Unipol Grupo Spa

Ladies and gentlemen, good afternoon. This is the chorus call operator. Welcome to the Q&A session on the consolidated preliminary results of 31st of December 2021 Gruppo Unipol. Group CEO is Mr. Carlo Cimberi. After a short introduction, you can ask questions.

Mr. Cimberi, the floor is yours. Thank you. Good afternoon, everyone. I'm here today with my colleague, Mr. La Terza.

I have a short introduction, a very short one before giving the floor to you for your questions. And by the way, apart from the presentation that has already been commented and described this morning, I'm here just to tell you that this is the last year of our Mission Evolve 2019-2021 plan. You can find here some of the final details of the plan. Once again, that, as I said before, closes or ends with these financial statements. Of course, you can have more details and insights, of course, during the presentation of the next business plan. So the next BP, now, as usual for our group, it will take place in the month of May. So I have to say the figures are really self-explanatory. I mean, as you can see, we have reached cumulative profits higher than the level we have forecasted three years ago in a market context that, of course, in the past three years was definitely very much different than the scenario we could imagine three years ago. So once again, it goes without saying that in the past two years, it has been highly strongly impacted by the COVID-19 pandemic. So there's been a temporary stop or even lockdown by the authorities. We have complied anyway with the commitments we had with the market in terms of remuneration of the capital. I have to say that we have, in terms of only POSAI, we have exceeded abundantly the total dividends, once again, that we forecasted to distribute. And this means that our shares are now at very high, well, I should say, between the highest levels of remuneration of the Italian market these days. Now, we're doing this by keeping... solvency level, which is absolutely above the range, once again, that we set three years ago. And again, in terms of Unipol, but also Unipol's side, this is the fruit of the policies, choices, asset allocation decisions, and of course, the results that we've been able to reach. So once again, these results are much bigger than what we thought, or actually much higher than our targets. So we thought, of course, we want to be in compliance with the good management principles. So we want to adopt very conservative policies in terms of the last quarter of this financial statement. So in particular I'm talking about the provisions item. So we have increased significantly the provisioning buffer that then translates into the capital considering the solvency to metrics. So basically, we have reached 2 billion euros capital or own funds that depends directly on the provisioning delta. Now, in our opinion, this is another key driver, if you will, to be able in the next plan and scenario we have on the market once again we will be able to have high margins and again uh this means we will reach the targets that we will share with you and hopefully uh well those objectives will be highly appreciated by the market so this being said and uh because of course we will be talking about the plan and in the future in the uh month of may meeting the uh Time has come for possible questions on the results of 2021. This is the College Collaborator. If you want to ask a question, 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 use the receiver of your telephone. If you want to ask a question, once again, please dial star followed by one now. Thank you. The first question is from Elena Perini from Intesa, Sao Paulo. Go ahead. Good afternoon, Carlo and Matteo. Good afternoon, everyone. I have some questions. The first one is on your solvency ratio that has improved between September and December or the end of the year. So you have already partly explained that this was due to a higher, let's say, caution in terms of provisions. have there been other components or factors in the past quarter that have translated into a benefit? Because if I'm not mistaken, the data going back to September 2021 didn't yet include the pro rata dividend. I also have questions on the non-live business. Now, as for the motor business, Do you think we have some signs of recovery in terms of average premium? Again, as for the current year, so 2022, do you think... we can have once again some recovery or let's say a plus sign also on the motor business, even if I know the non-motor business will probably grow more in terms of premium. At the same time, I'd like to ask you the breakdown of the use or release of provisions. I know that most of this had already been done in the first three quarters of the year. Thank you. Thank you very much. I have to say that this is basically due to the following reasons. I need to go back to reserves, or if you will, provisions. If you consider the capital data due to the excess provisioning, this is what I mentioned before, so 2 billion euros. Once again, this is the delta between the, let's say, best estimate on the one side we do and the balance sheet data. So the best estimate is something we do because of solvency. Now, as for the best estimate, I mean, throughout the entire year, we calculated on the 31st of December of the previous year. And of course, step by step, we will, you know, slightly adjust all of the claims paid throughout the year. Then you remove, of course, the part of provision having to do, I mean, there's a correlation with the claims paid. So only at the end of the year, so at the 31st of December, we recalculate the best estimate. So in this case, we have to take into account, I mean, the actuarial valuations, and we also have to implement all the models that you are familiar with. So, we have Ferguson, Leeds, and many other models. So, if you consider, I mean, the projections, I mean, the forecast of the models that we calculate, take into account all the movements, the so-called generations, so not only what we pay during the year, but also the projections or forecasts so as to establish the ultimate cost. So, the calculation of the year provision, I mean, it's done by the actuarial function, and it highlights a further excess of capital versus what we used to calculate throughout the year, starting from the 2020 provisions and then removing the claims paid in 2021. So there's an increase in delta or gap between, on the one side, the final best estimate calculation, on the other side, let's say, the financial statements calculation, So we have two factors. Best estimate is lower than the one we calculated during the year. But on the other side, if you will, we have a bigger delta coming from our financial statements. So there was also a question on the use or release provisions. This is due on September the 30th. I don't remember if we had this detail on the last quarter in the presentation, but anyway, you can see here 18 million euros. So these are some little changes, if you will. So as for the total provisions, I have here the absolute values for the year. So we have €580 million in 2019, €550 million in 2020, and €336 million in 2021. So once again, this was the total released provisions in terms of percent rate, 7.3%, 7%, 4.2% respectively. Now, as for the motor business trends, the floor goes to Matteo. Good afternoon, Elena. Thank you for the question. Now, as for the markets, I have to say that this market is still highly competitive. I mean, there's a strong, let's say, sensitivity towards prices. And, of course, we have to consider this factor. Now, as for our own, let's say, internal dynamics, we closed this year, as you can see in the presentation, with a reduction of average premium, which is around 3%. But the average premium started a sort of a stabilization phase starting from the past summer because of tariff adjustments that we have started implementing. I should say, in the second half 2021. And we did so considering the 2022 market. I mean, you know, road traffic is basically back to the 2019 pre-COVID levels as a consequence of what we expect is increasing frequency, which is a consequence of this coming back to pre-COVID. As for inflation, yes, I know there's inflation. Maybe in Europe this is less impacting than many other geographies around the world. But anyway, this is one of the focal points we have to take into account if you consider the pricing and then the cost of maintenance or even spare parts. Now, this means we have to adjust our tariffs or, once again, premium, which is, in our opinion, unavoidable and impossible to be delayed, so much so that we started this policy, if you will, in the second half last year. Now, how can this reflect into the increase of the average premium in 2022? Well, it depends on the churn rates we have today. on the portfolio. As a consequence, they depend on the competitiveness level of the market and many other dynamics that, of course, cannot be foreseen, well, at least in detail. Anyway, as we said in the past, this is our strategy. So we have to revise our tariff mechanisms in order to consider factors or dynamics which, in our opinion, are quite clear. Next question is from the conference in English from Sudarshan Bokhara from Societe General. Please go ahead.