# Non-financial Statement > Based on European Non-Financial Reporting Directive and non-binding guidelines for non-financial reporting. - Interactive version: https://allianzgroup.relayto.com/e/non-financial-statement-9xqu35wjac7tn - Format: PDF document, 208 pages - Published by: [Allianz Group](https://allianzgroup.relayto.com/) - Last updated: 2023-02-02 - More from this site: https://allianzgroup.relayto.com/llms.txt ## Page 2 To go directly to any chapter, simply click All references to chapters, notes, internet pages, etc. on the headline or the page number. within this report are also linked. CONTENT A _ To Our Investors Pages 1 – 14 2 Letter to the Investors 4 Supervisory Board Report 12 Mandates of the Members of the Supervisory Board 13 Mandates of the Members of the Board of Management B _ Corporate Governance Pages 15 – 52 16 Statement on Corporate Management (part of the Group Management Report) 25 Takeover-Related Statements and Explanations (part of the Group Management Report) 27 Remuneration Report C _ Group Management Report Pages 53 – 116 54 Business Operations 57 Non-Financial Statement 75 Business Environment 77 Executive Summary of 2021 Results 78 Property-Casualty Insurance Operations 80 Life/Health Insurance Operations 83 Asset Management 85 Corporate and Other 86 Outlook 2022 90 Balance Sheet Review 92 Liquidity and Funding Resources 95 Reconciliations 97 Risk and Opportunity Report 116 Integrated Risk and Control System for Financial Reporting D _ Consolidated Financial Statements Pages 117 – 194 118 Consolidated Balance Sheet 119 Consolidated Income Statement 120 Consolidated Statement of Comprehensive Income 121 Consolidated Statement of Changes in Equity 122 Consolidated Statement of Cash Flows NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 125 General Information 145 Notes to the Consolidated Balance Sheet 161 Notes to the Consolidated Income Statement 166 Other Information E _ Further Information Pages 195 – 204 196 Responsibility Statement 197 Independent Auditor’s Report 204 Auditor’s Report ## Page 3 TO OUR INVESTORS A Annual Report 2021 − Allianz Group 1 ## Page 4 A _ To our Investors OLIVER BÄTE o Chief Executive Officer 2021 was the second year in which the world had to deal with the ongoing COVID-19 pandemic and its profound economic implications, such as low, even negative “risk-free” interest rates, exuberant equity markets, and record levels of new public debt – to name just a few. 2021 was also another year in which we witnessed the rising impact of climate change. In Germany alone, we recorded the biggest flooding losses for the insurance industry in 100 years! Against this background, your company doubled down on its efforts to grow sustainable value for our customers, our employees and you, our shareholders. And hence, most of our financial performance indicators improved strongly. Our revenues grew by almost 6 % to € 149 bn and our operating profit increased by 25 % to € 13.4 bn. These results were driven by a strong performance across all our businesses. In our Property-Casualty business, we generated solid revenues of € 62.3 bn and an operating profit of € 5.7 bn. Moreover, the combined ratio in the business improved by 2.5 percentage points to 93.8 %, despite the significant natural catastrophe losses. In Life/Health, we grew our operating profit by 15 % to € 5 bn. The value of new business surged by a strong 45 % to € 2.5 bn, showing that we excel at generating returns for customers and shareholders at the same time. We have thus been able to free ourselves from the negative effects of the ultra-low interest rate policy in the eurozone. In Asset Management, we generated an operating profit of € 3.5 bn and our cost-income ratio improved by 2.7 percentage points to 58.4 %. Moreover, total assets under management reached an all-time high of € 2.6 tn by the end of 2021. Third- party inflows at both PIMCO and Allianz Global Investors were very strong at € 110.1 bn, and were driven by all regions and all asset classes. But it wasn’t just operating performance that grew strongly, the health of our institution also once again improved. The loyalty of our customers is reflected in Allianz’s Net Promoter Score (NPSTM), which measures the likelihood of customers recommending Allianz to others. This score has significantly and steadily improved over the last five years. The share of segments outperforming their local market in NPSTM jumped to 84 % – an all-time high. We were once again named the No. 1 global insurance brand by Interbrand. This year, Brand Finance also ranked us as the top globally operating insurance brand and the 30th most valuable brand in the world, giving us a brand strength rating of “extremely strong”. Going forward, our focus must now be to achieve Loyalty Leadership across our franchise and to harness the corresponding economic benefits systematically. Market-leading customer satisfaction is at the heart of sustainable business success and hence our top-most priority. 2 Annual Report 2021 − Allianz Group ## Page 5 A _ To our Investors The strong commitment towards our employees is also paying off. The results of our latest Allianz employee survey show that we have been able to maintain the trust and commitment of our workforce. Our Inclusive Meritocracy Index remained at an all-time high of 78 %, indicating, that at Allianz, we are fostering a culture in which performance and people play an equally important role. Allianz’s results also defy the market trend in 2021 of a strong decline in employee engagement scores. Our compelling people scores also reflect our strong engagement in diversity and inclusion, a key to unlocking organizational performance. Women represent almost a third of our Board of Management, and about 30 % of our total operating profit is led by female CEOs. In 2021, Allianz was featured in the Bloomberg Gender Equality Index for the sixth year in a row. Moreover, we ranked fifth in the respected Refinitiv Diversity & Inclusion Index in 2021, so we are the only German company in the top 20 and the only insurer in the top 100. Beyond the strong trajectory in employee motivation, diversity and inclusion, a strong leadership position on other critical ESG topics, especially climate change, has been a top priority for us. Allianz plays a central role in key alliances and public- private partnerships, such as the United Nations-led Net-Zero Asset Owner Alliance and the World Economic Forum’s Partnership for New Work Standards. Notably, we reinforced our leadership in sustainability, for example by achieving the highest score in our industry in the Dow Jones Sustainability Index for 2021. Furthermore, we have created a dedicated Group Center for ESG, which is responsible for embedding this priority into our core businesses to maximize real-world impact. Unfortunately, all these successes are not properly reflected in our share price performance in 2021, which yielded a total shareholder return of 8.1 %. Our 2021 results were impacted by the various proceedings related to the Structured Alpha funds in the United States, which had to be closed following losses suffered in the wake of market disruptions in early 2020 at the start of the COVID-19 pandemic. Allianz decided to book a provision in the financial statements 2021 in anticipation of settlements with major investors in the Structured Alpha Funds, and in light of current discussions with U.S. governmental authorities. This provision reduces the 2021 Group net income by € 2.8 bn. The settlements address a substantial majority of our Structured Alpha civil litigation exposure and offer fair compensation to investors for their losses. We look forward to fully resolving this matter for the benefit of all parties, and we are determined to learn all that we can from this incident to be smarter, stronger and better as a company. The effort that we have invested over the past several years in streamlining our products, in strengthening our risk awareness culture and in verticalizing our processes will continue with vigor and consequence – not just at Allianz Global Investors U.S., but also across the entire Allianz Group. Nevertheless, Allianz’ solidity and value creation power remains strong and keeps growing, as evidenced in our comfortable Solvency II capitalization and our strong Standard & Poor’s AA rating. We have therefore further raised our capital management ambitions through an improved dividend policy, and we are proposing to raise our dividend for 2021 to € 10.80 per share, an increase of 12.5 %. For 2022 and beyond, we have delineated a clear strategy at our Capital Markets Day on 3 December 2021. At the core, we believe that we can and will leverage the unique scale of Allianz into even higher value creation for our stakeholders, especially you, our shareholders. In a world that looks increasingly fragile and challenged to deal with existential threats to our health, environmental, social and economic future, we at Allianz believe that living up to our purpose “We secure your future” is the only way to reinforce the trust that we need to succeed in a sustainable manner. On behalf of our leadership team and all Allianz employees, we thank you for your trust and ongoing support. Annual Report 2021 − Allianz Group 3 ## Page 6 A _ To Our Investors SUPERVISORY BOARD REPORT Ladies and Gentlemen, During the financial year 2021, the Supervisory Board fulfilled all its duties and obligations as laid out in the company statutes and applicable law. It monitored the activities of the company’s Board of Management, dealt with the succession planning for the Board of Management and advised it on business management issues. It also continued to regularly address the situation and impact of the ongoing COVID-19 pandemic in the financial year 2021. In the financial year 2021, the Supervisory Board held six regular meetings as well as three extraordinary meetings. The regular meetings took place in February, March, May, June, September, and December, and the extraordinary meetings took place in August, September and December. The Supervisory Board also adopted a written resolution in October. In all of the regular meetings in the financial year, the Board of Management reported on Group revenues and results as well as business developments in the individual business segments. The Board of Management informed the Supervisory Board on the course of business as well as on the development of Allianz SE and the Allianz Group, including deviations in actual business developments from the planning. In this context, the adequacy of capitalization, the solvency ratio, and the respective risk and stress scenarios were discussed. The annual Allianz SE and the Group’s consolidated financial statements – including the respective auditor‘s reports, the half-yearly as well as the quarterly reports – were reviewed in detail by the Supervisory Board after preparation by the Audit Committee. Other focal points of reporting, in addition to the situation and impact of the COVID-19 pandemic on overall economic conditions as well as on the insurance industry and Allianz employees, were strategic topics including risk strategy and the Board of Management’s planning for both the fiscal year 2022 and the three-year period from 2022 to 2024. Another focus was the ongoing discussion of the civil and administrative proceedings in connection with the AllianzGI U.S. Structured Alpha Funds, especially in the second half of 2021. Cyber risk security and the impact of rising inflation rates on the insurance business were also regularly discussed. Furthermore, the Supervisory Board dealt in depth with personnel matters relating to the Board of Management, as well as succession planning for the Board of Management and Supervisory Board, especially in the context of the upcoming elections to the Supervisory Board in 2022. The Supervisory Board and various committees also discussed appropriate consideration of non-financial targets in the target-setting process for the remuneration of the Board of Management. The Supervisory Board received regular, timely, and comprehensive reports from the Board of Management. The Board of Management’s verbal reports at the meetings were accompanied by written documents, which were sent to each member of the Supervisory Board in time for the relevant meeting. The Board of Management also informed the Supervisory Board in writing about important events that occurred between meetings. The chairmen of the Supervisory and Management Boards had regular discussions about major developments and decisions. The Chairman of the Supervisory Board also had individual discussions with each member of the Board of Management about their respective half-year as well as full-year performance. Also in the financial year 2021, individual and group training sessions were held on the basis of an agreed development plan for continued training of the members of the Supervisory Board, for example on significant developments in information technology, especially cloud services, artificial intelligence and data analytics, as well as on Solvency II and the required reporting obligations relating to non-financial information with regard to environmental, social responsibility and corporate governance (ESG) issues. 4 Annual Report 2021 − Allianz Group ## Page 7 A _ To Our Investors In the meeting of 18 February 2021, the Supervisory Board dealt comprehensively with the provisional financial figures for the financial year 2020 and the Board of Management’s dividend proposal. The appointed audit firm, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC), Munich, reported in detail on the preliminary results of their audit. In the further course of the meeting, the Supervisory Board also discussed the target achievement of each individual member of the Board of Management and, on this basis, set their variable remuneration for the financial year 2020, subject to the approval of the annual financial statements. As part of this performance assessment, the fitness and propriety of the members of the Board of Management were confirmed. The Supervisory Board also set additional, individual sustainability targets to be achieved by the members of the Board of Management. Next, the Supervisory Board reviewed the remuneration system for the Board of Management and Supervisory Board to be submitted to the Annual General Meeting for approval, and received reports on data protection issues. In the meeting of 4 March 2021, the Supervisory Board discussed and approved the audited annual Allianz SE and consolidated Group financial statements, including market value balance sheets, as well as the Board of Management’s recommendation for the appropriation of earnings for the financial year 2020. The auditors confirmed that there were no discrepancies compared to their February report and issued an auditor’s report without any reservations for the individual and consolidated financial statements. The Supervisory Board also reviewed and approved the non-financial report for both Allianz SE and the Allianz Group, taking into account the report of the external auditor. In addition, the Board of Management submitted its report on risk developments in the financial year 2020. The annual reports from Compliance and Internal Audit were also presented at the meeting. Next, the Supervisory Board reviewed the agenda and proposals for resolution for Allianz SE’s 2021 Annual General Meeting (AGM) and approved the stipulation of the Board of Management for the AGM to be held virtually. Furthermore, at the recommendation of the Audit Committee, the Supervisory Board appointed PwC as auditor for the 2021 individual and consolidated financial statements, the auditor’s review of the 2021 half-yearly financial report, and the audit of the non-financial report. The Supervisory Board further received reports on the sales intensification (push-to-pull) program and on the situation in the industrial insurance business. Finally, the succession planning for the Board of Management was discussed. On 5 May 2021, just before the AGM, the Board of Management briefed the Supervisory Board on business performance in the first quarter of 2021 as well as on the current situation of both the Allianz Group and Allianz SE, in particular with regard to the wider impact of the COVID-19 pandemic and the acquisition of the insurance and asset management business from Aviva in Poland and Lithuania. The Supervisory Board also dealt with the objectives for its composition and matters relating to the Board of Management. At the meeting on 24 June 2021, the Board of Management first reported in detail on the course of business in the financial year 2021 to date and provided an outlook on the expected results for the second quarter and the half- year results. In addition, the Board of Management reported on legal conditions for dividend distributions and the Board’s actions to protect employees in the COVID-19 pandemic, in particular Allianz’s efforts with regard to vaccinations for employees and family members. The Supervisory Board also dealt comprehensively with Allianz Direct as an insurer with uniform market presence, product range and processes, and a common platform. Other topics covered in the report were an overview of Allianz France’s business activities, a status report on cyber risks and cybersecurity at Allianz and a comparative report on key competitors. The Board of Management then reported on the implementation of its 2018 strategy and presented the first part of the strategy presentation for Strategy 2022+ (trends and implications) for discussion. The Supervisory Board also reviewed the objectives for its composition and added the topics of cybersecurity and sustainability to the skills profile. The Supervisory Board further discussed in detail the preparation for the Supervisory Board elections in 2022 and the general succession planning for the Supervisory Board. At an extraordinary meeting on 1 August 2021, the Board of Management informed the Supervisory Board in detail about new developments with respect to administrative investigations in the USA and the ongoing civil proceedings in connection with the Structured Alpha Funds of AllianzGI U.S. LLC. At a further extraordinary meeting on 29 September 2021, the Supervisory Board discussed in detail the decisions on Board of Management personnel scheduled for the next ordinary meeting and heard a report from Ms. Boshnakova on the status of the transformation at Allianz Partners. Annual Report 2021 − Allianz Group 5 ## Page 8 A _ To Our Investors At the meeting on 30 September 2021, the Board of Management