Analyst reaction to alternative Generali strategy By Reuters

MILAN (Reuters) – Rebel challengers to Generali (MI:)’s current management pledged to increase earnings by a double-digit percentage and free more cash for takeovers, setting out their plans for Italy’s largest insurer before a showdown next month.

Generali faces a power struggle over its board, with investor Francesco Gaetano Caltagirone putting up his own candidates for the top jobs.

The following is a selection of reactions to a plan presented by the Caltagirone camp dubbed “Awakening the Lion” on Friday:

BNP PARIBAS EXANE

“14% EPS growth would not just beat the existing Generali plan, but would lead our entire sector. If you offer this to investors, you need to be prepared to back it up. We don’t feel we got that today.

In particular, the 6-6.5% CAGR contribution from ‘Business Enhancement’ stretches credulity: example strategic opportunities in Health, SME and Asset Management are all-well-and-good, but strike us as incremental rather than game-changing.”

CITI:

“Significantly larger efficiency targets were presented, but poorly supported in our view, also with a tight delivery schedule and being revenue dependent. It was also unclear how higher IT spend would be expensed.

Overall we see this as a far more aggressive plan that would significantly change the investment case and risk profile in a challenging time for large scale, shareholder-friendly M&A.”

KBW

“We are pretty sure that Generali can do better. But we do not agree that the evidence is overwhelming that the current management team has failed, especially when we consider issues such as the Eurozone crisis and the need to recover financial flexibility that bedevilled the 2010s.”

EQUITA SIM

“Caltagirone said that in the insurance business Generali will have to look to growth in Europe and the East (China and India) and for growth in asset management in the U.S. These points had already been highlighted by Generali’s current management in the business plan in December.”