OPERATING RESULT

Generali

The operating result in the life segment amounted to € 2,965 million, down by 0.4% compared to the € 2,978 million at the end of 2014. In particular, the growth in the technical margin net of insurance operating expenses was more than offset by the worsening trends in the net other operating expenses, including the brand royalties paid to the Head Office for marketing and branding activities. On the other hand, the investment result were slightly increased.

Finally, the operating profitability on investments5 of the life segment amounted to 0.74% (0.81% at 31 December 2014).

Operating result: Technical margin

Life segment operating result: technical margin

(€ million)31/12/201531/12/2014FOURTH QUARTER 2015FOURTH QUARTER 2015
Technical margin 5,909 5,532 1,606 1,547
Net earned premiums 48,689 44,699 13,792 13,102
Fee and commission from financial service activities 236 224 53 61
Net insurance claims adjusted for financial intrests and bonuses credited to policyholders -43,205 -39,547 -12,311 -11,686
Other insurance items 189 156 72 71

The technical margin6, equal to € 5,909 million, is strongly improved; there is a strong increase in premium loadings, in line with premium income trends, the positive developments in the profitability of protection lines and the growth in fees related to the sale of unit/index linked products. This margin does not include the insurance operating expenses, which are reported in Total operating expenses.

5 Please refer to the Glossary in the Appendix to Management Report section for more details on the way the indicator was calculated
6 Please refer to the methodological note on alternative performance measures in the Appendix to Management Report section for more details on the way the indicator was calculated.

Operating result: Technical margin

Life segment operating result: technical margin

(€ million)31/12/201531/12/2014FOURTH QUARTER 2015FOURH QUARTER 2014
Net investment result 2,260 2,240 480 564
Operating income from investments 15,141 16,594 4,832 3,821
Net income from investments 12,416 12,305 2,971 2,908
  Current income from investments 11,248 11,024 2,924 2,841
  Net operating realized gains on investments 2,365 2,443 283 460
  Net operating impairment losses on investments -334 -310 5 -126
  Other operating net financial expenses -863 -852 -241 -267
  Net income from financial instruments at fair value through profit or loss 2,725 4,289 1,861 913
  Net income from financial instruments related to unit nd index-linked policies 2,276 3,300 1,681 724
  Net other income from financial instruments at fair value through profit or loss 448 989 180 189
Policyholders' interests on operating income from own investments -12,880 -14,354 -4,352 -3,257

The net investment result, amounted to € 2,260 million was slightly increased (+0,9%) on the € 2,240 million recorded at 31 December 2014.

This trend was mainly attributable to the increase in current income, in absolute terms, from equities and bonds investments, despite the low interest rates environment; this was partially offset by lower the net realized gains, mainly in the equity sector.

In particular:

  • current income from investments – which also include the current income from investments at fair value through profit or loss – stood at € 11,248 million (€ 11,024 million at 31 December 2014), while the related current return, calculated based on the book value of the investments, decreased to 3.4%. In more detail, the current income from fixed income instruments rose from € 9,588 million at 31 December 2014 to € 9,877 million thanks to the actions undertaken by the Group to support current returns. The current income in the equity segment was reduced, falling from € 449 million at 31 December 2014 to € 416 million. Finally, current income from investment properties was also slightly decreased, at € 652 million;
  • net operating realized gains on investments amounted to € 2,365 million (€ 2,443 million at 31 December 2014) due to lower realized gains especially on the equity portfolios of the Group compared to the corresponding period of the previous year; 
  • net operating impairment losses on investments increased from € -310 million at 31 December 2014 to € -334 million; this reflects the lower impairments on equities, more than offset by the higher impairments on the debt securities recorded in the first half of 2015; 
  • other operating net financial expenses, which includes interest expense related to operating debt and investment management expenses amounted to € -863 million (€ -852 million at 31 December 2014); 
  • net income from financial instruments related to unit- and index-linked contracts fell from € 3,300 million as at 31 December 2014 to € 2,276 million. This trend was affected by the change in value of the investments related to the performance of certain financial markets with respect to the corresponding period of the previous year; 
  • net income from financial instruments at fair value through profit or loss amounted to € 448 million (€ 989 million at 31 December 2014). The significant change was due to the performance of certain financial markets during the year. 

The policyholders' interests on operating income from own investments moving from € -14,354 million at 31 December 2014 to € -12,880 million, decreasing from the corresponding period of the previous year, due to the volatility of the income from financial instruments at fair value through profit or loss.

Operating result: Total operating expenses

Life segment operating result: total operating expenses

(€ million)31/12/201531/12/2014FOURTH
QUARTER 2015
FOURTH
QUARTER 2014
Total operating expenses -5,204 -4,795 -1,459 -1,384
Acquisition and administration costs related to insurance business -5,047 -4,759 -1,363 -1,365
Net other operating expenses -157 -35 -96 -20

The acquisition and administration costs related to insurance business and the other operating expenses have increased from € - 4,795 million at 31 December 2014 to € -5,204 million.

In particular, acquisition and administration costs related to insurance business amounted to € -5,047 million, increase of 6.0% compared to 31 December 2014. The costs of acquisition contributed to this trend, which amounted to € -4,044 million, up by +5.9%, driven especially by France and Asia, due to improvement in the net inflows.

Administration costs, amounting to € -1,003 million, increasing by 6.7% due to trend observed in France and Asia, in contrast with other areas in which the Group operates.

The acquisition and administration costs ratio amounted to 9.6%, stable compared to 31 December 2014 (9.7%).

Finally, the percentage of the total administration costs related to insurance business to the average insurance provisions stayed substantially stable at 0.27%. The increase in the other operating components is due to the higher provisions to risk funds during 2015, and the brand royalties fees recorded in the 4th trimester of 2015 the Head Office for marketing and branding activities.