A plan that aims to generate cash flow of over 10,5 billion, an increase compared to the 7 billion already accumulated at the end of the previous plan (2015-2018) and which has three priority axes: achieve profitable growth, strengthening our leadership in Europe and "focusing on our strengths in asset management, which has given us satisfaction in the plan we just concluded and whose profits will grow by 15-20% annually between now and 2021, to double over the new floor"; reduce the level and cost of debt (by 1,5-2 billion by 2021); invest 1 billion in innovation and digital transformation. As the CEO Group of Generali, Philippe Donnet, whose mandate expires next spring, presented a Strategic Plan which essentially focuses on one keyword: growth. "It is a historic opportunity for the group: it hasn't often happened in recent years that we have capital to invest", said the French manager who did not even rule out an acquisitions policy, although he was unable to provide other details: "We will invest 3-4 billion in organic and non-organic growth, while 5 billion will be allocated to the increase in dividends. At the moment we have no acquisitions on the table, but they will be taken into consideration”, specified Donnet answering questions from journalists.
FINANCIAL TARGETS
To the delight of the shareholders (in fact the stock is performing well on Piazza Affari, +2,3% in mid-morning at 14,5 euros per share) the payout range will increase to 55-65%. with earnings per share growing 6-8% annually and a higher return for shareholders, with an average return on equity of more than 11,5% over the 2019-2021 period. The other major financial objective is to reduce the debt, which fell below 2017 billion in 12, by a further 1,5 or 2 billion between now and the end of the plan, “and above all to reduce the annual gross interest expense by a figure between 70 and 140 million,” said Donnet. The weighted average cost of financial debt as at 31 December 2017 stood at 5,71%. Capital generation, as mentioned, is expected to rise to over 10,5 billion (over 7 already achieved in the plan which ends on 31 December), with an increase in cash remittances to the holding company of +35% compared to the 2015 period -2018. As regards the exposure to Italian public debt, Generali confirmed that it owns – also through Banca Generali – 64 billion Btp, "which will be gradually reduced". The spread, which has grown to a five-year high in recent days, is not a concern for now but "is kept under control".
COMMERCIAL STRATEGY
As regards business growth, the CEO repeatedly insisted, during the press conference in the setting of CityLife in Milan, on leveraging "our strengths, i.e. retail and SMEs, and on the activities that Damage to Life and Wealth&Protection”, also focusing on innovation and therefore with maximum product flexibility, 24/7 assistance and 360-degree consultancy, digitization of the relationship between agent and customer, increasing the share of digital policies. It is a question, as he has repeatedly reminded Donnet in the last period, of “become a life-time partner of our customers”. On the areas in which to focus more for growth, the plan simply says that they will be the insurance markets with high potential: among these above all Europe, where Generali "aims to strengthen its leadership, a leadership that will be unchallenged"Donnet points out. Today Generali is the leader in the insurance market with over 63 billion euros in premiums. In particular, in addition to Italy, there are the German market (first after the Italian one with 12 million customers) and the French market, but also the Czech Republic where Generali is the first company with a share of 22,6%. The new plan aims at expansion in Eastern Europe but also in China, where there are now 18.000 Generali agents (+20% in the last 5 years), and in South America (in Brazil, Generali is the leading foreign insurance operator) . Potential next markets: Greece, India, Malaysia and Indonesia.
DIGITALIZATION AND SUSTAINABILITY
The theme of technology is at the heart of the project, with Generali setting itself the goal of become the European leader of Internet of Things and Artificial Intelligence solutions linked to the automobile (as already experimented in Italy by Generali Italia), to wellness insurance and to the connected home, another area already extensively studied and proposed by Generali Italia, also through the work of the Innovation Park of Mogliano Veneto. However, without forgetting the physical contact with the customer: in fact, the plan specifies that “the physical distribution networks are to be strengthened and not replaced by digitalisation. Physical networks will remain a competitive advantage for the industry, increasingly strengthened by digital tools that will allow for higher customer satisfaction". Confirmed the commitment to sustainability: Generali undertakes to increase green and social impact retail products by 7%-9% and to allocate 4,5 billion in green and sustainable investments by 2021.
