Mapfre Sa Unsp/Adr

Good evening and welcome to Mapfre's activity presentation for the first quarter of 2024. This is Leandra Clark, Head of Investor Relations. Thank you for being here with us today. It is a pleasure to have with us Fernando Mata, Group CFO and Vice Chairman, as well as Felipe Navarro, Deputy General Manager in the Finance area. They will walk us through the main numbers. We are also happy to have with us Jose Luis Jimenez, CIO and Deputy CFO, who will participate in the Q&A session at the end of the call. As we have said, we are reporting new IFRS financial information twice a year, at half-year and year-end. We continue with our commitment to transparency with the quarterly activity updates reports, like the one we released this morning. Just as a reminder, this information is prepared under the accounting policies applicable in each country. As a reminder, you can use the Ask a Question link at any point during the call, and we will open up the question and answer session at the end of the presentation. Let me turn the call over to Fernando. The floor is yours.

Good evening, everyone. Thank you, Leandra. Thank you all for being here with us again. The quarter's strong results are proof that our profitable growth strategy is working and that the KPIs are in line with the targets set at the recent AGM. We're growing strong in almost all markets and accelerating measures to correct imbalances. Our proven business model with high levels of diversification is helping us again, and we continue growing in the most profitable segments, while motor is still overcoming challenges. Regarding our main KPIs, premiums are up 4.6%, over 7% excluding life savings, reaching more than 8.1 billion with solid growth in LATAM, Iberia, and North America, as well as reinsurance. The net result of 216 million is up 70%. This strong result was based on, first, the relevant improvement in non-life technical profitability with an almost three percentage point reduction in the combined ratio to 95.8%. We have made significant progress and the underwriting measures and tariff adjustments already implemented are showing results, but we still have some way to go in the coming quarters. Second, the growing contribution of financial income in all regions, especially LATAM. And third, the stability of the life protection business in Iberia and LATAM. With this result, we have delivered an ROE of over 10%, 11% excluding the 2023 goodwill write-down. Regarding Solvency II, the provisional ratio, including transitionals, was 208% and 2023 year-end, almost 200% fully loaded. Final figures, as you know, we will report it on May 20th with the Group Solvency Financial Condition Report. These strong figures reflect the positive trends in our main markets. LATAM, especially Brazil, continues the group's growth engine and it is the largest contributor to group earnings. Iberia maintains leading market shares in main lines of business with continuous technical improvements. In North America, the already implemented technical measures have led to a radical turnaround in profitability. Maffrey Rea has doubled his profit, supported by solid business growth and also the absence of relevant net cut events. The decision made in 2022 to boost Maffrey Rea's capital position in a hard market is now paying off. Finally, I would like to announce that the board of directors agreed this morning that the final dividend of nine cents will be paid on May 24th. Here we have the breakdown of premiums. Non-life premiums are up over 405 million euros with almost 8% growth in general PNC, 6% in accident and health, and 3% in auto. Life premiums are down slightly by 50 million euros after a really strong first quarter last year for life savings, particularly in Iberia. Life protection, a very profitable segment, is growing well, over 16%. As you can see on this chart, our business mix is well diversified, with around 75% in all life and 25% in life. My business is evenly split between savings and protection. And general P&Cs are largest line of business with around 34%, which includes homeowners, commercial, agricultural, and burial expenses. Motor represents 24% of total premiums, while accident and health represents 17%. Now I would like to discuss the key figures by region and units. First, in Iberia, premiums reached nearly 3.4 billion euros. Non-life is up 6.4%, with strong trends in homeowners, condominium, and health, among others. Late premiums are down due to an extraordinary 2023 in savings, while protection is growing around 5%, with both contributing significantly to results. Net profit stands at 73 million with ROE at 11.6%. Business in LATAM is consolidating the strong trends of the previous year and is the largest contributor to earnings with an ROE of close to 17.7%. Performance in Brazil has been exceptional and there have also