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

Thank you very much, and thanks to everyone for being on this meeting. As we normally do, I'd like to offer a few remarks about the result before handing things over for your questions. As you're aware, the third quarter tends to be seasonally softer, largely as a result of NatCat events. On that point, this year proved less favorable than 2025. The main driver was an event involving Northern Italy from late August into the start of September. On investments, the third quarter also brought a notable increase in interest rates, as all of you know well, along with a widening of spreads, particularly on the government bond side, and that partly weighed on our solvency position. In spite of all of this, from where I sit we are closing a very solid quarter. First, we recorded very good premium growth across the board, in both life and P&C. Second, we achieved an improvement in the combined ratio. As the presentation shows, we closed the combined ratio at 92.5%, consistent with the target in our industrial plan, despite the larger impact from NatCat events. I should say that we are beginning to see the fruits of all the measures we put in place over the past three years in terms of de-risking, cutting risk in certain parts of the country, and repricing a significant portion of the risk, and as a consequence of that we did take an impact, but that impact was far lower than it would have been had we not taken this kind of action. We also delivered a very good result in life profitability, with a very good contribution from the main line of business, principally traditional products, but also term premium and unit-linked as well, where we achieved a very significant increase in production compared with the 2025 figures. Finally, strong support came from investment income, which was very impactful. There is, as you know, also the contribution from our investment in SpaceX, which can be quantified at EUR 170 million globally, but even excluding the contribution of that particular investment, the contribution from investments was significant. I can therefore say that, overall, the group is firmly on track to achieve all the targets of our industrial plan for 2026, of course. That said, with Enrico San Pietro, as usual, we are open to answering your questions. Thank you very much.

Hi there, and thanks very much for taking my questions. I've got three, if I may. First off, on technical profitability: you posted a really solid combined ratio of 92.5% even with NatCat and large losses, which I believe came in above what the market was expecting. At the same time, the attritional loss ratio was especially strong. Can you help us get a sense of how much of that comes from improved underlying claims experience as opposed to the prudence you've been building into initial loss picks? My second question concerns solvency. The group ratio fell by 15 percentage points quarter-on-quarter, and that was also in spite of strong insurance earnings. Could you walk us through a bridge of the key moving parts, especially organic capital generation variances and any changes in the SCR? And also, since sovereign spreads widened during the quarter, it would be great if you could shed light on the volatility adjustment's impact. I would have thought there'd be some positive offset on the liability side, so it would help to understand the net sensitivity to spread movement, given that so much of the decline came from other factors. The third one is about the running yield, which is up from last year, and the 4.7 is particularly impressive given the environment. Could you give some color on reinvestment yields versus the portfolio running yield and on how much further improvement you expect? Thank you.

Thank you. I'll take the last two questions, and then I'll hand over to Enrico on the technical profitability. First of all, on solvency, as I mentioned earlier, we had a negative contribution from economic variance; that means the impact of financial market trends can be quantified at 6 percentage points. Interest rates rose, spreads widened in the credit market, and equities didn't move much in the third quarter, so they didn't deliver a significant negative contribution. But taken together, interest rates and the credit spread had a negative effect on solvency of around 6 percentage points. On top of that, we need to add a negative contribution from non-economic variance that isn't tied to financial market trends, mainly stemming from the change in asset allocation we carried out during the quarter. You know, because we announced via the press release that in June we set a contract of total return equity swap on BPER Banca that we began to execute during the third quarter. By the end of the third quarter, we had finalized the contract with a total amount of shares close to 5% of the bank. This is an increase in our equity weight exposure of EUR 1.5 billion, and consequently it had an impact that can be quantified at roughly 5 percentage points with regard to the increase of asset allocation. If we hadn't put money into this financial instrument, which matters a great deal to us for carrying out the increase in our equity weighting in BPER, then solvency would have come out above 244%. That's the situation; so 6 percentage points of the decline can be viewed as a kind of hit originating from the financial market that aligns completely with the sensitivity we always disclose concerning how our solvency ratio may shift as credit spreads, equities or Italian government bonds rise. 5 percentage points stem from asset allocation, and specifically from executing the total return equity swap on BPER. There has been no change, I believe just a 1 basis point rise in the volatility adjustment, and therefore no positive contribution has resulted from the volatility adjustment going up. As for the running yield, the running yield is the contribution that comes from coupons and dividends, obviously. Dividends in 2026 have been fairly supportive for our investments. The rise in interest rates that we saw during the third quarter and that we expect to persist over the coming few quarters will bolster the reinvestment yield we are able to achieve by the end of the year, and mainly in 2027. I can say I feel fairly confident that in P&C, we can reinvest coupons and dividends at a yield ranging between 4.5 and 5. In life, where duration runs longer, we can also expect the chance to obtain somewhat more than that. Naturally, that assumes interest rates stay at the level where they sit today. On the first question, I'll hand over to Enrico for his comment.

