Docstoc

TORO ASSICURAZIONI BILANCIO INGLESE

Document Sample
TORO ASSICURAZIONI BILANCIO INGLESE Powered By Docstoc
					       TORO ASSICURAZIONI
2002




       REPORTS   AND   ACCOUNTS
TORO GROUP
2002 Financial Year




Reports and Accounts




                      Joint stock company – Capital (fully paid in) Euro 181,841,880
                      Tax code and Turin Companies Register No. 00810180018 – Turin Chamber of Commerce No. 70
                      Registered Office: 10123 Turin – Via Mazzini, 53
                      Authorised to transact insurance business as per Article 65 of Royal Legislative Decree No. 966 of April 29 1923
Notice of Meeting


The Shareholders are called to an Ordinary Meeting at the Company offices in Via Mazzini, 53
Turin at 9 o'clock on April 23 2003 at first call and, if necessary, at second call on April 24
2003 to vote on the following

                                                        Agenda

Ordinary part

1. Financial Statements at December 31 2002 and Directors' Report;
2. Appointment of the Board of Directors after establishing the number thereof; determination
   of the fees of the Directors and Administrative Committee;
3. Appointment of the Independent Auditors for certification of the financial statements for the
   years 2003, 2004 and 2005.

To attend, the Shareholders must deposit their shares at the Company offices at least five days
before the Meeting.



Turin, March 25 2003




The notice of meeting was published in the Official Gazette - Insertions Sheet - Second Part of April 7 2003 No. 81




                                                                                                                         3
                                                                                                 • NOTICE OF MEETING •
Insurance companies of the TORO Group




             92.13%                          51.00%                          99.58%

           NUOVA                          TORO TARGA                 CONTINENT
          TIRRENA                        ASSICURAZIONI                I.A.R.D.

             47.50%                          50.92%                          99.58%

            ROMA                           PHENIX                    CONTINENT
             VITA                        SEGURADORA                     VIE

             47.50%                          51.00%                          82.74%

         GIANO                         FIAT UBEZPIECZENIA     L’UNION GENERALE
     ASSICURAZIONI                         MAJATKOWE               DU NORD

             50.01%                          50.97%                          99.58%


            D.A.S.                     FIAT UBEZPIECZENIA           CONTINENT
                                             ZYCIOWE                ASSISTANCE

            100.00%                                                          99.58%

     LLOYD ITALICO
                                                                        ALTEGIA
     ASSICURAZIONI

            100.00%                                                          99.58%

      LLOYD ITALICO                                               GUARDIAN VIE
          VITA

            100.00%

       AUGUSTA
     ASSICURAZIONI
                                                                             ITALIAN INSURANCE
                                                                             COMPANIES

            100.00%                                                          FOREIGN INSURANCE
                                                                             COMPANIES

         AUGUSTA                                            Group interest
           VITA
                                                            Situation at March 25 2003




4
    • THE TORO ASSICURAZIONI GROUP •
Company Officers and Boards


                                     (1)
            BOARD OF DIRECTORS

            Chairman                                   * Gabriele Galateri di Genola

            Deputy Chairman                            * Franzo Grande Stevens

            Managing Director                          * Francesco Torri

            Directors                                  * Michele Amaturo
                                                       * Carlo Gatto
                                                         Francesco Arietti
                                                         Damien Clermont
                                                         Mario Renzo Deaglio
                                                         Enrico Emprin
                                                         Sergio Pininfarina
                                                         Claudio Recchi

            Secretary                                   Francesco Arietti



            BOARD OF STATUTORY AUDITORS

            Chairman                                    Cesare Ferrero

            Members                                     Giorgio Ferrino
                                                        Piero Rosso

            Alternate members                           Maurizio Gili
                                                        Paolo Piccatti



            GENERAL MANAGEMENT

            General Managers                            Francesco Torri
                                                        Luciano Roasio



            INDEPENDENT AUDITORS

                                                        KPMG S.p.A.



            * Member of the Administrative Committee
            (1)
                Company boards as of March 25 2003



                                                                                              5
                                                            • COMPANY OFFICERS AND BOARDS •
Powers of Company Officers


In accordance with Article 18 of the Corporate Bylaws, the Chairman is the legal representative
of the Company vis-à-vis third parties and before the law.

          On April 26 2000, the Board of Directors appointed the Managing Director and General
Manager as legal representatives of the company, with separate signature, except as regards the
granting of guarantees, endorsements and sureties not tied to the normal operations of the
company, the issue of promissory notes and the acceptance of drafts. A maximum limit of ten
billion lire (5,164,569 euro) has been established for investments and divestments of real
property and participating interests and also for the granting of loans to third parties.

With a resolution voted on December 20 2000, effective as of January 1 2001, the Board of
Directors appointed a new General Manager with powers to carry out operations in Italy.

       On February 7 2003, the Board of Directors appointed the Chairman of the Board of
Directors establishing that individual management powers are not conferred thereon.




6
    • POWERS OF COMPANY OFFICERS •
Summary


ANNUAL ACCOUNTS                                                                    page

Directors’ Report                                                                    10
– Business activities                                                                16
– Operating performance                                                              25
– Financial and investment activity                                                  28
– New products                                                                       31
– Organisation                                                                       33
– Subsidiaries Companies                                                             37
– Other information                                                                  48
– Major events in early 2003                                                         54
– Business outlook                                                                   56
– Proposed allocation of the profit for the year                                     57
Balance Sheet and Profit and Loss Account                                            59
Notes to the Financial Statements                                                    80
– Valuation criteria                                                                 80
– Comments on the Balance Sheet and Profit and Loss Account                          92
Certification Report                                                                129
Report of the Board of Statutory Auditors                                           132



CONSOLIDATED FINANCIAL STATEMENTS

Directors’ Report
– Business activities                                                               139
– Operating performance                                                             143
– Financial and investment activity                                                 145
– Other information                                                                 149
– Major events in early 2003                                                        155
– Business outlook                                                                  157
Consolidated Balance Sheet and Profit and Loss Account                              159
Notes to the Consolidated Financial Statements                                      174
– Consolidation Principles and Consolidation Area                                   174
– Valuation criteria                                                                182
– Comments on the Consolidated Balance Sheet and Profit and Loss Account            190
Certification Report                                                                223
Report of the Board of Statutory Auditors                                           225
Summary of the resolutions of the Shareholders' Meeting                             227




                                                                                          7
                                                                           • SUMMARY •
Annual Accounts




                                        9
                  • ANNUAL ACCOUNTS •
Directors’ Report
 (as per Article 2428 of the Italian Civil Code and Article 10 of Legislative Decree No. 173/97)



Toro Group

The highlights for the year are set forth below:

 (million euro)                                                 2002          2001         Change


 Total premiums                                               5,238          5,751         -8.9%

 Result of insurance operations                                  60             -5

 Result before taxes                                             59           243         -75.7%

 Net profit (including minority interest)                         9           147         -93.9%

 Non-life loss ratio                                          76.1%         78.5%

 Costs-to-premiums ratio                                      14.1%         12.3%

 Investment income                                               22           278         -92.1%

 Investments                                                 17,484        16,971           3.0%

 Technical provisions                                        16,508        15,677           5.3%

 Shareholders' funds                                          1,629          1,826        -10.8%

 Staff (number)                                               3,098          3,213         -3.6%


Overall premium income for the year amounted to 5,238m euro with a year-on year decrease
of 8.9%.

The short-fall was to be ascribed to a general slackness in life business, with premium income of
2,471m euro, a year-on year decrease of 21.2%, both in Italy (-20.5%), and in France (-29.1%).
In Italy, traditional business channels recorded a 6.7% downswing in premium income, while the
bank assurance sector, represented by Roma Vita, posted a reduction of 23.5%, affected in
particular by the process of re-organisation of the Capitalia Group following the merger with the
Bipop-Carire Group in mid 2002.
The decline on the French market was to be ascribed to products with a high financial content
distributed by Guardian Vie.

On the other hand, non-life business reported premium income of 2,767m euro, with an increase
of 5.8% on 2001 (+3.1% in Italy and +16.3% abroad) with growth rates basically aligned with
market trends.




10
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
As regards underwriting business, there was a further improvement in the non-life loss ratio,
forged by continuing attention to careful selection of the portfolio as in previous years. In
particular, the upswing in Motor business reflects a further reduction in the frequency of claims.

Operating costs disclose an increase in the cost-to-premiums ratio for the year due to the greater
impact of commissions and other acquisition costs which amounted to 11.5% of premiums
compared with 9.7% in the previous year. This trend is to be ascribed to the higher incidence of
non-life premium income. Administrative expenses were equal to 2.6% of premiums, as in 2001,
despite far-reaching investments in information technology in order to accelerate the process of
integration between Group companies and the setting up of Centro Servizi Toro S.p.A. (C.S.T.) to
which management of the claims of all Group companies in Italy has been transferred.

For the first time, positive results on the underwriting front and trimming of operating costs
made it possible to record a non-life combined ratio below 100 (98.4% in 2002 compared with
101.1% in 2001).

On the other hand, investment management and financial operations were affected by the
continuing negative performance of stock markets which resulted in write-downs of equity
investments for 424m euro (-143m euro in the previous year). Part of these adjustments are to
be ascribed to write-downs of strategic investments in Capitalia S.p.A. (-124m euro) and Fiat
S.p.A. (-78m euro). However, the sale of real property generated total capital gains of 120m euro.

Due to these factors, the pre-tax result for the year stood at 59m euro (compared with 243m
euro in 2001) and, net of tax effects, amounted to 9m euro as against 147m euro in 2001.

At December 31 2002, financial and real property investments had grown to 17,484m euro,
3% up on the previous year. These investments consist for 72% of fixed-income securities and for
23% of equities. The excess of investments in relation to technical provisions was 976m euro.

At December 31 2002, the Group workforce numbered 3,098 full-time equivalents with a
reduction of 115, or 3.6%, in relation to year-end 2001.




                                                                                                          11
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Toro Assicurazioni

The sector lead company continued to forge ahead with growth plans, steered towards achieving
maximum profitability targets. The main highlights are summed up below:

 (million euro)                                                2002          2001         Change


 Total premiums written                                      1,278          1,242          2.9%

 Result of insurance operations                                 33            23         43.5%

 Result before taxes                                            46            69         -33.3%

 Net profit                                                     25            43         -41.9%

 Non-life loss ratio                                         73.6%         74.1%

 Costs-to-premiums ratio                                     19.9%         19.9%

 Investment income                                              21            50         -58.0%

 Investments                                                 4,414          4,466         -1.2%

 Technical provisions                                        3,523          3,359          4.9%

 Shareholders' funds                                         1,165          1,330        -12.4%

 Staff (number)                                              1,042          1,091         -4.5%


With an upswing of 2.9%, overall premium income amounted to 1,278m euro. Non-life business
income came to 975.5m euro, with an increase 6.0%, while there was a 6.1% year-on-year
reduction in life premium income.

The balance on the technical account was a profit of 33m euro with a positive variation of 10m
euro, or 43.5%, in relation to the previous year, reflecting the significant improvement in the
claims rate. The non-life loss ratio improved, moving from 74.1% to 73.6%, while the ratio of
acquisition costs and other operating expenses to earned premiums for life and non-life business
was the same as in the previous year, i.e. 19.9%.

The upturn in the technical margin made it possible to only partially offset investment
management results, characterised by an approximate 29m-euro reduction in total net income
(21m euro compared with 50m euro in the previous year). On the one hand, the comparison with
the previous year reveals an increase in net ordinary income (interest and dividends) which
amounted to 271.4m euro (162.6m euro in 2001) and which includes the extraordinary dividend
distributed by the Augusta Assicurazioni S.p.A. subsidiary of 82.5m euro including income arising
on the tax credit and, on the other hand, alignments and downward adjustments of the securities
portfolio during the year for a total of 211.8m euro (87.5m euro in the previous year) of which
125.6m euro referring to write-downs of financial assets.

The above-mentioned write-downs generated a reduction in the value of the balance of
investments which, at December 31 2002, amounted to 4,414m euro with a decline of 1.2% in
relation to the previous year. The excess in relation to technical provisions was 891m euro.

12
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Net technical provisions totalled 3,523m euro, an increase of 4.9%, with a ratio to premiums,
net of reinsurance, of 296.5% compared with 286.4% in 2001.

At December 31 2002, the Company workforce consisted of 1,042 employees, with a reduction
of 49 or 4.5% in relation to year-end 2001.



Group companies

Premium income of the subsidiaries

 (million euro)                                                  2002             2001          % Change


 Roma Vita S.p.A.                                             1,785.0         2,334.7             -23.5

 Nuova Tirrena S.p.A.                                          691.4            690.8               0.1

 Augusta Assicurazioni S.p.A.                                  231.3            217.7               6.2

 Augusta Vita S.p.A.                                             64.3            64.8               -0.8

 Lloyd Italico Assicurazioni S.p.A.                            250.8            251.9               -0.4

 Lloyd Italico Vita S.p.A.                                       26.6            29.2               -8.9

 Toro Targa Assicurazioni S.p.A.                                 70.8            95.4             -25.8

 D.A.S. S.p.A.                                                   21.6            17.8              21.3

 Giano Assicurazioni S.p.A.                                       4.2              5.7            -26.3

 Total Italian Companies                                     3,146.0          3,708.0             -15.2

 Continent Group                                               742.7            749.5               -0.9

 Phenix                                                          51.1            38.1              34.1

 Fiat Ubezpieczenia (life and non-life)                          23.5            22.9               2.6

 Total Foreign Companies                                       817.3            810.5               0.8

 Grand Total                                                 3,963.3          4,518.5             -12.3




In particular:

- Roma Vita, a joint venture with Fineco Group S.p.A. (Capitalia Group), posted total premium
  income of 1,785m euro achieved through the banking outlets of the Capitalia Group with a
  year-on-year decrease of 23.5%.

- With a volume of premiums more or less unchanged in relation to the previous year,
  Nuova Tirrena achieved a further improvement in operating performance with a four
  percentage point reduction in the loss ratio and a two-fold increase in the operating result
  compared with the previous year;



                                                                                                           13
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 - Lloyd Italico Assicurazioni and Lloyd Italico Vita, acquired in 2001, contributed to premium
   income for around 227m euro, recording a positive balance of technical management;

 - Augusta Assicurazioni and Augusta Vita, transferred by the Fiat Group to the Toro Group in
   July 2001, expanded their total volume of premiums by 4.6%;

 - in France, the Continent Group reconfirmed 2001 business levels with an upswing in non-life
   business that offset the short-fall in life products with a high financial content of Guardian Vie;

 - Operating in partnership with Fiat Auto through its network of dealers, Toro Targa Assicurazioni
   bore the brunt of the general contraction of the automotive market in Italy and applied a strict
   policy of risk assumption during the year. With regard to its subsidiaries, Phenix, which operates
   in Brazil, achieved a significant growth of 34.1% in relation to 2001 and is now classed
   amongst the 10 leading insurance companies in the country while, in Poland, Fiat Ubezpieczenia
   confirmed the volume of premiums of the previous year, anticipating break-even, despite the
   sluggishness of the automotive market;

 - Das posted a further increase in profitability in the Legal Fees branch with business volumes
   that moved up 21%.

                                               *****

 We wish to thank employees, co-workers and reinsurers for their effective co-operation during
 the year.




14
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
To r o A s s i c u r a z i o n i S . p . A .




                                                                                         15
                                               • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
BUSINESS ACTIVITIES




2002 premium income amounted to 1,278.0m euro with a year-on-year increase of 2.9%.

Direct business accounted for 99.9% of business with premium income of 1,276.8m euro, an
upturn of 3.5%, while premium income from reinsurance totalled 1.2m euro.

The analysis by sector set forth below reflects the changes in the breakdown between non-life and
life business in relation to the previous year:

• Motor business, third-party liability and other classes, represented 45.2% of total premium
  income compared with 43.4% in 2001, with a growth of 7.2%;

• With an increase of 4.9%, non-motor business accounted for 31.1% of total premium income
  compared with 30.4% in 2001;

• Life business, with a downswing of 4.2%, contributed to overall premium income for 23.7%,
  compared with 25.4% in the previous year.

The breakdown by sector and changes in relation to the previous year are set out in the
table below.




16
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Premiums written by sector of acquisition

                                                  2002          2001               %          2002 Mix
                                              euro/000      euro/000          Change                %


 Direct Italian business                   1,276,792     1,233,433              3.5              99.9

 Non-life business                          974,503       917,817               6.2              76.3

 Motor TPL                                  482,739       448,950               7.5              37.8

 Motor, other classes                        94,666        90,145               5.0               7.4

 Fire                                        91,009        82,372              10.5               7.1

 Other property damage                       96,658        91,431               5.7               7.6

 Non-motor TPL                               69,515        68,884               0.9               5.4

 Health                                      54,746        55,661               -1.6              4.3

 Accident                                    58,209        57,620               1.0               4.6

 Marine, aviation and transport              10,913          8,181             33.4               0.9

 Sundry pecuniary losses                       7,060         6,170             14.4               0.6

 Credit and Suretyship                         5,147         5,341              -3.6              0.4

 Assistance                                    3,836         3,055             25.6               0.3

 Legal fees                                         5             7            -28.6              0.0

 Life business                              302,289       315,616               -4.2             23.7

 Insurance on the duration of human life    146,822       173,001              -15.1             11.5

 Insurance linked to investment funds        57,329        94,502              -39.3              4.5

 Capital redemption contracts                97,362        47,777             103.8               7.6

 Pension Funds                                   776           336            131.0               0.1

 Inward reinsurance                            1,197         8,703            -86.2               0.1

 Non-life                                        972         2,070             -53.0              0.1

 Life                                            225         6,633             -96.6              0.0

 Total Non-life business                    975,475       919,887               6.0              76.3

 Total Life business                        302,514       322,249               -6.1             23.7

 Grand Total                               1,277,989     1,242,136              2.9            100.0




                                                                                                         17
                                                              • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
CHANGES IN THE INSURANCE PORTFOLIO




LIFE BUSINESS

Life premium income amounted to 302.5m euro compared with 322.2m euro in 2001 with a
year-on-year decrease of 6.1%. Direct business income moved down 4.2% to 302.3m euro. The
reduction was also to be ascribed to the issue in 2001 of a number of premiums of high unit
value relating to group policies. The 103.8% growth achieved in the capitalisation sector (Branch
V) with premium income of 97.4m euro was driven in particular by the sale of the new "Toro
Rendimento Più" single-premium product with secured capital.

The different trends in premium income have resulted in a reconfiguration of the various sectors
of the portfolio. Individual products accounted for 48.6% of overall premium income compared
with 54.8% in 2001. Unit-linked and index-linked contracts accounted for 19.0% of the total with
a reduction of more than 10 percentage points, compared with 29.9% in the previous year while
capital redemption policies increased their contribution to premium income to 32.2% as opposed
to 15.1% in 2001. At 0.8m euro, premium income in the pension funds sector continued to be
of a marginal nature.

New business in the individual products sector, equal to around 135m euro, referred mainly
(92%) to index- and unit-linked financial and capitalisation contracts. As regards in particular the
latter type, two "campaign type" issues with single premium and secured capital (Toro Rendimento
Più in June and July 2002) accounted for around 50% of new business. Issue of a new index-
linked policy (IndexFive in November 2002) fostered premium income of almost 26m euro (19%
of annual production). More than 28m euro (21% of 2002 production) were achieved through
the issue of unit-linked policies which benefited from the sale of the new secured capital line (Toro
in Quota - Capitale Garantito 2002) with around 90% of the contracts relating to this type of
product.

At December 31 2002, technical provisions, net of reinsurance, had moved up to 2,035.1m
euro compared with 1,923.9m in 2001, an increase of 95.8%. Of these, 242.5m euro refer to
provisions where the investment risk is borne by the policyholders (class D). The ratio of net
technical provisions to net premiums was 693.5% compared with 614.6% in 2001.

Operating costs, including acquisition and collecting commissions net of commissions recovered
from reinsurers, other acquisition costs and other administrative expenses amounted to 29.3m
euro with a costs-to-premiums ratio of 10.0% (10.2% in 2001).

Direct business claims of 219.0m euro were paid during the year in relation to 188.4m in 2001,
an increase of 16.2%. The most significant items referred to maturities, equal to 121.0m euro,
with an increase of 39.4%, and surrenders equal to 88.1m euro, with a decrease of 5.4%.

The Rispav Fund amounts to 1,574.0m euro compared with 1,563.5m euro in the previous year.
Fund management generated a gross yield of 5.04% which, ceded to policyholders for 80%,
guaranteed a net yield of 4.03%, 1.5 points above the inflation rate.




18
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
NON-LIFE BUSINESS

Non-life premium income amounted to 975.5m euro overall, with a year-on-year increase of
6.0%, of which 974.5m or 6.2% relating to direct business, while indirect business returned only
marginal values.

Motor business (third-part liability and other classes) achieved a growth rate of 7.1% and
accounted for 59.3% of overall direct business income compared with 58.7% in 2001.

Non-life net operating costs, comprising commissions for the year, other acquisition costs and
other administrative expenses, came to 203.6m euro with a costs-to-premiums ratio of 22.8%
compared with 23.0% in 2001.

In the Motor branches, 149,983 claims were notified with a decrease of 5.2% on the 2001
figures (with a reduction of 6.7% as regards motor third-party liability business only). For the
other non-life branches, a total of 275,141 claims were notified with an increase of 12.8%.
During the year, 375,281 claims were paid for all the non-life branches with an outgo of 654.3m
euro (669.5m in 2001).

Net technical provisions amount to 1,487.7m euro. The breakdown is as follows

 (million euro)                                        2002                                      2001

 Provision for premium instalments                    345.9                                    326.0

 Provision for unexpired risks                          4.5                                       3.6

 Equalisation and ageing provisions                     6.9                                       6.3

 Provision for claims outstanding                   1,130.4                                  1,099.2

 Total provisions                                   1,487.7                                 1,435.1

 Ratio to net premiums for the year                    1.66                                     1.67




The commentary on the performance of the individual branches is set out below.




                                                                                                         19
                                                               • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Motor Third Party Liability

     Direct business premiums (euro/000)          482,739         +7.5%

     Claims notified (No.)                        120,997          -6.7%

     Claims paid (euro/000)                       366,505          -1.7%


 Direct business premiums amounted to 482.7m euro with total year-on-year upswing of 7.5%,
 partially restrained until March 31 2001 by the effects of the Government-imposed tariff freeze.

 There was a reduction in the frequency of claims with a year-on-year decrease of 6.7%. On the
 other hand, the per-claim cost remained high, in particular the cost of claims involving bodily
 injury which also increased their percentage ratio in relation to total claims. There was a
 significant improvement in the results of the branch which, without considering the allocated
 investment return, reduced the technical loss from 20.6m euro in 2001 to 0.6m euro.

 Claims paid moved down 1.7% while the average cost of claims paid relating to current business
 was 1,689 thousand euro compared with 1,575 thousand recorded in the previous year
 (an increase of 7.2%) and the settlement rate of claims notified during the year was equal to
 65.9% compared with 66.5% in 2001.

 Generally, the total number of current and prior year claims paid was equal to 111,719 with an
 outlay of 366.5m euro. The number of claims reserved at December 31 decreased by 6.3%
 moving from 74,162 at year-end 2001 to 69,479 at December 31 2002. The average cost of
 current claims reserved, considering the pro quota data of claims in coinsurance, was 6,428
 thousand euro compared with 5,848 thousand in the previous year, an increase of 9.9%.



 Motor, other classes

     Direct business premiums (euro/000)           94,666          5.0%

     Claims notified (No.)                         28,986          1.5%

     Claims paid (euro/000)                        44,435          -2.5%


 The 5% increase in premium income of this branch also reflects the positive upswing in sales of
 the Motor TPL sector.

 As opposed to the decrease posted in 2001, there was a 1.5% increase in the number of
 claims notified while the settlement rate of claims notified during the year dropped from 82.9%
 to 78.3%. The technical profitability of the branch held up well, with a result of 26.5m euro
 compared with 25.4m euro in 2001.




20
        • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Fire and natural forces and other Property Damage

 Direct business premiums (euro/000)                      187,667                 +8.0%

 Claims notified (No.)                                      88,775                +8.1%

 Claims paid (euro/000)                                   108,325                  -7.4%


Both sectors were affected by an increase in the frequency of claims and an upswing in major
claims, also tied to weather conditions.

On the whole, the branches were characterised by lower profitability compared with the previous
year with a net retained margin of 3.0m euro without considering the respective allocated
investment return (18.3m euro in 2001).

The highlights of the two branches and changes in relation to the previous year are set out in the
table below:


                                       No. of claims notified           % settlement rate               Total claims paid
                                                                     of current year claims                (million euro)


 Fire                              19,307        (+9.8%)                67.9      (23.4)            41.2    (-19.0%)

 Other property damage             69,468        (+7.6%)                62.5       (-1.0)           67.1      (+1.4%)




Non-motor third party liability

 Direct business premiums (euro/000)                        69,515                +0.9%

 Claims notified (No.)                                      35,179                 -0.2%

 Claims paid (euro/000)                                     52,334              +12.9%


A systematic overhaul of the portfolio was undertaken in 2002 with regard to the more critical
categories of risk. These actions tended to hamper the growth in premiums which moved up by
0.9% in relation to 2001.

Although still negative, the margin for the year improved in relation to 2001, also stimulated by
the above-mentioned review of the portfolio. Business was also affected by reinforcement of the
provisions for prior year claims and the increase in the provisions for late claims.

There was an increase in the claims settlement rate: 50.9% compared with 49.0% in 2001.




                                                                                                                            21
                                                                              • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Accident and Health

     Direct business premiums business (euro/000)   112,955         -0.3%

     Claims notified (No.)                          139,639       +23.0%

     Claims paid (euro/000)                          78,044         -0.2%


 Accident business captured premium income of 58.2m euro with an increase of 0.1% on the
 previous year while Health business premium income amounted to 54.7m euro with a downturn
 of 1.6%.

 Accident claims paid amounted to 35.8m euro, an upswing of 4.3% while, for Health risks,
 claims were paid for a total of 42.2m euro, 3.7% lower than in 2001. The comparison with the
 previous year of the current year claim settlement rate indexes of the two branches is set forth
 in the table below:

                                                      % 2002        % 2001            Change


     Accident                                          37.5          39.6              -2.1

     Health                                            94.4          87.1               7.3


 The technical margin of the Accident branch reflects a positive result of 4.0m euro, an
 improvement on the 3.3m euro of the previous year. The Health sector, with a year-on-year
 increase of 29.6% in claims notified, closed the year with a loss of 4.9m euro, affected by the
 reinforcement of the provisions for late claims.



 Other Non-Life Branches

     Direct business premiums (euro/000)             26,961       +18.5%

     Claims notified (No.)                           11,548        -11.7%

     Claims paid (euro/000)                           8,970        -17.0%




 Sundry pecuniary losses

 Direct business premium income amounted to 7.1m euro, moving up 14.4% in relation to the
 previous year. The technical result of the sector was once again positive with a profit of 1.0m,
 thus confirming the positive trends of claims, with a reduction in frequency of 40.3% in relation
 to the previous year.

 The current year claims settlement rate moved down from 76.0% in 2001 to 66.5% in the year
 under review.




22
        • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Credit and Suretyship

The Suretyship sector was characterised by a total reduction in premium income of 3.6% in
relation to 2002 also due to the application of specific assumption policies directed towards
attentive selection of risks and integrated in a role of partnership with consolidated customers,
while maintaining a positive technical margin with a profit of 1.2m euro (1.3m euro in the
previous year).

The recovery in Credit business was driven by the co-operation agreement in the commercial
credit sector with Gerling NCM Società Italiana Cauzioni, the effects of which should make
themselves felt in the next few years.

Marine, aviation and transport

Overall, direct business premium income amounted to 10.9m euro with an increase of 33.4% on
the 2001 figures, to be ascribed mainly to the upturn in the demand for covers and the
noteworthy market-wide increase in premiums. Claims paid during the year totalled 5.3m euro as
in 2001.

All-round technical management remained positive with a balance of 1.6m euro, an improvement
on the profitability margins achieved in the previous year (1.0m euro).

Assistance

Premium income from Assistance additional covers sold with Motor and Health products
amounted to 3.8m euro with an upswing of 25.6% on the 2001 figures. Business in this area
benefited in particular from positive trends in the Motor TPL sector.

There was a further 6.1%% reduction in the frequency of claims notified. Claims paid, in the
           1m euro, moved down by 27.5% in relation to the previous year. Insurance business
amount of 1.
income stood at 0.9m euro compared with 0.8m euro in 2001.




                                                                                                          23
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
REINSURANCE




 Outward reinsurance

 Reinsurance policy, unchanged in relation to the previous year, was directed towards
 guaranteeing the best possible protection of major risks and catastrophic events.

 The main forms of reinsurance applied are as follows :

 – “Proportional treaties: pure quota and surplus”: this is the most widely used form in the fire
   and technological risks, suretyship, credit, hail and life branches;

 – ”Non-proportional treaties: excess of loss”, intended to restrict the repercussions of major
   claims and catastrophic events. These forms are used in almost all branches of business with
   specific differentiation as regards limits of application according to the reference covers;

 – “Facultative”: which operates on individual insurance contracts in order to cover specific
   potentially high risks (e.g. large industrial companies for fire risks and natural events, banks for
   the risk of thefts, football teams for accident covers).

 In 2002, reinsurance premium income amounted to 89.8m euro compared with 68.9m in the
 previous year, of which 81.0m stemming from non-life business (equal to 8.3% of direct business
 income) and 8.8m euro in the life branches (equal to 2.9% of direct business income). Claims
 paid ceded during the year totalled 56.7m euro compared with 52.7m euro in 2001.

 The technical balance was a loss for the reinsurers mainly due to the effect of damages caused
 by atmospheric events and a number of major claims in the Fire branch.



 Inward reinsurance

 Business in this area is of a marginal nature except for a number of intra-Group acceptances of
 negligible value. The year closed with total premium income for the life and non-life branches of
 1.2m euro.




24
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
OPERATING PERFORMANCE




The main highlights of 2002 operating performance are set forth in the table below:

                                                                                  2002             2001
                                                                            million euro     million euro


 Earned premiums, non-life                                                    875.9             838.6

 Premiums written, life                                                       293.5             313.1

 Total premiums                                                             1,169.4          1,151.7

 Claims incurred, non-life insurance business                                 -644.5           -621.8

 • non-life loss ratio                                                        73.6%            74.1%

 Claims incurred and changes in life technical provisions                     -309.7           -334.2

 Commissions and other distribution expenses                                  -176.5           -171.7

 • ratio to premiums                                                          15.1%            14.9%

 Other administrative expenses                                                  -56.5            -58.0

 • ratio to premiums                                                            4.8%             5.0%

 Other technical income and charges                                               -5.1             -4.3

 Income allocated to life policyholders                                         56.0             61.1

 Margin on insurance business                                                   33.1             22.8

 • ratio to premiums                                                            2.8%             2.0%

 Net income from investments:

 • Interest, dividends and other net income                                   271.4             162.6

 • Gains and losses on the disposal of investments                                3.8              8.0

 • Value adjustments on investments                                           -211.8             -87.5

 • Total                                                                        63.4             83.1

 • of which: attributed to life policyholders                                   -56.0            -61.1

 Other income and charges                                                         -8.3             -3.4

 Ordinary profit (loss)                                                         32.2             41.4

 Extraordinary income and charges                                               13.6             27.6

 Profit (loss) before taxes                                                     45.8             69.0

 Tax-driven depreciation and amortisation                                         -0.1             -0.2

 Income taxes for the year                                                      -20.9            -26.1

 Profit (loss) for the year                                                     24.8             42.7




                                                                                                            25
                                                              • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Net premiums earned totalled 1,169.4m euro with a modest increase of 1.5% in relation to
 1,151.7m in the previous year mainly due to the short-fall in life business.

 At 644.5m euro, non-life claims were characterised by a further reduction of the ratio to
 premiums earned of the year, which moved from 74.1% in 2001 to 73.6%, with an
 improvement in particular in the Motor third-party liability loss ratio.

 Operating costs, comprising acquisition and collecting commissions including commissions
 received from reinsurers, other acquisition costs and other administrative expenses for the year
 totalled 230.0m euro, 1.4% up on the previous year, with the same costs-to-premiums ratio of
 19.9% as in 2001, and the same ratio to premiums written net of reinsurance (19.6%).

 In detail, commissions and other acquisition costs were equivalent to 15.1% of premiums
 earned, compared with 14.9% in 2001, while other administrative expenses were equal to
 4.8% of premiums compared with 5.0% in the previous year.

 There was an evident improvement (45.2%) in the result of insurance operations with a profit of
 33.1m euro compared with 22.8m in the previous year, with a ratio to premiums earned that
 moved from 2.0% to 2.8%.

 Investment management, still bearing the brunt of negative market trends, reflected a reduction
 in total income of around 29m euro (21m euro compared with 50m in the previous year).

 The comparison with the previous year reveals:
 - an increase in interest, dividends and other net ordinary income, equal to 271.4m euro,
   compared with 162.6m in 2001, owing in particular to collection of the extraordinary dividend
   distributed by the Augusta Assicurazioni subsidiary for 82.5m euro, including income on the
   tax credit of 29.7m euro;
 - alignments and downward adjustments on the securities portfolio during the year for a total
   of 211.8m euro compared with 87.5m euro in 2001, of which 125.6m euro relating to
   write-downs of financial assets;
 - income from trading activities (net gains of 3.8m euro) still affected by the general volatility of
   the markets, with falling prices and reduced trading volumes.

 Net extraordinary items amounted to 13.6m euro, compared with 27.6m in 2001. There was
 a decline in net income on the sale of real property (4.2m euro compared with 20.5m in the
 previous year) while net gains on the sale during the year of shares and interests, debt
 securities and fixed-income securities held for the longer term amounted to 14.1m euro as
 against 6.5m in 2001.




26
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Extraordinary charges for the year reflected the loss deriving from alignment of CONSAP
services following the aforementioned settlement agreement for 6.5m euro, gross of recoveries
of provisions accrued on a prudent basis in previous years.

The result before taxes was 45.8m euro and net profit amounted to 24.8m euro in relation to
42.7m in 2001




                                                                                                      27
                                                            • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
FINANCIAL AND INVESTMENT ACTIVITY




Investments

The movement on investments and liquid assets at December 31 2002 is set out below:

                                                                                 2002           2001
                                                                           million euro   million euro


 Land and buildings                                                            50.5           57.0

 Investments in Group companies                                            1,596.7        1,818.5

 • Shares and interests                                                    1,561.1        1,741.3

 • Debt securities                                                             35.4           76.8

 • Loans                                                                         0.2            0.4

 Other financial investments:                                              2,571.8        2,380.5

 • Shares and interests                                                      221.9          265.1

 • Debt securities                                                         2,330.5        2,095.7

 • Loans                                                                       18.6           19.0

 • Other                                                                         0.8            0.7

 Deposits with ceding companies                                                  2.0            2.3

 Investments for the benefit of life policyholders (class D)                 242.5          212.6

 • Units in unit trusts                                                        63.5           47.1

 • Debt securities                                                           178.7          165.4

 • Other investments                                                             0.3            0.1

 Other assets/liabilities:                                                    -49.1             -5.2

 • Net liquid funds                                                            16.4           -44.7

 • Other financial receivables/payables                                        -97.7            9.2

 • Accrued income on securities                                                32.2           30.3

 Total investments and liquid funds                                        4,414.4        4,465.7


At the end of the year, taking into account value adjustments, investments had moved down to
4,414.4m euro with a decrease of 51.3m euro.

As regards the breakdown of investments, these consist for 54.3% of debt securities, for 32.6%
of strategic shareholdings, for 5.0% of other equities, for 3.9% of real property and real property
investments and -1.3% relating to the loss balance represented by loans, net liquid assets, other
financial assets/liabilities and other investments.




28
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
The remaining 5.5% comprises investments for the benefit of policyholders who bear the
investment risk against life insurance and capital redemption contracts, with returns linked to
investment funds and share indexes. At the end of 2002, these amounted to 240.9m euro
compared with 211.6m in 2001. They also include investments relating to the administration of
pension funds for 1.6m euro.

The equities and debt securities portfolio consists for 58% of securities held for the longer term,
for 6% of investments for the benefit of life policyholders (Class D) and for the remaining 36% of
securities held for trading.

The value of real property investments, net of accumulated depreciation, moved down from 57m
euro at the end of the previous year to 50.5m euro at year-end 2002. Net gains of 4.2m euro
were recorded on disposals of real property during the year.

Investment management generated net gains, including extraordinary items, for a total of 81.7m
euro compared with 110.1m in the previous year, a decrease of 25.8%.

The average ordinary yield on debt securities, excluding class D investments, was 4.69%
compared with 5.2% in 2001.




                                                                                                          29
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Financial position

 The balance sheet of the Company is analysed in the table below:

                                                                                                         2002               2001
                                                                                                   million euro       million euro


     Total investments and liquid funds                                                            4,414.4           4,465.7

     Technical provisions                                                                          -3,522.9          -3,358.9

     Excess of investments over technical provisions                                                 891.5           1,106.8

     Balance of receivables/payables arising on insurance operations                                 222.8              219.9

     Excess of investments over technical commitments                                              1,114.3           1,326.7

     Intangible fixed assets and other assets/liabilities                                              50.9                 3.5

     Shareholders' funds                                                                           1,165.2           1,330.2



     Represented as follows:

     • to cover the solvency margins                                                                 226.2              231.2

     • excess in relation to margins to be covered                                                   709.3              729.5

     • against intangible elements (unavailable as regards the solvency margin)                      229.7              179.7

     • for proposed distribution of profit                                                               0.0            189.8


 Against net investments of 4,414.4m euro, net technical provisions totalled 3,522.9m having
 increased by 4.9%, with a ratio to net premiums that has risen from 286.4% to 296.6%.

                                                                  2002           2001     Change   % of premiums   % of premiums
                                                            million euro   million euro        %           2002            2001


     Non-life provisions for unearned premiums
     and claims outstanding                                 1,487.7        1,435.0          3.7           166.3         166.9

     Life provisions for policy liabilities
     and other technical provisions                         2,035.2        1,923.9          5.8           693.5         614.6

     Total                                                  3,522.9        3,358.9          4.9          296.6          286.4


 The excess of investments in relation to technical provisions amounted to 891.5m euro
 compared with 1,106.8m in 2001

 At December 31 2002, Shareholders’ funds were equal to 1,165.2m euro compared with
 1,330.2m at the end of the previous year.

 Changes during 2002 referred to:
 • distribution of dividends for 189.8m euro;
 • the profit for the year of 24.8m euro.


30
        • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
NEW PRODUCTS




Four new non-life products were launched during 2002:

• “Shipsystem”: this new product, intended to insure all craft regulated by Law No. 990/69,
  reflects the Company’s project to renew its range of motor products, initiated with Autosystem
  Più, and follows the same guidelines in particular as regards improved transparency of
  contractual conditions and personalization of rates. The main innovations include review of
  complementary guarantees, the introduction of the assistance guarantee which comprises a
  complete suite of services and the possibility of combination with the Legal fees product,
  proposed in two forms (basic and complete) provided by DAS.

• “Motosystem Più”: this product, designed along the same lines as the Autosystem Più and
  Driversystem Più policies, insures all mopeds and motorbikes regulated by Law No. 990/69,
  with improved transparency of contractual conditions and rates. The main innovations refer to
  review of the no-claims bonus scale, of the regulation of claims, review and implementation of
  complementary guarantees, introduction of the assistance cover and technical/commercial
  alignment of theft and fire rates to take into account different patterns of requirements in
  various areas.

• “Motor vehicle racing and sports competitions”: this new policy, intended to insure damages
  resulting from races and sports competitions regulated by Law No. 990/69, also reflects the
  process of reconfiguration of the motor product range in accordance with the same models
  and general conditions.

• “Legal, Fiscal and Administrative Area Professional Policy – Real Estate Brokers”: is a specific
  cover for the real property brokers sector. To protect customers, Law No. 57 of March 5
  2001, which amended Article 3, section 5 bis of Law No. 39 of February 3 1989, rules that
  suitable insurance must be taken out to cover professional risks when exercising the activity of
  real property broker. A subsequent circular of the Ministry of Production Activities, dated
  December 18 2001, established the minimum requirements with which the insurance
  guarantees to which the new cover refers must comply.

As regards life business, the Capital Flash product, temporary case of death with fixed premium
brackets, was reviewed during 2002 with definition of premium brackets rounded off in euro and
concurrent improvement of taxation, now more competitive, for male policyholders in the age and
contract duration ranges of major interest.

