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What happened? Generali management hosted a conference call following its H1 2025 results, hinting at various areas of upside to current guidance. It was clearly a confident call, with management sounding optimistic on the current operating performance, with the potential that it can continue to improve further from current levels. We summarise the key takeaways below: BNPP Exane View: Happy to hint at a combined ratio comfortably ahead of target: Generali''s current year attritional loss ratio was 64.5% in HY 2025. Normalising for Nat Cat and PYD and assuming a stable expense ratio, the undiscounted combined ratio would be ahead of the 94.5% target for the plan. Management stated that the quality of the earnings in H1 was good and there were not really any positive one-off or frequency benefits to flag. Rate momentum will continue to earn through, even if it is anticipated that pricing momentum will moderate. There are also internal measures that should continue to contribute to combined ratio improvement in terms of risk selection. As such, it is difficult to see why the company should not be comfortably ahead of the plan guidance (BNPPE: 93.9% for 2027E). Pruning work has worked: There has been sizeable improvements in the combined ratios in certain geographies yoy. These include Switzerland, France and Germany. The level of improvement appears to stretch beyond the benefit of rate improvement. The clear message from management in this regard was that ''pruning is working'' with the actions taken with respect to the portfolio in recent years beginning to show material benefits. Life - situation normalised: The Life business appears to have settled after a period of volatility. Management indicated that lapse experience in Italy and France had normalised and flows were expected to remain positive. Experience variance should be more minimal going forwards, given the updated assumptions and it does not anticipate material headwinds from upcoming...
Assicurazioni Generali Assicurazioni Generali S.p.A.
What happened? Generali has released its H1 2025 results. The numbers are pretty much in line on a group level, with a 1% beat on Operating Profit. This was led by the PandC segment, with a strong attritional development driving the outperformance vs expectations. Elsewhere, Life, Asset Management and Other were all in line with consensus. The EUR500m share buyback is in line with what has been announced at the company''s recent investor day. Given a relatively quiet set of results, attention will focus on the update regarding MedioBanca''s bid for Banca Generali. Generali has confirmed that it has responded to MedioBanca in light of its offer. Generali stated that is has received additional information regarding the potential future Industrial relationship between Generali Group and MedioBanca. It reserves the right to continue to evaluate the offer and there are no details on the nature of the response. BNPP Exane View: A solid attritional development, ahead of expectations: The only major deviation from consensus comes from the attritional loss ratio. The attritional was 80bps better than consensus (in line vs BNPPE) and a 160bps improvement yoy. This has been attributed to the earn through of rate increases and other technical improvements. However, the 80bps improvement in Q2 vs Q1 and the 2.5ppt improvement 2Q25 vs 2Q24 (normalising for the new Nat Cat calculation) likely implies some favourable experience as well. For example man-made losses were a 50bps benefit to the combined ratio yoy. Capital Generation: Capital Generation was EUR2.3bn in H1. This puts its on run-rate to achieve our full year forecast of EUR4.6bn. However, H1 encapsulates a relatively benign period for losses. Note, this also excludes the strain associated with the strategic asset allocation changes. The number is down EUR0.3bn yoy. However, there is a change in the recognition of the LTIP, which had a low triple digit headwind vs H1 2024. The headwind from the LTIP in H2 is...
We have adjusted our estimates and target price down slightly to reflect slightly lower growth (topline growth estimates predominantly). The updated estimates also reflect the comments of management in the company''s pre-close call ahead of Q2 results. We do not consider the changes to be material; our rating is unchanged.
What happened? Generali has reported its Q1 2025 earnings. The numbers are marginally ahead of expectations on an operating profit basis. This was led by a strong result in the PandC segment, with smaller misses in the other segment. The net result is supported by a slightly better non-operating result. The stand-out number is the combined ratio, which beat by 1.2ppt. This was supported by better PYD. The undiscounted normalised combined ratio is running in line with FY 25 target. BNPP Exane View: PandC drives the beat: The PandC segment drove the beat on the operating result, delivering an Operating Profit which was 7% ahead of consensus. The insurance service beat expectations, supported by slightly better premiums and a significantly better combined ratio. Life was in line with expectations, whilst AM, Holding and Consolidation all missed. AM was negatively impacted by lower performance fees and headwinds from FX on USD assets (mainly Conning). Combined ratio beat normalised on track for 95%: The combined ratio beat expectations 1.2ppts. However, this was supported by PYD of 2.5%. This compares to a FY25 budget assumption of 1.8%. CAT and Discounting were in line with our expectations. The current year (undiscounted) combined ratio was 20bps better than assumption. If we normalise for Nat Cat and combined ratio, the undiscounted COR was 95.1%. Given the continued earn through rate we expect for the remainder of the year, this puts the company on track to achieve the 95% undiscounted combined ratio target. Non-life growth: Generali continues to deliver strong growth in the non-motor segment. Non-motor growth (8.9%) exceeded growth in Motor (7.2%). This is in contrast to peers who have seen more Motor growth as rate tailwinds accelerates in this line. Note the Motor growth was 5% excluding Argentina. We would estimate that is close to the average rate increase suggesting limited policy count growth in that line of business. The insurance revenue...
