Assicurazioni Generli Adr

Good afternoon, this is the Corusco Conference Operator. Welcome and thank you for joining the Generali Group full year 2024 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may sing with 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 thank you for joining our full year 24 results call. Here with us today, we have our Group CEO, Philippe Donnet, the General Manager, Marco Cesana, the CEO of Insurance, Giulio Terzeriol, and the Group CFO, Cristiano Borean. Before opening for Q&A, let me hand it over to Philippe for some opening remarks.

Thank you, Fabio. Good morning, and thank you for attending our full year 2024 results call, for which I'm joined by Cristiano, Giulio, and Marco. Before we open the Q&A, let me share a few key remarks with you. These results mark the conclusion of our Lifetime Partner 24 Driving Growth Plan, and we are proud to have over-delivered against all financial targets. It is the third consecutive strategic plan we have successfully completed, and our 2024 results further confirm our group is the strongest it has ever been. The operating result at 7.3 billion and the adjusted net result at 3.8 billion for the full year are new record highs, and they have been achieved thanks to the very positive contribution from all business segments. When we presented our full-year 2023 results, I stressed that the return to positive net collection would be one of our priorities. In life, net inflows at year-end 2024 were close to 10 billion euros. This great achievement, which is unparalleled in the industry, was made possible by our powerful distribution force. Therefore, let me thank our agents and advisors for their excellent work. These net inflows were entirely driven by protection and unit-linked lines. Our continued focus on underwriting, discipline and in-force management has resulted in a further increase in the share of life reserves related to capital-like products, reaching 71% at year-end. In property casualty, the 7.7% increase in gross return premiums was driven by the positive performance of both motor and non-motor lines, which grew in all the main markets where we operate. Our tariff strengthening measures also continued to be effective throughout the year. This is also reflected in our improved undiscounted combined ratio, below 96% in line with our guidance, even when considering the 1.2 billion effect of natural catastrophes. The underlying trend showcases the ability of the team to successfully deliver. Our undiscounted loss ratio, excluding NADCAT and prior years, shows at 1.4 percentage point improvement. This is by far the best in the industry, and it would be close to two points with the same perimeter as 2023, excluding Liberty Seguros. As Giulio told you at our Investor Day, we are strongly focused on continued improvement in technical excellence. And this performance shows we are starting the new plan with a very positive momentum also on this front. Looking ahead, we are convinced that the key trends we shared on that occasion will create significant profitable growth opportunities for Generali. In line with the increasing demand from customers, premiums related to protection, health and accident continued to accelerate and now account for around 22% of the group's overall gross return premiums. This segment is highly profitable and it is central to our plan to increase the number of multi-holding customers. We have three key strengths that will ensure we achieve this. First, the best relationship net promoter score among our main peers. Second, a modular product offering to respond to customer needs. And third, a highly effective distribution platform boosted by enhanced usage of data and artificial intelligence. Proprietary distribution is an important cornerstone of our offering. We distribute over half of the policies through agents, almost double the average in the industry. When interest rates declined, our agents enabled us to transform our live book. When lapses increased, they enabled us to perform better than the market. As Marco highlighted in his presentation in Venice, our agents are fundamental in capturing growth across our preferred lines of business. Moving to asset and wealth management, the group's total assets under management reached 863 billion euros, growing by 32% thanks to positive net inflows and the consolidation of Koning Holdings Limited. The operating result of this segment grew by almost 23% to 1.2 billion euros. At the investor day, Woody explained the importance of having an integrated offering between our large life insurance book and our strengthened asset management platform. Fully leveraging this relationship is key for us. When this management team took over the helm of the group, remittances from subsidiaries were around 2.4 billion euros. In 2024, they reached 4.5 billion, contributing to the highest net holding cash flow we have ever reported at 3.8 billion euros. The relentless focus on cash and capital optimization has been one of Cristiano's priorities in the past six years as Group CFO. And it will continue to be an essential part of our focus on growing shareholder remuneration. Thanks to this healthy cash flow generation, a solid capital position with 220% solvency to ratio and the underlying growth of the business, we will propose at the next annual general meeting a dividend per share of 1.43 euro, up by almost 12% year on year. as well as a €500 million share buyback to be launched this year, subject to regulatory approval. Finally, I would like to mention the further significant progress we made as a responsible investor, insurer, employer, and corporate citizen. This will continue with Lifetime Partner 27 Driving Excellence, which has sustainability as one of its three key foundations. In conclusion, our 2024 financial performance is the result of our hard work across the last three strategic cycles, and we are now already focusing on the delivery of our new plan. We have committed once more to very ambitious targets, and we have everything it takes to succeed and to keep creating sustainable value for all stakeholders while driving excellence in everything we do. Before we open our Q&A, let me just remind you that we will be hosting our annual general meeting on April 24th in Trieste. I look forward to seeing you there, and I thank you very much for your attention. Operator, we are now ready to take questions on our 2024 results.

