Good afternoon. This is the Chorus Call conference operator. Welcome. Thank you for joining the Generali Group first half 2021 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Giulia Raffo, Head of Investor and Rating Agency Relations. Please go ahead, madam. Thank you. Welcome to Generali's first half 2021 results conference call. I am here with our Group CEO and our Group CFO. Before opening the Q&A session, I would like to kindly hand over to our Group CEO for some opening statement. Thank you very much. Thank you, Giulia. Hello, everyone. Thank you to all of you for joining the call today. As you saw this morning, we published our first half 2021 results. These are very good results in a very challenging environment. They are the proof that our current strategic plan, Generali 2021, was indeed and is still the right plan. I am here today with our Group CFO, Cristiano Borean. We look forward to taking your questions over the next hour. Before then, let me quickly review some highlights from the first six months of the year. First of all, we confirmed our strong business profitability. Our operating result increased by over 10% from the first six months of 2020, arriving at nearly EUR 3 billion, while our net profit practically doubled, reaching well over EUR 1.5 billion. Our life new business margin grew by 0.73 percentage points up to 4.67% in the first half of the year. Our new business value has been growing by almost 30%. On the P&C business, our combined ratio stood at 89.7%, underlining our technical excellence. Our capital position was very solid, even considering the uncertain context with our solvency ratio standing at 231%. We are continuing to work hard and with strong discipline to complete Generali 2021 and to deliver on our targets that were announced nearly three years ago. That were confirmed in November last year. At the same time, together with my team, we are defining our next strategic plan that we would be presenting to the financial community on December 15, making a new chapter of our group's history. We look forward to illustrating this plan to you, and in the meantime, now Cristiano and myself are available to answer to your question. Thank you again. Excuse me. Please go ahead. Thank you very much. We can now open the Q&A session. Thank you. Thank you. This is the Chorus Call operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Andrew Sinclair with Bank of America. Please go ahead. Thank you. Good afternoon, everyone. Three from me as usual, if that's okay. Firstly, just wondering if you could give us any color on the cost of July's European floods, and also just some details around your reinsurance protections. That's question one. Question two is just on asset management. I thought it was really impressive to keep expenses flat for that level of revenue growth. Do you see any risk of an expense catch up? You're running really far in advance of your operating margin target. Just really helpful to get some context on that. Thirdly was on Unit-Linked great flows. How much of that do you think was just a catch up from people who've been sitting on their hands during COVID than putting some money to work? Do you think you can achieve similar flows in H2 and into 2022? Thanks. Hello, Andrew. First of all, on the cost for the July European flood, the one more concentrated in Germany, please, I would like to remind you that the structure of our reinsurance treaty for these kind of events do not allow a retention per single event above EUR 100 million. The net retention for the group of such kind of events is EUR 100 million. You have the installment premium as a normal reinsurance contract when the effect happened. We are already above EUR 100 million of estimation. It will be EUR 100 million. How our reinsurance protection works as a group against all these kind of events related to wind chill, hail, and all the like of NatCat of this kind, we are protected up to EUR 500 million impact as a maximum amount that we can retain in the balance sheet as a sum of uncorrelated events. As you know, per single event, we do not retain more than EUR 100 million. That would be the maximum impact module of the installment premium we can get. This Translated only without reinstallment payments would be 2.4% of combined ratio maximum from those kind of events. We are already at including this event of July, summing the one off end of June plus other happened, we are at around EUR 300 million NatCat impact in the balance sheet, which is 1.5% as of year-end premium. The average over the last five years was 1.8%. This is for the first question. On the asset management performance, on the cost, you should not look at this figure of 45% as a basis to start. The one which is the ambition as we manage as a target is more consistent to the expenses we started doing in the second half of 2021 for the distribution platform and the IT project that are going to be implemented, will be progressively rolled out in order to increase our capacity to distribute. You should not look at this number, which is, by the way, also influenced by the performance fees effect, and more on what is the long term, including the expenses that we will do for the distribution going forward, which is the one as the target. The third one on the Unit-Linked performance. The growth, even if I compare it towards 2019, which is the pre-COVID effect, it is endogenous and sustainable. It is not brought up by external factor. It is really the strategy, and I would mean that this is consistent to the capacity of the group to grow. I hand over to Philippe to further comment. This is a strategy that we started many years ago, we are very much in the situation to manage the new business mix because of our strong proprietary distribution. This makes the