Unipol Gruppo 2023 Annual Report

Introduction

Macroeconomic background and market performance

Macroeconomic background

In 2023, global GDP growth continued, estimated at +2.7%, despite slowing compared to +3.1% in 2022. The slower pace of global economic growth depends, firstly, on the restrictive monetary policies implemented by the main international central banks and, secondly, on economic growth rates in China which are still below the pre-pandemic average and in turn penalised the evolution of global trade.

In the United States, GDP increased by 2.5% in 2023 (+1.9% in 2022). GDP growth was mainly supported by the good performance of private consumption and public spending, which offset the reduction in private investments, in turn penalised by high interest rates. The trend in consumption was supported by the positive labour market results, with an unemployment rate remaining at very low values in 2023 (3.6% on average). Growth was also accompanied by a gradual reduction in the inflation rate, which on average stood at 4.2% compared to 8.0% in 2022.

In China, GDP rose by 5.2% (+3% in 2022) thanks to the recovery in domestic demand assisted by the end of the restrictive “Zero-Covid” policies of 2022. However, growth remains below the pre-pandemic average due to tensions in the real estate market and lower exports, not fully offset by the expansion in domestic demand. In this context, the average unemployment rate in 2023 was 5.2%, while the average inflation rate was 0.2%, with deflation on average in the last quarter. In 2023, China resumed growing more rapidly than emerging countries. The estimated growth in 2023 for the block of Emerging Countries as a whole is 4.2%.

In Japan, it is estimated that GDP will close 2023 with growth of 2% (+0.9% in 2022). Despite the slowdown in the third quarter (-0.7% compared to the previous quarter), Japanese growth was supported by the improvement in foreign trade, which offset a low growth in domestic demand. The labour market continued to record a low unemployment rate, averaging 2.6% per year, while the inflation rate rose to 3.3% compared to 2.5% in 2022.

In the Euro Area, GDP rose by 0.5% in 2023 (+3.4% in 2022). Growth was essentially stagnant throughout 2023 due to the effects of the ECB’s restrictive monetary policy. In addition, the reduced demand for goods from China penalised economies more dependent on exports such as Germany, whose slowdown in turn negatively affected economic growth throughout the Euro Area. Despite the slowdown in economic growth, the unemployment rate fell slightly and on average was 6.5% in 2023 compared to 6.7% in 2022, while the inflation rate fell on average to 5.5% compared to 8.4% in 2022, with the December figure down further to 2.9%.

In 2023, Italian GDP increased by 0.7% (+3.9% in 2022). In particular, in the second quarter the GDP trend was negative (-0.3% compared to the first quarter) due to the decline in both final consumption and investments. The recovery in final domestic consumption led to a return to growth in the third quarter (+0.1% on the second quarter), while in the fourth quarter growth mainly benefited (+0.2% on the third quarter) from the improved net foreign component. The average annual inflation rate was 6% (8.7% in 2022). The labour market remains resilient with respect to the slowdown in growth, with the annual average unemployment rate down to 7.6% (+8.1% in 2022).

Financial markets

In 2023, the Fed raised the Fed funds rate by 100 basis points, also continuing the process of downsizing the portfolio of securities purchased during the various quantitative easing programmes.

Similarly, the ECB also maintained a restrictive monetary policy, increasing the two main monetary policy rates (refi and deposit rate) by 200 basis points. At the end of 2023, the deposit rate stood at 4% from 2% at the end of 2022 while the refi rate stood at 4.5% at the end of 2023, from 2.5% at the end of 2022. The ECB also continued its process of reducing the amount of securities purchased for monetary policy purposes.

Declining inflation rates and expectations of a less restrictive monetary policy by the Fed as well as the ECB led to a reduction in interest rates, particularly on long maturities.

Introduction

The 3-month Euribor rate closed 2023 with an increase to 3.91%, up by around 177 basis points compared to figures at the end of 2022, while the 10-year Swap rate decreased during the same period by roughly 70 basis points, closing 2023 at 2.49%.

In Germany, the 10-year Bund closed 2023 at 2.03%, down by around 50 basis points on the values at the end of 2022, whilst in Italy the 10-year BTP closed 2023 at 3.68%, down 96 basis points. The 10-year spread between Italian and German rates was therefore 166 basis points at the end of 2023, down 46 basis points from its value at the end of 2022.

2023 ended favourably for international stock markets. The Eurostoxx 50 index, which refers to the Euro Area indexes, showed an increase of 19.2% in 2023 compared to the end of 2022. The FTSE Mib index, referring to Italian listed companies, recorded an increase of 28% in the same period. The DAX index, referring to German listed companies, finally closed 2023 up 20.3% compared to December 2022.

In the United States, the S&P 500 index instead closed 2023 ahead by 24.2% compared to the values at the end of 2022. International stock markets also saw a sharp rise in 2023: the Nikkei stock index, referring to listed companies in Japan, closed 2023 with growth of 28.2% compared to December 2022, while the Morgan Stanley Emerging Markets index, referring to emerging markets, recorded a more limited increase in 2023 of 7.0%.

The narrowing of interest rate spreads between the United States and the Euro Area favoured the depreciation of 3% of the US dollar against the Euro, with the EUR/USD exchange rate closing 2023 at USD 1.10 to the Euro against USD 1.07 at the end of 2022.

Insurance Sector

At the end of the third quarter of 2023, final figures show premiums in the Italian and non-EU direct business insurance market as close to €93.9bn, down 1% compared to the same period of 2022. In particular, total Non-Life premiums written increased by 6.6% compared to the same period of 2022 and therefore a year-end growth of approximately 7% is expected, for premium values in excess of €38bn.

From the latest ANIA surveys for the third quarter of 2023 in the MV sector, the total premiums of the classes MV TPL, Marine Vessels TPL and Land Vehicle Hulls grew by 5.2% compared to the same period of the previous year, driven by the positive trend in premiums written for the MV TPL and Marine Vessels TPL component (+3.4%) and the Land Vehicle Hulls component (+11.1%). The increase in MV TPL premiums benefited from tariff increases, translating into an increase in the average premium, which stood at €357 in December 2023 compared to €336 in December 2022, in line with ISTAT surveys on list values (up by 4.3%). With regard to the Non-Life Non-MV business, at the end of September 2023 premiums reached €14.9bn, recording growth of 7.4% (Health +12.7%, Property +8.0% and General TPL +8.2%) compared to the same period of 2022.

