Poste Italiane Spa

Good morning, everyone, and welcome to Poste Italiana's third quarter and nine-month 2025 results conference call. Shortly, our CEO, Matteo De Fante, will take you through some opening remarks, and then the CFO, Camillo Greco, will cover the financials. As usual, the presentation will be followed by a Q&A session where you can ask questions either by phone or through our webcast platform. And for any topics we won't be able to cover today, please do contact the investor relations team. We'll provide any clarifications you might require. With that, over to you, Mattel. Good morning and thank you for joining us today for our Q3 in nine months, 2025 results call. As we celebrate 10 years since going public, we're proud to report another record-breaking quarter. reflecting sustained growth as we approach the end of 2025. The positive momentum established in the first half of the year has continued in the third quarter. We remain focused on executing our strategic plan and we're fully on track to achieve our updated 2025 guidance. In the first nine months, we delivered record results across group revenues, adjusted EBIT and net income. Each business unit contributed to a robust 4% earnings increase in top line, reaching €9.6 billion in total revenues. Adjusted EBIT grew by 10% to just over €2.5 billion for the period, and net profit reached €1.8 billion, representing an impressive 11% compared to the previous year. Since the start of the year, we have seen solid net inflows in investment products, confirming strong commercial performance in insurance products and improved net inflows in postal savings. I'm pleased to report that the migration of our clients to the super app has been successfully completed. To date, the app is used by 50 million clients with 4.1 million daily active users in November 25. which is more than our previous apps combined and the highest level among Italian apps. Our balance sheet remains extremely solid, with our insurance solvency tool ratio at 312%, well above our stated ambition of 200%, providing us with significant financial flexibilities. On November 26th, we'll pay a record interim dividend of $0.40 per share, totaling $518 million, up a remarkable 21% from last year. I'm pleased to share that our initiative to unlock synergies with teams are currently underway. At the end of September, we launched Team Energia, powered by Host Italiane, in more than 70 team retail outlets. This marks a significant step in combining the strength of both organizations, expanding our retail customer reach through TEAM's network and post-Italiana trusted energy offering. In the coming months, we will continue the strengthening of the Servigi partnership and roll out additional joint initiatives to deliver synergies and value creation for all stakeholders. While our investment in TEAM remains strategic, We are also pleased to note that the value of our stake has nearly doubled, now at 1.1 billion euro. These results underscore the strength of our business model, flawless execution, and our ability to adapt and grow in a dynamic environment, all while maintaining street cost discipline. Let's move to group financial results on slide four. also delivered a very strong performance in the third quarter and first nine months of the year. These were the best for Q3 and nine-month results ever reported by the group in terms of revenues, EBIT, and net profit. Focusing on the nine months, revenues at €9.6 billion, up 4% in a year, adjusted EBIT at €2.5 billion, and net profit at €1.8 billion. up a remarkable 10% and 11% respectively. In the quarter, we achieved record group revenues at 3.2 billion, up 4% year-on-year. Adjusted EBIT reached €856 million and net profit is at €603 million, up 8% and 6% respectively. On slide five, the strong revenue momentum across all our business segments continues into the year. In mail parcel and distribution, revenue growth was driven by higher parcel volume and supported by increasing client diversification. The anticipated decline in mail volume is effectively mitigated through ongoing repricing actions. In financial services, revenue increased by 5% year-on-year to $4.2 billion, supported by NII and solid commercial performance. Insurance services deliver strong profitability in both life and protection segments. Revenues rose 10% in the nine months, reflecting stable CSM and higher release. Post-EPA services' unique and integrated ecosystem of everyday services deliver sustainable revenue and profitability growth. The telco customer base remains solid and stable, while the number of energy clients has grown to approximately 950,000, on track to reach the target of 1 million clients by year-end. Team Energia, powered by Poste Italiane, launched on September 29, will provide an additional boost to this business. Let's go to slide six and EBIT evolution by segment. Mail parcel and distribution reported an adjusted EBIT of 137 million for the nine months in line with our full year guidance. Financial services operating profitability is up a sound 23% in the nine months to 790 million euros driven by NRI and overall stronger revenue trends. In the nine months insurance services adjusted, EBIT is up 9% to $1.2 billion, supported by both life investment and protection. Finally, post-pay services EBIT growth of 9% to $416 million is driven by resilient top-line performance, significantly outperforming the market. Seven, let's take a closer look at what we're building through our strategic partnership with