Cattolica Group: Strategy and Results

Transcription

1 Giulio Fezzi - Chief Financial Officer and IR Manager Andrea Battista General Manager Duomo Assicurazioni and IR Merrill Lynch and Borsa Italiana Italian Mid Caps Conference 2006 Cattolica Group: Strategy and Results London, 23 rd June

2 Agenda Cattolica Group at a glance Strategic framework and strategy implementation Business growth and value creation 2

3 Agenda Cattolica Group at a glance Strategic framework and strategy implementation Business growth and value creation 3

4 Cattolica Group The Parent Company is a co-operative legal-entity structure, operating in the life and non-life insurance businesses in Italy Today the Group consists of 25 companies, including 14 insurance companies Insurance subsidiaries of the Parent Company, include: 8 life insurance companies (Duomo Previdenza, Risparmio & Previdenza, BPV Vita, Lombarda Vita, Eurosav, Axa-Cattolica Previdenza in Azienda, San Miniato Previdenza, Persona Life) 5 non-life insurance companies (Il Duomo Assicurazioni, ABC Assicura, Cattolica Aziende, Tua Assicurazioni, UniOne Assicurazioni) Other Group companies consist of two real-estate companies, four service companies, one asset management company and one retail-brokerage (Fas) company 4

5 Cattolica Group Evolution HISTORICAL PHASES Cattolica Group brands and companies BIRTH CONS. GROUP DEVELOPMENT Listing Approved Operations Premiums (*) (Euro mln) 373 2,768 3,731 5,188 (*) Including Investment Contracts 5

6 Group Market Share trend Group Market Share Ranking 2005 ( ; Italian direct business) 4.9% 4.5% 4.5% 4.5% 4.3% 4.2% 4.0% 3.9% 3.8% 4.2% 5.0% 4.7% Non-life Life Total 5 th traditional insurance Italian Group Non-life Life Total market share Sources: Estimates on Cattolica Group reports and ANIA data 2005 FonSAI Generali Allianz Unipol Toro R. Mutua Cattolica Zurich Axa Italia Sara Generali Allianz Unipol Poste V. AIP Cattolica Aviva MPSI FonSAI CNP Generali Allianz Unipol FonSAI Poste V Cattolica AIP Aviva MPS Toro 6

7 Development of Group s multi-channel network Tied Agencies n. FAs n. Bank branches n. With the exclusion of 134 multimandatory agencies 2,653 2,717 2,748 3,053 2,917 2,913 2, ,024 1,049 1,092 1,357 1, ,212 1, /03/ /03/ /03/06 7

8 Rating on Cattolica: excellent risk-adjusted capitalisation A A NOTE Strong Stable outlook NOTE Excellent Stable outlook The rating reflects strong competitive position, strong operating performance and strong capitalization. The stable outlook represents S&P s expectation Cattolica will maintain its strong competitive position. The rating reflects Cattolica s prospective excellent riskadjusted capitalisation, excellent operating performance and distinctive business position in the Italian Market Aq NOTE Strong Quantitative Insurer Financial Strength The rating reflects very strong capitalisation and strong earnings. 8

9 Agenda Cattolica Group at a glance Strategic framework and strategy implementation Business growth and value creation 9

10 Mission and strategic objectives continued MISSION Strategic objectives sul core business assicurativo, focus on insurance core business, consolidating proseguendo nel consolidamento dei business current businesses and implementing new growth attuali ed avviando nuovi percorsi di crescita strategies through flexible development methods Organic Crescita External Crescita organica growth per growth linee esterne Architettura Focus industriale integrated, focalizzata, open Industrial integrata e architecture aperta STRATEGIC PATHS Develop current business Develop new markets, products, channels Consolidate the insurance business model Strengthen controllership Accelerate development Service centralisation and cost optimization Integrated development of financial services 10