What happened? Mediobanca has made an offer to buy Banca Generali for EUR6.3bn. Mediobanca is proposing to fund the offer through Generali shares it already owns. The offer is 1.7 Assicurazioni Generali shares for each Banca Generali share. Based on Friday''s closing prices, this offer equates to an 11% premium. BNPP Exane View - Generali perspective: A long-hypothesised deal: This proposal is another one that has long been hypothesised by investors. The timing is likely a reflection of the ongoing governance and shareholder wrangling in the Italian financial space. As such, the deal cannot be considered purely from a financial and strategic perspective. We must also consider the implications for all the various cross-holdings. Operational and financial sense: A deal would appear to make operational and financial sense in our view. Generali owns 50.2% of Banca Generali and it is a relatively small contributor to the group. Based on consensus earnings, Generali''s share of Banca Generali earnings are cEUR200m, equivalent to less than 5% of group net income. The Asset Management and Wealth Management segments are also only expected to contribute ~1% of the target EPS cagr across the 2024 - 2027 plan. Operationally, Banca Generali distributes Genertel Life products. This is c20% of the Italian Life new business, albeit these products are lower margin than the total Italian Life business. We note previous comments that state any corporate action with Banca Generali would require that this distribution agreement is maintained. Shareholders, Governance and Monte de Paschi: The real intrigue from this proposal relates to what it may means from a governance and shareholder perspective. MedioBanca''s ownership of 13% of Generali has effectively meant that it has had the ''casting vote'' at recent AGMs. This was demonstrated last week when MedioBanca''s proposed Board Slate won 52.38% of the vote, vs the Board Slate of Mr Caltagirone, which received 36.85%. ...
Generali will host its AGM on 24 April. There are a lot of potential outcomes. In this note we provide all you need to know on the key dates, board slates, process, and what it might mean for governance. What has happened? Generali has bought forwards its AGM to 24 April. This followed the presentation of a new 2024 - 2027 strategic plan on 30 January. Three Board slates have been put forward: one each from MedioBanca (13% stake), Mr Caltagirone (7% stake) and Assogestioni (Italy''s asset management industry association). MedioBanca''s slate has 12 candidates with Mr Sironi as Chairman and Mr Donnet as CEO. Mr Caltagirone proposes six candidates and Assogestioni has four candidates. What are the key dates The AGM will be held on the 24th April. In order to vote in the AGM, shareholders must hold the shares on the 10th April and must have bought them on or before the 8th April. What happens next? Shareholders will vote on the three slates at the AGM. Generali''s Board can be composed of no less than 13, but no more than 17 candidates. With three lists being submitted, four Board Members will come from the slate with the second most votes. Assuming the third slates gets at least 5% of the vote, that slate will get at least one board member. What does it mean? Based on the proposals, it is anticipated that there will be a mixed board going forward. At the 2022 AGM, the list proposed by the outgoing board got 55.9% of the vote. A Delfin proposed board received 41.7% of the vote. An Assogestioni proposal received 1.9% of the vote. Even, with a mixed board, it appears highly like that Mr Donnet and Mr Sironi will be re-elected as CEO and Chairman. We highlight the shareholder register and the mechanics of their re-election in the note.
What happened? Generali management hosted a detailed call discussing the outlook for 2025 given the strong starting point and delivering across FY 2024. Much of the call was spent discussing the detail of the numbers, given the company appears to be delivering ahead of expectations in some areas. Some of these positives appear sustainable, whilst others the company is more reticent to forecast continuing. However, the clear takeaway from both the results and the management call is that operating trends in the insurance business, most notably PandC are positive. We discuss the key takeaways below. BNPP Exane View: . Italian government bond exposure: There were some comments made by CEO Philippe Donnet on the Media call this morning surrounding Generali potentially increasing Italian government holdings. Any increase in exposure to BTPs would be in contrast to the long-run trend at Generali. On the call, these comments were downplayed. The company stated that the company may increase purchases of BTPs in line with the growth of the Life book and in line with their risk tolerance. However, the main strategic asset allocation priorities remain to decrease exposure to government bonds and increase exposure to Private Assets, as the company outlined at the investor day. . Strong Motor performance is evidence of underlying improvement: The company delivered a 98% undiscounted combined ratio in its Motor business in FY24, ahead of c99% that the company suggested at its investor day and a material improvement on recent years performance. Management indicated that this is an underlying number, with tariff increases earning through and favourable frequency trends expected to continue. Management is seeing tariff increases ahead of inflation, which will continue to support Motor combined ratio development, suggesting the company is clearly on the path to achieve the target Motor combined ratio for the next plan. . Investment returns: The company was a bit...
