MEDIOLANUM S.p.A. Interim Report and Accounts at March 31

Transcription

1 MEDIOLANUM S.p.A. Interim Report and Accounts at March

2 Contents 2 Corporate Governance Officers 3 Group structure 4 Mediolanum Group s financial highlights 6 Interim Management Report The macroeconomic environment Mediolanum Group s performance Consolidated Inflows, Assets under Management and Assets under Administration The Sales Networks Consolidated Income Statement at March 31, 2009 Key corporate events and performance of companies within the Group Post balance sheet date events Outlook 23 Schedules 30 Consolidated Accounts Balance sheet Income statement Statement of changes in equity Consolidated cash flow statement 36 Notes to the financial statements Accounting policies Key Balance Sheet information Key Income Statement information Segment reporting 60 Responsibility Statement The English version of the Interim Report is a translation of the Italian text provided for the convenience of international readers.

3 MEDIOLANUM S.p.A. Interim Report and Accounts at March Registered Office: Basiglio Milano 3 - Via F. Sforza Meucci Building Share capital 73,009, fully paid up Tax, VAT and Milan Register of Companies Registration No

4 Corporate Governance Officers BOARD OF DIRECTORS Ruozi Roberto Messina Alfredo Lombardi Edoardo Doris Ennio Berlusconi Luigi Cannatelli Pasquale Carfagna Maurizio Doris Massimo Antonio Ermolli Bruno Molteni Mario Pellegrino Danilo Renoldi Angelo Sciumè Paolo Zunino Antonio Chairman of the Board Deputy Chairman of the Board Executive Deputy Chairman Chief Executive Officer Director Director Director Director Director Director Director Director Director Director BOARD OF STATUTORY AUDITORS Simonelli Ezio Perotta Riccardo Vittadini Francesco Gatti Ferdinando Marchesi Antonio Chairman Standing Auditor Standing Auditor Alternate Auditor Alternate Auditor BOARD SECRETARY Luca Maria Rovere OFFICER RESPONSIBLE FOR PREPARING ACCOUNTING AND FINANCIAL REPORTING DOCUMENTS Luigi Del Fabbro 2

5 Group structure As at March 31, % BANCA MEDIOLANUM S.P.A. 100% MEDIOLANUM CORPORATE UNIVERSITY S.P.A. 100% 100% BANKHAUS AUGUST LENZ & CO. (MÜNICH, GERMANY) MEDIOLANUM VITA S.P.A. 100% 100% PARTNER TIME S.P.A. ON LIQUIDATION 49% MEDIOLANUM GESTIONE FONDI S.G.R.P.A. 51% MEDIOLANUM DISTRIBUZIONE FINANZIARIA S.P.A. 100% MEDIOLANUM INTERNATIONAL LIFE LTD (DUBLIN, IRELAND) 100% 100% MEDIOLANUM COMUNICAZIONE S.P.A. 44% MEDIOLANUM 51% INTERNATIONAL FUNDS LIMITED (DUBLIN, IRELAND) BANCA ESPERIA S.P.A. 0,75% 48.5% 100% 2.63% MEDIOBANCA S.P.A. PI DISTRIBUZIONE S.P.A. 49% 0.003% MEDIOLANUM ASSET MANAGEMENT LTD (DUBLIN, IRELAND) 51% % MEDIOLANUM INTERNATIONAL S.A. (LUXEMBOURG) % 5% BANCO DE FINANZAS E INVERSIONES, S.A. (BARCELONA, SPAIN) FIBANC PENSIONES S.A., S.G.F.P. (BARCELONA, SPAIN) GES FIBANC S.G.I.I.C., S.A. (BARCELONA, SPAIN) % % GAMAX MANAGEMENT (AG) (LUXEMBOURG) FIBANC, S.A. (BARCELONA, SPAIN) % THE MEDIOLANUM FINANCIAL CONGLOMERATE THE MEDIOLANUM BANKING GROUP Due to the fact that Mediobanca holds a given amount of own shares, total shareholding is equal to 3.45% of the voting shares. 3

6 Mediolanum Group s financial highlights /million March 31, 2009 March 31, 2008 Change % Dec. 31, 2008 Assets under management and administration (*) 29, , % 29,505.9 Gross Inflows 1, , % 7,709.8 Net Inflows % 2,499.0 Profit before tax % Income Tax (4.7) (9.4) -50% (33.8) Net profit % March 31, 2009 March 31, 2008 Change % Dec. 31, 2008 Earnings per share (#) ( ) % (*) The figures relate to retail customers only. (#) Net earnings attributable to holders of ordinary shares divided by the weighted average number of ordinary shares in issue. ( ) Dec. 31, 2008 comparative figures relate to ordinary activities, i.e. they do not include the operation put in place to safeguard the interests of customers after the default of Lehman Brothers. The Lehman Brothers operation was financed by the two Mediolanum S.p.A. key shareholders, Doris Group and Fininvest S.p.A., through a capital injection. 4

