Generali Deutschland Group
  • Consistent premium growth in property and casualty insurance
  • Combined ratio reduced from 96.1% to 93.6% despite Whitsun storm
  • Scheduled decrease of single premiums in life business
  • Improvement of net investment income marked by higher level of realized capital gains

Cologne - The Generali Deutschland Group continues its successful development in the first half of 2014. Due to technical improvements and a higher net investment income, the Group achieved a net profit of € 240 m (first half 2013: 224 m; in the following in brackets) in the first six months of the year. The earnings of Generali Deutschland, which comprises companies such as Generali Versicherungen, AachenMünchener, CosmosDirekt and Central Krankenversicherung, thus rose by 7.3%. Compared to the first half of 2013, pre-tax earnings even improved by 16.5%.

As at June 30, 2014 the total premium income of the Generali Deutschland Group contracted by 13.7% to € 8.6 bn. This development was mainly attributable to the conservative underwriting policy with regard to single premium life new business. On the other hand, the Group's property and casualty insurers again achieved satisfactory growth. While in the previous year the claims expenditure had been marked by the floods in north, south and east Germany, the claims caused by natural perils were lower this year, despite the Whitsun storm "Ela". Compared to the first half of 2013, the combined ratio reduced markedly from 96.1% to 93.6%.

"Within the international Generali Group, Generali Deutschland is one of the most important country units. I am confident that with our special business model and our distribution strength we will materially contribute to the success of the Group also in the future", says Dietmar Meister, Chief Executive Officer of Generali Deutschland Holding.

Scheduled reduction of single premium life business
In life business, the total direct premiums of the German Group, including savings portions and premiums of investment contracts, moved from € 6,775 m to 5,383 m. The new business of Generali Deutschland's life companies also contracted as planned. Compared to the extraordinarily high new business growth in the previous year, single premium new business reduced from € 2,810 m to 1,432 m and was thus within the range expected for the full year 2014. This was primarily attributable to a contraction of business with the pension products "3-Phasen-Rente" of Generali Lebensversicherung and "Flexibles Vorsorgekonto" of Cosmos Lebensversicherung as well as with the capitalization product "Tagesgeld Plus" of Cosmos Lebensversicherung. The products mentioned are highly dependent on the capital market. With a view to the overall portfolio of the Generali Deutschland Group these products are less supported in the business year 2014 compared to previous years. Instead the company deliberately concentrated on products with higher profit margins. Dr. Torsten Utecht, Chief Financial Officer of Generali Deutschland Holding: "Given the extremely low level of interest rates it is becoming increasingly difficult to find profitable investment opportunities. Our strategy of reducing single premium business in this environment has thus turned out to be the right policy."

New business in terms of regular premiums contracted by 4.4% to € 347 m. Ahead of the introduction of the new Unisex tariffs the first half of 2013 had still been marked by the sales of previous tariffs at year end 2012 entering the books in 2013, while there was no such extraordinary influence in the first half of 2014. Adjusted for this impact, regular premium new business would have been at the level of the previous year. "The whole development is also marked by a reluctant demand for retirement products. The low level of interest rates, which is politically motivated, diminishes the willingness of people to assume the responsibility for saving money for their retirement. In the light of demographic challenges, this development is increasingly to be regarded as critical", Dietmar Meister underlines. All in all, the new business in terms of APE (Annual Premium Equivalent1) decreased by 23.9% to € 490 m.

In health insurance, the business development continues to be marked by the strategic reorientation involving a decrease in the number of persons with full health covers. The premium income dropped by 3.0% to € 1,057 m from the level of the first half of 2013. This contraction was, however, smaller than expected because of a lower number of cancellations.