What happened? Generali has published its FY 2024 results. Unsurprisingly, the results are close to consensus given the preliminary figures already provided. However, adjusted EPS and DPS do suggest some upside to consensus figures. Perhaps most importantly in the near term, the company has bought forwards the date of its AGM to 24th April. There is also a large amount of new disclosure to dive into, with an initial read pointing positively vs some of the CMD targets. We discuss our key takeaways below. BNPP Exane View: AGM: Last night Generali bought forward the date of its AGM to 24 April. This is a key date for the company given all the shareholder noise and movement we anticipate into this event. EPS and DPS targets: At its investor day in January, Generali provided EPS and DPS cagr targets, however, the starting points were tied to the 2024 reported numbers. Adjusted EPS was EUR2.45 per share and the DPS beat expectations at EUR1.43. Taking the mid-point of the EPS CAGR target suggests c2% upside to the 2027E consensus estimates. Assuming a 10% DPS cagr implies a EUR1.90 DPS for 2027, roughly 4% ahead of consensus. Combined ratio development: Generali''s FY 2024 was slightly better than its target. The undiscounted combined ratio was 95.9%, vs a 96% target. This is a strong result given the higher natural catastrophe burden. There are some areas that suggest a positive trajectory. Firstly, the attritional undiscounted for FY 24 came in at 94.3%. It also includes a heavy load from man-made losses of EUR405m. It was also positive to see that Motor profitability had exceeded expectations. The undiscounted Motor combined ratio was 98% at FY 2024, improving by 3.1% yoy. This was also better than the c99% the company suggested at its investor day. Strong net cash remittance: Net cash remittance was EUR4,471m in FY 2024, cEUR100m ahead of our estimate. This is positive development supported by strong capital management actions. This better cash remittance...
Including comments on UniCredit implications from Ignacio Ulargui and Cyril Toutounji What happened? . STAKE: It emerged over the weekend that UniCredit has built a 4.1% equity stake in Generali over time which it describes as a pure financial investment, not strategic. In addition, it holds a 0.6% stake held as part of ordinary services for its clients. . FOCUS: UniCredit has reiterated its focus remains on the Commerzbank investment and the tender offer on Banco BPM. . IMPACT: In terms of capital impact on UniCredit, the bank suggests it is negligible - likely less than 10bps in our view. . CONTEXT: While this has been described as a pure investment, this takes place in the context of multiple MandA bids within the Italian financial sector, most recently BMPS'' offer for Mediobanca, which owns 13% of Generali. Politico reports that UniCredit''s stake building began before the BMPS offer was announced. It also takes place a few months ahead of Generali''s AGM (8th May). BNPP Exane View: . IMPLICATIONS FOR GENERALI: While UniCredit describes the move as purely financial, investors will inevitably speculate as to whether this represents an attempt by UniCredit to influence the outcome of potential MandA, and/or Generali''s AGM. Politico, for instance, notes that the BMPS/Mediobanca bid can be seen as an effort to create a third financial group to rival the existing giants UniCredit and Intesa Sanpaolo. We note that the stake building may at least partially explain Generali''s strong share price move over the past few months, largely driven by re-rating. . IMPLICATIONS FOR UCG: We continue to believe that focus on Banco BPM is the priority, and any potential combination with Commerzbank would come after, especially in terms of timing. When the bank built the stake in Commerzbank in September 24, UniCredit''s management never hid their intentions to explore business combinations with Commerzbank. Hence, we think that at this stage the investment in...
What happened? Yesterday, Generali presented its new 2025-27 strategic plan (see our initial take here: Generali investor day: Where to start?). Below we summarise takeaways from the presentation and QandA: . PandC: Of the c.6% topline growth in the plan, about 60% of this is price, 40% is volume. They believe their undiscounted combined ratio target of 94.5% is conservative. The discounting benefit in the plan is assumed to be slightly lower than it is at present (1.7ppts vs. c.2ppts), and they are assuming roughly flat net investment income. The motor undiscounted combined ratio is expected to improve from c.99% to 96-97%. . LIFE: lapses have been decreasing, and the need for fee holidays is coming to an end. Flows are recovering they expect to get to EUR11bn of inflows by the end of the plan, vs. c.EUR8bn at present. . AM: management highlighted the lack of overlap in clients between Generali IM and Natixis, enhancing complementarity, as well as the strength of the new AM business''s US distribution capabilities. Synergy targets exclude potential benefit from at least EUR15bn of seed capital investment. . ASSET MIX: they will use their expanded asset management capabilities to increase allocations to Private Equity/Infra and Private Credit, having a lower allocation than peers at present. The allocation mix shift will cost 3-4ppts in Solvency cover per year, but given they build c.8ppts of capital per year over-and-above the cash returns, they have plenty of headroom. . CAPITAL: They assume no benefit from the Solvency 2 reforms - but as things stand, they would expect something like c.10ppts of benefit, albeit the details of the reform need to be finalised. Don''t assume any remittance benefit from the reforms in the current plan; if they were to see any, that would be in the next plan. Capital generation targets are net of LTIP, assumed to hit the top of the range (i.e. this is conservative). . CASH: the uplift in FCF from c.EUR9.5bn in the old plan to...
