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Generali insurance says it will cut costs, boost cash flow

Company promises to boost capital reserves by 2015

Generali insurance says it will cut costs, boost cash flow

London, January 14 - Italian insurer Assicurazioni Generali SpA, the third largest insurer in Europe, said Monday that it intends to cut its costs and increase cash flow to restore profitability. That came as chief executive Mario Greco announced a reorganization aimed at boosting the sluggish financial performance of the Trieste-based company. Cash flow is expected to rise to as much as two billion euros in the next three years as Generali focuses on businesses in emerging markets as well as its core insurance unit to improve profitability. It also plans to increase its capital reserves by about four billion euros by 2015 through the sale of peripheral businesses. "We expect the total benefit to the business from the disposal of non-core assets, including those already mentioned, as well as possible others, will bring in around four billion euros of regulatory capital by end-2015," Greco told reporters on Monday in London where he was scheduled to make an investor presentation. Generali has already said that BSI, its Swiss private banking unit, and its life reinsurance business in the United States are up for sale - but only under the right conditions, Greco said Monday. The insurer wants to reduce costs by 600 million euros in the coming three years and expects a return on equity of 13%. Such targets are "serious, sensible," but not overly conservative, said Greco. "We are working to create a stronger company three years from today," he added. The news did not impress markets as Generali shares fell by as much as 3.2% in trading on the Milan stock exchange.

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