Cattolica Group 2013 results approved
CATTOLICA GROUP PREMIUMS WRITTEN INCREASE. DIVIDEND OF € 0.45 PER SHARE.
The 2013 results were approved by the Board of Directors. Profit was affected by the one-off government tax of € 31 million. The shareholders’ meeting will take place on April 26th in Verona. The comments of Chairman Paolo Bedoni and Managing Director Giovan Battista Mazzucchelli are included below.
Total premiums written amounted to € 4,384 million (+19.2% compared to the previous year), with consolidated net profit of € 64 million, which allows the proposal of a dividend distribution equivalent to € 0.45 per share. Non-life premiums of € 1,715 million (+1.8%) and life premiums of € 2,656 million (+34.4%) contributed to the total premiums written for the direct business.
The combined ratio (of 93.5%) and the solvency margin1, which is 1.66 times the regulatory minimum, both showed improvement. These are the key figures in the 2013 draft financial statements approved by the Board of Directors of Cattolica Assicurazione, which met today in Verona, chaired by Paolo Bedoni.
The dividend will be paid starting on May 22nd, following approval by the shareholders' meeting convened for April 26th in Verona. Note that normalised profit2 would have been € 109 million. This figure was affected by writedowns on goodwill and other assets equivalent to € 27 million and the additional, one-off IRES - company earnings’ tax of 8.5% for € 31 million.
Total premiums written for direct and indirect life and non-life business3 amounted to € 4,384 million, an increase of 19.2% compared to € 3,677 million in the previous year, due to significant growth in the life business, particularly through the banking distribution channel, as well as an increase in the non-life business that was greater than the market.
Direct premiums grew from € 1,686 million as of December 31st, 2012 to € 1,715 million at the end of 2013 (+1.8%), despite the decline in the market of 4.6%4 . In the motor segment, premiums written amounted to € 999 million, up 2.4% compared to the end of 2012. The non-motor classes, with premiums written for € 716 million, reported an increase of 0.9% compared to the previous year. In the non-life sector, the solid business performance was reflected in the combined ratio5 , which showed additional improvement over 2012, from 95.6%6 to 93.5%.
In the life business, direct premiums written amounted to € 2,656 million. Strong growth over the previous year (€ 1,976 million, +34.4%) is primarily due to premiums written for traditional classes I (+48.7%) and V (+18.7%). The increase in premiums written was driven mainly by the banking channel (+49.2%). The Group’s 2013 consolidated net profit was € 64 million. Prior to the application of the additional, one-off IRES - company earnings’ tax of 8.5%, which had an impact of € 31 million, consolidated profit would have been € 95 million, an increase over 2012 (€ 85 million7 ). In addition, the result includes writedowns on goodwill and other assets of € 27 million8 .
The Group’s net profit9 amounted to € 44 million. Without the additional IRES - company earnings’ tax, the Group’s profit would have been € 70 million, an increase over the € 6310 million earned in the prior year. The effect of the writedowns on goodwill and other assets on the Group’s profit was € 26 million8 .
Financial operations and balance sheet position
The result of investments11 came to € 501 million (compared to € 542 million as of December 31st, 2012). Investments amounted to € 16,927 million (€ 15,939 million as of December 31st, 2012). The gross technical provisions for non-life business was € 3,072 million (€ 3,014 million as of December 31st, 2012) and life provisions (including financial liabilities) came to € 13,165 million (€ 12,323 million as of December 31st, 2012). The figures as of December 31st, 2013 confirm the stability of the Group’s balance sheet, with the Group shareholders' equity equivalent to € 1,334 million (€ 1,317 million as of December 31st, 2012).
The Group’s solvency margin12, prior to dividends proposed by the Parent Company, is 1.66 times the regulatory minimum (1.55 times as of December 31st, 2012). The margin includes the subordinated loan granted on December 17th, 2013, eligible for purposes of calculating available capital.
At the end of 2013, the agency network included 1,422 agencies (1,391 at the end of 2012), distributed as follows: 55% in Northern Italy, 25% in Central Italy and 20% in Southern Italy and the islands. There were 5,862 bank branches placing Group products as of December 31st, 2013 (5,967 at the end of 2012).
The Parent Company
Gross premiums written for direct and indirect business by the Parent Company reached € 2,171 million (€ 2,110 million as of December 31st, 2012; +2.9%), of which € 1,457 million for direct non-life business (€ 1,468 as of December 31st, 2012; -0.8%) and € 686 million for the life business (€ 613 million as of December 31st, 2012; +12%). Net profit on the basis of Italian accounting standards amounted to € 83 million.
The Board of Directors will propose to the shareholders’ meeting a unit dividend of € 0.45 per share. The proposed dividend will be payable from May 22nd, 2014, with a coupon detachment date on the 19th of said month (coupon number 23) and a record date of May 21st, 2014, in compliance with Borsa Italiana’s calendar.
Indications from the initial months of 2014
For 2014, in anticipation of the conclusion of the Fata acquisition, the Group expects to continue its plan to improve operating results despite the continuing uncertainty in the macroeconomic situation.
