Allianz Global Benefits. Pooling. International Risk Management Programs. With you from A-Z. SCAN ME for more information on Allianz Global Benefits

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1 Pooling International Risk Management Programs With you from A-Z SCAN ME for more information on

2 Who we are is a member of Allianz Group and provides employee benefit solutions to multinational corporations and global brokers at a global level. The spectrum of solutions encompasses the full range of corporate life, pension, asset management and health products and services via a global and local network of more than 110 Allianz subsidiaries and selected leading external insurance partners in over 90 countries. International risk management programs helps you to optimize your employee benefit programs across countries, providing a clear overview, more advanced risk management and governance. Employee Benefits from A-Z Multinational corporations that offer their employees additional benefits as part of their compensation packages are faced with a multitude of systems and options in different countries. Benefit plans are often highly specific to local market practice and social security systems, which turns global coordination and consistency into a challenge. can help you meet this challenge, by utilizing the capabilities of our global network of more than 110 insurers present in over 90 countries to serve your subsidiaries all over the world. We cooperate with leading local market insurers and Allianz Global Lines (e.g. AGCS, AGI, PIMCO) to provide multinational corporations and global brokers with an extensive range of global and local solutions and services. By firstly implementing made-to-measure and cost effective employee benefit plans for your staff in your countries of operation, we ensure that our plans are locally compliant and above market standards. You benefit from the local expertise, local terms and conditions, administration and claims settlement of our local network insurers. Furthermore, by implementing an international solution you and your local operations may benefit from improved local underwriting terms (regional free cover limits) and global reporting & program management. is able to offer you the most appropriate international program to suit your needs and requirements. Pooling is just one of the options. Pooling involves the consolidation of local employee benefit plans from two or more countries into one account (pool) for experience sharing purposes. The combined insurance risks can comprise life, accident, disability, pension (risk elements only) and health. Local group insurance contracts are combined through At a glance Pooling consolidates local employee benefit plans from two or more countries into one account to assess and additionally optimize the overall result through a better spread of risk. In addition to optimal service and enhanced transparency through global reporting, multinational corporations can receive the benefit of an international dividend. Lines of business: Life Accident Disability Pension (risk elements) Health annual consolidated reporting: the local performance depicts the total premium amount reduced by the total local claim amount and the local costs. Then, profits from one country can be used to offset losses that may arise from another. In our Pooling program, the global performance of the pool is the result of the consolidated performance of all local plans reduced by international costs. A portion of the potential positive result is refunded to the client via an international dividend. Our local network insurers (April 015) Pooling How our Pooling program works Multinational Client Our approach in France * in Malaysia * in Mexico * Locally compliant policies = Cash flow & data flow = Data flow only Identify When a multinational client enters into a pooling arrangement with, we will first identify the company s subsidiaries that are already insured by network insurers around the world through a Network Search. Assess will assess the company s overall potential for a multinational Pooling program. We offer various types of Pooling systems taking into account the client s attitude to risk (please see next pages). Illustrate A pooling illustration demonstrates which Pooling solution is best suited to the company s size and interests, presenting also the savings that can potentially be achieved. Implement In close collaboration with the company, it is defined International dividend Global reporting & program management in France in Malaysia in Mexico Managed by Client Account Inclusion of risk premium up to 100% of pool capacity Profit and loss balancing via client account * Countries identified in the above chart are provided as examples only how the program can be best structured and established. and the company jointly execute a Preferred International Mandate (PIM). In addition the client provides a list of affiliate contacts worldwide. Manage A dedicated team is nominated whose role is to coordinate the relationships between the client s subsidiaries and network insurers. This includes both the strategic and operational support to facilitate the implementation of the Pooling solution and the transition of business into the pool in order to create maximum added value for the client. Evaluate Once the program is implemented, Allianz Global Benefits prepares consolidated annual reports (International Benefits Report) which provide a worldwide overview of local benefit programs, ensuring enhanced transparency and control. 3

