2014 Generali Full Year Results
Transcript of 2014 Generali Full Year Results
GENERALI GROUP 2014 Results The power of Discipline, Simplicity and Focus
Please note that prior year’s figures have been restated throughout the whole presentation to reflect the new perimeter of the Group.
Net income, Shareholders’ Equity, Solvency I, Life Value KPIs, Embedded Value, Economic Solvency are not adjusted for disposed entities.
The like for like change of written premiums, life net inflows, APE and NBV is on equivalent terms (on equivalent exchange rates and consolidation area).
© Generali
March 12, 2014 Results 2014
Agenda
I. Business Overview Page 3 Mario Greco – Group CEO
II. 2014 Group Financials Page 12 Alberto Minali – Group CFO
Backup Page 37
2
© Generali
March 12, 2014 Results 2014
Agenda
I. Business Overview
3
Mario Greco – Group CEO
© Generali
March 12, 2014 Results 2014
Key messages
CEO – Business Overview 4
Financial turnaround achieved with key solvency and
profitability targets delivered one year ahead of schedule
Excellent operating results in 2014 in both life and P&C.
Core markets performing well.
Our discipline, simplicity and focus gives us confidence in
the future, driving a +33% increase in dividend to Euro 0.60
per share
Completion of financial turnaround enables us to close
this period of internal focus: next phase of our development
to be presented in May
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March 12, 2014 Results 2014
We delivered against our 2013-15 financial priorities
CEO – Business Overview 5
Operating RoE (%)
Net profit (Euro bn, Continuing operations before mins.)
Improve
profitability
Operating RoE exceeded the
target level of 13% one year
ahead of plan
Very strong performances from
both Life and P&C contributed to
an early achievement of target
Net-tax profit from continuing
operations rose +22%
Our focus on core insurance
business delivering results in
profit growth
Net profit excluding identified
extraordinary one offs(1) amounts
to Euro 2.1 bn
9.6 10.9 11.7
13.2
2011 2012 2013 2014
0.5
-0.1
1.4 1.7
2011 2012 2013 2014
(1) Ingosstrakh impairment, Liability Management , Poland, discontinued operations
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March 12, 2014 Results 2014
We delivered against our 2013-15 financial priorities
CEO – Business Overview
6
Solvency I Ratio
(%)
Interest cover ratio
(x)
Restore
solvency
Pro-forma Solvency I exceeded
160% target more than one year
ahead of plan
Much optimisation work still to be
done on Solvency II preparations,
but applying full effort of discipline
and focus to this task
Reduce
Leverage
Interest cover improved to 5.3x,
due to profitability improvements
and debt reduction
Debt leverage ratio improved
1.1%pts. to 38.5%
(1)
(1) Pro-forma for agreed BSI disposal
117
145 141 164
2011 2012 2013 2014
4.0 3.6
4.2
5.3
2011 2012 2013 2014
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March 12, 2014 Results 2014
Operating performance highlights
CEO – Business Overview
7
Italy Operating profit
Life +31%
P&C +21%
Integration program ahead of initial plan
Outstanding results despite restructuring focus
Combined ratio further improved by 3.2%pts to
89.2% in P&C;
Very strong life net inflows, almost triple the level of
the previous year, with improving mix
Germany Operating profit
Life +11%
P&C +25%
Excellent performance in P&C, with combined ratio
3.1%pts lower at 92.6%, and volumes up 3.3%
Life operating result has outperformed
expectations, despite the very challenging interest
rate environment
New CEO brings extensive experience from across
our group to help accelerate the transformation of
our German business
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March 12, 2014 Results 2014
Operating performance highlights
CEO – Business Overview
8
France Operating profit
Life +6%
P&C n/m
Leading the way in fostering a more client centric
model and improved segmentation
Life business returning to growth – net flows
returned to positive territory in 2014
P&C result still impacted by portfolio pruning and
restructuring; Improved results expected in 2015
CEE Operating profit
Life -16%
P&C +1%
Final tranche acquired January 2015 – now at
100% ownership
We continue to reap the benefits of our strong
regional position in P&C – Combined ratio excellent
once again at 87.7%
Life result impacted by one-off adjustment for
surrender fees in Poland
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March 12, 2014 Results 2014
Costs development
CEO – Business overview 9
Group operating expense development, relative to 2012 baseline (OpEx view) (Euro bn)
Gross savings reached Euro 501 m at FY2014 (in line with forecasts, and on track to achieve Euro
750 m planned by FY15)
Net costs show 0.9% increase vs. 2012 baseline, with savings in mature markets offsetting
investments in growth and competencies
5.0
5.2
5.4
5.6
5.8
6.0
6.2
6.4
Cost baseFY 2012
Mature markets Growth markets Headoffice
Cost baseFY 2014
+0.9%
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March 12, 2014 Results 2014
Dividend increased +33%
CEO – Business Overview
10
Dividend per share
(Euro)
Strong operational performance reflected
in increasing dividend
Euro 0.60 per share proposed in respect of
2014 (2013: Euro 0.45)
Proposed dividend equates to a payout
ratio of 56% (45% excluding identified one
off extraordinary items(1)) 0.20 0.20
0.45
0.60
2011 2012 2013 2014
(1) Ingosstrakh impairment, Liability Management , Poland, discontinued operations
© Generali
March 12, 2014 Results 2014
Conclusion and looking ahead
We bring to a close a period of internal transformation. We will apply the same discipline, simplicity and focus as we define a new strategic vision for the future Generali
CEO – Business Overview
We have instilled the principles of Discipline, Simplicity and Focus within the organisation
We will turn our attention to applying this approach outside: to business, markets and
products
We will leverage a distinctive brand positioning and a consistent product and service
proposition to nurture, retain and grow our client base
We will instil a culture of excellence, efficiency and innovation across our group; and
We will consequently grow and deliver sustainable and progressive shareholder
remuneration.
