The Italian Market 2015 figures + 3M16 overview

September 2016 Italian insurance market snapshots

The Italian Insurance Market • 2015 figures + 3M16 overview PwC 1 Section 1 – Italian insurance market snapshots

Italian insurance market Key Messages • In 2015, the Italian GWP rose by 2.5% to €147bn, representing 9% of the Italian GDP with a premium per capita of €2,423 (life: €1,895; non-Life €528) • FY15 Key-data The positive technical result in 2015 (€6,401m) which decreased by 0.4%, can be ascribed to non-life business for 63.3% (or €4.1bn) and life business for 36.7% (or €2.3bn) • 2015 non-life profitability is in line with the previous year, despite a 2.4% decline in Italian insurance market GWP premiums; whilst life technical result declined by 0.9% despite the matching increase €147bn, +2.5% vs. FY14 in premiums of 4.0%, as it was offset by higher incurred claims (10.2%) o/w Life: €115bn (+4.0% vs. FY14) • Insurance players continue to be highly dependent on bonds (89% of the total Non-life: €32bn (-2.4% vs. FY14) investment portfolio), though a switch to alternative investment funds is in course with the Largest Italian insurance aim to improve investment results in the current low interest rate environment companies: • The adoption of Solvency II results in an overall estimated benefit for the whole o Life: Poste Vita (market share equal insurance landscape to 15.3%) • The insurance sector is on the brink of a major disruption: 43% of industry players o Non-life: UnipolSai Assicurazioni claim they have FinTech at the heart of their strategies, but only 28% have explored (market share equal to 19.3%) partnerships with FinTech companies and less than 14% have participated in ventures/incubator programs Largest Italian insurance groups: o Life: Generali Group (market share 2010/2015 Technical result equal to 17.0%) € million FY11 FY12 FY13 FY14 FY15 o Non-life: Group (market Gross written premiums 110,228 105,129 118,800 143,315 146,952 share equal to 24.4%) Change in reserves (3,069) (9,540) (29,174) (59,579) (52,844) Incurred claims (100,433) (100,815) (89,188) (85,778) (91,219) General expenses (12,593) (11,871) (11,971) (12,411) (12,672) Investment income 3,623 26,989 19,611 21,866 17,172 Other technical income (charges) (768) (885) (930) (908) (987) Technical result (3,013) 9,006 7,134 6,508 6,401 Reinsurance result (286) 925 (403) (217) (98) Net technical result (3,299) 9,931 6,731 6,291 6,303 Source: PwC analysis on ANIA data, PwC, How InsurTech is reshaping insurance, June 2016

PwC 2 Section 1 – Italian insurance market snapshots Italian insurance market trend

2011/2015 Italian market GWP Total written premiums in 2015 rose by 2.5% to a total of €147bn (€143bn in 2014) 143,315 146,952 Life premiums reached €115bn in 2015 (+4.0% from 2014). 118,800 32,800 32,002 110,228 105,129 Italy is the third European life market by GWP, after UK and 33,690 36,359 France. In the same period, non-life premiums fell by 2.4% to

35,413 €32bn (€33bn in 2014) million

€ 110,515 114,950 85,110 The Italian market remains dominated by traditional 73,869 69,715 distribution channels, such as the bancassurance model in the life segment (70% of total GWP) and the agents network in FY11 FY12 FY13 FY14 FY15 non-life (81%)

Life Non-Life

2011/2015 Italian market GWP per quarter 2015 Breakdown of distribution channel Non-Life market - Breakdown per distribution channel FY14 0% 5% 26% 28% 27% 26% 26% 8% 14% 14% 5% 0% 21% 21% 22% 23% 21% 21% 0% Life Non-Life 26% 26% 26% 26% 26% € 115bn € 32bn Non-life 70% 28% 25% 24% 25% 27% 81%

FY11 FY12 FY13 FY14 FY15 81%

1Q 2Q 3Q 4Q Banks Agents Financial promoters Others Source: PwC analysis on IVASS data

PwC 3 Section 1 – Italian insurance market snapshots

Top Italian insurance players Companies Groups

2015 top 5 ranking of life insurance companies and groups by GWP Market share

17.0% 18% 20,000 15.8% 15.8% 48% 19,494 60% 16% 18,145 13.1% 18,145 13.1% Top 5 companies Top 5 groups 14% 15,000 market share market share 15,087 15,087 12%

10% million)

€ 10,000 7.4%

6.7% 6.7% share

8% Market 6.2% 5.7% 8,495 6% GWP ( GWP 7,709 7,176 7,728 5,000 6,599 4% 2% - 0% Poste Vita Generali Genertel life Fideuram Generali Poste Vita Intesa Sanpaolo Unipol Vita Vita Vita

2015 top 5 ranking of non-life insurance companies and groups by GWP

15,000 35%

60% 71% 30% 12,000 24.4% 22.1% Top 5 companies Top 5 groups 25% market share market share 9,000 19.0% 16.5% 20% million) 14.9%

€ 7,814 share share 12.5% 15% Market 6,000 7,084 6,073 GWP ( GWP 5,286 10% 4,754 6.3% 6.1% 3,000 4,001 4.5% 4.4% 5% 1,426 1,414 2,030 1,943 - 0% AXA Reale Mutua Gruppo Cattolica Reale Mutua Unipol Sai Generali Allianz Assicurazioni Assicurazioni Unipol Generali Allianz Assicurazioni Assicurazioni

Source: PwC analysis on ANIA data PwC 4 Section 1 – Italian insurance market snapshots Investments

2011/2015 breakdown of investments (not related to investment contracts)

Insurance companies still invest mainly in Italian 544 10% Others government bonds (64%) 502 52 2% Shares 38 9 Investments in corporate bonds have been increasing 408 9 24% Corporate Bonds 371 132 steadily in the last few years reaching 24% in 2015 in an 27 119 319 24 9 Other Gov Bonds 3 1% attempt to contrast low yields on government bonds 10 94

billion 21 11 88 78 Ita Gov Bonds

€ 64% 83 49 13.9% of Italian family savings (€573bn) are invested in 13 68 15% 347 insurance products, almost as much in bank deposits Italian Government Bonds 229 258 (14.2%) and investment funds (11.1%) 191 182 Other Government Bonds Bonds 24% Shares 51% FY11 FY12 FY13 FY14 FY15 Other investments Source: PwC analysis on ANIA and BankIT data; excluding infra-group 2%investments New IVASS Regolamento #24, limited 8% investment restrictions 2010/2015 main 5 European Government Bonds yield to maturity In June 2016, a new regulation regarding 8% investments and assets backing technical provisions was issued by IVASS, the Italian insurance regulator. 6% The aim of the updated regulation was to implement

