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Allianz Annual Report 2012

false claims to the government through various practices, including backdating and inappropriately designating new producer status. Two former FFIC claims employees and one contract adjuster have pled guilty to assisting farmers in asserting fraudulent crop claims. The DOJ and FFIC are in negotiations to reach a final resolution of this matter. The outcome cannot be predicted at this stage. ­Allianz Life Insurance Company of North America (­Allianz Life) has been named as a defendant in various putative class action lawsuits in connection with the marketing and sale of deferred annuity products. Two of those lawsuits are currently pending as certified class actions in California. The complaints allege generally that the defendant en- gaged in, among other practices, deceptive trade practices and misleading advertising in connection with the sale of such products. These lawsuits have not yet progressed to a stage at which the outcome or exposure can be determined. In a class action lawsuit in Minnesota the Court, based upon a jury trial, entered final judgment in favor of ­Allianz Life in January 2010. In another California class action the parties reached settlement, which the court approved in 2011. In January 2013, ­Allianz SE received a tax assessment notice from the Italian Tax Authority which declares a tax liability of ­Allianz SE of € 1.4 bn including penalties and interest. The Italian Tax Authority asserts that the combination of the businesses in Italy following the cross-border merger of the Italian Riunione Adriatica di Sicurtà (RAS) with and into the former ­Allianz AG in 2006, which led to the change of legal form into ­Allianz SE, represents a taxable event. Manage- ment believes that the tax liability does not exist and in- tendstotakelegalremedyagainstthetaxassessmentnotice. Other contingencies In accordance with § 5 (10) of the Statutes of the Joint Fund for Securing Customer Deposits (“Einlagensiche­ rungsfonds”), ­­­Allianz SE has undertaken to indemnify the Federal Association of German Banks (“Bundesverband deutscher Banken e.V.”) for any losses it may incur by rea- son of supporting measures taken in favor of Oldenbur- gische Landes­bank AG (OLB), Münster­ländische Bank Thie & Co. KG and Bankhaus W. Fortmann & Söhne KG. With the sale of Dresdner Bank becoming effective on 12 January 2009, ­­­Allianz terminated the indemnification un- dertaking issued in 2001 in favor of the Federal Association 46 – Contingent liabilities, commitments, guarantees, and assets pledged and collateral Contingent liabilities Litigation ­­Allianz Group companies are involved in legal, regulatory, and arbitration proceedings in Germany and a number of foreign jurisdictions, including the United States. Such pro- ceedings arise in the ordinary course of businesses, includ- ing, amongst others, their activities as insurance, banking and asset management companies, employers, investors and taxpayers. It is not feasible to predict or determine the ultimate outcome of the pending or threatened proceed- ings. Management does not believe that the outcome of these proceedings, including those discussed below, will have a material adverse effect on the financial position and the results of operations of the ­­Allianz Group, after consid- eration of any applicable reserves. On 24 May 2002, pursuant to a statutory squeeze-out proce- dure, the general meeting of Dresdner Bank AG resolved to transfer shares from its minority shareholders to ­Allianz as principal shareholder in return for payment of a cash set- tlement amounting to € 51.50 per share. ­Allianz established the amount of the cash settlement on the basis of an expert opinion, and its adequacy was confirmed by a court ap- pointed auditor. Some of the former minority shareholders applied for a court review of the appropriate amount of the cash settlement in a mediation procedure (“Spruchver- fahren”), which is pending with the district court (“Land­ gericht”) of Frankfurt. On 12 December 2012, this court held a hearing and a decision is expected during the first half of 2013. The Management believes that a claim to increase the cash settlement does not exist. In the event that the court were to determine a higher amount as an appropriate cash settlement,thiswouldaffectalloftheapproximately16 mn shares that were transferred to ­Allianz. The U.S. Department of Justice (DOJ) is conducting an inves- tigation into whether certain employees of Fireman’s Fund Insurance Company (FFIC), a subsidiary of ­Allianz SE, en- gaged in violation (criminal or civil) of the False Claims Act in connection with FFIC’s involvement as a provider of fed- eral crop insurance from 1997 to 2003. The investigation concerns the issue of whether FFIC employees submitted Annual Report 2012    Allianz Group336