Mapfre Sa Reg Shs

Good afternoon and welcome to MOPFRI's activity update for the first quarter of 2025. This is Leandra Clark, head of investor relations. Thank you for joining us today. We have here with us Jose Manuel Enchausti, first vice president of MOPFRI, who will make a few opening remarks and will give an overview of recent business trends. Later, Jose Luis Jimenez, the group's CFO, will comment on the main financials, and Felipe Navarro, deputy general manager of the finance area, will walk us through the balance sheet and 2024 embedded value figures, which were also released this morning on our website. Just as a reminder, this information is prepared under the local accounting policies applicable in each country. You can use the Ask a Question link at any point during the call, and we will open up the Q&A at the end of the presentation. I will now hand the floor over to José Manuel Enchausti.

Thank you, Leandra. Good afternoon, everyone. Thank you for your time today. Let me share some of the highlights of the quarter before José Luis and Felipe walk you through the details. Last year was a record year for MAFRE and I'm happy to announce we have started 2025 in an excellent position with the first quarter figures in line with the updated targets we announced at the AGM. As the Chairman stated, these excellent results confirm our positive outlook for the year, with improved ratios and more balanced sources of income and profit. Growth remains solid in most markets. Recent exchange rate volatility is affecting the top line, but premiums are still growing by 5.4%, reaching 8.6 billion euros. Excluding life savings, which is a more volatile business, they are growing nearly 6% in line with our target. Profitability continues to improve, with the non-life combined ratio at 94%, down nearly two points, with significant reductions both in the claims and expense ratio. The net result is up nearly 28%, reaching 276 million euros with an adjusted ROE of 12.8%. Our capital base remains strong despite market volatility. with shareholders' equity at 8.4 billion and the solvency ratio at 207% at year-end, above the midpoint of our target range. Our privileged business profile, with a high degree of diversification and a very broad approach to investment management, is helping mitigate the impact of this volatility. The implementation of our strategic plan is on track and our core businesses are all performing well. In Iberia, we have made significant advances in technical management and the motor combined ratio has improved by over seven points, reaching around 98% and we expect it to continue improving in the coming quarters. Overall, Iberia has made an excellent contribution with 121 million euros, up 66%, thanks to its diversified business mix with the motor business now in positive territory, as well as strong results in general property casualty and the life business. In LATAM, performance has been excellent, with most countries now with combined ratios below 100% and improving, except in hyperinflationary markets. Brazil has had an excellent quarter, with a net result of 62 million, and there have also been important contributions from Mexico, Peru, and Colombia. The live business is highly profitable and non-live business has improved significantly and financial income continues to be a tailwind. The region reported a total result of 118 million euros up 25%. The largest challenge we are facing right now is currency volatility, which has increased in the last few weeks. We have lived through other similar periods in the past and are confident that our diversified business model will continue to prove resilient. North America is reporting one of the highest first-quarter profits ever, with €30 million up 94%. Technical measures are paying off with a relevant improvement in motor, with the combined ratio under 97% and solid profitability in general property and casualty. MAFRE-RI continues to show solid performance. Growth has been excellent this year, and MAFRE-RI's prudent approach to underwriting, diversification, and retrocession continue to deliver results. We faced a large claim in the quarter due to the California wildfires, one of the costliest events in the history of the U.S., with a net impact of 85%. million euros after retrocession tax and minorities. Our reserves continue in the upper end of our confidence interval and we increase prudence even further during the quarter. That was due to a conservative approach in the face of an ongoing rise in secondary perils over the last few years, in particular storms in Europe and in advance of the North Atlantic hurricane season. Results were resilient with a net result of 48 million and a combined ratio under 98%. In conclusion, our core businesses are delivering exceptional figures, supported by a focus on technical excellence, diversification and tailwinds from financial income. These outstanding results are backed by a long-term strategy focused on profitability growth technical excellence and diversification as set out in our 2024-2026 Strategic Plan. Now, I will hand the floor over to José Luis to walk us through the main figures.

