During the year, the Board of Statutory Auditors also issued the opinions, comments and certifications required by the applicable legislation. In particular, the Board of Statutory Auditors expressed a favourable opinion, pursuant to s. 2386.1 of the Civil Code, of the appointment by co-opting of Philippe Donnet at the meeting of the Board of Directors held on 17 March, having examined the process followed in this respect by the Company and its Committees. On that occasion, it also issued a favourable opinion of the proposed resolution pursuant to s. 2389 of the Civil Code regarding the remuneration of the new Managing Director /Group CEO.
EY S.p.A. Sede Legale: Via Po, 32 - 00198 Roma Capitale Sociale deliberato Euro 3.250.000,00, sottoscritto e versato Euro 2.950.000,00 i.v. Iscritta alla S.O. del Registro delle Imprese presso la C.C.I.A.A. di Roma Codice fiscale e numero di iscrizione 00434000584 - numero R.E.A. 250904 P.IVA 00891231003 Iscritta al Registro Revisori Legali al n. 70945 Pubblicato sulla G.U. Suppl. 13 - IV Serie Speciale del 17/2/1998 Iscritta all’Albo Speciale delle società di revisione Consob al progressivo n. 2 delibera n.10831 del 16/7/1997
Independent auditor’s report in accordance with articles 14 and 16 of Legislative Decree n. 39, dated 27 January 2010 and with article 102 of Legislative Decree n. 209, dated 7 September 2005
Directors’ responsibility for the consolidated financial statements The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union as well as with the regulation issued to implement article 90 of the Legislative Decree dated 7 September 2005, n. 209.
Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA Italia) implemented in accordance with article 11 of Legislative Decree dated 27 January 2010, n. 39. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of Generali Group as at December 31, 2016, and of its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and the regulation issued to implement article 90 of Legislative Decree dated 7 September 2005, n. 209.
This report has been translated into the English language solely for the convenience of international readers
Combined Ratio (COR): it is a technical performance indicator of property&casualty segment, calculated as the weight of the loss ratio and the acquisition and general expenses (expense ratio) on the earned premiums net of insurance.
Investments – asset allocation The Generali Group uses for the management and presentation of investments a different aggregation respect to financial statements. In particular, within total investments are included also cash and cash equivalents and specific items of financial liabilities having nature similar to investments, such as derivatives liabilities and repurchase agreements. Below are described asset classes that compose the total investments:
Other investments: includes participations in non-consolidated Group companies, derivative investments and receivables form banks and customers, the latter mainly related to Group banking operations.
Alternative performance measures The operating result: was obtained by reclassifying the components making up earnings before tax in each line of business on the basis of the specific characteristics of each segment, and taking account of recurring expense of the holding. All profit and loss items were considered, with the exception of net non-operating costs, i.e., results of discontinued operations, corporate restructuring costs, amortisation of portfolios acquired directly or through acquisition of control of insurance companies or companies in the holding and other activities segment (value of business acquired or VOBA) and other net non-recurring costs. In the life segment, the following are also considered as non-operating items: realised gains and losses on investments not considered in determining profits attributed to policyholders and net measurement losses that do not contribute to the formation of local technical reserves but exclusively in determining the deferred liability to policyholders for amounts not relating to policyholders and those on free assets. In the P&C segment, the following are considered as non-operating items: all realized and measurement gains and losses, including exchange-rate gains and losses. In the holding and other activities segment, the following are considered as non-operating items: realized gains and losses and nonrecurring net measurement losses. The total operating result does not include non-operating holding costs such as interest expense on borrowings and costs arising from parent stock option plans and stock grants.
Solvency II Regulatory Solvency Ratio: it is defined as the ratio between the Eligible Own Funds and the Group Solvency Capital requirement, both calculated according to the definitions of the SII regime. Own funds are determined net of proposed dividend. The ratio at 30 June 2016 has to be intended as preliminary since the definitive Regulatory Solvency Ratio will be submitted to the supervisory authority in accordance with the timing provided by the Solvency II regulations for the official reporting.
