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Generali partner challenges management with an alternative strategic plan

This content was published on Mar 25, 2022-18:07

(EX5274 update with Generali’s statement and analyst reaction)

Rome, March 25 (EFE). – Generali’s second shareholder, Italian Francesco Gaetano Caltagirone, on Friday presented his nominees to lead the group from April and a plan that bets heavily on mergers and acquisitions, in a move that defies the line from the outgoing board of directors.

Caltagirone and Generali’s third shareholder, Leonardo del Vecchio, are both opposed to the re-election of the current CEO, French Philippe Donnet, who is backed by the largest shareholder, Mediobanca, and the outgoing board.

The two shareholders are of the opinion that Dunnett has not sufficiently boosted the group’s profitability in two terms, and that it should not be repeated for a third term beginning in April, when a shareholder meeting elects the new management team.

Caltagirone, who resigned as Generali’s vice president in January, has proposed Luciano Cirina for CEO and Claudio Costamagna for president, as well as a 2022-2024 strategy based on cost containment and doubling the money the current team wants to allocate to mergers and acquisitions (€7,000 million, compared to 3,000 million the current board said in December that it would reserve for this item).

The program for the period 2022-2024 specifies a decrease in annual costs of up to 600 million euros, profits of 4,200 million euros for 2024 and an accumulated cash generation of at least 9,500 million euros in this period.

Italy’s largest insurer has long faced an internal power struggle to determine the composition of its next board of directors, which has forced even the Italian stock market regulator to demand explanations.

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After introducing the plan, Generali defended that “under the leadership of Dunnett and his management team,” the group “has succeeded in achieving its two most recent three-year strategic plans,” exceeding “a set of ambitious financial goals and delivering the best returns for shareholders, despite the very challenging environment.”

In addition, he noted that his list of candidates “will place the Generali above the European average in terms of independence and gender equality and will bring valuable skills in priority areas such as ESG and digital transformation.”

Caltagirone’s plan calls for a 14% earnings per share (EPS) increase, a target analysts at BNP Paribas Exane say should be offered if they are “willing to support it,” something they doubt will happen.

It also failed to impress Citi analysts, who estimated that it offers “broader, but poorly supported, effective goals”; It’s Equita noted that Caltagirone aims to “seek growth in Europe and the East (China and India) and manage assets in the United States”, and that these points were “already highlighted by Generali’s current management of the business plan in December”. EFE

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