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<strong>Generali</strong> <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong><br />

<strong>Generali</strong> Immobiliare<br />

Strategy & Performance<br />

Giancarlo Scotti<br />

Chief Executive Officer of<br />

<strong>Generali</strong> Immobiliare<br />

Venice, November 26, <strong>2010</strong>


Disclaimer<br />

Certain of the statements contained herein are statements of future expectations and other<br />

forward-looking statements.<br />

These expectations are based on management's current views and assumptions and involve<br />

known and unknown risks and uncertainties.<br />

The user of such information should recognise that actual results, performance or events<br />

may differ materially from such expectations because they relate to future events and<br />

circumstances which are beyond our control including, among other things, general economic<br />

and sector conditions.<br />

Neither Assicurazioni <strong>Generali</strong> S.p.A. nor any of its affiliates, directors, officers employees or<br />

agents owe any duty of care towards any user of the information provided herein nor any<br />

obligation to update any forward-looking information contained in this document.<br />

The manager in charge of preparing the company’s financial reports, Raffaele Agrusti,<br />

declares, pursuant to paragraph 2 of article 154-bis of the Consolidated Law on Financial<br />

Intermediation, that the accounting information contained in this presentation corresponds to<br />

document results, books and accounts records.<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

2


Agenda<br />

Introduction<br />

I. <strong>Generali</strong> Portfolio<br />

II. Corporate Structure<br />

III. Real Estate Strategy & Going Forward<br />

IV. Final Remarks<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

3


Agenda<br />

Introduction<br />

A. Real Estate Asset Class within <strong>Generali</strong> Group<br />

B. Real Estate Asset Management and Insurance business<br />

C. Real Estate versus Other Asset Classes<br />

D. Recent Trends<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

4


Introduction<br />

A. Real Estate Asset Class within <strong>Generali</strong> Group<br />

At 30.09.<strong>2010</strong><br />

Cash & financial<br />

instruments<br />

94.5%<br />

Asset Management:<br />

<strong>Generali</strong> Immobiliare<br />

Real Estate (2)<br />

5.5% at book value<br />

7.1% at market value<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

“Own Investments”<br />

including own use real estate (1) :<br />

Euro 331.1 bn<br />

(1) Including own use real estate within own investments. Own investments include own capital and insurance funds (i.e. unit linked excluded)<br />

(2) Including real estate mutual funds & own use real estate<br />

(3) Net technical reserves; life reserves including investment contracts<br />

Insurance<br />

Liabilities<br />

258.1<br />

30.5<br />

Traditional Life<br />

Reserves (3)<br />

P&C Reserves (3)<br />

5


Introduction<br />

B. Real Estate Asset Management and Insurance business<br />

Insurance objectives and Asset Allocation<br />

� Global real estate investment focuses on two areas: own use assets and investment properties<br />

� Real Estate asset management focuses on investment portfolio to deliver performance<br />

� The real estate assets of the Group provide the insurance business with a specific asset class in<br />

the company portfolio and are used to cover life and non-life technical reserves<br />

� The investment and management policies of the Group real estate assets are coherent with the<br />

insurance business requirements:<br />

� Life: Recurring income properties to support yearly income return<br />

Assets with long-term value creation<br />

� Non-life: Properties with value appreciation to maximize return on capital<br />

Investment strategy – Key drivers<br />

� Recurring income and value creation<br />

� Positive RE yield spread vs. bond<br />

� Inflation hedging<br />

� Long-term capital protection<br />

� Creation of latent capital gain<br />

� High quality tenants<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

6


Introduction<br />

C. Real Estate vs. Other Asset Classes (1/2)<br />

Property versus other asset classes: Long-term performance<br />

� Real estate is a significant asset class with specific characteristics:<br />

� Size of the real estate market<br />

� Risk/return profile (between stocks and bonds)<br />

� Diversification benefits due to low cross-correlation with financial assets<br />

