Unipolsai — Earnings Release 2016

Nov 11, 2016

Informazione Regolamentata n. 0230-63-2016		Data/Ora Ricezione 11 Novembre 2016 07:23:37	MTA
Societa'	:	UNIPOLSAI
Identificativo Informazione Regolamentata	:	81316
Nome utilizzatore	:	UNIPOLSAIN07 - Giay
Tipologia	:	IRAG 03
Data/Ora Ricezione	:	11 Novembre 2016 07:23:37
Data/Ora Inizio Diffusione presunta	:	11 Novembre 2016 07:38:38
Oggetto	:	2016 approved	UnipolSai: results of the first nine months of
Testo del comunicato

Vedi allegato.

Bologna, 11 November 2016

UNIPOLSAI: RESULTS OF THE FIRST NINE MONTHS OF 2016 APPROVED

• Consolidated net profit of €427m (€602m in the first nine months of 2015, which benefitted from the extraordinary results of financial management)
• Direct insurance income of €9.0bn (-11.1% compared to the first nine months of 2015)
• Non-Life business: €5.1bn (-2.1%)
• Life business: €3.9bn (-20.6%)
• Combined ratio net of reinsurance at 96.0% (95.7% in the first nine months of 2015)
• Return on invested assets equal to 3.7%
• Individual Solvency II margin equal to 190¹%
• Consolidated Solvency II margin equal to 169¹%

The Board of Directors of UnipolSai Assicurazioni S.p.A., which met yesterday under the chairmanship of Carlo Cimbri, approved the consolidated results as at 30 September 2016.

In the first nine months of the year, UnipolSai recorded a consolidated net profit of €427m, compared to €602m in the same period of 2015, which benefitted, in financial management, from significant capital gains mainly concentrated in the first three months of 2015 and not repeated in the current year.

In the period under review, direct insurance income gross of reinsurance, stood at €9,040m (-11.1% compared to €10,163m recorded in the same period of 2015).

Non-Life Business

Direct premium income as at 30 September 2016 amounted to €5,141m (-2.1% compared to €5,252m in the first nine months of 2015), of which €3,023m (-4.6% compared to €3,169m in the first nine months of 2015) from MV business and €2,118m from Non-MV business, which increased by 1.7% (€2,083m in the first nine months of 2015), thanks to the strong performance of the business linked to persons. New production in the MV business was also positive, recording an increase of 200,000 policies compared to the first nine months of 2015.

1 Figure calculated according to the Standard Formula with the use of USPs (Undertaking Specific Parameters), considered preliminary since the definitive figure shall be notified to Supervisory Authority according to the terms of applicable law.

With regard to underwriting profitability, the positive performance recorded by Non-MV business made it possible to offset the continuous decline in average MV TPL premiums resulting from strong competitive pressure.

In this context, as at 30 September 2016, UnipolSai recorded a combined ratio² of 96.0% (96.2% on premiums from direct business), compared to 95.7% in the same period of 2015. The loss ratio² stood at 68.6%, in line with 68.9% recorded in the first nine months of 2015. The expense ratio² was equal to 27.4% (compared to 26.7% in the first nine months of 2015).

The pre-tax result of the business was a profit of €381m compared to €653m in the first nine months of 2015, which whose strongly influenced by the capital gains realized during the year.

Life Business

In Life business the slowdown in production, already reported in the second quarter of 2016, continued. This phenomenon, relating mainly to the bancassurance channel, is attributable to the commercial policy adopted by the Company aimed at maintaining the production of traditional policies at a level compatible with the financial balance of segregated accounts over a multi-year period. In the first nine months of 2016, direct income amounted to €3,899m, a decrease of 20.6% compared to the same period of 2015 (€4,911m). In a market environment still characterised by very low or even negative interest rates in the short and medium term, the commercial offer was consequently geared towards unit-linked and multi-branch products.

UnipolSai S.p.A. recorded direct income of €2,210m (-7.1%). There was an even sharper drop in the production of the Popolare Vita Group which, with €1,611m, recorded a decrease of 33% compared to the first nine months of 2015.

