Annual Report • May 16, 2011
Annual Report
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Allianz
EURO STOXX 50
STOXX Europe 600 Insurance
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| Share type | Registered share with restricted transfer |
|---|---|
| Security Codes | WKN 840 400 ISIN DE 000 840 400 5 |
| Bloomberg | ALV GY |
| Reuters | ALVG.DE |
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Allianz SE, Investor Relations Koeniginstrasse 28, 80802 Munich
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E-mail: [email protected] Internet: www.allianz.com/investor-relations
| Change | ||||
|---|---|---|---|---|
| from previous |
||||
| Three months ended March 31, | 2011 | 2010 | year | |
| INCOME STATEMENT1 | ||||
| Total revenues2 | € mn | 29,905 | 30,567 | (2.2)% |
| Operating profit3 | € mn | 1,660 | 1,732 | (4.2)% |
| Net income | € mn | 915 | 1,603 | (42.9)% |
| SEGMENTS4 | ||||
| Property-Casualty | ||||
| Gross premiums written | € mn | 14,251 | 13,994 | 1.8% |
| Operating profit3 | € mn | 663 | 712 | (6.9)% |
| Combined ratio | % | 101.3 | 100.4 | 0.9 pts |
| Life/Health1 | ||||
| Statutory premiums | € mn | 14,270 | 15,356 | (7.1)% |
| Operating profit3 | € mn | 702 | 835 | (15.9)% |
| Cost-income ratio | % | 96.1 | 95.7 | 0.4 pts |
| Asset Management | ||||
| Operating revenues | € mn | 1,273 | 1,116 | 14.1% |
| Operating profit3 | € mn | 528 | 466 | 13.3% |
| Cost-income ratio | % | 58.5 | 58.2 | 0.3 pts |
| Corporate and Other | ||||
| Total revenues | € mn | 151 | 128 | 18.0% |
| Operating profit3 | € mn | (223) | (251) | (11.2)% |
| Cost-income ratio (Banking) | % | 88.2 | 107.8 | (19.6) pts |
| BALANCE SHEET1 | ||||
| Total assets as of March 31,5 | € mn | 625,589 | 624,945 | 0.1% |
| Shareholders' equity as of March 31,5 | € mn | 43,560 | 44,491 | (2.1)% |
| Non-controlling interests as of March 31,5 | € mn | 2,055 | 2,071 | (0.8)% |
| SHARE INFORMATION | ||||
| Basic earnings per share1 | € | 1.90 | 3.47 | (45.2)% |
| Diluted earnings per share1 | € | 1.88 | 3.46 | (45.7)% |
| Share price as of March 31,5 | € | 99.03 | 88.93 | 11.4% |
| Market capitalization as of March 31,5 | € mn | 45,009 | 40,419 | 11.4% |
| OTHER DATA | ||||
| Total assets under management as of March 31,5 | € bn | 1,492 | 1,518 | (1.7)% |
| thereof: Third-party assets under management as of March 31,5 | € bn | 1,138 | 1,164 | (2.2)% |
1 Figures for the first quarter of 2010 have been restated to reflect a change in Allianz Group's accounting policy. For further information please refer to note 2 of our condensed consolidated interim financial statements.
2 Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating revenues in Asset Management and total revenues in Corporate and Other (Banking).
3 The Allianz Group uses operating profit as a key financial indicator to assess the performance of its business segments and the Group as a whole.
4 The Allianz Group operates and manages its activities through four segments: Property-Casualty, Life/Health, Asset Management and Corporate and Other. For further information please refer to note 3 of our condensed consolidated interim financial statements.
5 2010 figures as of December 31, 2010.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
2009 € mn |
|---|---|---|---|
| Total revenues | 29,905 | 30,567 | 27,720 |
| Operating profit2 | 1,660 | 1,732 | 1,313 |
| Net income2 | 915 | 1,603 | 3553 |
| Solvency ratio in %1,4 | 180 | 173 | 164 |
Revenues declined slightly by 2.2% and 3.6% on a total and internal basis5 , respectively, due to lower demand for investment-oriented products in our Life/Health business.
Operating profit amounted to € 1,660 million, down 4.2%. Our Property-Casualty insurance business was affected heavily by losses from natural catastrophes, mainly in Japan, New Zealand and Australia, of € 737 million. Life/Health operating profit was in line with expectations, but stood below last year's high level. Asset Management continued to deliver operating profit growth.
Net income amounted to € 915 million (1Q 2010: € 1,603 million). The decline was mainly due to a lower non-operating investment result and higher tax expenses.
2 Executive Summary
in � bn
in � mn
Gross premiums written from Property-Casualty insurance grew by 0.2% on an internal basis. Positive pricing effects of 0.8% offset negative volume effects of 0.6%, reflecting our selective underwriting.
Life/Health statutory premiums were 8.5% behind the previous year on an internal basis. While traditional business sales increased, investment-oriented product sales declined due to strong competition mainly in Italy and France. In addition sales in the first quarter of 2010 benefited strongly from tax incentives in Italy and Taiwan.
Our Asset Management operations recorded internal growth of 14.1%, mainly driven by an increase in average assets under management. The positive business trend continued in the first quarter of 2011, where we recorded net inflows of € 15 billion. As of March 31, 2011 total assets under management amounted to € 1,492 billion.
Total revenues from our Banking operations (reported in our Corporate and Other segment) grew by 20.8% on an internal basis, mainly due to higher net operating income from financial assets and liabilities carried at fair value through income (trading income).
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 Total revenues include € (40) mn, € (27) mn and € (12) mn from consolidation for 1Q 2011, 2010 and 2009, respectively.
in � mn
Property-Casualty operating profit declined by € 49 million to € 663 million driven by a lower underwriting result, which was negatively impacted by a € 182 million increase in natural catastrophe losses. The combined ratio amounted to 101.3%, of which 7.6 percentage points related to natural catastrophes, partially offset by run-off of 3.9 percentage points. Our investment result increased by € 49 million.
The Life/Health operating profit decreased from last year's high level of € 835 million to € 702 million, despite an increased investment result, which was more than offset by a change in crediting rate assumptions.
Our Asset Management segment had another strong quarter and recorded operating profit of € 528 million. The € 62 million increase in operating profit was largely due to higher assets under management. The cost-income ratio remained low at 58.5%.
The Corporate and Other operating loss reduced by € 28 million to € 223 million, mostly attributable to the return to a positive result by our Banking business.
Our non-operating result decreased by € 433 million to a negative € 174 million. The main driver of this decrease was the € 587 million lower non-operating investment result, due to a decline in realized gains and non-operating income from financial assets and liabilities carried at fair value through income.
Realized gains and losses (net) amounted to € 386 million compared to € 763 million in the previous year. In the first quarter of 2010 we recorded capital gains from the sale of shares in the Industrial and Commercial Bank of China (ICBC) of € 522 million compared to € 129 million in the current quarter. As of March 31, 2011, gross ICBC unrealized gains amounted to € 221 million.
Non-operating income from financial assets and liabilities carried at fair value through income (net) decreased by € 179 million to negative € 96 million. € 237 million of the decline stemmed from a fair value change in the valuation of The Hartford warrants versus the previous year.
Impairments (net) increased slightly by € 31 million to € 83 million.
2 Includes € (10) mn, € (30) mn and € 21 mn from consolidation for 1Q 2011, 2010 and 2009, respectively.
2 Executive Summary
23 Asset Management
32 Balance Sheet Review 40 Reconciliations
Acquisition-related expenses decreased by € 97 million to € 101 million mainly driven by lower so-called PIMCO B-unit expenses1 . We have purchased further 13,547 B-units since the end of the first quarter of 2010 and have now acquired 88.4% of all B-units: 17,429 are still outstanding. The decline in expenses was mainly driven by the following components:
Non-operating restructuring charges reduced by € 45 million to € 2 million. In the previous period we incurred expenses for restructuring initiatives at a number of our operating entities including Allianz France and Allianz Sach.
Income tax increased by € 183 million to € 571 million; an effective tax rate of 38.4% (1Q 2010: 19.5%). The increase in the effective tax rate for the first quarter of 2011 is primarily attributable to losses from natural catastrophe events incurred in jurisdictions with low effective tax rates. The lower effective tax rate in the first quarter of 2010 was primarily impacted by a high level of tax-exempt income from the sale of ICBC shares, which were substantially lower in the first quarter of 2011.
in � mn
Net income decreased by € 688 million to € 915 million, largely due to a lower non-operating investment result and an increase in the effective tax rate.
Net income attributable to shareholders amounted to € 857 million.
in �
in � mn
As of March 31, 2011, shareholders' equity amounted to € 43,560 million, a decrease of € 931 million compared to December 31, 2010. Net income attributable to shareholders increased our equity by € 857 million while negative foreign currency translation effects led to a € 776 million reduction. Unrealized gains declined by € 1,057 million due to a reduction in bond values following higher interest rates as well as equity realizations.
The conglomerate solvency ratio4 increased by 7 percentage points compared to December 31, 2010, to 180% mainly due to the issuance of subordinated debt of € 2.0 billion and net income (net of accrued dividends) of € 0.5 billion. These effects were partially offset by negative foreign currency effects and lower unrealized gains on available-for-sale equity securities (due to realizations), which both decreased eligible capital. As of March 31, 2011, our eligible capital for solvency purposes, required for our insurance segments and our Banking and Asset Management businesses, was € 41.3 billion, including off-balance sheet reserves of € 2.1 billion. Eligible capital surpassed the minimum legally stipulated level by € 18.4 billion. Eligible capital as of March 31, 2011 also includes a deduction for accrued dividends of € 2.0 billion for the fiscal year 2010, plus an additional € 0.4 billion for the first quarter of 2011, which represents 40% of net income attributable to shareholders. Our solvency position is strong.
in € bn
1 Does not include non-controlling interests.
3 Off-balance sheet reserves are accepted by the authorities as eligible capital only upon request; Allianz SE has not submitted an application so far. The solvency ratio excluding off-balance sheet reserves would be 171% (2010: 164%).
9 Property-Casualty Insurance Operations
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Total revenues2 | 29,905 | 30,567 |
| Premiums earned (net) | 15,861 | 15,288 |
| Operating investment result | ||
| Interest and similar income | 4,894 | 4,579 |
| Operating income from financial assets and liabilities carried at fair value through income (net) | (129) | 120 |
| Operating realized gains/losses (net) | 728 | 547 |
| Interest expenses, excluding interest expenses from external debt | (125) | (129) |
| Operating impairments of investments (net) | (62) | (39) |
| Investment expenses | (202) | (177) |
| Subtotal | 5,104 | 4,901 |
| Fee and commission income | 1,987 | 1,801 |
| Other income | 31 | 29 |
| Claims and insurance benefits incurred (net) | (11,978) | (11,667) |
| Change in reserves for insurance and investment contracts (net)3 | (3,762) | (3,226) |
| Loan loss provisions | (16) | (12) |
| Acquisition and administrative expenses (net), excluding acquisition-related expenses | (4,915) | (4,793) |
| Fee and commission expenses | (649) | (599) |
| Operating restructuring charges | — | (1) |
| Other expenses | (15) | (3) |
| Reclassification of tax benefits | 12 | 14 |
| Operating profit | 1,660 | 1,732 |
| Non-operating investment result | ||
| Non-operating income from financial assets and liabilities carried at fair value through income (net) | (96) | 83 |
| Non-operating realized gains/losses (net) | 386 | 763 |
| Non-operating impairments of investments (net) | (83) | (52) |
| Subtotal | 207 | 794 |
| Income from fully consolidated private equity investments (net) | (19) | (37) |
| Interest expenses from external debt | (225) | (222) |
| Acquisition-related expenses | (101) | (198) |
| Amortization of intangible assets | (22) | (17) |
| Non-operating restructuring charges | (2) | (47) |
| Reclassification of tax benefits | (12) | (14) |
| Non-operating items | (174) | 259 |
| Income (loss) before income taxes | 1,486 | 1,991 |
| Income taxes | (571) | (388) |
| Net income (loss) | 915 | 1,603 |
| Net income (loss) attributable to: | ||
| Non-controlling interests | 58 | 38 |
| Shareholders | 857 | 1,565 |
1 Figures for the first quarter of 2010 have been restated to reflect a change in Allianz Group's accounting policy. For further information please refer to note 2 of our condensed consolidated interim financial statements.
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).
3 For the three months ended March 31, 2011, includes expenses for premium refunds (net) in Property-Casualty of € (45) mn (2010: € (43) mn).
Risk management is an integral part of our business processes and supports our value-based management.
For further information, we refer you to the 'Risk Report' in our 2010 Annual Report. The risks described therein essentially remain unchanged.
Allianz Group's management feels comfortable with the Group's overall risk profile and is confident the Group's risk management framework can meet the challenges of a rapidly changing environment as well as day-to-day business needs.
On March 24, 2011, Allianz SE and Banco Popular formed "Allianz Popular" in Spain to strengthen the existing partnership and unite all existing ventures under one roof. Allianz SE will own 60% of Allianz Popular. In this context, EUROPENSIONES S.A., Madrid, which is currently accounted for at equity, will be accounted for as a fully consolidated subsidiary of the Allianz Group. As a result a revaluation gain of approximately € 100 million is expected to be recognized during the second quarter of 2011. The transaction is subject to regulatory approvals which are expected for end of June 2011.
At the end of April and beginning of May 2011, the southern states of the U.S.A. were afflicted by several natural catastrophes. Based on current information the net claims regarding the tornadoes are expected to be € 60 million before income taxes. Regarding the flooding along the Mississippi River a reliable forecast for net claims is currently not possible.
In May 2011, Allianz Finance II B.V. has called for redemption with effect of June 10, 2011 the U.S. Dollar 500 million subordinated bond with the ISIN XS0159150720.
On April 6, 2011, Commerzbank AG announced certain recapitalization measures in order to redeem support received from the German government in connection with the financial market crisis. In connection with these measures, the Allianz Group expects to invest in total approximately € 300 million. Based on current information, it is expected that the Allianz Group's aggregate shareholding in Commerzbank AG will decrease from approximately 9% to below 5%.
The Allianz Group business operations and structure are described in the 'Worldwide Presence and Business Divisions' and 'Our Business' chapters of our Annual Report 2010. There have been no organizational changes during the first quarter of 2011.
The Allianz Group strategy is described in the 'Our Strategy' chapter of our Annual Report 2010. There have been no material changes to our strategy as described therein.
For an overview of the products and services offered by the Allianz Group, as well as the sales channels, please refer to the 'Worldwide Presence and Business Divisions' and 'Our Business' chapters of our Annual Report 2010. Information on our Brand can also be found in the chapter 'Allianz Brand'.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
2009 € mn |
|---|---|---|---|
| Gross premiums written | 14,251 | 13,994 | 13,886 |
| Operating profit | 663 | 712 | 969 |
| Loss ratio in % | 73.3 | 72.4 | 71.1 |
| Expense ratio in % | 28.0 | 28.0 | 27.6 |
| Combined ratio in % | 101.3 | 100.4 | 98.7 |
Overall, gross premiums written amounted to € 14,251 million, an increase of € 257 million. On an internal basis gross premiums increased slightly by 0.2%.
Our operating profit was € 663 million, a decrease of 6.9% compared to the first quarter of 2010. This decrease was mainly driven by our negative underwriting result, which was burdened by severe losses from natural catastrophes mainly in Japan, New Zealand and Australia. Our operating investment result (after expenses for premium refunds) increased by 6.3% and partially compensated this decrease.
Despite high natural catastrophe claims of € 737 million, accounting for 7.6 percentage points of the combined ratio, our combined ratio stood at 101.3%.
€663mn
Gross premiums written amounted to € 14,251 million, an increase of 1.8% or € 257 million on a nominal basis. Of this increase, foreign currency translation effects accounted for € 274 million, primarily from the appreciation of the Swiss Franc, the Australian Dollar and the Brazilian Real against the Euro. (De-)consolidation effects mainly from two Swiss subsidiaries had an offsetting effect with minus € 50 million.
On an internal basis gross premiums written increased slightly by 0.2%, driven by a positive price effect of 0.8% partially offset by a negative volume effect of 0.6%. The positive growth in gross premiums stemmed mainly from South America, our Travel and Assistance business, Australia and the United Kingdom, partially offset by Germany, the United States and Central and Eastern Europe.
In analyzing internal premium growth in terms of "price" and "volume" effects, we use four clusters based on the internal growth 1Q 2011 over 1Q 2010:
Growth Cluster 1: Overall positive growth; both price and volume effects are positive. Growth Cluster 2: Overall positive growth; either price or volume effects are positive. Growth Cluster 3: Overall negative growth; either price or volume effects are positive. Growth Cluster 4: Overall negative growth; both price and volume effects are negative.
In this quarter, Growth Cluster 4 was not applicable as none of our operating entities represented here had both negative price and volume effects.
in %
1Q 2010 over 1Q 2009 1Q 2011 over 1Q 2010
3 Allianz Risk Transfer (ART) business now shown within AGCS. Prior years were adjusted accordingly.
Executive Summary 9 Property-Casualty Insurance Operations Life/Health Insurance Operations Asset Management Corporate and Other 29 Outlook Balance Sheet Review Reconciliations
In South America gross premiums grew by 38.7% supported by all countries in the region. Brazil contributed most to the strong growth, mainly due to its motor, health and commercial businesses. Gross premiums were in total € 497 million, including foreign currency translation effects of € 35 million.
In the United Kingdom gross premiums amounted to € 519 million. Excluding € 19 million of favorable foreign currency translation effects, gross premiums increased by 8.0%. Almost all business lines contributed to this growth. Tariff increases, especially in our motor and Animal Health insurance businesses, led to a positive price effect of about 5.4%. In addition, we managed to grow gross premiums in our private household and legal protection businesses through expansion of our distribution network.
In Australia gross premiums were € 542 million. We had a strong positive internal growth of 6.8%, accounting for positive foreign currency translation effects of € 58 million and the acquisition of specialized underwriting agencies. Almost all business lines achieved a positive growth, which was particularly strong in our retail and global transport business. The positive price effect was estimated at 5.1%.
In Asia-Pacific gross premiums amounted to € 132 million. Excluding the transfers of our Hong Kong and Singapore businesses from Asia-Pacific to AGCS and the transfer of our China branch from Allianz Sach to Asia-Pacific as well as positive foreign currency translation effects of € 11 million, internal growth was 17.5%. Malaysia was the main driver of the volume related growth as our motor business continued to expand despite our tighter underwriting rules. The price effect was overall negative at around 2.5%.
In the Credit Insurance business gross premiums grew by 4.5% to € 535 million, supported by a strong positive volume effect due to an increase in our customers' turnover. As expected the overall price effect weakened after two subsequent years of tariff increases and higher rebates to our customers due to a lower claims environment. The resulting negative price effect was about 1.6%.
At AGCS gross premiums amounted to € 1,431 million. Adjusting for several portfolio transfers to AGCS within the Property-Casualty segment, our internal growth was 1.5%. The increase in gross premiums stemmed mainly from our property, marine and liability businesses. This was partly offset by a negative price effect of around 1.7%.
In Spain gross premiums were € 632 million. Adjusting for a portfolio transfer to AGCS, we achieved a slightly positive growth of 0.2%. Thanks to our cycle management strategy, despite increased VAT and expiring car scrapping incentives, we managed to increase volume especially in our motor retail business. The ongoing economic recession put pressure on prices, especially in the highly competitive commercial lines, leading to a negative price effect of approximately 1.1%.
In Italy gross premiums decreased slightly by 0.6% to € 939 million. The decline was entirely driven by our non-motor business, as small- to medium-sized companies were still affected by the economic recession and we maintained strict underwriting rules. However, double-digit growth in our direct channel and strong tariff increases, particularly in our motor business, also contributed positively. We estimate the positive price effect at 4.4%.
In France gross premiums were € 1,138 million, a slight decline of 0.7% stemming from volume losses in our commercial lines, partially offset by a positive growth in personal lines. In line with a hardening market we executed price increases in our portfolio. These resulted in a positive price effect of approximately 2.5%.
At Allianz Sach gross premiums amounted to € 3,864 million. Taking into account the transfer of our China branch to Asia-Pacific, gross premiums fell by 0.8%. The slight decrease was driven by the highly competitive motor business whereas our non-motor business grew thanks to a strong positive price effect. The overall positive price effect was estimated at 1.0%.
In Central and Eastern Europe gross premiums stood at € 774 million. Excluding favorable foreign currency translation effects of € 6 million, internal growth was negative 1.8%. The decline in gross premiums was driven mainly by a negative price effect due to a shortfall in our motor business in Hungary and Romania, resulting from lower renewal tariffs in a difficult economic environment. On the other hand, we were able to achieve a positive volume effect supported by Russia, partially offset by a low level of car sales in Hungary and Romania. We estimate the price effect to be negative 3.2%.
