Generali to Appoint Greco Chief as Perissinotto Ousted by Board
Assicurazioni Generali SpA (G) plans to name Mario Greco, head of general insurance at Zurich Insurance Group AG (ZURN), as chief executive officer to replace Giovanni Perissinotto, ousted after shares slumped to a 26-year low.
Perissinotto’s powers were revoked “due to the necessity to bring about change in the company’s management,” the Trieste, Italy-based insurer said yesterday. Ten out of 17 board members voted in favor of Perissinotto’s departure, Director Claudio De Conto said. Chairman Gabriele Galateri will act as the interim CEO.
Investors including Mediobanca SpA (MB), the insurer’s biggest shareholder with a 13 percent stake, and Leonardo Del Vecchio, who owns 3 percent of the company, are betting Greco, 52, can revive the performance and strategy of Italy’s largest insurance company. Profit has fallen for four consecutive quarters amid writedowns of assets including Greek bonds and a drop in earnings at the company’s life unit.
Perissinotto is “inadequate to lead Generali,” Del Vecchio, founder of eyewear maker Luxottica SpA, said in a statement June 1. “This was proved by poor operating results, a more than negative perception by markets of his management and more generally his total lack of a strategic vision.” Greco’s appointment would bring a “new pace” to the company, Del Vecchio said.
The shares have fallen 27 percent this year, compared with the Bloomberg Europe 500 Insurance Index’s 5 percent decline. Generali gained 3.4 percent June 1 amid reports of Perissinotto’s likely ouster. The stock closed at 8.49 euros, valuing the business at 13.2 billion euros ($16.4 billion).
Perissinotto, 58, has led the company since 2001 when he was named co-CEO, before becoming sole CEO in April 2010. He joined Generali in 1980. The executive in March said he expected “strong” profit this year as the company reduces costs and sells assets to strengthen capital.
Board member Diego Della Valle backed Perissinotto today and said he plans to resign June 4.
“I agreed neither with the form nor the substance” of his departure, Della Valle told reporters in Milan.
Greco has already headed an insurance company in Italy. In 1998 he became CEO of Riunione Adriatica di Sicurta SpA, Italy’s second-biggest insurer at the time, a company he ran until 2005, when he joined Intesa Sanpaolo SpA (ISP) as head of its insurance division.
“The appointment of Mario Greco would likely be welcomed by the market given his previous track record at the underperforming RAS in the late 90s,” Richard Burden, an analyst at Credit Suisse AG, wrote in a note June 1.
Greco combined several RAS units and expanded the insurer’s sales channels and banking services after he took over as chief executive in 1998. The former McKinsey & Co. consultant turned the insurer into one of Allianz AG’s most profitable units by fostering distribution alliances.
RAS shares rose about 66 percent under his management, compared with a 50 percent decline of the Bloomberg Europe 500 Insurance Index.
Perissinotto was summoned to Mediobanca’s Milan headquarters and asked to resign by CEO Alberto Nagel and Chairman Renato Pagliaro on May 30, Perissinotto said in a letter to board members. Today’s board meeting was called after he refused to resign.
Mediobanca has put “its interests above those of this company, its policyholders, employees and the vast majority of its shareholders,” Perissinotto wrote in the letter.
“Mediobanca has obstructed Generali management efforts to diversify risk into new high-growth areas,” because this might have led to a dilution of its stake and “reduced influence” over the group given the investment bank’s unwillingness to subscribe to a capital increase.
Generali, which gets about 13 percent of its operating income in central and eastern Europe, is expanding in emerging markets to boost earnings following the financial crisis. The insurer has repeatedly said that it’s focused on organic growth.
“We do not see this reshuffle as a solution,” Atanasio Pantarrotas, an analyst at Credit Agricole Cheuvreux, wrote in a note June 1. “This is another dramatic reshuffle after several major upheavals in recent years, due to tensions between top management and Mediobanca.”
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