Thank you, José Manuel. As mentioned, premiums are up over 5%, with a nearly three-point strike from currency movements, as we continue to see headwinds from the Brazilian real, the Mexican peso, and other Latin American currencies. At cost and exchange rates, premiums are up 8%, with growth in most lines of business. Non-life, which is around 80% of our business, continues to be supported by tariff adjustments. Premiums are growing almost 10% at cost and exchange rates, over 7% in euros, reaching nearly 6.8 billion. Performance in the accident and health line has been noteworthy. Our 5.5% general P&C is growing nearly 4%, while motor is growing over 3%, reflecting our risk appetite. Preinsurance is having an excellent year, up over 7%. The live business, which is around 20% of premiums, is down 1.5% in euros, with a drag from the Brazilian real. In local currency, premiums are growing 2.4%. I will now discuss the key trends by region, complementing the figures already provided by Jorge Manuel. In Iberia, total premiums are growing around 3%, with non-life up over 5%, with strong trends in most lines of business. Life premiums are down around 3%, which I will explain later. The combined ratio has improved over 4 points to 95.6%. The higher returns on the investment portfolio continue to boost the financial result. The return on equity is now approaching 13%. Profitability in LATAM has been excellent, with a return on equity around 18%. Both the non-live and live businesses are contributing very positively, and financial income remains a tailwind. Brazil continues to see exceptional profitability, posting a return on equity of around 26%, and a net result of 62 million, with improved technical ratios and high investment returns. The non-life combined ratio is around 76. Premiums are down 12%, with a strong impact from the Brazilian real. In local currency, business volumes were flat, with life and agro-segment still affected by the rise in interest rates. Odela TAM continues to show strong profitability, contributing over 56 million, up 68%, with improvements in technical results in most markets, with an almost 5% reduction in the combined ratio to 95%. Premiums are up over 10% in euros, with a strong growth in local currency in almost all countries in the region. In North America, the net result reached 30 million, nearly double compared to last year. Driven by underwriting measures and significant tariff increases, the combined ratio has decreased over three points now to 97.4%. In EMEA, losses have been reduced significantly, from 9 million last year to around breakeven this quarter, with an 11-point reduction in the combined ratio. There has been noteworthy improvements in motor in Germany and Italy, thanks to technical measures. Regarding mufflery, José Monel has already gone over the main figures and the impacts from the fire, which were 85 million net, 136 million gross. I would like to comment that the reinforcements of our SF had a one and a half point impact on the combined ratio. Finally, MAUDI continues to contribute positively. I will also like to address two specific items. There has been lower hyperinflation adjustment from around 25 million last year to 9.5 million this quarter, mainly in Argentina. And second, last year there was a 50 million positive tax impact which affected the holding. Overall profitability levels in general P&C are excellent, benefiting from technical discipline, strong market positions, and diversification across our different markets. Premiums are up nearly 4%. The combined ratio is excellent, around 84%, and the net result was $87 million. In Iberia, premiums have risen by 11%, with growth in most segments and exceptional performance in commercial lines. The combined ratio was 96.7 and the result was 27 million, down due to reserve strength mainly in burial as well as large claims in commercial lines. On the other hand, we are seeing solid and improving trends in homeowners. In Brazil, premiums are down around 8% in euros, but nearly 5% in local currency. Agriculture issuance is still affected by the high interest rate environment and falling commodity prices. The net result is 37 million, up around 5%, and the combined ratio has improved to 68%. This excellent level is supported by the solid agro ratio, although slightly up, and a strong performance in the retail lines, as well as the lack of relevant events. In North America, premiums continue to grow, around 5%, supported by tariff adjustment. The net result stands at 6.5 million, up 5.5% compared to last year. Regarding the motor segment, first quarter results confirmed previous trends, showing a huge turnaround. The combined ratio is now around 99%, with a six-point improvement year on year. And the net result has reached more than 50 million compared to a little under 30 million in losses last year. In Iberia, the combined ratio is now at around 98%, and we expect it to continue improving throughout the year. Premiums are growing 4% and reflect average premium growth of 7.5%. In Brazil, premiums are down mainly due to the currency depreciation. The combined ratio is slightly up to 102.5% in line with increases in interest rates, which are helping reach a net profit of 3 million euros. In North America, the result reached 21 million euros, up nearly 190%, with the combined ratio down 5 points to 197%. Regarding other business units, performance in other Latinas has also been excellent, with all units now reporting combined ratios below 100, with the exception of Argentina. In EMEA, the combined ratio is also significantly down from 124% to 112%. In conclusion, the technical measures implemented are now clearly paying off, and these trends will continue improving throughout the year. The lab business contributed $70 million to the result, with Iberia being the largest contributor, followed by LATAM. In Iberia, total premiums are down 3%, affected by the lower level of layer 7 group policies. Protection premiums are up over 3%, with the combined ratio standing at an excellent 64.5. Portfolio yields continue contributing to the financial result with lower realized gains. The net result was 32 million. In Brazil, premiums are down around 19% impacted by the currency, as well as the high interest rate which affect lending and related insurance sales. The net result was 17 million, very much in line with last year, with the protection combined ratio at 83%. Regarding the rest of the countries, volumes are up over 20% laid by Odelatam. Performance in both Mexico and Malta has been noteworthy, growing 20 and 30 percent. The result reached 21 million euros. Now, I will hand over to Felipe to discuss the main balance sheet items.

