Unipol Assicurazioni S.p.A. (UNI) Earnings Call Transcript & Summary

[Interpreted] Okay. Thank you, everyone. Really would like to thank you for connecting with us today. I'm sure you are safe and healthy. And I hope that you are being connected from home or from your safe office. Okay. Before moving to the ordinary, let's say, financial session and the Q&A session, I'd like to draw your attention on the fact that we are now going through an extraordinary moment in our lives. So this is absolutely unprecedented. It just never happened before. So in the recent months, the entire business community, including our company, strove to find some new ways of working, giving support to the network, including giving support to local communities, which is what you can briefly see in the very short press release. Now as for the figures that I'm going to walk you through. Now because of the lockdown concerning the entire business and because of the extraordinary, overall, consequences this has generated. Of course, when we do assessments or when we close some business lines or numbers, well, of course, there are always some adjustments or, let's say, we suppose that many things may happen. Now this is even more true today. So even the underwriting time windows are different. In some cases, yes, we do have some, let's say, indirect or long-term measures so once again, it is really very hard and difficult to say to do some estimates and assessments. So it's quite difficult and uncertain, I mean, to make calculations. It's really, really difficult to know what would happen. We know that, of course, the bans will be lifted step-by-step gradually. And of course, it's difficult to imagine, I mean, they are integral partners of consumers users and customers because, I mean, this high-risk situation may continue. This, of course, depends on the coronavirus. And the risk may be totally canceled only thanks to the discovery of a vaccine. Now the scientific community is telling us that this is going to happen, but we are a long way away from the vaccine, okay? So there's a long way to go. I also would like to highlight that the quarterly closures are little bit less analytical or specific. I mean, what is much more, let's say, reliable is what happens after 6 months and then at the closing of the year. So once again, please pay attention and be cautious when you read and interpret data and figures and numbers, of course, we are supplying and providing the financial community with these figures and numbers, but of course, all of this is now a little bit less specific and accurate so please interpret in our figures in an aggregate manner. I'm here with the General Director, Matteo Laterza. So I'm available for questions.

[Operator Instructions] Question number one from the original conference from Elena Perini, representing Banca IMI.

[Interpreted] Basically, I have 3 questions. The first question has to do with what you have written on the press releases this morning. I mean, based on the information that is available today and also based on the trends going on as far as your company is concerned. You say that you know how to continue pursuing the objectives included in your plan. So you have all the ingredients required. Can you give me some color about this? So what about your targets? I mean, can you reconfirm your targets? I mean, the ones that you set some time ago? And where do you think risks may come from? Question #2 concerns the Unipol dividend. So are you sure, are you confident that in the final part of the year, you may want to convene a general meeting in order to get to an agreement on the possible dividend distribution? And then the third question, last but not least, I'd like to have some color on the cash position of the holding company, maybe some fresh data versus what I can see on the general price.

