Generali sticks to 2024 targets, generates $1 billion per year for M&A

By Gianluca Semeraro

MILAN (Reuters) -Leading Italian insurer Generali on Thursday confirmed all targets in its business plan to 2024 after upbeat nine-month results, adding it was able to generate 1 billion euros per year of cash for any potential M&A.

In September, sources had said Generali was exploring several potential U.S. acquisition targets in the asset management business, including investment firm Guggenheim Partners.

For a deal of this size, Generali may need to divest its private bank Banca Generali, sources had said at that time.

In a post-results call with journalists, Chief Financial Officer Cristiano Borean declined to comment on rumours of an acquisition in the U.S. but said Generali was "a happy investor" in Banca Generali.

Under a plan unveiled last year, Generali had earmarked up to 3 billion euros for mergers and acquisitions in insurance and asset management businesses, citing possible deals in Europe, Asia and the United States.

Chief Executive Philippe Donnet survived a challenge from rebel domestic investors in April who were pressing for a more aggressive M&A policy.

Nine-month net profit came in at 2.23 billion euros ($2.24 billion), down 0.8% from a year ago, due to impairments of 141 million euros on Russian investments. The profit was above an analyst consensus provided by the company of 2.05 billion euros.

Net operating profit, a figure closely watched by the market, grew 7.8% from a year ago to 4.77 billion euros, above an analyst consensus of 4.52 billion euros, as higher interest rates boosted life business.

Generali shares were up 2.4% by 0841 GMT, outperforming the European insurance sector.

"We deem the numbers very strong and much better than our estimates," analysts at Banca Akros said, confirming their 'Accumulate' recommendation.

Generali's capital position proved resilient with a Solvency Ratio of 223% at the end of September, down 4.5 percentage points from the end of 2021 due to the impact of some M&A deals, regulatory changes and a share buyback of 500 million euros.

It stood at 225% at the end of October, Borean said.

Despite a challenging macroeconomic scenario, Generali confirmed all of its plan targets, including a 6%-8% average annual growth in earnings per share and dividends of up to 5.6 billion euros, it said in a statement.

($1 = 0.9971 euros)

(Reporting by Gianluca Semeraro, editing by Agnieszka Flak and Keith Weir)