7 MEDIOLANUM S.p.A. Interim Management Report at March

8 INTERIM REPORT AND ACCOUNTS Interim Management Report The macroeconomic environment Macroeconomic data and corporate earnings showed the world s major economies were still in recession in the first quarter The economic downturn started in 2008 turned out to be worse than forecast and the main international financial institutions had to revise downward their growth estimates for In order to restore the confidence of savers and depositors and unfreeze the credit market, the world s main central banks made unprecedented liquidity injections, expanded the range of their intervention tools, and, in certain instances, even acquired the liabilities of companies. In the US, in the fourth quarter 2008, GDP was down 6.3% on an annual basis, the deepest decline since 1982, while 2008 full-year growth stood at 1.1%, down from 2% in In the first quarter 2009, rising unemployment, reduced borrowing capacity of US households and increased mortgage delinquencies kept confidence subdued and restrained consumer spending and corporate investments. In the Eurozone, GDP shrank for three consecutive quarters in In the first months of 2009, the macroeconomic scenario weakened further as shown by falling industrial output and rising unemployment. Both consumer and business confidence deteriorated. At year end 2008, Italy s GDP dropped 1% after growing 1.6% in 2007 and 2% in Falling exports and investments, and, to a lesser extent, weak consumer spending, weighed on economic growth. The slowdown of the economy dampened inflationary pressures. This allowed Central Banks to ease their monetary policy in an attempt to mitigate the effects of the recession and stimulate earlier recovery. Since last October the European Central Bank has cut the main refinancing rate by 275 basis points to 1.5%. The Bank of England too slashed interest rates, from 1.5% at the beginning of the year to 0.5%, while the US Federal Reserve kept Fed Funds rates between 0 and 0.25%.The Fed, the Bank of England and the Bank of Japan also announced the adoption of non-conventional monetary policy measures, such as the purchase of government securities, in order to increase market liquidity, revive financial intermediation and bring down yields on all maturities. The world s main central banks and governments have been trying to ease the crisis through prompt responses in a coordinated fashion. Key interest rates have been rapidly slashed, and the governments of the world s major countries have adopted expansionary fiscal policies with measures that support demand adding to the actions taken to safeguard the financial and banking systems. All this facilitated, in part, the easing of tensions on interbank markets and the gradual decline in interbank rates: 3-month EURIBOR rates decreased from 2.86% at the beginning of the year to 1.51% at March 31, 2009, while the US interbank rates stood at 1.19% versus 1.41% at the beginning of the year. 6

9 Financial markets In the first quarter 2009, owing to fears of a deep, prolonged economic recession, market volatility continued to be elevated and investors risk aversion remained at historic highs. In the period under review, the world s major stock markets recorded negative performance. Stock market indices shed over 10% in the US and Europe, 8.5% in Japan, while emerging markets grew in the order of 4% on average, in local currencies. The underperformance of the automotive sector, which is one of the most cycle-sensitive, reflects the weakness of the economy, while banking and insurance continued to be adversely affected by the credit crisis. The ECB easing monetary policy pushed down yields on European treasuries especially on the shorter end of the curve, while yields on US treasuries increased across the board, but especially at the longer end of the curve. In the period under review, 2-year and 10-year yields on European treasuries declined from 1.755% and 2.951% at year end 2008 to 1.235% and 2.993% at March 31, 2009, respectively, while 2-year and 10-year yields on US treasuries increased from 0.764% and 2.212% at year end 2008 to 0.796% and 2.663% at March 31, 2009, respectively. In the quarter under review, the Euro was about 4.5% off the US dollar, declining from 1.40 at the beginning of the year to 1.25 last February 18, then closing at at March 31, The insurance market In the first three months of 2009, new premiums written under individual life policies amounted to 12.1 billion, up 20.7% compared to the first quarter New premiums written by EU companies conducting business in Italy amounted to million, down 46.4% over the prior year. Including these companies, new life premiums written in Italy have increased 10.7% to 13 billion since the beginning of the year. Growth was largely driven by premiums written under traditional products, in class I, that jumped 133.8% from 4.3 billion in the first quarter 2008 to 10 billion at the end of the quarter under review. Conversely, linked policies (class III) posted a 73.4% decline in new premiums written to 1.5 billion from 5.5 billion in the first three months of The analysis of distribution channels shows that premiums written through banks and post offices rose 37.4% increasing the market share of these channels to 76.7%, while premiums written through financial advisors fell 57.4% and the market share of this channel was down to 3.2%. Mediolanum Group s performance For first quarter 2009 the Mediolanum Group reported net profit of 16,618 thousand, down more than 46% from 30,877 thousand in the first quarter The financial crisis which had been severe in the first nine months of 2008 deepened in the final quarter of 2008 and in the first two months of 2009, eventually hitting a bottom in March Despite the decline in net profit for the first quarter of 2009, the value of Group consolidated assets under management and administration remained in line with year end 2008 figures.this is a major result considering that, as shown by the Morgan Stanley World Index, global stock markets fell 12%, and Euro-denominated securities shed 8%. INTERIM MANAGEMENT 7REPORT

10 INTERIM REPORT AND ACCOUNTS For the first quarter 2009 the Mediolanum Group reported gross inflows of 1,767.2 million, down 7% from 1,909.9 million in the first quarter Conversely, net inflows climbed 172% from million in 2008 to million at the end of the quarter under review. In particular, inflows into Banca Mediolanum asset management products grew 54% over March 2008 to million. Specifically, growth was outstanding in respect of inflows into mutual funds that amounted to million (vs. outflows of 89.4 million at March 31, 2008), while inflows into life products dropped 73% to 83.1 million from million at March 31, Clearly, compared to the first quarter 2008, first quarter 2009 results were affected by the lower level of performance fees due to the decline in the value of assets but also by the sharp decline in sales of Index Linked policies after the default of Lehman Brothers. First quarter 2009 commercial initiatives In conjunction with the annual national convention of Banca Mediolanum Sales Network held in March 2009, certain new products were presented, including a new bank account, Mediolanum Freedom, a product which combines all traditional bank account features with the opportunity to earn good interest on any account balances above a set threshold - currently 12,000. This opportunity can be seized by signing to a service called Mediolanum Freedom Plus whereby any balances in excess of said threshold are invested in the new Mediolanum Vita policy named Mediolanum Plus. Mediolanum Plus is a 1-year mixed life insurance contract which is tacitly renewed year after year and invests in the segregated fund Mediolanum Freedom Fund with revaluation according to the return established for that contract. With the Mediolanum Freedom Plus service, any bank account balances in excess of the preset threshold are automatically invested in the policy described above, while anytime the bank account balance goes below the threshold, predetermined amounts are automatically surrendered. If customers close their Mediolanum Freedom bank account or switch to another bank account contract, the Mediolanum Freedom Plus service is automatically terminated and any amounts accrued on the related life policy are paid out to the customer, unless the bank account and policy holder requests otherwise. As also noted in the section Outlook at the end of this report, this new product was extremely well received by customers. At the end of April 2009, inflows hit about 1.3 billion, of which about 900 million into the new Mediolanum Plus policy. 8

