25 |
6 22 |
– 119 |
– 80 |
– 8 |
– 5 |
13 52 |
11 66 |
– 3 |
– (4) |
31 598 |
||
| 247 | 204 | 94 | 58 | 229 | 135 | 125 | 126 | –3 | –3 | 73 | ||
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Net fee and commission income1 | 1,516 | 1,897 |
| Net interest income2 | – | 4 |
| Income from financial assets and liabilities carried at fair value through income (net) | (1) | 7 |
| Other income | 2 | 3 |
| Operating revenues | 1,517 | 1,911 |
| Administrative expenses (net), excluding aquisition-related expenses and one-off effect from pension revaluation | (873) | (1,008) |
| Restructuring charges | 2 | (3) |
| Operating expenses | (871) | (1,011) |
| Operating profit | 646 | 900 |
| Acquisition-related expenses | 3 | (25) |
| One-off effect from pension revaluation | (14) | – |
| Amortization of intangible assets | (3) | (6) |
| Non-operating items | (14) | (31) |
| Income before income taxes | 632 | 869 |
| Income taxes | (226) | (301) |
| Net income | 406 | 568 |
| Net income attributable to: | ||
| Non-controlling interests | 21 | 26 |
| Shareholders | 385 | 542 |
| Cost-income ratio3 in % | 57.4 | 52.9 |
1 Represents fee and commission income less fee and commission expenses.
2 Represents interest and similar income less interest expenses.
3 Represents operating expenses divided by operating revenues.
Consolidated Balance Sheets Consolidated Income Statements Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows 43 Notes
| € mn | ||||
|---|---|---|---|---|
| Holding&Treasury | Banking | Alternative Investments | ||
| three months ended 31 March | 2014 | 2013 | 2014 | 2013 2014 |
| Interest and similar income | 54 | 121 | 150 | 157 4 |
| Operating income from financial assets and liabilities carried at fair value through income (net) | – | 7 | 2 | 2 – |
| Fee and commission income | 14 | 10 | 116 | 120 37 |
| Other income | – | – | – | 2 – |
| Operating revenues | 68 | 138 | 268 | 281 41 |
| Interest expenses, excluding interest expenses from external debt | (78) | (89) | (66) | (73) – |
| Loan loss provisions | – | – | (9) | (14) – |
| Investment expenses | (14) | (18) | – | – (2) |
| Administrative expenses (net), excluding aquisition-related expenses and one-off effect from pension revaluation | (155) | (146) | (110) | (128) (31) |
| Fee and commission expenses | (69) | (52) | (65) | (60) – |
| Restructuring charges | – | – | – | (88) – |
| Other expenses | – | – | – | (1) – |
| Operating expenses | (316) | (305) | (250) | (364) (33) |
| Operating profit (loss) | (248) | (167) | 18 | (83) 8 |
| Non-operating income from financial assets and liabilities carried at fair value through income (net) | (5) | (7) | – | – (1) |
| Realized gains/losses (net) | 18 | 52 | (1) | 3 – |
| Impairments of investments (net) | (3) | (51) | – | – – |
| Income from fully consolidated private equity investments (net) | – | – | – | – (7) |
| Interest expenses from external debt | (204) | (241) | – | – – |
| Acquisition-related expenses | 1 | – | – | – – |
| One-off effect from pension revaluation | 679 | – | (1) | – (3) |
| Amortization of intangible assets | (2) | (4) | – | – – |
| Non-operating items | 484 | (251) | (2) | 3 (11) |
| Income (loss) before income taxes | 236 | (418) | 16 | (80) (3) |
| Income taxes | (114) | 103 | (5) | 24 1 |
| Net income (loss) | 122 | (315) | 11 | (56) (2) |
| Net income (loss) attributable to: | ||||
| Non-controlling interests | – | – | 2 | 2 2 |
| Shareholders | 122 | (315) | 9 | (58) (4) |
| Cost-income ratio1 for the reportable segment Banking in % | 80.3 | 146.6 | ||
1 Represents investment expenses, administrative expenses (net), excluding acquisition-related expenses and one-off effect from pension revaluation, restructuring charges and other expenses divided by interest and similar income, operating income from financial assets and liabilities carried at fair value through income (net), fee and commission income, other income, interest expenses, excluding interest expenses from external debt, and fee and commission expenses.
37 Consolidated Balance Sheets 38 Consolidated Income Statements 39 Consolidated Statements of Comprehensive Income
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
| Banking | Alternative Investments | Consolidation | Corporate and Other | ||||
|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| 150 | 157 | 4 | 4 | – | – | 208 | 282 |
| 2 | 2 | – | – | – | – | 2 | 9 |
| 116 | 120 | 37 | 39 | – | (1) | 167 | 168 |
| – | 2 | – | 1 | – | (1) | – | |
| 268 | 281 | 41 | 44 | – | (2) | 377 | 461 |
| (66) | (73) | – | (1) | – | – | (144) | (163) |
| (14) | |||||||
| (9) – |
(14) – |
– (2) |
– (1) |
– – |
– – |
(9) (16) |
(19) |
| (110) | (128) | (31) | (31) | – | 2 | (296) | |
| (65) | (60) | – | – | – | – | (134) | (303) (112) |
| – | (88) | – | – | – | – | – | (88) |
| – | (1) | – | – | – | – | – | |
| (250) | (364) | (33) | (33) | – | 2 | (599) | (700) |
| 18 | (83) | 8 | 11 | – | – | (222) | (239) |
| – | – | (1) | (1) | – | – | (6) | |
| (1) | 3 | – | – | – | 27 | 17 | |
| – | – | – | – | – | – | (3) | |
| – | – | (7) | (7) | – | – | (7) | |
| – | – | – | – | – | – | (204) | |
| – | – | – | – | – | – | 1 | |
| (1) | – | (3) | – | – | – | 675 | |
| – | – | – | (46) | – | – | (2) | |
| (2) | 3 | (11) | (54) | – | 27 | 471 | |
| 16 | (80) | (3) | (43) | – | 27 | 249 | |
| (5) | 24 | 1 | (5) | – | (5) | (118) | |
| 11 | (56) | (2) | (48) | – | 22 | 131 | |
| 2 | 2 | 2 | – | – | – | 4 | |
| 9 | (58) | (4) | (48) | – | 22 | 127 | (399) |
| 80.3 | 146.6 |
| € mn | ||
|---|---|---|
| as of 31 March |
as of 31 December |
|
| 2014 | 2013 | |
| Financial assets held for trading | ||
| Debt securities | 371 | 360 |
| Equity securities | 165 | 139 |
| Derivative financial instruments | 1,392 | 2,013 |
| Subtotal | 1,928 | 2,512 |
| Financial assets designated at fair value through income |
||
| Debt securities | 2,048 | 2,279 |
| Equity securities | 1,913 | 1,870 |
| Subtotal | 3,961 | 4,149 |
| Total | 5,889 | 6,661 |
| € mn | as of 31 March 2014 |
as of 31 December 2013 |
|---|---|---|
| Available-for-sale investments | 411,062 | 392,233 |
| Held-to-maturity investments | 4,117 | 4,140 |
| Funds held by others under reinsurance contracts assumed |
956 | 894 |
| Investments in associates and joint ventures | 3,222 | 3,098 |
| Real estate held for investment | 10,934 | 10,783 |
| Total | 430,291 | 411,148 |
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| € mn | ||||||||
|---|---|---|---|---|---|---|---|---|
| as of 31 March 2014 | as of 31 December 2013 | |||||||
| Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value | Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value | |
| Debt securities | ||||||||
| Government and agency mortgage-backed securities (residential and commercial) |
2,441 | 112 | (10) | 2,543 | 2,515 | 103 | (16) | 2,602 |
| Corporate mortgage-backed securities (residential and commercial) |
11,474 | 671 | (68) | 12,077 | 11,226 | 693 | (86) | 11,833 |
| Other asset-backed securities | 3,615 | 228 | (38) | 3,805 | 3,460 | 210 | (40) | 3,630 |
| Government and government agency bonds | ||||||||
| Germany | 14,415 | 1,104 | (5) | 15,514 | 14,852 | 918 | (46) | 15,724 |
| Italy | 26,110 | 3,263 | (28) | 29,345 | 26,304 | 2,001 | (91) | 28,214 |
| France | 31,690 | 3,742 | (32) | 35,400 | 31,410 | 2,471 | (177) | 33,704 |
| United States | 8,627 | 424 | (85) | 8,966 | 8,411 | 239 | (171) | 8,479 |
| Spain | 4,293 | 391 | (4) | 4,680 | 2,813 | 178 | (35) | 2,956 |
| Belgium | 5,883 | 878 | (1) | 6,760 | 5,968 | 613 | (3) | 6,578 |
| Greece | 1 | 2 | – | 3 | 1 | 2 | – | 3 |
| Portugal | 196 | 21 | – | 217 | 196 | 2 | (2) | 196 |
| Ireland | 51 | – | – | 51 | 38 | 1 | – | 39 |
| Hungary | 762 | 57 | – | 819 | 773 | 60 | – | 833 |
| Supranationals | 14,739 | 1,142 | (5) | 15,876 | 14,571 | 663 | (56) | 15,178 |
| All other countries | 51,142 | 2,894 | (506) | 53,530 | 49,596 | 2,328 | (878) | 51,046 |
| Subtotal | 157,909 | 13,918 | (666) | 171,161 | 154,933 | 9,476 | (1,459) | 162,950 |
| Corporate bonds1 | 173,905 | 11,921 | (628) | 185,198 | 168,353 | 9,212 | (1,397) | 176,168 |
| Other | 2,144 | 307 | (3) | 2,448 | 2,230 | 324 | (4) | 2,550 |
| Subtotal | 351,488 | 27,157 | (1,413) | 377,232 | 342,717 | 20,018 | (3,002) | 359,733 |
| Equity securities2 | 23,861 | 10,117 | (148) | 33,830 | 23,022 | 9,624 | (146) | 32,500 |
| Total | 375,349 | 37,274 | (1,561) | 411,062 | 365,739 | 29,642 | (3,148) | 392,233 |
1 Includes bonds issued by Spanish banks with a fair value of € 441 mn (2013: € 418 mn), thereof subordinated bonds with a fair value of € 125 mn (2013: € 115 mn).
