Consolidated Financial Statement
158 Board of Directors Report
161 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report Group Annual Accounts The Alleanza Group Notes to the Accounts
Supplementary Schedules During 2003 the corporate operations resulted in significant changes in the scope of Summary profit and loss account consolidation. These operations particularly concerned: – concentration of the bancassurance business of the Generali and Banca Intesa groups into a new company with name of Intesa Vita. The new Intesa Vita absorbed the bancassurance business unit of Alleanza Assicurazioni Insurance and equity par- ticipations of Assicurazioni Generali and Banca Intesa in Assiba and Intesa Vita. These last two companies were amalgamated to form the newco Intesa Vita. The sub- scribed capital of the company--represented by common and preferred shares--is owned 50/50 by Banca Intesa and Alleanza Assicurazioni. Since the latter has a majority of the voting rights in general shareholders' meetings, it consolidates the new company by the full-line method; – sale of the shareholding in La Venezia Assicurazioni to Gencasse Professionali S.p.A., wholly-owned subsidiary of Assicurazioni Generali. La Venezia and Gencasse consequently resolved to merge to create a new underwriter to serve the financial promoter network of Banca Generali. The sale is consistent with Alleanza's strategy to pursue development through two important distribution levers: a strong focus on the traditional channel and, in parallel, the bancassurance channel in partnership with Banca Intesa; – the spin-off of Finagen, through the transfer of the property that formerly housed the company headquarters to the new company “Immobiliare San Samuele S.p.A.”. At year-end, the Group Alleanza was structured as follows:
ALLEANZA ASSICURAZIONI S.p.A.
INSURANCE FINANCE REAL ESTATE & BANKING 47.9 51.4 (*) 100 INTESA GENERALI FONDI ALLEANZA PROPERTIES VITA S.p.A. S.G.R.p.A. 99.9 100 IMMOBILIARE ALLEANZA SAN SAMUELE S.p.A. INVESTMENTS PLC
99,9 AGRICOLTURE 100 FINAGEN S.p.A. AGRICOLA SAN GIORGIO S.p.A.
OPERATING VARIOUS 33 GRUPPO GENERALI SERVIZI S.r.l. (*) 1.4% referring to Banca Intesa partecipation.
At 31 December 2003 the voting equity participation in Banca Intesa was equal to 3.20%, the partici- pation in sister company AMB General Holding was 1.8%, and that in Banca Generali was 5.1%. 162 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook Operating activities
In addition to parent company Alleanza, the underwriting activity at 31 December was conducted by Intesa Vita S.p.A., whose contribution to the 2003 consolidated financial statements can be summarized as follows:
(IN EUR MILLIONS) ALLEANZA ASSICURAZIONI INTESA VITA CONSOLIDATED FINANCIAL
Technical data Gross premiums written 3,734.9 3,506.2 6,777.6 Technical provisions - class C 17,520.4 12,294.3 29,814.7 Charges related to claims paid (*) 1,400.6 1,314.1 2,714.7 Net operating expense (*) 212.8 106.1 318.9
Balance Sheet Data Class C investments 18,764.8 12,312.2 30,711.6 Cash 343.8 323.0 672.0 Capital and reserves 2,202.5 1,186.8 2,316.3 Net profit 403.9 4.1 357.4 (*) Data net of reinsurance.
Shareholdings consolidated by the full-line method
The following is a brief report on the individual activities of the principal group companies.
Intesa Vita S.p.A. For a more complete evaluation, the comparison with data for the previous year is made in homogeneous terms.
The premiums written, all from direct business, reached a total of Eur 3,506.2 million, with an increase of 38% over the previous year. The premiums from new production were Eur 3,236.9 million (Eur 2,192.1 million in 2002).
Of the 2,509 bank branches that collaborate with Intesa Vita, 1,928 are related to Banca Intesa, which contributed over 88% of the new business.
The results of the company confirmed its ability to offer valid investment solu- tions, including those with guaranteed capital, that can fully exploit the poten- tial market, characterized by a strong demand for security.
This, in fact, was the type of products that showed abundant growth, with an
163 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts
Supplementary Schedules increase of more than 47%, for both guaranteed minimum products and gua- Summary profit and loss account ranteed/protected unit-linked products.
These policies represented 89.9% of total premium income from new production.
The sums insured in portfolio totaled Eur 21,876 million. At year-end there were 1,148,871 contracts in portfolio (versus 532,724 a year earlier), including 179,022 contributed by parent company Alleanza Assicurazioni.
Class “C” investments reached Eur 12,312.2 million, comprising: 90.2% debt securities, 5.1% mutual funds, 1.3% equities, and 3.3% in other financial inve- stments. Including the class “D” investments of Eur 6,271 million, total invest- ments amounted to Eur 18,584.1 million.
The total of ordinary income, net of expense, was Eur 365.3 million. The average return on investments, based on the average portfolio during the year, was 3.6%.
Net capital gains were equal to Eur 13.3 million.
At year-end the unrealized gains in the equity and bond portfolios totaled Eur 185 million.
The financial statements, after expensing the amount of goodwill amortization (Eur 73.9 million) and taxes of Eur 7.7 million, closed with a net profit of Eur 4.1 million.
Alleanza Investments PLC At year-end the assets under management by the treasury company equaled Eur 505.8 million, composed of Eur 280.9 million in bonds and other fixed-income securities, Eur 142.9 million in mutual funds, and Eur 14 million in equities. Cash and other financial investments totaled Eur 68 million.
Investment income from the financial operation was equal to Eur 23.8 million, including: Eur 16.7 million in ordinary income primarily from bonds and other fixed-income securities and Eur 7.1 million in capital gains.
Financial expense totaled Eur 5.6 million, including Eur 1.3 million in value adju- stments on investments (portfolio losses), Eur 3,5 million in capital losses, and Eur 0.8 million in ordinary operating expense.
The contribution to the consolidated financial statements in terms of net profit was Eur13.8 million (Eur 14 million in the 2002). The dividend resolved under Irish regulations was equal to Eur 13.5 million. 164 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook Agricola San Giorgio S.p.A. The value of farm production was Eur 3.0 million (Eur 2.8 million in 2002), while the relative costs amounted to Eur 2.5 million (Eur 2.3 million in 2002).
The financial statements, after expensing Eur 0.3 million in income taxes, closed with a net profit of Eur 0.8 million, versus Eur 0.4 million in 2002.
The dividend resolved was Eur 0.4 million (Eur 0.3 million in 2002).
Shareholdings valued by the equity method
Finagen S.p.A. The volume of new business in 2003 was Eur 231.3 million with 6,833 newly issued contracts. The 580 new financial leasing contracts represented Eur 114.6 million in investments, while the 6,253 new loans were equal to Eur 116.7 million.
At year-end the value of tangible fixed assets related to the 2,477 leasing con- tracts was Eur 438.4 million, while the average contract duration was 82.5 months.
At the same date, the credit exposure of the loan sector, for 20,692 transactions effected, was Eur 325.3 million. The average duration of the transactions inter- mediated was 55.3 months.
The operations of 2003 closed with a profit of Eur 0.6 million (Eur 0.2 million in 2002) after expensing Eur 1.5 million in taxes.
Fondi Alleanza The assets under management reached Eur 4,221.7 million at year-end (Eur 3,988.5 million at 31 Dec 2002). There were 7,045 subscriptions net of redemp- tions (3,683 in 2002), while the number of investors at year-end was 30,303 (22,281 in 2002).
Net inflows for the year were Eur 225.7 million versus Eur 158 million the pre- vious year, with an increase of 42.8%.
This increase over 2002 is attributable primarily to the inflows from the financial promoter networks (+ 96.7%)—which consolidated the growth obtained the previous year (+ 24.7%), when overall inflows for the market had been negati- ve—demonstrating the growing confidence clients place in Fondi Alleanza, 165 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts
Supplementary Schedules based on its good past operating results. Summary profit and loss account
In fact, the Equity and Bond funds produced returns higher than their respecti- ve benchmarks during the year, enabling the Company to earn a total of Eur 26.7 million in performance commissions.
All the equity funds provided their subscribers with a significant increase in capi- tal during the year, except the Alto America Fund, whose return was affected by the devaluation of the dollar vs. the euro. The Alto Azionario Fund produced a return of 14.1%, Alto Pacifico 13.8%, and Alto Internazionale Azionario 6.5%, thought it, too, was affected by the weak dollar.
The Alto Bilanciato Fund, which again in 2003 was one of the best in its cate- gory in terms of risk-return level, produced a positive result of 9.1%.
The Bond and Money funds provided good appreciation of invested capital, except for Internazionale Obbligazionario, which also suffered from the weak dollar.
The net profit for the year, after expensing Eur 18,7 million in income taxes, was Eur 28.8 million (Eur 12.3 million in 2002). The total dividend resolved was Eur 28.8 million.
Generali Properties
At 31.12.2003 Generali Properties group was managing a real estate portfolio 2,350,000 sq.meters, high quality in terms of zoning, geographical location, and state of repair. Over 75% of the properties in terms of sq.meters were zoned as non-residential (54% for offices), and more than 56% are located in principal Italian cities (Milan 41%, Rome 16%).
A series of purchase and sale transactions were completed during the year aimed at upgrading the real estate portfolio, consistent with the strategic gui- delines in the group three-year plan. The divestitures involved primarily low-pro- fitability residential properties, as well as certain properties for services use that had entirely developed their potential. Part of the liquidity deriving from the sales was invested in non-residential properties with more interesting rates of return.
166 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook Regarding rental activity, Eur 266.6 million in income was generated through leases of company-owned properties. The relative production costs related to recurring property management expense totaling Eur 104.3 million.
The result of rental activity amounted to Eur 162.3 million.
The property and facility management activity generated an additional Eur 9.6 million in income.
The relative production costs amounted to Eur 8.3 million.
Overall, the difference between the value and costs of production was Eur 449.1 million. Net earnings for the year were Eur 250.8 million, after expensing taxes of Eur 157.6 million.
During of the year parent company Generali Properties distributed an advance dividend of Eur 62.4 million to Alleanza.
167 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account The financial statements
The Alleanza Consolidated Group Accounts Alleanza—prepared pursuant to Article 65 of Legislative Decree no. 173 of 26 May 1997 and audited by Reconta Ernst & Young—includes data on the subsidiaries and affiliates applying the usual methodology.
Full-line consolidation was used for those companies in which there is dominant influence or control over management. Another condition is that the sharehold- ing be long-term in nature and that no impediments exist to the actual exercise of control.
CONSOLIDATED CONSOLIDATED LINE BY LINE AT EQUITY
ALLEANZA ASSICURAZIONI S.p.A.
100% 99.9%
ALLEANZA FINAGEN S.p.A. INVESTMENTS PLC
100%
FONDI 100% ALLEANZA S.G.R.p.A.
AGRICOLA SAN GIORGIO S.p.A.
2.9% 51.4% BANCA INTESA INTESA VITA S.p.A.
47.9%
GENERALI PROPERTIES
168 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook To preserve the "insurance" nature of the consolidated financial statements, non-insurance companies were integrated by the full-line method only if their type of business activity would not diminish the clarity of the accounts.
Note that the insurance companies operate exclusively in life assurance, so most of the data on the insurance operation refer only to that branch of activity.
The other companies, to which these requisites are not applicable, were consol- idated by the equity method, based on the value of the shareholding of the par- ent company.
Sister companies AMB Generali Holding, Generali Servizi group and Banca Generali were valued at cost, as was subsidiary Immobiliare San Samuele S.p.A.
169 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts Operational performance
Supplementary Schedules
Summary profit and loss account The 2003 consolidated accounts closed with a net profit of Eur 357.4 million (Eur 230.4 million in 2002), after deductions of Eur 32 million and the assign- ment of Eur 125 million to specific provisions. ROE was 17.2% (12.0% in 2002). Income statement, reclassified in accordance the formats prescribed by law, consist of:
(IN EUR MILLIONS) 2003 2002 % CHG.
Premiums and fees (*) 6,777.6 4,196.9 61.5 Premiums ceded (*) – 876.0 – 874.3 0.2 Changes in technical provisions (**) – 3,730.8 – 2,014.5 85.2 Charges relative to claims paid (**) – 2,714.7 – 1,317.1 106.1 Net operating expenses (**) – 318.9 – 245.7 29.8 Other technical income/expense (**) 61.0 41.3 47.7 Income from Class D investments 238.3 – 142.7 n.c. Portion of investment income transferred from the non-technical account 990.4 629.7 57.3 Non-technical balance 426.9 273.6 56.0 Portion of investment income transferred to the technical account – 990.4 – 629.7 57.3 Investment income (***) 1,169.0 648.0 80.4
Other income/expense – 175.9 – 41.4 324.9 Result of ordinary activity 429.6 250.5 71.5 Extraordinary income/expense 21.6 81.3 – 73.4 Pre-tax result 451.2 331.8 36.0 Income taxes – 91.7 – 101.4 – 9.6 Minority portion of net profit – 2.1 – n.c Group portion of net profit 357.4 230.4 55.1 (*) including change in non-life premiums reserve of parent company Alleanza. (**) net of portion ceded to reinsurers (***) net of the interest to reinsurers. The principal insurance components showed a positive result, expressed by the increased balance of technical operations. The financial operation also pro- duced satisfactory results, though the markets continued to manifest a high degree of uncertainty. The result of ordinary activity therefore grew to Eur 429.6 million, with an increase of 71.5%.
The comments and notations on this report, as well as some significant aspects of operations, are presented below, broken down into the areas typical of our business: portfolio and production, insurance operation, overhead costs, resources, financial operations.
170 The Group
Portfolio and Production Portfolio and production Insurance Operation Financial Operations Premiums and fees Subsequent Events Conclusions and Outlook The gross premiums written, including the change in non-life premiums reser- ve of the parent company (Eur 0.1 million), reached a total of Eur 6,777.6 m, ver- sus Eur 4,196.9 million in 2002, with an increase of 61.5%. The increase in gross premiums was 12.8% with respect to the previous year, in homogeneous terms.
Of the premiums from direct business, Eur 245.2 million refer to first-year and recurring premiums, Eur 2,292.7 million to subsequent years, Eur 3,520 million to traditional single premiums, Eur 549 million to index-linked, Eur 157.6 million to unit-linked and Eur 0.6 million to pension funds.
The premiums from indirect business, Eur 12.4 million, refer to premiums accepted in reinsurance from La Venezia Assicurazioni (Eur 12.3 million) and the reinsurance relationship with C.I.R.T. (Eur 0.1 million).
PARENT- INTESA VITA TOTAL TOTAL CHG TOTAL (IN EUR MILLIONS) % 2003 2002 (**) % % First-year premiums (*) 243.1 2.1 245.2 275.0 – 10.8 3.6 Single premiums 998.1 3,218.5 4,216.6 1,744.4 141.7 62.2 Subsequent premiums 1,995.8 285.6 2,281.4 2,153.7 5.9 33.7 Group 10.6 – 10.6 12.2 – 13.1 0.1 Related income 11.3 – 11.3 11.2 0.9 0.2 Total 3,258.9 3,506.2 6,765.1 4,196.5 61.2 99.8 Indirect bus. 12.4 – 12.4 0.1 n.c. 0.2 Change in provision for unearned premiums 0.1 – 0.1 0.3 – 66.7 – Total 3,271.4 3,506.2 6,777.6 4,196.9 61.5 100.0 (*) including recurrent single premiums. (**) including Eur 727.6 million relative to La Venezia Assicurazioni.
