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Assicurazioni Generali SpA
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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Generali Group Full Year 2022 Results Presentation. As a reminder, all participants are in a listen-only mode. After the presentation, there’ll be an opportunity to ask questions [Operator Instructions].
At this time, I would like to turn the conference over to Mr. Fabio Cleva, Head of Investor and Rating Agency Relations. Please go ahead, sir.
Thank you, and good afternoon, everybody. Welcome to Assicurazioni Generali full year 2022 results Q&A call. On the call today, there is our Group CEO, Philippe Donnet; our Group General Manager, Marco Sesana, and our Group CFO, Cristiano Borean. Before opening the Q&A session, let me hand it over to Philippe for some opening remarks. Philippe, the floor is yours.
Thank you, Fabio, and thanks to all of you for joining this call. Today, we published our full-year financial results for 2022. They confirm our ability to achieve solid growth and execute our strategic plan in a year that was once again marked by extraordinary challenges, primarily the Russian invasion of Ukraine. The effects of the conflict have been widespread from heightened geopolitical tensions to food and energy supply pressures and wider inflationary trends.
In this environment, we maintain total focus on our successful transformation journey, which continues through the disciplined and effective execution of our Lifetime Partner 24, Driving Growth Strategy. I would like to highlight five key messages.
First, the group achieved its best ever operating result of €6.5 billion, plus 11.2% versus full year 2021 with continued growth in terms of gross written premiums, which amounted to €81.5 billion, and net result, which stood at €2.9 billion. These results reflect the transformation of our business model, making the group more resilient with a focus on profitable and sustainable growth.
Since 2015, our top line has grown by 10%. Our operating result today is 35% higher than our net result without considering Russian impairments is 55% higher -- sorry, 50% higher.
Second, these results allow us to propose to our shareholders an increased dividend of €1.16 per share, 8.4% higher compared to last year. The growth in the dividend per share was made possible by the disciplined execution of our strategy and reflects our confident outlook underpinned by our strong cash and capital position.
The group solvency ratio stands at an extremely strong 221% at the end of 2022. Thanks to a range of strategic actions and initiatives, the sensitivity of our solvency ratio to financial markets has substantially reduced during 2022 making us more resilient and better insulated. In particular, I would like to highlight that our sensitivity to 100 basis points movement in the BTP spread has more than halved from 13 percentage points at year-end 2021 to 5 percentage points at year-end 2022.
Third, we are well positioned to deliver the financial targets of our strategic plan. Two out of our three key financial targets are cash based. We are continuing to improve our cash generation as reflected in the 11% growth in the net holding cash flow to €2.9 billion. We have also fully maintained our disciplined consistent and opportunistic approach to capital redeployment following a straight set of criteria.
Financial discipline in capital deployment is a key component of our strategy, and we will only pursue opportunities that create value for all our stakeholders. Going forward, any dilutive impact from long-term incentive plans will be fully offset through share buybacks.
Talking about targets. We also are making strong progress on our commitment to being a lifetime partner to our 69 million customers worldwide, and we are on track to meet our objectives in terms of customer loyalty. Generali is the largest insurance in the European retail and SME segment. And in 2022, we worked relentlessly on client service, product simplification and customer satisfaction.
I'm very pleased by the results, both in terms of relationship net promoter score and multi-holding customer growth. The proximity to our customers enabled by our strong distribution capabilities is a key pillar of our strategy and a distinctive feature of Generali.
Fourth, these results also reflect an effective inflation fighting program that we put in place to adapt to the new environment. A year ago, I discussed with you the need to raise tariffs on this front, I can tell you that there is a good momentum with prices gradually increasing during the year, and this growth is continuing in 2023. We have been able to implement these measures while maintaining high client retention ratios showing the power of our brand and our effective distribution strategy.
And beyond tariff, we also implemented cost savings and productivity improvement measures to further shield our business from rising inflation. This inflation fighting program demonstrates the growth ability to react quickly and decisively to a changing environment led by a united management team and executed with passion and commitment by all our colleagues and unique agent networks.
Fifth and final sustainability, the originator of our plan, has continued and continues to drive all of our actions as a responsible insurer, investor, employer and corporate citizen. Following our efforts and our continued commitment to sustainability through tangible initiatives, I was very pleased when MSCI recently raised our ESG rating to the highest level at AAA.
In conclusion, today's results confirm the success of our Lifetime partner 24, Driving Growth Strategy. We will continue to update you on the progress of the plan in the upcoming months, and we are now happy to take all your questions. Thank you very much.
[Operator Instructions] The first question comes from David Barma of Bank of America.
