Generali sees scope for higher dividends as debt falls

Wed Nov 27, 2013 12:43pm EST
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By Gianluca Semeraro

LONDON (Reuters) - Italian insurer Generali (GASI.MI: Quote) is aiming to pay higher dividends to investors as its turnaround plan to cut debt through a string of asset disposals and hefty cost savings starts to pay off.

Europe's third-largest insurer by market capitalization has already raised 2.4 billion euros ($3.25 billion) through asset sales as part of an aggressive overhaul to improve profitability and focus on its core insurance business.

The company, along with other European insurers, is having to restructure to cope with low interest rates, tighter regulation and a weak economic environment in Europe.

Chief Executive Mario Greco said his three-year business plan, when completed in 2015, would free up about 2 billion euros ($2.71 billion) a year for dividends and investments in high-growth markets including acquisitions.

Greco said part of the additional capital will be used to increase the insurer's presence in markets with high potential, such as Poland, Brazil and Asia.

"Our priority was to sort out the capital issue, and this is why we have worked fast on asset disposals," Greco, who took up his job in August 2012, said on Wednesday.

"Once we have reached the capital targets, we will be able to start talking about a policy of progressively higher dividends," he said, adding he saw higher dividends by 2015.

Generali paid a dividend of 0.20 euros a share on its 2012 earnings, in line with the previous year. Greco had said in April that that dividend could not be a benchmark for future payments for Generali shareholders.   Continued...

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