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Generali beats 2018 targets despite 'challenging' Italian market, raises dividend

Reuters with CNBC.com
Key Points
  • Generali's net-profit last year rose 9.4 percent to 2.31 billion euros ($2.61 billion), broadly in line with analysts' forecasts. Operating profit stood at 4.86 billion, slightly above expectations.
  • Europe's third-largest insurer said it would pay a dividend of 0.90 euros per share, up from the previous year's 0.85 euros.
Pier Marco Tacca | Getty Images

Italy's top insurer Generali raised its dividend for 2018 after beating its business plan targets and posting growth in net and operating profits.

As it published its full-year earnings Thursday, Generali said it was also well positioned to achieve the targets in its 2021 business plan.

Speaking to CNBC's Julianna Tatelbaum on Thursday, CEO Philippe Donnet said the firm had been working "with great discipline" over the past three years on implementing its strategy.

"Our plan has been working, so we've been able to reach technical excellence, a very good combined ratio — despite many losses — and we were also able to continue the shift towards capital light product," he said. "So, at the end we are able to close this plan in very good conditions."

Generali's net-profit last year rose 9.4 percent to 2.31 billion euros ($2.61 billion), broadly in line with analysts' forecasts. Operating profit stood at 4.86 billion, slightly above expectations.

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Generali will profit in any economic scenario, CEO says

Europe's third-largest insurer said it would pay a dividend of 0.90 euros per share, up from the previous year's 0.85 euros.

When it came to a potential European slowdown in 2019, however, Donnet said Generali was not concerned. He explained that people sought out the solutions Generali provided whether the economy was booming or lagging.

"Our business is very resilient, because when people do invest and the economy is growing, the property and casualty business is growing," he said. "But when people do not invest because the economy is not growing, the life insurance business and asset management is growing."

However he noted heavy competition in its domestic market, especially with motor insurance, adding that it was "challenging."

"In Italy and France, by the way, we had to face very important claims ... which obviously had a significant impact on the operating result," he added.

Donnet also claimed that Generali's 59 billion euros in Italian BTPs was not a concern to investors.

"(Investors) do not struggle any more on this — we have demonstrated that we have a strong capital position. We have further increased our solvency ratio by 9 percentage points, so our exposure to BTPs is no longer an issue," he told CNBC.

Generali has reserved up to 4 billion euros for acquisitions and growth as it looks to asset management and high-margin business in Latin America and Asia.

Clarification: This story has been updated to reflect that Donnet claimed that Generali's 59 billion euros in Italian BTPs was not a concern to investors. The headline has also been changed on this story to more accurately reflect Generali's earnings release.