Some of Europe's richest and most powerful executives meet in the Italian city of Trieste this weekend to discuss the fortunes of one of the continent's most valuable companies, Assicurazioni Generali.
And tiny activist fund Algebris wants to spoil the party. Europe's No 4 insurer has invited its investors to the annual meeting in its home city Trieste - once a jewel of the Austro-Hungarian empire and an inspiration to writers such as James Joyce and Italo Svevo.
Algebris, which last year criticised the insurer's executives, prompting Chairman Antoine Bernheim to talk of a wider plot, is back needling the insurance giant with a rebel list for internal auditors and a promise of more questions.
Minority shareholders rarely make waves in Italy, where companies are often controlled by a core group of shareholders. Generali in particular has been considered unassailable as Bernheim's "flag bearer for Italian finance" has powerful merchant bank Mediobanca as its top shareholder with 15 percent.
Algebris holds just 0.52 percent of Generali's $65 billion capital but its head, Davide Serra, says he can count on nearly 200 institutional investors with a bit more than 2 percent of the insurer to back his nominees for independent auditors.
The fund has already secured a small victory in forcing the Benetton family's Edizione Holding to withdraw its list for auditors after a regulator backed the fund's complaint of a conflict of interest.
Edizione Holding has about 1 percent of Generali while the Benetton family are shareholders in Mediobanca, where the politically astute veteran banker Cesare Geronzi holds sway. Generali's shareholders also include UniCredit, Europe's third-biggest bank and the Bank of Italy.
Its directors include Ana Patricia Botin of Spain's Santander dynasty and head of its Banesto bank, Czech billionaire Petr Kellner, outgoing chairman of Germany's Commerzbank Klaus-Peter Muller and Italy's second-richest man, Luxottica Chief Executive Leonardo Del Vecchio.
In a suitably Machiavellian twist, Santander, Europe's No 2 bank, is an investor in Algebris. Even if Algebris manages to get a candidate as auditor, analysts said it would be mainly symbolic. "It would be like a victory on reputation, nothing more serious," said Thomas Noack, analyst at WestLB.
There is scepticism that Algebris can make many more waves, with analysts pointing out that it has not enough weight to put an item on the agenda or call an extraordinary meeting. "Clearly, Algebris does not have strong enough support. I don't think there's much they can do," said one London-based analyst who asked not to be identified.
What it can do in addition to proposing auditors is ask questions about issues already tabled for discussion, which include stock option schemes and the annual accounts - where Generali turned in a 21 percent jump in 2007 net profits.
Generali's shares have outperformed the DJ Stoxx index of European insurers by about 4 percent so far this year, with its conservative strategy seen as a boon in current financial market turmoil. "The only point Algebris could raise a bit of noise on is the stock options. But I don't think they have the means to get anywhere," the analyst said.
Serra told Il Sole 24 Ore newspaper earlier this week that he thought the number of shares held by top management was "embarrassing," adding "the basic problem is how the incentive plan lines up against other companies in the sector."
The 83-year-old Bernheim has one of the highest remunerations among European insurance executives but parries attacks on his age by playing up his 40 years of experience in the world of finance.
And he is adamant he will not step down at Generali before his term ends in 2010, even though Bank of Italy guidelines suggest he cannot stay and continue on Mediobanca's board. "I don't ever expect to resign, but if I must, I would quit Mediobanca," he told his native French La Tribune newspaper this week.
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