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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Earnings summaries by operations Holding & Treasury Holding & Treasury’s operating result declined from € (824) mn to € (1,115) mn. This was mainly attributable to lower operating revenues and higher operating expenses, in particular due to higher investments in IT and opera­ tions. A drop in the net interest result and higher adminis­ trative expenses also contributed to this development. Our net fee and commission result decreased by € 164 mn to a loss of € 232 mn. This was due to costs incurred by our inter­ nal IT service provider. In addition, our net interest result worsened by € 85 mn to a net loss of € 169 mn. Interest and similar income decreased from € 354 mn to € 245 mn, reflecting receding income on debt securities as a result of lower interest yields as well as lower equity related returns. This decline could only be par­ tially compensated for by the € 24 mn reduction in interest expenses, excluding interest expenses from external debt, which amounted to € 414 mn. Administrative expenses (net), excluding acquisition-related expenses, grew by € 71 mn to € 637 mn. This was primarily ­attributable to higher pension costs and salaries. Banking Overall, the operating loss halved to € 34 mn compared to the previous year’s result. This positive development was driven by higher trading income, but also by an improved net interest result and lower loan loss provisions. Our operating income from financial assets and liabilities carried at fair value increased from a loss of € 2 mn to an income of € 14 mn benefiting from changed interest rates. Our net interest, fee and commission result increased by € 9 mn to € 578 mn due to a higher net interest result, which grew by € 9 mn to € 369 mn as a result of lower funding costs and short-term investments in bonds offering higher yields. At € 209 mn, net fee and commission income remained un­ changed. Our loan loss provisions decreased by € 10 mn to € 111 mn. Thepreviousyear’sprovisionswereaffectedbythespillover effects of the financial crisis on our customers; in particular in our ship financing business. During the first two quarters of 2012, we increased loan loss provisions due to financial guarantees within certain unit-linked products related to peripheral sovereign bonds (which were sold or matured by the end of 2012). Administration expenses remained stable at € 511 mn (2011: € 512 mn). Alternative Investments Alternative Investments’ operating result improved by € 27 mn to record an income of € 22 mn. This was mainly due to a € 24 mn higher net fee and commission income. € 6 mn lower administrative expenses also contributed positively to this development. 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 153