Assicurazioni Generli Adr

After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Fabio Cleva, Head of Investor and Rating Agencies Relations. Please go ahead, sir.

Hello, everyone, and welcome to Generali 9 Months 2024 Results Call. Here with us today, we have the Group General Manager, Marco Susana, the CEO of Insurance, Giulio Terzarioli, and the Group CFO, Cristiano Boria. Before opening the Q&A session, let me hand over to Marco and Cristiano for some brief opening remarks.

Thank you, Fabio. And hi, everyone. Good morning. Let me start by saying that our TORQ work has confirmed the continued business and operational improvement achieved throughout the year and the positive effect of the commercial and technical action implemented since 2023. At the same time, we have maintained a solid Net Promoter Score leadership position versus peers. This is thanks to our ability to connect with multi-holding customers and a clear reflection of our lifetime partner proposition. I would like today to share three key highlights from the third quarter with you. The first one is in life. We confirm robust new production trends leading to sizable net inflow concentrated in our preferred line of business. At the first half 2024 result call, we provided the guidance on the new business margin between 4.5% and 5%. I am pleased to confirm that the third quarter will reach a 4.92% new business margin. While we confirm our guidance, we expect a lower new business margin in the fourth quarter compared to the third quarter, given the declining interest rate and the impact of product mix on the margin. The third quarter also enjoyed a 9% growth in new business volume, protection growing by 11.5%. As presented at our Investor Day in January 2024, we see attractive opportunities for long-term profitable growth in protection in the coming years. Protection generated again over 40% of our new business value in the past quarter. As we commented previously, lapses in France have basically normalized to the level seen in 2022. In Italy, we have continued to see a decrease in lapses in the second half of the year. We fully expect this trend to continue as the competition from government bonds and bank deposits gradually abates. Italy returned to positive net collection in the third quarter, and we confirmed that we expect the Italian business to achieve a positive net inflow for the year by the end of 2024. At that point, we will evaluate how to gradually scale back some of the commercial incentives introduced last year to support production. My second message is about the P&C business trends. The numbers we released today confirm the positive Joe's effect driven by both rising tariff and normalizing claims inflation in a context of overall benign frequency. Going into more detail, the annual average premium for our 10 main markets grew by 6.8% overall. In the motor line, this increase is equal to 7.5% and translates into an annual earned premium of 6.5%. more than compensating increase of the risk premium of 0.3%. We continue to implement our pricing and technical excellence strategy, and this is increasingly resulting into a positive development in the attritional combine ratio. The undiscounted combine ratio has improved to 96.3%, down by 1.4 percentage point compared to the last year. The third quarter improvement in the undiscounted attritional combined ratio was also supported by very benign frequency and low incidence of severe bodily injury claims. While we would not project the rate of improvement of the third quarter linearly into the future, it is certainly very encouraging to see this trend as we enter into a new strategic cycle. We confirm our confidence to reach our target to the end of 2024 with an undiscounted combined ratio below 96. This despite an impact from natural catastrophe that at the nine months 2024 is about 100 basis points higher than what we have budgeted. Our confidence is based on the strong improvement of our underlying underwriting result that is becoming increasingly visible in the numbers. And indeed, my third message is about nut cuts. Clearly, the third quarter has been an adverse one. It is a development that we will take into account within our new plan, where a higher budget for natural catastrophe will be appropriate. Most likely, this event will lead to a continuation of the hardening cycle in personal line in Europe. During the last months of the year, we usually experience a more benign trend for weather events in consideration of the footprint of our portfolio. Natural events since the end of September are estimated to lead to around 100 additional net natural catastrophe losses so far in the fourth quarter. In addition, we book a 20 million man-made loss from the riots in Martinique. Concerning the tragic events we have all seen in Spain, let me look past the economic impact and express our sorrow for the many people affected. To support this effort, Generali is actively supporting the Spanish Red Cross with financial aid. To express our solidarity with the affected areas, we have also launched a global fundraising campaign to support the Spanish Red Cross on the ground. focusing on helping those displaced from their homes or cut off from essential services. We are also actively providing support through our Human Safety Net Foundation in the areas in which it operates in Spain. Thank you for your attention and let me now hand over to Cristiano.

