Assicurazioni Generali S.p.a. · MIL:G
Assicurazioni Generali — FY2018 Earnings Presentation
64 slides from Assicurazioni Generali's earnings presentation, Mar 14, 2019
Slide 1: GENERALI GROUP 2018 Results
GENERALI GROUP 2018 Results The like for like change of written premiums, life net cash inflows is on equivalent terms (on equivalent exchange rates and consolidation area). 2017 numbers for operating result, investments and operating RoE are restated due to assets disposals. 2017 numbers for new bu
Slide 2: Agenda
2 Agenda I. Strategy Overview Page 3 Philippe Donnet – Group CEO II. 2018 Business Review Page 11 Frederic de Courtois – Group GM III. 2018 Group Financials Page 25 Cristiano Borean – Group CFO IV. Backup Page 48 © Generali March 14, 2019 Results 2018
Slide 3: Agenda: Strategy Overview
3 Agenda I. Strategy Overview Philippe Donnet – Group CEO page 3 © Generali March 14, 2019 Results 2018
Slide 4: Key messages
GCEO – Strategy Overview 4 Key messages 2015-2018 financial targets exceeded Strong net result increased by 9.4% Dividend (1) increased by 5.9% to €0.90 per share Well positioned to deliver Generali 2021 (1) Subject to the approval of shareholders at the Annual General Meeting on May 7, 2019 © Gener
Slide 5: 2015-2018 financial targets exceeded
CEO – Strategy Overview 5 2015-2018 financial targets exceeded TARGETS ACTUAL Cumulative Net Operating Cash > €7bn €8bn ✓ Cumulative dividends > €5bn €5.1bn (1) ✓ Average Operating RoE > 13% 13.4% ✓ (1) Including 2018 proposed dividend subject to the approval of shareholders at the Annual General Me
Slide 6: 2018: increased net result and dividend
CEO – Strategy Overview 6 2018: increased net result and dividend OPERATING RESULT DIVIDEND PER SHARE (Euro m) (Euro) 4,857 0.90 (1) 4,713 0.85 +3.0% 0.80 0.72 +5.9% 0.60 2017 2018 2014 2015 2016 2017 2018 NET RESULT SOLVENCY II (Euro m) (Regulatory view, %) 2,309 216 2,110 207 +9pp +9.4% 2017 2018
Slide 7: Generali 2021 ambition
CEO – Strategy Overview 7 Generali 2021 ambition Generali will be a life-time partner to its customers, offering innovative, personalized solutions thanks to its unmatched distribution network. Generali will lead the European insurance market for individuals, professionals and SMEs, while building a
Slide 8: Generali 2021: A strategy built on three pillars
CEO – Strategy Overview 8 Generali 2021: A strategy built on three pillars ▪ Strengthen leadership in Europe Profitable growth ▪ Focus on high potential insurance markets ▪ Develop a global asset management platform ▪ Increase capital generation Capital management and ▪ Enhance cash remittance finan
Slide 9: Generali 2021: robust financial targets
CEO – Strategy Overview 9 Generali 2021: robust financial targets GROWING EARNINGS PER INCREASING DIVIDEND HIGHER RETURNS SHARE FOR SHAREHOLDERS 6%-8% 55%-65% >11.5% EPS CAGR RANGE (1) DIVIDEND PAY-OUT AVERAGE RETURN ON 2018-2021 RANGE (2) EQUITY (3) 2019-2021 2019-2021 (1) 3 year CAGR; adjusted for
Slide 10: Generali actions driven by a long-term purpose
CEO – Strategy Overview 10 Generali actions driven by a long-term purpose To enable people to shape a safer future by caring for their lives and dreams © Generali March 14, 2019 Results 2018
Slide 11: Agenda: 2018 Business Review
11 Agenda II. 2018 Business Review Frederic de Courtois – Group GM page 12 © Generali March 14, 2019 Results 2018
Slide 12: 2018: Growth, technical excellence and cost discipline
