Assicurazioni Generali S.p.a. · MIL:G
Assicurazioni Generali — Investor Day (January 2013)
67 slides from Assicurazioni Generali's investor day presentation, Jan 14, 2013
Slide 1: Generali Group Investor Day, London
GENERALI croup INVESTOR era GROUP ro. | LONDON, FOUR SEASONS HOTEL - JANUARY 14", 2013
Slide 2: Agenda
Agenda 11:30 Reshaping Generali: discipline, simplicity and focus Mario Greco, Group Chief Executive Officer 12:15 Balance sheet, cash and cost discipline Alberto Minali, Group Chief Financial Officer 13:00 Lunch break 14:15 Towards industrial excellence Sergio Balbinot, Group Chief Insurance Office
Slide 3: Reshaping Generali: Discipline, simplicity and focus
Reshaping Generali: Discipline, simplicity and focus Mario Greco Group Chief Executive Officer
Slide 4: My mandate
My mandate 4 One simple mission: to significantly improve shareholder returns 250 Generali total shareholder returns(1), relative to peers 200 150 100 50 (2) Generali Average peers 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (1) Total return index (data as at 10/01/2013) (2) Allian
Slide 5: 166 days in the job: key findings
166 days in the job: key findings 5 Strengths Identified priorities § Highly regarded brand § Strong core franchise 1§ Enhance management team and ü leadership in key mature European markets governance structure ü distinctive presence in high growth CEE and China 2§ Remove uncertainty on GPH § Stron
Slide 6: 166 days in the job: what has been done
166 days in the job: what has been done 6 Appointment of a cohesive and effective management team and implementation of a rigorous corporate governance framework 1.a § 10 representatives: CEO, CFO, Chief Insurance Officer, CIO, CRO, COO, Creation of international Head of Global Business Lines and co
Slide 7: 166 days in the job: what has been done
166 days in the job: what has been done 7 Areas for development Actions already taken 2 The GPH transaction removes uncertainty § Fixed price, with clear timing § Significant reduction in contractual complexity § Two-tranche payment giving funding flexibility Remove Clear strategic benefits uncertai
Slide 8: Focus on GPH: strategic rationale (1/2)
Focus on GPH: strategic rationale (1/2) 8 CEE has a robust growth outlook, and historically solid profitability GDP growth Insurance penetration GWP growth Profitability CAGR '11-’17, %, real terms GWP/ GDP, 2011, % CAGR '11-‘17, % PAT/GWP, avg '07-'11,% x3 x2 x2.5 1/3 8.8% 8.3% 2.6% 5.8% 3.2% 3.3%
Slide 9: Focus on GPH: strategic rationale (2/2)
Focus on GPH: strategic rationale (2/2) 9 Poland Hungary Slovakia P&C 234 4% 8 P&C 304 22% 2 P&C 107 11% 3 Life 216 3% 11 Life 144 9% 4 Life 84 7% 4 Pensions 2,712 5% 6 Pensions 39 1.5% 17 Pensions 667 15% 3 Czech Rep. Slovenia § GPH(1) covers the whole CEE region, is active in 10 countries with P&C
Slide 10: 166 days in the job: what has been done
166 days in the job: what has been done 10 Areas for development Actions already taken 3 § Approved plan to restructure Italian operations Refocus on core § Renegotiated and completed sale of Migdal business § Launched disposal of selected non core businesses 4 § Euro 1.25 bn LT2 issuance successful
Slide 11: Generali: our vision for 2015
Generali: our vision for 2015 11 Reshaped approach to maximise value creation 1 Focused on core insurance business, with greater contribution from P&C 2 Stronger capital position and disciplined balance sheet management 3 Superior customer acquisition and retention, with focus on retail and affluent
Slide 12: Key execution guidelines
Key execution guidelines 12 Key actions Execution plan 1 Focus on core business § Insurance focus § Optimise geographic reach § Run-off / disposal of non core businesses § Shift mix in the direction of P&C 2 Restore capital strength § Introduce risk adjusted profitability and cash creation targets f
Slide 13: Focus on core business (1/2)
1 Focus on core business (1/2) 13 We start from a strong franchise… Leadership in § Generali's home market; leading and diversified presence Western Europe § Scope to generate higher value creation than in the past by reviewing product design, technical skills, approach to clients, and cost base § S
Slide 14: Focus on core business (2/2)
1 Focus on core business (2/2) 14 …but there is scope to reshape the geographical presence under value creative conditions § Footprint assessed on two § Based on the market assessment we have identified: key criteria: ü Mature countries where we further focus on maximising ü Market attractiveness re