With regard to distribution channels, the first nine months of 2023 showed a reduction in the share of the agency channel, confirming the trend already emerging early in the year, with premiums up by about 4.7% compared to the third quarter of 2022 and a total weight of approximately 83.3%. Direct channel premiums were also up (+4.0%), as were the broker and banking channels at 4.3% and 3.9%, respectively). In the Non-MV segment, the most significant increase in premiums was achieved by the broker channel (+13.5%), while the agency channel recorded an increase in premiums of 6.6%.

With regard to Italian and Non-EU direct Life business premiums, for 2023 Ania estimates total premiums of roughly €91bn, down by around 4.0% compared to the end of 2022, due to the decline in Class III premiums (-31%) and partly offset by the Class I trend (+9%). Vice versa, premiums in Class VI are expected to increase (+21%), while Class V (-28%) and Class IV (-4.3%) are expected to see a decline.

The estimated breakdown of premiums across Life distribution channels at the end of 2023 should remain strongly biased towards the banking channel, with an estimated share of total premiums of 60.4%, while the share of the financial advisors channel and the Direct and broker channels declined to around 12.1% and 11.8%, respectively, in favour of the agents channel, which is expected to account for roughly 15.8% of premiums.

Unipol Gruppo 2023 Annual Report

Pension funds

In 2023, on the basis of Assogestioni data, net deposits of assets under management (mutual funds, individual asset management, collective and individual pension plans) amounted to -€47.8bn, of which -€16bn referring to collective management (open and closed funds) and -€31.7bn in net deposits for portfolio management.

The management of pension assets, with net deposits of roughly €4bn at 30 September 2023, was up sharply compared to the €1.7bn of net deposits recorded in the same period of the previous year. Asset management referring to pension funds (pension funds and individual pension plans) therefore amounted to €105.2bn at 30 September 2023, equal to 4.7% of total assets under management.

In 2023, existing positions with supplementary pension schemes, reported by Covip, increased by 410 thousand units compared to the end of 2022. The 4% increase recorded at the end of the year confirms the upward trend observed in recent periods. In December 2023, there were therefore 10.7m existing positions, of which 7.9m held by employees (73.6%).

In line with the sector trend, in December 2023 occupational funds recorded growth of 5.5% compared to December 2022, with 211k more positions, for a total of 4m positions at the end of the year, and contributions up by 7.7%. The main growth driver was linked to the contribution of contractual enrolments, particularly in the construction sector fund (for about 88k positions), where workers join through the payment of a modest contribution from the employer, and, in the public sector, the activation of automatic registration for new public employees (for approximately 16k positions). Market pension schemes were also up compared to the end of 2022, with an increase in existing positions of open funds (+5.9%) and “new” Personal Pension Funds (PiPs) (+2.2%) and an increase in contributions of 7.4% and 2.3%, respectively. The latest data available for pre-existing pension funds, updated as at September 2023, showed an increase in the number of positions of 1.2% compared to December 2022, corresponding to roughly 8k.

In December 2023, the resources allocated to supplementary pension benefits were up by 8.2% compared to December 2022, i.e. equal to approximately €223bn compared to €206bn recorded in December 2022, due to stock price increases linked to the performance of the financial markets and the overall increase in contributions. The recovery in share prices had a positive impact on the returns of all types of pension schemes with higher values for portfolios with more equity exposure. The net return over a 10-year horizon was 2.4% for occupational funds, 2.5% for open funds, 2.7% for “new” unit-linked PiPs and 1.8% as regards the segregated fund component of “new” PiPs. All returns with a 10-year horizon were in line with or slightly higher than the revaluation threshold of post-employment benefits, equal to approximately 2.4%.

Real Estate market

In 2023, the residential real estate market continued to show solid demand. Nevertheless, according to the Real Estate Market Observatory of the Revenue Agency, in 2023 house sales fell by a total of 9.2% compared to 2022, due to the reshaping of state incentives for renovations and repeal of the option to sell tax credits related to works that began after 31 March 2023, in addition to the restriction of offer conditions on mortgages.

In 2023, on average for the 13 major cities, house prices recorded growth of 1.5%, although the property devaluation phase in real terms continued (net of inflation, prices were down by around 4%). The decline in sales and the reduced availability of household spending is holding back price growth. Amongst the large cities, Bari (-1.5%), Venice (-1.4%) and Catania (-0.4%) still showed a drop in prices, while the strongest growth continued to be recorded in Milan (+3.4%). On the other hand, demand for leases remained high, with an average increase in rents of 3.3%, and spread across all cities (between +1.2% in Naples and +6.9% in Bologna). In terms of returns, in 2023 the residential market had an average cap rate of 5.26%, up from 5.16% in 2022, and a total return of 6.7%.

In 2023, sales in the non-residential sector also recorded a decrease, but to a lesser extent than the residential sector (-4.2%). In fact, in the face of a more marked deterioration in the conditions of access to credit for businesses than for households, the sharp increase in public investments in the NRRP continues to support private non-residential investment. The decline was greater in the production sector (-10.5%), followed by offices (-3.5%), which were affected by the sharp drop in corporate investments, and stores (-2.2%), which in the first half of the year benefited from the period of expansion of tourist services.

Introduction

The decline in sales of non-residential properties had more marked effects on store and office price trends than those observed for homes. Indeed, on average in the 13 major cities store prices increased by 1.0% and office prices by 0.2%. Moreover, the growth in rents was still modest, but for offices (+0.9%) it was higher than that of prices, leading to a rise in yields (with cap rates at 5.2% and a total return of 5.4%), while for stores it was lower than prices (+0.8%) and led to a fall in yields (cap rates at 7.3% and total returns at 8.3%).

Main regulatory developments

In 2023, the following regulatory measures were issued:

Relevant regulations for the insurance sector

Provisions of particular importance to the insurance sector are contained in Law no. 213/2023 (Budget Law), which envisages the establishment of a Life insurance Guarantee Fund (the “Fund”). The Fund represents an association between insurance companies and intermediaries with the task of intervening to protect those entitled to insurance benefits (up to €100k each) against member companies subject to compulsory liquidation. When fully operational, the Fund will have a financial endowment of at least 0.4% of the total Life business technical provisions (approximately €3bn). This level of financial endowment will have to be reached gradually, by the end of 2035. The percentage contributions to the Fund by the insurance companies will be calculated in proportion to the Life technical provisions and the contributions may take the form of irrevocable payment commitments, for an amount not exceeding 50% of the Fund’s financial endowment (raised to 60% when fully operational). Establishment of the Fund represents a strong guarantee for policyholders and should limit the involvement of taxpayers to extreme cases through transfers of public resources in situations of Life insurance company insolvency. The contribution to be paid by the insurance companies will be due from 2024.

