The information contained in the Annual Integrated Report refers to the topics classified as significant through a materiality analysis process, in line with the criteria of the International <IR> Framework issued by the International Integrated Reporting Council (IIRC)2. Materiality contributes to ensuring that the Group’s strategic choices, their implementations and the resulting reporting take into account both the more significant economic, environmental and social impacts that our activities generate, and the social and environmental factors that might affect the Group in creating value to a greater extent. Since 2014 we have been periodically, at least quarterly, conducting a materiality analysis process considered as a tool to use to bring into focus priorities on which we should concentrate our sustainability action and reporting.
Adjusted net profit including one-off liability management amounted to € 2,191 mln.
RNPS is not expressed as a percentage but as an absolute number..
Option of early redemption announced on all outstanding perpetual subordinated notes belonging to ISINs XS0415966786 and XS0416148202 for a total nominal amount of € 700 million
Worldwide will continue to act as the partner of the employee benefits network of Generali and the latter will manage its health portfolio.
Plan (LTIP) 2019, and the share plan for the employees of the Generali Group aimed to promote the achievement of the strategic objectives, a culture of ownership and empowerment, as well as the employees’
Presented Arte Generali, an innovative business unit aiming at becoming Life-time Partner to art collectors, offering prevention, protection and insurance solutions, integrated with unmatched services and cutting-edge technology. Arte
We develop simple, integrated, customized and competitive Life and Property&Casualty insurance solutions for our clients: the offer ranges from savings, individual and family protection policies,
The premiums collected are managed through appropriate asset-liability management policies as to guarantee the payment of claims and benefits
international practices - is adequate for effectively pursuing our strategy of creating value for all stakeholders in the medium-long term.
REDUCE DEBT LEVEL AND COST: € 1.5-2.0 billion debt reduction by 2021; € 70-140 billion reduction in annual gross interest expense by 2021 vs 2017
26 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Following this analysis, we have defined objectives and metrics to mitigate the risks and to seize the opportunities arising from climate change and from a transition to a low environmental impact society.
The revitalisation of the St. Mark’s Square area in Venice is continuing. The project to restore the Procuratie Vecchie in St. Mark’s Square, the future home and global Hub of The Human Safety Net.
36 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
We are committing to rendering our HR training system increasingly effective. We continue to work in activities for creating awareness and training on the different themes of the Code. The implementation of specific training programmes - both online as well as in the classroom - combined with a global communication programme aims to create full awareness within all employees of the importance of the Code and their responsibility to report each violation that one becomes aware of. Everybody is encouraged to voice their concerns or request clarifications on any topic handled by the Code.
In 2019, we reached the fourth edition of the Shareholders’ Meeting Extended Inclusion (SMEI) programme, which has the purpose of facilitating participation in Shareholders’ Meetings and of facilitating use of the Shareholders’ Meeting venues and interaction of shareholders who have motor, auditory and visual difficulties. We have provided and extended sever dedicated services helpful to overcome any physical, communication and sensory barriers, like simultaneous translation into many languages, sign language and captioning in Italian - services available starting from the last Shareholders’ Meeting also for the streaming of the opening remarks of the Chairman, the Group CEO and the Group CFO - and reception and check-in, as well as professional medical assistance. Moreover, reporting on the SMEI services was added to with the publication of a new page on the Group website and with the distribution of a specific booklet to those participating in the Shareholders’ Meeting. One of the driving forces characterising the programme ever since the beginning is the participation of dozens of Group employees who each year embrace the initiative in the guise of volunteers, working in synergy with the specialised professional operators.
Our policy is based on the following principles that steer remuneration programmes and related actions: The remuneration policy for non-executive directors establishes that remuneration consists of an annual fixed component as well as an attendance fee for each Board of Directors’ meeting in which they participate, in addition to the reimbursement of expenses incurred for participation in such meetings. Directors who are also members of the Board Committees are paid remuneration in addition to the amounts already received as members of the Board of Directors (except for those who are also executives of the Generali Group), in accordance with the powers conferred to those Committees and the commitment required in terms of number of meetings and preparation activities involved. This remuneration is established by the Board of Directors. In line with the best international market practices, there is no variable remuneration.
