Generali in the first three months of 2022 it recorded a net profit of 727 million (from €802 million in the same period of 2021) after writedowns on Russia of €136 million (€96 million for Russian fixed-income securities held directly by the Group and €40 million for the investment in Ingosstrakh). Without that impact, the net result would amount to 863 million.
Exhibitions in Russia
In the press conference following the publication of the quarterly data, Christian Borean, CFO of Generali answered some questions relating to the situation in Russia. “In the worst-case scenario, the impact of the devaluations in Russia, which will only be clear and definitive with the half-year report, will be 163 million, of which 126 million linked to the 38,5% stake in Ingosstrack and 37 million to government bonds Russians after those carried out in the first three months of the year. With the six-monthly report there will be a definitive crystallization of values and devaluations, in which we will integrate further information and the evolution of the Russian situation, positive or negative… Certainly, the longer the war continues and becomes longer, the more it creates a context of tension” .
He then added that Generali was "extremely quick in deciding and announcing its exit from Russia: now, as already mentioned, Europe Assistance's activity in Moscow will be progressively terminated compatibly with the technical times and the regulations ”.
Asked whether the stake in Ingosstrack was for sale, Borean said: 'It is frozen and considered purely financial, therefore treated as a normal investment asset.'
Operating profit holds, non-operating is in the red
THEoperating profit held at 1,6 billion (+1,1%), higher than the 1,55 billion euro expected by the market, supported by the contribution of the Life (+7,2%) and Non-Life (+1,2%) segments , "also thanks to the contribution of the Cattolica group", says the note.
Instead the non-operating result it is in the red by 375 million (from -275 million in the first three months of last year), mainly due to write-downs on Russian investments, classified as available for sale.
I gross premiums of the group amounted to 22,3 billion, an increase of 6,1%, with the sub-fund Danni which grows by 6,4% and the Life by 6%. The consensus of analysts indicated gross premiums of 20,86 billion
Life net inflows, relating to unit-linked and pure risk and health lines, grew by 19,3% to 3,9 billion life and non-life
“The first quarter results confirm Generali's excellent performance,” he says Borean, in the press release, ”despite the scenario characterized by uncertainty due to the conflict in Ukraine. The development of the business in the most profitable segments demonstrates the Group's constant ability to generate value, maintaining a solid capital position and at the top of the sector”.
At the end of March the net assets of Generali amounted to 25,64 billion euros, a decrease of 12,5% compared to 29,31 billion at the beginning of the year. The management explained that the change is due to the decrease in the reserve for profits attributable to available-for-sale financial assets for 4,8 billion mainly deriving from the performance of fixed-income securities.
- Assets Under Management total of the group are equal to 680,5 billion (-4,1% compared to the whole of 2021), mainly reflecting the performance of the financial markets, says a note from the Trieste company.
Il Solvency Ratio (which represents the regulatory view of group capital and is based on the use of the internal model only for the companies that have obtained the relative approval from IVASS, and on the standard formula for the other companies) is 237%, above 227% for the whole of 2021, an improvement that mainly reflects the positive market variations in the quarter due to the increase in interest rates and the contraction in spreads on government bonds, explains the company The Combined Ratio is 90,4% (+ 2,4 pp) and New Business Margin excellent at 4,94% (+0,53 pp) mainly reflecting the higher loss ratio.
Generali confirmed thegoal of growth compound annual growth rate 2021-2024 of earnings per share between 6% and 8%. Furthermore, management has confirmed the indication to generate net free cash flows in the period 2022-2024 in excess of 8,5 billion euros and distribute to shareholders dividends accumulated in the three-year period 2022-2024 (in the absence of impeding regulatory recommendations) for an amount between 5,2 and 5,6 billion.
Article updated at 13 of 19 May 2022
