Generali presses margins amid upper-single-digit top-line gain
European universal insurer Generali managed to press its P&C margins upwards in 2023, overcoming a rising cat load as higher rates eased attritional loss ratios and both improved prior year reserve development and IFRS17 discounting gave boosts. Top line measures grew at mid-to-upper single-digit rates.
The group’s P&C combined ratio came down 1.4 points to 94.0%. The undiscounted measure came down a milder 0.3 points.
Nat cat claims of €1.13 billion added 3.7 points to the undiscounted combined ratio, an increase of 1.4 points from the prior year read. Management called out large man-made claims rose 0.5 point to 1.7%. Higher acquisition costs added the next 0.7 points via the expense ratio.
Generali countered with a 1.2 point reduction in current year attritional loss ratios, which management put chiefly to rate gains, a 1.2 point improvement in favourable prior year reserve development and 1.1 points from IFRS17 discounting.
That combined ratio improvement was present in all of Generali's regions save for Italy. The cost of risk increase in Italy, up 3.5 points on the undiscounted measure to a razor thin margin at 99.6%, was driven by higher natural catastrophe claims at 7.5 points, versus 3.1 points in 2022. Undiscounted attritional loss ratios were said to have improved.
A 3.1 point combined ratio decline in France was put to improved attritional in French motor and a decline in nat cats in non-motor. A milder improvement in Germany was said to balance gains in non-motor against broader German difficulties in motor.
Adjusted top line growth in P&C was mostly upper single digit. Gross written premium, excluding the artificial boost from hyperinflation in Argentina, grew 7.7% y/y. Management called out 6.9% growth in France, 5.8% growth in Italy, and 4.6% growth in the German DACH markets.
Motor premiums grew 6.6% y/y with management calling out gains in Italy, France and CEE, or a total of 17.5% when including the raging prices in Argentina. Germany lagged at 1.7% annual growth.
Non-motor premiums, excluding the Europ-Assistance product, grew 7.4%, what management called “continued to grow at a very healthy pace, achieving widespread growth across all main areas”. Europ-Assistance grew at a heady 23.3% annual pace.
Together with a mild margin-driven increase in operating profits in the life segment and a 5% increase in contribution from the asset & wealth management division, group EBIT was said to have hit a new record at €6.88 billion, a 7.9% annual gain. The net result ended with a much higher 68% annual gain following several one-off capital gains on asset disposals.
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