Unipol Grupo Spa

Gentlemen, good morning. This is the chorus call operator. Welcome to the Q&A question. We will be talking about Unipol and Unipol's data. The CEO, Carlo Cimbrì, will go through a short introduction, and then he will be available to pick up and answer your question. Dr. Cimbrì, your floor is yours. Thank you. Thank you so much, and good morning, everyone. Now, as usual, well, I have basically nothing to add to the contents of what we have published. So the press releases we have released this morning. So this is our habit. I'm here with the general director, Mr. La Terza. So once again, we are available. So do not hesitate to send us or to ask us questions. Thank you. Now, if you want to ask a question, please dial star followed by one on your phone. If you want to get out of the booking list, please dial star followed by two. Please do ask your questions by using the receiver of your telephone to hear you better. Once again, 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 from the Italian conference call. Hello, Carlo and Matteo. Good afternoon, everyone. I have three questions, if at all possible. Question number one. On the trend, I can see in the norm life. So in the second quarter, I saw an increase of the CR, so the combined ratio. So I just wanted to have some more light and color on the impact you expect on the second half of the year in terms of the evolution of the motor business frequency or rates, but also the impact of what happened in the past months. Now, as for the live business, this is my second question. I have to say that in the second queue, there's been a very positive contribution in terms of capital gains. So my question is, do you still have some components that you have to go or maybe to give back to the insured? And what can we expect? I mean, which kind of trends can we expect? I mean, a sustainable trend for the second half of the year. And then the third and last question is some color on the net financial position of the holding company at the end of the H1, which, in my opinion, is also, well, a new presentation. I mean, just, you know, some extra, you know, details on the net financial position and, again, the trends that you are expecting. Thank you.

Good afternoon, Elena.

