Result of the period

The result of the period attributable to the Group amounted to € 856.1 million (€ 1,701.9 million at 31 December 2010). Despite the sharp improvement in the Group’s operating result in the non-life segment, driven both by the increase in written premiums and the achievement of an excellent technical margin, the result of the period was significantly conditioned by the decrease in the operating result of the life segment and the negative performance of the non-operating result, both influenced by the exceptional financial scenario that had characterized the second part of the year. This scenario in fact resulted in impairment losses on equities and bonds, in particular Greek government bonds, for a gross amount of € 3,657.7 million (€ 503.3 million at 31 December 2010), which had an impact on the result of the period of € 1,017.2 million (€ 224.1 million at 31 December 2010).

In further detail, the result of the period was negatively affected by the impairment of the Greek government bonds held by the Group as a result of the country’s economic and financial situation. The Group wrote-down the entire portfolio of Greek government bonds by 76% on average, based on the market prices at 31 December 2011. This impairment loss amounted to € 2,279.0 million, primarily concentrated in the life segment, resulting in an impact on the Group’s result of the period of € 471.8 million, net of the releases from surplus funds allowed for these purposes by some local jurisdictions and classified as technical provisions.

The result was also affected for € 1,378.8 million by the impairment of the equity portfolio of which € 628.6 million attributable to the investment in Telco, a holding company which in turn holds 22.4% of Telecom Italia. This impairment loss, made based on an independent valuation, was determined on the basis of an implicit value of Telecom Italia of 1.5 euros per share. The impact of the equities’ impairment on the Group’s result of the period, including the indirect tax effect, amounted to € 545.4 million.

Finally, the result of the period was affected by the increasing of the tax rate, which went from 31% at 31 December 2010 to 36%, as a result both of the increased fiscal pressure in several important countries of operation for the Group and the increased presence of realized losses on equity instruments generally losses not eligible for tax deductions.

The result of the period attributable to minority interests amounted to € 296.6 million (€ 316.4 million at 31 December 2010), also thanks to the financial market trends of the related country of operations less influenced by the above mentioned scenario.

Taking into account also other net gains and losses recognized directly through equity, total comprehensive income attributable to the Group amounted to € -1,166.4 million (€ 1,452.3 million in the same period of the previous year). This overall result consists, in addition to result of the period attributable to the Group amounting to € 856.1 million, of the change in net gains and losses recognized directly through equity amounting to € -1,971.1 million (€ -913.9 million at 31 December 2010), the change in net gains and losses on hedging instruments amounting to € -109.0 million (€ -1.8 million at 31 December 2010), and the change in the foreign currency translation differences reserve amounting to € 57.8 million (€ 666.1 million at 31 December 2010).

The decline, which amount to € 2,618.6 million, was attributable for € 1,057.2 million to net gains on available for sale financial assets. At the end of 2010, the negative performance of the equity market was accompanied by the inception of the sovereign debt crisis in the Euro Area countries with a high public sector debt, resulting in a decrease in the corresponding equity reserve of € -913.9 million. During 2011, financial market tensions intensified and the widening of the spread on Euro Area government bonds, and especially Italian government debt, resulted in a severe decline in the value of the bond portfolio, causing a decrease in the aforementioned reserve of € -1,971.1 million.

Moreover, the decrease was influenced for € 608.4 million by the lower result deriving from currency translation differences arising from the translation of subsidiaries' financial statements denominated in foreign currencies, due to the appreciation of the main currencies used by the Group in its operation against the euro which had been recorded in 2010.

Finally, the change was due for € 845.8 million to the lower result of the period at 31 December 2011 compared to the same period last year.

(€ million) 31.12.2011 31.12.2010 Fourth
quarter
2011
Fourth
quarter
2010
Change
YE2011
/YE2010
Change
Fourth
quarter
2011
/Fourth
quarter
2010
Earnings before taxes 1,914.4 2,876.8 277.5 768.9 -33.5% -63.9%
Income taxes
-761.7 -909.2 -178.0 -255.0 -16.2% -30.2%
Earnings after taxes 1,152.8 1,967.5 99.5 513.9 -41.4% -80.6%
Profit or loss from discontinued operations -0.1 50.8 0.2 -0.1 -100.2% -392.4%
Consolidated result of the period 1,152.7 2,018.3 99.7 513.8 -42.9% -80.6%
Result of the period attributable to the Group 856.1 1,701.9 31.0 389.2 -49.7% -92.0%
Result of the period attributable to minority interests 296.6 316.4 68.7 124.6 -6.2% -44.9%
AttachmentSize
Reclassified P&L account by segment - FY 2011100.99 KB
Reclassified P&L account by segment - FY 201084.17 KB
From operating result to net result84.79 KB