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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 93 ­value), respectively. These effects were only partly offset by our net income (net of the proposed dividend). In total, our eligible capital was down from € 48.4  bn to € 46.5  bn, including off-balance sheet reserves of € 2.3 bn (31 December 2012: € 2.2  bn). The required funds increased by € 1.0  bn to € 25.6  bn, mainly due to higher aggregate po­licy reserves in Life/Health and growth in our Asset Management business. As a result, our eligible capital exceeded the minimum legally stipulated level by € 20.9 bn. Total assets and total liabilities In the following sections, we show the asset allocation for our insur- ance and banking portfolio and analyze important developments in the balance sheets of our business segments. As of 31 December 2013, total assets amounted to € 711.5  bn and totalliabilitieswere€ 658.7 bn.Comparedtoyear-end2012,totalassets and total liabilities increased by € 17.1 bn and € 17.2 bn, respectively. This section mainly focuses on our financial investments in debt instruments, equities, real estate and cash and other – as well as our insurance reserves and external financing – since these reflect the major developments in our balance sheet. Market environment of different asset classes Thefinancialmarkets showed a mixed picturein2013.Equitymarkets rallied, in particular during the second half of the year, fueled by the low interest rate environment. In contrast, selected major bond markets faced increasing government bond yields as the market anticipated an attenuation of the ultra-loose monetary policy of the Federal Reserve. German and particularly U.S. government bond yields consider- ably increased in 2013 – although starting from very low levels. In contrast, Italian and Spanish government bond yields decreased compared to 2012, with Spanish government bond yields showing the higher movement. Corporate credit spreads for A-rated debtors remained on a very low level in Europe and narrowed slightly in the United States during 2013. Interest rate development in 2012 and 2013 10-year German government bond % 10-year U.S. government bond % 3.0 2.5 2.0 1.5 1.0 0.5 0 1Q 2Q 3Q 4Q1Q 2Q 3Q 4Q 2012 2013 3.0 2.5 2.0 1.5 1.0 0.5 0 1Q 2Q 3Q 4Q1Q 2Q 3Q 4Q 2012 2013 1.2 1.7 1.3 1.7 1.5 2.0 1.7 2.0 1.2 1.8 1.8 2.0 1.3 1.6 1.1 1.8 1.4 1.9 1.8 2.1 2.5 3.0 2.5 3.0 1.6 2.6 1.8 2.4 1.6 1.8 1.5 2.3  High/low    Yield at end of period 

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