Unipol (AO) | Buy | Conf. call feedback: another layer of prudence, plenty of optionality

Research evidence excerpt

Unipol (AO) | Buy | Conf. call feedback: another layer of prudence, plenty of optionality

Unipol Buy | Target Price: EUR23.50

Company description Management

Unipol is one of the leading insurers in Italy, with a leading position in the Non- Carlo Cimbri, Chairman

Life segment, operating mainly in retail lines. It benefits from a highly integrated Matteo Laterza, CEO

model, leveraging Italy’s largest agency network, and efficient claims Luca Zaccherini, CFO

management, which provide strong pricing power and technical profitability. In Key shareholders

Life, while smaller in scale, it remains highly resilient and profitable. This stability Free float 48.00%

is underpinned by longstanding bancassurance partnerships with BPER and Coop Alleanza 3.0 Soc. Coop. 23.48%

BPSO. Holmo 6.74% Nova Coop Societa' Cooperativa 6.82%

Investment case Valuation methodology

Unipol's insurance company is a leading player in the Italian We value Unipol using a sum-of-the-parts (SOP) approach,

market, in which it traditionally managed to extract attractive applying an implied price-to-book multiple based on

margins, thanks to strong claim management and pricing sustainable ROEs across the group’s business segments. In line

actions in P&C, together with its resilient Life business, thanks to with KECH’s valuation framework, we adopt our in-house

the bancassurance partnership with BPER/BPSO. assumptions for the risk-free rate and equity risk premium.

The merger with UnipolSai simplified the group's structure and On average, across the group we apply a cost of equity of 9.7%.

improved the investment case. Risks to our rating

We now see scope for capital efficiences and a higher payout Economic indicators are important, especially the BTP spread

ratio. given a large holding of Government bonds.