Assicurazioni Generali S.p.A.(ARZGY) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The operating result in the Life segment for Q3 2024 increased by almost 11% compared to Q3 2023, with a CSM growth of nearly €500 million despite around €100 million of negative operating variances mainly related to lapses [18][31] - Investment results for the quarter reached €266 million, reflecting over 20% year-on-year growth, influenced by non-recurring elements [18][19] - The undiscounted combined ratio improved to 96.3%, down by 1.4% compared to the previous year, indicating enhanced technical profitability [11][20] Business Line Data and Key Metrics Changes - In the Life segment, new business margin for Q3 was confirmed at 4.92%, with a 9% growth in new business volume and Protection growing by 11.5% [6][7] - The P&C business saw an annual average premium increase of 6.8%, with motor line premiums rising by 7.5% [10][38] - The attritional combined ratio showed improvement, supported by benign frequency and low severe bodily injury claims [11][12] Market Data and Key Metrics Changes - Italy returned to positive net collection in Q3, with expectations for positive net inflow by the end of 2024 [9] - The company noted a normalization of lapses in France to levels seen in 2022, while Italy experienced a decrease in lapses in the second half of the year [8] Company Strategy and Development Direction - The company aims to leverage attractive long-term growth opportunities in the Protection business, which generated over 40% of new business value in the past quarter [7] - A focus on pricing and technical excellence is expected to continue driving improvements in the combined ratio, with a target of below 96% by the end of 2024 [12][20] - The company is adjusting its natural catastrophe budget in response to recent adverse events, indicating a shift in strategy to manage volatility and pricing [13][59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued improvement of technical profitability, despite cautioning against projecting the rate of improvement linearly into the future [12][30] - The management highlighted the impact of economic variances, with positive equity market performance contributing to a €405 million increase in economic variances for Q3 [32] - The company anticipates a slight decrease in new business margins in Q4 due to typical year-end dynamics [75] Other Important Information - The company is actively supporting the Spanish Red Cross following recent tragic events in Spain, reflecting its commitment to corporate social responsibility [15] - Restructuring costs are expected to decline significantly in 2024 compared to 2023, with ongoing efforts to enhance operational efficiency [63] Q&A Session Summary Question: Insights on P&C attritional and Life CSM variances - Management indicated that the benign frequency and disinflation trends are expected to continue, with a projected improvement in technical profitability [30] - Economic variances for Q3 were approximately €400 million positive, driven by equity market performance, while operating variances were around €112 million negative, primarily due to lapses [31][32] Question: Update on Life investment results and new business margin - The investment results included non-recurring items, with the new business margin impacted by commercial actions in Italy contributing 30 to 40 basis points [36][37] Question: Nat cat budget and pricing outlook - Management acknowledged the need for adjustments in the nat cat budget due to increased frequency and severity of events, while also indicating potential for further price increases [58][59] Question: Restructuring costs and future outlook - Restructuring costs for 2024 are expected to be about half of the 2023 levels, with ongoing efficiency measures in place [63] Question: Solvency ratio details - The numerator for the Solvency ratio is €48.9 billion and the denominator is €23.4 billion, resulting in a ratio of 209% [67] Question: Cash flow and investment income trajectory - The company reported operating cash of approximately €3.7 billion to €3.8 billion, with expectations for continued growth in investment income [47][65] Question: Nat cat reinstatement premiums and impairments - Reinstatement premiums for Q3 were around €15 million, while expected impairments on real estate investments are estimated between €25 million to €50 million [86][87]