Get documents about "Assicurazioni Generali
Document Sample
Assicurazioni Generali
INTERIM REPORT
30 SEPTEMbER 2011
80
th
year
2011
INTERIM REPORT
30 SEPTEMBER 2011
ECPI Ethical Index Euro
ECPI Ethical Index Global
FTSE ECPI Italia SRI:
Leaders Index; Benchmarck Index
Registered Office and Central Head Office in Trieste
Head Office for Italian Operations in Mogliano Veneto
Capital (fully paid in) Euro 1,556,873,283.00
Fiscal code and Trieste Companies Register 00079760328
Company entered in the Register of Italian Insurance
and Reinsurance Companies under no. 100003
Parent Company of Generali Group, entered
in the Register of Insurance Groups under no. 026
CHAIRMAN Gabriele Galateri di Genola
VICE - CHAIRMEN Vincent Bolloré, Francesco Gaetano Caltagirone, Alberto Nicola Nagel
MANAGING DIRECTOR AND GROUP CEO Giovanni Perissinotto (*)
(*) He acts also as General Manager
MANAGING DIRECTOR Sergio Balbinot (*)
(*) He acts also as General Manager
DIRECTORS Cesare Calari / Carlo Carraro / Diego Della Valle
(**) Directors who, together with the Chairman, Petr Kellner / Angelo Miglietta (**) / Alessandro Pedersoli
Vice-Chairmen and Managing Directors,
form the Executive Committee Lorenzo Pellicioli (**) / Reinfried Pohl / Paola Sapienza
Paolo Scaroni / Francesco Saverio Vinci
GENERAL COUNCIL Giorgio Davide Adler / José Ramón Álvarez Rendueles
Comprising, besides the below listed elective José Maria Amusátegui de la Cierva / Francesco Maria Attaguile
Members, the Members of the Board of Directors and
the General Managers Claude Bébéar / Kenneth J. Bialkin / Gerardo Broggini
Giacomo Costa / Maurizio De Tilla / Enrico Filippi
Carlos Fitz-James Stuart y Martínez de Irujo / Georges Hervet
Dietrich Karner / Khoon Chen Kuok / Stefano Micossi
Benedetto Orsini / Arturo Romanin Jacur / Guido Schmidt-Chiari
Alejandro Valenzuela Del Río / Theo Waigel / Wilhelm Winterstein
BOARD OF AUDITORS Eugenio Colucci, Chairman
Giuseppe Alessio Vernì / Gaetano Terrin
Maurizio Dattilo (substitute) / Francesco Fallacara (substitute)
GENERAL MANAGERS Raffaele Agrusti (***), Paolo Vagnone
(***) Chief Financial Officer and Manager in charge
of the preparation of the company’s financial reports
DEPUTY GENERAL MANAGERS Attilio Invernizzi / Manlio Lostuzzi / Aldo Minucci / Valter Trevisani
SECRETARY OF THE BOARD OF DIRECTORS Oliviero Edoardo Pessi
CORPORATE BODIES AS OF 11 NOVEMBER 2011
Eni - Drilling rig, Bir Rebaa camp, Algeria
The images published in this book refer to major Companies and works insured by Assicurazioni Generali.
Cover: collage of images provided by Save, Premuda, Citylife, Enel, Eni, Finmeccanica, Impregilo, Genagricola.
BOZZA DEL 11/11/2011 11:25:36
INDEX
MANAGEMENT REPORT
Group highlights 12
Business environment 13
Information on operations
Group highlights at 30 September 2011 21
Life segment 32
Non-life segment 47
Financial segment 59
Significant events after 30 September 2011 62
Outlook for Generali Group 62
Appendix to the Management report 67
CONSOLIDATED FINANCIAL STATEMENTS AND BASIS FOR PRESENTATION AND ACCOUNTING
PRINCIPLES
Consolidated financial statements
Balance sheet 76
Income statement 79
Segment reporting- balance sheet 80
Segment reporting- income statement 82
Basis for presentation and accounting principles 87
CERTIFICATION IN ACCORDANCE WITH ART. 154-BIS, PARAGRAPH 2, OF LEGISLATIVE DECREE NO.
58 OF 24 FEBRUARY 1998 91
Bozza del 11/11/2011 11:25:36 - DATI NON DEFINITIVI 9
Citylife - towers and residences project, Milan
MANAGEMENT REPORT
BOZZA DEL 10/11/2011 17:01:35
INDEX
Group highlights 12
Economic highlights 12
Financial highlights 12
Business environment 13
Macro-economic scenario 13
Financial markets 15
Insurance markets 17
Group highlights at 30 September 2011 21
Business performance of the Group 21
Financial position of the Group 26
Rating 31
Life segment 32
Business performance of the life segment 32
Financial position of the life segment 43
Non-life segment 47
Business performance of the non-life segment 47
Financial position of the non-life segment 56
Financial segment 59
Business performance of the financial segment 59
Financial position of the financial segment 61
Significant events after 30 September 2011 62
Outlook for Generali Group 62
Appendix to the management report
Information on operations 67
Methodological note on alternative performance measures 68
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 11
MANAGEMENT REPORT
BOZZA
Group highlights
Economic highlights
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Group
(*)
Gross w ritten premiums 51,326.9 53,829.3 15,474.0 15,700.4
Ex pense ratio 16.3% 15.4% 16.6% 16.4%
Acquisition costs / N et premiums 12.8% 12.1% 12.9% 12.8%
Administration costs / N et premiums 3.5% 3.3% 3.7% 3.6%
(**)
Consolidated operating result 3,100.4 3,132.7 692.2 996.8
Result of the period 825.0 1,312.7 19.5 439.8
Life segment
(*)
Gross life w ritten premiums 34,385.0 37,272.0 10,542.6 10,920.8
N et cash inflow s 6,496.2 12,621.7 1,677.8 3,021.0
APE 3,535.4 3,827.0 1,022.8 1,043.0
Ex pense ratio - life segment 11.3% 10.4% 11.9% 11.9%
Acquisition costs / N et premiums 8.9% 8.3% 9.4% 9.4%
Administration costs / N et premiums 2.4% 2.1% 2.6% 2.5%
Operating result - life segment 1,978.1 2,301.8 314.8 733.8
Non-life segment
Gross non-life w ritten premiums 16,941.9 16,557.3 4,931.4 4,779.6
Ex pense ratio - non-life segment 27.2% 27.3% 26.2% 26.0%
Acquisition costs / N et earned premiums 21.2% 21.3% 20.2% 20.0%
Administration costs / N et earned premiums 5.9% 6.0% 5.9% 6.0%
Loss ratio - non-life segment 69.4% 71.5% 70.5% 72.7%
C ombined ratio - non-life segment 96.6% 98.8% 96.7% 98.7%
Operating result - non-life segment 1,203.9 882.3 405.2 296.3
Financial segment
C ost income ratio 71.2% 69.2% 76.8% 71.0%
Operating result - financial segment 279.0 277.1 68.4 74.3
(*) Taking into account prem iums related to inv estment contracts.
(**) N et of holding ex penses and consolidation adjustm ents.
Financial highlights
(€ million) 30/09/2011 30/06/2011 31/12/2010
Total inv estments 372,273.5 375,273.4 372,073.5
Asset under management 90,262.5 91,869.1 92,980.1
(1)
Insurance prov isions 346,759.7 349,820.5 339,222.2
Shareholders' equity attributable to the Group 15,846.4 17,231.4 17,489.8
(1)
Taking into account financial liabilities related to policies of the life segm ent and ex cluding deferred policy holders liabilities.
12 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Business environment
Macro-economic scenario
In the third quarter of 2011 the global macroeconomic scenario was characterized by pronounced
volatility and uncertainty on financial markets due to the sovereign debt crisis that affected some
European counties. The primary issue remains the restructuring of Greek debt and its consequences for
the entire Euro Area. The downgrade of Greece, Portugal and Ireland in July was followed in
September by the reduction of the rating for Italy's government debt by the major rating agencies.
Likewise, the Italian and European banks, with the deepest exposure to the sovereign debt considered
at greater risk, were also downgraded. This resulted in a less favourable economic scenario than in the
first part of the year. Within this context, the spread between Italian government bonds and German
bunds registered an extremely volatile trend, widening in early August, then contracting later in the
month, and reaching in September and October level even higher than those observed in early August,
until historic highs from the introduction of the Euro reached in November.
In October, the summit of European heads of State or government reached an agreement regarding the
restructuring plan for Greece's public debt and provided some indications concerning strategies for
reducing imbalances in public finances and stimulating growth.
Moreover, the growth observed in emerging economies continued, albeit at a slower rate than in the
first half of the year.
In the United States, GDP underperformed expectations in the second quarter (up 1.5% compared to
the same period of the previous year), owing in particular to the decline in consumer spending and
weak domestic demand. The situation of uncertainty was reinforced by the weakness of the real-estate
market and the high level of public debt. The unemployment rate remained high (9.1% in August).
Economic growth also slowed in China, while remaining at very high levels. The International
Monetary Fund estimates that GDP growth will amount to approximately 9.5% for 2011
(approximately one point lower than in 2010), driven chiefly by huge investments. Despite the actions
of the Central Bank aimed at avoiding the occurrence of speculative bubbles and containing inflation,
the inflation rate remained at rather high levels (6.5% on an annual basis in July).
Economic activity continued to expand in Latin America, which benefited from the strong price
performance of commodities, of which the subcontinent is an exporter. The International Monetary
Fund forecasts that the area will achieve a growth of approximately 4.5% by year-end.
There was a general slowdown of the economy in the European Union: GDP growth decreased from
2.4% in the first quarter to 1.6% in the second. The decline affected Germany in particular which,
while remaining the Euro Area's most solid economy, reported a decrease in GDP in the second
quarter, amounting to 2.8% compared to the same period of 2010 versus 4.6% in the first three months
of the year.
Lastly, growth also slowed in France (GDP up 1.7% in the second quarter compared to 2.2% in the
first quarter) and Spain (up 0.7% compared to 0.9%).
There were profound differences in the growth rates reported by the countries experiencing the
greatest difficulty, which benefited from the aid programs of international institutions. Although
foreign trade is driving a rapid recovery of the Irish economy (tendential GDP up 2.2% in the second
quarter), the Greek and Portuguese economies are struggling to emerge from the recession due to the
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 13
MANAGEMENT REPORT
BOZZA
deep contraction in domestic demand, owing in part to the radical fiscal policies implemented
following the intervention by international institutions. The crisis in Portugal, which is characterized
by a less serious debt situation, appears less complex, whereas in Greece, where GDP declined by
more than 5% in the first quarter on an annual basis, re-establishing the equilibrium of public finances
seems more problematic. Moreover, as yet mentioned, the summit of European heads of state or
government in late October reached an agreement on a restructuring plan for Greek's public debt to
support the country in a gradual exit from the crisis.
In Italy, the economic scenario was less favourable than in the first part of the year. In the second
quarter of 2011, Italian GDP increased by 0.8% compared to the same period of 2010. Growth was
penalized primarily by domestic demand. The slow progress of consumer spending was influenced by
salary trends lower than the inflation, whereas investment expenditures, up 0.6% on an annual basis,
were affected by uncertain growth prospects and the difficulties experienced by businesses in granting
bank financing. This situation of uncertainty, combined with concerns regarding the sustainability of
public debt, resulted in a significant widening of the spread between Italian government bonds and
German bunds, which reached a maximum of 491 bps on 7 November 2011.
In the Euro Area, the job market remains in critical condition, with an unemployment rate of 10%. Of
the region's major economies, Spain is the country with the most difficult employment situation and
was the only country to worsen, with its unemployment rate climbing to 21.6% in August.
In the countries of Central and Eastern Europe belonging to the European Union, economic growth
continued to outpace the average for the Euro Area (4.5% in Poland and 3.5% in Slovakia) due to
strong domestic demand.
In the Euro Area, the tendential inflation rate reached 3% in September 2011 (2.1% at 31 December
2010). The increase was chiefly due to the rise in the prices of energy products and commodities.
Inflation also continued to rise in the United States, reaching 3.8% in August (1.5% at 31 December
2010), primarily due to the weakness of the dollar.
Central banks adopted differing policies with regard to benchmark interest rates: in response to
inflation, the ECB raised its rate to 1.5% from 1% at the end of 2010, whereas the Federal Reserve
adopted an expansionary policy, with the commitment to keep the Fed Funds rate below 0.25%.
Moreover, at the beginning of November, the ECB lowered the benchmark interest rate at 1.25%.
With reference to period-end exchange rates(1), trends varied against the Group's major currencies of
operation. In particular, the euro depreciated against the Czech koruna and Swiss franc compared to 31
December 2010. In order to limit the strong appreciation of the Swiss franc against the euro in the first
eight months of the year, in September the Swiss National Bank decided to implement all measures
necessary to guarantee a target exchange rate of 1.20. Lastly, the exchange rate against the U.S. dollar
remained stable.
(1)
Used to convert items of the balance sheet into euro.
14 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:57:22
Ex change rate at the end of the period (currency /€)
C urrency 30/09/2011 30/06/2011 31/12/2010
U S dollar 1.3417 1.4499 1.3416
Sw iss franc 1.2187 1.2208 1.2505
C zech koruna 24.7150 24.3330 25.0900
British pound 0.8613 0.9031 0.8569
Israeli shekel 5.0375 4.9331 4.7511
Argentine peso 5.6402 5.9502 5.3287
With reference to the average exchange rate(2), the euro showed a similarly varied trends against the
Group's other major currencies of operation, with the exception of the U.S. dollar, against which the
euro appreciated markedly, and the Israeli shekel, the exchange rate for which remained stable.
Av erage ex change rate (currency /€)
C urrency 30/09/2011 30/09/2010
U S dollar 1.4067 1.3163
Sw iss franc 1.2348 1.4017
C zech koruna 24.3538 25.4608
British pound 0.8713 0.8580
Israeli shekel 4.9629 4.9623
Argentine peso 5.7489 5.1232
Financial markets
In the first nine months of 2011, especially in the third quarter, financial markets were characterized
by periods of extreme volatility as a result of persistent tension on sovereign debt in the Eurozone. The
markets were affected by concerns of a contagion effect of the aforementioned crisis in Greece,
Portugal and Ireland on the entire Euro Area. Italy was also characterized by a situation of great
uncertainty caused by the high level of public debt and prospects of low economic growth.
On bond markets, the performance of government bonds reflected the above-mentioned tensions in
the Eurozone, with a considerable widening of spreads between German bunds and Portugal, from 368
bps at the end of 2010 to 904 bps at 30 September 2011, and Greece, from 950 bps to 2,079 bps. Italy's
spread was also characterized by an extremely volatile performance, rising from 185 bps at 31
December 2010 to 365 bps at the end of September. In contrast, Ireland's spread fell from 608 bps to
575 bps.
(2)
Used to convert items of the profit and loss account into euro.
Bozza del 10/11/2011 17:57:22 - DATI NON DEFINITIVI 15
MANAGEMENT REPORT
BOZZA
The performance of the government bond market was characterized by the search for security by
investors, with the ensuing decline in yields.
The yield on ten-year German government bonds, which is the European benchmark rate, went from
2.96% at the end of 2010 to 1.89% at 30 September 2011, reflecting the contraction witnessed in the
third quarter of the year in particular (-114 bps). Ten-year U.S. government bonds also declined
sharply, falling from 3.29% at the end of 2010 to 1.91% at 30 September 2011.
The European two-year benchmark rate went from 0.86% at the end of 2010 to 0.55%. The rate curve
thus flattened, reflecting the situation of uncertainty on the financial markets.
The U.S. two-year benchmark rate declined from 0.59% to 0.24%, showing a similar trend in the rate
curve.
Corporate bonds showed an increase in spreads, concentrated entirely in the third quarter. The spread
on investment-grade securities increased from 144 bps at the end of 2010 to 240 bps at 30 September
2011. The high yield segment showed a sharper increase from 494 bps to 792 bps.
16 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
After a substantially positive trend shown in the first half of the year, equity markets recorded a
significant drop at 30 September 2011. In particular, in the third quarter of the current year equity
indices showed losses higher of those registered in the quarters following the market crisis that began
in the second half of 2008. Overall, the Eurostoxx decreased by 21.75% (down 23.75% in the third
quarter of the year), Frankfurt's Dax by 20.42% (down 25.41% in the third quarter), the Parisian Cac
by 21.63% (down 25.12% in the third quarter), and Milan's FtseMib by 26.46% (down 26.51% in the
third quarter). Madrid's Ibex showed a more limited decline of 13.31% (down 17.50% in the third
quarter).
In the United States, equity indices declined more moderately in the nine months: the S&P 500
decreased by 10.04% (down 14.3% in the third quarter) and the NASDAQ by 8.95% (down 8.0% in
the third quarter).
Insurance markets
For the main insurance markets on which the Generali Group operates, the third quarter of the year
confirmed the trends observed during the first half of the year: written premiums of the life segment
registered a significant slowdown in almost all the main European markets. Written premiums in the
non-life segment were in line with a moderate economic scenario, while enjoying an uptrend in tariffs
for the motor line in some countries.
The decline of the life segment was partly the result of a natural process of adjustment following the
rapid growth of 2010, accompanied by factors specific to each country.
In Italy, the decline in written premiums (down 22% for the first half of the year) brought the volume
of premiums to pre-crisis levels, after the strong growth reported in 2010. The reduction in written
premiums in the banking segment was particularly significant (down 28.4%).
The decline in written premiums in France in the first half of the year (down 11% compared to the
same period of the previous year) is attributable to the uncertainties caused by the possible change in
the taxation of savings products and the competition of banking products.
In Germany, after two years of exceptional growth due to the reallocation of savings towards safer
investments, single premiums showed a readjustment to the levels of 2009 (down 27% in the first half
of the year), and recurring premiums increased (up 1% in the first half of the year).
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 17
MANAGEMENT REPORT
BOZZA
In contrast, Spain reported an uptrend in written premiums (up 10.7% for the first half of the year),
driven by the recent limitation of yields of deposits and the uncertain economic situation that supports
the demand of guaranteed products.
In the main countries of Central and Eastern Europe, the life segment slowed only in Hungary (down
1.4% in the first half of the year), while the segment remained at the high levels seen in 2010 in the
Czech Republic, reporting a 7.3% increase in written premiums in the first half of the year owing to
the excellent performance of single premiums. Also Poland showed a similar performance, with the
life segment (up 10.9% for the six months) driven by the unit-linked products (up 40.5%).
In the non-life segment, written premiums were significantly influenced by economic growth. In Italy,
written premiums grew by 3.3% for the first half of the year; the increase was almost completely
attributable to the motor line (up 5.8%), whose tariff policies contributed to the net rise in premiums
despite weak registrations. The revision of tariffs was a necessary step towards a restoring of the
technical balance for this segment (the combined ratio for 2010 was 106.1%, virtually unaltered
compared to 2009). Written premiums of the non-motor lines (which grew 1.6% overall for the first
half of the year) was on the contrary impacted by the extreme weakness of the economic recovery.
In France, the growth of this segment was driven by a substantial increase in motor tariffs - which led
to a 4% increase of this line compared to the same period of the previous year, aiming at restoring
technical balance - and by the increase in the rates of health policies, due to the rise in costs for health
segment services.
In Germany, the strong performance of the manufacturing industry fostered written premiums in the
non-motor lines, whereas the turnaround of the tariff dynamics, which went back to positive after
several years of decline, and the renewal of the vehicle fleet over the past two years contributed to
growth in the motor line (up 3.7% for the first half of the year).
In Spain, the sharp contraction of internal consumption led to a reduction in written premiums in most
of the non-life lines, particularly the motor line (down 1.7% for the first half of the year).
Written premiums also continued to decline in Central and Eastern European countries, particularly in
the motor line, with significant reductions in the Czech Republic (down 7.1% for the first half of the
year) and Hungary (down 16.8% for the first half of the year) mainly due to the high level of
competition and the widespread economic uncertainty. Poland performed contrary to the trend in the
region, fostered by a stronger domestic economy with less dependence on foreign demand, resulting in
an increase of 13.9% in the first half of the year, equally attributable to the motor line (up 14.8%) and
non-motor line (up 12.9%).
18 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
Premuda- m/c. Four Antartica, deadweight tonnage 114.800.
Information on operations
.