first reported on the course of business in the financial year 2021 to date and the impact of the COVID-19 pandemic on employees. The meeting focused on the continuation of the presentation on the strategic direction of the Allianz Group and Allianz SE (solo) and on the preparation for Capital Markets Day scheduled for December 2021. In particular, the objectives for the period 2022 – 2024 were discussed in detail. Another focus was the handling of the AllianzGI U.S. Structured Alpha matter, in respect of which the Board of Management gave a detailed progress report on the civil and administrative proceedings and the Supervisory Board had the Board of Management report in detail on the measures it was taking, and the appropriateness of such measures. The Supervisory Board also discussed the IT strategy as well as the self-evaluation of the Supervisory Board required by supervisory law and the development plan drawn up on this basis, as well as the adjustment of its rules of procedure and the objectives for its composition to reflect changed requirements due to the Financial Market Integrity Strengthening Act (FISG). Based on the discussion at the extraordinary meeting on 29 September 2021, the Supervisory Board appointed Dr. Andreas Wimmer to the Board of Management of Allianz SE with effect from 1 October 2021 as the successor for Ms. Jacqueline Hunt, who resigned from office as of 30 September 2021. The Supervisory Board further appointed Ms. Sirma Boshnakova as an additional member of the Board of Management of Allianz SE with effect from 1 January 2022. The Supervisory Board then met without the Board of Management and discussed the succession planning for the Supervisory Board, the strategy presentation given by the Board of Management at the meeting and the AllianzGI Structured Alpha matter. By way of a written resolution on 26 October 2021, for the purposes of clarification, the Supervisory Board assigned the Audit Committee the task of dealing with – and regularly discussing with the Board of Management – the progress of the civil and administrative proceedings concerning the AllianzGI Structured Alpha Funds as well as the measures taken by the Board of Management. It also established a working group of the Audit Committee to advise the Audit Committee and the Supervisory Board on this matter, and engaged an external law firm to advise the Supervisory Board on matters in connection with AllianzGI Structured Alpha. At an extraordinary meeting on 2 December 2021, the Supervisory Board discussed in detail its deliberations on the adjustment of the dividend policy and was told about a potentially imminent reinsurance transaction of the life insurance company in the USA. At the meeting of 16 December 2021, the Board of Management first provided information about the third- quarter results, the further course of business, and the situation of the Allianz Group. Furthermore, the Supervisory Board discussed the planning for the financial year 2022 and the three-year plan for 2022 to 2024, including the strategy for the China business, and also addressed the link between the risk strategy and the business strategy. Also at that meeting, the Supervisory Board discussed in detail the progress of the different proceedings in connection with the AllianzGI Structured Alpha matter. In addition, the Board of Management gave its regular status report on the issue of cyber risk security. The Supervisory Board further addressed the Declaration of Conformity with the German Corporate Governance Code as well as the separate audit of the Remuneration Report, which is to be submitted to the Annual General Meeting for approval for the first time in the financial year 2022. The Supervisory Board also talked to the Board of Management about the possible impact of the current pandemic situation on the preparation and arrangements for the Annual General Meeting in 2022. The Supervisory Board discussed in depth the Board of Management remuneration system and the appropriateness of the Board of Management remuneration. The system of the Supervisory Board remuneration was also reviewed for appropriateness on the basis of an external benchmark analysis. Furthermore, the Supervisory Board set targets for the variable remuneration of the members of the Board of Management for 2022 and debated succession planning for the Board of Management and the allocation of responsibilities within the Board of Management. Finally, the meeting addressed the results of the self-evaluation of the Supervisory Board’s activities (so-called efficiency review), which was conducted in 2021 with the help of an external consultant. The Supervisory Board then met again without the Board of Management and discussed the AllianzGI Structured Alpha matter, the efficiency review and the planning of the Supervisory Board’s work in the financial year 2022 as well as the succession planning for the Board of Management and the Supervisory Board. 6 Annual Report 2021 − Allianz Group ## Page 9 A _ To Our Investors On 16 December 2021, the Board of Management and the Supervisory Board issued the Declaration of Conformity in accordance with § 161 of the German Stock Corporation Act (“Aktiengesetz”). The Declaration was posted on the company website, where it is available to shareholders at all times. Since the submission of the last Declaration of Conformity on 10 December 2020, Allianz SE has complied with all recommendations set out by the German Corporate Governance Code in the version of 16 December 2019, and will continue to comply with them in the future. Further explanations on corporate governance in the Allianz Group can be found in the Statement on Corporate Management. More details on corporate governance are also provided on the Allianz website at https://www.allianz.com/en/about-us/corporate-management/corporate-governance.html. The Supervisory Board has formed various committees in order to perform its duties efficiently. The committees prepare the consultations in plenary sessions as well as the adoption of resolutions. They can also adopt their own resolutions. The composition of the committees can be found in the Statement on Corporate Management. The Standing Committee held six meetings in 2021 and adopted two written resolutions. This committee dealt with corporate governance issues as well as preparations for the establishment of a Sustainability Committee of the Supervisory Board, remuneration of the members of the Supervisory Board, the preparations for the AGM, the Supervisory Board self-evaluation as required by supervisory law and the associated development plan, and the efficiency review of the Supervisory Board, which was conducted in 2021 with the assistance of the external consultant Spencer Stuart. Collective and, if necessary, individual training sessions are continuously carried out as part of the implementation of the development plan. In addition, the Standing Committee has passed resolutions approving the granting of loans to senior executives. At an extraordinary meeting in March, the committee addressed in detail the planned acquisition of business activities from Aviva in Poland and Lithuania, which required the approval of the Standing Committee due to the transaction value. In May and August, the Standing Committee also gave its approval by written resolution to the exclusion of subscription rights in connection with the issue of certain financial instruments (Perpetual Fixed Rate Resettable Restricted Tier 1 bonds). The Board of Management only made use of the approval granted in August. The Personnel Committee held five meetings in 2021 and adopted five written resolutions. At the meetings, the committee discussed in detail the succession planning in the Board of Management, mainly with regard to board appointments due to expire at the end of the financial year 2022. The committee also addressed the departure of Ms. Hunt from the Board of Management and preparations for Dr. Wimmer to be appointed as her successor, as well as the appointment of Ms. Boshnakova as an additional board member with effect from 1 January 2022. Other key topics included the preparatory review of the Board of Management remuneration system for presentation at the AGM, the annual review of the appropriateness of the Board of Management remuneration, target achievement of the Board of Management members for the financial year 2020 and the definition of the targets for the 2022 variable remuneration. The committee also looked at various mandate matters of individual board members and at further succession planning for the Board of Management. The Audit Committee held five meetings in 2021. In the presence of the auditors, the committee discussed both Allianz SE’s annual financial statements and the Allianz Group’s consolidated financial statements, the management reports, the respective solvency statements and the auditor’s reports, as well as the half-yearly financial report. These reviews revealed no reasons for objection. The Board of Management reported on the quarterly results and discussed them in detail with the Audit Committee together with the results of the auditor’s review. One focus of the Audit Committee’s activities was the regular review of the ongoing impact of the COVID-19 pandemic and the effect of natural disasters and weather events, which occurred on a large scale in the last financial year. Furthermore, the committee prepared the engagement of the external auditor and defined key audit areas for the financial year 2021, and conducted an assessment of the quality of the audit. The committee also discussed the awarding of non-audit services to the auditor and approved an updated positive list of pre-approved audit and non-audit services. In two written resolutions, the Audit Committee approved the engagement of the auditor for non-audit services, each of which exceeds a value limit set by the Committee. Annual Report 2021 − Allianz Group 7 ## Page 10 A _ To Our Investors In addition, the committee dealt extensively with the compliance system and the internal auditing system, as well as the accounting process and internal financial reporting control mechanisms. At several meetings, the Audit Committee discussed with the Board of Management the effects of the changeover to the new accounting standards IFRS 9 & 17 with its respective effects on Allianz’s accounting from financial year 2023 onwards and the status of the implementation measures for a proper transition to the new standards. At all regular meetings, reports on legal and compliance issues in the Group, operational risks and the work of the Internal Audit department were presented and discussed in detail. Furthermore, the head of the actuarial function (Group Actuarial, Planning & Controlling) presented his annual report. In addition, the Audit Committee discussed the adjustments resulting from the Financial Market Integrity Strengthening Act (FISG), and the internal audit plan for 2022. The Audit Committee held in-depth discussions with the Board of Management on the progress of the civil as well as the administrative proceedings of the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice in the matter of the Structured Alpha Funds of AllianzGI U.S. A separate working group of the Audit Committee was additionally set up for this purpose; this group held four meetings in the reporting year, which were also attended by the lawyers engaged by the Supervisory Board. The Risk Committee held two meetings in 2021. At both meetings, the committee discussed the current risk situation of the Allianz Group and Allianz SE with the Board of Management. In the March meeting, the risk report and other risk-related statements in the annual Allianz SE and consolidated financial statements as well as management and group management reports were reviewed with the auditor and approved. The appropriateness of the early risk recognition system at Allianz SE and Allianz Group and the result of further risk assessments by the auditor were also discussed. The Audit Committee was recommended to include the Risk Report, as presented and discussed, in the Annual Report. At both meetings, the Risk Committee examined the risk strategy in detail, including risk appetite, capital management and the external rating as well as the effectiveness of the risk management system for the Allianz Group and Allianz SE. The committee further looked in detail at the report on Allianz’s own risk and solvency assessment and the changes to the internal Solvency II model, and held discussions with the Board of Management, in particular about transactions with portfolios in the life insurance sector to improve the return on equity and the solvency position. The Risk Committee also focused on the topic of inflation risk and, in this context, Allianz’s exposure in the event of rising inflation rates and the consideration of inflation trends in pricing, as well as on the developments relating to “silent cyber”, i.e., the unintended, implied coverage of cyber risks, especially in the area of commercial insurance. In addition, the consequences of the COVID-19 pandemic were again addressed with regard to the business development and risk situation, the management of reputational risks and accumulation risks as well as the management of non- financial risks. The Risk Committee also dealt extensively with the impact of the AllianzGI Structured Alpha matter on the risk situation at Allianz. In addition, special regulatory topics, such as the EIOPA review of Solvency II, as well as business policy topics were also on the agenda. The Technology Committee held two meetings in the financial year 2021, at which it discussed in detail the reorganization of information technology in the Allianz Group, the IT strategy and, in particular, the strategic IT partners in cloud and IT applications, and in the comprehensive IT transformation. The focus was again on the implementation of the Business Master Platform (BMP) in the context of the Allianz Customer Model (ACM). Another focus of the committee’s activities was dealing with the ever-growing cyber risks and the resulting increase in IT security requirements, as well as Allianz’s use of disruptive technology innovations, e.g., the Internet of Things and Digital Twins. 8 Annual Report 2021 − Allianz Group ## Page 11 A _ To Our Investors The Nomination Committee held one meeting in 2021, at which it reviewed the objectives for the composition of the Supervisory Board and proposed changes to the Supervisory Board in order to adapt to new legal requirements and to expand the skills profile. In particular, it was proposed to amend adequate expertise with respect to technology to explicitly include adequate expertise in cybersecurity as well as to add adequate knowledge in the area of sustainability. The Supervisory Board implemented these proposals in its meeting on 24 June 2021. The committee also reviewed the actual composition of the Supervisory Board. Furthermore, detailed preparations were made for the Supervisory Board elections at the AGM 2022, taking into account the objectives for the composition. The Nomination Committee discussed the general succession planning for the Supervisory Board and proposed the formation of a so-called “Staggered Board”, which has been strongly requested by investors. Beginning with the Annual General Meeting in 2022, the candidates standing for election as shareholder representatives will no longer be elected on the principle of block election with identical terms of office. In the case of new elections for retiring Supervisory Board members, new members shall then each be elected for the term of office stipulated in the Articles of Association, in order to also establish the Staggered Board for the following years. Furthermore, the Nomination Committee has intensively discussed potential candidates to succeed the members of the Supervisory Board who will retire in the coming years. For each retiring member of the Supervisory Board, outstandingly suitable candidates could be identified, each of whom has already declared their willingness to stand for election to the Supervisory Board at the Annual General Meetings in 2024 and 2025. Together with the Board of Management, the Nomination Committee has also agreed concrete measures to prepare the candidates at an early stage for the duties of a member of the Supervisory Board of Allianz SE as well as for the complex business of a globally operating and regulated financial services company. These measures include, for example, the preparation of candidates in the context of a mandate as a member of the supervisory board of a European subsidiary of Allianz SE or other appropriate measures, as well as the early identification of training measures based on the skill profile of the Supervisory Board. In addition, the Nomination Committee addressed the appointment of a further substitute candidate in the event that a Supervisory Board member had to be replaced at short notice. The Sustainability Committee, which was newly established by the Supervisory Board in February 2021, held two meetings in the 2021 financial year. At its constitutive meeting, the committee first dealt with structuring its area of responsibility, which covers the topics of environment, social responsibility and corporate governance, as well as data ethics, the committee’s mode of operation and its interfaces to other committees of the Supervisory Board, in particular the Personnel Committee and the Risk Committee. Key topics in the two meetings included sustainability reporting and the assessment of the Allianz Group by external providers of sustainability indices as well as the discussion of measures to improve the assessment, sustainability ambitions for the future and the implications arising from sustainability regulation. In addition, the committee dealt in detail with the strategy in the area of social responsibility and prepared the setting of sustainability targets for the Board of Management remuneration as well as the corresponding target achievement assessment for the financial year 2021 by the Personnel Committee and the Supervisory Board. The Supervisory Board was informed regularly and comprehensively of the committees’ work. Annual Report 2021 − Allianz Group 9 ## Page 12 A _ To Our Investors Overview of the member participation in Supervisory Board and committee meetings for the fiscal year 2021 Publication of details of members’ participation in meetings Presence % Presence % Michael Diekmann 5/5 100 PLENARY SESSIONS OF THE Jean-Claude Le Goaër 5/5 100 SUPERVISORY BOARD Michael Diekmann (Chairman) 9/9 100 Martina Grundler 5/5 100 Gabriele Burkhardt-Berg (Vice Chairwoman) 9/9 100 Jim Hagemann Snabe (Vice Chairman) 9/9 100 RISK COMMITTEE Sophie Boissard 9/9 100 Michael Diekmann (Chairman) 2/2 100 Christine Bosse 9/9 100 Christine Bosse 2/2 100 Dr. Friedrich Eichiner 9/9 100 Dr. Friedrich Eichiner 2/2 100 Jean-Claude Le Goaër 9/9 100 Godfrey Hayward 2/2 100 Martina Grundler 9/9 100 Frank Kirsch 2/2 100 Herbert Hainer 9/9 100 TECHNOLOGY COMMITTEE Godfrey Hayward 9/9 100 Jim Hagemann Snabe (Chairman) 2/2 100 Frank Kirsch 9/9 100 Gabriele Burkhardt-Berg 2/2 100 Jürgen Lawrenz 9/9 100 Michael Diekmann 2/2 100 STANDING COMMITTEE Dr. Friedrich Eichiner 2/2 100 Michael Diekmann (Chairman) 6/6 100 Jürgen Lawrenz 2/2 100 Jean-Claude Le Goaër 6/6 100 NOMINATION COMMITTEE Herbert Hainer 6/6 100 Michael Diekmann (Chairman) 1/1 100 Jürgen Lawrenz 6/6 100 Christine Bosse 1/1 100 Jim Hagemann Snabe 6/6 100 Jim Hagemann Snabe 1/1 100 PERSONNEL COMMITTEE SUSTAINABILITY COMMITTEE Michael Diekmann (Chairman) 5/5 100 Christine Bosse (Chairwoman) 2/2 100 Gabriele Burkhardt-Berg 5/5 100 Sophie Boissard 2/2 100 Herbert Hainer 5/5 100 Gabriele Burkhardt-Berg 2/2 100 Michael Diekmann 2/2 100 AUDIT COMMITTEE Frank Kirsch 2/2 100 Dr. Friedrich Eichiner (Chairman) 5/5 100 Sophie Boissard 5/5 100 Due to a special legal provision that is still applicable to insurance companies for the financial year 2021, the statutory auditor and the auditor for the review of the half-yearly financial report were appointed by the Supervisory Board of Allianz SE and not by the AGM. The Supervisory Board appointed PwC as statutory auditor for the annual Allianz SE and consolidated financial statements as well as for the review of the half-yearly financial report for the financial year 2021. PwC audited the financial statements of Allianz SE and the Allianz Group as well as the respective management reports. They issued an auditor’s report without any reservations. The management reports also each contain the respective non-financial statement. The consolidated financial statements were prepared on the basis of the International Financial Reporting Standards (IFRS) as adopted in the European Union. The annual financial statements of Allianz SE were prepared in accordance with German law and accounting standards. PwC performed a review of the half-yearly financial report. In addition, PwC was also mandated to perform an audit of the market value balance sheet according to Solvency II as of 31 December 2021 for Allianz SE and the Allianz Group. Furthermore, PwC was commissioned to conduct a review with respect to the content of the non-financial statement. 