Half Year 2024 Assicurazioni Generali SpA Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Peter Eliot - Kepler Cheuvreux - Analyst : Thank you very much, and congratulations, especially on the very strong net flows. My first question was on Liberty, please. I mean, you seem to have reported a combined ratio of well below 100%. I mean, you do make it clear that it benefited from no Nat Cats or man-made losses, but that still seems a much stronger performance than you'd expected. So, I'm just wondering if you could comment on that and whether that underlying performance is sustainable. The second question was you mentioned the Milan tables in your introductory comments. Just wondering if you could talk a little bit more about those. And in particular, the extent to which they were already in your numbers and pricing, or what adjustments you may have to make or either have made as a result of them or will have to make sort of pricing or reserves? I mean, I'm guessing, I think it was sort of expected that there would be an increase. So I'm just interested to know how much of it was a surprise, and yeah, what the impact is? And then the third one, I apologize in advance for this one, but IFRS 17, it changed the way you report most of your private equity, but I think it didn't change it for asset management. In that segment, I think you're right that you still include the dividends that Lion River receives. Before the accounting change, we were getting sort of high-double-digit, I think, per year and we were told that the run rate of the result was higher and that dividend should catch up. So I'm just wondering if you can give us an update on what dividends you're currently receiving in Lion River and whether there is still catch-up potential there. Thank you very much.

Question: Peter Eliot - Kepler Cheuvreux - Analyst : That's great. Thank you very much both. Cristiano, is it possible to quantify the accounting impact on Liberty?

Question: David Barma - BofA Securities - Analyst : Well, thank you for taking my questions. I have three on the life business, please. The first one is on the investment result, which was very strong in the second quarter and you flagged some items in your slide deck that sound like that may not be a sustainable level. What would be an underlying view of your Life investment result, please? Secondly, on the new business margin, I expected that to recover a bit more in the second quarter. Is the 4.8% of Q2 now a clean number, or are there other scope and mix effects like we had in Q1 to have in mind? And then lastly, on lapses, can you talk a little bit about the lapse environment? Because I've been quite surprised to see lapses in Italy remain fairly high, at least in the market as a whole, was still double-digit on an annualized basis and actually increasing again this year, which I guess explains your operating variances, which are continuing in the CSM. But can you give us a bit more color on the lapse environment, please? Thank you.

Question: David Barma - BofA Securities - Analyst : Can I ask what kind of lapse rates you have in Italy?

Question: William Hawkins - Keefe Bruyette & Woods Inc - Analyst : Okay, thank you. Yes, it's William at KBW. I've got two questions, please. Maybe the first one is a slightly strategic question for you. The first half result still had a negative in Life from the Loss Component on onerous contracts. And I think, if I'm right, that's mostly from China. And so, I'm thinking that onerous contracts structurally are still zero. But I wanted to check that as an accounting point. But then more strategically, can you just remind me kind of what's going on with China? Because I know it depressed the margin in the first half, but we're still a positive new business value but I think you're saying it's an onerous contract. And I'm not really sure sort of strategically what the value proposition is of the Chinese business that you're writing, please. So if you could help me understand the Chinese angle, that would be kind. And then secondly, when I'm looking at the mix of the combined ratio by country, there's a really low figure for the undiscounted combined ratio at the group center. It's historically been not a million miles from your overall figure. Last year, it was 88%, but in the first half of this year, it was only 70%. So there's something weird going on there. And I don't know if I extrapolate it or if there's some adjustment for the future. Those are my two questions. Thank you.

Question: Iain Pearce - BNP Paribas Exane - Analyst : Hi, Marco. Hi, Philippe. Thanks for taking my questions. The first one was just on premium growth, mainly focusing on motor here. I think the slides talk a little bit about some pruning in Italy and France. In Q1, there was some talk around some pruning in Germany. Just trying to understand on when you expect this pruning process to go on? And if you're expecting sort of an uptick in risk exposure overall, or expecting premiums to grow more in line with rate in the motor and the non-motor segment? And my second one was just on Conning and if there's been any disruption to flows or some outflows as a result of the acquisition? And sort of what you think about the run rate of flows for Conning going forward and what you're doing to drive flows there? And then, just a final one on one of the slides in the presentation like lower intergroup dividends from France. I don't remember there being any one-offs in France last year on remittance. I'm just wondering what that relates to. Thank you.

