Generali profits nosedive 85% on investment impairments due to COVID-19
Italian insurance group Generali's profits plummeted almost 85 percent on COVID-19 related investment impairments in the "most difficult and uncertain periods", according to its chief financial officer Cristiano Borean.
The insurer said that it is working to "significantly reduce costs in order to mitigate the impact of the foreseen reduction in revenues".
Generali's net profit dropped to €113 million in Q1 2020, from €744 million in 1Q 2019.
The decrease mainly reflected €655 million in net impairments on investments due to the impact of COVID-19 on financial markets, and the contribution of €100 million allocated to the Extraordinary International Fund for the pandemic emergency. Additionally, there was no contribution from disposals compared to a gain of €128 million in the first quarter of 2019.
The total gross written premiums stood at €19.2 billion, compared with €18.87 in Q1 2019.
Generali reported a positive development from the property/casualty segment and a P&C combined ratio of 89.5 percent. The net profit of the asset management segment also grew to €66 million. However, the insurer saw a decline in the life segment.
The insurer highlighted its resilience and "solid" capital position, but warned that its 2020 results will likely be adversely impacted, mostly due to impairments, as a result of the macroeconomic consequences of COVID-19 outbreak.
Borean commented: “In one of the most difficult and uncertain periods in recent decades, with the COVID-19 emergency and its consequent strong macroeconomic and financial impact, our business model has ensured the Group’s operating continuity and has allowed us to maintain our role as Life-time Partner to our customers. 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."
He added: "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.”
