WEBVTT 1 00:00:08.490 --> 00:00:09.810 Giovanni, shall we start 2 00:00:09.810 --> 00:00:12.760 with a quick ID of Generali Deutschland? 3 00:00:12.760 --> 00:00:13.593 Yes, of course. 4 00:00:13.593 --> 00:00:15.477 Generali Deutschland is the second biggest 5 00:00:15.477 --> 00:00:18.640 insurer in the German market. 6 00:00:18.640 --> 00:00:23.633 We do have almost 10,000 employees in this market, 7 00:00:23.633 --> 00:00:28.450 and about 14 billion Euro turnover. 8 00:00:28.450 --> 00:00:33.230 And we were able to deliver more than 800 million 9 00:00:33.230 --> 00:00:35.471 of operating profits in the last year. 10 00:00:35.471 --> 00:00:39.330 Giovanni, you've led a remarkable transformation 11 00:00:39.330 --> 00:00:42.960 of Generali Deutschland in the last few years. 12 00:00:42.960 --> 00:00:44.860 In this transformation you've streamlined 13 00:00:44.860 --> 00:00:49.110 your corporate governance, branding, 14 00:00:49.110 --> 00:00:54.095 product development distribution to boost profitability, 15 00:00:54.095 --> 00:00:59.090 and also solidify your leadership in innovation. 16 00:00:59.090 --> 00:01:02.950 Can you share why you started this transformation? 17 00:01:02.950 --> 00:01:04.793 When I came here five years ago, 18 00:01:04.793 --> 00:01:08.610 this was an apparently healthy company 19 00:01:08.610 --> 00:01:10.970 delivering 300 million of dividends every year 20 00:01:10.970 --> 00:01:12.350 to the shareholders, 21 00:01:12.350 --> 00:01:15.042 but still suffering from a silent sickness, 22 00:01:15.042 --> 00:01:18.400 which could have become a silent killer. 23 00:01:18.400 --> 00:01:20.430 The interest rates were falling down 24 00:01:20.430 --> 00:01:22.750 slowly but inexorably. 25 00:01:22.750 --> 00:01:26.290 So the environment was not an easy one 26 00:01:26.290 --> 00:01:29.500 for a life insurance company like we are basically 27 00:01:29.500 --> 00:01:31.980 because of three areas were to be addressed. 28 00:01:31.980 --> 00:01:34.530 The first one was that we had too many 29 00:01:34.530 --> 00:01:38.197 distribution channels competing between each other 30 00:01:38.197 --> 00:01:41.390 and therefore not exploiting the market potential 31 00:01:41.390 --> 00:01:42.670 and the competitive advantage 32 00:01:42.670 --> 00:01:45.200 we had in the area of distribution. 33 00:01:45.200 --> 00:01:48.380 The second area of concern was life insurance, 34 00:01:48.380 --> 00:01:51.080 in the sense that Germany was a market 35 00:01:51.080 --> 00:01:52.910 and is a market where the interest rates 36 00:01:52.910 --> 00:01:55.630 are the lowest in the European space. 37 00:01:55.630 --> 00:01:59.070 And all life insurance in this country have portfolios 38 00:01:59.070 --> 00:02:04.041 of customers which enjoy a guarantee of higher than 30%, 39 00:02:04.041 --> 00:02:05.420 so this is something 40 00:02:05.420 --> 00:02:08.505 which in the long run is not sustainable. 41 00:02:08.505 --> 00:02:10.900 The third thing was our organisation, 42 00:02:10.900 --> 00:02:15.733 a very complex organisation with an unclear governance, 43 00:02:16.566 --> 00:02:21.540 of the decision making process and a fragmented 44 00:02:21.540 --> 00:02:24.990 and duplicated cost structure. 45 00:02:24.990 --> 00:02:28.982 Can you share some of the outcomes 46 00:02:28.982 --> 00:02:32.746 of this very complex and successful transformation with us? 47 00:02:32.746 --> 00:02:36.010 So we started from distribution, 48 00:02:36.010 --> 00:02:40.530 where we were able to turn this problem 49 00:02:40.530 --> 00:02:42.530 of internal competition or different channels 50 00:02:42.530 --> 00:02:44.300 into an opportunity. 