2 Includes shares invested in Spanish banks with a fair value of € 487 mn (2013: € 402 mn).
| € mn | ||||||||
|---|---|---|---|---|---|---|---|---|
| as of 31 March 2014 | as of 31 December 2013 | |||||||
| Banks | Customers | Total | Banks | Customers | Total | |||
| Short-term investments and certificates of deposit | 3,506 | – | 3,506 | 3,275 | – | 3,275 | ||
| Reverse repurchase agreements | 333 | – | 333 | 613 | – | 613 | ||
| Collateral paid for securities borrowing transactions and derivatives | 354 | – | 354 | 315 | – | 315 | ||
| Loans | 58,8521 | 52,353 | 111,205 | 60,5111 | 51,595 | 112,106 | ||
| Other | 767 | 16 | 783 | 670 | 15 | 685 | ||
| Subtotal | 63,812 | 52,369 | 116,181 | 65,384 | 51,610 | 116,994 | ||
| Loan loss allowance | – | (142) | (142) | – | (194) | (194) | ||
| Total | 63,812 | 52,227 | 116,039 | 65,384 | 51,416 | 116,800 | ||
1 Primarily include covered bonds.
| as of 31 March 2014 |
as of 31 December 2013 |
|---|---|
| 1,875 | 1,537 |
| 6,538 | 6,494 |
| 4,432 | 4,463 |
| 117 | 115 |
| 12,962 | 12,609 |
| as of | |
|---|---|
| 31 March | 31 December |
| 2014 | 2013 |
| 4,746 | 4,354 |
| 15,722 | 15,837 |
| – | 159 |
| 20,468 | 20,350 |
| 991 | 1,046 |
| 720 | 807 |
| 22,179 | 22,203 |
| as of |
1 The respective entities have been prospectively reclassified from the business segment Asset Management to the business segment Life/Health. For further information please see note 3.
| € mn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Receivables | ||
| Policyholders | 5,890 | 5,489 |
| Agents | 5,489 | 4,424 |
| Reinsurers | 1,988 | 1,844 |
| Other | 5,029 | 4,160 |
| Less allowance for doubtful accounts | (736) | (720) |
| Subtotal | 17,660 | 15,197 |
| Tax receivables | ||
| Income taxes | 2,073 | 2,159 |
| Other taxes | 1,316 | 1,215 |
| Subtotal | 3,389 | 3,374 |
| Accrued dividends, interest and rent | 7,061 | 7,706 |
| Prepaid expenses | ||
| Interest and rent | 13 | 13 |
| Other prepaid expenses | 316 | 255 |
| Subtotal | 329 | 268 |
| Derivative financial instruments used for hedging that meet the criteria for hedge accounting and |
||
| firm commitments | 133 | 75 |
| Property and equipment | ||
| Real estate held for own use | 2,409 | 2,423 |
| Software | 1,889 | 1,832 |
| Equipment | 1,193 | 1,173 |
| Fixed assets of alternative investments | 1,330 | 1,304 |
| Subtotal | 6,821 | 6,732 |
| Other assets | 1,404 | 1,280 |
| Total | 36,797 | 34,632 |
| 2014 2013 |
|---|
| 138 131 |
| 3 – |
| 2 16 |
| 143 147 |
37 Consolidated Balance Sheets 38 Consolidated Income Statements
39 Consolidated Statements of
Comprehensive Income
40 Consolidated Statements of Changes in Equity
Investments in associates and joint ventures comprised an investment of € 138 mn in an associated Italian real estate company allocated to the reportable segment Western and Southern Europe (Property-Casualty). The sale of the asset will be completed in 2014. Upon measurement of the non-current asset classified as held for sale at fair value less costs to sell, no impairment was recognized for the three months ended 31 March 2014.
Real estate held for investment and held for own use comprised as of 31 March 2014 office buildings allocated to the reportable segment Growth Markets (Life/Health). The sale of these buildings is expected to be completed during the year ended 31 December 2014. Upon measurement of the non-current assets classified as held for sale at fair value less costs to sell, an impairment loss of in total € 1 mn was recognized for the three months ended 31 March 2014.
Real estate held for own use comprised as of 31 December 2013 an office building allocated to the reportable segment Asset Management which was sold as expected during the first quarter of 2014.
| € mn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Intangible assets with indefinite useful lives | ||
| Goodwill | 11,532 | 11,544 |
| Brand names1 | 294 | 296 |
| Subtotal | 11,826 | 11,840 |
| Intangible assets with finite useful lives | ||
| Distribution agreements2 | 981 | 995 |
| Customer relationships3 | 138 | 149 |
| Other4 | 114 | 116 |
| Subtotal | 1,233 | 1,260 |
| Total | 13,059 | 13,100 |
1 Includes primarily the brand name of Selecta AG, Muntelier.
2 Includes primarily the long-term distribution agreements with Commerzbank AG of € 363 mn (2013: € 373 mn), Banco Popular S.A. of € 366 mn (2013: € 369 mn), Yapı Kredi Bank of € 149 mn (2013: € 151 mn) and HSBC in Asia and Turkey of € 79 mn (2013: € 78 mn).
3 Includes primarily customer relationships from the acquisition of Selecta of € 110 mn (2013: € 118 mn) and Yapı Kredi of € 10 mn (2013: € 10 mn) and renewal rights acquired in the context of a business combination of € 15 mn (2013: € 19 mn).
4 Includes primarily acquired business portfolios of € 67 mn (2013: € 76 mn) and heritable building rights of € 17 mn (2013: € 17 mn).
| € mn | ||
|---|---|---|
| as of 31 March 2014 |
as of 31 December 2013 |
|
| Cost as of 1 January | 12,534 | 12,573 |
| Accumulated impairments as of 1 January | (990) | (894) |
| Carrying amount as of 1 January | 11,544 | 11,679 |
| Additions | 6 | 226 |
| Disposals | – | – |
| Foreign currency translation adjustments | (18) | (265) |
| Impairments | – | (96) |
| Carrying amount as of 31 December | 11,532 | 11,544 |
| Accumulated impairments as of 31 December | 990 | 990 |
| Cost as of 31 December | 12,522 | 12,534 |
| € mn | as of 31 March |
as of 31 December |
|---|---|---|
| 2014 | 2013 | |
| Financial liabilities held for trading | ||
| Derivative financial instruments | 5,954 | 6,010 |
| Other trading liabilities | 3 | 3 |
| Subtotal | 5,957 | 6,013 |
| Financial liabilities designated at fair value through income |
– | – |
| Total | 5,957 | 6,013 |
| € mn | as of 31 March 2014 | as of 31 December 2013 | ||||
|---|---|---|---|---|---|---|
| Banks | Customers | Total | Banks | Customers | Total | |
| Payable on demand | 187 | 4,459 | 4,646 | 696 | 4,473 | 5,169 |
| Savings deposits | – | 2,847 | 2,847 | – | 2,873 | 2,873 |
| Term deposits and certificates of deposit | 887 | 1,967 | 2,854 | 979 | 2,157 | 3,136 |
| Repurchase agreements | 1,311 | 2 | 1,313 | 1,028 | 3 | 1,031 |
| Collateral received from securities lending transactions and derivatives | 2,287 | – | 2,287 | 2,216 | – | 2,216 |
| Other | 4,567 | 3,805 | 8,372 | 5,050 | 3,634 | 8,684 |
| Total | 9,239 | 13,080 | 22,319 | 9,969 | 13,140 | 23,109 |
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
| € mn | as of 31 March 2014 |
as of 31 December 2013 |
|---|---|---|
| Property-Casualty | 56,478 | 56,614 |
| Life/Health | 10,100 | 9,961 |
| Consolidation | (12) | (9) |
| Total | 66,566 | 66,566 |
The following table reconciles the beginning and ending reserves of the Allianz Group, including the effect of reinsurance ceded, in the Property-Casualty business segment for the quarters ended 31 March 2014 and 2013. Although discounted loss reserves have been reclassified to "Reserves for insurance and investment contracts" in the balance sheet in 2013, the underlying business development of these Property-Casualty reserves is still considered in the loss and loss adjustment expenses as well as in the loss ratio and is, therefore, included in the development of the reserves below.
