Generali Group CEO Philippe Donnet interviewed at the Financial Times’ “Managing Assets for Insurers” conference
The GCEO discussed how the insurance sector and Generali can contribute to a sustainable recovery and prepare for future risks
“Looking forward what matters is the recovery, but not any kind of recovery, it can only be sustainable and it must be green,” Generali Group CEO Philippe Donnet stated during the keynote interview with Ian Smith at the FT Managing Assets for Insurers digital conference on June 10. The conference was attended by insurance leaders and investors to discuss the most effective strategies to deliver returns, sustainable growth and stability amid an uncertain economic outlook and continued market volatility.
During the interview, the Group CEO discussed how the European insurance industry can respond to geopolitical risks and macroeconomic instability in order to contribute to a sustainable recovery and future resilience. He also spoke about the evolution of investment strategies as a result of the change (and challenges) in the current macro environment as well as how to meet regulatory requirements while still delivering higher returns. Philippe Donnet also stated that “I believe that it is important that Europe has its own green and sustainable ratings agencies,” when asked about the evolution of ESG factors within the context of Generali’s approach to investments.
“We are celebrating our 190th anniversary. We took this opportunity to launch a new € 3.5bn investment fund, ‘Fenice 190’, dedicated to the sustainable recovery.”
Philippe Donnet also highlighted that in an environment that remains uncertain due to the ongoing pandemic, the European insurance industry has a crucial role to play in building the ground for a recovery that is more sustainable and greener, as it can leverage noteworthy firepower and investment expertise with € 11 trillion of managed assets - with Generali alone accounting for over € 630 billion. With a record operating result in 2020 and an excellent start to 2021, the Group is well positioned to support society and the real economy, as well as help in being fully prepared for future risks.
As part of this effort to boost European recovery - and to mark its 190th anniversary, Generali has launched five-year “Fenice 190”, the investment plan that targets all of European countries in which it operates to focus on sustainable growth in infrastructure, innovation and digitalization, SMEs, green housing, health care facilities and education.
To contribute to future resilience, the insurance sector can also help to manage risks from unforeseen crises. “In Generali we have been proactive, to propose and work on European protection for the next pandemic which would be a public-private partnership,” added Philippe Donnet. Hence, the GCEO has proposed a multi-level international pandemic fund (Pandemic Risk Pool) that brings together European institutions, member states and the leading insurance and reinsurance companies to create public-private partnerships to protect against future risks.
“We have a great opportunity in front of us. Insurance companies are long-term investors and we can invest in the real economy – in real estate, private equity and infrastructure with a long term view. We have a very good dialogue with European and national politicians that completely understand the need for insurance and investment regulation to be consistent with the need for the sustainable and green recovery.”
Commenting on the Solvency II Directive, Mr. Donnet highlighted that it is a key instrument for freeing up capital and directing it towards projects in line with the Commission’s political agenda such as the Green Deal, the Capital Markets Union and, more generally, the long-term investments that can support economic recovery. Moreover, within the framework of this Directive and considering how insurers can support the EU’s ambition to make Europe the first climate neutral continent, Generali has drawn up a proposal to treat “Green Bonds” as an asset class in its own right, in view of their distinct characteristics and lower risks when compared to other types of bonds. The idea is to consider investments in long-term green bonds separately, with decreasing capital requirements for longer holding periods.
When asked what he viewed as the biggest risk following the pandemic, Mr. Donnet replied that “The first risk would be not to take the right decisions to boost the economic and sustainable recovery,” and expressed his desire to not lose the spirit which has emerged in the context of the EU and US sustainable recovery plans. “The other risk would be to give up the sustainable recovery and focus on a short term recovery, which would not be sustainable. I hope politicians have the courage to stick to the sustainable and green recovery – this requires tough choices and political courage.”