Inside Europe

March 23, 2010 11:14 pm

Mediobanca can still prove critics wrong at Generali

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The choice is proving harder than expected to make.

After months of speculation, the identity of who will lead Generali after its April annual meeting could be known as early as the end of this week.

Not that the Trieste-based group, Europe’s third-largest insurer, has any say in the matter. The decision-maker will again most likely be the Milan-based investment bank Mediobanca, the insurer’s largest shareholder and a traditional Italian string-puller.

But as the deadline nears for the official presentation of the Milan bank’s list of candidates for the top jobs at Generali, it appears that the choice is proving harder than expected to make.

At the root of the problem is the widely accredited view that Mediobanca’s own chairman and controversial powerbroker Cesare Geronzi, is lobbying to become the next Generali chairman himself.

Mr Geronzi’s much-discussed past and his close ties with Rome’s political establishment are apparently making the necessary consensus inside and outside Mediobanca hard to achieve.

Last Friday, French financier Vincent Bolloré, a Mediobanca investor, reaffirmed his support for Generali chairman Antoine Bernheim, who Mr Geronzi, 75, would like to eject on the basis that, at 85, Mr Bernheim should retire.

Key investors in another large Mediobanca shareholder, the Italian bank UniCredit, are also thought to support the Generali executive management and to be wary of Mr Geronzi. Finally, international investors remember without fondness Mr Geronzi’s time as chairman of Banca di Roma (subsequently renamed Capitalia and then absorbed by UniCredit) before it was rescued by new management in 2001.

These 11th-hour wobbles behind the scenes have led to a scramble to line up alternative candidates who might garner the necessary consensus.

One such name is Enrico Cucchiani, formerly of RAS, the Italian insurer bought out by Generali’s German rival Allianz in 2006. The modest performance of Allianz’s Italian business since then – the non-life business Mr Cucchiani led and still has responsibility for has shrunk by more than 8 per cent in the past five years – suggests there would be few tears shed were he to answer the call from Milan.

This alone suggests that Mr Cucchiani may lack the necessary stature for the Generali job. The attractions for him are clear though. A smooth exit from Allianz to such a prestigious role in Italy would even compensate for the inevitable stigma of being little more than Mediobanca’s placeman in Trieste.

The fact that Mediobanca appears unable to contemplate an internal Generali candidate for the chairman’s role highlights the absurdity of the selection process. After all, the Trieste group last week announced 2009 results that bettered market expectations, reinforcing the current top team’s credentials.

Mr Bernheim has made no secret that he is available to stay on and there are many in the company who still hope that he will. For those prone to ageism, his two 50-something chief executives are also credible choices for anyone who believes Generali’s new leadership should continue to protect policyholders and independent shareholders from the meddling of Italy’s elite in Milan and Rome.

The logical solution clearly lies within Generali itself. Mediobanca still has time to prove its critics wrong by acting, unexpectedly, out of character and in the interests of one of Italy’s few international success stories and the majority of its stakeholders.

Stranger things have happened, although few will be holding their breath.

Sarkozy’s pension reform

Since coming to power three years ago, President Nicolas Sarkozy has confused everybody in France, including his own supporters, by launching a series of reforms on every conceivable front.

So much so that his reformist zeal is being blamed as one reason for his party’s rout in Sunday’s regional elections.

Mr Sarkozy has clearly understood the lesson and is adjusting his programme by focusing essentially on one key issue – an urgent reform of France’s pension system. He has appointed a new labour minister, Eric Woerth, to spearhead the controversial, yet necessary pension reform that will involve lengthening both the retirement age and the requisite minimum number of years of pension contributions.

Until recently, Mr Sarkozy had criticised President Barack Obama’s approach of concentrating on a single issue: US healthcare reform. He now seems to have been converted to the Obama one-track doctrine – not surprising, given Mr Obama got his healthcare reform past Congress at the very moment Mr Sarkozy suffered his most embarrassing setback since his election.

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