5% EIOPA’s guidelines on governance and investment risks and to provide guidance on assets backing 3% technical provisions. Under Solvency II, the former

Yield to maturity to Yield asset class quantitative restrictions have been 2% substantially removed as a Solvency Capital 0% Requirement and replaced by the risk underlying Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 investments, thus insurers are free to choose the Italy Spain UK France Germany most appropriate investment instruments Source: Bloomberg

PwC 5 Section 1 – Italian insurance market snapshots Low interest rates are the main issue life insurers must face onwards

2005/2015 Italian Government bonds and inflation evolution

8%

6%

4% BTP 10Y yield Inflation rate 2%

Avg segregated funds yield Yield to maturity to Yield 0%

(2%) Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: Bloomberg and ISTAT

The environment of prolonged low interest rates continues to To overcome this situation, insurance companies are undertaking pose major challenges to insurance companies, potentially various strategies: resulting in material implications for the profitability and the • Switching to new multiline (hybrid) products, which solvency of many insurers. In particular, the impact is expected to combine the guarantee of traditional products with the be highest for small and medium-sized life insurers with large higher returns of unit-linked, while reducing capital government bond portfolios and high guarantees to policyholders absorption; On the one side, insurance companies need to invest in more • Improving cost management; risky assets in order to ensure adequate returns for their clients, • Investing in convertible bonds, which benefit from a and on the other, they need to take into account the new strict lighter capital requirement by Solvency II capital requirements imposed by Solvency II Rising interest rates should improve life insurers’ cash flows, relieving some of the pressure related to reserving

PwC 6 Section 1 – Italian insurance market snapshots The negative trend of motor premiums has been impacting the whole non-life sector

2011/2015 Italian market non-life GWP The average premium of the motor business shows a decreasing trend over the last 5 years Total Motor Such performance has been driven by several factors resulting in a final benefit for policyholders: 36,359 35,413 33,690 32,800 32,002 • Actions from the Regulator to reduce frauds

• New rules on agency distribution (ban of motor tied agents) million

€ 20,652 20,190 • Telematics (i.e black boxes) 18,644 17,567 16,642 • Competition increase due to online aggregators

The profitability of the motor market is strictly dependent on the balance between premiums and claims. The current FY11 FY12 FY13 FY14 FY15 environment shows a positive balance, but insurers are worried about a potential increase of claim costs with the average premium levels

Focus on MTPL Motor +3.6% (2.2%) (7.7%) (5.8%) (5.3%) GWP FY11 FY12 FY13 FY14 FY15 GWP (€ millions) 17,760 17,542 16,230 15,180 14,187 Other Average price per policy (€) 527 530 506 470 439 LoBs (1.4%) (3.1%) (1.2%) 1.2% 0.8% # of policies (millions) 33.7 33.1 32.1 32.3 32.3 GWP Claims frequency (%) 6.5% 5.9% 5.7% 5.5% 5.6%

Source: PwC analysis on IVASS data

PwC 7 Italian life insurance market

The Italian Insurance Market • 2015 figures + 3M16 overview PwC 8 Section 2 – Italian life insurance market

Italian life insurance market Key Messages

• The GWP of the Italian life insurance market increased by 4.0%, resulting in a record GWP of €115bn and net cash flow of €44bn (€46bn in 2014) FY15 Key-data • 2015 technical result was positive (€2.3bn), however 0.9% lower than 2014 (€2.4bn) due to the increase in lapses which offset the increase in written premiums Italian life insurance market GWP • Italian families have invested €573bn of their own savings in life insurance products €115bn, +4.0% vs. FY14 (13.9% of total savings) • The market still shows a strong predominance of traditional products (68%), even Life products distributed mainly though it decreased compared to 2014 (75%). The low interest rate environment and the through banking channel (70%) introduction of Solvency II are likely to boost investment products, as already indicated by Largest life insurance company: the strong growth of multi-line contracts (€22bn in 2015, an increase of 88% versus 2014), Poste Vita (market share equal to 15%) also called hybrid contracts Largest life insurance group: • Life premium penetration in Italy is 7.0% (premiums/GDP), the second highest in Europe after UK (8.5%) Generali Group (market share equal to 17%) • With the new solvency regime, the life segment may benefit of a higher solvency capital ratio (151.7%) 71 insurance companies operating in the life business (76 in 2014) 2010/2015 Life business technical result € million FY11 FY12 FY13 FY14 FY15 2015 # of companies by GWP Gross written premiums 73,869 69,715 85,110 110,515 114,950 Changes in technical provisions (2,547) (10,013) (29,928) (59,967) (53,024) 26 Lapses (Surrenders/ Maturities/ Claims) (73,971) (75,022) (66,788) (64,577) (71,196) 16 19 General expenses (3,832) (3,367) (3,538) (3,812) (3,970) Investment income 3,019 25,382 18,409 20,588 15,976 Other technical income (charges) (177) (222) (325) (381) (388) 6 Technical result (3,639) 6,473 2,929 2,369 2,347 4 Reinsurance result 268 388 369 383 312 Net technical result (3,371) 6,861 3,298 2,752 2,659 GWP > €5bn €5bn- €1bn- €100m- < €50m €1bn €0,1bn €50m Source: ANIA

PwC 9 Section 2 – Italian life insurance market Italian life insurance market trend

2011/2015 Italian market life GWP

The regained confidence of policyholders to invest savings in insurance products (CAGR11-15: 11.7%), resulted in a growth in GWP of 4.0% in 2015. This growth was mainly driven by unit linked products (32% vs 25% in 2014), which tie their returns to

the performance of investment funds million

€ 110,515 114,950 Historically the business mix of the Italian life insurance market 85,110 has shown a strong preference for traditional products against 73,869 69,715 investment products. Such trend has been changing as investment products have been gaining significant market share also due to the steady growth of multi-line products (also called FY11 FY12 FY13 FY14 FY15 hybrid products). Such hybrid products combine returns offered by unit linked products with guarantees provided by traditional 2011/2015 Split between traditional & investment contracts contracts

FY15 68% 32% The shift towards investment products is mainly driven by the extremely low interest rates which have led to low returns on FY14 75% 25% government bonds and by regulatory evolutions in the insurance industry. Capital charges imposed by Solvency II are driving FY13 76% 24% insurance companies' preferences towards unit linked products FY12 73% 27% which absorb less capital as compared to traditional product

FY11 77% 23%

0% 20% 40% 60% 80% 100%

Traditional contracts Investment contracts Source: PwC analysis on IVASS data

PwC 10 Section 2 – Italian life insurance market Breakdown by quarter of Italian life insurance market

