TWENTY YEARS in the past Mediobanca was the epicentre of the salotto buono (the “nice drawing room”), a bunch of old school corporations whose net of cross-connections dominated Italian enterprise. Occasions have modified. In the present day the Milanese financial institution is within the modernising camp in a combat with two super-seniors over the way forward for 190-year-old Generali, Italy’s greatest insurer. Its final result may determine whether or not Italy’s company governance is eventually thrust into the twenty first century.
The ability battle pits Alberto Nagel, boss of Mediobanca, in opposition to Leonardo Del Vecchio, the 86-year-old founding father of Luxottica, an eyewear large, and Francesco Gaetano Caltagirone, a 78-year-old building tycoon. Either side personal huge stakes in Generali: Mediobanca controls 17%, whereas the pair collectively personal 14%. At stake is the long run route and governance of one in every of Italy’s greatest corporations. Mr Nagel thinks Generali is on the appropriate path below the stewardship of Philippe Donnet, the group’s French CEO whose mandate is up for renewal on the annual normal assembly (AGM) in April. Messrs Del Vecchio and Caltagirone are agitating for regime change on the venerable Trieste-based insurer.
Precisely why just isn't clear. They haven't provide you with a marketing strategy or another candidate for CEO. They appear sad with Generali’s mergers-and-acquisitions technique, which they contemplate too timid. The agency’s latest takeover of Cattolica, a parochial rival, was not the type of deal they need to see, which is huge and worldwide. They complain that Generali ought to do extra to digitise its operations.
In truth Mr Donnet appears to have accomplished a great job at Generali. He has strengthened its capital place via the sale of peripheral companies and enhancements in profitability. He has lowered its debt burden and altered its enterprise combine away from merchandise that eat up an excessive amount of capital, reminiscent of assured life-insurance contracts, to fee-paying ones, reminiscent of property and casualty insurance policies. In latest months he has led acquisitions that elevated Generali’s share in core European markets. And Generali has pioneered software program that writes insurance coverage contracts by itself.
What’s extra, Generali has grow to be a money machine that makes institutional buyers pleased, says Andrew Ritchie of Autonomous Analysis. When Mr Donnet offered his three-year plan in December he promised cumulative dividends of just about €6bn ($6.8bn), forecast an annual rise in earnings per share of 6% to eight% and introduced a €500m buyback.
So what motivates the dissident duo? A lack of affect, maybe. Within the previous days of the salotto the CEO of Generali would dine with vital shareholders earlier than asserting strategic choices or new board members. These days are gone because the insurer continues to deliver its governance consistent with European norms. Below guidelines Mr Donnet launched in 2020, the outgoing board final month really useful new administrators for the ten-strong physique—as is the case at some continental blue-chips. The duo dislike the brand new guidelines.
On the face of it they scored a victory on February 18th, when Gabriele Galateri di Genola, Generali’s chairman, mentioned he would step down on the finish of his third time period in April. However Mr Galateri didn't depart as a result of the duo pushed him out. He left as a result of he helps Mr Donnet’s drive to modernise Generali: below the brand new governance guidelines, three phrases is the utmost.
It's possible, in reality, that Mr Donnet will nonetheless be in his job after the AGM on April twenty ninth. Analysts assume that Mr Nagel and buyers who symbolize 35% of shares will prevail. This may occasionally upset the silver-haired rebels—however there's a silver lining, too. As prime shareholders, they stand to pocket large dividends within the coming years. ■
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