Assicurazioni Generali S.p.A. Company established in Trieste in 1831 Share capital € 1,565,165,364 fully paid-up Registered office in Trieste, piazza Duca degli Abruzzi, 2 Fiscal code, VAT and Venezia Giulia Companies’ Register no. 00079760328 Company entered on the Register of Italian insurance and reinsurance companies under no.1.00003 Parent Company of the Generali Group, entered on the Register of insurance groups under no. 026 assicurazionigenerali@pec.generaligroup.com
Annual Integrated Report and Consolidated Financial Statements 2018, Consolidated Non-Financial Statement, p. 119
Annual Integrated Report and Consolidated Financial Statements It expands the content of the Annual Integrated Report, providing details of the Group’s financial performance in compliance with national and international regulations.
Corporate Governance and Share Ownership Report It outlines the corporate governance system of Assicurazioni Generali and its ownership structure.
1 Core&More is a reporting approach developed by Accountancy Europe which provides for a core report, including a summary of all key information required to evaluate and understand a company, and more reports, presenting more detailed information. www.accountancyeurope.eu for further information.
This report has been prepared in accordance with the provisions of Legislative Decree 209/2005, CONSOB communications, and other regulatory provisions.
Although 2018 was a challenging year for many economies, especially in Europe, Generali has once again achieved excellent results. The Group closed the year with improvements in premium income, technical and operating performance and net profit. These results made it possible to meet, and in some cases even exceed, the expectations of the 2016-2018 strategic plan, demonstrating the Group’s excellent execution capacity and its tireless commitment to excellence.
Indeed, the Group optimised its geographical positioning by concentrating its presence within the most promising markets in which it has - or expects to have - a leadership position, while also generating considerably more proceeds from disposals than estimated. It streamlined its operating machine, generating synergies and boosting productivity, resulting in a faster than expected reduction in operating costs in mature markets. It improved its technical capacities, consolidating performance leadership with respect to its competitors, and rebalanced the portfolio towards capital-light products within a low interest rate environment. It also started to implement its asset management strategy. By so doing, Generali strengthened its profitability and resilience in the face of market fluctuations and was able to improve customer loyalty and the degree of preference for the brand.
In line with the Group’s culture of sustainability and long-term outlooks, and with the mutualistic approach at the basis of the insurance business, Generali published its Annual Integrated Report for the sixth consecutive year. Aside from the usual financial information, the Report provides a nonfinancial disclosure on social, environmental and governance matters, the importance of which is also reflected in the Group’s purpose: enable people to shape a safer future by caring for their lives and dreams.
The turnaround plan was accordingly supported by measures intended to improve governance and promote social responsibility. For example, we afforded greater autonomy to employees and simplified processes and lines of reporting. The Human Safety Net, the awareness-raising and concrete aid programme designed for the communities in which the Group carries on business at global level, was extended to 18 countries. The climate change strategy was also launched, to reduce direct and indirect impacts on the environment, including through investments in ‘green’ projects and disinvestments in the coal sector, promoting a shift towards more sustainable practices on the part of stakeholders.
On 21 November 2018, Generali presented Generali 2021, the new 2019-2021 strategic plan which aims to exploit the Group’s strengths to accelerate its growth. Generali aspires to become a partner for life for its customers, offering innovative and customized solutions relying on its unequalled distribution network. Generali strives to be a leader in the European insurance market for private individuals, professionals and SMEs, while also developing a global and focused asset management platform and taking advantage of opportunities in high-potential markets. Lastly, Generali 2021 is aligned with the Charter of Sustainability Commitments approved by the Board of Directors in 2017.
We are certain that Generali will reach its goals for 2021. Our confidence lies in the Group’s current position of strength demonstrated, inter alia, by its leadership position in Europe, its undeniable path of success and the clarity and robustness of the actions set forth in its new plan. Even more importantly, our confidence is based on the talented team consisting of roughly 70,000 employees and more than 150,000 agents and distributors present all over the world, who with their energy, commitment, skill and proud sense of belonging contribute to making the difference. Our sincerest gratitude goes out to them and their families.
Annual Integrated Report and Consolidated Financial Statements 2018, Investment, Asset & Wealth Management, p. 67
Annual Integrated Report and Consolidated Financial Statements 2018, Austria, CEE & Russia, p. 62
N.V. (and its subsidiaries). Generali remains active in the Netherlands through Europ Assistance and its
Global Business Lines, continuing to provide insurance services to its international customers.
Infrastructure (GGI), a cornerstone of the Group’s multi-boutique asset management strategy. It is a platform that employs internal know-how and also creates partnerships to invest in infrastructure debt across a wide geographical and sectorial investment scope and develop a range of products and solutions for investors.
Meeting of Assicurazioni Generali approved the 2017 financial statements, the remuneration policy, the 2018 Group Long Term Incentive
For the first time, Generali transmitted via streaming the initial speeches, thus confirming its focus on digital development and the integration of technology into the business.
companies respectively, as well as acquiring the entire capital of Adriatic
Revolving credit facilities renewed, initially signed in 2013 and last renewed in 2015, increasing their overall amount and adopting innovative sustainable and green features: their cost is linked both to targets on green investments and to progress made on sustainability initiatives.
UniCredit signed a bancassurance agreement for the distribution of insurance solutions in Central and
Announcement of the Group’s new organizational structure, which will boost the Group’s capacity to face the significant challenges of the 20192021 strategic plan. Amongst the other organizational modifications in force as of 1 September, the position of General Manager was created, reporting directly to the Group CEO, assigned to Frédéric de Courtois, and
Sustainability World Index (DJSI), the most prestigious international index that identifies leading businesses based on their sustainability performance. Generali is the only
GeneraliCyberSecurTech, wholly owned by the Group and created to offer clients innovative cyber risk assessment methods.
Assicurazioni Generali at Baa1 and of the notes issued or guaranteed by Generali (Baa2 senior debt; Baa3 senior subordinated debt; Ba1(hyb)
November December January February Launch of Generali Global Pension, a new business unit capable of offering innovative long-term asset management and environmental, social and governance (ESG) skills, funds for multi-boutique platforms, cross-border services and a new generation of defined contribution plans and selective risk transfer.
The Italian insurance regulatory agency (IVASS) authorized the extension of the scope of application of the Group’s internal model to
Generali’s multi-boutique strategy, strengthening its capacity to reach sophisticated clients and distribution partners in Europe and worldwide.
Trieste Convention Centre, the multifunctional centre which aims to become a hub of innovation and knowledge amongst research and training entities and businesses in
and will take place with respect to all notes outstanding, in compliance with the respective terms and conditions.
Limited, that has its headquarters in Guernsey and specializes in offering Life-insurance-based wealth management and employee benefit solutions to a global audience, and in Generali Link, an Irish company providing shared services in fund and policy administration. However,
Generali Worldwide will continue to act as the partner of the employee benefits network of Generali and the latter will manage its health portfolio in the Caribbean, as to maintain its presence in the region with the aim to further reinforce it in line with its strategy of sustainable growth and excellence in service.
Retail Partners, a new real estate boutique focusing on shopping centre investments. The partnership is in line with Generali’s strategy to further increase its exposure to real estate, where it is already one of the world’s leading investors through Generali
Publication of the results at 30 September 2019 and 2019 corporate event calendar 2019 We, Generali
Leading the European insurance market for individuals, professionals and SMEs, while building a focused, global asset management platform and pursuing opportunities in high potential markets
Profitable Growth about € 1 billion total investment in internal strategic initiatives 2019-2021
Generali 2021 – Financial Targets a strong brand a continuos commitment to sustainability
To measure and promote the engagement of our people, in June 2017 we carried out the second edition of the Generali Global Engagement Survey, a managerial tool for continuous improvement. In the course of 2018, leveraging our strengths, we established specific action plans for the opportunities for improvement. The priorities mainly identified in the local action plans were: – foster strategy cascading and communication; – keep investing in performance management tools and meritocracy; – accelerate on efficiency and velocity; – further enhance a diverse and inclusive culture.
Lastly, we promote a culture of inclusion which ascribes value to individuals and diversity of all types, particularly with regard to four types of diversity: cultural, gender, generational and disability. Our targets in terms of diversity and inclusion at Group level have been revised with a view to supporting the new strategy, coming into line with market best practices and collecting the points arising from continuous dialogue with business leaders. The Group’s plan is joined by local plans developed on the basis of local requirements. Amongst the main Group actions, diversity and inclusion training has been reinforced for the top international leaders. Particular focus has been dedicated to the topic of unconscious bias, i.e., the unconscious stereotypes and prejudices that can guide decisions with significant impacts on the business and people alike. The Group also launched the #BeBoldForInclusion initiative, with the participation of more than 40 CEOs on 8 March, which provided the occasion for an effective awareness-raising and promotion campaign with respect to Generali’s diversity and inclusion strategy, with a particular focus on gender diversity. The initiative opened up dialogue on this topic, collecting feedback from all employees. These and many other activities were shared and supported by the Group D&I Council, led by the Group D&I Sponsor Frédéric de Courtois, and consisting of business leaders acting as D&I champions.
IMD and dedicated to 70 Group Talent Directors. This initiative is intended to provide the Group’s future leaders with the necessary leadership capabilities in the digital age; – Global Mentoring Program, the third edition of which was launched in October 2018, involving 82 participants including members of the Generali Leadership Group (GLG) and young managers from throughout the Group. The Global Mentoring community now consists of more than 200 people and the Group initiative paved the way for multiple regional and local mentoring initiatives; – Strategic Study Tour 2018, an immersive study tour in the ecosystem of Singapore on the topic of digital innovation and business model transformation, supporting Generali 2021 strategic cycle planning and dedicated to a select group of 35 senior leaders.
The Group’s organization is a fundamental tool for ensuring the proper execution of the strategy and the achievement of business objectives. Thus, we periodically analyse the Group’s organizational structure to ensure that it is aligned with business challenges. We believe in a clear and simple organizational model that is based on shared rules, local empowerment and integration mechanisms. Furthermore, we promote a new way of working which, also thanks to the use of technology, is efficient, effective and capable of leveraging the organization’s collective intelligence. Within this context, we support smart working, including through trade union agreements.
Developing and improving upon the technical skills of all of our people has always been one of our objectives and is now more important than ever in today’s rapidly evolving business environment. Generali Advanced Technical Education (GATE) is our international training programme that aims to ensure the consolidation, updating and innovation of technical skills and business knowledge. GATE relies on the contribution of MIB - School of Management of Trieste instructors as well as the Generali Group Faculty, roughly 60 internal instructors and lecturers. 39 training initiatives were carried out in 2018.
Confirming the centrality of people in the Group’s strategy, we held 8 meetings with the European Works Council - the representative body for Group employees - at the permanent forum dedicated to social dialogue.
We have developed a framework for the assessment and management of operational risks inspired by international best practices and consistent with the requirements of the Solvency II directive. As part of the assessment conducted every year by the Group companies, the risks that could impact areas concerning our people were identified and precisely analysed, and the initiatives implemented with a view to mitigating such risks were evaluated. The areas of analysis regarded the following specific categories: – employment relationships, with a particular focus on matters relating to key people and business ethics; – safety at work; – discrimination, diversity and inclusion.
In line with the launch of a new strategic cycle and the new business priorities, in 2018 we developed the new Generali People Strategy which will guide the Group’s priorities and initiatives in 2019-2021. The new Generali People Strategy was defined through a co-creation process involving more than 400 of the Group’s people at various organizational levels. The result was the definition of five lines of transformation: – promote a culture of innovation, customer-centricity and inclusion; – build and develop key competencies for the digital age; – become a simple, agile and efficient organization; – leverage excellence and the creation of sustainable value; – favour the development of leaders and global talent.
The Group’s new strategy is aligned with our sustainability commitments. Generali has undertaken to increase premiums from social and green products by 7%-9% and allocate € 4.5 billion for green and sustainable investments by the end of 2021.
With respect to investments, as already announced, the Group has suspended all new investments in companies linked to the coal sector. As regards its existing exposure, estimated at around € 2 billion at the start of 2018, Generali is completing the disposal of its equity investments by the planned deadline of April 2019 and gradually disinvesting from bonds, by holding them to maturity and/or assessing the possibility of disposing of them before they mature if market conditions are favourable. In terms of green and sustainable investments, the internally planned objectives of the 2018 investment plan were successfully met. As expected, the Group decided to revise its initial commitment of € 3.5 billion in new investments by the end of 2020 up to € 4.5 billion by the end of 2021. In terms of underwriting, in 2018 we did not increase our minimal insurance exposure to coal-related businesses, which represent roughly 0.1% of all P&C premiums, also thanks to our commitment not to insure any new coal customer or any new mine or coal-fuelled power plant construction. With reference to the renewable energy sector, in which Generali already has a strong presence, the Group is defining concrete actions to transfer knowledge and best practices in all geographical areas. It is also considering the possibility of defining a dedicated industrial practice.
We are also committed to reducing our direct impacts through the responsible management of the relevant activities. In 2014, we defined an objective for reducing our Carbon Footprint by 20% within 2020 (base year 2013).
In 2018, purchased renewable energy was equal to 88% of the total acquired energy.
Generali will create a distinctive offer dedicated to responsible consumers who want to have a positive impact on the environment and society. The offer will include social and green products and sustainable investments to meet the expectations and satisfy the consumption choices of the consumers of today and tomorrow. We are committed to promoting responsible behaviours by engaging and training our sales channels. We have already identified specific products which, given the type of customer or due to their promotion of responsible behaviours or based on provided coverage, meet specific social and environmental needs.
EnterPrize is an initiative based on our successful experience with Entrepreneur d’Avenir in France and PMIWelfare Index in Italy. In line with our strategic focus on SMEs, Generali will create a prize at domestic and international level for the most sustainable SMEs based on their performance with respect to environmental and social matters, to boost awareness of the competitive advantage that sustainability can provide, with the ultimate goal of contributing towards building a more resilient economy. Thanks to this prize, it will be possible for SMEs to increase their knowledge of sustainability and competitiveness in general, while also gaining international visibility and improving their reputation amongst their main stakeholders.
The Human Safety Net was launched in 2017 with a view - provided in internal guidelines - to focusing on a smaller number of more similar and impactful initiatives for the communities where the Group operates compared to the past. It aims to activate both financial and technical resources, as well as the network of people and the skills of Generali’s employees and agents to meet shared goals, favouring contact with local communities and making lasting change in the lives of recipients.
For Families Investing - within a context in which UNICEF has reported that more than 250 million children worldwide risk not reaching their development potential - in courses and activities to support good parenting practices in families at risk of social exclusion with the aim of offering treatments and adequate stimuli for the cognitive, motor and social growth of children between 0 and 6 years, in line with the Nurturing Care Framework, an international document that promotes the development of early childhood.
For Newborns Contributing to combatting neonatal asphyxia, a condition that impacts almost one million newborns at the moment of birth every year all over the world, and can cause serious and permanent injury to the child’s brain.
In the coming three years, our ambition is to further extend The Human Safety Net through active engagement of employees and agents, including volunteering activities, as well as of customers and other third-party organizations that share its approach and mission.
The parent company provides the strategic direction, management and coordination and control of all its affiliated and investments
The efficiency of the capital structure is also guaranteed through the optimization of financial debt
The insurance and reinsurance business of the parent company is conducted through both the Head Office and foreign branches
We run our business in compliance with the law, internal regulations and professional ethics.
Group Policy for the Environment and Climate that contains the guiding principles for the strategies and objectives of environmental management
Responsible Underwriting Group Guideline that outlines principles and rules aimed at assessing environmental, social and governance features of the prospective and insured clients in the P&C underwriting process
We also have a structured internal Group regulatory system, regulated by the Generali Internal Regulation System (GIRS) Policy. The Group regulations cover the internal control system and governance as well as the risk management system - in particular, linked to monitoring solvency (Solvency II) - in addition to the primary areas of financial and non-financial risk.
The primary compliance risks are monitored through specific programs spread throughout the Group. We regularly monitor - by means of specific risk assessment activities - our exposure to these risks with the aim of minimizing potential reputational and economic damages deriving from the violation of regulatory provisions, including those which aim to prevent corruption. We condemn and combat all forms of corruption and financial crime. We have made available communication channels (Group Compliance Helpline) to our employees, customers and suppliers, even in anonymous format, which ensure an objective and independent management of reports of behaviour or actions which might violate law, the Code of Conduct and the related Group Rules or other internal rules, in accordance with the Process on managing reported concerns and the whistleblowing policy which we have been applying for years. These channels are active 24 hours a day. We have also adopted a rigorous policy against retaliations.
1 Compliance Week Risk is no joke! Awareness is the key to managing risks in your daily activities. Your commitment is essential! was the motto of the most recent edition of Compliance Week, during which the concept of risk was explored and the importance was underscored of providing the Group with an increasingly robust and effective Compliance Management System intended to prevent compliance risks. The role that every employee can play was emphasised throughout this prevention campaign.
Corporate Governance and Share Ownership Report 2018, p. 34-35 managed reports have completed the training course on the Code of Conduct
Live the community We are proud to belong to a global Group with strong, sustainable and long-lasting relationships in every market in which we operate. Our markets are our homes.
> € 7 bln cumulative net operating cash 2015-2018 > € 5 bln cumulative dividends 2015-2018 > 13% average operating RoE 2015-2018
Enable people to shape a safer future by caring for their lives and dreams
Deliver on the promise At 31 December 2018, Generali reached and surpassed its �nancial targets of more than € 7 billion in cumulative net operating cash in the 2015-2018 period and an average operating return on equity of more than 13%. The proposed 2019 dividend per share will enable Generali to reach and exceed the target of more than € 5 billion in cumulative dividends in the 2015-2018 period.
Our sustainable value creation is re�ected in an integrated offering of Life, P&C and Asset Management products, which is fundamental for customers who seek complete solutions to protect their quality of life, now and in the future. We distribute our products and we offer our services based on a multi-channel strategy: the guidance of our agents will be essential to provide our customers with customized products that meet their needs, including with the support of new technologies. .
In the USA, the tax reform kept up the confidence level; growth of real GDP in 2018 should settle at 2.9%, up by 2.2% over 2017, while the unemployment rate fell to the lowest level of the last 50 years. The Federal Reserve raised the reference rates four times during 2018, and additional increases are forecast for 2019 as well. With reference to the insurance sector, the Life business in Italy, France and Germany registered an upswing following a difficult period, thanks not only to the sale of unit-linked products, but also to recovery in traditional policies that increased to rates higher than those of the unit-linked ones. Income in the P&C market in the major Eurozone countries improved, with particularly good performance recorded in the health business.
We run our business in compliance with the law, internal regulations and codes and professional ethics, and we closely monitor the evolution of the regulatory environment, dialoguing with legislators and institutions. We regularly evaluate our exposure to the risk of noncompliance and assume prompt measures to adequately manage it.
