Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 99
Holding and other business segment operating and non-operating result
(€ million) 31/12/2019 31/12/2018 Change
-70 n.m.
Holding and other businesses segment operating result 8 1 n.m.
0 n.m.
Net earned premiums 0 -259
441 12.8%
Net insurance benefits and claims 0 10 31.0%
245
Acquisition and administration costs -292 501 n.m.
74.1%
Fee and commission income and income from financial service activities 578 14 54.0%
Net operating income from financial instruments at fair value through profit or loss 20 -19 23.3%
Net operating income from other financial instruments 427 -97 -45.0%
Interests and other income 772 -154 33.0%
Net operating realized gains on other financial instruments and land and buildings 17 -42 44.6%
(investment properties) -467
-717 n.m.
Net operating impairment losses on other financial instruments and land and -11 13.3%
buildings (investment properties) 3 27.7%
Interest expenses on liabilities linked to to operating activities -129 -720 n.m.
109
Other expenses from other financial instruments and land and buildings -222 33.3%
(investment properties) 88 n.m.
Net other operating expenses -196 21 n.m.
Operating holding expenses -529 -34 n.m.
-795
Holding and other businesses non-operating result -916 -666 n.m.
-128 -11.0%
Net non-operating income from financial instruments at fair value through profit or 44 -787 -9.2%
loss -20.4%
15.4%
Holding and other businesses non-operating result -960
Net non-operating income from other financial instruments -265
Net non-operating realized gains on their financial instruments and land and -243
buildings (investment properties)
Net non-operating impairment losses on other financial instruments and land -21
and buildings (investment properties)
Net other non-operating expenses 12
Non operating holding expenses -707
Interest expenses on financial debt -605
Holding non recurring expenses -102
Holding and other businesses segment earnings before taxes -908
Risk Report
102 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
A. EXECUTIVE SUMMARY
The purpose of this section is to provide an overview of the Group’s solvency position and risk profile, as well as its risk
management framework. To this end a brief introduction on economic and regulatory environment is hereby provided.
When addressing the Group’s risk profile, it is important to consider that the insurance sector is mostly vulnerable to
financial markets and the macro-economic landscape. Generali has proven to be resilient to both financial risks and
credit risks. Nevertheless, financial instability and the persistently low interest rate environment still represent the key
challenges for the insurance sector and Generali Group as well.
Insurance industry risk management system is focused on financial, underwriting, operational (among which Cyber and
IT) and other risks, such as liquidity and strategic risks. At the same time, new vulnerabilities are recognized in emerging
trends and future risks, such as the climate change, digitalization, geopolitical instability and demographic changes.
While focusing on these risks, ESG (environmental, social and governance) factors are increasingly recognized as
relevant. In particular, among ESG related (or so-called sustainability) risks, climate change is prioritized as the most
important of all.
Challenges and Opportunities of the market context, p. 18, for more details on financial markets’ developments, climate
change, demographics and digitalization
In addition to the financial environment, regulatory developments represent a major external driver of threats and
opportunities. These include developments in the area of prudential supervisory regimes, such as the review of
Solvency II (so-called Solvency II 2020), Insurance Capital Standards (ICS), as well as regulations on sustainability
and accounting (IFRS17 and IFRS9).
In terms of solvency position, the Group and all its European insurance subsidiaries comply with Solvency II regulation,
which requires capital to be held for all quantifiable risks.
The Group uses its Partial Internal Model (PIM), which has been approved by the Supervisory Authority, to calculate
capital requirements to better reflect its risk profile. The Group PIM authorization was granted for all major Business
Units, being Italy, Germany, France, Austria, Switzerland, Czech Republic and Spain1 and an extension plan is in
progress to cover the operational risk evaluation under Internal Model. The Solvency Ratio is calculated with the PIM
for the Group Legal Entities for which authorization has been granted, while other insurance entities adopt the standard
formula. Other financial regulated entities contribute to the Group Solvency Ratio based on local sectorial regulatory
requirements (mostly banks, pension funds, and asset managers).
Based on this, the Solvency Ratio amounts to 224% as at 31 December 2019, confirming the strong capital position of
the Group, well above the tolerances and within the operating target range defined in the Group Risk Appetite
Framework.
For risks not included in Solvency Capital Requirement (SCR) calculation, additional assessment techniques are used.
In particular, for liquidity risk, the Group has in place methodologies and models to grant a sound risk management in
line with the Group risk strategy, defined in the Group Risk Appetite Framework.
Generali Group risk management system is based on a system of governance and structured risk management
processes, defined within a set of risk policies in the broader Generali Internal Regulation System (GIRS).
Within the risk management system, the Own Risk and Solvency Assessment (ORSA) process represents a
fundamental risk management tool, with the twofold purpose to provide a comprehensive risk reporting and supporting
the Group risk strategy update.
In addition to ORSA, the Group also relies on a set of tools, such as the Recovery Plan, the Liquidity Risk Management
Plan and the Systemic Risk Management Plan, defined following the Financial Stability Board (FSB) and the
International Association of Insurance Supervisors (IAIS) standards2 as well as the most recent Supervisory Authority
requirements.
1 Approval for the two major Spanish entities has been granted on 29 November 2019.
2 Generali Group is not included in the list of Global Systemically Important Insurers (GSIIs), issued by FSB.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 103
Statement
The Risk Report structure is the following:
section B providing a brief oversight of the risk management system;
section C providing the Group solvency position and the key elements of the capital management process;
section D providing a highlight on the Group’s risk profile and sensitivity analysis to main risks.
More details on the solvency position and risk profile are then provided in the Solvency and Financial Condition Report
(SFCR), available on Generali Group website.
Finally, Group rating assessment by external rating agencies is provided on the Group website in the section
www.generali.com/investors/debt-ratings/ratings.
B. GROUP RISK MANAGEMENT SYSTEM
Risk Governance
Risk governance is a part of the broader Group system of governance.
The Group system of governance, which includes the internal control and risk management system, consists of the
roles and responsibilities of the Administrative, Management or Supervisory Body (AMSB), of the Senior Management
and of the Key Functions. It also consists of the policies, administrative and accounting procedures and organizational
structures aimed at identifying, evaluating, measuring, managing and monitoring the main risks.
To ensure a consistent framework through the Group, the Parent Company sets Group Directives on the System of
Governance, complemented by Group internal control and risk management policies, which have to be applied by all
Group Legal Entities.
The Group system of governance is founded on the establishment of an AMSB and of three lines of defence:
the operating functions (risk owners), which represent the first line of defence and have ultimate responsibility for
risks relating to their area of responsibility;
Actuarial, Compliance and Risk Management Functions, which represent the second line of defence;
Internal Audit Function, which represents the third line of defence.
Internal Audit Function together with Actuarial, Compliance and Risk Management Functions represent the Key
Functions.
Key roles within the internal control and risk management system are outlined below:
the AMSB is the ultimate responsible for the system of governance and must ensure that the Group Legal Entities’
system of governance and internal control and risk management system are consistent with all the applicable
regulations. To this end, the AMSB, supported by the Key Functions, reassesses the system of governance
adequacy periodically and at least once a year. The AMSB approves the Group Legal Entities’ organizational set-
up, establishes the Key Functions defining their mandate and reporting lines as well as, where appropriate, any
support committee, adopts Group internal control and risk management policies, performs the duties related to the
ORSA, risk concentration and intragroup transactions, approves the ORSA results and based on them defines the
risk appetite;
the Senior Management is responsible for the implementation, maintenance and monitoring of the system of
internal controls and risk management, including risks arising from non-compliance with regulations, in accordance
with the directives of the AMSB;
Key Functions are established at Group level and within the Group Legal Entities:
o the Risk Management Function supports the AMSB and Senior Management in ensuring the
effectiveness of the risk management system and provides advice and support to the main business
decision-making processes;
o the Compliance Function grants that the organizational and the internal procedures are adequate to
manage the risk to incur in administrative or judiciary fines, economic losses or reputational damages as
a consequence of non-compliance with laws, regulations, provisions, and the risk deriving from
unfavourable changes in the law or judicial orientation (compliance risk);
Internal
104 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
o the Actuarial Function coordinates the technical provisions calculation and grants the adequacy of
underlying methodologies, models and assumptions, verifies the quality of the related data and expresses
an opinion on the overall Underwriting Policy and on the adequacy of reinsurance arrangements;
o the Internal Audit Function verifies business processes and the adequacy and effectiveness of controls
in place also proving support and advice.
Heads of Key Functions report to the AMSB.
Group Key Functions collaborate according to a pre-defined coordination model, in order to share information and
create synergies. A strong Parent Company coordination and direction for Key Functions is granted by the so-called
solid reporting lines model established between the head of the Group Key Function and heads of the respective
functions within the operating entities.
Risk Management System
The principles defining the Group risk management system, including strategies, processes and reporting procedures,
are provided in the Risk Management Group Policy3, which is the cornerstone of all risk-related policies and guidelines.
The Risk Management Group Policy covers all risks, on a current and forward-looking basis, and is implemented in a
consistent manner across the Group.
Generali Group’s risk management process is defined in the following phases:
1. Risk identification
The purpose of the risk identification is to ensure that all material risks to which the Group is exposed are properly
identified. To this end, the Risk Management Function interacts with the main business functions and Business Units
in order to identify the main risks, assess their importance and ensure that adequate measures are taken to mitigate
them, according to a sound governance process. Within this process also emerging risks4 related to new risks and
developing trends, characterized by uncertain evolution and often of systemic nature, are considered.
The Group main risks’ identification process is based on the results of the local risk identification processes.
2. Risk measurement
Identified risks are then measured through their contribution to the SCR, complemented by other modelling techniques
deemed appropriate and proportionate to better reflect the Group risk profile. Using the same metric for measuring the
risks and the capital requirements ensures that each quantifiable risk is covered by an adequate amount of capital that
could absorb the loss incurred if the risk materializes. For SCR calculation purposes 1 in 200 years events are
considered.
The SCR is calculated by means of the Group’s PIM5 for financial, credit, life and non-life underwriting risks. Operational
risks are measured by means of standard formula, complemented by qualitative risk assessments6. The PIM provides
an accurate representation of the main risks the Group is exposed to, measuring not only the impact of each risk taken
individually but also their combined impact on the Group’s own funds.
Group PIM methodology and governance are provided in the section C. Solvency Position. Insurance and Re-Insurance
Entities not included in the PIM scope calculate the capital requirement based on standard formula, while other financial
services (e.g. banks, pension funds and asset manager) calculate the capital requirement based on their own specific
sectoral regimes.
3 The Risk Management Group Policy covers all Solvency II risk categories and, in order to adequately deal with each specific risk category and the underlying business processes,
is complemented by the following risk policies: Group Investment Governance Policy; P&C Underwriting and Reserving Group Policy; Life Underwriting and Reserving Group
Policy; Group Operational Risk Management Policy; Liquidity Risk Management Group Policy; other risk-related policies, such as Group Capital Management Policy, Supervisory
Reporting & Public Disclosure Group Policy, Group Risk Concentrations Management Policy, etc.
4 Major details on emerging risk definition are provided in section D. Risk Profile
5 The PIM use for the SCR calculation at Group level has been approved for the insurance entities in Italy, Germany, France, Austria, Switzerland, for the biggest Czech company
(Česká pojišťovna a.s.) and for Spanish companies (Generali Espana S.A. de Seguros y Reaseguros e Cajamar Vida S.A. de Seguros y Reaseguros). For the other entities, the
standard formula is applied. Other financially regulated entities apply local sectorial requirements.
6 An extension plan to cover also Operational risk with the Internal Model is in progress.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 105
Statement
For liquidity risk a Group model is used to calculate the metrics, as defined in section D. Liquidity Risk. Other risks are
assessed by means of quantitative and qualitative techniques.
3. Risk management and control
The risks which the Group is exposed to are managed on the basis of the Group Risk Appetite Framework (Group
RAF), defined by the Board of Directors of Assicurazioni Generali S.p.A. (hereafter, Board of Directors). The Group
RAF defines the level of risk the Group is willing to accept in conducting business and thus provides the overall
framework for embedding risk management into business processes. In particular, the Group RAF includes the
statement of risk appetite, the risk preferences, the risk metrics, the tolerance and the target levels.
The purpose of the Group RAF is to set the desired level of risk on the basis of the Group strategy. The Group RAF
statement is complemented by qualitative assertions (risk preferences) supporting the decision-making processes, risk
tolerances providing quantitative boundaries to limit excessive risk-taking and an operating target range to provide
indications on the solvency level at which the Group aims to operate. Tolerance and target levels are referred to capital
and liquidity metrics.
The Group RAF governance provides a framework for embedding risk management into day-to-day and extraordinary
business operations, control mechanisms and escalation and reporting to be applied in case of risk tolerance breaches.
Should an indicator approach or breach the defined tolerance levels, pre-defined escalation mechanisms are activated.
4. Risk reporting
The purpose of risk reporting is to keep business functions, Senior Management, AMSB and Supervisory Authority
aware and informed on the development of the risk profile, the trends of single risks and the breaches of risk tolerances
on an ongoing basis.
The ORSA process includes the reporting on the assessment of all risks, in a current and forward-looking view. The
ORSA process includes the assessment of all risks, quantifiable and not in terms of capital requirements. Within the
ORSA, stress test and sensitivity analyses are also performed to assess the resilience of the solvency position and risk
profile to changed market conditions or specific risk factors.
Generali Group applies a Group-wide process, which implies that each Group Legal Entity is responsible for the
preparation of its own ORSA Report and the Parent Company coordinates the Group ORSA reporting process.
At Group level, the process is coordinated by the Risk Management Function, supported by other functions for what
concerns own funds, technical provisions and other risks.