The following investment products were launched during the year:

• “Toro in Quota - Capitale Garantito 2002”: the new unit-linked line with guaranteed return of the
  invested capital. This new line, launched in April, permits diversification of investments through
  dynamic assets management that makes it possible to take advantage of market growth
  prospects, with the certainty of return of the capital invested regardless of any negative events.
  It is managed through setting up of an internal fund (Fondo Toro Gestione Garantita 2002)
  whose assets are spread between equity investments (risk component) and debt



                                                                                                          31
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
     securities/monetary funds (low risk component) with a mix that may vary in time, switching
     between different risk components according to the trends of market prices. The planned
     duration is 6 years, consistent with objectives of an investment characterised by dynamic but
     secure management.
     On expiry (8/4/2008), the capital paid will be determined multiplying the number of shares
     owned by the contracting party by the greater of:
     - the value of the share determined on 8/4/2008;
     - 75% of the maximum value reached by the share during the entire duration of the contract;
     - the maximum value reached by the share in the period between 8/4/2002 and 7/4/2003;

 • “Toro Rendimento Più”: single-premium capital redemption policy which, at the end of five years,
   guarantees a capital pre-defined at the time of subscription. The annual compound yield, which
   varies according to the premium paid, is between 5.21% and 6.01% before tax.
   The certain, particularly attractive yield (at the highest levels of the market) makes this a
   particularly appealing product. To meet all customer requests, two “campaign type” issues were
   placed in June and July;

 • “Toro IndexFive”: single-premium index-linked product with coupon, issued starting from
   December, which offers a high pre-defined yield, in the short term, relying, in the medium term,
   on the possibility of taking advantage of a more continuous, stable upturn of equity markets. Its
   main characteristics are: security of the capital invested, which will be returned on expiry in a
   measure equal to the premium paid; a yield of 5% per year in the first two years and, in
   subsequent years, from a minimum of 1% to a maximum of 9.6% according to European
   market trends, i.e. D.J. Eurostoxx 50 index; the possibility of annual collection of the yield in the
   form of coupon or of capitalising this; the duration of the investment is equal to 6 years.




32
      • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
ORGANISATION




“Unification” Project

During year under review, important steps forward were made in achieving Company strategic
priorities, i.e. unification of structures and of processes at Toro Group level in Italy.

The unification model is applied giving priority, initially, to management and back-office aspects,
thus laying the bases for major synergies in terms of operating costs and also paving the way to
improved process efficiency and customer satisfaction. The strategy applied envisages re-
engineering with identification of efficiency targets for each process.

In detail, action has been taken on the following issues:

Product

following the encouraging results achieved through unification of life business organisational
structures, a single Group structure of the elementary and motor branches has been established.
These functions have been set up with the aim of promoting uniform management of product
development processes and of defining and managing suitable assumption policies, valid for all
the companies. In line with portfolio selection strategies, structures able to guarantee the
necessary level of specialisation for assessment of risks have been defined for each branch.

Commercial

attention to improving the distribution network was reflected in a re-organisation project that has
defined the underpinnings for upgrading commercial and sales processes and which envisages
the following actions:
– optimisation of the sales networks of the various companies of the Group based on a common
  organisational model according to which precise responsibilities for control of planning activities
  and for providing support to the agency network for risk assumption processes relating to
  standard products are assigned to the supervisory roles of the territory;
– creation of Group functions for management of joint processes (marketing, relationships with
  the networks, communication and training) in order to promote uniform application of
  development guidelines and to establish a collective culture characterised by high level
  specialisation and professional expertise.

This project, which will be developed during 2003, is also expected to promote considerable
savings, forged by improved use of instruments and of the professional figures currently
operating at Group companies.




                                                                                                           33
                                                                 • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Claims

 the start-up of the activities of the CST (Centro Servizi Toro) services company marks a major
 milestone in the re-organisation of Group activities, promoting consolidation of the various
 settlement structures of the Italian companies and consequent process re-engineering. Each
 company has transferred its main office and inspectorate settlement structures through
 seconding of personnel. Specific organisational structures, distinguished according to the level of
 delegation envisaged by settlement policies and able to apply consistent processes to different
 types of business, have been set up at CST. The network of inspectorates, set up initially by the
 main offices of all the companies, is currently being rationalised and this process is expected to
 generate major synergies once it has been completed.
 A new information system is also being developed to ensure uniform management of all the claim
 settlement procedures currently adopted by the various companies.
 Central departments have also been established to manage major complex claims, for control of
 joint activities and for management of a new performance index system able to guarantee
 monitoring of the level of service provided and to define actions to improve the related quality.

 Personnel and Organisation

 a unitary management organisation has been set up with cross-company departments for
 management of organisational structures, of industrial relations and human resource
 development actions. Departments are maintained at each company for administrative and
 payroll activities. Payroll processes are currently being re-engineered in order to implement
 unitary management in 2003. Studies are being carried out to assess possible actions to
 optimise management of general services, managed independently by each company at the
 moment.

 Information systems

 the single Group level structure carries out all information system management processes
 (hardware, software and telecommunications). Hardware instrumentation has been centralised
 and a Group VPN (virtual private network) has been re-designed, laying the bases for application
 of uniform processes.

 Finance

 an administrative unification project had been launched and partly implemented. This comprises
 an initial phase during which a common general accounting system (SAP) will be set up and a
 number of subsequent phases which will make it possible to draft a Group accounting manual
 and share similar administrative and passive cycle management procedures with the risk system
 during 2003.




34
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
“On Line” Project

Re-engineering of risk assumption, policy issue and administrative data transmission processes
based on a univocal information system that links the agencies directly with central systems and
databases represents an important step towards improving business methods, in terms of
simplification and rationalisation of activities, and achievement of major synergies in back-office
processes both at central and agency structures. It also represents a major factor in enabling
development of the sales networks and for future integration of the products with other banking
and financial channels. The plan of work and investment hypotheses and expected benefits were
established during 2002.



Sales activities

During 2002, activities in this area addressed the following priorities:
– an increase in market share in the retail customer segment through improvement of the level
  of penetration with existing customers and also through cross-selling activities and stepping up
  the number of campaigns and sales contests on products with a good level of profitability;
– improvement of the technical quality of the assumption process and of the existing portfolio,
  pursued through application of strict risk selection standards.

Actions addressing the Agency network also continued during the year both as regards updating
know-how and commercial practices with continuation of the activities of the Toro Agents
Academy and development of projects for a new commercial information system and also as
regards re-organisation of the Agencies.

During 2002, 24 Agencies were re-organised, of which one new and 11 were suppressed; the
aim is to continue application of the policy of balancing distribution and size, to be achieved
through spin-off of the Agencies and a search for ever greater multi-functionality of the
distribution network.

Premium income generated by the agency network amounted to 1,117m euro (87.9% of the
total achieved by the company during the year) compared with 1,085m euro in the previous year;
the average premium income per agency was 2,568 thousand euro (2,438 thousand in 2001;
+5.3%).




                                                                                                           35
                                                                 • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Employees

 At December 31 2002, the Company workforce consisted of 1,042 employees, with a reduction
 of 49 in relation to the 1,091 employees at December 31 of the previous year, of which 42
 executives and 1,000 administrative staff.

 On March 29 2002, the Company integrative bargaining agreement, which expired on December
 31 1999, was renewed. Negotiations are in course for renewal of the national bargaining
 agreement that expired on December 31 2001.

 Training activities involved 359 persons, for a total of 826 man/days of classroom teaching,
 divided into 70 courses, with an average index of 2.3 days of classroom teaching per head. The
 total cost for training activities was 0.3m euro.

 During the year, total personnel costs amounted to 68.3m euro with a decrease of 2.4% in
 relation to the previous year. The breakdown of costs is as follows:

     (million euro)                                                                      2002   2001


     Salaries and allowances                                                             45.9   47.2

     Social security contributions                                                       14.2   14.3

     Provision to the reserve for employee termination indemnities                        3.3    3.3

     Total cost of labour                                                                63.4   64.8

     Contributions for policies according to National Collective Bargaining Agreements
     and Integrative Bargaining Agreements, travelling allowances and various
     other sums refunded to employees                                                     4.9    5.2

     Total cost of personnel                                                             68.3   70.0




36
         • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
SUBSIDIARY COMPANIES




The comment on the performance of the main subsidiaries is set out below.



Nuova Tirrena S.p.A.

The year closed with a net profit of 46.3m euro, a noteworthy improvement on the 24.1m
euro of the previous year. The positive result achieved in 2002 was forged principally by an
improvement in the technical performance of motor TPL business and to a minor extent by the
extraordinary income consisting of the expected reimbursement of the 8.1m euro fine applied
in July 2002 by the Anti-Trust Authority and quashed by the Council of State in 2002.

The volume of premiums bore the brunt of lower than expected sales of life products with a
financial content, undermined by the negative trends of financial markets and was also affected
by the strict risk assumption criteria applied in the non-life branches.

The main trends during the year can be summed up as follows:
– premiums written during the year amounted to 691.3m euro, more or less unchanged in relation to
  2001. The movement on this account was 3.2% for non-life branches and -16.9% for life business;
– technical operations were characterised by a further improvement in the non-life loss ratio
  which corresponded to 77.0% compared with 81.0% in 2001.
– administrative expenses came to 27.8m euro in relation to 27.4m in 2001 with a costs-to-
  premiums ratio of 4.1%, substantially unchanged in relation to 2001;
– investment and financial income stood at 57.5m euro, with a tail-off of 2.3%, to be ascribed to
  slack trends on financial markets.
– net technical provisions reached 1,620m euro overall with an increase of 71m or 4.5% in
  relation to the previous year.
– financial and real property investments moved up by 123m euro or 7% to 1,822m euro.

The second part of the share capital increase from 133,660,125 to 142,570,800 euro,
resolved by the Shareholders' Meeting of April 19 2001, was completed for 8.9m euro, plus an
equal amount as share premium.



Roma Vita S.p.A.

The 2002 accounts closed with a profit of 24.1m euro compared with 21.8m in 2001 with
therefore an increase of 10.2% .

The comparison between the result before taxes for 2002 equal to 40.6m euro and that of the
previous year of 33.8m with an increase of 19.9% confirms an even more noteworthy upswing.
Income taxes for the year amounted to 16.5m euro.

The positive results posted by the company, achieved on a particularly turbulent market, benefited
from higher income from technical management driven by the increase in the portfolio managed.



                                                                                                         37
                                                               • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Technical provisions moved up to 7,224m euro, 8.7% higher than in 2001.

 2002 premium income amounted to 1,785.0m euro with a year-on-year decrease of 23.5%,
 reflecting the complex re-organisation operation following the integration of the Bancaroma
 Group with the Bipop-Carire Group that culminated in the setting up of the Capitalia Banking
 Group in 2002.

 The main operating highlights are discussed below:
 – at year-end 2002, financial investments, including liquid funds, stood at 7,386.1m euro
   compared with 6,798.2m in the previous year;.
 – net income on class “C” investments (excluding therefore income from investments for the
   benefit of policyholders who bear the investment risk) amounted to 46.5m euro with a
   year-on-year decrease of 4.3m to be attributed to the general slackness of financial
   markets and the contraction in investments in this sector following the suspension two
   years ago of emission of the new revaluable policies with secured minimum yield;
 – overall operating costs, prior to allocation to the specific items of the accounts, amounted
   to 20m euro with a costs-to-premiums ratio of 1.1%, equal to that of 2001, despite the
   aforementioned decrease in premiums written;
 – commissions paid to banking networks for the sale of new policies and for processing of
   existing insurance contracts amounted to 62m euro in 2002, with an increase of close on
   26.8% in relation to the previous year when they amounted to 48.9m euro. The
   considerable growth in commissions stemmed, on the one hand, from payment of higher
   acquisition commissions on the new single-premium contracts and, on the other, from the
   higher volume of the portfolio managed which generated higher maintenance commissions.

 The accounts for the year reflect receivables from the Tax Authorities for taxes on actuarial
 provisions of 36.8m euro, stemming from the new regulations introduced by Article 1 of Law
 No. 265 of November 11 2002 and proportional to the amount of life actuarial provisions.
 This will be recovered as of January 1 2005 at the time of payment of the withholdings on
 capital paid to policyholders in relation to life insurance contracts. The item comprises both
 the amount already paid on account and the balance yet to be paid (in contra-entry to the
 related liability).

 The Capitalia Banking Group, stemming from integration of the Bancaroma Group with the
 Bipop-Carire Group, started operations on July 1 2002. Following integration, 47.5% of the
 shares of Roma Vita, owned originally by Banca di Roma S.p.A., have been transferred to
 Fineco S.p.A. (formerly Bipop-Carire S.p.A.). As a result, the 85,120,000 shares forming
 the share capital of Roma Vita S.p.A. were distributed as follows at year-end 2002:
       47.5%           Toro Assicurazioni S.p.A.
       47.5%           Fineco S.p.A. (Capitalia Banking Group)
        5.0%           Cardif Assicurazioni S.p.A.

 At year-end 2002, the share capital amounted to 85,120,000 euro, unchanged in relation
 to the previous year.



38
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
The examination with ISVAP of the results of the inspection carried out at the HQ
of the company from December 17 2001 to March 28 2002 was completed in February
2003. Roma Vita will comply diligently with the requests put forward as regards company
management and systems of internal control. Also, taking into account the performance
of financial markets, it will provide the redemption values of the index-linked policies,
the risk of which is borne by the policyholders, on a quarterly basis rather than once
a year and will also inform them promptly of any events that may modify the returns
on these on maturity.



Giano Assicurazioni S.p.A., wholly-owned by Roma Vita, closed the year with a positive
balance of 0.8m euro, 0.2m euro up on the previous year. This considerable improvement
was driven in particular by constantly good technical trends and also the lower incidence of
the amortisation of the costs capitalised during the start-up phase of the "bankassurance"
project.

The volume of premiums written in 2002 moved down in relation to 2001 due to failure to
renew important business in co-insurance with delegation to other companies, also affected
by a high rate of claims.

The main highlights for 2002 are set out below:
– gross premiums written during the year moved down 26.3% to 4.2m euro compared with
  5.7m euro in the previous year;
– technical management reflected a moderate increase in the claims to premiums ratio for
  the year, gross of reinsurance, which moved up from 58.3% in 2001 to 62.8%, mainly due
  to the charge relating to claims for the year;
– at year-end, net technical provisions amounted to 6.7m euro, a decrease on the 7.2m euro
  posted in the previous year, due to the reduction in the provisions for unearned premiums
  which reflected the lower volume of premiums written;
– at year-end, financial investments and liquid funds totalled 12.9m euro with an increase of
  4.3% over the previous year.



Lloyd Italico Assicurazioni S.p.A.

This company, acquired in 2001 from Royal & SunAlliance, closed the year with a profit before
tax of 25.1m euro with a year-on-year growth of 9.2m euro. Net profit stood at 13.0m euro
compared with 34.6m in 2001 which however reflected, inter alia, the allocation of 20.0m euro
as prepaid income taxes for deferrable fiscal losses.

The positive results achieved during the year were forged by actions taken to improve
technical performance, in particular in the Motor branches, and to curb operating costs,
factors that made it possible to offset the generally sluggish performance of financial
markets.



                                                                                                       39
                                                             • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 In particular:
 – premium income was more or less aligned with the 2001 figures, with a growth of 7.5% in
   the Non-Motor branches and a minor decrease of 2.8% for Motor business; the contribution
   of the Motor branches to total business moved from 76.2% in 2001 to 74.3% in 2002;
 – on the technical front, insurance operations were characterised by a considerable
   improvement ascribable both to the reduction in the claims rate and attentive selection of
   the portfolio. Therefore, the claims-to-premiums ratio of the total of the branches managed,
   equal to 72.4%, reflects a clear improvement in relation to the 82.0% recorded in 2001;
 – the costs-to-premiums ratio was characterised by a further reduction of 3.4m euro or 7%
   in relation to 2001, moving from 20.8% to 19.2%;
 – net income from investments was negatively affected by alignments to market value of
   securities held for resale and the permanent write-down of the investment in Lloyd Italico
   Vita S.p.A.;
 – there was a noteworthy increase in extraordinary items during the year, which moved from
   a negative balance of 0.9m euro to a positive balance of 5.1m euro. This improvement was
   to be attributed in particular to recovery of the Anti-Trust fine and to capital gains on the
   sale of non-instrumental property.

 As regards investments:
 – investments and liquid assets moved up by 3.0% to 631.6m euro in relation to 2001;
 – the excess of real property and financial investments at year-end in relation to net technical
   provisions amounted to 104.5m euro with an increase of 33.1%, in relation to the previous
   year (78.5m euro).

 During the year under review, actions continued to improve integration with the Group to
 which the company belongs, directed towards improving operating performance, in particular
 as regards settlement of claims, transferred as of May 1 2002 to Centro Servizi Toro S.p.A.
 (CST) to which staff of the claims area have been seconded and with which a service
 contract has been stipulated.



 Lloyd Italico Vita S.p.A.

 The company, owned 80% by Lloyd Italico Assicurazioni and 20% by Toro Assicurazioni,
 closed the year with a loss of 3.2m euro compared with a negative balance of 1.5m euro in
 the previous year.

 The further downswing in the results of the company was to be attributed to the continuing
 negative trends of financial markets which affected both yields on ordinary and extraordinary
 operations (in terms of disposals of long-term investments) and those forecast for future
 years, which resulted additions to provisions as established by ISVAP.

 Overall premium income moved down 8.9% to 26.5m euro, with mainly the subscription of
 capital redemption, unit-linked and index-linked policies.



40
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
During the year under review, the company broadened its offer through the issue of:
– a unit-linked policy called "Formula Unit Capitale 2002" (starting from April);
– an index-linked product called "Formula Borsa Index Five" in December).

Also, the “Formula Fondo Serie Speciale” product, a re-edition at particular favourable conditions
of a capitalisation product already proposed to the sales network was issued in June.

Separate management accounts posted the following returns in 2002:
– 3.39% for the Royal Fund
– 3.30% for the Royal Plus Fund

The costs-to-premiums ratio, gross of reinsurance, moved from 8.6% in 2001 to 7.5% in
2002, with a year-on-year reduction of 0.5m euro.

At year-end, investments and liquid assets amounted to 171.0m euro (of which 22.1m
referring to Class D investments) with a growth of 16.9% in relation to year-end 2001, also
due to the effect of the liquid funds generated by the 10m euro share capital increase
carried out in December. Direct business technical provisions reached 121.4m euro, 17.9%
up on the previous year.



Augusta Assicurazioni S.p.A.

Financial 2002, the twentieth year of business of the company, closed with a profit of 10.3m
euro compared with 53.1m in 2001, an exceptional but however not comparable result due for
42.1m euro to the dividends of the Augusta Vita subsidiary stemming from the spin-off of
business units at the end of 2002.
Although all-round technical performance held up well; the result for the year was negatively
affected by write-downs of 13m euro to align the value of securities in the portfolio to stock
exchange prices. On the other hand, the accounts reflect extraordinary income of 1.1m euro due
to cancellation of the fine applied in 2001 by the Anti-Trust Authority against which the company
had appealed to the Council of State.

Gross premiums for the year amounted to 231.3m euro with an increase of 6.2%, forged in
particular by Motor TPL, Fire and Non-Motor TPL business, which more than offset the short-fall
in Motor other risks covers and the Credit branch. Upswings were also recorded in the other
branches excluding Goods Transported and Sureytship. There was also a considerable increase in
inward reinsurance business following the acquisition of industrial business of Fiat Group
companies abroad.

At year-end, overall investments, including liquid funds, amounted to 551.9m euro with a decrease
of 5.8% in relation to 2001 mainly due to the distribution of the 2001 dividend of 52.8m euro.
Net Income from investments came to 20.8m euro compared with 85.9m euro in 2001 which,
net of the dividend and related tax credit of Augusta Vita, would have been 19.4m euro.



                                                                                                         41
                                                               • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Net technical provisions corresponded to 491.1m euro compared with 486m in the previous
 year.

 The directly-controlled company Augusta Vita S.p.A. posted a net loss for the year of
 3.5m euro compared with a profit of 1.3m euro in 2001.

 The negative result stemmed mainly from the write-down of shares and fixed-income
 securities for alignment with market values, net of upward re-adjustments of 5.1m euro, of
 which 4.9m euro relating to the AURIS separate internal management account are to be
 attributed to policyholders. The transaction carried out with CONSAP at year-end regarding
 the controversial matter of legal cessions also had negative repercussions, with a charge of
 around 0.7m euro, and lastly the appropriation of 1.1m euro to the provisions for accrued
 ALM pursuant to Article 25 Section 12 of Legislative Decree No. 174 of January 17 1995,
 considered to be extremely prudent on the basis of the forecast estimates.



 Continent Group (Continent Holding, Continent Iard, Continent Vie, Continent
 Assistance, Altegia, Union Générale du Nord, Guardian Vie, Guardian Finances)

 At a meagre 1%, economic growth in France in 2002 was weaker than forecast and the
 year was characterised by an extremely difficult financial context in which the Paris Bourse
 shed 34% in twelve months.

 The French insurance market achieved a total growth rate of 4% in 2002. The life market
 moved up 2%, spurred mainly by the increase in traditional revaluable contracts which
 increased by 15% in relation to 2001, while the crisis affecting the stock markets resulted in
 a further major decline of 30% in sales of unit-linked products. The non-life market grew by
 7% due to a general increase in rates.

 All-round, the Continent Group posted gross premiums written of 742.7m euro, with a
 moderate short-fall of 1% in relation to 2001. Life premium income amounted to 197.4m
 euro equal to 27% of the total with a decrease of 29%. Non-life premium income stood at
 545.3m equal to 73% of the total with an upswing of 15%.

 The negative movement in premium income of the life companies of the Group is tied to the
 peculiar nature of the Guardian Vie distribution network, specialised in unit-linked products
 (those most negatively impacted by stock exchange trends), and characterised by high level
 competition in the traditional products sector where competitors apply highly attractive
 profit-sharing rates in order to recover customers who have abandoned purely financial
 products.

 As regards non-life business, the Group posted significant increases in volumes in the
 individual risks and transportation branches, mainly due to considerable increases in rates.
 With regard to individual risks (car, household and accidents/health), due to the joint effect



42
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
of portfolio selection actions and rate alignments, the overall volume of premiums remained
more or less unchanged.

Selective measures and actions on rates promoted a considerable improvement in technical
results: in 2002, the non-life branch total loss ratio was equal to 73.5% compared with
77.9% in 2001, with a net combined ratio of 104.9% (108.6% in 2001). This result was
achieved after considerably reinforcing the technical provisions of the constructions branch
for complete enactment of the recommendations of the CCA (Commissione di Controllo delle
Assicurazioni - Insurance Control Commission) regarding the strengthening of statutory
provisions in this sector of business.

In the 2002 Italian consolidated accounts, the Continent Group has adjusted the book value
of equity investments to the average market prices struck in December, recognising write-
downs for a total of 89.0m euro. A write-down of 46.7m euro was also recorded relating to
Fiat S.p.A. ordinary shares in the portfolio following structural losses of value. As a result,
the effect of the loss of the French Group on the Toro 2002 consolidated result amounts to
65.4m euro compared with a net profit of 10.5m euro in 2001. In the statutory accounts,
Continent Iard has revalued part of its real property assets for a total of 93.8m euro. Such
revaluation, carried out in accordance with current legislation and with the prior authorisation
of the French Controlling Authorities, has been completely eliminated in the Italian
consolidated financial statements.

Lastly, it should be noted that, on December 19 2002, Continent Iard, the main operating
company of the Group in France, signed a commitment to sell the premises located in Paris,
Rue de Richelieu, the present HQ of the company, for a price of 49.5m euro. The sale was
completed in March 2003, resulting in disclosure in the 2003 profit and loss account of
gross consolidated capital gains of 34.4m euro.



Toro Targa Assicurazioni S.p.A.

Financial 2002 closed with a loss of 12.8m euro compared with a negative result of 5.2m
euro in the previous year. The result was affected by a further worsening on the technical
front due to the decrease in premiums, the increase in the claims rate and the
reinforcement of provisions for claims outstanding.

The main highlights of operations during the year are summarised below:
– premium income amounted to 70.8m euro, with a year-on-year reduction of 25.5% to be
  ascribed mainly to the general shrinkage of the automotive market and strict control of
  assumption of risks during the year;
– there was a considerable downswing in the result of insurance operations, with an increase
  in the loss ratio for the year which moved from 82.5% in 2001 to 97.0% at year-end
  2002;
– operating costs totalled 16.0m euro compared with 20.7m in the previous year (-22.8%);



                                                                                                        43
                                                              • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 – technical provisions grew to 127.1m euro with an increase of 5.7%; the ratio to premiums
   increased from 125.9% in 2001 to 179.4% in the year under review;
 – the volume of investments, including liquid funds, amounted to 165.0m euro at December
   31 2002 with a positive movement of 16.9m euro or 11.4% in relation to the previous
   year; net financial income came to 3.6m euro.

 During 2002, the company forged ahead with its business operations in Poland and Brazil in
 partnership with the local distribution networks of the Fiat Group. Commercial results and
 income were aligned with or higher than expectations despite the present downturn on the
 markets.

 In Poland, with GDP at a standstill and a spiralling unemployment rate, there was a
 considerable reduction in private consumption, in particular the sale of cars, with immediate
 negative repercussions on the sale of insurance. In 2002, total growth of the insurance
 market levelled out to a modest 4% of which 7.8% in the life sector and 1.5% relating to
 non-life business.

 In 2002, the two Fiat Ubezpieczenia Majatkowe and Fiat Ubezpieczenia Zyciowe
 subsidiaries posted premium income of 23.5m euro with an increase of 3.1% in relation to
 2001, of which 21.1m euro or 1% relating to non-life business and 2.4m euro or 26%
 referring to life business. In local currency, growth outpaced that of the market both as
 regards non-life (+5.5%) and life (+28%) business.

 Despite pessimistic forecasts, the Brazilian economy achieved a 1.5% increase in GDP in real
 terms. However, the economic and financial crisis besetting other Latin American countries
 (Argentina) and general uncertainty regarding the outcome of the local political elections
 triggered an outburst of financial speculation on securities and on the Brazilian currency which
 shed 60% of its value from the start of the year. This was accompanied by a considerable
 upswing in inflation and domestic interest rates which reached 25% in nominal terms.

 In 2002, the Brazilian insurance market achieved a good level of growth in the life sector
 (+67%) with a more modest upturn (3% in the Motor sector) as regards non-life business
 which resulted in a considerable short-fall in insurance spending in real terms. Against this
 backdrop, the Phenix Seguradora subsidiary wrote premiums for 51.1m euro with an
 increase of 34% over 2001 of which 45.9m for non-life business (+37%) and 5.2m for life
 business (+16%).

 In February 2002, the Extraordinary Shareholders' Meeting resolved to increase the share
 capital from 73,550,000 euro to 83,550,000 euro through the issue of 10,000,000
 shares with a par value of 1 euro, to be subscribed and paid by the shareholders according
 to their respective interests by the month of March. The increase is intended for 3.0m euro
 to sustain and promote development of business in Brazil, for 5.0m euro to comply with the
 regulations introduced in Poland regarding the coverage of technical provisions and for the
 remaining 2.0m euro to further business in Italy.



44
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
The Extraordinary Shareholders' Meeting held in February 2003 voted a paid share capital
increase from 83,550,000 euro to 89,550,000 euro through the issue of 6,000,000
shares with a par value of 1 euro, to be offered as option at par to the shareholders
according to their respective interests; the shareholders made the related payments in June.



D.A.S. S.p.A.

This Verona-based company is specialised in the Legal Fees branch.

In 2002, direct business and reinsurance premium income totalled 21.6m euro, an increase
of 21.4% in relation to the previous year, and the year closed with a net profit of 1.4m euro
compared with 1.2m in the previous year.

At December 31 2002, investments and liquid funds amounted to 32.7m euro, 13.8%
higher than in the previous year, with an excess in relation to technical provisions of 1.1m
euro.



Iniziative Sviluppo Immobiliare - Isim S.p.A.

Real property market trends held up again in 2002, spurred by various factors including:
– low interest rates that encouraged the stipulation of medium-long term mortgages;
– the development of real estate funds which helped to fuel demand;
– the negative trends of financial markets which encouraged investors to plough financial
  resources into "bricks and mortar" as a classic form of investment in shelter-goods.

Against this backdrop and to take advantage of market opportunities, the company stipulated
a "global service" contract with IPI S.p.A. for the furnishing of a co-ordinated suite of
services consistent with its objectives of safeguarding real property assets and of optimising
return on these. In particular, IPI's tasks include the implementation of divestment plans,
management of rental contracts, ordinary and extraordinary maintenance, restructuring
operations and also analysis of changes in the regulations established by various
Town-Planning Schemes.

Implementation of the divestment plan continued successfully with disposal of various
properties through block sales of entire buildings and also through splitting. The sale to
Immobiliare San Babila S.r.l. in February of the premises located in Milan - Piazza San Babila,
Via Meravigli and Via Manzoni, in Turin - Piazza Solferino, in Rome - Lungo Tevere Arnaldo da
Brescia and Mantova - Corso Vittorio Emanuale, for a total value of 220m euro is worth
noting.

Divestments generated net capital gains of 11.0m euro (25.0m euro in the previous year
with a considerably lower volume of sales). For a more correct evaluation, the fact that, as of



                                                                                                        45
                                                              • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 December 31 2001, all real property was revalued within the meaning of Law No.
 448/2001 up to the market value must be taken into account.

 Net profit moved down from 13.0m euro in 2001 to 7.5m euro for the year ended
 December 31 2002.

 An analysis of the profit and loss account reveals a reduction in service revenues, which
 stood at 16.6m euro (21.8m euro in 2001) to be ascribed to lower income from rents due
 to the aforementioned divestments. Overall, production value amounted to 31.2m euro
 compared with 50.0m in 2001.

 At December 31 2002, shareholders' equity amounted to 285.5m euro with a reduction
 of 146.7m in relation to year-end 2001. In two phases, the Extraordinary Shareholders'
 Meeting of the company reduced the share capital for a total of 150m euro; the further
 variation reflects the net effect of net profit for the year and the distribution of dividends
 for 4.2m euro.

 In July, an outline agreement was signed with La Rinascente S.p.A. relating the sale of real
 property for commercial purposes for a maximum value of 100m euro. According to this
 agreement, Isim undertakes to purchase one or more properties according to a pre-
 established list, granting the seller the option of repurchase. The agreement is effective until
 June 27 2005.



 CST – Centro Servizi Toro S.p.A.

 The Extraordinary Shareholders' Meeting of February 1 2002 extended the corporate
 purpose to include the new claim settlement activities in all branches on behalf of insurance
 companies of the Toro Group and affiliated or third party companies. The company was also
 converted from a "limited responsibility" to a joint-stock company and the share capital of
 8,010,000 euro has been divided into 8,010,000 shares with a nominal value of 1 euro
 each.

 As of May 1 2002, CST has therefore taken over management of motor and elementary
 claim settlement processes on behalf of Toro Group insurance companies according to
 precise powers assigned. The activity comprises management of claims in all the various
 phases: opening, negotiation, payment and management of provisions according to Group
 policies, development of management systems able to improve the level of customer service,
 curb the costs of claims, improve the efficiency of the structures and enhance professional
 competencies.

 The company operates with a dedicated structure to which staff belonging to the claims
 areas of Italian companies of the Group have been seconded, while administration, control,
 treasury, human resource management and organisation, information technology and general



46
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
services are provided by the parent company Toro Assicurazioni on the basis of a specific
contract.

As part of territory reorganisation plans, the process of unification of the inspectorates has
started, with closing of around 50 settlement points distributed between inspectorates and
delegations. In 2003, a further 60 non-life settlement points will be closed, setting up 21
unified inspectors' offices. The first test phase of the new claims system, dubbed S.Inte.Si,
that will make it possible to manage the claims of all Group companies according to standard
processes by the end of 2003, has started.



Toro International Holding N.V.

In November, the company fully subscribed the share capital increase of the French Le
Continent Holding S.A. for 18.0m euro.
Following this transaction, the company's direct stake in the company has increased from
47.96% to 52.57%.




                                                                                                       47
                                                             • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
OTHER INFORMATION




 Litigation

 Legal cessions

 At the end of the year, a settlement agreement relating to the dispute regarding legal cessions
                                           .
 was reached and formalised with CONSAP With respect to existing obligations, the transaction
 envisages payment by CONSAP of 47.5m euro by the dates established in the outline agreement
 stipulated between CONSAP and ANIA and waiver of on-going legal actions against CONSAP INA ,
 and the Ministry of the Treasury. From an economic point of view, the accounts reflect the
 alignment of CONSAP services which, net of provisions already made in previous years, involved a
 total charge of 4.2m euro.

 Requests for reimbursement for infringement of Anti-Trust regulations

 The Company has also received requests from policyholders for reimbursement of part of Motor
 TPL premiums paid between 1995 and 2000 on the basis of alleged infringement of the rules on
 competition established by Anti-Trust Authority procedure of July 28 2000.

 The Company considers such requests to be unfounded insofar as the aforesaid procedure has
 not ascertained, as a result of the infringement claimed, any effective damage to consumers in
 terms of an unjustified increase in Motor TPL rates which the Company has always determined
 according to the costs of claims. In relation to such requests, at March 13 2003, 2068 legal
 actions had been submitted to various Justices of the Peace (862 in 2002 and 1196 in 2003);
 in 18 cases, the request has been rejected while 207 sentences condemning the Company
 (concentrated at a number of Justices of the Peace) have been pronounced according to equity
 and subject only to appeal for Cassation. The Company has already presented a number of
 appeals to the Court of Cassation which has not yet handed down its opinion regarding the
 existence of the right claimed.

 It should also be noted that Legislative Decree No. 18 of February 8 2003 (published in the
 Official Gazette of February 10 2003) introduced an amendment to the current code of civil
 procedure which for suits deriving from legal relationships relating to so-called “mass” contracts
 (including those indicated above), the decision must be taken according to law rather than equity,
 with therefore the possibility of impugning the related sentences also in Court. The Decree is
 currently awaiting conversion into law by April 11 next.

 The provisions for risks accrued, on a prudent basis, in the financial statements are sufficient to
 cover any future charges in the case of unfavourable outcome of the aforesaid legal actions.




48
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Law No. 137/2000

With regard to the procedure initiated by ISVAP regarding compliance with the provisions of
Legislative Decree No. 70/2000 (converted with Law No. 137/2000) regarding the so-called
“freezing” of Motor TPL rates, it should be noted that Article 21 of Law No. 273/2002 has
abrogated the regulation (Article 2, section 5 ter of Legislative Decree No. 70/2000) which
establishes sanctions in the case of non-compliance with such provisions and the ineffectiveness
of any action taken by ISVAP within the meaning of the regulation abrogated.
ISVAP’s claims with regard thereto are therefore without effect.

With its sentence handed down on February 25 2003, the European Court of Justice declared
that introduction by the Italian Government of regulations enacting the aforesaid “freeze”,
infringing the principle of tariff freedom, constituted an infringement of Community regulations on
competition in the insurance sector.



Legislative Decree No. 231/2001 - System of Internal Control

In 2002, actions taken to reinforce the System of Internal Control mainly consisted in the
analysis and examination of regulations regarding the “Discipline of the administrative
responsibility of entities” as set forth in Legislative Decree No. 231/2001, already mentioned in
the notes to the financial statements of the previous year, and Legislative Decree No. 61/2002,
with a view to enactment at organisational level.

In 2002, following preparation by Category associations of the models established by the
regulation, the Fiat Group launched a pilot project, managed by Parent Company experts and
external consultants, intended to prepare the Fiat S.p.A. model and, consistently with this, that of
a certain number of companies.

According to the current stage of completion of the project, formal adoption by the Company of
its own Model can be expected in 2003, accompanied by the activities necessary to inform and
train Directors, employees and managers involved in “sensitive” processes in accordance with the
regulation concerned. Consistently with the guidelines for the insurance sector and with the Fiat
S.p.A. model, this Model will envisage assignment to an internal supervisory body of the task of
effective, correct application of the Model and constant supervision of its functioning, based on
the possibility of verifying and documenting major transactions for the purposes of the regulation
and also separation of functions in an ever-more transparent, formalised context of
responsibilities, roles and proxies.




                                                                                                          49
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Legislative Decree No. 209/2002 – New tax regulations regarding technical
 provisions

 With the measure concerned, the Government has issued what it considers to be urgent
 provisions intended to address the problem of evasion and of rationalising the taxable base of
 business income, ascribable to the unfavourable economic climate and the need to locate
 resources with a view to re-balancing public accounts.

 The provisions of Article 1, sections 2 to 2-quater of Legislative Decree No. 209 of September
 24 2002, converted by Law No. 265 of November 22 2002, refer to tax regulations regarding
 the provisions of the life and non-life branches of insurance companies.

 Life Branches

 For the 2002 tax period, companies and organisations that transact insurance business are
 required to pay a tax equal to 0.52% of the actuarial provisions of the life branches disclosed in
 the financial statements for the year, excluding those relating to contracts covering the risk of
 death or permanent invalidity, deriving from any cause, or non self-sufficiency in carrying out the
 actions of daily life, and also those relating to pension funds and insurance contracts within the
 meaning of Article 9-ter of Legislative Decree No. 124/93 (i.e. those stipulated according to
 individual pension schemes). The payment must be made, in the form of a pre-payment, by
 November 30 2002 (deadline extended by law to December 2 2002 as November 30 is a
 Saturday) in a measure equal to 0.25% of the provisions stated in the 2001 financial
 statements and the excess (i.e. the balance) by the term established for payment of the balance
 of income taxes.

 For subsequent tax periods, the aforementioned payment, equal to 0.20%, must be made by the
 date established for payment of the balance of income taxes.

 The payment constitutes a tax credit to be utilised, as of January 1 2005, for payment of
 withholdings on capital paid in relation to life insurance contracts (12.50%) and the replacement
 tax on capital income deriving from life insurance and capital redemption contracts (12.50%).

 In order to establish the provisions to be taxed, in a subsequent circular, the Tax Authorities
 specified that the tax base comprises direct business provisions, gross of reinsurance, as set
 forth in items CII, No. 1, and DI of the balance sheet format set forth in Legislative Decree No.
 173 of May 26 1997, relating to policies whose returns are potentially liable to the
 aforementioned withholdings and replacement tax.
 The aforesaid insofar as the amounts paid basically represent an advance payment of
 withholdings and replacement taxes to be applied to returns included in such provisions when the
 related services are provided.




50
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
This consideration justifies, inter alia, the exclusion of provisions relating to contracts referring to
risk of death or permanent invalidity due to any cause or non self-sufficiency in carrying out the
actions of daily life, insofar as the related services are not liable to taxation, and also those
relating to pension funds (including those that had already been set up at the date of coming into
force of Law No. 421 of 1992, as set forth in Article 14-quarter of Legislative Decree No. 124
of April 21 1993) and to life insurance contracts through which individual pension forms have
been applied, as per Article 9-ter of Legislative Decree No. 124 of April 21 1993, insofar as the
returns, i.e. the net result matured, are subject to replacement tax of 11% in each tax period.
According to the Tax Authorities, policies relating to pension schemes being set up, indicated in
Article 13, section 2-bis of Legislative Decree No. 47 of February 18 2000, are also to be
considered excluded insofar as the returns of such policies are subject to replacement tax of
12.50% in each year.

On December 2 2002, the Company paid 3.9m euro as pre-payment of the tax for 2002 and
will pay a further approximately 4.7m euro, as balance, in June 2003, with disclosure of both
amounts under Other receivables of the balance sheet in the financial statements at December
31 2002.

Non-Life Branches

As of the tax period in course at September 25 2002, the change in the provisions for claims
outstanding, stated under item 1.4.c of the profit and loss account, for the part referring to the
long-term component, is deductible for 90% when determining business income. The excess is
deductible at constant rates in the nine subsequent years; 50% of the same provision for claims
outstanding is considered to be a long-term component.

Deferment of deductibility and the consequent increase in statutory income to be recovered in
the nine subsequent years have resulted in disclosure in the accounts of deferred tax assets.



Tax Amnesty

Following the amendments introduced by Legislative Decree No. 282 of December 24 2002,
converted into Law No. 27 of February 21 2003, in Articles from 7 to 16, the 2003 Finance
Bill (Law No. 289 of December 27 2002) specifies a series of options for total or partial
definition of tax relationships with the State or local Tax Authorities. The Company is assessing
the advisability of taking advantage of some of the different forms of “amnesty”.




                                                                                                             51
                                                                   • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 Own shares and shares of the controlling company

 As of December 31 2002, the company did not possess own shares and during the year no
 transactions were carried out on these. At the same date, the securities portfolio included the
 following shares of the controlling company:

                                                      Number     Nominal value         % held


     FIAT ordinary                               11,699,384    58,496,920              1.89

     FIAT savings                                 1,084,716     5,423,580              0.18




 Transactions between group companies and with related parties

 Transactions with Group companies

 In 2002, transactions between the Company and other companies of the Group consisted of
 exchanges of goods and services. Apart from cost-effectiveness and the high level services
 obtained, membership of the Fiat Group provides your Company with considerable growth
 potential.
 All transactions were carried out on an arm's length basis and referred to the controlling
 company, the companies controlled by this and the subsidiaries forming part of the Toro Group.