11
We have created a strong base to build on for future growth and profitability
© Generali
March 12, 2014 Results 2014
Agenda
II. 2014 Group Financials
12
Alberto Minali – Group CFO
Profit & Loss and Balance Sheet Page 13
Business review Page 24
© Generali
March 12, 2014 Results 2014
Operating Result: Strong positive development (+10.8%) thanks to both Life and P&C business
Operating RoE: Up 150bp; Exceeded target of 13% for the first time
Net Result: Increasing (+21.6%) excluding the one-off effects from discontinued operations, thanks to
the operating performance of the period, lower non-operating items and lower minority interest
Solvency I: Significant improvement of Solvency capital position thanks to successful placement of
subordinated bond and financial market development, despite higher dividend and buy-out of GPH.
164% pro-forma for disposal of BSI.
Key 2014 financials at a glance
CFO – Profit & Loss 13
FY13 FY14 LFL D 4Q13 4Q14 LFL D
Operating result (Euro m) 4,071 4,508 +10.8% 832 840 +1.0%
Operating RoE 11.7% 13.2% +1.5%pts. 2.2% 2.3% +0.1%pts.
Net result (Euro m) 1,915 1,670 -12.8% 324 81 -74.8%
Net result from continuing oper. (Euro m) 1,429 1,739 +21.6% 1 143 n.m.
EPS (Euro) 1.24 1.07 -13.2% 0.21 0.05 -75.0%
Net operating EPS (Euro) 1.31 1.52 +16.0% 0.25 0.27 +7.5%
Shareholders’ equity 19,778 23,204 +17.3%
Solvency I 141% 156% +15%pts.
© Generali
March 12, 2014 Results 2014
(33)
4,071
392
211
(133)
4,508
FY13 Life P&C Holding & Otherbusinesses
Cons. Adj FY14
Operating result by segment
CFO – Profit & Loss
14
+10.8%
(Euro m)
FY 14 2,978 1,831 -5 -295
FY 13 2,585 1,619 128 -262
D +15.2% +13.1% n.m. +12.8%
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March 12, 2014 Results 2014
New segment reporting
CFO – Profit & Loss 15
(Euro m)
2013 as
reported
last year
Four steps to get from operating result published last year, to new segments
Step 1: Adjust for disposals, i.e. take out BSI and Argentina which are now in discontinued operations
Step 2: Add together the old "Financial" and "Holding" segments, into one new one, "Holding and Other“
Step 3: Some entities have been moved out of the Life and P&C segments, into the "Holding and Other" category
(e.g. pure holding companies, intermediate service companies, etc. are moved into Holding & Other).
Step 3 shows the relevant adjustments.
Step 4: We amend intercompany consolidation rules. In particular: Interest income and dividends earned by Life, P&C
and Financial operating entities are presented in the relative segment operating result, and eliminated in the
consolidation adjustments (if the transaction involves companies from different segments and countries)
-182 Cons
-354 Hold
483 FIN
2,645 LH
1,616 P&C
4,207 Total
Adjustments
for disposals
(BSI, Argentina)
-1
5
-96
-50
0
-142
2013 current
perimeter,
old segments
-183
-349
387
2,595
1,616
4,065
Step 1
H&O
2013 current pe-
rimeter, Financial
& Holding merged
-183
38
2,595
1,616
4,065
Step 2
Differences
due to scope (1)
0
90
-10
-76
5
Step 3
Differences due
to IC consoli-
dation (2)
-79
0
0
79
0
Step 4
New
-262
128
2,585
1,619
4,071
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March 12, 2014 Results 2014
From operating result to net profit
CFO – Profit & Loss
16
4,508
(203)
(819)
(441)
(1,124) (69) (182)
1,670
Operating
Result
Non Oper.
Investment
Income
Non Oper.
Holding
Expenses
Net Other
Non Oper.
Expenses
Taxes Disc.