The pre-tax result of the sector was a profit of €252m (€301m recorded in the same period of 2015).

Real Estate Business

Operations in the sector remained affected by the difficult situation in the real estate market and remained focused on the restoration and redevelopment of several important properties in portfolio, particularly in the city of Milan.

The pre-tax result of the business as at 30 September 2016 was a loss of €16m (-€90m as at 30 September 2015).

Other Business

The management and commercial development of diversified companies continued, together with the recovery measures implemented in previous years and, in some cases, still underway.

In the still weak market environment of the specific sectors, the positive result of the hotel business by Atahotels was confirmed, despite the lack of contribution from certain structures for which lease contracts were not renewed and pending completion of the agreement for the acquisition of the hotel business of UNA spa, which will enable significant recovery in turnover.

² Net of reinsurance

The pre-tax result of the business was a loss of €13m (-€6m as at 30 September 2015).

Financial Management

The profitability of the portfolio, despite aiming to preserve the risk/return profile of the assets and consistency between the assets and liabilities underwritten with policyholders, achieved a significant yield in the period under consideration, equal to approximately 3.7% of invested assets.

In the first nine months of 2016, the policy for the gradual reduction of domestic government bonds continued as part of progressive diversification towards a selective increase in corporate securities and other financial assets.

Balance Sheet

Shareholders' equity as at 30 September 2016 amounted to €6,519m (€6,615m as at 31 December 2015), of which €6,188m attributable to the Group. The total AFS reserve stood at €875m (€935m as at 31 December 2015).

The consolidated Solvency II margin as at 30 September 2016 was equal to 169%¹ of the capital requirement, compared to 190% as at 31 December 2015, mainly due to the effects of the greater reduction in the discount curve of liabilities in proportion to that of the bond market. The individual Solvency II margin as at 30 September 2016 was equal to 190%¹ of the capital requirement.

Business Outlook

With regard to the performance of the business in which the Group operates, the recent earthquake that affected Central Italy in October had a marginal impact.

In light of the foregoing and on the basis of the information currently available, a positive result is nevertheless expected at the end of this financial year, except in case of the occurrence of unforeseeable exceptional events.

***

Interim Publication of Quarterly Financial Data

The legislative changes that came into force in Italy on 18 March 2016 incorporated the amendments to the Transparency Directive of the European Union and eliminated the obligation to report quarterly financial data to the market.

On 26 October 2016, with Resolution No. 19770, CONSOB made the following changes to the Issuers' Regulation, introducing in particular the new Article 82-ter. According to this provision, listed companies are entitled to choose whether or not to publish additional interim financial data. If they choose to publish the same on a voluntary basis, the companies must notify the market of such decision, specifying the information they intend to provide so that the decisions adopted remain clear and stable over time. Any decision to stop publishing such information must be substantiated and made public, becoming effective as of the following year. The regulatory changes introduced by CONSOB Resolution No. 19770 shall apply as of 2 January 2017.

In this context, the Unipol Group decided to continue publishing, temporarily for financial year 2016, on a voluntary basis and for reasons of mere continuity with the past, interim quarterly reports with the same form and content as those published in previous years.

In line with the amendments to the regulatory framework of reference, starting next year the Unipol Group will make its quarterly financial reporting more concise, with a greater focus on its business.

At a formal level, the information will be reported in a specific press release, the content of which will differ from the quarterly press releases published up to 2016. Instead, the Interim Management Report of the Group will not be published and consequently nor will the balance sheets and income statements currently forming part of the present press release.

Therefore, as of financial year 2017, the content of the voluntary quarterly financial reporting will include at least the key quantitative performance indicators, namely:

• Non-Life and life income;
• Combined ratio;
• Net profit for the period;
• Shareholders' equity;
• Solvency II ratio.

The press release, which shall also contain qualitative information on the performance of the main businesses of the group, will be approved by the Board of Directors and published on the website of the Group according to the deadlines of the previous legislation.

