Bond AllianZ 2.121% ( DE000A254TM8 ) in EUR

AllianZ

100 % ▲

Germany

DE000A254TM8 ( in EUR )

2.121% per year ( payment 1 time a year)

08/07/2050

Prospectus brochure of the bond Allianz DE000A254TM8 en EUR 2.121%, maturity 08/07/2050

100 000 EUR

1 000 000 000 EUR

08/07/2025 ( In 6 days )

Allianz is a multinational insurance company offering a wide range of insurance and asset management services globally.

Allianz has issued a ?1,000,000,000 bond (ISIN: DE000A254TM8) denominated in EUR, maturing on 08/07/2050, with a 2.121% coupon rate, paying annually, and a minimum trading increment of ?100,000, currently trading at 100%.

Prospectus dated 20 May 2020
ALLIANZ SE
(incorporated as a European Company (Societas Europaea SE) in Munich, Germany)
EUR 1,000,000,000 Subordinated Fixed to Floating Rate Notes with
scheduled maturity in 2050
Issue Price 100.002 per cent.
Allianz SE (the "Issuer"), will issue on 22 May 2020 (the "Issue Date") EUR 1,000,000,000 subordinated fixed to floating rate
notes with a scheduled maturity in 2050 in a denomination of EUR 100,000 per Note (the "Notes") as Series 88 Tranche 1
under the EUR 30,000,000,000 Debt Issuance Programme of Allianz SE, Allianz Finance II B.V. and Allianz Finance III B.V. guar-
anteed by Allianz SE (the "Programme").
The Notes will be governed by the laws of the Federal Republic of Germany ("Germany").
The Notes will bear interest from and including the Issue Date to but excluding 8 July 2030 (the "First Call Date") at a rate of
2.121 per cent. per annum, scheduled to be paid annually in arrear on 8 July in each year, commencing on 8 July 2020. There-
after, unless previously redeemed, the Notes will bear interest at a rate of 3.280 per cent. per annum above the 3-months EU-
RIBOR being the Euro-zone inter-bank offered rate for three-month Euro deposits, scheduled to be paid quarterly in arrear on
8 January, 8 April, 8 July and 8 October in each year (each a "Floating Interest Payment Date"), commencing on 8 October
2030. Under certain circumstances described in § 3.1(d) of the Terms and Conditions of the Notes (the "Terms and Condi-
tions") certain benchmark replacement provisions will apply in case the 3-months EURIBOR (or a successor benchmark) used
as a reference for the calculation of interest amounts payable under the Notes were to be discontinued or otherwise unavaila-
ble.
Under certain circumstances described in § 3.2 of the Terms and Conditions, interest payments on the Notes may be deferred
at the option of the Issuer or will be required to be deferred.
The Notes are scheduled to be redeemed at the Redemption Amount (as defined in the Terms and Conditions) on the Floating
Interest Rate Payment Date falling on or nearest to 8 July 2050, provided that on such date the Conditions to Redemption and
Repurchase (as defined in the Terms and Conditions) are fulfilled. If this is not the case, the Notes will be redeemed only in the
circumstances described in the definition of the term Final Maturity Date (as defined in the Terms and Conditions) on the Final
Maturity Date. Under certain circumstances described in § 4 of the Terms and Conditions, the Notes may be subject to early
redemption. This includes that under certain circumstances the Issuer may call the Notes for early redemption (in whole but
not in part) for the first time with effect as of the First Call Date and on each Floating Interest Payment Date thereafter.
This prospectus in respect of the Notes (the "Prospectus") constitutes a prospectus within the meaning of Article 6.3 of Regu-
lation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when
securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (as
amended, the "Prospectus Regulation"). This Prospectus will be published in electronic form together with all documents
incorporated by reference on the website of the Luxembourg Stock Exchange (www.bourse.lu).