GM – Business Review 12 2018: Growth, technical excellence and cost discipline BEST ▪ Life: robust growth of Net Inflows and confirmed business mix shift towards TECHNICAL Capital Light Products with strong new business value and margin growth EXCELLENCE ▪ P&C: accelerated growth and strong discipli
Slide 13: 2015-2018 plan: all targets successfully delivered (1 of 2)
GM – Business Review 13 2015-2018 plan: all targets successfully delivered (1 of 2) IMPROVE OPERATING PERFORMANCE ✓ Optimise At least €1bn cash proceeds international • Cash proceeds of €1.5bn received from disposals footprint ✓ Rationalise €200m net reduction in nominal • Target exceeded by €90m as
Slide 14: 2015-2018 plan: all targets successfully delivered (2 of 2)
GM – Business Review 14 2015-2018 plan: all targets successfully delivered (2 of 2) CREATE LONG-TERM VALUE 30bps reduction of avg. portfolio guarantee to 1.5% ✓ • 1.36% at FY18, -44bps over the plan period (-20bps impact from the Generali Leben agreement and the geographical optimization program) ✓
Slide 15: International footprint optimization successfully completed
GM – Business Review 15 2015-2018 international footprint optimization successfully completed (€ bn) Deals closed Deals signed 1.0 (1) 2.5 1.5 Guatemala Colombia Panama Netherlands Ireland Tunisia Belgium Guernsey Proceeds Generali Total from geo Leben proceeds footprint (1) The value is related to
Slide 16: Disciplined approach towards M&A
GM – Business Review 16 Disciplined approach towards M&A – fully aligned with strategy INSURANCE ASSET MANAGEMENT CEE Partnership Exclusive partner for with Unicredit Union Investment in Poland €3.3bn of AuM distribution of CPI(1) Concordia in Poland - 330k clients with CM Investment Solutions $11bn
Slide 17: Continued reduction in mature market operating expenses
GM – Business Review 17 Continued reduction in mature market operating expenses Mature Market General Expenses development (OpEx view) (1) (€ bn) 5.3 ▪ 2018 net reduction across mature markets of ca. € -290 m (vs. 2015 baseline) exceeding the 5.2 5.1 -0.3 target 5.0 ▪ Continuous rigorous cost approa
Slide 18: Life net inflows growing with strong capital light component
GM – Business Review 18 Life net inflows growing with strong capital light business component NET INFLOW BY COUNTRY NET INFLOW MIX (€ m) (% of total) FY17 FY18 % Italy 5,703 4,769 -16.4% France 959 1,571 +63.9% Protection 31% 31% +1 p.p. Germany 2,966 3,197 +7.8% ACEER 327 312 -6.3% Unit Linked 60%
Slide 19: Further improvement in Life New Business profitability
GM – Business Review 19 Further improvement in Life New Business profitability MARGIN ON PVNBP NBV (%) (€ m) +4.3% -0.36 p.p. +0.20 p.p. +0.58 p.p. +0.26 p.p. +8.3% -0.02 p.p. 1,877 7.03% +0.03 p.p. -6.2% +4.5% +4.1% -3.2% 6.05% 5.30% 4.35% 978 310 2.83% 228 2.29% 219 143 Italy France Germany ACEER
Slide 20: Strong growth in P&C volumes and robust technical profitability
GM – Business Review 20 Strong growth in P&C volumes and robust technical profitability Total variation due to: Primary Motor +3.4% GROSS WRITTEN PREMIUMS Primary Non-Motor +2.7% COMBINED RATIO (€ m) (%) +3.3% +1.4 p.p. -2.3 p.p. +0.9 p.p. +0.2 p.p. +0.1 p.p. -1.0 p.p. +23.9 p.p. -1.6 p.p. +9.2% 20,
Slide 21: Solid growth in AM profit, in line with 2021 target
