Linea Directa Aseguradora, S.A.

Good morning, and welcome to Linea Directa's conference call to discuss June 2024 results. I am Beatriz Izar, Head of Investor Relations. As usual, we will first walk you through the slides, and then we will be happy to take any questions you may have. Now, let me turn the call over to our CFO, Carlos Rodríguez Duarte.

Thank you very much, Beatriz. Buenos dias, good morning, and thank you for joining us. We'll go straight to page number five. The first half of 2024 has been marked by a further consolidation of profit and a remarkable change of trend. We are pleased to present these results. Combined ratio dropped to 95.5% in the first half, 12.4 percentage points below of that of 2023, and stood at 93.6% in the second quarter standalone. This noteworthy trend was mainly due to the decline in the loss ratio. with a much better claim experience. Nonetheless, also expenses continue to behave, and expense ratio dropped to 22.1% and 21.9% in the quarter. Gross return premiums grew by 2.4%, with an acceleration in the health line of business. Another highlight is the customer portfolio, reversing the recent trend and growing in the quarter by 0.7%. All things together, Net income increased to 25.4 million euros, which compares to the loss of 50 million euros in the first half of 2023. Finally, solvency ratio stood at 191%, mainly driven by the positive results. The Board of Directors approved yesterday a first interim dividend on account of 2024 results for an amount of 50 million euros. Payment date will be August 1st. Considering such dividends, solvency ratio stands at a very comfortable 184%. Turning to page number seven, insurance revenue were up 2.7% with the contribution of all line of businesses. Technical profit stood at 21.6 million euros, accelerating the positive trend of the first quarter. Loss ratio dropped by 12.3 percentage points and expense ratio a further 0.1 points. Correspondingly, combined ratio dropped to 95.5%. As with regard to the second quarter standalone, combined ratio stood at an excellent 93.6%. Investment results was down 1.1%, mainly driven by the impairment of the ATOS bond. Underlying investment results will have been up by 26.2% on the back of higher income from the fixed income portfolio. Credited interest, which is shown separately from investment results for clarity purposes, is the financial unwinding on the prior year discounting of the provision for claims incurred. The unwinding was an expense of 4.3 million euros for the first six months of the year. Altogether, Profit after tax stood at 25.4 million euros, which compares to the loss of 50 million euros over the same period of last year, a turnaround of more than 40 million euros. Let's go to page number eight. As usually, we break down premiums and policyholders by line of businesses. Health continues to enjoy significant revenue growth. The portfolio also grew in the quarter standalone in motor and home. reversing the trend of the last four quarters. Turning to page number nine, the portfolio motor insurance grew by more than 5,300 policyholders. Insurance income continues to increase, although with a slight moderation of growth as compared to the first quarter. Coal mine ratio had an extraordinary progress as the result of the prudent management of claims and rate action taken in 2023. we can safely say we are back to the technical profit, yet we will continue working on this front. Turning to page number 10, in the home business, as with motor, in the second quarter, the portfolio of customers grew, restoring an upward trend. Premiums grew by 4.4% at the same rate as in the first quarter. Combined ratio was particularly low, at 88.8% and 81.1% for the six and three months respectively. The absence of weather events was a key component to which it is also fair to add the careful subscription. As we regard to the health business, the remarkable growth continues. Combined ratio also had an outstanding performance as compared of last year. We need both skills scale and efficiencies from the marketing and operational side of the business to reach our break-even goal. And this is where our efforts are being directed. As usually, full disclosure on combined loss and expense ratio by line of business is provided in page 23 and in the Excel Financial Supplement. Please let's move now to slide number 12. Loss ratio continues to improve. and stood at 73.4, 12.3 percentage points lower from last year, with motor leading the improvement. Also, health and home posted lower claims experience on the back of lower average costs and limited frequencies. Home was also aided by the absence of weather events. Turning to page number 13, on expenses, the company does not separate from its efficiency roadmap. The expenditure is very much controlled and below premiums growth. The trend in both acquisition and administrative expenses remains first class. Turning to page number 14, on financial results, investment results was down 1.1%. Prudently, the company decides to account for for an impairment in a bond on the French technological company Atos. Excluding such effect and the mark-to-market of the investment fund's financial result will have been up by 26.2% in line with the first quarter. The increase is driven by the income from the fixed income portfolio. As usually, we are providing the credited interest in a separate line for clarity purposes. On slide 15, we disclose the portfolio composition, the movements that flow directly through the equity and their IFRS 9 and some other metrics. The message here is that the overall yield of the portfolio stands at around 3%, excluding realized gains or losses, and the overall duration of the fixed income portfolio is 3.2 years. Portfolio composition, with minor changes, remains pretty much the same. Moving on to our solvency position, solvency margin rose to 191% in the quarter, the main contributor being the profit of the quarter. The Board of Directors yesterday approved an interim dividend on account of 2024 results of 50 million euros to be paid on August 1st. Considering such dividend, solvency ratio stands at a very secure 184%. For its part, SCR remained pretty much stable on the back of positive offsetting negative effects. Mainly, we recorded higher exposure to corporates offset by lower balances of deposits and the moderation growth as reflected in the non-live SCR. To conclude, in 2024, we are harvesting the fruits of coordinated and persistent actions that we needed to adjust our business to the new market environment. These results are a reason to be pleased about. Yet, this is not to say that we're easy in our efforts. We will continue to work to deliver better results. Thank you very much. I will now hand the call over to Beatriz to begin the Q&A session.

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