Goals and results
Based on the outstanding results achieved in 2016, we have confirmed the financial targets for the period 2015-2018: over €7 billion in cash generation, more than €5 billion in dividends and an Operating RoE of over 13%.
FINANCIAL TARGETS 2015-2018
On the Investor Day in November 2016, we announced an increased pace to accelerate the execution of our strategic plan. Despite the complex and uncertain context and adverse market conditions, we confirmed the financial targets for 2018:
- €7 billion of net cumulative net operating cash generation (2015-2018). As at year-end 2016, the Group had reached €3.5 billion.
- €5 billion of cumulative dividend distribution (2015-2018). As at year-end 2016, the Group had reached €2.4 billion.
- €200 million of net reduction in operating costs in mature markets by 2018. The previous target of gross savings remains unchanged, amounting to €1.5 billion in the period 2012-2018.
- 13% of average Operating RoE over the period 2015-2018. The Group recorded an average level of 13.8% over the two-year period 2015-2016.
ACCELERATING TOWARDS EXCELLENCE: THE TARGETS CONNECTED TO THE STRATEGIC DIRECTIONS
The targets we aim to achieve with the 6 strategic directions are:
- From the optimisation of our international presence: we plan to generate over €1 billion in cash proceeds by the end of 2017 through the withdrawal from 13-15 non-attractive markets. The process has already started with the sale of the businesses in Guatemala and Lichtenstein.
- Rationalisation of the operating machinery: With the Fit-to-Lead programmes, we intend to increase productivity by 15%. We expect to achieve a net reduction in operating costs in mature markets of €200 million by 2018, with restructuring, integration and simplification processes that will make the Group faster and more agile. Already in 2016 we reduced costs by around €70 million: this allowed us to bring forward the final target by one year.
- Strengthening of technical expertise: In the Non-Life branch we intend to further improve our outperformance compared to peers in the Combined Ratio (CoR, 92.5% in 2016). The sophistication of tariffs in the Auto branch will contribute to this result; a growth of between 2% and 4% in gross direct premiums in the Non-Auto segment between 2016 and 2018; technical excellence and service in claims management. In the Life segment, the group will pursue the growth of the new production share with low capital absorption products (+8 pp in the three major markets of Italy, Germany, France).
- Reduction of portfolio structure in the Life segment: thanks to the Active Liability Management and the orientation of the new production on Unit Linked and Protection products, we aim to achieve a 30 bps reduction in the guarantee of the Life portfolio to an average value of 1.5% 2018, and a 6 pp increase in Capital Light reserves (low-capital absorption life business).
- Innovation focused on customers and distribution networks: From initiatives aimed at increasing customer loyalty through innovations to real added value for consumers and distributors, especially thanks to digital technologies, we expect an increase in retention of 2 pp in 3 years, compared to the current level of 87.5%.
- Strengthening of brand: we aim to increase the degree of preference in mature markets by 3% and the level of awareness in promising markets by 10%.
We are already achieving the first results in our plan “Simpler, Smarter. Faster”.