Thank you Marco and hello everyone. Let me provide you some additional color on our nine-month 2024 financial performance to complement what you've just heard on the underlying business trends. Starting with life, the operating result in the third quarter is up almost 11% compared to the third quarter of 2023. There are two points I wanted to flag you. Firstly, the CSM grew by almost 500 million in the third quarter, despite around 100 million of negative operating variances, mostly related to lapses. I expect that for the full second half of 2024, we may record an amount of operating variances similar to what we had in the first half of the year within the context of the annual update of assumptions that will be completed by December. Secondly, the investment result in the quarter at €266 million is up over 20% year-on-year. Let me highlight that this growth also reflects non-recurring elements in the comparison between 2024 and 2023. Moving to P&C, Marco has already commented on the improvement in the combined ratio. Let me emphasize that this improvement is of a very high quality, entirely driven by the current year component, as we maintained a prior year development in line with our two percentage points guidance. As Marco said, we confirm our undiscounted core guidance below 96% for 2024, which reflects the improvement in the underlying technical profitability. This confirmation is, of course, subject to the final tally of natural catastrophes, Looking ahead to the fourth quarter, we expect the P&C business to have a minimal amount of current year discounting. I would say around 50 million euro, reflecting the lower interest rates and the intra-year trend of discounting. On the current year loss ratio, we will continue to see the benefit of tariff increases, but we will also book conservative initial loss picks in line with the Generali's longstanding approach to prudent reserving. On the non-operating result, please consider that in the fourth quarter, we expect to have some restructuring costs, which may also be driven by the recent acquisitions, And in addition, we are also likely to record some impairments on a selected number of real estate exposures within the context of the end-of-year appraisals. Concerning the tax reform currently under discussion in France, we expect to book around minus 40 million euro in the fourth quarter in case the final version of the corporate tax measures reflects what has been discussed so far. Finally, on Solvency, please note that by the end of the year, we expect to complete the closing of the step-up in the Generali-China PNC joint venture, which is expected to have a minus one percentage point impact on our final year 2024 Solvency II ration. As the year draws to a close, let me thank you for your continued support. I look forward to seeing you at our investor day in Venice on January the 30th. Operator, we are now ready for Q&A. Let me anticipate that given we have our investor day coming up in January, we may defer the forward-looking questions to that venue.

Thank you. This is the Coruscant Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. We kindly ask you to use handsets when asking questions. Anyone with a question may press star and one at this time. The first question is from Andrew Baker of Goldman Sachs.

Great. Thank you for taking my questions. So the first is just on the PNC attritional. So you know benign frequency, sort of low bodily injury claims in Q3, and you caution us from projecting linearly going forward. Are you just able to give us a bit more colour on sort of breaking that out in terms of how much of the attritional you would have considered more sort of one office or a quarterly benefit in 3Q? And then secondly, on the life CSM, can you just help me unpack the variances a little bit? So the expected return in Q3 actually looked like it went up a little bit, and that was lower rates. So curious what's going on there. And then I think you mentioned 100 million of operating variances. That was primarily lapses. And then just directionally, what was the impact from the economic variances? That would be really helpful. Thank you.

Thank you very much, Andrew. Cristiano, both questions are for you.

Hi, Andrew. About the effect of benign frequency and disinflation, which we've all seen below the pre-COVID level, which is an important trend still being confirmed quarter after quarter, there was more a comment related to the bodily injury part. Notwithstanding that, I would like to point out one thing. I think that, as I said in the introductory speech, for sure you will see a continuation of the improvement of the technical profitability going forward, and this is in the number. And so if we just accumulate the first nine months and you get to the year-end number, there will be further improvement on the year-end 2024 number versus the year-end 2020. 2023. The speed of this acceleration will also be mitigated from what I said, but we will continue to exercise strict prudence in terms of initial loss peaks. Please, the disinflationary forces are becoming increasingly visible in the numbers, so you should continue to project, but at an appropriate level, as I was saying. This is on the first question. The second question, the variances we have seen in the quarter, I would say it is of the order of €400 million for the economic variances in the third quarter versus the healthier number, and slightly more than €100 million in the operating variances, the vast majority being clearly related to the fact that On the economic variances, the major drivers are the positive equity market performance all around the world. the world, both in Europe and in Asia, and as well the positive impact of lower market volatilities, which, as you know, has a benefit in the time value option of guarantees. These, I would say, are the two major drivers with slightly more benefit from the equity performances, more than upsetting the negative interest rate effect, which is about €100 million negative. Next question, please.

