REVO: strong growth in operating result and premiums, exceeding plan forecasts

Premiums at €100.4 million (up 78.6%) and adjusted operating profit of €13.2 million, resulting in early closure of the operational “J-Curve” arising from the investment sustained for the launch of the project.

- Gross written premiums €100.4 million

- Insurance revenues €65.3 million

- Adjusted operating profit1 €13.2 million

- Net profit €6.2 million

- Adjusted net profit €8.1 million

- Group Solvency II ratio 234.7%

Verona, 8 August 2023 - The Board of Directors of REVO Insurance S.p.A., parent company of the REVO Insurance Group, approved the consolidated financial results to 30 June 2023 today.

- Gross written premiums of €100.4 million, up 78.6% on the corresponding 2022 figure (€56.2 million);

- Transversal growth across all classes, with further diversification of the business mix (surety at 40.2% compared with 59.8% of other business lines);

- Early closure of the operational “J-Curve” arising from investments in human and technological capital, with overall results above those generated by Elba Assicurazioni prior to the acquisition operated by REVO;

- Adjusted operating profit of €13.2 million, despite the presence of extreme non-recurring events, mainly concentrated in the second quarter (net impact of around €2.5 million);

- Excellent technical profitability level, with an overall loss ratio2 of 31.2% compared with 23.7% in 2022, driven by greater exposure to lines of business other than surety;

- IT investment plan (around €3.0 million in the half-year) and operating cost evolution in line with the trajectories set out in the Plan;

- Positive contribution of the investment portfolio (€1.8 million, compared with €0.5 million) with a further reduction in exposure to Italy risk (41.0% compared with 51.8% at 31 December 2022) with short duration and high geographical diversification;

- Consolidated net profit of €6.2 million (€8.1 million adjusted), a significant increase compared to the same period of 2022 (€0.8 million and €2.6 million respectively);

- Capital solidity confirmed at a high level, with a Group Solvency II ratio3 of 234.7%, above the medium-term targets despite the reduction4 resulting from the takeover buyback on REVO shares.

Alberto Minali, Chief Executive Officer of REVO, said: “The first half of 2023 closed with excellent results which provided tangible proof of the effectiveness of our business model and confirmation of a positive outlook. REVO is unique in the Italian insurance industry with its highly-qualified human capital and its use of state-of-the-art proprietary technologies. Competence, simplification and innovation are the factors that drive our growth. The further diversification of our business to covering specialty and parametric risks, supported by a distribution network of fundamental importance, is designed to ensure an insurance offer that is increasingly specific and focused on the real needs of SMEs and professionals."

STRATEGIC PERFORMANCE

- Marketing of new covers and tailor-made solutions in the specialty sector, together with the launch of new parametric products (over 3,000 policies sold in the first semester5), mainly in the agro and business interruption sector;

- Authorisation from IVASS at the end of April to operate in the Legal Protection line, with the consequent launch of initiatives designed to further extend the overall offer, including in addition to the guarantees offered by the cover already marketed;

- Exponential use of the proprietary OverX platform by brokers, with the implementation of new service modules to ensure excellent performance levels in terms of time and process simplification;

- Further expansion of the distribution network, which currently consists of 62 brokers and 118 agents, and the subscription of more than 190 mandates by REVO Underwriting, the Group’s brokerage firm. Also noteworthy is the signing of an agreement with the AXA Agents Union (UAA) in ten business lines;

- The recruitment process continues, with 30 new staff added, primarily in the underwriting area;

- Upgrade of the S&P rating from “BBB+ stable” to “BBB+ positive,” confirming the long-term sustainability of the development path. In June, the Group was awarded an ‘EE (strong)’ rating by Standard Ethics, demonstrating the Group’s ability to integrate ESG factors into its strategies, operations and the risk management process, with solid performance in terms of operating efficiency;

- Completion of a buyback of REVO stock, through a partial voluntary tender offer designed to increase the number of treasury shares held in portfolio as a result of particularly attractive share valuations compared to prices.

MAIN PLAN KPIs AND J-CURVE TREND

The following chart shows the main economic KPIs of the Business Plan over the various time horizons of reference.

During the half-year 2023, REVO was able to generate better performance than in the last pre- acquisition year of Elba Assicurazioni: a comparison shows the exit from the operational J-Curve linked to investments in human and technological capital made by the Group predominantly during 2022 for the development of the project.

