1

Statutory Annual Report& Account

FY 2002

107th YEAR OF BUSINESS

2

Profit & Loss highlights(Amounts in € millions)

1998 1999 2000 2001 2002

Total gross premiums written 920 1,442 2,768 3,351 3,731

Gross premiums written – non-life direct & indirect business 452 525 756 1,053 1,267

Gross premiums written – life direct & indirect business 468 917 2,012 2,298 2,464

Net premiums 779 1,291 2,559 3,075 3,428

Net investment income 131 91 145 173 169

Class III (unit-/index-linked life) income and gains net of charges 24 33 -122 -59 84

Other administrative costs 33 41 51 76 79

Consolidated net income 22 26 47 53 63

Group net income 22 25 44 46 57

Balance Sheet highlights(Amounts in € millions)

1998 1999 2000 2001 2002

Investments 2,153 3,239 6,699 8,644 11,075

Non-life and life technical provisions 2,074 3,033 6,418 8,495 10,972

Non-life technical provisions (premiums & claims) 753 879 1,348 1,608 1,957

Life technical provisions (actuarial & Class D) 1,321 2,154 5,070 6,887 9,015

Net shareholders’ equity 383 541 902 966 956

Group net equity 374 531 885 896 907

Minority shareholders’ interests 9 10 17 70 49

Performance/financial indicators and other data1998 1999 2000 2001 2002

Performance/financial indicators

Investments/Gross premiums written (%) (*) 234 225 242 258 297

Other administrative costs/gross premiums written (%) 3.59 2.85 1.84 2.30 2.12

Premiums per employee (in € millions) 1.8 2.6 3.0 3.5 3.7

Other data

Number of employees 519 557 925 960 998(**)

Number of agencies 497 546 900 974 1,024

Number of distributor bank branches 1,539 2,066 2,653 2,717 2,748

Number of financial advisors 132 337 511 613 895

Number of brokers 112 128 120 130 142

Market share (%) 1.75 2.28 4.27 4.38 4.37

Parent Company dividend (in euro) 0.57 0.62 0.70 0.78 1

(*) Percentages rounded down or up to the nearest unit(**) Calculated on a full-time equivalent (FTE) basis

Five-year trend of key indicators

Consolidated performance highlights

Key events in the year

• Today the CattolicaGroup comprises 12insurance companies –i.e. the parentcompany, 4 non-lifeinsurers, and 7 lifeinsurers – and 3service companies.

• The Cattolica Groupis ranked in sixthposition in the Italianinsurance market, witha market share of4.37%.

• The Group’s marketshare in the lifesegment is 4.65% and3.9% in the non-lifesegment.

• The Group achieves itssales coverage via twomain channels – agents andbancassurance.

• As at December 31st 2002the Group had 1,024agencies, of which 60.55%in Northern Italy, 28.81%in Central Italy, and10.64% in Southern Italy.

• There are 2,748 bankbranches (including 100Banca Popolare di Novarabranches) selling lifeinsurance products.

• 895 financial advisors sellGroup companies’ products.

• The Group does businesswith 142 brokers.

• December 2002: foundation of the real-estatecompany Cattolica Immobiliare (100% ownedby Group companies) following spin-off ofCattolica’s property division.

• November 2002: completion of acquisition of50% of Eurosav, an insurance company active inthe life business via a diversified sales network.

• October 2002: start of the operations forconferment on the parent company of theoperating divisions of the subsidiaries VeronaAssicurazioni, Cattolica Aziende, and CattolicaOn Line.

• October 2002: foundation, jointly with Cassa diRisparmio di San Miniato, of a new lifeinsurance company – San Miniato Previdenza –66% owned by Cattolica.

• October 2002: acquisition from NationalWestminster International Holdings B.V. of thecompany RBS Asset Management SGR –specialised in asset management for institutionalinvestments – the name of which was thenchanged to Verona Gestioni SGR.

• September 2002: foundation of Axa-CattolicaPrevidenza in Azienda, a company specialised incorporate and employee benefits, 50/50 ownedby Cattolica and Axa.

