Generali Third-Quarter Net Rises as Operating Income Climbs

Assicurazioni Generali SpA, Italy’s biggest insurer, said third-quarter profit rose 75 percent as it earned more from its life segment and property and casualty operations.

Net income rose to 510 million euros ($690 million) from 291 million euros a year earlier, Trieste, Italy-based Generali said in a statement today. Earnings beat the 411 million-euro average estimate of seven analysts surveyed by Bloomberg.

“We are making good progress with the transformation of our group and today’s results demonstrate that we are on track to reach our targets,” Chief Executive Officer Mario Greco said in a statement. Generali expects higher operating results this year, he said.

Greco, who took over as CEO last year, is selling non-strategic assets and focusing on the company’s main business to strengthen finances and boost profitability. The insurer is more than half way to reaching its goal of raising 4 billion euros from disposals by 2015, after selling its U.S. reinsurance unit and Mexican businesses earlier this year.

“Good confirmation of solidity,” Fabrizio Croce an analyst at Kepler Cheuvreux wrote in a note today. “These figures are very good, as for this group it is not a priority at this time to attain excellence on all metrics, but to show that the strategy and direction are correct,” he said.

Telecom Italia

Generali rose 0.5 percent to 17.35 euros as of 9:10 a.m. in Milan trading, giving the company a market value of 27 billion euros. The Bloomberg Europe 500 Insurance Index, which was up 0.3 percent today, has risen 23 percent this year, compared with Generali’s 25 percent increase.

Generali, which agreed to reduce over time its stake in Telco SpA, the controlling investor in Telecom Italia SpA, wrote down the holding by 65 million euros in the quarter. The CEO said the insurer is waiting for Telecom Italia’s new business plan before deciding whether support it.

“We expect management will present plans that improve the value of the company; we have no preference on possible options,” Greco said during a press conference call today. “We will review the plan and we’ll support it if it’s convincing.”

The Italian insurer is also selling its Swiss asset-management unit BSI Group as part of a disposal program approved in January.

“BSI is a good asset and we want to sell it at an adequate price,” Greco said, adding talks to sell it are “in progress.”

Bankinter SA of Spain may buy BSI, CEO Maria Dolores Dancausa said in April. 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.

Non-Life Income

Non-life operating profit increased 12 percent to 430 million euros as the insurer reduced costs. Claims and costs as a proportion of premiums, known as the combined ratio, improved to 95.1 percent in the first nine months of the year from 96.6 percent a year earlier.

Operating income rose 8.5 percent in the third quarter from a year earlier to 984 million euros as income at the life business rose 13 percent to 591 million euros.

Generali’s solvency ratio, a measure of its capacity to absorb losses, rose to 143 percent by Sept. 30 from 139 percent in June, the insurer said. At the end of October the ratio was 152 percent, the company said.

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