The overbearing debut of PIRs on the Italian market has left investors and operators stunned. No one imagined that individual savings plans would be so successful as to push the government and brokers to raise funding estimates already in their first months of operation, nor that indices such as the FTSE Small Cap and AIM Italia would be invested by a such rain of liquidity.
During these first seven months, the PIR market was dominated by banks and asset management companies, but a new protagonist has entered the scene a few days ago: Generali Italia. In mid-July, the Lion's insurance company launched a new product, GeneraCrescIta, which, unlike the others, makes the insurance component one of its strong points.
FIRSTonline spoke to Giancarlo Bosser about this novelty, with Generali since 1997, today chief life & employee benefits officer of Generali Italia, who explained to us the characteristics of the new PIR of the Italian insurance company, illustrating what the objectives of this new product are, how much and how the insurance share, represented by Gesav, affects the investment and what are the benefits for customers. Without neglecting the impact of individual plans on the companies to which enormous resources are allocated.
Doctor Bosser, Generali Italia has recently launched a new individual savings plan. What are the main features of your product and what makes it different from the others already on the market?
“It is a new insurance investment solution, which aims at an optimal synthesis between investment reliability and the search for long-term profitability. Being an insurance group, and especially in a market environment like the current one, we pay close attention to volatility management.
The added value of our product lies in the mix between active management, which focuses on a rigorous selection of the companies in which we invest, and greater control of market risk and investment liquidity".
The legislation provides that at least 70% of the total value of the PIRs must be invested in financial instruments of companies resident in Italy, while the remaining 30% of the portfolio can be invested in any instrument. You have decided to reserve 15% for Gesav, the separate management of Generali Italia. Almost only the reasons behind this choice and what is the convenience for the savers you are targeting?
“As I mentioned, it is a product that aims to be a diversification tool linked to the riskiness of investments and the search for long-term returns. It is divided into two components to better capture the needs of customers. 85% consists of the investment line chosen by the customer between two options, made up of a different mix of funds: the InItalia line, more oriented towards gradual capital appreciation thanks to a more measured investment style between bonds and shares, and the InItalia Plus line, more oriented towards seizing the growth of the stock market.
The remaining 15% consists of the more traditional insurance component represented by Gesav. The presence of separate management, with its proven ability to generate stable returns over time, allows GeneraCrescIta to better control the risk compared to PIRs that invest exclusively in funds.
As regards the convenience for savers, GeneraCrescIta combines insurance advantages with tax breaks on returns dictated by the legislation of the 2017 Budget Law which provides for total exemption on capital gains accrued if the investment is held for at least 5 years".
One of the objectives for which the PIRs have been introduced into our legal system is to stimulate the real economy, channeling resources to Italian companies. On the basis of which criteria did you choose or will you choose the companies in which to invest?
“Taking advantage of the expertise of Generali Investments, our insurance asset manager, and leader in asset management in Italy with over 455 billion euros of assets under management, we will select the companies in the real Italian economy that guarantee the greatest potential for development and the best control of liquidity risk. We will then make visits to these companies in order to be able to choose the restricted investment panel by focusing on the most solid and sustainable companies".
Why, unlike other operators, did Generali Italia wait to launch its first PIR?
“We were among the first insurers to start offering our PIR. Unlike asset management companies and banks, the entire insurance sector had to wait for the regulatory framework to be clearer. Once we had the expected indications, we immediately launched our PIR. In fact, we want to be alongside customers and through investments in Italian entrepreneurial realities contribute to the growth of the national economy”.
Over the months since their debut, criticisms have arisen about the costs of PIRs. In this regard, what are the entry, management and performance commissions envisaged by Generali Italia on GeneraCrescIta?
“Like all services, the cost is determined by the quality of the service offered. We offer active investment management by bringing all our expertise into play, we do not simply rely on indices, this determines the quality of our offer and our service.
The cost range in our PIR, at the moment, is in any case in the average range. For entry costs, the fixed amount when the policy is issued is 150 euros; the fixed amount upon issue of the additional payment is 100 euros; the annual administration services fee is 1,60%. For any costs linked to the underlying funds, the management fee is equal to 0,60%”.
PIRs on the Stock Exchange have experienced a real boom and a mini revolution is underway on the AIM: rain of IPOs, soaring prices, skyrocketing volumes. Huge cash is pouring into a segment of 60 stocks. What do you think of this ferment? Could there be a bubble danger in the future?
“This hypothesis cannot be ruled out a priori, but also for this reason, like Generali, we have decided to create an actively managed solution that examines the entire market in search of the best prospects for sustainable growth, instead of resorting to indices”.
How should the market evolve to guarantee greater security for the investment of small savers who, also thanks to the tax exemption provided for on capital gains, have been identified as targets of the PIRs?
“In the current scenario, in order to increase the value of one's savings, it is necessary to go in search of the opportunities offered by the market, managing the risk with correct diversification and having very clear investment objectives.
An accessible, transparent and personalized offer on the real needs of the individual is the best response that the market, managers and consultants can give to the needs of small savers”.
In your opinion, can these products become a driving force for growth for the country and above all for dimensional development for companies?
“From the point of view of the country system, it is a great opportunity to direct liquidity towards investments in the real economy, making up for the part of the credit market that is currently blocked, thus being able to finance the best Italian companies.
With our Pir GeneraCrescIta we believe we can generate a positive impact for individuals and families, as well as for companies and small and medium-sized enterprises, by responding to their needs".
The Italian insurance companies would like to increase the quota to be invested in separate management up to 30%. Alternatively, what could be, in your opinion, the most useful measures to implement in the near future to implement these tools and have a greater impact on the real economy?
“The possibility of increasing the separate management quota in the insurance PIRs up to 30% can only be an opportunity to enrich the products also in terms of yield stabilization mechanisms.
Further future developments can only come from the possibility of managing investments with the greatest possible flexibility, safeguarding tax benefits and the long-term investment objective in the country's real economy”.
