Cattolica Group: Growth and Value Mix

(1)

1

Cattolica Group

Cattolica Group:

Growth and Value Mix

Italian Investment Seminar

Dresdner Kleinwort Wasserstein

and Borsa Italiana

Frankfurt, 28 September 2005

(2)

(3)

2

Cattolica Group

Agenda

Cattolica Group at a glance

Market scenario and Cattolica strategy

Focus on value creation

1H 2005 Results

IAS/IFRS adoption

Attachments

(4)

Agenda

1H 2005 Results

IAS/IFRS adoption

Attachments

(5)

4

Cattolica Group

The Parent Company is a co-operative legal-entity structure, operating in life

and non-life businesses

Today the Group is made by

22 companies,

among which there are

14

insurance companies

Insurance companies

, other than the Parent Company, are:

•

8 operating in life business

(Duomo Previdenza, Risparmio & Previdenza,

BPV Vita, Lombarda Vita, Eurosav, Axa-Cattolica Previdenza in Azienda,

San Miniato Previdenza, UniOne Vita)

•

5 operating in non-life business

(Il Duomo Assicurazioni, Verona

Assicurazioni, Cattolica Aziende, Tua Assicurazioni, UniOne Assicurazioni)

Other Group companies are

two real-estate companies, four service

companies, one asset management company and one retail-brokerage

(Fas) company

(6)

1896

1976

BIRTH

CONS.

GROUP DEVELOPMENT

1994

2000

2002 2003

2004

‘98

‘95 ‘97

Cattolica Group history’s key points

HISTORICAL PHASES

2001

Cattolica Group Evolution

2005

Listing

November

(7)

6

Cattolica Group 525 756 1,053 1,267 1,392 917 2,012 2,298 2,464 2,820 1999 2000 2001 2002 2003

Development of consolidated premiums

1,442

2,768

3,351

3,731

4,212

2004

1,420

3,197

4,617

Gross Consolidated Premiums

Direct and indirect business

(1999 - 2003; Euro mn)

2004 Result

73%

64%

69%

66%

67%

Non-life

Life

Breakdown

27%

36%

31%

34%

33%

Life

Non-life

(*)

69%

31%

CAGR

99/04

26%

(*) With the inclusion of indirect business (**) Only direct business

2007E

2,010

3,499

5,510

64%

36%

2007 Target

28%

22%

CAGR

04/07

6%

3%

12%

+9.6%

+13

.4%

+13

.4%

+2.5%

**

+2.5%

** Change % 2004/ 2003 MKT10% MKT13% MKT6%

(8)

Group Market Share trend

Group Market Share

(2002 - 2004; Italian direct business)

Sources: Estimates on Cattolica Group reports and ANIA data

3.8%

4.0%

4.5%

4.9%

4.2%

4.3%

4.5%

2002 2003 2004

Non-life Life Total market share

2004

•

FonSAI

•

Generali

•

Allianz

•

Unipol

•

Toro

•

R. Mutua

•

Cattolica

•

Zurich

•

Axa Italia

•

Sara

•

Generali

•

Allianz

•

AIP

•

Unipol

•

Poste V.

•

Cattolica

•

Aviva

•

FonSAI

•

MPS

•

Mediolan.

•

Generali

•

Allianz

•

Unipol

•

FonSAI

•

AIP

•

Cattolica

•

Poste V.

•

Aviva

•

Toro

•

MPS

Non-life

Life

Total

7

6

5 th

traditional

insurance

Italian Group

(9)

8

Cattolica Group

Business mix: Cattolica Group and the Market

MARKET 31.12.2004

CATTOLICA GROUP 31.12.2004

Non-Life

35%

Non-Life

30.4%

Life

65%

Life

69.6%

Total

Non-Life

Life

Non-Life

Life

Motor

59.9%

Others

40.1%

Motor

60.1%

Others

39.9%

Index e Unit

37.7%

Traditional

62.3%

Traditional

43.3%

Index e Unit

56.7%

(10)

