Generali, a tumultuous story

Generali is one of the most ancient insurance companies. Since its establishment in Northern Italy in 1831, the Italian market leader has managed to cope with the changes in the economic and political arena. It stands today as one of the most powerful financial groups in Europe and worldwide despite the devastation of the two World Wars.

generali logo It was in Trieste, on the shore of the Adriatic Sea that its history started.

A major port of the Austrian-Hungarian Empire, the Italian city of Trieste, perched on the Adriatic Sea, enjoys an advantageous commercial position. After having been proclaimed free port in the middle of the 18th century, the city witnessed a substantial economic growth, hence, the emergence of marine insurance, which was then in its infancy. In 1825, no less than twenty insurers were established in Trieste.

Generali: a difficult start

GeneraliIn 1831, Giuseppe Lazzano Morpurgo, a businessman from Gorizia, a city located in the North of Trieste, founded an insurance company: Ausilio Generale di Sicurezza. He dragged with him various personalities from the world of finance and trade. His aim was to set up a company with a capital that is substantial enough to operate in a geographic area that is larger than that of his competitors.

Because of internal conflicts, the first general assembly ended up with the dissolution of the newly-established company. A month later, in December 1831, Assicurazione Generali Austro-Italische was set up with a capital of 2 million florins. Its by-laws were approved and Giuseppe Lazzano Morpurgo decided to base the headquarters of the new entity in Venice, with Della Vida at its top management.

The company was, then, determined to market not only marine transport and flood policies but also fire, land transport and any class of business authorized by the law. That is why the adjective “Generali” was stuck to the name of the company.

Soon after, that is two years after the establishment of the company, 25 agencies and subsidiaries were opened, scattered around the main cities of the Austrian-Hungarian Empire. Other subsidiaries were equally opened in France in 1832, in Switzerland in 1835, in Germany, Transylvania and in Galicia. This geographical diversification triggered a management reshuffle with Venice becoming in charge of operations in Western Europe and Italy while Trieste was entrusted with the management of operations in Austria-Hungary as well as in the Eastern countries.

In 1835, struggles for power destabilized Assicurazione Generali as Giovanni Cristoforo Ritter de Zahony, the company’s chairman since 1832, backed by G.L. Morpurgo, expressed his disagreement with Rosmini, the legal administrator. The board of directors sided with Rosmini, paving the way for the resignation of both Zahony and Morpurgo. Rosmini became the company’s co-manager along with Masino Levi appointed secretary general. Four other members of the board decided to resign. This incident resulted in the suppression of the position of chairman which was only reestablished in 1909.

The geographical expansion of Generali

Under the leadership of Levi, Generali witnessed a considerable growth and in 1837, the company successfully developed in Eastern and Central Europe, especially in Prussia, Saxony and Silesia. In the same year, the Venetian head office expanded its products by proposing credit insurance policies.

In 1838, the company was present in Corfu (Greece), Bavaria, Russia, Poland, Serbia and Romania. This European expansion was inconsistent with the company’s stagnation in Italy where it was faced with protectionist barriers imposed by each state of the peninsular which was not then unified.

Expansion throughout Europe was organized through a tiered system, with geographical regions being established around an agency entrusted with the company’s expansion in that area. Generali was established in Bucharest in 1847, then in Belgrade in 1856. In the next ten years, Bosnia and all of the Middle East, where the insurer was particularly active in fire insurance, became part of its markets.

Generali lionOnly in 1848 did the company take the name of Assicurazioni Generali, with Saint Marc lion, the symbol of power and justice in Venice, being chosen as its logo.

Between 1879 and 1882, the group’s effort focused on the Near and Far East, along the maritime transport routes of Lloyd Austriaco, a shipping company whose head office was in Trieste. This enabled Generali to open offices in Greece, Lebanon, Tunisia, India, Sri Lanka, China and Hong Kong. The company also turned to North and South America with California and Chile.
At the end of the 19th century, new policies were offered to customers with glass breakage, bodily injuries and theft policies.

Generali: modernization and diversification of the activity

Place Saint-MarcIn 1878, Masino Levi quit his position and was replaced by Marco Besso who would run the group for seven years. The latter started a stage of modernization and diversification of the business with the introduction of life insurance and by adopting a direct investment strategy in real estate. A palace of Saint Mark's Square was purchased in Venice and a new head office was built in Rome.

The company established its first subsidiary companies which it owned at 100% : Cassa Generale Ungherese di Risparmio, a Hungarian bank established in 1881 and Austrian General Accident Insurance, an Austrian insurance company set up in 1882 and which operates today under the name Erste Allgemeine Versicherung.