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 1 under touchtone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from David Barma, Bank of America. Please go ahead.

Good morning. Thank you for taking my questions. The first one is on the very good performance in P&C in Q4. So you've improved your undiscounted current year loss ratio by around 1.6% in Q4 compared to the nine months, which was the starting point of the new cycle. And actually, we're even closer to the two and a half if we account for the fact that manmade losses were higher in Q4. So that's better than your target for the next three years. I realize it's only one quarter, but I would expect the underlying profitability to further improve given the good trajectory of pricing for at least for 2025. So can you talk a little bit about this and the Q4 performance versus the improvement expected over the next three years? That's my first question. And then secondly, staying on PNC and motor lines specifically, Would you say most of the pruning is now behind, especially in Italy, and we can now start seeing a bit more volume growth in 2025? And then lastly, on cash, the CMD, I think you suggested you'd get around $400 million of remittances from management actions in 2025, but I would have thought the Libertice Gross excess capital and the the measures you've taken with Alianza and Genertel would give you more than that already. So can you please come back on the management actions that are expected to come through in 2025, please? Thank you.

Thank you very much, David. The first two questions are for Giulio, while the third one is for Cristiano.

Thank you, David, for the questions. On the four-quarter development, I will never read too much into a slice. Besides the fact that this gives you clearly the idea of the confidence that we have as we go also into 2025, why I'm saying you shouldn't read too much into a slice on a quarter because at the end of the year you have always the validation of all the assumptions that you have. And so in that sense, you get a little bit of a catch-up effect from an accounting point of view in the quarter. But clearly, when you see a strong ending, this means that we have a lot of quality in our numbers. And if you look at where we are standing right now in motor... The undiscounted combined ratio is 98, so that's a very strong basis. And as we think about also 2025, we still expect to see rate increases on top of the inflation. So from that point of view, there is room to do even better. To your specific question about pruning, I would say we have a limited situation where we really need a pruning. And a situation like that might be generally in Italy. In some geography, more than pruning, we still need to get some additional pricing. I'm thinking about Spain and Portugal. But fundamentally, we have a strong performance already now. and we expect also to see some further improvement from a very good level in 2025 and beyond. Also, on non-moto, we are running at a good combination, especially if we adjust for the net cat impact and we normalize for that. Clearly, on non-moto, we need to be always a little bit cautious because assuming that the net cat's budget is going to be lower is an assumption. But I think we are well positioned also if we are going to see more elevated net cat compared to our assumptions.

So, hi, David. So going to the 2025 expectation, I think that what is important to keep in mind is what I was telling you at Investor Day, where basically 2024 has been a special year with the 400 million coming from Italy and 200 million coming from Austria. In the 2025, you should more expect something like capital management action of the order – of the I would say the 400 to 450 million euro including all the action which will entail again Italy as we were highlighting.

Next question please.

The next question is from Andrew Baker, Goldman Sachs. Please go ahead.

Hi, thank you for taking my questions. The first one is on just the CSM operating variances. Are you able to give just a little bit more color on the model refinements that you did in France, Germany, and Asia? And then also related to that, what should we think or how should we think about the 2025 operating variance coming through on the lap side from your methodology change? Any guidance there would be helpful. And then secondly, your fourth quarter life new business margin was sequentially higher than Q3, which is more positive than you guided at the time. So just curious what drove this sequential development versus what you had expected. And then also, are you able to give the new business value for 2024 what it would have been under your new definition going forward? Thank you.