� High proportion of total return in current cash yield<br />

� Hedge against unanticipated inflation<br />

� Real estate’s relatively low correlation with other asset classes make it a source of diversification<br />

in a portfolio.<br />

Source: <strong>Generali</strong> Immobiliare Research<br />

Total return US Europe<br />

(annual in %) 30 years 9 years<br />

Bond 9.8% 6.1%<br />

All property 10.0% 4.1%<br />

Equities 10.8% 1.9%<br />

Source: EUROPE -All property: IPD all European pooled property fiunds index, Equities: Morgan Stanley Capital International, Bonds: JP Morgan Co Incorporated<br />

USA- IBBOTSON 2009 (1978 to 2008 data) Property: NCREIF-MIT, Equities: S&P 500, Bonds: US Long-term (20 y) Treasury Ibbotson.<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

7


Introduction<br />

C. Real Estate vs. Other Asset Classes (2/2)<br />

Property in a low interest rate environment (Milan example)<br />

7.0<br />

6.0<br />

5.0<br />

4.0<br />

3.0<br />

2.0<br />

1.0<br />

Dec. 2005 Jun. 2006 Dec. 2006 Jun. 2007 Dec. 2007 Jun. 2008 Dec. 2008 Jun. 2009 Dec. 2009 Jun. <strong>2010</strong><br />

� Increasing spread (Real estate yields vs. Bonds)<br />

� Low-cost debt financing<br />

� Real Estate spread near record to Government Bonds signals time to buy property<br />

Sources: Cushman, Datastream<br />

Spread [RHS]<br />

Milan Prime Yield<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

(1)<br />

Italian Gov. Bond (Rendistato)<br />

(1) Yields are net of direct costs i.e. maintenance, insurance, local taxes etc<br />

300<br />

250<br />

200<br />

150<br />

100<br />

50<br />

0<br />

8


Introduction<br />

D. Recent Trends<br />

Medium term outlook improving as market imbalances are reduced gradually<br />

30%<br />

20%<br />

10%<br />

0%<br />

-10%<br />

-20%<br />

-30%<br />

-40%<br />

� Real estate markets benefited from the increased economic activity in <strong>2010</strong><br />

� Rental values to stabilize, sharp decline in new supply and stabilization of vacancy<br />

rates<br />

� The demand-side environment remains the main short-term concern<br />

� We expect slight increases in capital values from 2011 onwards<br />

Source: GIm Market Research, Cushman<br />

Dec.<br />

2005<br />

European Prime Office Rental Growth<br />

Paris Munich Milan Madrid<br />

Jun.<br />

2006<br />

Dec.<br />

2006<br />

Jun.<br />

2007<br />

Dec.<br />

2007<br />

Jun.<br />

2008<br />

Dec.<br />

2008<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Jun.<br />

2009<br />

Dec.<br />

2009<br />

Jun.<br />

<strong>2010</strong><br />

9


Agenda<br />

I. <strong>Generali</strong> Portfolio<br />

A. Real Estate within <strong>Generali</strong>: Description<br />

B. Real Estate within <strong>Generali</strong>: Operational features and tenancy<br />

C. Real Estate within <strong>Generali</strong>: Key performance indicators<br />

D. <strong>Generali</strong> Group and Real Estate Investments<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

10


I. <strong>Generali</strong> Portfolio<br />

A. Real Estate within <strong>Generali</strong>: Description (1/2)<br />

Real Estate Asset Allocation: 7.1% as at September 30, <strong>2010</strong> at Market Value<br />

� Total Real Estate Market Value as at<br />

30.09.<strong>2010</strong>: Euro 24.2 bn:<br />

� Own Use: Euro 3.9 bn (16%)<br />

� Investment Portfolio: Euro 20.3 bn (84%)<br />

� Direct: Euro 17.9 bn (1)<br />

� Indirect: Euro 2.4 bn (1)<br />

� Latent Capital Gain for the Direct Investment<br />

Portfolio as at 30.09.<strong>2010</strong>: Euro 5.2 bn (30%)<br />

� Life: Euro 1.6 bn<br />

� Non-life: Euro 3.6 bn<br />

� Portfolio comprises more than 2,000 assets<br />

� Development projects represent a marginal<br />

activity in direct portfolio<br />

� Low Leverage level<br />

Source: Financial Statements 30.09.<strong>2010</strong><br />

(1) Direct: Re assets owned directly by the group insurance companies or through SPV directly controlled<br />

