Generali Group

Italian Lion on the Prowl

Generali CEO Philippe Donnet is looking for the lion's share of new insurance business in Germany. Source: Reuters

If there is a deep state in Europe, insurance giant Generali is part of it. Founded in Trieste in 1831 when it was the Mediterranean port of the Austrian Empire of the Habsburgs, Generali was a cross-border enterprise long before the integration of the European Union, spreading throughout Central Europe and Germany as well as the Italian Peninsula.

Now, having survived the wars of Italian and German unification in the 19th century and two continental wars in the 20th, Generali is the third-largest insurance group in Europe, after Germany’s Allianz and France’s Axa. It is in the midst of a radical restructuring to better survive the 21st century, and has Germany in its sights.

The Italian insurer last week announced it was renaming its various operations in Germany under the Generali brand. But that is only the most visible aspect of a streamlining that will trim operational costs and put new emphasis on internet marketing. “Customers never understand why we have so many brands in Germany,” explained Giovanni Liverani, head of the insurer’s German operations, in an interview.

“There is no threat of takeover, from anyone, neither from Italy nor from abroad.”

Philippe Donnet, CEO, Generali Group

Best known of those many German brands is AachenMünchener – a sizable enterprise in its own right, tracing its origins to 1824 – but also health insurer Central and a number of specialist operations, all of which will be merged together in the “One Company” approach. A struggling life insurance unit, Generali Leben, will cease writing new contracts early next year and will run off the existing contracts. The 10 separate units currently working on product development will be merged into one. However, the internet unit, CosmosDirekt, which is the market leader in Germany, will continue to operate under its name as it targets Millennials.

When a customer buys insurance that may not pay off for decades, it’s comforting to know that the underwriter has stood the test of time. But in a saturated market like Europe in general, and Germany in particular (Allianz dates back to 1890), there’s rivals that can boast the same claim. A company like Generali has to be cutting edge too if it is really going to grow.

“We play in the Champions League, not in the national league,” said Chief Executive Philippe Donnet, referring to the annual Europe-wide competition between the continent’s top soccer teams. The French executive came to Generali from Axa, and was named CEO last year.

The current restructuring in Germany will cost hundreds of jobs, as it has in Italy and throughout the group. Besides staff at the insurers, the distribution network will suffer losses because sales in the future will be handled exclusively by DVAG (Deutsche Vermögensverwaltung), a financial advisor group in which Generali has a 40-percent stake. The impact has been immediate as the Generali Group as a whole booked cost savings of €70 million last year and by 2018 will have reduced operating costs by €200 million, reaching its target a year earlier than planned.

Generali’s name originally was chosen to emphasize that it was not confined to marine insurance like the other firms popping up in Trieste in the 1800s. As of the past summer, the 186-year-old firm is styling itself an “insurance and asset management” company, following the trend of other big insurance groups.

Long enmeshed in Italy’s fabric of interwoven shareholdings, Generali has a good pedigree for expansion in this direction. That the current chief executive is French is no surprise. Antoine Bernheim, a longtime partner at Lazard Frères in Paris and a top investment banker in France, was chairman for 10 years until 2010. Mediobanca, the shadowy merchant bank with its finger in many Italian enterprises, took a big stake in Generali under the legendary Enrico Cuccia and remains the biggest shareholder. Before it, Italy’s leading universal bank, Banca Commerciale Italiana, or Comit (now subsumed into Intesa Sanpaolo), was a shareholder. The Agnelli family, of Fiat fame, also has longstanding links to Generali.

None of this may help it win market share in Germany, but it says something about the firm’s staying power. There was some historical irony that the Comit successor firm, Intesa Sanpaolo, was rumored earlier this year to have an interest in taking over Generali. The insurer countered by buying up a 3-percent stake in Intesa, and that put an end to the rumors. “There is no threat of takeover, from anyone, neither from Italy nor from abroad,” Mr. Donnet affirmed.

But investors would like to see Generali bolster its capital base, because it significantly lags its rivals. Generali currently has a stock market valuation of about €24 billion, far behind Allianz with more than €80 billion and Zurich Insurance with more than €40 billion.

Generali Deutschland is already the second-largest primary insurance group in the country. The Italian group has already announced its exit from the Netherlands, Belgium and Portugal, as well as a number of overseas markets, to focus on those where it sees chances for growth. Mr. Donnet described Germany as “one of the group’s core markets” and said the new measures would free up resources to “capture new growth opportunities.”

Since Trieste became part of Italy after the end of World War I, Generali has used Venice’s lion of St. Mark as part of its logo. Now, a leaner, hungrier Generali wants the lion’s share of new insurance business in Germany.

Christian Schnell covers financial markets for Handelsblatt from Frankfurt.  Regina Krieger is Rome correspondent. Darrell Delamaide, an editor in Washington, DC, contributed and adapted this story for Handelsblatt Global. To contact the authors:,, and

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