Generali toasts accounts above estimates, non-life business shifts gears

(Il Sole 24 Ore Radiocor) - Better-than-estimated accounts, especially for the third quarter, and positive analysts, particularly on the solidity of the non-life business, are driving Generali in Piazza Affari (FTSE MIB ). The stock during the session touched an intraday high of EUR 27.27, a level not seen since 2008, compared to an all-time high of EUR 37.76 touched in 2000. It was followed closely by Mediobanca, the leading shareholder of the Lion of Trieste, while Banca Generali hit a new all-time high of 43.2 euro.

Giving further support to the company's stock is the fact that, according to experts at Citi and Goldman Sachs, the statement as at 30 September 'pulls the wool over the eyes' of the new strategic plan to be presented on 30 January. Indeed, as Citi points out, 'third quarter results are encouraging, particularly in non-life business. The underlying loss ratio improved by 240 basis points year-on-year and 180 points sequentially. This, together with an improved expense ratio, is today's driving force and provides important momentum towards the new three-year plan' coming in early 2025. Goldman's experts are of the same opinion: 'We view the quarter as a strong result in a volatile period, and believe this provides a good starting point for Capital Market Day'. Among other things, according to Morgan Stanley, the results 'justify the overweight rating and allow us to look forward to the next, even more significant catalyst, which is the new plan in January, when management will define the multi-year targets'.

Turning to the accounts, operating profit for the quarter was 1.67 billion, up 25% and above consensus at 1.52 billion (+7.9% to 5.4 billion for the nine months). Life segment profit rose 11% to EUR 1.08bn and P&C by 60% to EUR 481m, versus estimates for EUR 443.8m. Net profit, which grew 5% to EUR 3 billion in the nine months, jumped 57% to EUR 909 million in the third quarter, against consensus for EUR 767.3 million. "Nine-month results were better than expected both at the operating and adjusted net profit level. P&C ended the nine months with a 2% better-than-expected operating result, with the insurance services result broadly in line and higher contribution from investments. The Life business reported a slightly better than expected nine months," explained Equita's experts, according to whom, among other things, the nine months "confirmed the positive indications that emerged from the previous quarter on the net inflows front, which rose to EUR 6.8 billion".

Generali Group CFO Cristiano Borean explained that the main driver of the acceleration in the non-life segment's operating result "has been the combination of rate increases carried out in the past and portfolio selection, which are beginning to represent a benefit in all segments". Added to this is the fact that 'we have recorded slightly fewer non-catastrophe claims'. In light of all this, JpMorgan also speaks of "a solid set of results, with operating profits 5% above consensus and our estimates, driven by improved results in non-life and life insurance. The elements underpinning the above-forecast results are sustainable and, even considering the negative fallout from natural catastrophes in the period, we believe that Generali is still able to achieve its ambition of an undiscounted combined ratio of less than 96% in financial year 2024".