The first-year and single premiums accounted for 65.8% of gross premiums writ- ten (48.1% in the 2002).
The outward reinsurance premiums were equal to Eur 876 million. Retained premiums were equal to Eur 5,901.6 million (+ 77.6%). The premiums retention ratio reached 87.1% (79.2% at 31 Dec 2002), due pri-
PREMIUMS AND FEES 12.4 21.9
2,281.4
23.4
2,153.7 4,216.6
Indirect business Group premiums 1,744.4 Subsequent premiums 245.2 275.1 Single premiums 31-12-2003 31-12-2002 First year premiums 171 Board of Directors Report
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External Auditors’ Report
Group Annual Accounts
Notes to the Accounts marily to the increased production of single-premium (both index-linked and tra- Supplementary Schedules ditional) of Intesa Vita. Summary profit and loss account The reinsurance contract of Alleanza with parent company Assicurazioni Generali remained unchanged.
The premiums from new production reached Eur 4,493.3 million (+ 123.7% over 2002); with the following composition: Parent company Eur 1,256.4 mil- lion, Intesa Vita Eur 3,236.9 million. Premiums from new production increased by 22.2% with respect to the previous year, in homogeneous terms.
PREMIUMS FROM NEW PRODUCTION
158.5 246.9 549.7 178.0 231.9 235.8
3,538.2 1,362.7
31-12-2003 31-12-2002 (*)
Single premiums Index Linked
Annual premiums Unit Linked single and recurring
(*) Eur 523.7 million relative to La Venezia Assicurazioni, including Eur 4 million relative to annual premiums.
Sums Insured and Actuarial Reserves The sums insured and actuarial reserves at the end of 2003 consisted of the following: PARENT INTESA VITA TOTAL TOTAL (IN EUR MILLIONS) GROUP 2003 2002 (*) Sums insured 47,521.9 21,876.0 69,397.9 55,241.7 Technical reserves 17,707.2 18,565.3 36,272.5 22,644.8 Capital at risk (direct business) 29,814.7 3,310.7 33,125.4 32,596.9
(*) including Eur 1,564.5 million related to capital at risk of La Venezia Assicurazioni.
The difference between sums insured from direct business (Eur 69,397.9 million) and the relative technical reserves (Eur 36,272.5 million) represents the capital at risk (Eur 33,125.4 million versus Eur 32,596.9 million at 31 Dec 2002).
The sums insured in portfolio at 31 December 2003 totaled Eur 69,397.9 mil- lion, with an increase of Eur 14,156.2 million or 25.6%.
A total of Eur 8,258 million in capital was produced, with an increase of 33.2% over 2002; consisting of: Parent company Eur 5,270.5 million, Intesa Vita Eur 2,987.5 million. The actuarial reserve related to past compulsory cession was reported in the accounts pursuant to ISVAP circular 357/D of 12.1.1999. 172 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook Contracts Newly issued contracts totaled 324,633, consisting of: parent company 214,228, Intesa Vita S.p.A. 110,405. Adjustments to premiums involved 387,262 policies. The positive contracts concluded in 2003, in terms of new acquisitions and adju- stments, therefore totaled 711,895 (901,501 in 2002).
The contracts in the portfolio at 31 Dec 2003 were 3,416,388 (2,708,762 at 31 Dec 2002), composed of: Parent company 2,267,517, Intesa Vita 1,148,871, including 179,022 contributed by parent company Alleanza.
Sums paid to policyholders The amounts paid for claims, maturities and surrenders totaled Eur 3,310.8 million (Eur 1,753.5 million in 2002), of which Eur 1,304 million related to Intesa Vita. Maturities amounted to Eur 1,499.5 million, surrenders Eur 1,541.1 million, and claims Eur 270.2 million. Regarding indirect business, claims totaled Eur 4.9 million. The amount of surrenders was affected by the particular type of "whole life" policies in the Intesa Vita portfolio. Net of portions ceded to reinsurers (Eur 623.5 million), and considering the change for sums payable and the cost of settlement service personnel, the Group was left with Eur 2,714.7 million on the books (Eur 1,317.1 million in 2002), with an increase of Eur 1,397.6 million. In homogeneous terms, net claim-related expense would have increased by Eur 898.6 million
CLAIMS PAID
270.2
1,499.5 114.8
994.8
1,541.1
643.9 Insured events
Maturities
31-12-2003 31-12-2002 Surrenders
Performance by sector and geographical area With reference to CONSOB Communication no. 98084143 of 27.10.1998, the distribution of Alleanza group activity does not require the presentation of sepa- rate accounting by sectors.
173 Board of Directors Report
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External Auditors’ Report Group Annual Accounts Insurance Operation Notes to the Accounts
Supplementary Schedules The key objective of the industrial operation of the Alleanza Group in 2003 was Summary profit and loss account growth with profitability, pursued through:
✧ Growth in individual productivity, by identifying the best individuals within the network capable of filling positions of responsibility, in skills and expertise, and a more aggressive sales approach to new market segments, leveraging on a com- pensation system based on the achievement of individual and team objectives.
✧ Protection of industrial margins by reducing fixed costs and providing the agencies with new monitoring instruments for strong growth in commercial results and rigorous control over acquisition and management costs.
✧ Strong consulting capacity especially for customers whose policies are approaching maturity and are targets of the "Reinvesto" sales program, dedicated to recapturing maturing capital, with the involvement of all the producers in the network.
✧ Defense and development of the portfolio to enhance customer loyalty through quality consulting and improved communication and marke- ting instruments designed to extend the opportunities for contact..
✧ Constant orientation toward customers, improving the capacity to meet their needs: the objective is to represent for savers a point of reference for their insurance and financial planning needs.
Products
In 2003 parent company Alleanza further strengthened the product range distributed through the traditional channel, particularly the Investments Line, which was enhanced with diversified solutions to bring the Company offering clo- ser to the investment-risk profiles of its customers.
The agency channel, with the preparation and launch of ”AlleIndex”, extended its range of new index-linked products, along with its traditional long-term pen- sion supplement products.
Regarding this Investments line, “AllOro”, the new product addressed primarily to customers over 50, was presented in November.
“AllOro” is a revaluable single-premium whole life policy that perfectly blends return and guarantee with the possibility of making additional payments on spe- cific investments.
During 2003 Intesa Vita began marketing “IntesaSempre”, the company's lead
174 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook product for Line 1 with minimum guaranteed return, which in the two versions— with periodic revision of benefits (Unico) or with liquidation of the revaluation to the beneficiary (Annuale)—can cover the needs of a broad segment of customers.
Within the Private Line, "Intesa SegnoPiù" was launched, also available in the two versions Unico and Annuale. Though it does not guarantee minimum return, it does ensure revaluation of the principal.
Company activity in Line III consisted of the marketing of three products index- linked products and two unit-linked products with protected capital. All three index-linked products, with an eight-year duration, offer not only return of the premiums paid at maturity but also a benefit indexed to inflation in the Eurozone and an additional benefit indexed to a basket of equities that was diffe- rentiated among the same products according to the respective financial scenarios.
The unit-linked products are differ significantly one from the other: “Sound” - Product with a protection mechanism only at maturity and no possibility of addi- tional payments or partial surrenders; “Intesa Protezione Attiva” - Whole-life product with two distinct phases of financial operation and the possibility of addi- tional payments and partial redemptions.
Sales Network
The Agency sales network of parent company Alleanza remains one of the key assets of the Group.
In 2003 major strategic projects were launched and completed to further impro- ve the organizational model, the "results culture", professional development, and marketing and customer service capacity.
RETE DI VENDITA PERSONALE DI VENDITA
30 AREE ISPETTIVE 30 CAPI AREA
315 AGENZIE 261 AGENTI GENERALI
SPETTORATI AGENZIALI 1,967 PRODUTTORI DIPENDENTI
2 726 SETTORI 12 800 PRODUTTORI LIBERI
175 Board of Directors Report
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Notes to the Accounts
Supplementary Schedules We also continued the geographical penetration activity by expanding the gene- Summary profit and loss account ral agencies, which numbered 315 at year-end.
At 31.12.2003, there were 1,013 collaborators in the Alleanza agencies who also held the position of financial adviser; 785 of them have already obtained mandates from Simgenia SIM and are therefore fully operational, while the others are completing the formal process necessary to obtain licensing.
The program to prepare aspiring new financial promoters for the CONSOB exa- mination continued through self-learning courses and classroom work, resulting in the addition of 103 new financial promoters.
The position of “Field Trainer” was confirmed to provide strong, ongoing ope- rational support to new promoters and all the additional commercial and tech- nical skills necessary to manage the financial products/services.
Simgenia, a stock brokerage firm "dedicated" to the insurance networks of Alleanza, Generali and INA, provided assistance and training through its area coordinators.
The number of bank branches in the Intesa Vita distribution network totaled 2,509 at year-end.
These networks made the following contribution to premiums written:
INTESA VITA 2% 2.4% 1.5% 6.1% 98 163 264 56 (*)
1,928 88%
Bank branches % on new production
Banca Intesa Friuladria Direct channel (*) Friuladria brought Alleanza Holding Intesa Biverbanca Other € 117,3 million in new production. Centro
Marketing Activities
During the year the group continued to develop instruments and processes for approaching potential customers, to achieve even more incisive acquisition, and customers already in the portfolio, to increase the cross-selling ratio.
176 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook The AlCliente program, integrated and implemented at all the agencies of parent company Alleanza, is now an essential element for launching sales cam- paigns that make use of the acquired database and for daily professional con- sulting work. In fact, a specific software enables Alleanza consultants to provide customers with a retirement and financial Checkup, tailoring the offering to their specific needs and the product lines managed.
We continued distribution of “ALcorrente”, an information monthly for policyholders, distributed during home collection (a characterizing modus ope- randi of parent company Alleanza) that aims at improving the level of customer service.
Along with these campaigns, we also pursued the numerous local marketing activities, which remain a strategic part of actions to develop local relations and contact with the market for sales purposes.
In December, parent company Alleanza launched the “Progetto Partner”, a major combined up-selling and cross-selling action focused on a large target audience, which will continue throughout 2004.
Relations with stakeholders
During the year the parent company communicated constantly with the business and financial community to provide detailed information on its shareholder value creation strategies.
Several meetings with sector analysts and the financial community were organi- zed as part of our investor relations activities. Road-shows were also conduc- ted in the United States, United Kingdom and Continental Europe.
Our media relations activities brought the company constant, high-quality visi- bility in the national and local media.
Customer Service
Confirming the central role of the customer for our Group, Alleanza's Customer Care unit was expanded during the year to improve the level of customer sati- sfaction and to constantly sensitize the Company structures on teh importance of customer service quality.
177 Board of Directors Report
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Notes to the Accounts
Supplementary Schedules This unit has the task of independently handling complaints and requests for Summary profit and loss account information from policyholders and ensuring that service levels are maintained by continuously monitoring requests and analyzing the emergence of significant phenomena.
In this context the "Code of Ethics" continues to be an essential point of refe- rence for the entire Company. Through it each Company employee is commit- ted to striving for excellence in his or her activity and maintaining the high level of quality that has always marked the products and professionality of Alleanza.
Regarding Intesa Vita, beginning on 31.12.2003 the new call center began providing integrated support to policyholders and to the branches of Banca Intesa.
178 The Group
Portfolio and Production
Insurance Operation
Financial Operations Overhead costs Subsequent Events Conclusions and Outlook In 2003 the total management, agency and production costs amounted to Eur 463.6 million, versus Eur 379.1 million in 2002. This expense is composed of:
COSTS 2003 2002 CHG % – personnel 116.5 108.9 7.0 – management 100.4 63.0 59.4 – agency 54.4 63.0 – 13.6 – production 191.0 144.2 32.5 Direct business 462.3 379.1 21.9 Indirect business 1.3 – n.c. Total 463.6 379.1 22.3
The increase in overhead expense is related to the consolidation of Intesa Vita, whose costs totaled Eur 114.3 million. The overall costs of management, agency and production of parent company Alleanza remained essentially unchanged with respect to 2002 (+ 1%), confirming the traditional policy of containing fixed costs as a strategic level for defending operating margins. The overall incidence on premiums dropped to 6.8% versus 9.0% in 2002. Net of the reinsurers' portion, Eur 140.5 million, and considering the realloca- tion of expense from other cost centers, the Group was left with Eur 318.9 mil- lion in operating overhead, versus Eur 245.7 million in 2002. In homogeneous terms, the increase in net operating expense was equal to Eur 24 million.
EXPENSES/PREMIUMS RATIO 14% 13.2% 12.9% 13%
12%
11%
10% 9.8% 9% 9.0% 8%
7%
6% 6.8% 31.12.1999 31.12.2000 31.12.2001 31.12.2002 31.12.2003
The investments in long-term project by parent company Alleanza, Eur 8.8 mil- lion, were capitalized.
179 Board of Directors Report
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Notes to the Accounts
Supplementary Schedules Summary profit and loss account Personnel and information systems
Workforce
The workforce at year-end was composed of 1,031 administrative personnel and 2,198 sales personnel, for a total of 3,229 employees (vs. 3,239 at 31.12.2002), including 119 employees related to Intesa Vita.
Training
The Group considers the ongoing training of its human resources as an basic lever for disseminating a professional culture consistent with the market context and the changing competitive models and, above all, sufficient to provide high- level consulting to policyholders. Consequently, new high-intensity training projects were organized in 2003.
The training of Alleanza managerial personnel, aimed primarily at developing managers, involved over 950 persons for a total of 3,000 man-days.
The training of the Alleanza sales network involved 542 seminars involving over 13,200 persons for a total of 17,952 man-days, in addition to intensive ongoing training activity organized within the agencies.
The bancassurance training activity at Intesa Vita, conducted directly and indi- rectly through specialized consultants, involved 1,740 “Premium Managers” under the Arcobaleno project, designed to develop a common new work approach for the three networks of different origins that now constitute the Banca Intesa network.
Other specific training initiatives involved 360 “Private Managers” and 400 “Business Managers” in various programs.
Information technology
Information technology is one of the three areas essential to innovation and the ability to confront the changes imposed by the market.
The collaboration with Generali Servizi Group intends to achieve important results in both qualitative and quantitative terms, permitting the gradual adop-
180 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook tion of best practices that will improve the efficiency and effectiveness of the services.
Activities were launched within the Group Life platform to migrate the existing portfolio to the new system which, when up and running, will reduce operating costs and improve the administrative management of the portfolio.
Efforts continued in 2003 to improve efficiency and complete the system for supporting the sales network.
Within the technological projects, a project was initiated to consolidate all the Group hardware at the GGS facility in Mogliano Veneto. This will improve the reliability and safety of the information systems and at the same time bring reductions in overall operating costs, thanks to system unification.
