UPDATE 1-Generali raises dividend after posting record operating profit

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MILAN (Reuters) – Generali (GASI.MI) raised its dividend on Thursday after Italy’s biggest insurer posted a record annual operating profit boosted by life and asset management businesses and cost cuts.

FILE PHOTO: The Generali Tower, designed by Iraqi-British architect Zaha Hadid, in seen at the Milan’s CityLife district, Italy, October 13, 2017. REUTERS/Stefano Rellandini/File Photo

Its operating profit rose 2.3 percent to 4.89 billion euros ($6 billion), in line with a company-provided analyst consensus of 4.86 billion euros.

“We are perfectly positioned to reach all of our objectives that we had set for 2018,” CEO Philippe Donnet said.

Strong performance of life and asset management businesses offset a 4.9 percent fall in non-life operations, impacted by a 416 million euro hit from natural catastrophe claims.

“Overall results are positive with a nice beat at the operating profit level,” a Milan-based trader said.

Last year insurers paid record claims of about $135 billion after a spate of hurricanes, earthquakes and fires.

Asked about consolidation in the insurance sector, Donnet said Generali would consider M&A activity “if it allows us to accelerate our strategy”.

This month French rival AXA (AXAF.PA) agreed to buy insurer XL Group (XL.N) for around $15 billion.

Generali is looking to sell businesses in some 13 countries. It wants to use proceeds to help fund an expansion of asset management operations and beef up its fee-based business.

Europe’s third-biggest insurer, which reported a 1.4 percent rise in net profit, said it would pay a dividend of 0.85 euros per share on its 2017 results, up from 0.80 euros the previous year.

It also said its economic solvency ratio – a sign of an insurer’s capital strength – had risen to 230 percent from 194 percent a year earlier.

Reporting by Stephen Jewkes, editing by Giulia Segreti and Jason Neely

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