GM – Business Review 21 Solid growth in AM profit, in line with 2021 target (1) (€) Asset Management Europe Total Asset Management FY17 FY18 % FY17 FY18 % AuM 447bn 443bn -1% 463bn 456bn -2% Operating result 221m 309m +39% 261m 335m +28% Net result (2) 154m 212m +38% 189m 235m +24% Cost / Income r
Slide 22: Ready for Generali 2021
GM – Business Review 22 Ready for Generali 2021 STRONG FOUNDATIONS AMBITIOUS AND CREDIBLE PLAN CLEAR FRAMEWORK FOR ACCOUNTABILITY © Generali March 14, 2019 Results 2018
Slide 23: Generali 2021 strictly monitored strategy execution
GM – Main KPIs 23 Generali 2021 strictly monitored strategy execution STRATEGY ITEM MAIN INDUSTRIAL KPI AMBITION Earnings CAGR 2018-2021 insurance markets Europe 3% - 6% Earnings CAGR 2018-2021 service-based revenue streams 7% - 10% Profitable Growth Earning CAGR 2018-2021 high potential insurance m
Slide 24: 2018 baseline for Generali 2021 strategy
GM – Main KPIs 24 2018 baseline for Generali 2021 strategy 2018 Adjusted (1) €2,233m Net Result (EPS) (€1.43) 2018 Financial €11.5bn Debt (1) Adjusted for impact of gains and losses related to disposals © Generali March 14, 2019 Results 2018
Slide 25: Agenda: 2018 Group Financials
25 Agenda III. 2018 Group Financials Cristiano Borean – Group CFO page 26 © Generali March 14, 2019 Results 2018
Slide 26: 2018 top and bottom line growth delivered
CFO – At a glance 26 2018 top and bottom line growth delivered 216216 FY17 FY18 D (LFL(1)) VOLUMES Gross Written Premiums (€ m) 64,381 66,691 +4.9% Life (€ m) 43,832 46,084 +5.7% P&C (€ m) 20,548 20,607 +3.3% Life Net Inflows (€ m) 10,877 11,369 +5.2% Life Reserves (€ bn) 336.1 343.4 +2.2% PROFITABI
Slide 27: Operating Result improved across all business lines
CFO – Profit & Loss 27 Operating Result improved across all business lines (€ m) +3.0% 74 93 48 4,857 4,713 84 (156) FY17 Life P&C AM Holding & Other businesses Cons. Adj FY18 FY 18 3,067 1,992 335 -70 -467 4,857 FY 17 2,982 1,944 261 -163 -311 4,713 D +2.8% +2.5% +28.2% -57.1% +50.0% +3.0% © Genera
Slide 28: Growth in both Life margins and volumes
CFO – Life Insurance 28 Growth in both Life margins and volumes (€ m) FY17 FY18 LFL D VOLUMES Gross written premiums 43,832 46,084 +5.7% Net inflows 10,877 11,369 +5.2% PVNBP 45,429 43,202 -1.8% PROFITABILITY Life operating result 2,982 3,067 +2.8% Life operating ratio on investments (bps) 82 83 +1
Slide 29: Improved technical profitability more than offsets lower investment result
CFO – Life Insurance 29 Improved technical profitability more than offsets lower investment result (€ m) 389 +2.8% 3,067 2,982 ▪ Overall improved quality of operating (264) (41) result, with greater share of technical margin vs. investment result ▪ Growth in technical margins reflecting good develop
Slide 30: Strong growth in life new business value driven by margin improvement
CFO – Life Insurance 30 Strong growth in life new business value driven by margin improvement PVNBP (€ m) X MARGIN ON PVNBP (%) = NEW BUSINESS VALUE (€ m) 45,429 43,202 4.01% 4.35% 1,820 1,877 -1.8% +0.26 p.p. +4.3% TOTAL 4,01% 4,35% 554 15,696 588 14,336 -1.5% Unit-Linked -3.8% 3.75% 3.86% 9,122 9,
Slide 31: Reserves mix shift towards capital light
CFO – Life Insurance 31 Reserves mix shift towards capital light: 2018 target achieved (€ bn) TOTAL LIFE RESERVES € bn) +2.2% 336.1 11.4 1.5 0.3 343.4 67.8 (5.8) 66.1 -2.6% 277.4 +3.4% 268.2 FY17 Net Loadings, Policyh. Share Exchange Rate, FY18 Inflows Risk & of Invest. Result Change in Surrender Sc