[Interpreted] Thank you for the questions now. Let me go back to what I said at the very beginning of my presentation. I mean, this very moment in time is very complex. So it is not difficult, I mean, to make reports or to draft reports, including what you talked about, I mean, the final result at the end of the first 3 months of the year. It's very difficult now to anticipate, I mean, to forecast, I mean, to see what may happen to the economy of our country because of the coronavirus. Once again, as I said before, this is going to be quite difficult for the entire planet, I mean, for the entire world, not just the financial business. And so this is the reason why we have decided, I mean, to implement a specific, let's say, way of behaving. So we want to be very, very cautious in terms of reporting, drafting reports but also making forecasts. So once again, in other words, and in simple words, because there are so many uncertainties around us, I think that an extra caution is absolutely necessary. Well, this is the best answer because we are just sitting and waiting. So we are right in the middle of a thick fog in terms of the Italian and the global economy. So we are waiting for the fog, I mean, to disappear. Now this being said, I think everyone here. So the operators, I mean, in this business, know very well that if you consider the -- well, industrial, let’s say, management of our business. Well, this year, for 2020 and what, maybe not today, but I'm just thinking of the possible results at the end of the year. So once again, 2020 will give us, well, let's say, consistent margins, I mean, versus the objectives and the targets that you can see in our business plan because you can see that the -- I mean, the lockdown here, the business lockdown has generated a contraction, and it will also trigger the reduction of the inflows, okay? So it depends, I mean, on the different sectors. So we have the Life and Non-Life, so the 2 main, if you will, businesses will deliver different results. But in general, this has generated a contraction of claims. And so I'm trying to project, I mean, our current assessments to the end of the year. So I'm trying to do this kind of forecast. So from the industrial point of view, I mean, in terms of business plan, well, yes, I do confirm that we will -- well, once again, get the results that we have said some time ago. Now what is pretty different is the other sector. I'm talking about the financial business. Because in this case, it is much more difficult to forecast, for example, the volatility, which is now very high on the market. So right now, we are going through the post-shock phase. I mean, the shock was the blasting, if you will, of the epidemic and then it turned into a pandemic. So everything, I mean, has been impacted negatively. So everything went down. I mean, the rates, the credit loans, I mean, shares, stocks, bonds, I mean, everything went down at the same time. So now the markets are sort of rebounding. And of course, they do what we are doing here. Once again, the fog is being lifted, as I said before. So this means that we will have a clear overview or a clearer forecast on what will happen to the Italian and global economy. So in terms of the financial business, I'm pretty sure there will be an increase of volatility. Now this being said, in terms of the income or income level generated by our portfolio, which is what you're often seeing in our presentation. Now that's not unchanged. In terms of pricing, pricing may change. And this is one of the consequences of the portfolio assessments and devaluations. We will have a positive global reaction. Now this means that we will be able to remove at least 1 part of the financial shock, which is what happened between February and March. Once again, it is difficult today to measure -- I mean, if you do a proper assessment. Once again, we are very cautious. Anyway, if you combine both businesses, I mean, the so-called industrial management on one side and the financial business on the other. And if you consider the current situation, and again, if you also consider, I mean the total -- the answers and the reactions, which are many different types of reactions. I'm thinking of the monetary policy and then the fact of keeping the Italian spread down. And then the stimulus, I mean the encouragement and the bonuses and the incentives to the global economy. So if you consider all of these factors, I don't think we will have any special criticality or difficulty also in terms of financial management. So if you combine both business lines, I am confident that we will reach, I mean, the targets that we have set some time ago, let's say. So it depends on us, of course. Now, there is something which is sort of special, which is what we are doing now. So what's happening now in this quarter, but also for the next quarters, we have to have a perspective on the future. So we do have to take into account the current trends. But at the same time we have to forecast, I mean the future perspectives, I mean, economy in 2021, 2022 as well. So once again, in terms of quantity, well, I do confirm what we have already written in the press release, which is exactly what you asked before. So based on current figures or current data, well, we won't have any difficulty this year to reach the target, I confirm once again. So once again, if there's no further, let's say, deterioration or extraordinary worsening of economy, I mean, the same may be happening in 2021. Anyway, we just have to wait the second half of the year, so H2 in order to really, really understand what will happen to economy. I know that the lockdown has been quite long. So that may have an impact on different business lines and the different sectors of the economy. Now it goes without saying that an insurance company doesn't have the same kind of correlation that the banking business has in terms of being linked to the evolution of the economy. So this is not a correlation, this is a decorrelation or, let's say, smaller correlation. So we take advantage of this. And this means that our leverage is more powerful also when it comes to manage let's say, difficult or more difficult economic cycles versus what we imagined when we drafted the business line. There's one point I'd like to highlight. And once again, this is what I briefly said at the beginning of this presentation, of course, we have to responsibly adopt right now extra caution before making choices or decisions of any type. And again, what I said before is also answer of your second question. I mean, you have a question on the Unipol dividend. Well, this is one of the choices we made. So we have decided, I mean, to be say, in compliance with the request and demands which are typical of that time. So this is what the regulator has done, and I'm talking about the -- well, both the Italian, but also the European regulators. So we want to be in compliance with what they said. Of course, you could find these results in the 2019 financial statements and balance sheet and the same will happen in the balance sheet in 2020. So in terms of cash, and I won't forget, I mean, to answer your third question on cash. Yes, we did have cash because, among other things, from a Unipol dividend, financially speaking, is not linked to the distribution of the UnipolSai dividend distribution. So we already had enough cash. So we already had enough provisions. So even if we don't consider the UnipolSai dividend, we do have cash. In terms of solvency, even if there's been quite a high volatility on the market, this is once again in compliance or just fit and proper, if you will, this means that, yes, we can distribute or pay the dividend this is worth basically 4, maybe 5x of solvency, okay? So EUR 200 million dividend, that this is what comes from Unipol. So once again, we have the same, well, philosophy, the same willingness. So as of today, we still have all the financial conditions in order to be able to do this. And then I mean for the same reasons I have mentioned before. So I'm not really talking about the results of 2020. I'm rather talking about the near future. We have to take into account the macroeconomic scenario, we also have to consider the industry scenario in the second half of the year. So we will make decisions there at that time. Anyway, there's plenty of willingness of what we want is unchanged. I mean we want to hit the targets we set. There was a question on cash. So at the end of March, of course, we have the properly liquid investments, but also general investment, EUR 700 million in terms of liabilities, we have EUR 2.4 billion. So the net financial position is EUR 1.7 billion. So once again, a EUR 700 million cash, plus EUR 400 million that we have to add, and we're going to receive this thanks to the UnipolSai dividend. So on a pro forma basis on our liquidity situation, I can say that well, it's basically, yes, the general cash position is EUR 1.1 billion, and the net financial position will go up to EUR 1.3 billion.