Thank you so much for your questions. Now, let me answer your first question that has to do with the evolution of the combined ratio in the first age, 2021. Now, of course, we also have to take into account, if you will, the entire H1 context, and in particular Q2 versus, you know, H1 2020. That, of course, was deeply characterized by, you know, very restrictive lockdown situations. I mean, much more, let's say, restrictive than the lockdowns we have experienced in H1 2021. Now, all of these happened in a context in which the average premium kept going down. And, you know, this is also due to the one month for you campaign that we have closed some months ago in April. But let's say that it continues until the end of the year because now we offer the possibility to all of those customers who haven't done this yet to use the voucher. And they can do this also in the, let's say, second renewal. So once again, the context, as you know very well, is characterized by rates and frequencies which are higher than H120. This is due to the, if you will, lower intensity of the lockdown measures between the two periods. Average premium is going down, and then the average cost of what we manage decreases. going up. We have to say that the combined ratio and the second queue mirrors the actual situation of the first half of 2021. Now what we do on a daily basis is the monitoring of the motorway traffic but also road traffic in general because we have 4 million black boxes that we have installed on the cars of our customers and what we see today is that traffic is exactly back to the pre-pandemic level. So, well, basically 2019 figures. Now, all of this hasn't yet brought about the, let's say, increase of the frequencies, but in the second half of the year, this may happen because, once again, we are right in the middle of quite a solid, intense economic recovery context, so this may happen. Now, considering all of these factors, well, we need to really think or imagine the possible future dynamics of the pricing of our products because, of course, what we want to do is to sort of not be surprised by the possible increase of frequencies in the second part of the year. Now, as for the non-MV business... Now, in this case, the situation is a little bit less intense than the motor vehicle. But if you consider the health or accidents, well, H1 2020 was an exceptional one. I mean, in positive terms, because... Once again, because of restrictions of mobility of citizens, I mean, there's been a major drop of frequencies. Now, H121 is basically a sort of a come back to normal situation. Well, maybe normal is a little bit too much. We do have some mobility restrictions also in 2021, but that was different. much less intense than before. So in terms of the ratio, I mean, considering the frequency and the premium, let's say that the situation is much closer to the average values in terms of accidents or claims in these two sectors. So in this sector, I don't think there will be major changes in H221. First of all, good afternoon, Elena. Thank you for your questions. Okay, just some more insights to add to what Matteo has just told you. Now, there's a natural trend starting now, and this will be a long-term trend. So what we see today is that, as Matteo said before, traffic is back to the pre-pandemic level, or let's say the same data we had in 2019. But we have far less claims than in 2019. So I have to say that as for the rate or the frequency, It's still very low. Now, we have plenty of unanswered questions. I mean, will frequency go back to the 2019 frequency, or how long will it take? We don't know, but in terms of claims, the situation is still positive. And once again, we are not even close to what happened in 2019. Then, you know, it goes without saying that... If you ask the question, okay, what about the drop of price in the market in the last five years? Well, the drop, if I'm not mistaken, was 35%, so 35% drop of the average premium. So if you consider this... It goes without saying, once again, that the trends that we will have in the future, well, of course, prices have to be adjusted once