consolidated half-year financial report as at 30 june 2013 relations/pdf_investor...ias 19 (employee...
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SOCIETÀ PER AZIONI REGISTERED OFFICES: VIA IGNAZIO GARDELLA, 2 - 20149 MILAN - ITALY SHARE CAPITAL: EURO 67,378,924 FULLY PAID-UP FISCAL CODE AND MILAN COMPANIES REGISTER NO. 01329510158 - REA NO. 54871 COMPANY REGISTERED TO REGISTER OF INSURANCE AND REINSURANCE COMPANIES – SECTION I NO.1.00014 PARENT COMPANY OF VITTORIA ASSICURAZIONI GROUP REGISTERED TO REGISTER OF INSURANCE GROUPS NO.008
92nd year of business
Consolidated half-year financial report as at 30 June 2013
Board of Directors’ meeting of 31 July 2013
(Translation from the Italian original which remains the definitive version)
Table of contents Page
Corporate bodies and officers 4
CONSOLIDATED 2013 HALF YEAR REPORT
Format and content 6Accounting policies 6Other relevant information 6 Directors’ report Economic and insurance scenario 7 Summary of key performance indicators 10 Performance of the Vittoria Assicurazioni Group 11 Insurance business 13 Real estate business 27 Service business 30 Investment – Cash & cash equivalents – Property 31 Gains and losses on investments 36 Financial liabilities 37 Investment and financial risk management & analysis policies 37 Infragroup and related-party transactions 43 Events after the reporting period 45 Condensed Consolidated 2013 half year financial statements Balance sheet 48 Income statement and Other comprehensive income 50 Statement of changes in equity 51 Cash flow statement 52 General explanatory notes to accounts Scope of consolidation 53 Unconsolidated equity interests 55 Geographical segments reporting 56 Specific explanatory notes to accounts Notes - Consolidated balance sheet 57 Notes - Consolidated income statement 72 Other disclosures 76
Annexes to Condensed Consolidated 2013 half year financial statements 79 Management Attestation 97
Independent Auditors’s Report 99
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BOARD OF DIRECTORS Luigi GUATRI Honorary President Giorgio Roberto COSTA Chairman Andrea ACUTIS Executive Deputy Chairman Carlo ACUTIS Executive Deputy Chairman Roberto GUARENA Managing Director Adriana ACUTIS BISCARETTI di RUFFIA Director Francesco BAGGI SISINI Independent director Marco BRIGNONE Independent director Fulvia FERRAGAMO VISCONTI Independent director Bernd GIERL Independent director Lorenza GUERRA SERÀGNOLI Independent director Pietro Carlo MARSANI Independent director Giorgio MARSIAJ Independent director Lodovico PASSERIN d’ENTREVES Independent director Luca PAVERI FONTANA Director Giuseppe SPADAFORA Independent director Anna STRAZZERA Independent director Mario RAVASIO Secretary
BOARD OF STATUTORY AUDITORS Alberto GIUSSANI President Giovanni MARITANO Standing statutory auditor Francesca SANGIANI Standing statutory auditor Michele CASO’ Substitute statutory auditor Maria Filomena TROTTA Substitute statutory auditor GENERAL MANAGEMENT Cesare CALDARELLI General Manager Mario RAVASIO Joint General Manager Paolo NOVATI Central Manager Piero Angelo PARAZZINI Central Manager Enzo VIGHI Central Manager INDEPENDENT AUDITOR Deloitte & Touche S.p.A.
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APPOINTMENTS AND REMUNERATION COMMITTEE Lodovico PASSERIN d’ENTREVES Independent non-executive president Francesco BAGGI SISINI Independent non-executive member Luca PAVERI FONTANA Non-executive member INTERNAL CONTROL COMMITTEE Pietro Carlo MARSANI Independent non-executive president Luca PAVERI FONTANA non-executive member Giuseppe SPADAFORA Independent non-executive member FINANCE COMMITTEE
Andrea ACUTIS Executive president Adriana ACUTIS BISCARETTI di RUFFIA Non-executive member Carlo ACUTIS Executive member Giorgio Roberto COSTA Non-executive member Roberto GUARENA Executive member Luca PAVERI FONTANA Non-executive member REAL ESTATE COMMITTEE
Andrea ACUTIS Executive president Adriana ACUTIS BISCARETTI di RUFFIA Non-executive member Carlo ACUTIS Executive member Francesco BAGGI SISINI Independent non-executive member Giorgio Roberto COSTA Non-executive member Roberto GUARENA Executive member Luca PAVERI FONTANA Non-executive member Anna STRAZZERA Independent non-executive member RELATED PARTIES COMMITTEE Pietro Carlo MARSANI Non-executive president Marco BRIGNONE Independent non-executive member Giuseppe SPADAFORA Independent non-executive member
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Form and contents of report
The consolidated half-year report as at 30 June 2013 was prepared in accordance with International Accounting Standards (IASs/IFRSs) and in compliance with Article 154-ter of Legislative Decree 58 of 24 February 1998, the “Consolidated Law on Financial Intermediation,” as amended by Legislative Decree 195 of 6 November 2007 (Transparency), and related implementation provisions pursuant to Article 9 of Legislative Decree 38 of 2005.
This report complies with IAS 34 - Interim Financial Reporting, and consists of the statements envisaged in ISVAP (now IVASS) Regulation no. 7 of 13 July 2007 (Balance Sheet, Income Statement, Statement of Changes in Equity, Statement of Cash Flows, and account statements), and includes additional detail tables as necessary to complete disclosures required pursuant to international accounting standards or to facilitate comprehension of the report. The account statements required by the supervisory authority as the minimum disclosures are contained in the specific chapter “Appendices to Consolidated Half-Year Financial Statements,” which is an integral part of this report. This report was prepared in accordance with the specifications set out in Legislative Decree 209 of 7 September 2005 and Consob Memorandum no. 6064293 of 28 July 2006.
All technical insurance figures that are shown in the various statements of this report refer to Vittoria Assicurazioni S.p.A., in its capacity as the sole insurance company of the Group. All amounts are shown in thousands of Euro, unless otherwise indicated.
Accounting policies The rules for preparation and the accounting policies applied for the consolidated for this interim management report are the same as those used for annual consolidated financial statements. Readers should therefore refer to the “Accounting Policies” section of the Consolidated Annual Report for the year ended on 31 December 2012. Given, however, the faster preparation required than in the case of annual financial statements and the fact that this is an interim report, use has been made – consistently with the period’s operating data – of appropriate estimation methods. Beginning with this report, a number of buildings for office use have been reclassified as “investment property” as they fall within the scope of application of IAS 40, given that they are being held for the purpose of receiving lease payments. These properties have been measured at cost. Starting from 1st January 2013 Group adopted the following GAAPs / amendments to GAAPs:
IFRS 13 (Fair Value Measurement) that gives recommendation about fair value measurement and requires additional disclosure on fair value measurement, such as classification of financial assets and liabilities in the fair value hierarchy levels;
IAS 1 (Presentation of Other comprehensive income) requiring Items of OCI should be grouped on the basis of those that will not be reclassified subsequently to profit or loss and those that will be reclassified subsequently to profit or loss when specific conditions are met. For relevant information please refer to the explanatory notes;
IAS 19 (Employee Benefits) requiring to charge the actuarial results to the “Other Comprehensive Income”. As Group charged to profit and loss this item, balances of previous year were ridetermined, charging to “Other Comprehensive Income” €324 thousand as at 30/06/2012 and €379 thousand as at 31/12/2012.
Endorsement by the European Union of the Amendments to IFRS 7 (Financial Instruments Disclosures) has no impact on this report.
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Other relevant information The Vittoria Assicurazioni Group was officially registered with the Register of Insurance Groups envisaged in Article 85 of the Italian Code of Private Insurance Companies (with registration number 008). The Vittoria Assicurazioni Group operates in the insurance sector solely through its parent company and, as part of its strategy to streamline its risk/reward profile, has made some of its investments in the real estate sector (trading, development, and real estate brokering and property management services) through Vittoria Immobiliare S.p.A. and other equity holdings, and in the private equity sector. Certain Group companies provide services primarily in support of insurance activities.
Yafa S.p.A., with registered office in Turin, Italy, controls Vittoria Assicurazioni through the chain of investors comprised of Yafa Holding B.V. and Vittoria Capital N.V., with registered offices in Amsterdam, The Netherlands, and administration offices in Italy. The parent companies do not engage in management and coordination of the Group, insofar as they merely serve as financial holding companies. The parent company Vittoria Assicurazioni SpA exercises its right as provided in article 70, paragraph 8 and article 71, paragraph 1-bis of the Regulations for Issuers, to waive the obligation to publish documents that are required in significant merger, split, share capital increase by transfer of assets in kind, acquisition or transfer operations.
Directors’ report Economic and insurance scenario According to the International Monetary Fund in its July updated forecasts published in July, global economic growth for the year is expected to reach 3%, which is in line with the rate of growth seen in 2012. Having been adjusted downward compared to the figures published in May, this forecast particularly reflects the challenges being faced in many emerging markets, which are having to face problems tied both to inadequate infrastructures and to a slowing in foreign demand. Also contributing to this outlook are the continuing difficulties being faced in many Eurozone nations as well as the decline in the rate of economic growth in the U.S. Conversely, excellent performance is expected for the Japanese economy, driven by private demand in particular and facilitated by accommodating fiscal policies. In the United States, economic growth should remain modest for 2013 before improving significantly in 2014. The job market is also expected to improve, accompanied by a strengthening of internal demand influenced by the recovery on the real estate market which has been underway for a few months now. Within such a macroeconomic landscape, Federal Reserve monetary policy should gradually shift towards a path of lessening economic support, although it should be noted that inflation is expected to remain at moderate levels. Confirming this possible conduct by the Federal Reserve there is the recent decision by the Federal Open Market Committee to gradually reduce its quantitative easing tactics, which should come to an end by around the middle of next year, assuming that the economic indicator forecasts are in line with expectations. In the meanwhile, the Federal Funds rate has been confirmed at between zero and 0.25%.
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As for the Eurozone, forecasts for 2013 point to a contraction in economic activity (-0.6%), but it should return to growth for the coming year at an estimated 0.9% (source: International Monetary Fund). This activity within Eurozone nations is expected to be influenced by a combination of factors: weak demand; declining consumer confidence; the fragmentation of the financial markets; and fiscal consolidation, the latter of which should continue, given the high levels of public debt, but it is hoped that the automatic stabilisers will be calibrated so as to promote faster economic recovery. Within this context of weakness, monetary policy should remain accommodating over the long term, given, too, the excess production capacity, which is helping to keep inflationary pressures under control. On 4 July, the European Central Bank (ECB) confirmed its official rate on the main refinancing operations, on the marginal lending facility, and on deposits with the ECB, leaving them at 0.5%, 1.0% and 0%, respectively. The ECB has also reported that it is ready to further loosen its monetary policy, in part through unconventional measures, while reiterating that the risks for the economy of the euro area continue to be lessening. As for Italy specifically, according to ISTAT figures published on 10 June, Italian GDP for the first quarter of 2013 fell by 0.6% from the previous quarter and by 2.4% compared to the same period of 2012. The current phase of economic contraction is due mainly to the effects of fiscal consolidation and the restriction on the credit market, and it is expected to continue throughout the rest of the year before beginning a modest recovery in 2014 (+0.7%, source: International Monetary Fund). These forecasts take account of the positive effects of the containment of public spending, of the measures to aid economic growth that were introduced last year, and of the lessening of the interest paid on public debt as a result of the current context of low interest rates. These factors should help to maintain debt at around 3% of GDP for the current year, with this ratio falling to around 2.25% for 2014 (source: OECD) and so with a fair margin for any expansionary fiscal policy that should be implemented if the economic growth forecasts are not confirmed. Figures for the financial markets for the first half of 2013 point to a downward trend on the stock market (-6.4% for the FTSE MIB), whereas the bond market has remained essentially unchanged (+0.85% for the FTSE Italy Gov’t Performance). As for exchange rates, the euro has been strengthening since the start of the year against the world's leading currencies, with the exception of the U.S. dollar, which has remained at the same level as at the beginning of the year despite some highly volatile performance. With regard to the Italian insurance industry, premiums (based on Italian accounting standards) as at 31 March 2013 (the most recent figures available) posted an increase of 17.7% in the life insurance segment compared to the same period of the previous year and a decline of 5.6% in the non-life segment (with automotive civil liability down 6.2%). Economic instability, together with ongoing selectivity in lending and the widespread expectation for a settling in market prices, are the factors underlying the continuing decline of the real estate segment. The significant drop in sales during the period 2006-2012, with real estate transaction volumes being cut roughly in half from 870,000 down to just 444,000, continued in the first quarter of this year, leaving experts to expect transaction volumes to slip further. The decline in average prices, which continued through the first half of 2013, was insufficient to offset a reduction in bank support for the real estate industry, with mortgage-backed sales for the first six months of the year accounting for just 41.6% of the total, and forecasts for Italy’s mortgage loan market point to a further decline for the third quarter of 2013 before a slight recovery towards the end of the year. This reduction in real estate lending had a necessarily downward impact, with home sales falling by as much as 14.2% in the first part of the year compared to the same period of 2012, and the average time it took to complete a sale increased further to 8.5 months for the residential segment and to 10.4 months for the office segment. Only a need for immediate liquidity could lead the way out of this
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current stagnation. The current wait-and-see stance is increasingly exposing the industry to the risk of system-wide consequences that will not necessarily be any less than those seen on markets in which adjustments take place more quickly and, in some ways, more traumatically. The widespread property ownership that characterises Italy would prevent any substantial correction in prices coming from the private sector, which largely drives the replacement market. Segmentation also makes any conscious, substantial repositioning of prices unlikely. Therefore, the trend in prices over the medium term will depend largely on any decisions by businesses, banks and public bodies, and government agencies and social security entities in particular, to sell off property. The sharper decline in GDP than expected at the start of the year (-1.8% vs. 1%) makes any real recovery unlikely, given the current uncertainty surrounding the macroeconomic landscape. Indeed, a survey within the real estate industry points to a reduction in home prices of 5% in 2013 compared to 2012. Furthermore, as a result of the macroeconomic context described above, this downward trend is expected to continue throughout the period 2014-2015, although with declining intensity.
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Summary of key performance indicators
Legend
Loss Ratio – retained business: is the ratio of current year claims to current year earned premiums;
Combined Ratio – retained business: is the ratio of (current year claims + operating costs + intangible assets amortization + technical charges) to current year earned premiums;
Expense Ratio – retained business: is the ratio of (operating costs + intangible assets amortization + net technical charges) to current year gross premiums written;
APE: Annual Premium Equivalent, is a measure of the new business volume which includes 100% of sales of regular recurring premium business and 10% of sales of single premium business.
Technical data are determined in accordance with Italian accounting principles.
€/million
30/06/2013 30/06/2012 31/12/2012∆ %
30/06/12∆ %
31/12/12
Non Life businessGross Premiums written - direct Non Life business 482.0 442.0 898.5 9.1 0.0Non Life business pre-tax result 54.3 39.8 78.7 36.5 0.0(1) Loss Ratio - retained 65.6% 67.6% 67.3% (2.0) 0.0 (2) Combined Ratio - retained 90.9% 93.9% 93.1% (3.0) 0.0 (3) Expense Ratio - retained 24.4% 25.2% 25.2% (0.8) 0.0
Life businessGross Premiums written - direct Life business 87.9 62.3 118.0 41.1 0.0 Life business pre-tax result 2.8 4.1 4.9 (30.9) 0.0 (4) Annual Premium Equivalent (APE) 12.1 8.1 15.8 48.8 0.0 Segregated funds portfolios 684.8 647.9 648.8 0.0 5.5 Index/Unit - linked and Pension funds portfolios 60.2 61.8 61.0 0.0 (1.3)Segregated fund performance: Rendimento Mensile 4.1% 3.2% 3.4% 0.0 0.0 Segregated fund performance: Valore Crescente 4.7% 4.7% 4.7% 0.0 0.0
Total Agencies 387 350 371 10.6 4.3
Average of employees 576 557 565 3.4 1.9
Real Estate business
Sales 8.7 1.2 17.9 n.s. 0.0 Trading and development margin 2.1 0.2 3.8 n.s. 0.0 Real Estate business pre-tax result -6.0 -5.0 -7.3 20.0 0.0
30/06/2013 30/06/2012 31/12/2012∆ %
30/06/12∆ %
31/12/12Total investments 2,643.0 2,355.0 2,516.5 0.0 5.0
Net gains on investments * 29.3 32.4 61.7 (9.6) 0.0
Pre-tax result 52.4 40.4 77.3 29.7 0.0Consolidated profit (loss) 31.8 23.8 47.4 33.8 0.0
Group profit (loss) 32.0 24.4 48.9 31.1 0.0
Equity attributable to the shareholders of the parent 466.3 368.4 442.1 0.0 5.5
Equity attributable to the shareholders of the parent net of unrealised capital gains 431.5 386.4 410.8 0.0
5.0
* net of gains on investments where policyholders bear the risk
CONSOLIDATED RESULTS
SPECIFIC SEGMENT RESULTS
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Performance of the Vittoria Assicurazioni Group At 30 June 2013, net income for the Group came to €32,027 thousand, as compared to €24,437 thousand for the same period of 2012 (+31.1%). Performance for the insurance segment, before taxes and intersegment eliminations, reached €57,250 thousand (vs. €44,736 thousand at 30 June 2012, an increase of 28.0%). This performance mainly came from the non-life segment, driven by car insurance, which posted an increase in premiums recognised and featured fewer claims for an overall decline in the ratio of claims to premiums. Premiums recognised during the first half of the year totalled €570,233 thousand (€504,637 thousand at 30 June 2012), for an increase of 13.0%. This growth may be attributed to the ongoing development plan backed by a careful selection of risks when granting new policies and by a constant focus on cost containment, resulting in an improvement in the retained combined ratio for the non-life segment from the 93.9 of the first half of 2012 to the current 90.9. This result was also benefitted from a decline in climatic and other disasters in the first half of the previous year. Despite the fact that margins on property sales during the first half of 2013 came to €2,096 thousand, as compared to €229 thousand as at 30 June 2012, the real estate segment posted a net loss of €3,255 thousand, as compared to the loss of €2,002 thousand for the same period of the previous year, due mainly to an increase in finance costs and in municipal property taxes. Given the continuing low yields on bond investments, the Group has decided to make a shift in strategy and to lease out the office properties in the Portello area, given that the high level of requests received exceeds the total amount of property available. Total investments posted in increase of 5.0% compared to 31 December 2012 to reach a total of €2,643,049 thousand, with €60,215 thousand (-1.3%) being related to investments for which the risk is to be borne by the policyholder and €2,582,834 thousand (+5.2%) to investments for which the risk is borne by the Group. Net capital gains on investments for which the risk is bone by the Group totalled €29,264 thousand, as compared to €32,381 thousand for the previous period (-9.6%), which benefitted from a gain of €7,157 thousand related to the sale of German government bonds. Equity for the Group totalled €466,272 thousand, increasing (by 5.5%) from the €442,060 thousand posted as at 31 December 2012.
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The table below shows Group performance broken down into the various areas of business.
At 30 June 2013, the parent company posted net income (based on Italian accounting standards) of €36,661 thousand (€30,775 thousand for the same period of 2012). Given the uncertainty surrounding the current economic and legislative landscape, and despite this favourable performance for the period, we feel that we should confirm the targets set out in the budget. Nonetheless, given the extraordinary gain resulting from taking part in the takeover of CamFin S.p.A. which is to take place in August, consolidated net income for the year is expected to reach €68.8 million, as compared to the previous target of €60.3 million. The Group is continuing its efforts to strengthen capital in line with coming Solvency II regulations. Nonetheless, in consideration of achieving the targets of the 2009-2013 business plan, and although we are aware that the current challenges within Europe have not been fully overcome, we feel that the forecast for financial year 2013 for a return to policies in place prior to doubling share capital, which called for a prudent, annual adjustment to dividends, remains appropriate. The companies that make up the Group are shown in Table A of the explanatory notes (Subsidiaries).