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier, in Luxembourg ("CSSF") as com-
petent authority under the Prospectus Regulation. The CSSF only approves this Prospectus as meeting the standards of com-
pleteness, comprehensibility and consistency imposed by the Prospectus Regulation. Such approval should neither be consid-
ered as an endorsement of the Issuer that is subject of this Prospectus nor of the quality of the securities that are the subject
of this Prospectus. Investors should make their own assessment as to the suitability of investing in the securities. The Issuer
may request CSSF to provide competent authorities in host Member States within the European Economic Area ("EEA") or in
the United Kingdom with a certificate of approval attesting that the Prospectus has been drawn up in accordance with the
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Prospectus Regulation. The CSSF gives no undertaking as to the economic and financial soundness of the transaction or the
quality or solvency of the Issuer.
This Prospectus will be valid until 20 May 2021 and may in this period be used for admission of the Notes to trading on a
regulated market. In case of a significant new factor, material mistake or material inaccuracy relating to the information in-
cluded in this Prospectus which may affect the assessment of the Notes, the Issuer will prepare and publish a supplement to
the Prospectus without undue delay in accordance with Article 23 of the Prospectus Regulation. The obligation of the Issuer to
supplement this Prospectus will cease to apply once the Notes have been admitted to trading on the regulated market of the
Luxembourg Stock Exchange and at the latest upon expiry of the validity period of this Prospectus.
Application has been made to the Luxembourg Stock Exchange for the Notes to be listed on the official list of the Luxembourg
Stock Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's regulated market
"Bourse de Luxembourg", appearing on the list of regulated markets issued by the European Commission. The Luxembourg
Stock Exchange's regulated market is a regulated market for the purposes of the Directive 2014/65/EU of the European Par-
liament and of the Council of 15 May 2014 on markets in financial instruments (as amended, "MiFID II").
The Notes will initially be represented by a temporary global note in bearer form (the "Temporary Global Note"). Interests in
a Temporary Global Note will be exchangeable, in whole or in part, for interest in a permanent global note (the "Permanent
Global Note") on or after the date 40 days after the later of the commencement of the offering and the Issue Date (the "Ex-
change Date"), upon certification as to non-U.S. beneficial ownership. The Global Notes will be deposited prior to the Issue
Date with Clearstream Banking AG, Frankfurt am Main ("Clearstream Frankfurt").
This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes in any jurisdiction where
such offer or solicitation is unlawful.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act")
and subject to certain exceptions, the Notes may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons.
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the EEA or in the United Kingdom. For these purposes, a retail investor means a person
who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the
meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not
qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in
the Prospectus Regulation. Consequently, no key information document required by Regulation (EU) No 1286/2014 (as
amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in
the EEA or in the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them
available to any retail investor in the EEA or in the United Kingdom may be unlawful under the PRIIPs Regulation.
Following the First Call Date, amounts payable under the Notes are calculated by reference to the 3-months EURIBOR ("EURI-
BOR"), which is provided by the European Money Market Institute ("EMMI"). As at the date of this Prospectus, EMMI appears
on the register of administrators and benchmarks established and maintained by the European Securities and Markets Author-
ity ("ESMA") pursuant to Article 36 of the Benchmark Regulation (Regulation (EU) 2016/1011) (the "Benchmark Regula-
tion").
Joint Lead Managers
BofA Securities
CITIGROUP
COMMERZBANK
CRÉDIT AGRICOLE CIB
HSBC
Co-Lead Managers
BAYERNLB
BNP PARIBAS
DEUTSCHE BANK
HELABA
NATIONAL AUSTRALIA BANK LIMITED
UNICREDIT BANK
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RESPONSIBILITY STATEMENT
The Issuer with its registered office in Germany accepts responsibility for the information contained in this Prospectus and hereby declares
that the information contained in this Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely
to affect its import.
The Issuer further confirms that (i) this Prospectus contains all relevant information with respect to the Issuer (also referred to as "Allianz SE"
herein) and its consolidated subsidiaries taken as a whole (the "Allianz Group") and to the Notes which is material in the context of the issue
and the offering of the Notes, including all relevant information which, according to the particular nature of the Issuer and of the Notes is
necessary to enable investors and their investment advisers to make an informed assessment of the assets and liabilities, financial position,
profits and losses, and prospects of the Issuer and the Allianz Group and of the rights attached to the Notes; (ii) the statements contained in this
Prospectus relating to the Issuer, the Allianz Group and the Notes are in every material respect true and accurate and not misleading; (iii) there
are no other facts in relation to the Issuer, the Allianz Group or the Notes the omission of which would, in the context of the issue and offering
of the Notes, make any statement in the Prospectus misleading in any material respect; and (iv) reasonable enquiries have been made by the
Issuer to ascertain such facts and to verify the accuracy of all such information and statements. All references to "we," "us," or "our" in this
Prospectus are to Allianz Group.
