Generali Group - Nine months 2020 results

OPERATING RESULT ROSE TO € 4 BILLION (+2.3%). NET PROFIT AFFECTED BY IMPAIRMENTS ON INVESTMENTS AND NON-RECURRING EXPENSES, INCLUDING THE LIABILITY MANAGEMENT. EXCELLENT CAPITAL POSITION

• Operating result up to € 4 billion, thanks to positive development of the P&C and Asset Management segments, supported also by recent acquisitions, as well as of the Holding and other businesses segment. Technical excellence was confirmed with a Combined Ratio at 89.7% (-2.8 pps) and New Business Margin reached excellent levels (4.10%; -0.18 pps).
• Total gross written premiums reached € 52 billion (+0.3%), with resilient P&C premiums and a positive development for the Life segment (+0.4%). Life net inflows remained solid at € 9.3 billion (-13%) and Life technical provisions increased to € 376.3 billion (+1.9%)
• The Group’s capital position strengthened, with a Solvency II Ratio at 203% (+9 pps HY20).
• The Group’s net profit was € 1,297 million (-40%), affected by € 310 million in net impairments on investments related to the performance of the financial markets, € 183 million for the arbitration settlement on the BSI disposal, the contribution of € 100 million2 for the Extraordinary International Fund for the pandemic emergency and € 73 million expense from the liability management transaction. Excluding the expense of the Extraordinary International Fund for Covid-19 and the expense from the liability management transaction, adjusted net profit3 reached € 1,629 million (-13%).

Generali Group CFO, Cristiano Borean, commented: “The results for the first nine months continue to demonstrate Generali’s resilience as evidenced by the excellent technical margins supporting the operating result and capital position. In an environment that continues to be characterised by heavy macroeconomic and financial impact of the ongoing pandemic, the Group confirms its strengths based on its leadership position in Europe and a primarily retail-focused, flexible and diversified business model. Generali remains committed to be a true Lifetime Partner to its customers, through specific aid and assistance initiatives, and to support the communities where it operates, through initiatives including the Extraordinary International Fund for Covid-19.”

Premiums, New Business and Volumes

The Group’s gross written premiums amounted to € 51,989 million, showing a slight increase compared to last year (+0.3%), thanks to the contribution from the Life segment. P&C remained stable. Excluding the written premiums of a collective Life pension fund in Italy5 amounting to around €1.5 billion, the Group’s gross written premiums would have been down by 3.9%.

Life premiums increased slightly (+0.4%): the increase in unit-linked products was significant (+24.6%), driven by the trend in Italy and Germany. Savings and pension products declined (-12.7%), mainly in Italy, France and Spain. The protection line (+1.6%)6 observed trends that were differentiated in the Group’s various countries of operations. The contribution from accepted premiums in the protection line grew thanks to a new partnership in France.

Concentrated in the unit-linked and protection lines, Life net inflows (premiums collected, net of claims and surrenders) were € 9,322 million, down 13%. The decrease was mainly due to the trend in the savings and pension line in France, which showed a reduction in premiums and higher surrenders, in line with the Group’s portfolio repositioning strategy. The countries in the International cluster contributed, albeit to a lesser extent, to the decline in net inflows. Excluding the growth in Italy resulting from the premium mentioned above, the decrease would have been 26.9%.

Against the market context, P&C premiums were stable, on equivalent terms, at € 16,566 million. The motor line observed differentiated trends across the Group’s various countries of operations, overall maintaining the same levels as in the previous year. The positive performance in ACEER and Americas and Southern Europe, also after inflationary adjustments, was offset by a 3.6% decrease in Italy due to the lockdown measures in the first half of the year. The non-motor line (+0.3%) reflected the positive trends across the Group’s areas of operations, particularly in Italy - driven by the development of policies associated with Covid-19 in the health and assistance line and that of the corporate business - ACEER, France and Spain. Europ Assistance posted a decrease (-31.5%), with premiums affected by the pandemic, particularly in the travel line of business.

New business in terms of PVNBP (present value of new business premiums) stood at € 31,599 million, up 1.3%. The above-mentioned effect in the Italian unit-linked line posted in June more than offset the decrease in savings and pension product premiums, associated with the current financial context characterised by very low interest rates. Protection products grew thanks to a significant contribution from Germany and the performance in Italy in the third quarter of the year. Excluding premiums of the above-mentioned Italian collective pension fund, new business would have been down by 6.9%.

The profitability on PVNBP stood at 4.10% (4.28% 9M19) with a 0.18 pps decrease due to a less favourable financial position than in the first nine months of 2019, partly offset by the more favourable business mix and the continuous development of new products without guarantee. Excluding the above-mentioned pension fund, profitability would have stood at 4.30%.

Consequently, new business value (NBV) was € 1,296 million (€ 1,340 million 9M19), down 2.9% compared to the first nine months of 2019. Without the value of the above-mentioned pension fund, NBV would have been € 1,250 million (-6.3%).

Total third-party Assets Under Management7 were € 160,576 million (-0.8%). Despite the financial market volatility, the improved trend compared to the first semester reflected the positive net inflows in the third quarter.

Life technical provisions rose to € 376,342 million (+1.9%), reflecting the performance of traditional liabilities (+2.3%) and the unit-linked component (+0.4%), thanks to the positive contribution from net inflows. [...]