Technical profitability

Non-life combined ratio trend

(1999 - 2003; %)

2004 Result

2007 Target

94.5%

2007E

97.5%

2004

1999

2000

2001

2002

2003

104.2%

98.9%

101.3%

98.5%

100.6%

(11)

10

Cattolica Group

Development of consolidated technical results

Non-life business

12

(Euro mn)

30

Life business

2003

58

(Euro mn)

59

Change % 2003-2004

Total technical result

(Euro mn)

2003

2004

71

89

2003

2004

2007E

93

170

2003

2004

2007E

77

+24%

+46%

+9%

CAGR 04/07

2007E

+1

48

%

+1

48

%

+1%

+26

%

+26

%

(12)

Development of consolidated net profit

Consolidated net profit 1999-2003

( Euro mn)

26

47

53

63

125

1999 2000 2001 2002 2003 Group net profit (*)

25

44

46

57

116

2004

150

136

2004 Result

CAGR

99/04

2007 Target

CAGR

04/07

2007E

176

162

42%

5,5%

+19

.6%

+19

.6%

40%

6%

+17.1%

(13)

12

Cattolica Group

Agenda

1H 2005 Results

IAS/IFRS adoption

(14)

Market scenario

Integration (M&A)

processes and

rationalization

and

concentration

in holding structures

Financial market recovery

expectations, and the resulting impact on the companies’ asset and

financial management

Progressive

improvement of technical management

, through

cost reduction

and

portfolio

selection

policies

Strengthening existing channels

and consolidating new distribution models

Customer need for

simplicity

and

transparency

, and an increasing

demand for consultancy

General overview and trends

Increase

in the

Life market growth

rate

Finalisation of Italian

pension reform

Pressure for

greater transparency of life product costs

P&C

is set to remain a

low growth

but highly

profitable

business

Motor business

: flat or slightly increasing tariffs and stable claim frequency.

Non- motor segments

will sustain the overall growth of the P&C sector

Non-life business

(15)

14

Cattolica Group

Mission and strategic objectives continued

Architettura industriale focalizzata,

integrata e aperta

Crescita

organica

Crescita

per linee

esterne

sul core business assicurativo,

proseguendo nel consolidamento dei business

attuali ed avviando nuovi percorsi di crescita

Focus integrated, open

Industrial architecture

Crescita

organica

Organic

growth

Crescita

per linee

esterne

External

growth

STRATEGIC PATHS

MISSION

Consolidate the

insurance

business model

Integrated

development of

financial services

Service

centralisation and

cost optimization

Strengthen

controllership

Develop current

business

Develop new

markets, products,

channels

Accelerate

development

Strategic objectives

… focus on insurance core business, consolidating

current businesses and implementing new growth

strategies through flexible development methods

(16)

Organic growth:

multi-channel development

BUSINESS/SERVICE

LINES

Tied agents

Banks

Brokers

Other channels

CHANNELS

Non-Life

Life

Financial

services and

asset

management

• Agency

network

develop-ment

• Product

and

channel

innova-tion

(TUA)

• Retail

segment

• Selective

corporate

expansion

• Focus on

profitability

• Penetration

on preferred

segments

• Social

security

• Expansion of parent

company units for

direct assumption of

corporate risks

• Private retail segment

• Standard products

• JV with BPVN and other

business/ partnerships

agreements (

OnLine

Division)

• “Flexible” confirmation of

the JV model

• Protection/development

of strategic commercial

contracts

• Product and segment

innovation

• Re-launch of

Cattolica

Aziende

• Focus

and

selection

of middle

size,

high-

contribu-tion

brokers

•

Axa-Cattolica

• Middle

company

segment

(B2B2E)

• Direct channel for

corporate contracts

• Development of

“preferred

multi-mandatory” distribution

• FAs working inside

agencies: Cattolica

Investimenti SIM

• Cross-selling at sales

outlets

• Banking partnerships

to increase multi-bank

financial products with

specific proprietary

brands

• Development of Cattolica Investimenti SIM model

• Institutional Asset management: Verona Gestioni

(17)

