Unipol Grupo Spa

Ladies and gentlemen, good morning. This is the Cori's Call Operator. This is the Q&A session on the rationalization of the Unipol Groupo together with the preliminary consolidated results at the 31st of December 2023 Groupo Unipol. Managing Director, CEO Unipol SAI, Matteo La Terza. We'll go through a short introduction and he will then be available for taking your questions. Mr. Loftafson, please go ahead. Good afternoon, ladies and gentlemen, and thank you so much for being virtually with us now. Now, I'm sure you know the most important piece of news of today, which is the streamlining or rationalization of the group, thanks to the merger of Unipol-SAI into Unipol Grupo Financiario. Now, we will be considering the exchange rates. So, 0.3 Unipol shares. Unipol SAE exchanged per one share. Unipol Grupo at the same time. Unipol Grupo is now launching a voluntary cash-based offer or tender. The price is 2.70 euros. Again, at the same time, we have announced the results of last year, 2023. These results are in my opinion very good also considering the difficulties typical of 2023 especially considering our natural catastrophes that have impacted heavily on the last year's business plus all the inflation related implications. and this is something we saw in the motor vehicle MV business so despite these difficulties as a result the group level is 1.3 billion euros 766 million for Unipol SAI so there's been a strong resiliency from our normal life business and again many other areas which are as important including the contribution of the health business which is bigger and bigger business plus the contribution of bank assurances or health and bank assurances. These are two of the key pillars of our business plan without forgetting the life business giving a major contribution to the comprehensive overall results of the group. Now, in terms of solvency, and this is my last point before getting questions, total solvency is 200%. Now, it includes the consolidation of BPS, Banca Popolare di Sondrio, which is what we didn't have last year, September 30th. It also includes the... Distribution of dividends. Now, as you have seen in the presentation, we have 37 cents, sorry, 38 cents, says the speaker, for Unipol Gruppo, and 0.165 cents for Unipol SAI. Of course, I'm talking about euros. That being said, I'm here with Enrico San Pietro to take your questions. Thank you. If you want to ask a question, please dial cross 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 phone. If you want to ask a question, please you can dial star followed by one now. The first question is from the Italian conference from Alberto Villa from Intermonte, please. Good afternoon and thank you. Good afternoon, Matteo. I have some considerations I'd like to share with you, but some questions on this operation. My first question is the following. What will be the pulse to merger solvency level? Because the current Unipol-Sci minority shareholders may take part in the cash offer, but also in those cases where there may be equity or shares exchange. So based on this solvency level, which may be the considerations concerning the distributions or the dividends in the future. So what about the possible solvency level for the group in the future? I mean, as the right range so as to carry out your business. Of course, this concerns this extraordinary operation. The other point, the other consideration is on the initiatives that you are putting together in order to improve the profitability of the non-life business, so the combined ratio. Can you tell us more about the tariff policies? Can you also tell us more about any possible change in the coverage level that you offer customers, for example, hail storms that have impacted negatively on 2023? Thank you. Now as for your first question, Alberto, now as you correctly said, the solvency of the combined entity depends on the percentages of participation to the public offering. So basically the starting point is quite similar. you the situation we had at the end of last year so figures you saw let's say that in case of total complete participation into the offer well this has an improving effect of course we haven't quantified it yet so in those cases where there's no total participation all the way to let's say zero percent in terms of accepting the the offer anyway the final figure if you will goes from the current number upwards now we know that in terms of this company on a combined level now from the structural point of view we do generate capital so in the future this organization will be able to improve its solvency position Now, it is too early to talk about possible dividends or paying dividends on the new organization. Of course, there will be evaluations and assessments done in the future. Now, as for the non-life business, let me ask Enrico to take this question. sorry to take the floor, this is Mr. Chamberlain now before giving the floor to Enrico on the non-life business I'd like to share an important point with you concerning solvency now of course we keep talking about the consolidated solvency level the way you can see it in printed documents anyway I'd like to share a key point with you Now, this point has to do with a very special, if you will, situation here. We are an insurance group, so we consolidate 20% of two banks in our equity, and this triggers a major consequence or effect on solvency just because I mean when I say solvency of course I'm talking about the percent rate and this is due because of the nature of the solvency levels or the regulatory capital of banks because of course