Poste Italiane Spa

Good morning, everyone, and welcome to a post-Italian four-quarter and full year 2023 research conference call. Matteo De Fante, our CEO, will take you through some of the remarks, and then Camillo Greco, our CFO, will cover the financials. This will be followed by a Q&A session where you can ask questions, either via phone or through our webcast platform. Please limit yourself to two questions. And with that, over to you, Matteo. Good morning, and thank you for joining us today. I will walk you through our results in 2023. Substantially, over-delivering on 2024 Sustain and Innovate targets, as well as on our guidance given to the market in March 2023. Ponce Italiana has been able to generate sustainable profitability even in complex environmental thanks to its well-diversified and resilient business model. We have delivered a revenue increase of over 5% year-on-year, nearing $12 billion, alongside a record 2023 operating profit of $2.62 billion, more than doubling 2018 EBIT. We have also approached breakeven in our mail parcel and distribution division, ahead of guidance. our key ambitions since the start of our journey back in 2017. TFA inflows from our loyal retail client base remain positive in a very challenging year for the saving industry. 2023 net profit is at 1.9 billion, corresponding to an earning per share of 1.48, up a remarkable 22% year-on-year. Strong results allow us to propose a dividend per share of 80 cents, up 23% year-on-year, and equal to over 1 billion cash distributed to our shareholders. Let's move to the financial on slide 4. In 2023, the top line came in at 12 billion euros, up 5.4% versus last year. Considering expenses to support business growth, total costs came in at 9.4 billion euro thanks to actions to mitigate inflation impact. Our best ever operating profitability of 2.62 billion for 2023 is up 9.4% year-on-year thanks to solid commercial results and effective cost discipline. Finally, net profit at 1.9 billion is up 22.1 year-on-year. Moving to slide 5, where you can see the healthy underlying revenue progression across business lines. In-mail parcel and distribution revenues were ahead of guidance thanks to mail repricing offsetting volume decline. as well as growing parcel volumes. In financial services, revenues were up in the quarter and full year, boosted by postal saving fees and NII. Insurance services revenues were in line with guidance, with the year-on-year comparison impacted by specific items within 2022 results, which Camilo will comment on later. Nevertheless, there is no doubt that 2023 has been a strong year for our insurance business with positive net flows outpacing a challenging market environment and keeping our lapse rate well above market average. Payments and mobile continue to grow double-digit, benefiting from continued increase in card usage. our leadership in e-commerce payments, and higher exposure to non-discretionary spending compared to our peers. Our energy business is up and running, with more than 500,000 contracts assigned to date, materially outpacing our original plan. The successful integration of lease is also supporting the positive progression of revenues. Let's go to slide 6, and EV evolution by segment. Main parcel distribution shows a materially improved operating profitability. And I'm pleased to say that the division is finally at break-even for the full year ahead of our guidance, which is something that we have always stated to be a priority for the group as a whole. Looking at the future, we're now entering another chapter. where we will further invest to generate growth across the logistic value chain and in new businesses, such as contra-logistic and cross-border e-commerce deliveries. In financial services, the resilience operating progression continues to be mostly driven by NII increases supported by higher interest rates, stable retail deposits, and low cost of funding. In addition, we have fully achieved our 2023 guidance on postal savings fees thanks to a very strong commercial performance. Insurance service EBIT is in line with our plan, mirroring the revenue dynamics I've just described. Payment and mobile, constant double-digit growth is driven by a strong revenue trend, more than compensating energy business and startup costs. Moving to slide seven. The excellent performance I've just described enables us to propose a dividend per share of $0.80 for the full year 2023, materially upgrading our most recent guidance of $0.71 and up 23% year-on-year. We will be distributing more than $1 billion to our shareholders, as I said, on 2023 results. The dividend upgrade is driven by strong financial performance and increased visibility on cash and capital generation. Our proven business model leverages on diversification and a fortress capital position. With the balance of the 2023 dividend we plan to pay in June, we will have distributed around $6 billion to our shareholders since listing. with the dividend per share growing at an annualized rate of 11% since 2016. Let's move to a more detailed overview of the financials with Camillo Greco, our CFO. Over to you, Camillo. Thank you, Matteo, and good morning to everyone. Let's start on slide 9 with mail, parcel, and distribution, where segment revenues grew 3%, reaching $3.7 billion in 2023. Main revenues at over $2 billion are slightly up for the full year and ahead of