| € mn | |||||||
|---|---|---|---|---|---|---|---|
| 2014 | 2013 | ||||||
| Gross | Ceded | Net | Gross | Ceded | Net | ||
| As of 1 January | 56,614 | (6,071) | 50,543 | 62,711 | (6,905) | 55,806 | |
| Balance carry forward of discounted loss reserves | 3,207 | (306) | 2,901 | – | – | – | |
| Subtotal | 59,821 | (6,377) | 53,444 | 62,711 | (6,905) | 55,806 | |
| Loss and loss adjustment expenses incurred | |||||||
| Current year | 7,532 | (552) | 6,980 | 7,428 | (464) | 6,964 | |
| Prior years | (399) | 146 | (253) | (210) | 59 | (151) | |
| Subtotal | 7,133 | (406) | 6,727 | 7,218 | (405) | 6,813 | |
| Loss and loss adjustment expenses paid | |||||||
| Current year | (2,028) | 67 | (1,961) | (1,878) | 36 | (1,842) | |
| Prior years | (5,283) | 335 | (4,948) | (6,272) | 625 | (5,647) | |
| Subtotal | (7,311) | 402 | (6,909) | (8,150) | 661 | (7,489) | |
| Foreign currency translation adjustments and other changes | 261 | (14) | 247 | 337 | (43) | 294 | |
| Changes in the consolidated subsidiaries of the Allianz Group | – | – | – | (20) | – | (20) | |
| Subtotal | 59,904 | (6,395) | 53,509 | 62,096 | (6,692) | 55,404 | |
| Ending balance of discounted loss reserves | (3,426) | 295 | (3,131) | (3,082) | 206 | (2,876) | |
| As of 31 March | 56,478 | (6,100) | 50,378 | 59,014 | (6,486) | 52,528 | |
| € mn | as of 31 March 2014 |
as of 31 December 2013 |
|---|---|---|
| Aggregate policy reserves1 | 372,772 | 365,519 |
| Reserves for premium refunds | 43,476 | 37,772 |
| Other insurance reserves | 785 | 781 |
| Total | 417,033 | 404,072 |
1 Includes discounted loss reserves of € 3,426 mn (2013: € 3,207 mn) in the Property-Casualty business segment.
| as of 31 March 2014 |
as of 31 December 2013 |
|
|---|---|---|
| Payables | ||
| Policyholders | 4,305 | 4,911 |
| Reinsurance | 1,318 | 1,170 |
| Agents | 1,634 | 1,604 |
| Subtotal | 7,257 | 7,685 |
| Payables for social security | 435 | 395 |
| Tax payables | ||
| Income taxes | 3,039 | 2,580 |
| Other taxes | 1,672 | 1,269 |
| Subtotal | 4,711 | 3,849 |
| Accrued interest and rent | 456 | 681 |
| Unearned income | ||
| Interest and rent | 22 | 16 |
| Other | 283 | 261 |
| Subtotal | 305 | 277 |
| Provisions | ||
| Pensions and similar obligations | 8,094 | 7,594 |
| Employee related | 2,251 | 2,104 |
| Share-based compensation plans | 440 | 685 |
| Restructuring plans | 143 | 214 |
| Loan commitments | 40 | 42 |
| Contingent losses from non-insurance business | 124 | 130 |
| Other provisions | 1,420 | 1,617 |
| Subtotal | 12,512 | 12,386 |
| Deposits retained for reinsurance ceded | 1,951 | 1,874 |
| Derivative financial instruments used for hedging that meet the criteria for hedge accounting and firm commitments |
183 | 158 |
| Financial liabilities for puttable equity instruments | 2,365 | 2,613 |
| Other liabilities | 7,924 | 6,514 |
| Total | 38,099 | 36,432 |
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| € mn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Allianz SE1 | ||
| Senior bonds | 6,589 | 6,581 |
| Money market securities | 901 | 869 |
| Subtotal | 7,490 | 7,450 |
| Banking subsidiaries | ||
| Senior bonds | 556 | 580 |
| Subtotal | 556 | 580 |
| Total | 8,046 | 8,030 |
1 Includes senior bonds issued by Allianz Finance II B.V., guaranteed by Allianz SE and money market securities issued by Allianz Finance Corporation, a wholly-owned subsidiary of Allianz SE, which are fully and unconditionally guaranteed by Allianz SE.
| € mn | ||
|---|---|---|
| as of 31 March 2014 |
as of 31 December 2013 |
|
| Shareholders' equity | ||
| Issued capital | 1,169 | 1,169 |
| Capital reserves | 27,701 | 27,701 |
| Retained earnings1 | 19,026 | 17,785 |
| Foreign currency translation adjustments | (3,297) | (3,312) |
| Unrealized gains and losses (net)2 | 8,926 | 6,741 |
| Subtotal | 53,525 | 50,084 |
| Non-controlling interests | 2,835 | 2,765 |
| Total | 56,360 | 52,849 |
1 As of 31 March 2014, includes € (218) mn (2013: € (220) mn) related to treasury shares. 2 As of 31 March 2014, includes € 206 mn (2013: € 203 mn) related to cash flow hedges.
| € mn | ||
|---|---|---|
| as of | as of | |
| 31 March | 31 December | |
| 2014 | 2013 | |
| Allianz SE1 | ||
| Subordinated bonds2 | 9,767 | 10,856 |
| Subtotal | 9,767 | 10,856 |
| Banking subsidiaries | ||
| Subordinated bonds | 254 | 254 |
| Subtotal | 254 | 254 |
| All other subsidiaries | ||
| Subordinated bonds | 400 | 399 |
| Hybrid equity | 45 | 45 |
| Subtotal | 445 | 444 |
| Total | 10,466 | 11,554 |
1 Includes subordinated bonds issued by Allianz Finance II B.V. and guaranteed by Allianz SE.
2 Change due to redemption of a € 1.5 bn bond and the issuance of a CHF 0.5 bn bond in the first quarter of 2014.
| Property Consoli three months ended 31 March Casualty Life/Health dation Group 2014 Premiums written Direct 14,454 6,453 – 20,907 Assumed 763 162 (21) 904 Subtotal 15,217 6,615 (21) 21,811 Ceded (1,227) (156) 21 (1,362) Net 13,990 6,459 – 20,449 Change in unearned premiums Direct (3,819) (157) – (3,976) Assumed (94) (25) 3 (116) Subtotal (3,913) (182) 3 (4,092) Ceded 333 (1) (3) 329 Net (3,580) (183) – (3,763) Premiums earned Direct 10,635 6,296 – 16,931 Assumed 669 137 (18) 788 Subtotal 11,304 6,433 (18) 17,719 Ceded (894) (157) 18 (1,033) Net 10,410 6,276 – 16,686 2013 Premiums written Direct 14,516 6,460 – 20,976 Assumed 681 162 (14) 829 Subtotal 15,197 6,622 (14) 21,805 Ceded (1,310) (149) 14 (1,445) Net 13,887 6,473 – 20,360 Change in unearned premiums Direct (3,843) (119) – (3,962) Assumed (111) 5 (1) (107) Subtotal (3,954) (114) (1) (4,069) Ceded 379 1 1 381 Net (3,575) (113) – (3,688) Premiums earned Direct 10,673 6,341 – 17,014 Assumed 570 167 (15) 722 Subtotal 11,243 6,508 (15) 17,736 Ceded (931) (148) 15 (1,064) Net 10,312 6,360 – 16,672 |
€ mn | ||
|---|---|---|---|
| 2014 43 |
2013 |
|---|---|
| 47 | |
| 298 | 299 |
| 3,296 | 3,281 |
| 37 | 27 |
| 207 | 191 |
| 1,216 | 1,283 |
| 42 | 39 |
| 5,139 | 5,167 |
40 Consolidated Statements of Changes in Equity
| € mn | ||||||
|---|---|---|---|---|---|---|
| three months ended 31 March | Property Casualty |
Life/Health | Asset Management |
Corporate and Other |
Consolidation | Group |
| 2014 | ||||||
| Income (expenses) from financial assets and liabilities held for trading (net) | (58) | (372) | (1) | 1 | – | (430) |
| Income (expenses) from financial assets and liabilities designated at fair value through income (net) |
– | 52 | – | – | – | 52 |
| Income (expenses) from financial liabilities for puttable equity instruments (net) | – | (27) | – | – | – | (27) |
| Foreign currency gains and losses (net) | 13 | 78 | – | (5) | – | 86 |
| Total | (45) | (269) | (1) | (4) | – | (319) |
| 2013 | ||||||
| Income (expenses) from financial assets and liabilities held for trading (net) | (45) | (656) | – | 40 | (1) | (662) |
| Income (expenses) from financial assets and liabilities designated at fair value through income (net) |
(2) | 87 | 19 | 1 | – | 105 |
| Income (expenses) from financial liabilities for puttable equity instruments (net) | 6 | (38) | (13) | – | – | (45) |
| Foreign currency gains and losses (net) | 40 | 376 | 1 | (40) | – | 377 |
| Total | (1) | (231) | 7 | 1 | (1) | (225) |
For the three months ended 31 March 2014, income and expenses from financial assets and liabilities held for trading (net) in the business segment Life/Health includes expenses of € 378 mn (2013: € 669 mn) from derivative financial instruments. Included in this are expenses of € 61 mn (2013: € 367 mn) from financial derivative positions of German entities, of which income of € 143 mn (2013: € 2 mn) relates to duration management, expenses of € 119 mn (2013: income of € 39 mn) relate to protection against equity fluctuations and expenses of € 84 mn (2013: € 395 mn) relate to protection against foreign exchange rate fluctuations. Also included are expenses related to fixed-indexed annuity products and guaranteed benefits under unit-linked contracts of € 246 mn (2013: € 251 mn) from U.S. entities.
