Intangible assets

Intangible assets
(€ million)  31.12.2011 31.12.2010
Goodwill 7,394.4 7,415.4
Other intangible assets 3,039.4 3,255.1
Software 515.9 503.8
Value of in-force business arising from insurance business combination 1,628.1 1,842.3
Other intangible assets 895.5 908.9
Total 10,433.8 10,670.4
Goodwill
(€ million) 31.12.2011 31.12.2010
Carrying amount as at 31 December previous year 7,415.4 7,273.5
Changes in consolidation scope -18.7 20.2
Other variations -2.3 121.7
Carrying amount as at the end of the period 7,394.4 7,415.4

At 31 December 2011 Group’s goodwill amounts to € 7,394.4 million (- 0.3% if compared to the same period last year). 

The table below shows the goodwill by relevant companies:

(€ million)  31.12.2011 31.12.2010
Alleanza - Toro Group 2,793.3 2,793.3
Generali Deutschland Holding 2,179.0 2,179.0
Generali PPF Holding Grupp 656.4 666.3
BSI - Banca del Gottardo Group (*) 549.9 527.2
Generali France Group 417.1 417.1
Generali Schweiz Holding AG 288.0 279.8
Generali Holding Vienna AG 153.4 153.4
Migdal Insurance Holding 135.4 135.4
Europ Assistance Holding 81.7 81.7
Other 140.2 182.1
Total goodwill 7,394.4 7,415.4

(*) Amount includes € 420.2 million of goodwill activated on acquisition of Banca del Gottardo and € 31.7 million on BSI. Goodwill activated on Banca del Gottardo Italia (€ 17.6 million net of minorities) is not included, since it was merged with Banca Generali Group and is shown in row "Other".

 

The change of the period is mainly attributable to the foreign exchange adjustments on the goodwill share calculated on entity that hasn’t got euro as reporting currency.

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

The table below shows the detail of the Group's goodwill by cash generating unit:

(€ million) Life Non Life Financial
Total
Generali Deutschland Holding 561.6 1,617.4 0
2,179.0
Alleanza Toro Group 2,101.0 692.0  0 2,793.0
Ceska Group 203.4 452.5  0 655.9
BSI – Banca del Gottardo Group 0
0
550.0 550.0
Generali France Group 318.8 98.3  0 417.1
Generali Schweiz Holding AG 81.0 207.0  0 288.0
Generali Holding Vienna AG 76.5 76.9  0 153.4
Migdal Group 113.0 22.0  0 135.0
Europ Assistance Group  0 81.0  0 81.0
Other  0 0
 0 142.0

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 Toro, Generali Deutschland Holding, Ceska Group, BSI Group, and Generali Schweiz Holding SA, Migdal Group and Europ Assistance

This method represents a variant of the method of cash flow. 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 for each CGU used in the analysis were those included in the Strategic Plan 2012-2014, presented to the Board of Directors on 16 December 2011 and subsequent changes, if any, were considered. In order to extend the analysis horizon to a 5 years period, the main economic and financial data were calculated for further two years (2015 and 2016). More in detail, the required and available solvency margin for 2015 and 2016 was determined on the basis of the growth of the last year of plan (2014), whereas the net result for 2015 and 2016 was calculated using a sustainable growth rate for each CGU.
In the analysis of the expected cash flows, in consideration of the particular economic-financial crisis’ situation, the guidelines included in the Discussion Paper “Impairment test dell’avviamento nell’attuale contesto di crisi finanziaria reale – linee guida” of the “Organismo Italiano di Valutazione” were considered. More in detail, for the measurement of the recovery value of each CGU, a mean Strategic Plan was considered, which has been calculated on the basis of 3 different scenarios:

  • Best estimate (Strategic Plan)
  • Projection of the first year Strategic Plan for the whole considered period (Steady state)
  • A more prudent scenario, which considered the worsening of the financial assumptions (Worst case)

In order to define the weight related to the alternative scenarios described above, a comparison between actual data and forecasts for the period 2008-2011 has been made. The three abovementioned scenarios were weighted differently for each CGU to take into account the outcome of the analysis, weighing more the alternative scenarios in case of significant deviations from the actual data, compared to what already included in the strategic plans.

The main valuation parameters used for each CGU were the follows:

A) Nominal growth rate (g):

  g
Generali Deutschland Holding 2.0%
Alleanza Toro 2.5%
Gruppo Ceska 3.0%
BSI Group – Banca del Gottardo 2.5%
Generali Schweiz Holding AG 1.0%
Europ Assistance Group 2.0%
Migdal Group 2.0%

B) Cost of own capital of the company net of taxes (Ke):

  Ke
Generali Deutschland Holding  
- Life 7.9%
- Non Life 6.7%
Alleanza Toro Group  
- Life 10.6%
- Non Life 9.4%
Ceska Group  
- Life 9.0%
- Non Life 8.9%
BSI – Banca del Gottardo Group 6.3%
Generali Schweiz Holding AG  
- Life 6.7%
- Non Life 5.5%
Europ Assistance Group  
- Non Life 7.9%
Migdal Group  
- Life 10.2%
- Non Life 9.1%