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Consolidated results at 31.03.2012

Generali Group: consolidated results (*) at 31 March 2012

Total gross premiums € 19.8 bln (+6.1%), of which 75.2% outside Italy. Growth in both Life and Non-Life.

Aggregate operating result stable at € 1.2 bln, a return to the excellent levels of 1Q11. Strong increase in Non-Life (+3.8%) and financial services (+12.2%). Improved trend in Life operating result.

Net profit € 567 mln (€ 616 mln 1Q11), a strong recovery compared with the last three quarters of 2011

Shareholders’ equity increases to more than € 18 bln (+16.3%). Solvency I ratio rises to 133% (FY11: 117%).

Approved the Sustainability Report

Generali Group CEO Giovanni Perissinotto said: “The first-quarter results reflect a strong recovery at the start of the year compared to the second half of 2011, with increased profitability across all business lines and a significant strengthening of our financial solidity. This is the best possible start to 2012, a year that will see us grow despite the challenges which remain. Over the next few months we intend to maintain our focus on profitability and efficiency, in order to continue to grow in high-potential markets and to maximise value from our core market operations. This allows us to confirm our operating result target of between € 3.9 and € 4.5 billion.” 

Non-Life: High profitability with combined ratio at 95.4% (96.1% 1Q11) thanks to Italy and CEE countries

  • Non-Life premiums € 7 bln (+4.7%). Growth in non-motor premiums (+5.1%), over all lines of business, and in motor premiums (+3.8%), particularly in Germany, Italy and Latin America
  • Continued growth of operating result to € 411 mln (+3.8%), driven by improved technical margins (+15%)

Life: Operating result € 819 mln (-4.2%), an improvement with respect to the second half of 2011

  • Renewed growth in Life premiums to € 12.8 bln (+6.9%); good performance in savings products (+12.5%) and protection covers (+3.6%) more than offsets a decline in linked products (-9.5%) caused by market volatility
  • New business in terms of APE € 1.3 bln (+6%)
  • Life profitability at top of the market: operating result to investments ratio reaches 0.27% on a quarterly basis

Financial services: operating result rises to € 126 mln (+12.2%)

  • Excellent contribution from Banca Generali to the operating result
  • Third-party assets under management up to € 88 bln (+4.5%)

***

Clemente Rebecchini and Claudio De Conto nominated as directors

Milan - At a meeting today chaired by Gabriele Galateri di Genola, the Board of Directors of Assicurazioni Generali approved the consolidated results at 31 March 2012.

In a first quarter affected by ongoing severe financial market volatility, Generali reported excellent results in premiums and margins across all business lines, demonstrating a strong recovery with  performances returning to pre-crisis levels. The first quarter of 2012 closed with an increase in total gross premiums to € 19.8 billion (+6.1%), due to the positive performance in Life premiums and the continued trend of development in the Non-Life business.

The Group achieved high levels of profitability across all lines of business, with a stable overall operating result of € 1,230 million, matching the excellent levels in 1Q11. This result arose due to the significant recovery in the Life operating result with respect to the second half of 2011, although the de-risking policy introduced by the Group to reduce cross-border exposure on government securities affected financial margins. The overall operating result was also supported by further improvement in the Non-Life business, with the combined ratio progressing to 95.4%, and steady growth in financial services (+12.2%) led by Banca Generali, which almost doubled its operating result.

Operating result
€ million 31/03/2012 31/03/2011   
Life operating result 819 881 -4.2%
Non-Life operating result 411 393 +3.8%
Financial services operating result 126 115 +12.2%
Total operating result 1,230 1,256 -0.1%

The non-operating result, unaffected by the extraordinary factors that were a feature of the second half of 2011, is almost in line with last year’s result for the same period (which benefited from higher capital gains), reaching € -266 million (€ -223 million 1Q11).

These factors enabled the Group to close the first quarter with a net profit of € 567 million (-7.9%), a sharp increase in comparison with the last three quarters of 2011 (€ 190 million 2Q11; € 20 million 3Q11; € 31 million 4Q11).

This positive performance was accompanied by a further strengthening of the capital structure. Group equity rose to more than € 18 billion from € 15.5 billion at the end of 2011, a return to pre-crisis levels. The Solvency I ratio grew to 133% (117% FY11).

