Good evening, ladies and gentlemen. This is the Chorus Call operator. Welcome to the presentation of the 2025 consolidated results conference call, Gruppo REVO. All participants are in the listening mode only. After the initial presentation, you will have the opportunity to ask questions. To get assistance from an operator during the conference, please dial star followed by zero. The floor goes now to Alberto Minali, Managing Director of REVO. Please.
Good evening everyone. Before I give the floor to Mr. Tanaglia, our CFO, I would like to quickly summarize the main corporate events of 2025. As you know, this is a bridge link year between the old industrial plan and the new industrial business plan that started in 2025 to be closed in 2028. We did many things in 2025.
We appointed a new board of directors, and we kept a lean governance of the board, which is represented basically by independent members. I am the only non-independent board member. In June, we presented the new industrial plan, and we presented to the markets, in our opinion, as sort of a match between the human intelligence plus artificial intelligence, and this is the meaning of the business plan. We would like to grow in terms of value. We also would like to expand as much as possible the use of machines. Of course, machines have to help our human capital, which is still the number one asset of this company. Within the business plan, we have also introduced the ESG plan with the identification of the main targets, and we have made a list of two different types of activities which are being executed during 2025.
The Standard & Poor's rating has been reconfirmed to A- stable. We also got a AA strong from Fitch. This means that the external assessment from rating companies in the traditional business, but also in ESG business, they are both positive in terms of our company. Throughout 2025, we laid the foundations for the execution of the plan, and in particular, we continued our investments in technology and applications, and certainly AI, especially in underwriting operations and finance. The key roles that we have identified, this makes our productivity in 2025 has further improved. All these investments will implement and affect throughout the next years. Of course, we work with machines, and machines work with people.
We have strengthened structures of underwriting, data analytics, and AI, because these individuals would be the ones that give the best contribution together with machines in terms of product innovation and project innovation as well. As for product innovation, we launched a series of new products. I'm not going to make a list there, but we launched one which is REVO for Microenterprise. Now, this is a very easy modular product. Execution speed is sky-high because it concerns many different pieces of information. We also completed the specialty line with two new desks, one for energy, the second one for credit. This means that from the market, we hired experienced persons, so they bring in experience, expertise, relations with brokers, and the possibility to build the products.
As for distribution business, it has improved as well because, as you know, we opened the banking channel with an agreement with Banco Desio. We are working with three other banks, of which one is very important to strengthen our distribution. Together with agents and brokers, we also have the third channel. Let me tell you, there will be something new because we're working with financial operators and non-banking operations in order to sell REVO policies. The very last point I'd like to highlight right now is the strengthening of the REVO managerial team. We have a new branch manager who's giving a big contribution to implement the plan for last year. We have reached the price level. This year, we have to make a further effort. The work done by Ms. Melissa in order to re-engineer all the products, the relations with brokers, and the entire community world.
This is so important to make sure we will also be successful in Spain as well. This is it. The floor goes now to Jacopo going through numbers. Of course, we will, with utmost pleasure, take your questions and/or your comments.
Thank you, Alberto. Good evening, everyone. Thank you for connecting to our call on the yearly results. You will find the presentation in our site, in the investor relations site. Slide number five is the first one that says the trajectory. I mean, a further growth of our numbers also throughout 2025. Now, we managed to get gross premiums equal to EUR 398.1 million. This is better than expectations, which is what we share with the markets during the presentation of our business plan in June 2025. Now, we've been able to seize opportunities with new tactics in the space.
We have had more transfers and reinsurance of all the premium underwritten. I'll be back on this so that I can tell you more about the operating performances. As for the adjusted operating result, in particular, the result at the end of the exercise, which is EUR 48.4 million. It is a strong growth versus 2024, more than 37%. Net profits were EUR 22.4 million, the ND adjusted net profits are EUR 28.6 million. In terms of ratio, now our loss ratio is 37.7%. This is a slight increase actually versus 2024, while CR combined ratio is 86.3%, so slightly over the threshold, which is our target, which is 85%. Now, as you know very well, in the plan year, of course, this will reduce slowly. In terms of BD breakdown, it's important to highlight that the key business is the first business line, so this is the cautions.
