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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 219 The U.S. Department of Justice (DOJ) is conducting an investiga- tion into whether certain employees of Fireman’s Fund Insurance Company (FFIC), a subsidiary of ­Allianz SE, engaged in violation (criminal or civil) of the False Claims Act in connection with FFIC’s involvement as a provider of federal crop insurance from 1997 to 2003. The investigation concerns the issue of whether FFIC employees sub- mitted false claims to the government through various practices, including backdating and inappropriately designating new producer status. Two former FFIC claims employees and one contract adjuster have pled guilty to assisting farmers in asserting fraudulent crop claims. The DOJ and FFIC are in negotiations to reach a final resolution of this matter. The outcome cannot be predicted at this stage. Allianz Life Insurance Company of North America (Allianz Life) has been named as a defendant in class action lawsuits in connection withthemarketingandsaleofdeferredannuityproducts.Twoofthose lawsuits are pending as certified class actions in California. Those two lawsuits have been consolidated and the complaints allege generally thatthedefendantengagedin,amongotherpractices,deceptivetrade practices and misleading advertising in connection with the sale of such products. The ultimate outcome of these cases cannot yet be determined. In November 2013, ­Allianz SE reached an agreement with the Italian Tax Authority closing a controversy regarding several inde- pendent tax issues. The result of the settlement is covered by ­Allianz Group’s provision and has therefore no negative impact on its income statement. The settlement includes an alleged tax liability of ­Allianz SE of € 1.4 bn including penalties and interest, as declared by a tax assessment notice from the Italian Tax Authority received by ­Allianz SE in January 2013. The Italian Tax Authority asserted that the combination of the businesses in Italy following the cross-border merger of the Italian Riunione Adriatica di Sicurtà (RAS) with and into the former ­Allianz AG in 2006, which led to the change of legal form into ­Allianz SE, represented a taxable event. Other contingencies In accordance with § 5 (10) of the Statutes of the Joint Fund for Secur- ing Customer Deposits (“Einlagensiche­rungsfonds”), ­Allianz SE has undertaken to indemnify the Federal Association of German Banks (“Bundesverband deutscher Banken e.V.”) for any losses it may incur by reason of supporting measures taken in favor of Oldenburgische Landes­bank AG (OLB), Münster­ländische Bank Thie & Co. KG and Bankhaus W. Fortmann & Söhne KG. With the sale of Dresdner Bank becoming effective on 12 January 2009, ­Allianz terminated the indemnification undertaking issued in 2001 in favor of the Federal Association of German Banks with respect to Dresdner Bank. As a result, the indemnification is only relevant for supportingmeasuresthatarebasedonfactsthatwerealreadyexisting at the time of the termination. ­Allianz and HT1 Funding GmbH have signed a Contingent Indemnity Agreement in July 2006, pursuant to which ­Allianz may, in certain circumstances, be obliged to make payments to HT1 Funding GmbH. HT1 Funding GmbH issued nominal € 1,000  mn Tier 1 Capital Securities with an annual coupon of 6.352 % (as of 30 June 2017, the coupon will be 12-month EURIBOR plus a margin of 2.0 % p.a.). The con- tingent payment obligation of the ­Allianz Group was reduced in 2012 following a reduction of the nominal amount of the Tier 1 Capital Securities from € 1,000  mn to € 416  mn. The securities have no sched- uled maturity and the security holders have no right to call for their redemption. The securities may be redeemed at the option of the issuer on 30 June 2017, and thereafter. The expected impact in the foreseeable future has been recognized in other provisions, however, itisnotpossibleforthe­AllianzGrouptopredicttheultimatepotential payment obligations at this point in time. Commitments Loan commitments The ­Allianz Group engages in various lending commitments to meet the financing needs of its customers. The following table represents the amounts at risk should customers draw fully on all facilities and then default, excluding the effect of any collateral. Since the majority of these commitments may expire without being drawn upon, the amounts shown are not representative of actual liquidity require- ments for such commitments. loan commitments € mn as of 31 December 2013 2012 Advances 429 496 Guarantee credits 104 95 Mortgage loans/Public-sector loans 335 445 Total 868 1,036 Leasing commitments The ­Allianz Group occupies property in many locations under various long-term operating leases and has entered into various operating leases covering the long-term use of data processing equipment and other office equipment.

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