10 Annual Report 2021 − Allianz Group ## Page 13 A _ To Our Investors All Supervisory Board members received the documentation relating to the annual financial statements and the auditor’s reports from PwC on schedule. The preliminary financial statements and PwC’s preliminary audit results were discussed in the Audit Committee on 16 February 2022, as well as in the Supervisory Board’s plenary session on 17 February 2022. The finalized financial statements and PwC’s audit reports (dated 21 February 2022) were reviewed by the Audit Committee on 2 March 2022, and in the Supervisory Board plenary session on 3 March 2022. The auditors participated in the discussions and presented key results from their audit. Particular emphasis was placed on the key audit matters described in the auditor’s report and on the audit procedures performed as well as the treatment of the AllianzGI U.S. Structured Alpha matter. No material weaknesses in the internal financial reporting control process were discovered. There were no circumstances that might give cause for concern about the auditor’s independence. In addition, the market value balance sheets dated 31 December 2021 for both Allianz SE and the Allianz Group as well as the respective PwC reports were reviewed by the Audit Committee and the Supervisory Board. On the basis of its own reviews of the annual Allianz SE and consolidated financial statements, the management and group management reports, and the recommendation for the appropriation of earnings, the Supervisory Board has raised no objections and agreed with the results of the PwC audit. It has also approved the Allianz SE and consolidated financial statements prepared by the Board of Management. The financial statements have thus been formally adopted. The Supervisory Board agrees with the Board of Management’s proposal on the appropriation of earnings. The Supervisory Board would like to express its special thanks to all Allianz Group employees for their great personal commitment over the past fiscal year under the continuing difficult conditions caused by the pandemic. There were no changes in the composition of the Supervisory Board in the fiscal year 2021. Dr. Barbara Karuth-Zelle and Mr. Christopher Townsend were appointed as new members of the Board of Management of Allianz SE with effect from 1 January 2021. They succeeded Dr. Christof Mascher and Mr. Niran Peiris, who left the Board of Management on 31 December 2020. Furthermore, Dr. Andreas Wimmer was appointed to the Board of Management of Allianz with effect from 1 October 2021. He succeeded Ms. Jacqueline Hunt, who resigned from office with effect from 30 September 2021. Ms. Sirma Boshnakova was also appointed as a new member of the Board of Management with effect from 1 January 2022. Munich, 3 March 2022 For the Supervisory Board: Michael Diekmann Chairman Annual Report 2021 − Allianz Group 11 ## Page 14 A _ To our Investors MANDATES OF THE MEMBERS OF THE SUPERVISORY BOARD Chairman Chairwoman of the Board of Management of Korian S.A. National Representative Insurances, ver.di Berlin Member of various Supervisory Boards Membership in other statutory supervisory boards Membership in other statutory supervisory boards Membership in other statutory supervisory boards and SE administrative boards in Germany and SE administrative boards in Germany and SE administrative boards in Germany Membership in comparable1 supervisory bodies Member of various Supervisory Boards Membership in other statutory supervisory boards Vice Chairman and SE administrative boards in Germany Member of various Supervisory Boards 1 Membership in other statutory supervisory boards Member of various Supervisory Boards Membership in comparable supervisory bodies and SE administrative boards in Germany Membership in comparable1 supervisory bodies 1 Membership in comparable supervisory bodies Employee of Allianz Insurance plc Member of various Supervisory Boards Membership in other statutory supervisory boards and SE administrative boards in Germany Employee of Allianz Beratungs- und Vertriebs-AG Vice Chairwoman Membership in other statutory supervisory boards Chairwoman of the Group Works Council of Allianz SE and SE administrative boards in Germany Membership in other statutory supervisory boards and SE administrative boards in Germany Employee of Allianz Informatique G.I.E. Membership in comparable1 supervisory bodies Membership in Group bodies Employee of Allianz Technology SE Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies 1_Generally, we regard memberships in other supervisory bodies as comparable if the company is listed on a stock exchange or has more than 500 employees. 12 Annual Report 2021 − Allianz Group ## Page 15 A _ To our Investors MANDATES OF THE MEMBERS OF THE BOARD OF MANAGEMENT Chairman of the Board of Management Insurance German Speaking Countries and Investment Management Membership in other statutory supervisory boards Central & Eastern Europe Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies and SE administrative boards in Germany Membership in Group bodies Membership in Group bodies Insurance Western & Southern Europe Membership in comparable1 supervisory bodies Asia Pacific Membership in Group bodies 1 Membership in comparable supervisory bodies Global Insurance Lines & Anglo Markets, Reinsurance, Middle East, Africa Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies Membership in Group bodies Business Transformation, Insurance Iberia & Latin 1 America, Membership in comparable supervisory bodies Allianz Partners Membership in Group bodies Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies 1 Insurance Western & Southern Europe, Allianz Direct, Membership in comparable supervisory bodies Allianz Partners Membership in Group bodies Human Resources, Legal, Compliance, 1 Membership in comparable supervisory bodies Mergers & Acquisitions Membership in Group bodies Membership in other statutory supervisory boards and SE administrative boards in Germany Membership in Group bodies 1 Membership in comparable supervisory bodies Asset Management, US Life Insurance Finance, Controlling, Risk 1 Membership in other statutory supervisory boards Membership in comparable supervisory bodies and SE administrative boards in Germany Membership in Group bodies Membership in Group bodies Asset Management, US Life Insurance Membership in other statutory supervisory boards Operations and IT and SE administrative boards in Germany Membership in other statutory supervisory boards Membership in Group bodies and SE administrative boards in Germany Membership in Group bodies 1 Membership in comparable supervisory bodies Membership in Group bodies 1 Membership in comparable supervisory bodies Membership in Group bodies 1_Generally, we regard memberships in other supervisory bodies as comparable if the company is listed on a stock exchange or has more than 500 employees. Annual Report 2021 − Allianz Group 13 ## Page 16 A _ To our Investors This page intentionally left blank. 14 Annual Report 2021 − Allianz Group ## Page 17 CORPORATE GOVERNANCE B Annual Report 2021 − Allianz Group 15 ## Page 18 B _ Corporate Governance STATEMENT ON CORPORATE MANAGEMENT The Statements on Corporate Management according to §§ 289f and Declaration of Conformity with the 315d of the German Commercial Code (“Handelsgesetzbuch – HGB”) German Corporate Governance Code form part of the Management Report and the Group Management Report, respectively. According to § 317 (2) sentence 6 HGB, the audit Good corporate governance is essential for sustainable business of the disclosures is limited to whether the relevant disclosures have performance. The Board of Management and the Supervisory Board been made. of Allianz SE therefore attach great importance to complying with the recommendations of the German Corporate Governance Code (hereinafter referred to as the “Code”). On 16 December 2021, the Corporate Constitution Board of Management and the Supervisory Board issued the of the European Company (SE) following Declaration of Conformity of Allianz SE with the Code: As a European Company, Allianz SE is subject to special European SE Declaration of Conformity in accordance with § 161 of the German regulations and the German SE Implementation Act (“SE- Stock Corporation Act Ausführungsgesetz”), in addition to the German SE Employee Declaration of Conformity by the Management Board and the Supervisory Board of Involvement Act (“SE-Beteiligungsgesetz”). Notwithstanding, the main Allianz SE with the recommendations of the German Corporate Governance Code features of a German stock corporation – in particular the two-tier Commission in accordance with § 161 of the German Stock Corporation Act (AktG) board system (Board of Management and Supervisory Board) and the principle of equal employee representation on the Supervisory Board Since the last Declaration of Conformity as of December 10, 2020, Allianz SE has complied with all recommendations of the German Corporate – have been maintained by Allianz SE. The Corporate Constitution of Governance Code in the version of December 16, 2019 and will comply with Allianz SE is laid down in its Statutes. The current version of the Statutes them in the future. is available on our website at www.allianz.com/statutes. Munich, December 16, 2021 Allianz SE Regulatory requirements For the Management Board: The regulatory requirements for corporate governance (system of Signed Oliver Bäte Signed Renate Wagner governance) applicable for insurance companies, insurance groups, For the Supervisory Board: and financial conglomerates apply. Specifically, they include the Signed Michael Diekmann establishment and further design of significant control functions (independent risk control function, actuarial function, compliance function, and internal audit) as well as general principles for a sound business organization. These regulatory requirements are applicable In addition, Allianz SE follows all the suggestions of the Code in its throughout the Group in accordance with the principle of 16 December 2019 version. proportionality. The implementation of the regulatory requirements The Declaration of Conformity and further information on is supported by written guidelines issued by the Board of corporate governance at Allianz can be found on our website at Management of Allianz SE. Furthermore, Solvency II requires the www.allianz.com/corporate-governance. publication of qualitative and quantitative information including a market value balance sheet. Details on the implementation of the regulatory requirements for corporate governance by Allianz SE Function of the Board of Management and by the Allianz Group can be found in the Solvency and Financial and the composition and functions of Condition Report of Allianz SE and of the Allianz Group, which are published on our website at www.allianz.com/sfcr. committees Since 1 January 2022, the Board of Management of Allianz SE has eleven members. Its members may not, in general, be older than 62 years of age. The Board of Management is responsible for setting business objectives and the strategic direction, for coordinating and supervising the operating entities, and for implementing and overseeing an efficient risk management system. The Board of Management also prepares the annual financial statements of Allianz SE, the Allianz Group’s consolidated financial statements, the market value balance sheet, and the interim report. 16 Annual Report 2021 − Allianz Group ## Page 19 B _ Corporate Governance The members of the Board of Management are jointly In the financial year 2021, the following Group committees were in responsible for management and for complying with legal place: requirements. Notwithstanding this overall responsibility, the individual members independently head the departments they have Group committees been assigned to. There are divisional responsibilities for business Group committees Responsibilities segments as well as functional responsibilities. The latter include the GROUP COMPENSATION COMMITTEE Designing, monitoring, and improving Finance, Risk Management and Controlling Functions, Investments, Board members of Allianz SE and executives group-wide compensation systems in line Operations and IT, Human Resources, Legal, Compliance, Internal below Allianz SE Board level. with regulatory requirements and submitting an annual report on the monitoring results, Audit, or Mergers & Acquisitions. Business division responsibilities focus along with proposals for improvement. on geographical regions or Global Lines. Rules of procedure specify GROUP INVESTMENT COMMITTEE Specifying the strategic asset allocation for the Board members of Allianz SE and Group to enable consistent implementation by the structure and departmental responsibilities of the Board of Allianz Group executives. the operating units, particularly in relation to Management in more detail. alternative assets, monitoring of performance across all asset classes and ensuring consistent Board of Management meetings are led by the Chairperson. organization of the Investment Management Each member of the Board may request a meeting, providing function and Investment Governance across the Group. notification of the proposed subject. The Board makes decisions by a As of 31 December 2021 simple majority of participating members. In the event of a tie, the Chairperson casts the deciding vote. The Chairperson can also veto decisions, but he/she cannot impose any decisions against the majority The Allianz Group runs its operating entities and business segments via vote. an integrated management and control process. First, the Holding and the operating entities define the business strategies and goals. On this basis, joint plans are then prepared for the Supervisory Board’s In the financial year 2021, the following Board of Management consideration when setting targets for the performance-based committees were in place: remuneration of the members of the Board of Management. For details, please refer to the Remuneration Report. Board committees The Board of Management reports regularly and comprehensively to the Supervisory Board on business development, Board committees Responsibilities GROUP FINANCE AND RISK COMMITTEE Preparing the capital and liquidity planning for the company’s financial position and earnings, planning and Giulio Terzariol (Chairman), the Group and Allianz SE, implementing and achievement of objectives, business strategy, and risk exposure. Details Dr. Klaus-Peter Röhler, overseeing the principles of group-wide capital on the Board of Management’s reporting to the Supervisory Board are Dr. Günther Thallinger, and liquidity management as well as risk Christopher Townsend. standards and preparing risk strategy. laid down in the information rules issued by the Supervisory Board. This includes, in particular, significant individual financing transactions and guidelines for Important decisions of the Board of Management require derivatives, Group financing and internal Group approval by the Supervisory Board. These requirements are stipulated capital management as well as establishing and overseeing a group-wide risk management by law, by the Statutes, or in individual cases by decisions of the Annual and monitoring system including stress tests. General Meeting (AGM). Supervisory Board approval is required, for GROUP IT COMMITTEE Developing and proposing a group-wide IT example, for certain capital transactions, intercompany agreements, Dr. Barbara Karuth-Zelle (Chairwoman), strategy, monitoring its implementation and, Dr. Klaus-Peter Röhler, approving local and group-wide IT investments and the launch of new business segments or the closure of existing Ivan de la Sota, as well as reviewing and overseeing individual Giulio Terzariol, IT projects. ones. Approval is also required for acquisitions of companies and Dr. Günther Thallinger, holdings in companies as well as for divestments of Group companies Christopher Townsend. that exceed certain threshold levels. The Agreement concerning