Generali Unveils Ambitious Strategy, Pledges Billions in Dividends and Buybacks
Italy’s largest insurer, Generali, has announced a bold new strategy that promises to reward shareholders with over €8.5 billion in dividends and share buybacks by 2027. This move comes as CEO Philippe Donnet prepares to face a crucial shareholder vote on his reappointment in the spring.
A History of Leadership Clashes
Generali’s investors have previously clashed over the company’s leadership, with Donnet enjoying the backing of top shareholder Mediobanca. However, two billionaires, Francesco Gaetano Caltagirone and the late Ray-Ban magnate Leonardo Del Vecchio, have been vocal in their opposition to Donnet’s leadership.
New Strategy Unveiled
Donnet expressed confidence in the company’s new plan, which aims to grow earnings per share (EPS) by 8-10% annually over the next three years. The strategy also includes a commitment to mergers and acquisitions, with €1.5 billion earmarked for potential deals. A memorandum of understanding has already been signed with France’s BPCE to establish an asset management joint venture with over €1.9 trillion in assets.
Government Reservations
However, the Italian government has expressed concerns about the deal, citing the need for domestic savings to be managed within the country. Generali has responded by pledging to assess M&A opportunities with strict discipline, benchmarking any potential transactions against share buybacks.
Shareholder Rewards
The company has committed to rewarding shareholders with at least €1.5 billion in buybacks, including €500 million for the current year. This move is expected to boost investor confidence, with Jefferies analysts describing the plan as a positive surprise and more ambitious than anticipated.
Market Reaction
Generali’s shares responded positively to the news, rising 0.9% in early trading, outperforming the 0.2% gain for Italy’s blue chip index.
A New Era for Generali
As Donnet prepares to face the shareholder vote, he remains confident in the company’s new strategy. With a focus on growth, mergers and acquisitions, and shareholder rewards, Generali is poised to enter a new era of success.
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