Note on Management Report

Note on Management Report

The Generali Group’s consolidated financial statements at 31 December 2014 were prepared taking into account the IAS/IFRS issued by the IASB and endorsed by the European Union, in accordance with the Regulation (EC) No. 1606/2002, Legislative Decree No. 58/1998 and Legislative Decree No. 209/2005, as amended by Legislative Decree No. 32/2007.

In this yearly report the Generali Group prepared its consolidated financial statements and Notes in accordance with the ISVAP Regulation No. 7 of 13 July 2007 and subsequent modifications and the information of the CONSOB Communication No. 6064293 of 28 July 2006. As allowed by the aforementioned Regulation, the Generali Group believed it appropriate to supplement its consolidated financial statements with detailed items and to provide further details in the Notes in order to meet also the IAS/IFRS requirements.

The Group takes advantage of the option provided for by Regolamento Emittenti, art. 70, paragraph 8, and art. 71, paragraph 1-bis, to waive the obligation to publish the information documents prescribed in relation to significant operations of merger, split, capital increase by contribution in assets, acquisitions and disposals.

The Group at 31 December 2014 consists of 473 consolidated line by line subsidiaries and valued at equity entities (480 at 31 December 2013). In particular, 426 entities consolidated line by line and 47 valued at equity.

This report was drawn up in euro (the functional currency used by the entity that prepared the consolidated financial statements) and the amounts are shown in millions, rounded to the first digit, unless otherwise stated, the rounded amounts may not add up to the rounded total in all cases.

On 14 July 214 the Group concluded an agreement for the sale of BSI Group. In October 2014 the Group has also agreed to sale the Argentinean entities La Estrella, Caja ART and Caja de Retiro. Pending the release of the necessary regulatory authorization, in accordance with IFRS 5, BSI group and the Argentinean entities under disposal were classified in the financial statements as disposal groups held for sale. Consequently, these investments have not been excluded from consolidation but both the total of the related assets and liabilities and the related profit or loss, net of tax effects, have been recorded separately in the specific lines in the financial statements. Comparative figures of this report have been restated, excluding from the consolidation area he noncurrent assets or disposal groups held for sale and sold during the period.

A description of the alternative performance indicators presented in this repot can be found in the Methodological note on alternative performance indicators.

The Management Report is prepared in accordance not only to the law but also to the Content Elements and Guiding Principles envisaged by the International Framework issued by the International Integrated Reporting Council (IIRC) in December 2013.

The connection between the Content Elements and the sections of the document is represented as follows:

Here follows an explanation of each Guiding Principle.

The Strategic focus and future orientation principle is applied along the whole document.

In accordance with the Connectivity of information principle, the report should show a holistic picture of the combination, interrelatedness and dependencies between the factors that affect the ability to create value over time. The key forms of connectivity used by Generali include the connectivity between qualitative and quantitative information, financial and other information, the capitals recognized through the stakeholders and information consistent with that in other communication tools. Other elements improving the connectivity of information and the overall usefulness of the report are a logical and well presented structure, cross-referencing (the design further contributes to achieve the principle) and a clear language – reference to the glossary is envisaged when jargon or highly technical terminology is used. Generali also issues an interactive version of its Annual Integrated Review on its website: it is another tool further highlighting the connectivity of information.

Generali maintains Stakeholder relationships as to understand and satisfy their needs, especially their information needs. The stakeholder engagement process promoted by the Group was addressed to the following stakeholders: financial community (analysts and investors), the community (academia) and employees.

Specifically, Generali regularly meets with members of the financial community at roadshows, meetings and sector conferences: 35 were such events in 2014. Following the 2013 result presentation, some investors were asked to give us a feedback on the new set of information from Generali, i.e. the Annual Integrated Review, the Financial Supplement and the simplification of the result presentation to the market. Feedback and suggestions on the integrated report were then collected through questionnaires over 2014, when the report was presented to about a hundred of students at the university of Trieste, Udine, Venice (Ca’ Foscari) and Milan (Bocconi) and to some Group employees.

We regularly dialogue with regulators and the European Institutions as to maintain good relationships and ensure legislative compliance. We also offer our competences and participate in public consultations for the definition of new rules, by providing our view in order to safeguard the specificities of the Group and the insurance industry.

In the future, Generali will continue to further strengthen its actions related to stakeholder engagement; thereby a greater alignment to the materiality determination process as proposed by the IIRC will be implemented.

In accordance with the Materiality principle, the report should only disclose information to explain to providers of financial capital how an organization creates value over time. Generali believes that value is created by focusing on the following primary stakeholders: the financial community, its people, clients, sales force and regulators. Matters that may significantly affect the Group ability to create value over time are therefore those connected to such five stakeholder categories.

In order to identify material matters, Generali relied on strategic management control tools, such as the strategic plan and the Quarterly Business Review (QBR).

The Annual Integrated Review also meets the Conciseness principle, as represented in the following diagram.

As for Reliability and completeness, the Annual Integrated Report is supported by a structured information system, which processes financial and non-financial information. This allows Generali to increase the homogeneity and reliability of both kinds of information. As for the scope of the reporting, the performance indicators refer to all the Group, unless otherwise indicated.

In accordance with the Consistency and Comparability principle, the report includes information that is consistent with the previous year (changes in criteria are reported in the paragraph below) and the strategic objectives announced.

Changes in the presentation of the performance indicators of the Group

All the economic indicators and comparative performance included in this management report have been restated in line with the current scope of consolidation.

It should be noted, therefore, that the changes indicated in the management report are on a comparable basis, excluding from the comparison period, discontinued operations with reference to 31.12.2014.

As mentioned above, the comparative KPIs contained in this report have been restated as follows:

31.12.2013 come precedentemente pubblicatovariazione perimetro e informativa per segmento31.12.2013 dato pubblicato
Gross written premiums 66,055 -174 65,881
Life Gross written premiums 45,115 -174 44,941
Property & Casualty Gross written premiums 20,940 0 20,940
Net cash inflows 8,702 -144 8,557
Operating result 4,207 -136 4,071
Life 2,645 -59 2,585
Property & Casualty 1,616 3 1,619
Holding and other businesses 129 -1 128
Consolidation adj. -182 79 -262
Non operating result -1.805 226 -1.578
Investments 342,036 -20,028 322,008