Banca Mediolanum SpA · MIL:BMED
Banca Mediolanum SpA — Mediolanum Group — H1 2003 Earnings Presentation
54 slides from Banca Mediolanum SpA's earnings presentation, 2003
Slide 1: H1 2003 Reclassified Results
Hii 2002) Reclassitied Results Mediolanun Gran
Slide 2: — O ae O — — LL
2 — O ae O — — LL
Slide 3: Positive & consistent Net Inflows into Mutual Funds
Positive & consistent Net Inflows into Mutual Funds* means better customer performanc 400 ++ O00) O- a 200 ++ + 2008 ====== Total Italian Industry 00 = . + 2008 c==== Mediolanum 00 Og + supaa * including Managed Accounts & Unit-linked policies Source: Assogestioni o aad Net Inflows into Equity Mutua
Slide 4: Most Important Performance Factors
Most Important Performance Factors NET PROFIT =» +40% ¥ > increased Interest Spread in our current accounts > much higher Net Investment Income coming from the traditional reserves > strong contribution from the Performance Fees fuelled by market growth
Slide 5: Edoardo Lombardi
Edoardo Lombardi
Slide 6: H1 2003 Reclassified Results Agenda
H1 2008 Reclassified Results Agenda New Ventures Resulis Bosc Elio Mosulis Loosing For yee
Slide 7: Consolidated
he sonsolidated ¥ Hi 2003 Reclassified Results Medioianum Grove
Slide 8: Consolidated Net Profit
Consolidated Net Profit ~ pat A Consolidated euro millions Ha 20038 Ha) 2002 Change Total Revenues 1,075.7 1,308.6 -17.8% Total Costs -1,015.4 -1,252.1 -18.9% Profit before Tax & E.l. 79.2 49.4 +60.3% Extraordinary Items -6.6 2.7 ns. Profit before Tax 72.6 52.1 +39.3% Income Tax -17.9 -13.1 +36.6% P
Slide 9: Consolidated Net Profit in detail
Consolidated Net Profit in detail euro millions Hq 2003 Net Premiums Written Commission Income Bank Revenues Other Revenues/ commissions Total Revenues Net Change in reserves Acquisition Costs G&A expense Amortisation/depreciation & provisions Total Costs Net Investment Income Operating Profit (Prof
Slide 10: Consolidated AUA Evolution
Consolidated AUA Evolution euro billions Bo bb BY BB BY YU YY) YZ YY Ys YS YR Vf YR YY YO YI Ue Fl ]u2 rus ound Consolidated Net Inflows euro millions Hi 2003 Hd 2002 Ghange Managed Savings 1,077.7 1,205.8 Administered Savings 189.5 TOIAL NET INFLOWS 1.267.2 2,203
Slide 11: H1 2003 Reclassified Results
H1 2003 Reclassified Results
Slide 12: Total Revenues
Total Revenues ae Core Business euro millions Premium Income -24.9% Reinsurance ceded F 4.9 -28.6% Commission Income 107.4 +8.5% Bank Revenues : 46.0 +38.0% Other Commissions & Revenues 5 6.9 +20.3% Net Profit ie Core Business Total Revenues 1,020.9 1,269.4 -19.6% Profit before Tax & E.I. 98.4 ; +41
Slide 13: Net Inflows
Net Inflows i euro millions > Mutual Funds & M.A. 331.2 -3.5% > Life Policies 688.9 -27.6% Managed Savings 1,020.1 -19.8% > Securities 324.3 -67.1% > Cash 529.0 -117.4% > Repurchase Agreements 15.6 +779.5% Administered Savings 868.9 -82.6% AUA Breakdown a_i Core Business Life Reserves 7,366.9 6,745.
