ALLIANZ GROUP 124 Reinsurance The  reserve for loss and loss adjustment expenses is for future payment obligations under insurance claims where normally the amount of benefits to be paid and/or the date when payments must be made are not yet fixed. The reserve for loss and loss adjustment expenses is calculated at the estimated amount considered necessary to settle future claims in full. It is calculated using recognized actuar- ial methods. Unusual cases are calculated on an individual basis. Past experience is taken into account as well as current and future antici- pated social and economic factors. With the exception of annuity re- serves, claims reserves are not discounted. The necessary estimates may mean that the payment obligations calculated may differ from the ultimate cost. The methods and corresponding percentages for participation in prof- its by the policyholders are set out below for the most significant countries: The reserve for loss and loss adjustment expenses includes 1) Following local accounting rules for contracts signed beginning at July 1, 1994, the policyholder is entitled to at least 90 % of net investment income and to an appropriate share of income from all other sources of profit 2) Following local accounting rules, policyholders are to be credited with at least 90 % of net interest income and at least 80 % of gross income respectively There is, as of yet, no adequate statistical data available for some risk exposures in liability insurance, such as environmental and asbestos claims and large-scale individual claims, because some aspects of these types of claims are still evolving. Appropriate provision has been made for such cases following an analysis of the portfolio in which such risks occur. Loss reserves of subsidiaries purchased (sold) are included (ex- cluded) as of the date of transaction (disposition). If the profit participation is attributed to individual policyholders, the corresponding amount is transferred from the reserve for premiums refunds to the aggregate policy reserve. Other insurance reserves also include the premium deficiency re- serve, which is calculated individually for each insurance portfolio on the basis of estimates of future claims, costs, premiums earned and proportionate investment income. For short duration contracts, a premium deficiency is recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs, and maintenance expenses exceeds related unearned premiums while considering anticipated investment income. For long duration contracts, if actual experience regarding investment yields, mortality, morbidity, terminations or expense in- dicate that existing contract liabilities, along with the present value of future gross premiums, will not be sufficient to cover the present value of future benefits and to recover unamortized acquisition costs, then a premium deficiency is recognized. Other insurance reserves include the reserve for premium re- funds. This item includes experience-rated and other premium re- funds in favor of policyholders. The reserve for premium refunds includes the amounts allocated under the relevant local statutory or contractual regulations to the ac- counts of the policyholders and the amounts resulting from differ- ences between these IFRS-based financial statements and the local fi- nancial statements (latent reserve for premium refunds), which will be reversed in the future and which affect future calculations of profit participation. These differences are recognized on a future accrual basis and reported in profit participation accounts. Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported on a gross basis. Prepaid reinsurance represents the ceded portion of unearned premiums. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liabil- ity associated with the reinsured risks. Accordingly, revenues and ex- penses related to reinsurance agreements are recognized consistently with the underlying risk of the business reinsured. Unrealized gains and losses in connection with the valuation of investments are recognized in the latent reserve for premium refunds to the extent that the policyholder will participate in such gains and losses on the basis of statutory or contractual minimum regulations when they are realized. _  claims reported at the balance sheet date, _  claims incurred but not yet reported at the balance sheet date, _  claims settlement expenses. Country Base Percentage Germany Life  all sources of profit 90 % 1) Health all sources of profit 80 % 2) France Life investments 85 % Italy Life investments 85 %