Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Generali Group 9 Months 2021 Results Conference Call. As a reminder, all participants are 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 all to Generali 9 Months 2021 Conference Call. Here with me, we have our Group CFO, Cristiano Borean. We are ready to take your questions. Thank you very much. Excuse me. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who has 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 Peter Elliott with Kepler Cheuvreux. Please go ahead. Thank you very much. I had three questions, please. I'm afraid they're all numbers based. The first one, I guess it would really help a lot with our modeling if you had disclosure on the private equity exposure results and dividend by division. I don't know how much of that you're able to tell us on this call or afterwards, but anything you can say would be very helpful. The second question is on the non-life. I was just wondering if you could give us the split of the operating results in terms of technical investment and other. I guess within the technical, the reserve releases were 6% in Q3 in isolation. I was just wondering if there's anything particular worth commenting on there. Finally, third question on the asset manager. It looked like the revenue margin dipped a little bit, the cost income ratio went up to 43% in Q3 from 37% in Q2. Maybe that's just normal quarterly volatility, I was just wondering if there was anything worth commenting on, or if that is just normal volatility. Thanks a lot. Hello, Peter. Regarding the first question on the private equity exposure, first of all, in the result, the private equity contribution operating result for the Group in the first nine months is EUR 540 million. Regarding the split of the asset by division, we will give you full detail in the year-end numbers. Don't forget that we started in the past with a higher weight of P&C, then in the last years, we are increasing also the exposure in life as a guidance. Second question. Operating result split. The third quarter reserve release, in general, the third quarter per se number, I kindly suggest all of you to look at the broadly nine months result more than the single Q3, which is a special particular also because of the high level of natural catastrophe we observed. In general, you should look more on a run rate to give you guidance more on what you've seen in the nine months than in the single piece of the quarter. Regarding the third question on the cost income ratio went up, it is not volatility. It is something which we announced in the half year results. As you remember, we raised some investment also to develop the franchise and the capacity to build our asset strategy from the point of view of investment capabilities and infrastructure. This is something that it is going to be discussed already, it is more on the IT and distribution part. It is absolutely in line with the strategy. Okay. Perfect. Thank you very much. Could I very quickly follow up? Sorry, very quickly. On the first one, thank you very much for the group contribution. Are you also able to give us the dividend figure by any chance? On asset management, I'm just wondering if you are able to give us the performance fees? Yes. Okay. On the asset, I start from the second one, which is in my hand. In the first nine months, performance fees are accounting for slightly more than EUR 19 million on asset management. The dividend paid by the private equity in the first nine months is EUR 164 million. Great. Thank you very much indeed. Welcome. The next question, please. The next question is from Andrew Sinclair with Bank of America. Please go ahead. Thanks. Everyone, three from me as well, if that's okay. First one, sorry, just to continue on the private equity gains. Just looking at EUR 540 million year-to-date, just really wonder if you can give us any guidance for kind of the near and even medium term on where you expect that to be on Q4 and longer term? Secondly, given this is the first time we've spoken since the Cattolica transaction completed, really just wonder if you can remind us of your options from here. What options do you potentially have for squeezing out the minorities in Cattolica? Thirdly, was just on motor experience and kind of COVID experience today. What are you now seeing in frequency benefits? Are they just neutralizing or actually are you getting any reversal in the short term as the world gets back to work? Just an update there would be great. Thanks. Yes. Hello, Andrew. On private equity gains, the guidance on the fourth quarter, we had for sure some specific exit on some investments, which was higher than a specific quarter in the first three ones, flattening out in the first nine months. The fourth quarter for sure will be positive, maybe not as positive as the average of the first three quarter, but still on the positive stance. You should expect, again, another contribution in the fourth quarter. For our guidance around private equity, I would like to say that due to the fact that the private equity amount of money invested were piling up due to also the growth in life, you should expect, before sharing with the policyholder as a pure investment, before sharing an increase of this contribution. When you start seeing overall the net effect after also the component of life, which is growing, you should expect broadly a result in the next years, which is