PIMS. Several work streams are underway to maximize synergies between the two groups. We have signed a contract that will allow the migration of post-immobilized NVNO operations to the T-Mobile infrastructure starting in Q1 2026. On the commercial front, we have reached the first significant milestones with the launch of Team Energia powered by Poste Italiane, now available through more than 70, 50 team retail offices with very encouraging results. Looking ahead, we are actively working on additional cross-selling opportunities on both retail and SMEs customers, including in the areas of insurance and payments. At the same time, we're exploring cost efficiency initiatives through joint procurement. We will communicate these developments to the market in a phased manner as relevant agreements are finalized. Post Italiana is taking a decisive step forward in digital innovation through a new joint venture with Team Enterprise dedicated to cloud-related IT services. This partnership will drive Italy's cloud transformation, harnessing the potential of generative AI and open source technologies. Our mission is to accelerate the nation's digital evolution, empowering public administration and private enterprises with secure and advanced solutions. The joint venture will deliver services across both leading public cloud platforms and several national infrastructures. With that, let's look at the detail of the financials. ...3.8 billion in the nine months, up 3.2% respectively. Main revenues, $480 million in Q3 and at $1.5 billion year-to-date, are in line with our fiscal year 2025 guidance presented in February. Passer revenues were up 10% to $420 million in Q3 and up 8% to $1.2 billion in the nine months, supported by all customer segments, which continue to improve our revenue diversification. Distribution revenues from other business units are up 3% in the nine months, reflecting positive commercial trends. Adjusted EBIT at $137 million year-to-date is in line with the guidance provided for the full year. Let's look at volume and tariff on slide 10. Parcel volumes are up a solid 14% in Q3 and 12% in the nine months to 245 million items. In Q3, we also increased the portion of items delivered via the parcel network to 45%, up five points versus last year, leading to a positive contribution to the overall profitability. Looking at pricing, the average tariff was impacted by higher volumes with lower pricing and unit costs as we continued to have high volumes in second-hand items and boxless returns. On mail, the volume trend is in line with expectations, showing a slower volume decline in Q3 compared to the first half of the year. The bulk of the volume decline remains concentrated on lower value items, such as direct marketing and unregistered mail. We continue to compensate the anticipated volume decline with ongoing repricing actions across both regulated and market products. Moving to financial services on slide 11. Gross revenue for Q3 landed at $1.6 billion and just shy of $5 billion for the nine months, up 3% and 6% respectively. Net interest income came at $669 million in Q3, up 3%. and at 2 billion year-to-date, up 6%, benefiting from higher average deposits and lower cost of funding. Postal savings distribution fees amounted to 443 million in Q3, up 3%, and 1.3 billion, up 5% year-to-date, supported by improved gross inflows driven by commercial initiatives as well as longer maturity of products sold. Consumer loans distribution fees reached $63 million in the quarter and $2 or $3 million in the nine months, both up 15%, driven by higher margins confirming the strength of our multi-partnership model. Asset management fees came in at $47 million in Q3 and $136 million in the first nine months, impacted by a different product mix with lower upfront fees, while AUM continued to grow thanks to positive net flows. Finally, adjusted EBIT came in at $262.3 million, up 16%, and $790 million in nine months, up 23%, compared to 2024, on the back of strong revenue performance. Moving to slide 12, TFA has continued to grow, reaching $6.1 billion, up $10 billion from the start of the year. Let's look at each component. We reported strong 2.3 billion net inflows in investment products, confirming the positive momentum in life insurance, where net inflows total 1.2 billion. Postal savings net outflows improved in Q3, supported by strong performance at 100-year anniversary postal bond. Deposits were up, benefiting from stable retail balances at 58 billion and higher, though more volatile balances from PA clients. Moving to slide 12. Moving to slide 13, insurance services revenues amounted to $446 million in Q3, up a strong 12% year-on-year, and $1.4 billion in the nine months, up 10%, supported by both life and protection. In Q3, we continue to report positive life net flows, driven by strong GWP, up 7% year-on-year, with an increased share of multi-class products, now with over 70% of life investment and pension GWP. Our advisory offering, built in the context of the new commercial service model, is leading to proactive rebalancing of our clients' portfolios, resulting in a lapse rate of 8.3% in the quarter, more than 50% of which have been reinvested into new, live investment and pension products. Life investors and pension revenues are up 11% to $393 million in Q3 and up 10% to $1.2 billion year-to-date on the back of stable CSM stock and higher CSM release. Protection revenues are up a solid 11% in the nine months. to $147 million, supported by higher gross return premium