Slide 32: Life investment return resilient
CFO – Life Insurance 32 Life investment return resilient Life segment general account Current returns (%) €303bn €301bn €m % 1.8 2.2 2.7 2.9 2.1 FY17 8,397 3.1% 2.9 4.0 4.3 Fixed income Other 7.8 7.8 FY18 8,025 3.0% Cash & cash equivalent FY17 421 3.5% Equity 34.8 33.5 Real estate FY18 569 4.3% FY17
Slide 33: Further decrease in guarantees, down by 25 basis points
CFO – Life Insurance 33 Further decrease in guarantees, down by 25 basis points Current return vs existing portfolio guarantee Reinvestment return vs average new business guarantee (%) (based on premiums) (%) 3.18% 3.10% 157 bps. 174 bps. 1.80% 2.01% 1.61% 1.36% 158 bps. 189 bps. 0.22% 0.12% FY17 FY
Slide 34: Strong growth in P&C volumes, resilient technical profitability
CFO – P&C Insurance 34 Strong growth in P&C volumes, resilient technical profitability (€ m) FY17 FY18 LFL D VOLUMES Gross written premiums, of which: 20,548 20,607 +3.3% Primary Motor 7,984 7,780 +3.4% Primary Non Motor 11,832 12,009 +2.7% PROFITABILITY Combined ratio (%) 92.9% 93.0% +0.1 p.p. Nat
Slide 35: Resilient P&C Operating result
CFO – P&C Insurance 35 Resilient P&C Operating result (€ m) +2.5% 1,944 6 69 1,992 ▪ Lower technical margin reflecting higher (27) acquisition costs ▪ Higher dividends more than compensates lower current income from bonds ▪ Improved Other result mainly due to lower non-technical provisions, in parti
Slide 36: Resilient P&C technical profitability
CFO – P&C Insurance 36 Resilient P&C technical profitability Combined ratio (%) Expense ratio (%) +0.1%pts +0.1 p.p. 27.8 0.4 27.9 92.9 0.1 93.0 5.5 (0.3) 5.3 0.1 0.0 27.8 27.9 22.3 22.6 Administr. costs Acquisition costs FY17 Δ Admin Δ Acq. FY18 65.1 65.1 Loss ratio (%) +0.0%pts 65.1 0.4 65.1 (0.4)
Slide 37: Stable P&C investment return
CFO – P&C Insurance 37 Stable P&C investment return P&C segment general account Current returns (%) €38.0bn €37.8bn Euro m % 4.7 5.4 FY17 748 2.7% 6.6 7.2 Other Fixed income 10.1 FY18 719 2.7% 10.6 Cash & cash equivalent 5.9 6.0 FY17 114 4.7% 7.4 Equity 8.4 Real estate FY18 114 4.8% Equity FY17 218
Slide 38: Reduced negative contribution from Holding and other businesses
CFO – Holding & Other businesses 38 Reduced negative contribution from Holding and other businesses (€ m) FY17 FY18 % Financial and Other Businesses 291 397 +36.3% of which Banca Generali (1) 241 233 -3.6% of which other businesses (2) 50 165 n.m. Operating holding expenses (454) (467) +2.9% Total
Slide 39: Improved transformation between operating and net result
CFO – Profit & Loss 39 Improved transformation between operating and net result Including: €265m: Net realised gains (€ m) (€431m): Net impairments Including: €11m: Fair Value through P&L (€211m) : Restructuring costs (€98m): VOBA amortization (€102m): Other non-recurring items, including €77m from
Slide 40: Improved gross remittance from operations
CFO – Cash generation & dividends 40 Improved gross remittance from operations Net Operating Gross Result (1) (4) Operating Profit remittance Gross remittance (€ m) Coverage ratio (€ m) (€ m) 2,794 2,631 77 Italy 1,249 1.1x 1,136 53 218 Other 254 486 International France (2) 458 0.9x 487 475 ACEER 3
Slide 41: Net operating cash generation in line with plan
CFO – Cash generation & dividends 41 Net operating cash generation in line with plan Net Operating Cash Generation (€ m) 2017 2018 Remittance from subsidiaries 2,631 2,794 ▪ Lower Reinsurance Result compared to the exceptionally positive result in 2017 Result of reinsurance (1) 341 145 ▪ Stable Grou