whole difference. Actually, our net inflow, which is EUR 6.3 billion after six months, it's already very solid in volume, but it's even more solid in terms of quality because it's basically only protection and Unit-Linked. Definitely, if we were less disciplined, if we hadn't such a strong proprietary distribution, we could have a higher net inflow but lower quality. This is definitely not our choice. Once again, the quality of our distribution makes the whole difference. These numbers regarding Unit-Linked are absolutely sustainable. Thank you. Next question, please. The next question is from Peter Eliot with Kepler Cheuvreux. Please go ahead. Thanks very much. Three questions from me as well, please. The first one was on investment income. I was just wondering, could you update us on your current expectations on how investment income might develop from here, both for life and non-life, would be very helpful, please. Secondly, echo Andrew's comments on the asset management great numbers. I guess the only area where you're sort of slightly behind target is the external clients, and maybe that ties into your comment just now, Cristiano. I was just wondering how you think of that target at the current time and what's achievable. Finally, the third one. I was wondering if you could just update us on what you're seeing in Italian motor in particular in terms of average premium trends, pricing trends. Thank you very much. Hello, Peter. Investment income. Please let me profit to make an initial clarification around this point, because when you look at the investment income today in the half year, you are not seeing the full allocation of the investment potential of our books because of the effect of the private equity, which we do report in the line holding another business, but it is an asset class per se. It is a company. That's why we report it as a company. Then this pay dividend to the class shareholder, which are the different insurance companies among the group. What you should consider as an investment income should also embed, even if there is a time shift between the allocation of result and the payment of the dividend of this extra result, also this component. Please don't forget what I told you already many times, that you should not consider the private equity as a one-off result. We are already, after almost EUR 7 billion allocation, harvesting at almost double-digit result on the investment, those money put at the service of both our shareholder and our policyholder. This will grow further for the normal increase of the real asset strategy we are deploying, and this will support investment income. Having said that, the investment income will be affected by the natural dilution of the low rate environment. We are working, and you see from our negative net collection in the saving business, that we are trying also to re-steer the business towards protection and Unit-Linked, hence having less money to be invested. In general, we are working on Life in this direction as well. In P&C, we are growing more. In P&C, we are growing faster, so there are more money to be invested. If you look at the stake of money, less on Life to be invested, more on P&C, we could expect for the next year a 10-15 BPS yield dilution in the current income on average book cost of our asset, both Life and P&C. Maybe skewed towards more the 10 BPS in P&C than in Life. Asset management. The target on the third-party client, as you know, I think that it is difficult to achieve by year-end 2021 as a percentage term. I would like to emphasize that in absolute numbers, so the numerator, which was building at that 35, the current level of the external revenues in that calculation was exactly coherent with the number of the strategy, the numerator. Clearly, the denominator increased more also because of the growth of the internal asset and the evolution of the market. For 2021, we don't think we can achieve it as a 35% target. For the Italian motor average premium, what are the pricing trends? What we observe is that so far we are observing in the motor TPL a 3.9% decrease in the average premium collected, which is sufficiently consistent with our strategy to, at the same time, retain the client and grow as well with the fleet business. As you know, we have a big agreement with Fiat Chrysler Automobiles in Italy, which is doing extremely well, also because of the MOD development, which is growing extremely fast. By the way, I anticipate the question, explain potentially also the increased expense ratio you are observing, because exactly the higher remuneration for the line MOD within the motor. That's very clear. Thank you very much, Cristiano. Thank you. Next question, please. The next question is from Farooq Hanif with Credit Suisse. Please go ahead. Hi, everybody. Thanks very much. Just going back to Non-Life first. I noticed that you've had an increase in reserve release, but it's still lower than what we've seen since 2016. Is there still some element of conservatism in this, given the still low frequency that you're experiencing? Secondly, can you talk a little bit about the capital implications of the Cattolica acquisition? For example, what diversification benefits could actually help your capital position, if this deal went ahead on the tender offer? Finally, could you also comment on, given your capital position is very strong, your leverage ratios have come down to good levels. Going forward in your strategic plan, what's the likelihood that you could move to a strategy of inorganic growth versus buybacks to help, a bit more of a formal kind of policy on buybacks versus inorganic growth, to help sort of use that surplus capital? Thank you. Thank you, Farooq. The first question, in P&C, on the prior year, you have seen an increase of 0.8% compared