Assicurazioni Generali S.p.A. (G) Earnings Call Transcript & Summary

Good afternoon. I'm the conference operator for Chorus Call. We're glad you could be with us for the Generali Group's presentation of first quarter 2026 results. Please note that everyone attending is in listen-only mode. Following the presentation, attendees will have a chance to pose questions. If you require help at any point during this call, you can reach an operator by pressing * and 0 on your phone. I'll now hand the conference to Mr. Fabio Cleva, Head of Investor and Rating Agencies Relations. Sir, the floor is yours.

Hi, everyone, and thanks for being on our Q1 2026 results call. Joining us today are Deputy Group CEO Giulio Terzariol, Group General Manager Marco Sesana, and Group CFO Cristiano Borean. Before we open it up for Q&A, I'll pass things to Giulio and Cristiano for a few opening remarks.

Hello, everyone. Good morning, and thank you for joining us today. Our first quarter 2026 results represent another step forward in delivering our Lifetime Partner 2027 successfully. We're now in the plan's second year, and our emphasis on excellence in core capabilities keeps producing tangible value for customers, employees, and shareholders. We've strengthened how the group centers support the implementation of key initiatives, particularly regarding technology and artificial intelligence. That approach lets us scale best practices more effectively and capture the advantages of our fully integrated group. All in all, we achieved strong growth in both operating and adjusted net results, with contributions from every segment. Allow me to spotlight a few first-quarter achievements that clearly show our strategy is working. Beginning with P&C, gross insurance revenue rose by €575 million, or almost 7% year-on-year. There's a lot of quality behind this top-line growth. Although revenue growth remains mostly driven by price effect in both motor and non-motor, volume growth is making a bigger positive contribution, with written non-motor volumes up 1.8%, and accident, health, and disability growing even faster at 3.4%.

I should also note that consolidated gross turnover at Europ Assistance rose to €1.2 billion in the first quarter, which is year-on-year growth of nearly 15%. Turning to motor, after 2 years of substantial pruning and the profitability recovery we delivered in 2025, we saw favorable movement, with risks in force up roughly 1%. I can tell you that we might have generated greater volume growth in motor by growing the book via more aggressive pricing. But, as we've noted before, our focus is squarely on cycle management. So we made the deliberate strategic choice not to expand contract counts more quickly at a moment when pricing is decelerating and without greater clarity regarding how the Middle East situation will affect claims costs. Against that backdrop, we remain disciplined and keep looking for further growth opportunities solely in carefully chosen markets. A brief point on the net Cat load, which was fairly substantial this quarter. It stemmed largely from the severe storms that struck the Iberian Peninsula, and Portugal in particular, accounting for nearly 70% of our gross net Cat losses. That is broadly in line with the latest insured industry losses on a case reserve basis before IBNR, which come to about €1.3 billion for Portugal alone.

Against that backdrop, our underlying performance came in quite healthy, since the attritional current year loss ratio improved by more than a full percentage point, and that came from both motor and non-motor. As we highlighted in the press release, man-made losses reached roughly €65 million, nearly twice last year's level, and that equated to 0.5 percentage point of the loss ratio. So if you strip out man-made losses, the underlying gain in the attritional current year loss ratio is close to 150 basis points year-on-year. Since our P&C efficiency target is the GEX ratio, that ratio got 60 basis points better year-on-year, reaching 13.7%. Compared with the full expense ratio, this ratio captures the productivity improvement journey in a more targeted way, because it reflects what we are doing to transform our core function, including claims, IT, customer operation, and underwriting. We are strongly focused on pushing forward the extensive deployment of AI agents that automate workflows, augment employee decision-making, improve service quality, and drive operational efficiency at scale. The reported expense ratio of 29.3% is up 40 basis points, which reflects higher acquisition costs and also the business mix. Excluding Europ Assistance, the expense ratio would be basically flat year-on-year at 28.7%.