our guidance, thanks to ongoing repressing actions and a favorable product mix. Parcel revenues were flat at $1.4 billion, with increasing volumes compensating the reduced contribution from the COVID logistics mandate, as well as the sender Italia, the consolidation, and other one-off items. Adjusting for these items, parcel revenues are up 6% in Q4 and 4% in the full year. Strong commercial trends have led to increased distribution revenues in both the last quarter and full year 2023. As Matt anticipated, we have brought the mail parcel and distribution division to a full year breakeven compared to our guidance of minus zero one billion loss, thanks to a positive commercial performance and effective cost management. As a reminder, 2023 EBIT was impacted by one-off items such as the extraordinary bonus for our employees of around €133 million and the capital gain on sender for €109 million. We also took a conservative stance on early retirement incentives to retain some flexibility going forward, booking €171 million compared to €76 million in 2022. Let's look at volumes and tariffs on slide number 10. Parcel volumes further accelerated in the quarter, up 12% and 7% in the full year, supported by healthy B2C growth. Looking at pricing, the slight reduction in parcel tariffs in the full year is related to increasing volumes with lower pricing and subsequently lower unit costs, mainly inbound volumes from China and secondhand products, which have a higher use of PUDOS. Moving to mail, continuous repricing actions coupled with a favorable product mix have offset the structural decline in lower margin unrecorded items. Tariffs increased by 4% in Q4 and by 6% in the full year. Moving to financial services on slide number 11. Gross revenues for the year were up 6% to almost $6.1 billion, mostly driven by NII and a strong commercial performance, particularly in postal service in the fourth quarter. Net interest income came at $2.2 billion for the full year, up 17%, and $569 million in Q4, up 8%. This was supported by higher interest rates, stable return deposits, and lower than planned cost of funding. Postal saving distribution fees amounted to $538 million in Q4, up 34% and to over $1.7 million in the full year, in line with our guidance, on the back of a strong commercial performance in the final quarter, and amended 2023 agreement with CDP to take into account the different interest rate environment. In Q4, transaction banking fees were impacted by lower current accounts repricing applied from April 2023, leading to $190 million in revenues, down 9% in the quarter, but stable for the full year at $764 million, supported by the growth of other banking services' fees, compensating the reduction in payment slip fees. Asset management delivered another positive result, reaching 144 million revenues in 2023, up 21%, supported by strong net inflows. Finally, EBIT came in at 863 million for the full year, down 3%, impacted by non-proportional allocation of distribution costs. Moving to slide number 12. 2023 TFA has reached $581 billion, up 5 billion since the end of 2022, supported by retail net inflows in a challenging environment and positive market effect. Let's look at each component. Postal savings outflows improved by €11.1 billion in 2022 to €7.2 billion in 2023 thanks to the revamped postal book time deposit offer, with €8 billion in new liquidity raised to our super smart offer. A positive interest accrual effect further mitigated the outflows by €4.9 billion. Insurance net inflows were at $3.4 billion in 2023, with the product mix mirroring customers' increased demand for capital-guaranteed products. We significantly outperformed the market in 2023, a year that saw life insurers reporting significant outflows. Retail deposits were stable at 57 billion, confirming the stickiness and loyalty of our customer base, with assets under custody increasing by 2.6 billion in 2023. Mutual funds recorded strong net inflows at 2.4 billion. Moving to slide 13. figures according to IFRS 17 standards, leading to an unfair life revenues comparison year-on-year, which we already anticipated. In particular, 2022 benefited from volatile components arising from a sharp increase in interest rates, resulting in a higher additional CSM release. Revenues amounted to $425 billion in Q4 and to $1.4 billion for the full year, in line with our guidance. We continue to have positive net inflows in Q4 with a lapse rate of 4.3%, less than half the market average, in a tough environment for life insurance investment products. CSM release was $1.3 billion, with CSM stock after release at $13.7 billion. Non-life net revenues are up 35% in a full year, supported by higher GWP in protection and net insurance consolidation, which represents an enabler to accelerate the growth of our protection business. In fact, protection GWP were up 59% to $188 million in Q4 and up 59% to $809 million in the full year. from net insurance. Combined ratio was at 84% for the full year, in line with our guidance of below 88%. Full year 2023 EBIT of 1.36 billion is in line with our guidance. Let me remind you that stated 2022 EBIT pre-IFRS 17 adoption was 1.35 billion. On slide 14, we showed the CSM evolution in 2023. Normalized CSM growth stood at 5%, with positive contribution from new business and expected return more than compensating the yearly release. Group CSM at the end of