11 Details on strategy and key assumptions n Consolidation of organization structure, insurance brands and corporate culture with a focused, integrated and open business architecture - Strengthening parent company controls by controlling strategic processes using improved support tools (planning and control, Internal Audit, Organization & HR, new Program Management structure, Group Finance) - Insurance business model consolidation with reorganization of technical areas, enabled by the new, enhanced non - life platform - Integrated development of financial and asset management - Completing integration of operating processes and procedures n Organic growth: research and development of internal growth initiatives, building on the existing business strengths - Expansion of existing businesses, through distribution channel development and diversification - Identification and entrance into new markets, products and channels: implementation and finalization of new initiatives like Tua Assicurazioni and Axa Cattolica Previdenza in Azienda - Assure the development of non-life bancassurance distribution - Reentry/development of multi- mandatory agent distribution: from Eurosav to Persona Life - Nurture the innovation culture as a growth driver for testing new products and market segments: Pension Center of Excellence, new health product development - from simple to LTC coverage n External growth - Formalized process for screening and developing proposals for potential acquisitions (Corporate Development team) - January % Eurosav acquisition - July 2005 UniOne acquisition 11

12 Internal Reorganization: the path to a focused, integrated, open business architecture Current Status Financial Services Centralized Treasury services Group Asset Management Real Estate Management Company Integrated financial product distribution Central Management Group Risk Management and ALM Group Planning and Control Group Internal Audit Group Organization & HR Group Actuarial Control Group Reinsurance Group Corporate Development structure and Group integration Insurance Business Specific focus on insurance life and non-life business Centralized claims management Centralized purchasing department (Co.CeA) IT Service Company (new processes) Centralized Administrative Services Operational services 12

13 Organic growth: multi-channel development CHANNELS Tied agents Banks Brokers Other channels BUSINESS/SERVICE LINES Non-Life Life Financial services and asset management Agency network development Product and channel innovation (TUA) Retail segment Selective corporate expansion Focus on profitability Penetration on preferred segments Social security FAs working inside agencies: Cattolica Investimenti SIM Cross-selling at sales outlets Private retail segment Standard products JV with BPVN and other business/ partnerships agreements (OnLine Division) Flexible confirmation of the JV model Protection/development of strategic commercial contracts Product and segment innovation Banking partnerships to increase multi-bank financial products with specific proprietary brands Focus and selection of middle size, highcontribution brokers Re-launch of Cattolica Aziende Axa- Cattolica Middle company segment (B2B2E) Expansion of parent company units for direct assumption of corporate risks Direct channel for corporate contracts Development of preferred multimandatory distribution Development of Cattolica Investimenti SIM model Institutional Asset management: Verona Gestioni SGR 13

14 Agencies network development Agency network development ( ; no. agencies) +24.3% Proprietary agency network 1,523 1,357 1, ,024 1,049 1, March E Multi-mandatory agency network (number of agencies) 134 Persona Life multi-mandatory agencies as at 31 March 2006, which will sell non-life products in

15 Agency network as at Proprietary agency network Number of proprietary agencies Multi-mandatory agency network Number of multi-mandatory agencies Group integrated agency network Number of total agencies % % 21% N: 706 C: 373 S: % % % N: 64 C: 25 S: % % 21% N: 770 C: 398 S:

16 Bancassurance consolidation December 2005 Renewal until 2010 of Cattolica and Banca Lombarda agreement Business and commercial agreement Cattolica Group insurance products will continue to be sold via the 796 bank branches and 578 Financial advisors of Banca Lombarda Confirmation of Lombarda Vita activity: the jointventure founded in 2000, 50.1% owned by Cattolica and 49.9 by Banca Lombarda Cattolica Group bank branches distribution: 2,917 branches Market share of 9.3% in Italy Market 74 share 11.4% Market share % Market share % Non-life bancassurance - During 2006 a new jointventure with Banca Lombarda Group will be set up for the sale of non-life products through the bank partner s distribution network 16

17 Non-Life Bancassurance development A strategic opportunity in Italian Market In Italy Bancassurance business in the non-life sector is poorly developed, with a share of just 1%, whilst market share turns out higher in other European countries: in Germany it is 5%, in the Netherlands and France it is 8% Cattolica Group Non-Life Bancassurance development: maximise competitive advantage and optimise the combination of Life Bancassurance experiences and Non-Life technical skills Mission: Meet the increasing demand for Non-Life insurance from the family segment Use the commercial and operative synergies between the insurance and banking partners Guarantee customers consultancy services suitable to different needs Start-up of the new 50/50 JV with the Group Banco Popolare di Verona e Novara Extend Non-Life Insurance activities to other Banking Groups Consolidate the operations of the Cattolica Online Division (development of the agreement with ICCREA) Products: Motor TPL, fire, theft, simple general TPL, injury and health Target: Bank retail customers Assistance: dedicated call center Claims settlement managed directly by Cattolica structure 17

