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Generali Group's operating result at record $6 billion

Released at: 11:14, 19/03/2018 BUSINESS SPOTLIGHT

Generali Group's operating result at record $6 billion

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Result stems from life segment, investments, asset and wealth management business, and cost reduction targets being reached ahead of schedule.

by Ngoc Lan

The operating result of the Generali Group stood at record $6 billion as at December 31, 2017, thanks to the life segment, the investments, asset and wealth management business, and cost reduction targets being reached ahead of schedule.

Net profit was $2.5 billion, up 1.4 per cent, due to improvements in operating and non-operating results that mostly benefited from lower impairment losses and notwithstanding the impact of discontinued operations and the increase in fiscal obligations. 

The operating return on equity, the Group’s main economic profitability indicator, came to 13.4 per cent, unchanged from the December 31, 2016 figure and exceeding the strategic objective of over 13 per cent.

Total premiums were steady at $84.1 billion, with the life segment slightly down, at $58.6 billion, while the P&C segment rose 1.7 per cent to $25.4 billion.

Life net inflows amounted to $11.9 billion; among the highest in the market. Life technical reserves stood at $476 billion, up 4.2 per cent. Unit-linked reserves grew 12.1 per cent.

The strategic reorientation toward the unit-linked and pure risk businesses, together with the effective redefinition of financial guarantees, resulted in significant growth in profitability (the margin on the present value of new business premiums) of 1.46 percentage points, rising to 4.01 per cent compared to 2.56 per cent as at December 31, 2016. New business value (NBV) also improved, up 53.8 per cent to $2.2 billion compared with $1.4 billion as at December 31, 2016.

The Combined Ratio, at 92.8 per cent, ranks highest among its large European peers and is consistent with the Group’s proven track record of technical excellence.

The Regulatory Solvency Ratio, which represents the regulatory view of the Group’s capital and is based on use of the internal model, solely for companies that have obtained relevant approval from IVASS and on the Standard Formula for other companies, stood at 208 per cent against 178 per cent in 2016.

The Economic Solvency Ratio of the Group, which represents the economic view of the Group’s capital and is calculated by applying the internal model to the entire Group perimeter, stood at 230 per cent against 194 per cent in 2016.

The dividend per share to be proposed at the next shareholders’ meeting is $1, up 6 per cent compared to the previous year. The pay-out ratio is equal to 63 per cent, from 60 per cent in 2016.

The total dividend relating to shares outstanding amounts to $1.6 billion. The dividend payment date shall be from May 23 with a record date on May 22 and an ex-dividend date from May 21.

The operating result of the Holding and other businesses segment amounted to $72.3 million, up considerably compared to a loss of $90 million in 2016.

In an improving macroeconomic and financial context still characterized by low interest rates and uncertainty in financial markets, the disciplined execution of the current strategic plan will continue. The Group will continue to rebalance the portfolio in the life segment with the goal of optimizing its profitability and allowing capital to be allocated more efficiently through the simplification and innovation of the range of product solutions. 

Despite the strong competitive pressure in the P&C business, premium income is expected to rise. The abovementioned initiatives will permit the Group to offset the prolonged low-interest rate scenario and will encourage growth, confirming the objectives set in the strategic plan.

Generali is an independent Italian Group with a strong international presence. Established in 1831, it is among the world’s leading insurers and is present in over 60 countries, with total premium income exceeding $83.4 billion in 2017. 

With nearly 71,000 employees around the world and 57 million customers, the Group has a leading position in Western Europe and an increasingly significant presence in Central and Eastern Europe as well as in Asia. 

In 2017 it was included among the most sustainable companies in the world in the Corporate Knights rankings.

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