been relevant contribution from Mexico and also Peru. The live business and financial income continue contributing very positively across the region. Focus on Brazil. Premiums are growing over 10%, supported by agro and life protection, which grew 8% and 15% respectively. The net result was 61 million euros, up nearly 14%, with ROE at 24%. The non-life combined ratio is down significantly to 77.5%, with both motor and general P&C improving. The life protection business also had a strong contribution to results. Regarding North America, premiums increased 8% on the back of relevant motor and homeowner's tariff increases, which will continue feeding into P&L. the auto combined ratio improved substantially, down over three points. And in general PNC, the combined ratio stands at 96%, down over 35 points, thanks to benign weather and significant tariff adjustments implemented last year. These improvements have led North America to deliver a 15.5 million net result, extraordinary compared to losses of 9 million the previous year. Puerto Rico recorded a 31% increase in business volume, surpassing 76 million in premiums, and contributing 4 million to results. In EMEA, premiums reached 416 million euros, a 4.7% decrease due to a fall in the light business with profits in Malta and also auto in Italy. The region recorded almost 9 million in losses, concentrated in Italy and Germany as a result of the current complicated auto environment. In Turkey, the positive performance of Euro-denominated investment has offset hyperinflation impacts, reporting profit in the quarter. And finally, Malta maintains earnings stability. Focus on Moffriery. Premiums were up 7%, reaching nearly 2.2 billion. The combined ratio was down nearly five points to 93.8%, supported by improving tariffs, especially for cat covers. There had been no large claims in the quarter compared to 2023, when there was a relevant earthquake in Turkey with a 72 million net impact. However, we're still seeing an upward trend in secondary perils and attritional claims. Net profit reached 67.3 million euros, doubled last year, and ROE is now over 13%. Modi continues to focus on the strategic markets for the group, with total business volumes growing 13.5%, with a net result of 1.48 million. I would also like to comment on two specific items. Hyperinflation adjustments had around 24 million impact, 11 million in 2023, mainly from Argentina. And also the second, in holding Spencer, there was a 15.5 million positive extraordinary tax impact as a result of the Constitutional Court decisions to reinstate, it was January this year, to reinstate tax benefits in the corporate income tax law that were eliminated in 2016. On the right of this slide, you can see the combined ratios by business segments. General P&C has an excellent combined ratio of 83.5%, down nearly four points. The auto combined ratio still has a high loss experience, but improved over one point to around 105%. And the accident and health combined ratio stands at 102.8% and is up one point due to an increase in costs. Now let's move on to the motor business. Given the current context, we are focused on rate sufficiency and defending our current portfolio. This is an ongoing process, as we mentioned in previous presentation. We're beginning to see the effects of the already implemented measures, but volatility and dispersion continues. The net result from motor has improved with losses down from nearly 30 million last year to under 13 million. The turnaround in the U.S. was spectacular, and now both Brazil and North America are in positive territory. The result in Iberia has improved modestly and still needs time for tariff increases to feed into results. Other markets in Latam are performing quite well, mitigating the complicated situation we're living in Germany and Italy. As we already mentioned, the group's strategy is to prioritize the most profitable segments. As a result, premium growth has been modest, 3.4%, with insured units down 5%. In Iberia, premiums increased 5%. The portfolio stands at a little under 6.1 million vehicles, down over 2%. In North America, premiums grew over 8%, with units down 5.6%. And finally, in Brazil, the auto business is down 7.7%, while the portfolio of vehicles is down 6%, with less appetite in fleets. The group's auto combined ratio was 105%, improving modestly by one point compared to last year and the last quarter. Iberia reached 105.7% in the quarter, slightly improving compared to last year, and is in line with the fourth quarter. The ratio should gradually trend downward. In North America, the ratio improved over three points and should continue to come down based on tariff increases. and Brazil's combined ratio is down five points year-on-year to 101.3%, with performance also slightly better than the last quarter of 2023. In summary, we're committed to