Searching for new ways to create valueand new value to create
La Via Cattolica
STRATEGICPLAN2007 - 20102007 - 2010
Borsa Italiana
ITALIAN INVESTORCONFERENCE 2007
London, 21-22 June 2007
Contents
The strategic positioning
The business Pillars of Group strategy
Economic and financial objectives to 2010
Going on the Cattolica way
1
A solid base for the generation of value
€ 4.5 bn in 2006 (+8.5% CAGR compared to 2000), of which 35% is non-life and 65% is life insurance6th largest operator in the Italian market, 5th in Motor
A history of overall growth of premiums
From ~550 to ~1,500 agencies during 2000-06Strong growth of the agency
network
Approximately 2 million direct customers in the agency network alone
A broad customer base with potential for further
development
Over 30 agreements with partner banks involving over 2,700 branches
A successful model in Bancassurance
~ 26,000 Shareholder membersNetwork of relations with Ecclesiastic and Non-profitentities
The Group has a firmly rooted system of economic relations
“A” rating from A.M. Best (stable outlook)"A-" rating from Standard & Poors (stable outlook)
Flexibility and financial strength
2
Leading insurance company for retail and small business customers
The strategic concept
Focused, organic growth, with specialization and further development of
Group's system of relations
Increased value with focus on operating efficiency and risk and capital
management
Systematic development of growth opportunities in Italy and abroad
Strategic objectives
Plan perimeter
3
The Business Pillars which constitute the Group's strategy
Focused, endogenous growth, with specialization and further development of Group's system of relations
Increased value with focus on operating efficiency and risk and capital management
Strategic Pillars
Unification and development of the Group's agency networks, widespread throughout the country (“Compagnia del Territorio”)Unification and development of the Group's agency networks, widespread throughout the country (“Compagnia del Territorio”)
Growth in value, quality of service and efficiency of the motorbusiness, through the specialized business partnership with Mapfre Group
Growth in value, quality of service and efficiency of the motorbusiness, through the specialized business partnership with Mapfre Group
Development of life and non-life bancassurance: reinforcement and extension of the partnerships with regional banks, intensification of the strategic relation with Banca Lombarda and extensive development of the new agreement with Banca Popolare di Vicenza
Development of life and non-life bancassurance: reinforcement and extension of the partnerships with regional banks, intensification of the strategic relation with Banca Lombarda and extensive development of the new agreement with Banca Popolare di Vicenza
Exploitation of the relations with shareholdersFocused action on ecclesiastic and non-profit entitiesExploitation of the relations with shareholdersFocused action on ecclesiastic and non-profit entities
Corporate, organizational and operational integrationCorporate, organizational and operational integration
Development of Group investment policies Development of Group investment policies
Strategic risk and capital management Strategic risk and capital management
4
A U T OA U T OA U T OA U T O
Shared operational services
The new business and service model
Motor Business(1)
(1) Including Motor FTK, Assistance and all accessories to the overall Motor product , except the business developed with Shareholder members and the banking channel
(2) Only the JVs will tend to have an autonomous corporate standing with respect to the parent company
Finance and Investments
Bancassurance“Compagnia del Territorio”
Non MotorP&C
Life Life Non-lifePensionplanning
Banking andfinancialproducts
BANKING CHANNEL (2)INSURANCE CHANNEL
5
Organizational and corporate structure
(1) To be established(2) Awaiting authorization
Note: The non-life bancassurance sector also includes the Cattolica Online division and Lombarda Assicurazioni, when activatedNote: Some transactions require the approval of Cattolica Assicurazioni AGM and the authorization of the competent authorities