For the three months ended 31 March 2014, income and expenses from financial assets and liabilities held for trading (net) in the business segment Corporate and Other includes income of € 5 mn (2013: € 52 mn) from financial derivative instruments to protect investments and liabilities against foreign exchange rate fluctuations. Income of € 2 mn (2013: expenses of € 4 mn) from the hedges of share-based compensation plans is also included.
For the three months ended 31 March 2014, income and expenses from financial assets and liabilities designated at fair value through income (net) in the business segment Life/Health includes income from equity investments of € 34 mn (2013: € 49 mn) and income of € 18 mn (2013: € 38 mn) from debt investments.
Foreign currency gains and losses are reported within income from financial assets and liabilities carried at fair value through income (net). 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 profit or loss. The Allianz Group uses freestanding
derivatives, included in the line item income (expenses) from financial assets and liabilities held for trading (net), to hedge against foreign currency fluctuations. For these derivatives, expenses in the amount of € 67 mn (2013: € 368 mn) were recognized for the three months ended 31 March 2014.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Realized gains | ||
| Available-for-sale investments | ||
| Equity securities | 422 | 597 |
| Debt securities | 475 | 537 |
| Subtotal | 897 | 1,134 |
| Investments in associates and joint ventures1 | 10 | 37 |
| Real estate held for investment | 17 | 49 |
| Loans and advances to banks and customers | 69 | 46 |
| Non-current assets classified as held for sale | – | 12 |
| Subtotal | 993 | 1,278 |
| Realized losses | ||
| Available-for-sale investments | ||
| Equity securities | (25) | (56) |
| Debt securities | (55) | (68) |
| Subtotal | (80) | (124) |
| Investments in associates and joint ventures2 | (4) | (3) |
| Real estate held for investment | (3) | (2) |
| Non-current assets classified as held for sale | – | (3) |
| Subtotal | (87) | (132) |
| Total | 906 | 1,146 |
1 During the three months ended 31 March 2014, includes no realized gains from the disposal of subsidiaries and businesses (2013: € 37 mn).
2 During the three months ended 31 March 2014 and 2013, includes no realized losses from the disposal of subsidiaries.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Property-Casualty | ||
| Fees from credit and assistance business | 196 | 183 |
| Service agreements | 110 | 107 |
| Subtotal | 306 | 290 |
| Life/Health | ||
| Service agreements | 23 | 18 |
| Investment advisory | 206 | 122 |
| Subtotal | 229 | 140 |
| Asset Management | ||
| Management fees | 1,655 | 1,803 |
| Loading and exit fees | 170 | 180 |
| Performance fees | 19 | 276 |
| Other | 17 | 27 |
| Subtotal | 1,861 | 2,286 |
| Corporate and Other | ||
| Service agreements | 17 | 13 |
| Investment advisory and banking activities | 150 | 155 |
| Subtotal | 167 | 168 |
| Consolidation | (155) | (130) |
| Total | 2,408 | 2,754 |
| Condensed Consolidated Interim Financial Statements | B | ||||||
|---|---|---|---|---|---|---|---|
| ----------------------------------------------------- | --- | -- | -- | -- | -- | -- | -- |
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Realized gains from disposals of real estate | ||
| held for own use | 20 | 15 |
| Income from alternative investments | 57 | 42 |
| Other | 1 | 3 |
| Total | 78 | 60 |
| 2013 | |
|---|---|
| 169 | 178 |
| 169 | 178 |
| (54) | (55) |
| (114) | (122) |
| (8) | (8) |
| (176) | (185) |
| 2 | 3 |
| (5) | (4) |
| 2014 |
1 This consolidation effect results from the deferred policyholder participation, recognized on the result from fully consolidated private equity investments within operating profit in the Life/Health business segment, that was reclassified into expenses from fully consolidated private equity investments in nonoperating profit to ensure a consistent presentation of the Allianz Group's operating profit.
| € mn | ||||
|---|---|---|---|---|
| three months ended 31 March | Property Casualty |
Life/Health | Consoli dation |
Group |
| 2014 | ||||
| Gross | ||||
| Claims and insurance benefits paid |
(7,311) | (5,184) | 9 | (12,486) |
| Change in reserves for loss and loss adjustment expenses |
178 | (26) | 2 | 154 |
| Subtotal | (7,133) | (5,210) | 11 | (12,332) |
| Ceded | ||||
| Claims and insurance benefits paid |
402 | 114 | (8) | 508 |
| Change in reserves for loss and loss adjustment |
||||
| expenses | 4 | 15 | (4) | 15 |
| Subtotal | 406 | 129 | (12) | 523 |
| Net | ||||
| Claims and insurance benefits paid |
(6,909) | (5,070) | 1 | (11,978) |
| Change in reserves for loss and loss adjustment expenses |
182 | (11) | (2) | 169 |
| Total | (6,727) | (5,081) | (1) | (11,809) |
| 2013 | ||||
| Gross | ||||
| Claims and insurance benefits paid |
(8,150) | (5,050) | 9 | (13,191) |
| Change in reserves for loss and loss adjustment expenses |
932 | 78 | (1) | 1,009 |
| Subtotal | (7,218) | (4,972) | 8 | (12,182) |
| Ceded | ||||
| Claims and insurance benefits paid |
661 | 159 | (8) | 812 |
| Change in reserves for loss and loss adjustment |
||||
| expenses | (256) | (13) | 1 | (268) |
| Subtotal | 405 | 146 | (7) | 544 |
| Net | ||||
| Claims and insurance benefits paid |
(7,489) | (4,891) | 1 | (12,379) |
| Change in reserves for loss and loss adjustment expenses |
676 | 65 | – | 741 |
| Total | (6,813) | (4,826) | 1 | (11,638) |
| € mn | ||||
|---|---|---|---|---|
| three months ended 31 March | Property Casualty |
Life/Health | Consoli dation |
Group |
| 2014 | ||||
| Gross | ||||
| Aggregate policy reserves | (65) | (1,993) | 1 | (2,057) |
| Other insurance reserves | (3) | (54) | – | (57) |
| Expenses for premium refunds |
(59) | (1,323) | (2) | (1,384) |
| Subtotal | (127) | (3,370) | (1) | (3,498) |
| Ceded | ||||
| Aggregate policy reserves | 2 | 51 | – | 53 |
| Other insurance reserves | – | 3 | – | 3 |
| Expenses for premium refunds |
– | 2 | – | 2 |
| Subtotal | 2 | 56 | – | 58 |
| Net | ||||
| Aggregate policy reserves | (63) | (1,942) | 1 | (2,004) |
| Other insurance reserves | (3) | (51) | – | (54) |
| Expenses for premium refunds |
(59) | (1,321) | (2) | (1,382) |
| Total | (125) | (3,314) | (1) | (3,440) |
| 2013 | ||||
| Gross | ||||
| Aggregate policy reserves | (49) | (2,026) | – | (2,075) |
| Other insurance reserves Expenses for premium |
(1) | (44) | – | (45) |
| refunds | (63) | (1,918) | 15 | (1,966) |
| Subtotal Ceded |
(113) | (3,988) | 15 | (4,086) |
| Aggregate policy reserves | 1 | (18) | – | (17) |
| Other insurance reserves | (1) | 3 | – | 2 |
| Expenses for premium refunds |
– | 2 | – | 2 |
| Subtotal | – | (13) | – | (13) |
| Net | ||||
| Aggregate policy reserves | (48) | (2,044) | – | (2,092) |
| Other insurance reserves | (2) | (41) | – | (43) |
| Expenses for premium refunds |
(63) | (1,916) | 15 | (1,964) |
| Total | (113) | (4,001) | 15 | (4,099) |
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets | 39 Consolidated Statements of | 40 Consolidated Statements of Changes | 41 Consolidated Statements of Cash Flows | |
| 38 Consolidated Income Statements | Comprehensive Income | in Equity | 43 Notes |
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Liabilities to banks and customers | (61) | (68) |
| Deposits retained on reinsurance ceded | (12) | (12) |
| Certificated liabilities | (67) | (68) |
| Subordinated liabilities | (141) | (175) |
| Other | (21) | (28) |
| Total | (302) | (351) |
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Investment management expenses | (113) | (128) |
| Depreciation of real estate held for investment | (56) | (50) |
| Other expenses from real estate held for investment |
(30) | (30) |
| Total | (199) | (208) |
