Assicurazioni Generali S.p.a. · MIL:G

Assicurazioni Generali — FY2017 Earnings Presentation

64 slides from Assicurazioni Generali's earnings presentation, Mar 15, 2018

  1. Slide 1: Generali Group 2017 Results

    GENERALI GROUP 2017 Results The like for like change of written premiums, life net inflows, new business volumes and value is on equivalent terms (on equivalent exchange rates and consolidation area).

  2. Slide 2: Agenda

    2 Agenda I. Business Overview Page 3 Philippe Donnet – Group CEO II. 2017 Group Financials Page 13 Luigi Lubelli – Group CFO III. Backup Page 44 © Generali March 15, 2018 Results 2017

  3. Slide 3: Agenda: Business Overview

    3 Agenda I. Business Overview Philippe Donnet – Group CEO page 4 © Generali March 15, 2018 Results 2017

  4. Slide 4: Key messages

    CEO – Business overview 4 Key messages Strong results and business performance Dividend increased 6% to €0.85 per share On track to deliver on all 2015-2018 targets New strategic plan in November 2018 © Generali March 15, 2018 Results 2017

  5. Slide 5: Positive 2017 performance in challenging conditions

    CEO – Business overview 5 Positive 2017 performance in challenging conditions OPERATING RESULT DIVIDEND PER SHARE (Euro m) (Euro) 4,783 4,895 0.80 0.85 0.72 0.60 0.45 2016 2017 2013 2014 2015 2016 2017 NET RESULT SOLVENCY II (Euro m) 2,081 2,110 (%) 230 208 194 178 2016 2017 Regulatory view Internal

  6. Slide 6: 2015 – 2018 Strategy: Our key business commitments

    CEO – Business overview 6 2015 – 2018 Strategy: Our key business commitments OUR STRATEGY IMPROVE OPERATING LONG TERM VALUE PERFORMANCE CREATION OUR INITIATIVES Optimise Customer & Rationalise the Enhance technical Rebalance our Strengthen international distributor operating machine capabilities por

  7. Slide 7: Improve operating performance

    CEO – Business overview 7 2015 – 2018 strategic plan status: On target ▪ Signed deals worth more than half the target Optimise international At least €1bn cash proceeds from ON TARGET ▪ Remaining transactions in progress, to be footprint disposals announced in coming months Improve operating perform

  8. Slide 8: Long term value creation

    CEO – Business overview 8 2015 – 2018 strategic plan status: On target 30bps reduction of avg. portfolio ▪ ~20bp reduction since end 2015, to 1.61% ON TARGET guarantee to 1.5% by 2018 at end 2017 Rebalance our portfolio +6p.p. capital light reserves as % of ON TARGET ▪ +4.5p.p. achieved by end 2017

  9. Slide 9: Well positioned to deliver financial targets

    CEO – Business overview 9 Well positioned to deliver financial targets Four year target Status end 2017 (2015-2018) (3 years completed) Cumulative Net Operating Cash > € 7 bn €5.8bn 82% Cumulative dividends > € 5 bn €3.7bn 74% 14.2 Average Operating RoE > 13% 13.7% FY15 13.4 FY16 13.4 13.0 FY17 © Ge

  10. Slide 10: Nearing completion of the industrial turn-around

    CEO – Business overview 10 Nearing completion of the industrial turn-around 2012 - 2015 2016 - 2018 2019 - 2021 TRANSFORMATION AND FINANCIAL TURNAROUND INDUSTRIAL TURNAROUND PROFITABLE GROWTH • Focus on core business • Optimise geographic footprint To be published at our • Strengthen capital • Ratio

  11. Slide 11: Accelerating our sustainability journey

    CEO – Business overview 11 Accelerating our sustainability journey Approval of the “Charter of Sustainability Commitments” ▪ Sets out our vision for running a responsible business and shaping a sustainable world. ▪ Makes concrete commitments to address the issues that are material to our role in soc

