Unipol Grupo Spa

Good morning. This is the Corus Call Operator. Welcome to the Q&A session on the Consolidated Results, 30th of September 2020, Gruppo Unipol. Our Group CEO, Carlo Cimbri, after a short introduction, will take your questions.

Mr. Cimbri, the floor is yours. Thank you.

Okay, the sound is back. Okay then, so I don't have to add Anything else to our presentation? I'm sure that there will be questions and plenty of food for thought that you may want to share with us. Thank you. Just go ahead. Once again, Coral's Call Operator is saying that if you want to ask a question, just dial a star followed by one on your telephone. If you want to remove your name from the booking list, just dial star followed by two. Please ask your questions by using the receiver of your telephone. If you want to ask a question, please dial star followed by one now. Question number one is from Elena Perini from Intesa San Paolo, please. Good afternoon, everyone. I have just a couple of questions I'd like to share with you. The first one concerns what you are experiencing in terms of the live business. Do you see people taking back their policies because of the second lockdown? So there may be some, let's say, difficult economic situations, especially in terms of small and medium enterprises or professionals or business owners. Their companies may be still closed, or they will be closed. The second question is, do you have some update in terms of dividends? I mean, we got a conference from General yesterday, and they think EVAS may remove the ban. So just would like to know what your opinion about this is and which kind of intention you have in terms of paying dividends.

Thank you.

Okay, let me give the floor to Matteo for the first part of the question. So, question on the live business. Don't forget, our policy portfolio is basically focused on retail customers. So, basically, we have persons, I mean individuals, and, you know, the small and medium enterprises or maybe the corporate, you know, chunk is quite small. Okay. So, no, well, people didn't, you know, take back their policies. I mean, this rate, even in the first pandemic, I mean, this rate, you know, has been reduced because, as you know, interest rates are now negative. So they went down and life policy is the last, if you will, document or investment which is taken back versus many other types of investments that you can find in the portfolios of families now. This is the second lockdown, the so-called soft lockdown, which has just begun. So, well, I don't think there would be any, you know, stress on, well, consumers or customers now. It all depends on how long it would be. But for the time being, the trend we see is definitely opposite. I mean, people are kind of reducing the lapse rate we have on the Unipol portfolio, but also on Arcavitas. Yes, I still have to give an answer on dividends before introducing the second question. Okay, that was sort of an unexpected question, so to say. So, in terms of dividends and, well, you know that I have shared some opinions about this in the month of August when we have approved the data and the numbers the first six months of the year i mean so our solid intention um based on the results that we have you know uh got in 2019 and this is also based on the current results so uh it is our intention solid intention to comply with what is written in the industrial plan so uh in terms of the uh no quantity of massive dividends to be uh distributed in terms of only paul grupo but also in terms of only policy so this is what we still want to do in terms of solvency levels but also in terms of you know financial uh resources which is what you know we uh keep we store i mean of course i'm talking about what we have saved the last year, including what we are saving right now. So this is what we're doing because, of course, we would like to redistribute and make dividends, and this is fair. I mean, this money has to go back to shareholders as soon as we can. We don't know exactly what our industry regulator wants to do, and as you have mentioned, I mean, the sector regulator is IVAS, so I-V-A-S-S. And, you know, they don't need any, let's say, spokespersons, I mean, to tell us what to do. I mean, they have plenty of, you know, top qualified, you know, well, representatives. So as soon as they want or as soon as they can, they will tell us what to do concerning, I mean, this subject.