16

Cattolica Group

Agenda

Cattolica at a glance

1H 2005 Results

IAS/IFRS adoption

(18)

Development of dividend per share

2000 2001 2002 2003 Pay-out(Euro mln) Other indicators 30 43 48

0.70

1.00

1.02

Dividend per share

(1999-2003; Euro)

0.78

0.22

Dividend yield(*) _2.28% _3.60% _4.59% _3.50% 43(**) Extraordinary dividend

1 free share for every 10 1999

0.62

17 n.a.

Dividend 2004

2004

1.35

64.,0 3.75%(***)

Cattolica dividend policy is consistent with the 3-year plan value creation program

+32

,4%

+32

,4%

CAGR

99/04

17%

30%

(19)

18

Cattolica Group

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Growth and Value Performance

Focus on

Growth

Focus on

Growth

Focus on

Value

Focus on

Value

Index value = 1

BUSINESS

PLAN 2005|2007

Business Plan

2005-2007 estimates a

balanced mix of growth

and value for the next

3 years

Index focused on growth and value performance

Index=Consolidated premiums/Group net profit (1995-2007E)

Listing

More focus on VALUE in combination with

(20)

Cattolica stock performance in 2005

PERFORMANCE 2005

as at 20 September 2005

Cattolica

+22.6%

MIB INS.

Mibtel

S&P/MIB

+12.6%

+11.5%

+7.5%

Change % 01/01/2005-20/09/2005 01/01/2005 Cattolica S&P/MIB MIB INS. MIBTEL

20/09/2005

Stock performance in comparison

with the main indexes

(21)

20

Cattolica Group

Agenda

1H2005 Results

IAS/IFRS adoption

(22)

1H 2005 Results at a glance

All figures compare 1H 2005 with 1H 2004

The validity of Cattolica 3-year-plan strategy is confirmed

b y 1

st

half 2005 results:

Increase of

consolidated net profit

up 11.9% to

€

66 million

and of

Group net profit

up 3.7% to

€

56 million

Premiums growth

up 14.7% to

€

2,768 million; significant

development in life premiums: + 21% to

€

2.015 million

Continued core business profitability:

technical

performance

+ 30.8% to

€

51 million; non-life technical result

up 240% to

€

17 million; consolidation of life technical result

Group

combined ratio

down from 99.28% in 1H 2004 to

97.41%

(23)

22

Cattolica Group

1H 2005 Key numbers

(1) Net of taxes and minority interests

Legend:

Technical Result

5 17 34 34 1H 2004 1H 2005 39 30.8% 30.8% 51 Non-life Life Figures in€ mln Change 1H04-1H 05 54 56 1H 2004 1H 2005 3.7% 3.7%

Net profit

(1)

Net profit

(1) 14,432 17,157 1H 2004 1H 2005 18.9% 18.9%

Technical Reserves

Gross Premiums

1.666 753 748 2,015 1H 2004 1H 2005 2,414 2,768 14.7% 14.7% Non-life Life 99.28% 97.41% 1H 2004 1H 2005

Non-life combined ratio

Net ordinary result

64

94

1H 2004 1H 2005

46,9%

(24)

Development of Group’s multichannel network

Agencies

n. 546 918 974 1,024 1,049 1,092 1999 2000 2001 2002 2003 2004 30/06/05

1,270

FAs

n. 337 511 613 895 1,212 _1,138 1999 2000 2001 2002 2003 2004 30/06/05

1,069

With the inclusion of 138

Eurosav multi-mandatory

agencies

Other 164 FAs of

Cattolica Investimenti

SIM network

Bank branches

n. 2,066 2,653 2,7172,748 3,053 2,702 1999 2000 2001 2002 2003 2004 30/06/05

2,955

The additional 198

branches are Eurosav

(25)