+4% 2011/2015 GWP breakdown by quarter +30% -6% +6% +5% 114,950 +32% 110,515 -10% +11% +23% +31% +20% 82,356 86,100 85,110 -12% 73,869 69,715 +16% 61,626 62,168 -21% +35% 55,599 56,195 +18% 50,522 million 40,340 42,593 € 31,972 35,444 27,493 21,785 17,251 20,297

3M11 3M12 3M13 3M14 3M15 6M11 6M12 6M13 6M14 6M15 9M11 9M12 9M13 9M14 9M15 12M11 12M12 12M13 12M14 12M15

Traditional products Unit & Index linked Capitalisations Others (sickness or mutual funds)

Source: PwC analysis on IVASS data

2011/2015 Annual, single and recurring premiums Sales continue to be dominated by single premium business, confirming the Italian trend of investing a lump-sum instead FY15 05% 84% 11% of paying premiums annually. This trend also confirms that FY14 06% 84% 10% life insurance policies are sold more for their saving characteristics than protection FY13 07% 81% 12%

FY12 09% 78% 13%

FY11 08% 79% 13%

0% 20% 40% 60% 80% 100%

Annual premiums Single premiums Recurring premiums Source: PwC analysis on IVASS data PwC 11 Section 2 – Italian life insurance market Breakdown of net cash flows

2015 Breakdown of net flows Written premiums Amounts paid

5,472 13,132

96,314

million (42,796) €

43,860 (21,085) (7,177)

4% 9% Single Premiums Recurring Premiums Recurring Premiums Surrenders Maturities & Yields Claims Total Net Flows 1st year 41%

3% 1% 2% 4% 3% 1% 4% 2% 8% 1% 0% 19% 17% 22% 30% 27% 22% €96bn €13bn €5bn 46% (€43bn) (€21bn) (€7bn) 66% 67% 69% 78% 75% 80%

Traditional products Unit & Index linked Capitalisations Other LoBs Source: PwC analysis on ANIA data

PwC 12 Section 2 – Italian life insurance market Breakdown of net cash flows by LoB

2015 Breakdown of net flows by LoB

Traditional Unit & Index linked Capitalisation

GWP 77,870 31,838 3,483

Redemptions (28,847) (11,376) (1,842)

Maturities (14,536) (4,611) (1,774)

Claims (5,763) (1,387) (4)

€ million € million € million Net flows €28,724m Net flows €14,464m Net flows (€137m)

43,860 14,464 809 (137)

28,724 LoBs contribution to Net Flow

million Traditional products 65% € Unit & Index linked 33% Capitalisations 0% Other Lobs 2%

Traditional products Unit & Index linked Capitalisations Other LoBs Total Net Flow Source: PwC analysis on ANIA data

PwC 13 Section 2 – Italian life insurance market Portfolio lapse index and average duration

2011/2015 Portfolio lapse index and average duration At the end of 2015 the lapse index confirmed prior year decreasing trend, with a ratio (calculated as total claims on 8 17.8% 17.7% 20% technical reserves) equal to 13.0% (13.2% in 2014), 7 15.0% confirming the 'U-turn' after the significant increase recorded 6 13.2% 13.1% 13.1% 13.0% 13.0% 15% during the financial crisis as a result of high levels of 5 surrenders 4 10% During 2015 the additional spread reduction between Italian 3 6.05 5.64 5.20 and the German government bonds allowed portfolio 4.41 4.40 4.44 4.63 4.76 2 5% managers to continue the ALM strategy review resulting in a 1 decrease of the average duration to 4.76 years (4.41 years in - 0% 2014). This confirms the investment portfolio strategy FY11 FY12 FY13 FY14 3M15 6M15 9M15 FY15 heading back to a shorter duration, in line with pre-crisis Average duration (years) Lapse index (%) levels of approximately 4.5 years

2011/2015 Portfolio lapse index composition 2015 Portfolio lapse index and average duration per LoB

17.8% 17.7% 12 16.5% 18% 11 15.0% 16% 10 13.3% 13.0% 5.6% 5.3% 13.2% 13.1% 13.1% 13.0% 13.0% 9 12.3% 14% 4.8% 8 12% 1.1% 1.2% 4.2% 4.1% 3.9% 3.8% 3.9% 7 10% 1.2% 6 1.3% 1.3% 1.2% 1.3% 1.3% 5 8% 4 6% 11.1% 11.1% 7.83 9.0% 3 7.7% 7.8% 8.0% 8.0% 7.8% 5.14 4.76 4% 2 3.32 1 2% - 0% FY11 FY12 FY13 FY14 3M15 6M15 9M15 FY15 Traditional products Unit & Index linked Capitalisations Life LoBs Total Surrender index (%) Claim index (%) Maturity index (%) Average duration (years) Lapse index (%) Source: PwC analysis on ANIA data

PwC 14 Section 2 – Italian life insurance market Distribution channel and investments overview

2011/2015 GWP by distribution channel

8.5% In line with other EU countries, such as France and Spain, 16.7% 16.8% 18.3% 23.3% banks represent the most significant distribution channel in the life insurance market (70% of total premiums)

69.9% 54.8% 48.6% 59.1% 62.0% The Italian bancassurance model changed over the last decade. In 2015 the model was characterised by a preponderance of captive companies (60% vs. 37% in 2002) 1.4% 1.5% 1.2% 1.0% 0.5% and JVs (29% vs. 51 % in 2002), whereas third party 25.6% 26.6% 23.0% 20.2% 21.2% distribution agreements remained stable representing the residual 11% FY11 FY12 FY13 FY14 FY15

Agents Others Banks Financial promoters Over the next few years a number of bancassurance

Source: PwC analysis on IVASS data agreements are going to expire and need to be renegotiated

2015 Asset allocation of life products The investment strategy of Italian life insurance companies is 1.8% 3.0% 2.0% 1.2% 4.9% 5.2% conservative, with portfolios being primarily invested in fixed- 9.9% 3.3% 26.4% 33.5% 34.6% income assets. Italian insurers used to match their profit 29.4% sharing products (liabilities) with government bonds, leading to a high level of exposure to Italian government debt 39.4% 39.5% 66.1% 56.9% In 2015, unit-linked and pension fund portfolios - though

22.2% 20.7% limited in their overall size - show a different asset allocation, where equities and corporate bonds are more significant than Total Total Total Total life market profit sharing unit-linked & pension unit-linked bonds funds Government bonds Corporate bonds Shares Liquidity Fixed assets and others Source: PwC analysis on ANIA data