And as for dividends,

There's a recommendation that has been sent out to the Italian market. This is not an isolated, I mean, one-off situation. This is happening all over Europe, and it's based on an organization or a body, I mean, the European Central Bank together with the AELPA. And again, it's been, let's say, harmonized and taken into account by local national regulators. I know that throughout 2019 there have been some diverse situations. I think that I'm now mentioning what the European regulators said, and the example I have shared with you refers to the month of July. So there have been some recommendations from industry regulators So we just wanted to be on the cautious side, and we have complied with this kind of recommendations also in the first part of the year. So as you know, we have distributed the Grupo SAI dividends, but 85% of those dividends basically don't go out of the group because, I mean, they apparently go out, but then they come back. There's been, you know, the other recommendations from other regulators in different countries in Europe. Well, somebody made different choices. But then I think that the, let's say, European recommendation is the one that's been harmonized and taken into account by every single regulator in the industry. So as far as I know, in the second half of the year, no dividends ever have been distributed by anyone. Of course, I mean, we compete with other, well, of course, competitors. I know that there have been some gaps or some differences, but I think that in this extraordinary situation, which is what the world is experiencing right now in terms of the COVID-19 pandemic, well, I think that this is something that may happen. They shouldn't. We'd rather avoid this, but I know that this is something that may happen in extraordinary situations. Well, what we do is working, striving to increase our profits to become, let's say, as solid as we can in terms of our balance sheet. We are ready to distribute dividends so we can do this as soon as the safety conditions to do so are met. And of course, I hope that we will find soon a solution for the pandemic. It will take months, of course. So I hope that we can reasonably think of a new normal business in the near future. So as I said in August, I do confirm here that the group will distribute dividends, which is what is written clearly into our business plan. You know that we are about to close the second year of the business plan, and the results that you have seen are self-explanatory in terms of our dividend capability. I think we have the right resources, the right positioning on the market. We have solid business, so all of this will give us the opportunity to reach well high targets in compliance with our estimates or forecasts also for 2021 so once again we are you know taking into account and meeting all the conditions to meet you know the contents of our business plan there are some limits or thresholds around us but this does not depend on us so once again I'm here to tell you that you know as soon as this is over of course, we will have the opportunity, I mean, to pay remuneration to shareholders, which is what shareholders expect. I mean, those who at least believed in our business plan. Thank you.

Thank you very much.

Next question is from Gianluca Ferrari from Mediobanca, please. Good afternoon. I'd like to go back to one of the points raised by Matteo. So I can see that the curve is negative on the BTPs. Now, the diagram that I can see, page 10, is very clear. So this is an asset class, which is less and less important for you. So back to Q3. Where did you look for yield? Which kind of business did you have on the non-life basis? I'd like to go back to one of the previous meetings with Ania, A-N-I-A. So no guaranteed capital for the so-called RP or first level, first branch. So is this something that you talked about with Ania, so with the regulator recently? Second and last question. Q4, should we expect some value realignment on the real estate and the hotel business. Good afternoon Gianluca. Now as for the investments carried out in Q3, so this is your first question, the value of the transfers we've carried out on BTB have been allocated into specific portfolios and There's one part, if you will, of the European core, which is basically France and Germany. So you can imagine that the investment yield is now basically negative. It's a component. I mean, it's an investment component which is quite large, quite big. And, well, credit notes or securities having a high yield, So the central value is A. So there are other interesting investment opportunities. So, yes, we've taken advantage of those opportunities. Now, the investment on the European core investment is on the extra long parts of the curve. I mean, the negative, if you will, side is very limited, very small. The reinvestment we've carried out was made on a 1% to 1.5% rate. I'm talking about the live business, basically, because what we have carried out was focused, basically, once again, on the live business and, in particular, on the so-called GS. Now, as for the normal life, well, investment rate is around 0.5%, so this is the average rate you have today when you reinvest money. cash flows, but once again, this is a small part. Now, as for the so-called first level or first branch product, I mean, with the possibility not to guarantee the capital, well, you know that this is a long debate that started so long ago. Now, we are not included into the ANIA's roundtables because, of course, we are not a negative partner there. But anyway, we talk about this with regulators, and there are no news, no novelties, that this kind of security has to guarantee at least the value, I mean the capital. So it's really very difficult now to talk about traditional products, so much so that we have discontinued the placement of first-branch or first-level products, So basically, we almost exclusively sell the multi-branch products. So they can be re-evaluated or reassessed. Once again, they contain quite many unit-linked products. Your second question was in real estate. Well, there have been no depreciations on the month of September. And as for the end of the year, well, We will take this into account, I mean, depending on the situation at the end of the year, but for the time being, well, the answer is no.

No criticalities I'd like to share with you today. Let me continue, you know, this answer. Okay, second part of the question, so what to expect, you know, at the end of the year.