·
BOZZA DEL 10/11/2011 17:01:35
Group highlights at 30 September 2011
- Result of the period: € 825.0 million (-37.1%)
- Operating result: € 3,100.4 million (-1.0%)
- Gross written premiums: € 51,326.9 million (-4.6%)
- Shareholders’ equity: € 15,846.4 million (-9.4%)
Business performance of the Group
Group’ s result
The result of the period attributable to the Group amounted to € 825.0 million (€ 1,312.7 million at
30 September 2010). The decline (-37.1%) was due to the performance of the net investment result
influenced by the exceptional macroeconomic and financial scenario occurred in particular in the third
quarter, which affected the operating and non-operating results, chiefly of the life segment. The net
investment results suffered in particular from the increased sovereign risk of some countries of the
Euro Area with a high public sector debt, causing higher net impairment losses on government bonds,
in the second and third quarter, and equities, in particular in the third quarter.
In further detail, the result of the period was characterized, on the one hand, by a significant reduction
of the life operating result offset by a significant improvement of the non life operating result and by
the stability of the financial operating result and, on the other hand, by the negative performance of the
non-operating result, affected by the difficult financial market conditions.
The result of the period was negatively affected in particular by the effects of the development of the
restructuring plan for Greece's sovereign debt. In accordance with the agreements reached in July, the
Group in its half-yearly report at 30 June had written down the Greek government bonds set to mature
by 2020, which account for over 70% of the Group's exposure toward this country and which was
originally identified as the only instruments affected by the aforementioned restructuring plan. This
impairment, determined on the basis of market price at 30 June 2011, had amounted to € 1,001.8
million. As previously described, on 26 October 2011 a new rescue package for Greek debt was
discussed at the European Union level. Under this plan, private investors were asked to accept a
further reduction based on a discount of 50% of the nominal value of all the bonds held. In light of this
new proposal, the Group in this interim report has written down also the bonds set to mature beyond
2020, for an amount of € 555.3 million. In addition, in this interim report the bonds set to mature by
2020, already impaired at 30 June, have been further written-down on the basis of the market prices at
30 September 2011, for further € 255.3 million. Therefore, the impairment of the third quarter
amounted to € 810.6 million.
Overall, at the end of September, the Group has written-down the entire portfolio of Greek
government bonds by 60.8%, with an impairment loss determined on the basis of the market prices at
30 September 2011, amounted to € 1,812.4 million, primarily concentrated in the life segment, with an
impact on earnings before taxes of € 464.9 million and on the Group's net result of € 328.8 million.
Lastly, the result was affected by the increased fiscal pressure in some of the main countries where the
Group operates, and particularly in Italy also due to the recently adopted fiscal measures. The tax rate
was 32% (30% at 30 September 2010).
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 21
MANAGEMENT REPORT
BOZZA
Taking into account also other net gains and losses recognized directly through equity, total
comprehensive income attributable to the Group amounted to € -859.6 million (€ 2,096.1 million
in the same period of the previous year).
The decline was attributable for € 2,050.2 million to net gains on available for sale financial assets. In
fact, in the first nine months of 2010, the negative performance by the equity portfolio had been offset
by a recovery in the bond portfolio, resulting in an increase in the corresponding equity reserve of
€ 398.5 million. In addition to equity market tensions, in 2011 the widening of spreads in particular for
Italian government debt resulted in a severe decline in the value of the bond portfolio, entailing a
negative change in the aforementioned reserve of € 1,651.7 million.
Moreover, the decrease was influenced for € 458.3 million by the result deriving from currency
translation differences arising from the translation of subsidiaries' financial statements denominated in
foreign currencies, due to the appreciation of the main currencies used by the Group in its operation
against the euro which had been recorded in 2010.
Finally, the change was due for € 487.7 million to the lower result of the period for the first nine
months of 2011 compared to the same period last year.
Gross written premiums development
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
(*)
Gross written premiums 51,326.9 53,829.3 15,474.0 15,700.4
(*)
Life gross w ritten premiums 34,385.0 37,272.0 10,542.6 10,920.8
N on-life gross w ritten premiums 16,941.9 16,557.3 4,931.4 4,779.6
(*) Taking into account prem ium s related to inv estm ent contracts, w hich am ount at € 2,306.9 m illion at 30 Septem ber 2011 (€ 3,750.7 m illion at 30 Septem ber 2010).
Total written premiums gross of reinsurance — which also include premiums related to investment
contracts — amounted to € 51,326.9 million (down 4.6% compared to 30 September 2010; down 4.8%
on equivalent terms).
As already observed in the first half of the year, the decline is entirely attributable to the life segment,
whose premiums amounted to € 34,385.0 million, down 7.7% (down 7.9% on equivalent terms). This
decrease was mainly due to the 21.7% drop in single premium from savings and linked policies, for
which the first half of 2010 had seen a relevant concentration of written premiums of the full year,
which was not completely offset by the 4.2% nine-months increase of annual premiums (up 3.3% on
equivalent terms). However the last quarter, recording -3.4% compared to the same period of the
previous year, showed a recovery, reducing to one third the decrease observed in the first half of the
year (-9.8% on equivalent terms).
Also the non-life written premiums, amounting at € 16,941.9 million, confirmed the performance seen
in the first half of the year, further improving their growth rate to 2.3% (up 2.1% on equivalent terms).
In addition to the previously observed recovery of the Motor line, which in 2010 had been influenced
by severe tariff competition and declines in vehicle registrations, the growth of written premiums was
also driven by the Personal and Commercial/Industrial lines. The latter, while continuing to suffer
from the economic conditions in some countries in which the Group operates, showed a recovery
compared to the decline reported in the first six months of the year. Written premiums of the Accident
and Health lines remained stable.
22 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
GROUP LIFE WRITTEN PREMIUMS at 30.09.2011 GROUP NON LIFE WRITTEN PREMIUMS at 30.09.2011
12,6% 14,1%
60,1% 42,1%
8,8% Motor
Savings and Protection
Personal
Unit/ Index linked
Commercial/Industrial
Health
21,4% Accident/Health
Group
18,4%
22,3%
Operating result
The operating result of the Group, amounting to € 3,100.4 million, remained essentially on the same
high level of the same period of the previous year (€ 3,132.7 million at 30 September 2010), as
mentioned above. In particular, while the performance of the operating result of the non-life segment
was the strongest of the past three years thanks to the significant recovery of technical margins, the
Group's overall operating result was affected by the worsening of the operating result of the life
segment.This segment, while confirming a positive technical margin, suffered from the deterioration,
mainly in the third quarter, of the financial margin. The latter, although the Group has achieved greater
net realized gains and maintained substantially stable the current return in the difficult financial
environment, was adversely affected both by higher net impairment losses recognized in profit or loss,
for € 1,812.4 million mainly recognized in the second and third quarter on bonds and for € 1,290.7
million on equity investments, particularly in the third quarter, and by the decrease in value of
investments at fair value through profit or loss. The operating result of the financial segment remained
mainly stable.
In particular, the aforementioned impairment losses were attributable for € 1,538.9 million of to the
impairment of Greek government bonds. Considering the share of financial profits attributable to the
policyholders' interests of the life segment, the net impact on the operating result of the
aforementioned impairment losses was € 191.3 million.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 23
MANAGEMENT REPORT
BOZZA
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Group operating result 3,461.0 3,461.2 788.4 1,104.4
Italy 1,316.6 1,305.2 321.0 373.4
France 408.7 510.8 -45.5 166.8
Germany 470.9 538.4 149.8 174.0
C entral and Eastern Europe 351.2 277.2 95.5 61.3
Rest of Europe 658.1 557.7 180.5 187.1
of w hich Spain 191.7 166.9 60.3 54.8
of w hich Austria 126.9 120.3 42.6 29.3
of w hich Sw itzerland 232.7 208.9 58.0 62.9
Rest of World 255.4 272.0 87.2 141.8
H olding ex penses -213.7 -203.7 -67.1 -65.6
C onsolidation adjustment -146.9 -124.8 -29.1 -42.0
T otal Group operating result 3,100.4 3,132.7 692.2 996.8
In this context, the main countries recorded an operating result influenced by the performance of the
life operating result, in particular in France due to the impairment losses of the Greek bonds. The
operating result showed an increase both in Central and Eastern Europe, owing to the good
performance of the non-life segment, and in the Rest of Europe, especially thanks to Switzerland and
Spain that reported good results in both segments.
Non-operating result
The non-operating result of the Group went from € -1,024.9 million at 30 September 2010 to
€ -1,463.5 million.
More specifically, the non-operating result from investments was characterized by lower realized
gains, which went from € 277.9 million at 30 September 2010 to € 80.2 million, as well as by lower
gains on foreign currencies, included as net non-operating income from financial instruments at fair
value through profit or loss, which amounted to € -28.2 million (€ 37.3 million at 30 September 2010).
In fact the impairment losses on financial instruments, considered non-operating as related to
instruments the impairment of which did not affect the statutory reserves to the extent they were not
included in the deferred policyholder liabilities and those on shareholders' funds, went from € -410.3
million at 30 September 2010 to € -794.4 million due to the above-mentioned higher impairment
losses. The latter were determined for € 273.6 million by the aforementioned impairment losses on
Greek bonds, net of the related share of the policyholders' interests of the life segment.
Net other non-operating expenses, which include net non-recurring income and the amortization of the
value of portfolios acquired directly or by obtaining control of insurance or financial companies,
amounted to € -224.9 million (€ -368.4 million at 30 September 2010), of which € 144.3 million
related to the amortization of the value of acquired portfolios (€ 146.5 million at 30 September 2010).
The decrease was substantially due to lower net allocations to risk provision.
Non-operating holding expenses went from € -561.3 million at 30 September 2010 to € -496.2 million,
following the decrease of interest expense on liabilities.
24 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
From operating result to Group result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Earnings before taxes 1,636.9 2,107.9 186.1 702.3
(*)
Income tax es -583.7 -654.3 -102.6 -248.8
Earnings after taxes 1,053.2 1,453.6 83.6 453.5
Profit or loss from discontinued operations -0.3 50.9 0.8 33.9
Consolidated result of the period 1,052.9 1,504.5 84.4 487.4
Result of the period attributable to the Group 825.0 1,312.7 19.5 439.8
Result of the period attributable to minority interests 227.9 191.7 64.8 47.6
Consolidated operating result 3,100.4 3,132.7 692.2 996.8
N et earned premiums 46,691.5 47,985.7 14,619.5 14,811.8
N et insurance benefits and claims -39,039.6 -48,798.0 -9,750.6 -15,737.5
Acquisition and administration costs -8,609.2 -8,553.5 -2,773.9 -2,805.7
activ ities 693.5 644.8 215.9 212.3
N et operating income from financial instruments at fair v alue through profit
or loss -4,105.0 3,025.4 -3,774.0 1,550.3
N et operating income from other financial instruments 7,893.0 9,299.4 2,232.4 3,087.0
Interest income and other income 9,601.5 9,215.4 3,128.0 3,063.8
N et operating realized gains on other financial instruments and land and
buildings (inv estment properties) 1,495.4 1,280.6 487.1 356.0
N et operating impairment losses on other financial instruments and land
and buildings (inv estment properties) -2,308.4 -369.5 -1,083.3 -48.2
Interest ex pense on liabilities linked to operating activ ities -433.3 -370.9 -140.6 -123.3
Other ex penses from other financial instruments and land and buildings
(inv estment properties) -462.3 -456.2 -158.8 -161.3
Operating holding ex penses -213.7 -203.7 -67.1 -65.6
(*)
N et other operating ex penses -210.1 -267.3 -10.0 -55.7
Consolidated non-operating result -1,463.5 -1,024.9 -506.1 -294.5
N et non-operating income from financial instruments at fair v alue through
profit or loss -28.2 37.3 -30.4 -53.5
(**)
N et non-operating income from other financial instruments -714.2 -132.4 -224.8 54.5
N et non-operating realized gains on other financial instruments and land
and buildings (inv estment properties) 80.2 277.9 90.8 131.6
N et non-operating impairment losses on other financial instruments and
land and buildings (inv estment properties) -794.4 -410.3 -315.6 -77.1
N on-operating holding ex penses -496.2 -561.3 -166.7 -178.0
Interest ex penses on financial debt -484.2 -539.7 -165.6 -168.7
Other non-operating holding ex penses -12.0 -21.6 -1.1 -9.3
(***)
N et other non-operating ex penses -224.9 -368.4 -84.2 -117.5
(*) At 30 September 2011 the amount is net of operating tax es for € 48,1 million and of non-recurring tax es shared w ith the policy holders in Germany for € 36.4 million.
(**) The amount is gross of interest ex pense on liabilities linked to financing activ ities.
(***) The amount is net of the share attributable to the policy holders in Germany and Austria.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 25
MANAGEMENT REPORT
BOZZA
Financial position of the Group
Investments
30/09/2011 30/06/2010 31/12/2010
Total Total Total
(€ million) book v alue % of total book v alue % of total book v alue % of total
(* )
Equity instrum ents 18,346.9 5.8 22,092.8 7.0 23,345.4 7.5
A v ailable for sale financial assets 15,559.9 4.9 19,060.3 6.1 20,517.8 6.6
Financial assets at fair v alue through profit or loss 2,787.0 0.9 3,032.5 1.0 2,827.6 0.9
(* * )
Fixed incom e instrum ents 250,749.3 79.5 253,588.8 80.6 249,276.5 80.0
B onds 222,975.9 70.7 225,117.3 71.6 222,533.0 71.4
(* * )
O ther fix ed income instruments 27,773.3 8.8 28,471.5 9.1 26,743.5 8.6
H eld to maturity inv estments 4,264.2 1.4 4,179.2 1.3 4,544.9 1.5
Loans 68,364.9 21.7 68,734.7 21.9 69,175.0 22.2
A v ailable for sale financial assets 168,876.1 53.5 171,440.3 54.5 165,721.2 53.2
Financial assets at fair v alue through profit or loss 9,244.1 2.9 9,234.5 2.9 9,835.4 3.2
(* * * )
Land and buildings (inv estm ent properties) 15,530.2 4.9 15,557.6 4.9 15,026.4 4.8
O ther inv estm ents 13,361.1 4.2 11,148.7 3.5 11,769.7 3.8
Inv estments in subsidiaries, associated companies and joint v entures 2,161.7 0.7 2,217.3 0.7 2,439.2 0.8
(* * * * )
Deriv ativ es 635.1 0.2 420.9 0.1 204.1 0.1
Receiv ables from banks or customers 9,429.2 3.0 6,958.5 2.2 7,476.4 2.4
O ther inv estments 1,135.2 0.4 1,551.9 0.5 1,650.0 0.5
(* * * * * )
Cash and cash equiv alents 17,496.0 5.5 12,149.7 3.9 12,100.2 3.9
(* * * * * * )
T otal 315,483.5 100.0 314,537.5 100.0 311,518.1 100.0
Inv estments back to unit and index -linked policies 56,789.9 60,712.1 60,637.0
T otal inv estm ents 372,273.5 375,249.6 372,155.1
(*) Inv es tm ent fund units am ounted to € 3,657.4 m illion (€ 4,138.9 m ilion at 30 June 2011 and € 4,213.9 m ilion at 31 Dec em ber 2010).
(**) Inv estm ent fund units am ounted to € 8,039.5 m illion (€ 8,243.5 m ilion at 30 J une 2011 and € 8,110.9 m ilion at 31 Dec em ber 2010).
(***) Inv es tm ent fund units am ounted to € 2,415.1 m illion (€ 2,418.6 m ilion at 30 J une 2011 and € 2,412.3 m ilion at 31 Dec em ber 2010).
(****) T ak ing into ac count deriv ativ e instrum ents book ed as liabilities w hic h am ount to € 2,408.5 m illion (€ 1,376.7 m ilion at 30 J une 2011 and € 1,703.2 m ilion at 31 Dec em ber
2010).
(*****) T ak ing into ac c ount R ev ers e R EPO w hic h am ount to € 827.3 (€ 652.0 m ilion at 30 J une 2011 and € 2,557.5 m ilion at 31 Dec em ber 2010) and R EPO w hic h am ount to €
998.4 (€ 1,716.1 m ilion at 30 J une 2011 and € 1,447.7 m ilion at 31 Decem ber 2010).
(******) T ak ing into acc ount deriv ativ e ins trum ents book ed as liabilities and R EPO.
Return on investments and harvesting rate (3)
C urrent return H arv esting rate P&L return C omprehensiv e return
30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010
Fix ed income instruments 3.2% 3.2% -0.6% 0.5% 2.6% 3.7% 1.4% 4.7%
Equities and equity -like inv estments 3.2% 2.7% -2.9% 0.1% 0.3% 2.8% -13.2% 0.5%
Real estate inv estments 5.7% 5.6% 0.8% 0.4% 6.6% 6.0% 6.7% 6.4%
Other inv estments 1.5% 1.2% 0.1% 0.5% 1.6% 1.7% 1.6% 1.7%
T otal investments 3.2% 3.1% -0.6% 0.5% 2.6% 3.7% 0.7% 4.3%
(3)
The return on investments and harvesting rate are calculated on the first nine months, excluding return on and
harvesting rate of investments back to unit- and index-linked policies.
26 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
At 30 September 2011, total investments remained substantially stable compared to 31 December
2010, at € 372,273.5 million. In detail, investments other than investments back to unit and index-
linked policies amounted to € 315,483.5 million (€ 311,518.1 at 31 December 2010), and the latter
amounted to € 56,789.9 million (€ 60,637.0 at 31 December 2010). Effective 30 September 2011, a
part of the Israeli insurance portfolio, previously classified to the traditional business, was reclassified
among unit- and index-linked portfolios to ensure a placement that better reflects the technical
characteristics of the products issued. As a consequence, all investments hedging that portfolio have
been reclassified accordingly for the comparative periods as well.
Due to the continuation of the de-risking strategy, the composition of investments not related to unit-
and index-linked contracts confirmed the reduction in the weight of equity instruments, which fell
from 7.5% at 31 December 2010 to 5.8%. The weight of fixed income instruments amounted to 79.5%
(80.0% at 31 December 2010). In contrast, the weight of real-estate investments remained
substantially stable at 4.9%, with an increase in their weight in the life segment and a decline in the
non-life segment. Finally, the weight of cash and cash equivalents grew as a result of the Group's
decision to prudently increase the weight of their investments in cash instruments taking into account
the current financial environment characterized by strong tensions on government bonds of some
countries in the Euro Area and in particular on Italian bonds.
The composition of the bond portfolio remained essentially stable, with a weight of corporate bonds
at 43.7% (44.0% at 31 December 2010) and the weight of government bonds at 56.3% (56.0% at 31
December 2010). Also the average duration of portfolios remained stable at 6.2 years.
The nine-month current return(4) of bond portfolios of the Group remained stable at 3.2%. Negative,
instead, the contribution to the result of the period of the realized and unrealized gains or losses
through profit or loss recorded on all the financial instruments (harvesting rate)(5) which decreased on
the basis of nine months from 0.5% at 30 September 2010 to -0.6%. Despite the return of trading
activity, that based on the nine months amounted at 0.34% (0.39% at 30 September 2010), the overall
harvesting rate was impacted by the impairment losses recorded, in particular in the second and third
quarter, on Greek government bonds, and by the decline in the value of the bond portfolios recognized
through profit or loss, recorded mainly in the third quarter of this year.
Lastly, the decline in value of the Group's portfolios due to current market conditions also affected the
nine-month comprehensive return(6), which includes gains and losses during the period recognized
through both profit or loss and equity, which went from 4.7% to 1.4%, significantly influenced by the
decline in value of bonds recognized through equity.
The nine-month current return on equities amounted at 3.2%, up slightly compared to the 2.7%
reported at 30 September 2010. While higher gains of trading activity realized in particular in the first
part of the year allowed the related nine-month rate amounting at 2.34% (2.29% at 30 September
2010), the overall nine-month harvesting rate decreased at -2.9% (0.1% at 30 September 2010) due to
the increase in impairment losses and the decrease in value of equity investments at fair value through
profit or loss.
(4)
Further information on the principles and procedures used to calculate this indicator is described in the
appendix to this report.
(5)
The harvesting rate is calculated on the basis of realized or unrealized gains or losses through profit or loss
other than the current income. Further information is given in the appendix to the report
(6)
Comprehensive return is calculated on the basis of current income plus unrealized gains or losses of the period
recognized through profit or loss or equity. Further information is given in the appendix to the report.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 27
MANAGEMENT REPORT
BOZZA
The nine-month comprehensive return, which includes value changes in the period recognized through
profit or loss and equity, dropped sharply to -13.2% (0.5% at 30 September 2010), impacted by the
decrease in value of the equity portfolio recognized through equity due to the deterioration of stock
exchange indices, particularly in the third quarter.
