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Allianz Annual Report 2013

C Group Management Report Your Allianz 49 Business Operations and Markets 56 Strategy and Steering 59 Progress in Sustainable Development Annual Report 2013    Allianz Group 57 our operating environment The 2013 insurance and asset management environment was char- acterized by the ongoing depression of interest rates, suppressed economic growth in mature economies, excess capital and risk capacity and a resulting margin pressure across our lines of business. In addition, we witnessed a further evolution of the regulatory frame- work we operate in: −− In July 2013, ­Allianz was designated by the Financial Stability Board as a Global Systemically Important Insurer and has, as a consequence, become subject to additional regulatory require- ments. ­Allianz continues its active engagement with supervisory bodies and is preparing for the additional requirements announced – for example, the implementation of a recovery plan. −− In November 2013, the European Union agreed on the timeline fortheimplementationofSolvencyII,whichwillcomeintoeffect from 2016 onwards. ­Allianz has supported Solvency II from the beginning, convinced it will provide the Union with one of the most advanced regulatory regimes in the world, for the benefit of insurers and their stakeholders. Natural catastrophes were again a major feature of the year, with Europe witnessing the highest ever losses due to flooding and hail. Our diversification and size helped us to absorb those risks but we will continue to monitor closely our overall exposures and to stay at the forefront of developments in the securitization of risks for the capital markets. Economic growth continues to differ markedly between our European core markets and the emerging economies. At the same time the Euro’s appreciation against most relevant curren- cies impacts our financial results. Consumer behavior is creating new channels and markets, challenging an industry still working largely on paper and face-to-face. Public scrutiny of the financial services industry is at an all-time high, with record fines being passed tobanksandongoingdiscussionsinthepublicandwithinourindustry on how to best ensure good advice, particularly for life and pension insurance. Our focus going forward In this environment we will continue to protect the pillars of our busi- ness strategy – our integrity, financial strength, operational excel- lence and talent base. Together with other leading financial institu- tionsweareinvestingtimeandtalenttodefinesustainableinsurance and investment (more information on our Progress in Sustainable Developmentstartingon    page 59).Wearecontinuouslymonitoring the nature of our customer relationships and our investment and insurance product portfolio to understand the potential implications and impact of our actions for society and the environment. We are pleased to be rated one of the strongest financial institu- tions in terms of capital: In March 2013, Standard & Poor’s raised the outlook for our AA rating to “stable”. It allows us to offer our clients outstanding security in a volatile global business environment. We intend to maintain our strong capital position through prudent man- agement of our balance sheet, an ongoing focus on operating profit- ability and a cautious stance on large-scale acquisitions. We will be looking out for further consolidation opportunities in attractive mar- kets and segments where we see a clear complementary fit with our portfolio and capabilities. In this context we expect to generate sig- nificant value through disciplined allocation of capital to businesses andmarketspromisingsustainablereturnsatoraboveourhurdlerate. To secure our leadership in the world’s preeminent markets for insurance and asset management, we will focus on growing with our existing customers. We will continue to drive best practice in under- writing, investment management and client service between our operating entities globally. At the same time we will further increase the pace of investments in our digital offering and processing capa- bilities. In each of our business activities we strive to reach the scale necessary to offer an unparalleled development platform for our employees and ensure an outstanding product offering and service for our customers and business partners. Consequently, we are evolving our structures to ensure that we capture the full potential of our global organization. For example, as of 1 January 2014, a new holding named “Allianz Worldwide Partners” (AWP) will steer the activities of ­Allianz Global Assistance, ­Allianz Global Automotive, ­Allianz France International Health and ­Allianz Worldwide Care. AWP thuscoordinatesouractivitiesintheB2B2Cbusiness,wherewedevelop productswithcorporateclientswhichtheyoffertotheirowncustomers or employees. Safeguarding the strategic pillars of our business and focused on growth and scale, we are confident that over the coming years we will build what we aim to be – the world’s strongest financial community.

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