NOTICE
No person is authorised to give any information or to make any representation other than those contained in this Prospectus and, if given or
made, such information or representation must not be relied upon as having been authorised by or on behalf of the Issuer or Citigroup Global
Markets Limited, Commerzbank Aktiengesellschaft, Crédit Agricole Corporate and Investment Bank, HSBC Bank plc or Merrill Lynch
International (together, the "Joint Lead Managers") and Bayerische Landesbank, BNP Paribas, Deutsche Bank Aktiengesellschaft, Landesbank
Hessen-Thüringen Girozentrale, National Australia Bank Limited (ABN 12 004 044 937) and UniCredit Bank AG (the "Co-Lead Managers" and
together with the Joint Lead Managers, the "Managers").
This Prospectus should be read and understood in conjunction with any supplement hereto and with all documents incorporated herein or
therein by reference.
The legally binding language of this Prospectus is English. Any part of the Prospectus in German language constitutes a translation, except for
the Terms and Conditions in respect of which German is the legally binding language.
In this Prospectus, all references to "", "EUR" or "Euro" are to the currency introduced at the start of the third stage of the European economic
and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the Euro, as
amended. References to "US$", "USD" and "U.S. dollars" are to the currency of the United States of America. References to "billions" are to
thousands of millions.
Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its
own appraisal of the creditworthiness, of the Issuer. This Prospectus does not constitute an offer of Notes or an invitation by or on behalf of the
Issuer or the Managers to purchase any Notes. Neither this Prospectus nor any other information supplied in connection with the Notes should
be considered as a recommendation by the Issuer or the Managers to a recipient hereof and thereof that such recipient should purchase any
Notes.
This Prospectus reflects the status as at its date. The offering, sale and delivery of the Notes and the distribution of the Prospectus may not be
taken as an implication that the information contained herein is accurate and complete subsequent to the date hereof or that there has been no
adverse change in the financial condition of the Issuer since the date hereof.
To the extent permitted by the laws of any relevant jurisdiction, neither any Manager nor any of its respective affiliates nor any other person
mentioned in the Prospectus, except for the Issuer, accepts responsibility for the accuracy and completeness of the information contained in
this Prospectus or any other documents incorporated by reference and accordingly, and to the extent permitted by the laws of any relevant
jurisdiction, none of these persons accept any responsibility for the accuracy and completeness of the information contained in any of these
documents. The Managers have not independently verified any such information and accept no responsibility for the accuracy thereof.
This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation.
The distribution of this Prospectus and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into
whose possession this Prospectus comes are required to inform themselves about and to observe any such restrictions. For a description of the
restrictions see the section "Subscription and Sale Selling Restrictions" below. In particular, the Notes have not been and will not be registered
under the Securities Act and are subject to United States tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold
or delivered within the United States of America or to U.S. persons as defined in Regulation S under the Securities Act ("Regulation S").
3

The Notes issued pursuant to this Prospectus are complex financial instruments and are not a suitable or appropriate investment for all
investors. In some jurisdictions, regulatory authorities have adopted or published laws, regulations or guidance with respect to the offer or sale
of securities such as the Notes to retail investors.
For the avoidance of doubt the content of any website referred to in this Prospectus does not form part of this Prospectus and the information
on such websites has not been scrutinised or approved by the CSSF as competent authority under the Prospectus Regulation.
MIFID II PRODUCT GOVERNANCE / TARGET MARKET: PROFESSIONAL INVESTORS AND ECPS ONLY
Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the Notes has led to the
conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only, each as defined in MiFID II; and (ii) all
channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering,
selling or recommending the Notes (a "distributor") should take into consideration the manufacturers' target market assessment; however, a
distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or
refining the manufacturers' target market assessment) and determining appropriate distribution channels.
