August 1, 2019 / 5:48 AM / 4 months ago

Italy's Generali beats first-half expectations, confirms targets

MILAN (Reuters) - Italy’s top insurer, Generali (GASI.MI), reported first-half operating profit above market estimates on Thursday, helped by growth across its business segments, and confirmed all of its three-year targets announced in November.

FILE PHOTO: The Generali logo is seen on the company's Tower, designed by Iraqi-British architect Zaha Hadidat, at the Milan's CityLife district, Italy November 5, 2018. REUTERS/Stefano Rellandini/File Photo

“After the first-half results we are very confident that we are able to face the challenges of our industry,” General Manager Frederic de Courtois told a press briefing on Thursday.

Generali affirmed its goals for the next three years despite renewed pressure from low interest rates. It has targeted 6-8% growth in earnings per share, an average return on equity of more than 11.5% and a dividend payout of 55-65% of net profit.

Operating result rose 7.6% to 2.72 billion euros ($3 billion) thanks to positive developments in all business segments, Generali said. Analysts had forecast an operating result of 2.65 billion in the first half, according to a consensus provided by the company.

Net profit rose 34.6% to 1.8 billion euros, including capital gains of 480 million euros from disposals of German life insurer Generali Leben and its Belgian business. Analysts had forecast net profit of 1.69 billion euros.

Without those gains, net profit grew 6.4% to 1.31 billion.

In the past three years Generali has raised 1.5 billion euros from disposals, exiting a dozen non-strategic countries.

Its solvency ratio at end-June, a key measure of financial strength, fell to 209% from 217% at end-December, mainly due to the impact of regulatory changes in the first quarter.

“Solvency is still solid despite low interest rates,” Bankhaus Lampe analyst Andreas Schaefer wrote in a research note, sticking to its “buy” rating and a price target of 18.5 euros.

The ratio recovered to 213% at the end of last week, CFO Cristiano Borean said during the press briefing.

Gross written premiums grew to 35.7 billion euros, up 1,8% but slightly below consensus of 36.2 billion euros, with a positive performance of both life and property and casualty segments.

The combined ratio, a measure of profitability and financial health, stood at 91.8% at end-June, down 2 percentage points from a year earlier.

Reporting by Gianluca Semeraro; editing by Mark Bendeich

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