Presentation of Results to the Financial Community

A conference call will be held at 12:00 pm today during which financial analysts and institutional investors may submit questions to the Group CEO and senior management on the results at 30 September 2016. The phone numbers to dial to attend the event are: +39/02/8020911 (from Italy and all other countries), +1/718/7058796 (from the US) and +44/121/2818004 (from the UK). Multimedia files containing the recorded comment of the results is in any case already available on under the investors section of the website www.unipolsai.com.

The Interim Management Report as at 30 September 2016 will be available, as provided by law, at the registered office, on the website of the Company www.unipolsai.com and on the website of the Italian Stock Exchange www.borsaitaliana.it.

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Please find attached hereto the Consolidated Balance Sheet, the Consolidated Income Statement, the summary of the Consolidated Income Statement by Business Segment and the Balance Sheet by Business Segment.

****

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Maurizio Castellina, Manager in charge of financial reporting of UnipolSai Assicurazioni S.p.A., declares, pursuant to Article 154-bis, paragraph 2, of the Consolidated Law on Finance, that the accounting information contained in the press release corresponds to the figures in corporate accounting records, ledgers and documents.

****

Glossary

COMBINED RATIO: sum of loss ratio and expense ratio EXPENSE RATIO: ratio of Non-Life operating expenses and premiums calculated on earned premiums LOSS RATIO: ratio of Non-Life claims and premiums calculated on earned premiums AFS RESERVE: reserves on assets classified as "available-for-sale

Contacts

Unipol Group Press Office

Fernando Vacarini Tel. +39/051/5077705 pressoffice@unipolsai.it Barabino & Partners Massimiliano Parboni m.parboni@barabino.it Tel. +39/335/8304078 Giovanni Vantaggi g.vantaggi@barabino.it Tel. +39/328/8317379

Unipol Group Investor Relations Adriano Donati

Tel. +39/051/5077933 investor.relations@unipolsai.it

UnipolSai Assicurazioni S.p.A.

UnipolSai Assicurazioni S.p.A. is the insurance company of the Unipol Group, Italian leader in Non-Life Business, in particular in vehicle liability insurance.

Also active in Life Business, UnipolSai has a portfolio of over 10 million customers and holds a leading position in the national ranking of insurance groups with a direct income amounting to approximately €14bn, of which €7.3bn in Non-Life Business and €6.7bn in Life Business (2015 figures).

The company currently operates through 5 divisions (Unipol, La Fondiaria, Sai, Nuova MAA and La Previdente) and has the largest agency network in Italy, with more than 3,500 agencies and 6,000 sub-agencies spread across the country.

UnipolSai Assicurazioni is a subsidiary of Unipol Gruppo Finanziario S.p.A. and, like the latter, is listed on the Italian Stock Exchange, being one of the most highly capitalized securities.

Consolidated Balance Sheet – Assets

Amounts in €m

		9/30/2016	12/31/2015
1	INTANGIBLE ASSETS	718	751
1.1	Goodwill	307	307
1.2	Other intangible assets	412	444
2	PROPERTY, PLANT AND EQUIPMENT	1,429	1,433
2.1	Property	1,280	1,323
2.2	Other items of property, plant and equipment	149	109
3	TECHNICAL PROVISIONS - REINSURERS' SHARE	855	869
4	INVESTMENTS	62,406	61,010
4.1	Investment property	2,475	2,535
4.2	Investments in subsidiaries and associates and interests in joint ventures	519	528
4.3	Held-to-maturity investments	876	1,100
4.4	Loans and receivables	5,270	5,251
4.5	Available-for-sale financial assets	44,530	42,804
4.6	Financial assets at fair value through profit or loss	8,736	8,791
5	SUNDRY RECEIVABLES	2,309	2,958
5.1	Receivables relating to direct insurance business	908	1,519
5.2	Receivables relating to reinsurance business	6 9	7 6
5.3	Other receivables	1,332	1,364
6	OTHER ASSETS	948	747
6.1	Non-current assets held for sale or disposal groups	4 1	1 7
6.2	Deferred acquisition costs	8 8	8 7
6.3	Deferred tax assets	221	187
6.4	Current tax assets	2 8	4 5
6.5	Other assets	569	412
7	CASH AND CASH EQUIVALENTS	572	957
	TOTAL ASSETS	69,237	68,724