PRIIPS REGULATION / PROSPECTUS REGULATION / PROHIBITION OF SALES TO EEA AND UK RETAIL INVESTORS
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to
any retail investor in the EEA ("EEA") or in the United Kingdom ("UK"). For these purposes, a retail investor means a person who is one (or
more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of the Insurance Distribution
Directive, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in the Prospectus Regulation. Consequently, no key information document required by the PRIIPs Regulation for offering or
selling the Notes or otherwise making them available to retail investors in the EEA or in the UK has been prepared and therefore offering or
selling the Notes or otherwise making them available to any retail investor in the EEA or in the UK may be unlawful under the PRIIPs Regulation.
Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Notes
(or any beneficial interests therein) from the Issuer and/or the Managers the foregoing representations, warranties, agreements and
undertakings will be given by and be binding upon both the agent and its underlying client.
BENCHMARK REGULATION: STATEMENT ON REGISTRATION OF BENCHMARK ADMINISTRATOR
Following the First Call Date, amounts payable under the Notes are calculated by reference to the EURIBOR, which is provided by the EMMI. As
at the date of this Prospectus, EMMI appears on the register of administrators and benchmarks established and maintained by ESMA pursuant
to Article 36 of the Benchmark Regulation.
STABILISATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, COMMERZBANK AKTIENGESELLSCHAFT (THE "STABILISING MANAGER") (OR ANY
PERSON ACTING ON BEHALF OF ANY STABILISING MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO
SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER,
STABILISATION MAY NOT NECESSARILY OCCUR. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE
PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY CEASE AT ANY TIME, BUT IT MUST END
NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF
THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER (OR ANY PERSON
ACTING ON BEHALF OF THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements, including statements using the words "believes", "anticipates", "intends",
"expects" or other similar terms. This applies in particular to statements under the caption "Description of Allianz SE and Allianz Group" and
statements elsewhere in this Prospectus relating to, among other things, the future financial performance, plans and expectations regarding
developments in the business of Allianz SE. These forward-looking statements are subject to a number of risks, uncertainties, assumptions and
other factors that may cause the actual results, including the financial position and profitability of Allianz SE, to be materially different from or
worse than those expressed or implied by these forward-looking statements. Neither the Issuer nor the Managers do assume any obligation to
update such forward-looking statements and to adapt them to future events or developments.
ALTERNATIVE PERFORMANCE MEASURES
This Prospectus contains certain alternative performance measures ("APMs") which are not recognised financial measures under the
International Financial Reporting Standards as issued by International Accounting Standards Board and as adopted by the European Union
("IFRS"). Such APMs must be considered only in addition to, and not as a substitute for or superior to, financial information prepared in
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accordance with IFRS included elsewhere in the Prospectus. Investors are cautioned not to place undue reliance on these APMs and are also
advised to review them in conjunction with the financial statements of the Issuer and related notes. For further information, please see
"Description of Allianz SE and Allianz Group - Alternative Performance Measures".
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TABLE OF CONTENTS
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF ALLIANZ SE AND ALLIANZ GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
TAXATION WARNING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
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RISK FACTORS
Allianz SE and the Allianz Group are exposed to a variety of risks through its core insurance and asset management activities, including market,
credit, underwriting, business, operational, strategic, liquidity, and reputational risks. The following is a description of the material risk factors
in relation to Allianz SE as Issuer and the Allianz Group in relation to the Notes. The realisation of any of the risks described below may affect
the ability of Allianz SE to fulfil its obligations as Issuer and/or may adversely affect the market price of Notes and can lead to losses for the
holders of the Notes (the "Noteholders"). As a result, investors are exposed to the risk of losing their investment in whole or in part. Additional
risks not included in the risk factors below, e.g., because they are now immaterial or not currently known to Allianz SE or Allianz Group, may
result in material risks in the future. This is in particular true for risks related to the crisis resulting from the outbreak of SARS-CoV-2 and its
associated disease ("Covid-19") which, although to some extent explicitly mentioned as a risk factor or implicitly reflected in the weighting
(high / medium / low) of the relevant other risk factors discussed in the following sections, are considered based on currently available infor-
mation and are subject to a constantly changing and very volatile environment. Investors should be aware that the Allianz SE as the ultimate
parent of the Allianz Group may face the same risks as the Allianz Group.