After having implemented the Solvency II requirements and those concerning transparency of investment products, we are closely monitoring the revision of these two important regulations for the sector. We are engaged in the various tests carried out by the International Association of Insurance Supervisors (IAIS) to determine the final architecture and calibrations of the supervisory requirement. We are also following the developments of the new international accounting standards entailing sizeable operational impacts for the companies. As regards these topics, we have developed an integrated Group programme called Finance NEXT (Navigate to Excellence Transformation) with the goal of optimally coordinating the plans to implement the new IFRS accounting standards (specifically, IFRS 9 on investments and IFRS 17 on insurance contracts) and of speeding up the reporting processes in line with the new regulatory deadlines. This will allow the Group to manage the new regulatory obligations that will have a very sizeable impact over the years to come in an integrated manner.
In this currently uncertain economic environment, consumer attitudes to insurance products and services are changing in light of two global trends: digitalization, which has introduced new selling options and more diverse insurance product management, and economic uncertainty, which has changed spending on savings and other insurance products. Customers currently place greater focus on service quality: they have a more independent approach to the decision-making process, which includes visiting the websites of insurance companies, reading customer reviews on social media and checking comparison websites. However, the role of the agent is still crucial in the purchase of an insurance product.
Agent Hub is an initiative focused on supporting the digitalisation of our distribution network, strengthening the advisory activity addressed to the customer and digital interaction with the customers.
Mobile & Web Hub is an initiative focused on supporting relationships with our customers, on making management of the key insurance operations easier (e.g. claims management) and on making good use of the many platforms. It offers customers a simple and quick consultation of their policies using different devices, it emphasises the centrality of the relationship with the network of agents and exploits the connectivity and geolocation potentials in order to offer personalised services. Germany, France, Switzerland, Spain, Italy, Austria, Argentina, Turkey, Portugal and India have joined the initiative. The first markets have launched the My Generali application in the stores and soon also the versions of the remaining countries will be developed and published. The platform, which is continuously evolving with the collaboration provided by the member countries, will also be extended to other business units.
Glossary available at the end of the Annual Integrated Report and Consolidated Financial Statements 2018
10 The number of distributors refers to all entities with core insurance business with relevant traditional distribution networks (line-by-line consolidated entities and few insurance entities in Asia measured with the equity method where Generali has relevant shareholdings).
Climate changes, a consequence of the global warming caused by the anthropic emissions of greenhouse gases, will produce direct or indirect effects that will become increasingly evident as time goes by. This will lead to increased risks. On the one hand, it is a question of physical risks that involve not only increased volatility of the weather events, but also ecological consequences, which without adequate countermeasures might become irreversible and have incalculable economic and social effects. The insurance sector as well would be impacted, with increased claims in coverage tied to the phenomena influenced by the climate and, as a result, costs for the related products. On the other hand, there will also be transition risks for coping with the change. They include new financial risks (e.g. creation of stranded assets), lower revenues if leaving the segments tied to fossil fuels were not to be offset by new flows, for example those arriving from the production of sustainable energy or carbon capture and storage. The environmental challenges also pose reputational risks for those players that do not manage them in the best way possible and our management
We actively engage in creating more stable communities while monitoring and tackling the effects of a changing society. This is why we develop and offer flexible and modular pension and welfare solutions for the coverage of healthcare costs and other potential current and future needs for individuals, families and communities. In particular, we are focusing on the senior customers segment with modular solutions that combine savings, protection and services in a welfare perspective. We also undertake to strengthen dialogue with individuals during their entire period of interaction with our companies through services accessible 24/7. We provide customers with complete and easily accessible information on products and services while helping them to understand the primary factors that may affect their income capacity and aiding them in accurately assessing their capacity to save as well as identifying their current and future needs. We believe that insurance coverage is the most appropriate tool to forecast and meet potential needs of both younger and older individuals with the required advance notice; we therefore formulate and present offers even in the case of market contexts with little knowledge and low individual propensity for insurance solutions.
Percentage of share capital represented by institutional investors in the Shareholders’ Meeting over the last five years
There is no stock ownership system for employees and there are no shareholder agreements on shares. It should, however, be noted that the Company facilitates participation in Shareholders’ Meetings for beneficiaries of long term incentive (LTI) plans - which are based on Generali shares - by providing them with a designated representative.
Annual Integrated Report and Consolidated Financial Statements 2018, p. 130 for further information on stakeholder relations
In 2016, we launched the Shareholders’ Meeting Extended Inclusion program to facilitate participation in the Shareholders’ Meeting to those with motor and sensory disability: some dedicated services are provided to overcome any physical, communication and sensory barriers, like simultaneous translation into many languages, sign language and captioning in Italian, reception and check-in, as well as professional medical assistance.
The Board of Directors has structured its own organization - even through the establishment of special Board Committees - in a manner that meets the need to define strategic planning in line with the Group’s purpose, values and culture and, at the same time, monitors the pursuit of this strategy with a view to the sustainable value creation over the medium to long term. Our integrated governance also leverages the varied and in-depth professional skills present in the Board and ensures effective oversight of management’s activities.
In early 2019 induction sessions were held on the impacts of the future application of IFRS 9 and IFRS 17 and IT impacts on the insurance sector (Insurtech).
Focus on the Board of Statutory Auditors in office until 2020 annual Shareholders’ Meeting
Our policy is based on the following principles that steer remuneration programs and related actions: The remuneration policy for non-executive directors establishes that remuneration consists of a fixed component as well as an attendance fee for each Board of Directors’ meeting in which they participate, in addition to the reimbursement of expenses incurred for participation in such meetings. Directors who are also members of the Board Committees are paid remuneration in addition to the amounts already received as members of the Board of Directors (except for those who are also executives of the Generali Group), in accordance with the powers conferred to those Committees and the commitment required in terms of number of meetings and preparation activities involved. This remuneration is established by the Board of Directors. In line with the best international market practices, there is no variable remuneration.
The Managing Director/Group CEO, the unique executive director, the members of the Group Management Committee (GMC) and the other executives with key responsibilities receive a remuneration package consisting of a fixed component, a variable component with no-claims bonus and claw back mechanisms, and benefits.
14 It represents the remuneration package for all those described, except for the executives with key responsibilities in control functions to whom specific remuneration policy and rules are applied.
Additional information in the Notes of the Annual Integrated Report and Consolidated Financial Statements 2018 for further information on pension benefits of the Group employees
44 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
The data in this Management Report is expressed in thousand euro, unless otherwise indicated.
— In April, Assicurazioni Generali S.p.A. finalised the merger by incorporation of the Dutch subsidiary Generali Finance B.V., directly held 100%. The transaction, whose accounting effects are backdated to 1 January 2018, mainly consists of incorporating intercompany loans receivable for 1,500 million and loans payable issued on the market for the same amount. This transaction generated the entry of a merger surplus reserve totalling 8.4 million.
— In April, the Generali Group finalised the disposal of its shareholding in the Colombian companies, i.e. 91.3% of Generali Colombia Seguros Generales S.A. and 93.3% of Generali Colombia Vida - Compañia de Seguros S.A. The direct shareholding interest held by Assicurazioni Generali S.p.A. in the two companies was equal respectively to 88.2% and 11.5%. The transaction generated 13.9 million in gross capital gain.
— In May, Assicurazioni Generali S.p.A. set up a new branch in the Grand Duchy of Luxembourg under the right of establishment dedicated to the Employee Benefits business (GEB). The new Generali branch will be operational in the Group reinsurance sector starting from 2019.
— In June, Assicurazioni Generali S.p.A. completed disposal of its investments in the subsidiaries Assurances Maghrebia S.A. and Assurances Maghrebia Vie S.A., of which it held 44.2% and 22.1% of the share capital, respectively. The transaction generated 4.9 million in gross total capital gain.
— In November, Assicurazioni Generali S.p.A. announced that it will exercise the option of early repayment of the 7.898% Perpetual Fixed/Floating Rate Notes for the amount of 100 million (option exercise date 19 December 2018).
• a decrease in the net underwriting balance of 155,113 thousand. The drop concerned both the Life segment (-137,537 thousand) and the Non-Life segment (-17,575 thousand). The contraction of the Life segment is mainly due to the reinsurance accepted directly by the Parent Company, by Generali Employee Benefits and by the London branch. The decrease in the Non-Life segment considerably worsened the result of the reinsurance accepted directly by the Parent Company, for the most part offset by the improved result of the London branch.
— The profit from extraordinary operations decreased by 20,337 thousand, and is mainly due to an increase in income tax costs regarding previous years, partially offset by higher realized gains.
— Greater tax income of 25,307 thousand, referring primarily to the rise in income from the relevant IRES.
Financial result (b) 2,422,237 2,450,022 minus income allocated to technical accounts −611,953 −816,384
(b) Including net income on investments, net income on realisation, value adjustments and net profits on internal fund investments
The premiums from indirect business were mostly underwritten by the Generali Employee Benefits unit for 1,042,671 thousand (1,034,002 thousand in the previous year) and by the Parent Company Reinsurance unit for 369,109 thousand (448,403 thousand in the previous year).
As regards the insurance business carried out by way of free provision of services, in the European Union a total of 8,839 thousand was collected in premiums.
The gross collection of the Non-Life segment amounted to a total of 1,679,800 thousand (1,661,058 thousand in the previous year).
The collection from indirect business comes primarily from the reinsurance that is directly accepted by the Parent Company (521,215 thousand versus 521,804 thousand of the previous year) and from the London branch (423,689 thousand compared with 434,524 thousand of the previous year).
To be added also are the premiums accepted in reinsurance by the Generali Employee Benefits unit (180,392 thousand versus 198,623 thousand of the previous year) and by the Hong Kong branch (97,925 thousand versus 98,391 thousand in the previous year).
The other branches of the Company and the Head Office portfolio contributed with 4,255 thousand (5,256 thousand in the previous year).
As regards the mostly significant changes, the decline in premium collection of the Generali Employee Benefits unit was particularly affected by the fewer premiums accepted by the Swiss subsidiary Generali Assurances Generales S.A. for 15,852 thousand, resulting from the non-renewal of several important insurance contracts with several multinational customers.
The other branches reported a total premium collection of 71,965 thousand compared with 111,117 thousand of the previous year, broken down as follows: Head Office portfolio for 52,275 thousand (43,996 thousand in the previous year), first quarter of the former Panama branch for 16,054 thousand (49,370 thousand in the previous year) and the Tokyo branch for 3,636 thousand (17,750 thousand in the previous year). Growth of the Head Office portfolio production was particularly concentrated in the Global Corporate & Commercial segment. As regards the contractions, they came from the transfer of the insurance activities of the Panama branch in April, and from the gradual divestment of the Japanese insurance portfolio that began in the second quarter of the year.
Net technical result amounted to 346,586 thousand, appreciably down compared with the previous year (448,130 thousand). The result is comprised of the net underwriting balance, down by 137,537 thousand compared to the previous year, and of the financial income transferred to the technical account, net of technical interest, up by 35,993 thousand compared to the previous year.
Gross financial income transferred to the technical account fell by 205,662 thousand (from 678,755 thousand to 473,093 thousand). This decline is closely related with the downturn in technical provisions following the transfer of the reinsurance contracts with the Group Companies divested during the year and the automatic contrac-
Administration costs / net premiums 3.9 2.9 tion of the portfolio accepted by the Subsidiary Alleanza Assicurazioni S.p.A. The technical interests of the Life segments considerably fell by 241,655 thousand (from 384,326 thousand to 142,671 thousand), in this case as well mainly following the transfer of the reinsurance treaties with the Companies divested during the year, to which lower financial profitability of the portfolios accepted in reinsurance by Alleanza Assicurazioni S.p.A. and of the portfolios of the Dubai and London branches is added. Therefore, the income allocated to the technical account, defined as the difference between the gross financial income transferred to the technical accounts and the technical interests of the Life segments, increased by 35,993 thousand (from 294,429 thousand to 330,422 thousand).
As with reference to the reinsurance accepted directly by the Parent Company, for almost all of the other Group Companies the result shows a decline from 89,919 thousand to 14,227 thousand, against a decline in the premium collection of 79,294 thousand (from 448,403 thousand to 369,109 thousand).
As regards the reinsurance acceptance by Alleanza Assicurazioni S.p.A., the results showed a 62,844 thousand decline (from 89,494 thousand to 26,651 thousand) due both to the automatic contraction in volumes of the run off treaties and to the lower recognised financial profitability. The reduction in accepted premiums stood at 35,833 thousand (from 223,002 thousand of the previous year to 187,169 thousand).
The considerably lower results generated by the reinsurance directly accepted by the Parent Company, a good part of which offset by the substantial improvement in the result posted by the London branch as itemized below, significantly affected the decrease in the net underwriting balance.
The reinsurance directly accepted by the Parent Company, primarily from other companies of the Group, posted a result of 70,454 thousand, down by 100,997 thousand compared with the previous year (171,451 thousand). The decline was affected by claims, maturities and surrenders, from 115,965 thousand in the previous year to 171,815 thousand, and a growth in premiums earned transferred to reinsurers (from 191,296 thousand to 236,656 thousand). Gross accepted premiums fell slightly, from 521,804 thousand of the previous year to 521,215 thousand.
The greater premiums earned transferred to reinsurers mainly come from the strengthening of the catastrophe reinsurance protection and the increased premiums replenishing reinsurance maximums paid to the reinsurers following a higher frequency of Man Made claims during the year.
Generali IARD from which, among other things, a lower commission burden arises. The combined ratio stood at 101.3% compared with 121.3% of the previous year.
In general terms, the claims/premiums ratio of the London branch stood at 77.1% (92.4% of the previous year). The ratio of operating costs/premiums of the London branch was 24.2% compared to 28.9% in the prior year. This latter significant reduction mainly results from the revision of reinsurance structure with the subsidiary 54 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
The class D net expense amounted to 17,556 thousand, down compared to the 90,484 thousand income of the previous year. The decrease is mostly due to the interest receivable on reinsurance deposits (68,889 thousand change) and, in particular, to interest related to reinsurance deposits concerning the company Generali PanEurope dac, transferred during the first half of 2018. The residual change can mainly be attributed to net unrealized capital losses, which amounted to 16,261 thousand compared to the net unrealized capital gains of 18,598 thousand of the previous year, for the most part on mutual fund units.
Income from bonds is equal to 60,589 thousand (72,974 thousand in the previous year), of which 24,149 thousand deriving from government bonds (32,555 thousand in 2017) and 36,440 thousand deriving from corporate bonds (40,419 thousand in 2017). The decline is mainly associated with the exit of the Panama securities portfolio, in addition to the repayments of investments in shortterm government bonds on the head office portfolios, whose liquidity flows were used in monetary instruments.
1 The average rate of return on investments is the ratio of income for the period to half the sum of investments at book value at 31/12/2018 and 31/12/2017 56 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
A discussion on the items of the above table is provided below, with exception made for the interest expenses on financial debt that is specifically discussed in the next section.
The following table shows details of the components of other ordinary income and charges: (in thousand euro) 2018 2017
The increase is attributable to the interest on subordinate liabilities (from 489,447 thousand in the previous year to 560,934 thousand), mainly against the loan taken over by Assicurazioni Generali following the incorporation of Generali Finance B.V..
The interest paid on other loans decreased (67,045 thousand compared to 75,757 thousand in 2017) by virtue of the lower interest rate to pay on the new positions compared to those paid back during the year, whose effect is greater than the increase in overall debt exposure.
The results from extraordinary operations are positive, at 190,641 thousand (210,977 thousand in the previous year).
Specifically, deferred IRES taxes amounted to 189,612 thousand (161,760 thousand in 2017). Taxes also include deferred IRAP taxes of 4,827 thousand (compared to a 5,470 thousand charge in the previous year), a charge for taxes due in Italy on the income of some Group subsidiaries overseas (Controlled Foreign Companies – CFC) of 21,728 thousand (10,636 thousand last year), an 855 thousand charge for other substitute taxes on contributions of real estate in real estate funds, and lastly, a charge for taxes paid abroad amounting to 25,058 thousand (24,163 thousand in the last year).
Mainly contributing to the formation of this result are the realized gains coming from the transfer of the Panama branch (77,459 thousand) and of the shareholdings in the following companies: Generali PanEurope dac (120,667 thousand), Generali Colombia Seguros Generales S.A. and Generali Colombia Vida - Compañia de Seguros S.A. (13,896 thousand), Assurances Maghrebia S.A. and Assurances Maghrebia Vie S.A. (4,911 thousand), Sara Assicurazioni (12,243 thousand).
This result is partially offset by the income tax costs relating to prior years for 30,434 thousand (19,228 thousand income in 2017) in connection with the supplementary returns submitted during the year.
Class C investments, i.e. the investments of the Company excluding those benefiting the Life-insurance policyholders who bear the risk, show an increase from 40,664,819 thousand to 41,010,267 thousand.
Class D investments, i.e. the investments of the Company benefiting the Life-insurance policyholders who bear the risk, show a decrease from 3,268,077 thousand to 228,850 thousand.
Reinsurance deposits decreased from 6,927,863 thousand to 5,342,732 thousand, mainly due to the termination of the reinsurance contract with the company Generali Levensverzekering Maatschappij N.V. (-1,254,449 thousand) and to the ongoing contraction of the portfolio in run-off accepted by the subsidiary Alleanza Assicurazioni S.p.A. (-499,847 thousand) in the Life segment.
The item “Other” increased from 1,985,176 thousand to 4,309,626 thousand. The change is mainly due to the greater loans to the companies of the Generali Beteiligungs -Gmbh Group (change of 1,186,002 thousand) and Generali Deutschland AG (change of 313,997 thousand) following the merger with Generali Finance B.V.. The increase in this item is also attributable to greater units of
mutual funds (change of 850,112 thousand), almost entirely due to the sale of units of the Generali Money Market fund.
Bond investments amounted to 1,824,461 thousand, down from the previous year (1,999,962 thousand). This decrease can be attributed to lower investments in government bonds (change of 127,128 thousand) and to investments in corporate bonds (change of 48,372 thousand ).
Technical provision of non life business 1,626,427 1,439,951 13.0 20.2 11.3
Total life and non life business 8,054,012 12,676,527 -36.5 100.0 100.0
As With regard to the technical provision of Life segment, the most important changes concerned the mathematical provision and provisions linked to the management of internal funds (down by 1,778,249 thousand and 3,039,909 thousand, respectively).
With regard to technical provisions tied to the management of internal funds, the considerable reduction mainly was caused by the termination of the reinsurance contracts with the companies Generali Levenverzekering Maatschappij N.V. (-390,683 thousand) and Generali PanEurope dac. (-2,634,672 thousand), divested during the year.
Non-Life technical provisions increased by 186,476 thousand (from 1,439,951 thousand to 1,626,427 thousand). Particularly affecting this increase were the provision for claims outstanding that increased by 170,856 thousand (from 1,183,360 thousand to 1,354,216 thousand), main with reference to the following components: London branch for 72,948 thousand, reinsurance accepted directly by Head Office for 67,339 thousand and Hong Kong branch for 33,196 thousand, in line with the performance of the technical result described above.
62 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Subordinated liabilities went up by 1,238,850 thousand in connection with the incorporation of Generali Finance B.V..
Other loans increased by 968,800 thousand, mainly to Participatie Maatschappij Graafschap Holland N.V..
The total debt of the Company increased by 2,143,765 thousand, from 14,054,965 thousand to 16,198,730 thousand, primarily due to the increase in subordinated liabilities linked to the incorporation of Generali Finance B.V..