Next question is from the conference in English from Peter Eliot.

Three questions, please. First one, I was wondering if you could let me know what reserve releases feature in the Non-Life result? The second question. As I understand that premiums were impacted by EUR 120 million from the discounts that you've offered to customers. And if I add that back, then motor premiums would have been [ 1 1 4 2 ], which is a growth of 10%, which seems far too high. So I'm just wondering if you can explain the moving parts of the premium income a little bit. And then finally, on the solvency. Maybe just focusing on UnipolSai for now. Would you got to split out the drivers of the change? So what caused -- how much of a fall was due to interest rates, equity markets, B2B spread, et cetera?

Okay. So 1 second. I think Mr. Cimbri has switched off the mic invertedly. Just 1 second. Okay. Here we go.

[Interpreted] Yes. Peter, sorry, once again, I realize now that the mic was off, sorry, let me start again. Okay. As for the reserve or, well, provision policy. And this was your first question. So I was basically answering this question indirectly when talking to the previous speaker, I mean, Elena. Let's say that what we do have now is a nonordinary situation. And you say that this policy is due to the extra caution that I have mentioned before. So based on this, we have released what was not possible to treat in a different way, I mean, from a financial point of view. So I'm talking about some recoveries that we went through during the year. Basically, we haven't released anything on the reserves. So what you can see in terms of book value. So you can see here reserves, but it is not -- it's just basically a recovery. So the mismatch or the difference that you have with the reserve or provisioning policies last year is basically EUR 70 million less of the reserves -- of release versus what we have done in Q1 2019. So this is the only difference. There was a second question on the discount, yes. Well maybe discount is not the right word. Let's say the policy we have chosen. Okay. So once again, let's say, let's call it the policy that we have chosen some time ago in order to carry out the campaign, I mean, to help our customers, Okay. Well, first of all, you have to consider that in Q1, well, let's say, that we have had, let’s say, 2 different phases, 2 different situations. I mean, January, February were ordinary business, so business as usual. So in terms of premium collection or premium income, including, I mean, the claim, let's say, area. Well everything was, once again, business as usual. So I mean just like the first 2 months of 2019. Now the big problem was in March. So we started here with a lockdown in March, and this is when everything started to change. So once again, we have already, well, registered, if you will, a reduction of claims in the month of March, I should say, a significant drop, let me check, so 20% down of the Motor business. And then this trend became even stronger in April, so much so that in April, we decided, I mean to get back -- to give our ensured customers back 1 month of premium worth, I mean, because once again, based on what was happening in April, we can see again that less premium being paid. I know that the premium will come later. But anyway, there was -- that there were many, many less claims, okay? So claim level went down. So once again, we've given back something. And of course, we have the possibility to do this. I mean, the gross value of what we have given back is around EUR 250 million. This is our own cost, in general, it is EUR 300 million of pure benefits, I mean, for our customers. From the accounting point of view, yes, of course, we made some estimates and calculations. So we think that this possibility that we have shared with our customers. I mean, the fact of receiving a voucher. Now this opportunity will be used by around 85% of our customers and this is the share or the percent rate that we are very familiar with. I mean this is the usual renewal rate from our customers, okay? So it's around 85%. Once again, we haven't done this to encourage people to underwrite because, anyway, 85% of people would have done this anyway, and this is once again demonstrated or based on some history. But in terms of accounting systems, once again, we imagined that 85% of those who renewed policies will take advantage of these vouchers or bonus of again the value is around EUR 180 million. So this quantity -- so EUR 120 million, sorry, so EUR 120 million is something that will impact the accounts this year. In terms of the technical management, if you will, of this disbursement and maybe this is the right answer to your question. Maybe you want to know how technically the EUR 120 million will impact on the accounts? Well, this is included into the ongoing risk reserve management, okay? So they don't have an impact on the premium of this quarter, okay? Because -- okay, let me rephrase this. So there's no impact on the premium collection, which is impacted, rather, this will impact the general premium, so the so-called competence premiums. So I'm really just trying to explain you how we do this from the accounting point of view. So we will use the risk of reserve going on. Once again, we will use EUR 120 million. So once again, the direct income or the direct collection is different. This is much, much higher than the one that you can see here in the premium line into the financial statements. Once again, my colleagues are reminding me that there was a third question, yes, solvency and UnipolSai. Well, if I'm not mistaken, the impact was 50 points. I mean, as compared to the level or to the situation we had at the end of 2019 on a consolidated level, I should say, because on an individual level. More or less, we have the same situation. So again, around 50 points. So individually, solvency is at 226% at the end of March, consolidated, it's 200%. Now, of course, this is entirely due to the use of own funds. So all of the, well, moves that we had to perform because of the big shock on some markets. Okay. Maybe you want to have some more details also, let me check. We have 40%, I mean, of this 50 points, I mean, out of this, 40% is due to the spread move, and around 30% is due to the, well, equity value changes, 15%, well, in general, so the remaining 30%, to say, is due to the move of the other spreads. So credit spreads for example. So I'm not talking about the Italian spread, okay. I'm talking about the credit spread and the spread on the other companies, okay? So 40% is for Italian spread, 30% other spreads and 30% equity.