The following risk factors are organized in categories depending on their respective nature. In each category the most material risk factors,
based on the probability of their occurrence and the expected magnitude of their negative impact, are mentioned first.
Words and expressions defined in the Terms and Conditions shall have the same meanings in this section.
Risk factors relating to Allianz SE / Allianz Group
I. MARKET RISKS
The market risks of the Allianz Group include credit spread risk, equity risk, interest rate risk, real estate risk, currency risk and inflation risk.
In our assessment, the credit spread and the equity risk are the most material risks for the Allianz Group in the category of market risks.
THE ALLIANZ GROUP IS EXPOSED TO CREDIT SPREAD RISK.
The Allianz Group holds a significant portfolio of fixed-income assets such as bonds. The value of this portfolio is changing in case of moving
credit spreads. It may lose value if credit spreads widen. This may happen in case the perception of risk in the market changes, i.e. investors
demand higher compensation for taking on risks, which can happen for several reasons for example following a political crisis, an economic
recession or changed monetary policy.
We consider this risk to be high.
THE ALLIANZ GROUP IS EXPOSED TO EQUITY RISK.
The Allianz Group holds a significant equity portfolio. This portfolio is subject to volatility in equity markets affecting the market value and
liquidity of these holdings. Investments are reviewed regularly for impairment, with write-downs to fair value charged to income if there is
objective evidence that the cost may not be recovered. The Allianz Group holds interests in a number of financial institutions as part of its
portfolios, which are particularly exposed to uncertain market conditions affecting the financial services sector generally.
In prior years the Allianz Group has incurred significant impairments on the value of the securities and other financial assets that it holds and
there is the risk that the Allianz Group will recognize significant impairments in the future again, which may have an adverse effect on the
Allianz Group's earnings and on the Allianz Group's business and its financial condition.
We consider this risk to be high.
THE ALLIANZ GROUP IS EXPOSED TO INTEREST RATE RISK.
Changes in prevailing interest rates (including changes in the difference between the levels of prevailing short- and long-term rates, or enduring
negative rates) may adversely affect the Allianz Group's insurance, asset management, corporate and other results.
An increase in interest rates could substantially decrease the value of the Allianz Group's fixed-income portfolio, and any unexpected change in
interest rates could materially adversely affect the Allianz Group's bond and interest rate derivative positions.
Assets and liabilities from an Allianz Group perspective are not necessarily matched in terms of interest rate sensitivities and therefore any
significant change in interest rates could materially adversely affect the Allianz Group's bond and interest rate derivative positions and the fair
value of liabilities. A change in prevailing interest rates may accordingly have a negative impact on the capitalization of the Allianz Group.
Results of the Allianz Group's asset management business may also be affected by movements in interest rates, as management fees are gener-
ally based on the value of assets under management, which fluctuate with changes in the level of interest rates.
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Changes in interest rates will impact the Allianz Group's Life/Health business to the extent they result in changes to current interest income,
impact the value of the Allianz Group's fixed-income portfolio and the fair value of the liabilities and affect the levels of new product sales or
surrenders of business in force. Reductions in the effective investment income below the rates prevailing at the issue date of the policy, or below
the long-term guarantees in countries such as Germany and Switzerland, would reduce the profit margins or lead to losses on the Life/Health
insurance business written by the Allianz Group's Life/Health subsidiaries to the extent the maturity composition of the assets does not match
the maturity composition of the insurance obligations they are backing. In particular, if low interest rates persist, the effective investment in-
come will decrease over time due to reducing reinvestment yields. Similarly, reductions in the effective investment income of the fixed income
trust assets backing the Allianz Group's pension reserves may lead to deficits of the internal pension plans, and these deficits would have to be
covered by the Allianz Group. Interest rate volatility risk could substantially impact the economic capitalization in a low interest rate environ-
ment, as long term guarantees in Life/Health business increase in value.
We consider this risk to be medium to high.
