Generali to spend 300 million euros on domestic restructure
MILAN (Reuters) - Generali (GASI.MI) is to invest around 300 million euros ($393 million) in the next three years on streamlining operations and improving profitability in its home turf, part of a revamp under new CEO Mario Greco.
The reorganization at Italy's biggest insurer comes after Greco launched a review after taking the helm in August, succeeding Giovanni Perissinotto who was ousted by shareholders unhappy with the company's performance.
Greco had said he is carrying out a thorough assessment of the insurer's geographical presence and its products and would outline his plans to investors in London on January 14.
In a statement on Friday, Generali said its board had approved bringing all its Italian insurance and banking businesses under a new company, Assicurazioni Generali Italia, to be fully operational from November 2013.
It is also regrouping 10 existing domestic brands into three - Generali, Alleanza and Genertel - in 2015.
It said this would result in a more efficient structure, but the statement made no mention of possible job cuts and also did not refer to Generali's strategy in eastern Europe, which the board was also due to discuss on Friday, according to two sources close to the matter.
A third source close to the board said the issue was not debated at Friday's meeting.
Several newspapers had said on Friday Generali could reach an agreement as early as January to buy the 49 percent stake it does not already own in a joint venture with Czech PPF group, for an estimated 2.5 billion euros.
In a separate statement, Generali said a decision on the partnership was not on the board meeting agenda.
PPF, controlled by Czech businessman Petr Kellner, has the option to sell its 49 percent stake from July 2014 to Generali or a third party but according to the agreement Kellner can exercise the option earlier under certain circumstances.
One of the sources had earlier said Friday's board meeting would be shown options on how to allow Kellner to get out of the joint venture with the aim of reaching a solution by January 14 when Generali will present its strategic review.
According to newspaper Il Messaggero an agreement to buy the PPF stake will be reached by January 8. The paper said a first tranche of about 25 percent would be bought immediately and the remainder at a later date.
Worries about the financial strength of Generali have receded considerably in recent months and at the end of October its solvency ratio - a key measure of an insurer's financial strength - rose to 145 percent after the sale of a stake in Israel's Migdal (MGDL.TA).
Generali shares closed up 0.2 percent at 13.2 euros, while the European insurance index .SXIP was down 0.9 percent.
(Reporting by Gianluca Semeraro and Stephen Jewkes; Editing by Dan Lalor and David Holmes)