Other assets

Intangible assets

(€ million)31.12.201331.12.2012
Goodwill 7,163 7,222
Other intangible assets 2,189 2,681
Software
385 426
Value of in-force business arising from insurance business combination 1,238 1,479
Other intangible assets 566 776
Total 9,352 9,902

Goodwill

(€ million)31.12.201331.12.2012
Carrying amount as at 31 December previous year 7,222 7,394
Changes in consolidation scope 0 -137
Other variations -59 -36
Carrying amount as at the end of the period 7,163 7,222

At 31 December 2013 Group’s goodwill amounted to € 7,163 million (-0.8% respect to 31 December 2012).

The table below details the goodwill by relevant companies:

(€ million)31.12.201331.12.2012(*)
Generali Deutschland Holding 2,179 2,179
Alleanza Assicurazioni 1,461 1,461
Generali Italia 1,332 1,332
Generali PPF Holding Group
569 616
BSI - Banca del Gottardo Group
545 553
Generali France Group 415 415
Generali Schweiz Holding AG 286 289
Generali Holding Vienna AG 153 153
Other 222 222
Total goodwill 7,163 7,222

(*) Year-end 2012 data have been restated on a comparable basis taking into account the reorganization transactions that have affected the Italian perimeter.

The decrease was mainly attributable to foreign exchange adjustments on the goodwill share calculated on entities that have
reporting currencies other than Euro.

The goodwill booked was subject to impairment tests as stated by IAS 36.

Cash generating units were established in accordance with the Group’s participation structure and considering the IFRS 8
requirements relating to operating segments, which Assicurazioni Generali identified as Life, Non-Life and Financial.

The table below shows the details of the Group’s goodwill by cash generating unit:

(€ million)LifeNon LifeFinancialTotal
Generali Deutschland Holding 562 1,617   2,179
Alleanza Assicurazioni 1,461     1,461
Generali Italia 640 692   1,332
Generali PPF Holding Group
365 204   569
BSI - Banca del Gottardo Group     545 545
Generali France Group 319 97   416
Generali Schweiz Holding AG 81 205   286
Generali Holding Vienna AG 76 77   153
Gruppo Europ Assitance   82   82
Other       140
Total 3,504 2,974 545 7,163

The cash generating units have been defined consistently with IAS 36; with regard to the measurement based on the new Group reorganization program, the CGU - Alleanza Toro has been split into Generali Italia and Alleanza Assicurazioni. This change was performed due to the following: from 1st July 2013 the company branch called "Direzione Per l’Italia" of Assicurazioni Generali S.p.A. including the Italian insurance business and the main Italian participations, among which Alleanza Assicurazioni, Genertel, Genertellife, Banca Generali, Generali Properties and Genagricola, were transferred into Ina Assitalia, as of 31.12.2013 Alleanza Toro S.p.A transferred business related to a company branch into Alleanza Assicurazioni and was then merged into Generali Italia.
The cash generating units have been defined consistently with IAS 36; with regard to the measurement of the recovery value, as described in the basis of presentation and accounting principles, the Dividend Discount Model (DDM) and the Embedded Value or Appraisal Value have been used.

Specifically, the Dividend Discount Model (DDM) was used for the determination of the recovery value for the following cash generating unit (CGU): Alleanza Assicurazioni, Generali Deutschland Holding, Ceska Group, BSI Group, Generali Schweiz Holding AG, Europ Assistance, Generali Holding Vienna and Generali France.

This method represents a variant of the method of cash flows. In particular, the Excess Capital variant, defines the entity’s economic value as the discounted dividend maintaining an appropriate capital structure taking into consideration the capital constraints imposed by the Supervisor as the solvency margin. This method results in the sum of discounted value of future dividends and the cash generating unit terminal value.

The application of this criterion entailed in general the following phases:

  • explicit forecast of the future cash flows to be distributed to the shareholders in the planned time frame, taking into account the limit due to the necessity of maintaining an adequate capital level;
  • calculation of the cash generating unit’s terminal value, that was the foreseen value of the cash generating unit at the end of the latest year planned.

The expected cash flows used in the analysis for each CGU, were those detailed in the Strategic Plan 2014-2016, presented to the Board of Directors on 6 December 2013 and subsequent amendments. In order to extend the analysis horizon to a 5 years period, the main economic and financial data were calculated for a further two years (2017 and 2018). In detail, the required and available solvency margins for 2017 and 2018 were determined on the basis of the growth of the last year of the plan (2016), whereas the net result for 2017 and 2018 were calculated using a sustainable growth rate for each CGU.

A) Nominal growth rate (g)

 g
Generali Deutschland Holding 2.0%
Alleanza Assicurazioni 2.5%
Generali Italia 2.5%
Generali PPF Holding Group
3.0%
BSI - Banca del Gottardo Group 1.0%
Generali France Group
2.0%
Generali Schweiz Holding AG 1.0%
Generali Holding Vienna AG 2.0%
Europ Assistance Group AG
2.0%

B) Cost of equity (Ke) of the company net of taxes:

 Ke
Generali Deutschland Holding  
Life 7.3%
Property&Casualty 6.9%
Alleanza Assicurazioni
 
Life 9.6%
Generali Italia
 
Life 9.6%
Property&Casualty 9.3%
Generali PPF Holding Group
 
Life8.0%
Property&Casualty8.8%
BSI – Banca del Gottardo Group
6.8%
Generali France Group
 
Life 7.8%
Property&Casualty 7.4%
Generali Schweiz Holding AG  
Life 6.5%
Property&Casualty6.1%
Generali Holding Vienna AG  
Life 7.6%
Property&Casualty 7.3%
Europ Assistance Group AG  
Property&Casualty 7.9%

The cost of equity (Ke) for each entity is extrapolated based on the Capital Asset Pricing Model (CAPM) formula. In detail:

  • the risk free rate was defined as the average value - observed during the last three months of 2013 - of the 10-years government bond of the reference country of operation of the CGU, on which the goodwill has been allocated;
  • the Beta coefficient was determined based on a homogeneous basket of securities of the non-life insurance, life insurance and banking sectors, which was compared to market indexes. The observation period was 5 years with weekly frequency;
  • the market risk premium amounts to 5% for all Group’s CGUs.