THE GROUPSALES SYSTEM

CORPORATE REORGANISATION -ACQUISITIONS AND NEWCOMPANIES

THE CATTOLICAGROUP -ITS MARKETSHARE

3

4

1,500

900

300

0

600

1,200

1998 1999 2000 2001 2002

756

525452

1,2671,053

NON-LIFE PREMIUMS FORDIRECT AND INDIRECT BUSINESS(Euro/mn)

PREMIUMS

3,000

1,500

500

0

1,000

2,000

2,500

19991998 2000 2001 2002

2,4642,298

468

917

2,012

LIFE PREMIUMS FORDIRECT AND INDIRECT BUSINESS(Euro/mn)

PREMIUMS

4,000

3,000

1,500

0

2,000

2,500

500

1,000

3,500

19991998 2000 2001 2002

9201,442

2,768

3,7313,351

TOTAL PREMIUMS FORDIRECT AND INDIRECT BUSINESS(Euro/mn)

PREMIUMS

12,000

3,000

0

6,000

9,000

19991998 2000 2001 2002

6,506

8,613

11,102

3,0762,101

NON-LIFE AND LIFEGROSS TECHNICAL RESERVES FOR DIRECT AND INDIRECT BUSINESS(Euro/mn)

RESERVES

Consolidated indicators

5

0

2,000

4,000

6,000

8,000

10,000

12,000

19991998 2000 2001 2002

16577 253

1,6582,153

95166

361

2,6173,239

167

278808

5,4466,699

324257831

7,232

8,644

339235997

9,504

11,075

INVESTMENTS(Euro/mn)

1,000

800

200

0

400

600

19991998 2000 2001 2002

541

902966 956

383

NET SHAREHOLDERS’ EQUITY(Euro/mn)

SHARE CAPITAL,EQUITY RESERVESAND NET PROFIT

700

400

100

0

200

300

600

500

19991998 2000 2001 2002

188

637

458

289206

CAPITAL AND FINANCIAL INCOME(Euro/mn)

TOTALINCOME

75

25

15

35

45

65

55

19991998 2000 2001 2002

2226

47

63

53

NET INCOME(Euro/mn)

NET INCOME

Others *

Land & Buildings

Equity

Fixed-Income

Total

* inclusive of banks, depositaccounts, mortgages and loans

Mission

The main objectives that Cattolica intends to

pursue are to:

Maintain its strong insurance focus, which has

enabled the Company to achieve strong

technical expertise and the ability to provide a

highly qualified service;

Aim for customer satisfaction via a customised

service, consisting of assistance and advisory

services, very close to and accessible by

customers;

Preserve asset integrity in order to consolidate

and develop the business;

Increase profitability to create value for

shareholder members and investors;

Promote the ethical values for which the Group

has historically been a vehicle.

This is a translation into English from the original in Italian, which alone is to beused for all legal purposes. The original text is at the disposal of the generalpublic at the registered place of business of CATTOLICA and at Borsa ItalianaS.p.A. The responsibility for the use of the information in the English languageversion is understood, within the maximum limits allowed by the law, asexclusively borne by those who decide to use it for any use, purpose or aimwhatsoever. CATTOLICA shall not, however, be held responsible for any direct orindirect loss or damage, claimed by anybody and for whatever reason followingthe use of incomplete or inaccurate information.

