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By Alice Baghdjian and Stephen Jewkes
ZURICH/MILAN (Reuters) - Major European insurers are to offer shareholders a bigger share of their earnings this year, as a low level of payouts for damage claims has allowed them to build up large cash piles.
Italy's largest insurer Generali said it would increase the dividend on its full-year results, while Switzerland's Zurich Insurance - already a generous payer at around 70 percent of net income - again flagged that its shareholders could expect an "attractive" dividend.
The insurers, which reported third-quarter profits on Thursday, have had to focus on strengthening their profitability because low interest rates have eaten away at investment returns. Many of them, including Generali and Zurich Insurance, have cut costs and are shedding businesses.
Zurich is selling its retail business in Russia, while Generali has already finished a phase of disposals and is in the middle of a 2 billion euro (1.5 billion pounds) efficiency programme.
A rise in net profit and buoyant markets in the 9-month period helped to boost Generali's net assets by 14 pct to 22.5 billion euros.
"Given our asset base situation, we feel we are in a position to remove the 40 percent payout ceiling and so we reckon we can pay a higher dividend," Generali's finance chief Alberto Minali told journalists.
Roberto Lotici, a fund manager at Ifigest, said Generali's Chief Executive Officer Mario Greco was clearly focussing more on boosting earnings per share (EPS) than strengthening the asset base. Greco is in the middle of a three-year plan to turn around the company's performance.
"He's like a steamroller. He's set his shop out to increase dividends and you can bet your bottom dollar he'll do it," Lotici said.
Europe's largest insurer, Allianz, which is due to report third quarter results on Friday, has said it would review its dividend policy by the end of the year. It currently pays about 40 percent of net profit as a dividend. Analysts have suggested it could increase this to bring it more into line with peers such as Zurich.
TOUGHER MARKET
Zurich's finance chief George Quinn was less upbeat than Generali, pointing to a tougher market ahead for General Insurance, its largest business.
"The pricing environment in General Insurance may be about to enter a phase of softer pricing and interest rates remain at very low levels. As a result, we will have to work even harder to reach our targets," Quinn said in notes for a presentation to investors on Thursday.
But Quinn said he was confident on the insurer's financial goals, including an "attractive" dividend for 2014.
Fewer natural catastrophes helped Zurich's third-quarter profit in general insurance, which includes property, car and other non-life areas, but only partly offset a year-on-year decline in money released from reserves no longer needed to pay off claims.
The Swiss insurer's shares were down 2.4 percent by 1050 GMT, underperforming a 1 percent weaker index of European insurers. Generali shares were also down 1 percent.
"Zurich has presented solid numbers for the third quarter, however this hasn't quite met high expectations," analysts at Zuercher Kantonalbank said.
Net profit for Zurich fell 16 percent to $928 million, below an average forecast for $1.06 billion in a Reuters poll of 7 analysts.
Generali, Europe's third-largest insurer by market value, said its nine-month operating profit rose to 3.677 billion euros, above the consensus forecast of 3.618 billion euros estimated by analysts in a company survey.
REINSURERS
Reinsurers like Munich Re and Swiss Re have also been returning surplus capital to shareholders by raising dividends or buying back their own shares.
Munich Re aims to conclude a 1 billion euro share buy-back by April next year and raised its dividend to 7.25 euros for 2013 from 7.00 euros previously.
JP Morgan analyst Michael Huttner forecast a further dividend rise to 8 euros per share for 2014.
The reinsurer on Thursday said it expected to earn net profit of slightly more than 3 billion euros this year, after reporting a 17 percent rise in net profit in the third quarter.
French peer Scor reported a 7 percent rise in quarterly net profit. Both of these reinsurers were helped by a fall in big natural catastrophe damage claims that improved the underwriting result.