The website was designed to be viewed on any device and developed based on the Group’s web guidelines, which also meet the international standards defined by the Web Accessibility Initiative (WAI).
This Annual Integrated Report 2016 has not been filed, pursuant to art. 154-ter of legislative decree of 24 February 1998, no. 58 - Testo Unico delle disposizioni in materia di intermediazione finanziaria (TUIF), and pursuant to art. 8 and 21 of law of 6 February 1996, no. 52. The Company shall publish the final version of the Annual Integrated Report and Consolidated Financial Statements 2016 in accordance with prevailing law, and will also include the reports by the Board of Statutory Auditors and the Independent Auditors. Please note that the report itself was translated into English solely for the convenience of international readers.
Our reports are not simply reporting documents. Their aim is to provide a comprehensive overview of how the Group creates value with regard to a number of major contemporary issues. These issues, of course, outline the field of action of a global insurance player such as ours: more specifically, demographic trends, climate change, the company’s social role and, above all, the changes dictated by innovation technology.
Innovation is indeed the cross-cutting issue of Generali’s 2016 reports, viewed from different perspectives: customers, who are evermore well-informed and interconnected; agents, the cornerstone of a distribution strategy increasingly open to multimedia; employees, actively involved in a process of cultural and operational change; big data management, a key tool for interpreting the world surrounding us and anticipating its developments. And then the Internet of Things, mobility and the major topic of growth, the real challenge not only for businesses but for all policymakers who need to take decisions in such complicated times.
This year, readers will be accompanied by illustrations created by artists who have used, each in their own way, a symbolic and coloured language to outline concepts that have a deep impact on the life of our Group and of its stakeholders. Our wish is for readers to have a pleasant journey that at the same time will make them reflect, help them interpret the economy and society with a more informed and aware attitude, and make them feel surprised that a Generali Group report can be much more than a simple report.
The Board of Directors of Assicurazioni Generali is responsible for the Annual Integrated Report. The reporting process was conducted under its responsibility, applying the Guiding Principles and Content Elements set out under the International <IR> Framework.
Note to the Report for further details on how the Framework was applied, especially regarding the Guiding Principles and the Content Elements set forth therein
Our strengthening confirms not only industrial leadership: Generali aims to act as a global point of reference for corporate social responsibility as well, by best interpreting that role of corporate citizen inherent in its insurance mission: to protect, prevent, manage risk and always take a long-term view. These are the tactics that will guide our initiatives all over the world, with a view to sustainability and the creation of shared value.
Once again this year, as always, we share our pride in our results with tens of thousands of Group employees, distributors and associates, to whom we express our heartfelt thanks. They constitute our strength, and are the real reason to be optimistic about the future of Generali.
The Group resumed its expansion during the Italian economic boom years. An agreement was signed with the US-based Aetna in 1966, and in 1974 Genagricola was founded, which heads all agricultural activities of the Group. Generali transferred its registered office from Rome back to Trieste in 1990. Genertel, the first direct insurance company in Italy, was established in 1994. The Group took control of the AMB group in 1997 to promote growth in the German market. Banca Generali was established in 1998 in order to concentrate all asset management activities and services under one umbrella. There were some acquisitions in the first decade of the new millennium, e.g. INA and Toro, and joint ventures were launched in Central and Eastern Europe and Asia.
Assicurazioni Generali completed the share capital increase to € 1,559,883,538, in execution of the Long Term Incentive Plan approved by the Shareholders’ Meeting of the Company on 30 April 2013.
AM Best confirmed the Financial Strength Rating (FSR) at A (Excellent) for Generali, the rating of the debt instruments issued or guaranteed by Generali and the stable outlook.
The Board of Directors of Assicurazioni Generali appointed Marco Sesana as Italy Country Manager.
Assicurazioni Generali acquired the voting rights on 505 million shares of Intesa Sanpaolo, amounting to 3.01% of the share capital, through a securities lending transaction.