Operations
Minorities Net
Result
Including: -€ 741 m: Interest costs
Including: -€ 182 m: Restructuring costs
-€ 139 m: VOBA amortisation
FY 14 4,508 (203) (819) (441) (1,124) (69) (182) 1,670
FY 13 4,071 19 (802) (795) (835) 485 (227) 1,915
D +10.8% n.m. +2.1% -44.5% +34.5% n.m. -19.8% -12.8%
(Euro m) Including: -€ 79 m: Liability Management
-€ 249 m: Ingosstrakh impairment
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March 12, 2014 Results 2014
2014 Group Free Cash Flow
Focus on 2014 cash generation by country
CFO – Cash Flow 17
(Euro bn) Gross expected
free surplus
Remitted cash
Holding & int.
expenses
Net free cash flow
before dividend
Gross Free Surplus in line with 2013
results despite high new business
volumes
Significant and stable dividend
capability in Italy
As previously indicated, no dividend
from France this year
Scope for CEE to expand following
our full ownership
Remain on track to reach
ambition of €1.5bn net fee cash
flow before dividend in 2015
Life Expected free surplus
P&C & Financial surplus
+
+
+
+
+
0.8 1.2 - =
0.4 0.4
0.3 0.7 +
EMEA and
Other
0.3 0.3 Reinsurance
0.1 0.1
0.2 0.3 CEE +
0 0.2
0 0.2 France +
0.3 0.2
0.3 0.5 Germany +
0.9 0.3
0.5 0.8 Italy +
+
+
+
+
+
2.0 2.8 Total
=
73%
=
Group remittance ratio
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March 12, 2014 Results 2014
Shareholders’ equity rollforward (Euro m)
19,778
3,997 1,670
(701)
(1,540)
23,204
Shareholders'Equity FY13
Δ in AFS Reserve
FY 2014 NetResults
Dividend Other Shareholders'Equity FY14
Shareholders’ equity
CFO – Balance Sheet 18
Change in AFS reserve (Euro m)
+17.3%
2,501
4,005
(486) 479
6,498
AFS Reserve FY13 Impact BondInvestment
Impact EquityInvestments
Other AFS Reserve FY14
Shareholders’ equity sensitivities (Euro bn)
Equities
-30bps
Interest rate
+100bps
Interest rate
-100bps
Credit spread
+100bps
-1.8
-2.8
2.3
-0.9
Including: -€ 648 m: GPH buyout
-€ 149 m: GDH squeeze out
-€ 733 m: defined benefit plan
© Generali
March 12, 2014 Results 2014
Solvency I
CFO – Capital 19
+15%pts
152
151
168
140
146
156
Real estate -10%
Credit spread + 100bps
Interest rate -100bps
Interest rate +100bps
Equities -30%
Total ratio 31.12.2014
164%
141%
(5%pts) (8%pts)
10%pts
(6%pts)
6%pts
18%pts 156%
Solvency IFY13
RequiredMarginGrowth
M&A (2) ConsolidatedResult
Proposeddividend2014 (3)
SubordinatedDebt
FinancialMarkets
and Other
Solvency IFY14
Solvency I proformaFY14
Solvency ratio pro forma for BSI reaches 164%(1) net of
proposed dividend
Substantial strengthening of Solvency Capital position despite
the GPH full ownership acquisition, thanks to:
Result of the period
Subordinated debt
Financial markets development
Solvency I rollforward (%) Solvency I ratio sensitivities (%)
(1) At FY14, the estimated positive impact of BSI disposal amounts to 8% pts (2) Including disposal of Fata Danni (+1%pts), acquisition of the 24% minorities of GPH (-7%pts) and 4% minorities squeeze out of GDH (-1% pts) (3) Proposed dividend for Shareholders: Euro 0.9 bn; proposed dividend for Minorities: Euro 0.1 bn
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March 12, 2014 Results 2014
Leverage
CFO – Leverage 20
Reduction of Senior debt stock by Euro 1 bn secured
Euro 0.5 bn senior debt maturing in 2015 already
pre-financed with subordinated, improving debt structure
Successful Liability Management transaction completed in
November 2014 for an amount of Euro 1.5 bn, aiming at
efficiently manage the debt maturities
Lower amount of interest expenses(1) due to debt reduction,
and refinancing at lower rates
(1) Around Euro 32 m of interests saving considering the double accounting for the refinanced bonds
Debt leverage (%)
3.6 4.2 5.3 Interest
Coverage
Ratio
Targets achieved:
Debt reduction by Euro 1 bn
Rebalancing of debt structure
40.4
39.6
38.5
39.5
2012 2013 2014
1.0%pts. pre-financing
of 2015 maturities
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March 12, 2014 Results 2014
28,830
2,922
26,390 (537)
(4,125) (701)
EV FY13 Change in Perimeter Normalised EVearnings
Investment, Tax andother Variances
2013 Dividend EV FY14
21
Group embedded value rollforward
CFO – Balance sheet & capital
Return on Embedded Value
RoEV Normalised RoEV
Group Embedded Value
Group EV per share
Group EV FY14
10.3% -4.3%
17.0 €
Mainly driven by the impact of low
interest rate curves and higher
volatilities of the market
Robust return on embedded
value, mainly driven by Life
NBV at € 1,239 m and a
positive combined ratio at
93.8%
(Euro m)
© Generali
March 12, 2014 Results 2014
184%
151% 157%
(5%) (0%)
(24%) (4%)
ESR FY13 Change inperimeter
Change in AC Change in RAC Proposed dividend2014
ESR FY14 Proforma ESRFY14
Economic solvency
Economic solvency rollforward (%)
CFO – Balance sheet & capital
New placement of eligible subordinated bonds offsets the impact of negative economic variances on
the Available Capital
Financial and credit risk drive up capital requirement
Lower interest rates led to reduced loss absorbing capacity with Germany being the biggest driver
Economic solvency ratio pro forma for BSI reaches 157%
22
-33%pts.
