Consolidated Results as of 31 December 2017
15 March 2018
OPERATING RESULT HITS RECORD HIGH, NET PROFIT OVER € 2.1 BILLION, DIVIDEND RISES 6% TO € 0.85 PER SHARE. CONFIRMING GENERALI STRATEGY FULLY ON TRACK
- Operating result at record of € 4.89 billion (+2.3%) thanks to the Life segment, the Investments, Asset & Wealth Management business and cost reduction target reached ahead of schedule
- Net profit over € 2.1 billion (+1.4%)
- Operating RoE at 13.4%, in line with the strategic plan target (>13%)
- Increase in profitability of life products, with New Business Value (NBV) rising 53.8%. Life net cash inflows at € 9.7 billion, among the highest levels in the European sector. Life technical reserves increased by 4.2%
- Combined Ratio at 92.8%, confirmed as the best among large peers
- The capital position is further strengthened: Regulatory Solvency Ratio at 208%; Economic Solvency Ratio at 230%
- Dividend per share at € 0.85, up 6% (€ 0.80 FY2016)
Generali Group CEO Philippe Donnet declared: “The excellent results that we presented today confirm the validity and effectiveness of our strategic plan in this current market context. We are perfectly positioned to reach all of our objectives that we had set for 2018. In light of these results, the Board of Directors will propose a dividend of 0.85 Euro per share, an increase of 6 per cent from 0.80 Euro in 2016. Our focus on technical excellence, combined with the results of our Investments, Asset & Wealth Management business and the cost reduction target hit two years ahead of schedule, have pushed the operating result to record levels. In 2017, we implemented a series of important projects, such as the launch of the new asset management strategy, the rationalizing of the international footprint and the transformation of our German business - all initiatives that contribute to the overall resilience of our Group. These results, obtained thanks to the daily commitment and passion of our colleagues, agents and collaborators, allow us to look to the future with confidence and to create sustainable value for all of our stakeholders.”
Milan - At a meeting chaired by Gabriele Galateri di Genola, the Assicurazioni Generali Board of Directors approved the consolidated financial statements and the Parent Company’s draft financial statements for the year 2017.
The Group closed the year 2017 with strong results and excellent capital position. In particular, the operating result and net profit both increased. There was improvement of the quality of life net cash inflows and strongly increased new business margins. They confirm the full implementation of the strategy presented in 2016 that will be completed by year-end.
The Group’s operating result reached the record level of € 4,895 million, up 2.3% thanks to the positive performance of the life segment and the Investments, Asset & Wealth Management business2 and to the cost reduction reached two years ahead of schedule (-€200 million in mature markets). The 1.8% increase in the Life result is due to a better investment performance; the growth in the result of the segment Holding and Other Activities, reaching € 59 million, reflects the excellent results of Banca Generali and the enhanced performance of Asset Management Europe. Both segments balance the decrease of the P&C operating result (€ 1,972 million, -4.9%) affected by €416 million in natural catastrophe claims that mainly came from the US hurricanes and the storms that swept Central Europe as well as by the lower contribution of investment returns in a low interest rate context. Excluding the impact of natural catastrophe claims in both years under comparison, the P&C operating result would be stable.
The operating return on equity, the Group’s main economic profitability indicator, came to 13.4% (unchanged compared with the 31 December 2016 figure), confirming the strategic objective (>13%).
Net profit reached € 2,110 million, up 1.4% due to the improvement in the operating and nonoperating results that mostly benefit from lower impairment losses and notwithstanding the impact of the discontinued operations and the increase in fiscal obligations.
As for production, the total premiums of the Group were steady at € 68,537 million (-0.2%), with the life segment slightly down at € 47,788 million (-1%) while the P&C segment rose 1.7% to € 20,749 million.
Life net inflows amounted to € 9,718 million, proving to be among the highest levels of the market. The life technical reserves stood at €388.7 billion, up 4.2%. In particular, the unit linked reserves grew by 12.1%.
The strategic reorientation toward the unit-linked and pure risk businesses, together with the effective redefinition of the financial guarantees, resulted in significant growth of profitability (margin on PVNBP) of 1.46 p.p., rising to 4.01% (2.56% at 31 December 2016). Also the new business value (NBV) improved consequently (+53.8%), standing at € 1,820 million (€ 1,193 million at 31 December 2016).
Growth in P&C premiums is due to both the motor and non-motor segments.
The Combined Ratio, at 92.8% (+0.5%), ranks number one among our large European peers and is consistent with the Group’s proven track record of technical excellence. In particular, not considering the impact of natural catastrophes, the loss ratio – the effect of claims on premiums – improved by 0.6% (62.9% from 63.5% in 2016).
The Regulatory Solvency Ratio – which represents the regulatory view of the Group’s capital and is based on use of the internal model, solely for companies that have obtained the relevant approval from IVASS, and on the Standard Formula for other companies – stood at 208% (178% FY 2016).
The Economic Solvency Ratio of the Group, which represents the economic view of the Group’s capital and is calculated by applying the internal model to the entire Group perimeter, stood at 230% (194% FY 2016).