and up 14% in the quarter. Combined ratio stood at 83%, while we confirmed our fiscal year 24 guidance of about 85%. Adjusted EBITDA, $1.2 billion in nine months, up 9% compared to 2024 and up 11% in Q3, reflecting top-line trends. Our stock of CSM is stable at 13.7 billion, driven by strong new business and positive financial variances. This provides us with strong visibility on the future profitability of the business. Normalized CSM growth stood at 3.5% on an annualized basis, up from 2% in 2024, with strong increase in new business value and expected return more than compensating the release. Let's look at the solvency ratio evolution on slide 15. Post Evita Group Solvency II was 312 at the end of September and well above the managerial ambition of circa 200% of the cycle. This ratio already includes the impact of foreseeable dividend based on 100% net profit remittance. The marginal reduction in the ratio was mainly related to economic variances such as higher risk-free rates. Our Solvency II ratio currently stands between 305 and 320 percent. Moving to PostePay service on slide 16. The PostePay ecosystem continues to represent a sustainable engine of growth, innovation, and customer engagement for the group. Revenues rose to 409 million in Q3 and 1.2 billion in the nine months, up 3 and 5 percent respectively. Payments are up 1% to 298 million in Q3 and are up 2% to 878 million in the first nine months, supported by transaction value growth of 10% in the quarter and 9% year-to-date, offsetting shortfall due to EU law change. We are significantly outperforming the market and growing our market share in a competitive environment. Net of instant payment shortfall, payment revenue growth is at around 5% in both the quarter and the nine months. Telco revenues are stable in the quarter and are up 1% in nine months to $247 million, supported by our resilient client base and the fiber offer. Finally, energy net revenues total $86 million in nine months, reflecting an increased customer base that now stands at around 950,000 clients and comfortably heading towards our 1 million client base target by the end of the year. Adjusted EBIT grew a robust 6% to $140 million in Q3 and 9% to $416 million in nine months, underpinned by solid top-line performance and in line with guidance. Since the start of the year, our average workforce has remained just under 120,000, consistent with the level of full year 2024, with hirings broadly offsetting excess of circa 6,000 FTEs. Our workforce productivity improved year on year as the growth in value added per FTE exceeded the increase in HR costs per FTEs. Moving to group HR costs on slide 18. At the end of September, ordinary HR costs increased by 2% to just under 4.2 billion due to higher FTEs. The new salary increase affects September 1st as part of the latest collective agreement and variable compensation. In the nine months, ordinary HR costs and revenues are down to 39% with improving operating leverage. Moving to slide 19, non-HR costs increased by $168 million year-on-year, mainly driven by $1.2 million additional variable COGS reflecting higher business volumes. Fixed COGS are basically flat, while DNA are up by $54 million in line with increasing investments driving our transformation. In general, our focus on cost and capex discipline across all divisions remains a little sharp, and protecting the bottom line profitability, as well as cash flow, remains our top priority. Thank you for your time. Let me hand over to Matteo for a wrap-up. Thank you, Camillo. Following five straight quarters of record performance, we have once again achieved outstanding results. with nine months revenues of €9.6 billion, up 4% year-on-year, and adjusted EBIT rising 10% to €2.5 billion. On the strength of these results, we can confirm that we are absolutely confident of hitting our €3.2 billion adjusted EBIT and €2.2 billion net profit for 2025 guidance. We continue to build on solid momentum with a clear commitment to creating long-term value for our stakeholders. Our focus remains on driving revenues growth and diversification, further improving our cost and capital efficiency, and maximizing the potential of people, technology, and data. We continue to maintain a robust balance sheet with low leverage and a solvency-to-ratio of 3.312%, well above our managerial targets. This strong financial position provides us with ample flexibility and underpins our confidence in a competitive dividend policy. As a result, we're distributing an interim dividend of $0.40 per share up 21% year-on-year, totaling nearly $520 million to be paid to shareholders on November 26th. I'm pleased with the progress of our collaboration with TEAM, which will generate meaningful synergies for both groups. The first of several projects, TEAM Energia Powered by Poste Italiane, was launched in September. It's now available through more than 750 TEAM outlets. This partnership will deliver significant value for all stakeholders in the future. Once again, these excellent results are a testament to the dedication and professionalism of our people, whose daily commitment remains at the heart of our success. With that, thank you for listening, and Giuseppe, over to you for the Q&A. Thank you, Matteo. And let's start with the Q&A session. To ask a question, please press star 1. And to remove yourself from the question queue, please press star 2. And please try to limit yourself to two questions. The first question is from Tommaso Niedo at Kepler. Please go ahead, Tommaso.