INVESTMENT POLICY

Investment policy continued to be based on prudent asset allocation designed to consolidate current margins and reduce capital absorption, thereby keeping technical margins steady. Inside the euro zone in particular, the Group is pursuing a de-risking policy with the aim of achieving a significant reduction in cross-border exposure in the region by ensuring that investments in bonds in any given country cover local liabilities.

Own investments' breakdown by asset class 31/03/2012 31/12/2011
Fixed income instruments 79.4% 77.6%
Cash and equivalents 6.6% 7.9%
Equity 5.3% 5.5%
Real Estate 4.7% 4.9%
Other 3.9% 4%
Own investments total € 320.5 bln € 310.8 bln

During the quarter, the Group undertook a partial divestment from cash and cash equivalents (which decreased to 6.6% from 7.9% at the end of 2011), which it had prudently set aside in the previous quarters in favour of corporate bonds, especially in non-financials. There was a slight reduction in investments in equities and real estate.

OUTLOOK

In the Life segment, the Group expects to match the premium levels of 2011, although it will give priority to products with lower capital absorption and higher value, consequently maintaining the technical margin. Stabilisation of the financial markets and a return to economic development are necessary for the Life business to resume growth.

In the Non-Life lines, the Group expects to match its 2011 premium growth rates in both the Non Motor and the Motor businesses. Assuming a normal level of catastrophic events, an additional improvement in overall technical margins is expected, through maintenance of current operating efficiency levels and the continuing impact of the tariff and claims management policies implemented by the Group.
Based on the scenario described above, which should lead to a reduction in the significant non-recurring elements that impacted the operating and non-operating results in 2011, the Group expects to report growth in its operating result in both the Life and the Non-Life segments, and in net profit.

LIFE SEGMENT

 

Life - Gross premiums and APE new business
€ million Gross premiums APE
  31/03/2012 31/03/2011 31/03/2012 31/03/2011
Italy 3,206 3,211 -0.2% 416 428 -2.8%
France 3,731 2,926 +27.5% 432 294 +46.8%
Germany 3,241 3,338 -2.9% 217 256 -15.2%
CEE 412 416 +2.7% 39 40 -0.2%
Total 12,815 12,34 +6.9% 1,328 1,311 6%

Life gross premiums written amounted to € 12,815 million (+6.9%; €12,340 million 1Q11), reflecting a reversal of the 2011 trend, due largely to the solid performance of savings policies (+12.5%) and protection covers (+3.6%), which more than made up for the decline in linked products (-9.5%) caused by the high volatility of the financial markets.
Specifically, France reported a significant improvement in performance (+27.5%), also driven by the actions taken to protect the savings portfolio as part of the strategy to increase policyholder loyalty. Premiums in Italy remained stable at € 3,206 million (€ 3,211 million 1Q11), due to the positive contribution of annual premiums (+1%) which mitigated the reduction in single premiums arising from market conditions and competition from bank products. Premiums were positive in Central and Eastern Europe (+2.7%) and in Latin America (+11.7%).

New business in terms of APE totalled €1,328 million (+6%), driven by the traditional savings business and by protection covers, which offset the performance in linked products, which are more closely linked to financial market trends. New business in terms of APE grew strongly in France, which reflects the above-mentioned actions taken to protect the savings portfolio, while the reduction in Germany was due to the decision to give priority to margins over volumes, with the termination of a series of business agreements with limited profitability. With regards to Italy, the result was impacted by the performance of annual premiums, when compared to the excellent performance in 2011.

Life net inflows amounted to € 760 million, showing a turnaround in the trend from the final quarter of 2011 thanks to the overall growth in production. Net inflows contributed to the improvement in net technical reserves, which rose by 1.7% to € 307 billion.

NON-LIFE SEGMENT

 

Non Life - Gross premiums and Combined Ratio
€ million Gross premiums CoR
  31/03/2012 31/03/2011 31/03/2012 31/03/2011
Italy 1,708 1,701 +0.4% 95% 96.2% -1.2 pp
France 1,271 1,264 +0.5% 97.2% 98.2% -1 pp
Germany 1,383 1,325 +4.4% 95.5% 95.3% +0.2 pp
CEE 623 617 +4.4% 91% 87.6% +3.4 pp
Total 6,999 6,792 +4.7% 95.4% 96.1% -0.7 pp

Strong growth continued in production and technical margins in the Non-Life segment. Premiums rose to € 6,999 million (+4.7%; € 6,792 million in 1Q11) thanks to growth in the Motor lines (+3.8%) notably in Italy, Germany and Latin America, and in all the Non-Motor lines (+5.1%) over all lines of business. There were significant improvements in Germany (+4.4%), Central and Eastern Europe (+4.4%), and Switzerland (+6%); in Italy Non-Life premiums grew by 0.4%, with the motor lines improving by 1.8%. Growth continued in Latin America (+43.6%), with positive performances in Mexico, Brazil and Argentina.

