Generali wants to oust Allianz from number one in Germany

Rome Philippe Donnet has not formulated any concrete takeover plans. But a clear claim: “Our dream is to also become number one in Germany,” said the CEO of the Italian insurance group Generali to journalists on Wednesday morning. He wants to “grow significantly” in Germany.

Up to three billion euros are earmarked for mergers and acquisitions in the insurance and asset management divisions, according to Donnet’s strategic plan for the years 2022 to 2024. Generali is already in second place among primary insurers in Germany, behind Allianz. In direct insurance, the subsidiary Cosmos Direkt, which mainly offers car, liability and household insurance, is even the market leader.

There are also ambitious goals for the shareholders in the new strategic plan: per share, earnings growth of six to eight percent per year is targeted. In addition, up to 5.6 billion euros in dividends are to be distributed by 2024. From 2019 to 2021 this value was 4.5 billion euros. To this end, a share buyback of over 500 million euros is planned, the first in 15 years.

Generali also wants to push ahead with the digitization of the group. 1.1 billion euros are being invested in new technologies, 60 percent more than in the past three years. “We are currently working on a group-wide software solution,” explained Bruno Scaroni, who took over the newly created post of Chief Transformation Officer (CTO) in February, the Handelsblatt. The “Insurance in a Box” project is already well advanced in Argentina and Brazil, and is set to start in Spain, Portugal and Switzerland in 2022 as well.

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Generali wants more solutions in the B2B area

“The new system should reduce the running costs in the respective countries by 30 percent”, emphasized Scaroni. The software could later be rolled out to larger markets such as Germany. Scaroni also expects synergies in clouds, data analysis, artificial intelligence and digital interfaces for 68 million customers worldwide.

Generali wants to offer even more solutions in the B2B area in the future. A platform that was launched in 2018 and offers insurance solutions in the mobility sector is to be expanded significantly. The target group are car manufacturers, rental car companies or providers of sharing models such as scooters and e-bikes. “As a next step, we want to build a similar platform for the health sector,” said Scaroni.

In order to promote insurtechs, as the start-ups in the insurance industry are called, Generali is investing 250 million euros in a venture capital fund. The Italians are watching the new market very closely, including early investors in the US financial services provider Robin Hood, the US software company Uipath and the German online bank N26.

On Investor Day, CEO Donnet never tires of referring to his successes. All goals for 2021 have been met or exceeded – despite Corona. Since Investors’ Day in 2016, the stock return has been 111 percent. A value at which Generali also beats Allianz or the French Axa in a European environment. In the 2020 corona year, Donnet even achieved the best operating result in the company’s history, at 5.2 billion euros.

A power struggle has broken out among the shareholders

The Frenchman has been leading the group since March 2016. If the shareholders elect a new board in April next year, the 61-year-old would like to take up his third term. But that is far from certain. Because a power struggle has broken out among the shareholders. On the pro-Donnet side is the Italian bank Mediobanca, which as the largest single shareholder has 17.25 percent of the voting rights.

On the other side are the media entrepreneur Francesco Caltagirone (7.8 percent), the billionaire Luxottica founder Leonardo Del Vecchio (6.3 percent) and the Sparkassenstiftung CRT (1.3 percent), who want to saw off Donnet and a joint pact for this have closed. They think Donnet is too hesitant about new mergers and want to make “the lion from Trieste”, as the insurance company is called because of its logo, bigger even faster. It was only this year that Donnet took over the majority of its Italian competitor Cattolica, thereby underscoring its growth ambitions.

But that’s not enough for the three-way pact. They criticize the fact that of the four billion euros that Donnet had available in the past three years, only 85 percent was spent. This will not affect the new strategic plan, which, according to media reports, was approved by the Board of Directors with eleven out of 13 votes. If the resistance want to seriously shake the CEO in April, they would have to offer credible alternatives. So a new CEO candidate, a new board list – and a better strategy.

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