Milan, March 13 (Reuters) - Italy's largest insurer, Generali, announced on Thursday a record profit for 2024, just before a crucial shareholder vote next month regarding the reappointment of CEO Philippe Donnet.
The insurer, a longstanding pillar of Italy's financial sector, indicated a potential increase in the purchase of domestic government bonds. This move is significant as Generali aims to secure approval from the Italian government for its planned partnership with France's Natixis Investment Managers.
Generali mentioned that the expansion of its life insurance portfolio could justify larger holdings of Italian government bonds, crucial for meeting reserve requirements against liabilities.
At the close of 2024, Generali held 35.6 billion euros ($38.67 billion) in Italian BTP bonds.
"Our BTP portfolio is tied to our insurance obligations in Italy, and this correlation will persist," Donnet informed analysts.
Analysts at Jefferies projected that "the volume of BTPs will increase in line with reserves, while the asset allocation proportion will remain stable."
Generali's significant role as a purchaser of domestic bonds has stirred concerns in Rome regarding its collaboration with Natixis, which is owned by BPCE. Sources disclosed that the government has ensured Generali will retain full authority over managing the savings amassed within the country.
The partnership has faced opposition from two major shareholders: construction magnate Francesco Gaetano Caltagirone and Delfin, the holding company of the late owner of Ray-Ban, Leonardo Del Vecchio.
These shareholders are in disagreement with Mediobanca, Generali's largest investor, about the composition of the insurer's board, setting the stage for a confrontation at the annual general meeting on April 24.
Three years ago, with Mediobanca’s support, Donnet successfully defended his leadership against challenges from Caltagirone and Delfin.
This time around, after exploring potential replacements, Caltagirone is reportedly considering endorsing an alternative CEO candidate; although sources suggest the AGM vote may still lead to a fragmented board.
Mediobanca's new connection with state-backed Banca Monte dei Paschi, which counts Caltagirone and Delfin among its recent shareholders, could have implications for Generali.
Generali stated that its adjusted net profit rose by 5.4% to 3.77 billion euros last year, while operating profit, a critical metric for analysts, increased by 8.2% to 7.3 billion euros, both hitting record highs for the company and aligning with the analyst consensus.
"When I took over, Generali's market capitalisation was 15 billion euros, now it's 50 billion euros," Donnet remarked. "Our growth trajectory is ongoing."
Generali's solvency ratio, indicating its financial robustness, decreased to 210% in 2024 from 220% in 2023, influenced by an acquisition and a share buyback program, and it stood at 214% as of March 7, according to finance chief Cristiano Borean.
Generali proposed a dividend hike of 11.7% to 1.43 euros per share, totaling 2.2 billion euros.
($1 = 0.9207 euros)