What happened? Generali has set out its new strategic plan. Lifetime Partner 27 has set out a series of new targets covering the FY24 - FY27 period. We summarise the targets and our views below. . EPS: The company has set an EPS CAGR target range for the plan of 8 - 10%. . DPS: Generali is targeting a DPS CAGR of 10% across the plan. . Share Buyback: Generali is committing to a minimum of EUR500m share buyback per annum . Net Holding FCF: EUR11bn net holding free cashflow across the plan period . PandC: In PandC, the targets involve a mix of topline growth and margin expansion. The company is targeting a PandC Operating Profit CAGR of 8 - 9%. This is supported by a target combined ratio of 94.5% on an undiscounted basis, supported by a 1.5 - 2ppt improvement in the attritional loss ratio and a 6% target GWP CAGR. This is again supported by non-motor growth. . Life: Life Operating Profit CAGR has a target of 4 - 5%. New Business Margin expectations are c6%, with continued strong growth in Health and Protection . . Asset Management: No new communication from the presentation given last week . Capital Management: The company has introduced a stricter capital management policy. The company anticipated returning at least EUR7bn of net holding FCF to shareholders in the form of dividends. The company is also targeting at least EUR500m share buyback per annum. Internal deployment costs are EUR500 - 700m, in line with our expectation. The remaining cash will be evaluated for MandA on strict criteria, with the company launching a SBB if cash is not utilised. BNPP Exane View: Overall, Generali has outlined a solid set of plans. The problem appears that expectations have already run up to, or even exceeded these plans. We run through the key targets below and evaluate our views below. . EPS: The 8 - 10% is ahead of peers. However, the company has not provided the 2024 starting point. It has stated that it is based on adjusted EPS on company provided consensus. We...
In the news A Natixis IM JV, the purchase of MGG, an upcoming investor day, shareholder cross-holding movements and a roaring share price. There has certainly been a lot going on. In this note, we outline our expectations for the investor day, highlight the challenges for the newly created Asset Management JV and remind investors of the various cross-holding implications for Generali. Generali''s shares have continued to re-rate, trading at all time high P/E''s. With minimal earnings upside potential, we struggle to justify current valuations. We retain our Underperform rating. Investor day outlook - Capital allocation and responding to peers on growth We expect few surprises from the 30 Jan investor day. The main discussion points are: 1) Capital allocation; and 2) organic growth. Over recent years, peers have increased pay-out ratios. These have converged to a ~75% pay-out ratio. Generali lags this level. As such, a dividend step-up, introduction of a recurring buyback or both, are possible. Peers have also outlined ambitious growth targets in retail PandC. We expect Generali to outline similar ambitions. Outlining a convincing strategy for volume growth without hitting margins will be key to the success of the investor event, in our view. Natixis IM JV - Transformative, in a way Last week Generali announced it was forming a JV between Generali Investment Holdings and Natixis Investment Managers, creating the largest Asset Manager by revenues in Europe. The deal is transformative in terms of AuM and revenue, however not in terms of earnings. Scale is not reflected in heightened efficiency. We also do not see the growth profile fundamentally changing. Governance - back on the radar as the 2025 AGM approaches Italian financial cross-holdings are back in the news. Banca Monte dei Paschi''s bid for Mediobanca raises questions about the voting direction of its 13.1% stake. This stake remains crucial for voting majorities in Generali, with ''rebel''...
