Assicurazioni Generali Group
Competing for sustainable returns
Giovanni Perissinotto - CEO
UBS Italian Financial Services Conference Milan, February 1st, 2007 March 2006 Agenda 2
I. Our plan – The route V. Efficiency to sustainable returns
II. Execution of our VI. Key challenges 2006 – 2008 plan
III. Growth VII. Conclusions
IV. Third age initiative
UBS Italian Financial Services Conference Agenda 3
I. Our plan – The route to sustainable returns
UBS Italian Financial Services Conference Going forward: The ‘06 – ‘08 plan 4
RoEV normalised (%)
Targets 2008 2003 – 2005: We delivered on our plans IFRS profit: +50%
NBV: 11.9 +10% CAGR 11.2 10.8
Combined Ratio: 9.2 95.5% RoEV = 14.5%*
Top-line growth: sustained above- market growth
Dividend: ’02 ‘03 ‘04 ‘05 € 0.54 for 2005, ‘05 target (11.9%) delivered with a 2.7 p.p. +100% for 2008 increase in 3 years
* Based on 10-year risk free rate of 3.7%
UBS Italian Financial Services Conference Agenda 5
II. Execution of our 2006 – 2008 plan
UBS Italian Financial Services Conference Generali’s ‘06-’08 Strategic Plan: The pillars 6
Operational improvement
The balance among Risk, Return & Growth
Enhanced governance Growth & This is the essence of Generali’s innovation ‘06-’08 Strategic Plan Capital optimisation
UBS Italian Financial Services Conference Strategic actions in 2006 7
Capital 9 AMB (Share: 85.05%) Optimisation: 9 Generali Holding Vienna (Share: 100%) 9 Generali Schweiz Holding (Share: 100%) Minorities buyout 9 Migdal (Share: 69.9%)
Growth and 9 Acquisition of majority shareholding in Delta Osiguranje, Serbia’s largest private insurance innovations: company (Life and P&C) 9 Acquisition of 100% of Libertas insurance company (Croatian life insurer) Acquisitions & J.V. 9 J.V. agreement in India with Pantaloon Retail, leading retailer. Set up Future Generali JV (Life and P&C) 9 Acquisition of 51% of Garant Auto and Garant Life (respectively No.2 and 3 of Ukraina) 9 Acquisition of a 51% shareholding in Orel-G Holding, leading insurance player in Bulgaria 9 Acquisition of Banca Unione di Credito, with AuM at CHF 4,6 billion (Private financial services provider in Switzerland) 9 Successful completion of Banca Generali IPO
Operational 9 Simplification and rationalisation of corporate organisation and business structure in Italy Improvement: Merger of Generali Vita and Assicurazioni Generali S.p.A. Integration of INA and Assitalia under the INA Assitalia brand name Restructuring 9 Integration of Italian activities of BSI into Banca Generali Initiatives 9 Reorganisation of French activities 9 Reorganization of Asset Management
UBS Italian Financial Services Conference AgendaAgenda 8
III. Growth Our core markets
Expanding in CEE
Initiatives in China
UBS Italian Financial Services Conference Our core markets are in Europe 9
Generali Group total GWP(1) (Euro bln as at 3Q06) Net result (Euro mln)
46.5 46.4 +3.0% like for +23.2% like (2) 13.1 13.3 P&C 1,941 1,576 33.5 33.1 Life
3Q05 3Q06 3Q05 3Q06 Geographical premiums distribution (%) In life, long anticipated trends Germany 22.1% begin to have real impact France 21.5% P&C market to grow in line with Austria 3.7% GDP
Leverage distribution systems Italy 35.6% capacity and experience
Spain 4.5%
(1) Life premiums include investment contracts for Euro 0.7 bln at 3Q06 and Euro 0.5 bln at 3Q05. (2) On like for like basis, excluding one off single premium in China in 3Q05
UBS Italian Financial Services Conference Expanding in CEE 10
New territories Overall Performance:
Overall premium income in 2005: € 831.3 mln PL Double digit organic growth (+26% life and +10 non life at 1H06) CZ S UKR External acquisitions to expand in new territories A K HU (Serbia, Bulgaria and Ukraine) both in life S HR R and non-life I O SCG Strengthen positioning in Croatia trough New SCG BG acquisition of Libertas territories Previous Recent acquisitions with strong life positions presence
Croatia Serbia Bulgaria Ukraine population: 4 mln population: 8 mln population: 8 mln; population: 47 mln; Generali (since 03): Delta Osiguranje Orel G since 2006 Garant Auto (51%) since 2006 premiums: € 10.9 mln (50%+1) premiums: € 28 mln (partner UrkAvto cars dealer market share: 1.1% since 2006: market share: market leader with above 50% 2006: Libertas premiums: € 41 mln - Non life: 3.5% mkt share) life mkt share: 2.9%; market share: 10%: - Life: 10% premiums: € 42.6 mln premiums: € 7.7 mln - Non life: 9% - Health: 60% market share: 4% Overall Group market - Life: 19% - Non life: 3.6% share: 5.8% -Motor: 12% -Life: 11%
UBS Italian Financial Services Conference China: Our strategy 11
2008 Main Goals: Strategic drivers Among top 3 foreign life players (out of 25) Access to 6 new cities Growth of agency force 6 new branches (cities) GC in 2008 (> 10,000) Increase number of agents First Sino-Foreign JV On going Introduction of FA’s in bancassurance in China providing Life & Non Life service to costumer Cross selling between Life and Non Life Sharing front and back GC in 2006 Widening of Life products range: office functions increase sophisticated and value- Wider commercial presence added offer Taping into captive Introduction of Non Life risk opportunities protection products
Clients exploiting potential
UBS Italian Financial Services Conference Agenda 12
IV. Third age initiative
UBS Italian Financial Services Conference Third age service model 13
Objectives Develop a focused business model to serve the “third-age” customer segment: asset de-cumulation, guaranteed-income protection, longevity and morbidity risk protection, health-care solutions