51 00:02:44.300 --> 00:02:46.200 We enjoy since 40 years, 52 00:02:46.200 --> 00:02:50.120 a corporation with the most successful distribution network 53 00:02:50.120 --> 00:02:53.190 of insurance business which I've ever seen, 54 00:02:53.190 --> 00:02:55.466 the DVAG, the Deutsche Vermogensberatung. 55 00:02:55.466 --> 00:02:57.370 And therefore we concentrated 56 00:02:57.370 --> 00:03:01.410 our physical exclusive distribution in that organisation. 57 00:03:01.410 --> 00:03:03.410 We brought 3,000 agents, 58 00:03:03.410 --> 00:03:08.410 which were operating under the brand of the mother company, 59 00:03:08.410 --> 00:03:10.720 into this DVAG organisation 60 00:03:10.720 --> 00:03:13.869 with a very successful improvement of productivity 61 00:03:13.869 --> 00:03:17.360 and efficiency in sales in a very short period of time. 62 00:03:17.360 --> 00:03:21.990 The second thing which we did was to create in this market 63 00:03:21.990 --> 00:03:25.255 a new normal for life insurance, 64 00:03:25.255 --> 00:03:28.190 and in doing so, we have to address the new business, 65 00:03:28.190 --> 00:03:31.140 the new products generation, and the portfolios. 66 00:03:31.140 --> 00:03:33.150 As far as new business is concerned, 67 00:03:33.150 --> 00:03:35.930 we decided immediately to stop the sale 68 00:03:35.930 --> 00:03:39.360 of traditional guaranteed products 69 00:03:39.360 --> 00:03:41.940 because of the situation in the interest rates. 70 00:03:41.940 --> 00:03:44.530 Basically it was a decision to switch 71 00:03:44.530 --> 00:03:48.630 from traditional products into a new generation 72 00:03:48.630 --> 00:03:50.570 of hybrid products, in which of course, 73 00:03:50.570 --> 00:03:53.250 we provide a certain guarantee to the customer, 74 00:03:53.250 --> 00:03:56.674 but we allow the customer to enjoy the potential upside 75 00:03:56.674 --> 00:03:59.870 in the unit link 76 00:03:59.870 --> 00:04:00.960 part of the products, 77 00:04:00.960 --> 00:04:03.060 which is basically investing in equity 78 00:04:03.060 --> 00:04:05.210 and in corporate bonds. 79 00:04:05.210 --> 00:04:09.250 The most difficult part was to restructure the portfolios. 80 00:04:09.250 --> 00:04:12.640 Out of 110 billion of reserves of our portfolio 81 00:04:12.640 --> 00:04:13.810 in life insurance, 82 00:04:13.810 --> 00:04:15.830 there were roughly speaking one third 83 00:04:15.830 --> 00:04:18.870 which were not sustainable with the business model 84 00:04:18.870 --> 00:04:22.210 of a classical life insurer in this market. 85 00:04:22.210 --> 00:04:24.890 So what we did was to put 86 00:04:24.890 --> 00:04:29.580 this book of business about 35 billion resource, 87 00:04:29.580 --> 00:04:32.210 which were concentrated in one of our three companies. 88 00:04:32.210 --> 00:04:34.540 We do have three companies in Germany, 89 00:04:34.540 --> 00:04:38.027 Cosmos Leben, Aachen Leben, and Generali Leben. 90 00:04:38.027 --> 00:04:41.640 And Generali Leben was the company, 91 00:04:41.640 --> 00:04:46.635 which was showing the most difficult situation. 92 00:04:46.635 --> 00:04:50.720 And we wanted to offload this portfolio from our books, 93 00:04:50.720 --> 00:04:52.310 from our balance sheets, 94 00:04:52.310 --> 00:04:54.745 and to give this portfolio to a joint venture 95 00:04:54.745 --> 00:04:59.490 between us and a specialist in this kind of business. 