Slide 15: Restore capital strength
2 Restore capital strength 15 Rebuilding a solid capital position is a key priority for Generali Our objectives: § Restore capital ratios ü Target > 160% Solvency 1 ü Long term “AA” philosophy to managing our solvency position § Manage our debt levels ü Leverage and interest coverage ratios consiste
Slide 16: Change approach to clients (1/2)
3 Change approach to clients (1/2) 16 § Develop more sophisticated client database and enhance exchange of data across units and channels § Build on our expertise in Direct § Enhance client segmentation as a key driver to refine our product Focus on the client to strategy improve retention and acqui
Slide 17: Change approach to clients (2/2)
3 Change approach to clients (2/2) 17 Enhance the multi-channel profile of our distribution Life distribution (%) 13 3 + § Multi-channel approach to reflect changing 12 client needs and expectations 16 52 + 59 20 + § Continue to build on our direct expertise 25 - Generali Market Direction § Leverage
Slide 18: Consistent technical excellence and tight control of costs (1/2)
4 Consistent technical excellence and tight control of costs (1/2) 18 Italian restructuring Industrial case Pre restructuring Post restructuring Brand 10 brands 3 brands § Creation of a strong new player in the Italian market ü Full consolidation of businesses / brands with similar characteristics i
Slide 19: Consistent technical excellence and tight control of costs (2/2)
4 Consistent technical excellence and tight control of costs (2/2) 19 We will implement Euro 600 m of cost saving initiatives by FY2015 A § Synergies to be extracted from the rationalisation of the Italian and other Simplify structure operations B IT efficiency § Centralisation of data centre, IT pr
Slide 20: Key take-aways
Key take-aways 20 1 Be disciplined, focused and more simple in executing our strategy 2 Improve client experience across our business 3 Introduce consistent technical excellence 4 Strengthen our balance sheet and capital position and enhance cash flow and value generation Assicurazioni Generali Grou
Slide 21: Balance sheet, cash and cost discipline
Balance sheet, cash and cost discipline Alberto Minali Group Chief Financial Officer
Slide 22: Key messages
Key messages 22 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 23: CFO organisation structure
CFO organisation structure 23 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 consult
Slide 24: Strengthen capital: solvency ratios
1 Strengthen capital: solvency ratios 24 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 25: Strengthen capital: the journey to reach our S1 capital target
1 Strengthen capital: the journey to reach our S1 capital target 25 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 d
Slide 26: Strengthen capital: economic solvency development
1 Strengthen capital: economic solvency development 26 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
Slide 27: Strengthen capital: example capital management actions / levers
1 Strengthen capital: example capital management actions / levers 27 (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 diversificati
Slide 28: Strengthen capital: rating agency views
1 Strengthen capital: rating agency views 28 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 29: Carefully manage debt levels (1/2)
1 Carefully manage debt levels (1/2) 29 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)
Slide 30: Carefully manage debt levels (2/2)
1 Carefully manage debt levels (2/2) 30 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 31: Enhance profitability
2 Enhance profitability 31 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 32: Enhance profitability: cost control
2 Enhance profitability: cost control 32 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 33: A tough market backdrop for insurers…
3 A tough market backdrop for insurers… 33 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 34: …requires a disciplined approach to investments
3 …requires a disciplined approach to investments 34 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 35: What we have implemented so far
3 What we have implemented so far 35 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 36: Improve cash flow from own business
4 Improve cash flow from own business 36 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 37: Focus on GPH transaction: key terms
Focus on GPH transaction: key terms 37 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 38: Indicative impact on capital of the transaction