Hello and thank you a lot for taking my questions. The first one is on the super app. So the migration of the super app has now been completed with 15 million users and over 4 million daily active users, which is kind of impressive. So could you elaborate on the next phase of that in terms of cross-selling across all your main verticals, I don't know, like payments, insurance, energy, and any more color would be highly appreciated. Then on the speed, you currently manage almost 30 million digital identities and it's still growing. So if you can give us any update on a potential introduction of a fee-based model. similar to other providers. So basically, if you could update us on your latest thinking around speed monetization. And just a third one, very, very quick on insurance. If you can give us more color on the negative operating variances that impacted the CSM evolution this quarter. So was it mainly different lapses assumptions? Thank you a lot.

Thank you, Tomas. I will take the first two and leave Camillo for the third one. Yes, we're very proud that moving clients and users from one app that you close into a new app is a risky exercise because there is an attrition rate percentage of clients that you know don't get used to the new app so you know doing this migration process in a smart and organized way is crucial in terms of not losing business and 4.1 million daily active users, which is almost the double of the second Italian player on our data, is a level of daily active users that we never reached in the past, not even adding the daily active user or the single app we had in the past. So that's good. In terms of the revenue and the business impact of the new app, we have basically an increase of the... diversification and cross-selling that is coming with the use of the app and that cross-selling is increasing in a very meaningful way our revenue and margin figures so we don't disclose you know our cross-selling indices, but I can tell you that, you know, a one additional product, so moving by one, our cross-selling index creates a multiple of revenues additional to the firm. So this is really the way forward. I'm very happy with that. Second question on speed, yes. Since several months, several key identity providers under speed have started asking a limited amount of money to users on an annual basis, something in the range of 6 to 7 euro per year per user. And that's something that we are observing in the market and will make our consideration before we announce the plan in 2026. Over here. But we're a strong believer of speed. We believe that speed not only is serving over 1 billion cases of utilization per year in public administration service providers, so that has become the standard standard. and very effective standard with very good use cases for public service provider. But as you know, there is also the use of speed by private service provider that is increasing is also creating meaningful and increasing revenues to post. But we believe that there is a huge potential in the system to double up from public to private service providers. With respect to the last question on operating variances, the amount was driven by three different factors. The first was the higher degree of lapses, where, however, I want to remind the audience that half of that amount is of self-help as we moved customers to more services. So the market-oriented products are in multi-class. So there is half of the collapse rate that is associated to data around 4.3. The second point that impacted operating variances is an update of the mortality tables. And the third point was a time value of money related to the upfront payment for the insurance provider of stamp duty tax.

Okay. Thank you.

Okay, thank you. Next question is from Alberto Villa at Intermonte. Go ahead, Alberto.

Hi, good morning. A couple of questions from my side. One is regarding the trend in card stocks. We have seen some decline there, especially for post-pay cards in total number, but then transactions and all the other metrics are positive. I was wondering if that's related to ready-to-reach finance or other events that impact the number of cards sold. And the second one is if you can help us modeling for the financial income 2026. So in terms of we have seen some different indications from last year. regarding the evolution of NII. Obviously, you have different levels, but in order to understand what we can expect in terms of evolution of financial income next year, what to bear in mind. Thank you.

On the first question, you have half of the answer related to the but don't forget that we have started already five years ago a trip to replace our prepaid card, the yellow card, without IBAN migrating into our evolution. So you have, and you have in the past five years, you had a very meaningful increase of the post-EPAE evolution that actually increased in the quarter by 3%. We're now 10.7 million evolution. And Evolution is clearly for us producing €18 per year of revenues and giving to our clients the best proxy to a current account. Because with the IBAN you can have your salary credited and you can do basically everything you do with a current account. On the second topic of NII, obviously we will disclose our targets in 2026, but we see clearly a slightly lower interest rate environment, especially on the short term of the curve. And that means for our floating rate portfolio, lower net interest income. As we've said since ever, basically since March 18, we will always compensate lower NII with higher capital gains. And this, I can make the statement today, will remain our objective also for 2026 and onwards. And to that respect, I'm pleased to report, and this is really the market coming this way, that for the first time we have our investment portfolio that has a positive mark to market. It's around 700 million out of yesterday. And on a gross basis, we have over $2 billion of positive capital gains that we can use next year and onwards to sustain our investment returns with a slightly lower NII scenario.

