Company established in Trieste in 1831 Share capital € 1,561,808,262 fully paid-up Registered office in Trieste, piazza Duca degli Abruzzi, 2 Tax code and Company Register no. 00079760328 Company entered on the Register of Italian insurance and reinsurance companies under no.1.00003 Parent Company of the Generali Group, entered on the Register of insurance groups under no. 026 Certified email (Pec): assicurazionigenerali@pec.generaligroup.com
Index 4 The integrated overview of our reports 4 About Management Report and Parent Company Financial Statements 6 Letter from the Chairman and the Group CEO
This Report provides an overview of the Assicurazioni Generali S.p.A.'s value creation process, reporting current and outlook financial and non-financial information and highlighting the connections between the environment in which we carry on our business, our strategy and our corporate governance structure.
Pursuant to Legislative Decree no. 254/2016, article 6, paragraph 1, the Company is not subject to the obligation of preparing an Individual Statement of a Non-Financial Nature, under article 3 of the Decree itself, since the Company is included in the Consolidated Statement of a Non-Financial Nature, prepared by the Generali Group pursuant to article 4.
Annual Integrated Report This report provides a concise and integrated view of the financial and nonfinancial performance of the Group, even in response to legislative decree 254/2016.
Corporate Governance and Share Ownership Report 2017 186th year | generali.com
At the end of the Report the part concerning Tables and the Appendices to the Notes in accordance with current requirements.
Remuneration Report This report provides specific information about the remuneration policy adopted by the Group and its implementation.
Management Report and Parent Company Financial Statements 2017 186th year | generali.com
Generali closed another year with excellent results and strengthened its positions as one of the most important players in the insurance industry. These results demonstrate that the Group is increasingly solid, efficient and innovative, and that it is able to effectively handle the challenges distinguishing our industry and that are becoming deeply intertwined with the global and interdependent changes in the society.
The Assicurazioni Generali brand is old, full of history and prestige. In recent years, the Group has turned into a modern multinational with a vocation for customer centricity, and has been able to combine its heritage with technology in order to find increasingly innovative solutions. However, there is another vocation that distinguishes us: that for the human factor, for talent and for our people, whether they are employees, agents or collaborators. Without them, it would have been impossible to build the group that we have become and to attain the results we achieved in 2017. A special thanks goes to them this year as well.
Since 1831 we are an Italian, independent Group, with a strong international presence. We are one of the largest global players in the insurance industry, a strategic and highly relevant sector for the growth, development and welfare of modern societies. In almost 200 years we have built a Group that operates in over 60 countries through more than 400 companies and over 71 thousand employees.
Generali Finance B.V. exercised the early redemption option on the perpetual subordinated bond on 8 February for an amount totalling € 869 million. This debt had already been refinanced through the subordinated bond, concluded on 8 June 2016, for an overall amount of € 850 million, targeting institutional investors.
On 15 March, the Board of Directors of Assicurazioni Generali approved the appointment of Aldo Mazzocco as the new CEO and General Manager of Generali Real Estate; he became a member of the Board of Directors of Generali Real Estate in June.
On 27 April, the ordinary and extraordinary Shareholders’ Meeting of Assicurazioni Generali appointed the Board of Statutory Auditors for the three-year period 2017-2019, electing Carolyn Dittmeier (Chairwoman), Lorenzo Pozza and Antonia Di Bella as auditors and Francesco Di Carlo and Silvia Olivotto as substitute auditors. The members of the Board of Statutory Auditors declared that they met the conditions of professionalism, respectability and independence.
On 19 July, an agreement was signed for the transfer of the shareholding in the Colombian companies2, equivalent to 91.3% of Generali Seguros and to 93.3% of Generali Vida. The operation is subject to approval from the competent authorities. The sale of the shareholding in the Guatemala subsidiary2 was also completed.
On 28 September, the subsequent phase of industrial transformation of Generali Deutschland was initiated in order to strengthen operational performance and increase value creation in the long term.
The Human Safety Net, a new Group initiative for the community, was launched.
On 18 December, an agreement for the transfer of the entire shareholding in Generali PanEurope2 was undersigned with an initial compensation of € 230 million, subject to adjustment on the closing date of the operation. The operation is subordinate, inter alia, to approval from the competent authorities and its completion is expected within the first half of 2018.
Generali completed the sale of its entire shareholdings in Generali Nederland N.V. (and its subsidiaries).
Our rules for running business with integrity, p. 23 14 March 2018: Board of Directors approving the Annual Integrated Report and Consolidated Financial Statements*, the Parent Company Financial Statements Proposal and the Corporate Governance and Share Ownership Report as at 31 December 2017 and the Remuneration Report * The Annual Integrated Report includes the Consolidated Non-Financial Statement.
Natural capital We are committed to contributing to the transition towards a more sustainable economy and society, even by managing our direct impact. t 112,782 CO2e total emissions (-9.5% vs base year 2013)
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.
Manufactured capital approximately € 26 billion in real estate assets composed of both historical properties as well as recent ones, and managed by Generali Real Estate (GRE) for the purposes of creating eco-sustainable value. Within the realm of the European project, Green Building Workshop, GRE developed the Green Building Guidelines (GBG) which aim to improve the environmental performance of the real estate assets of the Group by bringing them to elevated standards in order to mitigate the future obsolescence of properties and to ensure that - along the entire real estate value chain - all affected parties (manufacturers, administrators, tenants) understand and respect effective sustainability rules. An increasing number of buildings is therefore certified according to HQE, DGNB, LEED and/or BREEAM standards.
Annual Integrated Report and Consolidated Financial Statements 2017, Vision, Mission, Values, p. 21
The parent company coordinates and manages all activities aimed at capital optimization, via the balance between the strengthening of capital, profits and cash flow. The efficiency of the capital structure is also guaranteed through the optimization of financial debt
The parent company sets guidelines to improve efficiency in operational management
We operate in a sustainable manner in all our operations and support the community in addition to our daily activities. These are the two pillars on which our vision of sustainability is based. This vision is outlined in the Charter of Sustainability Commitments approved by the Board of Directors of Assicurazioni Generali in 2017 which renews the commitment of the Group with respect to its stakeholders and the society in general.
We have a collection of Group policies and guidelines published within the website of the Group which support our operations in a sustainable and responsible manner.
The Code of Conduct defines the basic behavioral principles which all the personnel of the Group is required to comply with: these principles are outlined in specific guidelines that refer, for example, to the promotion of diversity and inclusion as well as the management of conflicts of interest, personal data protection and corruption prevention.
The Responsible Investment Guideline codifies the responsible investment activities at a Group level.
The Ethical Code for suppliers highlights the general principles for the correct and profitable management of relations with contractual partners.
We also have a structured internal Group regulatory system, regulated by the Generali Internal Regulation System Policy (GIRS).
Be open We are curious, approachable and empowered people with open and diverse mindsets who want to look at things from a different perspective.
The insurance industry is characterized by a detailed regulatory system consisting of continuously evolving domestic and European regulations. Some of the most significant are: – European directive Solvency II, the European insurance market supervisory framework which includes three pillars: capital measurements, governance and risk management systems and reporting – Common Framework of the International Association of Insurance Supervisors (IAIS) on the development of standard qualitative and quantitative capital requirements based on risk for insurance groups operating globally
April 2008 amendments and additions to ISVAP Regulation No. 22 of 4 April 2008.
The capacity of the Group to create value can be significantly influenced by certain factors in the short, medium and long term which then determine risks and opportunities.
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 non-compliance and assume prompt measures to adequately manage it. We continue to apply the requirements of Solvency II and are engaged in the various tests carried out by the International Association of Insurance Supervisors (IAIS) in order to determine the final architecture and calibrations of the supervisory requirements. In accordance with our customer focus strategy, we have implemented the transparency requirements for investment products required by EU legislation by putting the best practices of the Group into common use. We are working to be ready to apply the new regulatory requirements on insurance distribution and personal data processing. Finally, we monitor regulatory developments pertaining to non-financial information; the first reporting on this topic was implemented within the Annual Integrated Report and Consolidated Financial Statements 2017.
Risk Report for a detailed description on the risk profile and the main risks, p. 73 of the Management Report
The constraints imposed by the calculation of the capital requirement according to the Solvency II regulations, market expectations, the Group’s profitability targets and the expectations of policyholders’ returns are the main factors influencing the formulation of the investment allocation strategy. The regulatory system and the continued low interest environment - despite overall positive global growth - render it essential to manage assets in a rigorous and careful manner that is consistent with liabilities. Geographical diversification and selective focus on alternative investments and real assets (real estate assets and/or infrastructural assets, both direct and indirect) are important factors in investment activities which aim to contain portfolio risks and sustain current profitability. The creation of a multiboutique insurance asset manager platform is part of the strategy to enhance the investment capacity in these market sectors.
We are facing profound changes caused by the interaction and cumulative effect of multiple technological developments: 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 (such as the development of programs for the prevention of losses) as well as develop new products and re-design operational processes. On the other hand, it creates potential challenges deriving from the management of personal data and the automation of decisive processes in addition to new challenges within the traditional risk management insurance model. At the same time, elevated technological growth implies an exponential evolution in cyber threats, both in terms of volume as well as typology (i.e. targeted attacks which aim to steal information or block operational processes). Adequate management of cyber risk is therefore fundamental in order to limit potential effects of economic and operational nature but also to preserve, in particular, the confidence of customers in the processing of their data which are frequently sensitive. This issue is also increasingly relevant for regulators which are requesting the introduction of specific safety measures as well as reporting processes in the case of violation of the data (Regulation on personal data protection). Finally, technology as an enabling element of the processes may also impair business continuity, representing a potential threat (malfunction of equipment and systems, etc.) if appropriate measures are not applied.
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 – economic uncertainty, which has changed spending on savings and other insurance products.
We have implemented a cloud analytical platform (with EU server) for the management and analysis of data derived from our business units. Each of these has a dedicated and exclusive area available to them where the data are initially uploaded and processed in an absolutely anonymous manner; at the end of the process, the results/models which are attained are made available to the requesting operational units. The platform takes advantage of the currently most innovative technologies which were also essential to define a series of applications available to all business units, thereby ensuring superior user experience so as to increasingly meet customer requests for greater digital interaction. This development is based on a hybrid architecture that offers the latest mobile technology. In order to protect ourselves from new threats we are continuing to enhance our ability to prevent, detect and respond to potential cyber attacks while implementing the most innovative security solutions and continuously improving our response processes. In particular, we acquire and analyse threat intelligence from multiple external and internal sources so as to increase our prevention capacity while adopting the best market solutions to detect and prevent potential attacks. We have also strengthened the Group’s security governance model, defined a policy and implemented effective awareness campaigns for our employees in relation to the management of security risks. To protect our trustworthiness, reputation and survival from threats of natural, human and technological origin, we have also implemented a Business Management Continuity process that identifies critical processes and operational risks that may interrupt business operations, as well as risk mitigation measures and solutions to recover and resume vital business processes as soon as possible and with limited financial impact.
Glossary available at the end of Annual Integrated Report and Consolidated Financial Statements 2017
Global warming caused by the emission of greenhouse gases has resulted in an increase in the volatility of climate events, particularly extreme conditions such as hurricanes, floods, heat waves and droughts. In addition to an increase in physical risks, there is also growing awareness at the political level, even international, in relation to these issues. This has strategic and regulatory repercussions on activities affected by climate risk, particularly in Europe. For example, there is the emergence of new financial risks (creation of stranded assets) as well as risks connected to the transition to a low-carbon economy due to unknown factors generated by the use of new technologies and business models with reduced emissions. These factors are increasingly affecting the economic and social system, including the insurance sector, which is thus facing new risks and opportunities. Opportunities arise from a new or increased demand for coverage which needs to be met with innovative products. For this to be sustainable, however, appropriate countermeasures must be prepared at the same time. These are necessary in order to avoid increased damages and greater volatility which would negatively affect the price dynamics of the policies, also due to the greater absorption of capital deriving from underwritten business. If they are not present, access to insurance would be excessively costly or, in extreme cases, the offer would not be feasible.
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 and thereby optimizing our underwriting strategy. Re-insurance plays a fundamental 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. In accordance with our commitments to favour the transition to a low-carbon society and the global targets established at the COP21 conference, we continue to monitor and reduce our direct impact through a responsible management of key activities; we also incentivise the adoption of environmentally sustainable behaviour within our spheres of influence through our insurance solutions as well as our investments in order to reduce indirect impact of our activities. 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 decrease 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 cause serious harm to the environment. We support research and studies on environmental risks. We adopt sustainability criteria for the underwriting of new insurance policies that are in line with the best and universally recognized sustainability standards, even through the use of specific third-party tools while analysing in detail and potentially excluding business opportunities that are not consistent with principles of environmental, social and governance sustainability. In particular, we utilize internal and external monitoring processes of environmental emissions associated with the activities in our investment and insurance portfolios. As a result, we are capable of monitoring, on the one hand, any business and environmental risks associated with greenhouse gas emissions and, on the other hand, we can design and develop new solutions that simultaneously offer a competitive advantage to our Group as well as an incentive for policyholders for the transition to a business model with reduced emissions.
cumulative net operating cash 2015-2018 cumulative dividends 2015-2018 Operating ROE on average 2015-2018
Guarantees maximum 0% on new retail business 3 The achievement of the targets reported in this chapter is expected by 2018, with the exception of the Asset Management target that is expected by 2020. The target about the € 200 net reduction in nominal Opex cost base in mature markets has been achieved a year in advance, in 2017.
We are committed to constantly improving the operating machine to maximize the Group’s potential, by implementing optimization initiatives such as streamlining the product portfolio, simplifying processes and integrating IT platforms. At the same time, we will invest in new competences enhance those activities that have higher value for stakeholders.
Management Report cumulative net operating cash 2015-2018 cumulative dividends 2015-2018 Operating ROE on average 2015-2018
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. We aim through the new Asset Management strategy to enhance investment capabilities and offer bespoke investment solutions to European companies and individual savings products.
Our people always at the heart of the strategy 49.8% (+0.4 pps)
we create and promote a new global managerial system We have developed the Managerial Acceleration Program (MAP) in order to strengthen the sense of responsibility and engagement in changing the corporate culture of the Group. By means of internal focus groups sessions, inputs were collected in order to identify the eight key managerial skills to empower our people: the Generali Empowerment Manifesto (GEM).
More than 390 local actions were identified, initiated and communicated as of January 2018.
I strongly believe in the goals and objectives of my Company.
I am willing to work beyond what is required to help my Company succeed.
As part of the operational risk management, the annual assessment of the categories that can impact on our people* was conducted. The results did not show significant critical issues. The Generali People Strategy implementation at Group level supports us in both mitigating any operational risks and managing other objectives, such as those related to the management of internal engagement and the empowerment of our resources, as well as to the management of internal talents and their skills.
we boost a performance culture By means of the Group Performance Management we promote engagement and a sense of responsibility for all our people so that they can contribute towards the attainment of our business strategy and strengthen transparency and meritocracy. The process was launched globally in 2016 with the implementation of numerous initiatives coordinated by the Group and managed locally, including classroom courses, e-learning modules and workshops for managers and collaborators.
• we support smart working and, in general, we develop a new approach to working that empowers us by increasing our flexibility, autonomy and responsibility • we simplify our HR processes with a cutting-edge platform
4 The data exclusively refers to Group companies, equal to 60,140 employees (84.3% of the total), within the scope of the Group Performance Management process.
5 Basel III - category 3: Employment practices and workplace safety: losses arising from acts inconsistent with employment, health or safety laws or agreements, from payment of personal injury claims, or from diversity/discrimination events.
Corporate Governance and Share Ownership Report 2017, p. 72 and 105 for additional information on the diversity of administration, management and control bodies investing-in-our-people e www.generali.com/it/work-with-us for more information on our people investing-in-our-people e www.generali.com/it/work-with-us for more information on our people investing-in-our-people e www.generali.com/it/work-with-us for more information on our people
Board of Statutory Auditors ensuring compliance with the applicable laws and regulations and the Articles of Association as well as management control
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.
Group Management Committee aiming at ensuring both greater alignment on strategic priorities among business units and a more effective, shared decision-making process
Product & Underwriting Committee supervising the profitability and risk level of new insurance businesses by means of a centralized process of prior approval of new products
The Board of Directors has structured its 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 mission, 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.