the GROUP MERGERS Managing and overseeing Group M&A Participation of Employees in Allianz SE, in the version dated AND ACQUISITIONS COMMITTEE transactions, including approval of Renate Wagner (Chairwoman), individual transactions within certain June 2021 (hereinafter “SE Agreement”), requires the approval of the Oliver Bäte, thresholds. Supervisory Board for the appointment of the member of the Board of Sergio Balbinot, Giulio Terzariol. Management responsible for employment and social welfare. As of 31 December 2021 The composition of the Board of Management is described in Mandates of the Members of the Board of Management or on our website at www.allianz.com/management-board. A general In addition to Board committees, there are also Group committees. description of the function of the Board of Management can also be They are responsible for preparing decisions for the Board of found there. Management of Allianz SE, submitting proposals for resolutions, and ensuring a smooth flow of information within the Group. Annual Report 2021 − Allianz Group 17 ## Page 20 B _ Corporate Governance Diversity concept for the Board of shortfall of the adequate proportion of women on the Management Management and succession planning Board, composed in accordance with the diversity concept. In accordance with the legislation on the implementation of the European guidelines as regards the disclosure of non-financial and Corporate governance practices diversity information (CSR Directive), the diversity concept for the Board of Management, its objectives, implementation, and results achieved are to be reported. The Allianz Group has an effective internal risk and control system for verifying and monitoring its operating activities and business The Supervisory Board adopted the following diversity concept for the processes, in particular financial reporting, as well as compliance with Board of Management of Allianz SE: regulatory requirements. The requirements placed on the internal control system are essential, not only for the resilience and franchise “For the composition of the Management Board, the Supervisory value of the company, but also to maintain the confidence of the Board aims for an adequate ‘Diversity of Minds’. This comprises broad capital market, our customers, and the public. An assessment of the diversity with regard to gender, internationality, and educational as adequacy and effectiveness of the internal control system as part of well as professional background. the System of Governance is conducted regularly in the course of the review of the business organization. For further information on our risk The Supervisory Board assesses the achievement of such target, inter organization and risk principles, please refer to the section “Risk alia, on the basis of the following specific indicators: governance system” in the Risk and Opportunity Report. For further information on our Integrated Risk and Control System for Financial − adequate proportion of women on the Management Board: at Reporting, please refer to the respective chapter. least 30 % by 31 December 2021; In addition, the quality of our internal control system is assessed − adequate share of members with an international background by the Allianz Group’s Internal Audit function. This function conducts (e.g., based on origin or extensive professional experience independent, objective assurance activities, analyzing the structure abroad), ideally with a connection to the regions in which the and efficiency of the internal control system as a whole. In addition, it Allianz Group is operating; also examines the potential for additional value and improvement of − adequate diversity with regard to educational and professional our organization’s operations. Fully compliant with all international background, taking into account the limitations for the Supervisory auditing principles and standards, Internal Audit contributes to the Board by regulatory requirements (fitness).” evaluation and improvement of the effectiveness of the risk management, control, and governance processes. Therefore, internal This diversity concept is implemented in the appointment procedure audit activities are geared towards helping the company to mitigate for members of the Board of Management by the Supervisory Board. risks, and further assist in strengthening its governance processes and For the purpose of long-term succession planning, a list of candidates structures. is prepared and updated on an ongoing basis by the Chairperson of the Board of Management in consultation with the Chairperson of the Supervisory Board. It is ensured that lists of successors will Integrity is at the core of our compliance programs and the basis for comprise appropriate percentages of female candidates as well as of the trust of our customers, shareholders, business partners, and candidates with international experience. The Personnel Committee employees. The Compliance function fosters a corporate culture of takes this into consideration especially in succession planning. The list individual and collective responsibility for ethical conduct and of candidates includes internal and external candidates who generally adherence to the rules by: meet the requirements for a mandate in the Board of Management. In the event of a vacancy on the Board of Management, the Personnel − advising the Board of Management, managers, and employees on Committee, after a thorough examination, recommends a suitable business conduct that is lawful and ethical; candidate to the Supervisory Board plenary session and reports on the − identifying and assessing material compliance risks and selection process and, if necessary, alternative candidates. Prior to an overseeing the implementation of adequate and effective internal appointment to the Board of Management, all members of the controls to mitigate them; Supervisory Board are given the opportunity to meet the candidate in − providing a speak-up facility that employees and third parties can use person. to confidentially report possible illegal or inappropriate behavior; As a result of the increase in the size of the Board of Management − communicating transparently and trustfully with supervisory to 11 members as of 1 January 2022, the three female members of the authorities. Board of Management account for 27.27 % of the total, which is slightly below the target value of 30 %. Since this shortfall is expected to be of The global compliance programs coordinated by Allianz SE’s central a temporary nature only, the Supervisory Board considers it Group Compliance function support our employees, managers, and acceptable. Five members of the Management Board have executive board members to act responsibly and with integrity in all international backgrounds. There is an adequate degree of variety as situations. regards educational and professional backgrounds. The Board of Management of Allianz SE is thus, with the exception of the temporary 18 Annual Report 2021 − Allianz Group ## Page 21 B _ Corporate Governance Moreover, Allianz SE’s central Group Compliance function is Function of the Supervisory Board and responsible – in close cooperation with local compliance functions – the composition and functions of for ensuring the effective implementation and monitoring of the compliance programs within the Allianz Group as well as for committees investigating potential compliance infringements. Furthermore, as a key function, the Compliance function carries out the advisory, risk The German Co-Determination Act (“Mitbestimmungsgesetz”) does identification and assessment, monitoring, and early warning tasks not apply to Allianz SE because it has the legal form of a European required under the Solvency II regime. Company (SE). Instead, the size and composition of the Supervisory Board is determined by general European SE regulations. These Code of Conduct regulations are implemented in the Statutes and via the SE Our Code of Conduct and the internal compliance policies and Agreement. guidelines derived from it provide all employees, managers, and The Supervisory Board comprises twelve members, including six executive board members with clear and practical guidance, shareholder representatives appointed by the AGM. The six employee enabling them to act in line with the values of the Allianz Group. The representatives are appointed by the SE works council. The specific rules of conduct established by the Code of Conduct are binding procedure for their appointment is laid down in the SE Agreement. for all employees worldwide and build the basis for our compliance This agreement stipulates that the six employee representatives must programs. The Code of Conduct is available on our website at be allocated in proportion to the number of Allianz employees in the www.allianz.com/compliance. different countries. The Supervisory Board currently in office includes four employee representatives from Germany and one each from Speak up France and the United Kingdom. According to § 17 (2) of the German A major component of the Allianz Group’s compliance management SE Implementation Act (“SE-Ausführungsgesetz”), the Supervisory system is a speak-up facility that allows employees and third parties Board of Allianz SE shall be composed of at least 30 % women and at to notify the relevant compliance department confidentially about least 30 % men. For the future, the AGM on 5 May 2021 resolved to potential illegal or inappropriate conduct. No employee voicing shorten the regular term of appointment for the Supervisory Board of concerns about irregularities in good faith needs to fear retribution, Allianz SE to four years. even if the concerns later turn out to be unfounded. Third parties can The Supervisory Board oversees and advises the Board of contact the compliance department via an electronic mailbox on our Management on managing the business. It is also responsible for website www.allianz.com/complaint-system. appointing the members of the Board of Management, determining their overall remuneration, succession planning for the Board of Compliance programs Management, and reviewing Allianz SE’s and the Allianz Group’s Allianz SE’s central Group Compliance function has set up annual financial statements. The Supervisory Board’s activities in the internal guidelines for the following identified compliance risk financial year 2021, including an individualized disclosure of the areas: financial crime, market integrity, customer protection, and meeting participation, are described in the Supervisory Board Report. compliance with legal requirements. For further information on The Supervisory Board takes all decisions based on a simple the compliance risk areas, please refer to the Sustainability Report majority. The special requirements for appointing members to the on our website at www.allianz.com/sustainability. Board of Management, as stipulated in the German Co- Determination Act, and the requirement to have a Conciliation Compliance training Committee, do not apply to an SE. In the event of a tie, the casting vote In order to convey the principles of the Code of Conduct and the lies with the Chairperson of the Supervisory Board, who at Allianz SE compliance programs based on these principles, Allianz has must be a shareholder representative. If the Chairperson is not present implemented interactive training programs around the world. These in the event of a tie, the casting vote lies with the vice chairperson from provide practical guidance that enables employees to make their own the shareholder side. A second vice chairperson is elected at the decisions based on internal and external requirements as well as employee representatives’ proposal. ethical principles. Training programs comprise in-person and e- The Supervisory Board regularly reviews the efficiency of its learning training and are delivered in several languages. activities. The review is carried out either on the basis of a self- Training courses to prevent corruption and money laundering are evaluation using a questionnaire or by consulting an external mandatory for all Allianz employees worldwide. The same is true for consultant. The entire Supervisory Board discusses recommendations the antitrust training to exposed employees. Further training exist for for improvements and adopts appropriate measures on the basis of the other compliance programs. recommendations from the Standing Committee. In addition, the fitness and propriety of the individual members of the Supervisory Board are reviewed as part of an annual self-evaluation required by supervisory law, and a development plan for the Supervisory Board is drawn up on this basis. Annual Report 2021 − Allianz Group 19 ## Page 22 B _ Corporate Governance Supervisory Board committees Part of the Supervisory Board’s work is carried out by its Supervisory Board committees Responsibilities committees. The Supervisory Board receives regular reports STANDING COMMITTEE – Approval of certain transactions which require the on the activities of its committees. The composition of 5 members approval of the Supervisory Board, e.g., capital – Chairperson: Chairperson measures, acquisitions, and disposals of committees and the tasks assigned to them are regulated by the of the Supervisory Board participations Supervisory Board’s Rules of Procedure, which can be found on (Michael Diekmann) – Preparation of the Declaration of Conformity – Two further shareholder representatives pursuant to § 161 “Aktiengesetz” (German Stock our website at (Herbert Hainer, Jim Hagemann Snabe) Corporation Act) and checks on corporate www.allianz.com/supervisory-board. governance – Two employee representatives (Jürgen – Preparation of the efficiency review of the Lawrenz, Jean-Claude Le Goaër) Supervisory Board AUDIT COMMITTEE – Initial review of the annual Allianz SE and consoli- 5 members dated financial statements, management reports – Chairperson: appointed (including Risk Report) and the dividend proposal, by the Supervisory Board review of half-yearly reports or, where applicable, (Dr. Friedrich Eichiner) quarterly financial reports or statements – Three shareholder – Monitoring of the financial reporting process, representatives (in addition to the effectiveness of the internal control and audit Dr. Friedrich Eichiner: Sophie Boissard, system and legal and compliance issues Michael Diekmann) – Monitoring of the audit procedures, including – Two employee representatives the independence of the auditor and the services (Jean-Claude Le Goaër, Martina Grundler) additionally rendered, awarding of the audit contract and determining the focal points of the audit RISK COMMITTEE – Monitoring of the general risk situation and special 5 members risk developments in the Allianz Group – Chairperson: appointed by the – Monitoring of the effectiveness of the risk Supervisory Board (Michael Diekmann) management system – Three shareholder representatives – Initial review of the Risk Report and other risk- (in addition to Michael Diekmann: related statements in the annual financial Christine Bosse, Dr. Friedrich Eichiner) statements and management reports of Allianz SE – Two employee representatives (Godfrey and the Allianz Group, informing the Audit Hayward, Frank Kirsch) Committee of the results of such reviews PERSONNEL COMMITTEE – Preparation of the appointment of Board of 3 members Management members – Chairperson: Chairperson – Preparation of plenary session resolutions on the of the Supervisory Board (Michael compensation system and the overall Diekmann) compensation of Board of Management members – One further shareholder representative – Conclusion, amendment, and termination of service (Herbert Hainer) contracts of Board of Management members – One employee representative (Gabriele unless reserved for the plenary session Burkhardt-Berg) – Long-term succession planning for the Board of Management – Approval of the assumption of other mandates by Board of Management members NOMINATION COMMITTEE – Setting of concrete objectives for the composition 3 members of the Supervisory Board – Chairperson: Chairperson – Establishment of selection criteria for shareholder of the Supervisory Board (Michael representatives on the Supervisory Board in Diekmann) compliance with the Code’s recommendations on – Two further shareholder representatives the composition of the Supervisory Board (Christine Bosse, Jim Hagemann Snabe) – Selection of suitable candidates for election to the Supervisory Board as shareholder representatives TECHNOLOGY COMMITTEE – Regular exchange regarding technological 5 members developments – Chairperson: appointed by the – In-depth monitoring of the Board of Management’s Supervisory Board (Jim Hagemann technology and innovation strategy Snabe) – Support of the Supervisory Board in monitoring the – Three shareholder representatives implementation of the Board of Management’s (in addition to Jim Hagemann Snabe: technology and innovation strategy Michael Diekmann, Dr. Friedrich Eichiner) – Two employee representatives (Gabriele Burkhardt-Berg, Jürgen Lawrenz) SUSTAINABILITY COMMITTEE – Regular exchange regarding sustainability-related 5 members issues (Environment, Social, Governance – ESG) – Chairperson: appointed by the – Close monitoring of the Management Board’s Supervisory Board (Christine Bosse) sustainability strategy – Three shareholder representatives – Support of the Supervisory Board in the oversight (in addition to Christine Bosse: Sophie of the execution of the sustainability strategy Boissard, Michael Diekmann) – Support of the Personnel Committee of the – Two employee representatives Supervisory Board in the preparation of the ESG- (Gabriele Burkhardt-Berg, Frank Kirsch) related target setting as well as the review of the set targets’ fulfillment for the Management Board’s remuneration As of 31 December 2021 20 Annual Report 2021 − Allianz Group ## Page 23 B _ Corporate Governance diversity concept in accordance with the legislation on the implementation of the European guideline as regards the disclosure of The objectives for the composition of the Supervisory Board in the non-financial and diversity information (CSR Directive) is also included. version of September 2021, as specified to implement legal The objectives for the composition of the Supervisory Board can be requirements and a recommendation by the Code, are set out below. found on our website at www.allianz.com/supervisory-board. In addition to the skills profile for the overall Supervisory Board, the Objectives of Allianz SE’s Supervisory Board regarding its composition “The aim of Allianz SE’s Supervisory Board is to have members who are equipped with the necessary Employee representation within Allianz SE, according to the Agreement concerning the Participation skills and competence to properly supervise and advise Allianz SE’s management. Supervisory Board of Employees in Allianz SE, contributes to the diversity of work experience and cultural background. candidates should possess the professional expertise and experience, integrity, motivation and Pursuant to the provisions of the German SE Participation Act (SEBG), the number of women and commitment, independence, and personality required to successfully carry out the responsibilities of a men appointed as German employee representatives should be proportional to the number of Supervisory Board member in a financial services institution with international operations. women and men working in the German companies. However, the Supervisory Board does not have These objectives take into account the regulatory requirements for the composition of the Supervisory the right to select the employee representatives. Board as well as the relevant recommendations of the German Corporate Governance Code The following requirements and objectives apply to the composition of Allianz SE’s Supervisory (“GCGC”). In addition to the requirements for each individual member, a profile of skills and expertise Board: (“Kompetenzprofil”) as well as a diversity concept are provided for the entire Supervisory Board. I. Requirements relating to the individual members of the Supervisory Board 1. Propriety – attendance at the General Meeting is required; The members of the Supervisory Board must be proper as defined by the regulatory provisions. A – depending on possible membership in one or more of the Supervisory Board Committees, extra person is assumed to be proper as long as no facts are to be known which may cause impropriety. time planning is required for participation in these Committee meetings and to do the necessary Therefore, no personal circumstances shall exist which – according to general experience – lead to preparation for these meetings; this applies in particular for the Audit and Risk Committees; the assumption that the diligent and orderly exercise of the mandate may be affected (in particular, – attendance of extraordinary meetings of the Supervisory Board or of a Committee might be administrative offenses or violation of criminal law, especially in connection with commercial activity). required to deal with special matters. 