in line with what we are observing this year on the so-called after policyholder. The sum of the P&C plus the effect on the life. What are the remaining options for us here in Cattolica? For your information, the tender offer has been successfully executed. Now we are shareholder of Cattolica at 84.475%, slightly less than 84.5% ownership. Now, we intend to achieve the objective to delist Cattolica shares through a merger. The merger project will be presented to the board of directors of Generali and Cattolica for their approval, and in Generali, as well to the authorization of the Italian Insurance Supervisory Authority. After that merger process, the company will be completely, fully integrated. This is consistent to what we put in the information memorandum for the initial public offering, the bid to Cattolica. The frequency benefits, third question on the motor. We have, I should say, a kind of three areas of focus I would like to give you. The first big question is, are we back to the pre-COVID 2019 level? The answer is no, not still. Are we back above 2020 level in the countries? The answer is in some, but not in all. We are observing, especially in Germany, still a frequency which is below the 2020 level. We are observing in some countries of Central Eastern Europe, still a positive development. They are clearly under now a fourth wave potentially. The frequency benefits are not fully neutralizing. We are seeing a little bit of less, even if I sum up the amount of frequency claims. We observe also when you are in a more catching back country, for example, like it is Italy or France. Still, we are not the return to the pre-COVID level of 2019. Hope I was insightful on this point. Very helpful. Thank you very much, Cristiano. Next question, please. The next question is from Andrew Ritchie with Autonomous. Please go ahead. Hi there. Just following up on, you commented there, Cristiano, on frequency trends. Could you just give us an update on severity trends that you may be seeing in the key markets, I guess in the context of some small pickup in broader economic inflation, just if you're seeing any major changes in severity. Second question, just to clarify, I think on the press conference this morning, you talked about having EUR 1 billion left for M&A. I'm assuming you're framing that in the context of the 2018 to 2021 plan and budget, to the extent that that might be set at the end of the year. Just checking that's the case. Thanks. Hi, Andrew. Thanks for the question. First point, what are the frequency trend, has already been discussed. Regarding the severity, let me tell you something which is, in my opinion, quite interesting and which I always share with our technical colleagues. First point is, if we look at the evolution of the average cost, there is a decrease trend compared to the quarter view at the beginning of the year, so first quarter 2021. We are lower than that level of increase, and this is consistent both in Italy, in Germany. In France, stripping out from, let's say, larger claims on debt, you are exactly on a slightly decreasing trend on average cost. This has a meaning. What we observed is that the claims inflation, especially on the spare parts, which is the one affecting the attritional the most, were starting already in the last previous more than 12 months. In the middle of the COVID, the speed of adjustment from the spare part providers was already starting, and we were observing already that. Now when you are rolling out the 12-month windows, you are seeing a lower effect of average cost increase because you are exiting that rolling window. We are more on a stabilizing and more natural inflation growth compared to the speed we observed so far. I hope I gave you the dynamic behind it. That's great. Sorry, just on motor damage. On property? What we see is a slight increase of the average cost, we are speaking about really tens of point of percentage increase. 0.2%, 0.3% increase in the average cost, which is really immaterial and anyhow has this a little bit of consistency in the part of, let's say, property side, maybe of scarcity of offer due to the huge demand. It is absolutely still limited in what we are observing. Let me say that clearly, inflation is one of the beasts which is more difficult to predict, but I would like to let you know that in any case, all our proactive approach towards this already started years ago, and we are always striving to improve the speed of claim settlement. On one side, because of the new world we are in after the drop of rates, which is clearly benefiting this, and the second way also because it is better serving our clients. We really kill two birds with one stone with this speed acceleration, where we are focused on. Don't forget that on the property, there is also the natural catastrophe effect embedding, which could a little bit change the average. Regarding the M&A, I clarify that the EUR 1 billion stems from a very simple mathematical calculation. We were saying that we were having around EUR 800 million, excluding already the money put aside for the completion of the settlement of the Malaysian operation. EUR 800 plus the minorities, which were not bought by cash and will be acquired through the merger on Cattolica, brings us to EUR 1 billion. This is the actual budget. For sure, clearly at Investor Day, we will update you on the full numbers. This is the so far budget. Okay. Thank you very