Results for the first half of 2016 approved
P&C premiums for € 996 million and Life premiums for € 1,526 million contributed to total premiums written for € 2,528 million.
The combined ratio improves as compared with June 2015, and it is equal to 92.5%1 , with a still decidedly positive business performance.
Consolidated net profit for the first half came to € 25 million and takes into account the total impairment on the three unlisted banking equity investments in Banca Popolare di Vicenza, Veneto Banca and Cassa di Risparmio di San Miniato, whose residual value is equal to about € 2 million.
The Solvency II margin, calculated using the Standard Formula, came to 1.88 times the regulatory minimum.
Verona, August 4th, 2016
The Board of Directors of Cattolica Assicurazioni, which met today in Verona under the chairmanship of Paolo Bedoni, approved the Consolidated interim report of the Cattolica Group.
The first six months of the year disclosed a consolidated net profit of € 25 million (€ 67 million at June 2015; -62.7%) and Group net profit2 of € 17 million compared with € 53 million in June 2015 (-67.9%). Consolidated net profit before impairments on the equity investments in Banca Popolare di Vicenza3, Veneto Banca4 , Cassa di Risparmio di San Miniato5 and on investment funds6 would have amounted to € 72 million, and the Group net profit to € 64 million.
Total premiums written for direct and indirect business - Life and P&C7 - came to € 2,528 million, down 21.1% compared with € 3,203 million in the first half of 2015.
This figure in particular for the Life business was influenced by the negative effects deriving from the situation in which Banca Popolare di Vicenza finds itself, which limited the ability to write premiums.
Premiums written for direct business dropped from € 1,033 million as of June 30th, 2015 to € 996 million at the end of June 2016 (-3.5%).
The motor segment posted premiums written of € 549 million, down (-4.4%) compared with June 30th, 2015.
The number of customers increased of over 52 thousand new motor polices sold from the beginning of 2016 (+1.7%8 ); the average premium was affected by the continuing market phase of reductions in tariffs, albeit with lower decrease rates than in 2015. The non-motor classes, with premiums written for € 447 million, decreased 2.4% with respect to June 2015 (€ 458 million), mainly as a result of underwriting choices on non-retail classes. The combined ratio1 fell from 93.4% as at June 30th, 2015 to 92.5%.
The technical result remained positive thanks to the quality of the portfolio both in the motor classes and in the other classes, due to the initiatives carried out over the last few years.
In the Life sector, direct premiums came to € 1,526 million. The drop (-29.5%) is mainly due to the weakness of the distribution channels linked to Banca Popolare di Vicenza (€ -254 million as compared with June 2015; -74%)9 . New business relating to life with profit polices, with minimum guaranteed rates equal to zero, is permitting a progressive lowering of the average guaranteed minimum of the stock of Group mathematical provisions.
Financial operations and equity situation
The result from investments10 came to € 230 million (compared with € 327 million as of June 30th, 2015); the result was affected by the afore-mentioned bank impairments. The 2015 result also benefited from a significant generation of capital gains from trading, due to special market conditions.
Investments amounted to € 21,539 million.
Gross technical provisions for P&C business amounted to € 3,593 million (€ 3,589 million as at December 31st, 2015) and the Life provisions, including financial liabilities, came to € 16,934 million (€ 16,607 million as of December 31st, 2015). The figures as of June 30th, 2016 confirm the Group’s equity soundness with consolidated shareholders’ equity of € 2,070 million (€ 2,159 million as of December 31st, 2015, before distribution of the dividends).
The Group’s Solvency II margin came to 1.88 times the regulatory minimum. The ratio was calculated according to the Solvency II principles, applying the Standard Formula.
The Group is preparing the application to the Supervisory Authority to use Undertaking Specific Parameters (USP) for the quantification of the solvency capital requirement for the Non-life technical-insurance risks. The use of the USPs will permit the Company to represent its risk profile in a more precise manner and further confirm its equity soundness.
The agency network at the end of June 2016 was made up of 1,509 agencies and the bank branches which place Group products as of June 30th, 2016 numbered 5,744.
Outlook for business activities
In a financial market characterised by low rates of return and high volatility, the Group’s operational management will continue by paying attention to profitability both in P&C business, still showing an environment of sharp competition, and in Life business, by promoting products with lower capital absorption. On the account of a probable continuation of the positive industrial performance also for the second part of the year and after the impairments on the banking equity investments, the Group deems it possible to maintain the expected level of remuneration for Members and Shareholders. Notice is also hereby given that today the Board of Directors has resolved to exercise the right of withdrawal from the strategic partnership agreements with Banca Popolare di Vicenza, as described in a previous detailed communication to the market.
Cattolica Board of Directors has also taken note that on August 2nd the rating agency S&P affirmed Cattolica’s rating at BBB- with outlook stable and the stand-alone credit profile (SACP) at bbb+. The agency acknowledges both the Group’s financial risk profile, which remains at an “Upper adequate” level, and the reconfirmed stability of the business risk profile, which remains “Satisfactory” also thanks to a “Strong” competitive position within the Italian market and the well-diversified distribution networks.
The executive appointed to draw up the corporate accounting documents, Giuseppe Milone, declares pursuant to Article 154 bis, section 2 of the Consolidated Finance Law, that the accounting disclosure contained in this press release corresponds with the documental results, the books and the accounting entries. The Company hereby discloses that the Interim report as of June 30th, 2016 of the Cattolica Group, inclusive of the Independent auditors’ report, shall be available to the general public care of the Registered offices and on the company website at the following address www.cattolica.it and on the storage mechanism authorised by Consob known as “NIS-Storage”, managed by Bit Market Services S.p.a. and accessible from the website www.emarketstorage.com, in accordance with the formalities and by the deadlines envisaged by current legal and regulatory provisions. The results for the first half of 2016 shall be presented to the financial community at 9.30 a.m., on Friday, August 5th, 2016 during the conference call.
The telephone numbers to call are as follows: + 39 02 8058811 from Italy, + 44 1212818003 from the United Kingdom and +1 718 7058794 (or 1 855 2656959 toll free) from the United States. The presentation relating to the results will be available on the homepage of the website www.cattolica.it in the Investor Relations section just before the start of the conference call. The reclassified statements as of June 30th, 2016 of the Consolidated interim report of the Cattolica Group are attached, disclosing that the envisaged independent auditors’ report on the same has not yet been issued.
1 Combined ratio of retained business: 1-(Technical balance/net premiums), inclusive of other technical items.
2 Net of minority interests.
3 For € 6 million, recognised in the first quarter of 2016.
4 For € 2 million, recognised in the second quarter of 2016.
5 For € 35 million, 1 million recognised in the first quarter of 2016 and 34 million recognised in the second quarter of 2016.
6 For € 4 million, recognised in the second quarter of 2016.
7 Includes insurance premiums and investment policies for life classes as defined by IFRS 4.
8 Figure relating to the period between December 31st, 2015 and July 22nd, 2016 (Fata Assicurazioni until June 30th, 2016).
9 Total premiums written, for the first half of 2016, by the companies part of the partnership with Banca Popolare di Vicenza, are equal to € 100 million.
10 Financial assets excluding investments whose risk is borne by the policyholders, gross of the tax effects.