At Intesa Vita, the activity concerned primarily the selection and activation of an information system capable of satisfying company operating requirements. In the absorbed companies, the portfolios they contributed still reside on their pre- vious operating systems.
The administrative systems have also been unified to support the new activity and new volumes of business, consistent with Group guidelines and policies.
181 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report Group Annual Accounts Financial operations Notes to the Accounts
Supplementary Schedules
Summary profit and loss account Investments Investments at the end of 2003, including cash, reached Eur 37,952.7 million, versus Eur 23,916.5 million a year earlier, with an increase of 58.7%. The inve- stments relative to Intesa Vita equaled Eur 18,907.1 million, including Eur 3,064.3 million deriving from contribution of the "bancassurance development" business unit by parent company Alleanza.
CHANGE CHANGE % OF (IN EUR MILLIONS) 2003 2002(**) AMOUNT % TOTAL Land and buildings 256.4 249.8 6.6 2.6 0.7 Bonds and other fixed-income securities 22,304.4 14,815.6 7,488.8 50.5 58.8 Participating interests 2,948.0 2,393.6 554.4 23.2 7.7 Bond mutual funds 3,312.0 2,982.6 329.4 11.0 8.7 Equity mutual funds 582.0 538.2 43.8 8.1 1.5 Loans 901.5 719.5 182.0 25.3 2.4 Deposits with banks – – – – – Other financial investments 407.3 1.0 406.3 n.c. 1.1 Cash 672.0 567.2 104.8 18.5 1.8 Total class C investments and cash (*) 31,383.6 22,267.5 9,116.1 40.9 82.7 Class D investments 6,569.1 1,649.0 4,920.1 298.4 17.3 Total investments 37,952.7 23,916.5 14,036.2 58.7 100.0
(*) the difference with respect to the total investments indicated in the balance sheet at 31.12.2003 related to the inclusion of Eur 672.0 million in bank deposits and time deposits in the item "cash" rather than among the inve- stments. (**) including Eur 3,027.7 million related to La Venezia Assicurazioni.
INVESTMENTS
1,980.7
3,894.1
2,948.0 1,287.7 3,520.8 2,393.6
22,304.4
Others Investment 14,815.6 fund Equity holdings
256.4 249.8 Bonds 31-12-2003 31-12-2002 Property
182 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook The investments in bonds and other fixed-income securities, Eur 22,304.4 mil- lion equal to 58.8% of the total, are the principal item of the financial portfolio.
The increase in participating interests was linked to stock-picking activities desi- gned to increase exposure toward the equity segment, given the favorable market conditions, although, as mentioned earlier, the distribution of the inve- stments continued to favor debt instruments to ensure adequate current profi- tability.
The loans included Eur 5.2 million granted to subsidiary Finagen S.p.A. to cover the funding requirements associated with characteristic activity and Eur 1.5 mil- lion related to subsidiary G.G.S.(Gruppo Generali Servizi).
The class "D" investments totaled Eur 6,569.1 million, against Eur 1,649 million at 31.12.2002; the increase related primarily to the new production of index- linked products deriving from Intesa Vita.
In conformity with CONSOB Communication no. 98084143 of 27.10.1998, note that the Alleanza Group conducts no financial activity risky geographical areas affected by economic crises.
Assets include 800,000 Alleanza common shares equal to Eur 7 million related to the stock option plan approved by the shareholders in special session on 24 April 2002.
In its portfolio at year-end, Intesa Vita had 113,000 shares of parent company Alleanza, valued at Eur 0.9 million, and debt securities of controlling sharehol- der Assicurazioni Generali worth Eur 2.5 million.
In conformity with CONSOB Communication no. 98084143 of 27.10.1998, note that Alleanza conducts no financial activity in risky geographical areas affected by economic crises.
Investment gains and extraordinary income
Net investment gains totaled Eur 1,169 million, versus Eur 648 million in 2002.
(EUR MILLIONS) 31/12/2003 31/12/2002 % CHG. Net investment income 1,337.5 905.2 47.8 Interest on reinsurance deposits – 267.7 – 229.5 16.6 Net gains on securities trading 144.1 154.2 – 6.5 Write-backs/value adjustments on investments – 44.9 – 181.9 – 75.3 Total net investment gains 1,169.0 648.0 80.4 Net extraordinary income 21.6 81.3 – 73.4
183 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report
Group Annual Accounts
Notes to the Accounts
Supplementary Schedules On the average portfolio of class "C" investments during the year, the average Summary profit and loss account annual return was 4.9% (4.3% in 2002).
The amount of dividends, before tax credits, collected during the year by parent company Alleanza and eliminated in the consolidation process, totaled Eur 179.1 million.
The net proceeds from trading transactions and net extraordinary income totaled Eur 165.7 million. The trading gains of Eur 176.7 million consisted of Eur 108.7 million on debt secu- rities and options, Eur 62.8 million on equities, and Eur 5.2 million on mutual funds.
During the year La Venezia Assicurazioni distributed Eur 41.1 million in reserves and Eur 13.5 million as an interim dividend, reported as net investment income. Subsequently, La Venezia Assicurazioni was sold to Gencasse Professionali S.p.A. fpr Eur 220.7 million, with a capital gain of Eur 16.8 million, reported as extraor- dinary income.
The value adjustments on investments (portfolio losses) at 31.12.2003 amoun- ted to Eur 86.3 million, versus Eur 190.4 million at 31.12.2002, and refer to equi- ties (Eur 41.1 million), debt securities (Eur 38 million) and mutual funds (Eur 7.2 million). Parent company Alleanza wrote down its participating interests in Finagen (Eur 9.3 million), AMB (Eur 15.4 million) and Lucchini (Eur 3 million).
The write-backs totaled Eur 41.4 million.
Among the other income and other expense, exchange rate fluctuations gene- rated a negative balance of Eur 19.3 million.
The unrealized gains on the equity and debt portfolios at 31.12.2003 totaled Eur 1,343.5 million (Eur 1,244.1 million at 31.12.2002), including Eur 1,157.7 million on participating interests (Eur 895.2 million related to Generali Properties), Eur 39 million in losses on mutual fund shares, and Eur 224.8 million in net holding gains on fixed-income securities. The unrealized capital gains on the real estate portfolio totaled Eur 120.9 million.
The portions of investment income attributable to the technical accounts were computed in accordance with ISVAP Resolution 1140G.
Other expense includes Eur 56.2 million for the ten-year quota of amortization on goodwill carried on the balance sheet of Intesa Vita.
184 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Subsequent Events
Conclusions and Outlook Contingent liabilities and commitments with Group companies not inclu- ded in the area of consolidation At year-end the guarantees granted on behalf of subsidiary Finagen were equal to Eur 329 million (Eur 331 million at 31 Dec 2002).
Cash Flow The operations of the Alleanza Group in 2003 generated cash flow available for investment of Eur 14,036.2 million (Eur 2,207.2 million in 2002), channeled pri- marily in tot he following sectors: Eur 7.488,8 million in debt securities, Eur 554,4 million in participating interests, Eur 693,0 million in sundry financial inve- stments, Eur 373.2 million in mutual fund shares, and Eur 6.5 million in real estate. The amount invested in class “D” investments increased by Eur 4,920.2 million. For further details, see the attached "Statement of Changes in Financial Position”.
Segregated Funds At 31.10.2003 the segregated funds of the Group amounted to Eur 28,725.6 million, including Eur 17,464.1 million related to parent company Alleanza and Eur 11,261.5 million to Intesa Vita. The “AlMeglio” pension fund of parent company Alleanza had assets of Eur 3.2 million under management at 31 Dec 2003.
Taxation
The income taxes related to the current year amounted to Eur 91.7 million (Eur 101.4 million in 2002), net of consolidation adjustments of Eur 87 million.
Provisions and Reserves
Provisions of Eur 93 million were set aside against the income statement, as fol- lows: Eur 80 million to the “securities fluctuation” provision, to stabilize the effects of volatility in the financial markets; Eur 20 million to the “CONSAP-rela- ted risks" provision; Eur 15 million to the “exchange rate fluctuation” provision to limit the risks deriving the fluctuations in exchange parities; Eur 10 million to the "social activity development" provision. Eur 32 million were drawn from the "securities fluctuation" provision.
185 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report
Group Annual Accounts Notes to the Accounts Subsequent events Supplementary Schedules
Summary profit and loss account At the end of February 2004, the collection of premiums and fees totaled Eur 1,079.4 million (Eur 611.1 million in 2003). For a better comparison, the figure for the previous year included Eur 61.5 million related to La Venezia Assicurazioni.
In the same period, the premiums from new production totaled Eur 792,5 mil- lion (Eur 253,4 million in 2003), of which Eur 686,2 million related to Intesa Vita.
* * * At 31.1.2004 the segregated funds of the Group amounted to Eur 29,876 million.
* * * Based on the market prices at 4.3.2004, the bond and equity portfolios contain Eur 1,592.9 million in unrealized gains, write-backs net of losses equal to Eur 2.9 million, and a positive balance of exchange rate differences from alignment (Eur 5.5 million). In the same period the gains realized on disinvestments amounted to Eur 21.6 million. * * * The act of settlement between Alleanza Assicurazioni and CONSAP is being fina- lized, with the intention of resolving the litigation that arose following termina- tion of compulsory reinsurance with the institute, which until 1993 required that 10% of policies written be ceded to INA.
The agreement being drafted falls within the parameters established in the fra- mework agreement between ANIA and CONSAP and should have no impact on the bottom-line, thanks to the prudent policy of provisions followed with that prospect.
* * * On 2 January 2004 the new organizational model adopted by Fondi Alleanza became operational, whereby that company acts as promoting company and Generali SGR acts as managing company.
As a consequence, Fondi Alleanza performs all the promotional activities and customer relations while Generali SGR is responsible for management and back office activities. The companies exchange information through the information systems develo- ped with the assistance of outsourcer Unione Fiduciaria and GGS (service com- pany of the Generali Group). Fondi Alleanza, in particular, provides the management company with constant information on the financial flows deriving from fund subscriptions and redemp- tions and receives share valuation information from it to regulate customer tran- sactions.
186 The Group
Portfolio and Production
Insurance Operation
Financial Operations
Conclusions and Outlook Subsequent Events
Conclusions and Outlook 2004 promises to be an extremely complex year due to persistent uncertainties of a macroeconomic nature and the deep trauma inflicted on investor confidence. Within this frame of reference, it is important to provide a system response that will restore saver confidence. The insurance offering through guaranteed and loyalty-enhancing products can respond to market expectations. The business and distribution model of Alleanza seems especially capable of positively exploi- ting a highly personalized relationship with customers. On another front, the bancassurance channel, through its network of bank branches, should reorient the asset allocation preferences of savers toward insurance formulas. In this context, it is reasonable to expect an increase in premium income for the year.
From the financial standpoint, the early months of the year have brought positi- ve results. Maintaining them, however, will be conditioned by the performance of the markets, which along with continuing weak signals continue to manifest uncertainty associated with the difference in performance between the American and European economies and the tensions present in the geopolitical sphere.
187 Report of the Board of Auditors
189 Report of the Board Auditors
Report of the Board of Auditors
Dear Shareholders:
With reference to the consolidated financial statements, the Audit Committee has ascertained that:
- the parent company organization is adequate insofar as information flow and consolidation procedures are concerned;
- the accounts comply with principles of consolidation and the other provisions of law, particularly regarding the formation of the scope of consolidation and the reference date of the data;
- the accounting principles and valuation criteria followed are in compliance;
- the company met the requirements of CONSOB in reporting on operations by category of activity and geographical area.
The Committee also confirms that the certification of the subsidiaries conforms to oft-mentioned Legislative Decree no. 58/1998 and CONSOB Resolution no. 11971 of 14/5/2000. We particularly attest that certification of the principal foreign subsidiaries is also in conformity with the aforesaid directives.
