Oct. 30 (Bloomberg) -- Assicurazioni Generali SpA, Europe's third-biggest insurer, said third-quarter profit fell 64 percent, missing analysts' estimates, on writedowns linked to the global financial crisis and lower income from its life business.

Net income decreased to 210 million euros ($273 million) from 587 million euros a year earlier, the Trieste, Italy-based company said today in a statement. That missed the 250 million-euro median estimate of seven analysts surveyed by Bloomberg. Operating profit from the life-insurance unit fell 19 percent to 454 million euros.

Generali, which is seeking to offset slower growth in its main markets by focusing on eastern Europe, is being hurt by the global market turmoil. The company has excess capital ``in line'' with the amount declared in June and is ``one of the best capitalized companies in Europe,'' Chief Executive Officer Giovanni Perissinotto said today. The insurer had 1.7 billion euros of capital at the end of June.

``Generali is well capitalized on an economic basis and can withstand the impact of our stress-test scenario without taking additional measures to enhance its capital base,'' Cazenove analyst Andreas van Embden wrote in a research note.

The insurer had 2 billion euros of writedowns in the first nine months of 2008. It didn't provide a breakdown for the quarter or further details. The company is now hedging against risks on its equity stakes in companies like Intesa Sanpaolo SpA, Banco Santander SA and Commerzbank AG, Perissinotto said.

Telco Risk

Generali also didn't mark down its stake in Telco SpA, the holding company that controls Telecom Italia SpA. The potential losses from Telco at the end of September were 300 million euros to 350 million euros, Chief Financial Officer Raffale Agrusti said today.

``The rapid deterioration in the third quarter of the financial markets and the increasingly uncertain outlook for the remainder of the year'' have made it ``difficult to provide reliable full-year guidance,'' the company said in the statement.

European financial-services firms are suffering after the collapse of the U.S. subprime-mortgage market last year led to a wave of banking failures and mergers, hurting global markets and making borrowing more expensive.

Insurers are being affected in different ways. Dutch companies ING Groep NV and Aegon NV are cutting dividends and receiving government lifelines to prop up their finances after posting losses. Aviva Plc, the U.K.'s biggest insurer by assets, said Oct. 28 its reserves were sufficient and that it has no plans to cut its dividend.

Returning to Growth

Generali has no investments linked to the U.S. subprime mortgage crisis and no exposure to the shares of bankrupt Lehman Brothers Holdings Inc. The company said Sept. 15 it had a maximum net economic exposure to Lehman debt of 110 million euros.

``We look forward to a return to growth in the operating result and in net profits once conditions in the financial markets stabilize,'' Chairman Antoine Bernheim said in today's statement.

Operating profit at the non-life business rose 0.6 percent in the quarter to 524 million euros. The company has a net income goal of 3.8 billion euros for 2009.

Italian insurers' life premiums fell 10 percent in the first nine months of the year, regulator Isvap said on Oct. 23.

Generali lost 42 cents, or 2.2 percent, to 18.75 euros as of 4:35 p.m. in Milan, giving the company a market value of 26.3 billion euros. The 31-member Bloomberg Europe 500 Insurance Index, down 46 percent this year, gained 2.8 percent today. Generali has fallen 39 percent in 2008.

The company's shareholders' equity increased by 300 million euros to 12.5 billion euros in the third quarter.

To contact the reporter on this story: Alessandra Migliaccio at amigliaccio@bloomberg.net

Last Updated: October 30, 2008 12:14 EDT