11 Consolidated Inflows, Assets under Management and Assets under Administration Gross Inflows /m March 31, 2009 March 31, 2008 Change % ITALY Life Insurance products % Mutual funds and managed accounts % Bank accounts and securities in custody % Other products % Banca Mediolanum total inflows 1, , % Banca Esperia Group (48.5%) % SPAIN Life Insurance products % Mutual funds and managed accounts % Bank accounts and securities in custody (20.7) (58.0) -64.3% Total % GERMANY Life Insurance products % Mutual funds and managed accounts % Bank accounts and securities in custody (6.8) % Total (0.5) % TOTAL GROSS INFLOWS 1, , % INTERIM MANAGEMENT 9REPORT

12 INTERIM REPORT AND ACCOUNTS Net inflows /m March 31, 2009 March 31, 2008 Change % ITALY Life Insurance products % Mutual funds and managed accounts (89.5) n.d. Bank accounts and securities in custody % Banca Mediolanum total inflows % Banca Esperia Group (48.5%) 71.8 (224.6) n.d. SPAIN Life Insurance products (1.5) 5.5 n.d. Mutual funds and managed accounts (0.5) (40.5) -98.8% Bank accounts and securities in custody (20.7) (58.0) -64.3% Total (22.7) (93.0) -75.6% GERMANY Life Insurance products (0.2) % Mutual funds and managed accounts (3.9) (15.4) -74.7% Bank accounts and securities in custody (6.8) 19.1 n.d. Total (10.9) 6.7 n.d. TOTAL NET INFLOWS % Consolidated Assets under Management and Assets under Administration (*) /m March 31, 2009 Dec 31, 2008 March 31, 2008 Life Insurance products 12, , ,796.3 Mutual funds and managed accounts 11, , ,753.8 Bank accounts and securities in custody 6, , ,548.4 Consolidation adjustments (6,230.8) (6,462.2) (7,421.1) Banca Esperia Group (**) 4, , ,314.6 DOMESTIC MARKET 27, , ,992.0 Life Insurance products Mutual funds and managed accounts Bank accounts and securities in custody ,296.5 Other products Consolidation adjustments (***) (232.7) (218.0) (248.2) FOREIGN MARKETS 1, , ,400.8 MEDIOLANUM GROUP 29, , ,392.8 (*) The figures relate to retail customers only. (**) The figures relating to Banca Esperia are stated on a pro-rata basis according to the stake held in that entity (48.5%). (***) Compared to the figure reported in the 2008 annual report, the balance of consolidation adjustments at December 31, 2008 reported herein shows a 50 million increase due to the cancellation of those Mediolanum International Funds invested in funds managed by Fibanc. 10

13 INTERIM MANAGEMENT REPORT At March 31, 2009, total assets under management and administration amounted to 29,494.9 million, in line with the year end 2008 balance of 29,505.9 million, and down 8.9% compared to the balance reported at March 31, The analysis of new business as well as of assets under management and administration by business segment is set out below. Life insurance In the first months of 2009, the value of assets continued to be affected by the financial crisis and declined from 12,618.4 million at year end 2008 to 12,524.8 million at the end of the quarter under review (Q1 2008: 14,155.6 million). The analysis of life products, on a management basis, is set out in the table below. /m March 31, 2009 Dec. 31, 2008 March 31, 2008 Unit-linked life products 6, , ,370.6 Index-linked life products 4, , ,448.2 Traditional life products 1, , ,336.8 Total Life Products 12, , ,155.6 Gross premiums written in the first three months of the year amounted to million, down 23.3% from million at March 31, New life business stood at million, down 41.4% from 501 million at March 31, In particular, sales of Index Linked products dropped significantly, due to persistent fears after the default of Lehman Brothers. The analysis of premiums written, on a management basis, is set out in the table below. /m March 31, 2009 March 31, 2008 Change Recurring premiums (68.3) Single premiums and group policies (139.2) Totale new business (207.5) Pension plans in-force Other business in-force (12.8) Total in-force business Total gross premium written (183.5) Ceded premiums (0.7) (1.1) 0.4 Premiums related to financial contracts (IFRS4) (1.1) (1.9) 0.8 Net premiums written (182.3) 11

14 INTERIM REPORT AND ACCOUNTS The analysis of premiums written by class clearly shows that business written by Group companies was almost exclusively in class III. /m March 31, 2009 March 31, 2008 Change Insurance/reinsurance Class I Traditional life policies Class III Fund-related insurance (222.9) Class V Investment plans (0.5) Class VI Pension funds (0.6) Total (184.0) The 40 million increase in class I policies relates to the new product Mediolanum Plus. In the first three months of 2009, amounts paid and change in reserves were down 21%, a decline slightly lower than the decrease in new life business written in the quarter. /m March 31, 2009 March 31, 2008 Change Surrenders (63.5) Maturities Claims Annuities Total amounts paid Change in Technical Reserves (177.2) Recoveries from reisurers (1.4) (1.5) 0.1 Total amounts paid and change in reserves (162.3) Specifically, maturities increased 31% due to the large number of Index Linked policies that matured in the quarter under review. Surrenders declined 32%, a notable result in the current market environment, proving that in bear markets Mediolanum customers hold their policies rather than surrender them. 12