So in general, you know that we are going through some, you know, unique times or abnormal situations. And as you can see by reading our results, but also the results of many other, well, companies in this industry. Well, this is something which is, well, non-conventional, if you know what I mean. If you check our plan forecast, of course, we wouldn't have imagined this kind of results, I mean, in the first nine months or three quarters of the year. So, of course, it's easy to understand that this depends on the current situation. So, you know very well that we're going through some, you know, uncertainties, and not just in our industry, but also considering, I mean, the economic situation. I think that today in this kind of prolonged, I mean, progressive uncertain times, we are managing and we will be managing our products with so much, let's say, caution. This is what I said before when talking about dividends, so we do hope the situation will will end soon, but of course, no one here has a crystal ball, so we don't know when it's going to end. This means that we have to expect, you know, 2021 with an ongoing pandemic, well, at least for the first part of the year and all the consequences that this entails. So, back to you, Gianluca. Our assessment or evaluations will be based on quotients, so we will have sort of an extra quotient versus an ordinary situation. Because, once again, we have no interest whatsoever, if you will, to, let's say, feed the results that they share. I mean, what we want to do is to guarantee stability or hitting the target in 2021 or in the next financial year up to our ambitions. I mean, I mean no matter what the scenario will be so we will you know strive to have some buffers or you know provisions or even reserves in all the branches of our business so back to your question on real estate now if you take a picture if you will or a snapshot of our real estate business well today there's no room for prudential depreciations because today more or less we have 3.8 billion euros. This is the value of our real estate. And basically we have, well, the evaluation says 400 million euros extra or more. Once again, this is sort of a forecast. I mean, what we hope we could earn But anyway, we know that this is aggregate data, so it doesn't take into account any single industry. Now, back to your question as for the hotel business. Now, hotels, if you will, are just one part of our assets, and the hotel situation, so the entire, if you will, hospitality situation in this country, well, it's something that everyone knows. I mean, we are right into the same situation. Anyway, we think that the hotel business is going through, let's say, a contingent, I mean, a temporary crisis. This is not a final crisis. I mean, the problem is not tourists going to other countries and maybe Italy will have negative results. No way. I mean, tourism will be back, business will be back, people will keep traveling or resume traveling, rather. We just have, well, so to say, wait for a normal life. So once again, the hotel business is going through a contingent crisis. Of course, you need to be very solid, very strong. You know, in Italy, the hotel business is very, how can I say, very fragmented, I mean, in terms of owners. So there may be different situations of the hotel business, but this is not something that's happening to us because, once again, we are very strong and sturdy to support and foster the hotel business. So, well, as long as this is necessary, so once again, just before, all the way before going back to normal. So we are here to support the hotel business. There may be some potential evaluations. Well, maybe we're not doing this for hotels. We just want to have a potential evaluation of all of our assets, just thinking of the future, but also aiming at stabilizing results. You can see here that the result in November is, let's say, out of scale. So totally different versus the ordinary business. Okay, thank you so much. I appreciate it. Next question is from the conference in English from Peter Elliott from Kepler Sugar.

Thank you very much. I have three questions, please. The first one is just return to the life division, but maybe looking at the earnings specifically because obviously they've been weak this year for a number of reasons. I'm just wondering, has anything changed in the business fundamentally or would you say it's all one off? I mean, I guess what I'm really asking is, you know, what do you think of as a sort of normal run rate of earnings for the life division from here? The second question is on non-life. And I'm just wondering if you could talk about the pressure you're seeing on pricing at the moment with the lower claims frequency that we've had. And then the final question is, I guess, Unipol hasn't been buying shares in Unipol side for the last couple of months. I mean, obviously, those shares seem to be just as good value as they were over the summer when when you were buying and you're still below 90 percent. So I'd just be interested to get an update on your thoughts there.

Thank you very much.

