Generali targets 5 billion euro operating profit after weak 2011

Wed Mar 21, 2012 8:56am EDT
 
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By Lisa Jucca

MILAN (Reuters) - Generali (GASI.MI: Quote), Europe's No.3 insurer, is targeting operating profit of more than 5 billion euros ($6.6 billion) in the mid term as it sees no repeat of the dramatic market shocks that prompted big writedowns in the past year.

Italy's top insurer said on Wednesday it believes the worst is over after detecting signs of recovery in the early months of 2012, having reported a 50 percent drop in yearly net profit to 856 million euros and a dividend cut late the previous session.

"I am hopeful that we have reached the bottom and now the way is up," Generali Chief Executive Giovanni Perissinotto told analysts during a conference call, adding he expected "strong growth" in profit this year.

Yet investors punished Generali shares, which were down 3.2 percent by 1212 GMT on the back of the weak earnings and reduced dividend. The company also set an operating profit target for its large life business slightly below the target set for last year.

Generali shares underperformed a 0.3 percent fall in the European insurance sector as a whole.

Generali had been hit hard by the deepening of the euro zone crisis due to its Greek bond holdings and its exposure to the Italian market. Its 2011 results were hit by impairment losses worth 1 billion euros on Greek bonds and other holdings.

The insurer's operating result of 3.9 billion euros in 2011 was below the bottom of its target range. It set a new 2012 target at 3.9 to 4.5 billion euros.

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A view of Generali headquarters in Rome April 6, 2011. REUTERS/Remo Casilli