Generali Profit Fell By 85%

Assicurazioni Generali SpA vowed to cut costs significantly to mitigate the impact of the coronavirus pandemic, which is expected to hit its bottom line this year after impairments related to the virus led to a sharp drop in first-quarter profit.

The Italian insurance giant said Thursday that although it is still too early to estimate the full impact of the virus, operating profit is likely to fall this year. It expects the pandemic to hit its revenue, with travel insurance among the hardest-hit business lines. Generali didn't give an outlook for the impact of the pandemic on claims, but said it "can rely on a favorable business mix and robust standard policy terms."

The insurer said it would cut costs significantly this year. It also expects net profit to take a hit from the pandemic, in particular due to impairments, which already dragged the results in the first quarter.

The company booked 655 million euros ($717.9 million) in impairments on investments due to disruption in financial market brought about by the coronavirus pandemic. This amount could change until the end of June based on the value of the assets at that time.

Net profit for the period fell almost 85% to EUR113 million. The impairments offset a solid operating performance. Operating profit rose 7.6%, boosted by the property and casualty division and the asset-management operations.