Thank you very much, Andrew. The first and the third question are for Cristiano, while the second one on the new business margin in the fourth quarter is for Marco.

Yeah, for sure. Hello, Andrew. So on top of what are the lapses effect which accounts for the 1.1 billion over the total 1.4, the 0.3 billion effect of the last quarter which are not related to the lapses on refinement are mainly model changes in France related to the way It is treated the movement between unit-linked payment and multi-hybrid product, while some change in assumption of expense review on Germany and more negative development of morbidity assumption in China. These are the main three drivers, which all of them, the three of them summed up to around 0.3 billion.

Marco, on the new business margin?

Yes, so I think the development that we are seeing on the new business margin overall is in line with what we pointed out as a guidance into the beginning of the year. So we said we were seeing an improvement of the new business margin across the different quarters. So we are coming to the level where we expect it to be, in particular, You know that we have always said that we would have done, you know, trade-off versus, you know, on volume versus margins and, you know, scaling back gradually over the next months the commercial incentive that we had to improve our collection. And that's what we did. So we are at the level where we expect it to be. And again, maybe I think it's useful also to look forward. So what do we expect for the next few months? We do expect this level of new business margin going forward. Clearly, we will need to be also tactical and gradually understanding the macro situation on the interest rate to understand when to cut back more on the commercial action and having... a good creation of value, because I just want to remind that everything is done to create more value overall. So new business margin, new business volume are in that line. Cristiano?

Yes. Andrew, just to complete on the 2025 guidance, which on the CSM I didn't mention before, after having made all these changes in the lapses hypothesis, we expect a much more stable development of the operating system next year, which will be materially decreasing down to very minor effect. Just to clarify, on the third question on what would be the new business value, new business margin, and the new definition, which we discussed also during the investor day, you should read the new business value as $3 billion. so basically $0.7 billion more with the new definition, and the new business margin would increase by 80 bps to 5.4%, hinting into an improvement of 15 to 20 basis points as a margin moving into 2025. Very helpful.

Thank you.

Thanks to you, Andrew. Next question, please.

The next question is from Michael Hoffner, Burenburg. Please go ahead.

Thank you. Just congratulations. Three cycles in a row is amazing. I have three really light questions. The first is a bit continuation of one of the previous questions, the cash outlook. And I noticed that in 2024, you had quite a big number or quite a big increase from others. So I just wondered why. What is that and how much more we can get? And also, I think you had the question, there was liberty, there's 300 million left there, whether that's included in the management actions you cited. And then the second is also on cash Switzerland. I remember you said Mama takes back and I wondered, is this already starting in 2025? And then the third question is something I think you said, Philippe, in an interview that... you're going to be buying more Italy government bonds. And I just wondered if you can maybe explain your thinking there.

Thanks a lot. Thank you very much, Michael. The first question and the second one on cash are for Cristiano, while, of course, the BTP one is for Philippe.

Hi, Michael. So the increase in the average remittance of 2024 should be considered also with some effect of example of one-off contribution from M&A initiatives like some dividends we received from Malaysia, if I take the example in 2024 on the average. Don't forget that also we had in 2023 some high dividends. dividend coming from the asset management because of the preparation for the conning deal. Going to Liberty, is it included in the management action of the CFO? Yes. They are there. We are already starting to get the cash back in the first quarter 2025 from Liberty as a first piece and the second one is throughout the year on switzerland is it already starting in 2025 the remittance the answer is we are not we are completing a final step because the very healthy situation of the the the life company be aware that we are slightly above 250 percent of switzerland's intestation for the year in 2024 so Everything is set in line to prepare, but we agreed to have a 2025 year list of stabilization and understanding on the full sensitivities with all the numbers to get starting from 2026. As you mentioned, what mama gives, mama will start to ask.

