Generali Group closes H1 with rosy performance

August 09, 2021 | 20:34
At a recent meeting chaired by chairman Gabriele Galateri di Genola, the Board of Directors of Italy-based Generali Group approved the consolidated financial report for the first half, expressing satisfaction with the excellent results achieved in a particularly challenging environment.
Generali Group closes H1 with rosy performance
Generali Group CEO Philippe Donnet

“Today’s excellent results confirm that we are fully on track to successfully deliver the ambitious targets of the current Generali 2021 plan, even in this very challenging environment,” said Generali Group CEO, Philippe Donnet. “The significant growth achieved in the first six months of the year strengthens Generali's position as the European leader, thanks to our operational excellence, the acceleration of our digital innovation, and the quality of our distribution network."

“We will continue to forge ahead with an even stronger focus on our Lifetime Partner ambition, leveraging on the enthusiasm, passion, and energy of our 72,000 colleagues and 165,000 agents worldwide, and we look forward to presenting the new plan at the Investor Day on December 15.”

Accordingly, the group’s operating result rose 10.4 per cent to €2.996 billion ($3.54 billion), benefitting from the positive performance of the life, asset management and holding, and other businesses segments. The contribution of the property and casualty (P&C) segment was excellent, despite the impact of several significant natural catastrophe claims in continental Europe.

The life and P&C segments confirmed excellent technical profitability, demonstrated by the new business margin at 4.67 per cent compared to 3.94 per cent in the first half of 2020 and a substantially stable combined ratio at 89.7 per cent, up 0.2 percentage points. The operating result of the asset management segment showed a 39.6 per cent jump to reach €306 million ($361 million), mainly boosted by the rise in operating revenues, also supported by the increase in assets under management.

Generali Group closes H1 with rosy performance
Generali Group reported excellent business results with strong financial standing in H1

The non-operating result was -€496 million (-$585 million) compared to -€941 million (-$1.1 billion) in the H1/2020. The significant improvement was thanks to the lower impairments on available for sale investments – which were particularly affected in H1/2020 by the impact of the pandemic on financial markets – and the increase in the realised gains, mainly deriving from equities and €67 million ($79 million) for a real estate transaction for the Libeskind Tower in CityLife, Milan.

H1/2020 was also impacted by the impairment on goodwill related to the life business in Switzerland for €93 million ($109 million), the one-off expense of €100 million ($118 million) for the extraordinary International Fund for COVID-19 and further local initiatives for €54 million ($63.7 million) to face the pandemic. The impact of interest expenses on financial debt further improved, as a result of the debt optimisation strategy.

Generali Group closes H1 with rosy performance
After more than a decade of vigorous development, Generali Vietnam is proud of making positive contributions to Generali Group’s overall achievements

The net result significantly increased to €1,540 million ($1.81 billion) compared to €774 million ($913 million) posted in H1/2020 driven by the operating result and the non-operating performance, mentioned above.

The gross written premiums picked up 5.5 per cent to reach €38.093 billion ($44.98 billion) thanks to positive growth in both business segments.

Life net inflows were strong and stood at €6.3 billion ($7.44 billion), down 8.6 per cent; the decrease was attributable to the savings and pension line, consistent with the group’s portfolio repositioning strategy. Both the protection and unit-linked lines recorded growth at 10.3 and 0.9 per cent, respectively.

Life technical provisions grew 2.3 per cent to €393.4 billion ($464.5 billion); the growth pace would be 3.4 per cent excluding the effect from the deconsolidation of a pension fund in central and eastern European countries.

The group's total assets under management reached €672.4 billion ($793.9 billion), up 2.7 per cent from the end of 2020.

Generali Group closes H1 with rosy performance
Generali Vietnam has been developing strongly with an extensive operation network and preeminent customer satisfaction scoring (R-NPS) leading the insurance market for many consecutive quarters

The group's shareholders' equity was €28.412 billion ($33.55 billion), down 5.4 per cent compared to December 31, 2020. The change was due to a €1.014 billion ($1.20 billion) decrease in available for sale (AFS) reserves, deriving mainly from the performance of government bonds and the deduction of the entire dividend approved for a total of €2.315 billion ($2.73 billion), of which €1.591 billion ($1.88 billion) related to the 2020 dividend which was paid on May 26, 2021.

Generali Group’s first half business results reflect excellent profitability with strong growth in premiums, operating and net results, and extremely solid capital position.

The group confirmed its excellent capital position with solvency ratio at 231 per cent, higher than the 224 per cent in the 2020 fiscal year. The increase of 7 percentage points was mainly attributable to the excellent normalised capital generation, net of the dividend for the period, calculated on a pro rata basis from the previous year’s dividend, and to market variances.

These positive trends more than offset the impact of the regulatory changes at the beginning of the year, operating variances (in particular, re-risking), and mergers and acquisitions transactions.

In June 2021, Generali announced its new strategy for climate protection which updates and extends the group’s existing plan approved in February 2018 with more ambitious targets. The strategy pledges significant action related to investment and underwriting activities, the group's core businesses, committing to a low climate impact future.

The new objectives include €8.5-9.5 billion ($10.04-11.2 billion) of new green and sustainable investments in the period 2021-2025; definition of a roadmap for the complete exclusion of investments and underwriting activities in the thermal coal sector in OECD countries and in the rest of the world; and gradual decarbonisation of the direct investment portfolio to become climate neutral by 2050.

By Anh Duc

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional