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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 225 An increase (a decrease) in the discount rate by 50 bps would lead to a decrease of € 1.4 bn (an increase of €  1.6 bn) in the defined benefit obligation. An increase of pre-retirement benefit assumptions (e.g. salary increase) of 25 bps would have an effect on the defined benefit obliga- tion by € 64 mn. However, the increase of post-retirement assump- tions (e.g. inflation linked increases of pension payments) of 25 bps would affect the defined benefit obligation by € 426 mn. A change in the medical cost trend rate by one percentage point would have an effect of € 1 mn on the defined benefit obligation and no material effect on the defined benefit costs. Plan Assets /Asset Liability Management (ALM) Based on the estimated future cash flows of € 714 mn for 2014, € 685 mn for 2015, € 703 mn for 2016, € 729 mn for 2017, € 745 mn for 2018 and € 4,104 mn for 2019 – 2023, the weighted duration of the defined benefit obligation is 17.6 years. The ­Allianz Group uses, based on the liability profiles of the defined benefit obligation, stochastic asset liability models to optimize the asset allocation from a risk-return perspective. Due to a well diversified portfolio of more than 140,000 plan par- ticipants, there is no reasonable uncertainty of future cash flows expected which could have an impact on the liquidity of the ­Allianz Group. The target allocation for the plan assets compares to the current asset allocation as follows: Asset allocation of plan assets as of 31 December Target allocation in % Real allocation in % Real allocation 2013 in € mn Real allocation 2012 in € mn Equity securities 13.8 13.7 Quoted 1,594 1,363 Non-quoted – – Debt securities 58.5 52.6 Quoted 4,212 4,349 Non-quoted 1,927 1,915 Real estate 5.7 4.8 561 453 Annuity contracts 19.9 17.7 2,071 1,893 Other 2.1 11.2 1,303 1,233 Total 100.0 100.0 11,668 11,206 The bulk of the plan assets are held by the ­Allianz Versorgungskasse VVaG, Munich, which is not part of the ­Allianz Group. Planassetsdonotincludeanyrealestateusedbythe­AllianzGroup and include only € 4.8 mn of own transferable financial instruments. In addition to the plan assets of € 11.7 bn, the ­Allianz Group has dedicatedassetsatGrouplevelamountingto€ 2 bnasof31 December 2013 which are likewise managed according to ­Allianz ALM standards. Contributions For the year ending 31 December 2014, the ­Allianz Group expects to contribute € 278 mn to its defined benefit plans and to pay € 321 mn directly to participants of its defined benefit plans. Defined contribution plans Definedcontributionplansarefundedthroughindependentpension funds or similar organizations. Contributions fixed in advance (e.g. based on salary) are paid to these institutions and the beneficiary’s right to benefits exists against the pension fund. The employer has no obligation beyond payment of the contributions. During the year ended 31 December 2013, the ­Allianz Group re- cognized expenses for defined contribution plans of € 213  mn (2012: € 190  mn). Additionally, the ­Allianz Group paid contributions for state pension schemes of € 335 mn (2012: € 328 mn). 48 – Share-based compensation plans Group Equity Incentive Plans The Group Equity Incentive Plans (GEI) of the ­Allianz Group help focus senior management, in particular the Board of Management, on the long-term increase the value of the ­Allianz Group. Until 2010, the GEI included grants of stock appreciation rights (SAR) and restricted stock units (RSU). From the 2011 grant onwards, the ­Allianz Equity Incentive Plan (AEI) replaces the GEI plans. With the AEI Plan, only restricted stock units (RSU) are granted to the plan participants. Stock appreciation rights The SAR granted to a plan participant obligate the ­Allianz Group to pay in cash the excess of the market price of an ­Allianz SE share over the reference price on the exercise date for each right granted. The excess is capped at 150 % of the reference price. The reference price represents the average of the closing prices of an ­Allianz SE share for the ten trading days following the Financial Press Conference of ­Allianz SE in the year of issue. SAR which were granted until 2008 vest after two years and expire after seven years. From the 2009 grant onwards, the SAR vest after four years and also expire after seven years. Upon vesting, the SAR may be exercised by the plan participant if the following market conditions are attained: −− during their contractual term, the market price of the ­Allianz SE share has outperformed the Dow Jones Euro STOXX Price Index at least once for a period of five consecutive trading days; and −− the ­Allianz SE market price is in excess of the reference price by at least 20 % on the exercise date.

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