Milan, 15 March 2004
The statutory auditors (Gaetano Terrin) (Nicoletta Dolfin) (Renzo Riccoboni)
191 External Auditors’ Report
193
Group Annual Accounts
197 Board of Directors Report Report of the Board of Auditors Consolidated Balance Sheet External Auditors’ Report Values expressed in EUR thousands Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account A. SUBSCRIBED CAPITAL UNPAID
called-up capital B. INTANGIBLE ASSETS 1. Acquisition commissions to be amortised 2. Other acquisition costs 3. Goodwill 4. Other intangible assets 5. Goodwill deriving from the consolidation of affiliated companies C. INVESTMENTS I. Land and buildings II. Investments in affiliated undertakings and participating interests:
1. Interests in a) parent companies b) subsidiaries c) subsidiaries of parent companies d) associated companies e) others 2. Debt securities 3. Loans III. Other financial investments 1. Equities 2. Holding of unit trusts and other mutual funds 3. Debt securities and other fixed-income securities 4. Loans 5. Participation in investment pools 6. Deposits with banks
7. Other financial investments IV. Deposits with reinsuring companies D. INVESTMENTS FOR BENEFIT OF LIFE ASSURANCE POLICY HOLDERS WHO BEAR THE INVESTMENT RISK AND DERIVING FROM PENSION FUND OPERATIONS
198 Consolidated Balance Sheet
Consolidated Profit and Loss Account
Assets
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
1 – 101 –
2 – 102 –
3 – 103 –
4 – 104 –
5 505,587 105 37,047
6 29,598 106 29,239
78535,185 107 14,357 108 80,643
9 256,374 109 249,846
10 110 1,008
1173,663 11164,444
12 1,176,877 112 1,137,435
13 431,426 113 380,174
14 12,002 15 1,693,968 114 12,002 115 1,595,063
16 210,136 116 298,543
17 6,728 18 1,910,832 117 12,775 118 1,906,381
19 1,254,016 119 798,569
20 3,894,050 120 3,520,830
21 22,094,306 121 14,517,007
22 894,797 122 706,698
23 123
24 124
25 407,225 26 28,544,394 125 1,046 126 19,544,150
27 28 30,711,600 127 128 21,700,377
29 6,569,075 129 1,648,976 carry forward 37,815,860 23,429,996
199 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report
Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account
D bis. TECHNICAL PROVISIONS - REINSURANCE AMOUNT I. NON-LIFE INSURANCE BUSINESS 1. Provision for unearned premiums 2. Provision for claims outstanding 3. Other provisions II. LIFE ASSURANCE BUSINESS 1. Actuarial provisions 2. Provisions for claims outstanding 3. Other provisions 4. Technical provisions where the investment risk is borne by the policyholders and provisions deriving from pension fund operations
E. RECEIVABLES
I. Receivables deriving from direct insurance operations II. Receivables deriving from reinsurance operations III. Other receivables F. OTHER ASSETS I. Tangible assets and stocks II. Cash at bank and in hand III. Own shares IV. Other assets G. PREPAYMENT AND ACCRUED INCOME
200 Consolidated Balance Sheet
Consolidated Profit and Loss Account
Assets
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
carryforward 37,815,860 carryforward 23,429,996
30 130 13
31 – 131 –
32 – 33 132 – 133 13
34 6,753,049 134 6,677,769
35 5,693 135 5,604
36 54,142 136 61,325
37 – 38 6,812,884 39 6,812,884 137 – 138 6,744,698 139 6,744,711
40 58,407 140 55,816
41 375,613 141 388,114
42 573,315 43 1,007,335 142 533,022 143 976,952
44 9,827 144 10,251
45 671,964 145 567,153
46 7,966 146 6,198
47 939 48 690,696 147 927 148 584,529
49 395,600 149 222,000
TOTAL ASSETS 50 46,722,375 150 31,958,188
201 Board of Directors Report Report of the Board of Auditors Consolidated Balance Sheet External Auditors’ Report Values expressed in EUR thousands Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account A. CAPITAL AND RESERVES I. Capital and reserves of group 1. Subscribed share capital or equivalent funds 2. Equity reserves 3. Consolidation reserve 4. Reserve for differences deriving from valuation of non-consolidated subsidiaries 5. Comulative conversion adjustment 6. Reserve for own and parent company shares 7. Profit (loss) for the year II. Minority shareholders’ interest 1. Minority portion of capital and reserves 2. Profit (loss) for the year B. SUBORDINATED LIABILITIES C. TECHNICAL PROVISIONS I. Non-life assurance business 1. Provision for unearned premiums 2. Provision for claims outstanding 3. Equalization provision 4. Other provisions II. Life assurance business 1. Actuarial provisions 2. Provisions for claims outstanding 3. Other D. TECHNICAL PROVISIONS WHERE THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDERS AND PROVISIONS DERIVING FROM PENSION FUND OPERATIONS E. PROVISIONS FOR OTHER RISKS AND CHARGES 1. Provisions for pensions and similar obligations 2. Provisions for taxes 3. Consolidation provision for future liabilities and risks 4. Other provisions
202 Consolidated Balance Sheet
Consolidated Profit and Loss Account
Liabilities and shareholders’ equity
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
51 423,171 151 423,171
52 1,368,374 152 1,304,323
53 64,871 153 33,777
54 94,475 154 78,633
55 155
56 7,966 156 6,198
57 357,394 58 2,316,251 157 230,417 158 2,076,519
59 591,525 159 181
60 2,063 61 593,588 62 2,909,839 160 5 161 186 162 2,076,705
63 73,158 163
64 54 164 160
65 – 165 –
66 – 166 –
67 – 68 54 167 – 168 160
69 29,445,655 169 20,825,943
70 58,120 170 29,284
71 310,840 72 29,814,615 73 29,814,669 171 172,209 172 21,027,436 173 21,027,596
74 6,568,903 174 1,625,760
75 – 175 –
76 20,075 176 22,755
77 – 177 –
78 172,636 79 192,711 178 80,800 179 103,555 carried forward 39,559,280 24,833,616
203 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report
Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account
F. DEPOSITS RECEIVED FROM REINSURERS G. PAYABLES AND OTHER LIABILITIES I. Payables deriving from direct insurance operations II. Payables deriving from reinsurance operations
III. Debenture loans IV. Amounts owed to banks and credit institutions V. Secured debt
VI. Other payables and financial debt VII. Provision for serverance pay VIII. Other payables
IX. Other liabilities H. ACCRUALS AND DEFERRALS TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
CONTINGENT LIABILITIES, COMMITMENTS AND OTHER MEMORANDUM ACCOUNTS I. Guarantees issued II. Guarantees received III. Guarantees issued by third parties in the interest of consolidated companies IV. Commitments V. Assets deposited with the company VI. Assets belonging to pension funds managed in the name and on behalf of third parties VII. Securities deposited with third parties VIII. Other memorandum accounts TOTAL EVIDENCE ACCOUNTS
204 Consolidated Balance Sheet
Consolidated Profit and Loss Account
Liabilities and shareholders’ equity
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR carried forward 39,559,280 24,833,616
80 6,620,987 180 6,300,986
81 77,861 181 52,235
82 111,966 182 121,668
83 – 183 –
84 3,807 184
85 – 185 –
86 186 256,267
87 42,208 187 42,784
88 292,444 188 341,575
89 10,735 90 539,021 189 5,851 190 820,380
91 3,087 191 3,206
92 46,722,375 192 31,958,188
Contingent liabilities
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
93 336,279 193 335,608
94 2,388 194 2,039
95 1,596 195 0
96 725,932 196 556,337
97 197 0
98 198 0
99 4,729 199 4,941
100 200 38,529
101 1,070,923 201 937,454
205 Board of Directors Report Report of the Board of Auditors Consolidated Profit and Loss Account External Auditors’ Report Values expressed in EUR thousands Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account I. TECHNICAL ACCOUNT - NON-LIFE INSURANCE BUSINESS 1. EARNED PREMIUMS, NET OF REINSURANCE: a) gross premiums written b) (–) outward reinsurance premiums c) Change in the gross amount of the provision for unearned premiums
d) Change in the provision for unearned premiums, reinsurers’ share 2. OTHER TECHNICAL INCOME, NET OF REINSURANCE 3. CLAIMS INCURRED, NET OF RECOVERIES AND REINSURANCE: a) Claims paid aa) gross amount bb) (–) reinsurers’ share
cc) recoveries net of reinsurance b) Change in provision for claims outstanding net of reinsurance aa) gross amount bb) (–) reinsurers’ share 4. CHANGES IN OTHER TECHNICAL PROVISIONS, NET OF REINSURANCE 5. PREMIUM REFUNDS AND PROFIT SHARING, NET OF REINSURANCE 6. OPERATING EXPENSES: a) Acquisition commissions b) Other acquisition costs c) Chg. in commissions and other acquisition costs to be amortised d) Collection commissions e) Other administrative expenses f) (–) Reinsurance commissions and profit participation 7. OTHER TECHNICAL CHARGES, NET OF REINSURANCE 8. CHANGE IN EQUALIZATION PROVISIONS 9. TECHNICAL ACCOUNT RESULT - NON-LIFE INSURANCE BUSINESS (item III.1)
206 Consolidated Balance Sheet
Consolidated Profit and Loss Account
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
1 47 111 47
2 112 –
3 – 106 113 – 292
4 – 12 5 141 114 – 37 115 302
7 – 117 –
8 118 67
9 – 119 –
10 – 11 120 – 121 67
12 – 122 –
13 – 14 – 15 123 – 124 – 125 67
16 – 126 –
17 – 127 –
18 – 128 –
19 – 129 –
20 – 130 –
21 – 131 –
22 132
23 – 24 133 – 134 –
25 135
26 – 136 –
27 141 137 235
207 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report
Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account II. TECHNICAL ACCOUNT - LIFE ASSURANCE BUSINESS 1. PREMIUMS FOR THE YEAR, NET OF REINSURANCE:
a) Gross premiums written b) (–) Outward reinsurance premiums 2. (+) POSITION OF INVESTMENT INCOME TRANSFERRED FROM THE NON-TECHNICAL ACCOUNT (item III.5) 3. INCOME AND UNREALIZED GAINS ON INVESTMENTS ON BEHALF OF POLICYHOLDERS WHO BEAR THE RISK AND INVESTMENTS DERIVING FROM PENSION FUND OPERATIONS 4. OTHER TECHNICAL INCOME, NET OF REINSURANCE 5. CLAIMS INCURRED, NET OF REINSURANCE: a) Claims paid aa) gross amount bb) (–) Reinsurers’ share
b) Change in provision for claims outstanding, net of reinsurance
aa) gross amount bb) (–) Reinsurers’ share 6. CHANGE IN ACTUARIAL PROVISIONS AND OTHER TECHNICAL PROVISIONS, NET OF REINSURANCE a) Actuarial provisions: aa) Importo lordo bb) (–) Reinsurers’ share b) Other aa) Gross amount bb) (–) Reinsurers’ share c) Technical provisions where the investment risk is borne by the policyholders and deriving from pension fund operations aa) Gross amount bb) (–) Reinsurers’ share 7. PREMIUM REFUNDS AND PROFIT-SHARING NET OF REINSURANCE 8. OPERATING EXPENSES: a) Acquisition commissions b) Other acquisition costs c) Chg. in commissions and other acquisition costs to be amortised d) Collection commissions e) Other administrative expenses f) (–) Reinsurance commissions and profit participation 9. FINANCIAL EXPENSE AND UNREALIZED LOSSES ON INVESTMENTS ON BEHALF OF POLICYHOLDERS WHO BEAR THE RISK AND INVESTMENTS DERIVING FROM PENSION FUND OPERATIONS 10. OTHER TECHNICAL EXPENSE, NET OF REINSURANCE 11. TECHNICAL RESULT - LIFE ASSURANCE BUSINESS (item III.2)
208 Consolidated Balance Sheet
Consolidated Profit and Loss Account
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
28 6,777,421 138 4,196,584
29 875,952 30 5,901,469 139 874,302 140 3,322,282
40 990,363 150 629,669
41 349,026 151 41,471
42 82,428 152 44,754
43 3,316,372 153 1,755,474
44 622,104 45 2.694,268 154 441,004 155 1,314,470
46 20,563 156 2,125
47 157 48 20,406 49 2,714,674 157 – 435 158 2,560 159 1,317,030
50 3,656,241 160 2,352,651
51 279,900 52 3,376,341 161 459,595 162 1,893,056
56 72,445 166 – 67,020
57 11,879 58 60,566 167 – 29,731 168 – 37,289
59 288,301 169 158,699
60 – 61 288,301 62 3,725,208 170 – 171 158,699 172 2,014,466
63 5,622 173 –
64 289,870 174 119,364
65 2,834 175 147,399
66 – 3,215 176
67 47,353 177 30,283
68 116,177 178 82,249
69 140,516 70 318,933 179 133,546 180 245,749
75 110,719 185 184,205
76 21,401 186 3,457
78 426,729 188 273,269
209 Consolidated Balance Sheet
Consolidated Profit and Loss Account
VALUES FOR THE CURRENT YEAR VALUES FOR THE PREVIOUS YEAR
79 141 189 235
80 426,729 190 273,269
81 184,211 191 108,880
82 110,446 83 294,657 192 38,606 193 147,486
84 22,165 194 48,200
85 1,106,233 86 1,128,398 195 759,750 196 807,950
87 41,335 197 8,543
88 203,981 89 1,668,371 198 313,470 199 1,277,449
90 353,326 200 279,790
91 86,279 201 190,367
92 59,789 93 499,394 202 159,276 203 629,433
94 990,363 204 629,669
95 60,957 205 101,816
97 7,405 206 17,829
98 229,431 99 236,836 207 125,282 208 143,111
100 429,605 209 250,557
101 38,622 210 110,427
102 17,078 211 29,122
103 21,544 212 81,305
104 451,149 213 331,862
105 91,692 214 101,440
106 359,457 215 230,422
107 2,063 216 5
108 357,394 217 230,417
211 Notes to the Accounts
213 Part A: Board of Directors Report Report of the Board of Auditors General Reporting Criteria External Auditors’ Report Group Annual Accounts and Area of Consolidation Notes to the Accounts
Supplementary Schedules
Summary profit and loss account Scope of consolidation
The Alleanza Consolidated Group Accounts are prepared based on the presen- tation criteria set forth in Article 65 of Legislative Decree no. 173 of 26 May 1997 and provide a fair and true representation of the financial situation and economic performance of the Group companies.
Majority participating interest The full-line consolidation includes companies in which more than 50% of the shares are owned by the parent company or by subsidiaries or in which they have operational control.
Continuity of investment and operational control Participating interests must be long-term investments and no impediments to the exercise of effective control may exist.
Activities To preserve the insurance industry nature of the consolidated accounts, partici- pating interests in subsidiaries that do not conduct underwriting or associated activities are excluded from the scope of consolidation; these interests are valued by the equity method. During the year the bancassurance activities of the Generali and Banca Intesa grou- ps were concentrated in a new company that assumed the name of Intesa Vita.
This new company absorbed the bancassurance business unit of Alleanza Assicurazioni Insurance and the equity participations of Assicurazioni Generali and Banca Intesa in Assiba and Intesa Vita. These last two companies were amalgamated to form the new company Intesa Vita. The subscribed capital of the company, consisting of common and preferred sha- res, is owned 50/50 by Banca Intesa and Alleanza Assicurazioni; the latter, since it holds a majority of voting rights in general shareholders' meetings, consolida- tes the new company by the full-line method.
The group also finalized the sale of its interest in La Venezia Assicurazioni to Gencasse Professionali S.p.A., a company wholly owned by Assicurazioni Generali.
214 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
As a consequence, the list of subsidiaries included in the consolidation by the full-line method is the following:
COMPANY NAME HEAD OFFICES SHARES/QUOTAS VALUE SHARES/QUOTAS % ACTIVITY OWNED CONTROL Agricola S. Giorgio S.p.A. Trieste 22,160,000 22,160,000 22,160,000 100.00 Agricola Alleanza Investments Dublin 4,000 40,000 3,999 99.97 Financial Intesa Vita S.p.A. Milan 78,845,260 394,226,300 39,422,630 51.4(*) Insurance (*) Direct + indirect At year-end the Group included no companies consolidated by the proportional method as set forth in Article 70 of Legislative Decree 173/97.
Consolidation Criteria
IThe principles followed in preparing the consolidated financial statements conform to the provisions of Legislative Decree 173/97. In particular, please note that: 1) The accounts of all the companies included in the consolidation close their financial years on 31 December. 2) The accounts of the companies consolidated by the full-line method were adjusted to obtain the necessary uniformity of presentation, thus including all the assets and liabilities of each. 3) The portions of capital and reserves of the subsidiaries pertaining to minority shareholders are shown, along with the equivalent portions of net profit, in a separate liability item on the consolidated balance sheet 4) The assets and liabilities of subsidiaries included in the consolidation were taken from the accounts of the individual companies, adjusting the original valuations where deemed significant and necessary to make them homoge- neous with those of the parent company. Based on the provisions of Article 72(3) Legislative Decree 173/97, the uniformity of accounting principles is not applied to liabilities, which are valued in conformity with the laws of the foreign country specific to the insurance industry or to assets whose change in value affects the rights of policyholders and are the basis for them. 5) Capital and reserves are eliminated against the book value of the participating interests at the date of acquisition, or when the companies became subsi- diaries.
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Supplementary Schedules For companies consolidated for the first time, an exception was made to this Summary profit and loss account principle: – for Agricola S. Giorgiom, since this company is the result of an amalgama- tion in 1985 based on data included in the 1992 financial statements. 6) The shareholders' equity of companies consolidated by the full-line method was eliminated against the book value of the shares reported in the accounts of the companies that own them. The consolidation differences generated by this operation are reported as shareholders' equity. Any infra-group dividends were also eliminated, as were commitments referring to reinsurance or other relationships between the companies included in the consolidation; the dif- ferences generated by the elimination of those amounts resulted in adjust- ments either to capital and reserves or to net profit for the year, depending on their origin. 7) Positive consolidation differences on participating interests consolidated by the full-line method were partially eliminated by transferring to the relative assets. The positive differences remaining after those operations were repor- ted on the asset side of the balance sheet under the item "consolidation dif- ference. The differences arising in the valuation of the participating interests in com- pany subsidiaries, affiliates and sister companies with the equity method were retained in the value of the participating interests reported among inve- stments on the asset side of the balance sheet. Both these differences were assigned to asset or liability items or to amorti- zation, pursuant to point 6 of Article 2426 of the Civil Code.