Real estate investments continued to contribute positively to the result for the period due both to the
nine-month current return, which remained stable at 5.7%, and the return on investment resulting from
realized gains, net of depreciation and impairment losses for the period (harvesting rate), which went
on the basis of nine months from 0.4% at 30 September 2010 to 0.8% thanks to greater realized gains.
Other investments amounted to € 13,361.1 million (€ 11,769.7 million at 31 December 2010). The
nine-month current return improved to 1.5% (1.2% at 30 September 2010), whereas the contribution
of the result from realized gains and valuations through profit or loss (harvesting rate) on the basis of
nine months was 0.1% (0.5% at 30 September 2010), worsening mainly due to the impairment loss on
the investment in Telco occurred in the second quarter of the current year.
(€ million) 30/09/2011 30/06/2011 31/12/2010
T otal investments excluded linked investments 315,483.5 314,537.5 311,518.1
Italy 82,447.7 87,852.6 87,631.7
France 71,349.3 72,988.4 72,343.1
Germany 83,873.9 83,632.5 82,238.3
C entral and Eastern Europe 9,436.5 9,633.7 9,441.3
Rest of Europe 54,084.0 46,605.9 46,170.4
of w hich Spain 9,326.2 9,252.7 9,430.1
of w hich Austria 9,971.4 10,053.7 9,814.4
of w hich Sw itzerland 25,265.9 18,065.5 17,703.4
Rest of World 14,292.1 13,824.5 13,693.3
Shareholders’ equity
(€ million) 30/09/2011 30/06/2011 31/12/2010
Shareholders' equity attributable to the Group 15,846.4 17,231.4 17,489.8
Share capital and reserv es 16,857.4 16,957.8 15,972.3
Reserv e for unrealized gains and losses on av ailable for sale financial assets -1,836.1 -531.9 -184.4
Result of the period 825.0 805.5 1,701.9
Shareholders' equity attributable to minority interests 2,649.3 2,607.2 2,574.7
T otal 18,495.6 19,838.6 20,064.5
The shareholders’ equity attributable to the Group amounted to € 15,846.46 million (€ 17,489.8
million at 31 December 2011). The decrease (-9.4%) was due to the negative performance of the
reserve for unrealized gains and losses on available for sale financial assets, occurred mainly in the
third quarter of the year as a result of the already mentioned conditions in the financial markets.
In detail, the reserve for unrealized gains and losses on available for sale financial assets, i.e. the
balance between unrealized gains and losse on financial assets, net of life deferred policyholder
liabilities and deferred taxes, went from € -184.4 million at 31 December 2010 to € -1,836.1 million.
28 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
The change for the period, amounted to € -1,651.7 million, was due to the negative performance of all
the investment of the Group and in particular for €-916.0 million is attributable to the decrease of the
equity portfolio and for € -735.7 million to the negative performance of the fixed income investments
with reference both to the government portfolio (€-419,6 million) and to the corporate portfolio
(-316,2 milioni di euro).
Insurance provisions
(€ million) 30/09/2011 30/06/2011 31/12/2010
(*)
Insurance provisions - life segment 306,558.7 311,904.6 308,986.3
N et insurance prov isions and financial liabilities: 315,998.8 318,637.9 313,347.9
traditional 258,714.1 257,218.2 252,387.8
linked 57,284.7 61,419.6 60,960.1
Deferred policy holders liabilities -9,440.0 -6,733.2 -4,361.6
(*)
Insurance provisions - non-life segment 30,760.9 31,182.6 30,235.8
Prov isions for unearned premiums 5,617.3 6,193.4 5,450.4
Prov isions for outstanding claims 24,760.1 24,621.8 24,413.7
Other insurance prov isions 383.5 367.4 371.7
Insurance provisions 337,319.6 343,087.2 339,222.2
(*) After the elim ination of intra-group transactions betw een segm ents.
Insurance provisions, which include life and non-life insurance provisions as well as financial
liabilities related to policies of the life segment, went from € 339,222.2 million at 31 December 2010
to € 337,319.6 million (down 0.6%).
Life insurance provisions and financial liabilities related to investment contracts excluding deferred
policyholders liabilities (7) went from 313,347.9 million at 31 December 2010 to € 315,998.8 million
(up 0.8%).
Following the significant decline in value of the Group's equity and bond portfolio, the deferred
policyholders liabilities amounted to €-9,440.0 million (-4,361.6 million at 31 December 2010).
(€ million) 30/09/2011 30/06/2011 31/12/2010
(*)
Insurance provisions 346,759.7 349,820.5 343,583.7
of w hich Italy 95,521.0 95,736.6 95,219.5
of w hich France 88,219.8 89,740.9 87,207.5
of w hich Germany 90,028.6 91,144.9 88,823.0
of w hich C entral and Eastern Europe 8,995.1 9,234.2 8,916.0
(*) After the elim ination of intra-group transactions betw een segm ents, ex cluding deferred policy holders liabilities, including financial liabilities related to inv estm ent contracts.
(7)
Effective 30 September 2011, a part of the Israeli insurance portfolio, previously classified to the traditional
business, was reclassified among unit and index-linked portfolios to ensure a placement that better reflects the
technical characteristics of the products issued. As a consequence, all investments hedging that portfolio have
been reclassified accordingly for the comparative periods as well.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 29
MANAGEMENT REPORT
BOZZA
Debt
In accordance with the IAS/IFRS managerial model adopted by the Generali Group, consolidated
liabilities were split into two categories:
- liabilities linked to consolidated operating activities, which are all financial liabilities related to
specific consolidated balance sheet items. This category also includes liabilities related to
investment contracts issued by insurance companies;
- liabilities linked to financing activities include other consolidated financial liabilities, as several
subordinated liabilities, bonds issued and loans received. For instance, liabilities arising from
transactions carried out to acquire controlling shareholdings belong to this category.
Total liabilities were as follows:
(€ million) 30/09/2011 30/06/2011 31/12/2010
Liabilities linked to operating activities 46,434.7 42,346.5 41,631.0
Liabilities linked to financing activities 12,369.2 12,425.0 12,272.7
Subordinated liabilities 6,425.1 6,438.7 6,492.9
Other non subordinated liabilities linked to financing activities 5,944.1 5,986.4 5,779.8
Total 58,803.8 54,771.5 53,903.8
The weighted average rate of liabilities linked to financing activities was 5.36% at 30 September 2011,
stable compared to 31 December 2010. Moreover, the average duration decreased at 6.12 (6.87 at 31
December 2010).
The related interest expense is broken down as follows:
(€ million) 30/09/2011 30/06/2011 31/12/2010
Interest expense on liabilities linked to operating activities 433.3 292.7 499.7
Interest expense on liabilities linked to financing activities 484.2 318.6 704.5
Total(*) 917.5 611.3 1,237.1
(*) Without taking into account the interest expenses on deposits under reinsurance business accepted which have been deducted from the related interest income and are not included in the
operating debt.
In detail, interest expense on liabilities linked to financing activities decreased compared to 2010
which was characterized by higher interest expenses resulting from the early refinancing of a
senior bond expiring in July 2010.
30 Bozza del 10/11/2011 18:37:40 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Rating
The current ratings and outlooks assigned to Assicurazioni Generali by the major agencies are
illustrated below.
Rating agency Rating Outlook
A.M .Best A+ Stable
Standard & Poor's AA- Stable
Fitch AA- N egativ e
M oody 's Aa3 N egativ e
Despite the general scenario of uncertainty in the Euro Area that resulted in the aforementioned
downgrade of the sovereign debt of several countries, and in particular of that of Italy, in October the
major rating agencies confirmed the rating of Assicurazioni Generali, rewarding the Group for its
financial solidity, broad international diversification and the flexible characteristics of its products. In
particular, in September Standard&Poor’s confirmed the Group's AA- rating and stable outlook, while
Moody’s and Fitch lowered the outlook for Assicurazioni Generali from stable to negative,
considering the exposure of Assicurazioni Generali to Italian sovereign risk.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 31
MANAGEMENT REPORT
BOZZA
Life segment
- Operating result: € 1,978.1 million (-14.1%)
- Gross written premiums: € 34,385.0 million (-7.7%)
- APE: € 3,535.4 million (-7.6%)
Business performance of the life segment
Premiums development
Gross written premiums for the life segment, including premiums related to investment contracts,
amounted to € 34,385.0 million (€ 37,272.0 million at 30 September 2010). The decline in written
premiums of 7.7% (down 7.9% on equivalent terms) showed a recovery compared to that reported at
30 June, thanks to the signs of a revival observed in the second quarter and reinforced in the third
quarter.
Overall, the decline was attributable to the performance of single premium savings and protection
policies and linked policies, the written premiums for which continued to be conditioned by the
comparison with the first half of 2010, which showed a relevant concentration of written premiums in
the first part of the year, especially in Ireland.
By contrast, annual written premiums performed very positively, increasing by 5.0% (4.5% on
equivalent terms).
Gross written premiums
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Life gross written premiums(*) 34,385.0 37,272.0 10,542.6 10,920.8
Italy 8,886.8 9,513.1 2,578.4 2,759.7
France 7,336.1 8,691.5 2,039.9 2,186.2
(**)
Germany 9,850.3 9,955.5 3,120.7 3,212.2
C entral and Eastern Europe 1,268.6 1,225.2 435.0 401.7
Rest of Europe 4,126.4 5,102.2 1,393.3 1,429.6
of w hich Spain 771.3 674.8 240.0 148.5
of w hich Austria 925.7 893.7 293.8 271.3
of w hich Sw itzerland 767.8 681.8 270.6 232.9
of w hich Ireland 564.0 1,570.8 245.5 361.6
Rest of World 2,916.7 2,784.5 975.4 931.5
(*) Taking into account premium s related to inv estm ent contracts, w hich am ount at € 2,306.9 million at 30 Septem ber 2011 (€ 3,750.7 million at 30 September 2010).
(**) Gross direct premium s w ritten include prem ium s draw n from the prov ision for profit sharing, w hich am ount to € 293.1 m illion at 30 September 2011 (€ 364.6 million at 30
Septem ber 2010).
Gross written premiums in Italy went from € 9,513.1 million at 30 September 2010 to € 8,886.8
million. The decrease (down 6.6%) is mainly attributable to the planned drop in the financial advisor
channel which written premiums, while still remaining at strong levels, showed a decline compared to
32 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
the previous year. The written premiums of traditional networks was positive, owing in particular to
annual premiums, which increased by 2.9%.
Gross written premiums in France went from € 8,691.5 million at 30 September 2010 to € 7,336.1
million. While recovering compared to the decline reported in the first half of the year, written
premiums continued to decline (down 15.6%) due to the performance of savings policies (down
18.6%), especially single premium policies. Written premiums were also negatively affected by the
decline of the individual linked policies (down 21.5%), which reflected the decline both in single and
in recurring premium products. The decrease in total written premiums was due to various factors,
such as the uncertain tax treatment applicable to life products, the competition of banking products
and, in addition, the business reorientation aimed at gradual decrease of the written premiums
collected through non-proprietary channels, the margins on which are not in line with those of the
Group. Lastly, the Health business continued to perform well (up 9.3%).
Gross written premiums in Germany slightly decreased from € 9,955.5 million at 30 September 2010
to € 9,850.3 million. The decrease (down 1.1%) was due to the significant decline in collective
policies (down 13.9%), essentially single premiums, and in savings policies (down 1.5%), both single
and recurring premium, largerly offset by the good performance of the Health line, whose written
premiums amounted to € 1,809.66 million (up 1.9%), and of individual linked policies (up 1.9%).
In a reversal of the trend compared to the first half of the year, gross written premiums in Central and
Eastern Europe increased by 0.6% on equivalent terms to € 1,268.6 million (€ 1,225.2 million at 30
September 2010). In particular, there was a significant increase in individual linked policies (up
15.2%), concentrated in the Czech Republic and Poland, and in the Health line, attributable to Russia
and the Czech Republic. By contrast, savings and protection policies decreased (down 5.4%) in the
area's major countries.
Premiums written in the Rest of Europe decreased by 20.9% on equivalent terms. The decline may
essentially be attributed to the performance of written premiums in Ireland, which compared with the
same period of the previous year was still affected by the significant written premiums realized as part
of the Group's private-banking activity, drawn up in the particular financial scenario that characterized
the early months of 2010.
In Spain the uptrend already started in the first quarter of the year was reinforced. Gross written
premiums increased by 14.3% to € 771.3 million (€ 674.8 million at 30 September 2010). Written
premiums on savings and protection policies remained positive (up 20.1%), especially those deriving
from bancassurance, and there was a recovery in collective policies (up 7.9%), which had declined in
the first half of the year.
Written premiums were also positive for Austria, rising from € 893.7 million at 30 September 2010 to
€ 925.7 million. The growth reported (up 3.6%) was attributable to the performance of savings and
protection policies (up 7.0%), which benefited from the signing of some contracts of particularly
significant amounts in the company pension sector. In contrast, individual linked policies continued to
decline (down 6.3%), especially single premium policies, which were affected by the revision of the
tax benefits applicable to that product type.
Despite the positive result reported in the third quarter of the current year, gross written premiums in
Switzerland declined slightly (down 0.8% on equivalent terms), amounting to € 767.8 million
(€ 681.8 million at 30 September 2010). In particular, the development of savings and protection
policies only partially offset the decline in written premiums for single premium individual linked
policies, which reflects the planned decrease in this type of guaranteed policy placed through non-
proprietary channels in favour of products with a lower capital absorption placed through the Group's
agency networks.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 33
MANAGEMENT REPORT
BOZZA
Gross written premiums of the Rest of the World increased. In particular, the performance of written
premiums in Latin America (up 31.1% on equivalent terms) was attributable to the development
concentrated in Mexico of single premiums for disability and survivor benefit annuities (up 38% on
equivalent terms). Moreover, the growth in the whole area was also driven by collective policies (up
29.4%), especially in Argentina and Mexico. Written premiums also performed well in the Middle
East(8) (up 12.6% on equivalent terms). Despite the uptrend in the third quarter of the year, written
premiums declined in China (down 33.1% on equivalent terms) due to the significant decrease in
written premiums in the sector of single premium collective policies, for which the comparison with
the same period of the previous year continued to be affected by a significant adjustment of premiums
issued in the first quarter of the previous year related to the pension plan in favour of the local
partner's former employees.
New annual business premium equivalent (APE)
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
New annual business premium equivalent (APE) 3,535.4 3,827.3 1,027.3 1,055.8
Italy 1,197.5 1,176.8 334.1 316.5
France 737.8 899.1 205.9 228.5
Germany 670.6 728.8 183.1 208.7
C entral and Eastern Europe 110.7 121.6 34.5 40.7
Rest of Europe 488.5 593.6 163.6 161.4
of w hich Spain 88.7 84.4 28.8 20.0
of w hich Austria 85.1 73.9 20.3 20.9
of w hich Sw itzerland 58.4 61.1 18.9 19.9
of w hich Ireland 60.6 161.1 29.3 34.5
Rest of World 330.4 307.4 106.1 100.0
New annual business premium equivalent (APE), which totaled € 3,535.4 million, decreased by
7.5% (on equivalent exchange rates and share attributable to the Group). The comparison with the
same period of the previous year was affected, however, by the relevant concentration of single
premium production mainly in France, Italy and Ireland in the early months of 2010. The decline,
however, showed a recovery compared to the decrease observed in the first half of this year
(down 9.4%).
In detail, the new business at 30 September 2011 was affected by the decline of both traditional
business, due to the downsizing of single premiums, and linked business, which still continued to be
influenced by the comparison with the high levels of new business recorded in particular in Ireland in
the early months of the previous year. Good performance of the annual premiums (up 3.6%),
representing 61.7% of APE (57.2% at 31 December 2010).
With reference to the channels, finally, they showed the good development of the direct channel and
the stability of the agency channel opposite to the decline of the banking channel and financial
advisors.
The increase of 1.8% of new business in Italy is due to the positive development of the more
profitable annual premiums production (up 13.2%). Single premiums new business continued to
(8)
Effective 30 September 2011, a part of the Israeli insurance portfolio, previously classified to the traditional
business, was reclassified among unit- and index-linked portfolios to ensure a placement that better reflects the
technical characteristics of the products issued.
34 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
decrease (down 15.2%) which was also affected by the comparison with the same period last year
characterized by high levels of production in the first quarter of 2010.
Even if recovering in respect of the first half (down 20.7%), the APE continued to decline in France
(down 18.0%) due to the reduction in both single (down 23.1%) and unit-linked new business
(down 15.5%).
New production in Germany (down 8.0%) showed a decrease due to the decline observed in both
health business (down 24.6%) and life business (down 4.5%).
APE also went down (-4.1%) in Central and Eastern Europe mainly as a result of the decrease
observed in Poland attributable to a change in regulations of the welfare system. The good
development of the production continued, instead, in the Czech Republic.
New business in the Rest of Europe decreased (down 18.5%) affected, in particular, by the
comparison with the relevant levels of unit-linked production, in the first half of 2010 in Ireland,
without which the decline would be reduced to one third (down 6.0%). Positive development in
Austria (up 15.1%) and Spain (up 5.1%) while Switzerland declined (down 12.6%) due to the
reorientation of production towards the traditional business.
The APE of Rest of World increased (up 8.8%) as a result of the positive contribution of the Middle
East and Latin America, while continuing the decline observed in the Far East (down 15.3%),
particularly in China which comparison with the same period of the previous year was affected, as
mentioned, by the presence of a relevant single premium adjustment recognized in the first quarter of
2010.
Net cash inflows
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Net cash inflows 6,496.2 12,621.7 1,677.8 3,021.0
Italy 543.8 1,542.5 181.4 397.8
France 423.2 3,517.8 -205.4 635.5
(*)
Germany 2,868.4 3,759.6 710.1 971.8
C entral and Eastern Europe 363.9 297.2 149.2 132.2
Rest of Europe 1,199.0 2,303.9 466.0 545.6
of w hich Spain -145.7 -403.8 -30.3 -173.8
(*)
of w hich Austria 182.8 163.2 66.8 63.6
of w hich Sw itzerland 356.6 374.7 157.5 133.3
of w hich Ireland 407.0 1,489.7 192.2 320.7
Rest of World 1,098.0 1,200.7 376.5 338.1
(*) Taking into account Health business.
Net cash inflows, equal to the amount of premiums collected, less outflows attributable to the period
amounted to € 6,496.2 million. Thanks to the effective diversification of distribution based on
proprietary networks and to the flexible characteristics of its life products, the Group confirmed its
ability to to maintain the net cash inflows at high levels despite the extreme uncertainty of its
operating context.
In fact, despite the significant decrease (down 48.8% on equivalent terms) determined, on one hand,
by the aforementioned decrease in single premiums for savings and individual linked policies, and on
the other hand, by the increase in benefits, mainly in France and Italy, the performance in the third
quarter compared to the corresponding period of 2010 reported a recovery compared to the change for
the half-year.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 35
MANAGEMENT REPORT
BOZZA
Operating result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result 1,978.1 2,301.8 314.8 733.8
Technical margin 4,558.3 4,478.2 1,465.6 1,520.2
N et inv estment result 1,308.2 1,734.7 102.0 545.2
Total operating ex penses -3,888.4 -3,911.1 -1,252.8 -1,331.6
Operating result in the life segment was € 1,978.1 million (down 14.1% compared to 30 September
2010). The decrease reported was due to the significant decline in third quarter of the net investment
result, defined as the difference between operating income from investments and the related
policyholders' interests.
In fact, while confirming a substantial stability of the current return and higher gains realized on
trading activities, concentrated in particular in the first part of the year, higher impairment losses was
recognized through profit or loss, increasing from € -346.0 million at 30 September 2010 to € -2,300.7
million. These higher impairment losses also affected the allocation to the local statutory technical
provisions and their concentration in the third quarter 2011 (€ -1,078.0) determined a significant
reduction in the level of absorption of the technical provisions. The overall negative impact on the
result of the quarter amounted to € 160 million and on the first nine months of the year amounted to
€ 225 million.