 With regard to the FIAT S.p.A. controlling company and its subsidiaries, the Company:

 • paid dividends for 189.8m euro;
 • purchased goods and services for a total of 11.0m euro referring mainly to:
   - legal, corporate, fiscal and administrative assistance and consulting and seconding of
     personnel;
   - management of equity investments and of real property assets;
   - payroll management;
   - information processing and telecommunications services;
   - advertising and press releases;
   - personnel training and recruitment.
 • purchased and sold motor vehicles with a net outlay of 0.5m euro;
 • sold to Fiat Geva S.p.A. the interest held in IPI S.p.A. for a price of 13.8m euro with capital
   gains of 8.9m euro;
 • recorded an active balance of 0.2m euro for interest on the current account maintained with
   Fiat Geva S.p.A. for financial management of intra-Group transactions;
 • subscribed share capital increases and payments to cover losses for 0.1m euro in favour of
   Fiat Revi S.c.r.l. and Fiat Se.p.in. S.c.r.l..




52
       • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
As regards transactions with its subsidiaries, your Company:

• provided services for a total of 17.5m euro referring mainly to:
  - loans and seconding of personnel;
  - data processing and other IT services;
  - management services in the administrative, human resource management and
    treasury/finance areas;
  - legal, corporate and fiscal assistance and consulting;
  - auditing services;
• stipulated inward and outward reinsurance contracts (volume of premiums 0.7m euro);
• purchased services for 15.2m euro referring in particular to settlement of claims;
• granted loans with an annual interest income of 0.1m euro;
• subscribed share capital increases and payments to make up losses for a total of 29.8m euro;
• received a reimbursement of 150m euro following partial reduction of the capital of ISIM S.p.A.;
• received the amount of 6.3m euro following reimbursement of the payment made against the
  future share capital increase of Roma Nuova Servizi S.p.A.;
• purchased Continent Holding shares from the same subsidiary with an outgo of 0.1m euro;
• sold to August Assicurazioni S.p.A. 1 quota of the Centro Servizi Toro S.r.l. subsidiary,
  subsequently converted into a joint-stock company.

Transactions with related parties

Toro Assicurazioni S.p.A. maintained and continues to maintain relationships with “related”
parties as defined by CONSOB. These relationships, also with regard to potential conflicts of
interest, are regulated on an arm's length basis.




                                                                                                          53
                                                                • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
MAJOR EVENTS IN EARLY 2003




 With regard to equity investments, the Extraordinary Shareholders’ Meeting of Toro Targa
 Assicurazioni S.p.A. subsidiary held in February 2003 voted a paid share capital increase from
 83,550,000 to 89,550,000 euro. This transaction, carried out to comply with current
 legislation regarding the coverage of technical provisions, following losses recorded in 2002, was
 formalised through payment by the shareholders in March 2003.

 On March 21 2003, acknowledging that the company has incurred total losses of 36.2m euro
 (of which 12.8m euro referring to 2002) and that the conditions envisaged by Article 2446 of
 the Italian Civil Code have been established, despite the aforementioned share capital increase,
 the Board of Directors of Toro Targa Assicurazioni proposed full coverage of total losses through
 utilisation of the legal reserve of 581,121 euro and reduction of the share capital from
 89,550,000 euro to 53,963,870 euro. The motion will be submitted to the next Shareholders'
 Meeting to be held on April 17 2003.

 On February 11 2003, the Shareholders’ Meeting of Lingotto S.p.A. resolved to cover total
 losses at November 30 2002 through utilisation of available reserves, write-down of the share
 capital and proportional payment by the shareholders for the remaining loss. The Meeting also
 resolved to reform the share capital through payment of 17,264,000 euro through issue at par
 of 17,264,000 shares with a par value of 1 euro. With value date February 11 2003. the
 Company paid a total of 6.8m euro of which 3.9m euro for coverage of excess losses and 2.9m
 euro for the share capital increase. Disposal of the investment within the first six months of the
 current year is planned.

 In January 2003, the validity of the letter of intent approved by the Boards of Directors of
 Capitalia S.p.A., Toro Assicurazioni S.p.A. and Fineco S.p.A., stipulated on July 25 2002 and
 amended on November 5 2002, relating to a project to integrate their respective activities in the
 life insurance sector in order to set up a leading insurance pole in Italy according to dimensions
 and distribution channel diversification, was extended for six months until July 25 2003.

 On March 7 2003, Fiat S.p.A., Capitalia S.p.A. and Toro Assicurazioni S.p.A. signed an
 agreement relating to the shares of Capitalia S.p.A. held by Toro Assicurazioni and the shares of
 Roma Vita S.p.A., also held by Toro Assicurazioni S.p.A.

 The agreement reflects Fiat decision to dispose of its controlling interest in Toro and also takes
 into account that part of Toro’s business is carried out through the outlets of the Capitalia Group
 and that it is in the reciprocal interest of the companies concerned to define the repercussions
 on existing relationships of the change in Fiat’s control of Toro.

 On the basis of this agreement:

 – Toro Assicurazioni S.p.A. grants Capitalia S.p.A. the option of having Toro Assicurazioni S.p.A.’s
   interest in Capitalia S.p.A. acquired by a third party indicated by Capitalia S.p.A., in the case of
   divestments in the next three years that determine a change of control of Fiat S.p.A. in relation
   to Toro Assicurazioni S.p.A. The take-up a price of the Capitalia option will be equal to the



54
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
 average official market prices in the last three months prior to the offer of the potential
 purchaser of the interest held by Fiat S.p.A. in Toro Assicurazioni S.p.A., increased by a
 premium of 25%. The option may be exercised as indicated above in the case of a further
 change of control of Toro Assicurazioni S.p.A. in the three years following the change of control
 of Fiat S.p.A. in relation to Toro Assicurazioni S.p.A., for which Capitalia S.p.A. has not
 exercised its option;

– Capitalia S.p.A. grants Toro Assicurazioni S.p.A. the option of selling to Capitalia, which is
  obliged to purchase, or have purchased by another company of the Capitalia Group, the interest
  held by Toro Assicurazioni S.p.A. in Roma Vita S.p.A. This option may be exercised only in the
  case in which Capitalia S.p.A. has previously exercised the option on Capitalia shares. The price
  of the option on Roma Vita shares will be equal to 370m euro. If the option on Roma Vita
  shares is exercised by Toro Assicurazioni S.p.A. after a second change of control of Toro
  Assicurazioni S.p.A. as mentioned above, the price will be calculated applying a multiple of 1.95
  to the embedded value resulting from the certified financial statements of Roma Vita S.p.A..

According to the aforesaid agreements with Capitalia, the option to sell can be exercised in 2006.

At the moment, it is not possible to assess, with any reasonable certainty, the probability of
Capitalia taking up the option granted. However, the management of your Company considers the
two options to be correlated from an economic and strategic point of view so that these would
be exercised consequentially. In this hypothesis, assessing the two options jointly on the basis of
current stock exchange prices, net positive components of income would be generated.

At its Meeting of March 22 2003, the Board of Directors of Fiat S.p.A. decided to accept the
offer submitted by the De Agostini Group for the sale of all the shares of the Company, including
all equity investments. The exclusive negotiation of the final agreement is due to start in the next
few days while closing is forecast by the end of June.




                                                                                                           55
                                                                 • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
BUSINESS OUTLOOK




 Business proceeded regularly in early 2003 with performance and trends more or less aligned
 with those of the end of the previous year.

 At the end of February, premium income of the Company amounted to 177.8m euro, 6.6% up
 on the previous year. In particular, there was a 6.0 upswing in non-life business and a growth of
 9.5% as regards life business.

 For the entire Group, premium income at the end of February totalled 966.6m euro, an
 improvement of 4.9% in relation to the previous year; non-life business increased by 4.2% and
 life business by 5.7%.

 Business prospects for the rest of the year can be considered positive taking into account the
 further improvement of the loss ratio and growth of the net technical margin; income from
 financial investments is still hampered by the continuing volatility of financial markets in a scenario
 without any signs of a possible turnaround.




56
     • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Proposed allocation of the profit for the year


Together with the accounts at December 31 2002, we herewith submit for your approval the
proposed allocation:


 Profit for the year                                                                        Euro     24,787,248

 Allocation to the Legal Reserve                                                            Euro       1,239,362

 Amount remaining which we propose be allocated to the Extraordinary Reserve
 included under Other reserves of Shareholders' funds                                       Euro     23,547,886




The second part of the Report (Consolidated Financial Statements) continues on page 137.




                                                                                                                    57
                                                                          • ANNUAL ACCOUNTS - DIRECTORS’ REPORT •
Balance Sheet and Profit and Loss Account




                                                                  59
                                            • ANNUAL ACCOUNTS •
Balance Sheet
ASSETS (1st part)


     (in euro)                                                                               Year 2002

 A • SUBSCRIBED CAPITAL UNPAID                                                                               1            0
     of which called-up capital                                    2               0

 B • INTANGIBLE ASSETS
        1 - Acquisition commissions to be amortised
            a) life                      3    10,460,551
            b) non-life                  4    70,182,569           5      80,643,120
        2 - Other acquisition costs                                6               0
        3 - Start-up and expansion costs                           7               0
        4 - Goodwill                                               8               0
        5 - Other deferred charges                                 9      18,604,501                         10   99,247,621

 C • INVESTMENTS
     I - Land and buildings
          1 - Property employed in company operations              11     46,882,875
          2 - Property used by third parties                       12      3,312,111
          3 - Other property                                       13              0
          4 - Other realty rights                                  14              0
          5 - Construction in progress and advances                15        341,593    16     50,536,579
     II - Investments in Group companies and other shareholdings
          1 - Shares and interests in:
              a) controlling companies     17   172,578,126
              b) subsidiaries              18   892,278,531
              c) affiliated companies      19    13,209,858
              d) associated companies      20                  0
              e) other companies           21   483,070,054        22   1,561,136,569
          2 - Debt securities issued by:
              a) controlling companies     23                  0
              b) subsidiaries              24                  0
              c) affiliated companies      25    19,712,898
              d) associated companies      26                  0
              e) other companies           27    15,705,673        28     35,418,571
          3 - Loans to:
              a) controlling companies     29                  0
              b) subsidiaries              30        150,038
              c) affiliated companies      31                  0
              d) associated companies      32                  0
              e) other companies           33                  0   34        150,038    35   1,596,705,178

                                to be carried forward                                                             99,247,621




60
       • BALANCE SHEET - ASSETS •
                                       Year 2001

                                                                    181           0
                        182              0




183     10,164,351
184     65,160,040      185     75,324,391
                        186              0
                        187              0
                        188              0
                        189     14,028,136                          190   89,352,527




                        191     48,480,762
                        192      8,225,784
                        193              0
                        194              0
                        195        341,593    196     57,048,139



197     129,457,249
198   1,025,611,439
199      18,022,864
200     553,319,578
201      14,881,918     202   1,741,293,048

203              0
204              0
205     25,421,505
206     51,405,389
207              0      208     76,826,894

209              0
210        335,265
211              0
212              0
213              0      214        335,265    215   1,818,455,207

to be carried forward                                                     89,352,527




                                                                                                                    61
                                                                                       • BALANCE SHEET - ASSETS •
Balance Sheet
ASSETS (2nd part)


     (in euro)                                                                                    Year 2002

                                  carried forward                                                                        99,247,621

 C • INVESTMENTS (continued)
     III - Other financial investments
           1 - Shares and interests
               a) Listed shares                36   128,082,110
               b) Unlisted shares              37       537,530
               c) Interests                    38                0      39    128,619,640
           2 - Shares in common investments funds                       40     93,255,427
           3 - Debt securities and other fixed-income securities
               a) listed                       41 2,264,667,547

               b) unlisted                     42    63,296,229
               c) convertible debt securities 43      2,541,191         44   2,330,504,967
           4 - Loans
               a) Mortgage loans               45     5,421,024
               b) loans on policies            46    11,926,204
               c) other loans                  47     1,231,975         48     18,579,203
           5 - Participation in investment pools                        49              0
           6 - Deposits with credit institutions                        50        206,583
           7 - Miscellaneous financial investments                      51        646,518    52   2,571,812,338
     IV - Deposits with ceding companies                                                     53       2,018,282   54   4,221,072,377

 D • INVESTMENTS FOR THE BENEFIT OF LIFE
     POLICYHOLDERS WHO BEAR THE RISK AND RELATING
     TO THE ADMINISTRATION OF PENSION FUNDS
     I - Investments relating to contracts linked to investment
          funds and market indexes                                                           55    240,906,719
     II - Investments relating to the administration of pension funds                        56      1,572,410    57    242,479,129

 D bis • REINSURERS' SHARE OF TECHNICAL PROVISIONS
      I - NON-LIFE
           1 - Provision for unearned premiums                          58     27,483,972
           2 - Provision for claims outstanding                         59    123,835,492
           3 - Provision for profit-sharing and premium refunds         60              0
           4 - Other technical provisions                               61              0    62    151,319,464
      II - LIFE
           1 - Provision for policy liabilities                         63     19,811,454
           2 - Provision for unearned premiums                          64              0
               for supplementary coverage
           3 - Provision for claims outstanding                         65         90,331
           4 - Provision for profit-sharing and refunds                 66              0
           5 - Other technical provisions                               67              0
           6 - Technical provisions where the investment
               risk is is borne policyholders and relating
               to the administration of pension funds                   68              0    69     19,901,785    70    171,221,249

                                  to be carried forward                                                                4,734,020,376




62
       • BALANCE SHEET - ASSETS •
                                       Year 2001

      carried forward                                                       89,352,527




216      152,272,220
217          463,161
218                0    219    152,735,381
                        220    112,324,753

221   2,000,317,023
222      92,823,930
223       2,583,284     224   2,095,724,237

225        6,007,648
226       11,913,798
227        1,060,797    228     18,982,243
                        229              0
                        230              0
                        231        707,803    232   2,380,474,417
                                              233       2,314,318   234   4,258,292,081




                                              235    211,559,749
                                              236      1,059,700    237    212,619,449




                        238     26,081,093
                        239    105,354,392
                        240              0
                        241              0    242    131,435,485

                        243     35,987,257
                        244              0

                        245        240,716
                        246              0
                        247              0



                        248              0    249     36,227,973    250    167,663,458

to be carried forward                                                     4,727,927,515




                                                                                                                       63
                                                                                          • BALANCE SHEET - ASSETS •
Balance Sheet
ASSETS (3rd part)


     (in euro)                                                                                      Year 2002



                                    carried forward                                                                      4,734,020,376

 E • DEBTORS
     I - Debtors arising out of direct insurance operations
           1 - Policyholders
               a) for premiums for the year 71     101,873,057
               b) for premiums of
                  previous years             72       3,342,284             73   105,215,341
           2 - Insurance interrmediaries                                    74   108,829,728
           3 - Current accounts with insurance companies                    75    28,956,711
           4 - Policyholders and third parties for sums
               to be recovered                                              76      547,718    77    243,549,498
     II - Debtors arising out of reinsurance operations
           1 - Insurance and reinsurance companies                          78    62,087,297
           2 - Reinsurance intermediaries                                   79     3,966,093   80     66,053,390
     III - Other debtors                                                                       81    110,279,408   82     419,882,296

 F • OTHER ASSETS
     I - Tangible assets and stocks:
           1 - Furniture, office machines and internal transport vehicles   83     3,040,013
           2 - Vehicles listed in public registers                          84       758,649
           3 - Machinery and equipment                                      85     1,599,542
           4 - Stocks and other goods                                       86         2,650   87      5,400,854
     II - Cash at banks and in hand
           1 - Bank and Postal accounts                                     88    16,300,697
           2 - Cheques and cash in hand                                     89        85,105   90     16,385,802
     III - Own shares or participating interests                                               91              0
     IV - Other assets
           1 - Deferred reinsurance items                                   92           284
           2 - Miscellaneous assets                                         93    12,721,141   94     12,721,425   95       34,508,081

 G • PREPAYMENTS AND ACCRUED INCOME
       1 - Accrued income                                                                      96     32,223,648
       2 - Rents                                                                               97              0
       3 - Other prepayments and accrued income                                                98         81,708   99       32,305,356




 TOTAL ASSETS                                                                                                      100   5,220,716,109




64
       • BALANCE SHEET - ASSETS •
                                     Year 2001



      carried forward                                                 4,727,927,515




251       96,759,659

252         5,970,710   253   102,730,369
                        254   112,569,740
                        255    21,973,413

                        256      594,879    257   237,868,401



                        258    44,076,999   260    44,538,111
                        259       461,112   261    76,898,470   262    359,304,982




                        263     3,544,342
                        264       702,953
                        265     1,571,157   267     5,820,239
                        266         1,787

                        268    13,289,019   270    13,303,434
                        269        14,415   271             0



                        272           539   274     7,913,300   275      27,036,973
                        273     7,912,761

                                            276    30,349,225
                                            277             0
                                            278        75,339   279      30,424,564




                                                                280   5,144,694,034




                                                                                                                   65
                                                                                      • BALANCE SHEET - ASSETS •
Balance Sheet
LIABILITIES AND SHAREHOLDERS’ FUNDS (1st part)


     (in euro)                                                                                     Year 2002

 A • SHAREHOLDERS' FUNDS
         I - Subscribed capital or equivalent fund                                           101    181,841,880
        II - Share premium account                                                           102    501,362,111
       III - Revaluation reserves                                                            103     73,053,033
      IV - Legal reserve                                                                     104     23,272,919
       V - Statutory reserves                                                                105              0
      VI - Reserves for own shares and of the controlling company                            106    164,113,897
      VII - Other reserves                                                                   107    196,771,858
     VIII - Profit (loss) brought forward                                                    108              0
      IX - Profit (loss) for the year                                                        109     24,787,248    110   1,165,202,946

 B • SUBORDINATED LIABILITIES                                                                                      111              0

 C • TECHNICAL PROVISIONS
     I - NON-LIFE
          1 - Provision for unearned premiums                          112     377,892,379
          2 - Provision for claims outstanding                         113   1,254,217,586
          3 - Provision for profit-sharing and premium refunds         114               0
          4 - Other technical provisions                               115       2,834,295
          5 - Equalisation provisions                                  116       4,104,404   117   1,639,048,664
     II - LIFE
          1 - Provision for policy liabilities                         118   1,767,990,346
          2 - Provision for unearned premiums
               for supplementary coverage                              119         45,961
          3 - Provision for claims outstanding                         120     16,379,755
          4 - Provision for profit-sharing and premium refunds         121              0
          5 - Other technical provisions                               122     28,141,047    123   1,812,557,109   124   3,451,605,773

 D • TECHNICAL PROVISIONS WHERE THE INVESTMENT RISK
     BORNE BY THE POLICYHOLDERS AND RELATING TO THE
     ADMINISTRATION OF PENSION FUNDS
     I - Provisions relating to contracts linked to investment
          funds and market indexes                                                           125    240,906,716
     II - Provisions relating to the administration of pension funds                         126      1,572,374    127    242,479,090



                                 to be carried forward                                                                   4,859,287,809




66
       • BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ FUNDS •
                                       Year 2001



                                              281    181,841,880
                                              282    501,362,111
                                              283     73,053,033
                                              284     20,445,326
                                              285              0
                                              286    120,739,888
                                              287    390,065,270
                                              288              0
                                              289     42,688,105    290   1,330,195,613

                                                                    291                0




                        292     355,638,145
                        293   1,204,530,684
                        294               0
                        295       2,957,204
                        296       3,329,435   297   1,566,455,468

                        298   1,685,267,708

                        299         45,780
                        300     15,589,316
                        301      1,411,525
                        302     45,222,283    303   1,747,536,612   304   3,313,992,080




                                              305    211,559,749
                                              306      1,059,700    307    212,619,449



to be carried forward                                                     4,856,807,142




                                                                                                                                       67
                                                                             • BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ FUNDS •
Balance Sheet
LIABILITIES AND SHAREHOLDERS’ FUNDS (2nd part)


     (in euro)                                                                                Year 2002

                                 carried forward                                                                   4,859,287,809

 E • PROVISIONS FOR OTHER RISKS AND CHARGES
       1 - Provision for pensions and similar obligations                               128        703,469
       2 - Provision for taxation                                                       129     59,263,874
       3 - Other provisions                                                             130     13,152,712   131     73,120,055

 F • DEPOSITS RECEIVED FROM REINSURERS                                                                       132     35,990,116

 G • CREDITORS AND OTHER LIABILITIES
          I - Creditors arising out of direct insurance operations
              1 - Insurance intermediaries                           133    7,500,944
              2 - Current accounts with companies                    134    2,226,688
              3 - Premium deposits and premiums
                  due to policyholders                               135    1,230,550
              4 - Guarantee funds in favour of policyholders         136    1,296,738   137     12,254,920
         II - Creditors arising out of reinsurance operations
              1 - Insurance and reinsurance companies                138   16,744,803
              2 - Reinsurance intermediaries                         139      149,178
        III - Debenture loans                                                           140     16,893,981
       IV - Amounts owed to banks and credit institutions                               141              0
        V - Loans secured by mortgages                                                  142              0
       VI - Miscellaneous loans and other financial liabilities                         143              0
      VII - Provision for termination indemnities                                       144    101,125,791
      VIII - Other creditors:                                                           145     24,177,785
              1 - Premium taxes                                      146   19,454,529
              2 - Other taxes                                        147    7,554,669
              3 - Social security                                    148    2,121,814
              4 - Miscellaneous creditors                            149   29,487,956   150     58,618,968
       IX - Other liabilities
              1 - Deferred reinsurance items                         151       19,642
              2 - Commissions for premiums being collected           152   15,650,321
              3 - Miscellaneous liabilities                          153   23,576,721   154     39,246,684   155    252,318,129



                                 to be carried forward                                                             5,220,716,109




68
       • BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ FUNDS •
                                    Year 2001

  carried forward                                                   4,856,807,142



                                           308      572,082
                                           309   73,501,798
                                           310    6,891,410   311     80,965,290

                                                              312     23,944,502




                        313    3,619,203
                        314    3,305,319

                        315    2,761,299
                        316      923,873   317   10,609,694



                        318    6,409,847   320    6,580,414
                        319      170,567   321            0
                                           322   58,005,383
                                           323            0
                                           324            0
                                           325   23,398,983

                        326   18,570,496
                        327    4,374,238
                        328    2,158,136
                        329   25,741,887   330   50,844,757

                        331       14,389
                        332   15,117,511
                        333   18,405,969   334   33,537,869   335    182,977,100



to be carried forward                                               5,144,694,034




                                                                                                                                 69
                                                                       • BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ FUNDS •
Balance Sheet
LIABILITIES AND SHAREHOLDERS’ FUNDS (3rd part)


     (in euro)                                                         Year 2002

                                carried forward                                              5,220,716,109

 H • ACCRUALS AND DEFERRED INCOME
       1 - Interest                                              156               0
       2 - Rents                                                 157               0
       3 - Other accruals and deferred income                    158               0   159              0



 TOTAL LIABILITIES AND SHAREHOLDERS’ FUNDS                                             160   5,220,716,109




GUARANTEES, COMMITMENTS AND OTHER EVIDENCE ACCOUNTS


     (in euro)                                                         Year 2002


 GUARANTEES, COMMITMENTS AND OTHER EVIDENCE ACCOUNTS
       I - Guarantees issued
         1 - Sureties                                                                  161              0
         2 - Endorsements                                                              162              0
         3 - Other personal guarantees                                                 163              0
         4 - Collateral                                                                164              0
      II - Guarantees received
         1 - Sureties                                                                  165        329,560
         2 - Endorsements                                                              166              0
         3 - Other personal guarantees                                                 167              0
         4 - Collateral                                                                168              0
     III - Guarantees issued by third parties in the interest
           of the company                                                              169      4,435,424
    IV - Commitments                                                                   170    354,278,965
     V - Third party assets                                                            171    181,841,880
    VI - Assets relating to pension funds managed in the name
           and on behalf of third parties                                              172               0
   VII - Securities deposited with third parties                                       173   3,437,343,210
   VIII - Other evidence accounts                                                      174     388,846,362




70
       • BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ FUNDS •
                  Year 2001

carried forward                         5,144,694,034



                       336    0
                       337    0
                       338    0   339                0



                                  340   5,144,694,034




                  Year 2001




                                  341                0
                                  342                0
                                  343                0
                                  344                0

                                  345         408,294
                                  346               0
                                  347               0
                                  348       4,857,277

                                  349      4,504,942
                                  350     78,824,768
                                  351    181,841,880

                                  352               0
                                  353   3,183,541,826
                                  354     653,816,309




                                                                                                     71
                                           • BALANCE SHEET - LIABILITIES AND SHAREHOLDERS’ FUNDS •
Profit and Loss Account


     (in euro)                                                                             Year 2002

         I. TECHNICAL ACCOUNT - NON-LIFE INSURANCE BUSINESS

 1 • PREMIUMS EARNED, NET OF REINSURANCE
     a) Gross premiums written                                                        1     975,476,062
     b) (-) Outward reinsurance premiums                                              2      81,025,856
     c) Change in gross provision for unearned premiums                               3      22,418,770
     d) Change in provision for unearned premiums, reinsurers' share                  4       3,905,866   5    875,937,302

 2 • (+) ALLOCATED INVESTMENT RETURN TRANSFERRED FROM
     THE NON TECHNICAL ACCOUNT (ITEM III.6)                                                               6     12,614,772

 3 • OTHER TECHNICAL INCOME, NET OF REINSURANCE                                                           7     10,358,450

 4 • CLAIMS INCURRED, NET OF RECOVERIES
     AND REINSURANCE
     a) Claims paid
        aa) Gross amount                                         8     680,589,181
        bb) (-) Reinsurers' share                                9      52,753,495    10    627,835,686
     b) Changes in recoveries, net of reinsurers' share
        aa) Gross amount                                        11      12,450,824
        bb) (-) Reinsurers' share                               12          -17,995   13     12,468,819
     c) Change in provision for claims outstanding
        aa) Gross amount                                        14      50,207,496
        bb) (-) Reinsurers' share                               15      21,035,764    16     29,171,732   17   644,538,599

 5 • CHANGE IN OTHER TECHNICAL PROVISIONS,
     NET OF REINSURANCE                                                                                   18      -122,909

 6 • PREMIUM REFUNDS AND PROFIT-SHARING,
     NET OF REINSURANCE                                                                                   19            0

 7 • OPERATING COSTS
     a) Acquisition commissions                                                       20    131,836,971
     b) Other acquisition costs                                                       21     23,795,339
     c) Change in commissions and other acquisition costs to be amortised             22      5,022,529
     d) Collecting commissions                                                        23     27,464,546
     e) Other administrative expenses                                                 24     42,632,899
     f) (-) Commissions and profit-sharing received from reinsurers                   25     17,070,443   26   203,636,783

 8 • OTHER TECHNICAL CHARGES, NET OF REINSURANCE                                                          27    14,783,578

 9 • CHANGE IN THE EQUALISATION PROVISIONS                                                                28      774,969

 10 •BALANCE ON THE TECHNICAL ACCOUNT FOR NON-LIFE BUSINESS                                               29    35,299,504




72
       • PROFIT AND LOSS ACCOUNT •
             Year 2001




                    111   919,886,847
                    112    59,954,313
                    113    20,650,615
                    114      -679,532   115   838,602,387



                                        116    43,159,168

                                        117    10,058,038




118   702,799,942
119    56,173,983   120   646,625,959

121    13,964,369
122        62,771   123    13,901,598

124   -24,006,486
125   -13,032,017   126   -10,974,469   127   621,749,892



                                        128       -56,145



                                        129            0



                    130   126,013,130
                    131    25,242,942
                    132     8,415,981
                    133    26,238,799
                    134    43,456,288
                    135    14,888,993   136   197,646,185

                                        137    14,048,184

                                        138      712,110

                                        139    57,719,367




                                                                                          73
                                                            • PROFIT AND LOSS ACCOUNT •
Profit and Loss Account


     (in euro)                                                                                                  Year 2002

         II. TECHNICAL ACCOUNT - LIFE INSURANCE BUSINESS

     1 • PREMIUMS WRITTEN, NET OF REINSURANCE
         a) Gross premiums                                                                                 30    302,514,265
         b) (-) Outward reinsurance premiums                                                               31      9,039,923      32   293,474,342

     2 • INCOME FROM INVESTMENTS
         a) From shares and interests                                                                      33    86,875,593
                                                                         (of which: from Group companies   34    79,664,282)
         b) From other investments:
            aa) land and buildings                                  35            484,320
            bb) other investments                                   36         72,958,237                  37     73,442,557
                                                                         (of which: from Group companies   38      2,134,885)
         c) Value re-adjustments on investments                                                            39      1,265,929
         d) Gains on the realisation of investments                                                        40      7,756,388
                                                                         (of which: from Group companies   41              0)     42   169,340,467
     3 • INCOME AND UNREALISED GAINS ON INVESTMENTS
         FOR THE BENEFIT OF POLICYHOLDERS WHO BEAR
         THE INVESTMENT RISK AND AND ON INVESTMENTS
         RELATING TO THE ADMINISTRATION OF PENSION FUNDS                                                                          43    13,352,549

     4 • OTHER TECHNICAL INCOME, NET OF REINSURANCE                                                                               44       56,813

     5 • CLAIMS INCURRED, NET OF REINSURANCE
         a) Claims paid
            aa) Gross amount                                        45       219,446,259
            bb) (-) Reinsurer's share                               46         4,376,288                   47    215,069,971
         b) Change in provision for sums to be paid
            aa) Gross amount                                        48                790,439
            bb) (-) Reinsurer's share                               49               -150,384              50        940,823      51   216,010,794

     6 • CHANGE IN PROVISIONS FOR POLICY LIABILITIES
         AND OTHER TECHNICAL PROVISIONS,
         NET OF REINSURANCE
         a) Provision for policy liabilities:
            aa) Gross amount                                              52   87,175,175
            bb) (-) Reinsurers' share                                     53    4,864,456                  54     82,310,719
         b) Provision for unearned premiums for supplementary coverage:
            aa) Gross amount                                              55          181
            bb) (-) Reinsurers' share                                     56            0                  57               181
         c) Other technical provisions
            aa) Gross amount                                              58  -18,492,760
            bb) (-) Reinsurers' share                                     59            0                  60    -18,492,760
         d) Technical provisions where the investment risk is borne by the
            policyholders and relating to the administration of pension funds
            aa) Gross amount                                              61   29,859,641
            bb) (-) Reinsurers' share                                     62            0                  63     29,859,641      64    93,677,781




74
        • PROFIT AND LOSS ACCOUNT •
                            Year 2001




                                        140   322,249,038
                                        141     9,186,933    142   313,062,105



                                        143   20,582,788
      (of which: from Group companies   144   16,156,993)

145          1,004,581
146         71,876,069                  147    72,880,650
      (of which: from Group companies   148     2,115,789)
                                        149     1,076,577
                                        150    15,182,445
      (of which: from Group companies   151             0)   152   109,722,460




                                                             153     5,932,259

                                                             154      598,951




155       188,556,819
156         8,469,635                   157   180,087,184

158           -6,891,774
159             -478,701                160    -6,413,073    161   173,674,111




162         80,100,175
163            255,126                  164    79,845,049

165                  -45,062
166                        0            167       -45,062

168         13,973,310
169                  0                  170    13,973,310



171         66,751,145
172                  0                  173    66,751,145    174   160,524,442




                                                                                                               75
                                                                                 • PROFIT AND LOSS ACCOUNT •
Profit and Loss Account


     (in euro)                                                                                              Year 2002

     7 • PREMIUM REFUNDS AND PROFIT-SHARING,
         NET OF REINSURANCE                                                                                                 65         1,146

     8 • OPERATING COSTS
         a) Acquisition commisions                                                                     66      8,138,261
         b) Other acquisition costs                                                                    67      3,386,248
         c) Change in commissions and other acquisition costs
            to be amortised                                                                            68        296,200
         d) Collecting commissions                                                                     69      4,972,227
         e) Other administrative expenses                                                              70     13,856,872
         f) (-) Commissions and profit-sharing received
            from reinsurers                                                                            71        722,600    72    29,334,808

     9 • INVESTMENT MANAGEMENT AND FINANCIAL CHARGES
         a) Investment management charges, including interest                                          73      6,771,928
         b) Value adjustments on investments                                                           74    101,163,376
         c) Losses on the realisation of investments                                                   75      4,005,130    76   111,940,434

     10 •EXPENSES AND UNREALISED LOSSES ON INVESTMENTS
         FOR THE BENEFIT OF POLICYHOLDERS WHO BEAR
         THE INVESTMENT RISK AND RELATING TO THE
         ADMINISTRATION OF PENSION FUNDS                                                                                    77    26,154,482

     11 •OTHER TECHNICAL CHARGES,
         NET OF REINSURANCE                                                                                                 78       40,086

     12 •(-) ALLOCATED INVESTMENT RETURN TRANSFERRED
         TO THE NON-TECHNICAL ACCOUNT                                                                                       79            0

     13 •BALANCE ON THE TECHNICAL ACCOUNT FOR LIFE BUSINESS (Item I.10)                                                     80      -935,360

         III. NON-TECHNICAL ACCOUNT

     1 • BALANCE ON THE TECHNICAL ACCOUNT FOR NON-LIFE BUSINESS (Item I.10)                                                 81    35,299,504

     2 • BALANCE ON THE TECHNICAL ACCOUNT FOR LIFE BUSINESS (Item II.13)                                                    82      -935,360

     3 • NON-LIFE INVESTMENT INCOME
         a) From shares and interests                                                                  83    68,298,147
                                                                     (of which: from Group companies   84    67,007,172)
         b) From other investments:
            aa) land and buildings                              85            990,855
            bb) other investments                               86         43,667,984                  87     44,658,839
                                                                     (of which: from Group companies   88       946,606)
         c) Value re-adjustments on investments                                                        89      1,944,095
         d) Gains on the realisation of investments                                                    90      4,674,355
                                                                     (of which: from Group companies   91              0)   92   119,575,436




76
        • PROFIT AND LOSS ACCOUNT •
                            Year 2001



                                                            175            0



                                        176    8,934,519
                                        177    4,450,545

                                        178      805,332
                                        179    5,627,761
                                        180   14,578,037

                                        181      700,131    182   32,085,399



                                        183    7,414,324
                                        184   48,635,015
                                        185   18,088,045    186   74,137,384




                                                            187   23,098,547



                                                            188      194,253



                                                            189            0

                                                            190   -34,398,361




                                                            191   57,719,367

                                                            192   -34,398,361



                                        193   21,541,746
      (of which: from Group companies   194   19,545,639)

195          1,629,449
196         54,972,061                  197   56,601,510
      (of which: from Group companies   198    2,291,801)
                                        199    2,200,551
                                        200   15,299,981
      (of which: from Group companies   201            0)   202   95,643,788




                                                                                                              77
                                                                                • PROFIT AND LOSS ACCOUNT •
Profit and Loss Account


     (in euro)                                                        Year 2002

     4 • (+) ALLOCATED INVESTMENT RETURN TRANSFERRED
         FROM THE LIFE TECHNICAL ACCOUNT (Item II.12)                                93             0

     5 • NON-LIFE INVESTMENT MANAGEMENT AND FINANCIAL CHARGES:
         a) Investment management charges, including interest    94      4,511,946
         b) Value adjustments on investments                     95     93,674,072
         c) Losses on the realisation of investments             96      2,691,315   97    100,877,333

     6 • (-) ALLOCATED INVESTMENT RETURN TRANSFERRED
         TO THE NON-LIFE TECHNICAL ACCOUNT (Item I.2)                                98     12,614,772

     7 • OTHER INCOME                                                                99     60,089,133

     8 • OTHER CHARGES                                                               100    68,430,169

     9 • PROFIT OR LOSS ON ORDINARY ACTIVITIES                                       101    32,106,439

     10 •EXTRAORDINARY INCOME                                                        102    26,146,761

     11 •EXTRAORDINARY CHARGES                                                       103    12,544,952

     12 •EXTRAORDINARY PROFIT OR LOSS                                                104    13,601,809

     13 •RESULT BEFORE TAXES                                                         105    45,708,248

     14 •INCOME TAXES FOR THE YEAR                                                   106    20,921,000

     15 •PROFIT (LOSS) FOR THE YEAR                                                  107    24,787,248




78
       • PROFIT AND LOSS ACCOUNT •
Year 2001



                         203           0



     204     5,795,088
     205    22,626,191
     206     2,767,360   207   31,188,639



                         208   43,159,168

                         209   69,928,763

                         210   73,320,991

                         211   41,224,759

                         212   50,223,676

                         213   22,614,995

                         214   27,608,681

                         215   68,833,440

                         216   26,145,335

                         217   42,688,105




                                                                          79
                                            • PROFIT AND LOSS ACCOUNT •
Notes to the Financial Statements


 The Notes to the Financial Statements comprise the following parts:
 - part A – valuation criteria
 - part B – comments on the Balance Sheet and Profit and Loss Account
 - part C – other information



 Part A - VALUATION CRITERIA


 Basis of presentation

 The financial statements at and as of December 31 2002, consisting of the Balance Sheet,
 Profit and Loss Account and these Notes to the Financial Statements, have been prepared in
 accordance with the pertinent provisions of Articles 2423 and 2423 bis of the Italian Civil Code.
 They comply with the specific regulations for the insurance sector introduced by Legislative
 Decree No. 173/97, which enacted EC Directive 91/674, as regards the annual and
 consolidated accounts of insurance companies, and adopt the valuation criteria established by
 Legislative Decree No. 127/71 insofar as compatible with the insurance sector. They comply
 with the compulsory formats established by the aforementioned Legislative Decree No. 173/97
 and with ISVAP directives and instructions regarding the Plan of Accounts set forth in ISVAP
 Directive No. 735 of December 1 1997, as integrated by ISVAP communication No. 360/D of
 January 21 1999. They are accompanied by the Directors' Report (set forth previously).

 The following Annexes are an integral part of the Financial Statements: actuary’s report under
 Article 24 Section 2 of Legislative Decree No. 174/95, list of long-term assets.
 The Consolidated Financial Statements have been prepared according to the law.

 With reference to assets on the balance sheet, Article 15 of Legislative Decree No. 173/97
 defines those of class B “intangible assets” and class CI "land and buildings” as long-term
 investments.

 Investments in equities and debt securities have been stated under long-term investments or
 short-term financial assets according to specific outline resolutions of the Administrative
 Committee dated October 28 1998 and September 24 2001 in compliance with the provisions
 of ISVAP Directive No. 893 G of June 18 1998.

 The following are therefore classified as long-term investments:
 - equity investments in listed and unlisted companies whose business in functional to insurance
   activities, i.e. which are considered strategic to the purposes of the Company regardless of the
   interest held;
 - debt securities convertible into shares of listed and unlisted companies that carry out activities
   functional to insurance business, i.e. which are deemed to be strategic to Company purposes,
   regardless of the interest held;




80
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
- shares in closed-end common investment fund as established by Law No. 344 of June 14 1993;
- unlisted fixed-income securities and those not intended for listing;
- fixed-income securities up to a maximum of 65% of the investment portfolio, shares other than
  those indicated previously and OICR (Organismi di Investimento Collettivo del Risparmio) up to a
  maximum of 15% of the investment portfolio which represent a stable investment according to
  portfolio management strategy;
- the so-called “structured” securities i.e. referring to investments for the benefit of life
  policyholders who bear the investment risk as set forth in Article 16, point 8 of Legislative
  Decree No. 173/97 that represent an independent category, and also investments deriving
  from the administration of pension funds, both subject to the specification regulation
  (compartments DI and D II).

The remaining debt and equity securities are classified as for resale.

Fixed-income securities, carried in the 2002 accounts as long-term investments, are
summarised in the specific schedule attached. For the purposes of Presidential Decree 917/96,
these can be considered similar to financial investments.



Long-term investments (classification according to Article 15 Legislative Decree
No. 173/97 and the resolutions of the Administrative Committee of October 28
1998 and September 24 2001)

Land and buildings

These items are entered at purchase cost including incremental costs.
The costs of improvements and refurbishing are recorded only in the case of an effective
increase in the useful life of the assets.
The historical cost of certain properties has been revalued in accordance with specific laws or for
economic reasons as detailed in the specific schedule. As not deemed economically advisable,
the Company did not take advantage of the possibility of voluntary revaluation permitted by Article
3 of Law No. 448/2001 (2002 Finance Bill) according to which companies may revalue assets
and equity investments according to the provisions already set forth in Law No. 342/2001 and
related enactments.
Depreciation rates are determined according to the estimated remaining useful life of the assets
also taking into account values that can be recovered at the end of their period of use.
Depreciation is also charged within the limits permitted by tax laws (Article 67 Presidential
Decree 917/86) in order to take advantage of deferred taxation and therefore to retain financial
resources within the company.




