Rififi at Generali, contributors at odds

Posted on Wed Jan 19, 2022 at 7:20 PM

The estrangement is completed: the major shareholders of Generali, two rebellious pact-bound billionaires and Italy’s first investment bank Mediobanca, are locked in a fierce battle over the future of the third European insurer and the reappointment of its chief executive, Philippe Donnet.

Construction magnate Francesco Gaetano Caltagirone, who owns 8% of Generali’s capital, resigned last Thursday from the board of directors, followed on Monday by a representative of Leonardo del Vecchio, founder of eyewear maker Luxoteca.

Thus, the two entrepreneurs intended to protest the way the Board of Directors adopted the new strategic plan 2022-24 and gave its support to Mr. Dunnett, a third-term candidate, believing that they had no vote in the class.

The response of the remaining 11 directors came late Tuesday night, after a marathon meeting: They “categorically rejected”, by majority, “the baseless and often offensive allegations” made by protesters in their resignation letters.

As expected, the board has drawn up its first tentative list of “25 to 30 candidates” for its renewal, which includes Mr. Donnet, a 61-year-old French polytechnic. A more restricted list will be presented to a vote at the general meeting of shareholders on April 29.

– counterattack –

The opposite party, sponsored by Caltagirone (78) and Leonardo del Vecchio (86), Italy’s second-largest wealth maker with a 6.6% stake in the insurance company, is preparing to counterattack.

A source close to the agreement told AFP that the demonstrators planned to present an alternative plan “towards the middle or end of February”, to be followed by a slate of competing candidates.

Dissident shareholders, who increased the pressure by doubling their purchases of additional shares, joined in their rebellion with Crt (1.5%).

Together, they now weigh 16.1% of Generali’s share capital, roughly the same as the major shareholder and Mr Donnet’s backing, Mediobanca, which holds 12.8%, but 17.2% of the voting rights, thanks to an equity loan.

Billionaires criticize Mediobanca for reaping a large income from the Generali, in the form of profits, without working for its growth, and for working behind the scenes to impose the leaders of their choice, without consulting.

The blame was refuted by the President of the Generali, Gabriel Galtteri de Ginola, who asserted that the group “has always carried out its activities in accordance with the standards of absolute transparency and strict fairness”.

– The numbers war –

The accusations against Mediobanca are most explosive as Mr. Del Vecchio is the main shareholder, with an 18.9% stake, and Mr. Caltagirone owns 3%.

“Nothing has been done for the benefit of a particular shareholder, we have always worked for the benefit of all shareholders,” an internal source at General told AFP.

Warriors argue that, compared to competitors such as Allianz, AXA or Zurich Insurance, Generali has lost ground in the past 20 years, in terms of growth and capitalization, and should be more aggressive in terms of mergers and acquisitions.

After acquiring Italian insurance company Cattolica for 1.2 billion euros and French group La Médicale for 400 million euros, Generali plans to strengthen its presence in India through its existing joint ventures, according to a financial source.

The capitalization of the group founded in 1831 in Trieste, or 29.6 billion euros, lags behind insurers such as Allianz (92 billion euros) or AXA (69 billion euros).

Donnett’s supporters point to another numerical record: Since November 2016, the stock price has risen 62%, well above the industry average, and shareholder returns have increased by 115%.

The title closed Wednesday down 0.72% to €18.72 on the Milan Stock Exchange.

The final word will go to the institutional shareholders and small investors who make up 57% of Generali’s capital, who must be convinced of the merits of the plan Mr. Donnet has already introduced or that has been laid down by his opponents.


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