Linea Directa Aseguradora, S.A.

Good morning and welcome to Linea Directa's first quarter 2024 results. This is Beatriz Gizar, Head of Investor Relations. It's a pleasure to have here with me Carlos Rodríguez Huarte, Linea Directa's CFO. Let's start by reminding that we started to report under the new accounting standards IFRS 17 and 9 last year. Yet, in order to meet the different needs of analysts and investors, we are also providing in the Excel Financial Supplement local IFRS 4 figures in addition to IFRS 1709. We will continue to do so all around 2024 and even further should you need it. As always, the Investor Relations Department is here to help you with the transition and a full reconciliation has been included. Nonetheless, please recall that IFRS 1709 doesn't have much an impact on our accounts and does not change the way we manage our business. With this brief introduction, over to you, Carlos.

Thank you very much, Beatriz, and good morning to all of you, and thank you for joining us. I will go straight to page number five. 2024 has begun with the consolidation of profit and a change of trend, which we anticipated on the second half of 2023. Gross return premiums were up a solid 3%. By line of businesses, net insurance income, which is equivalent to the former net premiums earned under IFR's score, were up 3.1% in motor, 4.5% in home, and 7.9% in health. It is not worthy to mention the acceleration of growth in the health segment. Policyholders, on the other hand, dropped 4.5%, alongside the hardening of subscription for the most aggravated risk not updated in the first quarter of last year. Combined ratio dropped to 97.3%, 9.5 points better than the first three months of 2023 and also improving over the fourth quarter of 2023. Expense ratio keeps on improving due to our continuous efficiency roadmap based primarily on digitalization. Capital position remains very robust at 183%. Turning now to page number seven, insurance revenue were up 3.4%, with a solid contribution from all line of businesses. Technical profit stood at 6.3 million euros, confirming the positive trend and the success of the action plans in which we focus on insurance margins. Loss ratio dropped by 9.1 percentage points and expense ratio a further 0.4 points. Correspondingly, combined ratio dropped to 97.3%. Investment result was up 10%, mainly based on higher income from the fixed income portfolio. Credited interest, which is shown separately from investment result for clarity purposes, is the financial unwinding of the prior year discounting of the provision for claims incurred. The unwinding was an expense of 2.2 million euros for the first three months of the year. All things together, profit after tax stood at 10.1 million euros, as compared to the loss of 5.3 million euros over the same period of last year, a remarkable improvement of 15.4 million euros. Turning to page number 8, as usually, we break down premiums and policyholders by line of businesses. It is not worthy that the acceleration of growth in health, both in premiums and clients. On the negative side, hardening subscription and risk selection had an impact on policy count, especially on motor. Turning to page 9, in motor insurance, in the quarter, we made individual adjustments to the most aggravated risk in the portion of the portfolio not updated in the first quarter of last year. As we have seen, this had a toll on policy count. Combined ratio on the positive side had an improvement of 10.3 percentage points. This phenomenal positive evolution is the result of great actions that continue to earn through our book, the excellent management of claims and a strict control over dispensers. We can securely say we are back to technical profit, although not to the levels we would like to. Turning to page 10, in the home business, premiums were up 4.4%, despite great actions also triggering some sliding effect on retention. The company is very much focused on innovation and on its multi-product offering, with the launch of specific offerings to our clients, such as the Car Home Formula and the Carefree Home Policy. Combined ratio was strong at a 96.6. Several fire claims affected the loss ratio. The cost ratio continues to have an outstanding trend on the back of growing business volumes at the same time as expenses keep on declining. As with regard to the health business, premiums accelerate its growth to 8.7%. Combined ratio also had an outstanding performance, specifically on the expense ratio. And this is precisely the area we know we need to improve the most to reach our break-even goal. As I commented on previous calls, the integration of health under the Linear Direct Umbrella brand is generating efficiency in both marketing and operational sites. Full disclosure on combined loss and expense ratio by line of businesses is provided in page 23 and also in the Excel financial supplement. Please, let's move now to slide number 12. Loss ratio continues to improve and stood at 75.1, 9.1 percentage points down from last year, with motor leading the improvement with adjustments on the own damages frequency, subscription, and claims management actions. Further, home and health posted lower frequency, although we have seen some increases in the cost of claims. Turning to page number 13 on expenses, the company keeps on being completely focused on our efficiency roadmap. The development of expenses has been exceptional along with growing business volumes. The trend in both acquisition and administrative expenses remains excellent. Turning to page 14 on financial results, investment result was up 10%, mainly driven by higher income from the fixed income portfolio. Excluding realized gains and the mark-to-market of investment funds, which, as you know, adds volatility, the financial result will have grown by almost 27%. As usual, we are providing the credited interest in a separate line for clarity purposes. On slide 15, we disclosed the portfolio composition, the movements that flow directly through equity, and some other metrics. The message here is that the overall yield of the portfolio increased to 3.1%, excluding net realignance gains. The overall duration of the fixed income portfolio is 2.9 years. Moving on to our solvency position. Solvency margins remains very solid at 183%. As with regard to eligible own funds, we have positive contributions, earnings, the development of the portfolio, and finally the provision for premiums. For its part, SCR increased by 6 million euros in the quarter, driven by market risk. The increase in the symmetric adjustments posted by regulators and a greater exposure to equities explains the vast majority of SCR movement. To conclude, in 2023, the company implemented many actions needed to adjust our business to the complex macro and micro sectors. a scenario of the insurance sector. We knew, and we shared this with the investment community, the short-term negative impact on the company's financials. But we also knew that those actions were appropriate for the future well-being of the company in the medium-long term. Now, although the market environment is still quite complex, we have started to see the result of past actions with an encouraging and consolidated change of trend, yet still much is to be done. Thank you very much. And now I will hand the call to Beatriz to begin here.

Thank you very much for the presentation, Carlos. First, we'll begin with the questions received from the conference call.