                                                                                                             81
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Equity investments

 For the shares of investee companies, if the underlying shareholders’ equity, resulting from the
 respective Financial Statements following the time of acquisition, shows a permanent loss of value
 or in the case of companies with listed shares, if the prices of the last six months are lower than
 the carrying value, the lower value is recorded according to Article 16, Section 3 of Legislative
 Decree No. 173/97. Any write-downs are partly or entirely reversed in subsequent years if the
 underlying assumptions therefor are no longer correct.

 During the year, in accordance with the structural losses disclosed in the respective financial
 statements, the interests held in Fiat S.p.A. and Capitalia S.p.A. were written down.

 With regard to Fiat shares, a "mixed" type of valuation has been applied referring to the
 theoretical conversion value of the debenture loan to be converted subscribed by the financing
 banks and the value of the consolidated net equity per share at December 31 2002, as can be
 deduced from the results of the Fiat Group anticipated on February 28 2003.
 The "mixed" type calculation takes into account and combines several elements of appreciation
 and different estimate hypotheses such as, for example, stock exchange prices in the last six
 months, the Group per-share equity value and the valuations of the individual parties indicated in
 the most recent broker reports published by leading banks.

 To determine the value adjustment of Capitalia, the valuations made at the time of the merger
 between Banca di Roma, Bipop-Carire and Banco di Sicilia and also, albeit on a theoretical basis,
 the result of application of the net equity method have been taken as reference parameters.

 Debt securities and other fixed-income securities

 Securities that the Company intends to hold to maturity are carried at acquisition or subscription
 cost adjusted for the portion of the difference between the cost and the redemption value that
 accrued during the year and for the portion of issue differences.

 The acquisition cost is computed by the “average continuous cost” method. In the case of
 permanent impairment of value, the appropriate write-down is made according to Article 16,
 section 3 of Legislative Decree No. 173/97. Write-downs will be partly or entirely reversed in
 subsequent years if the underlying assumptions are no longer correct.

 Interest on securities in the portfolio is recognised in the profit and loss account through
 disclosure of the related accrued interest according to correct accrual criteria.




82
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Investments held as short-term financial assets

Shares

Shares are stated at the lower of cost (average continuous cost) and market.
Italian listed shares are valued according to the average prices struck in December; for foreign
listed shares, the market value consists of the year-end price, considered to be representative.

Up to the purchase cost, any write-downs recorded in previous years are reversed with upward
adjustments recognised in the profit and loss account.

Debt securities and other fixed-income securities

Securities held for trading are valued at the lower of cost (average continuous cost) and market.

For Italian listed securities, the market value consists of the average prices of the month of
December; for foreign listed securities, the market value corresponds to the year-end price
insofar as this is considered representative. For unlisted Italian and foreign securities, the market
value consists of the stock exchange price of similar listed securities.

Up to the purchase cost, any write-downs recorded in previous years are reversed with upward
adjustments recognised in the profit and loss account.

The purchase cost as defined above is adjusted for issue differences that accrued during the
year.

Interest on securities in the portfolio is recognised in the profit and loss account on a correct
accrual basis through disclosure of the related accrued interest.



Investments for the benefit of life policyholders who bear the investment risk and
investments relating to the administration of pension funds

These include investments, stated at current value according to Article 16 section 8 of
Legislative Decree No. 173/97, relating to index-linked, unit-linked products and the
administration of pension funds. The securities are valued at market or trading value on the last
day of trading of the year.
Differences in relation to the carrying values are recognised in the profit and loss account.




                                                                                                              83
                                                    • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 The report of the “Toro Previdenza” defined contribution open pension fund managed by the
 Company, drawn up for each individual investment category, is attached to these accounts
 according to the general provisions of Resolution June 17 1998 issued by the Pension Fund
 Inspection Commission.



 Repo

 The corresponding value of securities acquired “for cash” is stated under receivables and that of
 the securities sold “for cash” under payables.

 Interest and differences between the corresponding “cash” and “forward” values are stated under
 ordinary income and expense on an accrual basis.



 Derivative contracts

 The following transactions were carried out on these instruments during the year:
 - purchase of index-linked debt securities (securities with yield linked to the trend of
   indexes/shares and with in any case a guaranteed minimum) intended to extend the life
   product range and as own investment of the Company:
 - purchase of a put option that guarantees preservation on maturity of the capital invested in the
   "Toro Gestione Garantita 2002" unit-linked product;
 - stipulation of interest rate swaps intended to increase exposure at the fixed rate in the unit-linked
   “Toro Gestione Garantita 2002”;
 - purchase/sale of structured debt securities with implicit put and call options

 The portfolio still includes:
 - floors contracts for which the premium paid is stated under Other financial investments on the
   balance sheet and amortised in the related years and compared at year-end with the market
   value for any write-down if lower;
 - an interest rate swap transaction, valued according to market prices at year-end;
 - other structured debt securities.

 All the transactions were carried out in accordance with the resolutions of the competent boards
 and in compliance with ISVAP Directive of July 19 1996 which regulates the use of derivatives.




84
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Intangible assets

• Purchase costs of computer programmes, share capital increase costs and other
  deferred charges

These items are written down directly on a straight-line basis over 5 years.

• Commissions to be amortised

The acquisition costs of multi-annual policies are deferred and amortised for both life and non-life
business according to the duration of the contracts starting from the year in which they occurred
with a maximum of 10 years.



Debtors

These items are entered at presumed realisable value, determined separately for each type of
receivable.
Changes in the allowance for bad and doubtful accounts are detailed in the comment on the
Debtors item of the Notes (part B).

Receivables from policyholders for premiums for the year and previous years – Non-Life

According to an analysis of recoverability of receivables by branch, in order to determine the
presumed realisable value, pursuant to the provisions of Article 16 Section 9 of Legislative
Decree No. 173/97, at the end of the year, the receivables were written down for a lump sum
amount disclosed under Other technical charges of the profit and loss account; the effects of the
write-down on the provision for premium instalments and on commissions have been taken into
account.



Tangible assets and stocks

These items are entered at cost including any accessory charges.
Depreciation is calculated on a straight-line basis applying rates deemed consistent with the
estimated useful life of the assets.




                                                                                                             85
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Accruals and deferrals

 Accruals and deferrals are stated to reflect timing differences in the respective expense and
 revenue items.



 Life technical provisions

 Life technical provisions, formed to cover commitments towards policyholders, have been valued
 in accordance with precise actuarial criteria. The provisions, calculated in accordance with
 Articles 24 and 25 of Legislative Decree No. 174/95, include the revaluations attributed
 according to contractual conditions and are not lower than the redemption value. The actuarial
 provisions include the additional provision established by Article 25, section 12 of Legislative
 Decree No. 174/95 as amended for revaluable contracts in order to cover any difference
 between the expected rates of return of the assets applied to cover technical provisions and
 commitments assumed; the foreseeable return on the assets is determined according to the
 provisions established by ISVAP with procedure No. 1801 G of February 21 2001.

 The technical provisions set forth in Article 38 of Legislative Decree No. 173/97, intended to
 cover commitments arising on unit-linked and index-linked contracts and deriving from the
 management of pension funds, are calculated referring to commitments assumed and the
 provisions of Article 30 of Legislative Decree No. 174/95 and subsequent laws.

 In the financial statements, the technical provisions comprise the following items:
 • actuarial provisions;
 • provision for unearned premiums for supplementary coverage;
 • provision for claims outstanding;
 • provision for profit-sharing and premium refunds;
 • other technical provisions.

 Reinsurers’ shares of provisions are determined according to the same criteria used to calculate
 total provisions, in compliance with treaties in force with reinsurers and taking into account that
 the cession is made without considering any splitting of the annual premium.



 Provision for unearned premiums

 In accordance with Legislative Decree No. 173/97, the provision for unearned premiums
 includes three components:
 • provision for premium instalments;
 • provision to integrate the provision for premium instalments of the branches for which these
   are required;
 • provision for unexpired risks.




86
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
As regards calculation of the provision for premium instalments, the following should be noted:
• the “pro-rata” method has been adopted;
• the deduction for acquisition commissions and acquisition costs permitted by the regulation has
  been made considering as such:
  - all commissions paid with reference to annual contracts; these have been considered
    acquisition commissions as, considering the highly competitive trends on the Italian insurance
    market, the acquisition activity can be considered predominant or completely absorbing in any
    stipulation or renewal of annual contracts;
  - all commissions paid referring to the first annual instalment of multi-annual contracts, for the
    same reasons as set forth in the previous point regarding competition and the predominant
    and absorbing nature of the acquisition activity at the time of stipulation or renewal of the
    contract. On the other hand, commissions relating to payments of subsequent annual
    instalments, which are clearly characterised as collection commissions, have not been taken
    into account;
  - the amortisation for the year of the acquisition commissions of the multi-annual contracts
    relating to the year.

In the case in which the provision for premium instalments is not sufficient to cover the costs of
future claims, a provision for unexpired risks has been made; the need for integration has been
determined referring to the claims to current year premiums ratio as specified in ISVAP ruling
No. 360/D of January 21 1999.

It should also be noted that:

- for the risks of Hail and Nuclear Risks insurance, the provisions have been calculated according
  to the lump sum method pursuant to Article 32 of Legislative Decree No. 173/97 and other
  laws that establish integration of the provisions for unearned premiums according to the
  peculiar nature of certain risks;

- for the Suretyship branch, the provision for premium instalments, calculated according to the
  "pro rata" method in accordance with Article 32, section 2 of Legislative Decree No. 173/97,
  is integrated according to the criteria defined by Article 2 of ISVAP Directive No. 1978-G of
  December 4 2001;

- for the Credit branch, for contracts stipulated or renewed as of January 1 1992, the provision
  for unearned premiums has been calculated using the “pro-rata” method, considered the most
  suitable in relation to the characteristics of the branch. For contracts stipulated or renewed by
  December 31 1991, according to Article 12, Section 5 of Legislative Decree No. 393/91,
  the obligation of forming the unearned premium provision according to the methods determined
  by Ministerial Decrees 23/5/81 and 22/6/82 until the end of the time frame established in
  the aforesaid decrees remains firm. The compensation provision envisaged by Article 24 of
  Legislative Decree No. 175/95 as replaced by Article 80 sub b) of Legislative Decree No.
  173/97 included in the “equalisation provision” has also been formed.




                                                                                                             87
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 - for the Health branch, the component for the ageing provision, calculated according to the
   lump sum amount established by Article 25 of Legislative Decree No. 175/95, is included
   under Other technical provisions in accordance with Article 36 of Legislative Decree No.
   173/97;

 - for the risks of natural disasters, the equilibration provision contemplated by Law No. 35 of
   February 16 1995 has been formed according to the conditions and methods established by
   Ministerial Decree No. 705 of November 19 1996; the accrual is included in the Equalisation
   provisions as specified in Article 37 of Legislative Decree No. 173/97;

 - as in previous years, in accordance with Ministerial Decree June 15 1984, the provision for
   unearned premiums for the insurance of damages caused by natural disasters such as
   earthquakes, seaquakes, volcanic eruptions and related phenomena has been integrated.

 The reinsurers’ and retrocessionaires’ share of the provision for unearned premiums has been
 calculated according to the same criteria adopted for the unearned premium provisions of direct
 and indirect business respectively, also taking into account treaty clauses.



 Provision for claims outstanding

 The provision for claims outstanding has been determined analytically examining the individual
 claims outstanding at the end of the year and taking into account, for mass risks, appropriate
 statistical methods.

 In particular, for Motor Third Party Liability, statistical-actuarial methods have been adopted
 according to the terms and methods specified in ISVAP ruling No. 360/D of January 21 1999
 which, specifically for the third party liability branches characterised by a slower settlement
 process, also suggests a statistical-actuarial approach to calculating the provision for claims
 outstanding, to be used together with the claim-by-claim method of valuation in order to obtain
 a more precise estimate of the provision for claims outstanding closer to the ultimate cost.

 These methods have not been adopted for the Non-motor third party liability branch which does
 not comply with the conditions for application of the methods established by the aforementioned
 ruling i.e. non complex claims, usually not of a high amount and with a statistically significant
 numerosity especially in relation to the aggregations that can be identified and related
 homogeneity as regards quality of the claims.

 In determining the provision for claims outstanding of the Credit and Suretyship branches, the
 regulations concerning the particular methods for the valuation of the provisions set forth in
 ISVAP Directive No. 1978-G of December 4 2001 have been taken into account.




88
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
The provision for claims in coinsurance with third party delegation has been stated according to
communications of the delegating companies that are responsible for management and
settlement of the claims integrated, where the necessary conditions exist, by specific provisions
determined according to objective data.

The provision for late claims has been calculated in accordance with Article 5 of ISVAP ruling of
December 4 1998 taking into account reasonably foreseeable developments of specific portfolio
segments that, according to past experience, have generated the highest number of late claims.

The provision for claims outstanding is considered sufficient to cover foreseeable charges
(damages, direct and settlement expenses) for the settlement of claims incurred until the end for
the year.

The provision for inwards reinsurance has been calculated on the basis of the information
provided by the ceding companies integrated, where necessary, by further appropriations
calculated by the Company on the basis of objective factors.

Reinsurers’ shares of the provision for claims outstanding have been determined on the basis of
the effective quota of recovery envisaged by the individual cession contracts.



Provisions for risks and charges

Includes provisions for risks and charges to cover specific types of certain or probable losses or
liabilities, the exact value and effective date of which cannot be determined at the end of the year
or which are subject to the occurrence of future events.



Provision for taxes

Includes provisions, calculated according to current rates and regulations, to cover Corporate
Income Tax ("IRPEG") and the Regional Tax on Production Activities ("IRAP") not yet paid. It also
includes the liability for deferred taxes on capital gains and, following CONSOB communication of
July 30 1999 No. 99059010, also prepaid taxes, determined on a prudent basis, referring to a
number of accounting items for which tax laws, as opposed to statutory regulations, permit total
or partial deduction of the related cost in several years after that in which incurred.



Provision for employee termination indemnities

The provision for employee termination indemnities has been calculated in accordance with
current laws and covers the liability accrued toward all employees at December 31.




                                                                                                             89
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Premiums

 Premiums with related additionals are entered with reference to maturity without considering the
 effective date of payment and are stated net of cancellations for technical reversals during the
 year, of cancellations of life premiums of subsequent instalments falling due in previous years and
 taking into account contract variations, without or without changes to the premiums, made
 through replacements or appendixes. Other cancellations are stated under Other technical
 charges of the profit and loss account.
 Compliance with the accrual principle is assured through allocation of the provision for unearned
 premiums.



 Claim settlement costs

 Claim settlement costs not directly attributable to the individual branches are allocated according
 to the amount of the claims paid.



 Other components of income

 Other components of costs and revenues are stated according to the accrual principle.



 Inward reinsurance

 The financial statements are prepared on an accrual basis. However, except for the Hail branch,
 the economic and financial effects of inward reinsurance assumed by companies not controlled
 are recorded with a one-year delay in that the information required is not available at the time of
 preparing the accounts.

 Financial transactions with Reinsurers are obviously disclosed in the accounts.



 Euro

 In compliance with provisions issued by ISVAP with Directive No. 1008/G of October 5 1998
 (adopted pursuant to Article 16 section 8 subparagraphs e) and f) of Legislative Decree No.
 213/98) and with circular No. 345/D of October 13 1998, the statutory financial statements
 are expressed in units of euro without decimal figures while the explanatory notes are
 denominated in thousands of euro.

 The amounts stated for entire numbers of euro are rounded up or down to the nearest unit; if
 the amount is half way, it is rounded up. The rounded-off amount of the totals and subtotals of
 the balance sheet and profit and loss account have been obtained by adding the rounded-off



90
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
amounts of the individual addenda. The sum of the differences deriving from rounding-off is stated
under item F.IV.2 Other assets or G.IX.3 Other liabilities on the balance sheet and under III.10
Extraordinary income or III.11 Extraordinary charges of the profit and loss account.

Data in thousands of euro in the explanatory notes are rounded off for consistency with the
values disclosed in the balance sheet and profit and loss account.



Conversion into Euro

Items in foreign currency of "out" countries have been translated into euro at the exchange rates
prevailing at the end of the year, disclosing the effects in the profit and loss account.



Classification of risks according to the new branches of business
ISVAP Directive No. 734 of December 1 1997

Premium instalments relating to the guarantees included in insurance contracts stipulated as of
January 1 2001 are attributed directly to the Ministerial branches as established in point A) of
the table attached to Legislative Decree No. 175/95.

For contracts stipulated before this date, where attribution of the guarantees contained does not
correspond entirely to the new branches, the attribution criteria set forth in the accounts of
previous years have been applied.




                                                                                                            91
                                                  • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Part B – COMMENTS ON THE BALANCE SHEET AND ON THE PROFIT AND LOSS ACCOUNT
 (The amounts are stated in thousand euro as established by Article 1, point 1, of ISVAP Directive
 No. 1008/G of October 5 1998)



 BALANCE SHEET - ASSETS


 Section 1 - INTANGIBLE ASSETS (item B)

         2002                                              2001                            Change

       99,248                                            89,353                           9,895


 The changes in this item during the year are set out in Annex 4.

 Life (10,461 thousand euro) and non-life (70,183 thousand euro) commissions to be amortised
 include the remaining part of commissions paid in advance at the time of subscription of the
 contract with reference to the entire duration of this, considering a maximum of ten years.

 Other deferred charges, in the amount of 18,604 thousand euro, include the purchase costs of
 software products and charges for the setting up of new information systems both for the part
 already amortised in previous years with regard to those that came on stream in the current
 year and in previous years and the part relating to new development projects that will be
 amortised starting from the year in which they come on stream; this item also includes the
 remaining portions of expenses relating to the 1997 share capital increase.



 Section 2 – INVESTMENTS (item C)

         2002                                              2001                            Change

     4,221,072                                         4,258,292                          -37,220




 2.1 - Land and buildings (item C.I)

         2002                                              2001                            Change

       50,537                                            57,048                           -6,511


 The movement on land and buildings, net of the related accumulated depreciation, is also set forth
 in Annex 4.




92
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Current value of land and buildings

In accordance with Article 18 of Legislative Decree No. 173/97 and in compliance with ISVAP
Directive 1915-G of July 20 2001, the Company had determined the current value of company-
owned property at December 31 2001 according to the method established by the Directive.

The total current value, updated for buildings and real property units disposed of during 2002, is
equal to 60,153 thousand euro, 9,958 thousand higher than the carrying value of the buildings
net of accumulated depreciation; all the differences are positive as the current value of all the
buildings is not lower than the carrying value.

The current value of each building is indicated in the notes to the financial statements in the list
of real property.


2.2 – Investments in Group companies and other shareholdings (item C.II)

       2002                                      2001                                              Change

    1,596,705                                 1,818,455                                         -221,750


The changes during the year in Shares and interests, Debt securities issued by companies and
Loans to companies are set out in Annex 5. Annexes 6 and 7 provide information regarding the
investee companies and the movement for each.




                                                                                                              93
                                                    • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 In particular, the most significant changes during the year in Shares and interests in companies
 were as follows:


 - Purchase of Fiat S.p.A. ordinary shares                                                                84,975

 - Subscription of Nuova Tirrena S.p.A. share capital increase                                            16,418

 - Formation and subsequent payment against future share capital increase of Roma Nuova Servizi S.p.A.     6,319

 - Subscription of Toro Targa Assicurazioni S.p.A. share capital increase                                  5,100

 - Subscription of Lloyd Adriatico Vita S.p.A. share capital increase                                      2,000

 - Capitalia shares arising on demerger of Bipop-Carire in Capitalia                                       1,171

 - Purchase of Continent Holding shares                                                                      102

 - Subscription of Fiat SE.P.IN. S.c.p.A. share capital increase                                             117

 - Subscription of Fiat REVI S.c.r.l. share capital increase                                                  15

 - Partial repayments of Isim S.p.A. capital                                                             -150,000

 - Alignment of Capitalia S.p.A. shares                                                                   -72,938

 - Alignment of Fiat S.p.A. ordinary shares                                                               -31,291

 - Alignment of interest in Lingotto S.p.A.                                                               -13,145

 - Sale of the Fiat S.p.A. ordinary shares                                                                -10,563

 - Return of payment made to share capital increase of Roma Nuova Servizi S.p.A.                           -6,289

 - Alignment of Toro Targa Assicurazioni S.p.A.                                                            -5,992

 - Sale of the interest in IPI S.p.A.                                                                      -4,945

 - Alignment of Lloyd Adriatico Vita S.p.A.                                                                  -960

 - Sales of the interest in A.PIMM. S.p.A.                                                                   -127

 - Sales of the interest in Europe Assistance S.p.A.                                                         -123

 - Sales of the interest in C.S.T. S.p.A.                                                                      -1


 The most significant changes in the Debt securities issued by companies were as follows:


 - Net issue/trading differences                                                                             182

 - Transfers from class D                                                                                     82

 - Sales and reimbursements of Capitalia debt securities                                                  -35,961

 - Sales and reimbursements of Fiat Finance and Trade debt securities                                      -4,513

 - Alignment of Fiat Finance and Trade debt securities                                                     -1,198


 The Loans to companies item includes the loan granted to the ISIM S.p.A. subsidiary
 (150 thousand euro).



94
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
2.3 - Other financial investments (item C.III)

        2002                                               2001                                                Change

     2,571,812                                          2,380,474                                           -191,338


The breakdown into long-term investments and short-term financial assets of the assets
disclosed under Shares and interests, Shares in common investment funds and Debt securities
and other fixed-income securities is provided in Annex 8 while the changes during the year in
other long-term financial investments are set forth in Annex 9; the variations in Loans during the
year are set out in Annex 10.

The following changes occurred in Shares and interests and Shares in common investment
funds:


- Purchases for normal management of the portfolio                                                             104,939

- Upward adjustments                                                                                                      3

- Sales for normal management of the portfolio                                                                  -85,934

- Alignment of values to the prices of the last month of the year                                               -62,193




The movement on Debt securities and other fixed-income securities is set out below:


- Purchases for normal management of the portfolio                                                           1,166,735

- Positive spread/trading differences                                                                             9,160

- Write-backs relating to write-downs made in previous years                                                      3,207

- Transfers from the class D portfolio                                                                            2,440

- Sales for normal management of the portfolio                                                                -932,777

- Negative issue/trading differences                                                                             -6,969

- Alignment of values to the average prices of the last month of the year                                        -7,015


The Loans guaranteed by mortgages caption includes only loans granted by the Company and
secured by mortgages. The Other loans consist almost entirely of loans granted to employees,
managers and agents.

The Other financial investments caption includes receivables for the subscription of premiums
relating to floor contracts amortised in the matching years.




                                                                                                                              95
                                                                • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Transactions on securities held as long-term investments (pursuant to Article 4 of ISVAP
 Directive No. 893-G of June 18 1998)

 Changes during the year in long-term financial investments are set forth in Annex 9 of the notes
 in accordance with the outline resolutions of the Administrative Committee of October 28 1998
 and September 24 2001.
 During the year, no transfers were made from short-term financial assets to long-term
 investments. Sales, to be considered of an exceptional nature, generated capital gains of 14,065
 thousand euro. The most significant transactions referred to the sale of the interests in IPI
 S.p.A., Europe Assistance S.p.A., A.P .IMM S.p.A. and the reimbursement of the payment made
 against the share capital increase of Roma Nuova Service S.p.A. together with the sale of debt
 securities.

 The analyses made of the operating-financial position of Fiat S.p.A. and Capitalia S.p.A. investee
 companies revealed that the conditions exist to proceed, at the close of the year, with a
 considerable reduction in value due to structural losses.
 In the valuation, persistently lower stock exchange prices have been considered as significant
 elements to be considered together with other economic-financial indicators and the financial
 results of the companies.

 With regard to Fiat, a "mixed" type of valuation has been adopted referring to the theoretical
 conversion value of the debenture loan to be converted subscribed by the financing banks and the
 value of the consolidated net equity per share at December 31 2002, as can be deduced from
 the consolidated results of the Fiat Group anticipated on February 28 2003.

 The "mixed" type valuation considers and combines several elements of appreciation and different
 estimate hypotheses such as, for example, stock exchange prices in the last six months, the
 Group per-share equity value and the valuations of the individual parties indicated in the most
 recent broker reports published by leading banks.

 The permanent loss of value of Capitalia was more difficult to determine; the valuations made at
 the time of the merger between Banca di Roma, Bipop-Carire and Banco di Sicilia and also, albeit
 on a theoretical basis, the result of application of the net equity method to the holding, have been
 taken as reference parameters. Both parameters have confirmed, to a reasonable extent, the
 value attributed to the interest in Capitalia at December 31 2002.

 A unit value of 3.30 euro has been attributed to the 145,886,908 shares of Capitalia S.p.A.
 owned, with a total write-down of 72.9m euro, while a unit value of 14.00 euro has been
 assigned to the 11,699,384 Fiat S.p.A. ordinary shares, resulting in a value adjustment for a
 total of 31.3m euro.

 Other write-downs of unlisted participating interests held for the longer term totalled 20.1m euro
 and referred to Lingotto S.p.A., Toro Targa Assicurazioni S.p.A. and Lloyd Italico Vita S.p.A..




96
     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
2.4 - Deposits with ceding companies (item C.IV)

         2002                                           2001                                               Change

        2,018                                           2,314                                              -296


Postponement of collection is tied to the evolution in time of technical provisions and of technical
items.



Section 3 – SEPARATE INDICATION OF INVESTMENTS FOR THE BENEFIT OF LIFE
ASSURANCE POLICYHOLDERS WHO BEAR THE INVESTMENT RISK AND RELATING
TO THE ADMINISTRATION OF PENSION FUNDS (item D)

         2002                                           2001                                               Change

      242,479                                          212,619                                           29,860



3.1 - Investments relating to contracts linked to investment funds and market indexes
(item D.I)

         2002                                           2001                                               Change

      240,907                                          211,560                                           29,347


The breakdown of assets of this caption is set forth in Annex 11 according to current value and
acquisition cost.

The following changes occurred during the year for each category of assets:


Index-Linked Portfolio

- Purchase of index-linked debt securities                                                                  24,424

- Capitalisation of interest accrued                                                                          5,771

- Upward adjustments to current values at year-end                                                            1,008

- Other changes                                                                                                     47

- Downward adjustments to current values at year-end                                                        -15,223

- Transfers to class C portfolio                                                                             -2,765

  Changes                                                                                                   13,262




                                                                                                                         97
                                                            • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Unit-Linked Portfolio

 - Purchases of common investment funds                                                   88,801

 - Upward adjustments to current values at year-end                                           634

 - Other changes                                                                              107

 - Sales of common investment funds                                                       -66,952

 - Downward adjustments to current values at year-end                                      -6,505

     Changes                                                                              16,085

 Total changes                                                                            29,347




 3.2 - Investments relating to the administration of pension funds (item D.II)

          2002                                              2001                         Change

          1,572                                            1,059                          513


 The breakdown of the assets of this caption according to current value and acquisition costs is
 provided in Annex 12. Changes during the year are set out below:


 - Purchases of common investment funds                                                       653

 - Upward adjustments to current values at year-end                                               11

 - Other changes                                                                                  47

 - Downward adjustments to current values at year-end                                        -198

 Total                                                                                        513




 Section 4 – REINSURERS’ SHARE OF TECHNICAL PROVISIONS (item D bis)

          2002                                              2001                         Change

         171,221                                         167,663                         3,558



 4.1 - Non-life (item D bis.I)

          2002                                              2001                         Change

         151,319                                         131,435                        19,884




98
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
The detail of technical provisions (provisions for unearned premiums and for claims outstanding)
by type of business is as follows:


(in thousand euro)                                                               Provision for           Provision for
                                                                           unearned premiums       claims outstanding


Italian portfolio                                                                 27,484                 123,752

Fire                                                                               13,622                    60,788

Other property damage                                                               5,096                    24,799

Motor third-party liability                                                              26                   5,732

Non-motor third party liability                                                     1,728                    14,445

Accident and Health                                                                 1,208                     1,812

Marine, aviation and transport                                                         417                    4,254

Suretyship                                                                          4,055                     8,666

Credit                                                                                 538                    2,849

Sundry pecuniary losses                                                                788                     396

Other                                                                                      5                      11

Foreign portfolio                                                                          0                      83

TOTAL                                                                             27,484                 123,835



4.2 - Life (item D bis.II)

           2002                                2001                                                      Change

         19,902                              36,228                                                    -16,326


A breakdown by branch of the reinsurers’ share of technical provisions is set out below:


(in thousand euro)                              Branch I             Branch V                        Total


Actuarial provisions                              785               19,027                       19,812

Provisions for claims outstanding                     90                    -                        90

Total technical provisions                        875               19,027                       19,902




                                                                                                                         99
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Section 5 – DEBTORS (item E)

           2002                                             2001                          Change

          419,882                                        359,305                         60,577


 This item is stated net of the related allowances for bad and doubtful accounts.

 The amounts referring to Group companies and other investee companies are set forth in the
 specific annexes.


 5.1 – Debtors arising out of direct insurance operations (item E.I)

           2002                                             2001                          Change

          243,549                                        237,868                          5,681


 The breakdown is as follows:

                                                                                2002           2001


  Policyholders for current and prior year premiums                         105,215       102,730

  Insurance intermediaries                                                  108,830       112,570

  Current accounts with insurance companies                                  28,956        21,973

  Policyholders and third parties for recoveries                                548            595

  Total                                                                     243,549       237,868


 The Company continued to apply its policy, adopted from 1998 onwards, of making a provision
 for write-down of receivables from non-life policyholders, disclosing this under other technical
 charges.
 At December 31 2002, the allowance amounted to 6,561 thousand euro. The write-down
 has been made according to the lump sum method taking into account negative collection
 trends according to experience acquired in previous years. The other effects, resulting from
 the write-down, on the profit and loss account for the year have also been determined as
 regards the provision for premium instalments and other technical income for acquisition
 and collecting commissions.

 At December 31 2002, the existing allowance for doubtful accounts towards agents and other
 intermediaries amounted to 2,244 thousand euro.




100
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
5.2 – Debtors arising out of reinsurance operations (item E.II)

          2002                                  2001                                              Change

         66,053                                44,538                                           21,515


The detail is as follows:

                                                                                     2002              2001


 Insurance and reinsurance companies                                             62,087            44,077

 Reinsurance intermediaries                                                        3,966               461

 Total                                                                           66,053            44,538


At December 31 2002, receivables from CONSAP take into account the alignments to the
value defined in the settlement agreement, as already discussed in "Other Information" of the
Directors’ Report.


5.3 – Other debtors (item E.III)

          2002                                  2001                                              Change

         110,279                               76,899                                           33,380


The most significant amounts are as follows:

                                                                                     2002              2001


 - Tax Authorities                                                               92,812            55,297

 - Customers for invoices issued                                                   1,962             7,025

 - Receivables of the supervisory offices                                          2,963             1,261

 - Invoices to be issued                                                           1,815             1,914


The noteworthy increase in receivables from the Tax Authorities is mainly due to advances paid
on Corporate Income Tax ("IRPEG" and the Regional Tax on Production Activities ("IRAP"), to tax
credits on dividends collected and taxes on life technical provisions.
At December 31 2002, the allowance for doubtful accounts in relation to tenants of
company-owned property amounted to 220 thousand euro.




                                                                                                              101
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Section 6 – OTHER ASSETS (item F)

          2002                                              2001                                               Change

        34,508                                            27,037                                               7,471



 6.1 – Tangible assets and stocks (item F.I)

          2002                                              2001                                               Change

         5,401                                             5,820                                               -419


 The items are stated net of the respective accumulated depreciation.

 The changes that have occurred are set forth in the tables below:


                                          31/12/01        Increases    Decreases   31/12/02     Accumulated              Net
                                                                                                depreciation




  Furniture                                14,869               379         36     15,212        13,760           1,452

  Ordinary office machines                     190                 -          1        189            189                  -

  Electronic and office machines           19,084          1,032            22     20,094        18,505           1,589

  Vehicles listed in public registers        1,213              958        934       1,237            478               759

  Miscellaneous equipment                    6,334              450        138       6,646         5,047          1,599

  Stocks and other goods                          2                -           -           2               -              2

                                           41,692          2,819         1,131     43,380        37,979           5,401


 The changes in accumulated depreciation are set forth below:


                                                                       31/12/01     Additions    Decreases      31/12/02


  Furniture                                                            13,251        5454               36       13,760

  Ordinary office machines                                                 190              -             1             189

  Electronic and office machines                                       17,158        1,370              23       18,505

  Vehicles listed in public registers                                      510         357            389               478

  Miscellaneous equipment                                                4,763         396            112         5,047

                                                                       35,872        2,668            561        37,979




102
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
6.2 - Cash at banks and in hand (item F.II)

       2002                                      2001                                               Change

      16,386                                    13,303                                             3,083


This item consists almost entirely of deposits with credit institutions.
The amounts relating to Group companies are stated in Annex 16.


6.3 - Other assets (item F.IV)

       2002                                      2001                                               Change

      12,721                                    7,913                                              4,808


Deferred reinsurance items amounted to 0.3 thousand euro and are of marginal importance in
relation to total inward reinsurance business. They include technical type income, disclosure of
which in the profit and loss account is postponed to the following year. They refer to relationships
with ceding companies not belonging to the Group and which have not, in any case, involved
postponement to the following year of booking of the respective changes in the credit or debit
balances.

The most significant item of Other assets consists of the connection account which shows assets
of the non-life branches with respect to the life branch of 12,716 thousand euro. A similar
amount has been stated under Other liabilities.

The remaining items (5 thousand euro) refer to brokerage and condominium expenses which are
booked during the year but which refer to the following year.




Section 7 – PREPAYMENTS AND ACCRUED INCOME (item G)

       2002                                      2001                                               Change

      32,305                                    30,425                                             1,880


Accrued income on fixed-income securities amounted to 32,224 thousand euro (30,349 thousand
euro in the previous year).

Prepayments (82 thousand euro) refer to postponement of administrative expenses to the
following year.




                                                                                                               103
                                                     • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' FUNDS


 Section 8 - SHAREHOLDERS’ FUNDS (item A)

          2002                                              2001                                          Change

      1,165,203                                         1,330,196                                        -164,993



 8.1 – Subscribed share capital (item A.I)

          2002                                              2001                                          Change

        181,842                                          181,842                                            -


 The share capital, fully paid in, was unchanged and at December 31 2002 consists of:


 - 104,914,380 ordinary shares with a par value of 1 euro                                              104,914,380

 - 76,927,500 preference shares with a par value of 1 euro                                              76,927,500

                                                                                                       181,841,880



 The share capital comprises (thousand euro):


 - reserves formed with profits up to which repayments of capital to the shareholders are considered
   as distribution of income (Section 2 Article 44 Presidential Decree No. 917 December 22 1986)             5,112

 - revaluation reserves (Law No. 576 of December 2 1975 and Law No. 72 of March 19 1983)
   that contribute to forming the taxable income of the company and the taxable income of the
   shareholders in the case of repayment of capital to the latter                                         104,035




104
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
8.2 – Share premium account (item A.II)

       2002                                          2001                                              Change

     501,362                                      501,362                                                -


No changes occurred in this item during the year.


8.3 – Revaluation reserves (item A.III)

       2002                                          2001                                              Change

      73,053                                       73,053                                                -


No changes occurred.
The shareholders' funds of the Company comprise the following reserves:


- Reserve under Law No. 413 of December 30 1991                                                         58,940

- Reserve under Law No. 413 of December 30 1991 unavailable                                             14,113



8.4 - Legal reserve (item A.IV)

       2002                                          2001                                              Change

      23,273                                       20,445                                             2,828


The change is due to allocation of 5% of the 2001 profit of the non-life branches to reach one
fifth of the share capital in accordance with Article 2430 of the Italian Civil Code.


8.5 – Reserves for own shares and shares of the controlling company (item A.VI)

       2002                                          2001                                              Change

     164,114                                      120,740                                            43,374


As envisaged by Article 2359 bis of the Italian Civil Code, the reserve has changed following the
purchase during 2002 of ordinary and saving shares of the Fiat controlling company.




                                                                                                                  105
                                                        • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 8.6 - Other reserves (item A.VII)

          2002                                              2001                            Change

        196,772                                          390,066                          -193,294


 These comprise:


 - Extraordinary reserve                                                                    196,597

 - Revaluation reserve under Article 20 Legislative Decree No. 173 of May 26 1997                175


 The change in the extraordinary reserve (-193,294 thousand euro) is to be attributed to
 utilisation of the reserve, for the part exceeding the remaining profit, for distribution of the 2001
 dividend as established by the "Proposed allocation of the profit for the year" of the 2001 Report
 (-149,920 thousand euro) and to the transfer to the Reserve for own shares and of the
 controlling company (-43,374 thousand euro).
 The revaluation reserve under Article 20 Legislative Decree No. 173 of May 26 1997 was
 unchanged.


 8.7 - Profit (loss) for the year (item A.IX)

          2002                                              2001                            Change

        24,787                                            42,688                           -17,901




106
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
SHAREHOLDERS' FUNDS

The changes in these accounts at December 31 2002 are stated below in thousand euro:


                                         Share        Legal       Share   Revaluation     Reserves for own        Other   Profit for       TOTAL
                                         capital    reserve    premium      reserves      shares and of the    Reserves    the year
                                                                account                 controlling company


 Balances at December 31 2000         171,765      16,966     381,130      73,053                             489,691     69,583       1,202,188

 Appropriation of 2000 profit:

 - Dividends                                                                                                              -44,989        -44,989

 - Allocation to reserve                            3,479                                                      21,115     -24,594

 Transfer of reserves                                                                           120,740       -120,740

 Share capital increase for

 transfer of Augusta shares            10,077                 120,232                                                                   130,309

 Profit for the 2001 financial year                                                                                       42,688         42,688




 Balances at al December 31 2001      181,842      20,445     501,362      73,053               120,740       390,066     42,688       1,330,196

 Appropriation of 2001 profit:

 - Dividends                                                                                                              -39,860        -39,860

 - Allocation to reserve                            2,828                                                                  -2,828              -

 Transfer of reserves                                                                             43,374       -43,374                         -

 Utilisation of the extraordinary

 reserve for distribution of profit                                                                           -149,920                  -149,920

 Profit for the 2002 financial year                                                                                       24,787         24,787

 Balances at al December 31 2002      181,842      23,273     501,362      73,053               164,114       196,772     24,787       1,165,203




                                                                                                                                              107
                                                                    • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Section 9 – SUBORDINATED LIABILITIES (item B)

 The Company does not hold subordinated liabilities.



 Section 10 – TECHNICAL PROVISIONS (item C)

          2002                                              2001                        Change

      3,451,606                                         3,313,992                      137,614



 10.1 - Non-life (item C.I)

          2002                                              2001                        Change

      1,639,049                                         1,566,455                      72,594


 The detail is as follows:

                                                                              2002            2001


  Provision for unearned premiums                                         377,893       355,638

  Provision for claims outstanding                                       1,254,218     1,204,531

  Other technical provisions                                                 2,834         2,957

  Equalisation provisions                                                    4,104         3,329

  Total technical provisions                                            1,639,049      1,566,455


 The changes during the year in the components of the non-life provision for unearned premiums
 and the components of the provision for claims outstanding are set forth in Annex 13.

 The Provision for unearned premiums consist of the provision for premium instalments of
 373,389 thousand euro and of the provision for unexpired risks for a total of 4,504 thousand
 euro set up for the Non-motor TPL (4,267 thousand euro), Credit (210 thousand euro) and Hulls
 of marine, lake and river vehicles (27 thousand euro) branches.

 Other technical provisions comprise the ageing provision of the Health Branch according to
 Article 25 of Legislative Decree No. 175 of March 17 1995.

 The Equalisation provisions include the provision for the risks of natural disasters according to
 Article 12 of Legislative Decree No. 691 of December 19 1994, converted with amendments by
 Law No. 35 February 16 1995.




108
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
The detail by branch is as follows:


 Equalisation provisions for risks of natural disasters:

 Fire and natural forces                                                                                           1,262

 Accident                                                                                                            795

 Health                                                                                                              790

 Other property damage                                                                                               640

 Motor other classes                                                                                                 291

 Marine, aviation and transport                                                                                      215

 Sundry pecuniary losses                                                                                                 90

 Assistance                                                                                                              21

 Total                                                                                                             4,104



 Compensation provision:

 Credit                                                                                                                    -



 Grand total                                                                                                       4,104




10.2 - Life (item C.II)

          2002                                               2001                                               Change

     1,812,557                                             1,747,537                                          65,020


The detail is as follows:

                                                                                                   2002              2001


 Provision for policy liabilities                                                           1,767,990         1,685,268

 Provision for unearned premiums for supplementary coverage                                         46                   46

 Provision for claims outstanding                                                              16,380            15,590

 Provision for profit-sharing and premium refunds                                                      -           1,411

 Other technical provisions                                                                    28,141            45,222

 Total technical provisions                                                                 1,812,557        1,747,537


The changes during the year in the provision for policy liabilities and provision for profit-sharing
and premium refunds are set forth in Annex 14.