In the United States gross premiums amounted to € 605 million. Adjusting for the transfer of our marine business to AGCS and unfavorable foreign currency translation effects of € 6 million, gross premiums declined by 2.9%. This decline was volume driven, in both our commercial and personal lines, reflecting the continuing soft market conditions. Part of the decline was offset by positive growth in our crop business as a result of increasing commodity prices. The overall price effect was positive at about 2.2% driven mainly by tariff increases in our personal lines.
We analyze the operating profit in the Property-Casualty segment in terms of underwriting result, operating investment result (after expenses for premium refunds) and other result1 .
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Underwriting result | (180) | (83) |
| Operating investment result | ||
| (after expenses for premium | ||
| refunds) | 823 | 774 |
| Other result | 20 | 21 |
| Operating profit | 663 | 712 |
Operating profit decreased by 6.9% or € 49 million to € 663 million.
The underwriting result worsened by € 97 million to negative € 180 million, reflecting unusually high losses from natural catastrophes of € 737 million (1Q 2010: € 555 million). With respect to natural catastrophes, the first quarter of 2011 was one of the most lossintensive quarters we have recorded. By taking advantage of positive price momentum and a further recovery of our Credit Insurance business as well as a more favorable run-off result we were able, however, to partially compensate the negative impact from natural catastrophes.
The operating investment result (after expenses for premium refunds) improved by € 49 million to € 823 million mainly driven by higher dividends and income from associates.
The combined ratio was 101.3% compared to 100.4% in the previous year. This increase was driven by a higher level of natural catastrophes, partly offset by a more favorable run-off.
2 Executive Summary
32 Balance Sheet Review
40 Reconciliations
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Premiums earned (net) | 9,676 | 9,413 |
| Accident year claims | (7,469) | (7,153) |
| Previous year claims (run-off) | 379 | 331 |
| Claims and insurance benefits incurred (net) |
(7,090) | (6,822) |
| Acquisition and administrative expenses (net) |
(2,708) | (2,633) |
| Change in reserves for insurance and investment contracts (net) (without expenses for premium refunds)1 |
(58) | (41) |
| Underwriting result | (180) | (83) |
Our accident year loss ratio stood at 77.2% in a difficult environment. The impact from natural catastrophes was again very high, accounting for 7.6 percentage points of the accident year loss ratio. In total, the net losses from natural catastrophes amounted to € 737 million driven mainly by the events in Japan, New Zealand and Australia. In comparison, in the first quarter of 2010, natural catastrophes represented 5.9 percentage points of the accident year loss ratio of 75.9%.
Excluding natural catastrophes, our accident year loss ratio improved by 0.4 percentage points mainly due to a higher average annual premium and a lower impact from large claims. Claims frequency/severity had a slightly negative impact.
The following operations contributed positively to the development of our accident year loss ratio:
Our Reinsurance business and AGCS had a negative impact on our accident year loss ratio due to a significantly higher level of losses from natural catastrophes. They added 2.9 percentage points and 1.2 percentage points, respectively.
1 Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of 'Change in reserves for insurance and investment contracts (net)'.
The expense ratio remained stable at 28.0%. Total expenses were up by € 75 million to € 2,708 million. Of this increase, foreign currency translation effects accounted for € 47 million. One-off effects, such as the modification of our reinsurance structure and the centralization of our Swiss back-offices, added another € 13 million. Moreover, the ad hoc introduction of a financial crisis tax in Hungary in the third quarter of 2010 resulted in approximately € 7 million in additional costs. Overall, the underlying expense development was flat. Our cost reduction programs in Germany, France, Italy and the United States compensated for negative premium volume effects in some of our core markets, such as Germany and the United States, due to our ongoing efforts to ensure profitability.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Interest and similar income (net of interest expenses) |
896 | 854 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
19 | 9 |
| Operating realized gains/losses (net) | 9 | 9 |
| Investment expenses | (56) | (55) |
| Operating investment result | 868 | 817 |
| Expenses for premium refunds (net)1 | (45) | (43) |
| Operating investment result (after expenses for premium refunds) |
823 | 774 |
Operating investment result (after expenses for premium refunds) amounted to € 823 million. This was an increase of € 49 million or 6.3%, mainly driven by interest and similar income.
Interest and similar income net of interest expenses, improved by € 42 million to € 896 million. Higher income from our equity investments as well as lower interest expenses accounted for most of this positive development. Income from debt investments, cash and real estate increased slightly. The total average asset base increased by 4.1% from € 92.5 billion in the first quarter of 2010, to € 96.3 billion in the first quarter of 2011.
Operating realized gains/losses (net) remained stable due to offsetting effects of higher realized gains on equities and lower realized gains on debt securities.
Operating income from financial assets and liabilities carried at fair value through income (net) improved by € 10 million to € 19 million.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Fee and commission income | 273 | 254 |
| Other income | 4 | 4 |
| Fee and commission expenses | (254) | (237) |
| Other expenses | (3) | — |
| Other result | 20 | 21 |
1 Consists of the investment-related part (expenses for premium refunds) of 'Change in reserves for insurance and investment contracts (net)'.
2 Executive Summary
9 Property-Casualty Insurance Operations
18 Life/Health Insurance Operations
23 Asset Management
27 Corporate and Other
29 Outlook
32 Balance Sheet Review
40 Reconciliations
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Gross premiums written1 | 14,251 | 13,994 |
| Ceded premiums written | (1,346) | (1,349) |
| Change in unearned premiums | (3,229) | (3,232) |
| Premiums earned (net) | 9,676 | 9,413 |
| Interest and similar income | 909 | 879 |
| Operating income from financial assets and liabilities carried at fair value through income (net) | 19 | 9 |
| Operating realized gains/losses (net) | 9 | 9 |
| Fee and commission income | 273 | 254 |
| Other income | 4 | 4 |
| Operating revenues | 10,890 | 10,568 |
| Claims and insurance benefits incurred (net) | (7,090) | (6,822) |
| Change in reserves for insurance and investment contracts (net) | (103) | (84) |
| Interest expenses | (13) | (25) |
| Investment expenses | (56) | (55) |
| Acquisition and administrative expenses (net) | (2,708) | (2,633) |
| Fee and commission expenses | (254) | (237) |
| Other expenses | (3) | — |
| Operating expenses | (10,227) | (9,856) |
| Operating profit | 663 | 712 |
| Loss ratio2 in % |
73.3 | 72.4 |
| Expense ratio3 in % |
28.0 | 28.0 |
| Combined ratio4 in % |
101.3 | 100.4 |
1 For the Property-Casualty 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) divided by premiums earned (net).
4 Represents the total of acquisition and administrative expenses (net) and claims and insurance benefits incurred (net) divided by premiums earned (net).
| internal1 Three months ended March 31, 2011 2010 2011 2010 2011 2010 2011 2010 € mn € mn € mn € mn € mn € mn € mn € mn Germany2 3,864 3,900 3,864 3,894 1,793 1,787 186 169 Switzerland3 913 864 804 800 355 344 41 32 Austria 336 332 336 332 177 173 12 21 German Speaking Countries 5,113 5,096 5,004 5,026 2,325 2,304 239 222 Italy 939 945 939 945 953 985 108 69 France 1,138 1,146 1,138 1,146 801 779 100 9 Spain4 632 637 632 631 447 447 78 70 South America 497 333 462 333 297 241 35 24 Netherlands5 295 326 295 306 197 206 7 1 Turkey 137 137 142 137 84 75 1 4 Belgium5 102 110 102 91 68 65 9 8 Portugal 86 85 86 85 61 61 11 7 Greece 32 31 32 31 22 19 2 4 Africa 33 28 33 28 12 8 2 2 3576 2026 Europe incl. South America 3,891 3,778 3,861 3,733 2,942 2,886 United States 605 638 599 617 530 579 62 40 Mexico 47 42 44 42 26 20 3 2 NAFTA Markets 652 680 643 659 556 599 65 42 Allianz Global Corporate & Specialty (AGCS)4,5,7 1,431 1,381 1,431 1,410 729 743 56 135 Reinsurance PC 1,450 1,648 1,450 1,648 753 795 (295) (59) United Kingdom 519 463 500 463 460 410 40 42 Credit Insurance 535 512 535 512 291 267 94 51 Australia 542 440 470 440 468 353 23 20 Ireland 230 194 230 194 157 135 8 (6) Global Insurance Lines & Anglo Markets 4,707 4,638 4,616 4,667 2,858 2,703 (74) 183 Russia 217 197 212 197 154 130 1 (1) Hungary 137 163 139 163 76 97 15 16 Poland 111 103 111 103 91 82 1 3 Slovakia 114 118 114 118 69 74 15 16 Romania 55 62 56 62 46 38 — 1 Czech Republic 82 75 78 75 55 50 8 6 Croatia 27 27 27 27 19 19 3 2 Bulgaria 17 17 17 17 17 20 5 5 Kazakhstan 10 18 10 18 1 2 — 2 Ukraine 4 2 4 2 2 1 — — Central and Eastern Europe8 774 782 768 782 530 513 46 45 Asia-Pacific (excl. Australia)2,5 132 122 121 103 69 62 13 11 Middle East and North Africa 19 19 19 19 12 10 (1) (1) Growth Markets 925 923 908 904 611 585 58 55 Assistance (Mondial) 460 397 460 397 380 333 16 18 Consolidation4,7,9 (1,497) (1,518) (1,529) (1,456) 4 3 2 (10) |
Gross premiums written | Premiums earned (net) | Operating profit (loss) | ||||
|---|---|---|---|---|---|---|---|
| Total 14,251 13,994 13,963 13,930 9,676 9,413 663 712 |
1 Reflect gross premiums written on an internal basis (adjusted for foreign currency translation and (de-)consolidation effects).
2 In 2011, Allianz China General Insurance Company Ltd., a former branch of Allianz Versicherungs-AG, was transferred from Germany to Asia-Pacific (excl. Australia). Prior year figures have not been adjusted.
3 In November 2010, the Allianz Group sold the subsidiaries Alba and Phenix Iart.
4 Corporate customer business in Spain transferred to AGCS in 2010. Prior year figures have been adjusted accordingly.
5 Corporate customer business in the Netherlands and Belgium as well as Allianz Insurance (Hong Kong) Ltd. and Allianz Insurance Company of Singapore Pte. Ltd. were transferred to AGCS in 2010 and 2011. Prior year figures have not been adjusted.
2 Executive Summary
9 Property-Casualty Insurance Operations
18 Life/Health Insurance Operations
23 Asset Management
27 Corporate and Other
29 Outlook
32 Balance Sheet Review 40 Reconciliations
| Combined ratio | Loss ratio | Expense ratio | ||||
|---|---|---|---|---|---|---|
| Three months ended March 31, | 2011 % |
2010 % |
2011 % |
2010 % |
2011 % |
2010 % |
| Germany2 | 98.5 | 99.8 | 70.8 | 72.1 | 27.7 | 27.7 |
| Switzerland3 | 93.6 | 95.8 | 72.9 | 74.6 | 20.7 | 21.2 |
| Austria | 95.4 | 95.1 | 68.7 | 68.5 | 26.7 | 26.6 |
| German Speaking Countries | 97.5 | 98.9 | 71.0 | 72.3 | 26.5 | 26.6 |
| Italy | 97.9 | 101.2 | 73.6 | 75.8 | 24.3 | 25.4 |
| France | 97.7 | 106.8 | 73.0 | 80.1 | 24.7 | 26.7 |
| Spain4 | 88.7 | 89.3 | 68.7 | 69.3 | 20.0 | 20.0 |
| South America | 96.5 | 98.0 | 65.1 | 66.3 | 31.4 | 31.7 |
| Netherlands5 | 100.6 | 105.1 | 70.0 | 75.4 | 30.6 | 29.7 |
| Turkey | 104.2 | 103.4 | 75.3 | 75.8 | 28.9 | 27.6 |
| Belgium5 | 98.4 | 102.1 | 64.8 | 66.3 | 33.6 | 35.8 |
| Portugal | 91.0 | 96.0 | 67.1 | 71.3 | 23.9 | 24.7 |
| Greece | 99.1 | 88.6 | 58.2 | 56.3 | 40.9 | 32.3 |
| Africa | 94.2 | 91.2 | 57.4 | 64.3 | 36.8 | 26.9 |
| Europe incl. South America | 96.6 | 100.8 | 71.2 | 74.7 | 25.4 | 26.1 |
| United States | 102.4 | 106.7 | 65.5 | 67.6 | 36.9 | 39.1 |
| Mexico | 95.8 | 99.6 | 70.1 | 70.7 | 25.7 | 28.9 |
| NAFTA Markets | 102.2 | 106.5 | 65.9 | 67.6 | 36.3 | 38.9 |
| Allianz Global Corporate & Specialty (AGCS)4,5,7 | 103.2 | 92.3 | 73.7 | 67.2 | 29.5 | 25.1 |
| Reinsurance PC | 142.5 | 108.8 | 114.5 | 85.7 | 28.0 | 23.1 |
| United Kingdom | 97.1 | 96.5 | 65.3 | 62.8 | 31.8 | 33.7 |
| Credit Insurance | 77.6 | 91.7 | 49.2 | 58.1 | 28.4 | 33.6 |
| Australia | 109.5 | 110.3 | 85.7 | 85.4 | 23.8 | 24.9 |
| Ireland | 101.7 | 114.0 | 76.9 | 93.3 | 24.8 | 20.7 |
| Global Insurance Lines & Anglo Markets | 110.9 | 101.1 | 82.7 | 74.7 | 28.2 | 26.4 |
| Russia | 101.4 | 105.5 | 64.0 | 61.7 | 37.4 | 43.8 |
| Hungary | 90.5 | 93.0 | 50.6 | 62.3 | 39.9 | 30.7 |
| Poland | 101.7 | 99.6 | 68.3 | 67.9 | 33.4 | 31.7 |
| Slovakia | 86.4 | 84.0 | 58.0 | 57.4 | 28.4 | 26.6 |
| Romania | 102.0 | 98.0 | 73.6 | 75.7 | 28.4 | 22.3 |
| Czech Republic | 89.8 | 92.1 | 66.0 | 72.0 | 23.8 | 20.1 |
| Croatia | 92.5 | 96.0 | 56.1 | 63.0 | 36.4 | 33.0 |
| Bulgaria | 71.7 | 77.4 | 41.7 | 46.4 | 30.0 | 31.0 |
| Kazakhstan | 83.8 | 41.0 | 16.2 | 5.3 | 67.6 | 35.7 |
| Ukraine | 110.6 | 115.4 | 26.9 | 48.5 | 83.7 | 66.9 |
| Central and Eastern Europe8 | 95.6 | 96.0 | 61.8 | 63.4 | 33.8 | 32.6 |
| Asia-Pacific (excl. Australia)2,5 | 88.2 | 91.3 | 59.3 | 60.8 | 28.9 | 30.5 |
| Middle East and North Africa | 116.3 | 118.3 | 76.7 | 82.1 | 39.6 | 36.2 |
| Growth Markets | 95.3 | 95.9 | 61.9 | 63.4 | 33.4 | 32.5 |
| Assistance (Mondial) | 97.6 | 97.0 | 61.8 | 61.6 | 35.8 | 35.4 |
| Consolidation4,7,9 | — | — | — | — | — | — |
| Total | 101.3 | 100.4 | 73.3 | 72.4 | 28.0 | 28.0 |
6 Contains € 3 mn and € 4 mn for 1Q 2011 and 1Q 2010, respectively, from a management holding located in Luxembourg and also € 1 mn and € 0.5 mn for 1Q 2011 and 1Q 2010, respectively, from AGF UK.
7 Allianz Risk Transfer (ART) business now shown within AGCS. Prior year figures have been adjusted accordingly.
8 Contains income and expense items from a management holding.
9 Represents elimination of transactions between Allianz Group companies in different geographic regions.
Operating profit1
| Three months ended March 31, | 2011 € mn |
2010 € mn |
2009 € mn |
|---|---|---|---|
| Statutory premiums | 14,270 | 15,356 | 13,013 |
| Operating profit 1 | 702 | 835 | 296 |
| Cost-income ratio in %1 | 96.1 | 95.7 | 98.0 |
Statutory premiums amounted to € 14,270 million. Compared to the first quarter of 2010 revenues decreased by 7.1% or € 1,086 million on a nominal basis. On an internal basis the decrease amounted to 8.5%. Positive developments in our traditional life business were more than offset by a decline in premiums from investment-oriented products in some of our major markets where competition increased and last year's sales benefited from tax incentives.
Operating profit decreased from last year's high level of € 835 million to € 702 million, despite an increased investment result, which was more than offset by a change in crediting rate assumptions.
€702mn
1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11
1 Figures prior to the third quarter of 2010 have been restated to reflect a change in the Allianz Group's accounting policy. For further information please refer to note 2 of our condensed consolidated interim financial statements.
2 Executive Summary
| Spain | (19.2) | |||||
|---|---|---|---|---|---|---|
| 29.3 | ||||||
| Belgium/Luxembourg | 24.8 | 52.1 | ||||
| United States | (17.7) | 16.3 | ||||
| Switzerland | 13.7 2.5 |
|||||
| Germany Life | 12.6 0.0 |
|||||
| Germany Health | (0.6) | 1.5 | ||||
| Central and Eastern Europe | (15.9) | 0.3 | ||||
| Asia-Pacific | (18.9) | 98.4 | ||||
| France | (21.9) | 38.5 | ||||
| Italy | (30.2) | 26.0 |
1Q 2010 over 1Q 2009
1Q 2011 over 1Q 2010
Despite a difficult environment in Spain driven by the economic recession and high unemployment, with banks offering high interest rates on short-term accounts, we recorded strong growth in premiums of 29.3% on an internal basis. Total premiums amounted to € 256 million. Sales of short- and long-term investment-oriented products, as well as sales of private pension products, contributed positively.
Premiums in Belgium/Luxembourg amounted to € 317 million. Internal growth of 24.8% was driven by both an increase in sales of investment-oriented products and higher premiums from our traditional business. Sales benefited from a new online tool for our brokers and product innovations.
In the United States premiums increased by 16.3% on an internal basis and amounted to € 1,939 million. This growth was driven by continued strong sales of
our fixed-index annuity products and variable annuity products. Our fixed-index annuity sales profited from product changes at the end of 2010.
Premiums in Switzerland amounted to € 927 million, resulting in internal growth of 2.5%. Sales of our investment-oriented products and premiums from our traditional business increased. Sales growth of our investment-oriented products was mainly driven by Group Life business, where we saw higher single and recurring premiums.
In our German life business premiums amounted to € 3,919 million, which is the same level as in the first quarter of the previous year. A decline in premiums from investment-oriented products was offset by growth in our traditional business, where regular premiums increased. Premiums in our German health business declined slightly as lapsed premium volume could not be fully compensated by new business and price increases.
In Central and Eastern Europe we recorded a decline of premiums by 15.9% on an internal basis, mainly driven by Poland and Hungary. In Poland, slightly higher unit-linked sales could only partially offset a drop in premiums from payment protection insurance and life deposit products. In Hungary, single premiums from investment-oriented products decreased significantly compared to last year's first quarter due to a successful campaign at the beginning of the first quarter 2010.
Premiums in Asia-Pacific decreased by 18.9% on an internal basis. In Taiwan, we recorded a significant drop in sales of our pure unit-linked products without guarantees resulting in a premium decrease of 42.9% on an internal basis. A decrease was expected as last year's positive development benefited from tax regulation. In Japan, premiums decreased by 33.9% driven by a shrinking variable annuity market and lower sales by our bank distribution partners. Premiums in South Korea increased by 2.5% on an internal basis due to higher single premiums from both unit-linked and investment-oriented products.
1 We comment on the development of our statutory premiums written on an internal basis; meaning adjusted for foreign currency translation and (de-)consolidation effects in order to provide more comparable information.
2 Before elimination of transactions between the Allianz Group companies in different geographic regions and different segments.
Premiums in France amounted to € 1,958 million, a decline of 21.9% on an internal basis. This deviation is in line with the general market decrease in life insurance activity and pressure from offerings of alternative short-term savings products.
In Italy, premiums decreased by 30.2% on an internal basis to € 1,998 million. The decline is largely driven by high premium income in the previous year due to tax incentives on foreign investments and to a stagnating economic environment affecting the demand for financial products in general. While premiums from traditional business were down slightly, sales of investment-oriented and unit-linked products declined significantly.
