Italy’s leading insurance company in terms of premium income and number one in the life assurance market, ranked among the leaders in Europe, known for its reliability and professionalism, it is profitable and will pay dividends of €5 billion between now and 2018
Following a turnaround accomplished a year ahead of schedule and with results for 2015 that herald great things, the latest financial targets that insurer Generali has set itself include a further €5 billion between now and 2018 and more than €7 billion in cash generation. Because Generali, chaired by Gabriele Galateri di Genola, the leading insurer in Italy in terms of premium income, the number one for life assurance, among the leading players in Europe in this sector, with a reputation for reliability and professionalism, has in the past been viewed as a leviathan – wealthy, but slow and conservative. Today it is a kind of profit-creating starship, full of fuel and able to travel at top speed around the world’s markets. It’s enough to look at the share price, which in the last three years has risen on the stock exchange by 110% compared to 100% in the case of Allianz, 30% for Zurich and 25% for Unipol. And now «The Time of the Lion», as the two hundred year history of the group (which has just gone to press) is called, is a time of growth.
A lion is just what the markets want, independent and dynamic. So much so that, under the pressures of its foreign institutional investors who now account for 40% of its capital, compared to 26% just a few years ago, the so-called controlling shareholders –Mediobanca, Caltagirone, De Agostini and others– have announced their intention to abandon multiple voting rights, now permitted in the European Union and transposed from Italian law, which could have doubled their voting power. But Generali’s management structure, irrespective of the professionals who can and will continue to move around the top roles, is now an undisputed pillar of the company. And the markets are reassured by this continuing good governance, as confirmed by the same Italian analysts: «In the first nine months of this year Generali has reported a net profit of €1.73 billion, already higher than the €1.67 billion reported in 2014», the specialists at Banca Imi point out following the third quarter results. The company is therefore in a phase which will allow it to reward its shareholders and raise the value of the company above the market average.
In fact, in 2014 Generali paid €900 million in dividends, an encouraging sign for the cumulative five billion promised over the coming four years. The truth is that the revolutionary recovery plan agreed at the end of 2012 by the former Ceo Mario Greco has been fully implemented. Its solvency ratio has been raised from 117 to 164, far higher than the regulatory target. The result: absolute solidity. A good €4 billion-worth of non-core assets have been sold off, financial leverage has been reduced, in three years it has saved €750 million in costs, and an additional €250 million will be achieved each year until 2018, making a total of €1.5 billion compared to 2012. Three years ago Generali’s return on equity was 9.6; in 2014 it was at 13.2.
In the interim there has been a complete restructuring of the management and of the business areas, and it has begun to make significant investments in an essential resource for the future development of the business: data. Something which a big insurance company has plenty of, and which will allow it to strengthen the business exponentially and to redefine its relationship with its customers.