At the November 2016 Investor Day we confirmed financial targets announced in May 2015 and announced initiatives to accelerate the execution of our plan
Today, the 6 strategic pillars presented in May 2015 are still valid, aiming to improve customer experience, to provide more efficiency and efficiency to our distributors, to create simpler and smarter offerings, to become more agile and effective, to open up to technological innovation and to place our people in the centre.
However, the increasingly challenging market environment has led us to identify which business initiatives to accelerate to improve our short-term and medium-term operational performance and long-term value creation.
Three strategic directions will improve our operational performance already in the short and medium term: the optimisation of our international presence, rationalisation of the operating machine and reinforcement of technical skills.
Three directions will lead to the creation of long-term value: Portfolio rebalancing, innovation focused on customers and distribution networks, and brand enhancement.
Innovation is a driving force for strategic actions and will enable us to remain competitive in a context characterised by increasing digitalisation, which changes the speed of doing business, influencing consumer needs and leading to more direct relationships between customers and distribution networks.
We also count on some notable competitive advantages: proprietary distribution network, technical and operational excellence, cohesive management.
THREE STRATEGIC DIRECTIONS TO IMPROVE OUR OPERATING PERFORMANCE
We will maintain a global and diversified geographic presence, focusing on key markets where we are already technically strong, efficient and profitable, and on countries that offer significant growth prospects over the medium to long term. The goal is to remain in the countries where we think we can be in the top 5 in the short to medium term.
We will exit 13-15 markets that do not meet our future profitability and growth requirements in order to invest in those that offer better prospects.
DIVESTITURES IN GUATEMALA AND LICHTENSTEIN TO OPTIMISE OUR GEOGRAPHICAL PRESENCE
We have already begun the process of geographical rationalisation with the sale of our subsidiaries in Guatemala and Lichtenstein. From the optimisation of our international presence we plan to generate over €1 billion in cash proceeds by the end of 2017, to reinvest in the business.
We are constantly striving to improve our operational processes to maximise the Group’s potential and improve its efficiency, with initiatives such as streamlining the product portfolio, simplifying processes and integrating IT platforms. This will allow a net reduction in costs of €200 million in mature markets by 2018. In expanding markets, we will grow in a disciplined way. At the same time, we will continue to invest in new skills and strengthen our activities with greater value for stakeholders.
DIGITALISATION OF REIMBURSEMENTS IN GERMANY
In Germany, thanks to the Central app, we have digitalised the whole process of requesting reimbursement of healthcare expenses, eliminating paper trails and speeding up compensation time. In fact, the app allows customers to simply send photos of receipts via smartphones and check the status of their requests. More than 30,000 customers are using it.
Technical excellence will remain a centrepiece of the Group’s performance.
In the Non-Life business, we will pursue actions to maintain or further extend our underwriting outperformance as compared to our large European peers.
For example we will pursue:
- greater sophistication of tariffs in the Auto segment, thanks to the use of data analytics and telematic profiling;
- risk selection;
- innovative offerings to push the growth of Non-Auto (related products like Smart Home, cyber risk products etc.);
- claims management based on technical excellence and service.
PROTECTION OF IDENTITY IN USA
To provide customers with security and peace of mind against the threat of fraud and identity theft, Europ Assistance has created Iris, a service portal covering the entire arc of identity protection: Prevention, management, alerts and resolution. Launched in the US, Iris has had a positive impact: it is about to launch in Canada and will be easily replicable in other markets.
DRONES IN THE CZECH REPUBLIC
In the Czech Republic, we were the first in the insurance industry to obtain a licence to use drones for extended property controls, a solution that provides detailed documentation, saving time and costs. The design phase lasted three years and we plan to develop the initiative through its replicability and the ability to incorporate new technologies such as thermal and multispectral cameras to carry out controls and take photos and videos even in the most adverse conditions.
In the Life business, we will constantly improve product quality and optimise the return on invested capital, pursuing growth in the share of new production with low capital intensity products.
THREE STRATEGIC DIRECTIONS TO CREATE LONG-TERM VALUE
We aim to optimise the portfolio structure by substantially increasing the proportion of low capital-absorbing products and commissions per capita, in order to protect the portfolio’s sustainability and increase resilience to market volatility. New Life production will be more focused on Unit Linked and Protection products, while pursuing rigorous Active Liability Management in the traditional portfolios. We aim to achieve a 30 bps reduction in the Life portfolio guarantee to an average value of 1.5% in 2018.
In this area, Generali has also launched a new strategy based on asset management that will make a strong contribution to the component of results linked to the fee-based service. Our new strategy is based on two pillars: increasing our skills, offering tailor-made investment solutions for European companies and savings products for private customers. This strategy should add in excess of €150m to the Group’s net result by 2020.
NEW PROTECTION SOLUTION IN ITALY
BG Stile Libero is our innovative investment and protection solution in terms of flexible content, services and distribution opportunities throughout the customer’s life. For the first time we move beyond the boundaries of financial products and mere insurance guarantees to a combination of these two worlds. This increases the central role of professionally developed capital planning: BG Stile Libero has been our most successful product in terms of Banca Generali’s net inflow over the past two years.
We have already achieved excellent results from the actions launched in 2015 aimed at increasing customer service and loyalty. We will continue to engage in specific and targeted innovation initiatives, where the added value for our customers and our distribution network is clear.
We are among the insurance leaders in the field of telematics, with over 1.3 million policies using various technology tools - such as Mobile App or Black Box - to induce the adoption of proper driving behaviours that help reduce accidents and collect useful information to provide products and services which are increasingly tailored to customer needs. Recently, the first “connected home” policies were also launched, which constitute major innovations in home risk insurance.
T-NPS GROUP PROGRAMME
Launched in 2015, the Net Promoter Score Listen and Act programme is currently active in 26 business units and covers about 90% of our customer base. As part of the programme, we have sent more than three million questionnaires to customers around the world, achieving a high overall response rate. We have attracted more than 108,000 unsatisfied customers to understand their motivations and set up interdepartmental working teams to implement different actions in response to the feedback received.
256 “fast” solutions have already been implemented based on the feedback received, and we have made 175 structural improvements such as automated status updates via SMS, apps, and portals.
DIGITAL AGENT AND MOBILE HUB
The Digital Agent programme is designed to equip our agents with digital devices to better understand and adapt to the new customer approach to the insurance world, through increased visibility on the web, social media and the mobile world. The creation of web & mobile tools has been completed in Spain and is being completed in France, Germany and Austria, while agents from Indonesia, Italy and Spain have been equipped with tools that enable them to be present on social networks with great effectiveness.
We also want to offer our customers the opportunity to interact more with us via mobile. That’s why we have created Mobile Hub, a platform that will allow our customers to manage their policies easily and independently. Indeed, it will be possible to file a complaint, contact an agent, or renew a policy directly from your mobile phone simply by downloading our app.
Generali Vitality, launched in 2016 in Germany and France and soon in Austria, is an innovative health and wellbeing programme designed to encourage and reward the behaviour of customers who want a healthier lifestyle, creating value not only at individual level, but for society as a whole.
We aim to increase the brand’s visibility and significantly increase the level of consumer preference. In line with our customer-oriented strategy, the brand will be repositioned on prevention issues and close to people’s most valuable assets (life, health, home, family and work). We will therefore look to optimise the brand portfolio, leverage the Winged Lion symbol, optimise media investments and search engine rankings for insurance cover quotes, and help our agents build value-added relationships with their customers through an increasingly consultative approach.