EU and US could reach trade deal this weekend - Reuters
Unipol (BIT:UNPI) Group reported its Q4 2024 earnings, highlighting robust performance across its insurance segments. The company achieved a net result of approximately €815 million and maintained a solvency ratio of 213%, even after accounting for proposed dividends. With a market capitalization of $395.6 million and a strong dividend yield of 4.35%, Unipol successfully navigated challenges such as increased claim costs in the motor insurance sector, leading to a positive market response. According to InvestingPro data, the company maintains a "GREAT" overall financial health score.
Key Takeaways
- Unipol Group's insurance net result reached €815 million.
- The solvency ratio remained strong at 213%.
- Motor insurance achieved a technical equilibrium with a 100% combined ratio.
- Health insurance showed significant growth with a 90% combined ratio.
- The company plans to present a new industrial plan in March 2025.
Company Performance
Unipol Group demonstrated resilience in Q4 2024, with strong performance across its insurance operations. The company maintained its competitive edge with a high dividend yield and successfully mitigated risks associated with natural catastrophes and inflation. Trading slightly below its Fair Value according to InvestingPro analysis, the company's strategic focus on bank assurance and health insurance has paid off, delivering an impressive return on equity of 24% and contributing to overall profitability.
Financial Highlights
- Total (EPA:TTEF) dividend for 2024: €600-610 million
- Insurance group net result: ~€815 million
- Solvency ratio: 213% post-dividend
- New business margin: 3.7%
Outlook & Guidance
Looking ahead, Unipol Group plans to unveil a new industrial plan on March 28, 2025. With revenue growth of 9.68% and a favorable P/E ratio of 15.59, the company expects continued premium increases in the motor insurance sector and aims to enhance bank assurance distribution efficiency. Additionally, a strategic review of its hotel business is under consideration. For deeper insights into Unipol's growth potential and comprehensive analysis, InvestingPro subscribers can access detailed financial metrics and expert research reports.
Executive Commentary
CEO Matteo Laterza stated, "We were able to over deliver all our economic KPIs," reflecting the company's strong financial performance. Enrico San Pietro, Executive, highlighted the successful de-risking activities, stating, "We did relevant de-risking activity in our portfolio." Both executives expressed optimism about future improvements and strategic initiatives.
Risks and Challenges
- Increased claim costs in the motor insurance market could pressure profitability.
- Macroeconomic uncertainties, including inflation, may impact financial performance.
- Potential strategic shifts in the hotel business could introduce operational risks.
- Regulatory changes in the insurance sector may affect future growth.
Unipol Group's Q4 2024 performance underscores its ability to adapt to market dynamics and maintain strong financial health. With analysts maintaining a Strong Buy consensus and the company showing solid fundamentals, its strategic initiatives and focus on innovation position it well for continued success in the coming quarters. Discover more detailed analysis and financial metrics with InvestingPro, including exclusive ProTips and comprehensive research reports.
Full transcript - Unicaja Banco SA (BME:UNI) Q4 2024:
Conference Operator, Chorus Call: Good afternoon. This is the Coruscult Conference operator. Welcome and thank you for joining the Unipol Group Preliminary twenty twenty four Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.
At this time, I would like to turn the conference over to Mr. Matteo Laterza, CEO of Unipol. Please go ahead, sir.
Matteo Laterza, CEO, Unipol Group: Good morning to everyone, and thank you very much for participating to this call. As usual, let me make some remarks on the number that we disclosed this morning. We are here, of course, to comment 2024 results, but we are also at the end of our industrial plan and this is, of course, an opportunity to share with you the last three years' results. In the last industrial plan named the opening new ways, we had to face two very important headwinds. As you know, the first one was an inflation rate that was very, way higher than expected with a significant impact on the average cost of claim in general in the P and C business.
And the second headwind was the huge impact coming from Nat Cat in 2023. Notwithstanding these two headwinds, we were able to over delivery all our economic, KPIs in terms of net profit and dividends, and also our KPIs in terms of solvency. Secondly, except for the combined ratio, where short of less than 1% mainly because of the two headwinds that I mentioned before, we also over deliver all our industrial KPIs. Passing to 2024, which is the subject of this call, 2024 was a very good year for top line growth, where we were growing in all our business line, above all in bank assurance and in health insurance as we have been achieving for a very long time, above all in the last three years. We had also a further improvement in technical profitability, with motor reaching technical equilibrium with 100% of combined ratio, and with a significant improvement coming also from the non motor business.
