Insurance risks

The Group companies life portfolios have a prevailing component of saving contracts, but there are also pure risk covers (death plus riders, such as accident, disability, dread disease, etc.) and some annuity portfolios, with the presence of the longevity risk.

The risks related to policies with a prevailing saving component and with minimum interest rate guarantee are adequately measured in a prudent way in the pricing process in accordance with the particular situation of the local financial markets, and taking also into account any relevant regulatory constraint.
In order to better manage risks and costs associated with embedded options included in the above products, the Group is continuing to pursue the policy, already undertaken in previous years, of redefining the structure of related financial guarantees.
In this perspective the structure of the product has been redefined, connecting in many cases the level and the recognition of guarantees with the length of staying inside the contract.

The table below shows the distribution of insurance provisions of life gross direct business by level of financial guarantee.

Life insurance provisions and financial liabilities: financial guarantee
 Gross direct insurance
(€ million)31.12.201331.12.2012
Liabilities with guaranteed interest(*) 244,770 237,274
between 0% and 1% 56,503 49,440
between 1% and 3% 105,317 98,823
between 3% and 4% 51,500 53,909
between 4% and 5% 30,173 31.366
more than 5 % 1,277 3.737
Provisions without guaranteed interest 60,907 55,113
Provisions matched by specific assets 6,930 7,556
Total 312,606 299,944

(*) The upper bound of each range is excluded

The total insurance provisions include the gross direct amount of mathematical provisions, which amount to € 238,629 million (€ 231,673 million at 31 December 2012), the provisions for policies where the investment risk is borne by the policyholders and for pension fund, which amount to € 45,795 million (€ 41,048 million at 31 December 2012), the ageing provision for life segment, which amount to € 10,249 million (€ 9,627 million at 31 December 2012), and financial liabilities related to investment contacts, which amount to € 17,933 million (€ 17,597 million at 31 December 2012).

Year end 2012 figures included technical provisions belonging to the Mexican group Generali Banorte, which were mainly recorded in the category with guaranteed interest higher than 5%.

The insurance provisions above are grouped in three macro classes:

  • contracts with a minimum guarantee level: this group considers both yearly cliquet and at event (death and maturity) guarantees;
  • contracts without interest guarantee: in this category, together with standard unit linked policies are also included contract whose benefits and premiums can be adjusted by Companies in order to mitigate interest rate risk;
  • contracts matched by specific assets: this category includes contracts where the liabilities are totally matched by specific assets.

The table above shows a progressive shift of the exposures towards ‘less than 3%’ guarantee classes, also due to the new business. It also shows a strong increase of ‘in addition to 5%’ thanks to the abovementioned disposal of Mexican activities where the nominal rates are higher than those in the Eurozone. Lastly, the amount of provisions without guaranteed interest showed an increase amounting to € 60,907 million (€ 55,113 million as at 31 December 2012).

From a quantitative point of view regarding the life underwriting risk and according to the parameters indicated by the CFO Forum, the Group performs the following Embedded Value sensitivities:

  • maintenance expenses -10%: sensitivity to a 10% decrease of maintenance expenses;
  • lapse rate -10%: sensitivity to a 10% decrease of lapse rates;
  • mortality/morbidity for risk business -5%: sensitivity to a 5% decrease of mortality/morbidity for all product lines except annuities (e.g. term assurance, whole life, annuity during the accumulation period);
  • mortality for annuity business -5%: sensitivity to a 5% decrease of mortality for annuity business only (e.g. annuities in payment).
Gross direct premiums by line of business and by geographical area
31.12.2013
(€ million)
Savings and PensionProtectionUnit/index linkedTotal
Italy 12,543 200 569 13,312
France 4,458 1,582 1,225 7,266
Germany 7,488 4,144 3,357 14,989
Central and Eastern Europe 851 245 471 1,568
EMEA 2,057 833 2,789 5,679
Spain 807 186 12 1,005
Austria 639 259 239 1,137
Switzerland 169 134 760 1,062
Other EMEA 442 254 1,778 2,474
Latin America 203 230 0 433
Asia 616 203 83 902
International  Operations 69 19 0 88
Total direct written premiums 28,285 7,457 8,495 44,237
31.12.2012
(€ million)
 Savings and PensionProtection
Unit/index linkedTotal
Italy 11,590 220 515 12,324
France 6,564 1,745 912 9,221
Germany 6,909 4,103 3,298 14,309
Central and Eastern Europe 981 233 428 1,642
EMEA 2,280 806 2,639 5,725
Spain 988 185 9 1,183
Austria 627 248 252 1,127
Switzerland 189 134 834 1,157
Other EMEA 476 239 1,544 2,259
Latin America 190 250 0 440
Asia 521 174 50 744
International Operations 92 20 0 112
Total direct written premiums 29,127 7,550 7,841 44,518
Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328