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Allianz Annual Report 2013

Annual Report 2013    Allianz Group122 regulatory and legal changes The insurance industry is faced with increased regulation in devel- oped markets, for example Solvency II in the European Union and the systemic risk discussions (G-SII) led by the Financial Stability Board. In July 2013, ­Allianz was identified as global systemically impor- tant insurer (G-SII). Policy measures applicable to G-SIIs include recovery and resolution planning requirements, enhanced group- wide supervision and – most likely – harmonized and potentially higher capital requirements. In any event, administrative costs relat- ing to recovery and resolution planning measures will increase. In addition, Solvency II in particular may heavily impact long- term savings businesses and may also make investments in equities and other asset classes less attractive. However, these regulatory trends could open up major opportu- nities as greater capital needs and regulation may lead to sector con- solidation where only financially sound insurance companies will survive. risk and Opportunity management Strategic investments Aspreviouslydescribed,theGrouphasawell-establishedstrategy and planning process with all Group operating entities which allows us to understand and respond to local risks and opportunities. This strong diversification across markets, business segments and cus- tomer groups gives ­Allianz a powerful lever to identify new opportu- nities and manage risks. In addition to these joint efforts, ­Allianz has built four opera- tional and strategic pillars to help the Group create opportunities on a wider basis: Digitalization, enabling us to take advantage of new products through channels to new markets at lower cost:  Digitalization is one of our major ongoing Group initiatives and affects all areas of ­Allianz, including our customers and our employees. This initiative spans everything from the design of new modular products, to new forms of access, to servicing existing customers in a better way. For example we are developing web-based and multi-access customer interaction tools to address changing customer behaviors. On the operational side, we are harmonizing systems across the Group to reduce com- plexity and improve efficiency. We are making considerable progress in this Group-wide digital transformation program and will invest approximately € 300  MN in 2014 to build reusable assets in the three areas of the ­Allianz Digital Target Picture: Customer Interaction, Ana- lytics & Products and Productivity. These initiatives are based on multi-year strategic infrastructure programs. ­Allianz will invest approximately€ 200  MNin2014focusedprimarilyontheconsolidation of data center operations worldwide and on the implementation of a private global network. Digitalization is also the basis for enhanced management information systems to improve steering. When driv- ing digitalization, security and data confidentiality remain a major priority. Capital allocation, ensuring that capital is available and allo- cated appropriately to finance growth initiatives and leveraging the Group's diversification benefits: In 2013, through our focus on capital allocation, we increased dividend payments from our operating entities to further allow the Group to support the financing of growth initiatives.Theintroductionoffurtherrefinedreturnoncapitalmetrics at the level of lines of business further supports the Group’s strategic decision making. Leverage Group synergies:  We continue to leverage Group syner- giesviaknow-howandbestpracticesharinginunderwriting,product development and operations through Global Property-Casualty and Global Life/Health units. At the same time, we are further developing sharedservicesinvariousareas,especiallyinOperationsandFinance. Numerous internal efforts are ongoing to identify improvement potentials and share best practices, e.g. in Operations and in Claims Management. In Human Resources, we are strengthening our efforts for international rotation of talents. Strategic Investments:  Strategic investments also open up new business opportunities. For example, ­Allianz is growing its Business to Business to Customer (B2B2C) area. By pairing up value proposi- tions – Automotive with Roadside Assistance, and International Health with Corporate Assistance – under the roof of ­Allianz World- wide Partners, we are taking a distinctive position in the B2B2C market. Onemajoradvantageforusistoextendagreementswithdistributors across global markets in a seamless manner. ­Allianz also operates an incubator to develop and pilot innovative ideas before they are imple- mented across the Group.

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