We develop simple, integrated, customized and competitive life and property&casualty insurance solutions for our clients: the offer ranges from savings, individual and family protection policies, unit-linked policies, as well as motor third-party liability (MTPL), home, accident and health policies, to sophisticated coverage for commercial and industrial risks and tailored plans for multinational companies.
As for capital other than financial capital, more information on external and internal impacts resulting from our business is reported in the Sustainability Report, the Corporate Governance and Share Ownership Report and the Remuneration Report
Lives Ultimately, we have an impact on the quality of people’s lives: wealth, safety, advice and service are instrumental in improving people’s chosen way of life for the long term.
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.
The Code of Conduct defines the rules of conduct to be observed, for example, for the promotion of diversity and inclusion, the management of personal data and privacy, the prevention of conflicts of interest and corruption, bribery, money laundering, terrorist financing and international sanctions, and the proper management of relationships with customers and suppliers.
The external context is increasingly challenging: on one hand, economic, financial and political uncertainty which results in greater volatility in interest rates, government and corporate bond spreads and the equity markets and, on the other hand, different customer behaviour, driven primarily by rapid technological evolution and more stringent regulations.
In Germany, we digitalized the entire claims management process, eliminating our use of paper records and speeding up compensation timing. Our clients are also able to use an app to view the entire claims settlement process: more than 30 thousand clients have used it since its introduction.
The share of products with low capital absorption and commission income will be increased so as to generate long-term value while protecting portfolio sustainability and increasing resilience in the face of market volatility.
New technologies offer the insurance business important innovations to be exploited in order to gain increasing awareness of the needs of our people and our clients.
June 2017 second edition of the Global Engagement Survey, a further fundamental step on our path of engagement and continuous improvement more than 330 local actions to respond to specific opportunities for improvement arising in the Group’s various countries and companies, the most recurring of which are: – improving communication – promoting empowerment and enablement to be simpler, smarter, faster
– introduction of training courses in all managerial training programmes at Group level for the purpose of maximising the value of diversity, teamwork and inclusion
– support in the organization of Elle Active Forum, an Italian female empowerment event
– appointment of Frédéric de Courtois as Group D&I Sponsor 91.1% trained people 37.3 average hours of training per capita € 61.2 mln training costs
Board of Directors It has all of the broadest management powers for the pursuit of the corporate purpose. It appoints a Chairman and may appoint one or more Vice-Chairmen.
Group CEO This is the main person responsible for Company management, in the capacity of Managing Director. The Group CEO is also the Director responsible for the internal control and risk management system.
Risk and Control Committee It has consultative, recommendatory and preparatory functions in favour of the Board with respect to internal control and risk management matters.
Nationality: Italian Professional background: Professor In office since 28 April 2016, elected from the minority slate
Nationality: Monegasque Professional background: Entrepreneur In office since 30 April 2013
Nationality: Italian Professional background: Lawyer In office since 28 April 2016
Nationality: Italian Professional background: Lawyer In office since 30 April 2013
The Managing Director and Group CEO, the members of the GMC and the other executives with key responsibilities receive a remuneration package consisting of a �xed component, a variable component (short and medium/long-term) and bene�ts, on the basis of the following principles: The short-term variable remuneration consists of an annual bonus system based on which a cash bonus of between 0% and 200% of the individual target baseline may be accrued depending on: – the Group funding, connected with results achieved in terms of the Group Operating Result and Adjusted Net Profit and the surpassing of a minimum Economic Solvency Ratio level – the achievement of the objectives defined in the individual balanced scorecards, which establish from 5 to 7 objectives at Group, Region, country, business/function and individual level - as appropriate - in terms of value creation, proper profitability based on risks, effectiveness, business transformation initiatives, strategy acceleration and people empowerment.
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 (with the exception of those who are also Generali Group executives), 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.
In particular, benefits include a supplementary pension and healthcare assistance for employees and their families, in addition to a company car and further benefits, including some linked to domestic or international travel (e.g. accommodation expenses, travel and education for children), in line with market practices.
