The transaction improved the Group’s Solvency I ratio by 8 p.p.. The sale of the bank also significantly reduced Generali’s non-insurance activities.
On 17 March 2016 the Board of Directors of Assicurazioni Generali appointed Philippe Donnet as Group CEO, conferring on him all related executive powers. The Board of Directors also appointed Alberto Minali as General Manager of the Company. Philippe Donnet and Alberto Minali will continue to hold their current positions within the Group.
Today the customer journey is nonlinear, characterized by multiple touchpoints 20 Gruppo Generali Business Model Sottotitolo Capitolo Sottotitolo Capitolo 21Gruppo GeneraliRendiconto Annuale Integrato
Relevant We know how to foretell and fulfil needs, taking opportunities. We tailor the solutions on the basis of the needs and habits of our customers, so that they will recognize the value.
As insurers, considering our high social impact, we cannot ignore the context that we operate in. We have always been committed to improving and protecting the local communities in which we operate. We continued to take a strong level of interest in the community in 2015.
Our strategy of becoming a Retail Leader requires that we: ❚ successfully distinguish ourselves from competitors by providing a superior customer experience to increase customers’ loyalty, for example, providing the right products and services at the right time and through the most appropriate channels; ❚ expand the skills of our distributors moving from the traditional model of distributors as customer “gate keepers” towards a model where distributors are actively involved; ❚ enhance our ability to generate cash to fund the investments needed to become retail leaders.
❚ With reference to operations, there were 2 cross-discipline initiatives launched in 2015 involving unit-linked and payments where we aim to provide cross-business unit services to develop and share capabilities within the Group companies. 2015 was also an intense year with respect to improving the lean processes, with more than 200 projects planned at national level, and approximately180 internal experts trained to various levels (green and black belts).
The Global Engagement Survey therefore defines the foundations for the changes that will be important for us and for the Group’s future. It will take place every two years and will allow us to measure the level of engagement and empowerment with the aim of promoting a process of ongoing improvement.
Around 231,000 shareholdersAt 31 December 2015 13.284% Mediobanca S.p.A. (206,810,114 shares)
Nationality Italian Professional background Professor In office since 30 April 2010 - elected from the minority slate Board committees Risk and Control Committee Sub Committee for related party transactions Investment Committee
Nationality Monegasque Professional background Enterpreneur In office since 30 April 2013 Board committees Chairwoman of the Remuneration Committee
❚ the Group Long-Term Incentive (LTI) is the long-term program for Group executives and certain selected key resources, paid in Generali shares with approval by the Shareholders’s Meeting: - in line with market practice and shareholder expectation, the shares are provided over a period of 6 years, subject to meeting performance conditions that are in line with the strategic targets of the Group; - in line with regulatory requirements, the LTI plan has no-claims bonus and claw back clauses within our risk management policies and a no-sell period of 2 years on the shares.
In line with our compliance culture, assessments are made at individual level to ensure the compliance of conduct with respect to the compliance, audit, code of conduct and governance processes; these assessments can trigger noclaims bonus and claw back clauses on all the incentives.
We develop simple, integrated, customized and competitive Life and P&C insurance solutions for our clients to meet their needs: our solutions include savings policies, individual and family protection policies, unit-linked policies, mass-market insurance products as MTPL insurance, household, accident and health policies as well as sophisticated products covering commercial and industrial risks and structured solutions for multinational companies.
GIS (SICAV di GIE) Ageing Population was launched on 12 October. It was planned and developed as an answer to the trend of ageing population and greater longevity, combining financial return and ability to create value for the community. The fund can also include issuers in the pharmaceutical and healthcare industry, in real estate (nursing homes), in Life and savings insurance and/or in the field of products for the elderly.
The integration process, launched in 2013, aiming at the unification of all the existing brands into three main strategic brands - Generali (retail market and SME), Alleanza (households) and Genertel (alternative channels) - is substantially over with succes. The completion of the project has allowed the Group to face more effectively the challenges of the new strategic plan in Italy.
After Italy and Germany, France is the third most important market in the Generali Group, contributing with 25% to the Group total premiums.
The French economy showed signs of recovery in 2015 compared to the previous year, although GDP growth has remained at low levels of approximately 1% yearly in real terms. Within a weak growth and low inflation scenario, interest rates remained at historically low levels, as in the rest of Europe. Moreover, the yield of the French ten-year government bond OAT increased from 0.83% at the end of 2014 to 0.99%.
