Instant View: Analyst reaction to alternative Generali strategy

Caltagirone Editore SpA

25/03/2022 14:53

MILAN, March 25 (Reuters) - Rebel challengers to Generali's
current management pledged to increase earnings by a
double-digit percentage and free more cash for takeovers,
setting out their plans for Italy's largest insurer before a
showdown next month.  urn:newsml:reuters.com:*:nL5N2VS0ZA 
    Generali faces a power struggle over its board, with
investor Francesco Gaetano Caltagirone putting up his own
candidates for the top jobs. 
    The following is a selection of reactions to a plan
presented by the Caltagirone camp dubbed "Awakening the Lion" on
 Friday:
    
    BNP PARIBAS EXANE
    "14% EPS growth would not just beat the existing Generali
plan, but would lead our entire sector. If you offer this to
investors, you need to be prepared to back it up. We don’t feel
we got that today. 
    In particular, the 6-6.5% CAGR contribution from 'Business
Enhancement' stretches credulity: example strategic
opportunities in Health, SME and Asset Management are
all-well-and-good, but strike us as incremental rather than
game-changing."

    CITI:
    "Significantly larger efficiency targets were presented, but
poorly supported in our view, also with a tight delivery
schedule and being revenue dependent. It was also unclear how
higher IT spend would be expensed.
    Overall we see this as a far more aggressive plan that would
significantly change the investment case and risk profile in a
challenging time for large scale, shareholder-friendly M&A."
    
    KBW
    "We are pretty sure that Generali can do better. But we do
not agree that the evidence is overwhelming that the current
management team has failed, especially when we consider issues
such as the Eurozone crisis and the need to recover financial
flexibility that bedevilled the 2010s."
    
    EQUITA SIM
    "Caltagirone said that in the insurance business Generali
will have to look to growth in Europe and the East (China and
India) and for growth in asset management in the U.S. These
points had already been highlighted by Generali's current
management in the business plan in December."
       

 (Reporting by Andrea Mandalà and Gianluca Semeraro
Editing by Agnieszka Flak and Keith Weir)
 ((andrea.mandala@thomsonreuters.com; +390680307738;))