Unipol Grupo Spa

Good morning, ladies and gentlemen, this is the Chorus Call Operator. Welcome to the Q&A session on the presentation of the results of the first nine months of 2022 Gruppo Unipol. General Director Unipol, Matteo Lattersa, will share with you a short introduction and then he will accept questions. Mr. Lattersa, the floor is yours. Good afternoon, ladies and gentlemen, and thank you for being with us. Now, I have a short introduction on the results. You must have seen the presentation and even the press release. So we closed the first nine months with a growth in terms of live but also non-live businesses. In particular, in the non-live business, we have the non-MV business development plus 10%. We grow on all the businesses, especially the big developments in the health area. In terms of distribution, what is really significant is the growth coming from bank assurance. In terms of profitability or combined ratio, what is very good is the profitability in the non-motor vehicle business. As for the MV, we do have some, let's say, criticalities. This is due to the impact of inflation on the average cost of the managed business. This has an impact on the MV combined ratio. especially if you make a comparison with the nine months of 2021, where, of course, the context was characterized by the lockdown in the first part of the previous financial year. So, of course, the 21-22 comparison is, let's say, a disadvantage for this reason. In the live business, the development is fed by the growth of pension funds. We see a slowdown, a very minor slowdown on investment policies, and this is in compliance with the general market trend. In terms of profitability, we had a slightly negative impact due to the evolution of financial markets. On the financial component of live business profitability, it had an impact on the quarter, which is a one-off. This is due to the fact that in the quarter, markets have underperformed. In terms of solvency, well, this is flat. I mean, there's a slight reduction, which is due to the market effect. Let's say that this was offset by the profits of the quarter. Within the market effect, there's been a positive contribution from the increase of interest rates on solvency. This is what happened. In terms of profitability, we thought that we can continue the best estimated liabilities to consider the inflation impact on the future performances. We think inflation is not a phenomenon having to do with what happened this year, or even next year, it is variable to be observed on a multi-year basis. We think we've been very cautious, very prudent, in terms of the best estimates liabilities items. Now, this is worth 3%, maybe 4%. It justifies the 4% reduction in terms of group level solvency versus the value we had at the end of June. I'm here with the General Director Enrico San Pietro to take all of your questions. Thank you. If you want to ask a question, please dial star followed by one on your telephone. If you want to cancel your booking, please dial star followed by two. please ask your questions speaking close to the receiver once again for questions please dial star followed by one now thank you the first question is from the original language conference from Gianluca Ferrari Mediobanca please good afternoon everyone First question is on CR, combined ratio. I see 3.2. In Q3, the situation is usually favorable, so I have to say that this is close to 94. Your target in the business plan is 92.6 in 2024. So can you give us some color on the MV and non-MV trends? Is this the right trend, sir? considering the trends on the NV you have explained the inflation impact they will be reabsorbed maybe based on tariff increases as for the non-NV the improvement is definitely remarkable this is due to indexation so the effect of the top line that we saw in the first nine months once again The situation is due to worsen, in my opinion. So, once again, can you give us some color on the MV, but also non-MV business? So, are we reaching 92.6? As for the live business... You already clarified doubts on Q3, so on 4Q we should go back to a normalized rate. So my question is the following. Just like other European players, will you have some differences in terms of IFRS 17? Thank you. Let me start on the live business. The floor will go to Enrico as for the non-live. Now, as I said before, on the live business, I mean, in Q3, we have had an impact due to the financial component, especially the one due to the valuations and realizations. they have impacted the Q3 result. Now, if you check the evolution of financial markets today, I mean, from September the 30th, what is happening is a one-off, which is only, let's say, impacting Q3. In terms of Q4, we should go back to normal versus, I mean, towards the trend that I have shown in the previous meetings. As for IFRS 17, well, especially in terms of live component, of course, this would be a major additional element on the contribution of the so-called CSM, contract service margin, to the business or financial statements, if you will, of the next years. So, as we have already said in previous meetings, we do not expect major changes versus the profits dynamics now of course quarter after quarter there may be higher volatility in the live business profits because this will depend on the updates of the curve parameters that we do have to implement in order to estimate them in the release of CSM in every single quarter Now, overall, and if you consider this long, if you will, term scenario, we do not expect major changes. In terms of CSM releases, what about the durations are you choosing? Which durations? Can you share this? 10 years, this is our duration. Okay, perfect, thank you. Good morning. Hello, Gianluca. Now, let's talk about the non-life business, CR. So, combined ratio today is in line or in compliance with our plan objectives. Now, it goes without saying that there are phenomena, especially inflation. So, this is a little higher than the forecast, so we head at the beginning of the plan. But we think that the tariff measures, including the reduction of the average cost of every claim, now I think that these two factors are keeping us in the right pathway. in terms of MV, evolution and inflation. So as we said in a previous meeting for the results of the first six months of the year, the impact of the inflation in the first part of the year was offset by many positive factors. The first one sounds like a paradox, but as I said before, Claims, very small claims are back. So the so-called composition effect on the average cost was beneficial. We also have a very important beneficial impact on the incidence of claims with injuries out of the totem. we keep seeing a drop, which is, of course, positive for us. And then our settlement model has been improved, so we now work with new systems, for example, with the delivery of spare parts, so we can control inflation much better than any other system. Now, this being said, today, the average cost of the MV, at the end of September, it is up by 2% versus the previous year. So, to face this phenomenon, as Matteo said, this is not a temporary one. We have also implemented tariff changes. The last one, November 1st. Of course, I don't have the results, but this is quite significant. This means that the MV result should be once again in line with our targets. As for the non-MV, the framework is quite special, so we need a longer comment in terms of growth. Now, our dynamic is different. Let's start from Unipol's side. The non-MV premium increases is a little bit more than 5%. Number of policies in our portfolio is flat. So on macro level, I have to say it is a so-called price effect only. There's another significant phenomenon on the premium, let's say, adjustments of the general insurance in 2021. There's been a huge increase of companies turnover. which translates today in more so-called regulations or adjustments. Then property prices are changing in terms of increasing rates, especially for new policies or the renewal of the largest corporate policies, plus the indexation effect. I mean, there's an automatic increase or even a non-automatic one of the amounts insured and the premiums. Most of these benefits shouldn't be temporary on the total result. On the health, we have an important growth, which is more than 12%. Let's say a little bit more than 50% is the increase of the number of insured, including companies and retail. A little bit less than 50% is the price increase. which is the improvement of margins. This is also due to the renegotiation of some large contracts we had at the end of last year. There's another key driver, bank assurance. So here we have ARCA and INCONTRA. So this is basically the increase of number of policies or risks, but I mean very profitable risks. Bank assurance with the retail non-MV production produces very high technical results. I hope I've given you hopefully the flavor of the general framework. We think we can continue on what we have done. This is the right way to reach the objectives we have in the plan. Yes, very useful. Thank you. Next question is from the conference in English from Peter Elliott, Kepler, Schubert, please.

Thank you very much. Three questions from me, please. The first one is I've noted that you are moving towards shorter duration bonds. Just wondering if you could clarify what impact that has had on your solvency ratio and also on your sensitivity of your solvency ratio. Second question, I'm hoping you can give us the amount of reserve releases in the quarter. And I'd be interested actually in your view as to why you don't include these within the morning release. Because for me, it seems like quite a material number to understanding the underlying combined ratio. Yeah, I'd be interested in your comments there. And then finally, one of your competitors yesterday reported some large reserve releases in the Italian life business due to the higher interest rates. You don't seem to have been reporting the same thing. I'm just wondering, might we get anything like that?

Thank you. Thank you so much.