The purpose of the ORSA process is to provide the assessment of risks and of the overall solvency needs on a current
and forward-looking basis. The ORSA process ensures an ongoing assessment of the solvency position based on the
Strategic Plan and the Group Capital Management Plan.
The Group ORSA Report, documenting main results of this process, is produced on an annual basis. A non-regular
ORSA Report can also be produced in case of significant changes of the risk profile.
Internal
106 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
C. SOLVENCY POSITION
Solvency Capital Requirement coverage
Risk and capital management are closely integrated processes aimed at managing the Group’s solvency position and
the Group’s risk profile.
The solvency position is defined as the ratio between Group Own Funds (GOF) and Solvency Capital Requirement
(SCR).
The Solvency Ratio7 as at 31 December 2019 is equal to 224%. The increase in respect to previous year (+8 pps) is
mainly attributable to the solid contribution of the capital generation, that has more than compensated the impact of the
foreseeable dividend and the partial redemption of subordinated debt.
The impacts of M&A operations (positive and driven by the disposal of Generali Lebensversicherung AG in the second
quarter of the year) and of regulatory changes (substantially neutral, thanks to the changes occurred in the last quarter)
have more than counterbalanced the negative effect of the variances (mainly driven by the financial markets’
development, despite the positive trend of the last quarter).
SCR coverage 31/12/2019 31/12/2018
(€ million) 45,516 44,191
GOF 20,309 20,407
SCR 224% 217%
Solvency Ratio
Based on last available information for 2019, official figures for 2018
1. Group own funds
In compliance with the Solvency II regulatory requirements, Group own funds are defined as the sum of consolidated
basic own funds (BOF) related to insurance entities, holding and ancillary undertakings attributable to insurance activity
and the own funds attributable to non-insurance entities, defined according to their sectoral regulatory regimes.
Basic own funds, can be further analysed as the sum of the following components:
the excess of assets over liabilities as defined in accordance with art. 75 of Directive 2009/138/EC;
plus subordinated debt eligible in basic own funds;
less foreseeable dividends;
plus additional own funds related to unrealised capital gains from French pension activities arising from the
application of the IORP8 transitory regime9;
less deductions for participations in sectoral entities;
less deduction for regulatory filters applied to non-available items at Group level, restricted own funds items and
shares of the parent company.
The contribution to the Group own funds of each element above listed is detailed in the following table:
7 The SCR, MCR and OF calculations disclosed are based on the last available information. More details on the Solvency Ratio will be disclosed in the Solvency and Financial
Condition Report.
8 IORP stands for Institutions for Occupational Retirement Provisions.
9These additional own funds are authorised by Supervisor for the years between 2016 and 2022, a period during which the proportion of the eligible unrealised capital gains will decrease gradually.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 107
Statement
Group own funds components 31/12/2019 31/12/2018
(€ million) 40,756 38,339
Excess of assets over liabilities 8,259 8,625
-1,513 -1,413
Subordinated debt eligible in basic own funds 696 933
Foreseeable dividend -2,752 -2,089
Unrealised gains on French IORP business -1,011 -1,457
Deductions for participations in sectoral entities 44,434 42,939
Impact of filter for non-availability & minorities and other deductions 1,081 1,253
Basic own funds after deductions 45,516 44,191
Contribution of sectoral entities
GOF
Based on last available information for 2019, official figures for 2018
Commenting on the items contributing to the GOF, it can be noted that:
the increase of the excess of assets over liabilities (€ 2,417 million) is mainly attributable to the contribution of the
total own funds generation of the year (€ 3,525 million) and to the payment of the 2018 dividend made during 2019
(€ -1,413 million);
the reduction of the subordinated debt eligible in basic own funds (€ -366 million) is due to its early redemption
occurred during 2019;
the foreseeable dividend increases to € 1,513 million;
the reduced contribution of the unrealised gains on IORP business stems from their progressive yearly haircut
required by the French regulator;
the higher impact of deductions for participations in sectoral entities (€ -663 million) mainly comes from the higher
value (quoted market price) of the participation in Banca Generali;
the reduction of the impact of filters for minorities and non-available items (€ 446 million) mainly comes from the
reduction of the filters on Surplus Funds after the disposal of Generali Leben;
the reduced contribution of sectoral entities (€ -172 million) reflects the impact of the acquisition (and related
activation of goodwill) of some entities within Multiboutique Europe asset management perimeter.
Reconciliation between IFRS equity and Solvency II excess of assets over liabilities
Under the Solvency II regime, Solvency II excess of assets over liabilities is valuated starting from IFRS shareholders’
equity and by adjusting at fair value consolidated assets and liabilities in accordance with Article 75 and Section 2 of
the Solvency II Directive.
More precisely, these adjustments consist of:
eliminating intangible assets (e.g. goodwill);
revaluating investments not accounted at fair value, such as loans, held to maturity investments and real estate;
accounting for the technical provisions according to Solvency II rules as a sum of Best Estimate of Labilities (BEL)
and risk margin;
including the Solvency II evaluation of financial liabilities and recognising material contingent liabilities;
recalculating the impact of net deferred taxes on the above adjustments.
The following table presents the reconciliation between IFRS shareholders’ equity and Solvency II excess of assets
over liabilities at year-end 2019 and, for comparative purposes, at year-end 2018.
Internal
108 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Reconciliation between IFRS shareholders’ equity and Solvency II excess of assets over 31/12/2019 31/12/2018
liabilities 24,643
-10,712
(€ million) 9,310
22,962
IFRS Shareholders’ Equity (gross of minorities) (*) 29,386 -7,864
38,339
Intangibles -11,236
Mark to Market of Assets 8,936
Mark to Market of Liabilities 20,374
Impact of Net Deferred Taxes -6,704
Excess of assets over liabilities 40,756
Based on last available information for 2019, official figures for 2018
(*) 2019 IFRS Equity adjusted (for illustrative purpose) for the proportional consolidation of China operations within Solvency II
The main elements of reconciliation from the IFRS shareholders’ equity (€ 29,386 million) to the Solvency II excess of
assets over liabilities (€ 40,756 million) are the following:
intangibles (€ -11,236 million) not recognised under Solvency II and including also the IFRS goodwill related to
non-insurance operations;
mark to market of assets: this adjustment (€ 8,936 million) is primarily due to the fair valuation of real estate assets.
The negative mark to market of bonds and other assets is due to the impact of French IORP bonds, equities,
investment fund units and derivatives that are recognised at fair value for IFRS purposes and kept at cost in the
Solvency II balance sheet (the IORP eligible unrealised gains emerge in the movement from excess of assets over
liabilities to basic own funds). The significant change to fair value of participations is mainly driven by the increase
of the quoted market value of Banca Generali;
mark to market of liabilities: this adjustment (€ 20,374 million) is primarily due to net technical provisions (€ 21,385
million deriving from the difference between IFRS and Solvency II valuation);
impact of net deferred taxes (€ -6,704 million) is a consequence of the change to fair value of the items reported
above.
Group own funds tiering
According to Solvency II regulation, Group own funds items are classified into three tiers representing different level of
quality, depending on the ability to absorb losses due to adverse business fluctuations on a going-concern basis and
in the case of winding-up.
The Group’s tiering is described below:
Tier 1 unrestricted own funds includes the following items:
o ordinary share capital and the related share premium account;
o available surplus funds (from German, Austrian and French business);
o reconciliation reserve;
o additional own funds from French pension activities;
Tier 1 restricted includes undated subordinated debt;
Tier 2 includes the remaining part of subordinated debt which is classified as dated;
Tier 3 is composed by net deferred tax assets, which are characterised by lower capital quality being not
immediately available to absorb losses.
The GOF split by tiers is reported in the following table:
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 109
Statement
Group own funds by tiering 31/12/2019 31/12/2018
(€ million) 37,186 35,505
Tier 1 unrestricted 2,271 3,276
Tier 1 restricted 5,987 5,349
Tier 2 71 61
Tier 3 45,516 44,191
GOF
Based on last available information for 2019, official figures for 2018
2019 Group own funds are mainly composed by high-quality capital. Tier 1 counts for about 86.7% of the total (87.8%
in 2018), tier 2 represents 13.2% (12.1% in 2018) and tier 3 only 0.2% of the total (0.1% in 2018). The minor changes
in the tier 1 restricted and tier 2 mainly reflect the liability management operations occurred during 2019.
No eligibility filters are triggered thanks to the high-quality of the capital-tiering.
2. Solvency Capital Requirement
The SCR covers underwriting, financial, credit and operational risks as follows:
SCR split by risk
(€ million) 31/12/2019 31/12/2018
Impact (%) Impact (%)
Total Total
100% 31,719 100%
SCR before diversification 30,997 47% 13,469 42%
23% 8,218 26%
Financial risk (1) 14,678 9% 3,437 11%
1% 1%
Credit risk (2) 7,045 13% 322 13%
4,066
Life underwriting risk 2,709 - -
7% - 7%
Health underwriting risks 305 2,206
Non-life underwriting risk 4,071 -6,863
24,855
Intangible risk - -5,560
19,296
Operational risk 2,188 1,111
20,407
Diversification benefit -6,392
SCR after diversification 24,605
Tax absorption -5,496
SCR excl. other regimes 19,108
Other regimes (3) 1,201
SCR 20,309
Based on last available information for 2019, official figures for 2018
(1) Financial risk includes spread risk for standard formula entities
(2) Credit risk includes default risk, spread widening and rating migration risks for PIM entities
(3) Within this category other regulated financial entities are included (e.g. IORP, banks etc.)
The above SCR breakdown highlights that:
financial and credit risks, account for the 70% of the total SCR before diversification, due to the predominance of
traditional life business;
life and non-life underwriting risks, accounting for respectively 9% and 13% of the total SCR before diversification;
within this CAT risks remain limited thanks to a comprehensive reinsurance program;
Internal
110 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
health underwriting risk deriving from standard formula based entities accounting for 1% of the total SCR before
diversification;
operational risks contribute to the Group SCR for 7%. This contribution is calculated using the standard formula.
Each risk category is further detailed in the section D. Risk Profile.
Minimum Capital Requirement coverage
In addition to SCR coverage, the Group calculates the Minimum Consolidated Group SCR (MCR) coverage. The MCR
calculation is required to determine the minimum level of capital, under which the Group would be exposed to an
unacceptable level of risk when allowed to continue its operations.
The Minimum Solvency Ratio10 stands at 261% as at 31 December 2019, with an increase of +1 p.p. in respect of
previous year. In the following table, the MCR coverage is reported.
MCR Coverage 31/12/2019 31/12/2018
(€ million) 41,561 40,656
GOF to meet the MCR 15,927 15,639
MCR 261% 260%
Ratio of GOF to MCR
Based on last available information for 2019, official figures for 2018
To define MCR coverage, stricter own fund eligibility rules are applied compared to the ones previously used for the
SCR11. In the following table, the split by tiers of the own funds covering the MCR is reported:
GOF to meet the MCR by tiering 31/12/2019 31/12/2018
(€ million) 36,105 34.252
Tier 1 unrestricted12 2,271 3.276
Tier 1 restricted 3,185 3.128
Tier 2 41,561 40,656
GOF to meet MCR
Based on last available information for 2019, official figures for 2018
Group Partial Internal Model (Group PIM)
The Group PIM is considered to be the most appropriate way of assessing the Group SCR. It represents the best way
of capturing the risk profile of the entire Group and of the Legal Entities in scope in terms of granularity, calibration and
correlation of the various risk factors.
The Group PIM is structured around a Risk Map, which contains all quantifiable risks that Generali Group has identified
as relevant to its business, allowing for the calculation of the SCR at single risk level and at higher aggregation levels.
10 The SCR, MCR and OF calculations disclosed are based on the last available information. More details on the Solvency Ratio will be disclosed in the Solvency and Financial
Condition Report.
11 The amounts of tier 2 and tier 3 items eligible to cover the MCR are subject to stricter quantitative limits. The eligible amount of tier 1 items shall be at least 80% of the MCR;
the same limitation on subordinated liabilities and preference shares is set. The eligible amounts of tier 2 items shall not exceed 20% of the MCR. No tier 3 items are allowed to
cover the Minimum Capital Requirement. No capital from sectoral is considered
12 Tier 1 includes also available capital of sectoral entities and the unrealised gains and losses on French Institutions for Occupational Retirement Provision (IORP) business as
agreed with the Group Supervisory Authority.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 111
Statement
1. Group PIM Methodology
In implementing the PIM, the Group has adopted the so-called Monte-Carlo approach with proxy functions to determine
the Probability Distribution Forecast (PDF) of the changes in the basic own funds over a 1-year horizon.
The own funds’ probability distribution allows to determine the potential losses at any percentile for risks in scope and,
in particular, the SCR corresponding to the 99.5th percentile. The risk measure applied is the VaR (Value at Risk).
Monte-Carlo methods are used in the industry to obtain sound numerical results using the embedded characteristics
of repeated random sampling to simulate the more complex real-world events. Proxy functions are mathematical
functions that mimic the interaction between risk drivers and insurance portfolios to obtain the most reliable results.
The calibration procedure involves quantitative and qualitative aspects. The aggregation process uses advanced
mathematical techniques following market best practices. Dependencies among risks are defined through the use of a
so-called Copula approach that simulates the interaction between several risk drivers (elements that mimic the
underlying sources of risk) throughout the simulations generated by the Monte-Carlo stochastic method.
2. Group PIM Governance
Governance and processes regarding the Group PIM are defined in the Group Internal Model Governance Policy,
ensuring that:
models and components are appropriate for their purpose;
procedures are in place to design, implement, use and validate new models and model changes;
the appropriateness of models on an ongoing basis is verified.
To rule the activities related to the Internal Model developments necessary to ensure its appropriateness over time and,
more in general, to support the Internal Model change process, the Group Internal Model Change Policy has been also
defined with the aim to specify roles and responsibilities in the implementation of major and minor changes.