Thank you, Matteo. Good morning, Tommaso. Technical profitability got better on a number of fronts; we saw the attritional loss ratio improve, particularly in motor, prior year reserve development also improved, and the discount effect improved as well. All of those together come to roughly a 4% improvement, and that was enough to more than offset the 2.8% deterioration tied to NatCat events.

All right, thanks.

Hello. I really appreciate your taking my questions. There were three of them. First, regarding that elevated NatCat ratio of 18%: I was just curious, that figure is my own estimate, and I wanted to ask how we ought to view it. My recollection is that the January figure stood at 8%, so this is elevated. Beyond that, my understanding is that you don't hit aggregate cover, which makes me wonder if your reinsurance policy has been altered. Second, there's been quite robust growth in health, that 8% over nine months. From my calculation, Q3 on a standalone basis has to be near 19%. Will that pace persist? Or is it somewhat of a one-time thing? That's all. Thanks.

Hi Michael. On NatCat events, sure, of course, 2026 wasn’t a good year for the Italian market. As Matteo explained to us, we’ve been de-risking, particularly for hail and for severe convective storms following 2023. So at this point we have a probabilistic risk measure roughly 20% lower than three years ago; that’s helping us to suffer less from these kinds of events. Right now we’re basically at the amount of expected losses we put in our budget, and we’re quite close, but not yet at the level where our insurance treaties could begin to work. Neither the main XL treaty nor the aggregate is working, and we hope they won’t be working because, of course, the year end should be quiet. Second question on health. Yes, we reported strong growth; it isn’t unusual. We’ve been growing double digit or high single digit for years. The market is growing. We had, during this year, a period in which growth was lower, but we told you that things could be better. This is happening for several reasons. Retail production of banking and also the agent channel, but also corporate business in which we had the addition of big contracts on the employees of the Ministry of Education of Italy.

Great, thank you very much.

Good morning. I appreciate you taking the time for my questions. My first is clearly somewhat speculative, since the final version isn’t available yet, but I wonder if you could offer some insight, some indication of what impact you expect from the measures currently envisaged in the draft budget law as it stands today. The second concerns the fact that in the plan, and also last year, you expensed integration charges tied mainly to staff turnover. I’d like to ask when we should anticipate those and whether you can provide an indication of the amount. One more thing — the CSM release in Q3 came in somewhat lower, so could you give us an update on how you see things shaping up from here? Thanks.

Where the financial law is concerned, the answer isn't straightforward, since a number of items could affect our figures over the coming years, and in 2026 as well. To begin with, the extra IRES component for insurers, judging by what we know as of today, could carry an impact of roughly EUR 30 million across 2027 and 2028, calculated on the pre-tax profit we anticipate generating over the next couple of years. One more point concerns the cut in tax deductibility for IRAP purposes on other administrative expenses and depreciation, which goes from 90% down to 30%; here we again anticipate an impact of close to EUR 20 million next year. Then there is the deferral of deductibility for both negative items that let the company record the DTA, and that measure is expected to total roughly EUR 30 million in 2027 and EUR 40 million in 2028. Taking everything I have mentioned together, the combined effect should land between EUR 80 million and EUR 90 million next year, 2027. Next, regarding the restructuring of how the Superbonus tax credit is used: the sum deductible in 2027 is anticipated to be spread across 10 years, requiring the full credit amount payable in 2027 to be provisioned. We anticipate this could create an adverse impact of roughly EUR 50 million in 2026, based on the details available to us at present. As you’re aware, deliberations in the lower house remain at an early stage, so the ultimate outcome of the budget law remains to be seen. Based on what I have in front of me, here are those figures. As for your second question, it has to do with the provision for the staff turnover charge, which isn't part of the third quarter of 2026 and will instead fall into the final quarter of this year; we're expecting roughly the same amount as we recorded last year, so somewhere in the range of EUR 70 million to EUR 80 million. On CSM release in the third quarter, I'd note that looking at the CSM we generated during the quarter against what we released, the two are more or less in balance. It isn't realistic to assume we'll consistently generate more than what we release — that hinges on production quality, on new business volumes of course, and on how the value in force affects the portfolio. Second, this period brought a negative contribution from economic variance, the first such occurrence this year, and that pulled down the overall CSM figure. An opening CSM sitting above our closing number doesn't surprise me, largely because of that negative economic variance contribution.