Another important change in the Budget Law consists in the introduction of the obligation for all companies, except agricultural companies, to take out an insurance policy against damage to property, plant and equipment (land and buildings, plant and machinery, industrial and commercial equipment) caused by catastrophic events, such as earthquakes, floods, landslides, inundations and overflows. A form of public-private partnership is also introduced in that SACE S.p.A. is authorised to grant coverage under market conditions of up to 50% of indemnities due from the companies in the event of catastrophic events envisaged in the contract. Against an increase in the frequency and severity of catastrophic events recorded in recent years, the new insurance obligation, which will have to be fulfilled by the end of 2024, represents a concrete initiative to increase the resilience of companies to catastrophic events and to fill the current protection gap, in particular affecting small businesses: only 15% of these companies (10-49 employees) have catastrophe insurance coverage.

At EU level, on 16 January 2023 Regulation (EU) 2022/2554 on digital operational resilience for the financial sector (DORA) entered into force, which introduces harmonised requirements for companies operating in the financial sector (including insurance companies) in terms of the management of ICT (Information and Communication Technologies) risk, ICT system resilience testing and management, classification and reporting of ICT incidents. DORA enhances the ICT risk management requirements already established by certain sector regulations and extends them to a broad range of entities, including larger insurance intermediaries, institutions for occupational retirement provision and alternative investment fund managers. One of DORA’s main innovations concerns the introduction of supervisory and sanctioning powers also with respect to critical third-party providers of ICT services, obliged to comply with the provisions of DORA and have a permanent presence in the European Union. DORA will apply from 17 January 2025.

Among the new initiatives, note that on 24 May 2023 the European Commission presented a legislative package relating to retail investor protection, known as the Retail Investment Strategy (RIS), with the aim of encouraging retail investors’ participation in the capital market, through new rules to mitigate conflicts of interest, combat misleading marketing communications, and increase transparency and Value for Money of the investment products offered to retail customers. The legislative package consists of a proposed Omnibus Directive containing amendments to MIFID II, IDD, Solvency II, AIFMD and the UCITS Directive, and a proposed regulation amending the PRIIPs Regulation. The

Unipol Gruppo 2023 Annual Report

main provisions contain stricter rules on inducements, including the introduction of a ban on paying/receiving inducements for sales of investment products (including IBIPs) in the absence of advisory services. It is also envisaged that, in the future, Member States and the European Commission will introduce stricter rules on inducements, including a total ban which, if actually adopted, could change the market structure of financial and insurance brokerage. Furthermore, to increase the Value for Money for customers, the RIS requires that ESMA and EIOPA publish benchmarks on the costs of investment products, preventing companies and distributors from marketing investment products that show significant deviations from these benchmarks.

With regard to secondary legislation, on 12 July 2023 IVASS published a consultation paper on Draft requirements and criteria of suitability of corporate officers and key function managers, in order to adapt the IVASS Regulation to the contents of Ministry of Economic Development Decree 88/2022. Following the consultation process, on 5 March 2024 IVASS adopted the definitive version of this measure (n. 142/2024). The main changes concern the establishment of a minimum quota of independent directors for insurance companies and ultimate Italian parent companies (listed and unlisted), set at 25% of members of the administrative body. In addition, corporate officers and key function managers will be required to complete standardised questionnaires that allow the competent body to conduct more specific and detailed suitability assessments than those compliant with previous regulations. In addition, IVASS may require corporate officers to be interviewed in order to assess their actual suitability and compliance with the limits on the total number of offices. The new measure aims to strengthen the quality of the corporate governance system of insurance companies, achieving alignment with the analogous banking regulations.

It should be noted that on 25 September 2023, IVASS issued Measure 138/2023 amending IVASS Regulation no. 52 of 30 August 2022 containing the implementation methods regarding the right to value trading securities based on the book value in the financial statements of the previous year rather than the realisable value (if lower than the purchase cost). This option, introduced by Decree Law no. 73 of 21 June 2022, was also extended to the entire 2023 financial year by MEF decree of 14 September 2023. Specifically, for the insurance sector, the allocation of an undistributable profit reserve is required in an amount corresponding to the difference between the values recorded and the market values recorded at the end of the reference period, net of the related tax charge. In particular, Measure 138/2023 modified Art. 5 of IVASS Regulation 52/2022, which governs undistributable reserve functioning procedures and also requires adequate reporting on them in the notes to the financial statements. Note that UnipolSai did not avail itself of the option envisaged in the aforementioned Regulation with reference to the 2023 financial statements.

In this respect, also note that on 12 March 2024 the Supervisory Authority issued Measure 143/2024 containing “Amendments and additions to IVASS Regulation no. 52/2022 for the implementation of provisions on the temporary suspension of capital losses for short-term securities introduced by Decree Law no. 73 of 21 June 2022”. In essence, this document reintroduces the right to determine the amount of the Undistributable Reserve to be established, also taking into account the effect on existing commitments to policyholders for the financial year and up to five subsequent years, thus deducting the portion attributable to the policyholders.

Lastly, on 6 October 2023 IVASS published a Draft letter to the market on insurance product oversight and governance (POG) for consultation, clarifying IVASS regulatory expectations in terms of POG and Value for Money (V4M) with particular reference, in a first phase, to the assessment of value for the customer arising from the product testing phase for insurance-based investment products (IBIPs). IVASS adopts and provides a more detailed breakdown of the EIOPA guidelines on V4M assessment, taking into account evidence acquired through inspections and investigations. IVASS expects a strengthening of the POG policies by insurance companies, an increase in the granular identification of the reference market and allocation of a greater weight to product profitability for the customer in the product evaluation and testing phase. At the date of this report, the consultation periods have concluded and publication of the final measures by IVASS is now pending.

The following document was submitted for consultation in the first few months of 2024:

Consultation paper no. 1/2024 containing proposals for amendments and additions to IVASS Regulation no. 52 of 2022 for the implementation of provisions on the temporary suspension of capital losses for short-term securities introduced by Decree Law no. 73 of 21 June 2022.

Introduction

Tax regulations

In 2023, the following regulatory measures were issued:

•

Decree Law no. 198 of 29 December 2022 (Milleproroghe 2023) containing “Urgent provisions on legal deadlines”,

converted with amendments to Law no. 14 of 24 February 2023. On conversion, the deadline for completing

investments in property, plant, equipment and intangible assets and in property, plant and equipment 4.0 “reserved” by 31 December 2022 was extended to 30 November 2023. The deadline for notifying the Tax Authorities of the exercise of alternative options to the tax deduction (invoice discount and factoring) on the expense incurred in 2022 for certain building works carried out on individual property units or on communal parts of buildings was also extended.

