Mapfre Sa Unsp/Adr

Good afternoon. Welcome to MOPFRE's earnings call for the September 2024 results. This is Leandra Clark, head of investor relations at MOPFRE. Joining us today are key members of our management team. Fernando Mata, CFO and third vice chairman. Jose Luis Jimenez, deputy CFO. And Felipe Navarro, deputy general manager of the finance area and treasurer. We appreciate you joining us for today's call. We will provide an overview of our financial performance for the third quarter and business trends. And after, we will open the floor for Q&A. You can use the Ask a Question link at any point during the call. I will now hand the floor over to Fernando Mata.

Good morning, everyone. Thank you, Leandra. Thank you all for joining us today. I'm pleased to present our results for the third quarter. Their income is up 39% and stands at 654 million after a 90 million in permanent goodwill in Verti, Germany. Without this effect, we will have posted an excellent $744 million for the first nine months, over $280 million in the third quarter, and an adjusted ROE of 12%. Growth remains strong, although we're facing a drag from currencies, and tariffs are normalizing in some markets. Premiums are up 4.6% and at 6% at constant exchange rates. Profitability was driven by improvements in technical management across all markets. The balance sheet is stronger, both on the asset side, with the goodwill write-down, as well as the liability side, with an even more prudent approach to reserving. The write-down of the Verti Germany goodwill, 70% of its book value, was a result of the challenging situation in Germany and Verti's lack of diversification. MAFRE continuously monitors and reviews the goodwill of its different operations, writing down over 800 million through P&L or reserves over the last six years. Our balance sheet is now much stronger, with only 1.2 billion of goodwill remaining, of which 600 million is from the U.S. business and 400 million from Spanish life and bank assurance businesses. We are confident in the future of the German business, and we will further invest in its digital capabilities. A 30 million capital increase was approved by the Board and will be dedicated to IT as well as strengthening the capital base. Non-life continues to improve with a combined ratio of 94.8%, 92.9% in the third quarter. General P&C contributed the most to this reduction in the absent or relevant cut events. In addition, there was a significant contribution from recurring financial results. Our capital base remains strong with shareholders' equity up 4.5% to over 8.4 billion and the Solvency II ratio at 197% at June. These robust results have allowed us to increase the interim dividend to 6.5 cents per share, representing an increase of over 8% compared to last year. Our diversified business models allow us to leverage the most profitable segments. Life and General P&C lines are performing exceptionally well. We have seen a significant channel run in the motor segment in North America and across Latam. In Iberia, recent figures are showing the changing trend, although not as fast as expected, and the business is clearly on the right path. In EMEA, we are still facing pressure on claims costs in Germany, which was mitigated by the significant improvement in Turkey. In Iberia, profit is up 15.5% to $283 million, over 30% when excluding extraordinary impacts. In North America, results have improved by $89 million on the back of technical measures. LATAM, including Brazil, remains the largest contributor to the group's profit, providing 305 million, a nearly 8% increase, with technical improvements as well as strong contribution from financial income. Lastly, our insurance and global risks business delivered a solid result of 207 million, up 9%, supported by premium growth and the absence of significant net cut impacts. Now I will hand the floor over to José Luis to walk us through the main figures.

