Generali Immobiliare Strategy & Performance

Generali Investor Day 2010

Generali Immobiliare
Strategy & Performance

Giancarlo Scotti
Chief Executive Officer of

Venice, November 26, 2010

Disclaimer 2

Certain of the statements contained herein are statements of future expectations and other
forward-looking statements.
These expectations are based on management's current views and assumptions and involve
known and unknown risks and uncertainties.
The user of such information should recognise that actual results, performance or events
may differ materially from such expectations because they relate to future events and
circumstances which are beyond our control including, among other things, general economic
and sector conditions.
Neither Assicurazioni Generali S.p.A. nor any of its affiliates, directors, officers employees or
agents owe any duty of care towards any user of the information provided herein nor any
obligation to update any forward-looking information contained in this document.
The manager in charge of preparing the company’s financial reports, Raffaele Agrusti,
declares, pursuant to paragraph 2 of article 154-bis of the Consolidated Law on Financial
Intermediation, that the accounting information contained in this presentation corresponds to
document results, books and accounts records.

Assicurazioni Generali Group – Investor Day 2010 – Investment Management of Insurance Assets

Agenda 3

Introduction

I. Generali Portfolio

II. Corporate Structure

III. Real Estate Strategy & Going Forward

IV. Final Remarks


Agenda 4

Introduction
A. Real Estate Asset Class within Generali Group

B. Real Estate Asset Management and Insurance business

C. Real Estate versus Other Asset Classes

D. Recent Trends


Introduction

A. Real Estate Asset Class within Generali Group 5

At 30.09.2010

Asset Management:
Cash & financial “Own Investments”
instruments including own use real estate(1):
94.5% Euro 331.1 bn
Insurance
Liabilities

Traditional Life
Reserves(3)
258.1

Real Estate(2)
5.5% at book value
7.1% at market value 30.5 P&C Reserves(3)

(1) Including own use real estate within own investments. Own investments include own capital and insurance funds (i.e. unit linked excluded)
(2) Including real estate mutual funds & own use real estate
(3) Net technical reserves; life reserves including investment contracts


Introduction

B. Real Estate Asset Management and Insurance business 6

Insurance objectives and Asset Allocation
Global real estate investment focuses on two areas: own use assets and investment properties
Real Estate asset management focuses on investment portfolio to deliver performance
The real estate assets of the Group provide the insurance business with a specific asset class in
the company portfolio and are used to cover life and non-life technical reserves
The investment and management policies of the Group real estate assets are coherent with the
insurance business requirements:
Life: Recurring income properties to support yearly income return
Assets with long-term value creation
Non-life: Properties with value appreciation to maximize return on capital

Investment strategy – Key drivers
Recurring income and value creation
Positive RE yield spread vs. bond
Inflation hedging
Long-term capital protection
Creation of latent capital gain
High quality tenants


Introduction

C. Real Estate vs. Other Asset Classes (1/2) 7

Property versus other asset classes: Long-term performance
Total return US Europe
(annual in %) 30 years 9 years

Bond 9.8% 6.1%
All property 10.0% 4.1%
Equities 10.8% 1.9%
Source: EUROPE -All property: IPD all European pooled property fiunds index, Equities: Morgan Stanley Capital International, Bonds: JP Morgan Co Incorporated
USA- IBBOTSON 2009 (1978 to 2008 data) Property: NCREIF-MIT, Equities: S&P 500, Bonds: US Long-term (20 y) Treasury Ibbotson.

