G Generali Ass

By Giovanni Legorano

ROME--Italian insurer Assicurazioni Generali SpA (G.MI) said Thursday it plans to raise its dividend for 2016 by 11% from the year before after reporting its best net profit performance in nine years.

The company said it plans to pay a EUR0.80 dividend a share for last year, compared with the EUR0.72 for 2015. Net profit for the year rose 2.5% to 2.1 billion euros ($2.2 billion).

The Trieste-based insurer said net profit was buoyed by an improved performance across different segments of its business and lower costs.

In November Generali pledged to accelerate a strategic turnaround it launched in 2015 by exiting unprofitable businesses and cutting operating costs.

At the time, the Italian insurer said it planned to generate at least EUR1 billion by selling businesses it deemed to be less attractive. It also said it planned to restructure its operations in mature markets to save EUR200 million in operating costs, while making investments in growing markets.

In 2015, Generali launched a big commercial push in Europe, Asia and Latin America to improve cash flow in the following four years, with gains to be returned to its shareholders through fatter dividends instead of spending on acquisitions.

According to the plan, the company aims to generate more than EUR7 billion in cash flow between 2015 and 2018 and raise the dividend payout to over EUR5 billion for the four years to 2018.

At the end of last year, the company had generated EUR3.5 billion in net operating cash and has reached EUR2.4 billion in cumulative dividends.

On Thursday, Generali said it had brought forward its target date to deliver EUR200 million in cost cuts by one year to 2018.

Generali confirmed that despite challenging macroeconomic conditions and volatile financial markets, it expects to increase shareholders' dividends for this year in line with its strategic plan.

In January, the company emerged as a potential acquisition target after Italian lender Intesa Sanpaolo SpA (ISP.MI) said it was weighing a tie-up with Generali, a prospect it abandoned a month later.

Generali Chief Executive Philippe Donnet vowed to maintain the company as "independent, Italian and with an international vocation."

-Write to Giovanni Legorano at giovanni.leograno@wsj.com

(END) Dow Jones Newswires

March 16, 2017 04:14 ET (08:14 GMT)

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