2. Fitness 5. Retirement age The members of the Supervisory Board must have the expertise and experience necessary for a The members of the Supervisory Board shall, as a rule, not be older than 70 years of age. diligent and autonomous exercise of the Allianz SE Supervisory Board mandate, in particular for 6. Term of membership exercising control of and giving advice to the Management Board as well as for the active support of The continuous period of membership for any member of the Supervisory Board should, as a rule, the development of the company. This comprises in particular: not exceed 12 years. – adequate expertise in all business areas; – adequate expertise in the insurance and finance sector or comparable relevant experience and 7. Former Allianz SE Management Board members expertise in other sectors; Former Allianz SE Management Board members are subject to the mandatory corporate law cooling- – adequate expertise in the regulatory provisions material for Allianz SE (supervisory law, off period of two years. including Solvency II regulation, corporate and capital markets law, corporate governance); According to regulatory provisions, no more than two former Allianz SE Management Board – ability to assess the business risks; members shall be members of the Supervisory Board. – knowledge of accounting and risk management basics. 3. Independence II. Requirements for the entire Supervisory Board The GCGC defines a person as independent who, in particular, does not have any business or 1. Profile of skills and expertise for the entire Supervisory Board personal relations with Allianz SE or its executive bodies, a controlling shareholder, or an enterprise associated with the latter, which may cause a substantial and not merely temporary In addition to the expertise-related requirements for the individual members, the following shall conflict of interest. apply with respect to the expertise and experience of the entire Supervisory Board: The Supervisory Board of Allianz SE states the following with regard to the further specification of – familiarity of members in their entirety with the insurance and financial services sector; independence: – adequate expertise of the entire Board with respect to regulatorily required areas of investment – former members of the Allianz SE Management Board shall not be deemed independent management, insurance actuarial practice, accounting; during the mandatory corporate law cooling-off period. – adequate expertise of the entire Board with respect to technology, including cybersecurity, – members of the Supervisory Board of Allianz SE in office for more than 12 years shall not be employee engagement and sustainability (especially Environment, Social responsibility and deemed independent. Governance as well as data privacy); – regarding employee representatives, the mere fact of employee representation and the existence – at least one member with considerable experience in the insurance and financial services fields; of a working relationship with the company shall not itself affect the independence of the – at least one member with comprehensive expertise in the field of accounting and at least one employee representatives. member with comprehensive expertise in the field of auditing; – at least one member with comprehensive expertise in the field of digital transformation; Applying such definition, at least eight members of the Supervisory Board shall be independent. In – specialist expertise or experience in other economic sectors; case shareholder representatives and employee representatives are viewed separately, at least four – managerial or operational experience. of each should be independent. It has to be considered that the possible emergence of conflicts of interests in individual cases cannot 2. Diversity concept generally be excluded. Potential conflicts of interest must be disclosed to the Chairperson of the To promote an integrative cooperation among the Supervisory Board members, the Supervisory Supervisory Board and will be resolved by appropriate measures. Board strives for an adequate diversity with respect to gender, internationality, different occupational backgrounds, professional expertise, and experience: 4. Time of availability – the Supervisory Board shall be composed of at least 30 % women and at least 30 % men. The Each member of the Supervisory Board must ensure that he/she has sufficient time to dedicate to the representation of women is generally considered to be the joint responsibility of the shareholder proper fulfilment of the mandate of this Supervisory Board position. and employee representatives; In addition to the mandatory mandate limitations and the GCGC recommendation for active – at least four of the members must, on the basis of their origin or function, represent regions or Management Board members of listed companies (max. two mandates), the common capital markets cultural areas in which Allianz SE conducts significant business. requirements shall be considered. For Allianz SE as a Societas Europaea, the agreement concerning the Participation of Employees With regard to the Allianz SE mandate, the members shall take into account that: in Allianz SE provides that Allianz employees from different EU member states are considered in the allocation of employee representatives’ Supervisory Board seats; – at least four, but as a rule six, ordinary Supervisory Board meetings are held each year, each of – in order to provide the Board with the most diverse sources of experience and specialist which requires adequate preparation; knowledge possible, the members of the Supervisory Board shall complement each other with – sufficient time must be set aside for the audit of the annual and consolidated financial statements; respect to their background, professional experience, and specialist knowledge.” Annual Report 2021 − Allianz Group 21 ## Page 24 B _ Corporate Governance The Supervisory Board pursues these objectives, and thus also the Dr. Eichiner, Mr. Hainer and Mr. Snabe, are independent within the diversity concept, when nominating candidates for shareholder meaning of the objectives (see No. I.3). With four female and eight male representatives. As employee representatives are appointed according Supervisory Board members, the current legislation for equal to different national provisions, there is only limited potential participation of women and men in leadership positions (statutory influence to the selection of employee representatives. The Supervisory gender quota of 30 %) is being met. In addition, the Supervisory Board Board of Allianz SE is currently composed in accordance with these has five members with international backgrounds. The skills profile is objectives, including the diversity concept. According to the also met by all current members of the Supervisory Board. Based on the assessment by the Supervisory Board, all shareholder objectives regarding its composition, the Supervisory Board of representatives, i.e., Ms. Boissard, Ms. Bosse as well as Mr. Diekmann, Allianz SE has developed the following skill matrix. Supervisory Board of Allianz SE: skill matrix Burkhardt- Diekmann Snabe Boissard Bosse Eichiner Hainer Berg Le Goaër Grundler Hayward Kirsch Lawrenz Tenure Joined Board in 2017 2014 2017 2012 2016 2017 2012 2018 2016 2017 2018 2015 Regulatory Personal requirement ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ appro- (Fit & Proper) priate- Independence1 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ness No Overboarding1 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Diversity Gender male male female female male male female male female male male male Nationality German Danish French Danish German German German French German British German German Accounting ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Insurance Actuarial ✓ - ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Practice Investment ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Management Expertise Technology ✓ ✓ ✓ ✓ ✓ - ✓ ✓ ✓ - ✓ ✓ Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Transformation Employee ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Engagement Sustainability ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ - ✓ ✓ North America ✓ ✓ - - ✓ ✓ - - - - - - Regional Growth ✓ ✓ - - ✓ ✓ - - - - - - Expertise Markets Europe (EU) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Criteria met. Expertise criteria based on yearly self-assessment. Tick means at least “Good knowledge” and implies the capacity to understand the relevant matters well, and to take educated decisions. Good knowledge may result from existing qualifications and from the training measures regularly attended by all members of the Supervisory Board. On a scale from A-E this requires at least grade B. 1_According to German Corporate Governance Code. The current composition of the Supervisory Board can be found in the Supervisory Board Report. In addition, the composition of the Supervisory Board as well as a general description of the functions of the Supervisory Board and its committees can be found on our website at www.allianz.com/supervisory-board. There you will also find the CVs of the members of the Supervisory Board. 22 Annual Report 2021 − Allianz Group ## Page 25 B _ Corporate Governance Directors’ dealings We inform our shareholders, financial analysts, the media, and the general public about the company’s situation on a regular basis Members of the Board of Management and the Supervisory Board as and in a timely manner. The annual financial statements of Allianz SE, well as persons closely associated with them, are obliged by the E.U. the Allianz Group’s consolidated financial statements, and the Market Abuse Directive to disclose to both Allianz SE and the German respective management reports are publicly available within 90 days Federal Financial Supervisory Authority any transactions involving of the end of each financial year. Additional information is provided in shares or debt securities of Allianz SE or financial derivatives or other the Allianz Group’s half-yearly financial reports and quarterly instruments based on them, as soon as the value of the securities statements. Information is also made available at the AGM, at acquired or divested by the member amounts to twenty thousand telephone conferences for analysts and journalists, and on the euro or more within a calendar year. These disclosures are published Allianz Group’s website. Our website also provides a financial on our website at calendar listing the dates of major publications and events, such as www.allianz.com/directorsdealings. annual reports, half-yearly financial reports, and quarterly statements, AGMs, and analyst conference calls as well as financial Annual General Meeting press conferences. You can find the 2022 financial calendar on our website at Shareholders exercise their rights at the AGM. When adopting www.allianz.com/financialcalendar. resolutions, each share carries one vote. Shareholders can follow the AGM’s proceedings on the internet and be represented by proxies. These proxies exercise voting rights exclusively on the basis of Information in accordance with the instructions given by the shareholder. Shareholders are also able to cast German Act on Equal Participation of their votes via the internet in the form of online voting. Allianz SE regularly promotes the use of online services. Women and Men in Executive The AGM elects the shareholder representatives of the Supervisory Positions in the Private and the Public Board and approves the actions taken by the Board of Management and the Supervisory Board. It decides on the appropriation of net Sector earnings, capital transactions, the approval of intercompany agreements, also on the approval of the remuneration system This section outlines the targets set for Allianz SE and the other presented by the Supervisory Board for the members of the Board of companies of the Allianz Group in Germany that are subject to co- Management and the remuneration of the Supervisory Board, as well determination (the “subsidiaries concerned”) for the Supervisory as changes to the company’s Statutes. Resolutions of the AGM shall be Board, the Board of Management, and the two management levels passed, unless mandatory legal provisions require otherwise, by a below the Board of Management. simple majority of the valid votes cast. In accordance with European Article 17 (2) of the German SE Implementation Act stipulates that regulations and the Statutes, changes to the Statutes require a two- as of 1 January 2016, the share of women and men among the thirds majority of votes cast, which at the same time represents the members of the Supervisory Board of Allianz SE must each total up to majority of the capital stock represented at the time of the resolution, in at least 30 %. The Supervisory Board currently in office fulfills this case less than half of the share capital is represented in the AGM. Each requirement as it includes four women (33 %) and eight men (67 %). year, an ordinary AGM takes place at which the Board of Management In August 2017, the Supervisory Board set a target for the and the Supervisory Board give an account of the preceding financial percentage of women on Allianz SE’s Board of Management at 30 % year. For special decisions, the German Stock Corporation Act to be achieved by 31 December 2021. As of 31 December 2021, the provides for the convening of an extraordinary AGM. percentage of women on Allianz SE’s Board of Management decreased to 20 % due to the resignation of Ms. Hunt from the Management Board. In light of the appointment of Ms. Boshnakova Accounting and auditing as member of the Board of Management as of 1 January 2022, and the resulting increase in the size of the Board of Management to 11 The Allianz Group prepares its accounts according to § 315e of the members, the percentage of women on the Board of Management German Commercial Code (“Handelsgesetzbuch – HGB”) on the basis increased to 27.27 %. of the International Financial Reporting Standards (IFRS) adopted by As regards the proportion of women on the first and second the European Union. The annual financial statements of Allianz SE are management levels below the Board of Management, the Board of prepared in accordance with German law and accounting rules. Management of Allianz SE has set a target of 20 % and 30 %, In compliance with the special legal provisions that applied to respectively, to be met by 31 December 2021. As of insurance companies until fiscal year 2021, the auditor of the annual 31 December 2021, this target was met for the first management level, with a percentage of women of 29 financial statements and of the half-yearly financial report have been %, but could not be met on the appointed by the Supervisory Board, not the AGM. In the future, such second level with a percentage of 26 %. The first two management appointment will be the responsibility of the AGM. The audit of the levels below the Board of Management comprise a very small financial statements covers the individual financial statements of comparative group of executives. No suitable female candidates Allianz SE and the consolidated financial statements of the could be identified for the very few positions that became vacant in Allianz Group. the period considered. Annual Report 2021 − Allianz Group 23 ## Page 26 B _ Corporate Governance In the longer term, Allianz aims to place women in at least 30 % of the positions at these two management levels throughout the Group. With regard to the Supervisory Boards of the subsidiaries concerned, the target quotas for eight out of nine subsidiaries concerned were set at 30 % and the target quota for the remaining subsidiary concerned was set at 33 % for 31 December 2021. Seven of the nine subsidiaries reached this target as of 31 December 2021. The target quotas for the respective Board of Management of the subsidiaries concerned were between 20 % and 30 % (24 % on average) for 31 December 2021 and were met by seven of the nine companies as of 31 December 2021. For the two management levels below the Board of Management, the respective Boards of Management of the subsidiaries concerned had set target quotas between 17 % and 33 % (23 % on average) for 31 December 2021 for the first management level and target quotas between 20 % and 33 % (26 % on average) for 31 December 2021 for the second management level below the Board of Management. As of 31 December 2021, the targets were met by seven of the nine subsidiaries concerned at the first management level, while six of the nine companies met the targets set for the second management level. Despite increased efforts to promote women in the Allianz Group and also at the individual subsidiaries, it was not possible to achieve the targets in these cases, as it was not always possible to identify suitable female candidates for all vacant positions. Allianz continues to work to achieve these targets. 