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Additions to allowances including direct impairments |
(28) | (48) |
| Amounts released | 12 | 28 |
| Recoveries on loans previously impaired | 7 | 6 |
| Total | (9) | (14) |
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Impairments | ||
| Available-for-sale investments | ||
| Equity securities | (134) | (114) |
| Debt securities | (226) | (4) |
| Subtotal | (360) | (118) |
| Real estate held for investment | – | (12) |
| Loans and advances to banks and customers | (1) | (4) |
| Non-current assets classified as held for sale | (1) | – |
| Total | (362) | (134) |
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Property-Casualty | ||
| Acquisition costs | ||
| Incurred | (2,765) | (2,712) |
| Commissions and profit received on reinsurance business ceded |
117 | 108 |
| Deferrals of acquisition costs | 1,828 | 1,751 |
| Amortization of deferred acquisition costs | (1,422) | (1,336) |
| Subtotal | (2,242) | (2,189) |
| Administrative expenses | (1,207)1 | (720) |
| Subtotal | (3,449) | (2,909) |
| Life/Health | ||
| Acquisition costs | ||
| Incurred | (1,215) | (1,121) |
| Commissions and profit received on reinsurance business ceded |
24 | 25 |
| Deferrals of acquisition costs | 834 | 736 |
| Amortization of deferred acquisition costs | (529) | (557) |
| Subtotal | (886) | (917) |
| Administrative expenses | (375) | (331) |
| Subtotal | (1,261) | (1,248) |
| Asset Management | ||
| Personnel expenses | (575)1 | (709) |
| Non-personnel expenses | (309) | (324) |
| Subtotal | (884) | (1,033) |
| Corporate and Other | ||
| Administrative expenses | 3801 | (303) |
| Subtotal | 380 | (303) |
| Consolidation | (116)1 | 4 |
| Total | (5,330) | (5,489) |
1 Including one-off effect from pension revaluation. Please refer to note 3 for further details.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Property-Casualty | ||
| Fees from credit and assistance business | (203) | (179) |
| Service agreements | (88) | (96) |
| Subtotal | (291) | (275) |
| Life/Health | ||
| Service agreements | (11) | (12) |
| Investment advisory | (76) | (44) |
| Subtotal | (87) | (56) |
| Asset Management | ||
| Commissions | (307) | (376) |
| Other | (38) | (13) |
| Subtotal | (345) | (389) |
| Corporate and Other | ||
| Service agreements | (70) | (52) |
| Investment advisory and banking activities | (64) | (60) |
| Subtotal | (134) | (112) |
| Consolidation | 75 | 54 |
| Total | (782) | (778) |
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Realized losses from disposals of real estate held for own use |
(4) | – |
| Expenses from alternative investments | (25) | (21) |
| Other | (1) | (25) |
| Total | (30) | (46) |
| Total | (867) | (877) |
|---|---|---|
| Deferred income taxes | 121 | (87) |
| Current income taxes | (988) | (790) |
| € mn three months ended 31 March |
2014 | 2013 |
For the three months ended 31 March 2014 and 2013, the income taxes relating to components of other comprehensive income consist of the following:
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Items that may be reclassified to profit or loss in future periods |
||
| Foreign currency translation adjustments | 1 | 11 |
| Available-for-sale investments | (920) | 245 |
| Cash flow hedges | (2) | (1) |
| Share of other comprehensive income of associates |
(1) | – |
| Miscellaneous | (30) | 103 |
| Items that may never be reclassified to profit or loss |
||
| Actuarial gains (losses) on defined benefit plans | 159 | 14 |
| Total | (793) | 372 |
41 Consolidated Statements of Cash Flows 43 Notes
The following table compares the carrying amount with the fair value of the Allianz Group's financial assets and financial liabilities:
€ mn
| as of 31 March 2014 | as of 31 December 2013 | ||||
|---|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | ||
| Financial assets | |||||
| Cash and cash equivalents | 12,167 | 12,167 | 11,207 | 11,207 | |
| Financial assets held for trading | 1,928 | 1,928 | 2,512 | 2,512 | |
| Financial assets designated at fair value through income | 3,961 | 3,961 | 4,149 | 4,149 | |
| Available-for-sale investments | 411,062 | 411,062 | 392,233 | 392,233 | |
| Held-to-maturity investments | 4,117 | 4,641 | 4,140 | 4,647 | |
| Investments in associates and joint ventures | 3,222 | 3,894 | 3,098 | 3,597 | |
| Real estate held for investment | 10,934 | 15,768 | 10,783 | 15,625 | |
| Loans and advances to banks and customers | 116,039 | 131,311 | 116,800 | 129,528 | |
| Financial assets for unit-linked contracts | 82,870 | 82,870 | 81,064 | 81,064 | |
| Derivative financial instruments and firm commitments included in other assets | 133 | 133 | 75 | 75 | |
| Real estate held for own use | 2,409 | 3,647 | 2,423 | 3,626 | |
| Financial liabilities | |||||
| Financial liabilities held for trading | 5,957 | 5,957 | 6,013 | 6,013 | |
| Liabilities to banks and customers | 22,319 | 22,605 | 23,109 | 23,282 | |
| Financial liabilities for unit-linked contracts | 82,870 | 82,870 | 81,064 | 81,064 | |
| Derivative financial instruments and firm commitments included in other liabilities | 183 | 183 | 158 | 158 | |
| Financial liabilities for puttable equity instruments | 2,365 | 2,365 | 2,613 | 2,613 | |
| Certificated liabilities | 8,046 | 8,701 | 8,030 | 8,576 | |
| Subordinated liabilities | 10,466 | 11,483 | 11,554 | 12,323 |
The Allianz Group carries certain financial instruments at fair value and discloses the fair value of most other assets and liabilities. The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The maximum exposure to credit risk of financial assets, without taking collateral into account, is represented by their carrying amount except for available-for-sale financial assets, for which it is represented by the amortized cost amount.
The degree of judgment used in measuring the fair value of financial instruments closely correlates with the level of non-market observable inputs. The Allianz Group maximizes the use of observable
inputs and minimizes the use of non-market observable inputs when measuring fair value. Observability of input parameters is influenced by various factors such as type of the financial instrument, whether a market is established for the particular instrument, specific transaction characteristics, liquidity as well as general market conditions.
If the fair value cannot be measured reliably, amortized cost is used as a proxy for determining fair values. As of 31 March 2014, fair values could not be reliably measured for equity investments with carrying amounts totaling € 225 mn (31 December 2013: € 214 mn). These investments are primarily investments in privately held corporations and partnerships.
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.
In general, the subsidiaries assume responsibility for assessing fair values and hierarchies of assets and liabilities. This is consistent with the decentralized organizational structure of the Allianz Group and reflects market insights of local managers. Estimates and assumptions are particularly significant when determining the fair value of financial instruments for which at least one significant input is not based on observable market data (classified within level 3 of the fair value hierarchy). The availability of market information is determined by the relative trading levels of identical or similar instruments in the market, with emphasis placed on information that represents actual market activity or binding quotations from brokers or dealers. If no sufficient market information is available, management's best estimate of a particular input is used to determine the value.
The level 1 inputs of financial instruments that are traded in active markets are based on unadjusted quoted market prices or dealer price quotations on the last exchange trading day prior to or at the balance sheet date, if the latter is a trading day.
