GuruFocus - Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Generali (BIT:GASI) (ARZGY) reported a robust new business margin of 4.9% in the third quarter, aligning with their guidance range of 4.5% to 5%.
- The company experienced an 11.5% growth in new business volume with protection, contributing over 40% to new business value.
- Generali (ARZGY) achieved a significant improvement in the undiscounted combined ratio, which decreased to 96.3%, down by 1.4% compared to the previous year.
- The company maintained a solid net promoter score leadership position, reflecting strong customer relationships and satisfaction.
- Generali (ARZGY) saw a 6.8% overall growth in annual average premiums across its 10 main markets, with motor line premiums increasing by 7.5%.
- Generali (ARZGY) faced a higher-than-budgeted impact from natural catastrophes, with losses about 100 basis points higher than expected for the first nine months of 2024.
- The company anticipates restructuring costs in the fourth quarter, potentially driven by recent acquisitions.
- Generali (ARZGY) expects a negative impact of around EUR 40 million due to the tax reform under discussion in France.
- The company is likely to record some impairments on a selected number of real estate exposures.
- Generali (ARZGY) noted a EUR 100 million negative impact from lower interest rates affecting economic variances.
A: (Cristiano, Group CFO) The benign frequency and low bodily injury claims are important trends that have been confirmed quarter after quarter. While we caution against projecting this linearly, the improvement in technical profitability is expected to continue. The speed of this improvement will be moderated by our prudent approach to loss picks, but the underlying trends are positive.
Q: Can you unpack the variances in the Life segment, particularly the expected return despite lower rates?
A: (Cristiano, Group CFO) The economic variances in Q3 were around EUR 400 million, driven by positive equity market performance and lower market volatilities, which offset the negative impact of lower interest rates. Operating variances were primarily due to lapses, amounting to over EUR 100 million.
Q: Regarding the investment results, are there non-recurring items similar to Q2?
A: (Cristiano, Group CFO) The non-recurring items in Q3 2024 are not as significant as in Q3 2023. Last year, we had increased hedging costs in Switzerland, which impacted results. This year, the investment results are more stable, with no significant non-recurring items.
Q: Can you update us on pricing versus claims inflation in your main markets?
A: (Cristiano, Group CFO) In the motor segment, average premiums increased by about 7.5%, which is ahead of claims inflation. The earned premium increase is slightly below the average premium increase, indicating embedded improvement. In the accident and health segment, we see high single-digit premium increases, which are ahead of claims inflation.
Q: How do you see the impact of NatCat events on pricing and your strategic outlook?
A: (Cristiano, Group CFO) The NatCat events will likely lead to a continuation of the hardening cycle in personal lines in Europe. We expect to adjust our pricing strategy to account for increased volatility and ensure adequate risk coverage. This will provide room for additional price increases in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.