to the first half last year. I would like to recall you that if I look the reserve adequacy, the excess of reserving above the best estimate we do on the Solvency II view, it is broadly unchanged, which is explained by the fact that still in the first six months, we observed a frequency which is lower than the pre-COVID period in almost all the geographies, and only in the month of June, we started to observe frequency trending to the level of the 2019, the pre-COVID one. For example, a country which is still below is Germany, where you see a positive benefit. My message is basically unchanged reserve adequacy. There is an increase in the prior year because maybe you remember last year I gave some guidance of extreme prudence in the prior year allocation due to the uncertainty of evolution and the prudence in the reserving. Second point, related to the Cattolica acquisition, we stated something in the order of 8 percentage points, almost 8 percentage points of solvency percentage point reduction. From the diversification benefit, you would have an increase of the P&C contribution, which diversifies well away, because as you know, the sources of profit in Italy are skewed towards Life versus P&C, which is helping. Anyhow, you will have a counter element which will come from the presence of the BTP, which is present in the portfolio, which so far is our largest sensitivity risk, which is counterbalancing the benefit. From the cash flow standpoint, from the initial diversification within the line, we have a very positive diversification from the P&C. I hand over to Philippe regarding the inorganic versus buyback. Yes, even after Cattolica, our capital position will remain very strong. As you know, we don't have the obsession of M&A at any cost. We have been very disciplined in the past few years with M&A. I remember that I told many of you a few years ago that the kind of M&A we would prefer were small and medium M&A, because I liked the build-up strategy, which is a safe one. It creates lower execution risks. We are very good at integrating the company we buy. This is what we did successfully in Portugal. This is what we are doing successfully in Greece. This is what we will do successfully in Malaysia, and with the others acquisition we made in Central and Eastern Europe. We have another five months to go before the end of the plan, because the plan is ending on December 31st at midnight. We will stick to our strategy. We will stick to our financial discipline. Our pipeline is not empty, we are looking at interesting opportunities, we will remain very disciplined, very selective. What matters to us is to create value for shareholders. If we believe that the many opportunities we are looking at are the best one to create value for shareholders, we will go for it. If not, we will find a better use for the excess capital. Next question, please. The next question is from William Hawkins with KBW. Please go ahead. Hello, gentlemen. Thank you very much. First question, please. Cristiano, I fully understand the concept of what you said about the private equity. Could you just help me clarify the numbers, please, about what was the impact of private equity on the first half other operating results, and what was the first half and second half figures last year? I get the point, I am just not quite clear on the numbers. Secondly, please, for the investment result, obviously the difficulty we have got is that there are, from the first half of this year, offsetting factors. You have got lower yields, the markets have been better, so your investment result has actually gone up, even though we are talking about the yield compression. I just wondered, again, given that you are also re-risking the portfolio, and I am not sure how much of the life business versus non-life benefits from that. The short question is, you have got slide 13 showing that your investment result was EUR 800 million in the first half of this year. Can I just double that to get to the full year? What am I assuming about next year? Is it fading? Could it be going up because you are re-risking, or do I keep it flat? The last question, please, again, I am sorry if this is disclosed somewhere, but in slide 30, when you show the roll forward of your Solvency II ratio, given that you have been raising debt and the rest of it, can you just remind me how the 47.7% breaks down by tier, please? Yes, William. First point, numbers. Half year 2020 operating result contribution from private equity, EUR 90 million. I recall you, again, these numbers then are paid as dividend on the investment portfolio. Half year 2021, EUR 300 million. Year end 2020, EUR 260 million operating result contribution from private equity. This is the comparison. Going forward, as I told you should expect this kind of contribution trending, as I told you, at almost double-digit% contribution on the investment we have. I hope I gave you the clarity on these first three figures. On the investment result, point taken on the lower yield versus the re-risking of the portfolio. How much is life? We increased our equity position, both in life and in non-life also, thanks to a progressive increase of our private equity, and we are increasing also the private debt. This is more related to the capacity of finding the investment, the speed is more related on that than the willingness to get. We are working towards the target. I can think about the half year 2021 life result, should it be doubled. I think we are broadly in line with this trend. For 2022, this will be also related to the capacity of the portfolio. On one side, to start growing on the sizes, because you have basically a 3% increase of the technical reserve year-on-year, and the structure goes in that direction. We are working exactly, thanks to