Assicurazioni Generali SpA (G.MI) said Wednesday that first-quarter net profit fell sharply from a year earlier, mainly because of the lower value of equity investments, while premiums were steady despite the financial crisis.

The Trieste-based insurer said net profit in the quarter ended March 31 dropped more than 88% to EUR104 million from EUR910.3 million a year earlier. In the fourth quarter of 2008, the insurer posted a EUR810 loss when it booked about EUR3 billion in impairments.

Gross equity impairments were EUR1.5 billion in the first quarter, the insurer said. In the same quarter of 2008, gross impairments were EUR113 million.

Generali said it was unable to provide reliable guidance for the rest of the year, citing the ongoing economic crisis.

In order to boost its profit in recent years, Generali has been carefully expanding its operations in markets with higher growth potential such as Central and Eastern Europe, India, China and United Arab Emirates.

In the quarter, gross premiums were unchanged at EUR18.5 billion. Life premiums fell 1% to EUR11.9 billion and non-life rose 3.5% to EUR6.6 billion, the company said, confirming figures announced by the chairman at the company's annual general meeting in April.

Generali said its combined ratio, a key industry figure that compares costs and claims to premium income, deteriorated to 96.3% from 93.1%. A figure below 100% indicates that the underwriting is profitable.

Generali shares have underperformed the Italian S&P Mib index. Since the beginning of the year, Generali stock has lost about 14%. Wednesday, the shares closed down 4.5% at EUR16.16, in line an overall negative market.

Generali ranks third among European insurers in market capitalization after Germany's Allianz SE (AZ) and France's Axa SA (AXA).

As its bancassurance joint-venture with Intesa Sanpaolo (ISP.MI) has been called off, Generali is considering signing commercial partnerships with small domestic banks, Chief Financial Officer Raffaele Agrusti said Wednesday.

Company Web site: http://www.generali.com

-By Sabrina Cohen, Dow Jones Newswires, +39 02 5821 9906; sabrina.cohen@dowjones.com