Italian insurance giant Generali has announced a first quarter net profit of €113 million despite the COVID-19 pandemic driving an investment loss of around €655 million.
This €113 million net profit is down from €744 million in the prior year quarter and includes a non-operating expense amounting to €100 million from the establishment of the Extraordinary International Fund launched by the group to assist in the Covid-19 emergency.
While too early to measure the overall effect on the global insurance sector, Generali’s Chief Financial Officer, Cristiano Borean, said the group’s business model has ensured operating continuity.
“This is also the result of the ever increasing digitalisation of our processes and products, a multi-channel distribution network that leverages a global agent network, and international diversification,” said Borean.
Generali’s operating result amounted to €1,448 million thanks to the contribution from the P&C and Asset Management segments, that also included the recent acquisitions, as well as from the Holding and other businesses segment.
P&C technical profitability improved, with the combined ratio at 89.5%, while the profitability of new life business remained high at 4.04%. Revenues from Asset Management continued to increase.
Total gross written premiums stood at €19.2 billion, with a positive 4% development from the P&C segment.
In the life segment, net inflows fell 25% to €3.1 billion and technical provisions stood at €363.4 billion, due to the current financial markets performance.
“The first three months of the year showed a good operating performance and confirmed the Group’s solid capital position. Net profit was affected by impairments due to the current financial markets performance as result of the global pandemic,” Borean added.
A statement from the group released alongside its results stated that, from an operational standpoint, the macroeconomic consequences of Covid-19 will affect its top-line evolution, particularly in travel insurance.
“The recurring financial revenues (from dividends, rental income and fee income) will also be adversely impacted.
“With regards to claims experience, it is as of yet difficult to provide precise guidance on the impact of Covid-19. Overall, Generali can rely on a favourable business mix and robust standard policy terms.”