Hello. Thank you for taking my question. The first one is on the P&C top line, please. Your sales increased by about 10% in 2022, and you flagged a price effect of around 4%, I believe. Can you talk a little bit about the volume drivers for last year and how you see this mix of volume and price evolve in 2023, please?
My second question is on Life earnings. The contribution from the Life businesses grew significantly in 2022. Can you help us understand the recurring parts of the strong results there, please? And then lastly, on the holding, could you please update us on the total holding cash position and also on the cash flexibility levels at year-end? Thank you.
Thank you very much, David. Marco, I would say the first question on the top line growth is for you. While Cristiano the question on Life earnings recurring versus nonrecurring part and the holdco cash position are both for you.
Yes. Hi, good morning. Talking about P&C top line increase, I think you could see an 11% increase. I think it's a very strong increase in the top line, in particular on motor. I want to remind you that this non-motor growth is the key of our target in the strategic plan. So we actually highlighted at the beginning of the plan that this would have been our main focus, and this is coming. So we made a specific effort to increase the non-motor P&C top line.
Discussing more broadly about the driver of volume increase. I think most of the volume increase that we see is driven by a change in average annual premium. So this is the main driver.
Just to highlight what we've shown is overall 3.3% retail and SME, 6% in Corporate and Commercial. So overall, I would say this is really something that we are focusing on. And I would stop here. So these are -- this is really the main driver and what we see in the market. Regarding -- so this is an increase that we see going on for the next few months in the increase in average premium, both in non-motor and motor.
Yes, David, regarding, it's Cristiano. Life earnings, recurring parts versus nonrecurring. First of all, let me recall you that we are commenting the existing environment of IFRS 4, where the rule going forward will change and then I will explain why I'm saying this. Within the €3.5 billion of Life operating result, you should account for something in between €200 million to €250 million of nonrecurring elements.
Having said that, I would like to recall you what we said at the Investor Day of December regarding IFRS 17, so telling you that even though we are not disclosing today and we will discuss the first quarter the comparative. We told you that we were stable from above.
So you should embed part of this also one-off when looking at the new way of seeing the operating result going forward in Life.
Third question regarding holdco cash position. As of year-end, the holdco cash was €2.8 billion. It is composed by three layers. First layer, which is something in the order of €1 billion, which is the cash available for operations and as well €1 billion of a layer of extra prudency of cash buffer due to the uncertain volatility we are facing in the market. So we are putting between the €500 million to €1 billion range of liquidity buffer, we put ourselves to the top end of that like always when there is this kind of volatility.
And the last part, it is purely operating cash. By the way, if I look at the end of February, which is before the dividend season, which we are starting getting from our subsidiaries in March. We were already at €3.2 billion, thanks mainly to the operating cash, which is not the one you should consider available for operations, but the cash from the treasury operations there.
Please be aware that within the €2.8 billion of cash compared to what you will see in the balance sheet, there are €300 million of short-term investment, which when they are more than 15 days, they are not accounted as cash in the balance sheet.
Next question please.
The next question is from Peter Eliot of Kepler Cheuvreux.
Thank you very much. And congratulations on the very good results. Three questions for me, please. The first one on the new business. In the slide commentary, you say that the new business margin has benefited from the higher interest rates, but the new business value has not. I was wondering if you could just clarify that for me, reconcile those statements?
Second thing, on private equity, we were told to expect a catch-up in the private equity dividend this year versus the result. But in fact, it seems to have fallen further behind. So I'm just wondering if that means we should expect an even bigger catch-up in '23 or what we should expect going forward. I appreciate the accounting is changing, but I think it's sort of relevant even under IFRS 17 for everything by the VFA model business.
And then the third question on the -- you -- I was interested that you say the VA reference portfolio changes are positive for you, which seems to be in contrast to others and I was just wondering why it's positive given that most of the weightings seem to have been reduced? Thanks so much.
Thank you very much, Peter. I'd say that the three questions are for Cristiano.
Hello, Peter. So new business margin benefit from interest rates, saying that the value has been positively affected by the higher interest rate environment, it is fair. On the present value new business premium on the contrary, we have been negatively affected by the higher interest rate because if you compare the PVNBP with the other old metric sometimes or other one used in the market, which is the annual premium equivalent, AP, the 12% drop we are observing in PVNBP is just a 7.9% drop in the annual premium equivalent, which is mainly driven when you have some premium like pension premium longer one.
On the new business value and margin, there was a small effect of positive interest rate, specifically in the saving and in some protection product.
Second question relating to private equity. So private equity, first of all, we had a slowdown in the dividend and especially in the result in the fourth quarter as expected and anticipated in the nine-month call because of the delay of the managing partner of the private equity funds usually waiting for realizing the full value in this uncertain market.