Okay. Could I come back on that very quickly. On the spread widening, that move seems to be rather bigger than the sensitivities that you've given us in the past. So I'm just wondering if you can update us on how you think the solvency ratio -- how sensitive the solvency ratio is to the BT spread in future? And perhaps if I can also quickly come back on my premium question, what I was really trying to understand is what is the underlying growth rate or development on premiums because on Slide 6, you showed that Motor premiums fell by 2%. What I'm trying to understand is what the actual growth rate is if you adjust for the vouchers that you've offered.

[Interpreted] Now as for the current solvency situation. Look, I have to say that -- okay, let me try and remember, okay, what's happening. So this is the figure we have, just 1 second on the -- let's say, market moves, well, around 180, yes, between 180 and 200. So here is the document so we also have other, let's say, adjustments. And so this is -- yes, exactly 180. So I remember correctly. So this is UnipolSai 180. Okay. So let me go back to Slide 6. Okay, this is our direct business. Okay. So going back to the previous question. Premium income, this is what you're going to see here. So this is impacted, okay? So this is, once again, impacted by the change of the risk reserves going on now, EUR 120 million, less or negative, okay? So the premium collection of the income, as you said, would have been bigger, higher and growing. So if you just consider what we have collected in the first 3 months of the year. But then we made a different assessment, let's say, an accounting assessment. And so this means that we charge onto this quarter 2/3 of the estimated future cost of vouchers. So well, this translates into the following. On the one side, so we have apparently reduced, I mean, premium level. It would have been much higher if we hadn't done this, okay? So the income would have been positive or it would have been -- it would have gone up. From the accounting perspective, we have basically less premium than we will have in the future, but we have set them aside. Well, let’s say, that 2/3 of this part has been, let's say, they won't be collected in the future. Rather, we decided I mean to do a reserve, so a provision this quarter. I know that this is a very flexible, well, presentation of the prudence. I mean of the caution I was talking about before with, Elena, okay? So from the accounting point of view, this is what we have to do. So we are now presenting here less premiums. So in this case, there are some lowering on the premium, there's a reduction on the turnover, and there's a reduction, if you will, of the economic result.

Next question from the original conference from Alberto Villa from Intermonte.

[Interpreted] I also have 3 questions. So the first one is on your share in UnipolSai. So you reached 83% in the past. I thought that you have sort of a threshold of 80%. So now you have exceeded 80%. So are you going to continue with this purchase? So is this share going to become bigger? Or because of the reduced liquidity of the security, maybe you have decided not to go over, not to exceed a specific threshold or once again, you think it's interesting, I mean, to buy UnipolSai on the market. Because of the, well, favorable prices? Second question, I'm talking about the [indiscernible] so the voucher offer. So 1 month off. You've decided, I mean, to basically spend EUR 120 million for this voucher project, 2/3 in the month of March, as you said before. So they have undergone the lockdown impact that then continued totally basically all the way to the beginning of May. So are you going to revise this offer? Or are you going to extend it? Because, I mean, you announced that some weeks ago, but then, of course, customers haven't used the vehicles for more than 1 month and so for a longer time. The third and last question is general consideration on the price of Unipol Group. Of course this is basically representing, I mean, investors who are quite worried, so it does seem that it reflects a very good, well, operating evolution of UnipolSai. So maybe shareholders or directors of UnipolSai want to with us some considerations of this situation?