The next question is from David Barma of Bank of America.

Hello. Thanks for taking my questions. Two small ones on life, please. Firstly, on the investment results, so clearly another good quarter. You suggest there's some non-recurring items in here. Is the proportion the same as what you suggested in Q2, which I think was half of the the annual growth, so if you can give a bit of color on this. And then on the new business margin, so 4.9% in 3Q, is there still an impact in there from the French protection business that was booked in Q1 this year and from the various marketing actions taken in Atelier, and maybe if you can quantify those things together. And then lastly, on P&C, if you can give us an update on pricing versus claims inflation in your main in your main markets and where you're seeing some pretty strong renewals at the end of the year. Thank you.

Thank you very much, David. The first question on the life investment result as well as the one on the new business margin are for Cristiano, while the question on pricing versus claims inflation and the outlook on the renewals is for Giulio.

Hi, David. So what I would deem as recurring versus non-recurring is more related to what was not recurring in the third quarter 2023, more than non-recurring in the third quarter 2024. And in third quarter 2023, we had some... effect of a negative effect of increased hedging cost in Switzerland because as we told you in the past we were changing the dynamic hedging into a more stable asset liability management which by the way helped a lot supporting the solvency of our life entity which is the right thing to be done but had a cost of around i think 40 million euro in the last third quarter 2023 this is the main element i would comment there on the second part of new business margin, we do still have commercial action in place, but we don't have any impact from the French protection effect because that was fully booked already. And the effect of commercial actions mainly concentrated in Italy are in the order of 30 to 40 basis points, if I add up all of them.

Okay, the question about pricing, I can tell you on the motor side, we have price increases on average of about 7.5%, and that's well ahead of the risk premium increase that we see. It's about almost 4% ahead of that, so that's a big improvement. Also consider that when you look at our numbers, the earned premium increase is a little bit below the average premium increase, So there is an improvement which is almost embedded as we go into also next year. As we think about non-motor, there we see an increase more of 4% of the average premium, but we are improving the attritional loss ratio, excluding the man-made by about 1%. So this means that basically the increase in average premium is almost 3 percentage points ahead of the risk premium. And on the accident and health, we see an improvement almost of very high single digits. So there is a lot of strength in what we are seeing right now. And as we think about the beginning of 2025, we are still going to go for increases in premium, which are at least matching a risk premium increase or ahead of that, depending on the case. So from that point of view, we are starting from a strong basis and we still push to make sure that we consolidate what we think is a very, very good position. That's on pricing.

The next question is from Michael Hartner of Berenberg.

Thank you so much. I loved your sentence on the jaws of the crocodile. And I suppose my question is how long is the jaw? In other words, does it reach to, I know it's forward-looking, so I don't know, 26, 27, 28 years? I'll give you a background. I was at the lunch of your Spanish competitor on Monday, and they also mentioned the Jaws of the Coca-Cola, but they said two years. So I'm hoping you can say thanks to your pricing action still to come, maybe three years, who knows. My second question would be on cash. I know it's far too early, and you'll probably say again, leave that. I know there's a lot of one-off cash this year, but maybe you can give a feel, given the very strong outlook in both your core businesses, you know, how quickly that $700 million might be kind of cast back or earned back or whatever in terms of, you know, getting the cash flow back up to current levels. And then my final question, and I'm sorry, it's three. You know, in the operative, in the solvency, your fantastic IR gave me a very detailed split of the solvency movements, which includes 1.5% operating variance negative. I'm sure it's something you've already mentioned, but I'd be curious. Thank you.

Thank you very much, Michael. I think the question on the crocodile jaws effect is for Marco, while the question on caching on the solvency movement, especially the operating variances, are for Cristiano.