PwC 15 Section 2 – Italian life insurance market Life insurance solvency margin

2011/2015 Life solvency I margin 1.98 In 2015, under Solvency I, the solvency capital 45,000 2.0 1.74 1.75 40,000 1.60 1.8 ratio of the life insurance sector was 1.5x 1.52 35,000 1.6 (decreasing slightly from the 1.6x of 2014), with 30,000 1.4 an overall surplus of €10.4bn (i.e. difference 31,624 30,616 1.2 25,000 29,019 29,734 between available and required capital) 26,825 1.0 20,000 0.8

million 20,176 15,000 18,562 € 0.6 15,400 15,980 16,581 10,000 0.4 5,000 0.2 - 0.0 FY11 FY12 FY13 FY14 FY15 Available solvency margin Required solvency margin Solvency ratio

Source: IVASS Solvency I Solvency II On January 1st, 2016 EU’s Solvency II Directive come into force, reviewing the prudential regime for insurance and Available margin Own funds reinsurance companies. At the end of the first quarter 2016, €30.6bn €46.4bn insurers were asked to provide the regulator with Solvency II figures for the year end 2015 and the first quarter 2016 Required margin SCR The life sector insurers benefitted from both an increase of €20.2bn €15.9bn average own funds (+52%) and a decrease of the required margin (-21%) resulting in an overall Solvency II ratio of 2.9x Solvency Solvency (Solvency I: 1.5x) capital ratio capital ratio 1.5x 2.9x

Source: IVASS, ANIA and PwC analysis

PwC 16 Section 2 – Italian life insurance market Focus: Multiline products Premiums and channel breakdown

2015 Premiums by Lob in multiline products Historically, the Italian insurance sector has been dominated by saving products offering a minimum guaranteed return. However, in the recent years characterized by a low interest rate environment: • Insurance companies have been pushed by stricter solvency 40% regulations to commercialize products less capital intensive than €22bn minimum guaranteed policies 60% • Policyholders have been demanding more sophisticated investment solutions combining saving features and attractive return

In such a context the introduction of Multiline life policies Traditional Unit & Index Linked (products splitting the investment in two parts - one linked to a segregated fund (SF), the other replicating the features of a Unit- 2015 Multiline breakdown by channel Linked funds (UL)) has been extremely successful

As of 2015, Multiline products amount to €22.5bn of new business premiums (23% of total) having increased by 87% year-on-year. In 11% 72% 17% line with the life market trend, bank branches represent the main distribution channel (€16bn in 2015 or 72% of total collection)

Asset allocation of that kind of product changes with the distribution channel: Others Banks Financial promoters • Banks and agents sell products with a higher share of traditional Source: ANIA saving features (60% SF fund, 40% UL funds) • Financial promoters market riskier products (20% SF fund, 80% UL funds) PwC 17 Italian non-life insurance market

The Italian Insurance Market • 2015 figures + 3M16 overview PwC 18 Section 3 – Italian non-life insurance market

Italian non-life insurance market Key Messages

• 2.4% decrease in GWP (€32.0bn vs. €32.8bn in 2014) is primarily driven by the motor business (-6.5%). However, in 2015 the number of insured vehicles increased (+0.5%), in FY15 Key-data line with the previous year slight growth (+0.6%) after several years of negative trend (-5.1% over the period 2010-2013) Italian insurance market GWP • Motor business represents 52% of the overall non-life business • In 2015, the non-life sector achieved a €4.1bn positive technical result driven by claims €32bn, -2.4% vs FY14 cost reduction. The underwriting result was 12.7% (in line with FY14) of total non-life Non-life products distributed mainly written premiums through agents (81.1%) • Decrease in claims occurred over the period 2011 – 2015 (CAGR11-15: -6.7%), resulting in Largest non-life insurance company: policy price reductions UnipolSai Assicurazioni (market share • There is lack of penetration and development of non-motor lines of business compared to equal to 19.3%) other European countries Largest non-life insurance group: • With Solvency II the non-life segment reveals the need of a overall capital strengthening, as Unipol Group (market share equal to 24.4%) the solvency capital ratio is estimated to decrease by 21.2% 127 insurance companies operating in the non-life business (132 in 2014) 2010/2015 Non-life business technical result € million FY11 FY12 FY13 FY14 FY15 2015 # of companies by GWP Gross written premiums 36,359 35,413 33,690 32,800 32,002 Change in reserves 35,836 35,886 34,441 33,188 32,182 Incurred claims (26,462) (25,793) (22,400) (21,201) (20,023) 59 General expenses (8,761) (8,504) (8,433) (8,599) (8,702) 23 21 Investment income 604 1,607 1,202 1,278 1,196 Other technical income (charges) (591) (663) (605) (527) (599) Technical result 626 2,533 4,205 4,139 4,054 15 9 Reinsurance result (554) 537 (772) (600) (410) Net technical result 72 3,070 3,433 3,539 3,644

GWP > €1bn €1bn- €0.3bn- €100m- < €50m Source: ANIA €0.3bn €0.1bn €50m Source: ANIA

PwC 19 Section 3 – Italian non-life insurance market Italian non-life insurance market trend

2011/2015 Italian market non-life GWP 2011/2015 Split between motor and non-motor LoB

Motor Non-Motor

43.2% 43.0% 44.7% 46.4% 48.0%

million 36,359

€ 35,413 33,690 32,800 56.8% 57.0% 55.3% 53.6% 32,002 52.0%

FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15

Source: PwC analysis on IVASS data Source: PwC analysis on IVASS data

2011/2015 Breakdown of GWP by LoBs

20,652 20,190 18,644 17,567

16,642

million €

5,208 5,113 5,031 5,030 5,105 4,989 4,917 4,947 5,072 5,019 2,933 2,939 2,848 2,831 2,871 2,577 2,254 2,221 2,301 2,364

Motor Accident & Sickness Fire & other damages General TPL Other

Source: PwC analysis on IVASS data FY11 FY12 FY13 FY14 FY15

PwC 20 Section 3 – Italian non-life insurance market Breakdown of non-life market and distribution channels

2011/2015 GWP breakdown by quarter

-2.6% -4.9% -2.6% -2.4% -2.1% -4.7% -3.5% -2.3% -1.8% -5.0% -3.8% -2.6% 36,359 35,413

-1.2% -5.6% -2.8% -2.0% 33,690 32,800 32,002 million

€ 25,713 25,168 23,988 23,153 22,619 18,385 18,059 17,159 16,515 16,090 8,791 8,687 8,198 7,967 7,804

3M11 3M12 3M13 3M14 3M15 6M11 6M12 6M13 6M14 6M15 9M11 9M12 9M13 9M14 9M15 12M11 12M12 12M13 12M14 12M15

Motor Accident & Sickness Fire & other damages General TPL Other Source: PwC analysis on IVASS data