Real estate is a significant asset class with specific characteristics:
Size of the real estate market
Risk/return profile (between stocks and bonds)
Diversification benefits due to low cross-correlation with financial assets
High proportion of total return in current cash yield
Hedge against unanticipated inflation
Real estate’s relatively low correlation with other asset classes make it a source of diversification
in a portfolio.
Source: Generali Immobiliare Research


Introduction

C. Real Estate vs. Other Asset Classes (2/2) 8

Property in a low interest rate environment (Milan example)
7.0 Spread [RHS] 300
Milan Prime Yield (1)
6.0 Italian Gov. Bond (Rendistato) 250

5.0 200

4.0 150

3.0 100

2.0 50

1.0 0
Dec. 2005 Jun. 2006 Dec. 2006 Jun. 2007 Dec. 2007 Jun. 2008 Dec. 2008 Jun. 2009 Dec. 2009 Jun. 2010

Increasing spread (Real estate yields vs. Bonds)
Low-cost debt financing
Real Estate spread near record to Government Bonds signals time to buy property
Sources: Cushman, Datastream (1) Yields are net of direct costs i.e. maintenance, insurance, local taxes etc


Introduction

D. Recent Trends 9

Medium term outlook improving as market imbalances are reduced gradually
European Prime Office Rental Growth
Paris Munich Milan Madrid
30%

20%

10%

0%

-10%

-20%

-30%

-40%
Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. Jun.
2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

Real estate markets benefited from the increased economic activity in 2010
Rental values to stabilize, sharp decline in new supply and stabilization of vacancy
rates
The demand-side environment remains the main short-term concern
We expect slight increases in capital values from 2011 onwards
Source: GIm Market Research, Cushman


Agenda 10

A. Real Estate within Generali: Description

B. Real Estate within Generali: Operational features and tenancy

C. Real Estate within Generali: Key performance indicators

D. Generali Group and Real Estate Investments



A. Real Estate within Generali: Description (1/2) 11

Real Estate Asset Allocation: 7.1% as at September 30, 2010 at Market Value
Total Real Estate Market Value as at Destination of use of the direct
30.09.2010: Euro 24.2 bn: portfolio Market Value as at
Own Use: Euro 3.9 bn (16%) September 30, 2010
Investment Portfolio: Euro 20.3 bn (84%)
Direct: Euro 17.9 bn(1) Other/Mixed Office
9% 74%
Indirect: Euro 2.4 bn(1)
Latent Capital Gain for the Direct Investment Logistic
Portfolio as at 30.09.2010: Euro 5.2 bn (30%) 3%
Life: Euro 1.6 bn Retail

Non-life: Euro 3.6 bn 6%

Portfolio comprises more than 2,000 assets Residential
8%
Development projects represent a marginal
activity in direct portfolio
Low Leverage level

Source: Financial Statements 30.09.2010
(1) Direct: Re assets owned directly by the group insurance companies or through SPV directly controlled
Indirect: Re funds managed by third parties



A. Real Estate within Generali: Description (2/2) 12

Country Italy France Germany Rest of Rest of Total
(Euro bn) Europe World
Total Investment MV 9.67 4.99 4.11 4.45 0.96 24.18
Own Use MV 1.55 0.43 0.79 0.95 0.18 3.90
Investment Portfolio MV 8.12 4.56 3.32 3.46 0.78 20.28
Direct Portfolio MV 6.84 4.31 2.46 3.53 0.71 17.85

Indirect Portfolio MV 1.28 0.25 0.86 0.04 0.00 2.43

Market Value by country (on Total Investment MV) Market Value by Cities (on Total Investment MV)
Rest of World Italy Paris 19% Milan 15%
4% 40%
Rome 6%

Vienna 5%
Rest of Europe
18% Tel Aviv 3%

Other 39% Hamburg 3%

Germany France Barcelona 2% Munich 2%
17% 21% Madrid 2% Berlin 2% Cologne 2%

Source: Financial Statements 2010.09.30


B. Real Estate within Generali: Operational features and tenancy (1/2) 13

Secure source of income
Long Lease Indexation and natural hedge to
inflation

Office lease contracts have different Inflation Hedging: Full indexation of
legal structure: the rent to the inflation across Europe:

Italy: 12 years (6+6) Italy: 75/100% of indexation
on inflation (ISTAT)
France: 9 years (3+3+3)
France: 100% indexed on
Germany: 10 years (5+5)
ICC (Construction
Long Lease duration, rental level Costs Index) or
defined over the period IRL (Life Costs Index)
Germany: Indexation based on
inflation with a threshold
minimum of 5%

