D _ Consolidated Financial Statements Assumptions for defined benefit plans Asset allocation of plan assets % € mn As of 31 December 2021 2020 As of 31 December 2021 2020 Discount rate 1.2 0.8 Equity securities This includes the following country rates: Quoted 1,569 1,302 Germany Non-quoted 13 3 long duration 1.2 0.8 Debt securities short duration 0.9 0.5 Quoted 4,564 4,858 United Kingdom 1.9 1.3 Non-quoted 2,880 3,494 Switzerland 0.3 0.3 Real estate1 962 900 1,2 Rate of compensation increase 1.8 1.8 Annuity contracts 4,954 4,065 1 Rate of pension increase 1.9 1.3 Life insurance investment products 1,249 1,168 Rate of medical cost trend 2.9 0.9 Other 279 341 Total 16,471 16,130 1_Real estate, annuity contracts and life insurance investment products are generally non-quoted. 2_Includes as of 31 December 2021 € 647 mn in the United Kingdom due to a buy-in. The recognized expenses are recorded based on the assumptions of the corresponding previous year. The discount rate assumption is the most significant risk for the The bulk of the plan assets are held by Allianz Versorgungskasse defined benefit obligation. It reflects market yields at the balance VVaG, Munich, which is not part of the Allianz Group. Plan assets do sheet date of high-quality fixed income investments corresponding to not include any real estate used by the Allianz Group, and include only the currency and duration of the liabilities. In the eurozone, the € 3.3 mn (2020: € 3.1 mn) of its own transferable financial instruments. decision for the discount rate is based on AA-rated financial and In addition to the plan assets of € 16.5 bn (2020: € 16.1 bn), the corporate bonds, and a standardized cash flow profile for a mixed Allianz Group has dedicated assets at Group level amounting to population. € 9.6 bn as of 31 December 2021 (2020: € 9.7 bn), which are likewise The range for the sensitivity calculations was derived by analyzing managed according to Allianz ALM standards. the average volatility over a five-year period. An increase in the discount rate by 50 basis points would lead to Contributions a decrease of € 1.7 bn (2020: € 1.8 bn) in the defined benefit For the year ending 31 December 2022, the Allianz Group expects to obligation, whereas a decrease in the discount rate by 50 basis points contribute € 276 mn to its defined benefit plans (2020: € 271 mn for would lead to an increase of € 2.0 bn (2020: 2.0 bn). the year ending 31 December 2021), and to pay € 412 mn directly to An increase of pre-retirement benefit assumptions (e.g., a salary participants in its defined benefit plans (2020: € 363 mn for the year increase) of 25 basis points would have an effect of € 68 mn (2020: ending 31 December 2021). € 73 mn) on the defined benefit obligation. However, the increase of post-retirement assumptions (e.g., inflation-linked increases of pension payments) of 25 basis points would increase the defined benefit Defined contribution plans are funded through independent pension obligation by € 604 mn (2020: € 586 mn). funds or similar organizations. Contributions fixed in advance (e.g., based on salary) are paid to these institutions and the beneficiary’s Plan assets/Asset liability management (ALM) right to benefits exists against the pension fund. The employer has no Based on the estimated future cash flows of € 916 mn for 2022, obligation beyond payment of the contributions. € 928 mn for 2023, € 956 mn for 2024, € 960 mn for 2025, € 997 mn for During the year ended 31 December 2021, the Allianz Group 2026, and € 4,915 mn for 2027 – 2031, the weighted duration of the recognized expenses for defined contribution plans of € 316 mn (2020: defined benefit obligation is 16.6 (2020: 17.4) years. Based on the € 311 mn). Additionally, the Allianz Group paid contributions for state liability profiles of the defined benefit obligation and on the regulatory pension schemes of € 348 mn (2020: € 329 mn). funding requirements, the Allianz Group uses stochastic asset liability models to optimize the asset allocation from a risk-return perspective. Due to a well-diversified portfolio of approximately 135,000 40 _ Share-based compensation plans (2020: 135,000) plan participants, no reasonable uncertainty is expected with regard to future cash flows that could affect the liquidity of the Allianz Group. The following chart shows the asset allocation: The AEI plan is granted in the form of restricted stock units (RSUs) and is part of the variable compensation component for the plan beneficiaries. The RSU granted to a plan participant obligates the Allianz Group to pay in cash the ten-day average Xetra closing price of the Allianz SE share on the vesting day, or to convert one RSU into one Allianz SE share. The Allianz Group can choose the settlement method for each unit. The payout is capped at a 200 % share price growth above the grant price. Annual Report 2021 − Allianz Group 179