© Generali
March 12, 2014 Results 2014
Agenda
II. 2014 Group Financials
23
Alberto Minali – Group CFO
Profit & Loss and Balance Sheet Page 13
Business review Page 24
© Generali
March 12, 2014 Results 2014
FY13 FY14 LFL D 4Q13 4Q14 LFL D
Gross written premiums 44,941 49,813 +11.2% 12,280 14,202 +15.9%
Net inflows 8,557 12,747 +49.7% 2,160 3,727 +73.0%
Life operating result 2,585 2,978 +15.2% 574 727 +26.6%
Life operating ratio on
investments (bps) 78 81 +3 17 19 +2
APE 4,470 5,163 +14.2% 1,259 1,497 +18.2%
New Business Value 937 1,239 +33.7% 267 305 +13.3%
Margin on APE (%) 21.0% 24.0% +3.5%pts. 21.2% 20.4% -0.9%pts.
Life key financial indicators
CFO – Life Insurance 24
(Euro m)
© Generali
March 12, 2014 Results 2014
2,585
(165)
506 52 2,978
FY13 Technical Margin Investment result Expenses FY14
Life Operating result by driver
CFO – Life Insurance 25
Strong improvement driven by the investment result and decreasing expense ratio
Technical margin lower due to policyholder share of lower expenses, and lower risk result
Large part of the improvement driven by Italy (+30.7%) +15.2%
(Euro m)
FY 14 5,532 2,240 (4,795)
FY 13 5,697 1,734 (4,846)
D % -2.9% +29.2% -1.1%
© Generali
March 12, 2014 Results 2014
Life inflows and technical reserves(1)
CFO – Life Insurance 26
(1) Including liabilities related to investment contracts
FY13 FY14
Italy 1,972 5,699
France -184 615
Germany 4,377 2,958
CEE 541 425
EMEA 1,436 2,703
Lat. Am. 122 118
Asia 275 197
International 18 32
TOTAL 8,557 12,747
Sharp increase in net inflows (+49.7%)
- Continued very strong performance in Italy and EMEA
- Positive trend in France, favoured by positive 4th quarter
- Decrease in Germany mainly due to contraction of cash-in
following planned reduction of single premiums
Overall growth in reserves of 6.9% from end 2013 (of which
+14.5% increase in unit linked)
+6.9%
265.9
1.7
279.7
58.9 67.5
324.8 12.7
(5.5)
13.4
1.7
347.2
FY13Restated
NetInflows
Loadings,Risk &
Surrender Result
Policyh. Shareof Invest. Result
ExchangeRate & Other
FY14
+14.5%
+5.2%
Unit linked
Traditional
(Euro m)
© Generali
March 12, 2014 Results 2014
Life investment performance
CFO – Life Insurance 27
Euro 280 bn Euro 321 bn
(1) Net of depreciation expenses
43.7 47.0
34.9 34.5
8.0 7.7
4.7 4.0
3.4 3.1
3.7 2.1 1.6 1.6
FY13 FY14
Other
Cash & cashequivalent
Real estate
Equity
Other fixedincome
Corporatebonds
Governmentbonds
Euro m %
Fixed income
FY13 9,251 3.9
FY14 9,588 3.6
Equity
FY13 388 3.1
FY14 449 3.5
Real Estate(1)
FY13 555 5.9
FY14 547 5.6
Total(1)
FY13 10,517 3.8
FY14 10,907 3.6
Life segment general account (%)
Current returns
© Generali
March 12, 2014 Results 2014
Life new business analysis
CFO – Life Insurance 28
APE NBV MARGIN ON APE
FY13 FY14 LFL D FY13 FY14 LFL D FY13 FY14 LFL D
Italy 1,845 2,492 +35.1% 336 641 +91.1% 18.2% 25.7% +7.5%pts.
France 752 817 +9.0% 96 89 -6.8% 12.7% 10.9% -1.8%pts.
Germany 938 862 -12.6% 248 265 +1.6% 26.5% 30.7% +4.3%pts.
CEE 191 148 -13.2% 73 49 -18.6% 38.5% 32.8% -2.2%pts.
EMEA 598 684 +9.7% 156 177 +11.2% 26.1% 25.9% +0.4%pts.
Lat. Am.&Asia 146 159 +16.0% 28 19 +49.0% 19.0% 11.8% +2.7%pts.
TOTAL 4,470 5,163 +14.2% 937 1,239 +33.7% 21.0% 24.0% +3.5%pts.
APE development (+14.2%) driven by the good growth of annual premiums (+5.9%) and the excellent
single premium increase (+27.2%)
NBM improves (+3.5%pts.) thanks to the higher weight of the profitable unit linked business and to the
reduction of the guarantees (in Euro area from 1.17% at FY13 to 0.91% at FY14)
Higher volumes and improved profitability lead the NBV to Euro 1,239 m (+33.7%)
(Euro m)
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March 12, 2014 Results 2014
P&C key financial Indicators
CFO – P&C Insurance
29
FY13 FY14 LFL D 4Q13 4Q14 LFL D
Gross written premiums, of which: 20,940 20,617 +0.2% 5,024 5,053 +2.5%
Primary Motor 8,282 8,062 +0.8% 1,732 1,743 +4.9%
Primary Non Motor 11,955 11,859 +0.0% 3,128 3,111 +0.2%
Combined ratio (%) 95.6% 93.8% -1.9%pts. 97.9% 94.8% -3.1%pts.