Disclaimer

gg

Table of contents

Group structure 13

Notice of Shareholders’ Meeting 16

Statutory governance bodies 19

Powers of governance bodies and powers delegated 21

Management report 25

Balance sheet and income statement 109

Notes to accounts 137

Part A - Accounting policies 141

Part B - Information on balance sheet 157

and income statement

Part C - Other information 205

Cash-flow summary 209

Property assets 211

Securities portfolio 215

Appendices to Notes to Accounts 255

Solvency margin charts 329

Charts showing assets covering technical provisions 349

9

10

Summary index oftables and charts

Table

Table 1 - Results gross and net of property spin-off 28

Table 2 - Summary data 29

Table 3 - Employees and sales network 30

Table 4 - 2003-2005 business plan - key consolidated

results expected and CAGR 41

Table 5 - P&L highlights - Italian insurance sector 2001 52

Table 6 - Balance-sheet highlights - Italian insurance sector 2001 52

Table 7 - FY2002 premiums 59

Table 8 - Investments - Breakdown 81

Table 9 - Investment income - Detail 85

Table 10 - Intercompany transactions 96

Table 11 - Key data of Group insurance companies 100

Table 12 - Intangible assets 159

Table 13 - Intangible assets - gross annual amortization 159

Table 14 - Intangible assets - cumulative amortization 159

Table 15 - Other long-term deferred costs 160

Table 16 - Land and buildings 162

Table 17 - Land and buildings - gross annual depreciation 162

Table 18 - Land and buildings - cumulative depreciation 162

Table 19 - Equity investments - Value summary 164

Table 20 - Summary data of subsidiaries 168

Table 21 - Summary data of associated companies 169

Table 22 - Summary data of other significant equity investments 170

Table 23 - Other financial investments - Breakdown 173

Table 24 - Technical provisions - Reinsurance amount 179

Table 25 - Receivables 179

Table 26 - Tangible assets and stocks 181

Table 27 - Tangible assets and stocks - gross annual depreciation 181

Table 28 - Tangible assets and stocks - cumulative depreciation 181

Table 29 - Other assets 182

Table 30 - Accrued income and prepayments 182

Table 31 - Net shareholder’s equity 183

11

Table 32 - Taxes under article 105 of Italian Income Taxes

Consolidated Text (TUIR) 184

Table 33 - Breakdown of technical provisions 184

Table 34 - Provisions for premium fractions - Direct business 185

Table 35 - Provisions for premium fractions - Indirect business 186

Table 36 - Provisions for risks and charges 188

Table 37 - Debt (payables) - Breakdown 189

Table 38 - Accrued employee severance indemnity provision 189

Table 39 - Other payables - Breakdown 190

Table 40 - Other liabilities - Breakdown 191

Table 41 - Guarantees, commitments and memorandum accounts 192

Table 42 - Other income - Breakdown 195

Table 43 - Other charges - Breakdown 196

Table 44 - Income taxes 197

Table 45 - Solvency margin 207

Table 46 - Technical provisions to be covered 207

Table 47 - Assets providing coverage 208

Charts

Chart 1 - Shareholdings owned by directors and statutory auditors 90

Chart 2 - Directors and statutory auditors held by directors

in listed and other unlisted companies 92

Chart 3 - Non-current (investment) securities 175

Chart 4 - Assets in Class C and Class D derivatives 198

Chart 5 - Remuneration of directors and statutory auditors 202

GroupStructure

Notes:Il Duomo owns 55.56% of Sulda and 50% of Cosmi.

99.97%

98%

100%

66%

2%

Cattolica On Line S.p.A.

Cattolica Aziende S.p.A.

VeronaAssicurazioni S.p.A.

Il DuomoAssicurazioni S.p.A.

96.49%

83.71%

68%

Axa Cattolica Previdenzain Azienda S.p.A.

San MiniatoPrevidenza S.p.A.

Eurosav S.p.A.

Lombarda Vita S.p.A.

BPV Vita S.p.A.

Risparmio &Previdenza S.p.A.

Duomo Previdenza S.p.A.

50%

50.1%

50%

50%

2%

2%

Legenda

Others

Banking

Services

Non-life Insurance

Life Insurance

14

99.9%

94.01%

97%

51%

98%

25%

20.12%

20%Prisma S.r.l.

NuovaBanca Mediterranea S.p.A.

Cassa di Risparmiodi San Miniato S.p.A.

Sopass S.r.l.

VP ServiziAssicurativi S.r.l.

CattolicaImmobiliare S.p.A.

Verona Gestioni SGR

diCA S.p.A.3%

2%

49%

1%

0.1%

15

Notice of Shareholders’ Meeting

Shareholders are invited to attend an Ordinary & Extraordinary Meeting ofShareholders at the company’s registered offices in Lungadige Cangrande 16,Verona (Italy), at 4 pm on Thursday, April 24th 2003 on first call or, on secondcall, if the legal quorum were not to be met on that date, c/o the premises of EnteAutonomo delle Fiere di Verona, Viale del Lavoro 8, Verona at Pavilion 38entering from Gate “C2” located in Via Belgio, at 9 am on Saturday, April 26th2003, to discuss and pass resolutions on the following

AGENDA

Ordinary meeting

1. Approval of FY2002 financial statements and accompanying annual reportand consequent decisions;

2. Appointment of directors;3. Appointment of the Statutory Auditors’ Committee and of its President and

determination of relevant emoluments;4. Conferment of assignment for independent auditing of statutory and

consolidated year-end financial statements and of the statutory and consolidatedfirst-half interim reports for the 3-year period 2003, 2004 and 2005.

