Debt and liquidity

Debt

In accordance with the IAS/IFRS managerial model used by the Generali Group, consolidated liabilities were split into two categories:

  • liabilities linked to operating activities, defined as all the consolidated financial liabilities related to specific balance sheet items from the consolidated financial statements. This category also includes liabilities stated by the insurance companies against investment contracts and liabilities to banks and customers of banks belonging to the Group;
  • liabilities linked to financing activities, including the other consolidated financial liabilities, among which subordinated liabilities, bonds issued and other loans obtained. This category includes, for example, liabilities incurred in connection with a purchase of controlling interests.

Total liabilities were as follows:

Group debt

(€ million)31/12/201831/12/2017
Liabilities linked to operating activities 27,009 26,199
Liabilities linked to financing activities 11,532 11,816
Subordinated liabilities 8,124 8,379
Senior bonds 2,983 2,980
Other non-subordinated liabilities linked to financing activities 425 457
Total 38,540 38,015

The reduction in the Group’s liabilities linked to financing activities was mainly due to the redemption of two subordinated bonds issued in 2008 for a nominal amount of € 250 million through the exercise of the early redemption option in November and December 2018.

The liabilities linked to operating activities posted an increase due mainly to the increase in the deposits of the Group banks.

The weighted average cost of liabilities linked to financing activities at 31 December 2018 stood at 5.66%, down from 5.71% at 31 December 2017. The weighted average cost reflects the annualized cost of financial debt, considering the nominal amounts at the reporting date and the related transactions of currency and interest rate hedging.

Interest expenses on total liabilities were detailed below:

Interest expenses

(€ million)31/12/201831/12/2017Change
Interest expense on liabilities linked to operating activities 333 337 -1,1%
Interest expense on liabilities linked to financing activities 666 673 -1,0%
Total(*) 1,000 1,010 -1,0%

(*) Without taking into account the interest expenses on liabilities linked to operating activities of the real estate development companies, classified among the other expenses, as well as the interest on deposit under reinsurance business accepted, deducted from the related interest income.

Details on the liabilities linked to financing activities

Details on subordinated liabilities and senior bonds

(in milioni di euro)31/12/201831/12/2017
Nominal valueBook valueAccrued 
interest expenses
Average
weighted cost %*
Nominal valueBook valueAccrued
interest expenses
Average
weighted cost %*
Subordinated liabilities 8,162 8,124 541 6,18% 8,417 8,379 547 6,22%
Senior bonds 3,000 2,983 125 4,19% 3,000 2,980 125 4,19%
Total 11,162 11,106 11,417 11,359

(*) The weighted average cost reflects annualized cost of financial debt, considering the outstanding debt at the reporting date and the related activities of currency and interest rate hedging.

Details of issues and redemptions of subordinated liabilities and senior bonds

(€ million)31/12/201831/12/2017
 IssuancesRedemptionsIssuances net
of redemptions
IssuancesRedemptionsIssuances net
of redemptions
Subordinated liabilities 0 250 -250 0 869 -869
Senior bonds 0 0 0 0 13 -13
Total 0 250 -250  0 882 -882 

Details on main issues

Subordinated liabilities

Principali emissioni subordinate

 CouponOutstanding (*)CurrencyAmortised cost (**)Issue dateCall dateMaturity
Assicurazioni Generali 6.27% 350 GBP 388 16/06/2006 16/02/2026 Perp
Assicurazioni Generali 6.42% 495 GBP 549 08/02/2007 08/02/2017 Perp
Assicurazioni Generali 7.24% 350 EUR 350 04/03/2009 04/03/2019 Perp
Assicurazioni Generali 8.50% 350 EUR 350 06/03/2009 06/03/2019 Perp
Assicurazioni Generali 9.00% 50 EUR 50 15/07/2009 15/07/2019 Perp
Assicurazioni Generali 10.13% 750 EUR 748 10/07/2012 10/07/2022 10/07/2042
Assicurazioni Generali 7.75% 1,250 EUR 1,248 12/12/2012 12/12/2022 12/12/2042
Assicurazioni Generali 4.13% 1,000 EUR 991 04/02/2014 n,a, 04/05/2026
Assicurazioni Generali 4.60% 1,500 EUR 1,341 21/11/2014 21/11/2025 Perp
Assicurazioni Generali 5.50% 1,250 EUR 1,243 27/10/2015 27/10/2027 27/10/2047
Assicurazioni Generali 5.00% 850 EUR 841 08/06/2016 08/06/2028 08/06/2048

(*) In currency million.
(**) In € million.

This category also includes unlisted subordinated liabilities issued by Assicurazioni Generali and other subsidiaries. The remaining subordinated liabilities are mainly issued by Austrian subsidiaries for approximately € 25 million at amortized cost.

In November and December 2018, two subordinated bonds issued by the Group in 2008 were redeemed for a nominal amount of € 250 million using available cash.

Senior bonds

Main senior bonds issues

IssuerCouponOutstanding (*)CurrencyAmortised cost (**)Issue dateMaturity
Assicurazioni Generali 5.13% 1,750 EUR 1,733 16/09/2009 16/09/2024
Assicurazioni Generali 2.88% 1,250 EUR 1,247 14/01/2014 14/01/2020

(*) In currency million.
(**) In € million.

The senior bonds were essentially unchanged

Detail on debt maturity

Detail on debt maturity

 

The average duration at 31 December 2018 stood at 5.34 years compared to 6.22 years at 31 December 2017.

Revolving credit facilities

Assicurazioni Generali has revolving credit facilities for a total amount of € 4 billion. They represent, in line with best market practice, an efficient tool to protect the Group’s financial flexibility in case of adverse scenarios.
The two facilities syndicated with a value of € 2 billion each, have a duration of 3 and 5 years.
The revolving credit facilities also present innovative features in terms of sustainability: their cost is linked to both the targets on green investments and the progress made in sustainability. This transaction further strengthens Generali’s commitment to sustainability and the environment, as set out in the Charter of Sustainability Commitments and in the climate change strategy. This will only impact the Group’s liabilities linked to financing activities if the facilities are drawn down.

Liquidity

Cash and cash equivalent

(€ million)31/12/201831/12/2017
Cash at bank and short-term securities 5,553 5,738
Cash and cash equivalents 115 96
Cash and balances with central banks 1,029 593
Money market investment funds unit 4,367 5,560
Other 50 -351
Cash and cash equivalents 11,114 11,635

Liquidity remained broadly stable, reaching € 11,114 million, in line with its seasonal trend and in the presence of unfavourable opportunities for reinvestment of profits generated, especially in the last part of the year.