Assicurazioni Generali S.p.A.

Good afternoon. This is the Coruscant Conference Operator. Welcome and thank you for joining the Generali Group full year 2025 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 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 Agency Relations. Please go ahead, sir.

Hello, everyone, and thank you for joining our full year 2025 results call. Here with us today, we have the Group CEO, Philippe Donnet, the Deputy Group CEO, Giulio Terzariol, the Group General Manager, Marco Cesana, the CEO of General Investments, Woody Bradford, and our Group CFO, Cristiano Borean. Before opening for Q&A, let me hand it over to Philippe for some opening remarks.

Thank you, Fabio. Good afternoon to all of you, and thank you for joining us today. These results mark a successful first year of our strategic plan Lifetime Partner 27, Driving Excellence. I'm very pleased by the strength and consistency of our performance. This clearly demonstrates that we have the right strategy, that we are executing it with total conviction, and that we are generating value for our stakeholders. We are also continuing to reinforce our already strong balance sheet. And this is going to be even more important in a world of greater geopolitical uncertainty. Furthermore, these numbers reflect the key initiatives being rolled out by our expert teams across business lines and geographies with hands-on guidance from head office and from the fantastic management team that presented the plan with me last year and that is here with me today, Cristiano, Giulio, Marco and Woody. I would like to share with you five key messages which underline the strength, quality and momentum of our results. First, the Group has delivered a very strong performance in 2025. We achieved a record operating result of €8 billion with a 9.7% increase year-on-year. Our adjusted net result exceeded €4.3 billion, also reaching a new record high. This translated into adjusted earnings per share growth of 16.2%, well ahead of our 8 to 10% compound annual growth rate target. Thanks to this strong performance, we will propose a dividend of 1.64 euro per share at our upcoming annual general meeting on the 23rd of April. This is almost 15% higher than last year and fully in line with our commitment to grow the dividend per share by more than 10% per year over the planned horizon. When I took the role of Group CFO, the dividend per share of Generali was 80 cents and I'm very proud that we more than doubled it since then. We will also propose a 500 million euro share buyback reflecting our strong capital position. We will implement it this year once we receive the relevant approvals. All of these highlights are clear commitment to profitable growth, disciplined capital management and increasing shareholder remuneration. My second message is about the excellent performance of our property and casualty business. Excellence in our core capabilities is one of our three key strategic priorities and it translated into a 20% increase in property casualty operating result. Such strong growth clearly demonstrates the positive effect of our disciplined strategic focus and of the many technical actions we have implemented in the last 18 months across pricing, risk selection, pruning, and claims management optimization. These actions enabled us to achieve a very strong underlying technical profitability with a 1.6 percentage point improvement in our undiscounted combined ratio. This was achieved together with very prudent reserving. Going forward, we have three key priorities in Property Casualty. One, we will further grow our non-motor book to shift our mix towards products and business lines with higher underlying profitability. Our franchise is very well positioned to capture growth opportunities in the countries in which we operate. Two, we will concentrate on preserving our excellent loss ratio in our key geographies, ensuring it is resilient across the cycle. We will also continue to execute the turnaround in Switzerland and at Genertel in Italy, as well as the successful integration of Liberty Seguros, which is proceeding very well. And three, we will improve the expense ratio through efficiency and productivity, supported by our widespread implementation of AI and automation across the insurance value chain. My third key message is on life. Net inflows rose to 13.5 billion euros, the highest level seen across the European insurance industry. This reflects the attractiveness of our product offering, the effectiveness of our distribution, and the significant investments we have made to improve customer experience. Our retention rate in 2025 was close to 90%. We have extremely loyal customers because they trust us and they like the services and products we provide. Our preferred business lines drove most of these inflows with 4.5 billion euros coming from protection and health and 6.6 billion euros from hybrid and unit linked. We achieved this while fully maintaining our underwriting discipline, with the share of capitalized products in our new business production at a very high 84.5%. The new business margin improved throughout the year, from 4.75% in the first quarter to 6.88% in the fourth quarter. This led to a full year new business margin of 5.66%, close to our 6% target for 2027. The interest rate environment is currently very favorable for the live business, and our product offering clearly appeals to customers. This gives us confidence in our ability to continue to deliver growth in new business value, leading to a higher contractual service margin and a growing live operating result. It is worth underlining the depth of the transformation we delivered in our live book. Ten years ago, this was primarily a spread business