Generali Group: Excellent 2016 results!

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Αθήνα, 19-10-2017

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Δημοσίευση: Πέμπτη, 16 Μαρτίου 2017 13:13

Generali Group: Excellent 2016 results!

Nextdeal newsroom



Generali Group closed the year 2016 with excellent results which confirms the strength of its strategy and effectiveness of its implementation. The operating result has reached the best performance ever, thanks to the strong performance of both Life and P&C segments, driven by further improved technical performances and even greater discipline on Opex costs, while the net profit and dividend are the best of the last 9 years.


In spite of a challenging macroeconomic environment and low interest rates, the actions undertaken by the Group have resulted in: excellent operating income, which remains above target; technical profitability, which steadily improved and constant diligence on cost management – for the first time decreasing almost by €70mln – which will allow the acceleration to 2018 from 2019 of targeted €200mln cost reduction. The Group also produced an increase in product profitability, and confirmed its capital strength.

The Group’s operating result reached €4,830 million (€4,785 mln FY15), up by 0.9% thanks to further improvements both in Life (+5.5%), benefitting from good technical performance despite the financial market environment, and in P&C (+2.9%) due to a continued improvement of the Group’s CoR.

Operating RoE, the main profitability target, stood at 13.5% (14% FY15), meeting the strategic objective for the third consecutive year (>13%).

Thanks to improvements in the operating performance, the net profit rose to €2,081 million (+2.5%; €2,030 mln FY15). This net profit increase has been achieved despite planned lower realized gains in line with the strategy of preserving future profitability and is a testament to the quality of the results.

On the production side, gross written premiums amounted to € 70,513 million (-3.9%; €74,165 mln FY15). The P&C segment improved (+2.1%), confirming the trend already observed during the year, while the Life segment amounted to €49,730 million (-6.3%; €53,297 mln FY15), reflecting both a disciplined approach on products, aiming to optimize the return on invested capital, and the current performance of financial markets.

This disciplined approach is reflected by the excellent quality of life net inflows, surpassing €12 bn (-18.5%), higher than the average of the last 5 years and the best amongst peers.

New production in terms of APE amounted to €4,847 million (-6.6%). With reference to the business lines, considerable improvement was recorded in protection policy products (+12.4%). At the same time, there was a decline in both unit-linked business (-11.3%), due to market volatility, and in the savings business (-9.7%), because of the unfavourable financial situation and due to the Group’s planned actions to carefully recalibrate guarantees. Thanks to the effective execution of the strategic plan, the new business value (NBV) improved significantly to €1,256 million (+14.6%), driven by a higher new business margin (NBM) of 25.9% (21% FY15). This improvement in profitability is thanks to the effective recalibration of the business mix towards protection policy products and recalibration of guarantees, and helped to counteract a deterioration in the economic environment against the previous year.

In the P&C segment, premiums grew by 2.1% on a like for like basis to €20,783 million (€20,868 mln FY15), thanks to the growth recorded in the Motor line (+4.3%) as well as in the Non motor line (+0.5%). High technical profitability was confirmed in the P&C business, with a combined ratio further and constantly improving to 92.5% (-0.7 p.p.), the best ratio amongst our peers, thanks to the decline in the loss ratio.

These results are accompanied by a strengthened capital position which the Group continues to hold in a sharp focus. Shareholders’ equity grew 4.2% to €24.5bn, mainly benefitting from the net profit of the period that offsets the dividend distribution.

The Regulatory Solvency Ratio - that represents the regulatory view of the Group’s capital and considers the use of the internal model solely for the companies for which IVASS approval was obtained and for the remaining companies applying the Standard Formula - after accruing the proposed dividend - amounted to 177% (171% FY15; +6 p.p.). The 2016 ratio benefits from the internal model approval used to calculate the Solvency Capital Requirement of the Life insurance portfolio in France, that in 2015 was calculated applying the Standard Formula.

The Group Economic Solvency Ratio, which represents the economic view of the Group’s capital and is calculated by applying the internal model to the whole Group's perimeter and after accruing the proposed dividend, remains stable at 194% (202% FY15; -8 p.p.) thanks to the strong capital generation that has partially offset the negative impact of the adverse economic context and to regulatory changes for the calculation of the Volatility Adjustment.

As a result of this, as expected, the progressive convergence of the two ratios is confirmed.

Its gap decreased from 31 p.p. by the end of 2015 to 17 p.p., as the process of achieving the planned expansion of the internal model application scope progresses.

Lastly, thanks to the higher dividends received from all main markets the Net Operating Cash has significantly increased by 13% to €1.9 bn. We continue towards reaching the financial target of a cumulative Net Operating Cash generation above €7bn by the end of 2018, and as of the end of 2016 a cumulative €3.5bn has been achieved.

The Generali Group CEO, Philippe Donnet, affirmed: “Our excellent 2016 results confirm that Generali is an industry leader in terms of profitability and performance. These results demonstrate our ability to deliver on our commitments. Operating result and cash generation are the highest ever, driven by further improvements in the performance across the whole group. In Life, the net inflows are very strong, with high margins thanks to a successful focus on the business mix. In P&C we improved our already best in class combined ratio. Thanks to a tighter focus on the efficiency of our operating machine, we reduced costs for the first time and we will now deliver our 2019 savings target on mature markets one year ahead of plan.

I am encouraged by Generali's progress in the last year. We are already seeing the early results of our “Simpler, Smarter. Faster” Plan, announced in November 2016. We will build further on these achievements and we have the best possible team to accelerate the execution of our current strategy. Moreover, Generali can count on a unique distribution model of more than 150 thousand dedicated agents and salespeople around the world, who ensure a closer relationship with clients based on trust, expertise and understanding. This, together with the unparalleled level of pride and passion of all Generali employees, is an incredible asset which underpins our success at all times.

We are proud of these results, but we consider them only a first step in a journey to become the best insurance company for clients, distributors, employees and investors and we look to the future with confidence, as an independent, Italian, international group.

In the light of our excellent results and the solid capital position of the Group, we have recommended a dividend of €0.80 an increase of 11.1% over the previous year”.

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