Thank you very much, José Luis. Shareholders' equity stands strong at around $8.4 billion, down 1.5% due to negative conversion differences, mainly from the US dollar with an $18 million impact. The net unrealized capital gains had a negligible impact during the quarter. Leverage was 22.5% below the 24% framework we announced at our AGM, reflecting our disciplined approach to capital and debt management. On the top right, we have included the 2024 embedded value figures, where we are now using the CSM net of tax under IFRS for the multi-year business. Embedded value is down 4.6% to over 7 billion euros impacted by the Brazilian real. The value in force of the business is down 5.8%, but adjusted for exchange rate movements was only slightly down, and the total embedded value would be relatively flat. Return on embedded value was over 11%, with a positive contribution of new business from the life protection in Brazil, Iberia and other LATAM, as well as a burial business in Iberia. Total assets under management stand at over 59 billion, in line with the end of last year. We have lost 14 billion in third-party assets, making one of the leading non-bank players in Spain. Our investment portfolio reached nearly 46 billion with assets allocation stable during the year. The portfolio is defensive and well diversified with a high share of government bonds. 50% of the portfolio and the Spanish government remains are largest exposure with 9.6 billion. Our position in corporate bonds and equities is conservative. Our credit portfolio focuses on investment grade. The portfolio is highly liquid and we follow strict ALM policy which mitigates interest rate risk. In summary, our portfolio's defensive nature, high liquidity and focus on quality and diversification allows us to confidently navigate the current market environment. On the left, you can see our main fixed income portfolios. I will focus on the actively managed ones, which are not immunized or cash flow matched. Regarding the euro area, yields are up over 20 basis points since the year end, and and relatively flat in Iberia. If we exclude linkers, the yields in the non-live portfolios will be around 50 basis points higher. Accounting yields are still below the current market levels in most portfolios and duration is lower. In other markets, accounting yields in Brazil are significantly up, over 150 basis points, with the portfolio yield approaching 12%. In other Latin America and North America, yields have been stable and still below market rates, with room to reinvest at higher returns. Regarding non-life net financial income, it is up 4% in Mafrería and Iberia, significantly increasing on the back of higher yields and capital gains. Although LATAM has been affected by the situation in Argentina, where inflation-linked investment yields and forex gains are down, this has been compensated by improving hyperinflation adjustments. On the right, you can see net financial gains. We reached 22 million, up over 10 million year on year. Iberia was the largest contributor with 19 million, the majority coming from the non-life business. Now, I will hand the floor over to José Manuel to make a few closing remarks.

