Results achieved between 2007 and 30.06.2012

Rome, 1st October 2012

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Agenda

Subsidiary’s profile at acquisition date Results achieved between 2007 and 30.06.2012 Gross written premiums Portfolio’s structure Sales network and number of employees Premiums per sales channel Performance indicators Investments Capital invested in the Subsidiary Profit & Loss history Forecast results for the year

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Subsidiary’s profile at acquisition date            

EUR mln Gross written premiums

Total assets Net assets Net profits  

2004 4.0 5.2 3.3 0.1  2005 7.4 8.9 5.4 0.1  2006 10.8 12.3 5.6 0.3  

           

           Shareholding as at 31.12.2006

N° shares Nominal value EUR

% 

Mel Finance EAD 10,109,950 5.2 99.9995%  Fintex EOOD 50 0.0 0.0005%  Total 10,110,000 5.2 100.0000%  

           

On 31st July 2007 FATA Assicurazioni Danni S.p.A. acquired a majority interest in Victoria (67%) at a cost of € 10.5 mln.

 

 

           Shareholding following the acquisition 31.12.2007

N° shares Nominal value EUR

% 

FATA Assicurazioni Danni S.p.A. 6,773,700 3.5 67.0000%  Mel Finance EAD 3,336,250 1.7 32.9995%  Fintex EOOD 50 0.0 0.0005%  Total 10,110,000 5.2 100.0000%  

           

History

Established in 1996 under the name Mel Ins., it changed its name to Victoria AD in 2002 and modified its management. The majority shareholder was the well known Bulgarian entrepreneur, Mr. Tsvetan Vassilev. ActivitiesAuthorised to sell non-life insurance (not authorised to carry out reinsurance activities).Placed 12th out of 22 companies operating in the non-life sector in Bulgaria; 2% market share;MTPL (36.9%), Kasko (31.2%) and Non-Motor Insurance (31.9%).

Sales network63 point of sales with employees and 5 exclusive agencies.

GovernanceDual System: administration and control carried out respectively by a managing board and a supervisory board.

HeadquartersSofia, Bulgaria.

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Results achieved between 2007 and 30.06.2012

The Bulgarian non-life insurance market has had a CAGR of 1.4% between 2007 and 2011.

Victoria has witnessed an average growth in gross written premiums of 15.8% reaching 10th place in the rankings of Bulgarian insurance companies operating in the non-life sector.

Net Combined Ratio: affected in the first three years by the realignment to the Group’s accounting principles, as well as reinforcing technical reserves as requested by the local supervisory authority to the entire market.

2010-2011: Portfolio Restructuring; Modifications to tariffs aimed at achieving better technical yields for Motor insurance; Increased underwriting in historically more profitable non-life lines of business.

As at 30th June 2012 Victoria showed performance indicators better than the reference market: Net Combined Ratio (91.8% Victoria vs market’s 97.9%), Net Loss Ratio (49.6% Victoria vs market’s 53.3%), Net Expense Ratio (42.2% Victoria vs market’s 44.7%).

Market Share Ranking in Bulgarian Non-Life Market Net Combined Ratio Net Assets

EUR millionNet Profits EUR million

2007 2.4% 12° 100.7% 5.9 0.42008 2.9% 12° 104.2% 5.9 0.02009 3.4% 12° 113.6% 4.4 - 1.62010 3.7% 11° 106.0% 4.5 0.12011 4.0% 10° 102.3% 6.1 0.6

6M 2012 4.9% 9° 91.8% 10.1 1.9

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Source: FSCEUR million

The first 11 non-life insurance companies: gross underwritten premiums as 30.06.2012

2,1%

9.7%

-11.1%

0.0%

-41.9%

12.5%8.1%

16.5%

55.9% -7.7%

37.6%

LEV INS BULSTRAD ARMEECDZI -

Generalinsurance

AllianzBulgaria BUL INS UNIQA

Insurance Euroins VICTORIA OZKInsurance

GeneraliI nsurance

6M 2011 32,9 43,3 38,6 43,6 34,8 41,4 18,5 17,4 13,9 7,8 12,76M 2012 45,3 44,2 42,4 38,7 34,8 24,1 20,8 18,8 16,2 12,2 11,7

0

5

10

15

20

25

30

35

40

45

50

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MTPL: Applied strategy of pruning the non-profitable portion of the portfolio, contrary to competitive market trends witnessed. Introduction of a new underwriting strategy and personalised tariffs, highly innovative for the sector, aimed at improving the portfolio’s risk profile;

Motor Hull: work to improve the portfolio, recovering adequate technical yields following more stringent underwriting policies;

Non-Motor: appreciable increases in underwriting corporate risks.

Gross written premiums from 2007 to 30.06.2012

EUR mln 2007 2008 2009 2010 2011 6M11 6M12MTPL 7.0 8.7 7.5 6.4 7.4 3.0 3.5Motor Hull 4.8 8.2 8.6 6.7 6.0 2.9 3.6Non-Motor 3.5 5.0 6.9 11.5 14.3 8.1 9.2TOTAL 15.4 22.0 23.0 24.6 27.7 13.9 16.2

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Portfolio structure from 2007 to 2011

Victoria had a strong presence of MTPL as opposed to other more profitable Non-Motor lines in 2007.

