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Allianz Annual Report 2013

C Group Management Report Management Discussion and Analysis 64 Business Environment 66 Executive Summary of 2013 Results 71 Property-Casualty Insurance Operations 78 Life/Health Insurance Operations 82 Asset Management 85 Corporate and Other 87 Outlook 2014 92 Balance Sheet Review 99 Liquidity and Funding Resources 104 Reconciliations Annual Report 2013    Allianz Group 67 guarantees in the persistent low interest rate environment. By con- trast, risk protection products fared better due to a rising awareness of a protection gap. For the asset management industry as a whole, 2013 was a favor- able year, although there was continued uncertainty on capital mar- kets with volatility remaining high. Following the tapering announce- ment of the Federal Reserve, interest rates increased and thus valuations for fixed income assets declined, while equities recorded a strong performance. These developments adversely impacted fixed income flows but continued to support favorable flows into equity assets. Management’s assessment of 2013 results We recorded growth in total revenues of 4.1 % – to € 110.8  bn – reaching an all-time high, despite the challenges of operating in a persistently low interest rate environment. On an internal basis 1, revenues increased by 4.7 %. Our Life/Health and Asset Management business segments generated strong revenue growth, while premiums in the Property-Casualty business remained rather stable. Our operating profit increased 7.8 % to € 10,066  mn. This was main- ly due to the remarkable underwriting performance in our Property- Casualty business segment despite a higher burden from natural catastrophes. Our Asset Management business segment contributed positively due to higher average assets under management and high- er related margins. The operating result from the Corporate and Otherbusinesssegmentimproved,mainlyduetoahighernetfeeand commission result. However, our Life/Health business was impacted by a lower investment result. Overall, our group performance devel- oped favorably and we significantly exceeded our original operating profit target of € 9.2  bn plus or minus € 0.5  bn. Our net income increased 14.1 % to € 6,344  mn, driven by the strong operating performance as well as a slightly improved non-operating result. Net income attributable to shareholders and non-controlling interests was € 5,996  mn (2012: € 5,231  mn) and € 348  mn (2012: € 327  mn), respectively. Our capitalization remained strong and shareholders’ equity decreased slightly by € 0.3  bn to € 50.1  bn compared to 31 December 2012.Ourconglomeratesolvencyratiostrengthenedbyonepercentage point, after reflecting the negative impact of a change in accounting for pensions 2. 1 Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions and disposals. Please refer to page 104 for a reconciliation of nominal total revenue growth to internal total revenue growth for each of our segments and the ­Allianz Group as a whole. 2 Prior year figures have been restated to reflect the retrospective application of the amended standard IAS 19 – Employee Benefits, effective as of 1 January 2013. For further information, please refer to note 4 to the consolidated financial statements. Total revenues 3 Total revenues – BUSINESS Segments � mn 120,000 100,000 80,000 60,000 40,000 20,000 20132012 110,7731 106,3831 56,784+9.1% 46,579(0.3)% 7,162 551 52,347 46,889 6,786 590 +8.5% (6.6)% +4.7%  Property-Casualty   Life/Health    Asset Management    Corporate and Other   Internal growth 1 Total revenues include € (303) mn (2012: € (229) mn) from consolidation. Property-Casualty gross premiums written amounted to € 46.6  bn, down 0.7 %. On an internal basis, gross premiums written decreased by 0.3 %, reflecting the expected reduction in our U.S. crop business. Excluding this reduction, our internal growth was positive at 2.5 %. We experienced solid growth mainly in Latin America, Turkey, at ­Allianz Global Assistance and in Germany. Life/Health statutory premiums amounted to € 56.8  bn, an increase of 9.1 % on an internal basis. Strong single premium increases from unit-linked and savings products more than compensated for the premium declines in selected markets where we were impacted by regulatory changes or took further profitability and risk manage- ment actions. Asset Management operating revenues grew by 8.5 % on an inter- nal basis. This was mainly driven by higher average assets under management and higher related margins. Our performance fees reached an impressive level of € 510  mn but remained € 256  mn below the record level of € 766  mn in 2012. Once again our overall investment performance was excellent. However, higher interest rates and vola- tile capital markets led to third-party net outflows of € 12 bn. Total revenues from our Banking operations (reported in our Corporate and Other business segment) decreased by € 39  mn to € 551  mn, mainly as a result of a lower net interest result. 3 Total revenues comprise statutory gross premiums written in Property-Casualty and in Life/Health, oper- ating revenues in Asset Management and total revenues in Corporate and Other (Banking).

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