What happened? Generali and BCPE have announced a memorandum of understanding to combine their asset management platforms into a combined new entity. The combined group will become one of the largest asset management businesses globally with EUR1.9trn of AuM on a pro-forma basis. The revenues will put the NewCo as the largest AM in Europe. The deal is for a 50/50 joint venture. There is no cash payment involved from Generali given the relatively similar earnings despite Natixis IM''s significantly larger AuM. The companies are guiding to a EUR210m cost and revenue synergy plan on an Operating basis by year 5. The EUR170m of cost synergies is expected to come from improved procurement, improved scale in IT spend and best practice roll-out. Revenue synergies are expected to come from internisation of mandates and growing cross-sell. The deal is expected to close in 2026. BNPP Exane View: This may appear a transformation deal for Generali. It definitely is in terms of AuM. This deal will see Generali''s Asset Management division reach almost EUR2trn of AuM. This is a rapid rise from a position where the company only started to build out its asset management strategy in 2017. However, from an earnings and revenue standpoint the deal is less transformative. The company are guiding to EUR210m of pre-tax earnings synergies in year 5. That is roughly 2.5% on 2030E earnings. The deal will bring new opportunities in terms of additional capabilities the combined entity can offer. However, we do not think it significantly alters the growth profile of Generali''s Asset Management footprint. Both GIH and Natixis IM have struggled to develop third party flows. Indeed, Natixis IM has outflows in 2022 and 2023. This excludes the impact of H20 Asset Management. We forecast single digit billion third-party flows at GIH for our forecast period. Overall, in order for this deal to be judged a success, we think we will have to see an improvement in third-party flow rate as...
What happened? On Friday, Generali announced that it plans to acquire 77% of MGG Investment Group for $320m. The acquisition will be made through the Generali Investment Holding subsidiary of Conning and Co. MGG is a Private Asset manager specialising senior secured loans and structured capital solutions to US mid-market businesses. It has $6bn of AuM. The deal will have a 2ppt negative impact on Generali group''s solvency position. The deal is expected to close in H2 2025. BNPP Exane View: Overall, this is a deal that continues Generali''s inorganic expansion in third-party asset management. This acquisition fits the company''s attempt to grow its third-party capabilities in private assets and its presence in US markets. The deal is small and not likely to move the dial in terms of earnings. The $6bn of AuM to be acquired is less than 1% of the current Generali Investment Holding AuM. We also do not think it will prevent or limit any of Generali''s other plans that may have in terms of potential strategic transactions. The deal cost of $300m will come from the 2025 - 2027 MandA budget. We forecast a EUR2.7bn MandA budget for the plan period. This assumption is based on a DPS growth in line with EPS and the introduction of a recurring share buyback of EUR300 - 400m per annum.
Generali management hosted a results call with management following a strong set of 9m 2024 numbers. In the call they discussed the true level of the underlying performance and highlighted a number of items which will impact the results in Q4. Overall, management are clearly optimistic on the underlying level of performance of the business and the trajectory of earnings vs claims inflation trends. However, there are expected to be a number of headwinds in the Q4 numbers and there was an indication that Q3 was especially strong and benefitted from a few one-offs. This may create a bit of caution around how much this run-rate of performance can be extrapolated into the targets at the investor day. We summarise the key takeaways from the call below: . Some positive experience supported the very strong attritional development in Q3: Generali delivered a very strong attritional loss ratio in Q3. The Q3 attritional undiscounted loss ratio was 65.1%, a greater than 2ppt improvement vs 3Q23. Management highlighted that the result had benefitted from a low level of frequency, low bodily injury and low man-made losses. As such, it cautioned against the extrapolation of these results into the future. However, it did confirm that the pricing trends are earning through positively and the company is clearly on track to achieve the targeted undiscounted combined ratio for FY24 and FY25. . Q4 Headwinds: Management also flagged a few items that will create headwinds in Q4. These include natural catastrophe losses which are already at EUR100m in the quarter. There is also an additional EUR20m of losses from riot losses in Martinique. Discounting is expected to be lower than we had forecast for Q4 at EUR50m (0.6% on BNPPE Q4 COR). In the non-operating line, there are expected to be negatives from restructuring costs and Real Estate impairments whilst tax changes are expected to be a headwind of EUR40m. . Positive expectation for the jaws on PandC: Management provided some...
Generali has released its 9M 2024 results. The numbers are a 4.7% beat vs Group Operating Profit at 9M (17% in Q3). This is led by the very strong PandC result vs expectations. The combined ratio was a 40bps beat vs 9M 2024 consensus figures. The current year attritional undiscounted Q3 loss ratio was c1ppt better than our estimates. This will be the main focus of the results, in our view. We discuss the drivers of this, the outlook, and the other key takeaways from the results below. . Strong non-life performance: Generali''s non-life operating profit beat consensus expectations by 5.4% at 9M (30% in Q3). Topline was in line with expectations, however, it was the combined ratio that significantly beat forecasts. The company had provided clarity on nat cat losses in Q3 ahead of the results and PYD and Discounting are only in line with BNPPE forecasts. As such, it is the underlying performance which has exceeded expectations. There does need to be some normalisation. For example, man-made losses included in the attritional loss ratio were c60bps better in the 9M 2024 vs 9M 2023. At a 9M 2024 vs 9M 2023, this implies a c60bps improvement, which is reasonable. The improvement vs Q2 on the attritional is particularly striking. . Stable non-life growth: The growth rate in the non-life segment has remained relatively stable and evenly distributed. The headline is flattered by the Argentinian result. Excluding this, the growth rate in Motor and Non-Motor business has been more stable at ~ 6%. We expect this is largely in line with rate increases. . A nice beat in Life: The non-life result was the stand-out. However, the Life segment also delivered a strong operating performance in Q3. The Life Operating Result beat consensus expectations by 10% in Q3. This was driven by normalised factors, with strong new business growth and a rising CSM release. The lapse expectations remains unchanged, with the company continuing to guide to similar impacts in H2 as...
