Cover: some of the young participants in Leave Your Mark, an initiative addressed to all employees worldwide, to create a selected pool of talent with the aim of working together to define the future strategies of the Group.
This year our people drive the design process of the reports. In fact, in the photos smiling faces are portrayed looking upward, as if to seize aspirations.
About the Report Consistently with the approach to corporate reporting adopted in 2013, we have decided to also prepare a 2014 Annual Integrated Report, in accordance with the principles included in the International <IR> Framework. We strongly believe that such approach is an innovative and efficient way to communicate our ability to create value in a sustainable manner over time. Our commitment to the International Integrated Reporting Council (IIRC) carries on through the <IR> Business Network, the ideal continuation of the <IR> Pilot Programme that officially ended in September 2014 and to which we participated since 2012. The Insurance Network, where we co-chair, has been set up within the <IR> Business Network, with the aim of developing, sharing and spreading best practices for drawing up of an integrated report in the insurance sector.
Annual Integrated Report generali.com 183rd year 4 | Generali Group - Annual Integrated Report 2014
Directors ornella Barra Flavio cattaneo Alberta Figari Jean-René Fourtou lorenzo Pellicioli sabrina Pucci Paola sapienza
Letter from the Chairman I am particularly pleased to present the 2014 Annual Integrated Report, which illustrates the progress made by the Group in 2014 and the results for all our stakeholders. Generali has consolidated its position and its role as a major player in the international insurance industry, confirming the quality of choices on which are based the complex and challenging strategic redesign commenced almost three years ago.
All of this took place against the backdrop of an uncertain global environment - characterized by diverse trends in the large international areas - which unfortunately kept the low rate of growth of the world economy in line with that of previous years.
Letter from the Group CEO 2014 was a crucial year for Generali. At 31 December, a turnaround phase ended that had few precedents in the industry and that now allows the Group to start a new phase in the market to regain the place of excellence it deserves. When in 2013 we set ambitious targets in terms of Solvency, operating result, cash flow and cost reduction, not everyone was willing to believe that we would make it. Instead today, we can state, with a year in advance, that the Solvency I ratio reached 164%*, operating result amounted to € 4.5 billion, allowing net result to exceed € 1.6 billion**, cash flow amounted to € 2.8 billion, and that all other targets were met or exceeded. It was a difficult path, through the sale of numerous non-core activities. At the same time we acquired minority interests in activities critical to our business, which we now have full control of, especially in Eastern Europe, where we continue to grow and consolidate our leadership position; and we reorganized the business in Italy with the creation of a single brand for the country.
We look to the future with greater confidence. We work to build the Generali of a tomorrow that is around the corner, with continuing connections with the present and future needs of our clients, constant attention to the opportunities offered by technological development, an even more efficient business model, a more global and even stronger brand.
We have achieved results to be proud of, thanks to the commitment of all the women and men who, through various roles, work for our Group worldwide. That is why, their faces are the fairest illustration of the 2014 Annual Integrated Report.
mario Greco * Including the disposal of BSI ** Net of some significant extraordinary impairments
Over the past few years Generali has focused on strengthening its position in key markets and improving customer centricity across all our companies. We currently protect over 72 million people around the world, by offering �rst class insurance products and services
We operate through more than 470 companies 60 countries in more than
For more information on the segment reporting review, please see Appendix to Management Report.
Improving COR, in particular owing to the positive performance of the loss ratio.
AprilMarch JuneJanuary February 2014 key facts 14 | Generali Group - Annual Integrated Report 2014
Flavio Cattaneo appointed as member of the Board of Directors and Giuseppe Catalano as Secretary of the Board
AprilMarch JuneJanuary February 2014 key facts - Generali Group | 15
Recognitions by rating agencies for the strategy aimed at improving the Group’s economic and capital strength
In February, the rating agency Fitch affirmed the Insurer Financial Strength rating of Assicurazioni Generali at A- and on 2 May it upgraded Generali’s outlook from negative to stable. The agency confirmed such rating in July and it also reaffirmed the Company’s senior and subordinated notes at BBB+ and BBB-, respectively.
In May, the resolution taken on 4 December 2013 by the extraordinary General Meeting of Generali Deutschland Holding AG (GDH), approving the squeeze-out of Gdh's minorities, was registered with the German Commercial Register. After the registration of the shareholders’ resolution, all the shares held by the minority shareholders in GDH were transferred to Assicurazioni Generali and, at the same time, the shares of GDH were delisted. This transaction resulted in a reduction in the equity of the Group of € 130 million.
In June, Generali completed the sale of 100% of Fata Assicurazioni danni s.p.A. for a total amount of € 194.7 million, after a price adjustment procedure, thus allowing the Group to further strengthen its liquidity and capital position and to improve the Solvency I ratio by 0.7 percentage points. The transaction resulted in a non-recurring gain of € 56 million.
Generali signed an agreement to sell its entire interest in the BsI Group to BtG Pactual for a total of € 1.24 billion in July. This operation allows a greater focus on the core insurance business and helps improve the Solvency I ratio by approximately 8 percentage points. Pending the release of the necessary regulatory approvals, since June 2014 the participation in BSI Group is classified as a disposal group held for sale. Following the operation, BSI had a negative result of € 112 million at year-end.
In November, Generali entered into a european partnership – the first of its kind in continental europe – with the insurance company discovery for the launch of “vitality”, an innovative platform of Health & Protection insurance solutions. Vitality is an insurance model - designed by Discovery - based on behavior and shared value. It has the aim of making the people healthier through a customized and regular interaction with the client in order to encourage and reward a healthy lifestyle. The development phase of the Generali Vitality products has already begun and the forecasted exclusive distribution will be launched in Germany, France and Austria and will then be extended to the other countries where the Group operates.
In December, the Board of Directors appointed Flavio cattaneo as member of the Board of Directors and Giuseppe catalano was appointed Secretary of the Board.
significant events after 31 december 2014 2014 key facts - Generali Group | 19
We pay off our beneficiaries in case of occurrence of the event
We sell insurance policies and collect premiums through a multi-channel approach
Main long-term factors that may significantly affect the business and the ability to create value for the Group
u We carefully follow the regulatory developments in order to ensure a proper level of internal preparation and we promote different dedicated initiatives. In particular, in order to meet the Solvency 2 requirements, we have identified our actions in a proper action plan and have prioritized the formal adoption of internal models for the measurement of capital requirements. With respect to the European directive IMD2 we have launched an important international and cross-functional initiative aiming at identifying possible actions and implications and better supporting our business units in addressing changes.
We were confirmed as a Global Systemically Important Insurer by the Financial Stability Board (FSB); as a consequence, we have developed the Systemic Risk Management Plan (SRMP), in which we explain how we intend to manage and reduce our systemic risk exposure, the Liquidity Risk Management Plan (LMRP), in which we disclose the level of adequacy of available liquidity and its management in a stress-scenario, and the Recovery Plan, which is the instrument for the evaluation and proper management of critical scenarios. We actively collaborate with the Supervisor for the drafting of the Resolution Plan as to guarantee an eventual liquidation procedure which does not compromise financial stability and economy.
u We are actively working on identifying and assessing the significance of the risks, so as to minimize the negative effects that may follow. We constantly monitor the main perils and territories to which we are exposed, using stochastic models for simulating natural phenomena. We are thus in a position to verify the adequacy and enhance the effectiveness of our insurance underwriting and risk mitigation strategy. We manage our reinsurance cessions centrally to take advantage of economies of scale, improve diversification in our business and to better leverage our “purchasing power” on the international reinsurance markets. We are also committed to investing in research and studies on these topics. We identify the opportunities arising from catastrophic events in the possibility of better promoting existing products and developing new ones, associated with an appropriate level of services, to satisfy the potential greater need of protection against catastrophes, and of promoting a supportive regulatory context.
In a mutating economic environment, consumers are showing different attitudes toward insurance products and services and insurers. These changes have their roots in two global trends: digitalization, which has created the possibility of introducing new forms of sale and use of new insurance solutions, and economic uncertainty, which has decreased spending on some forms of retirement savings or insurance. These factors have made clients increasingly attentive to the quality of service and also more independent in decision-making, thanks to the many lower cost sources of information available.
For an in-depth description of the risk profile and specific methodologies for risk assessment, please see Risk Report in the Notes to the Consolidated Financial Statements.
Insurance solutions We aim at offering and tailoring a bright combination of protection, advice and service.
Our Vision, Mission and Values are the backbone of the Group culture and they differentiate us from anybody else. I am proud of them. mario Greco, Group ceo 26 | Generali Group - Annual Integrated Report 2014
We believe that our values must be the basis of our activities, integrated in our product and services in order to reach our customers. These challenges are the basis of the values in Action labs, a global internal initiative undertaken to sustain this important phase of change in Generali. This initiative includes a series of workshops, aiming at the promotion and development of values in the countries and regions which host these events. The labs, adopting a methodology that promotes engagement and fosters focus and creative collaboration, took place in many offices of the Group, in order to ensure a complete geographical representation and a deep engagement. More than 400 participants had the opportunity to work together and prepare a true action plan, with the aim of translating the values into daily business activities and identifying the time, resources and people needed to implement the proposed initiatives. To date, more than 20 projects and initiatives have been launched with success. The Values in Actions Labs show that everybody in our Group is ready to commit in setting the bases of a shared culture. It is up to each of us to make the difference.
It has the task of expressing its opinion and make non-binding proposals to the Board on (inter alia) remuneration policies and the determination of the remuneration payable to the Chairman of the Board, Managing Directors, General Manager and the members of the Group Management Committee.
Subjects held - either directly or indirectly through third parties, trustees and subsidiaries - more than 2% of the share capital
He has the power of legal representation of the Company and does not hold an operational role, as he is not assigned further powers in addition to those set forth in the Articles of Association.
Our governance and compensation policy Governance 28 | Generali Group - Annual Integrated Report 2014
It performs consultative, recommendatory and preparatory activities for the Board on subjects relating to its size and composition and the corporate governance rules of the Company and the Group.
Collective body that reports to the Board of Directors and to which tasks and powers relating to the drafting, development and promotion of costant updates to the Organisation and Management Model are attributed.
Investment Committee 1,556,873,283 registered shares, all of which are ordinary shares, each with a nominal value of € 1.00 * As a result of the sale from Fondo Strategico Italiano of 29,777,535 Generali ordinary shares in July 2014 and 8,998,306 Generali ordinary shares in January 2015, the total percentage of Generali shares held by Cassa Depositi e Prestiti through Fondo Strategico Italiano decreased to 1.991% at 23 January 2015.
Carolyn Dittmeier (Chairwoman) Antonia Di Bella (permanent Auditor) Lorenzo Pozza (permanent Auditor)
He has the power of steering and operational management of the Company and the Group, in Italy and abroad, with the powers of ordinary administration, in line with the general planning and strategies determined by the Board of Directors, within the amount limits resolved, without prejudice to the powers assigned by law or the Articles of Association exclusively to other Company bodies or otherwise delegated by the Board of Directors.
His mission is to monitor the �nancial 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 �nancial reports.
His mission is to maximize the �nancial return from investments, given the constraint represented by the insurance liabilities pro�le 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 our asset management companies.
Focus on the Board of directors 30 | Generali Group - Annual Integrated Report 2014
Selection of Directors based on their professional skills among candidates who have at least three years’ experience in qualifying job activities and in compliance with age limits set in the Article of Association (Director: 77; Chairman: 70 and Managing Director: 65)
His mission is to strengthen our leadership on the Italian market, building more ef�cient operative platforms, though integration programs, business development actions and innovation initiatives.
His mission is to combine the strength of three leading strategic businesses (Generali Employee Bene�ts, Global Corporate & Commercial and Europ Assistance) 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.
He is also accountable as Manager in charge of the preparation of the Group's �nancial reports, in regards both statutory and consolidated �nancial statements.
His mission is to guarantee a world class integrated risk management system through the de�nition of the risk strategy including risk appetite, limits and risk mitigation, and through the identi�cation, monitoring and reporting of risks and the management of the risk model.
Board of Auditors 64% indipendent Directors as de�nes by the Self-Regulatory
Code 1 executive Director according to the terms of the Self-Regulatory
Self-assessment process conducted with the support of a leading �rm of consultants on the size, composition and functioning of the Board of Directors and its Committees with regard to its activities in 2014
— structured incentive systems linked to the achievement of sustainable Group results; — Targets setting on an annual and multi-year basis to maintain a sustainable level of performance in terms of results and risks taken.
We aim to attract, motivate and retain our people who – for their technical and managerial competencies and their different profiles in terms of origin, gender and experiences - represent a competitive driver for the Group. We believe that an effective compensation policy can positively reinforce employee engagement and alignment with organizational goals consistent with our Group vision, mission and values.
The Group’s intention is to align the executive compensation policy in competitive terms compared to our peers in the European financial market, with individual positioning set according to the performance and potential assessment and people strategy.
Our incentive systems are structured so that roles are remunerated according to the achievement of annual and multi-year results in order to maintain a sustainable level of performance over time. Targets are both qualitative and quantitative and allow a control over a variety of aspects of business performance, such as, in a sustainable perspective and aligned with our values, those related to the stakeholder engagement, specifically customer engagement, people management and community involvement.
− the Group Long-Term Incentive (LTI) is the multiyear programme for Group executives and for some selected key resources, settled in Generali shares under the General Meeting approval: • in line with market practice and shareholder expectation, payment is set within a 6-year timeframe subject to performance conditions aligned with the strategic targets of the Group; • in line with regulatory requirements, LTI plan has malus and claw back clauses in the terms of our risk management policies and a no-sell 2 years period of shares.
For in-depth information, please see www.generali.com/Governance/ remuneration-report 34 | Generali Group - Annual Integrated Report 2014
Based on these strengths, Generali developed a strategy to improve profitability and maximize the value creation for its shareholders, set on three key criteria: discipline, simplicity and focus on the core business, i.e. the insurance business.
The Group strategy is based on the following key strengths: Fundamentals of the strategy dIstRIButIon oPPoRtunItIes suPeRIoR oPeRAtInG model
BAlAnce sheet stRenGth lIFe PeRFoRmAnce P&c PeRFoRmAnce customeR oPPoRtunItIes 36 | Generali Group - Annual Integrated Report 2014
On one hand we are strengthening our presence in the main European markets (Italy, Germany and France) and on the other we are consistently pursuing our expansion strategy in emerging markets, namely Asia and Central and Eastern European countries.
Our strategy is to be client centric. We understand the importance of focusing on loyalty maximization and long-term value creation. We will maximize the value of our current customer base, by improving retention and increasing cross- and up-selling. As the availability of information is crucial in this process, we will invest in acquiring a broader knowledge of our clients, in order to better assess their specific needs and accordingly tailor appropriate solutions. Particular focus has been dedicated in targeting the affluent segment, given its relevant size and growth pattern in both mature and emerging markets. A key success factor will be the creation of distinctive integrated solutions for each stage of the customer lifecycle, via the proper architecture of the operating model.
Our goal is to increase our capital position by increasing the quality of operating net income and an increasing attention to cash flows.
Through General Employee Bene�ts, the Group operates in more than 100 countries
Spain, Switzerland and we are present also in the potential high-growth markets, such as Central-Eastern Europe and China.
The development of products with a unit-linked component, enabling customers to access the benefi ts offered by the fi nancial markets, is one of the key elements offered in the Life business. In Italy, Valore Futuro and BG Stile Libero have experienced considerable success among our clients.
We distribute our products and offer our services [c] through a multi-channel strategy [d], enabling our clients to contact us in various ways. We aim to become an excellent provider of insurance solutions, available through a variety of channels and accessible in different ways thanks to new technologies [e]: not only through our global agents and financial promoters, but also through brokers [F], bancassurance and direct channels. These channels allow clients to be more independent, since they can easily obtain information on alternative products, compare alternative options, purchase the preferred product and get a good post-sale service.
GC&C Global Construction caters extensive and homogeneous products and services built around brokers’ and clients’ needs with a 360° innovative approach that includes P&C, Employee Benefits and assistance solutions. Thanks to the experience in international risk portfolio in several sectors, our offer was enhanced to better suit the needs of clients belonging to specific industries. Generali has over 50 years of leading presence in the construction industry being the insurer of some of the biggest and most complex infrastructure projects worldwide.
Global construction c 40 | Generali Group - Annual Integrated Report 2014
We managed in an integrated way the relationship with the global brokers - on a worldwide basis and across all business lines and segments - through Generali Global Corporate & Commercial (GC&C). This global management guarantees a focused business planning and execution approach. Together with the brokers, our commercial partners, we identify specific activities, lines of business and target clients’ segments and industries.
After the flood that hit the city of Genoa (Italy), we prepared a plan of benefits providing immediate help for the benefit of our customers. We defined measures and incentives for our clients, residents in the town of Genoa, who had suffered damage caused by flooding, such as suspension, deferring and rescheduling of premiums payments. A task force was also set up for the coordination of the activities of our experts and vehicle repairers, to promptly proceed in the assessment and payment of the damages to our policyholders. We handled more than 600 claims for a total value of over € 16 million.
Premiums collected are properly managed in order to ensure the payment of claims [G] to our policyholders.
With regards to investments, we have showed great awareness of sustainable development topics since 2006.
— the analysis of the main criteria identified and assignment of a rating to the company that enable to identify socially responsible investments; — the selection of socially responsible investments also applying a financial filter.
