Generali Investor Day 2010
Generali Investor Day 2010
Generali Investor Day 2010
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<strong>Generali</strong> <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong><br />
<strong>Generali</strong> Immobiliare<br />
Strategy & Performance<br />
Giancarlo Scotti<br />
Chief Executive Officer of<br />
<strong>Generali</strong> Immobiliare<br />
Venice, November 26, <strong>2010</strong>
Disclaimer<br />
Certain of the statements contained herein are statements of future expectations and other<br />
forward-looking statements.<br />
These expectations are based on management's current views and assumptions and involve<br />
known and unknown risks and uncertainties.<br />
The user of such information should recognise that actual results, performance or events<br />
may differ materially from such expectations because they relate to future events and<br />
circumstances which are beyond our control including, among other things, general economic<br />
and sector conditions.<br />
Neither Assicurazioni <strong>Generali</strong> S.p.A. nor any of its affiliates, directors, officers employees or<br />
agents owe any duty of care towards any user of the information provided herein nor any<br />
obligation to update any forward-looking information contained in this document.<br />
The manager in charge of preparing the company’s financial reports, Raffaele Agrusti,<br />
declares, pursuant to paragraph 2 of article 154-bis of the Consolidated Law on Financial<br />
Intermediation, that the accounting information contained in this presentation corresponds to<br />
document results, books and accounts records.<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
2
Agenda<br />
Introduction<br />
I. <strong>Generali</strong> Portfolio<br />
II. Corporate Structure<br />
III. Real Estate Strategy & Going Forward<br />
IV. Final Remarks<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
3
Agenda<br />
Introduction<br />
A. Real Estate Asset Class within <strong>Generali</strong> Group<br />
B. Real Estate Asset Management and Insurance business<br />
C. Real Estate versus Other Asset Classes<br />
D. Recent Trends<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
4
Introduction<br />
A. Real Estate Asset Class within <strong>Generali</strong> Group<br />
At 30.09.<strong>2010</strong><br />
Cash & financial<br />
instruments<br />
94.5%<br />
Asset Management:<br />
<strong>Generali</strong> Immobiliare<br />
Real Estate (2)<br />
5.5% at book value<br />
7.1% at market value<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
“Own Investments”<br />
including own use real estate (1) :<br />
Euro 331.1 bn<br />
(1) Including own use real estate within own investments. Own investments include own capital and insurance funds (i.e. unit linked excluded)<br />
(2) Including real estate mutual funds & own use real estate<br />
(3) Net technical reserves; life reserves including investment contracts<br />
Insurance<br />
Liabilities<br />
258.1<br />
30.5<br />
Traditional Life<br />
Reserves (3)<br />
P&C Reserves (3)<br />
5
Introduction<br />
B. Real Estate Asset Management and Insurance business<br />
Insurance objectives and Asset Allocation<br />
� Global real estate investment focuses on two areas: own use assets and investment properties<br />
� Real Estate asset management focuses on investment portfolio to deliver performance<br />
� The real estate assets of the Group provide the insurance business with a specific asset class in<br />
the company portfolio and are used to cover life and non-life technical reserves<br />
� The investment and management policies of the Group real estate assets are coherent with the<br />
insurance business requirements:<br />
� Life: Recurring income properties to support yearly income return<br />
Assets with long-term value creation<br />
� Non-life: Properties with value appreciation to maximize return on capital<br />
Investment strategy – Key drivers<br />
� Recurring income and value creation<br />
� Positive RE yield spread vs. bond<br />
� Inflation hedging<br />
� Long-term capital protection<br />
� Creation of latent capital gain<br />
