(Reuters) — Italian insurer Assicurazioni Generali S.p.A. missed 2014 profit forecasts on Thursday, hit by a weaker-than-expected performance in property/casualty insurance and one-off charges, taking some of the shine off recent turnaround successes.

Europe's No. 3 insurer has strengthened its balance sheet by cutting costs and selling assets, and has met a series of recovery targets early.

But like rivals, it is under pressure to boost profitability as low interest rates eat away at investment returns.

"Generali's fourth quarter operating result ... is 30% behind (our) estimates. The miss is mainly driven by P&C (property and casualty)," said Bernstein analysts, who have an "underperform" rating on Generali shares.

They added cost levels were also disappointing and could lead to reductions in earnings forecasts.

Generali shares fell as much as 3.4%, though by 1120 GMT were down just 0.6% at €18.48 ($20.04), within a flat Italian blue-chip index.

The company said net profit fell 12.5% to €1.67 billion ($1.81 billion) last year, missing analysts' average forecast of €1.98 billion ($2.15 billion).

That was due in part to charges of around €400 million ($433.7 million) for a possible fine involving its former Swiss private banking unit BSI and an impairment on Russian insurer Ingosstrakh.

Chief Executive Mario Greco said the group hoped to close out the tax dispute with U.S. authorities over BSI by the end of March, but gave no details.

He struck an upbeat tone as the company focuses on its core life and nonlife insurance operations in Italy, Germany, France and Eastern Europe.

"The transformation of Generali has been achieved ... I am proud to confirm that the targets set out in January 2013 have been met one year in advance," he said.

Generali's closely watched Solvency I ratio stood at 164% at the end of 2014, above its 2015 target of 160%.

"Underlying we see the core trends in the group as solid and broadly supportive of our earnings forecasts," said Credit Suisse A.G. analysts, who have an "neutral" rating on Generali stock.

"However, management will need to convince that the legacy cleanup is now complete, and net income will begin to reflect the operational developments," it said.

Mr. Greco has previously said a new business plan in May will be based on growing existing businesses and not acquisitions.