3 - Insurance provisions

  Direct Insurance Accepted reinsurance
(€ million) 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Non-life insurance provisions (*) 32,970 33,189 1,506 1,460
Provisions for unearned premiums 6,417 6,154 168 137
Provisions for outstanding claims 26,148 26,650 1,331 1,319
Other insurance provisions 405 386 6 4
of which provisions for liability adequacy test 11 7 0 0
Life insurance provisions (*) 299,602 288,208 2,292 2,133
Provisions for outstanding claims 4,822 4,487 862 803
Mathematical provisions 231,673 231,588 1,225 1,085
Provisions for policies where the investment risk is borne by the policyholders and provisions for pension funds 41,048 46,804 20 46
Other insurance provisions 22,060 5,330 185 199
of which provisions for liability adequacy test 731 1,175 71 92
of which deferred policyholder liabilities 4,000 -12,185 0 0
Total 332,572 321,398 3,798 3,593

((*) After the elimination of intra-group transactions between segments.

The decrease in non-life insurance provisions (-0.5% compared to 2011) was entirely attributable to the development of claims provisions, whereas premium provisions increased following the increase of production observed during the period.

In the life segment insurance provisions increased by 4.0%; this trend is determined by the improving of financial markets, that determined both the increase of traditional business and unit-linked provisions. On equivalent terms (excluding effects due to the disposal of Migdal Group) life insurance provisions increased by 9.7%.

The overall total of the other life insurance provisions included both the provision for profit sharing and premium refunds, which amounts to € 7,365 million compared to € 7,213 million in 2011, and the ageing provisions for life segment, which amount to € 9,630 million compared to € 9,076 million in 2011.

Provisions for outstanding claims
  Gross direct insurance
(€ million) 31.12.2012 31.12.2011
Motor 11,315 11,590
Non motor 14,833 15,059
Personal and commercial lines 12,391 12,305
Accident/Health (*) 2,443 2,754
Total 26,148 26,650

(*)Life segment includes health insurance with life features

The 43.3% of the gross direct claims provisions referred to the motor business that was in line with last year (43.5%). In the non-motor business, the personal and commercial lines weighted for 83.5%.

Insurance provisions and financial liabilities related to policies of the life segment
  Net
(€ million) 31.12.2012 31.12.2011
Insurance contracts 194,721 207,312
Investment contracts with discretionary participation feature 87,744 80,165
Total insurance provisions 282,464 287,478
Investments contracts fair valued 12,650 11,563
Investments contracts at amortised cost 4,947 4,107
Total financial liabilities 17,597 15,670
Total 300,061 303,148

Total insurance provisions include the following items: mathematical provisions and provisions for policies where the investment risk is borne by policyholders and for pension fund net of reinsurance, which amounted to € 231,931 million and € 40,907 million, respectively; net ageing provisions for life segment, which amounted to € 9,627 million and were accounted for in other insurance provisions of the life segment.

The policies with significant insurance risk accounted for 64.9% of the total life portfolio (68.4% in 2011), while the investment contracts with discretionary participation feature account for 29.2% (26.4% in 2011).

The investment contracts within the scope of IAS 39 accounted for 5.9% compared to 5.2% in 2011. They are mainly unit/index linked policies without significant insurance risk.

Mathematical provisions and ageing for life segment
  Gross direct amount
(€ million) 31.12.2012 31.12.2011
Carrying amount as at 31 December previous year 240,661 234,246
Foreign currency translation effects 99 -35
Premiums and payments -2,272 -2,593
Interests and bonuses credited to policyholders 8,820 9,186
Change of the management component 33 -23
Transfer to Non-current assets or disposal groups classified as held for sale 0 0
Acquisitions, disinvestments and other movements -6,041 -120
Carrying amount as at 31 December current year 241,299 240,661

Interest and bonuses credited to policyholders include the attribution of financial returns.

The impact of acquisitions, disinvestments and other movements include the disposal of Migdal Group.

Provisions for policies where the investment risk is borne by policyholders and for pension funds
  Lavoro diretto lordo
(€ million) 31.12.2012 31.12.2011
Carrying amount as at 31st December previous year 46,804 49,386
Foreign currency translation effects 303 -384
Premiums and claims -199 1,385
Interests and bonuses credited to policyholders 4,402 -3,160
Acquisitions, disinvestments and other -10,262 -423
Transfer to Non-current assets or disposal groups classified as held for sale 0 0
Carrying amount as at 31st December current year 41,048 46,804

The impact of acquisitions, disinvestments and other movements include the disposal of Migdal Group. Net of this impact, the development of provisions highlights the increase in value of assets backing unit/index linked policies due to financial markets movements.

Deferred policyholders liabilities
(€ million)   31.12.2012 31.12.2011
Carrying amount as at 31 December previous year   -12,185 -4,362
Foreign currency translation effects   3 5
Change of the period   16,185 -7,829
Acquisitions and disinv estments   -2 0
Carrying amount as at 31 December current year   4,000 -12,185

The development of the period was mainly due to the significant recovery in value recorded mainly in the Group bond portfolio classified as available for sale instruments.