Created
by the merger of two primary Italian insurance companies, Fondiaria-Sai meets
the market with all that is necessary to assume a meaningful role, in Italy
and not only.
Presenting the 2003-2006 Business Plan, the company’s managing director, Mr.Fausto
Marchionni, said that, thanks to measures that in part are already in
effect, the company is poised to achieve important results, both in terms
of profitability and of strategic market positioning.
Mr.Fausto Marchionni
The Plan calls for domestic expansion, synergetic solutions and cost-cutting
to raise gross profits starting right away, doubling 2002’s €214 million to
an estimated € 510 million for 2003, and targeting for each following year
€ 650 million, € 820 million till to € 950 million estimated in 2006.
To reach these objectives, the company plans on becoming number one in non-life
branches on the Italian market, both in size and profitability, by applying
economies of scale to excel in underwriting and in claims management, by employing
the group’s expertise to develop better products and rate schedules and, finally,
by intensifying sales activities through what is Italy’s largest network of
agencies. The Group can rely on 3150 agencies throughout Italy and on 1500
financial advisers, as well as having 1200 bankassurance outlets.
The foundations are undoubtedly solid, and on this ground the Group is planning
to develop its business, having begun, on the one hand, to unify its product
portfolio and on the other hand, to develop and launch new products.
Special care is also dedicated to improving risk-selecting capacities, by
pooling databases and technical knowledge. Expanding the database and sharing
the best practices among Sai and Fondiaria has resulted in improved risk evaluation
and selection, positively affecting the company portfolio. These same analyses
have also led to develop a new Group rate schedule, which makes use of a larger
number of parameters.
The company intends also to continue attentively monitoring portfolio management,
with a view to gradually dropping the less profitable segments while stepping
up activities in the more profitable ones.
Another significant aspect on which the Company is working is cost-cutting,
which will be favoured by the synergies created by the fusion. In this direction,
the general measures will be the following.
Managing the organizational redundancies deriving from the
merger.
To streamline company set-up, the previous headquarters of the Group’s main
companies, which were located in three distinct geographical areas (SAI in
Turin, Fondiaria in Florence, Milano Assicurazioni and Nuova MAA in Milan),
will be effectively integrated.
Further rationalization of claim settlements, by exploiting
the critical mass and dividing settlement methods by sectors.
The aim is to abandon the various pre-merger operating networks and procedures
and to achieve:
- an integrated settlement network;
- the implementation of large-scale methods in handling simple claims and
specialized methods in handling the more complex ones;
Integrating IT systems and reducing the IT cost base.
Strengthening the distribution network,
without giving up any chances to cut costs.
Incorporating Nuova MAA in Milano Assicurazioni and implementing
the synergetic resources that will derive from territorial overlapping.
Both companies are based in Milan and operate in the same areas. The Plan
therefore calls for combining the two companies, integrating their operations
but maintaining the two separate brands.
Along with the non-life branches, the life branch and the savings management
sector will be equally important in reaching the anticipated objectives. While
providing for the conso-lidation of current activities, the Business Plan
also advocates increased development for the life branch.
The life branch will be consolidated by integrating the product range of the
Group’s companies, by collecting expiring credits and by increasing the commercial
pressure on the agency network for the sale of life-branch products.
As for the savings management sector, the aim is to develop the assets under
management through the Group’s existing companies, after appropriate process
integration. Another important part of the Business Plan focuses on the Group’s
assets and financial structure. Here the plan is to optimize the investment
mix favouring low-risk assets, to increase diversification in equity investments
and to cash in on expiring convertible debenture loans, thereby reducing the
overall debt.
One measure will be to trim down the real estate division, taking advantage
of current market trends. One third of the Group’s non-instrumental property
assets, 93 buildings having 580,000 square metres, will be put up for sale.
Other important aspects are deciding where to invest the cash flow created
by operating in low-risk insurance activities, tipping the balance of the
exposure in bonds towards variable-rate securities, and managing the existing
share portfolio for best results.
In conclusion, the Fondiaria-Sai Business Plan is full of important measures,
some of which are already being implemented and are producing the expected
results. This Plan comes from a profound understanding of the insurance business;
in the words of the Group’s managing director, Mr. Fausto Marchionni: “Insurance
is our job and we know how to do it. But the results can be even better…”.
And they are starting to.
r.p.
Translated by interpres sas
