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Allianz Annual Report 2013

Annual Report 2013    Allianz Group216 Fair Value Measurement on a non-recurring basis Certainfinancialassetsaremeasuredatfairvalueonanon-recurring basis when events or changes in circumstances indicate that the carrying amount may not be recoverable. If financial assets are measured at fair value on a non-recurring basis at the time of impairment, corresponding disclosures can be found in note 37 – Impairments of investments (net). If fair value less cost to sell is used as the measurement basis under IFRS 5, corre- sponding disclosures can be found in note 14 – Non-current assets classified as held for sale. Fair Value information about financial assets and liabilities not carried at fair value fair value hierarchy as of 31 December 2013 (items not carried at fair value) € mn Level 1 – Quoted prices in active markets Level 2 – Market observable inputs Level 3 – Non-market observable inputs Total fair value Financial assets Held-to-maturity investments 981 3,664 2 4,647 Investments in associates and joint ventures 393 54 3,227 3,674 Real estate held for investment – – 15,625 15,625 Loans and advances to banks and customers 402 90,443 38,683 129,528 Real estate held for own use – – 3,626 3,626 Total assets 1,776 94,161 61,163 157,100 Financial liabilities Liabilities to banks and customers 6,588 1,977 14,717 23,282 Certificated liabilities – 7,863 713 8,576 Subordinated liabilities – 12,042 281 12,323 Total liabilities 6,588 21,882 15,711 44,181 Loans and advances to banks and customers For loans and advances to banks and customers, quoted market prices are rarely available. Level 1 consists mainly of highly liquid advances, e. g. short-term investments. The fair value for these assets in level 2 and level 3 is mainly derived based on the income approach using deterministic discounted cash flow models. Liabilities to banks and customers Level 1 consists mainly of highly liquid liabilities, e. g. payables on demand. The fair value for liabilities in level 2 and level 3 is mainly derived based on the income approach using future cash flows dis- counted with risk-specific interest rates. Main non-market observ­ able inputs include credit spreads. In some cases, the carrying amount (amortized cost) is considered to be a reasonable estimate of the fair value. Held-to-maturity investments For level 2, the fair value is mainly determined based on the income approach using deterministic discounted cash flow models. For ­level  3, the carrying amount (amortized cost) is considered to be a rea­sonable estimate for the fair value. Investments in associates and joint ventures For level 2, fair values are mainly derived based on the market approach using market multiples derived from a set of comparables as the valuation technique. For level 3, fair values are mainly based on an income approach using a discounted cash flow method or net asset values as provided by third-party vendors. Real estate Fair values are mainly determined based on the income approach. In some cases, a market approach is applied using market prices of identical or comparable assets in markets which are not active. The fair values are either calculated internally and validated by external experts or derived from expert appraisals with internal controls in place to monitor these valuations.

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