We are facing a profound change caused by the interaction and the cumulative effects of various developments in technology: the Internet of Things, the constant growth of mobile networks, the adoption of cloud services, the development of cognitive computing and machine learning are all elements that contribute to creating a renewed environment in which to operate. The unprecedented availability of customer data, combined with the technological capabilities of processing data quickly and efficiently in terms of costs, allows the insurance business to create customized prices and identify potential fraud. However, it creates potential risks arising from the management of personal data as well as new challenges within the traditional insurance risk management model. Technology as an enabling element of the processes may also impair business continuity, representing a potential threat (malfunction of equipment and systems, etc.).
We constantly monitor the main perils and territories where we are exposed, using actuarial models to estimate the damage that could result from natural phenomena. We can therefore optimize our underwriting strategy. Reinsurance plays a key role: we manage our protections on a centralized basis in order to take advantage of economies of scale and pricing thanks to the size of the Group, with the aim of leveraging on business diversification. We also continue to monitor and reduce our direct impact and to favour the limitation of global warming to within 2°C through our insurance solutions as well as our investments. We develop and distribute increasingly innovative products along with a high level of services in order to meet the potential request for more and improved protection against catastrophes, in addition to products that reward virtuous and environmentally sustainable decisions and behaviour. Also in partnership with other public and private stakeholders, we work to support initiatives that help to expand access to insurance products, for example through more favourable taxation for catastrophic coverage, which would lower the impact of reconstruction on the public sector, as well as initiatives aimed at preventing and mitigating environmental risks. We invest responsibly, excluding from our investment universe those companies that are involved in causing serious harm to the environment. We support research and studies on environmental risks.
New business in terms of annual premium equivalents (APE) stood at € 4,847 million, down 6.6% with respect to the previous year. This performance is mainly attributable to the decline in single premium policies (-13.4%). Recurring premiums are basically stable (-0.5%).
As noted above, P&C premiums amounted to € 20,783 million. On a like-for-like basis, the 2.1% increase can be attributed to the motor segment (+4.3%), driven by Spain, CEE Countries, Germany and Argentina, which more than offset the continuing decline in motor premium income in Italy (-5.2%). Confirming the recovery observed during the year, non-motor premium income is also up slightly (+0.5%) in general across the countries in which the Group carries on business, with the exception of Italy (-3.6%).
-503 million at 31 December 2015) and were primarily impairments recognized on financial investments; • net realized gains are down, standing at € 422 million (€ 758 at 31 December 2015) due mainly to the planned lower profits on real estate and equity portfolios; • net non-operating income from financial instruments at fair value remained stable at € -96 million (€ -96 million at 31 December 2015); • other net non-operating expenses decreased to € -519 million (€ -712 million at 31 December 2015). This item comprises € -139 million for the amortization on the value of the acquired portfolios (€ -142 at 31 December 2015), € -176 million for restructur-
ing costs (€ -269 at 31 December 2015) and € -205 million in other net non-operating expenses (€ -302 million at 31 December 2015), that mainly includes the allocation to the risk provisions; • non-operating holding expenses amounted to € -794 million (€ -764 million at 31 December 2015).
This performance was influenced by interest expenses on financial debt which, as a result of new issues of € 1.25 billion in the fourth quarter of the previous year and € 850 million in May 2016, went from € -684 million to € -723 million.
Thanks to improvements in the operating results noted above, the result for the period attributable to the Group stood at € 2,081 million, showing an increase of 2.5% over the € 2,030 million recorded at 31 December 2015.
The result attributable to minority interests, amounting to € 158 million, which corresponds to a minority rate of 7.1% (10.1% at 31 December 2015) was down on the € 229 million of the previous year due to the results of Banca Generali and Generali China Life.
Result of the period attributable to the Group 2,081 2,030 2.5%
Reserve for unrealized gains and losses on available for sale financial assets 252 -431
For further information regarding the Group’s solvency position, please refer to the Risk Report.
