Growth factors

We live in a constantly and rapidly changing world. We face unprecedented challenges. We take them into account with a view to sustaining our ability to create value over time. We assess the risks for the Group and our stakeholders in a systematic way, while guaranteeing that they are adequately monitored. We manage our activities and seize the opportunities from the context.

Growth factors

In an operating context made even more complex by the consequences of the conflict in Ukraine, we have continued to monitor the mega trends that pose significant risks and opportunities for the Group and for our stakeholders, with a view to sustaining our ability to create value over time. The Lifetime Partner 24: Driving Growth’ strategy has proven to be particularly effective in enabling us to implement the activities envisaged by our plan, also taking these challenges into account and guaranteeing the systematic assessment and adequate risk monitoring.

Geopolitical and financial instability

The year 2022 was characterised by the war in Ukraine as well as the tail end of the Covid-19 pandemic. The conflict sparked energy supply fears, exacerbating the price pressures that had already been felt following the post-Covid economic recovery. Rising inflation led to exacerbation of monetary policy. Financial markets were affected by geopolitical events, economic performance, and economic policy responses, and were characterised by heightened volatility.

Our management

The Group’s asset allocation strategy is still mostly guided by consistency between liability management and targets on return and solvency. The higher interest rates allowed to lock-in attractive yields both for government bonds with high rating, which are the main instruments to pursue the matching of long-term liabilities, and for the investments in corporate bonds.

Geographical diversification and selective focus on private investments (private equity and private debt) and on real assets (real estate and/or infrastructure investments, both direct and indirect) continue to be important factors in current investment activities that aim to increase diversification and sustain current return; the multi-boutique Asset Management platform developed by the Group aims to enhance investment capacity in these market sectors.

ESG dimensions play a more and more relevant role in the process of investment allocation, specifically focusing on climatic change, backing companies that have a lower impact in terms of fossil emissions and that are focused on sustainable development, both environmental and social.

We are exposed to the market risks arising from the value fluctuations of the investments and to the credit risks linked to the risk of counterparties’ non-fulfilment as well as to expansion of the credit spread. We are handling these risks by following principles of sound and prudent management, in line with the Prudent Person Principle and with the Group Investment Governance Policy and risk guidelines. We also measure financial and credit risks using the Group’s Partial Internal Model, which offers us a better representation of our risk profile.

We are also exposed to operational risks, particularly owing to pressure on supply chains and business interruptions, together with the energy crisis. To ensure business continuity, both internal and external operational resilience has to be guaranteed – including third parties management.

Digital revolution and cyber security

We are facing a profound change guided by the interaction, cumulative effects and rapid evolution of various technologies: Internet of Things, cloud services, cognitive computing, advanced analytics, Smart Automation (SA), Artificial Intelligence, 5G and the development of mobile networks are elements that contribute to creating a renewed environment in which to operate in order to optimise efficiency, operations and proximity with customers, agents and employees. Technological evolution also involves exponential growth in cyber threats, such as attacks aimed at stealing information or blocking operational processes.

Our management

Thanks to specific tools and skill sets we formulate and analyse customer data - while guaranteeing anonymity - to enrich customer relations and be able to customize the offer and anticipate their needs. The increasing internal culture has made it possible to consolidate platforms that let us leverage synergies coming from the RPA and the cognitive technologies, thus allowing increasingly complex processes to be automated which increases quality and efficiency.

We are in step with the new technologies and are protecting ourselves from the new threats. Our IT security strategy, named Cyber Security Transformation Program 2, 2020-2022, aims to further increase our security posture through the adoption of innovative and advanced solutions and the progressive standardisation and centralisation of the Group cyber services. Adequate management of this risk is therefore fundamental in order to limit potential effects of economic and operational nature but also to preserve, in particular, the confidence of customers in the processing of their data, which are frequently sensitive.

Climate change

Climate change is a material mega trend, with complex impacts in different geographies and different sectors. Climate change risks can be divided in physical risks – arising from the worsening of catastrophic events such as storms, floods, heat waves - and transition risks – arising from the economic developments generated by the transition to a greener economy, with lower or virtually zero levels of greenhouse gas emissions.

Our management

In June 2022, Generali updated its climate strategy, updating the one approved in 2018, and adopting significant actions pertaining to investments and underwriting. These represent the core business of the Company, which is committed to contributing to a low-carbon future.