How to go and see going forward. First of all, I hope you will all be happy that we will treat private equity, not anymore as a company even though we have a company doing it. But as an asset class and starting from the 2023 representation, private equity will be allocated as an asset class investment in the Life and when the Life business, which is for the traditional business with profit is a variablity approach, VFA, that will be on fully total return approach against the portfolio.
On the other side, by rule, IFRS 9 will ask private equity to be considered fair after value for profit and loss. Notwithstanding this, for the component, which is, for example, in P&C, as a dividend received, we will continue to account it as an operating result, while the fair value movement will be part of the non-operating component and will be netted out from what we call the adjusted net result going forward.
Why we had a positive effect from VA reference portfolio compared to our peers. Well, this is mainly related -- we had -- I commented this morning to the press, we had a net-net 3 percentage point positive effect, which are the combination of 2 percentage point negative impact from the updated VA reference portfolio, but then there is a positive effect for us in Switzerland, stemming from the use of the reference curve and the last liquid point. So for the structure of our business compared to other piece, eventually, we have this positive effect.
Next question, please.
The next question is from Farooq Hanif of JPMorgan.
Thank you so much. I didn't think I would ever ask this question, but would you consider increasing your debt now given your great Solvency leverage, given your large value in force that you will have under IFRS, is this something that you might use strategically to deliver your kind of capital deployment plans? is question one.
Question two, in your pricing data. And thank you very much for that, by the way. You talked about average premium growth. And clearly, there'll be an earned effect in 2022. Can you just compare how this number compares with actual sort of pricing on renewals and on new business? And particularly, I think, around motor, where I think the number looks low? If you could comment on that.
And then I guess, finally, the sharp outflows in Savings business, I would have thought that in Italy, the high yield that you could potentially give your customers would be attractive given that your capital position is quite strong. I just wondered what you think of that, whether you're still kind of focused on capital-light and whether there is some sense now, particularly with new accounting to look at traditional business again, so if you could comment on how you think those Savings net flows will continue, that will be helpful? Thank you.
Thank you very much, Farooq. Philippe, the first question is for you. And then, Cristiano, if you want to, of course, integrate, while question number 2 and 3, Marco are for you.
Thank you, Farooq. The answer to the first one is very simple and very clear. It's no. We do not consider increasing our debt. We are happy with the current level of the current leverage, basically.
Just a word on the third question, we are not considering changing our strategy on the Life Insurance business. We remain very focused on capital-light products and protection products.
Farooq, if I can give you an integration of the very clear and simple answer by Philippe. It is evident that we were already looking in many reporting times on our solvency-related leverage. So this is not changing. IFRS 17 is just bringing it closer. So we have the same anymore to which we took our decision.
And it is really important also to highlight the importance of having reducing the leverage to reduce the non-operating charge in an uncertain environment, which will allow us to have better predictability and lower uncertainty in the final cost we have to pay, especially in a volatile environment like we are now.
So, hi also on my side. Topic, price increase in P&C. So just for clarification, what we have here is really our change in premium due to the price increase. So the average annual premium change, which is not a rate increase. So what I want to say that is the real premium that we see flowing, thanks to the price increase that we had in 2022.
So a couple of comments on this. As you can see, we believe the growth in non-motor has been particularly strong. So we see this as a real positive effect developing across 2022 from the beginning of the year until now. And I think it will continue to flow in the next months as long as we will see inflation and change in the environment, we will continue to push for this.
In non-motor, I think you see -- we reported a 0.9%. Again, here, I think you -- we are seeing more movement in the last part of the year. So we believe in the next months, more premium increase will come. Again, keep in mind that this is not the rate that we have injected on renewal rate or new business, but it's the real actual premium change that we see. So again, on motor, we believe that as we have -- I would see -- we have seen a more dynamic environment in the second part of the year on motor, and so we believe that this will continue over the next month.
I would just want to emphasize that these average annual premium increase is a metric that we believe is a fair measure. It's a good measure to show you what is the effect of rate change inside our portfolio.
I would go to the third question. So as Philippe said, in Italy, in particular. But overall, we will keep our underwriting posture unchanged because we think that it's good to have a healthy portfolio and keep on underwriting and healthy portfolio, especially on capital light.
Let me stress that our value proposition is to enlarge the type of product that we sell. So we want to put into our product a different type of line of business, so traditional saving unit linked and protection. And we believe these large value proposition will make sure that our customers will benefit from the full power of Generali in terms of protection of risk protection and investment.
Next question, please.
Next question is from Michael Huttner of Berenberg.
