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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Examples Property-Casualty underwriting framework Our sound Group-wide underwriting framework forms the basis for adequate risk taking and management decisions and helps us limit potentially significant individual risks, including reputational risks. The framework defines com- mon minimum requirements for our underwriting activi- ties in the international corporate and commercial Property-Casualty insurance business, both for direct and reinsurance business. There are clear underwriting limits, minimum standards and restrictions to protect ­Allianz from taking unwanted or excessive risks. They determine prohibited and restricted (subject to special approval) coverage and define clear ap- proval requirements at different levels of the ­Allianz Group. In particular, they specify all activities that require approval by or reporting to the Group Underwriting Committee – which is a Group Committee of ­Allianz SE for Property-­ Casualty underwriting related topics, established by the ­Allianz  SE Board of Management. These standards also document delegated underwriting authorities and estab- lish mandatory rules for individual policies. Exceptions require approval by different bodies, for example the Group Underwriting Committee, the local Chief Underwriting ­Officer, and, where necessary, the Group Chief Risk ­Officer – as well as reporting to the Group Risk Committee. Life product management framework According to our Life product management framework, product development and approval are local processes overseen by the operating entities. However, there are Group review ­requirements for new high-risk products or product features to ensure that the operating entities are aware of the associated risks. Alternative risk-mitigating product features are considered in the design phase and material real world assumptions are explicitly acknowl- edged as a core component of the business model. The framework also ­defines profitability standards, while at the same time ­allowing for individual exceptions approved for competitive reasons in the light of local market character- istics. The profitability of new and existing business is closely monitored and regularly reported to the Board of Management of ­Allianz SE. Risk Governance Structure As a key element of our risk management framework, ­Allianz’s approach to risk governance enables integrated management of our local and global risks and ensures that our risk profile remains consistent with our risk strategy and our capacity to bear risks. Supervisory Board and Board of Management Within our risk governance system the Supervisory Board and Board of Management of ­Allianz SE have both ­Allianz SE and Group-wide responsibilities and have set up commit- tees to provide them with support. Examples include: Supervisory Board −− The Audit Committee supervises the effectiveness of the ­Allianz risk management and monitoring framework. −− The Risk Committee focuses on the ­Allianz Group’s over- all risk profile and monitors risk-related developments as well as general risks and specific risk exposures. Board of Management The Board of Management formulates business objectives and a corresponding, consistent risk strategy. The core ele- mentsoftheriskframeworkaresetoutinthe­AllianzGroup Risk Policy, which is approved by the Board of Management. −− The Group Capital Committee supports the Board of Management with recommendations regarding risk strategy, capital and limit allocation. −− The Group Risk Committee defines risk standards and forms the major limit setting authority within the framework set by the Board of Management. −− The Group Finance Committee is authorized by the Board of Management to oversee investment and financ- ing activities, including the approval of significant transactions of ­Allianz SE and ­Allianz Group companies. Overall risk organization and roles in risk management A comprehensive system of risk governance is achieved by setting standards related to organizational structure, risk strategy, written policies, limit systems, documentation and reporting. These standards ensure the accurate and timely flow of risk-related information, as well as a disci- plined approach towards decision-making and execution at both the global and local level. C Group Management Report Risk Report and Financial Control 184 Risk Report 214 Controls and Procedures 211