Generali, Italy’s battle over insurance and finance

A new board will be appointed and two lineups, formerly friends, will square off.

On 29 April, a new board of directors will be appointed at Generali, the most important Italian insurance company. In recent months, the two main shareholders have been battling for control of the future board through shares acquisition, coalition and firing of directors. In fact, the clash over Generali has important implications for the finance sector.

Assicurazioni Generali SpA is the third-largest insurance company in Europe, behind rival Allianz and Zurich, who left Generali behind in the last years. Generali is an Italian company, listed in the Milan stock exchange but was established in Trieste in 1831, when the city was under the Austrian Empire: its bond with Italy sprang from the local branches it opened in Venice and Milan in that period. Nowadays Generali deals with insurances, financial products and investments. It also operates in the United States and in Asia.

Generali's major shareholder is Mediobanca, the most relevant investment bank in Italy. It controls almost 20% of Generali shares and wants current CEO, Phillip Donnet, to be reappointed. Mediobanca wants Generali to continue with the present strategy, focused on increasing asset management and insurance products with high margins. It helped to achieve the best ever financial results for Generali: the operating income increased to 5,9 billion euros in 2021.

But Francesco Gaetano Caltagirone is not satisfied. For him, Generali should have greater ambitions. The Roman real estate developer, who is also active in the publishing industry and is one of the richest men in Italy, presented the board an alternative list, with different people in the role of both CEO and chairman. Rather than Donnet, he wants Luciano Cirinà to lead Generali. He is Generali CEO for East Europe and has spent his entire career in Generali. But he’s actually unemployed as Generali’s current board fired him days after he was publicly announced as the candidate CEO by Caltagirone. Claudio Costamagna, former Goldman Sachs banker with friendly relations in different nations, would be the new chairman.

Caltagirone, who has a 9% stake in Generali, claims that the Italian insurer underperformed due to Mediobanca’s influence and needs a new strategic plan, based on cutting costs and intensifying acquisitions. Recently, he told Italian media Il Sole 24 ore that “The United States is the right place for Generali to boost saving and asset management, while Europe and Asia are crucial for insurance products”.

Caltagirone wants “a huge multinational company with Italian sovereignty”. Its challenge to Mediobanca is backed by Luxottica founder and tycoon Luigi Del Vecchio, who is also the main investor in Mediobanca, controlling 19% of its shares. Del Vecchio, 86, has been sceptical not only about Mediobanca’s influence over Generali but also about Mediobanca's own management. He has criticised CEO Alberto Nagel for relying too much on Generali, which accounts for almost a third of Mediobanca’s profits.

Caltagirone and Del Vecchio have a third ally: the Benetton family. They were bound by a pact, which after the presentation of Caltagirone’s list was dissolved to allow them to buy more shares. They also want the Italian financial regulator to intervene as Mediobanca borrowed some shares (around 4%) to increase its control over Generali, which will be given back after new board elections.

Mediobanca has actively helped Caltagirone and Del Vecchio during their industrial operations, supporting them with capitals, financial products and strategic backing when needed. In the last years the relationship softened, until they faced off in the race for control of Generali, which can radically change Italy’s financial sector.