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Allianz Annual Report 2012

Annual Report 2012    Allianz Group 135 Underwriting result C 035 € mn 2012 2011 2010 Premiums earned (net) 41,705 39,898 39,303 Accident year claims (29,699) (29,580) (28,685) Previous year claims (run-off) 1,207 1,660 1,544 Claims and insurance benefits incurred (net) (28,492) (27,920) (27,141) Acquisition and administrative expenses (net) (11,673) (11,115) (11,044) Change in reserves for insurance and investment contracts (net) (without expenses for premium refunds) 1 (138) (162) (119) Underwriting result 1,402 701 999 1 Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of “change in reserves for insurance and investment contracts (net)”. For further information, please refer to note 34 to the consolidated financial statements. Our accident year loss ratio was 71.2 %, down 2.9 percentage points compared to the previous year. Net losses from natu- ralcatastrophesdecreasedfromaveryhighlevelof€ 1,764 mn to€ 715 mn.Theimpactfromnaturalcatastrophesdecreased by 2.7 percentage points to 1.7 %. 2011 was severely impacted by events such as the earthquakes in Japan and New Zea- land, as well as the floods in Thailand, while 2012 was pri- marily impacted by Storm Sandy with € 447  MN. Excluding natural catastrophes, our accident year loss ratio was 69.5 %, a 0.2 percentage point improvement compared to 2011. This was mainly attributable to the continued pos- itive price momentum and a favorable outcome in claims frequency in our motor business. These favorable develop- ments were partly offset by losses from our crop business in the United States, due to severe drought and higher large losses at our Credit Insurance business. The following operations contributed positively to the devel­ opment of our accident year loss ratio: Reinsurance:  1.7percentagepoints.Thisimprovementwas attributable to the lower burden of losses from natural ­catastrophes compared to the previous year. Germany:  0.8 percentage points. The positive impact was due to lower losses from natural catastrophes but was par- tially offset by higher other weather related claims com- pared to the previous year. It was further supported by ­favorable price trends particularly in our motor business, lower large claims and a positive impact from our claims improvement measures. Italy:  0.5 percentage points. This was supported by positive developments in claims frequency and severity, especially in our motor business. This effect was partly offset by higher natural catastrophes, such as the earthquake in Emilia ­Romagna. AGCS:  0.4 percentage points. The positive impact was mainly a result of lower attritional claims and a reduced burden from natural catastrophes. Australia:  0.3 percentage points. This primarily reflects a significantly lower number of natural catastrophes in 2012 compared to the previous year. Additionally, we benefited from continuous positive price momentum in both retail and commercial business. The following operations contributed negatively to the ­development of the accident year loss ratio: United States:  0.7 percentage points. This was mainly due to the natural catastrophe losses we incurred from Storm Sandy. In addition, our crop business was affected by the severe drought. Credit Insurance:  0.1 percentage points. This was driven by an unfavorable development in severity, in particular a few large losses, but also by increasing frequency due to an ­unfavorable economic environment and a higher level of ­insolvencies compared to a rather exceptional 2011. How- ever, underwriting profitability is still high. Our run-off result declined by € 453 mn to € 1,207 mn. This decline was attributable to higher reserve strengthening of € 123 MN in the United States in 2012 compared to 2011 and to an increase in the estimated ultimate loss for the 2011 Thailand floods of approximately € 200 MN. Furthermore, in 2011, we benefited from favorable developments related to our non-U.S. asbestos reserves of € 130 mn and a positive development from a prior year large claim of € 163 mn. In 2012, total expenses stood at € 11,673 mn, compared to € 11,115 mn in the previous year. Our expense ratio increased slightly by 0.1 percentage points to 28.0 %, including the ­effect of newly acquired business in 2012. Excluding this effect, the underlying ratio trend was flat. C Group Management Report Management Discussion and Analysis 122 Business Environment 124 Executive Summary of 2012 Results 132 Property-Casualty Insurance Operations 140 Life/Health Insurance Operations 148 Asset Management 152 Corporate and Other 154 Outlook 2013 and 2014 166 Balance Sheet Review 175 Liquidity and Funding Resources 182 Reconciliations