Assicurazioni Generli Adr

Good afternoon. This is the Coruscant conference operator. Welcome and thank you for joining the Generali Group first quarter 2026 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 them and 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 thank you for joining our first quarter 2026 results call. Here with us today, we have the Deputy Group CEO, Giulio Terzariol, the Group General Manager, Marco Susana, and the Group CFO, Cristiano Borean. Before opening for Q&A, let me hand over to Giulio and Cristiano for some opening remarks.

Hello, everyone. Good morning, and thank you for being with us today. The first quarter of 2026 results mark another step forward in the successful delivery of our Lifetime Partner 2027. We are now in the second year of our plan, and our focus on excellence in core capabilities continues to deliver tangible value for our customers, employees, and shareholders. We have reinforced the role of the group centers in the implementation of the initiative, especially when it comes to technology and artificial intelligence. This approach allows us to scale best practices more effectively and reap the benefits of our fully integrated group. Overall, we have delivered strong growth in both operating and adjustment results, thanks to contributions from all segments. Let me highlight a few achievements from the first quarter that clearly demonstrate the success of our strategy. Starting with P&C, gross insurance revenue grew by $575 million, or almost 7% year-on-year. This top-line growth has a lot of quality needs. While revenue growth continues to be mainly driven by price effects in both motor and non-motor, volume growth is increasing its positive contribution, with volumes in rich and non-motor growing 1.8%, and we need even faster growth in accident, health, and disability at 3.4%. Let me also mention that Europe Assistance has increased its consolidated growth turnover to 1.2 billion in the first quarter, marking almost 15% year-on-year growth. Looking at MOTO, following two years of deep pruning and a recovery in profitability achieved in 2025, we saw positive development with risks in force growing about 1%. Let me tell you that we could have achieved a higher volume growth in MOTO by spending the book to more aggressive pricing. However, as we said previously, we are squarely focused on cycle management. Therefore, we deliberately have made a strategic decision not to grow the numbers of contracts faster at a time where price is slowing down and without further clarity on the implication of the Middle East situation and the cost of claims. In this context, we are disciplined and continue to explore additional growth opportunities only in very selective markets. A quick comment on the net cat load, which has been rather significant in this quarter. This was mostly related to the heavy storms that hit the Iberian Peninsula, and particularly Portugal, which represented almost 70% of our gross net cat losses. This is broadly aligned with the most recent insured industry losses for case reserve before IBNR that amount to approximately 1.3 billion for Portugal only. In this context, our underlying performance was very healthy, with more than one full percentage point improvement in the attritional current year loss ratio, thanks to both motor and non-motor. As I like in the press release, the amount of man-made losses was almost double that of last year, at around 65 million, amounting to zero percentage point of the loss ratio. Therefore, the underlying improvement of the efficient current year loss ratio, excluding man-made, is close to 150 basis points year-on-year. As you know, our target for P&C efficiency is the JAX ratio, which improved by 60 basis points year-on-year to 13.7%. This ratio represents a positive improvement journey in a more targeted way than the full expense ratio, capturing what we are doing to transform our core function. including claims, IT, customer operation, and underwriting. We have a strong focus to push forward the extensive deployment of AI agents that automate workflows, augment employee decision-making, improve service quality, and drive operational efficiency at scale. The report expense ratio 29.3 is up 40 business points, reflecting high acquisition costs and also the business mix. If you look at the expense ratio excluding Europe assistance, it would be basically flat year-on-year at 28.7%. Look at the acquisition cost and isolation. The reported 21.2% of the first quarter would be 20.3%, excluding Europe assistance, and the year-on-year change would be in the order of 20 basis points as opposed to the reported 50 basis points increase. As we mentioned previously, we are implementing actions that will enable us to achieve not only a better tax ratio, but also an improved expense ratio. Let's move now to life, where we have achieved very strong inflows of $4.3 billion, driven by contributions from all lines of business and benefiting from further improvement in leapsies. Compared to the first quarter last year, we recorded higher inflows in traditional savings. This has been achieved with a strong level of new business margin and enabled us to record a very healthy growth in new business value. The first quarter production is fully aligned with our underwriting discipline. The weight of non-guarantee business is 75%. The overall guarantee is stable at 0.73%, and the share of capital-like business is 83%. The overall development in new business value is clearly very satisfying. To be noted, the first quarter benefits from positive seasonality, so I would caution not to extrapolate these numbers for the next quarters. But the key message here is that the light business continues to grow profitably and is growing without compromising our underwriting discipline. I'm also very pleased that protection health and accident, one of our key strategic drivers of profitable growth, showed a premium increase of 6% year-on-year, while recording also a better profitability. In asset and wealth management, we have already seen a few days ago the very good numbers from Banca Generali, where we continue to deploy the joint insured bank initiative with a positive initial development. In asset management, as we indicate in the press release, there is a positive contribution for non-recurring fees of around $15 million. They reflect the successful business positioning of our infrastructure business. Although transaction fees can be less regular in terms of frequency than recurring management fees, they are indicative of sound investment capabilities and also reflect the success of our infrastructure business in originating and executing deals. Before I hand over to Cristiano, some closing remarks on the overall macro environment. Financial markets have been priced in and increased in short-term inflation indicators due to higher oil prices. And while we are monitoring the situation very closely, we are confident in the strength of our business model. On the light front, the business is capitalized and the high-quality investment portfolio combined with disciplined ILM ensures stability and resilience. Additionally, we have proven many times that we are capable to adjust to different cycles and match consumer needs in all kinds of environments, also thanks to our strong distribution footprint. For P&C, we are very focused on preserving the excellent level of profitability, and we are watching very closely the development of severity and frequency, and in some cases, we are already preparing to take pricing actions. Also, please keep in mind that two-thirds of our P&C book is non-motor, and of this, 60% is inflation indexed. In addition, our investment yields are higher than originally projected, which also benefits the P&C operating results. Lastly, an environment of high inflation is also likely going to support the P&C pricing cycle towards a new hardening phase. And of course, This overall context creates an even stronger reason to push ahead with our key initiative on digitalization and automation. To summarize, the Lifetime Partner 27 plan execution is progressing very well and showing tangible results. Looking ahead, we remain fully committed to delivering on our plan objectives, maximizing profitable growth in P&C, leading life to quality production, and expanding assets and world management. We are proactively managing the cycle to ensure strong performance, enable and affect essential steering, combine with discipline, local execution, with a focus on technical excellence and productivity improvement. Thank you for your attention, and let me now hand over to Cristiano.

