Consolidated results at 31.03.2013
10 May 2013 - 07:34
Consolidated results at 31 March 2013 (*)
Operating result in excess of € 1.3 billion (+8%) with strong growth in P&C (+26.6%)
Increase in net profit to € 603 million (+6.3%)
Life: solid profitability with operating result at € 797 mln (-2.6%), despite a challenging economic and financial environment
- Life net inflows grows to € 2.9 bln (€ 760 mln 1Q12).
- Life gross premiums € 12.3 bln (-4.7%, € 12.8 bln 1Q12) and high new business margin at 20.9% (20.8% 1Q12).
P&C: excellent performance with operating result at € 520 mln (+26.6%), growth reported across all major markets
- Improvement in technical margins, with combined ratio at 93.6% (-1.8 p.p.).
- Increase in P&C gross premiums to € 6.9 billion (+1.5%) with contributions from both the Non-Motor (+1.8%) and Motor (+0.7%) businesses.
Shareholders' equity € 18.8 billion (-1.2%) with Solvency I ratio at 138% (145% at the beginning of 2013), even with the impact of the GPH transaction.
Solvency I at 145% as of April 30.
Generali Group CEO Mario Greco said: "In this quarter we have recorded our best operating result of the last four years, thanks to an excellent P&C performance and a solid Life business reflecting the focus on profitability of our premium income. We are making good progress in implementing the planned measures to turn around our business. In recent months we have already taken important steps to achieve our strategic targets, such as the acquisition of the first tranche of GPH in Central-Eastern Europe, the placement of 12% of Banca Generali and the launch of the Corporate & Commercial business unit, which will enable us to grow in this segment. We are in the early stages of our journey and are on track to deliver our targets."
Milan – At a meeting chaired by Gabriele Galateri di Genola, the Board of Directors of Assicurazioni Generali approved the consolidated results for the quarter to 31 March 2013.
The Generali Group closed the first quarter registering a good premium income and strong business margins, which lifted its total operating result to € 1,328 million (+8%; € 1,230 million 1Q12) and net profit to € 603 million (+6.3%; € 567 million 1Q12).
The strong growth in the quarter’s operating result was driven in particular by the excellent result in the P&C segment, which rose to € 520 million (+26.6%) due to a 1.8 percentage point improvement in the combined ratio to 93.6%.
In the Life segment, despite the weaker market performance compared with the same period last year, the solid operating result of € 797 million (-2.6%; € 819 million 1Q12) was supported by the healthy business profitability, which benefited from resilient technical margins and from a better product mix.
The Group’s excellent operating performance was supported by solid production levels, with more than 75% coming from markets outside Italy, prioritizing greater profitability over the quarter. Aggregate premiums reached € 19.1 billion (-2.6%), with P&C premiums increasing to € 6.9 billion (+1.5%), supported by strong growth in Germany (+4.3%) and Latin America (+40.7%).
The slowdown in Life premiums to € 12.3 billion (-4.7%) was largely due to the one-off effect of the measures taken to protect the French savings portfolio in the first quarter of 2012.
The quality of production was reflected in the new business margin (NBM), which improved to 20.9% (20.8% 1Q12), while Life net inflows showed significant progress rising to € 2.9 billion (€ 760 million 1Q12), registering an improvement from the end of 2012 and becoming positive once again in Italy and France.
During the first quarter the Group maintained a strong capital position. Shareholders' equity was € 18.8 billion (-1.2%; € 19.0 billion at the beginning of 2013), despite the € 477 million effect of the purchase of the first tranche of the minority stake in GPH at the end of March. The transaction, which enabled the Group to consolidate its leadership position in Central-Eastern Europe, also had an impact of 7 percentage points on the Solvency I ratio, taking the ratio to 138% (145% at the beginning of 2013 2). The reimbursement of a € 200 million subordinated loan also impacted the ratio. At the end of April the Solvency I ratio was 145%, benefiting from both the favourable market trend and the positive effect stemming from the placement of 12% of Banca Generali’s share capital.
