Generali Profit Unexpectedly Rises as Non-Life Income Climbs

Assicurazioni Generali SpA, Italy’s biggest insurer, reported first-quarter profit rising 6.3 percent as non-life insurance earnings surged. The shares advanced the most this month.

Net income in the three months to March climbed to 603 million euros ($787 million) from 567 million euros a year earlier, the Trieste, Italy-based company said in a statement today. That beat the 561.4 million-euro average estimate of 10 analysts surveyed by Bloomberg.

Chief Executive Officer Mario Greco is seeking to boost profit at Generali and increase capital by disposing of non-strategic assets, cutting costs and focusing on faster-growing emerging markets. The company, which targets 4 billion euros in revenue from disposals by 2015, is selling its U.S. life-reinsurance business and Swiss asset-management unit BSI Group as part of a plan approved in January.

“In this quarter we have recorded our best operating result of the last four years, thanks to an excellent non-life performance and a solid life business,” Greco said. “We are making good progress in implementing the planned measures to turn around our business.”

Generali rose as much as 3 percent to 14.97 euros in Milan. It advanced 2.7 percent to 14.92 euros at 9:22 a.m., giving the company a market value of 23.1 billion euros. The Bloomberg Europe 500 Insurance Index rose 0.7 percent.

Greco reiterated today that he expects an improvement in total operating profit this year. Operating profit rose 8 percent in the first quarter from a year earlier to 1.33 billion euros as profit at the non-life business rose 27 percent to 520 million euros. Operating profit in the life business declined 2.6 percent to 797 million euros.

Asset Sales

Generali is in an “advanced stage” of selling BSI and the U.S. business, Greco said on a conference call. The company hasn’t made a final decision on whether to sell the units, he said, declining to comment on any bidders and their offers.

Bankinter SA of Spain may buy BSI, CEO Maria Dolores Dancausa said last month. The firm offered 1.5 billion euros in partnership with U.S.-based Apollo Global Management, Swiss newspaper L’Agefi reported in March. Generali has said the unit has a book value of 2.3 billion euros.

Generali’s solvency ratio, a measure of an insurer’s capacity to absorb losses, dropped to 138 percent on March 30 from 145 percent at the start of the year. The ratio climbed again to 145 percent as of April 30, Generali said. The first-quarter reading was hurt by the purchase of a 25 percent stake in its eastern Europe venture from private-equity firm PPF Group NV, it said.

“Generali showed good quality first-quarter results and confirmed the progressive trend of a mix re-balancing toward non-life,” Elena Perini, a Milan-based analyst at Banca IMI, wrote in an e-mailed report today.

Spending on claims and other costs as a percentage of premiums, known as the combined ratio, improved to 93.6 percent in the first quarter from 95.4 percent a year earlier.