Thank you, Giulio, and good morning, everyone. Thank you for joining us today. As Julio mentioned, our first quarter 2026 results demonstrate continued strong momentum in the execution of our Lifetime Partner 27 plan. We are delivering robust growth across all segments with a clear focus on quality, resilience, and profitability. This exemplifies our ability to navigate a complex environment while advancing our strategic priorities. Let me share some key highlights before we open the Q&A. Giulio spoke about the live new business production. Let me focus on the live CSM, which recorded a 1.4% normalized growth. The end of the first quarter marked a peak in financial market volatility and a low in equity markets. As a result... the CSM recorded slightly more than 900 million of economic variances. The key drivers of this 900 million movement were the widening of sovereign and corporate bond spreads, accounting for around 400 million euro, the increase in interest rate by around 200 million euro, which impacted in particularly Germany and Italy, the decline in equity markets around 200 million euro, and finally, higher volatility, especially in the equity markets, with around 100 million euro impact. Clearly, the economic variances in the quarter were also a reflection of the single measurement day. If we were to apply the disclosed sensitivities and use financial market level of May 15th, the CSM would be around $500 million higher than the $33.2 billion shown in the press release. Moving to P&C, Giulio has already mentioned the improvement in the attritional current year loss ratio. Let me emphasize that this improvement was achieved while maintaining the conservative booking of initial loss peaks, which was a key feature of our 2025 results. Concerning NASCAT, Storm Christine exceeded our per-event reinsurance protection set at around €300 million. This means that in the second quarter, we will book around €19 million as reinstatement premiums. which will be recorded in the current year traditional loss ratio. I would like to elaborate on the prior year development. Last year, at the nine-month 2025 call, I emphasized how a dynamic interplay between not cut and prior year development is the sensible approach for managing the business over the long term. This is why I indicated that we would calibrate our prior year development dynamically, always within the boundaries of the best estimate approach. This approach enhances earnings predictability and mitigates the year-on-year P&L volatility throughout the year. The first quarter has seen significant not-cut events, And as a result, you saw a higher contribution from prior year development in our numbers. I feel very comfortable with our ability to manage the combination of NATCAF and prior year development this way in the long term. This confidence stems from the very strong level of reserving from the ongoing conservative initial loss picks. is also reinforced by the new reinsurance structure that we negotiated at the last renewals, where we used the favorable market conditions to significantly strengthen the contractual features of our cut aggregate program. Staying with P&C, Let me also highlight that the investment result growth was led by high quality factors and also thanks to the volume growth recorded last year. As you have read in the press release, this quarter is impacted by around 50 million one-off tax components. This stems from the new French finance law that extended through 2026 the so-called surtax, which is based on the average taxable basis of 2025 and 2026. As such, the accounting rules requires us to recognize the 2026 surtax in the first quarter of 2026, considering the whole amount of the 2025 related surtax component. We expect that the residual component of the surtax will affect the group by less than 10 million per quarter for the remainder of 2026. Moving to cash and capital. As you know, we schedule most of our remittance inflow into parent company coffers ahead of the dividend payment. We have already received around 4.5 billion of remittance so far in 2026. And as a result, the cash of the holding company, after the 2.5 billion dividend payment we made yesterday, stands above 5 billion, of which slightly more than 3 billion is available. Finally, a word on solvency. As I mentioned this morning during the press conference, the estimated solvency to ratio increased around 2 percentage points as of May 15, compared to the end of March. Let me provide you the moving parts during the first quarter. We benefited from healthy normalized capital generation, adding four percentage points. This is basically stable year on year as the higher contribution from life and financials is offset by the impact from NAPCATs. The known economic variances include both the prior year development effect as well as the solvency capital requirement increase from business growth and SAA optimizations. The end of the grant hovering period reduced the own funds by $1 billion with a 4 percentage point impact on the solvency to a ratio. Capital movements in the period shed two points. including both the accrued pro-rata dividend and the subordinated debt operations. Finally, market variances impacted solvency for around 5 percentage points. This reflected, of course, the movement of equity markets and the widening of sovereign and corporate spread, as well as higher volatilities. Similarly to the CSM, the solvency-to ratio is also a reflection of the single measurement day. March 31st was close to the bottom of financial market during the recent bout of volatility. Looking ahead, during the second quarter, you should factor in three elements on top of the normalized capital generation and the dividend provision for the period. First of all, we expect to receive the regulatory approval for the 500 million share buyback with a two percentage point impact. Secondly, As we indicated at full year 2025, you should factor in two points stemming from the higher SCR following the SAA optimization. And finally, please consider that the downgrade of the Belgium sovereign from AA to single A occurred in April and will have a 0.5 percentage points impact on our solvency two ratio. In summary, This quarter's performance highlights the strength of our diversified business model and our ability to generate profitable growth. I am particularly pleased by the quality that I see in the numbers when I look through the quarterly noise of nutcats and the financial market movements. This quality makes me very confident in the ongoing delivery of our plan. Thank you for your attention, and now we are happy to take all your questions.

