This “Annual Integrated Report and Consolidated Financial Statements 2015” has not been filed, pursuant to article 154-ter of Legislative Decree no. 58 of 24 February 1998 - Consolidated Law on Financial Intermediation (“TUIF”), pursuant to Articles 8 and 21 of Law no. 52 of 6 February 1996. The Company shall publish the definitive version of the “Annual Integrated Report and Consolidated Financial Statements 2015” in accordance with prevailing law, and will also include the reports by the Board of Statutory Auditors and the Independent Auditors.
Members of the Board of Directors Ornella Barra Flavio Cattaneo Alberta Figari Jean-René Fourtou Lorenzo Pellicioli Sabrina Pucci Paola Sapienza
Board of Statutory Auditors Carolyn Dittmeier (Chairwoman) Antonia Di Bella Lorenzo Pozza Francesco Di Carlo (Substitute) Silvia Olivotto (Substitute)
Registered office in Trieste, Piazza Duca degli Abruzzi, 2. Tax code and Company Register no. 00079760328.
Company entered on the Register of Italian Insurance and Reinsurance Companies under no. 1.00003. Parent Company of the Generali Group, entered on the Register of Insurance Groups under no. 026. Certified email (Pec): assicurazionigenerali@pec. generaligroup.com
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The structure of the Management Report includes also the Content Elements provided for by the Framework as set out in the graph below.
The links among the elements above and among these elements and other Group reports will also be displayed with icons highlighting these links: Please note that, except where clearly specified, the terms “Generali Group”, “Generali”, “we”, “us” and “our” in this document always refer to the Generali Group and/or its subsidiaries worldwide, while the terms “Assicurazioni Generali”, “Parent Company” and “Company” refer to Assicurazioni Generali S.p.A..
Please refer to the Appendix to the Management Report for further details on how the abovementioned Framework was applied, especially regarding the Guiding Principles.
Glossary 10 Group highlights 12 Our history 14 2015 Key facts 21 Key events after 31 December 2015 21 2016 corporate event calendar 22 Our value creation process 23 External context: Risks and opportunities for the Group 31 Vision, Mission and Values 36 Our strategy 46 Our governance and remuneration policy 56 Our business model pursuant to article 154-bis of Legislative Decree no. 58 of 24 February 1998 and article 81-ter of Consob Regulation no. 11971 of 14 May 1999 66 68 Group performance 74 Group financial position 81 Share performance 85 Life segment 99 P&C segment 114 Holding & other business segment 120 122 Note to the Management Report 126 Methodological note on alternative performance measures 130 135 Balance sheet 143 Notes 269 Appendices to the Notes
2015 was also an important year considering the business results achieved, representing key turning points for us and for our clients, laying the foundation for further progress of the Group among the world leaders in our sector. In Italy we have now completed the integration process which began in 2013, concluding the most extensive reorganisation ever tackled in Europe in the insurance sector. We simplified the existing brands and unified the business structures across the country, creating a single technological platform for the Life and P&C portfolio, guided by the same simplicity principle which is the guiding force of our global and local initiatives. Likewise in Germany we launched a plan aligned within the Group strategy, based on a leaner organization and governance which presents a new Life business approach and a strong focus on smart insurance related to telematics, domotics and the Vitality project. In France, in 2015 we began to reap the benefits from the significant turnaround process started in 2013, with a positive set of results in the different business sectors, confirming the “Customer Centric” reorganisation originally launched.
By 2030, in all developing regions including Asia and Africa, the majority of inhabitants will be living in urban areas
Life Strong growth in premiums, thanks to unit linked policies. New business annual premium equivalent (APE) stable. Operating result remained stable, despite the low interest rate environment.
We have built a global insurance group in almost 200 years of history that operates in over 60 countries through more than 430 companies and more than 76 thousand employees.
1832–1914 The positive economic and social context, the keen business acumen of the "founding fathers" and Trieste’s strategic geographical position allowed Generali to grow and thrive: it was listed on the stock exchange in 1857 and became a “Group” in 1881. As a consequence, subsidiaries were founded in Italy and abroad, starting with Erste Allgemeine, established in Vienna in 1882.
1919–1945 Once the war ended, Generali returned to the growth that had been temporarily interrupted. In line with what was going on in Italy in those years when public construction activities and agriculture were strongly boosted through the policies adopted by the government, Generali made significant investments in agriculture and real estate starting from 1933. With the outbreak of World War II, the Group lost contact with its branches located in “enemy” countries and one of the most complex periods of its bicentenary history began.
Generali among the 50 smartest companies in the world according to MIT Technology Review
Three-year partnership signed with United Nations’ Abdus Salam International Centre for Theoretical Physics (ICTP)
Generali presented its new strategic plan at the Investor Day in late May; this plan aims to set out a new business model and achieve new, challenging financial targets focused on generating more cash and increased dividends. The Group plans to become a leader in the European retail insurance sector with smarter & simpler products and services. The whole customer experience will also take on greater importance, from when they start to look for information to when the contracts are up for renewal. The Group intends to achieve a net operating cash of over €7 billion cumulatively in the four years to 2018, while total dividends will amount to over €5 billion in the same period. The current cost reduction plan will continue, with savings of €250 million per annum from 2012 for a total of € 1.5 billion by 2018. A total of €1.25 billion will be invested in technology, data analytics and more flexible operating platforms.
❚ “New Normal” model in the Life business, with high performance and low capital absorption products; ❚ building a smarter and simpler operating platform with improved IT architecture; ❚ consolidation of back office operations.
The Telco demerger was finalized in June, which meant that the Telecom Italia ordinary shares owned by Telco – 22.3% of the shareholders’ equity – were distributed to its shareholders (of which 4.31% to the Generali Group). These shares were then sold on the market. When the demerger took effect, the shareholders’ agreement among the Telco shareholders was terminated.
On 15 September the Generali Group completed the sale of BSI to Banco BTG Pactual. In accordance with the agreement signed on 14 July 2014, the final price for the sale was about CHF 1,248 million, comprising about CHF 1 billion in cash and the remaining amount in BTG shares listed on the BM&FBOVESPA stock exchange of São Paulo. The sale of BSI completed Generali’s strategy to focus on its core insurance business and improved its capital position, concluding the turnaround plan launched in January 2013.
The Group announced the first Generali Innovation Challenge on November 9 in association with Microsoft; this international project involved the research and promotion of talent and startups that can respond to new business challenges in the insurance sector through innovative ideas and state-ofthe -art technological solutions.
Assicurazioni Generali renewed its revolving credit lines in May; the facilities were signed in May 2013 for a total value of € 2 billion, and may be used by the Company within a period of 3 to 5 years depending on the credit line. It will only impact the Group’s financial debt if the facility is drawn down, and will allow Generali to improve financial flexibility to manage future liquidity needs in a volatile environment. The new credit facilities replaced the previous ones – both the lines that had a 2-year duration and had expired and those with a 3-year duration that were closed in advance. A group of 21 leading Italian and international lenders made offers to provide credit facilities, with total offers amounting to € 13 billion, more than 6 times the company’s request. The competitive bidding process adopted by Generali allowed the Group to select 9 lenders and obtain very favourable conditions, strongly improved with respect to May 2013, both in terms of amount offered and pricing.
On 20 October Generali issued a subordinated bond for a total amount of € 1.25 billion, targeting institutional investors. The issue attracted around 400 investors for almost € 5 billion, 4 times higher than the target. The bond is intended to refinance the 2016 subordinated call dates of the Group , amounting to a total of € 1.25 billion. The issue attracted strong interest from international investors, who accounted for approximately in renewed revolving credit lines
Generali strengthened its governance in April with the arrival of two new managers to lead the Asian and Americas areas. Jack Howell is the new Asia Regional Officer responsible for Generali’s activities in China, Hong Kong, India, Indonesia, Japan, the Philippines, Thailand, Vietnam, Malaysia and Singapore. Generali is one of the leading foreign Life insurers in China. Antonio Cassio dos Santos joined the Group as Americas Regional Officer. Generali is one of the leading foreign insurers in Latin America, operating in Brazil, Argentina, Colombia, Guatemala, Ecuador and Panama. The Group also operates in North America with the Generali U.S. branch. Jaime Anchustegui has been appointed EMEA Regional Officer, the area covering twelve markets between Europe, North Africa and the Middle East. Moreover, Giovanni Liverani joined the Group Management Committee (GMC), as Country Manager Germany. He also started his new role as CEO of Generali Deutschland Holding.
In March IVASS, the Italian Insurance Supervision Authority, following the submission of Assicurazioni Generali S.p.A., has authorized the use, starting from 1 January 2016, of a partial internal model to calculate the Solvency Capital Requirement at Group level as well as the Solvency Capital Requirements for its main Italian and German insurance companies, for the Non-Life French companies and for Czech company Ceska Pojistovna A.s..
We operate in a complex business that can have a significant impact on our activities and our ability to create value. We are referring, for example, to the consequences of uncertain economic and financial turmoil, technology evolution or the aging global population. However, we believe that our base is solid enough (capital and input) to become a group that can offer insurance solutions
(output) that are easily accessible, and can anticipate and meet customer needs in line with our strategy. Our activities and output have consequences and internal and external effects (outcome) on the various capital values (financial, human, intellectual, social and relationship, manufactured and natural) used in our daily business.
Social and relationship adership recognized at European level Strong partnerships Focus on clients Regular dialogue with Institution
Financial Increased pro�tability Better remuneration of the shareholders Improved cash generation
As for capitals other than the financial one, for more information on other external and internal impacts resulting from our business please refer to the Sustainability Report 2015, Corporate governance and share ownership report 2015 and the 2015 Remuneration Report.
We believe that technological development is crucial for providing effective and appealing insurance solutions: we are designing and implementing a digital transformation in our Group entities to provide clients with insurance solutions
Please see the Risk Report in the Notes to the Consolidated Financial Statements for more information on the risk profile and the specific methods used to assess it
For further information please refer to Our strategy, page 39 of this report and Generali for innovation and Clients in the Sustainability Report 2015 and assistance whenever and wherever they want, via both traditional channels and mobile channels. Our aim is to become a leading European retail insurer by taking advantage of this digital transformation and by changing the company mind-set to a customer-centric one where insurance solutions and assistance services are provided across web, mobile and traditional channels.
Trends in population aging continue to influence contemporary society, driven by a greater life expectancies and falling fertility rates. These trends are only partially offset by migration, which tends to increase the younger strata of the population even though their average income generating power is much lower. Family structures, previously the main backbone of social and economic support, are also evolving, thus increasing the challenges at social level. The implicit risk in these phenomena is the creation of increasingly unbalanced societies, where the higher post-retirement requirements of the older population are no longer properly covered by the public system, and the economic and financial resources produced by the younger categories of the population, or from private savings, have to be directed and valued more carefully. Life insurance plays a fundamental role in monitoring and managing the consequences of a changing society.
By 2050, the global percentage of over-60s will nearly double from 2015, jumping from 12% to 22%
For further information please refer to Clients and Institutions and organizations of the Sustainability Report 2015.
Mission Our mission is to be the first choice by delivering relevant and accessible insurance solutions
First choice Ultimately, we have an impact on the quality of people’s lives: wealth, safety, advice and service help people’s quality of life in the long term.
Accessible Simple, above all. Easy to find, understand and use. Always available at a competitive price.
Our employees were highly involved in both the development of new strategy (the Leave Your Mark initiative involved +300 employees) and the subsequent distribution through the Group business units.
❚ a team of about 40 talented young colleagues from the Group
This approach is currently being introduced to the Italian market and all the main markets where Generali operates; particular attention is paid to the training and development of new professionals (specialized settlement agents and internal case management).
Rehabilitation in the working environment – access to speci�c rehabilitation and training centres
Connectivity is king: by 2019, smartphones will produce three-quarters of mobile data traffic
Innovation is crucial to influence changes in our industry. We are implementing innovation initiatives in the following three directions: ❚ crowd sourcing innovation ❚ incubation and co-operation with start-ups ❚ innovation through new partnerships As proof that we pay particular attention to technology, we are the first and only Italian company on the list of the so-called smart companies compiled by the MIT Technology Review. The Group came before companies like IBM, Microsoft and Uber, thanks to an innovative range of insurance solutions based on data analytics
For further information please refer to Our strategy, page 39 and Generali for innovation in the Sustainability Report 2015
The insurance market is in the middle of an intense period of change. Generali decided to approach innovation on different levels, looking at global partnerships with international players like Microsoft that have complementary skills, and seeking to leverage the community of innovators, start-ups, and businesspeople outside of the Group to generate ideas, business models and technical solutions that can help respond to the new challenges. Gian Paolo Meloncelli Group Strategy and Business Development Director
Within the scope of the Group strategy, we aim to achieve our financial and commercial goals in accordance with our vision, mission and values by pursuing the following guidelines: We will be more efficient in order to maintain a competitive cost position and help fund our transformation.
We aim at being simpler and smarter with new products for consumers that are easy to understand and use, connected, personalized and modular. We will also pursue this objective through business innovation (for example collaborating with external suppliers) and investing in the acquisition of new capabilities such as advanced data analytics.
We are committed to engaging our people, and empowering them by fostering a new mind-set and cultural shift, ensuring good leadership and talent management, encouraging the culture of simplicity. A high level of engagement and empowerment in our people will help us to accomplish our strategy.
We are working on a number of these areas. We consequently improved communications with customers to update them on the extra services available at Generali partner garages for claims repairs (e.g., in France, agents are now trained specifically on the advantages of going to Generali partner garages so they can better advise their customers).
An effective online presence is a critical component of our new strategy. Research conducted in 21 countries showed that there are opportunities to enhance our online presence to improve customer service. We recently launched a new corporate website (Generali.com) and we are also extending the new set of Group standards to all our digital platforms (website, social media, etc).
Other clients were not happy with the level of communication regarding the services provided by third parties, and since they had been organized through Generali, it was difficult to maintain direct contact with the repair staff, even for simple problems such as missed meetings or rescheduling. So, a SMS message can now be sent automatically to the customers’ mobile phone after a claim is opened, so that the technician can be contacted directly, but Generali will still be able to reorganize a meeting.
Simpler and smarter An excellent customer experience can only be obtained by being simpler and smarter. It means offering new proposals that meet customer needs, reflect their habits and go beyond providing a simple guarantee. We identified four components over the past few months to deliver simpler and smarter solutions for Products and Services: ❚ Connectivity: delivering a high level of service to clients taking advantage of the huge amount of information available.
– analysis of driver behaviour for: customer loyalty proposals, ad-hoc car insurance offers, knowledge of wear and tear of the car and of its use, predictive maintenance.
A concrete example of this growth process was the launch in Slovakia of the innovative product called SOS Partner, the first product of this type in Central Eastern Europe. The product - which uses telematics with a panic button installed professionally onto the windshield of the client’s car - allows advanced assistance to be provided to the driver and his/her entire family in case of need. This example of connected insurance allows the more serious road accidents to be detected automatically: a service request is automatically sent to the operations centre of Europ Assistance and the customer can speak directly to an operator to check the type of assistance required or get immediate access to the emergency services. At the same time the product is used to determine the driving style of the customer and uses a "Pay How You Drive" algorithm to reward virtuous drivers through discounts when purchasing and renewing the policies.
❚ Proactive protection: rewards for healthy lifestyles and integration of preventive elements in the insurance solutions, creating real value for customers and providing peace of mind.
For further information please refer to Generali for innovation in the Sustainability Report 2015
❚ IT Infrastructure: Generali Infrastructure Solutions, Generali’s first shared service company went live in July 2014. We are now midway through the data centre consolidation process. In addition to reducing costs, the program delivers improved services such as disaster recovery capabilities and state-of-the-art data security. Major milestones have already been reached with regard to data centre consolidation and the main major migrations have been completed (e.g. migration of the French and Czech Republic mainframe to Aachen); the migration plans for the other countries have already been planned and are currently being implemented. With regard to workplace harmonization, we have also selected a new single provider of help desk services for users and a global basket of standard hardware models.
❚ In the Premises & Facility Management changes are tangible. The Paris Campus was completed in 2015 with the consolidation of 26 sites and significant, consolidations involved buildings in Prague and Milan. Common space planning standards were also defined, in order to improve the workplace quality and control costs.
+1% vs. sector benchmark** +6% vs. benchmark for companies involved in major changes engagement rate calculated on the average percentage of the positive answers based on the following questions
Empowerment is a system of actions that creates a new everyday working style discipline, based on trust and autonomy, strong ownership, personal accountability and the willingness to go the extra mile. It is the greatest strategy enabler Monica Possa, Group HR & Organization Director
Constructing and supporting a diversified and inclusive organisation is becoming increasingly important for developing innovative products and services, interpreting and understanding the decisions and behaviour of customers. Taking our inspiration from international best practices, our ambition is to develop a culture that celebrates different ways of thinking, particularly as a result of generational, gender and geographical differences. Our diversity & inclusion programmes seek to raise awareness and sensitivity around issues that will increasingly become the subject of debate and new expertise, in a context aided by digitalisation. For this reason we are reviewing our internal personnel management processes and launching systems and pilot projects that can make our working environment flexible in the face of different needs, for example with the introduction of smart working.
Training has always been a priority and involved all of the Group’s employees. We are particularly keen on developing our leaders and allowing our most talented employees to emerge in a meritocratic environment in which enterprise and growth are encouraged. More specifically, the Group Academy, responsible for designing career paths and training programmes at Group level, is focused on the growth of our leaders and investing in improving their skills and expertise through a training package based on international programmes at corporate level. In order to develop our talents we have established succession plans for key roles in the Group, guaranteeing that future leaders take all of the necessary steps to reach a senior position. We believe it is possible to identify and develop talent at every level of the company, to guarantee a sustainable line of succession, through correct development and career progression. To 36.2 (+5.1%) Average hours of training per capita
Feedback is crucial for the development process and a useful tool for improving people’s understanding of their abilities and strengths, and their interaction with their group. We are working to create a “culture of feedback” through a performance management system that promotes constructive dialogue between managers and their people with the goal of having a regular performance feedback system for 100% of employees by 2018.
To further support the development of our people, we have provided more opportunities for global mobility: employees can transfer their skills to the other Group companies and enjoy new experiences. Asia, Brazil, the countries of Central and Eastern Europe, Germany, France and the Global Business Lines are particularly active in encouraging mobility
We believe that to face up to modern-day challenges we must be agile and develop new skills and expertise. For this reason we have invested in departments and projects like Customer Relationship Management (CRM), data analytics and digital. In the area of human resources we are already innovating, reviewing and simplifying our processes to promote a true performance management culture, attract and retain talent, and encourage mobility at international level. We have developed a global IT platform that makes it possible to simplify processes. Currently 1,500 people are online and the platform will later be extended to the entire company population in line with international best practices.
Meeting the needs of our customers means listening to their feedback and using it to create an organisation that works in the most simple and smart way possible to maintain its promises. This means building a team that is ready, willing and able to work in this way. In 2015 we introduced this customer-centric focus to our main human resources processes, beginning with global initiatives ranging from the definition of management goals to onboarding for new hires, the strengthening of the customer focus among leaders, and the development of talent. The projects aimed at redefining expertise, increasing awareness of the customer and aligning the recognition of performances will continue in 2016. In 2015 we began telling the stories of the Client Heroes on the Group portal to give perfect visibility to those that have done something special for customers, going beyond their regular role to really make a difference.