much. The next question is from Michael Huttner with Berenberg. Please go ahead. Thank you very much. Well done for the lovely results. On the private equity, just two figures. If I try to think about the contribution, excluding policyholders, I wonder if you could give us a figure or give me the figure. I do not know what it would be. Just on the total exposure, I am looking at your half year slides, and I see alternative funds at EUR 10 billion. I am just wondering if that is the exposure to private equity at the moment. Should be, I suppose, quite big. The second question is on Cattolica. You originally gave a guidance of synergies of EUR 80 million on top of the operating profit, which I think all the profits, and you had Bloomberg to use as a consensus, EUR 130 odd million. I just wonder if you can give a feel for how much you have already booked year to date from Cattolica, from your 24% stake, et cetera. In other words, what would be the delta now that you are at 84%, full consolidation? The final question is a really stupid question. You gave the answer to Andrew, but I did not quite understand, and this is me, I am really sorry. The EUR 1 billion left for M&A. Am I right in thinking, and this is a question I do not know, that this has to be or should be spent by the year end, otherwise it goes to shareholders? Is there some kind of more flexibility there? Thank you. Hi, Michael. Point number 1, excluding the contribution of policyholders and the contribution of alternative. There is a slightly higher contribution in the component of the P&C as of today because of its earlier stage of adoption, as we always said. You should expect that this is going to level out. Now the contribution is clearly higher because still there is an operating contribution in the life. I think you have seen from the adjusted result we are publishing, and I think you can extrapolate a little bit out of it, the life contribution, because that is already shown with policyholder participation. Regarding the question on Cattolica. In the nine months' result, using the equity method accounting done since the first time we booked the Cattolica in our balance sheet, we book all the result of Cattolica in the P&C. It has contributed for EUR 70 million in the first nine months result. Clearly, this is the combination of both the lines of Cattolica, but has a specific effect. Do not forget that in our purchase price allocation, our booking was embedding really a prudent approach without not at all considering any form of intangible. Clearly, if you try to compare and multiply by four what you are observing, you will not end up with the number of Cattolica because all the non-economic, let's say only the impairment side and the other form are not accounted for us because we already booked in the opening balance. Okay? Regarding the fourth quarter contribution, I think you know that we will be accounting as a consolidation for the piece of the period from since November 5th. What is the delta versus 85% anyhow, has to be considered regarding also this effect. I think in the year-end, we can give a better guidance on the split. Do not forget, last point on Cattolica, that due to the fact that we do not know the result of Cattolica because they are published after us, we embed only this with a shift of three months. Clearly, please take into account that when we will book the full year, we need to adjust also on the catching up all this effect according to the accounting rules. What are the amount of asset we have under Cattolica is EUR 7.8 billion on the asset under management. Do not forget that they gave us under the strategic agreement, and clearly they will not be any more accounted as third party money as they are in the inflows, being so far as of the nine months. Regarding the third question on the EUR 1 billion left for M&A. Again, Michael, I tell you that for us M&A is a mean to obtain a diversification of our earnings. By diversification, there is also the dispersion not only on the geographical but also on the business line. The case of Cattolica, we already commented, was to get the number one position in one of the most profitable P&C market of the world, which is Italy. On the use of M&A is also an accelerator towards our strategic goal, but M&A is per se not a mean for us. We always evaluate the usage and the capital deployment against our strategic objectives. We will give you a final also overview around what is left and what is the approach on the December 15th. Thank you so much. Can I just ask one follow-up on Cattolica? The EUR 70 million, the seven, zero in P&C, I take it that's pre-tax operating. No, it is a full net of tax because of the equity accounting method. You book the full net result of Cattolica as this, and it is also booked as operating by definition. Excellent. Thank you very much. Thank you. The next question. Thank you. The next question is from David Barma with Exane BNP Paribas. Please go ahead. Good morning. Three questions, if I may. The first one on the life new business margin, which was strong again in the quarter. Can you give some color on the drivers there, and the product mix versus market effect, please? Secondly, on life and asset management, can you give us an update on where you stand on your objective to internalize Unit-Linked funds in your asset management division? Lastly, on solvency, and apologies if I may have missed that in the release, could