The backstory of the Cattolica-Generali agreement: why this agreement had to be done

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The backstory of the Cattolica-Generali agreement: why this agreement had to be done. All done. Generali, the Lion King of Trieste, the largest Italian insurance company, took Cattolica. Or rather, it took 24.4%, paying 300 million euros. But he is clearly the first shareholder, ahead of Berkshire Hathaway’s Warren Buffett, which has “only” 9%. And who was the previous first shareholder of the Veronese company. Generali seems to have beaten rivals of the caliber of Allianz, AXA and Groupama on the woolen thread. But, to do so, will he have overpaid his (large) share in Cattolica? Posterity will judge.

Everything happened in the last month. To be precise after the letter from theIVASS, the insurance supervisory authority, in Cattolica. Where the Veronese were invited to increase the capital. And so here is the acceleration of Trieste. Which basically offered three things. The transformation of Cattolica into SpA; industrial and commercial weight agreements; the right to be able to subscribe a further capital increase of up to 200 million. For now everything seems fine. The decisive aspects will be focused in the near future. In other words, asset management, the health and non-life sectors (where Cattolica is fifth in Italy). Here are the background of the Cattolica-Generali agreement: why this agreement had to be done.

The backstory of the Cattolica-Generali agreement: why this agreement had to be done

Cattolica seems the real winner. Find the capital increase and the option of another 200 million is guaranteed. It gets rid of the capitary vote transforming itself into SpA. And also of the crazy paragraph that could allow to block the vote to those who were not of proven Catholic faith … Not only that, but the hundreds of parishes and religious bodies that are very fond customers of the Verona company have only to be gained from the arrival of a giant like Generali (and vice versa). It seems that from Omaha, Buffett’s headquarters, they said it’s okay. If the value of the company, and of the title, will go up, so much will be gained. And it would be useful, given the losses suffered by Buffett since the beginning of the crisis.

For Generali it is a small step.

But it was done in the wake of the mergers and acquisitions strategy that analysts such as the Swiss bank UBS had already anticipated. The operation is entirely Italian, and politically everyone likes it. It further strengthens Generali’s leadership, making it less contestable on the strictly operational level of insurance companies. Not only. Allows the Lion of Trieste to strengthen its position in Europe and excludes Americans from the company’s control. Philippe Donnet, the CEO, seems to be guessing them all for now.

But really there are no flaws in this agreement? Maybe just one. The not immediate return of the invested capital. This is because Generali will generate additional revenue from the additional services provided, although the extent of this amount is still unknown. They will probably derive from the assumption of a part of Cattolica Investimenti, and from an agreement to renegotiate the non-life business. Time will tell. And, for companies that thrive on life insurance policies, it is an absolute truth.



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