their percentages are much lower. than those characterizing the insurance sector. So for banks we have 14, 16, even 16%. So Monte Pasky they have 18%. Now this is a unique case. Once again, this factor generates a sort of an optical effect that It doesn't really allow you to understand the solvability of the group. Now, I'm sharing this with you for the following reason. Now, for any reason, if we decided to slightly reduce our stake in the banks, We wouldn't be obliged to do the consolidation in that case. So our solvency, now this is not an exact figure, this is a very very close proxy, so it would be very similar to the solvency level of the insurance business. So when Unipol, I mean we consolidated 200, so the insurance solvency would be 239. So 239, if we want to go there, we just have to sell some percent, if you will, of the two stakes in the bank. So we do no longer consolidate them and sort of like magically, you know, the solvency would go up to 239. Okay, so once again, sorry to interrupt you, but I heard about solvency. I really needed to share this point with you. Okay, let me take advantage of having you there. So in your opinion, what works for the right range of solvency may be for the post-merger group? Well, if you consolidate in a stable way, well, let's say between 200 and 220. So this is our objective. Thank you. Okay then, so let me talk about the industrial development or evolution. And Alberto, once again, good afternoon. So in terms of MV, so let's say elementary business, which is basically the guarantee against CVT, so the catastrophes. Now in terms of motor vehicle, So, we already talked about this on the previous conference calls. So, we started a major repricing policy some months ago, and month after month, as we announced, the tariff increases get into the premiums. So, today, well, actually in 2023, average premiums went up by around 10%, and the selectivity, if you will, of our tariff generates a more than proportionate, let's say, high risks together with an improvement of claim rate. So in the final part of the year we have to add the consolidation of two other elements that have a positive impact on the average claim cost. So this is the consolidation of the reduction of the incident of claims with injuries, in this case average costs are higher, out of the number of total claims and the incidence which is lower than last year on serious or severe claims now these two items impacted positively on the combined ratios concerning the MV business so even if you know in different technical forms they also impacted I mean the IFRS 17 So I have to say that the journey, if you will, has been started some time ago. We keep traveling along that journey because we want to complete the recovery of margins, which is one of our targets. As for the non-MV business, well, you know very well what happened on the Italian market. It's been heavily impacted by the atmospheric events, so natural catastrophes. They took place in 2023 in a real extraordinary way and again they represent a trend. All insurance companies have to take into account this negative trend. We are doing this in a very bold way because we started massive actions on hundreds of thousands of policies we have in our portfolio, especially those located in northern Italian regions. So this means increasing prices significantly sometimes, but we also have decided to change or amend the regulatory conditions, and particularly by including and increasing the percent of the damage that's not paid so this is an operation that we do for the first time as the first company doing this in the market and i'm sure this may help us rebalance the area in the non-motor vehicle claim i have to say that we this is where we had the worst results while on other businesses for example injuries and health and many other businesses, we keep having extremely positive results. Thank you. Next question is from the conference in English, from Michael Hackner from Pellenberg, please.

Thank you.

You certainly surprised me on the timing and also the decisiveness of this announcement. I have three questions. The first one, following from Alberto Vila's question, can you talk a little bit more, a little bit about the potential here? In particular, is there a tax benefit or are there cost-cutting? The tax would be of interest to me. The second is on the combined ratio, which in non-motors is stunning. I know you might say not stunning is the wrong word, but below 100% given the loss you've suffered is very good. I just wondered if you could maybe share whether there have been any reserve releases which helped smooth the results out. And then on the third point, you just now explained that you've increased the deductibles, increased the pricing in non-motor. Can you say a little bit on the reinsurance side, so where you hedge your risks? What's happened in terms of coverage? Does the reinsurance contract cover losses on motor-owned damage? And what's happened to the limits? And maybe give a feel for how the pricing has changed. And then the final point, and I'm really sorry for that many questions. So you talked about solvency and said, yeah, if you reduce the banking stakes marginally, you get this huge jump in solvency. You also said that pro forma as a deal, if the deal is accepted by shareholders or they subscribe, then solvency goes up. Can you explain the mechanism? My feeling is it's very simply because the 2.7 euro deal offer price or tender price is slightly below the sum to two earned capital value. Sorry for the many questions. And yeah, congratulations. This is great news.