  12. Slide 12: CEO – Business overview

    CEO – Business overview 12 © Generali March 15, 2018 Results 2017

  13. Slide 13: Agenda: 2017 Group Financials

    13 Agenda II. 2017 Group Financials Luigi Lubelli – Group CFO ▪ Profit & Loss and Balance Sheet page 14 Business review page 26 © Generali March 15, 2018 Results 2017

  14. Slide 14: Key 2017 financials at a glance

    CFO – Key 2017 financials 14 Key 2017 financials at a glance FY16 FY17 D (LFL(1)) VOLUMES Gross Written Premiums (Euro m) 68,907 68,537 -0.2% Life (Euro m) 48,400 47,788 -1.0% P&C (Euro m) 20,507 20,749 +1.7% Life Net Inflows (Euro m) 11,793 9,718 -17.1% Life Reserves (Euro bn) 373.0 388.7 +4.2% PRO

  15. Slide 15: Key 2017 financials at a glance – Main drivers

    CFO – Key 2017 financials 15 Key 2017 financials at a glance – Main drivers VOLUMES ▪ GROSS WRITTEN PREMIUMS stable, reflecting disciplined approach in Life, and positive momentum in P&C ▪ NET INFLOWS Strongly positive, driven by the strategic focus on Unit Linked and Protection products. Overall li

  16. Slide 16: Operating result by segment

    CFO – Profit & Loss 16 Operating result by segment (Euro m) +2.3% 133 22 4,895 4,783 56 (101) FY16 Life P&C Holding & Other businesses Cons. Adj FY17 FY 17 3,141 1,972 59 (278) 4,895 FY 16 3,084 2,073 (74) (300) 4,783 D +1.8% -4.9% n.m. -7.4% +2.3% © Generali March 15, 2018 Results 2017

  17. Slide 17: From operating result to net profit

    CFO – Profit & Loss 17 From operating result to net profit Including: € 331 m: Net realised gains Including: (Euro m) (€ 271 m): Net impairments (€ 297 m) : Restructuring costs € 26: Fair Value through P&L o/w: German restructuring announced September 2017: (€ 174m) (€ 106 m): VOBA amortization (€ 2

  18. Slide 18: Total remittance from operations

    CFO – Cash generation & dividends 18 Total remittance from operations Net Operating Operating Gross Gross remittance Result (1) Profit remittance(4) (Euro m) Coverage 2,631 (Euro m) ratio (Euro m) 2,435 53 44 419 Other Italy 1,234 1.2x 1,000 430 International 310 CEE France (2) 451 1.0x 450 285 400

  19. Slide 19: Net Operating Cash Generation

    CFO – Cash generation & dividends 19 Net Operating Cash Generation Net Operating Cash Generation (Euro bn) 2016 2017 ▪ 19% increase in Net Operating Remittance from subsidiaries 2,435 2,631 Cash Generation also due to strong Reinsurance result Result of reinsurance (1) 171 341 ▪ Group dividend cover

  20. Slide 20: Shareholders’ equity

    CFO – Balance Sheet 20 Shareholders’ equity Shareholders’ equity rollforward Shareholders’ equity sensitivities +2.2% (Euro mln) (Euro bn) 24,545 2,110 25,079 (1,249) (299) (27) Equities -20% -1.2 Interest rate +50bps -2.3 Shareholders' Δ in AFS FY 2017 Net Dividend Other Shareholders' Equity FY16 R

  21. Slide 21: Solvency II: Regulatory View & Internal Model View

    CFO – Solvency 2 21 Solvency II: Regulatory View & Internal Model View Eligible own funds vs. Required capital Key sensitivities (Regulatory View) (Euro bn) (%) Solvency II Regulatory view Solvency II Internal Model view 230% S-II Regulatory view FY17 208% 208%(1) 194% 178% 46.8 Equities +25% 214% (

  22. Slide 22: Solvency II: Regulatory View roll forward

    CFO – Solvency 2 22 Solvency II: Regulatory View roll forward Note: From year end 2017, the roll forward is presented on the regulatory solvency ratio. The full internal model view of the roll Excess forward is available in the backup. Own Own Solvency II Funds SCR Funds(1) ratio (Euro bn) (Euro bn)