In 1885, Giuseppe Besso became secretary general in replacement of his brother Marco Besso. The latter would recover the position of chairman which was reestablished in the company in 1909. He stayed there until his death in 1920. It was during his mandate that the renowned writer Franz kafka was hired in a Generali agency in Prague where he would stay for just nine months because of neurological disease.

Generali stands today as one of the most powerful financial groups in Europe and worldwide despite the devastation of the two World Wars.

The period between the two wars: an agitated period for Generali

On the eve of the First World War, Generali‘s capital amounted to 13.323 million liras. The company, which is comfortably settled in Europe, was hardly affected by the direct damages of the war. Most of its problems resulted from political pressure, confiscations or restrictions imposed on its operations in Italy and in Austria-Hungary.

It was in the 1918 armistice, during the reattachment of Trieste to Italy that the group obtained an Italian status and converted its capital into Italian liras. But since the devaluation of the lira in 1913, Generali had lost 17% of its value. Even though at the end of the First World War, the company was authorized to restart its operations throughout the former Austrian-Hungarian Empire, it maintained only life activities in Yugoslavia and Czechoslovakia.

Florence officeIn 1920, Edgardo Morpurgo became president. He managed to steer the company effectively out of the 1929 crisis as Generali proceeded to an increase of its capital from 13 to 60 million liras. The company operated then through 30 subsidiaries and associate companies, six of which are in Italy and twenty-four abroad.

In 1933, Generali acquired Aleanza & Unione Mediterranea which merged with Securitas Esperia, already under Generali’s control. This acquisition resulted in the creation of the second private life insurer behind the state-run group INA. Both its French subsidiary, la Concorde, and Austrian one, Erste Allgemeine witnessed great development.

The arrival of Hitler to power would reverse the situation. The fascism which was gaining momentum in Italy, caused problems to Generali’s chairman because of his Jewish faith. He had to appoint Gino Baroncini, an advocate of Mussolini’s ideas, general manager in order to keep things under control. But in 1938 he was taken over by Giuseppe Volpi di Misurata, who remained in that position until the fall of the regime in 1943 when he was replaced by Antonio Cosulich while Baroncini was maintained in his office by the new man in power. In 1940, all company’s contracts in enemy soil were cancelled.

Before the end of the war, the Germans landed in Trieste and Generali moved its headquarters to Rome. Although it managed to maintain its various entities in Western Europe, its rights, assets and properties were all confiscated in Eastern Europe, Libya and in Ethiopia. By the end of the conflict, 14 subsidiaries companies were lost along with part of the housing stock.

Generali: post-war reconstruction

The company’s sound capital would allow its rapid reconstruction, first in Western Europe, especially in Italy where as of 1948 operations came close to pre-war levels. It was also the opportunity for Generali to turn to South America. Since the early 1950s, the insurer was duly represented in the continent’s major countries.

Senator Mario Abbate, who became chairman of the group in 1948, was behind this recovery. He reintegrated the group in the United States in 1950 acquiring shares in South African insurer Standard General Insurance.

Mario Tripcovich, who took over Mario Abbate from 1953 to 1956, highlighted the development of the market beyond the Atlantic: Buffalo Insurance Company fell under the scope of Generali and a cooperation agreement was signed ten years later with Aetna, the most important American multiple line insurer. At the same time, the outstanding growth in France and in Austria enabled the company to become leader on these markets.

But the real architect of post-war reconstruction was Gino Baronchini, general manager for almost 20 years. Thanks to him, the company was present in 60 countries diversifying even more the range of its products. He became chairman of the group in 1960 and remained in duty until 1968.

The 1970s: new restructuring of Generali

Following the footsteps of Allianz and Axa after their important periods of development, Generali started a restructuring scheme in the 1970s. The French, Italian and German subsidiaries, along with those dedicated to life insurance became local companies submitted to the regulations of the countries where they were established. It was during that period that Europ Assistance Service Company, Generali’s travel insurance, came into being. In 1971, the group’s current logo was introduced with a shortened name: "Generali".

When Enrico Randone became chairman in 1979, he was on top of a company which underwrote 1.395 trillion liras of premiums, holding real estate investments worth 581 billion liras. The 1980s confirmed the company’s positioning. On the eve of the European common market opening in 1992, the insurance business witnessed an acceleration of mergers and acquisitions.

It was at this moment that Generali attempted in 1988 to take over Compagnie du Midi, an important French insurer in which it held stakes. It turned out to be a failure as the latter sided with Axa in an attempt to face this hostile takeover. This strategy, nonetheless, proved to be useless since Axa benefited from this rapprochement to take control of Compagnie du Midi. Generali, therefore, became a shareholder of the French giant through its engagement in Compagnie du Midi. In 1989, Generali became the first Western European insurer to restart operations in Eastern Europe by means of a joint-venture which it concluded with the national Hungarian insurer Allami Biztosito.