Group holdings and other companies 2,527 2,246 of which Europ Assistance 873 834
Insurance products, by their very nature, have a high social and environmental value given that they constitute a concrete response to pension and protection needs of customers and the growing needs of society. We constantly monitor risks that may have impact on the society and the environment as to identify opportunities and continue to create value. As part of its offering, the Generali Group is committed to promote several high value-added solutions from a social and environmental perspective. Developing this type of coverage means providing a service that creates value over time, responding to new requirements related to emerging risks, fostering eco-sustainable conduct, and bridging gaps in the pension and public health services sectors. Embracing technology and innovation, we address habits and behaviour towards healthier and more informed lifestyles, aiming at risk prevention rather than claims settlement. In order to encourage eco-sustainable conduct and support green activities, consistent with our climate change strategy, we develop and distribute products and services with particular attention to environmental protection.
The current return on investments fell slightly, reaching 2.9% (3.0% at 31 December 2018). The performance of this indicator is attributable, on the one hand, to the increase in average investments and, on the other, to growth less than proportionate in the absolute value of current income, which amounted to € 10,962 million (€ 10,668 million at 31 December 2018), due to the low interest rates obtainable as part of the reinvestment activity.
(*) Without taking into account the interest expenses on liabilities linked to operating activities of the real estate development companies, classified among the other expenses, as well as the interest on deposit under reinsurance business accepted, deducted from the related interest income.
On the financial markets, the ten-year BTP yield dropped from 2.77% at year-end 2018 to 1.43% at year-end 2019. The BTP-Bund spread went down from 253 bps at year-end 2018 to 161 bps at year-end 2019. The equity market was affected by the global monetary policies. The FTSE MIB posted positive performance during the year (+33.8%).
Global Corporate and Commercial (GC&C) GC&C offers medium to large companies and intermediaries in over 160 countries around the world, insurance solutions and P&C services. Backed by its solid global experience and knowledge of the local markets and of the corporate sector, integrated solutions that can be personalised in properties, casualty, engineering, marine, aviation, cyber and specialty risks are offered. Furthermore, GC&C guarantees companies the same level of assistance and protects everywhere in the world through its Multinational Programs, Claims and Loss Prevention experts. GC&C has collected a total premium volume of € 2 billion in 2019. The performances of the year were influenced by the occurrence of some large claims, which particularly affected the property. From a technical point of view, in 2019 GC&C continued to pursue a policy of rebalancing the portfolio through the development of Multinational Programs and Financial Lines, focusing globally on the medium-large companies segment, in a market characterized by strong competition especially in the property, casualty and engineering branches.
(+5.5%), reflecting the performance observed in Italy (+6.1%), France (+11.7%) and Germany (+11.6%). Premiums from unit-linked products dropped by 2.8%; the last quarter of the year however pointed to a recovery, with positive performance widespread in the main areas of operation of the Group.
The net investment result, amounting to € 1,985 million, was up 8.2% from the € 1,835 million at 31 December 2018. This trend was, in particular, determined by the increase in net income from investments, which benefitted from the improvement in the realized component and the drop in impairments. In particular: – current income from investments - which also included the current income from investments at fair value through profit or loss - was basically stable at € 9,514 million (€ 9,518 million at 31 December 2018), while the related profitability, calculated based on the book value of the investments, was down to 2.93%; – net operating realized gains on investments stood at € 1,584 million (€ 1,220 million at 31 December 2018), supported by the equity and bond investments, while those on real estate investments remained basically stable. The other investments recorded a decrease tied to derivative transactions; – net operating impairment losses on investments went from € -817 million at 31 December 2018 to € -318 million.
Net operating income from financial instruments at fair value through profit or loss 10,218 -6,115 n.m.
Therefore, the expense ratio stood at 28.4% (27.9% at 31 December 2018).