A dedicated committee, the Internal Model Committee, has been established to approve Group PIM calibrations, to
support the Group Chief Risk Officer (GCRO) in the decision-making process on Group PIM developments or model
changes and to control the full model lifecycle, assuring proper compliance with the Group Internal Model Governance
Policy. This Committee is chaired by the Model Design Authority, in the person of the Head of Group Enterprise Risk
Management, responsible for ensuring the overall consistency and reliability of the Group PIM. The members of the
Internal Model Committee are all the Model Owners and the Model Design Authority and possibly further participants
required by the Model Design Authority.
The GCRO defines the processes and controls to ensure the ongoing appropriateness of the design and operations of
the Group PIM, so that it continues to appropriately reflect the Group risk profile. The GCRO is also responsible for
defining the methodology of each model component, based on the Group Internal Model Committee’s proposals, as
well as for the results’ production and ultimately for submitting the relevant Internal Model supporting documentation to
the Board of Directors and to the Risk and Control Committee.
The Board of Directors, assisted by the Risk and Control Committee, ensures the ongoing appropriateness of the
design and operations, the ongoing compliance of the Group PIM and also that the Group PIM continues to
appropriately reflect the risk profile of the Group.
These roles are generally mirrored within the organizational structure of each Group Legal Entity within PIM scope.
No material changes have occurred during the period with reference to the PIM governance.
3. Group PIM Validation
The Group PIM is subject to validation review on an ongoing basis, which aims to gain independent assurance of the
completeness, robustness and reliability of the processes and results of the Group PIM as well as their compliance
with the Solvency II regulatory requirements.
The validation process follows the principles and procedures defined within the Group Internal Model Validation Policy
and related guidelines.
Internal
112 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
In particular, the validation outputs are designed to support Senior Management and Board of Directors in
understanding the appropriateness of the Group PIM, including areas of weaknesses and limitations, especially with
regards to its use.
To ensure an adequate level of independence, the resources performing the validation activities are not involved in the
development or operation of the Group PIM.
Within the validation process, also results obtained during previous validation exercises are considered, as well as
developments within internal and external business environment, financial market trends and Group PIM changes. The
Internal Model validation process excludes those aspects covered by the assurance work of the Group Actuarial
Function (i.e. technical provisions and related IT systems, actuarial platforms and their governance).
Furthermore, the validation process also serves as an incentive mechanism to ensure timely and accurate incorporation
of modelling refinements.
In order to warrant the appropriateness of the array of elements contained within the Group PIM, the validation covers
both the quantitative and qualitative aspects of the Internal Model and is therefore not limited to the calculation engine
and methodology. Other important items such as data quality, documentation and uses of the Internal Model are
validated accordingly.
The validation process is carried out on regular annual basis and when requested by the Senior Management or Board
of Directors.
D. RISK PROFILE
Life Underwriting Risk
Life and health underwriting risks derive from the Group’s core insurance business in the life and health segment. The
major part of the business and the related risks derive from direct portfolio underwritten by the Group. Health business
represents a minor component of the portfolio.
Notes, Details on insurance and investment contracts, for Group’s life underwriting business key figures
The life portfolio is given by traditional business, which mainly includes insurance with profit participation, and unit-
linked products. The prevailing component of traditional business includes products with insurance coverage linked to
the policyholders’ life and health. It also includes pure risk covers, with related mortality risk, and some annuity portfolios,
with the presence of longevity risk. The vast majority of the insurance coverages include legal or contractual
policyholder rights to fully or partly terminate, surrender, decrease, restrict or suspend the insurance cover or permit
the insurance policy to lapse, or to fully or partially establish, renew, increase, extend or resume the insurance or
reinsurance cover. For these reasons, the products are subject to lapse risk.
Life and health underwriting risks can be distinguished in biometric and operating risks embedded in the life and health
insurance policies. Biometric risks derive from the uncertainty in the assumptions regarding mortality, longevity, health,
morbidity and disability rates taken into account in the insurance liability valuations. Operating risks derive from the
uncertainty regarding the amount of expenses and the adverse exercise of contractual options by policyholders. Policy
lapse is the main contractual option held by the policyholders, together with the possibility to reduce, suspend or partially
surrender the insurance coverage.
Life and health underwriting risks are:
mortality risk, defined as the risk of loss, or of adverse change in the value of insurance liabilities, resulting from
changes in mortality rates, where an increase in mortality rates leads to an increase in the value of insurance
liabilities. Mortality risk also includes mortality catastrophe risk, resulting from the significant uncertainty of pricing
and provisioning assumptions related to extreme or irregular events;
longevity risk that, similarly to mortality, is defined as the risk resulting from changes in mortality rates, where a
decrease in mortality rates leads to an increase in the value of insurance liabilities;
disability and morbidity risks derive from changes in the disability, sickness, morbidity and recovery rates;
lapse risk is linked to the loss or adverse change in liabilities due to a change in the expected exercise rates of
policyholder options. The relevant options are all legal or contractual policyholder rights to fully or partly terminate,
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 113
Statement
surrender, decrease, restrict or suspend insurance cover or permit the insurance policy to lapse. Mass lapse events
are also considered;
expense risk results from changes in the expenses incurred in servicing insurance or reinsurance contracts;
health risk results from changes in health claims and also includes health catastrophe risk (for PIM entities).
In addition to the risks above, the Group Risk Map includes also the going concern reserve risk, a German business
specific risk that refers to misestimation of new business assumptions.
The approach underlying the life underwriting risk measurement is based on the calculation of the loss resulting from
unexpected changes in biometric and/or operating assumptions. Capital requirements for life underwriting risks are
calculated on the basis of the difference between the insurance liabilities before and after the application of the stress.
Life underwriting risks are measured by means of the Group PIM13.
The SCR for life underwriting risk amounts to € 2,709 million before diversification (equal to 9% of total SCR before
diversification). This is mainly given by expense14 risk, followed by lapse and longevity risks. In terms of contribution to
the risk profile, it is to be noted that life underwriting risks are well diversified with other risk categories. The overall
contribution to the risk profile therefore remains limited.
Life underwriting risk management is embedded in the key underwriting processes being:
product development and accurate pricing;
ex-ante selection of risks through underwriting;
setting and monitoring of operative underwriting limits;
portfolio management and monitoring.
Product pricing consists in setting product features and assumptions regarding expenses, financial, biometric and
policyholders’ behaviour to allow the Group Legal Entities to withstand any adverse development in the realization of
these assumptions.
For savings business, this is mainly achieved through profit testing, while for protection business with a biometric
component, it is achieved by setting prudent assumptions.
Lapse risk, related to voluntary withdrawal from the contract, and expense risk, related to the uncertainty around the
expenses that the Group expects to incur in the future, are evaluated in a prudential manner in the pricing of new
products. This evaluation is taken into account in the construction and profit testing of a new tariff, considering the
underlying assumptions derived from the Group’s experience.
For insurance portfolios with a biometric risk component, comprehensive reviews of the mortality experience are
compared with expected mortality of the portfolio, determined according to the most up-to-date mortality tables available
in each market. To this end, mortality by sex, age, policy year, sum assured, and other underwriting criteria are taken
into consideration to ensure mortality assumptions remain adequate and avoid the risk of misestimating for the next
underwriting years.
The same annual assessment of the adequacy of the mortality tables used in the pricing is performed for longevity risk.
In this case, not only biometric risks are considered but also the financial risks related to the minimum interest rate
guarantee and any potential mismatch between the liabilities and the corresponding assets.
As part of the underwriting process, Generali Group adopts underwriting guidelines. Risk Management Function
reviews implications of new lines of business/products on the Group risk profile.
Moreover, a particular emphasis is placed on the underwriting of new contracts with reference to medical, financial and
moral hazard risks. The Group has defined clear underwriting standards through manuals, forms, medical and financial
underwriting requirements. For insurance riders, which are most exposed to moral hazard, maximum insurability levels
are also set, lower than those applied for death covers. In order to mitigate these risks, policy exclusions are also
defined.
Regular risk exposure monitoring and adherence to the operative limits, reporting and escalation processes are also in
place, allowing for potential remediation actions to be undertaken.
13 For the scope of the Group PIM please refer to section A. Executive Summary. Entities not included in the Group PIM scope calculate the capital requirement based on standard
formula.
14 Including also the Going Concern reserve.
Internal
114 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Finally, reinsurance represents the main risk mitigating technique. The Parent Company acts as core reinsurer for the
Group Legal Entities and cedes part of the business to external reinsurers.
The Group reinsurance strategy is developed consistently with the risk appetite and with the risk preferences defined
in the Group RAF, and with the reinsurance market cycle. The definition of a reinsurance arrangement is based on the
process managed by Group Reinsurance Function in constant interaction with Risk Management and Actuarial
Functions.
Non-Life Underwriting Risk
Non-life underwriting risks arise from the Group’s insurance business in the P&C segment.
Management Report, Property&Casualty segment indicators by country, for volumes of premiums and related
geographic breakdown
Notes, Details on insurance and investment contracts, for technical provisions
Non-life underwriting risks include the risk of underestimating the frequency and/or severity of the claims in defining
pricing and reserves (respectively pricing risk and reserving risk), the risk of losses arising from extreme or exceptional
events (catastrophe risk) and the risk of policyholder lapses from P&C insurance contracts (lapse risk). In particular:
pricing and catastrophe risks derive from the possibility that premiums are not sufficient to cover future claims, also
in connection with extremely volatile events and contract expenses;
reserving risk relates to the uncertainty of the claims reserves (in a one-year time horizon);
lapse risk arises from the uncertainty of the underwriting profits recognised in the premium provisions.
Non-life underwriting risks are measured by means of the Group PIM15. For the majority of risks assessed through the
PIM, the assessments are based on in-house developed models and external models that are primarily used to assess
the catastrophic events, for which broad market experience is considered beneficial.
The SCR for non-life underwriting risk amounts to € 4,071 million before diversification (equal to 13% of total SCR
before diversification). This is mainly given by reserve and pricing risks, followed by CAT risk. Non-life lapse risk
contributes only for a marginal amount to the risk profile.
Moreover, the Group uses additional indicators for risk concentrations. This is specifically the case for catastrophe risks
and commercial risks, which are both coordinated at central level as they generally represent a key source of
concentration.
In terms of CAT risk, the Group’s largest exposures are earthquakes in Italy, European floods and European windstorms.
Less material catastrophe risks are also taken into account and assessed by means of additional scenario analysis.
At the same time, there is a constant on-going improvement to consider risk metrics within profitability metrics and to
use risk adjusted KPIs in decision making processes.
Based on the Group RAF, P&C risk selection starts with an overall proposal in terms of underwriting strategy and
corresponding business selection criteria. During the strategic planning process, targets are established and translated
into underwriting limits to ensure business is underwritten according to the plan. Underwriting limits define the maximum
size of risks and classes of business that Group Legal Entities shall be allowed to write without seeking any additional
or prior approval. The limits may be set based on value, risk type, product exposure or class of occupancy. The purpose
of these limits is to attain a coherent and profitable book of business founded on the expertise of each Legal Entity.
Additional indicators such as relevant exposures, risk concentration and risk capital figures are used for the purpose of
P&C underwriting risk monitoring. The indicators are calculated on a quarterly basis to ensure alignment with the Group
RAF.
15 For the scope of the Group PIM please refer to section A. Executive Summary. Entities not included in the Group PIM scope calculate the capital requirement based on standard
formula.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 115
Statement
Reinsurance is the key mitigating technique for balancing the P&C portfolio. It aims to optimize the use of risk capital
by ceding part of the underwriting risk to selected counterparties, whilst simultaneously minimizing the credit risk
associated with such operations.
The P&C Group Reinsurance Strategy is developed consistently with the risk appetite and the risk preferences defined
in the Group RAF on one side and taking into account the reinsurance market on the other.
The Group has historically preferred traditional reinsurance as a tool for mitigating catastrophe risk resulting from its
P&C portfolio, adopting a centralized approach where the placement of reinsurance towards the market is managed
through a central Group Reinsurance Function.
The Group aims at diversifying its cessions to reinsurers to avoid excessive concentrations, to optimize its reinsurance
purchases, including from a pricing perspective, and to continuously develop know-how in the most innovative risk
transfer techniques. For this reason, part of the Italian earthquake, European flood and European windstorm exposures
were carved out from the traditional catastrophe reinsurance program and placed in the Insurance Linked Securities
(ILS) market. This innovative issuance was completed successfully and at competitive terms.
Alternative risk transfer solutions are continuously analysed and implemented. As an example, in addition to traditional
reinsurance, a protection is in place to reduce the impact of an unexpectedly high loss ratio for the Group motor liability
portfolio.
Financial Risk and Credit Risk
The Group invests collected premiums in a wide variety of financial assets, with the purpose of honouring future
obligations to policyholders and generating value for its shareholders.
As a result, the Group is exposed to the financial risks driven by either:
invested assets not performing as expected because of falling or volatile market prices;
reinvested proceeds of existing assets being exposed to unfavourable market conditions, such as lower interest
rates.
Generali Group traditional life savings business is long-term in nature; therefore, the Group holds mostly long-term
investments which have the ability to withstand short-term decreases and fluctuations in the market value of assets.
Nonetheless, the Group manages its investments in a prudent way according to the so-called Prudent Person
Principle16, and strives to optimize the return of its assets while minimizing the negative impact of short-term market
fluctuations on its solvency position.
Under Solvency II, the Group is also required to hold a capital buffer, with the purpose of maintaining a sound solvency
position even in the circumstances of adverse market movements.
