Italy’s Generali maintains targets despite ‘difficult situation’

Italy’s Generali maintains targets despite ‘difficult situation’

MILAN – Italy’s biggest insurer Assicurazioni Generali confirmed all its targets through 2021 on Friday, after posting a record operating result for 2019, despite coronavirus-related uncertainty and soaring market volatility.

Italy has been hardest hit by the outbreak in Europe, with 15,113 confirmed cases of coronavirus, which has infected more than 134,500 people worldwide and caused more than 4,900 deaths.

“Our results show that Generali is a solid group and is able to face this difficult situation”, Chief Executive Philippe Donnet said on a results call for media.

Under the plan, Generali targets an 6-8% average annual 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.

The insurer is also sticking to plans to use 3-4 billion euros for “disciplined acquisitions”.

“There could be opportunities also in current markets,” General Manager Frédéric de Courtois said on the call.

Generali’s operating result, the figure most closely watched by the market, was 5.2 billion euros ($5.8 billion) last year, up 6.9% from 2018, helped by growth across all its businesses.

The figure is broadly in line with an analyst consensus provided by the company.

Generali’s Solvency ratio, a key measure of financial strength, rose to 224% last year from 217% at the end of 2018, topping an average analyst forecast of 210%.

As of March 6. the solvency ratio had fallen to 200%, due partly to an acquisition in Portugal, but also because of falling prices for Italian government bonds.

Generali’s domestic sovereign holdings totalled 62.7 billion euros at the end of last year and the insurer expects to keep them stable at this level.

Italian bonds have been hit as the coronavirus crisis and a nationwide lockdown aimed at stemming contagion rock the economy, forcing the government to ramp up deficit-spending.

Italy’s 10-year yields posted their biggest daily spike since the euro zone sovereign crisis on Thursday after European Central Bank chief Christine Largarde said it was not the ECB’s job to “close spreads.”

Net profit met forecasts, rising 15.7% year-on-year to 2.7 billion euros, including capital gains on a number of disposals partly offset by the cost of a junior bond buyback.

Generali will pay a dividend of 0.96 euros per share on 2019 results, up 6.7% from 2018.


($1 = 0.8925 euros)

(Reporting by Gianluca Semeraro, editing by Valentina Za and Alexander Smith)

(c) Copyright Thomson Reuters 2020