Source: Management report



B. Real Estate within Generali: Operational features and tenancy (2/2) 14

High quality source of income
Low Counterparty Risk Tenants concentration in main
countries
No exposure to a major tenant at Italy
Group level Top 10 tenants represent ca. 15% of
Good diversification of tenant’s activity passing rent
sector (financial institutions, retail, state Economic sector: Financial institutions,
organizations, food, fashion …) Telecom and media, state organization,
High quality of tenants (credit risk analysis services
by tenant are performed at country level) France
Quality buildings attraction for quality and Top 10 tenants ca. 35% of passing rent
branded tenants: new buildings in business
Economic sector: IT and services, food,
area and historical building in prime and
media, state organization, financial
downtown locations
institutions
Multitenancy prevails
Germany
Key tenant relation as a priority
Top 10 tenants represent ca. 20% of
Low concentration of expiry date of lease passing rent
(10-15% per year)
Economic sector: Retail, IT and services,
media, financial institutions



C. Real Estate within Generali: Key Performance Indicators (1/3) 15

Catch momentum and value creation
Direct Portfolio
33%
31% 31%
29% 29%

343 627 352
260
118
4.5% 4.5%
4.1% 4.2%
3.8%

2006 2007 2008 2009 2010e

Recurring Returns % Latent Capital Gain % Realised Capital Gain (Euro m)
Net Operating Income Increases thanks to active management (risk return profile)
Net Realised Capital Gain: Regular stream to support insurance profitability
Continue value creation: Latent capital gain at 30% over the period
Source: Financial Statements and management account
Recurring return %: (Rental Income – operating expenses, i.e. maintenance, insurance)/Market Value
Latent Capital Gain %: (Market Value – Book Value)/Market Value; Realised Capital Gain: Sales Price – Book Value



Take advantage of market timing
Latent Capital Gain Realised Capital Gain
33.3% 10.5%
6.0 35.0
31.5% 31.2% 600.0 12.0
29.0% 29.4% 500.0 10.0
5.5 30.0
400.0 6.6% 6.2% 8.0
5.0 5.9 25.0 300.0 626.6 5.0% 6.0
5.7
5.2 5.2 5.3 200.0 2.5% 343.0 351.7
4.0
4.5 20.0 260.0
100.0 2.0
117.7
4.0 15.0 0.0 0.0
2006 2007 2008 2009 2010e 2006 2007 2008 2009 2010e
Latent Capital Gain Capital Gain realised
% Latent Capital Gain % Capital Gain realised vs. latent
Direct portfolio

Took advantage of market timing and realised capital gain in 2008,
turnaround year in the Euro zone
Group portfolio confirms its resilience in 2009
Resume value creation in 2010
Source: Financial Statements and management account




Catch momentum and rebalance asset allocation
Direct Portfolio Asset Allocation by Destination of Use
Other/Mixed Office Other/Mixed Office
15% 55% 18% 74%

2000 2010

Residential Residential
30% 8%

On a long-term view over the past ten years, Generali has rebalanced the risk return
profile of the portfolio
Between 2000 and 2005 sales focused on residential sector to seize the market
opportunities (capital gain extraction from low yield properties)
Over the period new investments focused on recurring income and value creating
office properties
Source: Management account



D. Generali Group and Real Estate Investments (1/9) 18

A historical portfolio
Generali was founded in Trieste. The Group then expanded
into the Procuratie Vecchie in San Marco’s Square, Venice,
one of the most prestigious buildings among the firm’s historic
assets. The Group’s evolution and personality are mirrored
throughout Europe in the high quality commercial buildings
initially own used and then for investment purpose.
Trieste – Piazza Unità d’Italia

Milan – Piazza Cordusio




ITALY: From historical portfolio …
Rome – Piazza Venezia

Venice – Piazza San Marco




ITALY: … to modern investment properties
Milan – Via Filzi Milan – Palazzo Nimeyer