� High quality tenants<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
6
Introduction<br />
C. Real Estate vs. Other Asset Classes (1/2)<br />
Property versus other asset classes: Long-term performance<br />
� Real estate is a significant asset class with specific characteristics:<br />
� Size of the real estate market<br />
� Risk/return profile (between stocks and bonds)<br />
� Diversification benefits due to low cross-correlation with financial assets<br />
� High proportion of total return in current cash yield<br />
� Hedge against unanticipated inflation<br />
� Real estate’s relatively low correlation with other asset classes make it a source of diversification<br />
in a portfolio.<br />
Source: <strong>Generali</strong> Immobiliare Research<br />
Total return US Europe<br />
(annual in %) 30 years 9 years<br />
Bond 9.8% 6.1%<br />
All property 10.0% 4.1%<br />
Equities 10.8% 1.9%<br />
Source: EUROPE -All property: IPD all European pooled property fiunds index, Equities: Morgan Stanley Capital International, Bonds: JP Morgan Co Incorporated<br />
USA- IBBOTSON 2009 (1978 to 2008 data) Property: NCREIF-MIT, Equities: S&P 500, Bonds: US Long-term (20 y) Treasury Ibbotson.<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
7
Introduction<br />
C. Real Estate vs. Other Asset Classes (2/2)<br />
Property in a low interest rate environment (Milan example)<br />
7.0<br />
6.0<br />
5.0<br />
4.0<br />
3.0<br />
2.0<br />
1.0<br />
Dec. 2005 Jun. 2006 Dec. 2006 Jun. 2007 Dec. 2007 Jun. 2008 Dec. 2008 Jun. 2009 Dec. 2009 Jun. <strong>2010</strong><br />
� Increasing spread (Real estate yields vs. Bonds)<br />
� Low-cost debt financing<br />
� Real Estate spread near record to Government Bonds signals time to buy property<br />
Sources: Cushman, Datastream<br />
Spread [RHS]<br />
Milan Prime Yield<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
(1)<br />
Italian Gov. Bond (Rendistato)<br />
(1) Yields are net of direct costs i.e. maintenance, insurance, local taxes etc<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
8
Introduction<br />
D. Recent Trends<br />
Medium term outlook improving as market imbalances are reduced gradually<br />
30%<br />
20%<br />
10%<br />
0%<br />
-10%<br />
-20%<br />
-30%<br />
-40%<br />
� Real estate markets benefited from the increased economic activity in <strong>2010</strong><br />
� Rental values to stabilize, sharp decline in new supply and stabilization of vacancy<br />
rates<br />
� The demand-side environment remains the main short-term concern<br />
� We expect slight increases in capital values from 2011 onwards<br />
Source: GIm Market Research, Cushman<br />
Dec.<br />
2005<br />
European Prime Office Rental Growth<br />
Paris Munich Milan Madrid<br />
Jun.<br />
2006<br />
Dec.<br />
2006<br />
Jun.<br />
2007<br />
Dec.<br />
2007<br />
Jun.<br />
2008<br />
Dec.<br />
2008<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Jun.<br />
2009<br />
Dec.<br />
2009<br />
Jun.<br />
<strong>2010</strong><br />
9
Agenda<br />
I. <strong>Generali</strong> Portfolio<br />
A. Real Estate within <strong>Generali</strong>: Description<br />
B. Real Estate within <strong>Generali</strong>: Operational features and tenancy<br />
C. Real Estate within <strong>Generali</strong>: Key performance indicators<br />
D. <strong>Generali</strong> Group and Real Estate Investments<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
10
I. <strong>Generali</strong> Portfolio<br />
A. Real Estate within <strong>Generali</strong>: Description (1/2)<br />
Real Estate Asset Allocation: 7.1% as at September 30, <strong>2010</strong> at Market Value<br />
� Total Real Estate Market Value as at<br />
30.09.<strong>2010</strong>: Euro 24.2 bn:<br />
� Own Use: Euro 3.9 bn (16%)<br />
� Investment Portfolio: Euro 20.3 bn (84%)<br />
� Direct: Euro 17.9 bn (1)<br />
� Indirect: Euro 2.4 bn (1)<br />
� Latent Capital Gain for the Direct Investment<br />
Portfolio as at 30.09.<strong>2010</strong>: Euro 5.2 bn (30%)<br />
� Life: Euro 1.6 bn<br />
� Non-life: Euro 3.6 bn<br />
� Portfolio comprises more than 2,000 assets<br />
� Development projects represent a marginal<br />
activity in direct portfolio<br />
