London – At the Investor Day held on 14 January 2013, Generali presented the Group’s turnaround strategy to improve shareholder returns and maximize the value of its existing business. The new strategy is based on: a focus on core insurance business, an enhancement of capital strength and profitability and a client-led business approach.
Focus on core insurance business. Generali will refocus on its core insurance business through an optimization of its geographical footprint, growth in the P&C segment and higher Life profitability.
In terms of geographical presence, Generali will:
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maximize returns in mature markets e.g. Italy, France, Germany, Switzerland, Austria, Spain and Czech Republic;
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enhance its competitive position and profitability – through further investments – in the high growth markets: Central and Eastern Europe and Asia;
The business mix will shift towards a greater weighting from P&C, through the development of the Accident & Health segment, particularly in the emerging markets, and of the Commercial segment, thanks to its global presence. The reinsurance business will be centralized in order to optimize Group risk retention and improve capital management efficiency. By 2015, the group expects the P&C segment to increase its contribution to around half of its total insurance operating profits (vs. around 35% as of 30 September 2012).
In the Life business, the priority will be to maximize the business profitability, rather than volumes, whilst reducing capital absorption.
Enhancement of capital strength and profitability. A priority for the Group is to restore a solid capital position. Generali is targeting a Solvency I ratio of above 160% by 2015. The Group’s long term approach will be to run the business with capital and leverage ratios at levels consistent with an AA rating. Generali will achieve this through retained earnings, selective disposals of non core assets and other capital management actions. A more disciplined approach will drive greater cash flow generation from existing operations, targeting more than € 2 billion by 2015.
The Group aims to reach an operating RoE target of 13% over the cycle, translating into an operating result of more than € 5 billion. In addition to Generali’s new approach to clients and technical excellence, a tighter control on expenses will be adopted. The Group is targeting to deliver € 600 million from cost saving initiatives by 2015. Synergies will be gained from multiple areas, including the reorganization of the Italian business, the streamlining and merger of processes and the centralization of IT and other procurement.
Client-led business approach. Generali will adopt a business model where clients are at the core, with an aim to become the leading insurer in the retail and affluent segments. Improved client segmentation, product innovation and higher distribution effectiveness will ensure high customer retention.
Through a more efficient and innovative distribution approach, Generali will adopt a multi-channel offering in line with clients’ needs.
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The efficiency of traditional channels will be increased, with the aim to dedicate more time to clients;
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In direct channels, the Group will adopt business models targeted at each market’s specifics, while leveraging its global know-how;
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New high-potential opportunities will be explored in bancassurance, while existing partnerships will be enhanced.
To read the full press release please go to
http://www.generali.com/Generali-Group/Media-Relations/press-releases/2013/sezione/290268.html