It has the task of assisting the Board in performing the obligations assigned by the Code and the regulations of the Italian Insurance Supervision Body and, therefore, in determining the guidelines of the internal control and risk management system, assessing its adequacy and actual functioning on a regular basis, identifying and managing the main corporate risks. It has also consulting, recommendation and preparatory functions on environmental and social matters involving the Company and the Group.
It performs a consultative, recommendatory and preparatory role in favour of the Board when taking decisions falling within its responsibility relating to its size and composition and the maximum number of directorships or appointments as statutory auditor which can be held by Directors in other companies listed on Italian or foreign regulated markets, or in �nance, banking or insurance companies or other large companies. It performs preparatory activities relating to the drafting of the succession plan for Executive Directors, members of the GMC and the GLG, and assists the BoD with decisions relating to the structure of the corporate governance rules of the Company and the Group. It also expresses an opinion on the institution of the GMC and on development and management policies relating to the GLG’s resources. Finally, it expresses an opinion on the appointment of the Chairmen, executive Directors, General Managers (or top management executives who hold equivalent positions) and statutory auditors of the subsidiaries with strategic importance, and non-executive directors, if recruited from outside the Company and the Group
External supervisory body responsible for the regulatory audit of the Company's �nancial statements.
It has the task of expressing its opinion of related party transactions submitted for its attention by the Board or bodies holding delegated powers, in accordance with the related party transaction procedures approved by the Board.
Gabriele Galateri di Genola* Chairman Executive Director responsible for the internal control and risk management
Nationality Italian Professional background Manager In office since 8 April 2011 Board committees Chairman of the Appointments and Corporate Governance Committee Chairman of the Investment Committee
Nationality Italian Professional background Lawyer In office since 30 April 2013 Board committees Chairwoman of the Risk and Control Committee Chairwoman of the Sub Committee for related party transactions
Nationality Italian Professional background Manager In office since 11 May 2012, Vice-Chairman since
Nationality Italian Professional background Businessman In office since 28 April 2007, Vice-Chairman since 30 April 2010 Board committees Investment Committee Appointments and Corporate Governance Committee
Nationality French Professional background Manager In office since 6 December 2013 Board committees Remuneration Committee
Investment Committee * Hay Group “Non Executive Directors in Europe 2014” ** Assonime “La Corporate Governance in Italia: Autodisciplina e remunerazioni”
M ar ke t a nd s ta ke ho ld er s re la tio ns
Fi na nc ia l a nd a ct ua ria l a na ly si s
In su ra nc e an d fin an ci al m ar ke ts
His mission is ensuring business results while leading a wide strategic repositioning plan of the Group on the German market, which is currently under strong pressure in terms of competition, macroeconomic environment and regulations. The new strategy of Generali in Germany (Simpler, Smarter, For You) is based on a simpler organization, efficiency increase and significant cost reduction, competitive differentiation through product innovation and stronger focus on customers and on distribution channels. The aim is strengthening the profitability of this market and making Generali the retail market leader.
His mission is to combine the strength of four leading strategic units – Generali Employee Benefits, Global Corporate & Commercial, Europ Assistance and Generali Global Health – to offer corporate clients a full range of global insurance solutions fostering cross-selling initiatives and operational synergies and maximizing the value of the relationship with Top Tier Brokers.
His mission is to monitor the financial performance of the Group, supervising activities related to capital management, tax, planning and control, debt management, treasury, M&A, investor relations and shareholdings supervision, also managing and presenting the Group financial reports. He is also accountable as Manager in charge of the preparation of the Group's financial reports, in regards both statutory and consolidated financial statements.
Focus on the Group Management Committee (GMC) at 16 March 2016 * in office since 9 February 2016, when he has been temporarily assigned the powers of Mario Greco pursuant to the Group’s provisions for succession planning of the Group CEO
His mission is to transform and run the Generali Operating Platform to deliver operational excellence, enable client and distribution excellence; to build the needed capabilities to drive the transformation and secure the executition of all programs and initiatives.
His mission is to maximize the financial return from investments, given the constraint represented by the insurance liabilities profile and the Group risk appetite, also by establishing the Group investment strategies for all asset classes, supervising the implementation and correct execution and coordinating the Group Investment Management activities directly and indirectly through the Asset Management Companies.
With respect to remuneration, our governance is mainly focused on Group executives: ❚ Group CEO; ❚ members of the Group Management
Structured incentive systems linked to the achievement of sustainable Group results
Performance-based remuneration as a key driver of motivation, retention and alignment with organizational goals
The principles of our remuneration policy are consistent throughout the organization, in accordance with the type of business and local specificities and regulations in the various Group markets.
Remuneration systems are a fundamental way of aligning managers with corporate strategy. In this sense, our incentive systems are structured so that roles are paid in accordance with the achievement of sustainable results for the Group and the targets are set - both on an annual basis and long-term – to ensure that future goals will take account of the actual results obtained over time, also with respect to the behaviour adopted to reach these targets
For internal control functions (Internal Audit, Risk Management, Compliance and Actuarial Function), specific guidelines are applied in line with regulatory requirements.
The remuneration policy is approved by the Shareholders’ Meeting, upon proposal of the Board of Directors in association with the Remuneration Committee, and taking account of the applicable regulatory and governance requirements.
Particular attention is paid to developing a proactive and constructive dialogue on remuneration with our main investors and proxy advisors. The feedback we receive on these key topics is analysed in the Remuneration Report, that gathers all compensationrelated information in a single document to increase stakeholder awareness on our remuneration policies, their implementation and disclosure.
For further information please refer to Remuneration in Governance on www.generali.com/Governance/Remuneration
For further information please refer to Ethic in our investments in Our responsibility on www.generali.com 1. Identification of 34 ESG criteria Corporate Governance (Board structure and functioning); Environment (use of natural resources, emissions); Internal social responsibility (employees, providers); External social responsibility (safety on the market, product quality,ethical issues).
3. ESG analysis and rating Selection of companies in different industries according to 7-10 criteria identified as the most relevant in terms of risk 4.
❚ Own database allowing the adjustment of the screening criteria to the clients’ needs
Generali is a leader on the Italian insurance market with an overall share of 15.5%. The Group offers its clients – retail, SME and corporate – a complete range of insurance solutions, in both the Life and P&C segments. At distribution level, Generali operates through a multi-channel strategy, mainly concentrated on agents. It also has a strong position in the direct channel, through Genertel – Genertellife, the first online insurance launched in Italy. The Group also offers a complete variety of insurance, pension and savings products to its customers through Banca Generali.
The equity market recorded an excellent trend (Ftse Mib +12%; +0.23% at 13.12.2014).
In 2015 Generali in Germany continued the strategic repositioning aimed at implementing different initiatives to strengthen its competitive position and become the leader retail insurer. This aim will be achieved leveraging on the strong multichannel position, the simplified and market focused approach, a new business model in the Life segment, as well as through the launch of innovative and smart products and of services and processes focusing on the specific customer needs. To become fast, lean and agile, the structure governance and organisation were simplified, resulting in a significant cost reduction. From an organisational perspective, three companies will be merged into one, i.e. Generali Deutschland Holding, Generali Versicherung (P&C segment) and Generali Leben (Life segment) into Generali Deutschland AG. The headquarter was moved from Cologne to Munich, where the main business units are also based. With the realignment of the different Group companies’ board of directors and the implementation of a management matrix structure, Generali in Germany is consistently oriented towards a lean governance.
The product portfolio of Generali in Germany will be based on three pillars: ❚ Generali as a multi-channel Life and P&C insurer, mainly relying on agents and brokers as to the distribution; ❚ AachenMünchener, leader in unit-linked products with a successful partnership with DVAG, representing the strongest financial consultant network in Germany; ❚ CosmosDirekt as first direct insurer and leader in term-life products.
Finally, in the German economic environment the GDP is growing, though within a still particularly low interest rate scenario. The German 10-year bund is broadly stable at 0.63% (0.54% as of 31 December 2014). The share market significantly increased (DAX +10%, compared to + 2.35% at yearend in 2014).
With reference to the EMEA countries, the main areas where Generali operates are the following.
With reference to the insurance market, the P&C segment grew in 2015 for the first time since 2008, supported also by the first signs of recovery in the motor sector. Also the Life market recorded a slight increase, partially led by a real estate recovery.
Generali Switzerland is the 8th largest insurance group in terms of Life and P&C premium income, with a Life market share of 3.7%, and a P&C share of 5.7%. Overall, the Swiss economy has shown flexibility even after the decision of the central bank to abandon the floor on the exchange rate, which proves again to be stable. However, the inflation rate remains negative, the rate of unemployment, especially for young people, is growing and consumption levels are less dynamic.
Austria Generali has been operating in Austria since 1832, the year after the Company was established in Trieste. Generali operates in the country through the insurance companies Generali Versicherung, BAWAG P.S.K. Versicherung and Europäische Reiseversicherung. The multi-channel distribution strategy involves agents, brokers, financial advisors and banks (BAWAG P.S.K. and 3Banken). The Group strategy recently presented at the last Investor Day is reflected in the confirmation of Austria as market leader in the retail sector thanks to the focus on customers and on their needs and to the quality of services, offering simple and innovative solutions.
The Group's strategy in the region has been set out in line with its goal to substantially increase its presence in emerging markets, through the “organic” development and the growth of the existing business units, as well as through the identification of specific M&A opportunities and distribution agreements. In this regard, clear examples are the entrance into the Malaysian market and the signing of exclusive distribution agreements with Kiatnakin Bank in Thailand.
❚ Gross written premiums over € 74 billion mainly thanks to developments in the life segment
Gross written premiums development and the protection contracts are up 11.8%. The savings policies were also up by 3.7%.
This performance led to life net inflows of almost € 15 billion, an increase of 15.5%.
In line with the strategic targets, the operating result for the Group shows an increase (+6.1%), standing at € 4,785 million (€ 4,508 million at 31 December 2014).
cluding charges of about € 100 million linked to the strategic repositioning in the German market, recorded in the first six months of 2015, and € -302 million in other non-recurring provisions (€ -120 million at 31 December 2014), that mainly includes the increased in the risk provisions for the first half of 2015; ❚ non-operating holding expenses composed of
Thanks to improvements in the operating and non-operating results noted above, the result for the period attributable to the Group amounted to € 2,030 million, showing a considerable increase (+21.6%) over the € 1,670 million recorded at 31 December 2014.
The tax rate was 32.6% (35% at 31 December 2014). Compared to the previous year, this rate was mainly due to the reduction in IRAP (Italian regional tax on production ) and removal of the extraordinary charge for the substitute tax on the revaluation of Banca d’Italia paid in 2014.
The result from discontinued operations, amounted to € -35 million (€ -69 million at 31/12/2014) and includes the overall effects of the disposal of BSI, completed in the third quarter of the year.
Net non-operating income from other financial instruments(**) 255 60 -53 -25
Net non-operating realized gains on other financial instruments and land and buildings (investment properties)
(***) The amount is net of the share attributable to the policyholders in Germany and Austria.
Reserve for unrealized gains and losses on available for sale financial assets -431 3,997
In 2015, the available margin to the Group stood at € 30.1 billion (29.0 billion at 31 December 2014) while the required margin amounted to € 18.3 billion (18.6 billion at 31 December 2014).
The ratio on a pro forma basis including the BSI sale amounted to 164 at the end of 2014.
With respect to the ratio of the main investment categories, the respective exposure of the fixed income instruments was slightly down at 87.0% (87.3% at 31 December 2014). The ratio of investment properties declined, amounting to 3.6% (4.1% at 31 December 2014), while the incidence of the equity instruments and other investments was substantially stable, at 4.9% (4.8% at 31 December 2014) and 0.9% (1.0% at 31 December 2014) respectively. Other investments mainly include receivables from banks or banking customers, investments in subsidiaries, associated companies and joint ventures and derivatives. Finally, the liquidity ratio increased mainly due to the new cash flows generated by the new insurance business – which prudently have not been immediately reinvested since the market 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-financing the subordinated bond callable in June 2016.
With reference to the bond portfolio, government bonds which represent 54.9% (56.8% % at 31 December 2014) were down, standing at € 163,474 million (€ 165,014 million at 31 December 2014). The change during the period was due to the sales made in 2015. The exposure to each government bonds is mainly allocated to the respective countries of operation.
A breakdown by credit rating of the bond portfolio at 31 December 2015 split between corporate and government bonds follows.
The increase in the period was mainly attributable to the increase in value of investments, that benefitted from the positive trend in share prices.
In particular, the direct investment properties of the Group, at market value, amounted to € 17,385 million (€ 17,650 million at 31 December 2014), and are almost all in Western Europe, mainly in Italy, France and Germany. The properties are mainly located in their respective countries of operation.
The weighted average cost of liabilities linked to financing activities at 31 December 2015 amounted to 5.65%, substantially unchanged to the 5.62% at 31 December 2014 and the 5.67% at 30 September 2015. The weighted average cost reflects the annualized average cost of the debt considering the outstanding liabilities at the reporting date and the related currency and interest rate hedging.
* The weighted average cost reflects annualized cost of financial debt considering the outstanding debt at the reporting date and the related activities of currency and interest rate hedging.
The average duration at 31 December 2015 was 6.68 years compared to 6.87 years at 31 December 2014. The change in the average duration is a direct result of
The counterparties are major fi nancial institutions of high international standing. This will only impact the Group’s fi nancial liabilities if the facility is drawn down, and will allow Generali to improve fi nancial fl exibility to manage future cash requirements in a volatile environment.
The payout ratio for 2012 is not shown in the graph as it is not meaningful and not in proportion to the Group’s result for the period and it is impacted by the specifi c dividend payment policy applied by the Group.
Total shareholders' return (%)* 2.95 2.24 * (total dividend + var. share price during the reference period) / share price at the beginning of the year.
❚ Written premiums up (+6.2%) due to developing all lines of business; net inflows also showed strong growth (+ 15.5%).
❚ Operating income stable at € 2.965 million (-0.4%), despite interest rates remaining low4
Gross written premiums Net cash in�ows 31/12/2015 31/12/2014 2,978 31/12/2014 31/12/2015
Written premiums in the life segment, including premiums related to investment contracts, amounted to € 53.297 million, a 6.2% increase over the previous year. In accordance with the strategy to optimize performance of the life insurance business, favouring prod-
Net inflows were also positive, and amounted to € 14,920 million. The significant increase over the previous year (+15.5%) reflects improvements in the premium income, especially in Italy, France and the Eastern European countries, in addition to the excellent results in Asia where net inflows more than quadrupled.
With reference to the lines of business, there was a significant increase in unit/index linked business (+14.6%) which was concentrated in the main areas (+45.7% in 1Q 2Q 3Q 4Q YE
ucts with low capital absorption, the unit/index linked contracts are up by 8.6% and the protection contracts are up 11.8%. The savings policies also contributed to that performance (+3.7%).
Despite the strong recovery in the second half of the year thanks to the improvement in the financial situation, the adverse economic environment weighed on the profitability levels of new business (margins on the APEs) due to the reduction in interest rates and the strong increase in volatility during the year. This is why profitability amounted to 21.0% (24.0% as at 31 December 2015), which was stable in any case, due in part to the planned recalibration of the level of guarantees and their weight on the APEs (from 72.5% to 66.5%). New business value (NBV) stood at € 1,097 million (-13.0% on a like for like basis).
The new business in terms of APEs was down (-6.8%) following the fall in the annual premiums (25.2%) despite the progress in the single premiums (+17.7%) which represent the majority of the APEs (54.1%).
Net inflows, which had turned back to being positive the previous year thanks to the selective subscription policy and the proactive management of the existing portfolio, was up further, benefitting from the increase in premiums and reduction in capital outflows.
The gross written premiums in Germany increased from € 13,675 million as at 31 December 2014 to € 14,146 million (+3.4%). This trend reflects the increase in the protection line (+14.0%) and the unit linked policies line (+9.2%).
New business in terms of APEs were down (-5.0%) due to the drop in both the life segment (5.0%) and the health line (-6.0%). In terms of business lines, there was an increase in the unit-linked policies (+18.5%) to the detriment of the savings business (-20.9%).
The drop in new business in terms of APEs (-3.2% on a like-for-like basis) is mainly due to the drop in the unitlinked business (-35.9% on a like-for-like basis).
drop in the profitability of the risk business risk which represents 49.2% of the business.
Net inflows are strongly up (+38.4%); the previous year they had been strongly penalised by the higher outflows of pension funds and the increase in capital outflows.
The gross written premiums in Asia showed excellent performances, increasing from € 1,049 million at 31 December 2014 to € 1.895 million (+56.2%), thanks to the gains made in all countries in the area. Growth was positive in all countries in the region, but driven in particular by China (+61% on a like-for-like basis), thanks to the especially positive performance of the single premium products of the savings products, distributed through the bancassurance channel. These channels definitely benefitted from the uncertainties that characterised the Asian financial markets in recent months.
The gross written premiums in the International Operations grouping were up, increasing from € 598 million at 31 December 2014 to € 642 million (+7.4%). This development is attributable to the favourable business of
Spese di gestione assicurative e altre componenti operative ■ ■ Margine tecnicoMargine �nanziario 31/12/2015 31/12/2014 quarto trim. 2015 quarto trim. 2014
Finally, the operating profitability on investments5 of the life segment amounted to 0.74% (0.81% at 31 December 2014).
Fee and commission from financial service activities 236 224 53 61
The technical margin6, equal to € 5,909 million, is strongly improved; there is a strong increase in premium loadings, in line with premium income trends, the positive developments in the profitability of protection lines and the growth in fees related to the sale of unit/index linked products.
Please refer to the Glossary in the Appendix to Management Report section for more details on the way the indicator was calculated
Please refer to the methodological note on alternative performance measures in the Appendix to Management Report section for more details on the way the indicator was calculated.
Net income from financial instruments at fair value through profit or loss
Policyholders' interests on operating income from own investments -12,880 -14,354 -4,352 -3,257
In particular: ❚ current income from investments – which also include the current income from investments at fair value through profit or loss – stood at € 11,248 million (€ 11,024 million at 31 December 2014), while the related current return, calculated based on the book value of the investments, decreased to 3.4%. In more detail, the current income from fixed income instruments rose from € 9,588 million at 31 December 2014 to € 9,877 million thanks to the actions undertaken by the Group to support current returns. The current income in the equity segment was reduced, falling from € 449 million at 31 December 2014 to € 416 million. Finally, current income from investment properties was also slightly decreased, at € 652 million; ❚ net operating realized gains on investments amounted to € 2,365 million (€ 2,443 million at 31 December 2014) due to lower realized gains especially on the equity portfolios of the Group compared to the corresponding period of the previous year; ❚ net operating impairment losses on investments increased from € -310 million at 31 December 2014 to € -334 million; this reflects the lower impairments on equities, more than offset by the higher impairments on the debt securities recorded in the first half of 2015; ❚ other operating net financial expenses, which includes interest expense related to operating debt and investment management expenses amounted to € -863 million (€ -852 million at 31 December 2014); ❚ net income from financial instruments related to unit- and index-linked contracts fell from € 3,300 million as at 31 December 2014 to € 2,276 million. This trend was affected by the change in value of the investments related to the performance of certain financial markets with respect to the corresponding period of the previous year; ❚ net income from financial instruments at fair value through profit or loss amounted to € 448 million (€ 989 million at 31 December 2014). The significant change was due to the performance of certain financial markets during the year.