the re-risking, to use some points of solvency to pull up the investment result and reduce the speed of the dilution. Let us make it pictorial. The battle is exactly pulling up, thanks to the real asset strategy and the small re-risking, the downward trend, because the natural coupon of the maturing bonds is closer on the 3% side than the reinvesting amount, which is closer to the 1.3, 1.5. Going to your last question of Solvency II, the breakdown of the 47.7 tiering is, we have for your information, since you are mentioning that we issued With a subordinated debt. I would like to recall you that since we treat this EUR 500 million issued in the last week of June as a refinancing or pre-financing of the 2022 maturing, these are not included in the own funds. We do not double count, let's say, at least in Generali, we do not double count the pre-financing. It is excluded from the tiering you see. The Tier 1, the 47.7 are EUR 41.6 billion of Tier 1, of which EUR 2.1 restricted, EUR 6 billion of Tier 2, and EUR 0.2 billion of Tier 3. This is the tiering of the EUR 47.7 billion. Perfect, Cristiano. That was a good test. Thank you. Next question, please. The next question is from Michael Huttner with Berenberg. Please go ahead. Fantastic. Thank you so much. Lots of really easy questions. The first one is, I think you mentioned in an interview on Bloomberg, EUR 800 million to EUR 900 million kind of budget left to do deals. I just wondered, is this after Cattolica or before Cattolica? I mean, how does that The second is on cash. Can you remind us what the figure of cash for the holding was at the year-end, and maybe tell us what it is now and where you expect it to go? On the final question, you're probably going to say this is completely out of line, but is it right, you said at the investor day, so as you said, almost three years ago, that there might be possibility or you judge against buybacks, et cetera. Is it fair to assume that if you do a buyback, you effectively change the structure of your shareholders because some will accept a buyback, some will not, those who do not take the buyback effectively become more concentrated and gain a bigger voice, and in that way you would lose your independence? Thank you. Michael, excuse me, can I ask you, please, to repeat your last question as your line was particularly- Oh, sorry troubled. Yeah. Sorry. We couldn't hear well on your mic. Sorry. Sorry about that. Yeah. Sorry. Is this better? Is the line better? Yes. Yeah. Fantastic. Yes. Much better. Thank you. Sorry about that. Yes. It was a very cheeky question, asking if the decision or the kind of trend we've seen to do more deals than buybacks. Is there a thinking behind it that if you do a buyback, you would change the structure of your shareholders to the extent that some would accept a buyback, some would not, and therefore those who do not accept the buyback would gain a bigger say in the company, and in that way you would kind of, in a creeping way, lose your independence? Creeping, not in a negative way. What I mean is kind of diluted way. There we go. Hello, Michael. On the first one, the EUR 800 million-EUR 900 million left for M&A is after Cattolica and even after Malaysia. Cristiano will answer the second one. On the third one, frankly speaking, we look at the value creation for all shareholders, and this is only what matters. We do not enter in any other kind of consideration. Thank you. Hi, Michael. To update you. I would like to recall you that we issued the, as I was mentioning before with William, the pre-financing, refinancing EUR 500 million, which is piling up EUR 500 million more, but I do not consider them as available because they are in a certain sense already booked for the payment of next year of the subordinated maturing. There are also the EUR 720 million for the second tranche of the dividend, and there are the money which are already there to cover the Cattolica deal, the Malaysia deal, and being left with EUR 800 million-EUR 900 million. I'm not playing. Then you add the buffer of EUR 1 billion, the liquidity buffer, which we always keep, and this is the, let's say, cash you should consider at the HoldCo. On top of that, we have normal treasury cash, which is non-stable, and you should not consider it as an element for our strategy. It's just an optimization of the internal users of the resources. You should start from those elements which are the one which count. One thing I would like to add, I think it is worth to be aware of, that we completed 96% of our 2021 remittance. Basically we are almost there. We will do in the last quarter, the last piece which is missing. Again, as I gave you the guidance was EUR 3 billion-EUR 3.1 billion remittance received, and we are well on track to achieve the target. I recall that going forward, after dividend, I always said that there is an excess cash generation of the order of EUR 800 million per year. That's fantastic. Wow, what clarity. Thank you so much. Thank you. Next question, please. The next question is from Steven Haywood with HSBC. Please go ahead. Thank you very much. Obviously, I've seen that you've taken the expected October dividend payment out of shareholders' equity, as obviously it's been approved by the shareholders. Does this show, or does this imply that you are extremely confident in paying this in the fourth quarter of this year? Second question from me is on solvency ratio. Just looking at the roll forward in the first half, there's a negative three percentage point non-economic variance. Could you provide some color around this? Sorry if I've missed it in the disclosure. Thirdly, from me on the P&C top line premium growth, you say it's up about 9% in the second quarter. Can you go into more detail about what lines, what countries, whether