The Life segment grew moderately despite the low interest rates. The P&C market experienced a weak growth.
Senior debt Subordinated debt Hybrid debt was very volatile, especially at the end of 2015 – as well as due to the cash generated by the new bond issue aimed at re-fi nancing the subordinated bond callable in June 2016.
The growth in premiums was shared across all the companies, with good performance from all the distribution channels. More specifically, the hybrid products business was shared across Genertel Life (+35%), Generali Italia (+93.8%) and Alleanza (+218%).
Profitability (margins on the APEs) decreased from 30.7% in 2014 to 23.1% in 2015, mainly due to the adverse economic climate which strongly reduced profitability, especially in the savings business where there is a high level of guarantee. New business value amounted to € 191 million (-28.7%). Net inflows in Germany began to increase again after the drop the previous year which reflected the measures adopted to restructure the portfolio Tale trend riflette l’incremento osservato nella linea puro rischio e malattia (+14,0%) e nelle polizze unit linked (+9,2%).
Net insurance benefits and claims -56,010 -53,893 -16,666 -14,924 of which change in the provisions for unit and indexlinked policies
❚ Income is back up (+0.8%) due to the performance of the non-motor lines.
❚ Improving Group Net COR (-0.6 pps), thanks to the loss ratio performance despite the higher impact of catastrophic claims.
The gross written premiums in the EMEA regional structure, amounting to € 4,410 million, increased by 1.8% compared to 31 December 2014.
Administration costs are also slightly up, amounting to € 1,175 million (€ 1,155 million at 31/12/2014); the ratio of costs to net earned premiums was however stable at 5.9%.
Current income from real estate investments - net of depreciation - was also decreased, amounting to € 256 million (€ 268 million at 31 December 2014).
Net operating income from other financial instruments 255 295 22 -13
At 31 December 2015, the consolidated scope of the Group fell from 473 to 435 companies, of which 394 were consolidated on a line by line basis, and 41 measured with the equity method.
In order to help the assessment of the quality and sustainability of the net result of the Generali Group in the various business segments and territorial areas, the Management report includes the following alternative performance measures.
Change in the provisions for unearned premiums and for unexpired risks for non-life segment -56 -26
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD(*) 8,484 12.262
(**) Cash and cash equivalents at the beginning of the period include cash and cash equivalents (€ 9,044 million), liabilities to banks payables on demand (€ -7 million) and bank overdrafts (€ -13 million) without cash and cash equivalents of non current assets or disposal groups classified as held for sale.
VI. Credit Risk VII. Insurance risk VIII. Operational risk IX. Other risks X. Risk monitoring by third parties XI. Capital management
This yearly report is drawn up in Euro (the functional currency used by the entity that prepared the financial statements) and the amounts are shown in millions, unless otherwise stated, the rounded amounts may not add to the rounded total in all cases.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:  The contractual arrangement with the other vote holders of the investee;  Rights arising from other contractual arrangements;  The Group’s voting rights and potential voting rights.
During 2015, the Group has undertaken a preliminary assessment of the implementation impacts relating to the forthcoming application of IFRS 9. On the basis of these pre-assessment activities, the key areas for intervention have been identified and which will be addressed in the subsequent implementation phase for the purpose of ensuring the correct and homogeneous application of the new accounting standard. Following this assessment the Group expects impacts that could be material regarding classification and measurement of financial instruments and consists in a larger part of financial investments measured at fair value through profit or loss. Concerning impairment the Group assessed that the new Expected Credit Losses model should lead to less significant impacts in the Group financial statements.
Narrow scope amendments to IAS 39 Financial Instruments – 1 January 2014 June 2013
Amendments resulting from Annual Improvements 2011-2013 Cycle 1 July 2014 December 2013
Other intangible assets with indefinite useful life are not subject to amortization. They are periodically tested for impairment.
The future VOBA recoverable amount is nonetheless tested on yearly basis.
Result of the period Tale voce evidenzia il risultato consolidato del periodo. La distribuzione dei dividendi agli azionisti è contabilizzata successivamente alla relativa approvazione da parte dell’assemblea.
With reference to the investments, Generali Group measures financial assets and liabilities at fair value in the financial statements, or discloses the contrary in the notes.
When a quoted price for the transfer of an identical or a similar liability or entity’s own equity instrument is not available and the identical item is held by another party as an asset, an entity shall measure the fair value of the liability or equity instrument from the perspective of a market participant that holds the identical item as an asset at the measurement date.