After Italy and Germany, France represents the third market of the Generali Group, with the 16% of the Group total premiums. Generali France represents a major player in the French market, with a strong position and a multi-channel distribution network. Its sales force is composed of tied agents, salaried networks, brokers, indipendent financial advisors and partnership agreements (Generali France is a key player through P&C partnerships). It is leader in Internet Savings, main provider for indipendent financial advisors and Private Banks, and leader in Pensions for Professionals. Since 2014, Generali France introduced the We, demain program, a strategic long-term project aimed at reshaping its business model, to achieve a sustainable growth in profitability.
In the Central-Eastern European countries Generali operates through Generali CEE Holding B.V., previously named Generali PFF Holding (GPH), the minorities of which were totally acquired from the PPF Group in January 2015. The Holding, with operating headquarters based in Prague, provides professional and operational know-how to insurance companies in 10 countries: Bulgary, Croatia, the Czech Republic, Hungary, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia.
With regards to the Czech Republic, the main financial market of the area, the yield of the Czech 10y bond decreased from 2.52% to 0.74% during 2014, similar to the overall trend recorded in the Euro Area.
With reference to the other European countries which are not aforementioned, highlighted below are the other markets in which Generali is present: Austria Generali is the third largest insurance operator in terms of life and P&C premiums written, with a market share of 13.7% for life insurance and 16.7% for P&C. The Group’s total market share, according to recent estimates, evidences growth over the previous year. 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. Its distributing strategy is multi-channel and can rely on agents, brokers, financial advisors and bank desks of BAWAG P.S.K. and 3Banken.
lAtAm4 4 LATAM embodies Argentina, Brazil, Colombia, Ecuador, Guatemala and Panama. 5 ASIA embodies China, Indonesia, India, Hong Kong, Vietnam, Thailand, Philippines and Japan.
The strategy of the Region has been outlined according to the Group ambition to increase its focus on emerging markets. The Hong Kong Regional Office has been reinforced in order to provide further support and coordination to the whole Region. An increase in dimension will involve all countries, particularly China and Indonesia, by expanding the existing distribution channels and the variety of products offered. Growth is pursued also through the identification of M&A opportunities and distribution deals, in order to expand in new lines and segments.
Technical Exellence (TechEx) aims to strengthen the core insurance business and achieve technical excellence in order to enhance profitability and deliver sustainable growth. TechEx leverages skills and best practices within the Group, and is one of the most ambitious programs the Group has ever launched. It is a true journey and brings together people from all of Generali’s core businesses: Life, P&C, Claims management, and Customer&Distribution.
TechEx is working in this respect on different levels. It is completing the sharing of best-in-class solutions and practices with learning by doing experiences that include temporary assignments to competence centers and global projects, and with proper internal training for the technical community. One of the main contributions coming from a global company is the opportunity to create networks of experts from different countries to exchange experience and to develop innovations and new ambitions. Dedicated communities have been created in Life, P&C, Claims management and Customer&Distribution, where professionals meet regularly in live sessions, WebEx seminars and forums.
— Product portfolio and tariff simplification claims management — Bodily injury — Material damage claims & vendor management
For Generali, becoming a true client-centric company means focusing on insurance solutions, sales channels and operations, while keeping the customer at the centre of everything we do. In this respect evaluating customer experience is increasingly important and requires a dedicated approach. The Group is developing the Generali Net Promoter Score, which has become an important tool for evaluating the service we provide to the insured. The Net Promoter Score is based on customer opinions and on the principle that if customers recommend Generali to, for example, their family, colleagues or friends, it means that they are satisfied with the way the Group has worked for them.
Customer behaviour is changing: customers not only seek verbal advice and information about insurance products but also seek information in digital format. Based on these developments, we have launched the Group strategic initiative named Enable true multichannel distribution.
Our ambition in terms of multi-channel and multi-access is to satisfy these new tendencies in both the customer and the market through four main initiatives: — Lead management and Customer Relationship Management (CRM); — distribution platforms; — customer portals; — products and pricing.
The Captive network remains one of the most important distribution channels that the Group intends to strengthen by providing the right set of tools and services, such as distribution platforms. To provide a better service to clients via the captive network, the distribution platforms must be very advanced and well integrated (e.g. with CRM). As a Group we aspire to our Target Vision which is made up of all the elements required for meeting future customer expectations with regards to multi-access/ multichannel approaches.
A selection of case studies that demonstrate our capacity to deliver our multichannel Target Vision are: — Agenda Commercial from Spain, an effective tool for the sales force that is strongly related to the management of salesman performance; — myGenerali from Germany, a fully integrated front-end and back-end solution; — EasyTab from Generali Italy, an end-to-end tablet solution for the life insurance network.
Within Technical Excellence, the following actions are in place with the goal of reshaping our savings portfolio into a simplified and optimized set of insurance solutions in line with market constraints and regulatory framework (e.g. IMD2).
— in-force management; — savings guarantee and unit linked management; — development of protection business; — product and tariff simplification.
A Group program was launched to strengthen and extend telematics initiatives in selected geographical areas, leveraging on the creation of a Group Telematics Competence Center and on the competences acquired in Italy (where we are in a leading position with over 650,000 vehicles insured with telematic based products).
In the event of a claim, clients expect a simple, fast and efficient service while at the same time claims management needs to effectively deal with fraud attempts, to have an accurate estimate of the damage and, for motor claims, to manage a high quality network of mechanics and body shops. We rely on a large network of claim experts, including claim and fraud specialists and loss adjusters. TechEx is working with this network in order to make our approach more sophisticated in areas like loss control, fraud management, material damage evaluation, partner management, bodily injury, file review and recovery. The new approach to fraud management produces substantial savings in the cost of claims, while enhancing the identification of suspicious cases, new fraud patterns and organized fraud and reducing false positives with the improvement in data quality for suspicious cases. The Fraud Analytics Competence Center has been set up with the aim of enhancing the capabilities and the level of sophistication in fraud detection by combining statistical and claims fraud knowledge.
Reinsurance has experienced a further decrease in costs, driven not only by the first implementation of the Facultative Reinsurance Guidelines but also by the optimization of Group treaty protection which benefited from less stringent market conditions. In April 2014 Lion I Re was issued. It is the first ever catbond finalized at providing alternative reinsurance protection against the European windstorm risk.
Environmental changes have highlighted the Group exposure not only to catastrophic losses but also to the frequency of small to medium size natural events. To mitigate this emerging risk we purchased an aggregate catastrophe protection cover which integrates the per event cover and limits the deterioration of the combined ratio at Group level.
In order to carry out our daily work in the best manner, we believe it is important to communicate and share the same language, both internally and with the outside world. We have therefore defined and launched our Vision, Mission and Values. Such cultural framework contributes to differentiating us from others and presenting us in a simple and clear manner with regards to our commitments, objectives and principles of organizational behavior and to the relationships with our colleagues and clients.
organization and change management Our current organization reflects the Generali commitment to become a multinational insurance group. We therefore consolidate our organizational model that is based on: — a renewed governance, where the Group Head Office functions provide global strategic direction, maximize synergies and seize opportunities to support the business: they therefore aim at being centers of expertise and fostering best practices to create more value for our clients, shareholders and people; — an organizational structure of Business Units, based on 7 geographical areas, i.e. the three main countries (Italy, France and Germany) and the four Regions (CEE , EMEA, Latin America and Asia) that drive the local strategy and establish a targeted approach to products offered, distribution channels activation and provision of services; — a Global Business Lines division that serves global clients through a network of brokers and develops customized products; — coordination mechanisms guaranteeing integration and coordination between Business Units and Group functions and based, in particular, on functional Committees and Guidelines and on two types of reporting lines between Business Units and Head Office functions having different coordination levels.
Efficiency enhancement is an important target for us and it is possible to achieve also through operation processes – conducted by highly motivated and skilled people – optimized towards excellence.
Within the OpEx and under the supervision of the Group Operating Committee, composed of local COOs and Global function leaders, Generali is in the process of centralizing It infrastructure services into a single service company, launched on 1 July 2014. Furthermore we are also: — globalizing the Procurement function, ensuring the integration of local contracts into one organization and category of global management; we have launched the Global software delivery Program to optimize software development activities globally; — engaging in centralization and optimization of space usage and maintenance, with very positive results. The first positive result was in France: in a single urban area in Paris, 26 building were concentrated into one complex.
From an organizational point of view, Generali has established the Group operating committee supervising the Generali Operating Platform Strategy which is now fully functional. A mapping, monitoring and dialogue process regarding over 174 projects has been created and is fully operational with the delivery of significant results in local optimization programs.
OpEx operates in collaboration and in support of the technical excellence project and its related initiatives, such as behaviour-linked pricing for P&C and fraud detection through statistical analysis.
I am convinced that the opportunity of sharing the high-quality know-how of our leaders will be a speeding-up factor in our change processes and in our business results. monica Possa, Group hR & organization director terms of gender, age and culture are the specific focus groups and initiatives with the objectives of increasing the number of people which have an international experience, and the presence of women in leadership positions, reducing the average age of the working population and increasing diversity in general.
We invest in international mobility projects which allow all employees with specific professional requirements to bring their skills abroad and acquire new skills from international working experiences. Asia, Brazil, Central-Eastern Europe, Germany, France, Spain and the network of Generali Employee Benefits are particularly active in promoting international mobility, which has involved 305 colleagues since it was launched in 2013.
The Solvency I ratio amounts to 156% (+15 p.p.) with a €10.4 billion surplus due to the capital strengthening activities and in spite of the acquisition of the remaining 24% share of Generali PPF Holding. If the disposal of BSI is also taken into consideration, the pro-forma ratio reaches 164%, surpassing the forecasted target for 2015.
With reference to the geographical portfolio footprint optimization strategy, the Group made significant investments: in May, the acquisition of the minorities of Generali deutschland holding AG (Germany) took place with the contextual transfer to Assicurazioni Generali of all the shares previously owned by the minority shareholders. In July, the Group reached an agreement with Allianz to become sole owner of citylife s.p.A., through the acquisition of the remaining 33% of the company.
In January 2015, the acquisition of 100% of GPh, the holding company operating in Central-European countries, with the exercise by PPF of the sale option on the remaining 24% of the shares was concluded.
The Operating return on equity (ROE) is 13.2%, increasing with respect to 11.7% at the end of 2013, mainly due to the positive trend in the insurance operating result.
The results of the year show that the Group operating performance and capital position still improve despite an adverse market scenario and thanks to the strategy implemented, from which we expect a further future contribution to the journey in the value creation for all stakeholders. Alberto minali, chief Financial officer
— Net Free Surplus 2 bln — Net Free Cash before Dividends 1.2 bln
The Net Free Surplus is stable with respect to the previous year and in line with 2015 target.
This confirms that the Group profitability and free resources generation relies on solid fundamentals. Also the Net Free Cash before Dividends is line with 2013 results as well as 2015 target, also considering the reported remittance ratio around 73%.
Group highlights 6 For further information on the review of the disclosure on segments, reference should be made to the section Appendix to Management Report.
— Group result of the period amounted to € 1,670 million, affected by the lower result from discontinued operations compared to the previous year.
The growth in life segment written premiums, amounting to € 49.813 million, is driven by the excellent performance of Italy (+ 30.7%), France (+ 10.0%) resilient thanks to the actions taken on the portfolio in the prior year, the development of the EMEA area (+ 21.1% ) showing strong growth in single premium products. All lines of business are improving, particularly the Unit Linked, whose increase of 43% on equivalent terms is in line with the strategy to optimize the performance of the life insurance business, favoring products with low capital absorption.
net cash inflows further improved compared to the first nine months, increasing to € 12,747 million (+49.7% compared to 31 December 2013).
Gross written premiums in the property&casualty segment amounted to € 20,617 million, stable with respect to 31 December 2013. The premiums of the Motor lines of business increase slightly (+0.8% on equivalent terms); the decrease observed in the markets most affected by the current macro-economic environment - in particular Italy, France, Czech Republic and Spain - are more than offset by the development observed in Germany and in emerging markets.
The Non-motor line of business is at the same level of the prior year; the positive trend of the Commercial line (+0.6%), benefited from the strong performance in Germany and in the International Operations area, offset by the decline in Accident/Health and Personal line.
the operating result of the Group amounted to € 4,508 million, showing a strong increase (+ 10.8%) with respect to 31 December 2013 ( € 4,071 million). This result, which brings the performance levels of the Group similar to those recorded at the beginning of the economic and fi nancial crisis of 2008, was achieved despite the macroeconomic and regulatory diffi culties and in an environment of low interest rates.
The increase in the operating result of the Group was driven both by the life segment, which benefi ted from the increased performance of the investment result and of the costs reduction, and by the non-life segment, due to the improvement in the underwriting result generated by the general reduction of claims and lower impact of natural catastrophes. Finally, the operating result of the holding and other business segments decreased due to higher costs for projects regarding the strengthening of Head Offi ce structures, and due to personnel and IT expenses related to main Group projects, especially for the implementation of Solvency 2 requirements.
In line with the strategic objective of increasing the operating profi tability of the group, the operating return on equity was 13.2%, increasing from 11.7% at 31 December 2013, enabling the target achievement.
— net non-operating income from fi nancial instruments at fair value through profi t or loss amounted to € -263 million (€ -204 million at 31 December 2013), due to the lower performances of certain fi nancial markets compared to the same period of the last year; — other non-operating income and expenses which include net non-recurring income and expenses and the amortization of the value of acquired portfolios, amounted to € -441 million (€ -795 million at 31 December 2013), of which € -139 related to the amortization of the value of acquired portfolios (€ -155 al 31 31/12/2014 31/12/2013 fourth quarter. 2014 fourth quarter. 2013
December 2013). The improvement is mainly attributable to the negative impact of some one-off events that occurred during 2013; — non-operating holding expenses, essentially composed of interest expenses on financial liabilities
The result for the period attributable to the Group amounted to € 1,670 million, decreasing compared to € 1,915 million at 31December 2013; the result was affected by the lower contribution of the discontinued operations compared to the previous year.
The tax rate increased to 35% (32% at 31 December 2013). This trend, with respect to the previous year, is mainly attributable to lower non-taxable income on equities and the substitute tax on the revaluation of Banca d’Italia, paid in 2014, as well as to the increased burden on the substitute tax on Controlled Foreign Companies.
7 For further information on the accounting treatment, reference should be made to the section on Discontinued operations and Assets held for sale in the notes.
Group result of the period and holding expenses that are considered as non- operating, increased to € -819 million (€ -802 million at 31 December 2013) as a result of non-recurring expenses related to Group’s reorganization projects incurred by the Parent Company in order to support the implementation of strategic initiatives.
Net operating income from other financial instruments 13,082 12,404 2,954 3,042
Other expenses from other financial instruments and land and buildings (investment properties)
Result of the period attributable to the Group 1,670 1,915 81 324
Result of the period attributable to minority interests 182 227 21 23
(*) At 31 December 2014 the amount is net of operating taxes for € 64 million and of non-recurring taxes shared with the policyholders in Germany for € 27 million (at 31 December 2013 respectively for € 64 million and € 14 million).
(**) The amount is gross of interest expense on liabilities linked to financing activities. (***) The amount is net of the share attributable to the policyholders in Germany and Austria.
Shareholders' equity attributable to the Group at the end of the previous period 19,778 19,013
Net unrealized gains and losses on defined benefit plans -537 88
Shareholders' equity attributable to the Group at the end of the period 23,204 19,778 31/12/2014 31/12/2013
Shareholders’ equity attributable to minority interests 66 | Generali Group - Annual Integrated Report 2014
The index on a pro forma basis - also taking account of the sale of BSI - was 164%, exceeding the target set for 2015.
At 31 December 2014 total investments amounted to € 432.957 million, increasing by 12,99% over the previous year. Group investments amounted to € 365.250 million (+12,70%) and policy linked investments totaled € 67.707 million (+ 14,53%). With reference to the weight of the main investment categories, there is an increase in exposure to fixed income securities, which amounted to 87,3% (84,8% at 31 December 2013) ) while that to equities, while increasing in absolute terms, is reduced at 4,8% (5,4% at 31 December 2013). A decrease in the weight of real estate investments, which amounted to 4,1% ( 4,6% at 31 December 2013) while other investments, mainly including receivables from banks or banking customers, investments and derivatives, remain stable at 1,0% (1,1% at 31 December 2013). Finally, the weight of liquidity decreased from 4,0% at 31 December 2013 at 2,8% in line with its progressive reinvestment.
With reference to the composition of the bond portfolio, government securities, which accounted 56.8% (55.7% at 31 December 2013) show an increase amounting to € 165.014 million (€ 138.415 million at 31 December 2013). The change in the period is mainly attributable to the increase in the value of investments recorded in 2014. The exposure to individual bonds is mainly allocated to the respective countries of operation. The corporate component increased in absolute terms to € 125,544 million (€ 110,117 million at 31 December 2013) equal to 43.2% of the bond portfolio (44.3% al 31 December 2013). The change is attributable to net purchases made during in the year.
A breakdown by credit rating of the bond portfolio at December 31, 2014 split between corporate and government bonds follows: equity securities: equity portfolio Equity securities increased slightly to € 17.610 million (€ 17.467 million at December 2013).
The current return recorded a modest decline 3.5% (3.8% at 31 December 2013) while in absolute terms the current income increased to € 12,385 million (€ 12,081 million at 31 December 2013). The decline in the ratio is attributable to the significant increase in the average investments taking into account both, the reinvestment of cash at lower interest rates and the reduction in the credit spread of sovereign bonds of Eurozone countries. The contribution to the result for the period from realized gains and losses through profit or loss (harvesting rate) remains unchanged at 0.7%.