18 UniOne acquisition Restructuring and Integration process UniOne history Relative young company, born in 1984, from 2000 in Generali Group Agency network focused on P&C business, based most of them in middle and south Italy Motor Transportation business is 86% of total premiums Claims settlement network complementary to existing Cattolica network High potential in life business which is a recent start-up In 2006 Plan of incorporation in Duomo Assicurazioni in order to increase the level of integration and profitability of non-life business generated via the single-card agency network creation of a strong non-life unit with 569 proprietary agencies End 2005 UniOne Vita integration into Duomo Previdenza and following multimandatory agencies branch of business transfer from Eurosav to UniOne Vita 100% Persona Life birth: UniOne Vita new denomination; the first Group company dedicated to multi-mandatory agency network 18

19 Persona Life: development towards preferred multimandatory pole 100% Persona Life birth Branch of business transfer 100% 99.9% 100% TARGET Branch of business Multimandatory agents 100% Set up a Cattolica Group Pole for preferred multimandatory distribution Branch of (see business the French experience) transfer Branch of business transfer Persona Life Mission Cattolica Group first dedicated company for the multi-mandatory agency network in line with the preferred multi-mandatory model Progressively concentrate Group agents in the new specialised multimandatory pole Target: Main focus on central-southern Italian market Products: Innovative and flexible life products portfolio. In 2006 non-life products distribution will be implemented Cross selling towards non-life products Completed process Ongoing process 19

20 Completing Life Operations restructuring MAIN OBJECTIVES Life operations restructuring merger merger Specialize companies by business area and distribution channel R&P: center of excellence in bankinsurance agreements Scope economies (products, commercial initiatives) Scale economies (IT, back-office and other operations) Cattolica: set-up of a Group Pole for Life Business through all tied agency networks Scope economies (products, commercial initiatives) Scale economies (IT, back-office and other operations) 20

21 New Business Architecture MAIN DRIVERS maximisation of opportunities for value creation by integration of business areas and sales channels centralisation and optimisation of common services generation of economies of scale and increase of Group s operational integration CHANNEL FOCUSED NEW GROUP CORPORATE STRUCTURE Centralized Factories by divisions Non Life (*) Life Proprietary Agents Banks Brokers Multi-mandatory agents (*) Illustrative - New brand still under construction 21

22 Agenda Cattolica Group at a glance Strategic framework and strategy implementation Business growth and value creation 22

23 Development of consolidated premiums Gross Consolidated Premiums 2005 Result*** 2007 Target Direct and indirect business (IT GAAP) ( ; Euro mn) CAGR 99/05 CAGR 04/07 4,212 4, % 5, % 5,510 6% 3,731 2,768 3,351 2,298 2,464 2,820 3, % 3,646 With the inclusion of Investments contract s for 327 mn 3,499 3% 1,442 2,012 Life Non-life (*) ,053 1,267 1,392 1, % ** ** 1,542 2,010 12% E Breakdown Life Non-life 64% 73% 69% 66% 67% 36% 27% 31% 34% 33% 69% 31% 70% 30% 64% 36% Note: 2007 Premiums IT GAAP Change % 2005/2004 (*) With the inclusion of indirect business (**) Only direct business ( ***) IAS/IFRS results with the inclusion of investments contracts 23

24 Non-life business Premiums 2005 Non-Life business mix (Direct business - Euro mn) 1, % 1,523 (Direct business - Euro mn) Motor 65% Nonmotor 35% Non-Life business mix (Direct business - Euro mn) 1,398 Non-motor 460 Motor % +14.8% +6.3% 1, significant growth of more profitable business lines: Health at 58 mn (+ 14.5%) Accident at 105 mn (+ 15.4%) Fire at 88 mn (+ 8.6%)

25 Life business Life business collection (Direct business - Euro mn) 3, % 3, Life business mix (Direct business - Euro mn) Unit 16.4% Class VI 2.8% Traditional 48.8% With the inclusion of Investments contract s for 327 mn Index 32% Life new business collection (Direct business - Euro mn) +15% Mix by type of product (Direct business) Index 50.4% 34.4% Unit 9.7% 16.5% Traditional 39.8% 12.8% 49.1%