If you look at acquisition costs on their own, the 21.2% reported for the first quarter would come in at 20.3% once Europ Assistance is excluded, and the year-on-year movement would be roughly 20 basis points rather than the 60 basis point increase we reported. As we said earlier, we're putting actions in place that will let us deliver both a better GEX ratio and an improved expense ratio. Turning now to Life, we posted very strong net inflows of €4.3 billion, supported by contributions from every line of business and helped by a further drop in lapses. Versus the first quarter of last year, we saw higher inflows in traditional savings. We achieved that alongside a strong new business margin, which allowed us to post very healthy growth in new business value. First quarter production is entirely in line with our underwriting discipline. Non-guaranteed business accounts for 75%, the overall guarantee is steady at 0.73%, and capital-light business represents 83%. The overall evolution in new business value is plainly very satisfying. One thing to note: the first quarter gains from positive seasonality, and I'd caution against extrapolating these figures to the coming quarters.

The main takeaway is that our Life segment keeps expanding profitably, and that growth isn't coming at the expense of our underwriting standards. I'm also quite glad to report that protection, health, and accident — a core strategic engine for profitable growth — delivered a 6% year-on-year rise in premiums, along with improved profitability as well. On the Asset and Wealth Management side, you saw the strong figures from Banca Generali a few days ago, and there we're continuing to roll out the joint insurer-banking initiative, which is developing positively in its early stages. Within asset management, as noted in the press release, there's a favorable contribution from non-recurring fees amounting to roughly €15 million. Those reflect the successful positioning of our infrastructure business. Even though transaction fees may arrive less regularly than recurring management fees, they signal solid investment capabilities and demonstrate how well our infrastructure business originates and executes deals. Before handing things over to Cristiano, a few closing words on the broader macro picture. Financial markets have been building in higher short-term inflation indicators, driven by elevated oil prices. We're watching the situation very closely, and we remain confident in the strength of our business model.

When it comes to Life, this business requires little capital, and pairing a high-quality investment portfolio with disciplined ALM keeps things stable and resilient. Beyond that, we've demonstrated repeatedly our ability to adapt across different cycles and to meet what consumers need in every kind of environment, which our strong distribution footprint also makes possible. On the P&C side, we're sharply focused on keeping profitability at its excellent level, and we're monitoring severity and frequency developments very closely. In certain cases, we're already getting ready to take pricing actions. And please bear in mind that non-motor makes up 2/3 of our P&C book, with 60% of that inflation-indexed. On top of that, investment yields are running above the original projection, which gives P&C operating results a boost as well. Finally, a higher-inflation environment is also likely to carry the P&C pricing cycle into a new hardening phase. Naturally, this overall backdrop gives us an even stronger reason to move forward with our key initiative around digitalization and automation. In summary, execution of the Lifetime Partner 27 plan is going very well and producing tangible results. Going forward, we stay fully committed to hitting our plan objectives: maximizing profitable growth in P&C, leading Life through quality production, and expanding Assets and Wealth Management.

We’re taking active steps to manage the cycle so performance stays strong. That’s supported by effective steering at the center paired with disciplined execution locally, and we’re concentrating on technical excellence as well as gains in productivity. Thanks for listening, and I’ll now pass things to Cristiano.

Thanks, Giulio, and good morning to all of you. I appreciate you being with us today. As Giulio noted, the results we posted for the first quarter of 2026 show that momentum remains strong as we carry out our Lifetime Partner 27 plan. Across every segment we are producing solid growth, with quality, resilience, and profitability squarely in focus. This shows how we can steer through a complicated environment while still moving our strategic priorities forward. Before we take your questions, let me walk through a few key highlights. Giulio already covered Life new business production, so I will turn to Life CSM, which posted normalized growth of 1.4%. Financial market volatility reached its peak at the close of the first quarter, and equity markets hit a low. Consequently, the CSM booked economic variances of slightly more than €900 million. The main forces behind that €900 million movement were as follows: widening sovereign and corporate bond spreads contributed roughly €400 million; interest rates rose by approximately €200 million, with Germany and Italy particularly affected; equity markets fell by about €200 million; and lastly, greater volatility, mainly in equity markets, added an impact of around €100 million. Of course, the economic variances for the quarter also reflected the fact that measurement occurs on a single day.