Debenture loans decreased with the payment of the annual portion of 63,885 thousand of the senior bond issued to fund the tax recognition of goodwill relating to Alleanza Assicurazioni S.p.A..
EURIBOR 12M + 220 bps 560.0 EUR 127.8 12/05/2010 14/12/2020 64 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Shareholders’ Fund amounted to 14,976,820 thousand, compared with 14,825,483 thousand in the previous year.
The major changes concerned distribution of the dividend (1,330,299 thousand) and recognition of the merger surplus arising from the transaction with Generali Finance B.V. (8,353 thousand), plus the profit for the year (1,473,283 thousand).
As at 31 December 2018, the Company employs a workforce of 1,686 units (2,003 units as at 31 December 2017), including a total of 584 staff employed in the foreign branches (912 as at 31 December 2017). The considerable decrease in staff employed in the foreign branches is attributable to the transfer of the Panama branch.
In the year in question, the training programme Managerial Acceleration Program, started in 2017, continued for the purpose of promoting a Generali management model, shared and uniform, providing all current and future Managers of Assicurazioni Generali and the Group, with the mindset, the skills and tools necessary to effectively manage people, projects and budgets.
To increase and update management, transversal and technical skills of the entire corporate population, training classes geared to achieve technical excellence (Generali Advanced Technical Excellence) were confirmed and updated. Training classes on managerial soft-skills, offered to all organisational levels and involving all functions, were added to this initiative; the Tam Tam Talks, which by proposing multiple view points and multidisciplinary 66 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
As declared in our climate change strategy, approved by the Board of Directors in February 2018, and described in further detail in the technical note published by the Group in November 2018, our commitment to contribute to the transition entails specific actions regarding investments and underwriting, increasing exposure to green activities, and defining a clear stance on coal-linked experiences on the realities of the present, pursue the objective of increasing the collective capacity of understanding future contexts characterised by volatility, uncertainty, complexity and ambiguity.
As a major component of the People Strategy of the Group, there have been several Diversity & Inclusion initiatives in 2018, including events, workshops and seminars, in order to maximise the value of diversity, teamwork and inclusion.
Moreover, the offer of training and update programmes for the development of language skills continues, along with other initiatives supporting the specialized knowledge of professional skills such as the Internal Audit Programme.
As regards mandatory training, the classes for a better understanding of security measures to be adopted for the processing of personal information (Italian Legislative Decree 196/2003) and for the control of aspects related to occupational health and safety (Italian Legislative Decree 81/2008), continued. On a regular basis, classes intended to foster the dissemination and operating application of the “Organisational, management and control model”, as required by Italian Legislative Decree 231/2001, and courses on anti-money laundering as required by Italian Legislative Decree 231/2007 and regulatory provisions of the sector’s supervisory authority, also continued.
With respect to training on laws and regulations, employees were required to participate in specific e-learning classes regarding training and awareness-raising, through specific initiatives, on matters dealt with in the Code of Conduct.
We remunerate our employees based on the National Collective Labour Agreement of the average cost gross average remuneration
As proof of our commitment to the environment, we have undertaken to increase environmental and social product premiums by 7%-9% and to allocate 4.5 billion in green and sustainable investments by 2021.
68 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
With reference to outward reinsurance, the business model adopted by the Group calls for, in principle, centralisation of the transfer of the treaties of the subsidiaries of the Parent Company, except for any exceptions due to local legislation or regulations. The Parent Company acquires appropriate protection on behalf of the entire Group, in this way benefitting from advantages coming from the breadth of the portfolio and from the scale economies.
31-Dec-17 31-Jan-18 28-Feb-18 31-Mar-18 30-Apr-18 31-May-18 30-Jun-18 31-Jul-18 31-Aug-18 30-Sep-18 31-Oct-18 30-Nov-18 31-Dec-18
Within the deadline set by the Arbitral Tribunal, Generali then filed further briefs in which it reiterated the firm objection, both in fact and in law, of the opposing claims, reiterating the preliminary exceptions raised.
Taking into account the status of the arbitration proceeding and the legal opinions acquired in this regard, it is considered that the conditions of probability and ability to make a reliable estimate that are required by IAS 37 to make any provisions for risks related to the abovementioned request for damages are not met.
Concerning the information required by Article 123-bis of the Italian Consolidation Finance Act, please refer to the Corporate Governance and Share Ownership Report of the Company which will be available at the General Shareholders’ Meeting.
On the basis of article 36 of Consob resolution no. 16191/2007, as subsequently amended, and article 2.6.2, paragraph 12, of Rules for the Markets organized and managed by Borsa Italiana S.p.A., it is hereby certified that in the Generali Group are met the “conditions for the listing of shares of companies with control over companies established and regulated under the law of non-EU countries” and that adequate procedures have already been adopted to ensure full compliance with the foregoing regulation.
(*) (total dividend + var.share price during the reference period)/share price at the beginning of the year
Detailed information as required under current legislation in respect of stock option plans is given in the Report on remuneration.
related parties”. Said guidelines, available in the Governance section of the Company’s website, constitute the implementation of the regulations adopted by Consob with resolution no. 17221 dated 12 March 2010 subsequently amended by Resolution no. 17389 of 23 June 2010 which, in turn, implements the provisions of art. 2391-bis of the Italian Civil Code.
The main intra-Group transactions, settled at fair market conditions or at cost, involved reinsurance and co-insurance, administration and management of the securities and property portfolio, claims management and settlement, IT services, loans and guarantees and loans to employees. The above-mentioned transactions and contractual performances permitted operational functions to be rationalized and the level of services to be improved.
As from 2011, the matter of the related-party transactions was ruled by the regulation approved by the Board of Directors within the “Guidelines for transaction with 72 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Consolidated entities were 455 as at 31 December 2018 compared to 423 as at 31 December 2017. In detail, entities consolidated line by line increased from 388 to 419 and those valued at equity went up from 35 to 36.
— In January, Assicurazioni Generali S.p.A. launched a subordinated bond issue in the bullet format with ten-year expiry for a total amount of 500 million, addressed to institutional investors. The issuance, which is a tier 2 regulatory capital instrument, is intended to partially refinance 750 million of the subordinated Group debt with the first call date in 2019, early repayment which, by law, obtained prior authorization by IVASS.
— In January, Assicurazioni Generali S.p.A. announced that it will exercise the option of early repayment of the 7.236% Perpetual Fixed/Floating Rate Notes for the amount of 350 million (early repayment date 4 March 2019).
— In January, Assicurazioni Generali S.p.A. reported that it will exercise the option of early repayment of the 8.5% Perpetual Fixed/Floating Rate Notes for the amount of 350 million (early repayment date 6 March 2019).
— On 24 January 2019, the authorisation petitions necessary to establish two branches in the United Kingdom, one for the Life segment and one for the Non-Life segment, in place of the current mixed branch located in London. These petitions meet the regulatory requirements provided for by applicable legislation due to the United Kingdom’s exit from the European Union, as previously described in the paragraph on “Other information”. The authorisation petitions submitted to the United Kingdom Regulator
In the United States, a slowdown in the current expansion stage is forecast owing to the more restrictive monetary policy and the failed tax stimulus. The labour market, at the full employment level, will continue to sustain growth in salaries. The Federal Reserve announced a less aggressive path of standardization of the monetary policy for the future; a fence-sitting attitude tied to future performance of the economic indicators, and hence less foreseeable, will prevail.
With reference to the financial markets, increased longterm rates are expected in the bond sector. For the stock markets, intense volatility is expected during the year because of the reduced monetary stimulus, the higher bond yields, expectations of less economic growth and various exogenous risks that weigh on the political and economic scene.
With regard to the insurance sector, slightly weaker performance than what was recorded in 2018 is expected in the Life segment in 2019, with growth of the unit linked products at rates lower than those of recent years, while the traditional products, backed by the rise in rates, might find renewed interest. Growth in the Non-Life segment in the major Eurozone countries will continue, despite the slight slowdown forecast in economic growth.
In terms of risk profile representation, the Company uses the Partial Internal Model (PIM) of Generali Group. The use of the PIM has been approved by the Supervisory Authority for the Solvency Capital Requirement calculation. The PIM has become the cornerstone of the risk measurement and assessment and its use is embedded in all risk and capital management related processes.
Since Assicurazioni Generali is the Parent Company of Generali Group, the participations in subsidiaries represent the main asset class within the financial statement. As a result, the main contribution to the Company’s risk profile is given by equity risk.
In addition to financial and credit risks, the Company is exposed to life and non-life underwriting risks, which arise from the reinsurance accepted mainly from Group companies, from the Generali Employee Benefits and from the foreign branches.
The system of governance, which includes the internal control and risk management system, consists of the roles and responsibilities of the Board of Directors (BoD), Senior Management and Key Functions. Furthermore, it consists of policies, administrative and accounting procedures and organizational structures aimed at identifying, assessing, measuring, managing and monitoring the main risks.
The internal control and risk management system is founded on the establishment of three lines of defence: — Operating Functions (“risk owners”), which represent the first line of defence and have ultimate responsibility for risks relating to their area of competence; — Actuarial, Compliance and Risk Management Functions, which represent the second line of defence; — Internal Audit, which represents the third line of defence.
Internal Audit together with Actuarial, Compliance and Risk Management Functions represent the “Key Functions ”.
The roles and responsibilities of the BoD and related Committees, Senior Management, Key Functions and the interactions among Key Functions are described within the Corporate Governance Report. Key roles within the risk management system are outlined below: — the BoD is responsible to ensure the overall consistency of the System of governance and of the internal control and risk management system with all the applicable regulations, the Directives and Policies on internal control and risk management; it defines, with the support of the Risk and Control Committee (RCC) and of the Key Functions, the Group Directives on the System of Governance assessing their
Part B – Risk Report 3 In this Report, the SCR and MCR values are intended as preliminary estimates, as provided by IVASS Provvedimento n. 53, 2016. The final capital requirement will be provided in the Solvency and Financial Condition Report (SFCR). The comparative amount for YE2017 represents the final regulatory position.
Key Functions collaborate according to a pre-defined coordination model, in order to share information and create synergies.
The principles defining the risk management system are provided in the Risk Management Policy , which is the cornerstone of all risk-related policies and guidelines. The Policy covers all risks the Company is exposed to, on a current and forward-looking basis.
adequacy, effectiveness and functioning at least annually. It also defines, with the support of the RCC, the organizational set-up, establishes the Key Functions defining their mandate and the reporting lines as well as, where applicable, any supporting committee and approves their annual activity plans, adopts the internal control and risk management Policies, approves the ORSA Report results and, based on them, defines the risk appetite; — the Senior Management is responsible for the implementation, maintenance and monitoring of the System of governance both at local and Group level, according to the BoD directives; — the Key Functions, in particular: • the Risk Management Function supports the BoD
and the Senior Management in defining the risk management, risk monitoring and risk measurement strategies and provides, through an appropriate reporting system, the elements for the assessment of the overall risk management system; • the Compliance Function supports the BoD and the Senior Management in assessing, at local and Group level that the organization and the internal procedures are adequate to manage the potential risk of incurring in administrative or judiciary fines, economic losses or reputational damage as a consequence of the non-compliance with laws, regulations, provisions issued by the Supervisory Authorities or with the internal regulations, as well as the risk deriving from unfavorable changes in the law or judicial orientation (compliance risk); • the Actuarial Function supports the BoD in accordance with Solvency II regulation, carrying out co-
The risk management system consists in the following phases: 1. Risk identification 2. Risk measurement 3. Risk management and control 4. Risk reporting 4 The Risk Management Policy covers all Solvency II risk categories and, in order to adequately deal with each specific risk category and the underlying business processes, it is complemented by the following risk policies: Group Investment Governance Policy; P&C Underwriting and Reserving Policy; Life Underwriting and Reserving Policy; Group Operational Risk Management Policy; Group Liquidity Risk Management Policy and other policies related to business processes, such as Group Capital Management Policy, Supervisory Reporting and Public Disclosure AG Policy, etc. All policies are updated on annual basis.
76 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
The purpose of the risk identification is to ensure that all material risks to which the Company is or could be exposed are properly identified. The Risk Management interacts with the main business Functions in order to identify their main risks, assess their importance and ensure that adequate measures are taken in order to manage them, according to a sound governance process.
Identified risks are measured through their contribution to the capital requirement (for the so-called quantifiable risks), complemented by other modelling techniques (for the so-called non-quantifiable risks) deemed appropriate and proportionate to better reflect the Company’s risk profile. Using the capital metric ensures that each risk is covered by an adequate amount of capital that could absorb the losses incurred if the risks materialize.
The Company’s risks are managed in line with the “risk appetite” defined by the BoD within the Group’s Risk Appetite Framework (RAF). The RAF defines the level of risk considered acceptable in conducting business and provides the overall framework for embedding risk management into business processes. In particular, the RAF includes the risk appetite statement, risk preferences, risk metrics, tolerance and target levels.
The RAF statement is complemented by qualitative assertions (risk preferences) supporting the decision-making processes as well as by risk tolerances providing quantitative boundaries to limit excessive risk-taking, as well as by a target operating range to provide indications on the solvency level at which the Company aims to operate. Tolerance and target levels are referred to capital and liquidity metrics.
The RAF governance provides a framework for embedding risk management into day-to-day and extraordinary business operations and control mechanisms as well as the escalation and reporting processes to be applied in case of risk tolerance breaches. Should an indicator approach or breach the defined tolerance levels, escalation mechanisms are activated.
The Own Risk and Solvency Assessment (ORSA) Report is produced on an annual basis. This is the main risk reporting process with the purpose to assess and provide a reporting of the risk profile and of the overall solvency needs on a current and forward-looking basis. The main risks are assessed and documented in the ORSA process, also on a forward-looking basis. Both the risks included in the SCR calculation and those risks where no capital requirement is foreseen are taken into account.
In compliance with IVASS Provvedimento n. 53, 2016, the SCR and Minimum Capital Requirement (MCR) data hereby reported are based on a preliminary estimate.
EOF to cover SCR are calculated based on the net equity, revaluating all assets and liabilities at market value. The main adjustments in net equity include: — deduction of intangible assets; — revaluation of investments at fair value (incl. participations and bonds); — technical provisions (TPs) are accounted based on
Subordinated debt (with specific features in terms of availability, duration and absence of incentives to redeem or encumbrances) eligible to cover the SCR amounts to € 8.6 billion (more details on financial debt are presented in the Balance sheet).
Own funds (OF) are classified into Tiers, representing different levels of quality with respect to loss-absorption capacity criteria. Tier 2 OF refer to subordinated debt, while Tier 3 OF refer to deferred taxes.
The SCR is calculated as the Value at Risk (VaR) of the OF subject to a confidence level of 99.5% over a oneyear period (in other words the SCR is calculated to ensure 1 in 200 years events coverage).
The EOF to cover MCR are presented below: Total EOF to meet the SCR
The BoD, assisted by the Risk and Control Committee, ensures the ongoing appropriateness of the design and operations, the ongoing compliance of the PIM and also that the Internal Model continues to appropriately reflect the risk profile.
The validation output is designed to support Senior Management and BoD in understanding the appropriateness of the Internal Model, including improvement areas where PIM presents weaknesses and limitations, especially with regards to its use.
Furthermore, the validation procedures also serve as an incentive mechanism to ensure timely and accurate incorporation of PIM modelling refinements.
The validation process is carried out periodically and when requested by the BoD, Senior Management or, for example, in case of changes to the PIM.
The Company is exposed to life underwriting risk deriving from indirect business, as it operates as the main reinsurer of Group companies, and from direct business mainly performed through foreign branches operating in the United Kingdom (UK), Hong Kong and Dubai.
— health risk is related specifically to health products and also includes the related catastrophe risks; 9 Recovery rates refer to the assumptions adopted by the Company in the calculation of the technical provisions, with regards to the time period in which the policyholders will benefit of the disability, sickness and morbidity compensation.
Capital requirements for life underwriting risks are calculated on the basis of the difference between the insurance liabilities before and after the application of the stress.
Life underwriting risk contribution to the risk profile after diversification remains limited due to the business of Assicurazioni Generali, whose financial statements is mainly composed by participations, and due to the high level of diversification with other risks.
Life underwriting risk management inherent to direct business is based on the product pricing process. This process consists of setting product features and assumptions regarding expenses, biometric and policyholders’ behavior assumptions as to manage any adverse impact in the realization of these assumptions.
Non-life underwriting risk contribution to the risk profile after diversification remains limited, given the nature of the business of Assicurazioni Generali, whose balance sheet is mainly composed by investments in participations.
Further limits, related to the underwriting risks management and the reinsurance counterparty default risk at Group level, have been defined in the Risk Concentrations Management Group Policy – Reinsurance and Underwriting Exposure.
Since participations in Group companies are the main asset class within the Company’s portfolio, equity risk represents the main contribution to the risk profile. More generally, equity risk derives from adverse changes in the market value of the assets or of the liabilities due to changes in the level of equity market.
In addition to the equity risk driven by participations, as a result of its insurance activity, the Company invests the collected premiums in a wide variety of financial assets, with the purpose of honouring future promises to policyholders and generating value for its shareholders. Therefore, the Company is exposed to the risk that invested assets do not perform as expected because of falling or volatile market prices and that cash of maturing bonds are reinvested at unfavourable market conditions, such as low interest rates.
The Company manages its assets according to the socalled “Prudent Person Principle”, and strives to optimize their return minimizing the negative impact of short term market fluctuations on its solvency. The “Prudent Person Principle” is the main cornerstone of the investment management process.
The aim of ALM is to optimize a risk-return profile over a predefined time horizon, identifying a target variable satisfying the expected return and a corresponding risk measure.
As envisaged in the internal regulation, investments in securities with a high credit rating (investment grade) are preferred and diversification of risk is encouraged.
The credit risk assessment is based on the credit rating assigned to counterparties and financial instruments. To limit the reliance on external rating assessments provided by rating agencies, an internal credit rating assignment framework has been set within the Risk Management Policy. Within this framework additional rating assessments can be performed at counterparty and/ or financial instrument level. This applies even if an external rating is available. The additional rating assessment has to be renewed at least annually. Moreover, additional assessments shall be performed each time the parties involved in the process possess any information, coming from reliable sources, that may affect the creditworthiness of issuer/issues.
As for the financial risk, the monitoring of the credit risk is in line with the Group Investments Risk Guidelines (GIRG) and with the Delibera Quadro sugli Investimenti; a specific reporting on the compliance with limits defined and on derivative exposures is in place.
It should be noted that the SCR calculated based on Solvency II does not include the allowance for credit risk on Italian government bonds, i.e. BTP, as it does not reflect any allowance for the Volatility Adjustment. Given the reduced volume of the Company’s exposure to these and the impact of Volatility Adjustment, the effect on solvency position would tend to largely balance out.
84 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Operational risk is the risk of loss arising from inadequate or failed internal processes, personnel or systems, or from external events. The operational risks to which the Generali Group is exposed are identified and declined within the Risk Map defined in the Risk Management Policy and in the Operational Risk Management Policy. These risks include also compliance risks and financial reporting risks, while strategic and reputational risks are excluded.