THE ALLIANZ GROUP IS EXPOSED TO REAL ESTATE RISK.
The Allianz Group holds a significant alternative investments portfolio. Alternative investments include real estate, private equity, renewable
energy and infrastructure investments. These investments are subject to volatility in real estate, equity and alternative investment markets
affecting the market value and liquidity of these holdings and are generally covered by either the real estate or the equity risk capital modelling
depending on their characteristics. Investments are reviewed regularly for impairment, with write-downs to fair value charged to income if
there is objective evidence that the cost may not be recovered.
In prior years the Allianz Group has incurred significant impairments on the value of the securities and other financial assets that it holds and
there is the risk that the Allianz Group will recognize significant impairments in the future again, which may have an adverse effect on the
Allianz Group's earnings, the Allianz Group's business and its financial condition.
We consider this risk to be low.
THE ALLIANZ GROUP IS EXPOSED TO CURRENCY RISK.
The Allianz Group prepares its consolidated financial statements in Euro. However, a significant portion of the revenues and expenses from the
Allianz Group companies outside the Euro zone, originates in currencies other than the Euro. As a result, although the Allianz Group's non-Euro
zone subsidiaries generally record their revenues and expenses in the same currency, changes in the exchange rates used to translate foreign
currencies into Euro may adversely affect the Allianz Group's results of operations and the net asset value of subsidiaries from an Allianz Group
perspective.
We consider this risk to be low.
THE ALLIANZ GROUP IS EXPOSED TO INFLATION RISK.
Allianz Group is exposed to changing inflation rates, predominantly due to the Non-Life insurance obligations but also due to inflation-indexed
internal pension obligations. Unexpected inflation increases both future claims and expenses, leading to greater liabilities and payments to
policyholders.
We consider this risk to be low.
II. CREDIT RISKS
The Allianz Group companies are subject to a potential economic loss in the value of their portfolio that would result from either changes in the
credit quality of counterparties ("migration risk") or the inability or unwillingness of a counterparty to fulfill contractual obligations ("default
risk"). Allianz Group's credit risk profile is derived from three sources:
Investment portfolio: Credit risk results from Allianz Group's investments in fixed-income bonds, loans, derivatives, cash positions, and
receivables whose value may decrease depending on the credit quality of the obligor. As a result, defaults by one or more of these parties
on their obligations to the Allianz Group companies due to bankruptcy, lack of liquidity, downturns in the economy or real estate values,
operational failure or other reasons, or even rumors about potential defaults by one or more of these parties or regarding the financial
services industry generally, could lead to losses or defaults by the Allianz Group companies or by other institutions. In addition, with respect
to secured transactions, the Allianz Group companies' credit risk may be exacerbated when the collateral held by them cannot be realized
or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure. The Allianz Group companies also have
exposure to a number of financial institutions in the form of unsecured debt instruments, derivative transactions and equity investments.
Losses on or impairments to the carrying value of these assets may materially and adversely affect the Allianz Group's business or results
of operations. In our assessment, the credit risk related to the investment portfolio of the Allianz Group is the most material risk in the
category of credit risk. We consider this risk to be medium.
Credit insurance: Credit risk arises from potential claim payments on limits granted by Euler Hermes to its policyholders. Euler Hermes
insures its policyholders from credit risk associated with short-term trade credits advanced to clients of the policyholder. If the client of
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the policyholder is unable to meet its payment obligations, Euler Hermes indemnifies the loss to the policyholder. We consider this risk to
be low.
Reinsurance: The Allianz Group transfers exposure to certain risks in the Property-Casualty and Life/Health insurance businesses to others
through reinsurance arrangements. Under these arrangements, other insurers assume a portion of the Allianz Group's losses and expenses
associated with reported and unreported losses in exchange for a portion of policy premiums. Credit risk arises from potential losses from
non-recoverability of reinsurance receivables or due to default on benefits under in-force reinsurance treaties. We consider this risk to be
low.
If any of the above-mentioned risks materialize, this may materially and adversely affect the Allianz Group's business or results of operations.
