30 July 2015

Generali aims at diversification in fixed income

Generali said its investment strategy for fixed-income investments aims at portfolio diversification, in both government bonds, where the European core rates are at record lows, and corporate bonds, including private placements and guaranteed loans.

Releasing its interim management report for the first half of 2015, the Italian insurer said the objective is "is to ensure adequate returns for policyholders and a satisfactory return on capital, while maintaining a controlled risk profile."

Generali added that, "Equity exposure will be kept substantially stable, through geographical and sector rotation targeting regions and sectors with growth higher than in Europe."

New real estate investments will also focus on new geographical areas, such as Asia, UK and Eastern Europe, to improve the overall portfolio diversification.

Generali is also to implement "a more active portfolio management approach to improve the overall profitability."

The group announced that its operating result was up 11.3% to €2.8bn ($3.08bn) in the first half, its best result in the last eight years. Net profit jumped 21.6% to €1.3bn ($1.43bn).

Generali group total assets under management increased by 3% to €493.5bn at 30 June 2015, with the Italian insurer's investments standing at €442.5bn and third-party assets under management at €50.9bn.

General account investments of €366.1bn ($402.7bn) increased by 0.3% primarily because the bond portfolio benefitted from reinvestment of premium income in corporate bonds during the period, the insurer noted.

The equity portfolio also increased mainly thanks to share price increases. The value of investment properties was broadly stable.

Generali said cash and cash equivalents decreased, in line with group investment policy, and asset allocation strategy will continue to aim at consolidating current margins and minimising liquidity.

Group investments (€ million)
  30/06/2015 (%) total of 31/12/2014 (%) total of
Equity instruments 18,578 5.1% 17,610 4.8%
Fixed-income instruments 319,029 87.1% 318,884 87.3%
Investment properties 14,848 4.1% 14,872 4.1%
Other investments 3,453 0.9% 3,662 1.0%
Cash and cash equivalents 10,167 2.8% 10,223 2.8%
General account investments 366,075 100.0% 365,250 100.0%

Financial assets relating to unit
and index linked contracts

76,435   67,707  
Total investments 442,510   432,957