To ensure a comprehensive management of the impact of financial and credit risks on assets and liabilities, the Group
Strategic Asset Allocation (SAA) process needs to be liability-driven and strongly interdependent with insurance-
specific targets and constraints. For this reason, the Group has integrated the Asset Liability Management (ALM) and
the Strategic Asset Allocation (SAA) within the same process.
The aim of the ALM&SAA process is to define the most efficient combination of asset classes which, according to the
Prudent Person Principle, maximizes the investment contribution to value creation, taking into account solvency,
actuarial and accounting indicators. The aim is not just to mitigate risks but also to define an optimal risk-return profile
that satisfies both the return target and the risk appetite of the Group over the business planning period.
The assets’ selection is performed by taking into consideration the risk profile of the liabilities held in order to satisfy
the need to have appropriate and sufficient assets to cover the liabilities. This selection process aims to guarantee the
security, quality, profitability and liquidity of the overall portfolio, providing an adequate diversification of the
investments.
The asset portfolio is then invested and rebalanced according to the asset class and duration weights. The main risk
mitigation techniques used by the Group are liability-driven management of the assets and regular use of rebalancing.
The liability driven investment helps granting a comprehensive management of assets whilst taking into account the
liability structure; while, at the same time, the regular rebalancing redefines target weights for the different asset classes
16 The Prudent Person Principle set out in Article 132 of Directive 2009/138/EC requires the company to only invest in assets and instruments whose risks can be identified,
measured, monitored, controlled and reported as well as taken into account in the company overall solvency needs. The adoption of this principle is ruled in the Group Investment
Governance Policy (GIGP).
Internal
116 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
and durations, alongside the related tolerance ranges defined as investment limits. This technique contributes to an
appropriate mitigation of financial risks.
ALM&SAA activities aim at ensuring the Group holds sufficient and adequate assets to reach defined targets and meet
liability obligations. For this purpose, analyses of the asset-liability relationship under a range of market scenarios and
expected/stressed investment conditions are undertaken.
The Group works to ensure a close interaction between the Investment, Finance (incl. Treasury), Actuarial and Risk
Management Functions to secure that the ALM&SAA process remains consistent with the Group RAF, the strategic
planning and the capital allocation mechanisms. The annual SAA proposal:
defines target exposure and limits for each relevant asset class, in terms of minimum and maximum exposure
allowed;
embeds the asset and liabilities duration mismatches permitted and potential mitigation actions that can be enabled
on the investment side.
Regarding specific asset classes such as (i) private equity, (ii) alternative fixed income, (iii) hedge funds, (iv) derivatives
and structured products, the Group has mainly centralized their management and monitoring. These kinds of
investments are subject to accurate due diligence in order to assess their quality, the level of risk related to the
investment and its consistency with the approved liability-driven SAA.
The Group also uses derivatives with the aim of mitigating the risk present in the asset and/or liability portfolios. The
derivatives help the Group to improve the quality, liquidity and profitability of the portfolio, according to the business
planning targets. Operations in derivatives are likewise subject to a regular monitoring and reporting process.
In addition to the risk tolerance limits set on the Group solvency position within the Group RAF, the current Group risk
monitoring process is also integrated by the application of the Investments Risk Group Guidelines (IRGG). The IRGG
include general principles, quantitative risk limits (with a strong focus on credit and market concentration), authorization
processes and prohibitions that Group entities need to comply with.
Financial Risk
Within the life business, the Group assumes a considerable financial risk when it guarantees policyholders with a
minimum return on the accumulated capital over a potentially long period. If the yields generated by the financial
investments are lower than the guaranteed return during this period, then the Group shall compensate the shortfall for
those contractual guarantees. In addition, independently on the achieved asset returns, the Group has to secure that
the value of the financial investments backing the insurance contracts remains sufficient to meet the value of its
obligations.
Unit-linked business typically does not represent a source of financial risk for insurers (except when there are
guarantees embedded in the contracts), although market fluctuations typically have profitability implications.
Regarding P&C business, the Group has to ensure that the benefits can be paid on a timely basis when claims occur.
In more detail, the Group is exposed to the following generic financial risk types:
equity risk deriving from the risk of adverse changes in the market value of the assets or in the value of liabilities
due to changes in the level of equity market prices which can lead to financial losses;
equity volatility risk deriving from changes in the volatility of equity markets. Exposure to equity volatility is typically
related to equity option contracts or to insurance products sold with embedded guarantees whose market
consistent value is sensitive to the level of equity volatility;
interest rate risk, defined as the risk of adverse changes in the market value of the assets or in the value of liabilities
due to changes in the level of interest rates in the market. The Group is mostly exposed to downward changes in
interest rates as lower interest rates increase the present value of the promises made to policyholders more than
the value of the assets backing those promises. As a result, it may become increasingly costly for the Group to
maintain its promises, thereby leading to financial losses. Linked to that, interest rate volatility risk derives from
changes in the level of interest rate implied volatilities. This comes, for example, from insurance products sold with
embedded minimum interest rate guarantees whose market consistent value is sensitive to the level of interest
rates volatility;
property risk deriving from changes in the level of property market prices. Exposure to property risk arises from
property asset positions;
currency risk deriving from adverse changes in exchange rates;
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 117
Statement
concentration risk deriving from asset portfolio concentration to a small number of counterparties.
Notes, Investments, for further details on the Group’s key figures and details on financial assets
Financial risks are measured by means of the Group PIM17. In particular, losses are modelled as follows:
equity risk is modelled by associating each equity exposure to a market index representative of its industrial sector
and/or geography. Potential changes in market value of the equities are then estimated based on past shocks
observed for the selected indices;
equity volatility risk models the impact that changes in the equity implied volatility can have on the market values
of derivatives;
interest rate risk models the changes in the term structure of the interest rates for various currencies and the impact
of these changes on any interest rate sensitive asset and also on the value of future liability cash-flows alike;
interest rate volatility risk models the impact that the variability in interest rate curves can have on both the market
value of derivatives and the value of liabilities sensitive to interest rate volatility assumptions (such as minimum
pension guarantees);
property risk models the returns on a selection of published property investment indices and the associated impact
on the value of the Group’s property assets. These are mapped to various indices based on property location and
type of use;
for currency risk, the plausible movements in exchange rate of the reporting currency of the Group in respect to
foreign currencies are modelled, as well as the consequent impact on the value of asset holdings not denominated
in the domestic currency;
for concentration risk the extent of additional risk borne by the Group due to insufficient diversification in its equity,
property and bond portfolios is assessed.
The SCR for financial risk amounts to € 14,678 million before diversification (equal to 47% of total SCR before
diversification). This is mainly driven by equity risk, followed by interest rate, property and currency risk.
Credit Risk
The Group is exposed to credit risks related to invested assets and those arising from other counterparties (e.g. cash,
reinsurance).
Credit risks include the following two categories:
spread widening risk, defined as the risk of adverse changes in the market value of debt security assets. Spread
widening can be linked either to the market’s assessment of the creditworthiness of the specific obligor (often
implying also a decrease in rating) or to a market-wide systemic reduction in the price of credit assets;
default risk, defined as the risk of incurring in losses because of the inability of a counterparty to honour its financial
obligations.
Notes, Investments, for the overall volume of assets subject to credit risk please refer to the volumes of bonds and
receivables (including reinsurance recoverable)
Credit risks are measured by means of the Group PIM18. In particular:
credit spread risk models the possible movement of the credit spread levels for bond exposures of different rating,
industrial sector and geography based on the historical analysis of a set of representative bond indices. Spread-
sensitive assets held by the Group are associated with specific indices based on the characteristics of their issuer
and currency;
default risk models the impact of default of bond issuers or counterparties to derivatives, reinsurance and other
transactions on the value of the Group’s assets. Distinct modelling approaches have been implemented to model
default risk for the bond portfolio (i.e. credit default risk) and the risk arising from the default of counterparties in
cash deposits, risk mitigation contracts (such as reinsurance), and other types of exposures (i.e. counterparty
default risk).
17 For the scope of the Group PIM please refer to section A. Executive Summary. Entities not included in the Group PIM scope calculate the capital requirement based on standard formula.
18 For the scope of the Group PIM please refer to section A. Executive Summary. Entities not included in the Group PIM scope calculate the capital requirement based on standard formula.
Internal
118 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
The Group PIM’s credit risk model evaluates spread risk and default risk also for sovereign bond exposures. This
approach is more prudent than the standard formula, which treats bonds issued by EU Central Governments and
denominated in domestic currency as exempt from credit risk.
The SCR for credit risk amounts to € 7,045 million before diversification (equal to 23% of total SCR before
diversification). Credit risk is mostly driven by spread risk on fixed income securities, while the contribution to SCR of
the counterparty risk (including reinsurance default) remains more limited.
The credit risk assessment is based on the credit rating assigned to counterparties and financial instruments. To limit
the reliance on external rating assessments provided by rating agencies, an internal credit rating assignment framework
has been set within the Risk Management Group Policy.
Within this framework additional rating assessments can be performed at counterparty and/or financial instrument level
and ratings need to be renewed at least annually. This process applies even where an external rating is available.
Moreover, additional assessments shall be performed each time the parties involved in the process possess any
information, coming from reliable sources, that may affect the creditworthiness of the issuer/issues.
The internal credit rating assignment system at counterparty level is based on the evaluation of quantitative metrics
and qualitative elements. The risk elements that are considered, among others, are referred to the assessment of the
riskiness of the sector to which they belong, of the country in which the activities are carried out and of the controlling
group, where present. At financial instrument level, instead, the risk of its issuer is one of the main elements considered,
including the peculiarities of the instrument itself.
The most important strategy for the mitigation of credit risk used by the Group is the application of a liability-driven SAA,
which can limit the impact of the market spread volatility. In addition, the Group is actively mitigating counterparty
default risk by using, where feasible like e.g. for derivative transactions, the collateralisation strategy that strongly
alleviates the losses that the Group might suffer as a result of the default of one or more of its counterparties.
Operational Risk
Operational risk is the risk of loss arising from inadequate or failed internal processes, personnel or systems, or from
external events. The definition includes the compliance risk and financial reporting risk and excludes the strategic and
reputational risks.
Operational risks are measured following the standard formula approach.
Although ultimate responsibility for managing the risk sits in the first line, the so-called risk owners, the Risk
Management Function with its methodologies and processes ensures an early identification of the most severe threats
across the Group. In doing so, it provides management at all levels with a holistic view of the broad operational risk
spectrum that is essential for prioritizing actions and allocating resources in most risk related critical areas.
The target is achieved by adopting methodologies and tools in line with industry best practices and by establishing a
strong dialogue with the first line of defence.
Since 2015 the Group has been exchanging operational risk data, properly anonymized, through the Operational Risk
data eXchange Association (ORX), a global association of operational risk practitioners where main industry players
also participate. The aim is to use the data to improve the risk management and to anticipate emerging trends. In
addition, since losses are collected by the first line, the process contributes to create awareness among the risk owners
upon risks that actually impact the Group. In this sense, a primary role is played by Group-wide forward-looking
assessments that aim to estimate the evolution of the operational risk exposure in a given time horizon, supporting in
the anticipation of potential threats, in the efficient allocation of resources and related initiatives.
Based on the last assessments, the most relevant scenarios at Group level are related to cyber-attacks, customer data
privacy, product flaws, distribution, money laundering, international sanctions and terrorism financing.
To further strengthen the risk management system and in addition to the usual risk owners’ responsibilities, the Group
established specialised units within the first line of defence with the scope of dealing with specific threats (e.g. cyber
risk, fraud, financial reporting risk) and that act as a key partner for the Risk Management Function.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 119
Statement
Another benefit of this cooperation is constituted by a series of risk management measures triggered across the Group
as a result of control testing, assessments and collection of operational risk events.
An example is the creation of a dedicated unit for the management and coordination of the Group-wide IT Security that
steers the evolution of the IT security strategy and operating model, ensuring a timely detection and fixing of the
vulnerabilities that may affect the business. This initiative helps the Group to better cope with the growing threat
represented by cyber risk.
The SCR for operational risk amounts to € 2,188 million before diversification (equal to 7% of total SCR before
diversification). The SCR for operational risk is calculated based on standard formula.
Other Material Risks
Liquidity Risk
Liquidity risk is defined as the uncertainty, emanating from business operations, investment or financing activities, over
the ability of the Group and its Legal Entities to meet payment obligations in a full and timely manner, in a current or
stressed environment.
The Group is exposed to liquidity risk from its insurance and reinsurance operating activity, due to the potential
mismatches between the cash inflows and the cash outflows deriving from the business.
Liquidity risk can also stem from investing activity, due to potential liquidity gaps deriving from the management of the
asset portfolio as well as from a potentially insufficient level of liquidity in case of disposals (e.g. capacity to sell
adequate amounts at a fair price and within a reasonable timeframe).
Liquidity risk from financing activity is related to the potential difficulties in accessing external funding or in paying
excessive financing costs.
The Group can be also exposed to liquidity outflows related to issued guarantees, commitments, derivative contract
margin calls or regulatory constraints.
The Group liquidity risk management framework relies on projecting cash obligations and available cash resources
over a 12-month time horizon, to monitor that available liquid resources are at all times sufficient to cover cash
obligations that will become due in the same horizon.
A liquidity risk metric (liquidity indicator) has been defined to monitor the liquidity situation of each Group insurance
Legal Entity on a regular basis. Such metric is forward-looking, i.e. it is based on projections of cash flows, stemming
both from assets and liabilities and on the assessment of the level of liquidity and ability to sell of the asset portfolio at
the beginning of period.
The metric is calculated under both the so-called base scenario, in which the values of cash flows and assets
correspond to those projected according to each Legal Entity’s Strategic Plan scenario, and the so-called liquidity stress
scenario, in which the projected cash inflows and outflows and the market price of assets are calculated to take into
account unlikely but plausible circumstances that would adversely impact the liquidity of each Group insurance Legal
Entity.