you give us the organic capital generation for Q3, please? Thank you. David, sorry, your second and third question didn't come out too clearly. Would you mind to repeat them, please? Sorry. Yeah. Can you hear me well now? Yes. Thank you. Yes. The second question was on the internalization of Unit-Linked assets. Can you give us an update on how much of your Unit-Linked assets are run in-house? The last one was on solvency. Could you give us the organic capital generation number for Q3, please? Yes, David. Thank you. Good morning. Life new business margin. I would say, let's start with what are the driver from the nine months 2020 to nine months 2021. The largest driver is stemming from better product features and profitable products, and as well, the larger production. I am speaking about the protection, especially the Unit-Linked side, where you absorb better the fixed cost, which is driving you to more profitable effect. The economic variance played more on the negative side because of the full discount rate that you need to use, not only the risk-free, but you need also to take into account that there is a lower Volatility Adjustment in the discounting compared to the nine months 2020, which is bringing actually down the effect. What is very important, it is the product mix, which is stemming out. If you look at our present value of new business premiums, the growth of the protection in the Unit-Linked, it is basically three times higher than the present value of new business premiums of the savings. We are clearly growing in the most profitable segment. I recall you that our net inflow, which is not related to new business value, but don't forget, even the net inflow is completely more than driven by protection and Unit-Linked. This is allowing us also to improve the marginal profitability on protection and Unit-Linked as well because of higher amount on more profitable product, and as well in some cases also, and I am joining to the second answer, because we have higher funds of Generali in our offer. This is visible also when you look our so-called look-through profit in the new business value, because just for your reference, we are telling you that in these nine months, of the EUR 1.67 billion of new business value, EUR 225 million are given from the look-through profit of the funds, which are sold for Generali. You should go also, and I start to communicate this number, in the future, because this will be a good driver to see the improvement also of our capacity to internalize within Generali those numbers. These numbers are growing at a fast pace, also because of the larger amount of Unit-Linked sold, not only because of the higher internalization. I think this is quite in line with the strategy, and this will be farther accelerated. Around this, I think we will communicate a little bit more on the 15th of December. Regarding the organic capital generation in the third quarter, I think we have three percentage points of solvency capital generation. Please take into account the fact that in Q3 we had also a higher booking of natural catastrophes, which clearly is not giving the normal run rate of the best estimate current year of the P&C. Great. Thank you very much. Just to clarify, 3% is before deducting the dividend. This is the full capital generation, we deduct always out of the 3%, we will take off a pro rata dividend, this is the pure capital generation. Yeah. Thank you. Next question, please. The next question is from William Hawkins with KBW. Please go ahead, sir. Hi, Cristiano. Thanks for taking my questions. You've already talked helpfully about claims trends, so I'm sorry to come back to it, but I just want to ask the question a different way. If I take your attritional loss ratio, which is your loss ratio excluding the impact of nat cat reserve development, the third quarter figure was 69%, if you recognize that number. That's a lot higher than the 63% in the first half of this year, obviously because of all the trends that you've been talking about. What I'm finding it harder to do is to get a feeling for how indicative that is for future experience. You obviously said reserve development, we may be able to take the nine months figure, but we obviously can't do that. 69 is sort of similar to where we were back in 2019. Your business has evolved quite a lot. The question is, if I just take your three Q loss ratio, excluding nat cats from reserve development, is that a good baseline for the future, or do I need to adjust it in either direction? Second question, please. Do you mind just telling us the numerator and denominator for your Solvency II ratio? I hate just doing ratios without knowing the numbers that go into it. Thirdly, can you just remind us for the historical plan, why is the ceiling for your solvency ratio as high as 240%? It's quite an outlier. I've never seen companies that have ceilings go much above 220%. I know that, again, it may just be that you've historically been worried about Italian sovereign credit risk. If that is the case, how are you feeling about that at the moment? I guess the question is, the 240% seems like quite a high number these days, but how are you feeling about your ceiling? Yes, William. Hello. First question, regarding the third quarter. As I told you already before, I think it is not indicative of the future run rate. Take into account a couple of reasons. That's why I prefer you to stick as a guidance