Assicurazioni Generali 3Q Net Profit Falls 18% --3rd Update
November 05 2015 - 3:58AM
Dow Jones News
(Adds detail and background.)
By Giovanni Legorano
MILAN--Italian insurance giant Assicurazioni Generali SpA's
(G.MI) net profit declined by 18% in the third quarter, hit mainly
by lower income at its life business as market turbulence took its
toll.
Trieste-based Generali, Europe's No. 3 insurer, said Thursday
that net profit declined to 420 million euros (EUR457 million) in
the third quarter, down from EUR513 million in the year-earlier
period.
Operating income for the quarter dropped by 9% to EUR1.1
billion.
The operating income of its life business declined by 15% to
EUR625 million in the third quarter, compared with the same period
a year earlier. This was partly offset by its property and casualty
business, which grew by 11% to EUR501 million, mainly as a result
of lower claims compared with premiums collected.
Chief Financial Officer Alberto Minali blamed the insurer's
lower net profit on the poor performance of financial markets,
saying the life business was hit by declining capital gains and
higher impairments of its investments. This, in turn, hit the
insurer's net profit.
On a brighter side, he said the quality of the business
generated by the insurer's life sector was improving, with higher
sales of business protection and unit-linked insurance products,
which absorbed less capital.
"In the coming months of the year the group will continue to
take all actions aimed at improving the overall operating result,
therefore expecting a net profit significantly higher than 2014,"
Generali said.
Generali said its capital position, which has been a source of
concern in recent years, had improved during the first nine months
of the year.
A ratio based on an internal model, in line with Solvency 2
parameters decided by international regulators, stood at 196% at
the end of the quarter, compared with 186% at the end of last
year.
Mr. Minali said this level is more than adequate for the risks
to which the insurer's balance sheet is exposed.
In May, the company outlined plans for a big commercial push in
Europe, Asia and Latin America. The plan aims to improve cash-flow
in the next four years, with gains to be returned to the Italian
insurer's shareholders through fatter dividends rather than
deployed for spending on acquisitions.
At the time, the company said the combination of new measures
should generate cumulative net free cash-flow of more than EUR7
billion between 2015 and 2018, equivalent to around EUR1.8 billion
a year. Last year the company generated EUR1.2 billion in cash.
Chief Financial Officer Alberto Minali said on Thursday that
cash generation is proceeding according to the company's plans.
The new cash will be used to improve cash returns for
shareholders. Generali aims to raise the dividend payout to EUR5
billion for four years of the plan, compared with the EUR930
million, or EUR0.60 a share, paid out on last year's earnings.
While achieving these targets, Generali has committed to generating
a return on equity of more than 13%.
This week the Financial Stability Board replaced Generali with
Dutch insurer Aegon NV on its list of insurers that are considered
"too big to fail."
Mr. Minali said the company welcomed this decision, saying it
confirmed the work done to refocus Generali on its core insurance
business and to strengthen its balance sheet.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
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(END) Dow Jones Newswires
November 05, 2015 03:43 ET (08:43 GMT)
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