� Low Leverage level<br />
Source: Financial Statements 30.09.<strong>2010</strong><br />
(1) Direct: Re assets owned directly by the group insurance companies or through SPV directly controlled<br />
Indirect: Re funds managed by third parties<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Destination of use of the direct<br />
portfolio Market Value as at<br />
September 30, <strong>2010</strong><br />
Other/Mixed<br />
9%<br />
Logistic<br />
3%<br />
Retail<br />
6%<br />
Residential<br />
8%<br />
Office<br />
74%<br />
11
I. <strong>Generali</strong> Portfolio<br />
A. Real Estate within <strong>Generali</strong>: Description (2/2)<br />
Country<br />
(Euro bn)<br />
Source: Financial Statements <strong>2010</strong>.09.30<br />
Italy France Germany Rest of<br />
Europe<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Rest of<br />
World<br />
Total Investment MV 9.67 4.99 4.11 4.45 0.96 24.18<br />
Own Use MV 1.55 0.43 0.79 0.95 0.18 3.90<br />
Investment Portfolio MV 8.12 4.56 3.32 3.46 0.78 20.28<br />
Direct Portfolio MV 6.84 4.31 2.46 3.53 0.71 17.85<br />
Indirect Portfolio MV 1.28 0.25 0.86 0.04 0.00 2.43<br />
Market Value by country (on Total Investment MV)<br />
Rest of World<br />
4%<br />
Rest of Europe<br />
18%<br />
Germany<br />
17%<br />
Italy<br />
40%<br />
France<br />
21%<br />
Market Value by Cities (on Total Investment MV)<br />
Paris 19%<br />
Other 39%<br />
Barcelona 2%<br />
Madrid 2%<br />
Berlin 2%<br />
Milan 15%<br />
Rome 6%<br />
Vienna 5%<br />
Tel Aviv 3%<br />
Munich 2%<br />
Total<br />
Hamburg 3%<br />
Cologne 2%<br />
12
I. <strong>Generali</strong> Portfolio<br />
B. Real Estate within <strong>Generali</strong>: Operational features and tenancy (1/2)<br />
Secure source of income<br />
Long Lease<br />
� Office lease contracts have different<br />
legal structure:<br />
� Italy: 12 years (6+6)<br />
� France: 9 years (3+3+3)<br />
� Germany: 10 years (5+5)<br />
� Long Lease duration, rental level<br />
defined over the period<br />
Source: Management report<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Indexation and natural hedge to<br />
inflation<br />
Inflation Hedging: Full indexation of<br />
the rent to the inflation across Europe:<br />
� Italy: 75/100% of indexation<br />
on inflation (ISTAT)<br />
� France: 100% indexed on<br />
ICC (Construction<br />
Costs Index) or<br />
IRL (Life Costs Index)<br />
� Germany: Indexation based on<br />
inflation with a threshold<br />
minimum of 5%<br />
13
I. <strong>Generali</strong> Portfolio<br />
B. Real Estate within <strong>Generali</strong>: Operational features and tenancy (2/2)<br />
High quality source of income<br />
Low Counterparty Risk<br />
� No exposure to a major tenant at<br />
Group level<br />
� Good diversification of tenant’s activity<br />
sector (financial institutions, retail, state<br />
organizations, food, fashion …)<br />
� High quality of tenants (credit risk analysis<br />
by tenant are performed at country level)<br />
� Quality buildings attraction for quality and<br />
branded tenants: new buildings in business<br />
area and historical building in prime and<br />
downtown locations<br />
� Multitenancy prevails<br />
� Key tenant relation as a priority<br />
� Low concentration of expiry date of lease<br />
(10-15% per year)<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Tenants concentration in main<br />
countries<br />
� Italy<br />
� Top 10 tenants represent ca. 15% of<br />
passing rent<br />
� Economic sector: Financial institutions,<br />
Telecom and media, state organization,<br />
services<br />
� France<br />
� Top 10 tenants ca. 35% of passing rent<br />
� Economic sector: IT and services, food,<br />
media, state organization, financial<br />
institutions<br />
� Germany<br />
� Top 10 tenants represent ca. 20% of<br />
passing rent<br />
� Economic sector: Retail, IT and services,<br />
media, financial institutions<br />
14
I. <strong>Generali</strong> Portfolio<br />
C. Real Estate within <strong>Generali</strong>: Key Performance Indicators (1/3)<br />
Catch momentum and value creation<br />
Direct Portfolio<br />
31%<br />
118<br />
3.8%<br />
33%<br />
31%<br />