  23. Slide 23: Focus on normalised capital generation

    CFO – Solvency 2 23 Focus on normalised capital generation Total normalised Own Funds SCR(1) capital generation Regulatory view (Euro bn) (Euro bn) (Euro bn) Life 1.6 1.6 (1.3) 1.5 3.5 P&C 1.0 0.0 1.0 Holding & Other (0.9) 0.0 (0.9) Total Normalised 3.3 0.2 3.6 Capital Generation Life new business O

  24. Slide 24: High quality capital mix

    CFO – Solvency 2 24 High quality capital mix Tiering of Solvency II Capital Applicable Solvency II limits (FY17) (FY17) Generali FY17 Regulatory view Solvency II Generali Euro bn % of total limits Regulatory view Tier 1 40.9 88% Unrestricted Tier 1 37.3 80% Restricted Tier 1 < 20% 9% of total Tier 1

  25. Slide 25: Agenda: 2017 Group Financials

    25 Agenda II. 2017 Group Financials Luigi Lubelli – Group CFO Profit & Loss and Balance Sheet page 14 ▪ Business review page 26 © Generali March 15, 2018 Results 2017

  26. Slide 26: Life key financial indicators

    CFO – Life Insurance 26 Life key financial indicators (Euro m) FY16 FY17 LFL D VOLUMES Gross written premiums 48,400 47,788 -1.0% Net inflows 11,793 9,718 -17.1% PVNBP 46,605 45,429 -2.3% PROFITABILITY Life operating result 3,084 3,141 +1.8% Life operating ratio on investments (bps) 75 75 0 New Busi

  27. Slide 27: Life Operating result by driver

    CFO – Life Insurance 27 Life Operating result by driver (Euro m) +1.8% 130 ▪ Technical margin impacted by a change in 3,084 3,141 French legislation on annuity business, (45) and a high result from certain Italian Group (28) Life policies in 1H 2016 which did not repeat ▪ Positive investment result,

  28. Slide 28: Life business mix rapidly shifting (1/2)

    CFO – Life Insurance 28 Life business mix rapidly shifting (1/2) ▪ Strong steering of business towards unit linked and protection NET INFLOW BY COUNTRY NET INFLOW MIX (Euro m) (% of total) FY16 FY17 Italy 7,197 5,703 Protection France 438 959 28% 15% 17% +9%pts 37% Germany 1,560 1,784 25% Unit-Linke

  29. Slide 29: Life business mix rapidly shifting (2/2)

    CFO – Life Insurance 29 Life business mix rapidly shifting (2/2) ▪ Reserve mix continuing to improve – on track for 2018 target CAPITAL LIGHT RESERVES (% of total) 4.2% 373.0 9.7 14.3 388.7 Other -4.5pt 46.8% 52.8% 48.3% 67.3 (5.9) (2.4) 75.4 +12.1% +4.5pt 313.2 Capital-light(1) 305.7 +2.5% 51.7% 53

  30. Slide 30: Life New Business: Analysis by line of business

    30 CFO – Life Insurance Life New Business: Analysis by line of business PVNBP X MARGIN ON PVNBP = NEW BUSINESS VALUE (Euro m) (%) (Euro m) 46,605 45,429 1,820 -2.3% 12,252 TOTAL 2.56% 4.01% 1.46% +53.8% 15,696 588 +28.7% 1,193 8,850 Unit-Linked 3.37% 3.75% +0.41% +44.3% 9,122 413 +3.0% 715 Protectio

  31. Slide 31: Life New Business: Analysis by geographical area

    31 CFO – Life Insurance Life New Business: Analysis by geographical area PVNBP (Euro m) MARGIN ON PVNBP -2.3% (%) 1.90 p.p. 45,429 -3.3% 2.02 p.p. +9.7% 1.79 p.p. 1.46 p.p. -9.7% 10.98% -4.2% -0.04 p.p. +0.0% 1.93 p.p. 19,116 4.83% 4.72% 4.01% 9,306 8,529 2.85% 7,598 2.26% 881 Italy France Germany C