•

Law Decree no. 11 of 16 February 2023, converted to Law no. 38 of 11 April 2023, containing urgent measures on

factoring of receivables arising from tax relief on building works, which introduces limitations to factoring and discounting of the 110% bonus, or new additional subsidised works, and joint liability for factors. This provision also affects the Company as the entity acquiring receivables.

•

Decree Law no. 34 of 30 March 2023 (“Bill Decree”), converted into Law no. 56 of 26 May 2023, containing “Urgent

provisions to support households and businesses for the purchase of electricity and natural gas, as well as on meeting health and tax obligations”. The recognition of tax credits for electricity and natural gas was also confirmed for the second quarter of 2023, albeit with reduced rates, which may be used on their own or sold in full to other parties, including financial intermediaries and insurance companies. Extensions are also established as well as some updates, including in the criminal tax arena, to the Tax Peace regulations pursuant to Law no. 197/2022.

•

Decree Law no. 48 of 4 May 2023 (Labour Decree), converted by Law no. 85 of 3 July 2023, which in particular

envisages an increase in the substitute tax rate on Life business mathematical provisions for 2022 to 0.60% and for subsequent years to 0.50%. Only for 2023, it was also established that the tax exemption of fringe benefits for employees with dependent children would be increased to €3k.

•

Law Decree no. 61 of 1 June 2023 (Floods Decree) converted into Law no. 100 of 31 July 2023, containing “Urgent

action to deal with the emergency caused by the flood events that occurred starting from 1 May 2023”, which envisages the suspension of certain deadlines, tax and non-tax, for taxpayers who at 1 May 2023 were resident or had their registered office or operational headquarters in the areas affected and specifically identified.

•

Law no. 111 of 9 August 2023 containing the “Delegation to the Government for tax reform” to be implemented

through the issue of legislative decrees. The provisions of most interest include:

-the implementation of the first IRPEF reform module, which establishes a reduction of the rates by brackets from 4 to 3 for 2024 only and the repeal of the ACE starting from 2024 (Italian Legislative Decree no. 216 of 30 December 2023);

-the new cooperative compliance system, with strengthening of the bonus effects related to adoption (Italian Legislative Decree no. 221 of 30 December 2023).

•

Decree Law no. 145 of 18 October 2023 (Advances Decree), converted into Law no. 191 of 15 December 2023,

containing “Urgent measures on economic and tax matters, in favour of local authorities, to protect employment and for non-postponable needs” which establishes a new method for determining the fringe benefit for loans to employees, a further extension of terms for the repayment of the unduly offset research and development tax credit and the strengthening of investments in Individual Savings Plans (PIR).

•

Decree Law no. 212 of 29 December 2023 (Save Expenses Decree) containing urgent measures relating to the tax

concessions referred to in Articles 119, 119-ter and 121 of Law Decree no. 34 of 19 May 2020, converted with amendments to Law no. 77 of 17 July 2020 which, in the event of failure to complete building works, introduces a safeguard clause for the 110% Bonus tax credits acquired on the basis of work progress reports.

•

Law no. 213 of 30 December 2023 containing “State budget for 2024 and long-term budget for the three-year

period” (Budget Law 2024). The provisions of interest, in force from 2024, include:

-an increase in the threshold of non-taxable fringe benefits for employees;

-a prohibition against offsetting tax credits on form F24, in the presence of overdue positions relating to revenue taxes or enforceable assessments, for total amounts exceeding €100k;

-the introduction of withholding tax on commissions paid to insurance agents;

-the deferral of deductible surpluses deriving from impairment on receivables of credit and financial institutions and insurance companies.

Unipol Gruppo 2023 Annual Report

Other regulations

On 31 July 2023, the European Commission adopted Delegated Regulation (EU) 2023/2772, which introduces the first set of European sustainability standards (European Sustainability Reporting Standard - ESRS), in implementation of Directive (EU) 2022/2464 (CSRD), which requires large companies and listed companies to publish information on the risks and opportunities deriving from social and environmental factors, as well as the impact of their activities on people and the environment (“double materiality”). The ESRSs will constitute mandatory standards for corporate sustainability reporting, with the aim of ensuring greater availability and comparability of this information, and will apply to financial years beginning on or after 1 January 2024.

Lastly, note that on 22 December 2023 Regulation (EU) 2023/2854 on harmonised rules on fair access to and use of data (Data Act) was published in the Official Journal of the European Union. The Data Act governs access to and the sharing, portability and use of all data, personal and non-personal, introducing the right of users (businesses or consumers) that generate data through IoT (Internet of Things) products or related services that they own, rent or lease, to access promptly and free of charge the data generated by the use of such related products or services. Furthermore, users are afforded the right to authorise the data controller (e.g. IoT device manufacturer) to provide data access to third-party service providers: for example, the owner of a vehicle may wish to share the data generated through the use of the car with an insurance company. The objective of the Data Act is to improve data availability for companies, boost competition and create the conditions for the development of a data-driven economy, while protecting the industrial secrets and intellectual property rights of companies.

In 2023, no significant changes occurred in the series of national accounting standards issued by the OIC (Italian Accounting Standards Setter).

1. Management Report

1Management Report

Share performance

Information on share performance

At the end of December 2023 the official price of the Unipol share was €5.169, in the last 12 months recording an increase of 12.9% against an increase in the FTSE Italia All-share index of 26.3%.

Capitalisation values

Total capitalisation was €3,704m at the end of December 2023 (€3,270m at 31/12/2022).

Unipol Gruppo 2023 Annual Report

Shareholding structure

The shareholding structure at 31 December 2023 is shown in the chart below:

As rendered public according to current legislation, 16 beneficiary companies signed a shareholders’ agreement relating to Unipol Gruppo. That agreement, which was renewed on 15 December 2023, regarded 215,621,214 ordinary shares, representing 30.053% of the share capital of Unipol Gruppo. It should also be noted that on 1 August 2022, the increase in voting rights took effect in relation to 344,551,959 ordinary shares, pursuant to Art. 127-quinquies of the Consolidated Law on Finance and in compliance with provisions of the By-Laws and the Regulation on increased voting rights adopted by the Company on 25 June 2020.

Below is the updated list of Shareholders who, at 31 December 2023, hold more than 3% of Unipol voting rights, for which the increased rights took effect 24 months after registration in the Special List for entitlement to benefit from the increased vote:

(Direct) Shareholder

% share of voting rights

Coop Alleanza 3.0 Soc. Coop.