again. So there's been a unique, extraordinary phase. So prices went down in an extraordinary way. So we also have reduced prices by 7%, 8% last year. But, of course, prices are, you know, meant to be realigned once again. So as to strike, if you will, the right technical balance in those cases where frequency should go up. Now, in phases or times like these, and basically this is what we did last year as well, we have to be very cautious in terms of provisioning. So as you can see here, we are not using reserves or provisions in H121, maybe just some having to do with what we have recovered. But as you can see, once again, we have not touched the provisions, which is exactly what we did last year. So the combined ratio is good. just changing in a very small part just to have some so-called recovery percent that we get from last year. We also would like to be as cautious also for the future because, you know, we want to have strong, robust margins. If at all necessary, we would like to use this to keep the benefits or the profits of the group on a high level. And, of course, we will be talking about this during the presentation of the next business plan that will take place spring 2022. Thank you. Let me pick another question. There was a point on natural events. Now, in the first H21, we have had an impact that was a little bit smaller, lower than H1 2020, so a little bit less than 70 million euros instead of 80 million euros, which is what we got in H120. After the closing of the First age we had some peaks due to hail, hail storms. Now it's a little bit too early to make a total assessment of the impact of hail storms. So we are right at the beginning of the natural events season. So considering these events and based on our, you know, forecast, we have basically the same impact in terms of natural events that we had in 2020. No major changes. But once again, as I said before, we are here in Italy right at the very beginning of the, let's say, well, strong or extreme event season. So it would be too early to talk about this now. As for the live business, we have received a small contribution from capital gain. Maybe you remember that in the previous age, we had a negative contribution because we have realized capital losses. This is due to a deep change of the asset allocation, which is what we had implemented. And we did that in order to improve and enhance the risk profile and even the capital profile of our group. And I have to say that this had definitely a positive impact as a whole on our solvability. Now, in H121, this kind of negative element on the live business hasn't taken place. As a consequence, we went back to an ordinary normal profitability level. So, as we said, well, sometimes in the past, the general live business is between 150 to 200 billion euros a year. I'm now talking about the financial components of the live business, of course, and I have to say that if the total yield of financial assets is 100, well, what we withhold, I mean, for the shareholders is 90 basis points, and the rest is given to insured. Now, this is what happens in a normal situation, which is, you know, the first half, 20 basis If I'm not mistaken, you can see this in one of our slides. This trend is a sustainable one. I mean, if we don't have extraordinary events, if we don't have, let's say, positive or negative realizations from the financial point of view, this is the structure of the live business. And I have to say that so far we are 100% aligned or compliant with this kind of setup. Now, there was another question on the net financial position, NFP, which is what you can see, slide 20 of our presentation. 1.2 billion euros in net financial position. This is the current situation of the group. I have to say, we also have, well, we maintain a very strong financial flexibility, and by this, I mean that we have €2.8 billion of debt, of which €2.5 billion on the market. We also have liquid assets, €1.6 billion. That, of course, represents the financial flexibility leverage that gives us the opportunity to be, let's say, ready and prepared to any strategic option on the market.

