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Allianz Annual Report 2012

As of 31 December 2012, Euler Hermes Belgium recorded a restructuring provision of € 7 mn (2011: € 8 mN). During the year ended 31 December 2012, Euler Hermes Belgium re- corded restructuring charges of € 1 mn (2011: € 0 mn) ­­Fireman’s Fund Insurance company’s restructuring Plan (Fireman’s Fund) In 2011, Fireman’s Fund, a U.S.-based property and casualty insurer, launched a restructuring plan which is expected to be completed by early 2013. The primary objective was to address declining premiums and a high expense ratio by aligning staff levels with a reduced volume of business, in- cluding changes that will enable the company to be more customer focused and effectively compete in its markets going forward. The first phase of the restructuring initiated in the second quarter of 2011 included a voluntary retirement incentive program, involuntary reductions in force and closure of nine offices, which resulted in headcount decreasing by 7 % and the scope of business narrowing to focus on particular products, states and agents. The second phase of the re- structuring initiated at the end of 2011 entailed the imple- mentation of a customer centric structure that will facili- tate better, more efficient decision-making in the field (versus at home office) and a decision to abandon develop- ment of a policy administration system to reduce expenses. In the fourth quarter of 2011, Fireman’s Fund started to consolidate unoccupied office space at the Novato, Califor- nia, home office facility, which resulted in a vacant space provision for a long term lease expiring in 2018. During the year ended 31 December 2012, Fireman’s Fund recorded restructuring charges of € (1) mn (2011: € 90 mn). As of 31 December 2012, the Fireman’s Fund provision for re- structuring was € 41 mn (2011: € 63 mn). Other restructuring plans Other restructuring plans include restructuring provisions of ­Allianz Global Corporate and Speciality in USA and Ger- many (€ 13 mn), ­Allianz Compania de Seguros in Spain (€ 8 mn), ­Allianz Suisse Versicherung (€ 7 mn) and ­Allianz IARD together with ­Allianz Vie in France (€ 6 mn). effect of the reversal of discounting For the year ended 31 December 2012, the effect of the rever- sal of discounting arising from the passage of time was € 9 mn. To achieve this goal, AMOS decided to materially change its delivery model in the following two areas: −− For all AMOS locations that provide IT infrastructure ser- vices (Munich, Stuttgart, Frankfurt, Brussels, Rotterdam, Guildford, Dublin) shoring options will be pursued for data center facilities and data center operation services. −− Administrative and highly transactional tasks in pro- curement and finance will be sourced to an external provider. This will result in a reduction of headcount of approximate- ly 450 positions. The restructuring program is expected to be completed by year-end 2013. As of 31 December 2012, a provision for restructuring in the amount of € 40 mn was recorded. During the year ended 31 December 2012, AMOS recorded for this program restructur- ing charges of € 40 mn. Euler Hermes Group’s restructuring Plans In 2010, the Euler Hermes Group launched the program “Ex- cellence” which will be executed over a period of four years. This program comprises several measures including volun- tary leaver programs, early and partial retirements, invol- untary dismissals and termination of rental contracts. From the original objective of reducing approximately 570 positions by 2013 in the regions concerned by the restruc- turing program, approximately 100 positions remain as of 31 December 2012. The remaining staff reduction concerns mainly Euler Hermes in Germany. As of 31 December 2012, the Euler Hermes Group restructur- ing provision was € 30 mn (2011: € 46 mn). During the year ended 31 December 2012, Euler Hermes Group recorded restructuring charges of € 2 mn (2011: € 6 mn). In addition, Euler Hermes Belgium decided in 2010 to close its retail credit insurance business at the Brussels office which is no longer profitable in the long run. This measure comprises a reduction of approximately 40 employees, mainly through early retirement. The program was fin- ished in the third quarter of 2011 with ongoing payments occurring over the next years. Annual Report 2012    Allianz Group352

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