Property & Casualty insurance provisions 29,059 28,955 of which Motor 12,352 12,558 of which Non-motor 16,707 16,397
The operating result of the aforementioned businesses is summarized in the table below: Holding and other businesses operating result by sector
The impacts of M&A operations (positive and driven by the disposal of Generali Lebensversicherung AG in the second quarter of the year) and of regulatory changes (substantially neutral, thanks to the changes occurred in the last quarter) have more than counterbalanced the negative effect of the variances (mainly driven by the financial markets ’ development, despite the positive trend of the last quarter).
The following table presents the reconciliation between IFRS shareholders’ equity and Solvency II excess of assets over liabilities at year-end 2019 and, for comparative purposes, at year-end 2018.
Nonetheless, the Group manages its investments in a prudent way according to the so-called Prudent Person Principle16, and strives to optimize the return of its assets while minimizing the negative impact of short-term market fluctuations on its solvency position. Under Solvency II, the Group is also required to hold a capital buffer, with the purpose of maintaining a sound solvency position even in the circumstances of adverse market movements.
The credit risk assessment is based on the credit rating assigned to counterparties and financial instruments. To limit the reliance on external rating assessments provided by rating agencies, an internal credit rating assignment framework has been set within the Risk Management Group Policy. Within this framework additional rating assessments can be performed at counterparty and/or financial instrument level and ratings need to be renewed at least annually. This process applies even where an external rating is available. Moreover, additional assessments shall be performed each time the parties involved in the process possess any information, coming from reliable sources, that may affect the creditworthiness of the issuer /issues.
fined to monitor the liquidity situation of each Group insurance Legal Entity on a regular basis. Such metric is forward-looking, i.e. it is based on projections of cash flows, stemming both from assets and liabilities and on the assessment of the level of liquidity and ability to sell of the asset portfolio at the beginning of period. The metric is calculated under both the so-called base scenario, in which the values of cash flows and assets correspond to those projected according to each Legal Entity’s Strategic Plan scenario, and the so-called liquidity stress scenario, in which the projected cash inflows and outflows and the market price of assets are calculated to take into account unlikely but plausible circumstances that would adversely impact the liquidity of each Group insurance Legal Entity.
Women empowerment and minorities inclusion Employment dynamics and restructuring of business landscape
Engagement and response to Generali Global Engament Survey Employees Female employees Trained employees Reskilled employees Per capita training Training investment Employees engaged in performance management process Organizational entities with smart working Diversity & Inclusion index
Direct investments to which the Responsible Investment Guideline is applied Sustainable and Responsible Investments Engagement activities Managed reports related to the Code of Conduct Employees trained in the Code of Conduct
The Directors are also responsible for defining the Group's management and organization business model, as well as with reference to the matters identified and reported in the DNF, for the policies applied by the Group and for identifying and managing the risks generated or incurred by the Group. The Board of Statutory Auditors] is responsible, within the terms provided by the law, for overseeing the compliance with the requirements of the Decree.
Auditors’ independence and quality control We are independent in accordance with the ethics and independence principles of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, based on fundamental principles of integrity, objectivity, professional competence and diligence, confidentiality and professional behavior. Our audit firm applies the International Standard on Quality Control 1 (ISQC Italia 1) and, as a result, maintains a quality control system that includes documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable laws and regulations.
With regard to these aspects, we obtained the documentation supporting the information contained in the DNF and performed the procedures described in item 4. a) below.
– interest expenses on financial debt3; – company restructuring costs and other non-recurring expenses incurred for management and coordination activities; – costs arising from the assignment of stock options and stock grants by the Group.