P Committee Chairman 62% international experience in foreign business, professional or academic environments 56 average age 62% regulation framework and regulatory requirements 100% average participation in Board meetings 62% manager 60% female auditor 77% financial and accounting skills 24 meetings of the Board of Statutory Auditors 23% entrepreneur skills 3 induction days on corporate administrative liability, market abuse, management of inside information and reporting of non-financial information 77% insurance experience 38% academic skills 62% industrial experience 54% large cap companies
Equity and consistency in terms of the responsibilities assigned and capabilities demonstrated
Merit- and performance-based reward in terms of results, conduct and values
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 Ratio11 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 - based on the following perspectives: The long-term variable remuneration is based on a long-term plan based on Assicurazioni Generali shares (upon approval by the Shareholders’ Meeting). The maximum potential bonus to be disbursed in shares amounts to 175% of the gross fixed remuneration of the participation (this percentage is 250% for the Managing Director/Group CEO). Here the features of the plan are: – it is paid out over a period of 6 years and is linked with specific Group performance targets (Return on Equity and relative Total Shareholder Return) and the surpassing of a minimum Economic Solvency Ratio7 level – it is based on a three-year performance period and additional sale-restriction periods (i.e. minimum holding) on granted shares up to two years.
Benefits consist of 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.
Core business Key Performance Indicators (KPIs) (i.e. Operating Result, Net Profit, New Business Value,
www.generali.com/governance/remuneration for further information on remuneration policy and the Remuneration Report, including also information about remuneration
Additional information in the Notes of the Annual Integrated Report and Consolidated Financial Statements 2017 for further information on pension benefits of the Group employees
Information on operations contained in the following Part A) and referring to the technical results are net of outwards reinsurance, unless otherwise indicated. For a better recording of the items related to the hedging derivative agreements, the related financial income/ charges have been classified consistently with the financial charges accrued on the financial liabilities subject to hedging. For a better equity classification, we have provided a net exposure of accruals and deferrals on derivatives on the basis of each position, unlike the previous periods where the exposure distinguished between income and cost items. The same classification was also adopted accordingly for the balances of the previous financial statements. The changes made did not have any effect on the overall financial results.
— As regards Intesa Sanpaolo: • On 23 January 2017, the voting rights were acquired on 505 million shares of Intesa Sanpaolo S.p.A., equal to 3.01% of the share capital, through a securities lending transaction; • On 17 February 2017, 510 million ordinary shares of Intesa Sanpaolo were acquired for 3.04% of the share capital, and at the same time the procedure to end the securities lending transaction was launched. To protect from the economic risk connected to the acquisition of those shares, a hedging transaction was carried out using collateralised derivatives; • On 30 May 2017, the shares of Intesa Sanpaolo that were previously acquired (510 million representing 3.04% of the share capital) were sold, ending at the same time the transaction on collateralised derivatives that was carried out in order to fully hedge the financial risk related to the purchase of said shares.
— On 20 April 2017, Assicurazioni Generali S.p.A. completed the share capital increase to 1,561,808,262 euro, in execution of the Long Term Incentive Plan adopted by the Shareholders’ Meeting of the Company on 30 April 2014.
— In July, the Generali Group underwrote an agreement for 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 is equal respectively to 88.247% and 11.562%. The operation, subject to the approval of the competent authorities, will be concluded in 2018.
— Also in the month of July, Assicurazioni Generali S.p.A. has finalised the transfer of its subsidiary Aseguradora General S.A., in which it held 51% of the share capital, for US $ 25 million. The transaction generated 20 million in capital gain.
— In September, the Generali Group executed an agreement for the transfer of its shareholding interest in Generali Nederland and its subsidiaries; within the scope of this transaction, Assicurazioni
— A growth in the results from extraordinary operations, for 176,205 thousand, is attributable to the earned profits deriving from the transfer of the P&C portfolios in run-off of the London and New York branches.
— Lower tax income of 68,721 thousand, referring primarily to the decline in income from the relevant IRES.
Financial result (b) 2,450,022 2,139,127 minus income allocated to technical accounts -816,384 -748,193
Profits and losses on the realisation of other durable invest. 8,099 54,695
The gross premium collection from the life segment amounted to a total of 1,708,336 thousand (2,007,507 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 5,677 thousand was collected in premiums.
The lower number of gross premiums accepted directly by the Parent Company was significantly affected by an automatic contraction of the volumes of the reinsurance in run-off treaties executed with the subsidiary Alleanza Assicurazioni S.p.A. (-35,759 thousand).
With reference to the premiums from the direct business, slightly more than 40% of the premiums collected in 2017 is concentrated in the London branch (95,245 thousand compared with 94,722 thousand of the previous year) under the collective policies covering death and permanent disability of the Employee Benefits segment. The other external branches, active in the direct business of the life segment, are: Hong Kong (29,285 thousand), Panama (39,304 thousand) and Dubai (50,290 thousand), to which the direct portfolio of the Head Office should be added (11,056 thousand).
The collection from indirect business comes primarily from the reinsurance that is directly accepted by the Parent Company (521,804 thousand versus 532,048 thousand of the previous year) and from the London branch, particularly within the Global Corporate & Commercial segment (434,524 thousand compared with 438,196 thousand of the previous year).
To be added also are the premiums accepted in reinsurance by the Generali Employee Benefits unit (198,623 thousand versus 189,892 thousand of the
■ Direct ■ Indirect previous year) and by the Hong Kong branch (98,391 thousand versus 92,232 thousand in the previous year), in particular within the Global Corporate & Commercial segment.
The remaining portion is generated by the branches of Hong Kong, Panama and Dubai, to which the Head Office ’s direct portfolio must be added.
As regards the reinsurance accepted directly by the Parent Company, the result shows an improvement from 42,373 thousand in the previous year to 89,918 thousand, against a decline in the gross premium collection of 35,406 thousand (from 483,810 thousand to 448,403 thousand). The reinsurance acceptances that have determined, for the most part, the improved results, refer to the subsidiaries Generali Levensverzekering Maatschappij N.V. and Alleanza Assicurazioni S.p.A.
As regards the London branch, the life segment is represented by the following portfolios of direct insurance: employee benefits, individual income and unit linked. The overall net underwriting result is up by 5,484 thousand (from 22,310 thousand to 27,793 thousand) due, in particular to the greater mortality profit in the individual annuities line in run-off (from 5,089 thousand to 14,707 thousand). The employee benefits segment showed a decline from 17,221 thousand to 13,087 thousand due to better results transferred to the captive companies of the insured customers.
The lower balance of the net underwriting result was significantly affected by higher catastrophic claims which have characterised, in particular, the Global Corporate &
Commercial segment of the London branch. These effects are, for the most part, offset by the positive performance of the reinsurance directly accepted by the Parent Company. The growth in income assigned to the technical account reflects the increase in net investment income within the Non life business.
50 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
The previous table shows separately the underwriting results from the reinsurance accepted directly by the Parent Company, of the Generali Employees Benefits and of the London branch which for premium collection and technical commitments, represent the most significant items in the technical underwriting of the P&C insurance business of the Company. The item “Other” includes the underwriting results from the Hong Kong, Tokyo, Dubai, New York and Panama branches as well as the Head Office’s portfolio.
The reinsurance directly accepted by the Parent Company, primarily from other companies of the Group, contributed to the total underwriting result of the P&C segment of the Company, with 171,451 thousand, a significant increase compared with the previous period (59,725 thousand ). The growth is affected, in particular, by a net improvement in the P&C claims for 87,842 thousand (from 203,807 thousand to 115,965 thousand) and a growth in premiums earned for 30,218 thousand (from 296,717 thousand to 326,935 thousand).
The significant improvement in claims is characterised by the absence of any significant impacts from catastrophic Man Made and Nat Cat events, unlike the previous period which was affected by a great amount of claims from the fire and other damages to assets segments.
As regards the premiums earned, to be noted are an increase (from 296,717 thousand to 326,935 thousand).
The combined effect of the above performances, in claims and premiums, determines a loss ratio of 35.5% versus 68.7% in the previous year.
The ratio of administration costs to net premiums increased from 8.1% of the previous year to 9.9%. This increase was the result of a different method used to attribute indirect costs to the administrative expenses, applied starting from the current year.
Overall, the combined ratio of the reinsurance directly accepted by the Parent Company stood at 45.3% versus the 76.8% of the previous year.
The Generali Global Health segment records negative results of 2,485 thousand (positive for 150 thousand of the previous year) with a gross collection of 97,250, a significant growth versus the previous year (61,404 thousand).
The portfolio in run-off segment recorded a null result in the current year, because the economic effect of transfer in reinsurance has been reclassified as extraordinary operations.
previous year to 6,761 thousand. Gross of the reinsurance retrocessions, the premium income amounted to 198,623 thousand, compared with 189,892 thousand of the previous year.
As regards the other branches of the Company, the underwriting result was down by 19,061 thousand (from 26,499 thousand to 7,438 thousand); a decrease that has involved all the branches of the Company under the item “Other” of the previous table. The decreases with the most significant impact are to be attributed to the Hong Kong branch and the Head Office portfolio (for a total of 12,025 thousand), in the Global Corporate & Commercial segment in particular, as well as the Panama and Tokyo branches being divested (a total of 3,834 thousand).
In the previous year, the result benefited from the release of IBNR reserves and it was positive with 25,000 thousand. As already specified above, this portfolio was reinsured during the year to a third-party company outside of the Group.
In general terms, the claims/premiums ratio of the London branch stood at 92.4% compared with 69.1% of the previous year. The ratio of administration costs to net premiums was 28.9% compared to 27.5% in the prior year.
Investment adjustments, net of the gains and losses for the year, amounted to 28,607 thousand compared with 59,380 thousand in 2016. The change derives primarily from lower value adjustments in the equity segment compared with the previous year (changes amounting to 54,190 thousand) which was affected by value adjustments applied to the equity investment in Lion River I (26,869 thousand), Fata Asigurari (8,874 thousand) and Generali Shared Service Scarl (7,316 thousand). This positive change was partially offset by larger adjustments of the derivative financial instruments (a change of 22,271 thousand) of which 18,860 thousand concern the value adjustment applied to the coverage of loss ratio on 12 Group companies (insurance linked securiry Horse) classified in this category because the risk subjected to the coverage is not in the insurance portfolio of Assicurazioni Generali S.p.A..
Net realized gains were positive for 37,353 thousand; in the previous year they were negative for 37,953 thousand. In this period, net realised gains, deriving primarily from the sale of the equity stake in the subsidiary Guatemala Aseguradora General S.A. for 19,610 thousand and from the sale of bonds for 12,653 thousand, were recorded. The previous year was negatively affected by a net realized loss deriving from the closure of certain derivative financial instrument positions (53,693 thousand), partially offset by realized gains from the disposal of mutual fund units (8,817 thousand) and securities and other investments (4,421 million).
Details of the net income from investments, totalling 2,350,791 thousand (2,194,534 thousand in the previous year), are provided below.
in the prior year. Investment return allocated to the technical accounts amounts to 816,384 thousand for the year and 748,193 thousand in the prior year.
The dividends received from the companies of the Group totalled 1,981,244 thousand, an increase of 128,192 thousand compared with the previous year (1,853,052 thousand). The main income from equity investments is the dividend received from Generali Italia, totalling 1,000,000 thousand (up by 100,000 thousand versus the previous year).
Income from bonds is equal to 72,974 thousand (72,154 thousand in the previous year), of which 32,555 thousand deriving from government bonds (35,782 thousand in 2016) and 40,419 thousand deriving from corporate bonds (36,418 thousand in 2016).
The item “Other” showed a net expense up by 130,005 thousand, report negative exchange rate differences for 111,164 thousand (positive for 10,709 thousand in 2016) therefore showing a negative change of 121,872 thousand. This impact primarily linked to the net exposure in Chinese Renminbi, Swiss Francs and Brazilian Reals which, during the period, were depreciated against the Euro respectively by 6.7%, 9.2% and 16%.
The increase refers to the interest on subordinated liabilities (from 477,538 thousand in the previous year to 489,447 thousand) and is primarily due to the issuing of a subordinated liability amounting to 850,000 thousand carried out in June 2016, partially offset by the repayment of a subordinated loan of 468,082 thousand carried out in the same month.
Interests from other loans are subtantially in line with the figures of the previous year.
The results from extraordinary operations are positive, at 210,977 thousand (34,773 thousand in the previous year).
The balance of the current financial year is primarily affected by the earned profits deriving from the sale of the non life insurance portfolio in run-off of the London and New York branches for 195,625 thousand and a lower tax related to previous years for 19,228 thousand.
Expenses referring to incentive plans for exiting personnel contributed to this result by 16,813 thousand (16,991 thousand in 2016), partially offset by net contingent assets amounting to 6,747 thousand (expense of 1,343 thousand in 2016) referring primarily to the change of the pro-rata VAT of 2016, and realized gains deriving from the sale of long term investments for 7,208 thousand (54,695 thousand in 2016, of which 37,955 thousand deriving from the liquidation of the stake in Telco AG S.r.l.).
The following paragraphs provide a discussion of the composition and the variations compared to the previous year of the following components of the balance sheet: Investments, Net technical provisions, Debt and Shareholders’ funds.
Asset and financial management 58 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Class C investments, i.e. the investments of the Company excluding those benefiting the life-insurance policyholders who bear the risk, show a decrease from 40,998,308 thousand to 40,664,819 thousand.
Reinsurance deposits decreased from 7,680,393 thousand to 6,927,863 thousand. Within the life line, reinsurance deposits decreased from 7,275,871 thousand to 6,863,078 thousand, due primarily to the ongoing con-
The increase in the item “Other” of 446,963 thousand (from 1,538,213 thousand of the previous year to 1,985,176 thousand) derives primarily from new loans issued to the companies of the Group and, more specifically, with Generali Italia (1,187,500 thousand), Generali Schweiz Holding AG (57,500 thousand), Europ Assistance Holding S.A. (24,983 thousand), Generali PanEurope dac (15,000 thousand) and Generali Vitality GmbH (7,000 thousand). In the first half of 2017, the loan with Generali Finance B.V.
Bond investments amounted to 1,999,962 thousand, down from the previous year (2,140,706 thousand). This decrease can be attributed for 119,285 to lower investments in government bonds and for 20,826 thousand to investments in corporate bonds.
Provisions relating to contracts linked to investments funds and market index and relating to the administration of pension funds 3,265,804 3,454,111 −5.5 25.8 24.6
Technical provision of non life business 1,439,951 2,090,978 −31.1 11.3 14.9
As regards the Technical provisions of the Life business, the decrease in mathematical provisions (from 7,587,721 thousand to 6,989,987 thousand) is primarily due to: — the reduction in reserves accepted for reinsurance by the Parent Company (473,605 thousand), affected primarily by the natural decrease of the portfolio in run-off by the subsidiary Alleanza Assicurazioni S.p.A.; — decrease in reserves at the London branch for 74,788 thousand due to the favourable performance of the exchange rate of the pound against the Euro and to the concentration of mathematical provisions into the reserve for amounts to be paid in the following year; — reduction in the reserves of the GEB unit for 33,084 thousand, for the most part concentrated from the mathematical provision to the reserve with the amounts to be paid in the following year.
The provisions for claims outstanding increased from 815,440 thousand to 889,635 thousand. The main increases derived from the above concentrations from the mathematical provisions of the GEB unit (+27,226 thousand ) and the London branch (+36,390 thousand).
As regards the Other technical provisions, the reduction of 19,393 thousand was mainly affected by the profit -sharing reserves and the supplementary insurances of the GEB unit.
P&C technical provisions decreased from 2,090,978 thousand to 1,439,951 thousand. The decrease was affected by both the provision for unearned premiums (from 317,268 thousand to 256,277 thousand) and the provision for claims outstanding (from 1,773,512 thousand to 1,183,360 thousand), due mainly to said reinsurance of the portfolio in run-off to a third-party company outside of the Group and to the termination of a reinsurance treaty with the subsidiary Generali IARD by the London branch.
The liabilities showed an increase of 218,000 thousand against new issuing in favour of the subsidiaries Partic-
The total debt of the Company increased by 116,142 thousand, from 13,938,823 thousand to 14,054,965 thousand.
ipatie Maatschappij Graafschap Holland N.V. for a total amount of 200,000 thousand and Redoze Holding N.V. for 18,000 thousand, that took place in the first half of Debenture loans decreased by the annual payment of 63,885 thousand of the loan to fund the tax recognition of goodwill relating to Alleanza Assicurazioni S.p.A.
Nominal interest rate Nominal value Currency Book value Issue date Call Expiration date
Nominal interest rate Nominal value Currency Book value Issue value Expiration date
EURIBOR 12M + 220 bps 560.0 EUR 191.7 12/05/2010 14/12/2020 62 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Shareholders’ Fund amounted to 14,825,483 thousand, compared with 14,670,385 thousand in the previous year.
The decrease in other reserves of 155,410 thousand (from 8,134,014 thousand to 7,978,604 thousand) reflects the withdrawals carried out to pay the dividend last year (153,485 thousand) and for the above-mentioned share capital increase (1,925 thousand).
Please note that the portfolio includes 107,256 own shares with a nominal value of 1 euro each.