8 For details on the calculation of this indicator, see the Methodological notes attached to this report.
In comparison to the stock at 31 December 2013, there was a significant reduction of liabilities linked to financial activities. Consistent with the strategy of the Group, the net decrease is the result of an increase in subordinated debt following the refinancing of senior obligation from € 500 million maturing in May 2015 through a subordinated issuance carried out in May 2014 and a reduction of senior debt attributable to the repayment of maturities in 2014 partially using resources for € 1,000 million.
The weighted average cost of financial debt at 31 December 2014 amounted to 5.62%, decreasing from 5.93% at December 31, 2013 and 5.71% at 30 September 2014. The decrease in the cost during the year was due to the activities of refinancing and Liability Management conducted in 2014 at rates below maturing issues. The weighted average cost reflects the annualized cost of financial debt considering the outstanding debt at the reporting date and the related activities currency and interest rate hedging.
Issuances Redemptions Issuances net of redemptions 72 | Generali Group - Annual Integrated Report 2014
In 2014 the following transactions on subordinated liabilities were performed: — On 7 April 2014 Assicurazioni Generali made an early repayment of a bank loan of € 500 million; — On 2 May 2014 Assicurazioni Generali issued a subordinated loan of € 1,000 million; — On 21 November 2014 Generali Finance BV set up a Liability Management transaction in which three subordinated notes were partially bought back of the proceeds of a new subordinated issuance for a nominal amount of € 1,500 million.
This category includes also other bonds issued by the subsidiary Ceska Pojistovna for a nominal amount of CZK 500 million, corresponding to an amortized cost of approximately € 13 million. During 2014 the following operations on senior debt securities were performed: — On 14 January 2014 Assicurazioni Generali SpA issued a bond for € 1,250 million; — On 12 May 2014 Generali Finance BV repaid a bond issued for € 1,500 million; — On 11 November 2014 Assicurazioni Generali SpA repaid a bond of € 750 million.
The average duration at 31 December 2014 was 6.87 years compared to 5.27 years at December 31, 2013. The lengthening of the average duration is a direct result of the re-fi nancing operations and the optimization of capital described above.
31-Dec-13 31-Jan-14 28-Feb-14 31-Mar-14 30-Apr-14 31-May-14 30-Jun-14 31-Jul-14 31-Aug-14 30-Sep-14 31-Oct-14 30-Nov-14 31-Dec-14
Total shareholders' return (%)* 2.24 26.16 * (total dividend + var. share price during the reference period) / share price at the beginning of the year.
— Excellent development of premiums written (+ 11.2% on equivalent terms), attributable to the development of linked business; net cah infl ows showed a strong recovery.
Gross written premiums in France increased from € 7,671 million at 31 December 2013 to 8,438 € million. This growth (10.0%) was attributable to prevailing market conditions, which benefited from the fall in interest rates. With reference to the lines of business, there is a significant growth of savings policies (+12.6%), confirming the re-launch of this business. Even the collection of linked products showed strong growth (+17.3%) benefiting from the demand of customers looking for attractive returns and reflecting the actions taken by the Group to improve the portfolio mix towards products with lower capital absorption.
The increase in APe (+9.0% on equivalent terms) is mainly due to the excellent development of single premiums (+17.8% on equivalent terms) which largely offset the slight decrease in annual premiums (-3.4 %). The profitability (margin on APE) decreased from 12.7% in 2013 to 10.9% in 2014, mainly as a result of a review of the conservative operating assumptions used to assess the business risk. The value of new business amounted to € 89 million (-6.8% on equivalent terms).
Net cash inflows became positive as a result of the selective underwriting policy and pro-active management of the existing portfolio.
Gross written premiums in Germany decreased (-8.8%), from € 14,989 million at 31 December 2013 to € 13,675 million. This trend is mainly due to the planned reduction of single premiums (-25.9% with respect to the previous year). The current environment of low interest rates, as well as the uncertainties, still existing, concerning the development of the capital market, explain the current declining trend in single premiums, making Germany the second contributor within the Group.
new business in terms of APe presents a sharp decline (-12.6% on equivalent terms) due to the drop in both the life segment (-12.2% on equivalent terms) the protection lines (-23.5% in terms basis). Single premiums show a significant reduction (27.7% on equivalent terms), while annual premiums showed a slight decline (-1.6%).
A decrease of 32% in net cash inflows resulting from the measures taken to reduce the new production of single business premiums. The capital outflows are stable.
The reduction in new business in terms of APe (-13.2% on a comparable basis) is mainly due to the observed decrease in the production of unit linked policies (-21.8% on equivalent terms).
The combined effect of lower sales volumes and declining profitability caused the value of new business to contract by 18.6% on equivalent terms, amounting to € 49 million. A decline in net cash inflows with respect to 31 December 2013 (-19.2%) was due to higher cash outflows from pension funds and from rising capital outflows.
An increasing trend was observed for in gross written premiums from the EMEA regional structure (+ 21.1% on equivalent terms), which rose from € 5,703 million at 31 December 2013 to € 6,919 million. The trend (21.1%) is determined by the positive performance of the linked and savings lines of business and to a lesser extent, also by the protection lines.
Gross written premiums in Austria amounted to € 1,294 million (€ 1,156 million at 31 December 2013); the growth of 11.9% is due to the positive contribution of all the lines. Savings policies increased (+ 17.3%), mainly due to the trend of single premiums benefiting from a new legal situation in the private sector (tax reduction on the minimum contract term from 15 to 10 years for people over the age of 50), as well as from various large contracts with major business customers. Protection policies also increased (+9.7%) and unit-linked policies (+0.9%).
Increasing gross written premiums in switzerland (+4.7% on equivalent terms); regular premiums decreased slightly by 1.8%, while single premiums more than doubled. Regarding the business lines, the increase can be mainly attributed to savings lines (+ 48.1%).
A positive contribution was experienced (€ 2,085 million) in Ireland, which showed a strong positive trend on linked policies, the cash inflows of which almost doubled compared to last year.
new business in terms of APe increased (+9.7% on equivalent terms), following the increase observed in single premiums (+46.9% on equivalent terms) only partly offset by a decrease in annual premiums (-12.2% on equivalent terms). In terms of geographical area, the business showed positive progress in Ireland (+63.1% on equivalent terms), Austria (+8.1% on equivalent terms ) and Belgium (+8.3% on equivalent terms), while declining in Spain (-8.4% on equivalent terms), and Switzerland (-7.7% on equivalent terms).
net cash inflows in EMEA grew significantly due to the growth in premiums over a slight decrease in maturing contracts, observed mainly in Ireland. In Austria, net inflows have increased significantly (+68%) due to lower surrenders and the growth of single premium savings policies. The negative amount of net inflows in Spain is due to the type of life portfolio, mainly oriented to annuity products and short-term investments involving regular cash flows that are not always covered by an appropriate volume of revenue, since the trend of premiums written is more volatile.
Gross written premiums in Latin America recorded a growth (26.6% on equivalent terms) amounting to € 253.9 milllion (€ 260 million at 31 December 2013).
China, which alone has more than 70% of the total life production of the region, is growing due to a recently launched savings product sold through the bancassurance channel. Indonesia, after difficulties experience in the last few months due to political instability, also shows positive growth particularly in unit-linked policies, both in regular and single premiums. Positive development in the Philippines, both in the linked and savings products, mainly due to the performance of the bancassurance channel, which benefits from a number of initiatives to support and strengthen the sales force.
With reference to Asia and latin America, the new production in terms of APe is growing (+ 16.0% on equivalent terms) with increases observed in Asia (+ 15.5% on equivalent terms) and in Latin America (+ 21.4% on equivalent terms).
Growth in gross written premiums of the International Operations increased from € 537 million at 31 December 2013 to € 598 million (+11.4% on equivalent terms), this development is attributable to the favorable business of Generali Employee Benefits and the activity of the Holding.
The operating result of the life segment amounted to € 2,978 million, an increase of 15.2% from € 2,585 million at the end 2013. The increase is primarily due to the favorable fi nancial margin and the simultaneous containment of costs.
This improvement is also confi rmed by comparing the fourth quarter of 2014 to the corresponding quarter of the previous year (+ 26.6% on a comparable basis).
Finally, the operating profi tability on investments10 of the life segment amounted to 0.81% (0.78% at December 31, 2013).
Fee and commission from fi nancial service activities 224 200 61 55
Net insurance claims adjusted for fi nancial interests and bonuses credited to policyholders 11 For further information of the calculation methodology for this indicator, please refer to the Methodological note on alternative performance indicators in the Annex to the Management Report.
In detail: — current income from investments – which includes the current income from investments at fair value through profit or loss - amounted to € 11,024 million (€ 10,629 million at 31 December 2013), while the related current return, calculated based on the book value of investments, decreased to 3.6%. In detail, the current income from fixed income securities increased from € 9,251 million at 31 December 2013 to € 9,588 million due to the actions taken by the Group to support current returns and the reduction of cash held in the life segment portfolios. In addition, the current income of the equity segment also recorded an increase, from € 388 million at 31 December 2013 to € 449 million. Finally, the current income from investment properties amounted to € 672 million, essentially stable.
Total operating expenses improved from € -4,846 million at 31 December 2013 to € -4,795 million.
Administrative expenses amounted to € -940 million, increasing by 3.0% due to the trend observed in particular in Italy and France, in contrast with other areas in which the Group operates.
The ratio of total administration costs related to insurance business to the average insurance provision remained essentially stable at 0.28%.
The non-operating result of the life segment improved from € -487 million at 31 December 2013 to € -381 million due to higher non-operating net realized gains.
Net insurance benefits and claims -53,893 -49,526 -14,925 -14,231 of which change in the provisions for unit and indexlinked policies
Net operating income from financial instruments at fair value through profit or loss of which net income from financial assets and liabilities related to unit and index-linked policies
The exposure to fixed income instruments increased to 89.2% (86.6% at 31 December 2013) while, despite a slight increase in absolute terms, the weight of equity instruments decreased to 4.1% (4.7% at 31 December 2013). Real estate investments remained stable at 10,638 million, while the weight decreased from 3.4% to 3.1%. The weight of cash and cash equivalents decreased further to 2.1% (3.7% at 31 December 2013).
With respect to the bond investment portfolio, the exposure to government bonds increased at € 150,538 million (€ 122,274 million at 31 December 2013), the impact of this asset class increased at 57.6% (55.6% at 31 December 2013). The trend is primarily due to the increase in value of investments during the year.
The corporate component also increased to € 110,717 million (€ 97,718 million at 31 December 2013) with a slight decrease on incidence at 42.4% (44.4% at 31 December 2013). The growth was attributable to net acquisitions made in the year with the aim of diversifying the overall bond portfolio. The growth was attributable to the increase in the value of investments and, to a lesser extent, to the net purchases made during the year.
Finally, the average duration of the bond portfolio was 8.2 years (7.3 years at 31 December 2013), consistently with ALM Group strategy.
The contribution to the result of the period from harvesting operations remained stable at 0.6%, benefitting from the improvement in all components.
Finally, deferred policyholders liabilities increased to € 25,300 million (€ 3,999 million at 31 December 2013), due to the increases in the fair value of investments, particularly in the bond component.
— Improving Group Net Cor (-1.9 p.p.), thanks to the loss ratio trend.
The Non motor segment line result was stable; the positive trend of Commercial/Industrial line (+1.7% at equivalent terms ), although differentiated among the countries where the Group operates, is completely offset by the negative trend of Personal (-0.9%) and Accident/Health (-1.2%).
A geographical focus follows regarding the main indicators mentioned above: Gross written premium in Italy amounted to 6,132 million, in slight decrease with respect to 31 December 2013 (-2.9%). This performance is evident both in the Non-Motor line (-1.9%), and in the Motor line (-4.9%) mainly infl uenced by a signifi cant contraction in tariffs.
The Non-Motor Line evidences a negative trend in Accident /Health line (-6,7%), partially offset by the positive trend of the Personal line (+2.1%). The Commercial/Industrial line (-0.1%) witnessed a stable trend despite the stagnant economic situation of Italy.
Excellent performance of the German gross written premiums which amount to 3,547 million (€ 3,436 million at 31 December 2013), increasing by 3.3 % due to both the Motor (+4.3%) and Non Motor (+2.6%) lines.
Gross premiums written for the EMEA regional structure showed a slight increase compared to 31 December 2013 (0.6 % on equivalent terms) to 4,246 million (€ 4,218 million at 31 December 2013).
Austria experienced a positive trend, gross written premiums increased from € 1,408 million at 31 December 2013 to € 1,426 million (+1.3%). Both Non Motor (+1.7%), increased thanks to the growth of all business lines which benefi ted from tariff adjustments, and Motor (+2.0%) witnessed an increase.
Gross written premiums in Switzerland decreased (-2.5% on equivalent terms), reaching € 675 million (€ 684 million at 31 December 2013). The negative performance can be attributed to the Motor lines (-4.4% on equivalent terms), mirroring the reduction of renewals and portfolio pruning. The Non-Motor lines highlights a slight reduction (-0.8% on equivalent terms) due to the Accident /Health lines (-1.7% on equivalent terms) which suffers from portfolio pruning and a strict underwriting policy fi nalized at the recovery of profi tability.
A positive contribution of gross written premiums from Latin America (22.9 % on equivalent terms) from € 1,112 million at 31 December 2013 to € 1,057 million. The Motor line (+19.7%) increases, especially in Argentina, although below the infl ation rate. The rationale is to increase competitiveness in a competitive market. The increase of the interest rates throughout the year has convinced various companies to accept a lower technical result, offset by higher fi nancial results. A positive trend also for the Non Motor segment (+33.9%), mainly due to the growth of the Commercial/Industrial lines in Argentina and Brazil.
Gross written premiums amounted to € 103 million, increasing from the prior year (12.6 % on equivalent terms).
The operating result for the property&casualty segment increased to € 1,831 million (€ 1,619 million at 31 December 2013). The signifi cant increase observed (+13.1%) is mainly attributable to the technical result, with a Group Net Cor of 93.8%, improving by 1,9 p.p. compared to the previous year.
The technical result amounted € 1,082 million, registering a strong growth with respect to 2013 (+36.2%); the technical result includes the impact of catastrophic claims of approximately € 238 million. These events relate primarily to the fl oods that had repeatedly hit Italy in January, May, October and November and the storms of June in Central Europe. Similar events had an impact on 31 December 2013 for approximately € 460 million.
The worsening of the Other net technical income is primay attributable to Italy for non recurring positive effects recorded in 2013 related to ceded reinsurance, as well as more reversal of previous years’ premiums.
The current year loss ratio, excluding natural catastrophes was stable. The positive trend of the retail line is absorbed by the considerable amount of claims in the auto-fleets line. Negative contribution from the prior year loss ratio considering the strengthening of the reserves related to the Buildings and General lines, likewise the observed trend of the market. Stable the expense ratio at 27.7% (+0.1 pps).
The combined ratio of Germany amounted to 92.6, strongly decreased with respect to 31 December 2013. Previous year suffered from significant catastrophic events, which weighted for 4.1 pps (1.1 pps at year end 2014). Non catastrophic claims were stable.
Central and Eastern Europe 98 | Generali Group - Annual Integrated Report 2014
The combined ratio of Austria also improved (-0.4 p.p.), reaching 94.2% due to the decrease in the loss ratio (66.9%), despite some reserve strengthening which weighted for 1.2 p.p.
The financial result amounted to € 1,007 million, stable with respect to 31 December 2013 (-0.5%). In particular the current income from investments amounted to € 1,358 million (€ 1,410 million at 31 December 2013); this decrease is mainly attributable to the difficult context of low reinvestment rates. The actions of the Group, aiming at sustaining the result have allowed the achievement of a current return of 3.3%.
Despite the low reinvestment rate context, income derived from investments in fixed income securities registered a stable trend in line with the previous year, amounting to € 863 million at 31 December 2013 to € 861 million in 2014.
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, increased to € -258 million (€ -187 million at December 31, 2013) mainly due to increasing provisions for risks.
The non-operating result of the property&casualty segment worsened to € -184 million (€ -106 million at 31 December 2013).
Moreover also the net income from financial instruments at fair value through profit or loss decreased to € -263 million (€ -207 million at 31 December 2013).
Financial result 100 | Generali Group - Annual Integrated Report 2014
Europe, Middle East and Africa 1,592 1,581 2,554 2,550 4,146 4,130 102 | Generali Group - Annual Integrated Report 2014
Total investments in the property&casualty segment went from € 35,994 million at 31 December 2013 to € 38,559 million (+ 7.1%).
With reference to the exposure to the various asset classes, despite an increase in the absolute values, the weight of the fixed income portfolio remained stable at 67.3% (66.6% at 31 December 2013). A downward trend is registered regarding the exposure to equity instruments equal to 9.3% at 31 December 2013 to 8.7%, and also the exposure to the real estate investments equal to 11.1% (12.9% at 31 December 2013). Finally, the weight of cash and cash equivalents increased from 8.2% at 31 December 2013 to 9.8%.
Lastly the average duration of the bond portfolio is 4,6 years (4,1 years at 31 December 2013), consistently with ALM Group strategy.
The Holding and other activities segment refers to the activities of the companies of the Group in the banking and asset management sectors, the costs incurred for the direction, coordination and financing activities, as well as all the other operations which are considered ancillaries with respect to the core insurance business.