24 Annual Report 2021 − Allianz Group ## Page 27 B _ Corporate Governance TAKEOVER-RELATED STATEMENTS AND EXPLANATIONS The following information is provided pursuant to § 289a and § 315a of representative. A Vice Chairperson who is an employee representative the German Commercial Code (“Handelsgesetzbuch – HGB”) and has no casting vote (§ 8 (3) of the Statutes). § 176 (1) of the German Stock Company Act (“Aktiengesetz – AktG”). Amendments to the Statutes are governed by Article 59 SE Regulation, § 179 AktG, and the Statutes. § 13 (4) of the Statutes of Allianz SE stipulates that, unless mandatory law requires otherwise, As of 31 December 2021, the share capital of Allianz SE was changes to the Statutes require a two-thirds majority of the votes cast € 1,169,920,000. It was divided into 408,457,873 registered and fully at a General Meeting or, if at least one half of the share capital is paid-up shares with no par value. All shares carry the same rights and represented, a simple majority of the votes cast. Where the law obligations. Each no-par value share carries one vote. requires a majority in capital for a shareholder resolution, a simple majority of the capital represented at the General Meeting is sufficient, provided this is in line with legal requirements. The Supervisory Board may alter the wording of the Statutes (§ 179 (1) AktG and § 10 of the Statutes). Shares may only be transferred with the consent of the company. An approval duly applied for may only be withheld if it is deemed necessary in the company’s interest on exceptional grounds. The applicant will be informed of the reasons. The Board of Management is authorized to issue shares as well as to Shares acquired by employees of the Allianz Group as part of the acquire and use treasury shares as follows: employee stock purchase plan are generally subject to a three-year lock-up period. During the lock-up period, employees can exercise It may increase the company’s share capital on or before 8 May 2023, their voting rights. with the approval of the Supervisory Board, by issuing new registered no-par value shares against contributions in cash and/or in kind, on one or more occasions: Allianz SE is not aware of any direct or indirect interests in the share − Up to a total of € 334,960,000 (Authorized Capital 2018/I): In case capital that exceed 10 of a capital increase against cash contribution, the Board of % of the voting rights. Management may exclude the shareholders’ subscription rights for these shares with the consent of the Supervisory Board (i) for fractional amounts, (ii) in order to safeguard the rights pertaining There are no shares with special rights conferring powers of control. to holders of convertible bonds or bonds with warrants, including mandatory convertible bonds, and (iii) in the event of a capital increase of up to 10 %, if the issue price of the new shares is not significantly below the stock market price. The Board of Management may furthermore exclude the shareholders’ subscription rights with the consent of the Supervisory Board in the The appointment and removal of members of Allianz SE’s Board of event of a capital increase against contributions in kind. Management is governed by Articles 9 − Up to a total of € 15,000,000 (Authorized Capital 2018/II): The (1), 39 (2) and 46 of the SE Regulation, §§ 84, 85 AktG, § 24 (3) and § 47 No. 1 German Insurance shareholders’ subscription rights are excluded. New shares may Supervision Act (“Versicherungsaufsichtsgesetz – VAG”), and the only be issued to employees of Allianz SE and its Group Statutes. According to the Statutes, the Board of Management shall companies. consist of at least two persons; the Supervisory Board determines the number of any additional members (§ 5 (1) of the Statutes). The The company’s share capital is conditionally increased by up to members of the Board of Management are appointed by the € 250,000,000 (Conditional Capital 2010/2018). This conditional Supervisory Board for a term of up to five years; reappointment is capital increase will only be carried out to the extent that the holders permitted for a maximum of five years in each case (§ 5 (3) of the of convertible bonds, bonds with warrants, convertible participation Statutes). A simple majority of the votes cast in the Supervisory Board rights, participation rights, and subordinated financial instruments is required to appoint members of the Board of Management. In the issued against cash by Allianz SE or its subsidiaries, based on the case of a tie vote, the Chairperson of the Supervisory Board, who authorizations granted by the General Meeting on 5 May 2010 or pursuant to Article 42 of the SE Regulation must be a shareholder 9 May 2018, exercise their conversion or option rights, or to the extent representative, shall have the casting vote (§ 8 (3) of the Statutes). If the that conversion obligations from such bonds are fulfilled, and to such Chairperson does not participate in the vote, the Vice Chairperson extent that treasury shares or shares from authorized capital are not shall have the casting vote, provided he or she is a shareholder used for such purpose. Annual Report 2021 − Allianz Group 25 ## Page 28 B _ Corporate Governance Under an authorization by the General Meeting on 9 May 2018, − Bilateral credit agreements in some cases provide for termination the Board of Management may, until 8 May 2023, buy back Allianz rights in the event of a change of control, mostly defined as the shares corresponding to up to 10 % of the lower of (i) the share capital acquisition of at least 30 % of the voting rights within the meaning at the moment of the shareholder resolution and (ii) the share capital of § 29 (2) of the German Takeover Act (“Wertpapiererwerbs- und at the moment of the buy-back, and to use those shares for other Übernahmegesetz – WpÜG”). Where such termination rights are purposes (§ 71 (1) No. 8 AktG). Together with other treasury shares that exercised, the respective credit lines have to be replaced by new are held by Allianz SE, or which are attributable to it under §§ 71a et credit lines under conditions then applicable. seq. AktG, such shares may not exceed 10 % of the share capital at any − Under the Allianz Equity Incentive Program, Restricted Stock Units time. The shares acquired pursuant to this authorization may be used, (RSUs) – i.e., virtual Allianz shares – are granted to senior under exclusion of the shareholders’ subscription rights, for any legally management of the Allianz Group worldwide as a stock-based admissible purposes, in particular those specified in the authorization. remuneration component. The conditions for these RSUs contain Furthermore, the acquisition of treasury shares under this change-of-control clauses, which apply when a majority of the authorization may also be carried out using derivatives, provided such voting share capital in Allianz SE is directly or indirectly acquired derivatives do not relate to more than 5 % of the share capital. by one or more third parties who do not belong to the Domestic or foreign banks that are majority-owned by Allianz SE Allianz Group, and which provide for an exception from the usual may buy and sell Allianz shares for trading purposes (§ 71 (1) No. 7 and vesting and exercise periods. In line with the relevant general (2) AktG) under an authorization of the General Meeting valid until conditions, the company will release the RSUs to plan participants 8 May 2023. The total number of shares acquired thereunder, together on the day of the change of control, without observing any vesting with treasury shares held by Allianz SE or attributable to it under period that would otherwise apply. The cash amount payable per §§ 71a et seq. AktG, shall at no time exceed 10 % of the share capital of RSU must equal or exceed the average market value of the Allianz Allianz SE. share and the price offered per Allianz share in a preceding tender offer. By providing for the non-application of the vesting period in the event of a change of control, the terms take into account the fact that the conditions influencing the share price are substantially different when there is a change of control. The following essential agreements of the company are subject to a change-of-control condition following a takeover bid: − Our reinsurance contracts, in principle, include a clause under which both parties to the contract have an extraordinary termination right, if and when the counterparty merges with another entity or its ownership or control situation changes materially. Agreements with brokers regarding services connected with the purchase of reinsurance cover also provide for termination rights in case of a change of control. Such clauses are standard market practice. − Allianz SE is also party to various bancassurance distribution agreements for insurance products in various regions. These distribution agreements normally include a clause under which the parties have an extraordinary termination right in the event of a change of control of the other party’s ultimate holding company. − Shareholder agreements and joint ventures to which Allianz SE is a party often contain change-of-control clauses that provide, as the case may be, for the termination of the agreement, or for put or call rights that one party can exercise with regard to the joint venture or the target company, if there is a change of control of the other party. − The framework agreements between Allianz SE and the subsidiaries of various car manufacturers relating to the distribution of car insurance by the respective car manufacturers each include a clause under which each party has an extraordinary termination right in case there is a change of control of the other party. 26 Annual Report 2021 − Allianz Group ## Page 29 B _ Corporate Governance REMUNERATION REPORT The Remuneration Report describes the structure and arrangements of the remuneration system for the Board of Management and the In addition to the situation and impact of the global COVID-19 Supervisory Board of Allianz SE. It explains the application of the pandemic on overall economic conditions, as well as on the insurance remuneration system in the financial year 2021, using detailed and industry and Allianz employees, other key issues included the risk individualized specifications on the remuneration of current and strategy and the Board of Management’s planning for both the former members of the Board of Management and the Supervisory financial year 2022 and the three-year period from 2022 to 2024. Board. Cyber risk security and the impact of rising inflation rates on the The report was created jointly by the Board of Management and insurance business were also regularly discussed. Furthermore, the the Supervisory Board, and takes into consideration the requirements Supervisory Board dealt in depth with personnel matters relating to of § 162 of the German Stock Corporation Act (AktG), and the the Board of Management as well as succession planning for the recommendations of the German Corporate Governance Code in its Board of Management and Supervisory Board, especially in the currently valid version. context of the upcoming elections to the Supervisory Board in 2022. It was also decided to allow the auditor to carry out a The Supervisory Board and various committees also discussed comprehensive, content audit of the Remuneration Report above and appropriate consideration of non-financial targets in the target-setting beyond the legal requirements of § 162(3) AktG. process for the Board of Management remuneration. The Personnel Committee of the Supervisory Board has closely followed the business development from the viewpoint of potential Review of the financial year target achievement at Group level and individual remuneration targets for the first half of the year and at year-end. Another focal point was the ongoing discussion of the lawsuit and official proceedings in The Supervisory Board had resolved minor adjustments to the connection with the AllianzGI U.S. Structured Alpha Funds, particularly remuneration system for members of the Board of Management with in the second half of 2021 and with regards to the target achievement effect from 1 January 2021. These comprise primarily the introduction for the financial year. Besides the quantitative targets for the financial of requirements or recommendations of the German Stock year 2022, the non-financial targets and appropriateness of the Corporation Act and the German Corporate Governance Code. The remuneration of the Board of Management were discussed. Changes details of these adjustments are described in the section “Other in the Board of Management were also prepared and implemented. Remuneration Principles”, “Deviation From The Remuneration System” and “Remuneration Adjustments”. The Supervisory Board also resolved to adjust the target Remuneration of the Allianz SE Board remuneration and the maximum remuneration of the Chairperson of of Management the Board of Management, to ensure the appropriateness of the remuneration. The remuneration system adjusted on this basis was presented to the Annual General Meeting under agenda item 5 for approval on Remuneration is designed to be appropriate compared to peers, given 5 May 2021. The Annual General Meeting approved the system for the the Allianz Group’s range of business activities, operating environment, remuneration of the members of the Board of Management with a and business results achieved. The aim is to ensure and promote majority of 87.14 %. The remuneration system applies to all members sustainable and value-oriented management of the company that is of the Board of Management who were active in the financial year in line with our corporate strategy. The key principles are as follows: 2021. − Support of the Group’s strategy: The design of variable compensation, and in particular of performance targets, reflects the business strategy and sustainable long-term development of Barbara Karuth-Zelle and Christopher Townsend have been members the Allianz Group. of the Board of Management since 1 January 2021. They assumed − Alignment of pay and performance: The performance-based departmental responsibility from Dr. Christof Mascher and Niran variable component of the board members’ remuneration forms a Peiris, both of whom retired from the Board of Management as of 31 significant portion of the overall remuneration, corresponding to December 2020. 70 % of the target compensation. Effective 1 October 2021, Andreas Wimmer was appointed to the − Sustainability of performance and alignment with shareholder Board of Management. He assumed responsibility for the Asset interests: A major part of the variable remuneration reflects Management division and Allianz Life in the U.S. from Jacqueline Hunt, longer-term performance, with deferred payout (64 %), and is who is acting as strategic advisor to the Chairperson of the Board of linked to the absolute and relative performance of the Allianz Management as of this date. Remuneration for the new members of share. the Board of Management was set at the same level as the other ordinary members of the Board of Management. Annual Report 2021 − Allianz Group 27 ## Page 30 B _ Corporate Governance and selected international companies (including, for example, the top The Board of Management’s remuneration is decided upon by the positions in the STOXX Europe 600 Insurance), taking into account the entire Supervisory Board, based on proposals prepared by the company’s position, as well as the Allianz Group’s long-term Supervisory Board’s Personnel Committee. If required, the Supervisory performance, relative size, complexity, and internationality. Board may seek outside advice from independent external The benchmarking against the DAX companies in December consultants. The Personnel Committee and the Supervisory Board already took into account the extension of the peer group from 30 to consult with the Chairperson of the Board of Management in 40 companies. The outcome of the horizontal comparison is that assessing the performance and remuneration of Board of Allianz SE is well above 75th percentile relative to size (revenue, Management members. The Chairperson of the Board of number of employees, and market capitalization) compared to the Management is generally not involved in the discussion about their DAX companies. Accordingly, the total remuneration of the members own remuneration. The Supervisory Board designs the remuneration of the Board of Management is orientated on the upper quartile of the system for the members of the Board of Management in accordance remuneration of the peer companies. with the requirements of the German Stock Corporation Act (AktG) in its currently valid version as well as with regulatory requirements and Vertical appropriateness the recommendations of the German Corporate Governance Code, This comparison is based on the total direct compensation of a while ensuring clarity and comprehensibility. Feedback from investors member of the Board of Management and the average direct is also considered. compensation of an employee of the German Allianz companies. The Supervisory Board’s decision in December is based on the factor resulting from this comparison for the previous financial year. For the financial year 2020, the factor for the Chairperson of Board of Based on the remuneration system, the Supervisory Board determines Management to employee was “66”, and the factor for a regular board the target total compensation, and regularly reviews the member to employee was “36”. For the financial year 2021, the appropriateness of the remuneration. This is based on both a respective factor for the Chairperson of Board of Management to horizontal comparison (i.e., with peer companies) and a vertical employee is “70” and the factor regular board