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 touchtone telephone. To remove yourself from the question queue, please press star and two. 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 comes from Andrew Baker with Goldman Sachs. Please go ahead.

Great. Thank you for taking my questions. The first one, just on the life insurance service result, are you able to tell us how much of the 1Q result was from experience variances and not another? And then I guess if possible, are you able to break that out by sort of the portion that you wouldn't necessarily project going forward and any items that you would expect to repeat? Because I believe the PAA business runs through this line. And then secondly, again, thank you for the additional detail on the higher acquisition costs in P&C. I guess, should we assume that there's a broadly offsetting impact from the higher acquisition costs in the current year attrition or loss ratio from these same mixed effects? And any comments around that would be really helpful.

Thank you. Thank you very much, Andrew. The first question is for Cristiano and the second for Giulio.

Hi, Andrew. So breaking down the operating insurance service result into the CSM release at 828 million euro, which increased by 55 million euro compared to the first quarter of 25, you should then have a couple of extra elements which create the movement. We have a slightly higher amount of lost components, 31 million euro lost components with negative impact versus 11 last year, so 20 million euros. which reduced by 20 million the results, as well as the experience, variance, and other technical results had a 32 million positive contribution up going to the 97 million amount in the operating insurance service result. End in end, the other operating income and expenses decreased to, in a positive sense, at minus 37 million euro, which is an improvement of 17 million euro versus previous year. I would tell you that there are no particularly one-offs. in the first quarter 26 number, apart from slightly higher sensitivity on some lost components of interest rate up coming from our country, Italy. But there is a very healthy contribution in the other operating income and expenses of the so-called contribution from the investment contract under IFRS 17 accounting. So I would say pretty much good quality as was I hinting in the initial speech.

So, Andrew, to your question whether there is an offset in the loss ratio, I would say it depends. If you look at the numbers including Europe assistance, definitely. In that case, you see an increase in the expense ratio and there is an offset in the loss ratio. When we remove Europe assistance, actually the expense ratio is relatively flat. So, in that case, I would say there is not much of an offset. So, it depends how you look at the numbers.

Great. Thank you. Thank you, Andrew. Next question, please.

The next question comes from Michael Hartner with Berenberg. Please go ahead.

Fantastic. Thank you very much and congratulations. So, excuse me, the first one is 93% the new, I think you have 94.5% as an undiscounted combined ratio target. It feels like you're there and you're protecting margins. So, I would say yes, but you're probably going to say no, but who knows. And on the cash, thank you so much for the explanation, Christiana. I just wanted to add the four and a half billion you've collected so far. I've gotten the figures from last year. I just wanted to ask if you could help me on that. That would be amazing. And then... Being greedy. The cash aggregate cover, I'm really interested in that. I think you did mention it earlier, but I can't remember the details and how much more protection it provides. Thanks.

Thank you very much, Michael. So the first question is for Giulio, the second one is for Cristiano, and the third one is for Marco.

So, Michael, your question whether we are better than 94.5, yes, we are better than 94.5. I will tell you that already at the end of 2025, we were better than that number. And what we see right now is still very strong performance. So from that point of view, you know, we always say we want to run as fast as possible. Knowing also that the environment is going to become more challenging moving forward. So from that point of view, we know that as we move forward, inflation and risk premium is going to be more aligned with the average premium. So from that point of view, we're in a very wide position. And moving forward, we will try to get additional improvement coming from actions that we can take, as always, on the portfolio and also the productivity improvements that we can realize. But to your question, are we better than 94.5? Yes, we are definitely well below the 94.5, and I will tell you we're also below the 94% level. Perfect.