                                                                                                                               109
                                                                 • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 The provision for policy liabilities also includes the additional provision envisaged by Article 25,
 section 12 of Legislative Decree No. 174/95 as amended relating to contracts that guarantee
 an interest rate in the case in which 80% (100% for contracts stipulated prior to the coming
 into force of the above Decree) of the forecast return on the assets covering reserves is less
 than such commitment. The forecast return on the assets is determined according to the
 indications provided by ISVAP with Directive No. 1801 G of February 21 2001.

 Other technical provisions, totalling 28,141 thousand euro, include only the Provisions for future
 charges (Article 25, section 8 Legislative Decree No. 174/95) and are split between Branch I
 (15,241 thousand euro) Branch III (7,310 thousand euro) and Branch V (5,590 thousand euro).



 Section 11 – TECHNICAL PROVISIONS WHERE THE INVESTMENT RISK IS BORNE
 BY THE POLICYHOLDERS AND RELATING TO THE ADMINISTRATION OF PENSION
 FUNDS (item D)

           2002                                             2001                               Change

          242,479                                        212,619                            29,860



 11.1 – Provisions relating to contracts linked to investment funds and market indexes
 (item D.I)

           2002                                             2001                               Change

          240,907                                        211,560                            29,347


 The amount of the provisions, according to type of product in the portfolio, is as follows:


  Toro Azionario Globale Unit Linked                                                            27,943

  Toro Bilanciato Globale Unit Linked                                                           10,378

  Toro Gest. Gar. 02 Unit Linked                                                                23,941

  Toro in Borsa 1 Index Linked                                                                  13,760

  Toro in Borsa 2 Index Linked                                                                    6,632

  Toro in Borsa 3 Index Linked                                                                    1,914

  Toro in Borsa Più Index Linked                                                                23,066

  Toro in Borsa Più November 2001 Index Linked                                                  42,939

  Toro in Borsa Più April 2001 Index Linked                                                     54,988

  Toro in Borsa Più December 2001 Index Linked                                                  10,278

  Toro Index Five Indexed Linked                                                                25,068

  Total                                                                                      240,907




110
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
11.2 – Provisions relating to the administration of pension funds (item D.II)

          2002                                  2001                                               Change

         1,572                                  1,059                                               513


The amount of provisions according to the three investment lines is as follows:


 Toro Previdenza equity                                                                               1,008

 Toro Previdenza balanced                                                                               369

 Toro Previdenza bond                                                                                   195

 Total                                                                                                1,572




Section 12 – PROVISIONS FOR OTHER RISKS AND CHARGES (item E)

          2002                                  2001                                               Change

         73,120                                80,965                                             -7,845


The changes in the Provision for taxation and in Other provisions are set forth in Annex 15.

Following the appropriation for the year, the Provision for pensions and similar obligations
amounts to 703 thousand euro.

Other provisions include the Sofigea Fund (595 thousand euro), the Provision for extraordinary
risks (2,066 thousand euro), the Provision for future risks and charges (10,492 thousand euro).

The Provisions for future risks and charges were utilised for 3,528 thousand euro (including
1,800 thousand euro relating to the dispute with CONSAP) and appropriations were made for
9,790 thousand euro of which 3,869 thousand euro for the portion of the residual loss to be
covered of Lingotto S.p.A. (the payment was made on February 11 2002) and 3,000 thousand
euro for charges arising on the possible negative outcome of legal actions regarding requests for
reimbursements for infringement of Anti-Trust regulations.

The Provision for taxation covers the foreseeable tax liability at December 31 2002.




                                                                                                              111
                                                    • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 DEPOSITS RECEIVED FROM REINSURERS (item F)

           2002                                             2001                          Change

          35,990                                          23,945                         12,045


 Reimbursement of deposits received from reinsurers is tied to evolution in time of technical
 provisions and technical items.



 Section 13 – CREDITORS AND OTHER LIABILITIES (item G)

           2002                                             2001                          Change

          252,318                                        182,977                         69,341


 The amounts referring to relationships with Group companies and with other investee companies
 are disclosed in the specific Annexes.



 13.1 – Creditors arising out of direct insurance operations (item G.I)

           2002                                             2001                          Change

          12,255                                          10,610                         1,645


 The detail is as follows:

                                                                               2002             2001


  Insurance intermediaries                                                    7,501          3,619

  Current accounts with insurance companies                                   2,227          3,306

  Premium deposits and premiums due to policyholders                          1,230          2,761

  Guarantee funds in favour of policyholders                                  1,297             924

  Total                                                                     12,255         10,610




 13.2 – Creditors arising out of reinsurance operations (item G.II)

           2002                                             2001                          Change

          16,894                                           6,580                         10,314




112
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
This caption represents amounts due to other insurance and reinsurance companies and
reinsurance intermediaries divided as follows:

                                                                                     2002              2001


 Insurance and reinsurance companies                                             16,745              6,410

 Reinsurance intermediaries                                                          149                170

 Total                                                                           16,894              6,580




13.3 – Amounts owed to banks and credit institutions (item G.IV)

          2002                                2001                                                Change

            -                               58,005                                              -58,005


At December 31 2002, there were no bank liabilities.



13.4 – Miscellaneous loans and other financial liabilities (item G VI)

          2002                                2001                                                Change

         101,126                               -                                                101,126


At December 31 2002, a liability existed in relation to repo contracts maturing on January 30
2003.



13.5 - Provision for termination indemnities (item G.VII)

          2002                                2001                                                Change

         24,178                             23,399                                                779


The change during the year is detailed in Annex 15.



13.6 - Other creditors (item G.VIII)

          2002                                2001                                                Change

         58,619                             50,845                                               7,774




                                                                                                              113
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 The detail is as follows:

                                                                                2002        2001


  Taxes on behalf of policyholders                                         19,454        18,571

  Other tax liabilities                                                     7,555         4,374

  Social security                                                           2,122         2,158

  Miscellaneous liabilities                                                29,488        25,742

  Total                                                                    58,619       50,845


 The most significant amounts of Miscellaneous creditors are set forth below:

                                                                                2002        2001


 - Suppliers and professional workers                                      14,215         5,031

 - Invoices to be received                                                  7,232        10,134

 - Employees                                                                1,837         3,657

 - Sofigea s.r.l. in liquidation                                            1,517         1,517

 - Liabilities of the supervisory offices                                   1,482           656


 The considerable increase in amounts due to Suppliers and Professional Workers is due to the
 fact that the value dates of the year-end payments have been moved to January of the following
 year whereas in the previous year the payments were made with value date December 31.



 13.6 – Other liabilities (item G.IX)

           2002                                             2001                       Change

          39,246                                          33,538                       5,708


 Deferred reinsurance items amounted to 20 thousand euro and are of minor importance in
 relation to the volume of inward reinsurance.

 Commissions for premiums being collected amounted to 15,650 thousand euro against 15,118
 thousand euro in the previous year.




114
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
The most significant amounts of Other liabilities (29,568 thousand euro) are:

                                                                                                2002              2001


- Contra-entry of negative movements in income relating to reinsured business
  appropriated at the end of the year                                                           600               103

- Bonuses to Agents                                                                           5,179             5,337

- Personnel for annual allowances                                                             4,507             4,442


As already stated under Other assets, the connection account amounted to 12,716 thousand
euro.



Section 14 – ACCRUALS AND DEFERRED INCOME (item H)

No operations such as to give rise to accruals and deferred income for portions not referring to
the year were carried out.



Section 15 – ASSETS AND LIABILITIES RELATING TO GROUP COMPANIES AND
OTHER INVESTEE COMPANIES

The detail of assets and liabilities relating to Group companies and other investees is provided in
Annex 16 of the Notes to the Financial Statements.



Section 16 – RECEIVABLES AND PAYABLES

Amounts receivable stated under items C and E of assets falling due above one year and above
five years are as follows:

                                                     above one year        above five years


 Assets – item C – loans                                 23,445                 14,142

 Assets– item E – receivables                            38,362                 18,577


At December 31, there were no liabilities falling due above one year or above five years.




                                                                                                                         115
                                                              • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Section 17 – GUARANTEES, COMMITMENTS AND OTHER EVIDENCE ACCOUNTS

            2002                                            2001                              Change

      4,367,075                                         4,107,795                            259,280




 17.1 – Detail of guarantees given and received and of commitments - items I, II, III and IV
 (Annex 17)

            2002                                            2001                              Change

          359,044                                         88,595                             270,449


 The detail is given in Annex 17.



 17.2 – Information regarding changes in guarantees given, if of a significant amount

 No guarantees had been given at December 31 of this year.



 17.3 – Detail of assets and liabilities relating to pension funds administered in the name
 and on behalf of third parties (item VI)

 There are no assets and liabilities of this item.



 17.4 – Breakdown, by category of depository, of securities deposited with third parties
 (item VII) with specification of those referring to Group companies

            2002                                            2001                              Change

      3,437,343                                         3,183,542                            253,801


 The breakdown, according to depository, of securities deposited with third parties is as follows:


  Banks and Credit institutions (of which 835,794 with the Banca of Roma investee company)   3,286,681

  Issuers                                                                                     150,662

  Total                                                                                      3,437,343




116
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Securities deposited relating to Group companies and investee companies:


- Subsidiaries                                                                                   275,129

- Controlling company                                                                             63,920

- Affiliated companies                                                                           21,0159

- Other investee companies                                                                       165,099




17.5 – Detail of commitments (item IV) and of other evidence accounts (item VIII), if of a
significant amount, with specification of those referring to Group companies and investee
companies

         2002                                 2001                                               Change

      388,846                                653,816                                          -264,970


Item IV is already included in point 17.1 for 354,279 thousand euro.

The other evidence accounts (item VIII) refer to securities deposited with the Company; those
relating to Group companies and investees are as follows:


- Subsidiaries                                                                                   364,194

- Affiliated companies                                                                              4,932

- Other investee companies                                                                        19,184




17.6 – Disclosure of commitments for operations on derivatives (Annex 18)

The detail is given in Annex 18. These refer to the purchase of options and interest rate swap
contracts for 253,079 thousand euro (already included in point 17.1).

At December 31, the evidence accounts also included 181,842 thousand euro of third party
assets deposited with the Company (as per December 31 2001)




                                                                                                            117
                                                  • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 PROFIT AND LOSS ACCOUNT


 Section 18 – INFORMATION ON THE NON-LIFE TECHNICAL ACCOUNT


 Balance on the technical account

          2002                                              2001                         Change

        35,300                                            57,719                        -22,419


 • (Point 18.1) Gross premiums written in inward reinsurance, with the breakdown into non-life
   and life, are set forth in the table on page 17 of the Directors’ Report.

 • The summary information regarding the non-life technical account – Italian and foreign business
   – is provided in Annex 19.

 • The Allocated investment return transferred from the non-technical account, according to
   Article 55, Section 3, Legislative Decree No. 173/97, amounted to 12,615 thousand euro
   and was determined in accordance with ISVAP Directive No. 1140-G of March 8 1999

 • Other technical income, net of reinsurance, amounted to 10,358 thousand euro; the most
   significant amounts are as follows:
   - Utilisation of the allowance for doubtful accounts towards policyholders
     at December 31 of the previous year                                               6,228
   - Refund of expenses on settlements on behalf of the Road Victims Fund              2,496
   - Commissions relating to premiums of previous years cancelled during the year        640
   - Commissions on write-down of receivables from policyholders
     at December 31 of the year                                                          946

 • No amounts relating to Premium refunds and profit-sharing, net of reinsurance were paid
   during the year.

 • The total amount of Commissions and profit-sharing received from reinsurers (17,070
   thousand euro) is divided as follows:
   - commissions                                                                       16,719
   - profit-sharing                                                                       351

 • Other technical charges, net of reinsurance, amounted to 14,784 thousand euro; the most
   significant amounts are detailed below:
   - Cancellation of prior year premiums                                               5,238
   - Write-down of receivables from policyholders at December 31                       6,561
   - Claim settlement expenses on behalf of the Road Victims Fund                      1,554
   - Commissions on write-down of receivables from policyholders
     at December 31 of the previous year                                                 907

118
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
• The detail of the equalisation provisions by branch is disclosed in the Balance Sheet under
  Technical provisions.



Section 19 – INFORMATION ON THE LIFE TECHNICAL ACCOUNT


Balance on the technical account

       2002                                    2001                                               Change

       -935                                   -34,398                                           33,463


• The summary information concerning life business referring to premiums and the reinsurance
  balance is given in Annex 20.

• The detail of the investment return is provided in Annex 21.

• The detail of Income and unrealised gains on investments for the benefit of policyholders who
  bear the investment risk and on investments relating to the administration of pension funds is
  set forth in Annex 22.
  Unrealised gains deriving from balance sheet valuations are divided as follows:
  - INDEX LINKED                                                                            1,008
  - UNIT LINKED                                                                               633
  - PENSION FUNDS                                                                              11

• Other technical income, net of reinsurance, amounted to 57 thousand euro.

• Premium refunds and profit-sharing, net of reinsurance, amounted to 1 thousand euro and
  refer solely to profit-sharing in relation to amounts paid to policyholders.

• The total amount of Commissions and profit-sharing received from reinsurers (723 thousand
  euro) is divided as follows:
  - commissions                                                                           367
  - profit-sharing                                                                        356

• The detail of Investment management and financial charges is given in Annex 23.

• Annex 24 provides the detail of Investment management and financial charges and unrealised
  losses referring to investments for the benefit of policyholders who bear the investment risk
  and investments relating to the administration of pension funds.




                                                                                                             119
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
  The breakdown of unrealised losses arising on alignment to the year-end prices is as follows:
  - INDEX LINKED                                                                         15,223
  - UNIT LINKED                                                                             6,505
  - PENSION FUNDS                                                                             198

 • Other technical charges, net of reinsurance, amounted to 40 thousand euro and refer almost
   entirely to cancellations of receivables from policyholders for first annual premiums and single
   premiums issued in previous years (39 thousand euro).

 • The value of the Allocated investment return transferred to the non technical account in
   accordance with Article 5, Section 3, Legislative Decree No. 173/97 has been cancelled for
   the 2002 financial year as established by Section 7, Article 6 of ISVAP Directive No. 1140-G of
   March 8 1999 following complete reduction of this, considering the amount of the investment
   return recognised by contract to policyholders



 Section 20 – CHANGES IN BRANCH TECHNICAL ITEMS

 Annexes 25 to 29 contain all the summary schedules of the technical accounts of the non-life
 and life branches and the aggregate value.
 Items referring to other administrative expenses and other acquisition expenses that cannot be
 directly attributed have been allocated to the individual branches for the portion referring to the
 year according to the ratio per branch of direct business premiums. Claim settlement costs not
 directly attributable to the individual branches are allocated on the basis of the amount of claims
 paid.



 Section 21 – INFORMATION ON THE NON TECHNICAL ACCOUNT


 Non-life investment return

          2002                                              2001                           Change

        119,575                                           95,644                          23,931


 The detail is provided in Annex 21.




120
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Non-life investment management and financial charges

         2002                                            2001                                                Change

       100,877                                          31,189                                             69,688


The detail is provided in Annex 23.



Other income

         2002                                            2001                                                Change

       60,089                                           69,929                                              -9,840


The most significant amounts are as follows:


- Refunds of administration costs and expenses                                                                17,513

- Interest on other receivables                                                                                 1,515

- Utilisation of the provision for taxation                                                                   35,158

- Utilisation of other provisions                                                                               4,024




Other charges

         2002                                            2001                                                Change

       68,430                                           73,321                                              -4,891


The most significant amounts are as follows:


- Third party administrative expenses and expenses                                                            17,513

- Income taxes accrued in previous years and paid during the year                                             35,158

- Amortisation of other deferred charges                                                                        4,274

- Appropriations to various provisions                                                                        10,088


Interest expense on liabilities towards banks amounted to 127 thousand euro.




                                                                                                                        121
                                                              • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 Extraordinary income

          2002                                              2001                                      Change

        26,147                                             50,224                                    -24,077


 The most significant items are:


 - Gains on the disposal of the investment in IPI S.p.A.                                                 8,880

 - Gains on the disposal of the investment in Europe Assistance S.p.A.                                   1,077

 - Gains on the disposal of the investment in A.PIMM. S.p.A.                                               916

 - Gains on the sale of Fiat S.p.A. shares                                                                 300

 - Gains on the sale of debt securities                                                                  7,047

 - Gains on the sale of real property                                                                    4,251

 - Out-of-period income (of which 2,201 thousand euro referring to the definition of operations,
   relating to previous years, regarding coinsurance relationships)                                      2,740




 Extraordinary charges

          2002                                              2001                                      Change

        12,545                                             22,615                                    -10,070


 The most significant items are as follows:


 - Losses on the sale of debt securities                                                                 3,866

 - Divestment of Roma Nuova Servizi S.p.A.                                                                 289

 - Expenses on the sale of real property                                                                   181

 - Out-of-period expenses (of which 6,490 thousand euro relating to the gross charge for alignment
   of CONSAP services following the settlement agreement signed at the end of the year)                  7,817




 Section 22 – VARIOUS INFORMATION REGARDING THE PROFIT AND LOSS ACCOUNT

 • Annex 30 discloses relationships with Group companies and other shareholdings.

 • Annex 31 contains the summary schedule of premiums resulting from direct business (non-life
   and life) considering the business as carried out in a regime of stability and freedom of service.

 • Annex 32 shows charges relating to personnel, Directors and Statutory Auditors.




122
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
OTHER INFORMATION

• Solvency margins

• Non-life and life technical provisions to be covered at the end for the year and assets assigned
  to cover these

• Fees paid to Directors and Statutory Auditors

• Statement of changes in financial position

• List of real property

• Schedule of revaluations of shares and interests in subsidiary and affiliated companies




                                                                                                             123
                                                   • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 SOLVENCY MARGINS

 The life and non-life solvency margins to be established in compliance respectively with Article 61,
 Section 2, Legislative Decree No. 174/95 and Article 72, Section 2, Legislative Decree No.
 175/95 are given in the table below; the evidence schedules have been drawn up in compliance
 with the models approved with ISVAP provisions on March 10 1999 No. 1141-G for the life
 margin and No. 1142-G for the non-life margin.

 The table indicates the amount of the elements of the solvency margin, the excess of these in
 relation to requirements and the guarantee quota, in the highest value, determined for the life
 branches pursuant to Article 36 of Legislative Decree No. 174/95 and for the non-life branches
 according to Article 39 of Legislative Decree No. 175/95.

  (thousand euro)                                         Margin to be   Elements of               Guarantee
                                                                formed    the margin      Excess       quota


  Life                                                      78,636       462,694       384,058     26,212

  Non-life                                                147,536        472,792       325,256     49,179

                                                          226,172        935,486       709,314     75,391




 LIFE AND NON-LIFE TECHNICAL PROVISIONS TO BE COVERED AT THE END FOR THE
 YEAR AND ASSETS ASSIGNED TO COVER THESE

 The technical provisions to be covered at the end for the year amounted to 1,635,023 thousand
 euro for the non-life branches and 1,806,033 thousand euro for the life branches respectively.
 The assets assigned to cover these amounted to 1,643,741 thousand euro for the non-life
 branches and to 1,818,310 thousand euro for the life sector.



 FEES PAID TO DIRECTORS AND STATUTORY AUDITORS

 During the year, total fees paid to the Directors and Statutory Auditors of Toro Assicurazioni
 S.p.A. for their appointments amounted to:
 • Directors                      160.1 thousand euro
 • Statutory Auditors             143.5 thousand euro




124
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
STATEMENT OF CHANGES IN FINANCIAL POSITION

                                                                                                  2002             2001
                                                                                            million euro     million euro


A. NET LIQUID ASSETS AT THE BEGINNING OF THE YEAR                                              -44.7             47.6

B. CASH FLOW FROM OPERATIONS                                                                  321.6            194.8

Profit for the year                                                                             24.8             42.7

Increase in technical provisions                                                              163.9             172.9

Depreciation and amortisation                                                                     8.6              8.7

(Gains) or losses on the disposal of investments and of fixed assets                            -22.0            -35.6

(Gains) or losses on value adjustments to participating interests
and securities, including spread matured                                                      203.7              86.6

Change in assets and liabilities of insurance operations                                          -2.9           -16.6

Change in miscellaneous assets and liabilities                                                  -55.3            -63.6

Change in the reserve for termination indemnities                                                 0.8              -0.3

C. CASH FLOW FROM INVESTMENTS                                                                  -70.7           -242.1

Investments:                                                                               -1,509.1          -3,356.0

- Real property                                                                                   0.0              0.4

- Shares, interests and shares in common investments funds                                    -223.1           -784.7

- Debt securities and other fixed-income securities                                        -1,169.2          -2,448.0

- Investments to the benefit of life policyholders                                            -114.3           -110.2

- Loans, advances, deposit accounts and other investments                                         -0.5             -8.4

- Tangible assets                                                                                 -2.8             -4.3

Divestments:                                                                                1,439.2          3,113.9

- Real property                                                                                 15.0             28.7

- Shares, interests and shares in common investments funds                                    272.0             533.5

- Debt securities and other fixed-income securities                                           978.9          2,513.7

- Investments to the benefit of life policyholders                                              68.1             21.4

- Loans, advances, deposit accounts and other investments                                     104.1              15.6

- Tangible assets                                                                                 1.1              1.0

D. PAID SHARE CAPITAL INCREASE                                                                    0.0              0.0

E. DISTRIBUTION OF PROFIT                                                                    -189.8             -45.0

F. NET CASH FLOW FOR THE PERIOD (B+C+D+E)                                                       61.1            -92.3

G. NET LIQUID ASSETS AT THE END OF THE YEAR (A+F)                                               16.4            -44.7




                                                                                                                            125
                                                              • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 REAL PROPERTY
 (in euro)


  L = life                                                                PRIOR TO         MONETARY       VOLUNTARY    REVALUATION
  N-L=non-life                                                                                                              UNDER
                                                                       REVALUATION   REVALUATIONS (*)   REVALUATIONS   LAW 413/91


        PREMISES

  N-L BOLOGNA - Via N. Sauro 25                                       5,806,130                     -              -             -

  N-L MILAN - Via Quarenghi 27                                        4,895,706                     -              -             -

  L     ROME - Via Frezza 70 - Via Canova 12                             46,931             27,878           3,410      161,212

  L     ROME - V. Nazionale 183/184 V. Consulta 1/3/4                 2,441,617           457,134                  -   1,095,091

  N-L TURIN - Via Mazzini 49/51/53/60                                42,421,541                     -              -             -

        APARTMENTS

  N-L MIRANDOLA - Via F. Cavallotti 2                                    76,704             17,492                 -     18,799

  N-L PERUGIA - Via Campo di Marte 18                                   117,507             24,291                 -     11,530

  N-L PERUGIA - Via Campo di Marte 8/L                                   51,524             15,272                 -     31,445

  L     TURIN - Via Don Minzoni 2                                        11,804             14,292                 -     53,080

  TOTAL                                                              55,869,464           556,359            3,410     1,371,157
 (*) Law No. 74 11/2/52 - Law No. 576 2/12/75 - Law No. 72 19/3/83




126
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
        VALUES   ACCUMULATED        EFFECTIVE       CURRENT
at 31/12/2002
         TOTAL   DEPRECIATION          VALUE          VALUE




 5,806,130       1,478,026       4,328,104       5,490,000

 4,895,706       1,638,735       3,256,971       4,230,000

   239,431          68,388        171,043        1,500,000

 3,993,842       1,127,930       2,865,912       7,958,704

42,421,541       3,178,019      39,243,522      40,000,000



   112,995          16,419          96,576        180,000

   153,328           1,282        152,046         348,000

     98,241         49,912          48,329        196,000

     79,176         46,696          32,480        250,000

57,800,390       7,605,407      50,194,983      60,152,704




                                                                                                                        127
                                                              • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
 SCHEDULE OF REVALUATIONS OF SHARES AND INTERESTS IN SUBSIDIARY AND
 AFFILIATED COMPANIES AT DECEMBER 31 2002
 (in euro)


                                                                                        Monetary               Voluntary and
  Name                                                              Value before   revaluations at        fiscal revaluations         Carrying
                                                                    revaluations      31/12/02                at 31/12/02               values


  AUGUSTA ASSICURAZIONI S.p.A.                               130,425,312                                                        130,425,312

  CONTINENT HOLDING S.A. (*)                                   13,490,102          3,893,359                   588,572           17,972,033

  CST. S.p.A.                                                   8,017,432                                                         8,017,432

  D.A.S. S.p.A.                                                 1,355,916                                                         1,355,916

  ISIM S.p.A.                                                121,387,690                                                        121,387,690

  LLOYD ITALICO ASS.NI S.p.A.                                138,923,730                                                        138,923,730

  LLOYD ITALICO VITA S.p.A.                                     3,491,454                                                         3,451,454

  NUOVA TIRRENA S.p.A.                                       343,446,534                                                        343,446,534

  ROMA VITA S.p.A.                                             40,988,863                                                        40,988,863

  TORO INT. HOLD. N.V.                                         65,776,687                                                        65,776,687

  TORO TARGA ASS. S.p.A.                                       24,974,180                                                        24,974,180

  U.G.N. S.A.                                                             629                                                           629

  TOTAL                                                     892,278,531            3,893,359                   588,572          896,760,462
 (*) Revaluations referring to shareholdings in Continent Vie and Continent Iard




 Turin, March 25 2003                                                                                For the Board of Directors

                                                                                                           The Chairman
                                                                                                     Gabriele Galateri di Genola




128
      • ANNUAL ACCOUNTS - NOTES TO THE FINANCIAL STATEMENTS •
Certification Report




                                                                    129
                       • ANNUAL ACCOUNTS - CERTIFICATION REPORT •
130
      • ANNUAL ACCOUNTS - CERTIFICATION REPORT •
                                         131
• ANNUAL ACCOUNTS - ACTUARY’S REPORT •
 Report of the Board of Statutory Auditors to the
 Shareholders' Meeting of Toro Assicurazioni S.p.A.

 Shareholders,
 Article 153 of Legislative Decree No. 58 of February 24 1998 establishes that the Board of
 Statutory Auditors is required to inform the Meeting of the supervisory activities carried out and
 also of any omissions and censurable facts and also envisages the possibility of making proposals
 regarding the financial statements and the approval thereof and also referring to other matters
 within the sphere of their duties. This report complies with the aforesaid requirements.

                                                       *****

 During the year ended December 31 2002, we complied with the duties established by Article
 149 of Legislative Decree No. 58 of February 24 1998 and can therefore report as follows.
 We attended the meetings of the Board of Directors and of the Administrative Committee during
 which the Directors informed us of the activities carried out and the most important economic,
 financial and equity transactions entered into by the Company and/or its subsidiaries. We have
 ascertained that the above transactions were carried out in accordance with the law and the
 Bylaws, were not in contrast with the resolutions passed by the Shareholders' Meeting or gave rise
 to potential conflicts of interests and complied with the general principle of correct administration.
 We consider that the organisational structure of the Company continues to be adequate and
 consistent with its size. We were therefore able to acquire information regarding compliance with
 the proper keeping of administration also at meetings with those in charge of the Internal
 Administration and Auditing function and with the representatives of the Audit Firm.
 The internal control system is applied at Group level and also the activities of persons responsible
 are defined. Our assessment of the effectiveness of the internal system of control as indicated
 above is therefore positive.
 We have evaluated and monitored the administrative and accounting system, as in previous
 years, and consider it is able to correctly represent operating events.
 We consider that the instructions given to subsidiaries pursuant to Article 114 Section 2 of the
 aforementioned Legislative Decree No. 58/1998 appear adequate for the purposes of fulfilling
 the obligation regarding communication as required by law.

                                                       *****

 During our periodic tests, we verified correct posting of amounts assigned to cover technical
 provisions pursuant to ISVAP communication No. 176 of April 27 1992.
 We also made the checks required by ISVAP regarding:
 • anti-laundering regulations;
 • classification and valuation of the securities portfolio;
 • use of derivatives;
 • insurance records and registers.
 We received the Directors’ Report for the first six months of 2002 from the Board of Directors
 by the date established and we verified that this was published by the deadline and in accordance
 with the procedures established by CONSOB.
 With reference to CONSOB communication of February 20 1997 referring to “recommendations
 regarding company tests”, we can state that:



132
      • ANNUAL ACCOUNTS - REPORT OF THE BOARD OF STATUTORY AUDITORS •
- the information provided by the Directors in their Report can be considered complete;
- the periodic tests and controls made on the Company have not revealed any atypical or unusual
  transactions;
- as regards transactions between Group companies, in their Report, the Directors have
  highlighted the existence of exchanges of goods and services between your Company and the
  companies of the Group to which it belongs, specifying that these are carried out on an arm's
  length basis;
- the Report of the Audit Firm does not contain any objections or related comments and
  proposals and no censurable facts have been reported;
- the Company’s system of internal control, as already indicated, is adequate and efficient as also
  confirmed at the frequent meetings of the Audit Committee at which a member of the Board of
  Statutory Auditors was always present;
- during 2002, the Board of Directors, the Administrative Committee and the Board of Statutory
  Auditors held 10, 1 and 13 meetings respectively;
- the Board of Statutory Auditors has not received any complaints from Shareholders pursuant to
  Article 2408 of the Italian Civil Code and is not informed of any petitions received by the
  Company;
- in addition to the auditing and certification of the financial statements, the Company appointed
  KPMG S.p.A. to carry out the following audit work:

                                                                                           Fees in euro
   - Checking of the separate internal management
     accounts in accordance with ISVAP circular
     No 71 of March 26 1987                                                                   4,545.00
   - Examination of the annual report of internal
     insurance funds                                                                          8,884.00
   - Examination of the annual report
     of the open-ended pension fund                                                           5,400.00

KPMG Audit S.r.l., a company with which KPMG S.p.A. maintains continuous relationships,
provided the following professional services:

                                                                                           Fees in euro
   - Assistance in Internal Auditing
     of the Claim Settlement Structures.                                                   112,400.00

Lastly, with regard to CONSOB communication of October 27 1998 relating to “Segment
Information”, we inform you that, in their Report, the Directors have informed you of the trend of
operations in the various sectors of business, which is carried out mainly in Italy.

                                            *****

The Financial Statements are expressed in euro without decimals while the Notes to the Financial
Statements are set out in thousand euro.



                                                                                                              133
                                            • ANNUAL ACCOUNTS - REPORT OF THE BOARD OF STATUTORY AUDITORS •
 With regard to the Statutory Financial Statements, which disclose a profit of 24,787,248 euro, we
 have verified compliance with the laws regulating the preparation and formation of these through
 tests carried out directly by us and on the basis of information provided by the Independent Auditors.
 With reference to the items of the balance sheet and profit and loss account, we would inform you
 of the following.

 Derivatives
 All transactions on derivatives were carried out in compliance with the guidelines established by
 the Administrative Committee according to ISVAP Directive 19/7/1996.

 Technical provisions
 These have been calculated as established by Legislative Decree No. 173/97 which, starting
 from the 1998 financial year, has completely revised the previous regulation; in particular:

 - Life technical provisions
   Life business technical provisions have been calculated in accordance with actuarial
   assumptions with issue of an opinion of consistency by a certified actuary pursuant to Article
   24 Section 2 of Legislative Decree No. 174/95;

 - Non-life technical provisions
 Provision for unearned premiums
 • in accordance with the provisions of Legislative Decree No. 173/97, the provision for
   unearned premiums comprises three components:
   - provision for premium instalments
   - provision integrating the provision for premium instalments for which this is required;
   - provision for unexpired risks
 • as regards calculation of the provision for premium instalments, the following should be noted:
   - the “pro-rata” method has been applied;
   - the deduction for acquisition commissions and acquisition costs permitted by the regulation
     has been made:
 • in the case in which the provision for premium instalments is not sufficient to cover the costs
   of future claims, a provision for unexpired risks has been made; the need for integration has
   been determined referring to the current year loss ratio as specified in ISVAP Directive No.
   360/D of January 21 1999.
 • for the risks of Hail and Nuclear Risks insurance, the provision has been calculated according
   to the lump sum method pursuant to Article 32 of Legislative Decree No. 173/97.
 Other technical provisions
 This item includes:
 • the “ageing” provision of the Health Branch as specified in Article 25 of Legislative Decree No. 175/95.
 Equalisation provision
 This item includes:
 • the compensation provision of the Credit branch established by Legislative Decree No. 175/95;
 • the equalisation provision for the risks of natural disasters established by Law No. 35 of
   February 16 1995.



134
      • ANNUAL ACCOUNTS - REPORT OF THE BOARD OF STATUTORY AUDITORS •
Provision for claims outstanding
• the provision for claims outstanding, including settlement costs, has been determined
  analytically examining the individual claims still open at the end of the year, taking into account
  appropriate statistical methods for mass risks. In particular:
  - for Motor TPL, statistical-actuarial methods have been used as established by ISVAP circular
    No. 360 of January 21 1999;
  - the provision includes the estimate of late claims according to the criteria defined by Article 5
    of ISVAP Directive December 4 1998.

Assignment of the allocated investment return in the profit and loss account
The Board of Statutory Auditors acknowledges that:
- for the Non-life branches, transfers have been made from the non-technical account to the
  technical account;
- no transfers have been made for the Life branches;
as established by ISVAP Directive No. 1140 G of March 8 1999.

Current value of land and buildings
In compliance with ISVAP Directive 1915 G of July 7 2001, the Company had determined the
current value of company-owned buildings at December 31 2001.
The total amount of the current value is higher than the carrying value of buildings existing at
December 31 2002 net of accumulated depreciation.

Solvency margin
The Financial Statements are accompanied by the evidence schedules of the situation of the
solvency margin drawn up according to the regulations established by ISVAP with Directives
1141 G and 1142 G of March 10 1999 and which show an excess of the elements of the
margin in relation to the amount of the solvency margin to be formed.

Reserves for own shares and of the Controlling company
The Board of Statutory Auditors states that the Company has established a non-available reserve
under Section 4 of Article 2359 bis to cover the purchase during the year of ordinary and saving
shares of the FIAT S.p.A. controlling company.

                                             *****

Considering the above and taking into account the Certification Report, we invite you to approve
the Financial Statements at December 31 2002 and the proposal of the Board of Directors
regarding the allocation of the profit for the year.



Turin, April 7 2003                                                    The Board of Statutory Auditors
                                                                              (Cesare Ferrero)
                                                                              (Giorgio Ferrino)
                                                                                (Piero Rosso)



                                                                                                               135
                                             • ANNUAL ACCOUNTS - REPORT OF THE BOARD OF STATUTORY AUDITORS •
Consolidated Financial Statements




                                                                            137
                                    • CONSOLIDATED FINANCIAL STATEMENTS •
Directors' Report


BUSINESS ACTIVITIES

In 2002, consolidated gross premiums amounted to 5,238m euro with a decrease of 8.9% in
relation to the previous year.

This reduction is to be ascribed to the short-fall in life business with premiums for 2,471m euro,
21.2% lower than in 2001, which affected business both in Italy, with a decline of 20.5% and in
France, with a drop of 29.1%.
Non-life business with premiums of 2,767m euro posted an increase of 5.8% in relation to
2001 (+3.1% in Italy and +16.3% abroad).

With regard to life business, business income of the traditional channels in Italy was 6.7% lower
than in 2001 while the bankassurance channel, affected by the complex process of
reorganisation involving the Capitalia Group following the merger with the Bipop-Carire Group in
mid 2002, posted a reduction of 23.5%.

In the non-life sector, the Motor compartment (TPL and Motor Other Risks) posted premium
income of 1,747m euro with an upswing of 4.2% in relation to year-end 2001.

Other branches that also played a major role included Fire and Other Property Damage with
392m euro, an increase of 11.7%, and Accident and Health business with 252m euro, a
decrease of 1.6%.

An analysis of Group business by geographical area reveals that:

• Italian business produced premium income of 4,422m euro with a decrease of 10.5% in
  relation to 2001. Non-life business income amounted to 2,155m euro (an increase of 3.1%)
  and life business to 2,266m euro (a decrease of 20.5%);

• premium income from foreign business amounted to 816m euro, with an upswing of 0.7%.
  Non-life business totalled 611m, with an increase of 16.3% and life business 205m euro
  (compared with 285m in 2001, with a reduction of 28.1%;
  in particular:
  - in France, premium income amounted to 743m euro compared with 750m in the previous
    year. The non-life branches posted 545m euro with a growth of 15.8% while the life branches
    recorded 197m euro with a reduction of 29.1%, mainly due to the Guardian Vie company,
    reflecting the negative trends of the French market with regard to insurance products with a
    high financial content;




                                                                                                              139
                                                  • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
  - in Brazil, premium income came to 51m euro compared with 38m in the previous year, an
    upswing of 34.1%; on the basis of this growth, the Phenix company is now ranked amongst
    the ten leading insurance companies in Brazil;
  - in Poland, the Fiat Ubezpieczenia Majatkowe subsidiary posted premium income of 24m euro
    compared with 23m in 2001.




        PREMIUMS WRITTEN                                          TORO GROUP
        million euro                                              Distribution of premiums
                                                                  according to sales channel

                                        5,751 (*)

                                                      5,238        Agencies            Direct      Bank
                                                                   48%                 4%          36%
                              4,497
                   4,088
                                         3,135
                                                      2,471
        3,169
                              2,468
                   2,205

        1,437




                                                                     Concessionaires     Brokers
        1,732      1,883      2,029      2,616        2,767                      2%      10%



        1998        1999       2000       2001         2002
      (*) of which change in the consolidation area
          564m euro


          Non-Life            Life




 A comparison between consolidated premiums and those of each individual company is provided
 in the tables below.




140
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
Premium income of Toro Assicurazioni S.p.A. and of other Group companies

                                                                     2002              2001                %
                                                                euro/milioni      euro/milioni         change


Toro Assicurazioni S.p.A.                                       1,278.0           1,242.1                2.9

Nuova Tirrena S.p.A.                                               691.4             690.8               0.1

Roma Vita S.p.A.                                                1,785.0           2,334.6              -23.5

Augusta Assicurazioni S.p.A.                                       231.3             217.7               6.2

Augusta Vita S.p.A.                                                  64.3              64.8              -0.8

Lloyd Italico Assicurazioni S.p.A.                                 250.8             251.9               -0.4

Lloyd Italico Vita S.p.A.                                            26.6              29.2              -8.9

Toro Targa Assicurazioni S.p.A.                                      70.8              95.4            -25.8

D.A.S. S.p.A.                                                        21.6              17.8             21.3

Giano Assicurazioni S.p.A.                                             4.2               5.7           -26.3

Total Italian Companies                                         4,424.0           4,950.0              -10.6

Continent Group:

• Continent IARD S.A.                                              467.5             402.4              16.2

• Continent Vie S.A.                                                 54.3              66.9            -18.8

• L'Union Générale du Nord S.A.                                      58.7              56.0              4.8

• Continent Assistance S.A.                                            8.4               7.2            16.7

• Guardian Vie S.A.                                                143.1             211.7             -32.4

• Altegia S.A.                                                       10.7                5.3          101.9

• Total                                                            742.7             749.5               -0.9

Phenix    (1)
                                                                     51.1              38.1             34.1

Fiat Ubezpieczenia Majatkowe                 (2)
                                                                     21.1              21.0              0.5

Fiat Ubezpieczenia Zyciowe             (2)
                                                                       2.4               1.9            26.3

Total Foreign Companies                                            817.3             810.5               0.8

Elisions and adjustments                                              -3.4              -9.4

Consolidated premiums                                           5,237.9           5,751.1               -8.9

(1) exchange rate 1 € = Brazilian real                               2.765             2.107

(2) exchange rate 1 € = Polish zloty                                 3.854             3.677




                                                                                                                141
                                                   • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
 Premium income - breakdown by type of business and according to non-life/life sector

                                                                        2002           2001         %
                                                                  million euro   million euro   change


  Direct business Non-life                                        2,755.0        2,609.3         5.6

                    Life                                          2,471.2        3,135.1        -21.2

                    Total                                         5,226.2        5,744.4         -9.0

  Inward reinsurance                                                  11.7             6.7      74.6

  Total                                                           5,237.9        5,751.1         -8.9

  Non-life

  Italy                                                           2,155.3        2,090.5         3.1

  Abroad                                                            611.4          525.5        16.3

  Total                                                           2,766.7        2,616.0         5.8

  Life

  Italy                                                           2,266.2        2,850.1        -20.5

  Abroad                                                            205.0          285.0        -28.1

  Total                                                           2,471.2        3,135.1        -21.2

  Non-life+Life

  Italy                                                           4,421.5        4,940.6        -10.5

  Abroad                                                            816.4          810.5         0.7

  Total                                                           5,237.9        5,751.1         -8.9




142
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
OPERATING PERFORMANCE




The highlights of the reclassified profit and loss account are set forth below:

                                                                                                   2002         2001 (*)
                                                                                             million euro      million euro


 Earned premiums, non-life                                                                   2,463.4           2,344.0

 Premiums written, life                                                                      2,452.5           3.116.7

 Total premiums                                                                              4,915.9           5,460.7

 Claims incurred, non-life insurance business                                                -1,875.4          -1,839.4

 • loss ratio non-life                                                                         76.1%             78.5%

 Claims incurred and changes to life technical provisions                                    -2,093.4          -3,030.1

 Commissions and other distribution expenses                                                   -565.4            -532.3

 • ratio to premiums                                                                           11.5%               9.7%

 Other administrative expenses                                                                 -127.3            -141.4

 • ratio to premiums                                                                             2.6%              2.6%

 Other technical income and charges                                                              25.4              -18.8

 Income allocated to life policyholders                                                        -219.8              96.5

 Margin on insurance business                                                                    60.0                -4.8

 • ratio to premiums                                                                             1.2%             -0.1%

 Net income from investments:

 • Interest, dividends and other net income                                                    492.5             522.8

 • Gains and losses on the realisation of investments                                            28.0              48.6

 • Write-downs of investments                                                                  -423.6            -143.4

 • Charges/income on investments for the benefit of life policyholders (class D)               -410.6            -150.9

 • Total                                                                                       -313.7            277.1

 • of which: attributed to life policyholders                                                  219.8               -96.5

 Other income and charges                                                                        -11.8             10.9

 Ordinary profit (loss)                                                                         -45.7            186.7

 Extraordinary income and charges                                                              127.8               86.0

 Amortisation of goodwill and consolidation differences                                          -23.4             -29.3

 Profit (loss) before taxes                                                                      58.7            243.4

 Income taxes for the year                                                                       -49.6             -96.5

 Minority interest in profit (loss)                                                                9.9             11.7

 Group profit (loss)                                                                               -0.8          135.2

 (*) reclassified for consistency with 2002




                                                                                                                              143
                                                              • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
 Net premium income for the year totalled 4,916m euro moving down 10% in relation to the
 previous year. There was a 5.1% increase in non-life business and a decrease of 21.3% in the
 life sector. Net retention of premiums acquired, i.e. net of reinsurance, was equal to 94.3%, a
 reduction on the previous year (95.6%).