Nat Cat impact (%) 2.3% 1.2% -1.1% 1.7% 1.3% -0.5%pts.
P&C operating result 1,619 1,831 +13.1% 285 300 +5.3%
(Euro m)
© Generali
March 12, 2014 Results 2014
P&C Operating result by driver
CFO – P&C Insurance
30
1,619
287
(5) (71)
1,831
FY13 Technical Margin Investment result Other FY14
Significant improvement in technical margin, due to 1.9%pts reduction in combined ratio. Improvements
in all major markets
Investment return stable despite low interest rate environment
Increase in Other due to write-off of legacy IT systems in Italy, and reallocation of pension related items
between segments +13.1%
(Euro m)
FY 14 1,082 1,007 (258)
FY 13 794 1,012 (187)
D % +36.2% -0.5% +37.7%
© Generali
March 12, 2014 Results 2014
FY13 FY14 LFL
Italy 6,316 6,132 -2.9%
France 2,722 2,545 -6.5%
Germany 3,436 3,547 +3.3%
CEE 1,924 1,884 +1.3%
EMEA 4,218 4,246 +0.6%
Lat Am 1,112 1,057 +22.9%
Asia 92 103 +12.6%
International 1,118 1,102 -1.5%
Total 20,940 20,617 +0.2%
P&C gross written premiums trends
CFO – P&C Insurance
31
Overall stable premium development:
Decline in Italy both in Motor (decrease in average
premium but stable number of contracts) and Non-Motor
(increase in Personal lines partially mitigates decrease in
Accident & Health, stable Commercial lines)
Decline in France reflecting economic and competitive
market environment, in addition to portfolio restructuring
activities. 4Q14 shows decreasing premiums decline
Improvement in Germany thanks both to Motor and Non-
Motor (Personal and Commercial lines more than offset a
reduction in Accident & Health)
Sharp increase in Latin America (on like for like basis),
mainly driven by Argentina (reflecting inflation effect) and
Brazil (strong growth in corporate business)
(Euro m)
© Generali
March 12, 2014 Results 2014
68.5 66.7
27.1 27.1
(1.8) (0.1)
95.6 93.8
FY13 Δ Expense ratio Δ Loss ratio FY14
21.3 21.2
5.9 5.9
27.1
(0.1)
27.1
FY13 Δ Admin Δ Acq. FY14
Combined ratio analysis
CFO – P&C Insurance
32
Loss ratio
Expense ratio
68.5
(0.3) (1.1) (0.4)
66.7
FY13 Current year NATCAT Prior years FY14
Combined ratio (%)
-1.9%pts.
FY 14 69.3 1.2 -3.8 66.7
FY 13 69.5 2.3 -3.4 68.5
Expense ratio (%)
Loss ratio (%)
Acquisition costs
Administr. costs
-0.1%pts.
-1.8%pts.
© Generali
March 12, 2014 Results 2014
Combined ratio by country
CFO – P&C Insurance 33
FY13 FY14 LFL
Italy 92.4% 89.2% -3.2%pts.
France 105.5% 104.9% -0.6%pts.
Germany 95.7% 92.6% -3.1%pts.
CEE 88.8% 87.7% -1.0%pts.
EMEA 95.8% 95.5% -0.3%pts.
Lat Am 100.9% 113.3% +12.4%pts.
Asia 120.0% 97.6% -22.4%pts.
International
Operations 90.6% 83.8% -6.9%pts.
Total 95.6% 93.8% -1.9%pts.
Combined ratio still improving in Italy, despite heavier
Nat Cat impact (+1.2%pts. compared to FY13)
Slight improvement in France thanks to loss ratio
(favoured by lower impact of NAT CAT), stable expense
ratio
Lower NAT CAT events benefit combined ratio both in
Germany and CEE
In LatAm, strong impacts on loss ratio from restructuring
in motor business (Brazil) and large fire claims (Panama)
In Asia, strong contraction of loss ratio from FY13 levels,
which were impacted by large claims in Thailand and
earthquake in Japan
(%)
© Generali
March 12, 2014 Results 2014
P&C investment performance
CFO – P&C Insurance 34
Euro 36 bn Euro 39 bn
(1) Net of depreciation expenses
30.2 26.0
31.3 35.4
5.1 5.9
9.3 8.7
12.9 11.1
8.2 9.8
3.0 3.1
FY13 FY14
Other
Cash & cashequivalent
Real estate
Equity
Other fixedincome
Corporatebonds
Governmentbonds
Euro m %
Fixed income
FY13 863 3.5
FY14 861 3.4
Equity
FY13 94 3.6
FY14 121 3.6
Real Estate(1)
FY13 283 5.9
FY14 268 5.9
Total(1)
FY13 1,356 3.9
FY14 1,307 3.5
P&C segment general account (%)
Current returns
© Generali
March 12, 2014 Results 2014
FY13 FY14 LFL 4Q13 4Q14 LFL
Financial 343 374 +8.9% 95 82 -13.8%
of which Banca Generali(1) 198 221 +11.7% 56 44 -21.3%
Operating holding expenses (349) (418) +19.8% (86) (128) +49.2%
Other businesses(2) 134 40 -70.3% 39 (47) n.m.
