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Allianz Annual Report 2012

The following table shows, by line of business, the carrying amounts of reserves for loss and LAE that have been dis- Discounting of reserves for loss and LAE D 078 Discounted reserves Amount of the discount Interest rate used for discounting 1 as of 31 December 2012 2011 2010 2012 2011 2010 2012 2011 2010 € mn € mn € mn € mn € mn € mn % % % Motor liability 800 669 626 665 557 452 1.75 - 5.52 2.25 - 5.98 2.25 - 5.98 General liability 216 192 187 171 163 161 1.75 - 5.52 2.25 - 5.98 2.25 - 5.98 Personal accident 458 419 387 257 245 229 1.75 - 3.64 2.25 - 3.92 2.25 - 4.00 Workers compensation /  Employers liability 2, 3 2,093 683 630 775 356 350 0.58 - 5.52 1.00 - 5.98 2.00 - 5.98 Others 16 18 16 12 13 12 1.75 - 5.52 2.25 - 5.98 2.25 - 5.98 Total 3,583 1,981 1,846 1,880 1,334 1,204 1 The wide range of interest rates is the result of the presentation of the above information by line of business thus each line reflecting interest rates used in various countries. Overall, due to the low interest rate environment, interest rates used for discounting reduced. 2 The development in workers compensation / employers liability in 2012 is due to the insurance activities of Mensura CCA acquired by Allianz Belgium with discounted reserves of € 1,410 mn and amount of the discount of € 451 mn. 3 Prior year figures adjusted due to a correction of the determination of discounted reserves. Asbestos and environmental (A&E) loss reserves There are significant uncertainties in estimating A&E re- serves for loss and LAE. Reserves for asbestos-related ill- nesses and environmental clean up losses cannot be esti- mated using traditional actuarial techniques due to the long latency period and changes in the legal, socio-eco- nomic and regulatory environment. Case reserves are es- tablished when sufficient information is available to indi- cate the involvement of a specific insurance policy. In addition, IBNR reserves are established to cover additional exposures on both known and not yet reported claims. To the extent possible, A&E loss reserve estimates are based not only on claims reported to date, but also on a survey of policies that may be exposed to claims reported in the fu- ture (i. e. an exposure analysis). In establishing liabilities for A&E claims, management con- siders facts currently known and the current state of the law and coverage litigation. However, given the expansion of coverage and liability by the courts and the legislatures in the past and the possibilities of similar interpretation in the future, there is significant uncertainty regarding the extent of remediation and insurer liability. As a result, the range of reasonable potential outcomes for A&E liabilities provided in these analyses is particularly large. Given this inherent uncertainty in estimating A&E liabilities, signifi- cant deviation from the currently carried A&E reserve posi- tion is possible. While the U.S. A&E claims still represent a majority of the total A&E claims reported to the Allianz Group, the insur- ance industry is facing an increased prominence in expo- sures to A&E claims on a global basis. The Allianz Group continues to monitor these A&E exposures. During 2012 the acquired brokerage portfolio-related activities of Gan Euro- courtage resulted in a portfolio entry of € 23 mn asbestos reserves. An additional increase of € 75 mn for higher de- fense costs and large claims contributed to the overall re- serve change of € 130 mn or 4.2 % of the A&E reserves as at 31 December 2011. counted, and the interest rates used for discounting for the years ended 31 December: Annual Report 2012    Allianz Group298