Hi, Michael. Happy to give you some additional detail on the aggregate cover. So as you remember, our aggregate retention is at $1.2 billion in the range of $3.2 billion. points of combined ratio and we have a capacity of 550 million so at the moment what we have seen is just you know clearly we are commenting the first quarter where there was one big event but I would say we still have a lot in as a coverage in the aggregate so at the moment we have just seen the first the first the first quarter Clearly, it's a first quarter that is higher, significantly higher compared to the first quarter that we had in the last years. The first two years, the first two months of the second quarter are in line with expectations, so I would say that at the moment we are still fine with our aggregate coverage.

Michael, regarding cash, if I just take the picture as of today, I think compared to last year, we have already remitted around 200 million euros more compared to the same period of last year as of today. I think we are between 90% to 95% total remittance. So if you make some math, you should expect, compared to last year, slightly more remittance contribution in the second half in 2026 than what we had in 2025. So I think it is good news for you. Brilliant. Thank you.

Thank you, Michael. Next question, please.

The next question comes from Gabriele Venturi with Banca Acros. Please go ahead.

Good morning and thanks for taking my question. Could you please provide more detail on any changes in the scope of consolidation time that might have affected the volumes and life gross return premiums on a year-on-year basis, if any? Because when I divide the life gross return premiums for the first quarter of 2026 by those of 2025, I obtain a growth rate of 6.2% compared with the reported growth of 7.5%. And second, Even the first quarter, strong first quarter results, do you see scope for an acceleration in the coming quarters that could lead to an upgrade of the four-year guidance? Thank you.

Thank you, Gabriele. The first question is for Cristiano, while the second one is for Giuseppe.

So, overall, the only perimeter consolidation change is related to the IFRS 5 allocation on on our Irish activity, but it is as a branch, so you should not have any impact in the GWP as you are trying to hint. So in my personal opinion, I don't really probably catch the point. It is a true like for like for what regards the GWP. Look, maybe I kindly ask if you can follow up with the IRT to better maybe grasp what is Your question, because I just would like to confirm, no change of perimeter when you look at the GWP. There is no material effect in the consolidation.

To your question about expectation, top-line growth for the second part of the year, I would tell you the following. If I look at volume, let's set aside price increases. Volume in, as I said also in the introduction, in the speech, volume in motor was plus 1%. I don't expect this number to get stronger. Considering that we are prone to really manage technical profitability, this number, we stay at this level. Potentially, if we need to increase prices, we are even willing to lose a little bit of growth to protect the profitability. When we look at non-moto, we see a very strong development, both in non-moto without accident health and in accident health. So if you ask me, I would expect that we're going to see this momentum continuing. Maybe we can accelerate a bit, but fundamentally I don't expect a much different outcome. Coming back to motor, we see what kind of rate increases might be needed, maybe more towards the end of the year, and that might influence a little bit the trajectory of growth on the motor side. But fundamentally, the answer to your question is I would expect to see more of the same as we go into the second part of the year.

Gabriele, maybe just if I add on the first question, just to be sure, if you'll just, when we define life or life, our definition embeds as well a constant effects rate versus the first quarter 2025. I don't know if that could help you in making your exercise, but it's the standard approach.

Very clear. Thank you. Thank you, Gabriele. Next question, please.

The next question comes from Fahad Changazi with Pepler Chevreux. Please go ahead.

Thanks very much for taking my questions. And thank you for providing the detail on PMC and motor and motors. So I was just wondering in terms of motor and the outlook, what was the price effect just for motor in Q1 and how you expect that to develop? And on the life of business, could you possibly break out the impact on margin from the higher interest rates? And I'm sure it's in your comprehensive finance deep dive yesterday. But could you remind us again when you strike the updated assumptions? Is it H1 or is it at full year? Thank you.

Thank you, Fahad. Could you please repeat the first question just to make sure? The second question is when we update interest rates in the new business margin of life.

Yes, when are you updating those market assumptions? Do they get updated each one or per year? And the first question was just looking for the price effect in motor in 2021.

Yes, perfect, perfect. So, the first question on the price effect on motor is for Marco, while the other question is for Cristiano.

So, hi. As Giulio was saying, so we had still a positive development of motor on the price effect, so... I would say overall we look at the growth that we are having on motor mainly on price, but there is this time also around probably one-third of the growth would come also from volume, so around that. So we are seeing these. The more we go into the year, we see that these increase in average price are broadly in line with what we see on the risk premium development. So we are there. We don't see tailwind. We don't see headwind. We are more or less in line overall, country by country. There are differences, but overall we see that the average premium is developing in line with the risk premium. So As Giulio was saying, looking forward, we will adjust our posture portfolio by portfolio, making sure we maintain the level of profitability that we like to have in every different market. So we will look at the sign of inflation if they're going to appear. We're going to look at the different effect of frequency, so all the components of the risk premium. And we're going to decide portfolio by portfolio in the second part of the year what is the posture that we need to take, making sure that – and I want to reiterate that we manage each portfolio for technical margin and not for any – component of it, so not for growth or not for premium.