With reference to the bond portfolio, government bonds which represent 54.9% (54.9% at 31 December 2015) were up, standing at € 174,364 million (€ 163,474 million at 31 December 2015). The change during the period was due primarily to the acquisitions made in 2016. The exposure to individual government bonds is mainly allocated to the respective countries of operation, in line with the Group’s ALM policy.
The corporate component increased in absolute terms to € 143,063 million (€ 134,077 million at 31 December 2015), equal to 45.1% of the bond portfolio (45.1% al 31 December 2015). The change is due to the net purchases made during the year, as well as the increase in value resulting from the decrease in the credit spread. The corporate component includes guaranteed bank corporate bonds, financial sector bonds and bonds issued by industrial companies. With reference to the new investments those in the non-financial sector were preferred in order to increase diversification. The decrease of Covered bonds was mainly due to maturities not replaced by new acquisitions, also due to a lack of new issuances for this kind of instruments.
Rating changes in comparison with previous period reflect net sales as well as market movements; moreover further variations in some rating classes – mainly AAA
- are due to a changed methodology in the rating attribution process, which foresees the use of internal rating when lower than the external one.
The decrease in the Group’s liabilities linked to financing activities was due mainly to the following transactions completed in the course of the year: • the issue by Assicurazioni Generali of a subordinated bond with a nominal value of € 850 million for the early financing of the repayment of another subordinated liability issued by the subsidiary Generali Finance, with an early repayment option as of 8 February 2017; • the repayment as at 16 June 2016 of two subordinated bonds issued, in euro and pounds, by the subsidiary Generali Finance, for a total equivalent value of € 1,167 million.
Interest expense on liabilities linked to financing activities 723 684 5.8%
(*) Without taking into account the interest expenses on liabilities linked of the real estate development companies, classified among the other expenses, as well as the interest on deposit under reinsurance business accepted, deducted from the related interest income.
This category also includes other bonds, mainly including those issued by the subsidiary Ceska Pojistovna for a nominal amount of CZK 500 million. The amortized cost of the remaining positions amounts to about € 48 million.
New production registered a negative trend in terms of APE (-8.3%) following the reduction of both annual (-2.7%) and single premiums (-13.0%), mainly because of the drop in hybrid products sales caused by the review of the product range. NBM (margin on APE) grew from 25.4% (year end 2015) to 27.2, mainly because of the calibration of the offered guarantees, of more profitable unit-linked products and of a taxation reduction. Notwithstanding the reduction in terms of volumes, the increase in profitability brought the new production value to € 579 million (-1.8%), slightly lower than the previous year one.
In 2016 Generali Deutschland continued the strategic repositioning aimed at implementing different initiatives to strengthen its position by leveraging its strong multi-channel presence, the simplified and market focused approach, a new business model in the life segment, as well as through the launch of innovative and smart products and of services and processes focusing on the specific customer needs. Thanks to the strategic repositioning on German market started in May 2015, governance in Generali Deutschland has been strongly revised and made more efficient. The local holding, whose headquarter wad based in Cologne, organizationally speaking has been integrated with the two main business units - Generali Versicherung (P&C) and Generali Leben (life) located in Munich - becoming the new Generali Deutschland AG. With the realignment of the different Group companies’ board of directos and the creation of a matrix management structure, Generali in Germany is continuously oriented towards agile governance.
Within a context of high volatility, the yield on the 10-year German bund declined significantly, even recording negative returns during the summer, to then bounce back to around 0.2% (0.6% at the end of 2015). On the other hand, there was growth in the equity market (DAX +7%).
Decrease of savings products (-18.8%), in particular the single premium one, consistently with the strategic actions implemented for the reduction of this product category. New business in terms of APEs was down (-14.2%) due to the drop in the life segment (-14.9%), primarily following the decrease in single premium policies, whereas there was growth in the healthcare line (+3.4%). In terms of business lines, there was an increase in unit-linked policies (+1.8%) but savings products were down (-34.9%). The NBM (margins on the APEs) increased from 23.1% in 2015 to 38.8% in 2016, mainly due to the better business mix, a recalibration of guarantees offered and a reduced cost of capital. New business value amounted to € 275 million (+44.3%).
