Generali results boosted by restructure

Italian insurance group Generali has posted its best results for six years following a fundamental restructuring of its operations. Last year represented the first year in a three-year turnaround plan it has initiated designed to rebuild its profitability and capital solidity.

The company made a net profit of €1.58 billion compared with €314 million in 2012. Its net result attributable to the group was €1.9 billion compared with €94 million in 2012 – its best performance in six years. Its gross written premiums fell very slightly to €62.7 billion compared with €62.8 billion the year before.

Its performance meant the company almost doubled its dividend to €0.45 per share compared with €0.20 in 2012. Its net free surplus also grew strongly to €2.1 billion, a 38 percent increase on and ahead of its 2015 target.

“2013 has been a fundamental year for the turnaround of Generali and the results confirm that we are on track, or ahead, of the targets in our strategic plan,” said Mario Greco, chief executive of the group. “For the first time, after many years, our net result derives entirely from our business operations rather than being impacted by one-off items.

“During the year we have made deep changes to the group. In particular, we have disposed of €2.4 billion of non-core assets and acquired minorities in strategic areas for €1.5 billion. We have strengthened the management structure and simplified the Group’s governance, which is now in line with international best practice.

“Over 2013, we generated a total shareholder return of 26%. These results and the more than doubling of our dividend confirm we are on the right track. We are aware that a lot still needs to be done to reach the targets we set ourselves. In 2014 the debt will be reduced further and significant cost savings will be achieved. We estimate to improve the operating result and the net profit further, in line with the plan that aims to gradually increase the profitability for our shareholders.”

2013 represented the first year of the group’s three-year turnaround plan. The group has re-focused on its core insurance business and disposed of non-core businesses while investing to acquire full control of strategic activities. It has also tried to strengthen its governance by creating a simpler organisation.

The company said a culmination of these things allowed it to post a boost in profitability despite an uncertain economic recovery, low interest rates and high natural catastrophe losses. Its operating result for the year was €4.207 billion, a 5.3 percent increase on 2012.