Double commitment from Generali’s top management after the first quarter accounts which also opened a window on the transformation underway in Trieste. CEO Philippe Donnet met with investors to illustrate the quarterly report – which closed with a net profit of 1.1 billion and an operating result that rose by 5.5% to 1.9 billion – and the group’s objectives. Perspectives that have also pushed analysts such as HSBC to raise the target price of the stock from 24.5 to 27 euros which came close to 25 euros a week ago, a level not seen in Trieste since 2008, before the great crisis. The other working table that will open in June touches on more strategic issues. Donnet will in fact start meetings with the first line of managers to develop the guidelines of the strategic plan which will be presented to the market on January 30, but will have to be approved by the council in December. The path is already traced. At the beginning of June, the Leone summit will meet the 50 CEOs who oversee the business units around the world to conclude the current plan, but above all to lay out the contents of the new one. Then the construction site will come to life.
The times, the ambitions
The times are not long and the work is intense because the new strategic vision will project the group into the three-year period from 2025 to 2027. And it will return the most complete photograph of a Leone which has taken a new path, a reality which is progressively leaving behind the “old” and historic insurance company to wear the clothes of a financial group which has its focus on policies but which has become a player in asset management with over 800 billion managed and which has the ambition to grow.
Donnet’s appointments
Last week Donnet flew to the United States with a dual purpose. In New York he met the large funds, which have always been present in the group’s capital, now even more attentive to Leone’s moves after the acquisition of Conning. Then he went to Hartford to meet the “new colleagues” of Conning and its affiliates, with the aim of starting the integration process. Not to mention that Woody Bradford, the CEO of the US company, has just been appointed at the helm of Generali investment holding which has ceased to be a division to become a holding controlled by Trieste.
The new board of directors, the Capital Law
Generali is ready to accelerate the discontinuity with the past with new strategic lines. It fits into this evolution the other game, that of the renewal of the board which will be played in view of the assembly in April next year. The renewal of Generali’s governance will take place in a very changed context. And for various reasons. If three years ago the company was waiting to understand what the outcome of the confrontation between two opposing lists would be, today the situation has almost been reversed. The group has started a transformation process and expects that, say sources close to Trieste, “all shareholders and investors will take a market position”.
Above all, the appointment of the new board will take place with new rules, those introduced by the Capital Law. Generali will be the first large company to implement all its effects.
The work of shareholders
The 2022 meeting had been a training ground where the shareholders – Mediobanca with 13%, Delfin with 9.9%, the Caltagirone group with 7-8%, the Benetton family with 4.8% and Crt with around 2% — measured strength and goals. The result was a new governance with 70% independents, three expressed by the Caltagirone-Delfin minority. In these three years this “board has worked well”, said Donnet, an opinion shared by all the forces in the field which underline the great sense of responsibility of the board in recent years. The test to which the outgoing board of directors will be subjected will be to promote a list with the new rules and that the market likes, or a series of names starting from individual shareholders as was done until 2019 when Mediobanca presented the candidates for the board. In September the outgoing board of directors led by president Andrea Sironi, who will however play a role in the matter, will have to express their orientations.
Dividends and shareholders
There still remains a question mark over the choices of Donnet who has always declared himself focused on drawing up the new plan and has not yet expressed himself. The commitment in the company does not suggest a step backwards. The Caltagirone and Delfin group seem to observe from a distance, keeping their hands free, they are “secular and waiting for the rules of the game”, say some sources. That is to say, they are waiting to understand whether a dialogue will emerge between shareholders and whether or not there will be a board of directors list. However, reading both visions and projects on Leo in a unified way is not necessarily the best way. Ours “is a position of extreme neutrality, we are long-term shareholders, happy with the performance”, said Francesco Milleri, president and CEO of Essilux, as well as president of the Delfin safe. Definitely, the growth of dividends and stock market values represented a chapter in the formulation of Donnet’s strategy for shareholders. A feeling shared by both partners, and one of the aspects that had characterized the months of battle, remains that of Generali’s destiny as a potential aggregator and as a large Italian multinational capable of assuming the dimensions that are now only achieved by groups like Allianz and Axa.
The market and records
On the remuneration front, shareholders and the market certainly celebrated. With the dividend paid last week (1.28 euros for a total of 1.9 billion), Leone will have distributed 5.5 billion to its members in 2022-’24 as promised by Donnet, plus the 500 million buybacks by the end of 2024, a share buyback in addition to that of 2022 (another 500 million). The total return to shareholders since the beginning of the year has recorded an increase of 27.5%, the best among European competitors.
Artificial intelligence
Meanwhile, the life of the company does not wait and the team is at work. The size reached by the group – 82.5 billion in premiums collected in 2023 – also imposes the need to guide processes in a more streamlined and even more effective manner. Then the push towards rationalization continues, as demonstrated by the recent incorporation of Genertellife into Alleanza Assicurazioni. Furthermore, from this perspective, after the 1.1 billion in investments in technology in this three-year period, the focus will be more aimed at accelerating the implementation of technologies, such as Artificial Intelligence, both in the operating machine and in the distribution channels. Furthermore, as seen in the first quarter, cash generation is strong and Leo thinks that there is ammunition for growth in the next cycle too, thanks to the free capital to be reused for investments in M&A and to increase size, while finding a balance between development and shareholder remuneration.
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