Assicurazioni Generali S.p.A.

Good afternoon. This is the College School Conference operator. Welcome and thank you for joining the Generali Group first quarter 2023 financial results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and 1 on their telephone. Should anyone need assistance during the conference call, they may signal an operator by pressing star and 0. I would like to turn the conference over to Mr. Fabio Cleva, head of investor and rating agency relations. Please go ahead, sir.

Good morning, everyone, and welcome to our first quarter call. Here with us today, we have our group general manager, Marco Cesana, and our group CFO, Cristiano Borean. Before we open the Q&A session, let me hand it over to Marco and Cristiano for some opening remarks. Marco, the floor is yours.

So thank you Fabio and hi to everyone. Let me just start to say that our first quarter financial result confirmed the group ability to deliver solid growth and execute on our strategic plan. Even in a contest for geopolitical pressure and volatile financial market that is difficult. So we believe that our strategy is stronger than ever. Our vision of becoming lifetime partner to our customer made good progress in the first quarter. As we reach, I have to say we reached 69 million clients, increasing our client base by almost one million. Clearly, it's very important that we increase so much our client base, and it's important that our customer entrusts a generale with their saving and protection. It's a proof that we are there always when the customer needs us. Talking about this, as most of you have seen in the news, this is a difficult time for some Italian communities for the flooding in Emilia-Romagna. So let me say that we are very close to this community, we have defined several initiatives and we are present on the ground to support people. I would like to thank all of our Italian colleagues, our agents and everyone who is present on the ground and are working to support our clients. Now, going back to our customer, so we consolidated our position, our first position amongst our peer in term of relationship net promoter score with a score of 19, which is four percentage point higher year on year. This clearly reflects our effort, dedication, and focus on continuously improving the quality of our advisory service. And as an example, we are now at 70% digital policies or customers that have received insurance policies through digital channels. Let's go now to the different businesses and start with life. In term of volume, the first quarter we saw a continuation of the industry trend observed in the second half of 2022. Our distribution, our proprietary distribution channels like agents, employee remain the key lever for steering the business mix toward our preferred business line. And the product mix observed in the first quarter confirmed the effectiveness of our distribution strategy. In particular, I want to mention the protection that reached 1.3 billion euro, led by Italy and the international region, and the unit link that achieved 1.4 billion euro, demonstrating resilience compared to the wider insurance market. I want to remind you that the protection is the main source of value, as the MBV is depending from protection for more than 42%. And generally, we observe an increase in lapses, a moderate increase in lapses, which was concentrated in very specific customer segments on bank assurance channels. So we saw this moderate increase, particularly in Italy, mainly related to genital life. Those products are primarily distributed by Banca Generali as well as other banking partners to affluent and high net worth individuals who are particularly sensitive to interest rate evolution. Positively, a significant portion of this outflow had been recaptured by our bank through other managed products. Moreover, I would say that our preliminary number in April and May show an improving trend in Italy, reflecting positive effect of our new product offering and retention initiatives. In France, also, we have observed an uptick in lapse rate, primarily related to large contracts distributed through banking partners, which have a high profit-sharing clause. This increase, seen for this product, which typically has limited profitability from a general perspective, is mainly driven by affluent and high-net-worth individuals shifting their portfolio toward other asset classes. In general, from a product perspective, our business unit are adopting to meet changing customer appetite. And we preserve market competitiveness. In particular, we are updating our existing product and launching new product more attractive in the current market context. Let me give you a few examples. In Italy, for example, we are recalibrating the share of our premium allocated to saving versus unit link in the hybrid offering. We are introducing temporary variable fee to provide higher yields to our customer in the short term. And we'll test a new generation of product with two underlying segregated funds providing more competitive yield for our customer. Let me also reiterate that our overall strategy remains unchanged following the rise of interest rates. We maintain our strong focus on new business underwriting discipline, on protection and health business, and on capital light products enhanced by protection providers. Our strategy will continue to be focused on bundle solutions addressing multiple customer needs within a single product, in line with our lifetime partner ambition. We are convinced that the protection business in particular has an important growth potential, leveraging also on the customer increased awareness of protection needs post-COVID-19. As I said, this business line generates almost half of our new business value and is more insulated from lapse risk since it is less sensitive to interest rate evolutions. This unique value proposition represents a substantial differentiating factor for life insurance product versus other investment product. In addition to our discipline on new business, we continue to pursue and adapt our strategy to optimize our enforced business. And as I think you have seen, the recent announcement on the pension cash disposal is in line with this, in Germany is in line with this. And this is significantly reducing our exposure to the annualization risk in the German life business. Let's now move on P&C. P&C business growth, in particular in Italy, Germany, and France, is expected to continue in line with what we have seen in 2022. First quarter 22 of gross return premium is up 10% compared to last year. This growth is driven mainly by non-motor, which is growing both in terms of price and volume. At full year 2022, you remember we have disclosed an increase in the average premium in our retail and SME book of 3.3%. At the end of the first quarter, this has increased to 6.3% in motor, non-motor, accident, health, and disability. Non-motor premium, in particular, continue to grow significantly, supported by tariff strengthening implemented last year, as well as the effect of indecision mechanism. Travel insurance, thanks to Europe assistance, confirm its strong growth trend, also supported by the U.S. partnership with large online players. In motor, the average premium for our main market is continuing to increase. Tariff strengthening in line with market inflation and portfolio pruning remain a key focus and the group will continue to coordinate implementation and technical measure necessary to pursue profitable growth in our strategy. Having said that, it is important to highlight that the price increase usually takes 12 to 18 months to unfold and give the full benefit on BNC profitability. So they will progressively develop through our numbers as policies come up for renewal during the year. Our technical levers such as reselection and claims manager are being intensified. Now we move to investment. A few notes on the different asset class. So our listed equities, on listed equities we maintain a prudent approach. In credit we confirm our selective approach with low exposure to more cyclical sector and highly leveraged companies. We experience a very limited rating downgrades in the portfolio. Our funded exposure to private and real asset is lower than peers, which allow us to deploy at better multiples in attractive vintages. We have taken a prudent approach to exposure to private debt as in this asset class, we confirm the existing commitment while we have reduced the new allocation given the change in market condition. On private equity, we observe a slowdown of distribution, but we scrutinize the valuation we found that marks provided by our general partnership are prudent. Now, before I close, a few comments on real estate, where we have an exposure of around $35 billion. Over 80% of our direct portfolio consists in high-quality assets in big cities and core locations, while less than 5% of our portfolio is located in markets more under pressure, like UK, US, Scandinavia. These, together with a disciplined policy on tenant selection, explain the low vacancies that we have, which is close to 10%. These include vacancies related to refurbishment of buildings to make them more energy efficient consistently with our ESG strategy. We are comfortable with our real estate exposure also thanks to the negligible leverage that we have with the LTV with the loan to value of 7%. So in conclusion, this result of the first quarter 23 confirm our ability to deliver solid growth and execute on our strategic plan. As we move into the second quarter, we are confident on the right direction which are steering the group. Now, Cristiano, over to you. Thank you Marco and good morning everyone.