The operating result of the P&C segment amounted to € 1,992 million (€ 1,944 million at 31 December 2017). The 2.5% increase was mainly attributable to the investment result and the positive contribution of the other operating items.
The operating return on investments of the P&C segment stood at 5.2% (5.0% at 31 December 2017).
Technical result
Property & Casualty operating result: technical result
| (€ million) | 31/12/2018 | 31/12/2017 | Change |
|---|---|---|---|
| Technical result | 1,256 | 1,283 | -2.1% |
| Net earned premiums | 19,597 | 19,510 | 0.4% |
| Net insurance benefits and claims | -12,753 | -12,698 | 0.4% |
| Net acquisition and administration costs | -5,468 | -5,419 | 0.9% |
| Other net technical income | -122 | -110 | 10.3% |
The technical result amounted to € 1,256 million, down by 2.1% compared to 31 December 2017. This result included the impact of natural catastrophe claims for approximately € 342 million, mainly deriving from storms, floods and bad weather in Italy and Central Europe. Similar events had had an impact of approximately € 416 million at 31 December 2017. The technical result was influenced by a higher impact of large man-made claims of around € 125 million and the increase in the acquisition costs, resulting from the growth in premiums previously discussed.
Technical indicators
| (€ million) | 31/12/2018 | 31/12/2017 | Change |
|---|---|---|---|
| Combined ratio | 93.0% | 92.9% | 0.1 |
| Loss ratio | 65.1% | 65.1% | 0.0 |
| Current year loss ratio excluding natural catastrophes | 68.9% | 68.5% | 0.4 |
| Natural catastrophes impact | 1.7% | 2.1% | -0.4 |
| Prior year loss ratio | -5.6% | -5.6% | -0.1 |
| Expense ratio | 27.9% | 27.8% | 0.1 |
| Acquisition cost ratio | 22.6% | 22.3% | 0.4 |
| Administration cost ratio | 5.3% | 5.5% | -0.3 |
The combined ratio of the Group stood at 93.0% (+0.1 pps compared to 31 December 2017), the best amongst peers in the market. The change was entirely attributable to the trend in the expense ratio.
With reference to the total loss ratio, which remained stable at 65.1%, the current year non-catastrophe loss ratio increased by 0.4 pps due to the higher impact of the aforementioned large man-made claims of 0.6 pps, mainly concentrated in the Global Corporate & Commercial lines. The impact from natural catastrophe claims was 1.7% (2.1% at 31 December 2017). The prior year loss ratio remained stable at -5.6%. As usual, the Group maintained its prudent reserving approach, confirmed by the reserving ratio of 148%.
With regard to the main countries of operation, the combined ratio was excellent in Italy, equal to 91.0% (+0.9 pps entirely attributable to the increase in the expense ratio), and Germany (92.7%; +0.2 pps), inclusive of 2.7 pps of natural catastrophe claims for the various storms that hit the country, partially offset by the positive trend of the current year loss ratio. The CoR of France (99.9%; +1.4 pps) was also impacted by 2.6 pps, deriving from storms and floods. The combined ratio of ACEER improved to 88.1%, thanks also to the absence of natural catastrophe claims. The CoR of Americas and Southern Europe also improved to 101.6%: last year, in Argentina there was an adjustment of the local reserve for some classes of claims following the inflationary dynamics observed during the period.
Acquisition and administration costs related to insurance business amounted € 5,468 million (€ 5,419 million at 31 December 2017). In detail, acquisition costs increased to € 4,437 million (+2.2%), reflecting the increase in costs resulting from the growth in premiums observed in Central and Eastern European countries, in France and in Europ Assistance, as well as that in Italy to support non-motor premiums. The ratio of acquisition costs to net earned premiums therefore increased from 22.3% to 22.6%.
Administration costs rose from € 1,076 million to € 1,030 million, showing a drop of 4.2% due mainly to the reduction observed in Germany, as a result of efficiency from the SSYtL transformation program, and Americas. The ratio of administration costs to net earned premiums was down slightly at 5.3% (-0.3 pps).
Therefore, the expense ratio stood at 27.9% (27.8% at 31 December 2017).
Investment result
Property & Casualty operating result: investment result
| (€ million) | 31/12/2018 | 31/12/2017 | change |
|---|---|---|---|
| Investment result | 932 | 926 | 0,.% |
| Current income from investments | 1,230 | 1,209 | 1.7% |
| Other operating net financial expenses | -298 | -284 | 5.1% |
The investment result in the P&C segment amounted to € 932 million (+0.7% compared to 31 December 2017). In particular, current income from investments increased by 1.7% to € 1,230 million, thanks to income from equity instruments. However, the actions by the Group led to a current return of 3.1% (3.0% at 31 December 2017).
In more detail, income from fixed income instruments fell by 3.2% to € 616 million, reflecting the scenario of low interest rates.
Current income from investment properties - net of depreciation - was also up slightly, amounting to € 255 million (€ 249 million at 31 December 2017).
Other operating net financial expenses, which include the interest expense on liabilities linked to the operating activities and the investment management expenses amounted to € -298 million (€ -284 million at 31 December 2017).
Other operating items
The other operating items of the P&C segment, which primarily include non-insurance operating expenses, depreciation and amortization of tangible assets and multi-annual costs, provisions for recurring risks and other taxes, amounted to €-196 million (€-265 million at 31 December 2017) mainly due to lower allocation to provisions in Germany.