96 00:04:59.490 --> 00:05:01.900 We did it with Viridium, and this was very successful 97 00:05:01.900 --> 00:05:06.677 because it allowed us to free up a huge amount of capital, 98 00:05:06.677 --> 00:05:09.160 which translated into the capability 99 00:05:09.160 --> 00:05:13.050 of having free resources in order to support 100 00:05:13.050 --> 00:05:15.890 the new investments, which are necessary for our strategy 101 00:05:15.890 --> 00:05:18.380 of growth in this market going forward. 102 00:05:18.380 --> 00:05:23.148 The third thing which we were able to do was to 103 00:05:23.148 --> 00:05:25.674 restructure completely the organisation 104 00:05:25.674 --> 00:05:29.460 and the governance of this complex group. 105 00:05:29.460 --> 00:05:32.760 At the beginning we had the 13 different companies, 106 00:05:32.760 --> 00:05:36.370 11 different product factories, seven brands on the market. 107 00:05:36.370 --> 00:05:37.740 So we streamlined everything. 108 00:05:37.740 --> 00:05:41.360 All our employees are now belonging to one insurance 109 00:05:41.360 --> 00:05:43.470 company, and one service company. 110 00:05:43.470 --> 00:05:48.430 All this brought us to increase the profitability 111 00:05:48.430 --> 00:05:51.410 of this business significantly, 112 00:05:51.410 --> 00:05:53.900 because as I said, this organisation, 113 00:05:53.900 --> 00:05:57.120 we're able to deliver 300 million of the dividends 114 00:05:57.120 --> 00:05:59.070 to the shareholders with a certain amount 115 00:05:59.070 --> 00:06:00.840 of capital absorption. 116 00:06:00.840 --> 00:06:04.870 Today we have been able to transform this 117 00:06:04.870 --> 00:06:08.438 into a 500 million, 118 00:06:08.438 --> 00:06:11.234 so dividend payment capability, 119 00:06:11.234 --> 00:06:15.200 sustainable over time and heading towards 600. 120 00:06:15.200 --> 00:06:17.070 And at the same time, we ran this business 121 00:06:17.070 --> 00:06:19.580 with a lower amount of capital due to the fact that 122 00:06:19.580 --> 00:06:22.627 we were able to instal these new normality 123 00:06:22.627 --> 00:06:24.830 in the life insurance business. 124 00:06:24.830 --> 00:06:28.310 Now knowing you, you have other things in mind, 125 00:06:28.310 --> 00:06:29.290 new things in mind. 126 00:06:29.290 --> 00:06:32.830 If we look at the insurance landscape today 127 00:06:32.830 --> 00:06:37.050 and insurance trends, what jumps to mind? 128 00:06:37.050 --> 00:06:38.640 What do you need to react to? 129 00:06:38.640 --> 00:06:41.220 Technology is a big driver of change certainly, 130 00:06:41.220 --> 00:06:43.790 but it's only one factor which an insurance company 131 00:06:43.790 --> 00:06:47.600 needs in order to safeguard the future and the success. 132 00:06:47.600 --> 00:06:50.210 And it will be much better for the customers 133 00:06:50.210 --> 00:06:53.300 and for the insurers if we are now capable, 134 00:06:53.300 --> 00:06:56.070 not only to be there after the claims have happened, 135 00:06:56.070 --> 00:06:59.570 but to be there every day side by side with the customer, 136 00:06:59.570 --> 00:07:01.140 like a guardian angel, 137 00:07:01.140 --> 00:07:05.430 line:15% in order to give him either assistance online, 138 00:07:05.430 --> 00:07:08.138 line:15% real time assistance during the claim, 139 00:07:08.138 --> 00:07:12.820 line:15% or even better to give him prevention advice 140 00:07:12.820 --> 00:07:15.520 line:15% and incentives in order to prevent 141 00:07:15.520 --> 00:07:17.720 line:15% that the claims will happen. 142 00:07:17.720 --> 00:07:22.090 Today, this is really possible 143 00:07:22.090 --> 00:07:25.880 thanks to the new technologies and the new trends 144 00:07:25.880 --> 00:07:28.570 in the population, which are happening. 