Generali Group’s overall Assets under Management, which include third-party assets under management, totalled € 498.2 billion in the first quarter (+1.7% from the end of 2012).
Given the ongoing uncertainty in the general economic and financial scenario and Generali’s careful underwriting policy, the Group expects to report a reduction in Life premiums in 2013 and an increase in P&C operations with positive contributions from both the Non-Motor and the Motor businesses.
The Group expects an improvement in its total operating result in 2013, as it continues to strengthen its capital position and to cut expenditures.
Looking at Life production in the individual markets, premiums increased in Germany (+28.3%), Spain (+16.5%), Austria (+1.9%), Latin America (+22.7%) and China (+4.7%).
Regarding the business lines, protection covers (+8%) and linked contracts (+13.2%) performed well, while savings policies fell (-12.4%), in particular as a result of the one-off effect of the afore-mentioned measures taken in France to protect the portfolio in the first quarter of 2012.
Life new business APE was € 1,213 million (-9.7%), again reflecting the measures taken in France. With a resilient margin of 20.9%, the New Business Value stood at € 254 million (-10.1%; € 276 million 1Q12).
Life net inflows were excellent, benefiting from the containment of surrenders, and helped boost Life net technical reserves to € 318.3 billion (+1.4%).
|Life – Net inflows and NBM|
|€ million||Net inflows||NBM|
|Rest of Europe||683||534||25.5%||27.5%|
|Rest of World||310||250||36.1%||30.6%|
The P&C segment reported a positive premium performance in both the Non-Motor lines (+1.8%) and the Motor lines (+0.7%). Looking at the individual markets, production grew significantly in Germany (+4.3%) and Austria (+3.2%), whereas Italy and France reported declines (-3.5% and -1.6% respectively) arising from a downturn in the Motor business. Strong progress continued in South America (+40.7%) with healthy performances in Argentina, Brazil and Mexico.
Production growth was accompanied by strong technical margins, with a further improvement in the combined ratio to 93.6% (-1.8 p.p.; 95.4% 1Q12) fuelled by the healthy trend in the loss ratio in all the main countries where the Group operates. With a combined ratio of 84.6% (91% 1Q12) Central-Eastern Europe proved to be the Group’s best market.
The loss ratio, at 66.4%, fell by 1.1 percentage points, benefiting from the absence of significant Nat Cat events and the improvement in the current loss ratio. The expense ratio also improved to 27.2% (-0.7 p.p.; 27.9% 1Q12).
The excellent combined ratio and the tariff and settlement strategies adopted by the Group’s main countries contributed to the sharp improvement in the technical result (+49.3% to € 331 million), which in turn drove the segment’s operating result to € 520 million (+26.6%). The P&C operating result rose in all the Group’s main markets, with particularly strong progress in Italy (+21.4%), Germany (+91.8%) and Central-Eastern Europe (+25%).
|P&C – Premiums and Combined Ratio|
|Rest of Europe||1,59||1,598||-0.1%||95.3%||95.6%||-0.4 p.p.|
|Rest of World||513||415||+31.4%||100.6%||96.5%||+4.1 p.p.|
In the first quarter of 2013 third-party assets managed by the Group’s banking and asset management companies increased by 4.4% from the end of 2012 to reach € 100,836 million. The operating result contracted by 6.1% to € 119 million, largely as a result of both a reduction in dividends received and a decrease in income on financial instruments at fair value through Profit & Loss. The cost/income ratio moved from 64.5% in the first quarter of 2012 to 66.6%. The interest margin and net commissions were stable.
The manager in charge of the company financial reports, Alberto Minali, 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.
(*) The change in premiums, net inflows and APE is on a like-for-like basis (constant consolidation perimeter and exchange rates), excluding the CIS countries from the comparative period.
(**) As from 1 January 2013, IAS 19 revised has come into effect; its application involves a series of changes described in the notes to the interim report. Retrospective application as required by IAS 19 led to the re-determination of consolidated shareholders' equity at 31 December 2012. The Solvency I ratio was also recomputed at 1 January 2013 to take account of these effects.