2011/2015 Trend of sales channel 0.1% 0.1% 0.2% 0.2% 0.2% The negative GWP trend of the non-life insurance market is 3.5% 3.2% 3.6% 4.3% 4.7% 12.6% 13.1% mainly attributable to Motor TPL (-5.3% or -€0.9m vs. 2014) 12.7% 18.4% 14.0% Sales of non-life insurance remain dominated by agents, which hold a market share of 81% (77% in 2014) and brokers 14% (18% in 2014). Agents represent the dominant 83.8% 84.1% 83.2% 77.0% 81.1% distribution channel in all LoBs, with the exception of ships, railways, goods in transit and aircrafts dominated by brokers. Bancassurance leads the sale of credit and miscellaneous financial loss covers FY11 FY12 FY13 FY14 FY15

Agents Others Banks Financial promoters

Source: PwC analysis on IVASS data

PwC 21 Section 3 – Italian non-life insurance market Direct sales keep on growing

2015 Non-life GWP from direct sales Zurich Total € million Genialloyd Direct Line Genertel Linear Quixa Dialogo In 2015 sales through internet and Connect by LoB telephone channels represented 4.7% of total non-life GWP (8.3% if limited MTPL 479.2 262.2 329.3 132.7 107.9 101.9 17.5 1,456

to motor only) Other Motor 74 146.7 44.5 13.1 16.9 7.5 0.9 264 GWP of direct companies amounted to Accident & €1,922m, of which €1,720m (or Sickness 20.7 35.9 24.9 8.7 4.7 2.9 0.6 92 89.5%) related to motor business Fire & other damages 5.4 0.6 9.0 0.3 0.1 0 0 11 Direct companies operating in the 2.3 0.1 4 0.1 0.1 0 0 6 Italian market are usually part of GTPL leading insurance groups, except for Other 35.1 10.7 34.9 5.8 5.2 3.7 0.6 93 Direct Line, being part of the Mapfre Group Total by company 617 456 447 161 135 116 20 1,922 Ranking non-life In the Italian non-life insurers # 10 # 13 # 15 # 37 # 41 # 42 # 91 ranking, Genialloyd, Direct Line, and insurance market Genertel are ranked #10, #13 and #15 2011/2015 Trend of direct sales respectively

7.9% 7.9% 7.5% 7.7% 6.6%

4.7% 4.8% 4.8% 4.7% 4.1%

FY11 FY12 FY13 FY14 FY15 Non-life market Motor LoBs Source: PwC analysis

PwC 22 Section 3 – Italian non-life insurance market Expense, loss and combined ratios

2011/2015 Combined ratio Despite the stable general expenses in 2015, the expense ratio rose by 1.0% to 27.2% (26.2% in 2014) as a consequence of the 97.9% 95.9% reduction of the volume of premiums collected 90.1% 90.1% 89.4% The 5.6% claims cost decline, reported in 2015 (€20bn vs. €21bn in 2014), resulted in a loss ratio of 62.2% (63.9% in 73.8% 71.9% 65.0% 63.9% 62.2% 2014) The combined ratio was 89.4% at the end of 2015, decreasing by 0.7% confirming the halt of the trend started in 24.1% 24.0% 25.0% 26.2% 27.2% 2009, when combined ratio was 103.7% FY11 FY12 FY13 FY14 FY15 In 2014, General TPL recorded its first positive result in Expense ratio Loss ratio almost two decades, still prevailing in 2015 with a combined Source: ANIA ratio of 86.5%

2015 Expense, loss and combined ratios by LoB

Loss ratio Expense ratio 102.2% 113.7% 111.0% 91.2% 88.7% 92.1% 93.6% 76.3% 87.9% 86.5% 78.1% 71.0% 63.5% 64.6% 43.1% 54.7% 84.4% 76.7% 83.8% 56.2% 60.4% 54.7% 34.0% 41.4% 65.5% 58.1% 20.1% 41.9% 72.1% 26.7% 32.0% 35.4% (72.7%) 44.1% 36.8% 35.0% 25.8% 29.9% 23.1% 19.3% 18.4% 29.2% 32.6% 31.7% 21.5% 15.7% 31.8% 29.3% 34.3% 32.6%

(88.4%)

Accident Sickness Land Railway Aircraft Ships Goods in Fire and Other Motor Aircraft General TPL Credit Suretyship Financial Legal Assistance vehicles rolling transit natural damage to vehicle + liability loss expenses stocks forces property Ships Source: ANIA liability

PwC 23 Section 3 – Italian non-life insurance market Non-life insurance solvency margin

2011/2015 Non -life solvency I margin

30,000 2.72 2.75 2.74 2.77 3.0 In 2015, under Solvency I, the ratio of the 2.56 non-life insurance sector was 2.8x (in line 25,000 2.5 with the ratio in 2014 of 2.7x), with an 20,000 2.0 overall surplus of €10.8bn (i.e. difference 18,465 18,542 15,000 1.5 between available and required capital)

16,227 16,924 16,893 million

10,000 € 1.0

5,000 0.5 6,786 6,748 6,348 6,170 6,089 - 0.0 FY11 FY12 FY13 FY14 FY15 Available solvency margin Required solvency margin Solvency ratio

Source: IVASS

Solvency I Solvency II On January 1st, 2016 EU’s Solvency II Directive come into force, reviewing the prudential regime for insurance and reinsurance companies Available margin Own funds €16.9bn €22.7bn At the end of the first quarter 2016, insurers were asked to provide the regulator with Solvency II figures for the year Required margin SCR ended 2015 and the first quarter 2016 €6.1bn €14.3bn The non-life sector was negatively impacted by the new regulatory framework: under Solvency II The Solvency Capital Solvency Solvency ratio was 1.6x (vs. 2.8x, under Solvency I) capital ratio capital ratio 2.8x 1.6x

Source: IVASS, ANIA and PwC analysis

PwC 24 Section 3 – Italian non-life insurance market Focus: Motor GWP shows a declining trend (1/2) GWP is decreasing due to the drop in average MTPL tariffs

2007/2015 MTPL GWP As of 2015, Italy has one of the largest number of vehicles in circulation (37 million cars) and one of the largest MTPL markets in Europe (€14.2bn in Italy vs CAGR: €14.5bn in Germany) -3.1% 18,208 17,605 17,007 17,760 17,542 16,964 16,230 Due to pressure to lower premiums, motor GWP has million 15,180 € 14,187 declined by 3.1% since 2007. In recent years, this decline has become even stronger driven by the decrease in average MTPL tariffs. Despite the decline in rates, the combined FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 ratio has improved

Evolution of average MTPL tariffs (2007=100) The fall of average MTPL tariffs is mainly due to:

Combined 99 101 108 106 103 92 88 90 94 • Decrease in the use of motor vehicles affected Ratio % by rising fuel price (until 2014) and subdued “Normal” insurance economic cycle Progressive diffusion of (increasing tariffs along telematics products economic conditions with decreasing Combined Ratio) • Rising competition and customers churn rate 103 103 have resulted in: 100 98 96 97 a) Diffusion of online aggregators (helping