At the end of 2013, the Institute of Public Auditors in Germany (IDW) published an interpretation of IFRS 13 (IDW RS HFA 47). For prices provided by third parties, HFA 47 states that composite prices generally have to be classified in level 2 of the fair value hierarchy and only single (unadjusted) quotes could qualify for level 1. As the Allianz Group uses prices provided by service agencies on a consensus level, beginning 4Q 2013 the Allianz Group shifted most fixed-income securities from level 1 to level 2 due to this new interpretation. However, the interpretation is still subject to discussion and, depending on the final outcome, re-transfers are possible in subsequent reporting periods.
Furthermore, level 2 applies if the market for a financial instrument is not active or when the fair value is determined by using valuation techniques based on observable input parameters. Such market inputs are observable substantially over the full term of the asset or liability and include references to formerly quoted prices for identical instruments from an active market, quoted prices for identical instruments from an inactive market, quoted prices for similar instruments from active markets and quoted prices for similar instruments from inactive markets. Market observable inputs also include interest rate yield curves, volatilities and foreign currency exchange rates.
Where observable market inputs are not available, the fair value is based on valuation techniques using non-market observable inputs. Valuation techniques include the discounted cash flow method, comparison to similar instruments for which observable market prices exist and other valuation models. Appropriate adjustments are made for credit risks. In particular, when observable market inputs are not available, the use of estimates and assumptions may have a high impact on the valuation outcome.
The following financial assets and liabilities are carried at fair value on a recurring basis:
37 Consolidated Balance Sheets
38 Consolidated Income Statements
39 Consolidated Statements of Comprehensive Income
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
| Level 1 – Quoted prices in active markets |
Level 2 – Market observable inputs |
Level 3 – Non-market observable inputs |
Total fair value |
|---|---|---|---|
| 100 | 271 | – | 371 |
| 49 | 102 | 14 | 165 |
| 248 | 1,113 | 31 | 1,392 |
| 397 | 1,486 | 45 | 1,928 |
| 976 | 1,071 | 1 | 2,048 |
| 1,803 | – | 110 | 1,913 |
| 2,779 | 1,071 | 111 | 3,961 |
| 3,176 | 2,557 | 156 | 5,889 |
| 40 | 2,503 | – | 2,543 |
| – | 12,045 | 32 | 12,077 |
| 208 | 3,384 | 213 | 3,805 |
| 26,726 | 144,360 | 75 | 171,161 |
| 14,999 | 166,848 | 3,351 | 185,198 |
| 252 | 1,584 | 612 | 2,448 |
| 26,995 | 740 | 6,095 | 33,830 |
| 69,220 | 331,464 | 10,378 | 411,062 |
| 80,233 | 2,460 | 177 | 82,870 |
| 20 | 113 | – | 133 |
| 152,649 | 336,594 | 10,711 | 499,954 |
| 49 | 1,357 | 4,548 | 5,954 |
| – | 3 | – | 3 |
| 49 | 1,360 | 4,548 | 5,957 |
| 80,233 | 2,460 | 177 | 82,870 |
| – | 183 | – | 183 |
| 2,346 | 19 | – | 2,365 |
| 82,628 | 4,022 | 4,725 | 91,375 |
€ mn
| Level 1 – | Level 2 – | Level 3 – | ||
|---|---|---|---|---|
| Quoted prices in active markets |
Market observable inputs |
Non-market observable inputs |
Total fair value | |
| Financial assets | ||||
| Financial assets carried at fair value through income | ||||
| Financial assets held for trading | ||||
| Debt securities | – | 360 | – | 360 |
| Equity securities | 22 | 103 | 14 | 139 |
| Derivative financial instruments | 284 | 1,691 | 38 | 2,013 |
| Subtotal | 306 | 2,154 | 52 | 2,512 |
| Financial assets designated at fair value through income | ||||
| Debt securities | – | 2,278 | 1 | 2,279 |
| Equity securities | 1,867 | – | 3 | 1,870 |
| Subtotal | 1,867 | 2,278 | 4 | 4,149 |
| Subtotal | 2,173 | 4,432 | 56 | 6,661 |
| Available-for-sale investments | ||||
| Government and agency mortgage-backed securities (residential and commercial) | – | 2,602 | – | 2,602 |
| Corporate mortgage-backed securities (residential and commercial) | – | 11,800 | 33 | 11,833 |
| Other asset-backed securities | – | 3,418 | 212 | 3,630 |
| Government and government agency bonds | 35,570 | 127,324 | 56 | 162,950 |
| Corporate bonds | 18,939 | 154,080 | 3,149 | 176,168 |
| Other debt securities | – | 1,777 | 773 | 2,550 |
| Equity securities | 26,013 | 765 | 5,722 | 32,500 |
| Subtotal | 80,522 | 301,766 | 9,945 | 392,233 |
| Financial assets for unit-linked contracts | 78,230 | 2,655 | 179 | 81,064 |
| Derivative financial instruments and firm commitments included in other assets | – | 75 | – | 75 |
| Total | 160,925 | 308,928 | 10,180 | 480,033 |
| Financial liabilities | ||||
| Financial liabilities held for trading | ||||
| Derivative financial instruments | 136 | 1,447 | 4,427 | 6,010 |
| Other trading liabilities | – | 3 | – | 3 |
| Subtotal | 136 | 1,450 | 4,427 | 6,013 |
| Financial liabilities for unit-linked contracts | 78,230 | 2,655 | 179 | 81,064 |
| Derivative financial instruments and firm commitments included in other liabilities | – | 158 | – | 158 |
| Financial liabilities for puttable equity instruments | 2,595 | 18 | – | 2,613 |
| Total | 80,961 | 4,281 | 4,606 | 89,848 |
Comprehensive Income
The Allianz Group follows the interpretation of IFRS 13 (IDW RS HFA 47) by the Institute of Public Auditors in Germany (IDW) and classifies composite prices in level 2 of the fair value hierarchy. As the Allianz Group uses prices provided by pricing agencies on a consensus level, beginning 4Q 2013 the Allianz Group shifted most fixed-income securities from level 1 to level 2 due to this new interpretation.
Furthermore, the Allianz Group uses valuation techniques consistent with the three widely used classes of valuation techniques listed in IFRS 13:
There is no one-to-one connection between valuation technique and hierarchy level. Depending on whether the valuation techniques are based on significant observable or unobservable inputs, financial instruments are classified in the fair value hierarchy.
The fair value is mainly determined using the market approach. In some cases, the fair value is determined based on the income approach using interest rates and yield curves observable at commonly quoted intervals.
For level 2, the fair value is mainly determined based on the income approach using present value techniques and the Black-Scholes-Merton model. Primary inputs to the valuation include volatilities, interest rates, yield curves, and foreign exchange rates observable at commonly quoted intervals.
For level 3, derivatives are mainly priced by third-party vendors. Controls are in place to monitor the valuations of these derivatives. Valuations are mainly derived based on the income approach.
For level 2, the fair value is determined using the market approach. For level 3, equity securities mainly represent newly acquired unlisted equity securities measured at cost.
Available-for-sale investments – Debt securities Debt securities include:
The valuation techniques for these debt securities are similar. For level 2 and level 3, the fair value is determined using the market and the income approach. Primary inputs to the market approach are quoted prices for identical or comparable assets in active markets where the comparability between security and benchmark defines the fair value level. The income approach in most cases means a present value technique where either the cash flow or the discount curve is adjusted to reflect credit risk and liquidity risk. Depending on the observability of these risk parameters in the market, the security is classified in level 2 or level 3.
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 participants. 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 managers. For certain level 3 equity securities, the invested capital is considered to be a reasonable proxy for the fair value.
For level 2, the fair value is determined using the market or the income approach. For the income approach, primary observable inputs include yield curves observable at commonly quoted intervals. For level 3, the fair value is mainly determined based on the net asset value.
Financial liabilities for unit-linked contracts are valued based on their corresponding assets.
The fair value of the derivatives is mainly determined based on the income approach using present value techniques. Primary inputs include yield curves observable at commonly quoted intervals. The derivatives are mainly used for hedging purposes. Certain derivatives are priced by Bloomberg functions, such as Black-Scholes Option Pricing or the swap manager tool.
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.
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.
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 are generally required to be recorded at the redemption amount with changes recognized in income. For level 2, the fair value is mainly determined based on the income approach using present value techniques. For level 3, equity securities mainly represent private equity funds. The fair value is in most cases derived from the net asset value based on the valuation of the underlying private equity companies as provided by third-party vendors.
In general, financial assets and liabilities are transferred from level 1 to level 2 when liquidity, trade frequency and activity are no longer indicative of an active market. Conversely, the same policy applies for transfers from level 2 to level 1.