In particular, acquisition and administration costs related to insurance business amounted to € -5,047 million, increase of 6.0% compared to 31 December 2014. The costs of acquisition contributed to this trend, which amounted to € -4,044 million, up by +5.9%, driven especially by France and Asia, due to improvement in the net inflows.
Administration costs, amounting to € -1,003 million, increasing by 6.7% due to trend observed in France and
The acquisition and administration costs ratio amounted to 9.6%, stable compared to 31 December 2014 (9.7%).
Finally, the percentage of the total administration costs related to insurance business to the average insurance provisions stayed substantially stable at 0.27%.
The increase in the other operating components is due to the higher provisions to risk funds during 2015, and the brand royalties fees recorded in the 4th trimester of 2015 the Head Office for marketing and branding activities.
The non-operating result of the life segment improved, from € -381 million at 31 December 2014 to € -312 million thanks to the increase in the non-operating result of investments, following the lower net impairment losses, which amounted to € -132 million (€ -359 million at 31 December 2014 mainly due to impairment of the equity investment in Ingosstrakh). This was partially offset by the lower realized gains on the equities that decrease from € 121 million to € 24 million.
Net operating impairment losses on other financial instruments and land and buildings (investment properties)
Net non-operating realized gains on other financial instruments and land and buildings (investment properties)(***)
(*) Commissions related to investments contracts, which amounted to € -94 million (€ -92 million at 31 December 2014), are included in net fee and commission income and net income from financial service activities.
(****) The amount is net of the share attributable to the policyholders in Germany and Austria.
With reference to the breakdown of the bond investment portfolio, exposure to government bonds was slightly down, standing at € 149,400 million (€ 150,538 million at 31 December 2014), amounting to 55.5% of the portfolio (57.6% at 31 December 2014). The change during the period was due to the sales made in the period.
Gross written premiums in Italy amounted to € 5,947 million, down by 3% with respect to 31 December 2014. This was mainly a result of the motor lines (-7.3%), which was affected by the competitive pressures on the premiums market, refl ected in the signifi cant reductions in average premiums, both in traditional channels and direct channels.
On the other hand, the motor lines are down (-3.8%), affected by the falls in average premiums and the remaining restructuring to be done in the fl eet and garage sector. However, there has been significant progress in the retail sector in terms of number of contracts.
More specifi cally, the market dynamics for the motor line led to further strengthening of the existing portfolio, thanks also to the solid performance of the DVAG distribution network.
Gross written premiums in the Central and Eastern European countries were also up, amounting to € 1,976 million, up by 4.6% with respect to 31 December 2014. This trend is due mostly to the motor line (+6.6%) and, to a more limited extent, the non-motor lines (+2.5%).
All countries showed growth in the premiums apart from Slovenia where the premiums were stable. There was signifi cant growth in Poland (Proama), Slovakia, Romania and Serbia.
The gross written premiums in Spain were signifi cantly up, amounting to € 1,358 million, thanks to the positive performance in both segments. More specifi cally, the motor line grew by 14.2% due to the measures introduced in the second half of 2014, as credit scoring instruments and customer segmentation instruments.
Austria was slightly up in terms of income, where the gross written premiums increased from € 1,426 million at 31 December 2014 to € 1,431 million (+0.4%). The non-motor line (+0.9%) increased thanks to the growth of all business lines which benefi ted from tariff adjustments, as did the motor line (+0.9%).
This performance refl ected the differing trends in Argentina and Brazil; premiums grew by 36% in Argentina, refl ecting the performance recorded in the motor line. As described above in the life section, the growth in income should be viewed in the context of the infl ationary situation in the country.
The drop in Brazil (-44.7%) is due to the restructuring actions taken after the results of the previous year. This drop involved both the motor and non-motor lines, where most of the business is represented by the corporate business.
The operating result for the property&casualty segment increased to € 1,987 million (€ 1,831 million at 31 December 2014). This significant increase (+8.5%) is mainly attributable to the technical result, with a Group Net COR of 93.1%, improving by 0.6 pps compared to the previous year.
With reference to the fourth quarter of the current year, compared to the same period of the previous year, the operating result increased by +27.3%, due to the positive technical result in the fourth quarter.
The operating return on investments of the property&casualty segment increased to 5.09% (4.69% at 31 December 2014).
The technical result amounted to € 1,213 million, showing strong growth with respect to 31 December 2014 (+12.2%); this result includes the impact of catastrophic claims of approximately € 313 million, mainly resulting from the storms that hit Italy in March and April, and Central Europe at the beginning of July, in addition to flooding in the South of France in October. Similar events had an impact of approximately € 238 million at 31 December 2014.
The Group combined ratio improved to 93.1% (-0.6 pps compared to 31 December 2014), due entirely to the drop in the loss ratio (-0.8 pps); the expense ratio is slightly up at 27.3% (27.1% at 31/12/2014).
With respect the loss ratio, the improvement is due to both the current year loss ratio excluding natural catastrophes, down by 0.4 pps, which stood at -4.6 pps for previous years, taking the standard prudent approach of the Group. The percentage catastrophic claims at the end of 2015 were 1.6 pps, up by 0.4 pps compared to the previous year. The reserving ratio was stable at 154%.
A review of the combined ratio for the business areas of the Group will follow.
Italy confirmed its excellent technical performance with a COR of 89.1% (-0.2 pps). This trend mainly reflected the decrease in the loss ratio (−0.5% pps) which benefited from the positive trend of non-catastrophic events. There was an increase in the percentage of catastrophic claims, amounting to € 120 million (corresponding to 2.1 pps on the net COR, up by 0.5 pps from the end of 2014) due to the storms at the beginning of March and September and the floods in Northern Italy in September.
The combined ratio for France showed a significant improvement, going from 104.9% the previous year to 100.2%. This is entirely due to the reduction in the loss ratio standing at 72.6% (-4.6 pps), benefitting from the lower percentage of catastrophic claims, amounting to € 46 million (1.9 pps in 2015 compared to 2.4 pps at the end of 2014), but especially to improvement in the rate of non-catastrophic claims. In the previous year, this was affected by the strengthening of the reserves related to the Buildings and General lines in accordance with market trends. With reference to the business lines, the COR in the motor line was reduced in a significantly worse market, and in a situation where the Group managed to progressively recover its client base. The performance of the household multi-risk area was very positive in the retail sector. The expense ratio was substantially stable at 27.6% (-0.1%).
The German combined ratio also improved to 92.4%, which includes a 2.3 pps of catastrophic claims, mainly related to the June storms. Similar events had a 1.1 pps effect the previous year. On the other hand, non-catastrophic claims were down, as was the expense ratio, which stood at 27.9% (-0.4 pps).
The Swiss combined ratio also improved to 0.6 pps, standing at 92.2%, reflecting the combined effect of the fall in claims and simultaneous increase in the expense ratio.
Finally, the combined ratio in Spain was substantially stable at 93.2% (-0.1pps).
In detail, the change in current income is primarily attributable to the decline in income from equity instruments that fell from € 121 million at 31 December 2014 to € 96 million.
Despite the low reinvestment rates, income from investments in fixed income securities was stable, in line with the previous year, decreasing from € 861 million at 31 December 2014 to € 856 million.
Other operating net financial expenses, which includes interest expense related to operating debt and investment management expenses amounted to € -298 million (€ -352 million at 31 December 2014) due to lower investment property management costs.
Other operating items of the property&casualty segment, which primarily include non-insurance operating expenses, depreciation and amortization of tangible assets and multi-annual costs, provisions for recurring risks and other taxes, decreased to € -242 million (€ -258 million at 31 December 2014) mainly due to lower provisions for risks.
The non-operating investment result was increased due to the reduction in impairment which improved from € -417 million at 31 December 2014 to € 194 million. This reflects lower impairment losses on equity investments compared to the corresponding period of the previous year. This trend was partially offset by the decrease in net realized gains which amounted to € 662 million (€ 769 million at 31 December 2014).
Moreover, the net income from financial instruments at fair value through profit or loss increased, amounting to € -100 million (€ -263 million at 31 December 2014) thanks to the performance in certain financial markets during the year.
(€ million) Motor Non motor Total 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014
With reference to the exposure to the various asset classes, against an increase in the absolute values, the percentage of the portfolio to fixed income remained stable at 67.3%. There was a fall in the exposure to equity instruments, which fell from 8.7% at 31 December 2014 to 6.3%, while the exposure to real estate investments was substantially stable at 10.9%. Finally, the percentage of cash and cash equivalents increased from 9.8% at 31 December 2014 to 11.6%.
With reference to the breakdown of the bond investment portfolio, exposure to government bonds increased, standing at € 10,317 million (€ 10,021 million at 31 December 2014), amounting to 43.4% of the portfolio (42.4% at 31 December 2014), against a reduction in the corporate component, of € 13,476 million (€ 13,633 million at 31 December 2014) with a ratio of 56.6% (57.6% at 31 December 2014).
The harvesting rate increased to 1.4% (1.0% at 31 December 2014) due to a decrease in the impairment losses.
The net current return of total investments in the property &casualty segment fell slightly to 3.2% (3.5% at 31 December 2014), with related incomes amounting at € 1,267 million (€ 1,307 million at 31 December 2014).
The operating result of the holding and other businesses segment amounted to € 59 million, increased compared to the € -5 million at 31 December 2014. This trend was determined by the increase in the performance of the financial segment, especially thanks to the result of Banca Generali, and the improvement in the results of the other businesses, only partially offset by the increase in the holding operating expenses.
The operating result of the financial segment registered an increase, and amounted to € 434 million (€ 374 million at 31 December 2014), up by 16.0%. The result includes the operating result of Banca Generali which amounted to € 252 million, up by 14% (€ 221 million at 31 December 2014). The improvement in the performance of the financial segment, to which the Asset Management in China also contributed, is mainly due to the net result of financial activities, which benefitted from higher net fees, only partially absorbed by the increase in the acquisition and administration costs.
The operating result of the aforementioned business sectors are summarised in the table below: As at 31 December 2015, the third party assets managed by the banks and the asset management Group companies amounted to € 44,323 million (€ 43,795 million at 31 December 2014), increasing by 1.2%.
Net non-operating realized gains on ither financial instruments and land and buildings (investment properties)
Holding and other businesses result before taxes -881 -922 -363 -337
The International Monetary Fund forecasts that GDP growth in the eurozone will be 1.6% in 2016, in line with 2015 (+1.5%). Improvements in particular are expected in the economies of Germany, France and Italy (from 0.8% to 1.3%) thanks to a solid contribution from exports, and a slowdown in the Spanish economy (from 3.1% to 2.5%). Inflation in the eurozone is rising, but will stay well below the 2% threshold. In view of this situation, the European Central Bank will maintain the accommodative monetary policy. The US economy is also growing, emerging economies are expecting a recovery, which however will not be homogeneous throughout the countries; certain economies that slowed down in 2015, especially Brazil and Russia, should recover, even though GDP growth should stay negative. However, negative trends in China are expected to continue through 2016.
The recovery of the financial markets in the eurozone should continue through 2016, even though to a lesser extent than 2015, while financial markets in emerging countries are expected to slow down. Global growth prospects and the global economy will depend on how current geopolitical tensions play out.
Despite the difficult macroeconomic environment and highly volatile financial markets, the Group will continue to pursue all the strategic actions noted above through 2016, confirming its goal of obtaining an operating ROE of over 13%, and improving shareholder remuneration in accordance with the strategic plan introduced to the market.
The consolidated financial statements of the Generali Group as at 31 December 2015 were drawn up in accordance with the IAS/ IFRS international accounting standards issued by the IASB and The Generali Group’s consolidated financial statements at 31 December 2015 were prepared taking into account the IAS/IFRS issued by the IASB and endorsed by the European Union, in accordance with the Regulation (EC) No. 1606/2002, Legislative Decree No. 58/1998 as amended, and Legislative Decree No. 209/2005, as amended by Legislative Decree No. 32/2007.
A description of the alternative performance measures presented in this report can be found in the Methodological note.
The Annual Integrated Report adds to the Management Report to provide more information and clarify matters, expanding on it while maintaining a more rigorous and logical order.
As regards the Guiding Principles, the Strategic focus and future orientation principle is applied in the whole document.
1 The term “pre-financial” is used on purpose and replaces the classic term “non-financial”. The term pre-financial was used for the first time by the Danish pharmaceutical company Novo Nordisk to indicate the range of information (usually referred to as non-financial) that could influence the earning capacity of the company in the future despite being not strictly monetary at that stage.
❚ community (academia, experts and main business partners): some years ago we started interacting with students from the main Italian universities, providing specific sessions on our new reporting approach and on the implications at a national and international level. With a survey we are also taking their feedback and suggestions on the Integrated Report implementation. We are also interested in the experts’ view and started relevant meetings in 2015. In addition, we began to interact with some business partners: induction sessions also including hints and feedback to improve services and products that they are offering us. Overall we met more than 350 people in 2015.
For further information please refer to Annual Integrated Report 2015, p. 37
❚ clients: customer satisfaction is key in running of our business. Consequently, we have developed a specific and tailored methodology to understand and identify actions to take based on customers and distributors’ feedback.
As for Reliability and completeness, the Annual Integrated Report is supported by a structured information system, processing financial and pre-financial information, for Generali to increasehomogeneity and reliability of both types of information. As for the scope of the reporting, the performance indicators refer to the entire Group unless otherwise indicated.
Operating result Under CESR Recommendations on alternative performance measures (CESR/05 – 178b), the operating result cannot replace earnings before taxes calculated in accordance with IAS/IFRS. In addition, they should be read with the financial information and related notes on the accounts which are included in the audited financial statements. The operating result was drawn up by reclassifying items of earnings before taxes for each segment on the basis of the management characteristics of each segment and taking into consideration the recurring holding expenses.
In the life segment, all profit and loss accounts are considered as operating items, except for the following which are represented in the non-operating result: ❚ net realized gains and net impairment losses on investments that do not affect the formation of the local technical reserves, but only the calculation of the deferred liabilities towards policyholders for the amount not attributable to the policyholders, and on those of the free assets; ❚ net other non-operating expenses that mainly include the results of the run-off activities, company restructuring charges, depreciation of the value of the portfolios acquired directly or through acquisition of control of insurance companies (value of business acquired or VOBA) and other net non-recurring expenses.
In accordance with the approach described above, the Generali Group also provided the operating result in the main countries where it operates for the life and property&casualty segments and the consolidated figures. In order to provide a management view of the operating result by geographical area, the review of the key performance indicators by business segment and geographical area allows measurement of the result of each geographical area from a country viewpoint instead of as a contribution to the Group’s results.
Operating result by margins The operating result of the various segments was also shown in accordance with a margin-based layout which shows the operating trends of the changes that occurred in each segment performance more clearly. The operating result of the life segment comprises a technical margin including insurance costs, a net investment result and a component that includes acquisition and administration costs related to the insurance business and other net operating expenses. The technical margin includes the loadings and the risk and profit from the surrender results for the period. The net investment result comprises operating income from investments, net of the portion attributable to the policyholders. Finally, the insurance management and other operating components are indicated separately. The operating result for the property&casualty segment comprises the technical result, the financial result and other operating items. The technical result is equivalent to the insurance activity result, i.e. the difference between premiums and claims, acquisition and administration costs and other net technical income. The investment result comprises current income from investments and other operating net financial expenses, like expenses on investment management and interest expenses on operating debt. Finally, other operating items mainly include acquisition and administration costs related to the insurance business, depreciation of tangible assets and amortization of long-term costs, provisions for recurring risks and other taxes.
❚ the net other operating expenses in the operating result were adjusted for operating taxes and for non-recurring taxes that significantly affect the operating income of the countries where policyholders’ stakes are determined by taking the taxes for the period into account. These adjustments were included in the calculation of operating income and are excluded from the income taxes item.
Return on Investments The indicators for the return on investments are presented, obtained as the relationship: ❚ for the net current return between interest and other income, including income from financial instruments at fair value through profit and loss (excluding income from financial instruments related to linked contracts) net of depreciation on real estate investments and the average investments (calculated on book value); ❚ for the harvesting rate between net realized gains, net impairment losses and realized and unrealized gains and losses from financial instruments at fair value through profit and loss (excluding those from financial instruments related to linked contracts) and the average investments (calculated on book value); The profit and loss return is equal to the current return plus the harvesting rate net of investment management expenses.
The average investments (calculated on book value) included land and buildings (investment properties), investments in subsidiaries, associated companies and joint ventures, loans and receivables, available for sale financial assets, financial assets at fair value through profit or loss less financial assets and liabilities related to linked contracts, derivatives classified in financial liabilities at fair value through profit or loss and cash and cash equivalents. Total investments are adjusted for derivative instruments classified as financial liabilities at fair value through profit of loss and REPOs classified as other financial liabilities. The average is calculated on the average asset base of each quarter of the reporting period. These profitability indicators were presented for the life and property&casualty segments for the consolidated figures.
Consolidated investments With regard to the presentation of consolidated investments, the following variations, with respect to the corresponding balance sheet items have been implemented, in order to provide present the figures consistently with those used to calculate the relative profitability: ❚ Investment Fund Units were split by nature between equity, bond and investment property portfolios; ❚ derivatives are presented on a net basis, and therefore also including derivative liabilities. Moreover, hedging derivatives are classified in the respective asset class hedged; ❚ reverse REPOs were reclassified, in accordance with their nature of short-term liquidity commitments, from ‘Other fixed income instruments’ to ‘Cash and cash equivalents’; ❚ REPOs classified as liabilities are presented in “Cash and cash equivalents’
Net operating cash Net Operating Cash is a view of cash generation at the Group’s parent company level. The figure is the sum of: The dividends paid by Group subsidiaries, earnings from parent company reinsurance activities, expenses and interest paid, and the net balance of tax payments and recoveries.
Coherently with the concept of Integrated Reporting, as of 31 December 2015, the Group presents its Notes in a new guise. The Group objectives to be achieved with the review of the document are: ❚ make the Notes easier to understand and more user-friendly; ❚ present information on the same subject in a more integrated way; ❚ reorganize the information highlighting the main thematic areas of the Group's financial statements; ❚ streamline a particularly complex document coherently with the Integrated
In particular, the Notes are based on the so called thematic areas which has led to a deep review of the balance sheet chapters’ structure. Consequently it has also been achieved a greater integration of information related to the same topic as well as a greater emphasis on the main drivers of Group opposed to the scheme based on the Balance sheet. With the aim of increasing the usability of the document to the reader, some stylistic improvements have been implemented, such as, for example, the titles above the tables and reference notes between schemes and individual parts of the Notes.
Result of the period attributable to minority interests 229 182 16 EARNINGS PER SHARE
Statement of comprehensive income 1 CONSOLIDATED RESULT OF THE PERIOD 2,259 1,852
Items that may be reclassified to profit and loss in future periods 2.1 Foreign currency translation differences 328 110 2.2 Net unrealized gains and losses on investments available for sale -398 4,017 2.3 Net unrealized gains and losses on cash flows hedging derivatives 41 21 2.4 Net unrealized gains and losses on hedge of a net investment in foreign operations -49 -1 2.5 Share of other comprehensive income of associates 9 49 2.8 Result of discontinued operations -576 29
Change in the mathematical provisions and other insurance provisions for life segment 20,475 19,935
Net cash flows from cash items related to investing or financing activities 38 2,581
Other financial instruments at fair value through profit or loss 0 0
Net cash flows from investments in subsidiaries, associated companies and joint ventures(***) 929 -39
Net cash flows from shareholders' equity attributable to minority interests(****) -121 -119
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD(**) 9,025 8,484
(*) Cash and cash equivalents at the beginning of the period include cash and cash equivalents (€ 8,508 million), liabilities to banks payables on demand (€ -7 million) and bank overdrafts (€ -17 million) without cash and cash equivalents of non current assets or disposal groups classified as held for sale.
