Generali’s results fall in line with expectations and guidance. At constant environment and as we are approaching the end of the 3-year plan, we believe that all eyes will be on governance changes.
Companies: Assicurazioni Generali (G:BIT)Assicurazioni Generali S.p.A. (G:MIL)
Generali delivered a strong Q1 21 performance. From top to bottom lines, consensus estimates have been beaten. Although these figures give us much optimism for the rest of the year, we are disappointed that Generali only confirmed that the performance is in line with expectations.
Generali succeeded in posting increases in both sales (up 0.5% to €70,704m) and operating earnings (up 0.3% yoy to €5,208m). Net profit dropped by 34.5% to €1,774m. The Board will propose a total dividend of €1.47 per share, of which €0.46 is relative to 2019. The insurer confirmed all its strategy plan’s targets. We reiterate our positive opinion on Generali.
Even at the age of 85, Leonardo Del Vecchio kept his power in the Italian financial system. He seems to be behind the appointment of Andrea Orcel as the new CEO of Uncredit, a key issue for the possible acquisition of Monte dei Paschi di Siena and for the future of Generali.
Companies: Assicurazioni Generali S.p.A.
Generali confirmed its financial targets for FY 2021. The insurer, which posted resilient operating earnings, suffered from non-operating items that led to a decline in its net profit. Generali remains a solid European operator, with a capacity to pay the second tranche of the FY 19 dividend with FY 20’s one next year. The risk of Italian Sovereign bonds exists, but the company has always showed its capacity to manage all debt crises.
Generali posted resilient operating earnings in H1 20 at €2,714m, -0.4% yoy. The excellent P&C segment’s performance (+13.1% to €1,302m) compensated for the decline in profitability of the Life division (-15% in operating result to €1,369m). The asset management business showed an improvement in earnings to €219m. The net result decreased by 56.7% to €774m, mainly affected by impairments on investments (€-431m) and the contribution to efforts against COVID-19 (€1,002m). The Solvency II ratio was
While the impact of COVID-19 on the accounts is not yet clear, Generali seems to be accelerating its strategic moves. The insurer is to leave some low-growth markets to reinvest in the US and Asian asset management industry. The debt structure is also being improved and the buy-back of three series of subordinated notes and the issue of a new green one will allow the company to reach its targets of gross interest expense reduction.
The acquisition of 24.4% of Cattolica by Generali, through a reserved capital increase, is none other than a rescue operation to preserve an Italian insurer. The main conclusion from this transaction is that Generali is in good shape and has enough cash after the pandemic.
Net profit was hit by important impairments on investments (€655m) and stood at only €113m. The operating result showed resilience (+7.6% yoy to €1,448m), but this should not continue in Q2. Generali did not give estimates on the impact of the COVID-19 on its annual figures, but it said that it would be significant. It is working on a cost reduction plan that may noy be enough for it to reach all 2021 targets.
A fifth consecutive year of operating earnings higher than €2bn was expected, but the impact of the Coronavirus is the most pursued information now. The company said that it is not possible to assess fairly the impact of the virus, but it confirmed its strategic plan’s targets. The proposed dividend was €0.96/share and the Solvency II ratio is high at 224%. We keep our positive opinion on the company but we will adjust down our figures for 2020-21.
Generali posted excellent figures. 9M 19 gross written premiums improved by 3.2% to €51,379m and the operating result increased by 9.1% to €3,934m. The higher increase in operating earnings was recorded by the targeted asset management segment (+16.8% to €268m). The net result stood at €2,163m (+16.6% yoy). The regulatory Solvency II ratio stood at 204%. The released figures were in line with estimates and confirmed our positive opinion on the insurer.
After the recent €580m investment made by the Italian veteran entrepreneur Leonardo Del Vecchio in Mediobanca, speculation about the capital of Generali has re-surfaced. As ever, the shadow of Bolloré reappears as still the second largest shareholder of Mediobanca. This may have implications for Vivendi, Telecom Italia, and Mediaset.
Generali posted a 7.6% increase in the H1 19 operating result to €2,724m. All earnings generators are working well. In the P&C segment, the Italian market released an upward trend in sales and the operating result rose by 1.4% to €1,121m. The decline in the Unit-Linked sales has not prevented the Italian insurer from getting higher profits (up 4% to €1,611m). The Asset Management strategy began to bear fruit, but additional scale is needed to reach targets.
According to Bloomberg, Generali is one of the two main bidders in the acquisition of the Lisbon-based insurer Tranquilidade. The transaction would cost €600m. The targeted company has a strong presence in Health and Automobile, two business lines that interest the Italian operator. Relative to the sector valuation multiples, the P/E is acceptable contrary to the P/Book which seems to be expensive. Acquiring the second player in Portugal will require financial sacrifices.
Again, Generali confirmed it was in good health. Life and Non-Life sales improved by 8.5% and 3.1% to €12,502m and €6,371m, respectively. The operating earnings stood at €1,346m, up 6.9% yoy. Disposals boosted the Q1 19 net profit to €744m (up 28.1% yoy). The adjusted net profit was €616m, up 6% yoy. AuM reached c. €520m and generated operating earnings of €71m. Solvency II ratio was 207%. Our model will be adjusted slightly up with always a positive opinion.
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