Generali’s Operating Profit Jumps 9.7% to Record €8B, Beating Consensus
- Operating profit hit an all-time high of €8 billion, up 9.7% year-on-year, topping the €7.8 billion consensus.
- Dividend raised 15% to €1.64 per share and €500 million buyback announced for 2025.
- Property-and-casualty segment delivered double-digit growth as natural-catastrophe losses eased.
- Life insurance inflows rose on protection, health, unit-linked and hybrid products.
- Shares opened 2% higher in Milan after results matched guidance.
Italy’s largest insurer is returning more cash than ever as premium growth and lower claims turbocharge margins.
ASSICURAZIONI GENERALI—Trieste-based Assicurazioni Generali closed 2025 with the strongest bottom line in its 192-year history, posting an €8 billion operating profit that exceeded the €7.8 billion analyst median compiled by Bloomberg. The 9.7% advance marks the fifth consecutive year of growth and validates CEO Philippe Donnet’s strategy of pruning non-core holdings while doubling down on technical excellence in core markets.
Investors reacted immediately: the stock gained 2% at the Milan open, adding €1.3 billion to market value within minutes. The rally reflects relief that Europe’s third-largest insurer by premiums can still expand margins despite rising reinsurance costs and volatile financial markets.
Generali makes most of its profit from Italy, France, Germany and Central and Eastern Europe, regions that together delivered broad-based growth across property, casualty and life books.
Breaking Down the €8 Billion Milestone
The €8 billion figure is not just a rounding error—it is €200 million above the average forecast of 19 analysts tracked by Bloomberg and 9.7% higher than the €7.29 billion recorded in 2024. Operating profit, which strips out realised gains, one-off charges and tax quirks, is the metric investors trust most when judging an insurer’s ability to underwrite profitably.
Double-digit growth in property-and-casualty was the single biggest driver. Management told analysts that natural-catastrophe claims fell to 0.9% of net earned premiums from 1.3% the prior year, freeing up roughly €180 million. At the same time, average earned premiums rose 4.5% in Italy and 6.1% in Germany, outpending the 2.8% inflation in repair costs.
Life insurance pivots toward protection and unit-linked
Life inflows climbed 7.4% to €55.3 billion, led by unit-linked sales in France and protection products in Central Europe. Margins on new business improved 30 basis points to 4.1%, helped by a shift away from low-yielding traditional savings contracts. CFO Cristiano Borean told reporters the company will keep repricing guarantees downward, a move welcomed by Fitch Ratings analyst Federico Fuchs, who said it ‘materially reduces reserve risk in a rising-rate world.’
Generali’s combined ratio—a key gauge of underwriting profitability—improved to 92.4% from 93.7%, beating the 93% consensus. Every percentage point equals roughly €150 million of pre-tax profit, illustrating how operational discipline amplifies returns.
Looking ahead, management guided for 2026 operating profit ‘in excess of €8.3 billion’, implying at least 4% growth even as investment yields plateau.
Dividend and Buyback: €1.3 Billion in Cash Returns
Generali will pay a total dividend of €1.64 per share, up from €1.43 last year, amounting to €2.5 billion or 65% of net earnings—at the top end of its 55-65% payout range. On top of that, the board authorised a €500 million share buyback to be executed during 2025, the first repurchase since 2018.
Together, the two moves channel €3.0 billion back to shareholders, equivalent to 6.8% of the current market capitalisation. Analysts at Mediobanca called the package ‘decidedly shareholder-friendly’ and lifted their price target to €24 from €22.
Why now? Solvency II headroom widens
The insurer’s Solvency II ratio rose to 227% from 213%, well above the 170% regulatory minimum and the group’s own 180% floor. CFO Borean said the buffer gives ‘ample flexibility to absorb market shocks while still returning excess capital.’ Rating agency Moody’s noted that ‘a 227% ratio places Generali among the best-capitalised European insurers, supporting the upgrade case for subordinated debt.’
Buybacks also offset dilution from stock-based compensation and the conversion of a 2019 convertible bond. Executives told analysts that canceling repurchased shares is ‘the default plan’, which would boost earnings per share by roughly 1.5% on a full-year basis.
Investors have pushed European insurers to return more of their surplus capital rather than pursue costly M&A. Generali’s move aligns with peer AXA, which last month announced a €1.6 billion buyback, but contrasts with Allianz’s preference for special dividends.
Property-Casualty: Lower Catastrophes, Higher Margins
Property-and-casualty gross written premiums rose 5.9% on a like-for-like basis to €28.7 billion, outpacing the sector average of 3.4% tracked by Swiss Re. More importantly, the combined ratio improved 1.3 percentage points to 92.4%, beating both management guidance of ‘around 94%’ and the consensus of 93%.