Notes To The Income Statement 26 Net earned premiums 27 Fee and commissions income and income from financial service activities 28 Net income from financial asset at fair value through profit and loss 29 Income and expenses from subsidiaries, associated companies and joint venture 30 Income from other financial instruments and land and buildings (investment properties) 31 Other income 32 Net insurance benefits and claims 33 Fee and commissions expenses and expenses from financial service activities 34 Expenses from subsidiaries, associated companies and joint ventures 35 Expenses from other financial instruments and land and buildings (investment properties) 36 Acquisition and administration costs 37 Other expenses 38 Income taxes Fair Value measurement 40 Fair value hierarchy 41 Transfers of financial instruments measured at fair value between Level 1 and Level 2 42 Additional information on level 3 43 Information on fair value hierarchy of assets and liabilities not measured at fair value Additional information 44 Information on employees 45 Provisions for defined benefit plans 46 Share-based compensation plans 47 Contingent liabilities, commitments, guarantees, pledged assets and collaterals 48 Significant non-recurring events and transaction 49 Audit and other service fees for the fiscal year
I. Internal Control and Risk Management System II. Risk Management System III. Risk Management Policy IV. Risk Management process V. Financial Risks
The Generali Group’s consolidated financial statements at 31 December 2015 were drawn up in accordance with the IAS/IFRS
IVASS) Regulation No. 7 of 13 July 2007, as subsequently amended, and information of the Consob Communication No. 6064293
No. 7 of 13 July 2007, as subsequently amended. The financial statements also include special items that are considered significant for the Group.
Specifically, the Group controls an investee if, and only if, the Group has:  power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities 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.
In preparing the consolidated financial statements:  the financial statements of the Parent Company and its subsidiaries are consolidated line by line through specific
"reporting package", which contribute to the consistent application of the Group's accounting policies. For consolidation
purposes, if the financial year-end date of a company differs from that of the Parent Company, the former prepares interim financial statements at December 31st of each financial year;  All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation (intra-group losses are eliminated, except to the extent that the underlying asset is impaired);  the carrying amount of the Parent Company’s investment in each subsidiary and the Parent Company’s portion of equity of each subsidiary are eliminated at the date of acquisition;  Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. The non-controlling interests, together with their share of profit are shown as separate items.
A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.
Investment funds managed by the Group in which the Group holds an interest and that are not managed in the primary interest of the policyholders are consolidated based on the substance of the economic relationship and if whether the conditions of control stated by IFRS 10 are satisfied. On consolidation of an investment fund, a liability is recognized to the extent that the Group is legally obliged to buy back participations held by third parties. Where this is not the case, other participations held by third parties are presented as non-controlling interests in equity.
If in a business combination achieved in stages, the acquirer’s previously held equity interests in the acquire is re-measured at its acquisition date fair value and any resulting gain or loss recognized in profit or loss.
Any contingent consideration to be transferred or received by the acquirer will be recognised at fair value at the acquisition date.
Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in either profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.
The assets acquired and liabilities assumed in a business combination are initially recognized at fair value at the acquisition date.
In general, joint arrangements are contractual agreements whereby the Group undertakes with other parties an economic activity that is subject to joint control. Investments in joint arrangements are classified as either joint operations or joint ventures depending
on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control exists when it is contractually agreed to share control of an economic activity, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates and joint ventures are accounted for using the equity method and they are initially recognized at cost, which includes goodwill arising on acquisition. Goodwill is not separately tested for impairment. Negative goodwill is recognized in the income statement on the acquisition date. The carrying amount of the investment is subsequently adjusted to recognize changes in the Group’s share of the net assets of the associate or joint venture since the acquisition date. The income statements reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. Dividends receivable from associates are recognized as a reduction in the carrying amount of the investment.
Significant judgements in determining control, joint control and significant influence over an entity Following the guidelines set out in the strategic plan, the Group has recently concluded some transactions that have led to fully control the most part of its subsidiaries. The control is normally ensured by the full ownership of the voting rights, having thus the ability to direct the relevant activities and consequently being exposed to the variability of results arising from those activities.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).
New accounting principles, changes in the accounting rules and in the financial statements Following the endorsement of the European Union, as from the 1 st January 2015 new principles and amendments shall be applied.
Following the endorsement in the European Union by Regulation (UE) 634/2014, for the annual period began at 1 st the interpretation IFRIC 21 has been applied. In particular, the interpretation clarify when an entity shall recognize a liability for a levy, that consists in a tax linked to a particular activity: for example, in some countries there is a tax for entities acting in a specific market or which belong to a particular industry. For example, the activity that originates the tax payment may be the generation of income in the current year and the calculation of this tax is based of income generated in the previous year; in this case the obligating event is the generation of income in the current year. The liability is accounted as follows:  recognized in balance sheet progressively if the obligating event occurs over a period of time;  if the obligation to the tax payment is triggered when a minimum threshold is reached (for example a minimum of revenues, or sales or expenses), the corresponding liability is recognised one-off when the minimum threshold is reached.
A financial asset is measured at amortized cost if both of the following conditions are met:  the asset is held to collect cash flows(business model assessment)
 the contractual cash flows represent only payments of principal and interest (solely payments of principal and interest –
If the business model (assessed on portfolio basis) has the objective to collect the cash flows from the investments and to sell financial assets and the contractual cash flows characteristics represent only payments of principal and interest, the financial instrument under assessment shall be measured at fair value through other comprehensive income with recycling to profit or loss when the instrument is realized.
IFRS 9 introduced a new impairment approach for debt instruments measured at amortized cost or fair value recorded in other comprehensive income, which is based on expected losses. In particular, the new standard outlines an approach for the impairment in three stages based on the assessment of credit quality from the date of initial recognition at each balance sheet date:  Stage 1 includes the financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date (investment grade). For these assets are recognized for expected losses over the next 12 months (12-month expected credit losses - losses expected in view of the possible occurrence of events of default in the next 12 months) in a capital reserve (loss allowance), and in the profit or loss account. Interest is calculated on the carrying amount (ie without deduction of the loss allowance);  Stage 2 includes financial instruments that have had a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that do not have objective evidence of impairment. For these assets, lifetime ECL are recognised in a capital reserve (loss allowance), and in the profit or loss account , but interest revenue is still calculated on the gross carrying amount of the asset. (ie without deduction of the loss allowance);  Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. For these assets, lifetime ECL are recognised in a capital reserve (loss allowance), and in the profit or loss account. Interest revenue is calculated on the net carrying amount (that is, net of credit allowance)
The model also introduces a simplified approach to trade receivables and leases for which it is not necessary to calculate the 12month expected credit losses but are always recognized the lifetime expected credit losses.
The Group is assessing the impact of the new impairment model introduced by the standard and expects significant operational impacts related to the implementation of the calculation process of the abovementioned expected credit losses. In light of the high creditworthiness of the debt securities, the new model Expected Credit Losses should not result in significant impacts on the overall financial and economic situation of the Group.
In particular there is a significant simplification of the effectiveness test. There are no more predetermined thresholds of coverage to achieve effective hedge (ie 80-125% in the current IAS 39),but it is sufficient that:  there is an economic relationship between the hedging instrument and the hedged item; and
IFRS 4 – Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Exposure Draft) On 15 December 2015 the IASB published the exposure draft “Applying IFRS 9 Financial Instruments with IFRS 4 Insurance
The E.D. proposed the introduction of options within the new IFRS 4: 1. the Overlay approach, that allows the companies that issue insurance contracts to remove from profit or loss the incremental volatility caused by changes in the measurement of financial assets upon application of IFRS 9. An entity that applies this approach shall reclassify in the other comprehensive income the difference between: a) the amount reported in profit or loss of the financial assets linked to insurance liabilities in the scope of IFRS 4; and b) the amount that it would be reported in profit or loss, in application of IAS 39 “Financial Instruments: Recognition and
The effective date is three years after the publication of the final standard. Early application is permitted.
Insurance contracts are out of the scope of this principle, and for this reason the Group is not expecting any significant impacts. The standard is effective from annual periods beginning on 1 January 2018, following the deferral of effective date by the IASB, previously established at 1 January 2017.
IAS 38 Amendments regarding the clarification of acceptable methods 1 January 2016 May 2014 of depreciation and amortization
IFRS 10 Amendments regarding the sale and the contribution of assets 1 January 2016 September 2014 between an investor and its associate or joint venture
IAS 1 Amendments resulting from the disclosure initiative 1 January 2016 December 2014
The Regulation (EU) 2015/28 postponed the effective date for the EU countries to annual period beginning on or after 1 February 2015.
In accordance with IAS 38, an intangible asset is recognised if, and only if, it is identifiable and controllable and it is probable that the expected future economic benefits attributable to the asset will flow to the company and the cost of the asset can be measured reliably.
After initial recognition, goodwill is measured at cost less any impairment losses and it is no longer amortised. According to IAS 36, goodwill is not subject to amortization. Realized gains and losses on investments in subsidiaries include the related goodwill.
Discount Model is a variant of the Cash flow method. In particular the Dividend Discount Model, in the excess capital methodology, states that the economic value of an entity is equal to the discounted dividends flow calculated considering the minimum capital requirements. Such models are based on projections on budgets/forecasts approved by management or conservative or prudential assumptions covering a maximum period of five years. Cash flow projections for a period longer than five years are extrapolated using estimated among others growth rates. The discount rates reflect the free risk rate, adjusted to take into account specific risks.
Should any previous impairment losses no longer exist, they cannot be reversed.
The VOBA is amortised over the effective life of the contracts acquired, by using an amortization pattern reflecting the expected future profit recognition. Assumptions used in the development of the VOBA amortization pattern are consistent with the ones applied in its initial measurement. The amortization pattern is reviewed on a yearly basis to assess its reliability and, if applicable, to verify the consistency with the assumptions used in the valuation of the corresponding insurance provisions.
As for as the life and non-life portfolios, the recoverable amount of the value of the in force business acquired is carried out through the liability adequacy test (LAT) of the insurance provisions — mentioned in the paragraph related to life and non-life insurance provisions— taking into account, if any, the deferred acquisition costs recognised in the balance sheet. If any, the impairment losses are recognised in the profit or loss account and cannot be reversed in a subsequent period.
This item comprises land and buildings used for own activities and other tangible assets.
Land and buildings (self-used) In accordance with IAS 16, this item includes land and buildings used for own activities.
Finance leases of land and buildings are accounted for in conformity with IAS 17 and require that the overall cost of the leasehold property is recognised as a tangible asset and, as a counter-entry, the present value of the minimum lease payments and the redemption cost of the asset are recognised as a financial liability.
Other tangible assets Property, plant, equipment, furniture and property inventories are classified in this item as property inventory. They are initially measured at cost and subsequently recognised net of any accumulated depreciation and impairment losses. They are systematically depreciated on the basis of economic/technical rates determined in accordance with their residual value over their useful economic life.
A list of such investments is shown in attachment to this Consolidated financial statement.
The classification depends on the nature and purpose of holding financial instruments and is determined at initial recognition except for allowed reclassifications in rare circumstances and when the purpose of holding the financial assets changes.
In detail, the Generali Group includes in this category some unquoted bonds, mortgage loans, policy loans, term deposits with credit institutions, deposits under reinsurance business accepted, repurchase agreements, receivables from banks or customers accounted for by companies of the financial segment, and the mandatory deposit reserve with the central bank. The
Group’s trade receivables are instead classified as other receivables in the balance sheet.
Loans and receivables are accounted for at settlement date and measured initially at fair value and subsequently at amortised cost using the effective interest rate method and considering any discounts or premiums obtained at the time of the acquisition which are accounted for over the remaining term to maturity. Short-term receivables are not discounted because the effect of discounting cash flows is immaterial. Gains or losses are recognised in the profit and loss account when the financial assets are de-recognised or impaired as well as through the normal amortization process envisaged by the amortised cost principle.
Available for sale financial assets Available for sale financial assets are accounted for at the settlement date at the fair value at the related transaction dates, plus the transaction costs directly attributable to the acquisition.
The unrealized gains and losses on available for sale financial assets arising out of subsequent changes in value are recognised in other comprehensive income in a specific reserve until they are sold or impaired. At this time the cumulative gains or losses previously recognised in other comprehensive income are accounted for in the profit and loss account.
In particular both bonds and equities, mainly quoted, and all derivative assets, held for both trading and hedging purposes, are included in this category.
Financial assets at fair value through profit or loss also take into account investments back to policies where the investment risk is borne by the policyholders and back to pension funds in order to significantly reduce the valuation mismatch between assets and related liabilities.
The Group evaluates its financial assets held for trading, other than derivatives, to determine whether the intention to sell them in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets and management’s intention to sell them in the foreseeable future significantly changes, the Group may elect to reclassify them. The reclassification to loans and receivables, Available for sale or held to maturity depends on the nature of the asset. This
evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation, as these instruments cannot be reclassified after initial recognition.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is de-recognised when:  The rights to receive cash flows from the asset have expired;  The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the
Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Non-current assets or disposal groups classified as held for sale, deferred acquisition costs, tax receivables, deferred tax assets, and other assets are classified in this item.
Non-current assets or disposal groups classified as held for sale This item comprises non-current assets or disposal groups classified as held for sale under IFRS 5.
Deferred acquisition costs Concerning deferred acquisition costs, according to requirements of IFRS 4, the Group continued to apply accounting policies prior to the transition to international accounting principles. In this item acquisition costs paid before the subscription of multi-year contracts to amortize within the duration of the contracts are included.
Deferred tax assets Deferred tax assets are recognized for deductible temporary differences between the carrying amounts of assets and liabilities and the corresponding amounts recognized for tax purposes.
In the presence of tax losses carried forward or unused tax credits, deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the aforementioned tax losses or unused tax credits.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Deferred tax assets are measured at the tax rates that are expected to be applied in the year when the asset is realized, based on information available at the reporting date
Tax receivables Receivables related to current income taxes as defined and regulated by IAS 12 are classified in this item. They are accounted for based on the tax laws in force in the countries where the consolidated subsidiaries have their offices.
Deferred commissions for investment management services are amortised, after assessing their recoverability in accordance with
Other equity instruments The item includes preference shares and equity components of compound financial instruments.
The item comprises retained earnings or losses adjusted for the effect of changes arising from the first-time application of IAS/IFRS, reserves for share-based payments, equalisation and catastrophe provisions not recognised as insurance provisions according to
IFRS 4, legal reserves envisaged by the Italian Civil Code and special laws before the adoption of IAS, as well as reserves from the consolidation process.
Shareholder’s equity attributable to minority interests The item comprises equity instruments attributable to minority interests.
This item comprises amounts, gross of ceded reinsurance, of liabilities related to insurance contracts and investment contracts with discretionary participation features..
Shadow accounting In order to mitigate the valuation mismatch between financial investments carried at fair value according to IAS 39 and insurance provisions which are accounted for in accordance with previous local GAAP, shadow accounting is applied to insurance contracts and investments contracts with DPF. This accounting practice attributes to the policyholders part of the difference between
The accounting item arising from the shadow accounting application is included in the carrying amount of insurance liabilities whose adequacy is tested by the liability adequacy test (LAT) according to IFRS 4 (refer to paragraph Details on insurance and investment contracts), to rectify the IAS/IFRS carrying amount of insurance provisions.
The main accounting effect of the shadow accounting is double fold: on the one hand, the recognition of the policyholders’ share of unrealized gains and losses on available for sale financial assets in the deferred policyholders’ liabilities; on the other, the insurer’s share is recognised in equity. If financial instruments are fair valued through profit or loss or financial investments are impaired, the policyholders’ share on the difference between the market value and valuation used to determine the return which the profit sharing is based on (e.g. the carrying amount in segregated fund) is recognised in the profit and loss account.
Life insurance provisions Life insurance provisions are related to insurance contracts and investment contracts with discretionary participation features. These provisions are accounted for based on local GAAP, in compliance with IFRS 4.
Liability adequacy test (LAT) In accordance with IFRS 4, in order to verify the adequacy of the reserves a Liability Adequacy Test (LAT) is performed. The aim of the test is to verify if the technical provisions - inclusive of deferred policyholders liabilities - are adequate to cover the current value of future cash flows related to insurance contracts.
The liability adequacy test is performed through the comparison of the IFRS reserves (which include the impact of "shadow accounting"), net of any deferred acquisition costs or intangible assets related to these contracts, with the current value of future cash flows related to insurance contracts. A risk margin, estimated according to the cost of capital approach, is added.
The abovementioned amount also includes the costs of embedded financial options and guarantees, which are measured with a market-consistent methodology.
The insurance contracts modelling and best estimates assumptions used are consistent with the already established Group
Embedded Value methodology carried out by the Group for several years and are reviewed by an independent third subject.
Financial liabilities at fair value through profit or loss The item refers to financial liabilities at fair value through profit or loss, as defined and regulated by IAS 39. In detail, it includes the financial liabilities related to investment contracts where the investment risk is borne by the policyholders as well as derivative liabilities.
Other financial liabilities The item includes financial liabilities within the scope of IAS 39 that are not classified as at fair value through profit or loss and are instead measured at amortised cost.
Payables arising out insurance operations The item includes payables arising out of insurance and reinsurance operations.
 In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Other liabilities This item includes provisions for defined benefit plans, such as termination benefit liabilities and other long-term employee benefits
Acquisition loadings related to these products are accounted for in accordance with IAS 18 treatment of the investment management service component during the product life. They are recognised by reference to the stage of completion of the service rendered.
Therefore, the acquisition commissions have been reclassified in the balance sheet, as liabilities to be released to the profit and loss account during the life of the product.
Income from financial instruments and other investments The item includes income from financial instruments not at fair value through profit or loss and from land and buildings (investment properties). In detail, it includes mainly interests from financial instruments measured using the effective interest method, other income from investments, including dividends recognised when the right arises, income from properties used by third parties, realized gains from financial assets, financial liabilities and investment properties and reversals of impairment.
Other income The item includes: revenue arising from sale of goods and rendering of services other than financial services; other insurance income; gains on foreign currency accounted for under IAS 21; realized gains and reversals of impairment on tangible assets and other assets; and any gains recognised on the re-measurement of non-current assets or disposal groups classified as held for sale.
The item includes expenses from investments in subsidiaries, associated companies and joint ventures, which are accounted for in the corresponding asset items of the balance sheet.
Expenses from financial instruments and other instruments The item comprises expenses from land and buildings (investment properties) and from financial instruments not at fair value through profit or loss. It includes: interest expense; expenses on land and buildings (investment properties), such as general property expenses and maintenance and repair expenses not recognised in the carrying amount of investment properties; realized losses from financial assets, financial liabilities and land and buildings (investment properties); depreciations and impairment of such investments.
The item comprises acquisition commissions, other acquisition costs and administration costs related to contracts that fall under
IFRS 4 scope. Other acquisition costs and administration costs related to investment contracts without discretionary participation features are also included, as well as overheads and personnel expenses for investment management, and administration expenses of non-insurance companies.
