Cattolica Group's results for the first half of 2017 approved
CATTOLICA GROUP RESULTS FOR THE FIRST HALF OF 2017 APPROVED
TOTAL PREMIUMS WRITTEN UP BY 3.8%
COMBINED RATIO EQUAL TO 93.4%.
CONSOLIDATED NET PROFIT AT 8 MILLION, AFTER WRITEDOWNS FOR 67 MILLION
STANDARD FORMULA USP SOLVENCY II RATIO EQUAL TO 187%
Verona, August 2nd, 2017
Cattolica Assicurazioni’s Board of Directors 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 € 8 million (-68.0% compared to June 30th, 2016) and Group net profit1 of € 1 million (-94.1%). The net result remains positive also further to significant write-downs of a non-recurrent nature for a total of € 67 million (of which € 66 million for the Group’s portion)2 .
Total premiums written for direct and indirect business - life and P&C3 came to € 2,624 million, up 3.8% compared with € 2,528 million in the first half of 2016.
Premiums written for direct business rose from € 996 million as of June 30th, 2016 to € 1,004 million at the end of June 2017 (+0.7%).
The motor segment posted premiums written of € 549 million, more or less unchanged (-0.1%) compared with June 30th, 2016. The number of customers increased (the number of policies in the portfolio in the first half disclosed an increase of more than 100 thousand; +3.2%4 ), while the average premiums was again affected by the continuing market phase of reductions in tariffs.
The non-motor classes, with premiums written for € 455 million, increased with respect to June 2016 (+1.7%).
The combined ratio5 rose from 92.5% as of June 30th, 2016 to 93.4%.
The increase is the result of the drop in profitability of the motor class in the presence of a prolonging of the decrease in the average premium which is affecting the entire market. The Group is nevertheless maintaining a positive technical result also in a complex market context, featuring sharp competition and a slight pick-up in the frequency of the claims, thanks to a quality portfolio and distinctive skills in the settlement sphere. The profitability of the other P&C classes remains very positive.
In the life sector, direct business premiums came to € 1,613 million, up compared with the first half of 2016 (+5.8%). The premiums underwriting activity for the traditional classes (I and V +1.3%) was weak, while premiums written strengthened in class III increasing by 27.1%, also without the contribution of the Banca Popolare di Vicenza network. 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, which stands at 1% (1.2% as of December 31st, 2016).
Financial operations and equity situation
The result from investments6 came to € 240 million (compared with € 230 million as of 30th June, 2016), thanks to increasing assets under management and with very limited capital gains generated, with the aim of preserving the future portfolio profitability7 . Investments amounted to € 22,283 million. Gross technical provisions for P&C business amounted to € 3,584 million (€ 3,567 million as of December 31st, 2016) and the life business provisions, including financial liabilities, came to € 17,602 million (€ 16,991 million as of December 31st, 2016). The result for the first half was affected by one-off write-downs, for a total value of € 67 million8 broken down as follows:
- € 45 million on the Life Business (write-down of the goodwill of the life CGU of the proprietary channels, of BCC Vita and Cattolica Life, respectively for € 29 million, 13 million and 3 million);
- € 9 million on the P&C Business and other sector;
- € 6 million consequent to the amendment of the thresholds applied to the impairment indicators for AFS securities, both significant or prolonged;
- € 5 million for the total write-down of Fondo Atlante;
- € 2 million in accordance with the previous impairment rules.
The figures as of June 30th, 2017 confirm the Group’s equity soundness with consolidated shareholders’ equity of € 2,043 million (€ 2,114 million as of December 31st, 2016). The slight drop in particular is the consequence of the write-downs of intangible assets and securities mentioned above.
The Group’s Solvency II margin came to 187%. The ratio is calculated according to the Standard Formula with the use of the Undertaking Specific Parameters (USPs) authorised by the Supervisory Body as communicated on May 23rd, 2017.
The agency network as of June 30th, 2017 was made up of 1,509 agencies and the bank branches which place Group products numbered 5,644.
Outlook for business activities
After the write-downs made during the period for the purpose of adapting the Group’s evaluating models to the Solvency II approach, in line with the principles of maximum prudence, and communicated to the market on July 27th, the business trends envisaged for the period underway are confirmed, despite the continuation of heavy competition on the prices in the P&C classes and the impacts on the new life business, mainly linked to the Banca Popolare di Vicenza situation.
Cattolica Assicurazioni’s Chairman, Paolo Bedoni, declared: “The half-yearly financial report approved today by the Board of Directors confirms that, despite the write-downs consequent to the application of the new impairment test rules, Cattolica, thanks to its capital and financial soundness, to its business model and to its roots on the territory, is capable to face new challenges also in terms of innovation, by focusing on the needs of an ever more attentive and selective customer”.
The Chief Executive Officer of Cattolica Assicurazioni, Alberto Minali, declared: "The half-yearly financial report of the Cattolica Group, that I am presenting to the market today, includes some one-off write-downs that affected the result for the period. I am aware and convinced that the Group’s earning capacity, also consequent to the strength of its distribution network, its financial soundness and the quality of its capital will enable Cattolica to strengthen its market position and to adequately remunerate the capital invested".
The executive appointed to draw up the corporate accounting documents, Marco Cardinaletti, 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, 2017 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 “eMarket STORAGE”, managed by Spafid Connect 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 2017 shall be presented to the financial community at 9.30 a.m., tomorrow Thursday, August 3rd, 2017 during a 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, 2017 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 Net of minority interests.
2 See the press release dated July 27th, 2017.
3 Includes insurance premiums and investment policies for life classes as defined by IFRS 4.
4 Figure relating to the period between December 31st, 2016 and July 14th, 2017.
5 Combined ratio of retained business: 1-(Technical balance/net premiums), inclusive of other technical items.
6 Financial assets excluding investments whose risk is borne by the policyholders, gross of the tax effects.
7 Gross capital gains realised for the P&C class amounting to € 13 million as of June 30th, 2017, compared with € 26 million as of June 30th, 2016.
8 Values already net of the tax effects and shadow accounting, where applicable.