Generali posts record operating profit

(Reuters) — Assicurazioni Generali S.p.A. raised its dividend on Thursday after Italy’s biggest insurer posted a record annual operating profit boosted by life and asset management businesses and cost cuts.

Its operating profit rose 2.3% to €4.89 billion ($6 billion), in line with a company-provided analyst consensus of €4.86 billion.

“We are perfectly positioned to reach all of our objectives that we had set for 2018,” CEO Philippe Donnet said.

Strong performance of life and asset management businesses offset a 4.9% fall in nonlife operations, impacted by a €416 million hit from natural catastrophe claims.

“Overall results are positive with a nice beat at the operating profit level,” a Milan-based trader said.

Last year insurers paid record claims of about $135 billion after a spate of hurricanes, earthquakes and fires.

Asked about consolidation in the insurance sector, Mr. Donnet said Generali would consider M&A activity “if it allows us to accelerate our strategy.”

This month, French rival Axa S.A. agreed to buy insurer XL Group Ltd. for around $15 billion.

Generali is looking to sell businesses in some 13 countries. It wants to use proceeds to help fund an expansion of asset management operations and beef up its fee-based business.

Europe’s third-biggest insurer, which reported a 1.4% rise in net profit, said it would pay a dividend of €0.85 per share on its 2017 results, up from €0.80 the previous year.

It also said its economic solvency ratio — a sign of an insurer’s capital strength — had risen to 230% from 194% a year earlier.