The following reclassifications are made in the calculation of the operating result with respect to the corresponding items in the income statement: – investment management expenses and investment property management expenses are reclassified from acquisition and administration costs to net operating income from other financial instruments, more specifically to other expenses from financial instruments and land and buildings (investment properties); – income and expenses related to real estate development activities are classified under other non-operating income and expenses, in accordance with the management model adopted that provides for sale at completion; – in the Life and Holding and other businesses segments, gains and losses on foreign currencies are reclassified from net operating income to net operating income from financial instruments at fair value through profit or loss. In the Property & Casualty segment, they are reclassified from net operating income to net non-operating income from financial instruments at fair value through profit or loss. The classification for each segment is consistent with the related classification of the derivative transaction drawn up in order to hedge the Group’s equity exposure to the changes in the main currencies of operations. Net operating and non-operating income from other financial instruments are therefore not subject to financial market volatility; – net other operating expenses are adjusted for operating taxes and for non-recurring taxes that significantly affect the operating result of the countries where the policyholders’ profit sharing is determined by taking the taxes for the period into account. These adjustments are included in the calculation of the operating result and are excluded from the income taxes item; – in net operating income from other financial instruments, interest expenses on deposits and current accounts under reinsurance business are not included among interest expenses related to liabilities linked to operating activities but are deducted from the related interest income. Moreover, the interest expenses related to the abovementioned real estate development activities are not included in interest expenses related to liabilities linked to operating activities, but are classified under other non-operating income and expenses in accordance with the management model adopted that provides for sale at completion.
In order to provide a presentation of investments that is consistent with the calculation of the return on investments, the Group’s investments in the Management Report differ from those reported in the balance sheet items since: – Investment Fund Units (IFU) are split by nature in equity, bond and investment property instruments as well as cash equivalents; – derivatives are presented on a net basis, thus including derivative liabilities. Moreover, hedging derivatives are classified in the respective asset class hedged; – reverse REPOs (Repurchase Agreements) are reclassified from other fixed income instruments to cash and cash equivalents in accordance with their nature of short-term liquidity commitments; and
Notes to the consolidated financial statements Basis of presentation and accounting principles Segment reporting Information on consolidation area and Group companies 1 Consolidation area 2 Disclosures on interests in other entities 3 Investments in subsidiaries, associated companies and joint ventures 4 Goodwill 5 Non-current assets or disposal group classified as held for sale 6 Related parties disclosure
Result of the period attributable to minority interests 269 189 16 EARNINGS PER SHARE: Earnings per share (in €) 1.70 1.48
The consolidated financial statements of the Group include the financial statements of Assicurazioni Generali S.p.A. (Parent Company) and its subsidiaries. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an investee if, and only if, the Group has: – power over the investee (i.e. existing not merely protective rights that give it the current ability to direct the relevant activities of the investee, that impact meaningfully the returns of the investee); – exposure, or rights, to variable returns from its involvement with the investee; – the ability to use its power over the investee to affect its returns.
The assets acquired and liabilities deriving from a business combination are initially recognized at fair value at the acquisition date. Goodwill is initially measured at cost being the excess of the aggregate acquisition cost over the net value of the identifiable assets acquired and liabilities assumed. If the impairment test leads to the result that the acquisition cost is less than the fair value of the assets acquired and liabilities assumed, the difference is recognised in the profit and loss.
In the Annexes to the consolidated financial statements the complete list of subsidiaries, associates and joint ventures included in the consolidated financial statements at 31 December 2019 is presented. Unless otherwise stated, the annex shows the share capital of each consolidated entity and the proportion of ownership interest held by the Group equals the voting rights of the Group.
Lessees present interest expenses from lease liabilities separately from depreciation and amortisation charges of the right of use assets. Depreciation and amortisation charges are allocated according to the nature of the underlying items subject to leasing arrangements, while interest expenses from lease liabilities are allocated within interest expenses on loans, bonds and other payables.
In case of acquisition of life and non-life insurance contract portfolios in a business combination or portfolio transfer, the Group recognises an intangible asset, i.e. the value of the acquired contractual relationships
Property, plant, equipment, furniture and property inventories are classified in this item as property inventory.
This item comprises non-current assets or disposal groups classified as held for sale under IFRS 5. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification They are measured at the lower of their carrying amount and fair value less costs to sell.
Our performance Risk Report counted for in accordance with the IAS 18 treatment of the investment management service component. They are recognised along the product life by reference to the stage of completion of the service rendered. Therefore, acquisition commissions are incremental costs recognised as assets, which are amortised throughout the whole policy term on a straight-line approach, reasonably assuming that the management service is constantly rendered.
