* Proposes to hike dividend to 0.45 eur/shr from 0.20
* Posts 2013 net profit of 1.915 bln euros
* Solvency I ratio stood at 150 pct end-Feb
* CEO says on track to meet business targets (adds shares, analyst comments, comparisons)
By Lisa Jucca and Gianluca Semeraro
MILAN, March 13 Italian insurer Generali plans to more than double its dividend, showing its confidence in a turnaround drive that helped it to deliver the highest annual net profit in six years, even as its home market struggles to emerge from recession.
Under the leadership of CEO Mario Greco, Europe's third-biggest insurer has been shedding non-core assets to boost its capital base and focus on its most profitable business lines.
Yet, 2013 earnings came in slightly below analyst expectations after Generali's non-life business was hit by floods and storms in France and Germany, as well as regulatory changes in France.
Net profit rose to 1.915 billion euros ($2.66 billion) from 94 million euros a year earlier and against a Thomson Reuters SmartEstimate of 2.127 billion euros.
Following steps taken by some peers, Generali proposed hiking its dividend to 0.45 euros a share from 0.20 euros previously, bringing the dividend yield to 2.8 percent at current prices.
The yield for French rival Axa and Germany's Allianz stands at 4.4 percent, while it is 6.4 percent for Switzerland's Zurich according to Reuters data.
"The main positive is the dividend," said Berenberg analyst Peter Eliot, noting results were below expectations.
"While we had expected the payout ratio to rise as Generali progressed through its three-year plan, this has happened quicker than we thought," he added, referring to the proportion of earnings that the firm pays out as dividends.
Net profit for the fourth quarter was 324 million euros, rebounding from a loss of more than 1 billion euros in 2012.
Shares in Generali rose 1.1 percent at the open. By 1020 GMT, the stock was up 0.1 percent at 16.42 euros, just ahead of a flat European insurance index.
Greco, who promised to shake-up Generali to improve profitability when he took over in August 2012, said the insurer was on track to meet its target of delivering a 13 percent return on equity by 2015.
"These results and the more than doubling of our dividend confirm we are on the right track," Greco said.
The company said its earnings were entirely attributable to an improved operating performance rather than one-off items, because gains made on its stake in the Bank of Italy and from disposals in the United States and Mexico were offset by writedowns on Swiss private banking arm BSI and financial holding Telco as well as other items.
Europe's third-largest insurer by market capitalisation said its Solvency I ratio - a measure of financial strength - stood at about 150 percent at the end of February, below an average of around 200 percent for rivals Allianz, Axa and Zurich. The company is targeting a Solvency I ratio of 160 percent by 2015.
"Capital remains the main issue for the group," analysts at Banca IMI said in a note to clients ahead of the results.
The insurer has not yet been able to find a buyer for Swiss banking unit BSI, one of its largest non-core assets.
It said it had taken a 217 million euro writedown on BSI, a move that is likely to facilitate a sale.
Greco did not disclose the new book value of BSI and said a sale of Generali's stake in Telco, the top investor in telecoms group Telecom Italia, could happen as early as June.
($1 = 0.7192 euros) (Editing by David Goodman and Mark Potter)