At the end of 2013, the Allianz Group followed an interpretation of IFRS 13 (IDW RS HFA 47) by the Institute of Public Auditors in Germany (IDW) and transferred most fixed-income securities from level 1 to level 2. Re-transfers in subsequent reporting periods are possible given that the interpretation is still under discussion.
Equity securities within available-for-sale investments classified as level 3 mainly comprise private equity fund investments as well as alternative investments of the Allianz Group and are in most cases delivered as net asset values by the fund managers (€ 5.0 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 managers and hence a narrative sensitivity analysis is not applicable. The fund's asset manager generally prices the underlying single portfolio companies in line with the International Private Equity and Venture Capital Valuation (IPEV) guidelines using discounted cash flow (income approach) or multiple methods (market approach). For certain investments, the invested capital is considered to be a reasonable proxy for the fair value. In these cases, sensitivity analyses are also not applicable.
39 Consolidated Statements of
Comprehensive Income
in Equity
40 Consolidated Statements of Changes 43 Notes
41 Consolidated Statements of Cash Flows
Corporate bonds within available-for-sale investments classified as level 3 are mainly priced based on the income approach (€ 3.0 bn). The primary non-market observable input used in the discounted cash flow method is an option adjusted spread taken from a benchmark security. A significant yield increase of the benchmark securities in isolation could result in a decreased fair value, while a significant yield decrease could result in an increased fair value. However, a 10% stress of the main non-market observable inputs only has an immaterial impact on fair value.
Financial liabilities held for trading mainly include embedded derivative financial instruments relating to annuity products that are priced internally using discounted cash flow models (€ 4.4 bn). A significant decrease (increase) in surrender rates, mortality rates or the utilization of annuitization benefits could result in a higher (lower) fair value. For products with a high death benefit, surrender rates may show an opposite effect. However, a 10% stress of the main nonmarket observable inputs only has an immaterial impact on fair value.
The following table shows the quantitative description of valuation technique(s) and input(s) used for the level 3 portfolios described above.
| € mn | ||
|---|---|---|
| Non-market observable input(s) |
Fair value as of | Description |
| Available-for-sale investments | ||
| n/a | Equity securities | |
| Option adjusted spread | Corporate bonds | |
| Financial liabilities held for trading | ||
| 4,440 | Derivative financial instruments | |
| Annuitizations | Fixed-indexed annuities | |
| Surrenders | ||
| Mortality | ||
| Withdrawal benefit election | ||
| Volatility | ||
| Surrenders | Variable annuities | |
| Mortality | ||
| 31 March 2014 Valuation technique(s) 4,977 Net asset value 2,961 Discounted cash flow method 4,039 Present value of insurance cash flow 401 Deterministic discounted cash flow |
The following tables show a reconciliation of the financial instruments carried at fair value and classified as level 3.
€ mn
| Carrying value (fair value) as of |
Additions through | Net transfers | Disposals through | |
|---|---|---|---|---|
| 1 January 2014 | purchases and issues | into (out of) level 3 | sales and settlements | |
| Financial assets | ||||
| Financial assets carried at fair value through income | ||||
| Financial assets held for trading | ||||
| Debt securities | – | – | – | – |
| Equity securities | 14 | – | – | – |
| Derivative financial instruments | 38 | 2 | – | (18) |
| Subtotal | 52 | 2 | – | (18) |
| Financial assets designated at fair value through income | ||||
| Debt securities | 1 | – | – | – |
| Equity securities | 3 | 110 | – | – |
| Subtotal | 4 | 110 | – | – |
| Available-for-sale investments | ||||
| Corporate mortgage-backed securities (residential and commercial) | 33 | – | – | (2) |
| Other asset-backed securities | 212 | 1 | – | (7) |
| Government and government agency bonds | 56 | 19 | – | (1) |
| Corporate bonds | 3,149 | 119 | 31 | (29) |
| Other debt securities | 773 | 14 | – | (52) |
| Equity securities | 5,722 | 283 | – | (224) |
| Subtotal | 9,945 | 436 | 31 | (315) |
| Financial assets for unit-linked contracts | 179 | 25 | – | (26) |
| Total financial assets at fair value | 10,180 | 573 | 31 | (359) |
€ mn
| Carrying value (fair value) as of 1 January 2014 |
Additions through purchases and issues |
Net transfers into (out of) level 3 |
Disposals through sales and settlements |
|
|---|---|---|---|---|
| Financial liabilities | ||||
| Financial liabilities held for trading | ||||
| Derivative financial instruments | 4,427 | 276 | – | (102) |
| Financial liabilities for unit-linked contracts | 179 | 25 | – | (26) |
| Financial liabilities for puttable equity instruments | – | – | – | – |
| Total financial liabilities at fair value | 4,606 | 301 | – | (128) |
| B | Condensed Consolidated Interim Financial Statements | |||
|---|---|---|---|---|
| 37 Consolidated Balance Sheets 38 Consolidated Income Statements |
39 Consolidated Statements of Comprehensive Income |
40 Consolidated Statements of Changes in Equity |
41 Consolidated Statements of Cash Flows 43 Notes |
|
| Carrying value (fair value) as of Additions through Net transfers Disposals through 1 January 2014 purchases and issues into (out of) level 3 sales and settlements |
Net gains (losses) recognized in consolidated income statement |
Net gains (losses) recognized in other comprehensive income |
Impairments | Foreign currency translation adjustments |
Changes in the consolidated subsidiaries of the Allianz Group |
Carrying value (fair value) as of 31 March 2014 |
Net gains (losses) in profit or loss attributable to a change in unrealized gains or losses for financial assets held at the reporting date |
|---|---|---|---|---|---|---|---|
| Financial assets Financial assets carried at fair value through income |
|||||||
| Financial assets held for trading | |||||||
| Debt securities – – – – |
– | – | – | – | – | – | – |
| Equity securities 14 – – – |
– | – | – | – | – | 14 | – |
| Derivative financial instruments 38 2 – (18) |
9 | – | – | – | – | 31 | – |
| 52 2 – (18) |
9 | – | – | – | – | 45 | – |
| Financial assets designated at fair value through income | |||||||
| Debt securities 1 – – – |
– | – | – | – | – | 1 | – |
| Equity securities 3 110 – – |
– | – | – | – | (3) | 110 | – |
| 4 110 – – |
– | – | – | – | (3) | 111 | – |
| Available-for-sale investments | |||||||
| Corporate mortgage-backed securities (residential and commercial) 33 – – (2) |
1 | – | – | – | – | 32 | – |
| Other asset-backed securities 212 1 – (7) |
1 | 6 | – | – | – | 213 | – |
| Government and government agency bonds 56 19 – (1) |
– | 1 | – | – | – | 75 | – |
| 3,149 119 31 (29) |
– | 82 | – | (1) | – | 3,351 | – |
| 773 14 – (52) |
– | (47) | (4) | – | (72) | 612 | – |
| 5,722 283 – (224) |
3 | 200 | (22) | 6 | 127 | 6,095 | – |
| 9,945 436 31 (315) |
5 | 242 | (26) | 5 | 55 | 10,378 | – |
| 179 25 – (26) |
(1) | – | – | – | – | 177 | – |
| 10,180 573 31 (359) |
13 | 242 | (26) | 5 | 52 | 10,711 | – |
| Net losses (gains) in profit or loss attributable to a change in unrealized gains or losses for financial liabilities held at the reporting date |
Carrying value (fair value) as of 31 March 2014 |
Changes in the consolidated subsidiaries of the Allianz Group |
Foreign currency translation adjustments |
Impairments | Net losses (gains) recognized in other comprehensive income |
Net losses (gains) recognized in consolidated income statement |
|---|---|---|---|---|---|---|
| 4,548 | – | (1) | – | – | (52) | |
| 177 | – | – | – | – | (1) | |
| – | – | – | – | – | – | |
| 4,725 | – | (1) | – | – | (53) |
Certain financial assets are measured at fair value on a non-recurring basis when events or changes in circumstances indicate that the carrying amount may not be recoverable.
