Generali’s Russia Impairments, Management in Focus at 1Q — Earnings Preview

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By Ed Frankl

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Assicurazioni Generali SpA is scheduled to report results for its first quarter on Thursday. Here’s what you need to know:

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SALES FORECAST: Generali is expected to report gross written premiums of 20.86 billion euros ($22.01 billion) in the three months to the end of March, according to an analysts’ consensus provided by the company, compared with EUR19.71 billion in the same period. last year.

NET RESULT: The Italian insurer is seen posting net profit of EUR651 million for the quarter, according to the consensus, down from EUR802 million in the same period last year.


–RUSSIA: The year-on-year consensus decline in net profit is due in part to predicted impairments arising from Russia’s invasion of Ukraine. Citi estimates a pretax impairment of EUR350 million from the complete write-down of Generali’s Russian operations, it said in a research note.
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Earlier in May, rival AXA SA said its impairment from the effects of the Ukraine conflict would be “akin to a midsized natural-catastrophe event.” Generali confirmed in March that it would pull out of Russia in light of the war.

–COMBINED RATIO: Investors could look for any movement in Generali’s combined ratio, a measure of profitability that calculates losses and expenses over earned premiums. Reserve releases could be slightly higher than the normal run-rate, Citi said, weakening the outlook for profitability. The consensus has combined ratio at 91%, slightly worse than 90.8% over the whole of 2021.

–MANAGEMENT: Chief Executive Philippe Donnet won a re-election battle at the company’s annual meeting in April.
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However, there could be uncertainty in the short term around the actions of large shareholders including from second-largest investor Francesco Gaetano Caltagirone, who led the opposition to Donnet’s reappointment, Morgan Stanley said in a note. While there remains the risk that those who opposed Donnet may reduce their stakes in Generali, there is also the possibility that there will be areas of reconciliation and sharing ideas with opposing shareholders, JPMorgan said in a note.

Write to Ed Frankl at [email protected]


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