Indicative impact on capital of the transaction (before bond issue) 38 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 39: Key take-aways
Key take-aways 39 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
Slide 40: Towards industrial excellence
Towards industrial excellence Sergio Balbinot Group Chief Insurance Officer
Slide 41: Chief Insurance Officer: mission and guiding principles
Chief Insurance Officer: mission and guiding principles 41 Steers and controls the industrial performance of the Group The guiding principles 1 Outstanding technical performance Technical and operational excellence is an unchanged ambition 2 Operational excellence § The past: Governance and internal
Slide 42: Chief Insurance Officer: new organisation structure
Chief Insurance Officer: new organisation structure 42 Chief Insurance Officer Chief Technical Reinsurance, Officer Claims & Processes Bus.Perf. Global P&C P&C Sales & Treaty Treaty Cat Facultative Claims Global Life Op. Exc. Mgmt Units Retail Corporate Innovation reinsurance retrocession Modelling
Slide 43: Strategic priorities
Strategic priorities 43 Strategic priorities How to achieve them § Structured performance review § Product excellence § Strengthening capabilities in all core areas of the business (technical, distribution) in order Raising the ü Group Guidelines (Life, P&C UW limits) to achieve the highest level of
Slide 44: The way towards industrial excellence
The way towards industrial excellence 44 Theroadmap The way towards industrial excellence § Increase life value and reduce capital absorption ü Rebalancing business mix Life ü Limit capital deployed on guarantees ü Disciplined approach for profit sharing and credit rates § Rebalance the mix towards
Slide 45: Life trends: low interest rate environment with high volatility
Life trends: low interest rate environment with high volatility 45 German bund, 10 years Impacts on life market ▪ Current macro economic environment and low interest 5 4 rates impacting life business, both on volumes and on 3 (%) value 2 ▪ Increased competition from banks 1 0 2007 2008 2009 2010 201
Slide 46: Life: evolution of our portfolio (1/2)
Life: evolution of our portfolio (1/2) 46 Increasing life reserves … … fuelled by positive net inflows (Euro bn) Single premiums Regular premiums (Euro bn) 293 295 16.1 16.1 268 246 134 135 106 120 7.0 5.8 141 148 159 160 1.1 2008 2009 2010 2011 2008 2009 2010 2011 9M12 Life reserves by country & ty
Slide 47: Life: evolution of our portfolio (2/2)
Life: evolution of our portfolio (2/2) 47 Reserve guarantee development (%) Highlights The way towards industrial excellence 3.20 3.00 ▪ Over the last 8 years 2.80 portfolio average guarantee 2.60 has reduced by about 90 bps ▪ The share of “at maturity” 2.40 2.20 guarantee has reached 11% 2.00 2003
Slide 48: Life: evolution of new business (1/2)
Life: evolution of new business (1/2) 48 APE development: stable regular premiums (Euro bn) 9M 2012 APE by country & product (Euro bn) (Euro bn) 16% 15% Group 69% 5.3 5.2 4.8 4.8 1.1 3% 2% 2.2 2.3 Single 1.8 1.7 3.4 3.2 0.7 9% 1.3 0.6 1.3 18% 95% 21% 0.4 29% 0.1 Regular 3.0 3.0 3.1 3.1 42% 45% 2.0 7
Slide 49: Life: evolution of new business (2/2)
Life: evolution of new business (2/2) 49 Increasing share of low capital intensive products APE by type of guarantee At maturity Matched Yearly basis>0 w/o guarantee Yearly basis=0 11% 19% 56.8% 21% 22% 67.3% 21% 67.7% Low capital 30% intensive 30% 19% 29% 26% products 3% 2% 12% 2% 3% 3% 15% 25% 14%
Slide 50: Life: our strategic priorities going forward
Life: our strategic priorities going forward 50 Profitability enhancement Key levers Key metrics Key metrics § Rebalance product mix § Riskiness/capital § Emphasis on both technical sources of profit absorption § Optimise product design and safeguarding financial margin in low interest § Profitabili
Slide 51: Life: new product approval example
Life: new product approval example 51 Guiding principle Assessment of life product by country (1) Generali Group Relative to group average Country 1 Better Country 2 Country 3 Worse Country 4 Country 5 Country 6 All new products approved by the Corporate Centre and the full range of products open fo
Slide 52: P&C: market trends
P&C: market trends 52 GDP evolution in Eurozone (%) Trends on P&C market 5 § The Eurozone GDP performance had a negative impact 0 on the market ü Commercial Lines technical performance has -5 2006 2007 2008 2009 2010 2011 deteriorated as companies are more price sensitive (seek to reduce costs) New