Deferred tax liabilities are recognised for all taxable temporary differences between the carrying amount of assets and liabilities and their tax base, Deferred tax liabilities are measured at the tax rates that are expected to be applied in the year when temporary differences will be taxable, are based on the tax rates and tax laws enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The transactions with owners and the result of comprehensive income are presented in the statement of changes in equity.
This section comprises the allocation of the profit or loss of the year, the allocation of the previous year profit or loss into the capital reserves, increases in capital and other reserves (for the issuance of new shares, equity instruments, stock options or derivatives on own
Activities of Life segment include saving and protection business, both individual and for family, as well as unit linked products with investment purposes and complex plans for multinationals. Investment vehicles and entities supporting the activities of Life companies are also reported in this segment.
The recognised amounts in the financial statements for these exposures at 31 December 2019 amounted to € 456 million for a corresponding notional amount of € 41,602 million, which mainly relates to over-the-counter positions. The exposure is mainly associated with operations relating to interest rates hedges and foreign exchange rates hedges. Furthermore, the Group undertakes macro hedge strategies aimed at protecting the capital and the income statement from the risk of a significant reduction in share prices.
Our performance Risk Report 14 Amounts ceded to reinsurers from insurance provisions
(€ million) Direct insurance Accepted reinsurance Total 31/12/2019 31/12/2018 31/12/2019 31/12/2018 31/12/2019 31/12/2018
The total insurance provisions include the gross direct amount of mathematical provisions, which amount to € 253,870 million (€ 242,928 million at 31 December 2018), the provisions for policies where the investment risk is borne by the policyholders and for pension fund, which amount to € 75,402 million (€ 63,142 million at 31 December 2018), the ageing provision for life segment, which amounts to € 15,834 million (€ 14,782 million at 31 December 2018), and financial liabilities related to investment contacts, which amount to € 9,867 million (€ 9,128 million at 31 December 2018).
The reserve for other unrealised gains and losses though equity comprised, among other component, gains or losses on re-measurement of the net defined benefit liability in accordance with IAS 19, and gains or losses on hedging instruments accounted for as hedging derivatives (cash flow hedge), put in place in order to hedge interest rate change and British pound/Euro rate change on various subordinated bonds issued. The item amounted to € -1,240 million (€ -716 million at 31st December 2018); the changes is mainly attributable to the increase in defined benefit plans remeasurements reserve in application of IAS19 which amounted € - 1,283 million (€ - 892 million at 31st December 2018) and from the movement of reserves attributable to disposal groups classified as held for sale that does not include the gains and losses coming from disposal group anymore, because sold.
The major monetary and non-monetary changes occurred during the period for the main items of financial liabilities (non-insurance) as well as for derivatives at fair value are shown below: Other financial liabilities
Gross book value as at 31 December previous year 3,484 3,682
Fee and commission expenses related to pension funds management 10 11
Expenses from service and assistance activities and charges incurred on behalf of third parties
– Held to maturity investments The category includes primarily bonds, which valuation is above described. If the fair value cannot be reliably determined, the amortized cost is used as the best estimate for the determination of fair value. – Loans
– non-derivative liabilities linked to investment contracts measured at fair value through profit and loss, for which IAS 39 applies (€ 22 billion); – subordinated liabilities that qualify as own funds pursuant to the Solvency II regulations (€ 9 billion); – liabilities arising from defined benefit plans of Group companies operating in the Life and P&C segments (€ 4 billion); – tax liabilities related to insurance operations (€ 4 billion ).