Question: Iain Pearce - BNP Paribas Exane - Analyst : Okay, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 10:00AM, GASI.MI - Half Year 2024 Assicurazioni Generali SpA Earnings Call

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : Fantastic. Thank you very much. And the -- I had three questions. The first one is on the deals versus buybacks. The second one, I don't know if you can give us a feel maybe for where -- how big your cash pile is. Maybe if you can measure depth. Sorry, that's a bit of a tricky way of asking it. And the third one is, I guess, semi-technical, but it kind of relates to the answer that Giulio was beginning to make, this Milan quote and stuff. I remember from the past, you had a kind of almost like an inflation buffer. And I'm just wondering whether that's same which you've used or which you've kind of allocated or whatever to this Milan quote stuff? Thank you.

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : It's the balance between M&A and buybacks?

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : And then, on the -- there's an inflation buffer which we had before. And my guess is this is a bit which you recycled for the Milan quote. And then the last thing, if I may ask, because I think first you gave us a figure is the guarantee fund cost. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 10:00AM, GASI.MI - Half Year 2024 Assicurazioni Generali SpA Earnings Call

Question: James Shuck - Citigroup Inc - Analyst : Yeah, hi. Good morning, everybody. So, my first question is on Global Corporate and Commercial. And it's actually going to link in a little bit with Will's question earlier on. And Cristiano, you weren't on the call regarding that question, but there's a question about the undiscounted combined ratio in corporate H1, which seemed to be around 70%. And Marco helpfully answered that that was due to a low level of man-made in Global Corporate and Commercial. But perhaps you can just flesh that out a little bit for me. Kind of -- my kind of question though was really on that was just a request, if you could give us the actual premium base and the combined ratio for Global Corporate and Commercial in H1 and perhaps identifying the man-made, because I think that division has actually been the cause of some of the problems on man-made? So I'm just keen to get some insight into that. Second question, it looks like Switzerland had a combined ratio of 108% at 1H. I presume there's an adverse prior year happening there. But if you could just elaborate on that for me? And then, my third question, I'm not sure if we have Giulio on the call or not, but I'm sure Philippe can take it. Giulio's old shop had quite a big focus on something called a target operating model, which was a very kind of innovative approach to the tied agency set up and has been very successful in Italy. I'm really keen to get his views or Philippe's interpretation of how that target operating model works for a company like Allianz and what you might take and what features you might learn from that when you're looking to modernize and continue to modernize your own tied agency networks? Thank you.

Question: Steven Haywood - HSBC Holdings PLC - Analyst : Good afternoon. Thank you very much. Three questions, please. One is on the lapses. Obviously, thank you to Marco for explaining the trend. My question is mainly on whether you took any assumption changes in the first half or whether you need to take any assumption changes going forward? Second question is on Solvency 2 ratio mark-to-market since the end of the first half. Can you give us a kind of indication? I know you mentioned that you're not worried about volatility as it provides opportunities in your results, but if you could give us an indication on the solvency move, that would be quite helpful. And then finally, if you can answer this on your sort of yearly cash generation expectations. Can you give us an indication of what you think your yearly cash remittances generation is? And then net of the dividend, holding expenses, debt costs, what does this give you on a yearly basis to potentially deploy? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 10:00AM, GASI.MI - Half Year 2024 Assicurazioni Generali SpA Earnings Call

Question: Steven Haywood - HSBC Holdings PLC - Analyst : Thank you so much.