adapting tariffs as much as necessary across the group. Brazil and the U.S. are already improving, and the tariff increases in the U.S. should continue to feed through the results. Spain will need some time to bear fruits, but we are pretty confident that we are on the right track. Let's move on to General PNC, which had an extraordinary performance. Premiums are up almost 8% and the combined ratio is down almost four points. In Brazil, premiums are growing 13% and the net result is up 7.5% to 35 million. The combined ratio stands at an excellent 69.6%, supported by the agribusiness in the absence of relevant weather-related events. In Iberia, premiums are up 6.7%, driven by homeowners and condominium lines, and accident and health. The result reached 48 million euros, up 30%, and the combined ratio was under 94%, even with some weather-related events in March and also some relevant claims. In summary, the well-diversified general P&C portfolio is performing well, with a significant contribution to profitability, nearly 93 million euros in the quarter. On this slide, I would like to comment on the life business, another relevant profit contributor. Premiums at insurance units are down close to 17 million after a really strong first quarter last year in Iberia. Life savings premiums, although down 12% from the extraordinary issuance in 2023, stand at 935 million, doubling 2022 levels. In Iberia, the retail segment remains strong and life protection is up around 5%. In Brazil, premiums are up 13% and the life protection business combined ratio stands at 81.6%, up 3.8 points, but still at excellent levels. The other markets, remaining countries, showed excellent premium and profitability trends, especially in Latam, with Mexico extending out. Now I will hand the floor over to Felipe to discuss our capital position and the investment portfolio. Felipe, go ahead. Thank you.

Thank you very much, Fernando. On the left of the slide, you can see our capital structure. Shareholders' equity reached over €6 billion, quite stable since the close of 2023. You can consult the breakdown of movements during the quarter on the right. As you can see, both leverage at 23% and solvency at 208% are in line with the reference framework included in our strategic plan. On the bottom left, we have included at 2023 embedded value figures, which is up 5.5% to over 6.9 billion euros. The largest move was in the NAV due to the strong increase in unrealised gains as well as retained earnings. The new business contributed positively during the year driven by Spain and life protection in Brazil. The return on embedded value improved reaching 10%. The detailed figures are available on our website with a reconciliation of the VIF and CSM among other details. Regarding an investment portfolio, there was no relevant change in asset allocation during the quarter with a slight increase in a corporate fixed income. Spanish sovereign debt continues to be the largest exposure with 9.7 billion euros. Regarding asset management, we are confident moving forward. Pension funds are up almost 4% and mutual funds are over eight during the year. We have more than 13.7 billion in assets under management, placing us among the leading non-bank players in Spain. On the screen, you can have some additional details regarding our nearly 32 billion fixed income portfolio. First of all, I would like to remind you that a large share of our portfolio is immunized or matched, so we will focus on the actively managed portfolios, which are the main contributors to the net income. On the top, there are the details of the euro area portfolios with a market value of over 12 billion euros. Overall duration is down and yields are stable or slightly up. The accounting yield in Iberia and non-life and RE are both over 2.5%. On the bottom, there are other main markets amounting to around 8 billion euros. Duration is slightly down in Brazil and the rest of Latin America and remains stable in North America. Yields are relatively unchanged, except Brazil, which is down to 9.5%, very much in line with the market yields, which places our portfolio in a comfortable position. Non-life income is up 45 million euros, growing 30%. EMEA is up over 12 million, which is an important share coming from positive exchange rates gained in Turkey, where a large share of the assets are in euros. The next largest improvement is MAFRE, up 10 million euros. The contribution from Latin America is also up, with relative stability in Brazil and still growing contribution from other markets. Regarding net realized gains and losses, they're slightly down as the excellent quarter for markets allowed us to actively manage the equity portfolio, realizing gains which offset of prudent provisioning approach, mainly for the real estate. I will now hand the floor back to Fernando for a few closing remarks.