Cattolica had an impact, the rebound from COVID, and any impacts on pricing as well? That'd be very helpful. Thank you. Hello, Steven. On the first one, I confirm that so far we are very confident that we will pay, as expected, the second tranche of the 2019 dividend, so the EUR 0.46 per share. The ECB has removed the ban on capital repatriation and dividend payment for banks. The ESRB restriction is supposed to end by the end of September, and regulators, and particularly Italian regulators, have indicated they are quite confident that there will be no reason to renew these ESRB restrictions. Definitely we have tangible reasons to be confident that we will finally pay this second tranche by October, as decided by the shareholders. Steven, if I can add, from the accounting point of view, it is put at debt because the condition for IAS 32 are met according to the accounting rule. Second question on solvency roll forward, the non-economic variances are mainly explained by SCR impact of the risk in the vast majority and a small minor part of non-recurring holding expenses. Clearly it is the risk of the portfolio which has been put the different in the roll forward compared to what I've seen was the average estimation made on the market. On the P&C top line premium growth, what are the second quarter effect? You should think that the second quarter 2020 was also a specific quarter because it was the most impacted quarter for the COVID premium. I would like to stress that there is a very healthy growth in the second quarter from our global corporate commercial business, which, as you know, accounts for slightly more than 10% of the total premium, which grew 11%. The rest of the portfolio grew 8.9%. Don't forget that there is also a growth stemming from the accepted premium, where we increased some accepted business, thanks to our strategy of underwriting. In general, there is a very healthy growth in Italy, where premium are growing on the single quarter-over-quarter 9.3%, in France 11.4%, in Germany 4.4% quarter-over-quarter, and Austria, Central and Eastern Europe, Russia 7.7%. These are the four largest, and in the international area is growing also 10%. It's quite a healthy growth we are observing in the quarter. Please take into account the fact that the second quarter 2020 was heavily impacted also due to the COVID. The 4.9% is more an expression of the potential. Regarding the impact from Cattolica, there is some accepted reinsurance from Cattolica, some tens of million EUR, which are accounted in the Italian P&C premiums accepted, which I was mentioning before, our reinsurance acceptance. There is nothing else because, as you know, Cattolica is not consolidated because of the actual shareholding of 24.46 is an equity method accounting where their premium do not affect our premium. The only premium impact is in the reinsurance we accept from them. Hope I gave you the picture. Yeah, that's very helpful. Thank you. Next question, please. The next question is from Colm Kelleher with UBS. Please go ahead. Thanks a lot. Two from me. The first one just on in-force action. The business mix shift has been very clear and consistent across the group. If we look at the Capital Life reserve mix, it's at just shy of 65%. Clearly a key reason for that mix shift is to free up capital and reallocate to higher returning businesses. Do you expect to take any actions to accelerate the release of capital from Those capital-intensive businesses to accelerate that mix shift further, or given your strong excess capital position right now, are in-force actions not seen as necessary or desirable from a timing perspective? That's the first question. The second question is just around capital allocation. You've done a great job in the last few years at keeping risk capital flat that you allocate in the business, but increasing the return you generate on that capital. With a solvency ratio of 231, you clearly have a lot of scope to increase the amount of risk capital you deploy to accelerate growth even further. The challenge we and I have is it's very hard to assess the added growth potential that that excess capital brings in the future, because a lot of the talk has been around M&A, and it's hard for us to analyze businesses you don't own yet. Equally, that emphasis on M&A puts less market focus on the opportunities you have to allocate capital within your own existing business to accelerate growth beyond what is being delivered today. If we can shift the focus of capital allocation away from buybacks and M&A for a few minutes and put it onto the existing group, can you articulate somewhat specifically those businesses and geographies that can easily absorb the reinvestment of more capital today, such that doing so would tangibly increase the growth rate those businesses can generate? I know you're growing in P&C health protection Unit-Linked, but it's not clear and obvious if allocating more capital can enable you to grow share in those markets, or if they're already operating at capacity in terms of the capital that is deployed. That's question two. I'd appreciate if you can give some color there. Thank you. I'll take the first one. First of all, we are acting as the leading group in the life insurance business in Europe. I think that we deeply understand this business, probably more than anyone. We were the first movers when shifting the business from traditional savings to hybrid products, Unit-Linked and capital light products. This is for the new business. I think that we were also the first mover in the in-force management when we decided, three or four years ago, to sell a EUR 43 billion back book in Germany, Generali Leben. Definitely, we know how to manage both the new business and both the back book, and definitely we are going to