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Allianz Annual Report 2013

Motor For Motor, net loss and LAE reserves developed favorably during 2013 by € 748  mn, or 4.5 % of reserves at 31 December2012. Favorable develop­ ment was seen for different effects across several operating entities. The following subsidiaries were the largest contributors: € 274  mn at ­Allianz Italy. The reduction is due to the impact of claim initiatives being greater than expected as well as due to the introduction of more granular segmentation in the analysis. € 103  mn at ­Allianz Australia mainly related to a favorable court appeal and lower claims severity resulting from faster claims final- ization. € 82  mn at ­Allianz Spain. The reduction was driven by lower claim frequency and severity due to the economic environment, more favorable price agreements with external suppliers and the increased numberofsmallclaimsmanageddirectlyby­AllianzGlobalAssistance with the benefit of a lower cost to the company. € 71  mn at ­Allianz Germany mainly due to an ongoing review of methods and assumptions for motor third party liability and overall improved claim handling processes. € 67  mn at ­Allianz Suisse. The favorable development of bodily injury claims continues based on active claims management, port­ folio cleaning as well as a change in jurisdiction for whiplash injuries. General Liability For General Liability, net loss and LAE reserves developed unfavorably during 2013 by € 40  mn, or 0.4 % of reserves at 31 December 2012. This overall minor development consists of several offsetting develop- ments at different operating entities. Unfavorable development was observed at ­Allianz Italy mainly due to the introduction of a more granular segmentation in the analysis and at Fireman’s Fund Insur- ance Company mainly due to a large loss. Offsetting effects were noted at ­Allianz United Kingdom and for large losses at ­Allianz France. Property For Property Insurance, net loss and LAE reserves developed favorably during 2013 by € 396  mn, or 10.8 % of reserves at 31 December 2012. Favorable development was seen for different effects across several operating entities. The following subsidiaries were the largest con- tributors: € 102  mn at Fireman’s Fund Insurance Company due to favorable experience on natural catastrophe claims. € 90  mn at ­Allianz Italy due to lower than expected claim pay- ments on attritional and large losses as well as favorable develop- ment on 2012 earthquake losses. € 80  mn at ­Allianz Germany mainly due to a lower claims severity based on overall improved claims handling processes. Inwards and Group Internal Reinsurance ForInwardsandGroupInternalReinsurance,netlossandLAEreserves developed favorably during 2013 by € 119  mn or 2.0 % of reserves at 31 December 2012. At ­Allianz Re a favorable development of € 132  mn was seen mainly driven by natural catastrophe losses and Group internal quota share arrangements. Credit Insurance CreditInsuranceisunderwritteninthe­AllianzGroupbyEulerHermes. During 2013, Euler Hermes experienced a favorable development of € 152  mn net of reinsurance or 15.0 % of reserves at 31 December 2012, mainly driven by a better than expected development of the previ- ous years claims in almost all regions where Euler Hermes operates. ­Allianz Global Corporate and Specialty ­Allianz Global Corporate and Specialty (AGCS) is the ­Allianz Group’s global carrier for corporate and specialty risks. Overall AGCS experi- enced € 257  mn of favorable development in 2013 net of reinsurance, or 4.1 % of net reserves as at 31 December 2012. The major contributors of the favorable run-off included € 83  mn from the German entity’s corporate property portfolio, € 71  mn from the German entity’s corporate liability portfolio and € 55  mn from the North American entity’s aviation and marine portfolio, due to the release of IBNR on prior year reserves based on better than expected experience. Asbestos and environmental (A & E) loss reserves There are significant uncertainties in estimating A & E reserves for loss and LAE. Reserves for asbestos-related illnesses and environmen- tal clean up losses cannot be estimated using traditional actuarial techniques due to the long latency period and changes in the legal, socio-economic and regulatory environment. Case reserves are established when sufficient information is available to indicate the involvement of a specific insurance policy. In addition, IBNR reserves are established to cover additional expo- sures on both known and not yet reported claims. To the extent pos- sible,A & Elossreserveestimatesarebasednotonlyonclaimsreported to date, but also on a survey of policies that may be exposed to claims reported in the future (i.e. an exposure analysis). In establishing liabilities for A & E claims, the management con- siders facts currently known and the current state of the law and cov- eragelitigation.However,giventheexpansionofcoverageandliability by the courts and the legislatures in the past and the possibilities of similar interpretation in the future, there is significant uncertainty regarding the extent of insurer liability. As a result, the range of rea- sonable potential outcomes for A & E liabilities provided in these analyses is particularly large. Given this inherent uncertainty in esti- mating A & E liabilities, significant deviation from the currently carried A & E reserve position is possible. Annual Report 2013    Allianz Group186

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