If the disclosed sensitivities were applied, and using the financial markets level as of May 15th, then the CSM would come out roughly €500 million above the €33.2 billion that appears in the press release. Turning to P&C, Giulio has already talked about the better attritional current year loss ratio. I want to stress that this gain came about even as we kept the conservative booking of initial loss picks, something that was a key feature of our 2025 results. On NatCat, Storm Christine went beyond our per-event reinsurance protection, which is set at about €300 million; that means in the second quarter we will book approximately €19 million as reinstatement premium, and it will be recorded in the current year attritional loss ratio. I would like to go into more detail on prior year development. At last year's nine months 2025 call, I stressed that a dynamic interplay between NatCat and prior year development is the sensible way to manage the business over the long term. I said we would calibrate prior year development dynamically, always staying within the boundaries of the best estimate approach. This approach improves earnings predictability and reduces year-on-year P&L volatility across the year. The first quarter saw significant NatCat events, and as a result, you saw a higher contribution from prior year development in our numbers.

In the long run, I have a lot of confidence in how we can handle NatCat together with prior year development. That assurance comes from how very strong our reserving is, thanks to the conservative initial loss picks we keep applying. It is further supported by the new reinsurance structure we agreed at the most recent renewals, when we took advantage of favorable market conditions to make the contractual features of our Cat aggregate program considerably stronger. Still on P&C, I should also point out that growth in the investment result was driven by high-quality factors and also benefited from the volume growth we posted last year. As the press release notes, this quarter takes a hit of roughly €50 million from a one-off tax component. The source is the new French finance law, which extended the so-called surtax through 2026, calculated on the average taxable basis of 2025 and 2026. Because of that, accounting rules oblige us to book the 2026 surtax in the first quarter 2026, taking into account the entire 2025-related surtax component. For the rest of 2026, we anticipate the residual piece of the surtax will hit the group by under €10 million each quarter. Turning to cash and capital.

Since we front-load most of our remittance inflows into the parent company's coffers before the dividend payment. So far in 2026 we've already taken in roughly €4.5 billion of remittance, and consequently, cash at the holding company, following the €2.5 billion dividend payment we completed yesterday, now sits above €5 billion, with a bit more than €3 billion of that available. Last, a note on solvency. As I said this morning at the press conference, the estimated Solvency II ratio was up about 2 percentage points as of May 15 versus the end of March. Let me walk you through the moving parts for the first quarter. Healthy normalized capital generation helped us, contributing 4 percentage points. That's essentially flat year-on-year, since the greater contribution from Life and financials is offset by the NatCats impact. The non-economic variances take in both the prior year development effect and the increase in the Solvency Capital Requirement stemming from business growth and SAA optimizations. The close of the grandfathering period cut own funds by €1 billion, which had a 4 percentage points effect on the Solvency II ratio. Capital movements during the period took off 2 points, covering both the accrued pro rata dividend and the subordinated debt operations.

Lastly, market swings affected solvency by roughly 5 percentage points. That, naturally, mirrored how equity markets moved, along with wider sovereign and corporate spreads and increased volatility. Just like the CSM, the Solvency II ratio likewise reflects a single measurement date. March 31st sat near the trough of financial markets amid the latest stretch of turbulence. Going forward, in the second quarter, three items should be added on top of normalized capital generation and the dividend provision for that period. We anticipate regulatory approval for the €500 million share buyback, which carries a 2 percentage points impact. Second, as we noted at full year 2025, you should include 2 points arising from the higher SCR after the SAA optimization. Lastly, keep in mind that Belgium's sovereign downgrade from AA to A took place in April and will affect our Solvency II ratio by 0.5 percentage points. To sum up, this quarter's results underscore the strength of our diversified business model and our capacity to deliver profitable growth. I take particular satisfaction in the quality I observe in the numbers once I look past the quarterly noise from NatCats and financial market movements.