Capitalization of borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily take a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds
The statement of comprehensive income was introduced by the revised IAS 1 issued in September 2007 by the IASB, approved by the EC Regulation No 1274/2008.
Change of the closing balance This section comprises changes of the closing balance of the previous financial year determined by the correction of errors or changes in accounting policies (IAS 8) and the recognition of gains or losses arising from the first time application of accounting standards (IFRS 1).
Allocation 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 shares, for the sale of shares pursuant to IAS 32.33, for the reclassification to equity instruments previously recognized in liabilities and, in the consolidated financial statements, for changes in scope of consolidation), changes within equity reserves (es.
Reclassification adjustments to profit or loss This section comprises gains or losses previously recognized in equity, that are reclassified to the profit or loss according to IFRSs (e.g. following the transfer of a financial asset available for sale).
The statement illustrates all changes net of taxes and gains and losses arising from the valuation of financial assets available for sale, attributable to policyholders and accounted for in the insurance liabilities.
With effect from 1st January 2013, the Generali Group has implemented IFRS 13 - Fair Value Measurement. This standard provides guidance on fair value measurement and requires disclosures about fair value measurements, including the classification of financial assets and liabilities in fair value hierarchy levels.
(b) in the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value is equal to market price if market information are available (i.e. relative trading levels of identical or similar instruments) into an active market, which is defined as a market where the items traded within the market are homogeneous, willing buyers and sellers can normally be found at any time and prices are available to the public.
With reference to non-financial assets, fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The highest and best use of a non-financial asset takes into account the use of the asset that is physically possible, legally permissible and financially feasible. However, an entity’s current use of a non-financial asset is presumed to be its highest and best use unless market or other factors suggest that a different use by market participants would maximise the value of the asset.
Adequate controls have been set up to monitor all measurements including those provided by third parties. If these checks show that the measurement is not considered as market corroborated the instrument must be classified in level 3. In this case, generally the main inputs used in the valuation techniques are volatility, interest rate, yield curves, credit spreads, dividend estimates and foreign exchange rates.
Three widely used valuation techniques are:  market approach: uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities;  cost approach: reflects the amount that would be required currently to replace the service capacity of an asset; and
 income approach: converts future amounts to a single current (i.e. discounted) amount.
In the opposite case, the fair value of IFU is mainly determined using net asset values (NAV) provided by the fund’s managers provided by the subjects responsible for the NAV calculation. This value is based on the valuation of the underlying assets carried out through the use of the most appropriate approach and inputs, eventually adjusted for illiquidity. Moreover, depending on how the share value is collected, directly from public providers or through counterparts, the appropriate hierarchy level is assigned. If this
In the opposite case, the fair value of derivatives is determined using internal valuation models or provided by third parties. In particular, the fair value is determined primarily on the basis of income approach using deterministic or stochastic models of discounted cash flows commonly shared and used by the market.
The fair value of other liabilities relating to investment contracts is determined using discounted cash flow models that incorporate several factors, including the credit risk embedded derivatives, volatility, servicing costs and redemptions. In general, however, are subject to the same valuation techniques used for financial assets linked policies.
In relation to the issue of some subordinated liabilities, the Group hedged the interest expense rates and GBP/EUR exchange rate, recognised as cash flow hedges and accounted for as hedging instruments.
Further the Group set cash flow hedges on forecast refinancing operations of subordinated liabilities that are accounted for as hedge of a forecast operations, that are highly probable and could affect profit or loss. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in an appropriate item of comprehensive income. The ineffective portion of the gains or loss on the hedging instrument is recognized in profit or loss. If a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment.
The recognition of impairment follows a complex analysis in order to conclude whether there are conditions to effectively recognize the loss. The level of detail and the detail with which testing is being undertaken varies depending on the relevance of the latent losses of each investment.
If there is objective evidence of impairment the loss is measured as follows:  on financial assets at amortised cost, as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate;  on available for sale financial assets, as the difference between the cost and the fair value at the measurement date.
(impairment test);  deferred acquisition costs and value of business acquired;  deferred and anticipated taxes;  defined benefit plan obligation;  share-base payments.
However, due to the complexity and uncertainty affecting the above mentioned items, future events and actions, actual results ultimately may differ from those estimates, possibly significantly.
Further information on the process used to determine assumptions affecting the above mentioned items and the main risk factors are included in the paragraphs on accounting principles and in the risk report.
The pricing model is based on simulation models generally used for this type of estimation. Other conditions different than market condition are considered external to this valuation. The probability that these conditions are satisfied, combined with the estimated fair value of the right to obtain free shares, defines the overall plan cost.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or a non-vesting condition. These are treated as vested irrespective of whether or not the market or nonvesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense to be recognised is the expense had the terms had not been modified, only if the original terms of the award are met.
In this section the Group provides qualitative and quantitative information about exposure to credit, liquidity and market risks, arising from financial instruments and insurance contracts, and sensitivity analysis to assess the impact of the variation of principal financial and insurance variables on equity, profit and loss or other relevant key indicators.
Non life segment Activities of Non life segment include both motor and non-motor businesses, among which motor third party liabilities, casualty, accident and health. It includes also more sophisticated covers for commercial and industrial risks and complex plans for multinationals.
Holding and other business segment This grouping is an heterogeneous pool of non insurance assets and in particular it includes banking and asset management activities, expenses regarding coordination activities and interest expenses on the Group financial debt, as well as other activities that the Group considers ancillary to the core insurance business. The holding expenses mainly include the holding and territorial sub-holding direction expenses regarding coordination activities, the expenses relating to the parent company of stock option and stock grant plans as well interest expenses on the Group financial debt.
According to IFRS 8, the disclosure regarding operating segments of the Group is consistent with the evidence reviewed periodically at the highest managerial level for the purpose of making operational decisions about resources to be allocated to the sector and assessment of results.
The main impacts are explained below:  the elimination in the non-life segment and holding and other businesses segment of participations and loans to companies of other segments, belonging to the same country, as well as related income (dividends and interests)
 the elimination in the life segment of participations and loans to companies of other segments, belonging to the same country, as well the related income (dividends and interests) if not backing technical reserves
 the elimination in the life segment of realized gains and losses arising from intra-segment operations if not backing technical reserves
Furthermore, loans and interest income and expenses on loans between Group companies belonging to different segments are eliminated directly in each segment.
1.2 Fee and commission income and income from financial service activities 1.3 Net income from financial instruments at fair value through profit or loss 1.4 Income from subsidiaries, associated companies and joint ventures 1.5 Income from other financial instruments and land and buildings (investment properties)
At 31 December 2015, the consolidation area decreased from 473 to 435 companies, of which 394 are subsidiaries consolidated line by line and 41 associated companies valued at equity. The decrease is mainly due to the completion of the BSI disposal as well as to mergers in some Group countries as a result of restructuring policies put in place.
Changes in the consolidation area compared to the previous year and the table listing companies included in the consolidation area are attached to these Notes, in the Appendix related to the change in the consolidation area, compared to 2014.
January the Generali Group completed the takeover of Generali PPF Holding B.V. (GPH), acquiring the remaining 24% of shares held by the PPF Group, in line with the agreements signed in January 2013. For accounting purposes the effects of the operation had been already reflected in the financial statements closed at 31 December 2014.
DVAG is the leading sales network for financial services in Germany and has an exclusive distribution partnership with a company held by Generali Deutschland
The summarised financial information relating to the most significant associates in which the Group has an interest including the reconciliation with the related carrying amounts (including goodwill, where present) are provided here below.
(*) The financial information are referred to the last approved financial statements by the Shareholders meeting of the associated company Deutchsche Vermogensberatung Aktiengesellshaft DVAG
Carrying amount of interest in immaterial associates 257 240 130 125
As of 31 December 2015, Generali Group holds no interests in unconsolidated structured entities that expose the Group to the variability of returns arising from their performance.
However, Assicurazioni Generali is part of a reinsurance contract with a vehicle which provides coverage with respect to the potential losses affecting Generali Group from catastrophes arising from Europe windstorms over a three year period. Generali
Following the conclusion of Telco dissolution in June, Telecom Italia ordinary shares owned by Telco – 22.3% of the shareholders’ equity – were distributed to its shareholders (of which 4.31% to the Generali Group). With the dissolution becoming effective, the shareholders’ agreement among Telco’s shareholders has terminated. This operation has not had any impact on the economic or financial position of the Group. In July the Group completed the sale of its stake in Telecom Italia.
At 31 December 2015 goodwill booked by Group in relation to different companies acquisitions amounted to € 6,661 million (+0.7% compared to 31 December 2014).
The increase of the period was substantially attributable to the positive trend in the exchange rates which characterised 2015.
recoverability test for the goodwill of Generali CEE Holding has been performed taking into consideration the entire perimeter of
The table below shows the details of the Group's goodwill by cash generating unit: Goodwill by cash generating unit
The expected cash flows used in the analysis for each CGU, were those detailed in the Strategic Plan 2016-2018, presented to the Board of Directors in December 2015 and any significant subsequent events. In order to extend the analysis horizon to a 5 years period, the main economic and financial data were estimated for a further two years (2019 and 2020). The net result (2019 and 2020) was calculated using a sustainable growth rate for each CGU.
The table below shows the evaluation parameters used for the main CGU: A) Nominal growth rate (g): Goodwill: Nominal growth rate (g)
 the risk free rate was defined as the average value - observed during the last three months of 2015 - of the 10-years government bond of the reference country of operation of the CGU, on which the goodwill has been allocated;  the Beta coefficient was determined based on a homogeneous basket of securities of the non-life and life insurance sectors, which was compared to market indexes. The observation period was 5 years with weekly frequency;  the market risk premium amounts to 5.5% for all Group’s CGUs.
5 Non-current assets or disposal group classified as held for sale
and Caja de Retiro. This operation did not lead to additional economic compared to what accounted for in the financial statements as at 31 December 2014.
The comprehensive impact on Group net income of the IFRS5 evaluation of the interest in BSI Group, allocated in the item ‘result from discontinued operations’, amounted to € - 35 million (€ -112 million as at 31 December 2014).
6 Related parties disclosure With regard to transactions with related parties, the main intra-group activities, conducted at market prices or at cost, were undertaken through relations of insurance, reinsurance and co-insurance, administration and management of securities and real estate assets, leasing, loans and guarantees, IT and administrative services, personnel secondment and claims settlement.
These services substantially aim to guarantee the streamlining of operational functions, greater economies in overall management, appropriate levels of service and an exploitation of Group-wide synergies.
For further information regarding related parties transactions - and in particular regarding the procedures adopted by the Group to ensure that these transactions are performed in accordance with the principles of transparency and substantive and procedural correctness - please refer to the paragraph ‘Related Party Transaction Procedures’ included in section IVI ‘Internal control and risk management system’ of the ‘Corporate governance and share ownership report’.
The decrease in the loans towards associated companies relates to the repayment of the bonds issued by Telco S.p.a. for an amount equal to € 298 million. This repayment was occurred in the context of the spin-off transaction of Telco S.p.A. during the first half of 2015.
For the same reason repurchase agreements are reclassified in the same item, as well. Derivatives instruments are presented net of derivatives held as financial liabilities, Hedging derivatives are excluded, as they are presented within hedged item asset classes.
Financial assets at fair value through profit or loss 2,884 0.8% 2,440 0.7%
Investments in subsidiaries, associated companies and joint ventures 1,369 0.4% 1,284 0.4%
The Group limits the use of this category only to high quality quoted bonds that Group companies are able to hold till maturity. The decrease compared to 31 December 2014 was mainly attributable to maturity and subsequent repayment of certain bonds held.
This category accounts for 10.3% of total investments. It mainly consisted of unquoted bonds and mortgage loans, which represent 69.7% and 13.5% of total loans, respectively. More than 90% of the bonds category is represented by fixed income medium-to-long term bond instruments.
The decrease was mainly due to net sales carried out during the year.
The table below shows unrealized gains and losses and gains and losses recognized in profit or loss in the reporting period of available for sale financial assets: Available for sale financial assets - unrealised gains and losses 31/12/2015
Available for sale financial assets - unrealised gains and losses 31/12/2014
Available for sale financial assets: gains and losses at profit or loss 31/12/2014
Total financial assets at fair value through profit or loss 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014
Investments back to policies where the investment risk is borne by the policyholders and back to pension funds
91,611 million, which accounted for 97.1% of this category) whereas the residual part referred to the non-life segment (€ 2,179 million which accounted for 2.3% of this category) and in the financial segment (€ 596 million, which accounted for 0.6% of this category).
Assets covering contracts where the financial risk is borne by the policyholders
Gross book value as at 31 December previous year 14,875 14,873
Carrying amount as at the end of the period 12,112 12,628
The fair value of land and buildings (investment properties) at the end of the reporting period is mainly based on external appraisals.
Group’s exposures to government bonds, detailed by country of risk and rating, are reported at book value in the following tables:
The government bonds portfolio amounted to € 163,474 million at the end of the period, with the 61.9% of the portfolio represented by Italian, French and German debt instruments. The exposure to individual sovereign bonds is mainly allocated to their respective countries of operation.
Direct equity investments: breakdown by country of risk (€ million) 31/12/2015
Real estate investments Group’s exposures to direct real estate investments, detailed by country of location, is reported at fair values in the following table: Direct real estate investments: breakdown by country of location
As of 1st January 2009 the Group transferred to the loans and receivables category € 14,658 million of corporate bonds, according to the IAS 39 reclassification option. At 31 December 2015, after sales and pay backs during the years, the stock of these reclassified financial instruments amounted to € 3,738 million.
At 31 December 2015, the Group has retained substantially all risks and rewards arising from the ownership of the transferred assets and there are no transfers of financial assets which have been completely or partially derecognised on which the Group continues to control. In particular, the Group continues to recognise approximately € 9,028 million of financial assets linked to various contracts and which are still recognised. In particular, approximately € 3,819 are subject to securities lending transactions mainly in France, approximately € 1,121 million are subject to contracts to REPO while approximately € 4,088 million are assets pledged as collateral (please refer to the paragraph Contingent liabilities, commitments, guarantees, pledged assets and collaterals in section Additional Information).
Fair value hedging relationships mainly relate to macro-hedging strategies implemented in Life portfolios of subsidiaries operating in
In general, in order to mitigate the credit risk relating to over-the-counter transactions, the Group collateralises most of them.
Furthermore, a list of selected authorised counterparties is identified for the opening of new derivative transactions.
Details on exposure in derivatives instruments designated as hedge accounting and other derivative instruments.
In the Non-life segment insurance provisions remain substantially stable (+0.7% compared to 31 December 2014).
In the Life segment insurance provisions increase by 5.2%, mainly attributable to the development of net inflow and the financial revaluation of technical reserves.
The overall total of the other life insurance provisions included both the provision for profit sharing and premium refunds, which amounts to € 6,725 million (€ 6,895 million in 2014) and the ageing provisions for life segment, which amount to € 12,242 million (€
Non-life amounts ceded to reinsurers from insurance provisions 2,086 2,175 809 858 2,895 3,033
"Provisions for policies where the investment risk is borne by the policyholders and provisions for pension funds"
Mathematical provisions and other insurance provisions 480 655 563 534 1,043 1,189 15 Deferred acquisition costs
(€ million) Segment Life Segment Non Life Total 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014
Carrying amount as at 31 December current year 1,722 1,674 278 283 2,000 1,958
Total insurance provisions include the mathematical provisions and provisions for policies where the investment risk is borne by policyholders and for pension funds net of reinsurance (which amounted to € 263,411 million and € 57,637 million respectively), and net ageing provisions for life segment, which amounted to € 12,227 million (accounted for in other insurance provisions of the life segment). In the Life portfolio the policies with significant insurance risk amounted to 61.4% (63.9% at 31 December 2014), whereas investment contracts with discretionary participation feature amounted to 32.4% (29.8% at 31 December 2014).
Transfer to Non-current assets or disposal group classified as held for sale 0 0
Carrying amount as at the ed of the period 57,783 51,663
Group’s financial guarantee of life insurance provisions and financial liabilities of gross direct insurance is reported in the following table: Life insurance provisions and financial liabilities: financial gurantees
(**) The 2014 comparative figures have been restated in order to adopt a better exposures allocation, especially for the classes with the higher interest guarantee.
The total insurance provisions include the gross direct amount of mathematical provisions, which amount to € 263,099 million
(€249,760 million at 31 December 2014), the provisions for policies where the investment risk is borne by the policyholders and for pension fund, which amount to € 57,783 million (€ 51,663 million at 31 December 2014), the ageing provision for life segment, which amount to € 12,240 million (€ 10,962 million at 31 December 2014), and financial liabilities related to investment contacts, which amount to € 21,991 million (€ 20,776 million at 31 December 2014).
Carry amount as at the end of the period 22,642 25,300
The observed trend in the ultimate cost for generations 2006-2015 indicates the adequate level of prudence adopted by the
Cumulative claim payments at the end of accident year eight years later 11,125 12,068 nine years later 11,200
Estimate of ultimate cumulative claims costs: at the end of accident year eight years later 11,824 12,728 nine years later 11,788
Within the overall context of the technical reserves, the Group continued to experience the effects of an increasingly centralized management of reinsurance with a constant reduction in total reserves ceded to counterparties outside the Group, as well as a more efficient management of facultative reinsurance.
In some circumstances, local regulations, market practice or specific types of business allow the Group to benefit from mitigation of the related reinsurance credit risk through deposits from reinsurers and/or letters of credit as a guarantee on ceded reserves.
Reserve for unrealized gains and losses on available for sale financial assets 6,067 6,498
The share capital is made up of 1,556,873,283 ordinary shares with a par value of € 1 each.
During the year the Parent company distributed dividends amounting to € 934 million.
The reserve for currency translation differences arising from the translation of the subsidiaries’ financial statements denom inated in foreign currencies amounted to € 74 million (−239 million as at 31 December 2014). The positive variation was attributable to the depreciation of the euro against most major currencies.
Net unrealized gains and losses on cash flows hedging derivatives 41 21
Net unrealized gains and losses on hedge of a net investment in foreign operations -49 -1
Items that may not be reclassified to profit and loss in future periods
The following table shows the change of deferred tax assets and liabilities related to gains or losses recognized in shareholders’
Net unrealized gains and losses on cash flows hedging derivatives -21 -11
Basic earnings per share are calculated by dividing the result of the period attributable to the Group by the weighted average number of ordinary shares outstanding during the period, adjusted for the Parent Company’s average number of shares owned by itself or by other Group companies during the period.
Diluted earnings per share reflect the eventual dilution effect of potential ordinary shares.
Diluted earnings per share (in €) 1.29 1.06 - from discontinued operations -0.02 -0.05
In accordance with the CONSOB Communication No. 6064293 of 28 July 2006, the table below summarizes the reconciliation of the result of the period and shareholders’ equity of the Group and the Parent Company.
Adjustments to Parent Company for IAS/IFRS application 1.230 -241 1,156 118
Parent Company amounts in conformity with IAS/IFRS principles 14.997 691 15,120 856
Financial liabilities related to investment contracts issued by insurance companies where the investment risk is borne by the policyholders 0 0 15,673 14,361 15,673 14,361 other financial liabilities related to investment contracts 0 0 127 78 127 78
Unquoted subordinated liabilities issued by Assicurazioni Generali S.p.A. and other subsidiaries are also classified in this category.