If financial assets are measured at fair value on a non-recurring basis at the time of impairment, corresponding disclosures can be found in note 31 – Impairments of investments (net). If fair value less cost to sell is used as the measurement basis under IFRS 5, corresponding disclosures can be found in note 10 – Non-current assets classified as held for sale.
fair value hierarchy as of 31 March 2014 (items not carried at fair value)
| € mn | ||||
|---|---|---|---|---|
| Level 1 – Quoted prices in active markets |
Level 2 – Market observable inputs |
Level 3 – Non-market observable inputs |
Total fair value | |
| Financial assets | ||||
| Held-to-maturity investments | 1,073 | 3,566 | 2 | 4,641 |
| Investments in associates and joint ventures | 302 | 54 | 3,538 | 3,894 |
| Real estate held for investment | – | – | 15,768 | 15,768 |
| Loans and advances to banks and customers | 412 | 91,011 | 39,888 | 131,311 |
| Real estate held for own use | – | – | 3,647 | 3,647 |
| Total assets | 1,787 | 94,631 | 62,843 | 159,261 |
| Financial liabilities | ||||
| Liabilities to banks and customers | 6,348 | 1,918 | 14,339 | 22,605 |
| Certificated liabilities | – | 8,007 | 694 | 8,701 |
| Subordinated liabilities | – | 11,213 | 270 | 11,483 |
| Total liabilities | 6,348 | 21,138 | 15,303 | 42,789 |
| € mn | ||||
|---|---|---|---|---|
| Level 1 – Quoted prices in active markets |
Level 2 – Market observable inputs |
Level 3 – Non-market observable inputs |
Total fair value | |
| Financial assets | ||||
| Held-to-maturity investments | 981 | 3,664 | 2 | 4,647 |
| Investments in associates and joint ventures | 316 | 54 | 3,227 | 3,597 |
| Real estate held for investment | – | – | 15,625 | 15,625 |
| Loans and advances to banks and customers | 402 | 90,443 | 38,683 | 129,528 |
| Real estate held for own use | – | – | 3,626 | 3,626 |
| Total assets | 1,699 | 94,161 | 61,163 | 157,023 |
| Financial liabilities | ||||
| Liabilities to banks and customers | 6,588 | 1,977 | 14,717 | 23,282 |
| Certificated liabilities | – | 7,863 | 713 | 8,576 |
| Subordinated liabilities | – | 12,042 | 281 | 12,323 |
| Total liabilities | 6,588 | 21,882 | 15,711 | 44,181 |
39 Consolidated Statements of Comprehensive Income
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
For level 2, the fair value is mainly determined based on the income approach using deterministic discounted cash flow models. For level 3, the carrying amount (amortized cost) is considered to be a reasonable estimate for the fair value.
For level 2, fair values are mainly derived based on the market approach using market multiples derived from a set of comparables as the valuation technique. For level 3, fair values are mainly based on an income approach using a discounted cash flow method or net asset values as provided by third-party vendors.
Fair values are mainly determined based on the income approach. In some cases, a market approach is applied using market prices of identical or comparable assets in markets which are not active. The fair values are either calculated internally and validated by external experts or derived from expert appraisals with internal controls in place to monitor these valuations.
For loans and advances to banks and customers, quoted market prices are rarely available. Level 1 consists mainly of highly liquid advances, e.g. short-term investments. The fair value for these assets in level 2 and level 3 is mainly derived based on the income approach using deterministic discounted cash flow models.
Level 1 consists mainly of highly liquid liabilities, e.g. payables on demand. The fair value for liabilities in level 2 and level 3 is mainly derived based on the income approach using future cash flows discounted 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.
For level 2, the fair value is mainly determined based on the market approach using quoted market prices and the income approach using deterministic discounted cash flow models. For level 3, fair values are mainly derived based on the income approach using deterministic cash flows with credit spreads as primary non-market observable inputs. In some cases, the carrying amount (amortized cost) is considered to be a reasonable estimate for the fair value.
On 31 January 2009, certain USD-denominated CDOs were reclassified from financial assets held for trading to loans and advances to banks and customers in accordance with IAS 39.
As of 31 December 2013, the carrying amount and fair value of the CDOs was € 166 MN and € 156 MN, respectively. As of 31 March 2014, the carrying amount and fair value of the CDOs was € 159 MN and € 151 MN, respectively. For the three months ended 31 March 2014, the net profit related to the CDOs was not significant.
Basic earnings per share are calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding for the period.
| € mn three months ended 31 March |
2014 | 2013 |
|---|---|---|
| Net income attributable to shareholders used to calculate basic earnings per share |
1,640 | 1,707 |
| Weighted average number of common shares outstanding |
453,740,069 | 453,175,764 |
| Basic earnings per share (€) | 3.61 | 3.77 |
Diluted earnings per share are calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding for the period, both adjusted for the effects of potentially dilutive common shares. These effects arise from various share-based compensation plans of the Allianz Group.
| € mn | ||
|---|---|---|
| three months ended 31 March | 2014 | 2013 |
| Net income attributable to shareholders | 1,640 | 1,707 |
| Effect of potentially dilutive common shares | (20) | (25) |
| Net income used to calculate diluted earnings per share |
1,620 | 1,682 |
| Weighted average number of common shares outstanding |
453,740,069 | 453,175,764 |
| Potentially dilutive common shares resulting from assumed conversion of: |
||
| Share-based compensation plans | 3,033,129 | 2,466,088 |
| Weighted average number of common shares outstanding after assumed conversion |
456,773,198 | 455,641,852 |
| Diluted earnings per share (€) | 3.55 | 3.69 |
For the three months ended 31 March 2014, the weighted average number of common shares excludes 2,759,931 (2013: 2,774,236) treasury shares.
| as of 31 March 2014 |
as of 31 December 2013 |
|
|---|---|---|
| Germany | 40,251 | 40,537 |
| Other countries | 106,955 | 107,090 |
| Total | 147,206 | 147,627 |
As of 31 March 2014, there were no significant changes in contingent liabilities compared to the consolidated financial statements for the year ended 31 December 2013.
As of 31 March 2014, commitments outstanding to invest in private equity funds and similar financial instruments amounted to € 3,184 mn (31 December 2013: € 2,978 mn). Other commitments – mainly referring to a purchase obligation and sponsoring – increased from € 477 mn as of 31 December 2013 to € 906 mn as of 31 March 2014. All other commitments showed no significant changes.
Allianz has agreed to acquire a part of the Property and Casualty insurance business of the Italian insurer UnipolSai with premiums of € 1.1 BN for the year ended 31 December 2013. The acquisition will be for a total consideration of up to € 440 MN . The transaction is expected to be closed during the second half of 2014 and is subject to regulatory approval.
Based on a decision of the European Court of Justice (EuGH), the German Supreme Court (BGH) decided on 7 May 2014, that the former statutory exclusion of the rescission right after one year at the latest in case of improper consumer information provided by German insurance law is not applicable to life and pension insurance policies concluded in the period 1995 – 2007. The BGH remanded the case to the appellate court in order to define the consequences in the specific case. Once the written ruling of the BGH is available, the decision will be analyzed.
Munich, 13 May 2014
Allianz SE The Board of Management
39 Consolidated Statements of Comprehensive Income
40 Consolidated Statements of Changes in Equity
41 Consolidated Statements of Cash Flows 43 Notes
We have reviewed the condensed consolidated interim financial statements of Allianz SE, Munich – comprising the consolidated balance sheets, consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity, condensed consolidated statements of cash flows and selected explanatory notes – together with the interim group management report of Allianz SE, Munich, for the period from 1 January to 31 March 2014 that are part of the quarterly financial report according to § 37x Abs. 3 WpHG ["Wertpapierhandelsgesetz": "German Securities Trading Act"]. The preparation of the condensed consolidated interim financial statements in accordance with those International Financial Reporting Standards (IFRS) applicable to interim financial reporting as adopted by the E.U., and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports, is the responsibility of the Company's management. Our responsibility is to issue a report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We performed our review of the condensed consolidated interim financial statements and the interim group management report in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with a certain level of assurance, that the condensed consolidated interim financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the E.U., and that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports. A review is limited primarily to inquiries of company employees and analytical assessments and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the E.U., or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
Munich, 13 May 2014
KPMG AG Wirtschaftsprüfungsgesellschaft
Wirtschaftsprüfer Wirtschaftsprüfer
Klaus Becker Dr. Frank Pfaffenzeller (Independent Auditor) (Independent Auditor)
| Important dates for shareholders and analysts1 | |
|---|---|
| ____ Interim Report/Financial Results 2Q |
8 August 2014 |
| ____ Interim Report/Financial Results 3Q |
7 November 2014 |
| __________ Financial Results 2014 |
26 February 2015 |
| _____ Annual Report 2014 |
13 March 2015 |
| _______ Annual General Meeting |
6 May 2015 |
| ____ Interim Report/Financial Results 1Q |
12 May 2015 |
1 The German Securities Trading Act ("Wertpapierhandelsgesetz") obliges issuers to announce immediately any information which may have a substantial price impact. Therefore we cannot exclude that we have to announce key figures related to quarterly and fiscal year results ahead of the dates mentioned above. As we can never rule out changes of dates, we recommend checking them on the internet at www.allianz.com/financialcalendar.
Allianz SE – Königinstrasse 28 – 80802 Munich – Germany – Telephone +49. 89. 3800-0 – [email protected]m – www.allianz.com Interim Report on the internet – www.allianz.com/interim-report – Design/Concept: hw.design GmbH – Date of publication: 14 May 2014 This is a translation of the German Annual Report of Allianz Group. In case of any divergences, the German original is legally binding.
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