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Allianz Annual Report 2012

Future policy benefits Reserves for insurance and investment contracts of € 1,018,826  mn presented in the table include contracts where the timing and amount of payments are considered fixed and determinable, and contracts which have no spec- ified maturity dates and may result in a payment to the contract holder depending on mortality and morbidity ex- perience and the incidence of surrenders, lapses or ma- turities. Furthermore, the amounts presented in the table above are undiscounted and therefore exceed the reserves for insurance and investment contracts presented in the consolidated balance sheet that reflect the time value of the money. For contracts without fixed and determinable payments, the ­­Allianz Group has made assumptions to estimate the undiscounted cash flows of contractual policy benefits in- cluding mortality, morbidity, interest crediting rates, poli- cyholder participation in profits and future lapse rates. These assumptions represent current best estimates and may differ from the estimates originally used to establish the reserves for insurance and investment contracts as a result of the lock-in of assumptions on the issue dates of the contracts as required by the ­­Allianz Group’s estab- lished accounting policy. The effect of discounting and the differences between locked-in and best estimate assump- tions is € 393,221 mn. For further information, see note 2 to the consolidated financial statements. Due to the uncer- tainty of the assumptions used, the amount presented could be materially different from the actual incurred pay- ments in future periods. Furthermore, these amounts do not include € 181,531 mn of premiums and fees expected to be received, expenses in- curred to parties other than the policyholders such as agents and administrative expenses; nor do they include investment income earned. In addition, these amounts are presented net of reinsurance expected to be received as a result of these cash flows. For further information on re- serves for insurance and investment contracts, see note 20 of the consolidated financial statements. Transfers of financial assets Amendments to IFRS 7: Disclosures – Transfers of financial assets – are effective for annual periods starting on or after July 2011. The amendments enhance disclosure require- ments regarding transfers of financial assets that result in continued recognition or derecognition. As of 31 December 2012, the ­Allianz Group substantially re- tained all the risks and rewards out of the ownership of transferred assets. There were no transfers of financial as- sets that were derecognized in full or partly, in which ­Allianz continues to control the transferred assets. Trans- fers of financial assets mainly relate to securities lending and repurchase agreement transactions. Transferred finan- cial assets in repurchase agreement and securities lending transactions are mainly available-for-sale debt and equity securities for which substantially all of the risks and re- wards are retained. As of 31 December 2012, the carrying amount of the assets transferred for securities lending transactions amounted to € 1,531 MN (2011: € 459 MN). For repurchase agreements, the carrying amount of the assets transferred amounted to € 952 mn (2011: € 226 MN) and the carrying amount of the associated liabilities amounted to € 951 MN (2011: € 227 MN). Assets pledged and collateral are described in note 46 – Contingent liabilities, commitments, guarantees, and assets pledged as collateral. 45 – Related party transactions Information on the remuneration of Board members and transactions with these persons can be found in the “Re- muneration Report”, starting on page 74. Transactions between ­­­Allianz SE and its subsidiaries that are to be deemed related parties have been eliminated in the consolidation and are not disclosed in the notes. Business relations with joint ventures and associated en- terprises are set on an arm’s length basis. Annual Report 2012    Allianz Group D Consolidated Financial Statements 219 Consolidated Balance Sheets 220 Consolidated Income Statements 221 Consolidated Statements of Comprehensive Income 222 Consolidated Statements of Changes in Equity 223 Consolidated Statements of Cash Flows 226 Notes to the Consolidated Financial Statements 335