Generali profit up despite increase in claims

AP News
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Posted: Aug 02, 2012 6:25 AM
Generali profit up despite increase in claims

MILAN (AP) — Italian insurer Assicurazioni Generali on Thursday reported a 4.5 percent increase in first-half profits as growth in premiums offset higher claims from a pair of quakes in northern Italy and recessionary economic conditions in large parts of Europe.

The newly appointed CEO, Mario Greco, told analysts he aims to make Italy's largest insurer a European leader, improve earnings and shareholder returns. Toward that end, he pledged a review of the group's strategy, portfolio and organizational structure. The review could lead to sales of assets.

Greco's appointment was announced in early June after the board ousted Giovanni Perissinotto in reaction to some shareholder criticism about the company's performance. Generali shares had shed more than 40 percent of their value in the preceding 12 months.

Still, some shareholders, including Tod's luxury leather goods founder Diego Della Valle, criticized the swift change in CEO as harmful to Italy's image abroad. Generali had posted strong first-quarter results.

Greco, who was a top executive at Zurich Insurance Group for the last five years, took the post on Wednesday.

"The opportunity to lead Generali to a position of leadership among European insurers, reestablish strong business profits and achieve a solid capital position is irresistible," Greco said.

Generali's first-half 2012 net profit of €842 million ($1 billion) was up from €806 million in 2011. It credited the increase to growth in premiums, a strong operating performance and solid returns on investments. The improvement came despite a €222 million increase in payments for catastrophic events — including back-to-back quakes in northern Italy in May.

Premiums rose 2 percent to €35.6 billion, driven by non-life insurance business particularly in Germany, central Europe and Latin America. Nearly three-quarters of premiums were derived outside Italy.

Barring further catastrophic events, Generali said it expects to improve operating results over 2011.