Assicurazioni Generali S.p.A.
Assicurazioni Generali S.p.A.
Public Company Incorporated: 1831 as Assicurazioni Generali Austro-Italiche
Assets: L16.99 trillion (US$13.42 billion)
Stock Exchanges: Milan Rome Turin Trieste Florence Genoa Bologna Tokyo New York Frankfurt Paris London
Assicurazioni Generali, a joint-stock insurance company with worldwide operations, was founded in Trieste in 1831. It is the largest insurance company in Italy and ranks third among Italy’s largest corporations, after the state industrial group IRI and Fiat.
Trieste’s position on the Adriatic and its role as chief port of the Austro-Hungarian Empire made it a center of shipping and commerce, when the first ventures in maritime insurance were established in the mid-1700s after the Hapsburg King Charles VI had declared it a free port. Following the upheavals of revolution and the Napoleonic Wars, Trieste experienced an economic boom. In 1825, some 20 insurance companies were active, chiefly in maritime insurance.
Generali was founded by Giuseppe Lazzano Morpurgo, a businessman from a leading family in Gorizia, who brought together a group of Trieste financiers and merchants in November 1831 to found the Ausilio Generale di Sicurezza. Their intention was to establish a company with sufficient capitalization to expand beyond the geographical territory reached by other Trieste houses. Like its chief competitor at the time, the Adriatico Banco d’Assicurazione—today known as Riunione Adriatica di Sicurtà or RAS—the Ausilio Generale founding members were drawn from Trieste’s multiethnic business community, which included Austrians, Slavs, Italians, Germans, and Greeks.
At the first shareholders’ assembly, conflicts among the partners over statutes led to the dissolution of Ausilio Generale. A month later the remaining partners formed the Assicurazioni Generali Austro-Italiche, with an initial capitalization of 2 million florins, divided into 2,000 shares of 1,000 florins each. Statutes were approved on December 26, 1831. Almost immediately, founding member Giuseppe Morpurgo left Trieste to establish the company’s Venice headquarters, which was placed under the direction of Samuel della Vida from Ferrara.
Other Generali founders included Marco Parente, a businessman with ties to the Vienna Rothschild family, and Vidal Benjamin Cusin, grandfather of two future secretary-generals of Generali, Marco Besso and Giuseppe Besso. The company’s other members included Giovanni Cristoforo Ritter de Zahony, a Frankfurt native with a Hungarian title; the shipbuilder Michele Vucetich; Alessio Paris, who in 1826 had been a founder of the competitor Adriatico Banco, and Giambattista Rosmini, an Italian lawyer who managed the new company in his role as legal advisor.
The adjective “Generali” was intended to convey the fact that the company’s activities were not limited to maritime and flood insurance but, as Article 2 of the first charter indicated, “insurance of land [i.e., fire and shipping insurance]... security of the life of man in all its ramifications, pensions and whatever other area of insurance permitted by law.” The first agencies were opened rapidly, amounting to some 25 in the principal cities of the Hapsburg Empire in the first two years. Branches, agencies, and affiliates were established in France in 1832, and in 1835 to the east in Switzerland and Germany, in Transylvania, and Galizia. Administration of the company was divided between the Trieste and Venice headquarters, with Venice in charge of operations in Italy and west Europe while the central management in Trieste handled operations elsewhere in Austria-Hungary and east Europe. In 1837, the Venice office began to operate in the field of credit insurance, while limiting its transport insurance solely to goods being shipped from Venice.
In 1835, a struggle for power developed between the president, Zahony, and legal administrator Giambattista Rosmini, with Morpurgo supporting the president. The board of directors sided with Rosmini, who succeeded in forcing Zahony and Morpurgo out of the company. At this time, the charter was rewritten and the position of president was abolished, to be reinstated in 1909. The dispute had a deleterious effect on business; four other board members left with Zahony and Morpurgo, and the directors compelled Rosmini to share power with Masino Levi, former agent in the Padua office, who was named general secretary.
The following 40 years under Levi’s direction saw unprecedented growth for Generali. Expansion was effected according to the company’s geographical division, with activity on the Italian peninsula overseen by the Venice office, while Trieste was responsible for other European operations. Generali was especially active in east and central Europe, where offices opened in Saxony, Prussia, and Silesia in 1837, expanding further in 1838 to Corfu, Bavaria, Russian Poland, Serbia, and Valacchia. The company’s Hamburg operations center was run for many years by the mathematical prodigy Wilhelm Lazarus, who compiled the first mortality tables for Germany.
