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Interim Report Third Quarter 2014

Interim Report Third Quarter and First Nine Months of 2014    Allianz Group38 the valuation of our pension benefit obligation following a decrease in discount rates was offset by higher unrealized gains on equities andfavorableforeigncurrencytranslationadjustments.Therequired funds increased by € 1.4 bn to € 27.0 bn, mainly due to higher aggre- gate policy reserves in Life/Health. As a result, our eligible capital surpassed the minimum legally stipulated level by € 22.8 bn. Total assets and total liabilities As of 30 September 2014, total assets amounted to € 784.5 bn and total liabilities were € 723.4 bn. Compared to year-end 2013, total assets and total liabilities increased by € 73.4 bn and € 65.2 bn, respectively. The following section mainly focuses on our financial invest- ments in debt instruments, equities, real estate and cash since these reflect the major developments in our asset base. Structure of investments – portfolio overview The following portfolio overview covers the ­Allianz Group assets held for investment, which are mainly driven by our insurance businesses.1 Asset allocation Investment portfolio as of 30 September 2014: € 597.3 BN [as of 31 December 2013: € 536.8 BN] in % Cash/Other 2 [2] Debt instruments 90 [90] Equities 7 [7] Real estate 2 [2] Compared to year-end 2013, our investment portfolio increased by € 60.4 bn to € 597.3 bn as of 30 September 2014 with no relative change in asset allocation. Our gross exposure to equities increased by € 4.1 bn to € 39.7 bn due to new investments. This was also supported by positive develop- ments in some major equity markets over the first nine months of 2014. Although this exposure still accounted for 7 % of our investment 1 Effective from the Annual Report 2013, we changed the presentation of our investment portfolio in our Group Management Report. This also applies to our Interim Group Management Reports. Now, we also include investments of banking and asset management, which were excluded in the former presentation. We believe this will simplify a comparison with the figures presented in the notes to the condensed consolidated interim financial statements. portfolio, given the upswing in shareholders’ equity our equity gear- ing2 decreased one percentage point to 24 %. Our exposure to real estate increased by € 0.5 bn to € 11.2 bn due to new investments. Our cash and other investments was up by € 0.6 bn to € 10.4 bn. Our diversified exposure to debt instruments grew by € 55.3 bn to € 536.0 bn, but still represented 90 % of our investment portfolio. The increase in absolute terms was driven by new investments and higher fair values as a result of lower interest rates. fixed income portfolio Total fixed income portfolio as of 30 September 2014: € 536.0 bn [as of 31 December 2013: € 480.7 bn] in % Banks 6 [7] Government bonds 38 [37] Covered bonds 20 [21] Other corporate bonds 26 [24] Other 10 [10] Theallocationofourwell-diversifiedfixedincomeportfolioremained rather stable, with modest increases in the share of corporate bonds and government bonds accompanied by minor reductions in the por- tion of covered bonds and banks. About 95 % of this portfolio of debt instruments was invested in investment-grade bonds and loans.3 As of 30 September 2014, our government bond exposure totaled to € 202.3 bn, an increase of € 22.7 bn compared to year-end. The allo- cation of our government and government-related bond exposure remained rather stable, with a marginal decrease in the share of Ger- man government bonds reflecting the decision not to reinvest in those bonds at the low yield levels. The overall increase of the govern- ment bond exposure was primarily driven by positive market effects. Our sovereign debt exposure in Italy and Spain equaled 5.8 % and 1.0 % of our fixed income portfolio, reflecting new investments in Spain during the first nine months of 2014. The corresponding unrealized gains (gross) amounted to € 4,801 mn in Italy and € 735 mn in Spain. Our government bond exposure in Portugal remained limited with unrealized gains of a minor amount. 2 Equity gearing is defined as the ratio of our equity holdings allocated to the shareholder after policyholder participation and hedges to shareholders’ equity plus off-balance sheet reserves less goodwill. 3 Excluding self-originated German private retail mortgage loans. For 2 %, no ratings were available.

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