Victoria was able to increase its Non-Motor lines whilst restructuring its MTPL in 2011.

Specifically it was focused on: Obtaining significant corporate

contracts in Non-Motor lines; Ceding non-profitable brokering

contracts with intermediaries; Redefining contractual agreements

with main official importers of cars; Adopting stringent underwriting

strategies.

Victoria Market

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Sales network and number of employees

Gradual transition from a sales network made up of employees, to an alternative one based on exclusive agents paid on commission.

Improved efficiency of processes and rationalisation of resources.

N° Point of Sales 2007 2008 2009 2010 2011

N° Agencies with employees 68 71 69 65 62

N° Exclusive agencies 7 8 6 17 40

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Premiums per sales line from 2007 to 2011

Almost 50% of premium volumes in agencies were preformed WITHOUT intermediaries in 2011.

This was possible thanks to the introduction of an incentive plan that brought about € 1.1 million in cost savings in 2011.

Headquarters 1.2 2.0 4.3 7.5 9.3Agencies with employees 11.5 15.6 13.3 11.8 12.7Exclusive agents - - - 0.3 0.5Brokers 2.6 4.4 5.3 4.9 5.3TOTAL 15.4 22.0 23.0 24.6 27.7

2011Sales channels 2007 2008 2009 2010

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Net technical indicators from 2007 to 30 June 2012

An improved Net Combined Ratio following the rigorous control on operational costs and the increase of direct sales channels.

Curbing the Net Loss Ratio’s level thanks to the stringent underwriting strategies and prudential reserve strategies.

Improved Net Expense Ratio mainly due to incentivising the direct sales network.

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Net loss ratios from 2007 to 30 June 2012

MTPL: prudential reinforcing of reserves as imposed by the local supervisory authority for all insurance companies and in line with group guidelines;Improved frequency, levering on tariffs, whilst having increased average costs on late claims with bodyinjuries. Motor Hull: diminishing frequency and average costs thanks to decisive actions regarding underwriting and claims settlement.Non-Motor: increased severely bad weather has affected the technical trends for Fire and Agricultural Risks.

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Investments from 2008 to 2011

Total investments have increased from € 14.6 to € 28.9 million.

The composition of the investment portfolio shows a strong tendency towards bank deposits.

With respect to the Group’s de-risking strategy fixed yield bonds have been increased; derivatives and shares have been reduced. Over the years, the company’s portfolio’s risk

profile has improved: more government and sovereign bonds with fewer corporate ones.

Shares traceable to the minority shareholder represent 10% of the gross technical reserves, in line with ongoing agreements concerning asset management.

Average yields on investments are stable and amount to approximately 6.1%. A major component of this are the annual yields on bank deposits at the Corporate Commercial Bank (8.5%).

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FATA Assicurazioni Danni’s capital invested in Victoria AD

In order to continue supporting the development of the company, additional capital investments were made in 2010 and 2012 for a total sum of approximately € 1.9 million.

EUR mln 2007 2008 2009 2010 2011 6M 2012

Booked value 11.2 11.2 11.2 11.9 11.9 13.1

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Profit & Loss history from 2007 to 30 June 2012

Technical Account 2007 2008 2009 2010 2011 6M 2012

Gross Written Premiums 15.4 22.0 23.0 24.6 27.7 16.2Gross Earned Premiums 13.8 20.6 22.0 21.4 24.6 15.1

Gross Total Claims Incurred -5.7 -11.3 -13.3 -12.4 -13.6 -6.7

Acquisition costs - 2.9 - 3.9 - 4.3 - 4.9 - 5,0 - 3.1Administration costs - 4.6 - 5.6 - 5.3 - 5,0 - 5.3 - 2.9Operating Expenses -7.5 -9.4 -9.6 -9.9 -10.3 -5.9

OPERATING RESULTS, GROSS OF REINSURANCE 0.6 -0.2 -0.8 -0.9 0.7 2.4

TECHNICAL REINSURANCE RESULTS -0.7 -0.6 -1.8 -0.2 -1.2 -1.3

OPERATING RESULT, NET OF REINSURANCE -0.1 -0.8 -2.6 -1.1 -0.5 1.0

Non- Technical Account

NON-OPERATING INCOME FROM INVESTMENTS 0.5 0.8 1.1 1.2 1.0 1.0EARNINGS BEFORE TAXES 0.4 0.0 -1.6 0.1 0.5 2.1

Income taxes 0,0 0.0 0.0 0.0 0.0 - 0.2EARNINGS AFTER TAXES 0.4 0.0 -1.6 0.1 0.6 1.9

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Forecast results for the year

Assuming that the P&L Account may still be affected by the Global Financial Crisis, excluding any unpredictable extraordinary factors, the company estimates to close the year with profits over € 2 million.

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