Thank you.

Next question is from the conference in English from Peter Elliott from .

Thank you very much. Three questions, please. The first one, Unipol size solo solvency ratio was up very strongly. I mean, all the solvency ratios were up, but, you know, the solo ratio was up 18 points across Q2. I was wondering if you could just explain the moving parts of that, you know, what contributed to those 18 points. That would be the first question. The second question is maybe just a follow-up on the claims frequency. I was wondering if, you know, from your data, you can tell, you know, why the frequency has not come back as much as the traffic. Is that, you know, to do with the driving frequency? patterns, maybe sort of less in rush hour, any insights you could give into that would be very useful. And then finally, I was wondering if you could just comment on the momentum at Unipol REC and Outlook. It looks like the recovery rate is, I mean, not quite as good as it used to be. So just wondering on the Outlook there.

Thank you.

Thank you so much. Now, as for solvency ratio SR, I have to say that the increase of the solvency ratio is basically due. As I said before, you know, we made a sort of a change to the asset allocation last year. So that change has given us a positive contribution. So it has improved, you know, the solvency ratio. So I'm sure you remember that we have reduced the exposure to Italian Govis. This is what we have done during the three months. So in this case, I'm making a comparison versus March 31st. In 2021, Italian security spread went up. I mean, Italy versus Germany. I mean, so, well, that was not a significant increase, but it was an increase anyway. So the negative impact was less than proportional versus what it could have been in an ordinary normal context. We also have the – benefits and the profits, we have adjusted the life portfolio because every single trimester, we have, for example, high guarantees coming to a deadline. So the value enforced is negative for those products. While we produce, I mean, we make New products with no yield guarantee, so only capital guarantee at the very end, I mean at the final deadline, so on maturity. This means that every single trimester, so every quarter, we have a 5% improvement to solvency, thanks to what I just said. There's also a negative element, which is the reimbursement of subordinated products. Loans, 318 million euros. We knew about this because, of course, we had a maturity to comply with. I have already talked about asset allocation. In terms of SCR, there's been a reduction of market risk, which is the consequence of many investment policies that we have implemented. So, overall, this has led to an improvement of solvency ratio. Now, of course, this is something we could forecast thanks to all the actions we have taken. Now, in terms of market, the equity component, but also the credit component, you know that we have quite a large exposure. They have very well performed in the quarter. So this has helped us, you know, counteract, you know, the negative effect due to the increasing spread level. So there was also another question, yes, a follow-up question on the frequency issue. So once again, you're right. I mean, traffic is back to pre-pandemic level or 2019, but frequency is still lower. Well, first of all, let me tell you that I don't think there's just one single reason. I think there are many, you know, different elements that sort of, you know, all together have generated this situation. Now, as for July, we have minus 16% claims versus July 2019. So once again, minus 16% versus the figure we had two years ago. So the gap is a big one. So let me try and, you know, explain this or why we think this is happening. Let's say that, I mean, the life of people, life of citizens is not yet back to normal. We can't compare the current situation with the situation we had in 2019. We have so many companies, organizations working, I mean, where employees are working from home. So, as you said, the density of traffic, especially in the large metropolitan areas, is different. We don't have the high concentration. So people, let's say, travel in the same way, but at the same time, it's a different, you know, driving habit. It's, you know, this is a factor that, of course, reduces, I mean, the frequency of accidents and, as a consequence, the number of claims. You also have to consider that, you know, technology is now different. I mean, you know, if you make a comparison, you know, between technology today and technology two years ago, well, of course, we made a step forward. And so this is sort of a structural, you know, behavioral comparison. reason so as i said before there is not just one single factor or factor which is responsible for this drop now we're very cautious very prudent so what we see today is not structural i mean we see something like minus 15 minus 16 even minus 20. so i think we have to expect that the realignment of the frequency back to the previous values it will happen in our opinion so of course we keep our eyes open and we pay attention to our pricing policies because what we want is to sort of considering the changes with possible tariff or price increases as for Unipol REC I have to say that in the first six months of the year the recovery rate was if I'm not mistaken 27% Last year it was 30%, so I'm really talking about values which are very close to what we already had one year ago. It very much depends, you know, on the files you take into account, the practices people implement. So we used to recover on our portfolio only, so the portfolio of Unipol Banka, but then from BPER we have purchased, you know, 1 billion euros that we paid only 8 cents. So they are different credits or different loans. They are paid a little bit less than what we used to pay before. And in this case, you know, this has an impact on the average, you know, percent recovery rates. You know, in the past, we had, you know, many products covered with a guarantee. So once again, it's a blend. It's a mix of factors. But once again, we're very happy and satisfied in terms of recovery percent rates. I have to say the REC in the first months of the year has closed its debt position. So I'm sure you remember that REC. had a very special structure. So there was equity in debt. So we have reimbursed the debt. We now have a little bit less than 400 million euros old assets that we have to receive out of a total mass of around 3 billion euros. So 2.9 billion euros, exactly. So we keep being so positive on REC. And once again, it is, let's say, up to the task. So what we decided, I mean, to create it, let's say that we also decided not to sell the non-performing positions. Don't forget the non-performing positions are now priced between 10%, 15%, 20% while we recover on average 27% this month and then in the two previous years 30%. So On the record, we are very satisfied.