the year was at 13.7 billion, providing strong visibility on the division's sustainable profitability going forward. Let's look at Solvency Ratio Evolution on slide number 15. Post Evita Group Solvency II landed at 3 or 5%, up 53 percentage points since Q3 and well above the managerial ambition of circa 200% through the cycle. The improvement was mainly related to the positive impact from economic variances due to the decline in interest rates and BTP spread in the last quarter. Capital generation continues to positively contribute to the solvency duration with 7 percentage points, and we have already accrued the foreseeable dividend to be paid to the parent company based on a 75% remittance ratio, which was increased from 50% at the end of Q1. Solvency duration continues to be strong and is currently between 290 and 305%. Moving to payments and mobile on slide number 16. 2023 is yet another positive year for the division. Both revenues and EBIT grew 12% in Q4 to $399 million and $122 million, respectively. Let me remind you that Q4 comparison with 2022 is on a like-for-like basis, as this was consolidated from September 2022. Revenues for the full year grew at a remarkable 28%, reaching over $1.4 billion in 2023. Looking at the details, car payment revenues continued to grow double-digit by 11% to $198 million in the quarter, and 23% in 2023 to $717 million. Other payments grew 8% in the quarter and 63% for payment transactions directly managed by PostePay as a payment service provider. Telco revenues grew 2% in Q4 and 4% in the full year 2023, supported by the fiber offer. Finally, our new energy business has been successfully growing, with over 100,000 contracts signed since launch, above our guidance for the full year 2023. From this quarter onwards, we will show energy revenues net of commodity prices, dispatch, and pass-through charges, as we believe this provides a better representation of the underlying business trends. Energy net revenues amounted to $17 million in 2023, with gross revenues at $157 million. Yet again, thanks to strong revenue growth, EBIT reached a record high level, growing 16% to 440 million in 2023. On slide number 17, we look at our workforce evolution. Since December 2022, the average headcount decreased to around 119,000, including M&A, as we continue to renew our workforce with 7,000 new hires in the year. HR costs per FTE are up nearly 4% year-on-year to €44,700 related to planned salary increases and commercial incentives. But the value added per FTE is growing at a faster rate of over 9% year-on-year at over €81,000 per FTE. Moving to group HR costs on slide number 18. Before the application of FRS 17, ordinary chart costs were higher year on year, with increased variable compensation reflecting the strong commercial results, while continued FTE reductions partially mitigate the planned salary increases. The adoption of FRS 17, which requires costs borne by insurance services to remunerate the network to be accounted for in CSM and released over the term of insurance contracts, results in 473 million lower HR costs on a reported basis in 2023. In 2023, ordinary HR costs and revenues improved from 42 to 41 as a result of revenues growing more than ordinary HR costs. Moving to slide number 19. Exuding the effect of IFRS 17 and net of M&A, known HR costs increased by $178 million in 2023, below our guidance. In particular, costs were up $147 million, mainly driven by variable costs reflecting business growth and $55 million inflation impact. DNA was up $30 million due to higher capex. Finally, the businesses that we have acquired contributed $179 million of additional costs. More in general, our focus on cost discipline remains laser sharp and protecting the bottom line profitability remains our top priority. Thank you for your time. Let me hand over to Matteo for the report. Thank you, Camillo. Record EBITDA 2.62 billion in 2023, more than doubling since 2017, and revenues up to 12 billion. I can proudly say that in these last seven years, we have fulfilled our ambition to become Italy's leading omnichannel and platform company, grounded in our historic principles and values, and delivering long-term sustainable profitability and shareholder remunerations. We have also delivered on full year break even in mail parcel distribution ahead of our guidance. For our shareholders, we have delivered seven years of consecutive dividend increases underpinned by strong commercial performance, effective cost management, and a solid capital position. In this regard, we will be proposing an 80 cents dividend per share for 2023. accounting to over $1 billion in dividends for this year. Post Italiana reported its best ever EBIT in 2023, a seven-year journey which delivered for the present while transforming the company and preparing the company for the future. We will review our past accomplishments and look ahead to 2024 and beyond during our Capital Market Day on March 20th. And I really look forward to seeing you all at our headquarters here in Rome on March 20th. Thank you. And Giuseppe Esposito, over to you for the Q&A. Thank you, Matteo. Let's begin with the Q&A session. Let me remind you that to ask a question, you need to press star one. And to remove yourself from the question queue, you need to press star two. The first question we have is from Gianluca Ferrari and Mario Banca. Go ahead, Gianluca.