In life, we continue to achieve net inflows that allowed us to invest the cash flows at the current interest rate yield that we have in financial market. We had CSM coming from new business, again higher than the CSM released. And we achieved a new business margin at 3.7% above the 3.5% that was one of our KPIs of the past industrial plan. Very solid was also the investment income income as usual, even if the pace of the fourth quarter was a little bit lower than the first three quarters that were actually very strong. And passing to solvency, see, of course, there has been in the number of 213%, there has been the impact coming from the deduction of the proposed dividend.
But nevertheless, the numbers continues to be very solid in absolute value. I conclude with the dividend, the total amount of 600 a bit less than 610,000,000 have to be compared above all to the number of the insurance group number, that net number, the insurance group net result that is in the $815,000,000 area. And this number gives to you, as I said in the last meeting, the idea of the cash remittance of the group and consequently the maximum dividend that theoretically we can pay. To conclude, it has been a very good year, I think, but nevertheless, I also think that there is still room for improvement in the next three years and this will be the main topics that we will discuss the next March 28 when we will disclose to the financial community the new industrial plan. Having said that, as usual, I am here with Enrico San Pietro to answer to your question and so I open the floor for the Q and A.
Thank you very much.
Conference Operator, Chorus Call: This is the Chorus Call conference operator. We will now begin the question and answer session. First question is from Elena Perini, Intesa Sanpaolo (OTC:ISNPY). Please go ahead.
Elena Perini, Analyst, Intesa Sanpaolo: Yes. Good afternoon and thank you for taking my questions. I've got four questions. The first one is about the pro form a pretax P and C result. So excluding the solidarity fund and one off costs, if you can provide us with a figure on this.
Regarding the one off impairments on Unipol Rental, were they recorded in the financial results or in other costs just to understand about the classification? And then my third question is, again, about the P and C business and in particular the combined ratio in motor, if you can give us some outlook on how it is going in terms of frequency and cost of claims. Finally, I've got a technical question on the exchange offer launched announced by Dipper on Banca Popular de Lisondrio. Should it occur that you go up even temporarily over the 20% of the hypothetical new entity? Would you have any extraordinary impacts in negative terms on your solvency ratio?
How would it work? Thank you very much.
Matteo Laterza, CEO, Unipol Group: Thank you to you, Helena. And I tried to answer to the first question concerning the pretax of the P and C business. These are all one off items that we achieved in the fourth quarter twenty twenty four in the item other cost. We decided to make a devaluation of the vehicle fleet of Unipor Rental and the total amount, gross of taxes, in the 90,000,000 area. Then there is an update of the component that we allocated to the Solidarity Fund for $23,000,000 more on top of the total the number that we achieved in September 2024.
And And then we have some items that were allocated in the item 'other' and has been reallocated in the P and C that concern general expenses for €33,000,000 in the fourth quarter of '20 '4 million euros And there is the component of cost related to the merger between Unipol Group and Unipol SAI for 10,000,000. Summing up all these items, we can arrive to a total of $150,000,000 more or less. That is the impact in the fourth quarter coming from this item that were in the P and C business line. Concerning the merger, in the proposed exchange offer, Banca Popolais Sandrio and Beeper, of course, it will depends on the final result of the transaction. If there is there will be 100% acceptance of the offer.
Of course, we will remain with our 20% stake. If there will be a lower acceptance, we will have a higher stake in in beeper as a consequence. And consequently, we will have to reduce as soon as possible the stake that we have today that is lower than 20%. Anyway, the impact in solvency of, in both the alternatives is is not is not significant for our numbers. So we are talking about percentage points that can be counted in the fingers in the fingers or one end.
And then I leave the floor to Enrico for the question concerning technicality. Technical average cost of claim and motor.
Enrico San Pietro, Executive, Unipol Group: Thank you. Good morning, Helena. And so, the combined ratio on motor we reported is 100%. The market is still in a period in which need to recover average premium to offset the increase of the average cost of claim due to the new scheme issued by the Milan court on personal injury claims. So what happened for us in 2024 was an increase in the average premium, exceeding 4%, slight decrease in loss frequency, but relevant impact not on the average cost of the claims paid in which we were able to perform a good around 3% increase, but of course, relevant strengthening in our outstanding claims reserve.
And this, of course, determined also a minor impact on prior year reserve release. So we think we are in a good equilibrium technical equilibrium. We think to be able to increase even in 2025 also in 2025 the average premium and to maintain a level of profitability that is in line with our targets.
Conference Operator, Chorus Call: Next (LON:NXT) question is from Gianluca Ferrari (NYSE:RACE), Mediobanca (OTC:MDIBY). Please go ahead.