Thank you very much. Felipe, as you have seen, we have had an excellent start to the year. We can now confirm that we are witnessing a clear recovery in the Iberian motor market, while other markets are performing well or improving. Diversification continues to be one of our strongest assets. This is proof of the sustainability of our business model with diversified and balanced source of income. Financial income remains a tailwind and our balance sheet is resilient. We have been navigating geopolitical instability over the last few years. Recent developments have added a new level of complexity and uncertainty to the global outlook. Higher barriers to trade could lead to higher recession risk and a spike in inflation, but the insurance sector tends to be counter-cyclical in the short term. We are well prepared to face this constantly changing global context. Market volatility has been high over the last few weeks, but we feel very confident in the strength of our balance sheet. Our investment portfolio is well diversified. Solvency is high and very stable. It is early in the year, but we are confident that we are on the right track to meet the updated financial targets we announced at our ATM in March. Now, I will hand the floor over to Leandra to begin the Q&A.

Thank you, Jose Manuel. As a reminder, you can use the Q&A tool on the bottom of your screen. We will organize the questions by topic and answer them as time allows. We've already received quite a bit of questions. So we're going to start first with Brazil. Juan Pablo from Santander is asking, how do you see premiums evolving during the year? Do you expect a recovery in the next quarters? And what is your outlook on claims and combined ratio?

Okay, thank you very much, Carlos and Juan Pablo, regarding your questions. Probably in Brazil, probably it's quite difficult to say what's going to happen in this high level of uncertainty that we have during the last weeks. But it's true that we expect the combined ratio to be around that level. We are saying in different road shows and meetings that probably the most probable outcome is that it could deteriorate a bit. But it's true as well that on the second half of the year, we expect lower interest rates that could help us to grow in premiums. In a recent meeting with the Bank of Brazil, I remember that his chief financial officer as well, he said that things probably could improve in terms of growth during the second and third and fourth quarter. So we are on the same line.

Thank you, José Luis. We have another question coming from the MOP Free Rebusiness. Just give me one second, please. From the Mark Free Rebusiness. The question is, what is the reason behind the strong evolution of premiums during the first quarter of the year? the growth in the Mutt Free Rebusiness during the first quarter of the year?

We can see that the first quarter of the year was a very good quarter with a very high increase of the gross return premiums, which helped us to offset some of the bad trends that we may have seen in certain markets. What we can say is that this growth of 7% on the reinsurance business was mixed with a 20% increase in the global risk. We have to bear in mind that part of the programs have been renewed in this first quarter, so there will be some kind of seasonality in this figure. But we look very positively to the rest of the year. We need to see how can we improve these levels and continue moving forward in quite a good performance of the reinsurance unit.

Thank you, Felipe. We're going to stay on a similar topic. We have Max from JB Capital asking about our view on the evolution of prices in the global risk business. And do we expect any positive impact from macro volatility for the global risk business?

Well, as always, I mean, it is extremely difficult to make forecasts about the future, especially when you have such a level of uncertainty around. But it's true that in any volatility period, you have as well opportunities. I think we are well prepared. We have a well diversified business in terms of products and geographies. And I think that we can take profit of this opportunity. if things doesn't deteriorate too much. I would say it's too soon to say, but because every day we are seeing news coming in and out with different messages, but I think we are extremely well prepared to deal with whatever it comes.

Thank you, Jose Luis. We also have a few questions regarding the California wildfires, both from Carlos Peixoto at Caixa and also from Max at JB Capital. The first question is, is it feasible that Mott Free net profit could be at similar levels in the upcoming quarters despite the impact from the California wildfires? And how much was the impact from provisioning at Mott Free Re?

Okay, the California wildfires that, I mean, we said that was impacting 85 million net on our accounts. This is well in the first quarter. We don't see any kind of evolution or negative evolution of this wildfire that should be already fully booked. The possibility of MAFRE re-evolving during the year, I mean, we have seen that there was some reinforcement of reserves and these wildfires that were impacting this first quarter combined ratio. There will be some 1.4, 1.5% of combined ratio that is related with this reinforcement of reserves. And the evolution for the upcoming co-quarters will depend very much on the evolution of the rest of these secondary periods that we announced, that we are speaking. in the last years, and the evolution of the hurricane season in the North Atlantic, which is our area of risk that could be affecting the numbers in the future. But we foresee that with the numbers that we have, with the level of premiums, having a normal year that could be a good year for mafrerie as well.