The Combined Ratio showed further improvement, to 95.4% (-0.7 percentage points; 96.1% 1Q11), due to the effectiveness of the Group’s tariff, underwriting and settlement policies. The improvement in the current loss ratio resulted in the increase of 0.8 percentage points of the total loss ratio that reached 67.5%. The expense ratio was stable at 27.9% (+0.1 percentage points; 27.8% 1Q11).

FINANCIAL SERVICES

In asset management, third-party assets under management were € 88,077 million, a significant improvement on a like-for-like basis of 4.5% (€ 88,207 million FY11). Group total assets under management were € 422,166 million (-0.5%).

APPROVED THE SUSTAINABILITY REPORT

The Board approved the 2011 Sustainability Report. The report highlights Generali’s positive performance in reaching its goals and environmental improvement targets (relating to energy, paper, greenhouse gas emissions) for the three years from 2009-2012.

Global Added Value (GAV), which reflects wealth generated by Group operations in the year for the various stakeholder categories, reached € 12.7 billion. Amounts increased for employees, agents and, in particular, the community (+7.9%).

Distribution of Global Added Value
€ mln 31/12/2011 31/12/2010 Δ
Group 546 1,003 -45.6%
Shareholders 607 1,015 -40.2%
Employees 4,265 4,144 +2.9%
Agents and advisors 5,366 5,318 +0.9%
State 652 869 -25%
Lenders 1,253 1,237 +1.3%
Community 49 46 +7.9%
Global Added Value 12,737 13,633 -6.6%

The Board of Directors appointed Clemente Rebecchini and Claudio De Conto as new members, replacing Alberto Nicola Nagel and Francesco Saverio Vinci who have resigned their positions. Neither of the new directors have been assigned executive powers. Clemente Rebecchini was named a member of the Executive Committee and the Appointments & Corporate Governance Committee, Claudio De Conto was named a member of the Remuneration Committee and the Investments Committee. The Board confirmed that the new directors met the standards of professionalism, good standing and independence required by law for insurance companies. The curricula vitae of the two new directors can be viewed on the company website, www.generali.com.

Based on the declarations provided by the directors and the information in the possession of the company, the Board of Directors also confirmed that the independence requirement as laid down by article 3 of the Self-Regulatory Code of Conduct for listed companies was met by the following directors: Vincent Bolloré, Francesco Gaetano Caltagirone, Cesare Calari, Carlo Carraro, Claudio De Conto, Diego Della Valle, Angelo Miglietta, Alessandro Pedersoli, Lorenzo Pellicioli, Paola Sapienza and Paolo Scaroni, and that the independence requirement as laid down by article 147-ter of the Consolidated Financial Intermediation Act was met by the following directors: Gabriele Galateri, Francesco Gaetano Caltagirone, Vincent Bolloré, Cesare Calari, Carlo Carraro, Claudio De Conto, Diego Della Valle, Alessandro Pedersoli, Lorenzo Pellicioli, Clemente Rebecchini, Paola Sapienza, Paolo Scaroni.
The Board confirmed that all the Directors, Statutory Auditors and General Managers of the company were in compliance with the limits laid down by art. 36 of the “Save Italy” government decree.

The Manager in charge of preparing the company’s financial reports, Mr Raffaele Agrusti, declares, pursuant to paragraph 2 article 154 bis of the Consolidated Law on Finance, that the accounting information in this press release corresponds to the document results, books and accounting entries.

(*) Any variations are calculated on like-for-like basis. Following the sale of Migdal Insurance and Financial Holdings – ahead of completion - and the related accounting treatment, any such variations exclude figures from the aforementioned group from the comparative period regarding premiums, Ape, reserves and operating result.

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Consolidated results at 31.03.2012 489 kb