29.324%

Holmo S.p.A.

8.807%

Nova Coop Soc. Coop

8.123%

Cooperare S.p.A.

4.997%

Coop Liguria Soc. Coop. di Consumo

4.715%

Koru S.p.A.

4.420%

Coop Lombardia Soc. Coop.

3.200%

Immagine che contiene testo, schermata, cerchio, Carattere

Descrizione generata automaticamente

1Management Report

Group structure at 31 December 2023

(direct holding out of total share capital)

$Immagine che contiene testo, Carattere, schermata, numero Descrizione generata automaticamente$

Unipol Gruppo 2023 Annual Report

Management Report

Significant events during the year

The Unipol Group has an approximate 19.7% interest in the share capital of Banca Popolare di Sondrio

Through a reverse accelerated bookbuilding (“RABB”) procedure, Unipol finalised the purchase of 46.3m ordinary BPSO shares for a consideration of €5.1 per share, with a total outlay of approximately €235.6m, paid on 2 October 2023. With this purchase, which took place within the scope of the authorisation received by Unipol, which allows it to hold a direct and indirect investment in BPSO equal to 19.99% of the latter’s share capital, net of treasury shares, the Unipol Group now holds, also taking into account the shares held by UnipolSai, a total investment of approximately 19.7% of the share capital of BPSO. The increase in the investment allows the Unipol Group to (i) consolidate the industrial and corporate partnership with BPSO in the Life and Non-Life bancassurance business, strengthening its strategic approach, (ii) increase the stability of the BPSO Group ownership structure for the positive pursuit of its strategic plan objectives and (iii) stimulate the Bank’s evolution in accordance with best market practices.

In relation to the increase in the total interest held in BPSO, from October 2023 Unipol classified the investment in BPSO as an “associate” investment.

Merger of SIFA’ into UnipolRental

At its meeting on 23 March 2023, the Board of Directors of UnipolSai Assicurazioni SpA approved an industrial project in the long-term rental business with BPER Banca SpA (the “Framework Agreement”) which, inter alia, called for the integration via merger by incorporation of SIFÀ - Società Italiana Flotte Aziendali SpA (a company belonging to the BPER Group) into UnipolRental SpA. This project, developed as part of the “Beyond Insurance Enrichment” strategic guideline, more specifically the “Mobility” ecosystem of the “Opening New Ways” 2022-2024 Strategic Plan, aimed to create an operator of national significance in the long-term rental sector. On finalisation of the merger, which became effective on 1 July 2023, BPER acquired an interest in UnipolRental corresponding to 19.987% of the share capital and UnipolSai, previously sole shareholder of UnipolRental, retains the residual 80.013%.

Acquisition of the Santagostino Medical Centres

On 3 April 2023, UnipolSai acquired from the L-GAM investment fund the entire share capital of Società e Salute SpA, a company operating in the private healthcare sector under the brand name “Centro Medico Santagostino”. The company holds a 100% interest in Santagostino Servizi e Prodotti, specialised in the sale of sanitary items such as eyewear and hearing aids. At the end of 2023, the Santagostino Medical Centres had 38 local facilities in Milan, Sesto San Giovanni, Buccinasco, Rho, Monza, Nembro, Bologna, Brescia and Rome, and form part of the development roadmap laid out in the Beyond Insurance Enrichment strategic guideline of the Opening New Ways Strategic Plan.

UnipolSai participates together with the main Italian insurance companies in the Eurovita rescue operation

On 29 June 2023, the Board of Directors of UnipolSai Assicurazioni approved the Company’s participation in the rescue operation scheme to protect Eurovita policyholders, together with Allianz, Assicurazioni Generali, Intesa Sanpaolo Vita and Poste Vita (jointly, the “Companies”).

For this operation, the Companies set up a newCo which, after receiving IVASS authorisation to undertake insurance business, was renamed Cronos Vita Assicurazioni S.p.A. (“Cronos Vita”).

At 31 December 2023, the share capital of Cronos Vita amounted to €60m and was subscribed in equal shares of 22.5% by UnipolSai, Generali Italia, Intesa Sanpaolo Vita and Poste Vita, with Allianz subscribing the remaining 10%. The total payments made by UnipolSai in the form of share capital and share premium in favour of Cronos Vita amounted to €49.5m.

With effect from 30 October 2023, Eurovita SpA transferred a company complex to Cronos Vita comprising the entire portfolio of Eurovita policies, placed under compulsory administrative liquidation on 27 October 2023.

Cronos Vita is managing the run-off of this portfolio for the time strictly necessary (i) for the precise identification of the distinct business units making up the company complex to be assigned to the Companies and (ii) the subsequent transfer of these units to them (or, subject to the approval of the banks involved in the transaction, to their subsidiaries).

1Management Report

The contractual deadline established for completing the transfer of the business units to the Companies is 24 months from the effective date of the transfer to Cronos Vita of the business unit, without prejudice to any delays caused by objective technical or authorisation issues.

The Unipol Group supports populations struck by floods in Emilia Romagna and Tuscany

During 2023, after the May floods in Emilia Romagna and the November floods in Tuscany, UnipolSai launched structured and integrated plans to benefit the local populations, with the aim of supporting customers and agencies resident in the areas affected by the floods.

Moody’s changed Unipol Gruppo’s outlook from negative to stable

On 22 November 2023, the rating agency Moody’s Investor Service confirmed the Insurance Financial Strength Rating of UnipolSai Assicurazioni S.p.A. as “Baa2”, i.e. one notch above the Italy rating (Baa3/Stable Outlook), improving the outlook from “Negative” to “Stable” after similar action taken on the country rating. As a result, the outlook of the Unipol Gruppo S.p.A. ratings also changed from “Negative” to “Stable”. In its decision, the Moody’s Committee considered the high exposure of the company’s assets and liabilities to the country of Italy.

Cancellation of UnipolReC from the Register of financial intermediaries (Art. 106, Consolidated Law on Banking)

At the meeting of 7 February 2023, the Board of Directors of UnipolReC SpA, in acknowledging that, following the sale en bloc without recourse of the entire loan portfolio in favour of AMCO – Asset Management Company SpA, completed pursuant to Art. 58 of the Consolidated Law on Banking on 14 December 2022, the continuation of financial intermediation activities pursuant to Art. 106 of the Consolidated Law on Banking no longer satisfies the interests of the Unipol Group, resolved, among other things, on the proposal to adopt a new corporate purpose with consequent waiver of exercise of the activity reserved to it pursuant to Art. 106 of the Consolidated Law on Banking. This proposal was submitted for approval to the Shareholders’ Meeting of UnipolReC, subject to the issue by the Bank of Italy of the authorisation required pursuant to Bank of Italy Circular no. 288 of 3 April 2015. The company was struck off from the Register of financial intermediaries on 11 December 2023.