15 INTERIM MANAGEMENT REPORT Asset Management The analysis of assets under management in the retail segment is set out below. /m March 31, 2009 Dec. 31, 2008 March 31, 2008 Best of brands funds of funds 1, , Portfolio funds of funds ,028.7 Elite funds of funds Funds of hedge funds Total funds of funds 2, , ,741.4 Challenge 7, , ,032.1 Top Managers - - 3,036.3 Other Italy-based mutual funds 1, , ,563.8 Other internationally-based mutual funds Total other mutual funds 9, , ,413.0 Chorus managed accounts Real estate funds and others Duplications (726.7) (649.6) (1,042.7) Total mutual funds and managed accounts 12, , ,746.0 of which: equity 54% 57% 59% bond 17% 17% 15% money market 12% 11% 10% other 17% 15% 16% The financial market crisis continued into the first quarter 2009 and adversely affected the value of assets under management which declined, yet only 1.5% over 2008 year end, to 12,284 million. The limited descent was made possible thanks to the positive results in terms of inflows in the quarter. Specifically, in the retail segment, the Group reported net inflows of million versus net outflows of million in the first quarter

16 INTERIM REPORT AND ACCOUNTS The analysis of inflows into asset management products, in the retail segment, on a management basis, is set out in the table below. Gross inflows /m March 31, 2009 March 31, 2008 Change Best of brands funds of funds Portfolio funds of funds (29.1) Elite funds of funds (2.9) Total funds of funds Challenge (104.6) Top Managers (114.8) Other Italy-based mutual funds Other internationally-based mutual funds (27.4) Total other mutual funds (154.7) Chorus managed accounts (1.0) Real estate funds and others Total mutual funds and managed accounts (24.9) Net inflows /m March 31, 2009 March 31, 2008 Change Best of brands funds of funds Portfolio funds of funds (9.7) (53.7) 44.0 Elite funds of funds 0.1 (5.4) 5.5 Total funds of funds 85.8 (48.0) Challenge Top Managers - (17.1) 17.1 Other Italy-based mutual funds (26.9) Other internationally-based mutual funds (9.7) (57.6) 47.9 Total other mutual funds (83.7) Chorus managed accounts (2.4) (23.4) 21.0 Real estate funds and others (6.6) Total mutual funds and managed accounts (145.4)

17 Banking INTERIM MANAGEMENT REPORT At the end of the first quarter 2009, inflows into assets under administration amounted to 81.7 million versus million at March 31, The analysis of assets under administration, on a management basis, is set out in the table below. /m March 31, 2009 Dec. 31, 2008 March 31, 2008 Bank accounts 4,344 4,072 3,803 Securities in custody 2,040 2,179 2,653 Repurchase agreements Total Assets under Administration 7,137 7,182 6,846 of which: Banca Mediolanum 6,398 6,385 5,548 The decline in repurchase agreements is due to maturities of repos made in the fourth quarter 2008 under the Tasso Netto campaign. At March 31, 2009, Banca Mediolanum bank accounts totalled about 566,500, up 5% from about 539,579 at March 31, Primary account holders amounted to 547,000, up 5% from 523,000 in the same period of the past year. The Sales Networks Numbers March 31, 2009 Dec. 31, 2008 March 31, 2008 Italy Licensed Financial Advisors 5,076 5,077 5,096 Non-licensed advisors / agents (*) ,260 Spain Germany Total 6,172 6,367 7,073 (*) Banca Mediolanum S.p.A. non-licensed advisors work also as financial agents under a mandate from Mediolanum Distribuzione Finanziaria S.p.A. At the end of the quarter under review, the number of Banca Mediolanum licensed financial advisors stood at 5,076, essentially unchanged over year end Unlicensed financial advisors were instead impacted by the financial crisis and their number declined from 774 at December 31, 2008 to 609 at the end of the first quarter

18 INTERIM REPORT AND ACCOUNTS Consolidated Income Statement at March 31, 2009 /m March 31, 2009 March 31, 2008 Change Change % Net premiums written (182.3) (23.2) Amounts paid and change in reserves (585.8) (748.1) (21.7) Net Life insurance revenues (ex. commissions) (20.1) (55.5) Entry fees Management fees (16.0) (21.4) Performance fees Banking service fees Other fees (2.8) (34.6) Total commission income (10.5) (8.9) Interest income and similar income Interest expense and similar charges (42.2) (44.8) 2.7 (6.0) Net income on investments at fair value (3.6) (10.2) 6.5 (64.1) Net financial income Realised gains/losses on other investments Net impairment on other investments (2.2) (1.3) (0.9) 67.9 Net income on other investments Other revenues (0.4) (6.7) TOTAL REVENUES (15.8) (8.4) Commission expenses and acquisition costs (60.8) (65.6) 4.8 (7.3) General and administrative expenses (86.3) (78.9) (7.4) 9.3 Amortisation and depreciation (4.1) (3.8) (0.3) 7.8 Provisions for risks and charges (1.4) (1.1) (0.3) 23.5 TOTAL COSTS (152.5) (149.4) (3.1) 2.1 PROFIT BEFORE TAX (19.0) (47.0) Income tax (4.7) (9.4) 4.7 (49.8) Minority interests NET PROFIT FOR THE PERIOD (14.3) (46.2) For the first three months of the year, net premiums written amounted to 602 million, down 23.2% from million in the prior year. Amounts paid and change in reserves declined 21.7% from million at March 31, 2008 to million. Net life insurance revenues before acquisition costs amounted to 16.1 million versus 36.2 million in the prior year. The lower balance was due to lower sales, especially of Index Linked policies (down 48.6%). For the quarter under review commission income amounted to million versus million in The 10.5 million decline was largely due to the lower level of management fees (down 16 million) as a result of the financial crisis and the ensuing decline in the value of assets under management. 16