  32. Slide 32: Increasing New Business Value driven primarily by future cash profitability

    CFO – Life Insurance 32 Increasing New Business Value driven primarily by increased future cash profitability ∆ margin due to: Life New Business Margin Management actions 1.12 p.p. (% PVNBP) Financial assumptions 0.34 p.p. Minorities & FX impact -0.01 p.p. 6% ▪ Increase in Life New Business Margin p

  33. Slide 33: Improved mix drives future expected cash profits higher

    CFO – Life Insurance 33 Improved mix drives future expected cash profits significantly higher New business expected future cashflows After-tax and minorities real world expected cashflow profile (Euro bn) (Euro bn) 81% of ultimate cashflow generated 3.4bn 1.2 3.0 after 25 years (91% in PV terms) +0.

  34. Slide 34: Life investment breakdown and performance

    CFO – Life Insurance 34 Life investment breakdown and performance Life segment general account (%) Current returns Euro 346 bn Euro 351 bn Euro m % 1.4 1.7 2.0 2.9 2.8 FY16 9,734 3.2 3.8 2.9 3.6 Fixed income Other 7.6 7.3 FY17 9,528 3.1 Cash & cash equivalent FY16 520 3.9 Equity 37.5 35.6 Real estat

  35. Slide 35: Guarantees

    CFO – Life insurance 35 Guarantees Current return vs existing portfolio guarantee Reinvestment return vs average new business guarantee (%) (based on premiums) (%) 3.21% 3.11% 2.02% 1.80% 1.73% 1.61% 0.45% 0.22% FY16 FY17 FY16 FY17 Current return Existing Portfolio Guarantee Reinvestment return Aver

  36. Slide 36: P&C key financial indicators

    CFO – P&C Insurance 36 P&C key financial indicators (Euro m) FY16 FY17 LFL D VOLUMES Gross written premiums, of which: 20,507 20,749 +1.7% Primary Motor 7,887 8,054 +3.0% Primary Non Motor 11,880 11,962 +0.9% PROFITABILITY Combined ratio (%) 92.3% 92.8% +0.5%pts Nat Cat impact (%) 1.5% 2.1% +0.6%pts

  37. Slide 37: P&C Operating result by driver

    CFO – P&C Insurance 37 P&C Operating result by driver (Euro m) -4.9% 2,073 33 1,972 (106) (28) ▪ Lower technical margin reflecting higher nat cat ▪ Investment result decrease due to lower current returns on fixed income instruments FY16 Technical Result Investment result Other FY17 ▪ Improved Other

  38. Slide 38: P&C gross written premiums and combined ratio by country

    38 CFO – P&C Insurance P&C gross written premiums and combined ratio by country Total variation due to: Primary Motor +3.0% GROSS WRITTEN PREMIUMS Primary Non-Motor +0.9% COMBINED RATIO (Euro m) (%) +1.7% -1.0p.p. +1.3p.p. +0.5p.p. +0.1p.p. +2.6p.p. -1.7p.p. +5.7% -2.9% -16.1p.p. +1.6% 20,749 +0.2%

  39. Slide 39: Combined ratio analysis

    CFO – P&C Insurance 39 Combined ratio analysis Combined ratio (%) Expense ratio (%) +0.5%pts +0.5%pts 27.3 0.8 27.8 5.8 (0.3) 5.5 92.3 +0.5 0.5 0.0 92.8 21.5 22.3 27.3 27.8 Administr. costs Acquisition costs FY16 Δ Admin Δ Acq. FY17 Loss ratio (%) +0.0%pts 65.0 65.0 65.0 65.0 (0.8) 0.6 0.2 FY16 Δ Ex

  40. Slide 40: P&C investment breakdown and performance

    CFO – P&C Insurance 40 P&C investment breakdown and performance P&C segment general account (%) Current returns Euro 39 bn Euro 39 bn Euro m % 3.8 4.6 FY16 813 2.9 7.4 6.6 Other Fixed income 9.6 9.9 FY17 762 2.7 Cash & cash equivalent 5.5 5.8 FY16 86 3.9 8.4 7.3 Equity Real estate FY17 114 4.7 Equit