Yes, hi. Good afternoon, everyone. The first one is on CSM. If I'm not mistaken, the CSM release ratio fell down from... More than 10% last year to 8.6 in 2023. So I was wondering what drove this volatility in the release ratio. And also if you can provide the sensitivities to 50 basis points declining interest rates. And the second, and I will limit to two, is if you can provide an update on the renewal of the labor contract, the agreement with CDP, and a comment on the antitrust investigation. Thank you.

Okay, thank you Gianluca. I will start from the last questions and then let Camillo answer on CSM and sensitivity. Okay, labor contract is the work that we have opened formally the table already a few weeks ago with unions. and works are moving ahead well and the track record of our relationship with unions hopefully will allow us to reach the right agreement in the not too distant future. And I would say that on a similar note, we are re-discussing our multi-year agreement with CDP and, you know, progress has been made and I'm also confident that we will find a satisfactory agreement in the not too distant future. Then I think you asked about antitrust. If you are referring to the recent inquiry by the antitrust under the move from a couple of competitors in the energy space, I think it's quite clear the case from our side. The basis for the request is a competition law dated 1990, so it's a law of 34 years ago, when post offices were clearly very different in terms of activity. Today, the public sector component of activity in our post offices is extremely residual. compared to the overall activities we perform in the office. But nevertheless, in the next generation EU plan, there is a specific law, it's Law 59 of 2021, which says that that competition law of 1990 should not be applied to the players involved in next generation you investments and obviously we are very involved with the police project you know so we're cleaning that in that space so you know as usual were very pro-market we decided three years ago to enter this market with the agreement of all the regulators, antitrust, energy, telecom regulator, and obviously the government, because since 2017, when the Italian market started the liberalization process, There have been seven postponements, and finally it looks like 2024 is going to be the final year of liberalization. And we think market forces are always positive for final consumers. So we have... but obviously we will respect the activities of the antitrust authorities. Then for insurance, please. Yes, so two answers. First answer, the release of CSM in 2023 went down as a result of the increased duration of liabilities in the post-evita portfolio. And the second answer on sensitivity on interest rates, I'll give it to you on 100 as opposed to 50 and say that an upward parallel shift of 100 basis points in the interest curve would provide an additional 14 basis points on the portfolio yield and a decrease of 13 in case of downward parallel shift. And I also say that our effort to continue to solidify visibility on NII has continued throughout the last quarter. And as of now, we have circa 70% of the portfolio at fixed rate. Thank you.