93 92 comparability between different offers) 2007=100 85 b) Introduction of new rules on agency indexed average price (2007=100) distribution (multi-firm agents)

2007 2008 2009 2010 2011 2012 2013 2014 2015 • Technological innovations such as telematics black box products (pay as you drive) Source: PwC analysis on IVASS, ANIA, Insurance Europe and European Automobile Manufacturers' Association

PwC 25 Section 3 – Italian non-life insurance market Focus: Motor GWP shows a declining trend (2/2) The progressive diffusion of “Black Box” is one of the key drivers

Average MTPL tariffs Black box contracts Italy is characterized by strong regional differences in by Region (2015) diffusion by Region (2015) terms of average MTPL tariffs (2015 data):

Aosta Valley Trentino AA a) It shows higher MTPL tariffs in Campania €305 €350 Calabria and Tuscany b) and less expensive region such as Aosta Valley, Friuli VG. and Trentino AA. Friuli VG. €330 Diffusion of insurance frauds, especially in the Southern regions of the country, is one the main reasons Tuscany €494 behind regional differences of MTPL tariffs

Caserta To address the problem, Italy has become one of the Campania Napoli most advanced countries in the diffusion of €586 Salerno telematics products (pay-as-you-drive), as policyholders Calabria Reggio installing a black box in their vehicles receive a significant €499 Catania Calabria discount on their MTPL policy

As of 2015, black boxes have become mainstream and they Lowest average premium Black box agreement rate represent 16% of total motor sales (#4.8m policies), <10% reaching 30% in those regions with higher tariffs Medium average premium Black box agreement rate between 10% and 15% Strongest diffusion of black box policies is therefore found Highest average premium Black box agreement rate >15% in Southern Italy with top provinces located in Campania (Caserta 47%, Napoli 41%, Salerno 32%), Sicily (Catania 32%) and Calabria (Reggio Calabria 30%)

Source: IVASS

PwC 26 3M16 overview & industry outlook

The Italian Insurance Market • 2015 figures + 3M16 overview PwC 27 Section 4 – 3M16 overview & industry outlook 3M16: Insurance market trend update

3M12/3M16 Italian market GWP

39,776 38,035 35,460 7,804 28,495 7,704 25,937 7,967 8,198

million 8,687 € 31,972 27,493 30,331 17,251 20,297

3M12 3M13 3M14 3M15 3M16

Life Non-Life Source: PwC analysis on IVASS data 3M16 Italian Life & non-Life GWP breakdown per LoB 3M16 total GWP (life and non-life) decreased by €1.7bn (from €40bn in 3M15 to €38bn in 3M16, -4.4% decrease). The volume of Non-life market - Breakdown per motor and non-motor GWP collected in the first quarter of 2016 confirms the negative 3% 2%3M13 18% performance of the non-life business (-1.3% in 3M16) and a u-turn 4%2% of the positive trend of the life sector recorded until 2015 (-5.1% in 21% 3M16) Life Non-life 47% 53% €30.3bn €42%7.7bn 3M16 life GWP slight negative trend in comparison with 3M15, as a 58% 74% result of the little growth of traditional products (+7.0% or 77% €1,549m) totally offset by the drop of unit & index linked products (-33% or -€2,689m) Traditional products Motor Unit & Index linked The 1.3% non-life GWP decrease recorded during the first quarter Capitalizations Non-Motor 2016 was mainly due to the decrease of MTPL (-6.3% or -€227m), Others (Mutual funds & Sickness) whereas other LoBs recorded an overall slight positive trend Source: PwC analysis on IVASS data

PwC 28 Section 4 – 3M16 overview & industry outlook 3M16: Italian life insurance market update

3M12/3M16 Life GWP quarter breakdown per LoB 23,494 22,345 21,945

14,981

13,043 million

€ 8,208 5,519 4,183 3,074 3,856 1,403 691 769 940 856 443 364 354 418 461

Traditional products Unit & Index linked Capitalisations Others (Mutual funds & Sickness)

3M12 3M13 3M14 3M15 3M16 Source: PwC analysis on IVASS data

2012/3M16 Breakdown per type of policies 2012/3M16 Breakdown per channel

8.5% 15.2% 3M16 78% 22% 23.3% 16.7% 16.8%

FY15 68% 32%

59.1% 69.9% FY14 75% 25% 48.6% 62.0% 64.8%

FY13 76% 24% 1.5% 1.2% 1.0% 0.5% 1.7% 26.6% FY12 73% 27% 23.0% 20.2% 21.2% 18.3%

0% 20% 40% 60% 80% 100% FY12 FY13 FY14 FY15 3M16

Traditional contracts Investment contracts Agents Others Banks Financial promoters Source: PwC analysis on IVASS data

PwC 29 Section 4 – 3M16 overview & industry outlook 3M16: Italian non-life insurance market update

3M12/3M16 GWP breakdown per motor and non-motor 2012/3M16 Breakdown per distribution channel

0.1% 0.2% 0.2% 0.2% 0.3% 8,687 8,198 3.2% 3.6% 4.3% 4.7% 5.5% 7,967 7,804 7,704 12.6% 13.1% 14.0% 18.4% 20.5% 3,572 3,408 3,480

3,563 3,645 million

€ 84.1% 83.2% 81.1% 77.0% 73.7% 5,115 4,790 4,487 4,240 4,059

3M12 3M13 3M14 3M15 3M16 FY12 FY13 FY14 FY15 3M16

Motor Non-Motor Agents Others Banks Financial promoters Source: PwC analysis on IVASS data Source: PwC analysis on IVASS data

3M12/3M16 GWP breakdown per main LoB

5,115 4,790 4,487

4,2404,059

million € 1,311 1,240 1,2851,3141,340 1,054 1,015 994 1,0221,020 644 631 621 648 650 602 543 553 582 600

Motor Accident & Sickness Fire & other damages General TPL Other

3M12 3M13 3M14 3M15 3M16 Source: PwC analysis on IVASS data

PwC 30 Section 4 – 3M16 overview & industry outlook Industry outlook

In 2015, after few years of recession, Italian GDP increased 2016 Life GWP outlook by 0.7% (Source: ISTAT) 114,950 According to the Italian Association of Insurance Companies 104,653 29% of (ANIA), the Italian insurance market will be impacted by the 2016 forecast path traced by financial markets from the beginning of 2016.