So, hi, Michael. Good morning. So, we expect, so I want to build on what Giulio just said. So, we are very positive in the sense that we see We see embedded still price increase coming in the next month, and we are pushing for that. And we see an overall risk premium that is going in the right direction. So what do I mean? Inflation is still there. So we do still see some part of the business that has inflation. Keep in mind that there is... a lag effect between what you see on the consumer price inflation and what we see in the claims inflation. So the decrease is coming a little bit later from what you see in the public market. But this is also compensated by the trend in frequency that, you know, so far is going in the right direction. I would say it's a trend, you know, it's something that we see since many quarters. So So I would say we do see that there is potential for continuing this margin expansion for the next quarters. On top of this, you correctly mentioned the nut-cut effect that will have an impact on the rates that we will see both on corporate and commercial and on retail markets. because clearly all of us will need to deal with a different, I would say, mindset on NatCat, not only on the technical side, so understanding exactly how do we manage volatility and how do we make sure that we are properly on this risk, but also we'll have an effect on pricing. So clearly this will give us some room to additionally increase prices in the next quarter.

Hi, Michael. So going to cash, having said that at the nine months, including the operating cash. We were having something of the order of 3.7, 3.8 billion, but you have to strip out of this money the operating part, where what matters for you is to know that we have the usual 1 billion of liquidity buffer plus the money to cover the buyback and mine or spare 100 million out of that. For sure, we will give you the full detail on the investor day about the future evolution. The only thing I would like to highlight to you is that in 2024, we were able to have again, from a specific capital management operation, excess cash repatriation, for example, the one we were commenting in Austria. And as we highlighted this year, we presented and completed operationals of restructuring of participation, composition in our, for example, Italian entity, which will bring, as we already commented, the further benefit, which we will comment at the investor day.

Thank you.

And on the other movements, non-economic variances of the solvency, the 1.5 percentage points, I would say there are mainly a couple of drivers, evenly split. The first one is a slightly higher investment risk took in a portfolio because of the risk-bearing capacity and evolution. And you know when it is active, it is accounted in this piece of the non-economic because it is actively decided by the management. And the other piece are some small non-recurring and non-operating expenses which are then accounted there.

Thank you very much.

Next question, please.

The next question is from Will Harkessel of UBS.

Thanks for taking the questions. On the motor side, thanks for the big picture comments on pricing globally. I guess, which countries are you most confident of growing volumes in at the moment? And anywhere where you still feel a little bit of retrenching is necessary. And just, it certainly sounds like the net cap budget is being focused on. I guess, what do you think here has gone wrong in the budget setting over the last two years? Is it just a higher frequency and severity of events or? versus the reinsurance shift in the last couple of years? And is there anything you can do on reinsurance, or is it simply just raise the budget? Thank you.

Thank you very much, Will. The first question is for Giulio, while the second question is for Marco.

Yeah, I would say coming to Moto, I wouldn't highlight a market where we see necessarily more potential to grow the business. And also the focus is not necessarily on Moto. So what we are seeing right now on Moto, we are more or less holding the line on the risk and force, and this is going to be also somehow the strategy as we go into 2025. What we see growth is on no motor, on SME, on accident head, so that's what we are focusing on, and that's also part of our strategy of the so-called multi-holding customers. So from that point of view, look holistically, and there is also the light side, by the way, as we think about the multi-holding. So look holistically at the situation, and it's not about pushing necessarily the production on the motor side, where we are very much focused on making sure that we have a very, very strong... combined ratio. So that's the situation. The pruning, we will continue to do pruning. You know, we have about 200 million pruning that we do every year. To a certain degree, we should expect this to continue. So the combination of nice rate increases plus all the things that we do on the underwriting should bode well from a profitability point of view. From a growth point of view, we expect to get the growth not necessarily from motor, but from the other lines of business.

So on NatCat budget, so I don't think there is anything that necessarily went wrong in the last year in the budgeting phase. It's more, I would say, we are seeing this trend also coupled with many other trends that we see in the industry. But also let me underline that what we are seeing is also an effect of the increase in increased portfolio level that we have. So we have been growing a lot, so it's clearly, you know, the type of this event that we experience are going up. On the reinsurance side, you know, we have been changing, slightly updating the structure of reinsurance over the last couple of years. We will see... We will see in this renewal what we can do about this. I don't expect major changes, to be honest, in the structure. What I do see as important is to think about the climate change at 360 degrees in a different way. So it's not only about claims. It's about the type of services that we will provide, the type of coverages that we will provide, how we will be able to manage volatility differently in the future. but also how can we stay closer to the client when something happens. So overall, we will talk about this in January, in our investor day. I would say that this is something that we will see more in the future and will drive also prices in the future.

