Generali sees growth in Liberty acquisition, plans sales build-out
Generali might take in excess of €250 million in added group pre-tax profit from its acquisition of Liberty Mutual's Iberian unit as it builds out distribution for a growth opportunity, management is telling markets.
Generali announced the €2.3 billion acquisition of Liberty Seguros operations in Ireland, Northern Ireland, Portugal and Spain back in June 2023 and will devote part of its investor day soiree today (January 30) to selling the growth story.
Generali has already praised the deal for its size, including the target's €1.2 billion of 2022 gross written premiums, of which over 90% come from P&C lines, chiefly motor.
Generali did not offer a target for synergies from the deal, but did spell out a series of planned distribution initiatives suggesting a strong set of revenue-synergy hopes.
Generali’s own expertise in bancassurance will be shifted over to the new units "to extract additional value from Liberty Seguros in-force agreements."
Generali likes Liberty's more balanced distribution, including chief- chiefly in Spain - notable reliance on direct sales, bancassurance and partnerships in addition to the brokers and agents that Generali has relied on in those markets to date.
The direct sales capabilities may work their way into the Generali eco-system. “Liberty’s strong direct business will broaden and enhance Generali’s distribution capabilities,” management said.
Generali intends to build out the tied-agent network in Spain with ca. 600 more agents and "reinforce competences in brokers’ relationship management."
Generali also hopes to acquire an unspecified new distribution channel in Spain and Ireland and leverage on Liberty Seguros capabilities in the direct business, including digital marketing, management said.
In Portugal, the partnerships channel will be built out with new deals, management indicated.
The move into more motor, source of Generali's own margin issues in recent periods, should soon be offset with notable rate hardening, Generali believes.
"The market is responding with the highest tariff increases since 2001, with pressure on technical profitability expected to be temporary," management said of the Spanish market where 9M results still pointed to a 101% combined ratio.
The hard market in motor is "expected to continue for duration of 2024 at least."
In Spain, Generali will step up to the market's #4 position by adding Liberty's 2% market share to its own current 4% on $2.5 billion in 2022 GWP.
In Portugal, Generali consolidates its #2 spot by adding Liberty's 4% market share to its own 18% share for a combined €1.34 billion in 2022 GPW.
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