Indirect: Re funds managed by third parties<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Destination of use of the direct<br />

portfolio Market Value as at<br />

September 30, <strong>2010</strong><br />

Other/Mixed<br />

9%<br />

Logistic<br />

3%<br />

Retail<br />

6%<br />

Residential<br />

8%<br />

Office<br />

74%<br />

11


I. <strong>Generali</strong> Portfolio<br />

A. Real Estate within <strong>Generali</strong>: Description (2/2)<br />

Country<br />

(Euro bn)<br />

Source: Financial Statements <strong>2010</strong>.09.30<br />

Italy France Germany Rest of<br />

Europe<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Rest of<br />

World<br />

Total Investment MV 9.67 4.99 4.11 4.45 0.96 24.18<br />

Own Use MV 1.55 0.43 0.79 0.95 0.18 3.90<br />

Investment Portfolio MV 8.12 4.56 3.32 3.46 0.78 20.28<br />

Direct Portfolio MV 6.84 4.31 2.46 3.53 0.71 17.85<br />

Indirect Portfolio MV 1.28 0.25 0.86 0.04 0.00 2.43<br />

Market Value by country (on Total Investment MV)<br />

Rest of World<br />

4%<br />

Rest of Europe<br />

18%<br />

Germany<br />

17%<br />

Italy<br />

40%<br />

France<br />

21%<br />

Market Value by Cities (on Total Investment MV)<br />

Paris 19%<br />

Other 39%<br />

Barcelona 2%<br />

Madrid 2%<br />

Berlin 2%<br />

Milan 15%<br />

Rome 6%<br />

Vienna 5%<br />

Tel Aviv 3%<br />

Munich 2%<br />

Total<br />

Hamburg 3%<br />

Cologne 2%<br />

12


I. <strong>Generali</strong> Portfolio<br />

B. Real Estate within <strong>Generali</strong>: Operational features and tenancy (1/2)<br />

Secure source of income<br />

Long Lease<br />

� Office lease contracts have different<br />

legal structure:<br />

� Italy: 12 years (6+6)<br />

� France: 9 years (3+3+3)<br />

� Germany: 10 years (5+5)<br />

� Long Lease duration, rental level<br />

defined over the period<br />

Source: Management report<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Indexation and natural hedge to<br />

inflation<br />

Inflation Hedging: Full indexation of<br />

the rent to the inflation across Europe:<br />

� Italy: 75/100% of indexation<br />

on inflation (ISTAT)<br />

� France: 100% indexed on<br />

ICC (Construction<br />

Costs Index) or<br />

IRL (Life Costs Index)<br />

� Germany: Indexation based on<br />

inflation with a threshold<br />

minimum of 5%<br />

13


I. <strong>Generali</strong> Portfolio<br />

B. Real Estate within <strong>Generali</strong>: Operational features and tenancy (2/2)<br />

High quality source of income<br />

Low Counterparty Risk<br />

� No exposure to a major tenant at<br />

Group level<br />

� Good diversification of tenant’s activity<br />

sector (financial institutions, retail, state<br />

organizations, food, fashion …)<br />

� High quality of tenants (credit risk analysis<br />

by tenant are performed at country level)<br />

� Quality buildings attraction for quality and<br />

branded tenants: new buildings in business<br />

area and historical building in prime and<br />

downtown locations<br />

� Multitenancy prevails<br />

� Key tenant relation as a priority<br />

� Low concentration of expiry date of lease<br />

(10-15% per year)<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Tenants concentration in main<br />

countries<br />

� Italy<br />

� Top 10 tenants represent ca. 15% of<br />

passing rent<br />

� Economic sector: Financial institutions,<br />

Telecom and media, state organization,<br />

services<br />

� France<br />

� Top 10 tenants ca. 35% of passing rent<br />

� Economic sector: IT and services, food,<br />

media, state organization, financial<br />

institutions<br />

� Germany<br />

� Top 10 tenants represent ca. 20% of<br />

passing rent<br />

� Economic sector: Retail, IT and services,<br />

media, financial institutions<br />

14


I. <strong>Generali</strong> Portfolio<br />

C. Real Estate within <strong>Generali</strong>: Key Performance Indicators (1/3)<br />

Catch momentum and value creation<br />

Direct Portfolio<br />

31%<br />

118<br />

3.8%<br />

33%<br />

31%<br />

343 627<br />

352<br />

4.1%<br />

4.2%<br />

� Net Operating Income Increases thanks to active management (risk return profile)<br />