Gianluca Ferrari, Analyst, Mediobanca: Yes, hi, good afternoon, everyone. Three for me. The first one is, if you can explain why the coupon and dividends went up in 2024 vis a vis 2023. The second is the reserve sorry, the release ratio in the CSM went also up in the fourth quarter. So I was wondering if there is a technical explanation for that.
And the third and final one, if you can remind us the level of PYDs in motor in 2024 vis a vis 2023 in order to calculate a normalized accident year loss ratio and to understand the trajectory of the technical performance in Motor. Thank you.
Matteo Laterza, CEO, Unipol Group: Thank you to you, Gianluca. And concerning dividend, I tried to express the position before opening the Q and A. The decision on the coupon depends on how the business have performed in 2024. The performance was very strong, as I said, above all in the insurance business where we had a very strong support coming from an improvement of the technical profitability and also a strong contribution coming from investment income. On top of that, we had also an increase of the dividends that we got from our main stakes that we have in the two banks, Banca Popular, Beper Banca and Banca Popular, And so having reached a number of insurance group results that was very good but also impacted by some one off items that were the one that I mentioned before.
We were in the condition to pay a dividend that can allow us to be competitive with our main peers at European level. With 85¢ of dividends, we have a dividend yield on the market market close of yesterday above 6% that I think is very competitive. As I said before, it is a number in which we have room for improvement, and the way in which we have in mind to improve our business will be the subject of the presentation that we will have at the March concerning the industrial plan. And taking in consideration all the remarks that I said, we decided to pay $0.85 of
Gianluca Ferrari, Analyst, Mediobanca: Sorry, Matteo. Sorry to interrupt. I was referring more on the investment portfolio. So the fact that coupons and dividends in the investment portfolio went up 20 basis in life and 10 basis in life. Sorry.
Sorry. Thank you.
Matteo Laterza, CEO, Unipol Group: Okay. No, no, I understood. I suppose that we were talking about our dividends.
Gianluca Ferrari, Analyst, Mediobanca: Sorry for not being clear.
Matteo Laterza, CEO, Unipol Group: No, no, no problem. Yeah, yes, the 2024, we, during 2024, we tried to diversify our portfolio taking advantage of the fact that the absolute level of interest rates allow us to diversify out of Italian government bonds versus corporate credits, above all, mainly focused on the higher segment of the ratings just to approach as much as we can the benchmark portfolio according to which the way is calculated. On top of that, we had also a quite significant contribution coming from the real asset in which we invested quite consistently even if, of course, it is not the majority of our investment, but the contribution to the yield in terms of coupon and dividend is very important. On top of that, there is also the contribution coming from dividends that we got in our equity portfolio. I'm not talking about just deeper in bank of what is under but the old investment portfolio that contributed to support and to corroborate the number of the number of investment yield.
Sorry, I misunderstood
Gianluca Ferrari, Analyst, Mediobanca: the No worries. Very clear. Thank you.
Matteo Laterza, CEO, Unipol Group: Concerning the release ratio in CSM, in fourth in the fourth quarter, actually, I have no particular comment to make on that. I consider it a a quite normal evolution of the aggregate, respect of the number related to the creation of CSM that we achieved. Okay. And, I leave, Henrico to answer to the final question.
Enrico San Pietro, Executive, Unipol Group: Yes, Henrico. As I told you, to Elena, the the reserve release in motor in 02/2024 was, really small. So the number is 0.3 percentage points of positive prior year development. So much lower than usual, of course, due to our really conservative approach to that.
Gianluca Ferrari, Analyst, Mediobanca: Thank you very much.
Conference Operator, Chorus Call: Next question is from Michael Hatner, Berenberg. Please go ahead.
Michael Hatner, Analyst, Berenberg: Fantastic. Thank you very much and congratulations on lovely results. I've got lots of little number questions. So on the pricing in motor, I'd be interested, you said that the average premium was expected to rise. And I just wanted to know the background, are you raising prices or is the market raising prices?
Or is this just a mechanical effect from previous rate rises? The second is on the natural catastrophe. So the I note the significant exposure in Q4 to Nat Cat. And I just wondered what could be a kind of normal run rate to use for the portfolio? In Motor, it seems 2.5% is right.
But in Non Motor, I'm not very clear what should I use 12% or 6% or 18% like last year? I don't know or 21%, sorry, like last year. And then I suppose on maybe you can explain how the reinsurance impacts your view of natural catastrophe costs. And then two extra questions. One, again, going back to Motor.
I was speaking to an investor who highlighted the increased competition from the direct writing insurer called Prima. I just wondered if you could comment what you see in the market. And then finally on tax, I'm not clear what tax rate I should use for the insurance unit. It seems to be sometimes low, sometimes high. I'm using 27% average, but I think in 2024, you had a much lower rate.
