UPDATE 5-Algebris fund loses bid for Generali auditor

(adds Algebris, director comments)

By Jo Winterbottom and Claudia De Lillo

TRIESTE, Italy, April 26 (Reuters) - Activist fund Algebris lost its bid to appoint an auditor at Italy's biggest insurer, Assicurazioni Generali (GASI.MI: Quote, Profile, Research) on Saturday and its head, Davide Serra, said he might take legal action over the result.

At a tense annual sharholders' meeting which ran over eight hours, Serra's criticisms of the insurer's performance were rebuffed by executives and he was even reprimanded by the board for not following procedures.

At the meeting, Generali promised double-digit percentage growth in first quarter net profit and said total premiums were up 5 percent.

Algebris, which holds about 0.5 percent of Europe's No. 4 insurer, got investors with 3.6 percent to back its list against 12.83 percent for that of funds association Assogestioni, which will now appoint one of three auditors.

Serra's unprecedented criticism of the insurer's performance and governance last year prompted Chairman Antoine Bernheim to speak of a plot for control. Bernheim reiterated on Saturday that "maybe he has Italian friends encouraging him."

On Saturday, the 83-year-old Bernheim conceded that "everyone can always do better," but pointed to the outper