Generali eyes non-life, asset management acquisitions as cash pile grows

MILAN (Reuters) - Italy’s top insurer Generali said on Wednesday it was eyeing acquisitions in non-life insurance and asset management as its cash pile grew on the back of disposals and stronger operations.

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Europe’s third largest insurer has been selling businesses in a dozen or so countries around the world to raise proceeds to help fund expansion.

Last month it agreed to sell a majority of its German life insurance unit Generali Leben to private equity-backed Viridium for up to 1.9 billion euros (£1.7 billion).

Speaking to analysts in a call after first-half results, Generali chief executive Philippe Donnet said the group was looking at M&A opportunities in different geographical areas to help diversify its business.

“That means we are very interested in opportunities in property and casualty as well as asset management,” Donnet said.

Generali said on Wednesday it expected to raise more than 1.5 billion euros from asset disposals carried out this year and in 2017, above an original target of 1.0 billion euros.

Donnet, drawing down the curtain on disposals, declined to give further details on how the cash accumulated in 2018 would be used.

“We’re working on our new strategy which will be presented in November,” he said.

Disposals and stronger operating results in both life and non-life business helped the insurer report its best half-yearly profit in a decade on Wednesday.

Net profit in the period came in at 1.329 billion euros, above an analyst forecast provided by the company of 1.286 billion euros.

But the group’s economic solvency ratio - a measure of financial strength - fell to 221 percent from last year’s 230 percent, hit by rising yields on its Italian sovereign debt.

The spread between Italy’s 10-year BTP bonds and their German equivalent rose sharply in the second quarter of the year on worries Italy’s new ruling coalition could be eurosceptic.

“221 percent is an excellent level and shows we can absorb any shock on the spread... we are not concerned about our (bond) exposure,” Donnet said.

Generali holds around 60 billion euros of Italian state bonds.

Broker KBW said the group had reported a solid set of results overall, but added immediate share price performance would be driven by developments in Italian government bonds.

At 1224 GMT Generali shares were down 0.8 percent, while the European insurance index was down 0.3 percent.

Reporting by Stephen Jewkes; Editing by Jan Harvey