The operating result of the financial segment registered an increase, reaching € 374 million (€ 343 million at 31 December 2013), experiencing a growth by 8.9%. In detail, the result includes the operating result of Banca Generali which amounted to € 221 million, increasing by 11.7 % (€ 198 million at 31 December 2013).
The operating holding expenses amounted to € -418 million (€ -349 million at 31 December 2013) increasing due to the higher costs incurred for the projects of improvement of the Head Office structures, and for professional and IT activities regarding the main projects of the Group, such as the transition to the new Solvency II regime.
The operating result of other activities amounted to € 40 million, decreasing compared to €134 of the prior year. This trend was mainly attributable to the result of the real estate development activities linked with the Citylife project, which starting from the fourth quarter of 2014 was included in the operating result.
Also economy in USA is growing (+ 3.1%; 2.2% in 2014) and those of the emerging countries (+ 5.0%; 4.4% in 2014). Two main risks may arise in this improving scenario for the economies of Europe and the US in 2015: on the one hand, an exacerbation of geopolitical tensions in the Middle East and Russia, on the other hand a slight decline of financial markets, which experience a good dose of optimism.
Regarding financial markets, the robust economic growth of the United States and the expansionary monetary policy of Quantitative Easing in the Euro Area, announced in January 2015 by the European Central Bank, increase growth expectations in mature economies. In addition, the sharp decline in oil prices should support growth globally.
The life insurance segment shows a gradual recovery in household income that should mean greater savings. The low interest rates and the low level of inflation will make the traditional life products attractive compared to other financial instruments, while the positive performance of the equity markets should make the unit-linked products attractive. The banking sector could leverage the distribution of insurance products to try to offset the lower intermediation income. Premiums in the motor line is expected to be recovered in Spain and France; in Italy the growth rates are expected to remain negative, even if in recovery. In Germany, a slowdown is expected compared to the positive performance in the past years. In the property line, the premium collection should improve in line with the economic cycle and Italy should accordingly show more limited growth rates.
The future development of the Group life segment will face a market scenario characterised by various external constraints: IMD2 stricter rules for the distribution of insurance products, the Solvency 2 Directive and in general financial markets characterized by low interest rates. This scenario requires to continue and enhance the focus on the TechEx program initiatives at all levels of Group and Business Units. Some levers of In-force management show further room for improvement in order to increase the value of the in-force portfolio (e.g. retention management, portfolio optimization, cross & up selling), combined with a simplification of the product range. The Group’s commitment towards the technical excellence (the TechEx) needs to be increasingly driven by capability building and performance management: the trend of written premiums will continue to reflect a careful underwriting policy and the focus on the value of the products. Initiatives aiming at enhancing the value of the in-force portfolio through dedicated actions and at the selective development of some lines of business, such as Protection and Unit-Linked products.
New investments in the real estate sector will be selectively addressed in new geographical areas, such as Asia, the UK and Eastern Europe, in order to improve the diversification of the overall portfolio. Also more proactive management of the portfolio will be implemented in order to improve the overall profitability.
The Group takes advantage of the option provided for by Regolamento Emittenti, art. 70, paragraph 8, and art. 71, paragraph 1-bis, to waive the obligation to publish the information documents prescribed in relation to signifi cant operations of merger, split, capital increase by contribution in assets, acquisitions and disposals.
The Group at 31 December 2014 consists of 473 consolidated line by line subsidiaries and valued at equity entities (480 at 31 December 2013). In particular, 426 entities consolidated line by line and 47 valued at equity.
This report was drawn up in euro (the functional currency used by the entity that prepared the consolidated fi nancial statements) and the amounts are shown in millions, rounded to the fi rst digit, unless otherwise stated, the rounded amounts may not add up to the rounded total in all cases.
The Management Report is prepared in accordance not only to the law but also to the content elements and Guiding Principles envisaged by the International <IR> Framework issued by the International Integrated Reporting Council (IIRC) in December 2013.
The connection between the content elements and the sections of the document is represented as follows: 114 | Generali Group - Annual Integrated Report 2014
The strategic focus and future orientation principle is applied along the whole document.
In the future, Generali will continue to further strengthen its actions related to stakeholder engagement; thereby a greater alignment to the materiality determination process as proposed by the IIRC will be implemented.
It should be noted, therefore, that the changes indicated in the management report are on a comparable basis, excluding from the comparison period, discontinued operations with reference to 31.12.2014.
Non operating result -1,805 226 -1,578 116 | Generali Group - Annual Integrated Report 2014
Operating result was drawn up reclassifying items of earnings before taxes of each segment on the basis of the management characteristics of each segment and taking into consideration the recurring holding expenses.
Specifically, operating result represents earnings before taxes, gross of interest expense on liabilities linked to financing activities, specific net income from investments and non-recurring income and expenses.
In the property&casualty segment, all profit and loss accounts are considered as operating items, except the following which are represented in the non-operating result, i.e: — realized gains and losses, unrealized gains and losses, net impairment losses on investments, including gains and losses on foreign currencies,
The holding and other businesses segment, which 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.
Within this segment all profit and loss accounts are considered as operating items, except for the following which are represented in the non-operating result, i.e.: — non-recurring realized gains and losses and net impairment losses,
— other net non-operating expenses, principally including results activities in run-off, Company restructuring charges, amortization of value of business acquired directly or through acquisition of control of insurance companies (value of business acquired or VOBA) and other net non-recurring expenses.
In addition, non-operating holding expenses include: — interest expenses on liabilities linked to the Group’s financing activities1,
— restructuring charges and other non-recurring expenses incurred in the management and coordination activities,
— costs arising from the assignment of stock options and stock grants by the Group.
In accordance with the approach described above, the Generali Group has also presented the life, property &casualty and Group operating result of the main countries where it operates. In order to provide a management view of the key performance indicators, the geographical reporting, following the segment reporting review, is now disclosed as country’s consolidated view, instead of contribution to the Group’s results.
Within the context of the life and property&casualty operating result of each country, reinsurance operations between Group companies in different countries have been considered as transactions concluded with external reinsurers. This representation of the life and non-life operating result by country makes this performance indicator more consistent with both the risk management policies implemented by each company and with the other indicators measuring the technical profitability of the Group’s companies.
Please note the following reclassifications implemented in the calculation of the operating result compared to the corresponding items of the income statement: — within the operating result, investment management and investment property management expenses have been reclassified from acquisition and administration costs to net operating income from financial instruments, into other expenses from financial instruments and land and buildings (investment properties); — within the operating result, income and expenses related to real estate development activities have been classified as other non-operating income and expenses, coherently with the management model adopted that foresees the sale at completion; — within operating income, gains and losses on foreign currencies are reclassified in the life and financial segment from net operating income to net operating income from financial instruments at fair value through profit or loss. In the property&casualty segment, within operating income, gains and losses on foreign currencies have been reclassified from net operating income to net non-operating income from financial instruments at fair value through profit or loss. The classification for each segment is consistent with the related classification of the derivative transaction drawn up in order to hedge the Group’s equity exposure to the changes in the main currencies of operations. The net operating and non-operating income from other financial instruments are therefore not subject to financial market volatility; — within net operating income from financial instruments, interest expenses on deposits and current accounts under reinsurance business are not included among interest expenses related to liabilities linked to operating activities but are deducted from the related interest income. Moreover, the interest expenses related to the abovementioned real estate development activities are not included in interest expenses related to liabilities linked to operating activities but are classified among other non-operating income and expenses coherently with the management model adopted that foresees the sale at completion
Net investment result consists of operating income from investments, net of the related policyholders’ interests. Finally, other net operating expenses are indicated separately.
excluding gains and losses included in Other Comprehensive Income OCI (e.g. net unrealized gains and losses on AFS investments, foreign currency translation differences, net unrealized gains and losses on hedging derivatives).
A performance indicator of return on investments has been presented, that is calculated as the ratio: — for the 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 (excluded 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.
These investment returns have been presented in the life and property&casualty segments and for the Group consolidated figures.
With regards to the presentation of consolidated investments, the following variations, with respect to the corresponding balance sheet items have been implemented, in order to provide a consistent representation to that used for the calculation of the relative profitability: — Investment Fund Units have been split by nature between equity, bond and investment property portfolios; — derivatives are presented net of derivative liabilities. Moreover, hedging derivatives are classified in the respective asset class hedged; — reverse REPOs have been reclassified, in accordance with their nature of short-term liquidity commitments, from ‘Other fixed income instruments’ to ‘Cash and cash equivalent’; — REPOs classified as liabilities are presented in “Cash and cash equivalent”.
EBIT (Earnings before Interests and Taxes)/interest expenses on financial debt 120 | Generali Group - Annual Integrated Report 2014
Financial leverage: Financial debt / financial debt + adjusted shareholders’ equity.
The net Free surplus is the sum of the following components: life FcF: The Life FCF is calculated from the EV source and it represents the “Expected” Cash Flow generation in a given year from existing and new business, i.e. it is the movement of the Free Surplus excluding operating and economic variances. More in detail, it is the sum of: 1. The net Required Capital variation a. Release of Capital from existing business b. Additional required capital from New Business 2. The ANAV variation: a. Run off profit from existing business, i.e. transfers from VIF to ANAV
Financial FcF: Operating Result of the banking and asset management activities Net of Taxes (normalized tax rate) and Minorities, and net of Change in regulatory required capital (typically Basel 2 or Basel 3 for banks)
IFRS holding expenses, including interest expenses on financial debt, net of taxes and minorities.
Income statement Statement of compehensive income Statement of changes in equity Statement of cash flow (indirect method)
137 notes to the consolIdAted FInAncIAl stAtement 138 Basis of presentation and accounting principles 169 Risk Report 170 1 The Risk Management
Solvency II Pillar I risks 194 10 Risk monitoring by third parties 194 11 Capital management 197 Notes to the balance sheet 197 1 Intangible assets 201 2 Tangible assets 202 3 Amounts ceded to reinsurers from insurance provisions 209 6 Other assets 210 7 Cash and cash equivalents 210 1 Shareholders’ equity 211 2 Other provisions 212 3 Insurance provisions 215 4 Financial liabilities 217 6 Other liabilities 222 Notes to the income statement 226 3 Income taxes 230 Other information instruments 231 2 Other Comprehensive Income 232 3 Fair value measurement commitments, guarantees, pledged assets and collaterals 243 5 Disclosures on interests in other entities 247 6 Information on employees 247 7 Share-based compensation plans 252 8 Earnings per share 253 9 Reinsurance policy of the
1.1.1 Gross earned premiums 66,324 62,913 1.1.2 Earned premiums ceded -2,003 -2,290 1.2 Fee and commission income and income from financial service activities 967 872 1.3 Net income from financial instruments at fair value through profit or loss 3,510 4,611 of which net income from financial instruments where the investment risk is borne by the policyholders and related to pension funds 3,293 4,103 1.4 Income from subsidiaries, associated companies and joint ventures 192 181 1.5 Income from other financial instruments and land and buildings (investment properties) 15,991 15,374 1.5.1 Interest income 9,919 9,828 1.5.2 Other income 2,117 1,882 1.5.3 Realized gains 3,761 3,455 1.5.4 Unrealized gains and reversal of impairment losses 194 208 2.1 Net insurance benefits and claims -67,003 -63,101 2.1.1 Claims paid and change in insurance provisions -68,280 -64,527 2.1.2 Reinsurers' share 1,276 1,425 2.2 Fee and commission expenses and expenses from financial service activities -470 -468 2.3 Expenses from subsidiaries, associated companies and joint ventures -68 -294 2.4 Expenses from other financial instruments and land and buildings (investment properties) -3,461 -3,222 2.4.1 Interest expense -1,298 -1,355 2.4.2 Other expenses -421 -444 2.4.3 Realized losses -435 -475 2.4.4 Unrealized losses and impairment losses -1,307 -949 2.5 Acquisition and administration costs -10,489 -10,518 2.5.1 Commissions and other acquisition costs -7,884 -7,963 2.5.2 Investment management expenses -103 -75 2.5.3 Other administration costs -2,502 -2,480
EARNINGS AFTER TAXES 1,921 1,657 4 RESULT OF DISCONTINUED OPERATIONS -69 485
CONSOLIDATED RESULT OF THE PERIOD 1,852 2,142 Result of the period attributable to the Group 1,670 1,915 Result of the period attributable to minority interests 182 227
EARNINGS PER SHARE: Basic earnings per share (€) 1.07 1.24 from continuing operations 1.13 0.80 Diluted earnings per share (€) 1.06 1.23 from continuing operations 1.11 0.80
Items that may not be reclassified to profit and loss in future periods 2.5 Share of other comprehensive income of associates 0 0 2.8 Result of discontinued operations -196 25 2.6 Reserve for revaluation model on intangible assets 2.7 Reserve for revaluation model on tangible assets 2.9 Actuarial gains or losses arising from defined benefit plans -529 100 attributable to the Group 5,042 1,782 attributable to minority interests 309 65
CASH FLOW FROM FINANCING ACTIVITIES -2,427 -1,415 Effect of exchange rate changes on cash and cash equivalents 86 -122
The Generali Group’s consolidated financial statements at 31 December 2014 were drawn up taking into account the IAS/IFRS issued by the IASB and endorsed by the European Union, in accordance with the Regulation (EC) No. 1606 of 19 July 2002 and the Legislative Decree No. 58/1998, as amended by Legislative Decree No 259/2010, as well with the Legislative Decree No 209/2005.
Furthermore the comparative period of comprehensive income have been restated. In line with this adjustment also the tables related to comprehensive income has been restated.
The consolidated financial statements at 31 December 2014 were audited by Reconta Ernst&Young S.p.A., the appointed audit firm from 2012 to 2020.
At 31 December 2014, the consolidation area decreased from 480 to 473 companies, of which 426 are subsidiaries consolidated line by line and 47 associated companies valued at equity.
The balance sheet items of the financial statements denominated in foreign currencies are translated into euro based on the exchange rates at the end of the year.
The profit and loss account items are translated based on the average exchange rates of the year. They reasonably approximate the exchange rates at the dates of the transactions.
Subsidiaries are all entities (including structured entities ) over which the Group has control. Control is achieved when the Group is exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
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.
The assessment of control is based on the substance of the economic relationship between the Group and the entity and, among other things, considers existing and potential voting rights.
The Group re-assesses periodically and systematically whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
Subsidiaries are fully consolidated from the period on which the Group obtains control while they are deconsolidated from the period when the Group loses control.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.
Generali has assessed the nature of its current joint arrangements and determined them to be joint ventures and none are joint operations.
value, including contingent consideration, liabilities assumed towards the previous owners, and the amount of any non-controlling interests. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.
Regardless of the legal form of the investment, the evaluation of the control is made considering the real power on the investee and the practical ability to influence relevant activities, regardless of the voting rights held by the parent company or its subsidiaries.
IFRS 10, 11, 12, Amendments to IAS 27 and IAS 28
IFRS 10 “Consolidated Financial Statements” replaced IAS 27 and the interpretation of SIC12 “Consolidation - Special Purpose Entities”. IFRS 10 unified and specified the consolidation principles in IAS 27 and SIC 12. According to IAS 27 control is defined as the power to govern the financial operating policies of an entity to obtain benefits from its activities and for special purpose vehicles and SIC 12 indicates the majority of the risk and rewards that can be obtained from the investment as a criterion for their consolidation. According to IFRS 10 an investor has control over another company when it jointly has: — power to direct the “significant activities” (which influence the economic returns)
— exposure to returns of the investee — ability to affect those returns through its power over the investee
IFRS 11 substitutes IAS 31 “Interests in Joint Ventures” and SIC-13 “Jointly Controlled Entities - Non-Monetary Contributions by Venturers”. IFRS 11 defined a joint arrangement as an arrangement of which two or more parties have joint control. Distinguishes between joint operations and joint ventures: a joint operation is an agreement whereby the parties have rights to the assets, and obligations for the liabilities relating to the arrangement. For accounting purposes, the assets and liabilities that are part of the arrangement are reflected in the financial statements using the applicable IFRS. A joint venture is an agreement whereby the parties have rights to the net assets of the arrangement. For accounting purposes, the joint venture is consolidated using the equity method (proportional method no longer available as optional IFRS 11). The application of IFRS11 did not lead to any modification to classification and measurement of joint ventures. Joint operations had not been detected.
IFRS 12 established the minimum information designed to understand the nature and risk of the interest held by an entity in one or other entities and the effects that these interest bearing financial position, performance and cash flows of the entity that prepares consolidated financial statements. Generali Group included the required disclosures in the appropriate section of the notes. Consistent with the transitional provisions of IFRS 12, the comparative periods for the disclosures relating to unconsolidated structured entities were not presented.
The amendments to IFRS 10, IFRS 12 and IAS 27 “Investment Entities” define investment entities as companies that obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services, commits to its investor (s) that its business purpose is to invest funds solely for returns from capital appreciation and investment income, measures and evaluates the performance of investments on a fair value basis
The amendment to IFRS 10, 11, 12 “Investment entities ” have been endorsed by European Union with Regulation 1174/2013.
— intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously
Amendments to IAS 36 – recoverable amount disclosure for non financial assets
Following the entry into force of IFRS 13 Fair Value Measurement, the IASB published in May 2013 a narrow scope amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” requires more disclosures on the recoverable value of non-financial assets (goodwill included) as fair value less costs to sell.
The amendments to IAS 36 in question are effective for accounting periods beginning January 1, 2014 or later.