Extraordinary meeting

1. Proposal to increase share capital by € 12,924,066 via allocation to capitalof part of the extraordinary reserve available with proportional assignment toshareholders of one free share of the nominal value of € 3.00 for every tenshares owned. Relevant and consequent decisions.

The directors’ reports and the further documentation envisaged concerningagenda items will be lodged at the company’s registered HQ and c/o BorsaItaliana SpA within the terms laid down in current regulations.

Shareholders are reminded that, by law and according to company by-laws,attendance of shareholders’ meeting is open to those shareholders who havebeen registered in the Shareholders’ Register for at least three months andpossess the relevant certification issued by intermediaries belonging to thecentralised securities management system where their securities are lodged asper Article 85 of Italian Legislative Decree no. 58 dated February 24th 1998 andCONSOB (Italian listed corporate and stock-market surveillance commission)resolution no. 11768 dated December 23rd 1998.

Under the company by-laws, shareholders registered in the Shareholders’Register after April 21st 2001 may attend the shareholders’ meeting oncondition that the certification indicated above demonstrates ownership of atleast 100 (one hundred) shares.

16

Shareholders holding shares that have not yet been dematerialised pursuant tothe above-mentioned CONSOB resolution must deliver the share certificatespromptly to a licensed intermediary for execution of the requireddematerialisation process and release of the relevant certification.

Pursuant to Article 45 of the company by-laws, the Statutory Auditors’Committee will be elected on the basis of lists submitted by shareholders, whichmust indicate five candidates identified with consecutive numbers.

Each list must be submitted by at least 250 shareholders eligible to vote at theShareholders’ Meeting that elects the Committee and who document the saidright as per current regulations.

Each shareholder can take part in the submittal of just one list. If a shareholderdoes not observe this rule, he/she will not count for the submittal of any list. Thesignature of each submitting shareholder must be accompanied by a photocopyof a valid identity document.

Each candidate can present him/herself in just one list and will otherwisebecome ineligible.

The lists must be lodged at the company’s registered offices at least fifteen daysbefore the date fixed for the Shareholders’ Meeting on first call.

Together with each list, within the deadline for lodging the latter at thecompany’s registered offices, declarations must be lodged – or otherwise causeall persons on the list to become ineligible – in which the individual candidatesaccept their candidature and testify, under their own responsibility, to theabsence of causes of ineligibility or incompatibility, as well as to existence ofthe requisites laid down by current regulations and by the company by-laws inorder to hold office as a statutory auditor.

Each person eligible to vote can only vote for one just.

Whilst compliance with statutory provisions holds good, for the sake of greaterclarity and parity of treatment and in order to facilitate exercise of the right tosubmit lists, the Board of Directors has decided to make the operationalprocedures to be followed in performing relevant activities explicit, lodging theprocedures at the company’s registered offices.

Shareholders are invited to examine the company by-laws and theaforementioned operating procedures so as to be fully informed as regardsappointment of the Statutory Auditors’ Committee.

The Chairman(Giuseppe Camadini)

17

19

BOARD OF DIRECTORS

Chairman dott. GIUSEPPE CAMADINI*

Vice President avv. ERMANNO RHO*

Vice President avv. DANILO ANDRIOLI*

Secretary dott. ing. GIUSEPPE NICOLÒ*

Directors dott. PIERLUIGI ANGELIavv. LUIGI BARAGGIA*p.a. PAOLO BEDONI*on. dott. CARLO CASINIprof. dott. ANGELO FERROdott. STEFANO GNECCHI RUSCONEprof. dott. FELICE MARTINELLIdott. arch. GIUSEPPE MARTINENGOdott. GAETANO MIGLIARINIdott. CARLO ALBERTO PELLICIARDIprof. dott. GIORGIO PETRONIavv. LUIGI RIGHETTIavv. NICOLA ROTOLOdott. GIORDANO VERONESI

