UPDATE 1-Caltagirone to snub Generali AGM to signal discontent -sources

* Move brings to light underlying shareholder tensions

* Generali will name new board next year

* Caltagirone upped Generali stake recently (Adds sources, background)

MILAN, April 28 (Reuters) - A leading Generali investor, Francesco Gaetano Caltagirone, will snub the company’s AGM on Thursday in the first public sign that the businessman is unhappy with the balance of power among shareholders, three sources close to the matter said.

Tensions among investors in Italy’s largest insurer have been brewing behind closed doors, but are expected to intensify as Generali kicks off a months-long process to appoint a new board in spring next year, the sources told Reuters.

Caltagirone, whose business empire spans construction to publishing, recently raised his Generali stake while also building a holding in its top investor Mediobanca.

With a 12.9% stake, Mediobanca is the leading shareholder in Generali, followed by Caltagirone with 5.6%.

By not taking part in Thursday’s annual meeting, Caltagirone wanted to signal that he would like to have a bigger say on strategic decisions at Generali, the sources said.

Both Caltagirone and Leonardo Del Vecchio, who is Generali’s third-largest investor with a 4.8% stake and the single biggest shareholder in Mediobanca, have criticised some of Generali’s strategic moves in the past year, sources have previously said.

The latest flashpoint was Generali’s decision to enter exclusive talks to buy rival AXA’s non-life assets in Malaysia.

Caltagirone, who is a director at Generali, did not attend the meeting that approved the move backed by Mediobanca. Del Vecchio voted against it, the sources said.

Del Vecchio and Caltagirone are frustrated that Generali’s European rivals AXA and Allianz have market capitalisations, respectively, of two and three times that of Generali.

However, a source close to Del Vecchio said the eyewear magnate would take part in the AGM, which will be held remotely due to COVID-19, and had already filed his vote.

The sources said Caltagirone’s decision not to attend should not be considered as hostile to Generali CEO Philippe Donnet, whose mandate comes up for renewal next spring.

Donnet’s reappointment is in the hands of Generali’s board which for the first time will submit its own slate of candidates, after the insurer last year changed its by-laws.

Previously Mediobanca would file a slate of nominees to be voted on, effectively picking the CEO and chairman.

On Thursday, Generali shareholders will be asked to sign off on the financial statements for 2020, a year in which the insurer posted a record operating profit despite the pandemic, and a proposal to pay a two-tranche dividend of 1.47 euros per share.

Caltagirone’s decision not to attend the AGM was first reported by la Repubblica newspaper. (Reporting by Stefano Bernabei, Claudia Cristoferi and Gianluca Semeraro; Writing by Valentina Za; Editing by Alexander Smith and Elaine Hardcastle)