These amendments were approved with Regulation (EU) No. 1374 of December 2013 will not have a material impact on the Group.
financial instruments that is based on contractual cash flows characteristics and models through which financial instruments are managed (business model).
Considering to the contractual characteristics, a financial instrument is eligible for measurement at amortized cost if it consist in a basic lending agreement. The entity shall make its own assessment on the single financial instrument to assess if the nature of the contractual cash flows characteristics exclusively consists in payments of principal and interest (SPPI,). If a modification of the time value of the interest results in cash flows that are significantly different than those of a basic lending agreement then the instrument must be classified and measured at fair value through profit or loss.
As in the current IAS 39 Financial Instruments: classification and measurement the entity has the ability at initial recognition, to designate a financial instrument at fair value through profit or loss if that would eliminate or significantly reduce the accounting mismatch in the measurement of assets or liabilities or recognition of gains and losses related to them.
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 12-month expected credit losses but are always recognized the lifetime expected credit losses.
On 28 May 2014, the IASB published the IFRS15 “Revenue from contracts with customers”, whose objective is revenue recognition. Insurance contracts are out of the scope of this principle, and for this reason the Group is not expecting any significant impacts.
The Group is assessing the impact of the new requirements of impairment introduced by the standard. The most significant impacts are expected in terms of the process of assessing the losses expected by the Group’s risk management.
— credit risk should not be the key component of the hedged risk (ie the change in fair value of the hedging relationship must not be dominated by the component of credit risk).
The standard will be effective, in the case of endorsement, from annual periods beginning on or after 1 January 2018. A transitional provision allows to continue to apply IAS 39 for all hedging transactions until completion of the macrohedging project. The principle has not been endorsed by the European Union.
Narrow scope amendments to IAS 39 Financial Instruments – Novation of Derivatives and Continuation of Hegde Accounting
Amendments to IAS 19 Defined Benefit Plans Employee Contributions 1 July 2014 November 2013
Amendments resulting from Annual Improvements 2010-2012 Cycle 1 July 2014 December 2013
The purpose of the impairment test on goodwill is to identify the existence of any impairment losses on the carrying amount recognised as intangible asset. In this context, cash-generating units to which the goodwill is allocated are identified and tested for impairment. Cash-generating units (CGU) units usually represent the consolidated units within the same primary segment in each country. Any impairment is equal to the difference, if negative, between the carrying amount and the recoverable amount, which is the higher between the fair value of the cash-generating unit and its value in use, i.e. the present value of the future cash flows expected to be derived from the cash-generating units. The fair value of the CGU is determined on the basis of current market quotation or usually adopted valuation techniques (mainly DDM or alternatively embedded value or appraisal value based on EBS). The Dividend 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.
Intangible assets with finite useful life are measured at acquisition or production cost less any accumulated amortisation and impairment losses. The amortisation is based on the useful life and begins when the asset is available for use. Specifically, the purchased software expenses are capitalised on the basis of the cost for purchase and usage.
1.2.1 Contractual relations with customers - insurance contracts acquired in a business combination or portfolio transfer
The Generali Group applies this accounting treatment to the insurance liabilities assumed in the acquisition of life and non-life insurance portfolios, which therefore continue to be presented in the liabilities using the criteria ordinarly adopted by the buyer with expect to its insurance contracts.
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 3.2 and 3.3 of 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.
Land and buildings (self-used) are measured applying the cost model set out by IAS 16. The cost of the selfused property comprises purchase price and any directly attributable expenditure.
paired as well as through the normal amortization process envisaged by the amortised cost principle.
This category includes quoted and unquoted equities, investment fund units (IFU) not held for trading, nor designated as financial assets at fair value through profit or loss, and bonds, mainly quoted, designated as available for sale.
For a financial asset reclassified from the available-for sale category, the fair value carrying amount at the date of reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been recognised in equity is amortised to profit or 4.3.1 Held to maturity investments
Held to maturity investments 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.
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 im-
Receivables on premiums written in course of collection and receivables from intermediates and brokers, co-insurers and reinsurers are included in this item. They are accounted for at their fair value at acquisition date and subsequently at their presumed recoverable amounts.
Structured instruments, whose embedded derivatives cannot be separated from the host contracts, are classified as financial assets at fair value through profit or loss.
The financial assets at fair value through profit or loss are accounted for at settlement date and are measured at fair value. Their unrealized and realized gains and losses at the end of the period are immediately accounted for in the profit and loss account.
This item includes all other receivables, which do not have an insurance or tax nature. They are accounted for at fair value at recognition and subsequently at their presumed recoverable amounts 6. other assets
6.1 non-current assets or disposal groups classified as held for sale
They are measured at the lower of their carrying amount and fair value less costs to sell.
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.
The item includes the cash flow hedging derivatives reserve, the reserve for hedges of net investments in foreign operations. This item includes gains or losses on cash flow hedging instruments and gains or losses on hedging instruments of a net investment in a foreign operation. In addition, this item also includes the profits and losses relating to defined benefit plans and the part of the balance sheet reserves whose the variation is part of the comprehensive income of pasticipations and those relating to non-current assets or disposal groups classified as held for sale.
It also includes the reserve for unrealized gains and losses on available for sale investments and any other gains or losses recognized directly in equity attributable to minority interests.
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 3.2 Life insurance provisions), 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.
The liability adequacy test is performed through the comparison of the IFRS reserves (which include the impact of “shadow accounting” and financial liabilities related to investment contracts), 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 (Best Estimate Liabilities). In order to be consistent with the Solvency 2 project a risk margin is added to the Best Estimate; this margin is measured according to the cost of capital approach. The Best Estimate reserve also includes the costs of embedded financial options and guarantees, which are measured with a market-consistent methodology.
The local GAAP for each country is applied to nonlife insurance provisions, since all the existing policies fall under IFRS 4 scope. In conformity with the international standard, no provisions for future claims are recognised, in line with the derecognition of the equalisation and catastrophe provisions and some additional components of the unearned premiums provisions, carried out on the date of the first-time application.
The provisions for unearned premiums includes the pro-rata temporis provision, which is the amount of gross premiums written allocated to the following financial periods, and the provision for unexpired risks, which provides for claims and expenses in excess of the related unearned premiums.
This item includes provisions for defined benefit plans, such as termination benefit liabilities and other longterm employee benefits (the Italian provision for “trattamento di fine rapporto” is excluded and classified as other payables). In compliance with IAS 19, these provisions are measured according to the project unit credit method. This method implies that the defined benefit liability is influenced by many variables, such as mortality, employee turnover, salary trends, expected inflation, expected rate of return on investments, etc. The liability recognised in the balance sheet represents the net present value of the defined benefit obligation less the fair value of plan assets (if any), adjusted for any actuarial gains and losses and any past service costs not amortised. The rate used to discount future cash flows is determined by reference to market yields on high-quality corporate bonds. The actuarial assumptions are periodically tested to confirm their consistency.
The actuarial gains and losses arising from subsequent changes in variables used to make estimates are recognised shall be accounted for in other comprehensive income without any possibility of recycling to profit and loss.
The item includes liabilities directly associated with non-current assets and disposal groups classified as held for sale, as defined by IFRS 5..
Deferred tax liabilities are recognised for all taxable temporary differences between the carrying amount of assets and liabilities and their tax base, Deferred tax liabilities are measured at the tax rates that are expected to be applied in the year when temporary differences will be taxable, are based on the tax rates and tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are not recognized in the following cases provided for in paragraph 15 of IAS 12: — When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
The item includes payables due to tax authorities for current taxes. Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.
2.2 Fee and commission expenses and expenses from financial service activities
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.
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.
This section comprises the distribution of ordinary or extraordinary dividends, decreases in capital and other reserves (for redemption of shares, equity instruments and distributable reserves, the purchase of own shares, for the reclassification of liabilities previously recognized in equity instruments and, in the consolidated financial statements, for changes in scope of consolidation ) and the attribution of profit or loss recognized directly in equity and in other balance sheet items (i.e. gains or losses on cash flow hedging instruments allocated to the carrying amount of hedged instruments).
As for measurement and disclosure, the fair value depends on the unit of account, depending on whether the asset or liability is a stand-alone asset or liability, a group of assets, a group of liabilities or a group of assets and liabilities in accordance with the related IFRS. However when determining fair value, the valuation should reflect its use if in combination with other assets.
For the liabilities, the fair value is represented by the price that would be paid to transfer a liability in an orderly transaction in the principal (or most advantageous ) market at the measurement date under current market conditions (ie an exit price).
Single or multiple valuation techniques valuation technique will be appropriate. If multiple valuation techniques are used to measure fair value, the results shall be evaluated considering the reasonableness of the range of values indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances.
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; end
— income approach: converts future amounts to a single current (i.e. discounted) amount.
— Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (i.e. quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; market-corroborated inputs).
— Level 3: inputs are unobservable inputs for the asset or liability, which reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk (of the model used and of inputs used).
Adequate controls have been set up to monitor all measurements including those provided by third parties. If
A significant or prolonged decline in the fair value of an investment in an equity instrument below its Group cost is considered as an objective evidence of impairment.
The threshold of significance is defined at 30%, while the prolonged decline in fair value is defined as a continuous decline in market value below Group cost for 12 months.
If an investment has been impaired in previous periods, further fair value declines are automatically considered prolonged.
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.
The fair value of the right to obtain free shares in relation to market condition is assessed at grant date and is based on a model that takes into account factors such as historical volatility of the Generali share price and of the peer group, the correlation between these shares, the dividends expected on the shares, the risk-free interest rate as well as the specific characteristics of the plan itself. The pricing model is based on a n-nominal simulation on order to count for the possible outcomes fo Generali share performance respect to peer group. 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.
the equity reserve in the case of equity securities including shares of mutual funds (IFU).
The preparation of financial statements compliant to IFRS requires the Group to make estimates and assumptions that affect items reported in the consolidations financial balance sheet and income statement and the disclosure of contingent assets and liabilities. The use of estimates mainly refers to as follows: — insurance provisions for the life and non-life segment; — financial instruments measured at fair value classified in level 3 of the fair value hierarchy; — the analysis in order to identify durable impairments on intangible assets (e.g. goodwill) booked in in the balance sheet (impairment test); — deferred acquisition costs and value of business acquired; — deferred and anticipated taxes; — defined benefit plan obligation; — share-base payments.
The stock option plans granted by the Board in past periods configure as share based payments to compensate officers and employees. The fair value of the share options granted is estimated at the grant date and is based on the option pricing model that takes into account, at the grant date, factors such as the exercise price and the life of the options, the current price of the underlying shares, the expected volatility of the share price, the dividends expected on the shares and the risk-free interest rate as well as the specific characteristics of the plan itself. The possibility of early exercise of share options is another common factor. The bino-
Assets, liabilities, income and expenses of each segment are presented in the appendix to the notes, prepared under the ISVAP Regulation No. 7 of 13 July 2007 as subsequently amended.
The reporting and control process implemented by Generali Group implies that assets, liabilities, income and expenses of companies operating in different business segments are allocated to each segment through specific segment reporting. Intra-group balances between companies belonging to different business segments are accounted for in the consolidation adjustments column in order to reconcile segment information with consolidated information.
— the elimination in the non-life segment and holding and other businesses segment of realized gains and losses arising from intra-segment operations
— 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
An additional expense is recognized for any modification that increases the total fair value of the sharebased payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.
by geographical area presented in this report has been adapted to the new territorial structure of the Group
In accordance with IFRS 7 and IFRS 4, the information which enables the users to evaluate the significance of financial instruments on the Group’s financial position and performance and the nature and extent of risks arising from financial instruments and insurance contracts to which the entity is exposed and how the entity manages those risks are disclosed in the Risk Report.
With effect from 1 November 2013, Generali Group has concluded the re-definition of its geographical structure based on seven markets, in line with the strategy to simplify the Group and its governance. The new setup aims to optimise the Group’s international operations and will enable greater coordination between local businesses and the Head Office. This new structure is composed of the business units of the three core markets – Italy, France and Germany – and four regional units: CEE (Central and Eastern European countries members of the EU) and Asia, and the newly formed EMEA (Austria, Belgium, Dubai, Greece, Guernsey, Ireland, Netherlands, Portugal, Spain, Switzerland, Tunisia and Turkey) and LatAm (Argentina, Brazil, Colombia, Ecuador, Guatemala and Panama). The reporting
Within the Risk Management System, this Report is part of the reporting processes, aimed at disclosing a continuous monitoring of risks at various levels of the operational structure.
Generali Group has developed an Internal Control and Risk Management System, approved by the Board of Directors of the Parent Company, whose principles apply to all Group companies. It defines the purposes, principles, structure, roles, responsibilities and key disposals of the system, in line with laws and regulations applicable in terms of Group internal controls and risk management.
12 Board is meant to be the administrative, supervisory or management body according to the local governance.
170 | Generali Group - Annual Integrated Report 2014 lated to the implementation of the Risk Management Policy at Group level, with particular reference to governance and risk management processes. In particular the definition of the main risks and sub-risks which the Group is exposed to, is given, according to the structure of the Group Risk Map, which has been approved within the Risk Management Policy. For each category of risk, a brief description of the main methodologies applied for the evaluation is given, together with the quantitative evidence, in compliance with the requirements of IFRS 7.
In order to ensure an effective management of risks which could undermine the solvency position of the Group and of the Business Units or the achievement of the Group’s objectives, the Board of Directors11 adopted the “Internal Control and Risk Management System” and the “Risk Management Policy”. In order to guarantee a consistent approach and to monitor the management of risks throughout the Group, the adoption of these policies is required to all Group subsidiaries.
The “Internal Control and Risk Management System” defines the roles and the responsibilities of the governance bodies, of the organizational structures and of the control functions within the risk management process, with particular reference to those designated as “key” in the context of Solvency II regulation. According to regulatory requirements the roles of the Board of Directors, Risk and Control Committee, Top Management and committees supporting the Top Management are provided. The roles and responsibilities of the control functions are also detailed.
The “Risk Management Policy”, enclosed to the “Internal Control and Risk Management System”, outlines the strategies, principles, and processes to identify, assess and monitor present and forward looking risks.
The following table shows the main risk policies in coherence with Solvency II requirements and in particular those related to the main risk categories: Risk category Related Risk Type Policies Other Policies required within the Solvency II framework
Liquidity risk Group Liquidity Risk Management Policy 1.1 Roles and responsibilities
sessment of the Group financial and operating results, as well as on strategic program with impact at Group and main business units level.
Also Group companies have risk committees in support of the Top Management in terms of risk management.
The Policy establishes the driving principles and minimum process requirements to identify, evaluate, manage and monitor present and forward looking risks that could arise from the activities performed by Generali Group.
The main processes, procedures and responsibilities prescribed in this Policy are aimed at establishing a sound management of risks to preserve the stability and solvency of Generali Group, and at leveraging synergies, best practices, and specialized competences developed within the Group.
The Policy indicates the key activities to be put in place in order to perform the forward looking risk assessment, integrates the processes for the implementation of the Risk Management System, and describes the procedures in place to develop the ORSA Report.
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, 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 economic capital model reflects the risk profile of the Generali Group,
Interest rate volatility Default Reserving Longevity Financial reporting risk Strategic risk
Financial risk encloses risks deriving from unexpected movements in interest rates, equity, property and exchange rates or increasing in interest rate and equity volatility that may have an adverse impact on the economic or financial results.
At year-end 2014 the investments whose market risk affects the Group were of € 365 billion at market value13.
In life business this absorption is generally based on the level and structure of minimum return guarantees and profit sharing arrangements. The impact of the minimum guaranteed rates of return on solvency, both on the short and long terms, is assessed through deterministic and stochastic analysis. These analyses are performed at company and, if necessary, at single portfolio level and take into account the interaction between assets and liabilities helping to develop product strategies and strategic asset allocations aiming at optimising the risk/return profile.
nancial or solvency position of the Group. In order to mitigate and reduce such risks, the Group pursues with diversification of investments and of the counterparties. These diversification objectives are achieved primarily through the application of the Group Guidelines.
Concentration risk consists of possibility that a single investment exposure, or a group of exposures, generates a loss of such extension that might harm the fi-
176 | Generali Group - Annual Integrated Report 2014 costs of holding the capital and the cost of non-financial risks.
Regarding the market risk the Group performs the following sensitivities on its Embedded Value, according to the parameters indicated by the CFO Forum: — Yield curve +1%: sensitivity to an upward parallel shift of 100 basis points in the underlying market risk free rates, accompanied by an upward shift in all economic assumptions; — Yield curve -1%: sensitivity to a downward parallel shift of 100 basis points in the underlying market risk free rates, with a minimum level (Floor) of 0%, accompanied by a downward shift in all economic assumptions; — Equity value -10%: sensitivity to a 10% market value simultaneous reduction at valuation date for equity investments; — Property value -10%: sensitivity to a 10% market value simultaneous reduction at valuation date for property investments.
The changes in embedded value (%) at 31 December 2014 and 31 December 2013 are reported in the table below.
Taking into consideration the specific characteristics of the Life business, the impact of negative changes in the financial market conditions has to be assessed both on assets and liabilities. As allowed by IFRS 4, this impact is here represented as percentage change of Group’s Embedded Value14.