Reclassified Profit and Loss by business segment (€/000)
30/06/13 30/06/12 31/12/12 ∆
Non life business - Gross Insurance Result (excluding investments result) 39,460 22,083 51,137 +78.7%
Non life business - Gross Investments Result (excluding Yam and Private Equity) 14,982 18,590 28,072 -19.4%
Life business - Gross Insurance Result (including Investments Result) 2,808 4,063 4,768 -30.9%
Gross Insurance business Result 57,250 44,736 83,977 +28.0%
(914) (834) (770) +9.6%
Real estate business: taxes (21,016) (16,832) (29,446) +24.9%
Insurance business net contribution to Profit attributable to parent company shareholders 35,320 27,070 53,761 +30.5%
Gains on property trading 2,096 229 3,790 +815.3%
Real estate service revenues 755 802 1,662 -5.9%
Real estate business net costs (8,845) (6,043) (12,734) +46.4%
Gross Real estate business Result (5,994) (5,012) (7,282) +19.6%
Taxes and minority interests 1,399 1,758 2,031 -20.4%
Net Real estate business Result (4,595) (3,254) (5,251) +41.2%
Net profit attributable to Life business Policyholders 2,033 1,823 2,659 +11.5%
Tax on profit attributable to Life business Policyholders (693) (571) (903) +21.4%
Real estate business net contribution to Profit attributable to parent company shareholders (3,255) (2,002) (3,495) +62.6%
Yam Invest net contribution to Profit attributable to parent company shareholders 0 (408) (942) n.s.
Private equity net contribution to Profit attributable to parent company shareholders (94) (456) (513) -79.4%
Service business net contribution to Profit attributable to parent company shareholders 56 233 77 -76.0%
Net Profit attributable to parent company shareholders 32,027 24,437 48,888 +31.1%
Consolidation adjustments: dividends and interests from Real estate business
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Insurance business Profit for the insurance business, before taxes and intersegment eliminations, amounted to €57,156 thousand (€43,872 thousand as at 30 June 2012). The key operating items contributing to the period’s result are described below.
Total insurance premiums in 1H13 amounted to €570,674 thousand (+12.9% vs. premiums of €505,272 thousand in 1H12), of which €570,272 thousand for insurance premiums written and €441 thousand for unit-linked investment contracts and for the Vittoria Formula Lavoro open-ended pension fund.
Direct Life insurance premiums amounted to €87,854 featuring an increase of +41.1% vs. premiums in 1H12. This result was achieved thanks to the marketing effort over the last years, to the renovated relationship with Banks and to the strengthening of traditional sales network.
Direct Non-Life (i.e. property & casualty) insurance premiums increased by +9.1%. Specifically:
- Motor premiums: +6.2%;
- Non-marine premiums: +18.6%;
- Specialty categories [i.e. marine & transport, aviation, credit & suretyship] premiums:+15.5%.
Overhead costs as a percentage of total direct insurance premiums were 8.2% (vs. 8.8% in 1H12).
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Review of operations Premiums as up to 30.06.2013 thus amounted to €570,233 thousand. Portfolio breakdown and the changes occurring by business segment and branch are shown in the following table:
Revenues not qualified as premiums as defined by IFRS 4 (Unit Linked contracts and those relating to the Vittoria Formula Lavoro open-ended pension fund) amounted to €441 thousand (€635 thousand in 1H12).
(€/000)YoY % of
30/06/2013 30/06/2012 change total book% 2013 2012
Domestic direct business
Life businessI Whole- and term life 78,588 53,482 46.9 13.8 10.6 IV Health (long-term care) 291 221 31.7 0.1 - V Capitalisation 8,975 8,560 4.8 1.6 1.7 Total Life business 87,854 62,263 41.1 15.5 12.3
Non-Life business
Total non-marine lines (exc. specialty and motor) 114,751 96,793 18.6 20.1 19.2
Total specialty lines 7,768 6,725 15.5 1.3 1.3
Total motor lines 359,504 338,460 6.2 63.1 67.1
Total Non-Life business 482,023 441,978 9.1 84.5 87.6
Total direct business 569,877 504,241 13.0 100.0 99.9
Domestic indirect business
Life business 240 267 -10.1 0.0 0.1Non-Life business 116 129 -10.1 0.0 0.0Total indirect business 356 396 -10.1 0.0 0.1
Grand Total 570,233 504,637 13.0 100.0 100.0
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The table below shows the geographical spread of agencies and geographical breakdown of premiums for Italian direct business:
The direct operating parent company operates in France on the basis of the freedom-to-provide-service provisions. No significant premiums were collected during 1H13.
(€/000)
Non-Life Business Life Business
Regions Agencies Premiums % Premiums %
NORTHEmilia Romagna 34 35,412 5,388 Friuli Venezia Giulia 4 4,168 1,346 Liguria 16 21,607 2,590 Lombardy 97 108,026 36,650 Piedmont 45 40,879 8,500 Trentino Alto Adige 7 5,044 383 Valle d'Aosta 1 1,634 115 Veneto 33 28,020 4,806
Total 237 244,790 50.8 59,778 68.0
CENTREAbruzzo 12 25,274 3,058 Lazio 27 45,817 5,139 Marche 16 16,467 1,564 Tuscany 42 50,162 4,880 Umbria 14 23,340 2,732
Total 111 161,060 33.4 17,373 19.8
SOUTH AND ISLANDSBasilicata 3 4,290 547 Calabria 2 2,778 63 Campania 8 17,423 2,274 Molise 2 902 315 Puglia 6 13,493 5,657 Sardinia 9 16,342 230 Sicily 9 20,945 1,617
Total 39 76,173 15.8 10,703 12.2
Overall total 387 482,023 100.0 87,854 100.0
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Life business Insurance and investment contracts in the Life business The products currently offered by the parent company cover all insurance business lines, from savings (“revaluable” policies* relating to segregated accounts), to protection (policies covering risks of death, disability, and non-self-sufficiency (i.e. long-term care) and supplementary pension plans (individual pension schemes and open-ended pension fund). The product range also includes unit-linked financial policies. The lines marketed include policies that envisage the possibility of converting the benefit accrued into an annuity. Conversion takes place at the conditions in force when the option is exercised. The types of tariffs used are those for endowment, whole-life and term-life policies, on both an annual and single-premium basis, and fixed term policies, plus group tariffs for whole/term life and/or disability policies. Contractual terms are updated constantly and are in line with those commonly offered by the market.
Premiums
Direct insurance business premiums in 1H13 totalled €87,854 thousand, (€62,263 thousand in 1H12) split as follows:
Claims, accrued capital sums & annuities, and surrenders
The following table summarises data for direct business relating to claims, accrued capital sums and annuities, and surrenders as at 30.06.2013, compared with data for the same period in the previous year.
Reinsurance
Outward reinsurance
In the Life business, the main treaties in place, which relate to Class 1 (whole/term life), are as follows: - Excess of risk premium; - Pure office premiums – treaties set up in 1996 and 1997. In 1H13 ceded premiums amounted to €802 thousand (€946 as at 30 June 2012).
* For non-Italian readers: with the Italian “revaluable” policy, which is of the endowment type, the insurance company, at the end of each year, grants a bonus that is credited to mathematical reserves and depends on the performance of an investment portfolio. This bonus is determined in such a way that total interest credited to the insured is equal to a given percentage of the annual return of the reference portfolio and in any case does not fall below the minimum interest rate guaranteed. The “revaluable” policy is therefore of the participating type.
(€/000)
YoY % of30/06/2013 30/06/2012 change total book
% 2013 2012
Recurring premiums 18,581 18,747 -0.9 21.2 30.1Annual premiums 69,273 43,516 59.2 78.8 69.9Total Life business 87,854 62,263 41.1 100.0 100.0
(€/000)30/06/2013 30/06/2012
Claims 12,333 9,695Accrued sums and annuities 21,036 26,267Surrenders 26,731 25,174Total 60,100 61,136
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Inward reinsurance
With respect to the life business, there is a traditional pure-premium treaty no longer fed with new business, which merely records changes occurring in the related portfolio and a commercial premium treaty that refers to a portfolio of policies that have revaluable annual premiums. Non life Business Premiums Direct premiums issued totalled €482,023 thousand (€441,978 thousand for the same period of the previous year), for an increase of 9.1%. Performance by type NON MARINE Premiums in these segments posted an increase of 18.6% (16.3% for the same period of the previous year). Technical performance was positive, improving over the same period of the previous year thanks, in part, to a lower level of claims for atmospheric events (i.e. freezing and heavy snowfall), which struck the areas of central Italy during the prior year. Performance by segment is as follows: Personal injury: premiums increased by 21.1% (24.4% for the same period of the previous year) thanks to our strategy for growth in new accounts and the continuation of efforts to strengthen relations with existing customers. The technical performance for the period was positive, improving over the same period of the previous year. Illness: premiums increased by 17.1%. The technical performance remains negative, although it has improved compared to the same period of the previous year thanks to ongoing efforts of portfolio reform. Fire and natural disaster: premiums posted an increase of 17.5% (9.3% for the same period of the previous year). The technical performance was positive, thanks in part to a decline in atmospheric events this winter and in the seismic events seen during the previous year. Other property damage: premiums increased (+14.7%). The technical performance was negative, and efforts of portfolio reform are currently under way. General civil liability: premiums are on the rise. The technical performance worsened due mainly to a policy of greater prudence in allocating reserves. Portfolio reform continues in relation to the professional civil liability segment. Various pecuniary losses: premiums recognised increased by 31.3%, which is in line with the increase posted for the same period of the previous year. This segment posted positive technical performance, which improved over the same period of the previous year. Protection against lawsuits: premiums increased, and the technical performance remains positive.
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SPECIAL BUSINESS Rail and watercraft fleets: premiums posted an overall increase, and the technical performance improved compared to the same period of the previous year. Transported goods: premiums recognised posted an increase of 22.8% (14.8% for the same period of the previous year). The technical performance improved over the same period of the previous year. Credit: this segment covers risks related solely to lending backed by transfers of a portion of an employee’s salary. Premiums in this segment declined by 48.6%. Security deposits: premiums recognised posted an increase of 28.3% (-18.3% for the same period of the previous year). The technical result was negative, although it has improved. MOTOR BUSINESS On the whole, the auto insurance segments posted positive performance with premiums increasing by 6.2%, although this is less than the growth posted for the same period of the previous year (+13%). The marketplace is being significantly impacted by the general economic crisis, particularly within the automotive segment where new car sales are declining. Road vehicle fleets: premiums increased by 3.5%, and the technical performance has improved compared to the same period of the previous year. Contributing to this result was our policy of granting new policies, which places particular attention on matching ancillary cover to complement automotive civil liability. Civil liability – road vehicles and watercraft: premiums increased by 6.7%. Ongoing portfolio selection efforts, pricing policies, and proper claims management have all helped to keep technical performance positive and improving compared to the previous year. Assistance: premiums increased by 5.9%, and the technical performance remains positive.
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Claims Reported claims The following chart, concerning reported claims, has been prepared using data from positions opened during 1H13. Data are compared with those for 1H12:
As regards Motor TPL reported claims, the following table shows data by claim handling type:
The parent company received 55,546 reports of claim events to be managed as originator (53,532 reports of claim in 1H12: +3.8%), against which it will complete recoveries from other insurers for a total of €76,109 thousand (€75,089 thousand at 30 June 2012: 1.4%), based on the forfeitary amounts established by the Ministry Technical Committee as per Article 13 of Italian Presidential Decree no. 254/2006. Claims settlement speed The following table illustrates how quickly reported claims (by number) were paid net of claims eliminated without consequences, broken down by current generation and previous generation in reference to the principal Businesses:
(€/000)
number total cost number total cost number total cost
Total non-motor businesses 22,546 63,143 22,471 61,941 0.3 1.9
Total Special businesses 947 4,071 599 3,542 58.1 14.9
Total motor businesses 84,939 229,657 79,556 202,517 6.8 13.4
Total non-life businesses 108,432 296,871 102,626 268,000 5.7 10.8
30/06/13 30/06/12 Change %
(€/000)
Branch Claim handling Type Number Total cost Number Total cost
Motor TPL - land K-for-K - liable 36,379 74,969 34,855 72,163 Motor TPL - land K-for-K - originator 41,970 103,887 40,730 95,186 Motor TPL - land Non K-for-K claims 16,358 89,409 14,786 76,413 Motor TPL - watercraft Non K-for-K claims 20 107 23 81
94,727 268,372 90,394 243,843
30/06/13
Total Motor T.P.L. claims handled
30/06/12
(percentages)
30/06/2013 30/06/2012 31/12/2012 30/06/2013 30/06/2012 31/12/2012
Accident insurance 26.23 26.47 53.05 51.87 53.30 77.81
Health insurance 65.34 64.78 82.48 48.04 50.04 71.15
Motor vehicle hulls 70.36 73.15 84.10 72.49 72.05 89.75
Fire and natural events 49.33 52.49 78.57 67.01 67.86 81.34
Miscellaneous damages - theft 58.47 58.96 81.96 82.70 81.44 92.50
Third-party motor liability 64.34 61.98 73.43 45.78 52.61 69.54
Third-party general liability 40.37 42.51 64.30 25.76 27.42 39.98
current generation previous generations
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Claims paid The following table shows claims paid for direct business and the amount charged to reinsurers, with the data broken down by the period to which claims refer:
The cost includes the amount incurred in the period for the contribution to the guarantee fund for road-accident victims. This totalled €7,171 thousand vs. €6,670 thousand in 1H12. Reinsurance
Outward reinsurance As far as outward reinsurance is concerned, the corporate policy is based on selective underwriting of risks and on book development and entity in relation to the risks covered. It aims to balance net retention. Transactions are undertaken internationally with players in the reinsurance markets featuring high ratings. The main treaties in place are the following: Non-life business Type of treaty Accident Excess claims Malattia Pure premium health expense reimbursement Motor vehicle Hulls Excess claims Marine Hulls Excess claims Cargo (goods in transit) Excess claims Fire and natural events Excess claims Miscellaneous damage Pure premium for hail, single-multi-risk
Pure premium for engineering risks Pure premium for ten year guarantees
Motor TPL Excess claims General TPL Excess claims Suretyship Pure premium Legal protection Pure premium Assistance Pure premium
Ceded premiums in 1H13 totalled €12,851 thousand (€11,180 thousand in 1H12).
Inward reinsurance Acceptance of risks relating to the indirect business mainly arises from participation in syndicates and from acceptance of shares in Italian businesses, which are entered into voluntarily.
(€/000)
Claims paid Claims paid Change
30/06/13 30/06/12 grossCurrent
yearPrevious
years TotalCurrent
yearPrevious
years Totalclaims
%
Total non-motor businesses 10,642 37,316 47,958 4,424 10,598 30,920 41,518 15.5
Total Special businesses 854 2,718 3,572 1,107 762 4,443 5,205 -31.4
Total motor businesses 70,555 125,313 195,868 2,659 65,738 139,113 204,851 -4.4
Total non-life businesses 82,051 165,347 247,398 8,190 77,098 174,476 251,574 -1.7
Claims recovered
from reinsurers
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Insurance risk management and analysis
Insurance risk management Objectives The Parent Company manages its insurance business with the objective of diversifying the range of insurance coverage through accurate and adequate pricing of the policies that it underwrites. Accordingly, risks are diversified depending on the segmentation of the customer portfolio: households, individuals, professionals, small business operators, small/medium and large enterprises. Within these customer categories, emphasis is place on the net retention of premiums on risks of the personal line and small/medium enterprises; emphasis is placed also on larger enterprises, whose coverage is guaranteed by an adequate reinsurance policy. Diversification of the sales channels (agents, sub-agents, brokers, bancassurance agreements) is based on an accurate geographical segmentation of markets, with the availability of professionals capable of responding in a timely and competent manner to changed customer requirements. The development and strengthening of relationships with so-called affinity groups is followed by dedicated structures which, after identifying the relevant insurance requirements, take action to meet such requirements on the basis of adequate coverage and pricing. All these activities are designed to increase Non-life market share, with special attention to the non-auto business, and to undertake new growth avenues in the Life business. The above actions have been taken in view of our primary goal of improving underwriting results and the combined ratio, which measures the degree of coverage of claims, commercial costs and operating costs. Lastly, another important objective is the constant upgrading of the information system called New Age, taking into consideration changes in the management and agency operating processes, so as to monitor constantly the portfolio, risk concentration and speed of claim settlement, with special emphasis on changes in the insurance market. Policies The Parent Company intends to pursue the above objective as illustrated before, that is by expanding the agent network throughout the country, thus achieving geographical risk diversification while paying close attention to areas with unusually high accident rates. In addition, the Parent Company, proceeding with its twenty-year-long agency training program, continues to train agents and their collaborators, in the shared belief that the insurance market shows significant potential in niches where adequate and constantly upgraded skills are necessary. All of the above is accomplished with the creation of transparent products for insured customers, incentive campaigns that guarantee and disseminate the optimum mix of coverage provided as well as use of passive reinsurance by pursuing a policy of underwriting balance between mass risks and protection from serious incidents and catastrophes. Lastly, attention is paid also to cost curbing, thanks most of all to the integrated Management/Agency operating system. Furthermore, the presence of specialized Non-life actuaries makes it possible not only to price risk correctly (adaptation to expected losses) but also to customize rates with an innovative content. In particular, the greater degree of customization is reached in the motor liability business, with the Parent Company’s key product. The corporate segment, which includes large enterprises, has always been characterized by prices that take into account the insured party’s reliability and the level of risk to be taken on. In order to permit control of risks underwritten, agents work according to a level of independence that is constantly monitored and updated, defined by limits that vary depending on the type of cover and entity of risk. Beyond these limits, only headquarters personnel have the power to sign policies.
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Insurance risk analysis
In this section we describe the insurance risks to which the Group is exposed. These are classified in three main categories, i.e. credit risk, concentration risk, and catastrophe cover (earthquakes, hail, flight, and floods). Credit risk
As regards credit risk, we highlight the fact that the parent company makes use of premier reinsurers. Rating companies of reference are Standard & Poor’s, Moody’s, Fitch and A.M. Best; the following table shows the balance sheet transactions in place as at reporting date, by rating:
Concentration risk In order to neutralise concentration risk, the Vittoria Group distributes its non-life and life products throughout Italy using a multi-channel sales approach. Based on the analysis of premiums as at 30.06.2013, non-life business accounts for approximately 84.0% of total Group premiums, with 63.0% of this percentage referring to motor lines. This concentration of premiums in these lines means that group profitability is largely dependent on the frequency and average cost of claims and on efficient tariff management. The risks of this concentration may make the Group more vulnerable to changes in the regulatory framework and in market trends. They may occasionally translate into increases in indemnities payable to policyholders. These risks are mitigated by enhancing the loyalty of policyholders featuring more “virtuous” behaviour (i.e. not reporting claims) through accentuated tariff customisation. This aims to normalise the entity of claims whilst also reducing portfolio volatility. Earthquake exposure Reinsurance covers put in place to mitigate exposure to earthquake risks have been calculated using the main tools available on the market. Calculation is based on the maximum probable loss on the fire and other property damage lines (technological risk sector), in turn calculated over a 250-year return period, which is the one most widely used in the Italian market. The protection purchased far exceeds the requirement shown for the worst-case scenario.