Top Management
“Cattolica ClaimsManagement”
(new diCa)
“Compagnia del Territorio”
Life and Non-life Bancassurance
Pension Planning
Governance Functions
NewCoBank products (1)
BPVI FONDI
ABC Assicura
Finance and Investments
Ecclesiastic and Non- Profit entities
A U T OA U T OA U T OA U T O
Lombarda Assicurazioni (2)
6
Corporate simplification
Agency motor classes
A U T OA U T OA U T OA U T O
MERGER
Corporate Business/ brokers
Agency motor
classes
New name
Establishment of MCA Centralization of life and pension planning divisions
MER
GER
(1) Note: The transactions are subject to the authorization of the competent authorities
Mergers
7
Contents
Strategic positioning
The business Pillars of Group strategy
- “Compagnia del Territorio”
- The specialized business partnership with Mapfre Group
- Life and non-life bancassurance
- Corporate, organizational and operational integration
- Investment policies
- Risk and Capital management
Economic and financial objectives to 2010
Going on the Cattolica way
8
“Compagnia del Territorio” - Focus on proprietary channel
Increased penetration of non motor
and life products in the agency network
Unification and integration of the agency networks- Segmentation of agencies into the types and
models profiled- Progressive development of range of
products and services
Increase in commercial efficiency and exploitation of the agency network- New sales structure, unifying and
strengthening of the central and local sales structures
- Expanding Agency sales force, by introducing Insurance Consultants and Life and Pension Planning Consultants
- Intense training program- Incentives aimed at increasing profitability and
cross-selling- Development of support and sales monitoring
tools
Drivers of development
Target
“Compagnia del Territorio”“Compagnia del Territorio”
9
Unification and integration of the agency networks
Number of Agencies(3)
569625569~1,400~1,400
99
2
4545
143143
25515
145
21
9121
52
53
136
37
61
42
1475
79
9
29%
52%
19%
N: 725C: 362S: 271
A widespread agency network, firmly rooted in the local area, particularly outside the large metropolitan areas
58% of the Agencies are in areas with populations of 10,000 to 100,000 Strong relational system for retail and small business customersExcellent knowledge of the local marketsOpportunity to exploit relations with a wider range of insurance and financial products
“Compagnia del Territorio”“Compagnia del Territorio”
A unified agency network
Motor (1)
Two agency mandates
Non motor, life, pensionplanning(2)
A U T OA U T OA U T OA U T O
(1) Including Motor FTK, Assistance and accessories to the Motor product(2) Including the entire business portfolio (life and non-life) developed with
Shareholders members(3) Updated December 2006
10
Strategy of integrated products and services
Vehicles Protection
of goods
and assets
Personal protection
Life and pension planning
Savings and investments
Financing Banking services
Motor TPLProt. of other
damages to
goods
Health products
TCM
Savings plans
Pension Funds
Innovative products
Life financ. Revolving cardsalso for policies
Cash accounts
Motor FTKHeadof family TPL
and activities
Funds and management…
Consumer credit
Legaladvice
MortgagesAssistance
…
Products/services offered in progressive modulesDevelopment of specific offers targeted to certain segments (young people, couples, senior citizens, affluent/private)Product combinations, with multiple guarantee and multiple specialty innovations
Credit cards…
Development of customer loyalty initiatives
“Compagnia del Territorio”“Compagnia del Territorio”
Retail and Small Business Customers
Services
Long term care.
…
…
…
Integrated safeguarding circuits
11
Unification and strengthening of the sales process
Unification and strengthening of the sales structure, increasing the duties of the marketing and sales divisions
Increasing domestic sales staff (planned increase of 100-120), assigned to boost and support the agency network
“Compagnia del Territorio”“Compagnia del Territorio”
Action points Sales Division - Agents
Sales
Sales Division -Agents
Sales Planning
Network
Area Manager
Life spec.