Chairman Paolo Bedoni stated: “Cattolica Group confirmed the positive trend that, despite the economic difficulties in recent years, led to growth in both absolute and percentage terms in the Italian insurance market. This positive trend is the basis that has made it possible to acquire a company such as Fata, a leader in the agricultural and food sector, in full harmony with the business model for growth that consolidates and strengthens the strategic positioning of Cattolica in the Italian market. Consistent with this model, Cattolica can now begin a new phase characterised by important decisions in terms of innovation, technology and marketing that will take advantage of opportunities from the general recovery in the economy, for which the first, significant signs are evident, and that we hope will mean a turning point for the Italian economy and society.”
Managing Director Giovan Battista Mazzucchelli stated: “We submit financial statements for approval to the shareholders’ meeting that, across all the fundamental items, is positive, consistent with our development programmes and our forecasts for slow and stable growth over the medium to long term. The extraordinary additional IRES - company earnings’ tax of 8.5%, which the government implemented last November, reduced net profit by € 31 million, which otherwise would have improved over the prior year. The strengthening of the solvency margin, which does not consider the subordinated loan granted in December for the Fata acquisition, and additional declines in the combined ratio, show that growth is based on structural improvements that reinforce Cattolica’s positioning in the market and prepare the Group to fulfil the commitments associated with Solvency II regulations becoming effective in the near future."
The Executive appointed to draw up the corporate accounting documents, Giuseppe Milone, declares, pursuant to Article 154-bis, paragraph 2 of the Consolidated Finance Law, that the accounting information contained in this press release corresponds with the supporting documents, ledgers and accounting entries. Furthermore, the Board of Directors has verified that the Directors meet independence requirements based in the provisions of Code of Conduct. Cattolica’s Board of Directors has qualified the following non-executive directors as independent: Luigi Baraggia, Bettina Campedelli, Lisa Ferrarini, Paola Ferroli, Giovanni Maccagnani, Luigi Mion, Angelo Nardi, Domingo Sugranyes Bickel and Enrico Zobele13.
The Board of Directors of Cattolica Assicurazioni resolved the calling of the shareholders’ meeting, in ordinary and extraordinary session, for April 24th and 26th, in first and second calling respectively. The agenda for the shareholders’ meeting is as follows: Extraordinary Session 1. Articles of Association: amendments to articles 6, 9, 12, 18, 20, 22, 23, 25, 27, 29, 41, 44, 45, 46, 54 and the introduction of a new article, 9-bis. Inherent and consequent resolutions.
1. Approval of the 2013 financial statements and the accompanying report, with consequent and related resolutions.
2. Decisions related to the remuneration policies, in accordance with legislation and the Articles of Association.
3. Pursuant to the Articles of Association, establishing the remuneration for members of the Board of Directors and the Executive Committee and the related attendance fee.
4. Authorisation to purchase and dispose of own shares in accordance with the law. Inherent and consequent resolutions. Reports related to the agenda items will be made available at the registered office and on the website www.cattolica.it within the deadlines envisaged in governing regulations.
The Company hereby states that the financial statements of Cattolica Assicurazioni, the consolidated financial statements of Cattolica Group and the Report on Corporate Governance and Proprietary Structures as of December 31st, 2013 will be available to the public at the registered office and on the Company’s website, at the address www.cattolica.it, according to the methods and deadlines envisaged in governing legal and regulatory provisions. The reclassified consolidated and Parent Company balance sheet and income statement as of December 31st, 2013 are enclosed, with the qualification that the separate and consolidated financial statements and the related documentation have not yet been certified by the Independent Auditors.
1 Prior to the Parent Company’s dividend payment. Includes the dividend distribution proposals of the subsidiaries.
2 Not including the effects of the additional IRES – company earnings’ tax of 8.5%, equivalent to € 31 million, as well as other extraordinary components, such as the writedowns on goodwill and other assets for € 27 million, net of shadow accounting and related tax effects, and realised gains of € 13 million, net of tax effects.
3 Includes insurance premiums and investment contracts in the life business as defined by IFRS 4.
4 Source: IVASS Circular – March 4th, 2014.
5 Combined ratio of retained business: 1 - (Technical balance / Net premiums), including other technical items.
6 As compared to the previous year, actuarial gains and losses were reclassified from the income statement (other administrative expenses) to share capital and reserves, following the effective date of January 1st, 2013 for Revised IAS 19 in relation to employee severance indemnity (TFR). The figure as of December 31st, 2012 is shown with the restatement for Revised IAS 19; the combined ratio of retained business as of December 31st, 2012 under the previous IAS 19 was 95.7%.
7 With Revised IAS 19, the consolidated result as at December 31st, 2012 is € 85 million, and the Group result is € 63 million (compared to € 84 million and € 62 million, respectively, as published in December 2012 under the previous IAS 19).
8 Figures net of shadow accounting and tax effects.
9 Net of minority interests.
10 Refer to note 6.
11 Financial assets excluding investments whose risk is borne by policyholders, gross of tax effects.
12 Taking into account the dividend proposal, the solvency margin comes to 1.62 times the regulatory minimum.
13 Note that in its meeting of May 8th, 2013, Cattolica's Board of Directors resolved to set aside the independence requirement envisaged in criterion 3.C.1 e) of the Code of Conduct, in accordance with the recognised necessity of emphasising a substantive assessment.