“The analysis of investment strategies in the insurance sector” MABISZ Conference The role of insurance in stimulating the economy 8 October 2013

© 2013 KPMG Advisory S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Cooperative ("KPMG International"), entità di diritto svizzero. Tutti i diritti riservati. 2 Non Life Business: 2014 scenario Bull CaseBear Case ■Pricing Drives P&C Premium Growth as Volumes Fall ■European P&C Insurers Continue to Push Rates Higher ■New Capacity May Reduce Insurers Reinsurance Costs ■Rising Yields a Mixed Blessing for Europe's Insurers ■Falling Bond Values Cut European Insurer Book Values ■Mark-to-Market Bond Losses May Take Toll on Results

© 2013 KPMG Advisory S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Cooperative ("KPMG International"), entità di diritto svizzero. Tutti i diritti riservati. 3 Non Life Business: Bear and Bull Case BEAR CASE The decline in bond values will also reduce book values and hurt the profits of insurers Falling values reduce the reserves for unrealized gains and losses on investments and cancel out the gains from rising equity markets The sharp increase in U.S. interest rates may wipe out the gains in bonds Rising Yields a Mixed Blessing for Europe's Insurers Falling Bond Values Cut European Insurer Book Values Mark-to-Market Bond Losses May Take Toll on Results Pricing Drives P&C Premium Growth as Volumes Fall European P&C Insurers Continue to Push Rates Higher New Capacity May Reduce Insurers Reinsurance Costs Insurers can compensate for lower volumes by raising prices. Zurich Insurance increased personal insurance pricing by 3% and commercial insurance pricing by 5% on average in 2Q 2013 Abundant traditional capacity will cut the cost of reinsurance for primary insurers BULL CASE

© 2013 KPMG Advisory S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Cooperative ("KPMG International"), entità di diritto svizzero. Tutti i diritti riservati. 4 Life Business: 2014 scenario Bull CaseBear Case ■CDS Spreads for European Insurers Continue Declining ■Spanish, Italian Bond Yields Stay Below Crisis Levels ■Major Equity Markets Return to Pre-Crisis Levels ■Economy Remains Greatest Threat to European Insurers ■Wider Duration Gap Fuels Interest-Rate Sensitivity ■Insurers May Face Higher Lapse Rate If Yields Spike

© 2013 KPMG Advisory S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Cooperative ("KPMG International"), entità di diritto svizzero. Tutti i diritti riservati. 5 Life Business: Bear and Bull Case Economy Remains Greatest Threat to European Insurers Wider Duration Gap Fuels Interest-Rate Sensitivity Insurers May Face Higher Lapse Rate If Yields Spike Market risks remain dominated by the low-yield environment Life insurers would be particularly vulnerable to any cuts in interest rates This lapse rate may rise if interest rates climb suddenly, which would prompt unexpected cash outflows for insurers BEAR CASEBULL CASE Resolution of Europe's indebtedness may result in rising market confidence Less distressed valuations of southern European debt may ease the risk to assets held by European life insurers Stronger equity markets may also help life-insurer balance sheets CDS Spreads for European Insurers Continue Declining Spanish, Italian Bond Yields Stay Below Crisis Levels Major Equity Markets Return to Pre-Crisis Levels

© 2013 KPMG Advisory S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Cooperative ("KPMG International"), entità di diritto svizzero. Tutti i diritti riservati. 6 Conclusion No more “growth at all costs” strategy Flexibility European Macroeconomic Recovery is crucial