In the first quarter Generali recorded a normalized net profit of 1.1 billion (-9%). The result would have increased by 8% excluding the non-recurring profit made in the same period last year from the sale of a property in London. Operating profit rose to 1.9 billion (+5.5%).
Gross premiums are increasing to 26.4 billion (+21.4%), thanks to both the life and non-life segments and the consolidation of Liberty Seguros in February. In particular, life net inflows returned to positive at 2.3 billion, entirely driven by the pure risk and health and unit-linked lines, in line with the group strategy.
The normalized net result in the first quarter of 2023 included the non-recurring profit of 193 million after tax relating to the sale of a London property complex. Generali’s net result increased to 1,256 million (from 1,199 million in the first quarter of 2023), including a profit after taxes of 58 million resulting from the sale of Tua Assicurazioni.
As for the operating result which rose to 1,898 million (+5.5%), the Life operating profit increased to 969 million (+4.9%) and the value of new production (nbv) improved to 688 million (+5%) . The operating result of the Non-Life segment rose to 867 million (+2.4%), also thanks to the contribution of Liberty Seguros, consolidated starting from February 2024. The combined ratio stood at 91% (from 90.7%), reflecting a less benefit from discounting. The undiscounted combined ratio improved to 93.7%. (from 94.2%).
The operating result of the Asset & Wealth Management segment recorded significant growth to 263 million (+16.7%), thanks to the strong performance of Banca Generali which made an operating profit of 156 million (+41.7%), The result Generali’s Asset Management operations decreased to 107 million (-7%) due to increasing operating expenses due to different accounting times for variable staff remuneration. The Generali group’s overall assets under management increased to 670.3 billion (from 655.8 billion). The net assets pertaining to the group grew to 30.1 billion (it was 29 billion at the end of 2023). The Solvency ratio stands at 215% (from 220% at 31 December).
The decline – explains Generlai in the note on the accounts – reflects in particular the acquisition of Liberty Seguros. This effect, together with the impact of negative regulatory changes and the provision of the dividend for the period, was only partially offset by solid normalized capital generation and positive market variances. Gross premiums in the Life segment are growing strongly to 16.9 billion (+28.4%). A positive trend was recorded in all business lines, with a particularly strong performance in the savings line (+52.5%) in Italy and France, which reflects the commercial actions implemented from 2023, as well as in China. The pure risk and illness line confirmed solid growth (+9.6%) in most countries.
Growth was also observed in the unit linked line (+8.6%), in particular in the main markets represented by France, Italy and Germany. Gross premiums in the Non-Life segment are growing to 9.5 billion (+10.9%), driven by the performance of both business lines. The non-motor line grew by 6.0%, with widespread development in all the Group’s main areas of operation. Europ Assistance’s collection increased by 6.1%, a further increase compared to the strong double-digit growth recorded during 2023. The car line grew by 17.6%, in all the main geographical areas
Borean: ‘Fully on track to achieve our strategy objectives’
“In the first quarter of 2024, the growth of Generali’s operating result continues, thanks to the solid contribution of all business segments. In the life segment the Group achieved positive net inflows, thanks to strategic choices focused on the pure risk and health lines and unit-linked and thanks to the commercial actions implemented during 2023. The non-life segment also benefits from the consolidation of Liberty Seguros, an acquisition which is already contributing positively to the group’s earnings profile. Thanks to the diversified insurance and asset management model and to the solid capital position, driven by strong normalized capital generation, we are fully on track to successfully achieve all objectives of the ‘Lifetime Partner 24: Driving Growth’ strategy.” This was stated by Generali’s CFO, Cristiano Borean, commenting on the results.
The Generali group, in this last year of the plan, confirms its commitment to pursuing sustainable growth, improving the earnings profile and driving innovation in order to achieve a compound annual growth rate of earnings per share of between 6 % and 8% in the period 2021-2024, generate net free cash flows at the parent company level exceeding 8.5 billion in the period 2022-2024 and distribute cumulative dividends to shareholders in the period 2022-2024 for an amount between 5 .2 billion 5.6 billion, with ratchet policy on the dividend per share. With the payment of the 2023 dividend on May 22, the group reaches the latter target with total dividends of 5.5 billion in the period 2022-2024, underlines the Generali note.
‘Generali no longer has cash for other acquisitions’
Generali no longer has resources available for other acquisitions this year, the last of the plan, once the 500 million share buyback is completed, since it wants to maintain a 1 billion liquidity cushion. “We announced the buyback which was approved by the meeting and now we have submitted the request for approval to the regulator. Once this buyback has also been completed and other cash has been used, which we are using for the buyback of the incentive plans, we believe we are in line with the available free cash, in which we focus on a liquidity buffer of 1 billion.”
It is “a liquidity buffer that we do not want to touch for reasons of risk and liquidity management as we have historically always maintained”, explained Generali CFO Cristiano Borean when presenting the accounts to the news agencies. So you don’t have resources for other acquisitions? He was asked. “No, as per the cash projection, no. By maintaining the billion liquidity buffer we exhaust the free cash flow part. There are no significant quantities to report for acquisitions”, replied Borean.
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