3 Our Pooling systems The choice of the right pool depends on a number of factors including size and composition of the pool in combination with your company s risk profile. offers a full range of Pooling systems to ensure that multinationals of all sizes can benefit from pooling. Multi-Employer Pool (MEP) The MEP is designed to give companies with a small portfolio of pooled group contracts an opportunity to enjoy the advantages of pooling, which are usually only available for much larger portfolios. In the MEP, the client s risks are combined with risks from several other multinational clients into one single pool. In case of an overall positive result, losses within the MEP are distributed amongst all the participating multinational clients, ensuring that an international dividend is paid to those multinational clients with positive individual results (after deduction of the international costs). In case of an overall negative result our MEP pools are protected by an annual Stop Loss cover set at 100% of the premium in the pool. Through this mechanism our clients are not exposed to financial loss from participating in our pools. Three Year Stop Loss (3ySL) The 3ySL is suited to companies with a small to medium portfolio of pooled group contracts. Each client has its own self-standing pool, which means that the pool is of a size that enables it to assume its own risk and consequently has the potential to profit solely from its own experience. Under this arrangement, we look at the experience over a three year accounting period. At the end of each calendar year any positive or negative results are carried forward Minimum requirements of our different Pooling systems Countries No. of Risks* Premium ( ) within the accounting period of three years. The overall three year experience of the participating policies is therefore grouped together. In case of an overall positive result, international costs) is paid to the multinational client. In case of an overall loss the pool is covered by a Stop Loss set at 100% of the premium in the pool. Limited Loss Carry Forward (LLCF) The LLCF is for companies with a medium to large portfolio of pooled group contracts with a more mature and predictable experience. Each client has its own selfstanding pool, which means that the pool is of a size that enables it to assume its own risk and consequently has the potential to profit solely from its own experience. international costs) is paid to the multinational client. However, in the event of an overall loss being incurred, a year-specific loss will be carried forward to the subsequent years and balanced with positive results (maximum of three years). After the three year period a pool protection (Stop Loss) will be triggered to protect the pool from the original loss which could not be balanced with positive results. The Stop Loss is set at 100% of the premium in the pool. MEP 3ySL LLCF SL15 SL ,000 1, ,000,500 50,000, ,000 5, ,000 Risk management options (Pooling systems) Depending on various factors including size and composition of the pool Pool size (number of risks) Multi-Employer Pool (MEP)** * Three year accounting period ** Multiple companies risks in one pool *** Maturity in regard to risk profile and diversification 3-year Stop Loss (3ySL)* Pool maturity*** Stop Loss 15 (SL15) This pool is for companies with a medium to large portfolio of pooled group contracts with a more mature and predictable experience. Each client has its own selfstanding pool, which means that the pool is of a size that enables it to assume its own risk and consequently has the potential to profit solely from its own experience. international costs) is paid to the multinational client. However, in the event of an overall loss being incurred, a year-specific loss will be carried forward up to 5% of the pooled premium and balanced with positive results in subsequent years. A loss will be carried forward for a maximum of three years, after which a pool protection (Stop Loss) will be triggered. The SL15 is protected annually by a Stop Loss set at 15% of the premium in the pool. Stop Loss 15 (SL15) Limited Loss Carry Forward (LLCF) Stop Loss (SL) Stop Loss (SL) The Stop Loss pool is suited to companies with a large portfolio of pooled group contracts. Each client has its own self-standing pool, which means that the pool is of a size that enables it to assume its own risk and consequently has the potential to profit solely from its own experience. international costs) is paid to the multinational client. In case of an overall loss, the pool is covered by a Stop Loss set at 100% of the premium in the pool. * Number of lives covered per line of business 4 5

4 Case study Financial savings due to Pooling In the following example, non-pooled local accounts are compared with a pooled international account, illustrating the potential savings that could be achieved by the implementation of a multinational Pooling solution. Before Pooling: Non-pooled local accounts * Country France Malaysia Mexico Income Premiums Expenses Claims Commission Adminstration charges Local balance 505,000 65, , ,000 50,000 95, ,000 40,000 75, , ,000 15,000 The company s business in the Mexican and French subsidiaries shows an internal surplus, which occurs due to a positive balance between premium income and claim expenses. Without any kind of Pooling system, the surplus is retained by the local insurer. It is used for risk and operating costs, as profit margin as well as for local portfolio balance purposes in case there are loss making contracts (e.g. in Malaysia). Key benefits and services has built an excellent reputation as a leading provider of a comprehensive range of employee benefit solutions worldwide. With high quality employee benefit solutions, we ensure protection for employees while providing a vast range of services to multinational corporate clients and their brokers. To achieve highest possible customer satisfaction, Allianz Global Benefits offers a broad range of solutions and services: A vast array of made-to-measure Pooling solutions to fit your needs globally After Pooling: Pooled international account * Country France Malaysia Mexico Income Premiums Expenses Claims Commission Adminstration charges Local balance 505,000 65, , ,000 50,000 95, ,000 40,000 75, , ,000 15,000 Total,50,000,50,000 1,660, ,000 35,000,05,000 5,000 International costs** 37,000 30,000 45,000 11,000 By pooling the multinational employee benefit plans with Allianz Global Benefits, the surplus could be used to offset losses of other subsidiaries on an international stage. An overall surplus in the end of the international stage accounting would mean an international dividend is paid out: In this case our client would receive an international dividend of 113,000 despite of the loss of 160,000 made in Malaysia. Total pool result 103, , , ,000 international dividend * Countries, income figures, expenses figures and results identified in the above charts are provided as examples only ** Consisting of fees, risk retention and network share Added value through aligned and eased local underwriting terms (regional free cover limits) Possible financial savings on your worldwide employee benefits premiums A dedicated team, transparent account management and global underwriting Detailed annual International Benefits Reports for clients to keep an overview on pooled and non-pooled contracts placed within the network A network of leading local insurers who are strongly committed to meet the high standards to offer you best-in-class products and services High standards for information security and data protection: All Allianz operations adhere to a comprehensive set of policies for data protection and privacy as well as information security which are aligned with international standards and best practices Access to up-to-date benefit and social security data from around the world through a variety of marketing tools A long-term partnership backed by the financial strength and stability of the Allianz Group At a glance Pooling helps to keep the costs of employee benefit plans under control, to keep track of the development of the plans abroad, to detect problems at an early stage and to ensure that plans are in line with your corporate policy. 6 7

5 GmbH Reinsburgstrasse Stuttgart Germany Tel.: +49 (0) Fax: +49 (0) Advisory Board: Theo Bouts (Chairman) Board of Managing Directors: Dirk Hellmuth (CEO), Cyril Samson Head Office: Reinsburgstrasse 19, Stuttgart Comm. Reg.: HRB 517 February April Disclaimer: The contents provided do not constitute legal advice; will be for informational purposes only; and will not be relied upon by GmbH or any of GmbH s customers or insurers for any purpose other than informational.