Hello, Michael. As you know, our BTP portfolio is linked to our insurance liabilities in Italy, and it will always be the case. As of December 31st, 2024, The group exposure to government burns was 35.6 billion euros, compared to 38.5 billion by the end of 2023, and almost entirely in support to our Italian life business. This also includes 5.6 billion euros held by Banca Generale. As an Italian group with a significant and profitable life insurance business in Italy, BTPs naturally are an important part of our investment allocation. And as a result of the developments in the markets and the very positive net inflows for 2024, We are looking into increasing our purchases of BTPs, obviously in line with our investment policy and with our risk tolerance.

Thank you. Thank you very much.

Thanks to you, Michael. Next question, please.

The next question is from Farouk Hanif at JP Morgan. Please go ahead.

Hi, everybody. Thank you so much. could you please talk about the jump in the life investment margin, kind of any one-offs that were in 2024 that we need to take out? And also, you know, you had a very good investment income too in P&C. So just comment, I guess, around the sustainability of that given current macro. Second question on margins. I mean, when you adjust, for your new approach, you're already quite close to your 6% new business margin target in life. So I was wondering what the path to get there looks like. I mean, is it quite an easy jump from now, for example, in 2025 or 2026 to get there more quickly? And in that context, I know this is a big jump in the margin in CEE. You comment on it in your slides, but if you could give more details about what's going on there, that would be really helpful. Thank you.

Thank you very much, Farouk. The first question is for Cristiano, while the second one is for Giulio.

Hello, Farouk. So I think you're referring to the life investment result when you call the margin. So the effect, actually, if I just check versus the 2023 number in the last quarter, there has been a slow reduction versus the 2023, as you've seen, because we had lower rates. And there is an effect which is related to the fact that we are locally adopting in China IFRS 17 locally, which entails to have a single rate to be applied, which has slightly higher interest rates, which are unwinded than in the IFI, which has some more negative impact going forward with a clearly counterbalanced element of the value on the other side. There has been also an effect which is a shift from the excess capital from the life shareholder equity to PNC shareholder equity in Argentina. And that shift weights 30 million. So all in all... Let me tell you that the investment result for 2024 should be read for a guidance of 2025 of around 900 million euro, including this effect of water. I was mentioning you, higher EFI stemming from this changing curve also in China. So this is what I would mention on that. On the PNC side, I think that we should consider as the shift I was mentioning from live to PNC will be recurring for the PNC extra return from Argentina. But I mentioned before that... already at Investor Day, but we should not take into account this volatility stemming around from the Argentina side. So in a world which last year was quite positive, the contribution, So I think that a run rate to be projected for 2025 around the $950 million is a good conservative estimation you should plug in with this level of also lower interest rates also in the cash return.

We can go into the light side. Maybe first I answer your question about the jump in the new business margin in Eastern Europe. First of all, keep in mind that in Eastern Europe about three quarters of our premium are protection. So that's a very profitable business. And when rates are going down, the new business margin protection goes up. Then we had also some change in operating assumption. That's a positive. And also we have less inflation. You spend side. And that's also contributed to a better new business margin. So we are very pleased with that. With the level, we are pleased with the improvement, and also it's very important. We think we can keep this level moving forward, and clearly we're going to push, especially on the protection element in Eastern Europe. Now, on your question, a broader scope, I would say that going from the 5.4% that Cristiano was referring before to the 6% that we put into our strategic plan, it's not super easy, so we need to work on that, and you need to keep in mind that our new business margin is already at a high level. So we are starting generally from a high level point of view. It's one of the best new business margins you can see clearly in the industry. So from that point of view, there is some work that we need to do in order to go from the 5.4% to the 6%. One element is going to be the mix. because over the plan horizon we expect to see more protection compared, for example, to savings, and automatically this should push the new business margin up. So fundamentally we have a plan how to get there, but if you ask me it's a given, I would say it's not a given, so we need clearly to work over the next three years on that. The good part of the story, we have a strong distribution, so from that point of view we can really control our destiny, but there is some work to do on this one.

Thank you very much. Thanks to you. Next question, please.

The next question is from Ian Pierce, Exxon BNP Paribas. Please go ahead.

