Because Cattolica Assicurazioni will wage war on Banco Bpm
Emanuela Rossi's article on the legal dispute between Cattolica Assicurazioni and Banco Bpm
The skirmishes between Banco Bpm and Cattolica Assicurazioni continue for the Vera Vita and Vera Assicurazioni joint ventures. The last episode of the controversy is the letter of formal notice sent by Verona to the address of the credit institution and the request for damages for 500 million euros. At this point the ball passes back to the Lombard field as the insurance group gives Banco Bpm seven days to retrace its steps, after which the word will pass to the referees. But first let's retrace the steps of the story.
WHAT BANCO BPM SAID
The Milano Finanza website was the first to disseminate the letter sent to Cattolica by the bank's chief executive officer, Giuseppe Castagna, in which he explained that – following the entry of Generali – Cattolica "substantially no longer manages a significant investments, an activity now delegated to Generali, lost control over the management and settlement of claims in the accident and health classes, awarded Generali the contract for services relating to the mobility of cars insured by Cattolica and entrusted Generali with the reinsurance of own risks ".
In the letter, the manager stressed that the first Italian insurance group had placed "both a shareholders' meeting veto on a wide spectrum of matters and at the board level on matters that by their nature or materiality threshold pertain to the ordinary management of the company". One of the three directors appointed to the board by Generali, Stefano Gentili, chairs the Corporate Governance Committee of Cattolica. Therefore there must be the favorable vote of Gentili on resolutions for matters of great importance such as new debts, tangible and intangible assets, equity investments, guarantees, related parties.
These are issues that will soon come to a head given that on 1 April 2021 Cattolica will become a joint-stock company with the first shareholder Generali which, thanks to the current package in its portfolio in Verona, resulting from the withdrawal, will carry the right to vote of Generali at 27.7%.
THE FIRST RESPONSE OF CATTOLICA
The group led by Carlo Ferraresi had wasted no time and soon issued a note in which it clarified that it had "received a formal communication from Banco BPM" regarding the option right. "This purchase option – continued the press release – was requested by Banco BPM assuming an alleged change of control of Cattolica, pursuant to article 2359 of the Civil Code, as a supposed consequence of the acquisition by Assicurazioni Generali of 24 , 46% of Cattolica's share capital through the subscription of the reserved capital increase carried out on 23 October last ". According to Cattolica, a position "completely without foundation, in all respects" and which "is not reflected in any provision, either by law or by contract, as attested by authoritative independent legal opinions and by the guidelines expressed by the Supervisory Authorities, in particular with the provision authorization issued by IVASS upon the entry of AG into the share capital ".
For this reason, "the Banco Bpm initiative – which has only potential and entirely theoretical effects, because it is fully and radically contested by the Company, which indeed believes it has significant credits deriving from Banco Bpm's breaches of Bancassurance agreements – we reserve the right to action to protect Cattolica's position also in terms of compensation and reputation ". Furthermore, it was noted that, "in accordance with the provisions of the shareholders' agreement signed between Cattolica and Banco Bpm on March 29, 2018 (as subsequently amended on October 29, 2018), the price for the exercise of the purchase option should the a change of control event would be determined according to the amount of the so-called own funds, ie the own funds, of the companies involved in the partnership ". As of September 30th, Cattolica still informs, the sale to Banco Bpm of the equity investments held by the insurance group in Vera Vita and Vera Assicurazioni "could have had a negative effect equal to – € 377 million on the Group's IAS / IFRS income statement . On the contrary, the impact on the solvency position on the same date would have been positive for approx. 15 pp on the Cattolica Group's S-II ratio (bringing it to approximately 176% compared to the communicated value of 161%) ".
DIFFID IT
According to what reported by Il Sole 24 Ore in the warning sent to Banco Bpm Cattolica reiterates a concept already expressed the day after the letter written by the bank on 15 December last: "The call option you exercise is devoid of any foundation and, as such, it is considered by the undersigned company to have no legal effect ". Verona clarifies that "the Generali agreement" does not affect "corporate and commercial relations" and with respect to "the assertion of an alleged change of control that would have occurred in Cattolica" there is "nothing more groundless, in fact and in law, and therefore nothing more pretext and instrumental ”. Both the entry of the Leone di Triste – which in any case will be the majority shareholder from 1 April, it is emphasized – and the arrival of Gentili on the board, moreover, "do not determine" or "the majority in the meeting, nor in any way, not even approximately, the majority on the board of directors "and" do not even in the least involve a dominant influence on the management "of Cattolica.
The insurance group also brings into play IVASS which "in authorizing Generali to acquire the shareholding excluded that said acquisition entailed and entails control". Moreover, "the contract provides that the call cannot be exercised where there is a transformation of Cattolica into a spa (thus, verbatim, Article 6.2.2.1 (i), last part of the Shareholders' Agreement: '' it being understood that obtaining control of Cattolica by any Subject as a result of the transformation of Cattolica from a cooperative into a joint stock company will not constitute a change of control for the purposes of this document) '".
In short, the issues raised by Banco Bpm "are all and truly devoid of any foundation, as mentioned in fact and in law, and also imaginative because they misrepresent reality and the rules, in the ill-concealed, but in any case incorrect intent to obtain unjustified advantages and unjustifiable, indeed to cover or evade your precise contractual responsibilities ". For this reason "if the bank does not intervene" a reconsideration of the position taken, we can only reserve right now to act against you according to the remedies available to us by law and by contract in relation to partnership relations " . By asking for over 500 million or 452 million of difference between what Piazza Meda said it was willing to pay – 335.7 million – and what the agreement had been evaluated two years ago plus about 50 million for image damage.
THE LATEST PERFORMANCE OF REAL LIFE AND REAL INSURANCE
The differences are summarized in a table contained in the letter sent by Cattolica, which is always reported by the Confindustria newspaper: as at 30 September last, Vera Vita's gross inflows were to exceed 5 billion and was instead 3 billion (-40 , 3%), that of Vera Assicurazioni was 227 million while a figure of 289 million was assumed (-21.5%). The deposits of Vera Protection also decreased, from the supposed 272 million to 229 million (-15.8%).
THE SALE OF THE SHAREHOLDING IN LOMBARDA VITA TO UBI BANCA
Meanwhile, on 23 December Cattolica Assicurazioni announced that it had signed a binding agreement with Ubi Banca for the early termination of the life bancassurance agreements expiring on 30 June 2021. In practice, the bank can exercise the option to purchase the equity investment – equal to 60% – held by Cattolica in Lombarda Vita. In Verona, between 290 and 300 million euro will be reached according to the IAS / IFRS 2020 result of Lombarda Vita. Once the transaction has been completed, a note from the insurance group informs, Cattolica will benefit from an IAS / IFRS capital gain of between approximately 100 and 110 million in the 2021 consolidated financial statements, while the capital gain on Cattolica's statutory financial statements will be between approximately 50 and 60 million. and the expected impact on the Solvency II ratio is slightly negative (approximately -5%). In 2019 Lombarda Vita had collected premiums of € 1,365 million, operating income was € 68 million and IFRS profit (after tax) was € 47 million.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/cattolica-banco-bpm-guerra/ on Mon, 28 Dec 2020 06:01:30 +0000.