Consolidated Balance Sheet – Equity and Liabilities

Amounts in €m

		9/30/2016	12/31/2015
1	EQUITY	6,519	6,615
1.1	attributable to the owners of the Parent	6,188	6,278
1.1.1	Share capital	2,031	2,031
1.1.2	Other equity instruments	0	0
1.1.3	Equity-related reserves	347	347
1.1.4	Income-related and other reserves	2,592	2,297
1.1.5	(Treasury shares)	-52	-50
1.1.6	Translation reserve	3	4
1.1.7	Gains or losses on available-for-sale financial assets	842	903
1.1.8	Other gains or losses recognised directly in equity	1 6	3 4
1.1.9	Profit (loss) for the year attributable to the owners of the Parent	409	711
1.2	attributable to non-controlling interests	331	337
1.2.1	Share capital and reserves attributable to non-controlling interests	279	278
1.2.2	Gains or losses recognised directly in equity	3 3	3 3
1.2.3	Profit (loss) for the year attributable to non-controlling interests	1 8	2 6
2	PROVISIONS	498	519
3	TECHNICAL PROVISIONS	56,215	56,095
4	FINANCIAL LIABILITIES	4,386	3,897
4.1	Financial liabilities at fair value through profit or loss	2,056	1,543
4.2	Other financial liabilities	2,330	2,354
5	PAYABLES	765	807
5.1	Payables arising from direct insurance business	9 8	115
5.2	Payables arising from reinsurance business	9 8	9 7
5.3	Other payables	568	595
6	OTHER LIABILITIES	853	792
6.1	Liabilities associated with disposal groups held for sale	2	0
6.2	Deferred tax liabilities	5 3	4 1
6.3	Current tax liabilities	3 1	3 5
6.4	Other liabilities	768	717
	TOTAL EQUITY AND LIABILITIES	69,237	68,724

Consolidated Income Statement

Amounts in €m

		9/30/2016	9/30/2015
1.1	Net premiums	8,485	9,818
1.1.1	Gross premiums	8,799	10,162
1.1.2	Ceded premiums	-314	-344
1.2	Fee and commission income	2 4	7
1.3	Gains and losses on financial instruments at fair value through profit or loss	-107	223
1.4	Gains on investments in subsidiaries and associates and interests in joint ventures	4	1 7
1.5	Gains on other financial instruments and investment property	1,632	1,864
1.5.1	Interest income	1,121	1,108
1.5.2	Other gains	135	145
1.5.3	Realised gains	332	579
1.5.4	Unrealised gains	4 4	3 2
1.6	Other revenue	333	343
1	TOTAL REVENUE AND INCOME	10,371	12,271
2.1	Net charges relating to claims	-7,267	-8,714
2.1.1	Amounts paid and changes in technical provisions	-7,407	-8,862
2.1.2	Reinsurers' share	139	148
2.2	Fee and commission expense	-10	-7
2.3	Losses on investments in subsidiaries and associates and interests in joint ventures	-2	-7
2.4	Losses on other financial instruments and investment property	-232	-430
2.4.1	Interest expense	-60	-68
2.4.2	Other charges	-33	-36
2.4.3	Realised losses	-83	-167
2.4.4	Unrealised losses	-56	-159
2.5	Operating expenses	-1,693	-1,770
2.5.1	Commissions and other acquisition costs	-1,237	-1,298
2.5.2	Investment management expenses	-94	-82
2.5.3	Other administrative expenses	-361	-390
2.6	Other costs	-562	-484
2	TOTAL COSTS AND EXPENSES	-9,767	-11,413
	PRE-TAX PROFIT (LOSS) FOR THE YEAR	605	858
3	Income tax	-177	-256
	POST-TAX PROFIT (LOSS) FOR THE YEAR	427	602
4	PROFIT (LOSS) FROM DISCONTINUED OPERATIONS	0	0
	CONSOLIDATED PROFIT (LOSS) FOR THE YEAR	427	602
	attributable to the owners of the Parent	409	579
	attributable to non-controlling interests	1 8	2 4