Operating profit decreased from last year's high level of € 835 million to € 702 million, despite an increased investment result, which was more than offset by a change in crediting rate assumptions.
Interest and similar income net of interest expenses increased by € 285 million to € 3,807 million mainly driven by debt investments due to higher asset base and a slightly higher yield on debt and cash as result of recovering interest rates.
Net gains from financial assets and liabilities carried at fair value amounted to a negative € 162 million, a decrease of € 308 million resulting primarily from a decrease in the fair value of derivatives in Germany, used to manage our interest rate related exposures, and a reduction of the gains on Fair Value Option assets. In the United States we sold the majority of the Fair Value Option portfolio and reinvested it in assets classified as available-for-sale during the third quarter of 2010.
Realized gains and losses (net) increased from € 538 million to € 718 million mainly due to realizations of equity investments especially in Germany and France.
Net impairments on investments increased slightly from € 39 million to € 62 million.
Change in reserves for insurance and investment contracts (net) increased from € 3,096 million to € 3,629 million primarily due to the allocation of premiums to policy reserves in line with the increased traditional business. Also contributing were higher expenses for premium refunds related to a change in crediting rate assumptions in France, and an adjustment in Taiwan.
Acquisition and administrative expenses (net) decreased slightly from € 1,203 million to € 1,169 million. Acquisition costs declined by € 18 million to € 808 million. Administration costs amounted to € 361 million, € 16 million lower than the first quarter of the previous year.
2 Executive Summary
9 Property-Casualty Insurance Operations
18 Life/Health Insurance Operations
23 Asset Management
27 Corporate and Other
29 Outlook
32 Balance Sheet Review
40 Reconciliations
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| Statutory premiums2 | € mn 14,270 |
€ mn 15,356 |
| Ceded premiums written | (167) | (134) |
| Change in unearned premiums | (89) | (53) |
| Statutory premiums (net) | 14,014 | 15,169 |
| Deposits from insurance and investment contracts | (7,829) | (9,294) |
| Premiums earned (net) | 6,185 | 5,875 |
| Interest and similar income | 3.833 | 3,545 |
| Operating income from financial assets and liabilities carried at fair value through income (net) | (162) | 146 |
| Operating realized gains/losses (net) | 718 | 538 |
| Fee and commission income | 130 | 118 |
| Other income | 23 | 20 |
| Operating revenues | 10,727 | 10,242 |
| Claims and insurance benefits incurred (net) | (4.888) | (4,845) |
| Change in reserves for insurance and investment contracts (net) | (3.629) | (3,096) |
| Interest expenses | (26) | (23) |
| Loan loss provisions | — | 1 |
| Operating impairments of investments (net) | (62) | (39) |
| Investment expenses | (178) | (145) |
| Acquisition and administrative expenses (net) | (1,169) | (1,203) |
| Fee and commission expenses | (59) | (54) |
| Operating restructuring charges | — | (1) |
| Other expenses | (14) | (2) |
| Operating expenses | (10,025) | (9,407) |
| Operating profit | 702 | 835 |
| Cost-income ratio3 in % |
96.1 | 95.7 |
1 Figures for the first quarter of 2010 have been restated to reflect a change in the Allianz Group's accounting policy. For further information please refer to note 2 of our condensed consolidated interim financial statements.
2 Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investmentoriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction.
3 Represents deposits from insurance and investment contracts, claims and insurance benefits incurred (net), change in reserves for insurance and investment contracts (net) and acquisition and administrative expenses (net) divided by statutory premiums (net), interest and similar income, operating income from financial assets and liabilities carried at fair value through income (net), operating realized gains/losses (net), fee and commission income, other income, interest expenses, loan loss provisions, operating impairments of investments (net), investment expenses, fee and commission expenses, operating restructuring charges and other expenses.
| Statutory premiums2 | Premiums earned (net) | Operating profit (loss) | Cost-income ratio | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | internal3 | |||||||||
| March 31, | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | % | % | |
| Germany Life4 | 3,919 | 3,919 | 3,919 | 3,919 | 2,926 | 2,682 | 245 | 255 | 95.6 | 95.5 |
| Germany Health5 | 798 | 803 | 798 | 803 | 799 | 804 | 24 | 46 | 97.7 | 95.7 |
| Switzerland | 927 | 806 | 817 | 797 | 268 | 239 | 19 | 21 | 98.1 | 97.6 |
| Austria | 115 | 122 | 115 | 122 | 88 | 93 | 11 | 13 | 93.0 | 92.3 |
| German Speaking | ||||||||||
| Countries | 5,759 | 5,650 | 5,649 | 5,641 | 4,081 | 3,818 | 299 | 335 | 96.2 | 95.7 |
| Italy4 | 1,998 | 2,840 | 1,998 | 2,862 | 145 | 157 | 68 | 72 | 97.0 | 97.7 |
| France4 | 1,958 | 2,471 | 1,958 | 2,506 | 761 | 766 | 108 | 178 | 96.0 | 94.2 |
| Spain | 256 | 198 | 256 | 198 | 109 | 107 | 27 | 28 | 91.6 | 89.2 |
| South America | 14 | 12 | 13 | 12 | 10 | 8 | 3 | 2 | 83.2 | 88.2 |
| Netherlands | 104 | 85 | 104 | 85 | 56 | 34 | 12 | 14 | 90.4 | 87.1 |
| Turkey | 27 | 23 | 28 | 23 | 8 | 9 | 1 | 2 | 97.2 | 93.8 |
| Belgium/Luxembourg | 317 | 254 | 317 | 254 | 129 | 98 | 14 | 21 | 96.6 | 93.8 |
| Portugal | 45 | 35 | 45 | 35 | 20 | 20 | 5 | 5 | 89.5 | 87.5 |
| Greece | 29 | 30 | 29 | 30 | 17 | 16 | 1 | — | 95.3 | 99.8 |
| Africa | 12 | 7 | 12 | 7 | 6 | 5 | 1 | (2) | 94.3 | 118.4 |
| Europe incl. South America |
4,760 | 5,955 | 4,760 | 6,012 | 1,261 | 1,220 | 240 | 320 | 96.0 | 95.4 |
| United States | 1,939 | 1,651 | 1,920 | 1,651 | 167 | 153 | 92 | 102 | 96.1 | 95.2 |
| Mexico | 39 | 24 | 36 | 24 | 16 | 13 | 1 | 2 | 97.3 | 93.5 |
| NAFTA Markets | 1,978 | 1,675 | 1,956 | 1,675 | 183 | 166 | 93 | 104 | 96.2 | 95.1 |
| Reinsurance LH | 99 | 94 | 99 | 94 | 92 | 92 | 5 | 10 | 95.0 | 91.2 |
| Global Insurance Lines | ||||||||||
| & Anglo Markets | 99 | 94 | 99 | 94 | 92 | 92 | 5 | 10 | 95.0 | 91.2 |
| South Korea | 467 | 442 | 453 | 442 | 166 | 172 | 40 | 33 | 93.2 | 94.1 |
| Taiwan | 406 | 646 | 369 | 646 | 34 | 47 | (23) | 10 | 105.4 | 98.5 |
| Malaysia | 65 | 52 | 58 | 52 | 51 | 45 | 4 | 3 | 94.1 | 94.5 |
| Indonesia | 126 | 79 | 120 | 79 | 48 | 34 | 15 | 14 | 88.6 | 83.9 |
| Other | 348 | 406 | 318 | 406 | 100 | 105 | 1 | (9) | 99.7 | 102.1 |
| Asia-Pacific | 1,412 | 1,625 | 1,318 | 1,625 | 399 | 403 | 37 | 51 | 97.6 | 97.2 |
| Hungary | 49 | 68 | 50 | 68 | 15 | 15 | 2 | 3 | 96.3 | 95.8 |
| Slovakia | 61 | 64 | 61 | 64 | 46 | 44 | 8 | 8 | 88.8 | 88.7 |
| Czech Republic | 37 | 29 | 34 | 29 | 14 | 15 | 3 | 3 | 91.8 | 92.2 |
| Poland | 102 | 144 | 101 | 144 | 20 | 49 | 4 | 5 | 96.2 | 96.7 |
| Romania | 6 | 6 | 6 | 6 | 3 | 3 | 1 | — | 86.9 | 99.1 |
| Croatia | 11 | 11 | 12 | 11 | 11 | 10 | 1 | 1 | 94.3 | 88.8 |
| Bulgaria | 7 | 6 | 7 | 6 | 6 | 6 | 1 | 1 | 79.3 | 86.6 |
| Russia | 10 | 5 | 9 | 5 | 9 | 5 | — | — | 104.5 | 102.5 |
| Central and Eastern | ||||||||||
| Europe | 283 | 333 | 280 | 333 | 124 | 147 | 20 | 21 | 93.6 | 94.1 |
| Middle East and North | ||||||||||
| Africa | 53 | 30 | 56 | 30 | 45 | 28 | 3 | 2 | 93.9 | 93.6 |
| Global Life4 | 1 | 56 | 1 | — | — | 1 | — | (1) | 633.1 | 101.0 |
| Growth Markets | 1,749 | 2,044 | 1,655 | 1,988 | 568 | 579 | 60 | 73 | 96.9 | 96.7 |
| Consolidation6 | (75) | (62) | (76) | (63) | — | — | 5 | (7) | — | — |
| Total | 14,270 | 15,356 | 14,043 | 15,347 | 6,185 | 5,875 | 702 | 835 | 96.1 | 95.7 |
1 Figures for the first quarter of 2010 have been restated to reflect a change in Allianz Group's accounting policy. For further information please refer to note 2 of our condensed consolidated interim financial statements.
2 Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investment-
oriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction.
3 Statutory premiums adjusted for foreign currency translation and (de-)consolidation effects.
4 From the first quarter 2011 on, the variable annuity business of Allianz Global Life is shown within Germany, France and Italy, respectively. Prior year figures have not been adjusted. 5 Loss ratios were 83.5% and 79.6% for the three months ended March 31, 2011 and 2010, respectively.
6 Represents elimination of transactions between Allianz Group companies in different geographic regions.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
2009 € mn |
|---|---|---|---|
| Operating revenues | 1,273 | 1,116 | 716 |
| Operating profit | 528 | 466 | 211 |
| Cost-income ratio in % | 58.5 | 58.2 | 70.5 |
| Total assets under management in € bn | 1,492 | 1,312 | 1,014 |
Operating revenues increased by 14.1% on both a total and internal basis to € 1,273 million.
Operating profit amounted to € 528 million, an increase of € 62 million compared to the first quarter of 2010, mainly driven by an increase in average assets under management. We saw net inflows of € 15 billion of which third-party net inflows contributed € 14 billion.
Our cost-income ratio increased slightly by 0.3 percentage points to 58.5% mainly due to a decline in performance fees.
in € mn
€528mn
As of March 31, 2011 total assets under management amounted to € 1,492 billion. Of this, € 1,138 billion related to our third-party assets under management and € 354 billion to Allianz Group assets.
Fixed income Equities
Other
We continued to record net inflows of € 15 billion, of which € 14 billion came from our third-party assets. Fixed income business accounted for net inflows of € 19 billion, while equity business saw net outflows of € 4 billion. Market-related appreciation contributed an additional € 11 billion, of which € 8 billion came from fixed income assets and € 3 billion from equities. This was offset by unfavorable foreign currency translation effects of € 54 billion, mainly due to the weakening of the U.S. Dollar against the Euro.
In the following section we focus on the development of third-party assets under management since December 31, 2010.
Third-party assets under management by regions/ countries as of March 31, 2011 (December 31, 2010)1 in %
The regional distribution of third-party assets under management remained almost unchanged: the majority originated in the United States.
The split between fixed income and equity third-party assets was stable at 86% and14%, respectively.
The proportion of third-party assets under management from institutional and retail clients also remained unchanged at 66% and 34%, respectively.
1 Based on the origination of assets.
2 Consists of third-party assets managed by other Allianz Group companies (approximately € 19 bn as of March 31, 2011 and € 19 bn as of December 31, 2010, respectively).
Executive Summary 9 Property-Casualty Insurance Operations Life/Health Insurance Operations Asset Management Corporate and Other
29 Outlook
32 Balance Sheet Review
40 Reconciliations
Rolling investment performance of Allianz Global Investors1
Outperforming assets under management
Underperforming assets under management
The overall investment performance of Allianz Global Investors' assets under management was again outstanding with 89% outperforming their respective benchmarks (December 31, 2010: 87%). Fixed income assets recorded an exceptional performance of 92% versus their respective benchmarks. The performance of our equity assets strongly improved with 68% outperforming their respective benchmarks.
Operating revenues amounted to € 1,273 million, an improvement of € 157 million mainly due to our increased asset base. Our operating revenues increased by 14.1% both on an internal and total basis.
Net fee and commission income increased by € 159 million to € 1,256 million. The positive development was largely due to higher assets under management driven fees. Performance fees declined by € 72 million after an exceptionally high level in the first quarter of 2010.
Operating profit increased by 13.3% to € 528 million, due to our higher asset base and the resulting increase in assets under management driven fees.
In line with the favorable business development, we also saw an increase in personnel and non-personnel expenses. In total, administrative expenses increased by € 95 million to € 745 million.
Our operating expense base grew in line with revenues which allowed us to maintain an outstanding cost-income ratio, of 58.5% (1Q 2010: 58.2%).
1 AllianzGI account-based, asset-weighted 3-year investment performance of third-party assets vs. benchmark including all accounts managed by equity and fixed income managers of AllianzGI. For some retail equity funds the net of fee performance is compared to the median performance of an appropriate peer group (Morningstar or Lipper; 1st and 2nd quartile mean out-performance). For all other retail funds and for all institutional accounts performance is calculated gross of fees using closing prices (revaluated) where appropriate and compared to the benchmark of each individual fund or account. Other than under GIPS (Global Investment Performance Standards), the performance of closed funds/ accounts is not included in the analysis. Accounts at AllianzGI Investments Europe, Zurich Branch and Joint-Venture GTJA China and in parts WRAP accounts are not considered.
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Management and loading fees | 1,431 | 1,193 |
| Performance fees | 56 | 128 |
| Other income | 44 | 32 |
| Fee and commission income | 1,531 | 1,353 |
| Commissions | (272) | (251) |
| Other expenses | (3) | (5) |
| Fee and commission expenses | (275) | (256) |
| Net fee and commission income | 1,256 | 1,097 |
| Net interest income1 | 7 | 9 |
| Income from financial assets and liabilities carried at fair value through income (net) | 6 | 5 |
| Other income | 4 | 5 |
| Operating revenues | 1,273 | 1,116 |
| Administrative expenses (net), excluding acquisition-related expenses | (745) | (650) |
| Operating expenses | (745) | (650) |
| Operating profit | 528 | 466 |
| Cost-income ratio2 in % |
58.5 | 58.2 |
1 Represents interest and similar income less interest expenses.
2 Represents operating expenses divided by operating revenues.
| Three months ended March 31, | 2011 | 2010 | 2009 |
|---|---|---|---|
| € mn | € mn | € mn | |
| Corporate and Other 1 |
|||
| Operating revenues | 434 | 391 | 443 |
| Operating expenses | (657) | (642) | (627) |
| Operating loss | (223) | (251) | (184) |
| Holding & Treasury | |||
| Operating revenues | 110 | 93 | 137 |
| Operating expenses | (331) | (319) | (307) |
| Operating loss | (221) | (226) | (170) |
| Banking | |||
| Operating revenues | 294 | 265 | 277 |
| Operating expenses | (292) | (288) | (286) |
| Operating profit (loss) | 2 | (23) | (9) |
| Alternative Investments | |||
| Operating revenues | 33 | 35 | 31 |
| Operating expenses | (37) | (37) | (36) |
| Operating loss | (4) | (2) | (5) |
Operating loss reduced by € 28 million to € 223 million thanks to a positive Banking result and slight improvements in the Holding & Treasury segment.
1 Consolidation included; for further information about our Corporate and Other segment please refer to note 3 to the consolidated financial statements.
The Holding & Treasury's operating loss slightly reduced by € 5 million to € 221 million mainly due to an improved foreign currency result.
Interest and similar income grew by € 12 million driven by higher dividend payments. Interest expenses, excluding interest expenses from external debt increased by € 6 million to € 101 million.
Operating income from financial assets and liabilities carried at fair value (net) improved by € 18 million to a loss of € 1 million due to better foreign currency matching.
Net fee and commission result was negative € 21 million compared to € 0 million in the same period in the previous year. Administrative expenses (net), excluding acquisition-related expenses of € 140 million almost remained at the prior year level.
Our net interest, fee and commission result amounted to € 143 million in the first quarter of 2011, an increase of € 8 million compared to the first quarter of the previous year driven by volume and margin effects and higher fee income at Banking Germany.
Our operating income from financial assets and liabilities carried at fair value through income (trading income) improved by € 15 million mainly driven by our Banking business in Germany due to increased interest rates.
Administrative expenses amounted to € 133 million compared to € 138 million in the same period in the previous year. Our disposed banking business in Hungary accounted for € 4 million of this development.
Our loan loss provision increased by € 3 million to € 16 million.
Overall, our Banking business contributed a positive result. Operating profit improved by € 25 million to € 2 million. The cost income ratio amounted to 88.2%.
Alternative Investment's operating loss of € 4 million was essentially unchanged.
The world economy is being buffeted by several positive and negative factors. On the positive side are the still solid results of the business surveys, reflecting not least the very healthy state of order books. It is also encouraging that higher overall output continues to ease the situation on labor markets. Additionally, monetary policy remains very accommodating in the U.S.A., Japan and Europe, where the European Central Bank in April started what is expected to be a very gradual tightening cycle. Favorable financing conditions will continue to provide significant economic impetus for private households and the corporate sector alike. Furthermore, the growth potential inherent in emerging markets has not yet been fully exhausted and their demand will continue to reinforce the global economic recovery. On their own, these trends would point to broader-based growth. But several negative factors still pose a substantial risk to forward movement of the world economy. These include a possible further spike in oil prices, the deterioration on the price front in emerging markets (particularly in China), the need for budgetary consolidation in several countries of the eurozone as well as in the U.S.A, and the repercussions of the earthquake and the nuclear catastrophe in Japan. All in all, the global economic upswing looks set to continue in 2011 and 2012, although at a more moderate pace of between 3 and 3.5% in both years (2010: + 4%).
The U.S. economy is expected to grow by about 2.5% both this year and next year. Not least due to declining government expenditures, we expect to see only a moderately upward economic trend. The same is true for the eurozone, where an increasingly restrictive
fiscal policy is set to slow economic momentum. GDP is expected to rise by between 1.5 and 2% both in 2011 and 2012. The German economy looks poised to record above-average growth of close to 3% in 2011, before falling back more or less into line with the European average again in 2012.
Tackling the sovereign debt crisis will remain a major challenge in Europe. Provided that consolidation efforts and structural reforms are pushed forward decisively and the economic situation stabilizes gradually, most of the heavily indebted countries will be able to reduce their fiscal deficits significantly. The situation in Greece is more critical, despite its enormous consolidation efforts, as the country is suffering a severe recession. A debt restructuring – e.g. an extension of maturities – cannot be ruled out. Yields on German and U.S. bonds are likely to continue to creep up, taking into account a gradual normalization of monetary policy (in particular ECB), a somewhat fading "safe haven"-effect and a strong inflationary push from the increase in energy prices.
As far as the stock market is concerned, further increases in corporate earnings should mean that the overall environment in 2011, and presumably also in 2012, will remain broadly benign, despite the existing risks.
The industry is heading for higher growth in 2011 and 2012, but expectations should not be set too high. The growth in industrialized markets will probably remain on the modest side compared to that of emerging markets, where the underlying economic fundamentals and developing maturity characteristics are more favorable. Solvency II will probably continue to be the dominant industry issue through this period; however we are optimistic that the current uncertainty over its final shape will lift as we approach its planned 2013 implementation.
Although fixed income yields will probably improve further over these years, they are still likely to remain below pre-financial crisis levels on a rolling average basis. While we expect non-life prices to improve slightly, price adequacy overall will remain a persistent concern for the industry, in particular against a backdrop of rising catastrophe losses and cost inflation.
In the non-life sector, 2011 looks as if it will be another year dominated by catastrophes with first quarter losses alone that could top € 20 billion, including earthquakes in New Zealand and Japan and floods and cyclones in Australia. In terms of growth, we would expect premium income growth momentum to be more favorable in 2011 and 2012 on the back of improving economic conditions. While emerging markets can be expected to maintain a stronger growth trend than industrialized markets, we are encouraged by the growth prospects for our major European markets too. Our outlook for the pricing environment in 2011 and 2012 remains mixed, however. In those markets where prices increased in 2010, importantly for us including Western Europe, we would anticipate further positive momentum and a broadening to other lines. Yet elsewhere, for example U.S. commercial lines, it is hard to see the positive catalysts that could effect a significant improvement, including a better balance of supply and demand and an exhaustion of releases from prior-year claims reserves that are fueling lower prices. We remain steadfast in our belief that prices need to be significantly higher across the board, also to compensate for claims inflation, lower investment yields and longterm catastrophe loss trends. However, we do not consider catastrophe losses incurred year to date to be large enough to catalyze a widespread positive turn in pricing.