Available for sale financial assets (AFS) held to maturity and loans and receivables*** 350,839 22,210
The number of employees rose following the acquisitions during 2019, that resulted in the multi-boutique platform expansion and the strengthening of our position in the CEE region through Adriatic Slovenica in Slovenia and
The pension benefits of Generali Group’s employees are mainly in the form of defined benefit plans and defined contribution plans. As for defined benefit plans, participants are granted a defined pension benefits either by the employers or via external entities. The main defined benefits plans are concentrated in Germany, Austria and Switzerland, while in Italy the provision
Other investments 13.8 13.9 weighted-average hypotheses considered for the value definition of defined benefits plans obligations are summarized in the following table, for the main operating areas: The assumptions used in the actuarial calculation of the defined benefit obligations and the related periodic pension cost are based on the best estimates of each companies granting defined benefit plans. The main
The accounting treatment for these transactions consists of recognising the estimated cost of the services received in the most appropriate item of the financial statements (personnel expenses, commissions payable). This cost is determined based on the fair value of the assigned rights (stock option/stock grant), as a contra entry for an increase in equity by charging it to a specific provision. Since the share-based payment agreements made in connection with the plans under review do not include an exercise price, they are comparable to free grants (stock grants) and are treated in compliance with the rules established for this type of transaction. The total charge relating to these agreements is then calculated based on the number of shares estimated to be granted, multiplied by the fair value of the Banca Generali share at the grant date. The fair value of the Banca Generali share at the grant date is measured based on the stock market price recorded on the date of the Shareholders’ Meeting approving, each year, the Remuneration Policy for the current year, adjusted to take into account the estimate of expected dividends not received by the beneficiaries during the deferral period.
Eq ui tie s a t f air va lu e
Su bo rd in at ed li ab ili tie s 7, 8, 7, 8,
,5 a Pr em iu m s w rit te n
Un re ali ze d ga in s a nd re ve rs al of im pa irm en t lo ss es
e se gm en t Li fe s eg m en t
Fi na nc ia l a ss et s at fa ir va lu e th ro ug h pr ofi t o r l os s
O th er a ss et s 2, 2, 3, 3, 3, 3,
5. Generali 3. Immobilien AG & Co. KG, Munich 6. Generali Belgium S.A., Bruxelles 7. Generali Deutschland Schadenmanagement GmbH, Cologne - Merged in Generali Deutschland AG
GSS - Generali Shared Services S.c.a.r.l. 086 EUR 1,002,000 G 11 47.80 99.90 99.75 0.10 Pojišťovna Patricie a.s.
GEII Rivoli Holding SAS 029 EUR 12,000,000 G 10 100.00 Generali Europe Income Holding S.A. 100.00 98.92
SAS IMMOCIO CBI 029 EUR 61,058,016 G 10 100.00 Immobiliere Commerciale des Indes Orientales IMMOCIO 100.00 98.62
Retail One Fund OPPCI 029 EUR 120,999,890 G 11 35.29 Generali Vie S.A. 100.00 98.82 64.71 Retail One Fund SCSp RAIF
SCI Parc Logistique Maisonneuve 3 029 EUR 6,065,560 G 10 100.00 SC Generali Logistique 100.00 99.04
OPCI GR1 029 EUR 200,481,793 G 10 19.13 Generali IARD S.A. 100.00 98.62 73.69 Generali Vie S.A.
Sarl Breton 029 EUR 38,687,973 G 10 100.00 Generali Vie S.A. 100.00 98.62
GRE PAN-EU Munich 1 S.à r.l. 092 EUR 12,500 G 9 100.00 Generali Europe Income Holding S.A. 100.00 98.92
GLL AMB Generali Bankcenter S.à.r.l. 092 EUR 41,393,476 G 11 100.00 GLL AMB Generali Cross-Border Property Fund FCP 100.00 100.00
Office Center Purkyňova, a.s. 275 CZK 2,000,000 G 11 100.00 Generali Real Estate Fund CEE a.s., investiční fond 100.00 100.00
S.C. Generali Romania Asigurare Reasigurare S.A. 061 RON 178,999,222 G 2 99.97 Generali CEE Holding B.V. 99.97 99.97
Generali Life Assurance (Thailand) Public Co. Ltd 072 THB 3,627,000,000 G 3 49.00 Generali Asia N.V. 93.11 90.75 44.11 KAG Holding Company Ltd
The total percentage of votes exercitable at shereholders’general meeting, which differs from that of direct on indirect shareholding, is a follows: Generali France S.A. 100.00%
Generali Deutschland Rechtsschutz Service GmbH 094 EUR 25,000 a 11 100.00 Generali Deutschland AG 100.00 100.00 29
Association pour La Location du Moncey 029 EUR 0 a 11 100.00 Generali Vie S.A. 100.00 98.63
COSEV@D Société par actions simplifiée 029 EUR 4,759,035 a 11 59.12 Cofifo S.A.S. 100.00 98.63 8,916 40.88 Generali France S.A.