Total 128 (5) n.m. 49 (92) n.m.
Focus on Holding & Other businesses segment CFO – Holding & Other businesses
35
(Euro m)
(1) Banca Generali’s operating contribution as per Generali’s view
(2) Including pure financial holdings, international service activities and any other non-core businesses
© Generali
March 12, 2014 Results 2014
Final remarks
CFO – Final remarks 36
Operating RoE above 13% for first time
Strong operational performance in both main
segments
Solvency I target achieved; All focus on Solvency II
preparations
© Generali
March 12, 2014 Results 2014
Agenda
III. Backup
37
Costs Page 38
Investments Page 40
Financial debt Page 46
Life EV Page 49
Capital Page 54
Definitions Page 57
© Generali
March 12, 2014 Results 2014
FY 2014 Cost development
Back up: Focus on costs 38
Group operating expense development (OpEx view) (Euro bn)
Reconciliation of general expenses from IFRS view to OpEx view (FY 2014, Euro bn)
Overall costs broadly in line with ambition of remaining
flat at 2012 baseline (+0.9% deviation)
Slight increase in FY14 reflects higher HO costs
(Competency build-out, including C&C) and increased
investment in Asia, offsetting lower costs in mature
markets
Acquisition & Admin costs, accounting view
(per segmental operating profit analysis)
Adjustments from accounting view
Adjusted general expense base
5.3
4.8
0.8
(5.9)
1.0 0.4 6.4
IFRS Admin & Acquisition
costs
Commissions & DAC
Claims settlemement
costs (included
in claims & benefits)
Other items & adjustments
Total general expenses
(OpEx view)
Holding & other
Life
P&C
2012 2013 2014
+0.9% Costs relative
to 2012 baseline: -1.0%
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
© Generali
March 12, 2014 Results 2014
Agenda
III. Backup
39
Costs Page 38
Investments Page 40
Financial debt Page 46
Life EV Page 49
Capital Page 54
Definitions Page 57
© Generali
March 12, 2014 Results 2014
40
Assets under management
Backup: Investments
76.1
14.1
9.7 Generalaccount
Unit Linked
Third partyinvestments
5
87
4 3
1
Equity
Fixed income
Real estate
Cash & Cash Equivalent
Other
By Asset Class
By Region
31
23
29
3
10 4 Italy
France
Germany
CEE
EMEA
RoW and other operations
Total Portfolio: Euro 480 bn (%)
Breakdown by region and asset class (%)
© Generali
March 12, 2014 Results 2014
4 6
36
40
12 2
AAA AA A BBB Not Investment Grade Not Rated
73
6
12
8 1
0 14
35
4
44
2 0
Fixed Income Portfolio
Backup: Investments 41
(1) Italian government bond exposure is 83% of BBB (2) Duration gap = duration of fixed income assets – duration of liabilities x (Best estimate liabilities/Market Value of fixed income assets)
Bond duration FY13 FY14
Life 7.3 8.2
P&C 4.1 4.6
Life duration Gap(2) FY13 FY14
-0.6 -1.0
51.7
12.8
17.5
9.1
8.9
Other fixedIncome
Covered
Corporate nonfin.
Corporate fin.
Government
Total Portfolio Euro 319 bn (%)
Covered Euro 29 bn (%)
Corporate Euro 97 bn (%)
Government Euro 165 bn(1) (%)
© Generali
March 12, 2014 Results 2014
16
13
19 3 12
38
Italy Germany France CEE USA Other
8
16
27
1
1
47 37
5 22
6
3
28
Fixed Income Portfolio by country
Backup: Investments 42
51.7
12.8
17.5
9.1
8.9
Other fixedIncome
Covered
Corporate nonfin.
Corporate fin.