In the life sector, premium growth remains strong in emerging markets, where robust economic fundamentals and rising household income and wealth drive demand for savings products. As demographic change will not spare these markets, longevity products such as annuities will grow particularly strongly. In most industrialized markets, new business will benefit from the revived demand for savings products, reflecting the ever-increasing need to save for retirement. Investment returns are set to gradually improve from their low levels. And, while low interest rates and inflation will probably be worries for the industry through 2011 and 2012, we would still anticipate margins to improve over this period. At the product level, margins on fee business can be expected to rise as they benefit from increased assets under management and a semi-fixed cost base. They should also improve for spread business as a result of gradually improving investment returns, although these will probably remain on the low side compared to historical levels. If the prevailing return environment remains low and uncertainties associated with Solvency II persist, we could foresee a further shift away from spread business to higher margin risk products. Reported margins for 2011 and 2012 should also benefit from less reserve strengthening, as well as savings from recently implemented cost improvement programs.
The Allianz Group remains strongly capitalized: our solvency ratio strengthened by a further 7 percentage points since December 31, 2010 to 180%1 .
Our operating profit for the first quarter of 2011 of € 1,660 million is only slightly below the respective quarter of the previous year, despite this being one of the most loss intensive quarters in the history of the Allianz Group (losses from natural catastrophes amounted to € 737 million compared to € 555 million for the first quarter of 2010). Life/Health operating profit was in line with expectations, but stands below last year's extraordinary level. Asset Management performed strongly. This once again demonstrates that we are able to compensate for earnings volatility in single business segments.
Despite the difficult operating environment we remain on course. It would be inappropriate to simply multiply the current quarter's operating profit and net income by four to arrive at the expected result for the full year. Our published outlook for Allianz Group operating profit for 2011 is therefore unchanged at € 8.0 billion, plus or minus € 0.5 billion. For full details of the assumptions and sensitivities on which this outlook is based, please refer to the Allianz Group Annual Report 2010.
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, 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 in such forward-looking statements. Such deviations may arise, without limitation, because of changes in the general economic condition and competitive situation, particularly in the Allianz Group's core business and core markets or the impact of acquisitions, related integration issues and reorganization measures. Deviations may also arise from the frequency and severity of insured loss events, including from natural catastrophes, and from the development of loss expenses, mortality and morbidity levels and trends, persistency levels, and particularly in our banking business, the extent of credit defaults. In addition, the performance of the financial markets (particularly market volatility, liquidity and credit defaults) as well as changes in interest rate levels, currency exchange rates and changes in national and international laws and regulations, particularly tax regulation, may have a relevant impact. 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 forwardlooking statement.
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. The solvency ratio excluding off-balance sheet reserves would be 171% (2010: 164%).
in € mn
Unrealized gains/losses (net)
As of March 31, 2011, shareholders' equity amounted to € 43,560 million, a decrease of € 931 million compared to December 31, 2010. Net income attributable to shareholders increased our equity by € 857 million while negative foreign currency translation effects led to a € 776 million reduction. Unrealized gains declined by € 1,057 million due to a reduction in bond values following higher interest rates as well as equity realizations.
The Allianz Group is a financial conglomerate within the scope of the Financial Conglomerates Directive and the related German law in force since January 1, 2005. The law requires that a financial conglomerate calculate the capital needed to meet the respective solvency requirements on a consolidated basis.
The conglomerate solvency ratio4 increased by 7 percentage points compared to December 31, 2010, to 180% mainly due to the issuance of subordinated debt of € 2.0 billion and net income (net of accrued dividends) of € 0.5 billion. These effects were partially offset by negative foreign currency effects and lower unrealized gains on available-for-sale equity securities (due to realizations), which both decreased eligible capital. As of March 31, 2011, our eligible capital for solvency purposes, required for our insurance segments and our Banking and Asset Management businesses, was € 41.3 billion, including off-balance
Executive Summary 9 Property-Casualty Insurance Operations Life/Health Insurance Operations Asset Management Corporate and Other 29 Outlook
32 Balance Sheet Review 40 Reconciliations
sheet reserves of € 2.1 billion. Eligible capital surpassed the minimum legally stipulated level by € 18.4 billion. Eligible capital as of March 31, 2011 also includes a deduction for accrued dividends of € 2.0 billion for the fiscal year 2010, plus an additional € 0.4 billion for the first quarter of 2011, which represents 40% of net income attributable to shareholders. Our solvency position is strong.
In the following sections, we show the asset allocation for our insurance portfolio and analyze important developments within the balance sheets of our Property-Casualty, Life/Health, Asset Management and Corporate and Other segments.
As of March 31, 2011, total assets amounted to € 625.6 billion and total liabilities amounted to € 580.0 billion. When compared to year-end 2010 total assets and total liabilities increased by € 0.6 billion and by € 1.6 billion, respectively.
During the first quarter of 2011 most equity markets continued to show a positive trend.
Interest rates and credit spreads development
in %
10-year interest rates of all major countries increased during the first three months of 2011, whereas the first quarter of 2010 showed an overall decrease. The EONIA was almost constant in the first quarter of 2011, while an increase can be seen for the last 12 months.
33
The financial year 2009 showed tremendous credit spread narrowing as the economy was recovering from the impacts of the financial crisis. This trend slowed in 2010 but credit spreads were still declining. However, the pace of the 2010 decline nearly halted in the first quarter of 2011.
Allianz Group's asset portfolio is mainly derived from our core business of insurance. The following asset allocation covers the insurance segments together with the Corporate and Other segment.
in %
Allianz Group's asset portfolio as of March 31, 2011: � 445.2 billion (as of December 31, 2010: � 444.9 billion)
The Group's investment portfolio grew slightly by € 0.3 billion compared to the end of 2010 and by € 18.6 billion compared to the end of the first quarter of 2010.
During the first three months of 2011, our gross exposure to equities decreased slightly from € 33.0 billion to € 32.9 billion driven by divestments. During the first three months of 2011, our equity gearing after policyholder participation and hedges – which is a ratio of our equity holdings allocated to the shareholder to shareholder's equity plus off-balance sheet reserves less goodwill – remained stable at 0.4.
The vast majority of our investment portfolio comprises debt instruments. Our investments in this asset class increased slightly from € 395.6 billion to € 396.5 billion during the first three months of 2011. Net inflows, primarily from our property-casualty business, were partially offset by lower market values following increased interest rates. Our exposure in this asset class is well-diversified with around 60% allocated to governments and covered bonds. In line with our operating business profile, 67% of our fixed income portfolio is invested in eurozone bonds and loans. Approximately 94% of this portfolio is invested in investment-grade bonds and loans.
Of our government exposure, 75% is located in the eurozone where some governments experienced the threat of a liquidity shortage in recent quarters. Combined support efforts by other E.U. member states and the International Monetary Fund are intended to ensure financial stability. As of March 31, 2011 our sovereign bond exposure (market values) in Portugal, Ireland, Greece and Spain amounted to € 8 3 billion (December 31, 2010: € 8.1 billion). This exposure varies due to portfolio optimization strategies. The current unrealized losses of these sovereign bond holdings were € 1.1 billion as of March 31, 2011.
Nearly 60% of covered bonds are German Pfandbriefe backed by either public sector loans or mortgage loans. On these as well as on all other covered bond exposures, a cushion against house price deterioration and payment defaults is provided by minimum required security buffers and voluntary over-collateralization.
Our portfolio includes asset-backed securities (ABS) of € 18.9 billion. Around 26% or € 4.9 billion of our ABS securities are made up of U.S. agency mortgagebacked securities (MBS) which are backed by the U.S. government.
Our exposure in subordinated securities in banks amounted to € 10.2 billion. Our tier 1 share remains low at 0.5% (€ 1.8 billion) of our total exposure to debt instruments.
Our exposure to real estate held for investment remained stable at € 8.7 billion.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Interest and similar income1 | 4,769 | 4,450 |
| Income from financial assets and liabilities carried at fair value through income (net) |
(225) | 203 |
| Realized gains/losses (net) | 1,114 | 1,310 |
| Impairments of investments (net) | (145) | (91) |
| Investment expenses | (202) | (177) |
| Net investment income | 5,311 | 5,695 |
In the first quarter of 2011, our total net investment result amounted to € 5,311 million. The decrease of 6.7% was mainly driven by lower realized gains and a lower fair value result.
Interest and similar income1 increased by € 319 million mainly driven by a growing asset base, especially in our life business.
Executive Summary 9 Property-Casualty Insurance Operations Life/Health Insurance Operations Asset Management Corporate and Other
29 Outlook
32 Balance Sheet Review
40 Reconciliations
Income from investments held on fair value option and trading (net) declined from € 203 million to a loss of € 225 million. In the United States we sold assets which were designated at fair value through income and reinvested them in assets classified as available-for-sale. Another main impact stemmed from our life business in France, where we reduced the assets classified as Fair Value Option and from a direct impact of mark to market valuation of various funds. Furthermore, losses from foreign currencies were partly compensated by increased income from financial derivative positions. Financial derivatives are used to protect against equity and foreign currency fluctuations as well as to manage duration and other interest rate-related exposures.
Realized gains and losses (net) amounted to € 1,114 million, a decrease of € 196 million, primarily related to lower gains on equities and partly compensated by higher realizations on real estate investments. Realized gains and losses on debt investments remained at previous year level. One of our major transactions was the sale of another tranche of ICBC shares. In the first quarter of 2010 we recorded capital gains from the sales of ICBC shares of € 0.6 billion compared to € 0.1 billion in the current quarter.
Impairments (net) increased from € 91 million to € 145 million due to higher equity impairments.
During the first three months of 2011, our Property-Casualty asset base increased slightly by € 1.7 billion to € 99.0 billion. Our debt securities rose by € 0.1 billion. Equity investments amounted to € 5.4 billion, the same level as year-end 2010. Our cash and cash pool assets increased from € 5.3 billion to € 6.5 billion.
fair values1
| As of | As of |
|---|---|
| March 31, | December 31, |
| 2011 | 2010 |
| € bn | |
| 0.2 | 0.2 |
| 1.6 | 1.5 |
| 0.1 | 0.1 |
| 1.9 | 1.8 |
| 5.4 | 5.4 |
| 60.5 | 60.4 |
| 6.5 | 5.3 |
| 6.8 | 6.7 |
| 79.2 | 77.8 |
| 17.9 | 17.7 |
| 99.0 | 97.3 |
| € bn |
Of our Property-Casualty asset base, ABS made up € 3.9 billion as of March 31, 2011, which is approximately 3.9% of our asset base.
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 upon, among other factors, our ownership percentage.
Development of reserves for loss and loss adjustment expenses1
in € bn
Loss and loss adjustment expenses incurred in prior years B
Foreign currency translation adjustments and other changes, changes in the consolidated subsidiaries of the Allianz Group and reclassifications C
Reserves for loss and loss adjustment expenses in current year D
As of March 31, 2011, the segment's gross reserves for loss and loss adjustment expenses decreased by 1.0% to € 56.9 billion. On a net basis, reserves were down to € 50.5 billion. Foreign currency translation effects and other changes accounted for a € 0.8 billion decrease.
In the first three months of 2011, the Life/Health asset base decreased by 0.6% to € 415.3 billion. Of this total, € 64.8 billion were financial assets for unit-linked contracts. Overall, our debt and equity investments remained nearly on the same level compared to yearend 2010. Cash and cash pool assets were down by € 0.9 billion to € 6.5 billion.
fair values
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € bn | € bn | |
| Financial assets and liabilities carried at fair value through income |
||
| Equities | 2.3 | 2.7 |
| Debt securities | 3.0 | 3.2 |
| Other2 | (3.7) | (3.9) |
| Subtotal | 1.6 | 2.0 |
| Investments3 | ||
| Equities | 24.4 | 24.4 |
| Debt securities | 212.6 | 212.8 |
| Cash and cash pool assets4 | 6.5 | 7.4 |
| Other | 8.7 | 8.8 |
| Subtotal | 252.2 | 253.4 |
| Loans and advances to banks and | ||
| customers | 96.7 | 97.4 |
| Financial assets for unit-linked | ||
| contracts5 | 64.8 | 64.8 |
| Life/Health asset base | 415.3 | 417.6 |
Within our Life/Health asset base, ABS amounted to € 14.6 billion as of March 31, 2011, which is less than 4% of total Life/Health assets.
2 This comprises assets of € 1.3 bn and € 1.0 bn and liabilities of € (5.0) bn and € (4.9) bn as of March 31, 2011 and December 31, 2010 respectively.
2 Executive Summary
in € bn
Financial assets for unit-linked contracts
Foreign currency translation adjustments C
Financial assets for unit-linked contracts remained almost on the same level at € 64.8 billion. Unit-linked insurance contracts increased by € 1.6 billion due to good fund performance and premium inflows exceeding outflows by € 1.3 billion. The most significant contributions came from our operations in the United States (€ 0.9 billion) and France (€ 0.6 billion). Unitlinked investment contracts decreased by € 0.3 billion, mainly driven by Italy. The majority of currency effects resulted from the weaker U.S. Dollar (€ (0.8) billion) and Asian currencies (€ (0.4) billion).
in € bn
Change in aggregate policy reserves A
Change in reserves for premium refunds B
Foreign currency translation adjustments C
Life/Health reserves for insurance and investment contracts decreased by € 0.7 billion or 0.2% in the first quarter 2011. The € 4.4 billion increase in aggregate policy reserves was mainly driven our operations in Germany (€ 1.9 billion), the United States (€ 0.7 billion, excluding currency effects), Switzerland (€ 0.6 billion, excluding currency effects) and Italy (€ 0.4 billion). Reserves for premium refund decreased by € 1.6 billion due to unrealized losses on bonds following higher interest rates. Significant currency effects resulted mainly from the weaker U.S. Dollar (€ (2.6) billion), fluctuations of Asian currencies (€ (0.5) billion) and the strong Swiss Franc (€ (0.3) billion).
Our Asset Management segment's results of operations stem primarily from its management of third-party assets.1 In this section we refer only to the segment's own assets.
The main components of the Asset Management segment's asset base are cash and cash pool assets and debt securities. In the first quarter of 2011 the asset base increased by € 0.2 billion to € 3.5 billion.
Liabilities in our Asset Management segment amounted to € 3.8 billion (down by 12.1%).
Our asset base for Corporate and Other was up by 3.1% in the first three months of 2011 to € 40.3 billion. Loans and advances to banks and customers were up by € 0.9 billion to € 17.3 billion. Our investments overall were nearly unchanged from year-end 2010.
fair values
| As of December 31, 2010 € bn 0.1 |
|---|
| 0.2 |
| 0.0 |
| 0.3 |
| 3.3 |
| 17.3 |
| 1.6 |
| 0.2 |
| 22.4 |
| 16.4 |
| 39.1 |
ABS in our Corporate and Other asset base amounted to € 0.4 billion as of March 31, 2011, which is around 1.0% of our Corporate and Other asset base.
Other liabilities increased by € 1.4 billion to € 16.7 billion. The development of certificated liabilities from € 14.4 billion to € 13.7 billion was driven by a decrease of Allianz SE's outstanding issued debt 5 of € 0.7 billion. The increase in participation certificates and subordinated liabilities by € 2.3 billion to € 11.1 billion was mainly attributable to a Subordinated Bond issued by Allianz Finance II B.V.
5 For further information on Allianz SE debt as of March 31, 2011, please refer to note 17 and 18 of our financial statements.
2 Executive Summary
9 Property-Casualty Insurance Operations
18 Life/Health Insurance Operations
23 Asset Management
32 Balance Sheet Review 40 Reconciliations
| Interest | ||
|---|---|---|
| expense in | ||
| 1Q 2011 | ||
| 1. Senior bonds2 | ||
| 5.625% bond issued by Allianz Finance II B.V., Amsterdam |
||
| Volume | € 0.9 bn | |
| Year of issue | 2002 | |
| Maturity date | 11/29/2012 | |
| ISIN | XS 015 879 238 1 | |
| Interest expense | € 12.7 mn | |
| 5.0% bond issued by Allianz Finance II B.V., Amsterdam |
||
| Volume | € 1.5 bn | |
| Year of issue | 2008 | |
| Maturity date | 3/6/2013 | |
| ISIN | DE 000 A0T R7K 7 | |
| Interest expense | € 18.8 mn | |
| 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 expense | € 15.3 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 expense | € 18.0 mn | |
| Total interest expense for senior bonds | € 64.8 mn | |
| 2. Subordinated bonds3 | ||
| 6.125% bond issued by Allianz Finance II B. V., Amsterdam |
||
| Volume | € 2.0 bn | |
| Year of issue | 2002 | |
| Maturity date | 5/31/2022 | |
| ISIN | XS 014 888 756 4 | |
| Interest expense | € 28.5 mn | |
| 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 expense | € 16.3 mn | |
| 7.25% bond 4 issued by Allianz Finance II B. V., Amsterdam |
||
| Volume | USD 0.5 bn | |
| Year of issue | 2002 | |
| Maturity date | Perpetual Bond | |
| ISIN | XS 015 915 072 0 | |
| Interest expense | € 6.5 mn |
| Interest expense in 1Q 2011 |
||
|---|---|---|
| 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 expense | € 20.8 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 expense | € 15.6 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 expense | € 11.2 mn | |
| 8.375% bond5 issued by Allianz SE |
||
| Volume | USD 2.0 bn | |
| Year of issue | 2008 | |
| Maturity date | Perpetual Bond | |
| ISIN | US 018 805 200 7 | |
| Interest expense | € 32.4 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 A1GNAH1 | |
| Interest expense | € 7.6 mn | |
| Total interest expense for | ||
| subordinated bonds | € 138.9 mn | |
| Total interest expense | € 203.7 mn |
The previous analysis is based on our consolidated financial statements and should be read in conjunction with them. In addition to our stated figures according to the International Financial Reporting Standards (IFRS), 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 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).
