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Allianz Annual Report 2013

E Further Information 245 Joint Advisory Council of the Allianz Companies 246 International Advisory Board 247 Mandates of the Members of the Supervisory Board 248 Mandates of the Members of the Board of Management 249 Glossary 253 Index Annual Report 2013    Allianz Group 251 Held-to-maturity investments Held-to-maturity investments comprise debt securities held with the intent and ability that they will be held-to- maturity. They are valued at amortized cost. I IAS International Accounting Standards. IFRS International Financial Reporting Standards. Since 2002, the designation IFRS applies to the overall framework of all standards approved by the International Accounting Standards Board. Already approved standards will con­ tinue to be cited as International Accounting Standards (IAS). IFRS Framework The framework for International Financial Reporting Standards (IFRS) which sets out the concepts that underlie the preparation and presentation of financial statements for external users. Income from financial assets and liabilities carried at fair value through income (net) Income from financial assets and liabilities carried at fair value through income (net) includes all realized and unrealized gains and losses including interest and divi­ dend income from financial assets and financial liabilities carried at fair value through income, the income (net) from financial liabilities for puttable equity instruments and the foreign currency gains and losses (net). Issued capital and capital reserves This heading comprises the capital stock, the premium received on the issue of shares, and amounts allocated when option rights are exercised. J Joint venture A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. L Loss ratio Represents claims and insurance benefits incurred (net) divided by premiums earned (net). N Non-controlling interests Those parts of the equity of affiliates which are not owned by companies of the Allianz Group. Net income attributable to non-controlling interests That part of net income for the year which is not attribut­ able to the shareholders of the ­Allianz Group but to other third parties who hold shares in affiliates. O Options Derivative financial instruments where the holder is entitled – but not obliged – to buy (call option) or sell (put option) the underlying asset at a predetermined price sometime in the future. The grantor (writer) of the option, on the other hand, is obliged to transfer or buy the asset and receives a premium for granting the option to the purchaser. OTC derivatives Derivative financial instruments which are not stan­ dardized and not traded on an exchange but are traded directly between two counterparties via over-the-counter (OTC) transactions. P Pension and similar obligations Reserves for current and future post-employment ben­ efits formed for the defined benefit plans of active and former employees. These also include reserves for health care benefits. Premiums written/earned Premiums written represent all premium revenues in the respective year. Premiums earned represent that part of the premiums written used to provide insurance coverage in that year. In the case of life insurance prod­ ucts where the policyholder carries the investment risk (e.g. variable annuities), only that part of the premiums used to cover the risk insured and costs involved is treated as premium income. R Reinsurance An insurance company transfers part of its insurance risk assumed to another insurance company. Replicating portfolio Representation of the liabilities of our Life/Health insur­ ance business via standard financial instruments. This form of representation mimics the behavior of these liabilities under different market conditions and allows for efficient risk calculations on the basis of Monte Carlo simulations. Repurchase and reverse repurchase agreements A repurchase (repo) transaction involves the sale of securities by the Group to a counterparty, subject to the simultaneous agreement to repurchase these securities at a certain later date, at an agreed price. The securities concerned are retained in the Group’s balance sheet for the entire lifetime of the transaction, and are valued in accordance with the accounting principles for financial assets carried at fair value through income or investment securities, respectively. The proceeds of the sale are reported in liabilities to banks or to customers, as appro­ priate. A reverse repo transaction involves the purchase of securities with the simultaneous obligation to sell these securities at a future date, at an agreed price. Such transactions are reported in loans and advances to banks, or loans and advances to customers, respectively. Interest income from reverse repos and interest expenses from repos are accrued evenly over the lifetime of the trans­ actions and reported under interest and similar income or interest expenses. Reserves for loss and loss adjustment expenses Reserves are established for the payment of losses and loss adjustment expenses (LAE) on claims which have occurred but are not yet settled. Reserves for premium refunds That part of the surplus which will be distributed to policy­ holders in the future. This refund of premiums is made on the basis of statutory, contractual, or company by-law obligations, or voluntary undertaking. Retained earnings In addition to the reserve required by law in the financial statements of the Group parent company, this item con­ sists mainly of the undistributed profits of Group entities and amounts transferred from consolidated net income. Risk appetite The level of risk that an organization is prepared to ac­ cept, before action is deemed necessary to reduce it. Risk appetite is therefore clearly and comprehensively defined by using target and minimum risk indicators, (quantita­ tive) limit systems, or adequate policies, standards and guidelines to determine the “boundaries” of the Group’s business operations.

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