Thank you. And congratulations, not just on the results, but the disclosure, which is really lovely. I have three questions. The first one you mentioned the one-offs in the Life. Can you talk a little bit more about this and the dynamic of reserving, which I think you alluded to in one of the slides? I was looking for a comment on Swiss reserves, but any granularity here and how this could look going forward would be really helpful.
The second one is on also in Life, you mentioned in the expenses, which we kind of consume part of the improvement that effectively you're investing in that's my words, in growth in Asia. And here, I was just interested in what sort of payback do you see on that investment?
And the third question is more on strategy. So more generally, deals, what's the outlook at the moment? And more specifically, maybe -- there was some mention in the press a while back that you might be looking to sell off some or reinsure part of the Cattolica Life book? Any views on that? Thank you.
Thank you very much, Michael. The first two questions are for Cristiano and the third one are for Philippe and Marco.
Hello, Michael. So let's discuss a little bit of the one-off in Life. So there are, I think, three areas of point of release. One is related to a natural effect of alignment in Italy on the interest rate risk reserve, which has been brought homogeneously to a level, which is coherent with the actual interest rate and the diversification of the portfolio and this is part of the one-off. Another one-off effect you should consider is the technical benefit had in France related to a release of mortality table. This was already commented in nine months. I just recall that basically, we had the opportunity, thanks to a La [ph] to offer to our clients of pension products, the opportunity to decide whether to have lump sum versus the annuity.
And the client we decided to opt for the lump sum clearly made a change in our mortality reserving because we were not having any more the longevity risk related to this kind of client, which is a one-off release stemming from this change in regulation.
Regarding Switzerland, we had, thanks to the improved reserving already done in the previous year and improved market conditions, we had a lower need of reserving, and we went a number which is below €100 million, which is clearly definitely closer to the correct level of normal rate.
On that, I would like to recall you that the reserving in the world of IFRS 17 will not exist anymore from the point of view, but you have a full economic valuation of your assets and liabilities, which has to be covered every moment. At the moment, they are not covered you're entering the so-called loss component. So clearly, by nature, the reserving is done accordingly.
Other one-off effect were related in Germany to the fact that we have an asymmetry between the realized gains to put and allocate in the ZZR reserve, which were done mainly in the first part of the year, and we are happy because we did it in a moment where rates were much lower than end of the year. But due to the swift change throughout the year, the need for the ZZR reserving was completely different. So we had this let's say, excess of realization compared to the need of the reserve. I hope this is giving the full view on the first €200 million, €250 million effect of the one-off of Life.
On the other side, the Asia, for sure, we are reducing the payback of our portfolio overall at group level. It is, I should say, more than three-year, almost three years lower than the year-end '16, so compared to seven years -- six years ago, Asia business is a little bit longer in nature, so as a slightly higher than average group payback. In any case, don't forget that they are very healthy and loaded products because this is the characteristic of those markets.
So on the third one, we are, as usual, working on looking for some good opportunities for M&A as long as they create value for all stakeholders and as long as they are fully consistent with our strategic framework and our financial discipline.
On the in-force management on the back books, we are still very much focused on this. But in-force management is not only portfolio disposals, it's also about working on the liabilities. It's also about using reinsurance as well. Obviously, since we announced our -- during our strategic plan presentation, our targets in terms of in-force management, the market condition are completely different.
So in-force management with zero interest rates and in-force management with higher, much higher interest is something different. We are opportunistically working on in-force management. And talking about Cattolica, this is a good example because we decided to exercise our put on the Italy [ph] joint venture, which is already an in-force management decision consistent with our strategy.
Yes, maybe just complement on what Philippe was saying, I would love to say that, as Philippe was saying, we -- there are many ways to do in-force management, in particular, working on liabilities. A couple of points in Italy, we have been working on renewing contracts and exiting from some contract from -- for a total of almost €7 billion. So this is really something that in the last months, we have really been doing. Same thing in France for around €500 million. So I think this is really also a way of making sure that we do liability management.
On the other side, on Cattolica, I think it's always important to keep updating our process on reviewing the back book that we have. So also Cattolica is part now of this process and when we will see that portfolios are not in line with the profitability and overall measure that we have on looking at portfolios, we will put them underrated scrutiny.
Fantastic. That’s helpful. Thank you.
Next question please.
The next question is from Andrew Ritchie of Autonomous.
A couple of questions. Just first of all, the very high level in motor. Are you suggesting the combined ratio of that class across the group has now bottomed or other peaked, given the push-through of rate? Obviously, we saw that combined, I think it was 97 in the first half, 98 for the full year. Will it deteriorate further before improving because it's just timing effects? Or should it start improving from here? That's on motor.