Program Customer Product Service Distribution Branding and pillars insight offering proposition model communication Proprietary Income Generali Channel Common market replacement third-age strategy branding research Hedging of solutions Incentives Customer “third-age” schemes education risks Skill building Advice
Expected Position Generali as the market leader in the “third-age” segment benefits (long-term financial well-being)
UBS Italian Financial Services Conference Agenda 14
V. Efficiency Common country model
Toro acquisition
UBS Italian Financial Services Conference Common Country model 15
From complexity and fragmentation… … to simplicity and consolidation
Administrative Administrative Administrative Administrative services and services and services and services and procurement procurement procurement procurement
IT IT IT IT
Claims Claims Claims Management Management Management Claims Management
Strategic Strategic Strategic marketing & marketing & marketing & Strategic marketing & product product product product development development development development
Client and channel Client and channel Client and channel Client and channel Client and channel Client and channel management, management, management, management, management, management, product product product product product product customisation and customisation and customisation and customisation and customisation and customisation and post sale post sale post sale post sale post sale post sale
Company A Company B Company C Brand A Brand B Brand C
1 single brand in specific market situations
UBS Italian Financial Services Conference Toro Acquisition 16
Leadership of Leading position in the profitable P&C Italian market increasing the Generali in the weight of the retail portfolio Italian P&C Strengthening the key distribution channel in Italy optimising also the market geographic mix
Value creation Significant benefits from economies of scale and sharing best practice Synergies achieved through the application of a common country model Leveraging Toro client base for Life cross selling initiatives Total synergies achievable in 3 years Euro 225-250 mln pre -tax Accretive to Group IFRS and EV earnings in 2007 Total synergies achievable in 2009 (Euro mln) 225-250 20-30 5-10 20-30 180
Costs and Underwriting Asset Risk and TOTAL operations Management Capital Management
UBS Italian Financial Services Conference AgendaAgenda 17
VI. Key challenges Facing the P&C cycle
Talent is a strategic lever
UBS Italian Financial Services Conference Facing the P&C cycle 18
What we see on P&C earnings remain strong the market Motor is becoming more competitive Non motor still achieves growth Competitive pressure on commercial rates Other lines remain generally unchanged
Our response Our ERM process focuses on maximising risk adjusted returns Motor tariff project aims to capture business opportunities in a sector strongly influenced by market cycles Claims management project aims to improve performance management & organizational model, spreading best practices
UBS Italian Financial Services Conference Talent is a strategic lever 19
Talent strength Technological changes shift the balance of competition onto customer is core experience making quality of knowledge and relationship skills crucial Stock of talent is under pressure Due to the ageing of population, a war over talent is expected; employee engagement will be a critical success factor
Our actions Mobilise intellectual, social and organisational capital Improve the quality of leadership throughout the organisation Our Ulysses program for key senior managers, aiming at widening horizons and encouraging visionary thinking In Italy, our program “Essere Leader” (2,000 people involved in 2006- 2007) on talent development and performance management culture
UBS Italian Financial Services Conference AgendaAgenda 20
VI. Key challenges (2) Corporate governance
Market reform/ State intervention
UBS Italian Financial Services Conference AgendaAgenda 21
VII. Conclusions
UBS Italian Financial Services Conference Conclusions 22
Generali is a winner in key markets
We are ahead of schedule in implementing our Strategic Plan ’06/’08
Shareholders value creation is our priority
UBS Italian Financial Services Conference Contacts 23
For further information please contact
Pedro J. Martins – Head of Investor Relations (Tel.: +49-89-72610-3951; +39-040-671876) Email: [email protected]
Stefano Burrino (Tel.: +39-040-671202) Email: [email protected]
Emanuele Marciante (Tel.: +39-040-671347) Email: [email protected]
Veronica Cherini (Tel.: +39-040-671488) Email: [email protected]
Assicurazioni Generali Tel.: +39 040 671338 P.za Duca degli Abruzzi 2 Fax: +39 040 671260 34132 Trieste, Italy e-mail: [email protected]
UBS Italian Financial Services Conference Disclaimer 24
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 recognise that actual results, performance or events may differ materially from such expectations because they relate to future events and circumstances which are beyond our control including, among other things, general economic and sector conditions. Neither Assicurazioni Generali SpA nor any of its affiliates, directors, officers, employees or agents owe any duty of care towards any user of the information provided herein nor any obligation to update any forward-looking information contained in this document.
UBS Italian Financial Services Conference Assicurazioni Generali Group
Competing for sustainable returns
Giovanni Perissinotto - CEO
UBS Italian Financial Services Conference Milan, February 1st, 2007 March 2006