However, while growth was surging on the continent, expansion on the Italian peninsula was slower. Prior to the unification of Italy, protectionist laws in effect in the separate Italian states greatly restricted activity by foreign insurance companies. For example, until 1850 Generali representatives in the Bourbon kingdom of Naples frequently had to make appeal to the throne to avoid suspension of their activity. In the Papal States, business was possible only in the Romagna region. In the kingdom of Piedmont, the Societá Reale Mutua held a legal monopoly in fire insurance, and heavy legal hindrances existed in other fields until 1853. At Parma and Piacenza, Generali was only able to begin activity in 1837, when the Milan agency succeeded in winning monopoly rights in the region from the Bourbon duchess Maria-Luigia.
Expansion throughout Europe was carried out by means of a tiered system. Territories were grouped around a central general agency responsible for gradually increasing growth in new expansion zones. Where Generali was unable to establish an autonomous agency, an affiliate was authorized. From its lucrative Pest agency in Hungary, Generali extended operations to Bucharest in 1847 and to Belgrade in 1856. In the following decade, operations started in Bosnia and the remaining area of Turkish domination, enlarging Generali’s territory to include the whole of the Middle East, especially in the branch of fire insurance. The first fire insurance policies in Alexandria were issued by Generali in 1851, limited to the city’s European quarter.
Later in the 19th century, Generali’s attention turned to eastern and other non-European countries. Between 1879 and 1882 Generali opened agencies or representative offices in the main ports of the Near East and the Far East, along the sea routes of the Lloyd Austriaco line which had its terminal in Trieste: Generali’s territory was thus extended throughout Greece, to Beirut, Tunis, Bombay, Colombo, Shanghai, and Hong Kong. Across the Pacific Ocean, agencies were opened in San Francisco, California, and in Valparaiso, Chile. New kinds of insurance were initiated; in 1877, Generali began extending coverage to plate glass, in 1881 to injury, and by the end of the century to theft.
In 1878, Marco Besso replaced Masino Levi as secretary general, inaugurating a period of modernization and diversification. Besso had come to Generali in 1863 as the company’s representative to Rome, where he successfully negotiated the acquisition of the Vatican’s failing Pontificia insurance house. Taking over the company at the age of 35, Besso established Generali’s life insurance activities and initiated a policy of real estate investment. During his period of tenure the company acquired the Procuratie Vecchie, one of the Renaissance palaces on Venice’s Piazza San Marco, and built its imposing Rome headquarters in Piazza Venezia.
Also during this period Generali laid the groundwork for its future as a major European group with the constitution of its first wholly owned subsidiaries. It established Cassa Generale Ungherese di Risparmio (General Savings Bank of Hungary) in 1881, followed by Unfall (Austrian General Accident Insurance) in 1882, which today operates under the name Erste Allgemeine.
Marco Besso was replaced by his brother Giuseppe Besso in 1885, who served as secretary general until 1894. However, Marco Besso continued to guide Generali, acting as president from 1909, when the position was reinstated, until his death in 1920. During the years 1894 to 1909, he acted as consulting director while the post of secretary general was filled by Edmondo Richetti, who had joined the company ten years earlier as director of the Austrian Unfall branch.
During these years Besso formed what was to prove a fruitful long-term relationship with Italy’s principal merchant bank, the Banca Commerciale Italiana (COMIT), which exsists today. Less than two years after COMIT was founded in 1894, Besso was installed on the board of directors where he remained for life. Except for a ten-year period coinciding with World War II, Generali and COMIT traditionally have held reciprocal seats on each other’s boards.
In 1914, on the eve of World War I, Generali was enjoying a position of tremendous strength. Its assets totaled 12,600,000 crowns (L13,323,000). While the war brought unprecedented destruction to the very areas of Europe in which Generali was most active, the company suffered more from political pressures than from financial loss. At the outbreak of hostilities, Generali’s two most important offices found themselves in opposing camps of warring nations. The Venice headquarters made every effort to be regarded as Italian, whereas Generali’s Trieste office reaffirmed its loyalty to the Hapsburgs. The governments of France and England regarded Generali as a part of the Austro-Hungarian empire, and the company’s activities were curtailed in both countries until 1916.