The mentioned adverse conditions of the financial markets in the last quarter have also determined
both the drop of the value of investments at fair value through profit or loss amounting to about € 100
million and a reduction in the market value of the investment backing linked business and therefore
lower management fees compared to the same quarter last year, amounting to approximately € 43
million. Finally, the aforementioned financial scenario of the last three months resulted higher
allocations for financial risks, amounting to approximately € 52 million.
By contrast, the technical margin net of insurance acquisition and administration costs and other
operating items performed well, remaining at the levels reported in 2010.
The operating return of investments in the life segment(9) was 0.619% for the nine months (0.744% at
30 September 2010).
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result - life segment 1,978.1 2,301.8 314.8 733.8
Italy 933.4 1,004.1 186.3 261.2
France 208.1 362.0 -105.4 132.8
Germany 238.2 261.5 80.8 71.4
C entral and Eastern Europe 109.6 136.3 9.4 42.4
Rest of Europe 300.4 335.3 83.4 114.2
of w hich Spain 80.0 82.5 28.7 33.7
of w hich Austria 52.4 63.6 23.3 13.5
of w hich Sw itzerland 100.9 89.3 35.0 34.3
Rest of World 188.4 202.4 60.4 111.7
(9)
Equal to the ratio between the operating result and the average investments calculated based on the financial
statement figures of the life segment, as described in the Methodological Note annexed to this Report.
36 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
As described above, the operating result in the main countries was influenced by the operating income
from investments, only partially offset by the improvement in technical margins observed in certain
countries where the Group operates. In particular, the operating result of France was influenced to a
greater extent by the mentioned volatility and by the impairment losses recorded on Greek government
bonds.
Operating result: Technical margin
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
T echnical margin 4,558.3 4,478.2 1,465.6 1,520.2
N et earned premiums 31,324.1 32,854.8 9,560.3 9,708.4
Fee and commission from financial serv ice activ ities 220.0 172.6 72.6 58.6
N et insurance claims adjusted for financial interests and bonuses
credited to policy holders -26,987.8 -28,562.0 -8,187.6 -8,286.7
Other insurance items 1.9 12.7 20.4 39.9
The technical margin, which includes loadings, risk result and profits on surrenders of the period, was
substantially stable (up 1.8%). In particular, while written premiums declined, as discussed above,
technical profitability increased due to the greater contribution of recurring written premiums and to
the constant profitability of the Risk and Health lines of the Group's portfolio. The decrease in the
technical margin observed in the third quarter of the year was chiefly attributable to higher surrender
profits recorded in the previous quarter and to a reduction of loadings and fees in line with the
premiums written. However, considering the technical margin togheter with the operating expenses,
the indicator showed a growth, confirming the high levels of technical profitability of the Group.
The technical margin does not include insurance operating expenses, which are reported in Total
operating expenses and other operating items.
Operating result: Net investment result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Net investment result 1,308.2 1,734.7 102.0 545.2
Operating income from inv estments 2,640.5 11,157.8 -1,921.5 4,259.2
N et income from inv estments 7,186.9 8,611.6 2,000.3 2,848.3
C urrent income from inv estments 8,566.6 8,180.8 2,769.3 2,695.8
N et operating realized gains on inv estments 1,465.0 1,266.1 486.3 358.5
N et operating impairment losses on inv estments -2,300.7 -346.0 -1,078.2 -34.7
Other operating net financial ex penses -544.1 -489.2 -177.1 -171.2
N et income from financial instruments at fair v alue through profit
or loss -4,546.4 2,546.2 -3,921.9 1,410.9
N et income from financial instruments related to unit and index -
linked policies -4,146.7 1,776.5 -3,591.1 860.6
N et other income from financial instrumensts at fair v alue
through profit or loss -399.7 769.7 -330.7 550.3
Policy holders' interests on operating income from inv estments -1,332.3 -9,423.2 2,023.5 -3,714.0
Net investment result, which consists of the operating income from investments, net of the related
policyholders’ interests, decreased to € 1,308.2 million (€ 1,734.7 million at 30 September 2010).
Despite the stability of the current return and the increase in the Group's realized gains, the current
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 37
MANAGEMENT REPORT
BOZZA
macroeconomic and financial scenario has had a severe impact on the value of the Group's equity and
bond portfolios. In particular, investments other than those at fair value through profit or loss were
influenced by greater impairment losses, primarily relating to impairment losses recognized on Greek
government bonds in the second and third quarter and on equity in the third quarter. As already
mentioned, these higher impairment losses also affected the allocation to the local statutory technical
provisions and their concentration in the third quarter 2011 determined a significant reduction in the
level of absorption of the technical provisions.
In addition, the decline in the operating income from investments at 30 September 2011 was
significantly affected by the deterioration of the value of investments at fair value through profit or
loss, especially in the third quarter, as a result of the widening of the spreads on bonds and of the
performance of the equity markets.
Lastly, the net investment result was also affected by lower gains on foreign currencies due to the
appreciation of euro against dollar and British pound.
Current income from investments amounted to € 8,566.6 million (€ 8,180.8 million at 30 September
2010), with a nine-month current return on total investments, calculated on book value basis, which
remained essentially stable at 3.3%.
In detail, current income from fixed-income instruments went from € 7,046.2 million at 30 September
2010 to € 7,213.1 million, with a stable nine-month current return of 3.3%. Current income from the
equities segment amounted to € 530.4 million (€ 489.0 million at 30 September 2010), impacted by
the current situation of financial markets. The nine-month return amounted to 3.0% (2.5% at 30
September 2010).
Lastly, current income from investment properties increased from € 413.6 million at 30 September
2010 to € 515.1 million, with a nine-month current return of 5.4% (5.1% at 30 September 2010),
owing to the real-estate investment strategy implemented by the Group in this segment.
Net operating realized gains on investments went from € 1,266.1 million at 30 September 2010 to
€ 1,465.0 million, owing to the greater gains realized in particular on equities in Germany and France
and on the corporate portfolio in Italy and Germany, which offset the widespread decrease in realized
gains on government bonds affected by the worsening of the bonds issued by countries of the Euro
Area with a high public sector debt.
Net operating impairment losses on investments went from € -346.0 million at 30 September 2010
to € -2,300.7 million. The latter was attributable for for € -1,538.9 million to the aforementioned
impairment losses on Greek bonds, which, taking into account the policyholder interests’ share on
operating income from investment, determined an impact on the Group's result for the period of
€ 328.8 million.
Other operating net financial expenses, which include interest expenses associated with operating
debt and investment management expenses, went from € -489.2 million at 30 September 2010 to
€ -544.1 million, essentially due to greater interest expenses on operating liabilities, as a result of the
trend in interest rates.
38 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
The significant decrease in net income from financial instruments related to unit- and index-
linked contracts (10), which went from € 1,776.5 million at 30 September 2010 to € -4,146.7 million,
was due to the severe volatility that affected financial markets beginning in the second quarter of the
current year and the ongoing deterioration of bond markets, which continue to show a general
widening of spreads on bonds issued by the countries of the Euro Area with a high public sector debt.
This decrease was essentially offset by the ensuing lower policyholders' interests on operating income
from investments.
Net income from other financial instruments at fair value through profit or loss also decreased
to € -399.7 million (€ 769.7 million at 30 September 2010), always due to the performance of stock
markets and the decline in the value of the bond portfolio, as a result in particular of the widening of
the spread on Italian government bonds. Lastly, the Group also reported lower gains on foreign
currencies due to the appreciation of euro against dollar and British pound.
Coherently with the performance of the investment result, policyholders’ interests on income from
investments went from € -9,423.2 million at 30 September 2010 to € -1,332.3 million. This
performance was due to both policyholders’ interests share of the net impairment losses and the lesser
share of investment result attributable to policyholders in connection with unit- and index-linked
contracts.
Operating result: Total operating expenses
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
T otal operating expenses -3,888.4 -3,911.1 -1,252.8 -1,331.6
Acquisition and administration costs related to insurance business -3,797.7 -3,810.9 -1,231.3 -1,271.0
N et other operating ex penses -90.6 -100.2 -21.5 -60.6
Total operating expenses decreased to € -3,888.4 million (down 0.6%).
In detail, acquisition and administration costs related to insurance business amounted to
€ -3,797.7 million (down 0.3%). Given the aforementioned reduction in written premiums, acquisition
costs decreased (down 1.1%) totalling € 3,003.8 million, while administration costs, which went from
€ 772.5 million at 30 September 2010 to € 793.9 million, increased by 2.8%, concentrated in Latin
America, Middle East and Germany.
Third quarter Third quarter
30/09/2011 30/09/2010 2011 2010
Expense ratio 11.3% 10.4% 11.9% 11.9%
Acquisition costs / net premiums 8.9% 8.3% 9.4% 9.4%
Administration costs / net premiums 2.4% 2.1% 2.6% 2.5%
The ratio of acquisition costs and administrative expenses to net premiums equaled to 11.3% (10.4%
at 30 September 2010).
(10)
Effective 30 September 2011, a part of the Israeli insurance portfolio, previously classified to the traditional
business, was reclassified among unit- and index-linked portfolios to ensure a placement that better reflects the
technical characteristics of the products issued.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 39
MANAGEMENT REPORT
BOZZA
The decline in the ratio of total administration costs related to insurance business to the average
insurance provisions, which went from 0.261 to 0.252, confirmed the operating efficiency.
Administration costs
on av erage ins. prov isions Ex pense ratio Acquisition ratio Administration ratio
(% ) 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010
Group total 0.25 0.26 11.3 10.4 8.9 8.3 2.4 2.1
Italy 0.25 0.25 10.2 9.1 7.9 7.1 2.2 2.1
France 0.13 0.15 8.9 8.1 7.3 6.7 1.6 1.4
Germany 0.16 0.16 12.0 12.4 10.6 11.1 1.4 1.3
C entral and Eastern Europe 0.92 0.90 19.1 17.6 14.0 12.8 5.1 4.9
Rest of Europe 0.35 0.37 12.4 9.5 9.0 6.8 3.4 2.6
of w hich Spain 0.08 0.08 4.4 7.1 3.5 6.0 0.8 1.0
of w hich Austria 0.39 0.45 13.1 13.0 9.5 8.8 3.6 4.0
of w hichSw itzerland 0.60 0.64 20.3 20.8 14.3 14.4 6.1 6.4
Rest of World 0.84 0.91 15.5 15.3 8.4 8.5 7.1 6.8
Non-operating result
The non-operating result of the life segment went from € -219.7 million at 30 September 2010 to
€ -481.9 million. The worsening was attributable to the higher realized losses on financial instruments
and to the increase of impairment losses which were only partially offset by lower allocations to risk
provisions. In detail, non-operating impairment losses, related to instruments whose write-downs did
not affect the technical reserves to the extent they were not included in the deferred policyholders
liability and those on shareholders’ fund, amounted to € -295.2 million (€ -116.4 million at 30
September 2010), determined for € 135.7 million by the impairment of Greek government bonds.
40 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:58:05
Operating result - life segment
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result - life segment 1,978.1 2,301.8 314.8 733.8
N et premiums 31,324.1 32,854.8 9,560.3 9,708.4
N et insurance benefits and claims -28,356.7 -37,985.4 -6,181.5 -12,028.7
of w hich change in the prov isions for unit and index -linked policies 2,996.7 -3,574.2 3,574.4 -1,345.9
Acquisition and administration costs -3,731.6 -3,747.2 -1,205.0 -1,252.3
(*)
Acquisition and administration costs related to insurance business -3,703.8 -3,730.3 -1,195.7 -1,245.9
Other acquisition and administration costs -27.8 -16.9 -9.3 -6.5
N et fee and commission income and net income from financial serv ice
activ ities 126.0 92.0 37.0 33.4
N et operating income from financial instruments at fair v alue through profit or
loss -4,221.7 2,909.2 -3,805.1 1,517.7
of w hich net income from financial assets and liabilities related to unit
and index -linked policies -4,146.7 1,776.5 -3,591.1 860.6
N et operating income from other financial instruments 6,862.2 8,248.6 1,883.5 2,741.5
Interest income and other income 8,242.0 7,817.8 2,652.5 2,589.0
N et operating realized gains on other financial instruments and land and
buildings (inv estment properties) 1,465.0 1,266.1 486.3 358.5
N et operating impairment losses on other financial instruments and land
and buildings (inv estment properties) -2,300.7 -346.0 -1,078.2 -34.7
Interest ex pense on liabilities linked to operating activ ities -202.7 -157.1 -53.6 -46.3
Other ex penses from other financial instruments and land and buildings
(inv estment properties) -341.5 -332.2 -123.6 -124.9
(**)
N et other operating ex penses -24.3 -70.4 25.5 13.8
Non-operating result - life segment -481.9 -219.7 -180.9 -39.6
N et non-operating income from other financial instruments -390.2 -87.6 -153.8 9.8
N et non-operating realized gains on other financial instruments and land
(***)
and buildings (inv estment properties) -95.0 28.7 -39.7 20.0
N et non-operating impairment losses on other financial instruments and
(***)
land and buildings (inv estment properties) -295.2 -116.4 -114.1 -10.2
(****)
N et other non-operating ex penses -91.7 -132.0 -27.2 -49.4
Earnings before taxes - life segment 1,496.2 2,082.1 133.8 694.2
(*) Comm issions related to inv estm ent contracts, w hich amounted to € 93.9 m illion (€ 80.6 million at 30 Septem ber 2010), are included in net fee and comm ission incom e and net
incom e from financial serv ice activ ities.
(**) At 30 Septem ber 2011 the amount is net of operating tax es for € 48,1 m illion and of non-recurring tax es shared w ith the policy holders in Germany for € 36.4 million.
(***) The amount is net of the share attributable to the policy holders.
(****) The am ount is net of the share attributable to the policy holders in Germ any and Austria.
Bozza del 10/11/2011 17:58:05 - DATI NON DEFINITIVI 41
MANAGEMENT REPORT
BOZZA
Gross direct premiums by Line of Business - life segment
Indiv idual Indiv idual
(€ million) 30/09/2011 sav ings and protection unit/index linked H ealth Group T otal
Italy 7,317.5 170.8 0.0 1,184.7 8,673.0
France 4,950.2 1,022.6 676.5 526.3 7,175.6
Germany 4,925.8 2,438.0 1,809.6 676.2 9,849.6
C entral and Eastern Europe 794.8 316.1 139.9 17.8 1,268.6
Rest of Europe 1,410.2 1,875.3 205.6 617.3 4,108.5
of w hich Spain 464.3 9.4 0.0 297.6 771.3
of w hich Austria 527.2 212.4 174.9 0.0 914.4
of w hich Sw itzerland 184.1 575.8 6.5 1.2 767.7
Rest of World 700.2 343.0 122.2 1,198.8 2,364.2
T otal 20,098.7 6,165.9 2,953.9 4,221.0 33,439.5
Indiv idual Indiv idual
(€ million) 30/09/2010 sav ings and protection unit/index linked H ealth Group T otal
Italy 8,056.9 170.7 0.0 1,096.2 9,323.9
France 6,082.5 1,302.6 619.0 534.3 8,538.4
Germany 4,999.1 2,393.7 1,776.6 785.3 9,954.7
C entral and Eastern Europe 812.3 269.1 128.6 15.2 1,225.2
Rest of Europe 1,351.1 2,959.1 195.5 584.6 5,090.4
of w hich Spain 386.6 12.3 0.0 275.9 674.8
of w hich Austria 492.6 226.7 168.2 0.0 887.5
of w hich Sw itzerland 141.7 532.4 6.3 1.3 681.7
Rest of World 637.9 280.0 90.7 1,235.3 2,243.9
T otal 21,939.8 7,375.2 2,810.5 4,251.0 36,376.5
42 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Financial position of the life segment
Investments
30/09/2011 30/06/2011 31/12/2010
Total Total Total
(€ million) book v alue % of total book v alue % of total book v alue % of total
(*)
Equity instruments 14,363.9 5.5 17,635.8 6.8 18,921.4 7.3
Av ailable for sale financial assets 11,998.2 4.6 15,070.3 5.8 16,567.1 6.4
Financial assets at fair v alue through profit or loss 2,365.7 0.9 2,565.5 1.0 2,354.3 0.9
(**)
Fixed income instruments 218,216.1 84.0 219,745.4 84.2 217,318.1 84.0
Bonds 197,261.6 76.0 199,201.4 76.3 197,878.3 76.5
(**)
Other fix ed income instruments 20,954.5 8.1 20,544.0 7.9 19,439.8 7.5
H eld to maturity inv estments 3,517.4 1.4 3,448.7 1.3 3,722.7 1.4
Loans 59,553.0 22.9 58,766.0 22.5 59,572.2 23.0
Av ailable for sale financial assets 147,242.5 56.7 149,572.7 57.3 145,574.5 56.3
Financial assets at fair v alue through profit or loss 7,903.1 3.0 7,958.1 3.1 8,448.6 3.3
(***)
Land and buildings (investment properties) 9,972.1 3.8 9,956.5 3.8 8,614.1 3.3
Other investments 6,417.4 2.5 6,607.3 2.5 6,898.7 2.7
Inv estments in subsidiaries, associated companies and joint v entures 4,873.7 1.9 4,830.8 1.9 5,121.9 2.0
(****)
Deriv ativ es 571.3 0.2 429.7 0.2 265.2 0.1
Receiv ables from banks or customers 0.0 0.0 0.0 0.0 0.0 0.0
Other inv estments 972.3 0.4 1,346.8 0.5 1,511.6 0.6
(*****)
Cash and cash equivalents 10,678.3 4.1 6,962.2 2.7 6,980.4 2.7
(******)
T otal 259,647.8 100.0 260,907.3 100.0 258,732.6 100.0
Inv estments back to unit and index -linked policies 56,789.9 60,712.1 60,637.0
T otal investments 316,437.7 321,619.5 319,369.5
(*) Inv estment fund units amounted to € 3,034.8 million (€ 3,488.2 m ilion at 30 June 2011 and € 3,561 m ilion at 31 Decem ber 2010).
(**) Inv estm ent fund units am ounted to € 7,432.3 m illion (€ 7,555.2 m ilion at 30 June 2011 and € 7,545.6 m ilion at 31 Decem ber 2010).
(***) Inv estm ent fund units am ounted to € 2,247.4 m illion (€ 2,252 m ilion at 30 June 2011 and € 2,250.6 m ilion at 31 December 2010).
(****) Taking into account deriv ativ e instrum ents booked as liabilities w hich am ount to € 886.8 m illion (€ 693.8 m ilion at 30 June 2011 and € 785.1 m ilion at 31 Decem ber 2010).
(*****) Taking into account Rev erse REPO w hich am ount to € 594,6 m illion (€ 475.4 m ilion at 30 June 2011 and € 1,141.7 m ilion at 31 Decem ber 2010) and REPO w hich
am ount to € 267.3 m illion (€ 665,9 m ilion at 30 June 2011 and € 519.6 milion at 31 Decem ber 2010).
(******) Taking into account deriv ativ e instrum ents booked as liabilities and REPO.
Return on investment and harvesting rate - life segment(11)
C urrent return H arv esting rate P&L return C omprehensiv e return
30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010
Fix ed income instruments 3.3% 3.3% -0.6% 0.5% 2.7% 3.8% 1.4% 4.8%
Equities and equity -like inv estments 3.0% 2.5% -2.3% 0.9% 0.7% 3.4% -14.4% 0.8%
Real estate inv estments 5.4% 5.1% 0.5% -0.2% 6.0% 4.9% 6.1% 5.6%
Other inv estments 2.0% 1.6% -0.5% 0.8% 1.5% 2.5% 1.5% 2.5%
T otal investments 3.3% 3.2% -0.6% 0.5% 2.7% 3.8% 0.5% 4.5%
(11)
The return on investments and harvesting rate are calculated on the first nine months, excluding return on and
harvesting rate of investments back to unit- and index-linked policies.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 43
MANAGEMENT REPORT
BOZZA
At 30 September 2011,(12) total investments of the life segment amounted to € 316,437.7 million,
mainly stable compared to 31 December 2010 (down 0.9%), of which € 306,558.7 million related to
insurance provisions. In detail, total investments other than financial assets backing unit and index-
linked policies amounted to € 259,647.8 million (€ 258,732.0 million at 31 December 2010), and the
latter amounted to € 56,789.9 million (€ 60,637.0 million at 31 December 2010).