Well, thank you for the questions. Now, as for the live business, this was, Elliot, one of the key points we talked about when we shared, you know, the results on the first six months. Now, we have deeply modified our asset allocation strategy because we have reduced, you know, the shares exposures on a specific business, which is the banking business. You know that in that case, we got 110 million euros of capital losses so that was of course a one-off and it has had a major impact on the 2020 accounts of course this is also something that you can see in you know September 2020 so the effect is going on well as I said before it's important to say that that is a one-off in terms of RR or run rate the live business today produces something like 90 basis points on the total provisions of our portfolio. 90%, 9-0. So this is the level we have today. Of course, we expect an ordinary profitability, so no capital losses or no capital gains directly attributable to the life business. So just to tell you in general how the portfolio is behaving right now, because, I mean, without any runoffs, well, basically... We have between 85 and 90 BPS on provisions. There was, if I'm not mistaken, there was another question on the, right, on the pricing. Now, the pricing on the TPO, now, as you know, the prices have been lower and lower, especially because, I mean, frequencies, so, you know, accidents have reduced so much. So, of course, pricing is still going down. And I think that this will continue, well, until the end of this year. Then, you know, as for 2021, we have to consider all of the effects having to do with hopefully a return to normal or a foreseeable, you know, increase of, you know, frequencies. So hopefully and presumably there will be a stabilization of pricing. Peter, I'd like to add the following, you know, going back to pricing question. Now, as far as we are concerned, directly at least, back onto the average premium this year, don't forget that you have to consider one of the choices we made in April. Maybe you remember that in April, we decided to give one month of insurance coverage back to our customers. And there was... highly advertised initiative, and the name was Un Mese Per Stay, so one month back for you, and, you know, this is what we had to consider. So, if you consider, you know, the average policies or premium, well, this is basically 8% of the, well, premium, so of the income, you know, one month back is 1 12th of the yearly business. Now, many customers have, you know, renovated their policies, our renovation rate of our policies is now 87%, so this means that customers have used, I mean, the voucher that we have sent them, this means that you can have basically one month of the premium coverage back into the pockets of our customers. Of course, this has an impact onto the average premium, and as a consequence, I mean, the specific pressure that we have on the average premium in this financial year. As for your third question, I mean, the strategy that we are implementing right now on the, well, one of the companies we control, which is Unipol's side, you know, as I said in some previous conferences, you have to remember that what we do is a very careful evaluation and assessment of the values of this company so this is our well biggest asset and of course so well we do purchase shares at the right time or when we think that there's a value gap a significant value gap between you know the value that this company has in our opinion on the one side and on the other side what is it's really worth on the market so this is what led us to uh as i said before 85 which is now the uh shares that we have in the capital of unipolsai and the strategy is still there unchanged i mean we keep following with you know as much attention and focus as possible if we haven't done this in the past two months well maybe it's because my colleagues in the you know finance department think that uh there were no right conditions but once again the strategy is still there so When we think that there's room for maneuver, so if there's value to take advantage of in the company we control, well, we just go ahead and purchase some of their shares based on the results of this company. And we think this company will also do this in the future. So we think that this is one of the best investments possible for our company in terms of cash I mean, the cash we have in the holding company.

Thank you very much.

Next question is from the regional conference, from Andrea Lizzi from Equita, please. Good afternoon, everyone. I have some questions. Now, the first question concerns accident frequency in Q3 versus Q3 2019. What have you seen? And there have been, you know, new further restrictions in the past weeks. So what about the car accidents or claimed frequency? Can you tell us more about the financial situation about this today? I also have a question on combined ratios. I remember that in the H1, H2, you had a very prudential, very cautious policy. Can you confirm this for Q3? And what about the IFRS provision as of today?

Thank you.

Thank you for your questions. Now, as for the frequency, well, of course, I mean, mobility went back into this region and into this country starting from June the 1st, so after the first lockdown. So mobility was back, and this means that we sort of went back to normality. Now, this new normal has taken place very gradually, I mean stepwise. It has almost reached, in terms of traffic and mobility, it has almost reached a the same level we had one year before. So this is what happened in September. Now, claims take some time, so there's a sort of a time gap or a delay. So in Q3, we still see a claim level which is a little lower than the previous year. But once again, the difference was very, very small If you compare this with the lockdown season, so beginning of the year, it is still too early to carry out an assessment or a forecast on what's about to happen. Now we have the so-called soft lockdown, which is what we started here at the beginning of November, so we have just started implementing the soft lockdown measures. I don't think it's the right time to make any forecast on what is going to happen in the next weeks or so, I think that more or less we are very, very close, I mean, to normal, ordinary level. So traffic is just slightly smaller than the situation exactly one year ago. Of course, once again, you know, it depends on the, you know, the, well, infection rate and the possible further measures that the government may decide to implement in order to face this current situation. You also mentioned the financial position. Yeah, just one second. I'm just taking the floor to tell you that as for the net financial position, so NFP Unipol Grupo, we now have 1.5 billion euros, a little bit less than 1.5 billion euros This is what's happening at the 30th of September, so end of September, €1.5 billion. And if I'm not mistaken, well, we have made an investment, so we have underwritten 10% of the BPER bank capital increase. This is around €80 million, just a little bit less than €80 million.

So the S4, once again, the NFP, I think that that was in the presentation.

