Generali, from the merger with Cattolica synergies of 130 million – Corriere.it

Generali lifts the veil on the construction site underway in Trieste which involves the integration with Cattolica – from which more synergies are expected and in advance of a year – and the adoption of the new accounting criteria – IFRS 17 and 9 -, in the wake of what already done in October by other insurance groups such as Axa and Allianz. The point on the Lion’s projects in progress at the investor update in which the CFO Cristiano Borean and the Group General Manager Marco Sesana explain to investors and the financial community the steps taken and those to be taken.

The Catholic construction site

The starting point is the integration of Cattolica into Generali, which will generate synergies up to 130 million by 2025, an increase and one year ahead of the 80 million by 2026, estimated in a first phase. The normalized net profit of Cattolica’s core businesses is expected to be at least 145 million in 2024, with a greater contribution of a further 0.4 percentage points to the growth in earnings per share, compared to what was initially expected by Cattolica, over the of the Lifetime Partner 24: Driving Growth strategic plan.

The new Ifrs principles do not change the plan

Generali confirms the targets of the business plan to 2024 even after the implementation of the new accounting standards Ifrs 17 and Ifrs 9. The average annual growth of the adjusted earnings per share, emerges from the presentation slides of the investor update, remains fixed at 6- 8%, just as the net cash flows available at the parent company level are above 8.5 billion euros and the cumulative dividends that will be distributed between 5.2 and 5.6 billion euros. In terms of key performance indicators (Kpi), the introduction of the new accounting standards will lead to a reduction in financial leverage and an increase in the combined ratio, the profitability indicator of technical insurance management, but without impact on the operating result. The Solvency 2 ratio will not be impacted, the shareholders’ equity and the operating result will be substantially stable while the net result will be less volatile.

Visibility into future profits

The new accounting standards improve the visibility and predictability of the operating result of Generali’s Life segment without impacting cash and capital generation, net holding cash flow, dividends and Solvency, explains Generali in this morning’s note containing the updates. The impact of the adoption of the new criteria will be seen above all on the stock of life products, on which the group has technical reserves of 424 billion. In fact, the new standards oblige companies to predict the future profitability of those stocks. A datum that will be added to the profitability datum of the new collection.

A new fact

The shareholders’ equity is expected to be at a stable level compared to that recorded at the end of 2021 under the current IFRS 4 accounting standards. The contractual service margin (CSM) — i.e. a number that represents the expected profitability of the life business, in practice the present value of future earnings — expected at around €33 billion at the time of transition to IFRS 17, reflecting the profitability of the existing Life business. Generali expects the group operating result to remain stable. a new indicator that for the entire insurance industry will give a more complete view of how the business is composed and how profitable. a new way of representing insurance accounting, looking not only at the snapshot of the moment but at how profitable it could be in the future. For the benefit of analysts and investors who have greater visibility beyond the short-term trend that can be influenced by market volatility.