Okay, thank you. We're moving on to the next topic. Actually, there's a follow-up question from Carlos Peixoto. The specific question is, if we exclude the 85 impact from the California wildfires, the profit would have been around 360 million. The first quarter would have been at 360 million for the group. Is this a sustainable quarterly run rate for the group?

Well, I think we hope so, but you never know. I mean, it remember us that the wildfires in California has been one of these cat events, very difficult to predict. Probably has been the largest event in the U.S. in history. Fortunately for us, it's something that we can absorb with our cat budget during the quarter. But looking forward, we expect from Malfoy a very good performance, depending on how things evolve.

Just to be more specific, MAFRE has in its own business, in its nature, to have these kind of big nut-cut events, those big man-made events and those events that can affect dramatically the numbers of MAFRE. If we don't have those kind of events, probably the results of MAFRE are going to be boosted for the near future. But in any case, I think that we should expect that it is normal for Muffler Re to have these kind of events from time to time, having secondary periods that are affecting the combined ratio as well. And we should be and live with this kind of business because this kind of business is very much affected by this nature of claims.

Thank you. Thank you, Felipe. Thank you, Jose Luis. We're going to move now on to the Iberia business. We've received some questions on motor. I'm going to start with the other... Can I just... Oh, of course.

Can I just start off speaking about Maffre Re? I would like to highlight that Maffre Re still aims to grow in three areas mainly. We would like to expand our catastrophic book in the U.S., excluding, of course, southeast hurricane-exposed state. We would like to diversify more into casualty and life business in Europe. And finally, we would like to increase in operations in China. And I remind you that we have recently opened a new subsidiary office in Beijing. So as far as we are very proud, very happy with our current reinsurance business, and we would like to expand it to these fields I have mentioned.

Thank you, José Manuel. Very interesting. So now moving on to the Iberia business, we're going to start with questions we've received on general PNC. We received from Paz Ojeda at Bank Sabadell. What is the reason of the increase in reserves and both in burial and commercial lines in Spain? What impact has it had on the combined ratio? Is this a one-off and will it continue in the following quarters? First of all, I'd just like to clarify that there wasn't an increase in reserves only applied to the burial business, not to the commercial lines. What we stated during this presentation is that there were a higher number of claims in the commercial lines business. And the impact on combined ratio was around three points. I'm going to hand the floor over if the team would like to add anything else on that.

Just to specify that this adaptation of the reserves on the burial business is something that we do during the year normally and happens every year just to adapt on the transitory measures that we are applying on this business. So it's something that is usually done during the year. This year is true that we have done it fully booked on the first quarter, but I mean it's something that is normal during the year.

Thank you, Felipe. We also received another question regarding the health and accident combined ratio for the Iberian region and what's behind the strong improvement.

Okay, thanks, Sandra. It is true there has been a strong improvement in December with a combined ratio down around 14 points to around 90. The durable result improved as well from around break-even last year to over 23 million in the first quarter. And this business segment historically experienced strong seasonality with higher losses on the first quarter of the year and the ratio tended to improve gradually on quarter until year end. Now the premium has been adapted to this seasonality and we should expect a strong performance throughout the year. This has led to a strong increase in net premiums earned up 60% year on year in health and accidental business. Finally, last year we finished the year with a combined ratio of around 97%. We should expect similar or improved performance this year.

Thank you. We have another question regarding the life business. Do you expect recovery in volumes for life savings in Spain for this year?

I would say yes. The performance in the first quarter has been affected by an excellent beginning in the first quarter of the previous year. So I think we will be recovering the life premiums growth in the next quarters.

Thank you. Now I'm seeing we're receiving quite a bit of questions on the motor business, so maybe it's time that we move on to the motor business. Alex McKenzie from BNP comments that the improvement in the Spanish auto combined ratio has been remarkable. Could you please explain whether there have been any reserve releases in the quarter and how that compares to the reserve movements in Q1 2024? How has the weather experience been in Q1? Or how would you describe frequency in the first quarter? I mean, I think most of the questions we're receiving is they'd like to know, is there anything extraordinary in these very strong first quarter results for motor in 2025?