Managerial Acceleration Program is a training programme that aims at fostering the development of a managerial culture centred on empowerment and engagement that would allow all managers of the Group to effectively manage persons and organisations by sharing common approaches, skills, processes and instruments.
We believe that it is fundamental to promote the engagement and empowerment of people so that they can make sound decisions, demonstrate leadership and meet the customers’ needs.
Our employees are the most valuable resources, our most strategic asset.
Training has always been a key priority that has involved all our employees.
In the year in question, the training programme Managerial Acceleration Program was launched 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.
64 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
With respect to training on laws and regulations, employees were required to participate in specific e-learning classes regarding the processing of inside information (in compliance with the provisions set forth in the Group policy), while particular attention was dedicated to 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 sector and on the Supplementary Company Contract.
We also offer additional benefits including supplementary pension plans, death or permanent disability insurance, long term care insurance, discounted insurance coverage extendible also to family members and a company welfare plan. To reconcile work, personal and family commitments, our employees can also benefit from flexible hours, part-time work, unpaid leave of absence and child day-care.
In support of the implementation of a strong system for performance evaluation of the employees of Assicurazioni Generali and of the whole Group, in 2017 the training on the Performance Management process continued.
In 2017, the Global Graduate Program, an initiative that started in 2015 to promote cultural change, to develop Generali’s international reputation as a leading employer and to guarantee the leadership continuity line with the hiring of 20 young talented university graduates, was completed.
tools for individual workstations. Our vehicle policy provides for maximum limits in order to cut carbon dioxide emissions from the company ’s vehicles and our travel policy prefers the use of public transportation or car-pooling. All our initiatives are focused on minimizing our greenhouse gas emissions and reaching our objective of a further 20% reduction by 2020.
Convention on Climate Change (COP21). We plan to play an active role in order to support the transition toward a more sustainable economy and society. We will continue to monitor and reduce our direct impact and to foster the adoption of eco-sustainable behaviours through our insurance solutions and our investments, through dialogue and cooperation with Governments and Associations, consistent with the content of our Group Policy on Environment and Climate.
The above-mentioned principles have been confirmed by the Board of Directors on 21 February 2018, which has also approved the structures in place during the year, established in accordance with the reinsurance business model requiring the ceding of the treaties of fully-owned subsidiaries to the Parent Company, which in turn purchases suitable protection on behalf of the entire Group, benefiting from the advantages deriving from the amplitude of its portfolio and economies of scale.
No legal or natural person, directly or indirectly, individually or jointly, holds a number of shares sufficient to give such person a controlling interest in the Company. Under the provisions introduced with the Reform of Company Law, the Company is not subject to the direction and coordination of any Italian or foreign entity or company.
As at 31 December 2017, the Company was a party to 109 legal actions, for the most part as the defendant.
The lawsuits generated by the insurance activities of the Company totalled 72 units.
With reference to tax litigation, the contested amounts in the various proceedings concern indirect taxation, and are, in general, of a non-significant amount.
As for the rulings on Mr Perissinotto, in 2017, the Appeal Court of Trieste has confirmed the judgement given at first instance (rejection of the appeal challenging the employment exit agreement) and the Court of Trieste has rejected the claim for damages. The Board of Directors, within an overall costs-benefits assessment (which has considered, inter alia, the outcome of the disputes, the lack of evidence about new circumstances as well as the costs arising from an additional cultivation of disputes) decided not to appeal against these rulings which have therefore become final. Similar assessment was conducted by the Board with reference to the judgement regarding Mr Agrusti (concluded in 2016, with a rejection) which also became final.
With reference to the sale of BSI S.A. by subsidiary Participatie Maatschappij Graafschap Holland N.V. to BTG Pactual S.A. during 2015, Generali received request for damages through an arbitration proceeding promoted by Banco BTG Pactual S.A..
Generali is currently engaged in the analysis both in fact and in law of the complex litigation, as well as in the preparation of its first reply brief without prejudice to the preliminary objections already raised, which will be filed within the deadline set by the Arbitral Tribunal.
Management Report 31-Dec-16 31-Jan-17 28-Feb-17 31-Mar-17 30-Apr-17 31-May-17 30-Jun-17 31-Jul-17 31-Aug-17 30-Sep-17 31-Oct-17 30-Nov-17 31-Dec-17
a Non-Financial Nature, prepared by the Generali Group pursuant to article 4.
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 related parties”. Said guidelines, available in the Governance section of the Company’s website, constitutes 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 Civil Code.
Assicurazioni Generali said that it had decided to take up the option allowed under article 70, paragraph 8, and article 71, paragraph 1-bis of the Issuers Regulation, exempting it from the obligation to publish the prospectuses required in connection with major mergers, splits, capital increases through the transfer of goods in kind, acquisitions and sales. Pursuant to Legislative Decree no. 254/2016, article 6, paragraph 1, the Company is not subject to the obligation of preparing an Individual Statement of a Non-Financial Nature, under article 3 of the Decree itself, since the Company is included in the Consolidated Statement of
Annual Integrated Report and Consolidated Financial Statements 2017, Consolidated Non-Financial Statement, p. 120
In addition, the Board of Directors has adopted specific annual guidelines on intra-group transactions according to Regulation ISVAP (now IVASS) no. 25, dated 27 May 2008 (Regulation on supervision of intra-group transactions ).
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. For further details, see the Explanatory Notes.
Article 30, paragraph 2, of the Law 24/03/2012 no. 27 introduced the requirement for insurance companies authorized to operate in the motor vehicle liability line of business, to indicate an estimate of the reduction in charges for fraudulent, claims resulting in from independent fraud control and prevention activities. IVASS on 11 March 2014, in a letter, provided stringent and unique calculation rules to the entire market, including the obligation to publish the estimated savings in a report attached to the financial statements. Based on the above and on the calculations made by the Company, no amounts are to be disclosed for 2017.
The Generali Group’s consolidated financial statements as at 31 December 2017 were prepared taking into account the IAS/IFRS issued by the IASB and endorsed by the European Union, in accordance with the Regulation
More complete information of the Group’s data and significant indices is provided in the Management Report and Consolidated Financial Statements.
— In March, the preparatory proceedins for the merger by incorporation of Generali Finance B.V., a company fully controlled by Assicurazioni Generali S.p.A., were completed, effective on 1 January 2018.
As regards the United States, the current expansion phase is expected to continue with a slight acceleration (real GDP at +2.4%) due to the tax reform which substantially will reduce the corporate tax rate from 35% to 21%. The impact on households will be less significant and will be concentrated on higher income segments. As regards the monetary policy, the Fed is expected to follow its “normalisation” process by increasing its reference rate three x, bringing the corridor to 2.00%-2.25%.
Based on a strong growth and prospects of inflation slightly higher, the performance of the financial markets should increase showing a growth more pronounced in the Eurozone, with investors increasingly more focused on the first increase in interest rates by the European Central Bank in 2019. Consequently, a negative performance is expected for the mandatory segment, both public and private. The sovereign spreads of the countries in South Europe may suffer in the first quarter following the elections in Italy and the continuing uncertainties in the Catalan region. However, a strong growth should minimise the size of the widening of the spreads.
In reference to the insurance markets, for 2018, the growth in the P&C insurance segments will continue thanks to the good performance of the economy. The unfavourable cycle in the life-segment should continue, even if with some positive signs, thanks to the expected good performance of the disposable income and in Italy thanks to regulations that should make less unfavourable the sale of traditional products.
As regards the reinsurance activity, to be noted is the abnormal frequency of major catastrophic events, in the second half of 2017, that have hit primarily the Caribbean and the United States. The Harvey, Irma and Maria hurricanes at the end of August/beginning of September have caused damages under insurance of approximately US $ 93 billion. In addition, earthquakes in Mexico, the exceptionally widespread fires in California and in the Iberian Peninsula, have severely hit the reinsurance industry which has however demonstrated its financial soundness in sustaining an extraordinary sequence of claims. Consequently, the main season for renewals, concentrated on 1 January, has highlighted the end of the soft cycle and a trend reversal occurring also in the business classes that are not involved in these events.
Based on the scenarios described above an increase in net profit is expected for the Company compared to 2017.
To this end, the Company uses the Partial Internal Model (PIM) of Generali Group to better reflect the risk profile. The Supervisory Authority has approved the use of the PIM to calculate the Solvency Capital Requirement. 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.
The liquidity profile remains robust, in consideration of the effective coordination of the liquidity cash flows between the Parent Company and its subsidiaries.
(BoD) and its committees, the Senior Management, including the Chief Executive Officer (CEO), also acting as the Director in charge of the internal control and risk management system, and the Chief Financial Officer (CFO), appointed as Manager in charge of the preparation of the Company’s financial reports, as well as risk owners and Control Functions must accomplish within the internal control and risk management system.
The internal control and risk management system is founded on the establishment of three lines of defence: — Operating Functions (the “risk owners”), which represent the first line of defence and have ultimate responsibility for risks relating to their area of expertise; — Actuarial, Compliance and Risk Management Functions, which represent the second line of defence; — Internal Audit, which represents the third line of defence.
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 comparison amount for YE2016 represents the final regulatory position.
• the Actuarial Function supports the BoD in accordance with Solvency II regulation, carrying out coordination and control duties on the calculation of technical provisions in line with Solvency II, on the valuation of the underwriting policies and of the reinsurance agreements, as well as contributing to the effective implementation of the risk management system; • the Internal Audit Function supports the BoD by ensuring an independent evaluation of the adequacy and effectiveness of the internal control system and of other elements of the governance system, the need for adaptation, by providing support and consulting activities to other business Functions, and, therefore the effective functioning of the controls designed to ensure the proper conduct of the processes, taking into account the levels of risk appetite.
The heads of the Control Functions report functionally to the BoD except for the head of the Internal Audit who reports hierarchically and functionally to 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 identifying, evaluating and monitoring the risks that may arise from the violation of laws and regulations also internally and participates in the set-up of an adequate control system; 4 The Group 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; Group P&C Underwriting and Reserving Policy; Group 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, Group Supervisory Reporting and Public Disclosure Policy, etc. All policies are updated on annual basis.
The risk management process is defined in the following phases: 1. Risk identification 2. Risk measurement 3. Risk management and control 4. Risk reporting 74 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
The categorization of the identified risks is consistent with the structure provided by IVASS Regulation n. 20/2008.
The risks, which the Company is exposed to, are managed in line with the “risk appetite” defined by the BoD within the Group’s Risk Appetite Framework (RAF). Within the coordination and direction activities, the risk strategy is defined and then applied to the Group’s companies. The RAF defines the level of risk considered acceptable in conducting business and thus provides the overall framework for embedding risk management into business processes. In particular, the RAF includes the risk appetite statement, risk preferences, risk metrics and tolerance levels.
The ORSA process is coordinated by the Risk Management Function, supported by the other Functions for what concerns the own funds, technical provisions and other risks.
The solvency position is defined, as the ratio between Eligible Own Funds (EOF) and the Solvency Capital Requirement (SCR).
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 €7.5 bn (more details on financial debt are presented in the Parent Company Balance sheet).
7 To grant a high quality of capital available, the amounts of Tier 2 and Tier 3 items eligible to cover the SCR are subject to the following limits. The eligible amount of Tier 1 items shall be at least one-half of the SCR; in case of admissible subordinated liabilities and preference shares, exceeding 20% of total Tier 1, it is downgraded towards Tier 2. The eligible amount of Tier 3 items shall be less than 15% of the SCR. The sum of the eligible amounts of Tier 2 and Tier 3 items shall not exceed 50% of the SCR.
(in thousand euro) 2017 2016 8 To cover the MCR, the eligible amount of Tier 1 items shall be at least 80% of the MCR; the same limitation on subordinated liabilities and preference shares is set. The eligible amount of Tier 2 items shall not exceed 20% of the MCR. No Tier 3 items are allowed to cover the MCR.
Generali deems the PIM to be the most appropriate way of capturing the Company SCR in terms of granularity, calibration and correlation of the various risks.
To rule the activities related to the Internal Model developments necessary to ensure its appropriateness over time, and more in general to support the Internal Model change process, the Internal Model Change Policy has been also defined with the aim to specify roles and responsibilities in the implementation of major and minor changes.
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. No substantial change of the PIM governance has taken place during the current year.
The validation output is designed to support Senior Management and BoD in understanding the appropriateness of the Internal Model, including areas of weaknesses and limitations, especially with regards to its use.
Furthermore, the regular validation process also serves as an incentive mechanism to ensure timely and accurate integration of modelling refinements.
In order to warrant the appropriateness of the array of elements contained within the PIM, the Validation covers both the quantitative and qualitative aspects of the Internal Model, and is therefore not limited to the calculation engine and methodology.
The Company is mostly exposed to life underwriting risk deriving from indirect business, as it operates as the main reinsurer of Group companies. The Company’s direct business is mainly performed through foreign branches operating in the United Kingdom (UK), Hong Kong and Dubai.
The approach underlying life underwriting risk measurement is based on the calculation of the loss resulting from unexpected changes in biometric/operating assumptions.
Life underwriting risk management inherent to direct business, being a less significant component of the portfolio, 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.
To mitigate life underwriting risks, the Company reinsures part of its business with external reinsurers. The reinsurance program is updated on an annual basis and is subject to the Life Actuarial Function opinion regarding its adequacy in accordance with the Group Actuarial Function Policy and related guidelines.
Given the Company acts as the main reinsurer of Generali Group companies, the non-life underwriting risks mainly derive from its indirect business and from the direct business underwritten by foreign branches (mainly UK, United States and Hong Kong) and by Generali Employee Benefits (GEB) network, respectively in corporate & commercial and employee benefits segments.
Non-life underwriting risk contribution to the risk profile after diversification remains limited due to the business of Assicurazioni Generali, whose balance sheet is mainly composed of participations.
Given the increasing trend of European windstorm in the protection portfolio in the past years, part of these coverages have been excluded from the main reinsurance protections and have been placed in the more competitive Insurance Linked Securities (ILS) market, whilst keeping the dominant Italian exposure in the traditional reinsurance market with a consequent optimization of the overall pricing.
Alternative risk transfer solutions are continuously analyzed and the Group adopted different solutions during the year. As an example, in addition to traditional reinsurance, a protection has been placed on the capital market to reduce the impact of a high Loss Ratio for the Group Motor liability portfolio.
80 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Moreover, as a result of its insurance activity, the Company invests the collected premiums in a wide variety of financial assets, with the purpose of honoring 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 asset redemptions are reinvested at unfavorable market conditions, such us lower interest rates.
The Company manages its assets according to the socalled “Prudent Person Principle”, and strives to optimize their return while 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 pre-defined time horizon, identifying a variable target satisfying the expected return and a corresponding risk measure.
The Company is exposed to credit risks related to invested assets and also arising from other counterparties (i.e. reinsurance). Similarly to financial risk, the Company has to grant that the value of assets does not fall below the value of insurance obligations.
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 Group 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.
— default risk, defined as the risk of incurring in losses because of the inability of a counterparty to honour its financial obligations. This is approached differently for defaults on bond portfolio and for the default of counterparties in cash deposits, risk mitigation contracts, such as reinsurance, and other types of exposures subject to credit risk.
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.
The ALM&SAA process already described in the previous section also applies to the optimization of the asset portfolio allocation with respect to credit risks.
As envisaged in the Group Investments Risk Guidelines (GIRG), investments in securities with a high credit rating (investment grade) are preferred and diversification of risk is encouraged.
82 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
This approach, achieved by adopting methodologies and tools in line with industry best practices and by establishing a strong dialogue with the first line of defence, is essential to establish the priority of the actions to be taken and the allocation of resources to critical areas.
The loss data collection is integrated by the forward-looking 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.
In particular, risks related to non-compliance are addressed by a dedicated and independent Group Compliance Function, which provides guidelines to the local teams and monitors the execution of the Group Compliance Program.
The contribution of the operational risk to the SCR is defined according to the standard formula.
To further strengthen the internal control systems and in addition to the usual risk owners’ responsibilities for managing their risks, the Company established specialised units within the first line of defence with the scope of dealing with specific risks (e.g. cyber risk, fraud, financial reporting risk) and that act as a key partner for the Risk Management Function.
One of the main results from this cooperation is constituted by a series of risk mitigating measures triggered across the Group as a result of control testing, the assessments and the collection of operational risk events.
An example is the creation of a dedicated unit for the management and coordination of the Group-wide IT Security (cyber risk) that steers the evolution of the IT security strategy and operating model, ensuring a timely detection and fixing of the vulnerabilities that occasionally affect the business.
With reference to the compliance risks, the most impacted processes have been identified and the annual activity plan of the Compliance Function has been defined.
The Company’s liquidity risk profile derives from cash flows related to operating, financing and investing activities.
Operating activity generates cash flows related to the direct insurance business, reinsurance activities towards Group companies and subsequent cession to external reinsurers, in addition to administrative expenses and tax.
