Generali's profit beats expectations

(Reuters) — Generali, Italy's top insurer, beat market expectations with its nine-month results on Thursday, as its life and asset management segments performed well, and said it has about €1 billion left to deploy as it continues to look at M&A opportunities.

The company is set to update the market on how it plans to use its available capital on Dec. 15 when it will unveil a new three-year strategic plan, finance chief Cristiano Borean said in a post-results media call.

CEO Philippe Donnet, whose term expires next April, has come under fire from two main shareholders — Italian businessmen Francesco Gaetano Caltagirone and Leonardo Del Vecchio — who have criticized his M&A strategy as too timid and want Generali to grow further.

Generali earmarked up to €4 billion euros ($4.63 billion) for M&A under a three-year strategic plan ending this year.

After a number of acquisitions in Portugal, Greece, eastern Europe and Malaysia, the insurer sealed last month a €1.17 billion takeover of smaller rival Cattolica in a move aimed at cementing its domestic market leadership.

“We are still evaluating any M&A opportunities consistent with our discipline. But M&A is not a must,” Mr. Borean said, when asked if this capital could also be used for a share buyback.

Generali's nine-month net profit rose 74% to €2.25 billion ($2.60 billion), above the average forecast of €2.13 billion in an analyst consensus provided by the company.

Its shares have gained 35% this year and were up 1.6% in early trading Thursday.

While its life and asset management businesses performed well, nonlife business proved resilient despite the higher impact of natural catastrophe claims, the company said in a statement.

Its operating profit also came in above analyst consensus as it rose 10% to €4.4 billion. Generali's solvency ratio, which measures the financial strength of the company, stood at 233% as of Nov. 8, up slightly from 231% at the end of July and 224% at the end of 2020.

The insurer confirmed its target of annual compound growth in 2018-2021 of earnings per share of between 6% and 8%. Return on equity is expected to be higher than 11.5%.