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Allianz Annual Report 2013

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 207 44 – Financial instruments and fair value measurement Certain risk disclosure requirements of IFRS 7 are reflected in the ­following sections within the Risk Report in the Group Management Report: −− Internal Risk Capital Model including all subsections, −− Limitations, −− Concentration of risks, −− Quantifiable risks in the internal capital model including all subsections other than Business risk and Operational risk, −− Liquidity risk. Fair values and carrying amounts of financial instruments The following table compares the carrying amount with the fair value of the ­Allianz Group’s financial assets and financial liabilities: Fair values and carrying amounts of financial instruments € mn as of 31 December 2013 2012 Carrying amount Fair value Carrying amount Fair value Financial assets Cash and cash equivalents 11,207 11,207 12,437 12,437 Financial assets held for trading 2,512 2,512 2,346 2,346 Financial assets designated at fair value through income 4,733 4,733 4,937 4,937 Available-for-sale investments 392,023 392,023 383,254 383,254 Held-to-maturity investments 4,140 4,647 4,321 4,719 Loans and advances to banks and customers 116,800 129,528 119,369 137,215 Financial assets for unit-linked contracts 81,064 81,064 71,197 71,197 Derivative financial instruments and firm commitments included in other assets 75 75 129 129 Financial liabilities Financial liabilities held for trading 6,013 6,013 5,397 5,397 Liabilities to banks and customers 23,109 23,282 22,425 23,140 Financial liabilities for unit-linked contracts 81,064 81,064 71,197 71,197 Derivative financial instruments and firm commitments included in other liabilities 158 158 462 462 Financial liabilities for puttable equity instruments 3,064 3,064 2,601 2,601 Certificated liabilities and subordinated liabilities 19,584 20,899 19,574 21,174 The ­Allianz Group carries certain financial instruments at fair value and discloses the fair value of most other assets and liabilities. The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The maximum exposure to credit risk of financial assets, without taking collateral into account, is represented by their carrying amount except for available-for-sale financial assets, for which it is represented by the amortized cost amount. The degree of judgment used in measuring the fair value of financial instruments closely correlates with the level of non-market observable inputs. The ­Allianz Group maximizes the use of observ- able inputs and minimizes the use of non-market observable inputs when measuring fair value. Observability of input parameters is influenced by various factors such as type of the financial instrument, whether a market is established for the particular instrument, spe- cific transaction characteristics, liquidity as well as general market conditions. If the fair value cannot be measured reliably, amortized cost is used as a proxy for determining fair values. As of 31 December 2013, fair values could not be reliably measured for equity investments with carrying amounts totaling € 214  mn (2012: € 223  mn). These invest- ments are primarily investments in privately held corporations and partnerships. During the year ended 31 December 2013, such invest- ments with carrying amounts of € 35  mn (2012: € 99  mn) were sold leading to gains of € 2  mn (2012: no gains or losses).

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