Generali is currently violating the spirit of its own corporate ideals. A message on the insurer's website tells of entering “into a long-term relationship of trust with our employees," and of being “committed to our guiding principle to fulfill this promise through discipline and integrity."
Not according to one former employee. "That would be nice," said Dieter Degen, a former office manager who worked for the company for 39 years. "Generali treats us like toxic waste that needs to be disposed of as cheaply as possible."
When Mr. Degen began his career as a trainee in the central German city of Giessen in 1958, the company was called Volksfürsorge, which translates as 'People's Care'. It was acquired by insurer Aachener und Münchener Versicherung in 1988. When the company merged with Italy-based Generali in 2009, Mr. Degen had already retired. The firm has now lost his trust.
Mr. Degen is one of thousands of former employees affected by changes in the company's policies. In 2015, Generali refused for the first time to abide by an agreement to increase pensions by the statutory 2.1 percent. Instead, management informed approximately 5,500 former employees, widows and widowers that "the management and supervisory board have decided to increase total care benefits or pensions by 0.5 percent effective July 1, 2015."
Generali's behavior is outrageous, both on the merits and in terms of the approach taken. Klaus-Peter Kussmann, former Generali employee
Generali argued that it was eligible for an exception, whereby a suspension or reduction in the pension adjustment was possible. The company continued in the same vein in 2016, again limiting its pension increases to 0.5 percent, while the statutory pension in western Germany increased by 4.25 percent.
It is a breach of taboo that is unprecedented in the German economy. Many companies complain about the burden of their commitments to former employees. "There are smaller companies in all industries that are trying to do this sort of thing," said employment law expert Barbara Köckemann of the law firm Ulrich Weber & Partners. "But it's unusual to see an insurance giant like Generali take this step."
Ms. Köckemann's firm represents Dieter Degen and a number of other recipients of Generali's company pensions. About 1,800 former employees and surviving dependents have already filed complaints, and about 650 are suing. The numbers are growing.
Klaus-Peter Kussmann plays an important role in the lawsuits. The 68-year-old worked for the company for 30 years. "Generali's behavior is outrageous, both on the merits and in terms of the approach taken," said Mr. Kussmann. He learned about the cuts in a letter about the pension adjustment.
Mr. Kussmann is convinced that Generali expected that many company pension recipients would not even notice the reduction. Generali denies this. "The accusations are untrue. On the contrary, we wrote to all retirees and informed them in detail about the reduced adjustment," said a spokesman.
Mr. Kussmann's former employer once used the advertising slogan: "Don’t worry, you can count on Volksfürsorge." In a play on the tagline, Mr. Kussmann launched a campaign website called “Don’t worry.” He provides sample letters, lists names of attorneys and reports on new rulings. In most cases, the rulings are not in Generali's favor. The courts have already decided about 150 cases, finding in favor of the plaintiffs in the overwhelming majority. The retirees lost their lawsuits in only four cases.
"In the case of most recipients of company pensions, we are currently talking about several hundred euros a year," said Mr. Kussmann.
Generali apparently has the weaker arguments. According to the company, the pension adjustment is necessary because Generali is in a difficult economic situation. Low interest rates are making it hard to do business for the entire industry. For this reason, retired employees must make sacrifices, because of generational equality.
"The management board and supervisory board believe it is justified that former employees should also contribute to strengthening and securing the future of their former employer," said a Generali spokesman.
Generali rarely prevails in court. The Hamburg labor court described the company's statement that there is a "need to reduce personnel costs in some areas for an indefinite period" as "overly simplistic."
Besides, judges can also read balance sheets. The insurer reported about €2 billion ($2.1 billion) in earnings for 2015, its biggest profit in eight years. This prompted a judge to note: "The existence of the company is not in jeopardy." In its ruling, the Giessen labor court stated: "Generali overlooks the fact that the pension scheme is not just a recommendation but is fundamentally binding."
Generali is not challenging the defeats. "If necessary, we will seek a decision by the Supreme Court," said a spokesman. That could take time. But when push comes to shove, Generali has more time than the retirees.
Volker Votsmeier is an editor with Handelsblatt's investigative reporting team. To contact the author: [email protected]