Since 2015, the Group has been exchanging economic loss data related to operational risk, properly anonymized, through the “Operational Risk data eXchange Association (ORX)”, a global association of operational risk practitioners where the main banking and insurance players at global level also participate. The aim is to use the data to improve the Group risk management and to anticipate emerging trends. In addition, since losses are collected by the first line of defence, this process contributes to create awareness among risk owners on the main risks that actually hit the Company.
The loss data collection is integrated by the forwardlooking assessments that aim to evaluate the evolution of the operational risk exposure in a given time horizon, foreseeing potential risks and supporting the appropriate decisions for an effective and timely response.
One of the main results from this cooperation is constituted by a series of risk mitigating measures triggered as a result of control testing, the assessments and the collection of operational risk events.
The Company’s liquidity risk profile derives from cash flows related to operating activities, dividend policy, financing and investing activities.
The operating activity generates cash flows related to the direct insurance business, reinsurance activities towards Group companies and subsequent cessions to external reinsurers, in addition to administrative expenses and taxes.
The expected cash flows are closely monitored, in particular through the planning and control tool called “Annual Liquidity Forecast”, represented by a cash flow projection over a time period corresponding to the end of the current period, updated on a weekly basis and with a high level of detail of expected cash flows.
Although not included in the calculation of SCR, reputational and emerging risks are also taken into account.
Reputational risks refer to potential losses arising from a deterioration or a negative perception of the Assicurazioni Generali S.p.A. image or increasing conflicts with policyholders (e.g. due to poor quality of the services offered, placement of inadequate policies and behavior during sales, post-sales and liquidation phases).
Emerging risks arise from new trends or evolving risks which are difficult to perceive and quantify, although typically systemic. These typically refer to environmental trends (climate change), technological changes (big data), geopolitical developments. For the assessment of these risks and to raise the awareness on the implications of the main observed trends, the Risk Management Function engages with a dedicated network, including specialists from business functions (e.g. Insurance, Investment, Sustainability and Social Responsibility, Marketing, Strategy, etc.). The Group also participates to the Emerging Risk Initiative (ERI), a dedicated working group of the CRO Forum. Within ERI emerging risks common to the insurance industry are discussed and specific studies are conducted on single risks.
The proposed allocation of the profit of the year and dividend distribution keeps into consideration the resolution of the Board of Directors of March 13, 2019. With such a resolution the Board of Directors has approved the assignment of Generali’s shares in favor of the “Long Term Incentive Plan 2016“ (LTI Plan 2016). For the purpose of assigning the shares to the management of the Group, the expected increase in Shareholders Capital amounts to 4,435,531 euro.
Considering such increase in Shareholders Capital, the profit for the year is allocated for the amount of maximum 887,106 euro to Legal Reserve, in accordance with Art. 2430 of the Italian Civil Code, for 1,412,640,806 euro to dividend distribution and for 59,755,322 to extraordinary reserve
The total proposed dividend for each share amounts to 0.90 euro, for a total maximum pay-out of 1,412,640,806 euro.
Reclassified financial statements and alternative performance indicators for the Report on Operations
Total - - - - -2,409,668 Claims, maturities and surrenders -2,409,668
Net underwriting balance (**) 83,884 92 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Total - - minus allocated investment returns transferred to technical accounts and technical interests -611,953
Total - -1,227,606 Other ordinary income and changes -1,227,606 101 + Profit from ordinary operations 1,135,844
Total 190,641 105 1,326,485 Result before taxation 1,326,485 107 1,473,283 Profit for the year 1,473,283
This represents the ratio, expressed as a percentage, between claims and earned premiums for the period.
It is the sum of the percentage of claims with that of total incidence of costs on the premiums. It is essentially important in order to analyse the technical performance of the Non-Life segments because it represents the percentage of absorption that the technical costs (claims and operating costs) have compared to the premiums. The combined ratio is closely related to the “net underwriting balance” since it is not affected by the income of the investments. The less the combined ratio compared to 100%, the greater will be the “net underwriting balance ” coming from insurance operations.
Denominator 005 Earned premiums, net of reinsurance 1,107,077 018 Change in other technical provisions, net of reinsurance 0 028 Change in the equalisation provision -153
For the non-life business is the sum of the loss ratio and of the index of costs on premiums 92.5%
WHO BEAR THE INVESTMENT RISK AND RELATING TO THE ADMINISTRATION OF PENSION FUNDS
C. INVESTMENTS (follows) III - Other financial investments 1. Equities a) quoted shares 36 15,760,342 b) unquoted shares 37 11,876,933 c) other interests 38 7,628,991 39 35,266,266 2. Shares in common investment funds 40 890,425,386 3. Debt securities and other fixed-income securities a) quoted 41 1,807,390,767 b) unquoted 42 15,907,204 c) convertible bonds 43 1,163,211 44 1,824,461,182 4. Loans a) mortgage loans 45 0 b) loans on policies 46 349,664 c) other loans 47 393,381 48 743,045 5. Participation in investment 6. Deposits with credit institutions 50 142,059,510 7. Other 51 9,336,882 52 2,902,292,271 IV - Deposits with ceding
C. TECHNICAL PROVISIONS I - NON-LIFE INSURANCE BUSINESS 1. Provision for unearned premiums 112 402,755,611 2. Provision for claims outstanding 113 1,763,050,263 3. Provision for profit sharing and premium refunds 114 0 4. Other provisions 115 0 5. Equalisation provision 116 466,957 117 2,166,272,831 II - LIFE INSURANCE BUSINESS 1. Mathematical provision 118 5,375,367,001 2. Unearned premium provision for supplementary coverage 119 46,556,819 3. Provision for claims outstanding 120 1,230,286,390 4. Provision for profit sharing and premium refunds 121 81,609,401 5. Other provisions 122 19,671,165 123 6,753,490,776 124 8,919,763,607
D. PROVISIONS FOR POLICIES WHERE THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDER AND RELATING TO THE ADMINISTRATION OF PENSION FUNDS I - Provisions relating to contracts linked to investments funds and market index 125 225,895,413
G. CREDITORS I - Creditors arising out of direct insurance operations 2. Current accounts with insurance companies 134 6,598,193 3. Premium deposits and premiums due to policyholders 4. Guarantee funds in favour of policyholders 136 0 137 29,531,865 II - Creditors arising out of reinsurance operations
Previous Year brought forward 35,832,456,749 carried forward 47,950,885,742 111 We, Generali
1. PREMIUMS WRITTEN, NET OF REINSURANCE a) Gross premiums written 30 1,630,875,675 2. INVESTMENT INCOME: a) From partecipating interests 33 1,010,116,659
(of which, income from Group companies 41 0 ) 42 1,293,671,729 3. INCOME AND UNREALISED GAINS ON INVESTMENTS FOR THE BENEFIT OF POLICYHOLDERS WHO BEAR THE INVESTMENT RISK AND ON INVESTMENT RELATING TO THE ADMINISTRATION OF PENSION FUNDS
13. BALANCE ON THE TECHNICAL ACCOUNT FOR LIFE BUSINESS (item III.2) 80 346,585,739
b) From other investments aa) income from land and buildings 85 4,542,862 bb) from other investments 86 84,843,264 87 89,386,126
(of which, income from Group companies 201 19,610,037 ) 202 1,120,345,666 121 We, Generali
9. RESULT FROM ORDINARY ACTIVITY 101 1,135,844,406 12. EXTRAORDINARY PROFIT OR LOSS 104 190,640,679 13. RESULT BEFORE TAXATION 105 1,326,485,085 14. INCOME TAXES 106 −146,798,150 15. PROFIT (LOSS) FOR THE YEAR 107 1,473,283,235 122 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
In addition, the provisions of which at the ISVAP (now IVASS) Regulation No. 22 dated 4 April 2008 are applied with the amendments and integrations, and relative ISVAP (now IVASS) Regulations No. 53 dated 6 December 2016, the other implementing regulations issued by the institute of vigilance and by CONSOB. Furthermore, given the specific nature of the industry and for what is not provided in the above-mentioned disposals, the Civil Code rules have been applied, as well as the indications of national accounting standards issued by the OIC are considered.
The financial statements have been audited by EY S.p.A., the appointed audit firm from 2012-2020.
The significant accounting policies that have been applied when preparing the financial statements for the year are reported below.
Acquisition commissions on multi-year policies paid in advance and advertisement costs are charged entirely to the profit and loss account in the year in which those costs are incurred.
Other deferred charges are amortized over a maximum period of five year.
The cost of tangible fixed assets whose use is limited in time is depreciated annually based on their respective useful life.
Financial investments are subdivided into long-term investments, destined to be held permanently by the Company, and shot-term investments (or marketable securities ), which are held for trading; their classification, which also applies to own shares, is based on the criteria specifically set by the Board of Directors, in line with the requirements of ISVAP (now IVASS) Regulation No. 24 dated 6 June 2016.
Regarding the reasons and the most significant positions of the securities included in the item C.II and classified in the “short-term” portfolio, see part B Section 2.2 of the Notes.
The securities held for long-term use are valued at the weighted average cost, adjusted for any write-down considered permanent and, in case of fixed interest securities, also adjusted for the share accrued in the year of the trading spread, i.e. the positive or negative difference between the acquisition cost and the reimbursement amount at maturity.
The initial cost of securities held for long-term and shortterm use is partially or fully restored whenever the reasons for the write-downs cease to exist.
With reference to the securities portfolios, a net unrealized gain of 3,750,493 thousand euro emerges from the comparison between the market values at the end of the year and the carrying amounts. This amount includes the net unrealized gain of 3,598,575 thousand of the longterm portfolios and a net unrealized gain of 151,918 thousand of the short-term portfolio.
The Company have not exercised the option granted by the Regulation no. 43 IVASS of 12 February 2019 concerning the temporary suspension of the unrealized losses of the marketable securities introduced by Law Decree of 23 October 2018 n. 119 containing urgent provisions on tax and financial matters, converted by the law n. 136 of the 17 December 2018.
The evaluation criteria, in accordance with the provisions of Art. 23-septies of ISVAP regulation (now IVASS) n. 22/2008, amended and integrated, differ depending on the purpose of the financial transaction.
Hedging transactions are those carried out in order to protect the Company from financial risks related to the value of individual assets or liabilities, groups of assets, liabilities or future operations and cash flows. For example, hedging transactions protect the Company from the volatility of interest rates, exchange rates and market prices. Derivatives with hedging purposes are measured coherently with the related hedged asset and liabilities: gains and losses are recognized in the income statement in line with the corresponding capital gains and losses of the underlying items. For example, the income and expenses relating to derivatives hedging the interest rate on debt, are recognized among the other charges, just like the related interest due.
The value of derivatives is determined by referring to their respective market quotations, and, if these are not available, on the basis of a prudent valuation of the probable realisable value using calculation methodologies adopted by the market operators.
The item includes deposits with ceding companies in relation to reinsurance risks, and are recognized at nominal value.
Investment commitments relating to investment funds and market indexes and investments deriving from the management of pension funds
Such investments are measured at market value. The market value of the assets, established by contractual conditions, is determined as follows: a) for investments traded on regulated and active markets, by the value at the last trading day of the year; b) for investments traded in non-regulated markets, by the estimated realization value at the year-end; c) for other financial investments, other assets and liabilities and cash at hand, by the respective nominal value.
Receivables from policyholders include premiums accrued but not yet collected. Commissions payable to intermediaries for premiums in the course of collection are recognized among the other liabilities. Receivables from brokers include the amounts to be paid by agents, brokers and other insurance intermediaries.
Policyholders and third parties for recoveries include receivables for deductibles and retrieves following the payment of insurance compensations.
Current purchases of furniture, office equipment and goods listed in public registers are entirely depreciated over the financial year, in view of the fact that are constantly replaced.
The item includes demand deposits and deposits that provide for withdrawals subject to a time limit of less than 15 days, bank cheques and cashier’s checks, cash and stamps, recognized at nominal value.
The item also includes the connection account between life and non-life business.
In the Notes, any references to the Italian portfolio is to be interpreted in this sense.
For non-Group companies, only in cases of insufficient information received from ceding companies, to precisely determine the accrual economic result for the year at the reporting date, the technical income items regarding acceptances and retrocessions reinsurance are accounted for in the subsequent financial year.
The technical provisions for non-life business are computed according to the instructions of Art. 23 – ter and 23 – quater of Regulation No. 22 dated 4 April 2008, amended and integrated (hereinafter Regulation No. 22 dated 4 April 2008), in Annexes 15, 15 bis and 16 of the same Regulation.
The methodology consists in the analytical measurement of the ultimate cost of each claim in all lines of business and in the verification of the results through the application of statistical and actuarial methodology. The exception is represented by the damages to property in the MTPL line of business managed by the Company, reported in the last thirty days of the financial year, which are measured according to the “average cost” of homogenous groups of claims.
Claims incurred but not yet reported are estimated prudently on the basis of previous experience regarding both the frequency and the average cost for each line of business of the claims reported late.
The equalisation provisions are established with the objective of equalising the rate fluctuations of future claims or in order to cover particular risks such as credit risk, natural disasters or risks deriving from the use of nuclear energy. The provisions are determined in accordance with the attachment 1 of the above-mentioned Regulation No.15.
For the indirect business accepted through branches located in EU Member States, the technical provisions are determined, with relation to the commitments made, on the basis of the information provided by the ceding companies, appropriately integrated on the basis of independent evaluation to meet the commitments arising from contracts acquired pursuant to Annex 16 of Regulation No. 22 dated 4 April 2008.
The provision for unearned premium includes the provision for premium instalments, calculated analytically on a “pro rata temporis” basis, and the provision for unexpired risks, which is calculated using the empirical method. The provision for premium instalments is integrated by additional provisions covering risks arising from natural disasters as earthquakes, seaquakes, volcanic eruptions and related phenomena.
For the portfolio underwritten in non-EU branches, the technical provisions are computed in accordance with Art. 43 of Legislative Decree No. 209/2005, under the laws of the countries where branches operate.
The calculation principles, the valuations made and the declaration that technical provisions are sufficient to guarantee the obligations undertaken by the Company, are presented, for the Italian portfolio, in the report of the appointed Actuary, pursuant to paragraph 3 of Art. 23 – bis 14 of the Regulation No. 22 dated 4 April 2008.
For the foreign direct portfolio, underwritten in non-EU branches, the technical provisions are made in accordance with Art. 43 of Legislative Decree No. 209/2005, under the laws of the countries where branches operate.
The item includes payables towards reinsurers for deposits issued under reinsurance agreements. They are recognized at their nominal value.
Other liabilities include payables not included in other items, such as, premiums received but temporarily suspended due to mismatching. Moreover, the item includes the sum of the differences deriving from rounding up the additions of Balance Sheet, as well as the counterpart of the unrealized losses on options and swaps.
The item also includes the connection account between the life and non-life business.
Accruals and deferrals are recognized to ensure compliance with the “matching principle”, with reference to those transactions involving a period of several consecutive financial years. The trading spreads relating to financial liabilities are amortized over the residual duration of the liabilities.
Gross premiums written are accounted for in accordance with the ISVAP (now IVASS) Regulation n. 22/2008 amended and supplemented, gross of reinsurance premiums ceded. In particular, premiums are accounted together with the accessory premiums at the expiry date of each premium. The cancellations of a technical nature of premiums written during the year are directly deducted from premiums, whilst cancellations resulting from assessments by the Company on premiums receivable and annulments related to premiums written in previous years cannot be deducted, but are recognized within other insurance expenses.
Current taxes are determined based on the current tax law; the company has opted, as a consolidating com-
pany, for the Group taxation regime, pursuant to Title II, Chapter II, Section II of the Income Tax Code TUIR (Arts. 117-129).
Allocation of costs and revenues common to both the life and non-life business
“Common” costs and revenues that are not immediately attributable to Non-life or Life segment, are recognized based on their cost centre, and then correctly and timely allocated in their reference segment pursuant to Art. 8 and Art. 9 of the above-mentioned Regulation.
The Company operates systematically in foreign currency and therefore uses multi-currency accounting, in compliance with the disposals set out in Art. 89, paragraph 2 of Legislative Decree No. 209/2005. All the items in the balance sheet and in the profit and loss account are converted into euro at the exchange rates at the year-end closing date. The difference emerging from the conversion is recognized in the profit and loss account.
Below are exposed the changes compared the previous year occurred on the exchange rates provided by Bloomberg and adopted for the conversion into euro of currencies particularly significant for the Company.
(+) Quotas of investments profit transferred from the life technical account 0 759,761 759,761
(-) Quotas of investments profit transferred to the non-life technical account 138,861 0 138,861
1.1. Changes to intangible assets over the year – (attachment 4)
Decreases for the year for: sales or decreases 0 long-term devaluations 0 other changes 0
Increases for the year for: amortisation quotas 15,950 other changes 20
Decreases for the year for: reductions from sales 0 other changes 0
The current value indicated in the Notes as the reference value for assets in classes C.II and C.III correspond: — for investments in regulated markets, the value is that of the last trading day of the year; — for investments in non-regulated markets, the value is that deriving from a prudent estimation of their probable realisable value at year end, with the exception of unlisted participations in subsidiaries and companies in which a significant interest is held, for which the current reference value is equal to the value of the shareholders’ fund calculated in accordance with the international accounting standards IAS/IFRS.
Increases for the year for: acquisitions, subscriptions or payments 133,196 reversal value 480 revaluations 0 other changes 215,228
The increase during the year is mainly due to the growth in the value of equity investments in Europe Assistance Holding (+60,576 thousand) and in Generali Vietnam Life Insurance (+54,289 thousand) primarily for increases in share capital during the year.
With reference to value adjustments of shares, the main write-down relates to GLL GmbH & Co. Retail for a value of € 9,537 thousand.
The net result of the Other changes mainly includes the 139 We, Generali
140 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018 transfer from the life business to the Non-life business of the equity investment in Generali Italia (171,184 thousand ) and the change deriving from the merger by acquisition of the Dutch subsidiary Generali Finance B.V.
(-264,282 thousand). The residual amount is mainly attributable to the euro counter-valuation of investments in foreign currency.
Increases for the year for: acquisitions, subscriptions or payments 0 reversal value 0 other changes 0
Attestation and Reports 2.2.3 Changes in loans to companies over the year – Item C.II.3
Increases for the year for: acquisitions, subscriptions or payments 2,786 reversal value 0 other changes 1,751,260
Decreases for the year for: sales or redemptions 285,000 devaluations 0 other changes 0
Book value 3,131,929 2.2.4 a) Detailed outline of the most significant bonds issued by companies – Item C.II.2
The Company does not held bonds issued by other entities of the group.
The increases of the year mainly regard loans to the subsidiaries Generali Beteiligungs-Gmbh (change of 1,186,002 thousand) and Generali Deutschland AG (change of 313,997 thousand) acquired following the merger with Generali Finance B.V..
There are no shareholdings that exceed one tenth of the capital or one tenth of the voting rights that can be exercised during the Shareholders’ Ordinary General Meeting, classified in this category in the financial statements.
