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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 221 notifications, and for the estimated special contribution for 2014, adequate provisions have been accrued. Guarantees A summary of guarantees issued by the ­Allianz Group by maturity and related collateral-held is given below: guarantees € mn Financial guarantees Market value guarantees Indemni- fication contracts Performance guarantees 2013 Up to 1 year 411 78 – 21 1 - 3 years 18 450 – 19 3 - 5 years 14 – – 2 Over 5 years 12 680 91 127 Total 455 1,208 91 169 Collateral 72 – – 36 2012 Up to 1 year 387 271 1 24 1 - 3 years 16 614 – 19 3 - 5 years 14 60 1 2 Over 5 years 164 652 107 173 Total 581 1,597 109 218 Collateral 130 – – 36 Nearly all customers of the letters of credit have no external credit rating,whereasnearlyallcustomersoftheindemnificationcontracts have an external credit rating of A. Financial guarantees The majority of the ­Allianz Group’s financial guarantees are issued to customers through the normal course of banking business in return for fee and commission income, which is generally deter- mined based on rates subject to the nominal amount of the guaran- tees and inherent credit risks. Once a guarantee has been drawn upon, any amount paid by the ­Allianz Group to third parties is treated as a loan to the customer, and is, therefore, basically subject to the credit risk of the customer or the collateral pledged, respectively. Market value guarantees Market value guarantees represent assurances given to investors in certain mutual funds and related to specific asset management agreements, under which initial investment values and/or minimum performance of such investments are guaranteed at levels as defined under the relevant agreements. The obligation to perform under a market value guarantee is triggered when the market value of the affected investments does not meet the guaranteed targets at pre- defined dates. The ­Allianz Group’s Asset Management segment, in the ordinary course of business, issues market value guarantees in connection with investment trust accounts and mutual funds it manages. The levels of market value guarantees and maturity dates differ based on the separate governing agreements of the respective investment trust accounts and mutual funds. As of 31 December 2013, the maxi- mum potential amount of future payments of the market value guar- antees is € 680 mn (2012: € 652 mn), which represents the total value guaranteed under the respective agreements including the obliga- tion that would have been due had the investments matured on that date. The fair value of the investment trust accounts and mutual funds related to these guarantees as of 31 December 2013, is € 802 mn (2012: € 734 mn). The ­Allianz Group’s Banking operations in France, in the ordi- nary course of business, issue market value and performance-at- maturity guarantees in connection with mutual funds offered by the ­Allianz Group’s Asset Management operations in France. The levels of these guarantees, as well as the maturity dates, differ based on the underlying agreements. In most cases, both a market value guarantee and a performance-at-maturity guarantee is offered for the same mutual fund. As of 31 December 2013, the maximum potential amount of future payments of the market value and performance-at- maturity guarantees is € 528 mn (2012: € 945 mn), which represents the total value guaranteed under the respective agreements. The fair value of the affected mutual funds where market value guarantees have been issued as of 31 December 2013, is approximately € 589 mn (2012: € 853  mn). These funds have a remaining term of maturity of up to five years. Indemnification contracts Indemnification contracts are executed by the ­Allianz Group with various counterparties under existing service, lease or acquisition transactions. Such contracts may also be used to indemnify counter- parties under various contingencies, such as changes in laws and regulations or litigation claims. In connection with the sale of various of the ­Allianz Group’s for- mer private equity investments, subsidiaries of the ­Allianz Group providedindemnitiestotherespectivebuyersintheeventthatcertain contractual warranties arise. The terms of the indemnity contracts cover ordinary contractual warranties, environmental costs and any potential tax liabilities the entity incurred while owned by the ­Allianz Group.

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