The unquoted private placements issued by Assicurazioni Generali S.p.A. increase up to a nominal amount of € 1,000 million are accounted for at a corresponding amortized cost of € 997 million. The remaining subordinated liabilities are mainly issued by
The fair value of subordinated liabilities amounts to € 10,465 million.
The category of bonds includes several senior issues shown below: Main senior bonds issues
The fair value of bonds issued amounted to € 3,916 million.
Carrying amount as at the end of the period 1,985 1,983
acquired in business combinations, amounted to € 968 million. This amount was attributable to:  The acquisitions which took place in 2006 of portfolios of Toro Group (€ 138 million net of accumulated amortisation) and in
Central-Eastern Europe (€ 17 million net of accumulated amortization);  the acquisition of BAWAG PSK Versicherung in 2007, which brought a further activation of € 19 million, net of accumulated amortisation;  the acquisition of the Ceška group, which brought a further activation of € 794 million, net of accumulated amortisation.
Carrying amount as at the end of the period 1,625 1,814
Non-current assets or disposal groups classified as held for sale 0 21,304
For details on deferred taxes please refer to reference 38 of the section ‘Notes to the income statement’.
Provisions for commitments and other provisions include provisions for corporate restructuring, litigation or similar events as well as other commitments for which, at balance sheet date, an outflow of resources to settling the related obligation is considered probable. In particular, the variation in ‘Other provisions’ is mainly due restructuring provisions in particular in Germany.
The table below summarized the main changes occurred during the period: Other provisions - main changes occurred during the period
Carrying amount as at the end of the period 1,807 1,751
The category mainly included payables related to collateral as guarantee of derivative operations.
Liabilities directly associated to non-current assets and disposal groups classified as held for sale 0 19,700
(€ million) Gross amount Reinsurers' share Net amount 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014
The net income from financial assets at fair value through profit or loss mainly referred to the life segment (€ 1,903 million). This item is not material for non-life segment (€ 40 million) as well as for the holding and other businesses segment (€ -3 million).
Reversal of impairment of available for sale financial assets 8 50
Income from non-current assets or disposal group classified as held for sale 1 0
Change in the provisions for outstanding claims 240 50 112 337 352 387
Change in other insurance provisions 42 16 7 -3 48 13
Change in other insurance provisions 2,218 2,367 -25 1 2,193 2,368 33 Fee and commissions expenses and expenses from financial service activities
Expenses from other financial instruments and land and buildings (investment properties)
(€ million) Non-life segment Life segment Holding and other businesses 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014
The item “other administration costs” include expenses related to real estate activity which, overall, are reduced amounting to € 37 million (€ 40 million at 31 December 2014), focusing mainly in the holding and other businesses segment for an amount of € 32
Within “other administrative costs” of the Life segment, the investment management expenses grew at € 76 million (€ 56 million at 31 December 2014), the non-insurance management expenses amounted to € 2 million and are mainly refer to real estate activities.
Restructuring charges, termination employee benefit expenses and allocation to other provisions 648 491
Expenses from service and assistance activities and charges incurred on behalf of third parties 440 323
In Italy, with respect to the 2015 fiscal year, income taxes are calculated by using the ordinary corporate income tax rate of 27.5%.
In France, income taxes are calculated by using an overall corporate income tax rate of 38%. In particular, this overall rate includes the basic rate expected in the tax on corporate income, equal to 33.33%, increased by an additional (contribution sociale) of 3.30%
and a further additional temporary always calculated with reference the standard rate.
Czech Republic (19%), Netherlands (25%), Romania (16%), Spain (28%), Switzerland (22%) and United States (35%).
Reconciliation from theoretical income tax expenses to the effective tax rate
With regards to fiscal losses, it is worth noting that Italian Law by Decree 98/2011 introduced that fiscal losses can be carried forward with no time limits (as opposed to the previous five year limitation). Losses from a given year may, however, only be used to offset up to 80% of the taxable income of any following fiscal year.
Deferred income taxes are calculated on the temporary differences between the carrying amounts of assets and liabilities reported in the financial statements and their tax base, by using the tax rates applicable at the expected time of realisation according to each country’s current legislation. In particular, with regard to Italian companies, in 2015 fiscal year, the deferred taxes have been determined taking into account the reduction in the corporate income tax rate (IRES) at 24% from 2017, as provided by Law no.
208/2015. As a result, the balance of deferred taxes which is expected to be reversed from 2017 was adjusted accordingly. This regulatory change resulted in an overall gain of € 4.7 million.
Furthermore, in making this assessment, management considers the scheduled reversal of deferred tax liabilities and tax planning strategies.
Assessments show that deferred tax assets will be recovered in the future through either (i) expected taxable income of each consolidated company or (ii) expected taxable income of other companies included in the same tax group (e.g. “Consolidato fiscale”
Deferred taxes as of 31 December 2015 and 2014 are related to the following assets and liabilities.
IFRS 13 - Fair Value Measurement provides guidance on fair value measurement and requires disclosures about fair value measurements, including the classification of financial assets and liabilities in the levels of fair value hierarchy.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In particular, an orderly transaction takes place in the principal or most advantageous market at the measurement date under current market conditions.
The table below illustrates both the carrying amount and the fair value of financial assets and liabilities recognised in the balance sheet at 31 December 2015
Financial assets at fair value through profit or loss 19,420 19,420
Financial liabilities at fair value through profit or loss 20,082 20,082
With reference to investments in subsidiaries, associates and joint ventures, the book value, based on the fraction of equity for associates and interests in joint ventures or on cost adjusted for any impairment losses for non-consolidated subsidiaries, was used as a reasonable proxy of their fair value.
Other assets at fair value through profit or loss 0 684 42 726
Fair Value Hierarchy 31/12/2015 Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss 77,559 14,759 2,067 94,385
Fair Value Hierarchy: comparative period 31/12/2014 Level 1 Level 2 Level 3 Total
Financial liabilities at fair value through profit or loss 14,829 3,499 45 18,373
Total liabilities at fair value 14,829 3,499 45 18,373 41 Transfers of financial instruments measured at fair value between Level 1 and Level 2 Generally transfers between levels are attributable to changes in market activities and observability of the inputs used in valuation techniques to determine the fair value of certain instruments.
The more significant assets classified within Level 3 are the following:  Unquoted equities
It includes unquoted IFU funds, private equity and hedge funds, which are classified into available for sale and fair value through profit or loss. Their fair value is substantially provided by the fund administrators on the basis of the net asset value of the company.
With reference to the inputs on which the assessment is based, Generali Group might have, in some circumstances, limited details and therefore it is not possible to provide a sensitivity analysis.
The following table shows a reconciliation of financial instruments measured at fair value and classified as level 3. In particular, as mentioned above, the transfers highlighted with reference to Level 3 are attributable to a more precise allocation among levels due to a better analysis of the inputs used in the valuation primarily of unquoted equities.
Financial assets at fair value through profit or loss 1,756 61 296 -130
Investments in subsidiaries, associated companies and joint ventures 0 0 1,369 1,369
Fair Value Hierarchy of assets and liabilities not measured at fair value 31/12/2014 Level 1 Level 2 Level 3 Total
The category includes bonds, which valuation is described above, mortgages and other loans .
If the fair value cannot be reliably determined, the amortized cost is used as the best estimate for the determination of fair value.
These assets are mainly valuated on the basis of inputs of similar assets in active markets or of discounted cash flows of future income and expenses of the rental considered as part of the higher and best use by a market participant. Based on the analysis of inputs used for valuation, considering the limited cases where the inputs would be observable in active markets, the Group proceeded to classify the whole category at level 3.
 Subordinated debts, loans and bonds and liabilities to banks and customers
Generally, if available and if the market is defined as active, fair value is equal to the market price.
The number of employees decreased due to before mentioned disposal of the BSI Group and some argentine companies.
As for defined benefit plans, participants are granted a defined pension benefits either by the employers or via external entities.
The item “Changes in consolidation scope and others” referred to comparative period is mainly attributable to the classification of
BSI as disposal group held for sale consistently with the requirements of IFRS 5.
The net defined benefit plans expense of the year recognised in the profit or loss account is represented as follows:
The re-measurement of liabilities related to defined benefit plans and plan assets, recognised in Other comprehensive income are detailed as follows: Re-measurements recognised in Other Comprehensive Income
The table below shows the movements in the defined benefit obligation during the financial year and the current value of the plan assets: Present value of defined benefit obligation: movements
Defined benefit obligation as at 31 December current year 4,928 5,119
Defined benefit obligation as at 31 December previous year 934 1,755
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 weighted-average hypotheses considered for the value definition of defined benefits plans obligations are summarized in the following table, for the main operating areas: Assumptions for actuarial calculation of defined benefit plans
Discount rate for evaluation at reporting date 2.4 2.0 0.7 1.0
Rate of salary increase Rate of pension increase 0.5% increase 0.5% decrease 0.5% increase 0.5% decrease 0.5% increase
Within the next 12 months 207 185 46 Share-based compensation plans
At 31 December 2015 different incentive plans based on equity instruments granted by the Parent Company and other Group companies are outstanding.
Long-Term Incentives (LTI) represent the long-term variable remuneration of Generali which takes the form of multi-year plans, approved from time to time by the competent bodies and may be addressed to directors, managers with strategic responsibilities and other Generali employees; they may be based on cash disbursements or financial instruments.
From 2010 to 2012, the Company adopted multi-year plans, currently still in place, based on two cycles of three years. Once the first cycle reaches its conclusion, if the relevant targets have been achieved, a monetary bonus is disbursed of which a part shall be re-invested in Generali shares. This is then followed by a second cycle, after which, again assuming certain targets have been achieved, participants may be granted a certain number of free shares for each share purchased (further details are given in the information reports approved at the time by the Shareholders’ Meeting and published on the Generali Group website).
The LTI plans 2013 and 2014, currently in progress, may result in shares’ granting respectively in 2016 and 2017, subject to the Group performance level (determined by the cross-comparison of ranges of ROE and relative TSR) and the overcoming of the minimum level, where requested in terms of Solvency I ratio and Return on Risk Capital. As far as the lock-up constraint, 50% of the shares are immediately available, 25% is subject to a one-year lock-up period and the remaining 25% to a two year lock-up period.
ordinary shares;  the right to receive the shares is subject to an entry threshold, defined annually by the Board of Directors and which represents a condition precedent;
The performance level, expressed as a percentage, is determined by a new calculation methodology, based on two independent baskets respectively for the achievement of the ROE and the relative TSR. The final results in each basket, with a 50% weight on the bonus assignable, shall be calculated using a linear interpolation approach. The maximum performance level is 175% (or a different percentage considered the role of the related beneficiaries).
Individual tranches of shares are only granted at the end of the performance period and, therefore, at the end of the three years, after verifying the degree to which the targets have been achieved in the third year (i.e. assessment by the Board of Directors on the actual achievement of the targets set, considered both on an annual and overall 3-year basis) and as long as there continues to be an employment/ director relationship in place with the Company or with other companies of the Group as at the grant date. Consequently, save for extraordinary situations as specifically envisaged by the plan rules, and unless otherwise decided by the delegated bodies, any case of termination of the employment/director relationship automatically entails forfeiture of the right to be granted shares.
In order to assess the cumulative cost of the individual plans, for each tranche, the fair value related to the most probable RoE outcome was multiplied by the number of shares that can be assigned based on satisfaction of the vesting conditions. This cost has been allocated over a period of maturity of 3 years (vesting period), with a corresponding increase in equity.
Given the new calculation method described above and based on an independent assessment of the levels of achievement on the Group's financial indicators, the cost of the 2015 plan was determined by separating the component connected to the relative TSR to the one linked to the ROE.
Finally, the cost related to the recognition of dividends paid during the three-year period (so called dividend equivalent) was estimated by applying an estimated dividend to the expected number of shares to be assigned under the plan, based on the degree of achievement assessed as above described.
As for the stock option plans approved in 2006, linked to the quotation of Banca Generali on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A., both the vesting period and the maximum term of options’ exercisability ended. The options granted to employees of the banking group could have been exercised by 15 December 2015.
With reference with the plans approved in 2010, at the end of 2015 the granted options amounted to 780 thousands, of which 59 thousands reserved to the relationship managers (employees), whereas the options effectively exercisable amounted to 392 thousands, of which 27 thousands reserved to relationship managers. The decline in the number of granted options in respect of the previous year is mainly attributable to the exercise of options by the relationship manager and, to a lesser extent, to the end of the relationships with some financial promoters.
The fair value of the share of Banca Generali at grant date equals to € 29.4, which is the market price recorded at 24 April 2015, the date of the Shareholder’s meeting that approved the new Remuneration Policy.
At 31 December 2015 the grant of 73,495 shares is expected in relation to above mentioned remuneration, slightly below the maximum number of 88,318 authorized by the Shareholder’s meeting of 23 April 2015.
At the balance sheet date there were the following share-based compensation plans granted by Generali France to the employees of Generali France group: nine stock grant plans, as approved by the board on 21 st th th th th th th th March 2014 and 6 th March 2015, and a stock granting plan, reserved to the employees of the Generali France group.
With reference to the stock granting plans assigned by Generali France within the scope of IFRS 2, the charge recognised in the profit or loss amounted to € 33.9 million. The plans are considered as cash-settled and therefore a € 103 million liability was accounted for.
In the course of the ordinary business, the Group may encounter agreements or transactions which do not lead to the recognition of these commitments as assets and liabilities in the consolidated financial statements according to the IFRSs (contingent assets and liabilities). At 31 December 2015 the estimate of the contingent liabilities amounts to € 7 million attributable mainly to some litigations pending in Brazil.
Generali Group at 31 December 2015 has commitments for a total amount of approximately € 4,864 million, related to potential commitments on investments, loans and other commitments.
In particular, approximately € 1,862 million represent commitments associated with alternative investments (private equity), mainly in private equity funds which are consolidated line-by-line by the Group. Approximately € 1,676 million refer to several investment opportunities and, in particular, to real estate investment funds. The potential commitments to grant loans amount to approximately € 322 million, mainly associated to liquidity or funding needs of the customers of the Group’s banking operations.
Furthermore, the Group has received financial assets as collateral for approximately € 6,937, in particular for transactions in bonds and loans for approximately € 5,181 and for the transactions in derivatives for approximately € 810 million. Finally, with respect to reinsurance operations of the Group, collaterals of approximately € 858 million have been received.
48 Significant non-recurring events and transaction Below a description of non-recurring transactions carried out by the Group during the 2015
In September Generali concluded the disposal of BSI Group to Banco BTG Pactual. In accordance with the terms of the agreement subscribed on 14 July 2014, the final pricing for the disposal is about CHF 1,248, composed of about CHF 1 billion in cash and the residual part in shares. At 31 December 2015, following the events that affected the Brazilian credit institution, the share price significantly declined, leading to an adjustment to the carrying amount of the asset of about € 110 million.
La Caja Aseguradora de Riesgos del Trabajo ART S.A. and La Caja de Seguros de Retiro S.A. The operation did not result in additional effects compared to those recognized in the financial statements at 31 December 2014.
49 Audit and other service fees for the fiscal year In the table below, filled under the article 149-duodecies of Consob Regulation, are reported the 2015 fees for auditing and other services to Parent company’s audit and companies within audit company’s network.
Other service fees 427 446 of which Tax service fees 55 263 of which Other services 373 183
The period of validity of the Solvency I regulatory regime was concluded at the end of 2015 financial year and the new Solvency II regulatory regime came into force as from 1 January 2016. In line with the approach developed by Ania4 (Communication Prot. no. 0067), this Risk Report therefore provides qualitative disclosure regarding the objectives, policies and processes for capital management with reference to the Solvency II framework, giving evidence of the evolutions towards the new supervisory regime. Conversely, quantitative information, in continuity with the previous year, is still based on official data related to the Solvency I regulatory regime. This approach, consistent with the applicable accounting principles, is motivated, on the one hand, by the need to provide the stakeholders up-to-date information useful to evaluate the objectives, policies and processes for the capital management, and on the other hand, by the need to report quantitative data related to regulatory capital in line with the regulations in force at the reporting date.
Finally, given the prior designation of the Group as a Global Systemically Important Insurer (GSIIs), the Parent Company conducted an assessment of its systemic risk importance by updating its Systemic Risk Management Plan. In parallel the Group also updated the Liquidity Risk Management Plan and the Recovery Plan based on the guidelines and standards issued by the Financial Stability Board (FSB) and by the International Association of Insurance Supervisors (IAIS). In November 2015, the Group was removed from the list of GSIIs published by FSB.
The risk management is implemented through a specific ongoing process, which involves, with different roles and responsibilities, the Board of Directors, the Top Management and the operating and control structures both at Group and Company level. This is defined within the “Internal Control and Risk Management System”, annually approved by the Board of Directors of the Parent Company and, subsequently, by the Local Entities’ Boards5, taking into consideration local specificities and regulations.
At Group level, the Board of each Group Company maintains the ultimate responsibility to approve the risk management policy, strategy and risk tolerance levels as well as to periodically define its risk adjusted targets, in alignment with the Parent Company’s directives and its own required capital adequacy level.
The Parent Company Top Management is in charge, at different levels, of implementing, maintaining and monitoring the risk management policies in accordance with the Board of Directors’ directives. It also steers the definition of operative limits and their timely review through guidelines that each single Group Company is required to implement. Moreover, the Top Management monitors the risk exposures, and the compliance with the assigned tolerance level on an ongoing basis.
The Top Management shares its main strategic decisions with the Group Management Committee (GMC), which plays a coordination role. The purpose of the GMC is to ensure better alignment of the strategic priorities within the Group and to improve 5 Board is to be considered as the administrative, supervisory or management body according to the local governance.
the effectiveness of the decision-making process, through a team approach promoting the sharing of opinions and the adoption of an international perspective.
The Committee, chaired by the Group CEO, comprises, to date, the heads of the four Group Head Office Functions (Group CFO, Group CRO, Group COO, Group CIO), the three Country managers of the main Countries (Italy, Germany and France) and the Head of the Global Business Lines Division.
Within the first organizational level of the Internal Control and Risk Management System, the Dirigente Preposto in charge of the preparation of the Company’s financial reports, in accordance with the provisions of Art. 154 bis of the Consolidated Law on Finance Intermediation (T.U.F. – Testo Unico della Finanza), is responsible for providing adequate administrative and accounting procedures to prepare the Parent Company financial statements, and the consolidated financial statements as well as any other financial communication.
The Policy ensures a sound and effective management of risks throughout Generali Group consistently with the stated risk appetite defined by the Board of Directors of Assicurazioni Generali.
Group Companies are requested to adopt this Policy, according to the local specificities and the regulatory requirements.
The Policy includes also the principles aimed at drawing up ORSA Reports, at Group and local level.
The capital requirement for operational risks is defined on the basis of the EIOPA Standard Formula6.
V. Financial Risks Financial risks include risks deriving from unexpected movements in interest rates and exchange rates and the values of equities and properties, as well as increases in the volatility of interest rates and equity values that may have an adverse impact on the economic or financial results.
Also concentration risk is considered, consisting in the possibility that a single exposure or group of exposures to a single final issuer results in a loss of such magnitude so as to endanger the financial and solvency position of the Group.
Assets subject to market movements are invested both to profitably employ the capital subscribed by shareholders and to meet contractual obligations to policyholders. Unexpected movements in interest rates, in values of equities and properties, as well as exchange rates could have a negative impact on the shareholders’ equity and on Group solvency position. Therefore, a proper analysis of the impact of adverse market movements implies the consideration of volatility and correlations among these risks as well as the effects of these risks on the economic value of the related insurance liabilities.
