Global insurer Generali’s natural catastrophe losses came in roughly 100 basis points above budget for the first nine months of 2024, and as the firm’s portfolio continues to expand a higher nat cat budget is expected for 2025, although major changes to its reinsurance structure aren’t anticipated, according to Marco Sesana, Group General Manager.
This morning, the large Italian insurer reported 18% premium growth to €70.7 billion, with 10% growth in P&C to €25.1 billion and 23.3% growth in Life to €45.7 billion.
At the same time, Generali’s combined ratio for the period strengthened slightly to 94%, and this is despite losses from natural catastrophes, driven by adverse weather events in CEE, Germany, Austria, and Italy, totalling a significant €930 million.
Speaking during the company’s 9M 2024 earnings call, Generali’s Group General Manager, Sesana, said that although nat cat losses exceeded budget by roughly 100 basis points, “We confirm our confidence to reach our target to the end of 2024, with an undiscounted combined ratio below 96%.”
He also commented on the nat cat experience in the third quarter and suggested that the firm’s budget for natural catastrophes could rise.
“Clearly, the third quarter has been an adverse one,” said Sesana. “It is a development that we will take into account within our new plan, where a higher budget for natural catastrophe will be appropriate. Most likely, these events will lead to a continuation of the hardening cycle in personal line in Europe.”
In his opening remarks, Sesana also explained that during the last month of the year, Generali typically experiences a more benign trend for weather events, given the footprint of its portfolio, but that it has already booked some losses for the final quarter.
“Natural events, since the end of September, are estimated to lead to around €100 million of additional net natural catastrophe losses so far in the fourth quarter. In addition, we booked a €20 million man-made loss from the riots in Martinique,” said Sesana.
In light of the above-budget cat losses, during the call Sesana was questioned on the company’s nat cat budget, whether anything had gone wrong with the budget in recent times or if this is all down to frequency.
“I don’t think there is anything that necessarily went wrong in the last few years in the budgeting phase. It’s more, I would say, we are seeing this trend also coupled with many other trends that we see in the industry. But also, let me underline that what we are seeing is also an effect of the increase portfolio level that we have. So, we have been growing a lot. So, clearly, the type of these events that we experience are going up,” he explained.
He was also asked if there’s anything Generali can do in terms of its reinsurance protection.
“On the reinsurance side, we have been changing, slightly updating the structure of reinsurance over the last couple of years. We will see in this renewal what we can do about this. I don’t expect major changes, to be honest, in the structure,” confirmed Sesana.
“What I do see as important is to think about the climate change at 360 degree, in a different way. So, it’s not only about claims, it’s about the type of services that we will provide, the type of coverages that we will provide, how we will be able to manage volatility differently in the future. But also, how can we stay closer to the client when something happens. So, overall, we will talk about this in January, in our investor day. I would say that this is something that we will see more in the future and will drive also prices in the future,” he added.
While there wasn’t any mention of reinsurance recoveries in the 9M 2024 earnings call related to nat cats, Sesana did also confirm that at the third quarter, the company had paid about €15 million in reinstatement premiums, which were booked in the attritional development.