Thank you very much.

Thank you. The next question is from Azura Guelfi at Citi. Go ahead, Azura.

Hi, two questions for me, one on mail-in parcel and one on dividend. I'll start from the dividend. Dividend has been increased sizably versus the previous guidance and year on year. My question is, is it mainly driven because the profitability is better and this is your main driver when you think about your dividend policy? Or is it like what basically the question is, what are your main driver when you think about profitability dividend? Is it the profitability? Is it cash flow? Is it payout? If you can give us some color on that because that is a welcome surprise from today. The second one is on mail and parcel. When we met last time on the third quarter results, you indicated roughly 100 million of early retirement. The early retirement have been higher. And if I clean your mail and parcel from the early retirement and the one-off that you mentioned, the EBIT is actually around 150 million. And this is mostly driven, I guess, from the efficiency, but also on the revenue repricing. What do you think is the next big thing in terms of repricing and movement in the pricing, both of mail and parcel, and the efficiency as well in these two areas? Thank you.

Thank you, Azura. Very happy to answer your questions. On dividend, the company back in 2016-17, if you remember, had a time of privatization, a payout policy of 80%. We moved away from a payout because we felt with the first plan in 2018 that there was too much weight on on capital gains, which you remember at the time were very relevant on our operating profit results. And we're moving to fixed dividend with an increase annually that over time has actually been improved. And today we Obviously, look at cash flow, and we want to have the highest possible visibility on cash flow of dividends from mainly poste vita, obviously banco posta, and increasingly also poste pay. That visibility has increased. So the increased visibility on cash flow together with a higher profitability and a stronger capital position, because let's not forget that the company has very limited debt, has pushed us into this decision, which we proposed yesterday to the Board, of increasing by 23% over last year, leaving the payout still at a very conservative 53%, so still, you know, in areas where we feel we're not pushing the envelope too much. On main and parcel, I leave it to Camillo. Yeah, obviously, it goes without saying that this is going to be what we're going to discuss on March 20th, the future of the division, but certainly with respect to the efforts that have been put in place in 2023, we have had a return of material volumes from China. Amazon has continued to perform well. We have been working with Plurima that you remember we acquired last year in growing into medical logistics. So there are a number of things that are progressing in parallel and I should say, last but not least, we are also doing an effort on international where historically we have been less present as a result of our JV with DHL. So there are a number of things that are happening simultaneously and in parallel. I also wanted to make another point on early retirements. We are guided to 100 billion being the midpoint of 51-149, and we ended up slightly ahead. ahead of that just because we felt that it was the right thing to do also in light of the ambitions we have with the plan, but we are in line with that guidance. Thank you. Thank you for taking my questions.

The first one is on the NII. Could you provide some qualitative indication on the expected evolution of the NII? I saw that you have increased the duration of your investment portfolio to 5.4 years. So what I would like to understand is the resiliency of the return of your investment portfolio also in a declining interest rate scenario and considering that the majority of your investments are at fixed rates. The second question is a follow-up on a previous question and relates to the renegotiation on the renewal of the labor contract and the agreement with the CDP. I'm wondering if you plan to, let's say, close the negotiation or at least have a clearer framework of what could be the outcome of the negotiation by the 20th of March.