Government
Total Portfolio Euro 319 bn (%)
Covered Euro 29 bn (%)
Corporate Euro 97 bn (%)
Government Euro 165 bn (%)
© Generali
March 12, 2014 Results 2014
76
20
3
Life
P&C
H&O
83
17
Quoted
Unquoted
60
8
32
Life
P&C
H&O
76
23 0
Life
P&C
H&O
56 27
17
Equity Equity Funds Alternatives
Equity & Equity-like
Backup: Investments
43
Life, P&C and
Financial
Life, P&C and
Financial
Life, P&C and
Financial
Listed and
Unlisted
Total Portfolio: Euro 18 bn (%)
Alternative funds: Euro 3 bn (%)
Equity: Euro 10 bn (%)
Equity funds: Euro 5 bn (%)
© Generali
March 12, 2014 Results 2014
85
15
Investmentproperties
Own use
65
16
11 3 4
Office
Residential
Retail
Logistic
Other/Mixed
Asset Allocation: Real Estate1
Backup: Investments
44
35
16
25
2
20
2 Italy
Germany
France
CEE
RoE
RoW
1 Data, at fair value, includes own use assets and property inventory 2 Detail referred to direct investments in real estate only
FY13 FY14
Gross Unrealised Gains and
Losses (UGL)
5,532 5,437
Shareholders’ share of UGL
(after P/H share, tax &
minorities)
3,610 3,444
Total Portfolio: Euro 25 bn1
Breakdown by use2 (%)
Breakdown by country2 (%)
Breakdown by utilization2 (%)
Off balance sheet gains (Euro m)
© Generali
March 12, 2014 Results 2014
Agenda
45
III. Backup
Costs Page 38
Investments Page 40
Financial debt Page 46
Life EV Page 49
Capital Page 54
Definitions Page 57
© Generali
March 12, 2014 Results 2014
Focus on financial debt
Backup: Financial debt 46
4,468 3,477
7,539 8,315
678 460
FY13 FY14
Senior Sub/Hybrid Other
FY13 FY14
Average cost (%) 5.93% 5.62%
Subordinated/Hybrid 6.54% 6.21%
Senior 4.81% 4.13%
Average maturity
(years) 5.27 6.87
Euro 12,685 m Euro 12,253 m (1)
Total financial debt (Euro bn)
Average cost & maturity of financial debt (%)
(1) The amount of financial debt as of December, 31, includes the subordinated bond issued in May 2014 for a nominal amount of Euro 1 bn partly to refinance 2015
maturities
© Generali
March 12, 2014 Results 2014
500(1)
1,199
887
250
770
1,250
2,638
1,750
1,500 1,451
2015 2016 2017 2018 2019 2020 2022 2024 2025 2026
Senior Hybrid Subordinated
Financial debt breakdown by expiry date/call date
Backup: Financial debt
47
(Euro m)
(1) The senior bond due in 2015 was already refinanced
© Generali
March 12, 2014 Results 2014
Agenda
III. Backup
48
Costs Page 38
Investments Page 40
Financial debt Page 46
Life EV Page 49
Capital Page 54
Definitions Page 57
© Generali
March 12, 2014 Results 2014
26,136 310 26,446 1,239 1,248
25,082 (315) (1,905)
(62) (1,568)
EV FY13 Perimeter, FX Adjusted EVFY13
NBV Expectedcontribution
Operatingvariance
Economicvariance
Othervariance
Capital Flow EV FY14
Including the VIF impacts due to:
- reference rates drop (-2.9 bn)
- the narrowing of spreads (+1.4 bn)
- increased volatility (-1.2 bn)
49 Back up: Life EV
Life embedded value earnings (Euro m) Return on Life embedded value
RoEV
Normalised RoEV
Adjusted embedded value FY13 26,446
Embedded value earnings 204
Normalised EV earnings(3) 2,172
0.8%
8.2%
Life EV(1) roll-forward
(Euro m)
(1) Calculated with methodology and assumptions compliant with “Market Consistent Embedded Value Principles” as defined by CFO Forum
(2) “ Other variance ” includes model changes, extraordinary expenses and residual variance
(3) “Normalised EV earnings” defined as NBV + Expected contribution + Operating variance
(2)
© Generali
March 12, 2014 Results 2014
50
FY14 Life Embedded Value sensitivities
Back up: Life EV
-2.5
-1.5
-5.1
-3.5
3.5
-15.9
6.8
Euro m 25,082 Life Embedded Value
Risk Free Rate +100bps
Risk Free Rate -100bps
Equity +10%
Equity -10%
Zero Liquidity Premium
Equity Implied Volatility +25%
Swaption Implied Volatility +25%
(%)
© Generali
March 12, 2014 Results 2014
51
Expected Life cash flow generation
Back up: Life EV
2,204
1,392
709
(860)
(661)
Existing Run Off 2013 New Business 2013 Free Cashflow 2013
2,277
1,408
657
(926)
(600)
Existing Run Off 2014 New Business 2014 Free Cashflow 2014
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Years1-5
Years6-10
Years11-15
Years16-20
Years21-25
Years26-30
Years31+
-2,000
-1,500
-1,000
-500
-
500
1,000
1,500
Year 0 Years1-5
Years6-10
Years11-15
Years16-20
Years21-25
Years26-30
Years31+
Life expected free cash flows (Euro m)
2014 In-force – Expected undiscounted cash flows 2014 New Business – Expected undiscounted cash flows
Profit
Capital
© Generali
March 12, 2014 Results 2014
Update on Guarantees
Back up: Focus on guarantees
46.6% 47.3% 46.9% 47.8% 51.1%
52.7%
53.4% 52.7% 53.1% 52.2% 48.9% 47.3%
2.37%
2.04% 2.02%
1.21%
0.86%
0.65%
1.56%
1.23%
1.00%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
2009 2010 2011 2012 2013 2014
Low capital intensity guarantees (1) (% of portfolio) High capital intensity guarantees (% of portfolio)
Existing Portfolio Guarantee Average new business guarantee (premiums)
Average new business guarantee (APE)
Portfolio guarantee profile continues to improve in terms of type (52.7% of reserves is made of low capital
intensity guarantees) and average guarantee (currently 2.02%)
Improvements driven by new business: in 2014, 78.0% of total new business APE is made of low capital
intensity guarantees and the average guarantee is 1.00% (0.65% on new business premiums)
52
(1) Low capital intensity guarantees = no guarantees, matched, at maturity guarantees and yearly 0% guarantees