Next question, please.

The next question is from James Shark of Citi.

Hi, good morning, good afternoon. I had a question on the restructuring costs to begin with. You mentioned that in your comment. Restructuring costs have been a bit of a feature at Generali for many years, absorbing quite a high proportion of the net income. I think last year kind of came in around the 300 million level. I'm just wondering kind of where we're going to settle this year and then the kind of outlook as we go into the next plan. So Ideally, that should be fading away to zero, but I'm just keen to get your thoughts on that. So that's my first question. Secondly, I think, Christiane, you'd indicated in the past for the life insurance service results that the full year would see that the sum of the lost component, experience variances and other income expenses would be negative low triple digit millions, which it looks like it will end up being. My question is kind of on the outlook for that, because I'm just keen to understand if we're going to see an element of those recurring going forward, because that would be a key consideration in earnings growth outlook. And then if I may just quickly just ask about the trajectory for the investment income in P&C. So wherever we land at this year end, will you be expecting growth in absolute terms in the investment income are you still seeing a positive difference between the running yield and the reinvestment yield? Thank you very much.

Thank you very much, James. Cristiano, the three questions are all for you.

Hi, James. So, for sure, let me remind you that in 2023 there was a very specific restructuring charge, a large, 200 million euro, in our country, Italy, where there was an agreement with the Union on operation. We are not foreseeing for 2024 this kind of level. What I just recall is that in 2024 there are also the acquisitions done so far, but the level is absolutely lower, I would say, halving the level you are seeing there for 2023, if I have to make a guess for the year-end 2024. And this is about restructuring. And they are going forward with the actual perimeter we are having. They are going forward to decline. And clearly, we are continuously looking for efficiency solutions and measures. And on that, for sure, we will comment more on the investor day. On the second question related to the insurance service result for the lost component experience balance and other, the outlook for 2024 is coherent with the guidance of low triple digit between minus 150, minus 200 million euro, which is consistent. Going forward, you need to be aware that this kind of element, especially I'm expecting the experience variance on the component to scale down materially compared to the number we have seen so far. And the number I was commenting will be posted also in the cumulative. But don't forget that one of them, which is the lost component, is volatile and depending sometimes on the market conditions. Clearly, we are reducing the ALM risk in the portfolio, but there are assets which can bring up and down. Just take the case of the third quarter where equity market went well and some unit of accounts reversed from negative loss component into the positive, creating a positive P&L. Regarding the trajectory, third question, for the investment income in P&C, where we will land in 2024 and the balance between running and reinvestment yield, I would say that, first of all, don't forget that in 2023, We had something of the order of 50 million euro not repeated in 2024 of a specific private equity dividend payment on performance fees structures, which has not been repeated this year. which is more erratic in nature, so you should not project it forward, while we have observed an extension of the perimeter of the asset under management because of the acquisition of Liberty, which in the P&C only is bringing 60 million in the first nine months. of this result posted today. So their investment yield is still above 30 basis points above the current return, which is 50 basis points above the current return, so 3.6 versus 3.1. And don't forget that our asset allocation in PNC is skewed also with 30% of non-fixed income assets, which are not following the same pattern of their investment. But over the cycle, we are earning a risk premium, and this is going to be seen going forward.

That's really helpful. Next question, please.

The next question is from William Hawkins of KBW.

Hello, thank you. Lots of good questions have eaten mine up already. Five to one, please. Just back on Michael Hutner's question about the solvency ratio. First of all, just for housekeeping, can you tell me the numerator and the denominator behind the 209, please? But more importantly, we're now third quarter, I think, of seeing the operating variances being an increase in the SCR, having historically seen that as a tailwind to the solvency. Are we now into a structural pattern where because your business is growing and because of inflation and that kind of thing, your SCR from an operating point of view will be rising, or should we still be assuming that that is a tailwind from reducing SCR from operating items in the future? Thank you.