216 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part B: Valuation Criteria Part D: Other Information Section 1 - Description of Valuation Criteria
Intangible assets The item "other intangible assets" contains the commissions related to future periods deriving from settlement of the compulsory reinsurance relationship with CONSAP. The acquisition commissions paid in advance on multi-year contracts, R&D and advertising costs, and the cost of capital increases are fully expensed in the year in which they are sustained. The costs of multi-year projects sustained by parent company Alleanza were capitalized. The item "goodwill" in entirely reported in the financial statements of Intesa Vita.
Land and buildings These are considered tangible fixed assets, since they are a permanent part of the assets of each company. They are reported at historical acquisition cost except for the revaluations allowed by specific laws, involving solely real property. The values reported in the accounts include the costs sustained for improvements and restructuring that increased the value of the properties and prolonged their useful lives and are reported net of accumulated depreciation. Properties used by the parent company in the conduct of its business are depre- ciated on a straight-line basis at the ordinary rate of 3%. The current value of the properties was determined by estimating their presu- mable resale value under free market conditions that permits their sale by the method deemed most appropriate by the seller in each case (e.g. in a block or piecemeal). More specifically, in determining current value, the following factors were con- sidered, with reference to the unique situation of each individual property: – its intrinsic characteristics (type of property, state of repair, etc.); – iextrinsic characteristics (zoning context, existing restrictions, incidence of expenses, etc.): – its current and potential profit generation, based on the residual duration of leases and projected income; – the market quotations for similar properties in the individual markets; – any special situations that might affect the value of the individual assets.
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Supplementary Schedules Securities portfolio Summary profit and loss account The portfolio is divided into securities for long-term use, to be retained perma- nently among the assets of each company, and securities for non-durable use, intended for trading activity. The securities for long-term use are valued at average weighted cost adjusted for write-downs deriving from losses in value deemed permanent and, for fixed- income securities, by the portion of positive or negative difference between the purchase cost and redemption value matured during the year. Trading-grade securities are valued at the lower of average weighted cost and presumed market value, which for listed securities is the arithmetical average of prices in the month of December and for unlisted issues their presumed dispo- sal value. The cost of fixed-income securities is adjusted to reflect the issue spread accrued during the year. The original value of the securities is wholly or partially reinstated, if the reasons for the write-downs cease to apply.
Securities loaned These cause no accounting or valuation changes in the securities portfolio since: in the case of securities loaned out, they are treated from an accounting stand- point as the result of two offsetting transactions, one a loan receivable, the other a repurchase agreement under liabilities; similarly, in the case of securities recei- ved on loan, the operation is represented in the accounts as a loan payable off- set by a repurchase agreement under assets.
Derivatives Operations in derivatives are carried out within the limits and with the procedu- re set forth in a deliberation by the Board of Directors of parent company Alleanza of 20 September 20.09.1999. The valuation criteria applied to derivatives differ depending on whether they are used for "hedging" or for "effective management" of the financial operation. The purpose of hedging operations is to protect the value of individual assets or liabilities, as well as groups of assets and liabilities, from currency exchange risk, interest rate risk or the risk of financial market fluctuations.
218 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
These derivatives are valued according to the "valuation consistency principle”; specifically, any holding losses or gains are imputed to the profit and loss account consistent with the corresponding holding gains or losses on the assets being hedged. Effective management transactions are made to achieve predetermined invest- ment objectives in a faster, leaner, more economical and more flexible manner than would have been possible operating with the underlying assets. Such tran- sactions generate no significant increase in the investment risk. For these transactions the premium acquired is valued at the lower of cost and market value, while the premium sold, booked as "other financial debt", is only reported if it is greater than market value. The market value of derivatives contracts is determined with reference to their respective quotations or, if not available, based on a prudent valuation of their probable disposal value.
Investments related to unit- and index-linked policies and investments deriving from pension fund operations Investments for the benefit of life policyholders who bear the related risk and those deriving from pension fund operations are valued at current value. The current value of the assets is determined according to contractual conditions, specifically: a) for investments traded in regulated markets, it is the value on the last dealing day of the year; b) for other financial investments, other assets and liabilities and cash, it is gene- rally their face value.
Loans Loans are reported at their nominal value, corresponding to the presumable disposal value, considering the insolvency risk on secured and other loans as zero against the collateral offered and the insolvency risk on policies as zero since their amount is never greater than the surrender values of the policies.
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Supplementary Schedules Payables Summary profit and loss account Payables are reported at nominal value, adjusted where appropriate to reflect their collectibility, and net of the provision for doubtful accounts.
Other assets Tangible assets and stocks All the assets are booked at purchase cost and reported net of accumulated depreciation. Tangible fixed assets are booked at purchase cost including accessory charges and depreciated at rates deemed to represent their estimated economic-techni- cal lives, within the limits prescribed by the tax laws. Cash Cash is stated at face value.
Principles for computing technical provisions Non-life insurance The provision for unearned premiums of the parent company is calculated in accordance with the calculation principles set forth in existing legislation (Legislative Decree no. 175/95 and subsequent modifications), in particular: ✧ the provision for fractions of premiums, based on time accrual, is calculated using the pro rata temporis method prescribed in Article 32(2) of Legislative Decree 173/97; ✧ the provision for risks in progress was not instituted, given the precise clo- sure of the foregoing component for risks referring to years subsequent to those of premium payment and given the negligible nature of the claims, which are closely monitored. The provisions for reinsured business are computed with the same criteria fol- lowed for direct business. Life assurance The technical provisions on the direct Italian portfolio were calculated in accor- dance with the principles prescribed by current legislation (Legislative Decree 174/95 and subsequent modification). In particular, it should be pointed out that: ✧ the computation was made for each individual policy; ✧ the technical provision for each policy is greater at any time than its surren-
220 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
der value. The technical provisions include the following components: ✧ actuarial reserves; ✧ premium carryovers; ✧ provisions for all forms of profit sharing; ✧ provision for additional professional and healthcare premiums; ✧ provisions for unearned premiums on supplementary coverage; ✧ provision for claims outstanding; ✧ provision for future charges. Pursuant to Legislative Decree 173/97, the provision for unearned premiums from complementary coverage consists of the amounts of the premiums for said coverage pertaining to subsequent years. The provisions are computed on the analytical pro rata temporis basis. The provisions for claims outstanding were computed in conformity with the same Legislative Decree, with sufficient funds to pay amounts matured but not yet liquidated at year-end. Within the actuarial provisions, implementing the indications issued by ISVAP with Circular no. 343D of 1998, additional provision was made for demographic risks. With reference to technical provisions where the investment risk is borne by the policyholders, actuarial provisions were set aside for unit-linked contracts equal to the product of the number of units representing the commitments of the parent company times the unit value at year-end. The technical provisions on indirect business are generally stated on the basis of notifications from the ceding companies, supplemented, where the data are available, by adjustments made on the basis of objective information. Outward reinsurance provisions, except for those borne by CONSAP, are com- puted with the same parameters used for the retained portfolio. The reserves ceded, except for those borne by CONSAP, are computed with the same parameters used by the Company for the retained portfolio. The life provisions borne by CONSAP were determined considering that Article 3(110) of Law 662/96 contemplates that the reserves relative to the years 1994 and following be revalued based on the average return on the financial invest- ments set in the latest Ministry of Industry decree.
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Supplementary Schedules Reinsurance acceptances Summary profit and loss account The acceptances related to CIRT refer to the previous year.
Provisions for other risks and charges
Sufficient funds are set aside to cover risks and specific commitments at the close of the year.
Provision for securities fluctuation The purpose of this provision is to limit the risks of losses deriving from uncer- tain trends in the Italian and foreign financial markets, and it is increased or reduced to match the risks.
Provision for exchange rate fluctuations The purpose of this provision is to limit the risk of losses deriving from fluctuations in exchange parities and is adjusted to match changes in said risks.
Provision for taxation Changes in this provision reflect allocations and withdrawals for income on which taxation can be deferred.
Provision for reengineering charges This was created by the Alleanza parent company to cover possible one-time charges related to various scenarios linked to information technology strategies.
Provision for insurance-related risks This provision was prudentially created to cover the relationship with CONSAP.
Social activity development fund
This was created to accentuate the connection between planned objectives and the sales network and the achievement of the results, thus supporting the growth of Group social activity.
Payables and other liabilities Payables These are stated at face value, corresponding to their discharge value. Staff severance indemnity This is computed in conformity with provisions of law and existing labour con- tracts and totally covers the indemnity accrued by Group personnel to year-end.
222 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
Accruals and deferrals These are booked in accordance with the accrual principle of matching income and expense.
Income statement items Charges and revenues are attributed to the year in conformity to time-accrual accounting principles. For those characteristic of underwriting activity, the crite- ria were the "provisions applicable to the income statement" as set forth in Legislative Decree 173/1997 and in conformity with the instructions contained in ISVAP resolution no. 735/97. Reported premiums, in particular, include all the amounts due during the year, whether collected or not. They are also net of relative taxes and cancellations related to current premiums, as well as subsequent-year premiums falling due in prior years. Items common to more than one class of life assurance were allocated based on the following criteria: ✧ for administrative costs, according to the number of policies issued in each class as a percentage of total policies issued; ✧ for investment income, net of the portion transferred to the non-technical account, the incidence of the technical provisions retained on the individual lines to total technical provisions retained, as provided in ISVAP resolution no 1140 G of 8 March 1999..
Taxes Provision was made for taxes, computed on the basis of the tax laws and regu- lations in effect, on a time-accrual basis. Regarding deferred tax assets and liabilities, we applied accounting principle 25, related to the accounting treatment of income taxes.
Other information Translation of accounts in foreign currency The Group uses multi-currency accounting, so all the items of the balance sheet and income statement are converted into euros at the exchange rates in effect on the financial year closing date. The only exceptions are income statement
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Supplementary Schedules items related to class D investments-investments related to unit- and index- Summary profit and loss account linked policies and deriving from pension fund operations-which are reported at the exchange rate in effect on the transaction date, consistent with contractual provisions. The differences emerging from the translation into euros of assets and liabilities expressed in non-euro currencies with respect to the corresponding values at the close of the previous year are imputed to the income statement. The following table shows the exchange rates used to convert non-euro curren- cies to euros, with an indication of the previous year's rates.
Exchange rates for non-euro currencies
EXCHANGE RATES IN EUROS IN EUROS 2003 ACCOUNTS 2002 ACCOUNTS
U.S. dollar 1.263 1.0487 Swiss franc 1.5579 1.4524 Pound sterling 0.7048 0.6505 Japanese yen 135.05 124.39
Section 2 - Tax adjustments and provisions
The depreciation on real properties reported in the accounts of consolidated companies strictly for fiscal purposes were eliminated; Deferred taxes were the- refore computed on an accrual basis. The elimination concerned the real pro- perties of the parent company and had a Eur 24.8 million effect on the consoli- dation reserve for the prior portion and a 3.4 million effect on Group profit for the portion pertaining to the year, due to the reversal of depreciation reported and the calculation of deferred taxes on the adjustment.
224 Part A: General Reporting Criteria and Area of Consolidation Part C: Information on the Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Balance Sheet and Part D: Other Information Profit & Loss Account Balance Sheet - Assets Section 1 - Intangible assets - Item B
The total of Eur 535.2 million (Eur 80.6 million at 31 Dec 2002) representing total intangible assets is composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Goodwill 505.6 37.0 n.c. Other intangible assets 29.6 29.2 1.4 Consolidation difference – 14.4 n.c. Total 535.2 80.6 n.c.
1.2 Goodwill The item "goodwill", equal to Eur 505.6 million, refers entirely to the goodwill, net of the amortization for the year, reported in the financial statements of Intesa Vita following finalization of the amalgamation of Assiba S.p.A. and Intesa Vita S.p.A., as the difference between the value of the participating inte- rests and the book value of their shareholders' equity. This item is amortized over a period of ten years, also considering the time horizon of the existing portfolio.
1.3 Other intangible assets The other deferred charges refer to costs related to the compulsory reinsurance account with CONSAP of (Eur 10.3 million vs. Eur 12.9 million at 31 Dec 2002) and charges for long-term projects of parent company Alleanza (Eur 19.3 million).
1.4 Consolidation difference The consolidation difference was Eur 0 million (Eur 14.4 million at 31 Dec 2002) following the sale of the investment in La Venezia Assicurazioni to Gencasse Professionali.
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Summary profit and loss account Section 2 - Investments - Item C
The amount of Eur 30,711.6 million (Eur 21,700.4 million in 2002) is composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Total aggregate investments of the incorporated companies 31,585.3 22,287.6 41.7 Adjusted for items related to: Subsidiaries – 1,071.9 – 698.0 53.6 Sister companies 61.6 10.8 470.4 Affiliates 102.0 60.8 67.8 Other consolidation adjustments 34.6 39.2 – 11.7 Total investments 30,711.6 21,700.4 41.5 composition: Land and buildings 256.4 249.8 2.6 Investments in Group companies and other companies: Parent companies – 1.0 – 100.0 Subsidiaries 73.7 64.4 14.4 Sister companies 1,176.8 1,137.4 3.5 Affiliates 431.4 380.2 13.5 Others 12.0 12.0 0.0 Debt securities 210.2 298.5 – 29.6 Loans 6.7 12.8 – 47.7 Other financial investments 28,544.4 19,544.2 46.1 Deposits with ceding undertakings – – – TOTAL INVESTMENTS 30,711.6 21,700.4 41.6
The increase in Class C investments included Eur 12,312.2 million for Intesa Vita.
2.1 - Land and buildings - Item C.I Land and buildings are considered durable and have a total value of Eur 256.4 million (Eur 249.8 million at 31 Dec 2002), composed of Eur 21.2 million for company use and Eur 221.7 million for use by third parties. The item land and buildings includes Eur 13.1 million in farmland. At 31 Dec 2003 no assets were under leasing. Fixed assets in progress amounted to Eur 0.4 million. Il value current of Group land and buildings is Eur 377.3 million.
226 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
2.2 Investments in affiliates and other participated companies - Item C.II These totaled Eur 1,910.8 million at 31.12.2003 (Eur 1,906.4 million at 31 Dec 2002). 2.2.1 Shares and quotas in companies The participating interests in subsidiaries, Eur 73.7 million (Eur 64.4 million at 31 Dec 2002) refer to the following companies valued by the equity method:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Finagen S.p.A. 29.6 44.2 – 33.0 Immobiliare San Samuele 9.0 – Fondi Alleanza S.G.R.p.A. 35.1 20.0 75.0 Timavo Life S.p.A. – 0.1 – Torcello S.r.l. – 0.1 – Total 73.7 64.4 14.3
The investment in affiliate Banca Intesa, also valued by the equity method, was Eur 431.4 million (Eur 380.2 million at 31 Dec 2002). The investment in affiliate Generali Properties, valued by the equity method, is equal to Eur 989.3 million, il value of affiliate AMB General Holding, valued at cost, is Eur 92 million, G.G.S. Eur 4.5 million, and Banca Generali Eur 91 million. The item “Other participating interests” of Eur 12 million refer entirely to the inve- stment of parent company Alleanza in Mediobanca S.p.A. Regarding the required information concerning Group companies and other parti- cipating interests, see Annex 4.
