Trieste: is Generali going away?

Analysis by Paolo G. Parovel

In our analysis of 31 October 2015 “Does Rome want to eliminate the European Singapore?” (LINK) we did also report operations to move from the Free Territory of Trieste to Italy, in Milano, the siège social of the Direzione Centrale (Group Head Office) of Generali, with the role to set the strategic guidelines, to coordinate and control the third insurance company of the world.

The Assicurazioni Generali S.p.A. were established in Trieste in 1831, when the port-city was the maritime capital city of the Austrian Empire and of South-Eastern Europe, and they did remain here also between the two World Wars, as well as after 1947, when Trieste became an independent city-State with an international free port and entrusted, since 1954, under the temporary civil administration of the of the Italian Government (not to the State of Italy).

The main advantages of maintaining the head office of Generali in Trieste are two: the powerful image of a Mitteleuropean tradition of internationality, competence, prudence and sobriety, and the legal status of the current Free Territory of Trieste, which, despite the damages caused by the provisional Italian administration preserves all of its rights and strategic roles of international financial centre (LINK).

Since 2012, Trieste restarted to become aware of these rights, receiving increasing international attention for that, and the Italian provisional administration reacted by attempting to liquidate or move from Trieste to Italy both the status of international Free Port and the main enterprises left. Including the Assicurazioni Generali, which from 1991 to 1994, under the management of Alfonso Desiata, had already a project to use the fiscal regime off shore of the Free Territory of Trieste.

The other, historical insurance company of Trieste, the RAS, had already been transferred to Italy in 1947 (after the establishment of the Free Territory) and it was sold to Allianz in 2005 by the CEO of that time, Mario Greco.

In June 2012, Mario Greco, from the Zurich Group, is chosen as CEO of Generali with the support of Italian politics and press, which praises him as a young, dynamic innovator with the extraordinary talent to distribute dividends even in times of crisis.

But such behaviours that gives raise to great success on the media can also mean that the solid, traditional prudence of Generali, which has always protected the shareholders on medium/long term, is abandoned in favour of a policy made of short term visual effects that, instead, would favour cession initiatives, as has already happened for the RAS.

Now the fact. In July 2013, Greco creates Generali Italia S.p.A., with head office in Mogliano Veneto, by merging the insurance activities of Generali in Italy with those of other Italian groups that had already been purchased by the Company (Toro Assicurazioni, Ina Assitalia, Lloyd Italico and Augusta). As definitive head office in Milano, Greco orders the construction of a new building that is a formidable example of modern kitsch: a 44-story, irregular 170M tower in Citylife, right before the Allianz tower; works started in 2014, it should be ready in 2017-2018.

The merging should only involve operation on the Italian market, but it is immediately used for operations that seem to aim at making Generali Italia prevailing over the whole Group, therefore on the “Mitteleuropean” and international structure of the holding Assicurazioni Generali S.p.A., whose Direzione Centrale or Group Head Office, has siège social in Trieste.

For instance, it is from the sober and elegant, historical head office on the seashore of Trieste that the Group Head Office directs the current international strategic structures of the Chief Insurance Officer, of the Chief Financial Officer, of the Chief Risk Officer, of the General Counsel, of the Group HR and Organisation, the central financial activities, the communication activities and control functions over Generali Italia.

And this is why on 30 April 2013, Greco has the shareholder’s General Meeting approving an amendment of the Statute to remove the title of Direzione Centrale – Group Head Office to the office in Trieste, to move it to Milano and maintaining in Trieste only the siège social and the tax residence.

The labour unions of the Group of Trieste protest and, in June 2013, they undersign with the heads of the Company a “Verbale di accordo” (Agreed Record) to maintain in Trieste the Group Head Office and all of its structures.

The text of the agreement contains ambiguous references to further organization development, but it bounds the parties, so the labour unions and the head of the Group, to meet for further verifications within 10 days since the request of one of them.

In spite of the agreement, Greco increases recruitments in the Italian office of Milano, and in Summer 2015 he announces the intention that, since January 2016, a first part of the Group Head Office of Trieste is moved there, precisely, the Group Communication and Public Affairs, with more than 40 employees.

This is why at the end of September, the labour unions of the Generali of Trieste request the meeting to be held within 10 days, as prescribed by the Agreed Record. Instead, Greco makes them wait for two months, until December, when takes place a reunion that is attended also by the trade union leaders from outside Trieste. And the heads of Generali do not seem willing to respect the 2013 agreement.

These behaviours suggest that the gradual, forced transfer of the whole Group Head Office to Milano has started in order to establish the dominance of Generali Italia, which is also the part of Generali that can be easily conditioned by the disastrous Italian political system and, therefore, could be lead to commit reckless operations that would be danger for the whole Group.

Our opinion is that this drift can be easily stopped only by the shareholders, who should also start to draw their conclusions about the excessive distributions of dividends in time of crisis, for those are not as a company miracle: the truth is, this is absolutely an alarming sign.

© 20 Dicembre 2015