All CGUs passed the impairment test, being that their recoverable amounts higher than their carrying amounts. Furthermore a sensitivity analysis was performed on the results changing the cost of own capital of the company (Ke) (+/-1%) and the perpetual growth rate of distributable future cash flows (g) (+/-1%). This sensitivity highlighted that some negative changes included in the chosen sensitivity’s bucket could lead the recoverable value of some Group CGUs under the corresponding carrying amounts.

For other minor CGUs the Embedded Value Method and, if necessary, the Appraisal value were adopted. These methodologies are linked to the definition logics of fair value net of costs of sale.

The Embedded value method consists in the restatement at current values of all the assets and liabilities of the company as well as the valuation of the value of in force business according to actuarial methodology.

Appraisal value represents the company’s economic value determined by the adjusted net asset value and the present value of future profit arising from both the in force business and a fixed generation of new business.
Appraisal value is therefore defined as the sum of the embedded value and the fixed generations of new business, corresponding to the goodwill.

These CGUs also passed the impairment test being their recoverable amount, calculated on the basis of the Embedded value, greater than the carrying amount.

Tangible assets

Land and buildings (self-used)

The main changes that occurred in the period and the fair value of the properties used for own activity by the Parent Company and its subsidiaries to run the activity are shown in the table below.

(€ million)31.12.201331.12.2012
Gross bookvalue as at 31 December previous year 3,979 4,025
Accumulated depreciation and impairment as at 31 December previous year -977 -954
Carrying amount as at 31 December previous year 3,002 3,072
Foreign currency translation effects -19 2
Increases 15 29
Capitalized expenses 31 51
Changes in consolidation scope -7 -91
Reclassifications -35 0
Decreases -51 -9
Depreciation of the period -49 -52
Net impairment loss of the period -7 0
Carrying amount as at the end of the period 2,879 3,002
Accumulated depreciation and impairment as at the end of the period 986 977
Gross bookvalue as at the end of the period 3,865 3,979
Fair value 3,370 3,477

The fair value of land and buildings (self-used) at the end of the reporting period was mainly based on external appraisals.

Other tangible assets

(€ million)31.12.201331.12.2012
Carrying amount as at 31st December previous year 2,016 1,835
Foreign currency translation effects -4 1
Increases 264 296
Changes in consolidation scope -8 29
Decreases -73 -67
Amortization of the period -130 -140
Impairment losses of the period -131 0
Other variations -26 63
Carrying amount as at the end of the period 1,907 2,016

Other tangible assets amounted to € 1,907 million (€ 2,016 million at 31 December 2012). This category mainly includes property inventories (€ 1,451 million mainly allocated in Citylife) and furniture, fittings and office equipment (€ 416 million).

The impairment losses of the period were entirely attributable to the remeasurement of the carrying value of the inventories of Citylife due to a revision of the company’s business plan.

Receivables

This category included receivables arising out of direct insurance and reinsurance operations, and other receivables.
Among other receivables, € 622 million are related to the real estate activity.

Other assets

(€ million)31.12.201331.12.2012
Non-current assets or disposal groups classified as held for sale 653 15
Deferred acquisition costs 1,957 2,323
Tax receivables 2,866 2,686
Deferred tax assets 2,807 2,624
Other assets 7,368 6,956
Total 15,651 14,603

The variation of Non-current assets or disposal groups classified as held for sale was attributable to the reclassification into
this category of the assets of Fata Assicurazione Danni, a company held for sale.

The reduction of deferred acquisition costs was attributable to the exit of the investments from the consolidation scope in light of the Generali PPF Holding operation.

Deferred acquistion costs

 Segment LifeSegment Non LifeTotal
(€ million)31.12.201331.12.201231.12.201331.12.201231.12.201331.12.2012
Carrying amount as at 31 December
previous year
1,628 1,568 694 445 2,323 2,013
Acquisition costs deferred 421 466 193 466 614 932
Changes in consolidation scope -29 0 -351 0 -381 0
Amortization of the period -370 -409 -219 -258 -590 -667
Other movements 0 3 -9 41 -9 44
Carrying amount as at 31 December current
year
1,650 1,628 307 694 1,957 2,323

The deferred acquisition costs decreased from € 2,323 million as at 31 December 2012 to € 1,957 million as at 31 December
2013. The decrease of the period was due to the exit of some companies from the consolidation scope.

Cash and cash equivalents

(€ million)31.12.201331.12.2012
Cash and cash equivalents 2,519 7,490
Cash and balances with central banks 4,689 3,156
Cash at bank and short-term securities 12,224 11,000
Total 19,431 21,647

The decrease compared to 31 December 2012 was substantially attributable to the gradual reinvestment of excess of liquidity.

Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328