� Net Realised Capital Gain: Regular stream to support insurance profitability<br />

� Continue value creation: Latent capital gain at 30% over the period<br />

Source: Financial Statements and management account<br />

Recurring return %: (Rental Income – operating expenses, i.e. maintenance, insurance)/Market Value<br />

Latent Capital Gain %: (Market Value – Book Value)/Market Value; Realised Capital Gain: Sales Price – Book Value<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

29% 29%<br />

4.5%<br />

2006 2007 2008 2009 <strong>2010</strong>e<br />

Recurring Returns % Latent Capital Gain % Realised Capital Gain (Euro m)<br />

260<br />

4.5%<br />

15


I. <strong>Generali</strong> Portfolio<br />

C. Real Estate within <strong>Generali</strong>: Key Performance Indicators (2/3)<br />

Take advantage of market timing<br />

Latent Capital Gain Realised Capital Gain<br />

6.0<br />

5.5<br />

5.0<br />

4.5<br />

4.0<br />

33.3%<br />

31.5% 31.2%<br />

29.0% 29.4%<br />

5.2<br />

5.9<br />

5.7<br />

5.2<br />

� Took advantage of market timing and realised capital gain in 2008,<br />

turnaround year in the Euro zone<br />

� Group portfolio confirms its resilience in 2009<br />

� Resume value creation in <strong>2010</strong><br />

Source: Financial Statements and management account<br />

5.3<br />

35.0<br />

30.0<br />

25.0<br />

20.0<br />

15.0<br />

2006 2007 2008 2009 <strong>2010</strong>e<br />

Latent Capital Gain<br />

% Latent Capital Gain<br />

Direct portfolio<br />

600.0<br />

500.0<br />

400.0<br />

300.0<br />

200.0<br />

100.0<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

0.0<br />

2.5%<br />

117.7<br />

6.6%<br />

343.0<br />

10.5%<br />

626.6<br />

6.2%<br />

5.0%<br />

351.7 260.0<br />

2006 2007 2008 2009 <strong>2010</strong>e<br />

Capital Gain realised<br />

% Capital Gain realised vs. latent<br />

12.0<br />

10.0<br />

8.0<br />

6.0<br />

4.0<br />

2.0<br />

0.0<br />

16


I. <strong>Generali</strong> Portfolio<br />

C. Real Estate within <strong>Generali</strong>: Key Performance Indicators (3/3)<br />

Catch momentum and rebalance asset allocation<br />

Direct Portfolio<br />

Other/Mixed<br />

15%<br />

Residential<br />

30%<br />

� On a long-term view over the past ten years, <strong>Generali</strong> has rebalanced the risk return<br />

profile of the portfolio<br />

� Between 2000 and 2005 sales focused on residential sector to seize the market<br />

opportunities (capital gain extraction from low yield properties)<br />

� Over the period new investments focused on recurring income and value creating<br />

office properties<br />

Source: Management account<br />

Asset Allocation by Destination of Use<br />

Office<br />

55%<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Other/Mixed<br />

18%<br />

2000 <strong>2010</strong><br />

Residential<br />

8%<br />

Office<br />

74%<br />

17


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (1/9)<br />

A historical portfolio<br />

<strong>Generali</strong> was founded in Trieste. The Group then expanded<br />

into the Procuratie Vecchie in San Marco’s Square, Venice,<br />

one of the most prestigious buildings among the firm’s historic<br />

assets. The Group’s evolution and personality are mirrored<br />

throughout Europe in the high quality commercial buildings<br />

initially own used and then for investment purpose.<br />

Milan – Piazza Cordusio<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Trieste – Piazza Unità d’Italia<br />

