Corporate › Financial Unipol Group: approval of consolidated results for the first half of 2017

PRESS RELEASE

UNIPOL GROUP: APPROVAL OF CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2017

• Consolidated net profit of €390m (€276m in the first half of 2016), before the adjustments for the restructuring plan of the banking sector. Consolidated net income, including the effects of the restructuring plan of the banking sector, amounted to -€390m.

• Direct insurance income at €6.3bn (€8.4bn in the first half 2016)

   Non-Life: €4.0bn (+0.4%)

   Life: €2.3bn (-47.7%)

• Combined ratio for direct business at 95.3%

• Profitability of financial investments at 3.9%

• Consolidated solvency ratio based on economic capital equal to 153%1

Bologna, 4 August 2017

The Board of Directors of Unipol Gruppo S.p.A., meeting yesterday under the chairmanship of Pierluigi Stefanini, approved the Group's consolidated results at 30 June 2017.

In the first six months of the year, excluding the effects of loan adjustments in the banking sector, the Unipol Group achieved a consolidated net profit of €390m (€276m in the first half of 2016), a

1 Economic capital is the measure of absorbed capital calculated on the basis of the principles and models applied in the Partial Internal Model and having operational value.

contribution of financial management. The restructuring plan of the banking sector led to a negative economic effect of €780m in the half-yearly report of the subsidiary Unipol Banca, consequently having an impact on Unipol's consolidated net result, which was therefore equal to -€390m.

Pre-tax profit in the insurance sector amounted to €580m (+25.8% compared to €461m in the first half of 2016). The Non-Life insurance business contributed to this result with €368m (+37.1% compared to €268m in the first six months of 2016) and the Life Insurance business contributed with

€212m (+9.9% compared to €193m in the first half of 2016).

During the period, direct insurance income, gross of reinsurance, amounted to €6,327m (€8,408m at 30 June 2016).

Non-Life Insurance

Direct income in the Non-Life insurance business at 30 June 2017 amounted to €4,026m (+0.4% compared to €4,011m in the first half of 2016). UnipolSai contributed to this amount with €3,673m (- 0.3% compared to €3,685m in the first half of 2016) and other companies directly controlled by the Unipol Group (UniSalute, Linear and Arca Assicurazioni) contributed with €353m (+8.3% compared to

€326m in the first half of 2016). In particular, UniSalute continues to capitalise on its expertise achieving premium income of €210m (+6.4% compared to €197m at 30 June 2016).

Motor premium income amounted to €2,170m (-2.6% compared to €2,228m at 30 June 2016), while Non-Motor premium income recorded a growth of €1,856m (+4.1% compared to €1,784m at 30 June 2016) thanks to the good performance of the business linked to the people segment.

The ongoing controls over claims settlements together with provisioning solidity allowed the Group to offset most of the adverse effects associated with the further decline recorded by the average Motor Vehicle TPL premium, the increase recorded in the claims ratio for atmospheric events and a greater number of claims of a significant amount.

In this context, at 30 June 2017 the Unipol Group recorded a combined ratio2 of 95.3% (97.1% net of reinsurance3), compared to 94.7% in the same period of 2016.

The loss ratio stood at 68.1% (67.6% at 30 June 2016). The expense ratio was 27.2%, compared to 27.0% for the same period in 2016.

2 Direct business.

3 Combined ratio net of reinsurance and calculating the expense ratio on net premiums for the year.

Life Insurance

In a market environment still characterised by very low or negative interest rates in the short term, the Group confirmed the strategic choice to limit the flows of traditional products with performance linked to separate management and to guide the supply of the sales networks towards multi-branch and unit-linked products.

Following the above, the Life direct business amounted to €2,300m, thus recording a drop of 47.7% (€4,396m at 30 June 2016). UnipolSai S.p.A., the Group's main company, reported direct premium income of €1,416m (-11.1%). Within the bancassurance channel, the Arca Vita Group reported direct income of €370m, while the premium income of the Popolare Vita Group reported €456m. These results are mainly attributable to the upcoming termination of relationships with Popolare Vita4, while a contraction in the portfolio was reported for the Arca Group, which had reported uncharacteristic new business during 2016 hardly replicable in 2017.

This sector reported a pre-tax profit of €212m (profit of €193m in the corresponding period of 2016).

Banking Sector

In the Banking sector, direct deposits amounted to €10,492m (-0.4% compared to €10,535m at 31 December 2016). Investments5 with customers amounted to €7,767m (-9.4% compared to €8,579m at 31 December 2016).

The pre-tax result of the Banking sector at 30 June 2017 was a loss of €940m after recognising value adjustments of €962m on loans and other financial assets, which includes €945m6 arising from the above-mentioned restructuring of the banking sector. As set out in the restructuring plan of the banking sector, the adjustments on loans brought the overall coverage of non-performing loans to levels of excellence in the Italian banking system, raising it to 80% for bad loans, 40% for unlikely-to- pay exposures and 70.4% for total non-performing loans.

4 On 29 June 2017, the BoD of UnipolSai agreed to terminate the agreement with Banco BPM and to exercise the put option on the stake held in Popolare Vita.

5 Net of loans to the Parent Company.

6 Management figure

Real Estate Sector

Property management continued to be focused on the renovation of some properties in the portfolio, especially in the city of Milan.

This sector reported a pre-tax loss of €17m (loss of €10m at 30 June 2016).

Holding Sector and Other Activities

The operations of the companies belonging to the other sectors in which the Group operates continued to be focused on business development. In particular, as regards the hotel sector, the integration phase of Atahotels and Una Hotels facilities began with the creation of a new national leader in the Italian hotel industry, owner of 43 facilities (either for business or leisure), providing 5,500 rooms and revenues exceeding €60m in the first half of 2017.

This sector reported a pre-tax loss of €139m (loss of €58m in the first half of 2016) and was affected, among other things, by €105m in the adverse effects relating to the termination of the indemnification agreement entered into with the subsidiary Unipol Banca.

Financial Management

As for the management of financial investments, the first part of 2017 marked a reasonable generalised economic recovery and went by without particularly significant tensions other than those associated with the various election rounds in several European countries, which were in any case diffused.

Gross profitability of the insurance investment portfolio achieved a particularly significant return in the period under consideration, representing 3.9% of invested assets (3.6% in the first half of 2016), which includes 3.5% for the components of ex-dividends and dividends.

Capital

At 30 June 2017, shareholders' equity amounted to €7,182m (€8,134m at 31 December 2016), which includes €5,052m pertaining to the Group. At 30 June 2017, the Group's solvency ratio, calculated

according to Solvency II rules (standard formula using USP - Undertaking Specific Parameters), reported a ratio of 133%7 between own funds and capital requirement, compared to 141% at 31 December 2016, due to the effects of the restructuring plan of the banking sector.

7 Value calculated on the basis of information available today, to be considered preliminary. The final figure will be communicated to the Supervisory Authority within the period required by current legislation.