(Additional reporting by Paul Arnold in Zurich, Gianluca Semeraro in Milan and Jonathan Gould in Frankfurt; Editing by Edwina Gibbs and Jane Merriman) Zurich Insurance Group brochures are seen
By Alice Baghdjian and Stephen Jewkes
ZURICH/MILAN (Reuters) - Major European insurers are to offer shareholders a bigger share of their earnings this year, as a low level of payouts for damage claims has allowed them to build up large cash piles.
Italy's largest insurer Generali said it would increase the dividend on its full-year results, while Switzerland's Zurich Insurance - already a generous payer at around 70 percent of net income - again flagged that its shareholders could expect an "attractive" dividend.
The insurers, which reported third-quarter profits on Thursday, have had to focus on strengthening their profitability because low interest rates have eaten away at investment returns. Many of them, including Generali and Zurich Insurance, have cut costs and are shedding businesses.
Zurich is selling its retail business in Russia, while Generali has already finished a phase of disposals and is in the middle of a 2 billion euro (1.5 billion pounds) efficiency programme.
A rise in net profit and buoyant markets in the 9-month period helped to boost Generali's net assets by 14 pct to 22.5 billion euros.
"Given our asset base situation, we feel we are in a position to remove the 40 percent payout ceiling and so we reckon we can pay a higher dividend," Generali's finance chief Alberto Minali told journalists.
Roberto Lotici, a fund manager at Ifigest, said Generali's Chief Executive Officer Mario Greco was clearly focussing more on boosting earnings per share (EPS) than strengthening the asset base. Greco is in the middle of a three-year plan to turn around the company's performance.
"He's like a steamroller. He's set his shop out to increase dividends and you can bet your bottom dollar he'll do it," Lotici said.
Europe's largest insurer, Allianz, which is due to report third quarter results on Friday, has said it would review its dividend policy by the end of the year. It currently pays about 40 percent of net profit as a dividend. Analysts have suggested it could increase this to bring it more into line with peers such as Zurich.
TOUGHER MARKET
Zurich's finance chief George Quinn was less upbeat than Generali, pointing to a tougher market ahead for General Insurance, its largest business.
"The pricing environment in General Insurance may be about to enter a phase of softer pricing and interest rates remain at very low levels. As a result, we will have to work even harder to reach our targets," Quinn said in notes for a presentation to investors on Thursday.
But Quinn said he was confident on the insurer's financial goals, including an "attractive" dividend for 2014.
Fewer natural catastrophes helped Zurich's third-quarter profit in general insurance, which includes property, car and other non-life areas, but only partly offset a year-on-year decline in money released from reserves no longer needed to pay off claims.
The Swiss insurer's shares were down 2.4 percent by 1050 GMT, underperforming a 1 percent weaker index of European insurers. Generali shares were also down 1 percent.
"Zurich has presented solid numbers for the third quarter, however this hasn't quite met high expectations," analysts at Zuercher Kantonalbank said.
Net profit for Zurich fell 16 percent to $928 million, below an average forecast for $1.06 billion in a Reuters poll of 7 analysts.
Generali, Europe's third-largest insurer by market value, said its nine-month operating profit rose to 3.677 billion euros, above the consensus forecast of 3.618 billion euros estimated by analysts in a company survey.
REINSURERS
Reinsurers like Munich Re and Swiss Re have also been returning surplus capital to shareholders by raising dividends or buying back their own shares.
Munich Re aims to conclude a 1 billion euro share buy-back by April next year and raised its dividend to 7.25 euros for 2013 from 7.00 euros previously.
JP Morgan analyst Michael Huttner forecast a further dividend rise to 8 euros per share for 2014.
The reinsurer on Thursday said it expected to earn net profit of slightly more than 3 billion euros this year, after reporting a 17 percent rise in net profit in the third quarter.
French peer Scor reported a 7 percent rise in quarterly net profit. Both of these reinsurers were helped by a fall in big natural catastrophe damage claims that improved the underwriting result.
(Additional reporting by Paul Arnold in Zurich, Gianluca Semeraro in Milan and Jonathan Gould in Frankfurt; Editing by Edwina Gibbs and Jane Merriman)