MILANO (Reuters) - Italy’s second largest insurer UnipolSai (US.MI) said on Friday it was confident of meeting its 2020 targets on expectations that declining motor claims and measures to offset market volatility would outweigh the impact of the COVID-19 crisis.
Insurers across the globe are suffering from the impact of government-imposed lockdowns aimed at containing the spread of the virus on face-to-face sales. At the same time, falls in asset prices have impacted their investments.
“It is clear that the lockdown affected expected revenues, but it also made motor claims fall,” UnipolSai Chairman Carlo Cimbri told analysts.
Cimbri said that market volatility, which has impacted the insurer’s financial investments, is expected to ease thanks to measures taken by the European Central Bank and the government to support the economy.
“For these reasons I can tell you that hitting targets for the full year is something which is definitely within reach”, he said.
Under its 2019-2021 plan, UnipolSai is targeting a cumulative net profit of 2 billion euros ($2.2 billion) and dividends of 1.3 billion euros over the period.
The insurer said it expected to post “positive” results for the current year after its first-quarter net profit dropped 7% to 171 million euros.
Insurance premiums for the three months through March fell 6.1% year-on-year to 3.1 billion euros, dragged down by a 13.2% drop in revenues from the life business.
Those operations were particularly impacted by the shutdown of bank branches and insurance agents being unable to visit clients.
However a decline in motor claims as a result of the deep reduction in traffic amid a near two-month nationwide lockdown helped underlying income.
UnipolSai said it had launched a campaign to refund a month’s worth of car insurance premiums to retail customers impacted by the lockdown.
Cimbri said that he expected some 85% of customers would join the scheme, with an impact of around 120 million euros on the insurer.
The consolidated solvency ratio, a key measure of financial strength, stood at 200% at the end of March, down from 252% at the end of 2019 due to the increase in Italian government bond yields.
Reporting by Andrea Mandalà; Editing by Agnieszka Flak and Jan Harvey