Main liquidity commitments, not arising from operating activity, are represented by payment of dividends to shareholders and by investments. These produce also incoming cash flows in the form of interests from loans and credits to the subsidiaries and other inflows from investments.
The Company manages its financial resources according to sound and prudent management principles, based on the risk appetite established by the BoD.
The liquidity risk monitoring and management considers the overall Group’s perimeter, in order to identify potential liquidity risks at Group companies’ level. In case of potential critical issues, Group companies promptly inform the relevant Company Functions.
The proposed allocation of the profit of the year and dividend distribution keeps into consideration the resolution of the Board of Directors of March 14, 2018. With such a resolution the Board of Directors has approved the assignment of Generali’s shares in favor of the “Long Term Incentive Plan 2015“ (LTI Plan 2015). For the purpose of assigning the shares to the management of the Group, the expected increase in Shareholders Capital amounts to 3,357,102 euro.
The total proposed dividend for each share amounts to 0.85 euro, for a total maximum pay-out of 1,330,390,559 euro.
(in euro) 2017 profit for the year 1,404,459,284 to legal reserve 671,420 to dividend 1.330,390,559 to extraordinary reserve 73,397,304
Reclassified financial statements and alternative performance indicators for the Report on Operations In addition to the profit and loss and balance sheet statements required by regulations governing the sector, the Company also provides financial statements showing operating, balance sheet and cash flow performance for the year upon which the comments and comparative indicators used in the Report on Operations are based. The profit and loss account has been reclassified to combine the figures for life business with those for non-life, in addition to combining several other line items, and provides a breakdown of extraordinary income by its principal components. The net underwriting balance has also been provided and is considered an alternative performance indicator as it is not expressly required in the standard financial statements. This indicator is the total of purely technical items, including operating expense and technical interest expense contractually due to life policyholders, and is considered more representative of the actual technical result for the sector as, unlike the “net technical result” required in the statutory reporting forms, it is not influenced by investment performance.
Profits and losses on the realisation of other durable investmentsi 8,099
(*) Investment profit contractually acknowledged to the policyholders included in the items 042, 043, 076 and 077
Additional information on the preparation of the financial statements The information contained in the reclassified financial statements and the alternative performance indicators presented pursuant to CONSOB recommendation of 28 July 2006 are intended to facilitate an improved understanding of the data and operating performance of the business to users of the financial statements. As such, we considered it appropriate to provide additional elements for evaluation of the Company’s underwriting results by detailing the criteria used to calculate the principal technical performance ratios generally used by the Company in preparing the “Highlights” for 2017, which are calculated net of reinsurance.
This ratio is the sum of the loss ratio and the total expense ratio. It is of fundamental importance in analyzing the technical performance of the non-life segment as it represents the percentage coverage of technical expenses (both claims and operating expenses) by premium income.
The combined ratio is directly correlated to the “Net underwriting balance” as it is not influenced by investment income. The lower the combined ratio is, compared to 100%, the higher the “net underwriting balance” from the insurance business will be.
92 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Denominator 005 Earned premiums, net of reinsurance 1,170,817 018 Change in other technical provisions, net of reinsurance 0 028 Change in the equalisation provision -116
For the non-life business is the sum of the loss ratio and of the index of costs on premiums 91.9%
The average rate of return on investments is the ratio of income from investments to the half the sum of investments of the current year and of those of the previous one.
B. INTANGIBLE ASSETS 1. Acquisition commissions to be amortised a) life business 3 0 2. Other acquisition costs 6 0 3. Formation and development expenses 7 0
C. INVESTMENTS I - Land and Buildings 1. Property used for own activities 11 7,716,266 2. Property used by third parties 12 97,109,674 4. Other realty rights 14 0 5. Assets in progress and payments on account 15 1,787,491 16 106,613,431
II - Investments in affiliated companies and other shareholdings 1. Interests in a) parent companies 17 0 b) affiliated companies 18 29,491,857,152 c) affiliates of parent companies d) associated companies 20 219,431,138 2. Debt securities issued by a) parent companies 23 0 b) affiliated companies 24 650,000 c) affiliates of parent companies d) associated companies 26 0 3. Loans to a) parent companies 29 0 b) affiliated companies 30 1,662,883,344 c) affiliates of parent companies d) associated companies 32 0 carried forward 30,126,589 100 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
C. INVESTMENTS (follows) III - Other financial investments 1. Equities a) quoted shares 36 15,539,645 b) unquoted shares 37 12,822,091 2. Shares in common investment funds 40 40,313,704 3. Debt securities and other fixed-income securities 4. Loans a) mortgage loans 45 0 b) loans on policies 46 759,550 5. Participation in investment pools 49 0 6. Deposits with credit institutions
brought forward 33,196,847 carried forward 45,402,026,302 103 Parent Company Financial Statements
E. DEBTORS I - Debtors arising out of direct insurance operations 1. Policyholders a) for premiums current year 71 108,873,795 b) for premiums 3.
II - Cash at bank and in hand 1. Bank and postal deposits 88 744,092,935 2. Cheques and cash in hand 89 76,312 90 744,169,247 IV - Other 1. Deferred reinsurance items 92 7,582,122
TOTAL ASSETS 100 48,254,994,245 104 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
2. Unearned premium provision for supplementary coverage 119 31,849,560 3. Provision for claims outstanding 120 1,230,941,823 4. Provision for profit sharing and premium refunds 121 84,474,749
II - Provisions relating to the administration of pension funds 126 0 127 3,265,803,783 carried forward 35,832,456,749 106 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
G. CREDITORS I - Creditors arising out of direct insurance operations 2. Current accounts with insurance companies 134 4,906,752 3. Premium deposits and premiums due to policyholders 4. Guarantee funds in favour of policyholders 136 0 137 19,047,952 II - Creditors arising out of reinsurance operations
IX - Other liabilities 1. Deferred reinsurance items 151 2,338,236 2. Commissions for premiums in course of collection 152 13,751,411 carried forward 47,950,885,742 108 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
brought forward 36,733,325,801 carried forward 47,900,614,561 109 Parent Company Financial Statements
1. EARNED PREMIUMS, NET OF REINSURANCE: a) Gross premiums written 1 1,661,058,089 b) (-) Outward reinsurance premiums 2 489,281,052 c) Change in the gross provision for unearned premiums 3 24,269,406 d) Change in the provision for unearned premiums, reinsurers' share 2.
1. PREMIUMS WRITTEN, NET OF REINSURANCE a) Gross premiums written 30 1,708,336,285 2. INVESTMENT INCOME: a) From partecipating interests 33 1,003,318,838
b) From other investments aa) income from land and buildings 35 0 bb) from other investments 36 320,272,901 37 320,272,901
c) Value re-adjustments on investment 39 4,949,387 d) Gains on the realisationof investments 40 10,865,146
(of which, income from Group companies 151 0 ) 152 1,308,045,597 162 −67,287,413 165 −287,435 168 −530,219 171 −136,597,303 117 Parent Company Financial Statements
PROFIT AND LOSS ACCOUNT Current Year 7. PREMIUM REFUNDS AND PROFIT-SHARING, NET OF REINSURANCE 65 46,663,848 8. OPERATING EXPENSES a) Acquisition commissions 66 230,390,933 b) Other acquisition costs 67 10,302,994 c) Change in commissions and other acquisition costs to be amortised 68 0 d) Collecting commissions 69 0 e) Other administrative expenses 70 38,397,825 f) (-) Reinsurance commissions and profit sharing 71 65,317,514 72 213,774,238 9. INVESTMENT CHARGES a) Investment administration charges, including interest 73 17,715,844 b) Value adjustments on investments 74 3,567,118 c) Losses on the realisation of investments 75 282,668 76 21,565,630 10. EXPENSES AND UNREALISED LOSSES ON INVESTMENTS FOR THE BENEFIT OF POLICYHOLDERS WHO BEAR THE INVESTMENT RISK AND ON INVESTMENT RELATING TO THE ADMINISTRATION OF PENSION FUNDS 77 3,190,473 11. OTHER TECHNICAL CHARGES, NET OF REINSURANCE 78 8,172,734 12. (-) ALLOCATED INVESTMENT RETURN TRANSFERRED TO THE NON-TECHNICAL ACCOUNT (item III. 4) 79 729,569,758 13. BALANCE ON THE TECHNICAL ACCOUNT FOR LIFE BUSINESS (item III.2) 80 448,129,601
1. BALANCE ON THE TECHNICAL ACCOUNT FOR NON-LIFE BUSINESS (Item I.10) 81 222,923,859 2. RISULTATO DEL CONTO TECNICO DEI RAMI VITA (voce II. 13) 82 448,129,601 3. BALANCE ON THE TECHNICAL ACCOUNT FOR LIFE BUSINESS (Item I.13) a) From partecipating interests 83 980,537,499
(of which, income from Group companies 91 19,610,037 ) 92 1,120,345,666 118 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
PROFIT AND LOSS ACCOUNT Current Year 4. (+) ALLOCATED INVESTMENT RETURN TRANSFERRED FROM THE LIFE TECHNICAL ACCOUNT (item iI. 2) 93 729,569,758 5. INVESTMENT CHARGES FOR NON-LIFE BUSINESS a) Investment administration charges, including interest 94 31,656,044 b) Value adjustments on investments 95 36,893,285 c) Losses on the realisation of investments 96 10,098,515 97 78,647,844 6.
In order to better display the income statement items relating to hedging derivative contracts, the related financial income/expenses were classified in line with the financial charges accrued on the hedged financial liabilities.
In compliance with the provisions set by ISVAP (now IVASS) Regulation No. 22 dated 4 April 2008, the cash flow statement of the Company drawn up in free form, has been enclosed in the financial statements.
The financial statements have been audited by Ernst & Young S.p.A., the appointed audit firm from 2012-2020.
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. Goodwill and other multi-year charges are amortised on the basis of their residual useful life over a period not exceeding five years.
Other deferred charges are amortized over a maximum period of five years.
If at closing date, the value of fixed assets is deemed permanently lower than the book value, as determined above, appropriate adjustments are made. Write-downs are maintained in subsequent years until they remain justified.
The classification of the securities portfolio is defined under Art. 23-quinquies and 23-sexies of the ISVAP regulation (now IVASS) No. 22/2008, amended and integrated.
Fixed securities are valued at the weighted average cost less adjusted for any write-down considered permanent and in the case of fixed interest securities, net of the adjustments for the positive or negative difference between the acquisition cost and the redemption value accrued in the financial year.
For investments in subsidiaries and associates whose 126 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
book value is higher than that resulting from the corresponding shareholders’ equity, a recoverability test is carried out in order to determine the durability or otherwise of the loss.
With reference to the securities portfolio, a net gain of 3,076,816 thousand euro emerges from the comparison between current values at the end of the year and the carrying amounts. This amount includes the net unrealized gain of 2,862,689 thousands of durable securities and an unrealized gain of 214,127 thousands of a non-durable securities.
The use of derivatives is consistent with the principles of sound and prudent management of the Company, as provided for in the investment policy adopted by the Board of Directors with respect to ISVAP Regulation (now IVASS) n. 24 dated 6 June 2016.
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. Derivative financial instruments aimed at risk reduction are valued according to the “matching principle”. Gains and losses on the valuation of these derivatives are charged to the profit and loss statement in line with the corresponding gain or loss of the underlying asset or liability. In particular the income and charges relating to derivative financial instruments hedging the interest rate risk on the cash flows related to the payment of the financial charges on the debt, are posted to the other charges, in line with the classification of the related interest due.
Loans are recorded at nominal value which, given their characteristics, corresponds to their estimated realizable value.
Such investments are considered at current value. The current value of the assets, established by contractual conditions, is as follows: a) for investments traded on regulated liquid and active markets, by the value at the last trading day of the year; b) for investments 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 brokers include the amounts to be paid to agents, brokers and other insurance intermediaries.
The estimated realizable value of the receivables from policyholders is determined on a flat-rate basis, based on the analysis of the receipts trends for every single line of business, given the experience acquired.
Other receivables are recognised at their nominal value which, given their characteristics, corresponds to their estimated realizable value.
In the Notes to the Accounts, reference to the Italian portfolio is to be interpreted in this sense.
Technical items relating to inward and outward insurance are accounted for in the year of actual competence, in accordance with ceding company agreements and on the basis of timely communication.
The provision for outstanding claims is determined by a prudent assessment of claims made on the basis of objective and prospective considerations of all predictable charges. The provision is considered adequate to cover the payment of damages and the settlement costs of claims related to accidents that have occurred during the year even if not yet reported.
Claims incurred but not yet reported are estimated prudently on the basis of previous experience regarding both the frequency and average cost of late claims by line of business.
The provision for outstanding claims is determined on the basis of the information given by the ceding companies.
The methods of determination and the results of the analysis of the technical provisions of the reinsurance business are the subject of a technical report of the Actuarial Function, as provided by Par. 4 of Art. 23-quarter of the Regulation No. 22 dated 4 April 2008.
The provisions for outstanding claims relative to cessions and retrocessions are set up in accordance to the reinsurance contractual agreement, the provisions for unearned premiums are calculated consistently to the methods adopted for gross business.
For the 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 Company, in the calculation of the mathematical reserves, follows the provisions set out in paragraphs 13 and 14 of Annex 14 to Regulation No. 22 dated 4 April 2008, and operates a cautious assessment on the basis of best estimate and a reasonable margin for adverse deviation of the factors considered. In particular, consistent with paragraph 19 of Annex 14 to Regulation No. 22 dated 4 April 2008 mentioned above, the Company makes use of the same technical bases that have been adopted for the calculation of the premium, for almost all of the technical provisions whose corresponding assets are valued according to the purchase price. In any case, the amount of the mathematical reserves cannot be lower than that calculated one with reference to the minimum conditions or guaranteed surrender value, if required.
With specific reference to the technical provisions of the unit linked and index linked contracts, the following provisions have been made where applicable: — mathematical provisions for “unit-linked” contracts are calculated according to the principles set by paragraph 39 of Annex 14 to Regulation No. 22 dated 4 April 2008 and represented, with the maximum approximation, by the value of the units of Undertakings for Collective Investments (UCI, OICR) or by the value of assets included in the Company’s internal funds at year’s end; — mathematical provisions for “index-linked” contracts were calculated according to the principles set by paragraph 40 of Annex 14 to Regulation No. 22 dated 4 April 2008 and represented, with the maximum approximation, by the quota representing the reference value at year end; the provisions take into account all risk factors that might affect the level of security and marketability of the assets intended for their coverage.
The provisions related to accepted business are determined, in principle, on the basis of the information given by the ceding companies and can be supplemented as result of the adequacy evaluations performed taking into account the commitments made, pursuant to Annex 16 of the Regulation No. 22 dated 4 April 2008.
Provisions for risks and charges include provisions to cover losses or debts of a predetermined nature, of a certain or probable existence, for which, however, at year-end either the amount or date of occurrence are indeterminate.
Other liabilities include payables not included in other items, such as, premiums received but temporarily suspended due to mismatching. The account includes the sum of the differences due to rounding of balance sheet items as well as the valuation offset from unrealised losses on hedging options and swaps. The item also includes the suspense account for balances between the life and non-life segment.
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.
Costs and income are accounted in the year on an accrual basis. In particular, for items relating to insurance operations, the principle applied was that of “the regulations applicable to the profit and loss account” pursuant to Legislative Decree No. 173/1997 and in compliance with ISVAP (now IVASS) ruling No. 22/2008, modified and completed.
Allocation of costs and revenues common to both the life and non-life segments
“Common” costs and revenues that are not immediately attributable to Non-life or Life segment, are recognised 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.
Criteria for the allocation of general expenses and any revenues “common” to both segments (Non-life and Life) are based on specifics parameters, structured with the aim to obtain a consistent attribution with the operations carried out for each segment, as specified by the Resolution of the Board of Directors.
The Company deals 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 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 recorded in the profit and loss account.
A list of the exchange rates, supplied by Bloomberg, adopted for the conversion of currencies into euro, applied to currencies of particular significance of the Company, along with percentage changes with respect to the previous financial year is provided below.
(-) Quotas of investments profit transferred to the non-life technical account 137,629 0 137,629
The breakdown of non-life and life results is as follows (attachment 3).
The increases for the year refer to the new activations carried out during the year for software costs related to Group projects in the Risk Management area and to the development of commercial initiatives in the Corporate & Commercial segment.
1.1 Changes to intangible assets over the year – (attachment 4)
Increases for the year for: amortisation quotas 20,258 other changes 0
Decreases for the year for: reductions from sales 0 other changes 43
Book value (a - b) 30,127 135 Parent Company Financial Statements
The item includes property used for own use and properties rented for use by third parties. The depreciation rate for buildings is equal to 1%.
