Generali Q3 Profit Falls 18% on Decline in Life Insurance Business

By and | November 5, 2015

Assicurazioni Generali SpA, Italy’s biggest insurer, said third-quarter profit fell 18 percent after operating income declined at its life-insurance business.

Net income dropped to 420 million euros [$458.6 million] from 513 million euros [$560.2 million] a year earlier, Trieste-based Generali said in a statement on Thursday. That compares with 555 million euros [$606 million], the average of four analyst estimates compiled by Bloomberg. The earnings were also hurt by higher impairments that reflected market volatility, Chief Financial Officer Alberto Minali said during a conference call.

Chief Executive Officer Mario Greco is focusing on the company’s core insurance business after selling peripheral assets units to boost profitability. The insurer plans to expand in Europe by adding fee-generating products and commercial partnerships as part of a four-year plan to increase cash flow.

“We’re counting on a good fourth quarter and are confident that the full-year profit will be significantly higher than last year,” Minali said on the call.

Generali was down about 2 percent at 17.06 euros [$18.63] at 10:12 a.m. in Milan trading, giving the company a market value of almost 27 billion euros [$29.5 billion]. The shares are little changed this year.

Third-quarter operating profit fell 9 percent to 1.06 billion euros [$1.16 billion], Generali said.

The company’s life-insurance earnings dropped 15 percent, while its non-life businesses had an 11 percent increase.

“Decent set of numbers, with stronger economic capital and continued operational delivery in property and casualty, both positive,” analysts at UBS Group AG including James Shuck wrote in a report.

Generali’s economic solvency ratio, a key measure of financial strength, stood at 196 percent at the end of September, according to a new internal model based on a set of European Union capital rules called Solvency II, which will apply from 2016.

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