Assicurazioni Generali S.p.a. · MIL:G
Assicurazioni Generali — Investor Day (2013)
19 slides from Assicurazioni Generali's investor day presentation, Jun 24, 2013
Slide 1: Balance sheet, cash and cost discipline
Balance sheet, cash and cost discipline Alberto Minali Group Chief Financial Officer
Slide 2: Key messages
Key messages 2 Consistent financial discipline and oversight across activities A new approach to finance in Generali, in order to introduce financial rigour and consistency in all the main group decisions: 1 Strengthen capital and manage leverage ratios to improve competitive position, ambition for
Slide 3: CFO organisation structure
CFO organisation structure 3 Group CFO Investor Mergers Treasury & Debt Tax Affairs Relations & Acquisitions Management (Italy & International) § Equity analysts & investors § Deals valuation § Cash flow mgmt § Tax planning § Debt analysts & investors § M&A process § Credit lines mgmt § Tax consulti
Slide 4: Strengthen capital: solvency ratios
1 Strengthen capital: solvency ratios 4 Enhancing capital ratios is a key priority for Generali Comments Economic § Generali steers its business on an -2%pts. solvency (%) 188 economic view, but carefully monitors the (99.5% confidence 159 157 Solvency 1 position of the Group level) § Our long term
Slide 5: Strengthen capital: the journey to reach our S1 capital target
1 Strengthen capital: the journey to reach our S1 capital target 5 Solvency 1 ratio: indicative walk to 2015 160% 140% 140% 9M 2012 LT2 Issuance Impact of GPH Retained capital Growth in capital Capital Potential transaction requirements optimisation disposals (incl US measures Re/BSI) § The chart do
Slide 6: Strengthen capital: economic solvency development
1 Strengthen capital: economic solvency development 6 Economic solvency: indicative walk to 2015 140% 153% 9M 2012 LT2 Issuance Impact of GPH Retained Growth in capital Capital Potential transaction economic capital requirements optimisation disposals (incl US measures Re/BSI) § The chart does not a
Slide 7: Strengthen capital: example capital management actions / levers
1 Strengthen capital: example capital management actions / levers 7 (4/5) 1 Financial operations § Portfolio de-risking § Optimise debt structure § VIF monetisation Products Business / capital § Optimise product offering, by reducing guaranteed products optimisation measures § Enhance diversificatio
Slide 8: Strengthen capital: rating agency views
1 Strengthen capital: rating agency views 8 Key priorities § Short term, achieve resolution of various credit watches / reviews § Longer term, enhance our capital structure (quantity and quality) to be consistent with AA / equivalent rating § Continue to develop Enterprise Risk Management framework
Slide 9: Carefully manage debt levels (1/2)
1 Carefully manage debt levels (1/2) 9 Generali's leverage position vs. peers Leverage ratio (2011) Interest coverage (x) (²) ~7 7,1 § Generali's leverage ratio is high compared to peers on a book 40% value basis, though more in line with peers based on rating 31% 30% agency metrics (e.g. Moody’s) 2
Slide 10: Carefully manage debt levels (2/2)
1 Carefully manage debt levels (2/2) 10 Debt structure (2011, %) Subordinated + debt 59 64 § Generali has more senior debt ? relative to peers - Senior debt ü Reduce the weight of senior debt 41 36 § We will seek to diversify sources of (1) Generali Avg. Peers Direction funding ü Look at retail in a
Slide 11: Enhance profitability
2 Enhance profitability 11 Operating RoE target > 13% over the cycle Profitability ambitions Key Levers § We will manage the business to achieve § Emphasis on P&C operating RoE (1) of at least 13% over the cycle ü Strong and resilient earnings ü Further focus on technical excellence § Translates int
Slide 12: Enhance profitability: cost control
2 Enhance profitability: cost control 12 Identified actions to reduce expenses* by Euro 600 m in 2015 Main drivers Structure § Simplification of processes simplification § Removal of duplication Non-IT § Merger of entities procurement § Optimisation of sales networks IT efficiency § Centralised proc
Slide 13: A tough market backdrop for insurers…
3 A tough market backdrop for insurers… 13 European equities German bund, 10 years (MSCI EMU Index TR, 2007=100) 5 120 100 Generali’s current yield on 4 investments 80 3 60 (%) 2 (%) 40 5,0 1 20 4,5 0 0 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 4,0 Spreads over 10 year bu
Slide 14: …requires a disciplined approach to investments
3 …requires a disciplined approach to investments 14 Our investment approach Strict discipline is key § New Group investment policy guidelines to be implemented § Risk budgets at portfolio level § Risk capital constraints at entity level § Active ALM (with new Group monitoring function) § Very high
Slide 15: What we have implemented so far
3 What we have implemented so far 15 Investment structure (9M 2012) Comments Euro 269 bn Euro 36 bn § Concluded asset de-risking 2,4% 1,6% 5,6% 8,8% ü Group cross-border exposure to peripheral 3,6% European Sovereign debt reduced 4,6% 14,6% 8,8% ü Excess cash to be invested in coming 7,6% months 8,7
Slide 16: Improve cash flow from own business
4 Improve cash flow from own business 16 Free cash flow before dividend (Euro bn) Comments § Enhanced expected cash flow generation driven by: ü Earnings mix shift towards P&C, more cash generative >2.0 ü Careful management of profit sharing 1,3 ü Incorporation of payback 1,0 periods within new Life
Slide 17: Focus on GPH transaction: key terms
Focus on GPH transaction: key terms 17 n 25% participation in GPH (the “First Tranche”) transferred to Generali on 28-Mar-2013 n 24% participation in GPH (the “Second Tranche”) transferred to Generali on or about end of 2014 n First Tranche transferred at a price of Euro 1,286 m; use of proceeds by
Slide 18: Indicative impact on capital of the transaction (before bond issue)
Indicative impact on capital of the transaction (before bond issue) 18 ACTIONS TIMING SOLVENCY I ECONOMIC SOLVENCY GPH – acquisition of tranche 1 March 2013 - 7 %pts - 3 %pts. GPH – acquisition of tranche 2 End 2014 - 7 %pts - 3 %pts. Overall impact - 14 %pts -6 %pts. The above figures exclude the s
Slide 19: Key take-aways
Key take-aways 19 Strengthen capital and leverage ratios: > 160% Solvency 1 target, with 1 long term “AA” philosophy 2 Enhance profitability: >13% Operating RoE over the cycle 3 Disciplined and conservative approach to investments 4 Focus on cash flow generation: > Euro 2 bn cash flow from 2015 Assi