Assicurazioni Generali SpA Q4 2024 Earnings Call Transcript

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

Question: David Barma - BofA Securities - Analyst : The first one is on the very good performance in P&C in Q4. So you've improved your undiscounted current year loss ratio by around 1.6% in Q4 compared to the nine months, which was the starting point of the new cycle? And actually, we're even closer to the 2.5% if we account for the fact that manmade losses were higher in Q4. So that's better than your target for the next three years. I realize it's only one quarter, but I would expect the underlying profitability to further improve given the good trajectory of pricing for at least for 2025. So can you talk a little bit about this and the Q4 performance versus the improvement expected over the next three years? That's my first question. And then secondly, staying on P&C and Motor line specifically, but would you say most of the pruning is now behind, especially in Italy, and we can now start seeing a bit more volume growth in 2025? And then lastly, on cash, the CMD, I think you suggested you'd get around EUR400 million of remittances from management actions in 2025, but I would have thought the Liberty Seguros, excess capital and the measures you've taken with Allianz and Genertel would give you more than that already. So can you please come back on the management actions that are expected to come through in 2025, please?

Question: Andrew Baker - Goldman Sachs Group, Inc. - Analyst : The first one is on just the CSM operating variances. Are you able to give just a little bit more color on the model refinements that you did in France, Germany and Asia. And then also related to that, what should we think or how should we think about the 2025 operating variance coming through on the lap side from your methodology change? Any guidance there would be helpful. And then secondly, your fourth quarter Life new business margin was sequentially higher than Q3, which is more positive than you guided at the time. So just curious what drove the sequential development versus what you had expected? And then also, are you able to give the new business value for 2024, what it would have been under your new definition going forward?

Question: Michael Huttner - Joh. Berenberg, Gossler & Co. KG - Analyst : Just congratulations, three cycles in a row is amazing. I had three really light questions. The first is a bit continuation of one of the previous questions on cash outlook. I noticed that in 2024, you had quite a big number from or quite a big increase from others. So I just wondered what is that and how much more we could get? And also, I think you had a question that there was a Liberty, there's EUR300 million left there, whether that's included in the management actions you cited. And then the second is also on cash, Switzerland. I remember you said, mama takes back, and I wondered, is this already starting in 2025? And then the third question is something I think that you said, Philippe, in an interview that you're buying -- you're going to be buying more Italy government bonds. And I just wondered if you can maybe explain your thinking there.

Question: Farooq Hanif - JPMorgan Chase & Co - Analyst : Could you please talk about the jump in the Life investment margin? Kind of any one-offs that were in 2024 that we need to take out? And also, you had a very good investment income, too in P&C. So just comment, I guess, around the sustainability of that given current macro. Second question on margins. I mean when you adjust for your new approach, you're already quite close to your 6% new business margin target in Life. So I was wondering what the path to get there looks like? I mean, is it quite an easy jump from now, for example, in 2025 or 2026 to get there more quickly. And in that context, I noticed there is a big jump in the margin in CEE, you commented on it in your slides, but if you could give us more details about what's going on there, that would be really helpful.

Question: Iain Pearce - BNP Paribas Exane - Analyst : Two, just around the motor business. The first one is on the 98% full year combined ratio, which is a bit better than what I thought you spoke about at the Investor Day. Just trying to understand if there's anything sort of one-off or some favorable experience, favorable PYD in there? Or if you think the 98% is a true sort of underlying level and a good starting point for the 2027 plan? And then the second one is just on the motor businesses in France and Italy. So it looks like they're growing below the level of rate increase or average premium increase you would have been achieving in 2024. You flagged some challenges around Genertel in Italy. I wonder if you could firstly just elaborate on why that's so challenging in the direct segment. And if you expect those businesses to return to above premium increased growth in 2024 -- 2025, sorry, in France and Italy. If you can elaborate on that would great.

Question: William Hawkins - Keefe, Bruyette, & Woods, Inc. - Analyst : Just coming back on some of your answers you've already given. So forgive me, please. your Life investment results, the outlook, did I hear you say EUR900 million for 2025 because that feels very low relative to the EUR943 million for a business that should be growing. So just could you repeat what you said about the outlook for the Life investment result, please? And then secondly, you've already been very kind on the detail of the new business margin, but the specific impact of the commercial initiatives, they dragged 50 basis points last year. What are you expecting the drag is going to be in 2025? And do we keep that sort of par and pursue with the new methodology? Or is there some reason why it might change in the new methodology? And then lastly, please, I'm sorry to repeat again because I was trying to type while you were talking. The higher exposure to BTPs, are you simply saying that your business will be bigger. So of course, you're going to own more BTPs, or is there actually a suggestion that your economic weighting towards BTPs could be rising?

Question: Gian Ferrari - Mediobanca - Banca di credito finanziario S.p.A. - Analyst : Three for me, please. The first one is credit spread sensitivities. I noticed they went up quite materially, particularly on the CSM. I was wondering if there is anything related to the average rating of the credit book or if there is any other explanation for that? Second is the CSM of Switzerland. If you can give us a bit of color on the 30% decline in this line. And last, on a direct insurance company up for selling Italy, I think in Venice, you have been very clear in saying that M&A is not top priority of the new plan. I was wondering if you are looking at the file or this file is not of interest for you.

Question: Hadley Cohen - Morgan Stanley - Analyst : Two questions, please. So firstly, thank you for giving the extra color around the average coupon on redemptions for 2024, I think it was 1.3%. You said versus the 3.6% reinvestment rate. Is it possible to give us a flavor of how you're thinking or how we should think about the average coupon on redemptions for 2025, please? Presumably, we should still be expecting investment income to be pushing higher from here? And then second question, slightly linked to Will's question earlier, I think, but useful to see the EUR2 billion of net flows in the fourth quarter in Italy. I think, roughly split between unit-linked and savings business. Is it possible to give us an update on how you're seeing flows so far in the early parts of this year. I guess I'm thinking in the context of bond yields pushing higher, not quite as high as they were in '22, '23, but how we should think about the risk of an uptick in lapses again?

Question: Fahad Changazi - Kepler Cheuvreux - Analyst : Two questions, please. It sounds promising on the underlying loss ratio. But could you comment on the expense ratio for 2025. I think given the change in mix in non-motor versus motor, there was going to be an impact on acquisition costs. But is this still the case for 2025, given we expect some growth in motor premiums. And second question on Solvency II Life in-force returns. Could you give some indication on how that will develop in 2025 given the lower swap rates.

Question: Rhea Shah - Deutsche Bank AG - Analyst : Two questions for me. The first one, just going back to P&C and the loss ratio improvement that you saw in '24. You said that this was split between tariff strengthening and other technical measures. If you could just give the split between those two numbers and then how we should be thinking about that into 2025? And then the second question is in Holding and other, what's a good, normalized guide for other businesses, it was EUR250 million in 2023, EUR157 million in 2024. How should we be thinking about that going forward?

Question: Michael Huttner - Joh. Berenberg, Gossler & Co. KG - Analyst : I'm very lucky. So I'll keep it really brief. Just one question. The capital generation, an amazing number, EUR4.8 billion, 21% for Group growing as fast as you, that's an extraordinary number. You're well ahead of the target for -- to get to EUR14 billion in the next three-year plan. Can you explain a little bit what's driving this huge beat?

Question: Steven Haywood - HSBC - Analyst : Two questions from me. One is just to clarify on your Solvency II position at the start of the year, has there been any major moves since then and the EUR500 million share buyback is not in that ratio? And then secondly, can you give us an indication on what is going on with the Italian government's review of the Natixis deal? Could there be any implications from this as well?