Hi, William. So, numerator, 48.9 billion euro. Denominator, 23.4 billion euro. End in end, 209. Going to your question on the operating variances effect and the SCR, operating variances are affected also, as I was showing before, sometimes from changes also in strategic asset allocation because we consider this a kind of managerial action, so it's more in the operation of the company than only the purely passive economic variances effect of your final choices that you are taking. So I always call a kind of alpha versus beta component in the investment decision and being it alpha in the operating. So what we should add on top of that is clearly that we are now adapting the hypotheses and our processes that we discuss and decide in the third quarter and we act in the fourth quarter usually to update those assumptions which were still for modeling reason taking a kind of weighted average and timely weighted average effect on this which is dragging a little bit still some of these effects. But going forward I think that Thinking about these effects should more be linked to the investment decision on our risk-bearing capacity. And on the SCR, I would say that all the actions we are doing is to be efficient in the way we are managing the SCR. And there are capital management tools. which we are already pulling in the past, and we commented out already, be it through reinsurance, be it through specific edging of fees in the unit link ward, as we did already, which are allowing to have a grow with not a large SCR increase and being effective, because our aim is also to have an improved return on the capital, risk capital employed.

Next question, please.

The next question is from Elena Perini of Intesa San Paolo.

Yes, thank you for taking my questions. Actually, I have only one. It is about your outflows from the saving products still in the third quarter, so I know that you expect to be to be back to positive flows in Italy by the end of the year but I would like to have a bit more color also on other countries and on the overall picture for the group. Thank you.

Yes, Elena, I would say this question is for Giulio.

Yeah, so I would say generally when you look just at the saving part of the equation, we see negative outflows in Italy, the saving side. But when you put all together, you can see that the inflow situation is improving significantly for the standalone quarter. In Italy, we have positive flows. That's very important to highlight. And also we see that's also important a reduction of the legacy so the surrender i'm comparing here the quarter 2020 this quarter the 2024 to the quarter third quarter 2023 so we see a very different dynamic when you go outside italy generally we saw already a nice improvement in the first six months and we continue to see So from a flow situation I would say very good development across the board and starting I would say the summer of this year also a different trend in Italy. So we would expect at this point in time that on the total flows we're going to be positive also in Italy by year end.

Okay, thank you. Maybe I can add one point on the fact that we do expect new business margins that is going to decrease slightly in the fourth quarter. It's a typical effect of the last quarter of the year where you have a big campaign from the Asian side to get net inflows. And so typically the mix, and also you have, sorry, a renewal on some group business. So I would say the mix overall will have an effect of decreasing slightly the new business margin. So I think it's important to say that and also to say that We have discussed the topic of lapses over the last quarter, and we do still think that our franchise of agents are performing really in a very good way, both in Italy and in France.

Next question, please. The next question is from Andrea Lisi of Equita.

Thank you for taking my question. The first one is on the contribution from investment, the one that you said before as regards the yield on the front book and on the back book, if you can provide the data also for the life business. The second question is still on life, considering also what you said earlier on the new business margin that should be expected slightly down in the fourth quarter relative to the third one. Should we expect the trend in terms of growth year on year of the new business value to continue to accelerate as we have seen starting from the start of the year? And, yeah, as regards the last question is on PNC, on the combined ratio and impact of net cut. Maybe I have not understood well, but just to have confirmation that the impact of additional net cut you have seen so far in the fourth quarter is further 100 million. Just to have confirmation on that, thank you.

Thank you very much, Andrea. The first and second questions are for Cristiano, while the third one is for Marco.

Hi, Andrea. The first number is the life for investment yield in the total book before it is between 3.6% and 3.8%, depending if you add or not also that part, which is the highest number, the 3.76%. as well as we are observing the effect of having a benefit from this kind of allocation and the restored inflow into this projection. The second element on the life new business margin on the trajectory, it is the combination of a little bit of, I would say, 20 basis points, lower interest rate for the pricing itself. Just to make you an example, if I had to measure the third quarter in isolation, the 4.92 BIPs, of the third quarter new business margin. With the end of period hypothesis, not with the beginning, there are six basis points further of this down, which shows that there is some sensitivity, as we said, for the basis points movement. So there is this part together with a very positive improvement of the profitability of our protection business. Protection business is going farther up, and it is going and growing up, as Marco was commenting before. So the end trajectory will benefit from a pulling out in a right moment of the commercial action together with certain clearly mixed of offer will be different from the zero interest rate environment, which could have some slightly lower effect, but we confirm that the 4.5% to 5% new business margin range is there. In the new business value full effect, this year we had this drop and we are planning to work on improving it, but on that we will comment more in the investor day.