I've had, regarding the methodology, our new business value is calculated with the beginning of period assumption, so the number you've seen here reported for the first quarter 26 is the year end 2025 actual number. Just for you to be aware, had we had The benefit which this first quarter reflected because of the improvement of market condition was 26 basis points in this quarter. But if I take the end of period of March 31st and we calculate the new business margin for first quarter 26 backward, let's say, there will be another 15 basis points. So I hope this helps. Every quarter we use the beginning of period.

Thank you very much.

Thank you, Fahad. The next question, please.

The next question comes from James Ashok with CTE. Please go ahead.

Thank you. Good afternoon and good morning. Both my questions are kind of on AI technology-related areas. The first one really was to just want to get a bit more insight the productivity of the agents. I know the acquisition costs are very high, including or excluding Europe assistance. Are you able to share any productivity metrics amongst those agents, and also what the pipeline is in terms of rolling out AI-related CRM tools and perhaps any expectations there? And my second question, forgive me if you just focus already, but I know you have digital investment plan of $0.5 to $0.7 billion over the plan. Can you just remind me what your total technology spend is in the group? I'm not sure that $0.5 to $0.7 would be included in it. And if you're able to split that into kind of keeping the lights on versus other, that would be very helpful.

Thank you very much. Thank you very much, James. Both questions are for Marco.

Yeah, so... So maybe before going specifically into one part of the topic, I would remind the effort that we are making on AI, it's broad and deep on any area of the group. So we are working a lot on scaling our use cases. So what we have presented in our strategic plan, the 16 use cases, and that's a big effort because we want to make sure that we get scale. One big topic for One big topic for us is getting scale in everything we do. So this is an effort that we constantly do. At the moment, I can say we are around 55, 60% of implementation of those use cases, and we plan to go to more than 90%. So some of the use cases are technically related to the productivity in the agency. we want to make sure that we decrease the time spent by agents or by people in working for the agent, so inside the agency, on back office activity, on reconciliation, on discussing with us the different topic of a specific claim or something similar. And so what we are doing, we are also improving the productivity of the agency. Now, some of this is going to be a direct impact for the agency. Some of these use cases are going to be inside our company. We are going to make sure that in the end of the year when we are planning to have a full deep dive on AI here in like in the whole group, we're going to discuss more in depth also about this topic. One thing that is really promising, by the way, it's also all the development that we are having on claims because this is actually helping the agency in managing the claims much, much better and, therefore, talking to the client much better. For the overall total technology budget for the plan, I think this is one big topic that we are tackling. So we see a lot of potential for reducing the... development activity, in particular coding that we do inside the group. So we have, this is one of the big items that we have in our cost base. So we are targeting an improvement, significant improvement on this spending. And even here, probably we can give you more detail by the end of the year when we do the tip time.

Thank you. Thank you. Thank you, James. Next question, please.

The next question comes from Gianluca Ferrari with Mediobanca. Please go ahead.

Yes, hi. Good afternoon. A couple of questions for me, please. One is on the 4.3 billion inflows in life. I think if it's not the best result ever for a quarter, it's very close. I was wondering if you can give us a bit of color on how Q2 is going, if you're keeping the same pace or slightly lower than that. The second, I think Cristiano already gave a bit of an anticipation, but I was wondering if you can share with us a guidance for new business margin for full year 26, considering the current level of interest rates. Thank you.

Thank you, Gianluca. Both questions are for Giulio.

Yeah, so maybe I start also giving you some color on the first quarter, on the inflows. Right, the first was an inflow, so... Basically, we saw strong inflows in France, where we are up 45% compared to last year. Also, we see that in our unit links, you know, we sell a lot of unit links as part of the hybrids. We also are performing in the market, so that's a nice development. We saw also, from an inflows point of view, a good trajectory in Germany, where we are double the inflows of 2025, the first quarter. And then also, CE, Eastern Europe, is not a major, let's say, contributor to the inflows, but we see positive inflows also. And then clearly Asia is always contributing to the growth being clearly a growth area. So that's the picture that you see in the first quarter. Italy has been relatively flat, a little bit negative, which is also the reflection clearly of the strong quarter that we had at the end of the year. So there is always some sort of seasonality. If you ask me what we're going to see in the second quarter, it's similar, but clearly there is some seasonality, as I said before. So usually Asia tends to be less strong as we go into the second quarter. France, I would expect to be more of the same. Germany, the same. Italy, also for the second quarter, I don't expect to see much of a different trajectory. What we expect to see a different trajectory in Italy is towards the end of the year. So bottom line is you're going to see something similar, but clearly need to adjust a little bit for the inflows because of the seasonality coming from Italy. From Asia, but overall I would say we are very pleased with the development. I would like to point it out also to the growth in value on new business, which is 19% in the strong new business margins. So I would say that once again we deliver good results on aggregates in the live site. Thank you. The other one is?