Trade union agreement regarding Personnel and access to the Solidarity Fund

As part of the 2022-2024 Strategic Plan implementation activities, on 18 October 2022 and 25 October 2022 trade union agreements were signed (for the companies UnipolSai, UniSalute, Arca Assicurazioni and Siat) which concerns voluntary pre-retirement arrangements for employees meeting pension requirements by the end of 2027.

Pursuant to these agreements, terminations of employment were spread over the period between 31 December 2022 and 31 December 2023, with a prevailing concentration in three windows according to the time frame in which the relevant pension entitlement accrues.

A total of 912 employees (136 at 31/12/2022, 329 at 30/4/2023, 445 at 30/6/2023 and 2 at 31/12/2023) terminated their employment contracts by mutual agreement. The trade union agreement envisaged the early termination of 880 employees (in addition to a higher number of participants up to a maximum 10% more than the number indicated), and therefore the objectives of the Plan were achieved with regard to this action considered strategic in terms of generational renewal and cost reduction.

In addition, in December 2022, a trade union agreement was signed on pre-retirement arrangements for executive personnel who will meet pension requirements due to either the number of years of contributions or old age by 31 December 2027. This agreement refers to the provisions of the system governed by Art. 4, paragraphs 1 to 7-ter, of Law no. 92 of 28 June 2012 (“Fornero” law), as amended by Art. 34, paragraph 54, of Law no. 221 of 17 December 2012 and Art. 1, paragraph 160, of Law no. 205 of 27 December 2017.

Senior executives who intend to participate in the plan, subject to mutually agreed termination of the employment relationship, will be paid the “isopensione”, i.e. an allowance equal to the pension accrued at the time of termination, until the disbursement of the pension benefit. Payments of the relative contribution also continue until the first pension requirement is met. With reference to the trade union agreement mentioned above, at 31 December 2023, 9 UnipolSai executives and one Una Group executive had subscribed to the plan.

Unipol Gruppo 2023 Annual Report

Operating performance

The Company is a holding company which also provides services and is the Parent of the Unipol Group, the leader in the Italian insurance market, particularly in the Non-Life business.

The Financial Statements of Unipol for the year ended 31 December 2023 closed with net profit of €377.8m (€363.0m in 2022), to which dividends received from Group companies totalling €409.9m (€449.4m in 2022) made a particular contribution.

The 2023 Consolidated Financial Statements of the Unipol Group, drafted in compliance with IAS/IFRS, show a profit of €1,331m, of which €1,101m attributable to the owners of the Parent and €230m attributable to non-controlling interests.

A summary is provided below of the operations of the Unipol Group during the year 2022. For more detailed information, please refer to the Annual Integrated Report and the Consolidated Financial Statements.

Group highlights

Amounts in €m

31/12/2023

31/12/2022

Non-Life direct insurance premiums

8,651

8,304

% variation

4.2

4.5

Life direct insurance premiums

6,409

5,341

% variation

20.0

(0.8)

of which Life investment products

2,237

2,170

% variation

3.1

70.6

Direct insurance premiums

15,060

13,645

% variation

10.4

2.4

Result of insurance services

407

1,074

% variation

(62.1)

n.a.

Net financial result

1,148

166

% variation

n.s.

n.a.

Consolidated profit (loss)

1,331

675

% variation

97.2

n.a.

Balance on the statement of comprehensive income

1,529

153

Investments and cash and cash equivalents

67,309

62,796

% variation

7.2

n.a.

Insurance liabilities

51,200

47,327

% variation

8.2

n.a.

CSM Life business

2,295

2,265

% variation

1.3

n.a.

Financial liabilities

15,523

13,339

% variation

16.4

n.a.

Non-current assets or assets of a disposal group held for sale

133

514

Liabilities associated with disposal groups held for sale

360

Shareholders' Equity attributable to the owners of the Parent

7,967

4,862

% variation

16.1

n.a.

Solvency ratio

215

200

No. staff

12,407

12,370

_____________________________________________________________________________________________________________________________________________________________________________

The Financial Statements of Unipol are subject to audit by the independent auditors EY S.p.A., the company tasked with performing the legally-required audit of the financial statements for the 2021-2029 period.

1Management Report

Salient aspects of business operations

The economic figures that best summarise the operating performance of the Company are the following:

•Gains on investments: these were €444.9m (€466.1m in 2022) and mainly represent dividends agreed and collected during the year from subsidiaries (€409.9m) and associates (€17.9m).

•Value of production: amounted to €19.1m (€22.7m in 2022), primarily attributable for €8.2m to the recovery of costs for personnel seconded to Group companies (€9.3m at 31/12/2022), for €7.1m to services provided to Group companies (€5.9m at 31/12/2022) and for €1.5m to remuneration paid to Company executives holding corporate offices in other Group companies (€1.7m at 31/12/2022).

•Costs of production: amounted to €46.9m (€45.5m in 2022) and included operating costs deriving from the core holding company activity, consisting primarily of personnel expenses of €21m (€19.2m in 2022) and costs for the acquisition of services amounting to €19.6m (€18.4m in 2022).

•Other net financial income/charges: express a negative balance of €65m (€59.8m at 31/12/2022). This item included primarily interest expense and other charges on bonds issued for €83m (€85.7m at 31/12/2022), interest expense due to subsidiaries for €28.5m (€3m at 31/12/2022), income on short-term securities for €16.9m (€22.7m at 31/12/2022), income on long-term securities for €13.3m (€4.6m at 31/12/2022) and interest income from subsidiaries and associates for €32.4m (€5.7m at 31/12/2022).

•Value adjustments to financial assets: these were positive for €1.4m (negative for €33.4m at 31/12/2022, including the write-down of the investment held in UnipolReC of €28.2m).

•Pre-tax profit: €353.7m (€350.1m at 31/12/2022).

•Income tax: this had a positive impact on the income statement for €24.1m (€12.9m at 31/12/2022). This effect derives from the valuation of the tax loss for the period that will be recovered due to participation in the tax consolidation.

•Profit for the year: €377.8m (€363m at 31/12/2022).

Shareholders’ Equity of the Company at 31 December 2023, including profit for the year, was €6,176.9m (€6,063.5m at 31/12/2022). The change primarily results from a €265.4m decrease due to distributed dividends and a €377.8m increase due to profits for the year 2023.