[Interpreted] Now as for UnipolSai, now as you said before, our share threshold was 80%, so this is what we have done some time ago because, well, we thought that this was the right threshold considering our strategies. We would have complied with this 80% threshold, but some extraordinary situations, well, came up. And extraordinary situations may happen on the market, they also may happen to us. So for example, if the UnipolSai price drops by, for example, 30%? Well, for us, this turns into an opportunity for investment that we won't miss. So if the UnipolSai price hadn't changed, of course, we wouldn't have purchased shares in UnipolSai. So this is what's happening now. It may also happen in the future. So if the market, I mean, doesn't believe in UnipolSai, well, okay, they have their own reasons. I mean, there must be a reason why they don't believe in it. We have an opposite situation. We believe in it. And this is why we have moved up to 83%. It may also be more than this. Of course, as you said before, it depends on the price or the value of UnipolSai. So if we think that there's a significant temporary under-evaluation or under-assessment due to the pandemic or bad economy perspective? Well, we think that the perspective, I mean, the future of UnipolSai is positive. So we think they are really able to produce good income and good profits. So this is why we keep purchasing. But may I go back to this point. I mean, considering this price, is this the right purchasing time? Well, our assessments and decisions are very, let's say, personal. So if you want to have an advisory service, well, this is a different agreement, okay. Just joking. Now as for the decision that we made, so your second question, well, let's say that we made an immediate decision because we thought it was the right thing to do. If I'm not mistaken, it was mid-April, so just before Easter, we thought it was a good decision, and we made it. Well, I have to say that, in terms of follow-up or good reactions from the market? No, it didn't happen. I mean, recently, I've seen other competitors who, well, basically follow exactly what we have done. But I have to say that quite a large part of the market made a different decision. And to go back to your question. No, we don't have any other decisions of this kind in the pipeline. So we're just sitting and waiting. We are kind of observing what's happening on the market before making possibly other decisions about this. We have implemented, I mean, many other initiatives and one that's going on is reconfirmed, and it will continue throughout the year. So our customers will be able to use to redeem the vouchers until April 2021, okay? So once again, this is ongoing and it is confirmed. Now as for the, well, evolution of UnipolSai at the stock change? Well, basically, the same conditions apply. I mean, this is what I've just said, in terms of the investment decisions or investment choices on UnipolSai and by this, I mean the following, I mean, the market makes assessments or makes decisions, right, okay? So if the -- in my opinion, the market is wrong now, that they're making a mistake. I mean, there are no technical reasons why the market is negative on the UnipolSai. Just to look at the structure of our group, just look in the business of Unipol Group and do make a comparison with UnipolSai. Some time ago, the situation was different. I mean, let's say, the make was much more complicated than I mean we worked on this. We have streamlined and optimized, I mean, the shareholding structure. So the values of Unipol Group are very easy now to understand, anyway, if the market has a different perspective, I don't think to see some management problem, okay? It's a market problem. It's a market issue. So what managers here have to do is sort of arbitration between different situations, okay? Of course, we make an effort we try and make forecasts. But once again, we are not talking about this now. I mean, we're not talking about this with shareholders or where directors of the company is involved. We are not considering any kind of extraordinary operation. So we are not thinking of changing the corporate structure. So the only thing that's different between Unipol Group and UnipolSai, is the fact that we invest in UnipolSai because we are the holding company. I would invest very much and with pleasure, thanks to the current prices because, I mean, the market is not believing in them. We do believe in UnipolSai. So it's a pleasure for me to invest on this company. But as you know very well, investments that we make on our own securities, well, they have a direct impact on the solvability of our company. So because the market now show a high volatility level, which is represented by the big, big shocking moves that have taken place in the insurance companies in terms of solvency from December until today, it is not a good day. So it will be very risky to carry out operations which reduce own funds because, once again, volatility level is so high. So once again, I am so sorry, and I really repeat this, I am so sorry, I cannot do this because in terms of economy or income. So the securities to be purchased now are exactly the Unipol Group securities. And personally, and then I am one of the shareholders. I mean, from the management point of view, so this means that we have to have a balance between different factors, different variables. So this is the reason why we have to keep the balance, right? And of course, I cannot -- well, I have to take into account, I mean, all of the uncertainties and -- but when you consider, I mean, the general economic forecast, I cannot reduce own funds of my group, okay? So in a nutshell, this is what's happening.

The next question is from the conference in English from Edward Morris from JPMorgan.