(€/000)
S&P RatingCurrent and Deposit accounts
Reinsurers' share of technical reserves
Total net balance sheet items
% of breakdown
AA+ 257 733 990 2.3AA -70 394 324 0.7AA- -13,009 35,509 22,500 51.6A+ -7,656 18,896 11,240 25.8A* -3,618 6,465 2,847 6.5A- -439 1,566 1,127 2.6B - - - 0.0BAA2** -751 2,213 1,462 3.4Not rated 340 2,770 3,110 7.1Total -24,946 68,546 43,600 100.0
* of which provided by A.M. Best for €1,215 thousand
** provided by Moody's
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Hail exposure Once again, in the case of this risk, cover acquired for exposure to the risks present in the land vehicle hull line is fully greater than the amount of the worst claim that has ever occurred in this line. Flood exposure Exposure to this catastrophic risk has again been calculated based on an assessment model used by other market operators. The capacity purchased, as in the case of the earthquake risk, far exceeds the worst-case requirement assumed in the model. Reserving risk and pricing risk Non-life business Reserving risk measures the risk that the claims reserves in the balance sheet are not enough to cover obligations towards policyholders and injured parties. The claims reserve represents the final cost sustained by the parent company to settle all obligations deriving from claims that have already been made or that have been estimated (IBNR claims) and is determined on the basis of documentation and actuarial valuations that are available at accounting term closure. Reserving risk is constantly monitored through actuarial analysis, which is equivalent to that used to determine reserves, by observing the development of the final cost and varying the reserves accordingly. Pricing risk measures the risk that premiums may not be enough to cover claims and future expenses. In particular, considering the size of the portfolio, pricing risk for Motor TPL business is strictly monitored. Life business The Parent Company's Life business includes covers against pure risk (life insurance, Long Term Care, invalidity, accident), covers with a saving component and covers offering life annuity. There are many types of insurance risks inherent in such portfolio including:
financial risks for contracts that guarantee a minimum interest rate; risks deriving from biological phenomena such as death, longevity, invalidity or lack of self-
sufficiency; risks deriving from the variation of contractual or company costs; redemption risks in relation to non standard termination of contracts.
Such risks are prudentially valued at the product pricing phase that ends with the adoption of certain assumptions (first-order technical bases) which are considered best to cover the risks that are to be undertaken, taking into account their financial, demographic as well as regulatory constraints (e.g., maximum limits for financial cover), the latest information on demographic trends (e.g., mortality and/or longevity) and portfolio trends (e.g. cancellations and surrenders, etc.).
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The pricing phase, which is implemented by means of profit testing techniques, also requires the definition of further assumptions (second order assumptions) obtained from the Parent Company's own experience or from the market if not available:
macro-economic assumptions: trends in market interest rates, inflation, cash flow discount rates and assets’ rate of return;
mortality and expected portfolio trends; business assumptions: levels of commercial and administrative costs and expenses.
As part of such valuations, sensitivity analyses are performed of how the result varies according to changes in the above assumptions. A similar procedure is applied when moving from the ex ante valuation to the ex post valuation carried out on the entire portfolio in order to check the valuations made when designing the product. Particular attention is given to mitigating elements of demographic risk which can be observed at any moment. In the portfolio pricing phase for the case of death, the mortality tables used are marked up by a security margin. Policy conditions include the conditions for excluding the insurance cover. Underwriting risk provides for limits on the sum assured, on age and state of health of the insured individual. From a medical point of view, there are health requirements below which risk is examined directly by management with the help of a doctor; a questionnaire covering health, profession and sports, gives management the opportunity to apply a premium surcharge. Requests for exclusions also have to be submitted for approval by management in order to maintain exposure to risk within acceptable limits. Lastly, for the pricing of pure risk (death, lack of self-sufficiency, Long Term Care) recourse to reinsurance is of fundamental importance. In particular, activities that are jointly carried out with the re insurer regard the collective pricing of contracts, the pricing of Long Term Care products and risk assessment for covering death with a sum assured that is above a set threshold. The reserve funds are calculated according to formulae included in the notes and technical reports kept by the parent company as first order technical bases. The pricing structure with a greater impact on the parent company portfolio and those related to new products are checked on the basis of the same method of calculation. Moreover, periodic monitoring is carried out on portfolio movement by ministerial category, through an analysis of cash inflows and outflows that determine a variation of the technical reserves from the beginning of the accounting term up to the setting up of the reserve funds. Inflows, which are taken into account, are payments in settlement, issue of contracts, reactivations, portfolio cash inflows, revaluations of pre-existing policies, that all translate into an increment in services and an increment in reserve funds. The outflows, that result in diminished services and reserve funds, are surrenders, claims, policy expiries, payment of annuities, policy transformations, missed contract closures, cancellations, service reduction due to non payment of premium and portfolio cash outflows. A further check is carried out by the Appointed Actuary when the Financial Statements are compiled, by drawing a predetermined number of contracts at random to check if a calculation of the technical reserves corresponds with the system. Lastly, during the compilation of the Financial Statements, an assessment is made in relation to whether it is appropriate to create additional reserve funds, as provided by the regulations of the Supervisory Authority: for the longevity risk in favour of prices paid in instalments or as a lump sum that will be converted into an annuity, for the risk of underpricing associated with mortality, for the risk associated with interest rates, for the risk associated with time lag, and for the risk associated with expenses.
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Commercial organisation In 1H13 18 new Agencies were opened, 26 were reorganised, while 2 were closed. As at 30.06.2013 the parent company was nationally present as follows:
Products Work has continued on the creation of new products and the redesign of existing ones. Efforts during the first half of the year are outlined below: New Products Life Insurance: Two new rates have been created within the “Investment Line”:
o single-premium individual whole-life policy with “ceiling” named “Vittoria Alto Rendimento 3”;
o single-premium individual whole-life policy with “ceiling” named “Vittoria Alto Rendimento 3 R.M”.
Non-Life Segments: One new rate was introduced for auto insurance on 1 March 2013. Two new products have been added to the Basic Segments:
o Global Injury with permanent disability due to illness; o Professional civil liability for geologists.
Revised products Life Insurance: Efforts during the first half of the year focused on the following aspects: annual update pursuant to CONSOB regulations (2 capitalisations and 1 unit-linked); annual update pursuant to COVIP regulations (individual pension plan and open-ended pension
fund); annual update pursuant to IVASS regulations. Non-Life Segments: Within the Basic Segments, redesign work focused on the products related to professional civil
liability coverage for engineers, architects and other construction professionals; the product related to home coverage, the product for permanent disability due to illness, and the product related to farm-industry coverage.
Agencies 387 350 371Sub-Agencies 687 578 639
30/06/2013 31/12/201230/06/2012
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Overhead costs
Overhead costs – direct business The total amount of insurance overhead costs (Non-Life and Life business) – consisting of personnel costs, various general expenses, plus depreciation of tangible assets and amortisation of intangible assets – rose to €46,729 thousand vs. €44,429 thousand in 1H12, increasing by +5.2%. Besides current operating expenses, these costs also include depreciation & amortisation costs for investments made in IT facilities and processes. These investments are intended to limit, in future years, the operating costs burdening corporate departments and the agency network, whilst at the same time improving services to policyholders as regards insurance coverage and claims settlement. Their breakdown is shown in the following table, where “Other costs” consist mainly of office running costs, IT costs, legal and legal-entity expenses, mandatory contributions, and association membership dues.
Overhead costs as a percentage of total direct insurance premiums were 8.2% (vs. 8.8% in 1H12). Operating costs
The following table shows the total amount of insurance operating costs (Non-Life and Life business), as shown in the income statement, by activity.
(€/000)
ANALYSIS OF COSTS 30/06/2013 30/06/2012 ChangePersonnel expenses 23,604 22,784 3.6%Other costs 15,740 14,413 9.2%Amortisation/Depreciation 7,385 7,232 2.1%Total cost by nature 46,729 44,429 5.2%
(€/000)
30/06/2013 30/06/2012 Change
99,513 95,974 3.7%
-2,456 -2,801 -12.3%
Investment management costs 820 611 34.2%
12,745 13,244 -3.8%
Total 110,622 107,028 3.4%
Profit participation and other commissions received from reinsurers
Other administrative costs
Gross commissions and other acquisition costs
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Real estate business
The gross loss made by the real estate business, shown in the income statement by business and business line, amounted to €5,994 thousand (vs. a loss of €5,012 thousand in 1H12) and featured contributors to the income statement that, before intersegment eliminations, included:
- income earned on properties from trading and development totalling €2,096 thousand (€229 thousand in 1H12);
- revenues from real estate brokerage and management services of €269 thousand, from administrative services of €485 and rental income of €300 thousand, for a total amount of €1,054 thousand (€1,101 thousand in 1H12);
- financial expenses of €3,490 thousand (€2,385 thousand in 1H12);
- revenues from notarial deeds of €8,699 (€1,162 thousand in 1H12).
The Group’s real estate business includes trading and development, brokerage, and management of own and third-party property. Below, we highlight the key operating results of the group companies.
Trading and development
The following companies operate in this segment:
Vittoria Immobiliare SpA – Milan 100% direct equity interest This company operates in real-estate development and trading, both directly and via special-purpose real-estate companies. Revenues from the sale of property in 1H13 amounted to €1,223 thousand. Closing inventory totalled €27,158 thousand. Immobiliare Bilancia Srl - Milan 100% direct equity interest This company is active in real-estate trading and development. Revenues from the sale of property in 1H13 amounted to €69 thousand. Closing inventory totalled €22,162 thousand.
Immobiliare Bilancia Prima Srl – Milan 100% direct equity interest The company owns a site in the municipality of Parma, for which the development project is now underway. Closing inventory amounted to € 10,614 thousand.
Immobiliare Bilancia Seconda Srl - Milan 100% direct equity interest This company is active in real-estate trading. Closing inventory totalled €651 thousand. Acacia 2000 Srl – Milan 65% indirect equity interest via Vittoria Immobiliare S.p.A. The company is active in property development. Closing inventory – consisting of a buildable area for residential use in the Portello zone of Milan named “Residenze Parco Vittoria”– amounted to €215,456 thousand.
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Forum Mondadori Residenze Srl. – Milan 100% direct equity interest The Company owns a building complex in Milan, at via Adamello 10, intended for office use. Closing inventory totaled €9,695 thousand. Cadorna Real Estate Srl – Milan 100% indirect equity interest via Vittoria Immobiliare S.p.A. The company is active in the trading (after restructuring and refurbishment) of buildings located in Corso Cairoli in Turin. Closing inventories amounted to €5,999 thousand. VRG Domus Srl. - Turin 100% indirect equity interest via Vittoria Immobiliare S.p.A. The company, totalled a closing inventory of €10,638 thousand, related to the real estate operation named “Spina 1” in Turin and to a non residential property in Rome, Via della Vignaccia. Vaimm Sviluppo Srl – Milan 100% indirect equity interest via Vittoria Immobiliare S.p.A. The company is active in trading (after restructuring and refurbishment of buildings). The closing inventory of the building units located in Genoa in Piazza De Ferrari, Via Orefici and Via Conservatori del Mare amounted to €61,797 thousand.
Valsalaria Srl – Rome 51% indirect equity interest via Vittoria Immobiliare S.p.A. The company is managing a real-estate project in the municipality of Rome. Closing inventory amounted to €5,957 thousand.
Sivim S.r.l. – Italy 100% indirect equity interest via Vittoria Immobiliare S.p.A The company is building a complex in Rome. Closing inventories amounted to €9,772 thousand.
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Real Estate Brokerage Activities In this segment the following companies are active: Interimmobili Srl - Rome 80% indirect equity interest via Vittoria Immobiliare S.p.A. In its real-estate brokerage activities, the company achieved commission revenue of €816 thousand, (€660thousand as at 30 June 2012), before infragroup eliminations. In 1H13 the company continued to sell properties mainly in Rome, Turin and Milan based on sales mandates given by Group companies and premier institutional investors, social security & pension agencies, and building companies. Project management contracts acquired by Interimmobili with Group companies generated revenues of €1,185 thousand (€1,372 thousand as at 30 June 2012).
Vittoria Service Srl – Milan 70% direct equity interest and 30% indirect via Vittoria Immobiliare S.p.A. The company provides support activity in real estate and insurance business. Property management Gestimmobili Srl, based in Milan (80% indirect equity interest via Vittoria Immobiliare S.p.A.), is the company active in this segment, i.e. in the administrative and technical management of property assets. Revenues achieved for this activity in 1H13 totalled €422 thousand (€400 thousand as at 30 June 2012). Overhead costs Overhead costs for the real estate business, before elimination of infra-group services, are as shown in the table below:
Personnel and G&A costs are allocated to Operating Costs (specifically to “Other administrative costs”). Depreciation and amortisation costs are allocated to the “Other costs” caption in the income statement. Increase in “Other costs” is due to the municipal tax on property (IMU).
(€/000)
ANALYSIS OF COSTS 30/06/2013 30/06/2012 ChangePersonnel expenses 2,028 2,076 -2.3%Other costs 3,315 1,676 97.8%Amortisation/Depreciation 323 331 -2.4%Total cost by nature 5,666 4,083 38.8%
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Service business This segment showed a gross profit in the period, as shown in the income statement by business and business line, of €148 thousand (€567 thousand in 1H12). Revenues for services rendered in 1H13 by group companies, before elimination of infra-group services, amounted to €3,879 thousand. These revenues included €3,621 thousand for commissions and services rendered to the direct operating parent company. Overhead costs The following table shows overhead costs for the service business, before intersegment eliminations:
Personnel and G&A costs are allocated to Operating Costs (specifically to “Other administrative costs”). Depreciation and amortisation costs are allocated to the “Other costs” caption in the income statement.
(€/000)
ANALYSIS OF COSTS 30/06/2013 30/06/2012 ChangePersonnel expenses 550 539 2.0%Other costs 673 609 10.5%Amortisation/Depreciation 17 14 21.4%Total cost by nature 1,240 1,162 6.7%
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Investments – Cash & cash equivalents - Property Investments, cash & cash equivalents, and property reached a value of €2,643,049 thousand with an increase of +5.0% vs. 31/12/2012. The detailed breakdown is shown in the following table:
The following table, shows a breakdown of investments, cash & cash equivalents and property by business type:
(€/000)
INVESTMENTS - CASH AND CASH EQUIVALENTS - PROPERTY 30/06/2013 31/12/2012 Change
A Investment property 84,021 - n.v.B Investments in subsidiaries and associates and interests in joint ventures 14,919 15,770 -5.4%C Held to maturity investments 66,681 102,952 -35.2%
Loans and receivables 56,670 71,731 -21.0% - Reinsurance deposits 4,627 4,618 - Other loans and receivables 52,043 67,113
D Financial assets available for sale 1,692,864 1,533,113 10.4% - Equity investments 106,699 101,439 - OEIC units 34,631 26,415 - Bonds and other fixed-interest securities 1,551,534 1,405,259Financial assets at fair value through profit or loss 60,276 62,025 -2.8%
E Financial assets held for trading 61 1,007 -93.9% - Bonds and other fixed-interest securities held for trading 61 1,007
F Financial assets at fair value through profit or loss 60,215 61,018 -1.3% - Investments where policyholders bear the risk 60,215 61,018Cash and cash equivalents 169,167 161,247 4.9%
G Property 498,451 569,691 -12.5%Property under construction 270,613 345,662Property held for trading 109,286 103,321Owner-occupied property 118,552 120,708TOTAL INVESTMENTS 2,643,049 2,516,529 5.0% of whichinvestments where the Group bears the risk 2,582,834 2,455,511 5.2%investments where policyholders bear the risk 60,215 61,018 -1.3%
(€/000)
Investments - Cash and cash equivalents - Property
30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Investment property 84,021 - - - - - - - 84,021 -Investments in subsidiaries 135,011 125,203 - - - - -135,011 -125,203 - -
Investments in associates 12,763 14,348 2,529 2,711 36 93 -409 -1,382 14,919 15,770
Held to maturity investments 66,681 102,952 - - - - - - 66,681 102,952
Reinsurance deposits 4,627 4,618 - - - - - - 4,627 4,618
Other loans and receivables 33,792 49,740 18,301 17,423 - - -50 -50 52,043 67,113
Financial assets available for sale
Equity investments 106,525 101,215 174 174 - 50 - - 106,699 101,439
OEIC units 34,631 26,415 - - - - - - 34,631 26,415
Bonds and other fixed-interest securities 1,551,534 1,405,259 - - - - - - 1,551,534 1,405,259
Financial assets at fair value through profit or loss:Investments where policyholders bear the risk
60,215 61,018 - - - - - - 60,215 61,018
Financial assets held for trading: Bonds and other fixed-interest securities
61 1,007 - - - - - - 61 1,007
Cash and cash equivalents 146,775 125,383 17,292 30,715 5,100 5,149 - - 169,167 161,247
Property under construction - 82,020 269,690 262,719 - - 923 923 270,613 345,662
Property held for trading - - 108,557 103,321 - - 729 - 109,286 103,321
Owner-occupied property 100,108 102,025 18,444 18,683 - - - - 118,552 120,708
Total 2,336,744 2,201,203 434,987 435,746 5,136 5,292 -133,818 -125,712 2,643,049 2,516,529
TotalInsuranceBusiness
Real EstateBusiness
ServiceBusiness
IntersegmentEliminations
32
Investments benefiting Life policyholders who bear related risk and those arising from pension fund management (section F of earlier table) As at 30.06.2013 these investments amounted to €60,215 thousand, with a decrease of -1.3% YoY. Of this amount, €47,869 thousand related to unit- and index-linked policies and €12,346 thousand to the open-ended pension fund Vittoria Formula Lavoro. There was total net gain of €129 thousand (€2,885 thousand as at 30 June 2012). As at 30.06.2013 the status of the three segments of Vittoria Assicurazioni open-ended pension fund was as follows:
Investments with risk borne by Group Investments with risks borne by the Group totalled €2,582,834 thousand (€2,455,511 thousand as at 31 December 2012). The following transactions took place during the 1H13: A) Investment property This aggregate includes the office properties in the Portello area owned by the parent company, which, in a shift in strategy, are now to be leased out to third parties, given the high level of requests received B) Investments in subsidiaries, associates and joint ventures: The performance of the various subsidiaries has been described in relation to the Real Estate and Services Divisions. A description of the performance of the main associated companies is provided below. S.In.T. S.p.A. - Italy Held directly with a 48.19% interest This associated company traditionally handles the implementation and management of customer loyalty and incentives programmes for sales forces, relationship marketing, and marketing and communication generally. Revenues from relationship marketing, Sint’s core business, have gradually declined due to both internal factors and to general trends in the marketplace. From the end of 2011 and throughout 2012, a series of efforts have been made extend Sint's core offering so that it better meets the needs of the market. In 2012, a new outsourcing division, named "Outsmart", was launched to provide services that require considerable levels of human resources, given that it focuses on a series of manual front and back-office activities for the insurance industry and the service sector generally. For the period, the associate began providing new services to support the operations of the various insurance companies of the Group. As at 30 June 2013, the company posted a loss of €1,761 thousand, €849 thousand of which attributable to the Group.
