Assicurazioni Generali S.p.A.(ARZGY) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an operating result of over €1.8 billion, marking a 22% year-on-year increase [28] - The adjusted net result improved from €821 million to €1.23 billion, reflecting diversified profit sources [31] - The life operating result was €924 million, almost 10% higher than the previous year under IFRS 4 [44] Business Line Data and Key Metrics Changes - In the Life segment, protection reached €1.3 billion, while unit-linked products achieved €1.4 billion [9] - The P&C business saw a 10% increase in gross written premiums compared to the previous year, driven mainly by non-motor lines [17] - Non-motor gross written premium growth was 12.1% in Q1 2023, continuing the trend from 2022 [32] Market Data and Key Metrics Changes - The company increased its client base to 69 million, adding almost 1 million clients [5] - The average premium in the retail and SME book increased from 3.3% to 6.3% by the end of Q1 2023 [18] - The combined ratio for P&C was 90.7%, which is 5.6 percentage points lower than the previous year [36] Company Strategy and Development Direction - The company aims to become a lifetime partner to customers, focusing on improving advisory services and digital policy distribution [5][7] - The strategy remains unchanged despite rising interest rates, with a focus on new business underwriting discipline and capital-light products [14] - The company is adapting its product offerings to meet changing customer appetites, including recalibrating premium allocations [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic plan despite geopolitical pressures and volatile financial markets [4] - The company noted a moderate increase in lapses, particularly in bancassurance channels, but highlighted a positive trend in retention initiatives [10][11] - The management expects continued growth in the protection business, leveraging increased customer awareness post-COVID-19 [15] Other Important Information - The company has a strong solvency position at 227%, up from 221% at year-end 2022 [54] - The real estate exposure is around €35 billion, with a low vacancy rate of close to 10% [24] Q&A Session Summary Question: Can you provide insights on the Life Q1 operating profit and any one-off items? - The Life CSM release was €743 million, with a lower loss component of €10 million compared to €66 million in the previous year [57] Question: What is driving the increase in the P&C expense ratio? - The increase is mainly due to higher acquisition expenses from the growth of non-motor business and integration costs from newly consolidated businesses [59] Question: Can you elaborate on the extra costs in Asset Management? - The costs are related to investments in regulatory requirements and operational improvements, with expectations of a deceleration in cost increases later in the year [61] Question: What are the group's natural catastrophe retention and reinsurance arrangements? - The company has reinsurance protection operating in excess of €200 million for flood losses, with a maximum coverage of €2.4 billion [66] Question: What initiatives are in place to recapture outflows in Life products? - Initiatives include offering additional products and launching new segregated funds to attract customers [68] Question: What is the outlook for the discount benefit and insurance finance expenses? - The discount benefit is expected to decline, while insurance finance expenses will increase, with a projected €200 million increase in 2024 [100]