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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Outlook 2013 and 2014 −− World economy to regain some momentum. −− Allianz Group operating profit for 2013 expected to be in the range of € 9.2 bn, plus or minus € 0.5 bn, and is expected to improve in 2014. Overview: 2012 results versus previous year outlook 1 2012 results versus previous year outlook for 2012 C 055 Outlook 2012 - as per annual Report 2011 Results 2012 ­­­­Allianz Group Operating profit of € 8.2 bn, plus or minus € 0.5 bn. Strong operating profit of € 9.5 bn. Average U.S. Dollar to Euro exchange rate of 1.36. Average U.S. Dollar to Euro exchange rate of 1.29. Protect capital, solvency ratios and the investments of our shareholders. Strong regulatory solvency ratio of 197  % (179 % in 2011). AA Standard &  Poor’s rating with negative outlook. Allianz remains one of the highest-rated insurance groups. We protect the investments of our shareholders and rather miss an opportunity than risk losing money through our investments. Return on equity , after income taxes, of 10.5  % (2011: 5.7 %). Proposed dividend maintained at € 4.50 (2011: € 4.50) per share. We continue to strengthen our drive for profitable growth. We recorded a growth of 20.8 % in our operating profit compared to previous year, driven by improvements in all operating segments, especially Asset Management. Given the current interest rate environment our investment strategy remains focused on generating attractive returns and minimizing vulnerability to price fluctuations. Operating investment result increased by € 3.0 bn (16.1 %) and non-operating investment result improved by € 2.0 bn leading to a higher net income. Property-Casualty Gross premiums written are expected to grow slightly, in the range of 2.0  % to 3.0  %, driven by positive price and volume effects. Gross premiums written increased by 4.7 % due to positive inter­- nal growth of 2.5 % (both price and volume effects were positive), favorable foreign currency translation effects and the effect of acquisitions in the second half of 2012 (activities of Gan Euro- courtage and Mensura). We expect our operating profit to be between € 4.0 bn and € 5.0 bn. Operating profit of € 4.7 bn towards the higher end of our range, driven by a lower level of claims from natural catastrophes. We remain committed to our combined ratio target of 96 % over the cycle. Combined ratio improved by 1.5 percentage points to 96.3 %. We anticipate large claims from natural catastrophes to decrease to long-term average levels. Claims from natural catastrophes dropped to € 0.7 bn (2011: € 1.8 bn), which is below the long-term average level. Investment result will remain under pressure due to the rather short duration of investments in this segment and the low interest rate environment. Nevertheless, we continuously strive to adapt our investment strategy to current market conditions. Operating investment income declined by 4.9 % to € 3.2 bn. We expect that the aggregate effect of improvements in ­ pricing, claims management and productivity gains will more than compensate for underlying claims inflation. Accident year loss ratio excluding claims from natural catas­ trophes improved slightly from 69.7 % to 69.5  %. Expense ratio increased slightly from 27.9 % to 28.0  %, mainly driven by acquisitions in the second half of 2012. Life/Health We expect another strong but stable revenue level in 2012. Statutory premiums of € 52.3 bn, compared to € 52.9 bn in 2011. Revenues remained under pressure as a result of low interest rates and our selective focus on profitable growth. We expect an operating profit in our Life/Health business in the range of € 2.2 bn to € 2.8 bn, with a margin on reserves between 50 and 70 bps. Operating profit of € 3.0 bn, driven by a higher investment result, particularly in Germany. Margin on reserves increased to 67 BPS. The investment result for 2012 is expected to improve compared with 2011. Operating investment result increased by 20.1 % to € 17.9 bn, supported by higher realized gains following duration extension program and lower impairments compared to previous year. Asset Management We expect inflows to continue, especially into fixed income products. Net inflows of total assets under management of €114.7 bn, compared to € 34.7 bn in 2011, mainly into fixed income products. We expect operating profit to be in the range of € 2.0 bn to € 2.4 bn. Operating profit of € 3.0 bn due to strong growth in total assets under management and high performance fees. We expect to maintain a cost-income ratio well below 65 %. Cost-income ratio improved by 3.4 percentage points to 55.6  %. 1 For more detailed information on the previous year outlook for 2012, please see the Annual Report 2011 starting on page 123. 154