18


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (2/9)<br />

ITALY: From historical portfolio …<br />

Rome – Piazza Venezia<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Venice – Piazza San Marco<br />

19


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (3/9)<br />

ITALY: … to modern investment properties<br />

Rome – Via Po<br />

Milan – Via Filzi Milan – Palazzo Nimeyer<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Milan – Maciachini business park<br />

20


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (4/9)<br />

FRANCE: Historical portfolio and new projects for the city<br />

Paris (Issy les Moulineaux) – EOS<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Paris – Champs-Èlysées<br />

21


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (5/9)<br />

GERMANY: Mostly newly built portfolio<br />

Berlin – Adidas Cologne – Constantinhoefe<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Hamburg – Covent Park<br />

22


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (6/9)<br />

AUSTRIA: Unique portfolio<br />

Vienna – Tegetthoffstrasse, 7<br />

Vienna – Wipplinger<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Vienna – Graben<br />

23


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (7/9)<br />

SPAIN: Madrid and Barcelona CBD portfolio<br />

Madrid – Gran Via 10 Madrid – Serrano Barcelona – Paseo de Gracia<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

24


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (8/9)<br />

OTHER LOCATIONS<br />

Amsterdam – Herengracht<br />

Brussels – Louise Tower<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Zurich ZH – Freigutstrasse 12-14<br />

25


I. <strong>Generali</strong> Portfolio<br />

D. <strong>Generali</strong> Group and Real Estate Investments (9/9) 26<br />

RECENT ACQUISITION: Farragut Building – Washington<br />

Overview � Energy Star office property<br />

� 12 storey<br />

� Heart of Washington DC’s CBD, 2 blocks<br />

from the White House<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets


Agenda<br />

II. Corporate Structure<br />

A. Real Estate Structure within <strong>Generali</strong><br />

B. <strong>Generali</strong> Immobiliare<br />

C. Group Real Estate Divestment / Investment Committee<br />

D. Product Development<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

27


II. Corporate Structure<br />

A. Real Estate Structure within <strong>Generali</strong><br />

Integrated Asset Management Structure<br />

Global Player<br />

� <strong>Generali</strong> is a global key player with strong<br />

local competences<br />

� <strong>Generali</strong> Immobiliare: Group Real Estate<br />

Asset Management structure, with<br />

specialised poles<br />

� All investments / divestments approved by a<br />

centralised Real Estate Committee<br />

Vertical integration with focus on<br />

Investment Portfolio<br />

� Facility Management<br />

� Property Management<br />

� Asset Management<br />

� Product development and Fund<br />

Management<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Structure dedicated to Insurance<br />

Companies<br />

� Matching technical reserves<br />

� Asset Management for life – non-life<br />

segment<br />

� Follow Group geographical expansion<br />

� Expansion of third party institutional Asset<br />

Management<br />

Dedicated team in 11 countries,<br />

500 staff<br />

� Italy<br />

� France<br />

� Germany<br />

� Spain<br />

� Austria<br />

� Belgium<br />

� Netherlands<br />

� Switzerland<br />

� Israel<br />

� Czech Republic<br />

� China<br />

28


II. Corporate Structure<br />

B. <strong>Generali</strong> Immobiliare (1/2)<br />

� The globalisation of the Real Estate market provides <strong>Generali</strong> with a unique opportunity to<br />

leverage its competences and become a Global Player with strong local competences<br />

� <strong>Generali</strong> Immobiliare has been set up on the 1st September 2008 as a new department of the<br />

Corporate Centre (Assicurazioni <strong>Generali</strong>) dedicated to the Real Estate across the Group<br />

� <strong>Generali</strong> Immobiliare business model is client-focused and aims to combine Real Estate culture<br />

with a strong financial background<br />

Real Estate skills Financial skills<br />

Real estate services<br />

Project management<br />

Commercial property<br />

Client Relationship<br />

Tenants<br />

<strong>Generali</strong> Immobiliare<br />

Synthesis of both cultures<br />

to better serve clients<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Asset Management<br />