Guidance on new business margins.

Ah, non-business margin. Yeah, sure. So, you know, our guidance 5.5. I would say based on where we are right now, it's not difficult to imagine we might be better than 5.5 by the end of the year. This says, look, it's really not important whether we're going to be a 5.6 or even a 6. I cannot even exclude that we're going to end up there. We are very much focused on growing the value of business. So, clearly, we want to keep a high level of non-business margin. fundamentally, when we make our decision, it's about making sure that the value of the business is growing. You saw that this quarter, and when you look at the CSL normalized growth, we are north of 5% for 2026, if you do a sort of run rate, and that's clearly a good level because eventually this is what is sustaining the operating profit growth. So to your question, guidance, we feel very good about... meeting or exceeding 5.5%, but the focus is on growing value of business in a consistent manner.

Thank you very much.

Thank you, Gianluca. Next question, please.

The next question comes from William Hawkins with KBW. Please go ahead.

Hello, everyone. Thank you for taking my questions. Expenses, please. KBW has been doing work on admin expense leverage across the European insurers, and one of the things I've noticed is that The loss ratio component of your JECS ratio is only about 800 million Euro from the presentation you gave a bit earlier this year. And as I understand it, that is only claims handling expenses that are not allocated to specific claims. So my question from that is, why would you take such a narrow measure? Because presumably allocated claims handling expenses are just as addressable if not more so as what is central. And then secondly, if you were to take an all-in claims handling expense ratio, consistent with the 7% or so admin that you've got in your normal expense ratio. What would that figure be, please? And then secondly, if I could ask a strategic question, could you gauge for me Generali's long-term interest in London and global specialty business? So if it's a bit less field, but at the moment your business there is negligible, and I've always assumed that it's completely off the agenda because your focus is more European personal lines and maybe Asia. I just wanted to make sure I'm not missing something in terms of your portfolio ambitions for that part of the business. Thank you.

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

So on the JAX ratio, I will tell you, it's pretty normal to allocate the unallocated loss experiences to the loss ratio. So anything which is different would be totally new to me. So, honestly speaking. So, that's what usually is done in accounting. Now, when we look at our JAX ratio, we include in the JAX ratio the unallocated part of expenses, and this is usually two to three percentage points of our JAX ratio will be there. So, we are capturing the unallocated loss expenses in the trajectory of the JAX ratio, which is going down. By the way, in this quarter, we have 20 basis points of improvement in the JAX ratio, which belongs to the loss ratio. If you talk about normal accounting, to the best of my knowledge, I'm 100% confident, without hesitation, that you need to put the loss adjustment expenses in the loss ratio. Somebody's not doing that. I don't know what to tell you, but that's what accounting's always been, by the way, so it's not even a new development. So that's on that problem. On the question about... The specialty business, London, I would say we have a negligible presence. I would say we have zero presence actually at the moment in the lowest market. What is important for us, we have a company called GCNC, which is basically a virtual entity, but we are running GCNC operations, about 3 billion of operations. They are delivering very good results, so we are very pleased with the performance that the company is getting. We want clearly to expand the company, diversify this business, which means we are clearly going to look also at the opportunity. They don't need to be in the lowest market, but they could also potentially be in the lowest market, knowing, however, that the lowest market It's a very peculiar market, which is very much prone to specialty, maybe complex specialty, and also with a lot of U.S. business. We definitely don't have appetites for that kind of business. So to your question is, in reality, it's more our intention to try to strengthen our commercial business, to diversify that business, but it's not that we are targeting the lowest market in a specific way.

That's very helpful. Thank you. Thank you very much, William. Next question, please.

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

Hi. Thank you for taking my questions. The first one was just on Banco Generali, and they were flagging in their results that the Alianza partnership has been performing very well. Could you just touch on what you're seeing from your side in terms of the Allianza benefits, how that's impacting and how that is performing and if the sort of run rate in Bank of Generali that you're seeing is sustainable? The second one was just on your comments on if you see higher inflation, you expect or anticipate seeing a hardening of P&C markets again. I'm just trying to understand what you're trying to say there. Do you mean that you expect to be able to price for that inflation, or would you expect that that would lead to stress in the market again and pricing ahead of inflation? I just want to understand those comments. Thank you.

Thank you, Ian. Both questions are for Giulio.