Condensed Consolidated Income Statement by Business Segment

Amounts in €m

		NON-LIFE BUSINESS			LIFE BUSINESS		INSURANCE BUSINESS			OTHER BUSINESSES			REAL ESTATE BUSINESS (*)			INTERSEGMENT ELIMINATION		CONSOLIDATED TOTAL
																Sep-16 Sep-15 var.% Sep-16 Sep-15 var.% Sep-16 Sep-15 var.% Sep-16 Sep-15 var.% Sep-16 Sep-15 var.% Sep-16 Sep-15 Sep-16 Sep-15 var.%
Net premiums		5,120 5,252 -2.5			3,365 4,565 -26.3			8,485 9,818 -13.6		0	0	0.0	0	0	0.0	0		0 8,485 9,818 -13.6
Net fees and commissions	0	0	n.s.	1 4	0	n.s.	1 4	0	n.s.	0	0	n.s.	0		0 78.8	0	0	1 4	0	n.s.
Financial income/expense **	366		552 -33.7		890 1,163 -23.4			1,257 1,715 -26.7		0		1 -61.9	0		-47 -99.1	-21		-24 1,235 1,645 -24.9
Net interest	266	254	4.8	799	792		1.0 1,065 1,046		1.9	0		1 -120.4	-1		-1 12.3	0		0 1,064 1,045		1.8
Other income and expenses	7 1	6	1 16.3	5 0	6	1 -18.3	121	123	-1.0	0	0	-51.8	1 2	3	0 -60.4	-21	-24	112		129 -13.1
Realised gains and losses	134		255 -47.4	123		279 -56.0	257		534 -51.9	0	0	n.s.	-1	-1	2.3	0	0	256		533 -52.0
Unrealised gains and losses	-105	-18	n.s.	-82	3 1	n.s.	-187	1 3	n.s.	0		0 -146.2	-9		-74 -87.5	0	0	-197	-62	n.s.
Net charges relating to claims							-3,421 -3,543 -3.4 -3,787 -5,150 -26.5 -7,208 -8,693 -17.1			0	0	0.0	0	0	0.0	0		0 -7,208 -8,693 -17.1
Operating expenses		-1,460 -1,446	1.0	-195			-247 -21.0 -1,656 -1,693 -2.2			-42		-70 -40.4	-9		-23 -61.4	1 4	1	7 -1,693 -1,770 -4.4
Commissions and other acquisition costs		-1,144 -1,161	-1.5	-93			-136 -31.7 -1,237 -1,298		-4.7	0	0	0.0	0	0	0.0	0		0 -1,237 -1,298		-4.7
Other expenses	-316		-284 11.2	-102	-111	-7.8	-418	-395	5.9	-42	-70	-40.4	-9		-23 -61.4	1 4	1 7	-455	-472	-3.5
Other income / expense	-224		-163 -37.4	-35		-30 -18.5	-260		-193 -34.5	2 9	6	4 -54.4	-6		-19 68.2	7	7	-229		-142 -61.8
Pre-tax profit (loss)	381		653 -41.7	252		301 -16.3	633		954 -33.7	-13		-6 -125.2	-16		-90 82.7	0	0	605		858 -29.5
Income tax	-109		-197 -44.8	-75		-83 -10.5	-184		-281 -34.6	4	1	n.s.	2	2	4 -91.9	0	0	-177		-256 -30.6
Profit (loss) on discontinued operations	0	0	0.0	0	0	0.0	0	0	0.0	0	0	0.0	0	0	0.0	0	0	0	0	0.0
Consolidated profit (loss) for the period	272		455 -40.3	177		218 -18.6	449		673 -33.3	-8		-4 -90.1	-14		-66 79.3	0	0	427		602 -29.1
Profit (loss) attributable to the owners of the Parent																		409		579 -29.3
Profit (loss) attributable to non-controlling interests																		1 8	2	4 -24.1

(*) Real Estate business only includes real estate companies controlled by the Group. At 30/09/2015, the sector included figures for the company UnipolSai Real Estate, which merged into UnipolSai on 31 December 2015 - Insurance sector, Non-Life business.