2.1.1 Variations in land and buildings over the year – (attachment 4)
Increases for the year for: reversal value 340 revaluation 0 other changes 0
2.1.2 Leased property and operations carried out with Group companies and companies in which a significant interest is held
There are no leased assets and there were no financial leasing operations implemented with regards to real estate or other assets.
2.2 Investments in Group companies and other companies in which a significant interest is held – Item C.II
Generali Paneurope DAC 42,500,000 42,500 2.2.1 Equities – Item C.II.1 2.2.1 a) Variation in equities over the year – (attachment 5)
The increases for the year refer to the reversal value of the bonds issued by Generali Finance for 16 thousand.
The decreases mainly include: — sale of the stake in Aseguradora General for 1,052 thousand; — value adjustment on Lion River I shares for 2,997 thousand; — repayment of capital for 45,073 thousand of which 30,865 from GLL GMBH & CO. RETAIL and 12,303 from Lion River I.
In addition, both the increases and the decreases are due to the movement of 344,600 thousand linked to the transfer of the shareholding in Generali Italia and the transfer from the fixed to the current assets for a total of 43,649 thousand of the investments in Generali Paneurope LTD (42,500 thousand), Asseguradora General SA for (1,052 thousand) and Assitimm Srl (97 thousand). The residual amount is attributable to the euro counter-valuation of investments in foreign currency.
2.2.1 b) Information on companies in which a significant interest is held
Increases for the year for: acquisitions, subscriptions or payments 0 reversal value 16 other changes 0
Decreases for the year for: sales or redemptions 0 devaluations 0 other changes 0
2.2.3 Changes in loans to companies over the year – Item C.II.3
Decreases for the year for: sales or redemptions 386,100 devaluations 0 other changes 0
The increase refers to the new positions with Group companies, and, mainly with Generali Italia (1,187,500 thousand), Generali Schweiz Holding AG (57,500 thousand ), Europ Assistance Holding S.A. (24,983 thousand), Generali PanEurope dac (15,000 thousand) and Generali Vitality Gmbh (7,000 thousand). In the first half of 2017 it was instead paid off the loan with Generali Finance BV (381,000 thousand).
2.3.1 Breakdown on the basis of the durable or non-durable utilisation of the assets included in the equities items – Item C.III.1, units in common investment funds – Item C.III.2, bonds and other fixed-interest securities – Item C.III.3, participation in investment pools – Item C.III.5 other financial investments – Item C.III.7 (attachment 8)
Book value Current value Book value Current value Book value Current value
Total 2) C.III.2 Units in common investment funds 0 0 40,314 42,700 40,314 42,700 3) C.III.3 Bonds and other fixed-interest securities 647,581 711,480 1,351,730 1,432,450 1,999,311 2,143,930 4) C.III.5 Participation in investment pools 0 0 0 0 0 0 140 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
C.III.1 C.III.2 C.III.3 C.III.5 C.III.7 transfers from the non-durable portfolio 0 0 0 0 0 transfers to the non-durable portfolio 0 0 0 0 0
In the bond segment, increases were mainly due to net purchases for 149,283 thousand of which in corporate bonds for 77,816 thousand and in government securities for 71,467 thousand. During the year the company also proceeded to reclassify from the non-durable to the durable segment for 11,679 thousand.
Book value 2,905 128,799 2.3.3 Changes in loans over the year – Item C.III.4 and in deposits with credit institutions – Item C.III.6 (attachment 10)
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
The item refers to other loans for a total amount of 2,146 thousand, of which 1,696 thousand relative to loans gran2. 3.5 Breakdown of the duration of deposits with credit institutions – Item C.III.6
include deposits with: — Alleanza Assicurazioni S.p.A. for 3,697,968 thousand; — Generali Levensverzekering Maatschappij N.V. for 1,270,481 thousand; — Generali Deutschland Holding AG for 706,847 thousand.
There are no impairments on deposits with ceding companies over the year.
Section 3 – Investments for the benefit of life- assurance policyholders who bear the investment risk and relating to the administration of pension funds – Item D
3.2 Overview of operations relative to contracts linked to pension funds - Item D.II (attachment 12)
3.3 Transfers of investments from class C to class D and vice versa
4.1 b) Breakdown of Other technical provisions – Life business Item D bis II.5
Credits for securities and coupons sold or purchased to be adjusted 89,315
Tax credits mainly include receivables for IRES of 150,501 thousand, credit for the insurance tax advance payment of 60,407 thousand, and receivables for the tax advance on the income of some foreign subsidiaries for 34,997 thousand and the IRAP credit for 21,449 thousand.
Movables listed in public registers 1,408 83 313 1,178 6.3 Deferred reinsurance items – Item F.IV.1
Deferred reinsurance items, amounting to 7,852 thousand, include the negative income values of a technical nature that are to be entered in the profit and loss accounts in the following year.
Portfolios and other technical items 0 114 114 6.4 Details of miscellaneous assets – Item F.IV.2
The receivables for non-insurance transactions mainly relate to receivables due from Group companies.
Credits for deferred tax assets refer to items that are recognized, in terms of tax, in financial years other than that in which they were recorded in the income statement, and are recorded net of the provision for deferred taxes.
Aquarius Plus Investments Plc 311 EURO fixed 02/10/43 yes Tier II
Bank of America Corp 583 USD fixed 29/01/37 yes Other clauses
Furthermore, the deferred charges that have a residual duration of over five years are: — disagio on bond issues, subordinated liabilities and loans for 16,635 thousands.
7.2 Breakdown of other accrued income and deferred charges – Item G.3
Clerical Medical Finance Plc 4,506 GBP fixed perpetual yes Tier II
Lloyds Banking Group Plc 367 GBP fixed perpetual yes Tier I
Profit for the year 0 1,404,459 0 1,404,459 8.2 Share capital – Item A.I
The share capital at 31 December 2017 was 1,561,808 thousand, divided into ordinary shares with a nominal value of 1 euro each. The item shows an increase of 1,925 thousand consequent to the capital increase carried out for the allocation of shares to the management of the Group, as required by the long-term incentive plan “Long Term Incentive Plan 2014”.
The increment of the reserve equal to 385 thousand is due to the capital increase.
148 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Initial amount of the 2015 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 2,370,082 311,375 737,767 14,699,754
Distribution of previous year result to dividends (0.60 euro per share) −737,767 −737,767
Distribution of previous year result legal reserve adjustment 602 −602 0 to dividends (0.72 euro per share) −930,867 0
Final amount of the 2017 financial year 1,561,808 3,568,250 −3,040 793,055 92,676 802,313 30,425 118,769 20,123 153,474 4,147,612 1,823,197 312,362 1,404,459 14,825,483 151 Parent Company Financial Statements
Revaluation reserve pursuant to Law 904 - 16.12.1977 20,123 A,B,C 20,123 3)
Revaluation reserve pursuant to Law 2 - 28.1.2009 (DL 185/2008) 92,676 A,B,C 92,676
Distributable residual quota 11,546,854 1) Key: A = for capital increase, B = for hedging , C = for distribution to shareholders.
4) The amount of 170.928 thousand euro is taxable in case of distribution.
152 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
July 2022; • fixed rate until 10 July 2022, first date of the early repayment option; • variable interest 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; — a bond issue of 1,250,000 thousand Euro with the following characteristics: • due on 12 December 2042; • early repayment option for the Company from 12
December 2022; • fixed rate until 12 December 2022, first date of the early repayment option; • variable interest after 12 December 2022, until due date; • subordinated towards all the non-subordinated debtors, including policyholders; • suitable to cover the solvency requirements of
— a bond issue of 850,000 thousand Euro with the following characteristics: • due on 8 June 2048; Section 9 – Subordinated liabilities – Item B
The reduction in both the premiums reserve and the claims provision significantly affected the termination of a reinsurance treaty with the subsidiary Generali Iard. Specifically, the premium reserves accepted by the aforementioned company decreased from 33,440 thousand to 2,293 thousand, and the claims provision from 327,589 thousand to 9,722 thousand.
The following table illustrates the provision for unearned premiums by line of business.
The methodologies used for the evaluation of the provision for unearned premiums are indicated in the part A – Summary of significant accounting policies – of the Notes to the Accounts.
The additional reserves are calculated by applying the provisions of paragraphs 4 and 5 of Annex 15 of ISVAP regulation (now IVASS) No.22 / 2008 amended and supplemented.
— Natural disaster risks: the premium reserve for each business is integrated with an additional allocation 155 Parent Company Financial Statements
During the year the reserve for unexpired risks for direct business was established in the motor material damage class for 263 thousand, as the coverage was not sufficient in this class, as shown in the following table: (in thousand euro) % Loss ratio expected
ratio method. Amongst the input data, it is necessary to specify a series of factors (premiums or risk exposure ) to be associated with each generation of claims.
The methodologies adopted for the valuation of the provision for outstanding claims are indicated in part A – Summary of significant accounting policies – of the Notes to the Accounts.
2. Link Ratio on “incurred”. This method is the same as the traditional Chain Ladder method, but analyses and projects the development of the “incurred” rather than the “paid”. “Incurred” for a given generation of claims at a specific year, correspond to payments accumulated over the year and the reserve at end of year.
3. Bornhütter-Ferguson method. This method is substantially based on the Link Ratio method (on “paid” or “incurred”), but also uses a series of loss ratios per generation, which is used as an “advance hypothesis ” of the last generation cost, so that the estimated reserve is a weighted average between this “advance hypothesis” and the estimate obtained using the link 157 Parent Company Financial Statements
The equalisation provisions is 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.
10.5 Other life technical provisions – Item C.II.5 – by provision type and line of business.
Other life technical provisions, amounted to 17,895 thousand, were entirely made of the provision for future costs set by paragraph 17 of the Annex 14 of the Regulation No. 22 dated 4 April 2008 amended and integrated. It refers for 14,866 thousand to Line of business I, for 1,978 thousand to Line of business III, for 1,048 thousand to Line of business IV and for 3 thousand to Line of business V.
Section 12 – Provisions for other risks and charges – Item E
12.1 Changes to the provisions for other risks and charges over the year (attachment 15)
Uses of other provisions relate for 13,000 thousand to the withdrawals consequent to payments to outgoing staff, prudently set aside in previous years.
No provisions deriving from the administration of pension funds are accounted for in the financial statements.
160 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Not convertible bond issues, amounting to 3,191,654 thousand, comprise “Senior September 2024” bond issues for 1,750,000 thousand, “Senior 2014-2020” bond issue for 1,250,000 thousand and the bond issue “Senior 2020” for 191,654 thousand.
Book value 3,811,359 13.5 Changes to Provisions for severance pay over the year – Item G.VII – (attachment 15)
Sums due to credit institutions for entries to be adjusted 199,214
The others payables refer mainly to cash pooling transactions with Group companies. The most significant amounts relate to the counterparties Generali Beteiligungs-GmbH for an amount of 899,687 thousand, Graafschap Holand N.V. for 347,354 thousand and Generali Finance BV for 266,074 thousand.
The item “Operations on Derivatives” refers mainly to the valuation difference from 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 the underlying position.
Miscellaneous liabilities mainly refer to the reinstatement premiums related to the outward reinsurance.
162 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Accrued income and deferred charged on derivatives 8,714 6,111 14,825 14.3 Breakdown of accruals and deferred income and those with a duration of over five years
15.1 Details of the assets and liabilities relating to Group companies and other companies in which a significant interest is held – (attachment 16)
Investments relating to the administration of pension funds 0 0 0 0 0 0
Amounts due to banks and financial institutions 0 0 0 0 0 0
Furthermore, the following bond issue has a residual duration of over one year: — “Senior 2020” for 127,770 thousand; — “Senior 2014-2020” for 1,250,000 thousand.
With regards to receivables in items C and E of assets, 4,645 thousand may be collected after the next financial year and 5,505 thousand after five years.
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 other outstanding positions, provided from third parties in the interest of the Company, consist mainly of sureties provided to CONSAP, to government authorities and foreign insurance regulators as required for Company operations in non-European Union countries.
166 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
17.3 Details of the assets and liabilities relating to pension funds managed in the name and on behalf of third parties – Item VI
The securities owned by the Company, deposited in custody in various brokers, are recorded in the memorandum accounts at the nominal value of 14,143,372 thousand.
Among the commitments, the most significant positions represent the notional reference value of open transactions in purchase and sale of derivatives, as outlined in 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 are relative to index options, with related notional amount equal to 170,696 thousand and to repurchase agreement transactions for 197,000 thousand.
Derivatives transactions are consistent with the guidelines set by the specific resolution of the Board of Directors and in compliance with the rulings set by IVASS Regulation No. 24 dated 6 June 2016 and exclude transactions of a purely speculative nature.
The overall value of outstanding contracts at year end, in terms of the nominal value of the reference capital (notional reference value), was 2,533,475 thousand.
Number Value Number Value Number Value 17.7 Disclosure concerning contingent liabilities not recorded in the balance sheet of which to in Art. 2427, No. 9) of the first paragraph
The Company has identified potential additional liabilities with respect to those already taken into account for the determination of provisions for risks and charges (Section 12), for 6,927 thousand, relating to lawsuits for which the unsuccessful outcome was determined.
Income and charges from life investments 0 1,317,841 1,317,841 1,279,589 38,252
Change in unearned premiums, mathematical and other provisions −1,077 658,729 657,652 160,245 497,407
Income and charges from non-life investments 1,041,698 0 1,041,698 817,612 224,086
Investments profit transferred from/to the non technical account −137,629 729,570 591,941 573,322 18,619
Section 18 – information on the non-life business technical account (I)
Direct insurance: Fire and property other than fire 36,985 33,575 61,672 5,103 6,669
The percentage to be allocated to the technical account – in compliance with ISVAP (now IVASS) Regulation No. 22/2008 amended and supplemented– is calculated by applying to the net investment return, the ratio resulting between the average of (current and prior year) technical provisions, net of reinsurance and this same average 18.4 Other technical income net of reinsurance – Item I.3
Reversal of commissions relating to devalued or cancelled premiums of previous years 13
Total of other technical income 574 added to the average (current and prior year) of the shareholders ’ funds plus subordinated liabilities.
The division 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.
Total 41 18.7 Reinsurance commissions and profit- sharing – Item I.7.f
The item other technical charges mainly consist of reversed commissions related to canceled reinsurance premiums.
19.1 Summary of the life business: premiums and reinsurers’ share – (attachment 20)
(in thousand euro) Direct business Reinsurance Total c) 1. for non-profit-sharing contracts 174,870 1,483,156 1,658,026 2. for profit-sharing contracts 0 0 0 3. for contracts in which the investment risk is borne by policyholders and for contracts linked to pension funds 50,310 0 50,310
(in thousand euro) 2017 from equities: Dividends and other income from equities of Group companies 1,001,314
Interest on loans to Group companies and companies in which a significant share is held 17,473
Bonds issued by Group companies and companies in which a significant share is held 16
Gains from equities of 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 67,088
Gains from investments in Group comp. and comp. in which a significant share is held 0
Gains from other financial investments 106 - of which, from bonds 99
Grand total 93,674 19.4 Other technical income net of reinsurance – Item II.4
Reversal of commissions relating to devalued or cancelled premiums of previous years 843
174 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Total 65,318 19.8 Details of investment charges – Item II.9 (attachment 23 – Life)
Investments operating charges and other charges: Charges relating to equities 7,595
Equities in 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 0
Grand total 3,192 19.10 Other technical charges net of reinsurance – Item II.11
The other technical charges mainly consist of residual items relating to reinsurance acceptances by Generali Paneurope dac.
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)
176 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
For the 2017 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 1,317,841 thousand, was 55.361%, and involved an allocation to the non-technical account of 729,570 thousand (696,659 thousand in 2016).
(in thousand euro) Isvap Class 01 Isvap Class 02 Isvap Class 03 Isvap Class 04 Isvap Class 05 Isvap Class 06
(–) Charges relating to claims 6,030 39,828 21,844 −216 636 −1,129
Technical balance of direct business −1,939 −25,184 −8,086 480 288 1,129
(+) Positive share of investments allocated from the non-technical account 1,847 7,847 2,974 962 277 5
(in thousand euro) Isvap Class 13 Isvap Class 14 Isvap Class 15 Isvap Class 16 Isvap Class 17 Isvap Class 18
(+) Balance of other technical items −109 0 −1 0 0 0
(+) Positive share of investments allocated from the non-technical account 16,427 22 913 803 41 9
178 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
20.1.2. Summary of non-life business technical accounts – Italian portfolio – (attachment 26)
(–) Change in unearned premium provision 12,612 1,910 9,539 14,131 6,110
(–) Change in other technical provisions 0 0 0 0 0
(+) Balance of other technical items −315 39 0 3,061 −3,415
(–) Change in mathematical and other provisions −11,109 −3,158 −35,564 131 0
(+) Investment profit net of the quota allocated to the non-technical account 74,109 2,650 1,787 8,653 0
For the attribution of the expenses to the lines of business please refer to point 20.1.1.