We have adjusted our estimates ahead of the company''s Q3 results. We make data changes to reflect the guidance on natural catastrophe losses year to date and observed market movements in Generali''s markets. We do not consider the changes to be material; our rating is unchanged.
Generali has been the top performing multilines name over the last 12 months, deservedly so in our view. It remains our preferred of these names, even if the valuation differential vs peers has closed. However, given the relative re-rating of the multilines sub-sector (see our sector note), and some concerns on forecasts, we see more attractive options elsewhere. Downgrade to Underperform. Re-rating and remittance risks In our initiation a year ago, we saw: 1) too-low earnings and cash generation expectations and 2) a discount to peers that did not reflect the de-risking of the balance sheet and the operational improvements of recent years. Looking at Generali now, we see these factors as less clear. A strong run, now time for a breath Generali has delivered 40% TSR over the last 12 months. Unlike some peers, this TSR has not been entirely rating led, even if Generali has enjoyed a re-rating. Given our view that earnings expectations are in a more reasonable position and the valuation discrepancy vs peers has decreased on our key metrics, we see limited upside in the near term. Concerns on cash remittances We are c.2% behind consensus on business unit remittances for FY24 and FY25 but 8-9% behind for 2026-27. It appears cons is over-estimating underlying remittance capacity or forecasting continued ''excess'' remittances. This feeds into potentially overly optimistic views of cash utilisation, in our view. What does the next plan have in store? Generali will host a CMD on 30 January 2025. We expect that the company will continue to outline attractive earnings growth whilst also focusing on increasing cash conversion and returns to shareholders. Despite the increased focus on cash, we are more cautious than consensus on current cash forecasts and expectations already include a recurring share buyback of EUR450-550m.
We have adjusted our estimates slightly ahead of the company''s H1 2024 earnings release. We do not consider the changes to be material; our rating and price target are unchanged.
An attractive story, at a more reasonable price We continue to like Generali''s actions to reduce its Balance Sheet risk and deliver operational improvement. However, following a 10% relative share price increase ytd, the near-term upside appears more limited to us. We think consensus estimates are now more reasonable and the company has provided confidence on delivery of key underwriting targets. As such, we downgrade the shares to Neutral whilst we await the details of the next strategic plan, to come in early 2025. Valuation remains reasonable despite the strong performance Generali has performed well, but it continues to remain at a sizeable discount to peers. We forecast the company trading with an c.500bp discount on Capital Generation yield to AXA and Allianz. This discount on a FCF yield is 120bp and 180bp respectively. We continue to believe this discount is excessively wide given the de-risking of the business and the improved operational performance. However, the catalyst for this closing is not obvious or imminent. Consensus has caught up to targets Consensus has been trending positively for Generali. 2026E average consensus EPS estimates are up 12% since the end of July last year. The company is now being given credit for its combined ratio targets. The consensus undiscounted combined ratio target is at 95.7% for 2024, in line with the 96% target. 2025 is almost at the 95% target, with some scope that it will move there in our view. Similarly consensus remittances are now above EUR4bn for 2024, as we anticipate. This leaves more limited near-term upside in our view. Where are the opportunities for further upside We continue to like Generali. However, with consensus appearing up with events, near term upside is more limited. Going forwards, there is potential upside from guidance on cash conversion increasing. However, this is not likely to come until a new strategic plan is unveiled. Also see INSURANCE: Cash Nexus 2024: the return...
