The push to oust Perissonotto -- who spent more than 30 years at the group - happened suddenly last week and was led by chief shareholder Mediobanca (MDBI.MI) and private investors including Luxottica (LUX.MI) founder Leonardo Del Vecchio.

While Generali shares have traditionally ranked alongside Italian government bonds in terms of investment safety, Europe's debt crisis has dramatically slashed the value of Mediobanca and Luxottica's Generali stakes, piling pressure on the group's management to take action to improve the share price.

By picking Greco, the insurer has broken with a long-standing practice of tapping internal management.

Nor is Greco a manager who can be considered "near to" Mediobanca or other key shareholders. His ten-year stint at Italy's second-largest insurer RAS from 1995 to 2005 propelled him to the ranks of Europe's most successful risk managers. His recent tenure at Zurich Insurance Group has kept him away from the fray of Italian finance.

Greco, however, will face an uphill climb in his mandate to boost the insurer's underperforming share price since, its shares mirror the insurer's 46 billion euros ($57 billion) exposure to Italian government bonds.

Plus, Generali may face a looming capital increase, since it is on the hook to spend about 2.5 billion euros by 2014 to buy up a 50 percent stake in Generali PPF Holding, a joint venture operating in 13 countries is Eastern Europe.

Generali Chairman Gabriele Galateri will take over as acting CEO until Greco can join the group, Generali said in a statement after the board meeting. The decision was taken in just under four hours, in an atmosphere which independent board member Claudio De Conto described as "civil." Perissinotto left without comment, speeding away in a chauffer-driven Audi. He will remain on the board.

CLASHING WITH MEDIOBANCA

The boardroom battle, led by Generali's top investor, Mediobanca, flared up on Friday with Perissinotto and some investors clashing openly in hotly-worded letters leaked to the press.

The fight at the top at Generali comes less than a month after investors forced the departure of Aviva (AV.L) CEO Andrew Moss and more than a year after embittered shareholders kicked Alessandro Profumo out of Italy's top bank, UniCredit (CRDI.MI).

Generali has been under attack from investors due to its poor performance since 2007, and after it took a hit last year from its investment in Greek bonds.

But it was unclear what exactly triggered Perissinotto's ouster and brought dissatisfaction to a boiling point last week.

It was also unclear what role, if any, was played by a Mediobanca plan to merge stricken insurer Fondiaria-SAI (FOSA.MI), which owes over 1 billion euros to Mediobanca, with smaller peer Unipol (UNPI.MI), a contested deal now under regulatory scrutiny.

Perissinotto said in his defence last week he was being sacrificed because he had not tried to derail a rival rescue deal for Fondiaria-SAI led by private equity funds Sator, of banker Matteo Arpe, and Palladio.

With his sombre style and ability to navigate Italy's complex web of interests, Perissinotto, 58, survived boardroom battles that led to the departures of former chairmen Antoine Bernheim in 2010 and Cesare Geronzi in 2011.

But he ended up clashing with Mediobanca CEO Alberto Nagel, Italy's most powerful investment banker, who delivered to him the news of plans to oust him at a meeting on Wednesday.

Perissinotto's defeat underlines the investment bank's continued influence at the insurer despite a recently passed Italian law seeking to untangle the web of cross shareholdings in Italian finance.

Generali is a significant source of income for Mediobanca and allows it to wield influence across Italy's financial landscape.

($1=0.8089 euros)

(Writing by Jennifer Clark; Reporting by Paola Arosio and Gianluca Semeraro; Editing by Mike Nesbit)

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