Now, this is a very profitable line. At the end of the financial year, it was 27.1%. The growth is 13.5%. This is bigger than the trend that we saw on the market. You can see here the other property, which is now the second most important business line. This is 22.5% growing strongly versus the 2024 financial year. Also considering what we had already described in the past quarters. Market conditions are now very favorable in terms of pricing, but also in terms, if you will, of contract contents. At the same time, I would like to highlight it. Also, the small business lines have started to grow. It's giving a contribution to the top line. I'm thinking of the legal protection. In this case, the growth was more than 75% during the financial year. The parametric business exceeding 100,000 policies that were written.
This is a major increase in terms of number of pieces that we marketed, while the premium value is now very close to EUR 1 million. Now, as for some business lines, they turned out to be quite flat. For example, financial lines. In this case, risk selection that we carry out during underwriting, it's absolutely almost very accurate, especially in market conditions, which are now a little weak in terms of pricing level. The only business line that is really, really recording a slowdown is personal accidents. Now, this is now the subject of reforms, re-engineering during the financial year because of the non-renewal of a couple of accounts. They didn't perform very well in the past half years. There's a high level of attrition at REVO.
We're able to adjust the portfolio, of course, based on the market conditions, but also based on the performances that we have of every single ticket. Now, just a couple of words about how it's paying. Back in the month of 2024, we started our initial deal with REVO Iberia in Spain in 2025. It accounts basically for the first years of the real full operating year in Spain. We've been able to get quite a good result in terms of our premiums. This is absolutely aligned with our targets of within the EUR 8 billion-EUR 10 billion range, which is what we expressed and shared with the market. We managed to get EUR 9.4 million that we marketed in Spain. We've been able to get to this market, thanks to the gradual and stepwise widening of our distribution network in Spain. We now have around 50 or more brokers.
They help REVO in marketing our products. Now, at the same time, we have to further widen the staff. The number of people working in the company with the onboarding of the person responsible for claims and, as I've understood, the new branch manager inside the team. Now as for our distribution hub, we are going to see quite a strong growth of our marketing, which is what we do. We have brokers now. The brokers, just like agents, account for a fundamental foundation of our distribution network facilities. Actually, will be one of the main drivers of the growth of our top line during the upcoming years. Now, this is an exposure in terms of broker channel, which is swapping close to 50% of total premium underwriting. Now, REVO Underwriting, by the way, is also becoming a real hub of our distribution.
More and more brokers who managed to get onboard with our agency. Over 350 open relationships, thanks to our REVO Underwriting. This pathway, if you will be strengthened in the next quarters also. It goes without saying that our service, which by the way, is still positive in terms of operating performances. The average claims are now less than one day as for the broker business, and 1.5 days for all of the other business. Well, this is the key development that's made. We can really, really increase the interest from the broad community, because of course, we need to distribute in this slide number nine, you can see the details, you can see the operating performance. This is what the group has been able to generate throughout the financial year.
Our LR loss ratio is slightly going up versus the previous financial year, but it's absolutely aligned to the target range that we have set up during the plan. It's actually slightly better. You know this, our target range goes between 38% and 40%. Loss ratio is at 37.7% during the financial year. The cost ratio, CR, it's been improved further. This is fundamental, again, because as you know, year after year with the increase of our top line, with the improvement, thanks to technology, cost ratio is to reduce all the more as we will increase the value generated for every single euro of our premium income. The acquisition ratio, AR, is basically in line with our forecast. While the impact of reinsurance, well, in this case for the financial year 2024, this is a little heavier, so to say.
This is due to various factors. As I said before, this is linked to our big insurance, which is a little heavier at the end. This is the rest of the portfolio. Now, this is absolutely normal in this space because we are growing our top line. Once again, this is normal. This means that we can really be present on the market, and so we can keep talking with large size brokers, and at the same time we can have the splits that otherwise we wouldn't be able to have them later. At the same time, we recorded a slight minor reduction of our commissions and certain fees that we got from the insurance. This is due to some kind of technical dynamics which have characterized some portfolios in particular. We also had some, I would say, reinsurance actions.