Agentsworking under an
company departmentAgents
Sales Assistants
Marketing
12
Increasing the domestic sales force
CattolicaAgent
Sub-Agent (1)
Life and pension planningconsultant
AgencyFinancialAdvisor (2)
Insurance consultant
(1) The acquisition of new sub-agents with portfolios will not be the main focus over the next few years
(2) All the agency staff (Agents, sub-agents, producers) can be Financial Advisors
Potentialcareerpath
350(target for the period
in question)
Central role of the Agent in the process of integrating and increasing his own sales forceSupport from the “Compagnia del Territorio” to Agents for recruiting, training and sales coordination of the sales force
Primary focus on portfolios of agency
customers
“Compagnia del Territorio”“Compagnia del Territorio”
350(target for the period
in question)
Business development on new customers
700 Consultants
13
Targets of the strategic actions
Increased cross-selling
– actions aimed at increasing sales
– incentives for portfolio mix
– active management of life maturities
Support agencies in adding Insurance consultants (focus on new customers): agencies selected according to portfolio size and staff
Support agencies in adding Life and pension planning consultants(focus on cross selling): major agencies according to portfolio size and staff
*Excluding Cattolica on line divisionCAGR 06-10
2006 2010T
Non motor premiums– Agency channel (€ mn)
Life premium collection – Agency channel (€ mln)
458*617
347534
Action points
“Compagnia del Territorio”“Compagnia del Territorio”
2006 2010T
11.4%
7.7%
14
Mapfre Cattolica Auto - targets
Increase in profitability of the Motor segment,
with increased penetration of coverage with higher
added value and improvement in technical
results
• Company specialized in the Motor segment in a joint-venture with Mapfre
• Expanding the range of products and services; careful selection of risks and customized pricing
Business partnership withMapfre
Business partnership withMapfre
• Actions focused optimizing claims management, with focus on customer service and profitability over the entire life of the claim
Drivers of development
Target
Completion of on-going re-alignment strategy
A U T OA U T OA U T OA U T O
15
Profile of the joint-venture
Cross Fertilization of experiencesMAPFRE will take on the role of catalyst and driver for innovation. Both Groups will be able to benefit from the mutual exchange of experience and know-how
Create a corporate vehicle specialized in the Motor segment which, using the contributions of Mapfre, the leader in the motor business in Spain, will provide a suitable response to the competitive and regulatory change underway in the Italian Motor insurance market, by:
the provision of high quality service to customerscontinuous innovation of product and processspecific actions aimed at increasing customer appreciation of the value of the service receivedan integrated distribution network widespread throughout the countrytechnical excellence from underwriting up to claim adjustment optimization of efficiency of operations supporting the entire risk underwriting and claims management processes
(1) Aggregated 2005
• Creating a 50/50 joint-venture called Mapfre Cattolica Auto(MCA)
• Mapfre purchases 50% of the assets relating to the agency motor business of Cattolica and Duomo/ UniOne
• Consolidated gross premiums on an annual basis: > 1 bil (1)
• Shareholders’ equity: ~ 400 mn
• Distribution network 1,426 agencies
• Joint-venture on an equal basis as defined by IAS 31
Business partnership with the Mapfre Group
Business partnership with the Mapfre Group
The operation
The numbers
Mission
16
Optimization of claims management
All Group activities involving claims management centralized in di.CaDevelopment of operating platforms:– Industrialization of processes– Flexible organization– New TechnologiesProcess integration– Reduction of management and claim
settlement costs (e.g. legal expenses and inspections)
– Reduction of logistics costs in adjustment centers (unification of adjustment center networks)
– Centralization and diffusion of information and knowledge
Business partnership with the Mapfre Group
Business partnership with the Mapfre Group
Action points
Focus on customer service and
profitability over the entire claims cycle
In cooperationwith
In cooperationwith
17
Targets of the strategic actions
Premiums - Motor Agents (€ mln)
(1) Normalized value(2) Estimate - Gross of reinsurance
Claims ratio MCA (2) (%) 80.3% (1) 76.0%
Total MCA
Group share of MCA
Business partnership with the Mapfre Group
Business partnership with the Mapfre Group
2006 2010T
1,0521,138
569
CAGR 06-10
2.0%
- 4.3 p.p.
18
Bancassurance - strategic drivers
Consolidation of the life market share
and development of non-life
bancassurance
Reconfirmation of the partnership oriented model: sales agreements, focused partnerships, joint ventures
Strategic partnership with BPVI
Consolidation of life bancassurance
Development of non-life bancassurance
Drivers of development
Target
BancassuranceBancassurance
19
Bancassurance: the "repositioning" of the model
Focused partnerships
Sales agreements
Joint ventures
Product distribution agreements
Maximum exploitation of the management model for a differentiate portfolio of
partnerships
Distribution and product agreements,reinforced by
capital investments (in certain cases featuring a cross over)
Joint-ventures, with a strategicpartnership
946
252
1,539
Number of branches
Taking advantage of existing agreements
Development of new agreements, aimed at completing geographic coverage
Taking advantage of existing agreements
Business development aimed at selecting new agreements
Taking advantage of partnerships
BancassuranceBancassurance
20
The agreement with Banca Popolare di Vicenza
Life Bancassurance: acquisition of a 50% share in life assurance companies of Banca Popolare di Vicenza Group: Berica Vita SpA (governed by Italian law) and Vicenza Life Ltd (governed by Irish law)
Non-life Bancassurance: disposal to BPVI of a 50% share of ABC Assicura SpA
Asset management: integration of Verona Gestioni SGR with BPVI Fondi SGR. Equal stakes
Newco: Cattolica and Banca Popolare will establish a newco which is equally controlled by both, for placement of bank products across the entire network of Cattolica Group agencies, specifically loans developed by BPVI Group divisions under the Cattolica brand.