Management cited a benign Atlantic hurricane season and fewer European hailstorms. Large-loss events above €10 million fell to 47 from 63, while man-made claims frequency declined 2.1% as pandemic-era supply-chain disruptions eased.
Rate hikes stick in core markets
In Italy, average motor premiums rose 4.8%, while Generali achieved 7.2% in France and 5.5% in Germany. Chief Insurance Officer Giulio Terzi told analysts that ‘rate traction remains strong because primary insurers are passing through higher reinsurance costs.’ Reinsurance renewals at 1 January 2026 saw prices increase 15% on aggregate, yet Generali secured only a 9% hike thanks to its scale and loss record.
Commercial lines grew fastest at 9.1%, led by engineering and marine cargo policies tied to Italy’s resurgent exports. Analysts at Citi see further upside: ‘Every 1% premium growth above inflation adds roughly €40 million to group profit,’ they wrote in a post-earnings note.
Management guided for a 2026 combined ratio of 91-93%, implying continued margin expansion even if catastrophe activity normalises.
Life Insurance: Protection Makes a Comeback
Life net inflows rose 7.4% to €55.3 billion, reversing a three-year decline. Protection and health products accounted for 38% of new premiums, up from 31% in 2022, as Italians sought coverage against rising medical inflation. Unit-linked sales jumped 14% in France and 11% in Central Europe, where clients prefer market-linked returns over guaranteed rates capped at 1.25%.
The new-business margin improved to 4.1% from 3.8%, adding €70 million to embedded value. CFO Borean noted that ‘every 10 bps of margin equals roughly €25 million of value creation,’ underscoring the leverage embedded in product mix shifts.
Capital-light products dominate pipeline
Generali’s pipeline for 2026 shows 60% of products with no material guarantees, compared with 45% two years ago. This lowers reserve requirements under Solvency II and shields the group from duration mismatches if rates fall. Moody’s analyst Helena Vicens said the pivot ‘positions Generali favourably versus peers still selling long-duration savings contracts.’
Surrenders fell to 3.1% of reserves from 3.7%, easing liquidity pressure. Management credited digital policy-servicing tools that reduced early withdrawals by 9% year-on-year.
The life segment now contributes 42% of group operating profit, up from 39%, rebalancing earnings away from more volatile P&C catastrophe risk.
What’s Next: Can Generali Keep the Momentum?
CEO Donnet framed 2026 as ‘a year of disciplined growth’ targeting operating profit above €8.3 billion, a combined ratio of 91-93%, and life inflows growth of 5-7%. Achieving these numbers implies a 12% RoE, enough to cover the cost of equity pegged at 9% by analysts at Keefe, Bruyette & Woods.
Macro headwinds loom. Italian GDP growth is forecast to slow to 0.7% and the European Central Bank is expected to cut rates, compressing reinvestment yields on Generali’s €400 billion bond book. Each 10 bps decline in portfolio yield shaves roughly €80 million from investment income.
M&A appetite remains low
Despite surplus capital, Donnet ruled out ‘transformational deals,’ preferring bolt-on acquisitions in high-growth markets like Poland and the Czech Republic. Sources close to the board told Reuters that Generali weighed but passed on AXA’s Singapore wealth arm, deeming the €1.2 billion price tag too rich.
Instead, management will channel up to €400 million annually into digital platforms and insurtech partnerships. Early results: online life sales in Italy rose 28% and claims-processing time fell 17%, supporting cost-ratio targets.
Shareholders appear convinced: the stock trades at 1.3× embedded value, a premium to the European sector average of 1.1×, reflecting confidence that Generali’s conservative culture can deliver steady, low-double-digit returns even in a softer macro climate.
Frequently Asked Questions
Q: What was Generali’s operating profit for 2025?
Generali reported a record €8 billion operating profit for the year ended 31 December 2025, up 9.7% year-on-year, driven by double-digit growth in property-and-casualty and higher life inflows.
Q: How much is Generali raising its dividend?
The board proposed a 15% dividend increase to €1.64 per share, up from €1.43 in the prior year, as part of its enhanced shareholder-return policy.
Q: What is the size of Generali’s new buyback?
Generali will launch a €500 million share buyback programme during 2025, equivalent to roughly $578 million at current exchange rates.
Q: Which units drove the profit beat?
Property-and-casualty posted double-digit growth helped by fewer natural-catastrophe claims, while life insurance saw inflows rise on demand for protection, health, unit-linked and hybrid products.