Non-life 1) Equities of companies 2) Units in common investment funds 0 0 254,824 256,197 254,824 256,197 3) Bonds and other fixed-interest securities
Life 1) Equities of companies 2) Units in common investment funds 0 0 635,601 635,624 635,601 635,624 3) Bonds and other fixed-interest securities
With reference to bonds and other fixed interest securities in item C.III.3, the most significant items at book value are: (in thousand euro) 2018
The other items individually considered refer to sums under 100.000 thousand.
In the bond segment, the increases are mainly due to purchases of government bonds for 44,004 thousand and corporate bonds for 23,989 thousand, whereas the decreases relate to the sale of government bonds for 33,787 thousand and corporate bonds for 35,672 thousand.
2.3.4 a) Detailed outline of significant guaranteed loans – Item C.III.4.a.
2.3.4 b) Detailed outline of significant other loans – Item C.III.4.c.
2.3.5 Breakdown of the duration of deposits with credit institutions – Item C.III.6
Total 142,060 2.3.6 Breakdown of other financial investments by type – Item C.III.7
include deposits with: — Alleanza Assicurazioni S.p.A. for 3,198,120 thousand; — Generali Deutschland Holding AG for 709,447 thousand; — Generali Lebensversicherung AG for 270,474 thousand.
Deposits with ceding companies amount to 5,342,732 thousand (6,927,863 thousand in 2017). Information regarding transactions with Group companies is provided in attachment 16. In particular, deposits with subsidiaries
Attestation and Reports 2.4.1 Impairment on deposits with ceding companies over the year
3.1 Overview of operations related to contracts linked to investment funds and market indexes – Item D.I (attachment 11)
Investments in Group companies and companies in which a significant interest is held
3.2 Overview of operations relative to contracts linked to pension – Item D.II (attachment 12)
Item E includes, among other things, receivables arising out of reinsurance operations for an amount of 603,240 thousand and refer mainly to receivables from insurance and reinsurance companies (594,628 thousand). This amount is relative to the non-life business for 268,439 thousand and to the life business for 326,188 thousand.
Credits for the allocation of the financial year accrual of economic items 6,399
The following table provides a detailed description of the write downs per line of business
Receivables from Group companies for direct cash pooling of 118,617 thousand relate to the counterpart Generali Vie S.A. for an amount equal to 99,999 thousand and MyDrive Solutions Limited for 18,618 thousand.
Movables listed in public registers 1,178 57 66 1,169 6.3 Deferred reinsurance items – Item F.IV.1
Portfolios and other technical items 3 124 127 6.4 Details of miscellaneous assets – Item F.IV.2
— derivative hedging the exchange rate changes on loans issued in previous years, for 4,010 thousand.
Clerical Medical Finance Plc 4,457 GBP fixed perpetual yes Tier II
Credit Suisse Group Finance (Us) Inc 1,671 GBP fixed 05/10/20 no Tier II
Goldman Sachs Group Inc 3,900 GBP fixed 12/10/21 yes Tier II
Following the capital increase, the legal reserve has been risen by 671 thousand in order to achieve the minimum level required by law.
The merger residual reserves at the end of the period included: — revenue reserves for 3,998,607 thousand, deriving from the merger of Alleanza Assicurazioni S.p.A.; — capital reserves for 149,005 thousand deriving from the merger of Alleanza Assicurazioni S.p.A., and for 8,353 thousand deriving from the merger by acquisition of Generali Finance B.V..
Such extraordinary reserve consists of tax suspension for 170,928 thousand, corresponding to the sum of the realignment of the real estate fiscal values during the 2006 financial year as required by Law No. 266/2005, net of substitute taxation.
Initial amount of the 2016 financial year 1,556,873 3,568,250 −3,040 793,055 92,676 802,313 30,425 118,769 20,123 153,474 4,147,612 2,173,789 311,375 931,469 14,697,163
Distribution of previous year result legal reserve adjustment 602 −602 to dividends (0.72 euro per share) −930,867 −930,867
Distribution of previous year result legal reserve adjustment 385 −385 to dividends (0.80 euro per share) −1,095,876 −1,095,876
Distribution of previous year result legal reserve adjustment 671 −671 to dividends (0.85 euro per share) −1,330,300 −1,330,300
Distributable residual quota 11,628,379 1) Key: A = for capital increase, B = for hedging , C = for distribution to shareholders.
5) The reserves were aimed to the distribution of dividends and increas of capital.
— bonds for 750,000 thousand Euro with the following characteristics: • maturity 10 July 2042; • early repayment option for the Company from 10
July 2022; • fixed interest rate until 10 July 2022, first date of the early repayment option; • variable interest rate after 10 July 2022, until due date; • subordinated towards all the non-subordinated debtors, including policyholders; • suitable to cover the solvency requirements of
Solvency II; — bonds for 1,250,000 thousand Euro with the following characteristics: • maturity 12 December 2042; • early repayment option for the Company from 12
October 2027; • fixed rate until 27 October 2027, first date of the early repayment option; • variable interest rate after 27 October 2027, until due date; • subordinated towards all the non-subordinated debtors, including policyholders; • suitable to cover the solvency requirements of
June 2028; • fixed interest rate until 8 June 2028, first date of the early repayment option; • variable interest after 8 June 2028, until due date; • subordinated towards all the non-subordinated debtors, including policyholders; • suitable to cover the solvency requirements of
Solvency II; Section 10 – technical provisions – Item C.I for the non-life business and C.II for the life business 10.1 Changes over the year to the provision for unearned premiums – Item C.I.1 – and to the provision for outstanding claims – Item C.I.2 non-life business (attachment 13)
The most significant reductions compared to the balances at the end of 2017, relating to the provision for settlement costs and for claims that have occurred but not reported, derive mainly from the sale of the London branch’s run off portfolio.
November 2025; • fixed interest rate up to 21 November 2025, the earliest possible exercise date of the early repayment option; • variable interest rate after 21 November 2025, until maturity; • subordinated to all non-subordinated creditors, including policyholders; • suitable to cover the solvency requirements of Solvency II.
in an amount equal to the sum of 35% of premiums of the year and 70% of premiums of previous years. The obligation to make this allocation ceases when the integration has reached an amount equal to 100 times the total premiums for the year. The additional reserve is used upon occurrence of the ensured events, when the cost of claims for the financial year exceeds gross premiums recognized in the year. During the year has been allocated to this reserve an amount of 6,201 thousand in direct insurance and 2,568 thousand in indirect business.
The IBNR provision for claims that have incurred but not yet been reported at year-end is determined on the basis of the experience acquired during previous years with regards to the frequency and average cost of late claims reported and the average cost of claims reported during the year. Claims exceeding a given threshold are excluded when determining average cost in order to exclude events of an exceptional nature.
The compatibility of the estimated values is also verified with elements derived from late claims received at the moment in which the provision is valued.
In its traditional version, this method is based on the analysis of the accumulated payments, assuming that the progression of payments remains constant over time. The provisions for outstanding claims for each generation therefore depend exclusively on payments accumulated at the time of valuation and on this rule. There are also several variants in the calculation of the model parameters, known as Link Ratio/Link Ration modified for inflation methods. This method is similar to the previous one, but appropriately revised in order to take into account the effect of the growth rates of claims costs (so-called “endogenous inflation”). Therefore, the amounts paid are discounted at the time of valuation, while the future amounts are projected using an appropriate endogenous inflation rate.
There are no contracts with the characteristics indicated in the paragraph 42 and 43 of the Annex 15 of the ISVAP (now IVASS) Regulation No. 22/2008 amended and supplemented.
The equalisation provisions are determined according to the paragraph from 37 to 41 of the Annex 15 of the ISVAP (now IVASS) Regulation No. 22/2008 amended and supplemented. There are no non-compulsory equalisation provisions in the financial statements.
Other life technical provisions, amounted to 19,671 thousand, are entirely represented by the provision for
Book value 225,895 11.2 Outline of provisions deriving from the administration of pension funds – Item D.II
At the end of the period the provision for taxes amounts to 34,656 thousand. During the year, provisions for 22,622 thousand has been used mainly in relation to taxes on real estate transfers. This amount had been set aside following the repurchase of minority interests in the subsidiary Generali Deutschland Holding AG.
Provisions for the year equal to € 76,983 thousand and mainly refer to future risks and charges (for 37,501 thouto 989,806 thousand and mainly refer to loans granted by Deutsche Bank and BNP Paribas in relation to the Group indirect cash pooling.
Attestation and Reports 13.5 Changes to Provisions for severance pay over the year – Item G.VII – (attachment 15)
Book value 2,395 13.6 Details of other creditors – Item G.VIII.4
Sums due to credit institutions for entries to be settled 72,162
Payables for securities and coupons sold or purchased to be settled 19,387
Deferred reinsurance items, amounting to 3,641 thousand, include the positive technical values that are to be entered in the profit and loss accounts in the following year.
Furthermore, deferred income that has a residual duration of over five years relates to: — derivatives hedging changes in exchange rates, relative to loans issued in previous years, for 431 thousand; — derivatives hedging changes in interest rates, relative to loans issued in previous years, for 7,960 thousand.
The item “Operations on Derivatives” mainly refers to the hedging transactions covering risks deriving from exchange rates and interest rates on medium/long-term subordinated liabilities denominated in pound sterling, based on the “principle of coherent valuation” with reference to the underlying items.
Section 14 – Accrued expenses and deferred income – Item H
Other accrued income and deferred charges 23,376 20,073 43,449 14.2 Breakdown of the other accrued expenses and deferred income – Item H.3
Investments relating to contracts linked to investment funds and market indexes 0 25,970 0 0 0 25,970
— “Senior September 2024” for 1,750,000 thousand; With regard to debts for loans with a residual duration of more than one year, the companies of the group concerned are: — Graafschap Holland N.V. for 2,898,778 thousand; — Generali Investment for 55,000 thousand; — Transocean Holding for 40,000 thousand; — UMS Real Estate for 27,000 thousand; — Redoze Holding N.V. for 28,000 thousand; — Generali Versicherung AG for 652,581 thousand.
With regards to receivables in items C and E of assets, 6,737 thousand may be collected after the next financial year, of which 3,342 after five years.
Among the debts in items F and G of liabilities, the loans by group companies with a residual duration of more than 5 years are towards the following companies: — Graafschap Holland N.V. for 530,000 thousand; — Generali Deutschland Holding for 128,800 thousand; — Cosmos Leben for 110,000 thousand; — AachenMünchener Leben for 59,000 thousand; — Versorg. AM-GDH for 1,000 thousand.
Section 17 – Guarantees, commitments and other memorandum accounts 17.1 Details of guarantees issued/received and commitments – Items I, II, III e IV (attachment 17)
III. Guarantees received in the interest of the Company a) from Group companies, associates and other companies in which a significant interest is held 0 0 b) from third parties 101,321 90,475
V. Assets relating to pension funds managed in the name and on behalf of third parties 0 0
The Company has granted sureties and guarantees, primarily in the interest of subsidiaries, in the context of operations of a non-systematic nature and that did not involve a risk of insolvency inside the insurance group.
The guarantees referred to in point I.d) are issued in favor of the subsidiary Generali Life (Hong Kong) Limited for 796,291 thousand. Due to the merger by acquisition of Generali Finance B.V. in Assicurazioni Generali, the guarantee in respect to the subsidiary for the nominal value of 1,500,000 thousand has been extinguished. In relation to financial derivatives in CCS GBP / EUR with a reference value of 102,120 thousand and a fair value of 176,565 thousand, the Company collateralized the bonds for a corresponding market value of 180,150 thousand (of which 163,715 bonds and 16,435 cash). This collateral is not recognized in the guarantees given, as the transaction as a whole is represented in the appropriate items in the financial statements.
There are no assets and liabilities attributable to pension funds managed in the name and on behalf of third parties classified in this item.
Among the commitments, the positions of significant amount represent the notional reference value of the open transactions in the purchase and sale of derivative financial instruments, as illustrated in the table at point 17.6, and the commitments relating to the subscription of ancillary own funds of the subsidiary Generali Vie S.A. for 500,000 thousand. In the other memorandum accounts, the positions mainly relate to index options, with notionals reference value of € 276,650 thousand.
The most important transactions, with reference to notional values, took place in the Over the Counter (OTC) markets, offering adequate guarantees of settlement of the positions assumed. The contracts negotiated in these markets were drawn up with counterparties having investment grade rating, enabling the carrying out of professional operations, subject to prudential vigilance with the purpose of stability, pursuant the current regulations..
Number Value Number Value Number Value 17.7 Disclosure concerning contingent liabilities not recorded in the balance sheet pursuant to Art. 2427, No. 9) of the first paragraph
The Company has identified additional contingent liabilities with respect to those already taken into account for the determination of provisions for risks and charges (Section 12), for 2,360 thousand, relating to lawsuits for which the unsuccessful outcome was determined.
Income and charges from non-life investments 1,189,384 0 1,189,384 1,041,698 147,686
Investments profit transferred from/to the non-technical account −138,861 759,761 620,900 591,941 28,959
Attestation and Reports 18.2 Summary of the non-life business technical account – Italian and foreign business – (attachment 19)
Direct insurance: Fire and property other than fire 51,141 40,724 31,650 5,761 −2,688
18.3 Statement concerning the transfer of the allocated investment return from the non- technical account and indication of the base applied for the calculation – Item I.2
The net investment return assumed for the determination of the quota to be transferred to the non-life technical account arises from the amounts, registered in the non-technical account, of investment returns and related financial charges.
Reversal of commissions relating to devalued or cancelled premiums of previous years 36
Total of other technical income 891 age added to the average (current and prior year) of the shareholders’ funds plus subordinated liabilities.
The distribution into single portfolios and lines of business of the allocated investment return to the technical account was also carried out on the basis of the above- mentioned ISVAP (now IVASS) ruling.
The difference between the amount of the provision for outstanding claims recorded at the beginning of the year and the payment for claims accrued in previous years, as well as the amount of the relevant provision at the end of the year, produced a profit of 17,143 thousand, corresponding to 7,9% on the provision for outstanding claims.
Interest on loans to Group companies and companies in which a significant share is held 90,304
Gains from bonds issued by Group companies and companies in which a significant share is held 0
Investments in Group companies and companies in which a significant share is held 415
Other financial investments 1,506 - of which, income from bonds 969
Attestation and Reports 19.8 Details of investment charges – Item II.9 (attachment 23 – Life)
Investments operating charges and other charges: Charges relating to equities 11
Equities in Group companies and companies in which a significant share is held 9,537
Grand total 20,650 19.10 Other technical charges net of reinsurance – Item II.11
Total of other technical charges 720 19.11 Statement concerning the transfer of the allocated investment return to the non - technical account and indication of the base applied for the calculation – Item II.12
The quota to be allocated to the non-technical account – in compliance with ISVAP (now IVASS) Regulation No. 22/2008 amended and supplemented – is calculated by applying, to the investment return, the ratio resulting between: — the average of (current and prior year) Shareholders’ funds; — the average of (current and prior year) Shareholders’ funds plus the average of (current and prior year) technical provisions, net of reinsurance.
For the 2018 financial statements, on the basis of the calculation methods explained in the previous paragraph, the quota to be applied to the total income for the year, equal to 1,250,409 thousand, was 60.761%, and involved an allocation to the non-technical account of 759,761 thousand (729,570 thousand in 2017).
(+) Balance of other technical items 0 0 0 0 −1 0
(+) Positive share of investments allocated from the non-technical account 1,776 7,550 4,643 591 220 14
(+) Balance of other technical items −1,227 76 0 1,270 −2,573
(+) Positive share of investments allocated from the non-technical account 26,185 18,429 44,614 20.2 Life insurance 20.2.1. Summary of technical accounts by line of business – Italian portfolio – (attachment 27)
(+) Balance of other technical items −3 1 0 0 0
(+) Investment profit net of the quota allocated to the non-technical account 68,848 −1,469 2,077 10,320 0
(+) Investment profit net of the quota allocated to the non-technical account 79,776 266,081 345,857 20.3 Non - life and life insurance 20.3.1. Summary of non-life and life technical accounts – foreign portfolio – (attachment 29)
(+) Quota of profits transferred from the non-technical account of the non-life branches 94,247
Income from other investments: Income from bonds of Group companies and companies in which a significant share is held 0
Interest on loans to Group companies and companies in which a significant share is held 67,810
Equities of Group companies and companies in which a significant share is held 480
21.2 Details of investment charges – Item III.5 (attachment 23 – Non-life)
Investments operating charges and other charges: Charges relating to equities 132
Equities in Group companies and companies in which a significant share is held 7,228
Total of other charges 1,508,703 21.5 Details of extraordinary income – Item III.10
Total of extraordinary income 238,793 ali Colombia Vida - Compañia de Seguros S.A. (13,896 thousand), Assurances Maghrebia S.A. and Assurances Maghrebia Vie S.A (4,911 thousand), Sara Assicurazioni (12,243 thousand).
Total of extraordinary charges 48,153 21.7 Details of income taxes – Item III.14
By accepting the Corporate tax treatment, the company benefited from the immediate offsetting of the tax loss of the tax period, thus recording an income in current taxes. The company also took over, as consolidating company, the positions of the consolidated companies for the taxable income for the period, net of the offset of all the current and previous fiscal losses, recognizing a debt towards the Tax Authorities of 119,204 thousand and a concomitant credit for the same amount towards the companies themselves.
Income tax of foreign subsidiaries and associates and other taxes paid abroad 3.52%
Pre-paid and deferred taxation relate to items that combine to form the taxable profit in a fiscal period other than that in which they are recognized in the income statement.
Devaluations of credits due by policyholders 518,722 124,493 0 0 518,722 124,493
Assets for pre-paid taxes - IRAP 0 0 0 0 0 0
Interest on deposits with ceding companies 0 119,026 0 12 0 119,038
Interest on debts from reinsurance transactions 0 7,532 0 0 0 7,532
Costs of non-subordinate workforce: Total cost of workforce 255,468 32,815 288,283
Administrative charges and expenses on behalf of third parties 207,154 7,987 215,141
During the year the Company has not transferred securities from the non-durable portfolio to the durable one or conversely.
The early disposal of securities classified as durable determined net gain equals to 37,614 thousand, mainly realized from the sale of shares.
The negative results of outstanding swap contracts, held primarily for hedging purposes, have been determined by the exchange of periodic cash flows; those relating to closed positions have been determined by closing transactions of swaps on currencies and rates.
With respects to transactions with related parties, it should be noted that the main transactions, carried out at market prices or at cost, have regarded insurance, reinsurance and co-insurance transactions, asset management (securities portfolios and real estate), leasing, loans and guarantees, administrative services, IT services, secondment of employees and claims settlement.
The remuneration due and the shares held by members of the Board of Directors, Board of Auditors, General Managers and Managers with strategic responsibility, are shown, according to Consob regulation, in the “Remuneration Report”.
Pursuant to art. 2427, c. 22-septies of Civil Code the proposed allocation of the profit of the year, for 1,473,283 thousands is as follow: — for 887 thousands to Legal Reserve; — for 1,412,641 thousands to dividend; — for 59,755 to extraordinary reserve.
The increase in the legal reserve is needed in compliance with the provisions of Art. 2430, due to the expected share capital increase of 4,436 thousand for the assignment of an equal number of shares to the Group management, in accordance with the Long Term Incentive Plan 2016 (“LTI Plan 2016”).