Okay, that is a very interesting question. I mean, I think that the main topic here is how the motor evolution in the first quarter in Spain. There is nothing extraordinary on the first quarter. I think that if we look at the frequency, it should be a little bit lower than the first quarter last year, but I mean, it should be on similar levels. Probably what we have seen is that there was, and we mentioned this, that was certain reinforcement and revision of the reserves last year because there was this evolution of the reserves on the personal injuries that were affecting the numbers that we have been presenting. So there was this twofold consequence. First, the earned premium that is feeding into the profit and loss account, which is evolving in the positive way. And the second is that we are not putting any extra level of reserving on the personal injury. But for the rest, I think that we are just moving forward with a normal first quarter of the year, which has had its rains and its weather events, but nothing that is going to be affecting more or less than the different quarters. So we should see this kind of evolution during the year. There was nothing extraordinary during this first quarter.

If you'll allow me, Philippe, regarding the weather. I mean, you know, the weather, I would say, has been relative benign during the first quarter, although we have to say that Spain has been probably the country where we have more rain across all Europe. So despite we have such period of, I would say, heavy rains, we managed extremely well.

Thank you. We received a group of questions from Paco Riquel at Alantra, Max at JB Capital, Juan Pablo from Santander, and David Barma from BOFA. And they're all looking at a very similar topic, which is the fall in the policy count in modern Spain. They want to know, do we need to moderate the increases in tariffs to stop the policy cancellations? They'd also like to know what type of customers are we losing and should this stop? And in general, where do we see average premiums and policies evolving in the coming quarters?

Let me make some considerations. The first thing is that we are very selective on adjusting tariffs to each type of customer and depending on their circumstances on the type of business. What I will say is that, in general speaking, the retention rate we haven't seen a decrease on that rate so we have very solid retention rate and the lower retention rates is affecting to a very high claims ratio customer and some customer coming from commercial lines with the technical result was not very good at this the loss of customers are concentrating in these two type of of customers. For the rest, retention rates are sustainable and conversion rates are still going well within our networks.

And also, I mean, if you allow me to add something, probably what we did last year and probably we have continued slightly during the first quarter has been the pruning of fleets, where we see that they had a more higher combined ratio. So we prefer to cut this line of business a little bit. We are still doing fleet insurance, of course, but probably with lower points compared to last year. The other important thing is that the average premium last year, we grew more than the market, around two points. And the figures that we have for the first quarter, we are more or less aligned with the market, with the same rates.

Thank you. We just had one other question come in specifically from Paco Rical from Alantra. He would like to know if the Q1 results were affected by the Easter holiday. I think we had already mentioned that there was nothing extraordinary in these results, but maybe someone else would like to add.

Just to mention, I mean, usually Easter holiday is a period where there are usually less claims coming from this specific week. And they're spilling this kind of claims in other weeks during the year. In this case, Easter was in April, so there is nothing affecting dramatically the Easter in this first quarter. So we should see... this quarter as a normal quarter in the company for this year. There is nothing affecting this.

Thank you, Felipe. And we have one more question on motor, and it asks why the average motor claim costs seem to have come down so quickly during the quarter and even more than expected. Is there any explanation for this? And the second question is, are the Beremo updates complete? And the third question is, where do we see the Spanish motor combined ratio in the coming quarters? Will it improve from this 98% level?

Let me make a general consideration. We have been working on controlling the motor combined ratio in every country for the last three, four years after COVID. And this is not a lucky thing or this is a tendency that it will continue in the coming quarters because all the measures that we have taken leads to improve this combined ratio. So we expect good news. in the coming quarters?

If I may add on the average cost of the claim, I think that what we have seen and we already mentioned, that was that on personal injuries last year, we made a deep revision and deep understanding of how the evolution of the different personal injuries claims were going to have. This was done and affecting during the last quarter last year. And what we have seen during this quarter is a normal evolution of the claim. So it is not that we have an average lower claim during this year. But I mean, this is something that if we take part in this evolution of the third quarter last year, we should have the normal one. And I would mention as well that... What we are seeing as well is that the price increases and the adaptation that Jose Manuel was mentioning before is feeding into the profit and loss. So the direct consequence is that the combined ratio is going to improve. And this is what we have seen during this first quarter.

