Generali, which posted a 50 percent drop in 2011 net profit on Tuesday on the back of hefty writedowns on Greek bonds and other holdings, said that for 2012 it was targeting an operating profit of 3.9-4.5 billion euros.

The fall in 2011 net profit forced the company, the last major European player to report 2011 results, to offer a dividend payout of 36 percent, below its historical 40 percent target and equivalent to 0.20 euro per share, down from 0.45 euro for 2010.

French rival Axa (AXAF.PA) and German peer Allianz (ALVG.DE) had kept their dividend per share stable. European insurers' 2011 dividends have been under close scrutiny amid investor worries that writedowns on sovereign debt, near-record catastrophe claims, and dwindling investment returns might crimp their ability to pay while maintaining healthy capital reserves.

Generali made a 2011 net profit of 856 million euros, below some analysts' expectations as results were hit by one-off impairments totaling 1 billion euros.

"The net income was some 18 pct below expectations due to the impairments," Mediobanca analyst Gianluca Ferrari said. "The dividend was another miss on consensus ... It implies a payout of 36 percent vs the guidance of 40-45 percent and I personally was expecting 45 percent."

Generali's Solvency I ratio - a measure of financial strength - held up better than expected in the final quarter of 2011, when yields on Italian government bonds rose to euro-era highs amid an intensification of the euro zone crisis.

The ratio had rebounded to 132 percent by March 1, 2012 and chief executive Giovanni Perissinotto predicted "strong growth" in profit this year.

Generali said it had written down 76 percent of its portfolio of Greek instruments, reflecting an agreed haircut and in line with European rivals.

Generali, which reported a 38 percent rise in 2011 non-life results to 1.56 billion euros, said on Wednesday it had a 2012 target range of 1.5-1.9 billion euros, slightly above last year's goal.

In the life sector, where the insurer saw a 16 percent drop in 2011, this year's target was lowered to 2.4-2.8 billion euros.

Generali's effort to expand its footprint in high-growth emerging markets is making it a more attractive player than some rivals, although the outlook for Europe's life market remains uncertain as the crisis eats into household savings.

"We remain cautious on the prospects for European life markets in 2012 as a result of intense competition from banks and austerity measures putting a squeeze on consumer wealth," Barclays analysts said in a recent note.

Generali shares were down 0.2 percent in early trading.

($1 = 0.7564 euro)

(Reporting by Lisa Jucca; Additional reporting by Stephen Jewkes; Editing by Dan Lalor)

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