My first question, actually, just coming back to this point you've just been talking about around purchasing UnipolSai shares and not reducing your own funds by paying the final dividend last year or otherwise purchasing Unipol Group shares. Can you just walk us through the solvency treatment when you buy UnipolSai shares? What are the moving parts on your solvency ratio when you do that? And what point do we need to get to for you to have the confidence to be able to decide again on paying dividends from the group level or otherwise returning capital to shareholders of Unipol Group. So that's the first question is around solvency and the decision between buying UnipolSai and returning capital to group shareholders? My second question relates to the Life business. I noticed there's a quite significant drop in premiums written by -- in the Life business. And principally, this is coming from Arca Vita, it seems. Can you just tell us a little bit about what's going on there? And what sort of run rate we should expect to continue? What will be the factor that causes that to go back to a more normal run rate. So just a bit more color around what's happening at Arca Vita? And how will lower premiums affect the net results from Life?

[Interpreted] Thank you for your 2 questions. I mean, the first one is basically in part of solvency of the UnipolSai purchase. Okay. Just to give you an order of magnitude, I mean. So for example, as I said before. So if we pay dividends and they were for the value is around 5%, the same happens in terms of purchasing shares. So if I buy EUR 200 million worth of share. I basically lose around 5% solvency. If I buy EUR 400 million, I would lose around, let's say, 10 points -- I mean, 10% in terms of solvency. And of course, in that case, I'm talking about Unipol Group, okay? So more or less that achieve the general value to make the right calculations. And this is what we consider when we purchase, I mean, own shares, okay? So the -- let's say, the loss is on a one-to-one ratio versus the amount of money you invest. So if you buy 100 on own shares, of course, you lose 100 in terms of own funds. And in percent rate, this is -- I mean, EUR 200 million is more or less the kind of 5%, I mean, the point I said before. Now in terms of the UnipolSai purchase, well, this calculation is really, really very different. So the impact is much smaller in this case, because -- so because we purchase UnipolSai, well, basically, we have an inflow of the excess of capital in the pockets of UnipolSai. So every time I purchase UnipolSai, basically, I reduce the third-party shares in terms of excess of capital. And of course, I take it in. So on the one side, I have the amount represented by the investment made. But on the other side -- so this is the negative side. On the other side, I have the positive side. And the positive side is the excess, so the so-called over capital that was owned by third parties before. And then it becomes included. It is included then in our own funds. There was -- yes, another question on Arca. Back to Matteo.

[Interpreted] Thank you for your question on Arca. Now it depends on the distribution strategy that we have adopted the share in 2020. In Q1 2019, so 1 year ago, Arca has also distributed, I mean, traditional products the so-called level 1 or type 1 products. In terms of strategy, we decided, I mean, to discontinue those products and to sell the multi, let’s say, branch or multi-approach products. So this can be reassessed, reevaluated. But of course, we also have one part of unit linked. Now this kind of production has a lower productivity level versus traditional products. So they are easier to sell because the traditional products are totally guaranteed or secured. So the budget was already going down in terms of premium level versus the 2019 production. There is more -- I mean -- this means the big shock of the coronavirus and this has strongly downsized the operating activity in every single office, in every single agency. So we have, for example, Banca Popolare dell'Emilia Romagna, so BPER, and Banca Sondrio, so the 2 banks. As a consequence, I mean, the general income or the general production has shrunk. Now we are moving up. So we are just resuming our business. Bank agencies or banks are still receiving customers based on appointments. But anyway, we are implementing all the measures required. We are going slowly back to business. We are now much more active versus some days ago. I mean, versus the real lockdown, okay? So we expect a recovery of production. Don't forget that the rate structure has changed and the financial conditions have changed as well. So the so-called reevaluate or reassessable products may be sold in banks, but also in the, well, insurance, well, agencies. There was another question. I mean, there was an effect between Life premium reduction and income reduction. Well, no, there is no link. I mean, there's a reduction of income on Life business. Its origin, its calls is totally different. And basically, it has to do with financial income flows in the first quarter of the year. Usually, this part of this share is higher. This is mostly due to the fact that the financial markets in the first quarter of 2019 was totally different versus what happened in 2020. In terms of technical margins, basically, there are no important changes, no major differences. And so once again, I have no other comments on these differences just because there are no differences.

Can I just have 1 follow-up question on my first point around UnipolSai shares? I understand you passed this threshold now of 80%. But given that the solvency treatment, you seem to be saying is fairly neutral in buying UnipolSai shares or at least not very cumulative, then why not keep buying more? And what is the endpoint that you're aiming to arrive at? Are we -- is this just going to be a slow process towards reaching a level where you have to buy all of the shares?

