Italian insurer Generali is aiming to pay higher dividends to investors as its turnaround plan to cut debt through a string of asset disposals and hefty cost savings starts to pay off.
Europe’s third-largest insurer by market capitalisation is trying to improve profitability by shedding assets to focus on its core insurance business. Generali has already raised €2.4 billion through asset sales as part of an aggressive overhaul.
The company, along with other European insurers, is having to restructure to cope with low interest rates, tighter regulation and a weak economic environment in Europe.
Chief executive Mario Greco, in an update on his three-year business plan, said the revamp, once completed, would free up about €2 billion a year to be used for dividends and investments in high-growth markets.
Mr Greco said part of the additional capital Generali will generate will be used to increase its presence in markets with high potential, such as Poland, Brazil and Asia.
“Our priority was to sort out the capital issue, and this is why we have worked fast on asset disposals,” said Mr Greco, who took up his job in August 2012.
Generali paid dividend of 20 cents a share on its 2012 earnings, in line with the previous year. The insurer said it had sufficient resources to repay, rather than refinance, one third of the €2.24 billion of senior debt maturing in 2014. The sales proceeds will also allow Generali to buy out of Eastern European insurance joint venture GPH, for which it needs more than €1 billion. The company, which manages almost €500 billion in assets, said it wanted to keep a stable exposure to equity and fixed income while upping its stake in high-quality real estate.
Standard & Poor’s placed Generali on negative credit watch late on Tuesday, pending a review of its exposure to Italy’s sovereign debt, which Generali aims to trim to €55 billion by year end from €58.5 billion. – (Reuters)