Now they turned out to be necessary because we have had some peak claims throughout the financial year. Slide number 10, you can see here some further details as for LR, loss ratio. Let me highlight once again that in terms of property, well, it has been improved significantly. It has improved technical performance. At the same time, the same happens for CAT insurance, some parametric business, and once again, performances are going up in terms of the industries as in this previous financial year. As for the PA or personal accident, as we said before, a slight worsening as we said before, but this is the consequence of an account that's always very well performed, in the past years. We think they can be back on the right tracks and contributing extremely positively throughout 2026. While the marine industry went slightly down during the financial year.
Once again, this is under scrutiny, and there will be still the re-engineering of businesses in terms of the contents, but also in terms of underlying business. Also in terms of distribution, because on this very base, we will try and increase the number of brokers that we cover the market with. I'm talking about the marine market. It is important to highlight that 2025 also is a sort of a disruption year, if you will, in terms of serving, because as you can see, we have increased and we have put into the coverage, I mean, into our financial statements, we now have DNR provisions. I mean, we are using actuarial statistical models.
This means we can further improve our reserving calculations, because this will include some behaviors and some dynamics, which is what we've been seeing in the past quarters, especially for the business, which is underwritten in terms of co-insurance with other insurance companies. What is very positive, as we said before, is the development of the CR cost ratio, while total costs increase less than proportionately versus the growth of premiums. We have had an increase in staff costs, but this increase is highly targeted. Now, this means that we have had new hires, specific hires in terms of IT, data management, and underwriting. In slide number 11, you can see the bridge. Now, this is what drives us, or mixes between the operating results and the adjusted operating result. You can also see some details with the main adjustments that have been included throughout the financial year.
Traditional adjustments, especially the most important components, they have to do with the incentive plans. This is for the staff, of course. Also in terms of RTI, because it's again a bridge between the old business plan and the new business plan, as I said before, together with consulting costs, our ARN reorganization of the business plan. Because once again, this is what we have to do every three years. They make, if you will, the cost component a little heavier, once again, every three years. As for our investment portfolio, well, it confirms once again the management style, if you will, which is really very safe. I'm talking about our assets. We have a perfect match, for example, between assets and liabilities. Portfolio rating, for example, is always aligned to Single A. We do not have equity exposure.
Just in some cases, we have some tactical positioning, and of course, this gives us the possibility to stay out of the volatility dynamics of today's market. The new development is represented by something that we have although, some alternative components, gradually they will increase in the next years. Obviously these components, on the one side, will help us increase profitability. On the other side, they will strengthen the evolution of our assets, and they will act as a shield or protection system versus the dynamics of the market. This is confirmed that thanks to these sensitivities we carry out in terms of solvency. We have plenty of sensitivities. Once again, our solvency ratio will respond with an extremely low variability, which is around 2%. This is the result at the end of the financial year. We have 223%.
Once again, this is well above the target range that we wanted to have, which is between 180%-200%. Let me wrap up by sharing with you the current dividend distribution or proposal to somebody to pay out, which is EUR 0.27 per share. Maybe you remember what we represented and what is also planned. The guideline in terms of dividend growth was basically equal to the progression we imagine in terms of bottom line. Again, the dividend will grow by more than 20% year-on-year. This is fully aligned on the so-called vector, which is the key drivers for the next year or so. This is it with the description of our key numbers and results, and the floor is now for you for your questions.
Thank you so much. This is the operator once again. We'll now start with the Q&A session that seems reserved to financial analysts. The first question is from [Gabriele Lavitu] in Banca Akros . Please go ahead.
Good evening, everyone. My question concerns the impact on the business of the legislation concerning in-app policies. What about the impact at the end of 2025, and how is it impacting now, and what do you think about its impact in 2026? Do you see a possible upside based on this?
Thank you for your question. Now, the digitization and impact. Well, in terms of in-app coverages, we have the traditional form. So we have the coverage concerning, I mean, traditional forms, but also the parametric forms. The parametric world is on blockchain. This is absolutely and natively digital. Now, in that especially, well, of course, you will work on machines. Actually we do not expect a major effective digitization because we already are digital on this kind of products. I think the real point of this kind of products is to make sure the companies understand that they are not forced to do this. I mean, there's a new decree concerning the first sector and farming. Well, actually there's a risk, there's a need for hedging or coverage. We can get parametric and traditional coverages. The parametric ones have to do with emergency costs.