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Property-Casualty | ||
| Gross premiums written | 14,251 | 13,994 |
| Life/Health | ||
| Statutory premiums | 14,270 | 15,356 |
| Asset Management | ||
| Operating revenues | 1,273 | 1,116 |
| consisting of: | ||
| Net fee and commission income | 1,256 | 1,097 |
| Net interest income | 7 | 9 |
| Income from financial assets and liabilities | ||
| carried at fair value through income (net) | 6 | 5 |
| Other income | 4 | 5 |
| Corporate and Other | ||
| Total revenues | 151 | 128 |
| consisting of: | ||
| Interest and similar income | 178 | 169 |
| Income from financial assets and liabilities | ||
| carried at fair value through income (net) | 9 | (6) |
| Fee and commission income | 107 | 102 |
| Interest expenses, excluding interest | ||
| expenses from external debt | (89) | (84) |
| Fee and commission expenses | (53) | (52) |
| Consolidation effects | ||
| (Banking within Corporate and Other) | (1) | (1) |
| Consolidation | (40) | (27) |
| Allianz Group | 29,905 | 30,567 |
We believe that an understanding of our total revenue performance is enhanced when the effects of foreign currency translation as well as acquisitions and disposals (or "changes in scope of consolidation") are separately analyzed. Accordingly, in addition to presenting "nominal growth", we also present "internal growth", which excludes these effects.
| Three months ended March 31, 2011 |
Internal growth |
Changes in scope of consoli dation |
Foreign currency translation |
Nominal growth |
|---|---|---|---|---|
| % | % | % | % | |
| Property-Casualty | 0.2 | (0.4) | 2.0 | 1.8 |
| Life/Health | (8.5) | (0.1) | 1.5 | (7.1) |
| Asset Management | 14.1 | (0.9) | 0.9 | 14.1 |
| Corporate and Other | 20.8 | (2.8) | 0.0 | 18.0 |
| Allianz Group | (3.6) | (0.2) | 1.6 | (2.2) |
| As of March 31, |
As of December 31, |
||
|---|---|---|---|
| 2011 | 2010 | ||
| Note | € mn | € mn | |
| ASSETS | |||
| Cash and cash equivalents | 8,570 | 8,747 | |
| Financial assets carried at fair value through income | 4 | 9,439 | 9,843 |
| Investments | 5 | 335,497 | 334,618 |
| Loans and advances to banks and customers | 6 | 123,012 | 122,678 |
| Financial assets for unit-linked contracts | 64,775 | 64,847 | |
| Reinsurance assets | 7 | 12,720 | 13,135 |
| Deferred acquisition costs | 8 | 21,191 | 20,733 |
| Deferred tax assets | 2,764 | 2,663 | |
| Other assets | 9 | 34,128 | 34,001 |
| Non-current assets and assets of disposal groups classified as held for sale | 10 | 331 | 299 |
| Intangible assets | 11 | 13,162 | 13,381 |
| Total assets | 625,589 | 624,945 |
| As of March 31, |
As of December 31, |
||
|---|---|---|---|
| Note | 2011 € mn |
2010 € mn |
|
| LIABILITIES AND EQUITY | |||
| Financial liabilities carried at fair value through income | 12 | 5,048 | 5,013 |
| Liabilities to banks and customers | 13 | 20,889 | 21,155 |
| Unearned premiums | 19,878 | 16,497 | |
| Reserves for loss and loss adjustment expenses | 14 | 65,840 | 66,474 |
| Reserves for insurance and investment contracts | 15 | 349,103 | 349,793 |
| Financial liabilities for unit-linked contracts | 64,775 | 64,847 | |
| Deferred tax liabilities | 3,585 | 3,976 | |
| Other liabilities | 16 | 32,206 | 33,213 |
| Liabilities of disposal groups classified as held for sale | 10 | 258 | 188 |
| Certificated liabilities | 17 | 7,485 | 8,229 |
| Participation certificates and subordinated liabilities | 18 | 10,907 | 8,998 |
| Total liabilities | 579,974 | 578,383 | |
| Shareholders' equity | 43,560 | 44,491 | |
| Non-controlling interests | 2,055 | 2,071 | |
| Total equity | 19 | 45,615 | 46,562 |
| Total liabilities and equity | 625,589 | 624,945 |
| Three months ended March 31, | 2011 | 2010 | |
|---|---|---|---|
| Note | € mn | € mn | |
| Premiums written | 20,674 | 20,043 | |
| Ceded premiums written | (1,495) | (1,470) | |
| Change in unearned premiums | (3,318) | (3,285) | |
| Premiums earned (net) | 20 | 15,861 | 15,288 |
| Interest and similar income | 21 | 4,894 | 4,579 |
| Income from financial assets and liabilities carried at fair value through income (net) | 22 | (225) | 203 |
| Realized gains/losses (net) | 23 | 1,114 | 1,310 |
| Fee and commission income | 24 | 1,987 | 1,801 |
| Other income | 25 | 31 | 29 |
| Income from fully consolidated private equity investments | 26 | 393 | 368 |
| Total income | 24,055 | 23,578 | |
| Claims and insurance benefits incurred (gross) | (12,454) | (11,988) | |
| Claims and insurance benefits incurred (ceded) | 476 | 321 | |
| Claims and insurance benefits incurred (net) | 27 | (11,978) | (11,667) |
| Change in reserves for insurance and investment contracts (net) | 28 | (3,762) | (3,226) |
| Interest expenses | 29 | (350) | (351) |
| Loan loss provisions | 30 | (16) | (12) |
| Impairments of investments (net) | 31 | (145) | (91) |
| Investment expenses | 32 | (202) | (177) |
| Acquisition and administrative expenses (net) | 33 | (5,016) | (4,991) |
| Fee and commission expenses | 34 | (649) | (599) |
| Amortization of intangible assets | (22) | (17) | |
| Restructuring charges | (2) | (48) | |
| Other expenses | 35 | (15) | (3) |
| Expenses from fully consolidated private equity investments | 26 | (412) | (405) |
| Total expenses | (22,569) | (21,587) | |
| Income before income taxes | 1,486 | 1,991 | |
| Income taxes | 36 | (571) | (388) |
| Net income | 915 | 1,603 | |
| Net income attributable to: | |||
| Non-controlling interests | 58 | 38 | |
| Shareholders | 857 | 1,565 | |
| Three months ended March 31, | Note | 2011 € |
2010 € |
| Basic earnings per share | 37 | 1.90 | 3.47 |
Diluted earnings per share 37 1.88 3.46
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Net income | 915 | 1,603 |
| Other comprehensive income | ||
| Foreign currency translation adjustments | ||
| Reclassifications to net income | — | — |
| Changes arising during the period | (795) | 937 |
| Subtotal | (795) | 937 |
| Available-for-sale investments | ||
| Reclassifications to net income | (311) | (732) |
| Changes arising during the period | (771) | 1,542 |
| Subtotal | (1,082) | 810 |
| Cash flow hedges | ||
| Reclassifications to net income | (1) | — |
| Changes arising during the period | (7) | 3 |
| Subtotal | (8) | 3 |
| Share of other comprehensive income of associates | ||
| Reclassifications to net income | — | — |
| Changes arising during the period | 50 | 23 |
| Subtotal | 50 | 23 |
| Miscellaneous | ||
| Reclassifications to net income | — | — |
| Changes arising during the period | (5) | 18 |
| Subtotal | (5) | 18 |
| Total other comprehensive income | (1,840) | 1,791 |
| Total comprehensive income | (925) | 3,394 |
| Total comprehensive income attributable to: | ||
| Non-controlling interests | 8 | 96 |
| Shareholders | (933) | 3,298 |
| Paid-in | Retained | Foreign | Unrealized | Share | Non | Total equity | |
|---|---|---|---|---|---|---|---|
| capital | earnings | currency | gains and | holders' | controlling | ||
| translation | losses (net) | equity | interests | ||||
| adjustments | |||||||
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | |
| Balance as of January 1, 2010 | 28,635 | 9,642 | (3,626) | 5,457 | 40,108 | 2,121 | 42,229 |
| Total comprehensive income | — | 1,607 | 904 | 787 | 3,298 | 96 | 3,394 |
| Paid-in capital | — | — | — | — | — | — | — |
| Treasury shares | — | 2 | — | — | 2 | — | 2 |
| Transactions between equity holders | — | 17 | (10) | — | 7 | (63) | (56) |
| Dividends paid | — | — | — | — | — | (30) | (30) |
| Balance as of March 31, 2010 | 28,635 | 11,268 | (2,732) | 6,244 | 43,415 | 2,124 | 45,539 |
| Balance as of January 1, 2011 | 28,685 | 13,088 | (2,339) | 5,057 | 44,491 | 2,071 | 46,562 |
| Total comprehensive income | — | 900 | (776) | (1,057) | (933) | 8 | (925) |
| Paid-in capital | — | — | — | — | — | — | — |
| Treasury shares | — | 7 | — | — | 7 | — | 7 |
| Transactions between equity holders | — | (5) | — | — | (5) | 4 | (1) |
| Dividends paid | — | — | — | — | — | (28) | (28) |
| Balance as of March 31, 2011 | 28,685 | 13,990 | (3,115) | 4,000 | 43,560 | 2,055 | 45,615 |
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Summary Net cash flow provided by operating activities |
6,932 | 5,332 |
| Net cash flow used in investing activities | (8,891) | (5,726) |
| Net cash flow provided by financing activities | 2,015 | 828 |
| Effect of exchange rate changes on cash and cash equivalents | (233) | 118 |
| Change in cash and cash equivalents | (177) | 552 |
| Cash and cash equivalents at beginning of period | 8,747 | 6,089 |
| Cash and cash equivalents at end of period | 8,570 | 6,641 |
| Cash flow from operating activities | ||
| Net income | 915 | 1,603 |
| Adjustments to reconcile net income to net cash flow provided by operating activities | ||
| Share of earnings from investments in associates and joint ventures | (19) | (49) |
| 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 | (969) | (1,219) |
| Other investments, mainly financial assets held for trading and designated at fair value through income | (262) | 30 |
| Depreciation and amortization | 263 | 245 |
| Loan loss provisions | 16 | 12 |
| Interest credited to policyholder accounts | 968 | 1,172 |
| Net change in | ||
| Financial assets and liabilities held for trading | 312 | (618) |
| Reverse repurchase agreements and collateral paid for securities borrowing transactions | 68 | (463) |
| Repurchase agreements and collateral received from securities lending transactions | 476 | 431 |
| Reinsurance assets | (38) | (14) |
| Deferred acquisition costs | (610) | (619) |
| Unearned premiums | 3,677 | 3,622 |
| Reserves for loss and loss adjustment expenses | 273 | (33) |
| Reserves for insurance and investment contracts | 2,377 | 2,061 |
| Deferred tax assets/liabilities | (91) | (40) |
| Other (net) | (424) | (789) |
| Subtotal | 6,017 | 3,729 |
| Net cash flow provided by operating activities | 6,932 | 5,332 |
| Cash flow from investing activities | ||
| Proceeds from the sale, maturity or repayment of | ||
| Financial assets designated at fair value through income | 2,599 | 2,624 |
| Available-for-sale investments Held-to-maturity investments |
32,120 54 |
26,524 59 |
| Investments in associates and joint ventures Non-current assets and assets of disposal groups classified as held for sale |
68 124 |
209 — |
| Real estate held for investment | 190 | 135 |
| Loans and advances to banks and customers (purchased loans) | 1,916 | 1,734 |
| Property and equipment | 28 | 95 |
| Subtotal | 37,099 | 31,380 |
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Payments for the purchase or origination of | ||
| Financial assets designated at fair value through income | (2,484) | (2,072) |
| Available-for-sale investments | (40,267) | (34,921) |
| Held-to-maturity investments | (40) | (108) |
| Investments in associates and joint ventures | (59) | (213) |
| Non-current assets and assets of disposal groups classified as held for sale | — | — |
| Real estate held for investment | (131) | (42) |
| Loans and advances to banks and customers (purchased loans) | (1,609) | (1,589) |
| Property and equipment | (298) | (282) |
| Subtotal | (44,888) | (39,227) |
| 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) | (1,267) | 2,204 |
| Other (net) | 165 | (83) |
| Net cash flow used in investing activities | (8,891) | (5,726) |
| Cash flow from financing activities | ||
| Policyholders' account deposits | 4,844 | 6,042 |
| Policyholders' account withdrawals | (3,450) | (3,210) |
| Net change in liabilities to banks and customers | (643) | (1,446) |
| Proceeds from the issuance of certificated liabilities, participation certificates and subordinated liabilities | 2,967 | 1,724 |
| Repayments of certificated liabilities, participation certificates and subordinated liabilities | (1,688) | (2,044) |
| Cash inflow from capital increases | — | — |
| Transactions between equity holders | (1) | (56) |
| Dividends paid to shareholders | (28) | (30) |
| Net cash flow from sale or purchase of treasury shares | 7 | 2 |
| Other (net) | 7 | (154) |
| Net cash flow provided by financing activities | 2,015 | 828 |
| Supplementary information on the condensed consolidated statements of cash flows | ||
| Income taxes received / (paid) | (315) | 74 |
| Dividends received | 149 | 135 |
| Interest received | 5,037 | 4,641 |
| Interest paid | (554) | (572) |
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, condensed 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 §315 a of the German Commercial Code (HGB). IFRS comprise International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and interpretations developed by the International Financial Reporting Interpretations Committee (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 and endorsed by the E.U., that are compulsory as of January 1, 2011 or adopted early. See note 2 for further details.
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 December 31, 2010. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Allianz Group Annual Report 2010.
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, the provisions embodied under accounting principles generally accepted in the United States of America (US GAAP) have been applied to those aspects where specific guidance is not provided by IFRS 4, Insurance Contracts.
The condensed consolidated interim financial statements are presented in millions of Euro (€ mn), unless otherwise stated.
These condensed consolidated interim financial statements of the Allianz Group were authorized for issue by the Board of Management on May 11, 2011.
The following amendments and revisions to standards as well as interpretations have become effective for the Allianz Group's consolidated financial statements as of January 1, 2011:
The Allianz Group adopted the revisions, amendments and interpretations as of January 1, 2011 with no material impact on its financial results or financial position.
Future policy benefits of the fixed-indexed annuity business implicitly include a series of annual market value liability options (MVLO) that are accounted for as derivatives at fair value. These embedded derivatives have been separated from the related policy reserves and presented within financial liabilities carried at fair value through income in the consolidated balance sheet. Historically, once the annual index option was credited to the policyholder's account, this benefit continued to be classified as a derivative at fair value. As such, the MVLO would continually grow over time.
Effective July 1, 2010, the Allianz Group voluntarily changed its accounting policy with regard to the valuation of the MVLO. Specifically, the fixed benefit accruing to the policyholder's account balance is reclassified back to policyholder reserves upon crediting. In addition, the fair value of the MVLO has been refined to incorporate a discount rate that is more consistent with the returns on the assets used to fund these derivative liabilities.
The effects of these changes are that the portion of the policyholder's account balance representing a credited amount will no longer be accounted for at fair value and the ongoing valuation of the MVLO will better reflect the indexed returns being offered to policyholders. The Allianz Group believes these changes mitigate artificial accounting volatility and better reflect the economics of the fixed-indexed annuity business, consequently resulting in the presentation of more relevant and reliable financial information.
The voluntary change in accounting policy is applied retrospectively and results in changes in the presentation as described in the table below.
Certain prior period amounts have been reclassified to conform to the current period presentation.
The following table summarizes the impacts on the consolidated income statement for the three months ended March 31, 2010 relating to the change in accounting policy for fixed-indexed annuities:
| Three months ended March 31, | 2010 | ||
|---|---|---|---|
| As previously reported |
Change in accounting policy for fixed indexed annuities |
As reported | |
| € mn | € mn | € mn | |
| Premiums written | 20,052 | (9) | 20,043 |
| Ceded premiums written | (1,470) | — | (1,470) |
| Change in unearned premiums | (3,285) | — | (3,285) |
| Premiums earned (net) | 15,297 | (9) | 15,288 |
| Interest and similar income | 4,579 | — | 4,579 |
| Income from financial assets and liabilities carried at fair value through income (net) | 119 | 84 | 203 |
| Realized gains/losses (net) | 1,310 | — | 1,310 |
| Fee and commission income | 1,801 | — | 1,801 |
| Other income | 29 | — | 29 |
| Income from fully consolidated private equity investments | 368 | — | 368 |
| Total income | 23,503 | 75 | 23,578 |
| Claims and insurance benefits incurred (gross) | (11,988) | — | (11,988) |
| Claims and insurance benefits incurred (ceded) | 321 | — | 321 |
| Claims and insurance benefits incurred (net) | (11,667) | — | (11,667) |
| Change in reserves for insurance and investment contracts (net) | (3,176) | (50) | (3,226) |
| Interest expenses | (351) | — | (351) |
| Loan loss provisions | (12) | — | (12) |
| Impairments of investments (net) | (91) | — | (91) |
| Investment expenses | (177) | — | (177) |
| Acquisition and administrative expenses (net) | (4,989) | (2) | (4,991) |
| Fee and commission expenses | (599) | — | (599) |
| Amortization of intangible assets | (17) | — | (17) |
| Restructuring charges | (48) | — | (48) |
| Other expenses | (3) | — | (3) |
| Expenses from fully consolidated private equity investments | (405) | — | (405) |
| Total expenses | (21,535) | (52) | (21,587) |
| Income before income taxes | 1,968 | 23 | 1,991 |
| Income taxes | (380) | (8) | (388) |
| Net income | 1,588 | 15 | 1,603 |
| Net income attributable to: | |||
| Non-controlling interests | 38 | — | 38 |
| Shareholders | 1,550 | 15 | 1,565 |
| Basic earnings per share (in €) | 3.44 | 0.03 | 3.47 |
| Diluted earnings per share (in €) | 3.43 | 0.03 | 3.46 |
42 Condensed Consolidated Interim Financial Statements 51
48 Notes to the Condensed Consolidated Interim Financial Statements
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 between Property-Casualty and Life/Health categories. In accordance with the responsibilities of the Board of Management, each of the insurance categories 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 15 reportable segments in accordance with IFRS 8, Operating Segments.
The types of products and services from which reportable segments derive revenue are described below.
In the Property-Casualty category, 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 Life/Health category, reportable segments offer a comprehensive range of life and health insurance products on both individual and group basis, including annuity, endowment and term insurance, unit-linked and investment-oriented products as well as full private health and supplemental health and 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 fixed income funds as well as alternative products. The United States and Germany as well as France, Italy and the Asia-Pacific region represent the primary asset management markets.
The reportable segment Holding & Treasury includes the management and support of the Allianz Group's businesses through its strategy, risk, corporate finance, treasury, financial control, communication, legal, human resources and technology functions.
The reportable segment Banking consists of the banking activities in Germany, France, Italy and Central and Eastern Europe. The banks offer a wide range of products for corporate and retail clients with the main 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. The Alternative Investments reportable segment also includes certain fully consolidated private equity investments.
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 Consolidation. For the reportable segment Asset Management, interest revenues are reported net of interest expenses.
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:
Against this general rule the following exceptions apply:
Operating profit should be viewed as complementary to, and not a substitute for, income before income taxes or net income as determined in accordance with IFRS.
| Property-Casualty | Life/Health | |||
|---|---|---|---|---|
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
|
| ASSETS | ||||
| Cash and cash equivalents | 3,071 | 2,520 | 3,906 | 4,482 |
| Financial assets carried at fair value through income | 1,954 | 1,852 | 6,519 | 6,867 |
| Investments | 83,028 | 82,786 | 247,398 | 247,568 |
| Loans and advances to banks and customers | 17,893 | 17,697 | 96,671 | 97,377 |
| Financial assets for unit-linked contracts | — | — | 64,775 | 64,847 |
| Reinsurance assets | 8,083 | 8,365 | 4,654 | 4,793 |
| Deferred acquisition costs | 4,426 | 4,121 | 16,611 | 16,460 |
| Deferred tax assets | 1,125 | 1,110 | 221 | 208 |
| Other assets | 22,868 | 21,738 | 16,254 | 16,424 |
| Non-current assets and assets of disposal groups classified | ||||
| as held for sale 1 | 62 | 28 | — | 24 |
| Intangible assets | 2,293 | 2,308 | 2,338 | 2,346 |
| Total assets | 144,803 | 142,525 | 459,347 | 461,396 |
| Property-Casualty | Life/Health | |||
|---|---|---|---|---|
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
|
| LIABILITIES AND EQUITY | ||||
| Financial liabilities carried at fair value through income | 46 | 79 | 4,956 | 4,905 |
| Liabilities to banks and customers | 1,182 | 1,368 | 1,395 | 796 |
| Unearned premiums | 17,499 | 14,206 | 2,379 | 2,291 |
| Reserves for loss and loss adjustment expenses | 56,920 | 57,509 | 8,937 | 8,984 |
| Reserves for insurance and investment contracts | 9,371 | 9,338 | 339,820 | 340,539 |
| Financial liabilities for unit-linked contracts | — | — | 64,775 | 64,847 |
| Deferred tax liabilities | 2,298 | 2,461 | 1,265 | 1,559 |
| Other liabilities | 16,507 | 16,756 | 14,098 | 15,124 |
| Liabilities of disposal groups classified as held for sale 2 | 55 | — | — | — |
| Certificated liabilities | 25 | — | 1 | 2 |
| Participation certificates and subordinated liabilities | — | 398 | 65 | 65 |
| Total liabilities | 103,903 | 102,115 | 437,691 | 439,112 |
1 Comprise the assets from the disposal group Allianz Bank Polska S.A., Warsaw, in Corporate and Other, the assets from the disposal group Allianz Kazakhstan ZAO, Almaty, and other non-current assets classified as held for sale in Property-Casualty. See note 10 for further information.
2 Comprise the liabilities from the disposal group Allianz Bank Polska S.A., Warsaw, in Corporate and Other and the liabilities from the disposal group Allianz Kazakhstan ZAO, Almaty, in Property-Casualty. See note 10 for further information.
