Consolidated results at 30 September 2012
09 November 2012 - 07:44 price sensitive
Consolidated results at 30 September 2012 (*)
Overall operating result of € 3,292 mln (+9.4%), driven by Life result (+16.5%)
Total premiums € 51 bln (+1.8%), driven by P&C lines (+4.7%)
Net profit for the 9 months up to € 1.1 bln (+37.3%)
Shareholders’ equity increases 24.1% to € 19.2 bln (€ 15.5 bln FY11). Solvency I ratio improves to 140% (130% 1H12; 117% FY11).
- Life. Life premiums € 33.5 bln (+0.4%) due to our focus on quality and profitability of the business. Life net inflows positive at € 1.1 bln, after negative 1H12.
- Life operating result € 2,196 mln (+16.5%) with contributions from all the key markets.
- Property and Casualty. Premiums € 17.4 bln (+4.7%) with growth in all business lines.
- Combined ratio stable at 96.6% despite 1.3 p.p. increase in impact from catastrophic events.
- P&C operating result € 1,158 mln (-4.3%), with catastrophic events accounting for € 311 mln (€ 96 mln 9M11).
- Financial services. Operating result € 320 mln (+17.1%). Third-party assets under management at € 93.2 bln (+10.6% from FY11).
Generali Group CEO Mario Greco said: “These results are testament to the quality of the business and the strength of Generali’s franchise and distribution network. I’m particularly satisfied with our operating result – our key performance indicator – reaching € 3.3 billion. We are confident of achieving a 2012 operating result in excess of € 4 billion, in line with our previously announced target.”
Milan. At a meeting chaired by Gabriele Galateri di Genola, the Board of Directors of Assicurazioni Generali approved the consolidated results for the 9 months to 30 September 2012.
The Generali Group closed the first nine months of the year with strong growth in net profit to € 1,133 million (+37.3%). The result was driven by progress in production and – particularly in the Life segment – by growth in the operating result. The P&C operating result remained robust despite the impact from significant catastrophic events. An additional contributing factor to the profit increase was the improvement in the investment result, due in particular to a reduction in impairment losses.
In an environment where insurance premiums fell in many of the markets in which Generali operates, the Group reported a positive performance in premiums, buoyed by the expansion of its proprietary networks and continued product innovation. Total gross premiums rose to € 50,945 million (+1.8%), driven by premiums in the P&C segment (+4.7%) particularly in France, Germany and CEE countries.
In the Life business, the Group focused on profitability, registering growth in savings products (+1.9%) and protection covers (+4.4%), generating overall production of € 33,500 million (+0.4%). Life net inflows – premiums collected less outflows – were positive at € 1,142 million after the negative result of € 378 million in the first half of the year. This performance is particularly notable given the Group’s decision to cease renewing certain contracts with profitability levels deemed not adequate.
The overall operating result rose by 9.4% to € 3,292 million, showing strong progress in the third quarter (+43.1%), despite the effects of the de-risking policies put in place since the beginning of the year to reduce cross-border exposure to government securities.
In particular, the Life operating result improved by 16.5% to € 2,196 million, with a positive contribution from the Group’s main markets.
The P&C operating result – impacted by significant catastrophic events for € 311 million (€ 96 million 9M11) – was € 1,158 million (€ 1,204 million 9M11) supported by the improvement of technical margins excluding catastrophic events. The combined ratio remained stable at 96.6% due to the improvement in the current loss ratio and containment of expenses. Excluding the 2 percentage points impact from catastrophic events, the combined ratio improved by 1.3 percentage points. The operating result of the financial services segment was positive (+17.1%).
The improvement in results was accompanied by a significant improvement in the Group’s capital position. Shareholders’ equity was € 19,215 million, registering an increase of 24.1% (€ 15,486 million at the end of 2011), largely as a result of the positive performance of the Available-For-Sale reserve, benefitting from the revaluation in all asset classes, particularly bonds.