Hi, thanks for taking my questions. Two just around the motor business. The first one is on the 98% full-year combined ratio, which is a bit better than what I thought you spoke about at the investor day. Just trying to understand if there's anything sort of one-off or some favorable experience, favorable PYD in there, or if you think the 98 is a true sort of underlying level and a good starting point for the 2027 plan. And then the second one is just on the motor businesses in France and Italy. So it looks like they're growing below the level of rate increase or average premium increase you would have been achieving in 2024. you flagged some challenges around Genitel in Italy. I wonder if you could firstly just elaborate on why that's so challenging in the direct segment, and if you expect those businesses to return to above premium increased growth in 2025 in France and Italy. If you could elaborate on that, that would be great. Thank you.

Thank you very much, Ian. Both questions are for Giulio.

Okay, so starting from Moto, yeah, I would say the 98 is a good proxy for the starting point. So from that point of view, there are no special one-offs justifying the 98. So from that point of view, you can take this as a reference. And next year, considering the rate increases that we have, which are on top of inflation, we should expect the 98 to be even lower. So we feel very good about the work that we have done On the motor side, there are just maybe two question marks. It's Spain and Portugal. And not because we are not taking actions, but because in Spain and Portugal, we have seen inflation to be more persistent compared to other countries. A positive thing that we are seeing on the motor side is inflation is coming down a bit, but especially we see lower frequency basically across the board. And from that point of view, we might expect also to see lower frequency continuing into the next year. So fundamental is a strong business right now with a good performance and also with potential for further improvement. On France and Italy, I would say in Italy the situation has been especially driven by General Tell. But also, aside from General Tell, we're not necessarily increasing in motor the number of policy. This happens more in non-motor. But think about Italy. General Tell is clearly taking down policy. if you want, the number of risks. And on the non-genital side, there is a slight negative, but this is a reflection, clearly, the effort that we are putting to get to the good combination model that you're seeing. On France, there was more of a pruning. In MOTO, especially at the beginning of the year, now we are taking some corrective action also because the performance is very good. So I would expect that as we go into 2025, you are going to see a higher growth, if you want, or less of a pruning effect in MOTO compared to what you saw in the course of 2024. Thank you.

Thank you, Jan. Next question, please.

The next question is from William Hawkins, KBW. Please go ahead.

Hi, guys. Thank you very much. I'm just coming back on some of your answers you've already given, so forgive me, please. Your life investment results, the outlook, did I say $900 million for 2025? Because that feels very low relative to the 943 for a business that should be growing. So just could you repeat what you said about the outlook for the life investment result, please? And then secondly, you've already been very kind on the detail of the new business margin, but the specific impact of the commercial initiatives, they dragged 50 basis points last year. What are you expecting the drag is going to be in 2025? And do we keep that sort of pari-pursue with the new methodology or is there some reason why it might change in the new methodology? And then lastly, please, I'm sorry to begin because I was trying to type while you were talking. The higher exposure to BTPs, Are you simply saying that your business will be bigger, so of course you're going to own more BTPs, or is there actually a suggestion that your economic weighting towards BTPs could be rising? Thank you.

Thank you very much, William. The first question is for Cristiano, the second one is for Marco, and the third one is for Giulio, and of course Marco if you want to complement.

Hi, William. So let me remind you when we talk about life investment result, we are talking about the non-VFA business. Non-VFA business is clearly related to some specific business we are having, but there are also running off pieces of our portfolio. I'm thinking about the Czech Republic portfolio, which has a runoff nature out of that on top. On top of what I told you before, so we stick to this number. I said always when these estimations are given, we try to make a conservative estimation out of that. But I think the 900 is a good reflection also due to the fact that the shift... from the excess capital in Argentina from life to PNC itself is only 30 million as a weight on a yearly basis. So this is the outlook. And don't forget that what I was mentioning about you, about the non-VFA other part of the growth, with the Asian change in China, which is having higher unwinding of the embedded cost and guarantees out of that.

