Morningstar | Generali 9 Months Sparse but Decent Results
Generali reported indicators for 2018 nine-month period. While the numbers and details are a little light, we think this is actually not a bad set of numbers, given the operating environment and circumstances. Operating profit came in at EUR 3.6 billion, which is a 4% increase, and this was generally across all business segments. We are maintaining our Eur 17.30 fair value estimate and no moat and stable moat trend ratings.Probably the highlight of these results is the property and casualty combined ratio. This is a decent chunk of the business and we remain impressed with the overall standard of Generali’s underwriting, 92.8% combined ratio. More broadly, Group premium growth is up 6.0% to Eur 50 billion, driven to a lower extent by property and casualty, but largely by the life insurance business. This has been driven by protection and collective policies and that is probably a second good indicator of the driving forces behind the buoyant operating earnings. Savings and pension products new business sales have also declined by 4% which considering capital charge, intensity, and margin compression, probably haven’t done the business any harm.
While the information is sparse, this seems to us like a relatively decent set of results. Solvency has declined by 9 points but still remains well above 2 times, and we like that we are continuing to see growth in third party assets, up just under 5%, which is driven by the relationship with Banca Generali.
Assicurazioni Generali is the parent company for The Generali Group (the Group), an insurance and financial services provider. The commercial offer is composed of savings and pure risks policies, which constitute the majority of the portfolio, which includes protection and pension funds. In the non-life sector the Group is focused primarily on the retail market. In addition, through the Europ Assistance Group, Co. is engaged in services in motor, travel, health, home and family. The Group has also expanded its business from insurance to a range of asset management, property and financial services.
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