Operating result

Operating result

The operating result for the property&casualty segment evidenced an increase to € 1,616 million (€ 1,561 million at 31 December 2012). The increase (+3.5%) was attributable to the growth of the Investment result (+0.8%) and a positive contribution from other operating components. The technical result, despite the improvement of 0.2 pps in the combined ratio, evidenced a slight decrease (-1.1%), caused by the deterioration of other net technical income, particularly in Italy and from countries of Central and Eastern Europe due to the impacts of specific legislation relating to the Hungarian insurance sector.

With reference to the fourth quarter of 2013 compared to the same period last year, the operating result decreased sharply (-39.7%) due to the lower technical result, where catastrophic claims weigh approximately € 170 million and to the impact of the strengthening of reserves for outstanding claims relating to French civil responsibility aimed at aligning the level of prudence observed on the market.

The operating return on investments of the property&casualty segment rose to 4.37% (4.43% at 31 December 2012).

Technical result
(€ million)31.12.201331.12.2012FOURTH QUARTER 2013FOURTH QUARTER 2012
Technical result 807 811 101 359
Net earned premiums 19,825 19,785 4,921 4,680
Net insurance benefits and claims -13,577 -13,586 -3,420 -3,009
Net acquistion and administration costs -5,371 -5,363 -1,375 -1,326
Other net technical income -71 -25 -25 14

The technical result amounted to € 807 million, stable compared to 31 December 2012 (-0.5%). Despite the positive trend of the combined ratio, which further decreased by 0.2 pps, the technical result is affected by the worsening of Other net technical income, affected by the previously-mentioned effects of the regulations on the insurance industry in Hungary.

The technical result includes the impact of catastrophic losses of approximately € 460 million. These events relate primarily to the floods that hit central Europe in June, the storms in July / August in Germany and France and the storms that hit Central Europe again in late October. Similar events had an impact on 31 December 2012 of approximately € 290 million.

 Gross amountReinsurers’ shareNet amount
(€ million)31.12.201331.12.201231.12.201331.12.201231.12.201331.12.2012
Non-life net insurance benefits and claims 14,440 14,694 -842 -1,090 13,598 13.603
Claims paid 14,125 14,114 -1,148 -1,055 12,977 13.059
Change in the provisions for outstanding claims 230 462 293 −36 523 426
Change in claims paid to be recovered 29 49 12 1 41 50
Change in other insurance provisions 57 68 0 1 57 69
Combined ratio 95.6% 95.8% -0.2
Loss ratio 68.5% 68.7% -0.2
Current year loss ratio excluding natural catastrophes 69.5% 70.8% -1.2
Natural catastrophes impact 2.3% 1.5% 0.9
Prior years loss ratio -3.4% -3.5% 0.2
Expense ratio 27.1% 27.1% 0.0
Acquisition cost ratio 21.2% 21.1% 0.2
Administration cost ratio 5.9% 6.0% -0.2

The combined ratio was 95.6% down by -0.2 pps compared to 31 December 2012 due to the improvement in the loss ratio (-0.2 pps); stable expense ratio that is positioned at 27.1%.

In detail, there was an overall improvement in the loss ratio, confirming the trend observed in the first part of the year reaching 68.5%. The decline of -0.2 pps, was achieved despite the impact of catastrophic events for 2.3 pps, (at 31 December 2012, the impact was 1.5 pps). Without considering such events in both periods, the loss ratio would have further improved to -1.2 pps, due to the current trends in the loss ratio observed in the Non-motor lines, and in particular in Italy, France and Central and Eastern Europe. A slight decrease (-0.2 pps) owing to previous generations can be observed mainly in France, as a result of the strengthening of reserves for outstanding claims aimed at aligning the level of prudence observed in the market and, to a lesser extent, in Italy, mainly in the Non-motor lines.

Net acquisition and administration costs amounted to € 5,371 million, stable with respect to 31 December 2012. In detail, acquisition costs amounted to € 4,210 million, increasing slightly (+1.0%) essentially reflecting the observed increases written premiums in Germany, Austria and LatAm. The incidence of acquisition costs on net earned premiums increased slightly, reaching 21.2%.

Administrative costs amounted to € 1,161 million, evidencing a decrease of -2.7% , due mainly to the effects observed in Italy and France. The ratio of expenses to net earned premiums remained stable at 5.9%.
The expense ratio remained stable at 27.1%.

 Combined ratio(*)Loss ratioExpense ratio
(€ million)31.12.201331.12.201231.12.201331.12.201231.12.201331.12.2012
Italiy 92.4% 95.7% 70.7% 74.6% 21.7% 21.2%
France 105.5% 101.4% 77.9% 74.0% 27.7% 27.4%
Germany 95.7% 94.5% 67.2% 65.6% 28.5% 28.9%
Central and Eastern Europe 88.8% 88.5% 56.7% 57.3% 32.1% 31.2%
EMEA 95.8% 96.0% 67.8% 68.0% 28.0% 28.1%
Spain 94.3% 94.5% 65.9% 66.3% 28.4% 28.2%
Austria 94.6% 94.8% 67.7% 67.7% 26.9% 27.1%
Switzerland 94.4% 95.1% 69.3% 69.5% 25.1% 25.6%
Other EMEA 102.6% 102.7% 70.0% 70.1% 32.6% 32.7%
Latin America
100.9% 102.7% 62.7% 58.1% 38.2% 44.6%
Asia 120.0% 106.7% 79.0% 69.8% 41.0% 36.9%
International Operations 90.6% 90.7% 66.0% 64.1% 24.7% 26.6%
Total 95.6% 95.8% 68.5% 68.7% 27.1% 27.1%

(*)CAT claims impacted on the Group combined ratio for 2.3 pps, of which 0.5 pps in Italy, 2.8 pps in France, 4.1 pps in Germany and 4.1 pps in the European Eastern Countries (At 31 December 2012 CAT claims impacted on the Group combined ratio for 1.4 pps, of which 2.8 pps in Italy, 1.0 pps in France and 0.8 in Germany).