Coming from Banco Generale and Alleanza, so I can tell you the insured banking is going actually pretty well. We are very encouraged by the results that we are getting, and the targets for 2026 are to achieve 500 million of Stile Unico, which is the product that is an Alleanza product, but sold through this platform of Banco Generale to achieve 15,000 current accounts. Right now we are extremely confident that we are going to hit both targets, To your question, then, what are the specific benefits for Aleanto, because the benefits for Banco Generali are pretty clear, I will tell you the following. Of the 500 million of Stile Unico, we estimate that 40% is additional, because there is always an element of cannibalization. And if you ask us how much of these 500 million is just replacing other solutions and how much is on top, we will say that 40% of what we sell in Stile Unico is on top. And the second point, I was personally in the agency of Alianza, and I tell you that the conversation you can have with the clients are very different because they are really holistic. You can give more and more sort of 360-degree advisories. I would tell you that, in my opinion, the midterm, this is going to create more, of binding the customers even more. So it's a share of wallet kind of thing, because we can access a share of wallet that we don't have, and this is benefiting also Alianza, and then also I believe customer retention is going to be even stronger, and I saw that with my own eyes, and it was actually pretty impressive. On the other one, on the inflation leading to a new hardening price, yeah, it might happen, so we will say that if inflation is going to increase, I would assume that the market is going to react. We cannot speak for others, but we can speak for us, and as Marco was saying before, our posture is to always, first, it's about technical profitability, making sure that we are achieving the marginality that we like to achieve, and we are even willing to to a certain degree to forgive volume. And keep in mind that right now on Molto we have a positive balance, so from that point of view we have even some cushion before we go into negative territory. So the bottom line is, yes, if we need to increase prices because inflation is going to go up, we are going to do that. And I tell you that in some cases we are already doing this, not necessarily on the Molto side. I can tell you in Germany on the non-Molto side, We are increasing prices in Eastern Europe. We are going to be more cautious. So we are already preparing that direction, and then we are going to, as Marco was saying, watch the situation and act accordingly.

Thank you, Yang. Next question, please.

The next question comes from Andrea Lizzi with Equita. Please go ahead.

Hi, thank you for taking my questions. The first one is on PNC reserving. If you are already factoring in your reservation in PNC, a level of inflation that is higher and consistent with the current market expectations, And the second question is on the rate effect that could have on the inflows in life. We are observing that the curve is projecting a higher level of rates. So just wondering what are your expectations there and if it is possible If you think that at some point we will see a higher competition for, for example, GOBIs. And the very last question, if we have seen that Unicredit was quite vocal in referring to you as a potential partner and that there are discussions, potential discussions for developing partnerships between in both insurance and asset management. Any indication you could provide on this point, on this topic, would be super helpful. Thank you.

Thank you, Andrea. The first question is for Cristiano. The second is for Marco, and the third one is for Giulio.

Hello, Andrea. So regarding the higher inflation, so we are not seeing a specific spike in inflation versus the normal trend observed so far. By the way, I recall you that our reserving technique embeds a pretty prudent inflation. And as you know, the difference between insurance inflation and CPI or HCPI is different and usually it is higher, the insurance inflation. So we start already from a higher level. In the spare parts, what we are monitoring most, we are not seeing it in the bodily injury, the vast majority. The vast majority of the increases happened already because of the change, mainly because of judicial and tribunal rules that put them, which were an inflationary factor. So I would tell you that the huge prudence that we kept in 2025 and we are still keeping in 2026 on our current year number, coupled with the historical level of prudency in the insurance inflation project in our reserves make us extremely confident to manage it. Our reserving level has never been so high, and I think the proof of our interplay in the first quarter is a pretty much good demonstration out of that. So I can confirm you this is pretty much strong.

So in terms of the effects of higher rates on life, I think it's interesting to go back to what happened a couple of years ago. So when higher rates were there and inflation then was there. we have seen that the overall portfolio of the group was pretty resilient in terms of development in that situation. So, Clearly, it might be that we see higher rates, and as we have seen in the past, there could be more competition, especially on the short-term investment from, for example, Italian savers due to the issuing of more Italian debt on the short term. I would say unit link is more linked to equity, more than interest rate. And I would say protection has proven to be pretty resilient in different environments. And it's probably... what we have taken away, that there is such a strong demand for protection products that this will continue to go and will keep on growing in a nice way, so in the way we have seen developing in the last quarter, even in different conditions. So I also have to say that the type of business that we do, which I remind you is typically – so it's traditional unit link protection. It's developed through mainly through proprietary distribution and this is pretty resilient in different type of scenarios. We have seen that in low interest rates, we have seen in higher interest rates, so we are pretty confident that even after what happened in 2022, 2023, this is going to be the case. Consider also that until we don't see a significant increase in interest rate, what we have seen in 2023 already protect us from some of the lapses that already happen at that level of interest rate. So, overall, I would say we feel that our inflows and our life business is pretty, I would say, resilient in different conditions, external conditions.

So your question about Unicredit, first of all, I would like also to say we are already working with Unicredit in Eastern Europe, so we have a successful relationship there. Clearly, we have also, based on the collaboration that we have, clearly we have always touched point with Unicredit. It's a great institution. I would say it's also... You know, if you take the metro in Milan, you're familiar between Trattoria and Porta Garibaldi. They are just five stops, so it's easy to have a conversation with them. I think, anyway, it's pretty common that the bank and the insurance companies have a conversation about what kind of cooperation we can do on the asset management side, the insurance side, but I would not read more than that. It's normal that there is a conversation going on, and this is not the only conversation we have.