Thank you very much.

Next question is from Andrea Lisi from Ecuador. Please go ahead. Good afternoon. Now, my first question is on, again, the CR or combined ratio. So considering that, as you said, the claim frequency is still lower than the pre-COVID level. So implicitly, in the second quarter, the combined ratio is on quite a high level. So there's a pricing pressure. So can you give us some color on this situation, please? The second question. It's on the tax benefit that we saw for Unipol and Unipol. Can you tell us a little bit more about this? Because I guess I have missed some information. What about the, let's say, situation with Licareste? So can you confirm the figures, H1, and how are these figures broken down in the various business units?

Thank you.

Okay, I'll try and be as, let's say, precise and accurate as possible in terms of explaining the combined ratio. Now, average premium overall has gone down 6% to 6.5% considering individual portfolio but also the float portfolio. So if you consider, you know, all of the other factors, the impact of this, of course, has to be negative on the combined ratio. considering all what we said before, so I'm not repeating the same concepts. Average cost of what we manage has gone up, and then the average cost, I mean, of what we have paid in the past year went up because of many factors. Once again, prices are going up. Manpower costs are also going up. So this means that the increase was around 4%, maybe 5% year-on-year. Now, of course, this has a negative impact on the MV combined ratio. Now, when it comes to the frequency, I have to say, right, once again, the frequency is lower than 2019, as Carlos said before. Now, if you compare this with 2020 with a full lockdown semester, of course, the situation is totally different. So also from this point of view, if you make a comparison with the first half of 2020, of course, the combined ratio is worse than what it was before. months ago. I think these are the three key elements you have to take into account if you want to have a general assessment on the MV combined ratio situation. Don't forget, as Carlo said before, that in terms of provision release policies, well, In this first half of the year, we didn't do so. Well, the only thing is the so-called recovery that, you know, systematically but also physiologically, we do have on the management part of the policy we have to pay the MV claims. As for the non-MV business, I have to say that what happened here in the first half of the year on some businesses, for example, accidents or health care, there's been an extraordinary reduction of cases because, once again, most people were at home. So, of course, there's a reduction of claims or accidents, which is something that, of course, didn't happen in the first half of this year. Now, as for the tax or fiscal component, and this was one of your three questions, I can tell you that based on what is included into the so-called balance sheet law approved in 2021, we have realigned the difference or the gap we had versus the goodwill value. that you could see in the balance sheet. So once again, there was a gap versus the so-called tax or fiscal balance sheet. The difference or the gap was 283 million euros. And the law states says that we can pay a lump sum 3% tax. So in this case, we have paid 9 million euros that you can find in the balance sheet. So thanks to this, you can recover the fiscal value of the delta. So the gap between the ordinary balance sheet and the fiscal balance sheet, the 283 million euros. In terms of taxes, the value is 94 million euros that we will receive in terms of paying less taxes in the next years. Once again, the gap between 94 million, which is the fiscal benefit, if you will, which is something, once again, you can find in the balance sheet, and we will receive it in terms of paying less taxes in the next years. On the other side, we have a lump sum, so a one-off amount, 9 million. So the total is between 83 and 85 million euros, if I'm not mistaken. And again, this is the so-called item that you will find exactly into the balance sheet. There was another question on the legal SD agreement. Now, I do confirm, so once again, also this amount is something you can find in the balance sheet, 22 million euros in terms of, you know, non-life, 7 million euros life. and 12 million euros in the real estate because, I mean, there was an agreement. So there were some real estate companies involved in the former, if you will, Fondiaria group. So they managed, I mean, to receive the part they had to receive. The total is 43 million euros, which is the total amount of this transaction. Thank you so much. This is perfect. Thank you. Next question is from from Societe Generale, please.