A review of the combined ratio for the business areas of the Group will follow.

The ratio in Italy improved considerably (-3.3 pps), reaching 92.4%. This trend mainly reflected the decrease in the loss ratio (-3.9% pps) which benefitted from the lower impact of catastrophic events (-1.7 pps); last year, the loss ratio was affected by events such as the earthquake that struck Northern Italy and the considerable snowfall. The non-catastrophic current loss ratio, however, showed a positive performance in Non-motor lines. The expense ratio increased with respect to the previous year, reaching 21.7%, due to the increase in the acquisition cost ratio mainly in the Non-motor line.

The combined ratio of France equal to 105.5%, evidenced an increase of 4.1 pps due to the increase in the loss ratio, reaching 77.9% (+3.9 pps). This trend was affected by catastrophic events mainly caused by the floods that occurred in June, storms in July and August, and cyclone Dirk in December for an impact of 2.9 pps compared to 1.3 pps for the events that occurred in 2012.

The run-off result worsened due to the aforementioned strengthening of reserves associated with civil liability, carried out in the usual context of policy reservation of the Group, in line with the practices observed in the market The expense ratio increased slightly (+0.2 pps).

The combined ratio of Germany, which amounted to 95.7%, increased compared to 31 December 2012 (+1.2% pps) driven by the impact of catastrophic claims such as the floods in June and the storms that struck the country in July and August, October and December with an impact of 4.1 pps. At 31 December 2012, catastrophic losses had an impact of 0.8 pps. The expense ratio decreased by 0.4%, at 28.5%.

The combined ratio in Central and Eastern Europe was 88.8%, increasing slightly over 2012 (+0.3% pps). The loss ratio of 56.7% includes the impact of catastrophic events such as the June floods and storms in August, with an overall impact of 4.1 pps. The expense ratio, at 32.1% increased by 0.9 pps due to the trends observed in both components.

With respect to 31 December 2012 the combined ratio of EMEA improved at 95.8%, due to the trends observed in the main countries included in this area.

The combined ratio of Spain was 94.3%, improving by -0.2 pps, due to the contraction of the loss ratio (-0.4 pps) partially offset by a slight increase in the expense ratio (+0.2 pps).

The combined ratio for Austria, improved by -0.2 pps reaching 94.6%. The loss ratio remained stable at 67.7%; catastrophic events related to flooding in June weighed 1.5 pps compared to 2.5 pps for the events in the previous year.

Finally, the combined ratio in Switzerland, representing 94.4% improved by -0.7 pps due to the positive cost ratio at 25.1% ( -0.4 pps). The claims rate decreased slightly (-0.2 pps).

The combined ratio improved by -1.7 pps for Latin America, at 100.9% (pps) due to the contraction effects observed in Brazil, due to the positive contraction of the cost ratio while the loss ratio increased (+ 2.1 pps).

The combined ratio for the International Operations cluster is equal to 90.6%, stable with respect to the prior year; The improvement in the expense ratio of (-2.0 pps), was offset by a deterioration in the loss ratio component (+1.9 pps) from the increase in catastrophe claims (+3.8 pps).

Investment result
(€ million)31.12.201331.12.2012FOURTH QUARTER 2013FOURTH QUARTER 2012
Investment result 1,029 1,020 270 269
Current income from investments 1,453 1,462 370 367
Other operating net financial expenses -425 -442 -99 -98

The financial result of the non-life segment amounted to € 1,029 million, stable compared to 31 December 2012 (+0.8%). Even the fourth quarter of 2013 evidenced a slight increase compared to the corresponding period in the previous year (+0.9%). In particular, actions taken by the Group to maintain an appropriate portfolio liquidity while ensuring, at the same time, adequate coupon returns, enabled the Group to achieve current income from investments € 1,457 million (€ 1,465 million al 31 December 2012) equal to a current return of 3.8%, despite the difficult context of low reinvestment rates.

In detail, the change in current income is primarily attributable to the decline in income from real estate investments - net of amortization - decreasing from € 398 million at 31 December 2012 to € 358 million. Moreover, in light of lower reinvestment rates, income derived from investments in fixed income securities recorded a decrease from € 904 million at 31 December 2012 to € 885 million. The current income from equity instruments, instead, recorded an increase at € 106 million (€ 74 million at 31 December 2012).

Other operating net financial expenses, which include interest expense related to operating debt and investment management expenses amounted to €-425 million (€-442 million at 31 December 2012), the lower investment management expenses more than offset the slight increase in interest expenses on operating debt.

Acquisition and administration costs
 Non-life segment
(€ million)31.12.201331.12.2012
Net acquisition costs and other commissions 4,210 4,170
Investment management expenses(**) 55 65
Other administration costs 1,210 1,236
Total 5,476 5,471

(**) Before the elimination of intra-group transactions between segments

P&C key financial Indicators157.06 KB
P&C gross written premiums trends167.21 KB
Combined ratio analysis105.13 KB
Combined ratio by country156.9 KB
Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328