Generali however, was viewed with equal suspicion in Vienna. The Trieste headquarters was relocated to the Austro-Hungarian capital, where activities were supervised by a substitute managing director, Emanuel Ehrentheil. Generali, like much of Trieste, had always divided its loyalties between Italy and the Hapsburgs. Since much of Generali’s personnel transferred to Italy at the outbreak of fighting, the authorities placed most of Generali’s officers on a list of suspected Italian nationalists. Claiming suspicion of foreign espionage, the Military Command investigated the directors and searched their homes. In 1916 the company’s assets temporarily were sequestered under a decree to prevent the flight of foreign capital. Despite this, on May 31, 1918, a Generali life policy was written for the last Hapsburg emperor, Charles I.
In 1918, with the armistice, Trieste was united with the Italian republic and Generali assumed as its insignia the Lion of St. Mark, symbol of Venetian power and justice. After the collapse of the Hapsburg monarchy in central Europe, new nationalist states replaced the politically united territories that Generali had cultivated for nearly a century. In addition to the damage inflicted by the fighting, the new order resulted in complex monetary, legal, and economic problems in the insurance industry. Authorized to continue its activity in all the former Austro-Hungarian territories, Generali initially restricted itself to handling life insurance in Czechoslovakia and Yugoslavia.
Adjusting for the devaluation of the lire from its 1913 rates, the company estimated that its assets had fallen by 17% since the outbreak of war, but two years later Generali was on the road to an impressive recovery, and under the direction of Edgardo Morpurgo, from 1920, the company marked its 100th anniversary in extraordinarily good health.
Despite the economic crisis of 1929, Generali’s capital rose from L13 million to L60 million in ten years, and gross premiums in life insurance rose from L1 billion to L6 billion. The company boasted 3,150 representatives in Italy and 5,765 in foreign countries. It had 30 subsidiaries and associated companies—6 in Italy and 24 abroad. Real estate holdings were valued at L292 million, which then included urban and agricultural property in 17 different countries. Faced with the effects of the Depression in the United States and the need to have strong liquid assets readily available, the company established a new department at its central headquarters, solely in charge of financing.
Notable events in the 1930s included the acquisition of Alleanza & Unione Mediterranea in 1933, which was merged with Securitas Esperia, already controlled by Generali, to form Alleanza-Securitas-Esperia (Allsecures), no longer a part of the Generali group. Life insurance activities absorbed from this group formed the basis for the Alleanza Assicurazioni company, which is the largest private life insurance company in Italy, second only to the state-run giant, INA. Significant growth occurred, meanwhile, in Generali’s French holding La Concorde, and the Austrian Erste Allgemeine. Benito Mussolini’s alliance with Nazi Germany ensured that Italian interests in Austria were not lost after Adolf Hitler’s anschluss in 1934.
However, the extension of Germany’s anti-Semitic laws to Italy had a devastating effect on the Generali group. With the rise of fascism in Italy, Morpurgo, who was Jewish, had struggled to maintain control, enrolling in the Fascist Party and appointing a staunch supporter of Mussolini as managing director. Gino Baroncini—who came to Generali from the Milan-based subsidiary Anonima Grandine, an insurer covering crop damage by hailstorms formed by Generali in 1890— was to determine the company’s structure and course for much of the next 30 years. In 1938, however, Morpurgo was forced to leave the company, eventually fleeing to Argentina. He was replaced by Count Giuseppe Volpi di Misurata, who served until the fall of the Fascist government in 1943.
The company also lost 66 Jewish employees, including 20 directors. With Trieste under a German high command, Generali’s central headquarters were moved to Rome, and its status as an Italian company was formalized by an official decree. Antonio Cosulich, a Trieste shipbuilder and member of the board, was named as chairman and served until 1948, with Baroncini continuing as managing director.
The end of the war renewed prospects for a return to normal operating conditions in Western Europe, but in Eastern Europe all rights, property, and interests pertaining to Italy or Italian citizens were seized. Generali’s agencies and affiliates in Hungary, Czechoslovakia, Poland, and Romania suffered the worst losses while those in Yugoslavia, Bulgaria, Albania, and east Germany fared slightly better. In all, the Generali group lost 14 subsidiaries as well as substantial real estate holdings in Eastern Europe. Efforts by Baroncini to recover some of the losses in Eastern Europe were only partly successful: L13 billion were eventually restored to the company in payments from various countries, about one-tenth of what was lost. There were further losses in the former Italian colonies, such as Libya and Ethiopia.