Thank you. Okay, so, Manuela, with respect to the NAI, so this year we ended up at the top end of our guidance of 2.2 billion and the net yield is around 2.44%. We believe that we have not yet peaked in terms of evolution of the net yield and we think that going forward there will be more to come. Obviously, we'll be discussing 20 days, but to give you a bit more of a flavor in addition to the 70-30 split that we gave in terms of fixed and variable also say that you might have seen that there is a negative 10 million of capital gain in Q4 in financial service. That has to do with the fact that we have continued to prolong the duration of our portfolio to ensure we have greater visibility on NAI going forward also in the other years of the plan. Yeah, and with respect of the timing of the labor contract, I mean, they usually take months. And, you know, we started the negotiation. The former contract has closed, has ended legally and technically, 31st of December, 2023. So, my best guess, call it 90% likelihood that we will not reach an agreement formally by March the 20th. We're not, we don't need to rush. It's, you know, works are moving ahead reasonably well. seven years of track records of good negotiation with the leadership of the unions, which we still see in progress, but unfortunately the time frame is too tight to be able to deliver it for that time. date which is you know less than a month at this point down the road you know the average vacancy contractual vacancy is you know in the nine months so you know being able to sign it in three is is basically impossible as far as the CDP agreement is probably the Easier to have an agreement before the 20th of March, but as we have proven this year, taking the market by two tides in the last quarter, it's an ongoing focus that we have with CDP, and so even in that space... I'm not concerned of not finding the right agreement to keep our focus on postal savings there, which we've proven last year, and revenues and remuneration for our company and our shareholders to come on the back of our focus. Okay, we'll try again with Ashik Musadi at Mongastale. Ashik?

Can you hear me? Hello? Yes, we can. Oh, great. Thank you. And good afternoon, Matteo. Good afternoon, Kamila. Just a couple of questions I have is, first of all, can you just give us some color on insurance growth? I mean, given that flows have started becoming again positive, I mean, you never had outflows, but flows are positive in the guaranteed channel areas. And the whole industry, as far as I understand, is improving as well. So can you just give us some color about how you are thinking about the insurance, say, inflows or, say, top-line growth in the coming quarters? The second question is around NII outlook. I mean, clearly interest rates have been moving all around. First three quarters last year was different. Fourth quarter was different. This year is a bit different. So how should we think about modeling the NII would be helpful to know as well. And lastly is, I mean, you touched base on this dividend as well. I mean, first of all, thanks a lot for such a strong growth in dividend. But I just want to see if we can stretch a bit more on that dividend. I mean, what needs to happen? I mean, insurance sector is now moving towards a 75% payout ratio. This is what we have seen for last, say, two weeks, whoever have reported. So what needs to happen for you to consider moving to those levels? I completely agree that I'm being a bit greedy asking this question, especially given the big surprise you have done today, but I still thought I'll ask you. Thank you.

We like daring questions. What does it take? It takes additional visibility, which is basically the next plan. There's nothing more and nothing less than this. In terms of NAI outlook, I think Camillo already gave some indication, but let me say that we work a lot in the last two years to give maximum resilience to our NII over the next three to four years to the point that today we're in the position with an outlook on interest rate going slightly down from current levels to have a positive outlook on our NII over the course of the plan. both in terms of average yield and amount of assets, and so the sum of the two obviously makes it an upward NII trend. In terms of insurance growth, Well, I mean, obviously we have been investing a lot in PNC also with the acquisition of net insurance, and you might have seen that gross return premium are in excess of 800 million for the year, so I think a billion is in sight, so we expect the business will continue to grow strongly in that part of the insurance division, and naturally our leadership in live products will also continue to deliver the results. I'll also point out to the fact that, as I said in my script, the CSM has increased year on year at an annualized growth of 5%, and that's a level that we think that we should target also for the future.

Great. Thank you.

Okay. Next question is from Elena Perini, Bancaimi. Go ahead, Elena.

Yes. Thank you, and good afternoon, everyone. I've got two questions on the insurance business. The first one is related to your growth in the PNC business. You have a very good combined ratio at the moment, around 84% in line with 2022. Do you expect any increase relating to the expansion of the business? The second question is on your solvency. I would like to know if you have any update on a potential adoption of the internal model and if the level of the solvency ratio could drive or is driving now the payout ratio to the holding company. If you can elaborate a bit on this because you had a very strong number at the end of 2023, more than 300%. We know about the volatility of the standard formula. I don't know if together with the internal model there should be, you know, more limited movements to the economic variances. Thank you very much.