(1) a=non consolidated subsidiaries (IFRS 10); b=associated companies (IAS 28); c=joint ventures (IFRS 11)
In addition to the above activities, in the course of its ac-
As far as we are aware, no atypical and/or unusual transactions took place during 2019.
As part of its oversight of the ICRMS, the Board of Statutory Auditors paid particular attention to the IT area and to issues relating to cyber security management and data protection. In this area, on 6 June 2019, the Board of Directors adopted the “Strategic ICT & Cyber Security Plan”, in compliance with s. 16 of IVASS Regulation no. 38/2018. During 2019, the Cyber-Security area underwent specific inspections by the Group Audit Function, under the Audit Plan approved by the Board of Directors. In this regard, management continues to implement the initiatives intended to gradually strengthen monitoring and risk mitigation. In this context, the refinement of systems and procedures suitable to prevent and reduce the said risk remains an area of attention subject to regular monitoring by the Board of Statutory Auditors.
The above-mentioned areas addressed by reinforcement programs, also with a view to the continuous improvement of the efficiency and effectiveness of the Group system, are specifically monitored by the Board of Statutory Auditors.
This objective was pursued by the Company by adopting a “financial reporting model” consisting of a set of principles, rules and procedures designed to guarantee an adequate administrative and accounting system. Consistently with the Company ICRMS, the financial reporting model involves the corporate bodies and the operating and control units in an integrated management approach, consistently with the different levels of responsibility. The main characteristics of the model are described in the Corporate Governance and Share Ownership Report. The data and information exchanged with the external auditors for the performance of our respective tasks pursuant to s. 150.3 CFBA and s.74.3.e of IVASS Regulation no. 38/2018 showed no questions to be highlighted in this report.
erenced claim) – with reference to selected GRI Standards and indicators of GRI G4 Financial Services Sector Disclosures. The analysis also considered the European Commission’s orientation on disclosure of non-financial information, which was subsequently taken up by the ESMA. When drawing up the CNFD, the Company did not exercise the option to omit information concerning imminent developments and transactions under negotiation allowed by s. 3.8 of Lgs.Decree 254/2016. The Board of Statutory Auditors also noted that the external auditor EY issued its report as per s. 3.10 Lgs.Decree no. 254/2016 on 31 March 2020. In the report, EY certified that on the basis of the work performed, no elements had come to its attention suggesting that the CNFD had not been drawn up, in all significant respects, in compliance with the terms of ss. 3 and 4 Lgs.Decree no. 254/2016 and the reporting standard used by the Group. In turn, the Board of Statutory Auditors observes that, during its inspections, no evidence of CNFD non-conformity with the laws governing its preparation and publication came to its attention.
The DDM requires the use of assumptions with a high level of subjectivity, such as flows of dividends extrapolated from business plans, nominal growth rates and cost of capital. Furthermore, the persistence of low interest rate level, in past years, in many of the countries where the Group operates has led to a decrease in the profitability of CGUs of the life segment, representing more than 50% of the total amount, and, therefore, a reduction in the surplus between the carrying amount and the recoverable amount. Similar effects were generated by the high volatility of the financial markets which led to a negative trend in the assets under management of the GCU Multiboutique in the Asset Management segment.
Investment contracts: contracts that have the legal form of insurance contracts but, as they do not substantially expose the insurer to significant insurance risk (e.g. the mortality risk or similar insurance risks), cannot be classified as insurance contracts. In accordance with the definitions of IFRS 4 and IAS 39 these contracts are recognized as financial liabilities.
Provisions arising from policies where the investment risk is borne by the policyholders and from pension funds: they comprise the amounts to be allocated to the policyholders or to the beneficiaries relating to Life segment products where the risk arising from the underlying financial investments backing the technical liabilities is borne by the policyholders.