Can Generali's Greco wake up Italy's sleeping giant?

Thu Jan 10, 2013 10:00am EST
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By Lisa Jucca

MILAN (Reuters) - Generali's (GASI.MI: Quote) boss Mario Greco next week unveils an eagerly-awaited road map to put Europe's third-biggest insurer on a path to profits via asset sales and a greater focus on its core business.

Analysts expect Greco to spell out where the company sees growth and how it plans to improve its solvency ratio.

The long-awaited reorganization of Italy's biggest insurer is the latest in a European sector battered by plunging stock and bond prices and squeezed returns because of a euro zone crisis that has resulted in rock-bottom interest rates.

Over the past three years rivals Axa (AXAF.PA: Quote), Old Mutual (OML.L: Quote), and Aviva (AV.L: Quote) have all launched plans to strengthen their finances and shore up their flagging shares by cutting costs, selling unprofitable businesses, and cutting debt.

Greco, a much-respected outsider previously at Swiss insurer Zurich ZURN.VX, was called in to replace ousted chief Giovanni Perissinotto in August and has wasted no time since he took the top job at Italy's biggest financial group.

In fewer than five months he has appointed new management, unveiled a plan to revamp activities in core Italy and clinched a 2.5 billion euro ($3.26 billion) deal to buy out eastern European joint venture GPH, removing uncertainty over this large asset.

"We believe in Greco's leadership and ability to improve profitability at Generali through a greater focus on the core insurance business," said PierGiacomo Braganti, a portfolio manager at Banca Aletti Syz.

"Of course he has been helped by the markets but he is a very pragmatic executive who can put some order in Generali's vast investment portfolio," said Braganti, who had direct experience of Greco's leadership in the mid-1990s at Italian insurer RAS, now part of Germany's Allianz.   Continued...