Thank you, Fernando. As Fernando mentioned, premiums are up 4.6%, supported by the non-life tariff updates and the positive performance of the life business, but with headwinds from the Brazilian real and other Latin American currencies. The U.S. dollar is also slightly down. By market, Iberia, Latam and reinsurance continue performing positively. Non-life premiums, which are 80% of our business, are growing at 4.3%, reaching nearly $17 billion. There is noteworthy performance in the accident and health line, plus 6.4%, and a significant improvement in auto, plus 4.4%. The general P&C business is up 1.1% due to the slowdown of agro in Brazil and the depreciation of the real estate. The live business, which is 20% of premiums, has grown by 5.6%. In life savings, premiums are up 8.2%, supported by Iberia and other Latin. Life protection is up 6.8%, with notable growth in Mexico and Spain. At cost and exchange rates, premiums are up 6.1%, with non-life and life up 5.7% and 7.3% respectively. I will now discuss the key trends by region. In Iberia, net profit has reached 283 million, up 50% with an ROE of 13%. Last year's results included a net impact of 46.5 million due to arbitration following the breakup of the alliance with Bankia, as well as high net realized gains. Excluding these extraordinary impacts, profit growth was more than 30%. Non-life premiums have grown over 6%, driven by homeowners, condominiums, and health. Life premiums are up 6%, with a recovery in savings and solid trends in protection. LATAM continues to be a significant contributor to profit, generating $305 million, with an ROE of slightly under 18%. Non-life profitability has improved across the region, and both the life business and financial income are performing very well. In Brazil, we continue to see exceptional profitability with an ROE of 24%, and the net result has risen to R$ 188 million, despite the drag from the Brazilian real estate. The non-life combined ratio improved nearly four points to 74%, with improvements in general P&C and motor. Life protection has also made a strong contribution to these figures. The rest of LATAM continue to show strong profitability, contributing $118 million with improvements in technical results in most markets and tail wheels from financial income. North America, the net result was 71 million, up nearly 90 million compared to losses the previous year. This is driven by underwriting measures and significant tariff increases, which will continue to positively impact our P&L. The combined ratio has decreased by over eight points, now at 98.5%. In Puerto Rico, net profit was nearly 15 million. In EMEA, Turkey posted a profit of 24 million, with a strong improvement in the combined ratio down over 13 points and high financial income. The active sector remains challenging in Germany and Italy, bringing the losses in the region to around 19 million by showing a 12 million improvement compared to last year. Net profit and mastery is excellent. up over 9% to 207 million. The combined ratio remains stable at 95.5%. The most significant event in the third quarter were the storms in Europe with no of the major catastrophes. However, we continue to reinforce our prudence in reserve due to the ongoing rise in secondary perils and the recurrence of cat events due to an atypical hurricane season. This reserve in exercise added 1.5 points to the combined ratio. Modi continues to grow, posting a net result of 5 million euros. I would like to address two specific items. First, the positive tax adjustment had a 35 million impact. And second, the 90 million goodwill write-down for liberty Germany is recorded in the holding and adjustment line. Last year, in the same line, was the 75 million from the write-down of the U.S. business. On the right, you can see the combined ratios by segment. General P&C, our main line of business, both by premiums as well as profit, has delivered outstanding performance. Premiums are up over 1% and the combined ratio has improved 6 points to 81%. The net result stands at $307 million, a $136 million increase. In Brazil, premiums have decreased by 7% with nearly six points from currency depreciation and the rest due to the slowdown in agriculture issuance as a result of the high interest rate environment. The net result is 170 million and the combined ratio remained excellent under 65% with no relevant events during the quarter. In Iberia, premiums have risen by 6.6, fueled by ongoing tariff adjustment in homeowners and condominiums. The result has more than doubled to 121 million, and the combined ratio has improved by nearly five points to 93.4%. It has been a benign year so far regarding weather, as more events were covered by the Spanish consortium compared to last year. In North America, the net result reached 37 million compared to breakeven in 2023, with an excellent combined ratio of 85%, supported by tariff adjustment in homeowners and benign weather. Ode La Tam has also increased its contribution to the result by nearly 40 million. In summary, General PNC continues to be highly profitable and diversified. The third quarter results for the motor segment confirm the trend seen in previous quarters, already reaching break-even during the last three months. At the group level, the average premium is increasing more than 11%. Premiums are up 4.4% with sand drag from currencies, especially in LATAM, and in sweet units are down by nearly 7% due to selective underwriting. The losses year on year have been reduced by more than 25 million euros to 17 million, with a combined ratio around 104%. This reflects an outstanding turnaround in North America, while Brazil and the rest of Latin America are operating at combined ratios near 100% or below, which is satisfactory given the interest rate environments in this market. The profit contribution from motor in Brazil and other Latin has exceeded 30 million. In Iberia, premiums have increased by 6%. Our portfolio is down 3.2%. We are focusing more on retail in line with our risk appetite. A half of the portfolio reduction during 2024 is due to the fleet premium. The average premium has risen by over 9% of pace in the market, 7.2% increase. We are confident that the pricing is now ahead of expected claims inflation. The combined ratio improved nearly two points during the third quarter, reaching 102%. This was slightly higher than we were expecting in order to achieve the 100% for the second half of this year that we have guided to in June. However, the trend is clearly positive and further improvements should be visible in the coming months. In North America, premiums are up 6%, with units down 5.5%. In local currency, the average premium is up nearly 12%. During 2024, we have failed over 11 increases, including the most recent one that will come through in December. This adjustment, together with prior year hikes, which will continue to fit into P&L and improve the combined ratio. In 2025, rate hikes will converge with expected claims inflation. The combined ratio is down to over six points, reaching 100.8% in September and close to 100% in the third quarter, which was excellent considering the mileage and frequency increase during the summer month. The turnaround has been noteworthy with a net profit of $28 million, improving over $50 million compared to 2023. In Brazil, premiums are down 7.6%, around 2% in local currency. The vehicle portfolio is relatively flat year on year, as the fleet printing has already been executed. In Brazil, the combined ratio has decreased 1.7 points to 101.1%. In conclusion, Latam and North America are already consolidating profitability trends, while Iberia is on the right path. and we expect a strong third-quarter reduction in the combined ratio to continue in future quarters. The live business remains a key driver of profitability. Direct insurance premiums are up 7.5%. Both saving and protection have contributed significantly, growing near 8% and 7%, respectively, especially in Latam and Iberia. In Averia, life protection premiums are up 4.3%, outpacing the market with a combined ratio standing under 68%. The financial result was strong, with net realized gains up from 1.6 to 31.1 million, supported by real estate sales mainly in the second quarter. In Brazil, life protection premiums are down 1%, but growing almost 5% in local currency. There is some slowdown in investment and lending in the economy due to the recent rate hikes. This is a very profitable business, and the combined ratios stand at an excellent 84%, although up 4.5 points due to higher acquisition expenses. Across the rest of LATAM, volumes are up by over 30%. Mexico is not worth growing 49% in life protection. The table result for the life business has reached over 233 million in line with the previous year. And now I will hand over to Felipe to discuss the main balance sheet items.