Following are excerpts from a CNBC interview with Philippe Donnet, CEO of Generali, from the World Economic Forum 2017 with Julia Chatterley.
JC: Thank you for speaking to us. 2016 marked a re-shaping of the insurance industry where I think business focused more on where they have got scale, reducing where they didn't. Do you think this year will mark the same path?
PD: Yes I think 2017 will look very close to 2016. For basic reasons, we are still going to face a low interest rate environment and the regulation is going to be tough again. Most insurance companies, half at least European companies, have to deal with regulation, adapting themselves to regulation and to this new world with low interest rates.
JC: So what about deal size? Is it going to be less about big deal size and more about being selective and honing your business in a sense?
PD: I don't think there will be mega deals in the insurance industry. I think that there will be small or medium size deals, very much focused because companies will be looking for synergies. So the reasons for making deals will be synergies, industrial synergies.
JC: And what about for you? Because we keep coming back to this question about the French business. Is it time for you to part with the French business?
PD: Well you know we are Europe leading insurance company, Europe is very important to us, it's our core market and France is part of Europe so our business is France's core business.
JC: Does it worry you though because we do have elections this year and given what we have seen in terms of surprises on the political front, Marine Le Pen. Would a win from Marine Le Pen make you cautious about that market, make you concerned?
PD: I am quite confident and optimistic I don't think this will happen. I agree that we will have some surprises, nobody knows what is going to happen but I think at the end, the common sense will win, that at the end whoever is elected the reforms will be done in France and probably in other countries.
JC: So we heard from Mrs May this week talking about what Brexit is going to look like for the UK and actually the Market in some way was comforted by that. She seemed quite diplomatic I think on Europe. Do you think European institutional leaders need to be more diplomatic with the UK here?
PD: Well the Brexit hasn't happened yet. The vote has happened but not the Brexit and I think it's just the beginning of a very long and very complicated process. Nobody knows what will be at the end of the process so I think that we can be very surprised about what will be the exit of this process. Maybe the Brexit will not happen at the end , nobody knows.
JC: Really you still think there is a possibility?
PD: I think there is possibility because if the conditions are not good enough for the UK maybe they would prefer not to stay out from Europe.
JC: The governor of the bank of England, Mark Carney suggested that actually it could be worse for the EU than it could be for the UK going forward and I thought Mrs May made some interesting comments today, a suggestion that actually Europe needs to learn to bend here before it breaks. Would you agree with that? What's the outlook here for Europe?
PD: Well I think that obviously the vote, the negative vote for Europe or the positive vote for Brexit is an indication that Europe needs to improve. That people like myself who strongly believe in Europe, we all agree that Europe has to change and Europe has to improve. I think we need stronger integration, economic, financial, fiscal integration. We need to have a stronger European leadership. We need to work very hard on building, rebuilding the foundation of Europe. We need to be attractive, even for UK.
JC: Do you think we're not yet. That we're not at this moment, Europe isn't at this moment?
PD: I think that Europe has a lot to do and maybe the elections in many European countries is also an opportunity to build a new European leadership.
JC: Do you think Europe at this moment is more or less attractive than the United States with Donald trump taking over?
PD: I think that Europe is still very attractive we are very happy as Generali to have a strong position in Europe, for example in Central and Eastern Europe where you have a good growth of the Economy. There are plenty of opportunities in Europe, plenty of talent in Europe so definitely Europe is very attractive but can be even more attractive if we improve the political and economic management of Europe.
JC: You know if I was given money for every time I mentioned the name Donald Trump to a business leader or to a politician and they smile before they say anything, I would be a very rich lady. What do you think for Donald Trump and do you think he's ultimately going to be good or bad for the United States and for the global Economy?
PD: Frankly speaking I have no idea because he has been chosen by the American. He will start doing his job this Friday. I think we have to wait a little bit to understand which kind of president he is going to be. I think he knows what is business so we can hope he will create good conditions for business but business is not everything, politics is important as well.
JC: And perhaps diplomacy too.
PD: Diplomacy is important too and it is important for the American president to understand the complexity of the world because the whole world is not exactly like the US. And it is important to get into this complexity.
JC: Are you worried about the impact of the heightened tensions between the United states and China this year too. Because that looks like a possibility. We had President Xi come to Davos and talk about the importance of globalisation and there is an irony there given the tone that president elect is taking.
JC: Well it is kind of a strange situation, definitely. But I think it's very good. We need to look at the positive things and I think it's great news to listen to the Chinese President talking about how positive is Globalisation. I think it is something that we could not expect a few years ago. I think it's a good step for the whole world. So once again I'm quite optimistic.
JC: You think they see opportunity here to step up and be a leader in the world?
PD: Obviously they want to strengthen their position in the world which is fair because they have a strong economic position. I think that what they said about the planet, about the environment is very positive. It is something that we could ne expect one year ago. So I see very positive steps…
JC: Do you believe him? I mean, they say one thing about Globalisation but if you look at what they are doing domestically, there is a contradiction. Whether it's a on climate, even if they are trying, there is a contradiction in what the president said today. Do you think the direction is right, even if there is things going on at home that we might not agree with?
PD: Well I think that when a president talks, especially a President of such an important country, at the beginning we should believe him. And then obviously we need to see to check that he is going to walk the talk. But I think this is true for all politicians and that now I think everybody expects that politicians walk the talk.
JC: Are markets going to be more interesting this year? Is it going to be more easy to make money, particularly if we look at your life business.
PD: No it's going to be easy and this is why in our company we still very much focused on what we have to do to reduce cost, to increase margin because we know that there will be still strong volatility of the market. Maybe that the global situation will be better than last year. It will not make it easy to make money. We need to remain very focused.
JC: Talk to me about the outlook for Italy. It's clearly a very important business for you and it's had once again a politically interesting, let's say, year.
PD: Well as you said. Italy is very important to us. We have a very strong and a very robust business in Italy. We have a strong leadership position if the insurance industry in Italy and it's very resilient to whatever can happen. Everybody was very much worried about the referendum in Italy and the answer was clearly no. Nevertheless, there were not so many changes in the Italian government and actually the policy of the government hasn't changed and the government continues implementing the reforms that have to be implemented in Italy so I am quite positive. As you know, some solutions have been found for some Italian banks so I think Italy is on the right track.
JC: Do you think enough has been done for the banks? Or do you think more support will be needed.
PD: Important things have been done. The things we could not avoid have been done which is the most important.
JC: Have we seen the worst for the Italian banks do you think?
PD: I think so.