FINANCIALS: Generali Preview: M&A, Storms, Life Margins

Generali (ASSGEN: Baa2/BBB+) results are 9-Aug. M&A risk, including Hiscox, remains a feature with the CEO’s “growth push” and operating results may see storm losses, similarly to Zurich earlier today. However, the new business margin in life, which disappointed last time, could be the most obvious feature but there’s little real positive expectation built into recent spread moves, in our view.

• Results last time (21-May) showed solid credit stats and good premium growth but a fall in the new business margin meant pre-tax was only in line. Guidance was formally unchanged, but the surrounding narrative appeared a little more bullish to us. 
• The insurer is reportedly (21-Jun) looking to offload its businesses in Turkey and Philippines. After FY23 results the CEO was quoted as being open to “big insurance deals” in his growth push. The group was linked with Hiscox bid interest (8-Jul) – which we estimate would be at least a EUR4-5bn deal. Finally, storm losses could also feature here, like Zurich results earlier.
• Spreads have very marginally (5bp) underperformed insurance peers since those results, largely over the last month. Being Italian at times of volatility can automatically make you high beta, we fear. The equity has been a tiny underperformer, too.
• Revenue estimates were pushed ahead (on those premiums figures) by 4% and 9% for FY24 and FY25 but earnings have only advanced c.2%, as the margin impact was put through.

Results are due at 0600 (London time) with a conf call at 1100 at: https://services.choruscall.it/DiamondPassRegistration/register?confirmationNumber=1613081&linkSecurityString=327718a1e