Consistent growth in property and casualty insurance
In the first half of 2014 the property and casualty insurers of the Generali Deutschland Group again achieved growth. Higher average premiums, innovative products as well as the distribution strength and advisory capacity of the German Group led to a 2.9% rise to € 2,128 m in the premium income of direct business. The premium development was somewhat curbed by the flexibilization of the main renewal dates in the motor portfolios of Generali Deutschland. As the renewal dates in motor invoices are shifting from January to other months of the year, the share of main renewals in the first half of 2014 has decreased. This impact has, however, reduced in the second quarter compared to the first quarter 2014 and will nearly level off in the course of the year and thus a higher growth rate than in the previous year is to be expected for the full year 2014.

Thanks to a lower expenditure for claims caused by natural perils, claims and benefits decreased to € 1,099 m (1,113 m). The combined ratio (net of reinsurance) improved markedly from 96.1% to 93.6%. A contribution to this very good rate by market comparison was also made by the successful claims management of the Group.

Net investment income substantially increased
In the first half of 2014, the capital market environment was characterized by the intensified low-interest policy of the European Central Bank (ECB). On the one hand, interest rates of high-quality bonds, such as bunds, reduced again. On the other hand, the spreads of fixed-income securities with a poorer rating or lower liquidity also decreased on a broad front.

Nevertheless, supported by realized capital gains from the disposal of fixed-income securities, Generali Deutschland markedly improved its net investment income by 14.1% to € 2,021 m. Due to portfolio growth as well as a higher income from interest earned and shareholdings, the ordinary investment income also rose from € 1,678 m to 1,754 m. Furthermore the lower level of impairments had an additional positive influence. All in all, the yield on the average investment portfolio (without the investments of unit-linked business) thus amounted to 3.7%. Dr. Torsten Utecht: "The realized capital gains are mainly used to finance the additional interest reserve which our life companies have to set up. The very low interest level and the particular requirements for the calculation of the additional interest reserve are increasingly a burden for the companies."

Strong group integration and unique distribution model
Generali Deutschland is part of the international Generali Group and thus benefits from the advantages involved in a strong integration on a national and international level. On the basis of the strategic distribution partnership of nearly 40 years with Deutsche Vermögensberatung AG and its more than 3,400 administration and sales offices and in the light of the advisory capacity of its distribution networks, the Group has an excellent competitive position in business with German retail customers and small to medium-sized commercial clients.

Special events within the first half of 2014

Prof. Dr. Reinfried Pohl
On June 12, 2014 Prof. Dr. Reinfried Pohl, the founder and Chief Executive of Deutsche Vermögensberatung AG, deceased. With Deutsche Vermögensberatung he has created a company which is second to none in the world and which has made and continues to make a material contribution to the success of the Generali Deutschland Group. Generali Deutschland is very thankful to Prof. Dr. Reinfried Pohl and his family. His death is a great loss for the Group.

Squeeze-out and delisting
On May 7, 2014, the squeeze-out resolved by the shareholders at the extraordinary general meeting of Generali Deutschland Holding on December 4, 2013 was entered in the Commercial Register and thus became effective. With the registration, the shares held by the minority shareholders of Generali Deutschland Holding AG were thus passed on by law to the majority shareholder Assicurazioni Generali S.p.A. with registered office in Trieste. The shares of Generali Deutschland Holding AG have meanwhile been delisted.

Life Insurance Reform Act (LVRG)
The LVRG aiming to stabilize the German life insurers was initiated in the first half of 2014 by the German government. Large sections of this Act came into force early in August with the publication in the Official German Gazette. Some rules will not come into effect until January 1, 2015.

The Generali Deutschland Group welcomes the aim of the German government to strengthen the risk-bearing capacity of life insurers in an environment of persistently low interest rates. The rule on the modification of policyholder participation in the revaluation reserves is thus explicitly welcomed. Some individual measures, however, such as the blocking of dividend distributions for companies or the reduction of the maximum zillmerization rate for distribution costs are seen critically by the Generali Deutschland Group. The latter can lead to a further contraction in the new business of life companies and thus be to the disadvantage of the population which urgently has to provide for old age.

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

1 market standard to determine premium income under new business, 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.

distributed by