From transactions with ceding companies (2) 261,961 16,639 507 0 279,107 936.66
As part of the shareholdings management activities, the principal balances can be found on the balance sheet among the investments and on the side of the income statement under net income from investments, mainly with regard to dividends received. Dividends received from Group companies totaled 2,148,254 thousand.
— the commitments, in relation to the subscription of ancillary own funds of the subsidiary Generali Vie S.A. In particular, these commitments are divided into: i) ian “Equity committment letter” with which the
With reference to the other related parties, the most significant relationship is in place with the Fin. Priv. Srl for 14,352 thousand.
Gran total 16,404 23,002 b) Events and significant operations not recurring
Non-recurring events or significant operations have not been made during 2018, compared to what already previously described.
5. Information according to the CONSOB resolution No. 15915 dated 3 May 2007.
196 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Result for the year 1,473,283 1,404,459 Interest paid for the year 768,591 711,274 Income taxes -146,798 -121,491
Adjustments arising from financing and investing activities -247,493 -44,477 1. Profit (loss) of the year before taxation, interests, dividends and capital gains/losses deriving from cession -305,795 -34,091
Other adjustments Interest paid -765,835 -711,274 Income taxes -26,709 240,691 Dividends collected 2,153,378 1,983,856
Liquidity used for (-) / generated by (+) investing activities Real estate 1,388 1,918 Equity investments 79,955 -223,708
Cash flows from other items (1. + 2.) B. -353,616 -697,175
Net Cash flows from financing activities (1. + 2.) C. -954,922 -548,345
Total Cash flows for the year A. + B. + C. -3,037 116,526
Liquidity at the end of previous year 744,169 655,065 Adjustment to current year exchange rates 11,922 -27,422 Liquidity from the incorporation of Generali Finance 4,298 1. Liquidity at year-start 760,389 627,643 2. Liquidity at year-end 757,352 744,169
Change in the liquidity for the year -1. + 2. -3,037 116,526 201 We, Generali
Receivables for central treasury activity 266,074 1. Total adjustment Cash flows for the year (A + B + C) 4,054 2. Liquidity from incorporation 4,298
Attachments to the Notes to the Accounts Year 2018 (Amounts in thousand euro)
6 Assets -Breakdown of information on companies in which a significant interest is held 1 7 Assets - Details of investments in Group companies and other companies where a significant 1 interest is held: equities 8 Assets - Breakdown on the basis of the utilisation of other financial investments: equities and shares, shares in 1 common investment funds, debt securities and other fixed-income securities, participation in investment pools and other financial investments (items C.III.1, 2, 3, 5, 7)
25 Non-life business - summarised layout of technical account by branch - -Italian portfolio 1 26 Summarised layout of technical accounts of non-life business - Italian portfolio 1 27 Life business - summarised layout of technical account by branch - -Italian portfolio 1 28 Summarised layout of technical accounts of life business - Italian portfolio 1 29 Summarised layout of technical accounts of non-life and life business - Foreign portfolio 1 30 Relationships with Group companies and companies where a significant interest is held 1 31 Summary of direct business premiums written 1 32 Personnel expenses, directors and auditors fees 1 * Indicate the number of attachments actually filled in. Indicate 0 if the attachment, even if due, has not been filled in because all items are null. Indicate n.d. when the company is not obliged to fill in the attachment.
Notes on the accounts - Attachment 1 Company Assicurazioni Generali S.p.A.
C. INVESTMENTS (follows) III - Other financial investments 1. Equities a) quoted shares 36 8,362 b) unquoted shares 37 6,636 c) other interests 38 823 39 15,821 2. Shares in common investment funds 40 254,824 3. Debt securities and other fixed-income securities a) quoted 41 433,895 b) unquoted 42 893 c) convertible bonds 43 800 44 435,588 4. Loans a) mortgage loans 45 0 b) loans on policies 46 0 c) other loans 47 393 48 393 5. Participation in investment 6. Deposits with credit institutions 50 95,182 7. Other 51 9,337 52 811,145 IV - Deposits with ceding companies 53 72,669 54 19,323,883
I - Tangible assets and stocks 1. Furniture, office equipment, internal transport vehicles 83 2,084 2. Vehicles listed in public registers 84 1,114
II - Tangible assets and stocks 1. Bank and postal deposits 88 645,571 2. Cheques and cash in hand 89 61 90 645,632
1. Provision for unearned premiums 112 402,756 2. Provision for claims outstanding 113 1,763,050 3. Provision for profit sharing and premium refunds 114 0 carried forward 13,688,999 212 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
I - Creditors arising out of direct insurance operations 2. Current accounts with insurance companies 134 3,741 3. Premium deposits and premiums due to policyholders 135 7,535 4. Guarantee funds in favour of policyholders 136 0 137 23,394
IX - Other liabilities 2. Commissions for premiums in course of collection 152 18,644 of which Account linking to life business 902 137,798 carried forward 21,882,494 214 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS 160 22,054,886 216 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
C. INVESTMENTS I - Land and Buildings 1. Property used for own activities 11 0 2. Property used by third parties 12 0 3.Other properties 13 0 4. Other realty rights 14 0 5. Assets in progress and payments on account 15 0 16 0 II - Investments in affiliated companies and other shareholdings 1. Interests in: a) parent companies 17 0 b) affiliated companies 18 12,470,175 c) affiliates of parent d) associated companies 20 0 e) other 21 0 22 12,470,175 2. Debt securities issued by: b) affiliated companies 24 0 c) affiliates of parent d) associated companies 26 0 e) other 27 0 28 0 3. Loans to: b) affiliated companies 30 1,855,000 c) affiliates of parent d) associated companies 32 0 e) other 33 0 34 1,855,000 35 14,325,175 carried forward 6,552 218 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
III - Other financial investments 1. Equities a) quoted shares 36 7,399 b) unquoted shares 37 5,241 c) other interests 38 6,806 39 19,446 2. Shares in common investment funds 40 635,601 3. Debt securities and other fixed-income securities a) quoted 41 1,373,496 b) unquoted 42 15,014 c) convertible bonds 43 363 44 1,388,873 4. Loans a) mortgage loans 45 0 b) loans on policies 46 350 c) other loans 47 0 48 350 5. Participation in investment 6. Deposits with credit institutions 50 46,878 7. Other 51 0 52 2,091,148 IV - Deposits with ceding companies 53 5,270,063 54 21,686,386
I - Provisions relating to contracts linked to investments funds and market index 55 228,850
2. Unearned premium provision for supplementary coverage 3. Provision for claims outstanding 65 362,127 4. Provision for profit sharing and premium refunds 66 751 6. Provisions for policies where the investment risk is borne by the policyholders and relating to the administration of pension funds 68 0 69 551,801 carried forward 22,473,589 220 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
I - Debtors arising out of direct insurance operations a) for premiums - current year 71 27,990 3. Current accounts with insurance companies 75 824 4. Policyholders and third parties for recoveries 76 0 77 29,643
IV - Other of which Account linking to non-life business 901 137,798
VI - Negative reserve for own shares held 401 0 110 8,094,044
I - Creditors arising out of direct insurance operations 2. Current accounts with insurance companies 134 2,857 3. Premium deposits and premiums due to policyholders 4. Guarantee funds in favour of policyholders 136 0 137 6,138
Previous year brought forward 21,858,111 carried forward 25,870,489 227 We, Generali
H. ACCRUALS AND DEFERRED INCOME 1. Interests 156 133,865 3. Other accruals and deferred income 158 10,919 159 144,946
Notes to the accounts - Attachment 3 Company Assicurazioni Generali S.p.A. Year 2018
Allocated investment return transferred from the life technical account … ........................................................ + 24 759,761 44 759,761
Book value (a - b) ................................................................. 20 39,193 50 99,866 Current value .......................................................................... 51 107,518 Total revaluations ................................................................... 22 0 52 81,699 Total devaluations .................................................................. 23 0 53 18,489 231 We, Generali
Unquoted debt securities .............................................................................. 62 of which convertible debt securities .............................................................. 64 232 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Assets - Information regarding associated companies (*) N. Type Quoted or Activity Company name and registration place Currency ord. unquoted (**) (1) (2) (3) 1 b NQ 9 AG SE&A Ltda. SAN PAOLO Av. Presidente Juscelino Kubitschek, nº 1455 - 8° - BRASILE BRL 2 b NQ 2 Caja de Ahorro y Seguro S.A. BUENOS AIRES Fitz Roy 957 - ARGENTINA ARS 3 b NQ 9 CMN Global Inc. THORNHILL - ONTARIO 150 Commerce Valley Drive West, 9th Floor - CANADA CAD 4 b NQ 2 Europ Assistance Holding SAS PARIGI 2 rue Pillet-Will - FRANCIA EUR 5 b NQ 1 FATA Asigurari S.A. BUCAREST Lt. Av. Marcel Andreescu, no 30 - ROMANIA RON 6 b NQ 9 GBS S.c.p.A. TRIESTE Via Machiavelli, 4 - ITALIA EUR 7 b NQ 9 Genamerica Management Corp. NEW YORK 7 WTC, 250 Greenwich Street, 33rd Fl - STATI UNITI
42 b NQ 9 Welion S.c.a.r.l. TRIESTE Via Machiavelli, 4 - ITALIA EUR 43 d NQ 1 Assurances Maghrebia S.A. TUNISI Angle 54, Rue De Palestine 22, Rue Royaume D'Arabia - TUNISIA TND 44 d NQ 1 Assurances Maghrebia Vie S.A. TUNISI Angle 54, Rue De Palestine 22, Rue Royaume D'Arabia -
CNY 46 d NQ 2 Guotai Asset Management Co. SHANGAI 39F，World Financial Center，100 Century Avenue - CINA
N. Type Quoted or Activity Company name and registration place Currency ord. unquoted (**) (1) (2) (3) 47 d NQ 2 NEIP II S.p.A. CONEGLIANO Via Vittorio Alfieri n. 01 - ITALIA EUR 48 d NQ 9 Servizi Tecnologici Avanzati BOLOGNA Via Paolo Nanni Costa, 30 - ITALIA EUR 49 e NQ 2 Emittenti Titoli S.p.A. MILANO Via Santa Maria Segreta, 6 - ITALIA EUR 50 e NQ 2 Fin. Priv. S.r.l. MILANO Via Filodrammatici, 8 - ITALIA EUR 51 e NQ 2 H2i S.p.A. ROMA Via F. Paulucci de Calboli - ITALIA EUR 52 e NQ 9 Perils AG ZURIGO Marktgasse 3 - SVIZZERA CHF 53 e NQ 2 Perseo S.p.A. TORINO Via XX Settembre 31 - ITALIA EUR 54 e NQ 9 Protos S.p.A. ROMA Via Livenza, 3 - ITALIA EUR 55 e NQ 9 SOA Group S.p.A. ROMA Via Lovanio, 6 - ITALIA EUR 56 e NQ 8 Trieste Adriatic Maritime Srl TRIESTE Via Cassa di Risparmio 10 - ITALIA EUR 57 e NQ 2 Venice S.p.A. VICENZA Strada Statale Padana verso Verona, 6 - ITALIA EUR
Assets - Details of investments in Group companies and other companies where a significant interest is held: Equities N. Type Name of the company Increases in the year ord. For purchases Others (1) (2) (3) Quantity Value increases 1 b D Generali Latam Ltda - 0 0 2 b V Caja de Ahorro y Seguro S.A. - Classe A - 0 0 2 b V Caja de Ahorro y Seguro S.A. - Classe B - 0 0 3 b D CMN Global Inc. - 0 0 4 b D Europ Assistance Holding 154,369 60,576 0 5 b D FATA Asigurari S.A. - 0 13 6 b D GBS S.c.p.A. - 0 0 7 b D Genamerica Management Corporation - 0 0 8 b D Generali (Schweiz) Holding AG - 0 8,277 8 b V Generali (Schweiz) Holding AG - 0 13,220 9 b D Generali Beteiligungs-GmbH - 0 0 9 b V Generali Beteiligungs-GmbH - 0 0 10 b V Generali Beteiligungsverwaltung-GmbH - 0 0 11 b D Generali Brasil Seguros S.A. 495,805 14,671 0 12 b D Generali CEE Holding B.V. - 0 0 13 b V Generali China Life Insurance - 0 0 14 b D Generali Colombia S.A. - 0 0 15 b D Generali Colombia Vida S.A. - 0 0 16 b D Generali Companhia de Seguros S.A. - 0 0 17 b D Generali Consulting Solutions - 0 7 18 b D Generali CST S.r.l. - 0 0 19 b D Generali Deutschland Holding AG - 0 0 19 b V Generali Deutschland Holding AG - 0 0 20 b D Generali Ecuador S.A. - 0 1 21 b D Generali España Holding S.A. - 0 0 21 b V Generali España Holding S.A. - 0 0 22 b V Generali Finance B.V. - 0 0 23 b D Generali Financial Asia Ltd 63,970,000 7,243 530 24 b D Generali France S.A. 560 8 0 24 b V Generali France S.A. - 0 0 25 b D Generali Hellas A.E.A.Z. - 0 0 25 b V Generali Hellas A.E.A.Z. - 0 0 26 b V Generali Holding Vienna AG 0 0 800 27 b D Generali Italia S.p.A. - 0 171,184 27 b V Generali Italia S.p.A. - 0 0 28 b V Generali Link Limited - Ord. - 0 0 29 b V Generali PanEurope Limited - Ord. - 0 7,500 29 b V Generali PanEurope Limited - Pref. - 0 0 29 b V GENERALI PANEUROPE LTD 0 0 332 30 b D Generali Real Estate S.p.A. - 0 0 31 b D Generali Realties Ltd - 0 0 32 b V Generali Vida de Seguros S.A. - 0 0 33 b V Generali Vietnam Life Insurance LLC 1,330,000,000,00 34 b V Generali Vitality-GmbH - 0 563 35 b D Generali Investments Holding S.p.A. - 0 0 36 b V GLL GmbH & Co. Retail KG - 0 0 37 b D GSS - Generali Shared Services S.c.a.r.l. - 0 0 238 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
For sales Others Quantity Value cost value Quantity Value decreases 239 We, Generali
N. Type Name of the company Increases in the year ord. For purchases Others (1) (2) (3) Quantity Value increases 38 b D Lion River I N.V. - Classe A - 0 126 38 b D Lion River I N.V. - Classe B - 0 0 38 b D Lion River I N.V. - Classe C - 0 0 38 b D Lion River I N.V. - Classe D - 0 0 38 b D Lion River I N.V. - Classe E - 0 0 38 b D Lion River I N.V. - Classe F - 0 0 38 b D Lion River I N.V. - Classe G - 0 0 38 b D Lion River I N.V. - Classe H - 0 8 38 b D Lion River I N.V. - Classe I - 0 0 38 b D Lion River I N.V. - Classe J - 0 0 38 b D Lion River I N.V. - Classe K - 0 0 38 b D Lion River I N.V. - Classe L - 0 200 38 b D Lion River I N.V. - Classe N - 0 281 38 b D Lion River I N.V. - Classe O - 0 0 38 b D Lion River I N.V. - Classe P - 0 0 39 b D Participatie Maatschappij Graafschap Holland N.V. - Ord. - 0 0 39 b V Participatie Maatschappij Graafschap Holland N.V. - Ord. - 0 0 40 b D Redoze Holding N.V. - 0 0 41 b D Transocean Holding Corporation - 0 8,988 42 b D Welion S.c.a.r.l. - 0 0 43 d D Assurance Maghrebia S.A. 662,529 0 0 44 d D Assurance Maghrebia Vie S.A. 220,843 0 0 45 d D Generali China Insurance - 0 0 46 d D Guotai Asset Management Co. - 0 0 47 d D NEIP II S.p.A. - 0 0 48 d D Servizi Tecnologici Avanzati S.p.A. - 0 0 49 e D Emittenti Titoli S.p.A. - 0 0 50 e D Fin. Priv. S.r.l. - 0 0 51 e D H2i S.p.A. - 0 0 52 e D Perils AG - 0 13 53 e D Perseo S.p.A. - 0 0 54 e D Protos S.p.A. - 0 0 55 e D SOA Group S.p.A. - 0 0 56 e D Trieste Adriatic Maritime S.r.l. - 0 72 57 e D Venice S.p.A. - Classe A - 0 0 57 e D Venice S.p.A. - Classe B - 0 0 a Parent companies 0 0 b Affiliated companies 133,196 215,622 c Affiliated of parent companies 0 0 d Associated companies 0 0 e Other 0 85 Totale D.I. 0 0 Totale D.II. 0 0 240 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
For sales Others Quantity Value cost value Quantity Value decreases 241 We, Generali
A ss et s - B re ak do w n on th e ba si s of th e ut ilis at io n of o th er fi na nc ia l i nv es tm en ts
, p ar tic ip at io n in in ve st m en t p oo ls e o th er fi na nc ia l i nv es tm en ts
S ha re s in c om m on in ve st m en t f un ds
) l is te d go ve rn m en ts b on ds
) o th er li st ed s ec ur iti es
: e qu iti es a nd s ha re s, s ha re s in c om m on in ve st m en t f un ds , d eb t s ec ur iti es a nd o th er f ix ed -in co m e se cu rit ie s, p ar tic ip at io n in in ve st m en t p oo ls a nd o th er fi na nc ia l i nv es tm en ts
eb t s ec ur iti es a nd ot he r f ix ed in co m e fix ed in co m e se cu rit ie s
O th er fi na nc ia l in ve st m en t f un ds in in ve st m en t p oo ls in ve st m en ts
Loans Deposits with credit institutions C.III.4 C.III.6 244 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
,5 3, 5, 248 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
ot es o n th e ac co un ts - A
Provision for claims outstanding: Provision for refunds and direct expenses … ...... 4
Provision for profit sharing and premium refunds ......... 6 252 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
ha ng e fo r t he y ea r i n th e pr ov is io ns in th e fu nd s fo r r is ks a nd c ha rg es (i te m
O th er p ro vi si on se ve ra nc e ob lig at io ns pa y pr ov is io ns
S um s se t a si de fo r t he y ea r ...
O th er u til is at io ns fo r t he y ea r ...
A ffi lia te d of p ar en t co m pa ni es
P ar tic ip at io n in in ve st m en t p oo ls
eb to rs a ris in g ou t o f re in su ra nc e op er at io ns ..
B an k an d po st al d ep os its
254 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
D ep os its w ith c ed in g co m pa ni es .
In ve st m en ts re la tin g to th e ad m in is tra tio n of pe ns io n fu nd s
,0 w hi ch s ub or di na te d ac tiv iti es
C re di to rs a ris in g ou t o f d ire ct in su ra nc e op er at io ns ..
C re di to rs a ris in g ou t o f re in su ra nc e op er at io ns ..
4, 4, 3 Am ou nt s ow ed to c re di t i ns tit ut io ns .