343 627<br />
352<br />
4.1%<br />
4.2%<br />
� Net Operating Income Increases thanks to active management (risk return profile)<br />
� Net Realised Capital Gain: Regular stream to support insurance profitability<br />
� Continue value creation: Latent capital gain at 30% over the period<br />
Source: Financial Statements and management account<br />
Recurring return %: (Rental Income – operating expenses, i.e. maintenance, insurance)/Market Value<br />
Latent Capital Gain %: (Market Value – Book Value)/Market Value; Realised Capital Gain: Sales Price – Book Value<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
29% 29%<br />
4.5%<br />
2006 2007 2008 2009 <strong>2010</strong>e<br />
Recurring Returns % Latent Capital Gain % Realised Capital Gain (Euro m)<br />
260<br />
4.5%<br />
15
I. <strong>Generali</strong> Portfolio<br />
C. Real Estate within <strong>Generali</strong>: Key Performance Indicators (2/3)<br />
Take advantage of market timing<br />
Latent Capital Gain Realised Capital Gain<br />
6.0<br />
5.5<br />
5.0<br />
4.5<br />
4.0<br />
33.3%<br />
31.5% 31.2%<br />
29.0% 29.4%<br />
5.2<br />
5.9<br />
5.7<br />
5.2<br />
� Took advantage of market timing and realised capital gain in 2008,<br />
turnaround year in the Euro zone<br />
� Group portfolio confirms its resilience in 2009<br />
� Resume value creation in <strong>2010</strong><br />
Source: Financial Statements and management account<br />
5.3<br />
35.0<br />
30.0<br />
25.0<br />
20.0<br />
15.0<br />
2006 2007 2008 2009 <strong>2010</strong>e<br />
Latent Capital Gain<br />
% Latent Capital Gain<br />
Direct portfolio<br />
600.0<br />
500.0<br />
400.0<br />
300.0<br />
200.0<br />
100.0<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
0.0<br />
2.5%<br />
117.7<br />
6.6%<br />
343.0<br />
10.5%<br />
626.6<br />
6.2%<br />
5.0%<br />
351.7 260.0<br />
2006 2007 2008 2009 <strong>2010</strong>e<br />
Capital Gain realised<br />
% Capital Gain realised vs. latent<br />
12.0<br />
10.0<br />
8.0<br />
6.0<br />
4.0<br />
2.0<br />
0.0<br />
16
I. <strong>Generali</strong> Portfolio<br />
C. Real Estate within <strong>Generali</strong>: Key Performance Indicators (3/3)<br />
Catch momentum and rebalance asset allocation<br />
Direct Portfolio<br />
Other/Mixed<br />
15%<br />
Residential<br />
30%<br />
� On a long-term view over the past ten years, <strong>Generali</strong> has rebalanced the risk return<br />
profile of the portfolio<br />
� Between 2000 and 2005 sales focused on residential sector to seize the market<br />
opportunities (capital gain extraction from low yield properties)<br />
� Over the period new investments focused on recurring income and value creating<br />
office properties<br />
Source: Management account<br />
Asset Allocation by Destination of Use<br />
Office<br />
55%<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Other/Mixed<br />
18%<br />
2000 <strong>2010</strong><br />
Residential<br />
8%<br />
Office<br />
74%<br />
17
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (1/9)<br />
A historical portfolio<br />
<strong>Generali</strong> was founded in Trieste. The Group then expanded<br />
into the Procuratie Vecchie in San Marco’s Square, Venice,<br />
one of the most prestigious buildings among the firm’s historic<br />
assets. The Group’s evolution and personality are mirrored<br />
throughout Europe in the high quality commercial buildings<br />
initially own used and then for investment purpose.<br />
Milan – Piazza Cordusio<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Trieste – Piazza Unità d’Italia<br />
18
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (2/9)<br />
ITALY: From historical portfolio …<br />
Rome – Piazza Venezia<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Venice – Piazza San Marco<br />
19
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (3/9)<br />
ITALY: … to modern investment properties<br />
Rome – Via Po<br />
Milan – Via Filzi Milan – Palazzo Nimeyer<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Milan – Maciachini business park<br />
20
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (4/9)<br />
FRANCE: Historical portfolio and new projects for the city<br />