24

Cattolica Group

Non-life business

Premiums

726

(Direct business - Euro mn)

735

2003

1H 2004

1H 2005

2004

1,398

+1.2%

Agents

90.3%

Other 6.8% Broker 1.5% Banks 1.4%

Growth in agency networK

−

1,132

proprietary agencies

−

138

Eurosav multi-mandatory agencies

New structures for selecting and

supporting new agents

Special projects

−

Agency segmentation based on performance

−

Service Partners and Club Best agencies

−

Regional and local projects

Premiums breakdown by channel

Premiums growth by channel

1H2004

1H2005

Agencies - 1.8% Broker + 22.2% Banks + 100% Other + 38.9%

676

664

9 5 36 11 10 50

(26)

A

gencies network development

Proprietary agency network

(number of agencies)

Eurosav network

1H 2005 premiums collection:

€

275 million

(through banks and

agencies)

TARGET

Improve the multi-mandatory

agency network and set up our

Pole

for

“preferred

multi-mandatory”

distribution

UniOne network

1H 2005 premiums collection:

€

123 million

They will be included in Cattolica

Group agency network in 2H2005:

an integration plan with Duomo

has been approved

1,070

1,092

705

709

359

364

1H2004 FY2004

6

1H2005

1,132

719

374

31.8. 2005

1,325

Multi-mandatory agency network

(number of agencies)

138

Eurosav multi-mandatory agencies as at

1H2005, which sell

life products

from the

beginning of this year.

19

39

188

45

372

(27)

26

Cattolica Group

Life business

Premiums

1,666

2,015

1H 2004

1H 2005

2004

3,197

+21%

Banks

85.6%

Agencies 6 % Other 6.1% FAs 1.1% Broker 1.2%

Premiums growth by channel

1H2004

1H2005

Index- and unit-linked products

grew by

12% from

€

905 million to

€

1,014 million.

Capitalization operations

rose from

€

181 million to

€

362 million

Cometa pension fund

collected

€

90

million premiums. In the first 4 months

Cometa registered a 4.5% (annualized)

performance

Banks + 13.2% FAs + 100% Agencies + 8.1% Other + 609.5%

1.523

1.724

11 111 21 22 120 149

(28)

Life new business premiums

Premiums

1,580

(Euro mn)

1,835

1H 2004

1H 2005

2004

2,981

+16.1%

Premiums mix by type of product

(Euro mn)

1H 2004

1H 2005

44.1%

12.8%

43.1%

Index

Unit

Traditional

39%

15.9%

12.8%

45.1%

Breakdown by channel

(Euro mn)

+17.2%

+13.3%

75

1,683

64

1.485

75

44

Agents

1,485

Banks

FAs/other

77

31

+148.4

1H 2004

1H 2005

(29)

28

Cattolica Group

Life technical reserves and segregated funds

Group Average yield

Segregated funds

Technical reserves breakdown

by financial guarantee

2003A

2004A

2005E

2007E

3.57%

3.65%

3.62%

3.44%

3.55%

2006E

<= 2.5%

> 2.5% e < 4%

>= 4%

Financial guarantee

6,058

5,202

(Euro mn)

1H

2005

72.2%

56.6%

11.1%

14.2%

16.7%

29.2%

1H

2004

+ 48.2%

- 8.7%

- 33.5%

(30)

Core business: technical performance

Non-life business

Premiums stable; focus on profitability with a

record increase of

240%

Expense ratio

down to 20.67% from 20.83%

in 1H2004 and

claims ratio

decreases from

75.79% in 1H 2004 to 74.12% in 1H 2005

Life Business:

Strong premiums increase (+21%); technical

result stable; expense ratio down to 4.31%

from 4.49% in 1H2004

5

Non-Life technical result

(Euro mn)

17

1H 2004

1H 2005

2004

30

+240%

Combined ratio

99.28%

97.41%

1H2004

1H2005

2004

97.5%

34

Life technical result

(Euro mn)

1H 2004

1H 2005

2004

59

(31)

