Generali's 2012 Net Profit Plunges on Impairments

By Giovanni Legorano

MILAN--Assicurazioni Generali SpA (G.MI) said Thursday its net profit for the year dropped by around 89% as the insurer was hit by large impairments in the fourth quarter.

Net profit for 2012 was 90 million euros ($116.6 million), compared with a net profit of EUR856 million for the previous year, it said.

It said the result reflected a raft of impairment charges taken over the year of 2012 of EUR1.7 billion. Generali wrote down the value of its available-for-sale securities by EUR792 million and its investment in Telco--a holding company that owns the largest single stake in Telecom Italia SpA (TIT.MI)--by EUR148 million in the fourth quarter.

It said it also impaired the value of loans and receivables by EUR118 million, real estate assets by EUR56 million and other assets by EUR156 million in the same period of last year.

The company said that the impairments follow an assets review triggered by the strategic plan put in place by Chief Executive Mario Greco over the last months.

"We have recently outlined a new strategy, built on introducing discipline, simplicity and focus across all our activities. We are simplifying our structure and adopting a more disciplined approach to managing the Group and its investments, as we refocus on our insurance business," Mr. Greco said in a statement.

Generali said its board proposed a 2012 dividend of EUR0.20 per share, the same as the previous year.

Total premiums were up 3.2% on year at EUR70 billion.

The company's overall operating result was up 10.5% at EUR4.2 billion in 2012, while its operating result in the life sector rose 9.7% to EUR2.7 billion in 2012, driven mainly by savings products, the company said.

Its non-life operating result was up 5.6% at EUR1.7 billion in the year.

As a result, the combined ratio--a percentage of premiums spent in claims--improved to 95.7%, from 96.5% at the end of 2011.

Operating results in financial services were up 21.7% to EUR408 million in the year, helped by the good performance of asset manager Banca Generali SpA (BGN.MI), the company said.

Generali said its Solvency I ratio rose to 150%, from 117% at the end of 2011.

Write to Giovanni Legorano at [e-mail]

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