With reference to the composition of investment, not backing unit and index-linked policies, the
weight of the bond portfolio, amounting to 84.0%, was mainly stable while, as a result of the de-
risking strategy implemented by the Group, the exposure to equity instruments reduced from 7.3% at
31 December 2010 to 5.5%. The weight of real estate investments in this segment grew to 3.8% (3.3%
at 31 December 2010), due to the investment policy adopted by the Group with the aim of supporting
the current return in the context of low interest rates observable in some countries where the Group
operates, in order to ensure higher inflation indexed income and to realize the increase in value of such
assets in the medium term. Finally, the weight of cash and cash equivalents grew as a result of the
Group's decision to prudently increase the weight of their investments in cash instruments taking into
account the current financial environment characterized by strong tensions on government bonds of
some countries in the Euro Area and in particular on Italian bonds.
Despite the difficult conditions in financial markets, the above-mentioned strategy implemented by the
Group allowed to keep steady at 3.3% the current return of the investments calculated on a nine
months basis. By contrast, the contribution to the result of the period of harvesting operations
decreased, on a nine months basis, from 0.5% at 30 September 2010 to -0.6% . In detail, the increase
in realized gains obtained by the Group, that allowed to keep the related nine-month return at 0.56%
(0.53% at 30 September 2010), was fully offset, on the one hand, by higher impairment losses
recorded, within the second and third quarter, on Greek bonds and, on the other hand, by a decrease in
value of bond and equity portfolios recognized through profit or loss mainly in the third quarter of this
year.
Comprehensive return, which includes the current return and changes in value of the period
recognized through profit or loss and equity, also decreased significantly amounting to 0.5% on a nine
months basis (4.5% at 30 September 2010), heavily influenced by the decline in value of equities and
bond portfolios recognized through equity.
With regard to the composition of the bond portfolio, exposures to government and corporate bonds
remain essentially unchanged amounting respectively to 57.2% and 42.8% (57.1% and 42.9% at 31
December 2010). During the third quarter of this year in the life segment, the Group continued to
implement actions aimed to support an adequate liquidity of insurance portfolios and a careful
selection of government bonds and corporate bonds of issuers with solid valuations able to ensure
adequate coupon returns. These actions did not substantially change the average duration of the
portfolio, equal to 6.4.
The nine-month current return on the bond portfolio remained mainly stable, amounting to 3.3%
(3.3% at 30 September 2010). Despite the substantial stability of the realized gains thanks to the
trading activity realized in particular in the first part of the year, that amounted on a nine months basis
at 0.38% (0.40% at 30 September 2010), the nine-month overall harvesting rate declined from 0.5% at
(12)
Effective 30 September 2011, a part of the Israeli insurance portfolio, previously classified to the traditional
business, was reclassified among unit- and index-linked portfolios to ensure a placement that better reflects the
technical characteristics of the products issued. As a consequence, all investments hedging that portfolio have
been reclassified accordingly for the comparative periods as well.
44 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
30 September 2010 to -0.6%. This decrease was attributable to higher impairment losses recorded, in
particular within the second and third quarter, on Greek bonds and to a decrease in value of bond
portfolios recognized through profit or loss mainly in the third quarter of this year.
Again because of the deterioration of the bond market conditions, comprehensive return, which also
includes the changes in value of the period recognized through profit or loss and equity, also declined
on a nine moths basis, going from 4.8% at 30 September 2010 to 1.4%, significantly influenced by the
decline in value suffered by bonds recognized through equity.
The nine-month current return on equities went from 2.5% at 30 September 2010 to 3.0%. Despite the
the realized gains achieved within the trading activity realized in particular in the first part of the year,
that amounted on a nine months basis at 2.65% (2.41% at 30 September 2010), the nine-month overall
harvesting rate declined to -2.3% (0.9% at 30 September 2010), due to higher impairment losses
recognized through profit or loss in a context of exceptional volatility of equity markets during the
third quarter and from the reduction in portfolios' value recognized through profit or loss.
Comprehensive return, which includes current return and changes in value of the period recognized
through profit or loss and equity, declined significantly to -14.4% on a nine months basis (0.8% at 30
September 2010), heavily influenced by the performance of equity markets in the third quarter
recognized through equity.
Consistently with the de-risking strategy implemented by the Group, which aims to reduce the weight
of real estate in the non life segment and to increase it in the life segment, the incidence of real estate
investments, calculated on book values, increased to 3.8% (3.3% at 31 December 2010). Finally, the
contribution of the nine-month current return to the result of the period was positive and amounted to
5.4% (5.1% at 30 September 2010).
(€ million) 30/09/2011 30/06/2011 31/12/2010
T otal investments excluded linked investments 259,647.8 260,907.3 258,732.6
Italy 72,095.0 75,501.3 75,230.7
France 68,543.1 68,488.2 67,906.0
Germany 74,921.7 73,906.8 72,747.6
C entral and Eastern Europe 6,110.1 6,189.4 6,063.9
Rest of Europe 25,271.4 24,567.9 24,715.4
of w hich Spain 7,685.9 7,498.7 7,622.2
of w hich Austria 7,048.5 7,076.0 6,985.8
of w hich Sw itzerland 3,411.6 3,111.1 3,125.5
Rest of World 12,706.5 12,253.6 12,069.0
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 45
MANAGEMENT REPORT
BOZZA
Insurance provisions – life segment
(€ million) 30/09/2011 30/06/2011 31/12/2010
Insurance provisions - life segment 306,558.7 311,904.6 308,986.3
N et insurance prov isions and financial liabilities: 315,998.8 318,637.9 313,347.9
traditional 258,714.1 257,218.6 252,387.8
linked 57,284.7 61,419.3 60,960.1
Deferred policy holders liabilities -9,440.0 -6,733.2 -4,361.6
Life insurance provisions and financial liabilities related to investment contracts excluding deferred
policyholders liabilities(13) went from € 313,347.9 million at 31 December 2010 to € 315,998.8 million,
as a result of the increase in the traditional provisions (up 2.5%), attributable to the above-mentioned
contribution of written premiums and to the investment result shared with policyholders.
Following the significant decline in value of the Group's equity and bond portfolio, the deferred
policyholders liabilities amounted to € -9,440.00 million (€ -4,361.6 million at 31 December 2010).
30/09/2011 31/12/2010
(€ million) Traditional Linked Total Traditional Linked Total
Net insurance provisions and financial liabilities 258,714.1 57,284.7 315,998.8 252,387.8 60,960.1 313,347.9
of which Italy 78,179.7 5,883.8 84,063.5 77,088.2 6,282.8 83,371.0
of which France 68,876.9 13,593.9 82,470.8 66,842.7 15,149.9 81,992.6
of which Germany 74,456.1 11,255.8 85,711.9 72,289.3 12,448.8 84,738.1
of which Central and Eastern Europe 5,688.9 1,260.1 6,949.1 5,597.4 1,317.8 6,915.2
(13)
Effective 30 September 2011, a part of the Israeli insurance portfolio, previously classified to the traditional
business, was reclassified among unit- and index-linked portfolios to ensure a placement that better reflects the
technical characteristics of the products issued. As a consequence, all investments hedging that portfolio have
been reclassified accordingly for the comparative periods as well.
46 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Non-life segment
- Gross written premiums: € 16,941.9 million (+2.3%)
- Combined ratio: 96.6% (-2.2 p.p.)
- Operating result: € 1,203.9 million (+36.4%)
Business performance of the non-life segment
Premiums development
Gross written premiums in the non-life segment grew by 2.3% (up 2.1% on equivalent terms)
amounting to € 16,941.9 million (€ 16,557.3 million at 30 September 2010), confirming in this quarter
the uptrend in written premiums already observed since the second half of last year. Both the Motor
and the Non-motor lines performed well. Despite the difficult macroeconomic environment that
continues to characterize some countries where the Group operates, the Commercial/Industrial line,
which had performed negatively earlier this year, showed a recovery.
Gross written premiums
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Non-life gross written premiums 16,941.9 16,557.3 4,931.4 4,779.6
Italy 4,974.9 4,969.3 1,361.3 1,359.2
France 3,181.2 3,077.1 997.4 949.6
Germany 2,499.5 2,467.8 644.5 640.3
C entral and Eastern Europe 1,728.0 1,711.7 552.6 552.7
Rest of Europe 3,424.5 3,329.8 973.5 929.2
of w hich Spain 1,050.9 1,058.1 279.3 266.1
of w hich Austria 1,069.2 1,081.1 296.3 302.4
of w hich Sw itzerland 606.8 526.4 165.6 141.4
Rest of World 1,133.8 1,001.5 402.2 348.6
Gross premiums written in Italy were mainly stable going from € 4,969.3 million at 30 September
2010 to € 4,974.9 million (up 0.1%). In detail, the Motor line confirmed its growth trend (up 2.9%)
and continued to benefit from the growth in the average premium generated by the portfolio reform
policies recently implemented with the aim of recovering technical profitability levels. The Non-motor
lines, by contrast, continued to decline (down 2.5%), reflecting the performance of the
Commercial/Industrial lines which was affected by the country's economic situation, and the decrease
in the Accident and Health line, in particular as a result of the planned reduction in written premiums
from Health collective policies.
Gross written premiums in France performed positively, showing a 3.4% increase and amounting to €
3,181.2 million. This performance is attributable to the growth in Motor line (up 2.1%), as a result of
the rise in tariffs applied over the past few periods, as well as to the Non-motor line (up 3.2%). In
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 47
MANAGEMENT REPORT
BOZZA
detail, the Personal line increased by 5.1% and with particular reference to the Assistance line, which
refers to the French territory, written premiums stood at € 482.2 million at 30 September 2011 (down
0.7% on equivalent terms).
Gross written premiums in Germany went from € 2,467.8 million at 30 September 2010 to 2,499.5
million; this increase (up 1.3%) was attributable to the performance both of the Motor line (up 1.9%)
and the Non-motor lines (up 0.9%), driven in particular by the Personal line. More specifically, the
Motor line, which in 2010 had suffered from severe tariff competition, confirmed the growth rates
seen in the first half of the year, due to the rise in the average premium, both for the new business and
the existing portfolio, as well as the expansion of the portfolio.
Gross written premiums in Central and Eastern Europe recorded a 0.1% increase on equivalent
terms, amounting to € 1,728.0 million (€ 1,711.7 million at 30 September 2010). The Non-motor lines
continued to perform well (up 10.2% on equivalent terms), mainly in the Commercial/Industrial line in
the Czech Republic and Poland, offsetting the decline in the Motor line (down 10.3% on equivalent
terms) marked by a severe competition, taking into account the profitability of this business, observed
in the Czech Republic, Romania and Hungary.
Written premiums in the Rest of Europe also showed positive results (up 1.0% on equivalent terms).
In detail, gross written premiums in Switzerland increased to € 606.8 million (€ 526.4 million at 30
September 2010). This increase (up 1.5% on equivalent terms) was attributable both to the Motor line
(up 1.7% on equivalent terms) and the Non-motor line (up 1.4% on equivalent terms) driven by the
Personal lines. The Accident and Health lines, albeit recovering from the decline recorded in the first
half of the year, decreased slightly (down 0.4% on equivalent terms) reflecting the non renewal of
some collective contracts that did not meet the Group profitability requirements.
Gross written premiums in Austria remained substantially unchanged, amounting to € 1,069.2 million
(€ 1,081.1 million at 30 September 2010). In detail, the Motor line showed a slight decrease (down
0.5% on equivalent terms), due to the cancellation of some contracts related to corporate customers,
substantially offset by the the growth in Non-motor lines (up 1.0% on equivalent terms), driven by the
Personal lines, whose premiums reflect the applied tariff increases as well as by the written premiums
in the Accident line.
Gross written premiums in Spain went from € 1,058.1 million at 30 September 2010 to € 1,050.9
million. The performance of the third quarter of the year confirmed the reversal of the trend already
showed in the second quarter of 2011, growing by 4.9% compared to the same period of the previous
year and therefore reducing the decline for the nine months period to 0.7%. This decline was
attributable to written premiums in the Motor line (down 2.6%) while the Non-motor line remained
substantially stable, reflecting the positive performance of the Personal line (up 6.9%) and Health line,
which offset the downtrend of the Commercial/Industrial line (down 6.7%), which continued to be
affected by the country's economic crisis, particularly in the transport and construction sectors.
The Rest of World also performed positively, due in particular to written premiums in Latin America
(up 24.3% on equivalent terms), attributable both to the Motor line performance (up 22.0%) in Mexico
and mostly in Argentina, which is still influenced by the combined effect of tariff increases and
inflationary adjustments, and to the increase showed by the Non-motor line (up 30.6%) driven by the
Commercial/Industrial lines. Finally, written premiums also performed well in the Middle East, both
in the Motor line (up 2.1%) and in the Non-motor line (up 2.2%), driven by the Personal lines.
48 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Operating result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result 1,203.9 882.3 405.1 296.3
Technical result 492.2 152.8 162.6 44.7
Inv estment result 847.8 893.1 271.1 309.6
Other operating items -136.2 -163.6 -28.5 -58.0
Operating result in the non-life segment amounted to € 1,203.9 million, up by 36.4%, confirming the
trend shown in the first half of the year. This improvement was influenced by the positive performance
of the technical result, which represents the difference between premiums and the costs of insurance
operations (claims, acquisition and administration costs and other technical costs) that more than offset
the slight decline of the contribution by the investment result, whose management, in light of the
current market situation, focused on maintaining the current return, through the active investment
management implemented by the Group as part of its overall investment strategy.
With reference to the technical result, the improvement reflected the above-mentioned increase in
written premiums resulting from the tariff policies implemented which led to an improved current loss
ratio also combined with the lower impact of catastrophic events, which at Group level impacted for
approximately € 96 million, largely attributable to the storms in Germany in August and September
(for an overall amount of € 56 million) and the earthquake in Japan in the first part of the year (for an
overall amount of € 30 million). Compared to September 2010, therefore, the operating result was
influenced by lower catastrophic events for approximately € 221 million, whose positive effect was
partially offset by the higher negative reinsurance balance, given the technical characteristics of the
Group reinsurance operations. Overall, the reinsurance balance increased by about € 258 million.
Operating return in the non-life segment(14) thus continued to grow amounting to 3.303% on a nine
months basis (2.393% at 30 September 2010).
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result - non-life segment 1,203.9 882.3 405.2 296.3
Italy 295.8 206.7 110.5 83.3
France 193.4 142.0 56.1 31.4
Germany 194.5 237.9 52.8 94.1
C entral and Eastern Europe 223.9 122.7 81.8 13.1
Rest of Europe 258.6 138.9 86.2 57.7
of w hich Spain 111.7 84.4 31.6 21.1
of w hich Austria 73.4 66.9 18.9 20.8
of w hich Sw itzerland 35.1 32.3 13.3 10.0
Rest of World 37.7 34.1 17.7 16.7
Breaking the operating result down by the Group's main countries of operation, a positive performance
was recorded in Italy, France and Spain, primarily as a result of the improvement in the loss ratio.
Thanks to the improved technical margins, the operating result of Central and Eastern Europe also
continued to show a stronger performance, significantly contributing to the development of the
(14)
Equal to the ratio between the operating result and the average investments calculated based on the financial
statement figures of the non-life segment. Further information is given in the appendix to the report.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 49
MANAGEMENT REPORT
BOZZA
Group’s non-life operating result. By contrast, the operating result of Germany declined, due to the
decrease in the net investment result.
Operating result: Technical result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
T echnical result 492.2 152.8 162.6 44.7
N et earned premiums 15,367.4 15,130.9 5,059.3 5,103.4
N et insurance benefits and claims -10,667.8 -10,812.6 -3,568.8 -3,708.8
N et acquistion and administration costs -4,172.9 -4,131.5 -1,324.4 -1,329.3
Other net technical income -34.5 -33.9 -3.5 -20.6
As mentioned above, the technical result improved significantly from € 152.8 million at 30
September 2010 to € 492.2 million. This result was achieved thanks to both the good performance of
written premiums, and the lower overall loss ratio for the period, leading to an improved combined
ratio, which stood at 96.6% compared to 98.8% at 30 September 2010.
Third quarter Third quarter
30/09/2011 30/09/2010 2011 2010
C ombined ratio 96.6% 98.8% 96.7% 98.7%
Loss ratio 69.4% 71.5% 70.5% 72.7%
Ex pense ratio 27.2% 27.3% 26.2% 26.0%
Acquisition costs / net premiums 21.2% 21.3% 20.3% 20.0%
Administration costs / net premiums 5.9% 6.0% 6.0% 6.0%
As already noticed in the first part of the year, the loss ratio, which stood at 69.4%, continued to
decrease (down 2.1 pps), as a result mainly of the reduction in the current loss ratio – not related to
catastrophic events – by 1.6 pps, showing a further improvement compared to the first half of the year.
In detail, this reduction was due to the decrease in the current loss ratio of Non-motor lines both in
Italy and in foreign markets, particularly in Germany, Eastern and Central Europe and Spain, as well
as to an improvement of the current loss ratio in the Motor line especially in Italy, also thanks to the
effective claims settlement activities.
The above mentioned improvement in the current loss ratio was partly offset by the lower contribution
of previous years run off, obtained however in the usual context of prudence in the reservation policy
of the Group, as well as by the above-mentioned higher negative reinsurance balance.
Operating expenses amounted to € 4,172.9 million, up 1.0%, mainly due to the increase in net acquisition
costs generated by the development of written premiums. Administration costs remained stable.
The expense ratio amounted to 27.2% (27.3% at 30 September 2010), reflecting the trends observed
for both its components.
50 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
(*)
C ombined ratio Loss ratio Ex pense ratio
(% ) 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010
Group T otal 96.6 98.8 69.4 71.5 27.2 27.3
Italy 96.8 98.9 75.7 77.6 21.1 21.3
France 98.8 100.3 72.0 71.7 26.8 28.6
Germany 95.6 95.7 66.3 66.5 29.4 29.2
C entral and Eastern Europe 88.7 95.2 54.9 63.8 33.8 31.5
Rest of Europe 96.6 99.9 68.5 71.8 28.1 28.1
of w hich Spain 94.0 97.2 67.0 70.6 26.9 26.6
of w hich Austria 95.8 95.9 68.5 68.2 27.4 27.7
of w hich Sw itzerland 96.4 96.3 70.7 70.2 25.8 26.1
Rest of World 102.6 100.9 64.9 63.8 37.8 37.1
(*) CAT claims, net of reinsurance, impact on combined ratio of the Group for 0.6 pp, of w hich 2.5 pp in Germany and 1.1 pp in Sw itzerland (at 30 Septem ber 2010 the total
im pact w as 2.1 pp of w hich 0.4 pp in Italy , 2.8 pp in France, 2.2 pp in Germany , 7.6 pp in Central and Eastern Europe and 0.7 pp in Spain at 30 September 2010).
Breaking the performance of the combined ratio down by the Group's main countries of operation, the
ratio in Italy improved by 2.1 pps, reaching 96.8%. Specifically, the loss ratio showed a 1.9 pps
decline, attributable to the Non-motor lines, due to the improvement of the loss ratio related to both
catastrophic and non-catastrophic events. The expense ratio also improved slightly (down 0.2 pp) as a
result of the decrease in acquisition costs in both lines.
In France the combined ratio decreased by 1.5 pps, to 98.8%. Given the slight increase in the loss
ratio (up 0.3 pp), the improvement in the combined ratio is attributable to the expense ratio (down 1.8
pps), which stood at 26.8% thanks to the reduction in acquisition costs for both lines and in
administration costs, more specifically for the Non-motor lines.
In Germany the combined ratio was substantially stable (down 0.1 pp), amounting to 95.6%. Despite
the storms that hit the country in August and September, which impacted for approximately € 56
million (equal to 2.5 pps), the loss ratio slightly improved (down 0.2 pp), offset by an increase in the
expense ratio (up 0.2 pp) attributable to the trend of acquisition costs in the Non-motor lines recorded
as part of the development policy of these lines, which are characterized by good loss ratio levels.
The combined ratio of Central and Eastern Europe continued to be the best performance at Group
level, standing below the 90% threshold (88.7%) and recording a significant 6.6 pps improvement.
Benefiting from the absence of catastrophic events, which in the same period of 2010 had weighted for
7.6 pps, the loss ratio improved by 8.9 pps, partly offset by the performance of the expense ratio (up
2.3 pps). The deterioration of the latter was entirely determined by the performance of acquisition
costs, in particular in the Non-motor lines, whose share in total portfolio is increasing.
The combined ratio in Austria was substantially unchanged (down 0.1 pp) standing at 95.8%. In fact,
while the expense ratio showed a slight improvement (down 0.3 pp), resulting from a reduction in
operating expenses in both the Motor and Non-motor lines, the loss ratio performance worsened (up
+0.2 pp).