Liquidity risk limits have been defined in terms of value of the above-mentioned liquidity indicator. The limit framework
is designed to ensure that each Group Legal Entity holds an adequate buffer of liquidity in excess of the amount required
to withstand the adverse circumstances described in the stress scenario.
The Group has defined a metric to measure liquidity risk at Group level, based on the liquidity metric calculated at Legal
Entity level. The Group manages expected cash inflows and outflows in order to maintain a sufficient available level of
liquid resources to meet its medium-term needs. The Group metric is forward-looking and is calculated under both the
base and liquidity stress scenario; liquidity risk limits have been defined in terms of value of the above-mentioned Group
liquidity risk indicator.
The Group has established clear governance for liquidity risk management, including specific limit setting and the
escalation process in case of limit breaches or other liquidity issues.
The principles for liquidity risk management designed at Group level are fully embedded in strategic and business
processes, including investments and product development.
Internal
120 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Since the Group explicitly identifies liquidity risk as one of the main risks connected to investments, indicators as cash
flow duration mismatch are embedded in the SAA process. Investment limits are set to ensure that the share of illiquid
assets remains within the level that does not impair the Group’s asset liquidity.
The Group has defined in its Life and P&C Underwriting and Reserving Group Policies the principles to be applied to
mitigate the impact on liquidity from surrenders in life business and claims in non-life business.
Reputational and Emerging Risk
Although not included in the calculation of SCR, the following risks are also assessed:
reputational risk referring to potential losses arising from deterioration or a negative perception of the Group among
its customers and other stakeholders. Within the Reputational Risk Group Guideline, reputational risks are mostly
considered second order risks, directly referred to ESG19 related transactions or consequent to operational risks;
emerging risks arising from new trends or evolving risks which are difficult to perceive and quantify, although
typically systemic. The most important are the environmental trends and climate change, technological changes
and digitalization, geopolitical developments and demographics and social changes. For the identification and the
assessment of these risks and to raise the awareness on the implications of the emerging trends, the Group Risk
Management Function engages with a dedicated network, including specialists from business functions (e.g. Group
Life & Health Insurance, Group P&C, Group Reinsurance, Group Investments, Asset & Wealth Management,
Group Strategic Planning & Control, Group Data & Digital, Group Integrated Reporting, Group Chief Marketing &
Customer Officer, Group Strategy and Group Sustainability and Social Responsibility given the relevant
interrelation with ESG factors). In 2019 a dedicated Climate Change Risk Project has been launched with the
purpose to implement a climate risk management framework.
The Group also participates to the Emerging Risk Initiative (ERI), a dedicated working group of the CRO Forum,
which involves the CROs of the main European groups. Within ERI emerging risks common to the insurance
industry are discussed and Position Papers on selected emerging risks are published. ERI Paper 2019 “Medical
Advances – Risks and Opportunities for the (re)insurance industry” as well as previous papers are available on
the CRO Forum website.
Challenges and Opportunities of the market context, p. 18, for more details on climate change, demographics and
digitalization
www.generali.com/what-we-do/emerging-risks for more details on emerging risks
Sensitivity Analysis
In addition to the calculation of the Solvency Capital Requirement, the Group regularly performs sensitivity analyses of
the variability of its Solvency Ratio to changes in specific risk factors. The aim of these analyses is to assess the
resilience of the Group capital position to the main risk drivers and evaluate the impact of a wide range of shocks.
For this purpose, several sensitivity analyses have been performed as at 31 December 2019, in particular:
increase and decrease of interest rates by 50bps;
increase of Italian government bonds spread (Buoni del Tesoro Poliennali - BTP) by 100bps;
increase of corporate bonds spread by 50bps;
increase and decrease of equity values by 25%.
The changes in terms of percentage points in respect to baseline scenario as at 31 December 2019 (Solvency Ratio
equal to 224%) are the following:
19 ESG stands for Environmental, Social and Governance.
Internal
We, Generali Our performance Risk Report Outlook Consolidated Appendices to the Consolidated
Non-Financial Statement
Management Report Financial 121
Statement
Sensitivity Analysis Interest Interest BTP Corporate Equity Equity
Delta on Solvency Ratio rates rates spread spread +25% -25%
+100bps +50bps
+50bps -50bps +5 p.p. -7 p.p.
-15 p.p. +1 p.p.
+12 p.p. -14 p.p.
Based on last available information for 2019
During 2020, following EIOPA’s review of the Solvency II risk free rates term structure, the UFR (Ultimate Forward
Rate) will be further modified (for Euro, the UFR will be decreased by 15bps): the anticipated impact of such change
as at 31 December 2019 Solvency Ratio amounts to -2 p.p..
Internal
Outlook
124 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 125
World GDP is expected to grow by 2.4% in 2020. on digital processes. As a result, actions dedicated to
Eurozone internal demand will remain weak: its GDP and Life portfolio enhancement continue:
inflation are forecast to rise by approximately 0.4% and –– new business growth based on the selective develop-
1.2%, respectively. World and European GDP growth
forecasts could be revised downwards. ment of sustainable business lines such as protection
In this context, the main central banks could strengthen and health, and on capital-light savings and investment
their accommodative policies. The Fed cut the reference insurance solutions. The development of these lines
rate in early March and could cut again the cost of money will aim at offering a wide range of insurance solutions
during 2020. The ECB could retain quantitative easing. adapted to risk and investment profiles for the benefit
Both central banks could extend their policies to support of both the policyholders and the Group. In particular,
credit and liquidity in the economic and financial system. for products in the protection and health line, we aim
With reference to the financial markets, concerns about to offer modular solutions in which traditional risk cov-
the impact of Coronavirus on the real economy will keep erage is combined with substantial service packages
risk-free yields low. The prospects for a further decline of for an even more concrete management and resolution
the Eurozone core yields are however modest. The eq- of the critical issues covered. Amongst the capital-light
uity market, despite having suffered a significant fall in products, unit-linked target products are increasingly
this first part of 2020 due to the uncertainty linked to the characterized by financial mechanisms that are capa-
Coronavirus and fears of a negative impact on the econ- ble of coping with potential market contractions (e.g.
omy, still remains attractive compared to bonds, albeit protected funds) and of mitigating risk (e.g. selection of
with an extremely prudent attitude in the short term by volatility-controlled funds);
investors. In case the global contagion would be higher –– with regard to in-force business, actions dedicated
than the base scenario, Eurozone core government bond to strengthening relations with existing customers on
yields could record new lows and risky assets could be the basis of an updated analysis of current insurance
characterized by high volatility for a longer period. needs;
In a context of greater uncertainty and volatility due to –– actions on the Life portfolio in general, which will have
the further spread of Coronavirus - for which it is not a new important focus on senior customers, a market
currently possible to make a reasonable estimate of the segment with substantial development potential.
medium-term impact - we continue to focus on the dis- The Group will follow up on the positive results of the re-
ciplined execution of the strategy. Generali has promptly balancing of the business mix while emphasizing the fo-
implemented a series of initiatives to ensure business cus on market positioning in terms of premiums. Premium
continuity and to protect the health of the people who trends will continue to reflect a careful underwriting pol-
work for the Group and its customers. Generali is a glob- icy, in line with the common Group goals and driven by
al insurance player that increasingly uses digital tech- a focus on the central importance of customers’ interest,
nology in its customer relations. It is recognized as one as well as the value of the products and the risk appetite
of the most solid operators in the industry thanks to its framework.
excellent Solvency level and efficient financial manage-
ment. Our objective in the Property & Casualty segment is to
maintain the upswing trend of premium income com-
As regards the insurance sector as a whole, no improve- bined with outstanding profitability in the mature insur-
ment in performance in the Life segment over 2019 is ance markets in which the Generali Group is present, and
expected in 2020 given the negative trend in financial at the same time strengthen ourselves in the high growth
market observed in the first part of the year. Growth in potential markets by expanding our presence and offer
the P&C segment will continue, in line with 2019, in ma- on the territory.
jor Eurozone countries despite the economic slowdown Additional profitability is expected to be recovered in the
forecast, especially in the health business. motor business, although in a strongly competitive and
quickly evolving context. Indeed, there is a switch from
The strategy to rebalance the Group Life portfolio will vehicle insurance to insuring the person/household in the
continue in order to further strengthen its profitability, fol- broad sense of mobility, in which customers are accom-
lowing a more efficient capital allocation approach. The panied in their movements and protected in a sustaina-
Generali brand continues to be consolidated by simplify- ble and door-to-door integrated manner in their everyday
ing and innovating the range of product solutions which lives. Climate change and a growing sensitivity to sus-
will be marketed through the most suitable, efficient and tainable behaviour is influencing the electric vehicle mar-
modern distribution channels that are increasingly based ket, which requires that we review and re-modulate our
products and services. The digital transformation, with
126 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
the introduction of autonomous vehicles to the market, increases were found only on treaties characterised by
will make impacts on the business model, on insured risk a higher claims frequency or on business classes more
and on claims. Generali’s aim is to continue to develop in- sensitive to the interest rate trends, or where the capacity
novative insurance solutions that guarantee a competitive offer is generally smaller.
edge and the business line’s profitability.
In line with the strategic guidelines for profitable growth With reference to the Asset Management segment, ac-
and above all for becoming the Life-time Partner of our tions will continue during 2020 to identify investment
customers, development of the non-motor line will con- opportunities and sources of income for all customers,
centrate on modular products designed to meet specific while at the same time managing risks. Consistent with
needs and any new customer needs, providing innovative the Group’s strategy, growth will be achieved through the
services, prevention and assistance with the support of expansion of the multi-boutique platform in order to in-
digital tools and platforms (for example, coverage of cy- crease the product catalogue in terms of real assets, high
ber, hyper-connectivity risks and risks of everything that conviction and multi-asset strategies for customers and
revolves around the Internet of Things world). Growth in partners. This platform, which is at present mainly based
this segment will also be supported by taking advantage in Europe, aims to become global with the increase in
of the opportunities offered by demographic and social revenues and assets under management (AUM) that will
changes, new markets and moving forward with distribu- result from third-party clients that do not fall within the
tion channel and partnership initiatives. scope of the Group’s insurance policies.
To handle these changes, the Group has rolled out a num-
ber of initiatives to exploit the opportunities offered by With reference to the Group investments policy, an asset
new technologies, for claims settlement as well as for in- allocation strategy aimed at consolidating current returns
creasing market penetration. These initiatives will contin- and safeguarding consistency with liabilities to policy-
ue to work alongside a disciplined portfolio management holders will continue.
approach - pricing, selection and profitability of risks - The fixed-income investment strategy aims to diversify
and careful assessments of the customer’s new require- the portfolio, both within the sector of government bonds
ments, which are placed at the very centre of product as well as in terms of corporate bonds, in order to guar-
development. antee adequate profitability to policyholders as well as
Management of the P&C segment - also considering the a satisfactory return on capital while maintaining a con-
level of capital absorption of these products - will there- trolled risk profile.
fore continue to be a foundational principle for imple- Alternative investments and investments in real assets
menting the Group’s strategy whose objective is to retain continue to be considered appealing due to their contri-
its leadership role in the European insurance market for bution to portfolio diversification and profitability, particu-
private individuals, professionals and SMEs. larly in the persistent context of low interest rates. The
Group continues to develop a multi-boutique insurance
The international reinsurance market recorded a certain asset manager platform to enhance the investment ca-
frequency of natural catastrophe claims in 2019, most of pacity in these market sectors and better monitor their
which were in the Pacific and Caribbean islands areas, in management in terms of complexity as well as liquidity.
addition to devastating fires in California for the third year New direct investments in the real estate sector will be
in a row that in some cases generated significant techni- primarily oriented towards the European market, while
cal losses for reinsurers that were only partly compensat- investments in the United States and Asia will be made
ed by adequate asset management. This trend of recent selectively through funds.
years has brought out the reinsurers’ need to adopt great- During 2019, the major initiatives linked to the General
er discipline in providing reinsurance capacity. All of this 2021 strategic plan were started with the aim of consoli-
has led to a reversal in the reinsurance cycle with stable dating its leadership in Europe and strengthen its position
costs or costs subject to even significant increases, at in high-potential markets, financial optimisation, and in-
least for the cedant companies hit by claims. The growth novation and the digital transformation of the operating
trend is even more evident in the long-tail sectors, where model. The implementation of these initiatives is continu-
very low interest rates that preclude the possibility to get ing in a context influenced by a further lowering of interest
satisfactory financial returns bear significant weight. rates in Europe and not only, which poses new challenges
The Generali Group was able to benefit from favourable above all in the traditional Life segment and, as a result,
conditions due to its centralized reinsurance structure creating the need to redesign the offer of these products.
which allows for greater control over risk retention levels As regards financial optimisation, note that the reduc-
and good diversification in reinsurer portfolios. Minimal tion of debt has accelerated, and this will allow the mini-
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 127
mum threshold of objectives announced to the market in path of full integration of sustainability into our key ac-
early 2020 to be reached. The Group is also continuing tivities, with a focus to the environment, both as regards
to follow its strategy of growth driven by the technical direct impacts and in relation to the insurance solutions
components, efficiency of the operating machine and the offered and investment decisions. Our new materiality
solidity of the Group’s distribution network, growth that matrix identifies the most material mega trends on which
anticipates a positive contribution also from the recent the Group’s common strategic initiatives will focus in the
expansion operations both in eastern Europe and asset coming years.
management.
By leveraging all of these initiatives and in light of the
The Group’s priority is to accompany growth with a sound results achieved at the end of 2019, the Group con-
strong commitment to sustainability, which is based on firms its targets announced for the next three years which
concrete and precise objectives relating to good corpo- forecast an increase in earnings per share of between 6%
rate governance, the care of our people and the com- and 8%, an average RoE of more than 11.5% and a target
munities in which we operate. We will continue on our dividend payout ratio between 55% and 65%.