The Solvency I ratio improved to 140% (130% 1H12; 117% FY11) with a surplus of € 7.4 billion.
|Fixed income instruments||79.7%||77.6%|
|Cash and equivalents||7.1%||7.9%|
|Total||€ 329 billion||€ 311 billion|
The Group’s own investments at 30 September 2012 stood at € 328.5 billion, an increase of 7.8%. Exposure to fixed-income instruments rose to 79.7% (77.6% FY11) with the proportion of government securities increasing to 54.7% (53.8% FY11), on account of the revaluation of this asset class. Equities accounted for 4.8% (5.5% FY11) of the Group’s own investments. Investments in real estate were broadly stable (4.6%).
In the Life segment the Group expects to confirm the premium levels of 2011. It will also continue to reduce the financial guarantees in traditional insurance contracts.
In the Property and Casualty segment the Group expects to report premium growth from both the Non-Motor and the Motor businesses. Considering the current impact of catastrophic events and in the absence of new events, overall technical margins are expected to remain stable relative to 2011 through the maintenance of operating efficiency levels and the continuing effects of the tariff and claims management policies implemented by the Group.
With regard to 2012 year-end outlook, the Group expects an operating result in excess of € 4 billion, in line with our previously announced target range of € 3.9 – 4.5 billion.
|€ million||Gross premiums||Operating result|
Looking at Life production on a country-by-country basis, Germany (+2.7%) reported a reversal of the first-half trend with savings products rising by 4.7%. Healthy premium growth was also reported in Central Eastern Europe (+1.6%), Switzerland (+5%), Latin America (+7.7%) and China (+3.4%). With specific regard to Italy (-2.5%), France (-0.4%) and Spain (-4.2%), the Group chose to cease renewing contracts with profitability levels deemed not adequate. In Italy premium income made a recovery from the first half with a positive contribution of pension products (+19%), supported by the initiatives launched by the Group in this sector. In France premiums showed healthy performance in protection covers and savings products.
The Group’s decision to focus on products with higher profitability and low capital absorption reflects on new business in terms of APE that remains at good levels at € 3,184 million (-5.3%). Annual premiums account for 59% of new production, which is testament to the high quality of the business.
The Life operating result improved by 16.5%, reflecting the investment result (+26.2%), with a reduction in impairment losses and a revaluation of investments. The result was also supported by a stable technical margin.
PROPERTY & CASUALTY SEGMENT
|€ mln||Gross premiums||Combined Ratio|
Looking at P&C production on a country-by-country basis, Germany reported an excellent performance (+7.5%), driven by all business lines. In Central Eastern Europe, the significant increase in premiums (+8.4%) is attributable to Non-Motor lines (+20.5%). Healthy growth was also achieved in France (+1.6%) thanks in particular to the corporate business, as well as in Spain (+1.9%), Austria (+2.4%), Switzerland (+2.7%) and Latin America (+29.2%). In Italy production was broadly stable, despite the impact of the reduction in new vehicle registrations on Motor lines.
P&C confirmed its high technical margins, despite the impact of catastrophic events mentioned above. The combined ratio improved in France (-0.2 p.p.), in Germany (-0.7 p.p.) and in Switzerland (-0.4 p.p.). In Italy it worsened by 0.8 p.p. to 97.6%, specifically as a result of the earthquake in Emilia.
FINANCIAL SERVICES SEGMENT
In the financial services segment, assets managed by the Group’s banks and asset management companies totalled € 444,002 million. Third-party assets under management increased by 10.6% to € 93,236 million.
The operating result progressed by 17.1% to € 320 million, reflecting the improved investment result and, in particular, better investment opportunities on the market. The healthy performance of the operating result was also buoyed by the Group’s trading operations, especially on equity portfolios.
In his capacity as Chief Financial Officer, as from 9 November Alberto Minali takes on the duties of manager in charge of preparing the company’s financial reports.
The Group also announces that, following his appointment as Chief Insurance Officer and in line with what was previously announced, Sergio Balbinot has formalised his resignation from the company Board of Directors and Executive Committee and, consequently, from his position as Managing Director.
The Board of Directors also named the Group General Counsel, Antonio Cangeri, as the new Secretary to the Board of Directors.
The interim financial report for the nine months to 30 September 2012 is available in the section Investor Relations.
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.
(*) The change in premiums, net inflows and APE is computed on a like-for-like basis (at constant consolidation area and exchange rates). The change in operating results, own investments and third-party assets under management is computed excluding the Migdal group from the year-earlier comparatives. Unless otherwise stated, changes refer to the first nine months of 2011.