Thank you, Felipe. So I think, well, thank you for that excellent overview of the Iberian business. Now we're going to move on to the North American business. We have two questions. The first one is from Path Ojeda at Banque Sabadell. Specifically, she would like to know about the impact of tariffs on average claims costs and insurance rates in the U.S. business.

Thank you, Leandro. Well, as I said at the beginning, I mean, it's quite difficult to measure the impact right now, basically because all the news that we are receiving changed from one day to another. Probably you asked the same question, I would say, on Monday. We were expecting a 25 increase in tariff to car parts as well as steel and aluminum, which probably is still very important for cars, for the car industry. Right now, it seems that all this tariff won't happen. That's the last news that we already have. But probably this could change. I think we are well prepared in the U.S. We did a lot of technical measures in the last two or three years. The combined ratio is down below 100. Probably we expect even to try to improve this in the coming quarters. So we are confident. It is true that regarding what we call right now geopolitical risks is something that we cannot measure and do proper planning looking forward because it's extremely difficult. But the thing that after COVID, I would say the companies are well prepared for these kind of events, much better than probably, I don't know, five years ago. So we do not expect right now a big impact on this.

Thank you, José Luis. We also had another question on Germany right now. The question is if you could comment on the German motor business and where we see it going in 2025, the German motor business and the evolution of the combined ratio.

I mean, the situation of the German motor business is not affecting only MAFRA, it's affecting the whole industry, as we mentioned previously in previous presentations. The measures that have been taken in Germany should make this line of business back to profits in the following quarters, but for the moment, we need to bear in mind two things. First, the most part of the renewals happen at what they call the year-end business, so it's business that's been renewed during December and January, and then this is going to be affecting and speeding up during the year, so it takes time in order to move ahead with the adaptation of prices to the reality of the company. And second is that All the industry is in a similar situation. So we are moving ahead together with them in order to rebalance and put this design of business into profitability again. But it's going to take time. It's not easy. It's longer than in other countries. But it's moving ahead and the numbers that we have for the moment are very hopeful and looking positively in the future. So that is something that we need to solve and that is going to be solved in the future quarters.

Thank you, Felipe. We received a follow-up question, and specifically PATH would like to know what is the motor combined ratio in the German market and how it's evolved during the year. I think basically what we can say is, and we had mentioned it last year, of course it's above 100%, but it's the strong improvement you're seeing in the EMEA region is largely driven by the improvement in the ratio in Germany. Thank you. Going back to North America, we've received another question on the combined ratio in motor. And again, Max from JB Capital would like to know, is there anything extraordinary in this good performance? And also, given the recent premium increases, should we expect this combined ratio to improve even further?

I think we discussed this a little bit earlier, but I will say that there is nothing extraordinary, maybe a little bit of benign weather on the first quarter. That's all. And, yes, I mean, we hope and we work harder in order to try to improve the combined ratio of food.

Thank you. Now we're going to move on to the rest of Latin America. Paco Riquel from Elantra would like us to comment on the performance in the other markets outside of Brazil. What countries and businesses are contributing the most? How sustainable is this contribution? And in general, what's behind the strong technical results and where should we see the combined ratio?

Okay, I mean, the Guardian or the LATAM, I think the performance has been incredible. I mean, just in line with our strategic plan. I mean, most of the countries are contributing quite positively. I would like to remark in the case of Mexico, Peru, Colombia, as probably the key markets in the region, with the exception of Brazil. But also on the other hand, we have seen strong improvements in countries like Panama, Honduras. as well as even Argentina. Maybe it's a quite difficult market due to the macro picture that they are dealing with. But despite that, I think we see a more positive view on Argentina right now. And with the new introduction or just the new bounce for this change rate, we are confident that probably even Argentina could improve further on the coming quarters. But in general, I would say all the LATAM has really performed well, and we expect this trend to continue in the coming quarters. It is true that with such level of uncertainty that we are dealing with, it's extremely difficult to do forecasts about the future. But we tend to believe as well that Latin America could perform extremely well in this new geopolitical or new world order. Because if the new agreements with Europe, and probably as well with the US, maybe it's a region that can take profit of this uncertainty in the coming years.