As mentioned above, the economic impact of market changes for the shareholders does not only depend on the sensitivity of the assets with regards to these movements, but also on the effect of these movements on the present value of insurance liabilities, which can absorb part of the risk.
In managing the investments, the Companies follow the Group guidelines relating to assumption of risks and the defined operating limits.
The Group has a data warehouse for the collection and aggregation of data related to financial investments, which ensures homogeneity, time effectiveness and high quality analysis of financial risks.
6 The determination of capital requirements does not provide further sub-categories.
When analyzing the data from a general point of view, if it is evident that the decrease in equity and real estate prices has a negative impact on the shareholders’ value, it must be also noted that a shift in risk free rates might have both positive and negative effects, driven by the insurance portfolio structure and by the assets and liabilities mismatch in terms of cash flow.
The Group publishes annually an Embedded Value Report on the activities of the Life segment.
According to the requirements of IFRS 7, the impact of possible changes in interest rates and values of the equity instruments on the non-life and financial segments is represented by the impact on the result for the period and on the shareholder’s equity of the Group, net of the corresponding tax effects.
The market risk evaluation was made on all the financial instruments in the portfolios at the end of the year, both from direct and indirect investments held by funds, and derivatives instruments.
The stress test of +/- 50bp on the yield curve and of +/-20% of equity value changes shows: − a potential impact on the Group shareholders' equity attributable to the consequent change in the fair value of bonds and equities classified as available for sale8; − a potential impact on the Group's result of the period attributable to the consequent change in the fair value of debt securities and equities classified as financial assets at fair value through profit or loss; − a potential impact on the Group's result for the period related to the re-computation on coupons and accrued interest of floating rate securities.
Changes in interest rates and equity prices, net of the related deferred taxes, may have a potential impact on shareholders’ equity. The impact is detailed in the table here below. With regard to the sensitivity on the result for the period, it is not material and therefore considered within the impact on shareholders’ equity: Sensitivity on non-life and Holding and other businesses segments' Shareholders' equity
Credit risk refers to possible losses arising from the default or failure of counterparties to meet their financial obligations (default risk) or from changes in value of debt instruments resulting from the widening of their credit spreads (spread widening risk). Spread fluctuations can be caused by changes in the creditworthiness of debt instruments issuers or by widespread events of credit crunches or liquidity crisis.
available. An internal rating can also be attributed to externally rated securities, in order to limit automatic reliance only to external ratings assigned by agencies. Investment activities in instruments subject to credit risk are conducted following prudent criteria. This is evidenced by the fact that the distribution by rating class shows that the absolute majority of the investments is of a high rating standing.
It should also be noted that, for financial assets, which hedge liabilities related to life insurance policies, the same considerations made for market risk are applicable. As a result, in some cases, defaults, downgrades or spread fluctuations also have an impact on the value of insurance liabilities, which consequently mitigate risk.
VII. Insurance risk Insurance risk is analysed separately for life and non-life businesses. It should be noted that health risks are classified as life or nonlife depending on their technical features.
The risks related to policies with a prevailing saving component and with minimum interest rate guarantee are adequately measured in a prudent way in the pricing process in accordance with the particular situation of the local financial markets, and taking also into account any relevant regulatory constraint. In order to better manage risks and costs associated with embedded options included in the above products, the Group is continuing to pursue the policy, already undertaken in previous years, of reducing and redefining the structure of related financial guarantees. In this perspective, the design of the products has been redefined, by better linking the level of the guarantees to the persistency of the policies.
The insurance provisions above are grouped in three macro classes: − contracts with a minimum guarantee level: this group considers both yearly cliquet or at event (death and maturity) guarantees; − contracts without interest guarantee: in this category, together with standard unit linked policies, there are also contracts whose benefits and premiums can be adjusted by Companies in order to mitigate interest rate risk; − contracts matched by specific assets: this category includes contracts where the liabilities are totally matched by specific assets.
From a quantitative point of view regarding the life underwriting risk and according to the parameters indicated by the CFO Forum, the Group performs the following Embedded Value sensitivities: − maintenance expenses -10%: sensitivity to a 10% decrease of maintenance expenses; − lapse rate -10%: sensitivity to a 10% decrease of lapse rates; − mortality/morbidity for risk business -5%: sensitivity to a 5% decrease of mortality/morbidity for all product lines except annuities (e.g. term assurance, whole life, annuity during the accumulation period); − mortality for annuity business -5%: sensitivity to a 5% decrease of mortality for annuity business only (e.g. annuities in payment).
As far as riders are concerned, which are most exposed to moral risks, maximum insurability levels by Country and Company are set, lower than those applied for death covers; at the same time, in order to mitigate these risks, consistent policy conditions are established, especially for what refers to policy exclusions.
Risks related to voluntary withdrawal from the contract or changes in flows from expected premiums (lapse risk) and risks related to inadequacy of charges and loadings in the premiums in order to cover future expenses (expense risk), are evaluated in a prudential manner in the pricing of new products, while considering, in the construction and the profit testing of a new tariff, assumptions derived from the experience of the Company. Should this not be sufficiently reliable or suitable, the experience of the other Group entities of the same Country or the general experiences of the local market are applied. In order to mitigate lapse risk, surrender penalties are generally considered in the tariff and are determined in such a way to compensate, at least partially, the loss of future profits.
For all risk categories, in the annual Embedded Value analysis, there are two levels of local and central control, both ex-ante in underwriting and pricing phases and ex-post.
In this respect, the Group has progressively changed its strategy and its business model for the purchase of the contractual reinsurance: coordination and governance of the Parent Company has been further strengthened, entrusting to it the role of the single reinsurer of other Italian and foreign Companies.
With specific reference to the Parent Company, these principles have been confirmed by the Board of Directors on 17 February 2016 and the structures in place during the current year reflect the new business model for the purchase of the contractual reinsurance described above both in the structures and levels of retention.
Reserving risk The assessment is closely related to the valuation of technical provisions, in particular to the uncertainty of the claims provisions in respect to their expected value. Consequently, the risk assessment properly considers the reserving processes, by using claim triangles and all other relevant information collected and analysed according to specific guidelines.
For quantitative information on cumulative claim payments and the ultimate cost of claims by accident year and their development please refer to section "Insurance and investment contracts" in the Notes.
The underwriting activity is geographically diversified, although mainly concentrated in continental Europe, which accounts for around 93% of direct gross written premiums.
Operational risk also includes: − Financial reporting risk is the risk of a transaction error, which could entail an untrue and incorrect representation of the situation of the assets, liabilities, profit and loss in the Company’s financial statements, in the yearly and half-yearly consolidated financial statements and in any other financial release. The definition of a specific framework, based on internationally recognized standards (Coso, Cobit) provides assurance that the financial reporting risks, to which the Company may be exposed, are identified and addressed according to an approach of analysis that investigates the Company processes and focuses on the relevant transactions that contribute to the generation of the Company’s financial statements and any disclosure of financial nature. The definition of the methodology and organization of the financial reporting risk framework at Head Office and Group level, and the monitoring of its effective implementation are delegated to Dirigente Preposto in charge of preparing the financial reports of Assicurazioni Generali S.p.A. in accordance with the provisions of Law no. 262 of 28 December 2005 , as amended; − Compliance risk, defined as the risk of legal and regulatory sanctions, material financial loss or reputational damage the Company may suffer as a result of not complying with laws, regulations and administrative provisions applicable to the Company’s business. The Group has introduced a “Group Compliance Policy”, which sets out principles and guidelines to carry out the compliance activities and, as part of the management and coordination activities of the Parent Company, envisages that the compliance functions of the Group Companies establish an information flow between them and the Parent Company.
IX. Other risks This risk category encompasses risks that are not included in the previous categories and for which a specific capital requirement under Solvency II is not required.
The Group manages the liquidity risk with the aim of efficiently dealing with expected and unexpected cash outflows, taking as well into account potential difficulties arising from the illiquidity of assets upon their sale.
Through a constant cash flow monitoring activity the Group aims at maintaining a sound financial structure.
The liquidity risk is monitored and managed at local level by the single Business Units, within a common Group framework defined by the Head Office.
The Liquidity Risk framework includes an ad hoc liquidity risk policy that outlines the strategies, principles and processes to identify, assess and manage present and forward-looking liquidity risks to which Assicurazioni Generali S.p.A. is exposed to as a
In addition, with regard to entities operating in the P&C segment, reinsurance treaties with the Group Parent Company help each Business Unit to reduce the exposure to the main risks assumed at local level, thus mitigating the possible negative consequences of catastrophes events or large claims, which could impact the individual Companies’ financial stability.
The model focuses on the Company’s cash flows projections over multiple time horizons and on the portfolio investments liquidity, with a particular focus on the eligible assets covering technical reserves. The model final output is summarized through three main ratios indicating possible liquidity stress situations in each scenario. The key ratios are: − Technical Reserves Coverage; − Investments’ Liquidability Ratio; − Liquidity Gap Ratio.
Starting from the Business Units’ individual ratios, two additional Group metrics are calculated with the aim of measuring the amount of available liquid resources at Group level: the Group Liquidity Risk Coverage Ratio and the Group Excess Liquidity. The calculation methodology takes into consideration the need to preserve a sound financial stability in each Business Unit of the Group. The two indicators also take the available credit lines into consideration.
Parent Company The liquidity level of the Parent Company, Assicurazioni Generali S.p.A., is periodically monitored in order to satisfy all the commitments that could arise in the short and medium term. The monitoring activities include: a strict control over the ongoing operating business, detailed forecasts on dividends that will be paid by Group companies or to be paid to Shareholders, evaluations on possible capital needs for Subsidiaries, monitoring of holding expenses, management of coupons to be paid over the financial debt and a regular analysis of the Group refinancing strategy.
These evaluations are supported by the outcomes of the Liquidity Risk Model previously described, including under unfavourable scenarios, in order to be able to assess every possible liquidity need that might arise in the various market contexts.
The main funding sources at Group Parent Company level comprise cash flows arising from insurance and reinsurance activities, dividends from subsidiaries, intragroup loans, available credit lines with banking institutions, an integrated cash pooling system, a portfolio of liquid assets, and a quick and efficient access to the debt capital markets, continuously monitored by dedicated structures.
The Group target of debt reduction for the 2012-2015 period was achieved in advance during 2014-2015, with an overall decrease of the financial debt of 1 billion euro. For the next years we do not foresee any material change in current stock of debt.
Insurance liabilities The Group’s Companies take into account the impact on their expected profits of all the exit and entry sources and in particular those related to any rational/irrational surrenders, as reported also in the previous paragraph “Life underwriting risk”. In addition, in all the valuations, including sensitivities reported in the paragraph related to the market risk, a dynamic surrender approach is implemented, taking into account the interaction between the return of policyholder funds and the financial market developments.
The liquidity risk arises from a mismatch between liabilities and assets cash flows. The Group manages this risk by means of various mitigation strategies, either embedded in the products or in the funds structure.
Strategic risk refers to the risk arising from external changes and/or internal decisions that may impact on the future risk profile of the Company and the Group.
Contagion risk refers to the risk coming from Group's belonging, i.e. the risk that problems arising from one of the Group's Local Entities could negatively affect the solvency, economic or financial situation of other Group Companies or the Group as a whole.
Thanks to the improvement in the Group’s capital position and operating performance, the rating agency Fitch upgraded the rating on the Generali bonds on 26 August 2015. A key factor leading to the rating upgrade was the strong focus of the management on the capital strengthening and on reducing the financial leverage. The outlook was confirmed as stable.
XI. Capital management Generali Group aims at maintaining an adequate level of capital according to the current regulatory requirements and to the Solvency II framework.
The use of the Group Internal Model supports the capital management processes, within the strategic planning activities, and other business decision making processes.
The main Group’s objectives in capital management are, in summary: − ensure compliance with the solvency regulatory requirements of each operating segment where the Parent Company and other Group Companies operate (non-life segment, life segment and financial segment); − safeguard business continuity and the ability to develop its own business; − continue guaranteeing an adequate return on capital to shareholders; − achieve the best balance between equity and debt, ensuring adequate remuneration to all sources of capital and debt; − determine adequate pricing policies which are consistent with the level of risk arising from the activities within the various segments.
The Group is a financial conglomerate and it is subject to supplementary supervision regarding capital adequacy requirements, risk concentration, intra-group transactions and internal control. In particular, in 2015 the Group available margin amounted to € 30.1 billion (€ 29.0 billion at 31 December 2014) and the Groups required margin amounted to €18.3 billion (€18.6 billion at 31 December 2014). Therefore, the Group’s Solvency I cover ratio (i.e. the ratio of available margin to required margin) was 164% (156% at 31 December 2014).
As described above, Annual Report 2015 is the last reporting that contains information about Solvency I as, from 2016, it will be replaced by the Solvency II regime.
T a n g ib le a n d i n ta n g ib le a s s e ts
A t r ev al ue d am ou nt o r at fa ir v al ue T
in v es tm en t p ro pe rti es
O th er in ta ng ib le a ss et s 1, 1,
P ro v is io ns fo r un ea rn ed p re m iu m s
P ro v is io ns fo r ou ts ta nd in g cl ai m s 1, 1, 2, 2,
Li fe a m ou nt s ce de d to r ei ns ur er s fro m in su ra nc e pr ov is io ns (*
P ro v is io ns fo r ou ts ta nd in g cl ai m s
E qu iti es a t f ai r v al ue 9, 9, 2, 2,
Lo an s an d re ce iv ab le s fro m c us to m er s 1, 1, 1, 1,
Lo an s an d re ce iv ab le s fro m b an ks
O th er lo an s an d re ce iv ab le s
A v ai la bl e fo r sa le fi na nc ia l a ss et s
F in a n c ia l a s s e ts
In tra -g ro up a ss et s an d lia bi lit ie s re fe r to a ss et s an d lia bi lit ie s w hi ch a re e lim in at ed in th e co ns ol id at io n pr oc es s.
In su ra nc e pr ov is io ns a re n et o f a m ou nt s ce de d to r ei ns ur er s fro m in su ra nc e pr ov is io ns
In s u ra n c e p ro v is io n s
P ro v is io ns fo r un ea rn ed p re m iu m s 5, 5, 5, 5,
O th er in su ra nc e pr ov is io ns of w hi ch p ro v is io ns fo r lia bi lit y a de qu ac y te st
P ro v is io ns fo r ou ts ta nd in g cl ai m s 5, 5, 1, 1, 6, 6,
P ro v is io ns fo r po lic ie s w he re th e in v es tm en t r is k is b or ne b y th e po lic y ho ld er s an d pr ov is io ns fo r pe ns io n fu nd s
,7 of w hi ch p ro v is io ns fo r lia bi lit y a de qu ac y te st 1, 1, 1, 1, of w hi ch d ef er re d po lic y ho ld er li ab ili tie s
To ta l p ro vi si o n s 1, 2, 3, 3, 4, 6,
F in a n c ia l lia b ili ti e s
S ub or di na te d lia bi lit ie s 9, 8, 9, 8,
F in an ci al li ab ili tie s re la te d to in v es tm en t c on tra ct s is su ed b y in su ra nc e co m pa ni es
,7 w he re th e in v es tm en t r is k is b or ne b y th e po lic y ho ld er s
D ep os its r ec ei v ed fr om r ei ns ur er s
Li ab ili tie s to c us to m er s 8, 8, 8, 8,
in an ci al li ab ili tie s de si gn at ed a s at fa ir v al ue th ro ug h pr of it or lo ss
O th er fi na nc ia l l ia bi lit ie s
T e c h n ic a l in s u ra n c e i te m s
ha ng e in th e pr ov is io ns fo r un ea rn ed p re m iu m s
ha ng e in o th er in su ra nc e pr ov is io ns
ha ng e in th e m at he m at ic al p ro v is io ns
ha ng e in o th er in su ra nc e pr ov is io ns 2, 2, 2, 2,
In c o m e a n d e x p e n s e s f ro m i n v e s tm e n ts
ev er sa l o f im pa irm en t l os se s
In co m e an d e xp en se s fr o m i n ve st m en ts
( in v es tm en t p ro pe rti es )
1, 1, b fro m in v es tm en ts in s ub si di ar ie s, a ss oc ia te d co m pa ni es a nd jo in t v en tu re s c fro m h el d to m at ur ity in v es tm en ts d fro m lo an s an d re ce iv ab le s 1, 2, 1, 2, e fro m a v ai la bl e fo r sa le fi na nc ia l a ss et s 8, 1, 3,
In co m e an d e xp en se s fr o m r ec ei va b le s
In co m e an d e xp en se s fr o m f in an ci al l ia b il it ie s
,7 a fro m fi na nc ia l l ia bi lit ie s he ld fo r tra di ng
In co m e an d e xp en se s fr o m p ay ab le s
T ot al r ea liz ed ga in s an d lo ss es
U nr ea liz ed g ai ns a nd r ev er sa l o f im pa irm en t l os se s
A cq ui si tio n an d ad m in is tra tio n co m m is si on s 3, 3, 3, 2, b
C ol le ct in g co m m is si on s
C om m is si on s an d pr of it co m m is si on s fro m r ei ns ur er s
B ef or e th e el im in at io n of in tra -g ro up tr an sa ct io ns b et w ee n se gm en ts .
D e ta ils o n o th e r c o m p re h e n s iv e i n c o m e
N et u nr ea liz ed g ai ns a nd lo ss es o n ca sh fl ow s he dg in g de riv at iv es
It em s th at m ay n o t b e re cl as si fi ed t o p ro fi t an d l o ss i n f u tu re p er io d s
A ct ua ria l g ai ns o r lo ss es a ris in g fro m d ef in ed b en ef it pl an s
T ra ns fe r to p ro fit a nd lo ss a cc ou nt
Fa ir va lu e ga in s or lo ss es th ro ug h pr of it or lo ss
Fi na nc ia l a ss et a t f ai r va lu e th ro ug h pr of it or lo ss
Am ou nt o f t he fi na nc ia l as se ts re cl as si fie d in th e ye ar a t t he re cl as si fic at io n da te
Fi na nc ia l a ss et s re cl as si fie d un til
F in an ci al a ss et s an d lia bi lit ie s at fa ir v al ue th ro ug h pr of it or lo ss o n re cu rr in g ba si s
A v ai la bl e fo r sa le fi na nc ia l a ss et s 2, 2,
F in an ci al a ss et s he ld fo r tra di ng 1, 1, 1, 2,
F in an ci al li ab ili tie s at fa ir v al ue th ro ug h pr of it or lo ss
F in an ci al li ab ili tie s de si gn at ed a t f ai r v al ue th ro ug h pr of it or lo ss
T ot al fi na nc ia l l ia bi lit ie s on r ec ur rin g ba si s
N on -c ur re nt a ss et s or o f d is co nt in ue d op er at io ns 2, 3,
A v a ila b le f o r s a le fin a n c ia l a s s e ts
F in a n c ia l lia b ili tie s h e ld fo r tr a d in g
O p e n in g b a la n c e
P u rc h a s e s a n d i s s u e s
D is p o s a ls t h ro u g h s a le s a n d s e ttl e m e n ts
N e t tr a n s fe rs i n L
N e t tr a n s fe rs o u t o f L e v e l 3
C lo s in g b a la n c e
F in a n c ia l a s s e ts a t fa ir v a lu e t h ro u g h p ro fit o r lo s s
L o a n s a n d r e c e iv a b le s
In v e s tm e n ts i n s u b s id ia ri e s a s s o c ia te d c o m p a n ie s a n d j o in t v e n tu re s
L a n d a n d b u ild in g s (
T o ta l lia b ili tie s a n d s h a re h o ld e rs
T e c h n ic a l p ro v is io n s
F in a n c ia l L ia b ili tie s
lo s s o f th e p e ri o d
D iv id e n d s d is tr ib u te d t o m in o ri ty i n te re s ts
S u m m a ri s e d f in a n c ia l in fo rm a tio n
Europ Assistance Vai S.p.A. 086 EUR 468,000 G 11 100.00 Europ Assistance Service S.p.A. 100.00 99.99
Genagricola - Generali Agricoltura S.p.A. 086 EUR 187,850,000 G 11 100.00 Generali Italia S.p.A. 100.00 100.00
Banca Generali S.p.A. 086 EUR 116,092,599 G 7 9.67 Generali Vie S.A. 50.55 50.44 0.44 Genertel S.p.A.