42 Condensed Consolidated Interim Financial Statements 55
48 Notes to the Condensed Consolidated Interim Financial Statements
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
| 994 | 899 | 918 | 1,045 | (319) | (199) | 8,570 | 8,747 |
| 735 | 729 | 712 | 826 | (481) | (431) | 9,439 | 9,843 |
| 1,138 | 1,208 | 91,379 | 90,039 | (87,446) | (86,983) | 335,497 | 334,618 |
| 368 | 358 | 17,328 | 16,443 | (9,248) | (9,197) | 123,012 | 122,678 |
| — | — | — | — | — | — | 64,775 | 64,847 |
| — | — | — | — | (17) | (23) | 12,720 | 13,135 |
| 154 | 152 | — | — | — | — | 21,191 | 20,733 |
| 263 | 271 | 1,369 | 1,372 | (214) | (298) | 2,764 | 2,663 |
| 3,697 | 3,725 | 5,265 | 5,525 | (13,956) | (13,411) | 34,128 | 34,001 |
| — | — | 270 | 248 | (1) | (1) | 331 | |
| 6,893 | 7,065 | 1,638 | 1,662 | — | — | 13,162 | 13,381 |
| 14,242 | 14,407 | 118,879 | 117,160 | (111,682) | (110,543) | 625,589 | 624,945 |
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| As of March 31, |
As of December 31, |
As of March 31, |
As of December 31, |
As of March 31, |
As of December 31, |
As of March 31, |
As of December 31, |
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn |
| — | — | 476 | 461 | (430) | (432) | 5,048 | 5,013 |
| 945 | 876 | 19,962 | 20,499 | (2,595) | (2,384) | 20,889 | 21,155 |
| — | — | — | — | — | — | 19,878 | 16,497 |
| — | — | — | — | (17) | (19) | 65,840 | 66,474 |
| — | — | 36 | 42 | (124) | (126) | 349,103 | 349,793 |
| — | — | — | — | — | — | 64,775 | 64,847 |
| 55 | 80 | 181 | 174 | (214) | (298) | 3,585 | 3,976 |
| 2,797 | 3,364 | 16,736 | 15,333 | (17,932) | (17,364) | 32,206 | 33,213 |
| — | — | 239 | 241 | (36) | (53) | 258 | |
| — | — | 13,680 | 14,448 | (6,221) | (6,221) | 7,485 | |
| 14 | 14 | 11,085 | 8,778 | (257) | (257) | 10,907 | |
| 3,811 | 4,334 | 62,395 | 59,976 | (27,826) | (27,154) | 579,974 | 578,383 |
| Total equity | 45,615 | 46,562 | |||||
| Total liabilities and equity | 625,589 | 624,945 |
| Property-Casualty | Life/Health | |||
|---|---|---|---|---|
| Three months ended March 31, | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | |
| Total revenues1 | 14,251 | 13,994 | 14,270 | 15,356 |
| Premiums earned (net) | 9,676 | 9,413 | 6,185 | 5,875 |
| Operating investment result | ||||
| Interest and similar income | 909 | 879 | 3,833 | 3,545 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
19 | 9 | (162) | 146 |
| Operating realized gains/losses (net) | 9 | 9 | 718 | 538 |
| Interest expenses, excluding interest expenses from | ||||
| external debt | (13) | (25) | (26) | (23) |
| Operating impairments of investments (net) | — | — | (62) | (39) |
| Investment expenses | (56) | (55) | (178) | (145) |
| Subtotal | 868 | 817 | 4,123 | 4,022 |
| Fee and commission income | 273 | 254 | 130 | 118 |
| Other income | 4 | 4 | 23 | 20 |
| Claims and insurance benefits incurred (net) | (7,090) | (6,822) | (4,888) | (4,845) |
| Change in reserves for insurance and investment | ||||
| contracts (net) 2 | (103) | (84) | (3,629) | (3,096) |
| Loan loss provisions | — | — | — | 1 |
| Acquisition and administrative expenses (net), | ||||
| excluding acquisition-related expenses | (2,708) | (2,633) | (1,169) | (1,203) |
| Fee and commission expenses | (254) | (237) | (59) | (54) |
| Operating restructuring charges | — | — | — | (1) |
| Other expenses | (3) | — | (14) | (2) |
| Reclassification of tax benefits | — | — | — | — |
| Operating profit (loss) | 663 | 712 | 702 | 835 |
| Non-operating investment result | ||||
| Non-operating income from financial assets and liabilities | ||||
| carried at fair value through income (net) | 2 | (23) | (9) | (38) |
| Non-operating realized gains/losses (net) | 209 | 201 | 10 | 18 |
| Non-operating impairments of investments (net) | (33) | 1 | (4) | 2 |
| Subtotal | 178 | 179 | (3) | (18) |
| Income from fully consolidated private equity | ||||
| investments (net) | — | — | — | — |
| Interest expenses from external debt | — | — | — | — |
| Acquisition-related expenses | — | — | — | — |
| Amortization of intangible assets | (4) | (3) | (1) | (1) |
| Non-operating restructuring charges | (1) | (27) | — | (16) |
| Reclassification of tax benefits | — | — | — | — |
| Non-operating items | 173 | 149 | (4) | (35) |
| Income (loss) before income taxes | 836 | 861 | 698 | 800 |
| Income taxes | (279) | (270) | (216) | (224) |
| Net income (loss) | 557 | 591 | 482 | 576 |
| Net income (loss) attributable to: | ||||
| Non-controlling interests | 38 | 31 | 21 | 21 |
| Shareholders | 519 | 560 | 461 | 555 |
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 During the three months ended March 31, 2011, includes expenses for premium refunds (net) in Property-Casualty of € (45) mn (2010: € (43) mn).
48 Notes to the Condensed Consolidated Interim Financial Statements
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | |
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | |
| 1,273 | 1,116 | 151 | 128 | (40) | (27) | 29,905 | 30,567 |
| — | — | — | — | — | — | 15,861 | |
| 13 | 13 | 245 | 229 | (106) | (87) | 4,894 | |
| 6 | 5 | 7 | (25) | 1 | (15) | (129) | |
| — | — | — | — | 1 | — | 728 | |
| (6) | (4) | (190) | (179) | 110 | 102 | (125) | |
| — | — | — | — | — | — | (62) | |
| — | — | (23) | (21) | 55 | 44 | (202) | |
| 13 | 14 | 39 | 4 | 61 | 44 | 5,104 | |
| 1,531 | 1,353 | 182 | 187 | (129) | (111) | 1,987 | |
| 4 | 5 | — | — | — | — | 31 | |
| — | — | — | — | — | — | (11,978) | |
| — | — | — | — | (30) | (46) | (3,762) | |
| — | — | (16) | (13) | — | — | (16) | |
| (745) | (650) | (307) | (317) | 14 | 10 | (4,915) | |
| (275) | (256) | (120) | (111) | 59 | 59 | (649) | |
| — | — | — | — | — | — | — | |
| — | — | (1) | (1) | 3 | — | (15) | |
| — | — | — | — | 12 | 14 | 12 | |
| 528 | 466 | (223) | (251) | (10) | (30) | 1,660 | |
| — | — | (88) | 127 | (1) | 17 | (96) | |
| 3 | 1 | 152 | 493 | 12 | 50 | 386 | |
| — | — | (46) | (55) | — | — | (83) | |
| 3 | 1 | 18 | 565 | 11 | 67 | 207 | |
| — | — | (37) | (70) | 18 | 33 | (19) | |
| — | — | (225) | (222) | — | — | (225) | |
| (95) | (196) | (6) | (2) | — | — | (101) | |
| (7) | (8) | (10) | (5) | — | — | (22) | |
| — | (4) | (1) | — | — | — | (2) | |
| — | — | — | — | (12) | (14) | (12) | |
| (99) | (207) | (261) | 266 | 17 | 86 | (174) | |
| 429 | 259 | (484) | 15 | 7 | 56 | 1,486 | |
| (120) | (116) | 32 | 209 | 12 | 13 | (571) | |
| 309 | 143 | (452) | 224 | 19 | 69 | 915 | |
| 3 | (6) | (4) | (8) | — | — | 58 |
| German Speaking Countries1 |
Europe incl. South America2,3 |
|||
|---|---|---|---|---|
| Three months ended March 31, | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | |
| Gross premiums written | 5,113 | 5,096 | 3,891 | 3,778 |
| Ceded premiums written | (806) | (823) | (491) | (408) |
| Change in unearned premiums | (1,982) | (1,969) | (458) | (484) |
| Premiums earned (net) | 2,325 | 2,304 | 2,942 | 2,886 |
| Interest and similar income | 296 | 289 | 247 | 242 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
— | 3 | 35 | 20 |
| Operating realized gains/losses (net) | 9 | 9 | — | — |
| Fee and commission income | 35 | 31 | 8 | 8 |
| Other income | 4 | 1 | — | 1 |
| Operating revenues | 2,669 | 2,637 | 3,232 | 3,157 |
| Claims and insurance benefits incurred (net) | (1,650) | (1,664) | (2,094) | (2,155) |
| Change in reserves for insurance and investment contracts (net) | (82) | (63) | — | (2) |
| Interest expenses | (22) | (24) | (4) | (17) |
| Investment expenses | (21) | (20) | (23) | (21) |
| Acquisition and administrative expenses (net) | (617) | (614) | (747) | (753) |
| Fee and commission expenses | (35) | (30) | (7) | (7) |
| Other expenses | (3) | — | — | — |
| Operating expenses | (2,430) | (2,415) | (2,875) | (2,955) |
| Operating profit (loss) | 239 | 222 | 357 | 202 |
| Loss ratio4 in % |
71.0 | 72.3 | 71.2 | 74.7 |
| Expense ratio5 in % |
26.5 | 26.6 | 25.4 | 26.1 |
| Combined ratio6 in % |
97.5 | 98.9 | 96.6 | 100.8 |
1 In 2011, Allianz China General Insurance Company Ltd., a former branch of Allianz Versicherungs-AG, was transferred from German Speaking Countries to Growth Markets. Prior year figures have not been adjusted.
2 Corporate customer business in Spain transferred to AGCS in 2010. Prior year figures have been adjusted accordingly.
3 Corporate customer business in the Netherlands and Belgium as well as Allianz Insurance (Hong Kong) Ltd. and Allianz Insurance Company of Singapore Pte. Ltd. were transferred to AGCS in 2010 and 2011. Prior year figures have not been adjusted.
4 Represents claims and insurance benefits incurred (net) divided by premiums earned (net).
5 Represents acquisition and administrative expenses (net) divided by premiums earned (net).
6 Represents the total of acquisition and administrative expenses (net) and claims and insurance benefits incurred (net) divided by premiums earned (net).
7 Presentation not meaningful.
42 Condensed Consolidated Interim Financial Statements 59
48 Notes to the Condensed Consolidated Interim Financial Statements
| NAFTA Markets | Global Insurance Lines & Anglo Markets2,3 |
Growth Markets1,3 | Assistance (Mondial) | Consolidation2 | Property-Casualty | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn |
| 652 | 680 | 4,707 | 4,638 | 925 | 923 | 460 | 397 | (1,497) | (1,518) | 14,251 | 13,994 |
| (136) | (136) | (1,206) | (1,280) | (206) | (221) | (2) | (2) | 1,501 | 1,521 | (1,346) | (1,349) |
| 40 | 55 | (643) | (655) | (108) | (117) | (78) | (62) | — | — | (3,229) | (3,232) |
| 556 | 599 | 2,858 | 2,703 | 611 | 585 | 380 | 333 | 4 | 3 | 9,676 | 9,413 |
| 77 | 82 | 263 | 239 | 38 | 41 | 7 | 7 | (19) | (21) | 909 | 879 |
| 1 | — | (11) | (11) | (5) | (3) | (1) | (1) | — | 1 | 19 | |
| — | — | — | — | — | — | — | — | — | — | 9 | 254 |
| — | — | 142 | 130 | 13 | 16 | 90 | 85 | (15) | (16) | 273 | |
| — | — | — | — | — | 2 | — | — | — | — | 4 | |
| 634 | 681 | 3,252 | 3,061 | 657 | 641 | 476 | 424 | (30) | (33) | 10,890 | 10,568 |
| (366) | (405) | (2,365) | (2,020) | (378) | (371) | (235) | (205) | (2) | (2) | (7,090) | (6,822) |
| — | — | (22) | (18) | 1 | (1) | — | — | — | — | (103) | (84) |
| — | — | (5) | (7) | (1) | (1) | — | — | 19 | 24 | (13) | (25) |
| (1) | (1) | (8) | (9) | (3) | (3) | — | — | — | (1) | (56) | (55) |
| (202) | (233) | (805) | (713) | (204) | (190) | (136) | (118) | 3 | (12) | (2,708) | (2,633) |
| — | — | (121) | (111) | (14) | (20) | (89) | (83) | 12 | 14 | (254) | (237) |
| — | — | — | — | — | — | — | — | — | — | (3) | |
| (569) | (639) | (3,326) | (2,878) | (599) | (586) | (460) | (406) | 32 | 23 | (10,227) | (9,856) |
| 65 | 42 | (74) | 183 | 58 | 55 | 16 | 18 | 2 | (10) | 663 | |
| 65.9 | 67.6 | 82.7 | 74.7 | 61.9 | 63.4 | 61.8 | 61.6 | —7 | —7 | 73.3 | |
| 36.3 | 38.9 | 28.2 | 26.4 | 33.4 | 32.5 | 35.8 | 35.4 | —7 | —7 | 28.0 | 72.4 28.0 |
| 102.2 | 106.5 | 110.9 | 101.1 | 95.3 | 95.9 | 97.6 | 97.0 | —7 | —7 | 101.3 | 100.4 |
| German Speaking Countries1 | Europe incl. South America1 | |||
|---|---|---|---|---|
| Three months ended March 31, | 2011 € mn |
2010 € mn |
2011 € mn |
2010 € mn |
| Statutory premiums2 | 5,759 | 5,650 | 4,760 | 5,955 |
| Ceded premiums written | (42) | (43) | (102) | (92) |
| Change in unearned premiums | (46) | (19) | (13) | (15) |
| Statutory premiums (net) | 5,671 | 5,588 | 4,645 | 5,848 |
| Deposits from insurance and investment contracts | (1,590) | (1,770) | (3,384) | (4,628) |
| Premiums earned (net) | 4,081 | 3,818 | 1,261 | 1,220 |
| Interest and similar income | 1,983 | 1,868 | 1,026 | 963 |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
(82) | 114 | 83 | 86 |
| Operating realized gains/losses (net) | 399 | 380 | 250 | 121 |
| Fee and commission income | 5 | 3 | 92 | 97 |
| Other income | 22 | 9 | 1 | — |
| Operating revenues | 6,408 | 6,192 | 2,713 | 2,487 |
| Claims and insurance benefits incurred (net) | (3,514) | (3,417) | (994) | (1,070) |
| Change in reserves for insurance and investment contracts (net) | (2,072) | (1,958) | (899) | (539) |
| Interest expenses | (32) | (30) | (10) | (8) |
| Loan loss provisions | — | — | — | — |
| Operating impairments of investments (net) | (37) | (14) | (26) | (28) |
| Investment expenses | (107) | (82) | (53) | (45) |
| Acquisition and administrative expenses (net) | (330) | (352) | (442) | (431) |
| Fee and commission expenses | (4) | (3) | (48) | (46) |
| Operating restructuring charges | — | (1) | — | — |
| Other expenses | (13) | — | (1) | — |
| Operating expenses | (6,109) | (5,857) | (2,473) | (2,167) |
| Operating profit | 299 | 335 | 240 | 320 |
| Cost-income ratio3 in % |
96.2 | 95.7 | 96.0 | 95.4 |
1 From 2011 on, the variable annuity business of Allianz Global Life is shown within Germany, France and Italy, respectively. Prior year figures have not been adjusted.
2 Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investmentoriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction.
3 Represents deposits from insurance and investment contracts, claims and insurance benefits incurred (net), change in reserves for insurance and investment contracts (net) and acquisition and administrative expenses (net) divided by statutory premiums (net), interest and similar income, operating income from financial assets and liabilities carried at fair value through income (net), operating realized gains/losses (net), fee and commission income, other income, interest expenses, loan loss provisions, operating impairments of investments (net), investment expenses, fee and commission expenses, operating restructuring charges and other expenses.
4 Presentation not meaningful.
| NAFTA Markets | Global Insurance Lines & Anglo Markets |
Growth Markets1 | Consolidation | Life/Health | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn | € mn |
| 1,978 | 1,675 | 99 | 94 | 1,749 | 2,044 | (75) | (62) | 14,270 | 15,356 |
| (32) | (35) | (7) | (2) | (59) | (24) | 75 | 62 | (167) | (134) |
| (2) | 1 | — | — | (28) | (20) | — | — | (89) | |
| 1,944 | 1,641 | 92 | 92 | 1,662 | 2,000 | — | — | 14,014 | 15,169 |
| (1,761) | (1,475) | — | — | (1,094) | (1,421) | — | — | (7,829) | (9,294) |
| 183 | 166 | 92 | 92 | 568 | 579 | — | — | 6,185 | 5,875 |
| 641 | 549 | 23 | 25 | 179 | 158 | (19) | (18) | 3,833 | 3,545 |
| (154) | (62) | (13) | (1) | (1) | 14 | 5 | (5) | (162) | |
| 11 | 11 | — | — | 58 | 26 | — | — | 718 | |
| 13 | 9 | — | — | 20 | 11 | — | (2) | 130 | |
| — | — | — | — | — | 11 | — | — | 23 | |
| 694 | 673 | 102 | 116 | 824 | 799 | (14) | (25) | 10,727 | |
| (25) | (26) | (83) | (86) | (272) | (246) | — | — | (4,888) | |
| (410) | (368) | — | (2) | (248) | (230) | — | 1 | (3,629) | |
| (2) | (1) | — | (1) | (2) | (1) | 20 | 18 | (26) | |
| — | 1 | — | — | — | — | — | — | — | |
| — | — | — | — | 1 | 3 | — | — | (62) | |
| (10) | (10) | (1) | (1) | (6) | (6) | (1) | (1) | (178) | |
| (147) | (156) | (13) | (16) | (237) | (244) | — | (4) | (1,169) | |
| (7) | (9) | — | — | — | — | — | 4 | (59) | |
| — | — | — | — | — | — | — | — | — | |
| — | — | — | — | — | (2) | — | — | (14) | |
| (601) | (569) | (97) | (106) | (764) | (726) | 19 | 18 | (10,025) | |
| 93 | 104 | 5 | 10 | 60 | 73 | 5 | (7) | 702 | |
| 96.2 | 95.1 | 95.0 | 91.2 | 96.9 | 96.7 | —4 | —4 | 96.1 |
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Net fee and commission income1 | 1,256 | 1,097 |
| Net interest income2 | 7 | 9 |
| Income from financial assets and liabilities carried at fair value through income (net) | 6 | 5 |
| Other income | 4 | 5 |
| Operating revenues | 1,273 | 1,116 |
| Administrative expenses (net), excluding acquisition-related expenses | (745) | (650) |
| Operating expenses | (745) | (650) |
| Operating profit | 528 | 466 |
| Cost-income ratio3 in % |
58.5 | 58.2 |
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.
| Holding & Treasury | ||
|---|---|---|
| Three months ended March 31, | 2011 | 2010 |
| € mn | € mn | |
| Interest and similar income | 65 | 53 |
| Operating income from financial assets and liabilities carried at fair value through income (net) | (1) | (19) |
| Fee and commission income | 46 | 59 |
| Other income | — | — |
| Operating revenues | 110 | 93 |
| Interest expenses, excluding interest expenses from external debt | (101) | (95) |
| Loan loss provisions | — | — |
| Investment expenses Administrative expenses (net), excluding acquisition-related expenses |
(23) (140) |
(21) (144) |
| Fee and commission expenses | (67) | (59) |
| Other expenses | — | — |
| Operating expenses | (331) | (319) |
| Operating profit (loss) | (221) | (226) |
| Cost-income ratio1 for the reportable segment Banking in % |
1 Represents investment expenses, administrative expenses (net), excluding acquisition-related expenses 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.