That quality gives me a great deal of confidence that we will keep delivering on our plan. Thanks for listening, and at this point we're glad to take any questions you have.

Thanks. This is the Chorus Call conference operator. The question-and-answer session starts now. If you'd like to ask a question, you can press * and 1 on your touchtone telephone. To take yourself out of the question queue, please press * and 2. We kindly ask that you use handsets when asking questions. Anyone who has a question may press * and 1 at this time. Our first question comes from Andrew Baker with Goldman Sachs. Please go ahead.

Thank you for taking my questions. First, on the Life insurance service result: could you tell us how much of the 1Q result came from experience variances and other? Then, if possible, can you break that out into the portion that you wouldn't necessarily expect to carry into future periods and any items you'd anticipate recurring, since I believe the PAA business flows through this line? Second, thanks again for the extra detail on the higher acquisition costs in P&C. Should we assume that the impact of those higher acquisition costs is broadly offset in the current year attritional loss ratio by these same mix effects? Any comments on that would be really helpful. Thank you.

Thanks a lot, Andrew. Cristiano gets the first question, and the second one goes to Giulio.

Hi, Andrew. If we break the operating insurance service result down to the CSM release of €828 million, which rose by €55 million versus the first quarter '25, then you should have a few additional elements driving movement. Our loss components came in somewhat higher, at €31 million with a negative effect versus €11 million last year — €20 million more, which cut the result by €20 million — and experience variance plus other technical results contributed a positive €32 million, taking us up to the €97 million figure in the operating insurance service result. Finally, other operating income and expenses moved in a positive direction to -€37 million, an improvement of €17 million against the prior year. What I'd tell you is that there are no real one-offs in the first quarter '26 number, aside from somewhat greater sensitivity on certain loss components from interest rates rising in our country Italy, but the other operating income and expenses show a very healthy contribution from what we call the investment contracts under IFRS 17 accounting. I'd say the quality is pretty much good, as I was hinting in my initial speech.

Andrew, as for your question about whether an offset exists in the loss ratio, the answer depends. If you include Europ Assistance in the figures, then yes, definitely. In that scenario, you see the expense ratio rise, and there is an offset in the loss ratio. Once we take Europ Assistance out, the expense ratio is actually fairly flat. In that case, I'd say there isn't much of an offset. It depends on how you look at the numbers.

Thanks a lot. Appreciate it.

Appreciate that, Andrew. Let's take the next question.

Our following question is from Michael Huttner at Berenberg. You have the floor.

Great. Thanks a lot, and congratulations. I have three questions. First, on the 93% — I believe your undiscounted combined ratio target is 94.5%. It seems like you're already there and protecting margins. I'd say yes, but you'll probably say no — who knows? On cash, thanks so much for the explanation, Cristiano. I just wanted to ask about the €4.5 billion you've collected so far. I've forgotten last year's figure. I'd love your help on that — that'd be amazing. Then, oh, I'm being greedy. The Cat aggregate cover — I'm really interested in that. I think you mentioned it earlier, but I can't remember the details or how much more protection it provides. I'll stop there. Thanks.

Thanks a lot, Michael. Giulio gets the first question, Cristiano the second, and Marco the third.

On Michael's question about whether we're better than 94.5% — yes, we are better than 94.5%. I'd say we were already better than that figure at year-end 2025. What we're seeing at the moment is still very strong performance. From that standpoint, we've always said we want to run as fast as we possibly can, while also recognizing that conditions will get more challenging going forward. From that standpoint, we know that as we go forward, inflation and risk premium will be more in line with the average premium. From that standpoint, we're very well positioned, and going forward, we'll try to secure further improvement from actions we can take, as always, on the portfolio, and also from the productivity gains we can achieve. To your question of whether we're better than 94.5% — yes, we're definitely well below 94.5%, and I'd also tell you that we're below the 94% level.

That’s brilliant.