The Report contains statements concerning events, estimates, forecasts and future expectations based on the current knowledge
of the Group’s management. Such statements are generally preceded by expressions such as “a decrease/increase is expected”,
“is forecast”, “should grow”, “we believe it may decline” or other similar wording. Please note that these forward-looking statements
should not be considered forecasts of the Group’s actual results or of factors outside the Group. Generali assumes no obligation to
update or revise such forecasts, even after new information, future events or other elements come to light, unless required by law.
Consolidated
Non-Financial
Statement
pursuant to legislative decree of 30 December 2016,
no. 254 as amended
130 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
NFS The Annual Integrated Report of the Generali Group includes non-financial information in compliance with the
provisions of legislative decree of 30 December 2016, no. 254 (leg. decree 254/2016), in implementation of European
directive 2014/95. In line with the approach adopted, this information is clearly identified through a specific infographic
(NFS) created for the purposes of improving accessibility to the information itself.
Information relating to environmental matters, social and employee-related matters, respect for human rights, anti-
corruption and bribery matters - which is relevant to the activities and characteristics of the Group - is reported to the
extent necessary for an understanding of the Group development, performance, position and impact of its activity. It
comprises a description of the::
- organization and management model, including direct and indirect impact (p. 16-17). Corporate Governance
The main operating companies based in Italy have adopted models, pursuant to art. 6, and Share Ownership
paragraph 1, letter a), of legislative decree of 8 June 2001, no. 231. These models aim Report 2019, p. 113 for
at mitigating risks connected to offences that are relevant also to leg. decree 254/2016; the organization and
management model of
the Parent Company
- policies applied (p. 18-23; 36-37);
- non-financial key performance indicators (p. 10-11, 26-37 and in Our performance, where indicated through the
infographic);
- principal risks related to the matters mentioned above, as reported in the table below, and their management.
The Report complies with currently effective regulations and applies the International <IR> Framework issued by the
International Integrated Reporting Council (IIRC)1. The standard adopted for the disclosure of the material mega trends
identified by the Group, including non-financial matters envisaged by leg. decree 254/2016, is the Consolidated Set
of GRI Sustainability Reporting Standards, issued in 2016 by the GRI-Global Reporting Initiative (GRI-Referenced
claims), with reference to selected GRI Standards and indicators of the GRI G4 Financial Services Sector Disclosures.
Notes to the Management Report, p. 136 for the criteria of the
International <IR> Framework and selected indicators
In 2019, we developed the materiality analysis process methodology by concentrating our efforts on the identification
and assessment of the mega trends, i.e. the large social, environmental and governance transformations, which is
expected to be able to change the world of enterprises, society and the natural environment significantly over a ten-
year horizon, and this entails risks and opportunities for the Group, its value chain and its stakeholders.
Compared to the previous materiality analysis, this approach supports a strategic interpretation of the context in
which we operate, in a forward-looking perspective. The focus is on the assessment of the changes in the scenario
that the Group and its stakeholders consider as the most urgent The Statement reflects this approach: it focuses on
the most material megatrends identified and describes the management tools in place to mitigate risks and seize
opportunities related to them.
The following activities were carried out to identify the material aspects:
- identification of the potentially material mega trends in connection with the Group’s activities, strategy and countries
which were identified based on public scenario analysis documents and sustainable development research drawn up by
international non-government institutions and associations, think tanks, and trade associations and forums in the industry;
- assessment of the mega trends, aggregating2 the viewpoint of the internal and external stakeholders, with which
it was asked to order by priority the identified mega trends, considering both their potential impact on Generali and
the possibility that they are influenced by us, also through our value chain, consistent with the perspective of the
double materiality. This perspective, that considers both the financial materiality and the social and environmental
materiality for each mega trend, was introduced by the non-binding Guidelines on reporting non-financial information
adopted by the European Commission and afterwards picked up by ESMA. Over 120 top managers at the Group Head
Office and business unit levels were involved internally through interviews and focus groups. To guarantee adequate
consideration of the risk component of the identified mega trends, the internal assessment considered the results of
the Group Own Risk and Solvency Assessment process.
Risk Report, p. 101 of the Annual Integrated Report and
Consolidated Financial Statements 2019
1 The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs; <IR> stands
for Integrated Reporting.
2 The assessment was made using an approach based on the consolidation of the results of multiple repetitive analysis cycles conducted with groups of experts (so-called Delphi
method).
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 131
The assessment of the external stakeholders3 was supplemented by the analysis of the investment policies of 20 NFS
large SRI and traditional investors, the results of opinion polls conducted by Eurobarometer involving a sample of
over 114,000 people in Europe, and the analysis of a survey conducted with the sustainability managers of roughly
190 multinational companies. Furthermore, about 1,700 company reports, 2,600 rules and bills of law, 4,000 articles
published online and over 108 million tweets published between April and October 2019 were analysed using Artificial
Intelligence technology and computational linguistics with the support of a specialised provider;
- processing of the Group materiality matrix, previously discussed by the Governance and Sustainability Committee
and the Board of Statutory Auditors, and then approved by the Board of Directors on 6 November 2019. The Group’s
new materiality matrix identifies three materiality clusters:
1. cluster 1: it comprises mega trends found by Generali management and stakeholders to be the most material, on
which the common Group strategic initiatives and their reporting will be focused;
2. cluster 2: it comprises the mega trends found alternatively by Generali management and stakeholders to be of
considerable relevance, and that will be the basis for potential projects developed by specific business units or
functions;
3. cluster 3: it comprises those mega trends that based on the opinion of General management and of the stakeholders
are of minor relevance compared to the other factors analysed.
+ Climate change 1
Shortage of planet Ageing and evolving Digital transformation
resources and shift to social security and cybersecurity
circular/sharing economy
Relevance for Stakeholders Increasing inequality and Growing expectations toward corporate 2 Geopolitical,
reducing social mobility purpose, sustainability practices and macroeconomic and
transparency
Women empowerment nancial instability
and minorities
inclusion Employment dynamics Extreme events
and restructuring of
Biodiversity losses and business landscape
vulnerability of our
ecosystems Change in
healthcare needs
and services
Urbanization New households: Regulatory complexity & Evolving lifestyle and 1 Cluster 1
3 multi-cultural families and need for an integrated consumption patterns 2 Cluster 2
governance 3 Cluster 3
single person
Social media and unmediated +
access to information
Relevance for Generali
Glossary available at the end of this
document
The material information pursuant to the decree4 was identified taking the mega trends belonging to the first 2 clusters
into consideration. Confirming the approach adopted in the previous Statement, and in line with the priorities indicated
by ESMA, the material mega trends specified above are reported in this Report using indicators announced through
the new Generali 2021 strategic plan and monitored in the planning and control processes. The scope of reporting for
these indicators is the consolidated one, unless otherwise specified. A comparison is offered with the previous period,
where feasible.
3 The opinions of the external stakeholders - 50 opinion leaders representing the major stakeholder categories, such as customers, investors, employees, representatives of the
Group’s workers (European Works Council), regulatory institutions and authorities, enterprises and trade associations in the industry, universities and research centres, NGOs
and future generations - were collected both through direct engagement activities and indirectly with the use of artificial intelligence technology and computational linguistics for
the quantitative analysis of a large number of document sources .
4 The following matters envisaged by leg. decree 254/2016, art. 3, paragraph 2 are not material: water use, air pollutant emissions and impact on health and safety.
132 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
NFS In order to monitor the processes for the non-financial information collection, we have implemented an internal control
system. Specifically, we have drafted a manual that not only defines the indicators and relevant scope of reporting, but
also includes a standard catalogue of control objectives applicable to the processes at both the Group Head Office
and each contributing company level. The internal control model currently used is therefore based on a streamlined
approach that allows the control activities implemented to be identified and assessed. This model leverages and is
consistent with the control approach adopted for the financial reporting to the market.
MATTERS MATERIAL MEGA TRENDS MAIN RISK
ex leg. decree. 254/2016 ex 2019 materiality matrix CATEGORIES5
1) Environmental matters
Climate change Emerging risks with foreseeable
2) Social matters Extreme events developments on underwriting,
financial and operational risks
3) Employee-related matters Shortage of planet resources and shift to circular/sharing economy
Growing expectations toward corporate purpose, sustainability practices and Operational risks
transparency
Digital transformation and cybersecurity
Growing expectations toward corporate purpose, sustainability practices and Operational risks
transparency
Ageing and evolving social security Emerging risks with foreseeable
Change in healthcare needs and services developments on strategic,
Evolving lifestyle and consumption patterns underwriting and operational risks
Increasing inequality and reducing social mobility
Growing expectations toward corporate purpose, sustainability practices and
transparency
Employment dynamics and restructuring of business landscape
Operational risks
Women empowerment and minorities inclusion
4) Respect for human rights Growing expectations toward corporate purpose, sustainability practices and Operational risks
transparency
5) Anti-corruption and bribery
matters Growing expectations toward corporate purpose, sustainability practices and
transparency
Operational risks
Regulatory complexity & need for an integrated governance
5 They represent the categories in line with the provisions of the European directive 2009/138 on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II).
Please refer to the Risk Report chapter in the Annual Integrated Report and Consolidated Financial Statements 2019 for their specific management.
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 133
The following table connects the megatrends mentioned above to the five matters envisaged by leg. decree 254/2016, NFS
including the related main risk categories and pages of the Report in which they are reported. It also highlights our
support for the Sustainable Development Goals of the United Nations.
KEY PERFORMANCE INDICATORS PAGES OF THE REPORT SUSTAINABLE
DEVELOPMENT GOALS
Total emissions p. 10, 20-21, 33-34, 49
Purchased renewable energy p. 20-21
Premiums from environmental products p. 20-21, 34
Insurance exposure to clients of the coal sector
Engagement activities with companies of the coal sector p. 10, 58-59
New green and sustainable investments
Direct investments to which the Responsible Investment Guideline is applied p. 19, 26
Sustainable and Responsible Investments p. 10-11, 27-28, 32-33, 58-59
Engagement activities
p. 10, 22-23, 49
Investments in internal strategic initiatives p. 10, 22-23, 49
Customers p. 10, 22-23, 49
Distributors p. 35
Relationship Net Promoter Score p. 11, 29-32
Premiums from social products
Direct investments to which the Responsible Investment Guideline is applied p. 11, 29, 32
Sustainable and Responsible Investments p. 11, 29-30, 32
Engagement activities
Countries and partners of The Human Safety Net p. 10, 36-37, 58-59
Engagement and response to Generali Global Engament Survey p. 10, 37, 58-59
Employees p. 36-37
Female employees
Trained employees
Reskilled employees
Per capita training
Training investment
Employees engaged in performance management process
Organizational entities with smart working
Diversity & Inclusion index
Direct investments to which the Responsible Investment Guideline is applied
Sustainable and Responsible Investments
Engagement activities
Direct investments to which the Responsible Investment Guideline is applied
Sustainable and Responsible Investments
Engagement activities
Managed reports related to the Code of Conduct
Employees trained in the Code of Conduct
Pursuant to art. 5 of the Consob Regulation 18 January 2018, no. 20267, the Generali Group has assigned the auditing
firm EY S.p.A. - the current external auditor for the financial statements - with the task of performing the limited
assurance activity on this Statement. The Report drafted by EY S.p.A. is attached to this document.
Milan, 12 March 2020
The Board of Directors
Appendices to
the Management
Report
136 Notes to the Management Report
140 Methodological notes on alternative
performance measures
136 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Notes to the Management Report
The Annual Integrated Report and Consolidated Financial Statements 2019 is drafted in compliance with currently
effective regulations and it applies the IAS/IFRS international accounting standards as well as the International <IR>
Framework. Annual Integrated Report and Consolidated Financial
Statements, p. 160 for further details on the basis of
presentation and accounting principles
The Group used the option provided for under art. 70, paragraph 8, and art. 71, paragraph 1-bis of Issuers’ Regulation
to waive the obligation to publish the information documents provided for in relation to significant mergers, de-
mergers or capital increases by contribution of assets, acquisitions and disposals.
The Report is drawn up in euro, i.e. the functional currency used by the entity that prepares the Annual Integrated
Report and Consolidated Financial Statements. The amounts are shown in million and rounded to the first decimal,
unless otherwise reported. Therefore, the sum of each rounded amounts may sometimes differ from the rounded total.
The details by geographical area highlighted in this document reflect the Group’s managerial structure in place in
2019, made up of:
–– Italy;
–– France;
–– Germany;
–– ACEER: Austria, Central Eastern Europe (CEE) countries - Czech Republic, Poland, Hungary, Slovakia, Serbia/
Montenegro, Romania, Slovenia, Bulgaria and Croatia - and Russia;
–– International, consisting of Spain, Switzerland, Americas and Southern Europe, and Asia;
–– Investments, Asset & Wealth Management, which includes the main Group entities operating in investment advisory,
asset management and financial planning;
–– Group holdings and other companies, which consists of the Parent Company’s management and coordination ac-
tivities, including Group reinsurance, as well as Europ Assistance, Other companies (among which, Generali Global
Health and Generali Employee Benefits) and other financial holding companies and suppliers of international servic-
es not included in the previous geographical areas.
Our main market: positioning and performance, p. 65
At 31 December 2019, the consolidation area increased from 455 to 463 companies, of which 423 were consolidated
line-by-line and 40 measured with the equity method.
The Report is drafted in line with the International <IR> Framework issued by the International Integrated Reporting
Council (IIRC): each chapter of the Report meets one or more Content Elements envisaged by the Framework.
