By Gianluca Semeraro
MILAN (Reuters) -Italy’s biggest insurer Generali reported on Thursday a record profit for 2024, ahead of a key shareholder vote next month on the reappointment of CEO Philippe Donnet.
The insurer, historically a bulwark of Italy’s financial system, also said it could step up purchases of domestic government bonds, which may be significant as it seeks to win Italian government approval for its planned tie-up with France’s Natixis Investment Managers.
Generali said its growing life portfolio could warrant larger Italian government bond holdings, which it holds as reserves against liabilities.
Generali held 35.6 billion euros ($38.67 billion) in Italian BTP bonds at the end of 2024.
“Our BTP portfolio is linked to our insurance liabilities in Italy, and it will always be the case,” Donnet told analysts.
Jefferies analysts said they expected “the stock of BTPs will grow with reserves, but the proportion of assets allocated will not.”
Generali’s role as a large buyer of domestic bonds has raised concerns in Rome about the tie-up with BPCE-owned Natixis. The government wants further guarantees that Generali will remain in full control of allocating savings collected in the country, sources have told Reuters.
The tie-up has also drawn criticism from two major shareholders: construction tycoon Francesco Gaetano Caltagirone and Delfin, the holding company of late Ray-Ban owner Leonardo Del Vecchio.
The two shareholders are also at odds with Mediobanca, Generali’s biggest investor, over the makeup of the insurer’s board and are set to face off at the annual general meeting on April 24.
Three years ago, with backing from Mediobanca, Donnet overcame a challenge to his leadership brought by Caltagirone and Delfin.
This time, after considering possible replacements, Caltagirone is not planning to back an alternative CEO candidate, sources have told Reuters, but the AGM vote could still produce a fractured board.
In a move with implications for Generali, Mediobanca has become a takeover target for state-backed Banca Monte dei Paschi, which since November has Caltagirone and Delfin among its shareholders.
Generali said its adjusted net profit rose 5.4% to 3.77 billion euros last year, while operating profit, a key figure for analysts, increased 8.2% to 7.3 billion euros.
Both figures set new records for the insurer and were in line with the company-provided analyst consensus.
“When I arrived, Generali’s market capitalisation was 15 billion euros, now it’s 50 billion euros,” Donnet said. “The growth path is not over.”
Generali’s solvency ratio, a measure of financial strength, fell to 210% last year from 220% in 2023, reflecting the impact of an acquisition and of a share buyback programme. It stood at 214% as of March 7, head of finance Cristiano Borean said.
Generali proposed hiking its dividend per share by 11.7% to 1.43 euros, for a total payout of 2.2 billion euros.
($1 = 0.9207 euros)
(Reporting by Gianluca Semeraro. Editing by Valentina Za, Mark Potter and Susan Fenton)