But in 1945 tensions did not immediately ease in Trieste, where a bloody campaign of terror was waged by Yugoslavia at the end of the war, when Yugoslavian nationalists tried to win control of the city. After the declaration of the Free Territory of Trieste, the city led a tense existence from 1947 to 1954, until a hard-won international compromise resulted in the city’s being awarded to Italy.
Generali’s solid asset base made the work of reconstruction possible, and already by 1948 the company’s Western European operations were on the way to recovery. Spurred by the loss of Eastern and Central European markets, attention turned to Latin America, where a majority ownership was acquired in the Argentinian company Providencia. At the beginning of the 1950s, operations resumed in Greece and the Middle East and in Brazil, Guatemala, Venezuela, Ecuador, and Colombia. In South Africa, Generali acquired a controlling interest in the new Standard General Insurance, then in a phase of considerable expansion.
From 1948 to 1953, Senator Mario Abbate succeeded Cosulich as president of the company. Formerly he had been chairman of the Milan subsidiary Anonima Grandine. Already elderly and in ill health, Abbate’s was largely a titular presidency. Chief executive responsibility was shared by Baroncini and Michele Sulfina, a Generali manager who had served with Edgardo Morpurgo in the 1920s and 1930s. In 1950, during Abbate’s tenure, direct operations resumed in the United States after Generali had obtained the necessary authorization to offer shipping and fire insurance as well as reinsurance. At this time, and as Italy entered its postwar economic boom, the company dedicated itself to reorganizing and restructuring its Italian assets. Thus in 1955 the two old Milan firms constituted to handle injury and hailstorm insurance in the 19th century, Anonima Infortuni and Anonima Grandine, were merged to form the Milan head office.
Mario Tripcovich, who succeeded the aging Senator Abbate as president in 1953, came from the Trieste shipbuilding concern founded in 1895 by his father, Diodato Tripcovich, himself a member of Generali’s executive council for 20 years. The younger Tripcovich had spearheaded efforts to improve Generali’s position in the United States, insisting on buying the Buffalo Insurance Company in 1950.
Tripcovich was succeeded in 1956 by Camillo Giussani, who acted for a period as simultaneous chairman of Generali and the Banca Commerciale Italiana. The strengthening of bonds between the two companies was to continue in the decades that followed. As the Italian economy surged ahead, so did Generali, achieving first place among foreign insurers operating in Austria and France, thanks to its considerable presence in both countries, through La Concorde in France and Erste Allgemeine in Austria. The company was active in 60 different countries, and was diversifying into previously unheard-of areas. When television came to Italy, Generali initiated policies covering equipment and antennae, fire, theft, and destruction of cathode tubes.
The decade was also characterized by the entrance of powerful shareholders into the elite group of Trieste financiers and industrialists who had traditionally occupied seats on Generali’s executive council. In 1956 Mediobanca, Italy’s largest semi-private bank, acquired a 3.5% share. Guiding this move was Enrico Cuccia, president of the bank since 1949, who was to have a hand in Generali’s course in decades to come.
Baroncini, the engineer of Generali’s postwar recovery, was named chairman in 1960 and served until 1968 when he was succeeded by another former official of the COMIT bank, Cesare Merzagore. In 1966 an international cooperation agreement was reached with a leading U.S. insurer, Aetna Life and Casualty, under which each company provided reciprocal services to the other’s clients while abroad.
In the 1970s Generali rationalized its foreign activities, aiming at a greater local integration. Companies such as Generali France, Generali Belgium and, in West Germany, Generali Lebensversicherung were created as domestic companies governed by local laws, and often were strengthened by mergers with local companies. Reinsurance activity was increased. The Europ Assistance Service companies were also established, providing tourist assistance in the European market.
Enrico Randone became Generali’s chairman in 1979, taking over from Merzagore, who remained as honorary chairman. By this time the company had assumed its present name. Two years later a robust Generali celebrated its 150th anniversary. Total premiums amounted to L1.395 trillion, real property was valued at L581 billion, and equity investments at L1.09 trillion. This marked the beginning of a significant decade for the company. The prospect of a unified European market in 1992 prompted an increase in mergers and acquisitions in the major European markets, as Europe’s large insurers prepared for tough competition.
