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Allianz Annual Report 2012

Annual Report 2012    Allianz Group 115 that are considered contentious by some stakeholders are not considered so by others. These issues are complex and subjective, and are often influenced by culture and indi- vidual experiences. They are frequently interconnected with other issues and it is often difficult to establish a single, simple viewpoint on such topics, which explains their divi- sive effect. Food security Inrecentyears,risingandvolatilefoodpriceshaveincreased the profile of food security as an issue of global concern. Recently, financial institutions have been targeted with the accusation that their increased presence in agricultural commodity markets is contributing to food price hikes or price bubbles and thus, increased hunger among the world’s poor. We take the allegation very seriously and are engaging with non-governmental organizations (NGOs) and other organi- zations to better understand their concerns and expecta- tions and to outline our own position. As well as engaging with these NGOs, we conduct internal reviews in order to fully understand our potential impacts in this area. On one hand, we have no insurance assets invested in physical agricultural commodities, their derivatives or in related indices, as these investments do not fit our invest- ment strategy. On the other hand, ­Allianz customers are able to invest in shares of commodities producers (equity funds) and in commodity funds that invest solely in com- modities derivatives through our Asset Management busi- ness. It is important to stress that our asset management products also do not directly invest in physical agricultural commodities but only in related derivatives and indices. This means clients may benefit from rising as well as falling commodity prices, depending on the investment strategy of the fund. In these funds, commodity futures positions are closed well before the expiration of the contract since this precludes us from being in the position of having to accept or make physical delivery of the actual commodities. Of course, our third-party mutual funds meet the high transparency standards set by regulations; all product pro- spectuses provide details about the portfolio composition as well as underlying financial instruments. We compre- hensively inform our customers, who usually have longer- term investment horizons, so they can take informed invest­ ment decisions. Finally, we support the broad academic consensus that a liquid market for commodity futures is important for pro- ducers and buyers to protect themselves against the risk of fluctuating prices. As a risk manager, ­Allianz is also involved at the very root of the agricultural value chain by insuring the livelihoods of more than 2 million smallholder farmers through our micro­ insurance offering. In addition, ­Allianz Re supports around 125 million smallholder farmers in developing countries through public-sector agro-insurance schemes, thus help- ing to ensure local and global food security. RESPONSIBILITY IN THIRD-PARTY ASSET MANAGEMENT Allianz Asset Management (AAM), through its ownership of ­AllianzGI and PIMCO, is one of the world’s largest asset man- agers. AAM is responsible for the Group’s third-party asset management business as well as for managing the major- ity of our proprietary assets. ­AllianzGI concentrates on its specialized asset management units and PIMCO specializes in multi-asset global solutions. Even with different regional focuses and investment strate- gies, embedding ESG into asset management and offering corresponding products and services is already common practice across our third-party asset management entities. Building strong ESG research capabilities, engaging with the companies they invest in where practical and pursuing active share ownership through proxy voting are at the heart of all their ESG strategies. Sustainable and Responsible Investments (SRI) Allianz manages a growing portfolio of Sustainable and Responsible Investments (SRI). The largest SRI investment share of AAM’s total assets under management is managed by PIMCO. SRI figures for PIMCO are reported for the first time andtotaled€ 49.1 BNattheendof2012.Inaddition,­AllianzGI managed € 15.3 BN (2011: € 3.4 BN). A number of factors have driven this significant increase: an SRI screening was intro- ducedaspartofareviewoftheinvestmentcriteriaforsome of the assets managed for ­Allianz Group, general market appreciation as well as inflows of new assets from our third-party clients into both fixed income and equity SRI products. At year-end 2012, the total SRI managed by AAM amounted to € 64.4 BN, corresponding to 4  % of AAM’s total assets under management. More details on our approach to responsible investing can be found online:   www  Sustainability C Group Management Report Your Allianz 93 Business Operations and Markets 106 Our Strategy 109 Our Progress in Sustainable Development