With reference to the covered business at the date of valuation, and to the relevant consolidation perimeter (i.e. the operating life and health companies of the group), the EV is equal to the sum of the Adjusted Net Asset Value (ANAV), and the Value In-Force (VIF): — the Adjusted Net Asset Value corresponds to the market value of the consolidated shareholders’ funds, net of goodwill and DAC, and before the payment of dividends from profits in the year; — the Value In-Force corresponds to the present value of the projected stream of after-tax industrial profits generated by the business in force at the valuation date. This value takes into account the cost of financial guarantees related to the options, embedded in insurance contracts, and less the frictional
15 In the sensitivity analysis is assumed not to reach the defined impairment triggers.
The market risk evaluation was done 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.
— 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 of the period related to the re-computation on coupon and accrued interest of floating rate securities.
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 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.
Similarly to the previous year, data at 31 December 2014 showed that the Company suffered from the effects of the decreasing interest rates. The impact is also higher than the increase corresponding to the opposite risk free variation. This asymmetry, amplified over the previous year due to the decrease in interest rates and the increase of the volatility recorded in late 2014, is explained by the presence of specific financial guarantees implied in contracts, in particular minimum return guarantees, the cost of which increases considerably because of the decrease, in the current level of rates.
Market risk evaluation has been performed, for both non-life and holding and other businesses segments, following a bottom up approach and using a full evaluation model which calculates the change in value of each financial instrument caused by applied stress tests (+/- 100bp yield curve change, +/- 10% change for equity).
In order to mitigate the counterparty risk, related to market risk hedging strategies, the following measures have been: the counterparty selection, the use of quoted instruments and the integration of ISDA Master Agreements with the Credit Support Annex (CSA). CSA requires the counterparty to post collateral when the derivative position is beyond an agreed threshold.
Credit risk refers to possible losses arising from the default or failure of third parties to meet their payment obligations (default risk), or from the changes in value resulting from movements in the credit standings of the third party or from the widening of the credit spreads (spread widening risk).
Within the Group Risk Guidelines, investment in adequate credit quality securities (investment grade) is preferred and the diversification (or dispersion) of risk is encouraged.
The Group uses a data warehouse to collect and consolidate the financial investments, which guarantees a homogeneous, time effective and high quality analysis of the financial risks.
In terms of exposure to different rating classes, the Class AAA credit rating includes German and US titles, class AA includes French government bonds while the class BBB mainly includes Italian and Spanish bonds.
Group’s exposures to investments in government bonds - detailed by country of risk and rating - are reported at fair value in the following tables: Breakdown of investments in government bonds by country of risk
The Group centrally sets the main reliability and solvency criteria, which take into account the risk exposure and the probability of default of each reinsurance counterparty.
The investments in corporate bonds totalled € 129,255 million at the end of the period. The portfolio was composed for 43.4% by non-financial corporate bonds, for 32.8% by financial corporate bonds and for 23.9% by covered bonds.
The Group companies life portfolios have a prevailing component of saving contracts, but there are also pure
The table proves that the careful criteria for the selection of reinsurers adopted by the Group over the past allowed Generali to have a significant presence of counterparties in rating classes of high quality. The small percentage of AAA counterparties reflects the almost total lack of market players that have maintained these characteristics.
In this perspective the structure of the product has been redefined, connecting in many cases the level and the recognition of guarantees with the length of staying inside the contract.
The table below shows the distribution of insurance provisions of life gross direct business by level of financial guarantee.
risk covers (death plus riders, such as accident, disability, dread disease, etc.) and some annuity portfolios, with the presence of the longevity risk.
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 prodlife insurance provisions and financial liabilities: financial guarantee
— 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).
Regarding lapse, a decrease in surrender assumptions could produce both positive and negative effect in the Embedded Value, depending on the portfolio structure and on the economic contingencies. In particular the magnitude of variances depends on the alignment of some variables such as return of the fund, level of guarantee and structure of surrender penalties. Like the previous year, the offsetting effects of these factors result at Group level in an increase in the Embedded Value when the lapse rates decrease.
In addition to the quantitative analyses above presented, the qualitative aspects relating to underwriting process and operative risk management are carefully assessed.
As far as the demographic risk related to pure risk portfolios is concerned, the mortality tables used in the pricing include prudential margins. The standard approach is to use population or experience tables with adequate safety loadings. For the most important risk portfolios ad hoc reviews of mortality experience is performed every year in comparison with the expected mortality of the portfolio, determined according to the most up-to-date mortality tables available in each market. This analysis takes into consideration the mortality by sex, age, policy year, sum assured and other underwriting criteria.
There is a particular emphasis, both at local and central level, in the underwriting of new contracts, that considers both the medical and the financial and moral aspects. A Group standard for manuals, forms and medical and financial underwriting requirements has been established, both for death covers and for riders. Underwriting autonomy levels for companies are determined depending on their structure and their portfolio, while above the autonomy each risk is examined also by either the Underwriting Department of Parent Company (which is the main reinsurer for many Group companies ) or by a local professional reinsurer.
The Companies must apply the underwriting guidelines and operating limits defined by the Corporate Centre which also defines the standard process to request dispensations in order to maintain the risk exposure between the set up limits and to ensure a coherent use of the capital.
anisms for adjusting the basis of mortality compared with some variations in mortality effective population are often introduced.
As far as lapse risk (risks related to voluntary withdrawal from the contract) and expense risk (risks related to inadequacy of charges and loadings in the premiums in order to cover future expenses) are concerned, they are evaluated in a prudential manner in the pricing of new products, 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.
Aggregate analysis has been made on the best estimate of the risk factors in order to assess the congruence of the assumptions and to update them; at the same time it has been assessed the coherence of the assumptions made and the actual experience of the year valuating, risk by risk, the changes in the portfolio values.
In order to mitigate mortality and morbidity risk, another feature is reinsurance. As far as the surplus (proportional ) reinsurance is concerned, Parent Company acts very often as the main reinsurer for its subsidiaries, then ceding to the reinsurance market the portions of individual risks exceeding its own retention. Sometimes reinsurance is made directly by the company to the local reinsurance market, with Parent Company’s support and agreement. As far as the catastrophe risk is concerned, it is related to geographical concentrations, which are typical of group insurance, and it is covered acquiring, at a central or local level, ad hoc non proportional covers, and sometimes diversifying the risk, for instance adopting adequate underwriting policies.
As far as new business is concerned, in each country demographic assumptions reflecting future mortality trends are used, while for group contracts, if possible, mortality adjustments clauses are considered. For policies which foresee an accumulation phase and at maturity an annuity conversion option for the lump sum, no guarantee is normally allowed on the technical basis for the determination of the annuity to be paid in the future; if, however, this is guaranteed, particularly in cases of collective agreements, contractual mech-
The pricing risk derives from the possibility that premiums are not sufficient to cover future claims, contracts expenses and extremely volatile events.
In order to quantify this risk, the Group assesses its exposure to attritional claims, large claims and catastrophes, gross and net of reinsurance, for the most relevant part of its portfolio.
Gross direct premiums by line of business and by geographical area
Regarding treaty reinsurance, the most important lines of business are best covered by excess of loss contracts, which allow setting precise retentions for each class. This makes it possible to retain those risks that are marked by a lower volatility and higher expected returns.
As a result, the model provides for the Parent Company to subscribe – at market conditions – all the major treaties of the subsidiaries with few minor exceptions justified by regulatory reasons or market conditions. This approach allows to manage the reinsurance cycle more efficiently than in the past because it gives the chance to adjust easily the level of risk retention through the retrocession treaties, retaining more risk in the hard market phases and less risk in the soft market phases.
Estimate of ultimate cumulative claims costs: at the end of accident year 11,291 12,245 12,889 13,294 13,617 13,386 12,822 13,095 12,763 12,188 127,590 seven years later 10,920 11,496 12,456 eight years later 10,892 11,474 nine years later 10,873
The differences with the amounts published in previous reporting periods are mainly due to changes in exchange rates.
In the non-life branches, the Group underwriting embraces all lines of business. The Group is active in Personal, Small-Medium Enterprises and Corporate & Commercial lines.
The following tables show the concentration of non-life direct gross written premiums - split by Motor ad Non motor lines of business and geographical area - and the detail of Non motor line of business.
Gross written premiums (direct insurance) by line of business and by geographical area
This risk category encompasses risks that are not included in the previous categories and for which no capital is required. That may impact on the Group capacity to meet its business objectives and whose management and mitigation actions do not require any capital charge calculation.
The liquidity risk is primarily monitored and managed at local level by the single business units, within a common Group framework approved by the Head Office.
The management of operational risks is essentially the responsibility of each business unit. These units are asked to draw up operational plans aligned with the targets set by the Parent Company and to identify and implement all actions to mitigate any risk which could potentially jeopardize it. The overall assessment of these risks and the consistency of the various mitigating actions are guaranteed by the Group Risk Management department.
Operational risk also includes the following risks: — financial reporting risk, defined as the risk of a transaction error which could entail an untrue and incorrect representation of the situation of the assets, liabilities, profit or loss in the Company’s financial statements, in the yearly and half-yearly consolidated financial statements and in any other financial release; A model coherent with international frameworks (COSO, COBIT) has been defined to manage the financial reporting risk; the Manager charged with the preparation of the company’s financial reports of the Parent Company defines, with the support of the Group Financial Reporting Risk unit, its operational and organizational aspects in application of the powers and means provided for by Law 262 of 28 December 2005; — compliance risk, defined as the risk of legal and regulatory sanctions, material financial loss or reputational damage the Company may suffer as a
ual companies within the group acts as a constraint in the calculation methodology. The two indicators also take available credit lines into account.
The Head Office liquidity level 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 to be paid by the subsidiaries, evaluations on possible capital needs for the subsidiaries and a refinancing strategy analysis performed on a regular basis.
These evaluations, supported by the outcomes of the Liquidity Risk Model previously described, are also framework includes: 1. an ad hoc liquidity risk policy, which provides a common definition of the key risk factors and a detailed list of actions and strategies to be undertaken in order to prevent and mitigate possible risk situations, 2. operating liquidity risk guidelines which define the main monitoring activities, their frequency and the thresholds related to the main key risk factors and, finally, 3. a specific Contingency Funding Plan with the aim of identifying and formalizing the governance process and the financial plans to be activated in case of relevant liquidity stress situations.
The liquidity risk policy as well as the related operating guidelines has been formally approved by the Boards of the Group business units involved in the scope.
The model basically reflects the company’s cash flows projections over a one year time frame together with the portfolio investments liquidability, 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.
The Group Liquidity Risk Coverage Ratio and the Group Excess Liquidity, that measure the amount of group available liquid resources, are then calculated starting from the liquidity ratios of individual companies. The need to safeguard the balance of cash flows of individ-
Liquidity risk is also managed through the placement of different kinds of financial instruments into the market; this strategy allows the Group to diversify its sources of funds, drawing from different classes of investors.
The main Holding funding sources are cash inflows arising from insurance and reinsurance activities, the subsidiaries’ dividends, the intragroup loans, the available credit lines with the main banking institutions, an integrated cash pooling system, the sale of assets and the quick and efficient access to the debt market, continuously monitored by the appropriate structures.
Thanks to the regular cash flows monitoring the Group has the aim of maintaining a sound financial structure over a short and medium term time horizon.
(*) Including senior bond issued in May 2010 to fund the tax recognition of goodwill related to the extraordinary operation Alleanza Toro for a nominal amount of € 560 million (at 31.12.2014 the related book value amounted to € 383 million). This issue was classified as operating debt because the debt structure provides a perfect correlation between cash flows arising from the recognition of taxes and loan repayments in terms of interest than capital.
In the same period two senior bonds came to maturity for a total amount of 2,25 billion euro that have been reimbursed with the proceeds of the senior bond issuance priced in January 2014 for 1,25 billion and internal resources.
Debts to banks or bank customers primarily relate to the ordinary activities of Banca Generali and BSI and are mainly on demand or short-term.
In particular, in the phase of product design, penalties for surrenders are allowed, calculated in order to partially compensate the eventual decrease of expected future profits. At the same time, for a relevant part of the portfolio, financial guarantees are not provided in case of surrender; this has a disincentive effect for policyholders and reduces the cost of this embedded option for the Company. The surrender assumptions used both for pricing and valuation, in terms of value and risk, are periodically reviewed and updated.
residual duration is calculated considering an expected date of conclusion of the contract, according to the embedded value valuation.
The table below shows the amount of the life gross direct insurance provisions broken down by expected contractual residual duration. For contracts without maturity (annuity or whole life contracts) the expected life insurance provisions and financial liabilities related to investment contracts: contractual term to maturity
Note that the provision for outstanding claims (not included in the table), which at 31 December 2014 amounted to € 5,225 million (€4,548 million at 31 December 2013), by definition, matures in the first year.
More than 20 years 0 0 9.2 strategic, reputational, contagion and emerging risk
Strategic risk refers to the risk arising from external changes and/or internal decisions that may impact on the future risk profile of the Group.
Reputational risk refers to the risk of potential losses due to a reputational deterioration or to a negative perception of company’s or Group’s image among its customers, counterparties, shareholders and Supervisory Authority.
Finally, emerging risks refer to the new risks due to internal or external environment changes, that may bring to an increase in the exposure to risks already included in the Group Risk Map or that may require to define a new risk category.
Following the actions undertaken on some European sovereigns, including Italy’s, the main rating agencies have revised the rating assigned to the Group, while confirming its financial stability, which benefits from its competitive position, geographical and distribution diversification as well as flexible life product characteristics, which serve to partially insulate the Group somewhat from stress related to the sovereign debt.
The current rating and outlook assigned to Assicurazioni Generali by the major agencies are the following: Rating Outlook
Generali Group aims at maintaining an adequate level of capital according to the current regulatory requirements, and to the forthcoming Solvency II framework and related interim measures already in place.
The use of the Group Internal Model, along with Embedded Value metrics, supports the capital management processes within the strategic planning activities and other business decision making processes.
In February 2014 the rating agency Fitch has confirmed the Insurer Financial Strength rating of Assicurazioni Generali at A- and on May 2 has improved the outlook of Generali from negative to stable. In July 2014 the same agency confirmed its rating restating also the BBB + rating for senior bond placement of General and BBB- for subordinate.
Integration to the management report and the financial statement in compliance to consoB request of February, 19th 2015
In compliance with the CONSOB request pursuant to art. 114, paragraph 5 of Legislative Decree no. 58/98: — the progress of the initiatives undertaken following the issuance of the EIOPA Guidelines on October 31st, 2013 and the subsequent IVASS implementation in the regulations, for the preparatory phase to the introduction of Solvency II are described with particular reference to: • the system of governance • the forward looking assessment of own risks • the reporting • the pre-application of internal models for the calculation of the new capital requirements.
— indication of the actions taken or planned as a result of the outcomes of the Stress Test exercises shared by EIOPA on November 30th, 2014 has been given, also taking into account any request made by IVASS in line with the recommendations issued by EIOPA on November 27th, 2014.
With regard to the system of governance, the Group has updated the Directives on the Internal Control and Risk Management System, based on the regulatory provisions referred to in IVASS Reg. 20/2008 in the updated version in force since June 30th, 2014 and according to the guidelines explicated in IVASS Letter to market of April 15th, 2014. In addition to the updating of these Guidelines, which define the roles and responsibilities of key corporate bodies and of control functions, the Group has defined during 2014, in accordance with IVASS, a plan for policies required by Solvency II. To
The main Group’s objectives in capital management are the following: — to grant that local (solvency) regulatory requirements of each operating segment where the Parent Company and other Group companies operate (non-life segment, life segment and financial segment ) are fulfilled; — to ensure business continuity and the capacity to develop its activity; — to continue guaranteeing an adequate remuneration of shareholders’ capital; — to pursue the optimal ratio between equity and debt, by ensuring adequate remuneration of all capital and debt sources; — to determine adequate pricing policies which are consistent with risk levels of each activity sector.
In this context, the main evidences related to current capital requirements are described.
With reference to the Solvency I cover ratio the following sensitivity analysis to market risks have been performed: — equity -30%: a 30% reduction of the value of all the equity investments in the portfolio at the balance date affects the ratio by around 10 percentage points; — yield curve +1%: an upward parallel shift of 100 basis points in the underlying market risk free rates at balance sheet date affects the ratio by around 15 percentage points; — yield curve -1%: a downward parallel shift of 100 basis points in the underlying market risk free rates
this end, the Group has updated the main policies related to the control functions and, updated and defined risk management policies on the different types of risk. It is confirmed that the adoption of policies can be considered completed with the exception of some policies for which approval by the Board of Directors is expected in the 2nd quarter of 2015, according to a planning agreed with the Supervisory Authority and consistent with the broader plan for the adaptation to Solvency II requirements. All policies follow the EIOPA interim measures plan and include the contents therein required.
— optimization of reinsurance policies — reduction of the duration gap wherever possible and appropriate — upgrading of the Asset and Liability Management models and of the of strategic asset allocation processes
being elements supporting the understanding and managing of the risk profile in extreme situations.
Value of in-force business arising from insurance business combination 1,088 1,238
Carrying amount as at the end of the period 6,617 7,163
At 31 December 2014 Group’s goodwill amounted to € 6,617 million (-7.6% compared to 31 December 2013). The decrease was attributable to the application of IFRS 5 to BSI group.
The table below details the goodwill by relevant companies: (€ million) 31/12/2014 31/12/2013
The table below shows the details of the Group’s goodwill by cash generating unit: (€ million) Vita Danni Totale
The cash generating units have been defined consistently with IAS 36; with regard to the measurement of the recovery value, as described in the basis of presentation and accounting principles, the Dividend Discount Model (DDM) has been used.