member to employee is comparison (in relation to Allianz employees). Again, the Supervisory “41”. Board’s Personnel Committee develops respective recommendations, if necessary with the assistance of external consultants. The structure, weighting, and level of each remuneration The following diagram provides an overview of the structure and component should be adequate and appropriate. amount of the target remuneration of the members of the Board of Management in the financial year 2021. Horizontal appropriateness The Supervisory Board regularly benchmarks the remuneration of the Board of Management of Allianz SE against other DAX companies 28 Annual Report 2021 − Allianz Group ## Page 31 B _ Corporate Governance Pension contribution To provide competitive and cost-effective retirement and disability benefits, company contributions to the defined-contribution pension Fixed remuneration plan “My Allianz Pension” are invested with a guarantee for the The fixed remuneration components comprise the base salary, contributions paid, but no further interest guarantee. perquisites, and pension contributions. They serve to provide a Each year, the Supervisory Board decides whether a budget is competitive remuneration to attract and retain Board of Management provided and, if so, to what extent. The current pension contribution members, whose experience and skills enable them to develop and generally represents 15 % of the target compensation of the board successfully implement the Allianz Group’s strategy. They secure a members. reasonable level of income in line with market conditions, and promote Apart from cases of occupational or general disability for medical a management of the company that is commensurate with risk. reasons, the earliest age a pension can be drawn is 62. Should board membership cease before the retirement age is reached, accrued Base salary pension rights are maintained if vesting requirements are met. The base salary, which is not performance-related, is paid in twelve Members of the Board of Management may have additional equal monthly installments. pension entitlements under former pension plans based on previous positions in the Allianz Group or due to membership of the Board of Perquisites Management prior to 2015. Payments of social insurance Perquisites mainly consist of contributions to accident and liability contributions abroad required by Allianz in individual cases may also insurances, tax consultant fees and the provision of a company car and give rise to additional pension entitlements. further individual perquisites if applicable. Perquisites are not linked to performance. Each member of the Board of Management is Performance-based remuneration responsible for paying the income tax due on these perquisites. The The performance-based variable remuneration includes the short- Supervisory Board regularly reviews the level of perquisites; a term annual bonus and long-term share-based remuneration. The contractual annual cap applies. If an appointment to the Board of composition aims to balance short-term performance, longer-term Management requires a change of residence, relocation expenses are success and sustained value creation. The Supervisory Board ensures reimbursed to an appropriate extent. that the targets for the variable remuneration are challenging, sustainable and ambitious. Annual Report 2021 − Allianz Group 29 ## Page 32 B _ Corporate Governance Annual bonus occur if the supervisory authority (BaFin) requires this in accordance The annual bonus provides incentives for profitable growth and with its statutory powers. further developing the operating business by successfully implementing the business objectives for the respective financial year. Payout cap In doing so, the overall responsibility for reaching the Group targets as In accordance with § 87a (1) sentence 2 (1) AktG and the well as the individual performance with regard to the operational recommendations of the German Corporate Governance Code, the responsibilities of the individual members of the Board of Supervisory Board has determined a remuneration cap. Management are taken into consideration. Thus, the actual payout for the underlying financial year, The annual bonus is derived by multiplying the target comprising the base salary, variable remuneration and pension service achievement factor by the target amount for the annual bonus, and is cost, will be capped at maximum € 11,750 thou for the Chairperson of paid out in cash after the end of the relevant financial year, with the Board of Management, and at € 6,000 thou for a regular member payment limited to a maximum of 150 % of the target amount. of the Board of Management. If the remuneration for the financial year exceeds this amount, compliance with the maximum limit will be Long-term incentive – LTI ensured by reducing the payout of the long-term variable The long-term, share-based compensation is oriented mainly towards remuneration accordingly. the sustainable increase in the enterprise value. Taking the share price This payout cap principle was introduced for the first time for the performance in absolute and relative terms as a basis, it encourages financial year 2019. Given that the actual amount of the paid out long- combining the interests of the shareholders with those of the members term variable remuneration cannot be determined until after vesting of the Board of Management. and the final sustainability assessment, compliance with the payout Other stakeholder aspects are taken into consideration by setting cap will be reported on for the first time in the Remuneration Report strategic sustainability targets, whose achievement forms the basis for for the financial year 2024. the final assessment at the end of the four-year contractual vesting period. Deviation from the remuneration system Almost two thirds (64 %) of the variable remuneration is share- The Supervisory Board can deviate temporarily from the remuneration based, so as to adequately reflect the long-term performance of the system in exceptional circumstances in accordance with the statutory company in the Board of Management remuneration. requirements (§ 87a (2) AktG), if this is necessary in the interests of the long-term welfare of the company. The assessment may take into Additional remuneration principles account both macroeconomic and company-related exceptional circumstances, such as impairment of the long-term viability and Shareholding obligation and shareholding exposure profitability of the company. The deviation requires a prior proposal by The members of the Board of Management are obliged to build up the Personnel Committee. the following degree of share ownership within three years: The components of the remuneration system from which deviations may be made in exceptional cases include in particular the − Chairperson of the Board of Management: two times base salary, base salary, the annual bonus and the long-term incentive (LTI), i.e., € 3,822 thou, including their relationship to each other, their respective assessment − Regular Board of Management member: one time base salary, bases where applicable, the target setting and target achievement i.e., € 975 thou. assessment principles, and the determination of any payout and payment dates. The duration of the deviation shall be determined by Holding is required for the entire term of service on the Board of the Supervisory Board at its due discretion, but should not exceed a Management. Shares will be acquired through mandatory pay period of four years. In a crisis situation, for example, this principle is component conversion. In case of a base salary increase, the intended to allow the appointment of a new board member, e.g., with shareholding obligation increases accordingly. The holding obligation crisis management expertise, with a remuneration structure that ceases with the end of the mandate. temporarily deviates from the remuneration structure. In combination with the virtual shares (RSU) accumulated over In the financial year 2021, the Supervisory Board did not make four years through the LTI plan, the Allianz SE Board of Management use of the option to deviate from the remuneration system. has significant economic exposure to the Allianz stock: It amounts to approx. 800 % of base salary for the Chairperson and approx. 700 % of base salary for a regular board member. Malus/clawback Variable remuneration components may not be paid, or payment may be restricted, in the case of a significant breach of the Allianz Code of Conduct or regulatory Solvency II policies or standards, including risk limits. In the same way, variable remuneration components already paid may be subject to a clawback for three years after payout. Additionally, a reduction or cancellation of variable remuneration may 30 Annual Report 2021 − Allianz Group ## Page 33 B _ Corporate Governance Remuneration adjustment Transition payment The Supervisory Board is also entitled to take appropriate account of Board members appointed before 1 January 2010 are eligible for a extraordinary unforeseeable developments when determining the transition payment after leaving the Board of Management. The amount of the variable remuneration components. This rule takes up transition payment comprises an amount corresponding to the most a recommendation of the German Corporate Governance Code and recent base salary (paid for a period of six months), plus a one-time allows for the adjustment of the remuneration in rare unforeseeable payment of 25 % of the target variable remuneration at notice date. exceptional cases. Where an Allianz pension is due at the same time, such pension is Conceivable cases of application include, for example, significant deducted from the monthly transition payments. In the event of a changes in accounting rules, or in the tax or regulatory framework, as contractually agreed non-compete clause, the remittance of the well as catastrophic events not yet known at the time of target setting. transitional payment will be offset against the payment resulting from The application of this rule may also lead to a reduction in the variable the non-compete clause. remuneration. The Supervisory Board may also adjust the target remuneration Miscellaneous of the members of the Board of Management, insofar as this is appropriate to ensure that the remuneration of the Chairperson of the Internal and external board appointments Board of Management or a regular member of the Board of When a member of the Board of Management simultaneously holds Management is appropriate with regard to their duties and an appointment at another company within the Allianz Group or their performance. In doing so, it shall take into account the comparison of joint ventures with outside partners, the full amount of the respective the Board of Management remuneration horizontally and vertically. remuneration is transferred to Allianz SE. The aim of this rule is to moderately adjust Board of Management In recognition of related benefits to the organization, and subject remuneration on the basis of horizontal and vertical salary trends, and to prior approval by the Supervisory Board of Allianz SE, board thus to avoid major salary increases. members are also allowed to accept a limited number of non- It does not constitute an automatic adjustment, but requires a executive supervisory roles at appropriate external organizations. In justified decision by the Supervisory Board in each case. Such a these cases, 50 % of the remuneration received is paid to Allianz SE. moderate adjustment of the target remuneration does not in itself The respective board member will retain the full remuneration for represent a significant change to the remuneration system. These that position only if the Allianz SE Supervisory Board classifies the adjustments or deviations must be justified in detail in the respective appointment as a personal one (ad personam). Any remuneration remuneration report for the financial year. The remuneration report is paid by external organizations will be itemized in those organizations’ prepared in accordance with ARUG II and submitted to the Annual annual reports; its level will be determined by the governing body of General Meeting for approval. the relevant organization. In the financial year 2021, the Supervisory Board did not make use of the option to adjust the remuneration. Termination of service Board of Management contracts are limited to a period of five years. For new appointments, a shorter period of up to three years is provided based on the recommendation by the German Corporate Governance Code. Severance payment cap Payments for early termination to board members with a remaining term of contract of more than two years are capped at twice the annual compensation, consisting of the last financial year’s base salary and 100 % of the variable target compensation. If the remaining term of contract is less than two years, the payment is pro-rated for the remaining term of the contract. Contracts do not contain provisions for any other cases of early termination of Board of Management service. In the event of a contractually agreed non-compete clause, a severance payment is offset against compensation resulting from the non-compete clause in case of premature termination of service. Annual Report 2021 − Allianz Group 31 ## Page 34 B _ Corporate Governance attributable to shareholders, each at 50 %. The resulting target achievement is adjusted by an individual contribution factor (ICF) in Target achievement factor to determine the the range of 0.8 to 1.2, which reflects both the results of the business variable remuneration division and the performance of the individual board member. If In line with the overarching strategic objective “simplicity wins”, the targets are not met, the variable compensation can be reduced to calculation of variable remuneration follows a simple system. The zero. If targets are significantly exceeded, the target achievement is annual bonus and LTI allocation are based on only two Group financial limited to 150 %. targets for the relevant financial year: operating profit and net income Group financial targets The minimum, target, and maximum values for the Group The Group financial targets are based on equally weighted targets for financial targets are set annually by the Supervisory Board. These are Group operating profit and Group net income attributable to documented for the respective next financial year and published ex- shareholders. Adjustments are only applied to acquisitions and post in the remuneration report. disposals that account for more than 10 % of the Group’s operating profit or net income attributable to shareholders, or that have a value- Individual performance indicators adding effect from a risk management perspective (e.g., portfolio The Group financial target achievement is multiplied by the ICF for transfers) and were not yet known at the time the plan was prepared. each board member. The ICF is based on an assessment by the This regulation is intended to prevent meaningful transactions from Allianz SE Supervisory Board, resting upon KPIs reflecting the having a negative impact on the remuneration of the Management respective board member’s area of responsibility and their personal Board. contribution. Operating profit highlights the underlying performance of ongoing core operations. − Business division targets: For board members with business- Net income attributable to shareholders is the profit after tax and related division responsibilities, the contribution to the financial non-controlling interests (minorities). Furthermore, the net income performance considers various indicators of profitability (e.g., forms the basis for the dividend payout and for the return on equity operating profit and net income) and productivity (e.g., expense calculation. Both key performance indicators (KPIs) are important ratio) for the respective business division. For board members with steering parameters for the Allianz Group and therefore reflect the a functional focus, division-specific performance targets are level of implementation of the Group’s strategy. determined based on their key responsibilities, and qualitatively The Group’s financial target achievement is limited to a maximum assessed. of 150 % and can drop to zero. 32 Annual Report 2021 − Allianz Group ## Page 35 B _ Corporate Governance − Non-financial targets (incl. sustainability targets): Customer Determining the individual contribution factor (ICF) satisfaction (for example, Net Promoter Score (NPS)) and The Supervisory Board determines the ICF for each member of the employee satisfaction (for example, Allianz Engagement Survey) Board of Management based on the fulfillment of the individual are taken into account in the non-financial targets. The performance indicators. Most of the performance indicators are management qualities, including strategic properties, are also provided with quantitative criteria, and therefore offer a sufficiently assessed. The review of the individual management qualities concrete basis for the combined assessment. assesses behavioral aspects, such as customer orientation, The individual indicators are not weighted on a percentage basis, personnel management, corporate behavior, and credibility (for so that the ICF is not determined on the basis of a formulaic example, social responsibility, integrity, diversity). The following calculation. This allows the Supervisory Board to take appropriate elements were taken into account in 2021 with regard to consideration of the individual criteria and to react appropriately to sustainability/climate protection: changes in priorities during the year. Since the performance is determined without a specified weighting, the ICF covers a narrow − Decarbonizing the Allianz Group’s business operations and range of 0.8 to 1.2. increasing the share of renewable energy in order to reduce carbon emissions by 30 % by 2025, against a 2019 baseline. Long-term incentive (LTI) design − Decarbonizing the investment portfolio in line with the Asset The long-term, share-based compensation component makes up the Owner Alliance (AOA) with the interim target of reducing largest portion of variable compensation. It promotes alignment with emissions in listed equities and corporate bonds asset classes shareholders and reflects the sustainable implementation of the by 25 % by year-end 2024 (baseline year 2019). company’s long-term strategy. The LTI is based on the performance in − Securing the strong sustainability position in three leading absolute and relative terms (i.e., versus competitors) of the Allianz sustainability indices. share. Furthermore, the long-term development of KPIs is reflected in the deferred sustainability assessment following the four-year Additional information can be found in the Non-Financial Statement contractual vesting period. for the Allianz Group and Allianz SE. − Grant and contractual vesting period: The LTI is granted annually − The RSU allocation value is based on the ten-day-average in the form of virtual Allianz shares, so-called restricted stock units Xetra closing price of the Allianz stock following the annual (RSUs). The number of RSUs to be granted corresponds to the LTI financial media conference1. As RSUs are virtual stock without allocation amount, divided by the allocation value of an RSU at dividend payments, the relevant share price is reduced by the grant: net present value of the expected future dividend payments during the four-year contractual vesting period. − The LTI allocation amount is derived by multiplying the LTI target amount by the annual bonus achievement factor, and capped at maximum 150 % of the target level. 