Very clear. Thank you very much.

Thank you, Alberto. Next question is from Gianluca Ferrari, Mediobanca.

Bye, Gianluca. Good morning. Two for me. The first one is on the 1.8 billion revenue guidance on parcels. Even if I take a low end of this number, so 1.75, it would imply kind of 15% increase in parcel revenues in Q4, which seems to be implying a strong acceleration versus Q3. So I was wondering if the 1.8 billion is confirmed or not. The second is on the role of net insurance in the mandatory cut coverage for SMEs. I think net insurance will be your company dedicated to explore this opportunity. And can you confirm that you will not retain any cut risk and Net Insurance and Poste Group will outsource to reinsurers the cut risk. And the final one, if you can give us the impact on the revision of the standard formula in 2027. Thank you.

Okay, I will start with the first two and let Camillo go on the last one on the standard formula. Revenues, I mean, passive revenues grew 7%, 9%, and 10% in Q1, Q2, and Q3. Q4 is the peak quarter here. and that's where we usually more than outperform the market. So it's clearly ambitious, but if I look at the volumes, we have 12% growth in nine months and 14% growth in Q3. So certainly Q3 has shown an acceleration, and if I combine that, the acceleration of Q3 to the positive commercial momentum we have to the peak, hopefully we will get broader in line with our 1.8. We might be short a little bit if things don't go well, but we're broadly in line. The second question, was net insurance. Yes, it's correct. One, net insurance is the company in the group that will take care of the new cut insurance product. Two, it's correct the fact that it will be fully reassured. Three, I can tell you that it's not a big budget product at the moment, but there is a strong focus and all I can say at this point is that I'm relatively optimistic that this will give us some additional growth in protection from 26 onwards. On the third... question on solvency, regulatory changes, and standard formula, please. Okay, so we do expect from 2027 a marginal improvement. Think about the mid-to-wide single-digit impact on our solvency to ratio. That is driven mainly by two factors. The first one is the reduction of cost of capital for the calculation of the risk margin, and the second is the changes to the volatility adjustment. Meet to a single digit can mean up to 10 points.

Thank you. Grazie.

Thank you. Next question is from Giovanni Razzoli, Deutsche Bank. Go ahead, Giovanni.

Good morning to everybody. Two questions. The first one is on the parcel. There is a lot of narrative on Italian press about a possible taxation, a fixed taxation on small inbound parcels. I don't know whether it is included in the budget law or is something that is rumored by the press as an idea. Do you think this is a challenge with your volumes of parcels inbound, especially from China? And can you share with us what is the perimeter of these activities which could be potentially impacted? And in general, how do you see these potential negative initiatives going forward on the parcel volumes? And the second question is on the postal savings. I think that the performance of the third quarter was very, very good, very strong inflow. You mentioned that there has been an ad hoc marketing campaign for the 105th anniversary of this product. Shall we take this as a reversal of the trend? For instance, you had lower redemptions in the Q3. or shall we assume that this is a structural reversal of the negative trend that we've seen in the recent past because of the redemptions? Thank you.

