Generali, jump in first quarter profit
MILAN - generals archives the first quarter with clearly growing results. The group - reports a note - recorded a net profit of 1,199 million (from 481 million in the same period last year) and a normalized net result, which does not take into account, among other things, the impacts of assets measured at fair value and of hyperinflation, of 1,229 million (+49.7%) thanks to the benefit deriving from diversified sources of profit. The operating result grew to 1,820 million (+22.1%) thanks to the non-life segment whose premiums (+10.1%) support gross premiums which reached 22.2 billion (+1.3%).
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The Generali group "thanks to the results achieved" with the quarterly report confirms all the objectives of the strategic plan 'Lifetime Partner 24: Driving Growth' "focused on a solid financial performance, an excellent customer experience and an even greater impact in the social sphere". In detail, the group intends to pursue sustainable growth, improve the earnings profile and drive innovation to achieve a compound annual growth rate of earnings per share between 6% and 8% in the period 2021-2024, generate net cash flows at the parent company level exceeding 8.5 billion euros in the period 2022-2024 and distribute to shareholders cumulative dividends in the period 2022-2024 in the amount of between 5.2 and 5.6 billion euros.
Among the other significant figures, the life operating result held steady at 924 million (+1%) and the new business margin rose to 5.72% (+0.32 percentage points). The operating result of the non-life segment increased to 847 million (+74.6%) and the combined ratio improved to 90.7% (-5.6 percentage points), supported by a lower loss ratio. The operating result of the asset & wealth management segment amounted to 233 million (-10%): despite the improvement of Banca Generali, the change in the result was affected by a comparison with a particularly strong first quarter of 2022. The operating result of the holding and other activities sector was negative by 117 million (+6.2%).
To better reflect the underlying business dynamics, as already announced in December 2022, starting from the first quarter Generali has introduced a new definition of normalized net result, which neutralizes the impact of volatility deriving from gains or losses on financial instruments measured at fair value in the income statement held on portfolios other than those with direct profit participation, the effect of hyperinflation pursuant to IAS 29, the amortization of intangible assets related to mergers and acquisitions and the impact of gains and losses deriving from acquisitions and divestitures.
The growth in the normalized net result to 1,229 million (from 821 million) is mainly due to the improvement in the operating result, which highlights the benefit of diversified sources of income, to the non-recurring profit relating to the sale of a London property complex (for 193 million after tax), the impact of writedowns of €96m on Russian fixed-income securities recorded in Q1 2022.
The group's total assets under management (assets under management) increase to 631.3 billion (+2.6% compared to the whole of 2022).
As regards the life segment in particular, gross premiums amounted to 13,238 million (-3.7%) penalized by the unit-linked line (-17.4%), particularly in Italy, Germany and France. The pure risk and health line, on the other hand, recorded growth (+6.4%). Life net inflows were negative by 190 million, entirely concentrated on unit-linked lines and pure risk and health, in line with the group's strategy.
Generali maintains an extremely solid capital position, with the solvency ratio at 227% (221% at the end of 2022) due to the strong contribution of normalized capital generation which, together with the positive impact of market variances (in particular the narrowing of spreads on government bonds, the recovery of the stock markets and the reduced volatility), more than offset the impacts deriving from the accrual of the dividend for the period and the buyback linked to the long-term incentive plan.