Generali Group closes first quarter with upbeat performance

Generali is one of the world’s largest insurance and asset management groups with presence in 50 countries

The group’s latest financial information was released at a meeting on March 31, chaired by Gabriele Galateri di Genola, chairman of the Board of Directors.

Accordingly, the group’s operating result stood at €1.6 billion ($1.94 billion), up 11 per cent on-year thanks to the positive development of the P&C, asset management and holding and other businesses segments. The contribution from the life segment was resilient.

Its gross written premiums reached €19.7 billion ($23.86 billion), showing 4.2 per cent jump in both the life segment – up 5.5 per cent on-year and the P&C segment – up 1.9 per cent on-year.

Life net inflows increased to €3 billion ($3.63 billion), up 1 per cent, fully concentrated in the unit-linked and protection lines. The new business margin was excellent, and at 4.44 per cent, up 0.4 percentage points, among the best in the sector.

Net result rose to €802 million ($971 million) against €113 million ($136 million) one year ago as the first quarter of 2020 was impacted by significant impairments on investments and the expense of the Extraordinary International Fund for COVID-19.

The capital position was extremely solid, with the group’s solvency ratio at 234 per cent, benefitting from excellent capital generation and positive market performance.

“The group closed the first quarter of 2021 with a great performance in line with its targets, confirming the effectiveness of the ‘Generali 2021’ strategy,” said Generali Group CFO, Cristiano Borean. “Generali continues to post the best, least volatile Combined Ratio among its peers and has achieved impressive results in asset management and other segments. The strong growth in operating result and net profit demonstrate that the group continues to operate effectively in a macroeconomic context that is still facing uncertainty due to the pandemic.”

Particularly, the group's gross written premiums increased by 4.2 per cent to €19.71 billion ($23.87 billion), supported by the development of the life segment as well as the recovery in the P&C segment.

Life net inflows, fully concentrated in the unit-linked and protection lines, returned to growth, reaching €3 billion, 1 per cent more.

Life technical provisions grew to €386 billion ($467 billion), up 0.4 per cent. Adjusting for the effect of the deconsolidation of a pension fund in the countries of Central and Eastern Europe, the growth in life technical provisions would have amounted to 1.5 per cent.

The group's operating results rose to €1.61 billion ($1.94 billion), showing 11 per cent jump, benefitting from the positive development from the P&C, asset management and holding and other businesses segments.

The group also confirmed its outstanding technical profitability, with the combined ratio improving to 88 per cent, down 1.4 percentage points and the new business margin to 4.44 per cent, up 0.4 percentage points.

The operating result of the asset management segment continued to grow, mainly driven by the rise in operating revenues. The operating result of the holding and other businesses segment also continued to increase, thanks to private equity and to the significant contribution of Banca Generali.

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The first quarter of 2020 was also impacted by the one-off expense of €100 million ($121 million) for the Extraordinary International Fund for COVID-19. The impact of interest expenses on financial debt further improved, as a result of the debt optimisation strategy.

The group's total assets under management reached €671.6 billion ($813.4 billion), up 1.1 percent, and its shareholders' equity was substantially stable at €30.06 billion ($36.41 billion), up 0.1 per cent.

The premiums in the P&C segment increased by 1.9 per cent to €6.89 billion ($8.34 billion). On a business lines level, the motor line (up 1.9 per cent) was mainly driven by the positive development of premiums in ACEER, Italy, and Argentina (also following adjustments for inflation).

The non-motor line grew by 1.5 per cent, spread throughout the various areas of the group's operations.

The operating results of the P&C segment rose to €690 million ($835 million). The increase of 10 per cent reflected the development of the technical result, while the investment result remained stable.

The operating results of the asset management segment grew to €136 million ($164 million), showing a 46 per cent jump, boosted mainly by the increase in operating revenues which reached €235 million ($284 million, up 21 per cent), resulting from the positive contribution from all the asset management companies and the boutiques’ performance – including €13 million ($15.7 million) in performance fees.

Thenet resultsof the asset management segment grew to €98 million ($118 million), up 47.3 per cent, as a result of an improved operating results.

The operating results of the holding and other businesses segment reached €63 million ($76 million) compared to €-26 million ($31.5 million) one year ago. In particular, Banca Generali's result rose to €168 million ($203.5 million), up 59.2 per cent thanks to the trend in performance fees. Other businesses also provided a positive contribution, reflecting the excellent results of private equity.

A recovery of the global economy in 2021 is expected in the current scenario following the spread of vaccines, with positive impacts for the insurance sector as a whole.

In this context, Generali Group confirms that it will continue with the strategy of rebalancing the life portfolio to further strengthen profitability and with a logic of more efficient capital allocation.

In the P&C segment, Generali’s objective is to maintain the upswing trend of premium income, combined with outstanding profitability in the mature insurance markets in which the group is present, and at the same time, strengthen its position in high growth potential markets by expanding its presence and offer.

In the course of 2021, with reference to the asset management segment, the group will continue to identify investment opportunities through the expansion of the multi-boutique platform in order to increase its offering in terms of real assets, high convictions and multi-asset strategies for customers and partners.