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Thank you for standing by. This is the conference operator, and we will now begin the conference.

Thank you, Chad. Good morning, and thank you for joining Qualitas First Quarter 2022 Earnings Call. I'm Santiago Monroy, Qualitas IRO. Joining us today are our CEO, José Antonio Correa, and our CFO and international CEO, Bernardo Rizul, to talk about our quarter results and performance. As a reminder, information discussed in today's call may include forward-looking statements regarding Qualitas results and prospects, which are subject to risk and uncertainty. Actual results may differ materially from what is discussed here today, and the company cusses you not to place on you reliance on these forward-looking statements. Qualitas undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Let's turn it over to Jose Antonio, our CEO, for his remarks. Thank you, Santiago. Good morning, everyone. Great to be with you all again. As stated in 2021, we continue to confront the new normal and facing business challenges while serving our customers at the best-in-class level. Microeconomic and global turmoil leading to high inflation and shortage of new cars and auto parts, along with market volatility, is affecting us all, with quality as being no exception. Our quarterly results are neat and reflect this environment, as well as the continued and aggressive competition and mobility trends well above the pandemic. While our first quarter results are slightly below consensus on our own expectations, The reasons are clear and are being addressed, but most importantly, our fundamentals are stronger than ever and our strategy, which includes international subsidiaries and new venues, is working and proving to be the right one. Mexico car insurance market is yet to pick up, with 2021 numbers showing slight recovery versus 2020, but still down 6% versus 2019 in nominal terms. This is being affected by new car sales contraction that continues and was down 2.9% versus last year, and a full 24% versus 2019. We're expecting that things should sequentially improve in the second half, and that coupled with the competition and inflation put pressure in our underwriting results, which came in the low end of our expectations. The second piece of our business, the financial returns, in which Bernardo will elaborate, fell short of our target due to the combination of equity performance and increasing rates that are not fully reflected due to the duration of our portfolio. Importantly, this quarter's performance follows industry business cycles and should be seen as part of the expected run-up process after the atypical last two years. We have seen them before. We know what to do, and we are taking the right actions. I want to expand on the competitive environment, which, as we have mentioned in the prior calls, has been particularly aggressive on the pricing front, sometimes to what we believe unreasonable levels, seeking to regain market share by some of the participants. Our goal is, and we know it will be, to deliver the best value proposition for agents and policyholders, which doesn't mean being the cheapest. We acknowledge pricing levels are important, But even more important is the service we provide. During this quarter, we adjusted prices of some of our business lines, which are now up close to 10% versus the first quarter of 2021, and taking them back to pre-pandemic levels. We are adjusting once again the second quarter to partially recover industry inflation. The adjustments we are taking now support very technical models, and so I'll carefully We recognize that this may have a toll in our premiums since we are moving ahead of the market. This is the right action to ensure a sustainable and profitable operation. In parallel, we're also focusing on new technological tools such as Quali, our recently launched WhatsApp chatbot, the development of artificial intelligence in our call center, and the strengthening of our claims teams and processes to excel in the service provided to our clients. Let me now touch on another key part of our strategy, a move that not in the short term, but in a few years, is expected to be a relevant business, our new health and medical operation. Yesterday, we informed the market that the National Insurance and Bank Commission, our regulator, will soon start a certification visit to our new quality of health subsidiary. The visit is estimated to last between two and three months, and this is important and a final step forward before having from the authorities a favorable opinion for the beginning of our operations. Also, I would like to remind you that this new subsidiary will be completely independent of our Mexican auto insurance operation to ensure not to lose focus in our core business. In other news as part of our never-ending effort to sustainability, I'm glad to share that in January, Qualitat was included in the 2022 Bloomberg Gender Equality Index, GEI, as one of the 10 Mexican companies and the only Mexican insurance company to join the index, proving our commitment to transparency and best practices in gender-related topics. And before I hand it to Bernardo, let me reiterate that one of the Qualitas' biggest strengths has been our agility and our capacity