Generali, the sleeping giant woke up

Background information

ASSICURAZIONI GENERALIIn Tokyo they have the Abenomics, in the northeastern port city of Trieste it is Greconomics. This is the term with which analysts at Swiss investment bank Ubs defined the management style of Mario Greco, the new boss arrived in August 2012 at the helm of Generali, the third largest insurance company in Europe and the first Italian group by assets. In fact, just as Japan prime minister Shinzo Abe is committed to revamp his country economy after more than two decades of sluggishness, Greco has engaged into an intriguing restructuring of the Italian “sleeping giant”. The Greco’s new deal already delivered in just one-year time: the stock has recovered sharply from its post-lehman lows, he already made some 2.5 billion euros by disposing assets, from Israel’s Migdal to its US re-insurance business –more than a half of the 4 billion target he set for end 2015. Greco used part of the proceeds to buy the remaining of the German unit Generali Deutschland.
Thanks to these actions, Generali solvency ratio improved dramatically amid welcoming of financial analysts who hailed the «Greconomics» as the formula for revamping the splendor of the past. Greco managed to achieve his goals also thanks to the backing of main shareholders who sponsored his hiring from Zurich of Switzerland after the ousting of the former CEO Giovanni Perissinotto. But a drastic change in the governance he implemented, here again with the backing of big shareholders, also helped. Greco created a new group management committee, while revised in-depth the management structure and aligned it with international standards by creating the chief insurance officer post, the chief operations officer, and that of responsible of the global business line. In December 2012 he began re-organizing the business in the home-country with a three-brand (Generali, Alleanza and Genertel) commercial strategy to which are devoted 300 million euros of investment spending by 2015. He also created Generali Italia, the domestic operating company which is the first insurer of the country with 13 billion of yearly premiums income and some 10 million clients.
Now Greco is facing a major challenge, that of focusing on the core business while gradually putting on sale the bouquet of no core holdings that Generali piled up over years. Among those, that one in Telco, the holding company which in fact controls Telecom Italia where Generali seats along with Intesa, Mediobanca and Spain’s Telefonica. In September 2013 the three Italian partners agreed to give up the control of Telco to Telefonica. For Generali that meant a huge loss but also put an end to an investment that limited its room for maneuver for almost a decade.

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