Thank you, Elena. I think most of your questions will go in terms of answers in the plan. So the easy answer would be there with us another two or three weeks and we will go into the details of the answers. But I can try to give you a feel. In terms of growth, we're very happy with the P&C growth, which comes, as you've seen, also from China. the consolidation of the acquisition of net insurance and the impact or the non-impact on the combined ratio. We don't see any reason for a major change going forward, but we're also aware that 84 percent is extremely good. So one should be expecting a normalization towards market levels with the business growing over time. solvency and internal model. We're going very slowly on the internal model because we know that we have found now A good equilibria of ALM and the sensitivity of interest rate have gone down significantly compared to a few years ago. So we will state our position on internal model in our capital market day. Payout is also on the table. It's true, you know, the three or five is clearly a very positive number and that has an underlying assumption of 75% so clearly the question on the table is can we go above 75% and all this again is something that I believe on the positive will be addressed on the 20th of March.

Okay, thank you very much.

Okay, we move to the next question. It's from Farouk Anif, JP Morgan. Farouk, please go ahead.

Hi there. Thank you very much, and congratulations on your results today. Just you kind of answered some of the questions, and you probably won't answer some more, but just looking at maybe another way of asking about cash and dividends is if you kept your current dividend level, just theoretically, it feels like you would accrue positive cash at the holdco. But this year in 2023, you have, I think, higher capex. Just kind of wondering, like at this kind of dividend level, what would, in a normal way, if you take the fund from operations, you know, your dividends and subsidiaries, you know, minus kind of regular capex and the current dividend, would you be in a position right now to be accruing surplus cash at this level just as a way of trying to get some insight you know on into your flexibility and the second question a very quick one I mean I know that you've not really been impacted by a lot of NatCat I was wondering whether you know why that is in your P&C ratio and whether reinsurance is a problem or are you kind of immune because of your business mix and the kind of products you write? Thank you.

I'll take the dividend and then let Camillo and Annette get this. I think what you stated is basically the way we look at it. So sustainability in terms of cash as you know the starting point and capital is the second element and profitability going forward so we have a track record now of over-delivering and never being caught by the market with a promise that we then are not able to fulfill. And the last thing you want to do is to make that mistake of over-promising in the words of dividend, which we all know is a disastrous scenario. So we're very cautious, but all in all, on the 20th of March, you will see the final position we will take. good reasons to be positive on the topic. From now, if you can bear with us, to the 20th of March. Please, Camillo. And on the second question, we confirm we don't have exposure to natural catastrophes. And that's driven by the fact that this point is not a risk we are looking to insure other than margin indirectly through net insurance.

Okay, thanks very much. I think we're all looking forward to the 20th of March. Thank you.

Thank you, Farouk. Next question is from Alberto Villa, Intermonte.

Thank you. Good afternoon. Just a couple of questions from my side. One is on the, let's say, launches of new government bonds by the Italian Treasury that are draining retail liquidity. I was wondering if there is any sort of impact on your, let's say, saving deposits or deposits in general. I also noticed that you are still doing much better than the rest of the industry in terms of lapse ratio, but we have had an acceleration in the fourth quarter. So I was wondering if there is sort of maybe time lag compared to some of the other insurance players on the Italian market or if you expect lapse ratio to remain very much below the rest of the industry going forward. And the second question is a little bit trying to turn around the labour control renewal issue. I was wondering if the one-off you distribute to employees this year, in 2023, will maybe allow for a delay in the renegotiation, maybe putting forward to 2025 the effect of the renewal of the labor contract. Thank you.