(–) Change in mathematical and other provisions in life branches 62,142
(+) Quota of profits transferred from the non-technical account of the non-life branches 93,117
Technical result 195,892 147,865 180 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Equities of Group companies and companies in which a significant share is held 0
Investments operating charges and other charges: Charges relating to equities 6,871
Total of other income 398,403 182 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Total of other charges 1,631,104 21.5 Details of extraordinary income – Item III.10
Total of extraordinary income 254,534 contract does not qualify as protection, but as an integral part of the transaction as a whole, the related income has been classified as extraordinary items.
Total of extraordinary charges 43,557 21.7 Details of income taxes – Item III.14
The company complies, as a Parent Company, with the Corporate tax treatment, regulated by Title II, Chapter II, Section II of the TUIR (Art. 117-129). The number of subsidiaries that exercised the option with the Parent Company has equal to 20, unchanged compared to the previous year.
With reference to the significant terms and conditions of the agreements that regulate the relationship between the consolidating company and the consolidated companies, it should be noted that each consolidated company, in cases where it contributes to the formation of the total global income with its taxable income, must provide to the consolidating company an amount equal to the relative tax due; on the other hand, in case the consolidated company contributes to the formation of the consolidated total global income with a tax loss, an amount equal to the financial benefit due to the Parent Company on payment of the Group tax, will be granted.
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, accounting for a debt towards the Tax Authorities of 135,030 thousand and a concomitant credit for the same amount towards the companies themselves. Income taxes for the year show a positive balance of 121,491 thousand (190,212 the previous year), due to the following components: — income for accrual IRES for 161,760 thousand (217,729 thousand in the previous year), in line with the increase of the net result of the dividend received from Group companies; — accrual IRAP with a cost equal to 5,470 thousand; — taxes due in Italy on income of certain foreign subsidiaries for 10,636 thousand (14,774 thousand in the previous year); — taxes paid abroad for 24,163 thousand (9,445 thousand in the previous year).
Hereinafter the reconciliation between the theorical tax rate and effective tax rate: IRES ordinary rate 24.00%
The movements of pre-paid and deferred taxation are determined using the IRES rate of 24% and the IRAP rate of 3.54%; they refer to the items that contribute to forming the taxable income in a tax period different from that in which they are recorded in the income statement.
Devaluations of credits due by policyholders 8,963 317 −755 −26 8,208 291
Income from other financial investments 0 38 0 0 0 38
Interest on deposits with ceding companies 0 230,625 0 12 0 230,637
Recoveries of administration expenses and charges 0 61,299 0 0 0 61,299
Interest on debts from direct insurance transactions 0 0 0 0 0 0
Interest on debts from reinsurance transactions 0 9,793 0 0 0 9,793
Unrealised charges and losses on investments for the benefit of policyholders 0 43 0 0 0 43
Losses on the realisation of investments 0 27 0 0 0 27 187 Parent Company Financial Statements
Premiums written 22.3 Personnel expenses and director and auditor fees – (attachment 32)
Administrative charges and expenses on behalf of third parties 201,195 4,855 206,050 188 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
During the year the Company has transferred securities from the non-durable to the durable portfolio for 11,679 thousand, with a positive impact in the profit and loss account for 154 thousand. They were also made transfers from durable to the non-durable portfolio for 43,649 thousands, without general impact in the profit and loss account.
Hedging operations regarding assets and liabilities, and the other operations provided by the investment Policy adopted by the Board of Directors pursuant IVASS Regulation No. 24 dated 6 June 2016, as already specified in the Notes to the Accounts, have determined a total net loss of 38,945 thousand, relating to the realised economic components. This result is recognized as income from financial investments/charges for 30,012 thousand in the life business and 8,529 thousand in the non-life business and among other income for 1,169 in the life insurance business and other charges for 1,573 thousand in the non-life business.
The results of options were determined by sales transactions and abandoned premiums.
Furthermore, according to the above-mentioned CONSOB Ruling par. 1 bis Art. 78, as modified by CONSOB resolution No. 18049 dated 23 December 2011, no transactions have been carried out by the Company in order to favour the purchase and the subscription of shares pursuant to Art. 2358, Par. 3 of the Civil Code.
190 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
The remuneration due and 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 1,404,459 thousands is as follow: — for 671 thousands to Legal Reserve; — for 1,330,391 thousands to dividend; — for 73,397 to extraordinary reserve.
No natural or legal person, directly and/or indirectly, jointly or severally, holds a sufficient number of shares enabling the said person to acquire a controlling stake in the Company. In the light of the recent measures introduced by the company law Reform, the Company is not subject to direction and co-ordination by any Italian or foreign body or company.
Straordinary incomes and charges −252 0 0 0 −252 −0.12 1) The interests from deposits with ceding companies are include in the item “Incomes and charges from transactions with ceding companies” instead of item “net of investments”
Transactions with the Group companies are part of the usual activities of management of investments and management and coordination, management of the capital structure and Group reinsurance and are subject to the specific control discipline by the Supervisory Authority (IVASS). No transactions have been carried out that are atypical with respect to the normal business of the company.
As part of the management activities of the investments the principal balances can be found on the side of the balance sheet as investments and on the side of the income statement under net income from investments, mainly with regard to dividends received. In relation to this area, it is noted, as a significant transaction carried out during the period, the acquisition of the residual portion of the investment in Generali Finance B.V. from its subsidiary Generali Italia S.p.A. for an amount of 199 million. The transaction was concluded at market values. Dividends received from Group companies totaled 1,981,244 thousand.
vestment income and other charges in relation to the management of loans and receivables: in particular, the Company has outstanding loans to Group companies of 1,187,500 thousand at 31 December 2017 to Generali Italia S.p.A., for 370,900 thousand to Generali Beteiligungs GmbH, for 57,500 thousand to Generali Schweiz Holding AG, for 24,983 thousand to Europ Assistance Holding SA for 15,000 thousand towards Generali PanEurope dac and 7,000 thousand towards Generali Vitality Gmbh. On the liabilities side, there are loans from group companies to the following counterparties: Participatie Maatschappij Graafschap Holland N.V. for 3,158,778 thousand, Generali Holding Vienna for 484,501 thousand, Generali Investments S.p.A. for 55,000 thousand, Transocean Holding Corporation for 40,000 thousand, UMS Immobiliare Genova S.p.A. for 27,000 thousand, Generali Versicherung Ag for 18,080 thousand and Redoze Holding for 18,000 thousand. Interests income was recorded for 79,619 thousand, mainly attributable to Generali Italia S.p.A. (55,853 thousand) and Generali Beteiliguns GmbH (20,882 thousand) and interest due for 75,757 thousand, mainly related to Participatie Maatschappij Graafschap Holland N.V. (58,117 thousand) and Generali Holding Vienna for 7,976 thousand. In relation to the aforementioned loan to Generali Italia S.p.A. equal to 1,187,500 thousand, it should be noted that the same was purchased during the year by Generali Finance B.V. and the consideration was paid for by offsetting 381,100 thousands of a loan to the selling party and the remainder in cash; — guarantees given to third parties in the interest of group companies in relation to the debt issued on the market by the subsidiary Generali Finance B.V. (guarantee for a nominal amount of 1,500,000 thousand ); — 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) an “Equity committment letter” with which the
Gran total 18,530 23,572 a) Events and significant operations not recurring
Result for the year 1,404,459 1,096,261 Interest paid for the year 711,274 672,782 Income taxes -121,491 -190,212
Increases (+) / Decreases (-) of non cash-items Change in technical reserves -798,396 46,660 Changes in provisions 2,255 12,608 Change in depreciation and amortization 24,869 25,465 Adjustments/Reversal to equity investments 28,606 59,380 Other adjustments for non monetary items 66,949 -242,226 2. Cash flow before changes of the net current assets -709,808 -393,453
Changes in working capital Decreases (+) / (increases) (-) in receivables 361,782 318,669 Decreases (+) / increases (-) in payables 232,891 289,137 Decreases (+) / (increases) (-) in prepaids and accrued income -27,292 12,609 Decreases (+) / increases (-) in accrual and deferred income -26,069 6,376 Decreases (+) / (increases) (-) in other assets -2,536 -28,503 Decreases (+) / increases (-) in other liabilities 19,805 143,597 3. Cash flow after changes of the net current assets -151,227 348,433
Other adjustments Interest interest paid -711.274 -672,782 Income taxes 240,691 155,571 Dividends collected 1,983,856 1,857,435
Liquidity used for (-) / generated by (+) investing activities Real estate 1,918 -1,062 Equity investments -223,708 14,186
Net Cash flows from financing activities (1. + 2.) C. -548,345 -1,322,980
Total Cash flows for the year A. + B. + C. 116,526 102,414
Assets - Breakdown on the basis of the utilisation of other financial investments: equities and shares, shares in 1common 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)
Assets - changes for the year of other durable financial investments: equities and shares, shares 1in common investment funds, debt securities and other fixed-income securities, participation in investment pools e other financial investments (items C.III.1, 2, 3, 5, 7)
(item C.I.1) and those of the provision for claims outstanding (item C.I.2) of non-life lines of business 14 Liabilities - changes in the components of the mathematical provision for the year (item C.II.1) 1 and in the components of the provision for profit sharing and premium refunds (item C.II.4) 15 Liabilities -Change for the year in the provisions in the funds for risks and charges (item E) and 1 change in the severance pay provisions (item G.VII) 16 Details of assets and liabilities referring to Group comp. and other companies in which a significant interest is held 1 17 Details of "guarantees, commitments and other memorandum accounts" 1 18 Breakdown of commitments regarding derivative transactions 1 19 Details of the non life business technical account 1 20 Summary of life business: premiums and reinsurers' share. 1 21 Income from investments (items II.2 e III.3) 1 22 Income and unrelised gains on investments for the benefit of policyholders who bear the investment 1 risk and on investments relating to the administration of pension funds (item II.3) 23 Details of investment charges (items II.9 e III.5) 1
II - Investments in affiliated companies and other shareholdings 1. Interests in a) parent companies 17 0 b) affiliated companies 18 16,593,774 c) affiliates of parent companies 19 0 d) associated companies 20 219,431 2. Debt securities issued by a) parent companies 23 0 b) affiliated companies 24 0 c) affiliates of parent companies 25 0 d) associated companies 26 0 3. Loans to a) parent companies 29 0 b) affiliated companies 30 1,287,883 c) affiliates of parent companies 31 0 d) associated companies 32 0 carried forward 204 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
I - Tangible assets and stocks 1. Furniture, office equipment, internal transport vehicles 83 2,618 2. Vehicles listed in public registers 84 1,122
3. Other prepayments and accrued income 98 30,088 99 67,805 208 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
IX - Profit or loss for the financial year 109 549,930
1. Provision for unearned premiums 112 380,979 2. Provision for claims outstanding 113 1,916,612 3. Provision for profit sharing and premium refunds 114 0 carried forward 13,974,345 210 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
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 3. 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 12,898,083 c) affiliates of parent companies 19 0 d) associated companies 20 0 e) other 21 0 22 12,898,083 2. Debt securities issued by a) parent companies 23 0 b) affiliated companies 24 650 c) affiliates of parent companies 25 0 d) associated companies 26 0 e) other 27 0 28 650 3. Loans to b) affiliated companies 30 375,000 c) affiliates of parent companies 31 0 d) associated companies 32 0 e) other 33 0 34 375,000 35 13,273,733 carried forward 3,282 216 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Previous year brought forward 1,270 carried forward 26,057,718 219 Parent Company Financial Statements
I - Debtors arising out of direct insurance operations a) for premiums - current year 71 19,584 3. Current accounts with insurance companies 75 0 4. Policyholders and third parties for recoveries 76 0 77 20,540
I - Tangible assets and stocks 1. Furniture, office equipment, internal transport vehicles 83 78 2. Vehicles listed in public registers 84 56
II - Tangible assets and stocks 1. Bank and postal deposits 88 80,091 2. Cheques and cash in hand 89 6 90 80,097
3. Other prepayments and accrued income 98 84,166 99 114,108 220 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
2. Unearned premium provision for supplementary coverage 119 31,850 3. Provision for claims outstanding 120 1,230,942 4. Provision for profit sharing and premium refunds 121 84,475
I - Provisions relating to contracts linked to investments funds and market index 125 3,265,804
Notes to the accounts - Attachment 3 Company Assicurazioni Generali S.p.A. Year 2017
Allocated investment return transferred to the non-life technical account … .................................................... - 5 137,629 45 137,629
Profit (loss) for the year ................................................................. 13 549,929 33 854,530 53 1,404,459 228 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Assets - Changes in intangible assets (item B) and changes in land and buildings (Item C1)
Assets - Variations in the year of investments in affiliated companies and other shareholdings: equities (item C.II.1), debt securities (item C.II.2) and loans (item C.II.3)
The item C.II.2 includes: of which convertible debt securities ......................................................................... 64 0 230 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
10 b NQ 2 Generali (Schweiz) Holding AG ADLISWIL Soodmattenstrasse, 10 - SVIZZERA CHF 11 b NQ 2 Generali Beteiligungs-GmbH AQUISGRANA Maria Theresia Allee 38 - GERMANIA EUR 12 b NQ 2 Generali Beteiligungsverwalt. VIENNA Landskrongasse 1-3 - AUSTRIA EUR 13 b NQ 1 Generali Brasil Seguros S.A. RIO DE JANEIRO Avenida Rio Branco 128 - BRASILE BRL 14 b NQ 2 Generali CEE Holding B.V. AMSTERDAM Diemerhof 42 - OLANDA EUR 15 b NQ 1 Generali China Life Insurance PECHINO B-12 Jianguomenwai Avenue, Chaoyang District - CINA REP.
44 b NQ 9 Welion S.c.a.r.l. TRIESTE Via Machiavelli, 4 - ITALIA EUR 45 d NQ 1 Assurances Maghrebia S.A. TUNISI Angle 54,Rue De Palestine 22,Rue Royaume D'Arabia - TUNISIA TND 46 d NQ 1 Assurances Maghrebia Vie S.A. TUNISI Angle 54,Rue De Palestine 22,Rue Royaume D'Arabia - TUNISIA TND
232 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Assets - Information regarding associated companies (*) N. Type Quoted or Activity Company name and registration place Currency ord. unquoted (**) (1) (2) (3)
1 b NQ 1 Aseguradora General S.A. GUATEMALA 10a. Calle 3-17, Zona 10 - GUATEMALA GTQ 2 b NQ 4 Assitimm S.r.l. TRIESTE Via Machiavelli, 4 - ITALIA EUR 3 b NQ 2 Caja de Ahorro y Seguro S.A. BUENOS AIRES Fitz Roy 957 - ARGENTINA ARS 4 b NQ 9 CMN Global Inc. THORNHILL - ONTARIO 150 Commerce Valley Drive West, 9th Floor - CANADA CAD 5 b NQ 9 Donatello Intermediazione Srl ROMA Piazza Venezia, 11 - ITALIA EUR 6 b NQ 2 Europ Assistance Holding S.A. PARIGI 2 rue Pillet-Will - FRANCIA EUR 7 b NQ 1 FATA Asigurari S.A. BUCAREST Lt. Av. Marcel Andreescu, no 30 - ROMANIA RON 8 b NQ 9 GBS S.c.p.A. TRIESTE Via Machiavelli, 4 - ITALIA EUR 9 b NQ 9 Genamerica Management Corp. NEW YORK 7 WTC, 250 Greenwich Street, 33rd Fl - STATI UNITI
Paid up capital Equity (***) Last year Share owned (5) Amount Number Gain or Loss (***) Direct Indirect Total 233 Parent Company Financial Statements
49 d NQ 2 NEIP II S.p.A. CONEGLIANO Via Vittorio Alfieri n. 01 - ITALIA EUR 50 d NQ 9 Servizi Tecnologici Avanzati BOLOGNA Via Paolo Nanni Costa, 30 - ITALIA EUR 51 e NQ 2 Emittenti Titoli S.p.A. MILANO Via Santa Maria Segreta, 6 - ITALIA EUR 52 e NQ 2 Fin. Priv. S.r.l. MILANO Via Filodrammatici, 8 - ITALIA EUR 53 e NQ 2 H2i S.p.A. ROMA Via Barberini 95 - ITALIA EUR 54 e NQ 9 Perils AG ZURIGO Marktgasse 3 - SVIZZERA CHF 55 e NQ 2 Perseo S.p.A. TORINO Via XX Settembre 31 - ITALIA EUR 56 e NQ 9 Protos S.p.A. ROMA Via Livenza, 3 - ITALIA EUR 57 e NQ 9 SOA Group S.p.A. ROMA Via Lovanio, 6 - ITALIA EUR 58 e NQ 8 Trieste Adriatic Maritime Srl TRIESTE Via Cassa di Risparmio 10 - ITALIA EUR 59 e NQ 2 Venice S.p.A. VICENZA Strada Statale Padana verso Verona, 6 - ITALIA EUR
(*) Devono essere elencate le imprese del gruppo e le altre imprese in cui si detiene una partecipazione direttamente, anche per il tramite di società fiduciaria o per interposta persona. (**) The order number must be greater than "0"
For sales Others Quantity Value cost value Quantity Value decreases 237 Parent Company Financial Statements
(1) It must be equal to what indicated in the Attachment 6 (3) Indicate: D for investments allocated to the non life business (item C.II.1) (2) Type V for investments allocated to the life business (item C.II.1) a = parent Companies V1 for investments allocated to the life business (item D.I) b = affiliated Companies V2 for investments allocated to the life business (item D.2) c = affiliated of parent Companies It must be given, however, the same order number to the d = associated Companies participation, although divided. e = other Companies
(4) Point out with (*) if valued with the equity method (only for Type b and d)
, d eb t s ec ur iti es a nd o th er fi xe din
S ha re s i n co m m on in ve st m en t f un ds
) l is te d go ve rm en ts b on ds
240 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
B re ak do w n on th e ba si s o f t he u til is at io n of o th er fi na nc ia l i nv es tm en ts
) u nl is te d go ve rn m en t b on ds
V ar ia tio n fo r t he y ea r o f o th er d ur ab le fi na nc ia l i nv es tm en ts
: e qu iti es a nd sh ar es , s ha re s i n co m 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, pa rti ci pa tio n in in ve st m en t p oo ls an d ot he r f in an ci al in ve st m en ts
th er fi na nc ia l in ve st m en t f un ds fix ed in co m e se cu rit ie s 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.6 242 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Assets - Variations for the year regarding loans and deposits with credit institutions (items C.III.4, 6)
N ot es o n th e ac co un ts -
I. La nd s a nd b ui ld in gs
Sh ar es in c om m on in ve st m en t f un ds 4, 4, 2, 3,
eb t s ec ur iti es a nd o th er fi xe din
La nd s a nd b ui ld in gs ..