Anyway, as you know very well, in the month of September, so two months ago, we put 750 million euros. This is a new bond. And this is what we have done to increase our cash and cash equivalent because we saw that the market conditions lately are very favorable for us. So in this case, our coupon is 325% with Cereo. And by doing so, we've been able to stretch the duration of our total debt. So once again, we've been able to increase our cash and cash equivalents. So today we have 1.5 billion euros liquid assets on top of strategic assets, so without considering 85% of Unipol's side. And then there's a residual part that we still have to sell of the Unipol REC portfolio. So we may recover 450 million euros versus the 700 million euros we had two years ago. And we also have, you know, 10% BPER in our portfolio. I mean, all the rest is represented by cash or liquid assets totaling more than 1.5 billion euros. As for the FS Reserve... Now, we, well, considering the latest data, we have a little bit more than 1 billion euros.

We had... Excuse me. Ladies and gentlemen, please hold the line. The conference will resume shortly. Thank you.

Ladies and gentlemen, please hold the line.

We also wanted to have other buffers and we needed to have more trust and confidence for I mean facing 20, 10 to 1 together. Sorry, we missed a couple of seconds of speech because of line problems, sorry.

Okay, once again the operator is telling us that the line is now back. Okay, Andrea, sorry, I was told that maybe you couldn't hear me for some seconds. Okay, combined ratio, yes, maybe the answer on the combined ratio, we couldn't hear that.

Okay, okay, let me repeat the question, sorry, the answer on the combined ratio question. Now, in terms of the combined ratio, once again, we have a cautious approach, which is what you are, you know, talking about, and of course, this is confirmed in Q3. Now, this is to be considered within the framework of what I said before. This is due to the evaluations that we are carrying out right now. The situation is very uncertain. So, once again, we do this on a prudential basis, and we work very cautiously on all the aspects of our financial situation or business. Once again, we have sturdy, solid economic financial results. But once again, this is a very extraordinary phase or a one-off situation, if you will. So we're taking advantage of this situation to increase all the different components of our balance sheet. So we try and increase the so-called prudential or caution buffers that we have. Once again, as I said before, our objective is not, let's say, strengthening the business or booming the business one year as a one-off behavior, but we have a mid-term, long-term vision. Of course, we have to comply with the three-year-long plan that we are implementing now, including the future. This is what we're doing right now. So, cautious on basically everything we do, including what we think on combined ratio and even our provisioning or reserve policies, basically. Now, this concerns us. well, not only the current business provisionings, but we also provision on the previous business or previous financial years. So maybe you remember how much we have sold. Basically, we have 1.6% less than they were last year. If I'm not mistaken, last year in November, so year-to-date we have 6.3% in terms of provisioning. This year we have 4.7%. So if we consider that within 4.7%, more or less 50%, so more or less half. So two points is represented by collections. So it goes without saying that the, let's say, savings on what we have paid that you can see now on the financial statements, well, this part is very small. And then on top of this, if you consider that into the two main, let's say, plans, and again, this is data at the end of September, so we have saved money on what we have paid. I mean, more than 40% has been saved in terms of total product liability, TPL, for the motor vehicle business, and then if you consider all of this, it is easy to understand that the part that you can see in the financial statement this year is, again, very small and marginal. I hope you have heard the answer on the FS. Okay, I will repeat it briefly. Now, in terms of FS, I mean, the provision was positive at the end of September. It was 800 million euros. It is now exceeding 1 billion euros. This is the latest, I mean, assessment we carried out just some days ago. That was end of last week.

Thank you.

Next question from the conference in English is from Sudar Sharbutrat. from . Go ahead, please.

Hi. Three questions, if I may, and maybe some of my questions are already answered because my language is connected. My first question is regarding the customer rebates that you're providing. If there is a second lockdown, do you think that there will be any further pressure on providing additional rebates to customers going forward? I mean, just trying to understand what your thoughts are about that. My second question is on the combined ratio. Now, I think you probably answered this, but just for the sake of my understanding, I want to ask you, can you give some color on the underlying improvement in the combined ratio? That is, you know, if you exclude the impact of lower frequencies this year, what is the sort of underlying improvement that you're seeing in the combined ratio, in the loss ratio? And what are, and if you could give the figures for the current year reserve releases and the prior year reserve releases for nine months 20 and nine months 19. Thank you very much.

