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What emerges from the Generali quarterly and what the insurance group's CFO said. Emanuela Rossi's article
Stable profits for Generali in the first nine months of 2022. The insurance group confirms the targets of the 2022-2024 plan and – through the words of CFO Cristiano Borean – confirms its solidity despite the fact that the macroeconomic context is not simple. Starting with the conflict in Ukraine which has already led to major devaluations on Russian investments.
EARNINGS, COLLECTION AND EQUITY OF GENERAL INSURANCE
The net profit of Leone in the January-September period remained substantially stable at 2,233 million (-0.8%) but, without the impact of Russian investments, it would have grown to 2,374 million (+ 5.5%). Therefore, the net profit is affected by Russia for 141 million: the write-down on the investment in Ingosstrakh is 48 million; 93 million refer to fixed income securities held directly by the group, as evidenced by the note issued by the group.
Plus sign for the operating result – to 4.8 billion (+ 7.8%), thanks to the positive development of the Life and Non-Life segments – and for the gross premiums to 59.8 billion (+ 1.3%), thanks to the Non-Life development (+ 10.3%), in particular in the non-auto sector. On the other hand, premiums in Life decreased (-2.9%).
Life net inflows fell to € 7,667 million (-25.3%) but the operating result of the Life segment (+ 23.9%) and the New Business Margin (+ 0.68%) continue to grow thanks to the rise in interest rates. interest. The operating result of the Non-Life segment also increased (+ 2.9%). The Combined Ratio stands at 93.3% (+ 2.0%) but without the weight of hyperinflation in Argentina it would have stood at 92.5% (from 91.1%). The operating result of the Asset & Wealth Management segment reached 714 million (-7.5%) with that of Asset Management reaching 459 million (+ 1.7%). The operating result of the Holding and other activities segment also increased (+ 9.9%), mainly due to the effect of the real estate result.
Minus sign for the non-operating result of 1,064 million (-731 million in the first nine months of 2021). In particular, the non-operating result from investments amounted to -245 million (from 137 million), mainly due to the higher write-downs on investments classified as available for sale, in particular the Russian ones, and the lower net realized gains.
Turning to equity, the net equity amounted to € 16,578 million (-43.4%), a decrease mainly due – reported by Generali – to the decrease in the reserve for profits attributable to financial assets available for sale for -14,063 million. The Solvency Ratio drops to 223% (227% at the end of last year) due to the impacts deriving from the M&A transactions, the regulatory exchange rates in the first quarter and the provision of the dividend for the period and the buy-back transaction.
BOREAN (CFO): TARGET PIANO CONFIRMED, EQUITY INVESTMENT IN RUSSIA IS NOT FOR SALE
In the note accompanying the quarterly report, CFO Borean confirmed the group's objectives: “The strategic initiatives and business actions implemented since previous years ensure the Group's good positioning in achieving its objectives. Despite an evolving macroeconomic scenario, Generali confirms its commitment to pursue sustainable growth, improve its earnings profile and drive innovation in order to achieve a compound annual growth rate in earnings per share over the period 2021-2024 between 6% and 8%, generate net cash flows available at the parent company level in the period 2022-2024 in excess of 8.5 billion and distribute cumulative dividends to shareholders in the period 2022-2024 for an amount between 5.2 and 5 , 6 billion, with ratchet policy on the dividend per share ".
During the conference call with analysts, reports Ansa , Borean highlighted that “the results of the first nine months reflect the solidity of our group based on our strategy focused on the most profitable lines of business and on diversified sources of profits. This allows us to continue to generate value despite the macroeconomic context ”.
As regards relations with Russia, "the stake in Ingosstrakh is frozen, at the moment it is not for sale", the CFO reiterated. "In the nine months we devalued it to 165 million euros compared to 384 of the year-end value" or, in rubles, "the value of the investment was devalued by 70%".
Responding to a question, Borean said that the group is “a happy shareholder of Banca Generali, the recent results have been appreciated and for us the distribution agreement and the potential it has developed so far make us satisfied”. Therefore, there seems to be no sale on the horizon, as hypothesized by press rumors, for the consequent purchase of Guggenheim.
Borean, however, on possible mergers – reports Ansa – explained that in the plan "we expect to allocate between 2.5 and 3 billion cash flows over the three-year period in merger and acquisition operations as a means of diversifying our sources of profit. This is the commitment we made by remembering that, if we did not have to use all the 2.5-3 billion, at the end of the 2022-2024 plan we would return the unused excess capital to the shareholders ".
Finally, a few words on the tariff increases that occur "especially in the auto sector" which "has suffered more from the negative effect of inflation following the increase in repair costs". The CFO confirmed that "the group continues to inject increases that are certainly in line if not at times higher than the inflationary one".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-vanno-i-conti-di-assicurazioni-generali-2/ on Thu, 10 Nov 2022 08:51:28 +0000.