26 Development of consolidated net profit Consolidated net profit * ( Euro mn) 2005 Result ** 2007 Target* 176 CAGR 04/07 5,5% E Group net profit % (*) Italian GAAP results (**) IAS/IFRS result 26

27 Development of dividend per share Cattolica dividend policy is consistent with the 3-year plan value creation program Dividend per share Dividend 2005 ( ; Euro) 1.35 Extraordinary dividend*** CAGR 99/05 16% Extraordinary dividend % free share for every 10 Other indicators Pay-out (Euro mln) Pay-out ratio (*) 71.7% 76.5% 77.1 % (2) 72.4% (3) 78.3% 60.2% 69.6% Dividend yield (1) n.a. 2.28% 3.60% 4.59% 3.50% 3.98% 3.2% (**) 18.8% Fonti: (1) Dividend Cattolica yield: Dividend Bilancio per d esercizio share/official2003 price of last Analisi day of interne the year (2) With the inclusion of extraordinary dividend (3) Pay out, net of property transfer (*) Pay-out at Parent Company level (**) Calculated on a price per share of (***) 0.20 from distribution of the reserve freed up in the Parent Company following sale of property assets by Cattolica Immobiliare 27

28 Results as at 31th March 2006 Gross Premiums Collection(*) Insurance Premiums Non-life combined ratio -0.4% 1,318 1,313 1, % 1, % 98.8% % % Non-life Life Non-life Life Net Shareholders equity Consolidated net result Net profit (1) 1, % 1, % % (*) IAS/IFRS results with the inclusion of investments contracts (1) Net of taxes and minority interests Figures in mn 28

29 Embedded Value as at 31 December 2005 Group Embedded Value ( mn) 198 1,241 1,166 1,043 (123) Change 2005/ Delta Shareholders equity Adjustments N.A.V. Value of life in force Embedded Value business EV/ Share ( ) 1,067 (33) 1, , ,166 (123) 1, , Notes: All components are net of taxes, policyholders interests and minorities Souce: Internal Analysis 29

30 Cattolica stock performance in Stock performance in comparison with the main indexes PERFORMANCE as at 31 May 2006 Cattolica +21.7% Mibtel S&P/MIB MIB INS % +17.6% 11.25% 01/01/ /05/2006 Cattolica MIB INS. S&P/MIB MIBTEL Change % 01/01/ /05/2006 Source: Bloomberg 30

31 DISCLAIMER This document has been prepared by Cattolica Assicurazioni based on data from internal sources (year-end financial statements, consolidated group financial statements, internal reporting and other company documentation, etc.) for the sole purpose of providing information on the group s results and future operating strategies. Given this, it can in no way be used as a basis for possible investment decisions. It is not a solicitation to buy or sell shares. No part of the document can be taken to be the cause of or reason for agreements or commitments of any type or kind whatsoever, nor can it be relied upon for agreements and commitments.information contained in the document concerning forecasts has been prepared according to various assumptions and/or elements that might ultimately materialise differently to present expectations. Results might therefore change. Cattolica therefore in no way provides any guarantee, either explicit or tacit, as regards the integrity or accuracy of the information or opinions contained in the document, nor can any degree of reliability be attributed to the same, inasmuch as it has not been subjected to independent verification. Responsibility for use of the information and opinions contained in the document lies solely with the user. In any case Cattolica, within legally admissible limits, will not consider itself liable for any damages, direct or indirect, that third parties might claim due to utilisation of incomplete or inaccurate information. For any further information concerning Cattolica Assicurazioni and its related group, reference must be made exclusively to the information given in the annual, quarterly, and interim reports and financial statements. The full versions of these documents, which constitute the factual basis and proof for all legal purposes, are lodged at the company s registered offices and are available to anyone requesting them. Reproduction or full or partial publication and distribution of the information contained herein to third parties is prohibited. Acceptance of the present document automatically signifies recognition of the aforesaid constraints. 31

32 Giulio Fezzi - Chief Financial Officer and IR Manager Andrea Battista General Manager Duomo Assicurazioni and IR Merrill Lynch and Borsa Italiana Italian Mid Caps Conference 2006 Cattolica Group: Strategy and Results London, 23 rd June