19 INTERIM MANAGEMENT REPORT Net financial income and realised gains on other investments in the aggregate rose 15.1 million to 44.5 million from 29.4 million at March 31, Specifically, net interest income grew from 38.3 million in 2008 to 46.3 million at March 31, 2009, largely due to greater lending volumes and higher interest rate spreads earned on corporate bonds. Fair value measurement of investments entailed losses of 3.6 million versus 10.2 million in the prior year. Due to lower revenues, commission expenses and acquisition costs declined to 60.8 million from 65.6 million in the prior year. Other expenses (general and administrative expenses, amortisation, depreciation and provisions for risks and charges) amounted to 91.8 million versus 83.8 million in the prior year. The 8 million increase was largely in connection with greater advertising spending ( 3.8 million) and greater sales and marketing expenses, partly due to expenses generally made in other periods of the year that were made earlier in the current year. Income tax for the period declined to 4.7 million (tax rate of 22%) from 9.4 million at March 31, Key corporate events and performance of companies within the Group The Parent Company At March 31, 2009, the Parent Company Mediolanum S.p.A. reported net profit of 9.5 million versus 46.6 million in the same period of the prior year. The greater net profit reported in the first quarter of 2008 was largely in connection with the 25.2 million gain generated from the sale of the 2.5% shareholding in the subsidiary Mediolanum International Funds Ltd to the indirect subsidiary Banco de Finanzas e Inversiones S.A. In the quarter under review, the Parent Company recorded dividends of 13.4 million versus 28.5 million in the first quarter Key information on the performance of the main companies that are part of the Mediolanum Group during the period under review is set out below. Life Insurance Companies At the end of the first quarter 2009, Mediolanum Vita S.p.A reported net profit of 6.3 million down from 8.7 million at March 31, For the first three months of 2009, the company recorded premiums written of million, down from million at March 31, New business declined from million in the first quarter 2008 to 85.7 million at March 31, In-force business premiums amounted to million, remaining in line with the March 31, 2008 balance of million. At March 31, 2009, mathematical reserves and financial liabilities to policyholders amounted to 9,323 million, slightly down from 9,410.8 million at year end

20 INTERIM REPORT AND ACCOUNTS For the first quarter 2009, the Irish company Mediolanum International Life Ltd reported net profit of 2.3 million, down from 3.5 million at March 31, For the period under review the company reported premiums written of million versus million at March 31, At March 31, 2009, mathematical reserves and financial liabilities to policyholders amounted to 3,211.6 million, slightly down from 3,224.0 million at year end Mediolanum International Life Ltd policies are distributed in Italy by Banca Mediolanum, in Spain by Fibanc and in Germany through Bankhaus August Lenz. Asset Management Companies For the first quarter 2009, Mediolanum International Funds Ltd reported net profit of 24.5 million, up from 22.1 million at March 31, For the first three months of 2009, the company recorded net inflows of million versus million in the same period of the prior year. At March 31, 2009, total assets under management amounted to 10,300.5 million, slightly down from 10,421.0 million at December 31, The funds managed by Mediolanum International Funds are distributed in Italy, Spain and Germany. Specifically, in the Retail segment, funds are distributed through the sales network of the Mediolanum Banking Group s banks, while, in the Institutional segment, they are distributed largely to the fellow subsidiaries Mediolanum Vita S.p.A. and Mediolanum International Life Ltd. For the first quarter 2009, Mediolanum Gestione Fondi SGR p.a. reported net profit of 0.8 million, down from 1.0 million in the same period of the prior year. At March 31, 2009, the company recorded net inflows of million versus net outflows of 24.4 million in the first quarter At the end of the quarter under review, assets under management grew 4.5% to 1,872.9 million from 1,792.6 million at December 31, Assets managed on mandates from fellow subsidiaries amounted to 9,841.3 million versus 9,960.6 million at March 31, For the first quarter 2009, the Luxembourg-based company Gamax Management A.G. reported net profit of 0.5 million versus 0.3 million in the prior year. At March 31, 2009, in the retail segment, the company recorded net outflows 3.6 million, improving over the net outflows of 15.6 million in the first quarter of the prior year. At March 31, 2009, assets under management amounted to 161 million versus 178 million at December At the end of the quarter under review, in the institutional segment, assets under management amounted to 174 million versus 208 million at the end of the prior year. Banking operations (including Group product distribution) At March 31, 2009, Banca Mediolanum S.p.A. reported net profit of 1.7 million versus 19.7 million at March 18

