Mapfre Sa Unsp/Adr

Good afternoon and welcome to MAFRE's full year's 2024 activity update. This is Felipe Navarro, Deputy General Manager of the Finance Area. We want to welcome those who have joined us in person today, as well as everyone online. It is a pleasure to have Antonio Huertas, MAFRE's CEO, here with us today. He will make a few opening remarks and will give an overview of the business trends and developments. Later, Fernando Mata, the Group CFO, who will comment the main financials, and José Luis Jiménez, the Deputy CFO, who will walk us through the balance sheet and capital topics. We will discuss local accounting figures and will give a brief overview of IFRS 17 and 9 figures at the end. Before we begin, just a few reminders. First, interpretation services are available both here and at home, so feel free to choose the language you prefer. either English or Spanish. At the end of the presentation, we will open up the Q&A. For those of you who are here with us today, you can ask your questions in person, of course. And for those of you online, please use the Ask a Question link on the bottom of your screen. Questions can be made in either language. I will hand the floor over to Antonio Huertas. Please, Antonio.

Good afternoon, everyone. Thank you, Felipe. Before we discuss the key figures which we are presenting under local accounting standards, as Felipe said, I would like to reflect on the past year. I am pleased to present our results for 2024, which have been outstanding, posting the highest level of profit in over a decade. We are quite proud to highlight that we are meeting most financial targets set out in our current strategic plan. And in some cases, even surpassing them. This is proof of our successful execution of the strategic plan. We continue to focus on technical excellence, while financial income remains a strong tailwind. We posted an excellent result of 992 million, the largest ever, and an adjusted ROE of 12%. After accounting for the €90 million impairment of food in Germany recorded in September, net profit was €902 million, up 30%. Figures under IFRS were also very solid, with a net result of €968 million and a combined for-issue of 93%. Growth remains robust, with premiums up 6.6% at constant exchange rates, with more than $28 billion in premiums, our historic record too. The growth was really 4.5%, affected by the depreciation of most Latin American currencies. Non-life technical profitability continues to improve with a combined ratio at 94.4% and a little over 93% in the fourth quarter. General P&C contributed the most to this reduction on the back of technical improvements as well as the absence of significant cut events. Mocho continues to show strong advances in several markets, significantly improving profitability in North America and the town. In Iberia, measures are still being implemented, and we expect to see the results in the coming quarter. So far, this year, data shows we are heading in the right direction. The market in EMEA is quite challenging, but we are talking all necessary measures to improve our technical results there. The balance sheet is stronger on both asset and liability side. We continue to increase reserve improvements in many markets, especially in the reinsurance business and Iberia. Our capital base remains strong. We shareholder's equity up over 5% to 8.5 billion euros. And the solvency ratio at 202% as of September, in line with our reference framework. Thanks to these robust results, we are proposing the highest dividend in the company's history. Maffrey's Board of Directors has proposed the final dividend of 9.5 cents to be approved by the AGM in March. This will bring the total dividends paid against 2024 results to 16 cents, 1.6, amounting to over 590 million euros, fully in cash and with a payout of 55% within our target range. This attractive dividend remuneration with three consecutive increases is evidence of our firm commitment to shareholders. Over the last three years, MAFRE has paid out more than 2.2 billion euros, with an average dividend yield of 7.7% and nearly 7% in 2024. Moving on to the main regions and business units, I do believe that all of them are delivering exceptional results, supported by a focus on technical excellence as well as diversification. Life and general P&C lines are performing exceptionally well, in addition to reinsurance and global risks. Iberia is benefiting from its highly diversified business mix and improvements in technical management. Premiums were over 9 billion euros, and we maintain our leading position in key business line. Profit is up 6% to $367 million. If we exclude the impact from the banking agreement in 2023, net profit would be more than $50 million higher than last year, up 70%. Latam, including Brazil, remains the largest contributor to business volumes and profit, with close to 10 billion in premiums and 408 million euros in results, achieved as a consequence of technical improvements as well as a strong contribution from investments. North America is posting a remarkable profit this year, with 98 million euros and the ROE now at over 8%. Lastly, our insurance and global risk businesses delivered a solid result of $325 million, with an $81 million improvement, supported by growth and the absence of large-cut events, despite the increase in secondary perils. These outstanding results are supported by a long-term strategy focused on profitable growth, technical excellence and diversification as set out in our 2024 to 2026 strategic plan. Now I will hand the floor to Fernando to work us through main figures. Fernando, please. Thank you, Antonio.

