Italy’s Generali Group posted very strong first half results, with net profits increasing by 26.7 percent to €1.7776 billion ($2.435 billion). Operating profits, which exclude capital gains/losses, rose 28.3 percent to €2.8805 billion ($3.95 billion).
Italy’s largest insurer announced the good news at a Directors meeting, held in Venice on August 2. The Board also approved an agreement for the sale of Generali’s Nuova Tirrena subsidiary (part of the recently acquired Toro Group) to France’s Groupama for €1.25 billion ($1.72 billion), and authorized a renewed share buyback program of up to €1.5 billion ($2.05 billion).
In addition to the above, Generali also listed the following first half highlights:
— life operating result +24.1 percent
— non-life operating result + 44.7 percent
— total premium income € 34.4 billion ($47.1 billion) + 5.1 percent
— non-life premiums € 11.2 billion ($15.35 billion), up 17 percent
— life annual premium equivalent (ape) € 2.1879 billion ($3 billion), up 6.4 percent
— strong improvement in all performance indicators
— combined ratio improves to 95 percent from 95.9 percent
— total new business value gains 22 percent to € 535 million ($733 million)
— embedded value up to € 27 billion ($37 billion) from € 25.8 billion ($35.35 billion) at the end of 2006
— normalized ROE at 14.4 percent, from 11.7 percent
Concerning the sale of Nuova Tirrena, a non-life insurance provider with a strong base in central and southern Italy, Generali noted that premium income in 2006 was €814 million ($1.12 billion). The €1.25 billion sale price will generate a capital gain of approximately €240 million ($329 million). “From an industrial viewpoint, the sale is a further step in the optimization of the Group’s geographical presence in Italy and permits recovery of resources for international growth,” said the bulletin. “The transaction is subject to the approval of the regulatory and industry authorities.”
Generali also indicated that the capital gain, as well as the strong first half results, had led the Directors to authorize the renewal of the Group’s share buyback program, which it noted had been “suspended at the time of the acquisition of Toro Assicurazioni.” The bulletin added that in light of the results it “would expect the Group’s credit ratings to remain unchanged.”
Standard & Poor’s Ratings Services confirmed that statement in a brief announcement which said that its “ratings and outlook on the core operating companies of Italy-based insurer Generali group (insurer financial strength rating AA/Stable) remain unchanged following its announcement of the sale of subsidiary Nuova Tirrena SpA (not rated) and launch of a €1.5 billion share buyback program.”
S&P added that it believes the “sale has virtually no impact on the competitive position of Generali in Italy, and frees up capital to finance the share buyback. Although the share buyback program somewhat affects Generali’s capitalization and financial flexibility, they remain in line with the current rating. The rating on the group remains based on its very strong competitive position and earnings.”
Source: Generali – http://www.generali.com
S&P – wwwstandardandpoors.com
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