21 INTERIM MANAGEMENT REPORT 31, The 18 million decline was partly due to lower net commission income (down 9.9 million) still affected by the financial market crisis, especially in the asset management segment, and the greater incidence of administrative expenses (up 9.1 million), especially advertising spending and sales network training costs. Lower dividends from subsidiaries (down 5.5 million) also weighed on net profit. Net financial income grew from 30.6 million in March 2008 to 38 million at the end of the quarter under review (up 7.5 million). Direct funding from institutional and retail customers grew from 5,581 million at year end 2008 to 6,100 million at the end of the quarter under review (up 519 million). Loans to customers grew too (up 307 million) from 3,109 million at December 31, 2008 to 3,416 million at the end of the first quarter Growth was largely attributable to residential mortgage loans which rose 21.1% to 1,469 million from 1,213 million at December 31, At March 31, 2009, the balance on retail customers securities accounts amounted to 1,504 million versus 1,586 million at the end of the prior year. At March 31, 2009, the Spanish bank Banco de Finanzas e Inversiones S.A. (Fibanc) reported net loss of 1.2 million versus net profit of 0.4 million in the first quarter of the prior year. For the first quarter 2009, this entity recorded net outflows of 22.7 million (of which 2.0 million managed assets) yet improving over the same period of the prior year when it had posted net outflows of 93.0 million (of which 35.0 million managed assets). At March 31, 2009, total assets under management and administration amounted to 1,305.9 million (December 31, 2008: 1,458.0 million). For the first quarter 2009, the German bank Bankhaus August Lenz & Co. reported net loss of 2 million versus 1.7 million for the same period of the prior year. In the quarter under review, this bank recorded net outflows of 7.3 million versus net inflows of 22.4 million in the prior year. At March 31, 2009, total assets under management and under administration amounted to 62.2 million versus 71 million at December 31, Associates This account relates exclusively to the investments in Banca Esperia S.p.A (48.5% of share capital) and in Mediobanca S.p.A. (3.38% of share capital; 3.45% of voting rights). For the first quarter 2009, the Banca Esperia Group reported net profit of 1.6 million versus 2.5 million at March 31, For the first quarter 2009 the Banca Esperia Group recorded net inflows of 148 million versus net outflows of 463 million in the prior year. At the end of the quarter under review, total assets under management and administration increased to 8,275 million from 8,065 million at December 31, You are reminded that, at December 31, 2008, the investment in Mediobanca S.p.A., was reclassified to Investments in Associates and Joint Ventures. The Board of Directors approved first quarter financial results at March 31, 2009, yesterday, May 12, Mediobanca valuation according to the Group s share in its equity at March 31, 2009 will be recognised in the Mediolanum Group interim accounts at June 30,

22 INTERIM REPORT AND ACCOUNTS Post balance sheet date events On March 23, 2009, implementing the resolution carried on January 24, 2008, the Board of Directors of Banca Mediolanum effected a 20 million capital increase to improve capital levels and ratios in accordance with new regulatory capital requirements and its banking business growth. The related resolution was recorded in Milan s Register of Companies on April 10, In addition, in April 2009, Banca Mediolanum issued two subordinated notes: Banca Mediolanum Lower Tier II 22/04/09-22/04/15 (floating rate) with periodic amortisation and Banca Mediolanum Lower Tier II 28/04/09-28/04/19 (floating rate) with periodic amortisation amounting to 52,510 thousand and 4,640 thousand, respectively.these subordinated issues entail an overall increase in the Bank s Tier II capital of 57,150 thousand. After March 31, 2009, there was no other event which could have a significant impact on the financial position, result of operations and cash flows of the Mediolanum Group. Outlook In spite of the still elevated volatility, the positive valuation of fundamentals as well as the easing fiscal and monetary policies encourage expectations for an upturn of financial markets in In fact, financial markets have already discounted a deep, prolonged recession of the world s main economies. Should governments and central banks efforts be rewarded with the first signs of a turnaround of the economy in the second half of 2009, we may see a sharp decline in risk aversion and risk premiums, and investors may shift away from treasuries. In fact, with yields at historic lows, treasuries are going to continue to offer limited opportunities unlike corporate bonds which offer attractive returns. The new products and campaigns launched by our Group to weather the crisis have already borne significant fruits. The innovative bank account Mediolanum Freedom was particularly well received by customers. At the end of April inflows into this product hit about 1.3 billion, of which about 900 million into the Mediolanum Plus policy. In addition, in April, sales of Index Linked policies picked up notably compared to the previous quarter. Finally, in April, financial markets rallied and brought about a marked increase in performance fees as well as gradual progress in management fees, thanks to the revaluation of managed assets. In spite of the first quarter earnings level, based on the steadily positive results seen in terms of inflows which the recent commercial campaigns contributed to achieve and encouraging signs of financial market recovery, we expect continuous earnings improvements in the year Basiglio, May 13, 2009 For the Board of Directors The Chairman (Roberto Ruozi) 20

23 MEDIOLANUM S.p.A. Schedules at March

24

25 Schedules SCHEDULES Note on the method applied to the income statement reclassification The income statement set out herein was prepared by reclassifying income and expense items before tax by nature and recognising financial income/expense on policyholders assets/liabilities relating to contracts where the investment risk is born by the policyholder under Amounts paid and change in technical reserves. The reclassified income statement reflects the management reporting system of the Mediolanum Group. The reconciliation of the consolidated income statement prepared on a statutory basis to the reclassified income statement at March 31, 2009 is set out below. 23

