What will Generali do with the 3% of Intesa Sanpaolo purchased to defend itself from the takeover of the banking group? Who was it purchased from? And what will the company do to strengthen its capital and protect itself from possible future hostile moves?
The questions of a small shareholder, and the answer, come at the end of Generali's annual meeting in Trieste, the 186th meeting since its foundation and there are not a few Italian groups that can boast such a longevity. These are the questions that the market is asking and they represent the stone guest of a meeting which records the presence of 52,24% of the capital and during which the Group CEO Philippe Donnet announces a "new strategic plan to make asset management a substantial source of profit”, on May 11 with the quarterly and on that occasion it will be understood if acquisitions are envisaged; explains that the Intesa's stake is not strategic and that the prospect is for a sale in the short term; place "during 2018" the launch of phase 3, the "development-oriented" one. Meanwhile, he sends out three precise messages to shareholders and investors: the execution of the strategy "is proceeding in a disciplined manner, in line with the 2018 plan and allows us to accelerate savings targets on operating costs". The 2016 operating result was “the best in Generali's history” so much so that the dividend rose by 11% over the previous year. And for the 2017 “the start was positive even if challenging, we'll give the details in May”.
The meeting is an opportunity to take stock of the shareholder structure which records a growth in foreign funds which rose to 24,4% (+4,5% compared to last year) and to celebrate a year, 2016, which ended with figures record for Leo. The three strong shareholders are Mediobanca (12,98%), Franccesco Gaetano Caltagirone (which rose to 3,65% in April) and Leonardo Del Vecchio with 3,16%.
THE CLIMBING IS UNDERSTANDED
“When we have something to communicate to the market, we will do it promptly” replies the group CEO Philippe Donnet. And he adds: “The stake invested in Intesa does not have the character of a strategic shareholding and will be managed in the best interest of all shareholders. At a time when press statements - not denied - spoke of a possible operation by Intesa Sanpaolo, moreover in supposed connection with international subjects, the purchase of the 3% stake was the most obvious thing to do to avoid the accumulation of shares in Generali without the payment of a premium. The operation cost 1 billion and was expensed by drawing on the company's free equity and therefore has no impact on the group's solvency”.
MEDIOBANCA AND THE EXIT OF MINALI
The rumors about the climb are therefore “shadows” as the vice president of Leone, Caltagirone, declared on the eve of the meeting – the first three months after the never born engagement with Intesa – or a danger (given the involvement of Axa) against which it was necessary to act promptly to preserve the Italian identity of the group? In the background remains the crux of the expansion of the company and the role of Mediobanca: how much did it influence the group – asked a shareholder – in the exit of the general manager Alberto Minali? "Minali has not entered into a collision course with Mediobanca - replies diplomatically the president of the group Gabriele Galateri di Genola - there have been problems of non-optimal functioning of the top management and therefore we had to separate".
GROWTH ON THE STOCK EXCHANGE AND ACCOUNTS 2016
To reassure the shareholders who are looking at market capitalisation, Philippe Donnet thinks about it. “It is true – he admits – that the performance of our stock on the Stock Exchange was not positive from January 2016 to last November. But – observes the CEO – the market did not know the levers with which we wanted to achieve our objectives of excellence. We presented them at the Investors Day last November in London – he adds – and since then the Generali stock has gained 30% on the Stock Exchange, outperforming both the European insurance index and the performance of our competitors”. Donnet will push the information effort, which has already received good recognition from analysts, convinced that "our potential today is underestimated by the Stock Exchange but will be recognized because we will prove to the market our ability to achieve all our objectives".
Generali closes the spotlight on 2016 by collecting the best operating profit ever at 4,8 billion, improvements in all business units and a net profit of 2,08 billion. Operating cost savings amounted to 70 million (for the first time) in mature markets out of a target of 200 million in 2018. Operating cash increased by 200 million over 2015 (to 1,9 billion against 1,7). Life premium income exceeded 12 billion "at the top of peers". The dividend for 2016 rises from 72 to 80 cents and will be paid on May 24th.
“We are well positioned to achieve our 2018 goals” sums up Donnet. “Looking at the future of Generali – he continues – I want to conclude by saying that the company has completed its financial restructuring and is halfway through its industrial strengthening plan. Once it is completed, we will be able to design an ambitious plan for growth and development which starts from solid foundations. This is my personal commitment”. Acquisitions postponed to 2018? It would seem so, unless chances and opportunities present themselves to be seized before the end of the plan.
The assembly approves the accounts with a Bulgarian majority (98,6% of the capital present). Ditto for the other items on the agenda: appointment and remuneration of statutory auditors, remuneration report, Long-term incentive plan 2017, plan for the purchase of treasury shares and delegation for the right to free increases.