Yes, the On the last question, Andrea, you understood correctly. So far in the fourth quarter, we are at 100 million, and we are halfway in the fourth quarter, so we'll see. Yes. Thank you.

Next question, please. The next question is from Steven Haywood of HSBC.

Thank you very much. Three questions, mostly clarifications here. On the NatCap side of things, can you tell me about the reinstatement premiums that you've had? You can give a nominal amount and whether they were paid in the third quarter or fourth quarter, whether they come in the NatCap budget or come in attritional, please. Secondly, you mentioned about some impairments on real estate investments. Could you give some indication of the geography and, you know, the potential percentage sort of amounts that you're seeing? And then, thirdly, clarification on the LIFE CSM roll forward in the nine months. What was the economic variances and operating variances? Thank you.

Thank you very much, Stephen. The first question is for Marco on the reinstatement premium. while the question on real estate impairment and on the CSM roll forward, the variance is both economic and operating are for Cristiano.

Yes, so regarding the restatement premium, at the third quarter we are at around 15 million, and those are already booked in the attritional development. So that's what you have in the account so far.

So, Steven, going to the expected impairment real estate, I would say we are in the region of 25 to 50 million in the last quarter, and they are concentrated according to our exposure, which is mainly in Italy and small also in the other countries. But I would say the largest exposure is there. On the CSM road forward, the economic variances, as I was saying before, in the third quarter, so from half-year number, was 400 million positive economic variances and 100, so to be extremely precise, 405 economic variances and 112 negative operating variances, positive 405 economic variances.

Thank you.

Next question, please.

The next question is a follow-up from David Farmer of Bank of America.

Hello. Thanks for taking my follow-up. Just a few small things, please. On taxes first, you gave an amount for France. What is that based on? I would have expected a much higher taxable base for your French business. And for Italy, should we expect anything following the... the tax and deferred tax asset package that was presented. Then secondly, on motor, apologies if I missed that, but what was the undiscounted combined ratio for motor in the nine months? And then lastly, on asset management, revenues were pretty strong in the quarter, but I wanted to ask about the difference between conning and the rest of generality. On average, you generate about 20 bps revenue margin. Is there a big difference between the two units? Thank you.

Thank you very much, David. All the three questions are for Cristiano.

Yes, David. So the 14 million estimate is based on the existing proposal, which we understood also how the process should go, which is not a given process. stating if this proposal goes up to the end, the $40 million of more taxable effect comes, because basically you increase the yearly for the full year retrospectively to full year 2024 taxable base. And this comes from the fact that the corporate tax rate increase. So the taxable base is not increased per se. By the way, there are some plus and minus coming also on the local gap from realized capital losses to turn also the portfolio and other positive leasing taxes, which are reducing the potential effect on the economy. full net result. But at the end of the story, it is really coming from the increase of the corporate tax. I would say something in the order of 10 percentage points, which the law is embedding. On the undiscounted combined ratio in motor in the nine months, with pleasure, I tell you it is 99, the total one, including also the natural catastrophe point. It's just keeping out the discounting. On the questions related to the trend of revenues strong, conning versus generally what is the difference in revenue margin, well, I would say two. But the revenues were split. The 343 million of revenues were split between 85 almost in Koning and 260, I would say, almost in the Generali perimeter. Don't forget that in the Generali perimeter we have Yes, a higher weight of liability-driven as a base, but we have also other asset capabilities, conning the largest contributor apart from the liability-driven is the CLO business of Octagon. So the average margin is not extremely different when you make the sum of these two pieces around the 20 bps. Next question, please.

The next question is from Michael Hartner of Barenburg.