2.2.2 Debt securities The following table shows the composition of "debt securities" based on the type of relationship with the counterparty:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG a) parent companies 2.5 – 100 b) subsidiaries – – n.c. c) sister companies 12.4 – 100 d) affiliates 184.9 292.7 – 36.8 e) others 10.4 5.8 77.6
Total 210.2 298.5 – 29.6
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Supplementary Schedules The item “Debt securities” consists primarily of debt securities the parent com- Summary profit and loss account pany and Intesa Vita own in Banca Intesa (Eur 184.9 million vs. Eur 292.7 mil- lion at 31 Dec 2002). The "debt securities - parent companies" refer to debt securities Intesa Vita owned in Assicurazioni Generali. The "debt securities - sister companies" refer to a bond issued by Generali Holding, while the other debt securities refer to Mediobanca issues. The breakdown of the item “Debt securities” of the Group by duration is: Eur 20.2 million beyond one year; Eur 14.1 million beyond five years. Non-durable investments in equity and debt securities are those not linked to agreements for participation in the capital of the companies, as well as debt securities not used to cover financial guarantees related to single-premium insu- rance policies not purely for risk or capitalization. 2.2.3 Loans The following table shows the composition of the item "Loans" based on the relationship with the counterparty:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG a) parent companies – – – b) subsidiaries 5.2 5.3 – 1.9 c) sister companies 1.5 7.5 – 80.0 d) affiliates – – – e) others – – – Total 6.7 12.8 – 47.7
The loans to subsidiaries (Eur 5.2 million vs. 5.3 million at 31 Dec 2002) refer entirely to subsidiary Finagen S.p.A. valued by the equity method. The "loans - sister companies" of Eur 1.5 million refers entirely to sister company G.G.S. The breakdown of the item "loans - Group" by duration is: Eur 1.5 million beyond one year; Eur 5.2 million beyond five years.
228 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
2.3 Other financial investments - Item C.III The other financial investments total Eur 28,544.4 million (Eur 19,544.1 million at 31 Dec 2002), including Eur 12,136.1 related to Intesa Vita, and are composed of:
OTHER FINANCIAL INVESTMENTS (IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 VAR.% Shares and quotas 1,254 798.6 57 Mutual fund shares 3,894.1 3,520.8 10.6 Bonds and other fixed-income securities 22,094.3 14,517.0 52.2 Loans 894.8 706.7 26.6 Shares in investment pools – – – Deposits with banks – – – Other financial investments 407.2 1.0 n.c. Total 28,544.4 19,544.1 46.1
2.3.1 Shares and quotas The item “shares and quotas” equal to Eur 1,254, including Eur 162.6 related to Intesa Vita, consists of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Listed shares 1,217.5 753.5 61.6 Unlisted shares 36.5 45.1 – 19.1 Total 1,254.0 798.6 57
2.3.2 Bonds and other fixed-income securities The item “bonds and other fixed-income securities” equal to Eur 22,094.3, including Eur 10,932.8 related to Intesa Vita, consists of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Listed debt securities 21,505.3 14,141.6 52.1 Unlisted debt securities 577.8 365.6 58.0 Convertible debt securities 11.2 9.8 14.3 Total 22,094.3 14,517.0 52.2
The breakdown of the item "Debt securities" by maturity is Eur 3,373.1 million beyond one year and Eur 7,513.9 million beyond five years. 2.3.3 Loans The item "Loans" comprises:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Secured loans 2.2 3.2 – 31.3 Loans on policies 835.8 613.6 36.2 Other loans 56.8 89.9 – 36.8 Total 894.8 706.7 26.6
The secured loans refer to medium/long-term loans assisted by real collateral, granted by the Alleanza parent company to purchasers of properties.
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Supplementary Schedules The breakdown of the item by duration is Eur 30.6 million beyond one year and Summary profit and loss account Eur 534.3 million beyond five years.
2.3.4 Other financial investments The item "Other financial investments" equals Eur 407.2 million and consists pri- marily of repo operations on the balance sheet of Intesa Vita.
Section 3 - Other assets - Items D - Dbis - E - F - G
3.1 Investments for the benefit of life assurance policyholders who bear the investment risk and deriving from pension fund operations - item D The amount of investments for the benefit of policyholders at year-end equa- led Eur 6,569.1 million (Eur 1,649 million at 31 Dec 2002), including Eur 6,721 million related to Intesa Vita. Of the total, Eur 6,565.8 million relate to unit-linked and index-linked policies and Eur 3.2 million to pension funds. 3.1.1 Technical reserves - reinsurance amount - Item D.bis The technical reserves borne by reinsurers equal Eur 6,812.9 million (Eur 6,744.7 million at 31 Dec 2002) and consist of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Life assurance 6,812.9 6,744.7 1.0 Non-life insurance – – – Total 6,812.9 6,744.7 1.0
3.2.a Receivables - Item E The amount of Eur 1,007.3 million (Eur 977 million in 2002), including Eur 194.8 related to Intesa Vita, is composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 CHG. % Receivables deriving from direct insurance operations 58.4 55.8 4.7 Receivables deriving from reinsurance operations 375.6 388.2 – 3.2 Other receivables 573.3 533.0 7.6 Total 1,007.3 977.0 3.1
After consolidation adjustments referring to reinsurance operations for Eur 13 million, the receivables deriving from reinsurance operations were Eur 375.6 mil- lion; these relate almost entirely to amounts owed by CONSAP due to the ter- mination of compulsory reinsurance.
230 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
3.2.a.1 Other receivables The item “Other receivables” of Eur 573.3 million, including Eur 165.8 related to Intesa Vita, consists primarily of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Remittances in our favor in the closing days of 2002 that banks and the Postal Administration indicated in their statements in early 2003 30.6
Withholding tax on coupons, dividends, bank interest and tax credits 238.5 154.0 54.9
Amounts due from the State Treasury 12.4 62.5 – 80.2
Rents owed by lessees and recoveries 6.8 9.9 – 31.3
Advance taxes 152.1 27.7 449.1
The duration of the item “Other receivables” is equal to Eur 376 million beyond one year, Eur 122.6 million beyond five years.
3.2.b Other asset items - Item F
The other assets of Eur 690.7 million (Eur 584.5 million at 31 Dec 2002), inclu- ding Eur 325.4 related to Intesa Vita, consist of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Tangible assets and inventories 9.8 10.4 – 5.8 Cash on hand and in banks 672.0 567.2 18.5 Own shares 8.0 6.2 29.0 Other assets 0.9 0.9 0.0 Total 690.7 584.7 18.1 . 3.2.b.1 Other assets “Other assets”, equal to Eur 0.9 million (Eur 0.9 million at 31 Dec 2002) consi- st primarily of transfer accounts between the life and non-life operations.
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Supplementary Schedules 3.3 Prepaid expense and accrued income - Item G Summary profit and loss account The item “Prepaid expense and accrued income” of Eur 395.6 million (Eur 222 million at 31 Dec 2002) consists of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Accrued interest 389.1 220.5 76.5 Leasing charges 0.2 0.4 – 7.5 Other accrued expense and deferred income 6.3 1.1 472.7 Total 395.6 222.0 78.2
Balance Sheet - Liabilities
Section 4 - Shareholders' equity and Subordinated Liabilities - (item A-B)
4.1 Changes in shareholders' equity during the year The shareholders' equity of Eur 2,909.8 million (Eur 2,076.7 million in 2002), including Eur 1,186.8 related to Intesa Vita, is composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG CHG. IN AMOUNT
I. Group portion of shareholders' equity 2,316.2 2,076.5 11.5 239.7 Subscribed capital or equivalent funds 423.2 423.2 0.0 0.0 Equity reserves 1,368.4 1,304.3 4.9 64.1 Consolidation reserve 64.9 33.8 92.0 31.1 Reserve for valuation differences on unconsolidated participating interests 94.4 78.6 20.1 15.9 Translation difference reserve – – – – Reserve for own and parent company shares 8.0 6.2 29.1 1.8 Profit (loss) for the year 357.4 230.4 55.1 127.0 II. Minority portion of capital and reserves 593.6 0.2 n.c. 593.4 Minority portion of shareholders' equity 591.5 0.2 n.c. 591.3 Minority portion of profit (loss) of the year 2.1 – – 2.1 Total 2,909.8 2,076.7 40.1 833.1
For the schedule of changes in shareholders' equity accounts, see Annex 1.
232 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
4.1.1 Subscribed Capital and Reserves Subscribed capital consists of 846,342,325 common shares with a unit par value of Eur 0.50 of parent company Alleanza Assicurazioni. 4.1.2 Consolidation reserve The “consolidation reserve” of Eur 64.9 million (Eur 33.8 million at 31 Dec 2002) includes Eur – 10.1 million related to the allocation of consolidation adjustments related to prior years, as well as adjustments of Eur 75 million made in 2003. 4.1.3 Reserve for valuation differences on unconsolidated participating interests The “reserve for valuation differences on participating interests non included in the consolidation” of Eur 94.4 million (Eur 78.6 million at 31 Dec 2002), inclu- des net changes in participating interests valued by the equity method.
4.2 Reconciliation For the reconciliation between the shareholders' equity and net result of the parent company and the equivalent consolidated figures, see Annex 2.
4.3 Subordinated Liabilities - item B Subordinated liabilities equaled Eur 73.2 million and refer primarily to debentu- re loans and subordinated loans issued by Banca Intesa in favor of Intesa Vita.
Section 5 - Technical reserves and other provisions - Items C - D - E
5.0 Technical reserves - item C Technical reserves totaled Eur 29,814.7 million (Eur 21,027.6 million at 31 Dec 2002), including Eur 12,294.3 related to Intesa Vita, consisting of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Technical provisions on non-life insurance 0.1 0.2 – 50.0 Technical provisions on life assurance 29,814.6 21,027.4 41.8
Based on the provisions of Legislative Decree 173/97, the provision for fractions of premiums for the injury coverage of the parent company is formed of the amounts of the premiums for said coverage pertaining to future years. The pro- vision was computed analytically on the accrual basis.
233 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts
Supplementary Schedules The technical provisions on life assurance are divided as follows: Summary profit and loss account
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Actuarial reserves 29,445.7 20,825.9 41.4 Reserve for claims outstanding 58.1 29.3 98.3 Others 310.8 172.2 80.5 Total 29,814.6 21,027.4 41.8
The actuarial reserves can be broken down as follows:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Parent company 17,297.9 18,110.4 – 4.5 Intesa Vita S.p.A. 12,147.8 2,817.3 331.2 Reversal of reinsurance – – 101.8 – 100.0
Total 29,445.7 20,825.9 41.4
5.1 Technical reserves where the investment risk is borne by the policyhol- ders and reserves deriving from pension fund operations - item D The technical reserves for class D amount to Eur 6,568.9 million, including Eur 6,721.0 related to Intesa Vita. Of the total, Eur 6,565.7 million relates to unit- and index-linked policies and Eur 3.2 million to pension funds.
5.2 Provisions for risks and charges The provisions for risks and charges are equal to Eur 192.7 million (Eur 103.6 million at 31 Dec 2002), consisting of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Provisions for pensions and similar obligations – – Provisions for taxes 20.1 22.8 – 11.8 Consolidation provision for future liabilities and risks – – – Other provisions 172.6 80.8 113.6
5.2.1 Provisions for taxes The item "Provision for taxes" includes the amount set aside for Group deferred taxes related to income fiscally deferrable over a number of years and the defer- red taxes computed on the consolidation adjustments.
5.3 Consolidation provision for liabilities and risks The Group made no allocation to the consolidation provision for future liabilities and risks.
234 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
5.4 Other provisions The item “Other provisions”, based on the nature of items, consists of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Provision for securities fluctuation 80.0 32.0 150.0 Provision for exchange rate fluctuation 15.0 – n.c. Provision for reengineering charges 10 – n.c. Provision for insurance risks and other 67.6 48.8 38.5 Total 172.6 80.8 113.7
Eur 93.0 million was expensed to the income statement, composed of: to the "securities fluctuation provisions”, to stabilize the effects of market volatility, Eur 80.0 million set aside and Eur 32 million utilized; Eur 15 million were allocated to the "exchange rate fluctuation" provision, to cover potential risks deriving from the non-euro portfolio; Eur 20 million was allocated to the CONSAP-related risks provision; Eur 10 million was set aside in the "social activity development" provision.
Section 6 - Payables and other liabilities - Items F - G - H
6.1 Deposits received from reinsurers - item F The amount of deposits received from reinsurers is equal to Eur 6,621 million (Eur 6,301 million at 31 Dec 2002), referring primarily to provisions deposited with reinsurers.