In accordance with IFRS 7 and IFRS 4, the information which enables the users to evaluate the significance of financial instruments on the Group's financial position and performance and the nature and extent of risks arising from financial instruments and insurance contracts to which the entity is exposed and how the entity manages those risks are disclosed in the Risk Report.
IFRS 8, tree main sectors of activity have been defined:  Non life segment, which includes insurance activities performed in the Non life business;  Life segment, which includes insurance activities performed in the Life business;  Holding and other business segment.
The new structure is composed of the business units o the three core markets – Italy, France and Germany – and four regional units: CEE (Central and Eastern European countries members of the EU), EMEA (Austria, Belgium, Greece, Guernsey, Ireland,
2.1 Net insurance benefits and claims -13,081 -13,110 -56,010 -53,893 2.1.1 Claims paid and change in insurance provisions -13,604 -13,696 -56,600 -54,583 2.2 Fee and commission expenses and expenses from financial service activities 2.3 Expenses from subsidiaries, associated companies and joint ventures 2.4 Expenses from other financial instruments and land and buildings (investment properties)
For these associates aggregated summarised financial information are provided here below: Summarized financial information - immaterial associates
Comments on specific balance sheet items are presented in the following paragraphs.
Due to high volatility of the markets that occurred in particular at the end of 2015 it had been decided to maintain higher levels of cash and cash equivalents until investment opportunities improved.
(€ million) Direct insurance Lavoro indiretto Total 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014 of which provisions for liability adequacy test 12 20 0 0 12 20
With reference to the gross direct claims provisions 45.3% was referred to the motor business in line with the prior year (44.8%). In the non-motor business, the personal and commercial lines weighted 81.2%.
It should be noted that the extension of terms to the classes with the highest duration was mainly due to regulatory changes, as well as to a better and more prudent approach in the estimates of long-tail claims.
The amounts refer to direct business gross of reinsurance and recoveries (the latter amounting to € 477 million in 2015).
Actuarial gains or losses arising from defined benefit plans 162 -529
Reserve for unrealized gains and losses on available for sale financial assets
For details on deferred taxes please refer to paragraph 38 Income taxes of the section ‘Notes to the income statement’.
29 Income and expenses from subsidiaries, associated companies and joint venture
Life net insurance benefits and claims 56,600 54,583 -590 -690 56,010 53,893
All other foreign subsidiaries apply their national tax rates, including: Austria (25%), Belgium (34%), Bulgaria (10%), China (25%),
The following table shows a reconciliation from the theoretical income tax expense, by using the Italian corporate income tax rate of 27.5%, to the effective tax rate.
Fiscal losses carried forward as of 31 December 2015 and 2014 are scheduled according to their expiry periods as follows.
With reference to the investment, Generali Group measures financial assets and liability at fair value of in the financial statements, or discloses it in the notes.
The main defined benefits plans are concentrated in Germany, Austria and Switzerland, while in Italy the provision for Trattamento di fine rapporto (employee severance pay) matured until 1st January 2007 is included in the provisions for defined benefit plan for €
In Germany and Austria, where is allocated approximately 82% of the present value of defined benefit obligations, the pension guarantee associations, for yearly contributions to be paid by the companies, are liable for the fulfilment of the pension commitments granted in case of company insolvency.
In respect of the previous plans, a dividend equivalent mechanism has been introduced on the basis of the dividends distributed during the three-year performance period. In particular, should the shareholders’ meeting resolve upon the distribution of dividends in favour of the shareholders during the three-year reference period, at the expiry of such three-year reference period, an additional number of shares determined in relation to the overall dividends distributed during the three-year reference period will be assigned in favour of the beneficiaries. The additional number of shares thus determined shall be assigned simultaneously and in relation with the other shares assigned in favour of each beneficiary, subject to the same restrictions (holding period) mentioned above and determined considering the shares’ value at the assignment of the plan, to be calculated as the average price of the share in the three months prior to the meeting of the Board of Directors called to resolve on the draft statutory financial statements of the Parent Company and the consolidated financial statements for the previous year.
In line with the previous plans, the 2015 LTI plan can be treated as an equity-settled share-based payment falling under IFRS 2 scope.
The table below shows fair values for each RoE interval and for each tranche: Fair value of bonus related to market condition
A similar calculation was applied to the bonus portion linked to the ROE, identifying the pay-out through the linear interpolation applied to the level of RoE considered most probable. The range applied to the linear interpolation is included between the maximum pay-out, granted in case of a level of RoE equal to or greater than 13%, and a pay-out equal to 0 in case of a level of RoE equal to or lower than 11%.
