At the end of 2010, the Premafin Finanziaria Holding group controlled Fondiaria-Sai with a 53% stake and Milano Assicurazioni with 64%. In turn, the group was headed by the Ligresti family, whose members held the position of managing director and vice presidents. From the consolidated and interim financial statements as at 30 June 2011, it emerges that on the latter date the equity capital, i.e. risk capital, was equal to 2.295 million, corresponding to 5 per cent of total assets and that the share in the hands of the Ligresti, 314 million, represented just 7 per thousand of the assets. Of these two percentages, the very serious one was not so much 5 per cent of the shareholders' equity, given that in Assicurazioni Generali the index of financial independence is the same, but rather 7 per thousand in the hands of the reference shareholder, a share now impalpable.
At the end of 2010, the total technical revenues of the Premafin group amounted to just over 10 billion, equal to one sixth of Generali's turnover. In the last five years, also thanks to some corporate acquisitions, the incidence of Premafin's life classes has gone from 24 to 34 per cent of total revenues, to the detriment of the non-life classes. However, this was not enough to compensate for the loss of the latter, both because this loss increased by avalanche, accumulating 1.300 million in the two-year period 2009-2010, and because the positive result of the life business was also zeroed in 2010.
The cause of the loss in the non-life classes must be identified in the charges relating to claims. In 2006 these charges accounted for 67 per cent of the corresponding revenues, exactly the incidence recorded by Generali in recent years. But as of 2009 these charges of the Premafin group alone jumped to 86 percent of revenues and have eroded margins. A certain compression of commission expenses was useless. Furthermore, in these same branches, the income from investments made was rather negative.
The impression one gets is that in a world context of fierce competition, the dimensional scale of Premafin began to show its limits shortly after the middle of the past decade. In the first half of 2011, premiums underwent a further significant decline, but this time with a more than proportional cut in charges, a sign of a certain rationalization effort set by the management. As a result, the group's overall loss has shown signs of slowing down.
The agreement between Premafin and Unicredit – on the basis of which the capital of Fondiaria-Sai was increased by 450 million, Unicredit acquired 6,6% of the capital of the latter to such an extent that Premafin remained a 35% shareholder – was implemented after the 2011 half-year report, so that the impact can only be seen in the final balance for the year.
In conclusion, it seems we can say that the shareholders of the Premafin group underestimated the negative effects of its insufficient size and, even taking into account the scarcity of own risk assets, has achieved a marginal and insufficient correction of the insurance business portfolio; that the group's management was late in making management corrections; that the Ligresti family cannot maintain share control and that, on the contrary, it has already worked miracles in this sense; That any change of command will have to be accompanied by a profound rethinking of the industrial strategy in the insurance sector; that the Unicredit bank also needs to improve its ability to evaluate the strategies of its new participations; that, for the general interest of the stakeholders, the offers on the table must be evaluated with an industrial logic and not purely equity and financial.