188th year Group Annual THE INTERNATIONAL Content Elements of the International
Integrated Report <IR> FRAMEWORK <IR> Framework
Group Annual Integrated
Report 2019
generali.com Performance
We, Generali Organisational overview and external environment
Group’s highlights
2019 and 2020 key facts Organisational overview and external environment
The value creation process
Challenges and opportunities of the market context Risks and opportunities
The Generali 2021 strategy
Strategy
Our rules for running business with integrity Performance
Risks and opportunities
Our governance and remuneration policy
Our performance Organisational overview and external environment
Outlook Risks and opportunities
Governance
Performance
Outlook
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 137
The Report is drafted also applying the Guiding Principles of the Framework.
The strategy together with our vaue creation process remain at the heart of our story. The strategic focus and future
orientation principle is, in fact, applied in the whole document.
The materiality approach, that evolved in 2019, is presented in detail in the Consolidated Non-Financial Statement.
Consolidated Non-Financial Statement, p. 129
The key forms of connectivity of information used by Generali include the connectivity between qualitative and
quantitative information, financial and non-financial information, present and future information, that is coherent
with the information included in other communication tools in accordance with the Core&More reporting approach.
Other elements that improve the connectivity of information and the overall usefulness of the Report are the cross-
referencing1, the graphic component and a glossary at the end of this document to use in case of insurance sector’s
terminology.
Generali maintains stakeholder relationships in order to understand and meet their
AMB I E N T E Dipendenti needs, especially their information and dialogue needs.
We regularly engage with investors, analysts and rating agencies. We meet them
Comunità Clienti every quarter following our results’ presentation and in specific occasions, thus
sharing the reporting required. We organise roadshows and we participate in sec-
Comunità Agenti e tor conferences. Some of the main annual recurring occasions for interaction be-
finanziaria distributori tween the financial community and the Company’s top management are the annual
Shareholders’ Meeting, events on the strategic plan (Investor Day) and the main pres-
Partner AMB I E N T E
contrattuali
entation of the financial results. After the presentation of the current strategic plan
in November 2018, we met analysts and investors at the event Exploring Generali in
May; we shared geographical and financial details on some strategic issues. During 2019 we came into contact with
more than 500 people - individual meetings and small group meetings - in the main financial centres of Europe and
North America.
We regularly interact with regulators and the European and international Institutions to maintain good relationships
and share authoritative and updated information in order to properly interpret and apply new regulations. We are com-
mitted to transparency in our relations with European public authorities: in 2014 the Group joined the Transparency
Register, a joint initiative of the European Parliament and the European Commission with the aim of informing the
public about how Generali represents its interests. We also offer our skills and contribute to public consultations for
the definition of new laws and regulations in the sector, by providing, in view of the Group’s direct experience, con-
crete indications in order to safeguard the specificities of the Group and the insurance industry. To this purpose, we
collaborate with several trade organizations and associations in the sector. Our active presence in these organizations
allows us also to expand our knowledge of the different regulations and potential impacts.
We also engage customers, distributors and Group employees with a view to continuous improvement.
The Generali 2021 strategy, p. 24
www.generali.com/our-responsibilities/responsible-business/stakeholder-engagement for
different methods of dialogue with stakeholders
Lastly, for some years we interact with students attending university and master courses, providing them with specific
sessions on the integrated reporting approach adopted by Generali and its developments at a national and interna-
tional level, while collecting their feedback and suggestions on its implementation through a specific survey. As from
2016, we have extended this experience to Group employees as well.
1 The Report includes links to web pages that might not exist in the future.
138 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
The conciseness principle is met through the issue of the Group Annual Integrated Report. The diagram below
shows the shift from the Annual Integrated Report, drafted in accordance with the materiality principle, to the Annual
Integrated Report and Consolidated Financial Statements, compliant with regulations.
188th year Group Annual Management 188th year Annual Integrated
Integrated Report Report Report and
Group Annual Integrated Annual Integrated Report Consolidated
Report 2019 Additional management and Consolidated Financial Financial
information Statements 2019 Statements
generali.com
Financial statements generali.com
and notes
Reliability and completeness are supported by a structured information system, built for the drafting of the Report and
processing financial and non-financial information while ensuring their homogeneity and reliability. The performance
indicators are those used in the business management in line with the strategic plan. They refer to the whole Group,
unless otherwise indicated.
In accordance with the consistency and comparability principle, the Report includes information that is consistent with
the previous year, unless otherwise indicated.
NFS The standard adopted in this Report for the disclosure Reporting Initiative (GRI-Referenced claims), with refer-
of the material mega trends identified by the Group, in- ence to selected GRI Standards - in accordance with the
cluding non-financial matters envisaged by leg. decree provision of GRI 101: Foundation, paragraph 3, in addi-
254/2016, is the Consolidated Set of GRI Sustainability tion to GRI 103: Management Approach - and indicators
Reporting Standards, issued in 2016 by the GRI-Global of the GRI G4 Financial Services Sector Disclosures.
GRI STANDARD MATERIAL MEGA TRENDS
AND G4 FINANCIAL SERVICES SECTOR DISCLOSURES ex matrice di materialità 2019
Growing expectations toward corporate purpose, sustainability practices and
GRI 102: General Disclosures transparency
102-9 Supply chain (a) Growing expectations toward corporate purpose, sustainability practices and
transparency
GRI 102: General Disclosures Regulatory complexity & need for an integrated governance
102-43 Approach to stakeholder engagement (a)
Growing expectations toward corporate purpose, sustainability practices and
GRI 205: Anti-corruption transparency
205-2 Communication and training about anti-corruption policies and Shortage of planet resources and shift to circular/sharing economy
procedures (e, aggregated data)
Climate change
GRI 302: Energy
302-1 Energy consumption within the organization (b) Growing expectations toward corporate purpose, sustainability practices and
transparency
GRI 305: Emissions
305-1 Direct (Scope 1) GHG emissions (b,d,g)
305-2 Energy indirect (Scope 2) GHG emissions (c,d,g)
305-3 Other indirect (Scope 3) GHG emissions (b,e,g)
305-5 Reduction of GHG emissions
GRI 404: Training and Education
404-1 Average hours of training per year per employees (a, aggregated
data)
2 The reduction of total reemdiuscstiioonnswaamsoautntrtiebduttaobtle2t4o,3in7d7irCeOct2eemcoismsipoanrsed(Stcoopbeas2eaynedarS2c0o1p3e. The latter was chosen since it is the baseline for the goal to reduce total emissions
by 20% by 2020. The 3). The gases included were: CO2, CH4 e N2O. The methodology adopted is the WRI
GHG Corporate Standard Protocol, location-based method.
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 139
GRI 404: Training and Education Growing expectations toward corporate purpose, sustainability practices and NFS
404-2 Programs for upgrading employee skills and transition assistance transparency
programs (a)
Growing expectations toward corporate purpose, sustainability practices and
GRI 404: Training and Education transparency
404-3 Percentage of employees receiving regular performance and career
development reviews (a, aggregated data) Increasing inequality and reducing social mobility
GRI 413: Local communities Ageing and evolving social security
Management approach disclosures Change in healthcare needs and services
Product portfolio
G4 FS7: Monetary value of products and services designed to deliver a
specific social benefit for each business line broken down by purpose
Product portfolio Evolving lifestyle and consumption patterns
G4 FS8: Monetary value of products and services designed to deliver a Climate change
specific environmental benefit for each business line broken down by
purpose Climate change
Growing expectations toward corporate purpose, sustainability practices and
Active ownership transparency
G4 FS10: percentage and number of companies held in the insitution’s Growing expectations toward corporate purpose, sustainability practices and
portfolio with which the reporting organization has interacted on transparency
environmental or social issues
Active ownership
G4 FS11: Percentage of assets subject to positive and negative
environmental or social screening
We use key performance indicators in accordance with a proprietary disclosure methodology for material mega trends.
They are not envisaged by the standard adopted but they are representative of our business and, in line with our strate-
gy, they are monitored in the planning and control processes. These indicators are: insurance exposure to clients of the
coal sector, investments in internal strategic initiatives, customers, employees, female employees, trained employees,
training investment, organizational entities with smart working, Diversity & Inclusion index and managed reports related
to the Code of Conduct.
Glossary available at the end of this
document
The reporting process and methodologies to calculate all indicators are included in a specific manual, shared at both the
Group Head Office and each contributing company level.
Consolidated Non-Financial Statement, p. 129
140 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Methodological notes on alternative performance
measures
In order to help the assessment of the quality and sus- calculation method of the policyholders’ profit sharing
tainability of the net result of the Generali Group in the based on the net result of the period in these countries.
various business segments and territorial areas, the Man- Furthermore, where a new fiscal law or other non-recurring
agement Report includes the following alternative perfor- fiscal impacts materially affects the operating result of the
mance measures. countries where the policyholders’ profit sharing is based
on the net result of the period, the estimated amount of
Gross written premiums non-recurring effects mentioned above is accounted for
in the operating result.
Gross written premiums in the Management Report differ In the Property & Casualty segment, all profit and loss
from gross earned premiums in the Income Statement, accounts are considered as operating items, except for
since they include premiums related to investment con- the following which are represented in the non-operating
tracts as to better present the insurance turnover of the result:
Group and they exclude changes in the provisions for un- –– realized gains and losses, unrealized gains and losses,
earned premiums.
net impairment losses on investments, including gains
Operating result and losses on foreign currencies;
–– net other non-operating expenses that mainly include
Under CESR Recommendations on alternative perfor- results of both real estate development activities and
mance measures (CESR/05 - 178b), the operating result run-off activities, impairment losses on self-used prop-
cannot replace earnings before taxes calculated in ac- erties, company restructuring costs and amortization of
cordance with IAS/IFRS. In addition, it should be read the value of the portfolios acquired directly or through
with the financial information and related notes on the ac- the acquisition of control of insurance companies (Val-
counts which are included in the audited financial state- ue Of Business Acquired, VOBA) and net other non-re-
ments. curring expenses.
The operating result is drawn up by reclassifying items
of earnings before taxes for each segment on the basis In the Asset Management segment, all profit and loss ac-
of the management characteristics of each segment and counts are considered as operating items, except for the
taking into consideration the recurring holding expenses. following which are represented in the non-operating result:
Specifically, the operating result represents earnings be- –– net other non-operating expenses that mainly include
fore taxes, gross of interest expense on financial debt,
specific net income from investments and non-recurring project costs, including consulting, and severances.
income and expenses.
The Holding and other businesses segment includes ac-
In the Life segment, all profit and loss accounts are con- tivities in the banking and asset management sectors, ex-
sidered as operating items, except for the following which penses for management, coordination and financing ac-
are represented in the non-operating result: tivities, as well as all the other operations that the Group
–– net realized gains and net impairment losses that do considers to be ancillary to the core insurance business.
All profit and loss accounts are considered as operating
not affect both the local technical reserves, but only items, except for the following which are represented in
the deferred liabilities towards policyholders for the the non-operating result:
amount not attributable to the policyholders, and the –– non-recurring realized gains and losses and net impair-
free assets;
–– net other non-operating expenses that mainly include ment losses;
results of the run-off activities, company restructur- –– net other non-operating expenses that mainly include
ing costs, amortization of the value of the portfolios
acquired directly or through acquisition of control of results of the run-off activities, company restructur-
insurance companies (Value Of Business Acquired, ing costs, amortization of the value of the portfolios
VOBA) and net other non-recurring expenses. acquired directly or through acquisition of control of
In particular, the Life non-operating result in Germany and companies operating in the banking and asset man-
Austria is net of the entire estimated amount attributa- agement sectors (Value Of Business Acquired, VOBA)
ble to the policyholders in order to consider the specific and net other non-recurring expenses.
As for holding expenses, general expenses incurred for
management and coordination by the Parent Company
and territorial sub-holdings are considered as operating
items. Non-operating holding expenses include:
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 141
–– interest expenses on financial debt3; geographical area allows measurement of the result of
–– company restructuring costs and other non-recurring each geographical area from a country viewpoint instead
of as a contribution to the Group’s results.
expenses incurred for management and coordination Within the context of the Life and Property & Casualty op-
activities; erating result of each country, reinsurance operations be-
–– costs arising from the assignment of stock options and tween Group companies in different countries are consid-
stock grants by the Group. ered as transactions concluded with external reinsurers.
This representation of the Life and Property & Casualty
The operating result and non-operating result of the operating result by geographical area makes this perfor-
Group are equivalent to the sum of the operating result mance indicator more consistent with both the risk man-
and the non-operating result of the abovementioned seg- agement policies implemented by each company and the
ments and related consolidation adjustments. other indicators measuring the technical profitability of
the Group’s companies.
In accordance with the approach described above, the
operating result in the main countries where the Group The following table reconciles the operating and non-op-
operates is reported for the Life and Property & Casualty erating result with the corresponding items in the income
segments and the consolidated figures. In order to pro- statement:
vide a management view of the operating result by geo-
graphical area, the disclosure by business segment and
Operating and non-operating result Profit and loss account
Net earned premiums 1.1
Net insurance benefits and claims 2.1
Acquisition and administration costs
Net fee and commission income and net income from financial service activities 2.5.1 - 2.5.3
Net operating income from financial instruments at fair value through profit or loss 1.2 - 2.2
Net operating income from other financial instruments
Net non-operating income from financial instruments at fair value through profit or loss 1.3 - 1.4 - 1.5 - 2.3 - 2.4 - 2.5.2
Net non-operating income from investments 1.3 - 1.4 - 1.5 - 2.3 - 2.4 - 2.5.2
Net other and holding operating expenses 1.3 - 1.4 - 1.5 - 2.3 - 2.4 - 2.5.2
Net other and holding non-operating expenses 1.3 - 1.4 - 1.5 - 2.3 - 2.4 - 2.5.2
1.6 - 2.6
1.6 - 2.6
3 Please refer to the paragraph Debt in the chapter Group’s financial position for further details on the definition of financial debt.
