Generali Challenger plan would increase debt leverage to almost 25% – Paper | Investment News

ROME (Reuters) – A plan for Italy’s Generali presented by a rebel investor would aim to raise the insurer’s debt leverage to nearly 25% for any worthwhile operation, the second-largest shareholder’s proposed CEO said on Wednesday. of the group.

The third European insurer is at the center of a battle of shareholders around the board of directors and the renewal of CEO Philippe Donnet. Shareholder Francesco Gaetano Caltagirone, who owns more than 9% of Generali, presented his own candidates for the highest positions.

“We are talking about leverage (debt) to be used only in the case of a truly value-creating operation. Currently the leverage (of Generali) is 20%, that of Allianz is 25%. We offer to bridge part of the gap with Allianz,” Luciano Cirina told La Stampa daily in an interview.

He added that any decision “would not jeopardize the company’s rating” and that a capital increase “was not on the table”.

“The real key to an acquisition is integration. And it’s not easy. For that reason, it’s currently impossible to talk about possible targets,” Cirina said.

Challengers to Generali’s current management have pledged to boost profits by a double-digit percentage and free up more cash for buyouts.

In their plan – called “Awakening the lion” – they aim to bring average annual growth in earnings per share, including from acquisitions, to more than 14% over the period 2021-2024. This compares to Generali’s target of 6-8%. They also want to reduce the cost-income ratio from 64% to 55%.

Cirina, a veteran insurer executive who was fired at the end of March after siding with Caltagirone, added that his lawyers were considering how to challenge Generali’s decision to terminate his contract.

“I also gave them a mandate to take legal action for not indifferent reputational damage. It was certainly not elegant to use my dismissal to advance in this race,” said the former official of the Austria and Central and Eastern European countries with the insurer. .

Investor advisers Institutional Shareholder Services and Glass Lewis have recommended that Generali shareholders support the Italian insurer’s outgoing board’s proposal to reappoint Donnet to the helm, documents show.

(Reporting by Giulia Segreti; Editing by Cristina Carlevaro, Kim Coghill and Bradley Perrett)

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