Slide 14: Life Reserves
Life Reserves euro millions > Traditional > Index-linked > Unit-linked Life Reserves Life Reserves in own Mutual Funds -3,080.4 Core Business 1,758.2 -27.2% 2,322.5 +29.8% 2,664.5 +15.3% 6,745.2 +9.2% -2,753.2 euro millions » Equity Funds 917.1 >» Bond Funds 369.0 >» Monetary Funds 340.4 Italy-based
Slide 15: Bank Deposits
Bank Deposits Core Business Cash under Deposits 2,779.4 2,604.1 Securities under Deposits 2,033.1 2,005.4 Repurchase Agreements 340.9 247.2 Subordinated Loans Gross Premiums Written euro millions > U-L Pension Plans (Europension) > U-L Pension Plans (My Pension") > U-L Investment Pol. (Life Funds) >
Slide 16: Adjusted Premium Income
Adjusted Premium Income ie Core Business Recurring Policies Single Premium Policies x1/10 42.9 73.2 * Annual Premium Equivalent Gross Inflows into M.EF & M.A.* Core Business euro millions > Equity Funds 93.2 -6.8% >» Bond Funds 27.9 +50.2% » Monetary Funds 57.2 +200.2% Italy-based Funds -Unbundled 1
Slide 17: Bank Accounts & Customer Growth
Bank Accounts & Customer Growth ie Core Business 332,700 > 12.9% 766,000 > +3.0% Customer Base a_i H 1 20038 Core Business 24,000 customers closed 24,400 current accounts: LS 10,300 customers left the system 13,'700 customers remained Bank Customers 40,100 euro Group Customers 22,400 euro Lost Custo
Slide 18: Sales Network
Sales Network ae » Licensed Financial Advisors 4,086 +1.1% » Non-licensed Financial Advisors 1,064 -31.9% Banca Mediolanum* 5,150 -5.7% * o/w Financial Executives -2.9% Partner Time -8.9% Sales Network Evolution ie Core Business 6 Non-licensed Advisors @ Licensed Financial Advisors +39% +16% 613 199
Slide 19: Profit from Life business line
Profit from Life business line euro millions Life Insurance 48.3 33.8 +42.9% ¥ ... With a major contribution coming from Net Investment Income. Net Investment Income Core Business euro millions Investment Income - Life 4 +11.6% Adjustments to the value of financial investments 0.7 H -112.5% Adjusted
Slide 20: Evolution of Mediolanum Life Reserves
Evolution of Mediolanum Life Reserves i Core Business euro billions > Traditional reserves sensitive to low interest rates in decline > Guarantees relate only to traditional reserves, i.e. 17% of Life assets > Unit & Index-linked don't require solvency margins > Cost & availability of capital 3 are
Slide 21: Commission Income
Commission Income from Mutual Fund-related products Core Business Entry Fees b 17.4 -16.7% Management Fees ; 76.8 -13.5% Performance Fees I 13.2 +169.7% COMMISSION INCOME - Unoundied Mutual Funds Commission Income from Mutual Funds ag by Location Core Business ™ Italy-based funds 14.9% Perform, Fees
Slide 22: Profit by Business Line
Profit by Business Line euro millions Life Insurance Mutual Funds Bank Business (excl. Adv. Investments) Other Operations 8.6 12.7 3.9 Core Business +42.9% +2.1% +224.4% +138.6% Bank Revenues euro millions Interest Spread » Securities » Service fees - managed accounts » Other Services Service Margin
Slide 23: Profit Before Tax & E.I.
Profit Before Tax & E.I. ie by Business Line Core Business euro millions Life Mutual Other Insurance Funds Operations Benefits Paid & Change in Reserves ae Core Business a mo i agus 4002 Shang 158.3 133.1 +18.9% 89.8 136.2 -34.1% > Surrenders from Transformation 109.5 167.8 -34.7% Benefits Paid 357.
Slide 24: Surrenders
Surrenders* Euro millions Surrendars* from Transformation Natural Surrenders* % of Reserves * excluding Index-linked & Group policies Surrenders of Investments Policies Euro million Total Surrenders of Traditional Invest. Pol. 35.9 % of Reserves 14.3% 215.6 48.8% o/w Natural 18.5 % of Reserves 7.1%
Slide 25: Surrenders of Pension Plans
Surrenders of Pension Plans ie Core Business| Euro million Total Surrenders of Trad. Pension Plans 104.3 % of Reserves 10.5% o/w Natural 12.0 % of Reserves 1.1% Unit-linked Pension Plans 15.5 % of Reserves 0.7% % of Reserves ohw NeturalP % of reserves * excluding Group policies Costs euro millions C
Slide 26: New Ventures
ew Ventures Hi 2008) Reclassitzed Results MedhoiemnaGron
Slide 27: New Ventures - Net Profit/Loss