26 INTERIM REPORT AND ACCOUNTS Reconciliation of the Income Statement at March 31, 2009 to the reclassified Income Statement Consolidated income / 000 statement 1.1 Premiums written, net of reinsurance Gross premiums written 602, Reinsurance premiums (707) Total premiums written, net of reinsurance 601, Commission income 107, Income on financial instruments at fair value through profit/loss (210,248) 1.4 Income on investments in subsidiaries, associates and joint ventures Income on other financial instruments and investment property Interest income 80, Other income 1, Realized gains 3, Unrealized gains 1,819 Total income on other financial instruments and investment property 87, Other revenues 5,803 Total revenues and income 592, Costs 2.1 Claims incurred Claims paid and change in technical reverses (381,275) Reinsurers share 1,453 Total claims incurred, net of reinsurance (379,822) 2.2 Commission expense (42,620) 2.3 Loss on investments in subsidiaries, associates and joint ventures Loss on other financial instruments and investment property Interest expense (32,698) Other expense (41) Realized losses (1,750) Unrealized losses (4,026) Loss on the other financial instruments and investment property (38,515) 2.5 Operating expenses Agents commissions and other acquisition costs (19,709) Investment management costs (79) Other administrative expenses (78,677) Total operating expenses (98,465) 2.6 Other costs (11,880) Total costs (571,302) Pre-tax profit (loss) for the year 21, Income taxes (4,727) 4. Profit (loss) of discontinued operations (13) Consolidated profit (loss) for the year 16,618 RECLASSIFICATIONS Interest income and expenses on assets/liabilities pertaining to policyholders (including policies classified as financial contracts under IFRS 14) - Other reclassifications - TOTAL RECLASSIFICATIONS - 24

27 SCHEDULES RECLASSIFIED INCOME STATEMENT - REVENUES Amounts paid and Interest Interest Net income Net income Net premiums change in Commission income and expenses and on investments on other Other written reserves income similar income similar charges at fair value investments revenues 602, (707) , , ,686 (9,452) (263,482) , , , , , , , , ,824 (9,452) (263,482) 4,817 5,803 - (380,969) , (379,516) (32,698) (1) - (40) (1,750) (32,699) - (1,790) (379,516) - - (32,699) - (1,790) - 601,962 (379,516) 107, ,824 (42,151) (263,482) 3,027 5, (13) - 601,962 (379,516) 107, ,824 (42,151) (263,482) 3,014 5,803 - (205,614) - (54,225) 1 259, (713) - (1,064) - - 1, ,962 (585,843) 107,369 88,535 (42,150) (3,644) 4,041 5,803 25

28 INTERIM REPORT AND ACCOUNTS Reconciliation of the Income Statement at March 31, 2009 to the reclassified Income Statement Consolidated income / 000 statement 1.1 Premiums written, net of reinsurance Gross premiums written 602, Reinsurance premiums (707) Total premiums written, net of reinsurance 601, Commission income 107, Income on financial instruments at fair value through profit/loss (210,248) 1.4 Income on investments in subsidiaries, associates and joint ventures Income on other financial instruments and investment property Interest income 80, Other income 1, Realized gains 3, Unrealized gains 1,819 Total income on other financial instruments and investment property 87, Other revenues 5,803 Total revenues and income 592, Costs 2.1 Claims incurred Claims paid and change in technical reverses (381,275) Reinsurers share 1,453 Total claims incurred, net of reinsurance (379,822) 2.2 Commission expense (42,620) 2.3 Loss on investments in subsidiaries, associates and joint ventures Loss on other financial instruments and investment property Interest expense (32,698) Other expense (41) Realized losses (1,750) Unrealized losses (4,026) Loss on the other financial instruments and investment property (38,515) 2.5 Operating expenses Agents commissions and other acquisition costs (19,709) Investment management costs (79) Other administrative expenses (78,677) Total operating expenses (98,465) 2.6 Other costs (11,880) Total costs (571,302) Pre-tax profit (loss) for the year 21, Income taxes (4,727) 4. Profit (loss) of discontinued operations (13) Consolidated profit (loss) for the year 16,618 RECLASSIFICATIONS Interest income and expenses on assets/liabilities pertaining to policyholders (including policies classified as financial contracts under IFRS 14) - Other reclassifications - TOTAL RICLASSIFICATIONS - 26

29 SCHEDULES RECLASSIFIED INCOME STATEMENT - EXPENSES AND INCOME TAX Net impairment Amortisation Provision Commission of financial G&A and for risk Income Net expenses assets expenses depreciation and charges tax profit , , , (306) (306) (42,620) (4,013) - (13) (4,013) - (13) (18,140) - (1,569) (79) (78,677) (18,140) - (80,325) (6,400) (4,083) (1,397) - - (60,760) (4,013) (87,031) (4,096) (1,397) - - (60,760) (2,194) (87,031) (4,096) (1,397) (4,727) (60,760) (2,194) (87,031) (4,096) (1,397) (4,727) (60,760) (2,194) (86,281) (4,096) (1,397) (4,727) 16,618 27

30

31 MEDIOLANUM S.p.A. Consolidated Accounts at March

32 INTERIM REPORT AND ACCOUNTS Balance sheet Assets / 000 March 31, 2009 Dec. 31, Intangible assets 1.1 Goodwill 161, , Other intangible assets 15,407 16,427 Total intangible assets 176, , Tangible assets 2.1 Property 63,101 63, Other tangible assets 21,841 22,422 Total tangible assets 84,942 85, Reinsurers share of technical reserves 100, , Investments 4.1 Investment property 4,764 4, Investments in subsidiaries, associated and JVs 397, , Held to maturity investments 1,459,563 1,351, Loans and receivables 5,455,469 5,415, Available for sale financial assets 1,415,973 1,524, Financial assets at fair value through profit and loss 12,826,813 12,884,997 Total investments 21,559,664 21,578, Receivables 5.1 Arising out of direct insurance business 10,964 10, Arising out of reinsurance business Other receivables 3,452 3,376 Total receivables 14,524 14, Other assets 6.1 Non current assets or assets of discontinued operations, held for sale 1, Deferred acquisition costs Defferend tax assets 80,863 80, Current tax assets 165, , Other assets 304, ,838 Total other assets 552, , Cash and cash equivalents 197, ,865 TOTAL ASSETS 22,686,246 22,650,372 30