As mentioned, premiums are up 4.5%. supported by non-life tariff adjustments. There have been headwinds from the Brazilian real and other Latin American currencies. At constant exchange rates, premiums are up 6.6%, in line with growth expectations. By market, almost all regions continue performing positively, especially Iberia, other Latam, and reinsurance. Sorry. Non-life premiums, which are around 80% of our business, are growing at 5.6%, 7.6% at cost and change rates, reaching over 22 billion. Performance in the accident health line has been noteworthy, up around 8%, and motor is also up around 6%. The general PNC business is growing 1.5%, impacted by the slowdown of agro in Brazil, as well as the depreciation of the Latin American currencies. Life business, which is around 20% of premiums, has grown 3%, constant change rates, resulting from slower sales activity in the fourth quarter, with savings down 1% year-on-year. Light protection is up 3.6%, with natural growth in Mexico and Latin America, as well as healthy trends in Spain. I will now discuss the key trends by region. In Iberia, net profit has reached $367 million, up 1.6%, with an ROE of 11.4%. Last year's results included a net impact of $46.5 million due to the arbitration related to the Bankia exit. Excluding this item, profit growth was more than 17%. Realized gains are lower with 46 million in 2024 compared to 74 million in 2023. The Dana storms during the fourth quarter were manageable with a 27 million net impact. And growth trends are pretty strong with non-life premiums up 6.5%, driven by strong general PNC performance, especially condominiums and homeowners, along with the accidental health business. Life premiums are down 5%, which I will explain later. Profitability in LATAM has been excellent, with a net contribution of $408 million and ROE around 18.8%. Non-life profitability is exceptional across the region and financial income is performing well in most of the region. Premium growth trends are strong in Mexico, Colombia, Chile and the Dominican Republic. Brazil continues to see exceptional profitability with a net result of 255 million and an ROE of almost 26%. non-life combined ratio improved nearly six points to 72.8%, driven by agro and motor. The rest of LATAM continues to show strong profitability, contributing 153 million with improvements in technical results in most markets and also tailwinds from financial income. In North America, the net result reached 97.6 million, compared to near break-even last year, a big jump. This is driven by underwriting measures and significant tax increases, along with benign weather. The combined ratio has decreased by almost seven points, now at 98.7%. And in Puerto Rico, it's remarkable as well, net profit was over $25 million. In EMEA, losses have been reduced significantly to around 30 million, improving by 16.6 million. Turkey posted a profit of 28 million with a combined ratio down 14 percentage points and high financial income. On the other hand, the auto business remains challenging in both countries, Germany and Italy. After a week, net profit excellent, up 33% to over $325 million. The combined ratio is down two points to 93.6%. The most significant events in the year were the floods, well-known by you, in Brazil, as well as the storms in Europe. As a reminder, last year the Turkish earthquake and hurricane Otis in Mexico had a combined impact of, sorry, a net result impact of over $150 million. We continue to reinforce our prudence in provisions due to the ongoing rise in secondary perils. Finally, Modi continues to grow, posting a net result of nearly 5 million euros. I would also like to address two specific items. Just as a reminder, in September we recorded a $90 million goodwill write-down in Verti Germany, which is reflected in the holding and adjustments line. Last year, the same line, there was a $75 million from the write-down of the U.S. business. Second item, there were around 20 million of positive tax adjustments at year end compared with the 35 recognized in September. And the reduction was due to year end regulatory changes. On the right side, you can see the ROEs and combined ratios but different segments. General P&C, this is our main line of business, both by premiums as well as profit, and has delivered a standing performance. Premiums are up 1.5%, and the combined ratio has improved nearly 7 points to 80.9%. The net result stands at 413 million, a 187 million increase. In Iberia, premiums have risen by nearly 7%, fueled by homeowners and also condominiums. The result has nearly tripled to almost 147 million, and the combined ratio has improved by 5.5 points to 94.5%. This excellent level includes a 1.6% impact from the DANA, on the full year combined ratio and 6.5% in the fourth quarter. In Brazil, premiums have decreased by 6% but are up over 2% in local currency. Agricultural issuance