Yeah, so hi, William. So just to maybe go back to what we intend to do in 2025, clearly, as you know... We expect all the external environment to be a little bit volatile. So we are planning to reduce those commercial incentives. But we will look into quarter by quarter how much it's possible to do. We want to make sure that we are strong on the value creation. Therefore, we will see how that can be reduced. So we do expect to reduce it. And, by the way, this will stay broadly unchanged with the new methodology, so this number. But we do expect them to reduce it. But we are going to be tactical, you know, understanding how much is the environment changing and how much we can do.

Yes.

Hello, William. On the BTPs, I said that the exposure has been decreasing significantly between the end of 2023 and the end of 2024, from 38.5 down to 35.6. And then I said that we are looking into increasing our purchases of BTP. I didn't mention anything about the exposure on BTP, which is a matter of strategic asset allocation. Maybe, Marco, you want to say something about this?

Yeah, exactly. So I think, William, you remember in the plan presentation, we defined what are the main direction of our strategic asset allocation. You remember that we said we... would rethink the allocation of the GOVIs, but generally speaking, we would like to reduce our exposure to GOVIs into the medium term. We would like to slightly increase and tactically increase, but over time, our exposure to private markets, so private equity, private credit in particular. So that direction is unchanged. Clearly, we in Europe You know, we have defined a planned horizon direction. Clearly, this is going to change, you know, as long as, you know, in line with the external condition, this might be fine-tuned or tweaked a little bit over the different quarters. So we are just, we just said, you know, expose the general direction to our medium-term strategic asset allocation.

Thank you.

Thank you, William. Next question, please.

The next question is from Gianluca Ferrari, Mediobanca. Please go ahead.

Yes. Hi. Good afternoon, everyone. Three for me, please. The first one is credit spread sensitivities. I noticed they went up quite materially, particularly on the CSM. I was wondering if there is anything related to the average rating of the credit book or if there is any other explanation for that. Second is the CSM of Switzerland. If you can give us a bit of color on the 30% decline in this line. And last on a direct insurance company up for sale in Italy. I think in Venice you have been very clear in saying that M&A is not top priority of the new plan. I was wondering if you are looking at the file or this file is not of interest for you. Thank you.

Thank you very much Gianluca. The first two questions on the CSMR for Cristiano while the third one is for Philippe.

Hi Gianluca. So credit spread sensitivity is I think what matters most. It is not specific topic honestly out of that about the rating of the book. I think what is also important to keep in mind is more the Government spread sensitivity, which we experience in the CSM, which I think you have seen brought down a material 0.3 to 0.4 billion CSM effect only in the quarter. So I would more highlight that there are really no particular specific topic or issues related to the non-government credit distribution. For what regards the Switzerland CSM, I think there is a specific topic, again, to be mentioned. There is a joint effect of reduction of base interest rates and opening of the spreads of the government versus the swap rate, which is the baseline rate used for evaluating liabilities under both IFRS 17 and solvency. This creates a kind of leverage effect onto this movement which was by the way for your info we were at the highest level of bifurcation between the government and the swap spread rate observed there and had also some effect also on the local gap because it is linked the way you are making in the reserving. Reminding you that our Swiss business, which is left there, notwithstanding a good ALM, has also a long-standing nature. So the nature of the government sensitivity to swap spread is extremely high due to the dependency on the matching, which is a peculiar feature, if you allow me, both of... of the IFRS 17 and as well as of the solvency that we are all experiencing in this period when there is the full decoupling between the government bond movement in the rates versus the swap rate, which is a collateralized baseline rate where we are observing this deviation. I think these are the main explanations also going there.

Thank you.

Hello, Gianluca. So on your third question, let me remind you first that in our new plan, we have been very clear on our very strict approach and discipline on M&A, as we will benchmark any opportunity against share buybacks. then we do not comment on specific speculations. And as you can imagine, we are very happy with our footprint and our distribution in Italy.

Thank you.

Thanks to you, Gianluca. Next question, please.

The next question is from Hadley Cohen, Morgan Stanley. Please go ahead.

Morning, everyone. Thanks very much. Two questions, please. So firstly, thank you for giving the extra colour around the average coupon on redemptions for 2024. I think it was 1.3%, you said, versus the 3.6% reinvestment rate. Is it possible to give us a flavour of how you're thinking, how we should think about the average coupon on redemptions for 2025, please? Presumably, we should still be expecting investment income to be pushing higher from here. And then second question, slightly linked to Will's question earlier, I think, but useful to see the 2 billion of net flows in the fourth quarter in Italy, I think roughly split between unit linked and savings business. Is it possible to give us an update on how you're seeing flows so far in the early parts of this year? I guess I'm thinking in the context of bond yields pushing higher, not quite as high as they were in 22-23, but how we should think about the risk of an uptick in lapses again. Thank you.

Thank you very much, Hadley. Maybe we start with the second question with Giulio on the first quarter development in life, while the first question clearly is for Cristiano.

So from a flow situation in general, we see clearly positive flows into the beginning of the year. When we are focusing on Italy, we are basically a break-even, but we are much better compared to the beginning of last year. So from that point of view, it's normal that after a strong finish into 2024, you're going to have a break-even. Less of a momentum at this moment in Italy, but we are very confident that we are going to pick up also during the course of the year. So we expect 2025 to have a dumbbell flow in Italy, assuming the situation stays like it is, which is normal. consistent with the 2024 level. So we have a good start to the year because we see clearly that the headwinds that we had at the beginning of 2024 are basically behind us.

Yeah, hi, Hedley. So regarding redemption for life, we are expecting something around 3.2% in 2025, as an average, sorry, for the group, which is split between 3.5% in life and 2.2% in P&C. So these are the two main drivers you should focus on more than the average, per se.

Okay, thanks very much.

Thank you very much, Hedley. Next question, please.

The next question is from Fahad Changazi, Kepler Shavu. Please go ahead.

Thank you for taking my question. Two questions, please. It sounds promising on the underlying loss ratio, but could you comment on the expense ratio for 2025? I think given a change in mix in non-motor versus motor, there's going to be an impact on acquisition costs, but is this still the case for 2025, given we're expecting some growth in motor premiums? A second question on Solstice 2 life in force returns. Could you give some indication on how that will develop in 2025, given the lower swap rates? Thank you.

Thank you very much, Fahad. Both questions are for Cristiano.

Yeah, so first of all, when we look at the expense ratio development in the year, don't forget that this year was specifically affected by the so-called liberty effect. You know that there is this purchase price starting point where there is this mix between what is loss ratio and what is expense ratio. If I just take out the liberty effect, the expense ratio of the year would be reducing by 0.1%, so 10 BIPs versus the 30 we are showing. So that is a better starting point to project starting from next year which would keep in any case a double effect which we were highlighting already in the investor day. Don't forget that in the 25-27 plan we are driving through higher amount of non-motor component growth in high growth countries like Asian countries like India where there is a higher acquisition cost and together with the higher acquisition cost of no motor per se, which in the mix is not bringing a material change to what you should expect in 2025 versus what we had in 2024 adjusted for the Liberty. So if I can see the question or the second question on the life in force in light of the movement of the rates, we should have lower unwinding, which would mean something in the order of 0.2 billion less effect out of this unwinding. the growth of the business, the improvement of the profitability out of that will be a counterbalancing element.

That's great. Thank you very much.

Thank you, Fahad. Next question, please.

The next question is from Ria Shah, Deutsche Bank. Please go ahead.

Thank you. Two questions for me. The first one, just going back to P&C and the loss ratio improvement that you saw in 2024, You said that this was split between tariff strengthening and other technical measures. If you could just give the split between those two numbers and then how we should be thinking about that into 2025. And then the second question is in holding an other, what's a good normalized guide for other businesses? It was $252 million in 2023, $157 million in 2024. How should we be thinking about that going forwards?

Thank you very much, Ria. The first question is for Giulio, while the second question is for Cristiano.