Paris (Issy les Moulineaux) – EOS<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Paris – Champs-Èlysées<br />
21
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (5/9)<br />
GERMANY: Mostly newly built portfolio<br />
Berlin – Adidas Cologne – Constantinhoefe<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Hamburg – Covent Park<br />
22
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (6/9)<br />
AUSTRIA: Unique portfolio<br />
Vienna – Tegetthoffstrasse, 7<br />
Vienna – Wipplinger<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Vienna – Graben<br />
23
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (7/9)<br />
SPAIN: Madrid and Barcelona CBD portfolio<br />
Madrid – Gran Via 10 Madrid – Serrano Barcelona – Paseo de Gracia<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
24
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (8/9)<br />
OTHER LOCATIONS<br />
Amsterdam – Herengracht<br />
Brussels – Louise Tower<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Zurich ZH – Freigutstrasse 12-14<br />
25
I. <strong>Generali</strong> Portfolio<br />
D. <strong>Generali</strong> Group and Real Estate Investments (9/9) 26<br />
RECENT ACQUISITION: Farragut Building – Washington<br />
Overview � Energy Star office property<br />
� 12 storey<br />
� Heart of Washington DC’s CBD, 2 blocks<br />
from the White House<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets
Agenda<br />
II. Corporate Structure<br />
A. Real Estate Structure within <strong>Generali</strong><br />
B. <strong>Generali</strong> Immobiliare<br />
C. Group Real Estate Divestment / Investment Committee<br />
D. Product Development<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
27
II. Corporate Structure<br />
A. Real Estate Structure within <strong>Generali</strong><br />
Integrated Asset Management Structure<br />
Global Player<br />
� <strong>Generali</strong> is a global key player with strong<br />
local competences<br />
� <strong>Generali</strong> Immobiliare: Group Real Estate<br />
Asset Management structure, with<br />
specialised poles<br />
� All investments / divestments approved by a<br />
centralised Real Estate Committee<br />
Vertical integration with focus on<br />
Investment Portfolio<br />
� Facility Management<br />
� Property Management<br />
� Asset Management<br />
� Product development and Fund<br />
Management<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Structure dedicated to Insurance<br />
Companies<br />
� Matching technical reserves<br />
� Asset Management for life – non-life<br />
segment<br />
� Follow Group geographical expansion<br />
� Expansion of third party institutional Asset<br />
Management<br />
Dedicated team in 11 countries,<br />
500 staff<br />
� Italy<br />
� France<br />
� Germany<br />
� Spain<br />
� Austria<br />
� Belgium<br />
� Netherlands<br />
� Switzerland<br />
� Israel<br />
� Czech Republic<br />
� China<br />
28
II. Corporate Structure<br />
B. <strong>Generali</strong> Immobiliare (1/2)<br />
� The globalisation of the Real Estate market provides <strong>Generali</strong> with a unique opportunity to<br />
leverage its competences and become a Global Player with strong local competences<br />
� <strong>Generali</strong> Immobiliare has been set up on the 1st September 2008 as a new department of the<br />
Corporate Centre (Assicurazioni <strong>Generali</strong>) dedicated to the Real Estate across the Group<br />
� <strong>Generali</strong> Immobiliare business model is client-focused and aims to combine Real Estate culture<br />
with a strong financial background<br />
Real Estate skills Financial skills<br />
Real estate services<br />
Project management<br />
Commercial property<br />
Client Relationship<br />
Tenants<br />
<strong>Generali</strong> Immobiliare<br />
Synthesis of both cultures<br />
to better serve clients<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Asset Management<br />
Research<br />
Finance<br />
Client Relationship<br />
Insurance companies<br />
Institutional investors<br />
29
II. Corporate Structure<br />
B. <strong>Generali</strong> Immobiliare (2/2)<br />
Other Headquarters<br />
departments<br />