Hi. Good afternoon. Just one question from my side regarding the solvency ratio. So as I can see, your solvency ratio is at a very strong level on an absolute basis and well ahead of your target range. So I just wanted to understand, do you have any plans to redeploy this access capital or what are the plans to do with this capital?

Thank you. Thank you for the question.

No, as I said in other meetings, we are very happy. We have a very strong solvency position in terms of Unipol side, but also in terms of Unipol. And again, as you know very well, Solvency, if you will, is a very volatile indicator, you know, by definition, based on how it is built or how it is structured. It is much more volatile than the similar indicator for the capital level for the banking system. So it is very sensitive, if you will, to the market changes or market variations. So from our perspective, It requires strong buffers. So once again, we have to maintain, we have to hold strong buffers in order to respond to any kind of situation. So we don't have any specific strategy in terms of using the excess of capital. Because, you know, we think that, you know, the excess of capital is functional. So it is good in order to keep the competitivity level high of our core business so that we can be as competitive as possible on the market. Thank you.

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

I have three questions, if possible. Question number one is on AA. So the prospective asset allocation, do you think you will make some changes? Because the European Central Bank should keep low rate scenario here in the Eurozone. So are you considering moving some assets on other asset classes? And if so, what are you looking at and how much? So which kind of contribution can this give to the financial management part of the business? Second question, I'm talking about the investment in the Banca Popolare di Sondrio. Are you happy of the level you have reached? Do you want to increase the level, maybe to align the shares you have in that bank just like the shares you have in BPER in the future? Third question. I saw some movements in the shareholding in Unipol in terms of the largest shareholders, I mean the cooperative companies. Do you think there can be some consequences on the structure of the group? Also, well, thinking of the presentation of the next business plan that I'm sure you will do in spring 2022. Thank you. Thank you for your questions. So question number one, AA asset allocation. Well, I have to say that, yes, we have completed the structural change to the asset allocation that we conceived, designed, and implemented in the second half 2020. So we wanted to have an exposure in Italian GOVs around 40%. So we started with, you know, percent rates that were well beyond 50% at the end of 2019, while today, you know, we have reached, you know, this kind of value. Now, if you consider the current market levels, well, I think – You know, this level is something we are happy with, so it should be unchanged. As for the value of the sales and the new financial flows, well, this money is invested now 40% Italian Govis, but then 60% of this money is invested in the Gore government area, so basically Germany, France, and some credit securities areas. In this case, we work, if you will, onto the single A rating level. I have to say that our benchmark portfolio is very well represented about this, onto which we calculated a volatility adjustment. So this is what we wanted to have so that our asset allocation profile could be as aligned as possible, if you will, with the, you know, counterpart onto which we can make calculations. We also have another important contribution to profitability represented by investments in real assets, especially infrastructural real assets. In this case, we do keep quite a high level of interest because, I mean, in terms of cash flows or profiles, well, they are aligned with our life goals. liabilities so they support a profitability that is negatively characterized by the fact and also today on the italian gov is the absolute profitability levels are really really very low so um you know it's not an issue it's not a question of profitability or financial uh you know assets because This means we would have to, let's say, invest in two risky activities considering the risk appetite we have. What we want to do is the optimization, streamlining of the company's capital profile. This is the current situation in a nutshell, the situation we are experiencing today, and I'm sure we will keep doing this for the rest of 2021 unless there are deep, strong changes to the market rates overall. or in general the current situation of the financial market to come. Now, as for the question concerning the investments in the Banca Popolare di Sondrio, well, let's say we are, first of all, very happy with these investments.