The table below shows the evaluation parameters used for the main CGU: A) Nominal growth rate (g): g
Other intangible assets, which According to the IFRS 3 included the value of the insurance portfolio (or “The value in force”) acquired in business combinations, amounted to € 1,088 million. This amount was attributable to: — the acquisitions, which took place in 2006, of Generali Italia for € 179 million net of accumulated amortisation, and in the CEE countries for € 20 million, net of accumulated amortisation,
All CGUs passed the impairment test, being their recoverable amounts higher than their carrying amounts. Furthermore a sensitivity analysis was performed on the results changing the cost of own capital of the company (Ke) (+/-1%) and the perpetual growth rate of distributable future cash flows (g) (+/-1%). This sensitivity highlighted that some negative changes included in the chosen sensitivity’s bucket could lead the recoverable value of some Group CGUs under the corresponding carrying amounts.
— the acquisition of Bawag PSK Versicherung in 2007, which brought a further activation of € 34 million, net of accumulated amortisation,
Non-life amounts ceded to reinsurers from insurance provisions 2,175 2,454 858 985 3,033 3,439
Life amounts ceded to reinsurers from insurance provisions 810 632 534 805 1,344 1,437
Mathematical provisions and other insurance provisions 655 476 534 805 1,189 1,281 4. Investments
Financial assets at fair value through profit or loss 8,667 2.4% 8,687 2.5%
Investments in subsidiaries, associated companies and joint ventures 1,284 0.4% 1,407 0.4%
Total investments 432,957 401,152 sets. IFU allocated within equity instruments amounted to € 4,747 million (€ 4,732 million as at 31 December
Loans Total 2013), those allocated within fixed income instruments amounted to € 14,955 (€ 13,235 million as at 31 December 2013) whereas IFU allocated within land and buildings (investment properties) amounted to € 2,243 million (€ 2,128 million as at 31 December 2013).
Given their short term investments nature, Reverse REPO, that amounted to € 412 million (€ 393 million as at 31 December 2013), are reclassified within “cash and cash equivalents”. For the same reason REPO, that amounted to € -854million (€ -1,586 million as at 31 December 2013), are reclassified in the same item, as well.
Also IFU for an amount of € 2,158 million (€ 129 million at 31 December 2013) are classified within that class.
Derivatives investments are presented net of derivatives held as financial liabilities, that amounted to € - 1,709 million (€ - 1,131 million as at 31 December 2013). Hedging derivatives are excluded, as they are presented within hedged item asset classes.
od, i.e. those held to earn rentals or capital appreciation or both, and their fair value: 4.1 land and buildings (investment properties)
The table below shows the main changes in land and buildings (investment properties) in the reporting peri-
Gross book value as at 31 December previous year 14,873 14,802
Carrying amount as at the end of the period 12,628 12,828
The decrease was attributable to the application of IFRS 5 to BSI group, in particular € 68 million in the line item Investments in associated companies valued at equity and € 2 million within the item Investments in non-consolidated subsidiaries.
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 2013 was mainly attributable to maturity and subsequent repayment of certain bonds held.
The decrease of mortgage loans and receivables from banks and customers was mainly due to the application of IFRS5 to BSI group.
The fair value of total loans amounted to € 57,530 million, of which € 41,258 million related to bonds. Receivables from banks or customers are mainly short-term.
As already mentioned, available for sale financial assets are measured at fair value and unrealized gains and losses on these assets are accounted for in shareholders ’ equity in an appropriate reserve. The amortized cost of the available for sale financial assets amounted to € 240,608 million.
(€ million) 31/12/2013 Fair value Utili / Perdite da valutazione Costo ammortizzato
Other available for sale financial assets 40 -30 -14 4.6 Financial assets at fair value through profit or loss
Total financial assets at fair value through profit and loss 31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013
Investments back to policies where the risk is borne by the policyholders and pension funds 0 0 67,707 59,116 67,707 59,116
The decrease is due to the application of IFRS 5 to BSI group and Argentinean companies held for sale, more than offset by the increase in financial assets where the risk is borne by policyholders. In fact, the category also includes the assets covering contracts where the financial risk is borne by the policyholders, for an amount of € 67,707 million.
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 reclassifica-
Financial assets at fair value through profit or loss 630 625 573 501 363 168 -41 127 137
As a consequence of the recovery in the value of corporate bonds, the reclassification in loans category of investments previously classified as available for sale financial assets, implied a missing recognition of the revaluation of the related equity reserve of € 767 million (considering both the group share and minorities), € 98 million net of policyholders share and deferred taxes for the 2014 year.
As far as Reverse REPO transactions are concerned, if all the underlying risks and rewards are retained by the counterparty for the entire life of the transaction, the related financial asset is not recognised as an asset
Non-current assets or disposal groups classified as held for sale 21,304 653
Other assets 7,172 7,368 in the Group’s financial statements. The consideration paid is accounted for within the loans and receivable category.
(in milioni di euro Segment Life Segment Non Life Total 31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013
Reserve for other unrealized gains and losses through equity -943 -305
The Group’s own shares decreased to € −8 million, amounting to 309,133 shares (€ −11 million, 460,969 shares at 31 December 2013).
During the year the Parent company distributed dividends amounting to € 701 million.
The reserve for unrealized gains and losses on available for sale financial assets, i.e. the balance between unrealized gains and losses on financial assets, net of life deferred policyholder liabilities and deferred taxes, amounted to € 6,498 million (€ 2,501 million at 31 December 2013). The variation is essentially attributable to the gains recorded on fixed income securities, mainly for the government bond component, which benefitted from favourable market conditions.
The reserve for other unrealised gains and losses though equity comprised, among other component, gains or losses on re-measurement of the net defined benefit liability in accordance with IAS 19 revised, and gains or losses on hedging instruments accounted for as hedging derivatives (cash flow hedge), put in place in order to hedge interest rate change and British pound/ Euro rate change on various subordinated bonds is-
Adjustments to Parent Company for IAS/IFRS application 1,156 118 1,165 208
Parent Company amounts in conformity with IAS/IFRS principles 15,120 856 15,260 777
Result of the period of entities included in the consolidation area 6,865 5,343
Reserve for other unrealized gains and losses through equity -763 -67
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.
The Group does not recognize any contingent liability that is: — a possible obligation that arise from past events and whose existence will be confirmed only by occurrence or non occurrence of one or more uncertain future events not wholly within the control of the entity; or
The table below summarized the main changes occurred during the period: (€ million) 31/12/2014 31/12/2013
Carrying amount as at the end of the period 1,751 1,768 3. Insurance provisions
Provisions for policies where the investment risk is borne by the policyholders and provisions for pension funds 51,663 45,795 11 14 51,674 45,809 of which provisions for liability adequacy test 1,053 826 0 0 1,053 826 of which deferred policyholder liabilities 25,300 3,999 0 0 25,300 3,999
The overall total of the other life insurance provisions included both the provision for profit sharing and premium refunds, which amounts to € 6,895 million (€
(67.3% at 31 December 2013), while investment contracts with discretionary participation feature amounted to 29.8% (27.0% at 31 December 2013).
6,702 million in 2013) and the ageing provisions for life segment, which amount to € 10,965 million (€ 10,252 million in 2013).
Transfer to Non-current assets or disposal group classified as held for sale -504 0
The development of provisions for policies where the investment risk is borne by policyholders and for pension funds highlights the increase in the value of assets backing unit/index linked policies, due to financial market movements, and the development of net inflow.
4. Financial liabilities 4.1 Financial liabilities at fair value through profit or loss
Financial liabilities related to investment contracts issued by insurance companies 0 0 15,964 13,270 15,964 13,270 where the investment risk is borne by the policyholders 0 0 14,361 11,743 14,361 11,743 other financial liabilities related to investment contracts 0 0 78 42 78 42
Subordinated liabilities issued by Assicurazioni Generali S.p.A. and other subsidiaries in the form of private placements 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 and are accounted for at a corresponding amortized cost of € 997 million. The remaining subordinated liabilities are mainly issued by Austrian subsidiaries for approximately € 24 million.
The fair value of bonds issued amounted to € 4,558 million.
The category of bonds includes various senior issues shown below: Emittente Coupon Outstanding (*)
Liabilities directly associated to non-current assets and disposal groups classified as held for sale 19,700 648
As previously indicated, starting from 30 June 2014, the line item relating to non-current liabilities or belonging to a disposal group held for sale includes the liabilities of the banking group BSI and of the Argentinian entities held for sale. Other liabilities also include liabilities related to defined
The pension benefits of Generali Group’s employees are mainly in the form of defined benefit plans and defined contribution plans.
The table below shows the movements in the defined benefit plans liability which occurred during the financial year, net of assets legally separate and held solely to pay or fund employee benefits: (€ million) 31/12/2014 31/12/2013
The re-measurement of liabilities related to defined benefit plans and plan assets, recognised in Other comprehensive income are detailed as follows: (€ million) 31/12/2014 31/12/2013
The actuarial losses recognised during the period are mainly linked to the trend of the reference interest rates, consistently with the requirements of IAS 19, for the determination of the discount rate applicable to the measurement of the liability related to defined benefit plans. The amounts reported are gross of deferred taxes and deferred policyholders liabilities, where applicable.
The table below shows the movements in the defined benefit obligation during the financial year and the current value of the plan assets: (€ million) 31/12/2014 31/12/2013
Defined benefit obligation as at 31 December current year 5,119 5,273
The defined benefit plans’ weighted-average asset allocation by asset category is as follows: (%) 31/12/2014 31/12/2013
Other investments 7.0 7.6 weighted-average hypotheses considered for the value definition of defined benefits plans obligations are summarized in the following table, for the main operating areas: % Eurozone Switzerland 31/12/2014 31/12/2013 31/12/2014 31/12/2013
Fee and commission income related to pension funds management 17 17
Others fee and commission income 7 0 1.3 net income from financial asset at fair value through profit and loss
Total financial investments at fair value through profit or loss 31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013
Reversal of impairment of available for sale financial assets 50 21
Income from service and assistance activities and recovery of charges 461 510
Change in the provisions for outstanding claims 50 226 332 231 382 457
2.2 Fee and commissions expenses and expenses from financial service activities
(€ million) Non-life segment Life segment Holding and other businesses 31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013
Net acquisition costs and other commissions 4,157 4,209 3,727 3,754 0 0
Expenses from service and assistance activities and charges incurred on behalf of third parties 323 366
The components of the income tax expense for 2014 and 2013 are as follow: (€ million) 31/12/2014 31/12/2013
In Italy, with respect to the 2013 fiscal year, income taxes are calculated by using the ordinary corporate income tax rate of 27.50%. For the 2013 fiscal year, income taxes of the Group’s parent company, Assicurazioni Generali S.p.A., and its Italian subsidiaries carrying on banking or insurance business are computed at the ordinary corporate income tax rate of 27.50% plus a surcharge equal to 8.50%, whereas income taxes for the remaining companies are calculated at the ordinary corporate income tax rate of 27.50%. Furthermore, income taxes of Italian companies include the regional tax on productive activities (IRAP), which was computed – in respect of insurance companies – at the ordinary tax rate generally equal to 6.82%.
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.
The following table shows a reconciliation from the theoretical income tax expense, by using the Italian corporate income tax rate of 27.50%, to the effective tax rate.
For the 2013 fiscal year, the effective tax rate is slightly higher than the theoretical tax rate. In particular, as for Italy, the effective tax rate was influenced by the 8.50% temporary surcharge on IRES on banks and insurance companies, as well as by the substitute tax on Controlled Foreign Companies whereas, in respect of Germany, the effective tax rate was substantially influenced by the recognition of deferred tax assets on tax losses and interest expenses carried forward by Generali Beteiligungs.
Fiscal losses carried forward as of 31 December 2014 and 2013 are scheduled according to their expiry periods as follows.
Fair value hedging relationships mainly relate to macro -hedging strategies implemented in Life portfolios of subsidiaries operating in Central-Eastern Europe, with particular reference to risks arising from fluctuations in interest rates and foreign exchange rates.
The Group’s exposure in derivatives is mainly associated with hedging operations on financial assets and liabilities and it is in line with strategies aiming at mitigating financial and credit risks. The total exposure amounts to € -452 million for a corresponding notional amount of € 40,797 million. The notional exposure is presented in absolute amounts, including the positions with both positive and negative balances, and it arises for an amount of € 7.011 million from instruments for which a hedge accounting relationship has been formally designated, in accordance with the international accounting standard IAS 39. The remaining notional amount is attributable to derivative instruments for which, notwithstanding their purpose as hedging instruments, a formal hedge accounting relationship has not been activated.
The exposure in terms of amounts recognised in the financial statements amounts to € -302 million.
The table above shows the Group’s exposure in derivative instruments for which an hedge accounting relationship has not been identified. The recognised amounts in the financial statements for these exposures at 31.12.2014 amounted to € -150 million for a corresponding notional amount of € 33,786 million, which mainly relates to over-the-counter positions. The exposure is mainly associated with operations relating to interest rates hedges and foreign exchange rates hedges, with particular reference to the US dollar.
Net unrealized gains and losses on investments available for sale 4,017 -48
Net unrealized gains and losses on cash flows hedging derivatives 21 104
The following table shows the change of deferred tax assets and liabilities related to gains or losses recognized in shareholders’ equity or transferred from shareholders ’ equity.
Unrealized gains and losses on available for sale financial assets -1,766 187
— Level 3 inputs are unobservable inputs for the asset or liability, which reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk (of the model used and of inputs used).
If an observable input requires an adjustment using an unobservable input and that adjustment results in
The increase in level 3 of other financial instruments available for sale is attributable to an allocation via look-through of the investments in private equity funds, consolidated in accordance with IFRS10.
Investments back to policies where the investment riks is borne by the policyholders 46,204 20,495 1,008 67,707
Financial liabilities related to investment contracts issued by insurance companies 14,817 1,148 0 15,964
Financial assets at fair value through profit or loss 42,839 28,292 1,763 72,893
Investments back to policies where the investment riks is borne by the policyholders 33,410 24,698 1,009 59,116
Other assets at fair value through profit or loss 563 676 391 1,629
Financial liabilities at fair value through profit or loss 13,239 2,767 78 16,084
Three widely used valuation techniques are: — market approach: uses prices and other relevant information generated by market transactions involving identical or comparable (ie 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; end
With reference to the fair value adjustment for credit and debt risk of derivatives (credit and debt valuation adjustment CVA / DVA), this adjustment is not material for the Group for the valuation of its positive and negative derivatives, as almost entirely of them is collateralized. Their evaluation does not take into account for these adjustments.
In particular, the fair value of debt instruments issued by the Group are valued using discounted cash flow models based on the current marginal rates of funding of the Group for similar types of loans, with maturities consistent with the maturity of the debt instruments subject to valuation.
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. Moreover, depending on how the share value is collected, directly from public providers or through counterparts, the appropriate hierarchy level is assigned. If this NAV equals the price at which the quote can be effectively traded on the market in any moment, the Group considers this value equiparable to the market price.
Also, for some IFU funds the amortized cost is considered to be a reasonable proxy of fair value, and is therefore not applicable, a sensitivity analysis.
— Financial assets where the investment risk is borne by the policyholders and related to pension funds
Their fair value is determined using the valuation methods and observations on sensitivity analysis and input described above.
In addition to the analyses described above, the Group has decided to classify all asset-backed securities in Level 3 since their evaluation is not generally supported by market inputs. Regarding prices from providers or counterparties have been classified in Level 3 all those titles for which you cannot replicate the price through market inputs.
3.4 transfers of financial instruments measured at fair value between level 1 and level 2
The amount of financial instruments classified in Level 3 represents 2.1% of total financial assets and liabilities at fair value, substantially stable compared to 31 De-
(€ million) 31/12/2014 Carrying amount at the beginning of the period
Investments back to policies where the investment risk is borne by the policyholders 1,009 63 1 -109
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.
In particular, the fair value of debt instruments issued by the Group are valued using discounted cash flow models based on the current marginal rates of the Group financing for similar types of instruments, with maturities consistent with the residual maturity of the debt instruments subject to valuation.
The Group’s nominal exposure towards third parties amounts to € 744 million, of which € 628 million refer to guarantees given in the context of the Group’s real estate development and € 116 million to sureties normally given by Banca Generali as part of it ordinary business.
In the course of the ordinary business, the Group may encounter agreements or transactions which do no 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 2014 the estimate of the contingent liabilities amounts to € 107 million. This amount mainly refers to tax litigations relating to changes in the interpretations of the tax law in Germany.
A contingent liability is: — a possible obligation that arise from past events and whose existence will be confirmed only by occurrence or non occurrence of one or more uncertain future events not wholly within the control of the entity; or
Generali Group at 31 December 2014 has commitments for a total amount of approximately € 3,879 million relating to investments, loans and other commitments.
A summary of the financial information relating to each subsidiary that have non-controlling interests that are material to the Group is provided here below. The amounts disclosed are before inter-company eliminations (except for the item “Cumulated non controlling interests of the subsidiary” and “profit or loss attributable to non-controlling interests” that are disclosed from a consolidated perspective).
The most significant transactions with non-controlling interests occurred in 2014 and relate to Generali Deutschland Group and Generali PPF Holding (renamed in 2015 as Generali CEE Holding).
Principal place of business Banca Generali Group Generali China Life Insurance Co, Ltd
cash flow from operating activities -997 -219 173 153 cash flow from investing activities 1,170 308 -384 11 cash flow from financing activities -102 -90 221 -257
from private investors a 3% share of Generali Deutschland Holding, the second largest insurance group in Germany. On 7th May 2014, the Group has finalised the squeeze-out procedure for the remaining 4%, in order to obtain the control over 100% of the entity.
