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

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Unipol Consolidated Results at June 30, 2026 Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Matteo Laterza, CEO of Unipol. Please go ahead, sir.

Good morning, and thank you very much for attending this conference. Before opening the floor to the questions, as usual, let me make some remarks on the first half numbers that you saw this morning. They were numbers that confirms the strength, resilience and consistency of our business model. We were able to deliver excellent results across all key metrics with the net profit reaching more than EUR 900 million, up almost 50% year-on-year. More importantly, these results reflect not only a strong -- a very strong earnings growth, but also a significant improvement in the quality of our earnings. Our performance is based and supported by all the core drivers of value creation, technical profitability in Non-Life, profitable growth in Life and resilient recurring investment income and strong capital generation. What I would particularly like to emphasize in our ability to combine business growth and improving profitability. In Non-Life, premium increased by almost 4%, while the combined ratio improved to less than 92%, allowing us to reach ahead of schedule the target originally envisaged for the end of the strategic plan. This is particularly important achievement because it demonstrates that growth has not come at the expense of underwriting discipline. On the contrary, the quality of our portfolio continues to improve. The result is even more remarkable considering the operating environment. Compared to the first half of this year, we had a larger impact coming from nat cat that were offset by lower impact coming from large losses. Overall, the combined effect of the 2 is pretty in line with the numbers of 2025 and is way in line with the expectation and the assumption of our budget and the industrial plan. Life business is also performing very well. We delivered strong premium growth, positive net inflows at almost EUR 800 million and a significant improvement in profitability. This recovery in earnings is being driven both by the technical component of the business and the investment income, while improving portfolio economics continue to support future profitability. Finally, investment performance was very strong, independently on the effect of the SpaceX IPO that is a nonrecurring component of the investment income. But even not considering the impact of SpaceX, the investment yield of the portfolio is close to 6%. That is very robust, significant and persistent in terms of contribution coming from dividend and coupon. Finally, capital position remain a key competitive advantage for us. We closed the first half with a Solvency II ratio of 259%. That is the official number. But as usual, I underline and remark the importance of the 290% that is the solvency position of the insurance group. That is a very strong number and pave the way to be very consistent with our metrics and target in dividend distribution policy that, as I said last time that we met is based on the EUR 930 million for the dividend expectation for 2026 and pave the way to the dividend capability for the rest of the industrial plan and in general for the next future. Having said that, I am here with -- as usual, with Enrico San Pietro, to answer to your question. Thank you very much.

[Operator Instructions] The first question comes from Tommaso Nieddu with Kepler Cheuvreux.

The first one would be on net financial results, the underlying yield, especially I'm not talking about the SpaceX MTM. In the underlying yield, both in Life and Non-Life, the return has been incredibly strong. Just my question would be, I just want to understand what's the kind of run rate we should expect in H2? And the second question is on the Health business. Clearly, there, the profitability remains outstanding. But it seems to be that growth has been decelerating through the first 2 quarters compared with last year. So should we expect a reacceleration in the next quarters? Or please, if you can provide any color on why that shouldn't be the case?

Okay. Concerning the first question, without considering SpaceX mark-to-market that, as I said before, is an exceptional component, very volatile, and it comes from an investment that we did in the past that was very worth to do considering the evolution in terms of mark-to-market evaluation of SpaceX stock. It is not a strategic stake, and we will see the opportunity to divest the investment as soon as there will be -- the market condition to do it. Without considering SpaceX, as I said before, overall, the investment yield of P&C and Life not related to the segregated portfolio, just only separate is 6%. The running rate that is the component related to coupon and dividend is 5%, because 1% is the component related to mark-to-market valuation of assets that are mark-to-market through P&L. If you want to consider and to extrapolate the investment income for the second half, if you want to be prudent, you should consider only the 5% that I said before. Consider that to this 5%, a very important contribution come from dividend coming from the equity investment. Dividends are allocated in the first half of the year and so you can't expect a replication of the dividend stream coming in the second half of the year. If you skip the dividend component from the run rate, you should arrive to a number close to 4% if you want to have an idea of the contribution coming from the investment to the second half of the year. Of course, you have also the mark-to-market of the assets that are booked to P&L that will give a contribution depending on the performance of financial markets in the second half of the year. The second question regards the Health business. There is a point considering the trend of premium that were in a sort of sense, subdued in the first half of the year because the performance of bancassurance and agent was very strong. But in terms of contribution to total premium, these 2 components are still not the majority of the premium of the company. The most important component is the corporate, the big contract that we have with a big institution that in the first half of the year grew mid-single digit. We expect an acceleration in the second half of the year as a consequence of the acquisition -- possible acquisition of new contracts. In terms of profitability, the profitability was very strong, and we expect to maintain this trend also over the span of the industrial plan, that means the second half of 2026 and 2027.

The next question comes from Michael Huttner with Berenberg.

I hope you can hear me. Congratulations on fantastic results. I had 2 questions, and they come a little bit from listening to your competitor a little bit earlier. The one is on nat cat. Can you talk about what you've seen in July maybe? And the second is on the underlying trends in Non-Life and the balance between inflation, if there is any, and pricing and what you intend to do in pricing going forward?