to adjust and adapt. We will continue to follow very closely trends and factors that, while not under our control, impact our business. And we will continue prioritizing a sustainable and healthy operation. We know the next couple of quarters are going to be challenging, as the implemented actions will take time to fully reflect. Top line will face new objects and claim index will likely stay on the high end of our expected range. But once again, all actions are intended to continue creating value to the policyholders, agents, and shareholders. We will stay focused on executing against our priorities and strategy, and let me tell you, the future is bright. And with that, I will hand it over to Bernardo to walk you through the financial details, and as I said, a deeper dive on the financial income. Bernardo, please. Thank you, Jose Antonio. Good morning, everyone. As mentioned by Jose Antonio, first quarter operating results came in at the low end of our expectations while financial income performance was subpar. Relative to the industry, based on the 2021 overall figures that were released in early March, our performance continues to be ahead of the industry across top and bottom lines. Most importantly, our value proposition continues to be privileged by the confidence of agents and policyholders, leading to record market share in Mexico and the balance of the markets where we play. Going directly Into our underwriting, top line grew 0.9% given the financial headings. What we're highlighting is the strong performance of the individual segment in Mexico that increased 6.8% and of our international operations growing above 26% in dollars. Our international subsidiaries now represent 9.5% of the total company underwriting aligned with our strategy of boosting their potential in each of the markets where we paid. In addition to premiums, one KPI that we always look to assess businesses' strength and health is the number of insured units, which this quarter once again reached a record high of 4.6 million units, an increase of 284,000 units versus same period year ago on 109,000 up versus last year closing. In our contracting market, these results are worth recognizing. Due to the financial institution business linked to new car sales, our portfolio composition reflected 78% of our policy on an annual duration, and the remaining 22% are multi-annual. This, among other factors, led to a lower reserve constitution, resulting in a 7.9% increase in earned premiums. By the end of 2021, The total used car sales made through loan or credit increased 14%. From the total car sales through financial institutions, around 17% were secondhand cars, the highest proportion in the past eight years. Since the pandemic hit in early 2019, sorry, in early 2020, the automotive trend has been changing continuously. The demand for used cars is increasing, and we are taking advantage of this through our network of 19,000 agents. Looking forward, we continue to aim for mid-single digits in our top line towards the end of the year. We recognize that the speed of recovery of the auto industry and the effect of the crisis adjustment with unknown competitive reactions may impact our growth rate in the next quarters. Moving to our cost and indexes, to better understand the low cost and ratio performance, I would like to mention how mobility trends impact our business. Mexico, which continues to be our most relevant subsidiary, COVID-19 restrictions in terms of mobility were lifted and the country is fully back to normal. When comparing mobility trends of private transportation by the end of March, this is the pre-pandemic year of 2019, we are seeing it up 48% of higher mobility. It seems everyone was desperate to get out of the house, students are back in school, people are back in the office, or at least partially, travelers are back on the road, and social gatherings are now seven days a week. That increased mobility, it's impacting frequency, and thus the number of laundry claims, which just this quarter, were up 21% versus the same period a year ago. In addition, Mexican inflation levels of 7.5% is something we have not seen in the past decade. Even more, due to the supply issues and commodity prices, auto industry inflation is a couple of point higher, reaching close to 10%. These two main factors, which escalated faster than we expected, need more clean at a higher cost. Hence, a 65.9% loss ratio by the end of the quarter. Total loss composition has not changed much. Around 80% is related to property damages and city liabilities, growing 29% during the quarter, given the previously mentioned items. And around 13% is related to theft and robbery, which we have seen slight increase during the first quarter of the year. These impacts are cross-based and affect everyone in the car insurance business. In our case, we want to stay ahead. partially mitigating cost increases by leveraging our scale and vertical integration. Most importantly, on our risk prevention programs that seek to reduce accidents and thefts. The success of these efforts is seen and measured quietly, comparing not only our own goals, but to the balance of the industry performance. Our application ratio was 23.9% in line with the historical average where a lower mix of financial institutions, which carry a higher application cost, is topped by aging bonuses, which are paid based on collection time. We're maintaining our commission and bonuses in line with prior years. Thus, we do not expect major variances other than the ones coming from channel and customer mix. Our operating ratio stood at 3.7% for the quarter. 