The combined ratio in Spain also performed well (down 3.2 pps), standing at 94.0%. This
improvement was entirely due to the significant decrease in the loss ratio (down 3.6 pps), which was
positively affected by the loss ratio in the Non-motor lines and also by the absence of catastrophic
events which in the same period last year had impacted for 0.7 pp. The expense ratio slightly increased
(up 0.3 pp).
Finally, in Switzerland the combined ratio was substantially stable, amounting to 96.4% (up 0.1 pp),
due to a limited 0.4 pp deterioration in the loss ratio, with catastrophic events accounting for 1.1 pps,
not fully offset by the 0.3 pp decrease in the expense ratio.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 51
MANAGEMENT REPORT
BOZZA
Operating result: Investment result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Investment result 847.8 893.1 271.1 309.6
C urrent income from inv estments 1,209.4 1,240.2 397.3 422.9
Other operating net financial ex penses -361.6 -347.1 -126.2 -113.3
The investment result in the non-life segment, which consists of current income from investments
and other operating net financial expenses, went from € 893.1 million at 30 September 2010 to € 847.8
million. This decrease was determined both by lower dividends and by the reduction of current income
from investment properties which reflected their lower weight in this segment consistently with the
Group's investment strategy.
Current income from investments went from € 1,240.2 million at 30 September 2010 to € 1,209.4
million. Against a substantial stability of income from fixed-income investments, which totalled
€ 665.0 million (€ 674.7 million at 30 September 2010), the decrease was attributable to lower
dividends, which amounted to € 84.0 million (€ 103.6 million at 30 September 2010). Lastly, current
income from investments properties went from € 394.2 million at 30 September 2010 to € 375.0
million, reflecting the reduced exposure to real estate in the non-life segment in line with the Group's
strategy aimed at reducing the risk capital invested in this segment.
The nine-month current return on total investments, calculated on book values, however remained
stable at 3.3%, also reflecting the reduction in market values.
Other operating net financial expenses, which include interest expense on liabilities linked to
operating activities and investment management expenses, amounted to € -361.6 million (€ -347.1
million at 30 September 2010), due to higher interest expenses on operating liabilities caused by the
trend in interest rates.
Operating result: Other operating items
Net other operating items in the non-life segment, which include non-insurance operating expenses,
depreciation and multi-annual costs, provisions for recurring risks and other taxes, totalled € -136.1
million (€ -163.6 million at 30 September 2010).
Non-operating result
The non-operating result of the non-life segment went from € -200.0 million at 30 September 2010
to € -517.0 million. The significant decline was attributable to the deterioration of the non-operating
investment result, which reflected the extreme volatile conditions of the financial markets.
In detail, the non-operating investment result reflected both the decline in non-operating realized
gains, which went from € 245.8 million at 30 September 2010 to € 94.3 million and the increase in the
impairment losses on Group investments. The latter amounted to € -494.6 million (€ -293.7 million at
30 September 2010) due to impairment on equity and bond portfolios; in particular, these write-downs
were influenced for € 137.9 million by the aforementioned impairment of Greek bonds.
52 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Finally, net non-operating income from financial instruments at fair value through profit or loss
decreased significantly, amounting to € -28.2 million (€ 37.3 million at 30 September 2010) due to
both lower gains on foreign currencies, resulting from the Euro appreciation against the dollar and
British pound and the negative performance of equity markets.
Net other non-operating expenses continued to decrease, going from € -189.4 million at 30
September 2010 to € -88.6 million, including € 58.3 million in amortization of the value of the
portfolios acquired directly or by obtaining control of insurance or financial companies (€ 57.8 million
at 30 September 2010). The improvement is essentially attributable to lower net allocations to risk
provisions.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 53
MANAGEMENT REPORT
BOZZA
Operating result – non-life segment
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result - non-life segment 1,203.9 882.3 405.2 296.3
N et earned premiums 15,367.4 15,130.9 5,059.3 5,103.4
N et insurance benefits and claims -10,667.8 -10,812.6 -3,568.8 -3,708.8
Acquisition and administration costs -4,186.7 -4,146.7 -1,331.1 -1,335.7
Acquisition and administration costs related to insurance business -4,172.9 -4,131.5 -1,324.4 -1,329.3
Other acquisition and administration costs -13.9 -15.3 -6.6 -6.3
Fee and commission income and income from financial serv ice activ ities 0.0 -0.3 0.0 -0.2
N et operating income from financial instruments at fair v alue through profit
or loss 24.2 30.4 10.2 12.8
N et operating income from other financial instruments 823.5 862.7 260.9 296.9
Interest income and other income 1,185.2 1,209.9 387.1 410.2
Interest ex pense on liabilities linked to operating activ ities -131.8 -119.3 -55.2 -42.4
Other ex penses from other financial instruments and land and buildings
(inv estment properties) -229.9 -227.9 -71.1 -70.9
N et other operating ex penses -156.8 -182.0 -25.2 -72.1
Non-operating result - non-life segment -517.0 -200.0 -216.2 -66.0
N et non-operating income from financial instruments at fair v alue through
profit or loss -28.2 37.3 -30.4 -53.5
N et non-operating income from other financial instruments -400.2 -47.9 -146.3 44.2
N et realized gains on other financial instruments and land and buildings
(inv estment properties) 94.3 245.8 49.6 111.1
N et impairment losses on other financial instruments and land and
buildings (inv estment properties) -494.6 -293.7 -195.9 -66.9
N et other non-operating ex penses -88.6 -189.4 -39.4 -56.7
Earnings before taxes - non-life segment 686.9 682.3 189.0 230.4
54 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Gross direct premiums by Line of Business – non-life segment
Motor Non motor T otal
(€ million) 30/09/2011 Personal C ommercial/Industrial Accident/H ealth (*)
Italy 2,401.0 577.8 1,118.4 818.5 4,915.6
France 873.4 1,097.3 637.0 362.9 2,970.6
(*)
Germany 990.0 932.8 225.1 348.8 2,496.6
C entral and Eastern Europe 778.8 268.0 436.9 211.3 1,695.0
Rest of Europe 1,253.7 757.7 785.2 522.2 3,318.8
of w hich Spain 267.9 286.2 333.9 137.1 1,025.1
(*)
of w hich Austria 419.9 238.5 285.4 111.0 1,054.8
of w hich Sw itzerland 312.1 150.5 3.0 139.2 604.8
Rest of World 649.6 42.4 339.9 63.8 1,095.8
T otal 6,946.4 3,676.0 3,542.5 2,327.6 16,492.4
(*) The life segment takes into account the Accident/Health business w ith the proper criteria of the segment.
Motor Non motor T otal
(€ million) 30/09/2010 Personal C ommercial/Industrial Accident/H ealth (*)
Italy 2,333.1 564.4 1,155.5 859.8 4,912.8
France 855.8 1,043.9 627.3 360.7 2,887.7
(*)
Germany 971.4 922.4 224.8 346.4 2,465.0
C entral and Eastern Europe 862.4 247.7 359.0 216.1 1,685.1
Rest of Europe 1,193.9 710.7 821.2 488.6 3,214.4
of w hich Spain 275.1 267.7 358.0 131.3 1,032.0
(*)
of w hich Austria 422.0 233.9 287.4 112.9 1,056.2
of w hich Sw itzerland 270.3 128.9 2.2 123.2 524.6
Rest of World 585.1 38.1 290.3 60.6 974.2
T otal 6,801.7 3,527.2 3,478.1 2,332.2 16,139.2
(*) The life segm ent takes into account the Accident/Health business w ith the proper criteria of the segm ent.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 55
MANAGEMENT REPORT
BOZZA
Financial position of the non-life segment
Investments
30/09/2011 30/06/2011 31/12/2010
Total Total Total
(€ million) book v alue % of total book v alue % of total book v alue % of total
(*)
Equity instruments 3,460.4 9.8 3,963.9 10.7 4,000.4 11.0
Av ailable for sale financial assets 3,203.0 9.1 3,696.7 10.0 3,689.0 10.1
Financial assets at fair v alue through profit or loss 257.3 0.7 267.2 0.7 311.4 0.9
(**)
Fixed income instruments 23,039.6 65.2 23,728.3 64.1 21,876.6 60.1
Bonds 20,307.7 57.5 20,538.1 55.5 19,230.4 52.8
(**)
Other fix ed income instruments 2,731.8 7.7 3,190.2 8.6 2,646.2 7.3
H eld to maturity inv estments 200.6 0.6 200.8 0.5 214.0 0.6
Loans 4,296.2 12.2 4,721.0 12.8 4,405.5 12.1
Av ailable for sale financial assets 18,060.0 51.1 18,224.3 49.2 16,573.9 45.5
Financial assets at fair v alue through profit or loss 482.8 1.4 582.1 1.6 683.1 1.9
(***)
Land and buildings (investment properties) 5,533.7 15.7 5,576.5 15.1 6,387.8 17.5
Other investments 826.6 2.3 1,025.6 2.8 960.4 2.6
Inv estments in subsidiaries, associated companies and joint v entures 783.1 2.2 894.2 2.4 907.9 2.5
(****)
Deriv ativ es -15.3 0.0 14.8 0.0 15.3 0.0
Receiv ables from banks or customers 0.0 0.0 0.0 0.0 0.0 0.0
Other inv estments 58.7 0.2 116.6 0.3 37.2 0.1
(*****)
Cash and cash equivalents 2,469.9 7.0 2,718.0 7.3 3,183.7 8.7
(******)
T otal 35,330.1 100.0 37,012.2 100.0 36,408.9 100.0
(*) Inv estment fund units amounted to € 607.8 million (€ 630 milion at 30 June 2011 € 635.6 milion at 31 December 2010).
(**) Inv estment fund units amounted to € 571.3 million (€ 654.1 milion at 30 June 2011 and € 524.3 milion at 31 December 2010).
(***) Inv estment fund units amounted to € 167.8 million (€ 166.6 milion at 30 June 2011 and € 161.6 milion at 31 December 2010).
(****) Taking into account deriv ativ e instruments booked as liabilities w hich amount to € 73.8 million (€ 14.6 milion at 30 June 2011 and € 28.6 milion at 31 December 2010).
(*****) Taking into account Rev erse REPO w hich amount to € 228.7 million (€ 175.4 milion at 30 June 2011 and € 317.7 milion at 31 December 2010) and REPO w hich
amount to € 9 million (€ 7.9 milion at 30 June 2011 and € 7.8 milion at 31 December 2010).
(******) Taking into account deriv ativ e instruments booked as liabilities and REPO.
Return on investments and harvesting rate - non-life segment (15)
C urrent return H arv esting rate P&L return C omprehensiv e return
30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010
Fix ed income instruments 2.9% 2.9% -0.8% 0.6% 2.1% 3.5% 1.4% 4.5%
Equities and equity -like inv estments 2.2% 2.2% -4.0% -1.3% -1.8% 1.0% -9.5% -0.6%
Real estate inv estments 6.4% 6.5% 1.3% 1.2% 7.7% 7.7% 7.7% 7.7%
Other inv estments 2.1% 1.6% 0.0% -0.5% 2.1% 1.1% 2.1% 1.1%
T otal investments 3.3% 3.3% -0.8% 0.4% 2.5% 3.8% 1.3% 4.2%
Total investments in the non-life segment amounted to € 35,330.1 million, decreasing (down 3.0%)
compared to 31 December 2010.
(15)
The return on investments and harvesting rate are calculated on the first nine months.
56 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
With regard to the composition of the investment portfolio, the implementation of the strategy of
gradually de-risking the portfolios resulted in a reduced exposure to equities, which went from 11.0%
at 31 December 2010 to 9.8%, and to real estate investments, whose percentage weight declined to
15.7% (17.5% at 31 December 2010), in favour of fixed-income investments, whose weight stood at
65.2%, significantly increasing from 60.1% at 31 December 2010.
The nine-month current return on total investments for the non-life segment amounted to 3.3%, stable
compared with the same period last year. By contrast, the contribution of harvesting operations to the
result for the period was negative, amounting, on a nine months basis, to -0.8% (0.4% at 30 September
2010), caused by higher impairment losses recorded on Greek bonds and by a decrease in value of
bond and equity portfolios recognized through profit or loss mainly in the third quarter of this year.
The decline in value of equity and bond portfolios recognized through equity was reflected on the
nine-month comprehensive return, which includes current return and changes in the value of the
period recognized through profit or loss and equity, which went from 4.2 % at 30 September 2010 to
1.3%.
Against a reduction in the weight of the corporate component of the bond portfolio, which stood at
49.9% (51.0% at 31 December 2010), the weight of government bonds amounted to 50.1% (49.0% at
31 December 2010). With reference to the crisis that continued to affect government bonds of Euro
Area countries with a high public sector debt, the investment activity in government bonds was driven
by accurate assessments of the underlying risk, while at the same time ensuring an adequate level of
portfolio liquidity. Moreover, in the third quarter, the Group implemented a prudential strategy with
regard to fixed-income securities, favouring issuers with adequate spreads and solid credit standing in
order to support the portfolios' current return. The average duration of the portfolio was unchanged at
4.4 years.
The nine-month current return on fixed-income portfolio remained stable at 2.9%. Despite a nine-
month return from the trading activity which amounted to 0.10% (0.44% at 30 September 2010), the
nine-month overall harvesting rate went from 0.6% to -0.8%, mainly due to the increase in impairment
losses, substantially related to Greek government bonds.
Finally, due to the reduction in value of the bond portfolio recognized through equity, especially for
corporate bonds in the third quarter, as a result of higher spreads, the nine-month comprehensive
return on the bond portfolio, which includes current return and changes in value of the period
recognized through profit or loss and equity, declined to 1.4% on a nine months basis (4.5% at 30
September 2010).
The nine-month current return of the equity portfolio was substantially unchanged at 2.2%. By
contrast, the contribution of harvesting operations to the result for the period was negative, standing at
-4.0% on a nine months basis, (-1.3% at 30 September 2010), reflecting the deterioration of all the
indicator's components, which were particularly affected by the stock markets negative performance
for the third quarter.
Consequently, also the nine-month comprehensive return which includes current return and changes in
value of the period recognized through profit or loss and equity decreased to -9.5% (-0.6% at 30
September 2010), heavily influenced by the negative stock market performance in the third quarter.
The contribution of real estate investments nine-month current return to the result of the period was
substantially unchanged at 6.4% (6.5% at 30 September 2010). Finally, return from realized gains, net
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 57
MANAGEMENT REPORT
BOZZA
of depreciation and impairment losses for the period (harvesting rate), performed well, amounting to
1.3% on a nine months basis (1.2% at 30 September 2010).
30/09/2011 30/06/2011 31/12/2010
T otal investments - non-life segment 35,330.1 37,012.2 36,408.9
Italy 11,480.7 12,381.1 12,379.7
France 5,282.6 5,453.4 5,257.6
Germany 5,655.1 6,025.9 5,815.0
C entral and Eastern Europe 3,331.5 3,437.1 3,364.9
Rest of Europe 8,195.3 8,350.2 8,172.0
of w hich Spain 1,729.5 1,843.1 1,897.1
of w hich Austria 2,689.7 2,740.4 2,606.3
of w hich Sw itzerland 1,262.5 1,306.3 1,257.6
Rest of World 1,384.8 1,364.6 1,419.8
Insurance provisions – non-life segment
(€ million) 30/09/2011 30/06/2011 31/12/2010
Insurance provisions - non-life segment 30,760.9 31,182.6 30,235.8
Prov isions for unearned premiums 5,617.3 6,193.4 5,450.4
Prov isions for outstanding claims 24,760.1 24,621.8 24,413.7
Other insurance prov isions 383.5 367.4 371.7
30/09/2011 31/12/2010
(€ million) Motor Non Motor Total Motor Non Motor Total
Insurance provisions - non-life segment 13,889.0 16,871.9 30,760.9 13,475.3 16,760.5 30,235.8
of which Italy 4,841.6 6,576.0 11,417.6 4,938.8 6,909.6 11,848.4
of which France 2,342.4 3,314.0 5,656.4 2,073.8 3,140.1 5,213.9
of which Germany 1,946.4 2,370.3 4,316.7 1,805.9 2,278.0 4,083.9
of which Central and Eastern Europe 1,214.0 821.5 2,035.5 1,219.2 781.5 2,000.7
58 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Financial segment
- Third parties AUM: € 90,262.5 million (-0.4% on
equivalent terms compared to 31 December 2010)
- Operating result: € 279.0 million (+0.7%)
Asset management accounts for most of the Group’s activities in the financial segment and focuses
mainly on the management of the Group companies’ financial instruments.
At 30 September 2011, assets managed by banks and asset management companies decreased
amounted to € 426,015.3 million, mainly due to the negative performance of the financial markets. Of
this amount, third-party assets amounted to € 90,262.5 million (down 0.4% on equivalent terms
compared to 31 December 2010).
Business performance of the financial segment
Operating result
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result - financial segment 279.0 277.1 68.4 74.3
N et operating result from financial activ ities 986.0 952.4 312.1 289.8
Acquisition and administration costs -691.0 -659.6 -237.8 -217.7
N et other operating ex penses -16.1 -15.7 -5.9 2.1
The operating result of the financial segment improved slightly to € 279.0 million (up 0.7%) thanks
to the good performance of the BSI group, which reported an increase in its operating result of 8.5%
thanks to the implementation of its development programs.
A positive performance was also reported by the net investment result, defined as the intermediation
margin, net of net operating impairment losses on financial instruments, owing in particular to the
increase in the intermediation margin, which comprises the sum of net fee and commission income,
net interest income and other financial items. Despite the reduction of the realized gains associated
with the current financial market situation, the growth was attributable to the increase in dividends and
net interest income, which benefited from the rise in market rates. The increase in operating expenses
was primarily due to the BSI group's ongoing development programs in the Far East, the cost of which
amounted to € 56.3 million at 30 September 2011.
Finally, the cost income ratio went from 69.2% at 30 September 2010 to 71.2%.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 59
MANAGEMENT REPORT
BOZZA
Non-operating result
The non-operating result of the financial segment went from € -47.9 million at 30 September 2010 to
€ 34.7 million. This improvement was essentially attributable to the realized gain on the sale by BSI
group of its controlling interest in the service provider B-Source SA, a Swiss company specialized in
back-office and IT (BPO) services to private and universal banks.
Operating result – financial segment
Third quarter Third quarter
(€ million) 30/09/2011 30/09/2010 2011 2010
Operating result - financial segment 279.0 277.1 68.4 74.3
N et operating result from financial activ ities 986.0 952.4 312.1 289.8
Intermediation margin 993.7 975.9 317.3 303.4
N et interest income 247.5 231.2 86.5 74.5
Div idends and other income 93.0 70.9 30.6 18.9
Fee and commission income and income from financial serv ice
activ ities 657.2 650.9 208.0 217.6
Other net income from financial instruments at fair v alue through
profit or loss -5.6 9.0 -7.9 1.3
N et operating gains on other financial instruments 1.5 13.9 0.1 -8.9
N et operating impairment losses on other financial instruments -7.7 -23.5 -5.2 -13.5
Acquisition and administration costs -691.0 -659.6 -237.8 -217.7
N et other operating ex penses -16.1 -15.7 -5.9 2.1
Non-operating result - financial segment 34.7 -47.9 57.7 -13.0
N on-operating income from inv estments 76.3 -0.9 75.4 -0.4
N et non-operating realized gains on other financial instruments and
land and buildings (inv estment properties) 80.9 -0.6 80.9 -0.3
N et non-operating impairment losses on other financial instruments
and land and buildings (inv estment properties) -4.6 -0.3 -5.5 -0.1
N et other non-operating ex penses -41.5 -47.0 -17.6 -12.6
Earnings before taxes - financial segment 313.7 229.2 126.1 61.3
60 Bozza del 10/11/2011 17:59:58 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
Financial position of the financial segment
Investments
30/09/2011 30/06/2011 31/12/2010
Total Total Total
(€ million) book v alue % of total book v alue % of total book v alue % of total
(*)
Equity instruments 522.6 2.0 493.0 2.1 423.6 1.9
Av ailable for sale financial assets 358.7 1.3 293.3 1.3 261.8 1.2
Financial assets at fair v alue through profit or loss 163.9 0.6 199.7 0.9 161.9 0.7
(**)
Fixed income instruments 11,976.3 44.9 12,149.3 52.9 11,972.2 52.8
Bonds 5,878.6 22.0 5,849.7 25.5 5,895.8 26.0
(**)
Other fix ed income instruments 6,097.8 22.8 6,299.6 27.4 6,076.3 26.8
H eld to maturity inv estments 546.2 2.0 529.6 2.3 608.1 2.7
Loans 6,998.3 26.2 7,282.0 31.7 7,087.6 31.3
Av ailable for sale financial assets 3,573.6 13.4 3,643.3 15.9 3,572.8 15.8
Financial assets at fair v alue through profit or loss 858.2 3.2 694.4 3.0 703.6 3.1
(***)
Land and buildings (investment properties) 24.4 0.1 24.6 0.1 24.5 0.1
Other investments 9,718.6 36.4 7,081.8 30.9 7,553.2 33.3
Inv estments in subsidiaries, associated companies and joint v entures 92.6 0.3 44.7 0.2 41.9 0.2
(***)
Deriv ativ es 79.0 0.3 -23.6 -0.1 -76.4 -0.3
Receiv ables from banks or customers 9,442.8 35.4 6,972.1 30.4 7,486.5 33.0
Other inv estments 104.2 0.4 88.6 0.4 101.2 0.4
(****)
Cash and cash equivalents 4,449.3 16.7 3,200.6 13.9 2,698.7 11.9
(*****)
T otal 26,691.2 100.0 22,949.4 100.0 22,672.2 100.0
(*) Inv estment fund units am ounted to € 14.7 million (€ 20.7 milion at 30 June 2011 and € 17.3 milion at 31 December 2010).