Second question, just a very quick clarification. Do I assume for non-motor, you've shown us the rating -- the price effect, but indexation would be on top of that? So that's just pure price but as I understand, there's a high degree of indexation in non-motor because of the property.
The other questions were just on private equity, has there been any sort of further review of exposures at year-end given the uncertainty? And related to that, when I look at the report on accounts at the very back, I noticed a significant increase in Level 3 assets. I think they've doubled. And there's a reference made to the macroeconomic context, which has changed the view of liquidity of certain of those assets. Could you just clarify what's going on there? Thanks.
Thank you very much, Andrew. I would say, Cristiano, the first question is for you. The second question is for Marco, and then the third question is again for you.
Hello, Andrew. So the combined ratio of motor outlook. First of all, we are completely focused to increase and align to the level of desire profitability, as I think both Philippe and Marco showed you in the action done so far and the action that will continue. I will just to put things into context. Don't forget that the motor business is overall operating result accounting for something which is less than 8% of the total operating results reported at group level.
So clearly, we are talking about something which is core as an element for the client, but all the value is growing around, especially the motor. The outlook for the motor, I think we need to wait the full 12 months of 2023. Don't forget that I'm talking about not only IFRS 17 with discounting, I'm really looking at the undiscounted effect on combined ratio, which is more proper on a technical sound way to watch it and not to profit from the interest environment, which shows a better combined ratio. We have to wait the 12 months to see the benefit.
We are seeing healthy growth in the renewal and new business premium, especially in countries which have a lot of the bulk in the first two months of the year like it was for Germany. So the outlook and the actions done so far are bringing into the direction. But we need to wait the full 12 months of 2023 in order to get to the full benefit also for the product temporary effect.
On the second question, I hand over to Marco, then I come back.
So, clarification on my side. So, the indexation is included in the effect that we shown consider that, as a reminder, 60% of the non-motor book is indexed and around 12% of the motor book is indexed overall, so our level of indexation is at 40% of the portfolio. So that increase in annual average premium that we have shown would include the effect of indexation that clearly has a time lag because you need to have a reported inflation to then link the renewal of the premium. So there, you clearly -- you have a time lag on this effect.
So, on the private equity and in generali, the level fill, I start from the Level three part, what is happening is not that we are changing the fair value of assets. We are changing the so-called fair value hierarchy. What we did is due to the changed the market macroeconomic condition in accordance also with our auditors. We acknowledge to have a treatment of the private debt as a level three asset, like we are already doing with our private equity business.
So, there is nothing affecting valuation. It's just higher [indiscernible] valuation of what we do think because there are assets which do not have daily NAV [ph], but a weekly NAV, what we put into the Level three category. On the other side, regarding the private equity, we had recently performed a full review of the valuation using both public market benchmarks for a relevant portion of the portfolio basically, what is coming out coherently what we have done already on a recurring basis is that the asset manager, we are selecting and the general partner, adopted a conservative valuation approach.
Basically, in the back testing we are doing on our portfolio, there is always an exit value, which has been historically higher than the valuation in the funds on the last 12 and 24 months before the exit. So, this is what we have done so far. I would like to highlight that part of the increase of the value of the private equity you are serving is all -- is also related to a foreign exchange effect related to the fact that the vast majority of the private equity business is done in a U.S. dollar equivalent. Hence, when it is reported in our account due to the increase of the dollar versus the euro, there is also a fair value change positive coming from this effect. I hope this clarifies the point.
Next question please.
The next question is from James Shuck of Citi.
Thank you, for taking my question. It sounds like you might give the summer anyway just based on your answer to Andrew a second ago, but I was going to ask for the combined ratio in Motor and non-Motor full year. Apologies if I missed that in the presentation. And then linked to the combined ratio and looking for attritional loss ratio development, kind of underlying ex-NatCat, ex-Argentina. At nine months, that deteriorated 10 basis points at full year, that seems to have gone to 80 basis points. So just keen to understand what has happened in the fourth quarter.
Next question was around kind of lapse risk in the potential increased competition for deposit accounts. I can see that you've booked operating variances of negative €800 million due to updated surrender assumptions in France. So just keen to kind of understand what lapse risk you're seeing at the moment, whether the current term or might increase that?
And then finally, just on non-motor premium. It seems as if you're saying all of that premium growth 11% is coming from rate rather than volume. I guess my question is what's happening on the volume. This is not to be a key strategic growth target for you. It looks like group holding is where it came through full year, but just wondering what's happening in terms of the penetration of non-motor as opposed to the rate increases. Thank you, very much.
