The latest in chronological order were the analysts from Hamburg's Berenberg: a few days ago the German experts raised their opinion on Assicurazioni Generali from hold to buy, improving the target price to 20 euros from 17,90. A double promotion on the consideration that the group "is on track to comfortably achieve all its objectives for 2015". But the business house of the oldest German bank is not the only one to have been persuaded of the Lion's potential by CEO Mario Greco who has been changing the skin of the Trieste company for the last two years through restructuring and reorganization.
In recent times, the stock has recorded a real exploit in the favor of analysts: if a year ago the buys were just over 20%, today they exceed 40% of the judgments. On the contrary, those who recommend selling ("sell") have been reduced to 10%. A year ago the Platonist of the pessimists represented a more substantial 30%. In between, for a good 50%, there is the small group of prudent people who, if they don't buy, at least recommend keeping the stock in their portfolio, "hold". Certainly, bread for the teeth of the CEO Mario Greco who since he assumed command of the Trieste insurance company on August 2012, 30, has focused on the new "market" course of the group and on renewing the "feeling" with international investors . It is no coincidence that in the shareholders' meeting of 2014 April 15,2 the funds in the Leone capital had risen to 9,2% from 2012% and since August 10,18 the stock has gone from a quotation of 17,08 euros to the current 67 , with an increase of about XNUMX%.
While reassuring about the centrality of the city of the Barcolana, the former manager of the Swiss Zurich who grew up in the McKinsey nursery brought the Investor Day to London and reorganized the governance to align it with the best international standards (for example, he set up the Group management committee). Complete with an Academy for the group's future leaders: in just over six months, around 600 managers from about twenty countries took part in the training programs activated by the Trieste group in collaboration with the University of Trieste. The Friulian newspaper Il Piccolo has already dubbed it the Trieste Yale. It is necessary to train new talents and professionalism, is the message, to keep up with the new Generali branded Greco.
In just over two years, the manager overturned the command team, integrated operational structures, revised the organizational structure, merged the brands. And he has also overturned the skepticism of some noble business houses which, after the launch of the three-year plan in 2013, judged the objectives perhaps too ambitious, difficult to achieve. The final push came with the announcement by Greco, on the last investo day in November 2014, of the early achievement of the targets (at the end of 2015 and not in 2016) and of the increase in the payout to over 40%. However, the stock has slowed down in the last 12 months, dropping 3,6% thanks to the jolts in stock prices, underperforming the sector by 10% in 2014. Pending the presentation of the new plan in May, however, analysts seem convinced that 2015 will be “the year of the Lion”, as the Berenberg report is titled.
“Generali's Investor Day provided very positive messages, especially in terms of the cash flow generated”, commented the Deutsch Bank analysts after the Investir Day. "The necessary restructuring and repositioning of the business is progressing well," noted Bofa Merril Lynch. Credit Suisse underlined the "tangible progress in the restructuring of the Italian business" and the "relative strength of the brand in Germany and Eastern Europe".
So much so that the lion has done much better than foreign competitors in the judgments of analysts. Looking at the Bloomberg data, it turns out that Generali is the insurance group that has recorded the greatest improvement in the ratio between buy and hold/sell judgments in the last year. Extending the analysis to the last two years, it confirms itself as the best European group, surpassed only by the performance of the Canadian Manulife. In detail, between the end of 2013 and 2014 Generali improved as many as 15 ratings ahead of competitors such as Axa (+4), Aig (+8) and Aviva (+4). On the other hand, Zurich (-6) and Allianz (-25) contracted.
Tell that to the S&P experts, who are also analysts but ratings (i.e. creditworthiness and group solidity) are a real thorn in Greco's side. A few weeks ago, in mid-December, Generali had to receive an unexpected rejection from the agency, as a direct consequence of the cut in Italy's sovereign rating. The judgment on Italy was reduced to BBB-, a step above the so-called junk level and the adjustment to BBB+ (from A-) for Generali was triggered automatically despite the Leone, despite having its registered office and roots in Italy, genera more than 70% of turnover abroad.
There's no escaping it: for the big sister of ratings, no company can have a rating two notches higher than that of its own country. Greco, as expected, did not like it. For him, “Yes, Generali can”.
