Generali Hit by Coronavirus Costs, but Upbeat About 2021

March 11, 2021 by Gianluca Semeraro

Generali is confident it can hit its targets this year after Italy’s biggest insurer overcame a negative impact from the coronavirus crisis in 2020 to deliver a record operating profit.

Operating profit, which is closely watched by the market, rose 0.3% to 5.21 billion euros ($6.2 billion) in 2020, Generali said, despite a 123 million euro hit from COVID-19.

Generali shares were up 2% at 0830 GMT on Thursday, outperforming a flat European insurers index.

“After an excellent 2019 and an excellent 2020 we are well positioned to close out 2021 well,” Generali Chief Executive Philippe Donnet told a news briefing.

Asked if he felt under shareholder scrutiny, Donnet said it had not been a given that the Italian insurer would perform well in the unprecedented scenario of the health crisis.

Donnet, whose mandate as CEO comes up for renewal next year, has come under pressure from key shareholders Leonardo Del Vecchio and Francesco Gaetano Caltagirone.

Del Vecchio is the largest shareholder of Mediobanca , which in turn is the biggest investor in Generali.

In a bid to improve his chances of another term, Donnet launched a reorganization of Generali, with his deputy Frederic de Courtois leaving.

The group’s 2019-2021 strategic plan ends this year and while Donnet has said he is already working on the next one, no date for its presentation has been set yet.

Europe’s No 3 insurer said its net profit fell 34.7% to 1.744 billion euros in 2020 after net impairments of 287 million euros due to market volatility. The figure was in line with the analyst consensus.

Its solvency ratio, a key measure of financial strength, stood at 224%, rising to 228% at the end of February.

Generali will pay a dividend of 1.47 euros per share split into two tranches, a first of 1.01 euros to be paid in May and the second in October providing regulators give their blessing.

A second tranche was not paid last year after Italy’s insurance regulator asked companies not to pay dividends following recommendations from the European Systemic Risk Board (ESRB) to conserve cash in the coronavirus crisis. ($1 = 0.8385 euros)