Research<br />

Finance<br />

Client Relationship<br />

Insurance companies<br />

Institutional investors<br />

29


II. Corporate Structure<br />

B. <strong>Generali</strong> Immobiliare (2/2)<br />

Other Headquarters<br />

departments<br />

� Strategic Planning<br />

� Strategic Asset<br />

Allocation<br />

� Finance<br />

� Tax<br />

� Legal<br />

Jacques PLAS<br />

ITALY<br />

Giovanni<br />

PAVIERA<br />

FRANCE<br />

Philippe<br />

DEPOUX<br />

Benoit PRAT-STANFORD Tina PAILLET Dominique BEGHIN<br />

GERMANY<br />

Martin<br />

SCHRAMM<br />

GENERALI Immobiliare<br />

CHIEF EXECUTIVE OFFICER<br />

Giancarlo SCOTTI<br />

Research Finance Asset Mgmt Invest / Divest<br />

AUSTRIA<br />

Klaus<br />

EDELHAUSER<br />

Countries<br />

SPAIN<br />

Julio VIDAL<br />

AREAN<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

BELGIUM<br />

Michel STAES<br />

THE<br />

NETHERLANDS<br />

Ad OLIVIER<br />

GREDIC<br />

<strong>Generali</strong> Real Estate<br />

Divestment /<br />

Investment<br />

Committee<br />

SWITZERLAND<br />

Christian<br />

BREUTEL<br />

Asia<br />

Elisabeth LOH<br />

ISRAEL<br />

Shlomo<br />

GUTMAN<br />

30


II. Corporate Structure<br />

C. Group Real Estate Divestment / Investment Committee<br />

<strong>Generali</strong> Real Estate Divestment / Investment Committee ”GREDIC” is the<br />

investment / divestment technical & executive centre for <strong>Generali</strong> Group Real<br />

Estate:<br />

� All investments / divestments to be approved by GREDIC<br />

� Standard presentation with consistent Key Performance Indicators<br />

� Presentation from D. Beghin and local team<br />

� Comparability of performance investment process across the group<br />

� Due diligence and acquisition process covers all aspects of risk and performance<br />

� Ensure that local investments are in line with group strategy<br />

� Six members, international team, who meet weekly in Paris:<br />

Giancarlo<br />

SCOTTI<br />

Chairman of GREDIC<br />

Philippe<br />

DEPOUX<br />

Klaus<br />

EDELHAUSER<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

Giovanni<br />

PAVIERA<br />

Benoit PRAT-<br />

STANFORD<br />

Martin<br />

SCHRAMM<br />

31


II. Corporate Structure<br />

D. Product Development<br />

<strong>Generali</strong> Group has developed expertise in product development and real estate<br />

fund management for group insurance companies over the past 4 years<br />

Real Estate Funds rationale<br />

� Offer opportunity across group<br />

� Eligible asset for insurance company technical reserves<br />

� Rebalance risk / return profile for each company according to insurance requirements<br />

Creation of dedicated vehicles through Group Real Estate management companies<br />

� <strong>Generali</strong> Immobiliare Italia SGR: Set up in 2006, dedicated funds with clear investment strategy<br />

(AUM Euro 3.2 bn)<br />

� <strong>Generali</strong> Immobiliare Asset Management (Lux Co): Set up in 2009, dedicated funds<br />

geographically and sector focused<br />

� Third Parties Institutional Asset Management activity started in Italy in 2008 with Scarlatti Fund<br />

and Eracle Fund<br />

� Increase Third Party Institutional Asset Management is a target<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

32


Agenda<br />

III. Real Estate Strategy &<br />

Going Forward<br />

A. Investment Strategy & Market environment<br />

B. Going Forward<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

33


III. Real Estate Strategy & Going Forward<br />

A. Investment Strategy and Market environment (1/2)<br />

Real Estate under Solvency II<br />

� Real Estate estimated capital charge at 25%<br />

� Positive margin over bond yield backed by real assets<br />

� Total Return as sum of Recurring Income and Change of Value<br />

� Real Estate market momentum favorable for long-term investors<br />

� Inflation Hedging<br />

Real Estate attractive asset class for life business of <strong>Generali</strong><br />

Balance RE allocation Life – Non-life considering the risk capital absorption<br />

� Increase life segment exposure to Real Estate as an opportunity to optimize risk / return profile<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

