Giovanni, shall we start
with a quick ID of Generali Deutschland?
Yes, of course.
Generali Deutschland is the second biggest
insurer in the German market.
We do have almost 10,000 employees in this market,
and about 14 billion Euro turnover.
And we were able to deliver more than 800 million
of operating profits in the last year.
Giovanni, you've led a remarkable transformation
of Generali Deutschland in the last few years.
In this transformation you've streamlined
your corporate governance, branding,
product development distribution to boost profitability,
and also solidify your leadership in innovation.
Can you share why you started this transformation?
When I came here five years ago,
this was an apparently healthy company
delivering 300 million of dividends every year
to the shareholders,
but still suffering from a silent sickness,
which could have become a silent killer.
The interest rates were falling down
slowly but inexorably.
So the environment was not an easy one
for a life insurance company like we are basically
because of three areas were to be addressed.
The first one was that we had too many
distribution channels competing between each other
and therefore not exploiting the market potential
and the competitive advantage
we had in the area of distribution.
The second area of concern was life insurance,
in the sense that Germany was a market
and is a market where the interest rates
are the lowest in the European space.
And all life insurance in this country have portfolios
of customers which enjoy a guarantee of higher than 30%,
so this is something
which in the long run is not sustainable.
The third thing was our organisation,
a very complex organisation with an unclear governance,
of the decision making process and a fragmented
and duplicated cost structure.
Can you share some of the outcomes
of this very complex and successful transformation with us?
So we started from distribution,
where we were able to turn this problem
of internal competition or different channels
into an opportunity.
We enjoy since 40 years,
a corporation with the most successful distribution network
of insurance business which I've ever seen,
the DVAG, the Deutsche Vermogensberatung.
And therefore we concentrated
our physical exclusive distribution in that organisation.
We brought 3,000 agents,
which were operating under the brand of the mother company,
into this DVAG organisation
with a very successful improvement of productivity
and efficiency in sales in a very short period of time.
The second thing which we did was to create in this market
a new normal for life insurance,
and in doing so, we have to address the new business,
the new products generation, and the portfolios.
As far as new business is concerned,
we decided immediately to stop the sale
of traditional guaranteed products
because of the situation in the interest rates.
Basically it was a decision to switch
from traditional products into a new generation
of hybrid products, in which of course,
we provide a certain guarantee to the customer,
but we allow the customer to enjoy the potential upside
in the unit link
part of the products,
which is basically investing in equity
and in corporate bonds.
The most difficult part was to restructure the portfolios.
Out of 110 billion of reserves of our portfolio
in life insurance,
there were roughly speaking one third
which were not sustainable with the business model
of a classical life insurer in this market.
So what we did was to put
this book of business about 35 billion resource,
which were concentrated in one of our three companies.
We do have three companies in Germany,
Cosmos Leben, Aachen Leben, and Generali Leben.
And Generali Leben was the company,
which was showing the most difficult situation.
And we wanted to offload this portfolio from our books,
from our balance sheets,
and to give this portfolio to a joint venture
between us and a specialist in this kind of business.
We did it with Viridium, and this was very successful
because it allowed us to free up a huge amount of capital,
which translated into the capability
of having free resources in order to support
the new investments, which are necessary for our strategy
of growth in this market going forward.
The third thing which we were able to do was to
restructure completely the organisation
and the governance of this complex group.
At the beginning we had the 13 different companies,
11 different product factories, seven brands on the market.
So we streamlined everything.
All our employees are now belonging to one insurance
company, and one service company.
All this brought us to increase the profitability
of this business significantly,
because as I said, this organisation,
we're able to deliver 300 million of the dividends
to the shareholders with a certain amount
of capital absorption.
Today we have been able to transform this
into a 500 million,
so dividend payment capability,
sustainable over time and heading towards 600.
And at the same time, we ran this business
with a lower amount of capital due to the fact that
we were able to instal these new normality
in the life insurance business.
Now knowing you, you have other things in mind,
new things in mind.
If we look at the insurance landscape today
and insurance trends, what jumps to mind?
What do you need to react to?
Technology is a big driver of change certainly,
but it's only one factor which an insurance company
needs in order to safeguard the future and the success.
And it will be much better for the customers
and for the insurers if we are now capable,
not only to be there after the claims have happened,
but to be there every day side by side with the customer,
like a guardian angel,
in order to give him either assistance online,
real time assistance during the claim,
or even better to give him prevention advice
and incentives in order to prevent
that the claims will happen.
Today, this is really possible
thanks to the new technologies and the new trends
in the population, which are happening.
The companies which will be able to transform
their business model from payers of claims
into companions of the customer over the lifetime,
of course, also paying the claims
when the claims will happen,
but with much better helpers in preventing the claims
or supporters during the claims will win the battle.
What we are going to do in this area
is to be customer lifetime partners,
so they Generali has this in the core
of the strategy going forward.
And being customer lifetime partner,
frankly speaking, you cannot be, if you just take claims.
You can be customer lifetime partner
if you increase the capability to deliver solutions
to the customer, which are insurance,
but also prevention, assistance, supporting,
during the moment of the claim
or before the claim has happened.
You've made it very clear what it feels like
for the customer to actually be dealing
with this new kind of insurance.
I would say you are reinventing insurance
and your company while you do that.
So could you share from your perspective
what it means in terms of your business model?
How does that need to change or the setup of your company
to be actually able to deliver this?
Our people should think always about,
what is the reaction of the customer.
What will the customer say?
What will the customer appreciate
or not appreciate of what we are doing?
This is what I call the new humanism of the customer.
In a world in which everything is becoming digitalized,
everything is becoming impersonal.
I think the customer wants to be considered as a person.
We need to put him as a person
in the centre of the universe, like in the humanism,
but we need to make sure that the solutions with technology
are now enabling us to do many different things,
are there in order to support
these personal interaction with the customers.
Giovanni, thanks for sharing this exciting story
and your insights into the industry.
Thank you very much, Chris.