Slide 42: Shareholders' equity negatively impacted by change in AFS reserve
CFO – Balance Sheet 42 Shareholders’ equity negatively impacted by change in AFS reserve Shareholders’ equity rollforward Shareholders’ equity sensitivities (€ m) -5.9% (€ bn) 25,079 2,309 23,601 Equities (2,288) (1,330) (169) -25% -1.1 Interest rate +50bps -2.0 Shareholders' Δ in AFS FY 2018 Net Di
Slide 43: Solvency II regulatory ratio up by 9 p.p. vs. 2017
CFO – Solvency 2 43 Solvency II regulatory ratio (1) up by 9 p.p. vs. 2017 Eligible own funds vs. Required capital Key sensitivities (€ bn) (%) S-II ratio FY18 207% 216%(1) 216% 45.9 Equities +25% 220% (Δ +4p.p.) 44.1 Equities -25% 211% (Δ -4p.p.) Yield curve +50bps 220% (Δ +4p.p.) 22.2 20.5 Yield c
Slide 44: Strong positive contribution from normalized capital generation
CFO – Solvency 2 44 Strong positive contribution from normalized capital generation Excess Own Own Solvency II Funds SCR Funds(1) ratio (€ bn) (€ bn) (€ bn) (%) FY 2017 45.9 22.2 23.7 207% Regulatory Model Changes 0.4 (1.4) 1.8 +16%pts and opening adjustments Normalised capital generation 3.3 (0.2)
Slide 45: 2018 capital generation totalling €3.5bn
CFO – Solvency 2 45 2018 capital generation totalling €3.5bn Total normalised Own Funds SCR(1) capital generation Regulatory view (€ bn) (€ bn) (€ bn) Life 1.3 1.6 (1.3) 1.5 3.1 P&C 1.0 0.0 1.0 Holdings & Sectorals (0.6) 0.0 (0.6) Total Normalised 3.3 0.2 3.5 Capital Generation Life new business Oth
Slide 46: High quality capital mix: Tier 1 capital 88% of total
CFO – Solvency 2 46 High quality capital mix: Tier 1 capital 88% of total Tiering of Solvency II Capital Applicable Solvency II limits (FY18) (FY18) Generali FY18 Regulatory view Solvency II Generali € bn % of total limits Regulatory view Tier 1 38.7 88% Unrestricted Tier 1 35.5 80% Restricted Tier
Slide 47: Generali 2021: robust financial targets
CFO – 2021 key targets 47 Generali 2021: robust financial targets GROWING EARNINGS PER INCREASING DIVIDEND HIGHER RETURNS SHARE FOR SHAREHOLDERS 6%-8% 55%-65% >11.5% EPS CAGR RANGE (1) DIVIDEND PAY-OUT AVERAGE RETURN ON 2018-2021 RANGE (2) EQUITY (3) 2019-2021 2019-2021 (1) 3 year CAGR; adjusted for
Slide 48: Backup: Investments
48 III. Backup • Investments page 49 Financial debt page 55 Solvency 2 page 58 © Generali March 14, 2019 Results 2018
Slide 49: Assets under management
Backup: Investments 49 Assets under management Total Portfolio: €488bn Breakdown by region and asset class (%) (%) 6 8 Italy 7 34 France Germany By Region CEE 21 International General 14.8 Other account 25 Unit Linked 13.5 71.7 3 4 6 Third party 1 Equity investments Fixed income Real estate By Asset
Slide 50: Fixed Income Portfolio
Backup: Investments 50 Fixed Income Portfolio Total Portfolio Covered Corporate Government €300bn €17bn €95bn €159bn (1) (%) (%) (%) (%) 0 9.4 1 7 6 2 8 11 5 Other fixed Income 5.8 1 29 47 33 Covered 22.8 38 54 57 Corporate non fin. 8.7 12 AAA AA A BBB Not Investment Grade Not Rated Corporate fin. B
Slide 51: Fixed Income Portfolio by country
Backup: Investments 51 Fixed Income Portfolio by country Total Portfolio Covered Corporate Government €300bn €17bn €95bn €159bn (%) (%) (%) (%) 4 12 9.4 Other fixed 29 Income 5.8 31 37 42 20 49 Covered 22.8 0 0 11 11 15 2 2 20 1 13 Corporate non fin. 8.7 Italy France Germany CEE USA Other Corporate
