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Allianz Annual Report 2012

Annual Report 2012    Allianz Group fixed income portfolio C 062 Total fixed income portfolio as of 31 December 2012: € 460.8  bn [as of 31 December 2011: € 416.5 bn] in % Banks 8 [9] Government bonds 38 [36] Covered bonds 23 [25] Other corporate bonds 22 [20] Other 9 [10] Our government bond exposure totaled € 174.2  bn, which equals 38 % of our fixed income portfolio. We reduced our investments in Spanish, Greek, Irish and Portuguese sover- eign bonds over the course of the year. Our sovereign bond exposure in Italy, Spain, Portugal, Greece and Ireland com- prised approximately 7.4 % of our fixed income portfolio, thereof about 6.7 % in Italy and 0.5 % in Spain. Carrying values and unrealized Gains/losses in Spanish, Greek, Irish, Portuguese and Italian sovereign bonds C 063 € mn as of 31 December 2012 Carrying value Unrealized gains/losses (gross)1 Unrealized gains/losses (net)2 Spain 2,482 (104) (22) Greece  11 4 – Ireland 57 – – Portugal 241 (10) (6) Subtotal 2,791 (110) (28) Italy 31,097 1,279 251 Total 33,888 1,169 223 1 Before policyholder participation and taxes. 2 After policyholder participation and taxes; based on 31 December 2012, balance sheet fig- ures reflected in accumulated other comprehensive income. Unrealized gains (gross) on the above-mentioned sover- eign bond exposures, net of losses, amounted to € 1,169  mn (31 December 2011: unrealized losses of € 3,713  mn). The increase of € 4,882  mn primarily reflects the decline in Italian government bond yields. 50 % of our covered bonds portfolio were German Pfand- briefe, backed by either public sector loans or mortgage loans. Another 15 % and 9 % of the covered bonds were allo- cated to France and Spain, respectively. Covered bonds provide a cushion against real estate price deterioration and payment defaults through minimum required security buffers and over-collateralization. Due to a reduction in the Tier 2 share, our exposure to sub- ordinated securities in banks amounted to € 6.7  bn, repre- senting a decrease of € 1.7  bn compared to year-end 2011. Our portfolio included asset-backed securities (ABS) of € 19.5  bn (31 December 2011: € 19.9  bn). Of these, about 78 % were related to mortgage backed securities (MBS). Around 21 % of our ABS securities were made up of MBS issued by U.S. agencies which are backed by the U.S. government. Overall, 96 % of the total ABS portfolio received an investment grade rating,with88 %rated“AA”orbetter(31 December2011:84 %). Overall, the reduction of our exposure to equities and bonds of selected European peripheral countries leaves us better prepared to withstand further adverse effects of the European sovereign debt crisis and related market turmoil. Investment result Net investment income C 064 € mn Group as of 31 December 2012 2011 Delta Interest and similar income (net) 1 20,598 19,984 614 Income from financial assets and liabilities carried at fair value through income (net) (511) (1,287) 776 Realized gains/losses (net) 4,327 3,435 892 Impairments of investments (net) (934) (3,661) 2,727 Investment expenses (876) (852) (24) Net investment income 22,604 17,619 4,985 1 Net of interest expenses (excluding interest expenses from external debt). In 2012, our net investment income went up by € 4,985  mn – or 28.3 % – to € 22,604  mn. This increase was predominantly driven by lower impairments and to a lesser extent by higher realized gains and the improvement in our income from financial assets and liabilities carried at fair value through income (net). 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 169

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