Thank you so much for this opportunity. Very quickly, it's on the expense ratio, and it was lovely to see 9 months, 23%, 29.4%, 9 months, 24%, 28.5%. Can you talk a little bit about this and how much more there may be to come? Sorry, I always want more. Thank you.

Yes, thank you very much, Michael.

The question is for Cristiano. Yes, Michael. So the 0.9 percentage point improvement over the nine months is driven, I would split into basically two components. The first 0.6 improvement is the combination of two effects. First, we consolidated Liberty, and by definition, being a largely motor business, has a lower expense ratio, so it is a mechanical effect. The other effect, which is the 0.6 is evenly split. 0.3 benefit from consolidating liberty. Another 0.3 is a lower effect from the inflationary component of Argentina, which has an inflation going down. compared to previous year. Then we are left to, let's say, a more economically actively driven zero-free, which is a split, half with the mix of commission we are having compared to the previous year and half from an improvement of the ratio between the growth of the insurance revenues and the growth of the cost.

Fantastic. That's very clear. I did have one last question, if I may. It's a positive one. You know, last year, I think the time or the year before, you tried to orient us towards a nine-month result, and this feels more like you're happy to orient people to Q3 as a standalone. My feeling is this is because the quarterly is set to kind of, I'll exaggerate a little bit, rocket. Is that the right impression to get? Thank you.

Yeah, I hope I understood the question. So you are saying that the third is better than the fourth in your expectation. That's why we're focusing on it. Did I get the right question or not?

Yeah, no, I'm just saying you're focusing on quarterly. So it means that the quarterly trends are set to accelerate. Is that the right read?

Yeah. As I was saying, we are focusing on the quarterly because clearly we are observing in the integrated nine months a fair representation of what we were saying in the half year 24, which I personally think was not fully reflecting the good effect that we were already technically seeing, okay? And this was also related to the fact that we wanted to have some more confirmation. Okay. So at this point, I would say that the fourth quarter, as you know, generally has some one-off effects related to the impairment in the real estate component I was mentioning before because we have the full review of the book, the last 20%, 17% to be reviewed. Then we have the restructuring to be booked about the liberty part. But in the end, we are also expecting to have less natural catastrophe than the one observed in this quarter. So in the projection, I will see that what I was telling last time on this quarter is a fair representation of what you could expect further.

Fantastic. That's superb. Thank you, Cristiano.

Thank you, Michael. Next question, please. The next question is from Farquhar Morey of Autonomous.

Morning, all. Just one question for me, actually, really just following up on Michael's question there on the loss ratio improvement. I mean, I can understand that, obviously, the 0.3 you might refer to as economic is probably the only component that's within your control, but just to double-check, obviously, liberty is probably going to persist I presume the inflationary component in Argentina persists if inflation remains low, and presumably the economic component you're identifying is a matter of you continuing your efforts there. So I think broadly, would all of the 0.9 actually persist going forward, or have I misunderstood something? Thanks.

Cristiano?

Yes. Yes, so basically I was saying that if I compare year over year, it is the embedding of liberty. Don't forget that liberty has a PPA, so purchase price allocation of this, which is polluting this effect. Going forward, the effect of having the unearned premium reserve and treated as an expense versus another in the release, has some polluting accounting effect. So I would say don't over-weight on the Liberty side. Clearly, Liberty has a lower total expense ratio because it has a higher motor business. So the good part of it is explained by really underlying. On the Argentina side... Last year, we were experiencing a higher inflationary movement. This first quarter was high, but now it is going down. So you should, I think, understand that the negative impacting effect of Argentina could be lower going forward. And that was my comment on the 0.6 component out of the 0.9. In particular, Argentina has a better 0.3 component. which was reflected in the if situation stays like that, I think continue. Clearly, then, it is depending on the reduction of Favre Argentina. What is important is the 0.3 fully in the, let's say, hand of the control management, which is going forward. On top of that, we will comment for Favre guidance in Investor Day.

Great. Thanks much.

Next question, please. At the moment, we don't have other questions registered.

So thanks very much, everyone, for participating to our call. The IR team remains, of course, at your full disposal for any follow-ups, and we look forward to seeing many of you at our investor day in Venice on January the 30th. Goodbye.

Ladies and gentlemen, thank you for joining the conference. Now, over, you may disconnect your telephones. Thank you.