Insurance subsidiaries

The results of the two insurance companies of the Group (Carige Assicurazioni SpA and Carige Vita Nuova SpA) are presented below, prepared in accordance with the applicable provisions of the Italian Civil Code and with the specific provisions for the insurance industry in Italy (Leg. Decree 175/1995, Leg. Decree 174/1995, Leg. Decree 173/1997, Leg. Decree 209/2005, ISVAP Provision 735/1997).

It should be noted that said results are different from those reported in the section "Insurance activities" of this Report, where the information gathered from the so called reporting packages is prepared by the companies based on the joint provisions of the Measure of the Bank of Italy no. 262 dated 22 December 2005, of the ISVAP Regulation no. 7 dated 13 July 2007 and of the relevant guidelines of the Parent Bank.

The results of the insurance companies were heavily influenced by the negative performance of the securities portfolio as a result of the unprecedented anomalies in the operational mechanisms of the financial markets: the liquidity deficiency of the main financial operators which affected the whole world involved, for the bond market in particular, exceptional irregularities brought about by the absence of purchasers and increased volatility of prices due to the considerable widening of the bid/ask spreadⁱ, which was subsequently coupled with refinancing problems on the part of the main financial operators.

Faced with these exceptional factors that have pervaded the market for more than a year, more intense in the second half of 2008, it is commonly believed that bond prices no longer represent the realisation value and that the associated mark to marketⁱ figure is not significant due to the abovementioned events.

The gradual deterioration in the global financial markets is considered to represent a "rare circumstance" which has allowed the immediate approval, by the competent international Authorities, of some regulatory amendments.

The regulatory amendments approved, first by the IASB and then by the European Commission on 15 October 2008, allow companies which draw up their financial statements according to international accounting standardsⁱ to avail themselves of reclassifications applied retrospectively, i.e. from 1 July 2008.

As with the solution adopted for the financial statements prepared using international accounting standardsⁱ, Insurance Companies are permitted, following regulatory changes to Decree Law no. 185 of 29 November and the subsequent issue of Regulation no. 28 by ISVAP on 17 February 2009, to depart from the principle of using market data to assess the short-term securities portfolio, making it possible, having verified the consistency of the structure of commitments toward the insured and the maturity of the relative amounts, to use values recorded in the half-yearly report as at 30 June 2008, barring long-term losses.