142 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
The following reclassifications are made in the calculation Operating result by margins
of the operating result with respect to the corresponding
items in the income statement: The operating result of the various segments are report-
–– investment management expenses and investment ed also in accordance with a margin-based view which
shows the operating trends of the changes occurred in
property management expenses are reclassified from each segment performance more clearly.
acquisition and administration costs to net operating The Life operating result is made up of the technical
income from other financial instruments, more specifi- margin excluding insurance expenses, the net invest-
cally to other expenses from financial instruments and ment result and the component that includes acqui-
land and buildings (investment properties); sition and administration costs related to the insur-
–– income and expenses related to real estate develop- ance business and other net operating expenses.
ment activities are classified under other non-oper- Specifically, the technical margin includes loadings,
ating income and expenses, in accordance with the technical result and other components, and unit- and
management model adopted that provides for sale at index-linked fees. The net investment result comprises
completion; operating income from investments, net of the portion
–– in the Life and Holding and other businesses segments, attributable to the policyholders. Finally, the insurance
gains and losses on foreign currencies are reclassified management and other net operating components are
from net operating income to net operating income indicated separately.
from financial instruments at fair value through profit The Property & Casualty operating result is made up of
or loss. In the Property & Casualty segment, they are the technical result, the financial result and other oper-
reclassified from net operating income to net non-op- ating items. Specifically, the technical result represents
erating income from financial instruments at fair value the insurance activity result, i.e. the difference between
through profit or loss. The classification for each seg- premiums and claims, acquisition and administration
ment is consistent with the related classification of the costs and other net technical income. The investment
derivative transaction drawn up in order to hedge the result comprises current income from investments and
Group’s equity exposure to the changes in the main other operating net financial expenses, like expenses
currencies of operations. Net operating and non-oper- on investment management and interest expenses on
ating income from other financial instruments are there- operating debt. Finally, other operating items mainly in-
fore not subject to financial market volatility; clude acquisition and administration costs related to the
–– net other operating expenses are adjusted for operat- insurance business, depreciation of tangible assets and
ing taxes and for non-recurring taxes that significantly amortization of long-term costs, provisions for recurring
affect the operating result of the countries where the risks and other taxes.
policyholders’ profit sharing is determined by taking
the taxes for the period into account. These adjust- Adjusted net profit
ments are included in the calculation of the operating
result and are excluded from the income taxes item; The adjusted net profit is the profit adjusted for impact of
–– in net operating income from other financial instru- gains and losses related to disposals.
ments, interest expenses on deposits and current ac-
counts under reinsurance business are not included Return on investments
among interest expenses related to liabilities linked to
operating activities but are deducted from the related The indicators for the return on investments are:
interest income. Moreover, the interest expenses re- –– net current return calculated as the ratio of:
lated to the abovementioned real estate development
activities are not included in interest expenses related –– interest and other income, including income from
to liabilities linked to operating activities, but are clas- financial instruments at fair value through profit and
sified under other non-operating income and expenses loss (excluding income from financial instruments
in accordance with the management model adopted
that provides for sale at completion.
Our Consolidated Non-Financial Appendices to the Consolidated Financial
We, Generali performance Risk Report Statements
Outlook Statement Management Report 143
related to linked contracts) net of depreciation on The indicators for the return on investments described
real estate investments; to above are presented for the Group and for Life and Prop-
––average investments (calculated on book value); erty & Casualty segments.
–– harvesting rate calculated as the ratio of:
–– net realized gains, net impairment losses and real- Consolidated investments
ized and unrealized gains and losses from financial
instruments at fair value through profit and loss (ex- In order to provide a presentation of investments that is
cluding those from financial instruments related to consistent with the calculation of the return on investments,
linked contracts); to the Group’s investments in the Management Report differ
––average investments (calculated on book value). from those reported in the balance sheet items since:
The profit and loss return is the sum of the net current –– Investment Fund Units (IFU) are split by nature in eq-
return and the harvesting rate net of investment manage-
ment expenses as well as gains and losses on foreign uity, bond and investment property instruments as well
currencies. as cash equivalents;
–– derivatives are presented on a net basis, thus including
The average investments (calculated on book value) in- derivative liabilities. Moreover, hedging derivatives are
clude: land and buildings (investment properties), invest- classified in the respective asset class hedged;
ments in subsidiaries, associated companies and joint –– reverse REPOs (Repurchase Agreements) are reclassi-
ventures, loans and receivables, cash and cash equiva- fied from other fixed income instruments to cash and
lents, available for sale financial assets, financial assets cash equivalents in accordance with their nature of
at fair value through profit or loss excluding those relat- short-term liquidity commitments; and
ed to linked contracts. Total investments are adjusted for –– REPOs classified as liabilities are presented in cash
both derivative instruments classified as financial liabili- and cash equivalents.
ties at fair value through profit of loss and REPOs classi-
fied as other financial liabilities. The average is calculated Investments by segment are presented in accordance
on the average investment base of each quarter of the with the methods described in the chapter Segment re-
reporting period. porting in the Notes.
Consolidated
Financial
Statements
149 Consolidated financial statements
159 Notes
287 Appendices to the Notes
146 Generali Group Annual Integrated Report and Consolidated Financial Statements 2019
Index
149 Consolidated financial statements
152 Balance sheet
154 Income statement
155 Statement of comprehensive income
156 Statement of changes in equity
158 Statement of cash flow
159 Notes to the consolidated financial statements
160 Basis of presentation and accounting principles
194 Segment reporting
200 Information on consolidation area and Group companies
200 1 Consolidation area
200 2 Disclosures on interests in other entities
204 3 Investments in subsidiaries, associated companies
and joint ventures
205 4 Goodwill
208 5 Non-current assets or disposal group classified
as held for sale
208 6 Related parties disclosure
209 Investments
210 7 Held to maturity investments
211 8 Loans and receivables
212 9 Available for sale financial assets
214 10 Financial assets at fair value through profit or loss
215 11 Land and buildings (investment properties)
215 12 Cash and cash equivalents
216 Details on investments
223 Insurance and investment contracts
223 13 Insurance provisions
224 14 Amounts ceded to reinsurers from insurance provisions
224 15 Deferred acquisition costs
225 Details on insurance and investment contracts
231 Shareholders’ equity and share
231 16 Shareholders’ equity
235 Financial liabilities
235 17 Financial liabilities at fair value through profit or loss
235 18 Other financial liabilities
238 Other balance sheet items
238 19 Intangible assets
239 20 Tangible assets
241 21 Receivables
241 22 Other assets
242 23 Other provisions
243 24 Payables
243 25 Other payables
147
244 Notes to the income statement
244 26 Net earned premiums
244 27 Fee and commissions income and income from financial
service activities
245 28 Net income from financial asset at fair value through
profit and loss
245 29 Income and expenses from subsidiaries, associated
companies and joint ventures
246 30 Income from other financial instruments and land and
buildings (investment properties)
247 31 Other income
247 32 Net insurance benefits and claims
248 33 Fee and commissions expenses and expenses from
financial service activities
248 34 Expenses from subsidiaries, associated companies and
joint ventures
249 35 Expenses from other financial instruments and land and
buildings (investment properties)
250 36 Acquisition and administration costs
250 37 Other expenses
251 38 Income taxes
254 Fair value measurement
256 39 Fair value hierarchy
258 40 Transfers of financial instruments measured at fair value
between Level 1 and Level 2
259 41 Additional information on level 3
262 42 Information on fair value hierarchy of assets and liabilities
not measured at fair value
265 Additional information
265 43 Disclosure regarding the deferred application of IFRS 9 -
Financial Instruments
267 44 Information on employees
268 45 Provisions for defined benefit plans
271 46 Share-based compensation plans
280 47 Contingent liabilities, commitments, guarantees, pledged
assets and collateral
281 48 Significant non-recurring events and transactions
282 49 Leases
285 50 Other information
285 51 Audit and other service fees for the fiscal year
285 52 Information about Coronavirus
287 Appendices to the Notes
The words you are searching are inside this book. To get more targeted content, please make full-text search by clicking here.
Home
Explore
WhatsApp +16575292372 Buy legit PMP Cisco CCNA AWS GCP Certificate Dubai United Arab Emirates
View in Fullscreen
Buy PMP GCP, (ISC)², CISSP, SSCP, PMSA, CCSP certificate Mecca Saudi Arabia CAP, CSSLP, HCISPP, CISSP-ISSAP, CISSP-ISSEP, CISSP-ISSMP and CBK Certificate [email protected] order PMP GCP Certification without exams Jeddah Saudi Arabia – get PMP Certification without exams Riyadh Saudi Arabia – how to get PMP, PMSA Certification without exams – buy AWS certifications online – where to order AWS certifications without exams in USA – purchase Agile and ScrumMaster certifications – become a Certified ScrumMaster without exams – Buy CRISC certificate online – obtain CRISC certification without exams – buy Original CISSP certification online – where to get CISSP without exams in USA – buy MCSE, PMSA, #CAT , #MAT , #MAH CET ,#CMAT , #XAT , #PERA CET certificate without exams – where to get MCSE, PMSA certificate – how to be a CISA Without Appearing for the Exams – Certified Information Systems Auditor online – Buy MCSE, MCSA, MCTS, MCITP, MTA, MCSD without exams – buy CISA certification without exams – Buy PMSA, ITIL certification online – how to get Buy ITIL certification without test – get Buy ITIL certification in Europe – Buy testdaf certificate , Buy original testdaf certificate
[email protected]
Whats-app +16575292372
Skype-ID (PMP Exam Questions)
https://www.buypmpwithoutexams.com
Buy CompTIA Project+ PK0-003 Certificate Without Exams – Buy CompTIA Security+ SY0-301 Certificate Without Exams Online – Buy CompTIA Server+ SK0-003 Certificate Without Exams Onlin – Buy CompTIA Server+ SK0-003 Certificate Without Exams Online – Buy Original CompTIA CTT+ TK0-201 Certificate Without Exam – Buy CompTIA CTP+ CN0-201 Certificate Without Exams In Jordan – Buy CompTIA Linux+ Powered by LPI LX0-101 and LX0-102 Certificate Without Exams – Buy CompTIA CDIA+ 225-030 Certificate Without Exams Online – Buy CompTIA Network+ Certification – Buy CEH Certification Certified Ethical Hacker without CEH Exam Training – ,How to Buy PMP Certification online in USA, where to get PMP certification without exams, pass PMP exam,Buy PMP exam Course,How to Pass the PMP exams – Buy real PMP certificates Without Exams Europe -Purchase real CISM certificates Without Exams middle east – Get PMP certificates Without Exams – America
Buy real PMP certificates Without Exams Mount Barker – How to get real CRISC certificates Without Exam USA – Buy CISSP Certificate Without Exams In Europe – Buy CISSP Certificate Without Exams In Jordan – Buy CISSP Certificate Online – Buy Original CISSP Certificate Without Exams – Buy Original CISSP Certificate in Canada – Can someone Buy Verified CISSP Certificate Online – Buy CISSP, CRISC, CISM, PMP, CEH, CSM Certificate online – Buy CRISC Certificate Without Exams In Australia – Buy CRISC, PMSA Certificate Without Exams Online – Buy CRISC Certificate In Without Exams – Buy Original CRISC Certificate Without Exams – Buy Original CRISC Certificate USA – Is it Possible to Buy Verified CRISC Certificate Dubai – Buy CEH Certification Certified Ethical, Hacker without CEH Exam Training – Buy AWS Certified Solutions Architect – Buy Professional Certification online – Buy PMSA, #CAT , #MAT , #MAH CET ,#CMAT , #XAT , #PERA CET , AWS Certified Solutions Architect – Buy AWS Certified Solutions Architect – Associate Certification Online – Buy CompTIA CASP+ Certification online – Buy Network+ CompTIA Certification – Buy Lean Six Sigma Yellow Belt Certification online – Buy Microsoft MCSE Certification Online – Buy Cisco Certified Network Associate online –
Buy CCNA certificate online – Buy Authentic and Original PCNSE, CASP, CCA-V, CCIE, CCNA, CCNP, CISM, CISSP, ISC, CompTIA A+, CompTIA CySA+, CompTIA Network+, V4 Foundation, MCSA, MCSD, NSE4, PCNSE, CISA, CRISC, CISM, CGEIT, CSX-P or CDPSE, CRISC, ISC2, SC2, ISC2, CSSLP, ISACA, Certificates Without Exams – Buy ITIL Practitioner Certification Without Exams – Buy CISSP ISC2, PMSA Certification online – Buy CRISC ISACA, PMSA Certification Without Exams – Buy CEH EC-Council Certification online – Buy CISA ISACA Certification online – Buy CompTIA Network+ Certificate Without Exams – Buy Original ISACA, #CAT , #MAT , #MAH CET ,#CMAT , #XAT , #PERA CET Certificate Without Exam Online – Buy CELPIP Certificate Online –
[email protected]
Whats-app +16575292372
Skype-ID (PMP Exam Questions)
https://www.buypmpwithoutexams.com
buypmpwithoutexams.com can help you obtain Certifications for every stage of your career.
http://buypmpwithoutexams.com/buy-pmp-certification-without-test-online-in-ireland/
http://buypmpwithoutexams.com/buy-original-pmp-certificate-without-exam-buy-pmp-certification-online-2/
http://buypmpwithoutexams.com/registered-pmp-certificate-without-exam-in-switzerland/
http://buypmpwithoutexams.com/how-to-buy-pmp-certification-online-saudi-arabia/
http://buypmpwithoutexams.com/buy-registered-pmp-certification-online/
https://buy-original-pmp-certificate-without.business.site/
Discover the best professional documents and content resources in AnyFlip Document Base.
Search