Generali''s investor day supported the views outlined in our note, Derisky Business, that Generali is a significantly improved operation that offers a lower risk Balance Sheet and a lower volatility proposition for investors. The updated targets, such as the lower solvency range and upgraded cash and capital generation expectations, highlight the benefits of this improvement for investors. This has culminated in Generali conducting a EUR500m share buyback 1 year earlier than expected. Cash and capital delivery continues and brings buyback expectations forwards The derisking of Generali''s Balance Sheet, the lower economic sensitivities and the lower capital target range all point positively to the reliability of capital returns. This is supported by the company''s continued performance on capital and cash generation. The company upgraded the targets on these items, albeit this was expected. With some sizeable remittances expected from recently acquired entities, Generali''s holding cash position and remittance flow will look healthy. This healthy position and low cash pay-out ratios clearly brings the prospect of a more recurring share buyback into view. 95% on the table for 2025 Generali did not state a date for achieving its 95% undiscounted combined ratio target. However, commentary suggested to us that it can be achieved by 2025. The company is targeting a below 96% level in 2024. This is despite a 60-70bps increase in the CAT budget. Rate increases are continuing to earn through and new business rates are moving up materially, notably in Italy. This, along with synergies from Liberty Seguros, should support 95% being achievable for FY25. Interesting growth options The focus on Generali''s Life business has historically been on risks (guarantees, BTPs). However, the presentation highlighted significant growth opportunities in European Health and Protection markets. High margin, capital light business with attractive returns. Conning opens up new...
Generali’s results were in line. The P&C figures were expected to be weak following the warning on its Nat Cat budget. Nonetheless, the Life business provided positive signals as outflows slowed down, and the CSM results surpassed expectations. We believe the market has placed undue emphasis on the Solvency II figure, which fell below expectations. However, this deviation can be attributed to operating variances, known for their historical unpredictability. Otherwise, this number would still have been in line with expectations.
The results were in line for Generali, with good signals from the Life business. The impact on life CSM from the revised customer lapse assumption is lower, and the CSM contribution is still strong beside the market movements. While the P&C results were initially expected to be weak due to the announced Nat Cat losses exceeding the annual budget, the continued influence of discounting benefits has played an important role. Despite the challenges, the results have held steady.
In this report, we present our key assumptions regarding Generali’s model under the IFRS17/9 accounting standards. The transition from IFRS 4 to IFRS17/9 has no impact on Generali’s cash generation or on dividend payments. Following the publication of our new IFRS17 model, we raise our target price, from €22 to €23.3. This increase is primarily driven by the higher profit forecast, which elevates the embedded value and the P/E-based valuation, collectively accounting for 60% of our final target price.
Earnings on the rise. Margins expanding. Volumes poised to ratchet. Things are looking good over in Trieste, so what could possibly be holding you back? We''re willing to bet it''s risk, and specifically how much of it there is on the balance sheet. Or rather, was: In this granular and comprehensive view of all the moving parts, we show that Generali has turned a corner. Operating performance has been knocked into shape, the financials are trimmer than you might think, and an underappreciated and impressive campaign of derisking has rendered Generali''s business almost... boring. Well, not entirely: company-specific challenges do remain. But do you really need zero risk when the net cash generation yield is over 11%? Outperform.
A remarkably positive performance for Generali’s H1 results in the P&C segment, marking the first time that the P&C segment has achieved a higher operating result then the Life segment. The prevailing interest rate environment adversely impacted the performance of Generali’s Life business, despite the company’s effective execution of its strategy, which emphasizes the focus on capital-light product lines. This situation has resulted in the P&C segment emerging as a leader within the company segments.
Generali to acquire Liberty Seguros for EUR2.3bn Generali has announced it will acquire Liberty Seguros from Liberty Mutual for EUR2.3bn. Liberty Seguros has predominantly PandC operations in Spain, Portugal and Ireland. An attractive deal in terms of market consolidation The deal will take Generali to being the number 4 insurer in Spanish PandC markets (c6% market share) and reinforces its number 2 position in Portuguese PandC markets. It will also give Generali a top 10 position in the Irish market, a market the company has not been present in before. A deal in line with plan At Generali''s CMD it outlined discretionary FCF of EUR2.5 - 3bn accumulated over FY22 - 24e available for MandA. It highlighted one of its MandA priorities as a desire to consolidate its leadership positions in European insurance markets. Both the deal size and deal target fit with this disclosed strategy. Back of the envelope valuation appears reasonable Liberty Seguros''s 2022 SFCR showed a combined ratio of 93%. Profit at Liberty have been volatile in recent years, however, Generali estimate a normalised run-rate profit of cEUR100m for this entity. If we assume a 95% normalised COR, 2x investment leverage, 3% investment return and a 25% tax rate, we reach a similar conclusion. This does appear to be a very high P/E of c23x pre-synergies. However, we note Liberty Seguros has a solvency ratio of 332% at FY22 on a SCR of EUR373m. If we assume excess capital of c100% of SCR and deduct this from the deal price, we arrive at a multiple closer to 19x pre-synergies, which does still appear high. Strong synergies expected from the deal Generali are anticipating strong synergies from this deal. If we assume Generali can remove 35% of the Liberty Mutual cost base we reach a cost saving of cEUR140m. This equates to a post-synergy run-rate earnings of cEUR200m. This puts the post excess capital, post synergy deal price at c10x vs Generali''s current 2024e multiple of 8.5x.