38 basis points below the same period year ago, mainly explained by a 68% decrease of the employee profit sharing account, referred to as PTU in Spanish, and by our revised vertical integration accounting consolidation. These sales are now accounted as revenue in the other income items within our operating expenses. All of the above, we're talking a combined ratio of 93.5% for the quarter, The actions mentioned include but are not limited to direct increase intent to get this combined ratio back to the low and midpoint of the 90% to 94% range, although it will not be immediate due to the nature of our data. Moving now to the financial income pillar, first quarter delivered 348 million pesos, representing a 3.3% ROI. This is below Mexico's reference rate and our expectations. The top results are mainly explained by our 15% equity position that I'm best delivered, and to a grand extent, the duration of our fixed income portfolio, which is 0.7 years. Therefore, not benefiting immediately from the rate hike. On this, it is important to note that our liabilities have a duration of 1.2 years. Thus, we're already ahead of the curve anticipating this higher interest rate environment. As you recall, at the beginning of the year, we mentioned our expectations for CETES was between six and a quarter and six and a half at the year end, which is currently where we stand. Regarding our equity exposure, we are expecting that it recovers in the next quarters. We will continue to seek positions and invest since that will allow us to close the gap versus our target, which, as you recall, is to be between 100 and 100 basis points above the average Mexican reference rate. At this time, considering Q1 and our portfolio position, meeting the initial target seems challenging. Altogether, we posted 736 million net income for the quarter, which represents a 7.5 net margin. Important as well to note that these results include a lower effective tax rate versus our historic one, mainly driven by inflation adjustment combined with lower profitability and deduction of items, such as annual agent bonuses that were recharged last year but paid in this 2022. We do not expect this low rate to be sustainable, and we're likely to be backing the 20% as an effective tax rate in the next quarters. Regarding our financial ratios, our 12-month ROE stands at 17%, reflecting our strong capital position. 12-month earnings per share stands at 8.5 pesos, and price-to-earnings stands at 13.5, and finally, price-to-book value at 2.2%. Now, going forward, regulatory capital requirements, they stood at 3,619 million at the end of the first quarter, with a solvency margin of 16.4 billion pesos, equivalent to a solvency margin of 551%. We're working on a capital allocation interdisciplinary project seeking business continuity and diversification. We're focusing on projects within the insurance ecosystem in Mexico that contribute to the long-term sustainability of our business. We remain committed to the previously mentioned date of mid-2023 by which we will have better visibility. Finally, and before we open up to the questions, later today we're having our general shareholders meeting where we're proposing the annual returns for our shareholders as follows. First, the cancellation of 6 million shares that were previously repurchased. With this cancellation, the number of shares representing capital stocks will decline from 406 million to 400 million shares outstanding. Second, we're also proposing a cash dividend payment of 2.6 billion pesos, equivalent to 6.5 pesos per share, payable in two activities. four pesos in May, and secondly, 2.5 pesos in November. This will represent a 60% increase versus the cash dividend payment from last year with an approximate dividend yield of 5.7%. Third, a new share buyback fund for a total amount of one billion pesos with the main objective of increasing stock liquidity. which, as you know, has improved significantly, going from $1 million traded on a daily average to over $5 million traded where we stand today. We will also continue acquiring some shares, although we're not going to cancel many of them anymore, as we do not want to affect our flow rate of around 40%. To wrap it up, our commitment to you remains unchanged. We have the strength and we're ready to serve with excellence our customers by leveraging in our largest agent network, in our focus based on customer needs, and in technology by capitalizing our senior management experience. We're optimistic for the future. We have built the right foundation, and we're focusing on what we can control. We're confident in our ability to successfully continue leading the industry. Our ambition is to transcend the industry. and to create a significant long-term value for all our shareholders. Everything we've done put us closer in achieving that ambition. Now operator, let's please open up the line for questions.

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