The Group has classified these transactions as transactions with owners in their capacity as owners and consequently their effects have been accounted for through equity. The related impact is described here below.
As part of its plan to rationalise its business model, on 9th July 2013, Generali Group has agreed to acquire
In line with the agreement signed on 8th January 2013, Generali reached 100% ownership of Generali PPF Holding (GPH) starting from January 2015 following the exercise of the option held by PPF, the minority shareholder, for the sale of its remaining 24% share. The Group has not opted for the alternative exist mechanism provided for by the agreement. The acquisition of the outstanding of GPH has been completed according to the terms already communicated to the market (for a consideration of approximately € 1,246 millions). At the reporting date, Generali holds a 76% share of the entity with full control on the entity’s relevant activities.
The risks and rewards attributable to the minority interests have substantially been transferred to the Group and therefore the Group’s equity has recorded the following impact: During 2014, the Group has dismissed its investment in Fata Danni to Cattolica Assicurazioni S.p.A. and has finalised the agreement for the sale of BSI Group to BTG Pactual Group. Further details on these transactions can e found in section 11 “1 Non-current assets or disposal group classified as held for sale” of the Other information chapter and in section “2014 Key facts” in the Management Report.
(A)-(B) Difference recognised through equity -130 of which: with impact on Group Shareholders equity -130 of which: with impact on Non-Controling Interests 0
In relation to the Group’s interests in associates, no significant contractual, legal or regulatory restrictions exist on the Group’s ability to access or use its assets and settle its liabilities. With respect to contingent liabilities, please refer to paragraph 4 “Contingent liabilities, commitments, guarantees, pledged assets and collaterals”.
DVAG is the leading sales network for financial services in Germany and has an exclusive distribution partnership with a company held by Generali
Guotai is one of the first professional fund management companies in China.
The company manages mutual funds and several Social Security Fund (SSF) portfolios, adding up to approximately
Profit rights / voting rights held (if different) 30% / 40% 40%
(*) The financial information are referred to the last approved financial statements by the Shareholders meeting of the associated company Deutsche Vermogensberatung Aktiengesellshaft DVAG
At the reporting date no liability has been accounted for because the put option refers to an associate and therefore it does not fall into the category of the options on non-controlling interests referred to in par. 23 of IAS 32. The potential outflow of resources will be defined by the parties when and if the option is exercised on the basis of the fair value measurement criteria of the option itself.
Europe windstorms over a three year period. Generali Group is deemed to be sponsor because is has originated the insurance risk of the structured entity. Generali pays a premium of 2.25% per annum on the €190 million of cover under the reinsurance agreement. The related cost is presented within the “Earned premiums ceded” line in the statement of Profit or Loss.
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
As of 31 December 2014, Generali Group holds no interests in unconsolidated structured entities that expose the Group to the variability of returns arising from their performance.
The maximum number of shares that can potentially be assigned to participants at the end of the three years is divided up into three tranches; the first tranche is for 30% of the maximum number of shares to be possibly assigned, the second is for a further 30% and the remaining 40% represents the third tranche.
Each tranche is connected to an entry threshold that is represented by the Group solvency ratio calculated according to the criteria laid down by Solvency I.
The performance level, expressed as a percentage, is determined by the cross-comparison of ranges of ROE and relative TSR. The maximum performance level is 175%, whilst the minimum is 50%. For some specific individuals, the LTI maximum pay-out is limited to 87.5%.
In line with last year, a new long-term incentive plan based on Assicurazioni Generali shares - the 2014 Group LTI - has been submitted for the approval of the Shareholders’ Meeting.
In line with market practices and investor expectations, shares are assigned and made available to the participants over a total time frame of 6 years, subject to the achievement of the Group’s performance conditions, ie. return on equity (RoE) and relative total shareholders ’ return (rTSR) and the achievement of a minimum return on risk capital (RORC) at a Group level and the reaching of the entry threshold of the Solvency I ratio, as detailed below.
The maximum number of shares that can be assigned is determined at the start of the plan. The maximum potential bonus to be disbursed in shares equals 175% of the gross fixed remuneration of the plan participants,; therefore, the maximum number of shares that can be assigned is the result of the ratio of the maximum bonus and the share value, with the latter calculated as the average price of the share in the three months prior to the meeting of the Board of Directors called to resolve on the draft statutory financial statements of the Holding Company and the consolidated financial statements for the previous year.
For each tranche was calculated a fair value for each of the possible RoE intervals according to the reference matrix described above. The table below shows fair values for each RoE interval and for each tranche: 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.
As regards the holding period, at the grant date, 50% of the shares are immediately available (to allow the participants to pay the tax charges connected with the grant), 25% is subject to a one-year lock-up period and the remaining 25% to a two year lock-up period; this is without prejudice to the obligation of directors participating in the plan to maintain a suitable number of shares assigned until term of the office in course at the expiry of the lock-up.
The maximum number of shares that can be granted is 7,000,000, accounting for 0.45% of the current share capital.
The cost associated with the above mentioned plans recognised during the period amounted to € 23.5 mil-
The main share-based payments granted by the other Group companies are detailed here below.
The reduction in respect of the previous year is mainly due to the exercise carried out by financial advisors and employees and, to a lesser extent, to the termination of the relationships with some beneficiaries.
At 31 December 2014, the number of shares granted amounted to 5,071,218 preferred shares, of which 380,410 related to the plan granted for 175th anniversary of foundation of Parent Company.
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 € 2.3 million. The plans are considered as cash-settled and therefore a € 72.7 million liability was accounted for.
As for the stock option plans approved in 2006, with reference to the plan granted to the employees, following the three-year extension of the exercise period approved in 2011, the fair value at measurement date is € 2.5, while the fair value of stock options granted to the financial advisors is between € 2.4 and € 2.5 depending on the exercise date foreseen. As the vesting period of these plans has expired (and for financial advisors also the exercise period), they have now reached the end of the exercise stage.
These services substantially aim at guaranteeing the streamlining of operational functions, greater economies in overall management, appropriate levels of service and an exploitation of Group-wide synergies.
Result of the period (€ million) 1,670 1,915 - from continuing operations 1,751 1,238 - from discontinued operations -81 677
actions - 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 ‘Corporate governance and share ownership report’.
The most significant economic and financial transactions with Group companies that are not included in the consolidation area and other related parties are listed below.
As abovementioned, in April 2014 Generali entered into the Insurance Linked Securities (ILS) market to optimize its protection against catastrophes. This transaction involves the risk transfer of catastrophic natural events for a period of three years through the placement of a Indemnity bond providing protection in respect of European windstorm risk under the US Rule 144A. This operation allowed to increase the protection provided to Generali till €190 million with fix annual premium of 2.25%.
In June Generali completed the 100% disposal of Fata Assicurazioni Danni. The price adjustment procedure led to a transaction worth a total of €194.7 million. The operation resulted in a realized gain of € 56 million.
In June Generali resolved to exercise the demerger option from Telco. The Group will complete the demerger as soon as the necessary authorization are received. This operation had no impact on the economic and financial position of the Group.
17 Note that within the information on the Group consolidation area the ownership percentage represents the legal ownership.
254 | Generali Group - Annual Integrated Report 2014 for sale. Consequently, this participation has not been excluded from consolidation but the total of the related assets and liabilities have been recorded in two separate lines in the balance sheet and the related profit or loss, net of tax effects, is recognized separately under the appropriate heading of the income statement net in the consolidated profit (loss) from discontinued operations.
Following the agreement signed on 8 January 2013, Generali has bought the remaining 24% of shares of Generali PPF Holding B.V. (GPH) owned by PPF Group. With this operation Generali obtained full control of the GPH.
Awaiting the formal conclusion of this operation a liability was recognised for € 1,245 million, the entire amount of the consideration to be paid.
Finally, the operation contributed to the net result for € -112 million.
In October Generali concluded the agreement for the sale of some of its operation in Argentina - La Estrella, Caja ART e Caja de Retiro.
to the balance sheet date — might give raise to any doubts about the correctness and exhaustiveness of this report, conflict of interests, preservation of equity and protection of minorities.
During the year, there were no atypical and/or unusual transactions, which — because of materiality, nature of counterparties, subject of the transaction, transfer price determination method and occurrence close 12. non-current assets or disposal group classified as held for sale
The following tables show a condensed indication of the balance sheet ant the income statement of the discontinued operations.
condensed balance sheet and profit and loss for discontinued operations for BsI Group
Financial liabilities related to investment contracts issued by insurance companies 0 0 0 0
condensed balance sheet and profit and loss for discontinued operations for the Argentinean entities
The comprehensive impact of this operation on Group net income, allocated to the item result from discontinued operations, amounted to € - 19 million.
(in milioni di euro) Livello 1 Livello 2 Livello 3 Totale
Financial assets at fair value through profit or loss 522 0 0 523
Investments back to policies where the investment risk is borne by the policyholders 0 0 0 0
Within the result of discontinued operations is considered, besides the two abovementioned disposal groups contributions, also the contribution deriving from the sale of Fata Assicurazioni Danni S.p.A for € 56 million and result deriving form some minor operations for € 6 million.
4.1 Land and buildings (investment properties) 4,191 4,547 7,737 7,622 4.2 Investments in subsidiaries, associated companies and joint ventures 4.5 Available for sale financial assets 25,915 24,034 245,042 200,869 4.6 Financial assets at fair value through profit or loss 1,046 554 81,743 70,322 1 SHAREHOLDERS' EQUITY
4.1 Financial liabilities at fair value through profit or loss 364 390 18,004 14,512
2.1 Net insurance benefits and claims -13,110 -13,575 -53,893 -49,526 2.1.1 Claims paid and change in insurance provisions -13,696 -14,499 -54,583 -50,027 2.2 Fee and commission expenses and expenses from financial service activities 2.3 Expenses from subsidiaries, associated companies and joint ventures 2.4 Expenses from other financial instruments and land and buildings (investment properties)
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Fi na nc ial lia bil itie s he ld fo r t ra din g 1, 1, 1,
To ta l f in an ci al a ss et s an d lia bi lit ie s at fa ir va lu e on re cu rr in g ba si s 3, 1, 4,
rre nt as se ts or o f d isc on tin ue d op er ati on s 2, 3,
D et ai l o f t he v ar ia tio ns o fa ss et s an d lia bi lit ie s m ea su re d at fa ir va lu e on a re cu rri ng b as is c la ss ifi ed in L
Fi na nc ia l l ia bi liti es de si gn at ed a s at fa ir va lu e th ro ug h pr of it or lo ss
Di sp os al s th ro ug h sa le s an d se ttle m en ts
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N et u nr ea lis ed g ai ns a nd lo ss es re co gn iz ed in O
N et tr an sf er s ou t o f L
A ss et s an d lia bi lit ie s no t m ea su re d at fa ir va lu e: fa ir va lu e hi er ar ch y A
Inv es tm en ts in su bs idi ar ies , a ss oc iat ed c om pa nie s an d joi nt ve ntu re s 1, 1, 1, 1, 1, 1,
Company disposed of/wound up: 1. 3 Banken-Generali - CEE Liquid, Wien 2. Alpine Services Ltd, Nassau 3. AM Vertriebsservice-Gesellschaft für Personenversicherungen mbH (merged in VVS Versicherungs-Vertriebsservice GmbH), Frankfurt 4. AMCO Beteiligungs-GmbH (merged in Generali Deutschland Holding AG), Aachen 5. Anderfin SA, Lugano 6. BSI Generali Bank (Channel Islands) Limited, St. Peter Port 7. BSI Trust Corp. (Bahamas) Ltd, Nassau 8. Fata Assicurazioni Danni S.p.A., Rome 9. Finagen S.p.A. in liquidazione, Mogliano Veneto 10. FT GEN-Fonds, Frankfurt 11. Generali Capital Finance B.V (merged in Generali Finance B.V.), Amsterdam 12. Generali Horizon S.p.A., Trieste 13. Generali Vermögensverwaltung GmbH & Co. KG (merged in Generali Beteiligungs-GmbH), Aachen 14. Generali/AIV Leasing Salzburg GmbH (merged in Generali Versicherung AG), Wien 15. Generali/AIV Leasing St.Pölten GmbH (merged in Generali Versicherung AG), Wien 16. Generali/AIV Leasing Vorarlberg GmbH (merged in Generali Versicherung AG), Wien 17. GLL AMB Generali South Express S.à.r.l., Luxembourg 18. Icare Assurance S.A., Boulogne Bollancourt 19. Icare Courtage S.a.r.l., Boulogne Bollancourt 20. Icare S.A., Boulogne Bollancourt 21. Interunfall/AIV-Leasing Salzburg GmbH (merged in Generali Versicherung AG), Wien 22. Interunfall/AIV-Leasing Voarlberg GmbH (merged in Generali Versicherung AG), Wien 23. Risparmio Assicurazioni S.p.A., Trieste 14. SC Progador (SCI) (merged in Generali Vie S.A.), Paris 25. SCI 3-5 Malesherbes (merged in SCI Malesherbes), Paris 26. SCI Generali Le Dufy (merged in Generali Vie S.A.), Paris 27. SCI Generali Le Franklin (merged in Generali Vie S.A.), Paris 28. SCI Generali Pierre (merged in SCI GF Pierre), Paris 29. SCI Haussmann 50-Generali (merged in Generali Vie S.A.), Paris 30. SCI Parcolog Dagneux, Paris 31. SCI Parcolog Orchies, Paris 32. Solidia Finance et Patrimonie S.A. (merged in Oudart Patrimoine Sarl), Paris 33. Thalìa S.A., Lugano 34. Volksfürsorge AG Vertriebsgesellschaft für Vorsorge- und Finanzprodukte (merged in Generali Versicherung AG), Munchen
Method(1) Activity(2) Shareholding% Group equity ratio(3)Direct Indirect Through Total 0.01 Generali Italia S.p.A.
Europ Assistance Italia S.p.A. 086 EUR 12,000,000 G 1 65.10 Europ Assistance Holding S.A. 91.15 90.49 26.05 Generali Italia S.p.A.
Europ Assistance Trade S.p.A. 086 EUR 540,000 G 11 91.50 Europ Assistance Italia S.p.A. 100.00 90.49 8.50 Europ Assistance Service S.p.A.
1.00 SIMGENIA S.p.A. Società di Intermediazione Mobiliare 1.00 Generali Investments Europe S.p.A. Società di Gestione Risparmio 1.00 Generali Business Solutions S.c.p.A.
Generali Properties S.p.A. 086 EUR 268,265,145 G 10 100.00 Generali Italia S.p.A. 100.00 100.00 99.00 Generali Italia S.p.A.
Alleanza Assicurazioni S.p.A. 086 EUR 210,000,000 G 1 100.00 Generali Italia S.p.A. 100.00 100.00
Banca Generali S.p.A. 086 EUR 115,677,077 G 7 9.61 Generali Vie S.A. 50.71 50.61 0.44 Genertel S.p.A.
Fondo Scarlatti 086 EUR 547,456,612 G 10 2.89 Generali Vie S.A. 67.31 67.28 1.94 Genertel S.p.A.
Fondo Cimarosa - Fondo Immobiliare chiuso 086 EUR 508,445,239 G 10 3.51 Generali Vie S.A. 100.00 99.96 0.67 Genertel S.p.A.
Fondo Immobiliare Mascagni 086 EUR 2,094,121,438 G 10 1.52 Genertel S.p.A. 100.00 100.00 2.06 Generali Properties S.p.A.
Fondo Immobiliare Toscanini 086 EUR 262,022,734 G 10 1.89 Assitimm S.r.l. 100.00 100.00 18.45 Alleanza Assicurazioni S.p.A.
SIMGENIA S.p.A. Società di Intermediazione Mobiliare 0.01 Europ Assistance Italia S.p.A.
Method(1) Activity(2) Shareholding% Group equity ratio(3)Direct Indirect Through Total 1.01 Alleanza Assicurazioni S.p.A.
Generali Investments Europe S.p.A. Società di Gestione Risparmio 96.05 Generali Italia S.p.A.
BG Fiduciaria - Società di Intermediazione Mobiliare S.p.A. 086 EUR 5,200,000 G 8 100.00 Banca Generali S.p.A. 100.00 50.61
Generali Immobiliare Italia SGR S.p.A. 086 EUR 5,000,000 G 8 100.00 Generali Real Estate S.p.A. 100.00 100.00 28.29 Generali Deutschland Holding AG
Generali Innovation Center for Automobile Repairs S.c.a.r.l. 086 EUR 3,100,000 G 11 0.25 Genertel S.p.A. 100.00 99.99 1.00 Generali Business Solutions S.c.p.A.
AachenMünchener Lebensversicherung AG 094 EUR 71,269,998 G 2 100.00 Generali Deutschland Holding AG 100.00 100.00
AachenMünchener Versicherung AG 094 EUR 136,463,896 G 2 100.00 Generali Deutschland Holding AG 100.00 100.00
Central Krankenversicherung Aktiengesellschaft 094 EUR 34,017,984 G 2 100.00 Generali Deutschland Holding AG 100.00 100.00
Europ Assistance VersicherungsAktiengesellschaft 094 EUR 2,800,000 G 2 25.00 Generali Deutschland Holding AG 100.00 99.23 75.00 Europ Assistance S.A.
Cosmos Versicherung Aktiengesellschaft 094 EUR 9,205,200 G 2 100.00 Generali Deutschland Holding AG 100.00 100.00