Hi, Michael. Glad to walk you through a bit more on the aggregate cover. As you'll recall, our retention on the aggregate sits at €1.2 billion, which works out to roughly 3.2 points of combined ratio, and our capacity stands at €550 million. Right now, what we've observed is that, obviously, we're talking about the first quarter, when there was one large event, but I'd say we still have plenty left in terms of coverage within the aggregate. At this point, we've only been through the first quarter. Clearly, that first quarter runs higher — significantly higher — than the first quarter we saw in prior years. The first two months of the second quarter are tracking in line with expectations, and I'd say that as things stand we remain comfortable with our aggregate cover.

That’s excellent. I appreciate it.

Michael, on the cash side, if I look at where we stand right now, I'd say that versus a year ago, we've already sent roughly €200 million more than we had at this same point last year. I'd put total remittance at somewhere between 90% and 95%, so if you run the numbers, you should be expecting a somewhat larger remittance contribution in the second half of 2026 compared with what we saw in 2025. I think that's good news for you.

Excellent. Thanks so much.

Thanks, Michael. Let's take the next question.

Gabriele Venturi from Banca Akros has the next question. Your line is open.

Morning, and thanks for taking my questions. Could you give us more detail on any consolidation-scope changes that might have impacted volumes and Life gross written premiums year on year, if there were any? Because dividing Life gross written premiums for the first quarter of 2026 by the 2025 figure gives me a growth rate of 6.2%, versus the 7.5% reported. Second, in light of the strong first quarter results, do you see room for an acceleration over the coming quarters that might lead to an upgrade of the full year guidance? Thank you.

Thanks, Gabriele. Cristiano, you’ll take the first question, and Giulio, you’ll handle the second one.

On the whole, the sole change when it comes to perimeter consolidation concerns the IFRS 5 allocation tied to our Irish activity. But since it's a branch, you shouldn't see any effect on GWP, which is what you seem to be suggesting. Speaking personally, I don't think I quite get the point. Where GWP is concerned, this is a genuine like-for-like. Look, perhaps I could kindly ask you to follow up with the IR team so you can maybe better grasp what your question is, because I'd simply like to confirm there's no perimeter change when you look at GWP. There's no material effect on consolidation.

On your question about what we expect for top-line growth in the back half of the year, here's what I'd say. When you look at volume — setting price increases to one side — as I also mentioned in my prepared remarks, motor volume came in at +1%. I don't see that figure strengthening; given that we are inclined to manage technical profitability carefully, it will remain at this level. If anything, should we need to raise prices, we would even accept sacrificing a little growth in order to safeguard profitability. Turning to non-motor, we are seeing very strong development both in non-motor excluding accident health and in accident health. If you ask me, my expectation is that this momentum will carry on. Perhaps we can speed up somewhat, but fundamentally I don't anticipate a markedly different result. Back on motor, we'll see what rate increases may be required, possibly more toward the end of the year, and that could shift the growth trajectory on the motor side somewhat. Fundamentally, to answer your question, I would expect to see broadly the same as we move into the second part of the year.

Gabriele, perhaps I could just jump in on your first question — just to make sure, in case you're asking — when we talk about like-for-like, our definition also includes a constant FX rate against the first quarter of 2025. I'm not sure whether that's useful for your exercise, but that's the standard approach. Very clear. Thank you.

Thanks, Gabriele. Let’s take the next question.

Our following question is from Fahad Changazi at Kepler Cheuvreux. You have the floor. Hello,

Much appreciated for taking my questions. I appreciate the detail you gave on P&C and motor versus non-motor. I was wondering, regarding motor and the outlook, what the price effect was just for motor in Q1, and how you see that developing? On the Life business, might you be able to break out the impact on margin stemming from the higher interest rates? I'm sure it's in your comprehensive finance deep dive Investor Day, but could you remind us once more when you strike updated assumptions? Is that H1, or is it at full year? Thank you.

Thanks, Fahad. Would you mind going over that first question again? And let me just confirm — the second one is about when we update interest rates in the new business margin of Life, correct?

