• Board of directors approved termination of Greco's contract
  • Company to start process for selection of CEO candidates

Assicurazioni Generali SpA appointed its Chairman Gabriele Galateri, as acting chief executive officer after CEO Mario Greco decided to quit Italy’s biggest insurer to become the head of Zurich Insurance Group AG.

The company’s board approved the termination of Greco’s contract and asked the Appointments and Corporate Governance Committee to start the process for the selection of candidates for the CEO position, Generali said in a statement.

“The unexpected departure of the CEO leaves Generali in a precarious situation,”  analysts at Sanford C. Bernstein Ltd. including Thomas Seidl wrote in a Feb. 2 report. “With the turnaround not complete and the capital rather weak, the group enters difficult years.”

Greco took the helm at Generali in August 2012 facing the task of reviving profit as the European debt crisis threatened to engulf Italy. His mandate was due to expire in April. During his tenure he cut costs, reduced debt and sold non-strategic units to focus on the company’s main business. He raised about 4 billion euros divesting assets, including a U.S. reinsurer and Swiss private bank BSI Group.

Generali’s economic solvency ratio, a key measure of capital strength, stood at 196 percent at the end of September, according to a new internal model based on a set of European Union capital rules called Solvency II, which will apply from 2016. The insurer said third-quarter profit fell 18 percent after operating income declined at its life-insurance business.

Greco told Generali’s board that he was unable to agree with investors on his future role after months of discussions, according to a letter seen by Bloomberg. The company needs certainty to meet its targets, and the conditions for Greco to stay on weren’t there, he wrote.

Generali’s shares rose about 50 percent under Greco’s management, compared with a 70 percent increase of the Bloomberg Europe 500 Insurance Index.

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