continue doing this. You've seen the numbers for the new business in the first half of the year. They are very good. We are obviously still working on the in-force management. We've been making a very granular analysis of all our life insurance portfolio. This has been done, and definitely, we will take a decision, capital management decision, business decision, financial decision, when it will be the right timing. This will definitely be part of our next plan. We've been doing the biggest, and maybe it's a paradox, the easiest part with Generali Leben, because it was a big transaction of in-force management. Now we have a smaller portfolio to deal with, and there are plenty of solution to free up capital. We can use reinsurance, we can use runoffs, we can sell a portfolio or parts of portfolio. We have plenty of solution. The analysis is done. We are ready to take the appropriate decision. Colm, I started the question on the capital allocation. You absolutely highlighted correctly that there is room for managing our solvency ratio in order to increase the return, which is partially what we started to do when we were explaining before as re-risking. When we do this, we need to take into account two factors. Part of our allocation is a tangible one, where we can cover it with the direct investment. Other is related to our future value of what we have in force. In general, increasing the expected future value is the classical re-risking example you can extract as we did. Managing these two layer is exactly the, let's say, the oxymoron between deciding where to grow and how to use the non-tangible component of the value in force at best to produce higher result. This is exactly what we were thinking of doing in Life, for example, after having reduced the balance sheet risk from the point of view also of the P&L last year, reducing 40% of the equity impairment risk at group level, which is seen this year. We have the room and the firepower, both from the capital side and the P&L side, to manage this kind of capital allocation. Where we are allocating, we are growing in P&C, exactly to diversify. We are growing in protection and health. This growth is supported by our capacity to diversify out within our capital contribution. Not only the growth stemming from internal investment, but also exogenous capital reallocation were done exactly in line, which are differentiating the capital absorption because our preferred strategic line. I make you a couple of examples regarding the fact that it is not necessary to allocate capital only for external growth, but also for internal growth in the business. I take three kinds of examples. The first one, we started many years ago, we are progressively enlarging in other units of the group. In France, we started, for example, to hedge the Unit-Linked annual management fees in order to free up capital absorption, stabilize on fund volatility, and allow freeing up room to grow in this line without absorbing capital, even though Unit-Linked is self-financing, but it is allocating some solvency capital requirement, hence is supporting the capacity in a low rate environment for the saving business, to support growth in Unit-Linked without having an increase in the capital intensity of the business. Second example, we created an internal insurance structure exactly to reinsure the reserving risk in our P&C business, which is quite heavy and intensive and is blocking in some companies if you want to manage the remittance and the trade-off between growth and result has to be managed. We did this internal insurance hub exactly to optimize the capacity to grow, and you've seen the countries which are growing also in P&C without being blocked and allowing us to manage our remittance. For us, there are a couple of big principles, like the fact that optionality has a value as well as flexibility. This is how we are managing going forward the capital allocation. Also in our Far East Asian business, think about China, we are not paying out 100% of our result because we are growing in a fast-growing business where the return on equity is higher than the return on equity of the group. This is the logic where we are trying to push at the same time return on equity and reduce the capital intensity of the business to free up a growth capacity. Okay, thank you. Next question, please. The next question is from Andrea Lisi with Equita SIM. Please go ahead. Hi, good morning. First question is back on the private equity results. I understood that there are no one-off components, but if you can just provide us more indication about the seasonality of this business what we should expect for the rest of the year. The second question is on the frequency in the P&C, in particular in the motor business. You said that starting from June, you are observing a frequency trending to 2019 levels or pre-COVID levels. What are your expectation from here to the end of the year? My last question is, if you can come back on the impact of loss in July that was not really clear to me and the impact of reinsurance. Thank you. Yes, Andrea. I start with the first question. The private equity, it's not a business, it's an asset class. I stress it again because we report it as other, it flows back into the investment portfolio. It's really an asset class strategy. When I said that there is no one-off, it is clear that private equity is per se a business when you realize the investment value and you exit, you realize the exit. It is not one-off in the sense that we will have, within our amount invested, a certain regularity within the classical J curve approach of this kind of result achieved coherently with the investment profile of our liabilities. Expecting going forward, as I told you, I confirm that we are expecting a growing contribution