42 Condensed Consolidated Interim Financial Statements 65
48 Notes to the Condensed Consolidated Interim Financial Statements
| Banking | Alternative Investments | Consolidation | Corporate and Other | ||||
|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| € mn | € mn | € mn | € mn | € mn | € mn | € mn | |
| 178 | 169 | 2 | 8 | — | (1) | 245 | |
| 9 | (6) | — | — | (1) | — | 7 | |
| 107 | 102 | 30 | 27 | (1) | (1) | 182 | |
| — | — | 1 | — | (1) | — | — | |
| 294 | 265 | 33 | 35 | (3) | (2) | 434 | |
| (89) | (84) | (1) | — | 1 | — | (190) | |
| (16) | (13) | — | — | — | — | (16) | |
| — | — | — | — | — | — | (23) | |
| (133) | (138) | (36) | (37) | 2 | 2 | (307) | |
| (53) | (52) | — | — | — | — | (120) | |
| (1) | (1) | — | — | — | — | (1) | |
| (292) | (288) | (37) | (37) | 3 | 2 | (657) | |
| 2 | (23) | (4) | (2) | — | — | (223) | |
| 88.2 | 107.8 |
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
|
|---|---|---|
| Financial assets held for trading | ||
| Debt securities | 388 | 546 |
| Equity securities | 133 | 139 |
| Derivative financial instruments | 1,629 | 1,416 |
| Subtotal | 2,150 | 2,101 |
| Financial assets designated at fair value through income |
||
| Debt securities | 4,378 | 4,430 |
| Equity securities | 2,911 | 3,312 |
| Subtotal | 7,289 | 7,742 |
| Total | 9,439 | 9,843 |
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € mn | € mn | |
| Available-for-sale investments | 319,096 | 318,315 |
| Held-to-maturity investments | 3,941 | 3,987 |
| Funds held by others under | ||
| reinsurance contracts assumed | 1,286 | 1,117 |
| Investments in associates and | ||
| joint ventures | 2,514 | 2,527 |
| Real estate held for investment | 8,660 | 8,672 |
| Total | 335,497 | 334,618 |
| As of March 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Amortized Cost € mn |
Unrealized Gains € mn |
Unrealized Losses € mn |
Fair Value € mn |
Amortized Cost € mn |
Unrealized Gains € mn |
Unrealized Losses € mn |
Fair Value € mn |
|
| Debt securities | ||||||||
| Government and agency mortgage-backed securities (residential and commercial) |
4,963 | 186 | (14) | 5,135 | 5,043 | 235 | (6) | 5,272 |
| Corporate mortgage-backed securities (residential and commercial) |
9,746 | 613 | (155) | 10,204 | 10,023 | 625 | (174) | 10,474 |
| Other asset-backed securities | 2,737 | 137 | (37) | 2,837 | 3,501 | 186 | (34) | 3,653 |
| Government and government agency bonds |
122,830 | 3,018 | (2,811) | 123,037 | 123,726 | 4,339 | (2,253) | 125,812 |
| Corporate bonds | 144,749 | 3,517 | (2,900) | 145,366 | 138,576 | 4,786 | (2,743) | 140,619 |
| Other | 1,842 | 103 | (17) | 1,928 | 1,723 | 123 | (9) | 1,837 |
| Subtotal | 286,867 | 7,574 | (5,934) | 288,507 | 282,592 | 10,294 | (5,219) | 287,667 |
| Equity securities | 20,285 | 10,545 | (241) | 30,589 | 19,893 | 10,903 | (148) | 30,648 |
| Total | 307,152 | 18,119 | (6,175) | 319,096 | 302,485 | 21,197 | (5,367) | 318,315 |
48 Notes to the Condensed Consolidated Interim Financial Statements
| As of March 31, 2011 | As of December 31, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|
| Banks € mn |
Customers € mn |
Total € mn |
Banks € mn |
Customers € mn |
Total € mn |
|||
| Short-term investments and certificates of deposit | 6,736 | — | 6,736 | 5,216 | — | 5,216 | ||
| Reverse repurchase agreements | 951 | — | 951 | 1,018 | — | 1,018 | ||
| Collateral paid for securities borrowing transactions and derivatives |
38 | — | 38 | 38 | — | 38 | ||
| Loans | 67,233 | 45,988 | 113,221 | 67,303 | 46,575 | 113,878 | ||
| Other | 2,131 | 54 | 2,185 | 2,605 | 69 | 2,674 | ||
| Subtotal | 77,089 | 46,042 | 123,131 | 76,180 | 46,644 | 122,824 | ||
| Loan loss allowance | — | (119) | (119) | — | (146) | (146) | ||
| Total | 77,089 | 45,923 | 123,012 | 76,180 | 46,498 | 122,678 |
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € mn | € mn | |
| Corporate customers | 16,115 | 16,303 |
| Private customers | 23,240 | 23,433 |
| Public customers | 6,687 | 6,908 |
| Total | 46,042 | 46,644 |
| As of March 31, |
As of December 31, |
|
|---|---|---|
| 2011 | 2010 | |
| € mn | € mn | |
| Deferred acquisition costs | ||
| Property-Casualty | 4,426 | 4,121 |
| Life/Health | 14,655 | 14,459 |
| Asset Management | 154 | 152 |
| Subtotal | 19,235 | 18,732 |
| Present value of future profits | 1,134 | 1,180 |
| Deferred sales inducements | 822 | 821 |
| Total | 21,191 | 20,733 |
| As of March 31, 2011 |
As of December 31, 2010 |
|
|---|---|---|
| € mn | € mn | |
| Unearned premiums | 1,678 | 1,372 |
| Reserves for loss and loss adjustment expenses |
6,756 | 6,986 |
| Aggregate policy reserves | 4,190 | 4,674 |
| Other insurance reserves | 96 | 103 |
| Total | 12,720 | 13,135 |
| As of | As of | |
|---|---|---|
| March 31, 2011 |
December 31, 2010 |
|
| € mn | € mn | |
| Receivables | ||
| Policyholders | 5,490 | 5,322 |
| Agents | 4,801 | 4,129 |
| Reinsurers | 2,019 | 2,581 |
| Other | 4,206 | 3,515 |
| Less allowance for doubtful | ||
| accounts | (641) | (629) |
| Subtotal | 15,875 | 14,918 |
| Tax receivables | ||
| Income taxes | 1,441 | 1,691 |
| Other taxes | 1,059 | 1,043 |
| Subtotal | 2,500 | 2,734 |
| Accrued dividends, interest and rent | 6,810 | 7,356 |
| Prepaid expenses | ||
| Interest and rent | 16 | 16 |
| Other prepaid expenses | 331 | 334 |
| Subtotal | 347 | 350 |
| Derivative financial instruments used for hedging that meet the criteria for hedge accounting and firm commitments |
449 | 452 |
| Property and equipment | ||
| Real estate held for own use | 2,969 | 3,075 |
| Software | 1,303 | 1,287 |
| Equipment | 738 | 735 |
| Fixed assets of Alternative | ||
| Investments | 1,131 | 1,117 |
| Subtotal | 6,141 | 6,214 |
| Other assets | 2,006 | 1,977 |
| Total | 34,128 | 34,001 |
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
|
|---|---|---|
| Non-current assets and assets of disposal groups classified as held for sale |
||
| Allianz Bank Polska S.A. | 269 | 247 |
| Allianz Kazakhstan ZAO | 55 | — |
| Real estate held for investment (Property-Casualty) |
— | 22 |
| Real estate held for investment (Life/Health) |
— | 24 |
| Real estate held for own use (Property-Casualty) |
7 | 6 |
| Total | 331 | 299 |
| Liabilities of disposal groups classified as held for sale |
||
| Allianz Bank Polska S.A. | 203 | 188 |
| Allianz Kazakhstan ZAO | 55 | — |
| Total | 258 | 188 |
During the fourth quarter of 2010, the Allianz Group contractually agreed to dispose of Allianz Bank Polska S.A. Thus, the assets and liabilities related to the Allianz Group's 100% ownership of Allianz Bank Polska S.A. and allocated to the segment Corporate and Other, were reclassified as disposal group held for sale.
As of March 31, 2011, cumulative losses recognized in other comprehensive income relating to the disposal group classified as held for sale amounted to € 12 mn. The sale is expected to occur during the first half of 2011 and is subject to approval by the regulatory authorities. Upon remeasurement of the disposal group at fair value less costs to sell no impairment loss was recognized in the consolidated income statement for the three months ended March 31, 2011.
Assets held for sale include a capital increase of € 25 mn completed on March 31, 2011.
During the first quarter of 2011 the Allianz Group decided to dispose of Allianz Kazakhstan ZAO. Thus, the assets and liabilities related to the Allianz Group's 100% ownership of Allianz Kazakhstan ZAO and allocated to the segment Property-Casualty, were reclassified as disposal group held for sale.
The following table presents the classes of assets and liabilities reclassified as held for sale:
| As of March 31, 2011 | Allianz Kazakhstan ZAO € mn |
|---|---|
| Cash and cash equivalents | 2 |
| Investments | 13 |
| Loans and advances to banks and customers | 2 |
| Reinsurance assets | 35 |
| Other assets | 3 |
| Total assets of disposal groups classified as held for sale |
55 |
| Unearned premiums | 35 |
| Reserves for loss and loss adjustment expenses | 5 |
| Other liabilities | 15 |
| Total liabilities of disposal groups classified as held for sale |
55 |
As of March 31, 2011, cumulative losses recognized in other comprehensive income relating to the disposal group classified as held for sale amounted to € 3 mn. The sale is expected to occur during the year 2011. Upon measurement of the disposal group at fair value less costs to sell an impairment loss of € 16 mn was recognized in the consolidated income statement.
During the fourth quarter of 2010, the Allianz Group contractually agreed to dispose of one commercial property of Allianz Hungaria in Budapest. Thus, the asset allocated to the segment Property-Casualty and previously classified as real estate held for own use was reclassified and presented as non-current assets held for sale. The sale will be completed in the second quarter of 2011. Upon remeasurement of the non-current asset at fair value less costs to sell no impairment loss was recognized in the consolidated income statement for the three months ended March 31, 2011.
During the fourth quarter of 2010, the Allianz Group contractually agreed to dispose of various residential properties of Allianz IARD S.A. and Allianz Vie S.A. in Paris on an individual basis. Thus, the assets allocated to the segments Property-Casualty and Life/Health and previously classified as real estate held for investment were reclassified and presented as non-current assets held for sale. The individual sales were completed during the first quarter of 2011.
| As of March 31, 2011 |
As of December 31, 2010 |
|
|---|---|---|
| € mn | € mn | |
| Intangible assets with indefinite useful lives |
||
| Goodwill | 11,831 | 12,020 |
| Brand names1 | 311 | 311 |
| Subtotal | 12,142 | 12,331 |
| Intangible assets with finite useful lives |
||
| Long-term distribution agreement with Commerzbank AG |
573 | 585 |
| Customer relationships | 270 | 287 |
| Other2 | 177 | 178 |
| Subtotal | 1,020 | 1,050 |
| Total | 13,162 | 13,381 |
1 Includes primarily the brand name of Selecta AG, Muntelier.
2 Includes primarily research and development costs of € 63 mn (2010: € 67 mn) and bancassurance agreements of € 13 mn (2010: € 14 mn).
| 2011 | |
|---|---|
| € mn | |
| Cost as of January 1, | 12,603 |
| Accumulated impairments as of January 1, | (583) |
| Carrying amount as of January 1, | 12,020 |
| Additions | 1 |
| Foreign currency translation adjustments | (183) |
| Reclassification into non-current assets and assets of disposal groups classified as held for sale |
(7) |
| Carrying amount as of March 31, | 11,831 |
| Accumulated impairments as of March 31, | 583 |
| Cost as of March 31, | 12,414 |
The goodwill of Allianz Kazakhstan ZAO, Almaty, was reclassified to disposal groups classified as held for sale.
| As of March 31, |
As of December 31, |
|
|---|---|---|
| 2011 | 2010 | |
| € mn | € mn | |
| Financial liabilities held for trading | ||
| Derivative financial instruments | 5,046 | 5,012 |
| Other trading liabilities | 2 | 1 |
| Subtotal | 5,048 | 5,013 |
| Financial liabilities designated at | ||
| fair value through income | — | — |
| Total | 5,048 | 5,013 |
| As of March 31, 2011 | As of December 31, 2010 | |||||
|---|---|---|---|---|---|---|
| Banks € mn |
Customers € mn |
Total € mn |
Banks € mn |
Customers € mn |
Total € mn |
|
| Payable on demand | 290 | 4,527 | 4,817 | 68 | 4,110 | 4,178 |
| Savings deposits | — | 2,715 | 2,715 | — | 2,504 | 2,504 |
| Term deposits and certificates of deposit | 1,060 | 1,787 | 2,847 | 1,328 | 2,301 | 3,629 |
| Repurchase agreements | 829 | 165 | 994 | 867 | 129 | 996 |
| Collateral received from securities lending transactions and derivatives |
1,068 | — | 1,068 | 591 | — | 591 |
| Other | 5,574 | 2,874 | 8,448 | 6,278 | 2,979 | 9,257 |
| Total | 8,821 | 12,068 | 20,889 | 9,132 | 12,023 | 21,155 |
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € mn | € mn | |
| Property-Casualty | 56,920 | 57,509 |
| Life/Health | 8,937 | 8,984 |
| Consolidation | (17) | (19) |
| Total | 65,840 | 66,474 |
| 2011 | 2010 | |||||
|---|---|---|---|---|---|---|
| Gross € mn |
Ceded € mn |
Net € mn |
Gross € mn |
Ceded € mn |
Net € mn |
|
| As of January 1, | 57,509 | (6,659) | 50,850 | 55,715 | (7,175) | 48,540 |
| Loss and loss adjustment expenses incurred | ||||||
| Current year | 8,234 | (765) | 7,469 | 7,834 | (681) | 7,153 |
| Prior years | (794) | 415 | (379) | (814) | 483 | (331) |
| Subtotal | 7,440 | (350) | 7,090 | 7,020 | (198) | 6,822 |
| Loss and loss adjustment expenses paid | ||||||
| Current year | (1,782) | 47 | (1,735) | (1,786) | 88 | (1,698) |
| Prior years | (5,235) | 358 | (4,877) | (5,346) | 507 | (4,839) |
| Subtotal | (7,017) | 405 | (6,612) | (7,132) | 595 | (6,537) |
| Foreign currency translation adjustments and other changes |
(1,006) | 190 | (816) | 1,253 | (318) | 935 |
| Reclassifications1 | (6) | 3 | (3) | — | — | — |
| As of March 31, | 56,920 | (6,411) | 50,509 | 56,856 | (7,096) | 49,760 |
1 In the first quarter of 2011, Allianz Kazakhstan ZAO was classified as held for sale. See note 10 for further information.
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € mn | € mn | |
| Aggregate policy reserves | 325,186 | 324,189 |
| Reserves for premium refunds | 23,127 | 24,802 |
| Other insurance reserves | 790 | 802 |
| Total | 349,103 | 349,793 |
48 Notes to the Condensed Consolidated Interim Financial Statements
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € mn | € mn | |
| Payables | ||
| Policyholders | 4,241 | 4,855 |
| Reinsurance | 1,869 | 1,813 |
| Agents | 1,542 | 1,471 |
| Subtotal | 7,652 | 8,139 |
| Payables for social security | 424 | 434 |
| Tax payables | ||
| Income taxes | 1,757 | 1,661 |
| Other taxes | 1,381 | 1,086 |
| Subtotal | 3,138 | 2,747 |
| Accrued interest and rent | 453 | 659 |
| Unearned income | ||
| Interest and rent | 13 | 13 |
| Other | 313 | 293 |
| Subtotal | 326 | 306 |
| Provisions | ||
| Pensions and similar obligations | 3,929 | 3,925 |
| Employee-related | 1,882 | 1,887 |
| Share-based compensation plans | 767 | 1,099 |
| Restructuring plans | 360 | 409 |
| Loan commitments | 21 | 7 |
| Contingent losses from non | ||
| insurance business | 155 | 155 |
| Other provisions | 1,329 | 1,564 |
| Subtotal | 8,443 | 9,046 |
| Deposits retained for reinsurance | ||
| ceded | 2,253 | 2,320 |
| Derivative financial instruments | ||
| used for hedging that meet the | ||
| criteria for hedge accounting and firm commitments |
211 | 225 |
| Financial liabilities for puttable | ||
| equity instruments | 2,772 | 3,111 |
| Other liabilities | 6,534 | 6,226 |
| Total | 32,206 | 33,213 |
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
|
|---|---|---|
| Allianz SE1 | ||
| Senior bonds | 5,337 | 5,336 |
| Money market securities | 1,053 | 1,791 |
| Subtotal | 6,390 | 7,127 |
| Banking subsidiaries | ||
| Senior bonds | 1,069 | 1,099 |
| Subtotal | 1,069 | 1,099 |
| All other subsidiaries | ||
| Certificated liabilities | 26 | 3 |
| Subtotal | 26 | 3 |
| Total | 7,485 | 8,229 |
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.
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| € mn | € mn | |
| Allianz SE1 | ||
| Subordinated bonds2 | 10,190 | 8,301 |
| Subtotal | 10,190 | 8,301 |
| Banking subsidiaries | ||
| Subordinated bonds | 274 | 254 |
| Subtotal | 274 | 254 |
| All other subsidiaries | ||
| Subordinated bonds | 398 | 398 |
| Hybrid equity | 45 | 45 |
| Subtotal | 443 | 443 |
| Total | 10,907 | 8,998 |
1 Includes subordinated bonds issued by Allianz Finance II B.V. and guaranteed by Allianz SE.
2 Increase due to issuance of a € 2.0 bn subordinated bond in the first quarter of 2011.
| As of March 31, 2011 € mn |
As of December 31, 2010 € mn |
|
|---|---|---|
| Shareholders' equity | ||
| Issued capital | 1,164 | 1,164 |
| Capital reserves | 27,521 | 27,521 |
| Retained earnings1 | 13,990 | 13,088 |
| Foreign currency translation adjustments |
(3,115) | (2,339) |
| Unrealized gains and losses (net)2 | 4,000 | 5,057 |
| Subtotal | 43,560 | 44,491 |
| Non-controlling interests | 2,055 | 2,071 |
| Total | 45,615 | 46,562 |
1 As of March 31, 2011, includes € (230) mn (2010: € (237) mn) related to treasury shares.
2 As of March 31, 2011, includes € 188 mn (2010: € 196 mn) related to cash flow hedges.
| Three months ended March 31, | Property Casualty |
Life/Health | Consolidation | Group |
|---|---|---|---|---|
| € mn | € mn | € mn | € mn | |
| 2011 | ||||
| Premiums written | ||||
| Direct | 13,593 | 6,313 | — | 19,906 |
| Assumed | 658 | 116 | (6) | 768 |
| Subtotal | 14,251 | 6,429 | (6) | 20,674 |
| Ceded | (1,346) | (155) | 6 | (1,495) |
| Net | 12,905 | 6,274 | — | 19,179 |
| Change in unearned premiums | ||||
| Direct | (3,505) | (91) | — | (3,596) |
| Assumed | (106) | 1 | — | (105) |
| Subtotal | (3,611) | (90) | — | (3,701) |
| Ceded | 382 | 1 | — | 383 |
| Net | (3,229) | (89) | — | (3,318) |
| Premiums earned | ||||
| Direct | 10,088 | 6,222 | — | 16,310 |
| Assumed | 552 | 117 | (6) | 663 |
| Subtotal | 10,640 | 6,339 | (6) | 16,973 |
| Ceded | (964) | (154) | 6 | (1,112) |
| Net | 9,676 | 6,185 | — | 15,861 |
| 2010 | ||||
| Premiums written | ||||
| Direct | 13,103 | 5,947 | — | 19,050 |
| Assumed | 891 | 106 | (4) | 993 |
| Subtotal | 13,994 | 6,053 | (4) | 20,043 |
| Ceded | (1,349) | (125) | 4 | (1,470) |
| Net | 12,645 | 5,928 | — | 18,573 |
| Change in unearned premiums | ||||
| Direct | (3,402) | (54) | — | (3,456) |
| Assumed | (213) | — | (2) | (215) |
| Subtotal | (3,615) | (54) | (2) | (3,671) |
| Ceded | 383 | 1 | 2 | 386 |
| Net | (3,232) | (53) | — | (3,285) |
| Premiums earned | ||||
| Direct | 9,701 | 5,893 | — | 15,594 |
| Assumed | 678 | 106 | (6) | 778 |
| Subtotal | 10,379 | 5,999 | (6) | 16,372 |
| Ceded | (966) | (124) | 6 | (1,084) |
| Net | 9,413 | 5,875 | — | 15,288 |
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Interest from held-to-maturity investments |
46 | 44 |
| Dividends from available-for-sale investments |
147 | 121 |
| Interest from available-for-sale investments |
3,094 | 2,771 |
| Share of earnings from investments in associates and joint ventures |
19 | 49 |
| Rent from real estate held for investment |
192 | 162 |
| Interest from loans to banks and customers |
1,355 | 1,392 |
| Other interest | 41 | 40 |
| Total | 4,894 | 4,579 |
| Three months ended March 31, | Property Casualty |
Life/Health | Asset Management |
Corporate and Other |
Consoli dation |
Group |
|---|---|---|---|---|---|---|
| € mn | € mn | € mn | € mn | € mn | € mn | |
| 2011 | ||||||
| Income (expenses) from financial assets and liabilities held for trading (net) |
46 | 226 | 1 | (104) | (4) | 165 |
| Income (expenses) from financial assets and liabilities designated at fair value through income (net) |
11 | 80 | 5 | (5) | — | 91 |
| Income (expenses) from financial liabilities for puttable equity instruments (net) |
10 | (19) | 1 | — | — | (8) |
| Foreign currency gains and losses (net) | (46) | (458) | (1) | 28 | 4 | (473) |
| Total | 21 | (171) | 6 | (81) | — | (225) |
| 2010 | ||||||
| Income (expenses) from financial assets and liabilities held for trading (net) |
(73) | (458) | 1 | 117 | 3 | (410) |
| Income (expenses) from financial assets and liabilities designated at fair value through income (net) |
28 | 323 | 13 | 2 | — | 366 |
| Income (expenses) from financial liabilities for puttable equity instruments (net) |
(5) | (82) | (11) | — | — | (98) |
| Foreign currency gains and losses (net) | 36 | 325 | 2 | (17) | (1) | 345 |
| Total | (14) | 108 | 5 | 102 | 2 | 203 |
Life/Health segment Income (expenses) from financial assets and liabilities held for trading for the three months ended March 31, 2011 includes in the Life/Health segment income of € 218 mn (2010: expenses of € 470 mn) from derivative financial instruments. This includes income of € 374 mn (2010: expenses of € 210 mn) of German entities from financial derivative positions to protect against equity and foreign exchange rate fluctuations as well as for duration management. Also included are expenses from U.S. entities amongst others from embedded derivatives required to be separated related to fixed-indexed annuity products and guaranteed benefits under unit-linked contracts of € 162 mn (2010: € 230 mn).