  41. Slide 41: Holding & Other businesses segment

    CFO – Holding & Other businesses 41 Holding & Other businesses segment (Euro m) FY16 FY17 % Financial and Other Businesses 384 513 +33.6% of which Asset Management Europe 133 221 +65.7% of which Banca Generali(1) 190 241 +26.8% of which other businesses(2) 61 51 -15.7% Operating holding expenses (4

  42. Slide 42: Focus on Asset Management

    CFO – Holding & Other businesses 42 Focus on Asset Management (Euro) Asset Management Europe Total Asset Management FY16 FY17 % FY16 FY17 % AuM 436 bn(1) 447 bn +3% 448 bn(1) 463 bn +3% Operating result 133 m 221 m +66% 164 m 261 m +58% Net result 84 m 152 m +81% 112 m 187 m +67% Cost / Income rat

  43. Slide 43: Final remarks

    CFO – Final remarks 43 Final remarks A strong year in a challenging environment Successful execution of our strategy Solvency position even stronger Dividend increases 6% to €0.85 © Generali March 15, 2018 Results 2017

  44. Slide 44: Agenda: Backup

    44 Agenda III. Backup • Cost page 45 Investments page 47 Financial debt page 54 Solvency 2 page 57 © Generali March 15, 2018 Results 2017

  45. Slide 45: Cost development: nominal reduction in mature markets completed

    Back up: Focus on costs 45 Cost development: Delivery of nominal reduction in mature markets completed by 2017 Mature Market General Expense development (OpEx view) (1) (Euro bn) 5.4 5.3 -0.2 ▪ Acceleration of net reduction across 5.2 regions in mature markets to achieve the commitment of -200m€ by

  46. Slide 46: Agenda: Investments

    46 Agenda III. Backup Cost page 45 • Investments page 47 Financial debt page 54 Solvency 2 page 57 © Generali March 15, 2018 Results 2017

  47. Slide 47: Assets under management

    Backup: Investments 47 Assets under management Total Portfolio: Euro 542 bn Breakdown by region and asset class (%) (%) 4 11 Italy 3 31 France Germany By Region CEE 28 International General 12.4 Other 22 account Unit Linked 13.9 73.6 3 5 4 Third party 1 Equity investments Fixed income Real estate By

  48. Slide 48: Fixed Income Portfolio

    Backup: Investments 48 Fixed Income Portfolio Total Portfolio Covered Corporate Government Euro 348 bn Euro 24 bn Euro 112 bn Euro 181 bn(1) (%) (%) (%) (%) 8.7 0 2 9 11 6 1 7 Other fixed 12 Income 7.0 1 32 47 33 Covered 22.6 51 34 51 Corporate non fin. 9.6 12 AAA AA A BBB Not Investment Grade Not R

  49. Slide 49: Fixed Income Portfolio by country

    Backup: Investments 49 Fixed Income Portfolio by country Total Portfolio Covered Corporate Government Euro 348 bn Euro 24 bn Euro 112 bn Euro 181 bn (%) (%) (%) (%) 6 12 8.7 Other fixed 16 31 Income 7.0 11 36 43 42 Covered 22.6 1 19 0 11 3 34 1 13 2 20 Corporate non fin. 9.6 Italy Germany France CEE

  50. Slide 50: Focus on exposure to Italian banks

    Backup: Investments 50 Focus on exposure to Italian banks Market value at 31.12.2017 (Euro m) LIFE P&C TOTAL Senior 1,332 241 1,573 Lower Tier 2 680 116 796 Upper Tier 2 127 2 129 Tier 1 308 6 314 Other Subordinated 10 0 10 Equity 379 415 794 Total 2,837 780 3,616 © Generali March 15, 2018 Results 2

  51. Slide 51: Equity & Equity-like

    Backup: Investments 51 Equity & Equity-like Alternative funds: Euro 4 bn Total Portfolio: Euro 18 bn Equity: Euro 10 bn (%) (%) (%) Life, P&C and H&O Life, P&C and H&O 6 28 13 23 Life 4 68 Life P&C P&C H&O 81 H&O 55 Equity funds: Euro 4 bn (%) 22 Life, P&C and H&O Listed and 18 Unlisted 23 0 Equity