33 CONSOLIDATED ACCOUNTS Liabilities / 000 March 31, 2009 Dec. 31, Capital and reserves 1.1 Group shareholders equity Share capital 73,010 73, Other equity instruments Capital reserves 51,960 51, Retained earnings and other equity reserves 721, , (Treasury shares) (2,045) (2,045) Exchange difference reserves Gains or losses on available for sale financial assets (22,523) (30,004) Other gains or losses recognised directly in equity Profit (loss) for the year attributable to the Group 16,618 23,675 Total capital and reserves attributable to the Group 838, , Attributable to minority interests Capital and reserves attributable to minority interests Gains (losses) recognised directly in equity Net profit (loss) for the year attributable to minority interests - - Total capital and reserves attributable to minority interests - - Total capital and reserves 838, , Provisions 94,785 95, Technical reserves 12,348,642 12,380, Financial liabilities 4.1 Financial liabilities at fair value through profit and loss 1,318,570 1,020, Other financial liabilities 7,754,239 7,945,685 Total financial liabilities 9,072,809 8,965, Payables 5.1 Arising out of direct insurance business 4,952 10, Arising out of reinsurance business Other payables 160, ,988 Total payables 165, , Other liabilities 6.1 Liabilities of disposal groups held for sale 797 1, Deferred tax liabilities 11,271 11, Current tax liabilities 29,745 18, Other liabilities 124, ,490 Total other liabilities 165, ,978 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 22,686,246 22,650,372 31

34 INTERIM REPORT AND ACCOUNTS Income statement / 000 March 31, 2009 March 31, Revenues 1.1 Net premiums written Gross premium written 602, , Reinsurance premiums (707) (1,072) Net premiums written 601, , Commission income 107, , Net income on financial instruments at fair value through profit and loss (210,248) (1,213,476) 1.4 Income on investments in subsidiaries, associates and JVs 768 1, Income on other financial instruments and investment property Interset income 80,074 71, Other income 1, Realised gains 3,928 2, Unrealised gains 1,819 1,424 Total income on other financial instruments and investment property 87,006 76, Other revenues 5,803 6,218 Total revenues 592,660 (227,240) 2. Costs 2.1 Net claims and benefits Amounts paid and change in technical reserves (381,275) 465, Reinsurers share/recoveries from reinsurers 1,453 1,519 Net claims and benefits (379,822) 466, Commission expense (42,620) (43,998) 2.3 Loss on other investments in subsidiaries, associates and JVs Loss on other financial instruments and investment property Interest expense (32,698) (44,770) Other expenses (41) (18) Realised losses (1,750) (1,816) Unrealised losses (4,026) (2,741) Loss on other financial instruments and investment property (38,515) (49,345) 2.5 Operating expenses Agents commissions and other acquisition costs (19,709) (23,070) Investment management costs/expenses (79) (101) Other administrative expense (78,677) (71,774) Total operating expenses (98,465) (94,945) 2.6 Other costs (11,880) (10,957) Total costs (571,302) 267,537 Profit (loss) before tax for the period 21,358 40, Income tax (4,727) (9,420) Profit (loss) for the period 16,631 30, Profit (loss) from discontinued operations (13) - Group net profit (loss) for the period 16,618 30,877 Earning per share (in euro) 0,023 0,042 32

35 Statement of changes in equity CONSOLIDATED ACCOUNTS Adjustment Trasnferred Balance at to closing Amount to the Income Other Balance at / 000 Dec. 31, 2007 balance credit Statement Movements Dec. 31, 2008 Shareholders equity pertaining to the Group Share capital 72, ,010 Other equity instruments Capital reserves 51, ,960 Retained earnings and other equity reserves 523, ,333 - (62,025) 696,921 (Treasury shares) (2,045) (2,045) Exchange difference reserve Gains (losses) on available-for-sale financial assets 36,997 - (66,641) (360) - (30,004) Other gains (losses) recognized directly in equity Gains (losses) on cash flow hedges Gains (losses) on hedges of a net investment in a foreign operation Reserve relating to changes in the equity of investees Intangible assets revaluation reserve Tangible assets revaluation reserve Gains (losses) on non-current assets or disposal groups held for sale Other reserves Net profit (loss) for the year 212,243 - (104,723) - (83,845) 23,675 Total shareholders equity pertaining to the Group 895,033-64,714 (360) (145,870) 813,517 Shareholders equity pertaining to minority interest Share capital and reserves Gains (losses) recognized directly in equity Net profit (loss) for the year Total shareholders equity pertaining to minority interests TOTAL 895,033-64,714 (360) (145,870) 813,517 Adjustment Trasnferred Balance at to closing Amount to the Income Other Balance at / 000 Dec. 31, 2008 balance credit Statement Movements March 31, 2009 Shareholders equity pertaining to the Group Share capital 73, ,010 Other equity instruments Capital reserves 51, ,960 Retained earnings and other equity reserves 696,921-1,048-23, ,644 (Treasury shares) (2,045) (2,045) Exchange difference reserve Gains (losses) on available-for-sale financial assets (30,004) - 9,421 (1,940) - (22,523) Other gains (losses) recognized directly in equity Gains (losses) on cash flow hedges Gains (losses) on hedges of a net investment in a foreign operation Reserve relating to changes in the equity of investees Intangible assets revaluation reserve Tangible assets revaluation reserve Gains (losses) on non-current assets or disposal groups held for sale Other reserves Net profit (loss) for the year 23,675 - (7,057) ,618 Total shareholders equity pertaining to the Group 813,517-3,412 (1,940) 23, ,664 Shareholders equity pertaining to minority interests Share capital and reserves Gains (losses) recognized directly in equity Net profit (loss) for the year Total shareholders equity pertaining to minority interests TOTAL 813,517-3,412 (1,940) 23, ,664 33