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Results by Geographical Area

The table below shows the development of EV (and its components) and the return on EV in the main areas (represented for reporting purposes by Italy, Germany, France, Central and Eastern Europe, Rest of Europe and Rest of World).

Breakdown of Embedded Value results by geographic area (€ mln)
  Return
on EV		 EV VIF ANAV
    2012 2011 Change 2012 2011 Change 2012 2011 Change
Italy 74.1%
5,836
3.729 56.5% 860  -789 -209.0% 4,976
 4,517
 10.2%
Germany 5.9%  4,178 3.743  11.6% 3,104  2.641  17.5% 1,074
 1,103
 -2.6%
France  4.9%  3,730 3.828  -2.6% 812 1.212 -33.0% 2,918
2,616
 11.5%
Central Eastern Europe  11.8%  1,160 1.002  12.7% 900  823  6.1% 260
178
 43.5%
Rest of Europe  3.6%  4,234 4.177  1.2% 2,203 2.367-7.1% 2,031
1,809 12.1%
Rest of World  19.4%  2,262 2.893  24.4% 1,474 1.978  21.5% 788
914
 30.0%
Total 20.4%  21,400 19.372  16.7% 9,352  8.23324.7% 12,047
 11,138
 11.2%

In Italy, the excellent return on EV arises primarily from the strong narrowing of government bond spreads over swap, which contributes to the strong recovery of VIF (turning positive) and ANAV.

The low aggregate return on EV in Germany, France and Rest of Europe is mainly due to the very low risk free reference rates in the Euro area, which determine negative economic variances on VIF and erode the positive EV operating earnings.

The Central and Eastern Europe and the Rest of the World regions benefit from positive economic variances on EV, which added to positive operating earnings result in good returns on EV.

The following table shows the development of APE, NBV and new business profitability.

Breakdown of New Business Value results by geographic area (€ mln)
  APE NBV Profitability on APE
  2012 2011 change 2012 2011 change 2012 2011 change
Italy 1,637 1.715 -4.5% 281 374  -24.7% 17.2% 21.8% -4.6 pts
Germany   917 908  1.0%   186 166  11.9% 20.2% 18.3%  +2.0 pts
France   944 939 0.5%    120 128  -6.1%   12.8% 13.7%  -0.9 pts
Central Eastern Europe   187 147 23.6%    59 52 8.3% 31.4% 35.8%  -4.4 pts
Rest ofEurope   622 657 -5.5%    129 134  -3.8% 20.8% 20.4%  +0.4 pts
Rest of World   201 421  0.2%   88 121 -9.4% 44.1% 28.8%  +15.2 pts
Total   4,508 4.787 -1.4% 863 976 -9.5% 19.2% 20.4%  -1.2 pts

On a comparable basis, APE slightly increases in Germany (+1.0%, despite the drop in the health business), in France (+0.5%, with a positive development in pension business) and in the Rest of World region (+0.2%). The significant increase in Central and Eastern Europe (+23.6%) is mainly due to the increase of annual premiums (+37.1%), strongly affected by the one-off production correlated to regulatory changes affecting the pension funds in Czech Republic.

APE decreases in Italy (-4.5%, on account of the annual premium contraction - which however still represent the predominant part of the APE of the country) and in the Rest of Europe area (-5.5%).

In aggregate, APE reports a slight decrease (-1.4%).

New business margin on APE reduces at Group level by 1.2 percentage points to 19.2%, mainly as a consequence of the drop in Italy, due to the greater proportion of traditional saving business suffering more from lower reference rates. The positive profitability development in Germany is driven by the reduction of the offered guarantees and by the inclusion of look-through profits emerging in the distribution network. The decrease of profitability in France is mainly due to the lower margins of the one-off traditional single premiums written to retain the portfolio after the peak of surrenders registered in the first part of the year. Central Eastern Europe maintains an excellent level of profitability, despite the slight decrease due to the greater weight of less remunerative pension business. The Rest of Europe area reports a stable profitability, and the Rest of World margins benefit from the perimeter variation and the positive impact of lower interest rates on the protection business.