Other liabilities

Other provisions

(€ million) 31.12.2011 31.12.2010
Provisions for taxation 68.8 90.1
Provisions for commitments 745.4 758.2
Other provisions 572.0 648.2
Total 1,386.2 1,496.5

The main changes occurred in the period are summarized in the table below:

(€ million) 31.12.2011 31.12.2010
Carrying amount as at 31 December previous year 1,496.5 1,490.5
Foreign currency translation effects -0.9 13.0
Changes in consolidation scope 3.4 3.3
Variations -112.9 -10.2
Carrying amount as at 31 December current year 1,386.2 1,496.5

Provisions for defined benefit plan

The pension benefits of Generali Group’s employees are mainly in form of defined benefit plans and defined contribution plans.

As for defined benefit plans, participants are granted a defined pension benefits by the employers or via external entities.

The main defined benefits plans are concentrated in Germany, Austria and Switzerland, while in Italy the provision for Trattamento di fine rapporto (employee severance pay) matured until 1st January 2007 is included in the provisions for defined benefit plan.

(€ million) 31.12.2011 31.12.2010 31.12.2009 31.12.2008 31.12.2007
Present value of defined benefit plan obligation 4,684.7 
4,484.0 4,030.2 3,800.4 3,194.4
Fair value of plan assets -1,628.0 
-1,613.8 -1,401.0 -1,321.2 -682.2
Status funded 3,056.8 2,870.2 2,629.2 2,479.3 2,512.2
Net actuarial gains or (losses) not recognised  -350.3
-190.6 22.3 145.0 77.8
Past service cost not recognised 3.6 
0.0 0.2 -0.9 -0.3
Net liability recognised in the Balance Sheet 2,710.1 2,680.7 2,651.6 2,623.4 2,589.7

The funded status arising from the application of IAS 19 increased from € 2,870.2 as at 31 December 2010 million to € 3,056.8 million as at 31 December 2011.

The increase was mainly due to the increase of the present value of the defined benefit plan obligations, following the reduction of the discount rate applied in the “Project Unit Credit Method”(1) valuation.

(1) Refer to Assicurazioni Generali, Annual Report 2010, Basis for Presentation and Accounting Principles.

For many of the Group’s defined benefit plans there are assets that are designated, but not legally segregated, to meet the pension defined benefit obligations. These are investments related to insurance policies issued by Generali Group insurers, or other investments owned by the Group entities. Consequently, in accordance with IAS 19 these are not recognised as plan assets and so cannot be deducted from the defined benefit obligations. However, to obtain the economic net liability for defined benefit plans these assets would have to be netted against the present value of the related pension obligations.

This is predominantly for Germany and Austria, where the Group retains about the 60% of the present value of defined benefit obligations. Moreover, in these countries, the pension guarantee associations,  to the extent of the yearly contributions paid by the companies, are liable for the fulfilment of the pension commitments granted in case of companies insolvency.

 

The net defined benefit plans expense of the year recognised in the profit or loss account aroused from the following items:
(€ million) 31.12.2011 31.12.2010
Current service cost 93.0 86.0
Interest expense 192.9 185.8
Expected return on plan assets -66.7 -62.4
Net actuarial losses recognised in the period -43.4 -5.0
Past service cost 2.7 2.7
Curtailments and settlements effect -1.2 -4.3
Net expense recognised in the income statement 177.4 202.8
The table below shows the net defined benefit plans liability movements occurred during the financial year 2011:
(€ million) 31.12.2011 31.12.2010
Net liability as at 31 December previous year 2,680.7 2,651.6
Foreign currency translation effects 1.8 8.0
Net expense recognised in the income statement 181.5 202.8
Contributions and benefits payed -153.1 -181.5
Changes in consolidation scope -0.8 -0.2
Net liability as at 31 December current year 2,710.1 2,680.7
The defined benefit plans’ weighted-average asset allocation by asset category is as follows:
    (%)
31.12.2011
(%)
31.12.2010
Bonds 54.6 55.9
Equities 16.9 16.5
Rael estates 11.7 11.4
Investment fund units 7.4 5.9
Other investments 9.3 10.3
Total 100.0 100.0
The assumptions used in the actuarial calculation of the defined benefit obligations and the related periodic pension cost are based on the best estimates of each companies granting defined benefit plans.
The weighted-average principal assumptions used to calculate the Group’s defined benefit obligations – except the Italian provisions for Trattamento di fine rapporto (employee severance pay) – of the financial year 2011 are as follows:
  Eurozone
Switzerland   United Kingdom
USA
%
31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010
Discount rate 4.9 4.9 2.5 3.0 4.7 5.4 4.4 5.6
Expected long-term rate of return on plan assets 4.4 4.5 3.7 4.0 6.0 6.8 8.0 8.0
Rate of salary increase 3.0 2.9 1.9 2.0 0.0 5.3 3.3 4.0
Rate of pension increase 2.0 2.0 0.0 0.4 3.6 3.9 0.0 0.0
Other liabilities
(€ million) 31.12.2011 31.12.2010
Liabilities directly associated to non-current assets and disposal groups classified as held for
sale
0.0 0.0
Deferred tax liabilities 5,949.2 3,753.3
Tax payables 1,339.1 1,607.1
Other liabilities 4,531.7 4,348.0
Provision for other defined benefit plans 2,601.6 2,563.4
Termination benefit liabilities 90.2 86.8
Accrued interest expense 373.9 369.1
Other accrued expenses 316.8 308.4
Deferred expenses 99.5 100.6
Deferred income for investment management services 12.3 14.8
Miscellaneaus liabilities
1,037.5 905.0
Total 11,820.0 9,708.4
Defined benefit obligation
 (€ million) 31.12.2011 31.12.2010
Defined benefit obligation as at 31 December previous year 4,484.0 4,030.2
Foreign currency translation effects 39.1
203.1
Current service cost 93.0 86.0
Past service cost 4.3
3.3
Interest expense 192.9
185.8
Actuarial (gains) and losses 83.6
192.9
Curtailments and settlements effect 13.8
-11.0
Contribution by plan participants 11.9
18.5
Benefits paid -237.0
-226.0
Changes in consolidation scope -1.0
1.3
Defined benefit obligation as at 31 December current year 4,684.7 4,484.0
Defined benefit obligation
 

31.12.2011

31.12.2010
Fair value of plan assets as at 31 December previous year 1,613.8 1,401.0
Foreign currency translation effects 33.0 184.6
Expected return on plan assets 66.7 62.4
Actuarial (gains) and losses -52.2 -29.3
Curtailments and settlements effect 0.0 -6.6
Employer contribution 37.4 54.2
Contribution by plan participants 19.5 26.7
Benefits paid -89.0 -79.4
Changes in consolidation scope -1,2 0.3
Net liability as at 31 December current year  1,628.0 1,613.8