Okay. Now, if I have understood correctly, first question concerns basically, let's say, what may happen in terms of further reimbursements on the Total product liability on motor vehicles. Okay, so rebates. So if we plan to have other rebates on the motor vehicle business. Well, I think it's a little bit too early to say this. And I think that our country... So, as I said before, this country has just started, unfortunately, a second lockdown. The pandemic is going up right now in this country, at least. So, what is happening and what will be also happening probably in the future is further restrictions. This is what we expect from the government. Of course, it's really difficult to know how long they will be applied for. So once again, for the time being, it's really, really difficult for us to make some assessments or forecasts in terms of further actions we may want to carry out for our customers. Now, what we have done, well, had just one key target, I mean, protecting, at best, our customer base. So, basically, we felt no pressure onto the customer base in the past nine months. Well, rather the opposite. So, as I said before, we have reimbursed one month's worth of the policy coverage just because we wanted to strengthen the loyalty of our customer base that has responded positively, as I said before, because the... you know, retention or rate or renewal rate has grown. And we managed to let it go up by some percent points, also thanks to the actions that we have carried out. So once again, back to your question, no, no pressure on the customer base, rather the opposite. I mean, we've been able to further strengthen customer base. And as for your second question, on the CR, so on the combined ratio. Yes, well, I have just, you know, read before. In my opinion, this is what I'm recommending you to do for the entire insurance business. So, because all of these data now are based on an extraordinary situation, not just for us, but also for our competitors. In terms of, you know, this abnormal claim frequency, But of course, this is due to the current, you know, pandemic-related situation. I mean, when I say abnormal, I mean positive because, of course, we have, well, many, many claims less than usual. So once again, this is the way you should, you know, interpret or understand this data. Once again, you are also supposed to be very prudential, very cautious. when you read the current situation. As I said before, in front of us we have again some uncertain times, once again due to COVID-19. So the target we have right now is to ensure continuity and seamless stability to our results. We just don't want to have, let's say, an extraordinary year, which is the one we have just experienced. But this is what we do on all the items of our financial statements We do this also on the evaluations having to do with provisions. We do this concerning the current financial year, but also the previous FYs or financial years. So let me go now to the third question. Well, I can tell you that as far as the previous financial years are concerned, well, if you just make a comparison with 2019, in the month of September, we have basically 4.7% reserves or provisions. We had 6.3% one year ago. The difference is 1.6%. Now, if you also consider these figures net of collections, and as I said before, collections are basically two points out of 4.7. You know that this collection item goes right away into the financial statements. So if you assess, I mean, this percent rate, well, basically, this is almost 50% of 2.7. So this figure is really very small. I mean, if you read it by observing how much money we have saved on what we have paid in the previous financial years. So basically, we are saving more than 40% in terms of the TPO motor vehicle and more than 60% on the provisions on the total product liability TPL. So this is a huge amount of money we are saving and almost only 10% of this huge amount of money can be seen actually into the financial statement. So this is the reasoning you are supposed to do.

If I may just ask another question. on the dividends. I know your commentary on the dividends has been crystal clear and you know what you want to do. But just for the sake of confirming things, I wanted to ask whether you are still confirming the 600 million target for 2019 to 21 for Unipol Group.

Thank you.

Thank you for this question. So this is the target we have for 2020. So this is what we can see in our plan, as you said correctly. Once again, the so-called distribution objective, it should be reaching 600 million euros dividends. This is a cumulative data 2020. You're right. I mean, the first person who asked the question, Elena Perini, asked the question on our position on dividends. So I'm repeating the same answer again. So in 2019, our profits were good enough to distribute dividends. And, you know, based on the data of the first nine months of the year, we are doing exactly the same positive thing also in 2020, so in the current year. And, well, as for the assessment or forecast on 2021, well, we think we have a strong business base. At the same time, we have solid, sturdy buffers in all the branches of our business. So this means we will be able definitely to, well, we are almost sure, total peace of mind to reach the business plan objectives in terms of profits also in 2021. Now, this means that we are able to distribute or to pay dividends And I have to say that after, you know, the first two years of this industrial plan, we have the right, you know, possibility to pay dividends. This means that we are financially strong in terms of all Nepal group. And I said before that we have stretched a little bit the duration of our liabilities. And then we have 1.5 billion euro liquid assets or cash deposits. available in our pocket to keep implementing our strategies and, you know, based on the choices that we made in terms of asset allocation, which is what we have done throughout the 2020. So this is what I said before in the August conference. We have a strong, well, financial position, strong balance sheet because, I mean, apart from the solvency data, that you have seen before, and this is, you know, the six-month data. I can also add that in November, so November the 6th, basically last week, our individual solvency rate only is around 300 basis points. It's basically, sorry, 297%. And the consolidated data on both sides is 278 in terms of solvency. And the general overall group consolidated data is 200, 203%. So as you can see here, solvability position is very strong. Now, if you compare this to the data we had one year ago, our solvability situation is much less volatile than it was one year ago. Well, because of the different asset allocation choices that we have, you know, put into practice. So, once again, all of these indicators, if you take them into account altogether, well, once again, this translates in total peace of mind, and it confirms, once again, the willingness to pay 600 million euros throughout the business plan. So, as everyone has to do, we do depend on the restrictions or regulations of the regulator. But once again, this is what we would like to do. We would like to remunerate the shareholders for what happened in 2019, for what is still happening in 2020, and hopefully for what will be happening for 2021 in compliance with the business plan objectives.

