The head of Italy’s largest insurer Generali insists he will not be “distracted” by criticism from billionaire shareholders, as the company announces its first share buyback in more than a decade. and a new three-year strategy.
The 190-year-old insurer has been at the center of a fascinating Italian company drama since Leonardo Del Vecchio and Francesco Gaetano Caltagirone, Generali’s second and third largest shareholders, launched in September. campaign to change the way the team is managed and improve its performance.
Del Vecchio and Caltagirone’s move also brought them at odds with Generali’s largest shareholder, Mediobanca. Their criticisms have focused on the lack of ambition in trading at Generali over the past few decades, according to people familiar with the matter.
But as Generali laid out its strategy to focus on investing and creating better cash on Wednesday, chief executive Philippe Donnet said the management team was “not focused on addressing concerns.” [and] criticized” compared to the group, which is valued at 29 billion euros.
“The management team is not distracted, the management team is completely focused on doing what we have to do in the best interests of all shareholders,” he told the Financial Times. Generali has an “independent management team” that does not pursue the interests of any particular shareholder, he added.
The strategy announcement is seen as key to whether Generali’s management can retain other investors ahead of a leadership vote expected at next year’s annual shareholder meeting.
Generali said in a statement that it was on track to meet or exceed the standards set out in the 2018-21 plan, paving the way for a 500 million euro acquisition – the first in a decade. half century.
The new plan, drawn up between 2022 and 2024, aims to generate net cash of more than 8.5 billion euros during this period and cumulative cash dividends of between 5.2 billion euros and 5.6 billion euros, both both are an improvement over the previous period.
Generali also plans to pour 1.1 billion euros into its digital transformation program, which management hopes will increase customer engagement and reduce headcount through automation.
“This is part of where we are able to reduce costs and mitigate the impact of wage inflation that could be significant over the next few years,” said Donnet.
The company will also create a €250 million venture fund to invest in insurance startups. A person close to Delfin, Del Vecchio’s parent company, has previously criticized Generali as a “later in the fintech space”.
Generali has abandoned a return on equity target, which the group’s chief financial officer Cristiano Borean says is due to volatility caused by the change in accounting standards, while he hopes to make a profit. Entering and generating company money will be smoother.
The insurer also aims to generate €2.5 billion to €3 billion in accumulated free cash flow that can be redeployed to finance mergers and acquisitions in the insurance and management sectors. asset management, falling from a target of €3 billion to €4 billion in the last three-year plan. The previous figure was driven by liquidations, while the current target does not include any planned divestments, Donnet said.
The three-year plan, he said, is “not a response to an alternative that doesn’t exist,” but is the group’s “most ambitious possible” strategy. “It is very dangerous if a company plans to rely solely on M&A, that is the only thing that you cannot plan for,” he said.
Donnet added that the economic threat of the Omicron variant of the coronavirus will not affect the earnings targets. He said he was “much more concerned” about the broader risks posed by climate change or the possibility of a global cyberattack.