 Non-life claims, equal to 1,875m euro, with an increase of 2% in relation to 2001, reflect a
 considerable improvement in the loss ratio which corresponded to 76.1%
 compared with 78.5% in 2001. The further improvement in this index was forged by attentive
 selection of the portfolio and also by the effects of the above-average improvement in the Motor
 TPL claims rate compared with the rest of the Italian market. In reverse trend to the continuous
 increase in the last few years, the number of claims with personal injury tended to stabilise, with
 however an increase in the average-per-claim cost.

 Overall operating costs amounted to 693m euro, with a costs-to-premiums ratio of 14.1%,
 compared with 12.3% in 2001. In detail, commissions and other acquisition costs represented
 11.5% of premiums compared with 9.7% in the previous year while other administrative
 expenses were equal to 2.6% of premiums as in 2001. The increase in the burden of
 commissions it to be ascribed to the higher incidence of the non-life branches.

 Income from investments bore the brunt of the negative trends of financial markets which
 resulted in downward adjustments of 424m euro (-143m euro in the previous year), part of
 which were to be attributed to the valuations of the strategic investments in Capitalia (-124m
 euro) and Fiat (-78m euro).
 Interest, dividends and other ordinary income amounted to 493m euro compared with 523m
 in 2001; net gains on trading of equities and debt securities held for resale to 28m euro
 (49m euro in 2001).

 The short-fall in income from investments and in particular the repercussions of the write-downs
 of the equity portfolio generated a profit before extraordinary income and taxes of -46m euro
 compared with +187m euro in 2001.

 Extraordinary income, net of charges, amounted to 128m euro compared with 86m euro in
 2001 and consisted mainly of net gains on the realisation of long-term investments: the sale of
 real property for 120m euro (74m euro in 2001) and the sale of equities held as long-term
 investments for 11m euro (17m euro in the previous year).

 Group interest in the net profit for the year was equal to -0.8m euro as against +135m euro
 in 2001.




144
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
FINANCIAL AND INVESTMENT ACTIVITY




Investments

The breakdown of investments is provided in the table below:

                                                                                                     2002              2001
                                                                                               million euro      million euro


 Land and buildings                                                                              557.3             718.8

 Investments in Group companies and other shareholdings:                                         918.6           1,132.8

 • Shares and interests                                                                          770.8             890.4

 • Debt securities                                                                               147.8             240.7

 • Loans                                                                                                  -            1.7

 Other financial investments:                                                                  8,804.0           8,749.5

 • Shares and interests                                                                          719.9           1,018.7

 • Debt securities                                                                             7,990.8           7,668.4

 • Loans and other                                                                                 93.3              62.4

 Deposits with ceding companies                                                                    22.4              17.5

 Investments for the benefit of life policyholders (class D):                                  6,929.9           6,176.9

 • Land and buildings                                                                                7.5               8.0

 • Shares and interests                                                                        2,423.7           2,633.5

 • Debt securities                                                                             4,488.9           3,516.4

 • Cash at bank and in hand                                                                          9.8             19.0

 Other assets/liabilities                                                                        252.1             175.4

 • Liquid funds and other financial receivables/payables                                         107.4               37.4

 • Accrued income                                                                                144.7             138.0

 Total investments and liquid funds                                                          17,484.3          16,970.9


At year-end 2002, investments amounted to 17,484m euro, with an increase of 513m, or 3%,
in relation to the previous year. The investment portfolio consisted for 73% of debt securities, for
22% of equities, for 3% of real property and for 2% of liquid assets and other financial
receivables/payables.

The investments also include those for the benefit of policyholders who bear the investment risk
against life insurance and capital redemption contracts, with policies linked to investments funds
and stock exchange indexes. At the end of 2002, these amounted to 6,929.9m euro.




                                                                                                                                145
                                                                • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
 The securities portfolio, excluding investments in Group companies, consisted for 17% of securities
 held as long-term investments, for 42% of investments for the benefit of life policyholders (class D)
 while the remaining 41% consisted of securities held for resale.
 With regard to the real property portfolio, property was sold in 2002 for 159m euro, generating
 net gains of 120m euro. Property was sold almost entirely in Italy.
 Purchases and refurbishing costs for the year amounted to 5m euro.

 The average ordinary return (coupons, interest, rents) by type of assets invested, excluding
 class D investments, was 4.9% for debt securities (5.6% in 2001), 1.7% for shares (2.1%)
 and 5.6% for real property (6.3%).




        INVESTMENTS                                               TORO GROUP
        million euro                                              Investment mix




                                                                  Securities and    Real property
                                                                  other financial   3%
                                                                  instruments
                                                                  75%


                                   16,971   17,484


                         13,232

                10,867


        7,394
                                                                                             Shares
                                                                                             22%




         1998     1999     2000     2001     2002




146
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
Financial position

The analysis of the main items of the balance sheet of the Group is provided in the explanatory
notes in accordance with Decree Law No. 173/97.

The table below represents the consolidated financial position, reclassified briefly to highlight the
main items according to allocation:

                                                                                                     2002               2001
                                                                                               million euro       million euro


 Total investments and liquid funds                                                           17,484.3          16,970.9

 Technical provisions                                                                         -16,507.9         -15,677.5

 Excess of investments over technical provisions                                                 976.4            1,293.4

 Balance of receivables/payables arising on insurance operations                                 423.6              434.8

 Excess of investments over technical commitments                                              1,400.0            1,728.2

 Goodwill and consolidation differences                                                            96.7             120.3

 Intangible assets and other assets/liabilities                                                  132.4                -22.4

 Shareholders' funds                                                                           1,629.1            1,826.1


Against investments of 17,484m euro, net technical provisions totalled 16,508m with a year-on-
year increase of 830m or 5.3%. The provisions-to-premiums ratio increased from 285% in the
previous year to 334.2%.
The trend of technical provisions is indicated separately for life and non-life business in the table
below.

                                                           2002            2001          %     % on premiums   % on premiums
                                                     million euro    million euro    change            2002            2001


 Non-life provisions for unearned premiums
 and claims outstanding                              4,334.5         4,213.3          2.9             174.3         176.7

 Life provisions for policy liabilities and other
 technical provisions                               12,173.4        11,464.1          6.2             496.3         367.8

 Total                                              16,507.9        15,677.4          5.3            334.2          285.0




                                                                                                                                 147
                                                              • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
               NON-LIFE BUSINESS                                  LIFE BUSINESS
               % ratio technical                                  % ratio technical
               provisions/premiums                                provisions/premiums             496.3




                                         176.7                                            367.8
                                                  174.3                           359.4

                                                                          310.5

                                                                  268.3
                                 166.0
                        163.4


                156.6




                1998    1999     2000     2001     2002           1998    1999    2000    2001    2002




 The excess of investments in relation to technical provisions amounted to 976m euro compared
 with 1,293m in 2001.

 At December 31 2002, shareholders' funds were equal to 1,629m euro compared with
 1,826m euro at the end of 2001.
 Group interest amounted to 1,489m euro in relation to 1,687m in 2001.
 Minority interest in shareholders’ funds amounted to 140m euro compared with 139m euro at
 December 31 2001.
 The changes during 2002 refer to:
 • distribution of ordinary and extraordinary dividends for 197.3m euro;
 • share capital increases of Toro Targa Assicurazioni S.p.A. (for a total of 10m euro of which
   4.9m euro from outside the Group) and Nuova Tirrena S.p.A. for 17.9m euro of which 1.4m
   from outside the Group;
 • exchange rate and other differences for –15m euro;
 • profit for the year of 9m euro.




148
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
OTHER INFORMATION




New products

In 2002, Group companies undertook various actions on the products portfolio in order to
broaden market offerings and to cater more effectively to customers' requirements as regards
services.

• In the non-life sector, Toro Assicurazioni continued with plans to renew its range and also
  launched a number of new products during the year:

 “Shipsystem" and “Motorsystem più”: intended respectively to insure all craft and all mopeds
 and motorcycles regulated by Law 990/69. Both products are intended to review the covers
 offered, to achieve improved transparency of contractual conditions and rate personalization;

 “Motor vehicle racing and sports competitions”, a new policy for insurance of damages caused
 during races and sports competitions regulated by Law 990/69;

 “Legal, Fiscal and Administrative Area Professional Policy – Real Estate Brokers”: a specific
 insurance cover for the real estate agent sector, designed to meet the obligation, established
 by law, of suitable insurance coverage of professional risks in this area of business.

 Nuova Tirrena designed and launched the following new products: “AD HOC Veicoli Plus”
 (extension of no claims bonus to up to 60T trucks), “AD HOC Auto Plus” and “AD HOC” Ruote
 Plus” (extension of the guarantees proposed with introduction of new covers).

 Lloyd Italico Assicurazioni launched the “Formula Motori Più” new product, a modular policy
 that permits insurance coverage of any vehicle or craft regulated by legal obligations with, in
 addition to Third Party coverage, a wide range of accessory covers.

 Augusta Assicurazioni started to sell two new products: “Bene Auto” and “Bene Conducente”;
 the second product in particular is an evolution of the classic contract on accidents of the
 driver and provides interesting alternative possibilities of insurance coverage.

• In the Life sector, in response to market requests for products characterised by low risks on
  the capital, Group companies have developed new products that, while they meet this need,
  make it possible to reap growth opportunities on financial markets.

 The main products launched by Toro Assicurazioni during 2002 were as follows:

 “Toro in Quota – Capitale Garantito 2002”: a new unit-linked product, launched in March and
 managed through setting up of an internal fund, the assets of which are spread between equity
 and debt security investments, with the possibility of modification in time in accordance with
 market performance; at the end of the six years of the contract, return of the invested capital
 is guaranteed;




                                                                                                              149
                                                  • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
  “Capital Flash”: a review, presented to the market in May, of an existing temporary case of
  death product, with fixed premium brackets;

  “Toro Rendimento Più”: single-premium capital redemption policy with an investment in
  “zero coupon” securities with predefined return guaranteed on maturity;

  “Toro Index Five”: a new index-linked product, issued in the period November-December, with
  high predefined return in the short term (5% in the first two years) and in subsequent years
  from a minimum of 1% to a maximum of 9.6%, according to the trend of the D.J. Eurostoxx
  50 index. The product, with a duration of six years, guarantees the capital paid on maturity and
  the possibility of annual collection of the coupon or capitalisation of this.

  In January 2002, Roma Vita launched the “Progetto Crescita Valore” and “Progetto Crescita
  Previdenza” products, two new “recurrent-premium index-linked” type products for establishing
  individual pension schemes based on flexible savings plans. The two products, of similar
  structure, differ considerably as regards certain contractual characteristics:
  “Progetto Crescita Previdenza” represents a regulated solution (so-called Individual Pension
  Formulas) that, considering a number of contractual conditions as regards duration and supply
  of the services, without specific constraints, makes it possible to exploit the favourable tax
  conditions of pension funds. The “Progetto Crescita Valore” is a free form of pension fund,
  which does not make it possible to benefit from the above-mentioned tax regulations. In the
  second part of the year, Roma Vita also launched two unit-linked type product lines, tied to the
  trend of specific asset management accounts inside the Company with protection of the capital
  and minimum returns on expiry of the contract.
  Other index-linked products, launched at the end of the year, were also well-received by the
  market. These envisage fixed returns for the first two coupons and variable for the second,
  according to stock market trends.

  Nuova Tirrena launched two new versions of the index-linked product “Blue Unit-Linea Garantita
  2002” and “Blue Coupon Plus”, in addition to a new secured return capital redemption policy,
  called “Pretendo Serie Speciale”.

  Lloyd Italico Vita increased its offer through the issue of a unit-linked policy “Formula Unit
  Capitale Garantito 2002 ” and an index-linked policy called “Formula Borsa Index Five”.

  Similarly to other Group companies, Augusta Vita restructured its range of products, launching
  two new products “Bene Vita Flash”, a “light” version of the conventional temporary case of
  death policy and “Augusta Investimento Garantito 2002”, a new unit-linked policy.




150
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
Litigation

Legal cessions

Following the outline agreement sealed between Consap and Ania on October 12 2001, Group
companies communicated their willingness to define the dispute according to the solution
envisaged by the aforementioned agreement.
In particular:
- Nuova Tirrena S.p.A. sealed the settlement agreement in the opening months of the year and,
  on closing of the dispute, collected the amount of 21.7m euro, waiving continuation of all
  relationships. The company had already disclosed provisions to cover the economic effects of
  the transaction in the 2001 financial statements.
- At year-end 2002, Toro Assicurazioni S.p.A. reached a similar agreement according to which
  the company will collect an amount equal to 47.5m euro, waiving continuation of current legal
  actions in course. The amount to which the transaction refers was collected in February 2003.
- Augusta Vita S.p.A. signed a similar agreement at year-end 2002 and collected, as final
  settlement, an amount equal to 19.7m euro, also in February 2003;
- Toro Assicurazioni S.p.A. and Augusta Vita S.p.A., which settled the dispute with Consap in
  2002, have disclosed charges for a total of 4.7m euro, net of provisions accrued in previous
  years, in the financial statements for the year.
- At year-end 2002, Lloyd Italico Vita S.p.A. was the only Group company that has not yet signed
  an agreement with Consap for settlement of the dispute. The company allocated 1.3m euro in
  the 2002 financial statements to cover any loss emerging on settlement of the dispute, which
  is expected to be closed by the first half 2003.

Anti-Trust

According to the sentence handed down on February 27 2002 with which the Council of State,
partially upholding the appeals presented, amended the previous sentence of the Lazio Regional
Administrative Court, partially cancelling the sanctions imposed in July 2001 by the Anti-Trust
Authority for alleged infringement of the rules on competition in the Motor sector, Toro Group
companies have presented requests for reimbursement of the following amounts:
- Nuova Tirrena for 8.3m euro
- Augusta Assicurazioni for 1.1m euro
- Lloyd Italico Assicurazioni for 3.8m euro (the related economic benefit will ensue to the
  Royal & Sun Alliance Group which owned the company in 2000 as increase of the purchase price)
stating these under miscellaneous receivables.

Requests for reimbursements of premiums for alleged infringement of the Anti-Trust law

Similarly to other companies operating on the market, Toro Assicurazioni S.p.A. and Nuova
Tirrena S.p.A. have received requests for partial reimbursement of Motor TPL premiums paid
between 1995 and 2000, on the basis of alleged infringement of the rules on competition
determined by Anti-Trust Authority procedure of July 28 2000. Legislative Decree No. 18 of



                                                                                                            151
                                                • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
 February 8 amended the current code of civil procedure which establishes that for suits deriving
 from legal relationships relating to so-called “mass” contracts, the decision must be taken
 according to law rather than equity thereby making the related sentences subject to appeal also
 in Court. It will be possible to make a more precise assessment of the related economic
 repercussions only in the next few months, once the above Decree has been converted into law.
 The two companies have accrued a total of 3.3m euro in the financial statements for the year.

 Law No. 137/2000

 In relation to the procedure initiated by ISVAP regarding compliance with the provisions of
 Legislative Decree No. 70/2000 (converted with Law No. 137/2000) regarding the so-called
 “freezing” of Motor TPL rates, it should be noted that Article 21 of Law No. 273/2002 has
 abrogated the regulation of the above Decree which establishes sanctions in the case of non-
 compliance with such provisions and the ineffectiveness of any action taken by ISVAP within the
 meaning of the regulation abrogated.
 ISVAP’s claims with regard thereto are therefore without effect.
 With its sentence handed down on February 25 2003, the European Court of Justice declared
 that introduction by the Italian Government of regulations enacting the aforesaid “freeze”
 constituted an infringement of Community regulations on competition in the insurance sector.

 Inspections by the revenue authorities

 With regard to the dispute between the Tax Administration and Nuova Tirrena S.p.A. regarding
 tax assessments notified in 2000 regarding 1994 VAT and direct taxes for 1993 and 1994, the
 Rome Provincial Tax Commission, with its sentence dated March 28 2002, upheld the appeals
 presented by the company, cancelling all the assessments. The procedure relating to
 assessments notified with regard to 1995 Corporate Income Tax (“IRPEG”) and Local Income Tax
 (“ILOR”) and to 1996 VAT is still in course. These relate, inter alia, to the same items to which
 the aforementioned sentence refers, or other items of a minimum amount, which refer to
 questions resolved by law always in favour of the company.
 In December 2002, tax assessments were notified to the company relating to Corporate
 Income Tax (“IRPEG”) and Local Income Tax (“ILOR”) for 1996 and adjustment of the VAT return
 for 1997. As regards Corporate Income Tax and Local Income Tax, the same items to which
 the findings of the Revenue Authorities during 2000 are involved, already included in the
 notifications referring to 1993, 1994 and 1995; for VAT, the adjustment refers to the recovery
 on agent indemnities and relates to a question already solved, by law, by Article No. 53 of
 Law No. 342/2000.
 Authoritative tax experts have confirmed, also on the basis of the favourable opinion of the Rome
 Provincial Tax Commission mentioned above, the opinion expressed regarding the inconsistency of
 the findings underlying the assessments and the positive outcome of the litigation in course, for
 which a congruous provision was accrued to a specific fund in the 2000 financial statements.




152
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
Shares of the controlling company

At December 31 2002, the securities portfolio included the following shares of the controlling
company:

 TORO ASSICURAZIONI S.P.A.                                         Number        Nominal value          % held
                                                                                      in euro


 FIAT savings                                                1,084,716         5,423,580              0.176

 FIAT ordinary                                              11,699,384        58,496,920              1.898




 CONTINENT IARD S.A.                                               Number        Nominal value          % held
                                                                                      in euro


 FIAT ordinary                                               4,140,033        20,700,165              0.672




Intra-Group Transactions and Operations With Related Parties


Transactions with the Controlling company and its subsidiaries

During the year, the companies of the Toro Group maintained the following relationships of
exchange of goods and services, regulated on an arm's length basis, with the Fiat controlling
company and its subsidiaries:

- premium income of 91.6m euro, mainly (77.5m euro) from Augusta Assicurazioni;
- loans granted and extensions of credit that produced interest income of 1.3m euro;
- services provided for 1.4m euro;
- loans received and extensions of credit with interest expense of 2.5m euro;
- services purchased for consulting and seconding of personnel and goods for 35.6m euro.
Also:
- Toro Assicurazioni S.p.A. sold its investment in Ipi S.p.A. to Fiat Geva S.p.A. with capital gains
  of 4.7m euro;
- Isim S.p.A. sold real property to Immobiliare San Babila S.p.A. for a total of 220m euro with
  capital gains of 102m euro.

As part of ordinary operations, Group companies engage in investment and financing
transactions (active and/or passive) with companies of the Fiat Group, on an arm's length basis.
The most significant transactions are set out in the explanatory notes; for the others, reference
should be made to the financial statements and attached schedules of each company.




                                                                                                                 153
                                                   • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
 Fees paid to Directors and Statutory Auditors

 Fees due to the Directors and Statutory Auditors of Toro Assicurazioni S.p.A. for performance of
 their functions at the Parent Company and at the consolidated companies were as follows:


  - Directors                                                                 375.2 thousand euro

  - Statutory Auditors                                                        318.0 thousand euro




 Transactions with other related parties

 Through its companies, the Toro Group has maintained and continues to maintain insurance
 relationships with “related” parties as defined by CONSOB. These relationships, also with regard
 to potential conflicts of interest, are regulated on an arm's length basis.
 With respect to other non-recurrent transactions, the following should be noted:
 - Outline agreement between the Isim S.p.A. subsidiary and La Rinascente S.p.A. relating to Isim
   S.p.A.'s commitment to purchase real property owned by La Rinascente up to a maximum
   amount of 100m euro by the final date of June 27 2005;
 - Payment by Nuova Tirrena S.p.A. to Edison S.p.A. of 40m euro as advance payment on
   subscription of the share capital increase following transfer of the related option rights by
   Italenergia Bis S.p.A., the majority shareholder of Edison S.p.A..




154
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
MAJOR EVENTS IN EARLY 2003




On January 23 2003, Capitalia S.p.A., Fineco S.p.A. and Toro Assicurazioni S.p.A. signed an
amendment to the letter of intent stipulated on July 25 2002 and amended on November 5
2002.
According to the modification introduced in January, the parties have agreed to extend the
provisions of the original agreement to July 25 2003.
The above-mentioned letter of intent refers to a project to integrate the respective activities of
the three companies in the life insurance sector in order to set up a leading insurance pole in
Italy according to dimensions and distribution channel diversification.

On March 7 2003, Fiat S.p.A., Capitalia S.p.A. and Toro Assicurazioni S.p.A. signed an
agreement relating to the shares of Capitalia S.p.A. held by Toro Assicurazioni S.p.A. and the
shares of Roma Vita S.p.A., also held by Toro Assicurazioni S.p.A..
The agreement reflects Fiat decision to dispose of its controlling interest in Toro Assicurazioni
S.p.A. and also takes into account that part of the Toro Group’s life business is carried out
through the banking outlets of the Capitalia Group and that it is in the reciprocal interest of the
companies concerned to define the repercussions of the change in Fiat’s control of Toro on
existing relationships.
On the basis of this agreement:
- Toro Assicurazioni S.p.A. grants Capitalia S.p.A. the option of having Toro Assicurazioni S.p.A.’s
   interest in Capitalia S.p.A. acquired by a third party indicated by Capitalia S.p.A., in the case of
   divestments in the next three years that determine a change of control of Fiat S.p.A. in relation
   to Toro Assicurazioni S.p.A.. The take-up a price of the Capitalia option will be equal to the
   average official market prices in the last three months prior to the offer of the potential
   purchaser of the interest held by Fiat S.p.A. in Toro Assicurazioni S.p.A., increased by a
   premium of 25%. The option may be exercised as indicated above in the case of a further
   change of control in relation to Toro Assicurazioni S.p.A. in the three years following the change
   of control of Fiat S.p.A. in relation to Toro Assicurazioni S.p.A., in relation to which Capitalia
   S.p.A. has not exercised its option;
- Capitalia S.p.A. grants Toro Assicurazioni S.p.A. the option of selling to Capitalia, which is
   obliged to purchase, or have purchased by another company of the Capitalia Group, the interest
   held by Toro Assicurazioni S.p.A. in Roma Vita S.p.A. This option may be exercised only in the
   case in which Capitalia S.p.A. has previously exercised the option on Capitalia shares.
The price of the option on Roma Vita shares will be equal to 370m euro.
If the option on Roma Vita shares is exercised by Toro Assicurazioni S.p.A. after a second
change of control of Toro Assicurazioni S.p.A. as mentioned above, the price will be calculated
applying a multiple of 1.95 to the embedded value resulting from the certified financial
statements of Roma Vita S.p.A..
According to the aforesaid agreements with Capitalia, the option to sell the shares held in Roma
Vita S.p.A. by the shareholders (Toro Assicurazioni S.p.A. and Fineco Group S.p.A.) can be
exercised in 2006.

At the moment, it is not possible to assess, with any reasonable certainty, the possibility of
Capitalia taking up the option granted.




                                                                                                                155
                                                    • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
 However, it should be noted that the management of your Company considers the two options
 to be correlated from an economic and strategic point of view so that these would be exercised
 consequentially. In this hypothesis, assessing the two options jointly, on the basis of stock
 exchange prices at the moment, net positive components of income would be generated.

 In February 2003, the Extraordinary Shareholders’ Meeting of Toro Targa Assicurazioni S.p.A.
 voted a paid share capital increase from 83,550,000 to 89,550,000 euro; this transaction,
 carried out to comply with current legislation regarding the coverage of technical provisions, was
 formalised through payment by the shareholders in March 2003.
 On March 21 2003, acknowledging that the company has incurred total losses of 36.2m euro
 (of which 12.8m euro referring to 2002) and that the conditions envisaged by Article 2446 of
 the Italian Civil Code have been established, despite the aforementioned share capital increase,
 the Board of Directors of Toro Targa Assicurazioni S.p.A. proposed full coverage of the total
 losses through utilisation of the legal reserve of 581,121 euro and reduction of the share capital
 from 89,550,000 euro to 53,963,870 euro. The motion will be submitted to the next
 Shareholders' Meeting to be held on April 17 2003.

 As the situation envisaged by Article 2447 of the Italian Civil Code has been established following
 the accumulation of a loss exceeding the share capital of the company, on February 11 2003,
 the Shareholders’ Meeting of Lingotto S.p.A., in which Toro Assicurazioni S.p.A. has a 15.65%
 interest, voted complete utilisation of reserves, write-down of the share capital and subsequent
 reformation of this. On the basis of these resolutions, Toro Assicurazioni S.p.A. subscribed and
 paid a total of 6.8m euro of which 3.9m euro to cover losses.

 On March 12 2003, the Continent Iard S.A. and Continent Vie S.A. subsidiaries signed the deed
 of sale of the premises located in Paris, Rue de Richelieu 62, the present HQ of the company,
 for a total price of 49.5m euro. This transaction generated capital gains of 34.4m euro.

 The Board of Directors of Fiat S.p.A., at its Meeting of March 22 2003, decided to accept
 the offer submitted by the De Agostini Group for the sale of the entire interest held in Toro
 Assicurazioni S.p.A. and its affiliates.
 The exclusive negotiation of the final agreement is in course and is excepted to be closed by the
 end of June.




156
      • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
BUSINESS OUTLOOK




In the first two months of the year, Group companies posted premium income of 967m euro
with a year-on-year increase of 5%. In particular, Toro Assicurazioni S.p.A. recorded premium
income of 178m euro, Nuova Tirrena of 112m euro, the companies of the Lloyd Italico Group
of 46m euro, the companies of the Augusta Group of 54m euro, Roma Vita and its subsidiary
Giano Assicurazioni of 405m euro, Toro Targa Assicurazioni and its foreign subsidiaries Phenix
and Fiat Ubezpieczenia of 20m euro. In France, the companies of the Continent Group and
Guardian Vie posted overall premium income of 150m euro.

As regards business prospects in 2003, confirmation of positive business trends is expected.
However, financial markets continue to be extremely volatile and business is still beset by
uncertainties stemming from the international political scenario.




Turin, March 25 2003                                              For the Board of Directors

                                                                        The Chairman
                                                                  Gabriele Galateri di Genola




                                                                                                            157
                                                • CONSOLIDATED FINANCIAL STATEMENTS - DIRECTORS’ REPORT •
Consolidated Balance Sheet
and Profit and Loss Account




                                                                      159
                              • CONSOLIDATED FINANCIAL STATEMENTS •
 Consolidated Balance Sheet
 ASSETS (1st part)


  (thousand euro)                                                                          Year 2002

  A • SUBSCRIBED CAPITAL UNPAID                                                                           1          646
      of which called-up capital                                     2



  B • INTANGIBLE ASSETS
         1 - Acquisition commissions to be amortized                 3     118,694
         2 - Other acquisition costs                                 4

         3 - Goodwill                                                5      24,337
         4 - Other intangibles                                       6      38,717
         5 - Difference on consolidation                             7      72,373                        8      254,121

  C • INVESTMENTS
      I - Land and buildings                                                          9         557,341
      II - Investments in Group companies and other shareholdings
           1 - Shares and interests in:
               a) controlling companies      10       230,538
               b) subsidiaries               11             231
               c) affiliated companies       12         17,804
               d) associated companies       13

               e) other companies            14       522,203        15    770,776
           2 - Debt securities                                       16    147,795
           3 - Loans to affiliated companies                         17               18        918,571

       III - Other financial investments
             1 - Shares and interests                                19     437,932
             2 - Shares in common investment funds                   20     281,950
             3 - Debt securities and other fixed-income securities   21   7,990,791
             4 - Loans                                               22      35,923
             5 - Participation in investment pools                   23

             6 - Deposits with credit institutions                   24      2,504
             7 - Other                                               25     54,905    26      8,804,005

       IV -Deposits with ceding companies                                             27         22,376   28   10,302,293

  D • INVESTMENTS FOR THE BENEFIT OF LIFE-ASSURANCE
      POLICYHOLDERS WHO BEAR THE INVESTMENT
      RISK AND RELATING TO THE ADMINISTRATION
      OF PENSION FUNDS                                                                                    29    6,929,873

                                  to be carried forward                                                        17,486,933




160
      • CONSOLIDATED BALANCE SHEET - ASSETS •
                                   Year 2001

                                                            101         646
                        102




                        103    109,762
                        104

                        105     35,292
                        106     30,256
                        107     85,003                      108     260,313



                                          109    718,760



110        234,752
111          7,368
112         22,777
113        604,177
114         21,298      115    890,372
                        116    240,735
                        117      1,723    118   1,132,830



                        119     504,074
                        120     514,655
                        121   7,668,389
                        122      46,073
                        123

                        124      1,256
                        125     15,065    126   8,749,512

                                          127     17,472    128   10,618,574




                                                            129    6,176,904

to be carried forward                                             17,056,437




                                                                                                                         161
                                                                               • CONSOLIDATED BALANCE SHEET - ASSETS •
 Consolidated Balance Sheet
 ASSETS (2nd part)


  (thousand euro)                                                                     Year 2002

                                  carried forward                                                         17,486,933

  D bis • REINSURERS' SHARE OF TECHNICAL PROVISIONS

       I - NON-LIFE BUSINESS
           1 - Provision for unearned premiums                    30    60,285
           2 - Provision for claims outstanding                   31   485,196
           3 - Other provisions                                   32       201   33        545,682

       II - LIFE BUSINESS
            1 - Provision for policy liabilities                  34    73,196
            2 - Provision for claims outstanding                  35     1,268
            3 - Other provisions                                  36

            4 - Provision for policies where the investment
                risk is borne by the policyholders and relating
                to the administration of pension funds            37     1,184   38         75,648   39     621,330

  E • DEBTORS
        I - Debtors arising out of direct insurance operations                   40        573,694
       II - Debtors arising out of reinsurance operations                        41        135,747
      III - Other debtors                                                        42        368,912   43    1,078,353

  F • OTHER ASSETS
         I - Tangible assets and stocks                                          44         21,618
        II - Cash at bank and in hand                                            45        319,955
       III - Own shares or participating interests                               46            552
      IV - Other                                                                 47         34,176   48     376,301

  G • PREPAYMENTS AND ACCRUED INCOME                                                                 49     145,598

  TOTAL ASSETS                                                                                       50   19,708,515




162
      • CONSOLIDATED BALANCE SHEET - ASSETS •
                           Year 2001

carried forward                                         17,056,437




                  130    68,655
                  131   425,155
                  132       212   133   494,022



                  134   113,812
                  135     1,147
                  136        94



                  137       38    138   115,091   139     609,113



                                  140   562,937
                                  141    81,073
                                  142   276,767   143     920,777



                                  144    20,917
                                  145   219,977
                                  146       497
                                  147    30,292   148     271,683

                                                  149     139,024

                                                  150   18,997,034




                                                                                                               163
                                                                     • CONSOLIDATED BALANCE SHEET - ASSETS •
 Consolidated Balance Sheet
 LIABILITIES AND SHAREHOLDERS’ FUNDS (1st part)


  (thousand euro)                                                                                 Year 2002

  A • SHAREHOLDERS' FUNDS
      I - Group interest
           1 - Subscribed capital or equivalent fund                        51    181,842
           2 - Reserves                                                     52    794,460
           3 - Consolidation reserve                                        53    230,892
           4 - Reserve for valuation differences in
               non-consolidated shareholdings                               54     37,163
           5 - Reserve for exchange differences                             55     22,982
           6 - Reserve for own shares and shares
               of the controlling company                                   56    222,074
           7 - Profit (loss) for the year                                   57       -821    58      1,488,592
      II - Minority shareholders' interest
           1 - Capital and reserves                                         59    130,633
           2 - Profit (loss) for the year                                   60      9,868    61        140,501   62    1,629,093

  B • SUBORDINATED LIABILITIES                                                                                   63



  C • TECHNICAL PROVISIONS
      I - NON-LIFE BUSINESS
           1 - Provision for unearned premiums                              64     913,417
           2 - Provision for claims outstanding                             65   3,954,124
           3 - Equalisation provision                                       66       7,436
           4 - Other provisions                                             67       5,180   68      4,880,157
      II - LIFE BUSINESS
           1 - Provision for policy liabilities                             69   4,938,446
           2 - Provision for claims outstanding                             70     141,715
           3 - Other provisions                                             71     168,039   72      5,248,200   73   10,128,357

  D • PROVISIONS FOR POLICIES WHERE THE INVESTMENT
      RISK IS BORNE BY THE POLICYHOLDER
      AND RELATING TO THE ADMINISTRATION
      OF PENSION FUNDS                                                                                           74    7,000,833

  E • PROVISIONS FOR OTHER RISKS AND CHARGES
      1 - Provision for pensions and other similar obligations                               75            703
      2 - Provision for taxation                                                             76        138,996
      3 - Provision for future liaiblities and charges from consolidation                    77

      4 - Other provisions                                                                   78         26,321   79     166,020

                                    to be carried forward                                                             18,924,303




164
      • CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' FUNDS •
                                   Year 2001




                        151    181,842
                        152    984,926
                        153    102,167

                        154     25,116
                        155     31,571

                        156    226,035
                        157    135,143    158   1,686,800

                        159    127,554
                        160     11,746    161    139,300    162     1,826,100

                                                            163




                        164     899,179
                        165   3,796,947
                        166       6,033
                        167       5,174   168   4,707,333

                        169   5,094,286
                        170     100,788
                        171     147,625   172   5,342,699   173   10,050,032




                                                            174     6,236,527



                                          175        572
                                          176    189,984
                                          177

                                          178     19,662    179       210,218

to be carried forward                                             18,322,877




                                                                                                                             165
                                                      • CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' FUNDS •
 Consolidated Balance Sheet
 LIABILITIES AND SHAREHOLDERS’ FUNDS (2nd part)


  (thousand euro)                                                                 Year 2002

                                 carried forward                                                       18,924,303

  F • DEPOSITS RECEIVED FROM REINSURERS                                                           80     108,504

  G • CREDITORS AND OTHER LIABILIITES
          I - Creditors arising out of direct insurance operations           81         66,743
         II - Creditors arising out of reinsurance operations                82         68,223
        III - Debenture loans                                                83

       IV - Amounts owed to banks and credit institutions                    84         30,503
        V - Loans guaranteed by mortgages                                    85

       VI - Miscellaneous loans and other financial liabilities              86        185,460
       VII - Provision for employees' termination indemnities                87         43,797
      VIII - Other creditors                                                 88        201,813
       IX - Other liaiblities                                                89         78,081    90     674,620

  H • ACRUALS AND DEFERRED INCOME                                                                 91        1,088

  TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS                                                       92   19,708,515




 GUARANTEES, COMMITMENTS AND OTHER EVIDENCE ACCOUNTS


  (thousand euro)                                                                 Year 2002


  GUARANTEES, COMMITMENTS AND OTHER EVIDENCE ACCOUNTS
        I - Guarantees issued                                                                     93        7,365
       II - Guarantees received                                                                   94       29,551
      III - Guarantees given by third parties in the interest
            of consolidated companies                                                             95      11,217
     IV - Commitments                                                                             96     499,700
      V - Assets of third parties deposited with the Company                                      97     181,947
     VI - Assets relating to pension funds managed
            in the name and for account of third parties                                          98

    VII - Securities deposited with third parties                                                 99   16,801,976
    VIII - Other evidence accounts                                                               100       11,933




166
      • CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' FUNDS •
                  Year 2001

carried forward                               18,322,877

                                        180        99,179



                       181     41,726
                       182     25,435
                       183

                       184    110,309
                       185

                       186     81,873
                       187     43,236
                       188    174,870
                       189     96,958   190       574,407

                                        191            571

                                        192   18,997,034




                  Year 2001




                                        193         6,746
                                        194        30,121

                                        195        11,246
                                        196        78,824
                                        197       181,946

                                        198

                                        199   15,531,708
                                        200      142,951




                                                                                                         167
                                  • CONSOLIDATED BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' FUNDS •
 Consolidated Profit and Loss Account


  (thousand euro)                                                                                Year 2002

       I. TECHNICAL ACCOUNT - NON-LIFE INSURANCE BUSINESS

  1 • EARNED PREMIUMS, NET OF REINSURANCE
      a) Gross premiums written                                                         1    2,766,700
      b) (-) Outward reinsurance premiums                                               2      279,154
      c) Change in the gross provision for unearned premiums                            3       23,416
      d) Change in the provision for unearned premiums, reinsurers' share               4         -767   5    2,463,363

  2 • OTHER TECHNICAL INCOME,
      NET OF REINSURANCE                                                                                 7      21,905

  3 • CLAIMS INCURRED, NET OF RECOVERIES
      AND REINSURANCE
      a) Claims paid
         aa) Gross amount                                         8         1,975,701
         bb) (-) Reinsurers' share                                9           166,674
         cc) Change in recoveries, net of
             reinsurers' share                                   10           35,164    11   1,773,863
      b) Change in the provision for claims outstanding
         aa) Gross amount                                        12          171,422
         bb) (-) Reinsurers' share                               13           69,915    14    101,507    15   1,875,370

  4 • CHANGE IN OTHER TECHNICAL PROVISIONS,
      NET OF REINSURANCE                                                                                 16        510

  5 • PREMIUM REFUNDS AND PROFIT SHARING,
      NET OF REINSURANCE                                                                                 17        -154

  6 • OPERATING EXPENSES
      a) Acquisition commissions                                                        18    332,259
      b) Other acquisition costs                                                        19     85,862
      c) Change in commissions and other
         acquisition costs to be amortised                                              20      5,566
      d) Collecting commissions                                                         21     92,382
      e) Other administrative expenses                                                  22     90,618
      f) (-) Reinsurance commissions
         and profit sharing                                                             23     47,264    24    548,291

  7 • OTHER TECHNICAL CHARGES,
      NET OF REINSURANCE                                                                                 25     37,879

  8 • CHANGE IN THE EQUALISATION PROVISION                                                               26      1,157

  9 • BALANCE ON THE TECHNICAL ACCOUNT
      FOR NON-LIFE BUSINESS (Item III.1)                                                                 27     22,215




168
      • CONSOLIDATED PROFIT AND LOSS ACCOUNT •
           Year 2001




                  111   2,615,961
                  112     231,108
                  113      43,942
                  114       3,076   115   2,343,987



                                    117     15,358




118   2,037,491
119     173,891

120     44,182    121   1,819,418

122     48,713
123     28,691    124     20,022    125   1,839,440



                                    126        158



                                    127        567



                  128    316,997
                  129     93,175

                  130      9,756
                  131     74,357
                  132     99,412

                  133     44,653    134    529,532



                                    135     32,143

                                    136      1,309



                                    137     -43,804




                                                                                                 169
                                                      • CONSOLIDATED PROFIT AND LOSS ACCOUNT •
 Consolidated Profit and Loss Account