Perfect. Thank you.

Next question is from the conference in English.

It's a follow-up from Peter Elliott from Qatar. Shubhra, please.

Thank you very much. The first follow up was just on reinsurance. I mean, I guess you haven't been able to enjoy quite the same reinsurance cover this year as previous years. And I'm guessing in this environment, that's probably becoming a little bit more difficult to get cost effective reinsurance. So I was just wondering if you could talk about the sort of the opportunities there going forward. Secondly, the NACAT and large loss charges. obviously were a bit higher for the nine months. I was wondering if you could give us the Q3 figure in isolation. And finally, a third question, just on the solvency, obviously very, very good numbers and up in the quarter. The increase was a little bit less than we were expecting just by applying the sensitivities. I'm just wondering if the delta is basically explained by the de-risking that you did. or whether there's anything else that you would like to highlight that was slightly not normal for the quarter.

Thank you.

Yes, now as for the reassurance component, let me start first from some figures that I'd like to share with you and then I will give you some comments on to the effect of the reassurance because Overall, if you consider severe claims and net cut on a consolidated level, when I say consolidated, I mean we also include all the other insurance companies into the scope of the group. Well, first of all, we have had less, let's say, atmospheric events, but more severe claims. So, €400 million versus €450 million claims. in the first nine months of 2019, but more severe claims, 150 million, you know, and natural disasters totaling 240 million euros. The reinsurance treaties we have on catastrophes or atmospheric events in the first nine months of 2019. Now, because there was, if you will, bigger than 2020, have given us the possibility to activate the reassurance treaties we had, where the cap bond, but also traditional treaties. Now, in September 2020, this has not happened, because the situation changed. I mean, the component or the part representing net cap is now smaller, and if you consider the first nine months of 2020, you also have the cost of the reinsurance rate, but you don't have, let's say, the collections, so the inflows that we had in 2019. So this is the reason why we have the net gap effect that you have commented. Peter, let me tell you, so back to your question on solvency. If you consider, I mean, the assessments you made on the sensitivity, so the increase of solvency is a little bit less than expected. Okay, so this is basically the summary of your question, making, again, a comparison with sensitivity as well. You know that solvency is quite a complex calculation. And again, as you know, we have the internal model that we have to comply with. So, you know, when we calculate solvency, there are plenty of overlapping variables that we have to take into account. For example, one part of the solvency rate increase is due to the spread improving if you consider the italian govis uh so this is what happened you know in the past month but um you also have to consider you know the volatility adjustment effect so uh you know this effect uh you know uh kicks in but that let's say It goes out from the general situation in a non-linear way, so it doesn't really follow the spread changes. Then you also have to look for the correlation matrix of all the other variables that moved meanwhile, so on top of the season spread. So once again, if you stick to the guidances on the sensitivity for example, concerning the change of plus 100 or maybe minus 100 basis points. Well, I think that this is great just to draft a sort of a trend, but the real actual calculation is so complicated to do because you should be able to replicate basically all of the correlation matrices and all of the so-called variables, intersections, or overlapping behavior which is one of the features of the internal model. So this may be the general explanation I'd like to share with you. So this is not, you know, I mean, versus a plain vanilla interpretation of sensitivity on how much the spread actually moved. Peter, sorry, you also had a question on the effect of the events without including realistic. The answer is the 238 million versus 127 million third Q 2019, exactly for the reasons I have mentioned before.

That's great. Thank you very much. Yeah, I guess on the solvency, I guess what I was... kind of getting at was whether there had been any other sort of one off impacts. You know, we're aware of the de-risking, but whether there's anything else that we should consider. But I'm guessing not. Maybe if I could just quickly follow up. My first question was just on the outlook for reinsurance. I don't know if you're able to comment at all on the prospects for getting reinsurance cover for 2021 and beyond.

Maybe it's too early there.

Yes, you're right.