Once again, all of this has already been digitized. The aim is to end this, so basically we don't have any further advantage out of digitization.
Thank you. The question concerns, I mean, the legislation just introduced. Anyway, the answer was very clear. Thank you.
The next question is from Alberto Villa from Intermonte SIM. Please go ahead.
Hello, Alberto and Jacopo. Yes, I do have some questions. The first one being the following. Can we share a guidance for 2026 on premiums in terms of ratios? How do you think the operating profits may develop? I guess if you want to reach the 2028 targets, can we just have some color, I mean, on the guidance for 2026, that's maybe useful.
As for the average ratio, that has increased this year, do you think it will position to those levels also in the future, or do you think this ratio may go down in the future? In terms of provisions, strengthening the provisions, which is what you carried out last year. Do you see some possibilities that something would be necessary also for the next years? As for the distribution agreements, well, Alberto, you shared the comment, but I haven't understood fully. Say that potentially there are new developments going on. Apart from the banking channel, do you think the banking channel is still an opportunity in this case, or do you think the new channels are significant, meaningful opportunities for the future? Of the company. The last question is on Spain.
After the managerial re-engineering, can you again give us some color concerning possible growth that you foresee in Spain? Do you confirm what you expected in the plan? Thank you.
Alberto, thank you so much for the question. Let me start with question number four, then I'll give the floor to Jacopo. Now, in terms of distribution networks, as you know very well, banks were not included in our business plan because basically, we thought of a very strong organic growth. This is due to agents. Now, by the way, this is really going very well, and we also want to empower commercial actions with brokers, with specific facilities. For the time being, we have a distribution agreement going on with Banco Desio. As I said before, we're working with three other banks. We have, including professional indemnity.
One such bank is very important in Italy in terms of distribution network. I cannot tell you which kind of agreements that were decided, because we're still working on this. I think that, well, by the end of 2026, we will have three, maybe four banking agreements. Some products will have been launched within the end of 2026 with their distribution network. We can also see strong interest from non-banking financial operators, as I said before, because in our OVERX platform, which connects very well in terms of API to their platforms, well, we give them the possibility to work with us if there's some issuance. What I can tell you that in a few weeks or so, there will be an announcement in terms of distribution or innovative distribution, as you say.
Well, the omni-channel system, if you remember, omni-channel was one of the key foundations of our project. We're working on this. We're strengthening the agent channel. We're recruiting. Well, I have to say that basically we have started working with all of them. Once again, the banking system, but also the non-banking systems. We have a big range of different systems, because we don't have to build anything from scratch, so we can leverage something already existing. This makes me happy. It's a very important element in order to sell our products. Please go ahead.
Hello, Alberto. Again, thank you for your questions. Now, as for the results expected throughout 2026. Now, in terms of premiums, I have to say that the range should be around EUR 450 million for this financial year, with an operating result that should be in the range of EUR 55 million.
This is the progression we imagine for 2026. Now, in terms of the evolution of RAS, we can say that we should be around 14%. This is the average range that we expect today. Now, of course, something may happen during the financial years, and this may have an impact on the ratio. I have to say that this is the kind of value that we think we would be reaching also in the next years or so. As you know very well, year after year, our reinsurance organization is optimized. There may be some changes that, of course, do have an impact on the cost, the incidence of the reinsurance. This is a slow, step-by-step pathway that we are implementing more and more every single year.
I have to say that, well, basically, there may be some minor gaps, but more or less, this is the value we should get. As for the strengthening of our provisions, once again, this trend will be monitored, say, year after year. Well, let's say that we just want to say to be on the cautious side, very cautious, very prudent in order to take advantage of some dynamics we saw on some business lines. Maybe not all of them, but on some business lines, we have the reinsurers. Let's say that quite often you can see a reassessment to be done. This is why very prudently we decided to implement this logic. Maybe we won't have the same intensity in the next financial years.