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

The next question comes from Farhurkar Murray of Autonomous Research. Please go ahead.

Just two questions if I may, both on non-life and actually mainly an elaboration on Ian's questions earlier. So you mentioned further potential pricing actions in non-life and you at least partly linked them to the macro backdrop in the Middle East. So the first question is just to double check that the linkage there is predominantly coming from claims inflation or are there frequency and perhaps even economic consequences you're keeping an eye out for there? And then second question, what are the triggers for moving to implement those pricing actions? It sounds like some of your referees have obviously already gone through them. Thanks.

Thank you, Farquhar. Both questions are for Giulio.

Regarding the pricing action because of the situation in Iran. So we need to see first what is going to be the impact because of the Iran situation. For the time being, we don't see inflation yet. Now, according to some analysis, one might assume that if all prices stay up 25% or 30% of the time, we might see an increase, let's say, in the loss ratio before we take any actions in more than 1% to 2%. So if this is going to happen, we're going to see this kind of increase. We're going to react. But as we said before, right now we don't see severity increase. So for the time being, we are watching, preparing. In some cases, we are taking actions because of other reasons, but we are not at the moment in a situation where claims inflation is going up. Then I would like to highlight that on the non-motor side, you know, a substantial part of our business is indexed. So from that point of view, there will be a natural, if you want, offset in the case inflation is going up. So, coming back to what we said before, we are monitoring the situation. We're going to take action case by case based on what we see. Since you are asking anyway about the impact coming from the Iran situation on... One thing, because we saw also from calls with other competitors, on the travel side we don't see major impacts so far. Actually, Europe assistance in total was up 15% on revenue, and this despite clearly softening, especially in Australia. The business was very strong in America, so for the time being also we have been able to more than offset the weakness in Australia because of this situation. and we're going to continue to look at the involvement on the revenue side. It's more a revenue side issue potentially on travel, but I can tell you there might be a little bit of a headache, but not something that can change our delivery, not even for Europe assistance. So bottom line for the time being, so good so far.

If I can have one topic, I think the phases that we went through in the last year of inflation, made us learn a lot about where the first site of inflation comes up and shows up. So we have a very good monitoring at the micro level of peril and also going market by market, portfolio by portfolio. If you think about, for example, material damage, we are able to look at the different spare parts, brand by brand, portfolio by portfolio, or also the aggregation of those effects into periods. So I think this is also a good way of looking, you know, leading indicators of where inflation might come up. Because, as you know, when we talk about inflation, one thing is to think about the general inflation. One thing is to think about the claims inflation, which is completely different.

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

The next question is a follow-up from Michael Hartner with Berenberg. Please go ahead.

Thank you very much for this opportunity. I had two, and you may have answered one, but I wasn't sure. So on frequency, I think in the past it's been declining, but some... The way you've been talking, it sounds like it was flat. I just wondered if you can make a comment. And then remind me, on the Sonsi, you gave us basically the kind of Q2 figure performers of today, but what is the impact of Sonsi 2 review, which comes early next year? Thank you.

Thank you very much, Michael. The first question is for Giulio, and the second, Sonsi, is for Cristina.

So when we look at the frequency in MOTO, we need to adjust for Portugal because in Portugal we are picking up some attritional frequency, some frequency that is for sure related to the weather event that we had over there. So for the more Portugal, actually frequency across the portfolio is relatively stable. But we see a little bit of a different one compared to last year. Last year, we saw frequency going down across the portfolio. And now we see countries where frequency is going down. But in Central Eastern Europe, and Central Eastern Europe includes also Germany, we saw frequency going up. We think this is related to the winter because 2026 winter was colder. compared to the winter of 2025. So we see a little bit of a different trajectory depending on the country, but when we look at the total portfolio frequency, it's adjusted for Portugal. It's basically in line with the prior period level. It also consists with our plan assumptions.

Thank you, Michael. So I'm not commenting again that you're already done valuation so far of the second quarter, but referring to the solvency to review, we can confirm that we are around the 15 percentage points. The important thing is don't forget that it will come into practice at the end of January 2027. So any decision that has to be taken in beginning of 2027 will already embed this already at the end of January, which is also positive and conducive for resiliency, environment, and security of cash flows, since I know that both of us cares a lot.

Please go ahead.

Hello, everyone. Thank you for taking my questions. Expenses, please. KBW has been doing work on admin expense leverage across the European insurers. And one of the things I've noticed is that the loss ratio component of your JEX ratio is only about 800 million euro from the presentation you gave a bit earlier this year. And as I understand it, that is only claims handling expenses that are not allocated to specific claims. So my question from that is, why would you take such a narrow measure? Because presumably allocated claims claims handling expenses are just as addressable, if not more so, as what is central. And then secondly, if you were to take an all-in claims handling expense ratio, consistent with the 7% or so admin