Okay. Thank you, Giovanni. Very good question on taxation. I mean, this is not, from what we understand, a national initiative, but it comes at the European level. And it would be an additional duty. Today the FT was referring to one euro. I heard from other postal operators that it can be as much as two euro per item. import from countries outside the EU. The first order impact is clearly for those players that are more involved with delivering those items. and we have a meaningful distribution role of parcels coming specifically from Chinese platforms. So this tax lowers the amount of items shipped from China, the first order, could be a marginal impact. Usually, what we've seen in the past, it's not the first time that there was already something on customs 18 months ago, that the market readjusts and, you know, one or two euro will not really change the attractiveness of those platforms. There is also a second level impact, which I think is positive, or we should try to consider it and to play it on the positive side, which is this is making for the Chinese platforms less interesting to infrastructure themselves in Italy. So you know that today, you know, the largest platform in Italy is Amazon, and they have their own network. And, you know, looking forward and looking at what's happening around the globe, the Chinese platforms are also getting organized with their own logistics. These kind of barriers probably put their investment appetite in any specific region a bit more distant. On postal savings, there is no reversal on the net, Giovanni, on the net funding because the amount of redemption that we face every year is extremely significant. It's only showing that the CDP that is issuing the product has done a very good job in providing products that are, you know, in line with the market, that are attractive, and that help us, you know, And it's no coincidence the fact that given the number of Italians, we counted them a couple of weeks ago when we celebrated 150 years of postal savings, there are 27 million Italians that own postal savings. So our daily activities in the consultancy firms, in Adeteller, on postal savings is very intense. And when we have a product, we have our salespeople being able to engage clients, not only on postal savings, but generally speaking on all our products of savings and on. So for us, the quality of the offer of CDP is extremely important to keep a positive dialogue with customers. our clients, and I think, you know, Giovanni, this is the most important news that we can take out of this positive trend.

Thank you for the clarifications.

Thank you very much. The next question is from Andrea Ligi, Equita. Go ahead, Andrea.

Hi, thank you for taking my question. So from my side, The first one, I was really interested on having more detail for what you can share about the Gem Venture with the team for the cloud-based services. What should we expect here? Obviously, also the timing for the setup of this Gem Venture, the kind of services you expect to provide. And also, obviously, I know that it's really preliminary, but the kind of penetration and growth you expect to achieve here. And the second is on dividend. You have indicated that you want to keep the dividend policy really appealing for shareholders. So also considering the interim dividend of 40 cents, what should we expect in terms of evolution of the dividend policy and the dividend payout? Thank you.

Thank you, Andrea. The JV would require a bit more time and I'm sure Tim will and Pietro will do his own care and use his own care and duty to explain it to investors along the road. What I can tell you at this point in time is that there is a clear process of migration to cloud, which is not only moving data from on-prem uh data warehouses to cloud the beauty of moving to cloud is changing your operation and using that data in a more flexible way so you it's uh adding services to clients that are moving to cloud so when you offer when team offers and the commercial responsibility of the work of the JV remains with the team that obviously has a commercial sales force dedicated to this offer to migrate into cloud, increasingly they will add products, services, and value for clients. When it comes to public sector clients, there is a couple of additional considerations that need to be made. The first one is related to the PFN, you know, the Next Generation EU big effort, which has achieved a very meaningful result in terms of moving the majority of the public administration into cloud. And now it's, you know, the second wave of increasing the services and the value of using the cloud for the public administration. And the JV will allow teams to internalize some of the work and value-added integration of systems that were previously mainly outsourced. And the second consideration is the preliminary we receive from core public sector clients, public administration clients, that this initiative and the role of team in this space is very welcome because with our acquisition, we finally have in the country a national organization cloud provider. Think about the sovereign cloud topic, for example, in the current geopolitical situation is clearly a very hot topic in the hands of the public administration. So finally there is an Italian player that gives total confidence to the public administration to move and use data in a smarter way in the future. And this is the role that the JV will have to perform in supporting the commercial activities of TIM. And I think you will see more on this from team side, especially and also from our side with the announcement of the 2026 guidance in Q1 of 2026. Dividend, you said it all. We always stated that we want our dividend policy to be competitive, which basically means we look at our peer group, that is clearly in the insurance space, it's clearly in the banking sector. We look at the banking sector, including the buyback programs that we don't do. So when the share performs, we have left some room in terms of dividend payout to follow and make the dividend in terms of dividend yield appealing and competitive to our investor base. This is the work that we will perform over the next year. two to three months and, you know, second half of February when we will announce the 2026 preliminary results, five results, six guidance, we will also have our position on 2026 dividend.

Thank you.

Okay, thank you. The next question is from Daniel Wilson and Morgan Stanley. Go ahead, Daniel.

Hi, thank you for taking my questions this morning. Just two, one on CDP and one on the Solventeer review again. On CDP, can you walk us through the kind of process of the renewal of the agreement with them, whether there's any potential upside to the floor and the ceiling of the fees you can generate on the postal savings? And secondly, on the solvency tier review, I know you spoke about it just now, I thought the mid to high single digits benefit seemed a little bit lower than I was expecting, especially given that you guys have quite a high risk margin versus your solvency capital requirement, and I would have thought that the kind of risk margin changes would have been a pretty big benefit to you guys. So I'm wondering what are the offsetting factors from the benefits you're getting to bring you to that mid to high single-digit benefit? Thank you.