Generali had distinguished itself in the postwar decades as a slow-moving giant, too dignified for U.S.-style hostile takeover bids. In 1988, however, the Italian company tried to acquire Compagnie du Midi, one of the larger French insurance groups. This bid was ultimately unsuccessful, as the threat of takeover drove Midi to seek protection in a merger with its largest competitor in France, the AXA group. The widely publicized adventure ended in a boardroom battle between the two French managers. Midi’s president Bernard Pagezy was driven out by his younger partner Claude Bébéar, while Generali won no more than a joint partnership with AXA-Midi, in accordance with French regulations on foreign investment.
During this period, the large shareholders controlling nearly 23% of Generali stock proved to be influential in determining company strategy. Mediobanca heads this list, controlling 5.6%. Another 4.8% is held by the Euralux investment group whose members include Italy’s powerful Agnelli family. The Banca d’Italia owns a similar portion of shares.
Generali closed the decade with the constitution of AB Generali Budapest, the first mixed-ownership insurance company in eastern Europe, 40% of the joint venture being owned by Generali and 60% by Allami Biztosito, a Hungarian state-owned insurer. In 1990, Generali made its first real entrance into the U.S. business world, buying the Kansas City, Missouri-based Business Men’s Assurance Company of America from its parent BMA Corporation for about US$285 million, or less than L360 billion. Another significant achievement was Generali’s link-up with Taisho Marine and Fire Insurance Company (now Mitsui Marine and Fire Insurance Company), the third-largest insurer in Japan, whereby Generali was able to open a liaison office and general agency through Taisho Marine and Fire in Tokyo, and Taisho was able to operate in Italy through the offices of Generali subsidiary la Navale.
Several important changes, both for the company and the industry will have an impact on the long-term direction taken by Generali. The group will be challenged by the continuing trend toward expansion by all the largest European companies, seeking to ward off foreign competition, particularly from the United States and Japan. Generali is one of the five largest insurance groups in Europe, and has the broadest foreign presence of any European company.
In 1991, the 80-year-old chairman Enrico Randone retired, with several other senior officers who have guided Generali’s policy for the past few decades. The company has staked its success on long-term planning and careful management—Generali is the only company of its size in Europe to have three managing directors. The group should continue to play a leading role in the European insurance scene, without threat of takeover from Italian or European competitors, but competition will become tougher in the next decade as European companies continue to decline in number.
Agricoltura Assicurazioni—Soc. Mutua (51%); Alleanza Assicurazioni S.p.A. (63.67%); Unione Mediterranea di Sicurtà S.p.A. (68.01%); Navale Assicurazioni S.p.A. (98.56%); Gefina; Genagricola; Genedil; La Concorde S.A. (France, 61.66%); Generali France (99.91%); La Federation Continentale (France, 52.49%); La Lutece (France, 49.50%); Compagnie Dakar Saint-Louis (France, 56.54%); Generali Lebensversicherung (Germany, 80%); Deutscher Lloyd Lebensversicherung (Germany); Deutscher Lloyd Versicherung (Germany); Erste Allgemeine Versicherung (Austria, 81.19%); Union Suisse (Switzerland, 53.68%); Graafschap Holland (Netherlands); Caja de Prevision y Socorro (Spain); Transocean Holding Corp. (U.S.A.); Transocean do Brasil (Brazil); Standard General Insurance (South Africa, 89.48%).
Sancin, Luciano Giulio, “Storia dell’assicurazione—Sui primordi e su alcuni sviluppi dell’assicurazione in Italia,” Quaderni dell’instituto per gli studi assicurativi, No. 2, 1945; Palladini, Giovanni, “Le Compagnie di assicurazioni di Trieste,” Trieste Economica, December 1966; Le Assicurazioni Generali: Cenni Storici, Trieste, Assicurazioni Generali, 1966; An Introduction to Generali, Trieste, Generali Group, 1988; The Insurer Without Frontiers—a World Directory, Trieste, Generali Group, 1989; Lindner, Claudio, and Giancarlo Mazzuca, Il leone di Trieste: il romanzo delle Assicurazioni Generali dalle origini austroungariche all’era Cuccia, Milan, Sperling & Kupfer, 1990.