6.2 Payables and other liabilities - item G Payables and the other liabilities total Eur 539 million (Eur 820.4 million at 31 Dec 2002), including Eur 110.3 related to Intesa Vita. They are composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Payables deriving from direct insurance business 77.9 52.2 49.2 Payables deriving from reinsurance business 112.0 121.7 – 7.9 Bond loans – – – Amounts due to banks and financial institutions 3.8 – n.c. Secured debt – – – Other loans and notes – 256.3 n.c. Staff severance indemnity fund 42.2 42.7 – 1.1 Other payables 292.4 341.6 – 14.4 Other liabilities 10.7 5.9 81.4 Total 539.0 820.4 – 34.3
235 Board of Directors Report
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Notes to the Accounts
Supplementary Schedules The payables deriving from direct insurance transactions amount to Eur 77.9 mil- Summary profit and loss account lion (Eur 52.2 million at 31 Dec 2002). The payables deriving from reinsurance transactions amount to Eur 112 million (Eur 121.7 million at 31 Dec 2002). 6.2.a Debenture loans At year-end the Group owed no debenture loans. 6.2.b Amounts owed to banks and credit institutions At year-end the Group owed no amounts to banks and credit institutions. 6.2.c Secured debt At year-end the Group owed no amounts secured by mortgages. 6.2.d Other loans and notes The other financial payables equal zero (Eur 256.3 million at 31 Dec 2002) due to the closure of repo operations of subsidiary Alleanza Investments. 6.2.e Other payables The item “Other payables” of Eur 292.4 million (Eur 341.6 million at 31 Dec 2002), including Eur 64.3 related to Intesa Vita, consists of Eur 194.3 million in sundry taxes and these other principal items:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Trade payables 10.1 2.6 288.5 Transfer account with the parent company's real property accounting dept. 0.8 9.0 n.c. Taxes owed by policyholders 5.7 5.6 1.8 Social-security payable 6.4 4.9 30.6
6.2.f Other liabilities The item “Other liabilities”, equal to Eur 10.7 million (Eur 5.9 million at 31 Dec 2002), is composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Commissions on premiums being collected 2.6 0.6 333.3 Life/non-life transfer account from the parent company – 2.7 n.c. Other liabilities 8.1 2.6 211.5 Total 10.7 5.9 81.4
236 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
6.3 Accrued expense and deferred income - item H The item “accrued expense and deferred income” of Eur 3.1 million (Eur 3.2 mil- lion at 31 Dec 2002) is composed of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG Accrued interest 1.8 2.3 – 21.7 Leasing charges 0.1 0.2 – 50.0 Other accrued expense and deferred income 1.2 0.7 71.4 Total 3.1 3.2 – 3.1
Section 7 - Contingent liabilities, commitments and other memorandum accounts
These total Eur 1,070.9 million (Eur 937.5 million at 31 Dec 2002) and consist of:
(IN EUR MILLIONS) 31 DEC 2003 31 DEC 2002 % CHG
Guarantees granted 336.3 335.6 0.2 Guarantees received 2.4 2.0 20.0 Guarantees granted by third parties in the interest of consolidated companies 1.6 – n.c. Commitments 725.9 556.3 30.5 Third-party assets – – – Assets pertaining to pension funds managed in the name and on behalf of third parties – – – Securities deposited with third parties 4.7 5.0 – 6.0
Other memorandum accounts – 38.6 – 100.0 TOTAL MEMORANDUM ACCOUNTS 1,070.9 937.5 14.2
7.1 Guarantees The "guarantees granted" relate primarily to commitments assumed by the Alleanza parent company in respect of credit lines granted to wholly-owned sub- sidiary Finagen S.p.A., valued by the equity method. The "guarantees received" consist of credit guarantees of parent company Alleanza and Agricola San Giorgio of Eur 2.4 million. 7.2 Commitments At year-end the Group had commitments totaling Eur 725.9 million primarily regarding transactions in financial instruments by the Alleanza parent company and repo operations of parent company Alleanza. The change in commitments is the result of operations in derivatives outstanding
237 Board of Directors Report
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External Auditors’ Report
Group Annual Accounts
Notes to the Accounts
Supplementary Schedules at the end of the current year. Summary profit and loss account Regarding the schedule of commitments for operations in derivatives, we refer you to the comments in the financial statements of the parent company.
7.3 Detail of assets and liabilities of the pension funds managed in the name and on behalf of third parties At year-end the Group had none of the aforesaid assets or liabilities.
Income Statement
Section 8 - Information concerning the technical accounts
8.1 Gross premiums written Al netto dei premi riassicurati intragruppo per € 463,5 milioni (€ 13,8 milioni nel 2002), i premi lordi contabilizzati hanno raggiunto i € 6.777,6 milioni, con un incremento del 61,5% ( 1,3% nel 2002). Del totale € 3.506,2 sono i premi lordi contabilizzati relativi ad Intesa Vita
(IN EUR MILLIONS) DIRECT INDIRECT TOTAL TOTAL VAR.. BUSINESS BUSINESS 2003 2002 %
Non-life insurance business 0.2 0.2 0.3 – 33.3 Life assurance business 6,765.0 12.4 6,777.4 4,196.3 61.5 Total 6,765.2 12.4 6,777.6 4,196.6 61.5
Of the indirect business of Eur 12.4 million, Eur 12.3 million refers to La Venezia Assicurazioni and Eur 0.1 million to the reinsurance contract with il Consorzio Italiano Risks Tarati (C.I.R.T.). 8.1.1 Information concerning the technical account - non-life insurance business (I) The information on the technical account - non-life insurance business refers exclusively to the parent company and may be summarized as follows::
GROSS PREMIUMS GROSS PREMIUMS GROSS CHARGES OPERATING REINSURANCE (IN EUR MILLIONS) BOOKED FOR THE YEAR FOR CLAIMS EXPENSE BALANCE
Direct business: Injury and health – 0.2 – – Total direct business – 0.2 – –
Total Italian portfolio – 0.2 – – Grand total – 0.2 –
238 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
8.1.2 Information concerning the technical account - life-assurance business (II) Summary information on the life assurance business concerning premiums and the reinsurance balance:
(IN EUR MILLIONS) DIRECT INDIRECT TOTAL TOTAL % CHG BUSINESS BUSINESS 2003 2002
I Whole life insurance 5,566.2 12.4 5,578.6 3,465.7 61.0 II Wedding insurance, birth insurance – – – – – III Insurance of points I and II linked to investment funds 728.8 728.8 455.5 60.0 IV Health insurance pursuant to Article 1 of Directive 79/267/EEC 0.0 0.1 – 100.0 V Capital endowment transactions pursuant to Article 40 of L.D. 174/95 174 469.4 469.4 274.7 70.9 VI Operational transactions on group formed to disburse death benefits, in case of death, in case of survival, or in the event of termination or reduction in work activity. 0.6 0.6 0.6 0.0 Total 6,765.0 12.4 6,777.4 4,196.6 61.5
8.2 Breakdown of gross premiums by geographical area All the premiums were issued in Italy.
8.3 Portion of investment income transferred to the non-technical account - item II.2 The net portion of investments transferred from the non-technical account to the technical account of life assurance business, in accordance with reporting rules, was equal to Eur 990.4 million (Eur 629.7 million al 31.12.2002). The por- tions of investment income to allocate to the technical accounts were calculated pursuant to ISVAP resolution no. 1140 G.
8.4.a Other technical income net of reinsurance - Item II.4 The item "Other technical income net of reinsurance" of Eur 82.4 million (Eur 44.8 million in the 2002), including Eur 38.6 related to Intesa Vita, consists of:
(IN EUR MILLIONS) 2003 2002 % CHG Reversal of commissions and cancellation of premiums ceded 1.6 1.2 33.3 Other technical entries 52.3 34.3 52.8 Recover of management fees 28.5 9.3 206.4 Total other technical income 82.4 44.8 83.7 Among the other technical entries, Eur 35.3 million represent the actuarial reser- ves reinsured with CONSAP and reversed out of the portfolio.
239 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts
Supplementary Schedules 8.4.b Other technical expense net of reinsurance - Item II.10 Summary profit and loss account The item “Other technical charges net of reinsurance” of Eur 21.4 million (Eur 3.5 million in 2002) consists of:
(IN EUR MILLIONS) 2003 2002 % CHG
Reversal of commissions related to outward reinsurance premiums 0.2 3.0 – 93.3 Elimination of payables arising from first-year premiums issued in prior years 0.6 0.5 20 Other technical expense 20.6 – n.c Total 21.4 3.5 n.c.
The item "other technical expense" includes Eur 14.3 million related to com- missions of Intesa Vita on unit- and index-linked products.
8.5 Expense related to claims net of reinsurance item II.5 These total Eur 2,714.7 million (Eur 1,317.1 million in 2002), including Eur 2,110.5 related to Intesa Vita, net of the reinsurance portion of Eur 622.3 mil- lion (Eur 440.9 million in the 2002) and composed of:
(IN EUR MILLIONS) 2003 2002 %
Claims paid 2,694.3 1,314.5 105 Change in the provisions for claims outstanding 20.4 2.5 n.c. Total 2,714.7 1,317.0 106.1
The amounts paid for claims, maturities and surrenders totaled Eur 3,310.8 mil- lion (Eur 1,753.5 million in 2002), composed of Eur 1,499.5 million for maturi- ties, Eur 1,541.1 million for surrenders, and Eur 270.2 million for claims; those from indirect business were equal to Eur 4.9 million. Net of other reinsurance portions (Eur 623.5 million) and considering the change in claims outstanding and the cost of the claims settlement service, the Group bore total expense of Eur 2,714.7 million.
8.6 Change in actuarial provisions and other provisions net of reinsuran- ce - Item II.6 The total was Eur 3,725.2 million (Eur 2,014.5 million in 2002), including Eur 2,110.5 related to Intesa Vita, net of the reinsurance portion of Eur 291.8 mil- lion (Eur 429.9 million in 2002), composed of:
(IN EUR MILLIONS) 2003 2002 % Actuarial reserves 3,376.3 1,893.1 78.3 Other reserves 60.6 – 37.3 – 262.5 Technical reserves where the investment risk is borne by the policyholders 288.3 158.7 81.7 Total 3,725.2 2,014.5 84.9
240 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account
Part D: Other Information
8.7 Net operating expense. Item II.8 After charging reinsurers for commissions of Eur 140.5 million (Eur 133.5 million in 2002), net operating expenses were Eur 318.9 million (Eur 245.7 million in 2002), including Eur 106.2 related to Intesa Vita, consisting of:
(IN EUR MILLIONS) 2003 2002 %
Acquisition commissions 289.9 119.3 142.8 Other acquisition costs 2.8 147.4 98.1 Change in commissions and other acquisition costs 3.2 – n.c. Collection commissions 47.4 30.3 56.4 Other administrative expenses 116.1 82.2 41.4 Commissions and profit-sharing received from reinsurers – 140.5 – 133.5 5.2 Total 318.9 245.7 29.8
8.9.a - Income and unrealized gains on investments benefiting policyhol- ders who bear the risk and investments deriving from pension fund ope- rations The income on investments benefiting policyholders who bear the risk tota- led Eur 349 million, including Eur 234.5 million in unrealized gains and Eur 114.5 million in investment income. Income from investments deriving from pension fund operations of the parent company totaled Eur 0.4 million.
8.9.b - Financial expense and unrealized losses relating to investments benefiting policyholders who bear the risk and investments deriving from pension fund operations The expense related to investments benefiting policyholders who bear the risk amounted to Eur 110.7 million, including Eur 51 million in unrealized losses and Eur 59.7 million in losses on divestitures. The investment expense deriving from the pension funds managed by the parent company amounted to Eur 0.1 million.
241 Board of Directors Report
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Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account Section 9 - Information concerning the non-technical account
9.1 Investment income - Item III.3 After making net consolidation adjustments of Eur 4.8 million, investment inco- me amounted to Eur 1,688.4 million (Eur 1,277.4 million in 2002), including Eur 446.3 related to Intesa Vita, composed of:
(IN EUR MILLIONS) AGGREGATE ADJUSTMENTS 2003 2002 %
Income deriving from shares and quotas 289.5 5.2 294.7 147.5 99.7 Income deriving from other investments 1,128.8 – 0.4 1,128.4 807.9 39.7 Write-backs on investments 41.3 41.3 8.5 385.9
Gains on divestitures 204 204 313.5 – 34.9 Total 1,663.6 4.8 1,668.4 1,277.4 30.6
9.1.1 Income from other investments The income from other investments (Eur 1,128.4 million) consists of Eur 22.2 million from real estate (Eur 48.2 million in 2002) and Eur 1,106.2 million from sundry investments, consisting of:
(IN EUR MILLIONS) 2003 2002 % Mutual fund shares 92.1 92.2 – 0.1 Bonds and other fixed-income securities 957.6 636.8 50.4 Loans 34.8 30.7 13.4 Deposits with credit institutions. 0.9 – n.c Other financial investments 20.8 n.c. Total 1,106.2 759.7 45.6
9.2.a Write-backs on investments The write-backs on investments of Eur 41.3 million (Eur 8.5 million in 2002) consisted of:
(IN EUR MILLIONS) 2003 2002 % Shares in affiliates – – – Debt securities issued by affiliates – – – Other equities 39.9 4.8 731.3 Other debt securities 1.3 2.7 – 51.9 Other financial investments 0.1 1.0 – 90.0 Total 41.3 8.5 385.9
242 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account
Part D: Other Information
9.2.b Capital gains on investments These totaled Eur 204 million (Eur 313.5 million in 2002). The detail of the item is as follows
(IN EUR MILLIONS) 2003 2002 % Gains on shares in affiliates – – – Gains on bonds issued by affiliates – – – Gains on other shares 63.2 66.4 – 4.8 Gains on other debt securities 120.4 227.0 – 47.0 Gains on other financial investments 20.4 20.1 1.5 Total 204.0 313.5 – 34.9
9.3 Financial expense - Item III.4 This item totaled Eur 499.4 million (Eur 629.4 million in 2002), with the fol- lowing detail:
(IN EUR MILLIONS) 2003 2002 % Investment management fees and interest paid 353.3 279.8 26.3 Value adjustments on investments 86.3 190.4 – 54.7 Capital losses on investments 59.8 159.2 – 62.4 Total 499.4 629.4 – 20.7
9.4.a Value adjustments to investments This item is equal to Eur 86.3 million (Eur 190.4 million in 2002) and consists of adjustments to the following assets:
(IN EUR MILLIONS) 2003 2002 CHG. %
Land and buildings 0.1 0.1 – Shares in affiliates – 0.6 – Debt securities issued by affiliates – 1.5 – Other equities 41.1 170.9 – 76 Other debt securities 38.1 15.7 142.7 Other financial investments 7.0 1.6 337.5 Total 86.3 190.4 – 54.6
243 Board of Directors Report
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Notes to the Accounts
Supplementary Schedules 9.4.b Capital losses on investments Summary profit and loss account The capital losses on investments totaled Eur 59.8 million (Eur 159.2 million in 2002) and consisted of:
(IN EUR MILLIONS) 2003 2002 % Losses on shares and quotas 16.2 85.3 – 81 Losses on debt securities 28.6 72.3 – 60.4 Losses on other financial investments 15.0 1.6 837.5 Total 59.8 159.2 – 62.4
9.5 Other income - item III.6 Other income amounted to Eur 61.0 million (Eur 101.8 million in 2002) and con- sisted of:
(IN EUR MILLIONS) 2003 2002 %
Use of the provisions for risks and charges 32 55.3 – 33.1 Administrative expense charged back to third parties 1.9 0.8 137.5 Interest on bank account balances 0.7 3.4 – 79.4 Interest on the reinsurance account 9.2 12.8 – 28.1 Gains (losses) on foreign currency 0.4 15.9 – 97.5 Interest on time deposits 6.7 7.1 – 5.6 Others 10.1 6.5 – 21.5 Total 61.0 101.8 – 40.1
9.6 Other expense item III 7 Other expense amounted to Eur 236.8 million (Eur 143.1 million in 2002) as fol- lows: a) Interest on debt equal to Eur 7.4 million (Eur 17.8 million in 2002). b) Sundry expense:
(IN EUR MILLIONS) 2003 2002 %
Allocations for risks and charges 125 52.0 140.4 Gains (losses) on foreign currency 19.3 35.9 – 46.2 Amortization of intangible assets 66.0 13.1 403.8 Others 19.1 24.3 – 21.4 Total sundry expense 229.4 125.3 83.1
The “sundry expense” includes amortization expense of Eur 56.2 million relati- ve to goodwill on Intesa Vita.
244 Part A: General Reporting Criteria and Area of Consolidation Part B: Valuation Criteria Part C: Information on the Balance Sheet and Profit and Loss Account Part D: Other Information
9.7.a Extraordinary income - item III.9 The item “Extraordinary income” of Eur 38.6 million (Eur 110.4 million in 2002) consists of:
(IN EUR MILLIONS) 2003 2002 %
Income from securitization 7.9 11.2 – 29.5 Nonrecurring income items 6.1 7.6 – 19.7 Capital gains on land and buildings 0.2 0.1 100.0 Capital gains on the disposal of securities for long-term use 23.1 83.1 – 72.2 Index placement commissions 0.1 8.4 – 98.8
Others 1.2 – n.c.