(ii) the amount of the obligation can not be measured with sufficient reliability.
III. Risk Management Policy The “Risk Management Policy” is the cornerstone of all risk-related policies and guidelines. The Policy is approved by the Board of Directors, assisted by the Risk and Control Committee, upon proposal of the Group Chief Risk Officer.
IV. Risk Management process The Risk Management process, regulated by the Policy includes the following main phases: − Risk identification; − Risk measurement; − Risk management and control; − Risk reporting (for the Board of Directors, the Supervisory Authority and external stakeholders).
The risks identified in the Group Risk Map, within the financial, insurance and credit risks categories, are measured through a quantitative model aimed at determining the Solvency Capital Requirement, based on the Partial Internal Model (also called
For the purpose of concentration risk mitigation, the Group pursues the effective diversification of both investment and counterparties. Such diversification objectives are achieved mainly through the diffusion and application of the Group guidelines.
consolidated entity, both at Company level and at Group level. Generali has defined a specific Contingency Funding Plan with the aim of: identifying the key risk factors and scenarios which can lead to a situation of tension or crisis in the Group liquidity position; defining roles, responsibilities, and processes to be activated in such situations; and identifying the management actions to be undertaken in case of increasingly critical crisis situation. In addition, within the Recovery Plan Generali formalised the actions to be undertaken in order to restore a sound liquidity and solvency position should extreme external events hit the Group.
X. Risk monitoring by third parties The Generali Group risk profile, considered as a set of assessments regarding the level of overall exposure to various risks, is monitored by the Supervisory Authorities of the Countries where the Group operates.
On 23 October 2015, the rating agency AM Best confirmed Generali’s FSR (Financial Strength Rating) rating as A (Excellent). For the first time, AM Best assigned the same FSR rating also to the Generali Italia and Česká Pojišťovna. AM Best also confirmed the ratings of the debt instruments issued or guaranteed by Generali. The outlook was confirmed as stable.
A cc ep te d re in su ra nc e T
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F in an ci al a ss et s he ld fo r tra di ng
C ha ng e in d ef er re d ac qu is iti on c os ts d
N et u nr ea liz ed g ai ns a nd lo ss es o n in v es tm en ts a v ai la bl e fo r sa le 5,
R es ul t o f d is co nt in ue d op er at io ns
Fi na nc ia l a ss et c at eg or ie s af fe ct ed b y th e re cl as si fic at io n
: fa ir v a lu e h ie ra rc h y
T ot al fi na nc ia l a ss et s an d lia bi lit ie s at fa ir v al ue o n no n re cu rr in g ba si s
F in a n c ia l lia b ili tie s d e s ig n a te d a s a t fa ir v a lu e t h ro u g h p ro fit o r lo s s
I n te re s ts o f v o tin g r ig h ts i n t h e
Volksfürsorge 5.Immobilien AG & Co. KG 094 EUR 637,238,457 G 10 100.00 Generali Lebensversicherung Aktiengesellschaft 100.00 100.00
GID Fonds ALRET 094 EUR 1,546,241,459 G 11 100.00 AachenMünchener Lebensversicherung AG 100.00 100.00
GID-Fonds AAHYSL 094 EUR 262,979,492 G 11 32.10 AachenMünchener Lebensversicherung AG 97.94 97.94
SCI du Coq 029 EUR 12,877,678 G 10 0.81 Generali IARD S.A. 100.00 98.93 99.19 Generali Vie S.A.
SCI Espace Seine-Generali 029 EUR 1,000 G 10 100.00 Generali Vie S.A. 100.00 98.93
Participatie Maatschappij Graafschap Holland N.V. 050 EUR 3,000,000,000 G 4 55.79 100.00 100.00 3.79 Alleanza Assicurazioni S.p.A.
Transformovaný fond Penzijní spolecnosti Ceské Pojištovny, a.s. 275 CZK 300,000,000 G 11 100.00 Penzijní spolecnost Ceské Pojištovny, a.s. 100.00 100.00
Europ Assistance (Suisse) S.A. 071 CHF 200,000 G 11 100.00 Europ Assistance (Suisse) Holding S.A. 100.00 84.99
Customized Services Administrators Inc. 069 USD 2,974,774 G 11 100.00 Europ Assistance North America, Inc. 100.00 99.99
GNAREI 1 Farragut LLC 069 USD 26,801,181 G 10 100.00 GNAREH 1 Farragut LLC 100.00 99.62
Generali Colombia Vida - Compañia de Seguros S.A. 017 COP 4,220,989,500 G 3 15.38 99.81 93.90 68.28 Generali Colombia Seguros Generales S.A.
