MILAN (Reuters) - UnipolSai expects to regain ground on the technical profitability front in the motor line of business, as early as the next few months, thanks to an increase in premiums after inflation and higher claims frequency weighed on the segment's profitability in the first quarter.

This was revealed during the conference call with analysts on the quarterly results.

For CEO Matteo Laterza, the increase in premiums will unfold its full effect from the end of 2023 and the beginning of 2024, while the full impact of inflation on claims costs, which has already been underway for several months, is expected in the second half of this year.

In the first quarter, in the non-life business, the combined ratio -- which relates the cost of claims to premiums collected and indicates the profitability of non-life operations the further it falls below 100 -- deteriorated to 94.4 percent from 93 percent in the same period last year, affected by the growth in claims in terms of both frequency and cost increases that were affected by inflation.

The figure, expected to worsen, is nevertheless better than some analysts' estimates, with Equita predicting a combined ratio of 96 percent.

The insurance group's first-quarter results are the first calculated with the application, as of January, of the new accounting standards Ifrs 17 and 9, which govern the valuation of financial instruments and the management of insurance contracts, and therefore difficult to compare with last year's figures.

Consolidated net income stood at 231 million, up 13.8 percent from 203 million in the corresponding period last year calculated under previous accounting standards, benefiting in particular from the performance of the Non-motor business.

Overall direct insurance premiums rose 12 percent to about 3.9 billion, including 2.1 billion in Non-Life (+5.5 percent) and 1.7 billion in Life (+21.4 percent), with the latter segment benefiting from the acquisition of three new pension funds.

In Non-Life, Motor marked a limited growth in premiums of 1.7 percent, compared with 8.8 percent growth in Non-Motor,

Laterza emphasized, in particular, the strong performance of the bancassurance channel, thanks to distribution agreements with Pop Sondrio and Bper.

On the capital strength front, the individual Solvency ratio at the end of March was 305 percent from 288 percent at the end of 2022, and the consolidated Solvency ratio based on economic capital was 294 percent from 274 percent.

Controlling holding company Unipol ended the quarter with a profit of 284 million and a Solvency ratio at 213%.

Asked about a possible dividend improvement in light of the strong capital position, Laterza said that "it is still too early to talk about dividends," also mentioning that the Solvency ratio is also affected by the performance of financial markets.

In Piazza Affari, stocks of the Bologna-based group reacted little to the results, showing little movement. Around 2 p.m. Unipol is stable and UnipolSai marks a fractional decline of 0.08 percent.

(Andrea Mandalà, editing Stefano Bernabei)