Previdenza Garantita 246 248 3,110 3,057 Previdenza Equilibrata 288 299 4,064 3,995 Previdenza Capitalizzata 353 362 5,167 5,027
Members Assets(€/000)
30/06/2013 31/12/2012 30/06/2013 31/12/2012
33
Yarpa S.p.A. - Italy Held directly with a 27.31% interest Yarpa S.p.A. acts as a holding company and also provides financial advisory services. The company holds 100% of Yarpa Investimenti SGR S.p.A., as asset management company active in the management of mutual funds and closed-end real estate investment funds, as well as an 86% interest in YLF S.p.A., a joint venture together with LBO France created to manage private equity investments in Italy and targeting small and medium enterprise. Rovimmobiliare S.r.l. - Italy Held through Vittoria Immobiliare S.p.A. with a 50.00% interest This associate is a real estate firm that owns a property in Livorno. As at 30 June 2013, it had equity of €151 thousand. Mosaico S.p.A. - Italy Held through Vittoria Immobiliare S.p.A. with a 45.00% interest This associate is real estate firm that is currently working on a development project in Collegno (TO). As at 30 June 2013, it had equity of €537 thousand. Pama & Partners S.r.l. - Italy Held through Vittoria Immobiliare S.p.A. with a 25.00% interest This associate is a real estate firm that is currently building properties in Genoa. As at 30 June 2013, it had equity of €1,377 thousand. VP Sviluppo 2015 S.r.l. - Italy Held through Vittoria Immobiliare S.p.A. with a 40.00% interest This associate is working on the construction of properties in Peschiera Borromeo (MI). As at 30 June 2013, it had equity of €1,132 thousand. VZ Real Estate S.r.l. - Italy Held through Vittoria Immobiliare S.p.A. with a 49.00% interest This associate is working on the construction of a property in Milan (Via Don Gnocchi). As at 30 June 2013, it had equity of €148 thousand. Valsalaria A.11 S.r.l. - Italy Held through Vittoria Immobiliare S.p.A. with a 40.00% interest This associate is a real estate firms that owns land in Rome (Villa Spada). As at 30 June 2013, it had equity of €135 thousand.
34
C) Held-to-maturity investments: The main transactions during the period were as follows: - redemption of bonds in the amount of €36,263; D) Financial assets available for sale: The main transactions during the period were as follows: - redemption of bonds in the amount of €142,663; - purchase of Italian fixed-yield government bonds in the amount of €300,031 thousand; - sale of corporate securities at carrying value in the amount of €7,396 thousand; - concerning the closed-end Italian mutual fund managed by Yarpa Investimenti SGR S.p.A., a
wholly owned subsidiary of the associate Yarpa S.p.A., paid in €5,422 thousand for the recall of funds and was credited €437 thousand for the partial redemption of units;
- paid in €1,530 thousand to purchase 1,500 shares in Re Energy Capital Sicar SCA; - Nuove Partecipazioni S.p.A.: subscribed to a capital increase paid in kind by way of transferring
15,527,255 shares in Cam Finanziaria S.p.A. and receiving 11,179,624 shares, equal to a 5.32% interest in the company; the operations was made maintaining continuity of carrying value.
- GPA S.p.A. Group; recorded a write-down of the investment in the amount of €581 thousand, bringing the carrying value to €3,194 thousand in order to adjust it to its current value;
- received €69 thousand as a partial advance payment on the process of liquidation of the Swissair band, which is in default; amount has been recognised as a gain.
E) Financial assets held for trading: The main transactions during the period were as follows: - acquisitions due to policy surrenders (pursuant to Article 41(2) of Italian Legislative Decree no.
209 of 7 September 2005) in the amount of €209 thousand; - sale of corporate bonds in the amount of €1,163 thousand for a recognised gain of €9 thousand.
35
G) Property As at 30 June 2013, properties other than those held for the purpose of being leased to third parties totalled €498,451 thousand (-12.5% compared to 31 December 2012). The table below shows a breakdown of these properties and the changes for the period.
(€/000)
Property under
construction
Property held for trading
Owner-occupied property Total
345,662 103,321 120,708 569,691
- MILAN - Parco Vittoria (via Acacia 2000 S.r.l.) 12,836 - - 12,836
- SAN DONATO MILANESE (MI) - (via Vittoria Immobiliare S.p.A.) 0 3,886 - 3,886
- SAN DONATO MILANESE (MI) - (via Immobiliare Bilancia S.r.l.) 77 - - 77
- ROME (via Valsalaria S.r.l.) 18 - - 18
- TURIN - Villar Focchiardo Street - (via Vittoria Immobiliare S.p.A.) 8 - - 8 - TURIN - Barbaroux Str. - (via Vittoria Immobiliare S.p.A.) - 780 - 780
- GENOA - De Ferrari Sq., Conservatori del Mare Str., Orefici Str.( i V i S il S l )
- 640 - 640
- MILAN - Adamello Str. (via Forum Mondadori Residenze S.r.l.) - 4 - 4
- GENOA - Venezia Street (via Immobiliare Bilancia S.r.l.) - 4 - 4
- TURIN - Cairoli Str. (via Cadorna Real Estate S.r.l.) - 2 - 2
- FLORENCE - Viale Michelangelo (via Immobiliare Bilancia S.r.l.) - 81 - 81
- ROME - Meliconi Str. - (via Sivim S.r.l.) - 196 - 196
- ROME - Della Vignaccia Str. - (via VRG Domus S.r.l.) 241 0 - 241
- PARMA - (via Immobiliare Bilancia I S.r.l.) 115 - - 115
Total purchase and capitalised interests paid 13,295 5,593 0 18,888
- MILAN - Parco Vittoria (via Acacia 2000 S.r.l.) (7,408) - - (7,408)
- TURIN - Barbaroux Str. (via Vittoria Immobiliare S.p.A.) - (375) - (375)
- MILAN - San Donato Milanese (via Vittoria Immobiliare S.p.A.) (848) 0 - (848)
- MILAN - San Donato Milanese (via Immobiliare Bilancia S.r.l.) (69) 0 - (69)
Total sales (8,325) (375) - (8,700)
Reclassification to Investment Property (82,019) - - (82,019)
Surplus allocation - 651 - 651
Depreciations - - (2,156) (2,156)
Recognised gains 2,000 96 - 2,096
270,613 109,286 118,552 498,451 Balance as at 30/06/2013
Balance as at 31/12/2012
Purchase and capitalised interests paid
Sales:
36
Gains and losses on investments The following table shows the breakdown as at 30.06.2013 of net gains on investments:
Net gains on investments where the risk is borne by Group amounted to €29,264 thousand, decreasing by -9.6% vs. 30 June 2012. As up to 30.06.2013 the weighted average return on “Bonds and other fixed-income securities” was 4.1% as compared with 5.3% in 1H12. The following table shows the breakdown of investment gains and losses by business segment.
(€/000)
Gains and losses on investmentsRealised
gains/ (losses)
Unrealised gains/
(losses)
30/06/2013 total net
gains/(losses)
30/06/2012 total net
gains/(losses)
29,171 -109 29,062 36,388
b investments in subsidiaries and associates and interests in joint ventures -1,019 -343 -1,362 -1,689
c held to maturity investments 1,814 - 1,814 2,304
d loans and receivables 553 3 556 714
e financial assets available for sale 28,490 -581 27,909 32,075
f financial assets held for trading 9 7 16 99
g financial assets at fair value through profit or loss -676 805 129 2,885
300 - 300 448
1,447 - 1,447 725
-3,035 -975 -4,010 -5,768
b financial liabilities at fair value through profit or loss - -129 -129 -2,885
c other financial liabilities -3,035 -846 -3,881 -2,883
27,883 -1,084 26,799 31,793
a Gains on property trading 2,096 - 2,096 229
b Rent income on owner-occupied property and property held for trading 369 - 369 359
2,465 - 2,465 588
30,348 -1,084 29,264 32,381
Investments
Other receivables
Cash and cash equivalents
From:
Financial liabilities
Total gains and losses on financial instruments
Total gains and losses on investments
Real estate business
From:
Total real estate business
From:
(€/000)
Net income on investments
30/6/13 30/6/12 30/6/13 30/6/12 30/6/13 30/6/12 30/6/13 30/6/12 30/6/13 30/6/12
Gains or losses on remeasurement of financial instruments at fair value through profit or loss 16 99 - - - - - - 16 99
Gains or losses on investments in subsidiaries and associates and interests in joint ventures 54 -821 -502 -46 - 12 -914 -834 -1,362 -1,689
Gains or losses on other financial instruments and investment property 31,012 35,466 -2,887 -2,066 20 -17 - - 28,145 33,383Gains on property trading - - 2,096 229 - - - - 2,096 229
Revenue from work in progress (percentage of completion) - - - - - - - - - -Rent income on owner-occupied property and prop 109 109 299 299 - - -39 -49 369 359Total 31,191 34,853 -994 -1,584 20 -5 -953 -883 29,264 32,381
TotalInsuranceBusiness
Real EstateBusiness
ServiceBusiness
IntersegmentEliminations
37
Financial liabilities The following table shows the breakdown of financial liabilities by business segment.
Reference should be made to the Explanatory Notes for greater detail on the various items’ breakdown.
Investment and financial risk management & analysis policies Financial risk management The financial risk management system is designed to assure the Group’s capital soundness via monitoring of the risks inherent in asset portfolios due to adverse market conditions. In this perspective, specific investment policies have been designed – as illustrated in the earlier section “Investments – Cash & cash equivalents – Property” – and special procedures adopted. Investment policies: objectives
The Group’s financial assets are managed according to the following objectives:
A) Life and Non-Life investments with risk borne by the Group Assure the Group’s capital soundness by means of a policy of limitation of potential
portfolio loss risk following adverse changes in interest rates, equity prices, and exchange rates
Limit credit risk by giving preference to investments in issuers with high ratings
Assure adequate investment diversification, also prudently taking opportunities arising in the real estate sector
For the Life segment, assure a stable return higher than the technical rate envisaged by contracts in force, optimising management of expected cash flows consistently with insurance liabilities
For the Non-Life segment, assure both a stable return in line with the forecasts factored into product tariffs and positive cash flows also able to address scenarios featuring any significant increase in claims cost and settlement speed
Monitor the securities portfolio duration in relation to liabilities’ duration
(€/000)
Financial liabilities30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Financial liabilities where the investment risk isborne by policyholders relating toindex- and unit-linked policies 47,869 48,692 - - - - - - 47,869 48,692
Financial liabilities where the investment risk isborne by policyholders relating topension funds
12,346 12,326 - - - - - - 12,346 12,326
Reinsurance deposits 19,510 19,510 - - - - - - 19,510 19,510
Payables to banks - - 274,720 270,621 - - - - 274,720 270,621
Other financial payables - - 6,462 7,386 - - - - 6,462 7,386
Other financial liabilities 3,582 20,816 846 - - - - - 4,428 20,816
Total 83,307 101,344 282,028 278,007 - - - - 365,335 379,351
TotalInsuranceBusiness
Real EstateBusiness
ServiceBusiness
IntersegmentEliminations
38
Give preference to continuity of returns rather than to achievement of high returns in limited periods of time
Protect investments’ value from exchange-rate fluctuations also via use of financial derivatives.
B) Life investments with risk borne by policyholders Manage investments benefiting policyholders who bear related risk (index- and unit-linked
policies) and those relating to pension-fund management according to the objectives envisaged by relevant policies and by pension funds’ regulations, with the constraint of total transparency vis-à-vis policy holders and in compliance with specific legal regulations
Define investments’ level of protection against exchange-rate fluctuations also via use of financial derivatives.
Procedures
In order to keep its exposure to financial risks under control, the Group has equipped itself with a structured system of procedures and activities. These assure regular reporting able to monitor:
The market value of assets and their consequent potential losses vs. carrying value
Trends of macroeconomic and market variables
For bond portfolios, issuers’ rating of the issuers and analysis of sensitivity to interest-rate risk
Compliance with the investment limits defined by the Board of Directors
Overall exposure to the same issuer. The Group also performs ALM (asset-liability management) analyses, the main objective of which, in a medium-term perspective, is to:
Provide joint dynamic projections of cash flows and of other asset and liability features in order to show any income-statement and/or financial mismatching
Provide an indication – for asset portfolios backing life insurance contracts - of the expected trends in asset portfolios’ rates of returns compared with contractual minimum returns
Identify the variables (financial, actuarial and commercial) that may have a greater negative impact on results by performing specific stress tests and scenario analyses.
The results of the above activities and reports are regularly reviewed by the Finance Committee. This committee has been set up within the Board of Directors and has been delegated to supervise the securities portfolio’s performance and to define investment strategies within the limits established by the Board in investment policies.
39
Financial risk analysis In this chapter we describe the risks to which the Group is exposed in relation to financial markets’ movements. These risks are grouped in the three main categories, i.e. market risk, liquidity risk, and credit risk. The chapter does not discuss the Group’s investments in instruments designated at fair value going through profit and loss (index- and unit-linked policies – pension funds) because these are strictly connected with related liabilities. Securities portfolio breakdown The following table shows the carrying value of the securities portfolio with risk borne by the Group, broken down by investment type (debt securities, equity securities and CIU units). It also provides indications concerning financial risk exposure and uncertainties of flows.
The fixed-income securities portfolio has a duration of 4.3 years.
(€/000)
Investment natureAmount
30/06/2013% of breakdown
Amount 31/12/2012
% of breakdown
DEBT SECURITIES 1,618,276 91.9% 1,509,218 92.1% Listed treasury bonds: 1,585,109 90.1% 1,434,006 87.6% Fixed-interest rate 1,485,057 84.4% 1,334,216 81.5% Variable interest rate 100,052 5.7% 99,790 6.1% Unlisted treasury bonds: 1,683 0.1% 1,784 0.1% Variable interest rate 1,683 0.1% 1,784 0.1% Listed corporate bonds: 22,508 1.2% 64,601 3.9% Fixed-interest rate 14,650 0.8% 49,422 3.0% Variable interest rate 7,858 0.4% 15,179 0.9% Unlisted corporate bonds: 3,302 0.2% 3,227 0.2% Fixed-interest rate 3,302 0.2% 3,227 0.2% Bonds of supranational issuers: 5,674 0.3% 5,600 0.3% Fixed-interest rate 5,674 0.3% 5,600 0.3%of which Total fixed-interest securities 1,508,683 93.2% 1,392,465 92.3% Total variable-interest securities 109,593 6.8% 116,753 7.7%Total debt securities 1,618,276 100.0% 1,509,218 100.0%of which Total listed securities 1,613,291 99.7% 1,504,207 99.7% Total unlisted securities 4,985 0.3% 5,011 0.3%Total debt securities 1,618,276 100.0% 1,509,218 100.0%
EQUITY INSTRUMENTS 106,699 6.1% 101,439 6.2% listed shares 17,327 1.0% 22,637 1.4% unlisted equity instruments 89,372 5.1% 78,802 4.8%
OEIC UNITS 34,631 2.0% 26,415 1.6%TOTAL 1,759,606 100.0% 1,637,072 100.0%
40
Market risk Market risk consists of interest-rate risk, price risk and exchange-rate risk. Debt securities are exposed to interest-rate risk. The interest-rate risk on fair value is the risk of a financial instrument’s value varying due to changes in market interest rates. A decrease in interest rates would cause an increase in the fair value of such securities, whereas an increase in rates would decrease their fair value. The interest-rate risk on cash flows relates to possible changes in the coupons of floating-rate securities. The carrying value of fixed-interest debt securities exposed to interest-rate risk on fair value totalled €1,508,683 thousand (93% of the bond portfolio with investment risk borne by the Group), of which €1,468,844 classified as available for sale. The following table illustrates the quantitative impacts on the fair value of these latter assets of a hypothetical parallel variation in the interest rate curve of ±100 basis points (bp).
The carrying value of floating-rate debt securities exposed to interest-rate risk on cash flows totalled €109,593 thousand (7% of the bond portfolio with investment risk borne by the Group). In order to indicate the sensitivity of floating-rate securities’ cash flows, we point out that a 100-bp positive or negative change in interest rates would respectively cause higher or lower interest receivable of €1,130 thousand and €800 thousand. Life insurance contracts envisage a guaranteed minimum rate of interest and feature a direct link between investments and benefits to be paid to policyholders. This direct link between obligations to policyholders and investments of assets associated with benefits is governed by means of the integrated asset-liability management (ALM) model mentioned earlier. More specifically, the Group manages interest-rate risk by matching asset and liability cash flows and by maintaining a balance between liabilities’ duration and that of the investment portfolio directly related to such liabilities. Duration is an indicator of the sensitivity of asset and liability fair value to changes in interest rates.
(€ '000)
Fixed-interest securities at fair value Amount
Carrying amount as at 30/06/2013 1,468,844 (1)
Change100 BP increase -65,731100 BP decrease 64,813
(1) of which Euro 522,460 thousand allocated to the separately-managed life business.
41
To complete disclosure, the following tables show the carrying value of fixed-rate securities by maturity and the carrying value of floating-rate securities by type of interest rate.
The contractual rate refixing date for most of these securities is in the first half of the year. The Group holds real estate properties exposed to fluctuation in real estate market. As regards interest-rate risk, it is pointed out, lastly, that the Group holds floating-rate financial liabilities, mainly consisting of real estate companies’ bank borrowings, totalling €245,306 thousand. In order to indicate their sensitivity, taking into account the hedging operation set up by VAIMM Sviluppo Srl and Acacia 2000 Srl it is noted that a 100-bp increase would increase interest expense by €1,783 thousand. Vice versa, a 100-bp decrease would reduce interest expense by €-1,783 thousand. Equity securities are exposed to price risk, i.e., the possibility of their fair value varying as a result of changes arising both from factors specific to the individual instrument or issuer and those affecting all instruments traded on the market If the listed shares classified as “Available-for-sale financial assets” had suffered a 10% loss as at 30.06.2013, equity attributable to parent company shareholders would have decreased by €1,731 thousand. The Group is not exposed to foreign exchange risk since, as at 30.06.2013, nearly all investments for which it bears the risk were expressed in euro, observing the principle of consistency with technical reserves.
Fixed - interest securities (€/000)
Maturity Amount % of breakdown< 1 year 177,058 11.7%1<X<2 90,938 6.1%2<X<3 117,987 7.8%3<X<4 250,107 16.6%4<X<5 108,275 7.2%5<X<10 576,615 38.2%more 187,703 12.4%Total 1,508,683 100.0%
Variable - interest securities (€/000)
Tipe of rate Indexation Amount % of breakdownConstant mat. Swap Euroswap 10Y 25,147 22.9%Constant mat. Swap Euroswap 30Y 8,422 7.7%variabile 3 months tresury bonds 1,683 1.5%Variable 6 months tresury bonds 69,874 63.8%Variable other 4,467 4.1%Total 109,593 100.0%
42
Liquidity risk The group is daily required to execute payments arising from insurance and investment contracts. The liquidity risk is the risk that available funds may not be sufficient to meet obligations. It is constantly monitored by means of the integrated ALM procedure. This risk may also arise as a result of inability to sell a financial asset fast at an amount close to its fair value. This is less probable when the financial assets are listed in active markets. The greater the weight is of financial assets listed in active and regulated markets, the less likely it is that this will happen As at 30.06.2013 financial assets listed in a regulated market accounted for over 94% of financial assets owned. Credit risk In applying its investment policy, the Group limits its exposure to credit risk by investing in highly rated issuers. As can be seen in the table below, as at 30.06.2013 nearly all bonds held by the group were rated as investment grade.
(*) of which €1,563,802 related to Italian Government bonds
(€/000)
Rating (Standard & Poor's) Amounts % of breakdown
AAA 5,107 0.3%
AA+ / AA- 20,803 1.3%
A+ / A- 6,477 0.4%
BBB+ / BBB- (*) 1,583,176 97.8%
Total investment grade 1,615,563 99.8%
Non investment grade 2,713 0.2%
Not rated - 0.0%
Total 1,618,276 100.0%
43
Infragroup and related-party transactions Transactions with group companies referred to the normal course of business, using specific professional skills at going market rates. There were no atypical or unusual transactions. This section presents financial and business transactions occurring during 1H13 with group companies, excluding those with companies consolidated on a 100% line-by-line basis. The following table summarises the most significant economic and financial dealings with Group companies not included in the scope of consolidation and with directors, statutory auditors, and managers with strategic responsibilities.
Transactions and relationships with subsidiaries The Parent Company has confirmed, for the three-year period 2011-2013, that it has opted for the national tax consolidation scheme (Article 117 et seq of Italian Presidential Decree 917 of 22 December 1986) in relation to the subsidiaries Immobiliare Bilancia S.r.l., Immobiliare Bilancia Prima S.r.l., Immobiliare Bilancia Seconda S.r.l., Immobiliare Bilancia Terza S.r.l., Acacia 2000 S.r.l., VAIMM Sviluppo S.r.l. and Vittoria Properties S.r.l..
For the three-year period 2012-2014 the national tax consolidation option was renewed in relation to Vittoria Immobiliare S.p.A., Gestimmobili S.r.l. and Interimmobili S.r.l., Forum Residenze Mondadori S.r.l., Interbilancia S.r.l.,VRG Domus S.r.l. and Cadorna RE S.r.l.. For the three-year period 2013-2015 the national tax consolidation option was adopted also by Sivim S.r.l..
With reference to 2013, the Parent Company exercised its option to settle VAT in the context of the Group of companies pursuant to the Ministerial Decree dated 13th December 1979, together with the following controlled subsidiaries: Vittoria Immobiliare, Gestimmobili S.r.l., Interimmobili S.r.l., Acacia 2000 S.r.l., VRG Domus S.r.l., Cadorna Re S.r.l., Vittoria Properties S.r.l., Immobiliare Bilancia Prima S.r.l., Immobiliare Bilancia Seconda S.r.l., Immobiliare Bilancia Terza S.r.l. and Forum Residenze Mondadori S.r.l..
Transactions and relationships with parent companies The Group has no financial or commercial relationships with the direct parent company Vittoria Capital N.V. and the indirect parent company Yafa Holding B.V., The Netherlands.
(€/000)
Related partiesOther
receivablesLoans
Commitments for subscription of private equity
investments
Revenues Costs
Associates 308 24,352 3,582 5 905Total 308 24,352 3,582 5 905
44
Relations and transactions with associates
Yarpa S.p.A. - Genoa 27.31% direct equity interest Vittoria Assicurazioni has recognised €3,582 thousand under loans to associates and under financial liabilities for the commitment to subscribe to private equity investments through the associate.
S.In.T. S.p.A. – Turin 48.19% direct equity interest The parent company used the services of S.In.T. S.p.A. for commercial agreements made by the parent company, for an aggregate cost of €905 thousand and granted the associate an interest bearing shareholder loan, which has a balance of €1,050 thousand. Mosaico S.p.A. – Turin 45.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. granted the associate an interest bearing shareholder loan, which has a balance of €862 thousand. Pama & Partners S.r.l. – Genoa 25.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. granted the associate a non-interest bearing shareholder loan, which has a balance of €500 thousand.
Rovimmobiliare S.r.l. – Rome 50.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. gave the associate a non-interest bearing shareholder loan, which has a balance of €2,853 thousand.
VP Sviluppo 2015 S.r.l. – Milan 40.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. gave the associate an interest bearing shareholder loan, which has a balance of €6,471 thousand.
VZ Real Estate S.r.l. – Turin 49.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. gave the associate a non-interest bearing shareholder loan, which has a balance of €2,694 thousand.
Fiori di S. Bovio S.r.l. – Milan 40.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. gave the associate an interest bearing shareholder loan, which has a balance of €1,745 thousand.
Valsalaria A.11 S.r.l. – Rome 40.00% equity interest via Vittoria Immobiliare S.p.A. The subsidiary Vittoria Immobiliare S.p.A. acquired, together with participating interest, a shareholder loan which has a balance of €3,177 thousand. Spefin Finanziaria S.p.A. - Rome 21.00% equity interest via Vittoria Service S.r.l. The parent company granted the associate an interest bearing loan, which has a balance of €5,000 thousand.
45
Significant events occurring after the reporting period In July 2013, the parent company acquired an additional 7% interest in Touring Vacanze S.r.l., bringing its total stake to 31.0%, for an outlay of €1,600 thousand, and also signed a binding commitment to acquire a further 3% in 2014 and in 2015 for a total of €1,200 thousand. The parent company has decided to participate in the takeover of Camfin S.p.A. in August. The Board of Directors Milan, 31 July 2013
46
Condensed Consolidated 2013 half year financial statements
47
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(€/000)
Note 30/06/2013 31/12/20121 INTANGIBLE ASSETS 33,576 34,7941.1 Goodwill 1 0 01.2 Other intangible assets 2 33,576 34,7942 PROPERTY, PLANT AND EQUIPMENT 507,825 579,5022.1 Property 2 498,451 569,6912.2 Other items of property, plant and equipment 2 9,374 9,8113 REINSURERS' SHARE OF TECHNICAL RESERVES 3 74,087 71,7514 INVESTMENTS 1,975,431 1,785,5914.1 Investment property 84,021 04.2 Investments in subsidiaries and associates and interests in joint ven 4 14,919 15,7704.3 Held to maturity investments 5 66,681 102,9524.4 Loans and receivables 5 56,670 71,7314.5 Financial assets available for sale 5 1,692,864 1,533,1134.6 Financial assets at fair value through profit or loss 5 60,276 62,0255 OTHER RECEIVABLES 201,174 235,3605.1 Receivables relating to direct insurance 6 153,698 190,3905.2 Receivables relating to reinsurance business 7 3,622 4,6035.3 Other receivables 8 43,854 40,3676 OTHER ASSETS 118,799 108,002
6.1Non-current assets or assets of a disposal group classified as held for sale
0 0
6.2 Deferred acquisition costs 9 8,144 8,2476.3 Deferred tax assets 10 76,078 66,8296.4 Current tax assets 11 27,403 25,6426.5 Other assets 12 7,174 7,2847 CASH AND CASH EQUIVALENTS 13 169,167 161,247
TOTAL ASSETS 3,080,059 2,976,247
ASSETS
48
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION(€/000)
Note 30/06/2013 31/12/20121 EQUITY 487,642 465,9511.1 attributable to the shareholders of the parent 466,272 442,0601.1.1 Share capital 14 67,379 67,3791.1.2 Other equity instruments 14 0 01.1.3 Equity-related reserves 14 33,874 33,8741.1.4 Income-related and other reserves 14 297,934 260,5001.1.5 (Treasury shares) 14 0 01.1.6 Translation reserve 14 0 01.1.7 Fair value reserve 14 34,782 31,2661.1.8 Other gains or losses recognised directly in equity 14 276 1531.1.9 Profit for the year attributable to the shareholders of the parent 32,027 48,8881.2 attributable to minority interests 14 21,370 23,8911.2.1 Share capital and reserves attributable to minority interests 21,600 25,3741.2.2 Gains or losses recognised directly in equity 0 01.2.3 Profit for the year attributable to minority interests -230 -1,4832 PROVISIONS 15 3,767 3,7853 TECHNICAL RESERVES 16 2,032,317 1,930,4024 FINANCIAL LIABILITIES 365,335 379,3514.1 Financial liabilities at fair value through profit or loss 17 60,215 61,0184.2 Other financial liabilities 17 305,120 318,3335 PAYABLES 118,041 109,3415.1 Payables arising from direct insurance business 18 9,817 9,9515.2 Payables arising from reinsurance business 19 13,683 11,7855.3 Other sums payable 20 94,541 87,6056 OTHER LIABILITIES 72,957 87,4176.1 Liabilities of a disposal group held for sale 0 06.2 Deferred tax liabilities 21 31,209 32,0996.3 Current tax liabilities 22 12,904 25,1496.4 Other liabilities 23 28,844 30,169
TOTAL EQUITY AND LIABILITIES 3,080,059 2,976,247
EQUITY AND LIABILITIES
49
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(€/000)
Note 30/06/2013 30/06/2012 31/12/121.1 Net premiums 539,601 474,778 965,9531.1.1 Gross premiums 24 552,547 487,243 995,5181.1.2 Ceded premiums 24 12,946 12,465 29,5651.2 Commission income 25 459 209 599
1.3Gains or losses on remeasurement of financial instruments at fair value through profit or loss
26 16 99 127
1.4Gains on investments in subsidiaries and associates and interests in joint ventures
26 94 429 1,655
1.5 Gains on other financial instruments and investment property 26 31,271 39,345 73,5791.5.1 Interest income 32,341 31,236 62,9781.5.2 Other income 138 157 2191.5.3 Realised gains -1,211 7,930 10,3601.5.4 Unrealised gains 3 22 221.6 Other income 27 6,689 3,728 12,9611 TOTAL REVENUE 578,130 518,588 1,054,8742.1 Net charges relating to claims 385,292 343,378 695,7272.1.1 Amounts paid and change in technical reserves 24 395,184 352,765 720,1262.1.2 Reinsurers' share 24 -9,892 -9,387 -24,3992.2 Commission expense 28 16 16 32
2.3Losses on investments in subsidiaries and associates and interests in joint ventures
26 1,456 2,118 9,805
2.4 Losses on other financial instruments and investment property 26 3,126 5,962 8,3592.4.1 Interest expense 3,035 2,883 4,5032.4.2 Other expense 0 0 02.4.3 Realised losses -1,336 46 332.4.4 Unrealised losses 1,427 3,033 3,8232.5 Operating costs 112,843 107,149 217,6432.5.1 Commissions and other acquisition costs 29 93,436 88,946 178,5522.5.2 Investment management costs 29 820 611 1,2082.5.3 Other administrative costs 29 18,587 17,592 37,8832.6 Other costs 30 22,968 19,549 45,9612 TOTAL COSTS 525,701 478,172 977,527
PROFIT FOR THE YEAR BEFORE TAXATION 52,429 40,416 77,3473 Income taxes 31 20,632 16,655 29,942
PROFIT FOR THE YEAR 31,797 23,761 47,4054 GAIN (LOSS) ON DISCONTINUED OPERATIONS 0 0 0
CONSOLIDATED PROFIT (LOSS) 31,797 23,761 47,405of which attributable to the shareholders of the parent 32,027 24,437 48,888of which attibutable to minority interests 14 -230 -676 -1,483
0 0Basic EARNINGS per share 0.48 0.37 0.73Diluted EARNINGS per share 0.48 0.37 0.73
30/06/2013 30/06/2012 31/12/2012
CONSOLIDATED PROFIT (LOSS) 31,797 23,761 47,405Translation reserve 0 59 115Fair value reserve 3,516 21,397 70,580Hedging reserve 0 0 0Gains or losses on hedging instruments of net investment in foreign operations
0 0 0
Reserve for changes in the equity of investees 0 57 -70Intangible asset revaluation reserve 0 0 0Property, plant and equipment revaluation reserve 0 0 0Gains or losses on non-current assets or assets of a disposal group classified as held for sale
0 0 0
Actuarial gains and losses and adjustments related to defined benefit plans
123 98 153
Other reserves 0 0 0OTHER COMPREHENSIVE INCOME (LOSS) NET OF TAX 3,639 21,611 70,778COMPREHENSIVE INCOME (LOSS) 35,436 45,372 118,183of which attributable to the shareholders of the parent 35,666 46,048 119,666of which attibutable to minority interests -230 -676 -1,483
Income Statement
Statement of comprehensive income
50
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51
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013CONSOLIDATED STATEMENT OF CASH FLOW - INDIRECT METHOD
(€/000)
30/06/2013 31/12/2012Profif for the year before taxation 52,429 77,870Change in non-monetary items 72,704 166,862Change in non-life premium reserve 16,977 20,190Change in claims reserve and other non-life technical reserves 58,292 93,267Change in mathematical reserves and other life technical reserves 24,310 56,398Change in deferred acquisition costs 103 88Change in provisions -18 957Non-monetary gains and losses on financial instruments, investment property and investments in subsidiaries and associates and interests in joint ventures
-1,600 -7,467
Other changes -25,360 3,429Change in receivables and payables arising from operating activities 42,886 4,897
Change in receivables and payables relating to direct insurance and reinsurance 39,437 2,459
Change in other receivables and payables 3,449 2,438Taxes paid -20,632 -30,086
Net cash flow generated by/used for monetary items from investing and financing activities 946 1,780
Liabilities from financial contracts issued by insurance companies -803 -3,231Payables to bank and interbank customers 0 0Loans and receivables from bank and interbank customers 0 0Other financial instruments at fair value through profit or loss 1,749 5,011NET CASH FLOW FROM OPERATING ACTIVITIES 148,333 221,323
Net cash flow generated by/used for investment property 0 0Net cash flow generated by/used for investments in subsidiaries and associated companies and interests in joint ventures
1,993 92,283
Net cash flow generated by/used for loans and receivables 15,061 -19,451Net cash flow generated by/used for held to maturity investments 36,271 -4,905Net cash flow generated by/used for financial assets available for sale -155,654 -185,088Net cash flow generated by/used for property, plant and equipment 72,895 -47,235Other net cash flows generated by/used for investing activities 0 0NET CASH FLOW FROM INVESTING ACTIVITIES -29,434 -164,396
Net cash flow generated by/used for equity instruments attributable to the shareholders of the parent 0 0Net cash flow generated by/used for treasury shares 0 0Dividends distributed to the shareholders of the parent -11,454 -11,454Net cash flow generated by/used for share capital and reserves attributable to minority interests -86,312 756
Net cash flow generated by/used for subordinated liabilities and equity instruments 0 0
Net cash flow generated by/used for other financial liabilities -13,213 27,901NET CASH FLOW FROM FINANCING ACTIVITIES -110,979 17,203
Effect of exchange rate gains/losses on cash and cash equivalents 0 0
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 161,247 87,117INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,920 74,130CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 169,167 161,247
52
Notes to the consolidated interim financial statements The notes to the consolidated interim financial statements comprise:
tables and notes of a general nature listed below in alphabetic order; tables and notes of a specific nature on the individual balance sheet, income statement,
equity and cash flow statement captions, listed below in numerical order. Notes of a general nature A) Consolidation scope
NameRegistered offices
Share Capital Euro Direct Indirect Via
Vittoria Assicurazioni S.p.A. Milan 67,378,924
Vittoria Immobiliare S.p.A. Milan 60,000,000 100.00
Immobiliare Bilancia S.r.l. Milan 6,150,000 100.00
Immobiliare Bilancia Prima S.r.l. Milan 3,000,000 100.00
Immobiliare Bilancia Seconda S.r.l. Milan 1,000,000 100.00
Immobiliare Bilancia Terza S.r.l. Milan 100,000 100.00
Forum Mondadori Residenze S.r.l. Milan 1,200,000 100.00
Vittoria Properties S.r.l. Milan 8,000,000 99.00 1.00
Interbilancia S.r.l. Milan 80,000 80.00 20.00
Vittoria Service S.r.l. Milan 100,000 70.00 30.00
Acacia 2000 S.r.l. Milan 100,000 65.00
Gestimmobili S.r.l. Milan 104,000 80.00
Interimmobili S.r.l. Rome 104,000 80.00
V.R.G. Domus S.r.l Turin 400,000 100.00
Vaimm Sviluppo S.r.l. Milan 2,000,000 100.00
Cadorna Real Estate S.r.l. Milan 10,000 100.00
Valsalaria S.r.l. Rome 60,000 51.00
Sivim S.r.l. 60,000 100.00
Aspevi Milano S.r.l. Milan 100,000 100.00
Aspevi Roma S.r.l. Milan 50,000 100.00
Plurico S.r.l. Milan 10,000 70.00
55.76 Aspevi Roma S.r.l.
9.29 Aspevi Roma S.r.l.
9.29 Plurico S.r.l.
% Ownership
Vittoria Immobiliare S.p.A.
Vittoria Immobiliare S.p.A.
Interbilancia S.r.l.
Consorzio Servizi Assicurativi Milan 269,000
53
Changes occurring in 1H13 Changes in ownership percentages and other changes during the period:
Vittoria Immobiliare S.p.A. On 27 June 2013, Vittoria Assicurazioni S.p.A. purchased from BNP PARIBAS SA no. 5,614 shares thus becoming the sole shareholder of Vittoria Immobiliare S.p.A.. Immobiliare Bilancia S.r.l. On 18 June 2013 the Quotaholders’ Meeting of Immobiliare Bilancia S.r.l. resolved a capital increase of €2,000 thousand nominal, with premium of €8,000 thousand to be executed in one or more tranches by 18 June 2018. At 30 June 2013 capital thus amounted to €6,150 thousand, following the payment of €5,000 thousand made at the same time of the resolution. Forum Mondadori Residenze S.r.l. On 18 June 2013 the Quotaholders’ Meeting of Forum Mondadori Residenze S.r.l. resolved a capital increase of €1,000 thousand nominal, with premium of €9,000 thousand to be executed in one or more tranches by 18 June 2018. At 30 June 2013 capital thus amounted to €1,200 thousand, following the payment of €2,000 thousand made at the same time of the resolution. VRG Domus S.r.l. On 18 June 2013 the Quotaholders’ Meeting of VRG Domus S.r.l. resolved a capital increase of €700 thousand nominal, with premium of €6,300 thousand to be executed in one or more tranches by 18 June 2018. At 30 June 2013 capital thus amounted to €400 thousand, following the payment of €2,000 thousand made at the same time of the resolution. Consorzio Servizi Assicurativi On 1 March 2013 the Meeting of Consorzio Servizi Assicurativi resolved the entry of new partners, thus increasing consortium fund from €253 thousand to 269 thousand.
54
B) List of unconsolidated investments valued with the Net Equity method
NameRegistered offices
Share Capital Euro Direct Indirect Via
S.In.T S.p.A. Turin 5,000,000 48.19
Yarpa S.p.A. Genoa 38,201,600 27.31
Touring Vacanze S.r.l. Milan 12,900,000 24.00
Consorzio Movincom S.c.r.l. Turin 104,200 0.96
Spefin Finanziaria S.p.A. Rome 2,000,000 21.00 Vittoria Service S.r.l.
Rovimmobiliare S.r.l. Rome 20,000 50.00
Mosaico S.p.A. Turin 500,000 45.00
Pama & Partners S.r.l. Genoa 1,200,000 25.00
Fiori di S. Bovio S.r.l. Milan 30,000 40.00
Valsalaria A.11 S.r.l. Rome 33,715 40.00
VP Sviluppo 2015 S.r.l. Milan 1,000,000 40.00
VZ Real Estate S.r.l. Turin 100,000 49.00
Le Api S.r.l. in liquidazione Milan 10,400 30.00 Interbilancia S.r.l.
% Ownership
Vittoria Immobiliare S.p.A.
Changes in ownership percentages and other changes during the period Yarpa S.p.A. On 3 May 2013 the Parent Company purchased no. 865,963 shares of Yarpa S.p.A. increasing its stake in the associate to 27.31%. Consorzio Movincom S.r.l. On 4 June 2013 Aspevi Roma S.r.l. sold to third parties its 38.39% stake in Consorzio Movincom S.r.l..
55
C) Geographical segment reporting (secondary segment) As regards primary segment reporting, the relevant balance sheet and income statement tables by business segment – compliant with the formats established by the ISVAP ordinance already mentioned earlier – are shown in the specific section “Annexes to Consolidated interim financial statements”. The following tables show the geographical split of total balance sheet assets, deferred costs, and of the main items of revenue.
(€/000)
Assets
30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Debt instruments 1,578,642 1,247,137 34,527 174,154 5,107 16,672 1,618,276 1,437,963
Equity instruments and OEIC units 73,875 52,791 67,455 11,185 - - 141,330 63,976
Property 582,472 569,691 - - - - 582,472 569,691
Other assets 737,981 904,617 - - - - 737,981 904,617
Total 2,972,970 2,774,236 101,982 185,339 5,107 16,672 3,080,059 2,976,247
(€/000)
30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Other property, plant and equipment 9,271 9,740 103 71 - - 9,374 9,811
Other intangible assets 33,574 34,790 2 4 - - 33,576 34,794
Owner-occupied property 116,654 118,831 1,273 1,258 625 619 118,552 120,708
Total 159,499 163,361 1,378 1,333 625 619 161,502 165,313
(€/000)
30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Insurance premiums - direct business 304,568 262,842 178,433 165,837 86,876 75,561 569,877 504,240
Trading and construction profits 2,076 228 20 1 - - 2,096 229
Services and rent income 4,152 4,613 604 782 - - 4,756 5,395
Total 310,796 267,683 179,057 166,620 86,876 75,561 576,729 509,864
Total
Total external deferred costs
Deferred costs
Europe
Centre
Centre
North
Italy
North South and Islands
Rest of the World
Italy
Italy
Total Revenue (gross of intersegment
eliminations)
South and Islands
56
Specific explanatory notes Consolidated Balance Sheet Note 1 30/06/2013 31/12/2012 Change Goodwill - - - Note 2 30/06/2013 31/12/2012 Change Other intangible assets 33,576 34,794 -1,218Other items of property, plant and equipment
9,374 9,811 -437
Property 498,451 569,691 -71,240 Other intangible assets
The item “Other intangible assets” mainly refers to: long-term costs incurred for the creation of IT applications – called the NewAge system –
relating to development of the management system of the direct operating parent company, the claims settlement network, and of the agency network;
the value of the portfolio acquired in 2009 by SACE BT S.p.A. resulting from the determination of the VIF (Value In Force) at the acquisition date. VIF is amortised along the effective life of the acquired contracts, also taking into account the portfolio cancellation.
The assets recognised in Group accounts have a finite useful life and depreciation & amortisation is applied on a straight-line basis during estimated useful life. Specifically, the estimated useful life of each type intangible assets can be summarised as follows: - Software: between 5 to 10 years;
- Other intangible assets: between 2 to 5 years;
Amortisation of intangible assets is recognised in the income statement under ‘‘Other costs’’. Other items of property, plant, and equipment The estimated useful life of each type of property, plant and equipment can be summarised as follows: - Furniture, fittings, plant and equipment: between 5 to 10 years;
- Ordinary and electronic office machines: between 3 to 5 years;
- Cars: between 4 to 5 years.
57
Property
The following table shows the breakdown of this item:
(€/000)
30/06/2013 31/12/2012
ChangeOwner-occupied property 118,552 120,708 -2,156 Property held for trading 109,286 103,321 5,965Property under construction 270,613 345,662 -75,049 Total 498,451 569,691 -71,240
Owner-occupied property The book value of owner-occupied property at 30 June 2013 includes €16,584 thousand for property owned by the subsidiary Vittoria Properties S.r.l., €1,596 thousand for property owned by Vittoria Immobiliare S.p.A., €265 thousand for property owned by the subsidiary Acacia 2000 S.r.l. and €100,107 owned by the parent company, of which €89,993 thousand related to the Vittoria Assicurazioni’s headquarter. The following table shows the reconciliation of changes occurring during 1H13:
(€/000)
Owner-occupied property31/12/2012 Acquisitions
Improvement costs
Sales Depreciation 30/06/2013
Gross carrying amount 129,535 0 0 0 0 129,535
Accumulated depreciation 8,827 0 0 0 2,156 10,983
Carrying amount 120,708 0 0 0 -2,156 118,552
Depreciation is applied on a straight-line basis during property’s estimated useful life of between 30 and 50 years.
Property held for trading and property under construction
The following table shows the reconciliation of changes occurring during 1H13: (€/000)
Property Trading activitiesConstruction
work TotalCarrying amount as at 31/12/2012 103,321 345,662 448,983 Acquisitions, net of capitalised financial charges 6,205 12,420 18,625Capitalised financial charges 40 875 915Sales -376 -8,324 -8,700Movement to Investment properties 0 -82,020 -82,020Recognised gains 96 2,000 2,096Carrying amount as at 30/06/2013 109,286 270,613 379,899 Please refer to the Report on Operations for details on the principal real estate activities carried out during the first half.
58
Note 3 30/06/2013 31/12/2012 Change Reinsurers’ share of technical reserves 74,087 71,751 2,336 The following table shows – separately for the Non-Life and Life insurance business – reinsurers’ share of technical reserves:
(€/000)
30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Non-life reserves 62,182 60,102 284 282 62,466 60,384
Premium reserve 15,271 14,563 - - 15,271 14,563
Claims reserve 46,911 45,539 284 282 47,195 45,821
Life reserves 11,621 11,367 - - 11,621 11,367
Mathematical reserves 11,583 11,332 - - 11,583 11,332
Other reserves 38 35 - - 38 35
Total reinsurers' share of technical reserves 73,803 71,469 284 282 74,087 71,751
Direct business Indirect business Total carrying amount
Note 4 30/06/2013 31/12/2012 Change Investments properties 84,021 - 84,021 Beginning with this report, a number of buildings for office use have been reclassified as “investment property” as they fall within the scope of application of IAS 40, given that they are being held for the purpose of receiving lease payments. These properties have been measured at cost.
59
Note 5 30/06/2013 31/12/2012 Change Investments in subsidiaries and associates and interests in joint-ventures
14,919 15,770 -851
The breakdown of this item was as follows:
(€/000)
Investments in associates 30/06/2013 31/12/2012
S.In.T. S.p.A. 1,872 2,721
Yarpa. S.p.A. 5,893 5,665
VP Sviluppo 2015 S.r.l. 453 459
VZ Real Estate S.r.l. 73 73
Rovimmobiliare S.r.l 76 207
Mosaico S.p.A. 241 241
Pama & Partners S.r.l. 721 733
Le Api S.r.l. 36 36
Consorzio Movincom S.c.r.l. 1 59
Spefin Finanziaria S.p.A. 288 288
Fiori di S. Bovio S.r.l. 214 233
Valsalaria A.11 S.r.l. 54 58
Touring Vacanze S.r.l. 4,997 4,997
Total carrying amount 14,919 15,770 The Group’s interest in net income and losses totals €-1,018thousand. The shares of the associated company Mosaico S.p.A. owned by Vittoria Immobiliare have been pledged to Intesa Sanpaolo, as security for the credit lines granted to the associate by the bank.
60
The change in the line item of €-851 thousand reflects all investments and divestments made during the period, as well as the Group’s interest in the change of equity of the associates carried at equity, as illustrated in the following table:
(€/000)
Acquisitions and subscriptions 321
Yarpa. S.p.A. 321
Sales and repayments -58
Consorzio Movincom S.c.r.l. -58
Change due to equity method measurement -1,018
S.In.T. S.p.A. -849
Yarpa. S.p.A. 3
VP Sviluppo 2015 S.r.l. -6
Rovimmobiliare S.r.l -131
Pama & Partners S.r.l. -12
Fiori di S. Bovio S.r.l. -19
Valsalaria A.11 S.r.l. -4
Other changes -96
Carrying amount as at 30/06/2013 14,919
Carrying amount as at 31/12/2012 15,770
61
Note 6 30/06/2013 31/12/2012 Change Held to maturity investments 66,681 102,952 -36,271Loans and receivables 56,670 71,731 -15,061Financial assets available for sale 1,692,864 1,533,113 159,751Financial assets at fair value through profit or loss 60,276 62,025 -1,749 To complete the information disclosed below, reference should be made to the information already given in great detail in the Directors’ Report in the sections “Investments – Cash & cash equivalents – Property” and “Financial risk management and analysis”. The table detailing the breakdown of financial assets is shown in the specific section “Annexes to Consolidated interim financial statements”.
Investments held to maturity – Financial assets available for sale – Financial assets at fair value through profit or loss
The following table shows changes in financial assets – for which risk is borne by Group companies – referring to shares and quotas, bonds and other fixed-income securities, and shares in CIUs (collective investment undertakings). In addition, changes in assets for which risk is borne by policyholder and those relating to pension-fund management are shown separately.
(€/000)
Financial assets at fair value
through profit or loss
Financial assets held for trading
Equity investments
OEIC units
Bonds and other fixed-
interest securities
Total
Assets where the risk is borne by
policyholders and related to pension
funds
Bonds and other fixed-
interest securities
Carrying amount at 31/12/2012 102,952 101,439 26,415 1,405,259 1,533,113 61,018 1,007 1,698,090
Acquisitions and subscriptions - 3,942 6,952 300,026 310,920 1,494 209 312,623
Sales and repayments -36,263 -3,992 -437 -150,058 -154,487 -1,833 -1,162 -193,745
Other changes: - effective interest adjustments 602 - - 1,089 1,089 - - 1,691 - fair value adjustments - 5,891 1,701 -3,973 3,619 153 7 3,779 - impairment loss - -581 - - -581 - - -581 - rate changes -610 - - -809 -809 - - -1,419 - other changes - - - - - -617 - -617
Carrying amount at 30/06/2013 66,681 106,699 34,631 1,551,534 1,692,864 60,215 61 1,819,821
Held to maturity
investments
Financial assets available for sale
Total
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Loans and receivables
As at 30 June 2013 loans and receivables totalled €56,670 thousand (€71,731 thousand as at 31 December 2012). As envisaged in IAS 32 – AG7, the item includes the contra entry for commitments to Yarpa S.p.A. for the payments to be made for financing of the investments that the equity holdings will make in private equity transactions. The parent company’s residual commitment at 30 June 2013 is €3,582 thousand. The related commitments to the equity holding are recognised under the “Other financial liabilities” discussed in note 17.
In addition to the foregoing, the item is principally comprised of the following:
- loans granted by Vittoria Immobiliare S.p.A. to the indirect associates Mosaico S.p.A., Fiori di San Bovio S.r.l., Rovimmobiliare S.r.l., Pama & Partners S.r.l., Valsalaria A.11 S.r.l., VP Sviluppo S.r.l. and VZ Real Estate S.r.l. for a total of €18,301 thousand;
- loans granted by the parent company to third parties and secured by mortgages for a total of €4,183 thousand;
- €2,916 thousand in loans against life insurance policies;
- loans granted to employees and agents of the parent company for €16,764 thousand;
- €5,000 thousand in loans granted to the company Spefin Finanziaria S.p.A. and €1,050 thousand to the company S.IN.T. S.p.A.;
- reinsurance deposit assets for €4,627 thousand. The amount of €15,146 thousand is collectible after 12 months. Disclosure concerning fair value
The following table indicates the fair value of investments discussed in the present note. (€/000)
Financial assets Carrying amount Fair Value
Held to maturity investments 66,681 66,916
Loans and receivables 56,670 56,670
Financial assets available for sale 1,692,864 1,692,864
Financial assets held for trading 61 61
Financial assets at fair value through profit or loss 60,215 60,215
Total 1,876,491 1,876,726 To complete the above information, we point out that the fair value of unlisted financial instruments has been calculated on the basis of the market prices or rates of similar instruments or, when these benchmarks are not available, using appropriate measurement techniques. The latter include use of recent transactions and analyses using the discounted cash flow method. For further information concerning to the “fair value hierarchy”, please refer to the “Annexes to Consolidated half-year financial report”.
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Note 7 30/06/2013 31/12/2012 Change Receivables relating to direct insurance 153,698 190,390 -36,692 The breakdown of this item was as follows:
(€/000)
Receivables relating to direct insurance 30/06/2013 31/12/2012
Premiums due from policyholders 58,073 64,862
Receivables due from brokers and agents 41,971 70,160
Receivables due from insurance companies - current accounts 5,472 8,164
Amounts to be recovered from policyholders and third parties 48,182 47,204
Total 153,698 190,390 These receivables are stated net of related bad-debt provisions. Specifically, provision relating to receivables for premiums due from policyholders takes into account historical trends of cancellation of premiums written but not collected. Note 8 30/06/2013 31/12/2012 Change Receivables relating to reinsurance business 3,622 4,603 -981 The item relates to receivables due from insurers and reinsurers. It includes receivables arising from the current accounts showing the technical result of reinsurance treaties. Note 9 30/06/2013 31/12/2012 Change Other receivables 43,854 40,367 3.487 The most significant sub-item as up to 30 June 2013 consisted of advances of €19,428thousand on policyholders’ taxes and advances of €9,154 thousand paid by the real estate companies.
Note 10 30/06/2013 31/12/2012 Change Deferred acquisition costs 8,144 8,247 -103 This item includes acquisition costs paid in advance upon signature of long-term insurance contracts. As at 30 June 2013 €4,912 thousand referred to the life business and €3,232 thousand to the non-life business.
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Note 11 30/06/2013 31/12/2012 Change Deferred tax assets 76,078 66,829 9,249 The item included deferred tax assets pertaining to the direct operating parent company (€72,546 thousand), to the real estate segment (€4,539 thousand), plus those relating to consolidation adjustments (€-1,056 thousand). Note 12 30/06/2013 31/12/2012 Change Current tax assets 27,403 25,642 1,761 The item includes tax receivables of the direct operating parent company of €17,436 thousand (including tax credits relating to taxes prepaid on the life business mathematical reserves) and €9,769 thousand of the real estate companies arising from the purchase of buildable areas and property. Note 12 30/06/2013 31/12/2012 Change Other assets 7,174 7,284 -110 The item includes €617 thousand of deferred commission expenses relating to investment contracts and €5,677 thousand of prepayments, mainly relating to G&A costs. Note 13 30/06/2013 31/12/2012 Change Cash and cash equivalents 169,167 161,247 7,920 The item refers to bank balances of €169,081 thousand and cash amounts of €88 thousand.
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Note 15 30/06/2013 31/12/2012 Change Equity attributable to shareholders of the parent 466,272 442,060 24,212Equity attributable to minority interests 21,370 23,891 -2,521 Changes in consolidated equity are detailed in chapter “Statement of Changes in Equity”. The following table details the breakdown of equity:
(€/000)
BREAKDOWN OF EQUITY 30/06/2013 31/12/2012
Total equity attributable to the shareholders of the parent 466,272 442,060
Share capital 67,379 67,379
Other equity instruments - -
Equity-related reserves 33,874 33,874
Income-related and other reserves 297,934 260,500
Translation reserve - -
Fair value reserve 34,782 31,266
Other gains or losses recognised directly in equity 276 153
Group profit for the year 32,027 48,888
Total equity attributable to minority interests 21,370 23,891
Share capital and reserves attributable to minority interests 21,600 25,374
Minority interests' profit for the year -230 -1,483
Total consolidated equity 487,642 465,951 As at 30 June 2013 the direct operating parent company’s share capital consists of 67,378,924 fully subscribed and paid-up shares with a nominal value of Euro 1.00 each. The Group does not hold either directly or indirectly any shares of its parent companies. Dividends paid out by the direct operating parent company, shown in the column “Other transfers” in the statement of changes in equity, totalled €11,454,417 for FYs 2012 and 2013. Other gains or losses recognised directly in equity refer to actuarial results on Employee Benefits that will not be reclassified subsequently to profit or loss. Fair value reserve could be reclassified subsequently to profit or loss.
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More specifically, changes in the “Fair value reserve” (i.e. gains or losses on available-for-sale financial assets”) are detailed in the following table:
(€/000)
A) Net unrealised gains Gross amount Tax impact Net amount
31/12/2012 55,683 13,305 42,377
Decrease due to sales -850 -283 -567
Decrease due to fair value changes 2,487 -828 3,315
Total change for the period/year 1,637 -1,111 2,748
30/06/2013 57,320 12,194 45,125
(€/000)
B) Shadow accounting reserve Gross amount Tax impact Net amount
31/12/2012 16,918 5,806 11,112
Change in shadow accounting reserve -1,169 -401 -768
30/06/2013 15,749 5,405 10,344
Gains or losses on financial assets AFS (€/000)
Combined effect A) - B) Gross amount Tax impact Net amount
31/12/2012 38,765 7,499 31,266
Decrease due to sales -850 -283 -567
Decrease due to fair value changes 2,487 -828 3,315
Change in shadow accounting reserve 1,169 401 768
Total change for the period/year 2,806 -710 3,516
30/06/2013 41,571 6,789 34,782 Note 16 30/06/2013 31/12/2012 Change Provisions 3,767 3,785 -18 This account refers mainly to the provisions made for €1,526 thousand in costs for real estate contracts that have yet to be incurred, connected with properties for which closing has already taken place and to provisions accrued by the parent company to face fines and trials underway. The table below shows the changes in the item:
(€/000)
Provisions 31/12/2012 Accruals of the yearUtilisations of the
year30/06/2013
Provision for costs to be incurred 1,544 - -18 1,526
Other provisions 2,241 - - 2,241 Total 3,785 - -18 3,767
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Note 17 30/06/2013 31/12/2012 Change Technical reserves 2,032,317 1,930,402 101,915 The following table shows the breakdown of technical reserves.
(€/000)
30/06/2013 31/12/2012 30/06/2013 31/12/2012 30/06/2013 31/12/2012
Non-life reserves 1,212,082 1,134,754 868 845 1,212,950 1,135,599
Premium reserve 359,716 342,028 43 47 359,759 342,075
Claims reserve 851,957 792,317 825 798 852,782 793,115
Other reserves 409 409 - - 409 409
Life reserves 814,727 790,173 4,640 4,630 819,367 794,803
Reserve for payable amounts 16,867 21,436 12 12 16,879 21,448
Mathematical reserves 774,703 741,478 4,626 4,614 779,329 746,092
Other reserves 23,157 27,259 2 4 23,159 27,263
Total technical reserves 2,026,809 1,924,927 5,508 5,475 2,032,317 1,930,402
Direct business Indirect business Total carrying amount
The Non-Life “Other reserves” item consists of the ageing reserve of the Health line.
The Life “Other reserves” item mainly consisted of:
- €10,308 thousand = management expenses;
- €12,671 thousand = reserve for deferred liabilities to policyholders (of which €15,749 thousand stemming from fair value measurement of available-for-sale financial assets and €-3,078 thousand from reserving against subsidiaries’ profits allocated to segregated founds);
The mathematical reserves comprise an additional reserve for longevity risk relating to annuity agreements and capital agreements with a contractually guaranteed coefficient of conversion to an annuity (art. 50 of ISVAP Regulation no. 21 of 28 March 2008) amounting to € 703 thousand; in the case of capital agreements, account is taken of the propensity to convert to an annuity when it is calculated.
Mathematical reserves also include additional reserves for granted interest rate risk (art.47 of ISVAP Regulation no.21): €1,133 thousand calculated further to the ALM (Asset & Liability Management) analysis made on Segregated Funds “Vittoria Rendimento Mensile” and “Vittoria Valore Crescente” whose average yield rates were used in evaluating “Vittoria Liquinvest” and “Vittoria Previdenza”.
Liability Adequacy Test (LAT)
Testing confirmed the adequacy of the book value of the technical reserves shown in accounts.
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Note 18 30/06/2013 31/12/2012 Change Financial liabilities at fair value through profit or loss 60,215 61,018 -803Other financial liabilities 305,120 318,333 -13,213 To complete what is presented below, we point that the detailed breakdown of financial liabilities is shown in the specific “Annexes to Consolidated interim financial statements” section. Financial liabilities at fair value through profit or loss
The item “Financial liabilities at fair value through profit or loss” refers to financial liabilities relating to investment contracts for which policyholders bear the investment risk and those relating to pension-fund management. The following table shows the cumulative change as at 30 June 2013.
