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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Management’s assessment of expected revenues and earnings for 2013 In 2012, our total revenues amounted to € 106.4 bn, repre­ senting a 0.5 % increase on an internal basis compared to last year. The decline in Life/Health revenues, reflecting the challenging market environment and the trade-off between volume and margins, was more than compensated for by excellent growth in Asset Management along with a moder­ ate increase in Property-Casualty premiums. We expect the modest revenue rise to continue in 2013, with Property- Casualty and Asset Management experiencing positive inter­ nal growth, while Life/Health volumes are likely to remain under pressure due to the uncertain financial market out­ look and our selective focus on profitable growth. Howthelevelofourfuturetotalrevenueswillevolveis–apart from financial market developments – also dependent on market cycles and our ability to address continuing and emerging challenges and exploit new business opportuni­ ties, as described in the Management’s views on future challenges and opportunities section. As our product and service offerings differ from country to country, information about the development of our sales markets and modifications to our product portfolio also varies. Overall, we expect our market and product mix to remain relatively unaltered. Our Property-Casualty product mix will change slightly, driven by our recent acquisitions of the activities of Mensura (specialist in worker’s accident insurance) and Gan Eurocourtage (focused on commercial lines), and the expected decline in our crop premiums in the U.S. due to our reduced share in the reinsurance agree­ ment. In the Life/Health segment, in line with expected market trends, we could see a fall in premiums from life insurance products with guarantees. In addition, we de­ cided to cease business operations under the ­Allianz Bank brand with effect from 30 June 2013, not affecting the other banking business of OLB. In 2012, we significantly exceeded our original operating profit target, reaching €  9.5 bn. This excellent result was supported by lower claims from natural catastrophes in Property-Casualty, an outperforming Asset Management segment – particularly PIMCO – and solid results in ­Life/ Health, buoyed by a high operating investment result. In2013,weenvisageoperatingprofitof€ 9.2 bn,plusorminus € 0.5 bn, as we expect a normalized level of performance fees in the Asset Management segment and a lower overall investment result in the Life/Health segment. Furthermore, all restructuring charges will be presented within the oper­ ating profit from 2013 onwards.1 The increase compared to the 2012 operating profit outlook given last year, is driven by a continued strengthening of our Asset Management and Life/Health asset bases along with top-line growth in Property-Casualty. The operating profit outlook presented here and in the follow­ing sections assumes no significant deviations from the assumptions we make here and the segment-specific sensitivities mentioned below. Among other uncertainties, our operating profit range is sensitive to changes in interest rates and foreign exchange rates: −− A 100 bps increase or decrease in interest rates would, respectively, either raise or lower operating profits by approximately € 0.2 bn. This does not include fair value changes in interest rate sensitive positions that are re­ ported in our income statement. −− A 10 % weakening or strengthening of the U.S. Dollar ver­ sus our planned exchange rate of 1.25 to the Euro would have a negative or positive impact of approximately € 0.3 bn, respectively. In 2012, our net income increased substantially to reach € 5.5 bn, supported by a stronger operating performance in all operating segments and a more favorable non-operating result. In principle, but also given the inherent uncertainties de­ scribed above and the susceptibility of our non-operating results to adverse capital market developments, we do not provide a precise outlook for net income. However, since our outlook presumes no major disruptions of capital mar­ kets, we nevertheless expect a stable or slightly increasing net income for 2013. 1 For further information on the changes in presentation, please refer to note 6 to the consoli- dated financial statements. 158