Income (expenses) from financial assets and liabilities held for trading for the three months ended March 31, 2011, includes in the Corporate and Other segment expenses of € 88 mn (2010: income of € 146 mn) from derivative financial instruments. This includes expenses of € 23 mn (2010: € 2 mn) from financial derivative instruments to protect investments and liabilities against foreign exchange rate fluctuations. In 2011, hedging of strategic equity investments not designated for hedge accounting induced expenses of € 9 mn (2010: € 9 mn). Financial derivatives related to investment strategies exhibited expenses of € 83 mn (2010: income of € 154). Additionally, income (expenses) from financial assets and liabilities held for trading (net) for the three months ended March 31, 2011 includes expenses of € 25 mn (2010: € 15 mn) from the hedges of share based compensation plans (restricted stock units).
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. This excludes exchange differences arising on financial assets and liabilities measured at fair value through profit or loss, which do not have to be disclosed separately. The Allianz Group is to a large extent hedged against foreign currency fluctuations with freestanding derivatives resulting in an offsetting effect of € 355 mn (2010: € (261) mn) on the foreign currency gains and losses (net) for the three months ended March 31, 2011.
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Realized gains | ||
| Available-for-sale investments | ||
| Equity securities | 703 | 937 |
| Debt securities | 445 | 398 |
| Subtotal | 1,148 | 1,335 |
| Investments in associates and joint ventures1 |
— | 5 |
| Real estate held for investment | 73 | 75 |
| Loans and advances to banks and customers |
59 | 41 |
| Non-current assets and assets and liabilities of disposal groups classified as held for sale |
76 | — |
| Subtotal | 1,356 | 1,456 |
| Realized losses | ||
| Available-for-sale investments | ||
| Equity securities | (43) | (34) |
| Debt securities | (197) | (110) |
| Subtotal | (240) | (144) |
| Investments in associates and joint ventures2 |
— | — |
| Real estate held for investment | — | (2) |
| Non-current assets and assets and liabilities of disposal groups classified as held for sale |
(2) | — |
| Subtotal | (242) | (146) |
| Total | 1,114 | 1,310 |
1 During the three months ended March 31, 2011 and 2010, includes no realized gains from the disposal of subsidiaries.
2 During the three months ended March 31, 2011 and 2010, includes no realized losses from the disposal of subsidiaries.
| Three months ended March 31, | 2011 | 2010 | ||||
|---|---|---|---|---|---|---|
| Segment | Consoli dation |
Group | Segment | Consoli dation |
Group | |
| € mn | € mn | € mn | € mn | € mn | € mn | |
| Property-Casualty | ||||||
| Fees from credit and assistance business | 164 | — | 164 | 157 | (1) | 156 |
| Service agreements | 109 | (15) | 94 | 97 | (12) | 85 |
| Subtotal | 273 | (15) | 258 | 254 | (13) | 241 |
| Life/Health | ||||||
| Service agreements | 17 | (4) | 13 | 17 | (4) | 13 |
| Investment advisory | 113 | (9) | 104 | 101 | (7) | 94 |
| Subtotal | 130 | (13) | 117 | 118 | (11) | 107 |
| Asset Management | ||||||
| Management fees | 1,336 | (34) | 1,302 | 1,104 | (26) | 1,078 |
| Loading and exit fees | 95 | — | 95 | 89 | — | 89 |
| Performance fees | 56 | — | 56 | 128 | — | 128 |
| Other | 44 | (4) | 40 | 32 | (2) | 30 |
| Subtotal | 1,531 | (38) | 1,493 | 1,353 | (28) | 1,325 |
| Corporate and Other | ||||||
| Service agreements | 46 | (4) | 42 | 59 | (6) | 53 |
| Investment advisory and Banking activities | 136 | (59) | 77 | 128 | (53) | 75 |
| Subtotal | 182 | (63) | 119 | 187 | (59) | 128 |
| Total | 2,116 | (129) | 1,987 | 1,912 | (111) | 1,801 |
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Realized gains from disposals of real estate held for own use |
1 | 12 |
| Income from alternative investments | 26 | 10 |
| Other | 4 | 7 |
| Total | 31 | 29 |
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Income | ||
| Sales and service revenues | 390 | 366 |
| Other operating revenues | 3 | 2 |
| Interest income | — | — |
| Subtotal | 393 | 368 |
| Expenses | ||
| Cost of goods sold | (218) | (226) |
| Commissions | (26) | (27) |
| General and administrative | ||
| expenses | (151) | (146) |
| Other operating expenses | (16) | (19) |
| Interest expenses | (19) | (20) |
| Subtotal | (430)1 | (438)1 |
| Total | (37)1 | (70)1 |
1 The presented subtotal for expenses and total income and expenses from fully consolidated private equity investment for the three months ended March 31, 2011 differs from the amounts presented in the "Consolidated Income Statements" and in "Total revenues and reconciliation of Operating profit (loss) to Net income (loss)". This difference is due to a consolidation effect of € 18 mn (2010: € 33 mn) for the three months ended March 31, 2011. 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 segment, that was reclassified into expenses from fully consolidated private equity investments in non-operating profit to ensure a consistent presentation of the Allianz Group's operating profit.
| € mn € mn € mn € mn 2011 Gross Claims and insurance benefits paid (7,017) (5,002) 4 (12,015) Change in reserves for loss and loss adjustment expenses (423) (14) (2) (439) Subtotal (7,440) (5,016) 2 (12,454) Ceded Claims and insurance benefits paid 405 108 (4) 509 Change in reserves for loss and loss adjustment expenses (55) 20 2 (33) Subtotal 350 128 (2) 476 Net Claims and insurance benefits paid (6,612) (4,894) — (11,506) Change in reserves for loss and loss adjustment expenses (478) 6 — (472) Total (7,090) (4,888) — (11,978) 2010 Gross Claims and insurance benefits paid (7,132) (4,949) 3 (12,078) Change in reserves for loss and loss adjustment expenses 112 (24) 2 90 Subtotal (7,020) (4,973) 5 (11,988) Ceded Claims and insurance benefits paid 595 116 (3) 708 Change in reserves for loss and loss adjustment expenses (397) 12 (2) (387) Subtotal 198 128 (5) 321 Net Claims and insurance benefits paid (6,537) (4,833) — (11,370) Change in reserves for loss and loss adjustment expenses (285) (12) — (297) Total (6,822) (4,845) — (11,667) |
Three months ended March 31, | Property Casualty |
Life/Health | Consolidation | Group |
|---|---|---|---|---|---|
| Three months ended March 31, | Property Casualty |
Life/Health | Consolidation | Group |
|---|---|---|---|---|
| € mn | € mn | € mn | € mn | |
| 2011 | ||||
| Gross | ||||
| Aggregate policy reserves | (49) | (2,325) | — | (2,374) |
| Other insurance reserves | — | (46) | — | (46) |
| Expenses for premium refunds | (45) | (1,289) | (30) | (1,364) |
| Subtotal | (94) | (3,660) | (30) | (3,784) |
| Ceded | ||||
| Aggregate policy reserves | (9) | 26 | — | 17 |
| Other insurance reserves | — | 3 | — | 3 |
| Expenses for premium refunds | — | 2 | — | 2 |
| Subtotal | (9) | 31 | — | 22 |
| Net | ||||
| Aggregate policy reserves | (58) | (2,299) | — | (2,357) |
| Other insurance reserves | — | (43) | — | (43) |
| Expenses for premium refunds | (45) | (1,287) | (30) | (1,362) |
| Total | (103) | (3,629) | (30) | (3,762) |
| 2010 | ||||
| Gross | ||||
| Aggregate policy reserves | (42) | (1,862) | — | (1,904) |
| Other insurance reserves | — | (128) | — | (128) |
| Expenses for premium refunds | (43) | (1,126) | (46) | (1,215) |
| Subtotal | (85) | (3,116) | (46) | (3,247) |
| Ceded | ||||
| Aggregate policy reserves | 2 | 16 | — | 18 |
| Other insurance reserves | (1) | 3 | — | 2 |
| Expenses for premium refunds | — | 1 | — | 1 |
| Subtotal | 1 | 20 | — | 21 |
| Net | ||||
| Aggregate policy reserves | (40) | (1,846) | — | (1,886) |
| Other insurance reserves | (1) | (125) | — | (126) |
| Expenses for premium refunds | (43) | (1,125) | (46) | (1,214) |
| Total | (84) | (3,096) | (46) | (3,226) |
48 Notes to the Condensed Consolidated Interim Financial Statements
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Liabilities to banks and customers | (92) | (94) |
| Deposits retained on reinsurance ceded | (14) | (19) |
| Certificated liabilities | (73) | (75) |
| Participation certificates and subordinated liabilities |
(147) | (138) |
| Other | (24) | (25) |
| Total | (350) | (351) |
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Impairments | ||
| Available-for-sale investments | ||
| Equity securities | (96) | (9) |
| Debt securities | (24) | (81) |
| Subtotal | (120) | (90) |
| Real estate held for investment | (10) | — |
| Loans and advances to banks | ||
| and customers | (1) | (1) |
| Non-current assets and assets and liabilities of disposal groups |
||
| classified as held for sale | (16) | — |
| Subtotal | (147) | (91) |
| Reversals of impairments | ||
| Loans and advances to banks | ||
| and customers | 2 | — |
| Subtotal | 2 | — |
| Total | (145) | (91) |
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Additions to allowances including direct impairments |
(37) | (30) |
| Amounts released | 15 | 13 |
| Recoveries on loans previously impaired |
6 | 5 |
| Total | (16) | (12) |
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Investment management expenses | (115) | (102) |
| Depreciation of real estate held for investment |
(46) | (38) |
| Other expenses for real estate held for investment |
(41) | (37) |
| Total | (202) | (177) |
| Three months ended March 31, | 2011 | 2010 | ||||
|---|---|---|---|---|---|---|
| Segment | Consoli dation |
Group | Segment | Consoli dation |
Group | |
| € mn | € mn | € mn | € mn | € mn | € mn | |
| Property-Casualty | ||||||
| Acquisition costs | ||||||
| Incurred | (2,487) | 1 | (2,486) | (2,457) | — | (2,457) |
| Commissions and profit received on reinsurance business ceded |
76 | (1) | 75 | 156 | (1) | 155 |
| Deferrals of acquisition costs | 1,615 | — | 1,615 | 1,568 | — | 1,568 |
| Amortization of deferred acquisition costs | (1,215) | — | (1,215) | (1,188) | — | (1,188) |
| Subtotal | (2,011) | — | (2,011) | (1,921) | (1) | (1,922) |
| Administrative expenses | (697) | 37 | (660) | (712) | (1) | (713) |
| Subtotal | (2,708) | 37 | (2,671) | (2,633) | (2) | (2,635) |
| Life/Health | ||||||
| Acquisition costs | ||||||
| Incurred | (1,091) | 1 | (1,090) | (1,045) | — | (1,045) |
| Commissions and profit received on reinsurance business ceded |
25 | (1) | 24 | 25 | — | 25 |
| Deferrals of acquisition costs | 771 | — | 771 | 739 | — | 739 |
| Amortization of deferred acquisition costs | (513) | — | (513) | (545) | 1 | (544) |
| Subtotal | (808) | — | (808) | (826) | 1 | (825) |
| Administrative expenses | (361) | 4 | (357) | (377) | 15 | (362) |
| Subtotal | (1,169) | 4 | (1,165) | (1,203) | 16 | (1,187) |
| Asset Management | ||||||
| Personnel expenses | (572) | — | (572) | (627) | — | (627) |
| Non-personnel expenses | (268) | 4 | (264) | (219) | (1) | (220) |
| Subtotal | (840) | 4 | (836) | (846) | (1) | (847) |
| Corporate and Other | ||||||
| Administrative expenses | (313) | (31) | (344) | (319) | (3) | (322) |
| Subtotal | (313) | (31) | (344) | (319) | (3) | (322) |
| Total | (5,030) | 14 | (5,016) | (5,001) | 10 | (4,991) |
48 Notes to the Condensed Consolidated Interim Financial Statements
| Three months ended March 31, | 2011 | 2010 | |||||
|---|---|---|---|---|---|---|---|
| Segment | Consoli dation |
Group | Segment | Consoli dation |
Group | ||
| € mn | € mn | € mn | € mn | € mn | € mn | ||
| Property-Casualty | |||||||
| Fees from credit and assistance business | (148) | — | (148) | (146) | — | (146) | |
| Service agreements | (106) | 15 | (91) | (91) | 12 | (79) | |
| Subtotal | (254) | 15 | (239) | (237) | 12 | (225) | |
| Life/Health | |||||||
| Service agreements | (6) | 1 | (5) | (5) | 1 | (4) | |
| Investment advisory | (53) | 2 | (51) | (49) | 2 | (47) | |
| Subtotal | (59) | 3 | (56) | (54) | 3 | (51) | |
| Asset Management | |||||||
| Commissions | (272) | 38 | (234) | (251) | 38 | (213) | |
| Other | (3) | — | (3) | (5) | 1 | (4) | |
| Subtotal | (275) | 38 | (237) | (256) | 39 | (217) | |
| Corporate and Other | |||||||
| Service agreements | (67) | 3 | (64) | (59) | 5 | (54) | |
| Investment advisory and Banking activities | (53) | — | (53) | (52) | — | (52) | |
| Subtotal | (120) | 3 | (117) | (111) | 5 | (106) | |
| Total | (708) | 59 | (649) | (658) | 59 | (599) |
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Realized losses from disposals of real estate held for own use |
— | (2) |
| Expenses from alternative investments | (14) | — |
| Other | (1) | (1) |
| Total | (15) | (3) |
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Current income taxes | (653) | (438) |
| Deferred income taxes | 82 | 50 |
| Total | (571) | (388) |
For the three months ended March 31, 2011 and 2010, the income taxes relating to components of the other comprehensive income consist of the following:
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Foreign currency translation | ||
| adjustments | (16) | 30 |
| Available-for-sale investments | 405 | (505) |
| Cash flow hedges | 3 | (7) |
| Share of other comprehensive income | ||
| of associates | 2 | (5) |
| Miscellaneous | 42 | 2 |
| Total | 436 | (485) |
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.
| Three months ended March 31, | 2011 € mn |
2010 € mn |
|---|---|---|
| Net income attributable to shareholders used to calculate basic earnings per share |
857 | 1,565 |
| Weighted average number of | ||
| common shares outstanding | 451,557,793 | 451,198,878 |
| Basic earnings per share (in €) | 1.90 | 3.47 |
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 are derived from various share-based compensation plans of the Allianz Group.
| Three months ended March 31, | 2011 | 2010 |
|---|---|---|
| € mn | € mn | |
| Net income attributable to | ||
| shareholders | 857 | 1,565 |
| Effect of potentially dilutive | ||
| common shares | (8) | (2) |
| Net income used to calculate | ||
| diluted earnings per share | 849 | 1,563 |
| Weighted average number of | ||
| common shares outstanding | 451,557,793 | 451,198,878 |
| Potentially dilutive common shares | ||
| resulting from assumed conversion | ||
| of: | ||
| Share-based compensation plans | 4,249 | 606,814 |
| Subtotal | 4,249 | 606,814 |
| Weighted average number of | ||
| common shares outstanding after | ||
| assumed conversion | 451,562,042 | 451,805,692 |
| Diluted earnings per share (in €) | 1.88 | 3.46 |
For the three months ended March 31, 2011, the weighted average number of common shares excludes 2,942,207 (2010: 2,701,122) treasury shares.
In January 2009, certain U.S. Dollar-denominated CDOs with a fair value of € 1.1 bn (notional amount of € 2.2 bn) were retained from Dresdner Bank. On January 31, 2009, subsequent to the derecognition of Dresdner Bank, the CDOs were reclassified from financial assets held for trading to loans and advances to banks and customers in accordance with IAS 39. The fair value of € 1.1 bn became the new carrying amount of the CDOs at the reclassification date. The expected recoverable cash flows as of the date of reclassification were € 1.8 bn, leading to an effective interest rate of approximately 7%.
During mid-2009, the CDOs were transferred to one of the Allianz Group's U.S. Dollar functional currency subsidiaries. As of December 31, 2010, the carrying amount and fair value of the CDOs were € 808 mn and € 810 mn, respectively. As of March 31, 2011, the carrying amount and fair value of the CDOs were € 748 mn and € 753 mn, respectively. For the three months ended March 31, 2011, the changes in carrying amount and fair value were primarily impacted by cash receipts and the depreciation of the U.S. Dollar. The foreign currency effects were recognized in other comprehensive income. The net profit related to the CDOs was not significant.
| As of | As of | |
|---|---|---|
| March 31, | December 31, | |
| 2011 | 2010 | |
| Germany | 47,199 | 47,889 |
| Other countries | 103,218 | 103,449 |
| Total | 150,417 | 151,338 |
On March 24, 2011, Allianz SE and Banco Popular formed "Allianz Popular" in Spain to strengthen the existing partnership and unite all existing ventures under one roof. Allianz SE will own 60% of Allianz Popular. In this context, EUROPENSIONES S.A., Madrid, which is currently accounted for at equity, will be accounted for as a fully consolidated subsidiary of the Allianz Group. As a result a revaluation gain of approximately € 100 mn is expected to be recognized during the second quarter of 2011. The transaction is subject to regulatory approvals which are expected for end of June 2011.
At the end of April and beginning of May 2011, the southern states of the U.S.A. were afflicted by several natural catastrophes. Based on current information the net claims regarding the tornadoes are expected to be € 60 mn before income taxes. Regarding the flooding along the Mississippi River a reliable forecast for net claims is currently not possible.
In May 2011, Allianz Finance II B.V. has called for redemption with effect of June 10, 2011 the USD 500 mn subordinated bond with the ISIN XS0159150720.
On April 6, 2011, Commerzbank AG announced certain recapitalization measures in order to redeem support received from the German government in connection with the financial market crisis. In connection with these measures, the Allianz Group expects to invest in total approximately € 300 mn. Based on current information, it is expected that the Allianz Group's aggregate shareholding in Commerzbank AG will decrease from approximately 9% to below 5%.
Munich, May 11, 2011
Allianz SE The Board of Management
To Allianz SE, Munich
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 January 1 to March 31, 2011 that are part of the quarterly financial report according to §37 x 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 EU, 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, May 12, 2011
KPMG AG Wirtschaftsprüfungsgesellschaft
Johannes Pastor Dr. Frank Pfaffenzeller Wirtschaftsprüfer Wirtschaftsprüfer (Independent Auditor) (Independent Auditor)
| August 5, 2011 | Interim Report 2nd quarter 2011 |
|---|---|
| November 11, 2011 Interim Report 3rd quarter 2011 | |
| February 23, 2012 | Financial press conference for |
| 2011 financial year | |
| February 24, 2012 | Analysts' conference for 2011 |
| financial year | |
| March 23, 2012 | Annual Report 2011 |
| May 9, 2012 | Annual General Meeting |
The German Securities Trading Act ("Wertpapierhandelsgesetz") obliges issuers to announce immediately any information which may have a substantial price impact, irrespective of the communicated schedules. Therefore we cannot exclude that we have to announce key figures of 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
Design Anzinger | Wüschner | Rasp Photography Christian Höhn
Date of publication
May 12, 2011
Allianz SE Koeniginstrasse 28 80802 Munich Germany
Telephone +49 89 38 00 0 Fax +49 89 38 00 3425
Interim Report on the internet
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