Rome – Via Po
Milan – Maciachini business park




FRANCE: Historical portfolio and new projects for the city
Paris – Champs-Èlysées

Paris (Issy les Moulineaux) – EOS




GERMANY: Mostly newly built portfolio
Berlin – Adidas Cologne – Constantinhoefe

Hamburg – Covent Park




AUSTRIA: Unique portfolio
Vienna – Wipplinger

Vienna – Tegetthoffstrasse, 7

Vienna – Graben




SPAIN: Madrid and Barcelona CBD portfolio
Madrid – Gran Via 10 Madrid – Serrano Barcelona – Paseo de Gracia




OTHER LOCATIONS
Amsterdam – Herengracht Brussels – Louise Tower

Zurich ZH – Freigutstrasse 12-14




RECENT ACQUISITION: Farragut Building – Washington

Overview Energy Star office property
12 storey
Heart of Washington DC’s CBD, 2 blocks
from the White House


Agenda 27

A. Real Estate Structure within Generali

B. Generali Immobiliare

C. Group Real Estate Divestment / Investment Committee

D. Product Development



A. Real Estate Structure within Generali 28

Integrated Asset Management Structure
Global Player Structure dedicated to Insurance
Companies
Generali is a global key player with strong Matching technical reserves
local competences Asset Management for life – non-life
Generali Immobiliare: Group Real Estate segment
Asset Management structure, with Follow Group geographical expansion
specialised poles
Expansion of third party institutional Asset
All investments / divestments approved by a Management
centralised Real Estate Committee

Vertical integration with focus on Dedicated team in 11 countries,
Investment Portfolio 500 staff Belgium
Facility Management Italy Netherlands
Property Management France Switzerland
Asset Management Germany Israel
Product development and Fund Spain Czech Republic
Management Austria China



B. Generali Immobiliare (1/2) 29

The globalisation of the Real Estate market provides Generali with a unique opportunity to
leverage its competences and become a Global Player with strong local competences
Generali Immobiliare has been set up on the 1st September 2008 as a new department of the
Corporate Centre (Assicurazioni Generali) dedicated to the Real Estate across the Group
Generali Immobiliare business model is client-focused and aims to combine Real Estate culture
with a strong financial background

Real Estate skills Financial skills

Real estate services
Generali Immobiliare Asset Management
Project management Research
Commercial property Synthesis of both cultures Finance
to better serve clients

Client Relationship Client Relationship
Tenants Insurance companies
Institutional investors



B. Generali Immobiliare (2/2) 30

Other Headquarters
GENERALI Immobiliare GREDIC
departments
Generali Real Estate
Strategic Planning
Divestment /
Strategic Asset CHIEF EXECUTIVE OFFICER
Allocation Giancarlo SCOTTI Investment
Finance
Committee
Tax
Legal

Research Finance Asset Mgmt Invest / Divest Asia
Jacques PLAS Benoit PRAT-STANFORD Tina PAILLET Dominique BEGHIN Elisabeth LOH

Countries
ITALY FRANCE GERMANY AUSTRIA SPAIN THE SWITZERLAND ISRAEL
BELGIUM
Giovanni Philippe Martin Klaus Julio VIDAL NETHERLANDS Christian Shlomo
Michel STAES
PAVIERA DEPOUX SCHRAMM EDELHAUSER AREAN Ad OLIVIER BREUTEL GUTMAN



C. Group Real Estate Divestment / Investment Committee 31

Generali Real Estate Divestment / Investment Committee ”GREDIC” is the
investment / divestment technical & executive centre for Generali Group Real
Estate:

All investments / divestments to be approved by GREDIC

Standard presentation with consistent Key Performance Indicators

Presentation from D. Beghin and local team

Comparability of performance investment process across the group

Due diligence and acquisition process covers all aspects of risk and performance

Ensure that local investments are in line with group strategy

Six members, international team, who meet weekly in Paris:

Giancarlo Philippe Klaus Giovanni Benoit PRAT- Martin
SCOTTI DEPOUX EDELHAUSER PAVIERA STANFORD SCHRAMM
Chairman of GREDIC