Thank you very much, James. Apologies. Your line was a bit blurred. So, let me repeat the questions to make sure that we have them right. You would like to have the motor versus the non-motor combined ratio for the full year '22 and that is for Cristiano.
You would like an update regarding the current year attritional development of the combined ratio from nine months to full year the overall and excluding Argentina M&A, and that would also be for Cristiano. And update regarding the lapse risk we see in our book in the main geographies given the competition for deposit accounts, and that would be for Marco.
And the last one, if I understand correctly, the trends in non-motor GWP growth, what is happening in terms of volumes given that this is one of our strategic targets in terms of growing the GWP non-motor, given that there is a growth that is driven by price indexation. Did we all understand it correctly, James?
I think you got all of those precisely. Just part of the growth in non-motor those, it all seems to be coming from Greek Holding on the slide. So just keen to understand that.
Okay. Perfect. So, Cristiano, if okay, I would say that the two questions on the combined ratio are for you, while the question on lapses is for Marco, together with the one on the development of the non-motor GWP volumes.
Hello, James. So motor, non-motor core. So year-end 2022 combined ratio of motor is 98.2% and this is consistent to what I told you before, which is bringing -- including the investment result less than 8% of the total group operating result and non-motor at 90.3%. This is the year-end 2022 combined ratio of the two segments. Then moving into the attritional development ex-NatCat and Argentina, I would like to highlight also.
But if we take out the newly acquired companies like Cattolica, but as well, Malaysia and India, which you know it is a country where the combined ratio is above 100%, and we are above 100% as well. If I compare the attritional combined ratio of the business in P&C, it is moving at year end 2021, on a like-for-like basis from 62.9% to 63.6%.
And I recall you that in the nine months, this number of 63.6% without Argentina Catholic and M&A was 64.2%. So, for sure, these are the trends we are observing. But in order to have a better answer to your question, I would really strip out also the newly acquired entity to really look at the underlying machine before Argentina and acquisition, how it's going. Hope this clarifies this point.
Yes. Got it. Thank you.
Yes. So, on my side, let's first comment on lapses. I think in the first nine months of the year, I would say lapses remain mainly aligned to 2021, while an increase has been observed mainly in the fourth quarter and mainly in the type of distribution that are more bancassurance type of distribution. So that is where we would see also going forward a little bit more risk. On the other side, where -- as we were seeing at the beginning where we were able to offer the client more diversification of the type of products.
So, putting together protection, unit link and traditional savings on our main agent there, I would say, we are still having a normal type of lapses. So that is the type of risk that I see at the moment, very linked to the type of distribution. On the -- your last question, so in trend in non-motor growth, so probably one clarification so said most of volume. So, the growth was coming from a price effect. There is a growth that we have also on volume.
It's more limited. On the other side, let me highlight the growth that we had in assistance with Europe assistance. So that is really something that have stand out in this year in terms of growth, thanks to some large contracts that we have. And so overall, I think there is a nice growth that is coming from pricing, mainly for pricing, not only for pricing and an increase in the volume of Europ assistant that overall, I think give us the point on the strategy that you mentioned.
The way -- sorry, James, the Europ assistant growth is exactly the group holding and other you were asking because it is accounting that line, just to clarify.
Next question please.
The next question is from William Hawkins of KBW.
Hello. Thank you, very much. You've already given good deal to Andrew and James, but I really wanted to come back again, please, to the combined ratio years for 2023 and 2024. Given what you're saying about rates versus claims, are we looking at jaws that are improving the attritional claims ratio or maybe we're still seeing a deterioration because the rate changes are not enough with claims inflation.
Given the way you've answered the other two questions, it does sound to me like your kind of wanting to equivocate on this point. So, it is good news that we're getting rate increases but they're not necessarily sufficient relative to claims inflation to be confident in an improving claims ratio. But I wondered if you could just really focus on that point for me, please?
And then secondly, you seem to have a big step up in positive reserve development in the second half, which is great. I'm just wondering if there's any particular drivers of that or anything to think about, please? And then lastly, again, you might have already touched on this and be talking about the one-off to Michael, but can you just help me understand what's happened to the Italian investment margin. It's gone up very significantly in 2022 on 2021.
But actually, when I look at the key drivers, things like investment income or even realized gains, they haven't moved very much. So, it seems to be that the shareholder is getting a bigger share of this relative to the policy holder. I don't know if this is related to but sort of a last one, please.
On Slide 21, there isn't any change in your guarantees this year. They're 1.15%. So even to the second decimal place, they haven't gone down much. I just wondered why I kind of been assuming that your guarantees should be falling over time, but they seem quite stuck in '22 versus '21?
Thanks, Williams. I think Cristiano, all the four questions are for you.