[Interpreted] Thank you for the question. Now as for UnipolSai, the strategies of the group are the ones I explained before. I mean, our share, which, in our opinion, is the so-called structural share is 80%. You are right. Today, we have more than this, the market has basically dropped or reduced the UnipolSai prices. So for us, it became a good opportunity for a good investment. But there are no other strategies behind this. So we are not considering doing any other move. It is just an allocation opportunity that we couldn't miss. We have plenty of cash in the group, and we decided to spend the part of this cash in a high income way. So in a very, let's say, profitable way. Of course, we perceive the risk in a different way. So the market thinks that the risk is higher. This is a company we control. Of course, we know the solidity, the strength of the company, the assets, even the income flows generated by that company. So this is why we believe in it. And of course, we have possibly much more confidence in UnipolSai than the market today.

Next question from the original conference from Andrea Lisi from Equita.

[Interpreted] I have 2 questions. If I understand correctly what you said before, UnipolSai solvency based on your recent measure is around 180, 200 points. Can you give us some color on solvency on the Group level, please? I also have a question on the difference that I can see here between the pretax result of Unipol Holding and UnipolSai. This is due to the financial business carried out by the group, I guess, I'd like to have more color around this. I mean the losses, I guess, here what is this? Is this realized gains or losses? Is this the expectations of the market or any other reason behind this?

[Interpreted] Thank you for the 3 questions. I said before that as compared to the latest, I mean observations of solvency that we have collected concern UnipolSai. So if you make a comparison of the moves and the ups and downs of the market. I mean, after the 31st of March, I do confirm 180 to 200. So at the end of December -- sorry, at the end of March, okay, this is what we had between 180 and 200. As for Unipol Group solvency level. So end of March, 31st of March, we had 155. And the latest observations, okay, just gave me 1 second. Yes, we have 140 up to 145. As for the pretax result, Unipol, so that would be your second question. The mismatch that you can see versus the UnipolSai consolidated figures is due to the following. We have our portfolio in Unipol Group, I mean, a small portfolio, so some investments. Last year, it has generated between EUR 60 million and EUR 70 million extra income versus the typical, I mean, let's say, income of the holding company. So basically, the dividend of that this company receives from the subsidiaries. So if you go through the rest of the market. I mean, there have been capital losses. So we have closed some positions. And what we have had is around EUR 13 million capital losses. So this is the difference between UnipolSai and Unipol Holding.

Next question. [indiscernible], please.

I have a few questions. The first one relates to UnipolReC. Now your collections in the first quarter was quite good at EUR 26 million. I mean I just wanted some color on what are the more recent trends? And how do you expect the collections going forward, the 30% target that you have? Is that still achievable? The second question is on the cash position of the Group now. I mean, you have the cash coming in from UnipolSai as dividends, but you will not be paying out dividends from Unipol Group, so your cash position is quite strong now. Do you have any plans, how you plan to use this cash going forward, I mean, over the near-term or something? And the third question is more of a number question. Could you just provide the weather-related impact in the combined ratio for Q1 '19 and Q1 '20?

[Interpreted] Thank you for the questions. So now, UnipolReC, it keeps recoloring. And by the way, this is what it has done over the last year with an average percent rate of 30% versus the gross value of our loans. So again, this is what we have done in the first quarter this year, some operations and transactions have been carried out so this is already included into the pipeline also for the second quarter. So we are going to reconfirm, I mean, the assessment that we made. So as of today -- versus the portfolio that we have we keep seeing this trend in terms of recovery. So the percent is around 30%. So this is what we are catching up.

And the level of collection, is that also -- I mean, do you expect it to be at the same level as the last year? Or do you think because of the lower economic activity, this level could come down?

