10/22/2008
08.16 a.m

Press Release

The major shareholders of the Mediolanum Group, Doris and Fininvest, will take on the burden of the losses of the “Lehman Brothers” policies
The operation will have no impact on the minor shareholders

The Board of Directors of Mediolanum S.p.A. held an extraordinary meeting yesterday evening where they deliberated to give the insurance Companies of the Group the assignment to put into place initiatives in support of the customers holding Index Linked policies with “Lehman Brothers” bonds underlying. The Boards of Directors of the Companies Mediolanum Vita S.p.A. and Mediolanum International Life Ltd. have therefore approved intervention plans that lay out the transformation of the policies in question, with the objective of returning the net paid-in capital to the customers of all policies with capital protection, and the net paid-in capital less any negative variation in the reference index for those policies without capital protection.

The cost of this initiative will be completely and solely covered by the Doris Group and Fininvest S.p.A. (100% controlled by the Berlusconi family), the two major shareholders of Mediolanum S.p.A., which controls the Life Companies that issued the policies. This undertaking will safeguard the interests of the minor shareholders.

The above mentioned intervention plans will be enacted following the review by the regulatory authorities.

The Doris Group and Fininvest S.p.A. own a share of Mediolanum S.p.A. of approximately 41% and 36% respectively. Since the establishment of the Company, the two together have constituted a shareholders’ agreement, which has always been renewed, controlling Mediolanum S.p.A. on an equal basis and
representing 51.04% of the share capital (25.52% each).

The Doris Group and Fininvest S.p.A. have committed themselves to make financial interventions that will allow Mediolanum S.p.A. to set up an additional shareholders’ equity capital reserve for a total of 120 million euro, equal to the maximum estimated cost of the initiative in question, to be made by November 12, 2008.

Keep in mind, as is clearly indicated in the documents of the policies’ contracts, the default risk is completely carried by the policyholder. Moreover, note that at the time these Index-linked policies were issued, Lehman Brothers had a rating of A+ and was universally recognised as a solid and reliable institution.

In total, the Index-linked policies with Lehman Brothers bonds underlying amount to a nominal value of 213 million euro, a marginal figure with respect to the total assets managed by the Mediolanum Group (less than 1%).

There are a total of approximately 10,000 Mediolanum customers holding these policies, with an average per capita investment with the Mediolanum Group of more than 100,000 euro. Note that thanks to the diversification of their individual portfolios, the average exposure of these customers to Lehman Brothers is about 15% of all of their assets invested with Mediolanum.

“The Lehman Brothers default…” – states Ennio Doris, CEO of Mediolanum Spa – “…has caught the markets all over the world by surprise. We must not forget that this American bank was born 158 years ago and survived the two crises at the end of the 1800’s, one in the initial years of the 1900’s, the Great Depression of ’29, two World Wars, the oil crisis in the ‘70’s and the Twin Towers – and was the only bank that was not saved by the American government. We, the Doris Group and Fininvest, have decided that the consequences of such an extraordinary event shouldn’t fall on our customers, as they are our most precious asset, and we are doing so because we want to give the market a strong signal of the utmost care - as the loyal and reliable partner we’ve always been – towards those who, having faith in us, have entrusted us with their savings”.
“It’s a significant and very determined decision – emphasises Pasquale Cannatelli, CEO of Fininvest S.p.A. – which, moreover, is completely in harmony with the view of the Berlusconi family and the Fininvest Group, who - in all of their activities - have always been sensitive to the needs and the problems of the private investors”.

Technical specifics of the operation

The transformation of the policies with Lehman Brothers bonds underlying on the part of the Companies of the Group will be carried out through a replacement of all underlying financial instruments with new bonds. The Companies will keep the Lehman Brothers bonds in their own portfolio awaiting the realisation of any future yield.

The total net cost of the aforementioned initiatives comes to a maximum of 120 million euro and will be entirely covered by the Doris Group and Fininvest S.p.A. who have committed themselves:
- to renounce any 2008 interim dividend;
- to grant a non-interest-bearing Subordinate Financing to Mediolanum S.p.A. for an amount equal to the difference between the above mentioned 120 million euro and the amount resulting from the aforementioned dividend waiver.
The amount of the financing meant to cover the said loss will be set aside in a dedicated capital reserve in the Mediolanum S.p.A.
shareholders’ equity.

The contribution of the two major shareholders will be proportionate to their share in Mediolanum S.p.A:

	Share in Mediolanum S.p.A.	Pro-quota percentage
Fininvest S.p.A	36,02%	47,08%
Gruppo Doris	40,49%	52,92%

All costs resulting from the initiatives that will be enacted by the insurance Companies of the Group will be entirely expensed in the P&L accounts of 2008 and therefore in the Group Consolidated Financial Accounts as at December 31, 2008.
Additionally, the intervention on the part of the major shareholders will increase the capital reserves of the shareholders’ equity of Mediolanum S.p.A., thus neutralising the effects of this initiative.
Said initiative will not have any impact on the separate P&L accounts of the holding company Mediolanum S.p.A. and will not affect its dividend distribution capacity at all for 2008.

List of the Index-linked policies involved in the plan:

Policies with capital protection

Policy Name

Company

Di Più Platinum Money 2007-11

Mediolanum Vita S.p.A.

Di Più Step 2007-8

Mediolanum Vita S.p.A.

Di Più 2005-17

Mediolanum Vita S.p.A.

Di Più 2005-18

Mediolanum Vita S.p.A.

Di Più Platinum 2005-5

Mediolanum Vita S.p.A.

Di Più Money 2007/1