The 7.1% drop forecast for 2016 suffer the impact of life million business decrease, whose premiums, after the considerable € growth achieved in 2015 (+4.0%), are estimated to decrease -5.1% vs. 3M15 (-9.0%) in 2016. The first quarter 2016 result seems to 30,331

confirm the ANIA estimate (-5.1% vs. 3M15) Actual Forecast Actual 2015 2016 3M16

Source: PwC analysis on ANIA data

Despite the positive signs coming from the general economy, 2016 Non-life GWP outlook Italian non-life GWP is expected to decrease by o.5% in 2016, as motor TPL business will experience a 4.5% reduction 32,002 due to the additional decrease of tariffs and technological 31,846 innovations. Other non-life LoBs, on the other hand, are 24% of expected to benefit from the positive economic outlook and 2016 forecast

record an increase in GWP (+2.7%)

million € -1.3% vs. 3M15 7,704

Actual Forecast Actual 2015 2016 3M16

Source: PwC analysis on ANIA data

PwC 31 M&A activity

The Italian Insurance Market • 2015 figures + 3M16 overview PwC 32 Section 5 – M&A activity M&A Transactions

Life market – Recent Italian transactions Recent deals Deal Size  PwC has worked on most of the deals in # Year Target Bidder Stake % (€m) the life and non-life Italian market 1 2016 Wealth Italy SpA Cinven Partners LLP 100% 278 2 2015 C.B.A. Vita SpA HDI Assicurazioni SpA n.a. n.a.  Advised Cinven Partners on: 3 2015 ERGO Previdenza SpA Cinven Partners LLP n.a. n.a. 4 2014 Carige Vita Nuova Apollo Global Management 100% 170  The acquisition of 100% stake of 5 2013 Eurovita Assicurazioni JC Flowers 80% 47 Old Mutual Wealth Italy SpA 6 2012 Chiara Vita Helvetia Holding AG 30% 23 (€7bn funds under management) 7 2011 Bipiemme Vita SpA Covea 81% 243 for a consideration of €278m in 8 2011 BNL Vita SpA Cardif Assicurazioni SpA 51% 325 August 2016 9 2010 Life SpA Aviva Italia Holding SpA 50% 30 10 2010 Arca Vita Unipol 60% 270  The acquisition of Ergo Italia SpA, €359m GWP, 160 agencies and Non-life market - Recent Italian transactions 280 employees in November 2015 (in July 2016, DARAG, run-off Deal Size # Year Target Bidder Stake % (€m) specialist insurer, acquired Ergo 1 2016 Ergo Assicurazioni Darag AG n.a. 50 Assicurazioni from Cinven) 2 2016 Filo Diretto Nobis Assicurazioni 100% n.a.  PwC also advised on: 3 2015 InChiaro Assicurazioni SpA HDI Assicurazioni SpA 49% n.a. 4 2015 ERGO Assicurazioni SpA Cinven Partners LLP n.a. n.a.  January 2016: Nobis 5 2014 Carige Assicurazioni Apollo Global Management 100% 140 Assicurazioni, owned by Intergea, 6 2014 RSA (Italian branches) ITAS Mutua 100% 24 acquired majority stake in Filo 7 2014 Direct Line (Italy & Germany) Mapfre 100% 550 8 2014 Cargeas Assicurazioni SpA Ageas NV/BNP Paribas Cardif SA 50% -1 75 Diretto SpA, an assistance 9 2014 Milano Assicurazioni SpA Allianz €1.1bn portfolio* 440 insurance provider 10 2013 Fata Assicurazioni Danni 100% 179  November 2015: HDI 11 2012 Fondiaria-SAI Group Unipol 42% 954 Assicurazioni SpA acquired majority stake in C.B.A Vita SpA * renewal rights on an insurance portfolio + 729 agencies and 49% in InChiaro Assicurazioni Source: PwC analysis on Mergermarket data SpA from Banca Sella

PwC 33 The Italian insurance market in the European context

The Italian Insurance Market • 2015 figures + 3M16 overview PwC 34 Section 6 – The Italian insurance market in the European context

The Italian insurance market in the European context

Key Messages FY14 European key-data* 5 Strengths European insurance market GWP • Improving macroeconomic conditions (GDP +0.7% in 2015 and +1.0% in 2016, IMF) €1,167bn • Strong capital position of Italian insurers: in 2015 Solvency Capital Ratio 2.3x the o/w Life: €713bn regulatory requirement (ANIA) Non-life: €454bn • Strong demand for Multiline life products (+87% in 2015), which are less capital Western European insurance intensive than traditional saving products with minimum guaranteed return market average expenditure €2,694 • Highly attractive to foreign investors which, in the recent years, have made several o/w Life: €1,646 acquisitions both in life and non-life segments Non-life: €1,048 • Cutting edge non-life segment, with a widespread diffusion of insurtech innovations Italian insurance market average such as telematics (motor policies with black-boxes) and domotics (assistance policies through expenditure €2,358 home automated tools) insurance products o/w Life: €1,818 Non-life: €540 5 Challenges Italian insurance market GWP 12.3% of European Insurance market • Negative non-life market performance still driven by the declining MTPL GWP trend, (life insurance 15.5%; non-life insurance which is forecasted to decline also in 2016 (-4.5%, ANIA) 7.2%) • After several years of sustained growth life segment is expected to decrease, hampered Italian insurance market by stock market volatility and the consequent decline in Unit Linked GWP (-35%, ANIA) penetration (as GWP on GDP) 8.8% • Protracted low interest rates poses major challenges to life insurance companies, (vs. 7.7% in FY13) especially those more exposed to traditional saving products with minimum guaranteed return o/w Life: 6.8% (vs. 5.5% in FY13) • In Europe online aggregators have been gaining an increasingly important role, mainly in the Non-life:2% (vs. 2.2% in FY13) motor business. However in Italy, given that aggregators have a market share of just

* 2014 figures, which are the latest European available 2%, potential upsides are foreseen updated figures at the issuance date of our report • Average tax rate on premiums (26%) is higher than the European benchmark (19%)

PwC 35 Section 6 – The Italian insurance market in the European context European insurance market

2014 Life and non-life GWP and GDP per capita 3,500 GDP per capita By a comparison with the average European figures, the Italian United Kingdom 3,000 insurance market shows high growth potential as a result of:

) 2,500

€ Italy France

2,000 (i) Low premium rate per capita both in life (€1.8k) and non-life Life ( Life

- (€0.5k) business 1,500 Germany GWP 1,000 (ii) Historically high saving rate of Italian citizens (10.5% in 2014)

500 Netherlands Spain (iii) Historically low penetration rate of non-life insurance sector - - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 compared to the European peers (2.0% in 2014) GWP - Non-Life (€)

Source: PwC analysis on Insurance Europe data

2010/2014 Life and non-life direct GWP

Life market Non-life market 242 253 241 227 234 205 197 193 69 188 179 186 179 178 182 187 69 66 67 67 62 143 68 126 64 67 119 66 97 99 110 105 33 88 91 94 36 34 78 79 75 75 74 billion 36 184 35 56 60 57 55 54 159 167 173 176