Increase in the Gross written premiums thanks to the positive trends of both motor and non motor segments. Motor segment (+2.3%) benefitted from the pricing policies on the existing portfolio; non motor segment is also increasing (+0.6%). Cor strongly improves, thanks to the reduced current accident year loss and to the expense ratio restraint, which reflects the cost-reduction policies, and the reduced catastrophe losses (€ 71 million, 2.0 pps. instead of the 2.3 pps of last year.).
Generali Vitality is the first holistic health- and wellness-based insurance product which thanks to its innovative approach helps consumers gain in-depth knowledge about their health, how to improve it, and how to reap the rewards for improving their lifestyle. We decided to reinvent insurance, creating a constant and emotional way to keep in touch and reward people. We did this by taking a start-up mentality and combining it with central and local teams; then we inspired those teams and launched a partnership with Discovery in order to reshape value proposition based on customer research. We wanted to be the first in Europe to capture the wellness insurance space. We created a new eco-system, also thanks to valuable partners such as Adidas and Fitness First. Vitality will change our relationship with customers, offering them a tailored program of services to help them improve their lives. Sales will be able to engage with customers about rewards and wellness instead of death, illness, and disability. That’s why the 90% of agents subscribed to Vitality membership in the first week.
As in other regions, in Eastern European countries local supervisory authorities are continuing to issue new insurance market regulations, thereby increasing the level of complexity for companies during their subsequent adoption and implementation.
The improvement in premium income emerged entirely from the motor segment (+7.1%), in particular the Czech Republic (+4.6%, thanks primarily to Casco line), Romania (+64.6%, especially due to retail trends), Slovakia (+13%) and Hungary (+8.3%).
The Group’s main EMEA markets are Spain, Switzerland and Austria. In these countries the implementation of strategic initiatives focused on improving client centricity and the quality of service offered is on-going, with the aim to develop smart and innovative solutions in coherence with the Group strategy.
Austria Generali has operated in this country since 1832 and is the third largest insurance operator in terms of written premiums, with a market share of 14.0% in life insurance and of 16.3% in P&C. It currently operates in the country through the insurance companies Generali Versicherung, BAWAG P.S.K. Versicherung and Europäische Reiseversicherung. The multi-channel distribution strategy involves multiple sales channels: agents, brokers, financial advisors and banks (BAWAG P.S.K. and 3Banken). The strategy adopted in the Austrian market reflects that of the Group, allowing the company to confirm its position as market leader in the retail sector thanks to the focus on customers and on their needs and to the quality of services, offering simple and innovative solutions. At market level, the economic context remains overall quite complex, due to low interest rates, low inflation and a slightly increasing unemployment rate. As for the insurance market, price competition is very high, especially for the broker market, in which there has been a trend of concentration in pools. There have been difficulties in hiring new people for the sales force, and comparative web portals are on the rise.
Overall, NBM rose from 27.0% in 2015 to 39.0% in 2016, mainly due to the sharp decrease in traditional business in favour of the risk business in Austria, the recovery in profitability in Switzerland in light of new unitlinked products and the recalibration of the level of guarantee offered.
P&C premium growth in both segments was due in particular to Spain and Switzerland, which posted non-motor line growth. The motor segment is driven for the most part by growth in Spain and the Netherlands. The Cor improved due to the lower loss ratio, especially in Austria and Belgium in non-motor lines and in Spain in the commercial line. The expense rate was down slightly, especially thanks to trends in Spain and the Netherlands.
Asia includes China, Indonesia, India, Hong Kong, Vietnam, Thailand, the Philippines, Malaysia and Japan.
