Insurer Generali sees scope for higher dividends as its debt falls

City A.M. Reporter
ITALIAN insurer Generali is aiming to pay higher dividends to investors as its turnaround plan to cut debt through a string of asset disposals and hefty cost savings starts to pay off, its new chief executive said yesterday.

Europe’s third-largest insurer by market capitalisation has already raised €2.4bn through asset sales as part of an aggressive overhaul to improve profitability and focus on its core insurance business.

The company, along with other European insurers, is having to restructure to cope with low interest rates, tighter regulation and a weak economic environment in Europe.

Chief executive Mario Greco said his three-year business plan, when completed in 2015, would free up about €2bn a year for dividends and investments in high-growth markets including acquisitions.

Greco said part of the additional capital will be used to increase the insurer’s presence in markets with high potential, such as Poland, Brazil and Asia.

“Our priority was to sort out the capital issue, and this is why we have worked fast on asset disposals,” Greco, who took up his job in August 2012, said yesterday.

“Once we have reached the capital targets, we will be able to start talking about a policy of progressively higher dividends,” he said, adding he saw higher dividends by 2015.

Generali paid a dividend of €0.20 a share on its 2012 earnings, in line with the previous year. Greco had said in April that this dividend could not be a benchmark for future payments for Generali shareholders.

The group also increased its cost savings goal to €750m by 2015 and €1bn by 2016.