I'll start with the last question. That's not a strategy to delay working with the unions to sign a contract that provides coverage from 1 January 2024, but certainly our effort, which I remind you had also a tax benefit for our colleagues, for our employees, so it was equivalent to 1,000 euro growth, which was a meaningful gesture from the company, is giving us less pressure and in a way is putting the negotiation in good terms. On your first two questions, so the DTP valore and the lapse, I think we are always back to try to make the market understand that our client base is very different in terms of saving from the banking sector. We have the lower end, the less... wealthy side of the spectrum. So that means that in terms of the BTP valore, we are way under-exposed or way under-involved in the distribution of the BTP valore. than the private sector. If I look more generally at the asset under administration, we have a market share which is a fraction of the market share we have in bank deposit or we have in life insurance. So our clients bring deposit to poste and it's either postal savings guaranteed by the state or life contracts guaranteed by poste in class one mainly. And the average ticket of those live savings is, again, less than half of the market. And that also is one reason, Alberto, for the structurally lower, less than 50% lapse rate than the market. It's not that we are better than... our insurance peers. We simply are in a kind of a different market in terms of clients. And that has the consequences of not being able to go as and has aggressively managed assets, which, as you know, are growing in our space, but are clearly residual compared to capital-guaranteed assets. So I hope I managed to give you a feel. Thank you, Alberto. Thank you. Okay, next question is from Gianmarco Buonacina, Equita. Go ahead, Gianmarco.

Yes, good afternoon. Two questions for me. The first one on insurance services, you mentioned the base effect on your performance, the mid-single-digit EBIT decline. Can you quantify what has been the underlying performance if you were to normalize the base, which maybe could be a better indication in terms of forward performance of the insurance EBIT. The other one is on the mail-in parcel because it was mentioned before that if you add back the one-offs, so the standard, the one-off bonus and the early retirement, you would have an EBIT of plus 150, even though I guess you will always have some level of early retirement Can you maybe give us an indication of what we should expect for the next couple of years if the 2023 level is maybe too high, so maybe it's more in the 100 million region level? Thank you.

Okay, so the first question on CSM, so we have guided, I think, another question to normalize the growth of 5%, and I think you should take that as a benchmark also for EBIT evolution in the year X, the impact of the additional release in the 2022 driven dollar portfolio of inflation-linked bonds. In terms of the quote-unquote normalized made pasta and distribution EBIT, your second question, Gianmarco, you have to bear with us until the 20th of March because there are moving parts, which you mentioned, and it would be difficult for us to say more than this today, to be entirely honest. The good news is that we got there, the break-even, that we see a transformation taking place that will allow us to keep growing in the space of parcel with a different business model, which we will explain on the 20th of March. And as we stated in the past, the goal is to stay at the Black Even level in the future, plus or minus, and use our the time of the plan to finalize the parcel taking over mail process around a break-even scenario. And then, once you have completed that transformation from a mail company to a parcel company, then you are a big boy in the logistic game and you can start playing in the market. The next plan is the last step of the child becoming adult in the logistic market of the future.

Thank you. Just a quick follow-up, if I may. But given that your earlier indication was for 100 million of early retirement, can it be fair to say that this year 170 is a little bit, let's say, higher than what should be a normal level?

It's premature. That 171 tells you one thing for sure, that we had, you know, strong results and we had the opportunity to be a bit more conservative and increase the fund at 280 for this year because we had the room to do it. So it's just confirming, Gianmarco, our conservative approach to, you know, our accounts and our business. Thank you. And thank you. Okay, we have one more question from Michael . Michael, please go ahead, which is the last one.

Fantastic, thank you so much. It was just three number of questions and they'll be really quick. If you have an update, if you can, on the Solvency Now on the net inflows now, there were 100 million I think in Q4, and also on the total amount of the funds for early retirement. And I really thank you for listening to your business model. It's really lovely to hear and stay clear. Thank you.

Please Camilo. So I think, Michael, you asked us a question about the size of our early retirement fund, which is post-accrual $171 million to $180 million. So that I got. And then the first question, I'm not sure I got it. I just want to get confirmation of what you asked.

It was just another somity today and also the net inflow trend in the year to date.

Okay, sorry. So, yes, January and February, at least the first weeks of February, have been positive and certainly in line with what we will present on Master's 20th. Yes, certainly I can close saying that, you know, with the visit easy where today, 29th of February, we're closing the first two months of the year on a very positive note across segments. But we'll... We'll give you more evidence, preliminary evidence also of this on the 20th of March. Thank you, everybody. Thank you, everybody, for the time and the attention. Thank you very much.