0 Lo an s gu ar an te ed b y m or tg ag es
is ce lla ne ou s lia bi lit ie s ...
and on behalf of third parties …………………………………………... .............. 23 0 53 0 VI. Securities deposited with third parties…….………………………… .................. 24 13,579,165 54 14,143,372 Total .............................................................................................................. 25 13,579,165 55 14,143,372 256 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
D er iv at iv es c on tra ct s C
Fu tu re s: on s ha re s on d eb t se cu rit ie s on cu rr en ci es on ra te s ot he rs
: on s ha re s on d eb t se cu rit ie s on cu rr en ci es on ra te s ot he rs
O nl y tra ns ac tio ns o n de riv at iv es e xt an t a t t he b al an ce s he et d at e an d th at re pr es en t c om m itm en ts fo r t he
en tio ne d ty pe s or a co nt ra ct w hi ch h as c ha ra ct er is tic s of d iff er en t t yp es o f c on tra ct s, th e co nt ra ct m us t b e in cl ud ed in th e ne ar es t t yp e. It em s co m pe ns at io ns a re n ot a llo w ed , u nl es s th ey re fe r t o pu rc ha se /s al e tra ns ac tio ns re fe rri ng to th e sa m e ty pe o f c on tra ct
C on tra ct s pr ov id in g fo r c ur re nc y sw ap s m us t b e sh ow n on ly o nc e, w ith c on ve nt io na l r ef er en ce to th e cu rre nc y to b e pu rc ha se d. C
on tra ct s th at a llo w b ot h cu rre nc y sw ap s an d in te re st ra te s w ap s m us t b e re po rte d ex cl us iv el y am on g cu rre nc y co nt ra ct s. D
er iv at iv e co nt ra ct s pr ov id in g fo r i nt er es t r at e sw ap s ar e co nv en tio na lly c la ss ifi ed a s “p ur ch as es
“s al es ” d ep en di ng o n w he th er th ey c om m it th e in su ra nc e co m pa ny to p ur ch as e or s el l t he fi xe d ra te
or d er iv at iv es th at im pl y or c ou ld im pl y fu tu re s co nt ra ct s, th e se ttl em en t p ric e of th e co nt ra ct s ha s to b e in di ca te d; in a ll ot he r c as es , t he n om in al v al ue o f t he re fe re nc e ca pi ta l h as to b e in di ca te d.
D et ai ls o f t he n on -li fe b us in es s te ch ni ca l a cc ou nt
R ei ns ur an ce pr em iu m s pr em iu m s of c la im s ex pe ns es ba la nc e
Fi re a nd o th er d am ag e to p ro pe rty (c la ss es o f i ns ur an ce 8 an d 9)
is ce lla ne ou s fin an ci al lo ss
−6 8, 9 Fo re ig n po rt fo lio .
,9 258 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
ire ct in su ra nc e: A cc id en t a nd
H ea lth (c la ss o f i ns ur an ce a nd
To ta l d ire ct in su ra nc e
Dividends and other income from equities ............................................. 2 1,307 42 3,817 82 5,124 Total. .......................................................................................................................... 3 1,143,261 43 1,010,117 83 2,153,378 Income from land and buildings … ......................................................................... 4 4,543 44 0 84 4,543 Income from other investments: Income from debt securities of group companies and other companies in which a significant interest is held ........................... 5 0 45 0 85 0 Income from loans to group companies and ........................................... other companies in which a significant interest is held ........................... 6 67,810 46 90,304 86 158,114 Income from shares in common investment funds ................................. 7 591 47 0 87 591 Income from debt securities and other fixed-income securities 8 9,157 48 57,995 88 67,152 Interests on loans .................................................................................. 9 11 49 40 89 51 Income from participation in investment pools ....................................... 10 0 50 0 90 0 Interests on deposits with credit institutions ........................................... 11 1,473 51 1,130 91 2,603 Income from other financial investments ................................................ 12 5,558 52 0 92 5,558 Interests on deposits with ceding companies ......................................... 13 243 53 130,221 93 130,464 Total. .......................................................................................................................... 14 84,843 54 279,690 94 364,533 Value re-adjustments on other investments: Land and buildings ................................................................................. 15 0 55 0 95 0 Shares and participations in group companies and other
Debt securities issued by affiliated companies and other companies in which a significant interest is held .................................... 17 0 57 0 97 0 Other equities ........................................................................................ 18 595 58 2,078 98 2,673 Other debt securities .............................................................................. 19 2 59 200 99 202 Other financial investments .................................................................... 20 912 60 0 100 912 Total. .......................................................................................................................... 21 1,989 61 2,278 101 4,267 Gains on the realisation of investments: Surplus on the sale of land and buildings ............................................... 22 0 62 0 102 0 Gains on shares and participations in group companies and other companies in which a significant interest is held .................... 23 0 63 0 103 0 Gains on debt securities issued by group companies and other companies in which a significant interest is held .................... 24 0 64 0 104 0 Gains on other equities .......................................................................... 25 757 65 70 105 827 Gains on other debt securities ................................................................ 26 1,246 66 647 106 1,893 Gains on other financial investments ...................................................... 27 12,259 67 870 107 13,129 Total. .......................................................................................................................... 28 14,262 68 1,587 108 15,849 GRAND TOTAL … ..................................................................................................... 29 1,248,898 69 1,293,672 109 2,542,570 260 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
Income from equities: Dividends and other income from shares and participations in group companies and other companies in which a significant interest is held
Debt securities issued by affiliated companies and other companies in which a significant interest is held .................................... 17 0 57 0 97 0 Other equities ........................................................................................ 18 595 58 2,078 98 2,673 Other debt securities .............................................................................. 19 2 59 200 99 202 Other financial investments .................................................................... 20 912 60 0 100 912 Total. .......................................................................................................................... 21 1,989 61 2,278 101 4,267 Gains on the realisation of investments: Surplus on the sale of land and buildings ............................................... 22 0 62 0 102 0 Gains on shares and participations in group companies and other companies in which a significant interest is held .................... 23 0 63 0 103 0 Gains on debt securities issued by group companies and other companies in which a significant interest is held .................... 24 0 64 0 104 0 Gains on other equities .......................................................................... 25 757 65 70 105 827 Gains on other debt securities ................................................................ 26 1,246 66 647 106 1,893 Gains on other financial investments ...................................................... 27 12,259 67 870 107 13,129 Total. .......................................................................................................................... 28 14,262 68 1,587 108 15,849 GRAND TOTAL … ..................................................................................................... 29 1,248,898 69 1,293,672 109 2,542,570
Amounts Income arising from: ................................................................................................................................................... Land and buildings ..................................................................................................................................... 1 0 ................................................................................................................................................... Investments in group companies and other companies in which a significant interest is held ..................... 2 415 ................................................................................................................................................... Shares in common investment funds .......................................................................................................... 3 2 ................................................................................................................................................... Other financial investments ........................................................................................................................ 4 1,506 ............................................................................................... - of which income from debt securities ................. 969 ................................................................................................................................................... Other ......................................................................................................................................................... 6 24 Total ............................................................................................................................................................................ 7 1,947 Gains on the realisation of investments: ................................................................................................................................................... Surplus on the sale of land and buildings .................................................................................................. 8 0 ................................................................................................................................................... Gains on investments in group companies and other companies in which a significant
Investment management charges and other charges: .................. Charges referring to equities ............................................................. 1 132 31 11 61 143 .................. Charges referring to investment in land and buildings ....................... 2 3,080 32 0 62 3,080 .................. Charges referring to debt securities ................................................... 3 1,940 33 4,623 63 6,563 .................. Charges referring to shares in common investment funds .................. 4 0 34 0 64 0 .................. Charges referring to shares in common investments .......................... 5 0 35 0 65 0 .................. Charges referring to other financial investments ................................ 6 11,552 36 734 66 12,286 .................. Interests on deposits received from reinsurers .................................. 7 33 37 10,367 67 10,400 Total .................................................................................................................... 8 16,737 38 15,735 68 32,472 Value re-adjustments on investments referring to: .................. Land and buildings ............................................................................ 9 1,285 39 0 69 1,285 .................. Shares and participations in group comp. and other companies ........ 10 7,228 40 9,537 70 16,765 .................. Debt securities issued by group companies and other companies ..... 11 0 41 0 71 0 .................. Other equities .................................................................................... 12 1,793 42 1,029 72 2,822 .................. Other debt securities ......................................................................... 13 3,142 43 15,249 73 18,391 .................. Other financial investments ............................................................... 14 24,829 44 964 74 25,793 Total .................................................................................................................... 15 38,277 45 26,779 75 65,056 Losses on the realisation of investments: Losses on the sale of land .................. and buildings ..................................................................................... 16 0 46 0 76 0 .................. Losses on equities ............................................................................. 17 259 47 90 77 349 .................. Losses on debt securities .................................................................. 18 147 48 591 78 738 .................. Losses on other financial investments ............................................... 19 4,095 49 67 79 4,162 Total .................................................................................................................... 20 4,501 50 748 80 5,249 GRAND TOTAL ................................................................................................... 21 59,515 51 43,262 81 102,777 262 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
....................................................................................................... Losses on common investment funds ........................................................................................ 9 1,112 ....................................................................................................... Losses on other financial investments .........................................................................................
....................................................................................................... Losses on other financial investments ......................................................................................... 26 0 ....................................................................................................... Other losses ................................................................................................................................ 27 0 Total .............................................................................................................................................................. 28 0 Unrealised losses ......................................................................................................................................... 29 0 GRAND TOTAL ............................................................................................................................................. 30 0 263 We, Generali
Net balance of accepted business (+ o -) ..........................(A + B + C - D + E) 12 12,501 12 −4,862 Lob 07 Lob 08 Direct business gross of reinsurance Cargo Fire and natural events
Lob 13 Lob 14 Direct business gross of reinsurance General liability Credit
Net balance of accepted business (+ o -) .........................(A + B + C - D + E) 12 951 12 62,856
llo ca te d in ve st m en t r et ur n tra ns fe rre d fro m th e no nte
B al an ce o f o th er te ch ni ca l i nc om e an d ch ar ge s
al an ce o f o th er te ch ni ca l i nc om e an d ch ar ge s (+ o -)
Ita lia n lin e of b us in es s an d po rtf ol io in cl ud ed in it em s II.
C ha ng e in m at he m at ic al p ro vi si on a nd in o th er te ch ni ca l p ro vi si on s (+ o -)
A llo ca te d in ve st m en t r et ur n tra ns fe rre d to th e no nte
B al an ce o n th e te ch ni ca l a cc ou nt
Notes on the accounts - Attachment 29 Company Assicurazioni Generali S.p.A. Year 2018
Change in other technical provisions (+ o -) ...................................................................... - 4 0
Balance of other technical income and charges (+ o -) ...................................................... + 5 684
Allocated investment return transferred from the non-technical account ..................... E 11 94,247
Balance on the technical account for direct business (+ o -) ………….…(A+B+C-D+E) 12 57,226
Allocated investment return transferred to the non-technical account (1) .................... ...... + 6 11,574
Balance on the technical account (+ o -) …………………………………..…(A+B+C-D+E) 10 84,727
(1) 'Sum of the items relating to the Italian line of business and portfolio included in items II.2, II.3, II.9, II.10, II.12 of the Profit and Loss Account 269 We, Generali
G ro up c om pa ni es a nd c om pa ni es w he re a s ig ni fic an t i nt er es t i s he ld
In co m e fro m o th er fi na nc ia l i nv es tm en ts ..
In te re st s on d ep os its w ith c ed in g co m pa ni es
In te re st s on c re di ts .
O th er in co m e an d re co ve rie s
,0 7, 270 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
A ffi lia te d of pa re nt co m pa ni es
In co m e fro m d eb t s ec ur iti es
ec ov er ie s of a dm in is tra tio n ex pe ns es a nd c ha rg es ..
In te re st s on m or tg ag es
A dm in is tra tio n ch ar ge s an d ch ar ge s fo r t hi rd p ar tie s ..
2, 2, 6 Lo ss es o n re al is at io n of in ve st m en ts (*
Total ................................................................................................ 5 200,122 35 8,062 65 208,184 Foreign portfolio: - Wages ........................................................................................... 6 35,649 36 20,205 66 55,854 - Social contributions ....................................................................... 7 10,878 37 7,701 67 18,579 - Other employee costs .................................................................... 8 2,026 38 2,329 68 4,355
Total ................................................................................................ 9 48,553 39 30,235 69 78,788 Grand total ...................................................................................... ...... 10 248,675 40 38,297 70 286,972 Costs of non - subordinate workforce: Italian portfolio .................................................................................. 11 6,018 41 137 71 6,155 Foreign portfolio ............................................................................... 12 775 42 15 72 790 Total .................................................................................................... 13 6,793 43 152 73 6,945 Total cost of workforce ...................................................................... 14 255,468 44 38,449 74 293,917 II: Details of items entered Non-life business Life business Total
Investments charges ........................................................................ 15 80 45 24 75 104 Costs of claims ................................................................................. 16 4,360 46 590 76 4,950
Other acquisition costs ..................................................................... 17 16,742 47 1,655 77 18,397 Other administration costs ................................................................ 18 27,132 48 28,193 78 55,325 Administrative charges and charges for third parties ......................... 19 207,154 49 7,987 79 215,141 Holding costs .................................................................................... 20 0 50 0 80 0
Total .................................................................................................... 21 255,468 51 38,449 81 293,917 III: Average number of staff
283 Attestation of the Financial Statements pursuant to art. 154-bis of legislative decree of 24 February 1998, no. 58 and art. 81-ter of Consob regulation of 14 May 1999, no. 11971 as amended 287 Board of Statutory Auditors’ Report 301 Independent Auditor’s Report
pursuant to art. 154-bis of legislative decree of 24 February 1998, no. 58 and art. 81-ter of Consob regulation of 14 May 1999, no. 11971 as amended
Attestation of the Financial Statements pursuant to the provisions of art. 154-bis, paragraph 5, of legislative decree 58 of February 24, 1998 and art. 81–ter of Consob regulation of 14 May 1999, no. 11971 as amended 1. The undersigned, Philippe Donnet, in his capacity as Managing Director and Group CEO, and Cristiano Borean, in his capacity as Manager in charge of preparing the financial reports of Assicurazioni Generali S.p.A. and Group CFO, having also taken into account the provisions of Art. 154-bis, paragraphs 3 and 4, of the Italian Legislative Decree No. 58 dated 24 February 1998, hereby certify: - the adequacy in relation to the characteristics of the Company and - the effective implementation of the administrative and accounting procedures for the preparation of the financial statements over the course of the period from 1 January to 31 December 2018.
2. The adequacy of the administrative and accounting procedures in place for preparing the financial statements as at 31 December 2018 has been assessed through a process established by Assicurazioni Generali S.p.A. on the basis of the guidelines set out in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, an internationally-accepted reference framework.
In compliance with the provisions of Article 153 of Legislative Decree no. 58 of 24 February 1998 (“TUIF”), and the indications contained in Consob notice no. 1025564 of 6 April 2001, as amended, while taking the principles of conduct recommended by the National Council of Chartered Accountants (“NCCA”) into account, the Board of Statutory Auditors of Assicurazioni Generali S.p.A. (the “Company”) hereby presents this report on the supervisory activity carried out during the 2018 financial year.
1. Activities of the Board of Statutory Auditors during the financial year ending on 31 December 2018 (point 10 of Consob Notice no. 1025564/01)
The Board of Statutory Auditors performed the activities falling within its scope of duties during the 2018 financial year, holding 34 meetings with an average duration of approximately three hours and fifteen minutes. The Board of Statutory Auditors also: – attended the 14 meetings of the Board of Directors (BoD); – attended the 14 meetings of the Risk and Control Committee (“RCC”); – attended the 3 meetings of the Related-Party Transactions Committee (“RPTC”); – in the person of its Chairman and/or another statutory auditor, attended the 7 meetings of the Appointments and Remuneration Committee (“ARC”), with specific reference to remuneration matters; – in the person of its Chairman and/or other statutory auditor, attended the 11 meetings of the Investments and Strategic Operations Committee (“ISOC”); – in the person of its Chairman and/or another statutory auditor, attended the 9 meetings of the Corporate Governance and Social and Environmental Sustainability Committee (“GSC”).
Statutory Auditors’ Report to the Shareholders’ Meeting of Assicurazioni Generali S.p.A. called to approve the Financial Statements as at 31 December 2018 pursuant to Art. 153 of Legislative Decree 58/1998 of preparing the Company’s Financial Reports, the Head of the Group Financial Crime function, Group General Counsel, Head of Corporate Affairs and Head of Group Human Resources and Organisation, as well as the heads of the corporate functions affected by the supervisory activity of the Board of Statutory Auditors; – pursuant to Art. 74, paragraph 2, of IVASS Regulation no. 38 of 3 July 2018, held meetings with, and obtained information from, those responsible for the four fundamental functions envisaged by the aforementioned Regulation (Group Audit, Group Compliance, Risk Management, Group Actuarial, the “Fundamental Functions”), as well as all of the structures that perform control tasks within the Group, ensuring adequate functional and information connections; – met the members of the Supervisory Body established pursuant to Legislative Decree 231/2001 for the purpose of the exchange of information; – pursuant to paragraphs 1 and 2 of Art. 151 of the TUIF, as well as Art. 74, paragraph 3(g) of IVASS Regulation no. 38/2018, held meetings and/or exchanged information with the control bodies of the main subsidiaries (Alleanza Assicurazioni S.p.A., Banca Generali S.p.A., Česká pojišťovna a.s., CityLife S.p.A., Europ Assistance Italia S.p.A., Generali Allgemeine Versicherungen AG, Generali Deutschland AG, Generali España S.A. de Seguros y Reaseguros, Generali Investment Europe S.p.A., Generali IARD S.A., Generali Italia S.p.A., Generali Business Solutions S.C.P.A., Generali Insurance Asset Management S.p.A. SGR, Generali Investments Holding S.p.A., Generali Investments Partners S.p.A. SGR, Generali Real Estate S.p.A., Generali Personenversicherungen AG, Generali Properties S.p.A., GSS – Generali Shared Services S.c. a r.l., Generali Schweiz Holding A.G, Generali Versicherung AG, Generali Vie S.A., Genertel S.p.A., Genertellife S.p.A.); – in the framework of relations between the control body and the auditor as provided pursuant to the third paragraph of Art. 150 of the TUIF and Art. 74, paragraph 3(e) of IVASS Regulation n. 38/2018, and in light of the duties of the Board of Statutory Auditors as an Internal Control and Audit Committee, held specific meetings on a periodic basis with EY S.p.A, the company appointed to carry out the statutory audit. (“EY”), during which data and information relevant to the performance of their respective tasks were also exchanged.
2. Transactions having a significant impact on the economic, financial and asset-based position. Other noteworthy events (point 1 of Consob Notice no. 1025564/01)
In this context, the Board of Statutory Auditors received information from the Managing Director and the Board of Directors about the activities performed and transactions with a significant impact on the economic, financial and asset-based position conducted by the Company, including through directly or indirectly controlled companies. On the basis of the information provided, the Board of Statutory Auditors reasonably concludes that the said transactions can be deemed to comply with the legislation, the Articles of Association and principles of sound management, and that they do not appear to be manifestly imprudent, precarious or in conflict with the resolutions passed by the Shareholders’ Meeting, or such as to prejudice the integrity of the Company’s assets. In particular, the Board of Statutory Auditors was informed about transactions in which Directors declared an interest either on their own account or on behalf of third parties, and has no comments to make about the compliance of the corresponding resolutions with the legislation and regulations.