The results that we have just analyzed in the board of directors meetings some hours ago, well, the ratio is the good one, and we are obviously improving the methodologies. Without considering the strengthening of provisions that we have in our numbers, so we know what the dynamics are. Maybe in the future, this kind of need won't be felt. As for your question on Spain, well, quite recently, we discussed with the branch manager. We talked with him about our plan, which is actually being confirmed. For 2028, the target is unchanged. That's around EUR 50 million, which is more or less 10% of our total turnover. This is what we would like to get in Spain in 2028. As for this financial year, the range should be around EUR 17 million-EUR 20 million.
Well, we'll see what happens with the discussions with the brokers. After talking with the rest of the team apart from the congress that we have had, I have to say that 2025 was a year of major investment. Well, also in terms of the relationships that we have created with brokers. Because, well, I could now say that brokers also had to become familiar with our appetite and underwriting logics. 2025 was a sort of a springboard, a test bench. Our underwriters are now much more confident, because now they're ready, I mean, to generate a larger amount of premiums in 2026, which is what is happening, because we check in the numbers in the very first weeks of the year. Once again, this is happening.
Thank you so much.
Thank you. The next question is from Andrea Lisi from Equita. Please go ahead.
Good evening, everyone, and thank you so much for this possibility. My first question is on strengthening our provisions. Can I have the details? I'm going to have some follow on the actual impact that this has had in terms of LR or loss ratio. I also have a question on one-off items. For example, there's that EUR 4.4 million of one-off costs in terms of operations. Can you tell us exactly what this contains? I also have another question. In terms of pricing, when it comes to various business lines, what are you seeing and what, in your opinion right now, are the best business lines in terms of best growth in 2026? My last question is on the investment portfolio. I can see the size of investment portfolio was from EUR 220 million, it's now EUR 219 million for year, so it's going down.
Once again, can I have some extra color on this phenomenon, so what you expect in the future? Thank you.
Hello, Andrea. Thank you so much for your questions. Now, as for strengthening or empowering provisions, so around EUR 7 million, which is the 2% in terms of loss ratio, so the [so-called X ways]. Now, if I skip some steps, well, I apologize. We will go back to the possible points I have missed. Anyway, as for the costs, well, they have to do with basically the cost of staff. There's the golden incentive plan and the so-called bridge that we have set up in 2025. We also have our temporary replacement of the RTI, but this is basically the RTI that we imagined. This can also be reactivated.
By the way, the general meeting will have to approve this for the three years going from 2026 to 2028, and this is EUR 2 million. While the costs for the drafting of the business plan, the investor day, the consulting and advisory services for some insights concerning both the markets and the business, together with the investor relations activities, well, this is EUR 1 million. All the rest, well, this is small advisory one-off services that we needed or just a couple of costs that we had to have in terms of Italy and Spain during the financial year. Well, as such, this is, I confirm, one-offs that won't happen again in the future. As for the pricing, what we see on the market today is the following. I have to say that what is happening today is sort of flat.
There's a stability in terms of property after a very robust growth. Once again, the hype of the market is now going down. We can see basically the very slight reduction in the last weeks, in the last months or so, a slight reduction in price of core. This started from a pricing peak, which is what we saw a while ago. We have to say that the prices we are offering to the market today are still extremely interesting. Well, we are not yet seeing, by the way, a recovery in terms of pricing on the financial lines because the market there is still softer. By the way, this is also the foundation of if you will, the non-growth versus the other business lines.
I'm not talking about those lines that have to do with this kind of industry because, of course, we want to be very selective when it comes to taking up risks. Instead of taking up risks that in our opinion are difficult to manage well, we would rather have a reduction of our top line. The very last point, if I'm not mistaken, concerns the investment dynamics. Well, I have to say that in the second half of the year, in particular in the Q4, there have been plenty of, let's say, exits concerning reinsurance topics. I have to state that in the final part of the year, this is something that usually happens. Well, we see a reduction because we have a concentration of resources going out.
