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Allianz Annual Report 2012

S Segment reporting Financial information based on the consolidated financial statements, reported by business seg- ments (Property-Casualty, Life/Health, Asset Management and Corporate and Other) as well as by reportable segments. Subordinated liabilities Liabilities which, in the event of liquidation or bankruptcy, are not settled until after all other liabilities. Swaps Agreements between two counterparties to ex- change payment streams over a specified period of time. Important examples include currency swaps (in which payment streams and capital in different currencies are exchanged) and interest rate swaps (in which the parties agree to ex- change normally fixed interest payments for vari- able interest payments in the same currency). U Unearned premiums Premiums written attributable to income of fu- ture years. The amount is calculated separately for each policy and for every day that the premium still has to cover. Unrecognized gains/losses Amount of actuarial gains or losses, in connection with defined benefit pension plans, which are not yet recognized as income or expenses (see also “corridor approach”). Unrecognized past service cost Present value of increases in pension benefits relating to previous years’ service, not yet recog- nized in the pension reserve. US GAAP Generally Accepted Accounting Principles in the United States of America. V Variable annuities The benefits payable under this type of life insur- ance depend primarily on the performance of the investments in a mutual fund. The policyholder shares equally in the profits or losses of the under- lying investments. Y Yield curve extrapolation We apply the same methodology to determine the risk free yield curve for discounting assets and liabilities as provided by the European Insurance and Occupational Pensions Authority (EIOPA) in the fifth quantitative impact study (QIS 5) – except for the Euro yield curve where we follow their latest guidance on Solvency II. The method takes traded market data into ac- count until the maturity where market quotes are expected to be deep and liquid. After this last liquid period we apply a macroeconomic extrapo- lation technique to construct the curve by making use of forward rate assumptions. This technique interpolates between the last observable liquid forward rate per currency and the currency-spe- cific unconditional forward rate (UFR) for a later maturity. The UFR for each currency is based on estimates of the expected inflation as well as the long-term average of the short-term real rate. After reaching this UFR the forward yield remains constant over time. These derived forward rates are applied to calculate the final yield curve. No- tably in EUR we start extrapolating at 20 years, ap- plying a UFR of 4.2 % which is kept constant after 60 years. Annual Report 2012    Allianz Group378