In prior years the Allianz Group has incurred significant impairments on the value of the securities and other financial assets that it holds and
there is the risk that the Allianz Group will recognize significant impairments in the future again, which may have an adverse effect on the
Allianz Group's earnings and on the Allianz Group's business and its financial condition.
III. UNDERWRITING RISK OF THE ALLIANZ GROUP
Underwriting risk consists of premium and reserve risks in the Property-Casualty business segment as well as biometric risks in the Life/Health
business segment. In our assessment, the underwriting risk related to Property-Casualty business is the most material in this category.
UNDERWRITING RISK RELATED TO PROPERTY-CASUALTY BUSINESS
Our Property-Casualty insurance businesses are exposed to premium risk-related adverse developments in the current year's new and renewed
business as well as to reserve risks related to the business in force.
Loss reserves for the Allianz Group's Property-Casualty insurance and reinsurance policies are based on estimates as to claims liabilities. Ad-
verse developments relating to claims could lead to further reserve additions and materially adversely impact the Allianz Group's results of
operations.
In accordance with industry practice, accounting and regulatory requirements, the Allianz Group establishes reserves for losses and loss ad-
justment expenses related to its Property-Casualty insurance and reinsurance businesses, including Property-Casualty business in run-off.
Reserves are based on estimates of future payments that will be made in respect of claims, including expenses relating to such claims. Such
estimates are made both on a case-by-case basis as well as in respect of losses that have been incurred but not reported ("IBNR") to the Allianz
Group. These reserves represent the estimated ultimate cost necessary to bring all pending reported and IBNR claims to final settlement.
Reserves are subject to change due to a number of variables that affect the ultimate cost of claims, such as exchange rates, changes in the legal
environment and results of litigation as well as effects closely related to (super-imposed-) inflation that may adversely affect costs of repairs
and medical costs. The Allianz Group's reserves for asbestos and environmental and other latent claims are particularly subject to such varia-
bles.
Established loss reserves estimates are periodically adjusted in the ordinary course of settlement, using the most current information available
to management, and any adjustments resulting from changes in reserve estimates are reflected in current results of operations.
To the extent that the Allianz Group's actual claims experience is less favorable than the underlying assumptions used in setting the prices for
products and establishing reserves, the Allianz Group may be required to increase its reserves, which may materially adversely affect its results
of operations.
On a quarterly basis, Allianz Group monitors reserve levels, movements and trends. This monitoring is conducted on the basis of quarterly data
submitted by the subsidiaries as well as through frequent dialogue with local actuaries. However, ultimate losses may materially exceed the
established reserves and have a material adverse effect on the Allianz Group's results of operations.
Allianz Group's Property-Casualty insurance covers to a large extent losses from major unpredictable events like natural catastrophes (e.g.
hurricanes, earthquakes, floods) and man-made events (e.g. fires, industrial explosions) but also acts of terror. The likelihood of such events
can change due to natural climate cycles, changes in the portfolios, but also through a changing market or geopolitical environment. Conse-
quently, geopolitical tensions may increase the risk of terror losses significantly in some regions. Also increasing urbanization and increasing
concentration of industrial facilities in natural catastrophe prone regions has increased losses over the past years, a trend that is expected to
continue. In addition, increasing digitalization introduces new risks in regard to Cybercrime, i.e. manipulation of software or loss of sensitive
data. However, the incidence and severity of all these catastrophes in any given period are inherently unpredictable. All risk models are subject
to uncertainty arising from both scientific and management assumptions as well as underlying data.
The Allianz Group monitors its overall exposure to catastrophes and other unpredictable events in each geographic region and each of the
Allianz Group's subsidiaries within the Allianz Group's limit framework. In addition, local entities have implemented their own underwriting
limits related to insurance coverage for losses from catastrophic events. However, a series of unlikely catastrophes in a year may result in unu-
sually high levels of losses with a material adverse effect on the Allianz Group's financial position or results of operations.
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Furthermore, the occurrence of extreme large scale natural catastrophes, pandemics and man-made disasters (e.g. terror events) can have a
negative impact on local or even global economy in general, and capital markets in particular, and thus also on the Allianz Group's financial
position and results of operations.
We consider this risk to be medium.
