Operating result

Operating result - life segment
(€ million) 31.12.2011 31.12.2010 Fourth quarter
2011
Fourth quarter
2010
Operating result 2,541.7 3,025.9 563.6 724.1
Technical margin 6,224.6 5,995.7 1,666.3 1,517.5
Net investment result 1,715.0 2,381.9 406.8 647.2
Total operating expenses -5,397.9 -5,351.7 -1,509.5 -1,440.6
Technical margin
(€ million) 31.12.2011 31.12.2010 Fourth quarter
2011
Fourth
quarter
2010
Technical margin 6,224.6 5,995.7 1,666.3 1,517.5
Net earned premiums 42,076.0 45,452.5 10,751.9 12,597.7
Fee and commission form financial service activities 303.3 222.6 83.3 50.0
:Net insurance claims adjusted for financial interests and bonuses credited to policyholders -36,157.9 -39,706.3 -9,70.1 -11,144.3
:Other insurance items 3.2 26.7 1.2 14.0

Due to a business mix more oriented to protection products and recurring premium, the technical margin, which includes loadings, risk result and profits on surrenders of the period, increased (up 3.8%). In detail, technical profitability increased due to the greater contribution of recurring premiums and to the constant profitability of the risk lines and the Health portfolio, taking however into consideration the decline in written premiums.

The technical margin does not include insurance operating expenses, which are reported in Total operating expenses and other operating items.

Net investment result
(€ million) 
31.12.2011 31.12.2010 Fourth quarter
2011
Fourth quarter
2010
Net investment result 1,715.0 2,381.9 406.8 647.2
Operating income from investments 6,281.3 15,940.6 3,640.7 4,782.8
Net income from investments 9,841.0 11,749.8 2,654.1 3,138.2
Current income from investments 11,534.6 10,995.2 2,968.0 2,814.4
Net operating realized gains on investments 2,018.5 1,838.5 553.5 572.4
Net operating impairment losses on investments -2,967.4 -365.5 -666.8 -19.5
Other operating net financial expenses -744.7 -718.5 -200.6 -229.3
Net income from financial instruments at fair value through profit or loss -3,559.7 4,190.9 986.7 1,644.7
Net income from financial instruments related to unit and index-linked policies -3,158.7 3,823.3 988.0 2,046.8
Net other income from financial instrumensts at fair value through profit or loss -401.0 367.5 -1.4 -402.2
Policyholders' interests on operating income from investments -4,566.3 -13,558.7 -3,234.0 -4,135.5

Net investment result, which consists of the operating income from investments, net of the related policyholders’ interests, went from € 2,381.9 million at 31 December 2010 to € 1,715.0 million. The decline was due to the aforementioned continuation of negative financial conditions, which had a considerable influence on the value of equity and bond portfolios throughout the current year. Nonetheless, the Group reported resilient current income and higher in realized gains thanks to trading activities, which in particular took advantage from the good performance of financial markets in the first half of the year.

Current income from investments amounted to € 11,534.6 million (€ 10,995.2 million at 31 December 2010), with a current return on total investments, calculated on book value basis, which went from 4.3% at 31 December 2010 to 4.5%.

In detail, current income from fixed income instruments went from € 9,482.8 million at 31 December 2010 to € 9,735.6 million, with current return reaching 4.5% (4.4% at 31 December 2010). Current income from the equities portfolio increased to € 628.2 million (€ 616.7 million at 31 December 2010), with current return reaching 3.8% (3.1% at 31 December 2010). Lastly, current income from investment properties went from € 603.2 million at 31 December 2010 to € 696.4 million, with current return stable at 7.3%.

Net operating realized gains on investments went from € 1,838.5 million at 31 December 2010 to € 2,018.5 million. In further detail, there was an increase in realized gains in particular in Germany and France on domestic government bonds that offset the rise in realized losses on equities. The net realized gains on corporate portfolios also declined. Lastly, realized gains on investment properties increased sharply.

Net operating impairment losses on investments went from € -365.5 million at 31 December 2010 to € -2,967.4 million. In detail, the latter were attributable for € 1,970.4 million to the above-mentioned impairment of Greek government bonds. In addition, equity market performance, especially in the third quarter, resulted in impairment losses on the equities portfolio of  € 934.8 million, of which € 443.2 million referd to the investment in Telco. 

Other operating net financial expenses, which include interest expenses associated with operating debt and investment management expenses, went from € -718.5 million at 31 December 2010 to € -744.7 million, essentially due to greater interest expenses on operating liabilities, as a result of the trend in interest rates. 

Net income from financial instruments related to unit- and index-linked contracts(1) went from € 3,823.3 million at 31 December 2010 to € -3,158.7 million. The considerable decline is primarily attributable to the deterioration of the value of the investments classified in this item due to the severe volatility that affected the financial markets as of the second quarter of the reporting year and the ongoing deterioration of bond markets, which continued to show a general widening of spreads on the yields of the bonds of the Euro Area countries with a high public sector debt.

The aforementioned financial market tensions also affected net income from other financial instruments at fair value through profit or loss, which declined to € -401.0 million (€ 367.5 million at 31 December 2010). In further detail, the deterioration in terms of value of other investments at fair value through profit or loss was only partially offset by the transactions in derivatives and lesser losses on foreign currencies owing in particular to the depreciation of the euro against the dollar, resulting in an impact on the operating result of approximately € 100 million greater than that reported at 31 December 2010.

Coherently with the significant reducition of the investment result, policyholders’ interests on income from investments decreased from € 13,558.7 million at 31 December 2010 to € 4,566.3 million, with a total reduction of € 8,994.9 million, of which € 6,916.9 million due to the lower policyholders’ interests on operating income from investments related to linked contracts.

Total operating expenses
(€ million) 
31.12.2011 31.12.2010 Fourth quarter
2011
Fourth quarter
2010
Total operating expenses -5,397.9 -5,351.7 -1,509.5 -1,440.6
Acquisition and administration costs related to insurance business -5,262.9 -5,228.8 -1,465.2 -1,417.9
Net other operating expenses -134.9 -122.9 -44.3 -22.7

Total operating expenses increased slightly (up 0.9%) to € 5,397.5 million.

In detail, acquisition and administration costs related to insurance business amounted to € 5,258.4 million (up 0.7%). Given the increase in annual premiums, acquisition costs rose (up 0.4%) to € 4,195.1 million. Moreover, administration costs went from € 1,050.3 million at 31 December 2010 to 1,063.3 million (up 1.2%).

(1) Effective 30 September 2011, a part of the Israeli insurance portfolio, previously classified in the traditional business, was reclassified among linked portfolios to ensure a placement that better reflects the technical characteristics of the products issued. As a consequence, all investments hedging that portfolio have been reclassified accordingly for the comparative periods as well.

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Life profitability - Operating result64.39 KB
Operating ratio on investments64.06 KB