� Strategic Planning<br />
� Strategic Asset<br />
Allocation<br />
� Finance<br />
� Tax<br />
� Legal<br />
Jacques PLAS<br />
ITALY<br />
Giovanni<br />
PAVIERA<br />
FRANCE<br />
Philippe<br />
DEPOUX<br />
Benoit PRAT-STANFORD Tina PAILLET Dominique BEGHIN<br />
GERMANY<br />
Martin<br />
SCHRAMM<br />
GENERALI Immobiliare<br />
CHIEF EXECUTIVE OFFICER<br />
Giancarlo SCOTTI<br />
Research Finance Asset Mgmt Invest / Divest<br />
AUSTRIA<br />
Klaus<br />
EDELHAUSER<br />
Countries<br />
SPAIN<br />
Julio VIDAL<br />
AREAN<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
BELGIUM<br />
Michel STAES<br />
THE<br />
NETHERLANDS<br />
Ad OLIVIER<br />
GREDIC<br />
<strong>Generali</strong> Real Estate<br />
Divestment /<br />
Investment<br />
Committee<br />
SWITZERLAND<br />
Christian<br />
BREUTEL<br />
Asia<br />
Elisabeth LOH<br />
ISRAEL<br />
Shlomo<br />
GUTMAN<br />
30
II. Corporate Structure<br />
C. Group Real Estate Divestment / Investment Committee<br />
<strong>Generali</strong> Real Estate Divestment / Investment Committee ”GREDIC” is the<br />
investment / divestment technical & executive centre for <strong>Generali</strong> Group Real<br />
Estate:<br />
� All investments / divestments to be approved by GREDIC<br />
� Standard presentation with consistent Key Performance Indicators<br />
� Presentation from D. Beghin and local team<br />
� Comparability of performance investment process across the group<br />
� Due diligence and acquisition process covers all aspects of risk and performance<br />
� Ensure that local investments are in line with group strategy<br />
� Six members, international team, who meet weekly in Paris:<br />
Giancarlo<br />
SCOTTI<br />
Chairman of GREDIC<br />
Philippe<br />
DEPOUX<br />
Klaus<br />
EDELHAUSER<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
Giovanni<br />
PAVIERA<br />
Benoit PRAT-<br />
STANFORD<br />
Martin<br />
SCHRAMM<br />
31
II. Corporate Structure<br />
D. Product Development<br />
<strong>Generali</strong> Group has developed expertise in product development and real estate<br />
fund management for group insurance companies over the past 4 years<br />
Real Estate Funds rationale<br />
� Offer opportunity across group<br />
� Eligible asset for insurance company technical reserves<br />
� Rebalance risk / return profile for each company according to insurance requirements<br />
Creation of dedicated vehicles through Group Real Estate management companies<br />
� <strong>Generali</strong> Immobiliare Italia SGR: Set up in 2006, dedicated funds with clear investment strategy<br />
(AUM Euro 3.2 bn)<br />
� <strong>Generali</strong> Immobiliare Asset Management (Lux Co): Set up in 2009, dedicated funds<br />
geographically and sector focused<br />
� Third Parties Institutional Asset Management activity started in Italy in 2008 with Scarlatti Fund<br />
and Eracle Fund<br />
� Increase Third Party Institutional Asset Management is a target<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
32
Agenda<br />
III. Real Estate Strategy &<br />
Going Forward<br />
A. Investment Strategy & Market environment<br />
B. Going Forward<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
33
III. Real Estate Strategy & Going Forward<br />
A. Investment Strategy and Market environment (1/2)<br />
Real Estate under Solvency II<br />
� Real Estate estimated capital charge at 25%<br />
� Positive margin over bond yield backed by real assets<br />
� Total Return as sum of Recurring Income and Change of Value<br />
� Real Estate market momentum favorable for long-term investors<br />
� Inflation Hedging<br />
Real Estate attractive asset class for life business of <strong>Generali</strong><br />
Balance RE allocation Life – Non-life considering the risk capital absorption<br />
� Increase life segment exposure to Real Estate as an opportunity to optimize risk / return profile<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
34
III. Real Estate Strategy & Going Forward<br />
A. Investment Strategy and Market environment (2/2)<br />
Strategy has to be adapted to<br />
uncertain market environment<br />
� Globalization to continue<br />
� Objective to secure cash flow on existing assets<br />
