Assicurazioni Generali PARENT COMPANY STATEMENTS th year 2008 PARENT COMPANY STATEMENTS 2008 APPROVED BY THE SHAREHOLDERS’ MEETING OF 24 APRIL 2009 Registered Office and Central Head Office in Trieste Head Office for Italian Operations in Mogliano Veneto Capital (fully paid in) Euro 1,410,113,747.00 Fiscal code and Trieste Companies Register 00079760328 Company entered in the Register of Italian Insurance and Reinsurance Companies under no. 100003 Parent Company of Generali Group, entered in the Register of Insurance Groups CHAIRMAN Antoine Bernheim VICE-CHAIRMAN Gabriele Galateri di Genola MANAGING DIRECTORS Sergio Balbinot (*) / Giovanni Perissinotto (*) (*) He acts also as General Manager DIRECTORS Luigi Arturo Bianchi / Ana Patricia Botin (**) Directors who, together with the Chairman, Francesco Gaetano Caltagirone (**) / Diego Della Valle Vice-Chairman and Managing Directors, Leonardo Del Vecchio / Loïc Hennekinne / Petr Kellner form the Executive Committee Klaus-Peter Müller / Alberto Nicola Nagel (**) / Alessandro Pedersoli Lorenzo Pellicioli (**) / Reinfried Pohl / Kai Uwe Ricke Paolo Scaroni / Claude Tendil GENERAL COUNCIL Giorgio Davide Adler / José Ramón Álvarez Rendueles Comprising, besides the below listed elective José Maria Amusátegui de la Cierva / Francesco Maria Attaguile Members, the Members of the Board of Directors Claude Bébéar / Kenneth J. Bialkin / Gerardo Broggini and the General Managers Giacomo Costa / Maurizio De Tilla / Enrico Filippi Carlos Fitz-James Stuart y Martínez de Irujo / Albert Frère / Georges Hervet Dietrich Karner / Khoon Chen Kuok / Stefano Micossi Benedetto Orsini / Arturo Romanin Jacur / Guido Schmidt-Chiari Alejandro Valenzuela Del Río / Theo Waigel / Wilhelm Winterstein BOARD OF AUDITORS Eugenio Colucci, Chairman Giuseppe Alessio Vernì / Gaetano Terrin Maurizio Dattilo (substitute) / Michele Paolillo (substitute) GENERAL MANAGER Raffaele Agrusti (***) (***) Chief Financial Officer and Manager in charge of the preparation of the company’s financial reports DEPUTY GENERAL MANAGERS Lodovico Floriani / Andrea Mencattini (****) Secretary of the Board of Directors Aldo Minucci / Vittorio Rispoli (****) / Valter Trevisani CORPORATE BODIES AS OF 24 APRIL 2009 Gateway of India, Bombay - India A marked presence across the world The pictures featured in this volume were taken in squares of China and India - countries where Assicurazioni Generali is present - TABLE OF CONTENTS Report Company highlights ………………………………………………………………………………………… 10 Economic and insurance market developments ……………………………… 11 The Group’s strategy for growth ……………………………………………………………… 14 The Generali Group’s identity …………………………………………………………………… 15 Part A – Information on the operations of Assicurazioni Generali S.p.A. ………………………………………………………………………………… 19 Part B – Risk Report ……………………………………………………………………………………… 52 Appendix to the Report ………………………………………………………………………………… 61 Balance sheet and profit and loss account ………………………………………… 69 Notes on the accounts Foreword ……………………………………………………………………………………………………………… 95 Part A – Evaluation criteria ………………………………………………………………………… 95 Part B – Information on the balance sheet and the profit and the loss account ………………………………………………………………… 103 Part C – Other information ……………………………………………………………………… 176 Cash flow statement …………………………………………………………………………………… 183 Appendices to the Notes …………………………………………………………………………… 191 Securities and urban real estate on which revaluations have been carried out ……………………………………………………………………………………………… 281 Companies in which an unquoted shareholding (which is higher than 10%) is held …………………………………………………………………………… 296 Attestation of the financial statements in accordance with art. 154-bis of Legislative Decree 58/98 ……………………………………………… 363 Board of Auditors’ report …………………………………………………………………………… 367 Independent Auditor’s report and Actuary’s report ……………………… 377 Renmin Guangchang - Shanghai, China Report Parent Company Statements 08 REPORT Company highlights 2008 2007 2006 Financial Financial Financial (in million euro) Statements Statements Statements Normalized (b)+(c) Net profits 828.3 1,401.1 1,213.6 1,110.7 Aggregate dividend - 1,269.0 958.7 958.7 Increase -100.0% 32.4% 39.1% 39.1% Total net premiums 8,745.4 8,873.0 6,327.2 8,401.9 Total gross premiums 9,659.9 9,759.7 7,396.2 9,335.8 Total gross premiums from direct business 7,363.9 7,502.5 3,379.3 7,174.7 Increase on equivalent terms (a) -1.8% 4.9% 4.9% 6.8% Total gross premiums from indirect business 2,296.0 2,257.2 4,016.9 2,161.1 Increase on equivalent terms (a) 2.7% 6.1% 6.1% 6.1% Acquisition and administration costs 1,308.5 1,402.1 1,349.1 1,306.3 Impact on premiums 15.0% 15.8% 15.8% 15.8% Life business Total net premiums 5,514.9 5,609.8 3,003.3 5,271.3 Life gross premiums 5,698.4 5,835.8 3,312.6 5,476.4 Increase on equivalent terms (a) -1.7% 7.1% 65.1% -2.3% Life gross premiums from direct business 3,967.6 4,094.1 95.3 3,890.7 Increase on equivalent terms (a) -2.8% 5.4% 3.3% 5.1% Life gross premiums from indirect business 1,730.8 1,741.7 3,217.3 1,585.7 Increase on equivalent terms (a) 0.6% 11.2% 68.1% -16.5% Life acquisition and administration costs 572.6 615.2 577.4 568.5 Impact on premiums 10.4% 11.0% 19.2% 10.8% Non life business Total net premiums 3,231 3,263.2 3,323.9 3,130.6 Non-life gross premiums 3,961.5 3,923.9 4,083.6 3,859.4 Increase on equivalent terms (a) 0.7% 2.5% 7.7% 7.7% Non-life gross premiums from direct business 3,396.3 3,408.4 3,284.0 3,284.0 Increase on equivalent terms (a) -0.7% 4.3% 8.9% 8.9% Non-life gross premiums from indirect business 565.2 515.5 799.6 575.4 Increase on equivalent terms (a) 9.8% -8.1% 3.2% -24.9% Non-life acquisition and administration costs 735.9 786.9 771.7 737.8 Impact on premiums 22.8% 24.1% 23.2% 23.6% Non-life loss ratio 77.1% 70.2% 74.7% 73.5% Non-life net combined ratio 99.9% 94.3% 97.9% 97.1% Current financial result 2,030.1 3,168.6 1,926.2 2,413.9 (continues) 10 (continues) 2008 2007 2006 Financial Financial Financial (in million euro) Statements Statements Statements Normalized (b)+(c) Technical provisions 39,092.9 39,768.4 39,256.6 39,256.6 Technical provisions life 31,944.2 32,518.6 31,700.3 31,700.3 Technical provisions non life 7,148.7 7,249.8 7,556.3 7,556.3 Investments 58,087.3 56,891.3 55,543.1 55,543.1 Capital and reserves 9,798.9 9,513.6 9,221.8 9,221.8 (a) At equivalent exchange rates. (b) Excluding the effects of the accounting alignment of indirect business. (c) Adding Generali Vita items. Economic and insurance market developments Financial year 2008, which began amid a moderate economic expansion and concerns about the possible return of inflation, ended in recession. The global financial system fell into a profound crisis. In the United States, a number of major banks went bankrupt, while others were rescued by the government or other in- stitutions. Against this backdrop, the banking sector recorded a 75% drop in market capitalisation. Similar events occurred in Europe, which led governments to take action, and, in certain cases, to nationalize some institutions. In the United States, economic growth fell sharply in the second half of the year (estimated at 1.1% compared to 2% in 2007), recording a 0.5% and 3.8% decrease in the last two quarters, respectively. A sudden increase in unemployment aggravated the situation for families already burdened by high debt and declining property values. Weak domestic demand caused a drastic decrease in inflation, which remained at relatively high le- vels until June before falling to 0.1% at year-end. In China, figures for exports and industrial production indicate an estimated growth rate of 6% for 2008, much lower than in past years. Though there are no reliable figures, unemployment seems to have increased si- gnificantly, with a corresponding decrease in inflation. The country’s recent contractionary monetary policies were coupled by slowing economic growth. Subsequently, Chinese authorities lowered interest rates, chan- ged its credit-support measures and initiated a programme focusing on public works and boosting domestic consumption. In Latin America, economic growth remained steady compared to 2007 (estimated at 5.7% in 2008 vs. 5.6% in 2007). Nonetheless, the negative impact of slowing global demand and sharp decreases in the prices of the raw materials exported by these countries could be seen on year-end figures. With an average growth rate of 3.9% for 2008 (5.9% in 2007), the new European Union Member States also felt the effects of the crisis. Exchange rates depreciated across the board, due in part to expansive monetary policies adopted in those countries. 11 Parent Company Statements 08 REPORT After recording a slowdown in economic activity from the start of the year, the main economies of the euro area were hit by the recession in the fourth quarter. Germany, a strong exporter, saw its growth slow to ap- proximately 1.3% as a result of falling foreign demand. France and Spain reported modest growth (0.7% and 1.1%, respectively), while Italy’s economy shrunk by 1.0%. The unemployment rate in the euro area climbed back up to 8% in December (compared to 7.2% in 2007) after several years of decreases. The annual inflation trend rate for the euro area decreased to 1.6% in December (3.1% in December 2007). The decline in inflation, caused in part by falling raw materials prices, allowed the ECB to implement an ag- gressive policy starting in October aimed at reducing its reference interest rate, bringing the rate from 4% to 2.5% in December. Cutting interest rates was a measure imposed by central banks around the world in an attempt to jumpstart the economy.