New Ventures - Net Profit/Loss euro millions Spain Germany ; . +182.4% Banca Esperia d . -28.2% Med Private L ; -39.3% * share of Profit pertaining to the Mediolanum Group New Ventures - Net Consolidated Effect me Net Profit / Loss* -6.4 -4.8 +33.9% Goodwill Amortisation -10.1 -10.1 0.0% Interest pa
Slide 28: Banca Esperia - Net Profit/Loss
Banca Esperia - Net Profit/Loss euro millions Total Revenues 4.6 +113.0% Total Costs -9.1 +39.6% * share of Profit pertaining to the Mediolanum Group Banca Esperia - Highlights me ZOE OZ 00502) | __Assets under Administration |, 1,537 =» 2,454 _%in Managed Assets |, 80% 82% Gross inflows |, ggg 1,46
Slide 29: Spain - Net Profit
Spain - Net Profit euro millions (1) Total Revenues +67.9% 3 Total Costs” +69.1% Capital Gain : +585.7% Profit before Tax & E.l. : : n.s. Extraordinary Items ; b ns. Profit before Tax f ! n.s. Income Tax hE H n.a. Profit from Minority Interests na. () o/w Gross Premiums Written +194.2% ©) ow start-u
Slide 30: Spain - Sales Network
Spain - Sales Network » Commercial Agents & Employees - Old model 101 » Financial Advisors - Mediolanum model 217 +19.8% » Part-time Agents 22 +209.1% Spain - Gross Inflows me > Mutual Funds & M.A. 223.9 146.8 +52.5% > Gross Premiums Written 37.2 13.7 +171.5% Managed Savings 261.1 160.5 +62.7% > Sec
Slide 31: Spain - Net Inflows
Spain - Net Inflows euro millions > Mutual Funds & M.A. L ns. > Life Policies +157.7% Managed Savings +645.1% > Securities A +60.2% > Cash Administered Savings Spain - AUA Breakdown me Life & Pension Funds* 103.9 66.5 +56.2% Mutual Funds** 742.5 728.2 +2.0% Bank Deposits 1,208.9 1,157.0 +4.5% Instit
Slide 32: Gamax - Net Profit/Loss
Gamax - Net Profit/Loss euro millions Total Revenues ' 7.9 Operating Costs ; -6.9 Start up costs L 0.0 ns. Net Operating Profit/Loss : 1.0 ns. Write-downs L -1.7 -96.3% Capital gain/loss ; 0.0 ns. Extraordinary Items | 0.3 -66.7% Profit before Tax i -0.4 +119.8% Income Tax ; -0.6 n.s. Profit from Mi
Slide 33: Embedded Value
Embedded Value H1 2008 Reclassitied Results Mediolanum Group
Slide 34: Embedded Value Growth
Embedded Value Growth Post-acquisition effect* euro millions 1,816* +4% 1,881* 1,768* 4,786" +59 3% Value of “eo Z| in-force 4,496" business “ial WE Adustea 1,283 va hase We tive shareholders’ an = equity 4 -\ 303 VIF Funds & M.A. 707 745 oy +5% 535 595 +19% 484 +11% +11% PLL LLL il “e 94 95 96 97 9
Slide 35: EV Economic Assumptions
EV Economic Assumptions EV > 3.70% aap 2.00% investment investmen ong telan won =, 5.20% => 4.00% Return Our Portfolio Mutual funds & M.A. 7.75% “> 6.75% 3.00% Sm> 3.00% Embedded Value Earnings Change over the period 56 36 Dividends paid 72 72 Goodwill Amortisation - New Ventures 9 10
Slide 36: EV Earnings Components (1)
EV Earnings Components (1) Earnings on Initial E.V » Expected return on EV - unwind 59 59 0.0% » Experience variances * 26 (84) ns. » Operating assumption changes --- 18 n.a. » Economic assumption changes (21) -_- na. » Tax assumption changes 0 0 na. Earnings on Initial E.V. 64 (7) n.s. Value added
Slide 37: EV Earnings Components (2)
EV Earnings Components (2) Value added from New Business Earnings on Initial EV * 64 (7) n.s - Conversion from Mutual Funds (into 'Mix’ & 'Chorus’) - (14) —_ - Investments into 'Mix' & 'Chorus’ -- 29 _ » M.E Conversion net result --- 15 --- » Life transformation -- 2 --- » New Life business 61 82 -2
Slide 38: Activities Looking Forward
si: Activities Looking Forward Hi 2003 Reciassimed Results Mediolantim Grong
Slide 39: Key priority: recovery of volumes
Key priority: recovery of volumes ¥ Focus on increasing number of Current Accounts: » Advisor convention presenting: - new website with major upgrading of internet channel - reorganisation of direct channels to provide customers of "high standing" with a higher level of service quality >» New TV and
Slide 40: International activities
International activities Spain > TV advertising in Spain: Catalan only, where sales network is significant “Multi-channel bank" campaign adapted to the Spanish market 1 Increase awareness of the company Facilitate recruiting effort Germany ¥ Key effort on Recruitment
Slide 41: Mediolanum Group
Mediolanum Grom
