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GENERALI, 1H2017: improved net profit and operating result. Operating return on equity again above target

GENERALI Group's operating result rose by 4.1% to EUR 2,588 million in 1H2017, while the net profit increased to EUR 1,221 million. The Group's annualized operating RoE was of 13.6%, in line with the plan objective.

With reference to volumes, Life Net cash inflows exceeded EUR 5.7 billion, 23% down y-o-y reflecting the Italian group's more selective underwriting policy in the savings line and a targeted rebalancing in favor of products offering better risk-return terms. Furthermore, Italy, France and Ireland experienced an increase in surrenders. Life GWP, amounting to EUR 25.3 billion, recorded a drop of 1.8%, due to the continuation of the aforementioned strategic objectives, savings products declined by 15.5%, while unit-linked policies registered significant growth (+30%) in particular in Italy and France, together with a remarkable growth in the protection line (+5,4).

The growth observed in the P&C premium income in the first quarter continued, and rose to EUR 11.3 billion (+1.5%), due to the increase in the Motor segment (+3.7%), concentrated in particular in Germany, in Central and Eastern European countries and in the Americas. Premiums in the Non- Motor segment were also positive (+0.8%).

Total GWP of the Group consequently reached EUR 36.6 billion, a slight drop (- 0.8%) compared to the previous year.

The Non-operating result improved to EUR -577 million, reflecting better financial performances, lower interest on financial debt and lower restructuring costs.

The aforementioned positive economic performances, partially offset by the greater weight of taxes, which went from 31.6% to 32.5%, are reflected in the Result of the period attributable to the Group of EUR 1,221 million, up by 3.7% compared to EUR 1,178 million in the half in 2016.

Generali Group CEO, Philippe Donnet, declared: "Generali's first-half results confirm the solidity of our business and the efficient execution of our industrial transformation. The Combined Ratio at 92.9% and the New Business Value, which registered a strong increase of 52% with a margin of 4.11%, continue to remain at excellent levels. The rise in P&C premiums together with the solid and continued high-quality Life net inflows, are a result of our focused and disciplined approach to growth. The successful execution of our strategic plan led to today's positive results with a 3.7% rise in net profit, operating RoE remaining above our target and an overall increase in capital-light products. We are achieving our financial goals thanks to the determination, the focus and the commitment with which we are implementing our strategy to make Generali 'simpler & smarter'."

As mentioned by the Group's statement, the main 1H2017 results achievd by GENERALI may be summarized as follows:

- Net profit increased to EUR 1,221 million (+3.7%), thanks to the positive performance in all areas of operation

- Operating RoE stood at 13.6% (target >13%)

- Operating result up to EUR 2.6 billion (+4.1%), despite the current low interest rate environment, reflecting the improved profitability in the Financial and Property&Casualty segments

- Technical performance confirmed at excellent levels with CoR at 92.9% and Life New Business Value at EUR 942 million rising by 52%, with a margin of 4.11%

- Premiums solid at EUR 36.6 billion (-0.8%1). Growth recorded in P&C business (+1.5%); in Life, net inflows stood at best in class levels exceeding EUR 5.7 billion

- Improved capital position with Regulatory Solvency Ratio2 at 188% and Economic Solvency Ratio at 207%


As stated by the Group's press released, in the near future GENERALI will continue to pursue its strategic goals:

- In Life insurance - fostering the offer of policies less sensitive to the level of interest rates and with less capital absorption

- In the Property&Casualty segment - enhancing the technical profitability, in order to support the performance in a scenario of minor financial earnings, with the final aim of becoming a leader in the European retail segment

- optimizing the international footprint, through the disposal operations, and rationalizing the operating machine by managing operating expenses

- strengthening of the brand and innovation initiatives in order to retain clients and attracting new customers through improving the distribution network

A comprehensive presentation of the Group's results in 1H2017 is available here.

Author: Daniela GHETU on 10.08.2017

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