with high guarantees, exposure to capital market fluctuations and high capital intensity. Today, almost 80% of life new business comes from protection and unit linked activities that are most closely aligned to property casualty and asset management in terms of profit signature. And when it comes to traditional life, we now have a running yield on our portfolio that is 220 basis points above our guarantees. This translates into a profitability that comes more and more from fees and underwriting, and a business that is capital-light, less reliant on financial markets, and much faster in converting results into cash. I'm very proud of this transformation and the structural and sustainable improvement in the quality of our earnings. My fourth key message is on asset management and wealth management. Today, the Group has 900 billion euros of assets under management. We manage around 385 billion of those on behalf of third-party clients. A decade ago, this figure accounted for less than 50 billion. In 2025, asset and wealth management generated 15% of our overall operating result, meaning the contribution has more than doubled since 2016. I am particularly pleased with the strong performance results we have delivered for our clients and the underlying trend in net flows for asset management, which rose to over €16 billion last year, the highest figure we have ever recorded. Asset management generated over 1.6 billion euros of revenues, of which over 600 million came from external clients. Its operating result is up 7.5% on a year-on-year basis. This also reflects strong performance fees generated across a range of different asset classes, which in turn reflect our expanding and solid investment capabilities. We are very positive about our prospects for 2026 and beyond, boosted by several new initiatives, including the acquisition of MGG, which we concluded last October. We also continue to benefit from the synergistic relationship between our life and asset management businesses. As evidence of it, two-thirds of 2025 Unilink inflows are managed by our internal teams. In wealth management, Banca Generali once again recorded very strong flows of €6.8 billion, surpassing €110 billion of total assets. These results are excellent, and you can expect additional performance in 2026 from the integration of Intermonte and the Insure Banking Initiative with Alleanza Assicurazioni. My fifth and last message is about our strong progress across the three strategic foundations of our plan. These are people, artificial intelligence and data, and sustainability. Capturing the opportunities that AI digitalization and automation offer, including agent productivity and enhanced customer experience, is a key priority. We are working relentlessly on this, and I am truly impressed by the results our AI team is bringing. The research collaboration we began in 2024 with MIT is advancing rapidly, with three high-impact use cases nearing delivery and new streams already on track for this year. Another proof of our strong focus on innovation and technological transformation is Generali Cortec, a new AI-powered software factory for our insurance activities that we announced last month. At the same time, we are continuing to optimize our internal processes. For example, our AI initiatives are truly transforming the way we manage claims. This gives generally the strongest possible foundations for the years ahead, while already delivering tangible financial benefits today. When we developed our lifetime partner 27 driving excellence plan, we targeted around 300 million euro of efficiency gains thanks to AI implementation. Execution is progressing ahead of our original assumption, giving us the confidence to raise our 2027 ambition to more than 350 million euro. Our significant investment in AI across the entire insurance value chain will benefit generally beyond our current planned horizon. In fact, we see clear upside potential to grow the top line, designing better products, delivering them faster, growing our customer base, increasing agents' productivity, and gaining further efficiencies. Moving to sustainability, we set very ambitious targets as part of our current plan and we are very pleased with the progress achieved in 2025. Our results confirm that championing societal resilience and supporting the green transition are not only the right choices, they are also drivers of sustainable and profitable growth. We are proud that our leadership continues to be recognized and we remain fully committed to sustainability-driven excellence and long-term value creation. In conclusion, these results confirm the excellent start of our ambitious strategy. We are well on track against the planned trajectory and we see clear growth opportunities for our businesses. We are fully focused on creating even greater value for all our customers as their lifetime partner and for our shareholders. We also continue to reinforce our balance sheet as an important area of strength for the Group, with prudent reserving, conservative asset allocation, low leverage, and focus on cash generation. We close 2025 with an extremely solid Solvency II ratio, and this will go up by 15 additional percentage points with the upcoming Solvency II review. I believe this is very important also considering the current macro environment. We are fully focused on delivering and potentially exceeding our lifetime partner 27 driving excellence targets, and we are confident in our ability to do it once more, just as we have done for our three previous strategic cycles under the leadership of this management team, which I thank for the outstanding work. Thank you for your attention and for your interest in Generali. And we are now happy to take all your questions.