Earnings profile
Enhance earnings profile is the second pillar of our strategic plan Lifetime Partner 24: Driving Growth
The second pillar on which the strategic plan for the coming years has been built aims at enhancing earnings profile. In order to achieve this goal, we will rely on three key levers. For each of them, we have identified a set of strategic actions to carry on.
First lever
We will improve Life business profile and profitability by undertaking a comprehensive in-force optimization to reduce the capital intensity of our Life business and improve our operating result. We will also enhance our strategic asset allocation to improve returns, thanks to our investment capabilities in the real asset space and the further integration of ESG criteria. With in-force management, we are aiming for a reduction of up to € 1.5 billion in our solvency capital requirements, which will result in improved capital productivity and a further reduction in market sensitivity.
Second lever
We will redeploy capital to profitable growth initiatives with the expectation to have available € 2.5 to € 3 billion cumulative discretionary free cash flow. Overall, we will target activities that allow earnings diversification and increase our market leadership, minimizing execution risks. This represents our activities from a strategic point of view while, from a financial one, we will maintain the usual highly disciplined approach. Firstly, we will reinforce our leadership in Europe and strengthen our presence in specific growing markets, especially in Asia. Moreover, we will invest in selected Asset Management capabilities, and build scale to accelerate third-party growth. The goal is to maximise long-term value creation for our shareholders, while finding the right mix of capital redeployment and capital return.
Third lever
We will develop Asset Management franchise further. Our first aim is to expand our real asset capabilities, capitalizing on the strong track-record of Generali Real Estate and Infranity. This will allow us to optimize our general account and better attract third-party clients, expanding our recurring and high-margin fee business. We will furthermore integrate our Life and Asset Management businesses, which remains a priority. By broadening our investment capabilities, we will also expand our product offering. This will support our Unit-Linked strategy and further develop our third-party client base. Our second aim is to upscale distribution platform to drive growth in third-party revenues. To this end, we will maximize the reach of our multi-boutique platform well beyond our core European markets, diversifying profit sources with new markets and new channels. We will furthermore continue to integrate ESG criteria into our investments, in line with our commitment to sustainability and our customers’ expectations. All these activities will allow us to target an incremental revenue of more than € 100 million from third-party clients.
