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Generali Second-Quarter Profit May Rise on Fewer Writedowns

Assicurazioni Generali SpA, Italy’s biggest insurer, may say second-quarter profit rose as year-earlier writedowns on securities including Greek bonds weren’t repeated.

Net income probably increased to 254 million euros ($311 million) from 190 million a year earlier, according to the average estimate of 12 analysts surveyed by Bloomberg. The estimates ranged from 115 million euros to 481 million euros.

“We expect mixed results,” Gianantonio Villani, an analyst at Kepler Capital Markets, who has a “buy” recommendation on the stock, wrote in a July 26 report. Net profit may increase on an annual basis because of weak earnings a year ago, though profit could fall by half on a like-for-like basis because of claims related to earthquakes in northern Italy during this year’s quarter, he said.

Generali is grappling with rising losses from its non-life segment linked to the two quakes in the Emilia Romagna region May 20 and May 29 and lower investment income in the life business, which was hurt by the negative trend on equity markets and Italy’s sovereign debt exposure.

Operating profit is expected to decline 13 percent to 1 billion euros in the quarter, according to the analysts. Operating profit may decline 26 percent to 302 million euros in the non-life business, and may drop 6 percent to 737 million euros in the life segment.

Generali’s main investors ousted Chief Executive Officer Giovanni Perissinotto in June after the insurer’s profit fell for four consecutive quarters, replacing him with Mario Greco. Greco, 53, will formally join the insurer at a board meeting Aug. 1, facing the task of reviving profit and strengthening capital.

“We have positive expectations from the management reshuffle,” Alberto Villa, an analyst at Intermonte SIM SpA, wrote in a note July 18. “The new CEO will kick off a process of rationalizing the group’s activities, which will include asset disposals, cost-cutting and optimization of investments.”

The insurer is due to report earnings on Aug. 2 before the market opens and will hold a conference call at 10 a.m. the same day. Following is a table of the analysts’ estimates and the year-earlier results. The figures are in millions of euros, except the combined ratio.

                Q2 2012      Lowest      Highest      Q2 2011
                Average      Estimate    Estimate

Life Operating     737         603            828         782

Non-Life           302         222            428         406
Operating Profit

Operating        1,000         862          1,114       1,153

Shareholders’   16,700      13,370         18,029      17,231

Combined Ratio*   97.7        95.9           99.4        96.5

APE 1,190 1,007 1,279 1,202

Net Income 254 115 481 190 *Calculated on 6 months

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