C as h at b an k an d in h an d ...
D ep os its w ith c re di t i ns tit ut io ns .
ss et s r el at in g to c on tra ct s l in ke d to in ve st m en t f un ds a nd m ar ke t i nd ex (i te m
Sh ar es in c om m on in ve st m en t f un ds
O th er fi na nc ia l i nv es tm en ts : 1. E
Provision for claim settlement costs … ....................... 5 52,707 15 46,914 25 5,793 249 Parent Company Financial Statements
Liabilities - Changes in the components of the mathematical provision for the year (item C.II.1) and in the components of the provision for profit sharing and premium refunds (item C.II.4)
Provision for profit sharing and premium refunds .................. 6 84,475 16 99,294 26 −14,819 250 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
Mathematical reserve for pure premiums ............................... 1 6,390,145 11 6,933,683 21 −543,538
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 f or ri sk s a nd c ha rg es
) a nd c ha ng e in th e se ve ra nc e pa y pr ov is io ns (i te m
To ta l co m pa ni es pa re nt c om pa ni es co m pa ni es
D eb to rs a ris in g ou t o f re in su ra nc e op er at io ns
Pa rti ci pa tio n in in ve st m en t p oo ls .
O th er fi na nc ia l i nv es tm en ts ..
D ep os its w ith c ed in g co m pa ni es ..
B an k an d po sta l d ep os its .
D et ai ls o f a ss et s a nd li ab ili tie s r ef er rin g to g ro up c om pa ni es a nd o th er c om pa ni es in w hi ch a si gn ifi ca nt in te re st is h el d
D ep os its re ce iv ed fr om re in su re rs ..
Cr ed ito rs a ris in g ou t o f d ire ct in su ra nc e op er at io ns ..
Lo an s g ua ra nt ee d by m or tg ag es ...
Details of classes I, II, III, IV of "guarantees, commitments and other evidence accounts" Current year Previous year I. Guarantees issued: a) fidejussions and endorsements issued in the interest of parent companies, affiliated companies and affiliates of parent companies ................... 1 0 31 269,500 b) fidejussions and endorsements issued in the interest of associated …………… companies and other companies in which a significant interest is held ............... 2 0 32 0 c) fidejussions and endorsements issued in the interest of third parties ................... 3 0 33 0 d) other personal guarantees issued in the interest of parent companies, affiliated companies and affiliates of parent companies .................. 4 1,895,083 34 2,369,000 e) other personal guarantees issued in the interest of associated companies and other companies ........................................................ 5 0 35 0 f) other personal guarantees issued in the interest of third parties ........................... 6 0 36 0 g) guarantees secured by mortgages for obligations of parent companies, affiliated companies and affiliates of parent companies ..................................... 7 0 37 0 h) guarantees secured by mortgages for obligations of associated companies and companies in which a significant interest is held ........................ 8 0 38 0 i) guarantees secured by morgages for third parties obligations .............................. 9 0 39 0 l) guarantees issued for obligations of the Company ............................................... 10 45,315 40 47,578 m) assets deposited for accepted reinsurance operations ............................................................................................................ 11 118,458 41 131,806 Total ................................................................................................................................. 12 2,058,856 42 2,817,884 II. Guarantees received: ............................................................................................ a) from group companies, associated companies and other ..................................... 13 0 43 0 b) from third parties ................................................................................................. 14 549,871 44 376,396 Total ................................................................................................................................. 15 549,871 45 376,396 III. Guarantees issued by third parties in the interest of the Company: ...................... a) from group companies, associated companies and other .................................... 16 0 46 0 b) from third parties ................................................................................................ 17 90,475 47 97,958 Total ................................................................................................................................ 18 90,475 48 97,958 IV. Commitments: a) commitments for acquisitions with obligation to resale ....................................... 19 0 49 0 b) commitments for sales with obligation to buy back ............................................. 20 197,898 50 0 c) other commitments ............................................................................................. 21 2,889,024 51 3,156,189 Total ................................................................................................................................. 22 3,086,922 52 3,156,189
V. Assets relating to pension funds managed in the name and on behalf of third parties …………………………………………. ............... 23 0 53 0
B re ak do w n of d er iv at iv es a cc or di ng to ty pe o f c on tra ct s
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Life business Total Income from equities: Dividends and other income from shares and participations in group companies and other companies in which a significant interest is held 1 979,930 41 1,001,314 81 1,981,244 Dividends and other income from equities .................................................. 2 607 42 2,005 82 2,612 Total. ............................................................................................................................... 3 980,537 43 1,003,319 83 1,983,856 Income from land and buildings … ............................................................................. 4 4,944 44 0 84 4,944 Income from other investments: Income from debt securities of group companies and other companies in which a significant interest is held ................................ 5 0 45 30 85 30 Income from loans to group companies and ................................................. other companies in which a significant interest is held ................................ 6 62,146 46 17,473 86 79,619 Income from shares in common investment funds ....................................... 7 2,265 47 0 87 2,265 Income from debt securities and other fixed-income securities 8 18,240 48 61,981 88 80,221 Interests on loans ......................................................................................... 9 55 49 51 89 106 Income from participation in investment pools ............................................ 10 0 50 0 90 0 Interests on deposits with credit institutions ................................................ 11 814 51 673 91 1,487 Incom from other financial investments ...................................................... 12 4,906 52 0 92 4,906 Interests on deposits with ceding companies ............................................... 13 2,662 53 240,065 93 242,727 Total … ........................................................................................................................... 14 91,088 54 320,273 94 411,361 Value re-adjustments on other investments: Land and buildings ....................................................................................... 15 0 55 0 95 0 Shares and participations in group companies and other companies ... 16 0 56 0 96 0 Debt securities issued by affiliated companies and other companies in which a significant interest is held ......................................... 17 0 57 16 97 16 Other equities ............................................................................................... 18 0 58 114 98 114 Other debt securities .................................................................................... 19 1,172 59 4,820 99 5,992 Other financial investments ......................................................................... 20 5,733 60 0 100 5,733 Total … ........................................................................................................................... 21 6,905 61 4,950 101 11,855 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 19,610 63 0 103 19,610 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 ................................................................................ 25 966 65 0 105 966 Gains on other debt securities ....................................................................... 26 2,181 66 10,865 106 13,046 Gains on other financial investments ............................................................ 27 14,112 67 0 107 14,112 Total ... ............................................................................................................................ 28 36,869 68 10,865 108 47,734 GRAND TOTAL … ....................................................................................................... 29 1,120,343 69 1,339,407 109 2,459,750
Amounts Income arising from: .................................................................................................................................................................... Land and buildings .................................................................................................................................. 1 0 .................................................................................................................................................................... Investments in group companies and other companies in which a significant interest is held ................ 2 67,088 .................................................................................................................................................................... Shares in common investment funds ........................................................................................................ 3 1 .................................................................................................................................................................... Other financial investments ..................................................................................................................... 4 1,069 .......................................................................................................... - of which income from debt securities ................... 1,061 .................................................................................................................................................................... Other ....................................................................................................................................................... 6 −54 Total ........................................................................................................................................................................... 7 68,104 Gains on the realisation of investments: .................................................................................................................................................................... Surplus on the sale of land and buildings ................................................................................................ 8 0 .................................................................................................................................................................... Gains on invest. in group companies and other companies in which a significant interest is held ........... 9 0 .................................................................................................................................................................... Gains on common investment funds .......................................................................................................
.................................................................................................................................................................... Gains on other financial investments ....................................................................................................... 11 106 .......................................................................................................... - of which debt securities ........................................ 99 .................................................................................................................................................................... Other income .......................................................................................................................................... 13 0 Total ........................................................................................................................................................................... 14 2,469 Unrealised gains ........................................................................................................................................................ 15 23,101 GRAND TOTAL ...................................................................................................................................................... 16 93,674
Amounts Charges arising from: ................................................................................................................. Land and buildings ................................................................................................................... 1 0 ................................................................................................................. Investments in group comp. and other companies in which a significant interest is held ........ 2 0 ................................................................................................................. Shares in common investment funds ......................................................................................... 3 0 ................................................................................................................. Other financial investments ...................................................................................................... 4 7 ................................................................................................................. Other activities .......................................................................................................................... 5 67 Total ........................................................................................................................................................... 6 74 Losses on the realisation of investments: ................................................................................................................. Losses on the sale of land and buildings .................................................................................. 7 0
................................................................................................................. Losses on investments in group companies and other companies in which a significant interest is held
................................................................................................................. Losses on common investment funds ....................................................................................... 9 15 ................................................................................................................. Losses on other financial investments ....................................................................................... 10 20 ................................................................................................................. Other losses............................................................................................................................... 11 1 Total ........................................................................................................................................................... 12 36 Unrealised losses ......................................................................................................................................... 13 3,082 GRAND TOTAL ....................................................................................................................................... 14 3,192
Charges arising from: ................................................................................................................. Investments in group comp. and other companies in which a significant interest is held ........ 21 0 ................................................................................................................. Other financial investments ..................................................................................................... 22 0 ................................................................................................................. Other activities .......................................................................................................................... 23 0 Total ........................................................................................................................................................... 24 0 Losses on the realisation of investments: ................................................................................................................. Losses on investments in group companies and other companies in which a significant interest is held
Change in the provision for unearned premiums (+ o -) ................................................................ - 2 −66 2 4,311 Claims incurred .............................................................................................................................. - 3 2,503 3 15,926 Change in other technical provisions (+ o -) .................................................................................. - 4 0 4 0 Balance of other technical income and charges (+ o -) .................................................................. + 5 0 5 −106 Operating expenses ........................................................................................................................ - 6 188 6 5,733
Balance on the technical account for direct business (+ o -) ........................ A 7 558 7 4,182 Balance of reinsurance ceded (+ o -) ……………………………………….. B 8 −13 8 −5,529 Net balance of accepted business (+ o -) …………………………………… C 9 6,832 9 −4,818
Change in the equalisation provision (+ o -) ................................................................... D 10 0 10 0 Allocated investment return transf. from the non-technical account ............................... E 11 16,427 11 22
Net balance of accepted business (+ o -) ………………...... (A + B + C - D + E) 12 13,586 12 −2,036 Lob 07 Lob 08
Net balance of accepted business (+ o -) ………………….. (A + B + C - D + E) 12 2,140 12 2,697
Notes on the accounts - Attachment 25 Year 2017 by branch - Non-life business -Italian portfolio Lob 03 Lob 04 Lob 05 Lob 06
ha ng e in o th er te ch ni ca l p ro vi si on s (
T ec hn ic al b al an ce (+ o -)
,0 264 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
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Notes on the accounts - Attachment 29 Company Assicurazioni Generali S.p.A. Year 2017
Change in the provision for unearned premiums (+ o -) .................................................................... - 2 285
Change in other technical provisions (+ o -) ...................................................................................... - 4 0
Balance of other technical income and charges (+ o -) ...................................................................... + 5 526
Balance on the technical account for direct business (+ o -) ....................................................... A 7 28,483
Net balance of accepted business (+ o -) ....................................................................................... C 9 89,156
Allocated investment return transferred from the non-technical account .................................... E 11 93,117
Change in mathematical provision and in other technical provisions(+ o -) ............................... ...... - 3 62,142
Balance of other technical income and charges (+ o -) ............................................................... ...... + 4 13,771
Balance of direct business gross of reinsurance(+ o -) ................................................................ A ......
Net balance of accepted business (+ o -) ....................................................................................... C ......
Balance on the technical account (+ o -) ………………………………………...…(A+B+C-D+E) 10 147,865
(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 Accounts 267 Parent Company Financial Statements
Pr of its o n re al isa tio n of in ve st m en ts (*
2, 4, 8, 2, 5, 268 Assicurazioni Generali Management Report and Parent Company Financial Statements 2017
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Totale ......................................................................................................... 9 49,762 39 27,887 69 77,649 Grand total ...................................................................................... ................. 10 249,793 40 34,609 70 284,402 Costs of non subordinate workforce: Italian portfolio ............................................................................................ 11 4,232 41 199 71 4,431 Foreign portfolio ......................................................................................... 12 898 42 9 72 907 Total ............................................................................................................... 13 5,130 43 208 73 5,338 Total cost of workforce ................................................................................. 14 254,923 44 34,817 74 289,740 II: Details of items entered Non-life business Life business Total
Investments charges .................................................................................... 15 73 45 10 75 83 Costs of claims ............................................................................................ 16 8,249 46 3,273 76 11,522
Other acuisition costs .................................................................................. 17 17,392 47 2,693 77 20,085 Other administration costs .......................................................................... 18 28,014 48 23,986 78 52,000 Administrative charges and charges for third parties ................................... 19 201,195 49 4,855 79 206,050 Holding costs .............................................................................................. 20 0 50 0 80 0
Attestation of the Financial Statements persuant to the provision of the article 154-bis of Legislative Decree 58 February, 1998 and Consob regulations 11971 of May 14,1999
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 no. 11971 of 14 may 1999 and following amendments and integrations 1. The undersigned, Philippe Donnet, in his capacity as Managing Director and Group CEO, and Luigi Lubelli, 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 2017.
3. The undersigned further confirm that: 3.1 the financial statements as at 31 December 2017: a) are prepared in compliance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002, with the provisions of the Italian Civil Code, of Legislative Decree No. 173 of 26 May 1997, of Legislative Decree No. 209 of 7 September 2005 and with applicable provisions, regulations and circular letters issued by ISVAP (now IVASS); b) correspond to the related books and accounting records; c) provide a true and fair representation of the financial position of the issuer; 3.2 the management report contains a reliable analysis of the business outlook and management result, the financial position of the issuer and a description of the main risks and uncertain situations to which it is exposed. .
Ladies and Gentlemen, in compliance with s. 153 of Legislative Decree no. 58 of 24 February 1998 (CFBA) and the indications contained in Consob notice no. 1025564 of 6 April 2001, as amended, and having regard to the code of conduct recommended by the National Accountants’ and Bookkeepers’ Council, the Board of Statutory Auditors of Assicurazioni Generali S.p.A. reports on the supervisory activities conducted during the 2017 financial year.
The Board of Statutory Auditors (BSA) performed the activities falling within its remit during the 2017 financial year by holding 24 meetings, with an average duration of approximately two hours. The BSA also: – attended the 14 meetings of the Board of Directors (BoD); – attended the 13 meetings of the Risk and Control Committee (RCC); – attended the 3 meetings of the Related-Party Transactions Committee (RPTC); – attended, in the person of its Chairman and/or another statutory auditor, the 8 meetings of the Appointments and Remuneration Committee (ARC), with specific reference to remuneration matters; – attended, in the person of its Chairman and/or another statutory auditor, the 14 meetings of the Investments and Strategic Operations Committee (ISOC); – attended, in the person of its Chairman and/or another statutory auditor, the 8 meetings of the Corporate Governance and Social and Environmental Sustainability Committee (GSC).