30

Cattolica Group

Non-technical account

128

Net Investment income

(Euro mn)

149

1H 2004

1H 2005

2004

260

+16.4%

Financial performance increase despite

low interest rates environment

Lower incidence of extraordinary income

deriving from real estate reorganization,

even if property assets transfer is still

ongoing

Capital gains on property disposals

amounted to 19 million

64

Net ordinary result

(Euro mn)

94

1H 2004

1H 2005

2004

140

+46.9%

49

Net extraordinary result

(Euro mn)

14

1H 2004

1H 2005

2004

80

-71.4%

(32)

Consolidated net profit

Other

Net

income

1H04

Change in

technical result

Change in

financial

management

12

59

(35)

Change in

income taxes

Change in net

extra ordinary

result

21

12

Net

income

1H05

(3)

66

(33)

32

Cattolica Group

Agenda

Focus on value creation

1H2005 Results

IAS/IFRS adoption

(34)

Transition to IAS IFRS and impacts of first time adoption

IAS IFRS application

Cattolica Group edited the consolidated

six-months report to 30 June 2005 in

accordance with Italian gaap principles

and the required prospects attachment in

compliance with CONSOB art. 81-bis n.

14990

It’s important to point out that the Group

has decided to apply IAS 39 and IFRS 4

as from 1st January 2005, in order to

better understand the impacts on

consolidated shareholders’ equity and on

consolidated net profit

All other IAS/IFRS principles were adopted

as from 1st January 2004

The prospects resulted to be a complete

IAS/IFRS application as far as it regards

1H2005 consolidated net profit and

consolidated net shareholders’ equity

The impact on Group shareholders’

equity will be positive

=

Analysis areas

Consolidation area

Technical reserves and

DAC

Financial investments

Business combinations

Land and buildings

Intangible assets

Group shareholders’ equity

Impacts

Impacts of first time adoption

IAS/IFRS application on net profit gives rise

to non-significant impacts

(35)

34

Cattolica Group

IAS/IFRS impact on shareholders’ equity

Net shareholder’s equity

(Euro mn)

IT gaap as at 1st

January 2005

1,166

+3.7%

1,209

IAS/IFRS as at 1

st

January 2005

IT gaap as at 30

th

June 2005

IAS/IFRS as at 30th

June 2005

1,163

1,215

+4.5%

(36)

IAS/IFRS impact on shareholders’ equity

IT gaap as at

30

th

June 2005

IAS/IFRS as at

30

th

June 2005

1,163

1,215

- 22

Tangible and

intangible

assets

243

Financial assets

and liabilities

- 146

Insurance

contracts

3

Other

- 26

Fiscal

effect

Net shareholder’s equity

(Euro mn)

+4.5%

(37)

36

Cattolica Group

IAS/IFRS impact on consolidated net profit and life premiums

150

Consolidated net profit

66

IAS/IFRS as at

31

st

December 2004

66

163

IT gaap as at

31

st

December 2004

IT gaap as at

30

th

June 2005

IAS/IFRS as at

30 June 2005

(Euro mn)

+8.7%

Consolidated life premiums

1,777

2,015

IT gaap as at

30

th

June 2005

IAS/IFRS as at

30 June 2005

(Euro mn)

-11.8%

Investment

contracts:

€

238 million

(38)

Agenda

1H 2005 Results

IAS/IFRS adoption

(39)

38

Cattolica Group

Why UniOne?