At the same time, we have cash income, which is postponed because there's been a strong collection, which is what we usually do in the month of December. This is postponed to January, February. After the premium increases, this is something we see once again in the month of December. Necessarily we have a time delay or a postponement in terms of the payments from brokers, because then they increase the masses available in the first quarter. Andrea, I hope I have answered all the questions.
This is very kind, very complete and exhaustive. Thank you. Thank you so much.
Thank you. Next question is from Gian marco Bonacina, Banca Akros. Mr. Bonacina, your line is open. You can ask your question.
Good evening. These are my questions. I have three questions.
Can you tell us what the bridge is between the adjusted operating income, EUR 48 million, and the adjusted income, which is EUR 28.6 million? I need to well understand what will happen in 2026 in terms of the operating expenditures, but also in terms of taxation. The same goes on the other bridge. We have some extra color on solvency, which were the items that have had some negative impact in 2025. The very last question, by the way, is on the EUR 55 million operating profit. Is this reported or is this an adjusted number?
Hello. EUR 55 million is adjusted. In terms of operating results, as for the bridge, you will find that in our press release. We start from the insurance result. Once again, you will also see here the reclassifications.
This is fundamental to recalculate the operating result, which is then adjusted because we have had some one-off costs that we described before. One-off costs are LTI-related costs, minor costs, for example, mobile. Now, all of these adjustments are the adjustments, by the way, that take part, if you will, to the definition of the adjusted net profits. We start from the reported net profits. We carry out adjustments, which is what I just said. They are scaled up, if you will, on top of the net profits so that we can have the adjusted net profits. Once again, there are no differences in terms of adjustments between the two metrics because, of course, they work on the financial statements but in different ways, two different ways. The last point, if I'm not mistaken, concerns the solvency ratio as to our...
We have explained the dynamics of the decline there, the evolution of the trend. Well, we have to say the first four months, considering of the next years in the plan, we will incorporate growing volumes. Of course, that's an impact in terms of the quantification of the ratio itself. Now, we have slightly changed the reinsurance structure at the very end of the year, and this is what we have done because we needed a bit optimization that we've been talking about the fourth quarter. Our solvency ratio allows us to do so because we do have some capitals available. Those capitals have to become, let's say, active working capitals.
We have further reduced our exposure to reinsurance coverages on some business lines versus what we did in the past by slightly changing the structure, by increasing the risk retention points or net books on our books. Now, from a different perspective, I have to say that the evolution of our loss ratio together with the strengthening operation that we have carried out, as we said before, in terms of reserving, well, all of this has slightly impacted on the value of the calculation of our best estimates. This is why we saw a slight decrease of our own funds. We have many different dynamics, and now the main ones are those that I have just described, and they sort of are responsible for the stabilization of our solvency ratio. This is why we have 223%, which is the number I've shared before.
Thank you.
The next question is from Emanuele Musio, Intesa Sanpaolo. Please go ahead.
Good evening. Thank you so much for having me. Thank you for the presentation. I have one quick question, which is sort of insight or clarification on one point on CR ratio. This may be useful for me if it makes some estimate. There's a 2% impact due to the strengthening of provisions. My question is, how may I normalize the starting point for years to come? How can I normalize 2025, then I will do the extrapolation for the years to come.
Hello, Emanuele. Thank you so much for your question. Well, it's not a question of normalizing the starting point. I would consider the trend that we imagine. Well, yes, it's a recurring stabilization around 85%. We gave a guideline, which is the 2026 to 2027, 2028 guideline.
Please do not forget the numbers we are making right now because of the three-year launch of the industrial plan for the financial year. Of course, we would like to move steadily under or below 85% by the end of 2028. Basically what we imagine is a gradual reduction versus the starting point, which once again, it was actually 86.3%. Now, in my opinion, we don't have to be scared of this because, I mean, we're talking about, well, this is less than 1% above the value that we imagined for the end of the financial year.
Okay. That's clear. Thank you. Thank you.
Maybe we're being very clear, or we're being completely unclear. Anyway, thank you. Thank you so much for following us. Thank you for your questions. We will be available for any further insights or questions. Once again, if you need further clarification. Once again, thank you. Thank you so much. Bye.
Thank you. Bye-bye.