RESULTS OF THE CATTOLICA ASSICURAZIONI GROUP AT 30 JUNE 2018 CATTOLICA IN ACCELERATION: PREMIUMS INCOME AND TECHNICAL PROFITABILITY BOOST OPERATING AND GROUP RESULTS

• TOTAL PREMIUMS INCOME AT €2.9BLN (+12.6%); GROWTH IN BOTH LIFE (+17.2%) AND NON-LIFE (+5.4%)
• COMBINED RATIO AT EXCELLENT LEVELS (92.6%)
• OPERATING RESULT ¹ GROWING STRONG AT €149MLN (+25.1%)
• GROUP RESULT AT €51MLN DESPITE INTEGRATION COSTS FOR NEW JV AND ONE-OFF EFFECTS
• CONFIRMED GROUP STRONG CAPITAL POSITION WITH SOLVENCY II RATIO² AT 160%

Verona, 3 August 2018.The Board of Directors of Cattolica Assicurazioni, chaired by Paolo Bedoni, met yesterday in Verona and approved the results at 30 June 2018.

The CEO of the Cattolica Assicurazioni Group, Alberto Minali, stated: “The figures we present today show the Group's substantial growth, thanks to the increase of Life and Non-Life volumes and a greater technical profitability. We recorded strong operating result progression at €149mln, a sign that the actions undertaken over the last months are moving in the right direction and allow us to reach a Group result equal to €51mln. Furthermore, the Solvency II data confirms our strong capital position, despite volatility in the bonds market. The industrial turnaround will lead us to achieve the Plan's targets through a sustainable growth that is translating, even in this financial year, to a decisive improvement in operating result and net profits”.

The total premiums income of the direct and indirect business , Non-Life and Life³, grrow by 12.6% to €2,955mln (+4.6% like-for-like⁴). Non-Life business reports an increase of 5.4% (+2.9% like-for-like) in the direct premiums, 8.1% in Non-Motor (+2.9% like-for-like) and 3.2% in the Motor sector (+3% like-for-like). The growth of direct Life premiums is equal to 17.2% (+5.7% like-for-like) and is accompanied by a product review with a progressive reduction of the risk profile. The technical profitability of the Non-Life, with a combined ratio of 92.6%, continues to improve mainly thanks to the Motor business.

Thanks to the increase of Non-Life and Life volumes and the improvement in technical profitability, the operating result marks a strong growth of 25.1% at €149mln (+12.6% like-for-like). The operating ROE⁵ at 8.1% has grown of 0.6 p.p. compared to 1H2017, despite the interests on the recently issued subordinated bond.

The consolidated net result at €63mln (€8mln 1H2017) and the Group net result⁶ at €51mln (€1mln 1H2017) show strong growth compared to the previous year. It should in any case be mentioned that the first half of 2017 was marked by significant one-off write-downs for a total of €67mln (of which €66mln Group quota)⁷. The 1H2018 result was also penalised by some one-off impacts, for a total of €12mln, including the additional reserves related to the “dormienti” term life insurance policies, the risk fund for possible VAT application on coinsurance commission and the emergence of a cost linked to the unsuccessful commission recovery on some contracts sold via the branches of the former BPVi network. Impacts linked to the start of the partnership with Banco BPM are also present, such as the integration costs and the amortisation of the Value of Business Acquired.

The solid capital position is confirmed by a Solvency II ratio equal to 160%.

Non-Life Business

The premiums income from direct business records a growth of 5.4% to €1,058mln (+2.9% like-for-like), of which €566mln in the Motor segment , up by 3.2% (+3% like- for-like), mainly related to an increase in the average premium. The Non-Motor segment marks decisive growth in the premiums income for 8.1% to €492mln (+2.9% like-for-like) also due to numerous initiatives envisaged by the Business Plan. This development is in line with the objective to rebalance the mix of Non-Life business in favour of Non-Motor.

The combined ratio⁸ further improves, passing from 93.4% to 92.6% (-0.8 p.p.), thus confirmed at optimal levels. The claims ratio from retained business improves significantly (from 66.5% to 62.8%) thanks to the improved Motor frequency and average premium, and due to the start of the turnaround of the Non-Motor business, as announced in the Business Plan. The expense ratio reached 28%, up 2.3 p.p., mainly due to the greater provisional incidence of the Non-Motor business and to a lesser amount for investments in support of the launch of the new Plan.