€ 143 124 113 119 129 111 94 56 57 56 57 56 90 74 70 85 90 87 87 91 29 30 30 29 29 22 22 27 30 27 26 25 0 0 0 19 18 17 0 0 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14

Italy France Germany Netherlands Spain United Kingdom

Source: PwC analysis on Insurance Europe data

PwC 36 Section 6 – The Italian insurance market in the European context European insurance premiums penetration

2012/2014 Ratio of life premiums to GDP 2012/2014 Ratio of non-life premiums to GDP

9.4% 9.0% 8.9% 8.5% 8.1%

6.8% 6.0% 5.5% 5.6% 5.8% 4.4% 3.3% 3.4% 3.3% 3.5% 3.5% 3.4% 3.5% 3.3% 3.3% 3.3% 3.2% 3.2% 2.9% 3.0% 2.9% 2.9% 2.3% 2.4% 2.6% 2.5% 2.3% 2.2% 2.0%

n.a. n.a.

Italy France Germany Netherlands Spain United Italy France Germany Netherlands Spain United Kingdom Kingdom FY12 FY13 FY14 FY12 FY13 FY14 Source: PwC analysis on Insurance Europe data – 2014 data (and 2013 UK) estimated by ANIA

When compared to the main European countries, Italy is the A negative trend in non-life premium penetration ratio is 2014 best performer in terms of increasing life insurance (% of common between the main European countries. In the last year premiums on GDP) Netherlands and Italy show the worst performance, from 8.9% to 8.1% and from 2.2% to 2.0% respectively The negative trend related to Netherlands and Spain is mainly due to the decrease of life premium volumes, whereas the negative trend of Germany is related to a higher GDP growth

PwC 37 Section 6 – The Italian insurance market in the European context Distribution channels

2013 Breakdown of life GWP by distribution channel

3% 2% 1% Italian, French and Spanish life markets remain dominated by 18% traditional distribution channels, such as bancassurance 60% 64% 26% 70% 63% 76% Agents network led the distribution model in Germany with brokers playing a prominent role in United Kingdom and 9% 11% 50% 23% Netherlands 1% 15% 14% 7% 30% 15% 12% 17% 9% 4% Italy France Germany* Netherlands ** Spain United Kingdom*

Direct Writing Agents Broker Bancassurance Other * 2013 data not available ** Other refers to both intermediaries: agents and brokers Source: PwC analysis on Insurance Europe data 2013 Breakdown of non-life GWP by distribution channel

4% 1% 4% 7% 8% In Italy, the agents network collects 83% of total non-life 8% 13% 6% 11% 7%7% premiums. Only the German insurance distribution model is 18% 25% comparable to the Italian one with agent network representing 24% 81% 55% 59% of total GWP 83% 34% 34% 59% Direct writing is the main channel in the Netherlands, whilst in 5% 34% France 68% of total GWP is equally distributed by agents and 19% 24% 25% direct writing 6% 6% Italy France Germany Netherlands Spain United Kingdom The UK distribution model is led by brokers Direct Writing Agents Broker Bancassurance Other Source: PwC analysis on Insurance Europe data

PwC 38 Section 6 – The Italian insurance market in the European context Average GWP per insurance company

2012/2014 Number of insurance companies

1,282 United Kingdom 1,229 Italy ranks first among Top 6 European countries with average 1,247 255 GWP per company of €654m, due to a highly concentrated Spain 264 270 domestic market (219 companies in 2014) 170 Netherlands 189 FY14 210 On the other hand the UK is the most diluted market in Europe FY13 548 with 1,282 companies sharing c. €236bn of GWP (avg. of €192m Germany 560 FY12 570 GWP per company) 381 France 395 405 219 Italy 225 226

Source: PwC analysis on Insurance Europe data

2012/2014 Average GWP per insurance company

654

528 518 465 471 442 434 399 351 358

319 335 milion

€ 213 210 209 194 206 188

Italy France Germany Netherlands Spain United Kingdom

Source: PwC analysis on Insurance Europe data FY12 FY13 FY14

PwC 39 Section 6 – The Italian insurance market in the European context Investments portfolio

2008/2013 Breakdown of investments Investment in real estate and loans decreased over the 2008-2013 period, while European insurance companies have shifted part of 6.9% 6.6% 6.1% 6.1% 6.8% 6.6% their investments to bonds and investment funds (respectively 22.7% 24.0% 24.3% 23.4% 23.1% 23.4% 40.7% and 22.7% in 2008 and 42.7% and 23.4% in 2013)

12.4% 12.0% 10.6% 11.0% 10.6% 9.9% Germany, with a CAGR10-14 of 6.7% ranks first for growth in its investments portfolio (€1.83tn in 2014), closely followed by 40.7% 40.5% 40.8% 42.1% 42.3% 42.7% Netherlands (€0.46tn) and France (€2,14tn), while Italy, detached from the other top 3 Countries, accounts €0.63tn of 3.8% 3.3% 3.3% 3.1% 3.1% 3.1% investments 13.5% 13.7% 14.9% 14.3% 14.0% 14.2%

FY08 FY09 FY10 FY11 FY12 FY13

Equities and Participations Real Estate Bonds Loans Investment Funds Other Source: PwC analysis on Insurance Europe data

2010/2014 Investments portfolio Life market Non-life market

2.1 1.9 2.0 1.9 1.8 1.9 0.2 1.8 1.7 1.7 0.1 0.1 0.1 1.7 1.7 0.2 0.1 0.1 0.2 1.6 1.6 0.2 0.2 1.4 1.5 0.8 0.7 0.7

trillion 0.6 0.6

€ 1.9 1.9 0.6 1.7 1.7 1.6 1.6 1.7 1.8 0.5 0.5 0.5 0.6 1.5 1.5 0.5 0.1 0.4 0.4 0.1 0.1 1.1 0.4 0.4 0.0 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.8 0.8 0.9 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.5 0.0 0.4 0.4 0.5 0.3 0.3 0.4 0.3 0.4 0.2 0.2 0.2 0.2 0.2 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 Italy France Germany Netherlands Spain United Kingdom

Source: PwC analysis on Insurance Europe data

PwC 40 Our contacts

Emanuele Grasso Marco Falchero Partner | Financial Services Director | Financial Services

+39 02 7785 372 +39 02 7785 951 +39 348 1565344 +39 335 8086953 [email protected] [email protected]

Liana Vojkollari Gabriele Picuti Senior Manager | Financial Services Senior Associate | Financial Services

+39 02 7785 008 +39 346 5416607 +39 345 1530845 [email protected] [email protected]

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