considering the size of the investment done.

And I have to say that also based on the publication of the recent stress tests on the banking system, I have to say that Banca Popolare Sondrio, BPS, is one of the best banks in our country. I have to say this bank is very well managed. It is managed, you know, by people we know very well, very serious people we trust. Well, I have to say that BPS is our partner in terms of bank assurance together with BPER. Now, apparently, this bank is about to change the corporate structure. So, of course, we are sort of controlling this partnership that we have started more than 10 years ago. Once again, we're very happy, very satisfied, and I'm sure that they have the same level of satisfaction, I mean, on the BPS side. The same point concerns that the other bank, BPER, Now, if you consider, you know, the banking universe in terms of a distribution channel, of course, there's plenty of room for improvement and growth in the near future. You know, this is happening based on many different factors that we are considering. For example, I'm sure that this is something that you can read on many, you know, newspapers or even you can hear the same comments from many other CEOs saying, So the word lies to increase fee level or commission level. So if you sell insurance products in banks, well, this is a good source of revenues and income for banks. And we believe that this is a great business. I mean, we think we can do much more and much better than now. So we're now thinking about this. Just like we did in the past, we want to know what we can do as a group, I mean, something better, something bigger, so that we can really feed effectively this channel. So this is something that happens for BPER, but the same happens for Banca Sondrio, BPS. For example, for BPER, we are really, really happy. I know that this is a recent situation, but we're very happy of the volumes, I mean, the masses that can be made worldwide. by some customers or some agencies that BPER has just taken over, so acquired from UBI or Banca Intesa. So we can see there are large volumes, interesting volumes. So if you consider the total BPER collection system, this money, I mean, these flows come from the agencies that we've taken over end of February, beginning of March. So once again, this is a very good springboard or starting point There are some, you know, people in the UBI universe that, you know, under the great, you know, management of Piero Montani, if they are able to get a perfect integration with BPER, and I'm sure this will happen, you know, they are top quality managers and they really give a very positive contribution. So what they bring about is, you know, value to the BPER universe. So, of course, we are happy. about this in terms of shareholders, but also and especially as, let's say, distribution partners. So if you consider, you know, all of these philosophies that we apply to BPER, but also to BPS, we will do this in the future. And I'm sure that this channel... well, it's a channel for us. So this channel will be even more solid, robust, and profitable with a mutual interest. So the banks aside, but also on our side. So this is a win-win situation. And this is why we keep checking, controlling the situation in Banca Popolare Sondrio. We're really very happy with the investment made there. As for your third questions, I mean, the shareholding of Unipol. So the recent Transaction that has been implemented by some long-established partners and members of our group. Well, you know, when a managing director sees members and partners who... Increased investment in the group, of course, he has to be very happy on behalf of the entire management team because this means that long-time, long-established investors, by doing so, show their trust and confidence in our group. of course, it's a good way to invest money. So putting money into the Unipol group is, of course, a great idea. Now, this is very subjective, and, of course, this is something I have to think. But if you consider the figures, I mean, the evolution of the Unipol group, In the past 10 to 12 years, well, they do support and they do prove and confirm, I mean, the good choice made by shareholders. I'm not just talking about, you know, the long-established or the main shareholders, but hopefully even the rest of the markets. And, by the way, something happened today, and it was already into the press releases, so this is not one of your questions, but It's a pleasure for me to confirm something that I keep saying. I mean, our intention, even if there have been some stops because of regulatory framework, we want to comply with the commitments versus the market in terms of our business plan on every single point, including dividend distribution. So we stopped or we suspended in 2019. So apparently, possibly, and even formally, The international authority is giving us the green light. Of course, I'm talking about the European Central Bank, but also many other associations responsible for the insurance business. So at the end of September, the dividend distribution ban occurred. So, of course, soon afterwards we will comply with our commitment and distribute and pay dividends. I mean, this means that some long-established investors, I mean, they have already invested a lot of money in our group. Once again, they just decided to increase their investment and to keep investing in the group. So, of course, it's a pleasure. And, of course, they do this as soon as they have some money in their pockets, considering that the Unipol share, of course, I'm talking about Unipol holding, which is where they have invested now. So the level now, so the price now is definitely irrational versus the real value because this is a pure, simple holding company. So just do some mathematical calculations. If you consider the NAV of Unipol. You know, the NAV is given by the value of, you know, listed assets. Uniport controls, you know, 85% are only for site, 10% of BPER, which are listed assets. The only non-listed asset, if you will, is represented by the 400 million residual credits to come from REC. Anyway, there's a discount by around 40% versus the listing price. And again, once again, this is totally irrational. So this is not rational, not mathematical, not even logical. You know, this means that the market maybe doesn't believe in us, but some members, some shareholders do trust us. They think that investing in Unipol now is a big business in terms of, you know, future value increase of their shares, but also in terms of profitability. This year, considering, I mean, the total cumulative amount, and, of course, now I'm talking about the short-term investors, but also short-term investors this year will get something like 12%, 13% profitability. Now, rates are now down to zero, so I guess that this is a wonderful investment. Okay, to wrap up, you know, this is my opinion, what has motivated or pushed shareholders to do this. So, as I already said in the past, there is no project, no plan to change or to modify the structure of the group in terms of the Unipol and Unipolsai, you know, setup or organization. Now, this transaction concerns members or partners, not us. This is not depending on waiting or hoping for some changes of our corporate structure. Thank you so much. This is absolutely clear. The only point is that if you remove this company or corporate structure, even the value allocation would not exist any longer. So I do understand this, and I do understand it's quite difficult to explain it. Thank you. Thank you. Bye. Next question is a follow-up from Peter Elliott from Kepler.