I mean, these topics are being dealt with right now. So you're right, it's a little bit too early. Let's say that the negotiation is going on right now. Well, the effects and the consequences of natural disasters in our country, well, you know that this is happening more and more often, and they are becoming, let's say, bigger and bigger, heavier and heavier. So once again, the negotiation having to do with The natural disasters, well, has to consider some criticalities. We're talking about this now with reinsurance companies. You're right. It's a little bit too early to talk about the new conditions for 2020 and 2021. Thank you.

Thank you very much.

Next question is from Alberto Villa from Intermonte from the conference in Italian.

Please. Can I have some color on the combined ratio of the motor vehicle business but also the non-motor vehicle business? And, you know, today you talked so much about this cautious attitude based on the current conditions but also the evolution of the extraordinary business. I mean, profitability is also going through some, you know, unique times. So what about the health business? Is it as extraordinary as the other businesses that you talked about today? So what about the impact of the lockdown on the health business? Thank you. Thank you. Now, as for the MV combined ratio, the figure is 81.5. The impact of the previous financial years was 4.7, as I said before, on the MV motor vehicle business. As for CWT, combined ratio was 88.7. Incidence of the previous financial years was only 0.8%. And then as for the other branches, the so-called elementary business or branches, we had 88.7%. the incidence was 5.5% from the previous financial years. Of course, I mean, this is the so-called direct business. So once again, on direct business, as you can see in the presentation, we have 85.5, 4.7% from the previous financial years. Okay, I won't repeat once again all of the, I mean, collection activities. Almost 50% of this is represented by collection activities. Now, as for the health business, and I'm just waiting for some, you know, last minute data on this, but meanwhile, I can tell you that we have seen some consequences and some effects, of course, of the pandemic. For example, well, I remember that in the month of June, so in June, we had minus 20% in Unisalute, of paid services versus, I mean, the same period of the previous year. So this happened because of the lockdown, and then, you know, there was saturation of hospital beds, or well, actually, maybe closed due to saturation. So once again, all of this was due to the COVID patients. So the consequence on the general population, this was also induced by the fear of being infected. So, for example, if you had to have, for example, just a very ordinary checkup or maybe some, you know, a diagnostic examination, so many, many people just, you know, postponed or delayed those kind of controls and or checkups. Personally, this is another perspective, if you will. And, you know, this is what I have as the president of the European Institute of Oncology, EIO. It is a highly specialized hospital, so this is not a COVID hospital. But within the COVID emergency, so in the first phase of the year, you know, the key outbreak was Lombardy, so the Milan region. And this is what happened in the institute I mentioned before, EIO, together with the Monzino, which is the cardiology hospital. You know, the general hospitals have been directly hit by the large number of COVID patients. So within the local healthcare system, this is what they have done. So they have taken in

non-COVID patients from other hospitals.

So as for the, let's say, patients who traditionally go to those hospitals, well, those numbers dropped in the first months of the year, and they are still very low. So this is happening today, even before the new restrictive measures, and even before the increase of the pandemic. So I guess it will generate, I mean, the same effects we've seen in the first part of the year. So people, let's say, don't ask for the same level of care. So this is not our business, of course, but this is a huge issue for the future because now people have totally forgotten to do some preventive, you know, checkups. They just delay. They just postpone. And many experts, for example, oncologists, unfortunately, fear that there will be more cancer cases, more tumors. Because, well, people are just postponing visits or checkups. They are not doing the same prevention, which, as you know very well, is so important to try and reduce the number of conditions or pathologies. This number is going down because of the indirect effect of COVID. So, once again, people, you know, fear, you know, infection, they just don't go to the hospital. So, from the, well, insurance perspective, this means that there have been less services to pay. Okay, this said, and considering, once again, the very prudential, cautious assessments, which is what we are taking into account now, I have to tell you that the health sector has a combined ratio of 88.5% first nine months of 2020. When I say prudential, I mean that, well, in June it was 80.8. So this is satisfactory. I don't have to add anything else because considering, I mean, the number of services provided, now this number is dropping significantly, but the economic, you know, forecast is we do are really, really based on a very high level of cautious.

Okay, thank you so much. Very clear. Thank you. Mr. Chamberlain, for the time being, we have no other questions. Thank you so much for your attention. Thank you for your questions. Stay safe.

we all have two and uh well hopefully you know all of this will be over as soon as possible for all of us so stay tuned next conference will be uh at the beginning of the new year hopefully in a more positive scenario thank you so much keep up with the good work bye