Yes, William. Just to clarify, very clearly, we are not avoiding the answer, I hope we -- on the combined ratio outlook, what we said is that we had increased, maybe we didn't focus too much on the pruning we are as well doing on the portfolio which, by the way, is affecting the average premium because typically, you prune the riskier part of the segment where the average premium is higher.
So, what we are telling you is that we are bringing back towards desired level of profitability. We need the full 2023 to start seeing the effect. We will see positive effect in accounting combined ratio in 2023 for the simple benefit that discounting in IFRS 17 reserve will bring relevant positive benefit, but we are not focused on that benefit because we are focused on the underlying undiscounted effect, which is only brought through the actions and the price increase were done in all the segments, all the region, and we are following through in case there is further deterioration of inflation.
So, what we are telling you is that we did all that was needed to get to the desired 2024 underlying technical landing point. And we need to wait the full 2023 to start the trajectory back in line on the discounted.
On the positive prior year details, I would like to highlight that we had positive effect coming also to the extremely prudent reserving, but we always had at group level. And don't forget that notwithstanding prior year development positive, we also -- this is on the accounting side, on the best estimate of liabilities during 2022, we increased the best estimate of liabilities by €500 million in the P&C business due to inflation expectation and as well management in order to have lower uncertainty and being prudent going forward.
And this also, if you look at the best estimate movement is partially absorbed by the very positive real prior year development, when we pay a claim and the actual number paid is much lower than the reserve amount. By the way, the net effect could have been double if we consider the full effect without excluding the prudency also that we are continuously keeping in the allocation.
Third question related to the investment margin. Okay. First of all, let me recall you that the Italian interest rate risk reserve is fully allocated to the shareholder, and it is not given to the policyholder in case of release. This is shifting the investment result positively, and this is part of the one-off. It is in the end, low -- slightly above €100 million benefit that we had in the operating result Life, which is accounting for basically half of the one-off effect, I was mentioning the €200 million, €250 million.
On Slide 21, I think it is a tricky element of the guarantees because it is explained that the guarantees are calculated on the average of reserves when guarantees exist. Unfortunately, in reality, fortunately for the group and its capital intensity since a few years, we are selling basically in Italy that only guarantee. So, all the reserves and the premiums related to the collection in a year, plus the existing reserve of those premiums are not part of the 1.15 calculation. Even if we put a zero instead of no guarantee, the number would have been already very close to the 1%. But it is a wrong number because we do not have a guarantee. I hope this clarifies the three-key part on the average interest rate versus the stock.
Thanks. Very, helpful.
Next question please.
The next question is from Andrea Lisi of Equita.
Hi. Thank you, for taking my question. The first one is on saving products. I saw there was an acceleration in net outflows of saving products versus last year. Just want to understand how much of this is consistent with your optimization strategy in the right business? And on the other hand, which portion was driven by the investment decision by clients. And connected to this, if you can provide us more color on the movement of the reserve of traditional products we saw in Slide 17.
The last question is on Eurovita, if you can provide us some update of the situation we read in newspapers that there are talks to solve this situation, if you can provide us your point of view on that. Thank you.
Thank Andrea. Marco, the first question on the outlook for service products for you. The one live reserve movements, Cristiano is for you, while the third one on Eurovita is for Philippe.
So, the saving program outflows, I believe, is really consistent with our strategy. It's mainly on with strategy because you know that since I'm here, we are putting on the market a more balanced product between the different lines. So that has an effect to increase the unit linked and decrease the saving products. So, the outflow is mainly driven by this strategy. Clearly, we had some more outflow in the last quarter.
But overall, we remain consistent with our strategy also for the next months in being focused on bundled solution because we still think that this is the right thing to do in this kind of environment. So, I would say it's mainly -- most of the outflow that you see is consistent with our strategy.
So, Andrea, the more color regarding Slide 17 and the movement of the reserves. So, the walk from €424.5 billion to €414.7 billion. The Life net inflows is the published number, and it is mainly entirely positively driven by the unit-linked and the protection versus a negative outlook in the traditional component. By the way, the definition of traditional embedded as well the protection, don't forget, when you look at the €315.8 million.
When the loading risk and ensuring the result is the amount of charges we take together with the exit, the policyholder share of investment result is mainly driven by the movement of the market-to-market on -- especially on the unit linked because being negative, you are passing the market-to-market of the unit linked on the €108.7 billion starting year-end '21 to get to the €100.6 million, which is embedding also this negative effect.
The last element, the 3.3 million is a combination of some effects. First of all, there are some exchange rate and other effects. But especially, we are consolidating a future in the Life, the company we are consolidating since we became a major shareholder mid of 2022 in Malaysia. So broadly speaking, we are adding €1.2 billion of reserve. Why the number is negative.