also to look more on the nine months ex-COVID and ex natural catastrophe, which is driving you more in the center of the 90%-92% range, which the corridor we always said. I think that you have to take into account that in this quarter, we have already booked all the reinstatement premium to be paid, and some of them could be stripped out in the fourth quarter because of the reaching of our EUR 500 million maximum loss. This will be, let's say, stripped out and booked with a positive effect in the fourth quarter. There is another effect which I would like to highlight, that in this quarter, apart from the normal quarterly fluctuation, there is also a higher IBNR prudency in the booking. That's why, again, I go back to tell you, don't take this number and go more in the nine months as a good guidance to look forward. Second question is related to the numerator and denominator of solvency ratio. We have EUR 48.3 billion own funds. Okay? We have EUR 20.7 billion solvency capital requirement. Third question, why the ceiling on the 240% on our risk appetite framework? Well, I think that the risk appetite framework is built on a company. It's not built on a comparison against the peers. For sure, we are comparing to our peers a higher one, but I think this has to be built on the structure of Generali. Part of our own funds are built thanks to the value in -force of our life business, which is growing and growing profitably. These are non-tangible component of the solvency part, which we are using in case of increase of value, for example, as we did in these nine months, to, for example, transform a little bit the risk appetite in our investment portfolio, slightly increasing, for example, the equity or adjusting for some private debt speed as well on corporate, in order to clearly extract more also running result on the IFRS part, and not only on the value part. The combination of these, coupled for sure with a higher sensitivity to government bonds compared to other cases, will bring us to stay within this range, which is allowing us to operate at the best within the interest of maximizing the creation of value for the shareholder, notwithstanding our approach towards the capital redeployment. Clearly it is a tailor-made suite against the Generali structure. Once the capital structure could change, in case this is changing, then we could adjust. With this structure, I think this is also the good way to operate and navigate. I just take the case, don't forget that we need to be resilient, and our corridor allowed us to stay well within, even during the COVID crisis, which is again, a proof point of the need to manage this in this way. Fantastic. Thank you, Cristiano. Next question, please. The next question is from Sudarshan Bhutra with Societe Generale. Please go ahead. Hi, good afternoon. Just one question from my side. Could you provide some color on the 6.2% non-life premium growth that you reported? Basically, some color on the pricing environment in your key markets like Italy, and what is driving the 5% premium growth in motor line and 6% in the non-motor line. Thank you. Yes. Hello, Sudarshan. I think that I give you some driver on the growth of the different premium by the countries. You observe a good growth of premium in Italy, France, Austria, Central Eastern Europe and Russia, as well in the international area. It is also slightly positive in Germany, all over the board. The best growing factor is in Italy. Don't forget that there is a growth of both the component Global Corporate & Commercial, which is playing as a hub for the group, and this is a very profitable 15% premium increase business observed so far on that line, plus the growth of the non-motor. The other good growth which we are observing in France is pricing driven in the non-motor environment, plus some growth of the health lines, and as well a good development in the motor segment, thanks also to the contribution of partnership and the fleets, and as well, still a good pricing momentum. In Germany, we have as well a growth slightly lower because the country is a little bit less on an increasing price environment, but still observing, as I said before, a better frequency even than in motor than 2020. Austria, Central Eastern Europe and Russia are growing well, both in the motor and in the non-motor, and this is driving a very good growth in what you know is our most profitable region. There are developments in the international, which are also driven by the inflation, for example, in Argentina, which we have the number 1 operator on the motor market, which is clearly affected also by this kind of effect. Here is a kind of anatomy of the plus 6 for the group. Hope I gave you some trend. Okay. Okay? Just a follow-up. Please. Sorry. Basically, could you just provide some more color on the personal lines in Italy? Basically, what is the pricing trend and the outlook for profitability in the personal lines motor business, in particular, in Italy? Sorry, just to be clear, you are asking for detail, in particular with regard to motor in Italy pricing and profitability. Yes. Is that correct? Correct. Thank you very much. Personal line motor. Okay. Yes. What we are observing as a pricing trend in Italy is that the average premium is getting close to a tipping point from the point of view of we are not observing any more a decrease of the average premium quarter-over-quarter. We could reach the so-called