Right, when will you refresh those market assumptions? Are they updated in H1 or at full year? The first question was simply trying to get at the price effect in motor in Q1 2026.

Yes, that's great. Marco, you'll take the first one about how pricing affects motor, and Cristiano, the other question is yours.

Hello. As Giulio mentioned, motor still showed a favorable trend where price is concerned. Broadly speaking, when we examine the growth we're getting in motor, it's mostly driven by price, though this time roughly 1/3 of that growth would also come from volume, about that share. We're observing this, and as the year progresses, we see that these average price increases are largely consistent with what's happening in risk premium development. That's where we stand. No tailwind is visible to us. Nor do we see any headwind. We're more or less aligned overall; from one country to another there are variations, yet on the whole, we find the average premium moving in step with the risk premium. As Giulio mentioned, going forward, we'll fine-tune our stance portfolio by portfolio, ensuring we preserve the profitability level we want to hold in each individual market. We'll watch for signs of inflation should they emerge. We'll examine the varying impact of frequency, every element of the risk premium, and we'll determine portfolio by portfolio during the second half of the year which stance we need to adopt, ensuring — and I want to stress this — that we run each portfolio for technical margin and not for any single component of it, not for growth and not for premium.

Fahad, on the methodology question, the beginning-of-period assumptions are what we use when calculating our new business value. What you've seen reported here for the first quarter '26 is the actual year-end 2025 figure. Just so you're aware, the benefit this first quarter reflected from improved market conditions came to 26 basis points in this quarter. If we took the end-of-period of March 31st and recalculated the new business margin for 20 first quarter '26 backward, let's say, there would be an additional 15 basis points. I hope this helps. Each quarter, we use the beginning of period.

Thanks a lot — that’s great.

Thanks, Fahad. Let's take the next question.

Our following question is from James Shuck at Citi. Go right ahead.

Good afternoon, and good morning. Both of my questions relate to AI and technology areas, more or less. For the first one, I was hoping to gain a little more insight into agent productivity. I understand the acquisition costs are quite high, whether Europ Assistance is included or excluded. Could you share any productivity metrics among those agents, and also what the pipeline looks like for rolling out AI-related CRM tools, and perhaps any expectations on that front? On my second question, forgive me if this was already disclosed, but I understand you have digital investments of 0.5 to 0.7 billion planned over the plan. Could you remind me what the group's total technology spend is? I'm not certain whether the 0.5, 0.7 would be included in it. If you could split that between keeping the lights on and other items, that would be very helpful. Thank you very much.

Thanks a lot, James. Marco, both of those are for you.

Sure. Before I get into one specific part of the topic, I'd like to remind everyone of the effort we're making on AI. It's broad and deep across any area of the group. We're working a lot on scaling our use cases. What we presented in our strategic plan, the 16 use cases, that's a big effort, because we want to make sure we get scale. One big topic for us is getting scale in everything we do. This is an effort we constantly make. At the moment, I can say we're at around 55%, 60% implementation of those use cases, and we plan to go to more than 90%. Some of the use cases are technically related to productivity in the agency. We want to make sure we decrease the time spent by agents or by people working for the agent, inside the agency, on back-office activity, on reconciliation, on discussing with us the different topic of a specific claim or something similar. What we're doing, we're also improving the productivity of the agency. Now some of this is going to be a direct impact for the agency, some of these use cases are going to be inside our company.

By the end of the year, when we plan to do a full deep dive on AI across the entire group, we'll make sure to go into more depth on this topic as well. One thing that's really promising, by the way, is all the development we're doing on claims, because that's actually helping the agency manage claims much, much better, and as a result, talk to the client much better. As for the overall total technology budget for the plan, I think this is one big topic we're tackling. We see a lot of potential for reducing the development activity, particularly the coding that we do within the group. This is one of the big items in our cost base, and we're targeting an improvement, a significant improvement, on this spending. Even here, we can probably give you more detail by the end of the year when we do the deep dive.

Thanks.