of this line. This is an asset class which is a growing contribution to the investment result. The relative weight of the private equity within our investment result in both life and P&C will increase coherently with the strategy. This will increase a little bit faster than what we were expecting in the previous plan. Clearly, this is a good proof of the quality of the business. Regarding motor business, frequency trend. Fair point to say that we have observed a positive effect compared to 2019 in the first half of the year. Still a few hundred million EUR less claims than what we had in first half of 2019, and a few hundred million EUR more than what we had in 2020. Because it was a lower frequency environment compared to now. Going forward, we see a convergence country by country towards the pre-COVID level, with slightly below convergence to the pre-COVID level, still not at that level. We see this trending faster in countries like France or Italy, but still below the pre-COVID level and still a little bit more below in Germany. We are observing the progressive evolution. Going forward, we do think that this will, let's say, asymptotically go as slightly below, and that will be compensated by the slightly higher claim cost we are observing as a net effect. The impact on flood and reinsurance. I stress it back, I think the question was related to the July events, not the first half. The July event, mainly affecting Germany, but not only Germany, is affecting as well other countries like Switzerland, France, Austria, and Central Eastern Europe, is per se already accounting for a total damage above EUR 100 million. For the non-Italian business, we have EUR 100 million maximum retention of such kind of natural catastrophe, which does mean that if the damage is larger than EUR 100 million for us, we transfer the amount in excess of EUR 100 of the damage to our reinsurer, the one which are part of the reinsurance treaty. This acts in a way that once this is closely accounted, you transfer it, and when you do it, you pay a reinstatement premium, which is normal in the usual reinsurance contract. You will see lower impact in the claims and an amount of premium paid to the reinsurance to reinstall the coverage after the event happened. This is how it works. For the group, I recall you, we have a maximum retention on some of different uncorrelated events up to EUR 500 million on a yearly basis. The impact from NatCat, the one I described, like flood, wind, hail, and the like, cannot exceed the EUR 500 million retention for the group. Would be in five different uncorrelated events. Really clear. Thank you. You're welcome. Next question, please. The next question is a follow-up from Michael Huttner with Berenberg. Please go ahead. Thank you very, very much. On private equity. I'm sorry to go on about it. You said EUR 7 billion. Can you say where it is? I look at the equity pie chart. I just wondered which of the buckets it's included in. Maybe you can give an indication of how much more this bucket will grow. The other point related to that, compared to consensus, I know these are not your numbers, but still, the consolidation line was bigger, the reported. I'm just wondering if that's effectively what we're seeing here is the offset to the private equity dividends. My final question is, can you say something about the Cattolica contribution year to date or, I suppose, quarter? I don't know. Thank you. Yes, Michael. Where is the private equity? It is in the line so-called alternative. Okay? You can find it in the I don't remember the page of the presentation exposed. Okay? The consensus, the consolidation adjustment, you correctly pointed out, is linked and mainly for a very large part explained by the private equity dividend we are paying. For the mechanism I was mentioning before. We account the result in the private equity company called Lion Re. We pay to the shareholder of the different equity shares of Lion Re, which are the investment portfolio of our life and P&C company. Once this is paid, it is consolidated out because clearly it has already been accounted as a result. Yes, the more the private equity business increases, the higher will be the consolidation adjustment after having paid the dividend to the others, since you cannot count twice the same result. What matters to me is when I gave you the number of the private equity contribution, this is the number affecting the operating result. That's why, if I have to comment as a CFO, when I look at the combination of the investment portfolio in general at this half year, I do not see any special one-off effect because this is nothing but the growing contribution of the private equity and in general of the business flowing through the balance sheet. Hope I gave you, Michael, clarity on this point. You said EUR 7 billion. How much can this grow to? We are progressively increasing the amount. With an asset allocation, we should grow, and I think we can get to few billion EUR more, but clearly the capacity to deploy also depends on the market. It is a really positive momentum for the private equity market, the 2021, but clearly the capacity to deploy is also there. You should expect a growing contribution thanks to the growing amount of reserve and increased interest in the private equity asset class. Thank you. Sorry, I forgot to tell you that the contribution of Cattolica in the quarter is accounted in the operating result, and it is EUR 32 million. EUR 32. Fantastic. Thank you so much. For the first six months, yeah. Oh, can you clarify that? I think the first quarter was 17, so if you add up, the math should say 15. Right. Okay. I should cross-check. No, that's okay. Okay, the other I think you asked me also how much of the asset under management of Cattolica have been