At the same time, the results at 30 June 2023 highlight an excellent progression compared to the entire 2022 financial year, confirming the steady growth of the project and the viability of the Plan’s ambitions.

ECONOMIC PERFORMANCE

In view of the adoption of the new IFRS 17 accounting standard as of the year 2023, it should be noted that the overall impact for REVO from an economic and financial standpoint is limited, partly due to the adoption of the simplified PAA (Premium Allocation Approach) model, the characteristics of which significantly reduce the differences compared to the previous IFRS 4 standard.

During the period, gross written premiums of €100.4 million were recorded, with a significant increase compared with the first semester 2022 (up 78.6%). Growth was recorded across all lines of business, including cover for the Surety class, which grew by 11.3% during the half year.

As of 30 June 2023, the business mix of the insurance portfolio showed greater diversification than previous quarters, which is fully in line with REVO’s goal of becoming the player of reference in the SMEs and professionals segment due to its comprehensive offer of insurance solutions. The Group’s exposure to Surety business stood at 40.2% (64.5% as at 30 June 2022), due to the higher weight of other business lines (59.8% compared to 35.5%).

Insurance revenues deriving from insurance contracts issued, presented in accordance with IFRS 17, reflect the same contribution from the individual lines.

From a technical standpoint, the results exceeded the expectations of the plan, particularly in terms of business development, with a gross loss ratio for the period, calculated on the basis of the new IFRS 17 metrics, of 31.2%. The increase compared with the same period in the preceding year (23.7%) reflects, on one hand, the presence of all business lines since the beginning of the year7, and the effects of certain extreme events that mainly occurred in the second quarter of 2023, the negative impact of which on the income statement, net of reinsurance, can be quantified as approximately €2.5 million.

As a result of the continuation of the recruitment plan launched in the previous year, an increasing in personnel costs of some €2.8 million was incurred. At 30 June 2023, IT investments of approximately €3 million were made. This consisted of the release of new implementations on the OverX platform.

The final statement of acquisition commissions and reinsurance fees revealed a trend that is consistent with the development of the business.

The gross COR ratio8 for the period, calculated on the basis of the new IFRS 17 metrics, stood at 81.3% compared with 76.0% for the first quarter of 2022. This trend is in line with plan expectations.

Finally, the positive contribution of the investment portfolio stood at €1.8 million, compared with €0.5 million in 2022. New financial assets, which contributed to the further reduction of overall exposure to Italy risk (41.0% compared to 51.8% as at 31 December 2022), also benefited from favourable market conditions in a context of positive net inflows for the Company.

STATEMENT OF FINANCIAL POSITION

The following table shows a summary of the statement of financial position:

Shareholders’ equity at the end of the year stood at €217.0 million, up slightly on the figure for 31 December 2022 (€216.5 million). Of particular note is the increase in the number of treasury shares held in the portfolio following the finalisation of the purchase transaction during the half- year through partial voluntary tender offer.

As at 30 June 2023, REVO holds some 850,700 treasury shares (140,953 shares as at 31 December 2022), amounting to approximately 3.5% of the share capital9.

REVO presented a Group Solvency II capital ratio of 234.7% at the end of the half-year (269.3% at 31 December 2022), including the effect of the aforementioned buyback operation (net value of 244.3%).

FINANCIAL REPORTING OFFICER

Pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, the Financial Reporting Officer, Jacopo Tanaglia, declares that the accounting information contained in this press release matches those found in company documents, books and accounting records.

The Company announces that the consolidated Half-yearly Report as at 30 June 2023 will be made available to the public at company headquarters and on its website at www.revoinsurance.com in accordance with the terms and conditions laid down by current legislation.

The results as at 30 June 2023 will be presented to the financial community today at 6pm via a conference call. The numbers to be called are: +39 02 802 09 11 from Italy, +44 1 212818004 from the United Kingdom and +1 718 7058796 from the United States. The results presentation is available in the Investor Relations section at www.revoinsurance.com.

The consolidated Statement of Financial Position and Income Statement of REVO Insurance S.p.A. as at 30 June 2023 are appended below, with a disclaimer that individual company and consolidated financial statements with the related documentation and the Solvency II data have not yet been certified by the independent auditors pursuant to IVASS Regulation No. 42 of 2 August 2018.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION