(Reuters) – Assicurazioni Generali beat expectations in the first quarter even as write-downs on Russia drove down net profits, a boost for CEO Philippe Donnet who last month won a shareholder battle to keep his job for another three years.
Italy’s largest insurance company said on Thursday that net profit fell by 9.3% from a year earlier to 727 million euros (762 million dollars), well above the analysts’ consensus from the insurance company of 651 million euros.
“With revenues, margins, profits and capital all comfortably ahead of consensus, along with management’s repetition of its plans, Generali is performing exceptionally well and seems unaffected by board-level disputes,”; said Jefferies analyst, who has a “Hold” rating in stock.
The share in Generali rose around 0.5% in morning trading, which exceeded the European insurance index.
Generali, Europe’s number 3 insurer, has for months been embroiled in a feud among its leading shareholders.
Mr. Donnet’s challenger lost a shareholder vote on April 29 to appoint a new board despite securing three seats, raising concerns that tensions would persist.
Generali booked EUR 136 million in provisions during the quarter. It includes a hit of 96 million euros related to directly owned Russian interest rate instruments and 40 million euros for a share in the Russian insurance company Ingosstrakh.
In a worst-case scenario related to Russia, the company estimates further write-downs of 163 million euros, said its CFO Cristiano Borean at a press conference after the result.
Generali said the exposure to Russian and Ukrainian indirect and fund-linked instruments was “negligible” for a total of 77 million euros.
In March, the Generali had said that they would close down their operations in Russia and that they would also give up their seats on Ingosstrakh’s board.
The company’s 38.5% stake in Ingosstrakh, one of Russia’s largest insurance companies, is currently “frozen and not for sale at the moment,” Borean said.
Generali’s operating profit, closely monitored by the market, grew by 1.1% to € 1.63 billion, surpassing an average analyst consensus of € 1.55 billion, the company said.
Its solvency ratio, which measures insurance companies’ financial strength, proved resilient at 237% at the end of March and stood at 230% on May 16, Borean said.