Slide 52: Equity & Equity-like
Backup: Investments 52 Equity & Equity-like Alternative funds: €6bn Total Portfolio: €20bn Equity: €10bn (%) (%) (%) Life, P&C, AM and Life, P&C, AM and 13 20 Other Other 14 4 0 28 Life Life P&C P&C 77 AM AM 82 Other Other 53 Equity funds: €4bn (%) 0 Life, P&C, AM and 19 Listed and 15 Other Unlisted
Slide 53: Asset Allocation: Real Estate
Backup: Investments 53 Asset Allocation: Real Estate (1) Total Portfolio: €26bn (1) Breakdown by use (2) 4 4 Office (%) 17 Residential Breakdown by utilization (2) Retail 57 (%) 14% 18 Logistic Investment properties Other/Mixed Breakdown 1 Italy Own use by country (2) 19 (%) 31 France 86% 4 Germany
Slide 54: Backup: Financial debt
54 III. Backup Investments page 49 • Financial debt page 55 Solvency 2 page 58 © Generali March 14, 2019 Results 2018
Slide 55: Focus on financial debt
Backup: Financial debt 55 Focus on financial debt Average cost & maturity of financial debt Total financial debt (%) €11.8bn €11.5bn FY17 FY18 457m 425m Average cost (%) 5.71% 5.66% Subordinated/Hybrid 6.22% 6.18% 8,379m 8,124m Senior 4.19% 4.19% Average maturity (years) 6.22 5.34 Interest expenses
Slide 56: Financial debt breakdown by expiry date/call date
Backup: Financial debt 56 Financial debt breakdown by expiry date/call date (Nominal value - € m) Only partially January 2019 refinanced new issuance and call leading to option € 250 m exercised deleverage 2,000 1,750 1,000 1,500 1,250 1,250 750 850 552 500 31 390 2019 2020 2022 2023 2024 2025 2026
Slide 57: Backup: Solvency 2
57 III. Backup Investments page 49 Financial debt page 55 • Solvency 2 page 58 © Generali March 14, 2019 Results 2018
Slide 58: Focus on SCR
Backup: Solvency 2 58 Focus on SCR FY18 SCR (€ bn, Regulatory view) Pre-diversification SCR by region AG & (%) Holdings Internation 7% FY18 SCR before al 31.8 diversification 18% Italy 31% Diversification 6.9 ACEER 9% France Germany Taxes 5.6 17% 18% Pre-diversification SCR by type of risk (%) Credi
Slide 59: Reconciliation of IFRS equity to Solvency II Eligible Own Funds
Backup: Solvency 2 59 Reconciliation of IFRS equity to Solvency II Eligible Own Funds Solvency II Eligible own funds (FY18, € bn, Regulatory view) Of which: 22.9 8.6 23.9 bn net technical provisions 44.1 (1.4) 38.2 (1.3) Of which: (7.8) (6.7) bn Goodwill (4.0) bn Intangibles & DAC 24.6 (10.7) 9.3 Of
Slide 60: Disclaimer
60 Disclaimer Certain of the statements contained herein are statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. The user of such information should r
Slide 61: Next Events
61 Next Events 14 March 2019 7 May 2019 16 May 2019 24 May 2019 1 August 2019 7 November 2019 FY 2018 Annual 1Q 2019 Exploring 1H 2019 9M 2019 results General results Generali – 2019 results results reporting Meeting reporting edition reporting reporting 2019 © Generali March 14, 2019 Results 2018
Slide 62: Team
62 Team Assicurazioni Generali Leonardo Meoli Emanuele Marciante Stefano Burrino Group Head of Investor & Rating Agency Relations Credit & Rating Agency Relations Investor Relations Piazza Duca degli Abruzzi 2 Group Head of Strategy 34132 Trieste, Italy Leonardo.Meoli@Generali.com Emanuele.Marciante
Slide 63: Thank you
A. GENERALI Thank you
Slide 64: GENERALI GROUP 2018 Results
A. GENERALI GENERALI GROUP 2018 Results
Assicurazioni Generali — FY2018 Earnings Presentation on 6ix