UNDERWRITING RISK RELATED TO LIFE-HEALTH BUSINESS
Underwriting risks in our Life/Health operations (biometric risks) include mortality, disability, morbidity, and longevity risks.
The assumptions the Allianz Group makes in assessing its Life/Health insurance reserves may differ from what the Allianz Group may experi-
ence in the future. The Allianz Group derives its Life/Health insurance reserves using "best estimate" actuarial practices and assumptions. These
assumptions include the assessment of the long-term development of interest rates, investment returns, the allocation of investments between
equity, fixed-income and other categories, policyholder bonus rates (some of which are guaranteed), mortality and morbidity rates, policyholder
lapses and future expense levels. The Allianz Group monitors its actual experience of these assumptions, and to the extent that it considers that
this experience will continue in the longer term it refines its long-term assumptions. Similarly, estimates of the Allianz Group's own pension
obligations necessarily depend on assumptions concerning future actuarial, demographic, macroeconomic and financial markets developments.
Changes in any such assumptions may lead to changes in the estimates of Life/Health insurance reserves or pension obligations.
The Allianz Group companies have a significant portfolio of contracts with guaranteed investment returns, including endowment and annuity
products for the German market as well as certain guaranteed contracts in other markets. The amounts payable by the Allianz Group companies
at maturity of an endowment policy in Germany and in certain other markets include a "guaranteed benefit", an amount that, in practice, is
equal to a legally mandated minimum rate of return on actuarial reserves. If interest rates further decline or remain at historically low levels
for a long period, the Allianz Group could be required to provide additional funds to the Allianz Group's Life/Health subsidiaries to support
their obligations in respect of products with higher guaranteed returns or their pension obligations, or increase reserves in respect of such
products, which could in turn have a material adverse effect on the Allianz Group's results of operations.
In the United States, in particular in the variable and fixed-indexed annuity products, and to a lesser extent in Europe and Asia, the Allianz Group
has a portfolio of contracts where policyholder crediting is contractually tied to equity market performance. The hedging arrangements (if any)
may not cover the returns due to policyholders, which could in turn have a material adverse effect on the Allianz Group's results of operations.
We consider this risk to be low.
IV. BUSINESS RISKS
Business risks include cost risks and policyholder behavior risks, and are mostly driven by the Life/Health business and to a lesser extent by
the Property-Casualty business. Cost risks are associated with the risk that expenses incurred in administering policies are higher than expected
or that new business volume decreases to a level that does not allow Allianz to absorb its fixed costs. Policyholder behavior risks are risks
related to the unpredictable, adverse behavior of policyholders in exercising their contractual options, including for example the early termina-
tion of contracts, surrenders, partial withdrawals, renewals, and annuity take-up options.
ALLIANZ GROUP IS EXPOSED TO BUSINESS RISKS WHICH INCLUDE COST RISKS AND POLICYHOLDER BEHAVIOR
RISKS.
Allianz Group is exposed to business risks attributable primarily to the Life/Health business segment. Business risk is measured relative to
baseline plans.
We consider this risk to be low.
GERMAN LIFE INSURANCE UNDERTAKINGS OF THE ALLIANZ GROUP MAY HAVE INCREASED OBLIGATIONS
UNDER THE GERMAN POLICY HOLDER PROTECTION SCHEME FOR LIFE INSURERS (PROTEKTOR).
German life insurance undertakings of the Allianz Group are members of the German policy holder protection scheme for life insurers
("Protektor"). In case of an adverse development of the situation of German life insurance companies outside Allianz Group, German life insur-
ance undertakings of the Allianz Group may be required, in line with German regulation and the contract between these undertakings and
Protektor, to make substantial contributions to Protektor that are considerably higher than at the current moment.
We consider this risk to be low.
IF THE ALLIANZ GROUP'S ASSET MANAGEMENT BUSINESS UNDERPERFORMS, IT MAY EXPERIENCE A DECLINE IN
ASSETS UNDER MANAGEMENT, RELATED FEE INCOME AND A REDUCTION OF PERFORMANCE FEES.
While the assets under management in the Allianz Group's Asset Management segment include a significant amount of funds related to the
Allianz Group's insurance operations, third-party assets under management ("AUM") represent the majority.
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