Thank you, José Luis. We just received another question from Alex McKenzie at BNP. He would like to know if we have an estimated impact of the recent FX moves in the U.S. dollar and Latin American currencies on our shareholders' equity, solvency, and on earnings for the rest of the year. Maybe we can share some light on that.

Probably, I would say, not too much. The impact is not great. I mean, it's a normal impact as we have had in past years. But it's important to say that probably the figures we are looking at right now may be could change completely in the coming months. because we are seeing that this tariff policy are changing completely. So we have seen big movements on the US dollar and the US dollar as well is affecting overall emerging market currencies. But this is something that we get used to it. I mean, due to our geographical footprint, this is something that shouldn't be a concern for us. We are... we know how to deal with that. Probably we expect that we have some kind of mean reversion in the coming month if things are more stable and the uncertainty is reduced.

Just to mention that we are coming from a situation where our balance sheet is extremely strong and the level of solvency that we announced today, this last update on the numbers that were going to be communicated by the end of May, is that we are in a 207% solvency to ratio, which is excellent for the higher part of the range.

And if we add as well the transitional measures, this figure moves up to 214. That's the figure to compare with all the peers.

Thank you. On a similar note, we just received a question from Juan Pablo in Banco Santander asking about our very strong solvency levels at 207% and at the higher part of the range. And what he would like to know is if capital continues to build up, do you have any plans to allocate this excess? Max from JB Capital is also interested in that. Where do you want to deploy the excess? And do you have a preference of dividends, M&A, maybe share buybacks?

There is, I mean, there is a very limited possibilities of any kind of share buybacks. From the M&A, I think that we've been very constantly sending the same message, that we are looking to opportunities. We are looking to very specific markets, which is, we mentioned, usually markets. Spain, Germany, in Latam, probably Brazil or Mexico, and certain complementary business to the one that we have in the US. And those are the areas where we're looking at. We are not in a hurry and we will continue building and looking for opportunities. It is not something that we need to do in the short term. On the dividend distribution, I think that we need to mention what the chairman of the group said already. If we continue growing in profitability, the dividend should continue growing at the same pace. And the minimum of 50% of distribution of dividends has already been mentioned by the chairman at the last AGM. So we continue in the same trend. The numbers that we are posting are within the range that we have already mentioned. In this case, we are a little bit higher than the 200%, but in other cases, we've been a little bit lower than the 200% and nothing was decided or moving dramatically. I don't know if José Manuel or José Luis, do you want to add something at this?

I mean the dividend has grown during the last three years in a row and if things go well and we continue improving on the technical side and there is not or maybe a lower incentive they're looking for it's all depend I mean as the chairman said if the business grow the profit grow probably the dividend will grow as well but it's too soon to say.

Thank you. We seem to have no further questions. I want to thank you all for your time today. Before we say goodbye, I'm going to hand the floor back over to Jose Manuel so he can just make a few closing remarks.

thank you very much and thank you all for your question just to remark the the improvement on the technical performance of the company a combined ratio of non-life is 94.1 percent 1.7 points of improvement. General PC is deteriorating a little bit, 0.7%. And especially I would like to remark the improvement in motor insurance. Motor insurance has been our focus in the last three years. We were worried that at the inflation, the impact of the inflation rates in our core ratio. And now the improvement is about six point, comparing with the last year. So we are very happy with that. satisfaction for all of us to can share these results and 99.3 is not a final end of the combined ratio but it's a great advance to have recovered the the profitability in the motor insurance ratio our main our main operations are spain and us are between 98 and 90 97 percent and the other peak operation brazil which is around 102 percent i would like to remind that given the the highest uh the high interest rate, which is about 14%, it's impossible to ask an operation like Brazil to have better performance in the combined ratio, in the motor combined ratio. So, very happy with the results and we expect further improvements in the in the next quarters, but everything according to the long-term strategy that we have deployed some years ago.

Wonderful. Thank you. Thank you for your time today, and goodbye.