Fondo Immobiliare Mascagni 086 EUR 2,129,409,756 G 10 1.46 Genertel S.p.A. 99.99 99.99 29.10 Alleanza Assicurazioni S.p.A.
DAS - Difesa Automobilistica Sinistri S.p.A. 086 EUR 2,750,000 G 1 50.01 Generali Italia S.p.A. 50.01 50.01
Dialog LebensversicherungsAktiengesellschaft 094 EUR 2,045,200 G 2 100.00 Generali Beteiligungs- und Verwaltungs-AG 100.00 100.00 94.10 Generali Beteiligungs-GmbH
AachenMünchener Lebensversicherung AG 094 EUR 71,269,998 G 2 100.00 Generali Deutschland AG 100.00 100.00
Generali Lebensversicherung Aktiengesellschaft 094 EUR 124,053,300 G 2 100.00 Generali Beteiligungs- und Verwaltungs-AG 100.00 100.00
Generali Versicherung Aktiengesellschaft 094 EUR 27,358,000 G 2 100.00 Generali Beteiligungs- und Verwaltungs-AG 100.00 100.00
Central Krankenversicherung Aktiengesellschaft 094 EUR 34,017,984 G 2 100.00 Generali Deutschland AG 100.00 100.00
Cosmos Lebensversicherungs Aktiengesellschaft 094 EUR 11,762,200 G 2 100.00 Generali Deutschland AG 100.00 100.00
ENVIVAS Krankenversicherung AG 094 EUR 1,022,800 G 2 100.00 Generali Deutschland AG 100.00 100.00
Generali Investments Deutschland Kapitalanlagegesellschaft mbH 094 EUR 9,050,000 G 8 100.00 Generali Investments Holding S.p.A. 100.00 99.63
Generali European Real Estate Income Investments GmbH & Co. KG 094 EUR 20,203,178 G 10 5.55
Generali Northern America Real Estate Investments GmbH & Co. KG 094 EUR 17,560,021 G 10 27.77 AachenMünchener Lebensversicherung AG 99.95 99.95
Thuringia Generali 2.Immoblien AG & Co. KG 094 EUR 84,343,265 G 10 100.00 Generali Lebensversicherung Aktiengesellschaft 100.00 100.00
Grundstücksgesellschaft Einkaufszentrum Marienplatz-Galerie Schwerin mbH & Co. KG 094 EUR 14,805,190 G 10 100.00 AachenMünchener Versicherung AG 100.00 100.00
Grundstücksgesellschaft Einkaufszentrum Louisen-Center Bad Homburg mbH & Co. KG 094 EUR 77,675,829 G 10 100.00 Generali Deutschland AG 100.00 100.00
GID Fonds CEAOT 094 EUR 478,042,318 G 11 100.00 Central Krankenversicherung Aktiengesellschaft 100.00 100.00
GID Fonds GLLAE 094 EUR 651,433,814 G 11 100.00 Generali Lebensversicherung Aktiengesellschaft 100.00 100.00
GID Fonds GVMET 094 EUR 329,182,874 G 11 100.00 Generali Versicherung Aktiengesellschaft 100.00 100.00
GLL AMB Generali Properties Fund I GmbH & Co. KG 094 EUR 33,140,467 G 11 100.00
GLL Properties 444 Noth Michig. LP 069 USD 82,366,056 G 10 100.00 GLL Properties Fund II LP 100.00 100.00
GID Fonds AVAOT III 094 EUR 32,343,178 G 11 100.00 ADVOCARD Rechtsschutzversicherung AG 100.00 100.00
GID Fonds CERET 094 EUR 1,996,846,378 G 11 100.00 Central Krankenversicherung Aktiengesellschaft 100.00 100.00
GID Fonds GLRET 094 EUR 4,298,842,987 G 11 100.00 Generali Lebensversicherung Aktiengesellschaft 100.00 100.00
GID Fonds GDPRET 094 EUR 259,753,829 G 11 100.00 Generali Deutschland Pensionskasse AG 100.00 100.00
GID Fonds GVRET 094 EUR 431,054,657 G 11 100.00 Generali Versicherung Aktiengesellschaft 100.00 100.00
GID Fonds DLAET 094 EUR 36,799,732 G 11 100.00 Dialog Lebensversicherungs-
GID-Fonds ALAET 094 EUR 299,999,520 G 11 100.00 AachenMünchener Lebensversicherung AG 100.00 100.00
L'Equité S.A. Cie d'Assurances et Réass. contre les risques de toute nature 029 EUR 22,469,320 G 2 99.99 Generali IARD S.A. 99.99 98.92
GFA Caraïbes 213 EUR 6,839,360 G 2 100.00 Generali IARD S.A. 100.00 98.93
Europ Assistance France S.A. 029 EUR 2,464,320 G 11 100.00 Europ Assistance Holding S.A. 100.00 99.99
Suresnes Immobilier S.A.S. 029 EUR 43,040,000 G 10 100.00 Generali Vie S.A. 100.00 98.93
Generali France Assurances S.A. 029 EUR 1,038,510,560 G 5 100.00 Generali France S.A. 100.00 98.93
Expert & Finance S.A. 029 EUR 3,258,310 G 11 96.79 Generali Vie S.A. 96.79 95.75
Courtage Inter Caraibes 213 EUR 50,000 G 11 99.76 GFA Caraïbes 99.76 98.69
GEII Rivoli Holding SAS 029 EUR 12,000,000 G 10 100.00 Generali Europe Income Holding S.A. 100.00 99.64
SCI du 54 Avenue Hoche 029 EUR 152,400 G 10 100.00 Generali Vie S.A. 100.00 98.93
SCI Generali Pyramides 029 EUR 603,600 G 10 67.88 Generali IARD S.A. 100.00 98.93 32.12 SCI Generali Wagram
SCI Generali Wagram 029 EUR 284,147 G 10 100.00 Generali IARD S.A. 100.00 98.93
SCI GF Pierre 029 EUR 47,394,248 G 10 1.18 Generali IARD S.A. 100.00 98.93 90.96 Generali Vie S.A.
SCI Cogipar 029 EUR 10,000 G 10 100.00 Generali Vie S.A. 100.00 98.93
SCI Font Romeu Neige et Soleil 029 EUR 15,200 G 10 100.00 Generali IARD S.A. 100.00 98.93
SC Commerce Paris 029 EUR 1,746,570 G 10 100.00 Generali Vie S.A. 100.00 98.93
SCI Generali le Moncey 029 EUR 919,020 G 10 100.00 Generali Vie S.A. 100.00 98.93
SC Generali Logistique 029 EUR 122,720,767 G 10 100.00 Generali Vie S.A. 100.00 98.93
SCI Beaune Logistique 1 029 EUR 8,001,000 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Parcolog Lille Hénin Beaumont 2 029 EUR 1,130,000 G 10 100.00 SC Generali Logistique 100.00 98.93
OPCI Parcolog Invest 029 EUR 225,848,750 G 10 100.00 Generali Vie S.A. 100.00 98.93
SCI Parc Logistique Maisonneuve 1 029 EUR 7,051,000 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Parc Logistique Maisonneuve 3 029 EUR 8,004,000 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Parcolog Isle D'Abeau 2 029 EUR 12,476,000 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Parcolog Combs La Ville 1 029 EUR 7,001,000 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Parcolog Mitry Mory 029 EUR 11,320,950 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Parcolog Marly 029 EUR 7,001,000 G 10 100.00 SC Generali Logistique 100.00 98.93
SCI Commerces Regions 029 EUR 1,000 G 10 99.00 Generali Vie S.A. 100.00 98.93
SCI Thiers Lyon 029 EUR 1,000 G 10 99.00 Generali Vie S.A. 100.00 98.93 1.00 Generali IARD S.A.
SCI Iliade Massy 029 EUR 1,000 G 10 100.00 Generali Vie S.A. 100.00 98.93
SAS Parcolog Lille Henin Beaumont 1 029 EUR 302,845 G 10 100.00 OPCI Parcolog Invest 100.00 98.93
OPCI Generali Bureaux 029 EUR 103,996,539 G 10 100.00 Generali Vie S.A. 100.00 98.93
OPCI Generali Residentiel 029 EUR 149,607,800 G 10 100.00 Generali Vie S.A. 100.00 98.93
OPCI GB1 029 EUR 153,698,740 G 10 100.00 Generali Vie S.A. 100.00 98.93
SC Novatis 029 EUR 17,081,141 G 10 100.00 Generali Vie S.A. 100.00 98.93
HSR Verpachtung GmbH 008 EUR 35,000 G 10 40.00 Generali Versicherung AG 100.00 85.00 60.00 BAWAG PSK Versicherung AG
BAWAG PSK Versicherung AG 008 EUR 12,000,000 G 2 75.00 Generali Holding Vienna AG 75.00 75.00
Generali VIS Informatik GmbH 008 EUR 35,000 G 11 100.00 Generali Holding Vienna AG 100.00 100.00
Generali Bank AG 008 EUR 26,000,000 G 7 78.57 Generali Holding Vienna AG 100.00 100.00 21.43 Generali Versicherung AG
Generali Luxembourg S.A. 092 EUR 75,000,000 G 2 100.00 Generali France S.A. 100.00 98.93
Generali Investments Luxembourg S.A. 092 EUR 1,921,900 G 11 100.00 Generali Investments Holding S.p.A. 100.00 99.63
Generali North American Holding 2 S.A. 092 USD 7,312,384 G 11 100.00 Generali Northern America Real Estate Investments GmbH & Co. KG 100.00 99.95
GLL AMB Generali Cross-Border Property Fund FCP 092 EUR 225,000,000 G 9 33.33
Method(1) Activity(2) Shareholding % Group Equity Ratio(3)Direct Indirect Through Total 16.17 AachenMünchener Lebensversicherung AG
Generali Financial Hold SF2 092 EUR 714,259,968 G 11 4.72 Alleanza Assicurazioni S.p.A. 100.00 99.89 15.84 Flandria Participations Financières S.A.
Generali España, S.A. de Seguros y Reaseguros 100.00 99.98 95.00 Europ Assistance Holding S.A.
Generali Vida Companhia de Seguros S.A. 055 EUR 9,000,000 G 2 79.16 99.99 99.99 20.83 Generali Companhia de Seguros, S.A.
Generali Companhia de Seguros, S.A. 055 EUR 41,000,000 G 2 100.00 100.00 100.00
Generali Belgium S.A. 009 EUR 40,000,000 G 2 22.52 Flandria Participations Financières S.A. 99.99 99.99 32.29 Generali Italia S.p.A.
Europ Assistance Services S.A. 009 EUR 186,000 G 11 20.00 Generali Belgium S.A. 100.00 99.99 80.00 Europ Assistance Belgium S.A.
Generali Levensverzekering Maatschappij N.V. 050 EUR 11,344,505 G 2 100.00 Generali Nederland N.V. 100.00 98.56
Generali Real Estate Investments B.V. 050 EUR 250,000,000 G 10 59.66 Generali Belgium S.A. 100.00 99.42 40.34 Generali Levensverzekering Maatschappij N.V.
Generali España, S.A. de Seguros y Reaseguros 30.44 Generali Vie S.A.
Lion River II N.V. 050 EUR 48,500 G 9 2.06 Generali Beteiligungs-GmbH 100.00 99.98 2.06 Generali Vie S.A.
CZI Holdings N.V. 050 EUR 2,662,000,000 G 4 100.00 Generali CEE Holding B.V. 100.00 100.00
Method(1) Activity(2) Shareholding % Group Equity Ratio(3)Direct Indirect Through Total 30.00 Generali Vie S.A.
Generali Biztosító Zrt. 077 HUF 4,500,000,000 G 2 100.00 Generali CEE Holding B.V. 100.00 100.00
Genertel Biztosító Zrt. 077 HUF 1,180,000,000 G 2 100.00 Generali Biztosító Zrt. 100.00 100.00
Generali Velky Spalicek S.r.o. 275 CZK 1,800,000 G 10 100.00 Generali Immobilien GmbH 100.00 100.00
Direct Care s.r.o. 275 CZK 1,000,000 G 11 72.00 Generali Pojistovna a.s. 100.00 100.00 28.00 Ceská Pojištovna a.s.
Parížská 26, s.r.o. 275 CZK 200,000 G 10 100.00 Ceská Pojištovna a.s. 100.00 100.00
Ceská pojištovna ZDRAVI a.s. 275 CZK 100,000,000 G 2 100.00 Ceská Pojištovna a.s. 100.00 100.00
Generali Investments CEE a.s. 275 CZK 52,000,000 G 8 100.00 CZI Holdings N.V. 100.00 100.00
CP INVEST investicní spolecnost, a.s. 275 CZK 91,000,000 G 8 100.00 CZI Holdings N.V. 100.00 100.00
Method(1) Activity(2) Shareholding % Group Equity Ratio(3)Direct Indirect Through Total 10.23 Generali Pojistovna a.s.
Generali Zycie Towarzystwo Ubezpieczen S.A. 054 PLN 63,500,000 G 2 100.00 Generali CEE Holding B.V. 100.00 100.00
Generali Societate de Administrare a Fondurilor de Pensii Private S.A. 061 RON 52,000,000 G 11 100.00 Ceská Pojištovna a.s. 100.00 100.00
S.C. Generali Romania Asigurare Reasigurare S.A. 061 RON 179,100,909 G 2 99.91 Generali CEE Holding B.V. 99.91 99.91
Generali Bulgaria Holding EAD 012 BGN 20,520,000 G 4 100.00 Generali CEE Holding B.V. 100.00 100.00 34.81 Generali Bulgaria Holding EAD
Generali Life Insurance AD 012 BGN 7,000,000 G 2 99.56 Generali Bulgaria Holding EAD 99.56 99.56
Generali Zakrila Medical and Dental Centre EOOD 012 BGN 100,000 G 11 100.00 Generali Insurance AD 100.00 99.78
GP Reinsurance EAD 012 BGN 53,400,000 G 5 100.00 Generali CEE Holding B.V. 100.00 100.00
Generali Osiguranje d.d. 261 HRK 81,000,000 G 3 100.00 Generali CEE Holding B.V. 100.00 100.00
Generali Personenversicherungen AG 071 CHF 106,886,890 G 3 15.06 Generali Assurances Générales SA 100.00 99.99 84.94 Generali (Schweiz) Holding AG
Generali (Schweiz) Holding AG 071 CHF 4,332,000 G 4 51.05 100.00 100.00
Akcionarsko društvo za osiguranje Generali Osiguranje Srbija 100.00 100.00 42.51 Generali CEE Holding B.V.
Akcionarsko društvo za upravljanje dobrovoljnim penzijskim fondom Generali 289 RSD 135,000,000 G 11 100.00
General Securities Corporation of North America 069 USD 364,597 G 9 1.00 Generali North American Holding 1 S.A. 100.00 99.62 1.00 Generali North American Holding 2 S.A.
Generali Argentina Compañía de Seguros S.A. 006 ARS 79,391,209 G 3 60.68 100.00 96.10 39.32 Caja de Seguros S.A.
Caja de Seguros S.A. 006 ARS 228,327,701 G 3 99.00 Caja de Ahorro y Seguro S.A. 99.99 90.09
Generali Colombia Seguros Generales S.A. 017 COP 34,244,441,700 G 3 88.25 91.34 91.34 3.09 Transocean Holding Corporation
Generali Ecuador Compañía de Seguros S.A. 024 USD 4,327,444 G 3 52.45 52.45 52.45
PT Asuransi Jiwa Generali Indonesia 129 IDR 778,000,000,000 G 3 98.73 Generali Asia N.V. 98.73 98.73
Generali Pilipinas Life Assurance Co. Inc. 027 PHP 1,515,050,500 G 3 100.00 Generali Pilipinas Holding Co. Inc. 100.00 60.00
Generali Pilipinas Insurance Co. Inc. 027 PHP 1,208,860,137 G 3 100.00 Generali Pilipinas Holding Co. Inc. 100.00 60.00
Generali Pilipinas Holding Co. Inc. 027 PHP 3,079,155,490 G 4 60.00 Generali Asia N.V. 60.00 60.00
Generali Insurance (Thailand) Co. Ltd 072 THB 860,000,000 G 3 47.67 Generali Asia N.V. 82.56 80.70 34.88 KAG Holding Company Ltd
DWP Partnership 072 THB 200,000 G 4 50.00 FTW Company Limited 100.00 90.57 50.00 MGD Company Limited
Generali Vietnam Life Insurance Limited Liability Company 062 VND 1,651,000,000,000 G 3 100.00 100.00 100.00
HealthiChoices (Pty) Limited 078 ZAR 200 G 11 50.50 Europ Assistance Worldwide Services (South Africa) (Pty) Ltd 50.50 49.99
EASA Training Academy (Pty) Ltd 078 ZAR 100 G 11 100.00 Europ Assistance Worldwide Services (South Africa) (Pty) Ltd 100.00 98.99
Buxola (Pty) Ltd 078 ZAR 100 G 11 100.00 Randgo Rewards (Pty) Ltd 100.00 49.59
MRI Criticare (Pty) Limited 078 ZAR 200 G 11 100.00 Europ Assistance Worldwide Services (South Africa) (Pty) Ltd 100.00 98.99
Generali Corporate Services S.c.a.r.l. in liquidazione 086 EUR 10,000 a 11 1.00 100.00 99.47 10 1.00 Genertel S.p.A.
Generali Investments Europe S.p.A. Società di Gestione Risparmio 2.00 Alleanza Assicurazioni S.p.A.
Sementi Ross S.r.l. 086 EUR 102,800 a 11 100.00 Sementi Dom Dotto S.p.A. 100.00 100.00
Genertel Servizi Assicurativi S.r.l. 086 EUR 80,000 a 11 50.00 Genertel S.p.A. 100.00 100.00 50.00 Genertellife S.p.A.
Solaris S.r.l. in liquidazione (*) 086 EUR 20,000 b 10 50.00 Generali Properties S.p.A. 50.00 50.00 16.00 Generali Italia S.p.A.
Generali Investments - Società di Intermediazione Mobiliare S.p.A. 086 EUR 3,000,000 a 8 100.00
Generali Akademie GmbH 094 EUR 25,600 a 11 100.00 Generali Versicherung Aktiengesellschaft 100.00 100.00
MLV Beteiligungverwaltungsgesellschaft mbH 094 EUR 51,129 a 9 100.00 Generali Holding Vienna AG 100.00 100.00 41