Generali Investments Asia Limited 103 HKD 50,000,000 G 9 100.00 Generali Investments Holding S.p.A. 100.00 99.63
Europ Assistance Worldwide Services (South Africa) (Pty) Ltd 078 ZAR 18,264,900 G 11 99.00 Europ Assistance Holding S.A. 99.00 98.99
Generali Deutschland Immobilien Verwaltungs GmbH 094 EUR 25,000 a 10 100.00 Generali Real Estate S.p.A. 100.00 100.00 35
Risque et Sérénité S.A. 029 EUR 6,135,300 a 9 49.12 Generali Vie S.A. 61.16 60.50 3,916 12.04 Generali France Assurances S.A.
Bonus Pensionskasse AG (*) 008 EUR 5,087,098 b 11 50.00 Generali Holding Vienna AG 50.00 50.00 9,904
Société Robert Malatier Ltd 031 GBP 51,258 b 11 33.33 Generali IARD S.A. 33.33 32.98 543
Europ Assistance s.r.o. 275 CZK 2,900,000 a 11 25.01 Ceská Pojištovna a.s. 100.00 99.99 1,698 74.99 Europ Assistance Holding S.A.
GSL Services s.r.o. 276 EUR 6,639 a 11 100.00 Generali Poistovna a.s. 100.00 100.00 7
Europ Assistance (Bahamas) Ltd 160 USD 10,000 a 11 99.99 Europ Assistance - IHS Services S.A.S. 99.99 99.98
Generali Pacifique NC 253 XPF 1,000,000 a 11 100.00 Generali France S.A. 100.00 98.93 2,095
Europ Assistance Niger SARLU 150 XAF 1,000,000 a 11 100.00 Europ Assistance - IHS Services S.A.S. 100.00 99.99
(ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or
The following table shows the main results of the life and health perimeter, in terms of EV and NBV.
Contribution of future years to VIF as at 31 December 2015
With reference to the covered business, the following table shows the reconciliation of ANAV to the IFRS Equity in respect of the Life EV consolidation perimeter (see Annex A1). 2015 ANAV reported in the table refers to the value at 31 December 2015, before the distribution of dividends in 2015 on 2015 profits. The corresponding definition also applies to 2014 ANAV.
NBV NBM New business value 2014 1,239 24.0% Change in perimeter 14 0.1% Exchange rate fluctuation 8 0.0% Products mix/volume 93 1.8%
As a result, operating EV earnings amount to 428mln, while normalised earnings (which exclude the other operating variances) amount to 263mln and lead to a normalised return on EV of 5.7%.
Total EV earnings amount to 1,082mln, with an overall return on EV equal to 23.5%.
APE decreases (-3.2%) on a comparable basis (i.e. neutralizing the minority buyout and the FX effects), as a consequence of the decrease of Unit Linked business (-35.9%) only partially offset by the good production of protection business (+32.6%), mainly in Czech Republic (+32.8%), Poland (+63.8%) and Slovakia (+42.2%). Regular premiums decline (-11.9%) but continue to represent the vast majority of APE production of the Area, whereas single premiums remarkably increase (+125.3%).
Other non operating variances -12 0 -12 Total EV earnings 192 27 165
• Yield curve +0.5%: sensitivity to an upward shift of 50 basis points in the underlying reference rates, accompanied by an upward shift of 50 basis points in all other dependent economic assumptions. Volatility adjustment added to swap rates until the extrapolation “entry-point” remains the same as in the central scenario1.
• Equity Implied Volatilities +25%: sensitivity to a 25% increase of the equity implied volatility across all maturities, resulting in a change of the time value of financial options and guarantees.
Fixed income volatilities are taken from implied volatilities of at the money swaptions. Swaption implied volatility and equity option implied volatility used for year-end 2015 EV valuation have been based on the following market data as at 31 December 2015. All available market data have been used, without any smoothing or anchoring techniques except for Germany where anchoring techniques are adopted with a Long term target level equal to 9,34%. The following tables compare 2014 and 2015 volatilities, highlighting the sharp increase for medium-long term of interest rates volatilities across their whole surface.
Time Value of Financial Guarantees and Options (Time Value of FG&O)