Relative

young company

, born in

1984, from 2000 in Generali Group

Agency network focused on P&C

business

, based most of them in

middle and south Italy

Motor Transportation business is

86.3% of total premiums

Liquidators network

complementary to Cattolica

network

High potential in life business which

is a recent start-up

Before acquisition

100%

UniOne: the key pionts

(40)

Economic/Financial information

(*) Before dividens and reserves pay back

PREMIUMS

(Euro millions)

NET PROFIT

(Euro millions)

Capital

(Euro miilions)

ASSET

(Euro millions)

1H 2005

2004

120.7

236.3

+16%

1.6

14.1

51.9

85.3

~ 401

~ 410

P&C LIFE

2.5

5.4

TOTAL

123.2

241.7

(*)

2003

204.4

+19%

9.3

71.2

~ 350

P&C LIFE

3.2

TOTAL

207.6

(41)

40

Cattolica Group

Agency network at the end of June 2005

14

74

19

157

4

171

68

66

23

29

164

8

65

11

65

33

38

69

UniOne

189

Number of agencies

N

: 29

C

: 70

S

: 90

3

14

8

1

3

11

9

23

11

2

14

27

5

21

22

15

14

74

19

157

4

171

68

66

23

29

164

8

65

11

65

33

38

69

Cattolica Group

1.132

Number of proprietary agencies

N

: 665

C

: 328

S

: 139

89

235

131

20

132

78

21

39

113

43

7

27

31

9

49

18

32

3

37

18

37%

48%

15%

29%

12%

59%

(42)

Embedded Value as at 31 December 2004

1,228

1,034

1,067

(33)

194

Group Embedded Value 2004

(Euro mn)

Shareholders’

equity

Adjustments

N.A.V.

Embedded

Value

1,177

984

979

5

193

1,228

1,034

1,067

(33)

194

+ 51

+ 50

+ 88

(38)

+ 1

2003

2004

Delta

EV/Share

(

€

)

24.8

25.9

+ 1.1

Variazione 2004/ 2003

Value of life

in force

business

(43)

43

Cattolica Group

Embedded Value Assumptions

7.25%

4.5%

Variables

100% ISVAP Minimum

38.25%

Discount Rate

Life Products Investment Return

Solvency Margin

Taxation on Profit

Assumption

(44)

Definitions

Ratio

Calculation method

Claims incurred/Earned premiums, net of reinsurance

Claims Ratio

Operating expenses/ Earned premiums, net of reinsurance

Expense Ratio (non-life)

1 – (Non-life technical result/Net earned premiums)

Combined Ratio

Other administrative expenses/ Average Life Technical Reserves

Expense Ratio (Life)

Other operating expenses (life) / Earned premiums

Life G&A ratio

Acquisition expenses and commissions /Earned premiums ,net of reinsurance

Commision ratio (non-life)

(45)

45

Cattolica Group

This document has been prepared by Cattolica Assicurazioni – based on data from internal sources (year-end financial statements, consolidated group financial statements, internal reporting and other company documentation, etc.) – for the sole purpose of providing information on the group’s results and future operating strategies. Given this, it can in no way be used as a basis for possible investment decisions. It is not a solicitation to buy or sell shares. No part of the document can be taken to be the cause of or reason for agreements or commitments of any type or kind whatsoever, nor can it be relied upon for agreements and commitments.Information contained in the document concerning forecasts has been prepared according to various assumptions and/or elements that might ultimately materialise differently to present expectations. Results might therefore change. Cattolica therefore in no way provides any guarantee, either explicit or tacit, as regards the integrity or accuracy of the information or opinions contained in the document, nor can any degree of reliability be attributed to the same, inasmuch as it has not been subjected to independent verification. Responsibility for use of the information and opinions contained in the document lies solely with the user. In any case Cattolica, within legally admissible limits, will not consider itself liable for any damages, direct or indirect, that third parties might claim due to utilisation of incomplete or inaccurate information. For any further information concerning Cattolica Assicurazioni and its related group, reference must be made exclusively to the information given in the annual, quarterly, and interim reports and financial statements. The full versions of these documents, which constitute the factual basis and proof for all legal purposes, are lodged at the company’s registered offices and are available to anyone requesting them. Reproduction or full or partial publication and distribution of the information contained herein to third parties is prohibited. Acceptance of the present document automatically signifies recognition of the aforesaid constraints.

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Cattolica Group:

Growth and Value Mix

Frankfurt, 28 September 2005