Slide 42: Net Profit Q2 2003
Q2 2003 Net Profit euro millions Total Revenues Profit before Tax & E.I. Extraordinary Items Profit before Tax Income Tax Profit from Minority Interests CONSOLIDATED NET) PROFIT @2/2003 581.3 48.5 -2.9 45.6 -9.0 0.0 3616 Qi) 2003 494.4 30.7 -3.7 27.0 -8.9 0.0 18:1 Change +17.6% +58.0% -21.6% +68.9%
Slide 43: Consolidated Net Inflows
Q2 2003 Consolidated Net Inflows euro millions @2 2003 Managed Savings 477.3 Administered Savings JOIAL NET INELOWS 620)0 Qi 2003 600.4 46.8 64752 e X ‘ yt Consolidated Change -20.5% +204.9%
Slide 44: Net Inflows
Q2 2003 i Net Inflows euro millions > Mutual Funds & M.A. 181.3 +31.2% > Life Policies 268.3 +16.4% Managed Savings 449.6 +22.0% > Securities 20.0 -76.9% >» Cash -37.3 -32.2% > Repurchase Agreements 179.9 ns. Administered Savings 162.6 n.s. Q2 2003 Gross Premiums Written euro millions > U-L Pension
Slide 45: Adjusted Premium Income
== = Adjusted Premium Income Core Business Recurring Policies My - +11.4% Single Premium Policies x1/10 23.1 k +16.8% * Annual Premium Equivalent Q2 2003 Gross Inflows into Mutual Funds* Core Business euro millions > Equity Funds 48.0 38.9 +23.4% >» Bond Funds 18.8 23.1 -18.6% » Monetary Funds 77.5
Slide 46: H1 2003 vs. Q1 2003
H1 2008 vs. Q1 2003 Sales Network » Licensed Financial Advisors » Non-licensed Financial Advisors Banca Mediolanum* * o/w Financial Executives Partner Time Core Business Q2 2003 Net Profit euro millions Total Revenues Profit before Tax & E.I. Extraordinary Items Profit before Tax Income Tax Core Bus
Slide 47: Profit by Business Line
Q2 20038 i Profit by Business Line Core Business euro millions Life Insurance h, P +24.7% Mutual Funds ‘ . +127.4% Bank Business +6.7% (excl. Adv. Investments) +19.6% Other Operations L : -69.2% ound Q2 2003 Total Revenues Core Business Premium Income 440.5 395.6 +11.4% Reinsurance ceded 3 -1.7 +5.9
Slide 48: Commission Income - Mutual Funds
a = Commission Income - Mutual Funds Core Business Entry Fees 7.7 6.8 +13.2% o/w Irish Funds 4.4 4.0 +10.0% Management Fees 32.5 +4.3% o/w Irish Funds 28.2 +4.3% Performance Fees 5.3 +471.7% o/w Irish Funds ‘ 5.2 +436.5% = = Bank Revenues Core Business Interest Spread 16.4 15.4 +6.5% » Securities 4.
Slide 49: Costs
Q2 2003 Costs euro millions Claims, Benefits paid, Change in Reserves Recov. from Reinsurance Acquisition Costs G&A Expenses Advertising Expenses Depreciation Core Business 396.8 345.8 +14.7% -0.1 -2.2 -96.8% 47.0 40.3 +16.6% 47.4 40.6 +16.7% 2.2 0.3 +633.3% +33.7% ound Q2 2003 Benefits Paid & Chang
Slide 50: Net Investment Income
Q2 2003 i Net Investment Income Core Business euro millions Investment Income - Life I H +6.5% Adjustments to the value of financial investments i ; ns. Adjusted Invest. Income - Life LE +91.8% Policyholders' Interest ; -5.7% Net Invest. Income - Life a +460.7% Net Invest. Income - Other 2.3 Interes
Slide 51: New Ventures - Net Profit/Loss
Q2 2003 New Ventures - Net Profit/Loss euro millions Spain Germany i -2.0 Banca Esperia h -1.0 Med Private * share of Profit pertaining to the Mediolanum Group Q2 2003 me New Ventures - Net Consolidated Effect Net Profit / Loss* -3.3 -3.1 +7.3% Goodwill Amortisation -5.1 -5.0 +2.0% Interest paid on
Slide 52: Spain - Net Inflows
Q2 2003 Spain - Net Inflows euro millions > Mutual Funds & M.A. > Life Policies Managed Savings > Securities > Cash Administered Savings 28.0 14.2 42.2 52.1 -30.5 21.6 -24.3% -11.3% -19.9% -133.6% -49.5% -252.3% Spain ¢ mh Spain - Gross Inflows > Mutual Funds & M.A. 99.9 124.0 -19.4% > Life Policies
Slide 53: Spain - Net Effect
Q2 2003 Spain - Net Effect euro millions Net Operating Profit * Goodwill Depreciation Interest Paid on Investments * share of Profit pertaining to the Mediolanum Group Q2 2003 Banca Esperia - Net Inflows me Mediolanum's share (48.5%) Managed Savings 2.2 184.7 -98.8% Administered Savings 11.0 35.5 -6
Slide 54: Gamax - Net Profit/Loss
Q2 2003 Gamax - Net Profit/Loss euro millions Total Revenues 2.4 Operating Costs -3.1 Start up costs 0.0 Net Operating Profit/Loss -0.7 Write-downs -0.1 Capital gain/loss 0.0 Extraordinary Items 0.1 Profit before Tax -0.7 Income Tax 0.0 Profit from Minority Interests 0.0