STATUTORY AUDITORS’ COMMITTEE

President dott. FRANCO GIAROLLI

Permanent statutory prof. dott. ALESSANDRO LAIauditors dott. GIOVANNIMARIA SECCAMANI MAZZOLI

Substitute statutory dott. GABRIELE ALBERTINIauditors dott. GIOVANNI PADOVANI

GENERAL MANAGEMENT

General Manager dott. EZIO PAOLO REGGIADeputy General Manager dott. GIANCARLO BATTISTI

sig.ra MARIA PAOLA BOSCAINI

* The directors whose names are asterisked form the Executive Committee.

Statutory governance bodies

20

BOARD OF DIRECTORS

Chairman dott. GIUSEPPE CAMADINI*

Vice President avv. ERMANNO RHO*

Vice President avv. DANILO ANDRIOLI*

Secretary dott. ing. GIUSEPPE NICOLÒ*

Directors dott. PIERLUIGI ANGELIavv. LUIGI BARAGGIA*p.a. PAOLO BEDONI*on. dott. CARLO CASINIprof. dott. ANGELO FERROdott. STEFANO GNECCHI RUSCONEprof. dott. FELICE MARTINELLIdott. arch. GIUSEPPE MARTINENGOdott. GAETANO MIGLIARINIdott. CARLO ALBERTO PELLICIARDIprof. dott. GIORGIO PETRONIavv. LUIGI RIGHETTIavv. NICOLA ROTOLOdott. GIORDANO VERONESI

STATUTORY AUDITORS’ COMMITTEE

President dott. FRANCO GIAROLLI

Permanent statutory prof. dott. ALESSANDRO LAIauditors dott. GIOVANNIMARIA SECCAMANI MAZZOLI

Substitute statutory dott. MARCO BRONZATOauditors dott. FRANCESCO PASSERINI GLAZEL

GENERAL MANAGEMENT

General Manager dott. EZIO PAOLO REGGIADeputy General Manager dott. GIANCARLO BATTISTI

sig.ra MARIA PAOLA BOSCAINI

* The directors whose names are asterisked form the Executive Committee.

Statutory governance bodies

As result after the Shareholders’ Meeting on April 26th 2003.

21

Powers of statutory governance bodiesand powers delegated

In line with the recommendation expressed by CONSOB with circular no.97001574 dated February 20th 1997, below we indicate the powers andmandates conferred upon Directors, the Executive Committee and GeneralManagement.

This document indicates membership of the company’s Board of Directors,specifying the offices held by each director within the company.

The Management Report also shows the offices of director or statutory auditorheld by our directors in other companies listed on Italian and/or foreignregulated markets, in financial companies, banks, insurance companies, orcompanies of a significant size. The latter means those companies that matchany one of the following criteria: (i) more than 500 employees, (ii) share capitalexceeding € 25 million, and (iii) annual sales exceeding € 75 million. In thecase of companies mandatorily obliged to draw consolidated year-end financialstatements, the parameters mentioned refer to consolidated figures.

The Board of Directors, based on an outright majority of attendees’ votes,appoints from among its members, individually, the Chairman, Senior VicePresident, another Vice President, and a Secretary, who hold office until the endof their term of office as directors and can be re-elected. Together with two otherdirectors appointed in the same manner, they form the Executive Committee.

Pursuant to Article 38 of the Company by-laws, the powers of companysignature are held by the Chairman and, in his absence, by the two VicePresidents on an individual basis.The Board of Directors, however, can confer individual powers of signature alsoon other directors or also on other persons designated on a case-by-base basis.

For acts of ordinary administration the powers of company signature pertain tothe General Manager. The latter may delegate these, on an individual basis, toone or more managers designated by the Board of Directors, and alsocollectively as powers of joint signature, to other managers or staff employees,all designated by the Board of Directors.

The General Manager can also delegate signature of policies on an individualbasis to managers, staff employees or agents of the company.

Powers of representation of the company in the courts pertain on a disjoinedbasis to the Chairman, Vice Presidents, and General Manager.

