Assicurazioni Generali S.p.A.(ARZGY) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record operating results of €6.9 billion, an increase of 7.9% compared to 2022 [6] - Adjusted net results rose to a record level of €3.6 billion, reflecting a strong increase of 14.1% [6] - The growth of operating results has significantly outpaced top-line growth since 2016, indicating a successful transformation from a predominantly Life insurer to a diversified insurance and asset management group [7] Business Line Data and Key Metrics Changes - Property & Casualty (P&C) was the key driver of top-line growth, with both motor and non-motor lines performing positively [8] - The undiscounted attritional combined ratio improved, moving from 96.6% in the first nine months to 94.2% in Q4 2023, driven by tariff strengthening measures and reduced acquisition expenses [22] - Life business recorded positive net inflows close to €9 billion at the end of 2023, despite a challenging market environment [11] Market Data and Key Metrics Changes - The company confirmed its number one position in terms of relationship Net Promoted Score among peers, with over 50% of customers entrusting Generali to cover at least two of their insurance needs [9] - The company is experiencing strong pricing momentum across Europe, particularly in Germany and Italy, with double-digit price increases noted in motor insurance [74] Company Strategy and Development Direction - The company is focused on integrating sustainability into its operations and aims to enhance its insurance leadership in Europe while building a global asset management platform [5][16] - The management is committed to shareholder remuneration, proposing an increased dividend of €1.28 per share, which is over 10% higher than the previous year [12][13] - The company plans to implement a €500 million share buyback, subject to AGM approval, as part of its capital management strategy [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to positive net inflows in Life if market conditions improve throughout 2024 [11] - The company is focused on the successful delivery of its Lifetime Partner 24 driving growth strategy and is on track to achieve its remaining financial goals [16][17] - Management emphasized the importance of being close to customers as a key pillar of the company's strategy [10] Other Important Information - The company has been distributing a steadily growing dividend since 2016, with a cumulative dividend target of €5.5 billion achieved for 2022-2024 [13][14] - The management is increasingly shifting focus to the next strategic cycle, with Generali in a strong position as a diversified insurance and asset management player [17] Q&A Session Questions and Answers Question: Improvement in P&C underlying loss ratio - The underlying loss ratio improved in Q4 compared to the first nine months, with a decrease of 1.5 percentage points in the current year loss ratio, driven by technical measures and reduced acquisition expenses [21][22] Question: Contribution of Liberty Seguros to 2024 targets - The balance sheet of Liberty Seguros for 2023 is still pending approval, and the management is awaiting final figures to align with group figures [24] Question: Plans for reserving in Switzerland - The company has reached an agreement for prudent reserving in Switzerland, allowing for better predictability and reduced sensitivity to capital risks [27] Question: Balance of discounting and unwinding for 2024 - The expected discounting for 2024 is projected to be less than €800 million, while unwinding is expected to increase to €565 million [33] Question: Pricing momentum in Q1 - The pricing environment remains strong across Europe, with significant tariff increases planned, particularly in Germany [36][74] Question: Solvency implications of extreme scenarios - The company has reduced sensitivity to equity market fluctuations, with a potential 6 percentage point loss in Solvency for a 25% drop in equity [38] Question: Life operating results and loss components - The loss components in Life insurance are expected to remain in the low to mid double-digit range for 2024, with adjustments made for market performance [70][72] Question: Future dividend policy - The management is confident that the trend of shareholder-friendly capital management will continue, but specific future plans will be disclosed in early 2025 [49][56]