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Allianz Annual Report 2013

Annual Report 2013    Allianz Group 87 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 Outlook 2014 −− Global economic activity poised to pick up in 2014. −− Allianz Group operating profit outlook in the range of € 10.0  BN, plus or minus € 0.5  BN. Overview: 2013 results versus previous year outlook 1 2013 results versus previous year outlook for 2013 Outlook 2013 – as per annual Report 2012 Results 2013 ­­­Allianz Group Operating profit of € 9.2 bn, plus or minus € 0.5  bn. Operating profit of € 10.1  bn. Maintenance of strong capital and solvency ratios. Regulatory solvency ratio of 182  % (2012 (as published): 197 %; 2012 (pro forma restated): 181 %).“AA” Standard & Poor’s rating with “stable” outlook (revised upward from “negative” in March 2013). ­Allianz remains one of the highest-rated insurance groups. Protection of shareholders’ investments, while continuing to provide attractive returns and dividends (dividend payout ratio of 40 %). Return on equity, after income taxes, of 11.9 % (2012 (as published): 10.5 %; 2012 (restated): 11.1 %). Proposed dividend at € 5.30 (2012: € 4.50) per share. Payout ratio of 40 %. Profitable growth. We recorded growth of 7.8 % in operating profit compared to the previous year, driven by improvements in the Property-Casualty and Asset Management business segments and partially offset by a lower Life/Health contribution. Investment strategy focused on generating attractive returns and minimizing vulnerability to price fluctuations. Operating investment result decreased by € 1.0  bn (4.7 %) mainly as a result of the low interest environment and unfavorable foreign currency effects. Non-operating investment result fell by € 0.1  bn. Property-Casualty Growth in gross premiums written between 2.5  % and 3.5  %. Gross premiums written decreased by 0.7 % due to negative inter­nal growth of 0.3 % and unfavorable foreign currency translation effects. Operating profit in the range of € 4.3  bn and € 5.1  bn. Operating profit of € 5.3 bn above the higher end of our range, driven by a strong underwriting result. Combined ratio of 96 % over the cycle. Combined ratio improved by 1.9 percentage points to 94.3 %. Pressure on investment income due to reinvestments in a low interest rate environment. Operating investment income (net) declined by 5.6 % to € 3.0 bn. Overcompensation of the underlying claims inflation by the aggregate effect of improvements in pricing, claims management and productivity gains. Accident year loss ratio excluding claims from natural catas­trophes improved from 69.5 % to 67.0  %. Expense ratio increased slightly from 27.9 % to 28.4  %, mainly driven by the change in the crop business structure in the United States, the regulatory changes in Brazil (policy collection fee) and the acquisition of the activities of Gan Eurocourtage in France. Life/Health Revenues at 2012 level. Statutory premiums of € 56.8 bn, compared to € 52.3  bn in 2012. Growth driven by strong sales in the unit-linked business without guarantees. Operating profit in the range of € 2.5  bn and € 3.1  bn. Operating profit of € 2.7 BN. Margin on reserves between 50 and 70 basis points. Margin on reserves at 58 basis points. Pressure on investment income due to low interest rates and normalization of net harvesting result. Although net harvesting result was up, operating investment result declined by 5.0 % to € 17.0 BN, driven by lower income from assets and liabilities carried at fair value. Prioritizing profitability over growth, taking further product and pricing actions as necessary. New business profitability improved from the previous year as a result of continued product and pricing actions and a more favorable economic environment. Asset Management Moderate growth in total assets under management and continued net inflows, especially into fixed income products. Net outflows from total assets under management of € 14.0 bn, entirely out of fixed income products as a result of the sharp increase in interest rates during the second half of 2013. Operating profit in the € 2.7  bn to € 3.1 bn range. Operating profit of € 3.2  bn due to higher average assets under management and higher related margins. Cost-income ratio at or below 60 %. Cost-income ratio improved by 0.6 percentage points to 55.9  %. 1 For more detailed information on the previous year outlook for 2013, please see the Annual Report 2012 starting on page 157.

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