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Generali Shares dip Despite H1 Earnings Beat

Investing.com
·2 min read

By Scott Kanowsky

Investing.com -- Assicurazioni Generali SpA (BIT:GASI) shares were lower in mid-morning European trading despite the Italian insurance firm posting better-than-expected first-half earnings.

The company reported a 9% decline in total net profit to €1.4 billion during the period, dragged lower by a €138 million impairment charge from investments in its Russian operations, which Generali pledged to exit in March in the wake of Moscow's invasion of Ukraine.

However, the figure was still above analyst estimates of 1.33 billion euros.

Highlighting the results was a strong performance in Generali's life insurance segment, which saw its operating income jump by 17.1% to €1.69 billion thanks in part to an uptick in the value of new business.

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Generali confirmed its plan to achieve a compound annual growth rate in earnings per share of between 6% - 8% in 2021 - 2024. It also pledged to distribute a cumulative dividend to shareholders of between €5.2 billion and €5.6 billion over the next two and a half years.

But the firm warned that its outlook could be hit by increasing geopolitical tensions and worries over a broad economic slowdown.

"[T]he global insurance sector may be affected by uncertainty due to an economic slowdown, that may become recession, an increase in inflation and the risks of escalation following the Russian invasion of Ukraine, as well as to the spread of new variants of coronavirus," Generali said.

The company said it would move to mitigate these risks, including a planned price increase at its non-life unit to combat costs related to soaring inflation.

Chief executive officer Philippe Donnet - who recently survived a challenge to his leadership from two of Generali's largest investors - also flagged the uncertainties facing the company, but said it will stick to its long-term strategy.

"In the months to come, we will continue to be fully committed to the execution of our three-year plan as we reinforce our Group's leadership as a global insurer and asset manager,” Donnet said in a statement.

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