12/03/2015
Class CNBC
Interview with Generali Group CEO, Mario Greco
Journalist: Mr. Greco, this financial report marks the end of the first phase of your work
within the Company. What is the message that these figures give to the market?
Mario Greco: The message to the market is that we do what we announce and we do it
Media Relations
T +39.040.671085
[email protected]
Investor Relations
T +39.040.671202
[email protected]
faster than it was originally announced. The market can trust our promises and can
confidently wait for the promised results.
J: You have significantly increased the dividend as well. Can the market expect this level of
pay-out to be maintained in the years to come?
www.generali.com
MG: The pay-out is slightly higher than 40% because it was based more on the net
result adjusted for extraordinary entries rather than on the net result for the period.
Therefore we paid a dividend of €60 cents on our 2.1-billion Euro of adjusted net
result. Our policy is to have a dividend that grows over time, and we want to make it
grow to a rate that is clearly interesting for the shareholders, therefore we count on
the fact that we will be able to increase the dividend in the years to come and we
expect the profitability of the company to allow it.
J: Some adjustments still influenced these results and the net profit. Should the market
expect this type of operations to have an impact in the future as well?
MG: No, with this financial report we are really done with the sale of assets and their
consequences. With the devaluation of Ingosstrakh we have eliminated from the
financial statement all entries that may have an extraordinary or significant impact.
We are closing a page; from now on, the financial reports are going to be different,
they will reflect the ordinary results of the company. They will be far less volatile and
we expect, therefore, that the net profit figures will also grow significantly in the years
to come.
J: Market conditions remain challenging, particularly in the P&C segment. What signals have
you seen from the beginning of the year?
MG: Market conditions are extreme, because no one ever thought we would be
working with negative interest rates. The QE program further pushed market
conditions to unimaginable limits, but the market is adapting. We set out a program,
which luckily turned out to be effective, of cutting costs in the past years, we changed
our range of products and we’re capable of sustaining these profitability levels also in
the years to come. These are extreme conditions, but, and I am repeating myself, we
can continue to work with them.
J: There are a few countries, above all in the centre of Europe - France, partially Germany where you’ve had some difficulties in 2014. How are you dealing with these situations?
MG: They are very different situations. The situation of financial markets particularly
impacts all German-speaking markets, where customers are historically used to enjoy
secure yields. In these markets, the great change was to help the customers accept
that these yields will no longer be guaranteed, that they can no longer be guaranteed
in these conditions. Therefore we radically changed our range of products and we will
continue to move according to these principles.
J: And what about Italy?
MG: We had some fantastic results in Italy in 2014, and we are extremely happy about
them. We have implemented a very brave integration program, we did it in a short
time and I believe we did it very well and Italy brought to us results, even in terms of
growth, which were completely unexpected compared to our plans. We are extremely
happy. Now we are entering an interesting phase, where we can speed up even more,
helped by the fact that the economy is restarting and therefore we will also have more
favourable external market conditions.
J: Are you confident in the recovery of our country? Is it really accelerating?
MG: Recovery is accelerating everywhere in Europe. At the moment Europe is in a
very fortunate situation, and right now it probably is the most interesting region in the
world to work and invest: it enjoys a combination of the impact of the QE, the
devaluation of the Euro - an extremely powerful event - and also the low cost of
energy. Italy, within Europe, is the country that has implemented the higher number
of reforms and therefore it can benefit, compared to other European countries, from
the advantages that these reforms will bring to the Italian economy. That’s why I am
optimist: I am optimist about Europe and I am optimist about the Italian economy in
Europe.
J: QE just started, but it already has shown significant effects on the market. The European
Central Bank is looking for bond sellers. As you own a large quantity of BTPs, Italian bonds,
will you be selling some of them to the ECB?
MG: No, we are not thinking of selling them because, like all insurance companies, we
have bonds linked to our liabilities, therefore we do not have them for speculative
reasons, but to cover our liabilities. If we were to give them to the ECB, we would then
find it hard to rebuild a balanced assets/liabilities position like the one we have today.
I believe that the bonds will be given by those who own them for speculative
investment reasons, not linked to liabilities, i.e. financial institutions.
J: Do you think this operation will be successful?
MG: This operation is already a success. We can see the results today. It has already
lowered the spreads and boosted the markets. It is a huge operation, we are talking
about €1 trillion over two years. Its size is colossal, its impact can already be seen
and will be seen more and more over time. It is an operation that will have an effect
for more than two years.
J: Finally, Mr. Greco, this financial statement closes a stage of intense restructuring work for
the Company, which achieved the goals, even one year in advance. From now on, what are
you going to aim to? What is the strategy for the next stage for Generali?
MG: We will talk about this on the 27th of May, when the new strategy will be
unveiled. The good news is that we got there year in advance, it took us one year less
than what we thought. This year is a massive one, because economies are starting to
recover, and therefore we can be ready when the market starts to offer some
opportunities; we would have missed them had we still been in the turnaround stage.
We need to gain time, to achieve things very rapidly and we are glad we did it so far.
J: Thank you