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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Overview: outlook and assumptions 2013 outlook 2013 C 056 ­­­­Allianz Group Operating profit of € 9.2 bn, plus or minus € 0.5 bn.1 Maintenance of strong capital and solvency ratios 2. Protection of shareholders’ investments, while continuing to provide attractive returns and dividends (dividend payout ratio of 40%). Profitable growth. Investment strategy focused on generating attractive returns and minimizing vulnerability to price fluctuations. Property-Casualty Growth in gross premiums written between 2.5 % and 3.5 %. Operating profit in the range of € 4.3 bn to € 5.1 bn. Combined ratio of 96 % over the cycle. Pressure on investment income due to reinvestments in a low interest rate environment. Overcompensation of the underlying claims inflation by the aggregate effect of improvements in pricing, claims management and productivity gains. Life/Health Revenues at 2012 levels. Operating profit in the range of € 2.5 bn to € 3.1 bn. Margin on reserves between 50 and 70 bps. Pressure on investment income due to low interest rates and normalization of the net harvesting result. Prioritizing profitability over growth, taking further product and pricing actions as necessary. Asset Management Moderate growth in total assets under management and continued net inflows, especially into fixed income products. Operating profit in the € 2.7 bn to € 3.1 bn range. Cost-income ratio at or below 60 %. 1 From 2013 onwards, restructuring costs will be classified as operating. For further informa- tion on the changes in presentation, please refer to note 6 to the consolidated financial statements. 2 The conglomerate solvency ratio decreased by approximately 17 percentage points as of 1 January 2013 due to amendments to IAS 19. For further information, please refer to note 4 to the consolidated financial statements. Assumptions Our outlook is based on the following assumptions: −− Moderate global economic growth −− Interest rates remain low −− No dramatic interest rate movements −− No severe disruptions of the capital markets −− No disruptive fiscal or regulatory interference −− Level of claims from natural catastrophes returning to more expected average levels −− Average U.S. Dollar to Euro exchange rate of 1.25 We expect our business mix and profitability contributions to remain unchanged compared to 2012: our Property-­ Casualty business will carry on making up the majority of our operating profit, while we anticipate that the Asset Management segment will continue to be a significant source of operating profit, driven by the strong asset base growth in 2012. However, we expect the growth rate in Asset Management to ease and further expect operating profit in Life/Health to revert to a more usual level due to the nor­ malization of the investment result. Although the global economy is showing signs of a slow recovery, investment results are likely to remain under pressure due to low interest rates and the continued uncer­ tainty surrounding sovereign debts. This will be partly offset by a better operational performance in the business seg­ ments and a growth-driven increase in our asset base. 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 157