tipping point. This is also coherent with what we are observing exogenously as a market which could turn less of a soft than it is now in the future. Regarding profitability, I still recall you that we have a lower than 2019 frequency environment with a controlled claim environment on the claim severity and let's say, the average claim cost. Which is still bringing a good level of profitability. What I would like to highlight in the motor business in Italy, we are, as Generali, especially growing also thanks to the so-called motor other damages. The non-TPL part of the motor, which is extremely positive from the point of view of profitability as a segment. Clearly, we've a higher acquisition cost ratio, but it is worth the case to pay to get there. This is also thanks to big agreement we have with the Fiat Chrysler automobile. All right. Thank you very much. Next question, please. The next question is from Steven Haywood with HSBC. Please go ahead. Thank you. Just one question from me. It's on the Italian competition regulator, the AGCM. Has there been any update from them with regards to the investigation looking between motor insurers and price comparison websites? Do you have any knowledge about any potential implications, or is there a timeline when this regulator will come out with some conclusions? Can you remind me which subsidiaries of Generali and Cattolica are included within this investigation? Thank you. Yes. First of all, to my knowledge, there are no specific conclusion out of that and from the antitrust authority. Nothing to highlight the specific, and the company which was in that analysis was our direct company, which is called Genertel. Thanks. Was there anything from Cattolica? I'm not sure, and not to my knowledge so far. Okay. Thank you. Next question, please. The next question is a follow-up from Michael Huttner with Berenberg. Please go ahead. Thank you very much. It was just one question on private equity. Could you give us the amount invested in private equity? Just the total amount. I was looking at your slides, and I see a figure of EUR 10 billion for alternative equity, but I'm not sure if that's all private equity. Thank you. Yes. I think that on the full private equity amount, we should expect something which is, when I gave you the number, it was including the hedge fund, the full alternative equity. The private equity, you should expect something more in the order of EUR 8 billion as full asset class private equity as of year-end 2021, according to the actual market valuation. May I ask a very cheap key follow-up? Do you have a figure for cash at the holding? Any kind of indication of how the cash upstreaming is going? Thank you. Thank you for the cheap, Michael. I would like to recall, I think you should focus on two things. The first one is the EUR 1 billion number, which I gave you, which is the cash available for capital deployment. Don't forget that we paid on the 20th of October, the second tranche of the famous 2019 dividend. This is a closed story for us as well. Having said that, there is money put aside for the Malaysia deal, which is in the order of EUR 300 million. At the same time, don't forget that we are operating with a liquidity buffer, which we want to take in an uncertain environment. This buffer, always we said would have been between EUR 500 million and EUR 1 billion, and we are operating at the higher end of this now. On top of that, there is the usual treasury cash, which is not cash available for redeployment, it is more for internal optimization and use. You should focus on these sources for your estimation. Thank you so much. Thank you. Next question, please. The next question is a follow-up from Sudarshan Bhutra with Societe Generale. Please go ahead, sir. Hi. Thank you for taking my question again. Just a very brief one. Can you just provide some comments on the potential life back book deals? Are there any deals in the pipeline, and what are you looking at? Just some color on that would be great. Thank you very much. Yes. I owe a completion of the previous question for a reference for Michael, but all the analysts and investor connected, we completed the remittance plan for 2021. All subsidiaries upstreamed, so there is the full completion also of the 2021 plan. Just going on your question. Clearly, we are, and we were, among the first, starting with very large transaction, I recall you, but we did the Generali Leben in Germany, which has basically unleashed the potential to grow in Germany in a much more profitable way and putting the company on a much safer trajectory. This is always the way we are looking and analyzing our business. We already commented with the market, our Group CEOs many times explained as well that we did a forward analysis on all books. We have many set of options list around this. The levers could be multiple. Clearly, we are always looking in a proactive way around this. I think we will also give more information around our strategy in December 15 investor day. All right. Thank you. Operator, I believe there are no more questions in the queue. Can you please confirm that? I confirm there are no more questions at this time. If that is the case, I thank everyone on the call, and I look forward to hear from everyone, as the Investors' Day will be virtual still and not physical. We will look forward to hear from you on December 15. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.