D. Product Development 32

Generali Group has developed expertise in product development and real estate
fund management for group insurance companies over the past 4 years

Real Estate Funds rationale
Offer opportunity across group
Eligible asset for insurance company technical reserves
Rebalance risk / return profile for each company according to insurance requirements

Creation of dedicated vehicles through Group Real Estate management companies
Generali Immobiliare Italia SGR: Set up in 2006, dedicated funds with clear investment strategy
(AUM Euro 3.2 bn)
Generali Immobiliare Asset Management (Lux Co): Set up in 2009, dedicated funds
geographically and sector focused

Third Parties Institutional Asset Management activity started in Italy in 2008 with Scarlatti Fund
and Eracle Fund
Increase Third Party Institutional Asset Management is a target


Agenda 33

III. Real Estate Strategy &
Going Forward
A. Investment Strategy & Market environment

B. Going Forward



A. Investment Strategy and Market environment (1/2) 34

Real Estate under Solvency II
Real Estate estimated capital charge at 25%
Positive margin over bond yield backed by real assets
Total Return as sum of Recurring Income and Change of Value
Real Estate market momentum favorable for long-term investors
Inflation Hedging

Real Estate attractive asset class for life business of Generali

Balance RE allocation Life – Non-life considering the risk capital absorption

Increase life segment exposure to Real Estate as an opportunity to optimize risk / return profile



A. Investment Strategy and Market environment (2/2) 35

Strategy has to be adapted to More balanced RE Portfolio to benefit
uncertain market environment from different market timing

Market timing is key in Euro zone and USA as more
Globalization to continue
mature
Objective to secure cash flow on existing assets
Urbanization at an unprecedented speed in China
Some yield recompression across markets and India
Real estate debt to be refinanced in the next years Market and risk monitoring to support expected
might generate opportunities returns

Significant investment opportunities in Real Estate
Attractive returns where cycle is most advanced (USA)
Quality assets at affordable prices in core countries (France, Italy, Germany) due to distressed sellers
China: Entering real estate after markets have cooled down
India: Take advantage of fast urbanization process



B. Going Forward: Increase Real Estate Exosure (1/2) 36

Gradual increase of Group RE portfolio
Increase Real Estate exposure New Investments structure
Invest in quality assets with recurring income Traditionally, technical reserves backed by
Seize opportunities domestic assets: RE investment directly or
through local / dedicated products
Continue portfolio turnover to maximize
(domestic funds)
return
Selectively, technical reserves backed by
Allocation by segment: essentially in life
cross border assets: RE investment through
cross-border/
specialized products managed internally
(international funds)

Opportunity to invest over the next years, market turnaround expected in 2012
Ride the market cycle to take advantage of the Group’s existing markets and of new areas
(Euro zone)
Investments in countries where yields are attractive (USA)
Start to invest in China following Group expansion to match local insurance reserves
Invest in CEE markets following Group expansion to match local insurance reserves



B. Going Forward: Increase Real Estate Exposure (2/2) 37

Opportunistic
CORE Growth
strategy

Central Eastern Europe
North America Continental Europe Match Group Assets /
Attractive returns Portfolio Turnover Liabilities requirements
Advanced Real Ride market cycle:
Estate cycle Quality assets and Focus on
Liquid market returns Prague
Top quality products Resilient Portfolio Warsaw
offer with recurring income
Focus on
New York Focus on Asia
Washington Madrid, Barcelona China: Gradually
Boston Paris invest local technical
San Francisco Hamburg, Cologne, reserves
Chicago Munich, Berlin India: Study
Milan, Rome opportunities
Vienna
London Focus on
South America Shanghai
Study opportunities Beijing
Follow group Shenzhen
expansion Guangzhou


Agenda 38

Final Remarks


FINAL REMARKS

Final Remarks 39

Resilient portfolio with balanced risk return profile

Integrated Real Estate Asset Management structure

Real Estate exposure growth

Exposure to Real Estate mainly in life

Third party institutional Asset Management increase


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