D _ Consolidated Financial Statements 8 _ Reinsurance assets programs in place. Allianz SE participates with up to 100 % on an arm’s length basis in these cessions, in line with local requirements. The risk Reinsurance assets coming from these cessions is also limited by external retrocessions. € mn Reinsurance involves credit risk and is subject to aggregate loss limits. Reinsurance does not legally discharge the respective Allianz As of 31 December 2021 2020 company from primary liability under the reinsured policies. Although Unearned premiums 2,216 1,810 the reinsurer is liable to this company to the extent of the business Reserves for loss and loss adjustment expenses 13,033 11,274 Aggregate policy reserves 41,276 6,917 ceded, the Allianz company remains primarily liable as the direct Other insurance reserves 206 169 insurer for all the risks it underwrites, including the share that is Total 56,731 20,170 reinsured. The Allianz Group monitors the financial condition of its reinsurers on a regular basis and reviews its reinsurance arrangements periodically in order to evaluate the reinsurer’s ability to fulfill its obligations to the Allianz Group companies under existing and The increase in the reinsurance assets is largely due to a reinsurance planned reinsurance contracts. The Allianz Group’s evaluation criteria, transaction in the United States. In the fourth quarter of 2021 Allianz Life which include the degree of creditworthiness, capital levels, and Insurance Company of North America reinsured reserves of USD 36 bn marketplace reputation of its reinsurers, are such that the from the fixed index annuity portfolio. The transaction is expected to Allianz Group believes that its reinsurance credit risk is not significant, improve the return on equity and strengthen the regulatory capital and historically has not experienced noteworthy difficulty in collecting position for the Allianz Group. The effects from the transaction are mainly claims from its reinsurers. Additionally, and as appropriate, the reflected in following balance sheet positions. The reinsurance assets Allianz Group may also require letters of credit, deposits, or other increased by € 31 bn, this increase is fully reflected in the changes in financial guarantees to further minimize its exposure to credit risk. In aggregate policy reserves ceded to reinsurers. The deposits retained for certain cases, however, the Allianz Group does establish an allowance reinsurance ceded, which are included in other liabilities, increased by for doubtful amounts related to reinsurance as appropriate, although € 25 bn. In contrast, the investments decreased by € (7) bn, resulting from this amount was not significant as of 31 December 2021 and 2020. the asset derecognition for certain parts of the portfolio. Furthermore the deferred acquisition costs decreased by € (2) bn. 9 _ Deferred acquisition costs Changes in aggregate policy reserves ceded to reinsurers are as follows: Changes in aggregate policy reserves ceded to reinsurers Deferred acquisition costs € mn € mn As of 31 December 2021 2020 2021 2020 Deferred acquisition costs Carrying amount as of 1 January 6,917 5,260 Property-Casualty 5,099 4,876 Foreign currency translation adjustments 634 (390) Life/Health 18,224 16,550 Changes recorded in the consolidated income statement (687) 303 Subtotal 23,323 21,426 Other changes 34,411 1,744 Deferred sales inducements 234 190 Carrying amount as of 31 December 41,276 6,917 Present value of future profits 199 213 Total 23,756 21,830 The reserves for loss and loss adjustment expenses ceded to reinsurers Changes in deferred acquisition costs in the business segment Property-Casualty amounted to € 12,029 mn € mn (2020: € 10,471 mn) as of 31 December 2021. Their change is shown 2021 2020 in the respective table in note 14 . Carrying amount as of 1 January 21,830 24,777 The Allianz Group reinsures a share of the risks it underwrites in an Additions 7,113 9,845 effort to manage its exposure to losses and events, and to protect its Changes in the consolidated subsidiaries capital resources. For natural catastrophe events, the Allianz Group of the Allianz Group 2 22 has a centralized program in place that pools exposures from its Foreign currency translation adjustments 773 (984) subsidiaries by internal reinsurance agreements. Allianz SE limits Changes in shadow accounting 3,852 (2,308) exposures in this portfolio through external reinsurance. For other risks, Amortization (9,814) (9,523) the subsidiaries of the Allianz Group have individual reinsurance Carrying amount as of 31 December 23,756 21,830 Annual Report 2021 − Allianz Group 147