Michael, Enrico. The first question is about the nat cat events. As you have seen in the first half, the overall amount of nat cat losses was not concerning, around EUR 150 million. Then in July, as it happened to Italy, France, Germany, Switzerland between 15 and 20 July, there were several convective storms. In our estimation, this could have an impact that is, of course, quite significant, but still not concerning compared to what we put in our budget, in our plan. In the plan, the overall amount that we are expecting for nat cat events brought on Motor Other Damages and Property is around EUR 550 million. We think that we are on track to stay in this amount or lower. The second question is about the underlying trends in Non-Life generally, of course, when it comes to motor third-party liability, the price momentum is slowing down on the market. This is something that is true also for us. The price increase is lower than the previous year in the region of 2%. As you have seen in the first half, the motor combined ratio is slightly worsened, but the motor third-party liability is exactly the same level of combined ratio. The worsening is related to nat cat events on Motor Other Damages. So this is for the Motor business. Non-Motor has become quite profitable for the market. This means, of course, the price momentum is changing. In some cases, for instance, in general third-party liability, the whole market is decreasing the amount of premium written. That is, of course, due to the fact that after years in which general third-party liability was quite a problematic line of business, nowadays has become really profitable. So the market has become softer. The prices are decreasing and of course, also the overall amount of premium written. This is true also for us. As you can see, our business now that was not increasing is general third-party liability.

The next question comes from Antonio Gianfrancesco with Intermonte.

I have 3. The first one is on the agreement with Intesa Sanpaolo for the acquisition of the Banca Monte dei Paschi carve-out because I was wondering if you could help us to understand how fixed that the agreement with Intesa is at this stage. If Intesa were to revise the terms of its offer on Monte dei Paschi, should we assume that the terms of the agreement between Intesa and Unipol on Monte dei Paschi carve-out are fully locked? Or could there be any risk on changes in price perimeter or other conditions that could be less favorable for Unipol? The second one is on the dividend policy, because I was wondering if you could give us a bit more color on dividend policy after the very strong capital generation you delivered in the first half. You already generated EUR 300 million of excess capital in this first half on top of the EUR 0.5 billion in full year '25. Given the approval of capital increase and the consequent higher number of shares, should we think that your ambition is to manage a stable or growing DPS year after year, including '26 on '25 and '27 on '26 and this also even before the first material synergies from BPER Monte dei Paschi combination start to be visible. The third and last one is on corporate structure because I was wondering if you could give us a qualitative sense on how you think about the medium, long-term corporate structure? Because in theory, once BPER and Monte dei Paschi carve-out are combined, a bank leading inversion could be a way to improve capital efficiency. In that case, obviously, considering the current shareholder situation, this, let's say, action could be dilutive for current main shareholders of Unipol, also making the financial conglomerate exposed to takeover risk. So do you think that the more realistic path is first to increase progressively the stake in the combined bank over several years before any structural change could be considered?

Thank you to you. The first question regards the agreement with Intesa Sanpaolo that we disclosed when we did the conference call in the early of June. The agreement, of course, remain the same. As we said before, we have a cap in the acquisition of the carve-out that is EUR 3.5 billion. Once reached this cap, we are protected by the cap. So any decision that Intesa Sanpaolo will take in the offer will follow what is contained in the agreement. That means that we will pay half of the multiple that Intesa Sanpaolo will pay for Intesa -- for Monte dei Paschi kept at EUR 3.5 billion. This is the point. Concerning the dividend policy, we have a new floor at EUR 930 million that was the EUR 800 million that we disclosed before considering the capital increase that we think to be able to execute within the end of the year. This will be the floor for the future. Having said that, we also gave some numbers of the net profit that we could do once we will become hopefully a conglomerate taking the control of Monte dei Paschi and BPER and put together having the control of BPER with a total profitability close to EUR 2 billion. You can do your math in order to understand which could be the possible dividend policy that we could implement in the future, assuming that EUR 930 million is the floor. Concerning the third question, as you correctly said, our ambition within the next future is to execute the transaction that we disclosed in the early of June. That means to create a big financial conglomerate that will have an insurance leg and a banking leg of the same contribution in terms of profitability. Our ambition is to have a stake more than 30% in the new financial entity. Then depending on our capability in terms of capital generation, we look forward over time to increase the stake if we will have the capital to do it. Consequently, any possibility of inverse merger is not on the table today because as you correctly said, it would change quite radically the structure of the shareholding of the company, and it is a decision of the shareholders of the company, and it is the shareholder meeting that has to take this kind of decision. So it is completely premature to think about this possibility.

The next question comes from Andrea Lisi with Equita.

The first one is related to what you have already stated in the previous answer. So the fact that you are willing progressively to increase the stake in BPER also potentially from the kind of close to 30% at which you will end up following the transaction if successful. In particular, we know that you have dilutive position, in particular, you have entered into 4.9% derivatives on BPER Capital at the beginning of June. If you can provide us some update on your expected capital impact if you were to convert these derivatives right now. So the part on solvency, if you have any indication on that? The second question is on excess cash. We have seen that you are ahead of the plan and the EUR 1 billion target by 2027 is more than visible. You have indicated in the plan that these could be used for growth or to be returned to shareholders. Just wondering if the approach to use this excess cash has in some way changed with a potential transaction in place regarding Unipol, BPER, Monte dei Paschi. And last one is just if you can provide us the most recent mark-to-market regarding the value of the SpaceX stake. So if we were today relative to what has been an indication at the 30th of June, what have been the value of the impact on financials?