Generali closes 2013 with a profit of 1,9 billion and doubles the dividend. The company noted that it is the best result achieved "in the last six years and it is entirely obtained thanks to the operational performance". And so the board of directors will propose to the shareholders' meeting a dividend that has more than doubled compared to last year, equal to 0,45 euros per share for a total of approximately 700,5 million euros. “2013 – commented CEO Mario Greco – it was a fundamental year for the relaunch of Generali and the results confirm that we are in line or ahead of the targets set in the strategic plan. For the first time after many years, the net result derives entirely from management and is not influenced by extraordinary items". In 2013, the group completed disposals of non-core assets for 2,4 billion euros and acquisitions of minorities in strategic areas for 1,5 billion euros.
The stock rises by 0,49% while the Ftse Mib rises by 0,76%. Meanwhile, Merrill Lynch analysts confirmed the "buy" on the title and JPMorgan "overweight". "Although the company has had to face some long-term challenges," Merrill Lynch said, "we continue to forecast attractive earnings for Generali with an average annual growth of 13% over the next three years. As a result of a doubling of cash generation and the disposal plan, we estimate a significant improvement in the balance sheet. So we see a strong increase in dividends".
“In 2013 – continued Greco – we generated an overall shareholder return of 26%. The 2013 results and the more than doubled dividend thus confirm that we are on the right track. We are aware that there is still a long way to go to achieve the goals we have set ourselves. In 2014 the debt position will be further reduced and we will achieve significant cost savings. We expect to further improve the operating result and net income, in line with the plan which aims to progressively increase profitability for shareholders".
The group also specifies that "taking into account the proceeds from the disposals and the revaluation of the stake in Bankitalia, absorbed by the extraordinary negative impacts due to Telco (-189 million), Bsi (-217 million) and other assets, the overall impact of these one-off is basically neutral”. During the year, the group recorded Life premium income of 45,1 billion euro, stable compared to 2012 (+0,2%), with an operating profit up by 4,3% to 2,64 billion. Premium income in the non-life business was 20,9 billion euro, down 0,6% on 2012, with an operating result of 1,61 billion (+3,5%).
The 2013 results show significant progress compared to the 2015 targets with an operating Roe up by 80 basis points to 12,1%, in line with the 2015 target of an operating Roe above 13%. The Solvency I index reached approximately 150% at the end of February, in line with the 2015 target of greater than 160% (141% for the whole of 2013). Debt was reduced by 500 million with an 80 basis point improvement in the Debt Leverage Ratio to 39,6% (2015 target 35%). Strong improvement also in cash generation: the Net Free Surplus, as stated in a note, rises to 2,1 billion (+38%), "already beyond the 2015 target".
But Greco closed the door to a running review of the plan: “The targets are reached or missed but they never change – he said -. When all the targets are achieved, we will do the math and announce new targets".
In a conference call with the press agencies, Greco revealed that Generali is preparing to exit Telco in June, the first useful window for dissolution, based on the agreements of the holding company that controls Telecom. “There are two windows planned – said Greco – June 2014 or February 2015. Obviously we have to prepare for the first, but if it shouldn't be the first, it will be the second. It changes little." For this reason, the Lion "will not present his own list and will not have his candidates on the Telecom board of directors which will be re-elected" with the April meeting. "We still have an interest in Telecom - specified Greco - and we will vote the Telco list in the assembly".
Generali devalued Telco to 0,72 euro bringing it to the equivalent value of Telecom but CFO Alberto Minali said, "there will be no further write-downs". The decision to further devalue the stake stems from the consideration that "the hypothesis that Telefonica exercised its purchase option, given the difficulties in the dialogue with the Brazilian antitrust, was the least probable". However, it is more probable that the holding that controls Telecom will be dissolved and that the Italian shareholders will release their stakes in Telco.
On the BSI front, the negotiations are going ahead. “The book value of BSI has decreased – says Greco – the negotiations are simpler because some uncertainties have been eliminated”, such as the one concerning the treatment of American customers.
Greco leaves no room for the controversy stirred up by journalists after the shareholder Leonardo Del Vecchio said he was against the liability action against the former managers. “I don't think Leonardo Del Vecchio was critical – said Greco -. I didn't read his words like that. In any case, Del Vecchio is a shareholder and he can say what he wants, I take note. But I didn't read any criticism in what he said.
To those who ask him for a comment on Blackrock's recent investments and the possibility of new partners in Leone, he replies: “It's not my concern. With these results we restore our reputation and our value to what we deserve. Whether other shareholders will enter? We will see… Our duty is to put Generali's results ahead of those of our competitors, the shareholders' decisions depend on our results".
And he closes the door on his hypothetical transfer to the post office: “I read about my possible appointment to the post office in the newspapers. It seemed like a nice surprise in the early morning – he said – I intend to do the work I have to do here at Generali, to do it well and for as long as the company's shareholders deem indispensable».