Total 38.6 110.4 – 65.0
The capital gains on the disposal of securities for long-term use included a capi- tal gain of Eur 16.8 million on the sale of La Venezia Assicurazioni.
9.7.b Extraordinary expense - item III.10 The item “Extraordinary expense” amounted to Eur 17.1 million (Eur 29.1 mil- lion in 2002) composed of:
(IN EUR MILLIONS) 2003 2002 % Nonrecurring expense items 8.3 4.8 73 Securitization costs 5.3 8.3 – 36.1 Taxes related to the previous year – 1.5 n.c. Capital losses on the sale of durable debt securities 3.5 14.5 – 75.9 Total 17.1 29.1 – 41.2
9.8 - Taxes - Item III.13 After consolidation adjustments of Eur 87 million, including Eur 59.1 million for deferred taxes, the item amounted to Eur 91.7 million (Eur 101.4 million in 2002).
245 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report Group Annual Accounts Part D: Other information Notes to the Accounts
Supplementary Schedules
Summary profit and loss account Average staff levels of companies included in the consolidation
The number of employees of the companies included in the consolidation, com- puted as the average of the year-end totals for 2002 and 2003, by category, is as follows:
AVERAGE 2003
Managers 17 Office staff 1,235.5 Workers 11.0 Others 2,005.0 Total 3,268.5
Remuneration of Directors and Statutory Auditors
The amount of compensation due to directors and statutory auditors of parent company Alleanza for performing those functions in Group companies is Eur 1.3 million and 0.1 million, respectively.
Information of the volume and nature of the business of subsidiaries not included in the area of consolidation
Regarding the volume and nature of business conducted by unconsolidated sub- sidiaries, please refer to the Board of Directors report.
Statement of Changes in Financial Position
A statement of changes in financial position is provided in Annex° 3.
246 Supplementary Schedules
247 Schedule of Changes in Shareholders’ Equity Reconciliation of Shareholders’ Equity Statement of Changes Annex 1 in Financial Position List of Companies Statement of Changes in Shareholders’ Equity
(IN EUR MILLIONS) BALANCE CHANGES BALANCE 31/12/2002 2003 31/12/2003 POSITIVE NEGATIVE
Subscribed capital 423.2 423.2 Equity reserves 1,304.3 63.9 1,368.3 Consolidation reserve 33.8 31.1 64.9 Reserve for valuation differences on unconsolidated participating interests 78.6 15.9 94.5 Reserve for translation differences – – – – Reserve for own shares 6.2 1.8 8.0 Profit (loss) for the year 230.4 127.0 357.4 Minority portion of shareholders' equity 0.2 591.3 591.5 Minority portion of profit (loss) for the year 0.0 2.1 2.1 Total 2,076.7 833.1 2,909.8
249 Board of Directors Report
Report of the Board of Auditors External Auditors’ Report Annex 2 Group Annual Accounts Reconciliation of shareholders’ equity Notes to the Accounts
Supplementary Schedules
Summary profit and loss account (IN EUR MILLIONS) SH. EQUITY 2003 SH. EQUITY 2002 AT 31 DEC 2003 RESULT AT 31 DEC 2002 RESULT
Shareholders' equity of parent company 2,202.5 403.9 1,967.3 233.6 Sh. equity of. consolidated companies 1,720.8 18.8 697.0 37.2 Total (A) 3,923.3 422.7 2,664.3 270.8
CONSOLIDATION ADJUSTMENTS
(IN EUR MILLIONS) SH. EQUITY 2003 SH. EQUITY 2002 AT 31 DEC 2003 RESULT AT 31 DEC 2002 RESULT
Shareholders' equity of consolidated companies – 1,702.0 – 659.8 Consolidation reserve 64.9 33.8
Reserve for valuation differences 94.5 78.6 Reserve for own and parent company shares 0.9 0.0 Adjustments to result for the year – 65.3 – 40.4 Consolidation adjustments Dividends – 179.1 – 225.6 Tax credits on dividends and taxes on reversals of bancassurance gain 89.3 77.6
Amortization of consolidation difference – – 9.4
Fiscal amortization 5.8 12.4
Tax credit on fiscal amortization – 2.2 – 4.6
Valuation differences; Portion of companies valued at equity. 184.2 108.9
Reversal of gains on sale of bancassurance unit – 159.7
Adjustments to Group accounting principles: Reversal of organization and expansion costs – 1.5 0.1 Total (B) – 1,607.2 – 65.3 – 587.8 – 40.4 Group shareholders' equity and profit 2,316.3 357.4 2,076.5 230.4 Minority portion of shareholders' equity 591.5 0.2 0.0 Minority portion of net profit 2.1 2.0 Consolidated shareholders' equity 2,909.8 359.4 2,076.7 230.4
250 Schedule of Changes in Shareholders’ Equity Reconciliation of Shareholders’ Equity Statement of Changes Annex 3 in Financial Position Statement of Changes in Financial Position List of Companies
SOURCES
(IN EUR MILLIONS) 2003 2002
Net profit for the year 357.4 230.4 Minority portion of shareholders' equity 593.6 – Other changes in sh.equity 112.9 77.6 Increase in technical provisions 13,662.0 1,616.8 Increase in specific provisions 89.1 – 53.5 Increase in reinsurance deposits 320.0 469.3 Decrease (increase) in receivables/payables – 483.7 138.3 Total (A) 14,651.5 2,478.9
USES
(IN EUR MILLIONS) 2003 2002
Purchase/sale of plant, furnishings and other pluriennal costs 469 – 2.1 Consolidation difference – 14.4 – 9.4 Distribution to shareholders 160.7 283.2 Total (B) 615.3 271.7 Available funds (A + B) 14,036.2 2,207.2
INCREASE (DECREASE) IN INVESTMENTS AND CASH
(IN EUR MILLIONS) 2003 2002
Land and buildings 6.6 – 1,080.1 Debt securities 7,488.8 2,283.1 Mutual fund shares – 1,482.1 236.7 Participating interests 2,409.8 493.8 Loans 182.0 Cash 104.8 – 52.5 Other financial investments 406.3 147
Class D investments 4,920.1 179.2 Total 14,036.2 2,207.2
251 Board of Directors Report
Report of the Board of Auditors External Auditors’ Report Annex 4 Group Annual Accounts List of Companies Notes to the Accounts
Supplementary Schedules LIST OF CONSOLIDATED COMPANIES Summary profit and loss account Participating interests in subsidiaries valued by the "full-line" method”
COMPANY NAME HEAD OFFICES SHARES VALUE SHARES % OWNED CONTROL Agricola S. Giorgio S.p.A. Trieste 22,160,000 22,160,000 22,160,000 100.00 Alleanza Investments PLC Dublino 4,000 40,000.00 3,999 99.97 Intesa Vita S.p.A. Milan 78,845,260 394,226,300 39,422,630 51.4(*) (*) Direct + indirect
LIST OF COMPANIES VALUED BY THE EQUITY METHOD Participating interests in direct subsidiaries:
COMPANY NAME HEAD OFFICES SHARES VALUE SHARES % OWNED CONTROL Finagen S.p.A. Venice 5,040,000 25,200,000 5,037,984 99.96 Fondi Alleanza Sgr.p.A. Milan 10,000,000 5,200,000 10,000,000 100.00 Immobiliare S. Samuele (**) Venice 1,820,000 2,600,000 1,783,600 99.96
Participating interests in affiliates:
COMPANY NAME HEAD OFFICES SHARES VALUE SHARES % OWNED CONTROL Banca Intesa S.p.A. Milan 6,848,197,787 3,561,062,849.24 195,752,186 2.9 (*) Percent of participation in total capital.
Participating interests in sister companies:
COMPANY NAME HEAD OFFICES SHARES VALUE SHARES % OWNED CONTROL Generali Properties Trieste 71,537,372 357,686,860 34,288,791 47.90 AMB Generali Holding (**) Aachen 53,679,813 137,420,784.64 1,000,000 1.86 Gruppo Generali Servizi(**) Trieste 13,600,000 13,600,000.00 4,488,000 33.00 Banca Generali(**) Trieste 99,614,876 99,614,876 5,034,844 5.1
LIST OF PARTICIPATING INTERESTS IN OTHER COMPANIES
COMPANY NAME HEAD OFFICES SHARES VALUE SHARES % OWNED CONTROL Mediobanca S.p.A. (**) Milan 178,570,415 389,285,207 2,039,280 0.26
(**) Companies valued at cost.
252 Summary profit and Loss Account
253 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report Group Annual Accounts Summary Profit and Notes to the Accounts Supplementary Schedules Loss Account Summary profit and loss account
(IN EUR MILLIONS) 2003 2002 % CHG.
Premiums and fees 6,777.4 4,196.6 61.5
Premiums ceded – 875.9 – 874.2 0.2
Changes in technical provisions (*) – 3,736.1 – 2,016.7 85.3
Claims paid (*) – 2,706.3 – 1,312.7 106.2
Overhead costs (*) – 319.9 – 245.7 30.2
Technical interest (*) 1,050.6 456.9 129.9
Other income / technical expense (*) 59.2 41.3 43.3
Non-technical balance 249.0 245.5 1.4
Net ordinary income 1,276.2 919.2 38.8
Net Extraordinary gains 350.2 – 103.9 – 437
Interest to reinsurers – 270.1 – 236.2 14.4
Technical interest (*) – 1,050.6 – 456.9 129.9
Gross profit 554.7 367.7 50.8
Balance other provisions/withdrawals – 101.6 – 25.2 303.1
Pre-tax profit 453.1 342.5 32.3
Taxes – 93.6 – 112.1 – 16.5 Third parties net earnings – 2.1 – –
Net result for the period 357.4 230.4 55.1
(*) net of portion ceded to reinsurers
254 General and special Shareholders' Meetings
255 General and special Shareholders' Meetings
General and special Shareholders' Meetings of 22 April 2004
Chairman SANDRO SALVATI Recording Clerk NICOLA RIVANI FAROLFI
48 shareholders in attendance representing, directly or by proxy, a total of 441,912,721 shares.
AGENDA
General business
1. Board of Directors report and Statutory Audit Committee report on the 2003 financial year; presentation of the financial statements and inherent and con- sequent deliberations
2. Election of directors, after the determination of their number and compensation
3. Transfer of own shares to the stock option plan for the directors of the Alleanza Group
Special business
1. Amendments to articles 5 (Governance), 7 (Share capital), 8 (Shares), 11 (Convocation of Shareholders' Meetings), 13 (Participation in Shareholders' Meetings), 18 (Powers of Shareholders in General Meetings), 19 (Powers of Shareholders in Special Meetings), 23 (Board of Directors), 26 (Powers of the Board of Directors), 32 (Statutory Audit Committee) and 37 (Financial Reporting) of the company Bylaws.
SHAREHOLDERS DELIBERATIONS
General
1. Approval - taking note of the Statutory Audit Committee report - of the finan- cial statements for the 2003 financial year, wholly and in its individual items, with the proposed allocations and appropriations.
Distribution, after the allocations required by the Bylaws, of a dividend of EUR 0.28, before mandatory withholding, to each of the 845,542,325 sha- res, composed of EUR 0.21 as an ordinary dividend and EUR 0.07 as an extraordinary dividend.
256 2. Election of the Board of Directors, after setting the number of members at 14, in the persons of:
Giovanni Bazoli, Antoine Bernheim, Giuseppe Buoro, Dino De Poli, Alfonso Desiata, Maurizio de Tilla, Giancarlo Forestieri, Aldo Minucci, Amato Luigi Molinari, Alberto Pecci, Giovanni Perissinotto, Giulio Ponzanelli, Fabio Alberto Roversi-Monaco and Sandro Salvati.
Approval of the fixed annual compensation to the directors.
3. Authorization to transfer 90,000 own shares to the stock option plan for directors of the Alleanza Group.
Special business
1. Amendment to articles 5 (Governance), 7 (Share capital), 8 (Shares), 11 (Convocation of Shareholders' Meetings), 13 (Participation in Shareholders' Meetings), 18 (Powers of Shareholders' in General Meetings), 19 (Powers of Shareholders in Special Meetings), 23 (Board of Directors), 26 (Powers of the Board of Directors), 32 (Statutory Audit Committee) and 37 (Financial Reporting) of the company Bylaws
BOARD OF DIRECTORS MEETING OF 22 APRIL 2004
Deliberations
Designation of Sandro Salvati as Chairman of the Board of Directors and Managing Director and Antoine Bernheim as Vice Chairman. Designation of the Executive Committee composed of the following five members: Sandro Salvati – Chairman/Managing Director, Antoine Bernheim - Vice Chairman, Giovanni Perissinotto, Giulio Ponzanelli and Fabio Alberto Roversi- Monaco Designation of the Compensation Committee, composed of the following three members: Giovanni Perissinotto – Chairman, Maurizio de Tilla and Alberto Pecci. Designation of the Internal Control Committee, composed of the following three members: Amato Luigi Molinari – Chairman, Alfonso Desiata and Giancarlo Forestieri.
257 258 Progetto Grafico: - Milano Stampa: Bertieri Istituto Grafico, Monza (MI) Foto: Raffaello Sanzio - San Giorgio e il drago - olio su tavola - Washington , National Gallery of Art 259 Board of Directors Report
Report of the Board of Auditors
External Auditors’ Report
Group Annual Accounts
Notes to the Accounts
Supplementary Schedules
Summary profit and loss account
III. NON-TECHNICAL ACCOUNT 1. TECHNICAL RESULT - NON-LIFE ASSURANCE BUSINESS (Item I.9) 2. TECHNICAL RESULT - LIFE ASSURANCE BUSINESS (Item III.11) 3. INVESTMENT INCOME: a) Income from equities aa) income from participation valued according to equity method bb) other b) Income from other investments aa) from land and buildings bb) from other investments c) Value re-adjustments on investments d) Gains on the realisations of investments 4. INVESTMENT CHARGES: a) Investment management charges and interests b) Value adjustments on investments c) Losses on realisation of investments 5. (–) PORTION OF INVESTMENT INCOME TRANSFERRED TO THE TECHNICAL ACCOUNT - LIFE ASSURANCE BUSINESS (Item II.2) 6. OTHER INCOME 7. OTHER CHARGES a) Interest on financial debt b) Sundry charges 8. RESULT OF ORDINARY ACTIVITY 9. EXTRAORDINARY INCOME 10. EXTRAORDINARY CHARGES 11. RESULT OF EXTRAORDINARY ACTIVITY 12. NET PROFIT (LOSS) BEFORE TAXES 13. INCOME TAXES - CURRENT YEAR 14. CONSOLIDATED RESULT 15. MINORITY SHAREHOLDERS’ INTEREST PROFIT (LOSS) FOR THE YEAR 16. GROUP PORTION OF PROFIT (LOSS)
210