Once more, Shlomo Eliahu and Oded Sarig are parting company acrimoniously after a short alliance. This morning, Sarig resigned as chairman of Migdal Insurance Company Ltd. Sarig, who was formerly Commissioner of insurance, Savings and Capital Markets, resigned because of "problems with corporate governance in the group," according to his letter of resignation to the Migdal board. Sarig is believed to have wanted to resign with immediate effect, because of the tension between him and controlling shareholder Eliahu, who is chairman of Migdal's parent company Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), but he eventually consented to remain until a replacement was found.
In 2015, Sarig left Migdal Insurance and Financial Holdings after just seven months as chairman.
Migdal stated that Sarig had explained in his letter of resignation that he had resigned because of the responsibility he saw as placed upon him and because changes he had hoped would take place at Migdal Insurance Company, including construction of a new strategy, filling of key positions, and streamlining of the company's working methods, had not happened because of the ownership structure and the corporate governance regime that derived from it. Sarig said that Migdal Insurance was operating on the basis of short-term considerations, with no definite work plan, and according to established routine. He explained that in the light of all this the chairman of Migdal Insurance was unable act for the benefit of Migdal Insurance and its customers as required, and had therefore tendered his resignation.
The resignation comes after Eliahu took steps to set up a supervisory committee of public company Migdal Insurance and Financial Holdings board members - Eliahu himself, and external directors Ronit Bodo and Avraham Bigger (disclosure: Bigger is an advisor to the board of "Globes") - over the management of Migdal Insurance Company, intending thereby to circumvent Sarig and group CEO Doron Sapir.
Eliahu's intention was ultimately blocked by Capital Markets, Insurance and Savings Commissioner Moshe Bareket, who, after summoning Eliahu for an urgent hearing, received an undertaking from him to cancel the supervisory committee. The problem with the committee was that it was supposed to work not only with Sapir and Sarig but with the entire company management, including deputies and VPs.
In any event, even if it did not become operational, the committee represented a further clear step indicating Eliahu's disappointment at the results of Migdal Insurance under Sapir, who took up his post only last June, and Sarig, who became chairman in April this year. As Capital Markets, Insurance and Savings, Sarig approved Eliahu's takeover of Migdal.
Eliahu bought control of Migdal in late 2012 from Italian group Generali at a valuation of NIS 5.1 billion. Today it has a market cap of NIS 3.7 billion, after a 9.5% fall in its share price so far this year.
Sources close to Eliahu said that "all Sarig's accusations are testimony to his own failures; he harmed the conduct of the company."
A statement from the Capital Markets, Insurance and Savings Authority said, "The Capital Markets, Insurance and Savings Authority is closely monitoring developments at the company and is acting with it to ensure its proper conduct. The Authority will insist that Migdal's board should be headed by a professional person who will ensure proper corporate governance."
Published by Globes, Israel business news - en.globes.co.il - on December 24, 2018
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