given to Generali Investments, EUR 7.8 billion. Fantastic. More clarity. Thank you so much. You're welcome. Next question, please. The next question is a follow-up from Steven Haywood with HSBC. Please go ahead. Thank you again. On your life new business margins, particularly in the protection and the Unit-Linked businesses, they are developing very well. Do you see any further room for the new business margins to increase in the protection and the Unit-Linked businesses? I suppose the overall group life new business margins should continue to increase going forwards as your savings products reduce the proportion of the total new business sales. In general, the direction of new business margin is positive over the next few years. The second question, I saw a comment about the slate of candidates for the board renewal in 2022. I just wanted to make sure this is part of the normal process, and if there are any other comments you can give on this, that'd be great. Thank you. Hi, Steven. Life new business margin. Yes, it is going well. What you should look for, we will try to look for dimension growth. You've seen that we are growing fast in the Unit-Linked, and we are growing fast in protection. At that level of profitability, what matters is the volume, because that level of profitability is extremely good, so we do not want to jeopardize the net effect of the combination between volume and profitability, which is the new business value contribution coming from Unit-Linked and protection. Yes, for sure, there will be a further reduction of, let's say, capital absorption from the saving business because more and more we are selling, even when we sell the saving business or the hybrid product, we sell with lower guarantees or with no guarantees. For example, in Italy, already almost two-third of the production is sold without any form of guarantee. It's not death benefit, which is really good from the capital consumption point of view. That would help in counterbalancing a low rate environment. I think you should more focus on the growth of new business value than in the growth of new business margin, because what matters now is the growth at this level of profitability. On the second question, there is not that much to say at this stage except that yesterday the board of directors decided to prepare the process for the renewal of the board of directors in 2022, and that the process will be submitted to the next board of directors on September 27th. Nothing more to add on this at this stage. Okay, thank you very much. We can take the last question if there is any more in the queue. The next question is from Rötger Franz with Plenum Investments AG. Please go ahead. Hi. Thank you very much for taking my question. Coming back to the flood losses in Europe of the last month. You've given us a good indication about your net retention and your reinsurance coverage. Can you give us a better indication of your preliminary estimate of a gross loss from Bernd in Germany, Belgium, France and the Netherlands? As there are some market loss estimates around, can you give us a more precise indication of your market share in the affected areas? Do you expect any significant additional demand surge due to COVID, for example, because of the shortages of building materials and so on? Thank you. Yes. What is important, I recall you, regarding the flood in Europe, that the German one you were referring, since we have a net retention of EUR 100 million, this is what will be the impact for the Generali Group. There are some areas still not accessible, or where the claims adjuster, or the people which has to estimate the value of the damage, still did not have the final view. Still numbers can flow up from the gross impact. What I can tell you is already the amount is above EUR 100 million, hence, this will be the stopping line for us, and the rest will be transferred. As a market share, Generali is almost 5% of market share in P&C in Germany. I think this is sufficiently consistent to what you said. I recall you that we do not have operation in Belgium since we sold the Belgium operation a few years ago, neither in Belgium nor in the Netherlands. Further losses due to COVID. I recall, maybe it was already mentioned in the press release, there are EUR 62 million impact from mortality, morbidity effect related to life technical result in half year 2021 due to COVID. Could we have some further losses? There could be some expectation of further negative development, especially in the countries which has been mostly affected and where, fortunately for the business, unfortunately for the people, we have a lower market share like Brazil or India. We can expect as likely further impact. From the point of view of the number, what has been caught so far was the large amount. Just to clarify, my question regarding COVID loss was referring to additional demand surge in the areas affected by floods. Sorry, Rötger, I didn't understand the question. Well, do you expect any additional demand surge or claims inflation due to COVID-induced shortages in, for example, building materials and so on in the flood affected areas? Sorry. Now I got it. So far we are not expecting this. I think we are also in a situation where in Germany there is a huge also political focus on what happened, and we are in a period of election. I think there will be a strong monitoring from the authorities. In general, the business development is not giving us those indications. Thank you. Miss Raffo, there are no more questions registered at this time. Thank you. Thanks a lot to all the participants. As always, the IR team is available for any follow-up question that you might have. We will be in touch again with the Q3 numbers in November. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.