(**) Inv estment fund units amounted to € 35.9 million (€ 34.2 milion at 30 June 2011 and € 41 milion at 31 December 2010).
(***) Taking into account deriv ativ e instruments booked as liabilities w hich amount to € 1,447.9 million (€ 722.3 milion at 30 June 2011 and € 914.5 milion at 31 December 2010).
(****) Taking into account Rev erse REPO w hich amount to € 3.9 million (€ 3.8 milion at 30 June 2011 and € 281.1 milion at 31 December 2010) and REPO w hich amount to
€ 722.1 million (€ 1,044.7 m ilion at 30 June 2011 and € 850.3 milion at 31 December 2010).
(*****) Taking into account deriv ativ e instruments booked as liabilities and REPO.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 61
MANAGEMENT REPORT
BOZZA
Significant events after 30 September 2011
In October, the ratings agencies Moody’s and Fitch confirmed the ratings assigned to Assicurazioni
Generali, Aa3 and AA-, respectively, despite the situation of uncertainty in the Euro Area, which
resulted in the aforementioned downgrading of the debt ratings of some countries, and in particular the
Italian debt. This confirmation reflects the Group's financial solidity and, in addition, the Group's
broad diversification at the international level and the flexible characteristics of its products contribute
to isolate it from stress associated with Italian sovereign debt. However, the downgrade of Italian
public debt resulted in a reduction of the outlook for Assicurazioni Generali from stable to negative by
both agencies.
Outlook for Generali Group
The third quarter witnessed an economic slowdown due to factors of an episodic nature, such as the
earthquake in Japan and tensions surrounding the price of oil, in addition to a phase of structural
uncertainty for the global economy. The latter is affected by the need to rebalance both the domestic
demand (government spending versus consumer spending and private investment) and the deficit of
the balance of payments from developed to emerging countries.
The current weak performance of domestic demand, caused by restrictions on bank lending, the
consequences of real-estate bubbles, household debt situations and prospects of further cuts in
government spending support the belief that the slowdown witnessed in the first nine months of the
year will continue.
The growth prospects of industrialized countries are influenced by the sustainability of public debt and
government solvency, the primary condition for a resumption of growth. From this standpoint, the
positive outcome to the summit of European heads of state and government held in late October,
which concluded with an agreement on a restructuring plan of Greece's public debt and indications
from many countries concerning strategies to reduce imbalances in public finances and stimulate
growth, could represent the foundations for the beginning of an economic recovery.
Nonetheless, the financial market situation remains volatile due to concerns of the depreciation of the
bonds of countries with high public debt held in the portfolios of major European banks. However,
from this perspective as well, the will to prepare a plan to recapitalize the European banking system
has improved market expectations.
In the reinsurance sector, some events occurred in the first part of the year, such as the earthquakes in
Japan and New Zealand and the flood in Australia, which could result in changes in the pricing criteria
for coverage programs both on the markets concerned, where the Group traditionally has not had a
significant presence, and at a general level, although to a less significant extent.
Given the financial and macroeconomic scenario described above, the life segment is expected to
record a positive net cash inflows, although at lower levels than in 2010, and characterized by a good
quality in terms of technical marginality. In its underwriting activity, the Group will continue to
favour, in fact, products that absorb less capital, with the aim of maintaining/improving technical
margins, owing in part to the cost-containment policy.
On the contrary, the non-life segment is expected to confirm the growth rates of the Group's written
premiums observed in the first nine months of the year owing to the performance both of the Non-
motor business and of the Motor line. If natural catastrophes will be confirmed at physiological levels,
62 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
overall technical margins may be expected to improve due to the maintenance of current levels of
operating efficiency and the continuing effects of the tariff and claims management policies
implemented by the Group.
The Group investment policy will continue to be based on a prudent asset allocation focused on
consolidating current return, reducing the capital absorbed and maintaining an higher level of liquidity
of the portfolios taking into account the current financial environment characterized by strong tensions
on government bonds of some countries in the Euro Area and in particular on Italian bonds.
On the basis of the scenario described above, the operating result of the non-life segment is expected
to increase, driven by the continuing effects of the underwriting policies implemented by the Group. In
addition, considering the extremely volatile financial market performance, the operating result of the
life segment is expected to decrease due to extraordinary components associated with the
aforementioned volatility, which will have an impact also on the Group's net result.
Milan, 11 November 2011 THE BOARD
OF DIRECTORS
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 63
Save - Marco Polo airport, Venice
Appendix to management report
BOZZA DEL 10/11/2011 17:01:35
INFORMATION ON OPERATIONS
The Generali Group’s interim report at 30 September 2011 was prepared in accordance with article
154-ter of Legislative Decree No. 58/1998: “Consolidated Law on Financial Intermediation” (TUF).
In particular, the profit and loss account and balance sheet were prepared in accordance with
IAS/IFRS.
The Group at 30 September 2011 consists of 529 consolidated line by line and associated companies
valued at equity (528 at 31 December 2010). In particular, entities consolidated line by line increased
from 490 to 488, and those valued at equity increased from 38 to 41.
This interim report was drawn up in euro (the functional currency used by the entity that prepares the
financial statement) and the amounts are shown in millions, rounded to the first digit, unless otherwise
stated with the consequence that the rounded amounts may not add to the rounded total in all cases.
For a description of alternative performance indicators presented in this report refer to the
methodological note attached.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 67
MANAGEMENT REPORT
BOZZA
Methodological note on alternative performance measures
In order to support the assessment of the quality and the sustainability of its earnings in each segment
and country, the Generali Group has presented in this report two performance indicators, i.e. new
business annual premium equivalent (APE) and operating result.
New business annual premium equivalent (APE), net of minority interests, is equivalent to the sum
of new annual premium policies, plus a tenth of premiums in single premium policies.
Under CESR Recommendation on alternative performance measures (CESR/05 – 178b), operating
result cannot replace earnings before taxes calculated in accordance with IAS/IFRS. In addition, it
should be read together with financial information and related notes on the accounts which are
included in the audited financial statements.
Operating result was drawn up reclassifying items of earnings before taxes of each segment on the
basis of the characteristics of each segment and taking into consideration the recurring holding
expenses.
Specifically, operating result represents earnings before taxes, gross of interest expense on liabilities
linked to financing activities, specific net income from investments and non-recurring income and
expenses.
In the life segment, all profit and loss accounts are considered as operating items, except those
representing the non-operating result, i.e.:
1. realized gains and losses and net impairment losses on investments which did not affect the
statutory reserves to the extent they were not included in the deferred policyholders liability and
those on shareholders’fund;
2. net other non-operating expenses, mainly including results of non-current assets or disposal group
classified as held for sale as defined by IFRS 5 and run uff business, restructuring charges, the
amortization of the value of business acquired directly or by securing control of companies in the
insurance segment (value of business acquired or VOBA) and other net non recurring expenses.
As to consider the calculation method of the policyholders’ profit sharing based on the net result of the
period, life non-operating result in Germany and Austria was calculated net of the estimated amount
attributable to the policyholders.
Furthermore, whether a new fiscal law materially affects the operating result of the countries for which
the policyholders’ profit sharing is based on the net result of the period, the estimated non recurring
effect on the income taxes attributable to the policyholders has been accounted for in the consolidation
adjustments.
In the non-life segment, all profit and loss accounts are considered as operating items, except those
which represent the non-operating result, i.e.:
1. realized gains and losses, unrealized gains and losses, net impairment losses on investments,
included gains and losses on foreign currencies,
2. net other non-operating expenses, mainly including results of non-current assets or disposal group
classified as held for sale as defined by IFRS 5 and run uff business, impairment losses of land and
68 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
buildings used for own activities, restructuring charges and the amortization of the value of
business acquired directly or by securing control of insurance companies (value of business
acquired or VOBA) and other net non recurring expenses.
In the financial segment, all profit and loss accounts are considered as operating items, except those
representing the non-operating result, i.e.:
1. realized gains and losses and net impairment losses on investments in subsidiaries, associated
companies, joint ventures and strategic equities for the Group,
2. other net non-operating expenses, mainly including both the results of non-current assets or
disposal group classified as held for sale as defined by IFRS 5 and run uff business, the
restructuring charges, the amortization of the value of business acquired directly or by securing
control of companies operating in the financial segment (value of business acquired or VOBA)
and other net non recurring expenses.
The operating holding expenses mainly includes the expenses sustained by the Parent Company and
subholdings for management and coordination activities.
The non operating holding expenses refer to:
1. interest expenses on liabilities linked to the Group’s financing activities(16),
2. restructuring charges and other non recurring expenses incurred in the management and
coordination activities,
3. costs arising from the assignment of stock options and stock grants under incentive plans approved
by the Parent Company.
Operating result and non-operating result of the Generali Group are equivalent to the sum of operating
result and non-operating result of the aforesaid segments, the holding expenses classified as previously
said, and consolidation adjustments.
Starting from 31 December 2010 also operating results of life and non-life segments are presented in
format of result drivers, which better describes the changes occurred in each segment performance.
The operating result of the life segment is made up of a technical margin gross of underwriting
expenses, a net investment result and acquisition and administration costs related to insurance business
and other net operating expenses. In details, the technical margin includes loadings, risk and
surrenders results. Net investment result consists of operating income from investments, net of the
related policyholders’ interests.
The operating result of the non life segment consists of an technical result, an investment result and
other operating items.
The technical result is equivalent to the insurance activity result, i.e. the difference between premiums
and claims, acquisition and administration costs and other net technical income.
The investment result is made up of current income from investments and other operating net financial
expenses, like expenses on investment management and interest expenses on operating debt.
(16)
Further details on the definition of liabilities linked to financing activities are included in the paragraph Debt
in Asset and financial management of the report.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 69
MANAGEMENT REPORT
BOZZA
The operating result of the financial segment is slit by net operating result from financial activities,
acquisition and administration costs and other net operating expenses.
Specifically, the net operating result from financial activities is defined as the intermediation margin,
net of net operating impairment losses on other financial instruments. The intermediation margin is
equal to all net operating income arising from financial activity. Lastly, the interest margin is equal to
interest income, net of interest expenses.
In accordance with the abovedescribed approach, the Generali Group has also presented the life, non-
life and group operating result of the main countries where it operates. This performance indicator
measures the contribution of each country to the consolidated operating result.
Lastly, within the context of the life and non-life operating result of each country, reinsurance
operations between Group companies in different countries are accounted for as transactions
concluded with external reinsurers. This representation of the life and non-life operating result by
country makes this performance indicator more consistent with the risk management policies
implemented by each company and with the other indicators measuring the technical profitability of
the Group’s companies.
The reconciliation statement of operating result and non-operating result to profit and loss accounts is
shown in the table below:
Operating result and non-operating result Profit and loss account
N et earned premiums 1.1
N et insurance benefits and claims 2.1
Acquisition and administration costs 2.5.1 - 2.5.3
N et fee and commission income and net income from financial serv ice activ ities 1.2 - 2.2
N et operating income from financial instruments at fair v alue thriugh profit or loss
N et operating income from other financial instruments 1.3 - 1.4 - 1.5 - 2.3 - 2.4 -
N et non-operating income from financial instruments at fair v alue thriugh profit or loss 2.5.2
N et non-operating income from inv estments
N et other operating ex penses
1.6 - 2.6
N et other non-operating ex penses
Please note the following reclassifications implemented in the operating result calculation compared to
the related profit and loss items:
• within the operating result, investment management expenses and investment properties have been
reclassified from acquisition and administration costs to net operating income from financial
instruments, especially in other expenses from financial instruments and land and buildings
(investment properties);
• within the operating income, gains and losses on foreign currencies were reclassified in the life
and financial segment from net operating income to net operating income from financial
instruments at fair value through profit or loss. In the non-life segment, within the operating
income, gains and losses on foreign currencies have been reclassified from net operating income
to net non-operating income from financial instruments at fair value through profit or loss. The
classification for each segment is consistent with the related classification of the derivative
transactions drawn up in order to hedge the Group's equity exposure to the changes of the main
70 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
BOZZA DEL 10/11/2011 17:01:35
currencies of operation. The net operating and non-operating income from other financial
instruments are therefore not subject to financial market volatility;
• within net operating income from financial instruments, interest expenses on deposits and current
accounts under reinsurance business are deducted from the related interest income. Therefore, they
are not accounted for in interest expenses on liabilities linked to operating activities.
• within operating income, net other operating expenses are adjusted for operating taxes and for
non-recurring taxes that affect in a relevant manner the operating income of the countries where
the policyholders sharing is determined taking into account the taxes for the period. These
adjustment are therefore taking part in the calculation of operating income and are excluded from
the income taxes.
Specifically, starting from 31 December 2010 in the non-life segment gains and losses on foreign
currency have been reclassified from net operating income from financial instruments at fair value
through profit or loss to the related non operating item. Comparative figures have been coherently
restated in the following table.
30/09/2010
prev iously 30/09/2010
(€ million) reported adjustments restated
Operating result - non-life segment 938.7 -56.5 882.2
Operating result - life segment 2,301.7 0.0 2,301.7
Operating result - financial segment 277.1 0.0 277.1
Operating holding ex penses -203.7 0.0 -203.7
C onsolidation adjustments -124.8 0.0 -124.8
Operating result 3,189.1 -56.5 3,132.5
N on-operating result - non-life segment -256.5 56.5 -200.0
N on-operating result - life segment -219.6 0.0 -219.7
N on-operating result - financial segment -47.9 0.0 -47.9
N on-operating holding ex penses -561.1 0.0 -561.1
C onsolidation adjustments 4.0 0.0 4.0
Non-operating result -1,081.1 56.5 -1,024.7
Finally, the Generali Group has presented a performance indicator of investment returns, that are
calculated as the ratio:
• for the current return between interest and other income, including those arising from
financial instruments at fair value through profit and loss (excluded those from financial
instruments related to unit and index-linked contracts) and the the average investments
(calculated on book value);
• for the harvesting rate between net realized gains, net impairment losses and unrealized and
realized gains and losses from financial instruments at fair value through profit and loss
(excluded those from financial instruments related to unit and index-linked contracts) and the
the average investments (calculated on book value);
• for comprehensive return between current income and unrealized income and expenses
accounted for both in profit and loss (excluded those from financial instruments related to unit
and index-linked contracts) and in shareholders’ equity and the the average investments
(calculated on book value).
The profit and loss return is equal to the current return plus the harvesting return.
Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI 71
MANAGEMENT REPORT
BOZZA
The average investments (calculated on book value) includes land and buildings (investment
properties), investments in subsidiaries, associated companies and joint ventures, loans and
receivables, available for sale financial assets, financial assets at fair value through profit or loss less
financial assets and liabilities related to unit and index-linked contracts, derivatives classified in
financial liabilities at fair value through profit or loss and cash and cash equivalent. The total
investment is adjusted for derivative instruments classified as financial liabilities at fair value through
profit of loss an for REPO classified as other liabilities. The average amount is calculated on the
average asset base of each quarter of the reporting period.
These investment returns have been presented in the life and non-life segments and for the Group
consolidated figures.
As far as the Group investments are concerned, starting from 31 December 2010 the following
changes compared to the balance sheet have been implemented, in order to be aligned with the
calculation of the related returns:
• derivatives are presented net of those classified as liabilities, and
• cash and cash equivalent are presented net of reverse REPO and REPO classified as liabilities.
Furthermore, within the investment categories the following reclassifications have been made:
• reverse REPO have been reclassified from ‘Other fixed income instruments’ to ‘Cash and cash
equivalent’, coherently to their short term investment view,
• loans classified as at fair value through profit and loss have been moved from the residual item
‘Other investments’ to ‘Other fixed income istruments’.
Regarding investments of each segment, on the basis of the characteristics of each segment and in line
with the approach followed in the returns calculation, further to the abovementioned changes,
investments in subsidiaries consolidated line by line and loans and bonds between Group companies
have been excluded, except, in the life segment, those on which policyhoders’ share is based on.
In accordance with the abovedescribed approach, the Generali Group has presented life, non-life and
consolidated investments of the main countries where it operates. The indicator measures the
contribution of each country to the segment and consolidated investments.
