According to a report by Reuters, Italy’s leading insurer acknowledged the challenges posed by increased claims resulting from natural disasters, impacting its performance for the current quarter.
The vulnerability of Italy’s delicate topography to extreme weather conditions has become a mounting concern for insurance providers. Generali revealed that floods and hailstorms in Italy, Greece, and central eastern European countries have led to a 3.7-percentage point decrease in its combined ratio for the nine months ending in September.
The combined ratio, a key indicator of profitability in the property and casualty division, considers capital strength and remains below 100 when an insurer’s incurred claims and related expenses surpass the premiums earned.
As of the end of September, Generali’s combined ratio showed an improvement at 94.3%, compared to 97.4% the previous year. However, excluding a discounting effect from claim reserves, the ratio stood at 97.9%, falling short of analysts’ consensus forecast of 97.4%. This unexpected outcome has led to a 1.5% decline in Generali shares as of 0951 GMT, contrasting with a 0.7% rise in Italy’s blue-chip index .FTMIB and a similar gain in the European sector .SXIP.
“Premiums and profits are running marginally ahead of consensus, and remain on track to exceed targets,” analysts said, adding the solvency ratio was disappointing and the undiscounted combined ratio also “worse than expected.”
Generali forecast a loss of 50-100 million euros ($54-109 million) from October-November storms in Italy and France, finance chief Cristiano Borean told a post-results briefing.
Gross premiums rose 4.7% to 60.5 billion euros in the nine months, driven by strong growth in the non-life business (up 11.4%), while the life segment proved resilient.
Nine-month adjusted net profit came in at 2.98 billion euros, while operating profit, a figure closely watched by the market, rose 16.7% to 5.1 billion euros. Both figures were broadly in line with market expectations.
Despite this challenge, the insurer experienced a 4.7% increase in gross premiums, reaching 60.5 billion euros over the nine months. This growth was primarily driven by a robust 11.4% expansion in the non-life business, while the life segment demonstrated resilience.
The nine-month adjusted net profit for Generali reached 2.98 billion euros, and the operating profit, a closely monitored figure in the market, saw a substantial rise of 16.7% to 5.1 billion euros. Both of these figures aligned closely with market expectations.
However, the solvency ratio, a measure of the company’s financial strength, stood at 224% at the end of September, slightly below analysts’ consensus forecast of 227%.
“Generali remains fully on track to successfully achieve all the targets” of its 2024 strategic plan, finance chief Cristiano Borean told a post-results briefing.
Borean added that it decreased to 222% at the end of the last month due to an unfavourable market trend.
Author: Joanna England