[Interpreted] Well, it depends, and we have to see what's going to happen. So the effects and the consequences of the future economic crisis. I mean, it's difficult to foresee which impact they will have over customer portfolio. I have one point I may share with you. Once again, it goes without saying that the economic prices will have a negative impact on the loans portfolio currently managed by banks. So the unlikely to pay, for example, or let's say, the performing loans, of course, there will be an impact. Of course, there would be some, well, let's say, changing situations. Which is what I'm seeing these days. I mean, just look at what banks are doing in terms of provisions. Now the world has changed. And this is a new world, okay? So right now, we have plenty of loans. So that have to be recovered. So we have, I mean, we had nonperforming loans, so we had nonperforming exposures. Some provisions were already dead, if you will, in terms of quality of the loan. So what the UnipolReC does is something different. I mean, we have to do with the goods and products or assets which have been secured, okay? So basically, we look for an agreement for many different provisions because, for example, the company pays a credit for the bank, but there some people put some money somewhere else. I mean, we discover that this is what happened. And we have to find an agreement, okay? So we want to have the money back. I mean, we don't really work on the current operating economic world, okay, that will impact -- will be impacted by this crisis. I mean, we are now working on closed -- I mean, previous provisions. And of course, we strive to recover or to get the payment of guarantees. So this business does not really depends on the evolution of today's or future real economy. These are provisions that come from the past. Of course, if we recover 30%, I mean, maybe 30% or maybe too much. I mean, we are also happy with less than this to recover all the money that we have in UnipolReC. The value for the residual loans is only EUR 0.15, okay? So basically, we just have to recover EUR 0.15 instead of EUR 1 just to recover all of our money. And we can do this for as long as it is necessary. So today, we are doing this. And today, we are recovering twice as much versus the previous so-called loading value. I don't know if we are able to do this for the next 5 years, but I'm sure that we will recover or collect much more than the so-called loaded value. As for your second question, a question on liquidity or cash because there is a strong cash position that we enjoy. You're right. I mean, this is a choice that we have to make. In the -- well, when you go through a crisis or for example, when you have high volatility on the market, well, if you have plenty of liquidity, I mean, if you are very strong in terms of cash, well, this is my personal point, but this is an absolute value. So much so that -- I mean, just look at what companies need today. They need liquidity, they need fresh cash. And this is what the Italian government has to do. The government has to spend money to companies. Otherwise, they go bankrupt. In UnipolSai, so as soon as we knew about the crisis, I mean, the pandemic, we have reacted right away, and we have strengthened the cash position in terms of asset allocation, so UnipolSai investment exactly, because we think the cash is a major protection value. And even more so when it comes to the holding company. So there may be some small amounts of money allocated, I mean to some risk investments. I mean, sometimes they go positive, sometimes they are negative. But in this case, I'm talking about real small portfolios. I mean, maybe up to EUR 200 million. So the rest of investments of the holding company. So it may be either to purchase UnipolSai shares because, I mean, the risk ratio is interesting for us or because we have a low-risk positions. I prefer not to have some, let's say, some legal points in terms of income, but I have a strong cash position so that I can fight against the possible new shocks, okay? So for the Holding company, this is an ordinary situation. But well, even more so, when you are going through some stress situation, which is the current situation because of the pandemic. You also had another question back to Matteo.

[Interpreted] Maybe you want to have some color on the combined ratio change between the Q1 2020 and Q1 2019. Now in terms of, well, expenses, I mean, there's a slight deterioration, which is due to cost. Now if you -- well, if -- you have to consider less premium that we have received versus Q1 2019. But I mean, most of this change, this has to do with the ratio between the claims and premium. Now this -- this is what's happening for Motor but also Non-Motor. In our business plan, one of the key elements is to become technically excellent. So we want to have a much higher income and much of this improvement has -- I mean, depends on the actions that we have planned some time ago. So once again, this is what we are doing in the Motor business, but also in the Non-Motor business. In the Motor business, the changes in terms of claim and premium ratio. Well, this improvement is due to the current operating financial year. So we have had some repricing on the tariffs concerning the Motor business, but also many other risks concerning the Motor business. Anyway, of course, there has been less -- there have been less, less claims, especially in the final part of March. As Mr. Cimbri said before, we haven't released any reserve. So it's basically recoveries. So these recoveries have to do with a franchise or once again, there is no release at all on the Motor business. The same happened in the Non-Motor business. Now in that case, what I can see is an improvement of the current financial year. This is due to the activities and actions that were included in our plan and especially in terms of the total product liability, but also in many other business lines where we have striven to recover the margin. So of course, this improvement has been helped by the non-release of previous provisions. So, in general and as a total, I mean, there's an improvement that you don't see in terms of Non-Motor business combined ratio. If you also consider the previous financial years, I mean, there's an improvement of the combined ratio. And this improvement is due only to the Auto or Motor business. Don't forget that in the previous quarter, we had released reserves on the non-motor business, totaling 9%.

For the time being, we have no other questions.

[Interpreted] Maybe we have a voice on the conference in English. So I'm asking the operator to confirm that there are no other questions. Thank you so much for taking part of this conference. Stay healthy and stay safe. And looking forward to the next conference, to comment on the first 6 months of the year at the beginning of August. Thank you so much. Keep up with the good work. Bye-bye.

This is the Chorus call operator. So the conference call is over. You can now disconnect your telephones. Thank you. Bye-bye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]