I will let Camilo answer both questions. Thank you, Daniel. so the first question carries through until uh cdp agreement carries 20 20 the end of 2026 with respect to how the agreement is performing i would say that is performing well we had guided We got it for the year at around 1.7 billion in terms of revenues. We are going to be at least towards the high end of that, and we still have an additional year to perform. This was done in order not to have the agreement overlapping with... the CEO change in potential change at the end of the summer. So that is the first point. With respect to the second question, I confirm that at this point the estimate is around 10 basis points from 2027. We have both positive and negative factors, but at this point you should stick to what we advise, which is around 10 basis points incremental benefit. Percentage points, obviously.

Thank you.

Okay, thank you. And finally, we have a last question from Michael Atzer at Berenberg. Michael, please go ahead.

Thank you very much. Thank you for a lovely presentation, as always. Two, one is the 1.1 billion TIM valuation. Where's that? Or what's the benefit of that, if you like? Where can I see it? And the second is on your lovely slides, 36 and 37, where you talk about life net inflows and the mix between multi and segregated and all that. The feeling I have, but I'm more interested in what you're saying is you're not particularly interested at the moment in the big numbers, the volumes. So Generali this morning announced that their volumes went from 3.3 billion in Q2 to 4 billion in Q3, so quite an amazing number. Your numbers are… I'm nagging a lot, but it's not a criticism, it's just an observation. And the feeling I have is you're much more interested in transforming your portfolios and moving your policyholders from the old segregated accounts into the multi-class. I wonder if you can explain how is that working and what the benefit is, obviously both for your policyholders but also for investors. Thank you.

Okay, thank you, Michael. I will let... Yeah, Michael, on Tim, to be clear, the current market value of the stake is 1.9 billion, not 1.1. 1.1 is, roughly speaking, the amount invested.

And where's the benefit of that? Does it boost your sovereignty or your capital or anything?

No, no, no. The stake is equity accounted, so we don't do any market to market. So, basically, the changes in the accounting value will follow the pro-rata net profit and dividends of TIM going forward. So, there's no mark-to-market. But, obviously, you know, the mark-to-market is important from a balance sheet valuation perspective. Yeah. Basically, if you want to be, you know, precise, if we have put $1.1 billion, which we could have invested at, let's say, you know, $3.5 billion, percent in government securities, we are basically giving up around 40 million of NIAE. The strategy there is to extract two things. The first one is synergies, and we already signed the MVNO contract which is making us saving, versus the previous contract, 20 million per year from next year, so that's already in the bin. I mentioned several times in my presentation the Poste Energia contract sold. That's additional value that is created by this partnership and this stake basically in our accounts. I spent a few words on the JV and there is certainly more to come in terms of synergy. So that's the first block that will more than compensate the capital return that we would have had investing the 1.1 billion in government securities, which is, as you know, the only thing we can do by law. The second benefit for investor, Michael, will be once the company is already in the strategic plan announced, by team, we start paying dividends. So there will be a return on capital as an investor, and that return on capital now has also the benefit of being on 1.9 billion when we invested only 1.1. So it would be clearly more than compensating. It would be with an average component. The second question was, what are the trends towards shifting customer policies from capital guaranteed to partly non-capital guaranteed? And the answer is that provided that the customers interact with the right financial profile, moving from capital guaranteed to non-capital guaranteed in an environment where rates are expected to go down. The expected return of a non-capital guaranteed product is superior, so the expected return for the customer should be to have a better return on the policy. And as far as we are concerned, we have Different pricing between capital guaranteed and non-capital guaranteed with a different mix are sort of similar, but in the interest of customers, it's a more performing instrument in this rates environment.

And is there a capital benefit to you guys from doing this in terms of less required capital?

If there is a marginal benefit in terms of capital for us, yes. Excellent.

Super. Thank you so much.

Yes, sorry, just the last word, Michael. The capital benefit is marginal because the equity exposure embedded in our multi-class is residual. So our products always have, even if it is a multi-class contract, there is always a minimum of 60% percent of class one and the 40 percent has again a fixing and component so at the end you know we have you know we have less release than you know doing purely equity link unit products very clear thank you so that was the last question so thank you thank you very much for joining us today