(Reuters) — Italian insurer Assicurazioni Generali S.p.A. expects its net profit to rise significantly this year as it reaps the rewards of a three-year-old turnaround plan, it said on Thursday after its reported its highest first-half earnings since 2007.

Generali reported a 16% rise in second-quarter operating profit to €1.45 billion ($1.60 billion) on Thursday.

Its first-half operating result totaled €2.78 billion ($3.05 billion), beating a company-compiled analysts' consensus of €2.6 billion ($2.86 billion), and the highest in eight years.

Net profit of €1.3 billion ($1.43 billion) in the six months to June also beat forecasts, and Mr. Greco said the figure for the whole of the year was expected to improve “significantly” from 2014's €1.67 ($1.83 billion) billion.

The insurer aims to make gross cost savings of €250 ($274.6 million) million a year by 2018 and generate cash of €7 billion ($7.69 billion) by then, according to goals it set out in May. It also plans to pay more than €5 billion ($5.49 billion) in dividends.

Strength in Europe

The company said it had benefited from a strong performance in its life business in all its main markets, Italy, France, Germany and central and eastern Europe, with premiums rising 10.6% in the first half.

CEO Mario Greco said Europe's third-biggest insurer, which has been under pressure to boost profitability and cash generation, was reaping the fruits of the turnaround plan, launched in 2012, that has seen it bolster its balance sheet by cutting costs and selling assets.

“In just three years, without asking our shareholders for money and without resorting to help from outside, we have strengthened our capital to just over 200%,” Mr. Greco said.

He was referring to the group's proforma economic solvency ratio, a closely watched measure of financial strength calculated using internal models based on tougher Solvency II principles, which will come into force next year.

The 200% level, which was also higher than expected by analysts, compares with a ratio of 186% for Generali at the end of 2014 and with ratios of around 190% reported by its main European rivals, France's Axa S.A. and Germany's Allianz S.E., at the end of the first quarter.

The improvement is all the more significant given that rock-bottom interest rates reduce insurers' investment returns, making it harder for them to meet tougher capital requirements.

“The company is making solid progress towards profitability targets,” Deutsche Bank said in a note after the results on Thursday.

Mr. Greco reiterated that Generali was not interested in making acquisitions. “We are aiming to grow organically, we do not see the need — either strategically or financially.”