34


III. Real Estate Strategy & Going Forward<br />

A. Investment Strategy and Market environment (2/2)<br />

Strategy has to be adapted to<br />

uncertain market environment<br />

� Globalization to continue<br />

� Objective to secure cash flow on existing assets<br />

� Some yield recompression across markets<br />

� Real estate debt to be refinanced in the next years<br />

might generate opportunities<br />

Significant investment opportunities in Real Estate<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

More balanced RE Portfolio to benefit<br />

from different market timing<br />

� Market timing is key in Euro zone and USA as more<br />

mature<br />

� Urbanization at an unprecedented speed in China<br />

and India<br />

� Market and risk monitoring to support expected<br />

returns<br />

� Attractive returns where cycle is most advanced (USA)<br />

� Quality assets at affordable prices in core countries (France, Italy, Germany) due to distressed sellers<br />

� China: Entering real estate after markets have cooled down<br />

� India: Take advantage of fast urbanization process<br />

35


III. Real Estate Strategy & Going Forward<br />

B. Going Forward: Increase Real Estate Exosure (1/2)<br />

Gradual increase of Group RE portfolio<br />

Increase Real Estate exposure<br />

� Invest in quality assets with recurring income<br />

� Seize opportunities<br />

� Continue portfolio turnover to maximize<br />

return<br />

� Allocation by segment: essentially in life<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

New Investments structure<br />

�Traditionally, technical reserves backed by<br />

domestic assets: RE investment directly or<br />

through local / dedicated products<br />

(domestic funds)<br />

� Selectively, technical reserves backed by<br />

cross border assets: RE investment through<br />

cross-border/<br />

specialized products managed internally<br />

(international funds)<br />

Opportunity to invest over the next years, market turnaround expected in 2012<br />

� Ride the market cycle to take advantage of the Group’s existing markets and of new areas<br />

(Euro zone)<br />

� Investments in countries where yields are attractive (USA)<br />

� Start to invest in China following Group expansion to match local insurance reserves<br />

� Invest in CEE markets following Group expansion to match local insurance reserves<br />

36


III. Real Estate Strategy & Going Forward<br />

B. Going Forward: Increase Real Estate Exposure (2/2)<br />

Opportunistic<br />

strategy<br />

North America<br />

� Attractive returns<br />

� Advanced Real<br />

Estate cycle<br />

� Liquid market<br />

� Top quality products<br />

offer<br />

Focus on<br />

� New York<br />

� Washington<br />

� Boston<br />

� San Francisco<br />

� Chicago<br />

South America<br />

� Study opportunities<br />

� Follow group<br />

expansion<br />

Continental Europe<br />

� Portfolio Turnover<br />

� Ride market cycle:<br />

Quality assets and<br />

returns<br />

� Resilient Portfolio<br />

with recurring income<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

CORE Growth<br />

Focus on<br />

� Madrid, Barcelona<br />

� Paris<br />

� Hamburg, Cologne,<br />

Munich, Berlin<br />

� Milan, Rome<br />

� Vienna<br />

� London<br />

Central Eastern Europe<br />

� Match Group Assets /<br />

Liabilities requirements<br />

Focus on<br />

� Prague<br />

� Warsaw<br />

Asia<br />

� China: Gradually<br />

invest local technical<br />

reserves<br />

� India: Study<br />

opportunities<br />

Focus on<br />

� Shanghai<br />

� Beijing<br />

� Shenzhen<br />

� Guangzhou<br />

37


Agenda<br />

Final Remarks<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

38


FINAL REMARKS<br />

Final Remarks<br />

Resilient portfolio with balanced risk return profile<br />

Integrated Real Estate Asset Management structure<br />

Real Estate exposure growth<br />

Exposure to Real Estate mainly in life<br />

Third party institutional Asset Management increase<br />

Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />

39


<strong>Generali</strong> <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong><br />

<strong>Generali</strong> Immobiliare<br />

Strategy & Performance<br />

Giancarlo Scotti<br />

Chief Executive Officer of<br />

<strong>Generali</strong> Immobiliare<br />

Venice, November 26, <strong>2010</strong>

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