So the first question, it's always challenging to give you an exact split. I would say, anyway, the majority of the improvement is coming from clearly the tariff increases that we are pushing through. But, for example, when we speak about frequency which is reducing, this might be a consequence of the general trend, but also of the underwriting actions that we are taking. So doing the split is always a little bit of a complex exercise. But for the time being, I would say the majority of the improvement is coming from the rate environment. I would expect this to be the case also as we go into 2025. And then clearly, as we think about the last part of improvement we want to get, this is coming most likely not from rate increases over inflation, but more from the PRONI, the claims initiative that we have put in. put in place. So as I think about the timeline, think about price strength is right now the major driver of improvement and when we think about the planning at the back end of the plan, clearly the initiative that we put in place are going to help us to get to our targets. That's it. Thank you.

Hi, Ria. So for the second question, so first of all, holding another, when we comment within the other business, it is right because in the element, you should always take into account that you should add the consolidation adjustment effect of the infra-group dividend, the one which this year created the 60 million more consolidation adjustment because there were 60 million less infra-group dividend which were tackling down and projecting that The 2024 is a good run rate number, more than the 2023, which was positively impacted by some excess capital repatriation on, for example, the asset management component I was mentioning before to prepare for 2021. for the conning deal. So I would say 2024 is a much more representative number, also because we have minor businesses inside which are interest rate dependents, and the 2024 interest rate environment is much more in line with the one observed in 2025 versus the one in 2024, which was much, much higher and was potentially having a small benefit out of that.

Next question, please.

The next question is a follow-up from Michael Hartner, Barenburg. Please go ahead.

I'm very lucky, so I'll keep it really brief. Just one question. The capital generation, an amazing number, 4.8 billion, 21% for a group growing as fast as you. That's an extraordinary number. You're well ahead of the target to get to 14 billion in the next three-year plan. Can you explain a little bit what's driving this huge beat? Thank you.

Yeah. Hi, Michael. So clearly, as we were already discussing during the investor day, we confirm that our view on the capital generation takes also into account some margin of prudence because of the adverse potential scenario we can always face. So, by the way, I think the $4.5 billion is a good starting point onto which project but clearly the improvement that we can expect if we stabilize the environment also on the interest rate for the collection, as well as the expected direction where we are going with the contribution of the PNC. Don't forget that this year we were in any case having bad natural catastrophe years of, and we do put in the capital savings, generation only the current year contrary to I know the norm maybe in the market we are quite more conservative I think that the 4.5 is really a lower end level onto which projecting going forward And the beat was also given by good financial segment result where we have different topics, including our financial holdings of the asset management, wealth management, but including also a positive development in some business treated under Solvency One, which is our pension business in France.

Brilliant. Thank you very, very much.

Next question, please.

The next question is from Stephen Haywood, HSBC. Please go ahead.

Thank you very much. Two questions from me. One is just to clarify on your Solvency II position at the start of the year, has there been any major moves since then and the 500 million share buyback is not in that ratio? And then secondly, Can you give us an indication on what is going on with the Italian government's review of the New Texas deal? Could there be any implications from this as well? Thank you.

Thank you very much, Stephen. The first question is for Cristiano, while the second question is for Philippe.

Hi, Stephen. So on the 7th of March, we published in our slide commentary a 214% solvency to ratio expected. By the way, if I look at the sensitivity between the 7th of March and these recent days, there are no material change because there are ups and downs in various pieces. Here we are embedding already some regulatory changes like the IOPA curves. and the effect of the Intermonte deal on Banca Generale, we are not embedding the 500 million buyback which we are going to propose to the General Shoulder Meeting because there are two steps first to be achieved before accounting or deducting already for it. Number one, General Shoulder Meeting approving it. Number two, regulator approving it. Only in that moment we have the authorization to deduct from their own funds as a rule.

Hi, Stephen. There are no specific updates regarding NETEXIS, actually. We are in the middle of the consultations of the unions, as required by the law, as agreed before. in our memorandum of understanding. This consultation will probably take another two months and no other update on this. Okay. Thank you very much.

Next question, please.

As a reminder, if you register for a question, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Thank you, operator. This concludes our full year 2024 results call. Thanks, everyone, for dialing in. Of course, the investor relations team remains at your full disposal for any follow-up. Enjoy the rest of your day. Bye-bye.

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