Generali makes sparks on the Stock Exchange. Favored by a positive day for European stock markets, after the ECB bulletin and pending the start of the EU summit, the share leaps by more than 7%. The market likes the accounts, despite a 2012 profit of 90 million, down 89,5% from the 856 million of 2011, due to a 1,7 billion account of net write-downs: in fact, the operating profit which rose more than expected is surprising at 4,2 billion, a good 10% above estimates. And the initial indications for 2013 are pleasing: the quarter is going well for now and the group expects for 2013, in the light of the actions undertaken, and even in the presence of a still uncertain macro-economic scenario, "an improvement in the overall operating result ”. So if the coupon has remained unchanged at 0,20 cents, CEO Mario Greco promises: "we will try to gradually increase the dividend" recalling that "our policy is to distribute at least 40% of the net profit".
CLEANING IN THE ACCOUNTS
GENERALI ITALY IS BORN
In terms of the 2012 accounts, the write-downs that scuttled the profit refer for as much as 1,2 billion (1,7 the total account) to the fourth quarter alone. This amounted to 792 attributable to available-for-sale securities, 148 million to the investment in Telco, 118 million to loans and receivables, 56 million to real estate and 156 million to other assets. On the other hand, the cleanup on the accounts was widely expected by the market. Cleanliness that does not affect credit ratings. At the end of 2012 Solvency 1 was 150% compared to 117% in 2011. In 2012 Generali increased the Italian government securities in portfolio to 59,7 billion.
“The growth in the operating result – added Greco – demonstrates the excellent quality of our industrial business. The progress achieved by the Solvency I index proves that we have initiated capital strengthening actions, which will continue in the coming years. The stability of the dividend attests to our continued commitment to adequately remunerate our shareholders even in a phase of capital strengthening”, Greco noted in the note on the accounts.
With the arrival of the new manager, Generali has undertaken a series of initiatives which have revised the managerial structure, business organization and strategy. In particular, the guidelines are based on the introduction of discipline, simplicity and focus in all our activities and on the simplification of the structure and on a more disciplined approach in management and investments, with a focus on the insurance business. Thus was born Generali Italia, with the agency and broker distribution network, which will control Alleanza Assicurazioni, with the distribution network of independent producers, and Genertel, with the online distribution channels and bancassurance. A new short and medium/long-term variable incentive system was also defined for managers who hold strategic roles in all the countries where the group is present.
TURNING BUDGET
RCS, MEDIOBANCA, GOOD INVESTMENTS?
The one relating to 2012 “is a turning point. We have embarked on a profound transformation and the business has given excellent results. We have taken the right steps, which will allow us to achieve the objectives of the strategic plan, with much higher profitability now and a capitalization that is much safer than the current one” commented Greco in the conference call with analysts.
Initial satisfaction therefore for the large shareholders which last year imposed a daring change at the top of the Lion with the arrival of the new CEO Mario Greco, also due to the discontent over the stock market performance. From the lows of 2012 at 8 euros, the share in less than a year has conquered 13 euros (the highs of the year were reached at the beginning of 2013 above 14 euros). Of course, still far from the golden levels when the share exceeded 30 euros (but in between there was the financial and sovereign debt crisis, as well as a certain stock market fatigue in the Italian insurance sector, even at the time when the bank cousins sparked amidst mergers and acquisitions). The hope is that now Assicurazioni Generali will be able to acquire, in business as in the Stock Exchange, that vivacity which will allow it to attract the favors of the market. There are some signs on the dynamism front. Starting from the management of investments that "weigh" as RCS and Mediobanca, which, like all the other securities in the portfolio, have been aligned in the financial statements with the appropriate values. Generali will decide what to do when the RCS and Mediobanca agreements expire, for which any cancellations are expected in September, assessing them as good investments or not, Greco said, adding that "We think we no longer have any strategic stake, we think we have or make investments that are good for society. We will also look at those (in RCS and Mediobanca, ed) from this point of view: if they are good investments we will make them. It's not a matter of principle, it's a practical matter." As well as for Intesa Sanpaolo, whose share is no longer strategic.
Then there is the Italy chapter, where the political crisis puts a mortgage on growth. “Today there are clear signs of recovery in the world – Greco pointed out – The USA and China are leading the beginning of a recovery of the world economy which for the first time sheds some light on this very long crisis we have experienced. Unfortunately, when this begins to happen, Italy enters a complex political crisis which jeopardizes the possibility of benefiting from this beginning of global recovery”.
