AMB GENERALI Q1
[BIZ: Aachen, May 10] Storm loss "Kyrill" absorbed The AMB Generali Group started the business year 2007 with a noticeable increase of its first-quarter result to EUR 102m (first quarter 2006: EUR 84m). This is attributable to a 21.2% rise of net investment income, further improvements in operating business and an above-average growth of total premium income. In addition, the Group net profit was positively influenced by the contribution of AMB Generali's fund and investment company into Generali Investments S.p.A. It was thus possible to compensate the negative impact resulting from hurricane "Kyrill" occurred in January. Since these extraordinary items will partly level off in the further course of the year, the third-largest primary insurance group in Germany maintains its profit forecast for the full year. The AMB Generali Group expects to reach a profit of at least EUR 380m in 2007. The AMB Generali Group – which is the market leader in Riester business - is now also witnessing a strong rise in the demand for the so-called Rürup business or basic pensions. "After the improvement of the tax framework for this product, it has been turning into a real basic product for retirement provision. As one of the top providers in the German market of retirement provision we will fully exploit the growth potential of basic pension business and we are confident that in this product segment we will reach a market position similar to the one we have in Riester business", said Group Chief Executive Dr. Walter Thießen when presenting the quarterly financial figures. Total premiums above the expected market average Across all lines of business, the total premiums of the AMB Generali Group in direct business increased by 1.7% to EUR 3,866m from January through March. They were thus markedly above the 1% increase expected by the market for 2007. The total premium income of the Group's life insurers rose by 1.3% to EUR 2,104m. This figure also includes the savings portions of unit-linked policies and Riester products. The gross premiums written under IFRS accounting amounted to EUR 1,660m. The health insurers of the AMB Generali Group maintained their growth course, too; their gross premiums rose by 4.2% to EUR 431m in the first quarter 2007. Property and casualty business also experienced a positive development – despite keen competition – and achieved a growth of 1.4%. The market, for comparison, expects a 1% decrease for the year 2007. The gross premiums written of the Group under IFRS accounting totaled EUR 3,426m in the first quarter 2007. Life new business influenced by extraordinary item – strong demand for Riester and basic pensions The third Riester incentive step, which came into force in 2006, distorts the comparison of life new business with the previous year. This impact was particularly strong for the life insurers of the AMB Generali Group who are the market leader in Riester pensions with a business-in-force of about 1.3 million policies. Adjusted for extraordinary items, in terms of regular annual premiums new business increased by 11.7% in the first three months of the year. Without adjustment for the extraordinary items included in the previous year's Riester pensions, this business experienced a 28.5% decrease in terms of regular annual premiums. In 2008, the Group as market leader will again benefit over-proportionately from the fourth increase step of Riester incentives. From January through March the AMB Generali Group produced about 82,000 Riester contracts representing EUR 42m in terms of regular annual premiums. The demand for basic pensions (so-called "Rürup pensions") also rose substantially. In the first quarter 2007 alone, the life insurers of the AMB Generali Group produced more than 14,300 basic pension contracts with EUR 28.3m of regular annual premiums. Compared to the first quarter 2006, sales thus more than quadrupled. Since the launch of this product, more than 46,000 customers have opted for a basic pension with the AMB Generali Group. Deutsche Vermögensberatung, the long-standing distribution partner of the AMB Generali Group has made a substantial contribution to the successful development in Riester and Rürup business. Growth in property and casualty business The positive development in the first three months of 2007 is supported by further improvements in operating business and by continued cost cuts. The measures successfully launched with the aim of increasing competitiveness are being pursued further. Job cuts are proceeding as scheduled. In the first three months of 2007 134 jobs have already been shed. Besides the improvements in operating business, the increase of net investment income by EUR 182m to EUR 1,040m represented a major contribution to the profit of EUR 102m for the first three months. Investment income was substantially influenced by the contribution of the German investment company into Generali Investments S.p.A., the joint asset-management company. On a full-year basis this impact amounts to approximately EUR 40m. The three-month result of the AMB Generali Group was affected by the damage caused by hurricane "Kyrill" in January. In a total of 118,000 cases the property and casualty insurers of the AMB Generali Group settled the claims of their customers fast and in an unbureaucratic manner. The net claims expenditure caused by "Kyrill" in the Group amounted to about EUR 60m. The combined ratio thus increased to 102.7% (first quarter 2006: 97.8%). When looking at the combined ratio it should be noted that the "Kyrill" impact will level off in the course of the year. Taking into consideration further cost cuts and the initiated measures to improve claims management, AMB Generali thus sticks to its target of keeping the combined ratio below 97% for the full year. Positive outlook on the business year 2007 The result development in the first three months of the year was influenced by positive and negative one-off effects. Since these extraordinary items will partly level off in the further course of the year, the AMB Generali Group maintains its profit forecast made earlier this year and aims to reach a net profit after tax of at least EUR 380 m, provided the current year will not be affected by further extraordinary claims or negative capital-market developments. Under IFRS, according to the German regulation, technical items of the Balance Sheet and Income Statement are presented based on US-GAAP. The complete Group Report 1st Quarter 2007 of the AMB Generali Group can be downloaded from the website:
AMB Generali had a very good start into the business year 2007
Sales of basic pensions quadrupled in first quarter
Cost-cutting measures effective
First-quarter result increased to EUR 102m
Amid a prudent risk selection and a concentration on profitable customer segments, property and casualty business is witnessing noticeable success. Against the tendency forecast for the market, the property and casualty insurers of the AMB Generali Group increased their gross premiums written by 1.4% to EUR 1,334m in the first three months of 2007 (first quarter 2006: 1,316m). To a substantial degree this development is influenced by motor insurance business, which grew by 1% in terms of premiums. In this field, the Group also benefits from recent product innovations involving additional premium income in target segments and from its persistently balanced pricing policy.
Profit supported by improvements in operating business and net investment income – combined ratio affected by "Kyrill"
For the business year 2007 AMB Generali again anticipates premium growth above the market average and thus further market-share gains in insurance business. Again this growth will be supported by the Group's life and health insurers. In the highly competitive environment of property and casualty insurance the Group concentrates on writing profitable business and on enhancing its product range. Therefore premium growth is assumed to be at least at market level in this segment in 2007.
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