Some transactions require the approval of Cattolica Assicurazioni AGM and the authorization of the competent authorities
BancassuranceBancassurance
The key points of the agreementSignificant growth potential in
Life Bancassurance
BPVI
0.91.6
Average premiums per branch (€ mn)
BPVI Average for comparable
banks
16.422.4
Reserves/AUM (%)
Average for comparable
banks
21
The agreement with Banca Lombarda
LOMBARDA VITA2006 premiums:
1.376 € mnCAGR 2006/2010;
8%
22
Business and commercial agreementCattolica Group insurance products will continue to be sold via the 811 bank branches and 567 Financial advisors of Banca Lombarda
Confirmation of Lombarda Vita activity: the joint-venture founded in 2000, 50.1% owned by Cattolica and 49.9 by Banca Lombarda
Renewal until 2010 of Cattolica and Banca Lombarda agreement
Life Bancassurance: action points and objectives
Focus on pension planning as a growing business Balanced product mix, to maintain flexibility in relation to market performanceSelective introduction of innovative product elements to respond to pension planning challenges (e.g. class I and class III mixed products)Monitoring and, where possible, development of the insurance content of life products with financial contentSales actions focused on medium to high level bank customers (affluent and private insurance, also through Irish operations) and testing of corporate bancassurance products (collective / employee benefit)Maintenance of penetration of current partnerships, with a focus on service and sales support to PartnersContinuous search for new partnership opportunities (not taken into account for the Plan)
BancassuranceBancassurance
Premiums - Life Bancassurance (€ mn)
2,5173,107
BPVN
Other partnerships
720
2006 2010T
1,7973,107
MS (%) ~4.9% ~5.0%
Action points
5.4%
CAGR 06-10
23
Non-life Bancassurance: action points and objectives
Gradual activation of the range of products offered through all major partner networks, with a focus on collective products coupled with banking products (credit protection on personal loans and mortgages, accident and injury coverage for c/a and fire insurance on mortgages) and on stand-alone products
Maintenance of wide range of products/services (asset, vehicle, current account, credit line and personal coverage), but with a particular focus on personal coverage for the retail segment
Subsequent focus on products for the small business segment, in particular with “all risk”coverage products (theft, fire, civil liability)
Extension of the penetration of current partnerships
Continuous exploration of opportunities for new agreements with banks and financial companies
BancassuranceBancassurance
Premiums - Non-Life Bancassurance (€ mn)
28
82
Non motorMotor
24
2006 2010T4
20
MS (%) ~4.1% ~7.3%
62
Action points
31%
CAGR 06-10
24
IT intervention guidelines
Support the corporate and organizational evolution expected in the near future
Support the operating launch of MCA, through unification of the agency network
Unification and innovation of Group systems, rationalizing the platform and facilitating efficiency
Support the evolution of the integrated agency network
Main objectives
Corporate, organizational and operational integrationCorporate, organizational
and operational integration
Organizational acceleration strategies
Partnership in IT application and facility management
New management team for the IT company
Investment Plan for strategic projects 2007/10: ~ € 60 mn
25
Operating efficiency
Freeze employee turnover
− Take advantage of existing skills
− Reassign staff to areas with greater development, using dedicated training programs
− Recruitment of staff with selected specializations
Insourcing of currently outsource tasks/departments to available staff
− once the corporate unification is complete
− actions planned on information systems
Acceleration of the optimization and centralization of purchases
Compliance with IT budget
Action points
(1) At a perimeter level with 100% aggregated with MCA
