Business performance

Operating result
(€ million) 
31.12.2011 31.12.2010 Fourth quarter
2011
Fourth quarter
2010
Operating result - non-life segment 1,560.5 1,128.1 356.6 245.8
Net earned premiums 20,662.5 20,274.0 5,295.1 5,143.1
Net insurance benefits and claims -14,247.4 -14,451.4 -3,579.7 -3,638.8
Acquisition and administration costs -5,715.4 -5,601.8 -1,528.7 -1,455.1
Acquisition and administration costs related to insurance business -5,699.9 -5,582.2 -1,527.0 -1,450.7
Other acquisition and administration costs -15.5 -19.6 -1.7 -4.3
Fee and commission income and income from financial service activities -0.2 0.0 -0.2 0.2
Net operating income from financial instruments at fair value through profit or loss 40.7 43.8 16.5 13.4
Net operating income from other financial instruments 1,079.6 1,152.3 256.0 289.6
Interest income and other income 1,590.3 1,634.2 405.1 424.3
Interest expense on liabilities linked to operating activities -198.4 -155.5 -66.6 -36.2
Other expenses from other financial instruments and land and buildings (investment properties) -312.3 -326.4 -82.5 -98.5
Net other operating expenses -259.3 -288.7 -102.5 -106.8
Non-operating result - non-life segment -605.7 -238.8 -88.6 -38.8
Net non-operating income from financial instruments at fair value through profit or loss -34.2 37.4 -6.0 0.1
Net non-operating income from other financial instruments -409.0 31.0 -8.8 78.9
Net realized gains on other financial instruments and land and buildings (investment properties) 243.8 412.3 149.5 166.5
Net impairment losses on other financial instruments and land and buildings (investment properties) -652.8 -381.3 -158.3 -87.6
Net other non-operating expenses -162.4 -307.2 -73.8 -117.7
Earnings before taxes - non-life segment 954.9 889.4 268.0 207.0

Reinforcing the growth trend seen throughout the year, the operating result in the non-life segment stood at € 1,560.5 million, increasing by 38.3% compared to 31 December 2010. In detail, this performance benefited from the significant increase in technical result, which represents the difference between premiums and the costs of insurance operations such as claims, acquisition and administration costs and other technical costs. In addition, the investment result declined slightly owing to active investment management, which in the current market scenario is focused on maintaining the current return, within the Group’s overall investment strategy aimed at decreasing the risk level of investments in this segment by reducing real estate and equity exposure.

The improvement in the technical result was due, on the one hand, to the positive effects of the tariff and underwriting policies implemented during the year and on the current loss ratio – not related to catastrophic events – and on the other, to the lesser weight of catastrophic events. These events resulted for the Group in an impact of approximately € 177 million (€ 383 million at 31 December 2010), chiefly attributable to the storms that struck Germany in August and September (for a total of € 57 million) the earthquake in Japan in March (€ 30 million), the flood in Thailand (€ 30 million) and the autumn floods that struck several Italian cities (for a total of € 26 million) and southern France (for a total of € 22 million). Compared to 2010, therefore, the operating result was influenced by lower catastrophic events for approximately € 206 million, including the consequent lower reinsurance recovery taking into accounts the technical characteristics of the Group’s reinsurance operations.

As a result of the improvement in the loss ratio, the result of the Group's reinsurance activity had an overall impact on the operating result of € 270 milion, increasing from € -392 million in the previous year to € -662 million in 2011.

The increase in operating result led to an improvement of almost 30% of operating return in the non-life segment(1), which went from 3.07% at 31 December 2010 to 4.32%.

(1)Equal to the ratio between the operating result and the average investments calculated based on the financial statement figures of the non-life segment. Further information is given in the appendix to the report.

(€ million) 31.12.2011 31.12.2010 Fourth quarter
2011
Fourth quarter
2010
Operating result - non-life segment 1,560.5 1,128.1 356.6 245.8
Italy 399.4 205.5 103.6 -1.2
France 252.2 149.1 58.7 7.1
Germany 259.2 307.9 64.8 70.0
Central and Eastern Europe 285.7 218.3 61.9 95.6
Rest of Europe 335.4 199.1 76.7 60.2
of which Spain 138.9 105.2 27.2 20.8
of which Austria 107.2 101.6 33.7 34.7
of which Switzerland 51.3 46.1 16.2 13.8
Rest of World 28.7 48.3 -9.1 14.2
Breaking the operating result down by the Group’s main countries of operation, is especially worthy of note in particular the strong growth of operating results in Italy, France and Central and Eastern Europe, driven by the positive performance of technical margins. The contribution provided by the Rest of Europe, and by Spain in particular, was also reinforced, thanks to a further improvement in the loss ratio. In contrast, the operating result of Germany declined, influenced by lower dividends.The operating result of the Rest of World also decreased, mainly due to the performance witnessed in the Middle East,that led to a decrease of the fourth quarter operating result too.

Operating result: Other operating items

Other operating items in the non-life segment, which primarily include non-insurance operating expenses, depreciation and multi-annual costs, provisions for recurring risks and other taxes, totalled  € -229.0 million (€ -252.3 million at 31 December 2010). 

Non-operating result 

The non-operating result of the non-life segment amounted to € -605.7 million (€ -238.8 million at 31 December 2010), affected by the deterioration of the non-operating investment result caused by the conditions of extreme financial market volatility.

In detail, the non-operating investment result reflected both the decline in non-operating net realized gains, which went from € 412.3 million at 31 December 2010 to € 243.8 million and the increase in the impairment losses on Group investments, which amounted to € -652.8 million (€ -381.3 million at 31 December 2010). The latter was attributable, in particular, for € 166,4 million to impairment losses recognized on equities, particularly in the second and third quaters, and for € 178.4 million to impairment losses on Greek government bonds. Finally, net realized gains included the gain realized on the investment in Banorte for about € 108 million.

Lastly, also net non-operating income from financial instruments at fair value through profit or loss decreased to € -34.2 million (€ 37.4 million at 31 December 2010), affected by the volatility of financial markets. 

Net other non-operating expenses went from € -307.2 million at 31 December 2010 to € -162.4 million, including € 77.1 million in amortization of the value of the portfolios acquired directly or by obtaining control of insurers or financial companies (€ 77.3 million at 31 December 2010), thanks to lower non-recurring costs.