It is negative because it is driven to what Philippe told you before about the exercising the put option on Iccrea, the BCC business, which accounts for €4.1 billion of reserves, which are exiting the technical provision and are allocated in IFRS 5 accounting which is ready to be disposed and not anymore part of the reported reserves. So, I repeat, we are disposing with exercise of the put to €4.1 billion.
On the third one. First of all, I'm not used to comment what is written in the newspapers, but what I can tell you that there are no discussions at all with Eurovita. We are very much focused on our business model, which is to offer personalized and safe protection solution to our customers through our very professional distribution channels. This is what we are doing, and this is what we will continue doing.
The next question is from Sudarshan Bhutra of Societe Generale.
Good afternoon. Just one question from my side. This is regarding the capital management pie chart that you give. So, based on the cash flow of €5.5 billion over the last two years and the cumulative dividend payout of €3.5 billion, you would have approximately €1.5 billion to €2 billion of discretionary cash flow available with the companies right now. So, I just wanted to understand how much of it has already been used up and what is sort of remaining.
And then the second part of this is, is the -- what are your targets? What are the M&A targets that you wish to deploy this capital? Is there any change based on the current macroeconomic environment on your preferred targets? Thank you.
Perfect. Thank you very much. The first question on the available cash for capital deployment is for Cristiano. While, the second question, Marco, on the approach to private assets and the allocation to private assets within the context of the higher interest rate environment are for you.
So, hello, Sudarshan. So basically, what we did so far of the €2.5 billion to €3 billion, which are allocated in the three-year time, we spent already almost €0.5 million of them for, first, taking the minorities of Cattolica and started the squeeze out process and as well to increase the ownership of our India subsidiaries, which were not accounted for. Then there is the other redeployment. Don't forget, we also recently concluded the €185 million buyback for the long-term incentive plan of the future, which we recently concluded last week.
So, on my side, in terms of overall positioning on the asset side, I think clearly, the changing condition required to review our way of allocating assets. So clearly, we have been more prudent in terms of approach on equity and we have prudent credit exposure underwriting. And so, this is what we do in terms of private asset, so clearly, going forward, we will review that according to the different condition. So, in the recent year, we have clearly increased our weight in general account investment. And so, we've moved from 9.9%, around 10% in 2019 to around 18% in 2022.
So, we want to continue our strategy -- gradual strategy -- gradually increasing this strategy but very much looking at different condition overall. So, we will increase and we want to continue our gradual growth in exposure in private assets, but again, being very much focused on the context.
Next question, please. And the last question -- the next question is the last one, we can take operator.
So, the last question is from Alberto Villa of Intermonte.
Hi. Thank you, very much for taking my question. Just going back to the losses. I was wondering if you can provide us an update on the last week's development, if there has been any impact by the situation, especially in Italy for the Eurovita One, if there has been any pickup in late in life business. That's my first question.
The second one is if you can provide us an update on the outlook for the contribution of the investment income given the current interest rate environment for Life and P&C, the current investment rate and how should we look at 2023 for investment income contribution? Thank you.
Thank you, Alberto. I think the first question, Marco, is for you, while the second question, Cristiano, is for you.
So, I think in terms of development of lapses, I think it's exactly as we were mentioning before. So, there is one specific point that we have seen in the last months. But I would say no more than that. So, the general Italian situation is a good situation, consider also that our share of bancassurance distribution is very limited compared to overall the distribution that we have. So that is something that is important to keep in mind as this might have an impact on that share.
Yes. So, the -- let me comment with two information. First one is related to -- if we're looking at retrospective the business, which is sensitive due to shorter duration of reinvesting, which is the P&C half of the investment result growth is mainly driven by higher current income, okay? in P&C, half of the €110 million. And basically, the rest was -- I should say, 2/3 and the rest is mainly related to the increase of the perimeter, thanks to the newly acquired entity like the other units in Malaysia, India and as well the extension to Cattolica.
So, having said that, when we look at the reinvestment yield so far in the year, mainly done on a publicly listed bond, we are speaking about something in the order of 4.5% in Life and 3.6 -- between 3.6% and 3.7% in P&C. This is the effect Don't forget, but going forward, I'm not commenting too much the pickup in Life because clearly, Life due to the variable fee approach in IFRS 17 is measured against the liabilities. And so clearly has also to be accounted accordingly compared to the P&C where you see immediately as well the effect.
Thank you, Cristiano, and thanks, everyone, for participating to today's call. Should you have any additional questions, please feel free to reach out to the Investor Relations team here we are at your full disposal. Have a nice day.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.