© Generali
March 12, 2014 Results 2014
Agenda
III. Backup
53
Costs Page 38
Investments Page 40
Financial debt Page 46
Life EV Page 49
Capital Page 54
Definitions Page 57
© Generali
March 12, 2014 Results 2014
2.1 2.1
1.5 1.6 0.8 0.8 0.8 0.9
5.5
8.4
8.9
9.4
19.6
23.1
FY13 FY14
Financial
Credit
Life UW
Non Life UW
Operational
Not under IM
36
21
19
24
Italy
France
Germany
Other
FY14 Group RAC breakdown by segment (%)
54
Group Risk Capital (RAC)
Backup: Capital
(6%)
(52%)
(11%)
(-2%)
(5%)
(0%)
(1) Not under IM refers to top down approach for minor insurance entities and to regulatory capital requirements for financial segment
(1)
Group RAC at 99.5% after diversification (Euro m)
FY14 Group RAC geographical breakdown (%)
67
26
6
Life
Non Life
Financial
© Generali
March 12, 2014 Results 2014
55
Reconciliation of IFRS equity to Group Embedded Value
Backup: Capital
1 Includes subordinated and senior bonds issued 2 Mainly VIF AuM, CoC and DTL on subordinated debt
(Euro m)
Life Other Financial
MCEV operations Debt1
IFRS Equity 18.359 17.113 -12.268 23.204
Goodwill, DAC, VoBA and other intangibles -5.563 -4.399 0 -9.962
Mark to market of assets non backing 2.071 1.735 0 3.806
Double counting on life AFS reserves and on other investments -3.039 0 0 -3.039
Adjustment on debt 0 0 -1.088 -1.088
Other adjustments 284 -732 0 -448
Adjusted Net Asset Value 12.113 13.717 -13.357 12.473
In-force value (Life & AuM) 12.969 948 13.917
Embedded value 25.082 14.665 -13.357 26.390
Adjustments -550
Subordinated debt 9.767
Available Capital 25.082 14.665 -13.357 35.606
Group
© Generali
March 12, 2014 Results 2014
Agenda
III. Backup
56
Costs Page 38
Investments Page 40
Financial debt Page 46
Life EV Page 49
Capital Page 54
Definitions Page 57
© Generali
March 12, 2014 Results 2014
Definitions
Backup: Definitions 57
Total Operating Result Total operating result represents earnings before taxes, gross of interest expense on liabilities linked to financing activit ies,
specific net income from investments and non-recurring income and expenses
Adjusted Shareholders’
Equity
Shareholders’ Equity gross of minorities excluding gains and losses included in Other Comprehensive Income (OCI)
Operating RoE Operating Return on Equity indicates the return in terms of Operating Result on Group Shareholders’ Equity. It is calculated
according to the following ratio:
Total Operating Result adjusted to include:
- interest expenses on financial debt
˗ income taxes based on a mid-term expected tax rate as assumed in 2015 Target
- minorities interests
Adjusted Shareholders’ Equity
Financial Leverage Financial Debt / Financial Debt + Adjusted Shareholders’ Equity
Fixed Charge Coverage EBIT (net of disposals gains) / interest expenses on financial debt
Gross/Net Expected
Surplus
For Life segment it is calculated as the sum of Earnings and capital release from existing business and New Business
Strain
For Non Life and Financial segments it is calculated as operating result net of taxes, minorities and change in capital
requirements (S1)
Net Free Surplus is calculated as Gross Expected Surplus minus holding expenses net of taxes and minorities
Gross Remitted Cash The percentage of Gross Free Surplus actually remitted or passed up to the parent company
© Generali
March 12, 2014 Results 2014
Disclaimer
Certain of the statements contained herein are statements of future expectations and other forward-looking
statements.
These expectations are based on management's current views and assumptions and involve known and
unknown risks and uncertainties.
The user of such information should recognise that actual results, performance or events may differ
materially from such expectations because they relate to future events and circumstances which are
beyond our control including, among other things, general economic and sector conditions.
Neither Assicurazioni Generali S.p.A. nor any of its affiliates, directors, officers employees or agents owe
any duty of care towards any user of the information provided herein nor any obligation to update any
forward-looking information contained in this document.
The manager charged with preparing the company’s financial reports, Alberto Minali, declares, pursuant to
paragraph 2 of article 154-bis of the Consolidated Law on Financial Intermediation, that the accounting
information contained in this presentation corresponds to document results, books and accounts records.
58
© Generali
March 12, 2014 Results 2014
Next events
30 April 2015
Annual General Meeting
14 May 2015
1Q 2015 results reporting
27 May 2015
2015 Investor Day
30 July 2015
1H 2015 results reporting
5 November 2015
9M 2015 results reporting
59
© Generali
March 12, 2014 Results 2014
Team
Marta Porczynska
Team Assistant & Event Manager
+39 040 671402
Martina Vono
Team Assistant & Event Manager
+39 040 671548
Assicurazioni Generali
P.za Duca degli Abruzzi 2
34132 Trieste, Italy
Fax: +39 040 671338
e-mail: [email protected]
www.generali.com
Spencer Horgan
Head of Investor & Rating Agency Relations
+44 20 7265 6480
Stefano Burrino
Senior IR Manager
+39 040 671202
Emanuele Marciante
Senior IR Manager – Credit & Rating Agency Relations
+39 040 671347
Veronica Cherini
IR Manager
+39 040 671488
Rodolfo Svara
IR Manager
+39 040 671823
60
Thank you
61
GENERALI GROUP 2014 Results