has been affected by the high interest rate environment and also the falling commodity prices. The result in the region is almost 163 million, up 21.5%. And the combined ratio has improved to around 63%, with no relevant events during the quarter. This excellent level is also supported by the diversification of the agro-portfolio, which is sold as an insurance package, including life protection, around 40% of the premium, as well as property and crop insurance, around 50% each. North America had an excellent year with a combined ratio of 84.3%, supported by tariff adjustments in homeowners and benign weather. In fact, the ratio in December, which is typically a bad month, was the lowest on the last 10 years. The net results stood at 50 million compared to 17.6 million in 2023. In summary, General PNC continues to be highly profitable and also well diversified. The fourth quarter results for the motor segment confirm the trends seen in previous quarters, showing gradual improvements. Losses have been reduced by more than 40 million to 26 million, with the combined ratio improving by 1.4 points to 104.6%. The group's average premium is growing by almost 11%, with total premiums up 6%, with some drag from currencies, especially in LATAM. Insured units are down by 4.6% due to selected underwriting. The results reflect an outstanding turnaround in North America, while Brazil and the rest of Latin America are operating a combined ratio near break-even, 100%, or below, which is satisfactory given the interest rate environment in these markets. In Iberia, premiums have grown by over 6%, while our portfolio is down 3%, around 180,000 units, of which 80,000 of this reduction is due to fleet planning. The combined ratio had a slight uptick of 1.5 points, reaching 105.4%, impacted by increased costs resulting from various changes to the bodily injury compensation scale, known to you by De Varemo, will affect both current and previous year claims, as well as a higher prudence margin applied by MAFRE to the outstanding claims provision. Eliminating these two effects, the underlying combined ratio for 2024 will be around 102%. On the other hand, material damage expenses remain under control thanks to cost containment progress. And as we said, tariffs will continue to be adapted in line with expected future costs. This makes us confident that we will reach technical profitability at some point in the coming quarters. In Brazil, premiums are down close to 9%, less than 1% in local currency, with the numbers of units relatively flat in the year. The combined ratio of Brazil has decreased by 1.3 points to 101.2%. In North America, in local currency, the average premium is up 11.5%. Premiums are growing 6.5%, with units down over 5%. The combined ratio improves 6 points at around 101%, with a slight uptick in the forequarter due to seasonal effects, but it's still showing a strong recovery year on year. The turnaround has been outstanding, with a net profit of $40 million, improving by $75 million thanks to technical improvements and tariff adjustments. In 2025, rate hikes should converge with expected claims inflation. In a nutshell, we continue to closely monitor the motor segment and tariff adjustments together with the city underwriter, will help us to return to profitability. Life business. This segment contributed $283 million to the result, with Iberia being the largest contributor. In Iberia, total premiums are down 5%, affected by the exceptional issuance in savings in 2023, while protection premiums are up almost 4% with the combined ratio standing at an excellent 68.2%. We outperformed the market, which fell over 13% during the year. North result, remarkable, 168 million. Positive portfolio yields are contributing to the financial result, with net realized gains of 29 million, 10 higher than last year's. As a reminder, 2023 included 29 million from the Bankia exit. Excluding these extraordinary items, the result will be up 8%. In Brazil, protection premiums are down 6% by growing over 2% in Brasilia Real. There is some slowdown in investment and lending in the economy due to the recent rate hikes which are affecting sales. This is a very profitable business, and the combined ratio stands at an excellent 84%, although up 4.5 points due to higher acquisitions expenses already commented in previous presentations. Regarding the rest of countries, volumes are up by 27%, led by other LATAM. Mexico is not worthy, growing almost 49% in flight protection. And the result reached 49 million with a reduction of 37 million due to an increase in the runoff annuity portfolio reserves in Colombia, those that are linked to the legal minimum wave, which, as you know, significantly increased at year end. On the other hand, protection continues growing its contribution to the net result. Now I will hand over to José Luis to discuss the main balance sheet items.