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Allianz Annual Report 2012

Glossary The accounting terms explained here are intended to help the reader under­stand this Annual Report. Most of these terms concern the balance sheet or the income statement. Terminology relating to particular segments has not been included. A Acquisition cost The amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition. Affiliated enterprises The parent company of the Group and all consoli- dated subsidiaries. Subsidiaries are enterprises where the parent company can exercise a signifi- cant influence over their corporate strategy in accordance with the control concept. This is pos- sible, for example, where the parent company holds, directly or indirectly, a majority of the vot- ing rights, has the power to appoint or remove a majority of the members of the Board of Manage- ment or equivalent governing body, or where there are contractual rights of control. Aggregate policy reserves Policies in force – especially in life, health, and personal accident insurance – give rise to poten- tial liabilities for which funds have to be set aside. The amount required is calculated actuarially. Allowance for loan losses The overall volume of provisions includes allow- ances for credit losses – deducted from the asset side of the balance sheet – and provisions for risks associated with contingencies, such as guarantees, loan commitments or other obligations, which are stated as liabilities. Where it is determined that a loan cannot be repaid, the uncollectable amount is written off against any existing specific loan loss allowance, or directly recognized as expense in the income statement. Recoveries on loans previously written off are recognized in the income statement under net loan loss provisions. Assets under management The total of all investments, valued at current market value, which the Group has under man- agement with responsibility for maintaining and improving their performance. In addition to the Group’s own investments, they include invest- ments held under management for third parties. Associated enterprises All enterprises, other than affiliated enterprises or joint ventures, in which the Group has an interest of between 20 % and 50 %, regardless of whether a significant influence is actually exercised or not. At amortized cost Under this accounting principle the difference between the acquisition cost and redemption value (of an investment) is added to or subtracted from the original cost figure over the period from acquisition to maturity and credited or charged to income over the same period. Available-for-sale investments Available-for-sale investments are securities which are neither held to maturity nor have been acquired for sale in the near term; available-for- sale investments are carried at fair value in the balance sheet. B Business combination A business combination is a transaction or event in which an acquirer obtains control of one or more businesses. Business combinations are accounted for using the acquisition method. C Cash flow statement – Statement showing movements of cash and cash equivalents during an accounting period, classified by three types of activity: – operating activities – investing activities – financing activities Certificated liabilities Certificated liabilities comprise debentures and other liabilities for which transferable certificates have been issued. CFO Forum The European Insurance CFO Forum is a high-level discussion group formed and attended by the Chief Financial Officers of major European listed insurance companies. Its aim is to influence the development of financial reporting, value based reporting, and related regulatory developments for insurance enterprises on behalf of its mem- bers, who represent a significant part of the Euro- pean insurance industry. Collateralized Debt Obligation (CDO) A way of packaging credit risk. Several classes of securities (known as tranches) are created from a portfolio of bonds and there are rules for deter- mining how the cost of defaults are allocated to classes. Combined ratio Represents the total of acquisition and adminis- trative expenses (net) and claims and insurance benefits incurred (net) divided by premiums earned (net). Contingent liabilities Financial obligations not shown as liabilities on the balance sheet because the probability of a liability actually being incurred is low. Example: guarantee obligations. Annual Report 2012    Allianz Group374