Question: Elena Perini - Intesa Sanpaolo SpA - Analyst : Yes. Hello, everyone, and thank you for taking my questions. I've got actually two questions on the Asset Management. It is clear that this business is a strategic one for you, on the contrary of some other competitors of yours. I would like you to remind, please, the main reasons why you consider it as a strategic business for your group? And this is the first one. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 10:00AM, GASI.MI - Half Year 2024 Assicurazioni Generali SpA Earnings Call The second one is on the sustainability of the second quarter result, operating result, for the Asset and Wealth Management, which was around EUR300 million. Can we consider it as a recurring run rate going forward? And in this respect, another detail concerning the slide number 40, because I saw an increase in the cost income ratio for the Asset Management in the first half '24 compared to last year. If you can give some explanations on this trend? Thank you very much.

Question: Gianluca Ferrari - Mediobanca - Analyst : Yes, hi. Good afternoon, everyone. I have two left. One is on Germany. It seems that your combined ratio is in a better shape compared to some of your peers. So I was wondering, what is the managerial decision here if to follow the tariff increases that many others are doing, or to try to cash

Question: Gianluca Ferrari - Mediobanca - Analyst : Thanks for the clarification, Marco.

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : Thank you very much. It was just a very quick follow-up. I think I saw on the screen, Cristiano, you said profits would be below EUR900 million in Q3 and above EUR900 million in Q4. And I was thinking, I know it's like a decline, right, EUR1.1 billion in Q1, EUR900 million in Q2, below EUR900 million in Q3 and then maybe a slight bounce. Can you explain a little bit your thinking here? Thank you.

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : That's fantastic. Thank you.

Question: James Shuck - Citigroup Inc - Analyst : Yes, thanks for the opportunity to follow-up. I just wanted to follow-up on the remittances at 1H because, Cristiano, you gave the cash figure of EUR5.9 billion. So I think I have to try and fill in the pieces. But perhaps you could help me of what the actual remittances were at 1H and which remittances from OEs are still expected in the rest of the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 10:00AM, GASI.MI - Half Year 2024 Assicurazioni Generali SpA Earnings Call Then, on the P&C combined ratio, I appreciate the noise in this quarter, whether it's Liberty or whether it's weather or whatever, but the Q1 to Q2 sequential on an underlying basis kind of excluding discounting Nat Cats and PYD, et cetera, looked like it kind of deteriorated a little bit about 30 bps in Q2 versus Q1. I think about half of that might be due to Liberty. So it's still going to get a little bit worse. And I was expecting to see an earn-through from the rates you put on the books in this quarter. I appreciate weather has probably had an impact. So I'm keen to get an understanding of what you think a true reflection is of that development sequentially Q1 to Q2, please? Finally, just quickly, I'm looking forward to the Capital Markets Day and Venice is a lovely venue. So thank you for that. I'm just interested -- I don't want front-run too much of what you might say. But one of the targets that you don't have and it's quite conspicuous relative to peers and I think it's quite an important one given that you always focus on Solvency and cash generation and capital discipline. You don't have an ROE target. I'm keen to get your views on whether we might see that be introduced at the Capital Markets Day? Thank you.

Question: James Shuck - Citigroup Inc - Analyst : Thank you very much.

Question: Peter Eliot - Kepler Cheuvreux - Analyst : Thank you very much also for the opportunity to follow-up. Just had a quick -- two follow-ups, please. One was because you just mentioned that Cristiano, on the Nat Cats below the cutoff falling into Q2 and because others have mentioned. I was just wondering if you could remind us of what your cutoff is for claims before they fall into the Nat Cat bucket? And the second one was on your expense ratio, I mean ex-Liberty, it's down 0 which was -- seemed like quite a strong number. I was just wondering if you could talk about the drivers and sustainability of that? Thank you.

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : Sorry. Last one. On Liberty Mutual, so you had the target excluding Liberty of below 96%. Now you include Liberty. I'm going to be really silly. What's the improvement? I seem to remember 20 bps is in figure. And then acoustically, I didn't catch what you said about a Liberty undiscounted combined ratio. I think it's something 90 -- something 0.8, but I don't know what the big figures are. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 10:00AM, GASI.MI - Half Year 2024 Assicurazioni Generali SpA Earnings Call

Question: Michael Huttner - Joh Berenberg Gossler & Co KG - Analyst : Fantastic. Thank you very much.