(€/000)
Benefits relating to unit-linked and index-linked
policies
Benefits relating to pension fund management
Total
Carrying amount at 31/12/2012 48,692 12,326 61,018
Investment of net fund assets 28 -79 -51
Profits attributable to policyholders -138 267 129
Amounts paid -713 -168 -881
Carrying amount at 30/06/2013 47,869 12,346 60,215 Other financial liabilities
The item includes: - Reinsurance deposits of €19,510thousand; - Bank loans issued to the Group’s real estate companies for a total of €281,182 thousand (of
which €187,041 thousand backed by collateral); the covenants on the mortgage loan granted to Acacia 2000 S.r.l. consist in i) the ratio between net financial indebtment and the sum of tangible assets and inventories, which has to be lower than one, and ii) the ratio between the mortgage loan and the value of the properties secured by mortgages, which has to be lower than 0.75. These limits were satisfied at 30 June 2013;
- direct operating parent company’s commitment for payment of €3,582 thousand to the associate Yarpa S.p.A., against which the rights to receive the related financial instruments are posted in the “Loans & receivables” item.
Payables due beyond 12 months totalled €194,784 thousand. Disclosure concerning fair value The following table indicates the fair value of financial liabilities investments discussed in the present note.
(€/000)
Financial liabilities Carrying amount Fair Value
Financial liabilities at fair value through profit or loss 60,215 60,215Other financial liabilities 305,120 305,120
Total 365,335 365,335
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Note 19 30/06/2013 31/12/2012 Change Payables arising from direct insurance business 9,817 9,951 -134 The breakdown of the item was as follows:
(€/000)
Payables arising from direct insurance business 30/06/2013 31/12/2012
Payables to insurance brokers and agents 7,407 3,956
Payables to insurace companies - current accounts 2,348 1,950
Guarantee deposits paid by policyholders 62 43
Payables to guarantee funds in favour of policyholders - 4,002
Total 9,817 9,951 Note 20 30/06/2013 31/12/2012 Change Payables arising from reinsurance business 13,683 11,785 1.898 The item refers to amounts payable to insurers and reinsurers and reflects debts arising from the current accounts showing the technical results of reinsurance treaties. Note 21 30/06/2013 31/12/2012 Change Other sums payable 94,541 87,605 6,936 The breakdown of the item was as follows:
(€/000)
Other sums payable 30/06/2013 31/12/2012
Payments on accounts received by real estate companies for preliminary sales agreements 16,794 18,964 Trade payables 20,135 23,524 Payables to employees 2,791 4,405 Employee benefits - provisions for termination benefits 4,438 4,684 Policyholders' tax due 34,862 19,912 Sundry tax liabilities (withholdings) 1,894 2,114 Social security charges payable 2,541 3,238 Payables to associate companies 30 2 Sundry payables 11,056 10,762 Total 94,541 87,605
The other liabilities for employee benefits, particularly health benefits (P.S.) and seniority bonuses (P.A.) are classified in the account “Other liabilities” (note 24). It is expected that the amount of the reserve for termination benefits (T.F.R.) will be collectible more than 12 months hence.
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The main assumptions adopted for actuarial assessments were the following: Demographic assumptions
- probability of death: assumptions determined by the General Accounting Office of Italy and identified as RG48, for males and females;
- probability of disability: separate assumptions by sex adopted by INPS (Italian social security institute) for projections in 2010;
- retiring age: for the generic active individual, the first opportunity as per the mandatory state national insurance conditions was assumed;
- probability of abandoning active work for causes other than death: annual frequency of 2.50%;
- probability of anticipation: 3.50% year after year Economic and financial assumptions
Inflation: 2.0% Annual technical actualization rate 3.0% Annual rate of severance payment increment 3.0% Annual rate of growth of remuneration (for the purpose of calculating seniority premiums) 3.0% Annual rate of growth of the average reimbursement (for the purpose of calculating health services) 2.0%
Note 22 30/06/2013 31/12/2012 Change Deferred tax liabilities 31,209 32,099 -890 The item includes deferred tax liabilities allocated to the insurance business for €24,202 thousand, the real estate and services business for €5,944 thousand, and to reversals totalling €-1,063 thousand, mainly in regard to fair value adjustment of the assets owned by associates and subsidiaries acquired over the past few years. Note 23 30/06/2013 31/12/2012 Change Current tax liabilities 12,904 25,149 -12,245 This account refers to period income taxes net of tax prepayments. This payable reflects the options adopted by the parent company as part of the National Tax Consolidation Programme. Note 24 30/06/2013 31/12/2012 Change Other liabilities 28,844 30,169 -1,325 This account consists mainly of commissions to be paid on the bonuses being collected at the end of the period and provisions for agency awards totalling €11,390 thousand, the deferred commission income of €27 thousand connected with investment contracts, invoices and notes to be received from suppliers totalling €13,848 thousand, and the liabilities for defined benefits and other long-term employee benefits (health benefits and seniority benefits) for €2,768 thousand.
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Consolidated Income Statement Note 25 30/06/2013 30/06/2012 Change Gross premiums 552,547 487,243 65,304Ceded premiums for reinsurance 12,946 12,465 481Amounts paid and change in technical reserves 395,184 352,765 69,419Reinsurers’ share -9,892 -9,387 -505 The following table provides information on the split between direct business, indirect business, outward reinsurance, and retrocession:
(€/000)
Non-life business
Life business
Intersegment
eliminations TotalNon-life business
Life business
Intersegment
eliminations Total
NET PREMIUMS 452,309 87,292 - 539,601 413,195 61,583 - 474,778Gross premiums 464,453 88,094 - 552,547 424,714 62,529 - 487,243
482,138 88,094 - 570,232 442,107 62,529 - 504,636a Direct business 482,023 87,854 - 569,877 441,978 62,262 - 504,240b Indirect business 115 240 - 355 129 267 - 396
Change in premium reserve -17,685 - - -17,685 -17,393 - - -17,393a Direct business -17,688 - - -17,688 -17,404 - - -17,404b Indirect business 3 - - 3 11 - - 11Ceded premiums 12,144 802 - 12,946 11,519 946 - 12,465
12,851 802 - 13,653 11,181 946 - 12,127a Outward reinsusrance 12,851 802 - 13,653 11,181 946 - 12,127b Retrocession - - - - - - - -
Change in premium reserve -707 - - -707 338 - - 338a Outward reinsusrance -707 - - -707 338 - - 338b Retrocession - - - - - - - -
NET CHARGES RELATING TO CLAIMS 296,742 90,583 -2,033 385,292 279,313 65,888 -1,823 343,378Amounts paid and change in technical reserves 306,119 91,098 -2,033 395,184 288,089 66,499 -1,823 352,765Direct business 306,059 90,905 - 396,964 288,007 65,771 - 353,778Indirect business 60 193 - 253 82 728 - 810Shadow accounting of investee companies' profits - - -2,033 -2,033 - - -1,823 -1,823Reinsurers' share 9,377 515 - 9,892 8,776 611 - 9,387Outward reinsurance 9,377 515 - 9,892 8,776 611 - 9,387Retrocession - - - - - - - -
Gross premiums ceded
Gross premiums written
30/06/201230/06/2013
For the geographical split of premiums, reference should be made to the table shown in the section “Geographical segment reporting (secondary segment)”, Note 26 30/06/2013 30/06/2012 Change Commission income 459 209 250
The item refers to commission income for the period for investment contracts classified as financial liabilities (index- and unit-linked contracts and pension funds),
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Note 26 30/06/2013 30/06/2012 Change Gains or losses on financial instruments at fair value through profit or loss
16 99 -83
Gains on investments in subsidiaries and associates and interests in joint ventures
94 429 -335
Gains or losses on other financial instruments andinvestment property
31,271 39,345 -8,074
Losses on investments in subsidiaries and associates and interests in joint ventures
-1,456 -2,118 732
Losses on other financial instruments and investment property
-3,126 -5,962 2,836
To complete the information disclosed below, we point out that the table detailing the breakdown of financial and investment income and charges/losses is shown in the specific section called “Annexes to Consolidated interim financial statements”,
Gains and losses on financial instruments at fair value through profit or loss These are income and losses on financial assets held for trading; specifically, income realised, net of losses, amounted to €9 thousand, whilst unrealised losses amounted to €7 thousand, As regards financial assets designated at fair value through profit or loss – i,e, referring to investment contracts of the index-linked, unit-linked, and pension-fund type – net income recognised in 1H13 amounted to €129 thousand, set against losses/charges of the same amount, due to the change in related financial liabilities designated at fair value through profit or loss,
Gains and losses on investments in subsidiaries, associates, and joint ventures
As up to 30 June 2013 these items referred entirely to the results of equity-accounted Group companies, Reference should be made to Note 5 for further details, Gains and losses on other financial instruments and investment property
The following table summarises the investments and financial assets and liabilities originating the gains and losses indicated above:
(€/000)
Gains Gains Losses Losses30/6/13 30/6/12 30/6/13 30/6/12
Held to maturity investments 1,814 2,304 - -Loans and receivables 556 714 - -Financial assets available for sale 27,154 35,154 -755 3,079Other receivables 300 448 - -Cash and cash equivalents 1,447 725 - -Other financial liabilities - - 3,881 2,883Total 31,271 39,345 3,126 5,962
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Note 28 30/06/2013 30/06/2012 Change Other income 6,689 3,728 2,961 The following table details the breakdown of this item,
(€/000)
Other income 30/6/13 30/6/12Trading profits 2,096 229Revenue from services: real estate brokerage 167 445Revenue from services: real estate management 42 23Revenue from services: administration, real estate appraisals and other income 97 36Revenue from services: insurance commission income with third parties 2 96Revenue from services: other revenue from services 313 11Rent income 369 359Technical income on insurance contracts 2,903 1,777Gains on the sale of property, plant and equipment 31 3Exchange rate gains 18 73Incidental non-operating income 278 101Other income 373 575Total 6,689 3,728
(*) Of which: - €1,367 thousand (€62thousand in June 2012) referring to reversal of commissions on cancelled premiums; - €1,536 thousand (€1,715 thousand in June 2012) referring to other technical items, mainly consisting of recovers
on knock-for-knock claims settlement costs and ANIA contributions for cars scrapped following claim events; Note 29 30/06/2013 30/06/2012 Change Commission expense 16 16 - The item includes commission expense, i,e, acquisition and maintenance costs incurred for investment contracts classified as financial liabilities (index-linked, unit-linked and pension funds), Note 30 30/06/2013 30/06/2012 Change Commissions and other acquisition costs 93,436 88,946 4,490Investment management costs 820 611 209Other administrative costs 18,587 17,592 995 To complete the information disclosed below, we point out that the table detailing insurance operating costs is shown in the specific section called “Annexes to Consolidated interim financial statements”.
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The following table details the breakdown of “Commissions and other acquisition costs” as at 30 June 2013,
(€/000)
30/6/13 30/6/12
68,829 64,408
21,888 21,912
103 -26
5,071 5,454
-2,455 -2,80293,436 88,946Total
Premium collection commissions
Profit participation and other commissions received from reinsurers
Gross commissions and other acquisition costs net of profit participation and other commissions
Acquisition commissions
Other acquisition costs
Change in deferred acquisition costs
Note 31 30/06/2013 30/06/2012 Change Other costs 22,968 19,549 3,419 The breakdown of this item was as shown below:
(€/000)
Other costs 30/6/13 30/6/12
Technical costs on insurance contracts 11,807 7,922Accruals to the provision for bad debts 694 876Incidental non-operating costs 186 360Annual depreciation & amortisation 7,724 7,578Accruals to the provision for risks and charges - 600Commissions from services sector 2,536 2,177Other costs 2 9Total 22,968 19,549
(*) Of which: - €10,710 thousand (€6,601 thousand in June 2012) for technical write-offs and losses on unrecoverable premiums
and related bad-debt provisioning; - €1,097 thousand (€1,321 thousand in June 2012) for services supporting insurance covers and costs for premiums
under litigation. Note 32 30/06/2013 30/06/2012 Change Income taxes 20,632 16,655 3,977 Of this item €30,332 thousand related to current taxes and €9,700 thousand to deferred taxes. Income taxes are recognised in profit or loss, with the exception of those relating to items directly charged or credited to equity, in which case the tax effect is recognised directly in equity,
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Other disclosures Employees
Employees of Vittoria Assicurazioni and of fully consolidated companies numbered 579 as at 30 June 2013 vs, 570 present as at 31 December 2012 and 564 as at 30 June 2012, The average number of in-force employees on the payroll, split by contractual grade, was as follows:
30/06/2013 30/06/2012 31/12/2012
Managers 25 24 24
Officers 145 140 141
Administrative staff 406 393 400
Total 576 557 565 Tax status Insurance Business In 2008, the Parent Company revalued its property assets pursuant to Italian Law no, 2 of 28 January 2009, obtaining recognition of the higher value for the purposes of corporate (IRES) and regional business (IRAP) tax, effective as from the 2013 tax period (in the event of disposal, recognition is postponed to 2014) via payment of a substitute tax on the higher value recorded, The carrying value was aligned with market value, as calculated by an expert appraisal of the assets concerned performed by an independent expert.
Set against this higher value recognised in balance-sheet assets, the Parent Company has created a specific equity reserve for an amount equal to revaluation minus substitute taxes.
On 31 December 2012, the parent company and the various subsidiaries calculated corporate income tax refunds that were due, in view of the possibility of deducting regional business tax (IRAP) related to the cost of employed personnel or personnel "engaged in an equivalent manner", as per Article 2 of Legislative Decree No. 201/2011, by booking in 2012 the contingency assets deriving from less IRES tax that was due for the years 2007-2011 for an amount of roughly €2,000 thousand. The related refund requests were submitted in March 2013. In 2011, the parent company absorbed Lauro 2000 S.r.l., a company that was previously a 100% controlled subsidiary. Following this merger, on its 2012 income tax return relating to 2011 earnings, the parent company proceeded to redeem corporate income tax and IRAP on a part of the diminished income due to offsetting as a result of the merger by paying the substitute tax as envisaged under Article 172, paragraph 10-bis, of the Decree of the President of the Republic of Italy No. 917/1986. In June 2013, the parent company paid the first instalment of the substitute tax related to the fiscal redemption, for the purposes of corporate income tax and IRAP, on the remaining part of the diminished income due to offsetting as a result of the aforementioned merger. This redemption is to be shown on the parent company’s 2013 income tax return regarding fiscal year 2012, which is to be filed in the near future. During 2009 the parent company was subjected to a tax audit by the Italian tax authorities for the tax years 2004, 2005 and 2006, resulting in disputes concerning corporate income tax, regional business tax and VAT.
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Between 2009 and 2011, higher assessments for all three years under inspection were notified with details of higher corporate income tax and IRAP, fines and interest for an overall amount of €101 thousand; regarding VAT, the higher tax rate, the fines and interest amount to €387 thousand. The parent company met its corporate income tax and IRAP obligations for all three years, making full use of a tax provision of around €101 thousand set aside in 2009, which proved sufficient. As regards VAT, the parent company appealed against the demands relating to the three years, supported by a favourable precedent of the first instance on an identical set of circumstances relating to 2003 and multiple legal rulings in favour of other companies. The parent company has already obtained a favourable ruling related to the 2004 and 2005 audits in the courts of first and second instance (for 2004, there is an appeal pending before the Italian Superior Court; for 2005, no appeal of the ruling of the court of second instance has been filed thus far) and to the 2006 audit in the court of first instance (for which no appeal has been filed thus far). The Board of Directors Milan, 31 July 2013
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.
78
Annexes to Condensed Consolidated 2013
half year financial statements
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Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
Consolidation scope
CountryMethod
(1)Business
(2)%
of direct holding
%of total
investment
(3)
% of voting rights in
ordinary meetings
(4)
% of consolidation
Vittoria Assicurazioni S.p.A. Italy G 1 - - - - Vittoria Immobiliare S.p.A. Italy G 10 100.00 100.00 100.00 100.00 Immobiliare Bilancia S.r.l. Italy G 10 100.00 100.00 100.00 100.00 Immobiliare Bilancia Prima S.r.l. Italy G 10 100.00 100.00 100.00 100.00 Immobiliare Bilancia Seconda S.r.l. Italy G 10 100.00 100.00 100.00 100.00 Immobiliare Bilancia Terza S.r.l. Italy G 10 100.00 100.00 100.00 100.00 Forum Mondadori Residenze S.r.l. Italy G 10 100.00 100.00 100.00 100.00 Vittoria Properties S.r.l. Italy G 10 99.00 100.00 100.00 100.00 Interbilancia S.r.l. Italy G 9 80.00 100.00 100.00 100.00 Vittoria Service S.r.l. Italy G 11 70.00 100.00 100.00 100.00 Acacia 2000 S.r.l. Italy G 10 - 65.00 65.00 100.00 Gestimmobili S.r.l. Italy G 11 - 80.00 80.00 100.00 Interimmobili S.r.l. Italy G 11 - 80.00 80.00 100.00 V.R.G. Domus S.r.l Italy G 10 - 100.00 100.00 100.00 Vaimm Sviluppo S.r.l. Italy G 10 - 100.00 100.00 100.00 Cadorna Real Estate S.r.l. Italy G 10 - 100.00 100.00 100.00 Valsalaria S.r.l. Italy G 10 - 51.00 51.00 100.00 Sivim S.r.l. Italy G 10 - 100.00 100.00 100.00 Aspevi Milano S.r.l. Italy G 11 - 100.00 100.00 100.00 Aspevi Roma S.r.l. Italy G 11 - 100.00 100.00 100.00 Plurico S.r.l. Italy G 11 - 70.00 70.00 100.00 Consorzio Servizi Assicurativi Italy G 11 - 71.56 74.35 100.00
(1) Consolidation method: Line-by-line=L, Proportionate=P, Proportionate by common management=C
(2) 1=Italian insurance; 2=EU insurance; 3=Non-EU insurance; 4=insurance holding; 5=EU reinsurance; 6=non-EU reinsurance; 7=banking; 8=fund management; 9=other holding; 10=real estate; 11=other
(3) the total of the stakes held by all the companies that, in the shareholding structure, are placed between the company that prepares the consolidated financial statements and the investee. If the latter is directly held by more than one subsidiary, the individual products should be added.
(4) total voting rights percentage available in ordinary meetings if different from the direct or indirect investment percentage.
80
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
List of unconsolidated investments
CountryBusiness
(1)Type (2)
%of direct holding
%of total
investment(3)
% of voting rights in
ordinary meetings
(4)
Carrying amount
S.In.T S.p.A. Italy 11 b 48.19 48.19 48.19 1,872,133 Yarpa S.p.A. Italy 9 b 27.31 27.31 27.31 5,893,046 Touring Vacanze S.r.l. Italy 10 b 24.00 24.00 24.00 4,996,028 Rovimmobiliare S.r.l. Italy 10 b - 50.00 50.00 75,568 Mosaico S.p.A. Italy 10 b - 45.00 45.00 241,463 Pama & Partners S.r.l. Italy 10 b - 25.00 25.00 720,748 Le Api S.r.l. in liquidazione Italy 11 b - 30.00 30.00 36,147 Consorzio Movincom S.c.r.l. Italy 11 b 0.96 0.96 0.96 1,428 VP Sviluppo 2015 S.r.l. Italy 10 b - 40.00 40.00 452,947 VZ Real Estate S.r.l. Italy 10 b - 49.00 49.00 72,692 Fiori di S. Bovio S.r.l. Italy 10 b - 40.00 40.00 213,868 Spefin Finanziaria S.p.A. Italy 11 b - 21.00 21.00 288,623 Valsalaria A.11 S.r.l. Italy 10 b - 40.00 40.00 53,816
(1) 1=Italian insurance; 2=EU insurance; 3=Non-EU insurance; 4=insurance holding; 5=EU reinsurance; 6=non-EU reinsurance; 7=banking; 8=fund management; 9=other holding; 10=real estate; 11=other
(2) a=subsidiaries (IAS27) ; b=associated companies (IAS28); c=joint ventures (IAS 31); indicate with an asterisk (*) companies classified as held for sale in compliance with IFRS 5 and show the key at the foot of the table.