(**) Excluding assets/liabilities at fair value related to contracts issued by insurance companies with investment risk borne by customers and arising from pension fund management

Balance Sheet by Business Segment

Amounts in €m

		Non-Life Business		Life Business		Other Businesses Real Estate Business (*)					Intersegment Elimination	Total
								9/30/2016 12/31/2015 9/30/2016 12/31/2015 9/30/2016 12/31/2015 9/30/2016 12/31/2015 9/30/2016 12/31/2015 9/30/2016 12/31/2015
1	INTANGIBLE ASSETS	458	469	258	279	2	2	0	0	0	0	718	751
2	TANGIBLE ASSETS	929	923	3 4	3 4	135	141	332	334	0	0	1,429	1,433
3	TECHNICAL PROVISIONS - REINSURERS' SHARE	785	787	7 0	8 2	0	0	0	0	0	0	855	869
4	INVESTMENTS	16,144	16,478	45,820	44,016	4 4	4 4	497	521	-99	-49	62,406	61,010
	4.1 Investment property	1,943	1,986	9	9	4 2	4 2	482	498	0	0	2,475	2,535
	4.2 Investments in subsidiaries, associates and joint ventures	358	370	161	157	0	0	0	0	0	0	519	528
	4.3 Held-to-maturity investments	185	355	691	745	0	0	0	0	0	0	876	1,100
	4.4 Loans and receivables	2,220	2,140	3,148	3,159	1	1	0	0	-99	-49	5,270	5,251
	4.5 Available-for-sale financial assets	11,315	11,471	33,199	31,311	0	1	1 6	2 2	0	0	44,530	42,804
	4.6 Financial assets at fair value through profit or loss	124	156	8,612	8,635	0	0	0	0	0	0	8,736	8,791
5	SUNDRY RECEIVABLES	1,745	2,332	544	623	7 3	7 0	2 8	2 9	-80	-96	2,309	2,958
6	OTHER ASSETS	906	713	116	126	3 1	3 0	3 6	2 5	-142	-148	948	747
	6.1 Deferred acquisition costs	3 5	3 7	5 3	5 0	0	0	0	0	0	0	8 8	8 7
	6.2 Other assets	870	676	6 4	7 6	3 1	3 0	3 6	2 5	-142	-148	860	660
7	CASH AND CASH EQUIVALENTS	215	354	225	460	5 6	6 7	7 6	7 5	0	0	572	957
	TOTAL ASSETS	21,181	22,057	47,066	45,620	341	354	969	984	-320	-292	69,237	68,724
1	EQUITY	2,805	3,071	2,775	2,589	221	225	717	730	0	0	6,519	6,615
2	PROVISIONS	441	453	2 7	2 8	2 4	2 1	6	1 6	0	0	498	519
3	TECHNICAL PROVISIONS	15,155	15,748	41,060	40,347	0	0	0	0	0	0	56,215	56,095
4	FINANCIAL LIABILITIES	1,568	1,542	2,698	2,235	1 5	1 4	204	203	-99	-97	4,386	3,897
	4.1 Financial liabilities at fair value through profit or loss	104	6 2	1,952	1,479	0	0	1	2	0	0	2,056	1,543
	4.2 Other financial liabilities	1,465	1,480	746	756	1 5	1 4	203	202	-99	-97	2,330	2,354
5	PAYABLES	603	618	144	129	6 9	8 0	2 9	2 3	-80	-43	765	807
6	OTHER LIABILITIES	608	626	361	292	1 2	1 4	1 4	1 2	-142	-152	853	792
	TOTAL EQUITY AND LIABILITIES	21,181	22,057	47,066	45,620	341	354	969	984	-320	-292	69,237	68,724

(*) Real Estate business only includes real estate companies controlled by the Group.