Statutory Auditors’ Report to the General Meeting of Assicurazioni Generali S.p.A. called to approve the Financial Statements as at 31 December 2017 pursuant to s. 153 of Legislative Decree 58/1998 and the managers of the Company’s functions affected by the supervisory activities of the BSA at various times; – met members of the Surveillance Body instituted pursuant to Legislative Decree no. 231/2001 for a useful exchange of information; – pursuant to ss. 151.1 and 151.2 of the CFBA, held meetings and exchanged information with the Board of statutory auditors or supervisory bodies of the main subsidiaries (Generali Italia S.p.A., Generali Investment Europe S.p.A., Banca Generali S.p.A., Generali France Assurances, Generali Deutschland Holding AG, Alleanza Assicurazioni S.p.A., Genertel S.p.A., GenertelLife S.p.A. and Europe Assistance Italia S.p.A.); – in the course of the statutory dealings between the BSA and the auditors, held periodic meetings with the external auditors EY S.p.A., at which data and information relevant to the performance of their respective duties were exchanged.
In this context, the BSA 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 assets position conducted by the Company, including through directly or indirectly controlled companies. On the basis of the information provided, the BSA 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, rash or in conflict with the resolutions passed by the General Meeting, or such as to prejudice the integrity of the Company ’s assets. In particular, the BSA was informed about transactions
in which Directors declared an interest, 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.
– On 25 January 2017 the Board of Directors resolved to terminate the contract of employment of General Manager and Group CFO Alberto Minali, and having heard the favourable opinion of the Board of Statutory Auditors (pursuant to s. 154-bis.1 of the CFBA and art. 40.2 of the Company’s Articles of Association), appointed Luigi Lubelli as Group Chief Financial Officer, Manager in Charge of Preparation of the Company’s Financial Reports, and member of the Group Management Committee. All the first-level company functions that had reported to the General Manager were required to report directly to Group CEO Philippe Donnet.
– Also on 25 January 2017, the Board of Directors resolved to extend the responsibilities of the Investment Committee to include operations with a strategic value, and therefore changed its name to the Investments and Strategic Operations Committee.
– On 8 February 2017 Generali Finance B.V. exercised the option of early repayment of a perpetual subordinated bond amounting to € 869 million.
– On 20 April 2017 Assicurazioni Generali S.p.A. increased the share capital by way of implementation of the Long-Term Incentive Plan approved by the General Meeting on 30 April 2014. Following the said increase, which involved the issue of 1,924,724 shares, the fully subscribed and paid-up share capital of Assicurazioni Generali S.p.A. amounts to € 1,561,808,262.
– On 18 December 2017 an agreement was signed for the sale to Life Company Consolidation Group of the entire holding in Generali PanEurope for an initial consideration of € 230 million, subject to adjustment on closing of the transaction. The transaction is conditional on (inter alia) the approval of the competent authorities, and is expected to be completed in the first half of 2018.
The Board of Statutory Auditors also met the Manager in charge of Preparation of the Company’s Financial Reports and the Company’s other relevant internal functions, together with External Auditors EY S.p.A., 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, and the corresponding disclosure. As stated in the 2017 Integrated Annual Report and Consolidated Financial Statements, the Company, on the basis of its evaluations including discussions with the External Auditors, 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 risk provisions associated with BTG’s said claim for damages were not fulfilled.
The Company has introduced “Related-Party Transaction Procedures” (“RPT Procedures”), adopted in compliance with Consob Regulation 17221/2010, as amended, and s. 2391-bis of the Civil Code, which are also applicable to transactions performed by subsidiaries. As stated in the Report of the Board of Statutory Auditors pursuant to s. 153 of Legislative Decree 58/1998 issued on 31 March 2017, the Related-Party Transactions Committee, on request (inter alia) by the Board of Statutory Auditors, commissioned an external adviser to analyse some questions regarding relations between the Related-Party Transactions Committee and the other Board Committees; this activity indicated the advisability of a refinement to the RPT Procedures and the Regulation of the Board of Directors and the Board Committees to ensure better interaction between the various Board committees and a complete flow of information to the Related-Party Transactions Committee. The new text of the RPT Procedures, incorporating the refinements suggested by the external adviser, was approved by the Board of Directors on 15 February 2017, after obtaining a favourable opinion from the Related-Party Transactions Committee. On the same date, the Board of Directors also approved the corresponding amendments to the Regulation of the Board of Directors and the Board Committees.
In view of the factors set out above, the Board of Statutory Auditors concludes that the Company’s RPT Proce-
With regard to intercompany transactions during the year, on 26 October 2016 IVASS issued the new Regulation no. 30/2016 on intercompany operations and risk concentrations, which replaces the previous Regulation no. 25/2008. The new Regulation no. 30/2016, which significantly amended the provisions governing intercompany operations, came into force on 1 December 2016. The Group Compliance Function supported the preparation of the new Group policy pursuant to the said IVASS Regulation 30/2016, designed to provide the Generali Group’s internal control and risk management system with processes and procedures for the identification, measurement, monitoring, management and reporting of intercompany transactions, in compliance with the said regulatory provisions. Finally, the Company ’s Board of Directors, at the meeting held on 15 March 2017, approved the new Policy on Intra-Group Transactions. On the basis of the supervisory activities of the BSA, intercompany transactions were conducted during the year in compliance with the said policies approved by the Board of Directors. The main intercompany activities, with payment at market prices or at cost, were conducted by means of reinsurance and coinsurance agreements, administration and management of securities and real estate, claims management and settlement, IT and administrative services, loans and guarantees, and personnel loans. The said services allowed the rationalisation of the operational functions and a better level of services. The BSA also concluded that the information provided by the Board of Directors in the 2017 Annual Financial Statements of Assicurazioni Generali relating to intercompany and related-party transactions was adequate.
– with effect from 1 June 2017, the Board resolved to appoint Jean-Laurent Granier as new Country Manager for France, and he became a member of the Group Management Committee; – with effect from 1 July 2017, Bruno Scaroni was appointed Group Strategy & Business Accelerator Director; – with effect from 1 October 2017 the Board of Directors, having heard the favourable opinion of the Board of Statutory Auditors, appointed Nora Gürtler as Group Audit Manager; – on 18 October 2017 the Board of Directors updated the composition of the Group Management Committee, resolving to appoint Group Chief HR & Organisation Officer Monica Alessandra Possa and Group Chief Marketing & Customer Officer Isabelle Marguerite Conner as GMC members; – on 13 December 2017 the Board of Directors instituted, with effect from 1 January 2018, the new role of Group Chief Operating & Insurance Officer, appointing to that position Jaime Anchustegui, who became a member of the Group Management Committee from that date.
The Board of Statutory Auditors, by means of the activity described in paragraph 1 above, monitored the adequacy of the overall organisational structure of the Company and the Group and the adequacy of the instructions issued by the Company to its subsidiaries pursuant to s. 114.2 of the CFBA, to ensure rapid acquisition of the information required to meet the statutory communication obligations. The BSA also established, pursuant to s. 15 of the Market Regulation of 28 December 2017, that the Company ’s organisation and the procedures adopted enable the
The company functions operate in accordance with an organisational model based on three levels of control: – the managers of the operational areas (risk owners); – the functions of the second level of control, in particular Group Risk Management, Group Compliance and the Group Actuarial Function; – Group Audit. The Group CEO also holds the position of Internal Control and Risk Management Director.
In the development of the Internal Control and Risk Management System (ICRMS), the Company performs its activities 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 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. In the ambit of credit risk measurement a system of rules and procedures was implemented at Group level, designed to guarantee monitoring in terms of internal ratings of creditworthiness, thus reducing the sole use of external ratings.
Moreover, to maintain compliance with Solvency II, the Company has updated and/or introduced internal Group policies having the following objectives: – formalising the ICRMS by establishing the roles and responsibilities of the Control Functions; – establishing the processes associated with the management of specific risks (investment, underwriting and operational risks) and the main business processes (including capital management, the asset liability management (ALM) process and the product approval process).
As regards the administrative accounting system and the financial reporting process, the Board of Statutory Auditors monitored (inter alia) the Company’s activities designed to assess their adequacy continuously. This objective was pursued by the Company by adopting a “financial reporting model” consisting of a set of principles, rules and procedures designed to guarantee an adequate administrative and accounting system. The Corporate Governance and Share Ownership Report describes the main characteristics of the model, as defined by the Manager in Charge of Preparation of the Company’s Financial Reports, who is supported by the Financial Reporting Risk structure. Data and information relevant to the performance of their respective tasks pursuant to s. 150 of the CFBA were exchanged with the managers of the External Auditors, and no noteworthy aspects emerged. In particular, no significant deficiencies in the internal control system relating to the financial reporting process emerged from the additional report issued by EY S.p.A. pursuant to art. 11 of EU Regulation 537/2014. That report was discussed and analysed during information exchanges between the Board of Statutory Auditors and the External Auditors. From September 2016, consistently with the development of the applicable legislative situation, the Company decided to develop its quarterly financial reporting, as from the third quarter of 2016, by producing a more concise representation of its business, focusing on relevant information.
Company and its subsidiaries “to the extent required to ensure comprehension of the group’s business, trend and results, and the impact produced by it”. As specified in s. 3.7 of Legislative Decree no. 254/2016, the Board of Statutory Auditors, in the performance of its statutory functions, monitored compliance with the legislation governing the preparation and publication of the CNFS. In particular, the BSA monitored the adequacy of the organisational structures adopted by the Group in accordance with the strategic objectives pursued by it in the socioenvironmental field.
The BSA also monitored the adequacy of the processes and structures which, in the Group, control production, reporting, measurement and representation of the non-financial information and results.
For this purpose, the BSA examined the documentation made available by the Company and met, in various sessions, the Function responsible for drafting the CNFS identified in the ambit of the Group CFO Function, and the representatives of the External Auditors responsible for certification (EY), who were also instructed to issue a specific report containing the certification of conformity required by s. 3.10 of Legislative Decree no. 254/2016. In continuity with the Group’s well-established methodological decisions regarding integrated reporting, the Board of Directors prepared the CNFS, approved by the Board of Directors on 14 March 2018, in accordance with the Guiding Principles and Content Elements of the International <IR> Framework, approved by the International Integrated Reporting Council (IIRC). The standard adopted for reporting on the material subjects identified by the Group is represented by the GRI Sustainability Reporting Standard, published in 2016 by GRI Global Reporting Initiative (GRI – Referenced claim) with reference to selected GRI Standards and indicators of GRI G4 Financial Services Sector Disclosures.
Management Report information concerning imminent developments and transactions under negotiation allowed by s. 3.8 of Legislative Decree 254/2016.
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. With reference to subjects connected with establishing that directors meet the independence requirements, the activities commenced in 2015, following requests by the BSA for analysis and action, as illustrated in the Board of Statutory Auditors report issued pursuant to s. 153 of the Legislative Decree 58/1998 relating to the two preceding financial years, continued in the 2017 financial year. In particular, in order to provide the Board of Directors and the GSC with the most comprehensive possible information about the independence assessments, the additional provisions introduced into the Regulation of the Board of Directors and the Board Committees for the conduct and formalisation of the assessment process were finalised and implemented, as from the assessment conducted in May 2016; specific internal operational guidelines requested by the BSA were then concretely implemented, as from the assessment conducted in June 2017, with a view to ensuring, by means of formal processes for the collection of the relevant information from the various company functions involved, that the said information is made available to the bodies responsible for the independence assessments. In that context, and also in the light of the new policies and operating guidelines, 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 CFBA.
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 ISVAP Regulation no. 39 of 9 June 2011.
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 Assicurazioni Generali S.p.A. and the consolidated financial statements of the Group; during the 2017 financial year the said External Auditors checked that the Company’s accounts were properly kept and transactions properly recorded in the books of account. On 27 March 2018, the External Auditors issued the reports required by ss. 14 and 16 of Legislative Decree 39/2010 relating to the financial statements and the consolidated financial statements of the Group as at 31 December 2017. 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 Preparation of the Company ’s Financial Reports and the Managing Director and Group CEO issued the declarations and certifications required by s. 154-bis of the CFBA with reference to the financial statements and the consolidated financial statements of Assicurazioni Generali S.p.A. as at 31 December 2017.
The Directors’ Report annexed to the draft financial statements of the parent company illustrates the business trend, indicating current and prospective developments, and the Group’s development and reorganisation process. The Board of Statutory Auditors also declares that it was consulted, together with the External Auditors, by the Risk and Control Committee in the course of the evaluations falling within that Committee’s remit, together with the Manager in Charge of Preparation of the Company’s Financial Reports, regarding the correct use of the accounting standards and the uniformity of their use for the purpose of preparing the consolidated financial statements.
On 27 March 2018, EY S.p.A. issued its additional report pursuant to art. 11 of EU Regulation 537/2014 to the Board of Statutory Auditors, in its capacity as Internal Control and Audit Committee. In compliance with the terms of s. 19.1.a of Legislative Decree 39/2010, the BSA sent that report promptly to the Board of Directors, without formulating any observations.
The BSA also held meetings with the managers of External Auditors EY S.p.A. pursuant (inter alia) to s. 150.3 of the CFBA, during which useful exchanges of data and information relevant to the performance of their respective tasks took place, and no noteworthy facts or situations emerged. In that context, in the ambit of the supervision referred to in s. 19 of Legislative Decree 39/2010, the Board of Statutory Auditors also obtained information from EY S.p.A. regarding the planning and conduct of its auditing activities. Pursuant to s. 19.1.e of Legislative Decree 39/2010, the Board of Statutory Auditors, again in its capacity as Internal Control and Audit Committee, checked and monitored the independence of the External Auditors. In the performance of those checks, no situations were found that prejudiced the independence of the External Auditors 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. 6.2.a of EU Regulation 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 for the approval of the commissioning from the External Auditors and a company belonging to their network of permitted services other than audits (“Guideline for the assignment of non-audit services to auditors”).
Nora Gürtler, appointed by the Board of Directors on 6 July 2017 (with effect from 1 October 2017) to replace Anne Jaeger, who resigned on 31 July 2017. On 1 August 2017, the BSA also expressed a favourable opinion of the proposal that the Functions which reported directly to Anne Jaeger should be coordinated on an interim basis by the Chairman of the Board of Directors, assisted by the Chair of the Risk and Control Committee, until the date on which the new Group Audit Manager, Nora Gürtler, takes office. In the interim, the BSA constantly monitored the correct operation and continued independence of the Group Audit Function by means of periodic contacts with its main representatives.
In March 2017, the BSA expressed a favourable opinion pursuant to s. 2389 of the Civil Code of the proposed allocation of newly issued shares to the Managing Director (Group CEO) in the ambit of the resolution to increase the share capital for the purposes of the LTI Plan 2014, and a favourable opinion of the adjustment process relating to the 2016 incentive plans for the Group CEO. Again with reference to the Group CEO’s remuneration, in July 2017 the Board of Statutory Auditors, expressed a favourable opinion of the Group CEO’s remuneration taking the form of participation in the LTI Plan 2017. During the 2017 financial year the BSA also regularly commented on the Half-Year Reports on complaints prepared by 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.
11. Complaints pursuant to s. 2408 of the Civil Code. Omissions, reprehensible actions or irregularities found (points 5, 6 and 18 of Consob Notice no. 1025564/01
The Board of Statutory Auditors received two communications pursuant to s. 2408 of the Civil Code during the 2017 financial year.
On 7 May 2017, shareholder Marco Bava sent the Company ’s Board of Statutory Auditors, with a copy for information to CONSOB, a letter relating to news reported in the press about the alleged involvement of BSI, a subsidiary of the Generali Group until 15 September 2015, in the affair involving the Malaysian fund 1MDB, a former customer of the bank, in 2015. The shareholder referred to audits conducted in October 2016 by the Bank of Italy at the Italian subsidiary of BSI, during which breaches of the anti-money-laundering legislation are said to have emerged, and asked the Company’s Board of Statutory Auditors to establish whether the alleged irregularities found by the Bank of Italy took place while BSI was controlled by Assicurazioni Generali.
Management Report year, as in earlier years, the BSA regularly monitored the implementation and application of suitable controls and actions against that risk at Group level, and received regular reports on the subject from the appropriate company structures. For a more detailed illustration of the initiatives undertaken in this respect, see para. 5.1 above, and the corresponding paragraphs of the similar reports for the 2015 and 2016 financial years.
No complaints pursuant to s. 2408 of the Civil Code were received in the first few months of the 2018 financial year. No reprehensible actions, omissions or irregularities requiring reports to the Regulators emerged from the supervisory activities performed.
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