Gross overall savings of approximately € 35 million (1) in operating costs compared to inertial
Corporate, organizational and operational integrationCorporate, organizational
and operational integration
26
Guidelines for capital usage and management
Growth
Systematic development of growth opportunities in Italy and abroad
Share-holders
Progressive growth in the
dividend per shareSolidityConfirmation
of rating target ≥ A
In the medium term with
absence of opportunities
Capital management actions
Capital availability targets
Management of risks and capital
Management of risks and capital
27
Contents
The strategic positioning
The business Pillars of Group strategy
Economic and financial objectives to 2010
Going on the Cattolica way
28
Main targets of the plan: focus on growth aimed at generating value…
Premium collection (€ mn) (1) Non-life Combined ratio (%)
4,5145,279
Life
Non-life
(1) Including investment contractsNote: Tua Assicurazioni included in the figures for 2006 (in the one-off item for the combined ratio)
109.2%
Normaliz.2,906
2006 2010T
1,608
3,950
1,3302006 2010T
~ 99% ~ 93%
TARGETS
CAGR 06-10
3.4 %
- ~ 6 p.p
∆ p.p. 06-10T: Target
29
… with attention to the technical profitability and operating efficiency levels
2006
76.8
-1.6 -1.3-1.5
-1.8
2010T
70.621
2006
20.9
2010T
+1.8
-1.9
Operations involvingportfolio realignment
Operations involvingportfolio realignment
Evolution of the portfolio mix with increasing weight on non motor business
Evolution of the portfolio mix with increasing weight on non motor business
Portfolio re-balancing effect for theMCA operation
Portfolio re-balancing effect for theMCA operation
Reduction of manage-ment claim adjustment costs
Reduction of manage-ment claim adjustment costs
Evolution of the commission mix:
Evolution of the commission mix:
Actions involvingreduction of operating costs
Actions involvingreduction of operating costs• increasing
weight of non motor business
• MCA effect
Claims Ratio 2006-2010 change (%) Expense Ratio 2006-2010 change (%)
Commission ratio
Pure expense ratio(1)
(1) Normalized
TARGETS
F: Forecast; T: Target
30
85,6
Development of consolidated and net Group profits
Net consolidated profit (€ mn)
2006 2010T
Group net profit (€ mn)
2006 2010T
TARGETS
In the interim periodsignificant capital gains are expected from planned extraordinary transactions
CAGR 06-10
160
195
139
1705,1%
5,2%
T: Target
31
Contents
The strategic positioning
The business Pillars of Group strategy
Economic and financial objectives to 2010
Going on the Cattolica way
32
1Q2007 Results
1Q2006 1Q2007
Consolidated net result(€ mln)
3821
- 44.7%
2006 1Q2007
Combined ratio(%)
109.2%
102.7%
2005
Dividendo per azione(€)
1Q2006** 1Q2007**
Net financial income(€ mln)
51
7852.9%
2005
Dividendo per azione(€)
1Q2006** 1Q2007**
Gross premiums collection*(€ mln)
1,051 1,046- 0.5%
405 399
1.1%
-1.5%
Focus on non-life more profitable businesses:
• Non-motor business: +4%
• Motor premiums: -3.7% because of portfolio pruning
Focus on non-life more profitable businesses:
• Non-motor business: +4%
• Motor premiums: -3.7% because of portfolio pruning
1Q2006 result was positively affected by extraordinary gains coming from real estate disposal worth 10 mn, gross of taxes
1Q2006 result was positively affected by extraordinary gains coming from real estate disposal worth 10 mn, gross of taxes
In 2006 Cattolica maintained a prudent approach in P&C business via a reinforcement of non-life technical reserves
In 2006 Cattolica maintained a prudent approach in P&C business via a reinforcement of non-life technical reserves
646 647
* Including investment contracts ** Excluding BPV VITA according to IFRS 5
33
New Shareholders’ Structure
Stakebuilding planannounced by Mapfre who will acquire extra 10% Cattolica’sshares on the market
Two-part capital increase reserved to Banca Popolaredi Vicenza: 1° tranche will amount to 8% of Cattolica’spost-increase share capital (waiting for the final authorization from market authorities); 2° tranche, for another 4% of capital, will be available starting on July 1°2010.