1_For accounting purposes, the determination of the fair value of RSUs is based on an option pricing model the volatility of the peer index, their correlation, and the expected dividends. The value of the RSUs used taking into account additional input parameters, including the term structure of interest rates and the for the board members’ compensation may deviate from this IFRS value, as a simplified calculation expected relative performance of the Allianz share price compared to the peer index. For the latter, method was applied to increase transparency and traceability. simulation techniques are applied at the valuation date to determine the volatility of the Allianz stock, Annual Report 2021 − Allianz Group 33 ## Page 36 B _ Corporate Governance The LTI grant is followed by a contractual vesting period of four years. − At the end of the contractual vesting period, the difference After that period, the LTI amount to be paid is determined based on between the Allianz TSR and the Index TSR is determined in the relative performance of the Allianz share, the relevant share price, percentage points; the result is multiplied by “2”: As the and the results of the sustainability assessment. comparison with competitors and the market is of outstanding importance, the outperformance/underperformance is − Relative performance versus peers: Besides the absolute share- weighted twofold. price development, the LTI payout takes the relative performance − To determine the factor, 100 percentage points are added to of the Allianz share into account. The total shareholder return the result. Example: 1 percentage point outperformance (TSR) of the Allianz share is benchmarked against the TSR of the results in a relative performance factor of 102 %; 1 percentage STOXX Europe 600 insurance index by reflecting the relation of point underperformance results in a relative performance the total performance of the Allianz share (“Allianz TSR”) and the factor of 98 %. total performance of the STOXX Europe 600 insurance index (“Index TSR”) between the start and end of the four-year In order to avoid incentivizing excessive risk-taking, the relative TSR contractual vesting period. The payout is based on the TSR performance factor is limited: it can vary between zero (for performance factor, which is calculated as follows: underperformance of the index by - 50 percentage points or lower) and 200 % (for outperformance of the index by minimum + 50 percentage points or higher). − Sustainability assessment: Prior to the payout of each LTI tranche, − Allianz share performance, payout, and cap: Following the end of the Supervisory Board determines, following a preliminary the four-year contractual vesting period, the granted RSUs are assessment by the Personnel Committee and the external auditor, settled in cash, based on the ten-day average Xetra closing price whether there are any sustainability-related concerns regarding a of the Allianz SE share following the annual financial media full payout. If so, payment of the tranche may be canceled in full conference in the year the respective RSU plan vests, multiplied by or in part. the relative TSR performance factor, and adjusted by the sustainability assessment, if necessary. The relevant share price is Subject of the sustainability assessment are: capped at 200 % of the grant price. Likewise, the relative TSR performance factor is capped at a maximum of 200 %. Taking into − compliance breaches, account the overall compensation cap (€ 6,000 thou for a regular − balance sheet issues, such as reserve strength, solvency, board member and € 11,750 thou for the Chairperson of the indebtedness, and ratings, Board of Management), the LTI payout in relation to the LTI target − KPIs entailed in the individual board members’ targets, such as – which deviates from the individual LTI component caps – is NPS, employee satisfaction, and climate targets. limited to 272 %. The assessment is made applying a comparable basis; i.e., any Outstanding RSU holdings are forfeited should a board member leave regulatory changes, changes in accounting regulations, or at their own request or be terminated for important cause. changes in calculation methods for the KPIs in question are taken into account. 34 Annual Report 2021 − Allianz Group ## Page 37 B _ Corporate Governance Illustrative examples: LTI payout: performance exceeds expectation (scenario 1) Illustrative example for RBM % Number RSUs € thou Initial grant based on: •LTI target 1,463 •LTI allocation amount: annual bonus achievement factor applied to LTI target 110 1,609 •RSU grant (listed share price: € 240, share price relevant to the calculation of the allocation: € 190 (= reduced by the net present value of estimated 8,470 future dividends of € 50)) LTI payout at vesting based on: •RSUs x share price at vesting (€ 298) 2,524 •TSR relative performance factor: 2 x (TSR Allianz: 45 % – TSR Stoxx Europe 600 Insurance: 40 %) + 100 % 110 Payout 2,776 LTI payout: performance remains below expectation (scenario 2) Illustrative example for RBM % Number RSUs € thou Initial grant based on: •LTI target 1,463 •LTI allocation amount: annual bonus achievement factor applied to LTI target 90 1,317 •RSU grant (listed share price: € 240, share price relevant to the calculation of the allocation: € 190 (= reduced by the net present value of estimated 6,930 future dividends of € 50)) LTI payout at vesting based on: •RSUs x share price at vesting (€ 226) 1,566 •TSR relative performance factor: 2 x (TSR Allianz: 15 % – TSR Stoxx Europe 600 Insurance: 40 %) + 100 % 50 Payout 783 Annual Report 2021 − Allianz Group 35 ## Page 38 B _ Corporate Governance Application of the remuneration The provision recorded in Q4 2021 for proceedings relating to the system in the financial year Structured Alpha Funds significantly reduced net income attributable to shareholders and thus also the target achievement of the net income attributable to shareholders. With net income attributable to shareholders of € 6.61 bn, the target of € 7.20 bn was not reached, resulting in a target achievement of 83.60 %. Without the very strong Financial Group targets and target achievement operating performance and the positive effect from the Allianz Life The degree of target achievement for the Group's financial targets is reinsurance agreement in the USA, the target achievement for net calculated as the simple average of the target achievement of the income attributable to shareholders would have been even lower. operating profit for the year and the net income for the year Overall, this results in an achievement rate for the Group's attributable to shareholders. At € 13.4 bn, the operating profit target financial targets of 103.47 %. The Supervisory Board did not exercise of € 12.0 bn was exceeded as all business units achieved strong any discretion in determining the Group's financial target growth, resulting in a target achievement of 123.33 % for operating achievement. profit. Group financial target achievement level 2021 Group financial target achievement 2019-2021 Group financial target achievement Operating profit Net income Achievement level combined in % Financial year 2019 2020 2021 2019 2020 2021 2019 2020 2021 Bonus curve 0 % - Floor in € bn 5.80 6.00 6.00 3.80 4.00 3.60 100 % - Target in € bn 11.50 12.00 12.00 7.50 7.90 7.20 150 % - Max in € bn 14.35 15.00 15.00 9.35 9.85 9.00 Target achievement 108.72 75.58 103.47 Achievement level in € bn 11.86 10.75 13.40 7.91 6.81 6.61 Achievement level in % 106.24 79.19 123.33 111.19 71.97 83.60 Weight in % 50.00 50.00 50.00 50.00 50.00 50.00 36 Annual Report 2021 − Allianz Group ## Page 39 B _ Corporate Governance Individual performance indicators and application Dr. Barbara Karuth-Zelle has very quickly lived up to her new role of the individual contribution factor as member of the Board of Management, already making a positive In order to calculate the annual bonus, the target achievement level of and important contribution in her first year. Under her leadership, the the Group’s financial targets is multiplied by the individual contribution Allianz Group has made considerable progress in further harmonizing factor (ICF), which is determined for each board member by the and centralizing its IT operations. Productivity, for example, once again Supervisory Board in line with the target achievement of the individual increased. Despite the numerous group-wide transformation agreement on the financial and non-financial targets. initiatives, IT costs remained in line with expectations. The IT stability The financial performance of the Board of Management, based was maintained at a high level and the IT security of the Allianz Group on the operating business, has to be rated as very strong for the was improved further. The very positive development of employee financial year 2021. The solvency stabilized at a good level. Almost all satisfaction in her area of responsibility is also worth mentioning. business divisions made a positive contribution and some have The Supervisory Board expects further progress, especially in significantly exceeded the target level. synchronizing the global and local measures taken to implement the The Iberia & Latin America region and the non-operating business Business Master Platform, and the consistent alignment of personnel of the Asset Management are the exception. Consequently, the development to the new requirements. The topic of cybersecurity must Group’s target achievement level is negatively impacted almost always be at the forefront in a dynamic environment. exclusively by these divisions. With a strong contribution to earnings by the operating entities in The strong performance overall was achieved on a sustainable Western Europe, Sergio Balbinot once again made a material basis. As in the financial year 2020, both customers and employees contribution to the Group's very good operating result. Thanks to the once again awarded the Board of Management a very good rating in acquisition of the Italian property-casualty insurance entity from the the financial year 2021, as revealed by the indicators such as Net Aviva Group, he further reinforced Allianz’s strong position in Italy. In Promoter Score, Inclusive Meritocracy Index, and Work Well Index addition to Allianz’s leadership among the Asian insurance units, the Plus. authorization it was granted to establish an insurance asset The environmental target set for reducing CO2 emissions was also clearly exceeded. As a result, the overall determination of the individual management company is another very positive issue. Allianz is contribution factor (ICF) for the Board of Management was 1. therefore the first company in China to be able to establish a fully Compared to the previous year, this includes a flat-rate discount of foreign-owned insurance asset management enterprise on the around 10 percentage points, which was agreed with each individual Chinese market. From a Group perspective, the approval from the member of the Board of Management as a result of the Structured China Banking and Insurance Regulatory Commission (CBIRC) to Alpha proceedings. acquire the shareholdings in Allianz China Life Insurance from joint As CFO, Giulio Terzariol was responsible for a considerable share venture Partner Citic Trust is of great importance. Allianz is now the of the strong operating profit of over € 13 bn. He worked consistently sole owner of this company. on the Allianz Group’s S&P rating, the solvency ratio, and liquidity, For the financial year 2022, the Supervisory Board expects which he reinforced through very good capital management, such as internal and external growth potential, where appropriate, to be successful transactions with closed life insurance policies. Mr. Terzariol realized in the Asia region, as well as further optimization of the was also convincing in his communication of the new financial targets business operations. on the Capital Markets Day and of the preparations for the Renate Wagner made a positive contribution to earnings with the introduction of IFRS 9/17. functional units she leads – Human Resources, Legal, Compliance, The Supervisory Board expects further progress to be made in Privacy & Data Protection, and M&A. It is particularly worth mentioning 2022 on accumulation control, the management of potential the second-highest result in the history of the group-wide employee reputational risks, and in monitoring and managing the survey “Allianz Engagement Survey”, which reflects the high level of transformation and IT activities. employee satisfaction with the management of the still persistent Dr. Günther Thallinger achieved a performance that exceeded pandemic in 2021. Contrary to the market trend, employee satisfaction expectations in investment management, for which he was remained at a high level in 2021. Another positive factor is the responsible. Capital efficiency was significantly increased in the implementation of acquisitions despite adverse conditions, for Life/Health business segment through a series of capital measures. In example in Italy and Poland, and groundbreaking transactions with 2021 the return on equity in this segment was 13.0 %. Dr. Thallinger also various closed life insurance portfolios as well as the good played a significant role in further structuring and implementing the collaboration with the U.S. authorities in resolving the events Allianz Group‘s sustainability ambitions with regard to environmental, surrounding the AllianzGI U.S. Structured Alpha Funds. social and governance (ESG) issues, whereby it achieved the leading The Supervisory Board expects that, aside from economies of position among the insurance companies in the Dow Jones scale, M&A transactions will also contribute to the new technological Sustainability Index Ranking 2021. The Group Center for sustainability challenges. The HR division has to focus strongly on developing and was set up successfully and pro-actively supported the work of the supporting talent within the Group, with regard to the changing newly-established Sustainability Committee of the Supervisory Board. requirements. The Supervisory Board expects to make further efforts in consistently realizing potential in the area of health insurance, especially through new cross-border digital initiatives as well as strengthening the competitive position as an investor in global capital markets, especially in non-listed assets. Annual Report 2021 − Allianz Group 37 ## Page 40 B _ Corporate Governance Dr. Klaus-Peter Röhler successfully steered the Allianz The quantitative performance of the companies in the Iberia & Deutschland AG companies through a challenging year with a steady Latin America region led by Iván de la Sota fell short of expectations. hand. The implementation of the reorganization of Allianz in Germany, The Supervisory Board expects a visible improvement here, in terms of together with the very good results of the employee survey at the same profitability and technical excellence. It is worth mentioning the time, is positive. Despite the severe natural disasters of summer 2021, promising start of the joint venture with Banco Bilbao Vizcaya Allianz Deutschland AG achieved very solid results. In addition to the Argentaria (BBVA) in Spain, the integration of the SulAmérica business strong contributions to earnings from Switzerland and the region in Brazil, and the successful transactions of the Allianz X unit in Central and Eastern Europe, the acquisition of Aviva’s life and promising FinTech companies. The Supervisory Board assesses as very property-casualty business, as well as Aviva Poland’s pension and positive the further successful steps taken towards developing and asset management businesses, further expanded the strong position implementing a uniform, cross-border product and IT platform of the Allianz companies in the region. Dr. Röhler had a material strategy as well as in the claims processing of Allianz Group. impact on the group-wide improvement in the Group’s property Allianz Life Insurance Company of North America (Allianz Life) as insurance performance indicators in the retail business. well as AllianzGI and PIMCO showed a strong operating performance The Supervisory Board continues to expect strong growth above during the time Jacqueline Hunt was responsible until the market trend in the region Central and Eastern Europe. It also 30 September 2021. Also positive was the successful completion of the expects consistent development of the digitalization process in the reinsurance agreement for a $ 35 billion fixed index annuity portfolio German companies in particular as well as timely improvements in by AZ Life, which significantly improved the Allianz Group's return on customer satisfaction in property insurance, in order to become the equity and strengthened the Allianz Group's regulatory capital market leader here too. position. In the case of AllianzGI and PIMCO, in particular, the record Dr. Andreas Wimmer quickly familiarized himself with the business inflows of assets under management had a positive impact. division he assumed on 1 October 2021, while also continuing to The non-financial targets also showed a good performance of successfully manage Allianz Lebensversicherungs-AG. In addition to Mrs. Hunt and her contribution went beyond her divisional his commitment to processing the Structured Alpha proceedings and responsibilities. his contribution to the life insurance portfolio transaction in the United Mrs. Hunt has been an excellen [Text truncated. The interactive version has the rest.]