The General Manager is also responsible for deciding and executing acts ofordinary and extraordinary administration reflecting all operations undertakenwith the Deposits & Loans Bank (Cassa Depositi & Prestiti) and in relation tothe Public Debt. For acts of ordinary administration execution can also beundertaken by managers, delegated with powers of company signature in thesame way as envisaged in Article 38.

22

Under Article 42 of the company by-laws, the Board of Administration decideson all matters – of both ordinary and extraordinary administration – notexpressly reserved as being the prerogative of shareholders. Pursuant to thesame article, the Board determines the powers of the Executive Committee.

As regards this, the Board of Directors has delegated the Executive Committeefor matters concerning investments and disinvestments of company resources(establishing the investment limits for individual operations); appointment ofsupervisors and office staff; creation of agencies and delegations and theappointment and revocation of agents; granting of interest-bearing loans toagents; plaintiff or defendant legal action; purchases of real estate assets; issuesof funds for economic/social purposes and charity; and conventions to be signedwith public or private entities.

The Board of Directors has delegated the General Manager and Deputy GeneralManagers with the power of suing the perpetrators of illegal activitiesundertaken to the detriment of the company.

As regards the power to handle investments of company capital and ofunderwriting and equity reserves, the Board of Directors has established thequantitative and qualitative limits for execution of mandates for separatemanagement of financial investments covering underwriting reserves(Framework Resolution). With the same resolution the Board of Directorsdelegated powers to the Executive Committee for the purchase of financialinstruments designed to cover commitments connected with the issue of index-linked and unit-linked products, establishing operational approaches, controls,and relevant rules.

As specifically concerns abnormal and/or unusual transactions, on February28th 2003 the Board of Directors – also based on the guidelines indicated byCONSOB – passed a specific resolution based on which:• the Board of Directors has been assigned decision-making powers concerning

abnormal and/or unusual transactions that, generally speaking, are believed tobe such as to – by virtue of their entity/importance, the nature of counterparts,and the subject of the transaction – also in relation to ordinary management,method of determination of the price of transfer and timing of the event –close to fiscal year-end – cause problems concerning the accuracy/completeness of year-end financial statements, conflict of interests, and thesafeguarding of corporate assets;

• in assessing the existence or otherwise of the above conditions, referencewill be made, as regards entity/importance to the transaction’s incidence(also calculated using pro-forma methods or estimates) on (1) totalconsolidated assets, (2) consolidated net profit before extraordinary itemsand tax, and (3) consolidated net equity in excess of 5%. As regardsdetermination of the price of transfer, reference will be made to referencemarkets and/or in any case prices and/or indicators accepted for assessmentof its appropriateness.

23

Specific limits have been set for certain types of transaction, i.e.:

a) acquisitions or divestitures of assets, liabilities and/or company divisions;b) loans;c) guarantees and commitments;d) operations on third-party capital;

for which limited powers have been delegated to the Executive Committee.

As specifically concerns transactions with related parties – taking the latter tobe those defined in CONSOB circular DEM/2064231 dated September 30th2002, has passed a resolution that, co-ordinated with the provisions concerningabnormal and/or unusual transactions outlined above, establishes that:

• if the abnormal and/or unusual transactions as described earlier, and alsoroutine transactions, take place with related parties, when the relationship iswith a company officer who would have the right to take part in or observedeliberations (director, statutory auditor or general manager) or with a relatedparty via such an officer, the person concern limits himself to providingclarifications and then leaves the room prior to the decision;

• in order assure observance of conditions of consistency, in taking decisions –when this is justified by possibly critical situations, among which thecounterpart’s related nature must be examined with special attention – theopinion of one or more experts can be obtained – choosing such expertsaccording to criteria of expertise and independence – concerning, dependingon the various cases, on the economic terms, legitimacy, and technical featuresof the planned transaction;

• as regards reinsurance transactions with related parties, these have to besubmitted to the Executive Committee and, in the case of treaties, to the Boardof Directors;

• framework intercompany cost-allocation agreements must be decided upon bythe Board of Directors and must be periodically checked by the ExecutiveCommittee.

The Board of Directors is informed periodically on the activities performed bythe officers and bodies delegated.