Generali claims calm on inflation, but adds 3% to rates on latest uptick

Generali has packed another 2.5 to 3.0 percent of price increase into rates, chiefly on account of inflation pressures, but continues to claim that much of the global inflation surge can be held at bay.

“We’ve already injected an average increase of at least 2.5 to 3.0% across all lines and further elements of our reaction are foreseen in the next months if the situation is requiring,” CFO Cristiano Borean (pictured) told his company’s Q1 earnings call.

“We are constantly monitoring the technical equilibrium, being ready to act further,” Borean said, “if we get a continuation of the inflationary environment.”

But inflation does not appear to lead Borean’s concerns, in part because the group feels more protected in select lines where its latest strategy has focused growth efforts.

“Still, we are not worried about the movement [in inflation outlook],” Borean said.  Claims inflation, to the extent it is biting, is focused on the automotive lines and  Generali sees “some increase of cost overall” on spare parts in select geographies. He cites claims inflation up to 5% in Germany, 4.5% in France and a surprise sudden deflation in Italy on bodily injury costs.

Generali, in turn, has been focusing its own best growth efforts on non-automotive lines where asset value indexation often waters down inflation concerns across many  Generali lines and geographies, Borean said.

“There is a natural adjustment which is helping to manage the situation,” he said, citing heavy use of indexation in polcies in Germany and Austria amongst other regions.  Borean sees “good growth in non-motor,” enough to beat the 4% CAGR mark from the  Generali’s late 2021 strategy update.

To wit,  Generali is bragging of 16.7% rate increase currently in global corporate commercial, where it admittedly has a “lower share” of business at 10%, but where a swathe of policies bear inflation-indexing.

Cost indexing even brings a net gain in health lines, he said.

Asked repeatedly on the inflation question, Borean even gave signal that wage inflation inside the group may be the greater concern than claims inflation along affected lines. “You should see inflation impacting more on the side of wages,” he told analysts.

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