Asset and financial management

Property, plant and equipment and intangible assets

The breakdown of property, plant and equipment and intangible assets and the changes compared to the previous year are provided in the table below (for details on property, plant and equipment and intangible assets, please refer to Annexes 4 and 5 of the Notes to the financial statements).

Amounts in €m

Changes

31/12/2023

31/12/2022

value

Property, plant and equipment

- Other assets

0.5

(0.0)

(0.1)

Total

0.5

(0.0)

(0.1)

Intangible assets

- Concessions, licences, trademarks and similar rights

0.1

0.2

(0.1)

(58.1)

Total

0.1

0.2

(0.1)

(58.1)

TOTAL PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

0.6

0.8

(0.1)

(19.1)

Financial fixed assets

The breakdown of financial fixed assets and the changes compared to the previous year are provided in the table below (for details on equity investments, please refer to Annex 6 of the Notes to the financial statements).

Unipol Gruppo 2023 Annual Report

Amounts in €m

Changes

31/12/2023

31/12/2022

value

Financial fixed assets

-Investments

-Subsidiares

6,986.2

-Associates

557.0

318.5

238.5

74.9

Total

7,543.1

7,304.6

238.5

3.3

-Receivables

- Subsidiaries

461.8

Total

461.8

Other securities

386.6

587.1

(200.5)

(34.2)

TOTAL FINANCIAL FIXED ASSETS

8,391.5

7,891.7

499.8

6.3

The breakdown of investments by business segment and changes compared to the previous year were as follows:

Amounts in €m

2023

Changes compared to 2022

Insurance

5,169.3

(0.0)

Banks and financial services

567.7

(93.1)

Other investments

1,806.2

331.6

7,543.1

238.5

Investments in Banks and financial services were represented at 31 December 2023 by the investment in the associates BPER Banca and Banca Popolare di Sondrio and in the subsidiary UnipolSai Investimenti SGR. At 31 December 2023, Unipol had a direct holding of 10.21% of the share capital of Banca Popolare Sondrio as well as an indirect holding through UnipolSai of 9.51%.

Other investments included UnipolReC S.r.l. (recognised in 2022 in the Banks and financial services category), Unipol Finance, Unipol Investment and UnipolPart I.

The changes that took place during the year regarded:

the purchase, in a single tranche, of 46.3m ordinary shares of Banca Popolare Sondrio for a total of €238.5m (increase in the value of investments under Banks and financial services);

the reclassification of the investment in UnipolReC, for a total of €331.6m, from the item Banks and financial services to Other investments after the company was struck off from the Register of financial intermediaries (Art. 106 of the Consolidated Law on Banking).

Receivables from subsidiaries recognised under fixed assets

At 31 December 2023, there were receivables from subsidiaries recognised under fixed assets of €461.8m, attributable to the loan granted by Unipol Gruppo to the company UnipolRental, as part of the acquisition and merger by incorporation of the company Sifà. It should be noted that this loan, taken out on 22 June 2023 and disbursed on 4 July 2023, was repaid in full on 9 February 2024 at the request of UnipolRental.

For more information, please refer to the Other Information section of the Notes to the financial statements containing comments on Transactions with related parties.

Treasury shares

At 31 December 2023, there were 287,664 treasury shares in the portfolio for an equivalent value of €1.4m, acquired to serve the compensation plans based on financial instruments (performance share type) for executive personnel. As part of these plans:

85,000 treasury shares were acquired in 2023, for a value of €0.4m;

in January 2023, the first tranche of shares was assigned to those entitled in execution of the 2019-2021 Long Term Incentive plan for a total of 274,879 treasury shares.

1Management Report

At 31 December 2023, Unipol Gruppo also indirectly held a total of 641,014 treasury shares through:

UnipolSai Assicurazioni: 556,950 Unipol shares;

UniSalute: 19,629 Unipol shares;

Linear Assicurazioni: 14,743 Unipol shares;

Arca Vita: 2,403 Unipol shares;

SIAT: 24,443 Unipol shares;

UnipolRental: 13,783 Unipol shares;

UnipolAssistance: 2,007 Unipol shares;

Leithà: 7,056 Unipol shares.

The Ordinary Shareholders’ Meeting held on 28 April 2023 authorised the Board of Directors to purchase and sell treasury shares pursuant to Art. 2357 and Art. 2357-ter of the Italian Civil Code, for a period of 18 months from the Shareholders’ Meeting resolution and for a maximum of €300m.

Current financial assets

These amounted to €79.5m, down by €30.4m compared to the previous year, due mainly to the sale of all Italian and foreign listed shares and part of the government bonds held in the portfolio during the year.

The breakdown of the item was as follows:

•government bonds for €39.9m (€51.7m at 31/12/2022);

•listed corporate bonds for €38.5m (€39.3m at 31/12/2022);

•listed shares of UnipolSai for €1.1m (€2m at 31/12/2022).

The list of shares and securities recognised as current assets at 31 December 2023 is provided in Annex 7 of the Notes to the Financial Statements.

Financial operations

Financial operations in 2023 were consistent with the Investment Policy guidelines adopted by the Company and with recommendations of the Group Investments Committee and Financial Investments Committee.

The criteria of high liquidity of investments and prudence were the guidelines of the investment policy, which applied the criteria of optimising the portfolio’s risk-return profile.

Management activities focused on the bond and equity sector. There was a decrease in exposure to government bonds denominated in Euros and bonds of industrial corporate issuers, against an increase in the exposure to bonds of financial corporate issuers.

Exposure to equity instruments increased, while there were no transactions on alternative investments.

Operating activities were characterised by maintaining a strong level of liquidity at the end of the year.

The volatility of share and bond prices throughout 2023 offered trading opportunities; these activities, carried out in the bond and equity segments, aimed to achieve profitability objectives.

At 31 December 2023, the duration of the portfolio was equal to 0.98 years, down compared to the end of 2022 (1.31 years) following the transactions performed during the year, within the limits set by the Investment Policy.

Cash and cash equivalents

At 31 December 2023, bank deposits and cash were €822.2m, with a decrease of €138.6m with respect to the balance at 31 December 2022.

Please note that a cash pooling agreement was in force with a number of Group companies to improve corporate cash management and allow the Parent to constantly monitor Group company liquidity, with resulting optimisation of the relative costs and returns.

At 31 December 2023, Unipol recorded cash pooling receivables of €19m (€13.2m at 31/12/2022) and cash pooling payables of €1,072.2m (€749.4m at 31/12/2022). The breakdown of receivables and payables and the relative counterparties are provided in the Notes.