Thank you.
Matteo Laterza, CEO, Unipol Group: Thank you to you. I will answer to the final question and then I will leave the floor to Errico for all the questions concerning the technical margin in Motor and On Motor and not CAT. The tax rate was quite supportive above all in the fourth quarter because of some, again, positive one off. The first is a positive one off coming from the application of the new patent box that allows us to save almost €35,000,000 but it is not repeatable, of course, in the next years. And we had also a positive impact in the EUR 68,000,000 area of positive item due to anticipated tax paid for IRAP, Paid for the post merger transaction, and of course also the merger between Unipol SAI and Unipol Grupo, and this is also a not repeatable number.
So I'm aware that it is a very volatile number year by year, but it is just the application of the rule that we are allowed to apply in our country.
Michael Hatner, Analyst, Berenberg: Thank
Enrico San Pietro, Executive, Unipol Group: you. Hi, Michael. So the first question was about motor pricing. So the prices are going up. Of course, all the market need to offset the increase in the average premium in the average cost of a claim on personal injuries, as I told.
And what is expected is a further increase that is, for the most part, in my opinion, mechanic. So we reported more than 4% increase in 2024 and the increase in 2025 will be lower but will continue to grow. The second question was about Nat Cat. So as far as results are concerned, in the fourth quarter, we had a flood and the total cost of the flood was around EUR 40,000,000 of cost. But I also take the chance to give another information to you that during 2024, we did relevant de risking activity in our portfolio that was able to reduce by a double digit figure, our average aggregate loss in probabilistic calculation.
So we are less vulnerable than we were in 2023 to nat cat events. This is something that was very useful for us also to renew our insurance treaties. And I come to the third question. So we have this year, of course 2024, sorry was basically free of loss for reinsurers. So it was a good year.
And the renewal were better than expected for us, being able to cover our exposure like we were able to do in 2024 with no additional cost. The last question, if I remember properly, was about the increasing competition in motor from Prima. Prima is an MGA, is a direct company that is not an insurance company. Now he they were able to report relevant growth in the last years. And as you probably know, they are for sale now.
They are searching for a buyer and also probably need to find new carriers to underwrite their risk since the Swiss Re (OTC:SSREY) EPTQ insurance company that was writing their business decided to basically leave this kind of business. That's
Michael Hatner, Analyst, Berenberg: so clear. Thank you so much, Enrica. Thank you.
Conference Operator, Chorus Call: Next question is from Andrea Lizzi, Equita. Please go ahead.
Andrea Lizzi, Analyst, Equita: Hi. Thank you. Just one question remaining for me. Me. Is this in particular related to the dynamic of premiums in Life, which was in some way lower in terms of growth after there was a decrease versus the previous quarter?
And if you can explain the trends behind, if also there was a team of commercial activity, if there was something that is related to promotion or your decision and so on? And what are you expecting going on over the next year as regards to the growth in GBP and also in particular with the focus on the bank insurance business? Thank you. And yes, if you don't think of that the process of B plus 150 in the short run could in some way defocalize the entities the banking entities from the commercial activity on the insurance business? Thank you.
Matteo Laterza, CEO, Unipol Group: Thank you, Andrea. The dynamic on premium in Life have been, on my opinion, very solid in 2024 and also in the fourth quarter. The main reason why you notice a slowdown maybe is due to the fact that the comparison with 2023 is very tough, because in 2023 we had a very strong production, above all coming from pension funds, where we got two very important mandates in 2023 that allowed, above all, Ullipol Asikuraizioni to grow very consistently over the last year. But excluding the effect of this business that is very strongly impacted by the mandate. And if there is an year in which there are not mandates that have to be assigned, of course you have a consequence, a negative impact coming from that.
The performance of our agents has been very strong. And also the performance of the bank assurance business. Above all, the BIPER Bank Assurance distribution network performed very well. Nevertheless, also in this case, in the Bank Assurance there is still room for improvement in both the distribution network. If you look at the productivity per branch in life, there is still a gap that has to be filled, in my opinion, in life.
And this is where we are working very proactively in order to explore the possibility to fill this gap in the next three years.
Andrea Lizzi, Analyst, Equita: Many thanks.
Matteo Laterza, CEO, Unipol Group: Concerning the merger, I think, no. I don't think that will be the focalization of the business coming from the merger. It is the opposite. It is the merger that will incentivize a much more focus on the business, not only in Banc Assurance, but in all the business that the new entity will create. On this, I think that the press release that we disclosed this morning give a very clear position of Unipol Group on how we see this transaction.