We have defined processes and tools to mitigate climate risks and seize the opportunities arising from the green transition. These include monitoring the adequacy of the actuarial models to assess and rate risks, recourse to risk transfer mechanisms, periodical analysis of the investments, product and service innovation processes, dialogue with stakeholders and development of partnerships to share knowledge and identify effective solutions. Particularly noteworthy is our participation in the Net-Zero Asset Owner Alliance, the Net-Zero Insurance alliance, the PRI (Principles for Responsible Investments) Climate Action 100+ network, and the PRI and LSE Investing in a Just Transition project.

In order to seize the investment and development opportunities arising from mitigation and adaptation to climate change, we offer insurance solutions to protect from natural catastrophe damage, coverage for industrial power generation plants from renewables, and insurance solutions to support customers in adopting sustainable lifestyles. We are also increasing our direct investments in green and sustainable assets as stated in the ‘Lifetime Partner 24: Driving Growth’ strategy, and we continue to issue bonds with the aim of financing or refinancing also projects relating to green buildings, renewable energies, energy efficiency and clean transportation.

Ageing and new welfare

Modern communities continue to be influenced by distinct demographic and social phenomena with a strong impact on their socio-economic balances. In the more mature European economies, we are witnessing a continual process of population aging, driven by an increase in life expectancy, net of the still uncertain long-term pandemic effects, and a decrease in birth rates. The international migration phenomena only partially counter-balance this trend, which is in any case otherwise influenced by socio-political initiatives adopted locally.

In most European markets, the younger age groups are affected by a reduced and often discontinuous capacity to generate average income; this is strongly influenced by a flexible but precarious labour market that does not ensure reasonable certainty for financing the public welfare system. We confirm the presence of unbalanced communities, where the increase in social security and healthcare needs do not match the appropriate funding and coverage of public systems by the active population.

The healthcare need naturally evolves towards increasingly sophisticated, hence costlier, supplies and services, which have to face new needs. The stable expansion of the elderly and vulnerable age groups highlights the trend of a constant increase in chronic diseases with severity and incidence prolonged over time. At the same time, a widespread and enhanced awareness of the bond between health, lifestyles and the environmental context is developing thanks to both public social initiatives and greater proactiveness and promotion from private market.

Our management

We actively engage in creating more stable communities while monitoring and tackling the effects of a changing society. This is why we develop and offer flexible and modular pension and welfare solutions for the coverage of healthcare costs and other potential current and future needs for individuals, families and communities. We are committed to being a Lifetime Partner to our customers, strengthening the dialogue with individuals during their entire period of interaction with our companies through new, streamlined services accessible 24/7, in addition to subscription processes based on digitization and automation.

We provide customers with complete and easily accessible information on products and services, while helping them to understand the primary factors that may affect their income capacity and quality of life, and aiding them in accurately assessing their capacity to save as well as identifying their current and future needs.

Pandemics and extreme events

The Covid-19 pandemic has become one of the greatest global challenges in recent decades. After an upsurge at the beginning of 2022, the spread and the danger of the virus have decreased thanks to vaccinations and the spread of less invasive variants during the spring. The pandemic has had negative effects on every age group: the health impacts on elderly are added to the concomitant exacerbated economic weakness of singles and young families. The long-term effects are not yet fully stabilized and will affect the future demand of insurance and welfare services.

Our management

The digital transformation has been confirmed as a key element both as a communication channel and as a lever to enhance the efficiency in services to our customers, as well as to our distribution network. Through its digital approach, Generali has been able to stay close to its customers and its network even in the lockdown phases.

We continue to closely monitor the evolution of the pandemic in order to control premiums, frequency and severity of claims and their impact on our business profitability.

To be able to meet new consumer needs and interests, we expanded our insurance solution offerings with new products and services and improving, with extensive use of digital technology, the operating processes for underwriting policies and settling claims.

We continue to support the recovery of the European economies impacted by Covid-19 through the Fenice 190 investment plan focusing on infrastructure, innovation and digitalization, SMEs, green housing, healthcare facilities and education.

The pandemic has also impacted the internal organization, accelerating and improving processes and actions that were already in place. We are building flexible and sustainable hybrid work models to unlock our people potential, boost the business strategy ambition and deliver benefits to all the stakeholders involved in the Next Normal.