ALLIANZ GROUP 126 Supplementary information Consolidated cash flow statement Interest and similar income/expenses Trading income Equity remuneration plans Fee and commission income Segment reporting As a result of the Allianz Group’s worldwide organization, the business activities of the Allianz Group are first segregated by prod- uct and type service: insurance activities, banking activities and asset management activities. Due to differences in the nature of products, risks and capital allocation, insurance activities are further divided be- tween property/casualty and life/health categories. Thus, the operating segments are structured as Property/Casualty, Life/Health, Banking, and Asset Management.  Information on segments is reported separately in the Annual Report. Segment reporting has been prepared on the basis of the account- ing regulations used to prepare the consolidated financial statements as a whole. In determining the segments of the Allianz Group, man- agement evaluates the organization of the Allianz Group, its revenue generating activities of internal management reporting process and the level of financial information available and utilized by the Man- agement Board in reviewing performance. Administration fees are recognized as the services are performed. Such fees are primarily based on percentages of the market value of assets under management. Distribution and servicing fees are recognized as the services are performed. Such fees are primarily based on percentages of the mar- ket value of assets under management. Investment advisory fees are recognized as the services are per- formed. Such fees are primarily based on percentages of the market value of the assets under management. Investment advisory fees re- ceivable for private accounts consist primarily of accounts billed on a quarterly basis. Private accounts may also generate a fee based on investment performance which are recognized at the end of the re- spective contract period if the prescribed performance hurdles have been achieved. In its banking business, the Group receives fees from transac- tions in connection with assets and liabilities held by the Group in its own name, but for the account of third parties. These are shown as ”Fee and commission income” in the income statement.  In addition to traditional commission income received on security transactions, fee and commission income in the securities business also includes commissions received in relation to private placements, syndicated loans and financial advisory services. Other fees reflect commissions received for trust and custody services, for the broker- age of insurance policies, credit cards, home loan and savings con- tracts and real estate. Fee and commission income is recognized in banking business when the corresponding service is provided. The Allianz Group accounts for its stock-related remuneration plans under the fair value recognition provisions of SFAS 123, whereby stock-based compensation cost is measured at the grant date based on the fair value of the awards granted and is recognized as expense over the vesting period. For rights redeemed by the issue of shares, the fair value is determined at the date of grant. The corresponding compensation cost is accrued over the vesting period and increases revenue reserves in shareholders’ equity. At each subsequent valua- tion date, the new valuation is determined on the basis of the share price at the valuation date. Compensation expense for these rights is accrued over the vesting period and reported under the heading “Other accrued liabilities” until paid. Compensation expense is re- versed in the period in which an unvested award is forfeited. The Al- lianz Group stock-based compensation plans are more fully described in Note 43. Trading income comprises all realized and unrealized gains and losses from trading assets and trading liabilities. In addition, commissions and all interest and all dividend income attributable to trading oper- ations and related refinancing costs are included in trading income. Interest income and interest expenses are recognized on an accrual basis. Interest income from lending business is recognized using the effective yield method. This item also includes dividends from avail- able-for-sale equity securities and interest recognized on finance leases. Dividends are recognized in income when declared. Interest on finance leases is recognized in interest income over the term of the respective lease so that a constant yield based on the net invest- ment is attained. The consolidated statement of cash flows shows the structure of and changes in cash and cash equivalents of Allianz Group during the financial year from the cash flows arising from operating activities, investing activities and financing activities. The cash flows from in- vesting activities primarily comprise changes in investment securities (such as securities available-for-sale or held-to-maturity). Financing activities include all cash flows from transactions involving the issuing of own shares, participation certificates and subordinated liabilities. Cash flows from operating activities contain all other activities, which belong to the principal revenue-generating activities. 