Italian insurance group Generali's proceeds from selling unwanted businesses will "definitely exceed" the €1 billion target proceeds from disposals set for 2018, group CEO Philippe Donnet said March 15.
He also told analysts that more disposals would be announced "quite soon" and that the company is "very close to making a final decision" on whether to keep or sell the Generali Leben German life book, which the company placed into run-off in 2017.
Donnet said during the conference call for Generali's 2017 results: "Our disposal program is proceeding very well, absolutely in line with our targets. We are quite confident that we will be able to complete this disposal program by the end of this year.
"We already announced a few disposals and there is more to come quite soon. We are quite satisfied with the prices. We said we were expecting €1 billion as the proceeds of these disposals. I can tell you today that we will definitely exceed this €1 billion."
He declined to say how much the company would exceed the target by, but clarified that his expectations did not include the potential sale of Generali Leben.
Generali announced at its investor day on Nov. 23, 2016, that it intended to sell less profitable businesses, resulting in cash proceeds of at least €1 billion by 2018. The company started by selling its businesses in Guatemala and Liechtenstein.
On whether to keep or sell the Generali Leben run-off, Donnet said: "I am quite confident that we are very close to making a final decision on this." He added that its decision to sell or manage the run-off internally would be based on not only financial considerations, but also what is best for the affected policyholders.
He said: "We … want to make sure that our customers will be managed properly. We are not exiting the German market. It is the opposite. We are doing this to strengthen our position, our distribution and our brand in Germany."
Donnet's comments came after Generali reported what it called a record operating profit of €4.90 billion, up 2.3% on 2016's €4.78 billion. The company boosted its dividend by 6% to 85 euro cents per share from 80 euro cents in 2016. Generali's share price was up 2.1% at €15.64 as of 3.30 p.m. CET.
The insurer also reported a solvency ratio under the Solvency II capital regime of 208% as of the end of 2017, up 30 percentage points on the 178% reported at the end of 2016.
Donnet was reluctant to comment on whether the company was planning to deploy excess capital through share buybacks, increased dividends or mergers and acquisitions but told analysts that this would be revealed at the company's Nov. 21 investor day in Milan, where "this will definitely be a significant part of our new strategic plan."
He said the company was using its cash this year on the higher dividend and that the company would meet its target of paying out €5 billion in dividends by the end of 2018.
The company is also paying off €250 million of subordinated debt. Donnet said that this would be a cash payment and that it was not looking to refinance that portion of the debt.