2007 Shareholders’ Structure 2007 Cattolica Shareholders’ structure
FondazioneBanca del Monte diLombardia2.006%
Retailinvestors76%
Mapfre4.06%
BancaPopolare diVicenza 2.01%
FondazioneCARI Trento e Rovereto2.2%
Further actions
Institutional investors show stronger interest on the Stock with acquisition of important stakes
OtherInstitutionalinvestors13%
Going on the Cattolica Way
Corporate restructuring startedCommercial reorganization going-onAccelerating portfolio re-mixing (non-motor +4% in 1q)Joint activities with Mapfre started
New Board of Directorsin place since the AGM approval (28th April)
Cattolica new General Manager hired and already in place
General Manager of Mapfre Cattolica Autoappointed by Mapfre
Implementation Master Plan set-up and started
Group & Plan Governance Compagnia del Territorio®
New agreement with BPVI on track, but still not in numbersStrong performance of Lombarda Vita in 1Q (~+5%)Non-life bankinsurance growing at >50% pace in 1Q
Bankinsurance
Approved the integration of CIRA branch of business by CattolicaApproved the merger of Duomo Previdenza and Persona Life in CattolicaNew CIO hired and new IT partner selectedRigid cost control on IT spending in place (actual 20% saving on first projects started)Strong vigilance on HR & structure costs
Corporate organizational and operational integration
34
ANNEX
35
Definitions
Ratio Calculation method
Claims incurred/Earned premiums, net of reinsuranceClaims Ratio
Operating expenses/Earned premiums, net of reinsuranceExpense Ratio (Non-life)
(1 - Non-life technical result/Earned premiums, net of reinsurance)Combined Ratio
36
21 March
27-28 April
10 May
12 September
13 November
Corporate Events 2007
Calendar
Approval of the financial statements for the year and the consolidated financial statements for 2006
Shareholders’ Meeting27 April – First call28 April– Second call
Approval of the quarterly financial statements for the period ending 31 March 2007
Approval of the quarterly financial statements for the period ending 30 June 2007
Approval of the quarterly financial statements for the period ending 30 September 2007
37
Contacts
Group Chief Strategy and Operating OfficerHead of Investor RelationsTel. +39 045 8391620e-mail: [email protected]
Giulio Fezzi
Andrea Battista
Head of Bancassurancee-mail: [email protected]
Piero Gavazzi
Chief Financial Officere-mail: [email protected]
38
Chiara Adria
Investor RelationsTel. +39 045 8391229e-mail: [email protected]
Chiara Giordano
Investor RelationsTel. +39 045 8391114e-mail: [email protected]
This document has been prepared by Cattolica Assicurazioni – based on data from internal sources (year-end financial statements, consolidated group financial statements, internal reporting and other company documentation, etc.) – for the sole purpose of providing information on the group’s results and future operating strategies. Given this, it can in no way be used as a basis for possible investment decisions. It is not a solicitation to buy or sell shares. No part of the document can be taken to be the cause of or reason for agreements or commitments of any type or kind whatsoever, nor can it be relied upon for agreements and commitments.Information contained in the document concerning forecasts has been prepared according to various assumptions and/or elements that might ultimately materialise differently to present expectations. Results might therefore change. Cattolica therefore in no way provides any guarantee, either explicit or tacit, as regards the integrity or accuracy of the information or opinions contained in the document, nor can any degree of reliability be attributed to the same, inasmuch as it has not been subjected to independent verification. Responsibility for use of the information and opinions contained in the document lies solely with the user. In any case Cattolica, within legally admissible limits, will not consider itself liable for any damages, direct or indirect, that third parties might claim due to utilisation of incomplete or inaccurate information. For any further information concerning Cattolica Assicurazioni and its related group, reference must be made exclusively to the information given in the annual, quarterly, and interim reports and financial statements. The full versions of these documents, which constitute the factual basis and proof for all legal purposes, are lodged at the company’s registered offices and are available to anyone requesting them. Reproduction or full or partial publication and distribution of the information contained herein to third parties is prohibited. Acceptance of the present document automatically signifies recognition of the aforesaid constraints.
DISCLAIMER
39
Searching for new ways to create valueand new value to create
La Via Cattolica
STRATEGICPLAN2007 - 20102007 - 2010
Borsa Italiana
ITALIAN INVESTORCONFERENCE 2007
London, 21-22 June 2007