The 1990s: Generali's international expansion strategy

ItalyIn 1990, the company’s headquarters, which was in Rome for 45 years, came back to Trieste. The same year, ties have been established with the then third Japanese insurer, Taisho Marine and Fire Insurance Company (later named Mitsui Marine and Fire Insurance Company).

This collaboration enabled both groups to open liaison offices in Italy and Japan. This first contact with the Far East marked the start of an opening towards the Asian continent. It was Eugenio Coppola di Canzano, who took over Enrico Randone in 1991 as chairman, who tackle this task. In 1991, offices were opened in Hong Kong and Singapore. He also strengthened the group’s position in the United States by signing a partnership agreement with Continental.

Although expansion was strongly maintained at the time, the results obtained by British and French subsidiaries were very poor. In England the loss ratio attained 113% in 1991 and 117% in 1992 because mainly of the numerous natural catastrophes. In France, it was the non-life losses which accounted for the poor results. Some started criticizing the leadership accusing it of mismanagement. By and large, Generali’s remains, nevertheless, fairly profitable thanks to the Italian market in particular.

In 1994, the company increased its market share in Switzerland by 379% by taking a majority stake in Fortuna Holding where the premium volume it generated accounted for 6% of the gross premiums estimated at 17.63 billion USD from 40 countries. The same year, Generali inaugurated Genertel, the first Italian insurance company operating via the phone.

Under the reign of the new chairman Antoine Bernheim, who arrived in 1995, the group started a rapprochement with Axa, where Generali detains 16.9% of its capital devoid of voting rights. Relations with the French insurer have been conflictual since 1988, because the takeover of Compagnie du Midi was carried out under Generali’s nose. For many years, though, the insurer of Trieste has unsuccessfully tried to tie a partnership with Axa in Asia. Only under the threat of stakes’ sale which Generali detained in Axa did the Bébéar group renewed contact with the Italian company enabling it to obtain 11% of its capital and 15.6% of voting rights. This development in France is coupled with the group’s consolidation of its position in Germany and in Israel after taking control of two important insurers, respectively AMB and Migdal. As a result, Generali became the leading insurer in both countries.

In 1998, the company’s operations are extended to include the financial sector with the acquisition of BSI and the establishment of Banca Generali. This move occurred one year prior to the takeover of the giant INA, the Italian number one public insurer in the local life market. In 2006, Generali took over the Toro Group which merged with Alleanza in 2009.

The early 2000s were mainly characterized by the group’s expansion to the Chinese market where it was authorized to open a life subsidiary company at Canton. In 2005, Generali extended its field of activity to collective policies.

Generali, in 2010

In 2011, Gabriele Galateri di Genola has become chairman. Its group reported gross written premiums worth 68.4 billion EUR (90.6 billion USD) in 2010, 30.2% of which in non-life insurance, which boosts the group to the third ranking in Europe. Generali operates through 500 companies scattered around 66 countries. Its major markets are Italy (29%), Germany (22.9%), France (20.9%), Austria (3.4%), Spain (3.1%), and Switzerland (2.1%).

The assets managed (432 billion EUR , that is, 572 billion USD) in the banking sector thanks to Banca Generali, and in real estate enable it to develop financial products that set its overall turnover, all activities together, at 73.187 billion EUR (96.995 billion USD) at the end of 2010, for a net profit of 1.702 billion EUR (2.255 billion USD). Generali counts 85 000 staff members or collaborators worldwide.

Generali is, in 2010

  • a turnover of 73.187 billion EUR (96.995 billion USD)
  • 432 billion EUR (572 billion USD) of managed assets
  • 500 associated companies, subsidiaries, affiliated companies, ...
  • 85 000 employees
  • 70 million clients worldwide
  • a presence in 66 countries

The group’s main technical highlights: 2006-2010

in millions USD
The group’s overall turnover
85 19097 52896 997101 09196 995
- Non life
- Life
24 351
60 839
30 700
66 828
30 999
65 998
31 010
70 081
67 720
29 275
Consolidated operating result
5 3797 0595 5435 2325 403
Net result
3 1754 2931 2141 8762 255
Shareholder’s equity
20 07721 78215 94723 86823 179
Solvency margin
Non life combined ratio
Exchange rate
EUR/USD as at 31/12
Turnover’s evolution
in millions USD
Net result’s evolution
in millions USD

Financial soundness ratings as at 31.12.2010

Standard & Poor’s
A.M. best
Fitch Ratings

Breakdown in % of the 2010 turnover per geographic zone

2010 non life turnover 2010 life turnover
1 Including Spain, Austria and Switzerland.

Generali’s presence worlwide

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