Thanks.

Morning, and thanks for taking my questions. There are three of them. The first concerns the deal involving Intesa and Monte dei Paschi. I'd like to know how you're thinking about the valuation of the Monte dei Paschi carve-out at the point it gets contributed to BPER, since you're buying it from Intesa for roughly EUR 3.5 billion, which works out at about 8.5 PE. Obviously, when all is said and done, that final valuation is what will set your ultimate ownership in the combined bank. So how do you view the valuation of this carve-out in the merger with BPER? The second is about transaction timing, since BPER said recently that the potential closing of the merger might land around the first or second quarter of 2028. I'd like to know if that also matches your expectations. The third follows up on the BPER derivatives, because you've now got the authorization to raise your direct stake. I'd like to know if you're thinking about a physical settlement ahead of the merger transaction with Monte dei Paschi, and what the potential cost tied to that physical settlement would be. One very last one, sorry about that, on life, because we saw very strong premium growth, especially in unit-linked. I'd like to know how you're seeing the performance of the existing BPER distribution network, particularly on productivity and product mix, and whether you see room for faster acceleration even before the MPS transaction. Thank you.

Thank you. On the Monte dei Paschi transaction, it's quite early to talk about the valuation at which we'll carry out the integration with BPER. As you rightly said, this is a transaction we can expect to execute in 2028. The conditions around the valuation of the asset we'll buy from Intesa Sanpaolo, Monte dei Paschi di Siena, will be very different. We'll set the condition of the integration once we have full ownership of Monte dei Paschi. So it's very early. We haven't started discussing this with BPER, and I think we'll have time to do so over the next few quarters, mainly for sure starting from next year. On the derivative, yes, as you know, we obtained the authorization to exceed the 20% stake in BPER and to have de facto control of the bank. We already hold the shares in terms of derivative. We only have to decide when to convert. Again, we have time to do it. For sure, we'll do it before the general shareholder meeting of April, so we'll decide when the right time is to convert the derivative into physical. On bancassurance, I said in my introduction that unit-linked performance has been very good, more than EUR 300 million versus a little bit more than EUR 50 million in 2025. I believe there's significant potential in BPER's bancassurance distribution network, and once we manage to integrate Monte dei Paschi into BPER, there's considerable room to boost the productivity of that distribution network — not just in bancassurance, naturally, but for us bancassurance matters a great deal. Part of the revenue synergies we've identified within the overall 800 million — 500 of cost and EUR 300 million of revenue; within those EUR 300 million of revenue, there's also the opportunity to raise the commission for the bank that comes from greater productivity in bancassurance. That's a very positive contribution for the bank, and for our group as well, since another portion of the synergies sits not in the bank but in the insurance company, relating to the technical profitability that stems from the productivity gains we can achieve in bancassurance. I'm fairly confident we can perform considerably better than that, because there's ample potential in the distribution network — both at BPER and, I believe, at Monte dei Paschi too — in P&C as well as in Life.

All right, thanks. I just have a clarifying question. Can you provide a bit more detail on what the physical settlement of the BPER derivatives might cost? That will obviously hinge on when we choose to carry it out, but just to get a sense of it. Thanks.

No, there isn't any cost involved. We simply have to convert those shares into physical form. Naturally, there's a price at which we purchased the shares, and that price reflects the average BPER share price during the third quarter. You can work out the math on your own.