Andrea Lizzi, Analyst, Equita: Super. Thank you.
Conference Operator, Chorus Call: Next question is from Alberto Villa, Intermonte. Please go ahead.
Alberto Villa, Analyst, Intermonte: Hi, good afternoon. Just a couple from my side. One, you already answered a question about eventually going above 20% because of the proposed merger offer between Beeper and Bank of Popularity. So I was wondering if there is any chance you may consider to ask regulators to be allowed to go above 20% in the future on your banking stakes? And the second one refers to some price articles about potentially the opportunity to evaluate the disposal of the hotel business.
I was wondering if you can give us any comment on that. And in this case, what would eventually be the perimeter of the management of the hotels or also real estate assets? Thank you.
Matteo Laterza, CEO, Unipol Group: Thank you. To you, Alberto, concerning the first question, the option to go over 20% is not on the table today. So it is not an option for us at the moment, of course. And the second, we make assessment quite frequently on, above all, before an industrial plan on how we will have in the future manage our most important asset. And one of these is the business of the hotel.
Business of the hotel is performing very well, it gave a very important contribution to the P and L of 2024, with the net profit above 20,000,000 and EBITDA in 40,000,000 area. So it is a very strong business and we are very happy to manage this business also in the future. But we have to take in consideration all the opportunity that we can have on the table. The first one is, as I said before, to continue to manage the business and of course you have to take into consideration the setup of a new industrial plan, you have to take into consideration the CapEx that you have to spend to restore the real estate asset that cover the Atelier business. We are talking about an asset value of more than €500,000,000 You can take in consideration also the possibility to do commercial or a strategic partnership and also the possibility to dispose the asset.
It is an option, one of the three. And we are just sounding the market in this extent, and we are in this stage. No commitments there are on in Umipo's side. So we will see how to proceed. We didn't take any kind of decision yet.
It is just the sounding of the market.
Alberto Villa, Analyst, Intermonte: Okay. Thanks.
Conference Operator, Chorus Call: Next question is a follow-up from Michael Huttner, Berenberg. Please go ahead.
Michael Hatner, Analyst, Berenberg: Really brief question. It was on actually two. One is EuroVita and the other one is Health. On EuroVita, I think Q3 is expected to be the final transfer of assets to the various participants. And I just wondered, I think the amounts are small, it's about SEK 1,500,000,000.0 each for the life funds, but I just wondered if there's an impact on solvency.
And then the second question itself continues to grow at amazing rates, Unicellote, I think is it was it 27% or something? And I just wondered, is that kind of like a one off due to pricing? Or is that the normal trend in Italy? Thank you.
Matteo Laterza, CEO, Unipol Group: Yes. Thank you, Michael. I will answer to Herovit and then I will leave the floor to Frederico for the Health business. Yes, we expect to finalize the transaction on EuroVita in September 2025. We are talking about, yeah, €1,500,000,000 of technical reserve to be transferred to Unipol.
This is the carve out that we, that are in Unipol. And we don't expect impact from solvency actually because we already recapitalized quite strongly the company. So it is very well capitalized already because we put more than 50,000,000 of capital increase on Cronos (NASDAQ:CRON), and so I don't see negative implications coming from the solvency on Cronos.
Michael Hatner, Analyst, Berenberg: Thank you.
Andrea Lizzi, Analyst, Equita: I'll
Matteo Laterza, CEO, Unipol Group: leave, Errico, Unisaroute.
Enrico San Pietro, Executive, Unipol Group: Yes, Michael. So our growth in the hedge business is really relevant and at the same time remains profitable since we reported roughly speaking around 90% combined ratio in 2024. And growth comes from two main streams. On the bulk of the traditional business of Unisalute that are larger collective deals, there is mainly a price effect. So we are able to update our prices to what is the current, of course, need for the increasing use of the contracts of the people insured.
So, there is a relevant part of the growth that is price effect, but there is also another relevant part. It is the growth of the retail distribution channels, so bank assurance business that has a very good result in 2024 and also our retail agent network that is growing. And so we reported our relevant growth and we think that also in the future, we can continue to grow in Health business.
Michael Hatner, Analyst, Berenberg: That's very clear. Thank you, Enrique. Thank you. And thank you,
Conference Operator, Chorus Call: Mr. Lasser, there are no more questions registered at this time.
Matteo Laterza, CEO, Unipol Group: Okay. Thank you very much for attending this meeting, and I hope to see all of you you the next March 28. We will give to you the details of logistics later on. Thank you very much. Have a good day.
Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.