145 00:07:28.570 --> 00:07:30.860 The companies which will be able to transform 146 00:07:30.860 --> 00:07:34.048 their business model from payers of claims 147 00:07:34.048 --> 00:07:38.420 into companions of the customer over the lifetime, 148 00:07:38.420 --> 00:07:40.310 of course, also paying the claims 149 00:07:40.310 --> 00:07:42.210 when the claims will happen, 150 00:07:42.210 --> 00:07:45.900 but with much better helpers in preventing the claims 151 00:07:45.900 --> 00:07:49.840 or supporters during the claims will win the battle. 152 00:07:49.840 --> 00:07:51.620 What we are going to do in this area 153 00:07:51.620 --> 00:07:54.200 is to be customer lifetime partners, 154 00:07:54.200 --> 00:07:56.570 so they Generali has this in the core 155 00:07:56.570 --> 00:07:58.660 of the strategy going forward. 156 00:07:58.660 --> 00:08:00.240 And being customer lifetime partner, 157 00:08:00.240 --> 00:08:03.040 frankly speaking, you cannot be, if you just take claims. 158 00:08:03.040 --> 00:08:05.000 You can be customer lifetime partner 159 00:08:05.000 --> 00:08:07.870 if you increase the capability to deliver solutions 160 00:08:07.870 --> 00:08:10.510 to the customer, which are insurance, 161 00:08:10.510 --> 00:08:13.968 but also prevention, assistance, supporting, 162 00:08:13.968 --> 00:08:15.790 during the moment of the claim 163 00:08:15.790 --> 00:08:18.913 or before the claim has happened. 164 00:08:18.913 --> 00:08:21.060 You've made it very clear what it feels like 165 00:08:21.060 --> 00:08:22.900 for the customer to actually be dealing 166 00:08:22.900 --> 00:08:25.299 with this new kind of insurance. 167 00:08:25.299 --> 00:08:30.299 I would say you are reinventing insurance 168 00:08:30.303 --> 00:08:32.700 and your company while you do that. 169 00:08:32.700 --> 00:08:35.240 So could you share from your perspective 170 00:08:35.240 --> 00:08:37.120 what it means in terms of your business model? 171 00:08:37.120 --> 00:08:41.770 How does that need to change or the setup of your company 172 00:08:41.770 --> 00:08:44.520 to be actually able to deliver this? 173 00:08:44.520 --> 00:08:47.067 Our people should think always about, 174 00:08:47.067 --> 00:08:49.010 what is the reaction of the customer. 175 00:08:49.010 --> 00:08:50.700 What will the customer say? 176 00:08:50.700 --> 00:08:52.190 What will the customer appreciate 177 00:08:52.190 --> 00:08:54.421 or not appreciate of what we are doing? 178 00:08:54.421 --> 00:08:57.480 This is what I call the new humanism of the customer. 179 00:08:57.480 --> 00:09:00.450 In a world in which everything is becoming digitalized, 180 00:09:00.450 --> 00:09:02.840 everything is becoming impersonal. 181 00:09:02.840 --> 00:09:06.330 I think the customer wants to be considered as a person. 182 00:09:06.330 --> 00:09:08.220 We need to put him as a person 183 00:09:08.220 --> 00:09:11.470 in the centre of the universe, like in the humanism, 184 00:09:11.470 --> 00:09:14.840 but we need to make sure that the solutions with technology 185 00:09:14.840 --> 00:09:17.890 are now enabling us to do many different things, 186 00:09:17.890 --> 00:09:19.800 are there in order to support 187 00:09:19.800 --> 00:09:22.732 these personal interaction with the customers. 188 00:09:22.732 --> 00:09:26.306 Giovanni, thanks for sharing this exciting story 189 00:09:26.306 --> 00:09:28.734 and your insights into the industry. 190 00:09:28.734 --> 00:09:30.547 Thank you very much, Chris.