Reuters – FonSai Risks Special Administration

Italian regulators are ready to name an administrator to run loss-making Fondiaria-SAI if it does not soon address past irregular dealings with its controlling shareholder, writes Reuters. The insurer is the target of a complex takeover plan by Unipol and a rival bid by two Italian private equity funds.

Reuters – Italian regulators are ready to name an administrator to run loss-making Fondiaria-SAI if it does not soon address past irregular dealings with its controlling shareholder, further muddling a takeover plan by peer Unipol.

Insurer regulator ISVAP believes Fondiaria, Italy’s second-largest insurer, committed “grave irregularities” in certain real estate operations and other deals with the Ligresti family, which controls it.

Fondiaria needs to take action by the end of June to address them or “ISVAP could name an administrator to take the necessary actions,” Fondiaria said in a statement on Monday.

The insurer, the target of a complex takeover plan by Unipol and of a rival bid by two Italian private equity funds, has called a board meeting on June 19 to discuss ISVAP’s demands.

The regulator’s action follows a probe started in October 2010 after a complaint by activist fund Amber Capital, which owns less than 2 percent in Fondiaria.

Fondiaria shares fell 6 percent in early trading and were down 3.67 percent at 0.94 euros at 0858 GMT. Italian investment bank Mediobanca, Fondiaria’s biggest creditor, was down 1.46 percent while Unipol was down 1.33 percent.

The survival of Fondiaria, Italy’s biggest car insurer and the second largest national insurer after Assicurazioni Generali GASI.MI, is crucial to Mediobanca MDBI.MI, which holds 1.1 billion euros ($1.38 billion) of Fondiaria debt.

Unipol agreed in January to rescue loss-making Fondiaria in a four-way merger. But disagreements over swap ratios, demands by the Ligrestis and queries by regulators have complicated negotiations on the deal.

In a further twist, an Italian court declared last week bankrupt two holding companies of the embattled Ligresti family. Imco, one of the two holdings, had benefited from real estate deals with Fondiaria which ISVAP believes were irregular. (Reporting By Danilo Masoni and Lisa Jucca; Editing by Hans-Juergen Peters)