MILAN (Reuters) – Italy’s biggest insurer Generali <GASI.MI> expects its operating profit to be “resilient” this year, but to fall short of last year due to the COVID-19 pandemic, it said on Thursday.
General Manager Frederic de Courtois said the insurer would give a full update on its outlook for next year at an investor day in November, since it would take a while to have better visibility on the impact of the virus crisis.
Generali was less exposed than rivals to some of the business lines worst hit by the virus such as credit insurance, big corporate business and events, he said, adding the impact on travel business was not significant at the group level.
Generali shares were down 3.1% at 1247 GMT, underperforming a 1.2% decline in the European sector <.SXIP>.
“The caution that the full year result is likely to fall likely means consensus could still be cut,” KBW analysts said in a research note.
Generali’s operating earnings rose 7.6% to 1.45 billion euros ($1.59 billion) in the first quarter, above an analyst consensus provided by the company of 1.3 billion.
Net profit fell 85% to 113 million euros, reflecting impairments of 655 million euros due to the impact of the crisis on financial markets.
The insurer said the actual change in the carrying value of assets in its investment portfolio would be set on June 30, based on the value of the assets at that time.
The solvency ratio, a key measure of financial strength, fell to “almost 190%” as of May 19 from 196% at the end of March and 224% at the end of 2019, mainly due to falling Italian government bond prices, finance chief Cristiano Borean said.
Generali said it would cut costs to offset the fall in revenues expected this year, but de Courtois said that did not imply job cuts or lower investments.
(Reporting by Gianluca Semeraro, editing by Stephen Jewkes and Mark Potter)