(3) the total of the stakes held by all the companies that, in the shareholding structure, are placed between the company that prepares the consolidated financial statements and the investee. If the latter is directly held by more than one subsidiary, the individual products should be added.
(4) total voting rights percentage available in ordinary meetings if different from the direct or indirect investment percentage.
81
Vitt
oria
Ass
icur
azi
oni S
.p.A
.C
ond
ense
d C
onso
lida
ted
fin
anc
ial s
tate
men
ts a
s a
t 30
June
201
3
Bal
an
ce
sh
ee
t b
y b
us
ine
ss
an
d b
us
ine
ss l
ine
(€/0
00)
30
/06
/13
31
/12
/12
30
/06
/13
31
/12
/12
30/0
6/1
33
1/1
2/1
23
0/0
6/1
33
1/1
2/1
23
0/0
6/1
33
1/1
2/1
23
0/0
6/1
33
1/1
2/1
2
1IN
TA
NG
IBL
E A
SS
ET
S26
,175
27,5
99
6,8
356
,57
15
5761
49
10
00
33,5
76
34,7
94
2P
RO
PE
RT
Y, P
LA
NT
AN
D E
QU
IPM
EN
T87
,451
132
,04
62
1,7
6661
,56
239
6,8
3638
4,8
36
121
135
1,65
192
35
07,8
25
579
,50
2
3R
EIN
SU
RE
RS
' SH
AR
E O
F T
EC
HN
ICA
L R
ES
ER
VE
S62
,466
60,3
84
11,
621
11,3
67
00
00
00
74,0
87
71,7
51
4IN
VE
ST
ME
NT
S1,
213
,744
1,04
3,9
79
876,
116
847
,79
62
1,0
0420
,30
836
143
-135
,469
-126
,635
1,9
75,4
31
1,7
85,5
91
4.1
Inve
stm
ent p
rope
rty
43,8
250
40,
196
00
00
00
084
,02
10
4.2
Inve
stm
ents
in s
ubsi
dia
ries
and
ass
ocia
tes
and
inte
rest
s in
join
t v
92,0
6278
,73
95
5,7
1160
,81
22,
529
2,7
11
369
3-1
35,4
19-1
26,5
8514
,91
915
,77
0
4.3
He
ld t
o m
atu
rity
inve
stm
ents
13,3
5613
,52
05
3,3
2589
,43
20
00
00
066
,68
11
02,9
52
4.4
Loan
s an
d r
ece
ivab
les
30,8
7646
,79
27,
543
7,5
66
18,
301
17,4
23
00
-50
-50
56,6
70
71,7
31
4.5
Fin
anci
al a
sse
ts a
vaila
ble
for
sale
1,0
33,6
2590
4,9
28
659,
065
627
,96
11
7417
40
50
00
1,6
92,8
64
1,5
33,1
13
4.6
Fin
anci
al a
sse
ts a
t fa
ir va
lue
thro
ugh
pro
fit o
r lo
ss0
06
0,2
7662
,02
50
00
00
060
,27
662
,02
5
5O
TH
ER
RE
CE
IVA
BL
ES
170
,380
199
,92
92
2,1
0927
,63
91
4,5
9715
,61
95,
614
4,5
82-1
1,52
6-1
2,40
92
01,1
74
235
,36
0
6O
TH
ER
AS
SE
TS
82,4
7672
,25
52
1,2
6019
,68
91
5,2
0215
,32
891
794
7-1
,056
-217
118
,79
91
08,0
02
6.1
De
ferr
ed a
cqu
isiti
on c
osts
3,23
23
,38
24,
912
4,8
65
00
00
00
8,1
44
8,2
47
6.2
Oth
er a
sse
ts79
,244
68,8
73
16,
348
14,8
24
15,
202
15,3
28
917
947
-1,0
56-2
171
10,6
55
99,7
55
7C
AS
H A
ND
CA
SH
EQ
UIV
AL
EN
TS
96,3
7011
2,7
84
50,
405
12,5
99
17,
292
30,7
15
5,10
05,
149
00
169
,16
71
61,2
47
TO
TA
L A
SS
ET
S1,
739
,062
1,64
8,9
76
1,0
10,
112
987
,22
346
5,4
8846
7,4
20
11,7
9710
,96
6-1
46,4
00-1
38,3
383,
080
,05
92,
976
,24
7
1E
QU
ITY
487
,64
24
65,9
51
2P
RO
VIS
ION
S1,
891
1,8
91
00
1,8
761
,89
40
00
03
,76
73
,78
5
3T
EC
HN
ICA
L R
ES
ER
VE
S1,
212
,950
1,13
5,5
99
822,
445
795
,84
90
00
0-3
,078
-1,0
462,
032
,31
71,
930
,40
2
4F
INA
NC
IAL
LIA
BIL
ITIE
S11
,725
28,9
59
71,
582
72,3
85
282,
028
278
,00
70
00
03
65,3
35
379
,35
1
4.1
Fin
anci
al li
abili
ties
at f
air
valu
e th
roug
h pr
ofit
or
loss
00
60,
215
61,0
18
00
00
00
60,2
15
61,0
18
4.2
Oth
er f
inan
cial
liab
ilitie
s11
,725
28,9
59
11,
367
11,3
67
282,
028
278
,00
70
00
03
05,1
20
318
,33
3
5P
AY
AB
LE
S83
,825
70,5
04
7,9
045
,52
82
6,9
2636
,04
310
,293
9,6
56-1
0,90
7-1
2,39
01
18,0
41
109
,34
1
6O
TH
ER
LIA
BIL
ITIE
S46
,929
60,2
17
12,
539
15,0
72
12,
713
10,9
37
384
278
392
913
72,9
57
87,4
17
TO
TA
L E
QU
ITY
AN
D L
IAB
ILIT
IES
3,0
80,0
59
2,9
76,2
47
To
tal
Rea
l est
ate
b
usi
nes
sIn
ters
eg
me
nt
elim
ina
tio
ns
No
n-l
ife
bu
sin
ess
Lif
e b
usi
nes
sS
erv
ice
bu
sin
ess
82
Vitt
oria
Ass
icur
azio
ni S
.p.A
.C
onde
nsed
Con
solid
ated
fin
anci
al s
tate
men
ts a
s at
30
June
201
3
Inc
om
e s
tate
me
nt
by
bu
sin
es
s a
nd
bu
sin
es
s l
ine
(€/0
00)
30
/06
/20
13
30
/06
/20
12
30
/06
/20
13
30
/06
/20
12
30
/06
/20
13
30/
06
/20
12
30/
06
/20
13
30/
06
/20
12
30/0
6/2
01
33
0/0
6/2
01
23
0/0
6/2
01
33
0/0
6/2
01
21.
1N
et p
rem
ium
s45
2,30
941
3,19
587
,292
61,5
830
00
00
053
9,60
147
4,77
81.
1.1
Gro
ss p
rem
ium
s46
4,45
342
4,71
488
,094
62,5
290
00
00
055
2,54
748
7,24
31.
1.2
Ced
ed p
rem
ium
s12
,144
11,5
1980
294
60
00
00
012
,946
12,4
651.
2C
omm
issi
on in
com
e0
045
920
90
00
00
045
920
9
1.3
Gai
ns o
r lo
sses
on
rem
easu
rem
ent
of f
inan
cial
in
stru
men
ts a
t fa
ir va
lue
thro
ugh
prof
it or
loss
00
1699
00
00
00
1699
1.4
Gai
ns o
n in
vest
men
ts in
sub
sidi
arie
s an
d as
soci
ates
and
inte
rest
s in
join
t ven
ture
s3
617
998
507
712
70
12-9
14-8
3494
429
1.5
Gai
ns o
n ot
her
finan
cial
inst
rum
ents
and
in
vest
men
t pro
pert
y15
,673
22,4
9214
,956
16,5
3260
331
939
20
031
,271
39,3
45
1.6
Oth
er in
com
e3,
870
2,72
764
923,
183
1,36
13,
917
4,32
7-4
,345
-4,7
796,
689
3,72
81
TO
TA
L R
EV
EN
UE
471,
855
439,
031
103,
785
79,0
223,
793
1,80
73,
956
4,34
1-5
,259
-5,6
1357
8,13
051
8,58
82.
1N
et c
harg
es r
elat
ing
to c
laim
s29
6,74
127
9,31
390
,584
65,8
880
00
0-2
,033
-1,8
2338
5,29
234
3,37
8
2.1.
2A
mou
nts
paid
and
cha
nge
in t
echn
ical
re
serv
es30
6,11
928
8,08
991
,098
66,4
990
00
0-2
,033
-1,8
2339
5,18
435
2,76
5
2.1.
3R
eins
urer
s' s
hare
-9,3
78-8
,776
-514
-611
00
00
00
-9,8
92-9
,387
2.2
Com
mis
sion
exp
ense
00
1616
00
00
00
1616
2.3
Loss
es o
n in
vest
men
ts in
sub
sidi
arie
s an
d as
soci
ates
and
inte
rest
s in
join
t ven
ture
s94
71,
945
00
509
173
00
00
1,45
62,
118
2.4
Loss
es o
n ot
her
finan
cial
inst
rum
ents
and
in
vest
men
t pro
pert
y-6
483,
107
265
451
3,49
02,
385
1919
00
3,12
65,
962
2.5
Ope
ratin
g co
sts
101,
756
99,4
898,
866
7,53
95,
343
3,75
21,
223
1,14
8-4
,345
-4,7
7911
2,84
310
7,14
92.
6O
ther
cos
ts18
,711
15,3
681,
246
1,06
544
550
92,
566
2,60
70
022
,968
19,5
492
TO
TA
L C
OS
TS
417,
507
399,
222
100,
977
74,9
599,
787
6,81
93,
808
3,77
4-6
,378
-6,6
0252
5,70
147
8,17
2
PR
OF
IT F
OR
TH
E Y
EA
R B
EF
OR
E T
AX
AT
ION
54,3
4839
,809
2,80
84,
063
-5,9
94-5
,012
148
567
1,11
998
952
,429
40,4
16
Net
gai
ns
and
co
sts/
loss
esR
eal e
stat
e b
usi
nes
sIn
ters
egm
ent
elim
inat
ion
sN
on
-lif
e b
usi
nes
sL
ife
bu
sin
ess
Ser
vic
e b
usi
nes
s
83
Vitt
oria
Ass
icur
azi
oni
S.p
.A.
Con
dens
ed
Con
solid
ate
d f
inan
cial
sta
tem
ents
as
at 3
0 Ju
ne
201
3
Bre
akd
ow
n o
f o
ther
co
mp
reh
en
sive
in
co
me
(€/0
00)
30/
06/1
330
/06
/12
30/0
6/1
330
/06/
12
30/
06/
133
0/06
/12
30/0
6/1
330
/06/
12
30/
06/
133
0/06
/12
30/0
6/1
331
/12
/12
Tra
nsl
atio
n re
serv
e0
59
-
-
-
-
-
5
9
00
00
Fai
r va
lue
rese
rve
4,0
832
6,4
19-5
67
-
5,02
2
-
-
3
,516
21,3
97
-710
4,8
483
4,7
823
1,26
6H
edgi
ng
rese
rve
00
-
-
-
-
-
-
0
00
0G
ain
s o
r lo
sse
s o
n he
dgin
g in
stru
me
nts
of n
et in
vest
men
t in
fore
ign
oper
atio
ns0
0
-
-
-
-
-
-
00
00
Res
erv
e fo
r ch
ange
s in
the
equ
ity o
f in
vest
ees
057
-
-
-
-
-
57
0
00
0In
tan
gib
le a
sset
rev
alu
atio
n re
serv
e0
0
-
-
-
-
-
-
00
00
Pro
pert
y, p
lant
an
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quip
me
nt r
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luat
ion
rese
rve
00
-
-
-
-
-
-
0
00
0G
ain
s o
r lo
sse
s o
n no
n-cu
rren
t ass
ets
or
asse
ts o
f a
dis
posa
l gro
up
cla
ssifi
ed a
s he
ld f
or s
ale
00
-
-
-
-
-
-
0
00
0A
ctua
rial g
ain
s a
nd lo
sses
and
adj
ust
men
ts r
ela
ted
to d
efin
ed
ben
efit
pla
ns1
233
24
-
-
-
-
226
1
23
9
8
471
232
7615
3O
the
r re
serv
es
00
-
-
-
-
-
-
0
00
0T
OT
AL
OT
HE
R C
OM
PR
EH
EN
SIV
E IN
CO
ME
4,2
062
6,8
59-5
67
-5,0
22
0-2
263,
639
21,6
11
-663
4,9
713
5,0
583
1,41
9
Ta
xes
Bal
an
ce
All
oca
tio
nR
ecla
ssi
fica
tio
n t
o
pro
fit
or
los
sO
ther
Ch
ang
es
To
tal C
ha
ng
es
84
Vitt
oria
Ass
icur
azio
ni S
.p.A
.C
onde
nsed
Con
solid
ated
fin
anci
al s
tate
men
ts a
s at
30
June
201
3
Bre
akd
ow
n o
f fi
nan
cia
l as
sets
(€/0
00)
30/0
6/13
31/1
2/12
30/0
6/13
31/1
2/12
30/0
6/13
31/1
2/12
30/0
6/13
31/1
2/12
30/0
6/13
31/1
2/12
30/0
6/13
31/1
2/12
Eq
uity
and
de
rivat
ive
inst
rum
ents
m
easu
red
at c
ost
00
00
11,5
905,
627
00
00
11,5
905,
627
Equ
ity in
stru
men
ts a
t fa
ir va
lue
00
00
95,1
0995
,812
00
6,73
95,
960
101,
848
101,
772
of w
hich
list
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c
ate
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Ac
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las
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Am
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of
Fin
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cia
l a
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Ca
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ied
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Ga
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92
Vitt
oria
Ass
icur
azio
ni S
.p.A
.C
onde
nse
d C
onso
lidat
ed
finan
cial
sta
tem
ent
s as
at
30 J
une
2013
Det
ail
of
ins
ura
nce
te
chn
ical
ite
ms
(€/0
00)
Gro
ss a
mo
un
tR
ein
sure
r's
shar
e o
f am
ou
nt
Net
am
ou
nt
Gro
ss a
mo
un
tR
ein
sure
rs' s
har
e o
f am
ou
nt
Net
am
ou
nt
464
,453
12,1
4445
2,3
0942
4,71
411
,519
413,
195
aP
rem
ium
s w
ritte
n4
82,1
3912
,851
469,
288
442,
107
11,1
8043
0,92
7
bC
hang
e in
pre
miu
ms
rese
rve
17,6
867
0716
,979
17,3
93-3
3917
,732
306
,119
9,3
7829
6,7
4128
8,08
98
,776
279,
313
aA
mou
nts
paid
252
,195
8,1
9024
4,0
0525
5,38
27
,771
247,
611
bC
hang
e in
cla
ims
rese
rve
s59
,664
1,3
7258
,292
34,1
721
,743
32,4
29
cC
hang
e in
rec
ove
ries
5,7
401
845,
556
1,46
573
872
7
dC
hang
e in
oth
er te
chn
ica
l res
erve
s0
00
00
0
NE
T P
RE
MIU
MS
88,0
948
0287
,292
62,5
2994
661
,583
91,0
985
1490
,584
66,4
9961
165
,888
aA
mou
nts
paid
64,8
242
6064
,564
65,4
552
,684
62,7
71
bC
hang
e in
res
erve
for
am
ount
s to
be
pai
d-4
,570
0-4
,570
-3,8
250
-3,8
25
cC
hang
e in
mat
herm
atic
al r
eser
ves
31,7
472
5131
,496
2,50
2-2
,078
4,58
0
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hang
e in
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l res
erve
s w
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stm
ent
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k is
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and
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ves
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ana
gem
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00
00
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eC
hang
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l res
erve
s-9
033
-906
2,36
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2
NE
T C
LA
IMS
CO
ST
S
Lif
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usi
nes
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30/
06/2
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No
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ess
NE
T P
RE
MIU
MS
NE
T C
LA
IMS
CO
ST
S
93
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
Breakdown of insurance operating costs(€/000)
30/06/13 30/06/12 30/06/13 30/06/12
93,159 90,187 6,354 5,787
a Acquisition commissions 70,101 66,013 2,029 2,273
b Other acquisition costs 18,478 19,201 3,731 3,059
c Change in deferred acquisition costs 150 186 -47 -212
d Premium collection commissions 4,430 4,787 641 667
-2,335 -2,613 -121 -189
491 331 329 280
10,441 11,584 2,304 1,661
Total 101,756 99,489 8,866 7,539
Investment management costs
Other administrative costs
Non-life business Life business
Profit participation and other commissions received from reinsurers
Gross commissions and other acquisition costs
94
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
Breakdown of property, plant and equipment and intangible assets(€/000)
At costDeemed cost or
fair valueTotal carrying
amountInvestment property 84,021 - 84,021 Other property 498,451 - 498,451 Other items of property, plant a 9,374 - 9,374 Other intangible assets 33,576 - 33,576
95
Vittoria Assicurazioni S.p.A.Condensed Consolidated financial statements as at 30 June 2013
(€/000)
30/06/13 31/12/12 30/06/13 31/12/12 30/06/13 31/12/12On-balance sheet assets 47,869 48,692 12,346 12,326 60,215 61,018Infragroup assets * 0 0 0 0 0 0Total assets 47,869 48,692 12,346 12,326 60,215 61,018
On-balance sheet liabilities 47,869 48,692 12,346 12,326 60,215 61,018On-balance sheet technical reserves 0 0 0 0 0 0Infragroup liabilities* 0 0 0 0 0 0Total Liabilities 47,869 48,692 12,346 12,326 60,215 61,018
* Assets and liabilities eliminated in consolidation process
Detail of assets and liabilities relating to insurance contracts with risk borne by policyholders or relating to pension-fund management
Unit- and index-linked benefits
Benefits relating to pension-fund management
Total
96
Management Attestation
97
First-half financial statements certification pursuant to Art.81-ter of Consob Regulation N° 11971 dated May 14 1999, as amended
1. The undersigned Roberto Guarena (as Managing Director) and Mario Ravasio (as the
Manager Charged with preparing the financial reports), of Vittoria Assicurazioni S.p.A., taking into consideration Article 154-bis (subparagraph 3 and 4) of Italian Legislative Decree February 24th 1998 n.58, do hereby certify:
- the adequacy in relation to the Legal Entity features and - the actual application
of the administrative and accounting procedures employed to draw up 2013 half-yearly consolidated financial statements.
2. In this respect no remarks emerged besides what already reported in Director’s report to the
Consolidated half-year financial report as at 30 June 2013. 3. The undersigned also certify that: 3.1 The half-yearly consolidated financial statements as at June 30th 2013: a) was prepared in compliance with applicable international accounting standards
recognised by the European Community pursuant to European Parliament and Council Regulation no.1606/2002 of July 19, 2002;
b) corresponds to results of the books and accounts records; c) is suitable to provide a fair and correct representation of the situation of the assets and liabilities, the economic and financial situation of the issuer and the group of companies included in the scope of consolidation. 3.2 The consolidated interim directors’ report contains reference to the more significant events occurring in the first six months of the financial year and their impact on the half-yearly consolidated financial statements, together with a description of the main risks and uncertainties faced in the remaining six months of the year. The consolidated interim directors’ report also contains information on significant related party transactions. Milan, 31 July 2013 Roberto Guarena Mario Ravasio Managing Director Manager Charged with preparing the company’s financial reports
98
Report of Independent Auditors
99
