Generali Deutschland Group
  • Life assurance with planned decrease in single premiums and stable regular premiums
  • Positive premium growth in property and casualty insurance
  • Combined ratio of 94.0% within target range - claims experience at normal levels
  • Significant improvement in net investment income which is supported by gains from the disposal of bonds and equity securities
  • Outlook for full year 2014 confirmed

Cologne - The Generali Deutschland Group started the business year 2014 as planned. In the first three months the company achieved a net profit of € 115 m (2013: € 104 m; 2013 figures in brackets hereafter). The net profit of the Group which includes, among others, Generali Versicherungen, AachenMünchener, CosmosDirekt and Central Krankenversicherung, is within the target range for the full year 2014.

In the first quarter 2014, the total premiums of Generali Deutschland decreased, as expected, by 14.8% to € 4.6 bn. This development was primarily attributable to the more selective underwriting policy for single-premium new business in life assurance. In the period under review, the conditions were less attractive for single-premium policyholders than in the first quarter of 2013. On the other hand, the Group again achieved a growth in premium income in property and casualty insurance. Compared to the quarter of 2013, which was marked by a very low combined ratio, the combined ratio rose by 94.0% (92.3%) as a result of higher run-off in favour of reinsurers.

In a market environment continuing to be marked by low interest rates, the net investment income significantly rose by 22.7% to € 1,087 m (€ 886 m). Higher realized capital gains from the disposal of fixed-income securities and shares made a significant contribution to this development. These realizations mainly serve to finance the additional interest reserve as well as to the needed participation of policyholders in unrealized capital gains in life assurance. The net yield related to the average investment portfolio was at 3.6%.

"Our net profit shows that we have a good positioning in technical business despite the persistently difficult situation in life assurance. After the successful start we are well positioned to achieve our targets also in 2014", said Dietmar Meister, Chief Executive Officer of Generali Deutschland Holding. "The regulatory challenges, however, are substantial, continuously growing and lead to a rising burden for the entire company", continued Meister.

Declining premiums in life assurance, as expected
In life assurance segment the Group's total premiums of direct business, including saving portions and the premiums of investment contracts, declined by 23.3% to € 2,620 m (€ 3,415 m). This was mainly attributable to the significantly reduced new business for single premiums which decreased from € 1,406 to € 626 m compared to the extraordinarily strong first quarter 2013, however, it is in line with the expectations for the full year 2014. The regular gross premiums written, however, remained quite stable with € 1,498 m (€ 1,511 m).

New business for regular premium declined from € 212 m to € 180 m. While the first quarter 2013 was characterized by backlogs from the disposal of the new "unisex" tariffs at the end of the year 2012, this extraordinary item was missed in the first quarter 2014. This item made a contribution to the significant decline in new business for regular premiums. It is clear that customers are more and more selective when concluding new contracts - not least through the critical discussion about life assurance in public. All in all, new business in APE (Annual Premium Equivalent1) declined by 31.0% to € 243 m.

Besides the generally difficult environment for private health insurance, the business development in health insurance was still influenced by the strategic reorientation of Central. Compared to the first quarter 2013, the premium income declined by 3.7% to € 528 m due to a lower number of persons with full health cover. However, the decrease was smaller than expected as a result of the low level of cancellations. New business dropped in full health covers as well as in supplementary health covers. In supplementary health cover, the so called "Pflege-Bahr" product witnessed the first indications of saturation effects.

Increased premiums in property and casualty insurance
The property and casualty insurers of the Generali Deutschland Group were in position to raise their premiums again. Higher average premiums and positive new business led to premium growth of 1.2% to € 1,458 m. The development of premiums was affected by the increased flexibility of the main renewal dates in the Group's motor portfolios. As a result of the shift of the annual premium statement in motor from January of any year to other months, the share of main renewal date decreased in the first quarter. This effect, however, will level off in the course of the year. The gross premiums earned, where the effect of changed main renewal dates is not taken into consideration, increased by about 4%.

Besides a rise in the insurance portfolio, a higher run-off in favour of reinsurers, in particular, made a contribution to the slight increase in claims and benefits to € 538 m
(€ 523 m). On the basis of an unusually low previous year level, the combined ratio rose from 92.3% to 94.0% as a whole - a solid result when compared to the overall market.

Significant improvement in net investment income
In the first quarter 2014, the situation on the financial markets was also marked by the unchanged low interest rates. Moreover, the European Central Bank (ECB) did not set any new fiscal stimulus and continued to hold on their expansive monetary policy. The interest rates for ten-year German Bunds declined from 1.93% to 1.56% during the first three months of 2014.

The net investment income of the Generali Deutschland Group significantly increased by 22.7% to € 1,087 m, particularly through the gains from the disposal of fixed-income securities, but also through the realized capital gains of dividend-bearing securities. The ordinary investment income also grew from € 792 m to € 862 m due to a higher level of income from participating interests and interests. The yield (without investments of unit-linked insurance) referring to the average investment portfolio was therefore at 3.6%. "The current interest rates make it more and more difficult for investors to generate adequate yields in the new investment. In our new investment strategy we continue to focus on bonds with good quality and we intensify the international diversification of issuers", said Dr. Torsten Utecht, Chief Financial Officer of Generali Deutschland Holding.

Outlook for year 2014 confirmed
As part of the international Generali Group, Generali Deutschland benefits from the advantages of a strong national and international Group. Furthermore, the longstanding strategic partnership with Deutsche Vermögensberatung - which has more than 3,400 offices and agencies - is an important support for the whole Group and plays a key role in the successful development of the Group.

By means of its proven business model the Group is confident that it is able to continue strengthening its very good competitive position in Germany in the retail and small to medium-sized commercial segments also in 2014. Process optimizations and continuous improvements in the structural positioning ensure quick and flexible response to the requirements of the market. An active cost and complexity management helps to remain competitive in this presently challenging environment, and is laying the foundations to successfully seize the market opportunities.

Provided there are no extraordinary claims events in the further course of the year and investment income is not affected by substantially adverse impacts, the Generali Deutschland Group maintains its target of a net profit for the full year.

Under IFRS, according to the German regulation, technical items of the Balance Sheet and the Statement of Comprehensive Income are presented based on US-GAAP.

1 market standard to determine new business premium income, equalling regular premiums plus 10% of single premiums


Forward-looking statements
To the extent this Release includes prognoses or expectations or forward-looking statements, these may involve known and unknown risks as well as uncertainties. The actual results and developments may therefore differ materially from the stated prognoses or expectations. Besides other reasons not specified here, deviations may be the result of changes of the overall economy or of the competitive situation, especially in core activities or core markets. Deviations may also result from the extent and the frequency of claims, lapse ratios, mortality or morbidity rates or tendencies. The developments of financial markets and of exchange rates of foreign currencies as well as amendments of national and international law, particularly in respect of tax rules, may have an influence. Terrorist attacks and their consequences may increase the probability and the extent of deviations. The company is under no obligation to update the statements made in this Release.

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