  52. Slide 52: Asset Allocation: Real Estate

    Backup: Investments 52 Asset Allocation: Real Estate(1) Total Portfolio: Euro 26 bn(1) Breakdown by use2 3 4 Office (%) 18 Residential Breakdown by utilization2 Retail (%) 14% 11 63 Logistic Investment properties Other/Mixed Breakdown 2 Own use Italy by country(2) 19 (%) 31 Germany 86% 3 France CEE

  53. Slide 53: Agenda: Financial debt

    53 Agenda III. Backup Cost page 45 Investments page 47 • Financial debt page 54 Solvency 2 page 57 © Generali March 15, 2018 Results 2017

  54. Slide 54: Focus on financial debt

    Backup: Financial debt 54 Focus on financial debt Average cost & maturity of financial debt Total financial debt (%) (Euro bn) Euro 12.7 bn (1) Euro 11.8 bn 526 FY16 FY17 457 Average cost (%) 5.67% 5.71% 9,126 8,379 Subordinated/Hybrid 6.14% 6.22% Senior 4.18% 4.19% Average maturity (years) 6.72 6.2

  55. Slide 55: Financial debt breakdown by expiry date/call date

    Backup: Financial debt 55 Financial debt breakdown by expiry date/call date (Euro m) 2,589 1,750 1,500 1,394 1,250 1,250 850 750 250 0 2018 2019 2020 2021 2022 2024 2025 2026 2027 2028 Senior Hybrid Subordinated © Generali March 15, 2018 Results 2017

  56. Slide 56: Agenda: Solvency 2

    56 Agenda III. Backup Cost page 45 Investments page 47 Financial debt page 54 • Solvency 2 page 57 © Generali March 15, 2018 Results 2017

  57. Slide 57: Solvency II: Internal Model View roll forward

    Backup: Solvency 2 57 Solvency II: Internal Model View roll forward Excess Own Own Solvency II Funds SCR Funds(1) ratio (Euro bn) (Euro bn) (Euro bn) (%) FY 2016 41.7 21.5 20.2 194% Regulatory and other - - - +0%pts model changes Normalised capital 3.3 (0.2) 3.6 +18%pts generation Variances and othe

  58. Slide 58: Focus on SCR

    Backup: Solvency 2 58 Focus on SCR FY17 SCR (Euro bn, Regulatory view) Pre-diversification SCR by region (%) Italy FY17 SCR before Other 35% 34.5 27% diversification Diversification 7.5 CEE 5% Germany France 17% Taxes 6.0 16% Pre-diversification SCR by type of risk (%) Credit FY17 SCR excl. 19.2 28%

  59. 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 (FY17, Euro bn, Regulatory view) Of which: Of which: 8.9 (6.7) bn Goodwill 1.4 bn Bonds (4.1) bn Intangibles & DAC 7.5 bn Real Estate 21.8 1.0 bn other asset items (10.8) 46.3 (7.2) (

  60. 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

  61. Slide 61: Next Events

    61 Next Events 19 April 2018 4 May 2018 1 August 2018 8 November 2018 21 November 2018 Annual General 1Q 2018 results 1H 2018 results 9M 2018 results Investor Day Meeting reporting reporting reporting 2018 © Generali March 15, 2018 Results 2017

  62. Slide 62: Investor Relations contacts

    62 Team Spencer Horgan Head of Investor & Rating Agency Relations Spencer.Horgan@Generali.com +44 20 7265 6480 Stefano Burrino Martina Vono Investor Relations Investor Relations Associate Assicurazioni Generali Stefano.Burrino@Generali.com Martina.Vono@Generali.com P.za Duca degli Abruzzi 2 +39 040

  63. Slide 63: Thank you

    A. GENERALI Thank you

  64. Slide 64: Generali Group 2017 Results

    A. GENERALI GENERALI GROUP 2017 Results

Assicurazioni Generali — FY2017 Earnings Presentation on 6ix