Assicurazioni Generali S.p.A.(ARZGY) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a strong and resilient performance with a top line growth in key areas, particularly non-motor P&C, which saw a 10.1% year-on-year growth [21][22] - The operating result for P&C increased from €1.43 billion a year ago to €2.15 billion for the first nine months of 2023, driven by several factors including a €350 million increase in the undiscounted operating insurance service result [23][24] - The adjusted net result for the first nine months of 2023 was €2.979 billion, reflecting a solid capital position with a solvency ratio at 224% [35][36] Business Line Data and Key Metrics Changes - In the Life segment, net inflows were reported at minus €1.2 billion, showing improvement compared to the previous quarter, attributed to lower surrenders [26][27] - The P&C business gross written premiums increased by 11.9% in Q3 2023, with an average premium increase of 6.9% compared to the same period last year [12][22] - The normalized CSM growth for Life was around 3.8% on a nine-month basis, with expectations for stronger new business CSM in Q4 [30] Market Data and Key Metrics Changes - The company maintained a strong position in the market with a Net Promoter Score confirming its number one position among peers [5] - The average premium in the retail and SME book increased by 6.9% year-on-year, reflecting broad-based improvement across the portfolio [12][22] - The company noted a gradual normalization of outflows in France and improvements in lapses in Italy, particularly in the bancassurance channel [9][26] Company Strategy and Development Direction - The company continues to focus on bundling solutions that address multiple customer needs within a single product, aligning with its lifetime partners ambition [11] - The strategy includes adapting pricing in response to claims inflation and frequency, particularly in the P&C segment [13][58] - The company is also enhancing its product offerings to remain competitive in the current market context [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macro environment due to recent geopolitical developments and weather events affecting communities [4][6] - The company expressed confidence in its strategic direction and ability to deliver solid growth as it moves into the last quarter of the year [19] - Management highlighted the need to adapt pricing strategies in light of increasing claims frequency and severity, particularly regarding natural catastrophes [56][100] Other Important Information - The company reported a significant impact from natural catastrophes, with €875 million in undiscounted nat cat experience, of which €687 million occurred in Q3 [23][24] - The investment yield remained strong at 4.3% in Life and 4% in P&C, with a focus on maintaining a prudent approach to listed equity [16][18] - The company anticipates potential impairments in real estate assets due to market trends, which may impact non-operating investment results in Q4 [32] Q&A Session Summary Question: Insights on P&C loss ratio and guidance for combined ratio - Management noted an improvement in the current year loss ratio, excluding natural catastrophes, and confirmed ongoing efforts to reach the previous guidance of 95% for the combined ratio [38][41] Question: Clarification on discounting benefits and finance expenses - The guidance for discounting benefits for 2023 has been adjusted to €850 million to €900 million, with finance expenses expected to increase by around €200 million [45][46] Question: Changes in lapse assumptions and CSM variances - Management indicated marginal decreases in experience variances and noted that adjustments to assumptions may occur based on observed trends in lapse rates [46][113] Question: Long-term outlook for natural catastrophes and pricing strategies - Management acknowledged the increasing frequency of secondary perils and emphasized the need to adapt pricing strategies accordingly [56][58] Question: Impact of Life guarantee fund in Italy - The introduction of the Life guarantee fund is expected to have a net impact of €40 million over the next ten years if the law is approved as currently proposed [71] Question: Details on net inflows and performance in Italy and France - Management reported a positive trend in net inflows, with improvements in both Italy and France, indicating a reassuring normalization in the savings and pension business [84][90]