Generali’s Q1 23 results were strong. The higher rates environment still temporarily weighed on Life but P&C recorded an outstanding performance. Today’s release confirms our point: Life should hold on, despite being under pressure and P&C is the strong performer. However, the release also confirmed our argument on IFRS 17. Despite the massive improvement in earnings, the firm did not raise its objectives. We believe this is due to uncertainties and caution with respect to the new accounting standards.
Generali released very strong FY results. The firm’s profitability is improving and, ignoring the recent volatility, we believe that the stock is ideally positioned to outperform the sector thanks to better investment and underwriting results going forward.
Generali released strong 9M 22 results however in our view there are a couple of signals that could hold back a recovery in the share price. Our positive opinion is confirmed despite these macroeconomic uncertainties.
Generali’s H1 22 results were very strong on operations. Most of the outperformance came from an outstanding investment result, on the back of higher interest rates already kicking in. However, the share price reacted negatively which we believe is due to the further downside potential for the book value due to the Russian exposure and interest rates sensitivity. We strongly confirm our positive opinion but remain cautious in terms of momentum.
Strong Q1 22 results posted by Generali. Both Life and Non-life have disclosed strong performances top-line wise and in terms of profitability (although P&C was rather helped by the dividends from the Private Equity business and Banca Generali). Contrary to our expectations, the firm confirmed its CMD’s objectives (sketched out in December and well ahead of the fears surrounding the macro-economic context). Governance issues are now tempered; Generali has started its year well.
The long-lasting battle for control over Generali has finally come to an end. The current CEO Philippe Donnet has been re-elected by Generali’s shareholders, along with a new set of Board members proposed by the exiting Board. Now that the governance turmoil should be over, the management will be able to focus on delivering on its ambitious and challenging strategic plan (unveiled before the invasion of Ukraine by Russia). The battleground may now move to Mediobanca.
Earlier this morning, a conference held by Mr Gaetano Caltagirone (not initiated by Generali) took place in Milan, gathering the so-called “Finance community” to promote to investors, both Mr Costamagna and Mr Cirina, respectively as the Chairman and CEO candidates backed by Mr Caltagirone. The conference’s content seemed a farce. Shareholders may end up being the ultimate victims of the battle for board control between Mr Donnet (current CEO) and active shareholders (Caltagirone and del Vecchio). This needs to end.
Generali’s FY 21 results are satisfying. The firm recovered well from the tough 2020 due to the global pandemic and delivered on its last plan’s objectives. While Generali communicated last December on its next three-year plan, its execution and completion remains questioned because of the latest governance turmoil and the possible consequences of the current conflict between Russia and Ukraine.
Generali released a very ambitious three-year plan. On the agenda were increased cumulative cash dividend distributions, an outstanding EPS growth which should be partly driven by investments in digitalisation, and further light M&A activity in Insurance and Asset management. However, such an ambitious plan was not much of a surprise considering the very unstable throne on which CEO Donnet is sitting, aimed at convincing investors to support him.
Generali, in continuity of most insurers’ results releases, is on track to deliver on its FY objective as well as its 3-year strategic plan. All eyes are now turned towards the CMD to be held on 15 December and the AGM in Spring 2022 when CEO Donnet’s position might be challenged.
Generali and Italy’s most powerful business empires are throwing themselves into a bloody battle over Italy’s biggest insurer CEO’s head. Considering the timing, there is a high risk of Generali suffering from a jeopardised governance, while the Italian insurer is deciding upon its 2022-24 strategy, to be presented in two months time. The next few days as well as Mediobanca’s AGM on 28 October will be decisive.
Generali’s results fall in line with expectations and guidance. At constant environment and as we are approaching the end of the 3-year plan, we believe that all eyes will be on governance changes.
Generali delivered a strong Q1 21 performance. From top to bottom lines, consensus estimates have been beaten. Although these figures give us much optimism for the rest of the year, we are disappointed that Generali only confirmed that the performance is in line with expectations.
Generali succeeded in posting increases in both sales (up 0.5% to €70,704m) and operating earnings (up 0.3% yoy to €5,208m). Net profit dropped by 34.5% to €1,774m. The Board will propose a total dividend of €1.47 per share, of which €0.46 is relative to 2019. The insurer confirmed all its strategy plan’s targets. We reiterate our positive opinion on Generali.
Even at the age of 85, Leonardo Del Vecchio kept his power in the Italian financial system. He seems to be behind the appointment of Andrea Orcel as the new CEO of Uncredit, a key issue for the possible acquisition of Monte dei Paschi di Siena and for the future of Generali.
