Expecting to present our next Investor Day on 21 November 2018, we are currently nearing the completion of the industrial turnaround announced in May 2015 and confirmed at the November 2016 Investor Day
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 are improving 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 are leading 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.
In this view, we have signed or concluded a number of important deals to exit markets not meeting our future profitability and growth requirements. The cash proceeds that we have received or are going to receive amount to approximately € 1.5 billion, well above our announced target of € 1 billion, with details of the proceeds deployment to be provided within our next Investor Day on November 21 2018.
TRANSACTION CLOSINGS AND RECENT AGREEMENTS TO OPTIMISE OUR GEOGRAPHICAL PRESENCE
Since the start of our plan we have agreed transactions which are now concluded as in the case of Guatemala, Panama and Colombia, as well as our business in Ireland and in the Netherlands. We have recently signed other important deals, among which the disposal of our activities in Belgium.
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. As to the net reduction in costs of €200 million in mature markets originally planned by 2018, we already achieved the target by the end of 2017, taking advantage of many synergies and becoming consequently more efficient and agile.
STRATEGIC TURNAROUND OF GENERALI IN GERMANY
In the course of 2017, we have made significant progress in our second largest market, Germany, with the launch of the “One Company” approach and ultimately with the agreement to dispose of Generali Leben, a transaction structured through an innovative industrial partnership.
Technical excellence remains a centrepiece of the Group’s performance.
In the Life business, we constantly improve product quality and optimise the return on invested capital, pursuing growth in the share of new production with low capital intensity products.
In the Non-Life business we are pursuing actions to maintain or further extend our underwriting outperformance as compared to our large European peers, thanks to our strong pricing, underwriting and claims management capabilities and to our innovative offerings.
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. After the successful implementation in the US, Iris was launched also in Canada and can 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.
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, as well as reducing the Life average portfolio guarantee, 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. At the end of June 2018 both the above mentioned optimisation targets were already achieved and exceeded. Firstly, the capital light reserves have increased by +8.4 p.p., compared to the originally planned + 6.6. p.p.. Secondly, the planned30 bps guarantee reduction to an average value of 1.5% by 2018 was exceeded with a 42 bps reduction from the end of 2015 and the average guarantee is standing at 1.39%.
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. We are on track to meet this goal. In the first half of 2018 our asset management activities in Europe generated € 88 million of net result, resulting in an additional € 36 million to the Group compared to the first half of our base year of comparison 2016.
NEW PROTECTION SOLUTION IN ITALY
BG Stile Libero is among our innovative investment and protection solutions in terms of flexible content, services and distribution opportunities throughout the customer’s life. With the launch of this product we moved 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 among our most successful products in terms of Banca Generali’s net inflow over the past years.
We are experiencing a revolution in customer behaviour and technogical development. After the excellent results from the actions launched in 2015 aimed at increasing customer service and loyalty, we are continuedly capitalizing on these trends, with the objective to increase client retention overall by 2 p.p.. We are becoming “simpler, smarter and faster” not only in our internal processes, but also in the interaction with customers, understanding their needs. We continue to implement our Net Promoter Score initiative to reach our clients, collect their feedback and act upon it, with currently 90% of our customer base is covered by the program. With the Mobile Hub we allow clients to perform insurance transactions on their mobiles and with the Digital Agent we equip distributors with a platform leveraging social media, data and AI, to improve communications with customers and business opportunities.
T-NPS GROUP PROGRAMME
Launched in 2015, the Net Promoter Score Listen and Act programme currently 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 was launched in Spain,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 consequently in France and 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.