Unipol Gruppo 2023 Annual Report

Share capital

No transactions were carried out on the share capital in 2023. At 31 December 2023, the breakdown of the share capital, subscribed and fully paid-up, was as follows:

Share capital at 31/12/2023

Share capital at 31/12/2022

No. of shares

Euro

No. of shares

Euro

Ordinary shares

717,473,508

3,365,292,408.03

717,473,508

3,365,292,408.03

Total

717,473,508

3,365,292,408.03

717,473,508

3,365,292,408.03

Debt

At 31 December 2023, the bonds issued by Unipol were €2,427.6m (€2,457.7m at 31/12/2022) and represent three senior unsecured bond loans, listed on the Luxembourg Stock Exchange, with the following characteristics:

•€1,000m nominal value, 3% interest rate, 2025 maturity (same amount at 31/12/2022);

•€500m nominal value, 3.5% interest rate, 2027 maturity (same amount at 31/12/2022);

•€902m nominal value outstanding of the “green” senior bond, 3.25% interest rate, 2030 maturity (€937.5m at 31/12/2022), issued in two tranches in 2020 and subject to repurchases for a total nominal value of €98m, of which €35.5m during the course of the first quarter of 2023.

The issues described above were implemented as part of the Euro Medium Term Notes (EMTN Programme), established in December 2009 for an original nominal amount of up to €2bn with the latest renewal and increase to €3bn in September 2020.

At 31 December 2023, current financial payables included payables to Group companies due to the above-mentioned cash pooling agreement for a total of €1,072.2m.

Net debt (summarised in Annex 9 to the Notes to the Financial Statements) amounted to €2,587m (€2,137m with reference to the previous year).

Risk management policies (Art. 2428 of the Civil Code)

Financial risk is managed through the regular monitoring of the main indicators of exposure to interest rate risk, credit risk, equity risk, and liquidity risk.

Interest rate risk

The duration of the investment portfolio, an indicator of the Company’s interest rate risk exposure, was 0.98 years at 31 December 2023. With specific reference to the bond portfolio, the duration was 2.72 years.

The table shows the sensitivity of the bond portfolio to a parallel shift in the yield curve of reference for the financial instruments.

Amounts in €k

Risk Sector

Breakdown

Duration

10 bps increase

50 bps increase

Government

32.67%

2.55

(390)

(1,950)

Financial

66.32%

2.81

(871)

(4,357)

Corporate

1.01%

2.99

(14)

(71)

Bonds

100%

2.72

(1,275)

(6,377)

Credit risk

Management of the securities portfolio primarily involves investing in investment grade securities (88.15% of the bond portfolio). Specifically, 1.01% of bonds had an AA rating, 23.28% an A rating and 63.85% a BBB rating.

1Management Report

Credit risk is monitored by measuring the portfolio’s sensitivity to changes in benchmark credit spreads. The following table shows the sensitivity at 31 December 2023:

Amounts in €k

Rating

Breakdown

1 bps increase

10 bps increase

50 bps increase

1.01%

(1)

(10)

(52)

23.28%

(36)

(361)

(1,806)

BBB

63.85%

(86)

(856)

(4,280)

Non Investment Grade

11.85%

(13)

(131)

(654)

Bonds

100%

(136)

(1,359)

(6,793)

Equity risk

Equity risk is monitored by analysing the equity portfolio’s sensitivity to changes in the reference markets represented by sector indices. At 31 December 2023, Unipol Gruppo S.p.A. is not exposed to equity risk with reference to investments other than financial fixed assets.

Liquidity risk

In the construction of the investment portfolio, priority is given to financial instruments that can be quickly transformed into cash and quantitative limits are specified for the purchases of securities that do not guarantee a rapid sale and/or a sale at fair conditions, because of their type or specific terms.

Internal Control and Risk Management System

The internal control and risk management system (the “System”) is a key element in the overall corporate governance system. It consists of a set of rules, procedures and organisational structures for the effective and efficient identification, measurement, management and monitoring of the main risks, with the aim of contributing to the sustainable success of the Group1.

The following diagram provides a simplified view of the Risk and Control Governance Model of Unipol Gruppo.

1 The rules for the Unipol Group’s internal control and risk management system are set forth in the Group Directives on the corporate governance system, approved by the Unipol Board of Directors and the boards of other consolidated Group companies, and are periodically updated.

Unipol Gruppo 2023 Annual Report

The Risk Management System adopted by the Group is inspired by an Enterprise Risk Management logic (ERM Framework) based on the consideration, with an integrated approach, of all the current and prospective risks the Group is exposed to, assessing the impact these risks may have on the achievement of the strategic objectives. Based on these principles, and to pursue to assigned objectives, the Risk Management System relies on a key element: the Risk Appetite.

The Risk Management Policy outlines the risk management strategies and objectives of the Group and companies within its scope, identifying the roles and responsibilities of the corporate bodies and structures involved in the process.

The corporate bodies and top management of the Group companies are committed to promoting the dissemination of a culture of control.

In 2023, 9,046 Unipol Group employees participated in synchronous and asynchronous courses on Risk Management, a significant increase compared to more than 7,500 in 2022.

Verification of efficiency and effectiveness of the Internal Control and Risk Management System

Audit is responsible for assessing and monitoring the effectiveness, efficiency and adequacy of the internal control system and the additional components of the corporate governance system, including the risk management system.

The activities carried out by Audit are structured as follows: audits and other activities on processes (insurance, management; governance; IT; business of the Group companies subject to Bank of Italy supervision; business of the diversified companies); audits on settlement structures; audits required by regulations and internal fraud detection. In particular, note that the audits and other activities on governance processes also include actions that Audit carries

• Governance• Legal responsibility of Directors (law compliance)• Social responsability, Ethics principles• Responsibility for the Internal Control and Risk Management System• Supervision of OMM implementation

• Implementation and monitoring of the Internal Control and Risk Management System

• Verification of efficiency and effectiveness of the Internal Control and Risk Management System

• Monitoring and control of quantifiable risks (Solvency II - Basel 2 - Basel 3)• Management of compliance risk•Verification of the reliability and adequacy of the calculation of technical provisions - Solvency II• Control of accounting data and financial communication• Management of money laundering risk• Management of privacy risk

• Acquisition of information from business lines and the Group, and logical reorganisation for governance requirements• Operating controls on individual transactions

ShareholdersBoDBoard of Statutory AuditorsControl and Risk CommitteeOther Board CommitteesSupervisory Board

General ManagerBody with management functionsTop Management

Audit

Risk Management

Compliance

Manager in charge of financial reporting, Anti-Money Laundering and Data Protection Officer

Business Lines