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By Christian Plumb
MILAN, March 18 (Reuters) - Italy's second-largest insurer RAS said on Tuesday it increased its core operating profit six percent in 2002 and raised its dividend, helping boost its share price by as much as six percent.
Mario Greco, CEO of the company which is controlled by Germany's Allianz , said he expected similar growth for operating profit, excluding investments, in 2003.
"We think a better scenario is likely this year," he told reporters. "The beginning of 2003 has so far been positive."
Operating profit in 2002 before investment gains rose to 661 million euros from 625 million euros. Net profit more than doubled to 911 million euros in 2002, as the sale of property assets more than offset writedowns on its investment portfolio.
At 1455 GMT, RAS shares traded up 3.5 percent at 11.23 euros, after earlier gaining six percent. The stock outperformed the DJ Stoxx index of European insurers , down three percent, narrowing its loss so far this year to three percent.
"There could be some scope for RAS shares to recover on the back of these numbers," Commerzbank Securities analyst Marc Thiele said, adding the net profit figure was better than his forecast of 890 million euros.
Also helping was the ordinary share dividend, up 19 percent to 0.44 euros a share.
"The net profit was in line with expectations, while the dividend was higher," said a Milan-based broker. "Overall there was a fear that the results would be more disappointing."
NO TORO INTEREST
The Milan-based group has a war chest of around one billion euros after selling property assets and had previously said it would consider a bid for Fiat's insurance unit Toro.
But Greco said the group would not make an offer for the unit Fiat is selling to raise cash for a turnaround:
"We received preliminary information about the company," he said. "We didn't find it particularly interesting."
But other acquisitions were possible as RAS seeks to expand its distribution network for insurance and financial products.
"We are looking at all the opportunities in terms of growing the sales network," he said, adding Commerzbank's Italian sales network was among the acquisition candidates.
RAS made 151 million euros in extraordinary gains, helped by the property sales, down from 255 million euros in 2001. But rocky markets caused writedowns on investment portfolios totalling 675 million euros, up from 246 million euros in 2001.
Embedded value -- a firm's underlying asset value plus its prospects for profitability, a key indicator of an insurer's worth -- dropped to 3.455 billion euros on its life portfolio and assets under management from 3.474 billion euros in 2001.
But new production, a measure of new life insurance policies sold, was up 19 percent to 132 million euros, and the company saw double-digit growth in 2003.
The combined ratio -- which measures claims and costs against premium income -- came in stronger than expected, Thiele said, at 104.7 percent against 105.6 percent in 2001.
For 2003, the company said the combined ratio was expected to fall to 102 percent.