72 Bozza del 10/11/2011 17:01:35 - DATI NON DEFINITIVI
Genagricola - Farms
CONSOLIDATED FINANCIAL STATEMENTS AND
BASIS OF PRESENTATION AND
ACCOUNTING PRINCIPLES
Enel - Federico II Power plant, CCS pilot power plant, CO2 capture and storage, Brindisi
Consolidated financial statements
BALANCE SHEET - ASSETS
30/09/2011 30/06/2011 31/12/2010
1 INTANGIBLE ASSETS 10,533.6 10,615.3 10,670.4
1.1 Goodwill 7,424.1 7,432.5 7,415.4
1.2 Other intangible assets 3,109.5 3,182.8 3,255.1
2 TANGIBLE ASSETS 4,839.8 3,626.1 3,796.2
2.1 Land and buildings (self used) 3,057.2 3,057.5 3,211.7
2.2 Other tangible assets 1,782.6 568.6 584.5
3 AMOUNTS CEDED TO REINSURERS FROM INSURANCE PROVISIONS 5,653.1 5,670.0 5,765.3
4 INVESTMENTS 358,013.2 365,128.7 364,315.6
4.1 Land and buildings (investment properties) 13,115.1 13,139.0 12,614.1
4.2 Investments in subsidiaries, associated companies and joint ventures 2,161.7 2,217.3 2,439.2
4.3 Held to maturity investments 4,264.2 4,179.2 4,544.9
4.4 Loans and receivables 78,621.3 76,345.3 79,208.9
4.5 Available for sale financial assets 186,994.3 193,118.4 188,928.5
4.6 Financial assets at fair value through profit or loss 72,856.6 76,129.5 76,580.0
of which financial assets where the investment risk is borne by the policyholders and
related to pension funds 56,789.9 60,712.1 60,637.0
5 RECEIVABLES 12,215.6 13,761.1 11,468.0
5.1 Receivables arising out of direct insurance operations 8,860.3 10,171.5 8,643.1
5.2 Receivables arising out of reinsurance operations 872.2 1,034.2 889.1
5.3 Other receivables 2,483.2 2,555.4 1,935.9
6 OTHER ASSETS 16,862.4 15,670.8 15,424.2
6.1 Non-current assets or disposal groups classified as held for sale 321.0 191.7 198.2
6.2 Deferred acquisition costs 1,941.0 1,933.0 1,885.6
6.3 Deferred tax assets 5,369.7 4,281.7 3,596.3
6.4 Tax receivables 2,651.2 2,335.8 2,626.8
6.5 Other assets 6,579.4 6,928.7 7,117.3
7 CASH AND CASH EQUIVALENTS 17,667.1 13,213.7 10,990.3
TOTAL ASSETS 425,785.0 427,685.7 422,430.1
BALANCE SHEET - SHAREHOLDERS' EQUITY AND LIABILITIES
30/09/2011 30/06/2011 31/12/2010
1 SHAREHOLDERS' EQUITY 18,495.6 19,838.6 20,064.5
1.1 Shareholders' equity attributable to the Group 15,846.4 17,231.4 17,489.8
1.1.1 Share capital and reserves 16,857.4 16,957.8 15,972.3
1.1.2 Reserve for unrealized gains and losses on available for sale financial assets -1,836.1 -531.9 -184.4
1.1.3 Result of the period 825.0 805.5 1,701.9
1.2 Shareholders' equity attributable to minority interests 2,649.3 2,607.2 2,574.7
2 OTHER PROVISIONS 1,502.3 1,514.8 1,496.5
3 INSURANCE PROVISIONS 327,593.1 333,021.9 329,616.3
of which insurance provisions for policies where the investment risk is borne by the
policyholders and related to pension funds 45,860.4 49,717.6 49,460.9
4 FINANCIAL LIABILITIES 58,803.8 54,749.6 53,894.4
4.1 Financial liabilities at fair value through profit or loss 14,986.8 13,703.7 13,692.7
of which financial liabilities where the investment risk is borne by the policyholders
and related to pension funds 11,224.4 11,466.6 11,206.1
4.2 Other financial liabilities 43,817.0 41,045.9 40,201.7
of which subordinated liabilities 6,425.1 6,438.7 6,492.9
5 PAYABLES 7,842.2 8,317.4 7,650.0
5.1 Payables arising out of direct insurance operations 3,663.1 4,074.0 3,917.0
5.2 Payables arising out of reinsurance operations 606.7 768.4 691.7
5.3 Other payables 3,572.4 3,474.9 3,041.3
6 OTHER LIABILITIES 11,547.8 10,243.4 9,708.4
Liabilities directly associated with non-current assets and disposal groups classified
6.1
as held for sale 0.0 0.0 0.0
6.2 Deferred tax liabilities 5,421.0 4,071.6 3,753.3
6.3 Tax payables 1,542.8 1,792.4 1,607.1
6.4 Other liabilities 4,584.0 4,379.5 4,348.0
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 425,785.0 427,685.7 422,430.1
INCOME STATEMENT
Third quarter Third quarter
30/09/2011 30/09/2010
2011 2010
1.1 Net earned premiums 46,691.5 47,985.7 14,619.5 14,811.8
1.1.1 Gross earned premiums 48,715.9 49,963.4 15,297.7 15,439.8
1.1.2 Earned premiums ceded -2,024.3 -1,977.7 -678.2 -628.1
Fee and commission income and income from financial service
1.2 activities 1,065.0 969.4 358.8 321.3
Net income from financial instruments at fair value through profit
1.3 or loss -4,250.0 2,709.2 -3,927.5 1,439.1
investment risk is borne by the policyholders and related to pension
funds -4,147.4 1,775.3 -3,591.9 859.4
1.4 Income from subsidiaries, associated companies and joint ventures 270.9 59.6 168.8 21.5
Income from other financial instruments and land and buildings
1.5 (investment properties) 12,308.4 11,749.2 4,096.7 3,810.8
1.6 Other income 1,698.1 1,949.3 490.5 296.1
1 TOTAL INCOME 57,784.1 65,422.3 15,806.9 20,700.5
2.1 Net insurance benefits and claims -39,039.6 -48,798.0 -9,750.6 -15,737.5
2.1.1 Claims paid and change in insurance provisions -40,095.9 -50,140.6 -10,111.8 -16,228.3
2.1.2 Reinsurers' share 1,056.3 1,342.6 361.1 490.7
Fee and commission expenses and expenses from financial service
2.2 activities -371.6 -324.6 -142.9 -109.0
2.3 Expenses from subsidiaries, associated companies and joint ventures -384.7 -12.8 -22.1 -2.1
Expenses from other financial instruments and land and buildings
2.4 (investment properties) -5,334.2 -2,948.4 -2,349.6 -781.6
2.5 Acquisition and administration costs -8,726.5 -8,735.0 -2,808.4 -2,872.8
2.6 Other expenses -2,375.0 -2,519.7 -584.1 -519.3
2 TOTAL EXPENSES -56,231.6 -63,338.5 -15,657.6 -20,022.3
EARNINGS BEFORE TAXES 1,552.5 2,083.8 149.2 678.3
3 Income taxes -499.2 -630.3 -65.6 -224.8
EARNINGS AFTER TAXES 1,053.3 1,453.6 83.6 453.5
4 RESULT OF DISCONTINUED OPERATIONS -0.3 50.9 0.8 33.9
CONSOLIDATED RESULT OF THE PERIOD 1,052.9 1,504.4 84.4 487.4
Result of the period attributable to the Group 825.0 1,312.7 19.5 439.8
Result of the period attributable to minority interests 227.9 191.7 64.8 47.6
SEGMENT REPORTING - BALANCE SHEET
NON-LIFE SEGMENT LIFE SEGMENT
30/09/2011 30/06/2011 31/12/2010 30/09/2011 30/06/2011 31/12/2010
1 INTANGIBLE ASSETS 4,258.5 4,285.4 4,372.6 5,157.0 5,209.6 5,167.7
2 TANGIBLE ASSETS 3,303.0 2,069.9 2,211.9 1,215.6 1,220.9 1,243.1
3 AMOUNTS CEDED TO REINSURERS FROM
INSURANCE PROVISIONS 4,175.2 4,208.8 4,234.7 1,478.0 1,461.2 1,530.6
4 INVESTMENTS 33,162.7 34,484.2 33,571.5 307,240.8 315,772.4 315,108.0
4.1 Land and buildings (investment properties) 5,365.9 5,409.9 6,226.2 7,724.7 7,704.4 6,363.4
Investments in subsidiaries, associated companies and joint
4.2
ventures 783.1 894.2 907.9 4,873.7 4,830.8 5,121.9
4.3 Held to maturity investments 200.6 200.8 214.0 3,517.4 3,448.7 3,722.7
4.4 Loans and receivables 4,524.9 4,896.3 4,723.2 60,147.7 59,241.4 61,531.0
4.5 Available for sale financial assets 21,454.0 22,112.8 20,450.5 161,607.1 167,068.0 164,642.3
4.6 Financial assets at fair value through profit or loss 834.2 970.2 1,049.7 69,370.1 73,479.0 73,726.6
5 RECEIVABLES 6,514.9 7,056.5 6,596.3 5,668.7 6,695.3 5,100.2
6 OTHER ASSETS 5,699.6 5,599.3 5,673.5 10,591.4 9,583.4 9,303.3
6.1 Deferred acquisition costs 417.4 421.6 431.3 1,523.6 1,511.3 1,454.3
6.2 Other assets 5,282.2 5,177.7 5,242.2 9,067.8 8,072.1 7,849.0
7 CASH AND CASH EQUIVALENTS 2,250.2 2,550.5 2,873.8 10,351.0 7,152.8 5,611.2
TOTAL ASSETS 59,364.1 60,254.7 59,534.4 341,702.5 347,095.7 343,064.1
1 SHAREHOLDERS' EQUITY
2 OTHER PROVISIONS 798.0 798.4 764.8 531.6 537.3 553.7
3 INSURANCE PROVISIONS 34,936.0 35,391.4 34,470.6 292,657.0 297,630.5 295,145.8
4 FINANCIAL LIABILITIES 10,499.9 10,100.3 10,147.1 23,064.4 23,692.2 22,915.3
4.1 Financial liabilities at fair value through profit or loss 95.0 35.7 49.7 12,313.2 12,351.8 12,260.2
4.2 Other financial liabilities 10,404.9 10,064.5 10,097.4 10,751.2 11,340.4 10,655.0
5 PAYABLES 3,585.2 3,456.3 3,822.5 4,135.0 4,827.5 3,951.8
6 OTHER LIABILITIES 4,851.3 4,916.5 4,801.8 6,129.4 4,767.0 4,388.9
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
Appendix 1
FINANCIAL SEGMENT CONSOLIDATION ADJUSTMENTS TOTAL
30/09/2011 30/06/2011 31/12/2010 30/09/2011 30/06/2011 31/12/2010 30/09/2011 30/06/2011 31/12/2010
1,118.1 1,120.2 1,130.1 0.0 0.0 0.0 10,533.6 10,615.3 10,670.4
324.2 338.4 341.2 -3.0 -3.1 0.0 4,839.8 3,626.1 3,796.2
0.0 0.0 0.0 0.0 0.0 0.0 5,653.1 5,670.0 5,765.3
23,693.8 20,474.9 21,169.1 -6,084.1 -5,602.8 -5,533.0 358,013.2 365,128.7 364,315.6
24.4 24.6 24.5 0.0 0.0 0.0 13,115.1 13,139.0 12,614.1
92.6 44.7 41.9 -3,587.8 -3,552.5 -3,632.5 2,161.7 2,217.3 2,439.2
546.2 529.6 608.1 0.0 0.0 0.0 4,264.2 4,179.2 4,544.9
16,445.0 14,257.9 14,855.2 -2,496.3 -2,050.3 -1,900.5 78,621.3 76,345.4 79,209.0
3,933.2 3,937.6 3,835.7 0.0 0.0 0.0 186,994.3 193,118.4 188,928.5
2,652.3 1,680.3 1,803.7 0.0 0.0 0.0 72,856.6 76,129.5 76,580.0
172.5 142.8 152.0 -140.4 -133.5 -380.6 12,215.6 13,761.1 11,468.0
602.1 518.4 479.2 -30.7 -30.4 -31.8 16,862.4 15,670.8 15,424.2
0.0 0.0 0.0 0.0 0.0 0.0 1,941.0 1,933.0 1,885.6
602.1 518.4 479.2 -30.7 -30.4 -31.8 14,921.4 13,737.8 13,538.6
5,167.4 4,241.6 3,267.9 -101.5 -731.2 -762.6 17,667.1 13,213.7 10,990.3
31,078.0 26,836.3 26,539.4 -6,359.7 -6,500.9 -6,707.9 425,785.0 427,685.7 422,430.1
18,495.6 19,838.6 20,064.5
195.1 199.2 200.5 -22.4 -20.0 -22.5 1,502.3 1,514.8 1,496.5
0.0 0.0 0.0 0.0 0.0 0.0 327,593.1 333,021.9 329,616.3
26,073.0 22,024.9 21,788.8 -833.4 -1,067.8 -956.8 58,803.8 54,749.6 53,894.4
2,578.7 1,316.3 1,382.7 0.0 0.0 0.0 14,986.8 13,703.7 13,692.7
23,494.3 20,708.7 20,406.1 -833.4 -1,067.8 -956.8 43,817.0 41,045.9 40,201.7
236.0 197.2 235.4 -114.0 -163.6 -359.7 7,842.2 8,317.4 7,650.0
583.0 571.6 528.6 -15.9 -11.6 -10.9 11,547.8 10,243.4 9,708.4
425,785.0 427,685.7 422,430.1
SEGMENT REPORTING - INCOME STATEMENT
NON-LIFE SEGMENT LIFE SEGMENT
30/09/2011 30/09/2010 30/09/2011 30/09/2010
1.1 Net earned premiums 15,367.4 15,130.9 31,324.1 32,854.8
1.1.1 Gross earned premiums 16,810.3 16,581.4 31,905.6 33,381.9
1.1.2 Earned premiums ceded -1,442.9 -1,450.6 -581.5 -527.1
Fee and commission income and income from financial
1.2 service activities 0.1 0.0 227.2 180.2
Net income from financial instruments at fair value through
1.3 profit or loss 4.2 11.2 -4,283.8 2,675.5
Income from subsidiaries, associated companies and joint
1.4 ventures 103.1 35.9 180.5 101.9
Income from other financial instruments and land and
1.5 buildings (investment properties) 1,499.0 1,785.4 10,496.6 9,663.4
1.6 Other income 833.6 858.0 794.3 976.4
1 TOTAL INCOME 17,807.4 17,821.4 38,739.0 46,452.3
2.1 Net insurance benefits and claims -10,667.8 -10,812.6 -28,356.7 -37,985.4
2.1.1 Claims paid and change in the insurance provisions -11,289.0 -11,747.1 -28,791.9 -38,393.5
2.1.2 Reinsurers' share 621.2 934.5 435.2 408.1
2.2 Fee and commission expenses -0.1 -0.3 -101.2 -88.2
Expenses from subsidiaries, associated companies and joint
2.3 ventures -59.5 -12.3 -317.3 -0.2
Expenses from other financial instruments and land and
2.4 buildings (investment properties) -1,034.8 -904.5 -3,703.5 -1,375.3
2.5 Acquisition and administration costs -4,271.2 -4,236.5 -3,867.2 -3,937.1
2.6 Other expenses -1,087.1 -1,172.9 -981.5 -1,008.1
2 TOTAL EXPENSES -17,120.5 -17,139.0 -37,327.3 -44,394.2
EARNINGS BEFORE TAXES 686.9 682.3 1,411.7 2,058.1
Appendix 2
CONSOLIDATION
FINANCIAL SEGMENT HOLDING EXPENSES TOTAL
ADJUSTMENTS
30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010 30/09/2011 30/09/2010
0.0 0.0 0.0 0.0 46,691.5 47,985.7
0.0 0.0 0.0 0.0 48,715.9 49,963.4
0.0 0.0 0.0 0.0 -2,024.3 -1,977.7
945.0 903.6 -107.3 -114.4 1,065.0 969.4
29.6 23.0 0.0 -0.4 -4,250.0 2,709.2
83.9 2.8 -96.6 -81.0 270.9 59.6
371.1 352.4 -58.3 -52.1 12,308.4 11,749.2
130.7 145.0 -60.5 -30.2 1,698.1 1,949.3
1,560.4 1,426.8 0.0 0.0 -322.7 -278.1 57,784.1 65,422.4
0.0 0.0 -15.1 0.0 -39,039.6 -48,798.0
0.0 0.0 -15.1 0.0 -40,095.9 -50,140.6
0.0 0.0 0.0 0.0 1,056.3 1,342.6
-287.8 -252.7 17.4 16.5 -371.6 -324.6
-7.8 -0.3 0.0 0.0 -384.7 -12.8
-133.1 -140.5 -484.2 -539.7 21.4 11.6 -5,334.2 -2,948.4
-692.1 -659.1 103.9 97.7 -8,726.5 -8,735.0
-125.9 -145.0 -225.7 -225.3 45.1 31.5 -2,375.0 -2,519.7
-1,246.7 -1,197.6 -709.9 -765.0 172.7 157.3 -56,231.7 -63,338.5
313.7 229.2 -709.9 -765.0 -150.0 -120.8 1,552.5 2,083.8
Finmeccanica – ATR 600 version aircraft
Basis of presentation and
accounting principles
.
·
Basis of presentation and accounting principles
The Generali Group’s interim report at 30 September 2011 was prepared in accordance with article
154-ter of Italian Legislative Decree No. 58/1998. In particular, the profit and loss account and
balance sheet were prepared in accordance with IAS/IFRS.
Consolidation methods and valuation criteria applied for drawing up this quarterly report are
consistent with those adopted for the consolidated annual report at 31 December 2010.
As a result of the particular financial environment observed in the third quarter of 2011, the Group
improved the definition of impairment losses of equity investments classified as Financial assets
available for sale. The significant increase in volatility of financial markets, in particular the financial
sector, related to the anomalous trend of spreads between government bonds following the tensions on
the public debt of some European Countries, determined the presence of “exceptional circumstances”
for which it became necessary to review the definition of impairment losses.
In particular, the thresholds of significativity used to assess the objective evidence of impairment were
determined with reference to the market sector related to equity securities. This metodology, while
mantaining the thresholds of significativity at 50% as previously used, allows a better diversification,
based on the specific risk of the sector of the securities.
The different risk profiles were identified on the basis of the volatility of specific areas in which the
Group invests more. This analiysis will be updated periodically to monitor the sectorial
rapresentativity of the thresholds identified above. As a result of the improvement of methodology
described above, in the third quarter 2011 less impairments were recognised at Profit or Loss with a
positive estimated impact before taxes of about € 270 million for the bank sector and a negative
impact of about € 20 million for the basic materials sector compared to what would happened in case
of application of general significativity threshold of 50% previously used.
The definiton of “prolonged” impairment was not changed (continuous loss for 36 months).
The consolidated financial statements were presented considering the requirements of ISVAP
Regulation No. 7 of 13 July 2007 and, as allowed by said Regulation, they were supplemented with
detailed items without rendering the financial statements misleading.
Accounting principles adopted for drawing up this consolidated quarterly report and the contents of
the items in the financial statements are detailed in the Notes to the consolidated financial statements
in the consolidated annual report.
This quarterly report was drawn up in euros (the functional currency used by the Group), and the
amounts were given in millions, rounded to the first digit, with the consequence that the rounded
amounts may not add to the rounded total in all cases.
Comparative figures regarding the interim report at 30 September 2010 were revised, where necessary,
in comparison with those presented, in order to ensure uniformity of presentation with the other
accounting data provided in this interim report.
Under the current ldegislation this interim report is not audited by external auditors in charge.
87
Exposure to Greece, Ireland, Italy, Portugal and Spain
Following the guideline included in the public statement of ESMA (European Securities and Markets
Authority) of 28 July 2011 the exposure to some countries of Euro Area with high public debt is
shown below:
Amortised cost Fair value
(€ million) 30/09/2011 30/09/2011
(*)
Greece 1,143.0 1,143.0
Ireland 1,825.0 1,562.8
Italy 51,938.5 46,235.4
Portugal 2,964.4 1,823.4
Spain 5,636.5 5,403.0
Total exposure to government bonds issued by Greece, Ireland, Italy, Portugal and Spain 63,507.4 56,168.0
(*)
For Greek gov ernment securities the amortised cost includes the effect of the impairment recorded at 30 September 2011.
Changes in the presentation of the consolidated financial statement
Starting from 30 September 2011 a part of the Israeli insurance portfolio previously classified as
traditional business, was reclassified in the unit and index-linked category, to better reflect the
technical characteristics of these products. As a consequence, related balance sheet and profit or loss
items where reclassifed even for comparative periods.
The main impacts arising from the reclassification on the comparative periods are listed below:
- the financial assets at fair value through profit or loss covering the profit-sharing products
(mainly bonds, equities, real estate investments, derivatives and loans) were reclassified as
investments back to unit and index-linked policies (for an amount equal to € 10,504.8 million at
31 December 2010 and € 9,779.1 million at 30 June 2011);
- part of mathematical insurance provisions was reclassified as insurance provisions for policies
where the investment risk is borne by the policyholders (for an amount equal to € 10,504.8 and
to € 10,353.3 million at 30 June 2011).
88
Impregilo - Mazar hydroelectric power plant, Ecuador
Certification in accordance with art. 154-bis, paragraph 2,
of legislative Decree No. 58 of 24 February 1998
Certification in accordance with art. 154-bis, paragraph 2, of
legislative Decree no. 58 of 24 February 1998
The undersigned Raffaele Agrusti, General Manager, Chief Financial Officer and Manager in charge of the prepara-
tion of the company’s financial reports of ASSICURAZIONI GENERALI S.p.A., registered office in Trieste, piazza Duca
degli Abruzzi 2, registered capital e 1,556,873,283.00, Company entered in the Register of Companies in Trieste
under No. 00079760328, and in the Register of Italian Insurance and Reinsurance Companies under No. 1.00003,
Parent Company of Generali Group entered in the Register of Insurance groups, (“the Company”),
declares
pursuant to Art. 154-bis, paragraph 2, of Legislative Decree No. 58 dated 24 February 1998, that the accounting
information in the consolidated quarterly report as at 30 September 2011 (interim report) corresponds to document
results, books and accounts records.
Milan, 11 November 2011
Raffaele Agrusti
Manager in charge of the preparation of
the company’s financial reports
ASSICURAZIONI GENERALI S.p.A.
1
Editing:
Financial Reporting - Consolidated Statements Group
Co-ordination:
Group Communications/
Human Resources - Facilities Management Department
Graphic design:
Sintesi - Trieste
Photos:
The images published in this book refer to major Companies and works insured by Assicurazioni Generali.
Thanks to Save, Premuda, Citylife, Enel, Eni, Finmeccanica, Impregilo, Genagricola for its kind permission.
Photo Credits:
Citylife - Courtesy CityLife
Enel - photo Guido Fuà - Eikona Agency for Enel
Genagricola - photo Mauro Mezzarobba
Printed by:
Sa.Ge.Print spa
