OPERATING RESULT

Operating result

The operating result for the property&casualty segment increased to € 2,044 million (€ 1,987 million at 31 December 2015). This increase (+2.9%) is mainly attributable to trends in the technical result, with a Group Net CoR of 92.5%, further improving (-0.7 pps) compared to the previous year.

The operating return on investments in the property&- casualty segment increased to 5.13% (5.09% at 31 December 2015).

Operating result: Technical result

Property&Casualty operating result: technical result

(€ million)31/12/201631/12/2015Change
Technical result 1,396 1,213 15.0%
Net earned premiums 19,685 19,818 -0.7%
Net insurance benefits and claims -12,813 -13,053 -1.8%
Net acquistion and administration costs -5,388 -5,404 -0.3%
Other net technical income -87 -148 -41.0%

The technical result stands at € 1,396 million, significant growth compared to 31 December 2015 (+15%); this result includes the impact of catastrophe claims of around € 295 million, mainly deriving from the storms and flooding that took place in France and Germany in May and June, and the earthquakes in central Italy in August and October. Similar events had an impact of approximately € 313 million at 31 December 2015.

Technical indicators

(€ million)31/12/201631/12/2015Change
Combined ratio 92.5% 93.1% -07
Loss ratio 65.1% 65.9% -08
current year loss ratio excluding natural catastrophes 69.3% 68.9% 04
natural catastrophes impact 1.5% 1.6% -01
prior year loss ratio -5.7% -4.6% -11
Expense ratio 27.4% 27.3% 01
Acquisition cost ratio 21.6% 21.3% 02
Administration cost ratio 5.8% 5.9% -01

The Group combined ratio improved to 92.5% (-0.7 pps compared to 31 December 2015), due entirely to the drop in the loss ratio (-0.8 pps); the cost rate rose to 27.4% (27.3% at 31 December 2015).

With respect to the total loss ratio, the current year loss ratio excluding natural catastrophes rose by 0.4 pps due to the deterioration observed in the non-motor sector, while the loss ratio from previous times stood at -5.7 pps. As usual, the Group maintained its prudent reserving approach, confirmed by the stable reserving ratio of 155%. The percentage catastrophic claims was 1.5 pps, compared to 1.6% in 2015.

Acquisition and administration costs related to the insurance business stood at € 5,388 million, a slight decline (-0.3%) compared to 31 December 2015 (€ 5,404 million). In detail, administration costs of € 1,142 million dropped by 2.8%, thanks to the reductions seen in Germany and France. The ratio of costs to net earned premiums was down slightly at 5.8%.

Acquisition costs are essentially stable, amounting to € 4,246 million (+0.4%). The ratio of acquisition costs to net earned premiums therefore increased to 21.6% (21.3% at 31 December 2015).

Therefore, the expense ratio stood at 27.4% (27.3% at 31 December 2015).

Operating result: Investment result

Property&Casualty operating result: investment result

(€ million)31/12/201631/12/2015Change
Investment result 945 1,015 -6.9%
Current income from investments 1,229 1,314 -6.4%
Other operating net financial expenses -284 -298 -4.8%

The financial result in the P&C segment amounted to € 945 million, down compared to 31 December 2015 (-6.9%). In particular the current income from investments amounted to € 1.229 million (€ 1,314 million at 31 December 2015); this decrease is mainly attributable to the continuing context of low interest rates. However, the actions by the Group meant that it could achieve a current return of 3.0% (3.2% at 31 December 2015).

The change in current income is primarily attributable to the decline in income from fixed income instruments that fell from € 856 million at 31 December 2015 to € 819 million.

Current income from investment properties - net of depreciation - was also down, amounting to € 220 million (€ 256 million at 31 December 2015).

Income from investments in equity instruments was stable, in line with the previous year, falling from € 96 million at 31 December 2015 to € 86 million.

Other operating net financial expenses, which includes interest expense related to operating debt and investment management expenses amounted to € -284 million (€ -298 million at 31 December 2015) against lower investment property management costs.

Operating result: Other operating items

Other operating items of the property&casualty 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, were up to € -297 million (€ -242 million at 31 December 2015) mainly due to higher provisions for risks.