Thank you very much. I had two follow-ups, please, one on the combined ratio and one on solvency. The first one is when you were going through the various drivers of the combined ratio, probably the one variable you didn't mention, I think, was the severity factor. So I was wondering if you could just comment on the claims severity and what you're seeing there in terms of whether it's changing or not. The second follow-up is on solvency. And I took your very valid comments. I guess the solvency ratio is less volatile than it used to be. And if you compare it with peers, even peers that have more life exposure, so need maybe a slightly higher ratio, you are still much higher than the majority of those peers. So I appreciate now is probably not the right time to look at it, but I was just wondering if it's worth something to consider for the future as to whether the ROE, the return on equity, could be improved by having a slightly lighter capital base in light of those comments.

Thank you.

Peter, now, thank you for the questions. Now, as for the severity, so let's say the size of the average cost, well, I've tried to talk about this before now. Maybe that was a little bit too quick. So let me go back on this topic. Now, average premium goes up. The frequencies are – sorry, the price goes down. The frequency goes up. So the average cost, if you consider the current financial year, this is going up because the average cost of what we pay went up during the year. So, during the time, let's say, between June 2020 and June 2021, for many reasons, as I said before, the spare parts prices went up, manpower costs also went up. So, all these elements do have an impact on the claim inflation. So, all this... generated an increase of the average cost of the current financial year. So this aspect was a negative contribution to the combined ratio behavior. Now, this is what happened in the MV. Now, in the non-MV, there are no special severity elements worth being commented. But as you said before, the impact of natural events on the first half was basically aligned. In some cases, a little bit smaller versus H1 2020. So in terms of severity, I have to say no, this was not an issue. Now, in the second half, once again, from the seasonal point of view, there's a significant impact of natural events. We will do this at the end of the period. It doesn't make any sense to do it now because, as you said before, it's too early. We are at the beginning of the season. Now, Peter, as for solvency, as I said before – We think that considering how solvency is made, so how it is designed, I think this is an important competitive variable in terms of business, but also in terms of the stability of the group. So this is what I believe. But you know that now there's a review, so there's a revision process of solvency, which is a European review process now. Our wish and our hope is that we will be able to introduce new forms and new measures. So, of course, now the behavioral solvency doesn't have to change. It is a prudential evaluation tool, and it has to be like this. But at the same time, it has to be a little bit more aligned to the main features of the insurance business, which is, you know, a long-term business. And as such... Okay, allow me to speak for a second about, you know, this. So what is the key point of solvency? I mean, solvency stresses, I mean, the mark-to-market of the assets of our portfolio versus, on the other side, the business where, you know, you need, I mean, to have a long-term horizon or a long-term view. So this is an intrinsic initial contradiction. You know, they try to adjust this. I mean, there's been volatility adjustments here. But once again, in this case, there's still a big exposure to temporary market factors. For example, just think of the beginning of the pandemic and the drop of the market. I mean, the solvency ratios of insurance companies, I mean, there have been incredible oscillations, I mean, ups and downs much more drastically than the solvency rates. I mean, I'm using the word solvency, but I can also use the CET1 or Tier 1 of the banking industry. So, This is a very high level of volatility, which in our opinion is incorrect because it depends heavily on market to market. So this effect will be slightly changed, modified, and hopefully corrected thanks to the current reforms. Well, then we need to maybe change the level of capital. So with the current volatility, you know, if you take a snapshot today, for example, the one you can see today on the first half, the solvency levels is very high. And it's a pleasure to see that it is higher than our peers today. Anyway, we prefer not to optimize ROE. We would like to keep thinking the way we thought before. So there's an effort, an extraordinary effort on our capital.

Thank you very much. I guess on the first topic, what I was particularly maybe interested in is how much damage the average realtor accident is causing. So not just the cost inflation aspect of the amount of claims, but also the nature of what claims you are seeing. As I say, whether more damage is being caused by the average claim or less damage.

Peter, I don't think there are different types of damages that cost more or less. I mean, in the mix, this raises the average cost. Because last year, but also this year versus 2019, the frequency of claims is going down. So the number of claims is going down. So what is also reduced? As I said before, I was talking about this when talking about the density of traffic. So what is reduced is the small size traffic. because they are depending on the density of traffic. So from the statistical point of view, you don't have exactly the same reduction of the so-called large, big claims. They depend on events, and events happen anyway. So once again, statistically speaking, You know, they do happen, you know, almost on a regular basis. I'm talking about the big, you know, claims or accidents. So the claim base is now smaller. But what goes down is the small size claim. And they are reduced more than proportionally versus the so-called severe claims. So this means that the average or the mix, as I said before, is anyway higher because, of course, you have the more severe claims that have an impact on the small claims. So this is why the severity goes up. This is why the average cost of claims goes up. It is the different mix of the quantitative composition of the claims that we paid.

Perfect. Thank you very much.

Mr. Chimbrey, we don't have other questions for the time being. Okay, then. So, thank you so much for participating. Thank you for asking questions. And thank you once again. I mean, those who ask questions, but also those who listen to us. Together with Matteo, I would like to wish you a nice summer holidays. And The next meeting will be for the quarterly results to be shared with you in November. Thank you so much. Bye-bye.