Slide 53: P&C: portfolio evolution
P&C: portfolio evolution 53 Not only growth but also focus on portfolio profitability GWP development Gross direct premiums by country (9M 2012) (Euro bn) (Euro bn) Motor 22.8 4.9 60% 41% Group 59% Non Motor 22.0 21.6 22.1 16.9 17.4 3.4 49% 3.0 2.7 28% 38% 40% 1.8 40% 1.1 51% 72% 62% 60% 60% 60% 40%
Slide 54: P&C: challenging operating environment for Motor
P&C: challenging operating environment for Motor 54 Pressure on Average premium … …largely compensated by Risk premium decrease (Euro) TPL Retail, Average premium development TPL Retail, Risk premium development Italy Italy Germany Germany 120 500 300 120 110 470 110 270 100 100 440 240 90 90 410 21
Slide 55: P&C: our priorities going forward
P&C: our priorities going forward 55 Create Value Improve current profitability Capture new opportunities § Pricing: greater sophistication in pricing (more discrimination of individual risk profiles) to spin a virtuous cycle of § Expand our presence § Increase weight portfolio cleaning and better o
Slide 56: P&C: we will focus on technical expertise
P&C: we will focus on technical expertise 56 Strong Group commitment to technical expertise § Extended scope by geography and LoB Technical initiatives based on new § Stringent application designing principles § Direct link with budget Pricing - key levers Claims management - key levers § Driver sel
Slide 57: Reinsurance centralisation: leveraging risk & capital management (1/2)
Reinsurance centralisation: leveraging risk & capital management (1/2) 57 Full centralisation and optimisation of treaty reinsurance, from 2013 Moving from local … … to Group protection Country view Group reinsurance view Group reinsurance Retention Market reinsurance The rationale The benefits Rein
Slide 58: Reinsurance centralisation: leveraging risk & capital management (2/2)
Reinsurance centralisation: leveraging risk & capital management (2/2) 58 New reinsurance structure … … maximising group efficiency § Internal reinsurance provided at market § Maximum efficiency and terms and conditions, in compliance diversification benefit with requirements of local regulators and
Slide 59: Aiming at client-centricity and channel excellence
Aiming at client-centricity and channel excellence 59 Client value maximisation Key levers § Strengthen retention § Mapping Group best practices in customer value management § Increase cross & up-selling § Identification of the drivers for extracting customer potential and Leverage on our most § Opt
Slide 60: Key take-aways
Key take-aways 60 Strong commitment on industrial excellence Raising the bar of Life and P&C technical ambition Increasing customer value Enhancing commercial effectiveness Assicurazioni Generali Group Investor Day
Slide 61: Final remarks
Final remarks Mario Greco Group Chief Executive Officer
Slide 62: Generali: our vision for 2015
Generali: our vision for 2015 62 Reshaped approach to maximise value creation 1 Focused on core insurance business, with greater contribution from P&C 2 Stronger capital position and disciplined balance sheet management 3 Superior customer acquisition and retention, with focus on retail and affluent
Slide 63: New Generali Corporate App
New Generali Corporate App 63 The Corporate App is aimed at providing our key stakeholders on the move with the updated core package of institutional and financial news, both off line and on line. It complements generali.com by offering a quick and agile reference to the latest info, such as press r
Slide 64: What's next
What’s next 64 March 14, 2013 - FY 2012 Results April 30, 2013 - General Shareholders’ Meeting May 10, 2013 - 1Q 2013 Results August 2, 2013 - 1H 2013 Results November 8, 2013 - 9M 2013 Results November 27, 2013 - Investor Day Assicurazioni Generali Group Investor Day
Slide 65: Investor Relations Team
Investor Relations Team 65 Spencer Horgan (Tel.: +39-040-671402) Head of Investor Relations Email: spencer_horgan@generali.com Stefano Burrino (Tel.: +39-040-671202) Email: stefano_burrino@generali.com Emanuele Marciante (Tel.: +39-040-671347) Assicurazioni Generali Email: emanuele_marciante@general
Slide 66: Disclaimer
Disclaimer 66 Certain of the statements contained herein are statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. The user of such information should r
Slide 67: Generali Group Investor Day, London
GENERALI croup INVESTOR era GROUP ro. | LONDON, FOUR SEASONS HOTEL - JANUARY 14", 2013