Life Business

In the Life segment the direct premiums income increases by 17.2% to € 1,892mln ( +5.7% like-for-like). The production is supported by a good growth of linked products (+23.6%) in line with the Plan’s actions aimed at increasing its weight on the Life portfolio. The new with-profit Life contracts with guaranteed rates equal to zero have helped to gradually lower the average guaranteed minimum of the Group's stock of mathematical provisions, which stands at 0.9% (1% FY2017).

Financial management and equity situation

The investments result⁹ is equal to €258mln (€240mln 1H2017) and reflects the increase of the interest costs of the new subordinated bond issued in December 2017. The investments¹⁰ amount to €32,006mln (€23,285mln FY2017). The gross technical provisions for the Non-Life sector equal € 3,741mln ( € 3,603mln FY2017) and the provisions for the Life sector , including investment contracts, stand at € 25,973mln ( € 18,082mln FY2017).

The net consolidated shareholders’ equity is equal to € 2,197mln, which has grown compared to 31 December 2017 (€2,108mln), as a consequence of the increase of minority capital due to the consolidation of new Companies in partnership with Banco BPM.

The Group’s Solvency II ratio is equal to 160%. The ratio proves to be resilient, despite the negative impact of the increase of the spread on Italian government bonds. The ratio is calculated according to the Standard Formula, using the Undertaking Specific Parameters (USP) authorised by the Supervisory Body.

Sales network

At 30 June 2018 the agency network was made up of 1,486 agencies and the Bank branches that place Group products stood at 6,477.

Business outlook

In an insurance market that is still highly competitive, with low interest rates and a significant volatility of the spread on Italian bonds, in the absence of extraordinary events, we foresee a decisive improvement to the operating result and net Group profit compared to the previous financial year.

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The Corporate Financial Reporting Manager, Enrico Mattioli, states pursuant to paragraph 2 of Article 154bis of the Consolidated Law on Finance that the accounts information contained in this press release matches the results of the documents, books and financial records.

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The Company hereby states that the Consolidated Half-yearly Financial Report as at 30 June 2018 of the Cattolica Group, including the report by the auditing firm, will be available to the public at the Company offices and on the Company's website at the address www.cattolica.it and on the storage mechanism authorised by Consob entitled “eMarket STORAGE”, managed by Spafid Connect S.p.a. and accessible via the website www.emarketstorage.com , according to the procedures and within the terms foreseen by current legal and regulatory provisions.

The results at 30 June 2018 will be presented to the financial community at 9.30 am CET on 3 August 2018 in a conference call (with double English/Italian audio). The numbers to call are: +39 02 805 88 11 from Italy, +44 1212 818003 from the United Kingdom and +1 718 7058794 from the United States. Journalists can follow the event by connecting to the number + 39 02 805 88 27 (listen-only mode). The presentation of the results will be available on the home page of the website www.cattolica.it in the Investor Relations section.

The reclassified statements at 30 June 2018 of the Consolidated Half-yearly Financial Report of the Cattolica Group are attached, with indication that the related report expected from the auditing firm has not yet been issued.

1. See Glossary
2. Ratio following distribution of the dividend by the Parent Company, calculated according to the Standard Formula using Undertaking Specific Parameters (USP). The ratio includes the acquisitions of partnership companies carried out at the time of finalising the closing of the transaction between Cattolica and Banco BPM on 29 March 2018.
3. It includes life segment insurance premiums and investment contracts as defined by IFRS 4.
4. Excluding the premiums income relating to the partnership with Banco BPM consolidated in the second quarter of 2018.
5. The operating ROE is the ratio between the sum of the operating result net of the subordinated bond cost, taxes and minority interests and the average of the Group's net assets (excluding the AFS reserves). The taxes are calculated on the basis of a theoretical rate.
6. Net of minority interests.
7. See the press releases of 27 July 2017 and 2 August 2017.
8. Combined ratio of retained business: 1-(Technical balance/net premiums), inclusive of all other technical items.
9. Financial assets excluding investments whose risk is borne by the policyholders, gross of the tax effects.
10. Includes C and D class investments.

Glossary

Operating result: the operating result does not include highly volatile components (realised gains, write- downs, other one-off items). In detail, the Non-Life operating result is defined as the sum of the technical balance, net of reinsurance, with ordinary financial revenues and other non-technical net items (depreciations, write-down of insurance credits, etc.); The operating result does not include financial realised and unrealised gains/losses and impairments, impairments on other assets, interests paid on financial debts (subordinated debts), the amortisation of the value of business acquired (VOBA), the voluntary redundancy incentives and staff severance indemnity as well as other one-off items. Life operating result is defined in a similar way, with the only difference that the entire financial income contributing to the return of securities pertaining to the segregated funds is considered part of the operating profit.