  (thousand euro)                                                                    Year 2002

       II. TECHNICAL ACCOUNT - LIFE ASSURANCE BUSINESS

  1 • PREMIUMS WRITTEN, NET OF REINSURANCE
      a) Gross premiums written                                             28   2,471,195
      b) (-) Outward reinsurance premiums                                   29      18,644   30   2,452,551
  2 • (+) ALLOCATED INVESTMENT RETURN TRANSFERRED
          FROM THE NON-TECHNICAL ACCOUNT (Item III.5)                                        40    190,840
  3 • INCOME AND UNREALISED GAINS ON INVESTMENTS FOR THE BENEFIT
      OF POLICYHOLDERS WHO BEAR THE INVESTMENT RISK AND
      RELATING TO THE ADMINISTRATION OF PENSION FUNDS                                        41    301,119
  4 • OTHER TECHNICAL INCOME, NET OF REINSURANCE                                             42     48,816
  5 • CLAIMS INCURRED, NET OF REINSURANCE
      a) Claims paid
          aa) Gross amount                                43  1,422,234
          bb) (-) Reinsurers' share                       44       15,667   45   1,406,567
      b) Change in the provision for claims outstanding
          aa) Gross amount                                46       41,399
          bb) (-) Reinsurers' share                       47          173   48     41,226    49   1,447,793
  6 • CHANGE IN THE PROVISION FOR POLICY LIABILITIES
      AND IN OTHER TECHNICAL PROVISIONS,
      NET OF REINSURANCE
      a) Provision for policy liabilities
          aa) Gross amount                                50     -153,684
          bb) (-) Reinsurer's share                       51        3,068   52    -156,752
      b) Other provisions
          aa) Gross amount                                56        8,448
          bb) (-) Reinsurer's share                       57         -257   58      8,705
      c) Provision for policies where the investment
          risk is borne by the policyholders and relating
          to the administration of pension funds
          aa) Gross amount                                59      764,244
          bb) (-) Reinsurer's share                       60                61    764,244    62    616,197
  7 • PREMIUM REFUNDS AND PROFIT-SHARING,
      NET OF REINSURANCE                                                                     63     29,383
  8 • OPERATING EXPENSES
      a) Acquisiiton commissions                                            64     83,977
      b) Other acquisition costs                                            65     19,598
      c) Change in commissions and other
          acquisition costs to be amortised                                 66      3,092
      d) Collecting commissions                                             67      9,045
      e) Other administrative expenses                                      68     36,675
      f) (-) Reinsurance commissions and profit-sharing                     69      1,786    70    144,417
  9 • EXPENSES AND UNREALISED LOSSES ON INVESTMENTS
      FOR THE BENEFIT OF POLICYHOLDERS WHO BEAR THE
      INVESTMENT RISK AND ON INVESTMENTS RELATING TO
      THE ADMINISTRATION OF PENSION FUNDS                                                    75    711,737
  10 •OTHER TECHNICAL CHARGES, NET OF REINSURANCE                                            76      5,942
  11 •BALANCE ON THE TECHNICAL ACCOUNT -
      LIFE ASSURANCE BUSINESS (Item III.2)                                                   78     37,857



170
      • CONSOLIDATED PROFIT AND LOSS ACCOUNT •
           Year 2001




                  138   3,135,148
                  139      18,393   140   3,116,755

                                    150    247,330



                                    151    181,762
                                    152      3,114



153    911,467
154     20,324    155    891,143

156     41,097
157        249    158     40,848    159    931,991




160     34,634
161      -6,356   162     40,990

166     -32,311
167          34   168     -32,345




169   2,009,341
170               171   2,009,341   172   2,017,986

                                    173     80,112

                  174     71,752
                  175     21,576

                  176      -1,241
                  177       9,841
                  178     42,023
                  179       2,203   180    144,230




                                    185    332,628
                                    186      2,981

                                    188     39,033



                                                                                                 171
                                                      • CONSOLIDATED PROFIT AND LOSS ACCOUNT •
 Consolidated Profit and Loss Account


  (thousand euro)                                                                        Year 2002

        III. NON-TECHNICAL ACCOUNT

  1.    BALANCE ON THE TECHNICAL ACCOUNT FOR NON-LIFE BUSINESS (Item I.9)                        79     22,215

  2.    BALANCE ON THE TECHNICAL ACCOUNT FOR LIFE BUSINESS (Item I.11)                           80     37,857

  3.    INVESTMENT INCOME
        a) Income from participating interests
           aa) income from participations valued
               according to the equity method                  81          -222
           bb) other income from participating interests       82        87,132   83    86,910
        b) Income from other investments
           aa) income from land and buildings                  84     39,774
           bb) income from other investments                   85    390,999      86   430,773
        c) Value readjustments on investments                                     87     6,759
        d) Gains on the realisation of investments                                88    55,318   89    579,760

  4.    INVESTMENT CHARGES
        a) Investment management charges, including interest                      90    25,183
        b) Value adjustments on investments                                       91   430,425
        c) Losses on the realisation of investments                               92    27,313   93    482,921

  5.    (-) ALLOCATED INVESTMENT RETURN TRANSFERRED
        TO THE LIFE TECHNICAL ACCOUNT (Item II:2)                                                94    190,840

  6.    OTHER INCOME                                                                             95     46,542

  7.    OTHER CHARGES
        a) Interest on financial liabilities                                      96     4,515
        b) Sundry charges                                                         97    77,198   98     81,713

  8.    RESULT FROM ORDINARY ACTIVITY                                                            99    -69,100

  9.    EXTRAORDINARY INCOME                                                                     100   168,032

  10. EXTRAORDINARY CHARGES                                                                      101    40,260

  11. EXTRAORDINARY PROFIT OR LOSS                                                               102   127,772

  12. RESULT BEFORE TAXATION                                                                     103    58,672

  13. INCOME TAXES FOR THE YEAR                                                                  104    49,625

  14. CONSOLIDATED RESULT                                                                        105     9,047

  15. MINORITY' INTEREST IN PROFIT (LOSS) FOR THE YEAR                                           106     9,868

  16. PROFIT (LOSS) OF THE GROUP                                                                 107      -821




172
       • CONSOLIDATED PROFIT AND LOSS ACCOUNT •
         Year 2001




                                189   -43,804

                                190    39,033




191    20,361
192    57,011   193    77,372

194    53,802
195   425,037   196   478,839
                197     9,897
                198    94,459   199   660,567



                200    33,487
                201   153,303
                202    45,831   203   232,621



                                204   247,330

                                205    88,895



                206     3,277
                207   104,073   208   107,350

                                209   157,390

                                210   127,416

                                211    41,406

                                212    86,010

                                213   243,400

                                214    96,511

                                215   146,889

                                216    11,746

                                217   135,143




                                                                                           173
                                                • CONSOLIDATED PROFIT AND LOSS ACCOUNT •
 Notes to the Consolidated Financial Statements


 The Notes to the consolidated financial statements comprise the following parts:
 - part A, consolidation principles and consolidation area
 - part B, valuation criteria
 - part C, comments regarding the Balance Sheet and Profit and Loss Account
 - part D, other information


 PART A – CONSOLIDATION PRINCIPLES AND CONSOLIDATION AREA


 The consolidated financial statements of the Toro Group have been prepared using the financial
 statements of Parent Company Toro Assicurazioni S.p.A. and of all Italian and foreign subsidiaries
 in which Toro Assicurazioni S.p.A. holds, directly or indirectly, more than 50% of the share
 capital.

 For Roma Vita S.p.A., held 47.5% with Fineco Group S.p.A. and for its subsidiary Giano
 Assicurazioni S.p.A., the data have been included entirely in these consolidated financial
 statements considering the specific insurance nature of their business and the management of
 operations afforded. Toro Assicurazioni S.p.A. is part of the stable core of shareholders of
 Capitalia S.p.A. with a total interest that, following the dilution of the capital stemming from the
 integration with the Bipop-Carire Group, has moved down from 10.57% in 2001 to 6.61%.

 In compliance with the principle of consistency and considering the insurance character of the
 consolidated financial statements of the Toro Group, subsidiaries whose business cannot be
 considered as institutional investments tied to insurance business have not been fully
 consolidated. These companies are valued by the equity method with the sole exception of the
 French Civil Real Property companies.

 Investments in affiliated companies have been valued by the equity method except for the French
 Civil Real Property companies.

 For the French Civil Real Property companies (S.C.I.) that own and manage real property,
 valuation at cost corresponds to the accounting policy applied to the statutory financial
 statements in France. In accordance with this policy, the above-mentioned companies are stated
 at cost under Land and buildings.

 Changes in the consolidation area are detailed on page 180.

 The data have been consolidated by the line-by-line method. The carrying value of investments
 held by the Parent Company Toro Assicurazioni S.p.A. and by other consolidated companies has
 been eliminated against assumption of the total amount of assets and liabilities of the
 consolidated companies.




174
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
The data for consolidation purposes have been taken from the statutory accounts of each
consolidated company, adjusted where necessary to conform to the accounting principles
adopted by the Parent Company. Value adjustments made exclusively for the purpose of securing
tax benefits allowed by law have also been eliminated from the consolidated financial statements.
For foreign insurance companies, the above-mentioned principles of the Parent Company have
not been taken into account for items of liabilities, valued according to the law in force in the
specific country, and for items of assets the variations of which affect the rights of policyholders.

The difference arising on comparison of the carrying value of the investments - as disclosed in
the accounts of Toro Assicurazioni S.p.A. and in the those of the consolidated companies - and
the underlying net equity is disclosed in the consolidated financial statements under Consolidation
reserves of shareholders’ funds.

Minority shareholders' interest of consolidated subsidiaries in shareholders’ funds and in the
profit for the year is stated separately from that of the Group.

In the consolidated financial statements, all receivables and payables as well as expenses and
revenues among consolidated companies have been eliminated. For relationships referring to
reinsurance transactions, although international practice envisages the possibility of delay in the
recognition of inward reinsurance business, the items are aligned in the same year of occurrence
between ceding companies and concessionary companies when they refer to relations within the
Group.

Investments not fully consolidated, if affiliated, have been valued by the equity method according
to Article 2426 No. 4 of the Italian Civil Code.

Financial statements expressed in currencies other than the money of account (euro) have been
translated applying the year-end exchange rate to the items of the balance sheet and the average
exchange rate for the year to the items of the profit and loss account. Differences arising on the
translation of initial shareholders’ funds at the year-end exchange rate in relation to that
prevailing at the end of the previous year are recognised directly in a specific reserve under
consolidated shareholders’ funds.

All consolidated companies close their accounts on December 31.




                                                                                                                    175
                           • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 CONSOLIDATION AREA

 Companies consolidated line-by-line

  Company                                                  Business                                           % owned at 31.12.2002
  City                                                                                 Direct                                    Indirect                  Group
  Share capital                                                                                                                                        interest*

  Toro Assicurazioni S.p.A.
  Turin                                                    Insurance and
  Euro 181,841,880                                         Reinsurance
  Lloyd Italico Assicurazioni S.p.A.
  Genoa                                                    Insurance and
  Euro 132,997,250                                         Reinsurance               98.00         Augusta Ass.ni                     2.00            100.00
  Lloyd Italico Vita S.p.A.
  Genoa                                                    Insurance and
  Euro 14,524,500                                          Reinsurance               20.00         Lloyd Italico Ass.ni             80.00             100.00
  Augusta Assicurazioni S.p.A.
  Turin                                                    Insurance and
  Euro 26,000,000                                          Reinsurance              100.00                                                            100.00
  Augusta Vita S.p.A.
  Turin                                                    Insurance and
  Euro 39,000,000                                          Reinsurance                             Augusta Ass.ni                  100.00             100.00
  Nuova Tirrena S.p.A.
  Rome                                                     Insurance and
  Euro 142,570,800                                         Reinsurance               92.13                                                              92.13
  Rome Vita S.p.A.
  Rome                                                     Insurance and
  Euro 85,120,000                                          Reinsurance               47.50                                                              47.50
  Giano Assicurazioni S.p.A.
  Rome                                                     Insurance and
  Euro 5,200,000                                           Reinsurance                             Roma Vita S.p.A.                100.00               47.50
  Toro Targa Assicurazioni S.p.A.
  Turin                                                    Insurance and
  Euro 83,550,000                                          Reinsurance               51.00                                                              51.00
  D.A.S.-Difesa Automobilistica Sinistri S.p.A.
  Verona                                                   Insurance and
  Euro 2,750,000 Paid in Euro 2,104,429                    Reinsurance               50.01                                                              50.01
  Continent Holding S.A.
  Paris                                                    Insurance
  Euro 167,745,259                                         holding                   47.01         Toro Intern. Hold.               52.57               99.58
  Continent Iard S.A.
  Paris                                                    Insurance and                           Continent Holding                96.47
  Euro 104,819,728                                         Reinsurance                             Altegia                           3.53               99.58
  Continent Vie S.A.
  Paris                                                    Insurance and
  Euro 12,971,632                                          Reinsurance                             Continent Holding               100.00               99.58
  L'Union Générale du Nord S.A.
  Lille                                                    Insurance and                           Continent Iard                   82.81
  Euro 4,523,620                                           Reinsurance                 0.01        Continent Vie                     0.28               82.74
  Continent Assistance S.A.
  Paris                                                    Insurance                               Continent Iard                   99.99
  Euro 914,695                                                                                     U.G.N.                            0.01               99.58
  Altegia S.A.
  Paris                                                    Insurance and                           Continent Vie                      0.22
  Euro 16,867,400                                          Reinsurance                             Continent Holding                99.78               99.58
  Guardian Vie S.A.
  Rueil-Malmaison (Paris)                                  Insurance and
  Euro 39,346,452                                          Reinsurance                             Continent Holding               100.00               99.58
 * Group interest may differ from the sum of the percentages of direct and indirect control as the investments are also held through not wholly-owned subsidiaries.




176
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Contd. Companies consolidated line-by-line


 Company                                                  Business                                           % owned at 31.12.2002
 City                                                                                 Direct                                    Indirect                  Group
 Share capital                                                                                                                                        interest*

 Guardian Finances S.A.                                                                           Continent Holding                99.43
 Rueil-Malmaison (Paris)                                  Financial                               Altegia                            0.14
 Euro 53,358                                              management                  0.29        Guardian Vie                       0.14              99.58
 Phenix Seguradora S.A.
 Nova Lima                                                Insurance and
 Reals 66,962,839                                         Reinsurance                             Toro Targa Partic.               99.85               50.92
 Fiat Ubezpieczenia Zyciowe S.A.
 Warsaw                                                   Insurance and
 Zloty 26,013,700                                         Reinsurance                             Toro Targa Assic.                99.94               50.97
 Fiat Ubezpieczenia Majatkowe S.A.
 Warsaw                                                   Insurance and
 Zloty 61,500,000                                         Reinsurance                             Toro Targa Assic.               100.00               51.00
 Toro Targa Participaçoes S/C Ltda
 Nova Lima                                                Insurance
 Reals 93,991,710                                         Holding                                 Toro Targa Assic.               100.00               51.00
 Toro International Holding N.V.
 Amsterdam                                                Insurance
 Euro 65,250,000                                          Holding                  100.00                                                            100.00
 Iniziative Sviluppo Immobiliare ISIM S.p.A.
 Turin                                                    Real property
 Euro 113,900,000                                         management               100.00                                                            100.00
 C,S,T, Centro Servizi Toro S.p.A.
 Turin
 Euro 8,010,000                                           Services                  99.99         Augusta Assic.                     0.01            100.00
 Société Immobilière Belle-Terre S.A. (in liquidation)
 Geneva                                                   Real property
 CHF 50,000                                               management                              Continent Iard                  100.00               99.58
* Group interest may differ from the sum of the percentages of direct and indirect control as the investments are also held through not wholly-owned subsidiaries.




                                                                                                                                                                  177
                                           • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Companies valued by the equity method

  Company                                                  Business                                           % owned at 31.12.2002
  City                                                                                 Direct                                    Indirect                  Group
  Share capital                                                                                                                                        interest*


  SUBSIDIARIES

  OGEPA S.A.
  Paris                                                    Insurance                               Continent Iard                   79.76
  Euro 38,113                                              brokerage                               U.G.N.                           20.00               95.97
  O.F.I.B.A. S.A.
  Paris                                                    Real property
  Euro 38,113                                              brokerage                               Continent Iard                   99.76               99.34


  AFFILIATES

  Sestrieres S.p.A.
  Sestriere                                                Tourist facility
  Euro 16,120,000                                          management                30.00                                                              30.00
 * Group interest may differ from the sum of the percentages of direct and indirect control as the investments are also held through not wholly-owned subsidiaries.




178
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Companies valued at cost

 Company                                                  Business                                           % owned at 31.12.2002
 City                                                                                 Direct                                    Indirect                  Group
 Share capital                                                                                                                                        interest*


 SUBSIDIARIES

 Royal Servizi Tecnici s.r.l. (in liquidation)
 Genoa
 Euro 91,800                                              Services                                Lloyd Italico Ass.ni            100.00             100.00
 S.C.I. Immovie
 Paris                                                    Real property                           Continent Vie                    99.98
 Euro 17,662                                              company                                 Continent Iard                    0.02               99.58
 S.C.I. Continent Pierre                                                                          Continent Vie                    38.15
 Paris                                                    Real property                           Continent Iard                    1.12
 Euro 10,113,505                                          company                                 S.C.I. Cont. Wagram              60.73               97.56
 S.C.I. Continent Wagram
 Paris                                                    Real property                           Continent Iard                   80.30
 Euro 18,522,748                                          company                                 U.G.N.                           19.70               96.26
 S.C.I. Continent Pyramides                                                                       Continent Iard                   56.96
 Paris                                                    Real property                           S.C.I. Cont. Wagram              32.12
 Euro 30,160,815                                          company                                 U.G.N.                           10.92               96.67
 S.C.I. Continent Asnieres
 Paris                                                    Real property                           Continent Iard                   80.00
 Euro 4,116,123                                           company                                 U.G.N.                           20.00               96.21
 S.C.I. Continent Pierre Grenier
 Paris                                                    Real property                           Continent Iard                   80.00
 Euro 5,335,715                                           company                                 U.G.N.                           20.00               96.21
* Group interest may differ from the sum of the percentages of direct and indirect control as the investments are also held through not wholly-owned subsidiaries.




                                                                                                                                                                  179
                                           • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Changes in the consolidation area

 The following changes occurred in 2002:

 • C.S.T. - Centro Servizi Toro S.p.A.
   As management of claims on behalf of Group companies is now fully on-stream, the company
   has been fully consolidated starting from the year under review (until 2001, it was consolidated
   by the equity method)

 • Toro Poland Investments z.o.o.
   The company, owned by the Toro Targa Assicurazioni S.p.A. subsidiary, was wound up in
   December: its assets and liabilities have been transferred to the Toro Targa S.p.A. controlling
   company, including the interest of Toro Poland Investments in Fiat Ubezpieczenia Zyciowe.

 • Capitalia (formerly Banca di Roma)
   The merger through incorporation of Banco di Sicilia and subsequent integration with the Fineco
   Group (formerly Bipop) has resulted in the dilution of Toro Assicurazioni S.p.A.' s interest which
   has moved down from 10.57% to 6.61%. Therefore, the company is no longer included in the
   consolidation area in the 2002 consolidated financial statements.




180
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
In 2002, the following changes occurred in the share capital of Toro Assicurazioni S.p.A. and of
its subsidiaries:

 Company                                              Amount       Counterpart company
                                                    euro/000



 CAPITAL INCREASES

 Toro Targa Assicurazioni S.p.A.                   10,000          Toro Assicurazioni S.p.A. for 5,100 thousand euro

 Fiat Ubezpieczenia Majatkowe S.A.                   5,000         Toro Targa Assicurazioni S.p.A. (18,000 thousand zloty)

 Toro Targa Participaçoes S.A.                       3,000         Toro Targa Assicurazioni S.p.A.(6,216 thousand real)

 Phenix Seguradora S.A.                              2,819         Toro Targa Partecipacoes S.A. (5,842 thousand real)

 Nuova Tirrena S.p.A.                              17,822          Toro Assicurazioni S.p.A. for 16,418 thousand euro

 Lloyd Italico Vita S.p.A.                           9,997         Toro Assicurazioni S.p.A. for 2,000 thousand euro
                                                                   Lloyd Italico Assicurazioni S.p.A. for 7,997 thousand euro

 Continent Holding S.A.                            18,002          Toro International Holding N.V.


 REDUCTIONS OF CAPITAL

 Isim S.p.A.                                      150,000          Toro Assicurazioni S.p.A.




                                                                                                                           181
                                 • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Part B - VALUATION CRITERIA




 Basis of presentation

 The consolidated financial statements, consisting of the Balance Sheet, Profit and Loss Account
 and Notes to the Financial Statements, have been prepared in accordance with the specific
 regulations for the insurance sector introduced by Decree Law No. 173/97 which incorporated
 EC Directive 91/674 into Italian law as regards the annual and consolidated financial statements
 of insurance companies. They comply with the mandatory formats established by the
 aforementioned Decree Law No. 173/97; they enact ISVAP Directives and comply with the
 instructions regarding the Plan of Accounts set forth in ISVAP Directive No. 735 of December 1
 1997; they are accompanied by the Directors’ Report (set forth previously).



 Land and buildings

 These items are carried at purchase cost including accessory charges.
 The costs of improvements and refurbishing are recorded only in the case of an effective
 increase in the useful life of the assets.
 The active balances resulting from revaluation are credited to shareholders’ funds except for real
 property owned by Continent Vie through the "Società Civili Immobiliari".
 For these premises, as contemplated by French law, revaluation active balances are credited to
 technical provisions.
 With regard to the voluntary revaluations permitted under Law 342/2000 and related
 enactments, the following should be noted:
 - Augusta Assicurazioni S.p.A. took advantage of this possibility in 2000, with a total impact of
   4,878 thousand euro (net of replacement tax, equal to 4,085 thousand);
 - Isim S.p.A. took advantage of this possibility in 2001 with a total impact of 180,039 thousand
   euro (146,582 net of replacement tax).
 As Law 342/2000 would be applied for tax purposes only, the revaluation of the real property
 carried out by the two companies has been eliminated in the consolidated financial statements.
 Depreciation rates are determined according to the remaining possibility of use of the assets,
 also taking into account values that can be recovered at the end of their period of use.
 Real property is stated in the consolidated financial statements net of accumulated depreciation.



 Debt securities and other fixed-income securities

 Securities that the Company intends to hold to maturity are valued at acquisition or subscription
 cost adjusted for the portion of the difference between the cost and the redemption value that
 accrued during the year and for the portion of issue differences.
 The acquisition cost is computed by the “average continuous cost” method. In the case of
 permanent losses of value, appropriate write-downs are made. Write-downs will be partly or
 entirely reversed in subsequent years if the underlying assumptions are no longer correct.




182
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Securities held for resale are valued at the lower of purchase cost (calculated according to the
continuous average cost method) and market.
- For securities listed on the Italian stock exchange, the market value corresponds to the average
  price struck in December;
- For securities listed on foreign markets, the market value corresponds to the year-end price;
- for unlisted Italian and foreign securities, the market value is equivalent to that of similar listed
  securities.

Up to the purchase cost, any write-downs made in previous years are reversed with upward
adjustments recognised in the profit and loss account.
The purchase cost defined above includes issue differences computed on an accrual basis.
Interest on securities in the portfolio is recognised in the profit and loss account through
disclosure of the related accrued interest according to correct accrual criteria.



Long-term investments

The shares of investee companies with minority holdings are usually valued at cost. If the
underlying shareholders’ equity, resulting from the respective financial statements following the
time of acquisition, shows a permanent loss of value or in the case of companies with listed
shares, if the prices of the last six months are lower than the carrying value, the related
write-down has been made.
Up to the purchase cost, any write-downs recorded in previous years are reversed with upward
adjustments recognised in the profit and loss account.

During the year, in accordance with the structural losses disclosed by the respective balance
sheets, the investments in Fiat S.p.A. and Capitalia S.p.A. were written down.

With regard to Fiat shares, reference has been made, as a "mixed" type of valuation, to the
theoretical conversion value of the debenture loan to be converted subscribed by the financing
banks and the value of the consolidated net equity per share at December 31 2002, as can be
deduced from the results of the Fiat Group anticipated on February 28 2003.
The "mixed" type valuation considers and combines several elements of appreciation and different
estimate hypotheses such as, for example, stock exchange prices in the last six months, the
Group per-share equity value and the valuations of the individual parties indicated in the most
recent broker reports published by leading banks.
To determine the value adjustment of Capitalia, the valuations made at the time of the merger
between Banca di Roma, Bipop-Carire and Banco di Sicilia and also, albeit on a theoretical basis,
the result of application of the net equity method, have been taken as reference parameters.




                                                                                                                    183
                           • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Other shares

 Other shares are stated at the lower of purchase cost (calculated by the continuous average cost
 method) and market.
 Shares listed on the Italian Stock Exchange are stated at the lower of purchase cost and market
 calculated according to the average prices of the last month and at year-end prices for foreign
 securities.
 Up to the purchase cost, any write-downs made in previous years are reversed with upward
 adjustments recognised in the profit and loss account.



 Repo

 The corresponding value of securities acquired “for cash” is stated under Miscellaneous financial
 investments and that of the securities sold “for cash” under financial liabilities.
 Interest and differences between the corresponding “cash” and “forward” values are stated under
 Ordinary Income and Charges on an accrual basis.



 Derivative contracts

 The following transactions were carried out on these instruments during the year:
 - purchase of index-linked debt securities (securities with yield tied to the trend of indexes/shares
   and with in any case a guaranteed minimum) intended to extend the life product range and as
   own investment of the Company:
 - purchase of a put option that guarantees preservation on maturity of the capital invested in the
   unit-linked products issued by Toro Assicurazioni S.p.A. and other Group companies;
 - stipulation of interest rate swaps intended to increase exposure at the fixed rate in the unit-
   linked products issued by Toro Assicurazioni S.p.A. and other Group companies;
 - purchase/sale of structured debt securities with implicit put and call options.

 The portfolio still includes:
 - floors contracts for which premium paid is stated under Miscellaneous financial investments on
   the balance sheet and amortised in the related years and compared at year-end with the
   market value for any write-down if lower;
 - an interest rate swap transaction, valued according to market prices at year-end;
 - other structured debt securities.

 All the transactions were carried out in accordance with the resolutions of the competent boards
 and in compliance with ISVAP Directive of July 19 1996 which regulates the use of derivatives.




184
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Furniture and equipment

These items are stated at purchase cost including any accessory charges.
Depreciation is calculated on a straight-line basis according to rates deemed consistent with the
estimated useful life of the assets.



Intangible assets

• Purchase costs of computer programmes and costs relating to share capital increases.
  These items are amortised directly on a straight-line basis over 5 years.

• Commissions to be amortised
  The acquisition costs of multi-annual policies are deferred and amortised for both life and non-life
  business according to the duration of the contracts starting from the year in which they occurred
  with a maximum of 10 years.

• Goodwill and consolidation differences.
  This caption consists of costs incurred for the acquisition of insurance portfolios or investments
  in fully consolidated companies, stated as goodwill after charging, where possible, to the
  elements of the assets and liabilities of the companies purchased insofar as justified by
  expectations of future earnings.
  They represent the cost incurred for the acquisition of insurance portfolios by Nuova Tirrena
  S.p.A. and the difference between the purchase price of the holding in Nuova Tirrena S.p.A.
  and the respective shareholders’ equity. These costs are amortised, as regards the insurance
  portfolios, in 14 (Life) and 5 (Non-life) years respectively and, for the part referring to the
  purchase of the investment, over an average period of 12 years deemed to be consistent in
  view of the specific characteristics of insurance business and long-term business prospects.
  Similarly, the difference between the purchase price of the Brazilian Phenix, acquired in 1998,
  and the respective shareholders’ equity is amortised over ten years.
  At the end of 1999, the difference between the purchase price and the shareholders’ equity of
  the companies of the Guardian Group was also stated. This will be amortised over ten years
  starting from the 2000 financial year.
  In 2001, following the acquisition of the companies of the Lloyd Italico Group, the difference
  between the purchase price and the shareholders' equity of the companies has been disclosed.
  This difference is amortised in a period of ten years starting from 2001. Lloyd Italico
  Assicurazioni had stated under goodwill the costs incurred in previous years for the acquisition
  of part of its insurance portfolio; the cost is written off over 14 years.
  The transfer of Augusta Assicurazioni S.p.A. did not give rise to any consolidation differences.
  The purchase of 60% of Augusta Vita by the Augusta Assicurazioni subsidiary has given rise to
  a difference between the purchase cost and the underlying shareholders' equity, disclosed
  under assets and amortised over a period of ten years starting from June 2001.




                                                                                                                    185
                           • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Debtors

 These items are entered at presumed realisable value determined separately for each type of
 debtor.



 Accruals and deferrals

 Accruals and deferrals are stated to reflect timing differences in the respective expense and
 revenue items.



 Provisions for risks and charges

 Provisions for risks and charges are provided to cover specific types of certain or probable losses
 or liabilities, the exact value and effective date of which cannot be determined at the end of the
 year or which are subject to the occurrence of future events.



 Provision for taxes

 This item includes provisions, calculated according to current rates and regulations, to cover
 Corporate Income Tax (IRPEG) and the Regional Tax on Production Activities (IRAP) not yet paid.
 The provision also includes taxes relating to temporary timing differences for deferred/advance
 taxation of components of income.
 The profit and loss account also reflects the effects of adopting international accounting
 standards (IAS 12) and those of the Italian accounting profession (Document No. 25) regarding
 deferred taxes, calculated on components of income affected by changes in the valuation criteria.



 Provision for employee termination indemnities

 The provision for employee termination indemnities has been calculated in accordance with
 current laws and covers the liability accrued toward all employees at December 31, 2002.



 Life technical provisions

 Life technical provisions, formed to meet commitments towards policyholders, have been valued
 in accordance with current laws.
 According to these laws, they comprise the following items:
 • actuarial provision for pure premiums;
 • provision for operating costs;
 • provision for health and professional additional premiums;



186
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
• provision for unearned premiums and claims outstanding for supplementary coverage;
• provision for profit-sharing by policyholders.
The related amount of each of the above items has been calculated on the basis of precise
actuarial criteria according to the indications and instructions of the competent controlling
authorities.
In no case, the actuarial provision of each contract is less than the corresponding surrender
value.
As regards valuation of the provisions relating to the legal cession by the Lloyd Adriatico Vita
subsidiary, which had not yet settled the dispute with Consap on the closing date of the financial
statements, capitalisation has been carried out at rates established for 1994 to 1999 by the
Ministry of Industry, Trade and Crafts with Ministerial Decrees and adopting a rate of 3.5%,
aligned with ANIA indications, for 2001 and 2002.
Other reinsurers’ shares of provisions are determined according to the same criteria adopted
when calculating gross provisions, in compliance with treaties in force with reinsurers and taking
into account that the cession is made without considering any splitting of the annual premium.



Provision for unearned premiums

In accordance with Decree Law No. 173/97, the provision for unearned premiums includes
three components:
• provision for premium instalments;
• provision to integrate the provision for premium instalments of the branches for which this is
  required;
• provision for unexpired risks.

As regards calculation of the provision for premium instalments, the following should be noted:
• the “pro-rata” method has been adopted;
• the deduction for acquisition commissions and acquisition costs permitted by the regulation has
  been made considering as such:
  - all commissions paid with reference to annual contracts; these have been considered as
    acquisition commissions considering mainly that, due to the highly competitive trends on the
    Italian insurance market, the acquisition activity can be considered predominant or completely
    absorbing in any annual contract stipulation or renewal;
  - all commissions paid referring to the first annual instalment of multi-annual contracts, for the
    same reasons as set forth in the previous point regarding competitive trends and the
    predominant and absorbing nature of the acquisition activity at the time of stipulation or
    renewal of the contract. On the other hand, commissions relating to payments of subsequent
    annual instalments, which are clearly characterised as collection commissions, have not been
    taken into account;
  - the amortisation for the year of the acquisition commissions of the multi-annual contracts
    relating to the year.




                                                                                                                   187
                          • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 In the case in which, within each company, the provision for premium instalments is not sufficient
 to cover the costs of future claims, a provision for unexpired risks has been made; the need for
 integration has been determined referring to the current claims to premiums ratio.

 Reinsurers’ and retrocessionaires’ share of the provision for unearned premiums has been
 calculated according to the same criteria applied to the provision for unearned premiums, of
 direct business and inward reinsurance respectively, also taking into account treaty clauses.



 Provision for claims outstanding

 The provision for claims outstanding has been determined analytically examining the individual
 claims outstanding at the end of the year and taking into account, for mass risks, appropriate
 statistical methods.
 The provision for claims outstanding stated is deemed to be consistent with the foreseeable final
 value for the coverage of charges referring to damages, direct and settlement costs.
 Reinsurers’ shares of the provision for claims outstanding have been determined on the basis of
 the effective recovery established by the individual cession contracts.



 Premiums

 Premiums with related additionals are entered with reference to their date of maturity without
 considering the effective date of collection and are stated net of cancellations for technical
 reversals of premiums issued during the year, of cancellations of life premiums of subsequent
 annual instalments falling due in previous years and taking into account contract variations,
 without or without variations to the premiums, made through replacements or appendixes.
 Compliance with the accruals principle is assured through allocation of the provision for unearned
 premiums.



 Claim settlement costs

 Claim settlement costs not directly attributable to the individual branches are allocated according
 to the amount of the claims paid.



 Inward reinsurance

 The financial statements are prepared on an accrual basis. However, except for the Hail branch,
 the economic and financial effects of inward reinsurance assumed by uncontrolled companies are
 recorded with a one-year delay in that the information required is not available at the time of
 preparing the accounts.

 Financial transactions with Reinsurers are obviously disclosed in the accounts.


188
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Taxes

Income taxes for the year are determined according to current legislation in the various countries
where Group companies operate.

Deferred tax assets and liabilities referring to the most significant consolidation operations have
also been determined.

In particular, deferred tax assets are stated only in the case of reasonable certainty of future
recovery. Deferred tax liabilities are not disclosed in the case of limited probability that the related
liability will arise.

Deferred tax assets and liabilities are offset if referring to the same company and the balance is
stated under Other debtors, if receivable, and in the Provision for deferred taxes, if payable.



Allocated investment return transferred from the non-technical account to the Life
technical account

In accordance with the provisions of ISVAP Directive of March 8 1999, the allocated investment
return has been transferred from the non-technical account to the life technical account.
As regards the criteria used to determine this transfer, according to Article 10 of the
aforementioned Directive, the resulting amount is equal to the aggregate return on investments
assigned to the life technical account of the annual accounts of companies included in the
consolidation area.



Functional currency

All Group companies operating in Italy and in France have adopted the euro as functional
currency. In accordance with ISVAP Directive No. 1008/G of October 5 1998, the consolidated
financial statements and related notes are stated in thousand euro.




                                                                                                                    189
                           • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Part C – COMMENTS ON THE CONSOLIDATED BALANCE SHEET AND ON THE
 PROFIT AND LOSS ACCOUNT
 (in thousand euro)



 BALANCE SHEET - ASSETS


 Section 1 – INTANGIBLE ASSETS (item B)

            2002                                            2001                                         Change

           254,121                                        260,313                                        -6,192


 The detail is as follows:

                                                                                 2002             2001       Change


  B.1 – Acquisition commissions to be amortised

  - Non-life                                                                  95,824            90,294      5,530

  - Life                                                                      22,870            19,468      3,402

  - Total                                                                   118,694            109,762      8,932

  B.2 – Other acquisition costs                                                      -               -            -

  B.3 – Goodwill                                                              24,337            35,292    -10,955

  B.4 – Other intangible assets                                               38,717            30,256      8,461

  B.5 – Difference on consolidation                                           72,373            85,003    -12,630

  Total                                                                     254,121            260,313     -6,192


 Goodwill represents:
 - the remaining cost of the purchase by Nuova Tirrena S.p.A. of the Life insurance portfolio of
   the former Tirrena Group in compulsory administrative liquidation;
 - the remaining cost of the purchase by Lloyd Italico Assicurazioni (company acquired in 2001) of
   a portion of the portfolio acquired from the Fondiaria Assicurazioni Group.
 The change in relation to 2001 is to be attributed to the amortisation for the year.

 Other intangible assets represent the residual cost of licenses and software and other costs
 capitalised. The movement in relation to 2001 is due for 3.9m euro to full consolidation in 2002
 of CST S.p.A..

 The Difference on consolidation reflects the residual value of the difference between the prices
 paid and the respective underlying shareholders’ equity at the time of acquisition of the holding
 in Nuova Tirrena S.p.A., in the Brazilian Phenix and in the Guardian Group. In 2001, this item
 was increased by the difference calculated between the price paid and the related shareholders'
 equity for the acquisition of Lloyd Assicurazioni S.p.A. and Lloyd Italico Vita S.p.A. (9.1m euro)
 and for the acquisition by Augusta Assicurazioni S.p.A. of the remaining 60% of the stake in
 Augusta Vita S.p.A. (4.6m euro).




190
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Section 2 – INVESTMENTS (item C)

          2002                                            2001                                                   Change

    10,302,293                                        10,618,574                                                -316,281


The breakdown into categories is provided below:


2.1 – Land and buildings (item C.I)

          2002                                            2001                                                   Change

         557,341                                       718,760                                                  -161,419


divided according to use into:

                                                                         Carrying value         Accumulated       Book value
                                                                                                 depreciation


 Property employed in company operations                                    94,901                20,060          74,841

 Property rented to third parties                                         477,375                   6,453        470,922

 Advances paid for the purchase of real property                            12,958                  1,380         11,578

 Total                                                                    585,234                 27,893         557,341


The changes in relation to the previous year referred to:
- additions                                                                               for   euro/million         +5.1
- sales and other decreases                                                               for   euro/million       -163.1
- depreciation                                                                            for   euro/million          -2.8
- exchange differences                                                                    for   euro/million          -0.7

Sales produced net capital gains of 120m euro.
There is no leased property.




                                                                                                                               191
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 2.2 – Investments in Group companies and other shareholdings (item C.II)

           2002                                             2001                                            Change

          918,571                                       1,132,830                                          -214,259


 The detail is as follows:

                                                                                 2002               2001        Change


  C.II.1 – Shares and interests in:

  a) controlling companies                                                  230,538             234,752       -4,214

  b) subsidiaries                                                                231               7,368      -7,137

  c) associated companies                                                     17,804             22,777       -4,973

  d) affiliated companies                                                            -          604,177     -604,177

  e) other companies                                                        522,203              21,298     500,905

  Total                                                                     770,776             890,372     -119,596

  C.II.2 - Debt securities                                                  147,795             240,735      -92,940

  C.II.3 – Loans to companies                                                        -             1,723      -1,723

  Total                                                                     918,571            1,132,830    -214,259


 The change during 2002 in the value of participating interests in controlling companies is to be
 ascribed to:
 - the purchase of 109.9m euro of Fiat S.p.A. ordinary shares (85m euro by Toro Assicurazioni
   S.p.A., 20.7m euro by Augusta Assicurazioni S.p.A., 2.9m euro by Nuova Tirrena S.p.A. and
   1.3m euro by Lloyd Italico Assicurazioni S.p.A.);
 - the sale for 35.8m euro of Fiat S.p.A. ordinary shares (10.3m euro by Toro Assicurazioni S.p.A.,
   20.7m euro by Augusta Assicurazioni S.p.A., 2.9m euro by Nuova Tirrena S.p.A. and 1.3m euro
   by Lloyd Italico Assicurazioni S.p.A. and 0.6m euro by Continent Iard S.A.);
 - the sale for 0.3m euro of Fiat S.p.A. saving shares (by Toro Assicurazioni S.p.A.);
 - alignments for permanent impairment of value on Fiat S.p.A. ordinary shares for 78m euro
   (31.3m euro by Toro Assicurazioni S.p.A. and 46.7m euro by Continent Iard S.A.).
   The 11,699,384 Fiat S.p.A. ordinary shares owned by Toro Assicurazioni S.p.A. and the
   4,140,033 Fiat S.p.A. ordinary shares held by Continent Iard S.A. have been valued at
   14.00 euro.

 The change in shares of subsidiaries mainly reflects the full consolidation as of financial 2002 of
 C.S.T. S.p.A. which has now started operations.




