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Allianz Annual Report 2013

Concentration of insurance risk in the Life/Health business segment per reportable segment € mn as of 31 December Deferred acquisition costs Aggregate policy reserves Reserves for premium refunds Other insurance reserves Total non-unit-linked reserves Liabilities for unit-linked contracts Total 2013 German Speaking Countries 8,566 186,627 29,705 203 216,535 6,228 222,763 Western & Southern Europe 2,508 92,856 5,903 291 99,050 43,169 142,219 Iberia & Latin America 55 7,395 505 – 7,900 106 8,006 USA 4,321 51,699 – – 51,699 22,314 74,013 Global Insurance Lines & Anglo Markets 73 1,877 – 6 1,883 – 1,883 Growth Markets 2,167 16,357 297 142 16,796 9,247 26,043 Consolidation – (2,985) – (5) (2,990) – (2,990) Total 17,690 353,826 36,410 637 390,873 81,064 471,937 2012 German Speaking Countries 8,232 176,912 31,984 194 209,090 5,648 214,738 Western & Southern Europe 2,366 89,634 6,146 265 96,045 36,457 132,502 Iberia & Latin America 31 6,991 297 – 7,288 62 7,350 USA 2,225 51,488 – – 51,488 19,471 70,959 Global Insurance Lines & Anglo Markets 50 2,187 – 6 2,193 – 2,193 Growth Markets 2,086 16,875 248 84 17,207 9,559 26,766 Consolidation – (2,312) – (6) (2,318) – (2,318) Total 14,990 341,775 38,675 543 380,993 71,197 452,190 The majority of the ­Allianz Group’s Life/Health business segment operations are conducted in Europe. Insurance laws and regulations in Europe have historically been characterized by legal or contrac- tual minimum participation of contract holders in the profits of the insurance company issuing the contract. In particular, Germany, Switzerland and Austria, which comprise approximately 49 % (2012: 49 %) of the ­Allianz Group’s reserves for insurance and investment contracts as of 31 December 2013, include a substantial level of poli- cyholder participation in all sources of profit including mortality/ morbidity, investment and expense. As a result of this policyholder participation, the ­Allianz Group’s exposure to insurance, investment and expense risk is mitigated. Furthermore, all of the ­Allianz Group’s annuity policies issued in the United States meet the criteria for classification as insurance contracts under IFRS 4, because they include options for contract holders to elect a life-contingent annuity. These contracts currently do not expose the ­Allianz Group to significant longevity risk, nor are they expected to do so in the future, as the projected and observed annuitization rates are very low. Additionally, many of the ­Allianz Group’s traditional contracts issued in France and Italy do not incor- porate significant insurance risk, although they are accounted for as insurance contracts because of their discretionary participation fea- tures. Similarly, a significant portion of the ­Allianz Group’s unit- linked contracts in France and Italy do not incorporate significant insurance risk. As a result of the considerable diversity in types of contracts issued, including the offsetting effects of mortality risk and longevity risk inherent in a combined portfolio of life insurance and annuity products, and the geographic diversity of the ­Allianz Group’s Life/ Health business segment, as well as the substantial level of policy- holder participation in mortality/morbidity risk in certain countries in Western Europe, the ­Allianz Group does not believe its Life/Health segment has any significant concentrations of insurance risk, nor does it believe its net income or shareholders’ equity is highly sensi- tive to insurance risk. The ­Allianz Group’s Life/Health business segment is exposed to significant investment risk as a result of guaranteed minimum inter- est rates included in most of its non-unit-linked contracts. The weighted average guaranteed minimum interest rates of the ­Allianz Group’s largest operating entities in the business segment Life/ Health (comprising 87 % of non-unit-linked reserves in both 2013 and 2012) can be summarized by country as follows: D Consolidated Financial Statements 127 Consolidated Balance Sheets 128 Consolidated Income Statements 129 Consolidated Statements of Comprehensive Income 130 Consolidated Statements of Changes in Equity 131 Consolidated Statements of Cash Flows 134 Notes to the Consolidated Financial Statements Annual Report 2013    Allianz Group 189

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