Recently, the most significant transactions were the creation of a new life company in Hong Kong, added alongside the branch and the regional office. The company, founded in July 2016, is specialized in the High Net Worth segment. On the other hand, at the end of 2014 the Group entered the Malaysian market through an agreement with Multi-Purpose Capital Holdings Berhad (a wholly owned subsidiary of the Malaysian group headed by MPHB Capital) to acquire 49% of the P&C insurance firm MPIB “MultiPurpose Insurance Berhad”, with the option to exercise a call option on the additional 21% of MPIB in the course of 2017. Thus, the Generali Group would hold a 70% stake in the company, the maximum allowed for foreign companies in Malaysia.
Income experienced growth in all countries, driven by China and Hong Kong, the latter thanks to the High Net Worth business from the new life insurance company that has operated since July 2016.
The International Monetary Fund has forecast global growth of 3.4% in 2017, compared to 3.1% in 2016. In particular, the Eurozone, United Kingdom and Chinese economies are expected to slow down, while the US economy should accelerate and Russia and Brazil are expected to exit their recessions. In the Eurozone, GDP growth is expected to decline from 1.7% in 2016 to 1.4% in 2017, primarily as a result of weaker economic performance in Germany and Spain, while inflation in the Eurozone is expected to rise from 0.3% to 1.1%, driven by a modest price recovery in some commodities. In this context of economic weakness, the ECB will maintain an accommodating position, although towards the end of the year speculation will rise on the exit of the Central Bank from its quantitative easing programme. In 2017, US interest rates are expected to rise, driven by the Fed’s gradual exit from quantitative easing, and long-term rates in the Eurozone should increase as well, especially towards the end of the year.
The Group used the option provided for under art. 70, paragraph 8, and art. 71, paragraph 1-bis of the Issuers’ Regulations to waive the obligation to publish the information documents provided for in relation to significant mergers, de-mergers or capital increases by contribution of assets, acquisitions and disposals.
As regards the Guiding Principles, the Strategic focus and future orientation principle is applied in the whole document. Indeed, the strategy guides the process of creating value and summarizes in and of itself the material aspects for the Group. The Materiality of the information is then represented in detail within a matrix.
We also engage customers, distributors and Group employees with a view to continuous improvement.
Equivalent terms: refer to equivalent exchange rates and equivalent consolidation scope.
Technical components Gross written premiums: equal to gross written premiums of direct business and accepted by third parties.
New Business Margin: it is a performance indicator of the new business of life segment, equal to the ratio NBV / APE
Provisions for unearned premiums: it comprises the unearned premium component, defined as the part of gross premiums written which is to be allocated to the following financial periods, and the provisions for unexpired risk on insurance contracts in force in excess of the related unearned premiums.
Financial assets and liabilities Financial asset A financial asset is any asset that is: (a) cash; (b) an equity instrument of another entity; (c) a contractual right: (i) to receive cash or another financial asset from another entity; or
(b) a contract that will or may be settled in the entity’s own equity instruments and is: (i) a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments; or
Average duration It is defined as the average residual economic maturity (considering the first call option date) of the financial debt outstanding as at the reporting date, weighted for the nominal amount.
Equity investments: direct investments in quoted and unquoted equity instruments. Moreover, this asset class includes also investments funds mainly exposed to investments or risks similar to direct investments presented within this asset class, including also private equity and hedge funds.
Investments properties: direct investments in real-estates. Moreover, this asset class includes also investments funds mainly exposed to real-estate investments.
Investments back to unit and index-linked policies: includes various types of investments backing insurance liabilities related to unit and index-linked policies.
Share performance indicators Earning per share: Earning per share: equals to the ratio of Group net result and the weighted average number of ordinary shares outstanding.
Other indicators Net Operating Cash Net Operating Cash is a view of cash generation at the Group’s parent company level. The figure is the sum of: the dividends paid by Group subsidiaries, earnings from parent company reinsurance activities, expenses and interest paid, and the net balance of tax payments and recoveries.
Annual Integrated Report 2016 prepared by Group Integrated Reporting & CFO Hub