192
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
The detail of the shares of subsidiaries which, as they do not comply with the requirements for
full consolidation, are carried according to shareholders’ equity or cost is as follows:

                                                                                                    2002             2001


 OFIBA                                                                                               97                97

 OGEPA                                                                                               50                48

 Royal Servizi Tecnici (in liquidation)                                                              84                84

 C.S.T.                                                                                                 -          7,139

 Total                                                                                              231            7,368


A list of the shares of affiliated, associated and other companies is provided in the table below:

                                                                                                    2002             2001


 Affiliated companies:

 - Sestrieres                                                                                   12,828            13,050

 - Ipi                                                                                                  -          9,169

 - Fiat Se.p.in.                                                                                    404               288

 - Fiat Re.vi.                                                                                       82                86

 - H.D.P.                                                                                         4,478               192

 - Consorzio Fiat Mediacenter                                                                        12                12

 Total                                                                                          17,804            22,777


The main change refers to the sale of all the shares of IPI S.p.A. to Fiat Geva S.p.A. in December
2002.

                                                                                                    2002             2001


 Associated companies:

 - Capitalia (formerly Banca di Roma                                                                    -        604,050

 - A.P.Imm.                                                                                             -             127

 Total                                                                                                  -       604,177


The investment in Capitalia S.p.A. has been reclassified under Other companies as the
reconfiguration of the Capitalia Group due to the integration with Bipop has resulted in a dilution
of the capital with a consequent reduction in the stake owned by Toro Assicurazioni S.p.A. from
10.57% to 6.61%.
The investment in A.Pimm was disposed of during 2002.




                                                                                                                            193
                                   • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
                                                                                                  2002     2001


  Other companies:

  - Capitalia                                                                                  481,426        -

  - MCC (Medio Credito Centrale)                                                                36,018        -

  - Lingotto (*)                                                                                -3,869   13,145

  - Finlombarda                                                                                     6        6

  - Sofigea                                                                                      1,805    1,805

  - Europe Assistance Italia                                                                         -     123

  - Cestar                                                                                        139      157

  - Roma Nuova Servizi                                                                             30         -

  - SOGEA-Scuola Org.Aziend.                                                                        4        4

  - Ucis                                                                                           32       32

  - Rita                                                                                          211      211

  - Eparc                                                                                        5,744    5,715

  - Alfa Long Term                                                                                657         -

  Total                                                                                        522,203   21,298
 (*) in 2002, the value is net of the allowance for doubtful accounts for -3.9m euro.



 The change in relation to December 31 2001 is mainly due to the following:
 - reclassification of Capitalia S.p.A. from "Affiliated" for 604m euro;
 - increases in the shares of Capitalia S.p.A. following exchange of Bipop shares already in the
   portfolio for 1.2m euro;
 - alignments of Capitalia S.p.A. for permanent losses of value for 123.8m euro, bringing the
   value of the investment to the valuation indicated in the financial statements of Toro
   Assicurazioni S.p.A.. A unit value of 3.30 euro has been assigned to the 145,886,908 shares
   owned;
 - purchase by Lloyd Italico Assicurazioni of a 3% interest in MCC, disclosed under short-term
   investments;
 - alignment following permanent losses of value of Toro Assicurazioni S.p.A.'s investment in
   Lingotto S.p.A.;
 - disposal of the 3.9% interest held by Toro Assicurazioni S.p.A. in Europe Assistance Italia.




194
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
2.3 – Other financial investments (item C.III)

         2002                                              2001                                                Change

     8,804,005                                           8,749,512                                           54,493


The main components of this item are:

                                                                                2002              2001             Change


 1 – Shares and interests                                                  437,932           504.074            -66,142

 2 – Shares of common investment funds                                     281,950           514.655          -232,705

 3 – Debt securities and other fixed-income securities                   7,990,791         7.668.389           322,402

 4 - Loans                                                                   35,923           46.073            -10,150

 6 – Deposits with credit institutions                                        2,504             1.256             1,248

 7 – Miscellaneous financial investments                                     54,905           15.065            39,840

 Total                                                                   8,804,005        8,749,512             54,493


Value adjustments for alignment to market, net of upward re-adjustments of value, amounted to
-203.1m euro.

Equity investments, investments in debt securities and shares of common investment funds held
as long-term financial investments amounted to 2,240.7m euro while those held for resale
amounted to 6,470m euro.

Convertible debentures amounted to 34.1m euro.

The Loans mainly consist of mortgage loans for 2m euro, loans on life policies for 26m euro,
other loans secured by mortgages for 5.3m euro and miscellaneous loans for 2.6m euro.
Amounts falling due above one year amounted to 12.2m euro.

Deposits with credit institutions consist principally of the time deposits of Lloyd Italico Vita S.p.A..

The 39.8m euro increase in miscellaneous financial investments is to be ascribed mainly to the
purchase of option rights by Nuova Tirrena S.p.A. relating to the share capital increase of Edison
S.p.A., not yet effected at on the date of closing of the 2002 financial statements (40m euro).




                                                                                                                            195
                                 • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 2.4 – Deposits with ceding companies (item C.IV)

           2002                                               2001                                        Change

          22,376                                             17,472                                       4,904


 These consist of deposits established with ceding companies in relation to risks assumed in
 inward reinsurance.



 Section 3 – OTHER ASSETS (items D-Dbis-E-F-G)
 Investments for the benefit of life policyholders who bear the investment risk and
 relating to the administration of pension funds (item D)

           2002                                               2001                                        Change

      6,929,873                                         6,176,904                                        752,969


 This item refers to investments made in relation to life insurance and capital redemption
 contracts with returns linked to the performance of investment funds and reference market
 indexes. The increase in these index-linked and unit-linked products was driven mainly by the
 evolution of sales through bankassurance channels.



 Debtors (item E)

           2002                                               2001                                        Change

      1,078,353                                              920,777                                     157,576


 The breakdown is as follows:

                                                                                 2002             2001        Change


  E.I – Debtors arising out of direct insurance operations

  - policyholders for premiums                                              245,001            233,979     11,022

  - agents and other intermediaries                                         256,474            263,603      -7,129

  - current accounts with insurance companies                                 58,088            48,747       8,341

  - sums to be recovered for claims                                           15,131            16,608      -1,477

  Total                                                                     573,694            562,937     10,757




196
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
                                                                               2002              2001            Change


 E.II – Debtors arising out of reinsurance operations

 Total                                                                    135,747            81,073            54,674


The change is to be ascribed principally to disclosure of the amount receivable from CONSAP,
collected in February 2003, of the Toro Assicurazioni S.p.A. and Augusta Vita S.p.A. companies
in relation to settlement of the related dispute.

                                                                               2002              2001            Change


 E.III – Other debtors

 - companies of the former Tirrena Group in Compulsory
  Administrative Liquidation and the Road Victims Fund                       9,147           19,410            -10,263

 - Tax Authorities                                                        279,886           166,291           113,595

 - customers and tenants for invoices issued or to be issued                11,793           33,388            -21,595

 - others                                                                   68,086           57,678            10,408

 Total                                                                    368,912           276,767            92,145


The most significant change refers the increase of 113.6m euro in amounts due from the Tax
Authorities partly due to the new tax regulations introduced by the Finance Bill which envisage:
- the introduction of taxation of certain types of provisions for policy liabilities in the Life branch,
  which can be recovered in subsequent years, according to payments of taxed provisions
  (+50m euro);
- the introduction of immediate non-deductibility of part of the increase of the non-life provisions,
  which can be recovered in nine subsequent years, which resulted in the disclosure of
  receivables for prepaid taxes of +2m euro;
- the introduction of immediate non-deductibility of four fifths of the write-downs on long-term
  equity investments, which has resulted in appropriation of receivables for prepaid taxes of
  +34m euro.
Other factors of change in receivables from the Tax Authorities include:
- the increase in tax credits on dividends collected (+19m euro), which can be recovered in the
  following year;
- receivables for net deferred tax assets relating to 2002 losses of the Continent Group in
  France mainly due to the significant write-downs of the equity portfolio and which it is
  considered may be recovered in the next three years (around +18m euro);
- the utilisation of tax credits on prior year losses appropriated in 2001 by the Lloyd Italico
  Assicurazioni S.p.A. subsidiary on the basis of the positive results posted in 2002 (-10m euro).




                                                                                                                          197
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Other assets (item F)

           2002                                             2001                                          Change

          376,301                                         271,683                                        104,618


 The breakdown is as follows:

                                                                                 2002             2001        Change


  F.I – Tangible assets and stocks                                            21,618            20,917         701

  F.II – Cash at bank and in hand                                           319,955            219,977     99,978

  F.III – Own shares or participating interests                                  552              497              55

  F.IV – Other assets                                                         34,176            30,292       3,884

  Total                                                                     376,301            271,683    104,618


 Tangible assets and stocks consists of furniture, office machines, electronic machines, motor
 vehicles, machinery and equipment. The gross value is 106.4m euro and the related accumulated
 depreciation amounts to 84.8m euro.

 Cash at bank and in hand reflects a net change of +100m euro, due for 53.5m euro to the
 Roma Vita S.p.A. subsidiary, for +19.6m euro to Nuova Tirrena S.p.A., for +9.6m euro to
 Isim S.p.A. and for +13.3m euro to the French Continent Group.



 Prepayments and accrued income (item G)

           2002                                             2001                                          Change

          145,598                                         139,024                                         6,574


 These items consist mainly of accrued financial income (145.1m euro compared with 138.1m euro
 in 2001).




198
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
BALANCE SHEET - LIABILITIES AND SHAREHOLDERS' FUNDS


Section 4 – SHAREHOLDERS’ FUNDS AND SUBORDINATED LIABILITIES (items A-B)

         2002                                             2001                                                Change

    1,629,093                                         1,826,100                                            -197,007



4.1 - Shareholders' funds

The detail is as follows:

                                                                                                 2002              2001


 Group shareholders’ funds                                                                1,488,592        1,686,800

 Minority interest in shareholders’ funds                                                   140,501           139,300

 Total                                                                                   1,629,093         1,826,100




                                                                                                                          199
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 The composition and related changes in Group shareholders' funds are set out below:


                                    Share       Capital   Consolidation         Res. for    Reserve for   Res. for own     Profit for        Total
                                    capital   reserves        reserve          valuation     conversion     shares and      the year
                                                                                 diff. on   differences   shares of the
                                                                          unconsolidated                     controlling
                                                                             companies                        company


 Balances at December 31 2000     171,765     960,841         198,420            30,808        32,462                 0     83,282      1,477,578

 Share capital increase            10,077     120,232                                                                                    130,309

 Distribution of dividend                                                                                                  - 44,989      - 44,989

 Appropriation of remaining
 2000 profit                                   24,593           6,946             6,754                                     -38,293             0

 Foreign exchange diff.
 from conversion and other                                      2,096           -12,446           -891                                    -11,241

 Purchase of Fiat S.p.A. shares               120,740        -105,295                                         226,035                           0

 Net profit                                                                                                                135,143       135,143

 Balances at December 31 2001     181,842     984,926         102,167            25,116        31,571         226,035      135,143      1,686,800

 Distribution of dividend                     -149,920                                                                      -39,860      -189,780

 Appropriation of remaining
 2001 profit                                    2,828          81,287            11,168                                     -95,283             0

 Foreign exchange diff.
 from conversion and other                                        103               879         -8,589                                     -7,607

 Change in
 Fiat S.p.A. shares                            -43,374         47,335                                            -3,961                         0

 Net profit                                                                                                                    -821          -821

 Balances at December 31 2002     181,842     794,460         230,892            37,163        22,982         222,074          -821     1,488,592




200
       • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Share capital

At December 31 2002, the fully subscribed share capital of the Toro Assicurazioni S.p.A. Parent
Company consisted of:

Category of shares                                                        No. of shares               Nominal          amount
                                                                                                         value


• ordinary                                                           104,914,380                         1.0     104,914,380

• preference                                                          76,927,500                         1.0      76,927,500

Total                                                                181,841,880                                 181,841,880



Consolidation reserve

This item includes the differences between the carrying value of the shareholdings and the
corresponding portion of shareholders’ equity of the consolidated companies after any consolidation
differences (goodwill). It also includes adjustments due to application of the accounting policies of the
Parent Company and elimination of any intra-group dividends and income.

Reserve for valuation differences on unconsolidated shareholdings

Includes the valuation differences arising from application of the equity method to unconsolidated
shareholdings.

The reconciliation of the financial statements of the Toro Assicurazioni S.p.A. Parent Company
and the consolidated financial statements is set forth in the schedule below:

                                 2002 Shareholders' funds             2002      2001 Shareholders' funds                2001
                                    (excl. profit for the year)        profit    (excl. profit for the year)             profit


 Toro Assicurazioni S.p.A.                   1,140,416             24,787                 1,287,508                  42,688

 Result of the year and differences between book value and shareholders’ equity of investee companies

 Consolidated                                    307,948           90,977                       99,250              169,966

 Valued by the equity
 method and at cost                                  4,620            -222                      19,268                20,361

 Intra-group dividends                           100,045          -100,045                      78,051               -78,051

 Application of Group accounting principles,
 intra-group operations and other                 -63,616          -16,318                      67,580               -19,821

 Group interest                              1,489,413                -821                1,551,657                 135,143

 Minority interest                               130,633            9,868                     127,554                 11,746

 Group consolidated accounts                 1,620,046              9,047                 1,679,211                 146,889




                                                                                                                                  201
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Minority interest in shareholders’ funds refers to the following companies:

  Company                                                                                         2002      2001


  Nuova Tirrena S.p.A.                                                                          24,789    21,140

  Roma Vita S.p.A. / Giano Assicurazioni S.p.A.                                                 88,336    80,626

  D.A.S. S.p.A.                                                                                  3,252     2,880

  Toro Targa Assicurazioni S.p.A.                                                               40,736    42,962

  Toro Targa Participaçoes S.C. Ltda / Phenix Seguradora S.A.                                  -21,662   -15,560

  Fiat Ubezpieczenia Majatkowe S.A.                                                             -1,163      -207

  Fiat Ubezpieczenia Zyciowe S.A.                                                                 -315      -189

  Continent/Guardian Group                                                                       6,526     7,645

  S.I. Belle Terre S.A. (in liquidation)                                                            2         3

  Total                                                                                        140,501   139,300




 4.2 – Subordinated liabilities

 No liabilities exist that are payable, in the case of winding up of the Company, only after other
 debts with a higher claim have been satisfied.




202
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Section 5 – TECHNICAL PROVISIONS AND OTHER PROVISIONS (items C-D-E)


5.1 – Technical provisions (items C+D-Dbis of assets)

            2002                                           2001                                                Change

    16,507,860                                         15,677,446                                            830,414


The breakdown is as follows:

                                                                                2002              2001           % change


 Non-life

 • provision for unearned premiums                                         913,417           899,179                    1.6

 • provision for claims outstanding                                      3,954,124         3,796,947                    4.1

 • equalisation provisions                                                    7,436             6,033              23.3

 • other provisions                                                           5,180             5,174                   0.1

 • Total gross provisions                                                4,880,157         4,707,333                    3.7

 • Total provisions ceded                                                  -545,682         -494,022               10.5

 • Net provisions                                                        4,334,475        4,213,311                     2.9

 Life

 • Total gross provisions                                                5,248,200         5,342,699                -1.8

 • Total provisions ceded                                                   -74,464         -115,053               -35.3

 • Net provisions                                                        5,173,736        5,227,646                 -1.0

 Technical provisions where the investment risk
 is borne by the policyholders

 • gross provisions                                                      7,000,833         6,236,527               12.3

 • provisions ceded                                                          -1,184                -38                    -

 • net provisions                                                        6,999,649        6,236,489                12.2

 Grand total                                                           16,507,860        15,677,446                     5.3




                                                                                                                              203
                                 • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 5.2 – Provisions for risks and charges (item E)

           2002                                             2001                                          Change

          166,020                                         210,218                                        -44,198


 Amounted to a total of 166m euro and refer to:

 • Provisions for taxes comprising:

                                                                                                  2002         2001


  Provisions for current taxes                                                                 136,777    113,431

  Provisions for deferred taxes                                                                  2,219     76,553

  Total                                                                                        138,996    189,984


  The changes in relation to the previous year are as follows:
  - Provision for taxes for the year                                                             €/000     136,108
  - Utilisation/reclassification to the Receivables from the Tax Authorities item                €/000    -187,096


 • Provision for future liabilities and charges from consolidation

  No additions were made to this provision.

 • Other provisions

  Amounted to 26.3m euro compared with 19.7m euro in 2001. The breakdown is as follows:

                                                                                                  2002         2001


  Provisions for extraordinary risks and future charges                                         25,439     18,780

  Sofigea fund                                                                                    882          882

  Total                                                                                         26,321     19,662


 The year-on-year increase of 6.7m euro is mainly due to the provision made on a prudent basis in
 relation to the request of the previous shareholder to return the Anti-Trust fine recovered by the
 Lloyd Italico Assicurazioni subsidiary, paid by this when it was not yet part of the Toro Group
 (3.8m euro) and also provisions accrued by Toro Assicurazioni S.p.A. and Nuova Tirrena S.p.A.
 to hedge risks relating to law suits undertaken by policyholders for reimbursement of increases
 on Motor TPL premiums (3.3m euro).




204
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Section 6 – CREDITORS AND OTHER ITEMS OF LIABILITIES (items F-G-H)


Deposits received from reinsurers (item F)

          2002                                                2001                                            Change

         108,504                                           99,179                                            9,325


This caption refers to guarantee deposits established in relation to risks ceded in reinsurance.


Creditors and other liabilities (item G)

          2002                                                2001                                            Change

         674,620                                           574,407                                          100,213


The detail is provided below:

                                                                               2002              2001             Change


 G.I – Creditors arising out of direct insurance operations

 - Current accounts with insurance companies                                19,520           12,688              6,832

 - Agents and intermediaries                                                38,367           20,141            18,226

 - Premium deposits of policyholders                                         6,378             5,362             1,016

 - Road Victims Fund                                                         2,478             3,535            -1,057

 Total                                                                     66,743            41,726            25,017




                                                                               2002              2001             Change


 GG.II – Creditors arising out of reinsurance operations                    68,223           25,435            42,788




                                                                               2002              2001             Change


 G.IV – Amounts owed to banks and credit institutions                       30,503          110,309            -79,806


The decrease is mainly due to the reimbursement by Toro Assicurazioni S.p.A. of the debt
contracted in December 2001 for 50m euro.




                                                                                                                           205
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
                                                                                 2002             2001     Change


  G.VI – Miscellaneous loans and other financial liabilities

  - Financial liabilities falling due within one year                       166,423             81,489    84,934

  - Financial liabilities falling due beyond one year                         18,000                 -    18,000

  - Liabilities for purchase of real property                                  1,037              384       653

  Total                                                                     185,460             81,873   103,587


 The change is due to:
 - repayment by the Continent Iard subsidiary of part of the debt of 75m euro contracted with the
   fellow subsidiary Fiat France S.A. in July 2002 (-57m euro);
 - establishment by Toro Assicurazioni S.p.A. and Nuova Tirrena S.p.A. of a debt for "Repo"
   contract (101m euro and 45m euro respectively);
 - indebtedness of the Toro International Holding N.V. subsidiary with Fiat Finance and Trading
   S.p.A. for 18m euro.

                                                                                 2002             2001     Change


  G.VII – Provision for termination indemnities                               43,797            43,236      561




                                                                                 2002             2001     Change


  G.VIII – Other creditors

  - Personnel                                                                  9,420            11,796    -2,376

  - Suppliers                                                                 50,314            40,862     9,452

  - Premium taxes                                                             28,749            27,917      832

  - Contribution to National Health Service                                   11,595            10,958      637

  - Tax Authorities                                                           48,781            17,700    31,081

  - Tenants’ caution money                                                     4,303             2,349     1,954

  - Social security                                                           15,398            16,057      -659

  - Other                                                                     33,253            47,231   -13,978

  Total                                                                     201,813            174,870    26,943


 The most significant change is due to the increase in payables to the Tax Authorities, mainly
 owing to the liability for the balance of the tax on the life provisions for policy liabilities,
 established by the 2002 Finance Bill (27.2m euro).




206
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
                                                                                            2002         2001           Change


 G.IX – Other liabilities

 - Commissions on premiums being collected                                                27,354       27.023             331

 - Bonuses to agents                                                                      15.003       15.892           -889

 - Underwriting items and deferred reinsurance items                                       8,724       16.811         -8,087

 - Miscellaneous liabilities                                                              27,000       37.232        -10,232

 Total                                                                                   78,081       96,958        -18,877




Accruals and deferred income (item H)

         2002                                                        2001                                           Change

         1,088                                                        571                                           517




Section 7 – GUARANTEES, COMMITMENTS AND OTHER EVIDENCE ACCOUNTS

         2002                                                        2001                                           Change

    17,543,689                                                  15,983,542                                       1,560,147


This item includes:

                                                                                            2002         2001           Change


   I - Guarantees given                                                                    7,365        6,746             619

  II - Guarantees received                                                                29,551       30,121           -570

  III - Guarantees given by third parties in the interest of consolidated companies       11,217       11,246                -29

 IV - Commitments                                                                       499,700        78,824       420,876

  V - Third party assets                                                                181,947      181,946                   1

 VII - Securities with third parties                                                  16,801,976   15,531,708    1,270,268

 VIII - Other evidence accounts                                                           11,933     142,951       -131,018

 Total                                                                                17,543,689   15,983,542    1,560,147




                                                                                                                                   207
                                      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 The increase in commitments in relation to 2001 is due to:
 - commitments to purchase repo for 138m euro (Toro Assicurazioni S.p.A. for 101m euro and
   Nuova Tirrena S.p.A. for 37m euro);
 - commitments for interest rate swaps and options for 54m euro (Toro Assicurazioni S.p.A. for 46m
   euro, Augusta Vita S.p.A. for 2m euro, Nuova Tirrena S.p.A. for 3m euro, Lloyd Italico Vita S.p.A.
   for 3m euro);
 - commitment of the Isim S.p.A. subsidiary towards La Rinascente S.p.A. for the purchase of real
   property for a maximum amount of 100m euro;
 - reclassification from Other evidence accounts of swaps for 129m euro.

 Relationships with companies of the Group relate to:

 V – Third party assets with the Company
      - Sicind S.p.A.                                                                     euro/thousand   181,795
      - Fiat S.p.A.                                                                       euro/thousand       47


 VII – Securities with third parties
      - Fiat S.p.A.                                                                       euro/thousand     5,274
      - Consorzio Fiat Media Center                                                       euro/thousand        3
      - Fiat Re.vi                                                                        euro/thousand       15




208
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
PROFIT AND LOSS ACCOUNT


Section 8 – COMMENTS ON THE TECHNICAL ACCOUNTS


Breakdown of gross premiums written between direct business and inward reinsurance
by groups of branches:

                                                                         Direct business   Inward reinsurance          Total


 Life business

     I - Insurance on the duration of human life                           291,045                       17       291,062

    III - Insurance linked to investment funds                           1,828,474                          -   1,828,474

   IV - Health under Art. 1 No. 1, Sub.d) EC Dir. 79/267                          100                       -         100

    V - Capital redemption operations                                      348,657                          -     348,657

   VI - Insurance linked to pension funds                                      2,902                        -       2,902

    Total                                                                2,471,178                       17     2,471,195

 Non-life business

    Health and Accident                                                    251,830                     460        252,290

    Motor TPL                                                            1,344,480                     302      1,344,782

    Motor, other classes                                                   401,871                          -     401,871

    Marine, aviation and transport                                         125,794                     161        125,955

    Fire and Other property damage                                         387,985                  4,145         392,130

    Non-motor TPL                                                          135,429                  1,400         136,829

    Credit and Suretyship                                                    52,289                        7       52,296

    Sundry pecuniary losses                                                  12,329                         -      12,329

    Legal fees                                                               22,203                 5,257          27,460

    Assistance                                                               20,758                         -      20,758

    Total                                                                2,754,968                11,732        2,766,700

 Grand total                                                             5,226,146                11,749        5,237,895

 Totals 2001

 Life business                                                           3,135,116                       32     3,135,148

 Non-life business                                                       2,609,276                  6,685       2,615,961

 Grand total                                                             5,744,392                  6,717       5, 751,109

 % change                                                                       -9.0%               74.9%            -8.9%




                                                                                                                               209
                                 • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Breakdown by geographical area in relation to the individual countries:

  (million euro)                                                                                  2002        2001


  Italy                                                                                        4,420.6    4,940.6

  France                                                                                        742.7       749.5

  Brazil                                                                                          51.1       38.1

  Poland                                                                                          23.5       22,9

  Total                                                                                        5,237.9    5,751.1




 Allocated investment return transferred from the non-technical account to the Life
 technical account

 The transfer was made in accordance with ISVAP Directive of March 8 1999, aggregating the
 amount of the net income stated by each company operating in the Life compartment in its
 annual accounts.


 Other technical income and Other technical charges

 • Other technical income

            2002                                             2001                                        Change

           70,721                                          18,472                                        52,249


 Relating to:

                                                                                                  2002        2001


  Reversal of commissions for write-downs and cancellation of prior year premiums               2,171       2,399

  Cancellation of prior year premiums ceded in reinsurance                                      1,035         506

  Utilisation of the allowance for doubtful accounts for prior year cancellations               9,798       7,485

  Non-recurring income for premiums written down previously                                          -        231

  Miscellaneous technical items – revenues                                                     57,717       7,851

  Total                                                                                        70,721     18,472


 The increase in Miscellaneous technical items for the year is mainly due to the Roma Vita S.p.A.
 subsidiary following modification of classification of commissions on the management of
 investments relating to branch III polices, with the investment risk borne by the policyholders,
 which, in the previous year, referred to the investments giving rise thereto and were classified
 under other items of the profit and loss account.



210
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
• Other technical charges

          2002                                            2001                                                Change

         43,821                                          35,124                                              8,697


Consisting of:

                                                                                                 2002              2001


 Write-down of receivables from policyholders                                                  9,557             8,820

 Write-off of receivables from policyholders for prior year premiums                         10.194            14,751

 Reinsurance commissions on cancellation of premiums ceded                                       263               160

 Miscellaneous technical items - costs                                                       13,807            11,933

 Total                                                                                       43,821            35,124




Section 9 – COMMENTS ON THE NON TECHNICAL ACCOUNT


Income from other investments

          2002                                            2001                                                Change

         390,999                                        425,037                                             -34,038


Consisting of:

                                                                                                 2002              2001


 Interest and other gains on fixed-income securities                                        379,121           417,697

 Interest on various financial investments                                                   11,878              7,340

 Total                                                                                      390,999          425,037


The reduction in the interest on various financial investments is partly due to the different
classification, as discussed in the caption relating to other technical income.




                                                                                                                          211
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Value re-adjustments on investments

           2002                                             2001                                         Change

          6,759                                            9,897                                        -3,138


 Consisting of:

                                                                                                 2002         2001


  Value re-adjustments on shares                                                                  37          960

  Value re-adjustments on debt securities and other fixed-income securities                     6,722       8,937

  Total                                                                                         6,759       9,897



 Gains on the realisation of investments

           2002                                             2001                                         Change

          55,318                                          94,459                                        -39,141


 The detail is as follows:

                                                                                                 2002         2001


  Gains on shares                                                                              24,189     50,560

  Gains on debt securities and other fixed-income securities                                   31,129     43,899

  Total                                                                                        55,318     94,459



 Investment management charges and interest expense

           2002                                             2001                                         Change

          25,183                                          33,487                                        -8,304


 Referring to:

                                                                                                 2002         2001


  Charges on real property investments                                                         13,269     17,658

  Charges on securities and shareholdings                                                       7,088     10,409

  Depreciation                                                                                  1,343       2,115

  Interest expense and derivative transactions                                                  3,483       3,305

  Total                                                                                        25,183     33,487




212
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Value adjustments on investments

          2002                                            2001                                                Change

         430,425                                        153,303                                             277,122


Refer to:

                                                                                                 2002              2001


 Value adjustments on shares                                                                385,554           110,471

 Value adjustments on debt securities and fixed-income securities                            44,871            42,832

 Total                                                                                      430,425          153,303



The Value adjustments on shares are to be ascribed to write-downs of long-term investments for
a total of 218.8m euro of which:
- on the investment in Capitalia S.p.A. for 123.8m euro;
- on shares of the Fiat S.p.A. controlling company for 78m euro of which 31.3m referring to
  Toro Assicurazioni S.p.A. and 46.7m relating to Continent Iard;
- on the investment in Lingotto S.p.A. for 17m euro.


Losses on the realisation of investments

          2002                                            2001                                                Change

         27,313                                          45,831                                             -18,518


Resulting from:

                                                                                                 2002              2001


 Losses on trading in shares                                                                 21,229            42,257

 Losses on trading in debt securities and fixed-income securities                              6,084             3,574

 Total                                                                                       27,313            45,831




                                                                                                                          213
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Other income

           2002                                             2001                                         Change

          46,542                                          88,895                                        -42,353


 The detail is as follows:

                                                                                                 2002         2001


  Refunds of administrative expenses and costs by third parties                                 9,664     15,447

  Interest on receivables from reinsurance companies and other receivables                     14,290     16,180

  Exchange differences                                                                           996        6,007

  Other income and refunds                                                                     21,592     51,261

  Total                                                                                        46,542     88,895


 In 2001, Other income and recoveries included utilisation of the provision made in 2000 for the
 Anti-Trust fine (24m euro).


 Interest on financial liabilities

           2002                                             2001                                         Change

          4,515                                            3,277                                        1,238


 The breakdown is as follows:

                                                                                                 2002         2001


  Interest on amounts owed to banks                                                             1,797         406

  Interest on financial liabilities                                                             2,718       2,871

  Total                                                                                         4,515       3,277




214
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Sundry charges

          2002                                              2001                                               Change

         77,198                                           104,073                                            -26,875


Comprising:

                                                                                                  2002              2001


 Administrative charges and expenses on behalf of third parties                                 9,664           15,447

 Amortisation for the year of goodwill and consolidation differences                          23,390            29,302

 Appropriations to various provisions                                                         18,576            13,267

 Amortisation for share capital increases and other costs                                     12,458            10,173

 Minor taxes                                                                                    2,283             1,936

 Interest on liabilities towards reinsurance companies and other liabilities                    1,506             1,890

 Exchange differences                                                                           1,702             5,140

 Other charges                                                                                  7,628           26,918

 Total                                                                                        77,198          104,073


In 2001, Amortisation for the year of goodwill and consolidation differences included the reversal
of the result of the first half-year of the Augusta group (5m euro) not relating to the Group as it
was transferred by Sicind S.p.A. in July 2002.
In 2001, Other charges included the payment made for the Anti-Trust fine.
In 2002, the Appropriations to various provisions include:
- the provision accrued by Toro Assicurazioni S.p.A. and Nuova Tirrena S.p.A. for a total of 3.3m
  euro to hedge risks relating to law suits undertaken by policyholders for reimbursement of
  increases on Motor TPL premiums;
- the provision of 4.2m euro made by the Continent Iard subsidiary to hedge exchange risks on
  operations in currency;
- the provision for charges arising on the legal cession of the Lloyd Italico Vita subsidiary
  (1.3m euro);
- the provision to the allowance for doubtful accounts of 1.6m euro;
- provisions for on-going litigation.




                                                                                                                           215
                                 • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Extraordinary income

           2002                                             2001                                         Change

          168,032                                         127,416                                        40,616


 The breakdown is as follows:

                                                                                                  2002        2001


  Gains on the sale of real property                                                           121,476     75,047

  Gains on the disposal of securities held as long-term investments                             13,106     20,309

  Gains on disposal of shares held as long-term investments                                      7,664     20,063

  Non-recurring income and other extraordinary income                                           25,786     11,997

  Total                                                                                        168,032   127,416


 The Gains on the sale of real property are to be ascribed for 102m euro to the sale of premises
 by Isim S.p.A. to Immobiliare San Babila S.p.A. in February 2002.

 The Gains on the disposal of shares held as long-term investments mainly refer to the sale of
 Ipi S.p.A., Apimm S.p.A. and Europe Assistance Italia S.p.A. shares

 In 2002, Non-recurring income and other extraordinary income include the disclosure of the
 recovery of the Anti-Trust fine by the Nuova Tirrena S.p.A., Augusta Assicurazioni S.p.A. and
 Lloyd Italico Assicurazioni S.p.A. subsidiaries for a total of 13.2m euro.




216
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Extraordinary charges

          2002                                             2001                                               Change

         40,260                                           41,406                                             -1,146


Resulting from the following items:

                                                                                                 2002              2001


 Losses on the disposal of real property                                                       1,243               437

 Tax on Increased Value of Immovable Property (INVIM) and expenses on real property sales      4,410               727

 Losses on the disposal of securities and shares held as long-term investments                 9,936           22,979

 Non-recurring losses                                                                          9,587             2,280

 Extraordinary additions to various provisions                                                 4,885               450

 Other extraordinary charges                                                                 10,199            14,533

 Total                                                                                       40,260            41,406


Extraordinary additions to various provisions include the amount accrued at consolidated level to
cover the request for reimbursement by the former shareholder of Lloyd Italico Assicurazioni S.p.A.
of the Anti-Trust fine recovered, as paid by the company prior to sale to Toro Assicurazioni S.p.A..

Non-recurring losses include 4.7m euro relating to settlement of the dispute with Consap for life
cessions of Toro Assicurazioni S.p.A. and Augusta Vita S.p.A.




                                                                                                                          217
                                • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 Part D – OTHER INFORMATION




 • Consolidated cash flow statement

 • Personnel




218
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
CONSOLIDATED CASH FLOW STATEMENT

                                                                                                    2002             2001
                                                                                              million euro     million euro

- Net liquid assets on the balance sheet                                                        130.0            222.9
- Net liquid assets of companies no longer included in the scope of consolidation                   -0.1
- Net liquid assets of companies consolidated starting from the year under review                   0.2            21.4
A. NET LIQUID ASSETS AT THE BEGINNING OF THE PERIOD                                             130.1            244.3
B. CASH FLOW FROM OPERATIONS                                                                 1,537.9           2,602.4
- Profit for the year (including minority interest)                                                 9.0          146.9
- Increase in technical provisions                                                              830.4          2,191.3
- Depreciation and amortisation                                                                   46.8             52.3
- Losses on the realisation of investments                                                      -114.9           -115.8
- Value adjustments on shareholdings, securities and real property                              917.0            324.0
- Change in miscellaneous assets and liabilities                                                -149.9               3.6
- Difference arising on translation of initial net liquid assets in foreign currency                -0.5             0.1
C. CASH FLOW FROM INVESTMENTS                                                                -1,264.2          -2,759.9
- Investments:                                                                              -10,536.4        -11,634.5
• Real property                                                                                     -1.1           -18.5
• Shares, interests and shares in common investments funds                                   -4,237.9          -3,938.9
• Debt securities and other equity investments                                               -6,179.2          -7,643.9
• Loans and advances                                                                            -111.8             -22.5
• Securities                                                                                        -6.4           -10.7
- Divestments:                                                                                9,272.2          8,874.6
• Real property                                                                                 279.0            143.0
• Shares, interests and shares in common investments funds                                    4,209.3          2,525.3
• Debt securities and other equity investments                                                4,700.0          6,188.9
• Loans and advances                                                                              82.8             14.5
• Securities                                                                                        1.1              2.9
D. PAID SHARE CAPITAL INCREASES                                                                     6.3            13.5
E. CASH FLOW FROM FINANCING ACTIVITIES                                                            89.0             75.3
- Borrowings                                                                                    164.0            105.3
- Repayment of loans                                                                              -75.0            -30.0
F. DISTRIBUTION OF PROFIT                                                                      -197.3             -45.6
Dividends of the previous year distributed by:
- Toro Assicurazioni S.p.A.                                                                     -189.8             -45.0
- Other companies of the Group to third parties                                                     -7.5             -0.6
G. NET CASH FLOW FOR THE PERIOD (B+C+D+E+F)                                                     171.7            -114.3
H. NET LIQUID ASSETS AT THE END OF THE PERIOD (A+G)                                             301.8            130.0




                                                                                                                              219
                                 • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
 PERSONNEL

 At December 31 2002, the workforce of the Group numbered 3,098 persons with a reduction
 of 115 in relation to the previous year (-167 on equivalent consolidation terms).

 The breakdown by company is as follows:

                                                                                                2002    2001


  Toro Assicurazioni S.p.A.                                                                    1,042   1,091

  Other Italian insurance companies:

  • Nuova Tirrena S.p.A.                                                                        707     746

  • Roma Vita S.p.A. / Giano Assicurazioni S.p.A.                                                 5       5

  • Augusta Assicurazioni S.p.A. / Augusta Vita S.p.A.                                          146     160

  • Lloyd Italico Assicurazioni S.p.A. / Lloyd Italico Vita S.p.A.                              242     265

  • Toro Targa Assicurazioni S.p.A.                                                              17      30

  • D.A.S. S.p.A.                                                                                57      61

  Total Italian insurance companies                                                            2,216   2,358

  Foreign insurance companies:

  • Continent Group (France)                                                                    669     695

  • Phenix Seguradora S.A. (Brazil)                                                              93      89

  • Fiat Ubezpieczenia (Poland)                                                                  52      52

  Total foreign insurance companies                                                             814     836

  Total insurance companies                                                                    3,030   3,194

  Other non-insurance companies

  • C.S.T.                                                                                       56        -

  • Isim                                                                                         12      19

  Total                                                                                        3,098   3,213




220
      • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
The average number of employees determined according to personnel on the payroll at the end
of each month was as follows:

                                                                                         2002             2001


 Managers                                                                                 96               106

 Clerical                                                                              3,067            3,131

 Total                                                                                 3,163            3,237


Per capita consolidated premiums, considering the same consolidation area, reached 1,721
thousand euro, with a decrease of 9.5% in relation to 1,897 thousand euro per capita in 2001.




Turin, March 25 2002                                                    For the Board of Directors

                                                                               The Chairman
                                                                        Gabriele Galateri di Genola




                                                                                                                 221
                        • CONSOLIDATED FINANCIAL STATEMENTS - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS •
Certification Report




                                                                                      223
                       • CONSOLIDATED FINANCIAL STATEMENTS - CERTIFICATION REPORT •
224
      • CONSOLIDATED FINANCIAL STATEMENTS - CERTIFICATION REPORT •
Report of the Board of Statutory Auditors
to the Consolidated Financial Statements
at December 31 2002
Shareholders,
The Consolidated Financial Statements at and as of December 31 2002 of Toro Assicurazioni
S.p.A. which have been submitted to us together with the statutory financial statements, consist
of the Balance Sheet, the Profit and Loss Account and the Notes to the Financial Statements
prepared in accordance with current regulations and in particular with Legislative Decree No. 173
of May 26 1997 and ISVAP Directive No. 735 of December 1 1997, regarding the plan of
accounts, and subsequent pertinent provisions.
The tests made, also by the Independent Auditors KPMG, have revealed that the values stated in
the financial statements correspond to the accounting records of the controlling company and to
the information and financial statements formally communicated to this by its subsidiaries.
These accounts, transmitted by the subsidiaries to the controlling company for preparation of the
consolidated financial statements, drawn up by the competent company bodies, have been
examined separately by the bodies and/or persons responsible for control of the individual
companies according to their respective legal orders and also by the independent auditors
according to the procedures adopted for certification of consolidated financial statements. The
control of the Board of Statutory Auditors does not therefore extend to such financial
statements.
Determination of the scope of consolidation, selection of the consolidation principles of
investments and the procedures used for this purpose, valuation criteria, the structure and
contents of the consolidated balance sheet and profit and loss account and also the attached
schedules and annexes comply with the prescriptions of the aforementioned Legislative Decree
No. 173/97 and with ISVAP instructions.
The Directors' Report discusses with sufficient clarity and completeness the operating
performance, financial position and financial performance and the course of business in 2002;
the check made on this has revealed that it is consistent with the consolidated financial
statements.
In conclusion, we therefore state that the consolidated financial statements have been prepared
correctly and, in their entirety, comply with the specific regulations.




Turin, April 7 2003
                                                                         The Board of Statutory Auditors
                                                                                (Cesare Ferrero)
                                                                                (Giorgio Ferrino)
                                                                                  (Piero Rosso)




                                                                                                                 225
                             • CONSOLIDATED FINANCIAL STATEMENTS - REPORT OF THE BOARD OF STATUTORY AUDITORS •
Summary of the Resolutions of the Shareholders’ Meeting


The Shareholders' Meeting summoned for April 23 2003, at first call, approved the financial
statements at December 31 2002, which closed with a profit of 24,787,248 euro, and the
allocation of 1,239,362 euro thereof to the Legal Reserve and the remaining 23,547,886 euro
to the Extraordinary Reserve. The Meeting also voted to defer the appointment of the Board of
Directors, whose term of office has ended, considering the transfer, currently being defined, of all
the shares of Toro Assicurazioni to the De Agostini Group. The Board may be appointed at a
subsequent Meeting to be called as soon as the aforesaid transfer has been formalised. Lastly,
the Meeting resolved to appoint Reconta Ernst & Young S.p.A. to audit the financial statements
for 2003, 2004 and 2005, establishing the related fees.




                                                                                                             227
                                               • SUMMARY OF THE RESOLUTIONS OF THE SHAREHOLDERS’ MEETING •

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:31
posted:8/18/2011
language:English
pages:229