� Some yield recompression across markets<br />
� Real estate debt to be refinanced in the next years<br />
might generate opportunities<br />
Significant investment opportunities in Real Estate<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
More balanced RE Portfolio to benefit<br />
from different market timing<br />
� Market timing is key in Euro zone and USA as more<br />
mature<br />
� Urbanization at an unprecedented speed in China<br />
and India<br />
� Market and risk monitoring to support expected<br />
returns<br />
� Attractive returns where cycle is most advanced (USA)<br />
� Quality assets at affordable prices in core countries (France, Italy, Germany) due to distressed sellers<br />
� China: Entering real estate after markets have cooled down<br />
� India: Take advantage of fast urbanization process<br />
35
III. Real Estate Strategy & Going Forward<br />
B. Going Forward: Increase Real Estate Exosure (1/2)<br />
Gradual increase of Group RE portfolio<br />
Increase Real Estate exposure<br />
� Invest in quality assets with recurring income<br />
� Seize opportunities<br />
� Continue portfolio turnover to maximize<br />
return<br />
� Allocation by segment: essentially in life<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
New Investments structure<br />
�Traditionally, technical reserves backed by<br />
domestic assets: RE investment directly or<br />
through local / dedicated products<br />
(domestic funds)<br />
� Selectively, technical reserves backed by<br />
cross border assets: RE investment through<br />
cross-border/<br />
specialized products managed internally<br />
(international funds)<br />
Opportunity to invest over the next years, market turnaround expected in 2012<br />
� Ride the market cycle to take advantage of the Group’s existing markets and of new areas<br />
(Euro zone)<br />
� Investments in countries where yields are attractive (USA)<br />
� Start to invest in China following Group expansion to match local insurance reserves<br />
� Invest in CEE markets following Group expansion to match local insurance reserves<br />
36
III. Real Estate Strategy & Going Forward<br />
B. Going Forward: Increase Real Estate Exposure (2/2)<br />
Opportunistic<br />
strategy<br />
North America<br />
� Attractive returns<br />
� Advanced Real<br />
Estate cycle<br />
� Liquid market<br />
� Top quality products<br />
offer<br />
Focus on<br />
� New York<br />
� Washington<br />
� Boston<br />
� San Francisco<br />
� Chicago<br />
South America<br />
� Study opportunities<br />
� Follow group<br />
expansion<br />
Continental Europe<br />
� Portfolio Turnover<br />
� Ride market cycle:<br />
Quality assets and<br />
returns<br />
� Resilient Portfolio<br />
with recurring income<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
CORE Growth<br />
Focus on<br />
� Madrid, Barcelona<br />
� Paris<br />
� Hamburg, Cologne,<br />
Munich, Berlin<br />
� Milan, Rome<br />
� Vienna<br />
� London<br />
Central Eastern Europe<br />
� Match Group Assets /<br />
Liabilities requirements<br />
Focus on<br />
� Prague<br />
� Warsaw<br />
Asia<br />
� China: Gradually<br />
invest local technical<br />
reserves<br />
� India: Study<br />
opportunities<br />
Focus on<br />
� Shanghai<br />
� Beijing<br />
� Shenzhen<br />
� Guangzhou<br />
37
Agenda<br />
Final Remarks<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
38
FINAL REMARKS<br />
Final Remarks<br />
Resilient portfolio with balanced risk return profile<br />
Integrated Real Estate Asset Management structure<br />
Real Estate exposure growth<br />
Exposure to Real Estate mainly in life<br />
Third party institutional Asset Management increase<br />
Assicurazioni <strong>Generali</strong> Group – <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong> – Investment Management of Insurance Assets<br />
39
<strong>Generali</strong> <strong>Investor</strong> <strong>Day</strong> <strong>2010</strong><br />
<strong>Generali</strong> Immobiliare<br />
Strategy & Performance<br />
Giancarlo Scotti<br />
Chief Executive Officer of<br />
<strong>Generali</strong> Immobiliare<br />
Venice, November 26, <strong>2010</strong>