Generali exceeds its profit forecast despite the impact of Russia

(Reuters) – Assicurazioni Generali beat expectations in the first quarter even as writedowns on Russia dented net profit, a boost for CEO Philippe Donnet who won a shareholder battle last month to retain his job for another three years.

Italy’s biggest insurer said on Thursday its net profit fell 9.3% from a year earlier to 727 million euros ($762 million), well above a consensus of analysts provided by the insurer of 651 million euros.

“With revenues, margins, earnings and capital well ahead of consensus, alongside management reiterating its plan targets, Generali is performing exceptionally well and appears unaffected by board-level disputes. directors,” said analysts at Jefferies, which has a “Hold” rating on the stock.

Generali shares were up about 0.5% in morning trading, significantly outperforming the index of European insurers.

Generali, Europe’s third-largest insurer, has been embroiled in a dispute between its main shareholders for months.

Mr Donnet’s challengers lost a shareholder vote on April 29 to appoint a new board despite securing three seats, raising fears tensions could persist.

Generali recorded 136 million euros in provisions during the quarter. This includes an impact of €96 million related to directly held Russian fixed income instruments and €40 million for a stake in Russian insurer Ingosstrakh.

In the worst-case Russia-related scenario, the company estimates further write-downs at 163 million euros, its chief financial officer Cristiano Borean said in a post-earnings press briefing.

Generali said exposure to Russian and Ukrainian indirect and unit-linked instruments was “negligible”, totaling 77 million euros.

In March, Generali announced it would cease operations in Russia and is also ceding its seats on Ingosstrakh’s board.

The company’s 38.5% stake in Ingosstrakh, one of Russia’s largest insurers, is currently “frozen and not for sale at this time,” Borean said.

Generali’s operating profit, closely watched by the market, rose 1.1% to 1.63 billion euros, beating an average analyst consensus of 1.55 billion euros, the company said.

Its solvency ratio, which measures the financial strength of insurers, held up at 237% at the end of March and stood at 230% on May 16, Borean said.