They include the following events: – on 6 February 2018, the Company completed the sale of the entire investment in Generali Nederland N.V. The Group remains operational in the Netherlands through its Global Business Lines; – in March 2018, Generali Global Infrastructure was launched, a platform that involves external partnerships to invest in infrastructure debt, developing products and solutions for investors; – on 16 April 2018, the Company completed the sale of its activities in Panama and Colombia, countries in which it remains operational through its Global Business Lines; – on the same date, the company increased its share capital by implementing the Long-Term Incentive Plan approved by the Shareholders’ Meeting in April 2015. Following this increase, the Company’s fully subscribed and paid-up share capital amounts to € 1,565,165,364; – in the same month, the Company started the sale of Generali Belgium S.A. The transaction was completed in the beginning of January 2019; – in May 2018, the Company strengthened its geographical presence in Central and Eastern European countries through the acquisition of full control of the Slovenian company Adriatic Solvenica zavarovalna družba and Polish companies Concordia Capital S.A. and Concordia Polska TUW; – in June 2018, Generali CEE Holding B.V. and UniCredit signed a bancassurance agreement for the distribution of insurance solutions in Central and Eastern Europe; – in the same month, the Company completed the sale of the entire stake in Generali PanEurope DAC, while remaining operational in Ireland through its Global Business Lines; – in July 2018, the Company started the sale of 89.9% of Generali Lebenversicherung AG and signed an agreement with Viridium Gruppe, with which the Company undertook a larger industrial partnership on the German insurance market. The transaction is subject to the approval of the German Federal Authority for the supervision of the financial sector (BaFin), as well as that of the competent German antitrust authorities; – the new organisational structure of the Group was approved in the same month, effective from 1 September 2018. The most significant organisational changes include the creation of the position of General Manager, who reports directly to the Group CEO, and the appointment of Cristiano Borean as the new Group CFO; – in July, the Company also signed an agreement with Life Company Consolidation Group for the sale of its entire holding in Generali Worldwide Insurance Company Limited, a company based in Guernsey, and Generali Link, an Irish company. The transaction was completed in March 2019; – in October 2018, the Company signed an agreement for the acquisition of 100% of the Polish asset management company Union Investments TFI S.A. The transaction is subject to the approval of the competent regulatory authorities; – in December 2018, the Company acquired 100% of
CM Investment Solutions Limited from Bank of America Merrill Lynch, a company that works in the development of alternative UCITS strategies (Undertakings for the Collective Investment of Transferable Securities); – on 31 December 2018, the Company increased its stake to 49% in the Indian insurance partnership Future Generali Insurance, a joint venture with Future Group.
In this regard, the Board of Statutory Auditors received periodic updates from Group Legal Affairs on the evolution of the dispute during the meetings of the Board of Directors and RRC, and examined the opinions prepared by external lawyers. The Board of Statutory Auditors also met the Manager in Charge of preparing the Company’s Financial Reports and the auditing firm EY, with a view to monitoring the process conducted by them, insofar as falls within their respective remits, for the purpose of conducting the necessary evaluations relating to possible provisions pursuant to IAS 37 as well as the corresponding disclosure. As stated in the 2018 Integrated Annual Report and Consolidated Financial Statements, the Company, taking into account the status of the arbitration proceedings and the legal opinions obtained, decided that the conditions of probability and ability to make the reliable estimate required by IAS 37 for any risk provisions associated with BTG’s said claim for damages.
3. Related-party and intercompany transactions. Atypical and/or unusual transactions (points 2 and 3 of Consob Notice no. 1025564/01)
The BSA concluded that the information provided by the Board of Directors in the 2018 Annual Financial Statements of the company relating to intercompany and related -party transactions was adequate.
As far as we are aware, no atypical and/or unusual transactions were carried out in 2018.
Through the activity described in paragraph 1, the BSA supervised the adequacy of the overall organisational structure of the Company and Group, verifying the suitability of the definition of the proxies, and paying particular attention to the separation of responsibilities in the tasks and functions pursuant to Art. 74, paragraph 3(b) of IVASS Regulation no. 38/2018. The BSA also supervised the adequacy of the instructions given by the Company to subsidiaries pursuant to Art. 114, paragraph 2, of the TUIF for the purpose of promptly obtaining the information necessary to comply with the disclosure obligations required by law and by Regulation (EU) no. 596/2014. As required by paragraphs 1 and 2 of Art. 151 of the TUIF and by Art. 74, paragraph 3(g) of IVASS Regulation n. 38/2018, the Board of Statutory Auditors acquired the reports of the control bodies of the main subsidiaries and/or information provided by them following specific requests; no elements worthy of mention emerged in this Report from the analysis of this documentation.
The main features of the internal control and risk management system are described in the Report on Corporate Governance and Ownership Structure and the Group Risk Report (included in the Annual Integrated Report and Consolidated Financial Statements 2018).
nal control and risk management policies of the Group, which apply to all companies.
The ICRMS was defined in accordance with the terms of Solvency II, including delegated acts and guidelines issued on the subject by EIOPA, and with the legislative and regulatory provisions transposed at a national level. Following the issue by the Regulator of authorisation to use a “Partial Internal Model” (PIM) to calculate the Solvency Capital Requirement (SCR) as required by Solvency II, the Group is allowed to use the PIM to determine the SCR of the Group and the main Business Units for the Italian, German, French and Czech companies. For further details, see the Group Risk Report. During 2018, in compliance with Solvency II, the Group updated or defined the related internal group policies aimed at pursuing the following objectives: – to standardise the ICRMS, establishing the roles and responsibilities of corporate structures to which the Fundamental Functions are entrusted; – establishing the processes associated with the management of specific risks (investment, underwriting, concentration and operational risks) and the main business processes (including capital management, the asset liability management process and the product approval process).
Although the Company is no longer among the systemic entities, Group controls were also confirmed in 2018 with the updating of the Systemic Risk Management Plan, Liquidity Risk Management Plan and Recovery Plan, the latter also in light of the recent provisions of IVASS Regulation no. 38/2018 on reinforced emergency plans.
The Company monitored legislative developments during the year, activated compliance-checking plans and continued its ongoing reinforcement of the procedural structure, as described in the parent company’s Risk Report, Annual Integrated Report, and Consolidated Financial Statements 2018. The Internal Control and Risk Management System policies are also adopted by the main subsidiaries, having regard to the specific legislation in each country in which the Group operates, and any special features of the business. These policies are continuously updated.
IVASS Regulation no. 38/2018 was issued on 3 July 2018, which repealed the previous IVASS Regulation no. 20 of 26 March 2008. The latter remained in force until the publication of new secondary legislation, and was applicable for the first part of the financial year in question.
The interventions on the role of the Chairman and the Board Committees, the organisational structure of the Fundamental Functions and the effective and efficient performance of their respective functions, as well as the updating of internal regulations of the Board of Directors and Committees were immediately implemented, and approved by the Board of Directors at the meeting of 12 December 2018. On 30 January 2019, the Board of Directors also approved some amendments to the Articles of Association for compliance with the aforementioned IVASS Regulation no. 38/2018 for aspects relative to the provisions of the articles of association on the composition of the Executive Committee, which was not instituted by the Company.
As part of its supervisory activity over the ICRMS, the Board of Statutory Auditors paid specific attention to matters of IT security. During the 2018 financial year, a new Group document framework was defined for the management of Cyber-Security and Data-Protection, and specific procedures have been prepared for the management of IT incidents. The Board of Statutory Auditors also continued to monitor the implementation of the plan to mitigate money laundering and terrorist financing risks as defined by the Board of Directors in December 2017, following the self-assessment process conducted during the year as based on the specific methodologies indicated by IVASS. Also during the 2018 financial year, the Board of Statutory Auditors received updates on the external quality assessment conducted by PricewaterhouseCoopers on the Group Audit Function, both on the Company and certain Group companies. This analysis highlighted the general compliance of the Function with international standards for the professional practice of internal auditing, and identified some areas of further refinement, for which an action plan has already been defined.
With reference to areas that will be the subject of specific interventions already planned by the Fundamental Functions, the following is noted in view of the process of constant reinforcement and continuous improvement of the efficiency and effectiveness of the Group system: – in the IT area, and with particular regard to aspects of Cyber-Security and Data Protection, activities have been scheduled to verify the effective implementation of the new regulatory framework and the implementation by individual Group companies of the related procedural structure for IT security management; – a series of interventions were planned by the four Fundamental Functions to support the internal control system on branches, and in particular that located in the UK, in view of potential operational difficulties deriving from Brexit; – in light of legislative and regulatory developments (anti -money laundering, privacy and customer protection,
etc.), additional reinforcement of the internal control system has been planned, with specific joint actions by the Group Audit and Group Compliance Functions.
The aforementioned activities will be subject to specific monitoring by the Board of Statutory Auditors during the 2019 financial year.
In light of all the above information and having regard to the above-mentioned areas of attention and taking the development of ICRMS into account, no factors emerged from the analyses conducted or the information obtained that could lead this BSA to consider the Company’s Internal Control and Risk Management System as not adequate as a whole.
The Board of Directors approved the CNFS on 13 March 294 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
The Board of Statutory Auditors also checked on the correct application of the criteria and process initiated by the Board of Directors to assess the independence of directors classed as “independent”; it also established that its own independence requirements were met, sending such to the Board of Directors are required by the SelfGovernance Code. In light of the policies and operating guidelines provided for by the Company, the Board of Directors conducted its assessments of whether the independence requirement is met on the basis of all the information available to the Company in any way, and on the basis of specific supplementary declarations, designed to obtain from Directors stating themselves as independent precise, accurate information about the existence of any commercial, financial or professional relations, relations involving self-employment or employment or other pecuniary or professional relations, which are relevant as defined in the Corporate Governance Code and the TUIF.
The BSA notes that the Board of Directors has adopted a specific top management succession policy and plan. The BSA has no comments to make about the consistency of the remuneration policy with the recommendations of the Corporate Governance Code and its compliance with IVASS Regulation n. 38/2018.
9. External audit (points 4, 7, 8 and 16 of Consob Notice no. 1025564/01)
The firm EY S.p.A. was appointed as External Auditors to audit the financial statements of the Company and the consolidated financial statements of the Group for the 2012-2020 period by EY. During the 2018 financial year, the auditing firm verified that the Company’s accounts were properly kept and transactions properly recorded in accounting records. On 3 April 2019, the independent auditors issued the reports pursuant to Articles 14 and 16 of Legislative Decree 39/2010, respectively for the financial statements and consolidated financial statements of the Group as at 31 December 2018. The said reports indicate that the financial statements are drawn up clearly and truthfully and correctly represent the assets and financial situation, profit and cash flows for the year ending on that date, in compliance with the applicable standards and regulations. The Manager in Charge of preparing the Company’s Financial Reports and the Managing Director and Group CEO issued the declarations and certifications required by s. 154-bis of the TUIF with reference to the financial 296 Assicurazioni Generali Management Report and Parent Company Financial Statements 2018
The Report on Operations annexed to the draft financial statements of the parent company illustrates the business trend, indicating current and prospective developments, as well as the Group’s development and reorganisation process. Together with the independent auditors and the Manager in Charge of preparing the Company’s Financial Reports, the Board of Statutory Auditors was heard by the RCC in the context of the assessments for which the latter is responsible, together with the Manager in Charge of preparing the Company’s Financial Reports as regards the correct use of accounting principles and the consistency of their use for the purposes of preparing the consolidated financial statements.
On 03 April 2019, EY issued its additional report to the Board of Statutory Auditors, in its capacity as Internal Control and Audit Committee pursuant to Art. 11 of EU 537/2014. In compliance with the provisions of Art. 19, paragraph 1(a), of Legislative Decree 39/2010, the BSA sent this report in a timely manner to the Board of Directors, without making comments.
Pursuant to Article 19, paragraph 1(e) of Legislative Decree no. 39/2010, the Board of Statutory Auditors, in its capacity as Internal Control and Audit Committee, checked and monitored the independence of the auditing firm. In the performance of those checks, no situations were found that prejudiced the independence of the auditing firm or constituted grounds for incompatibility pursuant to the applicable legislation. This is confirmed by the statement issued by EY S.p.A. pursuant to Art. 6, para. 2(a) of Reg. EU 537/2014. With reference to non-audit services, at the request and with the support of the BSA, on 1 January 2017 the Company adopted a specific procedure aimed at governing the appointment of the auditing firm and a company belonging to their network of permitted services other than audits (“Guideline for the assignment of non-audit services to auditors”). During 2018, the Board of Statutory Auditors supervised the implementation of some changes to the Guidelines as mentioned above, aimed at aligning them with the interpretative development of current legislation and applicable practices. This review process led to the adoption of an updated version of the Guidelines on 6 July 2018. After that date, the BSA requested that further processes be implemented to raise awareness among Group companies as regards the correct application of the new Guidelines. During the 2018 financial year, in compliance with the provisions of Art. 19, paragraph 1(e) of Legislative Decree 39/2010 and Art. 5, par. 4, of Reg. EU 537/2014, the Board of Statutory Auditors, in its role as the Internal Control and Audit Committee, previously examined the proposals for non-audit services conferred on the independent auditors or companies belonging to the relevant network subject to its attention. As part of its assessments, the Board of Statutory Auditors has not only verified the compatibility of these services with the prohibitions of Art. 5 of Reg. EU 537/2014, but also the absence of potential risks for the independence of the auditor deriving from the performance of said services in light of the provisions contained in Legislative Decree 39/2010 (Articles 10 et seq.), in the Issuers Regulation (Art. 149-bis and following) and Audit Principle n. 100. As the statutory pre-requisites were fulfilled, the BSA approved the commissioning of the service from EY or other companies belonging to its network. The fees for non-audit services by the auditing firm or other companies belonging to their network for the company and its subsidiaries in the 2018 financial year are disclosed in detail in the Notes to the Financial Statements.
During the year, the Board of Statutory Auditors, as the Internal Control and Audit Committee, supervised the trend of said fees.
In March 2018, the Board of Statutory Auditors, in its capacity as the Internal Control and Audit Committee, together with the Group CFO structure and the other competent corporate functions, started the selection procedure aimed at identifying the new auditing company to be appointed for the nine-year period 20212029.
The decision to undertake this procedure before the expiry of the EY mandate (2020) was first and foremost dictated by the need to ensure compliance with the independent auditor’s forecasts pursuant to EU Regulation no. 537/2014, to which the Company is subject by virtue of its status as a “public interest entity ” (PIE). Art. 5 of EU Regulation n. 537/2014 identifies specific services that the auditor and entities belonging to the relevant network cannot provide to the institution of interest and to the companies controlled by it also in the year immediately preceding the first object of the audit assignment (“cooling-in period”) (in the case of Generali, in 2020). Secondly, the appointment of the new auditor prior to the expiry of the one in office facilitates handover from the outgoing to the incoming auditor. This would allow for dealing more efficaciously with the lesser knowledge about the PIE and its group the incoming auditor would inevitably have more knowledge of the PIE and the group, in the hopes of obtaining a better quality of statutory audit. In compliance with the provisions of Art. 16 of EU Regulation n. 537/2014, the procedure for selecting the new auditor was carried out in a fully transparent and traceable manner, and was conducted on the basis of clear and non-discriminatory assessment criteria.
The subject of the selection procedure also included auditing the financial statements of Italian and foreign companies subject to the control of the Company pursuant to Art. 93 of the TUIF, including other PIEs. The BSA agreed with the Company, as well as with the control bodies of subsidiaries, that the assignment of the audit assignment concerning the accounts of the entire Group to a single subject allows for greater efficiency and quality in the performance of the audit. The single auditor approach also satisfies the requirement of ensuring greater uniformity in application of the rules on the issue of the independence of the auditor are not only for PIEs, but also to their parent and subsidiary companies.
Manager (summary of 2017 targets and setting of 2018 targets) and the Audit Plan for 2018.
During the meeting of the Board of Directors on 14 March 2018, the BSA expressed a favourable opinion pursuant to Art. 2389 of the Civil Code with respect to the proposal to assign the newly issued shares to the Chief Executive Officer (Group CEO) as part of the resolution to increase the share capital as part of the 2015 LTI plan. Again with reference to the Group CEO’s remuneration, on 29 June 2018 the Board of Statutory Auditors, expressed a favourable opinion of the Group CEO’s remuneration as part of the LTI Plan 2018. At the meeting of the Board of Directors on 30 July 2018, pursuant to Art. 154-bis, paragraph 1, of the TUIF and Art. 40, paragraph 2, of the Articles of Association, the Board of Statutory Auditors also expressed a favourable opinion on the proposal to appoint Cristiano Borean as the new Manager in Charge of preparing the Company’s Financial Reports. During the 2018 financial year the BSA also regularly commented on the Half-Year Reports on complaints prepared by the Head of the Group Audit Function in compliance with ISVAP Regulation no. 24 of 19 May 2008, as amended. The reports did not highlight any particular problems or organisational deficiencies. The BSA also checked that the Company sent the reports and associated comments by the BSA promptly to IVASS.
The Board of Statutory Auditors received two communications pursuant to s. 2408 of the Civil Code during the 2018 financial year.
On 21 April 2018, the shareholder Tommaso Marino forwarded a complaint pursuant to Art. 2408 of the Civil Code, by which he requested the Board of Statutory Auditors to verify the correctness and legitimacy of the proxy issued by Generali PanEurope DAC (“GPE”), an Irish company at the time wholly controlled by the Company, to attend the Shareholders’ Meeting of Il Sole 24 Ore S.p.A. (“Il Sole 24 Ore”) held in Milan on 28 June 2017. The Board of Statutory Auditors immediately involved the competent corporate functions in order to carry out the appropriate checks, discussing the outcomes reported below, within the limits permitted by the regulatory restrictions on the protection of personal data.
of Statutory Auditors considered that the facts presented by the shareholder Marino are not censurable. The Foundation is not required to carry out all of the activities listed in its corporate purpose: Art. 3 of the Foundation’s articles of association, to which the shareholder expressly referred, only represents a limit for the directors of the Foundation, who cannot direct its scope towards purposes other than or additional to those indicated therein. The Board of Statutory Auditors was also able to ascertain, in the light of the information provided by the Company ’s management, that the Foundation, through the “Human Safety Net” Group program, has launched some significant initiatives attributable to social, health and social -health assistance sectors. Please refer to the disclosure on these initiatives reported in the Annual Integrated Report and Consolidated Financial Statements 2018.
No complaints pursuant to Art. 2408 of the Civil Code were received in the first few months of the 2019 financial year. No censurable actions, omissions or irregularities requiring reports to the Regulators emerged from the supervisory activities performed.
On the basis of all the factors set out in this Report, the Board of Statutory Auditors finds no reason to object to the approval of the Annual Financial Statements of Assicurazioni Generali S.p.A. for the financial year ending on 31 December 2018, as submitted to you by the Board of Directors, and expresses a favourable opinion of the proposed dividend distribution, funded entirely by the profit for the year.