Part One: Generali Asset chief Trabattoni reflects on five years’ transformation

By Luke Jeffs

Carlo Trabattoni became head of Generali Investments Partners in 2017 after more than 20 years at Schroders and has since then managed an ambitious programme of transformation at the Italian asset manager. In March last year, he was promoted to chief executive of Generali Group Asset & Wealth Management.

Founded on Boxing Day 1831 in Trieste, Generali has built in 190 years a prodigious reputation as the preeminent Italian insurer. Managing over €700 billion (£595bn) of assets on behalf of 67 million customers globally, nobody can challenge Generali’s insurance credentials.

Given the Group’s insurance pedigree, it is understandable that its asset manager Generali Investments has had historically a strong bias to fixed income but that has changed under Trabattoni.

He told Global Investor: “Generali Investments today is not what Generali Investments was in 2017 when I joined. There has been a massive transformation that we have gone through to look like we do now. The watershed moment for our business was in 2017 when the group’s CEO Philippe Donnet stated that Generali had to be looked at as an insurance and asset management company.”

Looking back over the past five years, Trabattoni added: “Since 2017, we have decided to step into the asset management world by leveraging what we already had which was mainly our fixed income capability linked to our insurance background.

“Since then, we have decided to enlarge and broaden our investment capabilities by launching a multi-boutique platform. We achieved this in two fashions: the first one was to give value to what we already had, i.e. fixed income and Liability Driven Investment capabilities, together with a private asset segment that focused on real estate and private equity that were part of the group.

“When it came to equity, more sophisticated fixed income, ESG and other parts of the private debt universe for example, we had more limited competencies. So we started by identifying capabilities that were either existing in the market or we would be able to set-up with a selective group of partners in order to launch new initiatives, to create quickly an offer that would be competitive for our clients.”

The multi-boutique approach to asset management has become popular in the past decade, combining the performance of boutiques with the resources and reach of a global asset management group. US exponents include the Affiliated Managers Group (AMG), BNY Mellon, Legg Mason and PGIM (formerly Prudential Investment Management) though European practitioners are less common.

Trabattoni outlines the business model: “We set-up, from the ground up, a few boutiques off the back of a model based on Generali having the majority of the venture while the partners provide the intellectual capital, i.e. the investment capability.”

The plan was to diversify Generali Investments into new markets, enabling the firm both to attract new clients and win more business from its existing customers.

“We have set-up initiatives in a number of different segments – infrastructure debt, high octane equity, so focused on pure alpha generation rather than a benchmark, and, last but not least, an initiative in multi-asset,” the chief executive said.

“These businesses were non-existent until 2018. The formula was simple. Generali was the largest shareholder, setting up the company with the partners and launching the registered entity in different jurisdictions so that’s France, the US and Italy, by providing investment capital to support the launch.”

The Generali Investments strategy was also multi-faceted, however, and included two key acquisitions. Trabattoni and his team bought in February 2019 Sycomore Asset Management, the leading French environmental, social and governance investment expert.

The Sycomore acquisition came just two months after Generali acquired in December 2018 CM Investment Solutions, the London-based alternative asset management arm of Bank of America Merrill Lynch that had at the time $11bn (£9bn) under management. Generali subsequently renamed the business Lumyna.

Trabattoni said: “When we look back at recent history, at the time of pandemic, we had a set of businesses that were either mature – Sycomore or Lumyna – or others that were just starting. But it is important to remember that we also had over €600bn from our existing fixed income business on our balance sheet so this allowed us some tranquillity as we worked through a difficult environment from 2020 onwards.”

This allowed Generali to pursue its transformative agenda through the Covid pandemic and start to deliver earlier on its business objectives.

The chief executive said: “The numbers we have been able to produce have been quite significant from an asset management perspective. Not only have we been able to come out with new flows and raising assets but we have also been able to contribute positively to the bottom line of the group. Total assets under management grew from €456bn at the end of 2018 to €575.3bn at the end of last year. In the same period, assets from third parties grew from €27bn to about €113bn.”

Yet Trabattoni admits Generali has further to go in this transformation.

“When you look at our operations at the moment, you should look at us as a traditional asset manager because the fixed income book makes up the bulk of the assets we have, but, on the other hand, we are an asset manager that is transforming itself by the addition of new capabilities that we pursue and build through the partnership model.”

Trabattoni’s transformational agenda is part of a broader growth strategy that involves competing with the best in the business, he says.

“Ultimately, we are doing this because we want to compete with the largest players globally. If you go back to 2017, the vast majority of our client base were group clients, so we had no external clients. To develop our non-captive client base, we had to build out a sophisticated offering and create a proper third-party mentality based on servicing non-captive clients.

“It is a challenging way forward that we have chosen for ourselves but it will give us the opportunity to diversify the bottom-line by adding other channels and diversifying the revenue streams. We have set an ambitious 2022-2024 plan to further grow our business in terms of clients reach and offer. For this, we need to cultivate what we have in our garden already. This means for example consolidating our LDI capabilities, growing our ESG platform through Sycomore, expanding our infrastructure debt capabilities that we have in France.”

Part Two of the Carlo Trabbatoni Series is on Tuesday May 31